Subprime Is Back - Sponsored By The Taxpayer

This one really irritates me.  Get ready for "chapter 22" for GMAC (bankruptcy x 2).  The Taxpayer-owned auto finance bank formerly known as "General Motors Acceptance Corp." and now known as "Ally Financial" (what a stupid name) is back doing what it knows how to do best:  make risky loans that drive the company into insolvency.  Only this time with a 74% backing of Taxpayer money.  Here's the article:  LINK  I knew back in 2002 that GMAC was going to hit the wall.  Back then I was aware that GMAC was one of the largest users of derivatives in the world.  History will once again repeat, as GMAC/Ally will go tits-up again, only this time it will be your money, not shareholder money.  Both times Wall Street made billions...

I'm guessing everyone has seen the news reports this morning which show that the U.S. economy is rapidly spiraling into a depressionary abyss.  I love it when my forecasts are vindicated, as the Case-Shiller home price index reported a big drop for March and is now at an 8-year low.  Here's the LINK  One of the bow-tie bubblevision analyst morons proclaimed that lower prices wouldn't lead to more foreclosures.  Too bad he does not read this blog, otherwise he would know that there is a direct statistical correlation between negative home equity and the occurrence of strategic default, affectionately known as "jingle mail."  Not only that, but this will fuel the vicious feedback loop in which prospective buyers will likely decide to intelligently postpone buying a home, as the market is getting worse.  This just isn't a foreclosure inventory problem and it's not a credit-availability problem, as FNM/FRE are doing with home-loans the same thing than GMAC is doing with auto loans and have been relaxing credit standards.

Elsewhere the consumer confidence index for May fell to 60.8 and was significantly lower than was expected by the group-think, highly paid Einsteins on Wall Street, who were looking for the index to increase from April's 66 reading to 67.5.  Ouch!  These economists are less accurate than weathermen and they get paid a helluva lot more...insane...

Does anyone know if the company that prints up food stamps is a public company?  If so, what's the stock ticker?  Why?  The number of people receiving food stamps just hit a new record of 44.2 million.  Talk about a growth business..per zerohedge.com:  LINK  That's roughly 1 in 7 Americans...

Finally, got gold?  It is expected by this Einstein from HSBC that China will be settling more than half of its trade in yuan by 2015:  LINK  Heh heh hehhh.  I expect China to be settling a much higher percentage of its trade well before 2015.  I also expect that the yuan that we'll be trading with will be gold/silver-backed.

P.S.  Everybody enjoying watching AIG stock melt away as much as am I?




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