CHESSNOID

Today the market rebounded after a tough day yesterday. If this market follows history from the Great Depression and FDR, we might have a 15% rally although not in one day.  So far the closing numbers for today are:

We are headed in the right direction for now. I am not sure how long the euphoria will last until the reality sets in that this economy will not change overnight. It would be nice to rally 10-15% in the next few months, but if the economy continues the way it is now that will be difficult to accomplish.

The stimulus package being sold to the public will still not deal with the housing mess.  I don’t think you can just bail everyone out and modify everyone’s loans.  There are excesses in the market that are being squeezed out and all the actions the Bush administration made look like they will be repeated in this Democratic Obama administration.

I know I am in the minority when I say increased deficit spending and sending out stimulus checks is not the answer and will not work.  If we as a nation plan on spending another trillion dollars, then let’s make it count and worth our while.  I was against the bailouts which have already cost that much and we still don’t have an economy that is stronger.

In fact it is weaker now than before we spent the money, and I don’t buy the theoretical argument that it would be even worse now if we didn’t do the bailouts back then.  Some of that bailout money went to compensate the CEOs, dividend payments,  and buy assets of other banks while not one penny went into buying “bad” mortgages as originally proposed by Paulson.  This plan to alleviate the credit crunch has not helped eased the credit markets at all.

Federal Times:

The Treasury Department hasn’t developed controls to manage its $700 billion financial bailout, and isn’t guarding against potential contract abuse by the firms managing the bailout, according to a new report from the Government Accountability Office.
GAO’s report is the first oversight conducted of the Troubled Asset Relief Program (TARP), which was created by Congress in October. The congressional audit agency said the program was hurt by Treasury’s abrupt decision to switch from purchasing troubled assets — the original goal of the plan — to recapitalizing struggling banks.
GAO added Treasury hasn’t done enough to measure the effectiveness of the more than $150 billion already invested in dozens of banks.
“It’s early. And I’m not saying you have to determine the effect today,” said Tom McCool, director of GAO’s center for economics. “But their metrics right now are more ‘macro’ metrics. I’m looking for more ‘micro’ metrics — looking at specific financial institutions, at their balance sheets, that sort of thing.”

GAO credited the Treasury Department for launching the program quickly. The department has already hired about four dozen employees to work on TARP; it expects it will eventually need up to 200 to run the program. But GAO said Treasury needs better controls to enforce the terms of TARP, particularly limits on executive compensation and dividend payments by banks.