Before the Great Recession, Americans looked forward to the day when they would purchase their first home. The ultimate symbol of success — home ownership kept the U.S. economy going. It meant having shelter over your family's heads, a nest egg, a way to fund your children's education, vacations — but sadly, that's no longer the case.

The New York Times reports that more than likely, that era is gone for good. When the economy collapsed, homeowners saw values depreciate at a pace like never before. Homes went into foreclosure, and with that their owners dreams collapsed as well.

"There is no iron law that real estate must appreciate," Stan Humphries, chief economist for the real estate site Zillow told the New York Times. "All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn't hold up."

Instead of appreciating as they did in decades past, real estate values will only rise to keep up with inflation. So if you're looking for a sure fire way to make money, don't bet on buying a house. It won't do anything for your future but provide a roof over your head.

Goldman Sachs might still be able to sell a bad mortgage-backed security, but there'll be no more "sh**ty" deals.

The Wall Street firm has told its employees that they can't use profanity in emails, text messages or instant messages anymore, not even ones with asterisks, The Wall Street Journal ($) reports Thursday.

That's 34,000 traders, investment bankers and other employees suddenly seeing their arsenal of four- and five-letter words out of reach. The company will even screen the messages with computer programs to prevent ones that might slip by.

The term "sh**ty deal," if you remember, provided the touchstone moment at an April Senate hearing featuring Goldman executives. Sen. Carl Levin repeatedly - and to comically indignant effect - invoked the phrase in a memorable 10-minute period during which he questioned Daniel Sparks on whether the company was pushing a bad mortgage security called Timberwolf on clients. He quoted an email sent to Sparks, which read: "Boy, that Timberwolf was one sh**ty deal."

Levin then asked: "How much of that shi**ty deal did you sell?"

And "you didn't tell them that you thought this was a sh**ty deal?"

And "should Goldman Sachs be trying to sell the sh**ty deal? Can you answer that one, yes or no?"

There were even T-shirts made.

No word on whether this applies to shorthand forms like "WTF."

Financial reform, the Goldman Sachs $550 million settlement and corporate earnings to boot--it was a busy five trading days. When it was all over, the week's action boiled down to the same question that has been plaguing markets since the end of April: will the current economic slowdown degenerate into contraction (the so-called "double-dip")? If yes, then the recent drop in world stock prices is just the beginning. If not, the recent shakeout will be seen as a buying opportunity.

It bears noting that double-dips are rare: there have only been two since the Great Depression-- one in the 1970s, caused by the oil shock and rising interest rates and a second in the early 1980s, which was caused by a rise in interest rates that helped curtail runaway inflation.

The U.S. economy doesn't have to actually show negative GDP growth to feel bad. A pull-back from 3 percent growth to a slower, 1 - 1.5 percent level will feel pretty rotten and would severely impact the already-rotten labor market. Jobs remain the key to the recovery process.

This week investor attention will turn to second-quarter earnings season, with more than one-third of Dow components set to report, including financial giants Goldman Sachs, Morgan Stanley, Wells Fargo and Bank of America.

Also on tap will be a slew of data on the housing market, which likely declined in June. Mid-week, Federal Reserve Chairman Ben Bernanke will testify before the Senate Banking and the House Financial Services Committees to provide a mid-year update on the economy. President Obama is scheduled to sign historic financial-reform legislation Wednesday.

This morning, Asian stocks fell after Friday's dismal day in the U.S. markets. There was one exception: Chinese stocks popped by over two percent. European shares traded lower earlier this morning after Moody's downgraded Ireland's sovereign bond rating. The ratings giant cited below-trend growth as the reason behind the cut. Markets recovered and are now holding steady,

There will be more focus on Europe Friday, when the Committee of European Banking Supervisors (CEBS) will release the results of Euro-zone Banks Stress Tests. Like the U.S. bank stress tests that were conducted last year, the tests are intended to examine the ability of 91 European banks (two-thirds of the sector) to withstand losses on sovereign-debt holdings. The test will assume a 3 percent decline in EU GDP over the next 2 years, compared to forecasts of 1 percent growth this year and a bit more than that in 2011.

U.S. stock futures are pointing slightly higher, but the day is young! Here's where we start the week:

DJIA: 10,097, down 1 percent on week, down 3.2 percent YTD

S&P 500: 1064, down 1.2 percent on week, down 4.5 percent YTD

NASDAQ: 2179, down 0.8 percent on week, down 4 percent YTD

August Crude Oil: $76.01

August Gold: $1,188.20

Total bank failures for 2010 = 96 (six new bank failures over weekend).

Last Updated at 8:45 a.m. ET

Asian stocks rallied and European shares are trading higher in the aftermath of the US stock market surge yesterday. The catalyst for the move was positive economic data from Europe, China and the U.S. , all of which gave investors confidence that the recovery is on track. The Dow gained 273 points, or 2.8% to 10,172, while the NASDAQ and S&P 500 saw similar gains.

After a stream of bad news from across the Atlantic, investors found solace when the European Central Bank (ECB) increased its economic growth forecast to 1 percent for this year, higher than the previous estimate of 0.8 percent.

Chinese exports grew by 48.5 percent, the most in 6 years, a sign that the fastest-growing major economy will continue to fuel the global recovery. Still, there is a concern that the country is overheating--today, a new report said that China's consumer price index (CPI) rose 3.1 percent in May, to a 19-month high. The government's official inflation limit is 3 percent.

Domestically, there was a tiny bright spot on the nation's employment front. The Labor Department said initial jobless claims dropped by 3,000 to 456,000 last week and continuing claims declined to 4.46 million, the lowest since December 2008.

The Fed reported that U.S. household net worth is now down $11.4 trillion dollars from the peak in 2007, but up $6.3 trillion from the low point in the first quarter of 2009.

Today, the focus will be on the May Retail Sales report, which showed a decline of 1.2% from the previous month. The report was worse than expected, and futures started trading lower upon the release.

Finally, as a government panel doubled the estimated amount of oil spilling into the gulf to 25,000-30,000 barrels a day, investors are watching to see whether BP cuts its dividend.

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Global stocks are trading mostly higher in pre-market activity, following a lackluster session in the US.

Asian shares gained ground after investors viewed a better-than-expected Chinese export report as a sign that growth would resume after the European debt crisis. And speaking of Europe, stocks firmed after the Bank of England kept its benchmark interest rate at 0.5%, where it has been since March 2009.

Today investors will keep an eye on BP shares, which have lost half of their value since the April 20th oil rig disaster and subsequent spill. Talk of potential bankruptcy increased, though many contend BP has the wherewithal to withstand the financial costs (estimated to be as high as $35 billion) associated with the Gulf spill.

On the economic front, there will be the first release of weekly jobless claims since last Friday's terrible report and investors will absorb the most recent data on foreclosures. RealtyTrac said that April foreclosure filings, which include default notices, scheduled auctions and bank repossessions, decreased 3% from April to 322,920 and increased by less than 1% from a year ago. While down, the number remained above 300,000 for the 15th month.

Finally, there are reports of a new pending SEC investigation into Goldman Sachs. Like the SEC's Abacus case, this one centers on a synthetic CDO called Hudson and was mentioned in this 2009 NY Times article. No charges have been filed. The story comes on the heels of the FCIC's document request.

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This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

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My first job on Wall Street was as a gold options trader on the floor of the COMEX in the late 1980s. It was then that I realized the power of a metal that has very little use except for jewelry ... and to provide some semblance of calm for investors. But gold went out of fashion in the 1990s as investors were happy to dump the yellow metal for the technology stocks.

When I was managing money in the early 2000s, I recall that one of the most "aggressive" purchases that I made for my clients was gold at a price of about $300. Clients rarely questioned trades, but when they saw GLD appear in their accounts, I sure did hear about it. I tried to explain that I thought that gold would be a great long-term hold, not because I am a gold bug but because gold represents security in an insecure world.

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First, the CEO of the ratings agency Moody's, which provided favorable ratings for billions in crappy subprime mortgages, says that investors shouldn't rely on ratings to buy or sell securities. In prepared testimony for the Financial Crisis Inquiries Commission (FCIC),  which is  probing the role of  Wall Street and government agencies in the financial meltdown, Moody's CEO Raymond McDaniel said his company's inaccurate ratings were "deeply disappointing." He explained that ratings are a "tool," and should not be confused with buy, sell or hold recommendations.

Then Warren Buffett, probably the most admired investor in the world, tells the FCIC in New York that investors like himself should not rely on ratings agencies for their due diligence.

At the same time Buffett, the chairman of Berkshire Hathaway, owns a significant chunk of Moody's, which must have looked like a good business to him at one point, even though he personally didn't need its services.

Buffett said that the ratings agencies should not be blamed for the financial meltdown.  "I would say in this particular case that they made a mistake that virtually everybody in the country made," he told the commission.

According to Phil Angelides, chairman of the FCIC,  Moody's revenue went from $600 million in 2000 to $2.2 billion in 2007 as the housing bubble evolved. The company gave its highest rating  to 42,625 residential mortgage-backed securities during the five-year period. Needless to say the securities were downgraded as the bubble burst.

"This comes as close as you can to the very product being fraudulent or of no use to the marketplace in reality," Angelides said at the FCIC hearing on Wednesday.

Clearly, the ratings are not meant to be buy, sell or hold recommendations, but they should at least give an accurate indication of risk.  And if Moody's ratings -- or those from Standard & Poor's or Fitch Ratings -- are an unreliable, but critical "tool" in an investor's decision process, then what's the point of having them?

Aren't the rating agencies, which are paid by companies who issue securities to determine (rate) their creditworthiness, geared to help investors understand the risk profile of a security?

Buffett didn't defend the issuer pays the ratings agency model. "As chairman of Berkshire, I hate issuer-pay, we pay a lot of money and we have no negotiating power,"  he said to the FCIC.  "It makes for a wonderful economic model for the business, but for a practical matter I have no negotiating power."

So, the ratings issuers could be perceived as too close to the securities issuers, and the Moody's CEO and Warren Buffett don't think that savvy investors should rely too much on the rating.  He trusts his own judgment, but where does that leave the vast majority of investors looking for credible risk assessment of securities?

Eric Kolchinski, former managing director for rating subprime mortgage securities at Moody's, blamed the ratings mismatch on company management. "Despite the increasing number of deals and the increasing complexity, our group did not receive adequate resources. My own attempts to stay on top of the increasingly troubled market were chided by my manager. She told me that I spent too much time reading research," he told the FCIC.

The blame game won't clear up the fundamental disconnect and conflict in the business model of the ratings agencies.

Sen. Al Franken, D-Minn., has proposed eliminating the conflict by setting up a government committee that would assign credit rating agencies to issuers. That might help alleviate one of the problems with ratings agencies, but not the lack of credibility that currently distinguishes them.

Federal prosecutors are in the early stages of investigating complex mortgage-derivatives deals arranged by Morgan Stanley, looking for any proof that the company may have misled investors by setting up the deals knowing, and wagering their own capital, on their failure, Continue »

Last Thursday's incredible market plunge may not have been set off by a typographical error, as originally speculated, but rather by a hedge fund's big bet that stocks would decline, according to a Wall Street Journal report ($) Tuesday.

The furious sell-off, which sent the Dow Jones industrials down nearly 1,000 points on the day in a matter of minutes, took place shortly after hedge fund Universa Investments LP executed a $7.5 million trade for 50,000 options contracts, according to the report. Traders on the other side of the transaction, including Barclays Capital, engaged in their own selling in order to offset the risk, creating a tidal wave of selling that clogged up exchanges.

Ordinarily, Universa's trade, which would have paid off around $4 billion if the S&P 500 falls to 800 by June (it was 1145 at the time of the transaction), might have had a temporary impact on stock prices, but not cause a dramatic ripple effect. But among markets already jittery because of Europe's debt woes, the transaction may have triggered more widespread selling, according to the report.

The episode points out a "structural flaw" in the markets, Gus Sauter, chief investment officer at Vanguard Group, told the Journal.

As the report notes, physical exchanges like the New York Stock Exchange are becoming less important as computer-driven trading operations at firms around the country drive much of the market. That leads to greater potential for disorder and makes controlling markets more difficult.

Fabrice Tourre, the Goldman Sachs bond trader embroiled in the SEC fraud case against the bank, sent a number of conflicted emails to his girlfriend about his role in creating ultimately doomed securities, referring to them as "like a little Frankenstein turning against his own inventor."

Goldman released the emails ahead of Tourre's appearance on Capitol Hill Tuesday, where he will join CEO Lloyd Blankfein in testifying before a Senate investigative panel.

Special Section: Wall Street Under Fire

The SEC charges Goldman and Tourre, the only individual named in the civil suit, misled investors when it created a mortgage-backed security in 2007 for a hedge fund client looking to bet against the housing market. In the bank's marketing material for the investment, a collateralized debt obligation backed by subprime mortgage assets, there was no mention of the client, Paulson & Co.'s, role in selecting some of the assets or its short position against the portfolio.

In his emails to his girlfriend, Marine Serres, the London-based Tourre appeared somewhat conflicted about his work, but his tone could also be dismissive, at one point joking that he sold risky bonds to "widows and orphans."

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Senate Democrats are moving toward a bill that would rein in Wall Street firms, but they're getting resistance from billionaire investor and Obama supporter Warren Buffett on measures to regulate derivatives, the Wall Street Journal reports ($).

Senate Banking Chairman Chris Dodd, D-Conn., and Senate Agriculture Chairwoman Blanche Lincoln, D-Ark., reached a tentative deal Sunday night that would place tighter controls on derivatives - requiring banks to spin off derivatives investments into separate businesses with their own capital and creating separate exchanges on which derivatives would be traded.

Special Section: Wall Street Under Fire

But Berkshire Hathaway, Buffett's multi-billion dollar investment firm, has been pressuring lawmakers to include a provision into the bill that would allow existing derivatives contracts to be exempt from the new rules, a move that would save the company billions, according to the report. Barclay's Capital puts Berkshire's derivatives portfolio at $63 billion.

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A veteran market watcher who correctly called the bear in 2008 and the recovery in 2009 says the current state of Wall Street is much less clear.

Today's market is "neutral to positive" but overvalued on a fundamental basis, says Richard Suttmeier, chief market strategist at Niagara International Capital and ValueEngine.com, in an interview on Yahoo's Tech Ticker financial news web site.

A year ago this week, the stock market began a historic rally from the depths of the worst bear market since the Great Depression. Technically, there was a "perfect storm for a bottom" in March 2009, says Suttmeier, one the few market watchers who were correctly bearish in 2008 and called the turn in 2009.

Today, Suttmeier says the outlook is far-less clear. Technically, the market is "neutral to positive" but overvalued on a fundamental basis, he told Tech Ticker. The veteran market watcher believes short-term momentum could take the Dow as high as 11,500 in the near term and is long tech names such as Cisco, Intel and Adobe Systems.

But the market's "downside risk is a lot more than that upside potential," Suttmeier says, advising investors to "take money off the table" into additional strength.

Read the full interview

Want a piece of Warren Buffett?

On Friday, millions of Americans will get just that as his famed Berkshire Hathaway joins the S&P 500, according to a Wall Street Journal report ($).

While Berkshire shares' multi-thousand dollar price tag prohibited many individual investors from owning it, its inclusion in the index, along with a recent stock split, has made it a much more accessible security.

And while index funds are expected to gobble up pieces of the $178 billion behemoth, individual shares are also getting exposure to average investors.

Berkshire has two classes of stock. It recently split the lower class – the B shares – 50 to 1. Shares were trading at $70.69 at the end of Thursday's session.

So whether it's through index funds or individual shares, Berkshire is certain to see much more volume than normal.

The stock market may be putting a bow on a successful 2009, but prospects for a repeat performance in the new year may be dim.

The Dow Jones Industrial Average shrugged off the nation's worst financial crisis since the Great Depression to add roughly 20 percent for the year (depending on how the final trading day of 2009 goes). That includes a better than 60 percent gain from its low point in March. In all, it would be the best yearly gain for the stock market since 2003.

But, as the Wall Street Journal reports ($) Thursday, those gains are unlikely to be matched in 2010 as investor's take stock of the economy's true strength and, in turn, the market's true value.

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