Ridiculous Things in Bizarro World

1) Timothy Geithner on whether Federal money was going to be available to cities and states - "As for any assistance, I wouldn't use the words 'bailout' or 'federal,' I would say we're in close consultation with people who are looking at ways to make sure these markets are working so states and municipalities can meet their needs."

Translation: Federal Bailouts of states and municipalities are on the way

2) Unlike the rest of us the Federal Reserve is not interested in money. Accordingly it has postponed considering Goldman Sachs, Morgan Stanley, and JP Morgan's request to repay the TARP until the week of June 8. http://www.bloomberg.com/apps/news?pid=20601087&sid=a7MkO._fo1fw&refer=home

3) Senate Passes Credit Card Bill - In a bid to further reduce credit the Senate has overwhelmingly passed "a credit-card “bill of rights” that would curb fees and limit contract changes." http://www.bloomberg.com/apps/news?pid=20601087&sid=aPFv1avGReog&refer=home . It is interesting that the government along with the Federal Reserve is doing everything it can to increase the supply of credit in the market, and then they go and pass a bill which will undoubtedly make it harder for credit card companies to stay in business and will most assuredly decrease the supply of credit. Which is it guys?

4) New Housing Starts and Permits Fall to Record Lows. Mr. Stock Market is confused all day. He can't decide whether this is a good thing or a bad thing. On the one hand it means new inventory won't increase housing supply down the road on the other it means "green shoot" recovery isn't happening at all and it still sucks to be a construction worker.

5) One of my all-time favorites....the administrations goal of making housing more affordable. To this end the federal government subsidizes houses with tax credits, deductions, the FHA, Fannie Mae, Freddie Mac, ZIRP (Zero Interest Rate Policy), 1.2 trillion of GSE debt purchase courtesy of Mr. Bernanke, and many more. My question: If you want to make housing more affordable why are you trying so hard to stop prices from falling? Isn't that what affordable means...low price?

More to come later....

You Can't Handle The Truth

It's recently come to my attention that it is a rare person that actually wants the truth. Therefore dear reader I am offering you a choice. "You take the blue pill and the story ends. You wake in your bed and believe whatever you want to believe. You take the red pill and you stay in Wonderland and I show you how deep the rabbit-hole goes." Of course dear reader "Remember -- all I am offering is the truth, nothing more." (Morpheous speaking to Neo in the Matrix).

If you continue reading this blog I will present the truth. The truth about green shoots, media spin, and corrupt government and business practices. If you stop reading you will be happier. The choice is yours.....

Today in Bizzaro World we are going to discuss the WHO or World Health Organization. For some time now the WHO has resisted declaring a level 6 pandemic for the swine flu. Let's look at the WHO organizations own definitions for a level 5 alert and a level 6 pandemic.

"Phase 5 is characterized by human-to-human spread of the virus into at least two countries in one WHO region....

Phase 6, the pandemic phase, is characterized by community level outbreaks in at least one other country in a different WHO region in addition to the criteria defined in Phase 5."

There are now more than 8,000 officially recognized cases of the swine flu. The virus appears to double every 4 days. It has spread across the globe. So why dear reader has the WHO not declared a level 6 pandemic???

Of course I know the answer. It's because nobody wants to hear that the WHO has raised the alert level to a level six PANDEMIC. The truth is too harsh and they don't want to spread fear. Probably rightfully so as the herd might stampede.

I however am providing the truth to the rare few that want it. It's clear that according to the definition we are already at the level six stage. The WHO is stuck between a rock and a hard place. They cannot raise the alert level because the herd might stampede but by not raising the alert level they look incompetent. As far as I see it they have two choices. Raise the alert level or far more probable change the definition of a level six alert so the swine flu no longer qualifies.

Already there has been rumblings of changing the definition. The New York Times had an article http://www.nytimes.com/2009/05/19/world/asia/19flu.html?_r=1&ref=global-home in which it states that "Britain, Japan and other nations [have urged the WHO] to change the way it decides to declare a pandemic — saying the agency must consider how deadly the virus is, not just how fast it is spreading."

How this plays out is anybody's guess. The WHO can't stall too much longer. I'm a skeptic. I bet they change the definition.

Treasury Bailing Out Insurers --- Hooray We're Saved

Today is going to be a great day. The Washington Post has revealed that preliminary approval has been granted to some of the nation's largest insurance companies for a capital infusion courtesy of TARP. http://www.washingtonpost.com/wp-dyn/content/article/2009/05/14/AR2009051403866.html?hpid=topnews

Anyone else other than me not reassured? Why stop at insurers? Rumor is trucking companies are going to be asking for bailouts next. After that retail. Where does the madness stop? Wouldn't it be nice if we could just bail everyone out? It sure sounds good. No suffering ever for anyone. Not a day goes by that I don't wish I was dumb enough to think it could work. Think of all the good things we could do (and probably will do in the future). We could pass laws stopping companies from firing people. Raise minimum wage to a million dollars an hour. Hooray we're all rich.

Anyway, aside from the ridiculousness of bailing anybody out how much money is actually left in the TARP? If we didn't live in Bizarro World it seems like this would be an easy question to answer. Instead the situation always plays out something like this.

Ron Paul: How much money is left in the TARP?

Timothy Geithner: Well Congressman Paul, first off I would like to thank you for your excellent question. I'd like to begin answering your very important question by first telling you about the overwhelming support Congress gave the Treasury when it passed the TARP. As you know, the program was necessary in order to stop the systemic collapse of the banking system.... [Here Geithner tries to use the words "systemic collapse" as often as possible].... Now this program along with many others that we have diligently instituted have done wonders for increasing liquidity in the capital system. As long as we persevere we have nothing to fear. [Wow that one is quite catchy. Geithner should seriously look into stealing it.]

Barney Frank: Congressman Paul your time is up

Ron Paul: Sigh

Now you see what just happened there? The question never got answered. Geithner said all kinds of things while managing to say nothing at all. Most likely because TARP funds are running dry and he doesn't want anyone to know it. It's much better when everyone thinks the money tree called TARP is in full bloom.

Of course who really cares if TARP runs out of money. At this point I have no doubt that they will somehow either legally pass more money through Congress or use an unconstitutional end around of Congress like they used the FDIC for in the PPIP.

Ah well, at least I can sleep better tonight knowing my life insurer has plenty of fun paper money it can throw around should I die. Goodnight All.