Some developments to watch

[Guest guest]

GMAC gets another bailout.

"WASHINGTON (Reuters) - GMAC Financial Services is expected to get about $3.5 billion in additional U.S. government aid to help the troubled lender absorb mortgage losses, a financial industry source familiar with the matter said on Wednesday.

The announcement is expected within days, the source said, speaking anonymously because the talks have been private.

GMAC has already received $12.5 billion in aid from the U.S. government since December 2008."

http://www.reuters.com/article/idUSTRE5BT06O20091230

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Barney promising the banks $4 trillion.

"Here are some of the nuggets I gleaned from days spent reading ’s handiwork:

-- For all its heft, the bill doesn’t once mention the words “too-big-to-fail,†the main issue confronting the financial system. Admitting you have a problem, as any 12- stepper knows, is the crucial first step toward recovery.

-- Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts†talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.

-- Oh, hold on, the Federal Reserve and Treasury Secretary can’t authorize these funds unless “there is at least a 99 percent likelihood that all funds and interest will be paid back.†Too bad the same models used to foresee the housing meltdown probably will be used to predict this likelihood as well."

http://www.bloomberg.com/apps/news?pid=20601039 & sid=a48c8UpUMxKQ

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Wonder where all this money is going to come from especially since:

"In the ITC's largest-ever steel case, all six commissioners voted in the affirmative that imports of so-called oil country tubular goods from China have injured U.S. manufacturers. The commission will provide details of its decision later Wednesday.

The ruling, which will likely result in duties on future imports of Chinese steel pipes, adds more tension to the U.S.-China trade relationship. Ties between Washington and Beijing are already frayed by the Obama administration's imposition of duties on Chinese tire imports and China's criticism of U.S. moves as protectionist.

Imports of oil country tubular goods, which are largely used in the energy sector, have surged in recent years to around $2.8 billion, prompting U.S. steelmakers and the United Steelworkers union to petition for relief."

http://online.wsj.com/article/SB126219101972610403.html?mod=djemalertNEWS

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Granted this is something that needed to be done, but it should have been done in 2000, certainly several years ago when the economy was strong and we had the upper hand in negotiations. We should also have taken the chance to get concessions out of the unions as part of the deal: they give or they don't get. If the steel industry then failed, much of the onus would be on them.

Anyway, my point is that we seem to be trying to get into a trade war with our main supplier and debt holder (and don't forget they have given strong signals they won't buy much more of our debt). Perhaps some of the college boys in DC now think that China won't risk harming its own economy in a trade war with us. I think we overestimate ourselves. China would be hurt in such a dispute, but what would happen over here if cheap garbage started vanishing from the shelves? American shoppers will freak if the walk into a store and see empty shelves and they can't buy toys, gadgets, let only necessities. I think our politicians will blink first.