The Economy Guy

Everything else went sideways, except Gold that fell $11 – Gold is now a major BUY.

In the news today….

Congress passed the (now) $850B bailout bill.  Everyone pilled on their favorite pork, and all of Congress should be voted out of office for not just addressing the issue.  

Wells Fargo bought Wachovia today in a share swap that does NOT require any FDIC guarantees.  What happened to Citigroup?  They required FDIC guarantees, and didn’t pay as much as Wells Fargo.  This is a great example of the market working without government intervention.  The original FDIC intervention forced a Citigroup marriage, and could have cost taxpayers some money.

The real news was the job loss report – 159,000 jobs were lost last month.  This was far greater than anyone expected, and foretells the recession that will become absolutely more visible through the remainder of the year.

Tonight’s Dinner Conversation

The current symptom of the problem (NOT the cause) of the problem we are facing is the housing market meltdown.  Does that make you sit up and question the sanity of all the news reporters?  I hope so.

The housing house of cards was caused by having toxic mortgages become common in the US economy, and Fannie / Freddie were the vehicles of giving out these toxic mortgages to buyers who they KNEW couldn’t afford the mortgage.  Why would a profit motive company with Fannie or Freddie do that?  Because they were told to do it.  Who told them?  And what was their motivation?  

That’s the question for you to ponder.