Incentives To Loot

As I walk into work today I am firmly in the camp that the SPX would run up to 1100. This is not a stretch for me to say as the futures are printing 1100 when I walked in. Anyway that seems to be a nice round number for the market to gun for. About 10 days ago the SPX was at 1044, so the recent 5% run up in the averages cooled off the bears. The bulls have held most of the cards since last March. Every sharp spike down in the markets have been bought and new highs have been made. We will have to wait and see if this particular decline will just be reversed as well.

Today's news du jour item of the day is New Home Construction.

"Groundbreaking activity for new homes increased 2.8 percent to a seasonally adjusted annual rate of 591,000 units, reversing the prior month's weather-induced drop, a report from the Commerce Department showed on Wednesday. Analysts had expected housing starts to rise to a 580,000-unit pace. December's housing starts were revised upwards to 575,000 units from the previously reported 557,000. Compared to January last year, starts surged 21.1 percent, the largest increase since April 2004."

Of course the market loves this. What's not to like? The gravy train continues. The construction industry loves to build homes because the home builders are incentivized to build and get fronted money from the banks. The banks get the money at near zero interest rates and give it to the home builders. Where do the banks get the money? They borrow it of course from the government and tax payer. So eventually when these home units are not sold because no one can get a mortgage in this country the tax payer is on the hook for these unsold homes. Why don't the banks originate mortgages? Because why loan out funds to over leveraged and unemployed Americans when you can borrow at zero and lend to the idiots at Treasury at 4%? This was the whole plan from the beginning. The Treasury/FED played out this charade perfectly. They told everyone that TARP/TLGP/QE was enacted to get the bank’s lending again, but they really had a secret handshake agreement with the banks specifically not to lend. This was the prudent thing for the banks to do when the economy is losing hundreds of thousands of jobs every month. The banks then stopped lending to everyone in the country. They cut credit lines and closed credit accounts aggressively across the board. All along the Treasury/Fed was outraged! We gave you all of this TARP/TLGP money to lend but you are not lending? Good going guys! You are listening. This whole TARP/TLGP/QE shame was enacted for the banks to rebuild their balance sheets via bulking up their Net Interest Margins. You don't have to be a genius to run a bank. You borrow short to lend long, in the process you capture a yield spread. The only problem is when you start underwriting/originating mortgages to dead people and household pets. So Geithner and Bernanke told the dolts at the banks that they have a great idea. We will lower rates to zero and we will print you guys trillions of dollars. The only thing you nitwits have to do is to plow that money back into the Treasury Market. Presto! Capture an easy 4% yield. You morons can handle that? Oh! In the process we will make Congress pass a law that legitimizes and legalizes accounting fraud. You guys don't have to mark your mortgages/loans to market. You know the mortgage that was underwritten to Maxie the Parrot? Forget it! Extend and Pretend. We are in such a giving mood that we are going to debase and murder the USD by blindly printing it up by the Trillions so we can give it to you in exchange for all of the moronic loans you guys made. This is QE in action. The Trillions that we have drunkenly printed you guys can just keep that as excess reserves as long as you want. You guys need the excess reserves to support your shadow banking/OBS shenanigans. Dot worry about the low rates you guys are currently getting, we have a plan to raise the interest rates on excess reserves, because we are so afraid of inflation and all of that money you guys are lending out. So you guys can gorge on the extra interest and pay yourself billions in tax payer financed bonus money even next year. You imbeciles can handle these simple instructions while we hood wink the country and tax payer?

The following paragraph might seem funny but it’s so depressingly true. Everything that has been done so far by Treasury/Fed is to ensure the same rotten to the core system is re inflated back to business as usual. These bankers brought the entire global financial system to the edge. They knew they would get bailed out. These same bankers are about to blow up the entire continent of Europe. When does it end? When does the looting end? I tell you when. When we stop incentivizing and institutionalizing the looting and raping of common ordinary citizens. The reason there are no more slaves in America, is because there is a law against it. Goodness! They fought a war over it! Do we need to fight another civil war against the banking/lobbying/corporate state?