jdl51

A Cautious Look at Where Markets Are Headed

It's hard to believe that with interest rates at 0, the 30 year mortgage at 5%, oil fairly stable, and earnings reports more up than down, that a protracted retreat in stock prices will happen. Correction, yes, but never before have we had interest rates this low with no hike on the horizon. Add to that the stimulus efforts worldwide I have to believe that next year will be a more gradual rise in stock prices than we've had the past few months with a few pullbacks along the way. Consumers should gradually work their way back into the picture, too. Automobile sales have been depressed lately and with a 12 million per year scrappage rate, it's only a matter of time before people will have to buy cars. We shall see.

Where's the Outrage at the Banks?

"Whoa there for a moment, lets be fair and think back in the early 1990's when our government who regulates our banks told them and other financial institutions to ease credit for those who normally cannot qualify for a home loan."

Let' be fair and tell the truth here. The CRA was implemented to stop banks from redlining neighborhoods that they were taking deposits from but refused to lend to. The banks were never "forced" to lend to anyone but were required to lend to qualified borrowers in neighborhoods that they serviced. The banking fiasco had its roots in irresponsible lending to just about everyone, not poor unemployed ghetto folks. If that were the case, we would not be having foreclosures in every neighborhood in the country, but would be limited to a few homes in the poorest neighborhoods that the right constantly tries to blame for the collapse of the whole financial system. You'd have to be an idiot or completely ignorant of how the system works to believe that. Banks went on a lending binge to anyone that walked in the door regardless of qualifications because they were more interested in making fees, securitizing the loans, passing them on to investment bankers who with the collusion of the rating agencies, sold them to an unsuspecting world and then the cycle repeated itself until it collapsed. And to multiply the problem, investment banks sold insurance policies, but they couldn't call them insurance policies because those are regulated so they called them credit default swaps. They sold them to anyone who wanted one, again to collect the fees on something they never thought they would have to pay off. Unfortunately the whole house of cards collapsed. The previous administration didn't believe in regulation and looked the other way while all this was going on instead of jumping in and putting a halt to it or at least try to regulate the derivatives industry which would have lessened the losses considerably. If you want to blame someone, blame the mortgage brokers that sold these subprime loans to people they knew wouldn't be able to pay, the appraisers that juiced their numbers, the regulators who were asleep at the switch and the ratings agencies that didn't bother to do their due diligence and check the underlying mortgages. Any link in that mortgage chain would have put a stop to the whole mess, yet all of them were too greedy to do their job responsibly.

Looking Back at Fiscal 2009

"Wow! talk about not being able to remember history!! It was a year ago when the Dem majority split the 2009 budget in half with "the Bush budget" covering the 6 months to end of March when the second half Democrat/Obama budget could run the deficit up faster than Bush ever had. If you are going to write here, at least TRY to get your facts straight. BTW, I think that Bush and the GOP congress were complete fiscal failures as are Obama and the Dems. WE ARE TOAST!"

Bush's 2009-2010 budget that he proposed, before Congress even looked at it, had a $1.2 trillion deficit, not including Iraq and Afghanistan, which he never included in his budgets since the wars started. So before Democrats touched it, he projected a $1.2 trillion/$1.4 trillion for this coming fiscal year which started a couple of weeks ago. Bush ran up close to $7 trillion in debt. Started at around $5 trillion and ended up close to $12 trillion, much of that when republicans had complete control of Congress. Of course, republicans have been saying for the past 30 years that deficits don't matter, except when a democrat is in charge. No one gave the dems credit when they fixed the budget mess left behind by Reagan and Bush I. They'll have to fix it again because the republicans are incapable of ever balancing a budget.

Looking Back at Fiscal 2009

This is the final Bush budget. All of the deficit, aside from the $200 billion stimulus spending, are what's left of the Bush administration "fiscal responsibility". In other words, Obama is not responsible for this deficit and it's increased government spending. And Bush's proposed budget for 2009/2010 had a projected deficit of $1.4 trillion. So before Obama even set foot in the WH, these deficits were already baked in the cake. Not bad considering Bush started with a budget in surplus and projected surpluses as far as the eye could see. He averaged around $750 billion a year in deficits with nothing to show for it except two wars and a financial meltdown that almost destroyed our economy. Now let's see if the public will remember how well the republicans did last time they were in power and vote for them again next year.

Bank Earnings: Reality Check Ahead

So no concrete information, just passing on a rumor is the best you can do? How about some facts instead of printing a comment from another article. Some experts? Are these the same experts who haven't reliably predicted any of the catastrophes the financial system went through the past couple of years?

Marc Faber: Equities Safer than Dollars

"Estimated Currency and Financial Derivatives $642.184 Trillion"

I think you misplaced the decimal here. A year ago during the meltdown, financial derivatives were around $60 trillion and some of that has been wound down. Next month, the
last Bush budget will expire. So aside from the stimulus spending this year, somewhere around $100 billion, all of the deficits accumulated since 1980, around $11 trillion, are from the last three republican presidents. The borrow and spend policies of the last three decades has nearly destroyed our economy, and may yet destroy our economy. So much for deficits don't matter.

On Sep 29 07:08 PM twitee wrote:

> For those less inclined to Scripture, we can readily turn to mathematics
> and to our instructive friend, the parabola, for clues about what
> lies ahead. Simply stated, parabolic growth rates herald major changes
> just ahead in virtually any arena of life, and the parabolic increases
> in the Federal Reserve’s creation of dollars will prove to be no
> exception.
>
> The accumulated official US Public Debt of $11.3 Trillion at May
> 2009 has grown by over $2.1 Trillion in the past twelve months alone,
> with multi-trillions more ahead and no end in sight. The immediate
> future suggests massive additional bailouts for commercial real estate,
> credit card debt portfolios and insurance companies - plus the bubbling
> up of a Witches’ Brew from hundreds of trillions of toxic OTC derivatives
> now in jeopardy - as the next major dominoes likely to fall. The
> usdebtclock.org website provides the following:
>
> US Public Debt $11.317 Trillion
> US Government Bailouts $11.650 Trillion
> Estimated Currency and Financial Derivatives $642.184 Trillion <br/>
>
>
> Note: In March 2006 the Federal Reserve discontinued its separate
> publishing of the critical M3 money supply data, and so we are left
> to the estimate the parabolic increases in the printing of money
> within the larger ‘Estimated Currency and Financial Derivatives’
> data.
>
> At some point in the near future, the market may finally acknowledge
> that the boasted about US Dollar, the Emperor, is no longer wearing
> any clothes. And for both Wall Street and the average American alike,
> the Buck may stop here...be prepared for the inevitable rise of Gold,
> Equities and any Hard asset in a long run....in a short term we are
> in the war with deflation....

Should You Invest in Banking Stocks?

Betting on financials, or the market in general, to go down this time of the year is more often right than not. We are still feeling the effects of the meltdown in real estate but things are less bad than they were a year ago. I sincerely doubt that BAC and C have hit their highs and anyone holding these two, especially BAC, should make out very well in the long term. 0% from the Fed, 5% mortgage rates and 14% +/- on CC added to BAC's Merrill acquisition, it would be almost impossible not to make a ton of money.

Some Scary Implications of U.S. Debt

Thirty years ago when RR was elected, our national debt was a little over $1 trillion. After 30 years and three "deficits don't matter" republican administrations later, it's closer to $12 trillion. Eight years ago people were wondering what would happen if we didn't have a treasury market anymore because we were starting to retire some of that debt. Thanks to "fiscally responsible" republicans we don't have to worry about THAT anymore.

Defending the 'Most Dangerous ETFs': A Response to Don Dion

If you had put your money in FAS last spring and held it, you'd have something like an 800% return by now, even with the decay. Not bad.

Some Scary Implications of U.S. Debt

In 2001 as GWB took office, the question economists had on their minds was what would we do if the debt was totally paid off. We were running $200 billion a year surpluses and surpluses were projected out as far as the eye could see. They took the 30 year bond off the market and we were down to around $5 trillion in debt. After eight years, GWB and the republican congress managed to take care of that problem. They added another $6 plus trillion and as of today, we're still operating under Bush's last budget. So much for being "fiscally conservative".

Why the U.S. Dollar Drop Might Be Significant

The dollar hit new lows against the Euro? Wasn't it trading around 1.65 to the Euro last year? It's now at 1.44. And when the Euro was first issued in the late '90s it was at 1.18, which isn't much of a decrease seeing as how we've added almost $6 trillion in debt the past eight years. It may go lower, which will make our goods and services much cheaper, imports more expensive and bring our trade deficit into balance which would then improve the position of the dollar. And the cycle goes on.

Is a Crash Impending?

"How old are you? Do you remember 1982-3? 1990-1? Do you recall 1973-4?"

And then you can add 1987 and 2008. Anyone see a pattern here? They all happened under republican administrations. Since 1981 three republican administrations have added over $11 trillion to our national debt, with an average of $750 billion a year with the last administration. We're still operating under Bush's final budget until next month with over a trillion deficit and his proposed budget that he submitted in January of this year for FY 2009/2010 had a $1.2 trillion deficit. These are the facts and they are not in dispute so don't give me a thumbs down because you don't like hearing the truth. This economy was driven into the ground with the world's financial system teetering on the brink of total collapse, yet it seems the majority of posters on Seeking Alpha had the delusional expectation that the new administration would have fixed everything by now and have positive growth rates and growing employment in their first few months in office. It took Clinton six years to bring our budget into balance from a much less precarious situation. It will take much longer to dig ourselves out of the huge hole that we now find ourselves in, especially given the non cooperation and obstructionism from the party that put us there.

The Non-Stimulating Stimulus Bill

"WASHINGTON -- Government efforts to funnel hundreds of billions of dollars into the U.S. economy appear to be helping the U.S. climb out of the worst recession in decades.

The U.S. economy is beginning to show signs of improvement, with many economists asserting the worst is past and data pointing to stronger-than-expected growth. On Tuesday, data showed manufacturing grew in August for the first time in more than a year. "There's a method to the madness. We're getting out of this," said Brian Bethune, chief U.S. financial economist at IHS Global Insight.

Much of the stimulus spending is just beginning to trickle through the economy, with spending expected to peak sometime later this year or in early 2010. The government has funneled about $60 billion of the $288 billion in promised tax cuts to U.S. households, while about $84 billion of the $499 billion in spending has been paid. About $200 billion has been promised to certain projects, such as infrastructure and energy projects.


Bloomberg News

U.S. Treasury Secretary Timothy Geithner speaks last month at the construction site of a new elementary school in Berea, Ohio.
Economists say the money out the door -- combined with the expectation of additional funds flowing soon -- is fueling growth above where it would have been without any government action.

Many forecasters say stimulus spending is adding two to three percentage points to economic growth in the second and third quarters, when measured at an annual rate. The impact in the second quarter, calculated by analyzing how the extra funds flowing into the economy boost consumption, investment and spending, helped slow the rate of decline and will lay the groundwork for positive growth in the third quarter -- something that seemed almost implausible just a few months ago. Some economists say the 1% contraction in the second quarter would have been far worse, possibly as much as 3.2%, if not for the stimulus.

For the third quarter, economists at Goldman Sachs & Co. predict the U.S. economy will grow by 3.3%. "Without that extra stimulus, we would be somewhere around zero," said Jan Hatzius, chief U.S. economist for Goldman.

The Non-Stimulating Stimulus Bill

Since 1980 the past three republican administrations have run up over $11 trillion in debt with nothing to show for it but a bloated military and the biggest gap between rich and poor in our history. The numbers you're seeing on deficit projections just didn't appear on January 20,2009. These numbers have been baked into the cake for years. We were well on the path of fiscal responsiblity when GWB took office with surpluses as far as the eye could see. It took just a few short years of applying Friedmanomics, tax cuts for the rich and no regulation/deregulation of the banking industry to turn our economy into a shambles and creating deficits as far as the eye can see. Bush's last proposed budget for FY 2009-2010 had a $1.2 trillion deficit not even counting Iraq and Afghanistan. This was before Obama even took office. We're still working under a Bush budget right now, not counting the stimulus which is paid out over a more than two year time frame. GWB's budget doesn't even run out until next month. So all this BS about Obama having a larger deficit than Bush had during his entire two terms shows either the level of ignorance on the right or the outright dishonesty. The term "fiscally responsible republican" was long ago relegated to the ash heap of history. It will take a democratic administration, once again, to straighten out our countries finances.

What's Plausible for the Fiscal Outlook?

We spend almost two thirds of that every year on defense spending. The trillion for health care is over a 10 year period and some of that could be made up in efficiencies. We're talking about, at most, tens of billions a year for health care coverage for all. Cut out half of the farm subsidies and other corporate welfare and you've got something that really benefits the country.


On Aug 31 10:11 AM crazyv wrote:

> "therefore Obama Administration tax policy is not that different
> from where we’d end up if we extended all of the Bush tax cuts (as
> Senator McCain had wanted to do had he become president) ($11.3 trillion)."
>
>
> The difference is equal to the cost of providing universal health
> insurance! When a trillion dollars is "not that different" in eyes
> of the author - I stopped reading.