The Housing Bubble

In a speech on Tuesday, Philadelphia Fed Bank president Charles Plosser publicly took issue with positions advocated by Fed chief Ben Bernanke.

“It is a huge disagreement,” said Robert Brusca, chief economist at FAO Economics.

CATFIGHT!!!

MEOW?!?

Damn…. it’s about time. (rolling eyes) /jk

From Mike Larson…

Federal Home Loan Banks following Fannie,
Freddie, private banks over a cliff?

Unless you follow the banking industry closely, you probably haven’t heard of the Federal Home Loan Banks. But the FHLBs are vitally important as a source of funding for U.S. banks both large and small. There are 12 of them spread around the country — in Atlanta, Boston, Chicago, Cincinnati, Dallas, Des Moines, Indianapolis, New York, Pittsburgh, San Francisco, Seattle, and Topeka.

You’ve probably never heard of Federal Home Loan Banks. But after the federal government, they’re the biggest borrowers in the country!
FHLBs sell debt into the capital markets to raise money, using their AAA ratings to borrow cheaply. They use that money to make advances to banks that are members of the system and take collateral in exchange — often mortgages or mortgage-backed securities.

The banks use the money they get from the FHLB, along with cash raised elsewhere from their own debt sales and depositors, to make loans. The banks are required to own stock in the FHLBs, and that stock helps capitalize the regional FHLBs.

So what’s the problem?

The FHLBs own billions and billions of dollars worth of mortgage backed securities. Those securities have plunged in value. So just like their banking customers, FHLBs are facing potentially huge write-downs on their portfolios. They may also be losing money on derivatives they employ.

And that’s what is stressing the system.

Specifically:

The Seattle FHLB just warned that it may miss one of its capital targets. It may be barred from paying dividends on the stock member banks hold in it, potentially impacting those institutions counting on the money.

The San Francisco FHLB also said earlier this month that it was facing impairment charges, and that it wouldn’t pay a fourth-quarter dividend as a result.

Moody’s recently warned that eight out of the 12 FHLBs could ultimately face capital problems thanks to losses on their $76 billion of mortgage securities not backed by Fannie Mae and Freddie Mac.
Now here’s where it gets really interesting: While many investors have never heard of the FHLBs, they collectively have roughly $1.25 trillion — with a “T” — in debt outstanding. That makes them the biggest borrowers in the U.S.— behind the federal government!

If you thought it was expensive to bail out Fannie Mae and Freddie Mac (The Treasury has pledged to inject up to $200 billion in capital into the two of them), just you wait. Should the FHLBs need a bailout, there’s no telling how much it will cost!

The mere fact the Shelia Bair ‘down played’ the nationalization of lenders question means it’s not only on the table, it’s in the works!

U.S. ‘Bad Bank’ Plan Gets Momentum to Revive Lending…

Jan. 16 (Bloomberg) — Renewed questions about U.S. banks’ viability are pushing regulators toward a new plan that would remove toxic assets from bank balance sheets, in what may become the biggest effort yet to unfreeze lending.

President-elect Barack Obama’s advisers see an increasingly grave banking crisis and are considering proposals far more sweeping than any steps that have been taken so far, according to people who’ve discussed the outlook with them.

“They need to do something dramatic,” said Harvard University Professor Kenneth Rogoff, a former chief economist at the International Monetary Fund, and member of the Group of Thirty counselors on financial matters, a panel that includes Treasury Secretary-designate Timothy Geithner and Lawrence Summers, incoming director of the National Economic Council.

Federal Reserve officials are focusing on the option of setting up a so-called bad bank that would acquire hundreds of billions of dollars of troubled securities now held by lenders. That may allow banks to reduce write-offs, free up capital and begin to increase lending. Paul Miller, a bank analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia, estimates that financial institutions need as much as $1.2 trillion in new aid.

Other steps that may be under consideration include providing further guarantees for toxic assets that remain on the banks’ books, as officials did for Citigroup Inc. in November and with a $118 billion backstop for Bank of America Corp. today, or purchasing selected investments. Federal Deposit Insurance Corp. Chairman Sheila Bair yesterday played down the alternative of nationalizing lenders.

Slump in Stocks

A move could come soon after Obama is sworn in on Jan. 20. Adding urgency to the deliberations is a deepening slide in financial shares. Citigroup yesterday sank below the level it reached when regulators mounted a rescue of the lender in November. Bank of America fell to an 18-year low as the company sought more aid from the government.

“A lot of the trouble in all this is that once you got into a financial mess, people don’t know where the bodies are buried,” Paul Krugman, the Princeton University professor who won this year’s Nobel Prize for economics, said in an interview with Bloomberg Radio. “People think ‘Who knows what I’m getting into?’” by lending or trading with others, he said.

The late John Maynard Keynes (died, 1946) is still misleading America’s leaders and the citizenry at large. He’s the guy who said it was fine to print money to bail out an economy. His basic theories of money and credit were long ago shot down by the likes of Frederich Hayek and Henry Hazlitt, but Mr. Obama is a Keynesian promising to give us a good dose of money creation in the belief the U.S. can print its way back to “prosperity”.

Batten your hatches. The Keynes method will keep us in the economic doldrums for a decade…or more!

The cost of living in the U.S. probably fell in December as the recession deepened, capping the first annual decline in a half century, economists predict today. CPI - First Annual Decrease Since 1954

(A little correction, here. Only twice since 1940 has the Consumer Price Index shown an annual decline…1949 and 1955. Think of it! Nearly 70 years of price inflation! Now, we’re entering an economic scene to which we’re unaccustomed. A deflationary depression. Unless, of course, Mr. Obama, the Congress, and the Federal Reserve succeed in igniting hyperinflation, which is widely expected but may not occur.

” financial institutions need as much as $1.2 trillion in new aid”
My suggestion, send every man, woman and child a $1 million dollar stimulus check. That’ll fix the problem.
1. Nobody will need to borrow anymore money, so we really don’t care if banks go under or not.
2. It will reverse the deflationary downward spiral abruptly.
3. Nobody with any sense will actually be saving the money, they will rush out and spend it as soon as possible.
4. Housing prices will not only stabelize, they’ll start booming again.
5. Sales of luxury cars and SUVs will boom, Detroit will be saved.
6. Happy days are here again..

What could be the potential downside? I have no idea…better go now, I hear helicopters coming.

Wellington man sentenced in mortgage fraud scam

By RANDY DIAMOND

Palm Beach Post Staff Writer

Thursday, January 15, 2009

MIAMI — Orlando M. Gonzalez of Wellington was sentenced to 46 months in jail and ordered to pay $446,000 in restitution after he pleaded guilty to federal charges that he obtained more than $3.6 million in fraudulent mortgages and for identity theft, prosecutors said Thursday.

The 55-year-old Gonzalez, who was sentenced on Jan. 9, was charged with engaging in a scheme to obtain mortgages from lenders for a house in Wellington by using straw purchasers, and through the submission of phony documentation - including false loan applications and employment information, according to the U.s. Attorney’s Office for the Southern District in Miami.

Prosecutors said Gonzalez also stole the identity of one of the straw purchasers to obtain an American Express card account. He used the card to obtain cash, merchandise and services without the permission of the person whose name appeared on the card.

The restitution will be paid to National City Bank, American Express and the person whose identity was stolen, prosecutors said.

Gonzalez had previously pled guilty to charges of wire fraud, unlawful use of an access device and identity theft.

The four-count indictment charged Gonzalez with two counts of wire fraud involving one property and more than $3.6 million obtained in fraudulent mortgages in Wellington. Prosecutors said these fraudulent mortgages resulted in a loss of about $400,000 to National City Bank

C.Cards are bound to be a major problem, that we’ll need to ‘fix’.

“The worst of the economic situation is not yet behind us,” J.P. Morgan CEO Jamie Dimon told the FT yesterday. “It looks as if it will continue to deteriorate for most of 2009. In terms of our sector, we expect consumer loans and credit cards to continue to get worse.

”When we look back at industry excesses in areas such as highly leveraged lending and securitization, it is clear that some of these markets will never come back,” Dimon said. “In the next few years, the industry will go back to basics: serving individual and corporate customers as best as we can.”

Dimon said a credit card bubble might be the next to pop.

http://www.larouchepub.com/hzl/2009/3601financial_system_swindle.html

Is the whole world financial system one big Madoff swindle?

WellPoint to Cut 1,500 Positions to Lower Operating Expenses

By Brad Skillman

Jan. 16 (Bloomberg) — WellPoint Inc. said it’s cutting 1,500 jobs, including more than 900 open positions.

The job cuts will result in a fourth-quarter aftertax charge of about $24 million, the company said today in a PR Newswire statement.
Last Updated: January 16, 2009 08:03 EST

How low can they go?
When shipping from Asia to Europe, evidently ZERO is the answer:

“Shipping rates hit zero as trade sinks”

Freight rates for containers shipped from Asia to Europe have fallen to zero for the first time since records began, underscoring the dramatic collapse in trade since the world economy buckled in October.

link: http://tinyurl.com/79pnfp

“Industry sources said they have never seen rates fall so low. “This is a whole new ball game,” said one trader.

The Baltic Dry Index (BDI) which measures freight rates for bulk commodities such as iron ore and grains crashed several months ago, falling 96pc. The BDI – though a useful early-warning index – is highly volatile and exaggerates apparent ups and downs in trade. However, the latest phase of the shipping crisis is different. It has spread to core trade of finished industrial goods, the lifeblood of the world economy.”

Maybe the Fed can try to prop up housing prices
AND entire segments of world trade by throwing trillions of dollars down a rat hole, ya think???

Is “down 96 per cent” indicative of a trend?

Obamamania May Be Investor Nightmare: Michael Sesit (Update1)

Commentary by Michael R. Sesit

Jan. 16 (Bloomberg) — Can the Obama effect last?

The U.S. president-elect is so admired, engenders such high aspirations and is such a wellspring of hope that no one could meet these expectations. That’s bad news for financial markets.

Barack Obama is four days from entering the White House with more at stake than any president since Franklin Delano Roosevelt.

So far, markets are betting that he will succeed. The Standard & Poor’s 500 Index has rallied 12 percent since Nov. 20. And from 2.06 percent on Dec. 30, the yield on the 10-year U.S. Treasury bond has risen to 2.20 percent, suggesting the flight-to-safety trade has abated somewhat. Meanwhile, the dollar has advanced 9.7 percent against the euro since mid- December.

The make-up of Obama’s economic team was leaked to the press on Nov. 21 and formally revealed a few days later.

The group is impressive. Federal Reserve Bank of New York President Timothy Geithner was designated to be the new Treasury secretary. Lawrence Summers, former Treasury secretary in Bill Clinton’s administration, was tapped to head the National Economic Council, with the smart money betting he’ll take over the Federal Reserve in 2010. And Paul Volcker, a highly respected former Fed chairman, was named to head an economic advisory board.

Optimism surrounding the appointments was so high that the S&P 500 wracked up its biggest four-day rally since 1933.

The euphoria may be overdone.

To all public transportation watchers, the situation in DC should be epic this weekend, but especially Tuesday. The DC Metro system has only two tracks, so if there is a track problem or train with mechanical problems (or even a train with a sick passenger), they have to go to single tracking (let a few trains go around problem in one direction while stopping all of them in the other direction, same thing for other side, repeat - can easily add 20 to 30 minutes to a trip and that is on weekend volume.

Metro is planning to run rush hour service all day, from 4:00 AM to well after midnight (normal shut down time) on Tuesday. Running 8 car trains (normal is 6 cars though the platforms are built for as often as they have the cars available, and of course, a few extra people on board.

Folks who have lived here longer than I are predicting complete system failure. We have been warned (officially) that it may be very difficult to get into the city on Wednesday.

Please note, this is in no way a general dis on public transportation which I generally love and use even when I don’t love it. But Metro is very badly designed (someone told me they decided to skip or at least minimize expansion joints in the tracks because they make the ride noisy) and not run particularly well, and definitely mostly meant to be for commuters. It also doesn’t work well unless ALL of it works well. For example, some of the stations are very very far underground, so that it becomes nearly unusable when the escalators are out of service (a lot). It may have met its match in this event.

Jan. 16 (Bloomberg) — International demand for long-term U.S. financial assets fell in November as foreign investors sold Treasury, agency and corporate debt, a government report showed.

Total net sales of long-term equities, notes and bonds totaled $21.7 billion, compared with selling of a revised $400 million in October, the Treasury said today in Washington. Including short-term securities such as stock swaps, foreigners bought a net $56.8 billion, compared with net buying of $260.6 the previous month.

Boy, the Obama-hysteria seems to be going into serious overdrive here today. Interesting . . .

WASHINGTON (MarketWatch) - The output of the nation’s factories, mines and utilities plunged 2.0% in December, the Federal Reserve said Friday. Output has fallen in four of the last five months. The figures were weaker than forecast by economists surveyed by MarketWatch, who were looking for output to fall 1.2%.

Output in November was also much weaker than previously thought. Output fell 1.3% in November, more than double the 0.6% drop initially estimated…. Capacity utilization - a gauge of inflationary pressures — fell to 73.6% from 75.2%. This is the lowest level since December 2001. Industrial output fell at an 11.5% rate in the fourth quarter. Output was down 1.8% in 2008.

Fla. driver license settlement: $2.9 million for lawyers, $1 for you

By STEVE BOUSQUET

Miami Herald Tallahassee Bureau

Friday, January 16, 2009

TALLAHASSEE — Facing a $3.5 billion deficit next year, Florida desperately needs all the money it can get. But millions more will disappear because the state has settled a lawsuit that affects millions of motorists.

The Legislature will spend $10.4 million to settle a class-action lawsuit over allegations that the state illegally sold drivers’ personal information to marketing firms over a four-year period in violation of a federal law barring the practice. The state made $27 million each year on the deal, according to the lawsuit.

The settlement to drivers? $1.

Obama Adviser Urges More Rigorous Global Financial Regulation

Paul Volcker was the lead author on a report calling for a restructuring of the global financial system.

By Anthony Faiola
Washington Post Staff Writer
Friday, January 16, 2009

“…The report’s recommendations may find support among those in the United States and Europe who have called for tighter regulation over the financial system in the wake of the current economic crisis. But elements of the plan were already opposed Thursday by some in the financial industry, where some worry that the push for tighter government regulation may go too far.

The report offered 18 recommendations that would insert government regulators into the boardrooms of financial institutions as never before. The plan calls for vastly increased oversight of major banks, going as far as to recommend the end of an era of mega banks whose size makes their failure potentially catastrophic to the global financial system. To limit their size and scope, banks, the document states, should be prohibited from managing private-equity or hedge funds. And deposits should not be concentrated in the hands of too few banks.

…”
WaPo

Ah the joys of government in all my affairs.

Will the PPT be at work next week or is today its last day? Did anyone notice how all the earnings calls got pushed up to yesterday and today? Did anyone notice who broke the BAC b@ilout news and where and when it was broken? Despite BAC cutting its dividend to a penny and C breaking itself up, the market just broke its downtrend line. Is it all coincidence or just great coordination by several prescient CEOs?

Do not squander America’s stimulus on tax cuts

By Joseph Stiglitz

Published: January 15 2009 19:48 | Last updated: January 15 2009 19:48

As news of the US economy worsens, worries about whether a stimulus could restart the economy are growing. Making matters more complicated is the fact that our 2009 fiscal deficit will exceed 8 per cent of gross domestic product, even before the stimulus.

What is clear is that tax cuts will not help much. When Barack Obama, president-elect, last week proposed to use nearly 40 per cent of the stimulus for tax cuts, he was rightly told this would be less effective than, say, spending on infrastructure. It has been surprising, then, to see President George W. Bush’s former economic advisers, including Greg Mankiw, argue that tax cuts are the way forward.

Mr Mankiw cites a recent study by Christina Romer and David Romer, economists at the University of California, Berkeley, who found that each dollar of tax cuts raises GDP by about $3 (€2.30). Such studies, based on past data, may have little to say about the situation the world now faces. Americans confronted with debt, shrinking retirement accounts, houses worth less than mortgages and a tough credit environment will save more of their money than in the past. That was the experience with the February 2008 tax cut, where less than half of it has been spent. It matters who gets the break – if it is lower income Americans, the fraction spent will, on average, be greater than for wealthier Americans….”
FT

Obama will reform Social Security and Medicare. Here’s my guess what it will look like once it gets through Congress.

1) The generations that came of age in the 1950s and 1960s will have their benefits unrestricted at current levels, because they “worked hard all our lives.”

2) Those younger will face payroll tax increases and diminished benefits in old age, to “save the system” and be “fiscally responsible.” Because the higher taxes will be on work earnings, the retired will not have to pay them.

3) The generations that came of age in tyhe 1950s and 1960s will then seek to spend all the extra revenues and future savings on themselves, meaning that even the diminished benefits will not be available to those younger. Just like the aftermath of the 1983 “reform.”

Democrats unveil $825bn stimulus

By Edward Luce in Washington

Published: January 15 2009 20:26 | Last updated: January 15 2009 23:09

Democratic lawmakers on Thursday unveiled a much-awaited $825bn stimulus package to halt America’s vertiginous economic slide which Nancy Pelosi, the speaker of the House, said was only the “first step” in a process that could take weeks to pass into law.

The bill, which Barack Obama, the incoming president, wants enacted before mid-February when Congress goes into a short recess, comes in at $50bn (€38bn, £34bn) higher than the initial ceiling set by his transition team. But economists said they expected it to climb towards the important psychological threshold of $1,000bn by the time it becomes law.

“This is more like an opening bid,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said on Thursday. “You would expect the tax cut element of the bill to grow as the Democrats try to win over more Republican support.”

…

FT

“This is more like an opening bid….” I’ll open 6 NoTrump. Ooops wrong click of the mousey.

Why is it that banking CEOs earning high multiples of seven figures have such friggin’ poor eyesight? And why should the rest of us have to chip in to compensate for their blindness issues?

Wall Street Journal

* BUSINESS
* JANUARY 16, 2009, 9:09 A.M. ET

Lewis Defends Merrill Purchase
By DAN FITZPATRICK

Bank of America Corp. Chief Executive Kenneth Lewis on Friday rejected the suggestion that he and his team did not conduct enough due diligence before agreeing to buy securities firm Merrill Lynch & Co., saying forecasts did not suggest Merrill’s assets would drop so suddenly in value.

“We did not expect the significant deterioration in mid to late December that we saw,” he said on a conference call with analysts.

Given a projected $42 bn budget gap, a 38m population and an economy in the world’s top ten or so, will CA be summarily deemed “too big to fail” when The Messiah™ takes office?

Governor’s plea short, simple
He calls for courage in balancing budget
By Mike Gardner U-T Sacramento Bureau and Jim Sweeney (Contact) U-T Sacramento Bureau
2:00 a.m. January 16, 2009

SACRAMENTO — In a stark departure from years of tradition, Gov. Arnold Schwarzenegger yesterday dedicated an unusually brief, at times solemn State of the State address to the pressing need to solve California’s monumental budget crisis.

The Republican governor urged lawmakers to muster the courage to make the tough, politically perilous decisions needed to close a record $42 billion deficit forecast over the next 18 months.

Hoz, Voz, FPSS, Darrell, etc. do you guys have formal training with this stuff?

Jan. 16 (Bloomberg) — A decline in U.S. stock indexes below the 2008 lows from November may trigger a rout…, according to two leading technical analysts.

“Hopefully we don’t make new lows, because if we do, all bets are off,” said Ralph Acampora…. Should the Dow Jones Industrial Average fall below the 7,552.29 it touched on Nov. 20, it might tumble to 6,000, Acampora said. That’s 27 percent below yesterday’s close of 8,212.49 and a level last reached in October 1996.

The lows reached by the Dow average and the Standard & Poor’s 500 Index in November are “a very, very significant area” because they are roughly where the last bear market ended in 2003, said John Murphy…. “If that’s broken, it becomes very negative.”
…
“There’s another down leg coming,” Murphy said. “Normally the market comes down in five legs. We’ve come down in two. I think we’re going to test those lows at the very least, and eventually probably take them out.”

With all the noise dedicated to this economic mess isn’t it worth considering that this is all a side show to distract folks from some really devestating event that might be coming down the road? If these PTB folks knew for a fact that polar shift would occur in some near future date, wouldn’t they try to keep folks distracted while they get their bunker supplies and the door locks changed? Then when it is finally obvious that something epic is going to happen to silently dissapear and let it all happen. Meanwhile the tube keeps on harping about some bailout or other that never seems to do the job.

I have to think that the folks in charge are not the simpleton morons that they seem to be, but then never having met them I cannot make that distinction. If they are smart then they wouldn’t tell us the truth anyway would they? I still call distraction on this whole mess. Watch the back door, something might be sneaking up on us.

I just did a simple linear regression of the log of Radar Logic’s 1-day PPSF for San Diego on time, over the period from 9-2-08 through 11-15-08 or so The results suggest the price per square foot of San Diego homes was falling at over a 40 percent annualized rate over the period — right in line with the rate at which PPSF has fallen since May 2006.

Here are recent data, which show the PPSF has recently gravitated south of $200 on all three time horizons over which they average (1-day, 7-day and 28-day moving averages):

Period End Date /Publication Date / RPX.SD.1 / RPX.SD.7 / RPX.SD.28
14-Nov-08 16-Jan-09 $197.83 $198.36 $198.98
13-Nov-08 15-Jan-09 $209.59 $199.68 $200.17
12-Nov-08 14-Jan-09 $188.87 $193.01 $199.86
11-Nov-08 13-Jan-09 #N/A $196.67 $201.50
10-Nov-08 12-Jan-09 $204.56 $197.26 $201.85
7-Nov-08 9-Jan-09 $203.47 $194.32 $201.60
6-Nov-08 8-Jan-09 $183.51 $194.03 $201.74
5-Nov-08 7-Jan-09 $199.17 $198.16 $203.33
4-Nov-08 6-Jan-09 $201.19 $198.58 $204.03
3-Nov-08 5-Jan-09 $192.62 $196.76 $204.52
31-Oct-08 2-Jan-09 $203.17 $201.72 $205.62
29-Oct-08 31-Dec-08 $201.10 $201.61 $206.53
28-Oct-08 30-Dec-08 $192.09 $201.74 $206.93
27-Oct-08 29-Dec-08 $208.39 $203.51 $207.65
24-Oct-08 26-Dec-08 $205.20 $203.02 $208.68
22-Oct-08 24-Dec-08 $202.29 $207.48 $209.86
21-Oct-08 23-Dec-08 $201.83 $208.70 $210.00
20-Oct-08 22-Dec-08 $206.39 $209.12 $210.94
17-Oct-08 19-Dec-08 $219.95 $209.86 $210.94
16-Oct-08 18-Dec-08 $207.94 $208.03 $211.24
15-Oct-08 17-Dec-08 $211.57 $206.29 $211.64
14-Oct-08 16-Dec-08 $204.27 $206.57 $211.82
13-Oct-08 15-Dec-08 #N/A $208.01 $212.94
10-Oct-08 12-Dec-08 $210.97 $209.64 $213.63
9-Oct-08 11-Dec-08 $202.45 $210.00 $213.56
8-Oct-08 10-Dec-08 $207.77 $211.71 $214.92
7-Oct-08 9-Dec-08 $214.63 $209.66 $215.66
6-Oct-08 8-Dec-08 $214.35 $209.53 $215.71
3-Oct-08 5-Dec-08 $212.57 $212.17 $215.75
2-Oct-08 4-Dec-08 $207.96 $212.14 $216.54
1-Oct-08 3-Dec-08 $199.74 $215.01 $216.97
30-Sep-08 2-Dec-08 $215.05 $215.40 $217.49
29-Sep-08 1-Dec-08 $231.50 $215.95 $217.60
26-Sep-08 28-Nov-08 $216.15 $210.69 $217.06
24-Sep-08 26-Nov-08 $198.81 $213.62 $217.37
23-Sep-08 25-Nov-08 $218.63 $217.77 $218.23
22-Sep-08 24-Nov-08 $208.39 $217.19 $218.49
19-Sep-08 21-Nov-08 $225.33 $219.80 $218.46
18-Sep-08 20-Nov-08 $222.53 $217.12 $218.18
17-Sep-08 19-Nov-08 $216.55 $218.94 $217.95
16-Sep-08 18-Nov-08 $214.79 $218.99 $217.98
15-Sep-08 17-Nov-08 $219.11 $219.11 $218.59
12-Sep-08 14-Nov-08 $209.47 $217.98 $217.90
11-Sep-08 13-Nov-08 $229.45 $219.77 $218.51
10-Sep-08 12-Nov-08 $219.91 $217.61 $217.98
8-Sep-08 10-Nov-08 $214.90 $217.29 $218.46
5-Sep-08 7-Nov-08 $221.67 $215.79 $217.25
4-Sep-08 6-Nov-08 $211.54 $215.10 $217.56
3-Sep-08 5-Nov-08 $213.95 $218.27 $218.27
2-Sep-08 4-Nov-08 $216.16 $220.41 $218.09
1-Sep-08 3-Nov-08 #N/A $222.40 $218.61

Feds give Colorado $34 million for foreclosures

The state said it plans to rehabilitate 40 properties to rent to low-income families, buy 120 homes to sell or rent, demolish 45 blighted structures, provide homebuyer counseling to 120 people, help 100 homebuyers purchase and rehabilitate property and use $3.8 million to administer the program.

http://biz.yahoo.com/ap/090116/co_foreclosure_grants.html?.v=1

More wastefull spending!

Kaboom. CNBC announcing Circuit City to be liquidated, 35,000 CC employees to hit the street. Further details soon.

Guess with no MEW there is no means to a big screen.

Drumroll please….
Ok, what’s the difference between a stimulus check and a bailout?

As mentioned earlier, the S&P 500’s rising trendline from the Nov. 21 intraday low has been broken to the downside (see Chart 1). So, too, has the 50-day average and short-term support at 857.

These factors tell us in a fairly strong tone that the rally as we knew it is over. As for the rally itself, some chart watchers have labeled it as a “rising wedge.” Basically, a rising wedge forms as a correction of the trend that preceded it and, in this case, it is a corrective rally within a bear market.

Traders wait for prices to fall below the lower border of the wedge to either close out their existing positions, buy inverse exchange-traded funds (ETFs) or initiate outright short sales. They got that signal Monday.

Barrons: Michael Kahn — Dude, Where’s My Rally? (Note: He is still bullish, argues decline too steep to be sustainable.)

Trillions More: Govt. Will Keep Spending Until Economy Reflates, Mauldin Says
Posted Jan 16, 2009 09:00am EST by Aaron Task
Related: ^dji, ^gspc, UDN, SPY, UUP, DIA, TLT
Barack Obama’s stimulus package has now grown to $825 billion, news that comes as no surprise to John Mauldin, president of Millennium Wave Advisors.

“We are in uncharted waters. But the captains of the boats are all Keynesians,” Mauldin says, meaning they believe government spending is key to fighting the downturn. “They will keep spending until the economy reflates.”

Mauldin, who has been notably bearish on the economy and stocks in his popular Thoughts from the Frontline e-letter, does not believe the government will be successful in turning the economy anytime soon; “this recession is going to be the longest in anyone’s memory,” he writes. “It is going to seem like it is never going to end.”

Still, he does believe the government spending will prevent the most dire economic outcome and that from the rubble of Wall Street a new, private banking system will emerge - even as the government continues to prop up the old, failed model.

I’ve mentioned before that I ended up on a mailing list for local real estate powerhouse @properties — the SOB grabbed my name from an e-mail sent by a mutual friend. At any rate, the bright side is I get demented real estate shinola delivered right to my inbox. And insight into the dark, manipulative mind of a Realtor.

Here’s an excerpt from today’s mailing. It’s a great time to buy, baby:

After the rate cuts by the Federal Reserve over the last few months, buyers can now lock in a 30-year mortgage rate with a 10% down payment (on a conventional loan) with an interest rate at approximately 5% for 30 years. This is an unprecedented event and offers what might be the opportunity of a lifetime.

We have all been looking for hope with the economy and we feel we have been given a belated holiday present, but it is your choice to unwrap it! Please take the time to contact me if you are considering a move; there are many options open to buyers. And if you are considering selling, please contact me to discuss the best way to position your property to take advantage of this historical situation. This moment in time will not last — please take advantage of it.

Here are just some of the examples of what Obama considers “economic stimulus”:

$3.836 billion for rural water and waste grant and loan programs

$6.2 billion to help low-income families reduce their energy costs by weatherizing their homes and make our country more energy efficient

$400 million to help state and local governments purchase efficient alternative fuel vehicles to reduce fuel costs and carbon emissions

$6 billion for broadband and wireless services in underserved areas

$650 million to continue the coupon program to enable American households to convert from analog television transmission to digital transmission

$400 million to replace the 30 year old Social Security Administration’s National Computer Center to meet growing needs for processing retirement and disability claims and records storage

$3.1 billion for infrastructure projects on federal lands including improvements to visitor facilities, road and trail restoration, preservation of buildings of cultural and historic importance, rehabilitation of abandoned mines and oil fields, and environmental cleanup projects

$400 million for ready-to-go habitat restoration projects

$850 million for hazardous fuels removal and other efforts to prevent wildfires on public lands

$1 billion for 21st century classrooms, including computer and science labs and teacher technology training

$66 million for formula grants to states to provide services to homeless children including meals and transportation when high unemployment and home foreclosures have created an influx of homeless kids

$2 billion to provide child care services for an additional 300,000 children in low-income families while their parents go to work

$30.3 billion to extend health insurance coverage to the unemployed, extending the period of COBRA coverage for older and tenured workers beyond the 18 months provided under current law

$500 million to rehabilitate and improve energy efficiency at some of the over 42,000 housing units maintained by Native American housing programs

$1 billion to help low-income families pay for home heating and cooling at a time of rising energy costs

Paulson and Bair want to create an aggrigator bank to buy up bad debts, like RTC, for whatever the current owners need to sell for.

Can we get an aggrigator stock brokerage? I have several thousand WCOM shares from 2000 that I’d love to sell for $40 per.

Anyone else getting the feeling that the economy is in far worse shape than they are telling us. .4% per month increase in unemployment. 2% drop in retail sales. .1% CPI.

Then why all the DESPERATION talk from Paulson, Bernanke and others to rush, rush, rush the second half of TARP. Rush, rush, rush the stimulus.

Bigger, more desperate moves needed, like aggrigator bank to buy up the crap.

I just get the feeling that it is accelerating downwards, and they are having a code brown nearly continuesly. Seriously, can anyone in DC look at ecnomic data and not need to change their Depends…

Opened up finance.yahoo.com, looked at the Dow:

pssssssss….

like a deflating bike tire

BWAHAHAHAHAHA!!

Do I understand the numbers correctly. $1 trillion deficit for FY 09 which started Oct 1 2008. Add to that $700 billion TARP. Then add half of the $800+ billion stimulus.

So, we are talking about adding $2+ trillion to the national debt just this year… right? And before this year, the total publically held (subtract intergovernmental borrowing) was $5 trillion. A 40% increase, AT LEAST, in debt… in 1 year?

Seriously?

OMG! After rallying above it for about 90 mins, the bulls just hammered back under the downtrend line. The bears are determined. A battle is on.

Left. Left. Left-Right. Left-Right. Knee to the head. Knee to the groin.

Consumer sentiment improves a little in January

Economic expectations could improve in coming months after President-elect Barack Obama takes office, according to the report.

“If Obama’s economic policies receive widespread public support and are promptly enacted — as is now anticipated — consumer confidence could post some anticipatory increases even as actual economic conditions continue to worsen,” the report said.

http://finance.yahoo.com/news/Consumer-sentiment-improves-a-rb-14082906.html

I’ll believe this when I see it!

Pfizer Inc. plans to lay off as many as 2,400 sales staff, up to a third of its marketing work force, this quarter as the drug maker reorganizes its commercial side, according to a person familiar with the matter.
…
Pfizer, the world’s largest drug maker by sales, recently laid off as many as 800 researchers at its leading laboratories around the world. The latest cuts will be to sales representatives and middle managers, said a person familiar with the matter.

WSJ — (Cutting marketing and research, where’s the growth?)

Jan. 16 (Bloomberg) — General Electric Co.’s finance arm may cut 7,500 to 11,000 jobs, or at least 10 percent of its workforce, because of the global financial slump, people familiar with the company’s plans said.

Jan. 16 (Bloomberg) — The Baltic countries of Latvia, Lithuania and Estonia are facing unrest and street protests over government austerity measures that may make political leaders casualties of the worst economic collapse in the European Union.

Protesters hurled stones and broke windows at the Parliament building during an anti-government demonstration in the capital of Vilnius today, leading to at least 86 arrests. It followed a larger riot on Jan. 13 in Riga, Latvia’s biggest city, in which 106 people were detained. Lithuanian Prime Minister Andrius Kubilius held an emergency Cabinet meeting as police pushed protesters back with rubber bullets and tear gas.

Wonder why the deadbeats over at GM won’t help a brother out!

Checker Motors, 87-Year-Old Auto-Parts Maker, Seeks Bankruptcy
By Erik Larson

Jan. 16 (Bloomberg) — Checker Motors Corp., the auto-parts maker that once produced the iconic Checker Taxi Cab, filed for bankruptcy blaming high labor costs and declining vehicle sales by customers including General Motors Corp.

The 87-year-old company, based in Kalamazoo, Michigan, listed assets of $24.5 million against debt of $21.8 million in Chapter 11 papers filed today in U.S. Bankruptcy Court in Grand Rapids, Michigan. The company said it has 246 employees.

Workers “dedicated their careers to the debtor with an expectation of compensation and working conditions that the debtor can no longer afford and that are no longer supported by the market,” Chief Operating Officer Mark Walburn said in court papers.

At least six partsmakers filed for bankruptcy protection last year as GM and Chrysler LLC sought government loans to stay afloat. The automakers received commitments for a combined $17.4 billion, with GM getting $13.4 billion. The companies must convince Congress by March 31 that they can become viable.

Checker Motors, which plans to reorganize, had 2008 sales of $61.5 million, down from $63.4 million a year earlier, court papers show. The company, with a 72-acre site, does stamping and welding for hood assemblies, rear panels and other parts.

Checker Motors was formed by the 1922 merger of Commonwealth Motors and Markin Automobile Body, according to court papers. In addition to the Checker Taxi, the company previously made trailers for Sears, Roebuck & Co. and the U.S. Army, and an Aerobus for airports, train stations and hotels, according to its Web site.

The case is In re Checker Motors Corp., 1:09-bk-00358, U.S. Bankruptcy Court, Western District of Michigan (Grand Rapids).

PARK RIDGE, N.J. (AP) — Rental car company Hertz Global Holdings Inc. said Friday it will eliminate more than 4,000 jobs worldwide as it further cuts costs amid slowing demand.

The company expects to save $150 million to $170 million this year and take a related fourth-quarter charge of $20 million to $25 million.

Hertz already has trimmed its work force by 22 percent in the last two years. The new reductions will bring staffing to 32 percent below August 2006 levels. According to CapitalIQ, the company currently has about 29,350 workers in total, who operate about 8,100 locations in 144 countries.

The company said the latest round of eliminations, which will take place in its fiscal 2008 fourth quarter and first quarter of 2009, will come in its car and equipment rental operations as well as corporate and support areas. The reductions will occur across all regions.

Chairman and Chief Executive Mark P. Frissora said in a statement that Hertz is still committed to its global airport and off-airport car rental and equipment rental businesses and will add the “necessary resources” when operating conditions get better.

The rental car industry has been pressured as economic conditions have caused both businesses and consumers to curb their corporate and personal travel.

In November Hertz suspended its financial guidance and said it no longer expects to meet annual earnings targets set in August. That same month the Park Ridge, N.J.-based company prepared to cut 4.7 percent of its work force and close some of its locations.

LOL! This will really piss off the old socialist sot, Teddy has been fighting this tooth and nail. NIMBY

Cape Cod Wind Farm Gets U.S. Environmental Approval (Update2)
By Daniel Whitten and Catherine Dodge

Jan. 16 (Bloomberg) — The Interior Department gave environmental approval for a proposed wind farm off the coast of Cape Cod, Massachusetts, over the objections of Senator Edward Kennedy and other residents.

Final federal approval to build the 130 windmills, the first in U.S. waters, wouldn’t be granted for at least 30 days, after President-elect Barack Obama takes office. The Interior Department’s finding is one of about 20 federal, state and local permits or authorizations needed.

Supporters call the project, under review since 2001, an important step toward developing renewable energy. Opponents say it may cause radar interference to boats and planes and spoil the ocean views from Cape Cod.

“It would be one of the largest skylines in the U.S. in the middle of Cape Cod beaches,” said Audra Parker, executive director of the Alliance to Protect Nantucket Sound. “We support renewable energy, but Nantucket Sound is the absolute worst location for an industrial-scale wind plant.”

The alliance is readying a fund to pay for legal action against the wind farm, she said.

Kennedy, a Democrat from Massachusetts, has a home at Hyannisport on Cape Cod. He has said that while he supports wind power development, the project off the coast is a “sweetheart deal” that “threatens the livelihood of Massachusetts’ fishermen” and its tourism industry.

“By taking this action, the Interior Department has virtually assured years of continued public conflict and contentious litigation,” Kennedy said today in an e-mailed statement.

Electricity for the Cape

The windmills, proposed by Boston-based Cape Wind Associates LLC, would produce three-quarters of the electricity needs of the Cape and surrounding islands, according to the company’s Web site.

Randall Luthi, director of the Interior Department’s Minerals Management Service, told reporters today on a conference call that the agency has approved the environmental plan.

“There is nothing in the final environmental impact statement to basically cause extreme alarms about the project,” Luthi said.

To contact the reporter on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net
Last Updated: January 16, 2009 12:58 EST

Nothing but terrible, terrible news everywhere you look, but the scam market doesn’t care, looks to rally.

Yo,Yo,Yo,B.O.’s new ride… He has requested spinners and appropriate thump sound system…

Obama’s ‘Beast’ of a car revealed

By Rajini Vaidyanathan
BBC News, Washington

It looks like something out of a James Bond film.

But the presidential seal on the side marks this hulking limo out as something not even the superspy will be able to get his hands on.

These are the first pictures of the new armoured limousine which will be used to ferry Barack Obama around.

Nicknamed “The Beast”, the Cadillac will make its debut on 20 January, as part of the inaugural parade.

It is traditional to show presidential cars off for the first time in this way.

‘State of the art’

The Secret Service said the 2009 limo would provide it with a “valuable asset” in providing its occupant with the highest level of protection.

As expected, they are not giving too much away about the car, but Nicholas Trotta, their Assistant Director for the Office of Protective Operations is quoted in their news release:

“Although many of the vehicle’s security enhancements cannot be discussed, it is safe to say that this car’s security and coded communications systems make it the most technologically advanced protection vehicle in the world.”

Observers say the car is likely to include bullet proof glass, an armoured body, a separate oxygen supply, and a completely sealed interior to protect against a chemical attack.

One of the specifications is that we don’t talk about the specifications
David Caldwell
General Motors
Some joke the car is so tough it could withstand a rocket-propelled grenade. Its tyres are said to work flat, so the vehicle will keep going even if shot at.

While the car’s interior is a closely guarded secret, there is no doubt “The Beast” has been kitted out with the best and most up-to-date equipment.

David Caldwell, a spokesman for General Motors which makes Cadillac, told the BBC that the car is made to specifications that the company is given by the federal government.

“One of the specifications is that we don’t talk about the specifications,” he said.

But Mr Caldwell did reveal that the car has been made in keeping with the design of a contemporary Cadillac, and would include a hand-crafted interior.

When asked if it included such extras as an iPod dock, he said he could not comment specifically, but added that the limo would have “state of the art electronics”.

Circuit City going liquidation, laying off another 35,000 people.

GE Capital dumping 7,000-11,000 employees.

Hertz letting go 4000 people as car rentals crash.

I’m sure this is all very inflationary.

To paraphrase (Jett Rink) James Dean:
“I’m rich, VIX. I’m a rich ‘un. I’m a rich boy. Me, I’m gonna have more money than you ever *thought* you could have — you and all the rest of you stinkin’ sons of … Benedicts! ”

VIX: 48.67 @1:00PM CST. It’s up lately.
I wonder why?

Roidy

Man buys modest house in 1980 for modest price. Man responds to mass marketing and takes out HELOC in 2005, in order to buy another house for “investment”. Everything blows up, and man loses houses, both of which are later purchased for pennies by CEO of Wall St. firm, along with dozens of other properties, as a personal “investment” providing for ample cash flow and future equity. A brilliantly orchestrated plan which worked to perfection.

Calling Prez candidate 2012 “Ms. Barracuda” : “Drill here! Drill Now!”

…rumor has it that McSame, in a jesture of empathy for the American economy is buying x7 electric hybrid Cadillac’s …one for each of his x4 car garage homes.

“Traders unable to get rid of crude are selling at a huge discount as storage facilities fill up with unwanted oil and gas, said analyst Stephen Schork.”

Diminishing room to store cheap crude:

http://finance.yahoo.com/news/Diminishing-room-to-store-apf-14085153.html

Coming soon to your hood: Debbie Does Yo Mama (if it wasn’t so ridiculous it would be totally funny):

Film, Porn Shoots Sought by Los Angeles Homeowners Hit by Slump
Email | Print | A A A
By Nadja Brandt and Daniel Taub

Jan. 16 (Bloomberg) — Jayshree Gupta reclined on an English-style sofa in her Beverly Hills penthouse as crews buzzed around taping protective paper over the hardwood floors and wheeling in crates of camera gear.

She was hosting a television-commercial shoot. It meant allowing dozens of strangers and 400-pound klieg lights into her home for a full day, and it was worth every minute, Gupta said.

“I am doing it because I need money to maintain my lifestyle,” she said, perched near a portrait of herself painted by her friend Barbara Carrera, the Bond girl in 1983’s “Never Say Never Again.” “A lot of my money is either gone or tied up. Right now I am hurting.”

Gupta, a clothing and jewelry designer, is among an increasing number of recession-pinched Los Angeles homeowners turning to Hollywood for help, offering their houses as sets for feature films, commercials and even adult movies.

Jan. 16 (Bloomberg) — Consumer prices and industrial production tumbled in the U.S. as a record slide in retail sales destroyed companies’ pricing power and idled more than a quarter of factory capacity.

The cost of living fell 0.7 percent in December, capping the smallest annual increase since 1954, the Labor Department said today in Washington. Industrial output shrank 2 percent, and the capacity-utilization rate slid to 73.6 percent, the Federal Reserve said. A private survey showed consumer sentiment little changed in January.

Prices for clothing, new automobiles, airline fares and recreation all decreased last month. For all of 2008, the 3.2 percent drop in new-car prices was the biggest since 1971.

http://www.bls.gov/news.release/cpi.t01.htm

They have housing up 2.4%, now I think we must all sit back and laugh at this.

They have food up 5.6%. Medical and education up. I would expect gov assisted costs to be the slowest to correct. I would expect food prices to be the stickiest in a deflationary environment. People will cut spending on food last of all. Hard to believe the 5.6% # with the recent articles about falling milk and grain prices.

NEW YORK (AP) — Burgeoning crude inventories pushed oil prices lower Friday with yet another major energy group predicting demand will fall again this year in a widening recession.
In its closely watched monthly survey, the Paris-based International Energy Agency cited “the relentless worsening of global economic conditions” as it reduced its global demand expectations by 1 million barrels, to 85.3 million barrels a day.

It would mark the first time in more than a quarter century that global demand fell in consecutive years.

“This is more than just your average bear market,” said Michael Lynch, president of Strategic Energy & Economic Research. “There’s so much pent up inventory in terms of cars, houses, industrial equipment. It’s going to take a long time to get out of this.”

California moved closer to delaying tax refunds and other payments to preserve dwindling cash in the state, in a new indication that the state’s budget crisis is worsening.
…
Among the payments Mr. Chiang said he would order delayed for 30 days include the tax refunds due to millions of individuals and businesses. He said the state would also delay payments to state vendors, local governments expecting aid for social programs, and individuals expecting rent or food assistance.

WSJ

Tales of woe from the New Yorker:

http://www.newyorker.com/talk/2009/01/12/090112ta_talk_widdicombe

“FINRA has found no evidence of trades by Bernie Madoff on behalf of his private investment fund through Bernard L. Madoff Investment Securities, a commercial brokerage founded in 1960.

This appears to be a brick in the wall of ‘rogue trader’ status. He could do it himself because he made no trades at all.

However this was not Bernie’s only commercial operation in the securities business, in addition to his now nefarious private fund.

Primex was registered as Primex Holdings, L.L.C. in NYS in October of 1998. Primex is a joint venture involving a digital trading auction which operates out of Bernie’s 18th floor office at 885 Third Ave.

Madoff’s business partners in the Primex Exchange were Citigroup, Morgan Stanley, Goldman Sachs, and Merrill Lynch.

Did Bernie give any business to this joint venture? Did any of the above brokers have any investments or losses with the Madoff Fund? If not why not? It was one of the most successful funds, on paper, on the Street?

More questions than answers. Let’s hope this one does not disappear down a black hole like the enormous put option positions placed on the airline stocks just prior to 9/11.”

-theory #1. The money is hiding in plain site.

10 degrees here in central South Carolina tonight! Hey OwlGore hows that global warming working out!

ROTFLMFAO!

Can I buy some carbon credits from your company to help us with the warming?

So much for the big windfall taxes on ‘big oil’…Up yours Marxist Waters(d) Cali.

HOUSTON (Reuters) - ConocoPhillips (NYSE:COP - News), citing a steep decline in oil and gas prices, said on Friday it will cut 4 percent of its workforce and sees big writedowns on some of its exploration.

Shares of Conoco fell nearly 3 percent in extended trading.

The third-largest U.S. oil company also set its 2009 capital expenditures at $12.5 billion, a budget the company said was ample enough to fund large development projects but down from a projected $20 billion in spending for 2008.

Conoco said the drop in oil and gas prices will affect its year-end reserves.

On a year over year basis, crude oil prices fell more than 50 percent, while natural gas prices tumbled 25 percent.

(Reporting by Anna Driver in Houston; Editing by Tim Dobbyn)

Professor Bear /GS-

I wanted to reply to a question you asked me yesterday- you said
“In your opinion, are there adequate safeguards to prevent airlines in financial difficulty from scrimping on preventive maintenance, or avoiding replacement of planes which are too decrepit to fly safely?”

The safeguards are basically the honor system. The FAA is terribly undermanned, and really can’t police the airlines or all the General Aviation facilities. There has always been scrimping- it will get worse as the economy worsens. The saving grace is that A & P (airframe and powerplant) mechanics are by and large very honest and principled- and the fact that they are signing for the work performed or (not performed) with their license helps keep them honest. Another saving grace is that most parts are replaced or overhauled at half life- so even if they go a few hours/cycles over there is usually lots of life left in the part. The marginal players will probaby go bankrupt before the airframe really comes into play, safety wise.

Having said that- the foreign airlines are another story entirely. The Europeans and alot of the Oriental countries are even more strict than we are, but everywhere else? Its as bad or worse than you are probably imagining, I wouldn’t fly on their planes!

Can’t wait for more of the same dismantling of our economy after tuesday. tick tick tick.
Just in today’s bits there is so much bad news.
tick tick tick. Ah hell throw us a rope!