Foreclosures Forecast For 2010
By Chuck Butler
Good day... And a
Happy Friday to one and all! A Fabulous Friday
in my book so far... The wind is blowing so hard
outside that the door to the building wouldn't
open for it was opening against the wind! Have I
told you all recently how much I dislike cold
weather? I gotta go where it's warm! And...
Hopefully I will next week, when I head to
Orlando for the Money Show... Last year, it was
cold there too, so I was very disappointed! But
back in the day when Alex was young, we used to
go early, and spend a few days at Disney World,
we always had warm weather then...
OK... Another day, another day of listening to
dolts talk about rate hikes coming in the near
future for the U.S. I'm going to go into the
reasons, and please notice, I have an "s" at the
end of reason, in a bit, for why I think these
people are showing their doltness...
The Currencies, which had rallied during the
European session yesterday morning, got sold
during the U.S. session, VS the dollar the rest
of the day... The data in the U.S. was nowhere
near what was expected, thus showing that the
economy wasn't as strong as suspected, which
brought about that same old tired trading theme
that's really beginning to give me a rash!
So... We start this Fabulous Friday on the
downside with the non-dollar currencies... The
euro continues to get dragged through the mud
and muck of Greece's debt problems... I did a
short interview with Reuters yesterday, and told
them that I truly believe that this smashing the
euro is getting completely overdone, and blown
out of proportion... Sooner or later love is
gonna get ya', Oh, really Chuck, was that
necessary? Sooner or later, the European Union
and the IMF are going to step in, and fix
Greece's debt problem... And this will be just a
I told the Reuters reporter that I didn't
understand why, if the euro was getting sold
because of Greece, why the dollar wasn't getting
sold because of California, and California is
the world's 8th largest economy... I don't think
you'll find Greece anywhere near that size! I
also told the reporter that I believed that
traders and investors were forgetting about all
the skeletons in the dollar's closet... At least
for now they are!
Here's a skeleton that's a BIGGIE in my book...
According to RealtyTrac Inc. foreclosures here
in the U.S. will probably reach 3 million this
year, surpassing the record of 2.82 million
foreclosures in 2009...
And that brings me to the reason(s) why the Fed
can not entertain raising interest rates any
time in the near term...
The Fed has been buying mortgage backed
securities, read toxic waste bonds, from
financial institutions for almost a year now...
The Fed Heads stated when they first began this
program that their intention was to sell these
bonds back to the market once the sky cleared...
Well... Should the Fed raise rates, these
mortgage backed bonds would lose value... I've
explained this before, but for those new to
class, when dealing with bonds, yield and price
have an inverse relationship. When yield goes
up, price goes down, and vice-versa... And...
When you have a bond with a stated yield, and
interest rates go up, then the new higher
yielding bond has more value, and thus the "old
bond" is worth less...
So... The Fed Heads can either raise rates and
take HUGE losses on their books, or continue to
hold these toxic waste bonds, and eventually
have to take losses on mark to market moves...
See above regarding the 3 million foreclosures
forecast for this year... Raising interest rates
would sink whatever life the housing market has
Unemployment... I saw John Williams latest
report on Unemployment yesterday... For those of
your new to class, John Williams is a former
Gov't accountant that started a website called
"Shadow Stats" and John goes through Gov't
reports and gets down and dirty with them,
taking out all the hedonic adjustments, and
cooked books, and reports "real data"... Well,
John's latest report on Unemployment shows the
unemployment rate to be 20%, not the 10% the
Gov't claims... OMG!
There's no way on earth, the Fed Heads are THAT
stupid to raise rates when unemployment is 20%
in this country!
When... Have the Fed Heads ever been
"pro-active"? They'll hold on to these near zero
interest rates until the cows come home, and
then it will be too late to begin to fight
I'm sure I could think of a few more, but I
think that's enough for today!
Speaking of Fed Heads... I see where Big Ben
Bernanke was finally confirmed to a second term,
as Fed Chairman, yesterday... But not before
some senators took some deep cutting shots at
the Fed Chairman! Jim Bunning, who I had to
explain to all the youngsters on the desk here
was a former major league baseball pitcher, led
the charge against Bernanke... Everything the
senator said was absolutely true... Of which,
one of the quotes went like this, "you (Bernanke)
has turned the Fed into an arm of the Treasury."
The vote was interesting in that, no Fed
Chairman confirmation has ever had as many "no"
votes as Bernanke received yesterday! I would
have voted no, but then I probably didn't have
to say that, as long time readers know that I am
not fond of "Time Magazine's Man of the Year"...
I still say that the American public have the
right to know what goes on at the Fed, and who
received funds from the Fed during the financial
crisis... We would know all this if the
lawmakers would get off their duffs and pass Ron
Paul's "audit the Fed Bill"...
Watch the major dumbed down media drool all over
themselves today, when they announce that the
U.S. 4th QTR, annualized GDP was the strongest
growth in 4 years, at +4.7%... These dolts will
conveniently forget to mention that the growth
was mainly Government stimulus, but don't let
that get in the way of a "feel good story"...
Someone with a little intestinal fortitude
should stand up and ask the question... "How can
we have 4.7% growth when 2/3rds of our economy
is consumer spending, and we have 20%
Don't get me wrong here... I live here, and
would love to see "full employment, and 4.7%
growth"... But, we don't have full employment,
and in reality, we don't have 4.7% growth
A couple of weeks ago, I did a video on our
deficits... One of those deficits was the
"leadership deficit"... This isn't just the
Gov't... It's the Central Bank and Treasury...
And Credibility is a big thing when it comes to
leadership... This latest fiasco involving the
Fed and Treasury, regarding the payments made by
AIG, with Gov't bailout money, to financial
institutions... You see, these financial
institutions weren't figuring on receiving 100%
of their contract amount... They figured they
would be happy to get 1/2 the money... But...
The Treasury instructed AIG payments to be 100%
of the contract, thus causing Billions on
Billions of taxpayer money to be spent when it
didn't have to be!
Don't worry, the guys in charge at that time
were our old friend, NOT! Henry Paulson, and NY
Fed Chief, and now Treasury Sec. Tim Geithner...
They'll have some sweet, fat, jobs waiting for
them once they leave the Gov't... (Paulson
already has one!) (and rumors are going around
that Geithner has finally figured out Turbo Tax!
So... Going down the list of reasons why
foreigners would shy away from U.S. assets,
would be a long list, but it would include,
Corporate scandals, ponzi schemes, lack of
regulation being carried out, the age of
ignorance at the Federal Reserve, lack of yield,
lack of credibility, and a lack of leadership...
That's not all, but I was getting upset typing
Then there was this... Remember last spring,
when I tried to explain to the dolts at CNBC of
how I suspected there was "outside forces"
pushing stocks higher, and they mocked me, and
told me to take the story to Hollywood? A couple
of weeks ago I told you about a guy named
Charles Biderman, had discovered proof that the
Government was involved in the stock moves?
Well, a reader was kind enough to send me
this... If this stuff is of interest, then you
might want to watch this fascinating television
Unfortunately, this was not seen on American
television. Again... Our dumbed down major media
would never look into this kind of stuff...
Currencies today 1/29/10: American Style:
A$.8955, kiwi .7080, C$ .9395, euro 1.3965,
sterling 1.6135, Swiss .9530, European Style:
rand 7.5575, krone 5.8850, SEK 7.3325, forint
193.85, zloty 2.8985, koruna 18.7355, RUB 30.36,
yen 90.25, sing 1.4035, HKD 7.7675, INR 46.17,
China 6.8268, pesos 13.01, BRL 1.86, dollar
index 78.99, Oil $73.79, 10-year 3.65%, Silver
$16.30, and Gold... $1,084.40
That's it for today... Tomorrow is BIG DAY! For
it's our Little Christine's Birthday! Yeah for
Christine! Our Little Christine was born the
same year that I got married! Uh-Oh, she won't
be happy that I said that, for some people with
math skills will be able to figure out her age!
HA! Christine began working for me when we
barely had 10 people in the office... She's
gotten married, had two adorable boys, and is
still the same fun loving, hard working person
after all this time of working for me! HA! (My
beautiful bride can't believe anyone would work
for me 1 year, much less multiple years!) One of
our customers call her "Super Chris" So... Happy
Birthday, Christine... I hope your day is grand!
I'm taking Chris Gaffney to lunch today to
celebrate his birthday... We never leave for
lunch, so both of us leaving for lunch at the
same time is uncharted waters! Mike Meyer will
have the conn! I hope you have a Fabulous
Friday, stay warm, and raise a glass to our
little Christine tomorrow!