Tony Petroski

The upside of U.S. unemployment is that corporate profits are rebounding much quicker than expected, as witnessed by today's startling 14.5% jump. As Tom Armistead explains, "If you fire people faster than your business declines, profits will increase." Based on the correlation between profits and share prices, he finds support for an S&P 500 climb to 1,250 - a further increase of 13%.

Imagine how profitable they'll be when they quickly fire more people.

Too Big to Fail vs. Too Political to Regulate

I'm in the cut down the Too-Big-to-Fail camp, also known as the Bull Moose party, because time and again, the Too-Political-to-Regulate path doesn't work. The regulated capture the regulators and it leads to corruption of the political process along with the very failures the regulators are supposed to prevent.

The author recalls Continental Illinois.

I recall Chrysler in the mid-70's. The same arguments were made in favor of a bailout for them at that time. I remember (and have to laugh) at the amounts involved. $600 million was given as the figure sought by Chrysler to save their business.

I argued at the time (when I was in knee pants) that 1) There is no constitutional provision for the federal government to tax one citizen in order to take his money to give it to another. 2) Giving $600 million to Chrysler prevented banks from lending that $600 million to businesses with more promising prospects. 3) Chrysler's failure wouldn't be the disaster it was portrayed: Ford and GM would be comparatively stronger and the two could purchase up whatever assets they could use along with employing a portion of the laid-off Chrysler workers and the overall business of making American cars would be stronger although the medicine would be bitter in the short-run.

We know what happened: The political pressure to bail out Chrysler was too much. Chrysler got their bailout. Lee Iacocca became famous (although he was never able to parlay his fame into political power) and the Chrysler bailout entered the lore as a great success.

Now we know the next chapter of the Chrysler story. A second bailout, this time along with GM, amounts that dwarf $600 million, the institution of Tsars for the first time outside of Russia, and a still-bloated auto system that will drag on the economy for many years to come. The same arguments apply to all businesses, not just banks that are TBTF.

Too-Big-to-Fail doesn't mean that we have to kill all the birds so as to catch the few with swine flu. It means we have to make sure the flocks don't get so large that they block out the sun, and the smaller flocks can still fly (hopefully not all of them to China and Brazil).

Deficit Spending: The Emperor's Children Also Have No Clothes

The story of the Emperor with no clothes is a familiar one. The image of the Emperor in the parade with all his children naked is one I don't want to see outside a nudist colony. Come to think of it, I don't want to see it there either.

To those young and not so young who complain and threaten to leave, as a famous American once said: "I feel your pain."

That same famous American said "The era of big government is over," so I guess we have to take his statements with a grain of sand.

Chris Coonan: It sounds as if you have the makings of an interesting book.

Do you not know that the Citizens of the World have been working towards this goal their whole lives: To spread socialism so far and wide and especially in the United States that there is no place to go to, no way to "vote with your feet."

I don't see China absorbing immigrants or appealing to freedom lovers.

Brazil?

Harvard professor Brandon Adams says some of the best potential traders are professional poker players: "They’re used to skirting the edge of ruin and they learn the tools of how to do that." If so, maybe Wall Street recruiters should be looking here and here.

Again, the Market Guy gets things right.

Just ask Minnesota Fats.

Boeing's (BA) incentives for building its 787 Dreamliner plant in South Carolina could go from $250M up to a little over $400M, "depending on how you cut the apple," says Governor Mark Sanford. The facility will be Boeing's first outside Washington state, and the company has about 840 orders for the new plane.

No.

More AIG Controversy: Maiden Lane III

This is from Mr. Kwak:

"There are a couple of details I can’t quite reconcile (for example, the Fed balance sheet shows initial funding of $29.3 billion, but everyone says Maiden Lane III paid $29.6 billion for the CDOs), but essentially it went like this."

I was just about to nominate him for inspector general and then this

"The controversy is not over paying $29.3 (or $29.6) billion for the CDOs, since that was the market price. The controversy is over whether AIG should have agreed to settle the CDS at 100 cents on the dollar..."

Readers: Vote. AIG/Goldman or Mr. Kwak?

Krugman on the Invisible Bond Vigilantes

I'm sorry. I saw the name, thought he had been awarded the peace prize and I was going to protest against it.

Boeing's (BA) incentives for building its 787 Dreamliner plant in South Carolina could go from $250M up to a little over $400M, "depending on how you cut the apple," says Governor Mark Sanford. The facility will be Boeing's first outside Washington state, and the company has about 840 orders for the new plane.

Copywriter:

Why is the amount different depending on how you cut the apple?

Dollar/Yuan Peg Means China Gains on All Fronts

From the article:

"The U.S. has pressured China to let their currency float..."

Evidence? Source?

Mr. Lewis. A fellow American deserves some credit, although you make a good point.

China and South Korea: From Emerging to Emerged

The author:

"Best known for exports, its domestic economy is once again showing its strength."

(He's writing about South Korea).

We here know the place as the land of the winner of the U.S. Open.

A gutty performance I can tell you and he took on Tiger man to man.

The fans here were cheering for Tiger, but I (contrarian) was cheering for Kim.

If you accept that the crisis is over and we're on the road to recovery, what, Paul Vigna asks, has Tim Geithner specifically contributed? Aside from stress tests and the PPIP: a whitewash and an awful idea respectively.

Nathan W M:

Me too.

But where do we go from here?

To settle credit-default swaps, derivatives traders have set a value of 68.125 cents on the dollar for CIT Group (CIT) bonds. The price fell from 70.25 cents after the first round of a 13-dealer auction.

Hold out. The government pays these at 100 cents to the dollar.

Why Krugman Is Wrong About the Yuan

Mr. Rein. You are right and Krugman is wrong.

From the article: "the Nobel Prize-winning New York Times columnist, who wrote on Nov. 15 that China severely undervalues its currency."

Forgive me. Peace Prize? Economics? Soccer.

For you who are scoffing at my put-down of Mr. Krugman, I must point out that the august body, the Nobel Committee, awarded my President the prize for peace. He, after all had....

Are you guys sure this Nobel Committee knows what they're doing?

If you accept that the crisis is over and we're on the road to recovery, what, Paul Vigna asks, has Tim Geithner specifically contributed? Aside from stress tests and the PPIP: a whitewash and an awful idea respectively.

Geithner has had a bad day. Why?

Is he on the road to riches as Chief of U.S. Operations for the North American market, Goldman Sachs?

Are Negative Yield Money Funds Next?

This man is onto something.

In an era of dog eats dog, you may pay a protector to keep your goods safe. Those of you with gold and ammution. Think.