Thursday, October 8, 2009

A Bad Day For The Dollar

Let’s run down the headlines today –

Geithner boasts about how the US Government has successfully used Taxpayer money to refinance 500,000 mortgages.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a0VZEj.oK9Wg

Word comes out that the Federal Housing Administration may need at least $50 Billion to remain solvent. The FHA insures mortgages (think Freddie, Fannie and Geithner’s new masterpiece). At least 27% of the mortgages insured by FHA that were written in 2007 are now seriously delinquent or worse. 20% of the 2008 originated mortgages are now seriously delinquent… or worse.

http://dealbook.blogs.nytimes.com/2009/10/08/is-fha-the-next-shoe-to-drop/

Mortgage Application Up +18.2% last week as the Fed buys mortgages to artificially force down interest rates. The money used to buy these Mortgages was created by taking TARP money and levering it up 10 to 1 at the NY Fed - $30 billion at Freddie and $30 billion buys $600 billion in mortgages for the US Taxpayer.

http://www.mortgagebankers.org/NewsandMedia/PressCenter/70556.htm

Mortgages are the Red and Green blobs –

I told you that they would raise the taxes on those with jobs to raise the entitlements of the unemployed. Democrats extend Unemployment Benefits to (infinity and beyond) and propose to raise taxes on Health Insurance companies.

http://hotair.com/archives/2009/10/08/pelosi-wants-windfall-profits-tax-on-insurance-companies/

http://www.marketwatch.com/story/democrats-unveil-plan-to-extend-jobless-benefits-2009-10-08-171800

The Fed is worried that owners of Commercial Real Estate will not be able to refinance their debt when it comes due in the next 18 months, because so much of this property is under water.

http://www.businessinsider.com/fed-starting-to-freak-out-over-commercial-real-estate-2009-10

Oh yeah, and the Democrats are now talking about Stimulus 2.0. When the first $1 trillion was so successful, why not print up another $1 trillion and flush it down the toilet too...

http://apnews.myway.com/article/20091008/D9B76AUO0.html

What do all of these headlines have in common? They all tell how the US Taxpayer is either subsidizing prices or subsidizing Interest Rates – we can only execute these programs by printing money.

The Result
The Dollar was getting creamed last night and Gold is breaking out of a gigantic trading base. Apparently the Central Banks of Asia hit the panic button and started to sell the currencies of South Korea, Hong Kong, Taiwan, Thailand, the Philippines and maybe Indonesia to buy Dollars. I think the Dollar was on the brink of crashing and these guys decided to prop it up for a little while longer.

http://www.cnbc.com/id/33233199


I’ve been telling you ever since Paulson and his cronies decided to screw the US Taxpayer and use Inflation to bail out the banks, that this was the only possible outcome. The Dollar will crater, because those in charge do not want to do what is required to fix the real problems in our economy.

And who says that I am cynical… I just read too much.

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