"But I thought the bottom was in?"

Client to broker as Dow plunges yet again:

Client: "...but,... But I thought the bottom was in? You told me the bottom was in, what do I do now"

Broker: "Pray."

There's a sucker born every minute, and Wall Street has the market cornered. Sucker's Rally, Dead Cat Bounce...call it what you will. You can't say it wasn't expected to turn out this way. The Three Stooges', Bernanke, Bush, and Paulson, cup of lies runneth over. In the past their lies might buy the markets a couple weeks, maybe a month's time, before they'd continue lower. Now their lies are good for buying time for just a day or two. There are fewer suckers left. Realists are now being born every minute. And the reality is that this "credit crisis" cannot be fixed. Period. The ship is sinking, and the rats aren't wasting time jumping it on each little rally inspired by these three clowns lies.

Duped far too many times by the lies spewed by Wall Street and Washington, investors will soon be on a mission in search of the Truth. And as we know, that Truth is Gold, and it's trusty sidekick Silver. As we have said many times since the first of the year, it will be the investors discovery of, and rush to, Gold that will propel it to "infinity and beyond". The lines are forming at bank exits as we type...

Wall Street in Financial Stock Fantasyland
...a gigantic flood of money [is] betting that the bottom is in for financial and real estate stocks.

But is that the case? Is the credit crisis over? I don't think so. And I ask you to consider, for a minute, Wall Street's forecasting track record on this issue ...

They said the same thing when the Fed started cutting rates last fall ...

They said the same thing when the Treasury rolled out the HOPE NOW mortgage modification program ...

They said the same thing in January when the Fed stepped up the pace of rate cuts ...

And they said the same thing in March when the Fed helped engineer the rescue of Bear Stearns.
http://www.moneyandmarkets.com/Issues.aspx?Wall-Street-in-Financial-Stock-Fantasyland-2015


Unthinkable Truth; Undeniable Reality
The truth may be unthinkable, but the reality is undeniable:

Much of our nation's financial structure is collapsing, and our government's only response is phony money, bogus bailouts and a litany of false promises.

Ben Bernanke, Henry Paulson, the FDIC and the U.S. Congress say they can do it all.

They say they can save bankrupt brokers like Bear Stearns ... take over recently failed banks like IndyMac Bank and First National of Nevada ... prop up insolvent mortgage giants like Fannie Mae and Freddie Mac ... refinance millions of defaulting mortgages ... dish out hundreds of billions in tax rebates ... and still have enough cash in the kitty to cover the next round of financial collapses.

They say their unbridled money printing won't devalue the U.S. dollar.

They say their unlimited pledge to guarantee junk mortgage bonds won't sabotage the credit of the U.S. Treasury.

They say their blank checks to private companies won't rip off U.S. taxpayers.

They'd have you believe they can outlaw the cycle of boom and bust ... repeal the law of supply and demand ... even freeze the march of time.

In the real world, of course, no government in history has ever been able to do anything of the kind, and they know it.

In the real world, their "solution" is part of the problem, and they know that too.

They know that wealth is generated from work — not from the paper money they're printing.

They understand the hazards of indulging the most daring debtors and rescuing the most reckless risk-takers.

They know darn well the fatal flaws of the course they've chosen. But they proceed to pursue it anyhow.
http://www.moneyandmarkets.com/Issues.aspx?Unthinkable-Truth-Undeniable-Reality-2024



Home Foreclosures Soar 121 Percent
As foreclosures continue to soar, 220,000 homes were lost to bank repossessions in the second quarter, according to a housing market report Friday issued by RealtyTrac.

That's nearly triple the number from the same period in 2007.

A total of 739,714 foreclosure filings were recorded during that three-month period, up 14% from the first quarter, and 121% from the same period in 2007. That means that one of every 171 U.S. households received a filing, which include notices of default, auction sale notices and bank repossessions.
http://biz.yahoo.com/cnnm/080725/072508_foreclosure_figures_up_again.html


Fannie’s and Freddie’s free lunch
Defenders of the bail-out argue that these institutions are too big to be allowed to fail. If that is the case, the government had a responsibility to regulate them so that they would not fail. No insurance company would provide fire insurance without demanding adequate sprinklers; none would leave it to “self-regulation”. But that is what we have done with the financial system.

Even if they are too big to fail, they are not too big to be reorganised. In effect, the administration is indeed proposing a form of financial reorganisation, but one that does not meet the basic tenets of what should constitute such a publicly sponsored scheme.

First, it should be fully transparent, with taxpayers knowing the risks they have assumed and how much has been given to the shareholders and bondholders being bailed out.

Second, there should be full accountability. Those who are responsible for the mistakes – management, shareholders and bondholders – should all bear the consequences. Taxpayers should not be asked to pony up a penny while shareholders are being protected.

Finally, taxpayers should be com­pensated for the risks they face. The greater the risks, the greater the compensation.
http://www.ft.com/cms/s/0/c6999a06-5994-11dd-90f8-000077b07658.html


Take taxpayers off hook for rot at Fannie, Freddie
By John McCain
Americans should be outraged at the latest sweetheart deal in Washington. Congress will put U.S. taxpayers on the hook for potentially hundreds of billions of dollars to bail out Fannie Mae and Freddie Mac. It's a tribute to what these two institutions — which most Americans have never heard of — have bought with more than $170-million worth of lobbyists in the past decade.

With combined obligations of roughly $5-trillion, the rapid failure of Fannie and Freddie would be a threat to mortgage markets and financial markets as a whole. Because of that threat, I support taking the unfortunate but necessary steps needed to keep the financial troubles at these two companies from further squeezing American families. But let us not forget that the threat that Fannie Mae and Freddie Mac pose to financial markets is a tribute to crony capitalism that reflects the power of the Washington establishment.
http://www.tampabay.com/opinion/editorials/article735638.ece


'Stealth' Housing Bailout: It's Bigger Than You Think
With Congress on the eve of passing a historic bill that would give the Treasury a blank check to lend money to Fannie Mae and Freddie Mac, it’s worth looking at how much money the government has already pumped into the system during the housing crisis.

The numbers are staggering and likely to get much larger. What we have here is, through a variety of programs, a stealth bailout where more than a trillion dollars of taxpayer guarantees have been extended to the housing market, both to keep it going and to clean up the mess from the past.

The total: $1.43 trillion.
http://biz.yahoo.com/cnbc/080725/25851253.html


Two more US lenders bite the dust as loan defaults soar
US BANKING regulators closed two lenders in California and Nevada two weeks after the collapse of IndyMac Bancorp, as loan defaults and foreclosures soar.

First National Bank of Nevada, with $US3.4 billion ($35.6 billion) in assets, and the Californian First Heritage Bank, with $US254 million, lacked sufficient capital, the Office of the Comptroller of the Currency said last week in a statement. Their deposits and some assets would be acquired by Mutual of Omaha Bank, the Federal Deposit Insurance Corporation said.

"This is part of the wringing-out process that we need to go through," the Senate Banking Committee chairman, Christopher Dodd, said on Saturday in Washington after the Senate vote. "I would anticipate there will be some additional bank failures."
http://business.smh.com.au/business/two-more-us-lenders-bite-the-dust-as-loan-defaults-soar-20080727-3ls0.html


Bush administration projects record 2009 deficit
WASHINGTON (AP) -- The government's budget deficit will surge past a half-trillion dollars next year, according to gloomy new estimates, a record flood of red ink that promises to force the winner of the presidential race to dramatically alter his economic agenda.

The deficit will hit $482 billion in the 2009 budget year that will be inherited by Democrat Barack Obama or Republican John McCain, the White House estimated Monday. That figure is sure to rise after adding the tens of billions of dollars in additional Iraq war funding it doesn't include, and the total could be higher yet if the economy fails to recover as the administration predicts.

The result: the biggest deficit ever in terms of dollars, though several were higher in the 1980s and early 1990s as a percentage of the overall economy.

"Whoever becomes the next president will have a very, very sobering first week in office," said Senate Budget Committee Chairman Kent Conrad, D-N.D.
http://biz.yahoo.com/ap/080728/budget_deficit.html


Evidence of the US Banking System Teetering on the Brink of Collapse
1. Paulson appears on Face The Nation and says "Our banking system is a safe and a sound one." If the banking system was safe and sound, everyone would know it (or at least think it). There would be no need to say it.

2. Paulson says the list of troubled banks "is a very manageable situation". The reality is there are 90 banks on the list of problem banks. Indymac was not one of them until a month before it collapsed. How many other banks will magically appear on the list a month before they collapse?

7. Paulson says Fannie Mae and Freddie Mac are "essential" because they represent the only "functioning" part of the home loan market. The firms own or guarantee about half of the $12 trillion in U.S. mortgages. Is it possible to have a sound banking system when the only "functioning" part of the mortgage market is insolvent?

8. Bernanke testified before Congress on monetary policy but did not comment on either money supply or interest rates. The word "money" did not appear at all in his testimony. The only time "interest rate" appeared in his testimony was in relation to consumer credit card rates. How can you have any reasonable economic policy when the Fed chairman is scared half to death to discuss interest rates and money supply?

13. Citigroup (C), Lehman (LEH), Morgan Stanley(MS), Goldman Sachs (GS) and Merrill Lynch (MER) all have a huge percentage of level 3 assets. Level 3 assets are commonly known as "marked to fantasy" assets. In other words, the value of those assets is significantly if not ridiculously overvalued in comparison to what those assets would fetch on the open market. It is debatable if any of the above firms survive in their present form. Some may not survive in any form.

14. Bernanke openly solicits private equity firms to invest in banks. Is this even close to a remotely normal action for Fed chairman to take?

24. There is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 billion in FDIC insurance to cover $6.84 Trillion in bank deposits. Indymac will eat up roughly $8 billion of that.

25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.

What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
http://www.marketoracle.co.uk/Article5594.html



Dow Plunges Over 200 Points
NEW YORK (AP) -- Wall Street again surrendered to investors' anxiety about the financial sector Monday, sending the Dow Jones industrials down 240 points and back into bear market territory. The flight from equities sent investors into safe-haven bets like Treasury bonds.

Financials that had rallied in recent weeks after logging huge declines, suffered from the same worries about souring debt that caused an abrupt end to their run-up late last week. Wall Street is concerned that a further withering of the housing and credit markets will damage bank balance sheets.

An International Monetary Fund report added to some of the stress in the market. The IMF predicted continuing problems in the credit and housing market that will continue to hurt the financial industry. It said, "at the moment a bottom for the housing market is not visible."
http://biz.yahoo.com/ap/080728/wall_street.html