"using the proceeds from the sale of mortgages to buy Treasury bonds"
...after letting Goldman Sachs off the hook like Arnie let Enron off, it will be safe to continue letting Goldman ratchet home valuations against market re-e-value-ation. Letting Fannie Mae hold foreclosed homes more than 30 days past eviction rather than auction them without stop loss is a violation of law in many states, but foreign looters continue to illegally hold land title through the Goldman FNMA laundry which gained title through the free money false valuation and predictable renter balk precipitating collapse of the ponzi values locked in by Goldman to force Fannie Mae to cover the foreign looter banks transparently and illegally owning US housing through Goldman and FNMA. Now the foreign looter banks hold a gun to our heads by hiring the US Treasury (t-bonds). -Bob --- In cia-drugs@yahoogroups.com, Robert Millegan <ramille...@...> wrote: > > http://online.wsj.com/article/SB10001424052748703723504575425723973560744.html?mod=googlenews_wsj > > > > Is a Crash Coming? Ten Reasons to Be Cautious > > By BRETT ARENDS > > > Article > Video > Comments (133) > more in Investing » > Email > Print > Save This â" More > > > Twitter > > > Digg > > > + More > close > Yahoo! Buzz > MySpace > del.icio.us > Reddit > Facebook > LinkedIn > Fark > Viadeo > Orkut > Text > Could Wall Street be about to crash again? > > This week's bone-rattlers may be making you wonder. > > I don't make predictions. That's a sucker's game. And I'm certainly not doing > so now. > > But way too many people are way too complacent this summer. Here are 10 > reasons to watch out. > > > 1. The market is already expensive. Stocks are about 20 times > cyclically-adjusted earnings, according to data compiled by Yale University > economics professor Robert Shiller. That's well above average, which, > historically, has been about 16. This ratio has been a powerful predictor of > long-term returns. Valuation is by far the most important issue for > investors. If you're getting paid well to take risks, they may make sense. > But what if you're not? > > > The Big Interview with David Rosenberg > > 2. The Fed is getting nervous. This week it warned that the economy had > weakened, and it unveiled its latest weapon in the war against deflation: > using the proceeds from the sale of mortgages to buy Treasury bonds. That > should drive down long-term interest rates. Great news for mortgage > borrowers. But hardly something one wants to hear when the Dow Jones > Industrial Average is already north of 10000. > > 3. Too many people are too bullish. Active money managers are expecting the > market to go higher, according to the latest survey by the National > Association of Active Investment Managers. So are financial advisers, reports > the weekly survey by Investors Intelligence. And that's reason to be > cautious. The time to buy is when everyone else is gloomy. The reverse may > also be true. > > View Full Image > > > Associated Press > Crowds panic on Wall Street on Oct. 24, 1929. > > 4. Deflation is already here. Consumer prices have fallen for three months in > a row. And, most ominously, it's affecting wages too. The Bureau of Labor > Statistics reports that, last quarter, workers earned 0.7% less in real terms > per hour than they did a year ago. No wonder the Fed is worried. In > deflation, wages, company revenues, and the value of your home and your > investments may shrink in dollar terms. But your debts stay the same size. > That makes deflation a vicious trap, especially if people owe way too much > money. > > 5. People still owe way too much money. Households, corporations, states, > local governments and, of course, Uncle Sam. It's the debt, stupid. According > to the Federal Reserve, total U.S. debtâ"even excluding the financial > sectorâ"is basically twice what it was 10 years ago: $35 trillion compared > to $18 trillion. Households have barely made a dent in their debt burden; > it's fallen a mere 3% from last year's all-time peak, leaving it twice the > level of a decade ago. > > 6. The jobs picture is much worse than they're telling you. Forget the > "official" unemployment rate of 9.5%. Alternative measures? Try this: Just > 61% of the adult population, age 20 or over, has any kind of job right now. > That's the lowest since the early 1980sâ"when many women stayed at home > through choice, driving the numbers down. Among men today, it's 66.9%. Back > in the '50s, incidentally, that figure was around 85%, though allowances > should be made for the higher number of elderly people alive today. And many > of those still working right now can only find part-time work, so just 59% of > men age 20 or over currently have a full-time job. This is bullish? > > > Brett Arends tells Simon Constable and Michael Casey a few of his ten reasons > why investors should be cautious ahead. > > (Today's bonus question: If a laid-off contractor with two kids, a mortgage > and a car loan is working three night shifts a week at his local gas station, > how many iPads can he buy for Christmas?) > > 7. Housing remains a disaster. Foreclosures rose again last month. Banks took > over another 93,000 homes in July, says foreclosure specialist RealtyTrac. > That's a rise of 9% from June and just shy of May's record. We're heading for > 1 million foreclosures this year, RealtyTrac says. And naturally the ripple > effects hurt all those homeowners not in foreclosure, by driving down prices. > See deflation (No. 4) above. > > 8. Labor Day is approaching. Ouch. It always seems to be in September-October > when the wheels come off Wall Street. Think 2008. Think 1987. Think 1929. > Statistically, there actually is a "September effect." The market, on > average, has done worse in that month than any other. No one really knows > why. Some have even blamed the psychological effect of shortening days. But > it becomes self-reinforcing: People fear it, so they sell. > > 9. We're looking at gridlock in Washington. Election season has already > begun. And the Democrats are expected to lose seats in both houses in > November. (Betting at InTrade, a bookmaker in Dublin, Ireland, gives the GOP > a 62% chance of taking control of the House.) As our political dialogue seems > to have collapsed beyond all possible hope of repair, let's not hope for any > "bipartisan" agreements on anything of substance. Do you think this is a good > thing? As Davis Rosenberg at investment firm Gluskin Sheff pointed out this > week, gridlock is only a good thing for investors "when nothing needs > fixing." Today, he notes, we need strong leadership. Not gonna happen. > > 10. All sorts of other indicators are flashing amber. The Institute for > Supply Management's manufacturing index, while still positive, weakened again > in July. So did ISM's new-orders indicator. The trade deficit has widened, > and second-quarter GDP growth was much lower than first thought. ECRI's > Weekly Leading Index has been flashing warning lights for weeks (though the > most recent signals have looked somewhat better). Europe's industrial > production in June turned out considerably worse than expected. Even China's > steamroller economy is slowing down. Tech bellwether Cisco Systems has > signaled caution ahead. Individually, each of these might mean little. > Collectively, they make me wonder. In this environment, I might be happy to > buy shares if they were cheap. But not so much if they're expensive. See No. > 1 above. > > Write to Brett Arends at brett.are...@... >
