DJ30 – 10.940   up 141
US Treasury 10 Year Bond – 1.91%    up 0.12%
USDEUR  -  1.3347
Gold – $1640  up $25
Oil – $79.76    up  $4.09

Gold went down to $1600 twice yesterday, and has confirmed that price level as a true support for the gold price.  Gold continues to consolidate and to go up.

Update on Greece and Europe…….

The news from Europe continues to drive the stock markets around the world – including the US.  But, now it appears to be “good” news.  It’s good in the sense that it isn’t pointing to the European banks going bankrupt – but rather to them surviving for the time being.

Yesterday, there was news coming out of Europe that the Finance Ministers of the EU nations agreed that they would “backstop” the European banks.  This means that they will be propping up those banks to avoid them going bankrupt in the case of a sovereign debt default (think Greek debt).  This news caused the massive 400 point rise in the DOW yesterday – from negative to positive.

How much money was needed?  Well, the amount of 200B Euros ($260B) was mentioned by the IMF.  I personally don’t believe this amount as any numbers coming out of Europe are always on the “low side.”  However, given the idea of banks having 10 times the loans as they have capital reserves – the addition of $260B would mean they could take on loans of $2.6 TRILLION – and this seems reasonable to me.  The downside of this thinking is that if the loans lose more than 10%, the banks are bankrupt again.

And in fact, they are bankrupt today – and they don’t have this additional $260B today – so these are words (just jawboning) that mean nothing in fact.

The European troika (EU, IMF and ECB) have saying that Greece will “probably” get its 8B Euro tranche of money and the Greek Finance Minister said that Greece will not run out of money (= default) until mid November – giving Europe a little breathing room to work out the rescue.  This is all good news as far as markets are concerned – but it doesn’t change the fact that Greece will default sometime in the future.

In the meantime, the Greek civil servants all went out on strike on Tuesday – shutting down all the rail services and air travel services, and everything else as far as that is concerned.  It isn’t pretty in Greece right now.

Another minor news article is that Moody’s downgraded Italian debt 3 steps yesterday – and the Italians shrugged it off, as they “expected” it.  There is nothing that the Italian government can do to avoid the downgrade (just like there was nothing the US government could do to avoid our downgrade).  Italians are spending more than they collect in taxes – so their debt and deficits are growing.  Ever with austerity (something the US government has not agreed to yet), the Italians are losing ground – and they are now the bogeyman in Europe (the one who will bring the house of cards down), rather than Spain (who could raise its ugly head soon.)

The IMF also said yesterday that it would buy sovereign debt alongside the EFSF (the European debt fund).  I consider this very dangerous – as the US is the major contributor to the IMF, and it is causing an obligation to US taxpayers without our approval or representation.  Think about that a minute.  What happens when those bonds to bad, and the IMF must write off the debt?  Where did the US money go that they lent out?  It went to “money heaven” of course.  I haven’t heard anyone in Congress talk about protecting Americans from the IMF actions.  Why is that?  I think it is that Congress is too focused on their own issues to look outside of itself – and maybe they trust little Timmy Geithner to protect Americans on this issue.

To give you an insight into European banks – consider the Dexia Bank.  It is now in deep trouble (again as it was bailed out in 2008 by Belgium and France).  Dexia currently holds a bunch of Greek and Italian sovereign debt, and can’t get day to day funding from other banks.  Dexia is very important in France as it is the main lender to French towns.  The solution this time around is to split the bank into a “good bank” and a “bad bank” and place the toxic assets in the bad bank.  How many toxic assets?  Well, they say (can I believe it?) 180B Euros (or $250B).  Now compare this number of $250B in toxic assets to the numbers the IMF was touting above.  Also remember that these toxic assets have some value (maybe 10%?), but even then the loss is enormous.  And Dexia is only ONE BANK.  What about all the other ones?  These numbers should scare you – it certainly has scared the banking markets (stock market and CDS market) – and you can actually learn from what the market is saying (risk, risk, risk.)  In the end, any loss to the owners of Dexia would fall on the Belgian and French taxpayers – as it is governmental agencies that own the bank in the first place.

My conclusion:  Europe is being forced to face its debt crisis – and to deal with it.  The US doesn’t appear to be aware that we are in worse shape than Europe – but we will be told about it sometime in the future.  Watch the bond market for that signal.  It was sovereign bond interest rates that caused Europe to act, and I believe that will happen in America too.

Ben Bernanke Speaks……

Ben was talking to Congress yesterday, and he said four thinks of note:

1. He said the US economy was “close to faltering” – I guess he is finally getting that we are going into a recession.  He is the last one to acknowledge this fact.
2. He said that “operation twist” would reduce the Fed Funds rate the equivalent of 20 basis points (0.20%) – and this is good for banks – so bank stocks went up on the news.
3. He said that “operation twist” was meaningful, but not enormous support for the US economy – this was a way of saying he didn’t expect “operation twist” to be the panacea many are looking for.  In other words, if the FED is to come to the rescue of the US economy when Big Ben says the economy is in the toilet, he will be doing something else (think QE3, or equivalent that means printing money).
4. He said that the Chinese currency is valued too low and it is causing our trade deficit to be impossible to balance.  I completely agree with Ben on this issue, and think that past and present President’s have been “weak knee’ed” when dealing with China on this issue.  I believe we should take a very tough stance and negotiate through a position of strength, rather than weakness.  They need us as much as we need them, and we could come to a more equitable arrangement if this was every addressed – and recognized by both sides.  Clearly the US doesn’t have experience or good negotiators working on this case – as China continues to gain from our relationship, and we continue to lose.

DJ30 – 12,587   up 202
US Treasury 10 Year Bond – 2.89%    down 0.02%
USDEUR  -  1.4140
Gold – $1587     down $17
Oil – $97.71    up $1.78

Stocks climbed today on some good earnings – and its ability to see the European stock markets melting.  The world is still worried as bond yields declined a little today.  The Dollar went down today, but the Yen strength is most interesting for me to watch – now at just about 79 yen/$.  Oil spurted up and there was some news that said that gasoline was over $4 in 11 states.

Gold took a hit today after it hit an ALL TIME HIGH (interday) of $1610.  The decline was a massive selloff just about when the President announced that agreement was being made among the “gang of 6” in our Debt talks.

What’s Up with the Debt Talks…….

You are probably underwhelmed with the progress being made on coming up with an agreement to the Debt Cap.  I certainly am underwhelmed, and bored with the obvious political posturing taking place – and I expect those posturings to continue right up the the end.

So far, there have been about 3 proposals – and none of them seem to have too much depth in their thinking – and none of them have any support across the parties.  They are:

The President’s idea – of doing a “big deal” – about $4T – with spending cuts in all areas including entitlements plus a tax increase.  Not much progress on this one by the Republicans as they are hard over on a tax increase – and Boehner has said that the President is presenting “smoke and mirrors” – meaning those cuts don’t actually exist anywhere, but in the President’s mind.

Cut, Cap and Balance – a Republican plan that would allow the Debt Ceiling to be raised if some cuts are agreed and an Amendment to the States is allowed which would require a balanced federal budget sometime in the future – probably 5 to 10 years out.  The Senate will kill off this idea quickly this week, but if they happen to pass it, the President has said he would veto it.

“Gang of 6” Senators – have come up with a bi-partisan idea on spending cuts and tax increases.  This looks a lot like the President’ plan, and the President praised it today.  Probably DOA in the House, but we will have to see – as last minute brinksmanship will count in this game of “chicken.”

Have you noticed that there is little or no detail about what is in these plans?  Obvious questions like “What will get cut?”  “How much will get cut in each area?” “What are the exact tax increases being proposed?”  “What happened to the ‘chained’ CPI idea?”  “When will the cuts and tax increases take place – exactly what tax year?”  Without any details, there can be no lobbying by the public – which I believe is exactly what the politicians want right now – that is no public inputs.

And, sitting in the background is a Senate idea being worked out behind closed doors for the President to decide what to cut and when to increase the Debt Cap.  This has constitutional questions surrounding it, but those are probably what is being worked out by those cigar smoking senators.  This one could be the last one standing after the dust clears – but only time will tell.

My conclusion is:

1. Nothing much will change after the Debt Cap decision is finally made.
2. We will continue to rack up Debt at the rate of over $100B/month – and probably closer to $125B/month.
3. No one is talking about paying down the Debt itself.
4. Everyone’s plan increases the total Debt into the future.
5. The 2012 Fiscal Budget discussions – the next big topic for Congress that should be in place by October 1 – will probably continue to be “business as usual” so there will continue to be $1.5T of more debt in that fiscal year too.
6. Only the election of 2012 has any possible political solution to our debt problem – which continues to grow and bubble and threaten our future.
7. The other solution isn’t pretty – it would be a financial meltdown that forces the politicians to fix the problem – and given the scare a few years ago, we know that politicians are easy to scare.
8. The probability of not agreeing anything by August 2nd is still small – as no politician wants to be blamed for the economic meltdown that would follow.  Both parties will blame the other party – but the philosophy of “everyone smells a lot when the s… hits the fan” will prevail in this event.  However, there is a minority of Representatives and Senators who support this outcome.
   

What does the public want……

Well, Gallup did a poll recently and came up with what the public wants with respect to spending cuts versus tax increases.  Here are the results:

1. Only/mostly with spending cuts – 50%
2. Only/mostly with tax increases – 11%
   

Guess that is interesting as every politician thinks he/she knows what the public is thinking.

Is it Fair????

This Republicans in Congress who now control what is going on, were elected into Congress on a promise of many things.  One of those things was to “cut the budget by $100B”.  Now when I compare $38B to $100B, I come to the conclusion that their promise wasn’t met.  This was best analyzed by the statement:

“$100B budget cut is $100 budget cut is $100 budget cut.”

It is very easy to say that the Republicans are not meeting their promise, and were elected under false pretenses.

However, the “new” Republicans in Congress immediately raised a fuss that we must meet the $100B promise, or even exceed it.  I think the Republican leadership got the message, and they should be shaking in their boots.  Freshmen Congressmen are supposed to be seen, and not heard.  But, these Congressmen and women are there to make a real change in the fiscal deficit spending and the total debt that America is facing.

Remember that there are a lot of “old”  Republicans and some of these Republicans are “big government supporters”.  In other words, there are a bunch of Republicans that need to be thrown out of Congress.  And, these “old” Republicans are in positions of power inside of Congress.

What is really going on in Congress????

Congress is going to debate a Continuing Resolution in an Open Session of Congress.  This has never been done before, and in my opinion, we are seeing this because the new Republican freshmen and women are rocking the boat.  Also, Speaker Boehner wants to have a much more open Congress than existed under Nancy Pelosy – just last year.

Here is what can happen.

During the Open Session, any Congressman or woman, Democrat or Republican, can add to the budget cut resolution by having a vote on individual areas to cut in the government.  In other words, if someone knows of an area of government where spending is just plain nonsense – and you know as well as I do that they exist – the person can have a vote to add that budget reduction added to the resolution.

This should increase the amount to be cut from $38B to something greater.  How much greater?  It depends.  Here is an opportunity for YOUR Congressman or woman to make their presence felt.  It your representative does nothing to reduce the budget, they are letting the side down, and should be considered for replacement in the next election.  I am speaking for both Republicans and Democrats.

So, there is a chance that the $100B will be met after all the dust settles.

What can YOU do about all this????

Here is a fundamental point for you to consider.  Do you think the deficit spending is too large?  Do you think the debt is too large?  If you do, you can do something right now to make a difference.

Call your Congressman or woman.  Tell him/her to propose a budget cut.  It they don’t know of anything in government that should be cut, then they should be replaced out of hand.  That is an insane response.  Even Democrats know where there is waste in government.  If your representative if a Democrat, tell them to look at legislation that was passed at the beginning or the Bush Administration by Republicans – there must be something they disagree with.  If they are Republicans, tell them the opposite.

Sometime in April the US Government will have spend so much money that it’s debt will be hitting up against the “debt ceiling” created by Congress.  Congress created it to have a mechanism for reining in governmental spending.  Today’s debt ceiling is  $14 TRILLION plus change.

Every time we have hit up against that debt ceiling in the past, the Congress has blustered, and then raised that ceiling.  Every time, someone has stated that if we hit the debt ceiling the US would default on its debt – an unthinkable thought.   After all, the US Dollar is the Reserve Currency of the “world.”  So, in the past, the debt ceiling has been considered a speed bump in the way of increased spending – nothing very serious.

But, today there are a bunch of new Congressmen and women who have been elected to rein in spending.  And, their mantra and the strength of their election has scared the “professional” politicians into being cowed into supporting that position too – at least if they are Republican and Independent thinkers.  Some Democrats are also cowed (especially in the Senate), but their Progressive ideals keep them in the camp of spend, spend, spend (until the country fails.)  (My comment in parenthesis).

What is the point of each side?????

Keynesian economics dictates that the government can “fix” a slowing economy by spending more.  This is the position of President Obama, the Democrat Party and the Federal Reserve.

The Republicans think that there is a limit to spending, and the new Republicans are ashamed of their party’s past excessive spending.  They believe in the Austrian school of economics which says that the government gets in the way of economic growth, and private free enterprise creates jobs and the wealth in any nation.

Is there a limit????

I strongly believe that there is a limit to excessive spending.  Keynesian spending worked in the past when the US had “mild” recessions, and a very low debt.  Modern Keynesian economics ignores the debt of the nation in its assumptions.  Past Keynesian spending has lead the US to the position it finds itself today – so it can be argued that Keynesian economics has “failed” in that it hadn’t considered the long term consequences of its actions.

So, let’s use our common sense for a moment, and ignore all the rhetoric.

What happens when the debt of the US gets too big?  Let’s ignore “how big is too big” for this argument.  In reality, no one can define when “how big is too big.”

As the US Fiscal Debt grows, the amount of interest the US must pay grows accordingly.  The annual interest is the product of the average weighted interest rate and the total debt.  In other words, the greater the interest rate, the greater the interest that must be paid.  And, the greater the total debt, the greater the interest that must be paid.  Both the interest rate and the total debt are directly proportional to the amount of interest paid.  That means the interest rate and the total debt are both VERY IMPORTANT drivers in the amount of interest paid each year.  ( I have purposely stated these things many times to drive home the point.)

So, the next logical question is “How much annual interest is too much?”  This is a hard question to answer, but the best minds of America think that excessive interest payments slow the annual GDP growth.  From a common sense point of view, the amount of interest paid REDUCES the amount of money the government can spend on other things.  And for those of you who believe in “stimulus spending”, that means there is less money to stimulate the economy.  No matter how you look at it, large annual interest payments are bad for the US.

At some point, and let’s take it to an extreme, the amount of interest that must be paid is equal to the total “income” – and that means taxes – of the US Government.  I would content that that is a “limit.”

But, there are many more practical limits to the amount of interest that kills the US economy.  There are three main economic statistics pointed to by economists as being indicative of “too much interest payments” or just too much debt.

1. the ratio of total debt to GDP
2. the ratio of total annual debt payment to the total Fiscal Budget.
3. the ratio of the annual deficit to the total Fiscal Budget
   

Without going into any detail, let me just say that all of these measure are flashing “red” for the United States.  One proof is the threat of the rating agencies to reduce the AAA bond rating for US Government debt.

So, what is unthinkable?????

Today’s debate within Congress is whether or not to increase the debt ceiling.  The Congressional majority’s feeling is that they will only increase the debt ceiling if the Administration agrees to large budget cuts.  The President has not agreed to large budget cuts, but said he is freezing his already excessive spending, and will reduce spending by an average of $40B per year – an insult to any thinking deficit reducer.

So, there is a game of chicken going on.

What happens if the debt ceiling is not raised?  It means that the US Treasury cannot issue more debt (US Treasury bonds) to pay for the government’s spending.  What happens next?

First of all, the Treasury can do some financial maneuvering with its money, and avoid crossing the debt ceiling by several months.  That would buy time if it is needed.

Secondly, at some point, the government must pay its bills.  Those bills are:

1. interest on the debt
2. governmental payroll
3. entitlement paychecks
4. project spending
   

The government would have to make a decision on what bills to pay, and what bills not to pay.  Naturally, that decision is politically unacceptable.  But, the easiest one not to pay is the “project spending.”  The interest on the debt must be paid, or the US government would be in default, and the interest on our debt would soar, and the spiral downward would begin again.  I put the four categories of governmental bills in the priority order that I believe the government would pay its bills (as a morally sound decision.)

My point is that you should listen to the arguments going on in the press, and by the politicians, with an educated “ear.”

Conclusion:

1. The game of chicken being played in Washington can be very injurious to our health – our financial health.
2. The debt ceiling doesn’t “have” to be raised, as the Administration would be put in the position of deciding priorities on paying bills.
3. The game is a high risk game without a  known outcome.  Possible outcomes include:
   
   1. It could result in an agreement to cut the budget by a negotiated amount.  This is the probable outcome.  Any measure of success should be measured by
      
      1. Is the total debt being reduced?
      2. Is the fiscal deficit being reduced if the debt isn’t being reduced?
      3. Is there a plan to eventually reduce the total debt, the the total debt wasn’t reduced?
      4. How much was the spending reduced?
      5. If you don’t like the answers to these questions when we get them, then vote the bums out again next time – and with a louder message.
         
   2. It could result in a default on our debt.
   3. It could cause the US economy to tumble into another Depression.
   4. It could be the first step back to a healthy economy (but, I personally don’t think this is possible because of the Federal Reserve Quantitative Easing I and II actions – which are printing money and debasing our monetary base.)
   5. In any case, it will be the basis of the arguments to be used in the 2012 Presidential election.

The Dollar and Gold moved sideways with gold gaining just a little – nice to have higher gold prices.

Oil and gasoline both rose.  Have you noticed the generally upward motion of oil (and gasoline)??? The trend is up for oil, and so you can just count on those extra pennies leaving your pocket at the pump.

In the news today……

Jobless Claims – were 652,000 last week, and represents a very large number.  This definitely points to a higher unemployment number when it comes out.

Treasury Secretary Geithner has asked Congress for the power to better regulate the financial industry that got us into this mess.  My opinion has always been that more regulation needs to be in place, as Wall St is motivated to break all the rules in the search for the Dollar.  Specifically, Geithner wants:

1. Hedge Funds regulated and to have to register with the SEC
2. Derivatives to be regulated
3. Credit Default Swaps (CDS) to be regulated – this is a $60 TRILLION market today, and is totally unregulated.  This is the one that makes AIG “too big to fail.”  George Soros says that CDS should be purchased by the issuing bond authority ONLY and not be sold in a market.  This is probably one of the only times I would agree with Soros – except for his ability to make money in the currency market.
4. the ability to measure the risk of the investments of large financial institutions.  This is a failing of the current financial institutions – as even their own CEOs didn’t know how much risk they were taking.

All of these ideas are good ones in my opinion – even more authority for the SEC.  The SEC just needs to be run by someone who can actually enforce the laws on the books.
 

Here are the last numbers for today:
Dow Jones 30 Industrial – 7925 (up 175 points)
10 Year Treasury Bond – 2.73% (down 0.04%)
Euro – $1.3519
Gold – $942 (up $4)
Oil – $54.34 (up $1.57)
Gasoline – $1.53 (up $0.04)  

Bonds went sideways, but the Dollar strengthened – gaining back some its recent losses.

Oil and gasoline went sideways, and is establishing a new base to rise from – watch out.

Gold lost half of its recent gain.  It should be interesting to follow the near term price of gold as the FED is supposed to start its purchases of long term US Treasuries in the near term – and this will be inflationary.

In the news today…..

President Obama has asked Congress to pass legislation allowing the Treasury Secretary the power to take control of entities in financial trouble, such as AIG.  Today, the FDIC can take over a bank in financial trouble, but no one can take control of an insurance company – other than shareholders.

I haven’t come up with my own opinion of this idea yet.  My opinion has always been that these entities need regulation – as their lack of regulation has been demonstrated to create financial meltdown – as greed rules – more profits, more profits, bigger corporation, bigger jets, looking good, keeping up with the Jones, etc.  However, giving the Treasury the power to step in just could be going too far.  What’s wrong with Chapter 11?

The Chinese are pushing a new international currency becoming the new reserve currency and having the IMF control it.  Ignore this talk – it would be giving up sovereignty in the US.  The problem is that the Obama Administration is scaring a lot of nations around the world, like Sweden, France, China, saying our spending is scaring them as it’s just too socialist.  Hmmmmm.

 
Here are the last numbers for today:
Dow Jones 30 Industrial – 7660 (down 116 points)
10 Year Treasury Bond – 2.65% (down 0.01%)
Euro – $1.3468
Gold – $924 (down $29)
Oil – $53.98 (up $0.18)
Gasoline – $1.50 (up $0.01)  

Bonds were a safe haven play, so interest rates fell significantly.

The Dollar gained a small amount as England and Europe (ECB) dropped their interest rates, making the dollar more favorable as an investment.  In addition, the dollar is currently a safe haven play during meltdowns.

Oil and gasoline fell slightly as worries about the economy crept into those markets.

Gold gained, and this was the signal I have been awaiting to recommend another “buy” for gold.  Gold went up $21 today, and it also is a safe haven play during market meltdowns.

In the news today…..

US Factory Orders were down 1.9% in January. While this was better than expected, it is still negative, and six negatives in a row.  As long as this number is falling, the layoff from factories will continue.

Mortgages – 12% of mortgage payers are one month or greater behind; that’s 5,400,000 mortgages.  Startlingly, 48% of subprime mortgages or adjustable rate mortgages fall in this category.  Foreclosure are being driven by the job market – as people get laid off, many of them go into foreclosure.

Unemployment Claims were 639,000 last week.  While this is a drop from the previous week, it is still way too high, and will continue to increase the unemployment rate.  Remember that anything over 400,000 is a negative for the economy.

The FED announced today that it won’t release information on which banks have taken loans from its various loan facilities.  Bloomberg asked for the info from the Freedom of Information Act, and this was rejected by the FED.  The FED says that the release of the information would be damaging to those institutions as they would have a negative stigma.  In my opinion, the FED has a point.  However, if I had my money in one of those institutions, I would like to know about it.  From the readership’s viewpoint, know that Citigroup and Bank of America are on the intensive care list.

AIG – Did you ever wonder how we ended up lending $180B to AIG as a big surprise???  Probably more coming in the future.  Well, there were some regulators who failed to notice that AIG was acting like a huge Hedge Fund, and over-committing its resources.  They were writing a bunch of Credit Default Swaps – a type of insurance guaranteeing they will pay if the original bond writer fails to pay.  Just another example of a massive regulatory loop-hole in the financial system.

Tonight’s Dinner Conversation…..

President Obama said today that we must solve the healthcare problem now.  I agree with him.  Are you surprised????  Here is what I think we need to solve:

1. the massive % cost increases of healthcare each year.
2. the stranglehold that pharmaceutical and healthcare companies have.
3. the complacency in Congress – taking of PAC money and other “perks” from pharmaceutical and healthcare companies.
4. the 48 million Americans who don’t have healthcare insurance.

I simply don’t agree with the President’s solution to the healthcare system – Nationalized Health Care – starting with the seemingly innocuous computerization of YOUR health records.  Technology can be used for good or evil.  Obama’s team has already stated the good (reduced medical costs) and the evil (government dictating what procedures you are eligible for.)  Given they are already stating the evil – I am totally against it.  In addition, I lived in the UK and I can state that the UK National Healthcare System is broken.  But, you know as well as I know that ANY government run system (with its uncaring bureaucrats) can’t possibly run as effectively as a privately run one.

President Obama is using the “economic catastrophe” as a pretense to get his nationalized healthcare off the ground.  “Don’t you know what a stimulus is???”  The President’s party (in general – there are exceptions) doesn’t care an iota about YOUR health.  It simply wants you dependent upon them, so you don’t have any choice but to be “beholding.”  This is a clear cut choice between “big government – think welfare” and the “free enterprise system.”  The problem is that the “free enterprise system” is broken when it comes to healthcare (and other areas too, like Wall St.)  

So, the conversation for you tonight is to debate what you could do, or would do if you were in power, to fix the “free enterprise system” with respect to healthcare.  I’ve delineated some (but definitely not all) of the problems with today’s healthcare system.  So, why don’t we see our political leaders asking these type of questions??
 

Here are the last numbers:
Dow Jones 30 Industrial – 6594 (down 281 points)
10 Year Treasury Bond – 2.82% (down 0.19%)
Euro – $1.2553
Gold – $928 (up $21)
Oil – $43.61 (down $1.31)
Gasoline – $1.31 (down $0.07)

Bonds increased in interest rates again, and this is much more dangerous to the future economy than where the stock market ends up.  If interest rates go up another half point, then mortgages will just be so expensive that people won’t buy that first time home.

The Dollar lost a little value today, and so did Gold.  Gold did not turn around yet, but when it does, it will be a “buy” signal.

Oil and gasoline recovered all their lost territory, so prices are just bound to bounce up in the near term.

In the news today….

FDIC – How safe is your money in the bank?  Fairly safe, but there could be a bump in the road.  The head of the FDIC said it was running out of money, and could be out of money in 2009.  The solution???  Charge all banks an additional fee to go to bolster the FDIC fund.  The smallest banks are outraged.  The fee could wipe out half to all of their 2009 profits.  But, don’t worry.  Congress would always pony up more of your money to cover FDIC losses if the fund ever goes negative.

Job Losses – 697,000 jobs were lost in February – more than in January.  February is on Obama’s watch – so he has to take the heat for the big number.  His policies were well known before February, and could have stopped the layoffs, but businesses just don’t have that much trust.  January’s numbers were revised upward from 522,000 job losses to 614,000 job losses.  The trend is going in the wrong way for the economy to look like it’s going to turn around soon.

Underwater Mortgages – One if five homeowners with mortgages are underwater in the US.  That’s 8,310,000 homeowners who are underwater.  Remember that the cause of the current economic laments come from the housing price meltdown.  As more people go underwater, the number of foreclosures and short sales will continue to increase, and house prices will continue to decrease.

Home Values – The total value of all homes in the US was $21.5TRILLION last September, and now it’s $19.1TRILLION.  From an absolute deflation amount, homes have lost $2.1TRILLION – now that’s a lot of loot.  Here is another little tidbit.  Half of that loss is in the state of California.
 

 
Here are the last numbers:
Dow Jones 30 Industrial – 6875 (up 150 points)
10 Year Treasury Bond – 3.01% (up 0.07%)
Euro – $1.2660
Gold – $907 (down $7)
Oil – $45.38 (up $3.73)
Gasoline – $1.38 (down $0.06)