Treasury to Buy $5 Billion GMAC Stake, Expand GM Loan
Dec. 29 (Bloomberg) -- The U.S. Treasury said it will purchase a $5 billion stake in GMAC LLC, the financing arm of General Motors Corp.
“The company intends to act quickly to resume automotive lending to a broader spectrum of customers to support the availability of credit to consumers and businesses for the purchase of automobiles,” GMAC said in statement.
GMAC had limited loans to buyers with the best credit ratings, cutting into GM’s sales.
The credit from the Treasury is under its Troubled Asset Relief Program and comes after the Federal Reserve last week approved GMAC’s application to become a bank holding company.
Treasury provides financial support to 43 banks
WASHINGTON – The Treasury Department said Monday that it has provided $1.9 billion to 43 banks as part of the government's $700 billion financial rescue program.
The department previously announced that it was providing the money but did not reveal the recipients' names until late Monday.
Some of the funds were granted to 20 privately held banks. A total of 34 private banks have now received funds from the financial rescue program.
So far, Treasury has invested more than $162 billion in 207 banks. The department set aside $250 billion from the bailout fund to be used for direct investments in banks.
The investments are intended to bolster banks' balance sheets and spur them to step up lending to counter the worst financial crisis to hit the country in 70 years. But critics contend that many banks are not using the money for that purpose.
There's No Pain-Free Cure for Recession
By PETER SCHIFF
As recession fears cause the nation to embrace greater state control of the economy and unimaginable federal deficits, one searches in vain for debate worthy of the moment. Where there should be an historic clash of ideas, there is only blind resignation and an amorphous queasiness that we are simply sweeping the slouching beast under the rug.
...It would be irresponsible in the extreme for an individual to forestall a personal recession by taking out newer, bigger loans when the old loans can't be repaid. However, this is precisely what we are planning on a national level.
I believe these ideas hold sway largely because they promise happy, pain-free solutions. They are the economic equivalent of miracle weight-loss programs that require no dieting or exercise. The theories permit economists to claim mystic wisdom, governments to pretend that they have the power to dispel hardship with the whir of a printing press, and voters to believe that they can have recovery without sacrifice.
Gold and Silver in 2009
By: James Turk
Gold will climb into 4-digits in the first quarter and this time will remain in 4-digits for the rest of the year. The potential high is $1800 per ounce ($57.87 per goldgram). I expect the low to be $850, which will be reached early in the first quarter. In short, 2009 is shaping up to be the key "break-out year" for gold. It will become a "break-out year" because the average investor will start becoming aware of gold and begin buying. Despite its remarkable performance throughout this decade, few people own physical gold. That will begin to change in 2009 as the financial disruptions will worsen and people seek a safe haven for their money.
Silver is dirt cheap. It’s only a matter of time before it climbs above $30, but if you choose to buy silver, be prepared for the volatility, which is reflected in the gold/silver ratio. I think the ratio will not break above over-head resistance in the low 80s. The downside potential for the ratio is 45 or so, which is the bottom of its multi-year trading range. If I am right that gold reaches $1800 sometime during the course of 2009, and if the low in the gold/silver ratio is 45 at that same moment in time, then mathematically, silver would be $40. If the ratio only moves to 60, then silver will be $30. In any case, I expect the gold/silver ratio to fall in 2009. Thus, regardless of the prices they eventually achieve, I expect that silver will outperform gold in 2009.