Xmas gifts for Wachovia execs

As the Chronicle’s James Temple reported earlier this month, it’s sayonara for most of Wachovia’s top executives when Wells Fargo’s takeover is complete, around Christmas time. He also noted that golden parachutes will be billowing all over Charlotte, N.C., where Wachovia is based.

Now we have hard numbers. According to an SEC filing, the failing bank’s top 10 executives will be eligible for a total of $98.1 million in severance pay. At last report, two of those executives are moving over to Wells, so the actual tab will be a little smaller. CEO Bob Steel and chairman Lanty Smith aren’t eligible for severance, but not to worry. They get to reap $2.5 million in stock based rewards as a going away present…

Wells Fargo already received $25 billion from the taxpayers under the Federal Reserve’s TARP program, part of the $700 billion bailout, approved by our heroic representatives in Congress. They, along with other banks, will have enough money available for many more of these games.

In fact, since they are “too big to fail”, they will most likely receive much more. And rightfully so. Now is really the time for the tax paying workers in this country to cut back and give those ailing executives a well deserved break for a job well done…

…Wachovia lost $33 billion in the last two quarters.

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Treasury Yields at Record Lows

The yield for the 10 Year Treasury note (the interest that the government pays on loans) closed at 3.09% today. This is an all time low as far as my data goes. The way toward the 2-2.5% yield is wide open. I expect to see yields at those levels sometime in 2009/2010. The yield curve will flatten out further since there is little room left for Treasury Bill Yields to drop.

Please see the chart below

Click on image to enlarge.

A closeup:

Click on image to enlarge.

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Good News – Houses Continue to Become More Affordable

Once again good news on the housing market for the middle class and less fortunate people: Home prices continued to drop across the board, thus making homes more affordable to the average American. The composite index dropped by 19% when compared to September 2007. The two cities with the largest annual declines were Phoenix (32%) and San Francisco (30%). Nationwide home prices are still at 2004 levels so there is still plenty of room for falling prices in the months to come.

Below please find the development of the composite index and the two cities with the largest decline:

Click image to enlarge.

Click image to enlarge.

Full Report: Go to S&P Website.

Barack Obama, President Bush and Wall Street don’t like to see homes become more affordable to the little guy who works hard, produces, and saves up money. They hate to see opportunities for common people to realize their dreams of owning a home one day. They have pledged to do whatever they can to stop home prices from dropping further. They want to take money away from those people via taxation and inflation in order to prop up home prices.

I have a recommendation for them: Why don’t you start a program that aims at burning down 1/3 of the entire supply of homes in the United States. This will successfully stop home prices from falling sooner or later. If 1/3 doesn’t suffice, just keep firing up additional homes until the supply is low and prices high enough so only the very fortunate people will be able to buy. This, and nothing but this, is the essence of what they are trying to accomplish, intended or not.

It is amazing that the market is still able to listen to the consumers’ value preferences and let prices develop accordingly in the face of unprecedented government intervention.

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Feds unveil plans to unfreeze consumer debt market

The AP writes:

The government has introduced a pair of new programs that will provide $800 billion to help unfreeze the market for consumer debt which Treasury Secretary Henry Paulson calls vital to supporting the economy.

Paulson says key markets for consumer debt such as credit cards, auto loans and student loans essentially came to a halt in October. He says the new programs are aimed to get lending back to more normal levels.

Paulson says all the government programs have been aimed at supporting the lending that is vital to the economy.

What? $800 billion? Where does it come from? When did Congress approve this? Is this a joke?

2 months ago they were fighting bitterly over $700 billion and now we have gotten to the point where $800 billion are mentioned in a side note. They have completely lost their minds.

Just a few days ago I mentioned that consumer credit is going to collapse in 2009.

Of course it is merely a coincidence that the main beneficiaries of this measure will be the executives of the largest credit card issuers in the country, the company names at the top of the list appear utterly familiar:

1. JPMorgan Chase
2. Bank of America
3. Citigroup
4. American Express
5. Capital One
6. Discover Card
7. HSBC
8. Wells Fargo
9. USAA
10. US Bank

Nice little Christmas present before they jump ship.

Expect the money supply and gold to soar.

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