This week just felt different. Something has definitely changed. Its subtle and its bubbling below the surface, but the change is palpable. Its seems that market participants are FINALLY catching on to the structural problems at the major banks and housing market. The news was coming fast and furious all through the week. Because it is Friday, I will cover a few major issues with my characteristic dry humor.
The US Dollar $
Today's close on the index was 75.4! I will be honest, I never thought the dollar would fall so far so fast. It is comical to listen to Boom Boom Bernanke say in his testimony that rate cuts may cause some weakening of the dollar. Some? How much room is left? The wonders of a weak dollar include competitive exports of goods that can increase profits from increased sales. Problem is the US is a consumption based economy, not a production one. So how does weak dollar help the average person? I have no idea. It seems lately even cheerleaders for the market are coming around to the fact that a weak dollar sucks. Inflation in all the things we need (gasoline, food, heating fuel) are showing up in consumer confidence numbers. Inflation concerns tip the list, even as the FED and the cheerleaders would tell you inflation is "well contained". Which brings me to my second issue:
The Word Contained Should be Removed from the American Financial Vocabulary
Never before has a word been as misused and misapplied as "contained". Loan defaults were contained. Foreclosures were contained. Loan losses were contained. Home price declines were contained. Worthless paper sold all around the world was contained. Inflation was contained. I submit that all these things were contained, to this Galaxy! I hear home prices are still rising in our neighbor the Andromeda Galaxy. Maybe the real estate flippers can build a Bussard Ramjet with all their profits and travel over there and try again. Take the FED with you on the way out.
Mythical Spring 2008
Last night I covered the "Spring 2008" miracle turnaround projection. Anyone parroting this line is either an absolute dolt, or thinks you are. Either way it is not pretty. Will any of the jokers using this mantra ever be held to account? What we need is Abby Joseph Cohen and Henry Blodget to come out and be the new poster children for the 2008 miracle. In the Spring I will refer to this crap as the "Miracle on Ice", meaning the recovery is on ice.
Time to Hit Back
The financial banking system is a scam. A select few run the hedge funds, manage 401k's, trade stocks, and basically populate wall street. They throw money around like candy, because NONE OF IT IS THEIRS. While I am sure there are a bunch of sound thoughtful money guys out there trying to do the best they can for investors, the majority is out there trying to do the best for themselves. The derivative market is a made up sham meant only to run up fees and multiply money across the banks. As the great unwind of crap paper continues, it will be clear the derivatives do not help anybody. The financial sector has given themselves tons of your money. New York's financial district has so many millionaires its scary. I am all for free market capitalism. I am all for getting all you can. The point is that the same fools that brought you the Nasdaq nuclear winter stock collapse turned around and now have provided a mortgage multiple independently targetable reentry vehicle (MIRV) of bombs that will sink every ones assets. They did it for riches, they did it for fame. Well, in the free market "paybacks a bitch and she's in heat". Nobody on Wall Street should see a bonus this year. Matter of fact, all bonus money should be pooled to pay back the Billions lost in the mortgage lending scam they designed. I like that idea.
I have no doubt plenty of folks had to buy a home over the past 3-5 years. I am sure plenty of people did not do it to make a killing. The problem is that tons of other people did. Easy money and a silly psychology of home buying swept the nation. When this is all said and done it will be written that a major contributor to the housing bust was that people with no understanding of money were given ridiculous sums of money to play with. The money became like chips in a casino. Its hard to push all in on a bluff in poker if you have to move a stack of $100 bills into the middle of the table. Pushing some red and blue chips is easy however. Now we are told the misled homeowners need a bailout? Most knew exactly what they were doing. Most aggressively went after the instant riches. Reap what you sow. Unfortunately the collapse will take a whole lot of money through various vehicles from folks that had nothing to do with it.
Enough financial doom and gloom. Its Friday! Only a week and a half to Thanksgiving. Where does the time go? I wanted to submit a photo for a look, as it is one of my favorite pictures:
The photo is of an Apollo 12 astronaut standing next to the Surveyor 3 Lunar probe. Surveyor 3 was the third lander of the Surveyor program that explored the Moon. Launched on April 17, 1967, Surveyor 3 landed April 20, 1967 at the Mare Cognitium portion of the Oceanus Procellarum. A total of 6,315 images were transmitted to Earth. The Apollo astronauts landed November 24th 1969 not even 600 feet from the probe. The crew removed some parts from the probe and brought them back to earth. I can look at this photo for a long time. It really stirs something in me. It is amazing.
Friday Rock Blogging!
A little music to settle you in for the weekend.
I was thinking of the song "Lodi" by Creedence Clearwater Revival the other day. A particular line "If I only had a dollar, for every song Ive sung. Every time I had to play, while people sat there drunk". Sometimes I feel like that. I try my best to explain what is going on in the financial system to people, and they either do not care, can't understand, or they are drunk. I hope this blog helps someone somewhere see whats going on:
Simon&Garfunkle with "Homeward Bound"
Have a good night.