The Dollar lost 1.5 cents against the Euro which sent oil and gold prices higher.

In the news today……

Detroit Real Estate – prices are astonishing.  Can this happen else where?  Or, is this just associated with the car industry meltdown?  20% of Detroit foreclosure are being left empty.  Property prices have fallen 80%.  The average price for Detroit houses is $7500.  Some houses are selling for $1.  Can this happen to your neighborhood?  It can happen, obviously, as it is happening in Detroit.  Stay tuned.

Commercial Real Estate – is broken, and crashing about two years behind the residential real estate market.  $46B, or 5.8% of mortgages, are in default.  This is a 325% increase over the previous year.  Watch out below.

February Lost 20,000 Jobs – and this is less than the 60,000 jobs lost in January.  Is this good news or bad news?  I think any job losses is just BAD news, no matter what the trend is.

Greece cuts budget next year – by reducing its spending by $6.5B.  This budget cut was accomplished about 50/50 in reduced spending and increased taxes.  This will be painful to the average Greek.  However, it is my feeling that much greater cuts are needed to pull Greece out of its quagmire.  Greece is trying to get the rest of Europe behind its plan, and allow Greece to borrow cheap money.

Here are the last numbers for today:
Dow Jones 30 Industrial – 10,397 (down 9)
10 Year Treasury Bond – 3.63% (up 0.02%)
Euro – $1.3703
Gold – $1139 (up $2)
Oil – $80.94 (up $0.07)
Gasoline – $2.24  (up $0.04)

All other markets went sideways too.

In the news today……

Geithner called to resign – over the auditor report of his handling of the AIG affair while he was Fed Chairman of the NY Fed.  Remember that it has been leaked that the “Fed” wasn’t tough enough on AIG which resulted in Goldman Sachs getting billions – whereas a tougher negotiator would have reduced the amount Goldman would have received.  Why would he resign?  He didn’t leave when it was revealed he didn’t pay all his income taxes.

Geithner (trickster) – is going to sell all the “warrants” that it received as part of TARP money lent to banks.  Those warrants will be sold on the open market.  But, what happened to Goldman Sachs is a “special case.”  For Goldman, Geithner agreed to sell the warrants to Goldman directly for $1.1B, and not sell them on the open market for the then market value of $1.24B.  The taxpayer got screwed out of $114M by Geithner, and Goldman besides saving the money, didn’t dilute its shares as the sale of a warrant does.  Just another scumbag at work – you can tell them by their actions.

Tonight’s Dinner Conversation…..

You know the housing market just about brought down the entire world’s financial systems.  And, here is a chart showing the commercial real estate market going away.  Banks have these bad loans, and those banks are in deep trouble.  What do you think this will do to our entire economy? And Why?  A composition question.

Commercial Real Estate Prices

The title on this chart “Pray and Delay” is the tactics that our government is currently using in our economic meltdown.  They are hoping, like Big Bird with his head in the sand, that the problem will just go away if it waits long enough.  Good luck.  Perhaps it might be good to prepare – just in case – this gets much worse in the future.

Here are the last numbers for today:
Dow Jones 30 Industrial – 10,318 (down 14 points)
10 Year Treasury Bond – 3.36% (up 0.01%)
Euro – $1.4862
Gold – $1146 (up $5)
Oil – $76.72 (down $0.74)
Gasoline – $1.98  (up $0.01)

The Dollar gained almost one cent against the Euro, and drove the other markets.

Oil, gasoline and gold all fell with the stronger Dollar.

In the news today…..

GMAC – wants more tax payer dollars.  They already have been given over $13B, and they want another $5B+.  You will never see that original money.  Why do you think our government is giving it these dollars?  What are the safeguards that the car loans will be paid back?  What if they aren’t.  What if the cars are repossessed – like houses being foreclosed?  You pay for it.  Again and again and again.  GMAC finances GM cares for sale – and probably Chrysler too.  The government MUST bail out GMAC or they will look like the fools they are for bailing out these two losers the first time around.  This pit is getting deeper, and it stinks down here.

And if you think we’re bailing out a winner – read this article.

Ford shows why it’s #1 – Consumer Reports’ much-awaited yearly car reliability survey held few surprises, with foreign automakers dominating its top-10 list, and domestic brands prominently featured on its least-reliable tally. Scion took top spot, followed by Honda, Toyota and Infiniti.   Ford, at #10, was the only U.S. carmaker to make the grade. Least reliable brands were Chrysler, Cadillac, Dodge and Jeep. Media reports yesterday claimed Fiat models will drive Chrysler’s turnaround efforts, but with new cars not due until 2012, it’s unclear whether Chrysler has enough staying power in its balance sheet.  Note where GM is located on this reliability list.  Reliability is one of the reasons that Americans were buying foreign made automobiles.  Doesn’t look like they learned any lessons very quickly.  Maybe when they actually go out of business – a Harvard Business School student will write a long paper on why GM collapsed – and why the American taxpayer would be paying for it for generations to come.  Remember that Ford wasn’t bailed out – only GM and Chrysler received Obama’s grace.

That’s a good czar – While so-called pay czar Kenneth Feinberg’s new rules for TARP backed firms cut compensation by about half, they also boosted base salaries by 14% to an average of $438K/year after executives complained, according to an analysis in today’s WSJ. The move appears to contradict Feinberg’s stated goal of tying pay to long-term performance, and “deepens the confusion and skepticism” surrounding the types of pay systems the government is promoting.

Mortgage Applications – fell last week as we approach the end of the “up to $8000 tax credit” for first time buyers.  This fall was in spite of the fall in interest rates.  The $8000 tax credit should end at the end of November.  However, there are Congressional folks who want to extend it.  From a purely financial viewpoint, the government interference in the housing market only prolongs the inevitable bottom of that market.  It is great is you qualify, of course, and just like Cash for Clunkers, the politicians are pandering to the voters. (I guess they must feel a little insecure in their jobs based on current performance.)  In any case, a fall in mortgage applications is little different than a fall in housing sales; so it is to be expected when the incentive is going away.

New Home Sales – fell 3.6% in September.  This is the first decline since March.  It rattled the stock market.  The “Green Shoots” thinkers thought that new home sales told the story that the real estate market was all right.  But, it isn’t.  Perhaps there is an opportunity to sell all those home builder stocks, and make money that way.

Here are the last numbers for today:
Dow Jones 30 Industrial – 9763 (down 119 points)
10 Year Treasury Bond – 3.41% (down 0.05%)
Euro – $1.4712
Gold – $1030 (down $5)
Oil – $77.31 (down $2.24)
Gasoline – $1.99  (down $0.08)

In the news today…..

Home Building Permits – fell in September.  This shows that home builders got the message – there is going to be plenty of competition from foreclosures in the near future.

Wholesale prices – fell last month, but not much.  This is a fairly volatile and inaccurate measure, so I generally ignore it.

Here are the last numbers for today:
Dow Jones 30 Industrial – 10041 (down 51 points)
10 Year Treasury Bond – 3.34% (down 0.06%)
Euro – $1.4932
Gold – $1057 (no change)
Oil – $79.09 (down $0.52)
Gasoline – $1.99  (no change)

Everything went sideways today, except the Dollar and Gold.  It definitely looks like stocks have topped out, but time will tell.

The Dollar strengthened somewhat, and gold fell significantly.  Is this what we can expect in a down stock market?

In the news today…..

Consumer Confidence – fell in July.  While this is a flakey statistic, as it is wholly subjective, it does have some significance, and Wall St listens as this is one of the reasons stocks fell today.  If this is a true forecaster, then consumer spending should continue to be weak, and perhaps even weaken further, and consumer spending is 2/3 of the total economy.  People are still worried about being able to keep their jobs.

Housing Prices – rose 0.5% in May.  This was the first increase since 2006.  While house prices is the most important statistic to be watching, this is only one month’s evidence; so I continue to hold my opinion until there are 3 consecutive months of increases.  I personally believe that house prices will be lower at the end of the year than they are right now.

Here are the last numbers for today:
Dow Jones 30 Industrial – 9097 (down 12 points)
10 Year Treasury Bond – 3.69% (down 0.03%)
Euro – $1.4171
Gold – $942 (down $15)
Oil – $67.23 (down $1.12)
Gasoline $1.91 (down $0.02)

Bonds, oil and gasoline all went sideways.

The Dollar lost over one cent – a major move downward.

Gold gained $11, and has broken out of its recent trading range to the upside.

In the news today….

Economic Indicators – were up in June. Ergo the increase in the stock market recently. What indicators?? Well, home starts, lower jobless claims and higher stock market – those are the economic indicators used to predict the economy for the next 3 to 6 months.

Do you believe these indicators? Well, they are grounded in history. BUT, we are in virgin economic territory right now, so it is very dangerous to hang your hat on past history. Home starts are flaky because house prices are continuing to go down, but home starts are a local phenomenon, so it is possible to have pockets of new homes. Lower jobless claims happened, but the auto industry has interfered with the real measure. The stock market has gone up, but will it continue? These are the thoughts for you to ponder.

CIT is saved – from within. Its bondholders ponied up $3B in additional funds. Why?? If CIT had declared bankruptcy, the bondholders would have been worse off. So, this is self-interest at work; and it represents capitalism at work. In other words, the bondholders assessed the risk of various options, and this was the least risky for them. They have $10B in security, and a high interest rate on the new money. More self interest. It doesn’t solve the CIT problem, but it buys time for CIT to attempt to work their way out of their mess. I usually don’t comment on individual companies unless they have a major impact on the overall economy. CIT is one of these companies, as its demise would be a major blow to small businesses across the USA.

Commercial Real Estate Loans – U.S. banks are charging off failed commercial mortgages at the fastest rate in 20 years. If the pace continues, commercial loan losses could reach $30B by the end of 2009, with regional banks likely to be especially hard hit.

57 Banks have Failed – so far this year. And, we’re only half way through the year. It is predicted that even more banks will fail next year. So, far no individual has lost one cent – provided they stayed within the FDIC limits of $250,000 per unique account. People who went over that limit lost money – let that NOT be you.

Here are the last numbers for today:
Dow Jones 30 Industrial – 8848 (up 108 points)
10 Year Treasury Bond – 3.59% (down 0.07%)
Euro – $1.4229
Gold – $949 (up $11)
Oil – $63.98 (up $0.42)
Gasoline $1.79 (up $0.02)