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Joining me right now to review this second stimulus package and where we head from here.
Is of course Robert -- since he is the principal at Sandler O'Neill.
And he joins us this morning great -- -- good to be here are -- there's so much to talk about this morning let's first of all talk that the Fed chief.
Basically endorsed him yesterday and second stimulus package is needed to agree or disagree.
I disagree I don't think it helps I think it's more of the same I think trying to -- -- pump when when will drive the consumers can spend much anymore they're overspent that's why we're where we are.
That's why this is going to take a long time to work out.
And did -- -- a tax rebate next year we have someone 500 dollars you're still not creating earnings you're still not pretty source of growth in this economy.
Okay but here's the thing you -- point I was reading a report where you said basically the consumer spending cycle has been in existence now -- sixteen to seventeen years.
You can't feel that overnight it's gonna take time but some are suggesting that the second stimulus package may not be as much of -- Shaq.
To get and to go out there and -- but perhaps it should be invested on things like infrastructure and creating job growth would you agree with that.
But you shouldn't be giving it to the consumer the government should should do one thing that no one is suggesting that has to start and infrastructure program.
Government wrong to create jobs and make our infrastructure competitive again we are no longer competitive in global markets.
That would create real earnings from which good -- all probably consumption.
OK so 250 billion dollars toward infrastructure spending and job growth.
Federal spending on a state by state level and you'd be happy because that would create job opportunities and earnings.
Yes except I'm a mom and be very unhappy with what they're -- with with tax policy wouldn't.
Everyone's on -- bandwagon here personalities taking over from reality.
What you're talking about is not going to really raise revenues.
There's a redistribution of wealth I understand everybody wants to do that.
But there's no creation of wealth wealth is going to is going to retreat.
The mile that I watch for the last two years as we mishandled the home sector and house prices went crazy.
It's the same denial I am now hearing.
The political level about how how tax policy works they have -- wrong.
And I think they have a great possibility of sending us into something far worse than just -- tough recession.
Okay -- you -- you wanna talk little politics and I want you to talk a little politics how we need to continue they have long had an eight X what's the right solution on tax policy.
To create shots and -- -- to buys.
People go out there and create wealth whether lower middle upper class.
I hate to say it.
Probably are people still understand this but 5% of the population -- 60% of the taxes if you raise their tax rate.
They will probably not pay as much taxes they will move offshore.
That's the incorrect thing to do them and it will not stimulate job formation.
They also have a disproportionate.
Element of spending.
In in the US economy.
If you if you take money away from them.
You really taking money -- from the economy that's not the way you re distribute.
The -- you re distribute it is to give incentives for people to take more risk to him to build more businesses.
And become more competitive we're doing it backwards.
Point taken poverty is not any voting for Senator Obama that should stay here one that I'm not putting words you about but I want I only mistake here as -- feel like redistribution of wealth.
But I want to bring in the rest of the -- -- to secretary Henry Paulson is now saying the 250.
Billion dollar capital injection.
It's -- encourage banks to lend to each other but the Wall Street Journal is reporting.
Is important Robert Medicaid thoughts on this at some banks mainly use the cash to make deals and -- why involve.
That's what the treasury wants them to do because what it's our taxpayer money so is -- money -- -- is -- blending.
We have a very sick banking system a lot of problem assets the original version of TARP didn't take off so well also they went for direct injection.
We now have probably a thousand banks that cannot survive on their own smaller banks they're gonna have to be acquired so when you when you tell the treasury.
I may not land right away I may make an acquisition the treasury will smile and say thank you that's what we want to.
Okay -- you agree I mean look and it's a great point because of our I'm gonna turn around turn around hearing.
Our -- look at him face to face I pumped up but come.
Look at -- every one of the three of them the Fed Chairman the FDIC chairman and a Treasury Secretary ball said smaller banks will fail.
Is that part of the job of this capital injection to allow the few that are strong to purchase those that are weak.
I would think that is part of the process I was -- go to Robert person that in this was -- curious to see what he was gonna say about it and isn't this interesting point is that how this process kind of plays out.
Long term that -- we all seem to think there's going to be fewer players in the market and if he can play out in the way that.
You don't stronger banks are able to buy weaker banks as opposed to allowing.
All all a large number of these weaker banks to fail which would it you know -- system even further that's a better ending I think than than the other than okay the other and.
But driver -- let's get back to the real issue here -- the number one issue we had fed is housing.
We're still not doing anything to address -- -- -- person I aggressively here talking about it.
-- the FDIC chairman Sheila Bair who says we need to refinance mortgages into -- long term strategies that work.
Yeah and I certainly offer that they they can renegotiate mine's -- -- the lower level as well I.
At hurdle I you know that has sort of gained traction was with the -- few traders and and some other people in the business -- spoken with but doesn't seem to be -- percolating up to the to the higher levels there and I'm also -- -- -- the other -- to go first but certainly you think that that this money coming and is a help because keep in mind a lot of these banks were also hurt.
By the government's actions with Freddie and Fannie -- particularly.
We know what those with the preferred that went away there because there there are taking down big -- on that right now so they do need this fresh injection of capital you have -- stronger.
I capital base now and you have more base of people have faith and confidence in -- we all know that right now it has been almost as much a crisis of confidence.
As capital so I think -- going forward it will be better to have stronger hands in the banking system.
Right but actually if in fact -- it doesn't improve -- lending environment okay.
I imagine that polls saying and the members of congress and signed -- FISA legislation.
Are are -- -- taken on the chin because they didn't put the language in their daily said.
-- currency lending but they didn't really put language in there that forces -- Yeah that's a fine line is it too true government intervention I know we're dealing with taxpayers' money here.
But I think it's way too early to be talking about this stuff I think banks are gonna sit on money for a little while I just think it's all about the Libor rate.
Once we see that coming down and we all that's the best measure I think of lending between banks and lending in general.
Once those tensions stopped to ease then I think we can really look at the -- seriously and see what they're doing and I think lending will come back it's in their interest ultimately.
And as far as eating up the smaller banks yes I agree I think there are too many banks it's like a culling of the hood.
Robert only ten seconds agree or disagree on time.
On time -- we need to get a time when you do you probably two years you know we we we mandated homeownership that's what caused the problem.
Robert Albertson it's always great pleasure thing you know -- apparently down here thank you very much.
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