The stimulus is over. Job losses are back on the rise. And did anyone see car sales numbers for last month post clunker incentives? Ugly. Make no mistake about what this "recovery" has been about. Government infusions of capital. Without it every major industry would still be gasping for air. Even with it there are just too many holes in the dike to plug. The markets have had very little to do with economic reality for quite some time. We'll see if this week is an acknowledgement of that gap, or just a blip of consciousness prior to a coma relapse.
If the dam does burst, it will be interesting to note whether or not the gold rally unpegs to the market rally and resources pile into gold hoarding. We'll see if lack of bank reform coupled with new proposals to raise FHA down payment requirements will stir the ire of the jobless. It's great that 30-year mortgages are at all-time lows while nobody qualifies to get one except those being propped up by already delinquent FHA programs. Loan reserves are already at less than 2% of loans insured. Great. Combine that with a 128% increase in strategic defaults, homeowners just opting not to pay their mortgages as penalties become lax and the sheer inventory of foreclosures makes it virtually impossible to do anything about it. Think the housing crisis will get resolved anytime soon with the largest amount of ARM resets still to come next year?
If you have any doubts as to whether or not your government has any interest in your well being, look at the Vanity Fair article detailing the multiple scenarios in which GS officially took over the world, or was at least handed the rest of the banking industry on a platter. Someone had to remind Paulson that he used to run GS, and that the head of the Treasury couldn't set up a deal between his former firm and a distressed bank.
1-1 again last week, this is getting repetitive. Gonna stick with big losers and winners this week. Like the Bengals over the hapless Browns, Giants at KC and Colts against Seattle.
http://www.bloomberg.com/apps/news?pid=20601087&sid=apCiBvKN8DTU
http://www.vanityfair.com/online/daily/2009/09/andrew-ross-sorkin-too.html
1 comment:
I'll have to reexamine my understanding of the world if the U.S. can really recover in the midst of massive job losses and severe cutbacks in consumer credit -- both in terms of credit cards and home equity loans. If things get better despite these factors, what does that say about the real nature of consumer spending?
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