Government
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AIG Stock Sale Doesn't Justify Bailout Package
The U.S. government, for the first time since 2008, is officially a minority stakeholder in American International Group Inc. (NYSE: AIG), with an $18 billion stock sale that made money for taxpayers.
The AIG stock sale will reduce the government's stake in the insurance company to about 22% from 53%.
The U.S. Treasury Department announced Sunday it was selling a large chunk of shares in the bailed-out insurer. The government saved AIG in 2008 and 2009 with a bailout package that totaled around $182 billion.
Including Monday's sale and money from AIG, the Treasury claims it has recovered a total of $197.4 billion from AIG - a $15 billion profit for taxpayers.
It's not surprising the government is selling AIG shares. What is unexpected is that such a large chunk of AIG stock will be released into the market at once, instead of spaced out over time.
One reason to shed the stock faster than planned is to credit U.S. President Barack Obama with taxpayer profit ahead of a tight race for the White House.
White House Press Secretary Jay Carney said Monday, "We have been committed to exiting those investments as quickly as practicable. What it does demonstrate is an ongoing commitment to recover taxpayer money. It's safe to say the president is pleased with the progress being made as we wind down these investments."
But even with a multi-billion dollar profit, defending private-sector bailouts is an impossible sell to most voters.
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One of the Decade's Biggest Examples of Wasteful Government Spending
In February we told you that despite nearing $15 trillion in debt - now close to $16 trillion - the U.S. government decided to spend $592,000 last year to figure out why chimpanzees throw poop.
Now we've discovered yet another example of wasteful government spending that has burned up more than $1.5 billion of your tax dollars - with nothing to show for it.
We're talking about the fruitless pursuit of a biofuel known as cellulosic ethanol, surely one of the greatest government boondoggles of the past decade.
Cellulosic Ethanol Production: What You're Paying For
Both Republican and Democratic administrations have showered companies with grants and loan subsidies with the goal of turning materials like wood chips and switch grass into an ethanol fuel that could be used in automobiles.
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Election 2012: Is Mitt Romney a John Kerry Impersonator?
Be wary of the rich, slick politician from Massachusetts, he might seem eerily familiar.
He flip-flops. He's super-rich. And he has nice hair.
Only this time it's not Sen. John Kerry, D-MA. It's Republican candidate Mitt Romney, the former Governor of Massachusetts.
The comparisons are so similar Election 2012 pundits now compare it to the 2004 election which pitted Kerry against the incumbent George W. Bush.
Here's another similarity: Neither one comes off as likable-- not even to their supporters.
Even still, like Kerry, Romney has been heralded as the candidate most likely to defeat the incumbent even though he hasn't inspired or energized voters.
That may be why Republicans went through candidates earlier this year like they were Baskin-Robbins flavors of the month.
In the end, voters finally chose Romney over Rick Santorum, favoring the uncharismatic yet stable candidate over the exciting but controversial one.
But will Romney and Kerry also share an election loss?
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Five Things Obama Didn't Want You to Hear in His State of the Union
Seeking to put the best possible spin on his message, President Barack Obama took some liberties with the truth in his State of the Union address.
Although the president never actually lied, he repeatedly left out facts that contradict his claims of success.
President Obama hadn't yet left the House chamber when the reality check started. And it didn't take long to find some pretty big the holes in the State of the Union address.
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Question of the Week: Investors Prepare for State and Local Governments' Tight Budgets
It's been 25 years since state and local governments across the United States were in such bad shape - and the budgetary pain is far from over.
The state-funding gap is growing, local governments lost 76,000 jobs last month, and property tax receipts are slated to fall for years.
"While the recession might have officially ended on the national level, cities are in the eye of the storm and the problems are intensifying," Christopher Hoene, a director at the National League of Cities, told The Financial Times.
A study released last week showed that big U.S. cities could face a painful financial squeeze: Their pension plans are under-funded to the tune of $547 billion.
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We Want to Hear From You: Are You Vulnerable to the Budgetary Woes of Your State and Local Governments?
It's been 25 years since state and local governments across the United States were in such bad shape - and the budgetary pain is far from over.
The state-funding gap is growing, local governments lost 76,000 jobs last month, and property tax receipts are slated to fall for years.
"While the recession might have officially ended on the national level, cities are in the eye of the storm and the problems are intensifying," Christopher Hoene, a director at the National League of Cities, told The Financial Times.
A study released this week showed that big U.S. cities could face a painful financial squeeze: Their pension plans are under-funded to the tune of $547 billion.
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Will the Mid-Term Elections Drive the Market Into High Gear?
The past five days added more hues to the emerging snapshot of U.S. economic growth that is sluggish and top-heavy, but still rolling forward -- kind of like a tank that can't get out of first gear. New data shows that U.S. GDP is back to 70% of its pre-recession strength, but jobs have recovered only 9%. It's this disconnect between output and employment that has made the current "recovery" seem so anemic.
That was fine for investors, who bid up risky assets in the past week just as they had the previous three weeks. TheS&P 500rose 2%, theNasdaq 100rose 3.5%, overseas large caps rose 3.3%, and emerging markets rose 2.5%.Goldrose 1.7%,silverrose 3%,crude oilrose 2.1%, and evenbondsrose 1.5%. Among the overseas markets we care most about,ishares MSCI Thailand Index Fund (NYSE: THD) rose 5.6%,Wisdom Tree IndiaEarnings Fund (NYSE: EPI) rose 3.3%, and ishares MSCISingaporeIndex Fund (NYSE: EWS) rose 2.4%.
To find out why the mid-term elections are important to the market read on...
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Money Morning Mailbag: GOP Announces "Pledge to America" as Voters Question Obama's Economy
Republicans this week outlined their plan for reform in one-page summary entitled "A Pledge to America." Republicans today hope their pledge will do for them what the "Contract with America" did for Republicans in 1994 when the GOP gained 54 House seats and regained control of Congress for the first time in 40 years.
The proposal's goals include immediately canceling any unused funds from last year's $787 billion stimulus program, permanently extending the Bush tax cuts, repealing the new healthcare law, cutting $100 billion in discretionary spending, and freezing the size of the "nonsecurity" federal work force. It also calls to end government control of Fannie Mae and Freddie Mac.
The plan comes at a time when many Americans are questioning the economic policies put forth by the Obama administration. With the unemployment rate stuck near 10%, President Obama two weeks ago announced a new six-year infrastructure plan, which says will create a "substantial" number of jobs and improve the country's transportation system.
