Detroit Phoenix

In the black again, General Motors,
Still one-quarter owned by the voters,
Has seized on the chance
Of expanding its plants
With the market it took from Toyoters.

Those who recall when, just two years ago, GM was rescued from certain death by a $50 billion taxpayer bailout, must be pleasantly surprised at the automaker's recent developments. Having increased its domestic market share from 18.7% to 19.6% over the last year, a newly profitable GM is investing $2 billion in US factories and creating or saving 4,000 American jobs. There's a catch: the new factory jobs, at an hourly wage of $14, pay half the going rate of existing jobs and add to the pressure on UAW president Bob King to take back some of the concessions made during the crisis.

It Isn't a SNAP

An American family who,
On a pittance, must try to make do,
Turns to fed'ral assistance
To get their subsistence,
As one out of seven do, too.

The Wall Street Journal's Real Time Economics reports that the proportion of the US population receiving food stamps has stabilized (if that's the word for it) at 14.3%. The USDA's Supplemental Nutritional Assistance Program , or SNAP, helps poor Americans - for example, a family of four with gross annual income of less than $28,700 - get basic nutrition. Almost two years after the "Great Recession" was declared over, a surprisingly large number remain in the qualifying pool.

Taking Stock

The President paused to take stock
After giving the world a great shock;
"We've gotten," said he,
"Our arch-enemy,
After pulling the troops from Iraq."

US President Barack Obama, on the CBS 60 Minutes program Sunday evening, reminded interviewer Steve Kroft that he came into office promising to draw troops and materiel from Iraq not in order to wage peace, but rather to finish the job against Al-Qaeda and the Taliban in Afghanistan and Pakistan.

Unrefined Reversal

On the global commodity bourses,
Crude oil is subject to forces
Like the gasoline price,
Which, when high, may suffice
That the market puts carts before horses.  

A sudden, 8.6% plunge in the price of crude oil to $99.80 a barrel yesterday originated with a surprising source: the high price of US gasoline.  Fears of an imminent "double dip" into recession have been fed by gas prices approaching $4/gallon.  Oil, which - though the main ingredient in gasoline - is sensitive to economic cycles, was evidently poised for a break to the downside.  All that was needed was a surprisingly bearish announcement, and the market got two: European Central Bank President Jean-Claude Trichet implied no imminent hike in euro interest rates, which strengthened the dollar; and new jobless claims were higher than expected, which weakened the US growth outlook.

MBS Q&A

Tell me how can we state with finality
When the mortgage bond crisis finale be?
When loans finish tanking
In ledgers of banking
To prices reflecting reality.  

Freddie Mac has inspired the foregoing Q and A with the news of its first quarterly profit in over 3 years. The $676 million profit stems from FHLMC's having arrested the slide in the collective value of the mortgages and foreclosed homes on its balance sheet, begging the question of whether the valuation is realistic, and whether it may yet fall further. As Freddie Mac CFO Ross Kari cautioned: "We're encouraged by the trends, [but] we're not putting up a 'mission accomplished' sign on the front of the building either."

Overheard at a Mortgage Lender

"To originate loans to the maximum,
One must feed the demand to invest in 'em;
If a borrower's no good,
Then it's best if you would
Not disclose what does not show the best in 'em."  

The "reckless" practices of the mortgage origination industry were illuminated in a federal lawsuit filed against Deutsche Bank and its US mortgage lending subsidiary.  MortgageIT Inc. was purchased by the German bank in 2007, as it tried to capture more volume in the booming mortgage bond business.  The suit alleges that the bank was so eager not to disrupt its mortgage origination flow that it literally locked documentation of underwriting violations in a closet, only to have them "outed" in court when the boom turned to bust.  The US government has paid out $386 million in claims on defaulted mortgages, and is liable for $888 million more.

It's Still the Economy

The brass of the vict'ry parade
To the background may easily fade;
As Bill Clinton could tell 'em,
The economy's realm
'Swhere political fortunes are made.  

From celebratory to somber, the nation is swept up in reactions to the death of Bin Laden at the hands of US Navy SEALs.  Meanwhile, the political world tries to sort out what it all means for the 2012 Presidential election.  Though Republicans cede the day to President Barack Obama, they are mindful of the short-lived popularity of President George Bush (the elder) following his lightning victory in the 1991 Gulf War.  In the downturn of 1992, the little-known governor of Arkansas realized that elections are decided by "the economy, stupid," and Bill Clinton went on to beat the war hero incumbent.

Change

A pol had to cancel his plan
For the banner beneath which he ran,
Which read that "Obama
Cannot find Osama,"
When now it appears: Yes, he can.  

The death of Osama bin Laden, more than nine years after the 9/11 attacks, represents a watershed moment in US history.  Among other things, it will certainly shift the ground in the emerging 2012 Presidential race; how many political strategies were being torn up and written anew on Sunday evening at 11:00?

A Leading Indicator

The Jobless Claims number's expected
To predict whither growth is directed,
For there's much one may plumb
When aware what the sum
Of those getting an unemployed check did.  

Indeed, a higher-than-expected jobless claims number yesterday helped to drive the dollar lower against the euro, which now costs nearly $1.50.  In combination with Fed Chairman Ben Bernanke's dovish comments at his first-ever press conference, the indication of higher unemployment tells the markets to expect a period of slow growth and low interest rates in the US, both of which would make other currencies more attractive.