Bank Walkaways are becoming fashionable

Banks throughout this country are beginning to utter the phrase, "lets walkaway from this foreclosure". In some locations, the value of the underlying real estate has fallen so much that it is not worth the banks time to foreclose on the property. In other words, we are beginning to witness neighborhoods with vacant houses that are boarded up and decaying. Imagine ten houses on a street all boarded up because there is no investor willing to buy or rent the property. This is happening in places like Indiana, Missouri and Florida. These areas are being haunted by the famous real estate phrase, "location,location, location".

Random thoughts.....As the first quarter of 2009 ends this week, President Obama is tackling the eventual bankruptcy of GM & Chrysler....his actions to remove the CEO of GM should be applauded...the market is correcting today but should trend higher in the next thirty days.....this week the important phrase will be G-20 and the Employment Report on Friday..

The New Private-Public Bank

In the next few days, Treasury Secretary Timothy Geithner will unveil his plan for public-private partnerships that will begin the process of removing toxic assets from banks balance sheets. The final plan is still being formulated but the concept would be for the government to finance and participate in the purchase of these assets. The private sector will have to invest some equity in these deals and will help determine the purchase price. If this process is successful, a market will develop for these toxic assets and the banks will begin to clean up their finances. The private investors such as hedge funds will only get involved if they believe that they can trust the government to stay 'out of their business'. The AIG bonus debacle has to fade from view so that we can get back to solving our problems.

Random thoughts....the first quarter ends in nine days...earnings reports for financial companies will be released around April 10th or so....look for upside surprises from most banks....optimism would help.....how will gold and the dollar behave for the next few months?...please leave Geithner alone and let him live....

Fifty Days that may change the world

In a year when so many baby boomers are approaching FIFTY years old, it is the next FIFTY days of President Obama's administration that will make or break the back of the 'Great Recession' of 2008-2009. The President has realized that leadership and a positive attitude are important ingredients for success in dealing with the economy.

The politicians are beginning to understand and deal with some of the basic issues that have sabotaged the economy. We can expect the so called 'uptick rule' to be reinstated within a few weeks. This will make it more difficult for short sellers to drive down the price of stocks. I also expect a revision in the 'mark to market' rules that will add some flexibility in dealing with the write downs of bank assets. The fiscal and monetary stimulus that were instituted in the last six months will begin showing some progress.

The most important policy decision of the Treasury will be the plan for dealing with the 'toxic assets' that are on the balance sheets of most banks. These policies must be viewed positively by Wall Street so that we can begin the process of healing our banking system. I expect the President and his staff to spend as much time as necessary in the next few weeks to make sure that the plan will work. Hopefully, the next FIFTY days will put a smile on all of us as we head to the stores to start spending money again.

Random thoughts.....I think it is time for the press and the politicians to stop worrying about the bonuses that everyone is getting on Wall Street...it is time to calm down and start spending some money....

Dear Mr. President Please Act Now on my plan

President Obama has the power to change the course of the Great Recession of 2008-9 by following these steps:

1. Suspend the accounting rule of Mark-to-Market for two years. This will take the pressure off of the various financial institutions that have seen their Balance Sheet collapse.

2. Suspend Capital Gain taxes for any individual buying United States stocks in 2009. Give the American people a chance to invest in their country and keep 100% of all gains so that they can recoup some of their losses.

3. Use the rest of the TARP money to make sure that the banking system doesn't fail. There are a number of reasonable plans to remove the 'toxic assets' from the books of major banking institutions. Make a decision by Monday on whichever method will satisfy the financial community.

4. State that the US Government will not dilute any Senior Corporate bonds in any restructuring of a non-bankrupt Corporation. In addition, instruct the Federal Reserve to begin purchasing investment grade Corporate bonds next week (at least $500 Billion).

5. Force General Motors into a pre-packaged bankruptcy that is financially supported by the government. Inform Chrysler that they are on their own.

Mr. President, if you take these steps within days you will create a stock market rally of 25%.

In addition, you will stop the downward spiral in the world's economies. People around the world will have confidence in your ability to lead and to create confidence. It is time to lead us out of this great recession.