Countrywide Will Unravel

For those who believed the main stream media and pundits who continued to say that the economy was strong, that no recession was on the horizon, and that recent volatility in the market was a good thing and everyone should be buying the "bargains" are in for a rude awakening. It does't take a rocket scientist to figure out that the US economy is slowing and there is a real possiblity of negative growth for the unforeseeable future. For those who hope for a rate cut soon, even if that should materialize, there is no easy way out of this. Take your poison, recession or stagflation. We as a society have grown complacent, lethargic, and forgotten the good value of hard work. Thus we are always looking for a quick fix or an easy way out without considering the future consequences. It is no different from our leaders who is supposed to be the stewards of our economy.

I feel bad for Ben Bernake because he has to now deal with the impossible and unenviable situation of dealing with this mess that "Easy Al" Greenspan has created. I for one believe that Greenspan is to blame for this current mess in housing industry which I believe will be worse than our previous dot com bubble fiasco. While dot com was a relatively isolated event to that industry and Wall Street, the ramifications of housing bubble burst will have profound consequences on our economic growth, inflation, and standard of living. Perhaps we all deserved this. No one is immune from what I fear is just around the corner. Massive job market contractions, unemployment, loss of economic leverage to the rest of the world, and increasing debt with no way of ever climbing out of them. It is a bleak prospect but one that must be heeded and acted on before it is too late. I find in amazement that people are looking for a rate cut because that would be the single worst mistake that the FED can make and it would not be in the best interest of this national economic security. With rising oil prices and geopolitical tensions circumscribing this issue, it becomes more important to do the right thing and raise the interest rate. We must control the inflation above all else. If inflation should run out of control, there is not much anyone can do, and the consequences will reverberate throughout the global economy, thus creating further degradation of world peace. You think I am kidding? Just look at what Iran can do right now to the supposed "super powers", GBR and USA. That type of disregard and blatant disrespect will continue to acclerate and decay.

Now, Countrywide appears to be changing the guard, with Mozilo appearing to possibly appear on CNBC and announce his "retirement" and handing the reins to David Sambol. I do not think that the market will react too kindly to this event. Countrywide is engaged in a fight for life struggle with the housing bubble, subprime crisis, and continued crack down on all lenders related to Mortgage industries. The rate of insider activity is old news but one that will plague this company for years to come if it is to survive. Plus, contradictory statements from Mozilo's interviews (see yesterday's blog) shows that Mozilo might have conceded defeat and will place the burden on David Sambol. Once the dust settles, I am hopeful that more wrongdoings and deceit will be uncovered.