Don't Be A Dope

If I hear any more from the perma-dopes out blathering about how the Fed is going to save the economy, I'm liable to end up in a stupidity induced coma. I "hope" they are right right along with I hope everyone in the world becomes a millionaire. If I had a dollar for every time the Fed did NOT save the economy, I'd be significantly richer than when they did. A soft landing, were we just experiencing a real estate bubble, might be possible. That is why real estate's over investment in the late 1990s didn't break. I don't know how many posts I can make about the automobile sector's importance to the American economy but how about one more. These are auto headlines from newspapers across the Midwest in the last week.

• Thyssen to close plant
• Delphi's losses grow
• Auto chains limit orders
• Ford to cut production in 2007
• US auto factory jobs fall to 14 year low
  
• Dura teeters on the edge of bankruptcy
• Supplier C&A slashes jobs
• American Axle offers buyouts
• Metaldyne to begin layoffs next week
• BorgWarner to cut jobs
• Lear lowers earnings outlook
• Ford & GM to source more from China
• Ford retirees face tough medicine
• Visteon cuts jobs, shifts work abroad

It's not just housing. It's a large chunk of the economy outside of pushing around excess liquidity enjoyed by the few. That is why I've stated the finance industry is likely peaking. Not everyone can leave every sector and go to work for a bank. There's a little too much crowding into one side of that trade. Yet, that is what we are seeing with accountants, real estate agents, banks, mortgage companies, Wall Street, CFA licenses, etc.

That reminds me of dozens of conversations I've had with people who say the Midwest housing sector isn't vulnerable because it didn't see the rapid rise in appreciation experienced on the coasts or hot markets. Really? Ever heard of the term "Rust Belt"? I don't think those housing markets had any such large appreciation before they cratered. Not that I'm predicting what housing in the Midwest will do but I doubt it will be pleasant for quite some time.