Thursday, March 26, 2009

The Spin Stops Here


I am not a huge Bill O'Reilly fan but I thought the title was appropriate for today's post. Just an FYI before I get started. I am away over the weekend so I might not have a chance to hop on here until Monday.

Alright, lets get started. The markets are pulling back today as I speak after an incredible bull run over the last three weeks.

I wanted to provide some data today to reinforce why we are nowhere near the bottom when it comes to this bear market. You often here that this recession will not be over until housing prices stabilize and the jobs picture improves. As you can see below, the numbers in both areas are still bad and getting worse.

New home sales prices continue to decline:

The unemployment picture is just as grim when you look at the most recent jobless claims numbers:

Quick Take:


The most stunning data point that I saw around the new home sales figures was this: In the last three months there have been ZERO new home sales over $750,000. Zero! Zilch! Nada!

During the housing boom 750k barely got you a one bedroom condo in NYC. This is quite a remarkable change when you think about it.

When you look at the economic data there is simply no reason to think that we have turned a corner. Housing prices continue to fall and unemployment continues to soar. There have been zero signs that either number is stabilizing. Until these numbers reverse there is no hope for a recovery.

The Real AIG Story

This is a must watch video from Dylan Rattigan around the AIG fiasco. Many Americans were outraged by the whole $165 million bonus payment scandal around this company.

Dylan does a great job pointing explaining why the real fraud around AIG is the $50-100 billion that was paid out to the banks via the taxpayer in order to make them whole on bets they placed with AIG using CDS's. This was basically a "backdoor bailout" at our expense.

Basically AIG was nothing but a clueless bookie that took sucker bets from the banks via CDS. The banks were then made 100% whole on their bets courtesy of the US government via the taxpayer. Once again the taxpayer gets raped!:

Must Reads

This is perhaps the best read that I have seen around this economic crisis. Here is the link to "The Quiet Coup in the U.S.". Its written by former IMF chief economist Simon Johnson and he does a great job explaining why the elite(oligarchs) in this nation must be stopped before they destroy this country.

Also, check out Rosenberg's latest here.

Bottom Line:

We have a long way to go before the recovery begins. Housing and unemployment continue to worsen and the fraud continues to roll on. All three of these must be reversed before we can begin our economic recovery. Keep an eye on the AIG story. If J6P learns about the $100 billion AIG extortion by the banks you may start seeing mobs on Wall St looking for blood.

We also found out this morning that consumer spending rose 2% while personal income dropped 2%. So basically the consumer spent more while making less. Sigh...Do I need to start banging my head against a wall again? Its time to save people versus digging yourselves deeper into debt!

The markets are down around 1.5% as I finish this post. Lets see where we close today.

Have a great weekend!


Nate said...

I have really enjoyed reading your blog. Please keep up the good work. I have bookmarked you and have become a faithful reader.

ryan said...

I also enjoy your blog and have been reading it for some time now. I was wondering where you learned about what you know. Were you educated as an economist? Or are you just a bright realtor?

Anyway, keep up the good work!

teddy bear said...

The Dirty Dozen ;)

Joey said...

Excellent post and articles

Jeff said...


Thanks for the support. I appreciate the kind words.

Jeff said...


No to both. I think I was born an economist but didn't realize it until I became an adult!

I am simply a passsionate investor that spends countless hours doing research.


Some of my family have been on Wall St(one close relative has been there over 40 years and has contacts way up the food chain).

I get a lot of insight from them.

What you here on the inside is a whole different story versus what CNBC reports.

The street is literally in shambles. The smart guys on the inside saw this collapse coming way before it happened.

When I ask them how things are the D word(depression) is often used.

Jeff said...

Teddy: Classic

Thanks Joey!

That read by the IMF economist is the best I have seen so far.

ryan said...

Thanks for the reply. I've known since I started trading last March that cnbc has its own spin, bias, and agenda.

It's hard to find good sources though. I've been listening to Phil Grande of Phil's Gang and he talks about a lot of the political/financial connections and what a lot of the "mystical" words mean. And I enjoy reading your blog.

Anyway, love the work.

Take care.