Epain Homes

The following charts provide a simple comparison between the big stock bounce that occurred in the wake of the DOW crash of 1929 and the bounce we are seeing today in the S&P 500 index.

The method of alignment was simple… take the first definitive up trading day off the bottom of the preceding bear market low and set that as the start of the series… then simply re-base both series to a value of 100 so that they can be compared side-by-side.

The lower bar chart plots the cumulative percentage change since the start of each bounce.

The S&P 500 is up over 45% in a little over 160 trading days… an historically aggressive run with an obvious note of mania to it… and wholly comparable to… even far stronger than… the price movement seen in the 1930s-era DOW rally.

At this point for the 30s-era DOW, the bull-run was over as the bear trend resumed in earnest… today though the Bull is seriously on the move… how long will this boom last?

Only time will tell… But for now, let’s continue to keep a watchful eye…

Today, the U.S. Census Bureau released their September read of construction spending showing a continuation of the government’s tax-carrot fueled bounce in residential construction spending while indicating an acceleration in weakness to non-residential construction spending.

Even with the governments tax-credit gimmick residential construction spending is still 26.96% below the level seen last year and a whopping 62.16% below the peak set in March 2006.

Worse off though was private single family residential construction spending which declined 34.99% as compared to September 2008 and a truly grotesque 76.39% from the peak set in February 2006.

Non-residential construction spending, currently accounting for just under half of all private construction spending, posted another significant year-over-year decline of 15.42%.

The following charts (click for larger versions) show private residential construction spending, private residential single family construction spending and private non-residential construction spending broken out and plotted since 1993 along with the year-over-year and peak percent change to each since 1994 and 2000 – 2005.

The math is trivial… Recovery.gov states that the American Recovery and Reinvestment Act has already “created or saved” 640,329 jobs as a direct result of $52.1 billion of funds (a.k.a. your tax dollars) payed out in “contracts, grants and loans”.

So… $52.1 billion divided by 640,329 = $81,364 per each job “saved or created”.

Here is a nice image widget that you can embed in your favorite web page in order to keep track of the governments costly shenanigans … Ill updated it as the stats at recovery.gov are updated.

Decades from now the summer of 2008 will likely be remembered to mark the turning point where legislative blundering took an otherwise serious financial crisis and molested it into an epic financial collapse.

By fully assuming the liabilities of Fannie Mae and Freddie Mac, the two colossal and corrupt (and conduit of corruptness funneling junk Countrywide Financial loans onto the implied balance sheet of the federal government) government sponsored enterprises, the federal government, led by Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke, has thrust taxpayers into an abyss of insolvency with one mighty shove.

Given the sheer size of these government sponsored companies, with loan guarantee obligations recently estimated by Federal Reserve Bank of St. Louis President William Poole of totaling $4.47 Trillion (That’s TRILLION with a capital T… for perspective ALL U.S. government debt held by the public totals roughly $4.87 Trillion) this legislative reversal making certain the “implied” government guarantee is reckless to say the least.

The following chart (click for larger ultra-dynamic and surf-able chart) shows what Fannie Mae terms the count of “Seriously Delinquent” loans as a percentage of all loans on their books.

It’s important to understand that Fannie Mae does NOT segregate foreclosures from delinquent loans when reporting these numbers.

Finally, the following chart (click for larger ultra-dynamic and surf-able chart) shows the relative movements of Fannie Mae’s credit and non-credit enhanced (insured and non-insured) “Seriously Delinquent” loans.

Do you have a plan B? A MUST WATCH… last night’s Frontline. Aw Shucks… poor bastards on the upper-east side.

The White House says it has already “saved or created” 650K jobs… only problem… since just this January, 3.386 million jobs have actually been lost and the losses are continuing… Jared Bernstein says the figure is closer to a million jobs “saved or created” and adds “It’s a great example of the unprecedented transparency, where the American taxpayer can point and click and see their taxes creating jobs … you have to understand the nature of Keynesian stimulus”… I say it’s a new low for government falsehoods and propaganda and so does the AP.

If they can’t manage their own finances why should they be influencing yours?

J.P Morgan Analyst James Glassman thinks unemployment could trend down this winter… He also predicted back in 2000 that the DOW would reach 36,000 and wanted to help you profit from it.

It seems to me that the size of crews repairing roadways is getting substantially smaller … just a few guys and some serious machinery… definitely not long lines of guys with shovels as in the 1930s depression era… When we think about infrastructure stimulus it’s easy to imagine lots of potential employment… Is this misguided?

Is it any surprise that a people in Nevada are encouraging children to play with matches?