Moving Forward economically post 2 Corporate Profits

Corporate profits are up. They are up a lot. This is both a problem and an opportunity. It is also a reflection on its unique position within the current economic climate. No other part of the economy as much a rosy picture as corporate executives and shareholders. The government is broke. Too high a percentage of consumers are either broke or not far from broke. This is not a fair balance.

The questions that will be covered in the following posts are 'How did this disparity happen?' and "What are the changes needing to be made so that the economy rises as whole while corporations are still making profits?'.

back to normal

Now that Citigroup has successfully persuaded the government to give its TARP funds back to the government, there must be a sense that all danger in the large banking industry has been eliminated to the largest extent possible. Yeah, right. Citigroup is still losing money! We are right back to 2008.

The main reason for this rush to payment is the executive pay issue. Citigroup wants to get away from the government pay umbrella.

They didn't expand lending. They didn't expand staff to handle the glut of foreclosures.

They did find money for bonuses though.

There will be a lot of pats on the back on this one. But it will mostly be from bankers and politicians that collectively have let us down.

Bank of America

I am troubled by the news today that Bank of America will be allowed to pay back the full amount of TARP bailout money it owes to the government. The reason why I am troubled by this is that the bank is doing this solely because it cannot seem to find a CEO that is willing to accept the government's pay restrictions. The fact that the government is allowing this shows that the banks are still in solid control and that the government still does not have principles for this policy.

Does this put the bank back in failure risk? I will have to check the balance sheet and the effect this move will have on it. I believe that this will have a terrible effect on the ability for consumers to get a loan. The bank will be tighter than ever with loans because they will have to be. In the meantime they will pay ridiculous amounts to their executives.

This allowance by the government clearly shows that the banks are still in control. They knew that Bank of America was having trouble finding a new CEO. Allowing this will shrink loans given out to consumers. Once again the government is putting us at risk. Now maybe Bank of America can pay this back and continue giving out loans. That most certainly can be the truth. But this situation is showing more clearly how the government is mismanaging the program.