Also heard there's a 40-month supply of homes priced over $750k.  A guy with a 750k home has 5x the skin-in-the-game as a 150k home, and the oversupply of high-priced homes means there's more downward pressure forthcoming on that "existing median home price" we talk so much about here.

Recently, we also talked about how home foreclosures hit an all-time high last month, and unemployment is rising.

Also heard this week, that 12% of all US loans (of all types:  homes, autos, credit cards, etc.) are NOT current, which means they are in default.

U.S. Treasury Interest Rates have been skyrocketing over the past 10-or-so days, and it's probably for several reasons:  (1) recent U.K. credit talk;  (2) Bill Gross questioning U.S.-AAA rating;  (3) $1.8T debt, which needs to be financed, and;  (4) China no longer has an appetite to buy U.S. debt.

Recently, I've been looking to buy a new car.  While researching, I learned that Mitsubishi sold an AVERAGE of 10 cars last month per dealership.  How can any auto dealership survive by selling only 10 cars?

Now, take the reality above, and compare it with news articles.  Almost everyone is saying things are getting better.  The front page of today's local paper talked about how everyone's shopping...LOL.  Things are getting worse, imo.

===

OK...  let's talk about my topic, which is...
"Darvos, plus Mark-To-Fantasyland, plus Spin-offs = Retail Investor Gets The Shaft Again!"

If you recall, during the last Darvos Conference, it was George Soros who suggested the U.S. Banking System needs to separate the good part of the business from the bad part.  In his words, "Good Bank vs. Bad Bank".

Now, to get there, you've gotta do a few things, and I've been seeing this trend emerging, so pay close attention, and please tell me if I'm full of bullshit.

GOAL:  Separate good bank assets from bad bank assets, so you can flush the cancer out!

HOW DO WE DO IT?
(1)  We get Obama to stop talking about reality.  If you noticed in the earlier part of the year, Obama was telling the truth about the economy.  Today, we are getting a lot of misinformation.  I imagine somebody told him to shut up about the real news.

(2)  Next, we change the accounting rules for mark-to-market, and turn them back into mark-to-fantasyland, where companies are now allowed to cook the books again.  As you heard over the past quarter, banks are now allowed to get off the reality of mark-to-market, and use something else.  I call it mark-to-fantasyland.  I believe banks are going to start showing larger profits starting with July 1st earnings releases, because the rules changed in Q2 2009.

(3)  Raise cash.  These banks are raising cash.  Instead of going the normal route of secondary offerings, these banks are not wasting any time, and are selling their own stock on the open market at market prices.  Of course, when there's all this supposed-good news around, you might as well pump and dump while you can.

(4)  Spin-off the "bad company".  This is what I see is coming.  So far, #1-3 are already in place, but in this #4 item, we haven't seen it yet.  What I envision, is the final element in Soros' theory of separating the good from the bad, in order to purge the market, and that is by spinning-off the junk via a company spinning-off subcompanies.  Here, is where I see the unsuspecting retail investor getting the shaft again when they choose the wrong company.  These toxic assets are going to be folded into something people think can survive, but will ultimately fail because of reality.  I think the retail investor who buys these bad companies will take losses.

END RESULT:  NUMEROUS BANKRUPTCIES
I believe we'll start hearing about numerous bankruptcies in the news... so much, that it will be common to hear of 'em daily.

What do you think?

- Vooch
www.ActiveValueTrader.com