Congress Spends Billions Without A Coherent Plan

It has been pretty obvious to the Stock Market every time he appears. Treasury Secretary, Henry Paulson usually holds a press conference in the middle of the trading day. Soon after he starts speaking, the Dow Jones Industrial Average will begin a steep descent.

The market knows that the Treasury Secretary is a man with 700 billion dollars of taxpayer money that does not have a real economic plan. The Troubled Assets Relief Program (TARP) was originally rushed through Congress as money that was going to save the economy from disaster by buying distressed mortgages from consumers.

However, the TARP plan now seems to have evolved into a huge bailout of selected firms in the financial services industry. Of course, TARP was passed with extensive Congressional oversight but half of the taxpayer's money has already been spent and much of the oversight provisions have not been enacted.

The only ongoing review of the TARP program is headed by Elizabeth Warren. She is the the chairwomen of a new Congressional panel that was set up to monitor the bailout. Recently, (New York Times) Ms. Warren was quoted as saying that "the government still does not seem to have a coherent strategy for easing the financial crisis, despite the billions it has already spent in that effort. The government instead seemed to be lurching from one tactic to the next without clarifying how each step fits into an overall plan."

Meanwhile, the Treasury has just bailed out Citigroup in the last week. It was a financial services company that was "too big to fail". The Citi was not sleeping well since it had billions of dollars of bad loans on its balance sheet and its stock price had reached the status of a penny stock.

The TARP was used to bailout Citi and now billions of those toxic loans will be the responsibility of the United States taxpayer to guarantee. In addition, Citi was given billions of taxpayer dollars to shore up the liquidity on its balance sheet.

Someone may ask what did Citi use all that new taxpayer cash for? Well, Inner City Press is reporting that Citi is sponsoring a Congressional junket to the Caribbean and spending over seven billion Euros to buy the highway business of Spanish construction firm, Sacyr Vallehermoso. Seems like the taxpayer's money could have been spent better, doesn't it?

This week the automakers are back in town requesting a bailout from the United States Congress. A few weeks ago the Big 3 flew in on private jets to attempt to get a piece of the TARP pie and were rejected. The reason given by Congress was that they didn't have a coherent business plan.

So, the automakers did not present a coherent business plan to obtain money from a 700 billion dollar government program that does not have a coherent plan. In the real world this would be considered absurd, but its just business as usual inside the beltway in Washington D.C.

Paris Fashion Week: Declining Hemlines And Strange Designs

Let me just say that I don't really know anything about designer clothing. In fact, I am certainly the type of person that prefers fabric comfort over making any type of designer fashion statement.

However, I know that there are people who view the most contemporary fashion design as if it were an art form. So, when it comes to taste in apparel, fashion is clearly in the eye of the beholder.

Fashion Week in Paris ended last Sunday and I decided to use the Internet to look at some of the latest fashion show clothing designs. I was driven to this strange state after recieving my latest 401k account statement that showed the negative impact the recent global stock market carnage had made to my investment holdings.

Consider that I was looking for a future stock market rally by researching a leading economic indicator, the length of designer hemlines. It is thought that when the economy is good, hemlines decline and clothing is short. However, when the economy is bad, hemlines increase and clothing is lengthened.

What was the result of my research about hemlines at Paris fashion week for the Spring design? Here is a quote from Alexandra Shulman, the editor in chief of British Vogue from the Associated Press: "I don't think it's been as exciting as other seasons. On the whole, most of the designers here have kind of stuck to what they know they can do, and not really tried anything that's going to scare the horses. We've seen a lot of very short clothes, which goes against the old idea that when the economy is bad, hemlines go down."

There you have it. Hemlines are not going down. So the economy should improve by next spring. It could well be a sign that its time to buy equities. After the recent market carnage led by the decline of the Investment Banks, could clothing fashion designers perform any worse than current stock brokers?

Probably not, but its still very hard for me to understand who would actually consider wearing some of those strange fashion designs.