The Voodoo that Feds Do

Okay, I just migrated away from my blog without saving an hour worth of work and it is all gone. So without all the verbage I had written, here are some well worth the read links about how the Fed is doing, and has for decades done, a terrible job and is in no small part responsible for the mess we are in, and is in no small part responsible for the new bubble we are seeking to build to get out of the last. I only hope they fail miserably so that we can suffer and take our medicine now. I for one do not want to put our mistakes on my children to deal with.

http://www.nakedcapitalism.com/2009/09/5324.html

http://www.calculatedriskblog.com/2009/09/fed-and-subprime-lendng-watchdog-that.html

To the Moon Alice!!

I think the market is taking off from here, not. Why not, let me count the ways:

• consumer debt, while a smidge lower than it was at the beginning of the year, is still near historic high;
• unemployment, while slowing, is going to go over 10%, perhaps 12%, and real unemployment is much higher, so this does not bode well for an economic recovery;
• commercial real estate is heading into the dumper big time. I need not link anything here if you are reading up on things, but daily there are articles on how hotels, malls and the like are suffering;
• residential real estate is reaching a bottom but, absent first time home buyer incentives, is still sucking wind. Builders still cannot hope to make money, especially if you include condos, which most stats do not include;
• the market has climbed to a very high P/E, even in good times. This glass is the more than half full society is bound to come back to Earth;
• there is a well known shadow inventory in the housing market. This is based on banks not foreclosing, homeowners not listing properties they would like to sell and the like. While official inventory is reduce down to less than eight months supply, we will see . . .; and
• the too big to fail banks still have significant toxic assets on their books. No one, including them, knows how much.

And so folks, I continue on the doom-and-gloom troop. I dare you, convince me I am wrong.

Disclosures: None.