The Economy Guy

Stocks fell again yesterday as consumer spending has fallen off.  Bonds gained (and interest rates fell) for the same reason.

Gold and oil fell back a little yesterday, and the Dollar moved sideways.

Basically, the markets were predictable, and boring.

In the news yesterday…..

Consumer Spending was up 0.1% in February.  When you adjust for inflation, the consumer spending actually fell.  The market got this message.  This is a BIG SIGN OF RECESSION, and it confirms recession is happening in my opinion.

People are getting the message that it’s better to invest their 401Ks in overseas funds because the dollar is dropping like a rock.  60% of all current investments are in overseas funds.

Dinner Conversation

JP Morgan Chase is one of those investment banks that were encouraging mortgage brokers to write as many loans as possible during the “good old days”, about 2 years ago.  They use a mortgage calculator program called Zippy.   Here is an internal memo talking about how to make those mortgage look good!!!!!!!!

Never fear, Zippy can be adjusted (just ever so slightly.)
1. Lump all of an applicant’s compensation as the applicant’s base income, rather than breaking out commissions, bonuses and tips.

2. Do not disclose use of gifts for down payments.

3. If all else fails, simply inflate the applicant’s income. “Inch it up $500 to see if you can get the findings you want. Do the same for assets.”

Is there any doubt that mortgage applications were manipulated???  This is from the investment bank, and then they sold this crap onto the securitized bond markets.  Wow.  Just another example of how “unregulated” those companies really are.   They live in the wild west.

Here are yesterday’s Numbers:
Dow Jones 30 Industrial - 12,216 (Down 86 points)
10 Year Treasury Bond - 3.45% (Down 0.07%)
Euro - $1.5796
Gold - $937 (Down $18) - looks like more profit taking, or actual gold selling is going on right now.
Oil - $105.62 (Down $1.96)
Gasoline - $2.72 (No Change)