Now That That's Over...

by Larry Levin

The Politburo decided today to ignore your supplications to defeat the Wall Street & Foreign Investment Bailout Bill. This time around it passed easily. USSA Politburo to constituents: DROP DEAD! Now that that's over, we can get on with the economic data of the USSA - grand!

So that's it - right? No more bailouts? This, The Mother of All Bailouts, is the end of the line? Umm, not so much. The state of California now has its hat in hand, asking the Federal government for a handout. Said another way, the state of California wants the Feds to collect tax dollars from all over; Illinois, Texas, North Dakota, Michigan, Tennessee, Ohio, anywhere, EVERYWHERE - so that we can pay for California's bloated give-away programs. How nice.

Let's have a look at the current bailout program, shall we?

1) Stimulus package - $150 billion, of which $28 billion went to those who paid NO income tax. In Joe Biden's neighborhood (he claimed in the debate) they call that fairness. In my neighborhood, as well as Karl Marx's, it's called income redistribution. Did the stimulus help? No.

2) Bear Stearns stolen - $30 billion.

3) Fannie Mae nationalized - $100 billion minimum.

4) Freddie Mac nationalized - $100 billion minimum.

5) AIG - $85 billion. Days before AIG was bailed out, everyone in the Politburo was quoted as saying it would not get a bailout. However, once it was known that the counterparty to Goldman Sachs' toxic derivatives investments was AIG, Mikhail Paulson of the Treasury department (ex-CEO of Goldman Sachs) jumped into action. Immediately, it was said, AIG must be saved; in order to save Goldman Sachs of course. It pays to have friends in VERY high places.

6) Detroit auto makers - $25 billion, with $25 billion more on tap.

7) Wall Street in general - $810 billion (with pork).

8) Now the new wrinkle: California , $7 billion/month. This $7 billion is just for day-to-day operations and to pay teachers' salaries, nursing homes, law enforcement and every other State-funded service this month alone. What about next month, and the month after? Now that the Masters of the Universe won't be paying income and business taxes to New York for years to come, will the city and state of New York be asking the same?

Now in case you missed it, this $1.2 TRILLION stimulus was supposed to resurrect the market - like Lazarus. However, it's acting more like Milli Vanilli's career: dead and buried.

Now that the government has passed the Mother of All Bailout bills, it will soon be in charge of approximately 80% (more?) of all mortgages in the USSA. Say hello to your new landlord - Uncle Sam. For the next several years, Uncle Sam will be in charge of; foreclosures, evictions, trimming trees, repairing damaged homes, cutting lawns, paying property taxes to local governments, boarding up windows and doors of abandoned homes, and more, all of which to be done with the efficiency of the Post Office and the compassion of the IRS. Won't Socialism be wonderful?

In the future I doubt we'll look back and smile saying - Good times, good times.

So what comes next? Now we can look at economic data. Earlier this week the ISM manufacturing data was bad - very bad. Manufacturers cut back production at a much faster pace than expected in September, the Institute for Supply Management reported Wednesday. This is the lowest level since October 2001. The ISM index plunged to 43.5% in September from 49.9% in August. This is the biggest drop in the index since 1984.

Auto sales information was also released earlier this week. Ford's sales plunged 35% from a year earlier. GM sales fell 15.6%, and Chrysler sales fell 33%. By the looks of this data, that extra $25 billion will be approved very soon.

The California Public Employees' Retirement System (CalPERS) has lost $24.9 billion over the last three months. The 10.4% loss is less than the Standard & Poor's 500, which dropped 13.6% in that time, which could actually earn the investment manager a BONUS. After all, the manager is beating the benchmark. Is that crazy or what?

If you thought that was crazy, you'll agree that this is worse since it is on a grander scale. If the losses continue, all California taxpayers could be faced with demands to make up shortfalls in funding the giant pension system. Excuse my language, but how in the hell is that legal? Where does it read in the Constitution that if one group doesn't make X amount of money in an investment, then the public at large will be FORCED to make them whole. THAT IS AN OUTRAGE! Thank goodness I don't live in that silly place.

So we're left with the monthly jobs data which will surely put a cherry on it. On what we don't know, but on a pile of something is what I'd guess. Sadly, the jobs data was dismal.

Employment declined for the 9th consecutive month, losing 159,000 jobs in September. Although the reported unemployment rate stayed the same at 6.1%, the real unemployment rate increased to 11.0%. The latter is a measure of unemployment that includes discouraged workers, which rose from 10.7% to 11%, the highest since April 1994. This is the only data that used to be reported, until politicians realized if they excluded this and excluded that.

For those that do not believe me, click the following link which directs you to the governments very own report, Table A-12. https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHaVdgXgy7npTfHNC80xFWUdKJ5pgyyrvHaA_c3vmfrrKsvDPtWlu5SxtboXyom3k6FtrZ_jzchlOoyP9-AQS6IIFPFAMWQ3uRbDxo55wcnrQJHmdLVQPjhUIi6B58a8ZWozC9_7-LValC/s1600-h/table-a-12-2008-09.png

Real Time Trading Signals*for

Trade Date: 10/3/08

E-Mini S&P Trades*
(before fees and commissions):

1) Engf sell @ 9:00am at 1140.00 = -2.50 (1 lot)

2) OTF buy @ 10:40am at 1147.50 = -2.00 (1 lot)

3) TP buy @ 10:55am at 1145.25 = -1.75 (1 lot)

4) VA buy @ 1:45pm at 1118.50 = -2.00 (1 lot)

5) Algorithm positions (0)...combined total...-8.25

ZB (30 Year Bond) Trades*
(before fees and commissions):

1) No ZB trades today.


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