"I've NEVER seen a soft landing in 53 years."
Tuesday, December 12, 2006 | Dylan Jovine
"I'VE NEVER SEEN A SOFT LANDING IN 53 YEARS."
That's what Angelo Mozello, the Chairman & CEO of the nation's LARGEST mortgage company, Countrywide Credit, said to a group of analysts this summer.
The two owners of the SECOND LARGEST mortgage company in America obviously agree: Herbert & Marion Sandler decided to sell Golden West Financial to Wachovia Bank back in May. (Wachovia definitely top-ticked the market with this purchase.)
What does all this really mean to the markets? Not much, at first glance.
But if you believe the housing slump is going to hit consumers in the pocket, you have to start paying attention: they represent fully 70% of all economic activity in this entire country!
In other words, if the consumer falls down, the economy is sure to follow.
So that begs the question: are you, as an investor, gambling everything on talk of a “Soft Landing” in 2007?
The Federal Reserve Board would love to have you believe in a fairy tale ending.
Over the years, they’ve learned that the best way to calm a nervous market is to sing sweet nothings into its ear. It’s understandable … that’s their job.
But when the Fed begins to talk about “soft landings”, that’s Wall Street’s
cue to begin selling.
That’s because, ever since 1870, out of 20 "landings", there has only been one “soft” one. The other 19 "landings" have been hard ... for somebody.
And make no mistake about it: Wall Street’s con is happening right now.
What you may have been witnessing over the past six months is the greatest transfer of wealth in the history of mankind … a series of sophisticated stock manipulations that make the shenanigans of the Kennedys and Rockefellers (which caused the 1930s stock market wipe-out) look like petty theft.
THE SET UP
How do you convince ordinary, conservative people to risk their life savings
in the stock market, even as the economy all around them begins to melt down?
One way is to drive stock prices so high that “no one can stand to miss out on the profits.”
As the old adage has it, if you don’t want to feel the pain in your finger,
pinch your arm hard.
But as I said before, the strength of the stock market is based on the strength of the economy.
And the strength of the economy is based on the strength of the consumer.
Yes, consumers like you and me represent 70% of all economic activity
in this country. If we get hurt, the economy gets hurt.
And if the economy is hurt, the stock market hurts right along with it.
Are consumers hurt? Well, in just one year, literally $1 Trillion has vanished from the housing market, loan defaults have soared, and the job market is getting far weaker.
“We think the sky may be falling,” is what Mark Fitzgibbon, Director of Research at respected firm Sandler O'Neill & Partners said LAST WEEK when talking about defaults of mortgage payments ...
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Dylan Jovine
Chief Investment Officer
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