Thursday, May 13, 2010

Use the new term F**** Crash in a sentence

Weekly unemployment claims were down only slightly so no real job growth can be expected. Home foreclosures for last month were down 2% from the previous year and the only good news from that is they weren’t up. One and a quarter million homes are already in the foreclosure process currently and another six million are seriously delinquent and are just waiting their turn. The deadline for the federal home buying incentive has passed and after the last minute surge of sales are processed in June then the already weak housing market could be expected to nose dive.

Gold continues to climb in price with the prospect of inflation from the continued printing of bail out money. The Euro continues to be driven down by fears that the European banks are in much worse shape than earlier thought. The only good news from this is that is driving up US T-bills which sets the price of home mortgages so interest is down again. In theory more people should be able to get a mortgage to buy a house but good luck finding a bank to make a loan.

Speaking of home loans; the New York AG has started a criminal probe into the eight largest mortgage banks and their collusion with the three big bond rating agencies. They represented securitized debt obligations to be AAA grade as if they were as good as Treasury bonds when in fact they Nigerian email grade investments. They sold a lot of this crap to the European banks and it is believed a large chunk of this had to be eaten by the US Fed but they aren’t telling if they did. The Senate passed an amendment 97 to 0 that will authorize the CBO to audit the Federal Reserve during this two year period. Everybody seems happy about this so the fix must be in on the report.

The Federal Reserve had ended the program for loaning money to European banks and taking their currency as collateral but this was reinstated Sunday night to ward off a full blown market panic. China is doing its own currency swaps with Asian countries in order to get control of the influx of foreign money as investors flee Europe and the US to find relative stability.

China bears (short sellers, not the pandas) had been pointing to China’s running a practically first ever trade deficit as an ominous sign the dragon was dying but that trend has reversed and China is again accumulating surplus currency. China has 2.5 trillion and the neo-cons say China would never consider dumping it, but lots of things they said could never happen have been coming to pass lately. Can you use the new term, Flash Crash in sentence? My 401k went to zero because we had a…