Is TARP Working?
Stocks, bonds, oil and gasoline all treaded water – went sideways – today as were fairly boring. No big news moving these markets.
The Dollar lost a little ground against the Euro, and there is a lot of talk going on right now about the possible future collapse of the Euro. In any case, the general concensus is that the Euro will go way down in value over the next few quarters.
Gold was the story for today. It closed above $910, at $911. This was the magic number for me, and I’m very excited to see this happen. This is a major breakout for gold technical trading with the next stop at $970/ounce. I am always cautious as no one can absolutely predict future trends in any market – there are just too many players ready to make you wrong and take your money. So, I’ll be ever more elated if/when gold closes higher than $911 over this next week. If it does, I’ll declare gold another “buy” – kind of contrary to buy as it goes up, but that’s the trend, and “the trend is your friend.” I hope you are getting the philosophy of investment purchasing through these writeups.
In the news today….
Existing Home Sales rose 6.5%, much to everyone’s surprise, in December. The main reason was the lower housing prices across the USA, but especially in the West. This is a good sign, but not sufficient to solve our housing created problem. House prices must stop declining, and become stable, before we can think we are out of the woods with housing. If nothing political changes, then the decline in house prices should continue to at least another year.
The New York Conference Board came out with their “economic indicator” which was up 0.3%, again a positive surprise, but this was caused by the “bailout” money being pumped into the economy – one of the inputs to this economic model. Without the “bailout” money, the economic indicator would have fallen 0.6%, much greater than anyone thought possible. The Conference Board also predicted a 9% unemployment rate in the “Spring” – and I’m pleased to think my prediction of at least 10% unemployment by year end (at a minimum) is still on course.
More on the Scumbags…..
Thain, the CEO of Merrill Lynch who Lewis fired after finding out about Thain’s extravagant company spending and $15.4B 4th Quarter loss, is going fighting back. Thain says that Bank of America (and Lewis by implication) knew exactly what the Merrill Lynch 4th Quarter results were going to be. There were no surprises between Merrill and BofA. Thain will be on a TV interview show this Wednesday to give more detail. This is very negative for BofA CEO Lewis who is today’s scumbag for purchasing both Merrill Lynch and Countrywide – which drove the price of BofA shares down 80% and is wiping out shareholders. This scumbag who has taken a ton of TARP money from the Government should be fired. His judgment is proven to have come up short of someone who holds the leadership role of Bank of America – which is now almost a “nationalized” bank owned by the Government. Remember that Lewis’ actions together with the US TARP involvement in Bank of America make YOU responsible for all future losses of the bank.
Whenever YOU lose money this way – there must be a Scumbag somewhere in the crowd.
Government Scumbags…..
It’s official!!!!! Banks lent less in the 4th Q 2008 than the 3rd Q 2008. ‘But, they got all that TARP money to starting lending,’ I hear you say. You’re right. Here’s what’s happening. Banks are hoarding their TARP money to make their Balance Sheet look better. US Government Bank Regulators are looking over all banks’ books, and encouraging them all to keep their Balance Sheets “good.” So, US Bank Rules are encouraging a decrease in lending.
It only took $350B of TARP money for the US Government (Treasury, Congress, the President) to find out that their desires of throwing money at the banks to encourage more lending DOESN’T WORK. (Remember, this is YOUR money.)
So, what about the 2nd tranche of $350B TARP money??? Will the new Treasury Secretary learn from this lesson? Probably not. The general flavor in Congress is to “just give them (the banks) the money.” When will Congress learn that we must have some “strings attached” to the TARP money to make banks do what they want them to do???? Watch and wait and be vigilent. Remember always that Congress is “playing” with your (and your children’s and grandchildren’s) money. Throw the scumbags out if they screw up again – or even better – throw them out anyway for their evil decisions of the past.
The Scumbag for today’s lesson is Hank Paulson for giving money to banks with “no strings attached.” His way failed.
Here are Today’s numbers:
Dow Jones 30 Industrial – 8116 (up 38 points)
10 Year Treasury Bond – 2.64% (up 0.02%)
Euro – $1.3163
Gold – $911 (up $13) – YAHOO!!!!!! It closed above $910!!!!!!
Oil – $45.73 (down $0.74)
Gasoline – $1.15 (no change)
