Bankruptcy Law Alters Obama’s $275 Billion Housing Plan

U.S. President Barack Obama yesterday (Wednesday) released a proposed housing program designed to prevent up to 9 million “at risk” Americans from losing their homes. However, some critics say they were surprised that the proposal is more ambitious – and more expensive – than initially expected, and includes controversial changes to bankruptcy laws that could cause the mortgage market to freeze up.

In fact, an Obama administration official told Reuters the total plan commits up to $275 billion for housing, including $50 billion from funds already committed in the country’s financial sector bailout.

Headlining the plan is a $75 billion Homeowner Stability Initiative,…

Forget the Bailout, Buy Like Warren Buffett

In today’s semi-political investment environment, it starts to become a little hazy whether we’ve turned the corner or whether we’re still headed for an even worse market crash. Press reports have praised the work of Treasury Secretary Henry Paulson and Congress for diverting the economy from a new version of the Great Depression.

The only problem is that their plan has not been adopted. It still must run the gauntlet of the U.S. Congress. Anyone who knows something about politics understands that trying to get a bill passed is like playing a grown up version of telephone – you may not…

ECB and BOE Inject Billions, Bank of China Cuts Rates as Central Banks Cope with Lehman Fallout

Central banks around the world, including the European Central Bank (ECB), the Bank of England (BOE) and the People’s Bank of China, scrambled yesterday (Monday) to shore up liquidity and protect domestic markets against the fallout from the collapse of Lehman Bros Holdings Inc. (LEH).

The Bank of England and the European Central Bank injected billions of dollars into global money markets and the Bank of China cut interest rates for the first time in six years and lowered capital reserve requirements for its smaller banks.

The ECB allotted roughly $43 billion (30 billion euros) in a one-day money-market auction that…

THE GREATER DEPRESSION AND WHAT YOU SHOULD DO ABOUT IT

I believe in the existence of the business cycle. That’s partly because almost everything in life is cyclical, which has been recognized at least since the tale about Joseph and the seven fat years and seven lean years. The Austrian school of economic thinking explains why the business cycle keeps coming around and does so without relying on a soothsayer to interpret your dreams. I urge you to read the appropriate chapters in either Crisis Investing for the Rest of the 90’s or Strategic Investing for a full explanation. But, in a nutshell, government intervention in the economy – through…

NRG Looks to Electrify its Business with $11.3 Billion Calpine Takover

Princeton, NJ- based NRG Energy Inc. (NRG) has publicly acknowledged its estimated $11.3 billion takeover bid for Calpine Corp. (CPN) – a wholesale provider of electricity emerging from chapter 11 bankruptcy protection.

NRG acknowledged Wednesday that it made the initial $22.98 a share offer on May 14. NRG said the deal assumes Calpine had 500 million fully diluted shares outstanding as of May 13. That calculation would value all of Calpine at $11.35 billion.

NRG offered to pay 0.534 shares for each share of Calpine, the company said in a statement. Based on NRG’s Wednesday closing price of $42.51, the deal values each…