Foreclosures rise as banks make huge profits. What's wrong with this picture?

Here's several related stories which should cause great concern:
• "Foreclosures rise 15 percent in first half of 2009" versus then next two stories
• "JPMorgan Chase posts 2Q profit, surpasses Street"
• "Goldman Sachs sees record profit"

You see both JP Morgan and Goldman Sachs received significant Tarp money to ease the Credit crisis in the Mortgage industry to prevent foreclosures. In this earnings report, JP Morgan also said they had paid back all $25 Billion in TARP funds to the Government. Here's more details on the Mortgage article that should cause concern.

"The data show that, despite the Obama administration's plan to encourage the lending industry to prevent foreclosures by handing out $50 billion in subsidies, the nation's housing woes continue to spread. Experts don't expect foreclosures to peak until the middle of next year.
Foreclosure filings rose more than 33 percent in June compared with the same month last year and were up nearly 5 percent from May, RealtyTrac said.
"Despite all the efforts to date, we clearly haven't got a handle on how to address the situation," said Rick Sharga, RealtyTrac's senior vice president for marketing."

So despite the earnings looking very god in the banking and financial industry, things are not getting better. Compare that to the rising tolls of the unemployed, now expected to go as high as 13% by some estimates, and you have a recipe for a calamity ahead of us. This must affect the stock market negatively if the stock market is truly free of manipulation. But we know it isn't, don't we. My friends, it used to be one could generally predict market direction based on certain outcomes in the economy and based upon data which supports future predictions. The truth is I can't any more and I doubt any one else can as well. That should be the biggest concern of all. When the stock market becomes unpredictable, it is time to consider ending the trust placed in the system and cash in. There is an expression made famous by the man who was shown by the psychologist a series of ink blot charts. Evert time the man was shown a chart and asked what he saw, the man would say, "people naked". The psychologist turned to the man and asked him, Why do you keep seeing naked women. The man replied, it's not my fault, you're the one with the pictures! I see the same thing in the stock market right now, reason to give great pause as to the integrity of the entire system. Just because we are on a slower decline than we were before, we are still in decline with much more expected over the next several years with more people losing jobs begetting more foreclosures and less disposable income to prop up corporate profits and so the cycle continues. Help me see something differently here.

Is Bank TARP money being used to stop judges from resetting mortgages?

Headline reads: "Fight building over judges redoing mortgages." According to the article, "A bill to give judges authority to alter loan terms for primary residences may be the quickest way to arrest the housing market's collapse. Most Democrats in the House and Senate support that plan. President Barack Obama told Democratic leaders Friday he also backs it.

But 10 groups representing the lending industry and other businesses are fighting back fiercely. Several have engaged portions of their lobbying machines to stop the legislation. The groups spent $83 million in lobbying on multiple issues in 2008, a figure that shows the power of the banking and investing industry and their business supporters."

My question is this, when money was given to the banks in the form of TARP Funds, was any of that money used for Lobbyists to mount a battle to stop the legislation? If it was the Banks should be required to give the money back to the government and the taxpayers. It is not beyond their audacity to do so. But this is a good reason why the money should be tracked and accounted for by those receiving it.

Are all Bailouts created equal? No!

So we have all seen how quickly the Congress and the Government came up with $700 Billion bailout for Wall Street when a number of Investment Banks faced bankruptcy. It took a few weeks after the initial Paulson proposed legislation was only 1 page in length. When all the bargaining was done with Congress, the final Bill was 400 pages and did not contain a provision that a percentage of the TARP money had to be loaned out, and not just held by the Banks. Then we saw a bailout of AIG followed by a huge loan guarantee of $300 Billion of Citigroup.

Now after weeks of negotiations between Democrats, Republicans and the White House over a Loan to the Auto Industry, much is being made about how tough an agreement this loan will have and even then might not get Republican support with the votes. Seems to me there is a double standard here and this issue shows why many in office have lost the election. They still don't get it. Until they show support for average Americans as they have a chance to do here, they will become irrelevant to the rebuilding of America.

Where were all the concerns before? Where were the checks and balances on the out of control spending by this Administration over the past 8 years. Where were the checks and balances on the $12 Billion per month we are spending in Iraq? You know the answer to that one., there weren't any! We are now a Debtor nation thanks to that past 8 years of an uncontrolled Bush Administration and both Democrats and Republicans are to blame as well as the rest of us for continually reelecting incompetent government officials. Hopefully President Obama will reverse this trend.

Use it or Lose it says President-Elect Obama. Why didn't Paulson say the same to bailed out Banks?!

In his Saturday radio address, President-Elect Obama says he is planning to give the States money as a stimulus to boost jobs and the economy, but he said, the money will have strings attached that they must use it for the specific purposes or they will lose those funds.The question I have for Hank Paulson, Treasury Secretary, was why he didn't have similar strings attached to the Banks, when he bailed them out with the TARP money approved by Congress? He should have required a certain percentage of the funds be used for loans for cars, mortgages, student loans and small business ventures. But not only didn't he require it, but neither did the Congress!

When are thse folks going to wake up. I swear they are asleep at the switch and this feels like the blind leading the blind.

My take on today's market action and looking forward.

Today the markets confirmed what I have predicted last week. I said the rally last week was a Bear market rally and not to be fooled by jumping back in. I suggested buying Ultra Short ETF Funds such as DXD and SDS. Both are up now. In the case of SDS which is a short on the S&P 500 closed Friday at $89.89 and closed today at $104.75. That is a $14.86/share gain for a 16.5% gain. When I asked readers to buy this it was at $87.55. Overall it is up now 19.6%. Looking at DXD, which is an Ultra Short Fund of the Dow, it closed Friday at $79.31 and today closed at $86.20/share. That is a gain of $6.89/share for a 8.7% gain. I recommended buying this Fund at $70.50/share. It is up now 22.2%. Normally I would sell these with these gains, but the market closed at near the lows and I believe we are in for another drop tomorrow. We have gone below the recent lows on the Nasdaq, which is not a good sign for those wanting a rally. Also, the ratio of Insiders Buying is overshadowed by Insider Selling, in terms of actual dollars.

There are no good news stories on the immediate or near term horizon, and in fact, there was one negative news item today, as Hank Paulson, Treasury Secretary, announced he is changing the actions he had announced regarding the TARPS (Troubled Asset Rescue Plan which Congress finally approved prior to the election) "because the facts on the ground require a change in strategy," he said. This did not give confidence to the market. Many now believe he has not foreseen some of the current problems and has lost some credibility with the market. The markets function based upon confidence levels of investors and there appears to be less and less each day.

We are getting close to the 8,000 level and without some encouraging news in the days ahead, I fear we may take a run at the real market bottom, which I have said since September, is at about 7.300 on the Dow. If we do go there, that will be capitulation and we should not go lower.