And you need to take your own advice, just because the weather is sunny now doesn't mean it will be tomorrow.

Take deficits for example, your sunny disposition neglects the fact that Dubya has conveniently timed his exit to coincide with an exploding deficit dilemma. DO YOUR HOMEWORK!

tell us "Guru", what is the weather going to be like this year, where should we put our money so that one day we too can also live the good life in Detroit?

And before you blame Bush, tell us how he is supposed to single handily reform both of those institutions.

Ah yes, a typical response from our resident condescending asshole.

FYI - suburban living in Motown is pretty much the same as suburban living in any major metropolitan area (weather being the exception), and $550k buys a pretty nice home in an outstanding school district in Motown, what does $550k buy in SoCal? A 1 bedroom shack, no thanks.

He and the Republican congress had six golden years to accomplish reformation, instead Dubya chose to fritter away his political capital invading and occupying Iraq.

I for one don't believe there will be a national bubble that will pop, some regional markets will see a decline, but that happens every year, as a whole real estate is still a safe bet.

And, I'm earning 5.70 on my cash w/ no principle risk.

Funding problems are not unique to Michigan. Look in the mirror clownface.

The next bubble to deflate may be Alan Greenspan's reputation.

Hailed as perhaps the greatest central banker who ever lived when he left the Federal Reserve in 2006, Greenspan is under attack from critics ranging from the New York Times to economists at the American Enterprise Institute for his handling of the 2000-2005 housing boom. The former Fed chairman has taken to the media to defend himself, writing in the Wall Street Journal and appearing on network television.

``He's had a bubble reputation that derived from the growth of U.S. household wealth,'' said Edward Chancellor, author of ``Devil Take the Hindmost: A History of Financial Speculation.'' ``As that goes down, his standing as a superstar will suffer.''

At stake is not only Greenspan's legacy but also the future of policies he espoused during 18-1/2 years atop the central bank. Critics blame his aversion to regulation and reluctance to use interest rates to puncture asset bubbles for the boom in mortgage lending and house prices that has since gone bust, threatening to throw the economy into recession.....

In Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve, William A. Fleckenstein takes tough shots at the former Fed chairman. The hedge fund manager and writer of the online column Contrarian Chronicles studied transcripts of Fed meetings and Greenspan's congressional testimony, and tracked the market's moves. That is the basis for the critique he co-authored with Frederick Sheehan, published by a unit of McGraw-Hill (MHP), BusinessWeek's corporate parent. Contributing editor Christopher Farrell asked Fleckenstein how investors will fare during Ben Bernanke's regime.

We've seen some puzzlers over the years, but we'll admit we never expected to see a Federal Reserve Chairman talking down the capital cushion of the nation's banking system.

But there it was on Tuesday, the equivalent of a CEO shorting his own stock, as Ben Bernanke encouraged the nation's bankers to write down the principal on millions of mortgage loans. Voluntary loan modifications aren't doing enough to stop foreclosures, declared the chief steward of the U.S. financial system. "In this environment," he said, "principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure."

Mull over that one for a moment. Mr. Bernanke and the Fed are charged with protecting the soundness of the banking system. The bulwark of such protection is shareholder equity -- capital -- which is generated in part by income-producing assets known as loans. Yet the Fed chief has now advised that, as a matter of public policy, banks should take a chunk of that capital and transfer it to mortgage debtors. How this additional charge -- and new political risk -- against bank earnings will ease the mistrust at the heart of the current credit crisis is a mystery.....

.....The worst irony here is that the mortgage crisis is in large part the fault of the Fed's own reckless monetary policy. Low real interest rates for too long created a subsidy for debt that spurred the housing and credit bubbles that have now burst. Prices got higher than they should have been, and the first step in any recovery is letting those now-falling prices find a new bottom. Government interference in that price discovery will only prolong the crisis, increasing the chances that the losses are eventually dumped onto taxpayers.....

Let's face it: The Federal Reserve must be scared to death as it watches the financial system unravel.

Unravel would appear to be the operative word as leverage proves to be as toxic on the way down as it was intoxicating on the way up.

By late last week, events seemed to be spinning out of control. Credit spreads were blowing out, with tax-exempt municipal bonds out-yielding Treasuries by a record and the spread between Fannie Mae mortgage-backed securities and government bonds hitting a 22-year high. Treasury bill yields were collapsing (further). The U.S. dollar was sinking like a stone. And commodity prices, in their lofty ascent, had all the makings of a market unhinged from the fundamentals, which, after all, is the definition of a bubble.

Mortgage foreclosures hit an all-time high in the fourth quarter of last year while homeowners' equity, or the value of a home less the outstanding mortgage, sank to an all-time low of 47.9 percent.

This measure of owners' equity has been declining since the Fed started collecting data in 1945. (This isn't your father's housing market.) More unusual was the drop in the value of household real estate in the fourth quarter, one of a handful of declines in the half-century life of the series.

Margin calls are causing forced selling of assets (often what investors can sell, not what they'd like to sell), which makes them cheaper, which triggers additional margin calls and more forced selling. No wonder the Fed announced two initiatives early Friday before the New York Stock Exchange opened to address ``heightened liquidity pressures.''

Temporarily Permanent

The Fed said it was increasing the amount banks could borrow at the Term Auction Facility (TAF) to $100 billion this month compared with $60 billion in January and February. ``The Federal Reserve will increase these auction sizes further if conditions warrant,'' the central bank said in its press release.

In addition, the Fed will make $100 billion available through term repurchase agreements, collateralized loans to Wall Street primary dealers.

Fifteen minutes after the Fed's announcement, the Labor Department reminded us that the economy's problems aren't strictly financial. Non-farm payrolls fell 63,000 in February, following a revised 22,000 drop in January. Employment has always been the most visible, and perhaps the most important, of coincident economic indicators. Your average Joe doesn't know, and probably doesn't care, if industrial production is expanding or contracting in any given month.

Waiting for a Plan

Jobs are a different story. Statistically there isn't much difference between a decline of 63,000 and a similar-sized increase. It's the sign, and the trend, that matter. Private payrolls fell 101,000 last month, the third consecutive monthly decline.

What is to be done? The Fed has lowered its benchmark rate by 225 basis points since September, with another 75 basis points expected on March 18, based on the prices of fed funds futures. It introduced, and now enhanced, the TAF to address liquidity needs.

President George W. Bush and Congress worked together to pass a $168 billion fiscal stimulus package, including tax rebates for savings-short households and tax breaks for business. The pace of mortgage delinquencies and foreclosures is outpacing Treasury Secretary Hank Paulson's ability to keep up with them.

Paulson said last week that the administration was looking at the mortgage-origination and securitization process, disclosure, regulatory and capital issues, and the rating companies. We can expect new proposals ``in the weeks ahead,'' he said.....

Federal Reserve Chairman Ben S. Bernanke may be facing something worse than a loss of personal credibility on Wall Street and in Washington: waning faith in the ability of the institution he leads to turn around the economy and the financial markets anytime soon.

Bernanke has reached deep into the Fed's toolkit to come up with innovative ways to head off a recession and restore some calm in credit markets. While many have initially been greeted with rallies in stocks, cumulatively they haven't yet had lasting impact on bringing down credit costs and setting the stage for economic recovery.

``The Fed has been playing the equivalent of Whac-A-Mole as financial turmoil keeps cropping up in new and unexpected places,'' says former Fed Vice Chairman Alan Blinder, referring to the arcade game where players try to hammer down plastic critters that randomly pop out of holes. ``Yet many of the problems facing us are beyond its reach.....''

.....The financial industry is likely to stagnate or shrink in the next few years. That is partly because the last phase of its growth was founded on unsustainable leverage, and partly because the value of the underlying equities and bonds is unlikely to grow as it did in the 1980s and 1990s. If finance is foolishly reregulated, it will fare even worse.

And what of all the clever and misused wizardry of modern finance? Mr Greenspan was half right. Financial engineering can indeed spread risk and help the system work better. Like junk bonds, reviled at the end of 1980s, securitisation will rebound, tamed and better understood—and smaller. That is financial progress. It is a pity that it comes at such a cost.

On a freezing day in March 2007, Nassim Taleb walked into a conference room at Morgan Stanley's Manhattan offices on 47th Street and Broadway to address a group of the firm's risk managers. His message: Your models don't work.

Using a whiteboard to scribble out his calculations, Taleb, now 48, began one of his rants, this time against stress tests -- Wall Street lingo for examining how a market rout will play out. Stress tests are inherently risky because they ignore rare but potentially devastating events, Taleb said.

``Past shortfall doesn't predict future shortfall,'' the options trader turned best-selling author recalls telling the assembled group of about 40. The risk managers, part of a tribe of mathematical model makers known in the finance world as quants, stared back at him blankly, and a debate ensued, according to people who were there.

Only six months later, Morgan Stanley experienced its own rout. The world's second-biggest mergers adviser announced in December that it had written down its subprime-related holdings by $9.4 billion after the firm's traders misjudged how fast and far prices of the debt would fall. Their risk management had failed.

The Lebanese-born Taleb, a balding man who labels himself a philosopher of randomness, has an eerie knack for timing things right. His most recent book, ``The Black Swan: The Impact of the Highly Improbable'' (Random House), came out in May 2007, just months before the subprime fiasco rocked global markets and led banks to announce at least $208 billion worth of writedowns. The book's message offered something of a preview of the crisis: that we're all blind to rare events and routinely fool ourselves into believing we can predict risks and rewards.....

Former Federal Reserve Chairmen Paul Volcker and Alan Greenspan present an interesting study in contrasts.

Volcker is tall; Greenspan isn't. Volcker is a man of few words; Greenspan won't shut up. Volcker retired as Fed chair and avoided the limelight; Greenspan is doing everything possible to make sure the light shines on him.

The problem for Greenspan is that the spotlight on him is also illuminating detritus on the economy's shoreline now that the tide of easy money has gone out. (Wait, easy money is back!) Greenspan's curriculum vitae includes two asset bubbles (one in Internet and technology stocks in the late 1990s, another in residential real estate), a pair of banking crises, a boatload of fraudulent lending he chose to ignore, and a household savings rate of zero.

What really separates the two men, however, is the legacy issue. Volcker is content to let his record speak for itself: He inherited inflation of almost 15 percent and bequeathed a rate of 4 percent to posterity. It took two recessions to get there, but he did the heavy lifting on inflation.

Greenspan is desperate to deflect the blame for a credit crisis he called ``the most wrenching'' in 50 years. He can write his autobiography, which he did last year, but he can't write his epitaph. We, the public, will do that.....

You know, I always say you should get greedy when others are fearful and fearful when others are greedy. But that's too much to expect. Of course, you shouldn't get greedy when others get greedy and fearful when others get fearful. At a minimum, try to stay away from that.

The biggest bear market in Treasuries since 2004 may get worse.

Unlike four years ago, when Federal Reserve Chairman Alan Greenspan embarked on 17 consecutive interest-rate increases to contain the threat of rising consumer prices, his successor Ben S. Bernanke is giving investors few assurances that the scourge of inflation will abate anytime soon.

``The Treasury market going forward is more an inflation story,'' said Colin Lundgren, head of institutional fixed income for RiverSource Institutional Advisors in Minneapolis, which manages $100 billion in bonds. RiverSource is reducing Treasuries in favor of securities backed by commercial mortgages and investment-grade corporate debt, he said.

Investors have lost 2.88 percent on average since March, including reinvested interest, according to Merrill Lynch & Co.'s Treasury Master Index. That's the worst performance since the second quarter of 2004, when they tumbled 3.1 percent.

Based on past years when the Fed, like now, was grappling with faster inflation and concern about turmoil in credit markets was starting to ease, investors might not enjoy a rebound.

In the second halves of 1994 and 1999, U.S. government debt returned less than 1 percent. In the first case the Fed increased interest rates in response to inflation threats, while in 1999 the collapse of hedge fund Long-Term Capital Management LP the year before failed to bring down the economy.....

The biggest bear market in Treasuries since 2004 may get worse.

Unlike four years ago, when Federal Reserve Chairman Alan Greenspan embarked on 17 consecutive interest-rate increases to contain the threat of rising consumer prices, his successor Ben S. Bernanke is giving investors few assurances that the scourge of inflation will abate anytime soon.

``The Treasury market going forward is more an inflation story,'' said Colin Lundgren, head of institutional fixed income for RiverSource Institutional Advisors in Minneapolis, which manages $100 billion in bonds. RiverSource is reducing Treasuries in favor of securities backed by commercial mortgages and investment-grade corporate debt, he said.

Investors have lost 2.2 percent on average since March, including reinvested interest, according to Merrill Lynch & Co.'s Treasury Master Index. That's the worst performance since the second quarter of 2004, when they tumbled 3.1 percent.

Based on past years when the Fed, like now, was grappling with faster inflation and concern about turmoil in credit markets was starting to ease, investors might not enjoy a rebound.....

WASHINGTON (MarketWatch) -- Cable business channels can turn off their countdown clocks of the timing of interest rate announcements, the 30-word statements on monetary policy can gather dust on the shelf: it is clear that the Federal Reserve is not going to pull the economy out of this rut.

"Interest rates didn't get us into this mess and they are not going to get us out of it," said Robert Brusca, chief economist at FAO Economics. Leaving aside what caused this downturn -- or recession if you like -- it certainly wasn't caused by a central bank worried about inflation.

And lower rates are not going to turn the economy around.

WHEN he was still in academia, Ben Bernanke once argued that Franklin Roosevelt’s greatest contribution to ending the Great Depression was not a specific policy, but his “willingness to be aggressive and to experiment…to do whatever it took to get the country moving again.” That would fairly describe how Mr Bernanke has battled perhaps the biggest financial crisis since FDR’s time, which erupted one year ago this week.

The chairman of the Federal Reserve has cast aside any notion that central bankers should be boring. He has slashed interest rates; rolled out a dizzying array of new lending programmes; backed the debt of Bear Stearns, a failing investment bank; agreed to lend to Fannie Mae and Freddie Mac, America’s troubled, quasi-private mortgage agencies; argued for fiscal stimulus and mortgage write-downs; and proposed an expansion of the Fed’s regulatory domain.

The Fed did not seek its bigger role, but acted because no one else could. Mr Bernanke is now consumed with responsibilities he never imagined when he became chairman in early 2006. Since the crisis broke, he has been at his desk seven days a week, fuelled by cans of Diet Dr Pepper from a small refrigerator in his office. Even if his aggression and experimentation do not prevent a recession, they have softened the impact of falling house prices, rising default rates and the credit squeeze on America’s economy. But they have also created new political risks for the Fed......

Troubled by the Bear Stearns debacle, former Federal Reserve Chairman Alan Greenspan is advocating a new way of dealing with government bailouts of companies whose sudden collapse could wreak havoc on the country's economic and financial stability.

Greenspan says Congress needs to give the government new powers to handle troubled companies to minimize any potential losses to American taxpayers. A self-described libertarian Republican, Greenspan has a reputation for being wary of giving the government extra powers. However, in crisis situations, there needs to be a clear process for handling bailouts, rather than depending on the Fed to do so, he reckons.

A high-level panel of financial officials should be given broad authority to quickly determine whether a failing company poses a sufficient threat to the entire U.S. economy, he recommends. If so, the company would be shut down.....