This promises to be a week rich in economic news, mostly bad, as experts predict. But experts can be wrong, too. Case in point: we were told to brace ourselves for the release of the existing home sales data for December. But the National Association of Realtors said today that the sales of existing homes last month went up 6.5 percent, to an annual rate of 4.74 million units. December’s sales had been forecasted to fall to a pace of 4.4 million units. The situation in the housing market is still precarious with many homes going into foreclosure and median prices nationwide falling over 15 percent since December 2007, the biggest year-over-year drop on records going back to 1968. Other economic news that the markets were supposed to be taking their cues from was the earnings data from heavy-hitters like, Caterpillar, American Express, McDonalds, Kimberly-Clark and earnings reports from the rest of the 137 S&P 500 companies and 12 Dow components. The winner of the “Worst in Show” was definitely Caterpillar. The maker of mining and construction equipment, said its fourth-quarter profit fell 32 percent and that it would lay off 20,000 workers. The company’s stock fell 10 percent on the announcement. Sprint Nextel announced it would lay off 8,000 workers. Home Depot announced plans to eliminate 7,000 positions, and Dutch Bank ING Group is planning to eliminate 7,000 jobs. The stocks of all three companies went up after the announcements. The markets also liked the news of the pharmaceutical company Pfizer acquiring Wyeth, a developer of a new Alzheimer’s drug, for $68 billion. So, overall markets are not having a bad day, with the Dow, S&P 500 and NASDAQ all trading up this morning. It appears that some amount of bad news is expected now and can be tolerated by the markets. The $825 billion stimulus continues to be debated in Washington, and will be for some time. As always, questions abound whether the infusion of vast amounts of government money will have the intended result, i.e. stimulate the economy. It seems that the last infusion of government funds ($700 billion TARP package) failed to do what was intended, i.e. stimulate lending. The Wall Street Journal looked at 13 banks that had received TARP funding in a front page article today. The conclusion is this: lending fell 1.4% in the fourth quarter at 10 of the 13 biggest beneficiaries of the taxpayer capital What is the reason? The banks say it takes time to make prudent loans and so they are just biding their time until they find high-quality borrowers, which is not easy to do in this economy. Meanwhile, the banks have wasted no time paying executives bonuses, dividends to the shareholders, and acquiring other banks, so as to take advantage of the loopholes written into the tax regulations by the Paulson Treasury. Looks like the Obama administration will have to undo the TARP program before it can begin to work with banks to increase the availability of credit.