Stock Market Crash--25 year look--Chart

clipped from efhutton.blogspot.com I want to issue a major note of caution here. The formation above could be signaling a market capitulation. Think about it like flushing a toilet. You know what goes down the toilet=, but then the bowl fills right back up. My guess is, if flushed it will be a great opportunity. Markets rarely capitulate, however, when everyone is looking for it. A look at this long term pattern shows that the market is extremely vulnerable. The fundamental news, especially the size of budget deficit continues to weigh on the market. The only question now is do we go down slow or fast.

All American Investor: Stress Test Good, Could lead to a Bottom in the Stock Market

This is one of the better articles I have read on the stress test--Stress Test for Banks Exposes Rift on Wall St. It has me thinking about the long term direction of the stock market.

I think if you read this article carefully you might conclude that much of what is being written about banks is getting discounted in the stock market. I am not saying everything is beautiful. Quite the contrary, we are teetering on the brink of disaster. But, I find myself asking myself constantly--has the market discounted the news. It is always hard when things look bleak to see the light at the end of the tunnel. However, the market always discounts the future long before the future gets here. The market always bottoms when things look bleakest to the herd. The herd tends to focus on the recent past, rarely looking forward into the future."

Test of Banks Could lead to a Bottom in the Stock Market

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Roubini Predicts U.S. Losses May Reach $3.6 Trillion


Six Errors on the Path to the Financial Crisis


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Option ARM--The Toxic Mortgage


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Help for Homeowners--Are you smarter than a Fifth Grader?

Help for Homeowners--Are you smarter than a Fifth Grader?

I am doing my best to figure out who is in and who is out in the new mortgage plan announced by President Obama. Are you qualified if you meet any one requirement? Or, is it a more like an equation--if this, then that. For example, if your ratio of income to mortgage payment exceeds 31 percent you are in? Or is it, if your ratio exceeds 31 percent, and your house is only down a little bit, and you made a substantial down payment when you bought the house you are in?

I did figure this out---the key words throughout the announced information so far are "you may be". So you may be eligible but you might not find out until March 4. Sooner or later I will figure this one out, "This initiative will also include borrowers who show other indications of being at risk of default."

The Obama Administration’s Homeowner Affordability and Stability Plan will offer assistance to as many as 7 to 9 million homeowners making a good-faith effort to stay current on their mortgage payments, while attempting to prevent the destructive impact of foreclosures on families and communities. It will not provide money to speculators, and it will target support to the working homeowners who have made every possible effort to stay current on their mortgage payments. Just as the American Recovery and Reinvestment Act works to save or create several million new jobs and the Financial Stability Plan works to get credit flowing, the Homeowner Affordability and Stability Plan will support a recovery in the housing market and ensure that these workers can continue paying off their mortgages.

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Who the Program Reaches:

The housing plan President Obama unveiled today could directly help up to 9 million people.

Focusing on Homeowners At Risk: Anyone with high combined mortgage debt compared to income or who is “underwater” (with a combined mortgage balance higher than the current market value of his house) may be eligible for a loan modification. This initiative will also include borrowers who show other indications of being at risk of default. Eligibility for the program will sunset at the end of three years.

Reaching Homeowners Who Have Not Missed Payments: Delinquency will not be a requirement for eligibility. Rather, because loan modifications are more likely to succeed if they are made before a borrower misses a payment, the plan will include households at risk of imminent default despite being current on their mortgage payments.

Common Sense Restrictions: Only owner-occupied homes qualify; no home mortgages larger than the Freddie/Fannie conforming limits will be eligible. This initiative will go solely to supporting responsible homeowners willing to make payments to stay in their home – it will not aid speculators or house flippers.

Special Provisions for Families with High Total Debt Levels: Borrowers with high total debt qualify, but only if they agree to enter HUD-certified consumer debt counseling. Specifically, homeowners with total “back end” debt (which includes not only housing debt, but other debt including car loans and credit card debt) equal to 55% or more of their income will be required to agree to enter a counseling program as a condition for a modification.

How the Program Works

The Homeowner Stability Initiative has a simple goal: reduce the amount homeowners owe per month to sustainable levels. This program will bring together lenders, servicers, borrowers, and the government, so that all stakeholders share in the cost of ensuring that responsible homeowners can afford their monthly mortgage payments – helping to reach up to 3 to 4 million at-risk borrowers in all segments of the mortgage market, reducing foreclosures, and helping to avoid further downward pressures on overall home prices. The program has several key components:

Shared Effort to Reduce Monthly Payments: Treasury will partner with financial institutions to reduce homeowners’ monthly mortgage payments.

1. The lender will have to first reduce interest rates on mortgages to a specified affordability level (specifically, bring down rates so that the borrower’s monthly mortgage payment is no greater than 38% of his or her income). Next, the initiative will match further reductions in interest payments dollar-for-dollar with the lender, down to a 31% debt-to-income ratio for the borrower.

1. To ensure long-term affordability, lenders will keep the modified payments in place for five years. After that point, the interest rate can be gradually stepped-up to the conforming loan rate in place at the time of the modification. Note: Lenders can also bring down monthly payments to these affordability targets through reducing the amount of mortgage principal. The initiative will provide a partial share of the costs of this principal reduction, up to the amount the lender would have received for an interest rate reduction.

“Pay for Success” Incentives to Servicers: Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. Servicers will also receive “pay for success” fees – awarded monthly as long as the borrower stays current on the loan – of up to $1,000 each year for three years.

Responsible Modification Incentives: Because loan modifications are more likely to succeed if they are made before a borrower misses a payment, the plan will include an incentive payment of $1,500 to mortgage holders and $500 for servicers for modifications made while a borrower at risk of imminent default is still current.

Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time under the modified loan, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance on the mortgage loan. As long as the borrower stays current on his or her payments, he or she can get up to $1,000 each year for five years.

Home Price Decline Reserve Payments: To encourage lenders to modify more mortgages and enable more families to keep their homes, the Administration -- together with the FDIC -- has developed an innovative partial guarantee initiative. The insurance fund – to be created by the Treasury Department at a size of up to $10 billion – will be designed to discourage lenders from opting to foreclose on mortgages that could be

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Option ARM--The Toxic Mortgage

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The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means

The Last Lecture

GM, Chrysler now say they need billions more

What should we do? Bailout or bankrupt?

clipped from www.freep.com General Motors Corp. and Chrysler LLC summoned the prospect Tuesday of their collapse unless they get $7 billion in federal aid within six weeks -- part of a dramatic plea for a total of up to $39 billion to survive the worst economic crisis in the history of Detroit's signature industry. The plan calls for closing five more plants in the United States than previously announced, bringing total plant closures to 14 over the next three years, and eliminating 47,000 jobs worldwide this year and 20,000 in the United States by 2012. Chrysler said it would cut 3,000 jobs and eliminate three models from its lineup. GM "remains convinced bankruptcy would be protracted with a significant possibility that exit would not be achieved," the company said. The UAW said it had not agreed to changes in retiree health-care trust funds at all automakers, but Chrysler said it had reached a tentative pact depending on sacrifices by bondholders.

Irving Fisher the forgotten economist

Over investment and over speculation are often important; but they would have far less serious results were they not conducted with borrowed money. The very effort of individuals to lessen their burden of debts increases it, because of the mass effect of the stampede to liquidate…the more debtors pay, the more they owe. The more the economic boat tips, the more it tends to tip.

All American Investor: Irving Fisher the forgotten economist

All American Investor: Who Caused the Financial Crisis?

The cause of the financial crisis is likely to be debated for a long time. Most American's believe the crisis was caused by greedy Wall Street executives, shabby lending practices by mortgage companies and banks, and the deregulation of financial institutions by our elected representatives in Washington. No doubt there is plenty of blame to go around.

All American Investor: Who Caused the Financial Crisis?

Is Etanercept the Cure for Alzheimer's

Alzheimer's is the sixth leading cause of death recently surpassing diabetes. If a cure is not found, ten million baby boomer's can expect to suffer from Alzheimer's disease. Alzheimer's treatment is likely to be an enormous market so you can expect all kinds of alternative treatments to be popping out of the woodwork. Here comes Dr. Edward Tobinick and his claim that he has the cure--etanercept.

Dr. Tobinick claims he injects a shot of etanercept--a drug approved for arthritis-- into the neck of his patients. Unfortunately, in the video provided below, he closed the door when it was time to demonstrate the procedure.

He says,

"We leave them upside down or inclined on the examination table for about five minutes and what we believe happens is that blood flow reverses into the venous system and goes backwards into the brain...the injection targets a protein in the brain that causes inflammation...

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Is Etanercept the Cure for Alzheimer's

Worried about the Economic Stimulus Package--You will be after you read this

Ready for a stomach ache, here goes.

Milwaukee Public Schools would reap $88.6 million over two years for new construction under the economic stimulus package just passed by the U.S. House of Representatives - even though the district has 15 vacant school buildings, a large surplus of property and no plans for new construction.

The amounts for MPS are particularly eye-catching, and not only because they are the largest in the state. Enrollment is declining every year, and the last major wave of construction in MPS - the $102 million Neighborhood School Initiative launched in 2000 - resulted in projects that are underused, have not met enrollment projections or have closed. A series in the Journal Sentinel in August detailed how tens of millions of dollars in construction spending did not produce the expected results, and the project as a whole has not led to a higher percentage of students attending neighborhood schools.

If you are interested in ascertaining the validity of this information and the source go to, The Mikwaukee Wisconsin Journal Sentinal: Milwaukee Public Schools may be in line for millions in stimulus package

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