State of the Economy....

The announcement by Bank of America (owner of Countrywide), CitiBank, Fannie Mae, and Freddie Mac that they will start renegotiating mortgages may begin what turns around the economy, in the least it may help keep this bail out to a minimal. Times are tough however and more outside the bank world companies are going to start asking for money. Tough times are ahead.

More signs of a down market that I have heard / seen:

* Paint orders are still extremely low.
* Construction orders are being put on hold / slowed down.
* People I know are still worried about losing their home.

For now my money besides what is already in, is going to wait. What I would like to know is what is the everyday investor's sign of a turn around? So what are your ideas, metals stabilize? New house orders rise? You tell me...


Holy Crap! I guess ask and ye shall receive.


Up next lawsuits from people who missed out on this...

Brilliant! CitiMortgage Coming Through!

Recently I have been eluding to what I think will recover the economy the quickest both here and on thecornerofficeblog run by my friend Grant. Basically, figure out a way to keep as many people that can into homes, without letting them off the hook for payments.
The idea is simple, people that can afford to stay in there home can afford to buy other stuff. Thus ensuring the great capitalist society that is America.

Math will tell you that as long as a homeowner stays in a home for some given amount of time, then the interest on that loan will ensure a bank makes a profit. Most times it means the bank will make a big profit if that homeowner remains in a house 8+years or more. Well I have recently thought that two strategies to keep homeowners in their house would be to A)adjust the interest rate to a level that they could afford and fix it for 30-years or B)extend the mortgage to a 40-year fixed and adjust the rate appropriately. I am not talking about handouts but something appropriate for that homeowner. Don't ask me to define what determines what, I don't know that answer, but something reasonable should be able to be agreed upon. I believe this will still shake out the people who can't afford a home period, but maybe saving some people on the fringe and those who may have recently lost their job. Like arm floaties for those getting tired of swimming.

I know the argument against doing anything like this was that people should have known better and if they couldn't afford the home that they were buying then shame on them. That is a good argument, but I would argue as well that many of these people probably thought if I can't afford this when the my 3 to 5 year ARM ends, then I will just refinance like this banking guy is telling me or just sell the house. Both of those "fail-safes" have, well, failed. Now people are upside down, banks aren't collecting any money, and foreclosure is abound. If you could keep people in homes, home values could stabilize, governments property tax funding could stabilize, and maybe the taxes we all see on the horizon could be greatly reduced.

Now I originally thought that the government would be the only entity that may put together a plan like I was speaking about, but to me real capitalist hope is on the horizon. Citi (the nation's largest or second largest bank I can't remember) announced that it was going to put together a team of 600 specialists to help their struggling customers figure out a payment that they can afford. Although it may be too late for our economy and many foreclosed homeowners, but the lender is finally coming through with the promise to refinance, albeit not in the way they were originally planning.

To me, a big signal of the economy starting to turn around would be several more of the big banks following suit without government involvement or encouragement. Until then I think you will not see an end to this economic struggle until floor opens up and a lot of otherwise good, smart decision people have lost their jobs along with all of the idiots. It is a downward cycle in my mind that will continue until something is done.

The downward cycle:

1. People can’t afford their home, bills, etc.

2. People stop spending on anything that isn’t necessary.

3. All those companies making the non-essentials suffer greatly, because now there aren’t any orders.

4. Those companies layoff people, close plants, and consolidate.

5. Now more people can’t afford their home.

6. Repeat 2-5 over and over.

All that is occurring right now, and we all are going to be affected. I don't know about the rest of the world but I want the costs to me, the working population to be minimalized, before my life or my job (again) to be affected.


This week's article of the week...

This week's article comes from the most unlikely of places for me, Seeking Alpha. My brother can be thanked for finding it however. Seeking Alpha is pretty hit or miss as far as quality of articles, but this one seems to hit well.

This week's is from Seeking Alpha's James Quinn, titled "The Shallowest Generation" it goes on to speak about the amount of debt that he believes his generation has spent. I don't know how true his facts relate back to the Baby Boomers, but it is an acurate depiction of the our current state of the nation. His solution is odd as well, basically for the boomers to pull out their wallets and pay for things, which would be hard I think if they have already maxed out their credit as the article says. Either way, enjoy...



This Just In...MJ Revealed!

Yup that's me. Notice the mask and safety glasses, it's the only way I can enjoy the fall. I am basically allergic to everything in the fall, but nothing is more fun than a big pile of leaves (MFTABPOL for short). That's my great little midwest ranch in the back, no we haven't painted it yet. I especially like the Oliver Stone camera angle my GF went for. Funny thing is this is exactly how I eat the burnt-end special at Oklahoma Joe's.


The truth about Warren B...


Read it while you can, it is currently free.

This is what I have been saying to people that have responded to me with the phrase, “well Buffett is buying again.” He is getting deals we are not getting, a 10% dividend on GE and Goldman Sachs is hardly something the rest of us can get. That 10% hedges most of the activity of the stock he is holding whether it goes up or down.

It looks as if the market is starting to level out, but I still don’t think this is the end. My prediction is to see how the market reacts to the post holiday earnings reports and then judge the state of the economy.