Markets up, Health Care done, Debt soaring, Housing crashing. UPDATE March 24, 2010.

Marc’s Notes:
Bank of America just announced it will go forward with another house bailout plan to reduce actual mortgage principal. I hate to say I told you so, but “I told you so”.
The under the table prodding with funds from Uncle Sam was of course a big factor here as well as the topic of show # 86, should you stop paying your home mortgage.
As house prices continue to drop, (new report out today says a double dip in housing is beginning) the banks want YOU to own the house, NOT THEM. And even if it costs them some money, they know the drop in the house price will be worse then your loan forgiveness costs to them. The plan here is to keep you in the house as it continues down in value, then when you no longer can afford to stay there, nor want to, they foreclose anyway, keeping all the money you paid them. Take a read here:

http://www.bloomberg.com/apps/news?pid=20601068&sid=aToSv9PXNo3g

Or did you think the banks just got compassionate?
Have they ever been “compassionate”?
You can expect similar announcements from other lending institutions soon. Don’t kid yourself; the banks aren’t doing this on their own. This is a government sponsored, back door deal, done because of all the flack they would take by announcing another overt government handout to bad homeowners.
The money has to come from somewhere, right? And just out in the news to prove the banks KNOW housing is still plummeting? Sales of new homes in the U.S. unexpectedly fell in February to a record low, according to Bloomberg, today. As I said, they want YOU to own the house while it plummets in value, THAT’S why they are reworking your loans.

The National Health Care plan is launched. I have soooo many things to say about this it would take up too much room. But consider this. The money has to come from somewhere. Do YOU believe it will REDUCE the budget by 130 billion? I mean, really.
The FEDS really get money up front as most of plan doesn’t kick in for a few years but we start paying for it very soon. This was a brilliant money grab to get funds now and in typical government fashion, worry about paying for it later, after all the money will be spent now.
Just for starters, the IRS is hiring up to 17,000 new agents to enforce the mandatory insurance coverage. That alone is estimated at 1.5 BILLION in cost. And that’s just to hire the enforcement guys! And just the IRS part. Mark my words. The costs will soar, to you and the FEDS. The amount of money all this stuff like Social Security, Medicare and Medical and the Prescription Drug plan and now this will drive this country into bankruptcy. I know you may not believe it but mark my words. Bad things cometh.

Markets:
The Bull is in control for now. The Dow went past 10,750 which puts the BEAR to rest. Although most investors are still down from their initial amounts, if you look at the markets you would think everyone is making millions. Well, the banks are, that’s for sure, and so are all the brokerage houses. After all, they are getting billions in tax payer money to wager with, and getting an interest free- risk free bet from the FEDS by getting free money from the Federal Reserve and buying Treasuries at 3 % interest from the Treasury department. What a deal!
New Dow possible target is over 11,000 to a possible 11,500 but I highly doubt it. But then again, the markets can stay illogical longer then you can stay liquid, so lets take the UP market and collect on our dividend payers. Remember, as long as the markets don’t crash, our dividend payers are ok and pay. We hang for now and wait to see what happens. The market movers will be Greece and the Euro’s problems, interest rates, or an unforeseen event or worse then expected economic figure somewhere.

Holdings:
Gold and Silver despite the recent slowdown are still holding remarkable well, all things considered. As mentioned in the last 6 or 8 newsletters, add physical anytime but I would not add any gold stocks until we see a major move in gold either up or down.  A possible gold near $1,000/oz is still possible in the near term. Meanwhile gold is moving to record highs when price in Euros, so the gold bull is snorting.

Oil: Going nowhere and we reiterate our NO BUY recommendation. HOLD what you have of course.

Natural Gas: You should have been stopped out on our gamblers special a week or so back when UNG hit the 7’s. Hold only long term stock now for 2011. You should have stops in at 50 % of your buy in price to limit loss.

Dividend Payers- Hold as usual.

Contrary funds- Protects against a market turn. They are insurance and going down as the market goes up. They will go up if the market turns down.

Safe Money- FDIC insured bank accounts, or similar US GOVT Insured accounts. Paying little but this is about safety here. Get your money from your high dividend payers. As indicated over and over, MOST of your money should be here.

Interest Rate funds- We sit. I will add more later after the dollar has its final rally which is coming. Then it will be time to add much more.

Everbank CD-Nothing yet- Stay tuned.

Foreign Currencies-Rising nicely, especially the Canadian dollar as the Australian Central bank just raised their interest rates gain. The interest now paid on the FXA fund is a tad over 2 %.

All for now, and don’t forget, the US COMPTROLLER interview, David Walker, is free for download on the website.  MONEYMANAGEMENTRADIO.COM.

Marc