BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise...

BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise After Durable Goods? When are Construction Revisions Coming? A certain dose of market discipline in the form of lower prices might be healthy, but market forecasters currently project over two million defaults before this current cycle is complete. The resultant impact on housing prices is likely to be close to -10%, an asset deflation in the U. S. never seen since the Great Depression. The ultimate solution, it seems to me, must not emanate from the bowels of Fed headquarters on Constitution Avenue, but from the West Wing of 1600 Pennsylvania Avenue. If we can bail out Chrysler, why can’t we support the American homeowner? The time has come to acknowledge that there are precedents aplenty in the long and even recent history of American policy making. This rescue, which admittedly might bail out speculators who deserve much worse, would support millions of hard working Americans whose recent hours have become ones of frantic desperation. Get with it Mr. President and Mr. Treasury Secretary. This is your moment to one-up Barney Frank and the Democrats. Reestablish not the RFC or the RTC, but create an RMC – Reconstruction Mortgage Corporation. If not, make some modifications in the existing FHA program, long discarded as ineffective. Write some checks, bail ‘em out, prevent a destructive housing deflation that Ben Bernanke is unable to do. After all “W”, you’re “the Decider,” aren’t you? Mr. Practical, whom I seldom disagree with simply because he is too practical, commented on the situation and came to a conclusion that I 100% agree with: In my humble opinion Mr. Gross is right about only one thing: that Mr. Bernanke is unable to eventually stop a destructive housing deflation. At least now the pundits are admitting that a housing deflation is at the heart of the economic problems. That is a watershed event. But for the “government”, which I thought was using taxpayer money (except for the $9 trln in debt it has borrowed), to bail out malinvestment is only to increase the problem. If you don’t punish your child for playing with matches, he may one day burn the house down. I see the top bond guru in the world returned a three year average of 3.83% in his 'Total Return' Fund. One could have parked money in a money market fund, CDs, a bank, or short term treasuries and done better than that. Of the US Government breakdown I see the Total Return Fund is grossly overweight agencies (Fannie Mae) vs. Treasuries. This is really irritating. Shame on Morningstar for being willing to label Fannie Mae and Fredie Mac as ' There are scores of so called 'Government Bond Funds' out there chasing minuscule returns above treasuries when Fannie Mae (and brother Freddie Mac) are not even government backed. For more on this idea as well as a recommendation that everyone look into just what is in their Money Market and 'Government Bond Funds' please see The Total Return Fund does not present itself as a 'government bond fund' but everyone by now should be wondering how the so called best bond trader in the world could get himself into this position. And even worse is the fact that 40.20% of the Total Return Fund is invested in mortgages which from the above tables it would appear that most of that is not even 'quasi-government guaranteed'. The logical conclusion is that Bill Gross is overweight mortgages and wants a taxpayer bailout of PIMCO. Is it any wonder then that he is asking Bush to ' The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.