The Economy-U.S. Output Down, Ratings Agencies Reports Worthless, Bank Bailout a Failure and Mid-Week at Prudent Home

The Economy–U.S. Output Down: “U.S. Output Plummets; Manufacturing at Historic Low” is the posted headline at Newsmax.com on 3/16/09.

The article begins with ‘U.S. industrial output fell to it’s lowest level in almost seven years in February …” and continued with “Adding to the economy’s problems, the Treasury said foreigners were net sellers of U.S. securities in January, a worrying development at a time when the government is rolling out a massive spending plan in an effort to break the 14-month-long recession.”

Analysts are saying that the hopes that the recession is bottoming out are broken with this industrial output information.

–Ratings Agencies Reports Worthless: “Rating Agency Reports Called Worthless” is the title of the Michael Kling article posted on Moneynews at moneynews.newsmax.com on 3/16/09.

The article begins with an evaluation by Frank Partnoy (law professor at U. of San Diego) and Jerome S. Fons (former managing director at Moody’s) to the effect that Standard & Poor’s and Moody’s ratings are worthless and should be ignored . They continue, “No one has been more wrong that Moody’s and S&P.”

In conclusion, SEC Chairman Mary L. Shapiro notes that the way ratings agencies are paid creates a conflict of interest as they are paid by the companies whose bonds they rate and indicates that a different model would be preferable.

Prudent Home comment: This economic crisis is an “onion” with seemingly never-ending layers and connections. If, somehow, we’re able to stumble through this mess, someone should suggest to the ‘powers-that-be“: simplify, simplify.

–Bank Bailout a Failure: “Poole: Bank Bailout a Failure” is the Dan Weil piece posted at Moneynews (moneynews.newsmax.com) on 3/16/09.

William Poole is the former St. Louis Federal Reserve Bank President and he calls the Obama administration’s efforts to rescue the financial system “incompetent”. Mr. Poole goes on to criticize the bank bailout as one that “…simply keeps the zombie banks alive and rewards bankers who took excessive risks.”

Mr. Poole concludes that “Washington does not have a clue as to what reforms to put in place.” when it comes to correcting faults within the financial system a full year after the beginning of the crisis. Former Treasury Secretary James Baker concurs.

Mid-Week at Prudent Home: More home gardening info and sources.

Until mid-week then, keep your eyes on the horizon as the weathers changing fast.