The Economy Guy

Stocks ended down today, and for the whole week.  The DJ Industrials looks like it wants to break into the 7000’s, and there’s not much stopping it – good news is lacking.

Bonds continued their increase in interest rates as bonds worry about all those new bonds being issued next week – a record $70B worth of 2 year and 5 year Treasury bonds.  Never been that many bonds to auction at one time before – so the bond traders are nervous.  A sign of our “bailout” times.

The Dollar strengthened slightly.

Oil and gasoline is definitely on its way UP.   Plan on paying a lot more for gasoline and other energies, like electricity, heating oil, natural gas, etc.

Gold is the good news.  It ended up $37/ounce today.  It is now spitting distance to the technical test of $910.  If gold ever closes over $910, then we are in a bull market for gold, and I’ll signal another buying opportunity.  Gold has technically broken out of its downtrends, and passed the last resistance level.  I hope you all got your fair share of gold over the past few months.  If not, there will undoubtedly be another opportunity.

Today’s News……

Freddie Mac will be asking for $30B to $35B in additional funds to keep funding their non-performing mortgages.  This is just the tip of the iceberg, as Fannie Mae will undoubtedly be asking too – two peas in a pod.  As long as home prices are falling, these GFE’s are going to be asking for more money.  Oh, I forgot, these are no longer GSE’s; they are totally government owned.  That means all this money is coming out of YOUR pocket.

Today’s News – Scumbags……

The FDIC gave OneUnited Bank a letter to shape up or ship out a few months ago.  The bank went to their congressman and asked for help.  And, did they get help!!!!!  Rep. Barney Frank put a SPECIAL PROVISION (aka an earmark) in the $700B TARP bill passed by Congress a few months ago for OneUnited Bank to get some of that TARP money.  He also called Treasury and lobbied for them to get the money.  They got $12M of TARP money!!!!!!  The FDIC thinks they should have been put out of business.  Is this the “transparency” we have been promised????  If you remember, the TARP money was to be given to “healthy” banks to keep them afloat, and not to banks going under.  This rule has been broken so many times it is no longer a rule – only a long lost memory.  Every state is now lobbying its representatives to get TARP money to its states banks.  Do you hear this in the news?  I don’t.  You are getting the straight skinny from economyguy.  Barney Franks should be run out of town on a rail.  Remember, he was the scumbag that “encouraged” Fannie and Freddie to make home loans to people who couldn’t possibly pay their loans back.  PS – your Congressperson (if he/she is still in office) should be held accountable for approving this bill without (??) knowing about this (or are there more???) special provision.

Two small defense firms are being investigated today by the IRS, Defense Security, and the FBI to see if there is any connection between their receiving “earmark” money from Congress and their paying off the person who put the earmark there.  Who is this Congressman??  Rep. John Murtha.  Here is another scumbag who should be on a second rail on his way out of DC.  John Murtha is the biggest “earmark” maker in Congress.  Should be interesting to wait for the details, and it will take months to come out.

Oh, by the way, the news and TV did have the story about the CEO of Merrill Lynch (John Thain) giving $15B of bonuses in December to all Merrill executives on the SAME DAY that the CEO (Ken Lewis) of Bank of America was asking for $20B of TARP money to buy Merrill Lynch.  In other words, 3/4 of the TARP money was funneled straight out the door and into the executives pockets.  Merrill was one of those companies with their fingers deep in the “securitized mortgage market”, and was one of the companies that caused out financial meltdown.  Their executives should have received NO bonuses.  Fortunately, the NY Attorney General has declared this as fraud, and is investigating the situation.  Let’s hope some of these scumbags go to jail.

Let’s look at the decision that Bank of America made to buy Merrill Lynch.  It turned out that Merrill lost $15.4B the 4th Quarter of 2008, and BofA didn’t know about this until “later”.  Looks like the loss equals the amount of executive bonuses paid out at the same time.  The loss was apparently well hidden from BofA by Merrill’s Thain when he went on a ski trip just after seeing the final numbers – I guess he forgot to telephone Lewis with the news.  But, Bank of America has never said “fraud” about this much greater loss than expected!!!!!!  So, if they don’t think it’s fraud, then it must be Bank of America incompetence.  So, don’t have a BofA bank account if they are incompetent.

Here are Today’s numbers:
Dow Jones 30 Industrial – 8078 (down 45 points)
10 Year Treasury Bond – 2.62% (up 0.03%)
Euro – $1.2968
Gold – $896 (up $37)
Oil – $46.47 (up $2.86)
Gasoline – $1.15 (up $0.06)