The biggest bad news I heard was not AIG posting another $7-8 BILLION dollars in losses due to the mortgage debacle and is now searching for $12.5 billion. That type of news is becoming more consistent. Investors don’t seem to comprehend what that really means. Why else would they keep buying more of their stock while it is in a downward trend. No, the worst news is Citigroup is shedding another $500 BILLION dollars in assets.
Ultimately, Citigroup said it would get rid of roughly $500 billion in so-called legacy assets that currently make up about 22% of the company. Given the current market conditions, the company said it expected to wind down those assets to less than $100 billion over the next two to three years.
They just had 2 big stock offerings in the last few months and raised supposedly enough capital to manage their mortgage write offs. I think the biggest suckers, I mean buyers were Singapore with $6.88 billion and Abu Dhabi with $6.5 billion. What I suspect is they can no longer spoonfeed the bad news as originally planned every month with more steep losses than the previous month. I don’t think the market reacted at all to the scope of the news, but $500 BILLION worth of legacy assets being shed dwarfs these 2 investors buy in at just $14 billion.
Oil, food, and energy prices are increasing at an alarming rate. I don’t think anyone is immune at this point. Everyone is trying to buy smarter either in bulk or waiting for sales.
Real estate sales are falling, inventories are rising, and banks can’t even keep up with the number of foreclosures they are handling. I read that some people who have stopped paying their mortgage are still living there and not even paying rent with the banks’ silent approval because they rather have someone living in it than have an empty house that may get vandalized. Check out Dr HousingBubble’s Blog:
“The above image is particularly interesting. Are banks so loaded to the gills in REOs they are reluctant to start more foreclosures? If so, people are now living in their homes for free. There have been various media reports of this happening.
As bad as that sounds, from a bank perspective that is better than having a house sit there to become infested by vermin, rats, bees, mold etc. I spoke on the phone with Mike Morgan this morning and he tells me the latter is happening right now in Florida. Some homes are so infested with mold they are a health hazard and have to be bulldozed down. Total loss to the lender is 100%, perhaps greater if they have to pay to clean up the mess!”
As far as the rebate stimulus checks, for most people in California that is just a couple of fill ups for their SUVs or Trucks. The only people benefiting from those checks are big oil executives. You know, the Bush constituents and his “OIL” friends. Why would Bush want his friends make less money by helping the American people?
I would like the war in Iraq to end, but the battle that many people here in the US are fighting is to the battle to stay head above water. I have been through a couple of recessions in my lifetime, but this is by far the worse. Bush is number one at least in something. One recession in each of his terms. LOL. 
The Republican mantra is lower taxes, reduce government spending, and incentives for businesses to spend. Funny how we pay more taxes now, we have the highest budget deficit, and businesses are doing massive layoffs or just shutting down. I didn’t vote for Bush the first or second time. I didn’t believe in the weapons of mass destruction that Iraq supposedly have. I didn’t spend like crazy even though that is what the Bush’s White House, the Federal Reserve, and the US Treasury wanted us do for the past few years. I definitely won’t be voting for McCain to have Bush’s policy continue. He may well be the our next President, but I won’t take any credit for voting for him like 50% of Americans did by voting Bush into office twice. I know I am sarcastic when I talk about this administration because they have done such a poor job. I don’t think anyone can argue with me when I agree with many others and chime in BUSH IS AN IDIOT. But I might make you upset if I tell you if you voted for Bush one time you might be an idiot. If you voted for him both times, you are definitely an idiot and must be stupider than him. That would be the only logic that makes sense. HA HA. I know that is not nice, but I get tired of stupid people.
I can’t wait till the White House reinstates the fake terror alerts again to scare the US public to become sheeple and be afraid to step out of their house. I am sure that will happen in October just before the November general election. Remember those terror alerts right before the last presidential election?
Crude oil is in the mid $120 range per barrel. Goldman Sachs is predicting prices to move up to $200 per barrel. The US is very dependent on oil. Will the rising price of oil coupled with the high rise in foreclosures be enough to knock down our economy? It’s scary to have to contemplate that, but we are at the breaking point. Those refund checks seem like nothing now. The BILLION dollar bailouts of Bear Stearns and Countrywide with US tax dollars just puts more pressure on the economy. Those 7 silly interest rate cuts for the last 7 months to try to stop the housing prices from falling and foreclosures increasing haven’t worked and have hurt our economy even more. Funny how the price of gasoline has risen about a dollar in the same time frame. Hmm, interesting indeed.
