Aaron Wormus is the managing director of HedgeCo Networks, and part-time financial and technology blogger for Wormus.com.
» View all entries
Seth Berlin is Principal at Performance Thinking & Technologies, a consulting firm that focuses on operations, reporting, and risk management for hedge funds and investors.
» View all entries
Tim Seymour is co-founder and managing partner of Red Star Asset Management, as well as Chief Operating Officer of the $116 million Red Star Double Alpha Fund.
» View all entries
Alex Akesson is the author of Hedgefunds-Weblog.com, providing breaking news and interviews for the hedge fund industry.
» View all entries
Richard Heller Richard Heller is a partner at the New York City law firm of Thompson Hine LLP. His experience is in the formation of private offerings for hedge funds as well as the formation of registered broker-dealers and RIAs.
» View all entries
Bret Rosenthal Principal of RCM, LLC, and founding partner of the Fortune's Favor Family of Funds.
» View all entries
Cameron Hight, CFA, is an investment industry veteran with experience from both buy and sell-side firms, including CIBC, DLJ, Lehman Brothers and Afton Capital. He is currently the Founder and President of Alpha Theory™, a Portfolio Management Platform designed to give fundamental money managers the ability to create their own repeatable discipline to organize the complex process of portfolio management.
» View all entries
|
|
Perspective: US$ vs. Gold
-US$ tops out on March 2nd, 2009 and declines by 18% at the low on December 1st.
-During the same time period (March 4th – Dec. 3rd) Gold prices rise 34.8%
-From Dec. 1st to Jan. 29th the US$ rallies 6.5% while Gold prices fall 12.28%
-The US$ rally has failed to break above the 200-day moving average and remains in a long-term downtrend.
-The Gold price advanced 30% from Sept. thru Dec. to reach a high of $1,225, has since retraced 50% of that move and has settled around $1,100. This is normal action in the context of an overall uptrend and it is action that would be considered healthy.
Question: What is the fundamental basis for a US$ rally or decline?
Answer: The continuation or cessation of Quantitative Easing/easy credit in all forms.
This is a simple answer to a complex question, you say? Respectfully, I say, “Wrong, the question is not complex.” Traditional financial news outlets would like you to believe the question is complex so you continue to waste time and money in your effort to understand.
For two months the US$ has rallied, not because the economy is recovering or company earnings are improving, but because the possibility of continued Q.E. was in question. All of the participants involved in the events I list below benefited from a stronger US$ and created all sorts of sound bytes during the last two months to champion their cause. The biggest beneficiary of this jawboning — and perhaps most important — was, of course, Ben Bernanke. The US$ had declined 18% and word began to spread that Ben may not be reappointed. So Ben and his cohorts began to talk about tightening policy in all of its forms. I stress the word, talk, as no actions have been taken to reduce liquidity.
List of the events:
The State of the Union address
Ben Bernanke’s Reappointment
The FOMC meeting (for months now the US$ has rallied in front of FOMC events)
The Geithner grilling on Capitol Hill
All of the above happened in the same week, the last in Jan., and one can argue all participants appreciated the US$ appreciation. Coincidence? We think not.
That was then, this is now…
Bearish US$ developments as of Feb. 1:
-2010 Budget released: After parsing the numbers the increase in spending looks real, the “savings” as usual appear dubious. Evidence the insanity below:
The Wall Street Journal reports President Obama will propose on Monday a $3.8 trln budget for fiscal 2011 that projects the deficit will shoot up to a record $1.6 trln this year, but would push the red ink down to about $700 bln, or 4% of the gross domestic product, by 2013, according to congressional aides. The deficit for the current fiscal year, which ends on Sept. 30, would eclipse last year’s $1.4 trln deficit, in part due to new spending on a proposed jobs package. The president also wants $25 bln for cash-strapped state governments, mainly to offset their funding of the Medicaid health program for the poor. To get the deficit down by the middle of the decade, Mr. Obama will be relying on some cuts that have previously been proposed without success, on cooperation from a wary Congress and on a yet-to-be set up debt commission to suggest politically difficult choices.
Reuters.com reports the White House budget proposal released on Monday assumes the U.S. economy is heading for a six-year run of above-average economic growth with no sign of a worrisome spike in inflation or interest rates. The forecasts underlying President Barack Obama’s budget plan show real gross domestic product rising 2.7 percent this year, which is largely in line with private forecasts. Beginning in 2011, the White House’s projections diverge. It expects six consecutive years of strong growth ranging from 3.2 percent to 4.3 percent — well above what most economists consider the longer-term trend of around 2.6 percent. The last time the economy saw a similar streak of strong growth was in the late 1990s, during the dot-com boom. Obama has said both that expansion and the housing-powered growth in the mid-2000s were bubble-driven, and he wants the next expansion phase to rest on sturdier pillars. If the White House is assuming stronger economic growth, that implies bigger tax revenues and a smaller budget gap. The proposal shows the deficit shrinking to just under 4 percent of GDP by 2014, from an estimated 10.6 percent this year.
-Senate votes 60-39 to increase US debt ceiling by $1.9 trillion – DJ (This vote was delayed in Dec. adding to the US$ rally at that time)
-Personal Consumption and Income Weaken
-Construction Spending Dips in December
I will leave you with the following quote from White House Economic Advisor Romer, “ …strong GDP forecasts included in the budget are based on a history of growth after recessions.”
To recap, the “strong” GDP numbers carried in the budget are the primary source of deficit reduction going forward. Does anyone else see the Lewis Carroll nature of the 2010 budget, or am I just a madhatter? Romer says, “history of growth after recessions.” This assumption would imply we have just experienced a normal recession but we all know that to be untrue. We can all agree a credit crisis of epic proportions led to a real estate collapse that has defied all expectation. These events were not normal or historic, hence the growth of GDP going forward should not be normal either. Previous “normal” recessions were preceded by sharply rising interest rates. “Normal” recoveries were preceded by sharply declining interest rates. According to Romer’s logic the Fed will need to take interest rates substantially below zero to foster a “normal” recovery. Pay close attention to the appearance of President Obama during his next speech and see if he looks like a Cheshire Cat.
Is it any wonder the price of Gold jumped 4.2% in the two days following the budget release?
Tags: ben bernanke, debt-ceiling, economy, GDP, Geithner, gold, gold prices, obama, Q.E., Quantitative Easing, U. S. economy, US$
Comments feed (RSS 2.0),
comment or trackback from your site.
That’s it! I’ve had it! Enough!
Let’s dispense with the absurd, ludicrous, vacuous debate about “imminent” Fed tightening. The financial airwaves and print are full of this idiotic expectation that the Fed will reduce liquidity soon. Allow me to be clear: THE FED WILL NOT REDUCE LIQUIDITY AT THIS TIME.
The Fed cannot reduce liquidity because the economic environment is tenuous at best and tragic at worst. If you don’t want to take my word for this assessment, reading the FOMC minutes from December would be a good start to your education. You will note that the private session comments from the Fed do not correlate with the public Fed statements made during the same period. Perhaps this misdirection by the Fed is the cause of all the financial media drivel about possible Fed tightening. Whatever the case, I’ve listed four stories below that should, along with the FOMC’s own emissions, put to rest the useless notion of Fed tightening.
Stock Market Investing: Expect Q4 earnings, released over the next few weeks, to be lackluster (Alcoa’s announcement today is the first example of disappointment). Subdued EPS results along with continued employment, consumer credit and real estate woes will succeed in limiting the Fed’s ability to change policy. This sad realization will send the US$ lower, commodity prices higher and perhaps extend the equity market rally for a bit longer.
Maintain a close watch on the Treasury market. The recent selloff in bonds/increase in rates has been problematic as mortgage rates have climbed. It would be in the best interest of government for a little volatility and weakness to hit the equity markets and drive the fear trade into treasuries effectively bringing down rates.
Miller Tabak on Payroll Figures:
Beyond Friday’s lackluster headline payroll figures, the “real” unemployment rate (or U6) rose to 17.3% and the average hourly work week remained near record lows at 33.2. In addition, the average duration of unemployment rose to 29.1 weeks as the ranks of the long-term (or “permanently”) unemployed continue to swell. Furthermore, the household survey showed a decline of 589,000 employed persons to the lowest level since 2003, according to Miller Tabak.
In sum, fewer people are working, more Americans are dropping out of the labor pool and those who are working are working fewer hours: Average hourly earnings up just 2.2% vs. a year ago in December, lowest rate since 2004 and vs. an average gain of 3.3% over the prior decade, according to Miller Tabak.
“Net-net, we are not in your typical WWII recovery and major headwinds still remain,” writes Miller Tabak equity strategist Peter Boockvar.
Consumer Credit in U.S. Drops Record $17.5 Billion
By Vincent Del Giudice
Jan. 8 (Bloomberg) — Consumer credit in the U.S. dropped a record $17.5 billion in November as unemployment close to a 26- year high discouraged borrowing and banks limited access to loans.
A labor market that’s shed 7.2 million jobs since the recession started in December 2007 is restraining consumer spending that accounts for about 70 percent of the economy. Fed policy makers have said tighter bank lending standards and reductions in credit lines are hampering the recovery.
“Double-digit unemployment is eroding consumer confidence and the uncertainty is prompting consumers to pay down their credit card debts,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “We have not seen such a wholesale reduction in consumer credit since the last time we had double-digit unemployment rate following the early ‘80s recessions.” READ MORE…
America slides deeper into depression as Wall Street revels: December was the worst month for US unemployment since the Great Recession began. By Ambrose Evans-Pritchard
…The Fed’s own Monetary Multiplier crashed to an all-time low of 0.809 in mid-December. Commercial paper has shrunk by $280bn ($175bn) in since October. Bank credit has been racing down a hair-raising black run since June. It has dropped from $10.844 trillion to $9.013 trillion since November 25. The MZM money supply is contracting at a 3pc annual rate. Broad M3 money is contracting at over 5pc….
… This has not stopped an army of commentators is trying to bounce the Fed into early rate rises. They accuse Ben Bernanke of repeating the error of 2004 when the Fed waited too long. Sometimes you just want to scream. In 2004 there was no housing collapse, unemployment was 5.5pc, banks were in rude good health, and the Fed Multiplier was 1.73. READ MORE…
Delinquency rate rises for mortgages – WSJ
WSJ reports more than 6% of commercial-mortgage borrowers in the U.S. have fallen behind in their payments, a sign of potential troubles ahead as nearly $40 billion of commercial-mortgage-backed bonds come due this year. The percentage of loans 30 days or more delinquent rose to 6.07% in December from 5.65% a month earlier, according to data provider Trepp. That is the highest delinquency rate since the advent of commercial-mortgage-backed securities.
By year end, delinquency rates on loans for hotels, shopping malls and other commercial properties could rise to between 9% and 14%, according to Jefferies analysts, as high unemployment levels and a depressed housing market inhibit consumer spending. As retailers, hoteliers, restaurateurs and other businesses find it difficult to keep up with their rent payments or to meet rent increases written into their leases, their landlords will find it just as hard to keep up with their mortgages. “As cash flow declines materialize … loans that are current will face pressure,” said Aaron Bryson, an analyst with Barclays Capital.
Follow up on our China post…
China overtakes US as world’s largest auto market – AFP
AFP reports China’s auto sales surged past those in the United States in 2009 to make the Asian nation the world’s biggest car market, industry data showed, but analysts warned sales would slow this year. The China Association of Automobile Manufacturers said more than 13.64 million units were sold last year, marking an increase of 46.15% from the 9.4 million units sold in 2008, Xinhua news agency reported. Auto output for 2009 increased 48.3% to 13.79 million units, Xinhua said. Calls to CAAM to confirm the figures went unanswered… Analysts welcomed the news, but warned that China car sales could hit the brakes this year. “We are still optimistic about the outlook for this year but it will be quite difficult to achieve the growth rates of 2009,” John Zeng, a Shanghai-based analyst at IHS Global Insight, told AFP. “This year will see a high single-digits growth rate of nine to 10 percent.”
Rosenthal Capital Management runs the Fortune’s Favorite Family of Funds, including Fortune’s Favor I, Fortune’s Favor Precious Metals and Fortune’s Favor Offshore. For more information visit www.rosenthalcapital.com
Tags: ben bernanke, China, consumer credit, earnings, employment, Fed, stock market investing, unemployment, US$
Comments feed (RSS 2.0),
comment or trackback from your site.
Stock Market Investing: No change from last week. The technicals didn’t get much better but an overwhelming tsunami of weak economic data helped to drive the US$ lower and drove both hard asset prices and equity prices higher.Read More…
…Meanwhile, even as Brazil implements policy changes to stop its currency from appreciating, the Real advances adding credence to the Economist theory of a Forex crisis approaching …Read More…
Investment Strategy: Ride the wave! This market behavior reminds me of the waters off Jupiter Beach, FL, where I live. Right now I’m looking at a beautiful expanse of ocean as far as the eye can see (don’t hate the player, hate the game) and I see perfect 5ft. rollers washing up on shore. The break is speckled with surfers all the way down to Juno Beach pier where the best are attacking the biggest swells.
The picture seems perfect but the key word from the description above is ATTACKING. I sat through brunch on Sunday next to a local surfer girl. She was around 16 and had everything going for her with the tiny exception of crutches and a rather large bandage on her foot.
While the surf was perfect for humans, it was also an absolute delight for the sharks. Do you see where I’m going with this? When investing in today’s markets you can enjoy the ride but you better remember the sharks are circling.
Time to review the details from last week. Follow the bouncing ball and you will get to the inevitable conclusion that hyperinflation is raging toward us like a Hammerhead that smells blood….
Fed’s Fisher says Q3 US GDP growth probably not quite as robust as originally reported, closer to 2.5% – Reuters
November University of Michigan-prelim 66.0 vs 71.0 consensus, October 70.6
Initial Claims Continue to Fall
Initial claims again beat consensus estimates as claims fell from 514,000 new claims to 502,000 for the week ending Nov. 7. While the drop in claims doesn’t represent a clear turning point, for the second consecutive week claims have fallen below the 520,000 to 550,000 range that it seems to have been stuck at during the previous month. The market is going to take the drop as a sign that the labor sector is beginning to turn around, but we’ve seen a similar decline in claims before when initial claims fell below the 550,000 threshold at the end of September…
The drop in continuing claims was not due to workers finding new jobs, but due to people running out of unemployment benefits. Approximately, 7,000 unemployed workers lost their benefits every day. Congress recently passed an extension of the unemployment benefits that gave all unemployed workers an additional 14 weeks of unemployment insurance payment and an additional six weeks to workers that live in states where the unemployment rate is above 8.5%. Obama signed the extension into law on Nov. 6. The extension will stop the downward trend in continuing claims…
More workers are still losing their jobs than finding new ones and we expect the data to show a slight uptick in unemployed workers over the next three months. Due to timing of the releases, the data will not show the results of the unemployment extension until the Nov. 25 release. This means that the continuing claims numbers will show a decline in next week’s reported numbers.
…The details above represent “blood in the water” that requires the Fed to remain easy. However, these policies that balloon money supply have fueled the decline in the value of the US$. I have written volumes about this vicious cycle. For the sake of new readers I will repeat the RCM mantra: Hyperinflation is a currency event not an economic event.
I am forever baffled by the ignorance of many financial commentators when asked about inflation. They point to economic troubles and scoff at the very idea of inflation but applaud Fed policy and cheer rapidly inflating asset prices. Do they not see the oxymoron? Or are they simply morons? (OK, true that was trite and a little unfair but it couldn’t be helped.)
Hyperinflation is rapidly spreading worldwide because currencies around the globe are being devalued in an effort to keep up with the Bernanke “helicopter” drops of US$. The world is heading toward a Forex crisis as the Economist article below suggests. Our response to this roller coaster: Please hold on to the (GOLD) bar…
The Economist on Gold and Forex:
Developed-country governments have attempted to control bond yields through quantitative easing and to support stockmarkets through ultra-low interest rates. But they cannot support their currencies as well without risking problems in the bond and equity markets. Gold’s surge may indicate that investors fear the next stage of the crisis will occur in the foreign-exchange markets.
Brazil’s real is up 1.1 percent against the dollar this month, even after imposing a tax in October on foreign stock and bond investments and increasing foreign reserves by $9.5 billion in October in an effort to curb the currency’s appreciation. The real has risen 33 percent this year.
…As you can see, the march toward hyperinflation and perhaps a currency crisis seems inevitable. The best defense: Precious metals, Gold & Silver. A note of caution: Make sure your precious investment is backed by the actual metal. More on that topic next time…
Tags: ben bernanke, Brazil, Dollar, Fed, forex, GDP, gold, hyperinflation, investment strategy, obama, precious metals, silver, stock market investing, US$
Comments feed (RSS 2.0),
comment or trackback from your site.
By viewing the five charts above, (UUP = US$, TLT = Treasury bonds, CRB = Commodities, GLD = Gold) you have just witnessed a graphical demonstration of the beginning of the stagflation trade. Those of you who read this blog regularly know we have been warning of the inevitable rise of hyper-inflation at a time when a jobless recovery will lead to the obvious quagmire of a stagnant economy. Well, last week’s price movement across a broad front foreshadows the deleterious economic environment ahead.
Allow me to fit the puzzle pieces together and create a little illumination:
- UUP = US$ -> The US$ broke down against a basket of currencies last week and in doing so took out major long-term support. The weakening US$ trend has been going on for a while as the Fed continues to print currency out of thin air in an attempt to stimulate the economy. The latest magic trick and perhaps the last straw has been the monetization of treasury debt. The Fed’s buying of government debt at a time when the Obama administration continues to inflate the deficit has led to a loss of confidence in the US$ as the reserve currency of the world. This corrosion of confidence and abuse of Fed powers is the leading cause of the hyper-inflation trend. Remember, inflation is a currency event not an economic event.
- TLT = Treasury bonds -> T-bond prices were down last week which of course results in higher yields. This rate creep up is in its infancy. However, if rates continue to rise, eventhough the Fed is supporting the market, this will be a clear indication that inflation fears are beginning to dominate.
- CRB = Commodities -> The commodity complex as a whole sold off last week. Basic materials such as energy suffered declines indicating that an economic recovery is not in the offing. I would not typically read too much into any one week but with the US$ off so much last week one would have expected to see the whole commodity complex higher. Instead, we witnessed a bifurcated commodity complex that screams of stagflation; economically sensitive commodities suffered as inflation sensitive commodities rallied.
- GLD = Gold -> The key inflation sensitive commodity rallied strong last week as did the price of silver. Tuesday the 1st was perhaps the most telltale day when the inflation sensitive precious metals complex closed higher in the face of a stronger US$.
The developments of last week could be viewed as troubling if you are not prepared. However, if you are a member of the Rosenthal Capital Management family, then you are all smiles this week. You know we are prepared for this development and in fact welcome the trend.
I feel at this time we are compelled to clear up a little misunderstanding. We should give credit where credit is due. Yes, Ben Bernanke has been able to create “shoots” in the economy. We stand corrected and beg for Ben’s forgiveness for our ever doubting his ability to create “shoots”. We would however, respectfully request he visit his ophthalmologist or perhaps a neurologist to discuss his confusion recognizing colors. The “shoots” that he sees are real but they are GOLDEN not green.
Tags: ben bernanke, commodities, crb, Fed, gold, green shoots, interest rates, precious metals, silver, T-bonds, US Treasury, US$
Comments feed (RSS 2.0),
comment or trackback from your site.
The American people are receiving a true education from our president regarding the various uses of the baffling word that is ‘Change‘.
First, during Obama’s campaign for presidency, we were led to believe that change meant ‘out with the old, in with the new’. Old representing all that was bad and new all that was good.
Then, after obtaining the presidency Obama has been kind enough to illustrate the use of the word change as in ‘the more things change the more they stay the same.’ This use of the word change can be evidenced by the Bernanke story below as well as countless examples of cronyism and kotowing to lobbyists by the Obama administration. Simply look up stories connecting Obama to ACORN if you desire evidence. Both of these egregious endeavors were objects of ridicule by Obama during his campaign and, might I remind you, reasons to vote for the caped crusader as he promised to eradicate the evils of Washington.
And that brings me to the next use of the word ‘change‘. If anyone actually believed that Obama was going to change Washington then I respectfully request you review the phrase, ‘A leopard can’t change its spots.”
Read the rest of this entry »
Tags: ben bernanke, central bankers, China, Not Categorized, obama, tax increases, UK
Comments feed (RSS 2.0),
comment or trackback from your site.
RCM Editorial
While the mainstream media is busy rolling “green shoots” and smoking them, I thought I’d compose a post today to help you ‘JUST SAY NO.’
Ben “Helicopter” Bernanke and his side kick Tim “Pinocchio” Geithner (honestly, watch him speak, I swear his nose looks like it grows) have been dealing some pretty potent D.C. “trip shoots.” Of course, they are not alone. A vast network of dealers have combined to create the hallucinogenic state in which the mainstream media floats.
Perhaps the most dastardly dealers in the cartel are those who manipulate the equity markets. They claim to be champions of the free markets and providers of liquidity when they are anything but. They team up with big brokerage firms who love the gravy train of fees and drive up the cost of doing business for the rest of us.
I’m going to take a leap so try and stay with me. If you would like someone to blame for the predicament we are in today look no further than Arthur Levitt. Levitt, an ex-head of the SEC and beloved blatherskite of news outlets everywhere, spearheaded the ruination of Wall Street with the move to decimalization. In his infant wisdom, he believed that the spreads between the bid and ask on equities were too large and therefore hurt the small investor. His stupidity prevented him from realizing that spreads were and are necessary to create real liquidity. As an investor I’d rather see a .25 cent spread on a stock and know I can trade real volume at the price than a .01 cent spread with no volume. In today’s market of decimalization an investor may have to bid a stock (all but the most liquid) up $1 or more to find the real volume that would have been there a 1/2 point lower in a spread environment.
The advent of decimalization murdered a major profit center for the brokers and forced them to find other means of revenue. We all know how that worked out. The profit center of spreads for brokers was not a gift. It was earned by way of creating real liquidity. Decimalization has led to a serious disease of manipulation in the markets today. The blog post below by Joe Saluzzi and the clip from CNBC should further illuminate this argument:
Joe Saluzzi Themis Trading:
Our equity market is being controlled by machines that are nothing more than two bit, SOES bandits. They cloak themselves under the mantra of liquidity providers but they are really just locusts and are feeding off the equity market until it doesn’t suit them anymore. Once their profit margins are squeezed to almost zero, they are likely just to move on to a new market. But what damage would they have done? We will be left with a shell of a market that is used to being led around by computers. Real people and real capital are a scarce resource in today’s market. Read more…
And Here It Is On CNBC: Manipulation
(I’d like to take this moment to commend Rick Santelli whose voice is a true beacon of light on this otherwise wasteland of a network.)
RCM Comment: This California story is not getting much news coverage but should be on the top your watch list. California’s slow sinking into the financial abyss could destabilize the credit markets and in turn the equity markets…
California misses budget deadline, readies “IOUs” – Reuters.com :
Reuters.com reports California’s lawmakers failed to agree on a balanced budget by the start of its new fiscal year on Wednesday morning, clearing the way to suspend payments owed to the state’s vendors and local agencies, who instead will get “IOU” notes promising payment. The notes will mark the first time in 17 years the most populous U.S. state’s government will have to resort to the unusual and dramatic measure. Democrats who control the legislature could not convince Republicans late on Tuesday night to back their plans to tackle a $24.3 billion budget shortfall or a stopgap effort to ward off the IOUs. The two sides agree on the need for spending cuts but are split over whether to raise taxes. Democrats have pushed for new revenues while Republican lawmakers and Governor Arnold Schwarzenegger, also a Republican, have ruled out tax increases. They instead see deep spending cuts as the solution to balancing the budget, but Democrats say that would slash the state’s safety net for the needy to the bone.
Tags: arthur levitt, ben bernanke, california budget deadline, decimalization, equity markets, RCM Editorial, timothy geithner
Comments feed (RSS 2.0),
comment or trackback from your site.
The equity markets continue to work their way higher as the government-sponsored and controlled bank stress test pageantry is in full swing. In my business we commonly refer to this type of charade as “putting lipstick on a pig”. However, the herd is content at the moment to try and make that silk purse, so we must respect the trend and trade from the long side. My advice: remain alert, we are witnessing the greater fool theory in full force. Keep one foot out the door or the market will cut off your legs when it turns.
I have heard a lot of talk about Ben Bernanke’s “green shoots” comment in regards to the economy. He points to different economic numbers that have been released over the last 6 weeks as reasons to be optimistic. I was asked about this “green shoots” theory during the interview I gave on The Financial Lifeline Radio show Monday. My question in return:
What does it take to get these “green shoots”?
Answer: A lot of manure.
Enough said about “green shoots” let’s make a reality check:
Creditors object to Chrysler deal, setting up fight
NEW YORK (AFP) – - A group of Chrysler creditors objected Monday to the struggling automaker’s bid for a quick restructuring, calling it an illegal bid by the government that violates constitutional property rights. More…
RCM Comment: The government conjures up green shoots by stepping all over the Constitution. Maybe Bernanke was right, yes something is growing, but it’s green mushrooms and they are poisonous.
Mike Morgan:
The moratorium on foreclosures lasted five months. That’s over now. And real estate brokers have been warned to expect a tsunami of properties to be listed and sold.
RCM Comment: Foreclosures are increasing in the luxury space. Prime borrowers are now losing their houses and these repossessed homes are recorded as sales in the national figures. So, now you have a “green shoot” reported by the press as “increasing home sales”. Then (to add a little more manure onto the “green shoot”) the press reports the increase in median home sales prices as a positive. Of course, the increase comes from the repossessed luxury homes that are valued at higher prices, but no one in the press bothers to mention that little annoying detail.
Tags: ben bernanke, green shoots
Comments feed (RSS 2.0),
comment or trackback from your site.
|
