Yesterday I received an email from a very reputable real estate broker telling me of the availability of mortgage products that would not only consider the $8,000 tax credit as part of the down payment, but would, if you chose, finance the $8,000 credit over 29 years, allowing you to effectively “keep the cash”.

So I am immediately wondering just how bad is it in debt finance land.

We are starting to see housing prices firm and we are continuing to see inventory levels decline. Home Depot announced a decent quarter and lifted guidance. Confirmation of indications that housing is not getting worse.

Unemployment is nasty, though it is a trailing indicator. It is likely to get worse before it starts to get better.

Say it out loud- GM an Chrysler are simply jobs retention programs! The stock market no longer cares about either as the potential disruption caused by large job losses has been averted. In my view, neither will succeed in the long run, nor is it reasonable to expect that the Gov’t will get a reasonable return on it’s investment. But jobs will, to an extent, be preserved and the pension plans will survive for another period of time.

This morning, ten major banks gained approval to repay the TARP monies they borrowed. Interesting how compensation restrictions can cause company’s to get religion. Again, I am thinking, just how bad can it be?

Finally, Texas Instruments announced earnings last night. They had a very strong report. But more importantly, they gave guidance and lifted it significantly over the general expectations. Until recently, nobody was offering guidance of any sort. So this is suggestive that the ground may be moving.

Yes interest rates are moving up, newspaper and magazines remain in deep trouble, the healthcare debate is heating up.

But the underlying environment continues to improve. And, of all the major world markets, the United States has recovered the least, so far, this year. Keep your heads up!

Misdirection!

“U.S. Housing starts unexpectedly fall to record low”

That is the headline on last week’s release of data. Is the fact that builders have radically adjusted downward the number and size of new homes planned to be constructed good news? I think it is largely because it allows the overhang of excess inventory of unsold homes to be absorbed more quickly.

Yet the press trumpets negativity.

How about this: “Commercial loan defaults could exceed $100 billion”

A big number by itself. A small number compared to the residential challenges of the past few months, and an even smaller number compared to the outstanding commercial loans. I want to say, “so what”.

According to the press, it is all but certain that terrible inflation is just around the corner. Makes for exciting headlines but if you catch a glimpse of the bond interest rate curve, in a split second you reach an opposite conclusion.

“The banks remain in trouble”. Maybe so, and specific banks certainly have significant problems to work through. But a check of the spread between 3 month LIBOR and the Treasury Bond rate tells a different story. That story is that the world financial institutions are getting much more comfortable and confident in the ability of counter parties to meet obligations.

“The dollar is weak”. OK, that means that US producers will find their goods more attractively priced and imports will be dearer. Do we not need international demand to help restart our economy?

Don’t get me wrong, I am not complaining. I am simply pointing out that the press, and the public, will be biased toward negative slants on stories until too many people begin to believe that “it’s safe” again.