Bloomberg’s story titled “Subprime Borrowers to Lose Homes at Record Pace as Rates Rise” offers some surprising data showing that as many as half of the 450,000 subprime borrowers may lose their homes. The obvious reasons are increases in their adjustable mortgage payments which, in combination with lower real estate prices, won’t allow them to sell, refinance or “qualify for help from the U.S. government.”

Hmm, qualify for help? Why? Isn’t buying a piece of real estate a personal decision that adults make knowing full well that they will have to live with the consequences? If we want all of the profits if that real estate investment works out fine, should we not have all of the responsibilities that come with it, if it fails?

I am sympathetic to others, but you can’t have it both ways. I have had some real estate investments that worked out better than others but, no matter what the results, they were my problem and not the government’s.

One issue is that people want a bailout solution; the other one is that most of them are homeowners who should not have purchased a property in the first place. Remember, ‘Subprime’ means “you don’t qualify for a loan!”

The real responsible parties are the unscrupulous mortgage companies, and other lenders, who used unethical, yet legal, methods of creating a large group of non-qualified homeowners, who did nothing but provide a broad buyer base in a pyramid scheme which pushed the housing market into a bubble stage.

Pyramid schemes never last for the simple reason that eventually you run out of people to feed the base. It’s time to pay the piper for the reckless lending and, if a fall guy is needed, it should be those who created the problem in the first place.

For most of this year (and last), Wall Street traders have been hoping that the Federal Reserve would cut interest rates, a whish that they can now finally cross off their list. Market reaction was swift and euphoric with all major indexes gaining handsomely last week.

By the market’s sharp up move you could get the impression that all of the world’s problems have been resolved in one final swoop. Far from it! Perception is not the same as reality, especially in Wall Street world.

Minyanville had an article featuring a list of things that have changed after the rate cut and a list of things that didn’t change. While the jury is still out on the longer term effects of the rate change, short term only stock market investors have been the immediate beneficiaries.

The NYT featured a story titled “Japanese Housewives Sweat in Secret as Markets Reel.” While it is a funny read, it’s somewhat sad at the same time.

It’s no secret that since the credit crisis struck this summer, large and well known brokerage firms and professional investors alike have suffered big time losses. It turns out that another class of unknown investors has suffered right along with them, namely middle-class Japanese homemakers who moonlight as amateur currency speculators.

The story tells of tens of thousands of married Japanese women who ventured into online currency trading in the last year and a half, by playing the markets between household chores or after tucking the children into bed. Many bought and sold stakes worth into the millions of dollars using leverage to enhance profits.

All seemed to go well until the SubPrime pig arrived and spread the credit crisis into all corners of the financial world. Suddenly Japan’s homemaker-traders have become another casualty of the shakeout with some losing a large portion of their life savings.

If you missed it, you need to read Paul Farrell’s “All wrong! Bernanke, Paulson, Greenspan.” Not that this piece will help you much with your investing efforts, it’s the media circus at its best. Read it for entertainment only.

Yes, it’s hard to believe that Paul, who has forever touted the Buy-and-Hold the coffeehouse and gone-fishing portfolios, is now forecasting a bear recession. His solution is “bonds” based on the fact that history suggests a rally.

Hmm, based on his past writings, I was under the impression that you should hold his coffeehouse portfolios forever. That it was a solution for all times, no matter if bull or bear market. What happened?

From my vantage point, it’s the usual media hype of useless information at its finest. As I wrote in Thursday’s blog, we may be facing a changing headwind, but the investments of choice can’t yet be determined.

I believe it’s a better approach to be rational in your decisions and make changes when appropriate (and trends can be established) as opposed to writing articles that do nothing but spread fear and uncertainty to the investing public.

My latest No Load Fund/ETF Tracker has been posted at:

http://www.successful-investment.com/newsletter-archive.php

Thanks to Federal Reserve’s decision to lower interest rates by 1/2%, the markets staged one of the best rallies in quite some time.

Our Trend Tracking Index (TTI) for domestic funds/ETFs jumped to +5.03% above its long-term trend line (red) as the chart below shows:

The international index also moved sharply higher to +2.73% above its own trend line, keeping us safely on the buy side.

For more details, and the latest market commentary, as well as the updated No load Fund/ETF StatSheet, please see the above link.

With the recent announcement of unexpected job losses during August, and now the lowering of interest rates, the question about a slowing economy in 2008 has been moved again to the front pages. At this time this is only speculation, however, you may be interested in knowing which investment orientations might have the best potential during times of a slowdown.

Obviously, interest rate sensitive instruments have always worked well, but what else? In my view, it’s way too early to tell specifics; however, as a regular reader of my weekly StatSheet, you will know first as to when new opportunities develop.

As the economy works itself through this cycle and into a different one, you will notice how the M-Index rankings of my listed no load funds and ETFs are changing. While it is possible that we may very well have sell signals in domestic and international funds, the wide variety of sectors will offer investment opportunities for a different economic environment.

As I mentioned before, the glut of ETFs and their ongoing dissection into many sectors will eventually be a benefit to all of us, since there will always be areas in demand even in a slumping economy. My data base currently contains over 1,700 no load funds and ETFs, with more being added.

As time goes on, follow the changes in the rankings, which will give you a clue as to which investment orientations are on the way up and which ones are on the way down.