Has TARP Helped?
Stocks rose today on Apple’s earnings report. All other markets were sideways.
Gold bounced off its support level, and rose $10 today.
In the news today…..
Underwater?? – that’s the amount of a home’s mortgage minus its value. Lots of homes are underwater, and lots of homes aren’t. Ever wonder what all US homes look like when aggregated? Well, the FED did us the service of calculating this. It took the total of all mortgages, and it subtracted the value of all homes (whether they are underwater or not). The difference? $4 TRILLION. Yes, that is a whopping number, and it gives you the meaning of depression for homeowners. This naturally leads us to how we get out of this massive hole. Well, it’s simple. We wait for home prices to go up. Gotcha. How do home prices go up? Well, they can do it the hard way – by having more buyers than sellers. Or, it can be done the easy way – by having inflation – and I’m betting on this method.
Goldman Sachs – is being ignored by European nations which need big bank help in selling their bonds. As Goldman Sachs played funny games (to feather their own nest) in Italy and Greece, other nations are now shunning Goldman. (The Worm Turns.) Also, in another story, Goldman is going to pay out 45% of its revenue in 2010 to its employees. That seems rather a lot – doesn’t it? Where is the Pay Czar when you need him? Is he getting part of the payout too?
Bank of Canada – raised their key interest rate for the second time another 0.25% to 0.75%. Watch your neighbors if you want to know what’s going to be coming to this country.
China consumes more energy – than the USA, and is now the number one consumer of energy. I hope those bleeding hearts tell the Chinese to reduce their carbon footprint before that foot wears a boot, and stomps on his head.
Tonight’s Dinner Conversation…..
Has TARP (or any other government program) really helped? I say no. I say it just postponed the inevitable. Another way of saying this is “Would you rather die of a swift blow, or by a thousand cuts?” The government just cuts us 1000 times – hope you are enjoying it.
We are facing a cliff in the economy – employment, consumer sentiment, housing sales – all are awful. The future only looks glum. The news will be talking more about a “double dip recession” soon.
Take new home sales. They are currently 300,000 homes sold versus 1,800,000 homes during the height of sales. I call that a “cliff.” As I have written before, this is actually good news, as new homes just add to the number of homes in the US, and we need to get rid of the housing overhang before housing prices can turn around. Housing is fundamental to the US economy in direct and very indirect ways.
Would there be any employment bump up if we didn’t have a census? I doubt it. The government continues to create strategies that cost jobs – NOT create jobs.
So, what’s going to happen to the stock market? It depends on what the government does. If it decides to have a QE2 (Quantitative Easing version 2) or has another Stimulus, then the stock market will try to use that new money to drive stocks up. BUT, the bond market probably won’t accept this NEW money this time around. It was fooled last time (2008 financial crisis when $2 TRILLION was created by the FED), but it won’t be fooled this time around. Your job is to watch and listen to what’s actually happening in the economy and by the FED and US Treasury.
Another possible future is a BIG decline in the Dollar. The Dollar has been going down for the past 4 weeks. The recent upward Dollar movement at the beginning of this year was a “head fake” and was caused by the panic in Europe. However, the Europeans are “talking” about reducing spending, and the US is talking about increasing its spending; so people are voting with their feet by selling the Dollar. If the Dollar starts to fall dramatically, then energy and food will increase dramatically, and everyone in the US will be hurt.
Here are the last numbers for today:
Dow Jones 30 Industrial – 10,230 (up 76)
10 Year Treasury Bond – 2.93% (down 0.03%)
Euro – $1.2892
Gold – $1192 (up $10)
Oil – $77.44 (up $0.90)
Gasoline – $2.08 (up $0.02)