$100M Pay Day
There was very little change in any of the markets today. Interest rates continue their trend up, as do oil prices.
In the news today……
New Home Sales – jumped 11% in June over the May figure – the largest increase in 8 years. That is 3 straight months of sales increases. There remains an 8.8 month supply of new homes to sell. That’s the good news. For the bad news, the sales price has continued to fall each month, and fell again in June. It’s the falling prices that is creating the crisis in our economy – that this is what must stop. However, the price is apparently low enough for people to buy homes (using the government incentive) and investors to cashflow purchases.
Bernanke – said today that the US economy will emerge from this meltdown much stronger than it was before it started. He also is suggesting that financial institutions (that are TOO BIG TO FAIL) should be allowed to go bankrupt and sold off – using a modified mechanism that will insure the US economy is not significantly hurt.
Imagine that – Bernanke is now coming out and saying let them go bankrupt. I wonder what light went on inside his head?
Citigroup – is in the news again, as its star trader has earned $100M in income!!!! But, the taxpayers own Citigroup, and we have a Pay Czar who is supposed to insure incomes are “reasonable.” Is $100M reasonable?? Of course not. However, the other side of the story is that this trader has a written contract saying if he does certain things – he will be paid his $100M – and he did do those things.
The real story is “contract law.” Will the Obama government tear up this trader’s contract, and throw it away – like they did during the GM/Chrysler bankruptcy??? Or, will the Obama government obey the “contract law” like it did with the Goldman Sachs and other financial institutions. Is there a double standard in the Obama Administration??? You bet’ya. Naturally, there is a third option (and I believe this third option will be used). The trader will be offered much more than $100M, but will accrue it sometime in the future – like shares in Citigroup – and that will take the political heat off the Obama Administration, and the Pay Czar can earn his money by doing NOTHING – the normal option of a bureaucrat.
Here are the last numbers for today:
Dow Jones 30 Industrial – 9109 (up 15 points)
10 Year Treasury Bond – 3.71% (up 0.04%)
Euro – $1.4245
Gold – $956 (no change)
Oil – $68.38 (up $0.33)
Gasoline $1.92 (up $0.02)
