Stock Market "Stimulus" of the Day

I figured out why Geithner was so vague in his speech Tuesday... now each time the market is weak and about to fall off a cliff they can release another piece of "salvation" - this methodology could last for months. Why shoot your load all at once?? Genius! I tell you there must be an army of technical analysts employed somewhere in the bowels of government. Their timing is beyond impeccable; below S&P 800 and the panic would have begun.

If you observe an intraday chart we had one of our wonderful 3 PM reversals off of a news leak to CNBC it appears. Every time I see such action I scurry over to CNBC.com and sure enough - another news item to solve all our ills. It's gotten to such a point I expect it and as we trailed down to S&P 800 area I was letting go a lot of my short exposure (I am talking the ETFs). I didn't do a lot of buying on the long side because you never know which day exactly "breaking news" will be announced, but at least the reversal did not crunch us from the short side. I thought the next layer of "surprise" would be about mark to model, but hey this one works just as well. Let's save mark to model for when things get really squirrely. It's quite sad that we expect the government to step in using the news media to move the markets - but just another of a continuum of steps to our Banana Republic status.

As a full blown (apparent) socialist, I won't even bother going off on how a country where 40% without health insurance ("we can't afford it!") and 1 in 10 are on food stamps finds the money to bail out people who bought homes at the wrong time. It's not even worth the energy anymore; the government wins. I'm just going to give a big toothy grin and smile at how wonderful this is - as a person who lived in a state that never had a housing bubble (hence I never had the chance to extract equity to buy a cool car or redo my kitchen), and someone who despite 8 years of ownership is underwater due to a 4 year recession [Jun 25: I have Michigan Economic Bias], I realize I've lived a sucker's life of paying mortgage bills since becoming a homeowner in 2001. The joke is on me. My tax dollars will now go to help someone else stay in their home - and that's balanced and useful.

• The Obama administration is hammering out a program to subsidize mortgage payments for troubled homeowners who have gone through a standardized re-appraisal and affordability test, sources familiar with the plan said on Thursday. Under the plan being contemplated, mortgage companies would use a uniform eligibility test even before a borrower becomes delinquent, sources said.

I am completely benign to this as a stock market participant because we actually called for all the stops to be pulled out.

We'll see interest rate buydowns, we'll see principal reductions, we'll see anything and everything that basically gives a big (bleep) you to people who have been honoring the system. In return we will tell those people, well if your neighbor's house goes into foreclosure we will all suffer, so it's a necessary evil.

Obama & Co will also come up with myriad plans for buyers to suck up excess inventory - the government will be our partner. Nothing should surprise you - this will be an all out assault - we are already seeing the first inane ideas such as no appraisal refinances.

What does get me is this language from the overlords

• Lockhart said that policymakers are eager to prevent a large drop in home values from their current, deflated levels. "Just as we had a large overshooting to the upside. Is there any way to prevent going much further to the downside?"

First, I don't remember anyone complaining when we overshot to the upside? Where were the government programs to stop that? It was applauded. The "free market" will take care of the correct pricing. Second, "deflated levels"? No - it's not deflated - it's not even yet at the correct spot. I showed in 2007 home prices were nowhere near correct levels in historical income to home price ratio. They still are not. [Dec 6, 2007: Analysis - What Should Median Home Prices Be Today?] But in the USSAR I guess the overloads determine what the right price "is".

Anyhow, I'm cool with it - it's a new me. Hopefully my minuscule gains from speculating on housing related stocks shall help me pay for my neighbors in Montana and Manhattan to stay in their homes. While I sit in my multiple years underwater one dutifully paying my note.

So we're saved again from S&P 800, and we got back over our magnet line S&P 820. Now we can hear how this is what we were really waiting for, we had the "great technical reversal" (government managed of course) and we can rally again. Watch the government put out cheese, watch the lemmings run into maze (buy stocks!) sniffing for cheese. Rinse. Wash. Reapt. Groundhog day. Play the pattern until the pattern breaks.

Sincerely,
Turning Over a New Leaf. The Government Has Our Back. I Approve this Message. Buy Stocks.