I can't decide if she looks like a bulldog or a boxer.

Back when Congress was going to vote on the 400 billion-dollar bazooka I contacted my Senator pleading for her to vote against this bill because it will create obligations the taxpayer can't meet by backstopping the GSEs. Here is the reason she ultimately voted FOR the housing bill (With my present day thoughts in red):

August 25, 2008

Dear Mr. [Me]:

Thank you for contacting me regarding the recent passage of legislation that assisted Fannie Mae and Freddie Mac. I appreciate hearing from you on this important issue and apologize for the delay in my response.

As you may know, the President recently asked the Congress to pass legislation that would bolster the financial solvency of Fannie Mae and Freddie Mac. Specifically, the President asked that the Congress extend an existing line of credit to both Fannie Mae and Freddie Mac. He also asked that the Congress permit the Administration to purchase stock in both entities to ensure that they have sufficient capital. The President asked for these changes because he was concerned about the deteriorating housing market and its effect upon the overall economy. The Congress ultimately incorporated a modified version of President Bush’s proposal into a housing bill that it had already been considering.

I, too, had several concerns about creating a federal backstop for both Fannie Mae and Freddie Mac. Because many members of Congress expressed some reservations about creating a federal backstop, the Congress tried to limit this portion of the bill in several different ways. For example, the Administration’s authority to purchase stock would expire at the end of 2009 [xmas eve blank check announcement anyone?] and the government’s purchase of stock would be limited to the statutory federal debt ceiling [lol, raise the roof anyone?]. In fact, the nonpartisan Congressional Budget Office concluded that there is a greater than fifty percent chance that the Administration will not need to use any portions of the bill to bolster Fannie Mae’s and Freddie Mac’s financial solvency [lmao]. Finally, the housing bill creates a strong, new regulator to ensure that something like this will never happen again. [rofl]

I ultimately supported the overall housing bill because it contained significant tax cuts for Louisiana families that were unrelated to Fannie Mae and Freddie Mac. For example, the bill contained a provision that I authored, which provided $1 billion in tax relief for Gulf Coast families who were taxed on their Road Home grants. The bill also created a $7500 tax credit for first time home buyers. Finally, it created a new $500 tax deduction ($1,000 for couples) for homeowners who own homes but who do not itemize their taxes, and therefore cannot deduct their property taxes.[yeah you kind of look like PORKy too]

I appreciate the opportunity to hear from you about this important matter, and I hope you will continue to contact me on issues of mutual concern. Please feel free to also visit my website at http://landrieu.senate.gov for more information on legislative affairs. [fuck off]

With warmest regards, I am

Senator Mary Landrieu

Fast forward to today and here is what I'd like to send her (this was not my email to her) :

-------------------
Dear Mary Landrieu,

I looked up the definition of Mary Landrieu and this is what it said:
worth·less (wûrthls) (click that speaker 3 times like Cramer, who is worthless)

adj.

1. Lacking worth; of no use or value.

2. Low; despicable.

With warmest regards, I am
- Pissed the eff off.

America Rising: An Open Letter To The Democrats.



This gives me chill-bumps. I almost want to say this level of composition brilliance could only come from Beta Activity - brain waves with a frequency of greater than 13 Hz (Hertz).

Check out that CO2 spewing assclown Mary Landrieu.

From "It's your turn Congress" :

The Federal Reserve/Treasury are very interested in using Fannie/Freddie for several reasons. The modus operandi being to transfer liabilities from the bank's balance sheet to that of the taxpayer. The second will be "quasi-mortgage interest rate tool"

Excerpt from Zero Hedge "Goldman Boosts Q4 GDP Estimate From 4% to 5.8%; Economic Status Quo Expected To Continue" in which Goldman prophesied:

Q: What can the GSEs do to keep rates down? The most obvious approach would be for the agencies to add to the $1.5 trillion in mortgages and mortgage-backed securities that they collectively hold in their portfolios. As shown in Exhibit 1 above, the GSEs have not been large buyers of MBS over the last year, accumulating roughly $100 billion. This is largely because when the Treasury put the GSEs under conservatorship, it required them to reduce their portfolios by roughly $150 billion below year-end 2009 levels by the end of 2010.

In December, the Treasury amended this agreement, effectively raising the portfolio cap to $110 billion above current levels, or $260 billion above where it otherwise would have been (Exhibit 4). This is a relatively small amount, equivalent to roughly one month?s worth of Fed/Treasury purchases in 2009. It is also worth noting that the last time the portfolio limit was increased, it had little effect. In May of 2009, the Treasury increased the cap on the GSE portfolios by a combined $100 billion, but this resulted in little GSE net buying. In fact, the agencies? retained portfolios began to shrink soon after.

That said, the agencies will still have some flexibility to influence rates. The cap on portfolio size applies only at year end. During the year, the GSEs are limited only by the cap on outstanding debt, which is set at 120% of their portfolio cap, or roughly $2 trillion in 2010. However, this expansion would necessarily be temporary, since the agreement requires that the retained portfolio be reduced to $1.6 trillion by calendar year end.

My thoughts? GD-SOB-JFC-WTF-OMFG

See Also:
Revolution Resolution
WE THE PEOPLE (Have Had Enough)
Good Times, Goldman Sachs & Kneale

Click for larger version:

Also, for those who think the TARP was repaid with interest and the Treasury returned a profit... Might I refer you to the Maiden I though Maiden MMX funds? Dare I refer you to the Fed's balance sheet? Also, please consider the recent hundreds of billions to the GSEs. With a 1 in 5 delinquency rate on 5T in guarantees could it be valuing these assets at 50 cents on the dollar (and paying 100 cents for them)

Chumbawamba - Tubthumping

-------
Deuces,
Thurgy

PS. It's an inside joke.

With Barney Frank's recent check to Fannie/Freddie I was wondering what we could do with 4 trillion pieces of George Washington Toilet Paper:

The size of a dollar bill is 6.6294cm (2.61") wide, by 15.5956cm (6.14") long, and 0.010922cm (0.0043") in thickness.

The moon is on average 238,857 miles away.

The average centre-to-centre distance from the Earth to the Moon is 238,857 miles, about thirty times the diameter of the Earth.

...A 4-lane highway and enough to spare for the construction of a boardwalk around the moon.

Meanwhile back at the ranch, Congress is bowing down to Blankfein. My feelings:

Nine Inch Nails - Head Like A Hole

Peacefully Yours,
Thurgy

PS. Death by a thousand cuts really sux0rs...Could you put me down like a wounded horse?

[link]

SPDR Barclays Capital High Yield Bond (JNK)

The appetite for junk bonds continues unabated. As long it's going up so will equities. While the daily and weekly charts are showing overbought, the monthly leads me to believe it's got a little "squirt" left in it. If it takes out 40 (trying to as I type this) it will try and make a move to the next two resistance points shown above. It's getting close to being "done".

[Video Link Here]


Geithner’s Fed Told AIG to Limit Swaps Disclosure

Jan. 7 (Bloomberg) -- The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

See Also:

Where The Sun Never Shines

AIG Has Become A Figurehead Of All That Is Broken In America

Tim Geithner "Protects America From Itself" By Forcing Elimination Of Material AIG Disclosure

Time To Indict Geithner For Securities Fraud

Still tracking the projected path. Yup, sticking to my guns on this one. 76.75 will be an important area for the dollar to hold or things might get "interesting". Gold bulls are back to beating the George Washington Pinata, although I'm still anticipating a move down to 1036 after touching 1179. Ok, so that might be too bold a statement given the pages per minute Bubbles Bernanke is capable of printing on any given day and it would not surprise me at all to see the S&P and Gold kiss at 1179.

"The longer-term structure suggests we could see $4 copper, but in the shorter-term I am looking at a 5% upside versus a 15% correction before heading into the next leg higher."

Ok, so we got the 5% move higher. It is looking ripe for a correction soon. Good luck jumping on the Red Gold bandwagon at this spot.



Lots of chatter about oil closing about the 82.50 mark today. I will note there is resistance at 84-85 and then the fibonacci relationship at $90. Nothing useful to add other than today's inventory numbers came with an initial selloff only to be promptly jackknifed higher the rest of the day. Of course Bloomberg attributed today's rise over fears the cold weather might cut into supply - LOL.

Natty Gas found support at the confluence of the 20/50dma. It's currently bumping up against 20 week moving average (not shown) and given it's daily structure I would venture to say it is poised make a move to the 200 day.

If you've not heard of "Trailer Park Boys" then let me give you the skinny. In this trailer park there are thugs, ex-cons, prostitutes and the like. Then there is Bubbles, a mentally retarded guy that turns out to be the smartest person in the entire trailer park. Anyway, Bernanke is a retard who likes to blow bubbles. I might even say he's the smartest guy in the room compared to his regulators.

[Video Link]:
Bernamke talking about rescuing and cleaning up the banks.

Bubbles Bernanke has launched an "O"ffensive pointing fingers in every direction but himself. In short, he warns of asset bubbles and how destabilizing it can be to the system, especially when monetary policy is used as the rudder. I will not bother to point out just how silly he is making himself look, instead I will link to much better material on the subject. This is the guy who was riding co-pilot with his mentor Greenspan for all those years. This is the same guy who is currently blowing an equity bubble the size of Mars (or to Mars, whichever comes first). I'm beginning to wonder if we'll see P/E ratios run a 1:1 ratio with the S&P somewhere near eleventy-seven thousand?

Suggested Reading on Bubbles Bernanke:
Ben Bernanke Looks In Mirror, Sees Barney Frank
Fed Bubble Blowing: A Study Of Denial
Is it Possible Bernanke Has Seen the Asset Bubble Light?

My Blather on Housing
Recently Matt Taibbi opined on the recent GSE chatter (go read it). He makes the case there were many players involved in creating this bubble. I, along with most others, have acknowledged there is plenty of blame to go around. However I feel as though he is downplaying the significance of policies that created the problems. Imho, it is undeniable that without the housing mandates we would not have needed complex derivatives with phony ratings. We would not have had the lax underwriting. We would not have pushed home ownership over renting, regardless of one's income.

[1] On November 3, 1994, President Clinton to HUD Secretary Cisneros:

Dear Henry:

Homeownership is the American Dream. Our nation has embraced this dream since the National Housing Act of 1949 made 'a decent home and a suitable living environment for every American family' a goal of national policy. The United States is the first major industrial country to make homeownership a reality for a majority of its people. Thanks to effective cooperation between industry and government, the doors of homeownership have been opened to millions of families in the past 45 years. However, since 1980, the national homeownership rate has been declining. Reversing this trend is vital to American families, to communities, and to our economy. Homeownership strengthens families and stabilizes communities. It encourages savings and investment and promotes economic and civic responsibility. Expansion of homeownership is an integral part of the Administration's economic plan. It spurs new investment, strengthening the economy and creating jobs. A stronger economy in turn enables more people to buy homes. For all these reasons, it is in our national interest to expand homeownership opportunities for all Americans.

Today, I am requesting that you lead an effort to dramatically increase homeownership in our nation over the next six years. I would like you to work with the Assistant to the President for Economic Policy, the Assistant to the President for Domestic Policy, the Secretary of Agriculture, the Secretary of Veterans Affairs, and other private and public sector partners you may designate to develop a National Homeownership Strategy that will carry us into the 21st century. I request that you report back to me within six months, with a concrete strategy involving the private and public sectors, and all levels of government, that builds on the base of the more than 1.5 million additional families who have been able to buy their own homes since the beginning of this Administration. Your program should include strategies to ensure that families currently underrepresented among homeowners - particularly minority families, young families, and low-income families - can partake of the American Dream.

In the course of developing this strategy, you should explore ways to combine private and public sector resources and commitment to:

* Cut Costs, including financing, production, and transaction costs and fees, to make homeownership more affordable and financing more accessible;
* Open Markets, to increase choice and remove discriminatory and regulatory barriers, making homes, financing, and insurance more accessible and affordable to all Americans, and;
* Expand Opportunities, to make homeownership a reality for more people through education, information, technology, and community involvement.

Previous cooperation between the private sector and the federal government has opened the doors to homeownership to tens of millions of American families, and has been one of America's greatest success stories. This new initiative to dramatically expand homeownership by the end of this century is in keeping with our nation's bipartisan tradition of public-private partnership in this arena. I welcome your commitment and involvement in this important task. I know that working together, we can make the dream of homeownership a reality for millions more families and build a better future for all Americans.

HUD from 1990-2000 [2]

• 1990 Cranston-Gonzalez National Affordable Housing Act emphasizes homeownership and tenant-based assistance, launches HOME housing block grant. Low-Income Housing Preservation and Residential Homeownership Act of 1990 fortifies Federal commitment to preservation of -assisted low-income, multifamily housing.
• 1992 Federal Housing Enterprises' Financial Safety and Soundness Act of 1992 creates HUD Office of Federal Housing Enterprise Oversight to provide public oversight of FNMA and Federal Home Loan Mortgage Corporation (Freddie Mac).
• 1993 Henry G. Cisneros is named Secretary of HUD by President William J. Clinton, January 22. Empowerment Zone and Enterprise Community program becomes law as part of the Omnibus Budget Reconciliation Act of 1993.
• 1995 "Blueprint for Reinvention of HUD" proposes sweeping changes in public housing reform and FHA, consolidation of other programs into three block grants.
• 1996 Homeownership totals 66.3 million American households, the largest number ever.
• 1997 Andrew M. Cuomo is named by President Clinton to be Secretary of Housing and Urban Development, the first appointment ever from within the Department.
• 1998 HUD opens Enforcement Center to take action against HUD-assisted multifamily property owners and other HUD fund recipients who violate laws and regulations. Congress approves Public Housing reforms to reduce segregation by race and income, encourage and reward work, bring more working families into public housing, and increase the availability of subsidized housing for very poor families.
• 2000 America's homeownership rate reaches a new record-high of 67.7 percent in the third quarter of 2000. A total of 71.6 million American families own their homes - more than at any time in American history.

Home ownership rate at record levels was not good enough. Please consider the following snippets from an article several years old. Although I do not agree with everything in the article, it does provide a lot of insight into the root causes of the housing bubble.

National Housing Policy in the U.S. for the 21st Century
Dr. Marc A. Weiss
Chairman Prague Institute for Global Urban Development

In May 2002 the Congressionally appointed bipartisan Millennial Housing Commission issued its final report, Meeting Our Nation's Housing Challenges. This is the first major comprehensive congressional commission report on housing policy since the 1990 National Commission on Affordable Housing (the Rouse-Maxwell report). While the fact that the Millennial Housing Commission was created in 2001 indicates some level of concern by national policymakers about the lack of sufficient and decent quality affordable housing in America, the report's recommendations suggest that the current political commitment to devoting significant new resources to address this problem is extremely weak...

Currently the nation's homeownership rate has begun to drop in 2003 after 10 years of steady advances, causing some concern within the Bush Administration about a potential return to the declining homeownership days of Reagan and Bush from 1981 through 1992. This could open the door for a strong and popular issue to be vigorously raised by the Democrats in Congress and among the 2004 Presidential candidates...

The Prosecution rests...

Sources:
[1] National Housing Policy in the U.S. for the 21st Century
[2] HUD History

This is a textbook reversal I'd like to illustrate with GS. If you were still pressing your shorts at 161-163 you probably were not looking at the technicals. There were several clues over the past two weeks that should have alerted anyone to pare down the trade. First the divergence between price and short-term momentum (3/10 oscillator). The second was the bounce off the 155 day xma coupled with aforementioned divergences. The 3rd and final warning (you were watching the technicals right?) came when the the trendline was broken to the upside.

It pays (literally) to watch the technicals if you are playing in this market...

PS. This is for illustration only and without a technical outlook going forward. I will note it's short-term momentum ended overbought at the close therefore a pullback is in order. If I had to guess here I would view this as a wave 4, before heading in the wave 5 down to 155...

Gold found that bounce at the 1080 target and now it's on it's way to the previously targeted 1136. I am upping the possible target to 1179 now, before heading to 1036. If Gold 1179 then I would think the DXY would be at 76.50 by then, EUR 1.45-1.46 and the S&P threatening 1150. None of these are foregone conclusions (is it ever?) and for all I know Gold might go straight to the moon. If the market can maintain a 90* trajectory for a year then why stop now? We are at the mercy of the men behind the curtain.

In the graph above the hash marks are only there to show there will be some backing and filling on the way to 1036 [forgot to add them to the black line]. It's all about the dollar and when you read things like this it doesn't exactly inspire confidence in the confetti.

As far as the S&P goes, there are all kinds of resistance points at 1136, 1145, 1150 through 1169. Should make for some chop. Advantage still to the neutrals while 800 e-traders a day churn their accounts into net-debit.

I've recently picked up on some rumblings about the Brazilian Bovespa Index and wanted to have a look at the technical take. It's no secret that Brazil is a commodity rich (and self-sustaining) country who will continue to benefit from our disastrous policies.

Copper (not shown) - The longer-term structure suggests we could see $4 copper, but in the shorter-term I am looking at a 5% upside versus a 15% correction before heading into the next leg higher. Eventually Copper will be a good play because it is both dollar sensitive as well as one of the main industrial components in the event we actually have a recovery this decade. I do not put much weight into it as an "economic barometer" right now because the prices are being heavily influenced by the Dollar, Pig Farmers, Chinese Diversification and the rest of the speculators as opposed to actually being consumed from industrial demand. As far as Copper becoming the next precious metal...I remember when oil became "Black Gold" at 150/bbl and now it's just "crude oil" sitting in idle tankers as far as the eye can see.

Several months ago I blathered about the "Back Scratching" between Bernanke, Geithner and Barney Frank as it relates to housing. Let's review again what the House Banking Committee does:

House Banking Committee

The United States House Committee on Financial Services (also referred to as the House Banking Committee) oversees the entire financial services industry, including the securities, insurance, banking, and housing industries. The Committee also oversees the work of the Federal Reserve, the United States Department of the Treasury, the U.S. Securities and Exchange Commission, and other financial services regulators. It is chaired by Barney Frank (D-MA).

Now you would think this committee, given their jurisdiction, would be very interested in the actions of the Federal Reserve and the Treasury. We were told each and every bailout would come with taxpayer protections, transparency and oversight. However when it came to voting for an audit (Paul-Grayson Amendment) here is how concerned the heads of the Committee/Sub-Committees were:

CA-35     Rep. Maxine Waters        nay
NC-12     Rep. Melvin L. Watt       nay
IL-04     Rep. Luis V. Gutierrez    nay
NY-06     Rep. Gregory W. Meeks     nay
KS-03     Rep. Dennis Moore         nay
MA-04     Rep. Barney Frank         nay
PA-11     Rep. Paul E. Kanjorski    absent

Ok, so now we have some back-scratching going on. Barney's biggest interest is using Fannie/Freddie to provide endless entitlements for homeowners (or would-be) at the expense of the Taxpayer. The Federal Reserve benefits from this by using the GSEs as a magic carpet to sweep the toxic assets under. This is all in the name of restoring the bank's balance sheets - not yours. It's a win-win situation for them and a lose-lose for the taxpayer.

If we could just modify some mortgages, postpone foreclosures, let people squat without paying, give $8,000 home buyer credits or refinance the underwater homeowners into an OptionARM with Fannie/Freddie we could effectively put a floor under home prices. Bullshit. These endless attempts to prop up housing will prove futile. Stop thinking the method is failing and realize the entire idea is not reasonable. Please consider this New York Times piece on exactly how well this is working.

The Federal Reserve/Treasury are very interested in using Fannie/Freddie for several reasons. The modus operandi being to transfer liabilities from the bank's balance sheet to that of the taxpayer. The second will be "quasi-mortgage interest rate tool" in case the bond vigilantes demand 7% for their money resulting in an immediate 25% haircut on home valuations. Now keep in mind the GSEs own or guarantee nearly half of the entire $11T mortgage market with 1 in 5 homeowners underwater, 1 in 5 GSE loans delinquent and nearly a 1 in 5 "real" unemployment.

I would like to post some thoughts here that I commented on in another forum. Hopefully these questions will get you to look at things a little differently:
[slightly edited]

Who enabled/allowed this to happen? What political agenda was pushed by Clinton and later Bush? What is regulatory capture? What asset bubble was directly responsible for fueling additional leverage through fictitious wealth?

Who pushed HUD and every single housing entitlement since? Do homes really become affordable by giving people cheap money or does this actually make home less affordable thereby creating instabilities in the entire financial sector? Were Americans using their home equity to bring on additional leverage (debt)? Peel back the many layers of the onion and you will cry. Consider how every sector/state/municipality were directly influenced by the housing boom which only added to the instabilities of the system (budgets etc...)

Who passed the "Modernization Act"? Who changed the bankruptcy laws? Who is bought and paid for?

Which committee oversees the entire financial services industry ? What is the mission statement of said Committee with respect to housing?

Who is using the GSEs as a magic carpet in which to sweep the feces under? Who oversees the GSEs?

In short, placing the blame solely on the financial services industry is misguided. I'm just as angry as the next guy when it comes to bankers but there is plenty of blame to go around. 1) Government Enabler/Entitlements 2) Banks/Wall St providing liquidity for said entitlement and 3) Dumb Borrowers. Without 1 and 3 this would be a non-issue. We have the GSEs owning or guaranteeing 5T, with 1 in 5 delinquent...Do the math

Yes, bankers are a "Den of vipers and thieves" but the government has run this country into the ground. The Federal Reserve is just there to facilitate the agenda of the ruling party. Do not blame the crack dealer for the user's addiction when the Government is complicit. They are the true enablers.

[afterthought] Who put the Federal Reserve at the at the epicenter thereby allowing for the micro-mismanagement of the economy through the expansion and contraction of credit?

In closing, it is high time the public's anger move from that of the banks to the various branches of our corrupt government that are the true enablers of this cluster fuck. The American People have expressed outrage, voted against the various bailouts, health care, etc... yet Congress continues to answer the needs of Wall Street at your expense.

It's your turn to be the whipping-post Congress. It's time the American People rout out the Legislative Branch (on up). It's time to reform the reformers. So go ahead and put Pelosi on a microphone crying about people at the steps of the capital. We are tired of this bullshit. We are coming.

Suggested reading:

1. Origins of an American Kleptocracy
2. Fraudie/Phoney - What Does Treasury Know?
3. Congressional Legislation Introduced By Barney Frank Pre-Approves $4 Trillion For Next Crisis

Alas, there are no "do-overs"... This video is a year old but the underlying message is still very applicable. We could root for 2012 but it's a day late and a few trillion dollars short. Looks like CONgress will be the whipping-post come mid-term elections.

MTV's Aimee Allen, Ron Paul Anthem Music Video


Your resolution:
I, John Q Taxpayer, will wake the fuck up, get off my ass and do something about my government running the country into the ground.

Signed,
_______________________________ [your name here]

fail·ure (flyr)

n.

1. The condition or fact of not achieving the desired end or ends: the failure of an experiment.

2. One that fails: a failure at one's career.

3. The condition or fact of being insufficient or falling short: a crop failure.

4. A cessation of proper functioning or performance: a power failure.

5. Nonperformance of what is requested or expected; omission: failure to report a change of address.

6. The act or fact of failing to pass a course, test, or assignment.

7. A decline in strength or effectiveness.

8. The act or fact of becoming bankrupt or insolvent.
9. The United States House Committee on Financial Services (also referred to as the House Banking Committee) oversees the entire financial services industry, including the securities, insurance, banking, and housing industries. The Committee also oversees the work of the Federal Reserve, the United States Department of the Treasury, the U.S. Securities and Exchange Commission, and other financial services regulators. It is chaired by Barney Frank (D-MA).