Mortgage Debt Still the Main Show

Another wild day out there!

That had to be first 3 day losing streak for the new bull market in some time. I will have more to say about this below, but it was almost surreal to see indices move down after almost a year of vertical moonshot.

Plenty of topics tonight and of course some fun stuff (hardly any requests?!).

Fly the Empty Skies
I came across this article via Some Assembly Required and I thought the story had to be a misprint:

2009 airline revenue: Worst drop ever
NEW YORK (CNNMoney.com) -- The airline industry suffered its largest drop ever in passenger revenue last year as a weak economy grounded many would-be travelers, an industry group said Wednesday.

The Air Transport Association of America said total passenger revenue for the major U.S. carriers fell 18% in 2009 versus the year before. It was the largest drop on record, exceeding the 14% decline in 2001.

The current drop off is worse than after 9/11? Granted the terrorist attacks were in September (near years end) but that is a shocking contraction year over year. Another sign of the V shaped recovery no doubt.

Ben Bernanke Confirmation: Understand What it Will Mean
There are now some serious doubts about whether Ben Bernanke will be confirmed as FED head by the end of the month. I of course think he should not be and that case has been layed out in depth by many already. I wanted to talk about what this will result in ahead of time so people are not shocked when it happens.

-Get ready for the Mother Of All Temper Tantrums (MOATT) by Wall Street. This could be a downside 10% move in 2 or 3 days time in a fit of rage. It will be blamed on "uncertainty" or whatever but you will know what it is.
-Who replaces Bernanke is important, but likely to be another academic easy money type. The difference here is the nominee will be under enormous pressure to do things different.

If I am betting I think he scrapes in by the thinnest of margins.

Market Action
Returning to the market move down I want to point out the painfully obvious because it exposes the truth about the markets:

-It is only easy money and never ending backstops that have generated the entire move up in stocks and the entire improvement in economic data.

This should settle that debate. The exit button cannot be hit fast enough after the mere hint that things may change in the slightest.

Mortgage Debt Still the Main Show
It all comes back to housing debt, and it will until something is done about it. I wrote about my support for the proposals of the President on banking reforms and i think that is a good start. The central threat the banks, and thus the taxpayers, remains mortgage debt.

HAMP has been a failure (for the 3rd o 4th time?) and now we are getting to the real show. From today's New York Times:
Treasury Weighs Fixes to Foreclosures Program
Key Snippet:

The changes by the Treasury Department are expected to include greater assistance for homeowners no longer able to make mortgage payments because their paychecks have shrunk, said banking industry representatives privy to the department’s deliberations who spoke on condition of anonymity for fear of alienating government officials.

The Treasury was still debating the method, these banking representatives said, looking at either direct cash assistance or a grace period in which borrowers could postpone payments. That component may not be announced next week, but would follow soon after.

At least the games are being trimmed off, direct cash handouts to mortgage deadbeats. Unreal.

As you may know, because of my special Force powers I am able to Flow-Walk at times and see the future. On October 29th, 2009 I shared my vision of the future with the readers and offered this:

The future distortion that I see is folding FNM/FRE/FHA and the MBS assets of the FED into a "bad bank". New purchases will be funded by the newly created Federal Office of Mortgage Issuance with a 4% rate for all. This will be funded on the bond market with shortfalls made up with taxpayer money. Do not worry, this program will be short term with an exit strategy planned for 5 years before our Sun goes Red Giant.

The FOMI. That is what I saw.

Today while checking out the new and improved Housing Doom site I came across this revealing tidbit from a Bloomberg story:
"A Whole New System of Housing Finance"

Jan. 22 (Bloomberg) — Representative Barney Frank said his committee will push to replace Fannie Mae and Freddie Mac, seized by regulators almost 17 months ago, with a different model for U.S. mortgage financing.

“The committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance,” Frank, a Massachusetts Democrat and chairman of the House Financial Services Committee, said at a hearing in Washington today. “That’s the approach, rather than a piecemeal one.”

Housing Doom writer Twist offers:

There have been many of us who have speculated as to what the housing market would look like after government intervention ends. Clearly "recovery" and "stabilization" in the market at the moment is the result of massive government intervention, the government being nearly the only game in town for housing finance.
If Frank and Co. are considering a "whole new system of housing finance" replacing Fannie and Freddie, we can assume that the plan is for intervention to be a permanent thing.
Will this prevent housing prices from falling? My guess is, no. Unemployment, a large shadow inventory and a jumbo market that will continue in freefall will continue to put downward pressure on prices. Home prices for homes under the conforming limit may see short-term gains in some areas, but in general are liable to languish at best.

There are those that claim that this is necessary because of the failure of the free market. I disagree. The free market was never given- and isn't likely to be given, a chance.

Good stuff.

Remember, I named the FOMI before anyone else!

Friday Night Entertainment
That was plenty of heavy lifting, now for some cutting loose. Foot loose. Kick off the Sunday shoes.

Sketch Cartoon
The following XKCD comic may only be funny if you have seen both "Dirty Harry" and "Rain Man":

Instant Classic!

It's Hammer Time!
This clock is for the ultimate geek:

Full Description at Geekologie.

Film Clips
Maybe inspiring a rental some where out there.

My favorite Bill Murray film is "Lost in Translation" which is a special film. One of my favorite comedies that Bill Murray starred in was "Quick Change". Not too many people have seen this one and it is worth a look:

"Quit looking at me!"

While not a film, my local Channel 7 News weather man Pete Bouchard thought it was a good time to share some very personal information about himself with the TV audience that left me thinking that it had to be a movie (MUST SEE!!!!!!!!):

Maybe he needs this book.

Rock Blogging
A little rock and roll because:

I've got a dream when the darkness is over
We'll be lyin' in the rays of the sun
But it's only a dream and tonight is for real
You'll never know what it means
But you'll know how it feels

Loyal requester Anon wanted Roy Orbison and "Only the Lonely" and who am I to say no?:


The Golden Truth had a Cypress Hill tune posted tonight and I actually like that rap band, go figure. Try out "Insane in the Membrane" for some wicked pissa base(Skip if a sensitive sort!):

Nasty!

What could be better than Lita Ford AND Ozzy together for "Close My Eyes Forever"?:

Wonderful.

Last week I featured what could be thought of as a "Ladies Anthem" as a SonicNinjaKitty grew up with "The Warrior". Tonight it's the boys turn and what better than Motley Crue and "Girls, Girls, Girls"! This video is the only one I could embed, so the visuals are pure coincidence, honest:

Moving along.....

Last call!!! Are you ready? Are you really? Ok.

Closing the show with a song that may well fit the mood right now. Enjoy the Scorpions and "Winds of Change" and how we have turned a corner on this financial system:

Sweet.

Added:
My friend C-T knew the lyrics from one of my favorite films, so here is "Tonight is What it Means to be Young":

Crazy wonderful.

Have a good night.