Archive for the ‘Financial News’ Category

Wally Woodchuck Gets Stimulated by an “Economic Stimulus Package” a parable about Fiscal Irresponsibility

Thursday, October 14th, 2010
 

by

Charlie Champion

 

Wally Woodchuck was full of himself. He was cool, he knew it, and anyone who didn’t recognize his coolness was very uncool.

If you had any doubts about Wally’s specialness, just ask him..” I’m hip, I’m Cool. Lay it on me , baby” He would reply, looking down his nose at such a plebeian question.

Several months ago, while surfing the City garbage dump, Wally had found a pair of discarded, Barbie doll , sun glasses. They were oversized by woodchuck standards, but with the help of a length of salvaged wire, they were able to perch precipitously on the bridge of his nose.

Wally looked at his reflection in a pool of water, ” These glasses are the final touch.” He thought. ” I’m much too fine to do any woodchucking. That type of work is only for suckers and regular Woodchucks.. The other Woodchucks should feed me and take care of all my health and wealth needs.

After all” He continued,” I’ ve worked very hard at being too cool to work. It’s much more fun to drink with my friends, chase after females in heat, and get free food from public storage during the Winter.”

He ambled over to the local wood pile, and leaned against a stump.

There was a group of 10 or 12 woodchucks busy at work, chucking the wood into ragged piles.

His noticed three of his buddies working as part of the group.

He snickered as Warren Woodchuck picked up a length of tree limb.” Hey Willie , look at sexy Wanda Woodchuck.” He pointed off to his right.

When Willie Woodchuck looked away, searching for Wanda, Warren chucked the branch he was holding, landing a glancing blow at the back of Willies head.

” Hey who did that?” Growled Willie, in mock anger. ” Who hit me in the head?” He looked around the work group, while reaching down to pick up a clod of mud.

As Willie straightened up, he threw the muddy clump aiming at Warren’s head.

Seeing the approaching mud ball, Warren ducked. The mud ball sailed over his head and hit group leader Winston, smack in the snout.

The ensuing melee lasted far too long, and left several members of the group nurseing injuries, effectively ending any any additional work getting done.

Still chuckling, Wally went over to his friends.” Look at you guys! What a sight.” He shook his head,.” You all certainly made a mess. All the wood that you chucked is gone, mashed in with the mud.”

Willie’s black nose glistened with moisture, and a splatter of brown mud. ” What do you think we should do, Wally? The Union leaders, and their supervisors will be angry that we ruined all this work.” He rubbed his mouth. ” I chucked so much wood that my teeth hurt.”.

” Who are you kidding?” Sneered Wally. “Your teeth hurt because Winston Woodchuck smacked you in the mouth for hitting him with that mud.”

Willie looked sheepish. ” Perhaps you are right. So what do we do to fix this mess?”

” We go to the Union Hall and talk to Wingo. He’s our representative to the Bosses. They can’t do anything without Wingo’s O K .You know that.”

Willie sighed . ” I forgot. Things have changed so much since the World economy crashed two years ago.Everything is so different.So easy. They tell us what to do. When and how to do it, I get tax rebate checks even if I don’t work.”

Wally Woodchuck nodded in agreement. “As long as the Red Woodchuck’s United party remains in power, we can’t get fired.Our share of the Annual Spending Stimulus (A . S . S . ) Pays for our food. Takes care of our landlord. Pays for our health care. We get a monthly stimulus payment. ” He looked at his friend.” And if we mess up at work, our union covers our ASS.”

Warren walked over and joined his friends. Reaching out he patted Willie on the back.” Wally’s right” He said.” Let someone else clean up the mess. There are plenty of woodchuck’s wanting to work.Let them do it if they are so industrious.. Hard work and responsibility are such old fashioned concepts. .”

” Right on baby,” Said cool Wally. The sunlight bounced off his shades, rendering his eyes invisible.” Pre bailout is pase. Give me my stimulus, and let me go play.Working is for squares.Let someone else do it”

He thought about it for a moment, then smiled.” Yes thats it, Let someone else do it. Our New motto. Let someone elase do it.”

Warren and Willie picked up the chant. “Let someone else do it!” They shouted in unison.”Let someone else do it.”

The Economic Rescue and Stimulus Package.(E.R.S.P.) had accomplished its goal.

Woodchuck ambition and innovation had been replaced by government employment. Everyone got a job. Working was optional.

Healthcare was available to every person in the Country, and the quality was equally low and slow for all.

The standard of living was permanentally lowered, but no citizen was forced to work for their lowered standard.

And of course, most important of all,THE RED WOODCHUCKS UNITED party( TRWU) was the benevolent orchestrator of out welfare, safety, and what we can think from now on.

A very comforting thought.

 

 

 

Why the World is Going Broke. Does Anyone Care ?

Friday, May 21st, 2010

Why is the world going broke, and how did we get into this mess.

Start with a homeowner who was granted a mortgage even though he did not deserve one, and couldn’t afford one.

During a dip in the economic cycle, he looses his job, and can’t keep up with his mortgage payments.

He falls behind and ultimately defaults on his loan.

The mortgage company that brokered his loan  to the lending institution , takes a loss on the bad debt and goes broke.

The lending bank has a growing number of  defaulting  mortgages, and fails.

The failed bank had previously packaged and sold its mortgage loans as “derivatives”, to another bank.

The larger bank which bought the first bank’s derivative debt “bomb”, now goes broke.

The government springs into action, bailing out the failied bank, and assumes their bad debt.

As the derivative bombs continue to explode, they turn into a “blitzkreig” which threatens our entire financial system.

The government steps up and spends trillions of dollars to bail out and prop up the “entire world” .

While spending all of this bail out and now stimulus money which it does not have, the government continues to :

Provide Social Security, money , which it does not have.

Provide unemployemnt insurance  for upwards of 20 % of the population for almost 2 years, money , which it does not have.

Provide Medicare and Medicaid and other free health care services, with  money that it does not have.

Provide another trillion dollar health care reform coverage, with money, that it does not have.

Bail out the Bankers with TARP funds, which it does not have.

Bail out the auto industry with money it does not have.

Bail out and protect labor unions, with money that it does not have

When smaller countries, governments, states, counties, and municipalities can no longer afford the growing tide of the social welfare state, they turn to larger governments and countries to bail them out.

Investors seeing the dangerous rising tide of debt and insolvency in the world, buy big government bonds because they are “safer”.

When big governments run out of printers ink, the Ship of State finds inself sailing in rivers of red ink.

Red ink is not as buoyant as clean clear water, and the Ship of State is in danger of sinking.

Disaster lurks !

The main stream media and their very long noses

Thursday, April 8th, 2010

The other day, a business, news report on CNBC talked about the exciting road to economic recovery.

The absurdity of the optimistic dribble left me shaking my head in disbelief.

Walk out of your insulated little cocoon world and look at the reality of life.

Our economy is in terrible shape, and despite the optimistic run up on Wall Street, our status is deteriorating not improving.

Twist the facts how ever you want, the World is in the beginning  stages of an extended deleverage process, unwinding from nearly 50 years of credit expansion.

We have lived beyond our means, existing in a world of hypocritical conspicuous consumption.

Keeping up with the Jonses .

Practicing one upsmanship.

Bigger and flashier is better.

Most expensive is best.

No!! No!! No!!

We are now going to be paying a very hard price, which has just begun.

Western economies in general are hemorrhaging jobs,  money, and slowly we are loosing our freedom.

The deficits are staggering, and growing at an alarming rate, and governments are attempting to keep up by printing fiat paper as fast as their printing presses can run.

The United States is not alone, see Greece,Italy, Great Britain, Ireland,Spain,ET AL.

Our currencies are being diluted, and our grandchildren are being  turned into chattels, to serve a current agenda.

Our future is being wagered upon a foundation of government spending, massive entitlements, and staggering deficits.

This foundation is sitting upon a swamp.

Sixteen Months to Socialized medicine, How about a Capitalist Stimulus to Pay for this mess.

Tuesday, March 30th, 2010

The politicians spent 16 months fighting , quibbling , and arm twisting to pass this massive health care bill which no one has read. and which” we had to pass so that we can find out what is in the bill”.

O K , so it passed.

Now what?

Despite the phony optimism about the recovery of our ailing economy, I still find middle America is living on life support.

Business on Main Street is weak, and sinking further into the “red” with every passing day.

The health care bill is starting to add additional expenses to our bottom line, and the “benefits ” won’t show up for 4 or more years.

What are we supposed to do in the mean time?

The $ Trillion stimulus is a joke.

Not one penny has trickled down to the main stream private sector.

Construction is dead, retail sales are shrinking, the unemployment actual figures remain solidly in the  mid 20’s, and housing is soft and desperately treading water (trying to keep from going under water)

The next wave of foreclosures is a 2 headed viper, coiled and ready to spring, with the commercial loan defaults, and the prime ARM’s due to begin phase II & III later in 20 10 and spilling over into 2011 and beyond.

Wall Street is having a great time, defying gravity, blowing in the wind, and blowing smoke up you know where.

The rich get richer, and those in power become more and more powerful and entrenched at the expense of us, you and me, the citizens of this great country, that sadly is sliding into Socialistic mediocrity at an alarming rate.

Wall Street keeps going up while Main Street is going under water. Why?

Friday, November 13th, 2009

The Federal Reserve and our fearless leaders in Washington have set up a “Can’t Lose” scenario for big bank speculation.

Their traders are almost guaranteed winners . This is  a “no brainer” situation which leaves me  sorry that I left the tradeing desk  a lifetime ago.

The big banks can borrow money from the Fed for close to 0%, which they theoretically should be lending to consumers for mortgages, small business loans, and other economy stimulating  activities.

Instead they are useing this almost free money to speculate or trade in foreign currencies, or to buy commodities such as oil , gold futures, or anything else which is benefiting from a falling dollar.

Prices across the board are being bid up despite the imminent onset of the next phase of our recession/ depression.

Large multinational corporations are showing growing profits due to the weakened dollar . Overseas sales in foreign currencies are brought back to the U S where an additional profit is realised due to the dollars weakness.

If you pay attention to the economic reports, you will notice an exorbitant number of corporations reporting that they exceeded estimates of earnings per share (E P S ) but they are also reporting shrinking sales volume.

The increased profits despite smaller volume is due to cost cutting overhead.( Layoffs) , in addition to the falling dollar.

A win for multinational corporations, a big LOSS  for the American worker.

The Market continues to recover, passing the Dow 10000 mark and not looking back, yet the U S economy is still mired in a spreading recession.

Unemployment is increasing week by week. Last week the new filings for Unemployment insurance wasd ONLY 510000 ..Only!! Are you kidding me.

They say that is an improvemnt showing a turn in the economy.BULL FEATHERS!!! 

 They don’t care.

They have an agenda which welcomes spreading economic pain for the little guy.

In September consumer credit fell almost $ 15 billion, the 8th consecutive month of contracting consumer credit, (Over $ 170 billion total so far)

Considering that consumer debt is still exceeding historical levels by over 60% of income, or almost 2 1/2 to 1 . This indicates an additional correction can be expected, which should exceed the rapid decrease which we have just experienced.

 These figures do not include the mortgage credit markets, creating an additional credit contraction of $ 4 – 6 trillion.

This scenario, coupled with other market factors which we have discussed over the past 16 months will create a serious deflationary spiral, which should accelerate as the prime ARM’s begin to accelerate in 2010-2011.

At this rate of deflation the burgeoning recession/depression figures to have another 5-8 years, assuming that the Government leaves the economy alone,  Which it won’t.

Next- Don’t forget the falling dollar!!! A great way to further muddy the waters .

Why are stocks still going up? The lie of the century!

Friday, November 13th, 2009

Every day I watch the steady increase in stock prices and I hold my breath.

” Will today be the day the world wakes up , looks in horror at their portfolio holdings, and decides to Sell ! Sell ! SELL !!!”

Stocks are going to be hit hard and the Market is going to tank, when people realze that the recovery is a fraud.

There are several things which might set this off, but I believe that the second wave of foreclosures and defaults is getting ready to begin in early 2010.

Rising unemployment is definitely a major factor, pushing many prime mortgage holders over the edge into default.

The depletion of the severance packages given to bankers and other executives in the fall of 2008 and early 2009 is beginning to take a toll. Upper income executives expecting to quickly find new jobs, continued to maintain a semblance of their life style, and with the scarcity of jobs, they find severance pay dissapearing, and bank accounts depleted.

This financial deterioration and continued bleak employment picture is now affecting a new category of exotic mortgages, which were developed in the early part of this decade to enable young executives to take advantage of the exploding real estate market.

Beginning in 2002 and 2003 , just as the real estate market  began to approach its peak, the Alt A, and oprtion ARM’s sprang into existence as a way for these wealths executives to purchase homes that they could not really afford, by offering loans with 5-7 year interest only payments, or low interest mortgages with an adjustable balloon after the 5-7 year period.

Additional creative, no income verification loans were created , featuring low payments for that 5-7 year period, knowing that all of these prime mortgages would adjust upwards after the initial period.

The theory was dependent upon a never ending rise in real estate prices and a endless supply of money available to fund new mortgages.

These adjustable mortgages . by contract with the buyers, are set to adjust not at prime or treasury rates, but at a premium spread above these rates.This is the payment agreed to in exchange for no income verification and low payment options selected by home purchasers.

These higher peyments are confounded by the reality that many of these larger mortgages are already under water.( Loan is more than the value of the home)

The timing of many of these loans during the last phase of the Real  Estate Boom, leaves many with a very high loan to value ratio.

As these loans readjust then end up in defauld , the foreclose rate will accelerate, creating a new real estate tumble.

TOMORROW

WHY IS THE STOCK MARKET DEFYING REALITY

Is Wall Street right? Are things really getting better?

Thursday, October 22nd, 2009

Wall Street might think its right, but its really turning left, and a left turn  isn’t good for Capitalism.

Our investments are doing very well !

The Dow is currently holding above 10000.

And this is a  great achievement when you compare it to last March, but very sobering when you realise that this is where it was in the Spring of 1999. This kind of progress could drive a sober person to drink.

When you factor in the fact that the buying power of the dollar is only 70-75% of what it was in 1999,  a case could be made for investors being down 25-30% during the last decade.

“Hot Dog! Are we running backwards, or what!”

In real terms, almost 15% of us  are unemployed, and home prices continue to fall .

Foreclosures are increasing at close to a  5% rate, and the numbers are growing despite various government sponsored and ineptly initiated bailout plans.

What will the future bring? Are things really improving, or is this a sham perpetrated with mirrors.

The Obama presidency has hit some serious bumps in the road, and his future as a viable President is being affected.

A case in point is the Governors race in New Jersey.New Jersey is a traditionally very blue state, and one that Obama carried by better than 15% .

Despite a highly  uninspired campaign, Chris Christie the Republican candidate is running neck and neck with  Governor Corazine.

The panic in the Democratic ranks is evident by the parade of heavy hitters arriving in New Jersey to try and boost Corazines reelection chances.

In the last week, we have seen Vice President Biden, Former President Bill Clinton, and now the President himself, stump the state in an attempt to engender excitement for Corazine, yet the polls continue to signal a dead heat.

This is not a good omen .

A Democratic loss, or even a close win is a repudiation of the Obama policies, and an abandon ship warning from the moderates in his party.

Obama is stuck in a quandary. All the money spent, and the promises made, leave his presidency in a very difficult position.

Going forward is impossible and going backward is unthinkable.

He can’t back away from his promises to rescue the U S economy, if he does the whole country will loose the glow of hero worship, and the historic election will turn into quite a different meaning.

On the other hand, going forward with his expensive rescue and stimulus programs will take $ trillions additional. Since he doesn’t have the money, he will have to borrow or print more .

He has already used up half the trees in North America printing all this money so far. Who knows how many more trees will have to be sacrificed to the voracious printing presses.

The best hope for a successful resolution for the President would be an economic recovery.This way Obama wouldn’t have to do anything, and he would be able to retain his mantle of invincibility.

That is not going to happen, no matter how much the media and the insiders try to run this rally.

“Why not?” You ask.

If you have followed my writings you already have the answer.

Our system is broken, the recovery is an illusion, and the reality is that we are headed into a much more serious recession/ depression.

The consumer credit economy is dead.

The banks aren’t lending to consumers, and the consumers don’t want to borrow anyway.

Consequently demand is shrinking.

Wall Street has managed to keep its rally going by posting higher profits , which they trumpet, yet lower gross sales, which they whisper.

They call it reduced overhead, but what they mean is employee layoffs, and shrinking benefits.

Rest assured, this recovery is a fraud, and the illusion for recovery is a sham.

One World Economy Who’s World will it be?

Friday, October 9th, 2009

      Hi. I’m Charlie Champion and I am coming to you as a write in candidate for President.

     I have chosen to run as a write in candidate for President because I have grown to distrust out political system.

      It feels like there is a very sneaky , subversive  agenda  being fostered on the American public.
    

     The Socialization of our society is in full swing, robbing the individual of incentive to achieve and create.
 

     With the development of International corporations, and  the globalization of  wealth and production,  our leaders, both Republicrats and Demopublicans  have been leading us on a long sloping path towards a One world economy.

      Out sourcing, open borders, NAFTA, CAFTA, the elimination of duty on many imports, the clues are everywhere.. The money funding so many of our politicians   and their political campaigns appears to pour in from foreign sources.

    
     Our major industries are being nationalized. The banks, the Auto manufacturers, now they are after health care .

 
     The ascendancy of socialism has empowered the labor unions, and their loyalty transcends borders.

     If not a world economy, then certainly a North American Union, possibly Western Hemisphere.

    International corporations survive and prosper but how about us?

       Natural resources from Canada, manufacturing with cheap labor in Mexico or Central America is great for corporate profits and wealthy  CEO’s, but what happens to  your Everyman USA citizens? What do we get out of a World wide economy?

      Nothing good!!!  Very little is manufactured here anymore. We are being turned into a nation of  working drones ..Our freedoms are being eroded, and  our living standards are dropping , while   World leadership and World Economic Emperors of Industry get richer and more powerful.
         Unemployment is growing, our home values are crashing, yet our leaders point to an artificially inflated Stock Market as a sign that all is getting better .
 

     The best Nation in history is being taken away from us.

    

     We are being turned into a Nation of  slaves many working from paycheck to paycheck. We are becoming mindless workers!

 

     I DON’T THINK SO!!! I’m no DRONE!!!!

 

     I’m mad as Hell at what I see coming !! Enough is enough.

    Vote for Charlie Champion for President . This insidious plot must be thwarted.

    Free enterprise not socialism.

     America the Beautiful.

A stock market rally like no other

Monday, October 5th, 2009

The current 7 month rally on Wall Street is unusual for a number of reasons, first and foremost being the lack of statistical relevance.

The underlying fundementals for  publicly traded companies generally provides a reality check that engenders a modicum of sanity to a roaring bull market.

Earnings and the P/E ratio(Price easnings ratio) historically give a focal point for evaluating a reasonable trading range for a companies stock.

This is not currently the case. Most companies have improved their balance sheets by reducing overhead, shedding employees, and reducing inventory.

These factors are admirable ,as corporate America attempts to weather the perfect storm of a heavy recession, an ultra left wing economic policy, real unemployment over 17%, and an arguably ineffective policy of squandered stimulus and corporate bail outs.

“Then why”, you might ask ,” is the market still going strong?”

This rally has no legs to keep it running.

Observations and interaction with the public has made me suspect that the retail public has not been the fuel for this rally.

This suspicion was recently confirmed by a report released by TrimTabs.

In the last 6 months only $ 2.5 billion has been placed into equity mutual funds, while almost 12 times that amount has gone into bond funds, an indication of conservative saving not speculative risks.

The U S investor has watched this rally rather being the fuel for its excess.

Who’s  behind the speculative excess which has seen this unworthy market gain over 50% from its march lows, defying all underlying realities.

The answer has to be hedge funds. institutional speculators, the investment bankers with their TARP money and access to treasury funding as newly accredited banks.

These Go Go managers have a different perspective on the rally.

If indeed the rally turns out to be real, and they miss it, their jobs and reputations are toast.

If the rally fizzles and fails, they are risking someone else’s money.

The risk reward is in favor of maintaining the speculative push.

The danger in this type of speculation is  extreme.

As they jumped into the rise, they will be willing to bail at the first sign of a negative reality.

We saw a free fall market last Fall.

Let unemployment continue to increase.

Let the next round of Prime Adjustable Rate mortgages begin to default.

Let the commercial real estate market crash due to the flood of small and medium sized companies being forced to close.

Let the perfect storm flood the boat.

You have heard the phrase , sink like a rock.

Let the little investor BEWARE.

Are we turning this recession into the next Great Depression?

Monday, September 28th, 2009

It is necessary to revisit an article I wrote last January.

This pertains to a correlation between our current economic situation and the outset of the Great Depression.

There are many disturbing similaritiess, and the critical time line is getting too close.

Read and see if some of these actions taken by FDR sound chillingly familiar.

                             *           *           *
I have been telling you a shortened version of how Hoover and Roosevelt managed to turn a bursting speculative bubble, and a moderate recession into THE Great Depression.

In A previous article I gave you some unemployment data,based upon a Vedder & Gallaway  statistical study in their book “Out of Work”.

 Unemployment in November 1929 , was just over 5% almost two  months  after the market crash .

Unemployment hit a high of 9% + in December 1929, but gradually dropped to mid 6% by the beginning of Summer 1930.

 President Hoover and later FDR began tampering with the economy . They attempting to reduce unemployment  by  imposing  protectionist  tariffs.

This intervention resulted in double digit unemployment , but it was more than a year after the crash.

The more they attempted to fix the economy, the higher the unemployment numbers became.

F D R interfered with the economy more than any President to that time. Previously, it was not considered the business of the Government to  intervene in economic cycles.

The more Roosevelt tried to use government spending to help the economy, the higher the unemployment rates soared.

The methodology which he used , involved putting people to work!  Sponsoring Publick works! Rebuilding and improving the infrastructure! All honorable intentions.

However, let me explain.

Everyone knows the expression,” the road to someplace is paved with good intentions.”

Here is whar Franklin D Roosevelt and several other well intentioned leaders have done, or are about to do.

For clarity, lets shrink everything down to a small parable.

Lets say the President has $ 1 million available to stimulate the economy.The money was from the Treasury , and had come via taxes collected.

He looks at the pile of bills.” Not bad,” He thinks. This is quite a large pile. I should be able to help a great many people with all this money.

He scratches his chin,” My citizens are hurting. Unemployment keeps going up. The people are hungry.”

“What should I do?”

OPTION #1

“I know what I have to do.” He picks up the phone. “Mr Secretary, we must do the right thing. The safe thing.  The Politically expedient thing .”

He holds the phone away from his ear. The voice on the line is speaking loudly.

Finally the President becomes impatient. ” Listen” He says, ” Do you want to help the country, or do you want to get reelected?’

There was silence on the other end.

“We must get money and stimulus directly to the people.” He continues,” We will take our $1 million and create public works jobs .Our people will build bridges, repair roads, construct  hydro electric plants and wind turbine farms.”

” Of the $ 1 Million, $400,000 will go to administer the programs, maybe $250000 will go towards advertising and Public Relations, so that the voters know who created all these jobs.The rest will go directly to the people  to put bread on their tables.” 

 The plan was implemented. The money was spent. The people were put to work… For 1 year…Then what?

In this scenario, which is what happened under FDR, the unemployment rate went up to over 20% and stayed there with a few short term exceptions, for over 4 years.

We had created new dams and new roads, but no new jobs, no new industry, and no new wealth.

OPTION #2

The President takes the $ 1million and calls in CEO’s from 5 small but successful private buisnesses.

” Gentlemen,” He says.” Our Nation is in trouble. The economy is in a slide, and unemployment is growing. “He looks around the room.

“We need your help. Your Country needs your help.

Here is $1million. Taxpayer money. A precious public trust.

I want to give it to you Gentlemen to invest.

Take the money, go back to your businesses and invest this public money. Use it to expand your business. Enter new markets, create new wealth.”

THE GREAT DEPRESSION ENDED IN 1932. A GENERATION OF PEACE AND PROSPERITY ENSUED. A WORLD WIDE VISION OF CORNICOPIA BECAME A REALITY. A LITTLE KNOW RADICAL GERMA, ADOLPH HITLER WAS LAUGHED OFF THE WORLD STAGE.THEY DIDN’T NEED HIM, THEY HAD PROSPERITY.