No Jobs, No Jobs! Maybe Never!

I must say that I'm totally flabbergasted that the Capital Markets are doing so well. Its a tribute to the Global Market Manipulators, just like in the good times that can operate in any climate.
Why is it that Spain can have a 18.5% unemployment rate, but their stock market is outperforming France, Germany, & England? Why is it that the US Dow & SP are doing just find when true US unemployment is well above 10%?
I think I have finally come to the answer, the worker has become irrelevant, and thus the consumer when it comes to a companies profitability. Corporations around the World don't need huge market share if they keep more efficient control of costs, thus I unfortunately suspect that jobs are not coming back, especially the high paying middle class "white collar" ones! Gone forever, I'm afraid!!

My Mortgage Payment isn't the Problem

Funny, but it used to be that your Monthly Mortgage Payment would be the "killer" payment that would ultimately "bust the budget!" Now, it's those other creepy / sneaky Property Taxes, Insurance (homeowners, flood, life, auto, medical, dental, etc), and Technology bills (cable & cell) that break your back! It seems every time your ready to get ahead of your monthly expenditures, there they are demanding your attention since they usually represent a substantial amount $$$.
When will it ever end, premiums that don't leave anything left over for those important items, like food for instance. Low interest rates have kept my Mortgage Payment reasonable, but I don't know if I can survive with those I N S U R A N C E and T A X increases to provide me with services and benefits that I don't seem to be able to get my "teeth into!"
I'm totally frustrated on this subject and I just can't stand it!

TREASURY "KEY" MARKETMAKER

Let me keep this very simple. Government TARP gave money to Banking & Financial Institutions by printing money from our US Treasury to enable them to stay solvent and begin lending money to businesses and consumers. The Banks are now stable because they received these billions and are in turn buying "treasury notes" with their surplus cash in mass which keeps interest low and not lending. Therefore banks having no obligation to offer attractive money market rates or CDs to their bank customers keep safe modest returns and get very wide profit margins from their outstanding business and consumer loans.
The Government and Treasury are continuing to stimulus Housing ($8,000) first time home buyers program and Auto Industry by ($4,500) cash for clunkers! They have also been busy buying into the Equity Market on the "qt"to instill confident.
Its now a game of what came first "the chicken or the egg" which no one knows or willing to admit?
Now we are way in uncharted waters!!

Commerical Property - Big Elephant in Room

Many Regional and National Banks are as they say "kicking the can" down the road. They have many delinquent and soured commerical loans on the books and with the other "toxic residential loans" still hanging somewhere around they just don't have any strategy to get themselves whole. You really can't blame them, what do you do with a 100% or 50% vacant shopping center or office building once you foreclose?? Hang out a For Sale Sign and maintain these properties for the next five years or longer?
Additionally, the Federal Reserve isn't putting any pressure to bear on these member banks since they also recognize the "catastrophic repercussions" of another financial Waterloo!
So maybe the "elephant" will go hiding somewhere in the back room. Only problem is that its really starting to "stink up" the place!

STOCK MARKET DISCONNECT

Stop "scratching your head" I know you don't understand how you, me, and your neighbors are struggling and falling deeper and deeper in the economic abyss and yet Wall Street is just doing fabulous with corporate earning beating expectations and the Dow, S&P, and NASAQ recovering just nicely.
If your convinced now, you never will be that you and I as small insignificant investors really aren't needed to drive the averages higher. As a matter of fact we never were but just happened to be along for the ride. Corporations have eliminated all the high paying jobs now (cleansed the books) and have reduced inventories and are concentrating on profits from lower sales and pushing for higher margins. Technology has enabled institutions to effectively operate more efficiently with less people and of course is very bad news for the unemployed and the "come back" of high paying white collar jobs.
Additionally, the financial institutions have benefited from the TARP money and still aren't being asked to put a value on the "toxic assets" still on their books as our Treasury is well aware.
Short term I expect the stock market to remain in a positive mode for the next couple of quarters, but as the American Consumer becomes more frugal as their unemployment compensation and their remaining savings evaporate, I expect the "crap to hit the fan" beginning in the first quarter of 2010.

CASH IS KING!

How many times have we heard your father's voice in your subconscious say the old saying:
CASH is KING??
I have a very substantial Brokerage Account where my IRA money resides and my Investment Banker, just like the Federal Reserve and Treasury are trying their hardest to convince me that its time to dump my money into Equities to "bet" on higher returns. They have insulted me by posting my portfolio in comparison to a person my age to graphily illustrate what an "ass" I'm by stipulating that I should have at least 55% of my money in Stocks!
At age 63 I'm a complete coward after loosing $100,000 hard from my company's 401k in 2008. I now have 95% of my money in low yielding CASH. My average return is 1.5%! I'm playing a game of "chicken" with the Federal Government that can't continue to run the printing presses and I strongly believe by next year at this time I will get some attractive returns for my cash. So if you are like me, be steadfast and patient because I can't believe in a corporate turn around for some long time to come and I certainly can't afford to be gambling at this stage of my life.

Unemployment Continues to Get Worst!

When the June unemployment numbers were released last week, it scared me because the deeper the numbers increase month after month the longer and more difficult it will become for the economy to show any true signs of recovery. Reason, the people unemployment are also getting more and more frugal and aren't spending and the multiplier affect sets in causing business to fail and laid off more people.
The unemployment rate stands at 9.5% which is the highest since 1983, but the horrifying number is a broader measure established by the government termed "U6" which constitutes workers who have quit looking for jobs or who can't find anything in their fields of expertise.
That rate is up to a whopping 16.5%.

Financial Advisors Beware!

Bernie Madoff will be sentenced today and whether its for 12 years or 150 years it doesn't matter. The real questions are yet to be determined, like did he really act alone and be able to singularly manage this fraud for over 25 years in excess of Billions without help?? I hope you are not that naive. Madoff is the "fall guy" for some major names associated with the financial establishment, it just doesn't make logical sense to think otherwise.
It is my humble and non confirmed opinion that its simply impossible to deceive that many regulatory agencies, to include the SEC as well as his accounting firm decade after decade unless many others were involved outside Madoff's firm!
Now that all the damage is done, its almost totally impossible to believe any financial institution representing integrity of a corrupt market that is still being manipulated on the impulses of people only to make money in the short term. Suck you in and suck you out. It you think I skeptical that this mess will self correct, you are absolutely right. Look... Watch.... & Listen!!

CD Rates Will Go Up!

All of us who have allot of money in cash, money markets, treasuries, and CDs are being made to feel very foolish right now with the ridiculously low yields being offered. The Government and Financial Institutions want you to become impatience as many of us have and start dumping the remainder of our cash into the Equity markets.
Remember: printing billions in paper in conjunction with historically high federal deficits will ultimately demand rates get higher. I'm not insinuating that it will happen this year, but I do strongly believe it will occur as early as the second quarter of 2010.
So for now avoid the temptation to surrender into the Stock Market because once the treasury stops the printing presses all Hell will break loose and rates will rise rapidly!

Keep Print Money!

Boy, I'm certainly comfortable (sarcasim) that the rest of the G8 agree with us that printing money is the only way to avoid a global economic disaster. Only Canada and Germany have any fear of Hyper Inflation! Maybe Germany remembers those old "wives tales" about wheel barrels of money to buy goods!
Unfortunately, I happen to believe that the Global Consensus is mistaken with their present path. All monies will be less valuable and will only delay the eventual Financial Armageddon because there is no "pretty way" out of this mess. Let's face the music sooner than later. The longer we pretend that we can subsidize our debt the worst will be the outcome.
Who wants to revert back to the barter system anyway!

Math vs Ideology?

Is anyone in Washington doing the math these days? Take the GM bankruptcy issue for an example, my five year old grandson knew that it was apparent that GM wasn't going to make it in its present financial state, but our Federal Government gave them a Christmas Present of $18 Billion and now that they are going bankrupt the Fed's are printing up another $18 Billion.
I never knew that you give a company money to go bankrupt in the first place. What does that come out to per remaining employee of GE ... $100,000+ ??
No accountability and eventually it will kill us even more with much...much... higher interest rates with little available credit!

Economist say Worst is Behind Us

Boy it sure is reassuring to know that 90% of our national economist (who still have jobs) agreed that the worst of our economic woes are behind us. That's really makes me feel "warm & fuzzy" especially since 98% of these same morons said that the Sub Prime Mortgage crisis would have negligible impact on the overall economy.
Now don't you feel better knowing that you can't get laid off twice!
Make it a great day.

Consumer Confidence Surge?

Are you buying, literally or do you think its bull?
Gee its so great when the government can create their own consumer surveys to say whatever they need for the moment. Confidence is a relative term. For instance if you lost 40% of your 401k's value and now it's recovered 10% then that makes you optimistic.
If you still have a job and won't be laid off even though you thought you would, then your up-beat!

Think about it.... our banking system is still playing a "shell game" but they aren't showing the pea! The automotive system is in complete ruin with thousands of works and support industries still awaiting casualties. The states across this nation are in peril of huge deficits to include CA and state pension funds are a disaster, but the "brain dead" consumers are still "high" on confidence.

Then God Bless America.

Money & Market Minutes by Conrad Peditto

Federal & State Governments in Denial

Yes, most of us that have experienced a prosperous household for most of our adult live really to a major degree are in denial about the future economic prospers of the US economy. As long as there is a credit card or an equity line of credit to still spend money, we are delaying the unavoidable.



Well both federal and states are also in complete denial because as tax revenues have plunged across the nation, we have had US Postal rates increase by 2 cents. States have raised tolls on their bridges and expressways and other than most recently CA, no legislators or senators have voted in a salary pay cut!



End game is someone has to come clean and truly ring the alarm bells and we must all stop pretending that things will be back to normal by 2010!

Money & Market Minutes by Conrad Peditto

Investors Excited by Banks Issuing Common Stock

What am I missing here? All wire services are making this prolificate annoucements that Bank of America, JP Morgan Chase and others are raising hundreds of millions of dollars to pay back TARP but selling newly created common bank stock!

Hello! Isn't that a form of dillution of shareholder value. More stock outstanding less value!

I really feel sorry for all of the finanical MBAs out there because all of the economic rules that I always cherished are being broken on a daily basis. Then again what the hell do I know!

Money & Market Minutes by Conrad Peditto

Your aren't Buying into the Stock Market?

Boy, it sure is dam tempting to take some of that high yielding 1% interest money market money and put into some commodity fund or solid "blue chip" large cap stock, but that is exactly why we are once againbeing programed back into the market.

They know you can't continue to live of zero return on your cash. Greed, it got them there and now they want you again. They need your cash, that's how they get paid.

I realize you are paying over $1200 a month for your COBRA, but remember another virtue to adhere to, patience. I realize that's difficult when some of your friends are now starting to brag about their recent returns.

Watch out and be careful,

Conrad Peditto