Arkady's Thoughts

On the heels of a GDP report riddled with ominous signs of a government taxing more, wages falling and personal savings shrinking there is yet more reason to fear the economic future.  Now that the subprime implosion is wearing off and people have understood the implication of issuing loans to people incapable of paying another implosion is scheduled to begin .  This is the option ARMs market and it's arguably even more dangerous than the subprime market.  Main difference between these two loans is that a subprime is simply a risky loan given to people whose income, eligibility, down payment, etc is not up to par.  Option ARMs instead offer teaser rates and an option to only pay interest, without actually paying down any of the principal.  In California for example this was a very popular choice because buying half a million dollar homes was extremely difficult and most were looking for a quick flip anyway.  Now that the bubble popped and values plummeted...

Green shoots are blossoming, Obama is smiling and somewhere Bernanke is patting himself on the back.  Folks, I am pleased to announce that things are looking very rosy and judging by the crooks traders driving the stock market it would appear they agree.  BEA's report confirms the speculation (well at least the headline) so many idiots economists on TV have predicted, things are getting better; GDP increased at an annual rate of 3.5 percent.  Time to put that 401K back to work and buy another house.    Let's look at the report: Real federal government consumption expenditures and gross investment increased 7.9 percent in the third quarter, compared with an increase of 11.4 percent in the second. National defense increased 8.4 percent, compared with an increase of 14.0 percent. Nondefense increased 6.8 percent, compared with an increase of 6.1 percent. Yay.  Glad to see our government is hard at work spending like the drunken sailors that they are....