Bearish News

Blankcheck von Moneypants, heh.

If you could ask Bernanke a question, what would it be?

Here’s mine:

What makes you believe the current recovery is sustainable? What happens if/when the Fed stops buying toxic MBS, the FHA no longer guarantees 25% of all U.S. mortgages, and Freddie/Fannie stop gobbling up the bound-to-fail mortgages?

With 25%+ of homeowners underwater, it’s fair to say that the housing market would crash as rates shot up. I’m pretty damn sure the Fed will not end their massive MBS buying-spree next Spring, as the original gameplan calls for.

So what’s the plan, Bernanke? Print, print, print. Delay the inevitable crash, and attempt to inflate our way out of it. Until our lenders really catch on.

Tarp II also seems inevitable, whether it’s 2010 or 2013. Much depends on whether the banks are actually required to value their assets at realistic levels. And whether they are forced to bring toxic off-balance-sheet assets into daylight. If/when they are forced to acknowledge the crap that exists outside their balance sheets (and the ones they used as Fed collateral), things could get ugly.

I’m following the FASB vs. Bank Lobby fight at CFO.com. It’s a crucial one to watch.

Nasty inflation is becoming more likely by the day. If gold continues to pull-back, we may get a great buying opp soon.

Posted by an American serviceman in Iraq.

See the discussion at Reddit.com, where I found it, for more info. The submitter used the title “Equipment bought for Iraq, paid for by the US, stretching as far as the eye can see – this is just some of it”

Here’s the submitter responding to questions about who took it, and why they created a new acct to do so:

Oh no, Im in the military and I took this photo myself. Posting things that are controversial can get you in deep shit (of one form or another). Things over here are very political.

This was too moving too keep under wraps though.

Further down the thread he says, “I got in trouble with a blog my first few months here, hence the paranoia.”

Who woulda thought the Hummer loophole would end badly? Another example of what happens when the government meddles in markets.

Lots of other food for thought in this chart by Jake from Econompic.