Bailout watch: Who’s grubbing now?
I’ve reported for years on how city and state governments have forked over hundreds of millions in public subsidies to private mall developers and retailers.
In the wake of bad holiday sales, they want more government help. It’s not enough. It’s never enough:
Facing a disastrous holiday shopping season, the retail industry on Tuesday urged President-elect Barack Obama to incorporate three national tax-free shopping holidays in 2009.
The group wants the measure to be included in Obama’s stimulus efforts.
“The situation is critical,” the National Retail Federation (NRF) wrote in a letter to Obama. “In October, consumer confidence was at its lowest level in the 41 years. We urge you to act quickly on legislation to help stimulate consumer spending as one of the first priorities of your new administration,” the NRF said.
Via WSJ:
Under the industry group’s proposal, which would exclude alcohol and tobacco sales, the federal government would reimburse states for the lost tax revenue. State sales tax rates range from 2.9% to 7.25%, the group said. The five states without a sales tax — Alaska, Delaware, Montana, New Hampshire and Oregon — would also receive monies.
In a letter signed by the chief executives of retail chains, including J.C. Penney Co., Saks Inc. and Petsmart Inc., the NRF warned the situation was “critical,” with consumer confidence in October falling to the lowest level in the 41 years data has been collected.
“Without swift, additional Congressional measures, the current economic weakness could worsen, creating a more rapid downward spiral — beyond what economists are predicting for 2009 — in the years ahead,” the NRF said.
The group said it supports Mr. Obama’s efforts to create a long-term stimulus plan to generate jobs by rebuilding the country’s infrastructure and investing in public schools and alternative energy. However, the NRF said short-term incentives are also needed to encourage consumer spending, which accounts for 70% of the U.S. economy.
In the third quarter, spending by consumers fell 3.7%, the biggest drop in 25 years. The fourth quarter’s results are expected to fall even more.
Rachel Bernstein, vice president and tax counsel for the NRF, said in crafting the proposal the group considered an incentive that would directly and immediately benefit the economy, as opposed to the tax rebate checks sent to consumers last summer, some of which weren’t spent.
But Tom Gallagher, a Washington, D.C.-based economist with ISI Group Inc., an broker-dealer and investment advisory firm, questions whether the NRF proposal would do much to boost consumer spending. “People might just shift the spending they would do anyway to those days designated tax-free,” he said.
Adding to the Borrow-Spend-Panic-Repeat cycle, the Federal Reserve’s approval of GMAC’s application to become a “bank holding company” for the sole purpose of siphoning off TARP funds was approved. Just in time for Christmas, when you weren’t paying attention:
General Motors Corp., days from receiving its first installment of at least $9.4 billion in U.S. aid, won another victory with the Federal Reserve’s approval of lender GMAC LLC’s bid to become a bank holding company.
GMAC’s shift to a bank eases the threat of a default that threatened to dry up credit for GM dealers who used the company to finance about three-quarters of their inventory. GMAC also handled loans for about 35 percent of GM’s 2007 retail buyers.
“This has a positive impact on GM and also the auto market,” Tatsuya Mizuno, director of Fitch Ratings in Tokyo, said today in a Bloomberg Television interview. “The problem is how they can prepare for next-generation vehicles, to restore their competitiveness.”
The Fed used emergency powers on Dec. 24 to grant GMAC’s bank conversion, citing turmoil in financial markets and the potential impact on Detroit-based GM as the biggest U.S. automaker taps emergency federal loans to stay in business.
That decision was the second lift for GM in less than a week, after President George W. Bush said Dec. 19 that GM and Cerberus Capital Management LP’s Chrysler LLC were eligible for U.S. aid to help them avoid running out of cash by early next year, threatening a collapse that would cost millions of jobs.
Like I said: They are all “bank holding companies” now.
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Should have listened to Michelle in the first place. What did she call it? Stimulus-palooza? That’s what it’s become.
Enough already! Read our lips! You ain’t getting any more.
If they do this it should just be tax free days on American made products.
Isn’t every day a federal “tax-free” day on most retail items? Of course, I’m ignoring the corporate income taxes built into the cost of every item, and the excise taxes on a lot of the items.
Let me see if I got this right – the Gov issues “tax free shopping days”, then the Gov gives the states back the money they lose on sales tax revenue. Doesn’t this still come out of my pocket when I pay federal taxes? Or do people really believe they are getting something “free”? Are we really THAT dumb??
I read in the WSJ that the retailers are asking for the bailout in tax free shopping days.
I can go for that;-0
#4
Unless I have to pay for it in the end ;-(
These vicious circles are making me dizzy.
Fool me once. Oh well, the only option I have is to ask that we, the American voters throw the old bums out. The only stimulus I want is a decent job.
Can all levels of government cut spending PLEASE?
Obviously no one cares about the greed, avarice, and piss poor business plans that led to the financial meltdown now that “Big Daddy” government will fix everything by printing more money and screwing over the taxpayer to pay for it over the next several generations. All the rest of the business sector want is to belly up to the trough and get their piece of the pie now! We just had a month with over 550K lost their jobs in November and those that still have a job are nervous about having one over the next few months and the Mallrats think we are going to charge into their overpriced stores and continue to mortgage ourselves to the hilt to buy their foreign made crap. I don’t think they understand how angry the average taxpayer is over these bailouts. Maybe it is just about time for the 2nd American Revolution!
ΜΟΛΩΝ ΛΑΒE (mo-lone lah-veh) Translation: “Come and Take Them!”
I think Obama said from the top income earners only……… and there’s a bridge in Brookline that’s for sale/sarc
Babbledabble – Present company excepted, I think we know the answer to that question.
If you want to treat anemia with leeches, then bailouts are the right approach.
So, we’re now operating on the principle that you can spend your way to prosperity and you CAN get something for nothing. That’s the promise that got the Marxist punk elected.
Anyone who thinks the economy has taken a dump so far is in for a shock. You ain’t seen nothin’ yet.
[yawn]
I’ll pule, when my taxes go up.
Socialism, pure and simple. Reminds me of the scene in The Lion King. Total devastation is on the way.
GMAC a bank holding company??? WOW, not too long ago they bought out DI-TECH.COM… How can I become a BANK HOLDING COMPANY???
You can rant all you like, but the government does not listen to the ‘little people’ any more…assuming it ever really did. As stated above, the economy now runs on consumption (and yes, it’s an illness just like in some of the old movies). The way to get the government’s attention is to stop consuming, at least slow it down. And don’t forget April 15th coming up, where government spending comes directly out of your pocket…..!
The article said that GMAC makes loans to 35% of GM customers. GM sales are off roughly 35% last month. Sounds like those banks ain’t loaning money doesn’t it? They say you must have perfect, or near perfect credit to get a loan yet, we are loaning money to the Banks? What would their credit score be, I wonder…
In WSJ from two or three days ago there was an article about how all the big real estate developers and REITS and shopping center developers are now demanding a bailout. The real estate boys are claiming that when tenants can’t pay rent or won’t rent, they (the real estate boys) can’t pay their mortgages and the US government should pay. It doesn’t dawn on any of these well fed morons that I don’t care about their mortgages. They don’t weep if a homeowner in Perth Amboy, New Jersey can’t make a payment. Second, it doesn’t occur to them that they took a risk and would make great profits if their plan worked but they have to take the medicine if the development does not work. And how about lowering the rent? Ever heard of that?
GMAC a bank holding company, wow! I want to be one too! Lets all do it, then we can get bailout money for ourselves. We could call ourselves the Bank of Malkin.
Clearly, there will not be ANY chance of a 3rd party ever financing a GM car. So the government is now on another side of this monopoly.
Oddly, even Barney Frank was complaining about how GM had chased the banks out of the car financing business.
New bumper sticker suggestion:
Socialism is not the Answer
Next the auto companies should declare themselves Not-for-Profit compaies and avoid all those pesky property taxes. Executives should become ministers and get discount tickets on airlines.
GM a banking company? What is this world coming to?
Huh? Maybe the turkey was undercooked–I am having a problem understanding that one all all.
When people enter government service do they go to school to be stupid or are they self-taught?
I noticed Chrysler is running a banner add on top of Drudge thanking the American taxpayer for helping them out.
I have to believe the CPMs (cost per thousand impressions) on Drudge is setting us taxpayers back a few thousand dollars.
Drudge should be ashamed for accepting the ads.
Honestly I am sick watching my country fall into socialism.
It’s all in the name of “fairness” or their skewed understanding of it. They stop thinking and let their feelings take over.
High speed rail trains only seem to make economic sense in places with narrow coastal corridors between very large cities–Japan is the prime example.
***
Other requirements seem to be poor road systems, very high car costs, high fuel costs, and no parking places anywhere.
***
Good projects pass the ECONOMIC SMELL TEST. Private companies risk their capital and make a profit with realistic payback schedules–NO TAXPAYER SUBSIDIES NEEDED TO OPERATE.
***
The “Gubernator” (aka RINO) in the People’s State of Kalifornia will rape the U.S.S.A. taxpayers again. How is his failure to veto the California taxpayer funded stem cell research project thingy working out?
***
He already has the cojones to ask for a bailout of his failed state. My cousin and her family bailed out of California to stop the economic hemorrhage in their lives–they moved to Las Vegas to escape the taxes. Will the last taxpayer turn out the lights when they leave the state?
***
John Bibb
Several years ago controlling interest in GMAC was purchased by Cerebus. Does that name ring a bell? Yup, same guys who bought Chrysler from Mercedes Benz. Since shortly after that acquisition was finalized Cerebus has regretted owning Chrysler.
It has been losing money and in the autumn of 2008 Cerebus/GMAC tightened its lending guidelines for GM dealer floorplanning (dealer inventory loans) in an apparent bid to get GM to agree to accept Cerebus’s equity interest in Chrysler in exchange for GM’s remaining equity interest in GMAC. So far no luck with that swap.
GMAC expanded beyond auto lending decades ago and during the past 10 years or so it subsidiary Residential Capital has been the largest non-government wholesale mortgage lender in the country. GMAC also owns GMAC Mortgage, DiTech, Homecomings, etc. They are wa-a-a-y deep into mortgage lending. Last May ResCapital was looking to get almost $4.2 Billion loan from its parent – Cerebus. For years DiTech led the way in squirrely loans like 105% and 125% loans (yes, lending more than the property was appraised for) and Alt-A grade loans.
It is no surprise Cerebus/GMAC is seeking TARP funds to stay afloat. Without GMAC providing GM dealer financing and consumer car loans, GM itself is at risk of collapse.
Intervention requiring more intervention. I guess the American public had it right when 75% said no bailout. More money in the hands of stupid people results in more stupid ideas. This recession was caused by over spending and high debt and will not be fixed by more spending regardless of which party is doing the spending. Here’s to learning chinese, since China will own us and our debt.
Sorry, but a tax free day isn’t going to make me, or anyone else, go buy stuff. The most it might do is alter which day I buy what I was going to buy anyway.
The battle cry used to be “Buy American”.
These days it should be “Buy from Bailout Refusers”
That’s exactly right rambler. Well put.
And aren’t they run by Snow, the former US Treasurer?
Buy a gun on the tax free days!!!!
You can save a lot of money on a $1000 rifle, even a $500 one has a good tax chunk.
That way we don’t have to bailout the manufacturers or dealers. Thanks to Obama, the salesman of the year!!!
MisterP – you are right. Surprise, surprise, surprise…
http://en.wikipedia.org/wiki/Cerberus_Capital_Management
Boycott GM and Chrysler. Don’t reward their bad behavior.
Honda makes excellent cars. So does BMW if you’re taste are further upscale.
And both have assembly plants here in the US that employ hard working Americans.
Oh well, as long as it is FAIR.
Generous with other people’s money, aren’t they?
It’s too late. The floodgates have been opened and nothing can stop the coming destruction of our fragile economy.
The way I see it, you can either fight it (and lose) or just take it (and lose). Your choice.
Dude, that is a perfect metaphor.
Where is the GOP and why are they waiting to get on the right side of this issue and separate themselves from both Bush and Obama?; None of this bailout intervention will work long term; The free market is trying to purge itself of failure and all this inappropriate government intervention will seriously retard the beginning of economic recovery; Let the free market throw up and wash out all the losers; There are many winners just waiting in the wings.
There is even more to the shenanigans of Cerberus. In Sunday NY Times, there is an article about how Cerberus is now REFUSING to allow investors to take their money out of Cerberus. When people who put their money into this hedge fund tell Cerberus that they want to take their money out, Cerberus is incredibly refusing to allow them to do so. The poor investors are now captive customers of Cerberus. If Cerberus’ lousy investments in Chrysler continue to crater, the poor investors/suckers are left to hold the bag. And the country club crowd that runs Cerberus has the unmitigated gall to ask the taxpayers of the US to bail them out. For shame!
Close, zorro.
I think this is better:
Socialism – a century of failure proves nothing.
Perfect! Pass the FairTax.
Since the depression(Great one that is-not 2008) the Democrats told everyone they were the “Friend of the Workingman”. Who the heqq are they bailing out? Looks to me like a lot of sucessful business people. This must be to prove Obama’s claim that prosperity trickles UP. So now all us little and poor taxpayers are going to make these rich folks—–even richer.
Great – another bailout/stimulus. So, let’s borrow MORE money from China and use it to buy…Chinese-made goods! How, exactly, is this going to help AMERICA?!
I find it more than a little interesting that tied into Cerberus Capital LLC is one George Soros.
It seems that all of a sudden where ever you kick over a rock this “slime ball” come slithering out.
And this guy pulled most of the strings to put BO in as POTUS. He’s still pulling them in Minnisota hmmmmmmmm
PC is Thought Control
LEE
I wouldn’t be surprised in the least to find out that Cerberus’ “investment” holdings group was really just another Ponzi scheme ready to crumble…
Buckle up and hold on boys and girls, i’s gonna be a whirlwind!! The good news? We’re gonna print so much money we’ll all be flush for a while! The bad news? My great grandkids will be speaking Chinese. Bad enough GWB sold us out to economic socialism, but it’s just the very beginning. The One will bring us “One World” and I’ll bet you we won’t be the ones ruling it.
There are many reasons to suspect the reports of bad retail sales this year. Remember the lack of parking spaces at the malls, the traffic around shopping areas, and people carrying bags and bags of purchases? Amazon and other on-line retailers had their biggest year ever.
Now that bailouts are rampant and Obama is riding in to save us, the reports are greatly exaggerated to the down side.
If the buying season was reported as good, there’d be little support for further bailouts or giveaways and Obama couldn’t save us.
And when all of these businesses are standing with their hands stretched out waiting for money they never earned and do not deserve, our Wounded Warriors were waiting for a facility to built and it would have never happened if it weren’t for private giving.
Congress will give exorbitant and ridiculous amounts of our money (against our will) to failed businesses, and they gave themselves a vulgar raise. I wish they cared as much for our Wounded Warriors. Their actions and inaction speak louder than their cheap rhetoric.
Phil Gringrey (GA-11) wrote a column in the local paper this morning saying just that.