Common_Denominator

U.S. Records Another Huge Current Account Deficit

The main problem is that all of the junk mortgages were sold by banks to Freddie & Fannie. Those two outfits had orders to encourage home ownership by the poor. When government guarantees are available, Fannie & Freddie then sold those mortgages pooled together in tranches as high rated bonds.

This problem is similar to what happened in the Savings & Loan fiasco a few years back. People put money in S&L's since the government backed it up. That led to crooks operating S&L's using saver's money to be lent to their crooked friends.

Moral of the story is....the government should never give cheap guarantees to banks, S&L's, Wall street Bankers or any one else.

An Optimist Looks at the Market

An Optimist: Is a single guy looking forward to marriage.
A Pessimist: Is the married optimist.

10 Signs of a Recession

Brazil is NOT free of gasoline usage. They have a 50-50 mix of
cars running on bio-fuels and gasoline. They make the ethanol out
of sugar cane which is far more efficient than using corn. But they
have an advantage. Their climate and soil is great for sugar cane
growing. Much of US is not.

In US, to produce 1 gallon of ethanol requires 3/4 gallon of gasoline. Average car in US consumes 600 gallons of fuel/year
and that boils down to 60 gallons of ethanol per car per year.

No wonder gasoline and food prices are going through the roof.

10 Signs of a Recession

But as addendum to my post above, I will grant you that "EASY" oil
has been discovered.

OTOH countries like Iran & Venezuela are falling behind on oil production not because they are running out of oil but because of crazy dictators with harmful policies. Iran is in such bad situation, that they will soon need to import petrol in spite of sitting on one of the largest proven oil reserves in the world.

10 Signs of a Recession

Peak oil is a 100 years away at minimum. There is more oil in oil shale in US & Canada than entire oil reserves of Saudi Arabia. ANWAR has 30 years of oil at million+ barrels/day. Brazil just discovered the largest oil field in the world, although it is under sea.
Many Coastal areas have not even been explored yet much less exploited.

The stupid fact is the enviro wacko's have succeeded in making it illegal to process oil shale, drilling in ANWAR & off-shore drilling. But their time is fast coming to an end. The more pain Americans feel at the pump and the cash register, sooner they will wise up.

What a Time to Be a Value Investor

My strategy is to buy late and sell early.

Risky Waters, But Opportune Waves

Even though 20% decline is significant, what exactly is the catalyst to propel this market higher? Housing, Retail, Energy costs, Deficit gov't budgets, balance of trade, Food inflation, Iraq war, etc are all still looking ominous. Me thinks we have another 10% decline in the cards if not more.

Market Rallies Since the Start of the Credit Crisis

In 1990 we had no 1) Iraq war 2) Sub-Prime fiasco 3) Record debts by individuals & the government 4) No competition from Chinese manufacturing.

It is different this time.