More Housing Trouble
Stocks tumbled today, and could be starting a long road downward. Bonds increased in value (lower interest rate) but within its current trend.
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)
