Are You Outraged Yet? You Should Be!!

A couple of days ago the market dropped due to an analyst downgrading Wells Fargo to sell from hold. Part of the reasoning was that the Wells Fargo profit was tied to mortgage servicing, which is not an income stream that is sustainable in the long run. As it turns out, however, the companies making the most from loan servicing include Bank of America, Citigroup and JPMogan Chase; go figure.

http://online.wsj.com/article/BT-CO-20091022-708579.html

So hey, you say, what does it matter where their profit comes from. Well, if you understand the situation, you are going to be just a little bit pissed off. Let's start with the fact the these financial institutions brought us the financial meltdown of the past year or two by playing a lot of financial games. We are talking derivatives and high leverage games that led to serious problems from which the entire planet is suffering. Next we move to the fact that we the people bailed out their collective arses at great cost. Our government debt is at record levels and our children and grandchildren will pay the price. Then we move on to how these too big to fail idiots continued providing big bonuses to themselves and dividends to their stockholders with our money. Upset yet? You will be. Now many of these companies are returning to profitability despite record numbers of Americans losing their homes due in no small part to the policies of the financial institutions. What do I mean by that?

Well, most banks securitized their mortgage portfolios and sold them off to investors. The loans were sliced and diced ad infinitum. Yet they remained the servicers on the loans, extracting fees for collecting payments and foreclosing on homes. As it turns out, many of the financial institutions that created the current mess are making loads of money off of the misery of those facing foreclosure. They are profiting from our pain and they are avoiding loan modifications because they can make more money through the foreclosure route. Are you outraged yet?

http://www.creditwritedowns.com/2009/10/why-mortgages-arent-modified-and-what-a-ruling-stopping-foreclosures-means.html

Disclosures: None.

I am Totally Doubting My Vote.

I voted for Obama. I have for years liked McCain but during the election he caved too much to the far right and made some rather radical statements, and then he had Governor Palin as VP and I had no choice. Not that I was adverse to Obama, but I was not totally sold on him and among Republicans McCain was one I felt I could support. I am still not saying I would vote for McCain, especially with his inexperienced Alaskan sidekick (not saying here that I like Biden, but he has some experience), but I would have many more reservations about Obama if I knew then what I know now. I did not vote for him in the primary and now I believe I was right.

So why so down on Obama? Well, he is paying attention on the financial front to idiots. You know, like Geithner, Summers, Bernanke, Paulson and the like. Meanwhile he is ignoring tons of respected economists who say to nationalize and break up the too big to fail idiots that brought us her. He is ignoring his respected advisors. He is building a new bubble, inspiring people to spend when they need to save. Building new problems, I suspect for political banefits, not benefits to the country. I am truly disheartened by his financial performance to date and truly believe we are financially in a very, very precarious state at this moment.

One man I respect is Paul Volcker. One reason I voted for Obama is that he had Volcker on his staff of economic advisors. Now the elected idiot is ignoring (and has for some time) his most knowlegeable and least biased advisor. WAKE UP OBAMA AND LISTEN TO THIS MAN!! HE IS SAYING THINGS FOR THE NATIONAL GOOD, NOT THE WALL STREET GOOD!! If this jerk does not wake up soon I will actively campaign against him in three years, probably sooner.

http://business.theatlantic.com/2009/10/volckers_quest_to_reinstate_glass-steagall.php#

Disclosures: I am a life long Democrat and doing this post was totally against my grain but someone has to do it.

The End is Near - Or at Least a Lot Closer!!

I am squarely back in chicken little territory (like I ever left). Nonetheless, I have this really bad feeling. It could be the market reversal between March and now being the most extreme since the Great Depression (what was so "great" about it) or it could be that consumer debt versus income is still at record levels and climbing.

Either way, we are into the old bubble pop territory. Yep, I am not feeling at ease about this recovery. You judge for yourself.

Disclosures: None.