Monday, July 20, 2009

CIT, the 18th largest bank in the US, announced today that it has obtained emergency financing from its bond holders that will keep them in business for the short term. The Obama Adm. refused to intervene with additional TARP money despite CIT’s domination of loan market for small and medium businesses. The real economy seems to be of no concern to the former Goldman Sach’s executives in the Treasury Dept. that keep the paper economy churning. Even with CIT taking a small step back from the brink, the thousands of companies that depend on them for operating loans are still in a perilous position, most of which would find it difficult or impossible to find financing should CIT fail.

Today’s news was dominated by reports of the private/non-government Conference Board of Leading Economic Indicators that does on average show the economy is not collapsing at the previous rate. These indicators are heavily dependent on polls of business leaders. Meanwhile the Obama Adm. is delaying the release of a key economic report that is mandated by Congress. The Office of Management and Budget will delay by several weeks the annual report, which takes the measure of economic growth, job creation and budget deficits. Intended to update assumptions that were used to create the administration's budget for next year, the updated report is expected to be filled with dire economic news.

Out in the real world, things are only getting worse. In Goldman Sach’s world, they are planning record bonuses. The bubble is well on its way to recovery, the rest of us should make other plans.