"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey
Government to Bailout Housing and Banks
We have said several times that during periods of extreme crisis, solutions do appear. The latest plan being tossed around would allow the government to buy up to 1 million mortgages over five years to help prevent foreclosures, and more credit losses by banks.
I knew this option was available thru the Federal Housing Administration (FHA). The FHA was created by congress in 1934 to help borrowers get loans while reducing the risk to the lender. FHA is basically a Depression-era agency that insures loans made to borrowers with poor credit.
Since the mortgage crisis began, I've always held the opinion that potential solutions to the crisis were aggressively being worked on. This is why I came up with the slogan;
"Throughout our history, the track record is clear. Solutions to major problems always appear".
If you stop and think about it, the Federal Government really has no other choice. What are they going to do, let millions of mortgages go into default and throw the US into a depression? I don't think so.
If the US Government during the Carter years was willing to loan money to bailout a public company like Chrysler, surely they would do something to bailout the banking system, and the US economy. It's just common sense.
High Oil Prices- Again, and Again, and Again...
With oil prices above post Katrina highs, and no hurricanes in sight, Wall Street wants you to believe we have a supply and demand problem. We do not have a supply problem; we have a declining dollar problem.
I told you yesterday that OPEC President Chakib Khelil told reporters that OPEC will not increase output when it meets next week "because there are plenty of stocks." This means we have plenty of oil.
The bottom-line here is simple, oil prices rise as the value of the dollar declines. Sure, China is using more oil, but the supply and demand issue is not desperate enough to warrant $100/bbl oil.
What's happening is the US dollar continues to fall to record lows, and traders continue to invest in commodities such as gold and energy as a hedge against inflation. As economic reports continue to reveal a weaker economy, the dollar falls in anticipation of lower interest rates.
The US Labor Department reported that wholesale inflation jumped by a full 1% in January, more than double the increase that analysts had been expecting, and also marking the fastest rise in more than 26 years.
Today, Commerce Department reported that factory orders for big-ticket items fell -5.3 percent, the largest decline in five months. Then, to add more fuel to a burning dollar, this morning Fed Chairman Ben Bernanke hinted that interest rates will be lowered again. As Bernanke spoke, the dollar continued to spiral lower, and oil prices remained firm.
In the pre-market, Fannie Mae (FNM) posted a $3.80 loss for the fourth quarter. The stock traded down to to a 12-year low of $25.70, and promptly reversed to trade as high as $31.58. The reasons given for the reversal was news that Bernanke will lower rates again, and that federal regulators will lift the investment cap for finance companies to invest in the housing market.
I still believe the big news moving FNM & FRE is the FHA plan that I mentioned earlier that would allow the government to buy up to 1 million mortgages over five years to help prevent foreclosures.
Political News
In the race for the White House, the NAFTA- New World Order Gang (Clinton & McCain) are trying desperately to stay in power. I still have not figured out Barrack Obama. I'm not sure if he is part of the gang or not. Apparently Obama is not part of the gang based on his debates.
Obama has raised the issue of US jobs lost by US corporations moving operations abroad in order to lower their labor costs and boosting profitability. He proposed to lower tax rates for US companies that maintain or increase their US workforce relative to their overseas workforce. This doesn't sound like a NAFTA- New World Order proponent to me.
Since the NAFTA- NWO Gang have all of the power and money, I am looking for these people to dig up as much trash as they possibly can to discredit Obama. Who knows, before its over they may try to get Obama charged with the Kennedy assassination.
