With the passage of the housing bailout bill and the promise of a signature by President Bush the media, market analysts, and financial writers are positioning themselves for the outbreak of a new war.

The new war will be an onslaught of propaganda from all sides. The Government has already taken the side that this bill will be the cure all for everything that ails the country. The financial media who is supposed to be neutral, will take their expected role of being cheerleaders for the Government. And the real fighting will come down to guerilla warfare among the financial analysts that span the globe. Everything about this soon to be new housing bailout bill will be cut, sliced, diced, and dissected over and over, with different forensic evaluations of it. What will be more important is the forensic evaluation that takes place ‘after’ the impact of the bill has been injected into the veins of the US economy.

Those of you who are our long time readers understand how Lisa and I always look at the big picture in our analysis of the markets, the economy, and the relation therein. You also know that we feel this housing bill is potentially an economic nuclear bomb that could have far reaching fallout should it detonate. Giving the Treasury what amounts to a blank check for the purpose of keeping two publicly traded companies afloat with liquidity while it continues to lose it, is in my view nothing more than an IV bottle hooked to the veins of these two companies. What happens when the IV bottle runs out? The US taxpayers are being the unwilling donor of vital fluids for these two companies, even against our will.

It has been said that our economy is strong if it is able to come to the rescue of these failing institutions. I disagree, the Government is simply extending it’s debt further in order to pay for the here and now. Like a person borrowing from one credit card to pay another, it can only go on for so long before the credit card company cuts off any further credit. The over use and the over extension is what got us in this mess.

You can’t cure an economy that has been devastated by over use of credit by issuing more credit !

Stand by for the onslaught of propaganda that will be unleashed…

We have a lot of data on tap for this week.

Monday, July 28, 2008

12:00pm : Fed’s Mishkin speaks on communication in Washington, DC.

Earnings

Before the Open: ACV, ARLP, ANPI, BOH, BWP, CG, CNA, DIN, DCO, GEHL, K, KFT, MV, MSA, ONB, SPG, SOHU, TSN, VZ, WWY.