IMHO; "LBJ STILL LIVES"! THE DEMOCRATS` "GREAT SOCIETY" IS RISING AGAIN AND WILL FLOURISH LONG ENOUGH TO ALLOW POG TO RISE WELL ABOVE ITS PRESENT FCST MAX OF $1650! HOW DOES $2800 MINIMUM SOUND? GOT GOLD??? Rgd`s,delazus //////////////////////////////////////////////////////////////////////// EXCERPTS FROM: Credit Bubble Bulletin, by Doug Noland April 19 – Market News International (Margaret Chadbourn): “Distress in the subprime sector of the U.S. housing market has revitalized lawmakers’ efforts to revamp the Federal Housing Administration mortgage insurance program. ‘There is an affordable housing crisis in America. I believe the FHA modernization bill points us in the direction of a solution to help meet the housing needs for many Americans,’ Rep. Maxine Waters, said… Waters is a co-sponsor of a bill with House Services Chairman Barney Frank that would increase FHA loan limits in high-cost pockets of the country; allow FHA to provide low-downpayment loans competitive to those offered by private lenders; eliminate fee hikes on certain FHA loans; and permit the FHA to underwrite loans to borrowers with higher credit risks.” April 19 – The Wall Street Journal (James R. Hagerty and Damian Paletta): “Freddie Mac and Fannie Mae said they expect to buy tens of billions of dollars of newly created subprime mortgage loans over the next few years to help prop up the roughly $1.3 trillion subprime market as lenders tighten their credit standards or flee altogether. The move shows how the two government-sponsored companies are redeeming themselves on Capitol Hill by depicting themselves as part of the solution to surging defaults on subprime mortgages, those for borrowers with weak credit records or high debt in relation to income.” ============================================================================== As long as Credit expands at the current rapid pace the consumer will undoubtedly keep spending and asset markets will keep inflating. And as long as the Credit Bubble is sustained U.S. financial assets may appear sufficiently enticing to our foreign Creditors (although they must not be that attractive or foreign central banks wouldn’t have been forced into accumulating about $1 TN of reserves the past year). But this is Ponzi Finance at its most extreme. The U.S. financial sector must now balloon rapidly and incessantly to sustain over-consumption; to maintain inflated real estate and securities values; to support corporate earnings and income growth; and, importantly, to support the ever-growing pyramid of financial sector debt obligations. But as we have been witnessing of late, this kind of Credit system expansion creates only more dollar liquidity to add to the global deluge. If only, in Minsky’s language, “Ponzi Finance Units” could live forever. There will, at some point, be a reversal of flows out of Wall Street “finance” that will likely coincide with a flight from the dollar.