7500 DOW Possible??

The simple answer is YES!!!

I know I wrote in December 2007 that I expected a 9,000 DOW and believed that an 8,000 Dow is where I said it should be… but 7,500 is panic and that is what I am seeing around the world… people are afraid… plain and simple.

DO NOT sell you 401K or other funds now… it is far too late for you to do that… your best bet is to hold on and try to read and watch something other than economic news… at least until AFTER the election.

I am working on my economic predictions for the rest of 2008 and 2009… and in some cases even into 2010. I should release that November 5 or 6, AFTER the Elections… there is nothing good in store… except that we will know more about where our Government is taking us… and at least THAT will restore some stability to the financial markets in the USA and give a good indication of the future of the economic health of the Country.

You will see great swings in the market… mostly down for now… but you will get high upswings as well… do not take any of these seriously at this point… we really are at about the right pricing given the full economic data….

Additionally you will see a more bad economic news and then a few good pieces… but overall it is glum out there… so stop reading things like this and others and concentrate on what is important to you.. your life and your family… the rest will settle out soon… just not as soon as you would like.

Craig

NOTE:  This is MY OPINION. I make no assurances of this actually being the way the market will go. You should do your own research and make your own informed decisions!!!

I am FURIOUS at What is Going On!!!!

AND I AM NOT TALKING ABOUT MY EX-WIFE… and this is the last piece of levity you will see in this post!!!

This is a FIRST Draft… it is NOT my final draft of this post… I need to edit it but am pressed for time yet felt that the timely publication should help stimulate some debate as we all seem to be overwhelmed with so much happening so fast.

I have not been in Washington D.C long… but it appears that I could not have come at a more dramatic moment…. And what is going on infuriates me. I was going to write a piece in the Presidential race (and maybe even make a dispassionate prediction) but for now this Financial Crisis is more important and I feel it needs to be addressed immediately.

Simply, I am furious at our government taking over AIG and Fanne Mae and Freddie Mac…. Things have gotten so bad since that the hundreds of billions of dollars put up for them are not even being added to this current 700 to 1 trillion dollar action.

Now I read the following:

A little after 7 PM Saturday night (September 20, 2008) a Treasury “Fact Sheet” was released that sought to give the administration more flexibility, with an expanded definition that could include foreign banks. I quote:

“Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets.”

See the Yahoo News report from Politico:

http://news.yahoo.com/s/politico/20080921/pl_politico/13690;_ylt=Anm5.jWbo72bCnhyicEpvVBh24cA

Bailing out any foreign bank or entity with US tax payer funds is wrong… AIG was example with bond holders (136 billion for China alone) being bailed out and with preferred stock holders being “saved” and common stock holders getting wiped out… and AIG was a profitable company in most of its operations…. worse more than half of AIG business was NOT in the USA!!! In essence a nationalization of a private company I would not be surprised if this is challenged in Court especially after this new round of bailout money.

Compare what the new regulations of the stock market with regards to short selling to a ball game with half players taken off field in the middle of the game because one team (a disliked team) was winning… or in this case right … don’t tell me the crap about naked short sells… ONLY 1% of ALL shorts were naked…. Worse… the “market Makers” who assure the liquidity of the stock in a company use shorts to help in their moving the buyers and sellers of stock… they are a necessary part of this market, and even they were hurt by this short sighted action by the SEC.

The run up of stock prices was NOT because the companies got better over night… it was mostly because short sellers (those who believed that the companies were not as healthy as the Wall Street Bulls said) were FORCED to buy stocks to cover their market positions that believed the market would continue to go down.

Additionally, the planned Federal Guarantee of Money Market Funds… could cause run on banks as bank deposits are only insured to 100,000 dollars and there is concern that the Federal Deposit Insurance agency responsible for making sure depositors get their money back does not have sufficient money to cover most of the banks that are in danger of failing.

The COST: the final “bailout” is shaping up to be about 3 TRILLION dollars… that money had to be “printed” (meaning the fed has to increase the money supply by that amount…. Which can be done by a few keystrokes on a computer) …… This amounts to a DEBT of $10,000 to $30,000 PER HOUSEHOLD. Worse it weakens the buying power of the dollar and will cause inflation probably in the double digits. Add to this that the Fed wants to pay interest to banks on their mandatory “reserve” they keep means that we are now paying banks to follow the law at a COST to taxpayers that is yet undetermined.

With higher inflation there will be higher interest rates… which also hurt every American.meaning mortgage resets will SUPPOSED to pay higher interest rates and also means that less people will be able to afford mortgages.

Personally I feel that since financial institutions ONLY make money by lending (if the FED does not give interest) then LET the Financial markets and the overall market place determine the value of these “financial instruments” that the US Government wants us the tax payers to foot the bill on… let the FREE MARKET REIGN… and let things work out themselves. Federal intervention in either Monetary of Fiscal Policies in the free market not only doom a free market by changing the rules in the middle of the game… but do nothing for the tax payers in the United States and mostly serve foreign interests.

I am actually sick to my stomach with what is going on here in the USA…. I feel that greed, corruption and politics are destroying this country and the adage that the rich get richer while the poor get poorer seems to be true today… the bailout ONLY serves the financial companies and foreign entities that hold this debt… while it is argued that the American citizen would be hurt worse if this was not done I find it untrue and the rhetoric is only being done to “sell” this to the American Public. I really find that the interference in a Free Market is untenable and irresponsible… let those that have done wrong pay the price… not the average citizen…. This is just plain wrong!!!

Craig’s Diatribe on the USA and Global Economy (# 2)

June 6, 2008

This blog entry (number 2 in a series) is to try and express my viewpoints on the current state of the USA Economy, my predictions for the future and how we are no longer a localized economy but now are part of a GLOBAL economy.

Where are we NOW? Commodity Prices:

Before I go into the Global Economy for Commodities and Fuel/power Prices I need to say that a LOT (maybe as much as one third in some cases) of the increase of Costs is from the weak dollar … as such, most of this post is dedicated to the supply and demand issues of the global econony.

The has been great interest in Oil prices… as well as there should be… I talked about Oil being in our everyday life before… as a commodity…. But I need to address some misconceptions about what the general public believes about the Price of Oil today.

First: OIL IS A COMMODITY… that means the prices are subject to supply and demand…. There is NO QUESTION that China and India play a significant role in the new use of oil… as a fuel and as a commodity for other applications…. This is a result of the rest of the world using those countries for lower prices thus bring in more Currency (Money) into those countries and lifting them out of the poverty (and to satisfy our own greed for more at lower prices and greater profits) that we saw them suffering from… now that we have awoken the sleeping giant, so to speak, there is no putting them back to sleep. They will continue to demand oil and other commodities at an ever increasing rate of consumption.

We have been duped into believing that “Speculators” are to blame for higher prices… if South West Airlines is a speculator then you are right… but the reality is that it is GLOBAL DEMAND that pays these exorbitant prices we are seeing… and as I said before… there is NO GOING BACK.

IF we produce more oil it will only keep up with the demand worldwide. While it may make us less dependent on oil for our own needs the prices we will pay in the USA will be based upon WORLD PRICES… not our domestic (USA) production. To believe otherwise is just foolish. Additionally, currently we are importing only about 30 percent of our domestic needs.

We are not entitled to lower fuel prices… it is what it is and we will not sell for less than the world price unless we become a socialist society and subsidize our oil… and that will never happen… or at least I hope we will never become a socialist country. Our sense of entitlement is what is causing a great many problems for us in this country today… and it needs to be put into proper perspective.

Many Americans want to know why China or India Consumption of oil is hurting us here… it is simply business…. I business you do not want to hear about but at least need to understand….The companies that drill for oil are not federal Government Oil Companies… they are in the business to make money… the basic model of Business is that thing called supply and demand… Because I drill and pump crude oil in the USA does not mean that I am obligated by any law to sell it in the USA… as a businessman when I get something out of the ground I can sell it to the highest bidder…. If the USA does not want my product but someone in another country wants it… then I am entitles to sell it to any country (with few exception) I want to … THAT IS BUSINESS. To expect that I should sell it to you at any cheaper price is unreasonable… and bad business… and since these companies that do pump crude oil have other people who own stock (real ownership) of their companies… then they have a legal (fiduciary) obligation to maximize profits for their owners… remember again… we are NOT a socialist Country. Additionally to punish me for selling at the market price with a windfall profits tax is unreasonable… you may not like my profits… but they are legitimate and are mine… additionally I will increase prices to compensate for the “surcharge” tax on my profits.

If we really want Oil Companies to become energy companies then we need to develop incentives to foster the Oil Companies to become “Energy Companies” release in the Fall of 2008….

As I said you did not want to hear that… but those are the basic facts of life today, as we know them! Painful is it not?? Yet this has been the standard model of capitalism for hundreds of years and is not going to change anytime soon.

The same is true of cheap food and household energy use and even in other commodities like gold and Steel and copper (used in your wiring I might add) (I will address health care in another post… and you will NOT like what I have to tell you there either).

The ONLY way of getting a better price is to strengthen the dollar… but our past practices in our country have caught up with us and now we have financial troubles with Credit availability (after years of easy credit) and even with interest rates low we are not able to get the benefits of those cheap rates. Yet is we raise interest rates to fight the higher costs (also known as inflation) we will cause greater harm to the overall economy… the government and the Federal Reserve are in quite a conundrum and there is no quick fix to this problem of a stringer dollar… so do NOT anticipate things getting better quickly.

As bad as things are now they will get better based upon what has already happened… and I fear for many Americans with the Winter Heating Season just ahead (yes we are actually almost there and it is only the beginning of summer) as any American who drives to work and makes less than 40,000 per year per household will find themselves financially in the red (to me this is the new Poverty level in the USA). Elderly Americans on fixed incomes will suffer the most and the Cost of Living adjustments are not accurately reflection the actual increase of cost on the average family… and how can they when the supposed US Index for the Average hourly wage is over 17 dollars an hour…. That shows how skewed the Inflation indexes are by the number of “high wage” earners there are in this country… it is, simply, out of control.

In a future post I will give the bad news … I NOW expect oil to reach 250 dollars a barrel by sometime in 2010… unless the dollar gets better fast…. However with the choices for president and the policies I see coming down the road… that may not be able to be done (remember the discussion on Fiscal and Monetary policy and the effects). Hence 5 dollar a gallon gas will be cheap by comparison…

Corn Prices :

When we find other uses for Commodities outside the normal and regular use we create a demand for additional supply of that commodity. Corn, however, has had a double whammy effect. Yes I am talking first about Global Demand… Most of us think of corn as a food product for our table in many different forms…. Many of us forget that beef and chicken and even pork is raised for slaughter through the use of “feed corn” for them to consume to get these products…. Now also remember that farmers have limited amount of land to use… they also want to get the most out of every acre of land they farm… and currently feed corn is a great provider of revenue.

AS we increased the standard of living for impoverished countries like India and China… they consumption patters changed…. Meaning they now eat more of the Meats I described above…. Those meats also require the feed corn to produce. …Hence demand for feed corn went up and farmers produced more feed corn as a result.

The second whammy was the production (and subsidy by our government) of Ethanol. This non-food use for Corn drove the demand beyond the normal supply and demand curve and as we have seen dramatically increased prices… while the effectiveness of using Ethanol is being debated and alternatives are being developed this demand will not come down and prices will remain high.

What has surprised me about this is, that it was not expected by so many people…. Using a food in a way that is not a food product would naturally increase the demand for that product. As a note…. using Sugar Cane for ethanol will also raise food prices… yet the government may be more willing to do this because of the health consequences of sugar (yes gaining weight).

Corn prices are a direct result of GLOBAL DEMAND and the traditional supply and demand pricing but in a global context.

Energy Costs:

Generally we think of energy as the gasoline we put into our cars. This is true but we consume electricity in ever greater quantities then ever before. Heating, Air-conditioning, lighting TV’s Computers… ALL requiring Energy…. Energy is derived from many sources… Nuclear is being touted as a future provider of energy to wean us off of fossil fuels… but the COST to produce which is said to be low… will NOT reflect in lower prices to the Consumer…. The pricing index will show that they will sell this energy at lose to the same price as Coal or Diesel or natural gas plants… this seems to be the case with Hydro electric now. OLD power plants, are increasing prices, because of consumption, they are not lowering them. Yes the prices of oil and Coal have a lot to do with the international (Global) demand… and the prices have been going up dramatically…. So while we like to think we are better off with “alternative Fuels” and Alternative generation facilities” we are kidding ourselves if we think that will reduce our costs by very much at all… Making electricity… the production of power is a business and as such they obligation is to get the highest price for the product as possible. WE are not entitled to lower power costs!

Electricity is a produced commodity from a natural resource commodity…. At least for now.

Post #3 will be about credit, housing prices and maybe the stock market and Global Currencies

If you have been reading these posts… I will eventually get to the part where I make recommendations for the future… but I still need to explain more about where are are and how we got here.

Craig Eisele

Craig’s Diatribe on the USA and Global Economy (# 1)

June 6, 2008

This blog entry is to try and express my viewpoints on the current state of the USA Economy, my predictions for the future and how we are no longer a localized economy but now are part of a GLOBAL economy. It is part one of a series.

Economic models are nothing more than a theory of how things work… while those theories have been fairly accurate on the last 2 or 3, or even 4 decades our understanding of the way in which the USA economy (as well as the global economy), works is in need of revision.

The USA used to be the master of its own destiny… no more!!!

Where to begin?? This could be a complicated entry and I do not want you the reader (especially if you are a novice) to get lost…. So here I go….

Americans, for the most part, have lost their direction over the last 15 or 20 years…. I cannot and will not blame the politicians… although they should share some of the blame… but we as individuals, need to accept responsibility for where we are today (at least mostly). What do I mean by this?? Well we became a society that never foresaw that our spending (consumption) patters were too great. We felt wealthy and even entitled to an ever increasing and higher standard of living. We disregarded the warnings of our grandparents and great parents who lived through the “Great Depression” years.

We did not save! We used our equity on our homes for newer cars, the latest technologies, and what we determined to me our “God Given right” to a vacation and other rewards for working so hard. We failed to save and invest wisely and gambled on stocks and the future value of our homes to be our savior in the years ahead. We thought about the future in lose terms but never really took the risk too seriously. We always believed that our life style would never be reduced but would continue to rise. WELL … If you still believe that you are in for a great shock… as our quality of life and our life style is never going to be the same. We are no longer masters of our own destiny and must now participate in a global society…. And these facts, my friends (and foes) are the mere facts of life today, which we have not yet accepted.

HOW DID WE GET TOM THIS POINT???

That answer is very complicated…. But lets examine some basics:

1 Commodities: There are two types of Commodities. One that we basically get from the earth in raw form and then convert to materials we use in our daily life…. Oil, Coal, Water, Natural Gas, Metals etc…. then there are those the we grow and raise… food stuffs primarily… the most basic being things like corn, wheat and rice…. Basics in almost every countries diet.

Commodities cost money and energy to produce… when we start importing and exporting those commodities then we have a currency exchange…. One country’s money in exchange for another’s for the buying and selling of those commodities. These “prices get higher the more “value” we add to each commodity…. For instance…. Refining oil into lubricants or heating oil and even more personal into plastics and Synthetic fabrics like Polyester and rayon etc.

We add even more value when we change those plastics into use for appliances, electronics, automobiles and so on… combining commodities to make products that end up in homes and offices, and to a lesser extent in factories where they are used to make “end user” products

Simply we as the consumer are at the end of the “value added” chain of events and must pay the final price ….. This does not include the “disposal Price” when we have to get rid of our “old things”.

REMEMBER: Supply and Demand economics is real… but NOT as important in the United States Economy alone… meaning that the Supply and Demand pricing models are now based on World Wide Demand and not just what is demanded in the USA… we ARE a global society now.

The “global economy” comes into play when we realized that much greater profits could be had by using another countries labor to add the value. Clothing was one of the first things that was “outsourced” and the Amalgamated Clothing Workers of America: fought hard to keep their jobs from going overseas… but obviously they were no supported very well in their protests.

We then subjected ourselves to the mandates of the WTO (World trade Organization) and had to negotiate trade agreements with various countries to keep the balance of trade in some order. However by doing this we lost more control over our destiny then anyone would imagine even to this day. Simply we cannot protect our own companies or workers that function in the USA because it is now against international law that WE agreed to (OK… this blame goes to the Politicians).

One needs to look only at the stocks that did well the last 6 to 9 months and see that MOST of their profits came from overseas…. More on how this is possible later….

Our thirst for MORE PROFITS, and the false belief that what was good for Wall Street was good for America is seriously being challenged… but it is to late to unwind the situation we now find ourselves… George Sorros calls for a new paradigm… maybe that is where we are already and have now acknowledged it… or at least told the average American.

Now the pressure has been on the Federal Reserve and the US Government to make things better… but they really cannot, and we need to stop thinking they can. These institutions CAN however reduce the amount of FUTURE pain that the average American is feeling.

There is a concern that the pain is now gone from “Wall Street” to “Main Street” with the focus on BUSINESS… but most Americans are now feeing it on “MY STREET” something that is being ignored. Business seems to be what we are most interested in, and for that the average person will continue to bear the brunt of this economic condition we are in… because … if you read above… the CONSUMER is the one who is basically the END USER… WE pay the final price for this.

OK… enough of the basic economics lesson for toady…. Later I will write about where we are and the CURRENT economic Condition that ALL of us need to be aware of… not the HYPE that the TV and other media wants us to see and hear… but realities

After that I will write on what we can do for the FUTURE… how we can survive… not thrive… in the downturn that is here and will continue for some time…. Practice advice that IF I AM WRONG… will never hurt you but only make you better off in the future.

Oil Prices. The Dollar value in the world, an Energy and commodity prices will be discussed. I know people are looking at the stock market after what happened on Friday June 6…. And especially they are looking at OIL PRICES… and there is a lot of attempts to LAY BLAME…. And to say it is speculation… our congress has tried to find a “culprit” to blame… and I firmly believe it is not the “Speculators” it is really because we are in a “GLOBAL ECONOMY” that these prices are raising…. That is why I have decided to write this post… so the average person will understand What has happened, what is going on and Where we are going ….. it is very important to knowing what to do in the future and to see how we are not in control of our destiny as we have been in the past and how we are really a global society now … whether we like it or not… and there is no turning back!!!

Post note: I know that this blog has been used for my promotion of Africa Development…. I am still working on these as well… I have been silent for some time for a variety of reasons… but I have not stopped working on these projects

I have also decide that now that BOTH parties have selected their nomine for President of the United Staes… NEITHER of which can make our lives like they were…. that the time was right to discuss our economy .

Additionally I was going to discuss the Housing Crisis in America and the weakening dollar and what the Federal reserves actions have been….but I do what to do that later… but please remember that the Federal Reserve is in charge of MONETARY POLICY… meaning the banking and Interest rates and to control the growth of our economy . There is considerable discussion taking place as to the Bear Sterns intervention by the FED and if is was a way to intervene in the Financial markets…. which was NOT disctated by their mandate from Congress… they are to be independent politically… but they a have limited authority… CONGRESS and the Executive Branch of Government has the responsibility for FISCAL Policy.. that means raising or lowering taxes and the borrowing of money to finance the government operations.. they can help or hurt the economy of the USA in general by the amount of money and the number of :jobs” they create within government. Sometimes those policies may appear to have a socialistic view point… but that is a discussion for another time…. just remember to keep the FED (Federal Reserve) and the FEDERAL GOVERNMENT as two distinct entities that try to work together and yet should never be able to influence each other in keeping the economy stable… also more on interest rates and why Mortgages are so hard to get today in a later post.

For the accuracy of my predictions I invite you to read my other posts on the US Economy at

http://craigeisele.wordpress.com/2007/12/10/my-predictions-for-2008-for-the-us-economy/

and

http://craigeisele.wordpress.com/2007/12/25/more-2008-predictions-from-craig-eisele/

Clothing Prices Poised to Rise Dramatically

Most of the people who read this will not remember the oil embargo of the Early 70′s when lines at the gas stations stretched for blocks on end.

What many who do remember will have forgotten is the increase in clothing prices. Why? Well at the time “polyester” was the “miracle” fabric of the day. In fact most synthetic fibers used in clothing are made from OIL. And as we all know Oil prices have increased dramatically.

According to today’s farm planting reports being released, farmers are going to plant less cotton this year. Cotton is the other significant component of clothing. Hence when the next harvest of cotton is made there will be higher prices. Higher because of the amount of cotton available… but also higher because of the demands moving from high priced “synthetics” to “lower priced” Cotton. But as I have already indicated Cotton will also cost more.

The lower value of the dollar around the world will also begin to have this effect on Clothing manufacturing and prices. While the price of labor is cheaper abroad generally, the exchange rate of the dollar for the foreign countries currency is declining against them and they will be forced to raise their prices to pay their people and to sustain profits.

That means it will cost more to buy clothing not just for yourself but for your children. That means a tighter budget and that dreaded word “Inflation”.

It is not just your clothing that will cost more. The cost of plastics has yet to be passed on completely to the consumer goods market. And all you have to do is look at that commercial showing everything disappearing because of no oil… now you just have to increase the price because the oil will be available but will cost more.

We have yet to see the real cost of this inflation from Oil Prices to Aluminum to Steel and Copper. These are commodities that have built our “modern” society and are critical to our society as we know it.

I am not trying to scare you about the future. I AM trying to warn those of you who care about the future and urge you to take appropriate steps to be prepared for these inevitable events as I do not see an easing of this anytime in the near future.

Kite Flying… Remembering Cultural Roots

Easter Sunday, 23 March 2008

As some of you know I try to be as culturally diverse as possible. I also try to to encourage my children to keep at least a part of the Culture of their mothers. Today is one of those occasions where traditional events are practiced.

In Guyana and other places in the world easter Sunday is not just a family event and family time… it is also marked by something FUN. Flying Kites!!

When in Guyana one Easter I was able to participate in this event along the beaches of Georgetown… actually is was more along the sea wall… but it was fun nonetheless.

Sadly I have been unable to find kites this year… well so far… and intend to go to at least 2 more places to find them. Maybe it is because Easter is so early… or maybe kids are just not that into flying kites…. but I still intend to try. I just want a relaxing day of fun… and hopefully no power lines…lol

So if you into having a bit of fun with your kids this weekend… why not try flying kites… and even if you have no kids… you may be able to touch the child in you.  OH… and do not forget some scrap cloth for the tail…. Have fun!!!

More 2008 Predictions from Craig Eisele

2009 Predictions can be found at:

http://craigeisele.wordpress.com/2009/01/11/2009-economic-predictions-by-craig-eisele/

The below was written on December 25, 2007 for 2008:

More 2008 Predictions from Craig Eisele:

RETAIL: As I write this the bulls are still either saying it is a good season or hoping that last minute shoppers will make it one. Lets look at this in another way. I have been shopping EVERY weekend from Thanksgiving on… and what I have seen is dismal. This year, I have NEVER had to look for a parking space or needed to walk from the far end of the parking lot… I have seen LESS people in the Mall this year and many many more sales. Sometimes so bad I thought that it was March weekend shopping (meaning low numbers of people). I was extremely unhappy with FoxBusiness TV today when the announcer in a shopping mall was saying that the people were starting to flood in and I barely saw 10 people shopping in a wide-angle shot. Only later did ONE gust on the show tell it like it is… MANY of the retail Companies are having LOWER sales… and those sales that are moving are either in Electronics (lower profit margins) or in SALE merchandise… hence LOWER Profit margins… so even if you see higher sales… which is unlikely… the PROFITS WILL BE LOWER!

Credit Card Evaluation by Moody’s is showing a huge number of defaults in the 90 day ranges… and as those of you with Credit Cards you will know that ONE missed payment can mean a jump to 29 percent annual interest rates or higher. Capital One and Bank of America are shown as being at worse rates and possible doubling since their October numbers in their November reports. This does not bode well for Retail and some say as much as two thirds of our economy is consumer spending driven.

Remember that Saving Rates in the USA are AGAIN Negative (meaning we are spending more than we are making), Homeowners no longer have access to their home equity that they had in the past because of declining values and Credit card companies have been increasing interest rates based on your total credit report meaning that if you take out another credit card or even cancel some credit cards or are late on payment to ANY other creditor you can be hit with high interest rates on your credit card balance.

Because of the new bankruptcy laws these credit cards may still have to be paid off entirely but your interest payment may be stopped…. I predict a change in the Laws by a Democratic Congress to make it easier to have these and Mortgage related debts forgiven to better protect the consumer and to allow for MORE consumer spending fostering a recover in the economy. This does not favor the Financial Companies.

Talking about Financial’s… there is great excitement about foreign funds coming to the rescue of the various Financial Businesses… but what you generally do not hear is the COST of those investment… many are for PREFERRED STOCK…. With GUARANTEED rates of 8 to 12 percent… remember that Preferred Stock Holders are often given their payments before there is dividends to the Common Stock holders… and there are still more write offs to come for many companies.

Personally as I said earlier the “credit” market especially for the consumers will be tight and unless you have stellar credit there is most likely no way you will get a loan or if you do your rates will be high. Even Fanny Mae and Freddie Mac have indicated continued price and value declines through 2008 and MAYBE a slow recovery starting in 2009. When Housing prices do go up (and some analysts and pundits say the opposite of me here) the price increase will be slow because of the Credit requirements that will have to be slowly reduced as well as many people who will be wary of a repeat of the last 2 years and finding out that it is actually CHEAPER to Rent a home than to own it and risk their equity on another potential downturn. And for Zero Down Mortgages.. forget it… those days better be over!!

Simply ALL of those rosy predictions of a good 2008 are for the benefit of companies who want to keep your money in stocks without regard to the real possibility that this economy is in for a rocky 2008.

Recession: Do not expect to be told that this economy is in a recession until it is either extremely sever or until there is a reversal of the current trend, at which time you will be told that we WERE in a Recession. The “powers” behind the Financial information as well as the Government does not believe you are rational human beings capable of knowing the truth until after the fact. They are afraid you will panic and that is not good for business. Right or wrong that seems to be the way the general population of the United States is treated.

I stand by my predictions in the previous post, for the Euro vs. Dollar exchange and the price of Oil for 2008.

Craig Eisele