February: The Month When We Deal With All Of Our Problems

The first two weeks of February should be more than a little interesting. By my count three things are going to come to a head. The fiscal stimulus bill will be passed in some form, TARP ll or some sort of banking bailout bill is going to be proposed and the auto companies have to come back to the government with a credible plan for survival.

The fiscal stimulus measure is, if you believe the news reports today, in trouble. The Republicans are digging in their heels and some Senate Democrats are having second thoughts. I don’t believe that for a second. Politicians being politicians are going to be spend money so as to be seen as trying to do something, anything. This is just the sausage making period of legislating. It lands on Obama’s desk on schedule and gets signed with bipartisan grins all around.

TARP ll or whatever it ends up as is going to be a lot bigger problem. Despite the fact that this is probably the most important single item that needs to be addressed, it’s tainted by the last goaround. After putting the taxpayer on the hook for close to a trillion large on the fiscal stimulus bill, smoke and mirrors will rule the day. There is no way that Capitol Hill is going to appear to be going all in on another couple of trillion dollars for the banks. If anything happens it will be guarantees and kick the can to the Fed. Oh, and a lot of bluster about dividends and compensation while they surreptitiously have the taxpayer bail out the banks and set the stage for an enormous amount of power to accrue to the large banks.

The auto companies are due back to report on how they plan to multiply loaves and turn water into wine. No doubt they will produce a business plan that purports to do just that and it will be blessed and pronounced good for the country. It will be long on soon to be broken union promises, market share projections, homage to “Green” technology and wildly optimistic assumptions about unit volume. Handshakes all around and assurances that enough money to lead us to this promised land will be forthcoming.

So thank the Lord that February is a short month. If it had a few more days who knows what kind of trouble we might get into.

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