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Wednesday, February 25, 2009

Laughing So Hard I Can Barely Write

If my life weren't going so well, I'd be depressed about this. But as it is, I can hardly bring myself to give a flip. Yes, the Obama administration just managed to put us into a depression-like event. The "brilliant" moves of the last 10 days or so assure it.

But I just don't care. I know how things work. As long as I have reasonable health, the Chief, and the rest of my family's okay, we'll survive. I'll go where the money is and do what no one else will do that needs doing, and I'll be okay. It won't be easy, but my life has never been easy.

God pity the vulnerable, that's all I can say.

Among the "accomplishments" of the last couple of weeks:
Then last night Obama's speech proved that this administration doesn't even understand the economic problem. Here it is:
The concern is that if we do not restart lending in this country, our recovery will be choked off before it even begins.

You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.

But credit has stopped flowing the way it should. Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can’t afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further.
This is, honest to God, untrue. There are some junk banks out there that have problems, but credit is not tight at all. Only junk loans aren't being made, and making junk loans can't improve matters.

What is true is that by blowing up Citi and BofA, there will be a massive curtailment of credit card lending. However you can still get credit from smaller banks, so it is really a movement of credit from one place to another, with the really uncreditworthy individuals not getting credit. That is not an ecoomic problem. No one can make an economy grow by extending bad debt.

For what it is worth, before this stunning series of errors the economy was sliding into the bottom. Existing home sales for December, for example, were rising, and the months of supply had dropped to 9.3 months. But when your "plan" for housing recovery involves having government guaranteed mortgages written for unsecured loans, and allowing the people who get those loans to then go to a bankruptcy court and get those loans written down, thus handing the loss to the investor who bought the mortgage, believe me, investors are going to be in short supply.
Who is going to be stupid enough to invest in mortgages that are 115% of the property value ( a declining property value) under these rules? Not me!!! Not Japan! Not China!

So now the US Treasury has to buy mortgage bonds and the GSEs are going to be paying the investors for the bankruptcy cramdowns - so those bankruptcy courts are going to be handing the losses directly to the taxpayer. Read the whole article linked.

Congratulations! You're a slum landlord! ACORN is going to be squatting in your homes to prevent eviction! You get to pay for ACORN's squatting costs too, under the new stimulus bill. It's a beautiful, hilarious thing, but we are going to pay dearly for our entertainment.

Read Obama's speech. This poor man is a BS merchant, but the tragedy is that he doesn't know it. Nothing in his life has ever taught him how to balance the books.

Note: Existing home sales for Jan showed an increase in inventory to 9.6 months from the originally reported 9.3 (r 9.4) months in December. Not surprising because of higher rates. However, sales in the west (i.e. CA) increased 29% over last year. When houses are reasonably priced, people will buy them.

Crude inventories are up 17.2% compared to last year, and total stocks of petroleum products ex-SPR are up 7.0%. Refineries are ramping back on gasoline production, probably because of profitability issues.

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