GREECE DOOM STILL ON! NO BAILOUT!!

As of today It's not confirmed that Greece is bailed out. Not all EU leaders agreed to it yet. This could still be doom. EU leaders haven't yet agreed unanimously to offer Greece a bailout, according to a Wall Street Journal report that offered details about the potential plan. But ministers have made the terms of a potential deal public in an effort to reassure world financial markets, which have been unnerved by Greece's debt woes for months.

Oops... ALL LEADERS WILL HAVE TO AGREE TO IT, probably even PASS LAWS IN THEIR OWN COUNTRIES to allow it...
Here is MSM version of this news
http://www.nasdaq.com/

"This decision today was no decision on aid for Greece," Finance Minstry spokesman Michael Offer told Dow Jones Newswires. "But it was only about technical preconditions for aid by further specifying the decision of the heads of state and governments. We expect, we hope that Greece is now in a situation where it can continue to refinance itself on the capital markets, as previously."


Doom still on!

Double Dip Recession is looming, The evidence is piling up that all year we've been living in a dreamland

After publicly doubting recovery all through the summer and early fall, the housing bears are definitely getting their moment, after two key numbers (mortgages and starts) came in particularly weak yesterday.


Today the WSJ adds some further evidence that the much-feared "double dip" is happening.
On Wednesday Pulte Homes Inc., the nation's largest home builder, warned investors of a grim outlook. "As we look out to 2010, we are expecting difficult conditions to continue," said chief executive Richard Dugas.

Meanwhile, more Americans who bought homes during the boom are falling into mortgage limbo. About 3.4% of U.S. households -- or about 1.9 million homeowners -- are 120 days or more overdue on their payments, but not yet in foreclosure, according to LPS Applied Analytics, a research firm in Denver. That is up from 1.5% a year earlier.
Many of these people are likely to lose their homes over the next few years. That means more bank-owned homes will hit a market already suffering from oversupply.
The housing-supply picture is tricky to read. The number of homes listed for sale was 3.63 million in September, down 15% from a year earlier, according to the National Association of Realtors. That is enough to last about eight months at the current rate of sales. Anything above about six months is considered a buyer's market, in which prices may come under downward pressure.

China reduced buying US Bonds, raising its own currency

China has sent the clearest signal yet that it may be about to scale back lending to the United States. On Wednesday, the Chinese Central Bank indicated that it would consider allowing the dollar to fall against the yuan. The change in policy—at a time when America is running the largest deficits in world history—could have major ramifications for the U.S.


The People’s Bank of China’s most recent policy report contained some interesting new language. Instead of repeating the typical rhetoric about keeping the yuan “basically stable at a reasonable and balanced level,” it hinted at a move away from the dollar peg (the mechanism by which it keeps the exchange rate of the yuan stable to the dollar).

The new policy language said that the bank will “improve the yuan exchange-rate formation mechanism,” based upon principles of “initiative, controllability and gradualism.” Analysts are interpreting this to mean that China may be about to allow the dollar to fall against the yuan.

“I think the wording change … shows that it is an irresistible trend for China to resume yuan appreciation,” said Xing Ziqiang, an economist at Beijing-based China International Capital Corp.

One of the ways China intervenes to keep the yuan pegged to the U.S. dollar is by purchasing dollar assets—like U.S. treasuries—in international currency markets. This increased demand for dollar assets, along with the subsequent increased supply of yuan, helps prop up the value of the dollar against the Chinese currency. However, if this relationship is about to change, and China is going to allow the dollar to fall in relation to the yuan, it means that China’s central bank will probably have to reduce its purchases of dollar assets.

If China curtails its treasury purchases, America may find itself in a pickle. China is America’s most important creditor. Over the past decade, China has willingly lent money to the U.S. government (by purchasing treasuries), so that the yuan would be artificially pegged at a low rate to the dollar. China did this to give an advantage to its exporters and encourage U.S. businesses to relocate to China. The advantage for America was that both the government and consumers had an easy source of borrowed money, and interest rates were kept low. This allowed both the public and private sectors of the U.S. economy over the past few years to embark on what was probably the biggest spending binge in history.

However, the downside to this arrangement may now be about to be felt. American society is addicted to debt. China’s announcement that it will let the dollar fall against the yuan is a warning that Chinese money might not be quite so easy to get. For the U.S. government, it means that it may need to find an additional source of foreign lenders—not an easy task when you are already the world’s largest borrower and you are running world-record deficits.

The U.S. is auctioning off another $81 billion in treasuries this week. This total is lower than other recent auctions, but it is still gargantuan compared to pre-economic-crisis days. This auction may not fail, but the probability that one will fail someday soon just got a whole lot more likely.

And if an auction were to fail? Interest rates could soar. For an economy addicted to debt at all levels—federal, state, municipal, corporate, personal—higher interest rates could be a killer.