January, Tuesday 31, 2012

DOW – 20 = 12,632
SPX – 0.6 = 1312
NAS + 1 = 2813
10 YR YLD  -  .04 = 1.80%
OIL  -  .50 = 98.28
GOLD + 6.40 = 1737.70
SILV -.37 = 33.23
PLAT – 23.00 = 1591.00

Greece has worked out a debt swap agreement with private bondholders where the creditors will take a loss of about 70%, but they won't make an announcement until later in the week; there is still some unfinished business. The Greek technocrats must beat the local population into submission; the government will demand commitments on reforms, labor issues and the pension system. The Greek technocrats are very aware that further austerity measures would likely deepen the recession and impose additional hardships. And then there is the prospect of an election in April which could spell the end of the technocrats. And then there is the prospect of more protests in the streets, which tends to make governments nervous; just ask Hosni Mubarak.  Average, everyday Greeks on the street are more than miffed that the economists find it so easy to dispatch democracy to the dustbin when they are convinced they have the right technical answers.

But other than that, the Greeks have apparently cobbled together a deal; it's just not cobbled enough to show to anybody. Why? Well, one of the big stumbling blocks is that the European Central Bank holds Greek bonds, and while it might be fine for private bondholders to take a  70% haircut, the ECB is still hoping to make a profit.

Meanwhile, the rest of the European Union wrapped up another summit in Brussels by agreeing to adopt German style budget discipline. The German plan would impose sanctions on countries that breach deficit limits, and it would require countries to make balanced budget rules part of their national laws. Only the Brits and the Czechs refused to submit to German domination.

The whole Euro-mess seems contained; have no fear. The S&P 500 is up about 4% to start the New Year; the markets in France are up 4%; Italy is up 6%; Germany is up 10%.  Everything is fine, it's just that things are a little tight for the Euro-banks and so they'll need some extra money. The biggest Euro-banks are expected to double or triple their requests for funds from an ECB auction later this month. So, everything is fine, except the big banks have almost no liquidity.

So except for a bad dose of German discipline and a Greek bond deal that is still up in the air and illiquid or possibly insolvent banks, everything is copacetic in Euro-land; the problems are all contained.

As long as Portugal doesn't implode, it's all good, all contained.

But no worries for the USSA. We've been through an economic crisis. We weathered the storm and come out on the other side, almost; not quite.

The federal government will spend roughly $61 billion more in fiscal 2012 than it did in fiscal 2011 on its continuing emergency rescue fund instituted at the height of the 2008 financial crisis. The Congressional Budget Office said the government would record outgoings of $23 billion in fiscal 2012 on TARP, the Troubled Asset Relief Program; that compares to #37 billion in savings booked in 2011. 

This is largely due to declines in share prices of two companies in which the government still holds substantial shares: AIG and GM. The Treasury and the New york Fed still control a 77% stake in AIG. The firm received a total of $184 billion in loans and guarantees from the Treasury and Fed in 2008. The federal government owns a 32% stake in GM, after having helped the car maker through a managed bankruptcy. The company emerged from bankruptcy protection in June 2009, much sooner than expected, and had been on track to pay off the federal government sooner than anticipated. However, its shares have struggled over the 12 months. For the government to break even, the AIG share price needs to climb by about $5 per share; the GM shares need to more than double from around $24 to more than $53 per share. Don't worry, we're long term investors.

Most of the large financial firms that received infusions of Treasury funds during the crisis have since repaid the loans with interest. There are still several smaller financial companies that owe money to the federal government.

The CBO released its latest budget and economic forecasts this morning.

Here are the key points in the report:

1) Growth will slow to just 1.1% in 2013 because of tax increases, spending cuts, and other factors. CBO projects 2012 GDP to increase just 2%.

2) Unemployment rate will stay above 7% until 2015. It will increase to 8.9% at end of this year and hit 9.2% at the end of 2013.

3) Deficit will be $1.1 trillion in 2012, the fourth consecutive year above $1 trillion.

4) The deficit is projected to shrink next year, but how much it shrinks depends on tax and spending choices.

5) Revenues are projected to pick up markedly in future years. Total revenues to jump from $2.3 trillion in 2011 to $3.7 trillion in 2015. That’s the equivalent of going from 15.4% of GDP to 20.2% of GDP.

6) The Social Security Disability Insurance trust fund will be exhausted in 2016. The Medicare hospital insurance trust fund will be exhausted in 2022.

7) If spending cuts and tax increases are allowed to go into effect as required under current law, the deficit will contract sharply to $585 billion in 2013 and $345 billion in 2014.

8) Under current law, the debt will grow $3.1 trillion over the next 10 years. If spending cuts and tax increases are reversed, however, the debt would grow $11 trillion. That includes an additional $1.2 trillion in interest on the debt.

A couple of economic reports today; one on consumer confidence and one on home prices.

The confidence index fell to 61.1 in January from 64.8 in December. According to the Conference Board, one of the biggest factors to determining confidence is the price of gas, which increased by about 10 cents a gallon over the last month.

The S&P/Case-Shiller composite index of single-family home prices in 20 metropolitan areas declined 0.7 percent on a seasonally adjusted basis. Nineteen of the 20 cities reported lower prices, the exception was Phoenix, which showed price increases for the second straight month. Phoenix home prices are still down 3.7% for the past year. In a separate report, the Commerce Department says the rate of home-ownership dipped in the fourth quarter to 66.0 percent from 66.3 percent – the lowest levels since 1998.

Tomorrow, President Obama is expected to unveil more details about a new mortgage-refinance program.

In the State of the Union, Obama said he’s sending to Congress a plan that would give homeowners a chance to save roughly $3,000 a year on their mortgage by refinancing to historically low rates. The plan would be paid for by a fee on the largest financial institutions.

The new plan is expected to be an expansion of an existing White House program, the Home Affordable Refinance Program, or HARP, that seeks to help underwater borrowers, who have no equity in their homes, to refinance at lower interest rates.

The new proposal is expected to seek to help millions of underwater borrowers who have loans that are not owned by government-seized mortgage giants Fannie Mae and Freddie Mac. The existing program, HARP, which already has been expanded to what is being called HARP 2.0, helps underwater borrowers refinance as long as their mortgage is backed by Fannie Mae and Freddie Mac, the government-controlled housing giants. HARP 2.0 is scheduled to launch on March 19^th. This new proposal is in addition to HARP 2.0.

It appears that this new program that will be announced tomorrow will be focused on borrowers whose loans are not owned by [Fannie and Freddie]: principally those in private label securitizations and bank portfolios.

Including millions of homeowners who have mortgages not owned by Fannie and Freddie would require the approval of Congress. The bank tax Obama seeks to pay for the refinancing program also would need lawmaker approval. If the new plan gets approved by Congress, roughly 1.5 million borrowers would be eligible. Those borrowers would save cumulatively $5 billion to $6 billion annually. If the plan includes underwater, private label mortgages, the program could include and additional three million borrowers.

Anyway, I think we can expect to see a huge surge in refinance activity in March. Not a new policy - this was announced last October when the FHFA made changes to Home Affordable Refinance Program (HARP) to allow more homeowners with Fannie and Freddie loans and with negative  equity - and who are current on their mortgages - to refinance into lower interest rate loans.

Now, there are some political reasons why we are seeing HARP 2.0. This could be a huge economic stimulus. If you have a Fannie or Freddie mortgage and you refinance, you might very well end up with an extra $200 or $300 per month, and the thinking is that you will spend that money. But the real reason HARP 2.0 will be big is that it will be a big bailout for the banks. The key to this program - for the lenders - was that the lender was not responsible for any of the representations and warranties associated with the original loan (this is huge for the lenders). The elimination of Reps and warrants for the original loans applies to software called DU, or Desktop Underwriter, and that will not be updated until March.

Congress' low approval ratings have sparked a rare instance of bipartisanship, as both parties are rushing to pass a bill that would make it clear that insider trading laws apply to lawmakers.

The Senate voted 93-2 Monday to clear the way for consideration of amendments and possibly final passage later this week.The legislation would require disclosure of new stock transactions on the Internet within 30 days and explicitly prohibit members of Congress from initiating trades based on non-public information they acquired in their official capacity. The legislation, at least partly symbolic, is aimed at answering critics who say lawmakers profit from businesses where they have special knowledge.

The bill is titled the Stop Trading on Congressional Knowledge (STOCK) Act. President Barack Obama has endorsed it. The Senate bill would prohibit lawmakers from tipping off family members or others about non-public information that could influence a stock's price, in addition to the explicit ban itself. And it would direct the House and Senate ethics committees to write rules that would make insider trading violators subject to congressional punishment. House leaders are working on a more expansive bill that would include land deals and other non-stock transactions. Don't be fooled into believing that this will eliminate corruption in Congress; it won't. It might make it more difficult to profit from this specific form of corruption. It does nothing to eliminate campaign financing that is nothing more than bribery; it does nothing to stop the big financial players from otherwise greasing the wheels of power.

There's nothing wrong with the profit motive driving business. And there's nothing wrong with working hard and trying to make a lot of money. Those are honorable pursuits.

President Calvin Coolidge said: "The chief business of the American people is business." You've probably heard that line before, but do you remember what Coolidge said right after that in the same speech back in 1925? He went on to say: "Of course the accumulation of wealth cannot be justified as the chief end of existence."

And it should be obvious that the accumulation of personal wealth is not the primary civic duty of our elected officials. The mere fact that they have to put it into law, shows how deep the moral deficits run in Washington. The politicians are either taking care of the peoples' business or they are taking care of their own business; they can't serve two masters.

January, Monday 30, 2012

DOW – 6 = 12653
SPX – 3 = 1313
NAS – 4 = 2811
10 YR YLD - .06 = 1.84%
OIL - .61 = 98.94
GOLD - 7.00 = 1731.30
SILV - .49 = 33.60

PLAT – 10.00 = 1616.00

The stock market moved lower this morning; the justification was that Greece had not resolved its debt crisis. The 27 nations of the European Union held their 17^th Summit in the past 2 years. The Greeks have been trying put together a deal with private bondholders to restructure about 200 billion euros of debt. But they couldn't come up with completed deal. You're shocked; I know; I'm shocked.

And so the EU leaders can't do anything until a deal gets done in Greece. To push things forwar, the Germans proposed a European Commissar take control of Greek public finances to ensure it meets its fiscal targets. Greek Finance Minister Evangelos Venizelos said that to make his country choose between national dignity and financial assistance ignored the lessons of history. The German call won cautious backing from the Dutch and Swedish prime ministers. Apparently everyone forgot that the EU has already installed an unelected technocrat to run the country, Prime Minister Lucas Papademos.

Then the Europeans talked about increasing the bailout funds to make at least a trillion dollar fire-ring around the economies of Portugal and Ireland and Greece, in hopes that the default problem doesn't jump to Spain and Italy and get out of control.Treasury Secretary Tim Geithner went to the World Economic Forum in Davos, Switzerland on Friday he said he wants the Europeans to come up with a bigger, more credible firewall.

Yep, shocking, absolutely shocking. And as the day dragged on, the stock market realized it was all just Europe being Europe. And equities recovered.

Geithner talked about more than a bigger, more credible firewall. He also discussed the “critical risks” facing the American economy this year. Geithner's conclusions: the European sovereign debt crisis and the rise in tensions with Iran that might result in a jump in oil prices. Those are certainly risks, however, he forgot about jobs and wages here at home. America now produces more than it did when the recession began. But it does so with 6 million fewer workers. For all of 2011, incomes fell .1 percent. Consumer spending picked up slightly in the fourth quarter mainly because consumers drew down their savings; that sounds a bit risky to me. It's easy to forget what's really important, especially when you're in Davos.

A week before MF Global Holdings Ltd. collapsed, its chief financial officer told Standard & Poor's in an e-mail that the futures broker had "never been stronger."

S&P provided the House Financial Services Subcommittee on Oversight and Investigations with an excerpt of the e-mail from MF Global CFO Henri Steenkamp. S&P also informed the panel that Jon Corzine, then MF Global's chief executive officer, met with its analysts on Oct. 20 to reassure them that his $6.3 billion bet on European sovereign debt was no threat to the firm.

U.S. lawmakers will turn their attention to the role of the ratings companies in the failure of MF Global at a Feb. 2 hearing. The bankruptcy trustee of MF Global’s U.S. brokerage unit has returned about 72% of the money in customer’s U.S. accounts when the New York firm filed for bankruptcy at the end of October. By contrast, all the money of U.S. customers invested on foreign exchanges remains frozen.

Officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered. The findings so far suggest that a "significant amount" of the money could have "vaporized" as a result of chaotic trading at MF Global during the week before the company's Oct. 31 bankruptcy filing.

This is actually a very interesting concept, that money can vaporize. Some people question this, they think that vaporizing money is just a euphemism for stealing money. But think about it; if the Federal Reserve can create money out of thin air, then it makes sense, ashes to ashes; dust to dust; thin air to vaporization. This is the problem when money isn't real in the first place – poof, it disappears. It happens to all of us. For example. A couple of months ago, I bought a tank of gasoline for $50, this week it cost me $55 for the same amount of gas. What happened? My $5 vaporized.

Money managers raised combined bullish positions across 18 U.S. futures and options by 13 percent to 742,902 contracts in the week ended Jan. 24, Commodity Futures Trading Commission data show. The so-called net-long position in copper jumped 53 percent to the highest since August and in silver by 22 percent to the most since September. Speculators also expanded bullish bets in sugar, soybeans, cotton, gold, gasoline and crude oil.

State and federal officials are close to a settlement with the largest U.S. banks over mortgage abuses, with states facing an end-of-the-week deadline to decide whether they will sign on. The final value of any settlement will depend on which states it includes, and could drop sharply if states like California don't join.

In another sign the deal is close, negotiators have overcome a sticking point and agreed on Joseph Smith, North Carolina's banking commissioner, as a monitor to ensure the banks comply with the terms of the settlement. The banks in the talks are Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial.

The proposed settlement releases the banks only from civil claims of errors in servicing and originating the loans. In exchange for up to $25 billion, much in the form of cutting mortgage debt for distressed homeowners, the banks will resolve civil state and federal lawsuits about servicing misconduct and faulty foreclosures, and state lawsuits about how they made some of the loans. President Barack Obama said in his State of the Union speech last week that he directed his attorney general to create the new working group to "help turn the page on an era of recklessness." The idea being that there might still be investigations into misconduct that fueled the financial crisis.

If this settlement goes forward (and I expect it will), then there will be more modification and foreclosure activity in coming months.

This is just one of several policy changes in the works including the automated HARP refinance program (starts in March) and a possible GSE REO to rental program. Plus the Federal Reserve is "contemplating issuing guidance to banking organizations and examiners" to allow banks to also rent more residential REO.

What shall we make of this surprise pronouncement in President Obama’s State of the Union address? A belated investigation has been launched into the role of fraud in the financial crisis.

This much is clear: Despite rampant illegalities, bank fraud and countless cases of perjury, the response to date — at the federal level and from most, but not all, states — has been underwhelming, cowardly even. A few principled holdouts — the attorneys general of Delaware, New York, Nevada and California — refuse to rubber-stamp a pre-investigation settlement with banks, but that’s all. Despite chances to bring crooks to justice, there has been little action.

So, here we are, four years after the great financial collapse, three years after the recovery began and in the last year of Obama’s term — and the president has finally decided to investigate the role of fraud in the great global financial crisis. Hence, this new task force — the unit of Mortgage Origination and Securitization Abuses — begins behind the curve. The statute of limitations is, in many cases, close to elapsing.

Even so, do not dismiss the investigation out of hand because of the timing: History informs us that a serious investigation can begin four years after the fact. Recall that Ferdinand Pecora was the fourth chief counsel for the Senate committee that investigated the Wall Street crash of 1929 and subsequent Depression. He was appointed in 1932 and received broad investigatory powers in 1933. His report ran thousands of pages. Thanks in large part to Pecora’s findings, Congress passed the Glass-Steagall Banking Act, which separated commercial and investment banking; the Securities Act of 1933, which established penalties for filing false information about stock offerings; and the Securities Exchange Act, which created the Securities and Exchange Commission to regulate the stock exchanges. Nearly 50 years of financial stability followed.

Maybe we really need a Fraud Unit running around with windbreakers with the bold letters: FU; rushing in to arrest the banksters, only to realize the statute of limitations has expired; maybe they could just reinstate Glass-Steagall.

January, Thursday 26, 2012

DOW – 22 = 12,734

SPX – 7 =1318
NAS – 13 = 2805
10 YR YLD -.08 = 1.93
OIL +.48 = 99.88
GOLD + 9.70 = 1721.50
SILV +.20 = 33.57
PLAT + 24.00 = 1614.00

Remember back before the holidays I told you the European Central Bank was following the Federal Reserve's playbook?  The ECB was going to loan the Euro-banks plenty of capital, which would allow the big Euro-banks to report adequate capital ratios when they file their annual reports – which is a way of saying the banks get a big bailout, and then the banks could buy sovereign bonds. And the bottom line is they were not going to allow a deflationary collapse in Europe.

And then yesterday, the Federal Reserve said they will keep interest rates at zero, and when you consider inflation, it really is less than zero, but the Fed said they aren't thinking about inflation; they set a target for inflation and they'll check back in a few years. The new Fed policy is negative real interest rates, but no new stimulus, no QE3 today.

 JP Morgan Chase CEO Jamie Dimon says Europe is not a problem:"The direct impact of a Greek default is almost zero. There's a teeny chance of a catastrophic outcome, which is why the muddle-through is the only good strategy. There is no other good strategy," Dimon believes the ECB's long term refinance operations took the liquidity problem off the table in Europe. Dimon did not address the difference between liquidity and solvency, which has not yet been addressed. I suppose even a dolt could muddle through by borrowing money at zero percent and then buying treasuries at 2 percent. Notice Dimon spoke as if a Greek default was a given, which is funny, because  last summer, Dimon was quoted as saying the European authorities and politicians will find a way to keep Greece from defaulting.

Euro-crats now say they are very close to a deal between Greece and the hedge funds and such that hold Greek bonds. The private sector bond holders will take a significant haircut, and then another haircut on the coupon rate; we still don't know what kind of haircut the European Central Bank will take – the ECB is the largest public holder of Greek debt, and they have not been forthcoming about renouncing any profits for the greater good. We'll probably get details in the next week or two, but whether it is orderly or disorderly, Greece is defaulting.

Most of these announcements seem to be coming from Davos, Switzerland where the World Economic Forum is holding another meeting. The Forum has mainly been a chance for hedge fund managers, bank CEOs and various politicians to complain about how they are misunderstood.  Remember last year at Davos, Jami Dimon complained that the constant refrain of blaming the bankers “it's just a really unproductive and unfair way of treating people,” he said. ''People should just stop doing that.'' There's something pathetic about a hedge fund manager whining that their life is too tough – in Davos Switzerland!

Here's the problem – it's not just Greece. Greece is just the starting point. Now that Greek debt is being restructured, the next step is to restructure Portuguese debt. And then you have to think about the cost of putting firewalls around Italy and Spain, and then you start hearing crazy numbers like $12 trillion dollars. And if that doesn't happen then Jamie Dimon will be wrong.., again.

So, anyway back to the Federal Reserve; they leave interest rates at zero and the inflation target at 2% and no immediate plans for additional asset purchases at this moment in time, but  we still have very high unemployment and we're working on the idea that the problems in Europe can be muddled through. So, the Federal Reserve will almost certainly be involved in Quantitative Easing Part 3. Which is another way of saying the Fed will follow their own playbook, which implies printing presses, lots of ink, helicopters, and free money for the banks.

The gold market likes the free-wheeling Fed playbook. At the moment everything points to even higher prices, given the strong risk appetite, the better mood among market players, the strong equity markets and the weak dollar. A quick reminder that nothing goes straight up, and we are looking at some fairly strong resistance. Gold will likely hit the ceiling at 1750, and then more resistance at 1800.  We saw a slight breakout for silver today, so we'll look for confirmation; then we have more resistance at 35.70, and even more resistance at 38.50.  So, don't get too happy, but still, if you bought the dips... you're welcome.

Elsewhere, The Arizona Attorney General's office says Bank of America is impeding an investigation of its loan modification practices by negotiating settlements with borrowers who must agree to keep them secret and not criticize the bank in exchange for cash payments and loan relief. Bloomberg reports that one 2011 accord involving a borrower facing foreclosure who defaulted on a $253,142 mortgage included a $5,000 payment, plus $7,500 for legal fees, and the defaulted payments were waived and the loan was modified to a 40-year term with a 2 percent interest rate. The terms of the original loan and the borrower’s complaint about the lender weren’t described in the court documents.

But here's the catch: The borrower had to agree to “remove and delete any online statements regarding this dispute, including, without limitation, postings on Facebook, Twitter and similar websites,” and not make any statements “that defame, disparage or in any way criticize” the bank’s reputation, practices or conduct.

So, BofA gave mortgage mods to some of the people who were going to complain to state officials, but the deal was they couldn't say anything bad about BofA. So, apparently the BofA defense was to bribe the victims and then use extortion, or (shall we say) a contractual threat, to keep the victims from talking to the authorities. 

 Bank of America, which holds assets equal to roughly one-seventh of the country’s gross domestic product, is too large and complex to manage or regulate properly, the petition said. Moreover, its financial condition is poor and could deteriorate rapidly. And so, a group called Public Citizen has sent a petition to the Federal Reserve and the Financial Stability Oversight Committee calling for the break up of Bank of America.

January, Thursday 25, 2012

DOW +81 = 12,756
SPX + 11 =1326
NAS + 31 = 2818
10 YR YLD -.06 = 2.01
OIL +.79 = 99.74
GOLD  + 44.40 = 1711.80
SILV + 1.22 = 33.37
PLAT + 35.00 = 1585.00

The Federal Reserve will leave interest rates unchanged. That is the biggest non-news event of the day, but wait, there's more! The Fed wrapped up their FOMC meeting with a new twist, they issued an official inflation target of 2 percent and they published individual policymakers' forecasts for the Fed funds rate. A 2 percent target for inflation isn't really new, and it wasn't really on target because the rate for 2011 was 3 percent. The individual policymakers offered a wide range of views; three policymakers expect rates will need to rise this year and two others don't think rates will need to rise until about 2016. The consensus seemed to be that rates should stay unchanged until the end of 2014.

The Fed says the economy faces "significant downside risks" but it offered little to suggest it was close to launching another round of bond-buying to prop up growth. It did say, however, that it would maintain a "highly accommodative" monetary policy stance. The statement also dropped a reference saying the Fed was monitoring inflation and inflation expectations.

Let's break this down a bit further; the biggest change was that the Zero Interest Rate Policy has been unofficially extended from 2013 to 2014; this could be considered dollar negative; meanwhile, there was no announcement on QE3 – no surprise; we weren't expecting an announcement but that doesn't mean we won't see accommodation. Fed Chairman Bernanke has called for more aid for housing. President Obama proposed a program for refinancing during last night's State of the Union Address. The proposal will likely be dead on arrival for this year and that means the Fed will need to take a back door approach. Whatever the path, the effort may damage investors in government-backed mortgage bonds by more quickly paying off securities with high coupons and limited default risk, but it would be good news for holders of other home loan securities and banks. The Fed would like fiscal policy to juice the housing market but there's still plenty they can do with the tools in the monetary policy tool belt.

I  know we're going fast here, but if you need to review, you can go to moneyradio.com and listen to the archives later. Here's the bottom line – the Fed will try to stimulate the economy and they're not worried about inflation. We didn't hear hardly a word about the Euro-crisis from the Fed, or for that matter in the State of the Union speech, and maybe the Fed is keeping their ink dry in the event of a Euro-implosion, but I think they're going to do back door stimulus to try to juice the economy for an election year.

By the way, did you hear the State of the Union last night? There was one line that caught my attention but apparently skipped right over the talking heads today. President Obama said: “if you're a big bank or financial institution, you are no longer allowed to make risky bets with your customers deposits. You're required to write out a “living will” that details exactly how you'll pay the bills if you fail – because the rest of us aren't bailing you out ever again.” The implications of that promise are huge because we know the big banks like Bank of America are more than willing to put customer deposits at risk, but now the Too Big to Fail Era is over, finished, dead. This means we should see a change in banking behavior – at least in theory we should see a change in behavior. If we truly aren't bailing out the big banks ever again, then the living wills should include provisions for breaking up the big banks into smaller banks, because if the banks remain big, their potential failure continues to present a systemic threat. But I didn't hear anything about breaking up the banks. I didn't hear anything about reinstating Glass-Steagall. I heard about a Financial Crimes Unit and a special unit of federal prosecutors but 3 ½ years after the fact we still haven't seen perp walks; and even the village idiot knows there has been fraudulent activity by big banksters; and even I know that justice delayed is justice denied; and even my dog knows the $25 billion dollar multi-state settlement between the states' attorneys general and the big bank mortgage lenders is just another sweetheart deal for the banks.

It was interesting to hear that we're not going to bail out the banks when the very next day the Fed announces it will continue its Zero Interest Rate Policy.  The Fed lends money for nothing and then allows the banks to park the money with the Fed and collect free money. I want that gig. What is ZIRP if not a bailout of the big banks?

Actually, there were several very important lines in last night's speech. I won't attempt to replay them all here. You can go online and read the speech or watch it – and you should. Politics is an important part of the economy and our personal finances. How you viewed the speech is likely a function of your political affiliation. I get it. Last night, President Obama hit a home run – as speeches go.  The speech rebuffed all the criticisms against him, it especially looked like a preemptive strike after watching the republican response. The speech writer is due a bonus. And then to put an exclamation point on it, this morning we hear that Leon Panetta and the President had pulled off a Navy Seal mission to free prisoners from Somali pirates. And then to put another exclamation point on it, this afternoon, Tim Geithner said he will stay on through the end of the year but he doesn't expect to be around for a second term. It's like a banana split with whipped cream and a cherry on top and then another cherry on top. The President was aggressive; he was positive; and he was populist; and he can present a really great speech; and he did. And much of what we heard will face opposition and might not happen. And it is still a long way to the election. And so much can happen.

The woods are lovely, dark, and deep,
But I have promises to keep,
And miles to go before I sleep,
And miles to go before I sleep.