Apr 9 2009

Wells Fargo: $865 Billion in Loans. Time to Really Examine the Wells Fargo $3 Billion First Quarter Expected Bounce. $57 billion in Pick-a-Pay Loans Still Waiting.

It was rather stunning to see the market react so positively to a bank that has received $25 billion in taxpayer money turn a profit of $3 billion in the first quarter, which also included the FASB mark to market rule adjustment.  What many people have seemed to forget in the last few weeks is that Wells Fargo in their infinite wisdom took over Wachovia.  Wachovia for many of those who do not know swallowed uber toxic mortgage dealer Golden West that ultimately led to the demise of the bank because of mortgage indigestion.  So Wachoiva was swallowed up by Wells Fargo in a shotgun marriage similar to JP Morgan Chase taking the entirety of Washington Mutual.

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Apr 7 2009

Credit card companies shut down 8 million credit card accounts in February while accepting more Bailout Credit Cards from the U.S. Treasury. 400 Million Credit Card Accounts still open.

Many American households have been strapped for money for many years.  The benefit of having a debt bubble is the ability to cover up troubling economic trends and drown out any noise while people feed at the bubble.  During this time, credit was easily accessible and many families used credit cards as a bridge loan to hold them over for another month.  That lifeline is becoming more and more limited.  That is why we are seeing bankruptcies jumping sky high in the latest filings with U.S. courts.  In news that will make life harder for more on the edge, credit card companies pulled 8 million credit card accounts in February.  The peak number of credit cards was reached in July of 2008 at 483 million.  The current number of credit card accounts open is 400 million.

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Apr 5 2009

24 Million Americans Unemployed or Working Part-time but Available for Full-time Work. Why This Recession Feels Much Worse to Average Americans.

During the height of the Great Depression in 1933 with unemployment hitting its peak, 13 million Americans found themselves out of a job.  This translated to 1 out of every 4 workers in the civilian labor force.  You may be wondering how is it that we have recently heard rumblings that this recession may have bad elements similar to the Great Depression?  After all, the current headline unemployment rate is only 8.5 percent.  The truth of the matter is the unemployment situation is much worse. If we add up all the unemployed, those working part-time but are looking for full-time work, and those who have given up looking for work we would find that over 24 million Americans are out of work or under employed.  25 out of every 100 workers during the Great Depression.  Currently 15 out of every 100 workers in our current recession.

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Apr 2 2009

Employment a Lagging Indicator? Not Always. Using Outdated Economic Data and Trends for Future Financial Models. Just Because Stocks Rebound doesn’t Mean the Fundamentals are Good.

The markets are continuing on an unrelenting upward movement since their March 9th lows.  This is a strong rally that has now seen the S&P 500 jump up by 25 percent in the matter of a few weeks!  This kind of market volatility is reserved for highly volatile and troubled markets.  It is a rare occurrence to see this kind of quick burst to the upside in more stable and solid bull markets.  In addition, the rally is being spurred on by “not so bad” news while the core economic fundamentals are still horrible.  Take unemployment for example.  This is probably the best indicator of how people and families “feel” the actual recession.  The fact that the market is now up 25 percent does very little for the average American family.

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Mar 28 2009

Saving Money is Bad for the Economy: Personal Savings Rate Higher, Consumption Slightly Up, Banks get new American Express, and Markets Begging for Money.

Last month the savings rate hit the 5 percent mark.  That makes two months over 4 percent and for the first time in a decade that Americans have actually saved more than 4 percent for two consecutive months.  Saved 4 percent of what?  Of their personal income.  You would think that most people would be saving a little bit of money but that has not been the case.  The average American household does not make as much as the media once portrayed.  This fact is hard to reconcile when our eyes see brand new cars and clothes on virtually every person we come into contact.  Yet the fact of the matter is the large majority of these people have those new shiny artifacts because of debt.  Let us take a look at the savings rate and consumption over the past two decades:

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Mar 25 2009

Dow and S&P 500: Is 2009 a Redux of 1938 and 1939? Powerful Spring through Summer Rallies. Market on Track for best Month in Decades.

The recent market rally is going down in the record books.  The S&P 500 is up 21 percent in a matter of 3 weeks, which is one of the strongest short-term rallies in the books.  In fact, we are on track for our best month since 1987.  Yet this rally has the ominous signs of a short-term spring and summer rally that may fizzle out later.  Two other years that had strong spring and summer rallies occurred during the Great Depression.  With the U.S. Treasury and Federal Reserve flooding the entire system with money and throwing the long-term security of our dollar aside, the system was bound to react even in the short run.  Most of the data coming out is still gloomy.  Unemployment is rising and credit for the average consumer is still tight.  Yet for banks, things just got a lot better thus spurring the current run.

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Mar 22 2009

Banking Transparency Gone: The Federal Reserve has been Slowly Moving to more Archaic Forms of Creating Credit. New Plan Will Subsidize Casino Loans for Investors with Taxpayer Money.

While the public is exercising a Freudian fixation on the A.I.G. scandal, misguidedly thinking that A.I.G. is an American company in the sense of G.M. or Ford (it is not although many Americans see a Rorschach American company), the Federal Reserve just decided to increase its balance sheet by $1.2 trillion.  This unprecedented action was not unexpected, like rain in the winter but the speed and magnitude tells us that the Federal Reserve and U.S. Treasury are completely set on decimating any value in U.S. dollar.  What is even more troubling is over the life span of the crisis, each new program for injecting liquidity and capital into the markets has been less and less transparent.

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