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Monday, February 28, 2011

Notables From The News

On Saturday I was at Starbucks with my hubby - my weekly outing - otherwise I am sitting at my computer trying to make extra money to get us out of debt or taking baby steps in my "get organized, get prepared project" or battling dirt, grime and ick in our home (I win the battle but seem to be losing the war). I always buy a newspaper on my Starbucks trip, and this time they had the Wall Street Journal, so I chose that over the local derailer dailies, The Ventura County Star and The Los Angeles Times - both excellent sources of misinformation and glaring omission.

A few items caught my attention which are worthy of mention and comment.

  1. Obama administration is pushing settlement to reduce loan balances for those who owe more than their house is worth. This sounds like a fabulous way of ensuring that banks stop lending money for home purchases unless you have a huge down payment. If you are a youngster and think you will someday own a home, you can forget it unless you make or inherit lots of money.

    Here is what I don't understand: Banks turn right around and sell these loans to Fannie and Freddie - I have read that those two hold 80 or 90% of all home mortgages in the US. So how is it that banks stand to lose money as stated in the WSJ? Isn't it the taxpayer who will ultimately foot the bill since Fannie and Freddie are backed by the Federal Government? Or those that bought those ingenious investments which bundled loans together then chopped them up and sold them off as mortgage backed securities? Did banks buy these?
  2. Gasoline sales accounted for10.34% of retail sales as gas prices rose and the cost of a barrel of oil hit $100 last week. If I am not mistaken, the last time oil prices spiked it slowed things down enough that we got the big financial crisis, so hold on to your hats folks - whatever is teetering could very well topple.
  3. Food price inflation - the real cause of the revolts occurring in the middle east - not an overwhelming desire for "freedom" - has arrived in your grocery store, too. Not that I need to tell you this - if you do your family's grocery shopping you know or suspected this already. It is not your imagination, food is getting more expensive. I used to buy 2 lbs of butter for $5 on special and now the specials offer 1 lb for $3.50. A loaf of sliced bread - Orowheat, for example is pushing $5 as well.
  4. Economic data for 2010 revised downward. Initially reported as 3.2% growth, the government now says it was only 2.8% after all. If you have been paying attention, this is somewhat of a habit of the reporters of economic statistics. Big headlines for the reporting of the 3.2% growth, the downward revision, page A-3 of the WSJ, bottom of the page, tiny 4 paragraph article with a camouflage title "Growth Seen At 2.8% Pace In Late 2010". You have to read the article to read that this is an revision of the earlier 3.2% growth figure. I guess the WSJ is joining the derailer crowd.
I get my information from several sources - none of which include the MSM. I have found them to be very accurate in predicting outcomes and adept at reporting the relevant - free from the irrelevant attention grabbers such as Lindsey Lohan or Charlie Sheen. For economic reporting done the old-fashioned way (ie correctly) I subscribe to Shadow Stats. I was expecting the report I noted in item (4) above because Shadow Stats said it would be so. I also follow the boys at Inflation.us who report things in a very dramatic fashion and lately have been touting their stock picks and investment wins rather loudly, but nevertheless called the food price inflation accurately at least a year ago. I also get Lee Bellinger's newsletter in paper format and finally to top it off and put it all together, I subscribe to Gerald Celente's Trends Journal

I do read the news put out by the usual suspects, but mostly to monitor what they are trying to get people to think, rather than to learn anything new. I used to read the Economist for news, but the derailers have taken that over too. I consider it to be an unreliable source for an accurate assessment of what is going on in the world. Beyond processed information, I have gotten into the habit of going to the source. If I read an article about a new law they are working on, at the Federal level, THOMAS is where you will get the no-spin version. Each state should have a legislative reporting service and site for you to get at the actual text of the bill in question. It is tedious, but in times like these, it is important to know what is really going on as opposed to what they want you to think is going on.

OK gotta go try and make some money now. See ya in the funny pages.

RH 

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