After acquiring Chrysler in 1998, Daimler Chrysler AG has cried uncle and found someone to take the loss making unit off their hands. Private Equity firm Cerberus, is paying Chrysler (note: thats Chrysler, not Daimler) $7.5 Billion to acquire 80% of it. Daimler is also chipping in approximately $650 million to get rid of $18 Billion of pension and health care liabilities.

You have to be desperate when you pay someone to take over a business! Not entirely sure what Cerberus gets out of it. I think it’ll probably be a strip and flip deal that will entail taking it public again and huge profits for Cerberus (and not the subsequent stockholders). Although, public-private-public deals like Burger King (BKC) have done pretty well (even if the initial period was a bit rocky).

I saw a news item about India introducing $3,000 cars. I don’t know if theres a market for such “toys” in the US, but I’m sure the US auto-manufacturers are worried. Plus, there’s a good chance that we’ll see a recession late this year. (33% chance of recession according to Greenspan, although to be fair his exact words were “2-1 chances we won’t see a recession” which is effectively the same thing only with a positive spin on it!)

When the Fed prints more currency notes (to pay for the war and the interest on all the T-bills we’ve dumped on the rest of the world) it devalues each existing dollar in circulation. This is an inflation in the money supply and its bad for us in the long term.

Here’s a quote from Ron Paul’s home page explaining why.

The greatest threat facing America today is not terrorism, or foreign economic competition, or illegal immigration. The greatest threat facing America today is the disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation. It is this one-two punch– Congress spending more than it can tax or borrow, and the Fed printing money to make up the difference– that threatens to impoverish us by further destroying the value of our dollars.

The Fed’s inflationary policies hurt older people the most. Older people generally rely on fixed incomes from pensions and Social Security, along with their savings. Inflation destroys the buying power of their fixed incomes, while low interest rates reduce any income from savings. So while Fed policies encourage younger people to overborrow because interest rates are so low, they also punish thrifty older people who saved for retirement.

The financial press sometimes criticizes Federal Reserve policy, but the validity of the fiat system itself is never challenged. Both political parties want the Fed to print more money, either to support social spending or military adventurism. Politicians want the printing presses to run faster and create more credit, so that the economy will be healed like magic- or so they believe.

Fiat dollars allow us to live beyond our means, but only for so long. History shows that when the destruction of monetary value becomes rampant, nearly everyone suffers and the economic and political structure becomes unstable. Spendthrift politicians may love a system that generates more and more money for their special interest projects, but the rest of us have good reason to be concerned about our monetary system and the future value of our dollars.

Finally a politician who understands how inflation caused by government sanctioned counterfeiting is bad for the us and is willing to tell the truth about it. Gasp, is there really an honest politician? I’d vote for him!

Countrywide has announced that beginning 12 March 2007, it will no longer be offering 100% financing to home borrowers. This follows its announcement earlier this month that delinquencies among non-sub-prime borrowers are up this year.

It was just a matter of time before the lenders started tightening their loose lending standards. As I’ve said before, I think their will be widespread losses across the spectrum of lenders, whether they’re sub-prime or not.

Today was a great day in the markets. Well actually the Dow, Transports, Industrials and Russell sank on inflation worries. Gold spiked up $23 and Oil closed above $60.

Novastar Financials(ticker: NFI), another mortgage lender, tanked 42%.

And the Bank of Japan raised interest rates a quarter of a percent. I didn’t think they had the back bone to do it! The BoJ’s prime lending rate is now a whopping 0.5%! But they said they’ll take their own sweet time in considering future rate increases so the Yen didn’t spike on that news.

Well a good day for gold and oil is a good day for my portfolio!

San Diego just blocked Walmart’s plans for a new Super Store arguing that that Wal-Mart puts smaller competitors out of business, pays workers poorly, and contributes to traffic congestion and pollution.

Of course the council failed to state that social engineering isn’t their job and that the people who currently work at Walmart seem very happy with their jobs and have never protested their pay or anything else. Nor the fact that Walmart’s lower prices put competitors out of business but help low-income families buy more stuff and actually increase their standard of living. Of course no one wants low income families shopping in their neighborhoods so the easiest solution is to ban the superstore itself.

Another bad idea is the forced raise of the minimum wage. Mom and pop stores who are trying to stay afloat in California due the increase in real estate prices [& therefore taxes on triple-net leases when the properties are sold], increase in electricity & heating costs and the slow down in the housing market are hurt the most. [50% of new jobs created in the state since 2000 were real estate related. As the house market slides, the jobs will disappear as will the income of the people still in the business]. As a result they will be less likely to hire new employees or maybe even cut down on the hours of existing employees. At the same time, prices will have to be increased to make up for the increase in the wages. So the poor employees will see no real benefit in the wage hike while feeling the brunt of the increase in prices.

But atleast we’re still better than France, where the employer can’t fire anyone even if the business files for bankrupcy!!!!