Friday, March 13, 2009

R/E Ethics, the Economy and Bank Failure Friday!

UPDATE: No word from the FDIC @ 7:15 pm PDT. Just doesn't feel like Friday.

Ahhh... another Friday and faithful readers are tuning in for the latest on Bank Failure Friday.

Before we get to that, let's touch on a few other things.

Real Estate Ethics

Recall last week (March 5th) we talked about the latest tactic of the Real Estate Industry to target first time home buyers. A campaign was launched insinuating that "other young couples are buying, you should too!"

Round Two of that campaign hit the streets this week. Simultaneous articles appeared all across the country. In Vancouver, the Sun’s headline was, “First-time buyers driving market,” in Calgary it was the Calgary Herald, “Entry-level buyers now driving Calgary’s home sales, report says".

Garth Turner beat me to this and you can read more about it here. Turner takes a look at the so called 'report' and notes "there is no data, no numbers, no proof, no confirmation. Just another real estate marketing gimmick – a 'report' which 'confirms new buyers are driving real estate' in almost every major centre in Canada." Turner concludes its nothing more than a fabrication of facts that amounts to a conspiracy of misinformation, unintentional or not.

It's hard to disagree.

The Economy

As we have written this week, the United States has taken huge steps to offset the collapse in asset values and bank balance sheets by buying up bad investments, stocks and debt. This is being done by printing money like it's going out of style.

Two weeks ago Britain decided to embark on the same course. Last week the Bank of Canada joined the printing press parade. And yesterday it came to light that three other countries climbed on board the ever-expanding currency producing wagon. Japan, China and Switzerland.

Market insiders say this confirms all the fears about the coming onslaught of hyper-inflation. The latest three day rally on Wall and Bay Streets saw not only stocks rise dramatically, but gold/silver/oil and mineral commodities too.

This (the rise of both stocks and gold/silver/oil) insiders say points to a bottoming out of the worst Bear market since the Great Depression and the start of the predicted hyper-inflationary period.

If they're right, buckle up folks, it means things are gonna take off like a rocket if that is the case. It's not the end of the recession or hard times in Canada, but the market is usually six to eight months ahead of the economy.

My recommendation? Now's the time to play the market. Silver stocks like First Majestic, commodities like Tech Resources, oil stocks. But beware! A rapid blowing up of the market could lead to another rapid collapse. Study the 1930s! The market recovered almost 60% after the crash of 1929. All the stimulus that has been announced will find it's way into the market - mark my words. But beware the rebound back down.

Bank Failure Friday

As our Prime Minister said, "there won't be a recovery until the U.S. financial system is repaired." So we watch the US banking developments with keen interest. And what a week it has been.

The FDIC went to Congress to ask for up to $500 Billion in extra funds to deal with failing US Banks. The FDIC is funded by insurance premiums levied against all US Banks. Those premiums are used to bail out bad banks. Well it turns out those running things believed their fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the insurance premiums from 1996 to 2006.

Ya gotta love it.

While we wait for today's carnage, take the time to check out this '60 Minutes' segment that follows the FDIC when they take over a failing bank on Bank Failure Friday. From the into...

"Most every Friday now the FDIC is seizing several banks. You haven't seen these takeovers happening because they're done secretly, at night, to make sure that there's no needless panic by depositors. But last week we were given extraordinary access to one of these operations... "

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