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  • Subprime Mortgage Crisis #2 in the Making?

    In May 2009, President Obama created the “Financial Crisis Inquiry Commission” (FCIC) to investigate the causes of the financial crisis of 2007-2009. Basically, the FCIC put the blame for the financial crisis on lax regulation, greed on Wall Street, faulty risk management at banks and other financial firms and on households for taking on too much debt.

    The FCIC’s Democratic majority placed the blame for the financial crisis on the private sector and dismissed the idea that government housing policy could have been responsible. The report went so far as to suggest that Fannie Mae and Freddie Mac, and the politicians that oversaw them, were not the cause of the financial crisis.

    I strongly disagreed in my May 18, 2010 E-Letter and now a new book on the subject comes to the same conclusions that I did. Now Fannie and Freddie and the politicians responsible are back in the news again.That’s good!

    What is not good is the recently reported fact that the government is once again pressuring regional and community banks to make mortgage loans to low income families that can’t afford them. This could be the making of subprime loan crisis #2. You need to know about this, and I will give you the details as we go along.

    To round-out today’s letter, I will show how the so-called government “Agency Debt” – that which is supposedly not backed by the full faith and credit of the government – really is guaranteed by the government. Agency Debt has exploded over the last 25-30 years, yet it is not included in our official national debt. You need to know about this as well.

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  • Fannie & Freddie - The Unnecessary Disaster

    Earlier this month, mortgage giants Fannie Mae and Freddie Mac requested an additional $19 billion in government bailout money just to stay afloat. Since Fannie and Freddie were taken over by the government in September 2008, the government has poured $145 billion in taxpayer money into these mortgage agencies. These quasi-government agencies have been out of control for decades, and I will argue that they were largely responsible for the housing bubble, the financial crisis that followed, and the Great Recession. The Bush administration tried to reform these agencies for years, but the Democrats blocked all such efforts. Why? Because Fannie and Freddie were huge political contributors. You will definitely want to read this week's E-Letter, and you will probably want to share it with others. Feel free.

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  • Consumer Confidence & Bank Lending Plunge

    Two economic/financial reports last week were shockers and support my view that we may be facing a double-dip recession. First, consumer confidence unexpectedly plunged in January - no analysts that I read saw this large a drop coming. Second, the Federal Deposit Insurance Corporation (FDIC) released its quarterly report which showed that lending by US banks plunged last year in the sharpest decline since 1942. We also saw new unemployment claims spike higher for the week ending February 20.

    What does this all mean? For one, the economy is not improving and more and more Americans are coming to know this. And banks are still not lending - what else is new? Are we indeed headed for a double-dip recession? Maybe, maybe not, but the odds are increasing. This week, we go over the latest reports, and try to come to some conclusions. And we end on a personal note from me. Let's get started.

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  • Market Mayhem & Credit Fears - What's Next?

    Market Mayhem & Credit Fears - What's Next? IN THIS ISSUE: 1. The Economy - The News Is Not All Bad 2. Consumer Spending Remains Firm For Now 3. Housing & Subprime - More Bad News 4. Should The Government Come To The Rescue? 5. The Fed Needs...
  • Stock Prices Plunge In The Perfect Storm

    Stock Prices Plunge In The Perfect Storm IN THIS ISSUE: 1. Stocks Make New Record Highs, Then Plummet 2. Forget The Cheese, Just Let Me Out Of The Trap! 3. Unwinding The "Yen Carry Trade" 4. Fed & Central Banks To The Rescue 5. So What Next...