The Market Ticker

So this morning NY and Chicago wake up to the news that DOWn Chemical has decided that due to the incessant (and insane) cost-push pressure coming from feed stocks, they will increase prices (another) 25%.

That would be a 45% increase (if you failed math) in the last two months, or a roughly 50% increase if you passed.

Yeah.

This, of course, resulted in an immediate reaction in the futures, as well it should.  This sort of "pricing pressure" has no way to be spun as a "positive" by anyone. 

And let's not kid ourselves about why these feed stocks have increased in price - it is simply too much liquidity chasing the goods out there in the market, and that is Bernanke's responsibility.

Ben claims to have a dual mandate to protect both the economy and price stability, but in fact he has intentionally abused that mandate to protect not the economy but rather his banking buddies on Wall Street, who made bad bets and instead of having to eat them, are being allowed to foist them off on you and I.

See, Bernanke thinks he's immune from all of the laws of economics, not to mention the securities marketplace.  In the case of the latter, he is - The Fed "trades" on inside, undisclosed information literally on a daily basis.

But in the case of the former, nobody is immune from the laws of economics.

Unfortunately the damage done from Ben's "reliquification campaign" is now quickly snowballing.  The banks which allegedly have a "backstop" are finding that the money flow for their secondary offerings are starting to close, as people get real tired of buying stock at $10 only to see the price fall to $5 a week later.  That's a real 50% loss!

You can fool some of the people some of the time, but eventually, if they lose enough money, you get the middle finger in response to your entreaties to come play in the sandbox once again.

The down payment assistance game is getting more heat, as well it should. Have a peek at the results of these games:

Source: WSJ

Gee, you think that might be a problem?  We more than double the rate of default based on whether the buyer cheats on his down payment?

Of course the firms involved in this are beating shoe leather in a desperate attempt to prevent the rug from being pulled out from under them.  Never mind that the entire concept of a "non profit" that simply washes someone else's money is one of the more "interesting" uses of the 501 section of the IRS code that I've managed to come across in my years.

The other problem with these "down payment assistance" programs is that they are really a scam to hide the actual selling price, and therefore they distort the market in other ways - all of them bad.

If you have a $100,000 house (for example) but the seller of the house finances the down payment of 3%, then the real selling price is not $100,000, its $97,000.  But it is reported in the MLS as a $100,000 sale, even though the seller doesn't really get $100,000 for the house, as they kick back $3,000 to the buyer.

I call this fraud but apparently HUD calls the practice acceptable and allows these "adjustments."  I guess when the entire housing finance industry has become steeped in gamesmanship and BS "a little more" doesn't bother anyone.

Nobody really expects The Fed to drain the swamp tomorrow or, for that matter, at any time in the reasonable future, but they sure as hell should.  Bloomberg picked up on the box Ben finds himself in though (gee, you're only a few months late guys) today:

"Raising rates may exacerbate the economic slowdown and roil banks whose losses sent their stocks down the most in a decade this month. Forgoing a rate boost next quarter risks damaging the Fed's credibility and deepening its divisions. Already this year, three officials have dissented on rate decisions."

Oh what a tangled web we weave when we practice to deceive.

Congress needs to get involved in putting a sock in this crap, but being an election year and all, the best we can probably expect is more BS partisan rhetoric. 

Of course being a "Friend of Angelo" might have something to do with that, along with being a Friend of Fannie and Freddie.  Speaking of which, do you think we'll ever see any sort of meaningful disclosure of all of these "special deals"?

IRA calls it "legalized bribery."

I agree, and its time for this garbage to stop.