The Housing Bubble

February Is National Layoff Month….are you proud to be an American today?

Spoke with a friend yesterday who purchased in Spring 2008 - he admits that while home prices are falling, there is no way any sane banker would lend him the money for his purchase anymore, so he’s glad he purchased.

But he apparently ran into a RE agent at a party on Friday night and she was spouting this “fact” that he’ll get a $15,000 tax credit - this year - just for being a homeowner. So he’s planning a basement rehab.

I don’t know if this RE agent is just stupid, lazy, dumb, or just a liar…. but you can only imagine how the NAR is going to blow this tax credit thing way out of porportion in an effort to steal future demand. Just think of how much misinformation a typical RE agent claims regarding the mortgage interest tax deduction - and add this to their stable of lies.

So do you think Rick Santelli on CNBC reads and may possibly post on this blog?

Caught Rick Santelli on CNBC. He said the Fed Gov. should have let the bad banks collapse and supported the good banks. Rick Santelli is my hero and pleasing to the eye to boot

According to cnbc.com, a report is coming out later this week from Moody’s Economy.com. From the article:

“Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view,” the report said.

“More than three years since the market began correcting, inventories are flattening, prices are coming back down to earth, and sales are approaching stability,” the report said.

http://www.cnbc.com/id/29028031

One of the headlines out there this AM is “Wall Street Anxious for Passage of Stimulus Bill”. Scary. Because if Wall Street likes it, it’s got to be a REALLY bad idea.

Does anyone else get a sort of squeamish feeling over the word “stimulus” being used in this context? It makes me cringe a little.

I am making an HBB soundtrack for Ben and Vegas, please post any bubble related sings or NAR clips, or whatever!

YOu can email them to me, too
x110y110 at gmail

Good watch!

http://www.youtube.com/watch?v=_NMu1mFao3w

I usually find Dr. John Hussman’s market commentary to be insightful and actually made some good trades based on his views. His article today had some snippets from Ray Dalio, who runs Bridgewater Associates, on the current financial crisis and what is likely to happen going forward, as interviewed in Barron’s this week. It has some of the things I predicted earlier such as no inflation likely in the short & probably intermediate term as current monetary policy only barely keeps deflationary spiral at bay at best:

“Basically what happens is that after a period of time, economies go through a long-term debt cycle — a dynamic that is self-reinforcing, in which people finance their spending by borrowing and debts rise relative to incomes and, more accurately, debt-service payments rise relative to incomes. At cycle peaks, assets are bought on leverage at high-enough prices that the cash flows they produce aren’t adequate to service the debt. The incomes aren’t adequate to service the debt. Then begins the reversal process, and that becomes self-reinforcing, too.

“What the Federal Reserve has done and what the Treasury has done, by and large, is to take an existing debt and say they will own it or lend against it. But they haven’t said they are going to write down the debt and cut debt payments each month. There has been little in the way of debt relief yet. Very, very few actual mortgages have been restructured. Very little corporate debt has been restructured. The reason it hasn’t actually produced increased credit activity is because the debtors are still too indebted and not able to properly service the debt.

“If you think that restructuring the banks is going to get lending going again and you don’t restructure the other pieces — the mortgage piece, the corporate piece, the real-estate piece — you are wrong, because they need financially sound entities to lend to, and that won’t happen until there are restructurings.

“By the way, in the bear market from 1929 to the bottom, stocks declined 89%, with six rallies of returns of more than 20% — and most of them produced renewed optimism. But what happened was that the economy continued to weaken with the debt problem. The Hoover administration had the equivalent of today’s TARP [Troubled Asset Relief Program] in the Reconstruction Finance Corp. The stimulus program and tax cuts created more spending, and the budget deficit increased.

“You print a lot of money, and then you have currency devaluation. The currency devaluation happens before bonds fall. Not much in the way of inflation is produced, because what you are doing actually is negating deflation. So, the first wave of currency depreciation will be very much like England in 1992, with its currency realignment, or the United States during the Great Depression, when they printed money and devalued the dollar a lot. Gold went up a whole lot and the bond market had a hiccup, and then long-term rates continued to decline because people still needed safety and liquidity. While the dollar is bad, it doesn’t mean necessarily that the bond market is bad.

“I can easily imagine at some point I’m going to hate bonds and want to be short bonds, but, for now, a portfolio that is a mixture of Treasury bonds and gold is going to be a very good portfolio, because I imagine gold could go up a whole lot and Treasury bonds won’t go down a whole lot, at first. Buying equities and taking on those risks in late 2009, or more likely 2010, will be a great move because equities will be much cheaper than now.”

POLITICO
Summers: At least $50B for housing
By NIA-MALIKA HENDERSON | 2/8/09 10:18 PM EST

Treasury Secretary Timothy Geithner’s speech on his plans for the second half of the $700 billion bank bailout package has been postponed until Tuesday, Lawrence Summers said Sunday on “This Week with George Stephanopoulos.”

The speech had been slated for Monday, but Summers said that the Obama administration wanted to focus for now on the $800-plus billion economic stimulus package Congress is negotiating.

“I think there is a desire to keep the focus on the economic recovery program which is so very, very important,” said Summers, the former Treasury secretary in the Clinton and head of the White House’s National Economic Council.

In the speech, Geithner is set to lay out how the administration will use the $350 billion in remaining TARP funds. Summers gave a preview of what that program will look like:

“The focus is going to be on increasing the flow of credit and doing it with transparency, with accountability for those that receive support and with a kind of consistency that frankly we haven’t seen so far,” he said. “There will be support for the credit markets more generally and absolutely critically, support and pressure that assures that these needless foreclosures are avoided…I expect there will be 50 billion dollars or more that will be directed at providing support for the housing sector of our economy.”

Reuven,

You claimed yesterday that nobody has to pay for tax cuts and when I expressed disbelief, you challenged me to tell you who did pay for them. It was too late when I saw your question, so here is the answer.

The exact same people who pay for additional spending pay for tax cuts - future taxpayers.

Deficit spending is deficit spending. Doesn’t matter if you generate the deficit by reducing your income and spending the same amount or by increasing your spending and not bringing in more money. To claim that your can reduce taxes and not generate deficits is absurd.

Is this a government operation or what? The problem is we have a bunch of bad banks that are so crippled by their past bad decisions that they cannot lend, and no one trusts them enough to do business with them.

So what is the solution? Have the government create yet another bad bank.

Why not just keep the bad banks we have, and have the government create some good banks?

In a NYT article on how “difficult” it is to live on only $500K in Manhattan, this blew me away:

“You’re not going to get through private school without tutoring a kid,” said Sandy Bass, the editor of Private School Insider, a newsletter that covers private schools in the New York City area. One hour of tutoring once a week is $125. “That’s the low end,” she said. “The higher end is 150, 175.” SAT tutors are about $250 an hour. Total cost for 30 weeks of regular tutoring: $3,750.”

So an SAT tutor to Wall Street kids, working 30 hours/week makes $390,000 a year, almost as much as the President of the United States? Yeah, nothing out of whack there. How can anyone living in the Wall Street world have any idea how the real world is or how to fix it? No wonder Paulson and Geithner are so clueless.

I still don’t understand why the Lenders had these kind of losses . Didn’t the Lenders pass off the junk papers to the big Secondary Market of CDO’s or they passed the paper to Freddie and Fannie in which the risk was suppose to be spread out on the securities and diced up into securities . I know that the Credit Default Swaps come into play here ,but I am still unclear
as to how the whole system put the losses back on the pass the bad paper
Lenders . I thought the whole idea of the CDO’s was to spread out the risk to many ,and that was one of the reasons why those investment Trenches were considered less risky . I mean is it just a matter of the CDS Insurance not being able to pay off ,because of the leverage. I still don’t fully get it .

Any pol who stands in the way of stimulus risks catching the blame for causing the financial tsunami in progress.

Congress warned on delaying stimulus
Financial rescue package details to come tomorrow
By David Cho and Michael A. Fletcher
THE WASHINGTON POST
2:00 a.m. February 9, 2009

Today: President Barack Obama will hold a town-hall-style meeting in Indiana to promote the stimulus plan, then convene his first White House news conference at 5 p.m. PST.

Tomorrow: The Senate expected is to approve the stimulus package; Obama will attend a town-hall-style meeting in Florida.

Wednesday: Obama will discuss the stimulus plan in Northern Virginia; conference committee could begin negotiations on House and Senate bills.

WASHINGTON – Senior Obama administration officials sought to intensify pressure on Congress yesterday to pass a massive stimulus package for the crumbling economy, warning lawmakers of the consequences of delay while rescheduling the unveiling of their financial rescue plan to keep the spotlight on Capitol Hill.

cougar91
Sorry, I stole your thunder. I just posted the link to that article you pasted above(Dr. Hussman).

America’s New Rescuer: Japan

By David M. Smick
Sunday, February 8, 2009

Here’s a disillusioning thought: Solving the financial crisis may be beyond the capacity of government finances. The likely $3 trillion price tag, give or take, of both saving the banks and stimulating the economy is causing interest rates to inch up. U.S. Treasury long-term rates have already risen from 2.1 percent just before Christmas to nearly 3 percent. …

Consider the situation: Tokyo has lost control over its soaring currency. The yen has risen nearly 30 percent against the dollar in just the past 18 months, despite the dollar strengthening against most other world currencies. This dramatic surge (the result of once-aggressive Japanese buyers of foreign bonds bringing their savings back home as the world slashes interest rates to Japanlike levels) is killing Japan’s global competitiveness. Locked in its own currency straitjacket, the export-dependent Japanese economy is in freefall. The collapse of Japanese exports to China hasn’t helped matters. To put it simply, Japan is as desperate for currency relief as we are for credit relief. …”
WaPo

The Death of ‘Rational Man’

“…But everyone else had those same numbers. Why did Roubini act? The answer is that he decided to trust his gut, which told him there was trouble ahead, rather than Wall Street’s “wisdom of the crowd,” which — as reflected in stock prices — said everything was rosy. He concluded that the markets were not pricing in the degree of risk that was actually present in housing.

“The rational man theory of economics has not worked,” Roubini said last month at a session of the World Economic Forum at Davos. That’s why he and other prominent economists are paying more attention to behavioral economics, which starts from the premise that economic decisions, like other aspects of human behavior, are influenced by irrational psychological factors. …”
WaPo

Saudis show the way for Washington policymakers

By Henny Sender

February 7 2009

In March of 2005, a year before the Saudi Arabian stock market reached its peak, the Saudi Arabian Monetary Agency summoned its charges among the banks to its elegant Riyadh headquarters.

Concerned that investors were putting money into shares without regard for fundamentals, the central bank’s officials warned the banks not to finance excessive speculation.

“We were accused of micro-managing. They said that the SAMA was intrusive when we said ’slow down’,” recalls Muhammad Al-Jasser, the SAMA vice-governor. “Now they want to kiss our foreheads.” …

http://www.ft.com/cms/s/0/97b6b904-f4bb-11dd-8e76-0000779fd2ac.html

We have $780 billion do I hear 790 come on folks this is an emergency 780 780 780.. 790! in the corner! We have 790 790 do i hear 800 800 we must move fast 800 800 …going once at $790 billion.. going twice … 800! We have 800 up front thank you sir DO i hear $810 billion 810 810 there is no time to waste folks 810 anyone? Anyone 810 810 We have 810! 810! Do i hear $820 billion $820 billion please folks dig deep our lives depend on this 820 820 820..

UBS arm seeks to lure US brokers from rivals

By Francesco Guerrera and Greg Farrell in New York

Published: February 9 2009 02:00 | Last updated: February 9 2009 02:00

UBS The brokerage arm of UBS has launched an aggressive hiring spree in the US, offering financial advisers large pay packages to lure them away from rivals such as Merrill Lynch, Morgan Stanley and Citigroup.

The move is striking because it comes as UBS’s competitors are shedding thousands of jobs. Brokers sell financial products to wealthy private clients and do not place bank capital at risk.

The bank, which has suffered big credit-related losses and received a capital injection from the Swiss government, promised some brokers compensation equal to almost three times their yearly profits, according to documents seen by the Financial Times.

UBS Financial Services has added more than 400 brokers to its 8,000-strong network in the past few months, insiders say….”
FT

What did Bank of America get for its Merrill purchase? lol The talent has left the building and the rest are being lured away.

Politics is damaging the credibility of economics

By Clive Crook
February 8 2009

http://www.ft.com/cms/s/0/437694de-f602-11dd-a9ed-0000779fd2ac.html?nclick_check=1

Last week Voz pointed out that Mr. Paul Krugman had turned into a depression/deflationista and my comment was Mr. Krugman is wrong. Maybe wrong is the improper term, but instead of rational economics, we now get black/white and the world is multi-colored.

“A good plan violently executed now is better than a perfect plan next week.”
Gen. George S. Patton

With all honesty guys, what type of jobs do you believe will be available in the US in the upcoming years?

With the massive layoffs that are taking place, I see a large number of high-tech jobs being moved overseas, a lot of retail jobs dissapearing, no construction/contracting jobs avaiable, the financial sector has been also affected tremendously.

What’s the future of this country?

I just picture in my mind all this money coming into the American Investment markets from around the World ,during the boom times,and
it created all this money that needed to be placed somewhere ,so it ended up being directed toward real estate and Credit Card lending and fueled the whole debt cycle . Nobody was denied credit during the boom .

So ,if that money is tied up in CDO’s and other securities related to debt ,
isn’t it just a matter of the losses being taken by the investors . If a account isn’t insured ,than why is it the responsibility of Taxpayers of the USA to cover losses ? Its just like when stockholders lose value ,they don’t get bailed out do they ?

Just curious: how does a bankrupt or near-bankrupt company taking back parts of an already bankrupt company somehow make it MORE “viable”???

http://www.cnbc.com/id/29096264

I hope this wasn’t posted previously.

From NYmag

They actually kind of have a point. Wall Street didn’t force Americans to take out loans on houses they couldn’t afford. They merely encouraged them by extending credit to people that couldn’t pay it back, which they would have known if they hadn’t been so busy buying and selling the complex securities that they, in fact, barely understood themselves. And there is another force that contributed just as much to the mortgage meltdown, one that is as much to blame as the guys in midtown.

The real villains here, the truly bad seeds at the heart of this crisis, have gone unpunished thus far and are still in operation. They are Jeff Lewis and Ryan Brown of Bravo’s Flipping Out, Armando and Veronica Montelongo of TLC’s Flip This House, Kristen Kemp of TLC’s The Property Ladder, Kendra Todd of HGTV’s My House Is Worth WHAT?, and the TLC, Bravo, HGTV, and Fine Living networks in general. All of them encouraged people to take out massive loans in order to buy and renovate homes and sell them at a profit when, really, most people have terrible taste, and furthermore, are bad at laying tile. These shows are still on! WHY?
We’d also like to see the team responsible for MTV’s Cribs, the set designers of the loft on Friends, Page Davis from Trading Spaces, and the editors of Martha Stewart Living, Real Simple, and the dearly departed Domino brought in front of the House Financial Services Committee to explain themselves, along with everyone else who, over the past ten years, has colluded to convince the American public that if they weren’t living in a wholly renovated open-plan home with recessed lighting, granite countertops, and freakishly organized closets, they might as well be living in a cave. We trust Barney Frank will bring them to justice!

“Two of Switzerland’s largest banks, UBS and Credit Suisse, are set to announce combined losses for 2008 of 29 billion Swiss francs later this week, the Sonntag newspaper reported Sunday.

According to the report, UBS will announce an annual loss of 21 billion Swiss francs (14 billion euros, 18 billion dollars) on Tuesday, the largest in Swiss history and reflecting the fact the company was one of the banks hardest hit by the US subprime loan crisis.

Last November, UBS posted a net profit of 296 million Swiss francs for the third quarter following a year of losses, but warned that a renewed loss was looming for the following quarter.

Under a rescue plan unveiled in October, the Swiss government injected six billion francs in new capital to UBS and lent 54 billion dollars to the bank to transfer its non-liquid assets into a separate fund.

The massive spread of so-called “toxic” assets — mainly linked to financial instruments now worth very little because of the US home-loan crisis — throughout the global banking system is at the core of the crisis. …”
BreitBart

If UBS and Credit Suisse go under, so does the Swiss Franc. Their combined bailout needs are as much as 4X Switzerland’s total GDP. Europe is toast.

Obama is going to Ft. Myers to speak about his plan. There’ll be, like, three people left by the time he gets there… LMFAO.

Barack, turn the lights off on your way out. Thank you

Are all these bottom callers trying to coax out the knife catchers? oh, I mean fence sitters?

Moody’s Economy.com Study: U.S. House Price Bottom by Year’s End, 36% Off Peak

“Notwithstanding the intensifying economic gloom, the bottom of the housing downturn is within sight for the nation,” said Mark Zandi, chief economist of Moody’s Economy.com. “Presuming we see strong action by policymakers to help support the economy and the housing market, prices will begin to recover by the end of this year.”

http://biz.yahoo.com/bw/090209/20090209005327.html?.v=1

After reflecting on our entire government’s (left and right) performance over the past week or two, I think we are firmly on our way to Hoover-Ville. I tried my best to look at all possible positive outcomes. However, it’s pretty clear and as expected, confidence is rapidly slipping away.

Feb. 9 (Bloomberg) — Daiwa SB Investments Ltd. is urging clients to put their money into Brazil, Mexico and Turkey after the yen’s 55 percent gain against their currencies made emerging markets a bargain. A year ago, it wasn’t recommending any developing nation funds.

“A lot of assets have gotten extremely cheap and Japanese investors are looking to park their money somewhere,” said Kenichiro Ikezawa, who oversees about $3 billion as a fund manager at the second-largest brokerage in Tokyo. “Emerging markets including Brazil, Mexico and Turkey look attractive. We would like to invest more in such countries.”

After a year when the yen rallied against 177 currencies, Japan’s biggest money managers say the best is over in the foreign exchange market. The nation’s investors bought 940 billion yen ($10.3 billion) more international stocks and bonds than they sold in the five days to Jan. 31, the seventh week of net purchases, according to the Ministry of Finance.

Japanese companies are also taking advantage of the strengthening currency, spending record amounts on mergers and acquisitions outside the country. The total value of overseas takeovers more than tripled to $76.8 billion last year, according to data compiled by Bloomberg.

The yen rallied 60 percent against the Brazilian real, 55 percent versus the Mexican peso, and 62 percent against the Turkish lira in 2008 as the global economic slump led investors to pull billions of dollars out of emerging-market assets to repay low-cost loans funded in Japan’s currency. …”

Got it Voz, Faster? Thems with the moneys set the rules.

Two questions for my best friends who don’t know they’re my best friends — Hoz, Voz, the Profe Oso and my personal favorite, Faster Pussycat (El Gato Rapido) — so I hope not to be mocked for my lack of knowledge:

1) What is an acceptable P/E ratio?

2) when you guys say “low volume” what’s the range?

The Hubby’s making me put some of our savings where my mouth is. Mainly, I’ve been spouting off what you guys are saying. I need to learn a lot.

BTW, Exeter, I am a public employee and so am currently off work and off to stimulate the economy at the evil empire, Disneyland. But I get a discount because I’m a teacher, my husband’s getting in free (it’s his birthday) and we’re bringing lunch. Oh, and I got free parking covered.

Stimulate this, Dow.

Hoz, thanks for the tip on UYG a few weeks back; sold today for a nice 15% profit.

Feels to me like almost time to get more short financials again… Thoughts anyone?

Hi. The other day I wrote about a Capitol Hill townhouse with English basement apartment. 913 North Carolina Ave, SE, Wash, DC 20003. Listed for $435K. Under contract in a few a days for $10K under listing price. This was a Countrywide forclosure. Last sold in 2005 for $630 ish. The the $425K is about 2000 pricing. Still overvalued I think by $150K. Hopefully there go the comps. :). But still many many wishing prices. Houses still listed here for $700k +. Anything under $500k is tiny and or bad shape and or bad part of the Hill. On my tour of open houses if I see esp. young couples starting out I chat them up and tell them to to wait. 2 years ago few were interested in listening. These days they’re all ears.

Try, try again:

http://blogs.ft.com/crookblog/

Politics is reducing economics to a truly dismal science
February 9, 2009

“…The problem is not that Mr Krugman questions the consensus on trade (if indeed he does), or that Mr Barro questions the consensus on fiscal policy (as he certainly does). It is that both set the consensus aside so carelessly. In doing so, these stars of the profession destroy the credibility of their own discipline. Mr Krugman gives liberals the economics they want. Mr Barro gives conservatives the same service. They narrow or deny the common ground. Why does this matter? Because the views of readers inclined to one side or the other are further polarised; and in the middle, those of no decided allegiance conclude that economics is bunk.

Politics and economics are always difficult to keep apart. But the problem is getting worse, perhaps because political splits are deepening, or perhaps because the lack of disinterested economic advice is more keenly felt with so much at stake….”

Mostly OT - a buddy just sent me this:

I have finally figured out the difference between a bribe, a gift, a tip, a quid pro quo, and an off-the-books honorarium in kind.

A bribe is when you get caught.

I saw in today’s Journal that the latest proposal for that 15K homedebtor handout is no longer for “first time homebuyers” only!

So Harry Homedebtor, who just walked away from hundreds of thousands of dollars of debt (that he most likely lied on an application to get, and won’t have to pay taxes on what he kept free and clear), can pick up and start again! WHEEEE!

At deeper issue, lots of people see good tax haven bennies in low yielding treasury Bills, TIPS, series I bonds, gold (to hold) and growth stocks for the long run. The Messiah scared them away from taxable events when he pledged to raise taxes on high incomes and pledged to “spread the wealth around.” And people had enough of watching irresponsible types get the rewards and are tightening up. This tightening is a powerful vote against loose credit and irresponsibility. The Messiah is pushing on a string and he’s going to get more and more frustrated about it.

Couple of interesting articles on the local newswire today:

TORONTO (AP) - The number of Canadian consumers and businesses going bankrupt soared nearly 47 percent in December.

The Office of the Superintendent of Bankruptcy said Monday 8,299 individuals and businesses went bankrupt in December, up from 5,659 for December, 2007, a jump of 46.7 percent.

Canadian bankruptcies soar 47 percent

WASHINGTON - It’s an ugly but growing trend: millions of homeowners are upside down, meaning they owe more on their homes than they’re actually worth.

Some statistics show as many as 29 percent of mortgages are upside down in D.C. metro area.

Wave of Upside Down Homeowners Slams Area

Hey FPSS, good to see you back!

Hey hippie commie ex-Californian by way of Arizona and Texcas, where are you? Picking up stones to sell as arrowheads on Craigslist?

“…Let’s say Jane and James are trying to determine whether a particular coin is fair. They both think there’s an 80% chance the coin is fair. They also know that if the coin is unfair, it is the sort that comes up heads 75% of the time.

Jane flips the coin five times, performs a perfect Bayesian update, and concludes there’s a 65% chance the coin is unfair. James flips the coin five times, performs a perfect Bayesian update, and concludes there’s a 39% chance the coin is unfair. The averaging heuristic would suggest that the correct answer is between 65% and 39%. But a perfect Bayesian, hearing both Jane’s and James’s estimates - knowing their priors, and deducing what evidence they must have seen - would infer that the coin was 83% likely to be unfair….

(Math for original example:
James, to end up with a 39% posterior on the coin being heads-weighted, must have seen four heads and one tail:
P(four heads and one tail| heads-weighted) = (0.75^4 ∙ 0.25^1) = 0.079. P(four heads and one tail | fair) = 0.031. P(heads-weighted | five heads) = (0.2∙0.079)/(0.2∙0.079 + 0.8∙0.031) = 0.39, which is the posterior belief James reports.
Jane must similarly have seen five heads and zero tails.
Plugging the total nine heads and one tail into Bayes’ theorem:
P(heads-weighted | nine heads and a tail) = ( 0.2 ∙ (0.75^9 ∙ 0.25^1) ) / ( 0.2 ∙ (0.75^9 ∙ 0.25^1) + 0.8 ∙ (0.5^9 ∙ 0.5^1) ) = 0.83, giving us a posterior belief of 83% that the coin is heads-weighted.)”
Anna Salamon and Steve Rayhawk

Welcome to the world of likelihood theory. A new fun way to determine probabilities. Ok, Sun get out here and write a new dovetail program.

I submit the candidate for clueless write of the year.

Pent-Up Demand Could Quickly Pull Economy Out of Its Hole
Justin Lahart

(He makes about the weakest attempt I’ve ever seen at comparing this recession to the early 80’s)

test

Must be tough getting all that pork over a hurdle.

Recovery package clears key Senate hurdle February 9, 2009 7:38 PM ET

All Thomson Reuters news WASHINGTON (Reuters) - The U.S. Senate on Monday moved a step closer toward approving President Barack Obama’s plan to jolt the U.S. economy out of recession with government spending and tax breaks, setting up a vote to pass the $838 billion emergency package on Tuesday.

I hate to break it to those of us in the economy who are, or who will soon be unemployed, but, the Government will run out of money, and this time they will not be able to afford to pay endless unemployed benefits. The huge ‘pie plate’ that has become the Federal trough is soon to find that there is not enough monetary pie filling to even cover the bottom of the “pan of promises” coming from our CONgress.
The political reaction will be to monetize the debt directly through the consumer (rather than through the insolvent banks), and then we will possible see a whipsaw of hyperinflation the likes of which this nation has never before witnessed. Then the end of our current financial system……….

Gimmie an “A”! Gimmie a “C”! Gimmie an “O”!
Gimmie an “R”! Gimmie an “N”! Gimmie 4 Billion Dollars! Whaddya Got? - Voter fraud and Democratic Party corruption funded by us taxpayers for a long time!

Acorn to be stimulated to the tune of $4,000,000,000 for a job well done:

By Kristen Lopez Eastlick, OpEd Contributor
- 2/8/09

KEY DATA:
* ACORN could receive up to $4 billion under the economic stimulus legislation approved by the House of Representatives.
* ACORN has received an estimated $53 million in government funds since its founding in 1970.
* ACORN is under investigation in at least 14 states in connection with allegations of voter registration fraud in the 2008 campaign.

TAKE HOME:

ACORN claims to represent low-income workers but does not pay its own employees the minimum wage and in 1995 sued California for an exemption from its minimum wage requirement.

A multi-million dollar liberal non-profit activist conglomerate reportedly under federal investigation may get a big piece of the economic recovery stimulus pie now under consideration by Congress.

It’s the Association of Community Organizations for Reform Now – the infamous ACORN.

That’s right. ACORN, the activist group that has been implicated in voter fraud and registration deception in at least 14 states may get the financial bailout it needs to pull off another round of schemes in the next election season.

Last fall, nearly every time ACORN was in the news the group’s credibility was — rightfully and appropriately — questioned. In the final weeks leading to the election, twice as many voters held a negative view of the group than a positive view.

But now that ACORN is receding from public view, it’s apparently counting on the economic crisis and its friends in Congress to refill its coffers with up to $4 billion in aid.

“The euro fell over 1 percent against the yen and the dollar, weighed down by a report that Russia was to request negotiations with European and other foreign banks to postpone repayment of private sector debt.

The euro fell 1.2 percent to $1.2849 and 1.6 percent to 117.08 yen .

Traders said the report in Japan’s Nikkei business daily had caused markets players to sell the euro. The report could not be immediately confirmed….”
Reuters

I hate investing in Russia, lousy capitalists.

On Monday evening, new details emerged after lawmakers were briefed on the plan.

It intends to call for the creation of a joint Treasury and Federal Reserve program, at an initial cost of $250 billion to $500 billion, to encourage investors to acquire soured mortgage-related assets from banks.

It wants the Fed to use its balance sheet to provide the financing, and the Federal Deposit Insurance Corporation might provide guarantees to investors who participate in the program, which some people might call a “bad bank.”

A second component of the plan would broadly expand, to $500 billion to $1 trillion, an existing $200 billion program run by the Federal Reserve to try to unfreeze the market for commercial, student, auto and credit card loans. A third component would involve a review of the capital levels of all banks, including projections of future losses, to determine how much additional capital each bank should receive.

The capital injections would come out of the remaining $350 billion in the Troubled Asset Relief Program, or TARP.

A separate $50 billion initiative to enable millions of homeowners facing imminent foreclosure to renegotiate the terms of their mortgages is to be announced next week.

NYT: Geithner Said to Have Prevailed on the B@ilout

“…They are convinced we are going into some deep national morass worse than the Great Depression (and such deflationary times will somehow make their gold go to $3,000!?!?). Yet they are working to make sure their own personal worlds are covered. I get no letters from people who are simply giving up. What company will keep a CEO who does not work hard to figure out how to keep the company alive? If you lose your job, do you not try and get another one or figure out how to make ends meet? Do you not put in extra hours to try and make your personal life or business or job better? Even if it is terribly difficult, the very large majority of people don’t throw in the towel. Each of us, in our own way, gets up every morning to fight the good fight, even when the swamp is full of more alligators than we ever counted on. We just pick up a baseball bat, wade into the swamp, kill as many alligators as we can in one day, and then go home to get ready to fight the next day.

The lesson from Harry is the same as it was in 1998: It is the individual working to get his or her own house in order that will help us all collectively get our national house in order. This is not to diminish the Herculean tasks we have in front of us, collectively. We have dug ourselves into a very deep hole of credit and leverage. It is going to take lots of time. The way back is not entirely clear at this point. This is not an ordinary business-cycle recession. But each of us will do what we can to make our small corner of the world better. And in the fullness of time, we will collectively get back to trend growth and a rational market….”
Mr. John Mauldin
Feb 9

“…With every day that goes by bringing another spate of earnings disappointments, bankruptcies, and examples of mismanagement, it would seem intuitive to expect corporate behavior to reflect these grim times, with companies retreating, retrenching, and regressing. But, in recent weeks, we have started to pick up on examples of the exact opposite, as the well-capitalized platform companies have used this period of turbulence to position themselves for the next phase of growth. …”
GaveKal
Feb 9, 2009