It seems now almost acceptable that Americans can walk away from their mortgages. Why not? So many are upside down, owing more money on a house than the house is actually worth.

Many Americans are just walking away and renting virtually the same homes for half or a third of their previous mortgage payment.

What does this mean for the banking industry? How healthy can these banks really be with non performing loans both on the residential side and commercial side? How real is this stock market rally? My proverbial question… what has really been solved? Has everything been delayed for a further down turn? Trend followers and commodity traders that have much experience do not try to predict the future.. but it seems very evident.

There are bearish signs percolating in the stock market such as the CBOE put call ratio looks toppy…there was a huge uptick reading over 1500+ which is usually sign of a top as well as there are less and less bears… except Jim Chanos and calling China a bubble ready to burst ( 1,000 times greater than Dubai). Jim Chanos has not been wrong all the much… He has become a billionaire by calling tops in the housing market, Enron and many others.

The NY times reported on this the other day. They stated the housing collapse has left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Can you imagine how much money the banks can be losing on this…

To me it is mind boggling. What I do not understand instead of bailing out the banks… why didn’t the administration do what FDR did in the great depression. The govt bought up the loans from the banks…and restructured them in order that people could live in their homes. This worked and they stemmed the tide of foreclosures and broken families.

What does this mean for the markets? No one has a crystal ball…but I would suspect we are headed for turbulent times. The best way to protect assets is real assets. With all the money that was printed..I can not see how inflation will not raise it’s ugly head.

Andrew Abraham
www.myinvestorsplace.com

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading advisor and co manager of a Commodity Pool. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Visit Angus Jackson Partners (http://www.angusjacksonpartners.com) Contact: A.Abraham@AngusJackson.com (mailto:A.Abraham@AngusJackson.com)

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