Rising from the Ashes, or Handcuffed?

As if another curve in the road was needed, the ECB is not going along with the plan of world wide cuts in interest rates. Inflation in China was 11%, last month! Crude oil at $100 a barrel, with predictions of prices to the $120's along with other signs of inflations may give the Federal Reserve pause before its cuts rates again.

That is the last thing the housing and financial institutions want to hear. A major premise of their collective position is that low interest rates, easy monetary conditions and time will cure most of the problem. The spread is widening between short and long term treasury securities, indicating a concern about inflation moving into the future.

Lowering interest rates may have negative long term consequences that the Fed must overlook due to short term conditions. Is this really the type of enviornment you want to be a basic investor of equity shares in corportate America?

The fear about the economy has reached the state level, just look at the latest discussions about stalling property tax relief because of predictions revenue streams will be down in 2008.

Obama and McCain are both populist politicians, what type of investment climate might they foster? Many uncertainties lie directly ahead, the markets hate uncertanties. The path of least resistance is down.

http://www.msnbc.msn.com/id/23129556/

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20080213&id=8024968

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/HousingMessTooBigForAQuickFix.aspx

The Bottom?

Sub-prime is being attacked from many different directions. The issue of property owner's is near completion, even homeowners not exposed to sub-prime, but nonetheless affected with the threat of foreclosure have help available.

The tail end of dealing with this issue is near, the remaining obstacle is how to deal with the investor's who bought the bundled mortages as securities on the open market. Once this facet of the problem is resolved, the process of putting sub-prime in the rear view mirror will begin.

The bears in the market are waiting in the weeds somewhere along the line, they will be heard from one last time. Interest rates will be cut at least one more time, the 3rd and 4th quarter of 2008 should be the turning point for financial institutions exposed to sub-prime.

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20080212&id=8175887


http://blogs.moneycentral.msn.com/smartspending/archive/2008/02/08/rebate-or-bonus-the-semantics-of-spending.aspx


http://money.cnn.com/2008/02/12/news/newsmakers/warren_buffett.fortune/index.htm

Confusion Reigns

The talking heads on cnbc are funny. Funny in the sense they have to say something, but are confused, because no one has seen anything like this before.

Sub-prime, it's everywhere and it's acting like a case of aggressive cancer. It is eating the financial system from the inside out.

Cutting interest rates is like pushing on a string, there are calls from so-called "free market" types, crying for a government bail-out of the entire situation. Best guess, is that's a couple trillion dollar proposition.

The FBI is investigation numerous institutions for fraud, let's not even discuss AMBAC or MBIA, which are insurance entities for municipal and corportate debt. They are required to be rated AAA, but as of right now, they are, but in name only. Can anyone say "shell game".

Ugly, ugly, ugly. Keep your powder dry, the investment opportunity of a life time is somewhere down the road. O.k., let's talk about AMBAC and MBIA, see the link below


http://articles.moneycentral.msn.com/Investing/SuperModels/TheBigThreatOfMuniDebt.aspx

Super Tuesday

Sometime later this evening, it should be clear who the presidential candidates for the November election will be.

The press, is in love with Obama and McCain. Populists both, big business and big money managers are becoming nervous.

Clinton and Romney make these entites much more comfortable. Clinton, because of the fond memories of her husbands Presidency, and Romney, because he is one of them, a money guy.

The thought of one of the former being President, means the end of the gravy train. Obama is all feel good rhetoric, but there are signs he is assembling a good economic team. Paul Volker endorsing Obama will not go unnoticed. McCain, does not have a love fest going on with his own party, so lot's of uncertainty there.

Why they play the game

Giants win!! Who would have thought?

If your a regular reader, I apologize for not posting recently. I've been a little under the weather this past week.

Most of my posts have been in regards to Hammond property & taxation. This one won't be any different, except for the fact I'd like to move the discussion in a different direction.

Change is often met with skepticism, but ready or not, change is coming. As I stated in a previous post, rental property owners will benefit greatly if the Govenor's proposals are adopted.

I have also posted previously that I believe rental property is an intergral part of the housing options for city residents. However, I do not believe houses cut up into multiple rental units is beneficial to the fabric of the city.

An old victorian made into a two or three flat is one thing, cutting up a garage into a three unit rental is another entirely. People, are not cattle to be herded into a convienent location to maximize profit.

What type of people would want to live in such an enviornment? I would imagine the poor, who are most vulnerable to being taken advantage of. Perhaps illegal immigrants, who probably wouldn't cause a fuss if they were unhappy with the living conditions.

The city, for it's part, appears ready to attack the problem. A litmus test will be how the case of the garage cut-up turns out. Besides the issue of whether permits were drawn to do the work, I would imagine the city somewhere must have an ordinance concerning square footage and density of population inhabitating that footage. Beyond that, was the work done up to standard. Judge Harkins docket, might be filling up in the not too distant future.

So while legitimate rental property owners are about to see the bottom line improve, the clock is running on those who are not. I do not begrudge anyone making money, but it's hard to raise the profile of the city when too many view it as a holding pen for livestock