Mr. Ed, Jr.

Cash For Clunkers Datapoint of the Day

"I think this is safely the worst policy implemented to date by the Obama administration: it has almost nothing in the way of redeeming features. Let’s hope it was some kind of weird aberration."

I have a hunch the author's comment (above) will be needed at the end of just about every article on Obama administration policies. Copy/paste is probably most efficient.

Corporations Win Again - This Time It's Healthcare

"The House bill -- which is more ambitious than the Senate bill -- does almost nothing to contain runaway health care costs"

Well.....that is because it is not really about health care.

It is about politicians getting control of a significant portion of the economy, and using "mission creep" tactics to advance their agendas. It is about directing and influencing the flow of trillions of dollars-- it is a threat to our freedom.

If this atrocity of a bill passes, there will be no end to the regulations that will be imposed on us by stealth-- unelected agency and department heads making new "policy" outside of the legislative process.

The bill is unlikely to be passed, because the Senate has just a few less lunatics than the House. But it is a sad state of affairs when it depends on a head count of the lunatics in Congress.

Employment Lags the Stock Market

"In each of the past six recessions, regardless of cause or severity, the stock market led the recovery in employment by 4-9 months"

How many of the last 6 recessions were debt-based ?

It's not that "It's different this time", because it is not. You just have to be comparing debt-recession to debt-recession. Then, it's not different.

This is not a recession caused by the usual and very normal expansion and contraction of the economy (breathe in, breathe out). This is the only recession since the Great Depression that has been caused by too much credit/debt.

Credit is contracting at record rates, Fridays are now "Bank Closing Fridays", and we are nowhere close to resolving the matter of massive debt of either the consumer or the government.

CRE is collapsing, and the Fed has just given banks permission to play bookkeeping games with it, just like with housing. Millions of the jobs that have been lost are never coming back, and the consumer is not spending. Banks are not even bothering to foreclose these days, because they don't want to have to write off the loan. And they don't want to maintain the property, either-- they have more houses than they know what to do with. And all of those defaults that set records in the last several months are coming on the market early next year.

We have barely even started the deleveraging process, because our politicians believe they can spend trillions of dollars to keep things in a state of limbo until the economy "turns around". But it can't start turning around until we deal with the debt.

Government spending does not really create GDP-- it is faux GDP.

One way or another, we are going to have to take our medicine. Only then we will start the recovery.

Dear Fed: The Problem is Solvency, Not Liquidity

Yes, I suppose the intentionally vague "liquidity crisis" does sound much better than "solvency crisis", which the citizens would immediately comprehend.

Obama's Plan A Failed, But Plan B Looks Promising

"The G-20 leaders are finally addressing the trade imbalances that are preventing recovery from the Great Recession. This weekend, the G-20 finance ministers will meet in St. Andrews, Scotland. According to Reuters, they are "expected to focus on a framework to foster future balanced trade."

Ohhhh, my.....The G-20 is not going to do anything of substance. (We can all be thankful for that)

There are at least 19 too many members to come to an agreement about trade, because what benefits one nation will hurt another, and nobody is ever going to surrender anything of importance, especially during an economic mess. The trade treaties are so ridiculously complicated that there is absolutely no possibility of getting anything serious accomplished. And Geithner is in no position to dictate to anyone. He needs international cooperation to keep his and Bernanke's ponzi scheme from collapsing.

What they will do, however, is what politicians do best-- point with pride, bloviate, claim success (imaginary) and congratulate each other (for not destroying what is left of the financial world, I suppose).

It is a slam-dunk guarantee that the "framework to foster future balanced trade" will not be about this financial mess, but the next one they create. Or, maybe the one after that.

The Homebuyer Credit as Economic Success Story

"Think GDP = C + I + G + (X-M) as I did in this post from earlier this year when the “recovery and reinvestment” act passed, and recognize that even under case #1 where the tax credit is just a windfall of cash to the household, that such windfalls are often a reliable stimulus strategy as long as households spend most of those windfalls–even if not on a house, but on other things"

Then why would it not be better to just give EVERY taxpayer an 8k tax credit or just 8k in cash ? Then, all could help stimulate the economy, rather than just a small % of citizens who want to buy a home. Why not make it 10k or 15k, for even more stimulation ?
Why not give every citizen a million dollars ? Then we can pay off our mortgages and credit cards and get back to the mall. If that sounds idiotic-- it is. But it is just taking the smaller version and expanding it.

Do you think renters find this amusing ? They have their tax dollars taken from them to prop up somebody else's home price-- so that the rental prices can stay elevated.

The government thieves took almost a trillion dollars of our money and handed it over to incompetent and dishonest bankers-- the very ones who helped wreck the economy. Then they took another trillion and told us they would spend it to stimulate the economy. Instead, they handed it out to political cronies and used it to reward those who supported their campaigns. Now they want to steal more, but this time the money props up housing to protect the banksters. Again.

Not only is this a GDP mirage, it is an outrageous use of tax dollars. I do not know exactly where we went off the tracks as a nation, but we surely have.

Property Values Set to Fall 43% from Current Depressed Levels

"Catastrophe" does not begin to describe the financial carnage that comes with a 43% fall from here. If housing falls another 43 %, we are Iceland. On crack.

Health Insurance Costs Gouging the U.S. Economy

The problem with the "public option", as proposed by our Congress, is that it is a ploy designed to do exactly that-- induce employers to drop employee coverage. The last bill had a bribe built right in-- employers could dump their expensive health benefit plans for just an 8% added payroll tax-- far less than what health insurance costs. The clear and obvious result would have those dropped employees enter the government plan, which was being touted as a plan with pricing "not driven by profit". Private insurers would be put out of business by a government that prints money as it needs it. That is the idea, of course. We have video of our leaders telling supporters that the plan is to create a single-payer program, one step at a time, against the will of the people, if need be.

In this country, the reforms that are being served up are not about insuring those who are unable to afford coverage. If that were the issue, it could be resolved with a one page bill, allowing persons with incomes below a certain level to be enrolled in the Medicare or S-CHIPS program. In some states, families with incomes up to $80k are enrolled in S-CHIPS, the states having received income waivers from the Bush administration.

No, this bill is about government taking control of 16% of the U.S. economy. That is a tremendous amount of money to be able to direct by rules and regulations imposed by agency heads-- and of agencies that do not even exist yet, but will be newly created by the bill. It allows unelected bureaucrats to impose their "mission creep" tactics on us, as there is hardly any aspect of our lives that cannot somehow be interpreted as a "heath" matter.

We wonder-- actually we know-- that the government will place limits on our healthcare, based on budget. Yes, health insurance companies also have limits, but we are free to find another provider, or pay out of our own pockets. Will we always have that option if government takes such control ? Are Canadians permitted to seek out their own doctors, or pay for care rather than be on a waiting list ? It is my understanding that they are not free to do so. That is part of what we fear.

Will health care become politicized ? It is not really so unthinkable, in our highly polarized nation. Will "friends" of politicians, or campaign donors, receive special treatment or waivers not granted to ordinary citizens-- or those who belong to a different political party ? Our current crop of "leaders" would use their influence in a nanosecond.

Americans are generally distrusting of government. It is our nature, having been so cautioned by our Founding Fathers. (Imagine that-- those who were creating a new government were warning the citizens not to trust it.)

The last health care bill out of Congress, which was scuttled, is Exhibit A in matters of distrust. Our Thomas Jefferson would not be proud.


On Nov 03 11:54 PM bob adamson wrote:

> While the public option can be characterized as socialist (in the
> same way and for the same reasons as Medicare for seniors, the public
> library and the public schools can), it does have interesting benefits
> for the private sector. It can relieve employers from the burden
> of insuring their employees (or bargaining about this in labour or
> employment contracts) thereby allowing them to concentrate their
> capital and management attention more fully on their core businesses.

Gold Is Not in a Bull Market

"But if we take away the fear premium, take away the funds and the ETFs, and put in fundamentals, you're left with a range of $680-880—which isn't a bad level, by the way"

Well....you won't be taking away the "fear premium" until you take away the fear-- and that is not going away any time soon. Fear is the key element here, and it can come in many forms. One of those forms is a falling dollar. Of course, the underlying fear is about why the dollar is falling.

Then there is the comment "and put in fundamentals". Yes, please, we would like some fundamentals. In something. Where in the world are "fundamentals" in play ? Not in the U.S. economy. In fact, fundamentals have been and continue to be tossed out the window and our government is doing the tossing. Just the other day, the Fed gave its blessing to the banks to play games with the CRE nightmare, by telling them if they do so, they "...will not be subject to criticism for engaging in these efforts." That is government cutesy for "We will not hold it against your bank in determining solvency." Fundamentals ? Bring 'em on. Please.

There is also an assumption that the dollar and gold are inversely linked and thus it shall always be. Maybe...but it was also the conventional wisdom in this country that real estate always went up (They aren't making any more land, you know.).

We are experiencing the greatest economic dislocation and upheaval in the history of the world. Our government and others are conducting massive experiments with the fiat money. Banks are allowed to phony up their books with "mark to fantasyland" valuations, because they are otherwise insolvent. It is financially dangerous to assume that known historic relationships will always hold up.

So, since we will not be "taking away" fear nor putting in any fundamentals in the foreseeable future, what is the case against gold again ?

McClatchy's Greg Gordon goes to great lengths to document how Goldman Sachs (GS) peddled over $40B in new mortgage-backed securities even as it secretly placed bets on a collapse.

Describing Goldman's activities as "hedging" seems very kind and generous, indeed. The lawsuits will eventually come, if only because there is far too much money that has been lost, and Goldman's has those very deep pockets. (And Goldman's is also working up a bit of a bad reputation these days, so trial lawyers would love to get them in front of a jury somehow) Then, the subpoenas will start to fly and we will get to the depositions and the inner-sanctum conversations and the emails about the 'hedging".

However, the real problem in this matter is the misfeasance, malfeasance and nonfeasance of our Congress and Department of Justice. Why are there no Congressional hearings, at the very least ? Well.....perhaps Sean Penn and Jewel are too busy to testify.

What the Solar Industry Wants in a Climate Change Bill

"Resch noted that the oil industry gave $22 million to political candidates in 2008 while the utilities put up $21 million"

This would seem to explain why the opinion of "We The People" is ignored on issue after issue.

Paul Krugman says you need to read today's WSJ editorial "The Dollar Adrift" with an eye to the paper's long-term goldbugism: Focusing on currency stability over domestic recovery is a path to disaster.

"If there’s one overwhelming lesson from the Great Depression, it is that putting a higher priority on stabilizing your currency than on domestic recovery is utterly disastrous."

Could we at least pick one -- currency or recovery-- and do something about it ? Some of us non-Nobel laureates think that might be a good idea.

As troubled CRE loans begin to skyrocket, new guidelines from federal regulators will let banks keep loans on their books as "performing" even if they're underwater - describing about $770B of the $1.4T of commercial mortgages maturing in the next five years. The rules aim at loans that are being serviced but can't be refinanced, and essentially sanction the practice of "extending and pretending."

We will all be Icelanders soon.


On Oct 30 11:44 PM TraderMark wrote:

> wow
>
> we are Japan

Baseball's defending champion Phillies won the first game of the World Series last night, spurring speculation on an uncomfortable financial parallel: The last time Philadelphia won repeat championships was 1929 and 1930. A Moody's economist's study shows the economy souring whenever a Philly team wins the title.

Phils Winning Title Makes Analyst Recall Depression

Oct. 29 (Bloomberg) -- While the 105th World Series may generate as much as $87 million of additional revenue for the No. 1 and No. 6 cities in the U.S., Philadelphia’s triumph last night is the worst omen for a troubled Moody's employee if history repeats itself.

Ryan Sweet, senior economist at Moody’s, produced a study on the eve of last year’s World Series that showed whenever a Philadelphia team won the title, he became depressed, a pattern that held true in 2008.

“We all know what happened then,” said Sweet , referring to last season's Phillies win. "I just sort of lost it. Couldn't eat for weeks...wanted to sleep all day. It was a complete mental crash."

Critics argue that one event does not constitute a pattern, but Sweet contends his research will vindicate him.

His latest study, which is being self-published at Kinko's, boldly predicts an eerily similar outcome for this year. "I have crunched the numbers, and there is no arguing with math. What will be, will be", laments Sweet, "What will be will be and what will be will always be. That is the code we Moody's analysts live by, be what may. May the chips fall be it where they may. "

Sweet's book is set to be published as soon as Kinko's receives the balance due.

Homebuyer Tax Credit: The Moneypit Is Alive and Well

Well......

Sure, it is just $8,000. A pittance. A mere bag of shells.

And, as some have pointed out, it really does pale in comparison to some of the other really, really wasteful schemes that have cost hundreds of billions. So, if I am understanding the argument as it is presented....it is that there is no problem in wasting taxpayer money as long as there are other, more wasteful programs that can be used for comparison.

The purpose of the credit (By the way, It is a credit-- not just a deduction, so it really does cost the U.S. Treasury the full amount.) is to help keep real estate prices propped up by increasing the number of homebuyers, thus positively impacting demand by reducing supply. But foreclosures are still far outpacing the number of potential buyers that could possibly be brought into the market with this program, so how does that work with the law of supply and demand ?

Who does this help ?

Well, it might help homeowners who are selling their homes. Citizens who stay in their homes and pay their mortgages are not getting any proveable benefit.

Renters are not helped. But even if the unproven theories are correct and the tax credit actually does suspend the law of supply and demand, keeping home prices from more decline, that means the renter is having his tax dollars used to keep his rent propped up, too. Anything wrong with that ?

It certainly is going to help special interests. Today, the most special of all special interests are the banks. Yes, this will help them. Maybe. And it will help the NAR.

Home foreclosures continue at a record pace. Personal bankruptcies are expected to top 1.5 million for this year. Unemployment is expected to continue to rise and remain high for a few years. If this is the state of the economy, it is likely that home prices will fall more. Record numbers of foreclosures hitting the market early next year will not help home prices. Nor will wasteful spending by the biggest debtor nation in the histoty of the world.