Bakruptcies, Bailouts & Mergers...Oh My!

I know you have been missing the daily updates; however, I have been a little distraught over the past few days. My head is spinning. I am questioning the limits of government. I am feeling sorry for the innocent employees getting ready to become an unemployment statistic. I am pondering the destructiveness of greed. Clearly, my mind is over worked.

For all of you that have been living in a cave, the financial news of late has not been pretty. The week started off with a bang. Lehman Brothers filed for Chapter 11 Bankruptcy protection. What? The same Lehman Brothers that survived the Great Depression? That would be the one. Scary, right? Well, it gets worse. Merrill Lynch was saved from imminent death when Bank of America bought them out. First, they bought Countrywide, now this! Are they searching for world domination on the horizon?

Just when we thought things couldn't get any worse, AIG (the world's largest insurer) hinted of major problems. A collapse of this magnitude would be horrific on a global scale. So, our government did what it does best these days....it bailed out AIG to the tune of $85 Billion! Just think, if those cocky CEO's at AIG didn't spend over $1 Billion a year ago to have their logo on Manchester United's "Football" Jerseys, the US tax payers would have been spared at least that much. Like my dad always says, "You get cocky, you get beat!"

What effects have the past few days had on the markets at large? I'm glad you asked. First and for most, it has become clear the government is controlling our economy. I can't be sure how I feel about this. I know they are trying to protect the people at large by their actions, but at the same time they are going against the capitalistic principles the country is formed upon. Quite a quandary. Repeat of the Great Depression vs. a centrally controlled economy. I truly do not envy their position.

All in all, the events that have unfolded have negatively affected the stock market, but the fact that it hasn't gone into full meltdown is a testament to the actions of Bernanke & Paulson. Many thought the fallout would be much, much worse. Some would say it proves they know what they are doing. I say, let's wait and see how this really affects our economy, our business practices, our government intervention, and our economic liberties as Americans. I hate to be a Negative Nancy, but I just don't like big government. On the surface it seems to help, but in the end the people like me are the ones that suffer. After all, the former CEO's get big "parting packages" as they exit the companies they ran into the ground. No wonder Morgan Stanley& Goldman Sachs are looking for investors to merge with. Here is the formula: Rise to the top of large company based upon your skill and investment prowess. Next, get caught up in the greed of Wall Street. Then, start rewarding your employees for short-term gains while gambling with the future strength of your company. Finally, get fired for ruining the company while laughing all the way to the bank with your $45 million payout. Honestly, can you blame these guys. When you are rewired for bad behavior you will continue with said behavior. It's Psych 101!

The trickle down effect of the chaos is hitting the global markets. Global Confidence dropped 2.8% this month, while we Americans saw our confidence drop 7.6%. It is so good to be number one! Also, housing construction fell 6.2% to its lowest level in 17 years, and the Security & Exchange Commission released a set of zero tolerance rules against abusive short selling of stock in publicly trades companies. Hopefully, traders will heed the warning and not end up knitting shawls in white collar prison! Even OPEC is sad. Their greed made them reduce their daily output of black gold to increase the price, but it is well under $100/barrel. I guess they haven't figured out that no money = less demand!

Finally, onto Hollywood where America's favorite messed up family is once again in the headlines. No, not for trips to the psych ward, beating up paparazzi, or being pregnant at 16! This time, Mama Spears is pimping out her family's drama to sell her new book about parenting & fame. As if enough of your dirty laundry is not already out there, you have to go and do this? I just want to thank my family at this point for being "normal." It means the world to me!

Oh "BIG BROTHER", Where Art Thou?

I may no longer be a man of constant sorrow; not after the watchful eye of Big Brother has taken over. I'm sure you have heard, since it is all the rage, the government seized control of the mortgage giants, Fannie Mae & Freddie Mac. Seized is such an ugly word, but let's face it, this is down right, run 'em through the mud, dirty! Let's review how it all went down, shall we? First, a little over a year ago, banks started dropping like flies. Then, investors only wanted Fannie & Freddie backed loans. Next, foreclosures started multiplying to historic levels. Then, Fannie & Freddie found themselves in the precarious situation of having way more debts than assets. Finally, the government stepped in, took control of all their assets, kicked the CEOs to the curb, caused shareholders to loose most of their investments and barred the firms from lobbying in Congress! Whew. Are you as spent as I am? It is all practically dizzying!

The Libertarian part of me keeps repeating, "How is this disturbing? Let me count the ways." 1. The government just seized control of the 2 largest mortgage lenders in the country! Need I say more? 2. The government now owns more than half of all US mortgages; maybe even yours! 3. The tax payers will end up paying a hefty price for this seizure, no matter what they say. 4. Fannie & Freddie shareholders were left in the dust. Let's hope it wasn't their retirement! 5. It's 2008, so why does it feel like 1984?

As I said, this is the Libertarian part of me. There is also this little mortgage banker voice that keeps screaming, "Is this the way out? I think I can see sunlight!" To everything, there is a reason, and the government had lots of them when they decided to take over. First and foremost, they were completely terrified of the mortgage giants collapsing. You think it is tough out there now? That would have been down right depressing. I guarantee you would have seen make-shift "Hooverville's" again. Also, they felt compelled to stop the bleeding in the market, and my wallet. The word on the street is this take over is going to lower 30 year fixed rates by almost a full point, leading to the rebound of the housing market! Can I get an Amen! Clearly, I smell a refinance boom! And here's the skinny. The more quickly the housing market rebounds, the less impact this whole take over will have on tax payers. So, here's the deal. We all need to get off our duffs and make this happen! With a quickness!! Never before has my mantra of "It will be if we believe," meant more!

Even though it doesn't seem like it, there are other items in the news today. As was expected, the markets have gone on quite a little rally today! Investors are feeling great and believe the new government mortgage presence will lead to a broad economic recovery. The global markets are also increasing, and much more confident about their US mortgage investments. Also, OPEC is at it again. With oil dropping from $147 to $109, Iran & Libya think there is just too much oil in the global markets. As a result, they want to cut production. Apparently, it is making them poor at $109/barrel, even though it was never that high until a year ago! Luckily, the Saudis have to approve reducing output and they are saying nothing needs to be done until oil reaches a floor of $80/barrel. Thank goodness. As a side note, I had a globe as a child that my dad would spin, point to a country and ask me for its capital. Fun game, I know. Anyway, during our issues with Libya in the early 80's, I blacked it out in pen. If they mess with oil production, I just may have to get out that globe again. After all, there is no need to be greedy, but this incident points out there plenty of need to have the US be Energy Independent.

Finally, onto Hollywood where Ms. Britney Jean Spears has officially proven you can have a comeback. One year after her disastrous, and quite embarrassing, performance at the MTV Video Music Awards, she took the stage looking poised and beautiful. She even took home 3 awards. Thank goodness for conservanship! Heading back to the East Coast, it is a story about the good, the bad, and the ugly! Serena Williams was all good as she won the US Open Tennis Championship and took over the #1 ranking in the world. Congratulations! But, unfortunately, there is no joy in Beantown, for the mighty Brady has been hurt! Yes, the bad and the ugly go out to Tom, who is out for the season with a torn ACL. We all wish him a speedy recovery!

Hanna...meet Oprah's Mama

Apologies to all of our loyal readers! We’ve been slow in coming back since the Labor Day holiday. The good news…nothing major has happened in the world except for a few annoying weather systems that are coming straight for us! Yikes! Yes it looks like Hanna will be making her appearance on the Outer Banks as soon as Saturday morning. At present she’s a Cat 1 which is about the equivalent of our typical Nor’ Easters. Of course the media will play it up with photos of random Outer Bankers fighting over ply wood and nails at the Home Depot! In fact, I saw Channel 13 at the Avalon Pier just last night. They were begging me for an interview but I told them they had to go through my publicist. That’s Emily by the way. So far no calls. My father in-law works for Noaa so I feel like I could be a good source of information on the upcoming storm. My take…I’ll finally get a nice rainy Saturday to be lazy and do exactly nothing. Works for me.

In other news, the markets are down this morning. Jobless claims rose (up 15,000) for the first time in three weeks. Currently the number of unemployed workers stands at 444,000. That’s up from the same time last year when 320,000 workers were without jobs. Analysts aren’t sure what caused the jump. Um…ok. I know I’m not officially “anyone” but it was just Labor Day and I would imagine that a lot of seasonal workers lost their jobs or went back to their home countries. Just an educated guess. Following that story, the private sector cut 33,000 jobs in August. Hardest hit were the construction and manufacturing sectors. The Service Sector on the other hand is reporting a growth spurt from 49.2% to 50.6 in July. Anything over 50 signals growth. Well that’s some good news!

Economists were expecting better “Back to School” numbers in the way of Retail Sales. The only retailer showing positive growth was Wal-Mart. Good ole Wally World! People buy where they can afford to buy. Does this shock anyone? Toll Brothers reported a Q3 loss but said they feel that the economy is stabilizing. Q3 saw their biggest decrease in clients cancelling their home building contracts in two years. They also noted that they are seeing an increase in the amount of deposit monies being given when contracts are written. Right….that’s the way the system should work. People who can’t afford homes shouldn’t buy them. People who can put down money shouldn’t buy them. It’s back to the old school way of doing business. Toll Bros also indicated that they feel the market will come back in full swing when the foreclosure market has been depleted. Agreed.

I’m skipping the RNC because I don’t feel we should get caught up in political rhetoric. Translation….I’m not into smoke and mirrors on either side. So it’s on to Hollywood where smoke and mirrors rule the world! David Spade may be a Baby Daddy! Seems he had “relations” with a Playboy model and…pop…out came a baby! No word yet on the paternity test. Mackenzie Phillips was arrested last week for cocaine and heroin possession. You’ll remember her from “One Day at a Time.” Very sad what’s happening to these childhood stars! Oprah’s Mama is in financial trouble! Seems she’s been doing some shopping to the tune of $155,547.31! Yup! She allegedly owes a Wisconsin boutique for various purchases. Her Mama hired a team of three lawyers to defend her against the claim. She shoulda just hired Oprah to pay that jam! Have a great day!

You down with GDP?

It's a rainy day here on the Outer Banks. Hopefully the rain will move out in time to salvage a sunny Labor Day weekend for all of our tourists! The rain has ushered in a surge in the stock market. The economy seems to be doing better and jobless claims are down! You down with GDP, yeah you know me? Sorry. A random rap reference will act as a prelude to some good news on GDP. The good ole GDP increased at a rate of 3.3% for the period of April-June. The weak dollar helped boost US Exports thus helping that number rise above economist’s expectations of 2.7%. Even better than all of that, 3.3% is the best GDP number we've seen since Q3 last year when it was 4.8%.The Dow rose 150.96 points as a result of the good news! Can I get an Amen?!

On to jobless claims. The number of claims for people seeking unemployment assistance fell for the 3rd straight week. Claims in excess of 400,000 signals a weak economy. Currently we are right at 425,000. Weak. That's all I have to say about that. Sears isn't so happy this morning. It seems their Q2 sales are down by 62%! Ouch! Personally I think the "Big K" drags them down. I don't know about your K-Mart but ours is severely lacking in a lot of areas! On the upside, I believe us to be one of the only K-Marts in the country with a live band. Yeah, it's scary. Sears is blaming tools and home goods for the decrease in sales. Sure...jump on that band wagon! They plan on reducing their domestic inventory to solve the issue. Do I smell a sale? Maybe the Big K will bring back the blue light specials! They really should. Lights, buttons and whatnot intrigue people that would otherwise be wandering aimlessly around the store.

Our new friend Gustuv has managed to drive oil prices back up to $120 a barrel. Currently Guvvy has sustained winds of 70mph. So do most politicians? What does it all mean? Can't be sure. I think it means we are in for higher gas prices and more rhetoric. Should be use to that by now. Here's a bit of interesting info. Did you know that on average, people in Philadelphia leave the highest tips? Yup! Their average tip is around 19.6% while the rest of the country leaves only 19%. My Dad longs for the days when 15% was acceptable. He feels pressured to conform to the new 20% rule. I assure you he's not one bit pleased. Perhaps he should move to LA where the average is 18.4%! Shame on you LA LA Land! I'm jumping over to Hollywood to see what those non-tippin movie stars are up to.

Don't shake the Juice! OJ that is. Seems OJ's eldest daughter got into a fight with his girlfriend. Low and behold the Juice was knocked to the ground by his own kin! I think they call this...justice. Lindsey Lohan's Daddy has done it again. He's been running off at the mouth about her relationship with Sam Ronson. Lindsey fired back (on her blog) telling Daddy if he has something to say he should say it to her face. Excuse me! NBC has apologized to Matthew Mitcham for failing to recognize his Gold Medal achievement in diving. Matthew is an openly gay athlete in case you were looking for a motive. Maybe they were just busy watching Mr. Phelps clean house. Not. He dove AFTER Phelps made his clean sweep. Shame on you NBC!

Have a great day!

Shining Little Glimmers of Hope

What a difference a day makes on Wall Street. The markets are enjoying a nice boost today after orders from durable goods increased by 1.3% in July. I know it doesn't seem like the percentage of increase that would cause the masses to run wild, but hey, I've seen mobs go crazy for less. It seems as if demand for commercial aircraft led the charge, but I don't want to take anything away from its teammates, cars, appliances and machinery. After all, it takes everyone’s contribution to win! We will just award commercial aircraft with this month's MVP award to make it fair.

Durable goods don't get all the glory for today's surge on Wall Street, however. No, No. Fannie & Freddie's (you know, your cousins from down yonder) shares have climbed for 3rd straight day. This turn of events is the direct result of investors feeling an eminent government buyout is no longer a threat. Also, it seems as though country club women are still looking fancy, as Talbot's raised its forecast for 2008. Not to be outdone, Chico's price rose when they beat Wall Streets profit expectation. This is what I like to call the Michael Phelps Mom effect. See, she loves herself some Chico's and even sported their wares throughout the Olympic Games. Finally, the news most near & dear to my heart. Mortgage applications rose slightly last week. Yes, I can attest to this fact. I have been doing crazy numbers of pre-qualification applications. You heard me correctly, pre-qualifications. I live in constant fear they will never turn into real deals, until I see the little glimmer of hope. Follow the shiny object & believe a recovery is just around the corner. It's all I have; please don't take my glittery hope away!

Just because I sound all giddy, does not mean there was not some worrisome news today. US Thrifts (federally insured savings & loan institutes) lost $5.4 Billion in the 2nd quarter. The NY Attorney General is investigating whether there was any foul play in the relationship between Fidelity and Goldman Sachs. They are making sure no incentives were given to Fidelity to sell auction-rate securities. I sure hope not, I am growing a little weary of scandals in the financial world. Oh, and Gustav is still rearing his ugly head, making oil prices climb to $117.80/barrel.

The biggest bummer of all is the delays incurred by numerous airline passengers yesterday. It seems as though the FAA had a little software malfunction. Comforting, right? I say Hell, you say No. HELL NO! When I think of a malfunctioning in the FAA, I think of smoky control rooms, where men in thick rimmed glasses are allowing planes to take off at the same time, nearly crashing! It is kind of like my worst nightmare, but I digress. Hopefully this little "malfunction" will result in a wee bit of updating in the ol' control rooms. 1970's, OUT! 21st Century, IN!

Speaking of old and outdated, archeologists in Peru found a preserved female mummy, along with the remains of 2 other adults and a child, in Huaca Pucllana. This mummy is thought to be from the Wari culture…pre-Inca's...and is likely from around 700 AD. Very cool.

Finally, we will move onto our celebrity corner. Somehow, politicians have become celebrities in their own right. Hillary Clinton brought down the house last night at the DNC, in fine fashion I may say. She spoke of uniting, blah, blah, blah, but you know she was getting a kick out of the crowd's adoration, thinking, "It should have been me!" Tonight is Bill "Slick Willie" Clinton's turn at the podium. God only knows what will come out of his mouth! I personally cannot wait! Breaking NEWS....after nearly 84 years on Earth, the original Playboy, Hugh Hefner, may be marrying his main girlfriend (as he clearly has 12). I will keep you posted. I say, don't believe the hype. I don't think Hugh will go down without a fight!

Hope and Change Are In the Air

Wow! Can you feel the excitement? The Democratic National Convention seemed to set the tone on Wall Street this morning, and everything was coming up roses. After yesterday's bad vibes on the floor, the markets were all in the green by the opening bell. Good news was coming from every direction. The dollar was at a 6 month high against the Euro, the sales of new homes rose 2.4% in July, inventory of homes for sale shrank 5.2%, consumer confidence edged up 5% and Freddie & Fannie announced they had enough capital to withstand this year's losses. This is spectacular, right? Everyone seemed to be hoping for signs of an economic recovery, but like they say, Hope is Not a Strategy. So, inevitably, things flipped to the "dark side" again. What caused the shift? One word, GUSTAV! Those dang hurricanes don't want to leave the oil rich Gulf of Mexico alone. As the storm strengthened, investors worries about the impact to the region. Sure, they were able to overlook US home prices tumbling by 15.4% in the 2nd quarter (note to self: the drop did slow between May & June...I see a silver lining), North Korea suspending the disablement of their nuclear reactor, an AK-47 attack on a top US Diplomat in Pakistan, and the weakening of European Economies; but when oil supplies are threatened...WHOA NELLY! That there is cause for reversal of fortune! One thing is for sure, however, tomorrow is another day. We will have to wait and see what lies ahead.

In other news, Dave Freeman, the co-author of "100 Things to Do Before You Die," died yesterday at the age of 47 after falling and hitting his head at his Venice Beach home. He believed in getting the most out of life every day. In fact, he had even visited over half of the items on his "must do" list by the time he passed. This just goes as a reminder that you never know when it will be your time. So tell your family you love them, always do your best, and please stop with all the negative attitudes! A good friend once told me, "it is the best day of my life because I wake up in the morning!" How true!

I guess this next blip is just a sign of the times. We all feel as if we have to be so politically correct these days, watch out for others feelings more and more, and make everyone feel equal in every facet of life. Well, 9 year old Jericho Scott from New Haven, CT has proven that not all are created equal...on the baseball field that is. Apparently, Little League has now taken the stand that players that are deemed "too good" cannot play because the others cannot keep up. What? Did I hear that correctly? A child is being punished for being too good? That's absurd! Sure, little Jericho throws a 40 mph fast ball and players are a little scared, but he is extremely accurate and has never hit an opponent. I would think parents would be excited to see that kind of talent. Maybe their kids would one day be able to say they faced that Cy Young Award winner back when they were in Little League. Instead, when Scott is on the mound, other teams forfeit and leave the field. Ridiculous! Let's look at how we are damaging these kids. First, we are telling them not to excel in a field because you may be banished. Then, we are following that up with a good ol' when anyone is better than you, just quit! I am completely outraged. As a daughter of a former Little League coach, I know my Pops would have put him on the mound for the Expos whenever possible, and if he had the misfortune of having to face him, he would have told his kids to, "Buck Up! Don't back down. It's time to get Mad Dog Mean!" And that, my friends, is why my dad was such an inspiration to all of his players! He taught them not only to win, but to be fearless in the face of adversity. That's how you become a champion! For winners never quit, and quitters never win.

Yes Alex, I will take Ironic for $1,000 please.

Yes, irony is the word of the day on Wall Street. Let's all say it together now. Very good. Does little Sally need some examples? Well that shouldn't be too difficult, now should it? First, everyone is aghast because oil is edging up on reports of a weakening dollar. Never fear, in the subsequent breath they are touting that gas prices have dropped $0.15 nationally in two weeks because of lowered oil prices. Next we have reports that the number of unsold properties reached an all time high in July, but in the same month the sales of existing homes increased by 3%. And, we shan't forget the election this fine year. We have a man touting Hope & Change as a platform, who then goes and picks a lifer...by this I mean a man that has been in Washington so long that he is part of the system requiring change. All of these things are just a little too ironic, don't you think? But all in all they have banned together to create a drop in the Dow of almost 225 points...Ouch! If nothing else, hopefully this decrease will result in some lower rates, 'cause let's face it...Mama needs a pay check!

In other news, the Democratic National Convention starts today, and people are really fired up! It does my heart good to see people so engaged in the political process. Hopefully they will not become bitter like myself where they sit a dream of a day when real change is possible. I know, I know, it seems like Negative Nancy has taken up permanent residence in my soul today, but I can't help but scowl. The Democrats actually said aloud they think they have the best conditions in their party since Watergate. Are you kidding me? Even if you think it people, don't let on. What you are saying to the world is we have to have a major scandal caused by the other side to be competitive. No, no, no! No need to worry, the Republicans are just as bad. Their leader can't remember how many houses he has, he compared his competitor to Paris Hilton & Britney Spears, all while having the master minds in the background planning their next political assault. It is truly frightening, this process we have. I have now turned you into a Bitter Betty, haven't I?

One person that will not be left out of good ol' fashion Americana is Oprah! She is number one for a reason, and no it is not just because she puts her own face on the cover of her monthly magazine. No, she is number one because she comes up with ideas that create a sense of pride while tugging at your heart strings. Priceless! For the 7th anniversary of the 9/11 attacks, she is gathering all 36 US Olympic Gold Medalists for one show. Good stuff!

Attention all hippies. I repeat, attention all hippies. A new study reports that long-term exposure to incense increases risks of cancer because it creates carcinogens. Apparently someone forgot to tell the Asians, yogi's, etc...but wait, they don't get much cancer. I don't know what to believe anymore! Next they are going to tell me that using fluoride while pregnant increases the risk of Alzheimer in the fetus...that's right, they already did. We simply can't win!

When all else fails it is always nice to turn to Hollywood, where people think they can do anything because they are stars, by God! Apparently, Madonna feels that after donning a British accent and turning 50, she is the go-to person in politics. At her recent concert she compared John McCain to Adolf Hitler and Robert Mugabe. Note to all celebrities...STOP! You are not, in any way, helping your candidate. In fact, you are hurting them. If you want a person to win, please, I am begging you, stop the madness!