Idol Chatter

I was just reading the following over at the Washington Post:

The Treasury on Thursday offered six life insurers capital infusions under the Troubled Assets Relief Program. The precise terms of the proposed investments have not yet been negotiated.

All of the life insurers that received the offers have stock that is publicly traded, providing a constant measure of investor confidence. They had to apply for the money by last November, and some took other steps to shore up their finances during the long wait for Treasury approval.

Now it appears that some companies including Ameriprise Financial will be declining the funds.  Decline free money?  Now on the surface that may not seem very logical but like most things in life, the funds come with some hidden costs.  The Washington Post article speculates that one main consideration may be that the funds come with restrictions on executive pay.  Now that may be a factor but frankly I’d have to suspect that possible dilution of the company’s stock value is a bigger concern.  After all, if stockholders see their stock prices decline, they are more likely to vote out the CEO and other key officers.

What is more interesting is that most of these companies are deciding they just don’t need the money because they are not financially strapped.  If that is the case, why are they being offered the money?  If the Government has funds to give out, what about more ways to send funds to small businesses which are likely to be decimated in numbers by the time this economy turns around.

The current administration continues to help out the industry giants who severely mismanaged funds while almost completely ignoring the Mom & Pop shops who continue to face squeezes on their credit lines and credit rates.  This at a time when revenues are down is just going to kill many businesses and further increase this nation’s unemployment rate.

If only some of that attention and financial assistance that big companies are being offered who don’t need it were directed to small business, we just might see this economy pull out a bit faster.

It’s April 15th and that means it’s tax day here in the US.  You need to file today (your return or an extension).  When we look at how much we pay in taxes we have to wonder how this amount could go up if the current administration continues to spend at a hectic pace.

It does not take a rocket scientist to figure out that the wealthiest 5% cannot pay for the spending increases contemplated in the budget Obama wants with a modest increase in the tax rates.  That means that either less must be spent or more will see taxes increasing.

So think about how much more you want to pay the next time you hear the administration touting how the full budget must be approved.

Mortgage rates fell again this week prompting the usual segments on the news shows that the prudent investor should refinance now for savings.  And while this is, on the surface, sound advice, what it overlooks is whether there is still enough equity in the home to make a refinance approval likely.

In some regions of the country, home values have dropped by more than 20%.  This drop may cause some folks to go upside down in their mortgage owing as much or more than the home is worth.  Even with a small positive equity, many home owners could get turned down for refinancing unless they can afford to pay a sizable payment to increase their equity position in the home.

So an opportunity for a few folks but nothing that will help the rank and file who are, in some cases, hanging by a thread financially and braceing for more layoffs in the post holiday economy.