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B4 The Bell Wednesday Septemeber 8


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:D Welcome to B4 The Bell! :D

 

There may be a micro-recovery in the mortgage market in progress, just enough to keep the economy and money supply from slipping into recession levels for now:

 

U.S. mortgage applications rise in Sept 3 week

Wed Sep 8, 2004 06:59 AM ET

 

NEW YORK, Sept 8 (Reuters) - New applications for U.S. home loans rose last week to their highest level in four months even though mortgage rates climbed from their recent lows, an industry group said on Wednesday.

 

The Mortgage Bankers Association said its seasonally adjusted market index, a measure of mortgage activity, rose for the week ending Sept 3 by 7.7 percent to 692.0 from the previous week's 642.7. The latest reading on weekly application volume is the highest since 742.2 for the week ending May 7.

 

Thirty-year mortgage rates, excluding fees, averaged 5.79 percent, up 0.04 percentage point from the previous week but down 0.20 percentage point from a year ago, the Washington trade group said.

 

The Mortgage Bankers Association's seasonally adjusted index on new refinancing applications rose by 8.0 percent to 1,948.9 for last week from the previous week's 1,804.1.

 

http://www.reuters.com/financeNewsArticle....storyID=6178725

 

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Good trading! ;)

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Someone here has been all over this...

 

"US Treasury Secretary John Snow urges Congress to raise the government's debt ceiling, or face a cash crunch in the autumn"

 

Very little mention of the upcoming debt ceiling "crisis" in the mainstream news. Wouldn't affect the thinking of Al's subjects.

When I discussed this on the weekend with people that should know better, including a currency trader, the response was unaminous...

"They will just print more"...No worries, no cares. The faith in federal reserve notes runs unabated as can be seen in the morning boner in the clownbuck....

 

More...

"The debt ceiling has already been raised twice since President Bush took office in 2000.

 

However, anal cysts say Congress is likely to back Mr Snow's call for an increase in the limit, as failure to do so could force the government to default on its debt, triggering chaos on global financial markets.

 

The US government has never defaulted on its debt in its 228-year history.

 

The Treasury also has scope to raise extra cash by juggling its accounts."...

 

http://news.bbc.co.uk/2/hi/business/3529818.stm

 

Notice who published the artical...

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MoGauge Hovers Near Collapse

 

ARM Rates Rise, Low Fixed Rates Not Helping

 

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I just love having all my data seasoned for adjustments. "Say, that tastes a little flat. No problem just throw in a cup of re-fi and extra dash of purchase." I don't trust data put out by self-serving industry associations. I deal with the same crap in our tiny little industry. The RVIA puts out sale numbers for the industry. A unit is called sold if it has been turned over to a shipper. At month's end the units dutifully leave the mfg's yard and magically appear in the shipper's yard. Oddly inventories magically rebound in the first day or two of the month as those same units magically reappear in the mfgs yard. But what the hey, they were "sold" last month, so what if the sale was never completed. This is no lie, I've watched them do it.

 

If the real estate industry wanted real data, it would be derived from filings with the county offices. If you want real employment numbers use the collected Social Insecurity payment numbers monthly and once a quarter the self employment estimated payments from the IRS. The auto industry could tell you exactly how many cars were actually retail sold simply because when a sale is completed the owner must be registered almost instantly in the system for warranty purposes. Good data is available, but everyone feels compelled to have a data base they can "control".

 

I had to laugh when I read yesterday that Haliburton may not bid on the next round of "projects" in Iraq. Since they didn't bid on the first round of "free money" (aka Big Dick's retirement fund) I reallly doubt if they're the least bit worried.

 

Boy oil has sure plunged since Saudi announced their buy one get one free program. It's way down to $43.25.

 

I do believe the "anybody but Bush" vote is as solid as it has ever been, but in the end Americans still vote with their wallets. If enough believe that their wallet is better off now than it was when Bush took office, they'll stick with the known. If they don't then, they'll vote for the other guy who can promise anything and everything at this stage. And this gets right to the heart of my projected POR, due at about year's end. I'm just not sure if it will occur sufficiently before the election to make the difference. This is where Kerry should be attacking.

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The Asian markets did NOT follow through last night after the multiple tick/Dow boner blast yesterday.

Europe is flat.

Whys that?

Don't they BELIEVE?

3am boner futures blast was not forthcoming but better late then never as a solid bid now under the market in anticipation of Al's measured pace and soft patch lies, upcoming later today.

Feed is being jammed with less then 2 months to go until power maintains for the next 20 years.

 

Silver and gold being kicked again as PAPER RULES.

Everything is at a disconnect as is the mentality of mericans who see Bush as the savior for the war on "terror"

 

Meanwhile back in the land of reality US Air and Delta look to be on the verge of implosion with airline pensions threatening to bankrupt the federal PGT. UAL also has huge obstacles in the coming months. AMR is in very bad shape. Who cares if such important infrastructure is erased?

Not the stock market

Not the bond market

Not the currency market

 

The creeps pulling the strings have had 300 years to practice for the upcoming dark ages. In my wildest dreams I never thought it would be sooooo easy to accomplish.

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Douglas Gillespie has published an article by Walter J. Williams that explores a favorite hobby horse of mine, the federal government's misleading use of cash instead of GAAP accounting.

 

I was aware that the fiscal 2003 cash deficit of $374.3 billion was actually $665 billion on GAAP basis. What I DIDN'T KNOW was that the latter figure EXCLUDES Social Security and Medicare, which are of course the long-term destroyers of the state.

 

Williams does the math, using the Treasury's own Financial Report of the United States Government. The results are just appalling. I'm telling you, this knocks my socks off:

 

Including accounting for Social Security and related areas, the 2003 deficit balloons to $3,702 billion, or $3.7 trillion. The accounting reflects no adjustment for the new, more expensive Medicare program.

 

As an aside, if you download a copy of the financial statements, the GAO's auditor's letter as to why they won't certify the statements is an expos? of significant financial mismanagement within the federal government.

 

Beyond the $3.7 trillion deficit in 2003, however, the numbers get even worse, because the shadow deficit has been taking its toll ever since the Johnson era.  According to the Treasury's 2003 financial statement, the U.S. government has a negative net worth of $34.8 trillion. That $34.8 trillion reflects $36.2 trillion in financial liabilities offset by $1.4 trillion in assets, of which only $0.4 trillion are liquid.

 

Federal deficit reality

 

Many of us are aware of the Gokhale/Smetters (G/S) study in 2003, which found that the net present value of the U.S. government's fiscal imbalance is $44.2 trillion (of which, Social Security is $7.0 trillion, and Medicare's is $36.6 trillion). G/S estimated that the fiscal imbalance would grow about $1.6 trillion a year, to reach $54 trillion by 2008.

 

Somehow, though, I had never detected the inconsistency between the $1.6 trillion annual deterioration forecasted by G/S, vs. the U.S. Treasury's $665 billion "GAAP deficit" which (to my shock and surprise) excludes Social Security and Medicare deficits.

 

Sharp-eyed readers will note a further discrepancy between the G/S $1.6 trillion deficit and Williams's $3.7 trillion deficit. G/S were analyzing changes in the net present value of a long series of future cash flows. Williams is simply looking at changes in the govt's net worth from year to year. The Williams/Treasury deficit reflects what has happened in the past year, not what will happen to future cash flows.

 

Either way, the implication is that the real budget deficit is vastly higher than the record cash deficit of $420 billion being estimated for FY 2004, ending this month.

 

To spell it out in plain words, the U.S. government is teetering on the edge of financial crisis. Any loss of confidence in the dollar or Treasury debt could precipitate a run that would provoke massive currency printing and ensuing hyperinflation.

 

As if that weren't enough, an earlier first installment by Williams (at the bottom of the linked page) goes into detail about phony gov't economic reports. Get this:

 

If the GDP methodology of 1980 were applied to today's data, the second quarter's annualized inflation-adjusted GDP growth of 3.0% would be roughly three percent lower (effectively netting to zero percent or below).  In like manner, current annual CPI inflation is understated by about 2.7% against the pre-Clinton CPI methodology (would be about 5.7%), and the unemployment rate is understated by about seven percent against its original design and what many people would consider to be actual unemployment (would be about 12.5%).

 

I'm going to print out Williams's article, before Gillespie's site gets taken down by a DOS attack. I'm going to download the Treasury reports he references. Then I'm going to assess whether financial Doomsday is closer than I thought. Talk about a WAKE UP CALL ... :o

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