Been over a month since I sent one of these out! I have a ton of stuff here, but a lot of it was collected a while back - so lucky you, I'm going to move a bunch of it to the non-required reading at the bottom for those who are still interested in seeing it.

At least read the first section to see how my "updates" can be profitable to you - otherwise, hope the rest is insightful too!


Stimulus payments start getting mailed!!! The following Q&A is a quick summary

Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers.

Q. Where will the government get this money?
A. From taxpayers.

Q. So the government is giving me back my own money?
A. Only a smidgen.

Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.

Q. But isn't that stimulating the economy of China?
A. Shut up.


For those of you who are Cub shoppers. They advertised a thing in the paper Sunday saying if you brought your stimulus check in they would give you a gift card with an extra 10% on it. So it would cost $300 for a $330 card, $600 for a $660 card or $1200 for a $1320 card.

They have no way of knowing if you got a stimulus check or not because they can be direct deposit. The gift cards do not expire. I just bought mine. It's free money that you will spend at Cub anyway someday, Something to consider for whatever amount you want from those listed above.

Also, I had her split it on 2 cards just in case I somehow lose it, at least then it would only be for half the amount.

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So oil at $135 this morning?! Remember when oil hit $100. I said get ready for $125. Of course you remember - that was LAST month (April). Thanks for playing. Oh, driving season starts this weekend, that's when gas is supposed to *start* going up. Guess it started a tad early this year? Hurricane season is next. Bring on $150. They can blame it on speculators, they can sue OPEC (yes, congress passed a law allowing that this week - good luck with that!), they can say demand is up (35% in a month?), but the blame remains in ONE spot - the US Fed. They are the one and only reason for this. Destroying the dollar, and giving investment banks money to play with for worthless mortgages (not inflation, no money/credit was created) has gone straight to commodities. Bring on $200 for all I care, eventually the blame will end up where it belongs and a lesson might for once be learned.

Oh, and they didn’t seem to care when all the funny-money (easy credit, bailouts) was creating the largest housing bubble known to man, or heading straight into the equity markets – but oil, now we need to do something ‘cause that’s just wrong….

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Quote of the century to CNBC commentator: "You are not allowed to call the bottom of a downturn you refuse to acknowledge"

A bigger "wow" quote:
"The Federal Reserve's moves to prop up Bear Stearns Cos. will come to be seen as "the worst policy mistake in a generation," the Fed's past head of monetary affairs said.

The action is comparable to "the great contraction" of the 1930s and "the great inflation" of the 1970s, said Vincent Reinhart, a scholar at the American Enterprise Institute, who retired from the Fed last fall.

Mr. Reinhart's assessment, delivered at a panel discussion at the institute Monday, is one of the harshest appraisals yet by a high-profile observer of the Fed's decision in mid-March to lend money to Bear both as temporary funding to make a merger possible and then to finance $29 billion of Bear's assets to make its takeover by J.P. Morgan Chase & Co. possible.

The Fed's actions "eliminated forever the possibility the Fed could serve as an honest broker," he said..."


More quotes:

Starbucks CEO: "worst consumer environment in company's history"

Buffet: "My general feeling is that the recession will be longer and deeper than most people think."

Greenspan in 1977 " from a document he's tried to keep hidden as it refutes everything he pushed on the country during his tenure.

"There is no perpetual motion machine which generates an ever-rising path for the prices of homes."

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Ambac lost about $12/share. Double their stock price. In one quarter. They insure things. Makes sense.

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Is this chart bad?
http://tinyurl.com/59m9c7

More specifically - every single number in this article about CA foreclosures is shocking - yowzers! 500+ a day...
http://tinyurl.com/5d8jzy

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All we ever hear from in the press is Greenspan - he's clearly an idiot. Volcker before him was the one that set the country up to prosper in the Greenspan years, but we never get much press on him. Greenspan set up the demise of the Bernanke years. Eventually the blame/praise will be set straight - enjoy this:

The Bernanke Fed may have already seized too much power and has abandoned historical principles, says Paul Volcker, who was Fed chairman from 1979 to '87. "The Federal Reserve has judged it necessary to take actions that extend to the very edge of its lawful and implied powers," Volcker, 80, told the Economic Club of New York on April 8. "A direct transfer of mortgage and mortgage-backed securities of questionable pedigree from an investment bank to the Federal Reserve seems to test the time- honored central bank mantra in times of crisis: lend freely at high rates against good collateral. It tests it to the point of no return."

Allan Meltzer, a Fed historian and economics professor at Carnegie Mellon University in Pittsburgh, agrees that Bernanke is swatting a fly with a sledgehammer. "In monetary policy, he has not been good," Meltzer, 80, says. "It is a silly policy designed to head off a recession that may come but hasn't come yet."

Meltzer says the Fed, by ignoring the inflationary potential in its latest rate cuts, is creating the possibility of negative real interest rates. He also says the Fed should never take credit risks, especially to save floundering banks. "We can't have a system that continues to work well if the bankers make the profits and the public, the taxpayers, take the losses," he says. "That is not a viable system."

Meltzer says Paulson's plan for expanded Fed oversight of the financial industry is both overreaching and impractical. "It's hard to see how the Fed is going to do it," he says. "The Fed's record of anticipating and heading off crises is poor. Now they are going to go out and examine investment bank portfolios? Most of the people who are buying and selling this stuff don't fully understand it. How is some Fed auditor going to figure it out?"

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From Merrill's research report dated 4/15:

Five major takeaways
1. Recession a reality, not a forecast (short & shallow ... or deep & prolonged?)
2. No asset class or security fully priced for it (esp. a 73-75 consumer recession)
3. Stagflation maybe today's story but deflation is tomorrow's story
4. More Fed rate cuts to come; still bullish on bonds
5. Major risk: another 20% decline in home price

They proceeded to go on CNBC and proclaim another 5% rise in stocks.

I believe that's called talking out of both sides of your mouth. Guess which of the two the public likely took in??

I feel bad for the many people who have and still will lose jobs - but I will continue to laugh my a** off as these investment banks eventually go under. Lying, deceitful sacks of complete sh*t - every last one of them.

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Of course I'm not condoning doing anything illegal when I talk about maxing the Home Equity loans (in my last message) - just getting caught in the countries newest hobby, moral hazard.

As for why the banks will be thrilled to get ANY of it back if I were to do it:

"I have a source in the credit markets. HELOCS and the 20 part of the 80/20 Mortgage loans are sold as secondary mortgage debt. The word is the bid on secondary mortgage debt is one penny on the dollar. Wall St. essentially sees this debt as worthless and will never be paid back because the 80% part of the loan is paid back first by law."

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Pat my own back for easily calling this one:

(Reuters) - Bank of America Corp (BAC.N) is likely to renegotiate its deal to buy Countrywide Financial Corp (CFC.N) down to the $0 to $2 level or completely walk away from it, said Friedman, Billings, Ramsey, which downgraded Countrywide to "underperform" from "market perform."

Or more recently:
It looks increasingly likely that the deal of Bank of America (BAC) buying Countrywide (CFC) may collapse: according to many banking experts once BAC does its due diligence on this deal it will become obvious that Countrywide is effectively bankrupt (negative equity) and saddled with a mountain of litigation and potential liabilities whose size are likely to be extremely large and uncertain. The point that is becoming clear is that BAC will be better off paying the modest break-up fee and walk away from a deal that sucks in every dimension. So if CFC goes bankrupt (its bank subsidiary into a FDIC receivership and the holding company into Chapter 7 liquidation) what will be the systemic implication of the biggest banking bust in US history? Remember that CFC originated almost 20% of all mortgages in the US in the last few years. So the collapse of the biggest mortgage lender will have massive and systemic ripple effects in financial markets.

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The massive misinformation being spewed by the mass media is sickening. CNBC's constant mission to absolutely screw the investing public is shameless. While insiders and wall street continue to dump shares, they trot out pumper after pumper talking about how fantastic everything is. Coupled with glossing over anything remotely negative that might be considered newsworthy. This is what proves it is clearly intentional. That's what is sick about it.

Merrill Lynch said they don't need to raise money two weeks ago and the market loved them. $7 BILLION of it yesterday. Lies. Surrounded by lies.

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The system is purposely being gamed by the Fed/Gov't to save the banks. They are orchestrating a consumer collapse. You think it's crazy, just watch. Wages down, costs up, credit gone. Those are the ONLY 3 things that can keep the consumer afloat, and all are underwater. The consumer is done. The government and the banks are about to own a LOT. It's not going to be the "accident" it will be portrayed as (for anyone that will even bother to pay attention).

Word is that an alarming number of stimulus checks are being confiscated to pay off things like student loans – the gov’t had that right. So it turns out this “stimulus” for the public was yet another way of creatively bailing out lenders.

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If you think you can't make a difference, you are wrong.
http://tinyurl.com/69ta2w

Call them, write them. Don't give them your money without a fight.

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California setting up parking lots for people who live in cars:
There are 12 parking lots across Santa Barbara that have been set up to accommodate the growing middle-class homelessness. These lots are believed to be part of the first program of its kind in the United States, according to organizers.

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Now THIS is inflation:

Weary Zimbabweans are facing a new wave of price increases that will put many basic goods even further out of their reach: A loaf of bread now costs what 12 new cars did a decade ago.

Independent finance houses said in an assessment Tuesday that annual inflation rose this month to 1,063,572 percent based on prices of a basket of basic foodstuffs. Economic analysts say unless the rate of inflation is slowed, annual inflation will likely reach about 5 million percent by October.

As stores opened for business Wednesday, a small pack of locally produced coffee beans cost just short of 1 billion Zimbabwe dollars. A decade ago, that sum would have bought 60 new cars.

And fresh price rises were expected after the state Grain Marketing Board announced up to 25-fold increases in its prices to commercial millers for wheat and the corn meal staple.

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Nope - nothing scary about where this is heading. We are about to have a SERIOUS problem, and they knew when they did this stuff if we knew (which tells you how bad everything really is)
http://tinyurl.com/5fkmz8

It won't stop them from trying, but the intelligent Robert Shiller tells us why a mortgage bailout won't work.
http://tinyurl.com/6d49uz

An absolutely fascinating article that basically shows how this all started. Happens to be long, but if you just read the first handful of paragraphs you'll get the scoop - and may likely be hooked into reading further like I was...
http://tinyurl.com/5n5rl7

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Just to bring back another old favorite - from my update January 10th:

Do you want another bank that's in the $30's that likely won't be there 6 months from now - FirstFed Financial Corp (FED). Feel free to play the home version of the ba-bye game with me.

The main reasons:
90+% of portfolio is Adjustable Rate loans. Based in California. Non-performing (delinquent etc) assets to total assets ratio was .22% last November, jumped to 1.81% by October of this year, and to 2.34% in November. It's not about to go down any time soon. 25% of their loans were stated income or stated assets. Hence 75% fall under the good old liar-loan heading. But I'm sure keeping up with the Joneses in California didn't cause anyone to overstate their ability to pay...

It's down over 50% since then. And not anywhere near done. The other beauty I didn't realize then - when people pay the minimum payment on Option-Arm's, the amount they underpay by counts as EARNINGS for the company. Ha ha - suuuuuure, FED is going to get all of that money they already booked. Ba-bye.

Ok, so that's First Federal (FED), WaMu (WM), National City (NCC), and Countrywide (CFC) that I've coughed up. Ready for another bank in the $30's (it was when I wrote this) that hasn't taken it's medicine? This one's a whale that the government won't let go easily (and they happen to be my bank - ugh). Wells Fargo (WFC). Like I said, there is plenty of reason that bad things won't happen to them - so will the people in charge win or will math win again? The math says that they are loaded to the hilt in Home Equity loans that aren't going to get paid back (and you saw above what they are actually worth). Honestly, tough call.

50 to 100B of this stuff sitting out there - and NONE of it has been reserved for.
http://tinyurl.com/6b3eyl

I really don't see how Wells Fargo comes out of this unscathed - but I'd put them under the "too-big-to-fail" umbrella - which means the public might be on the hook for this one too.

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Brazil now halting rice exports. Thailand considering the same (they are the largest exporter if I recall?). Costco and Walmart raising prices AND putting limits on amounts purchased. It's all happening, and it's happening fast.

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Fannie and Freddie are done - this is going to be horrible - and put on the public, yet they continue to stuff all the junk they can in there (maybe that's why). "Wagner pointed out that at the end of January, 82% of all mortgages in the U.S. were backed by one of the firms, up from only 46% in the second quarter of 2007."
http://tinyurl.com/4ylwt9

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Alstry summary - and correct.
http://tinyurl.com/5r4fy4

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This is a sad article about a local lady. When this many people can't afford the basics, we have big problems. This is why they can't keep cutting rates - which kills the dollar - which spikes oil - which is used to create plastic the plastic that nearly everything includes, as well as adds to transportation costs - which is spiking food higher and higher. All to bail out homebuilders/lenders/dumb f*ck greedy sh*t heads who caused this problem in the first place. This has to stop.
http://tinyurl.com/6rn2s2

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Courtesy of a Nobel Prize winner:
The U.S. economy is already in recession -- and may echo the 1930s, Nobel Laureate Joseph Stiglitz said Friday.
...

"This is going to be one of the worst economic downturns since the Great Depression," said Stiglitz.

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Retail sales chart. They loved that retail sales were up. Look at the chart and tell me if it was up, or if maybe the price of a certain item was WAY up?
http://tinyurl.com/3pwr2f

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Non-required (at least read my headlines to see if you'd be interested):

When Warren speaks - two quotes from Buffet:
http://tinyurl.com/5ebodl

Then again...Most of the world would side with Buffet, but I'm with Mish on this one. Warren HAS to say the worst is behind us - those puts he wrote are the type of thing that could bring Berkshire down - literally.
http://tinyurl.com/5jjhfd

Two articles in this link - 2nd is more shocking. The public plight will continue to grow big-time.
http://tinyurl.com/4jbj4n

You heard so much about the monolines, here is a great Mish article talking about Ambac's numbers yesterday.
http://tinyurl.com/5naphx

You literally CAN'T make this stuff up - AAA???
http://tinyurl.com/63j9qp

This most certainly will not help the banks - I didn't see this problem coming.
http://tinyurl.com/569kow

Close to home, sad, and easily blamed on greed.
http://www.startribune.com/local/west/17932454.html?ref=patrick.net

Even the Philly Fed has a study saying inflation has more volatile pieces than food and energy, and that core inflation is not the way to look at it
http://bigpicture.typepad.com/comments/2008/05/core-measures-o.html

Sad state of affairs close to home. This was part 2 of a 3 part series in the Strib recently. The scams the builders and lenders did here are deplorable. And now they want money from us to bail them out. Sign the petition!
http://www.startribune.com/templates/Print_This_Story?sid=17958114

And the quest for food begins...
http://nysun.com/news/food-rationing-confronts-breadbasket-world

Target writes off 8% of it's loans in March - this is getting ugly faster and faster...
http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=TGT:US&sid=a1QsfMUcMs4w

This is so sad it's funny...
http://globaleconomicanalysis.blogspot.com/2008/04/congress-threatens-oil-producers.html

At least they are honest over the pond. Still doesn't remotely make this right. When it's done with the publics money (and $100 BILLION at that). The system becomes more of a joke.
http://www.thisismoney.co.uk/news/article.html?in_article_id=440824&in_page_id=2&ct=5

Anecdotal evidence:
"Hey bill, this is your car dealer friend. I will have to tell you that I am seeing a troubling crash in prices at all actions around the country. I spoke with a few dealers in florida and they were selling 50 percent less cars. The worlds largest car auction is in orlando {6000 cars a week} and one dealer told me that most cars did not even get a bid. One dealer said that business is so bad that there might be a rush to dump inventory. An enterprise rental car manager told me that they shipped thousands of cars out of florida. The cars are just sitting at actions. they will have to dump them at some point. The car business was just like the housing mess. Free cars were given to all. Anyone could buy a 40,000 dollar truck. now dealers are advertising that they will not accept trucks and big suvs as trades. It is crazy. ford motor credit and gmac are piling cars and trucks up. dealers are full an we just look at one another at auction and yell man that's cheap! I have been very optimistic for 20 years but not now. We have created a new class of poor in this country.I do not understand the disconnect in the stock market. The middle class is going away and melting into the poor. Unfortunately my costomers are now poor. How long can the stock market not get it? "

we had a tire blow out about a mile from the imaging center. i took us cross country walking and we made it about 5 minutes late, called gmmotorclub, and they dispatched a local service to assist me. while the guy changed my tire, he told me that he and the other wrecker services in the area had noticed that over the last 2 months people were calling in out of gas about 10 times the normal amount. and most of them were out of gas in their own driveway? he told me that one of them actually told him they needed enough gas to make it till friday from wednesday morning.