Bush Wants Congress To Stop Spending Money

Elaine Meinel Supkis

The last bubble inflates: the stock market soars while housing sours. The usual tools: cheap energy and cheap loans, are keeping the bubbles inflated and intact. It is tremendously warm up here in the densely populated Northeast so families have more money to spend recklessly. This keeps the consumer economy limping along. With Democrats taking over DC, time for Bush to start yapping about balancing the budget he and the GOP busted. Also, Home Depot's destruction fuels happy stock market deals.

&hearts Naturally, he publishes his missive in only the paid for view format of the Wall Street Journal.

President George W. Bush has written an op-ed for The Wall Street Journal that will appear in its pages today.

In a lengthy piece intended to address the new Congress, the President cites Sep. 11, indicates his continued opposition to tax hikes, and projects a balanced federal budget by 2012.

As per always, like clockwork, the minute the free booting, free spending wastrels of the GOP are kicked out of office, a Democrat has to come along and raise taxes and cut spending. They do this honorably time after time to a chorus of shrieks by the GOP who suddenly start counting pennies and demanding money be spent parsimoniously.

Of course, Bush repeats the family mantra: we won't pay taxes, nyanyanya. He proposes balancing the budget in the fourth year of the next Democratic President's tenure. Isn't that nice. This is the man who happily signed all the GOP spending bills filled with GOP pork and he is the one who puffed up the military so it spends more than $600 billion a year and now he wants to be careful? While increasing spending in Iraq?

I just read elsewhere, we are going to build a huge 'American University' in the countryside in Iraq. It won't be in Baghdad because it is too dangerous! But it will be somewhere there. This ignores the reality that every thing we have turned over to the Iraqis is promptly looted down the the light fixtures. But we will spend around $20 billion to build a whole new university that will what? Teach Iraqis to love us? Who are we kidding?

This latest extravagance is being heaped on top of us even as Bush is desperate to stop pay raises for the very poor, student loan increases and health care insurance for all American. Seriously, he wants to make a university for Iraqis but won't give my son a loan to go to school here in America? This is the deal!

&hearts The housing market trainwreck is barely beginning yet Wall Street and the GOP are acting as if it is entirely over and the boom will bellow onwards.

But just when you're feeling hopeful again, you get reports like yesterday's Wall Street Journal piece reporting that delinquency rates are suddenly soaring on all those loosey-goosey subprime mortgages. They are starting to cause real heartburn for pension funds and other investors who bought securities backed by those mortgages on the theory that they were no more risky than a Treasury bond.

"We are a bit surprised by how fast this has unraveled," Thomas Zimmerman, head of asset-backed securities research at UBS, told the Journal, removing his head from the sand. Trust me, Tom, you ain't seen nothin' yet. After the subprime loans come the 100 percent, interest-only loans, followed by the meltdown in the overbuilt multi-family housing sector.

Never, ever does a collapsing housing market recover in a few months! Even with artificially low interest rates thanks to the Chinese recycling our dollars, a boom is impossible to extend forever because of simple over-building. The overheads become too high as land costs rise and banks see more and more delinquencies and eventually the whole thing capsizes.

In this situation, the price of housing greatly exceeds income and only by extending really bizarre loans can many deals close. I have said in the past and will say it now again: it is far better to have high interest rates and cheap prices than the other way around. Even if one doesn't get 'easy wealth', this represents a stable economy that doesn't turn into a huge bubble. The busting of this bubble will be truly hideous once the deadbeats become legion.

&hearts Home Depot's CEO is dumped which causes Wall Street to take off because they plan to loot the company.

NEW YORK - Stocks moved soundly higher in the first session of 2007 as investors cheered mostly solid readings on the economy and found reason for increased prospects for big-name retailers Home Depot Inc. and Wal-Mart Stores Inc.

A decline in oil prices added to the strong sentiment that drove the Dow Jones industrials to a triple-digit advance and a new trading high.

Stocks, which had surged from the start on word that Home Depot's chairman and chief executive had resigned after years of lackluster performance in the company's stock, added to their gains after Wall Street received a stronger-than-expected report on December manufacturing from the Institute for Supply Management and saw a softer-than-expected decline in construction spending.

Home Depot is heading towards hard times. It depends heavily on the home improvement market and if houses are losing value, there is no incentive to fix them up. This is why housing in poor neighborhoods look worse and worse. Housing sales in cheap housing in my village is nearly dead even while vacation housing just outside the village is still doing fine, the houses in the village are beginning to show some wear and tear. In the Great Depression, housing rotted away all over the place. Many of the mansions built during the post-WWI boom became haunted houses or were broken up into smaller units while large houses in the cities were also subdivided.

The investors hope to take Home Depot and load up the corporation with a mountain of IOUs. They even paid the CEO $210 million dollars to exit swiftly so they can dismember the corpse. I remember when Home Depot began to collapse: for years and years, managers of these stores would give me all the left-over or useless wood and other things like sinks or doors. A goodly portion of my house is built with this stuff, things they would have to pay to cart away. Then last year, they told me they had to sell this stuff. So I couldn't take it away.

But it didn't sell! They had to pay MORE to remove it! I covered the entire Albany area, picking up their unsaleable stuff. For free! See? Some of the managers groused about this and the news that the CEO is getting a huge bundle of loot while nickel and diming the stores to death...well, they were big on waving American flags this and support the troops that but like all Republicans (the CEO is a Bush Pioneer) they ended up being total jerks who will let down the fine people who work for them so hard.

&hearts Home Depot can see the writing on the wall:

WASHINGTON (MarketWatch) -- U.S. construction spending fell by a seasonally adjusted annual rate of 0.2% in November, led by a drop in outlays on home construction projects, the Commerce Department said Wednesday.

Spending for private residential construction projects fell by 1.6% in November, following a drop of 1.7% in October. Residential construction outlays fell by 1.3% in September.

Year-over-year, private residential construction spending is down 11.0%.

Wall Street still sees a rainbow in front of this storm. The drop in energy prices is a temporary thing and Americans who are whooping it up because of this and the mild weather are like the grasshopper in the 'Ant and the Grasshopper' fable. We know what happens next.

&hearts Many of us bears can see the danger of this last Indian Summer weather...winter is around the corner.

Financial Sense.com: First, the housing and commodity dominos fell. Now, here we sit with the stock market still holding up at this point and everybody seems to be oblivious to the fact that it is among the very next of the dominos to fall. Well, as I have been explaining, we continue to see the warnings from the ongoing Dow theory non-confirmations. This non-confirmation is telling us that something is wrong just as it did in 2000, and just as the non-confirmation between lumber, the housing indexes and copper did more recently. Also, my statistical data surrounding the 4-year cycle continues to suggest, contrary to popular belief, that the 4-year cycle did not bottom this past summer. On top of that, we are now beginning to see the poor economic data continuing to stream out with the latest example of this being the Philadelphia Fed Survey and Industrial Production on Thursday.

Yes indeed: things run in cycles. This is because nature loves cycles and all things seem to follow wave patterns whether it be empires over hundreds of years, local economies, harvests of grains, population growth, whatever. Whenever this is interfered with, 'bubbles' appear and they then blow up and things go back to normal. This particular cycle is very dangerous for our empire for it is entirely based on increasing debts on every level coupled with stupendously reckless spending, nearly all of which is on things that are not productive at all. I read last week that our new economy will run entirely on the strength of 'services'. This is pure insanity.

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Comments

[D. F. Facti]

the services economy - my favorite term in the econo-speak lexicon. yes, we'll all be suing each other and doing each other's laundry. I've told this before, but I have a good friend who once advised me that the US would be the Kenilworth of the world - Kenilworth being a tony, old money suburb of Chicago - the place where the managamnet class lives while the workers toil away elsewhere.

And he STILL believes this bullshit.

Too many MBAs and lawyers - starting with the one in the WH.

Home Depot, like all the mega retailers, has built an awful lot of stores on brownfield sites. So the taxpayer is subsidizing the great benefits supposedly brought to a community when one of these monsters decides to invade.

[Elaine Meinel Supkis]

The Home Depots here are all on former milk farms. They are ideal spots being flat and all that. We are paving over our farms at an astonishing rate. Something our great grandchildren will regret.

[raivo pommer-eesti.www.google.ee.]

EU HILFGELD

In den Streit zwischen Berlin und Brüssel um staatliche Beihilfen für die Commerzbank ist Bewegung gekommen: Deutschland meldete milliardenschwere Hilfen für das Frankfurter Geldhaus bei der EU-Wettbewerbsbehörde zur Überprüfung an.

«Da wir jetzt eine Anmeldung haben, wollen wir dazu kommen, so schnell wie möglich eine Lösung zu finden», sagte der Sprecher von EU- Wettbewerbskommissarin Neelie Kroes der dpa in Brüssel am Freitag.

Der zweitgrößten Bank Deutschlands drohen angesichts milliardenschwerer Staatshilfen scharfe Auflagen durch die EU-Kommission. Dabei geht es auch um den Verkauf von Beteiligungen - wie die Hypothekentochter Eurohypo. Wegen der Commerzbank-Hilfen hatte es in der zurückliegenden Woche einen Schlagabtausch zwischen Bundesbank-Chef Axel Weber und der Kommission gegeben. Weber befürchtet unter anderem , dass Banken gezwungen werden könnten, profitable Geschäftsbereiche abzugeben.

[Buy Canada Goose]

By the side of sickness health becomes sweet.