Is Your State's Unemployment System in Danger?

Aug. 31: This post has been updated. New data is in red.

As part of our investigation into unemployment insurance , here's a look at how individual state systems compare. Thanks to a historical compromise, each state has its own unemployment insurance system, and they come in 51 different flavors -- one for each state and Washington, D.C. (Puerto Rice and the Virgin Islands technically make it 53.)

How does your state's unemployment insurance system stack up? Is it about to go bankrupt? Is it bankrupt already? States with negative balances are in red. Pink states may have to borrow soon. Read about the states' policies that fed the current crisis.

Are your benefits below average? Roll over a state to see information on its benefits.

Click on this LINK

US Dollar to be transformed into a Mickey Mouse Currency

Commentary by Kevin Hassett
Aug. 31 (Bloomberg) -- Like the Chinese, the folks at Disney World peg their currency to the dollar. Hand them $1 U.S. and you receive one Disney dollar, complete with a picture of Mickey Mouse or his friends, plus the signature of Disney’s official treasurer, Scrooge McDuck.

That transaction now seems superfluous. The U.S. dollar is rapidly transforming into a Mickey Mouse currency. This has led to a rising call for the creation of an alternative to the dollar in the form of a new world currency. It would be an enormous mistake to discount these calls as a sideshow. The odds of a world currency emerging have never been higher.

The calls are coming from many corners. Nobel Prize-winning economist Joseph Stiglitz chaired a United Nations panel that recommended the creation of a global reserve currency. Zhou Xiaochuan, governor of the People’s Bank of China, proposed that the International Monetary Fund take over the global leadership role traditionally ceded to the U.S. And Russian President Dmitry Medvedev handed out minted coin samples of a new world currency at the recent Group of Eight meeting in Italy.

These calls are worth paying attention to for a number of reasons. The arguments for a world currency are much better than you might think. An alternative to the dollar clearly has a promising market that can develop even if it is opposed by the U.S. And the idea of a world currency is most attractive to those who devoutly believe in multilateral institutions and the Canon of Lord Keynes -- beliefs that are hardly in short supply in Barack Obama’s White House.
Bloomberg Link

China to renege on commodity contracts

A report that Chinese state-owned companies will be allowed to walk away from loss-making commodity derivative trades provoked anger and dismay among investment bankers on Monday as they feared it may set a damaging precedent.
The State-owned Assets Supervision and Administration Commission, the regulator and nominal shareholder for state-owned enterprises (SOEs), told six foreign banks that SOEs reserved the right to default on contracts, Caijing magazine quoted an unnamed industry source as saying in an article published on Saturday.
While the details of the report could not be confirmed, it was Monday's hot topic in financial circles from Shanghai to Singapore as commodity marketers feared that companies holding underwater price hedges could simply renege on the deals, costing banks millions of dollars in profit.

(snippet)
"It's like the father suddenly told the creditors of his debt-ridden son that his son won't pay any of his debt," said a lawyer from the derivatives risks committee of the Beijing Lawyers Association. (C ) Reuters
LINK

Tim Hawkins-The Government Can

Its "Delusional" to believe the Economic Status Quo will return to normal

By Ambrose Evans-Pritchard
Two facts that should give pause for thought.
1) Japanese data released on Thursday showed that exports fell yet again in July. They are down 39.5pc to the US, and 26.5pc to China.
Japan is the world’s second biggest economy. It lives on exports. It is also a key part of the supply chain for the Chinese economy. How can this hard data be reconciled with the extreme V-shaped recovery already priced in by the markets?
By the way, Toyota is suspending a key production line at its Takaoka plant in central Japan. It is cutting global capacity by 1m vehicles.
2) The Baltic Dry Index measuring freight rates for bulk goods and commodities has been falling almost continuously for eleven weeks, dropping from 4,290 to 2,778 on Thursday.
Is this just a glut of ships or is this telling us what the Shanghai market is also telling us, that credit tightening by the Chinese government is pulling the rug from underneath the latest commodity bubble?
There is something wrong with the entire recovery tale, which ignores the fact that excess plant is still at the highest level since the Great Depression (capacity use is 70pc in Europe, 68pc in the US, 65pc in Japan, and as low as 50pc in some countries, according to the World Bank’s Justin Lin). Companies will have to cut jobs and investment.

(snippet)
I have no idea when stock markets and commodities – especially base metals – will reflect the hard facts on the ground (ie, an end to the Chinese construction bubble). Timing is not my forte. Nor is the market.
But I am absolutely convinced that those who think we can return to the status quo ante of the credit bubble as if nothing has happened are delusional. As almost every central banker in Jackson Hole reminded us over the weekend, it is going to be a very long hard slog.
LINK

The Great Depression and Today-Sobering Parallels Abound

By Simon Maierhofer
The market has been up, which puts investors in a good mood. It is this feeling of security, however, that preceded every major market meltdown. Think back to the 2000 and 2007 stock market highs and compare it today. 1929 was no different. In fact, the parallels are fear inspiringly similar. If there's ever been a lesson to be learned from history, it's RIGHT NOW.

It's been said (and perhaps you are getting tired of hearing it) that history may not repeat itself, but it certainly rhymes. Furthermore, those who don't learn from history are doomed to repeat it.

If there is just one time you want to take a lesson from history, it is RIGHT NOW. The parallels between today and the Great Depression are numerous and strikingly similar. This 5-minute history lesson might be the best investment you'll ever make.

Watch out! Even this rally parallels the Great Depression

The first leg of the Great Depression reduced the Dow Jones (DJI: ^DJI) by 48%. The first leg of the 2007 bear market reduced the Dow Jones by 53%. Both times, the initial declines were followed by powerful and persistent rallies.

Link Here

The Five Horseman of Economic Apocalypse

By Chris Martenson
Executive Summary
What can we expect next, and how will we recognize it?
A series of sharp, interrupted shocks is more likely than a major sudden collapse.
Five game-changing events, what I call The Five Horsemen, will indicate that the rules have changed and a new reality is about to take over:
The First Horseman: New credit growth falls below interest payments
The Second Horseman: The Fed monetizes debt
The Third Horseman: Government deficit spending exceeds 10% of GDP
The Fourth Horseman: The dollar goes down, while interest rates go up
The Fifth (and final) Horseman: US debt becomes denominated in foreign currencies
Severe structural damage has already been inflicted on our economy. As I wrote two weeks ago (May 16, 2009) in It Has Hit the Fan:

If you have been waiting for further confirmation about the direction of the economy, or waiting for a sign that it's now time to get serious about preparing for a future filled with less, this report is written for you.

You are living in the midst of the collapse of western economies, which are moving from a more complicated state to a less complicated one. This is it. Keep a journal, because it's happening right now.
Great Read Here

“Truth would destroy U.S. economic system, Fed warns…

By DeepCaster LLC
The U.S. Federal Reserve asked a federal judge not to enforce her order that it reveal the names of the banks that have participated in its emergency lending programs and the sums they received, saying such disclosure would threaten the companies and the economy…

"Immediate release of these documents will cause irreparable harm to these institutions and to the board's ability to effectively manage the current, and any future, financial crisis," the central bank argued.”

Fed Urges Secrecy for Banks in Bailout Programs
Jonathan Stempel, Reuters, August 27, 2009
Via The GATA DISPATCH 8/27/09 www.gata.org

“The Social Security and Medicare Trustees Report for 2009…(shows) Social Security and Medicare have a combined unfunded liability of almost $107 trillion…

The nation can’t pay for Social Security and the health entitlement programs it has now…

Are Members of Congress Out of Touch with Reality?”

www.dailymail.com, opinion/editorial, 8/21/09 Here

“What is a crying shame is, if they were going to print 10 trillion dollars, they would have done a lot more good rebating it to households, rather than sending it down the black hole of too big to fail institutions. In the hands of consumers, that cash would have trickled up to the larger institutions. As taxpayers, wouldn’t you rather have the money and decide how it is spent, rather than let the Central Planners have it and decide how it is spent? If you decide, we have capitalism. If they decide, we have socialism. What a blown opportunity. If the Central Planners change policy and decide to defend the Dollar rather than let it devalue, interest rates will rise sharply and destroy what is left of this fragile economy.”

(snippet)
Official Numbers vs. Real Numbers

Annual Consumer Price Inflation reported August 14, 2009
-3% 5.5% (annualized August Rate)

U.S. Unemployment reported August 7, 2009
9.5% 20.5%

U.S. GDP Annual Growth/Decline reported August 27, 2009
-3.9% -5.9%

All the above Real Numbers are calculated by Shadow Government Statistics the old-fashioned way i.e. with the methods used before the official gimmicking of these numbers began in the 1980’s and 1990’s. See shadowstats.com and click on ‘Alternate Data’.

LINK

Another Bailout required....For American Dams? 16 Billion needed

By Alexis Madriga
Last year, 140 dams were fixed, but inspectors discovered 368 more that need help. That’s why the American Society of Civil Engineers gave our dams a grade of “D” in its 2009 report on the nation’s infrastructure. There are just too many aging dams and too few safety inspectors.

“With the huge number of dams getting older every day, it’s becoming a bigger and bigger problem,” said Larry Roth, deputy executive director of the ASCE. “The policing of maintenance and filing of inspection records is relatively haphazard, not because of lack of focus or knowledge of significance, but they just don’t have the monetary resources to do it.”

The Association of State Dam Safety Officials estimate that $16 billion would be needed to fix all high-hazard dams. The total for all state dam-safety budgets is less than $60 million. The current maintenance budget doesn’t match the scale of America’s long-term modifications of its watersheds.


While dams have been built in this country for a couple hundred years, the first half of the 20th century saw a building boom. Large dams were built for hydroelectric power, smaller dams to provide water for industrial concerns or irrigation. There was little state or Federal regulation, particularly of the little dams in small watersheds, until the 1970s, when five major dam failures took hundreds of lives and caused almost $1.5 billion in damage. The Carter administration began to put safeguards in place, but the inspections continue to be carried out at the state level.

In some places, like California, that works pretty well, Roth said. But other states haven’t put much money toward dam safety, and Alabama hasn’t allocated any cash at all. State dam inspectors have to look after an average of 160 structures.

Worse still, more people are moving into risky areas. As the American population grows, dams that once could have failed without major repercussions are now upstream of cities and development. That’s why the number of high-hazard dams has increased from less than 9,000 in 2001 to more than 10,000 now.

The Bureau of Reclamation, which manages a portfolio of more than 350 dams, has a team of close to 50. That’s the big reason the government-managed facilities are less of an issue.

“Most of the dams that are hydroelectric are generally well-inspected and well-maintained,” Roth said. “It would be safe to say that most of our hydroelectric dams are safe in the U.S.”

The rigorous process that Reclamation requires catches problems. Brian Becker, chief of the Dam Safety Office at the Bureau said they’ve modified 70 dams to reduce their risk failure.

“If dams are properly operated and maintained, the useful life of a dam can be very long,” Becker said. “There are dams that are centuries old.”
Link

Bob Chapman: over 4000 banks will collapse

The TV told me it was true-Conspiracy or not?

NEW Bill would give Obama control over the INTERNET
LINK

America is in Utter Denial of its Fiscal Catastrophe

(snippet by Stewart Dougherty he is a specialist in inferential analysis)
To those who study the numbers, it is now obvious that America’s fiscal situation is hopeless. Given the country’s current debt and unfunded liabilities of $75,000,000,000,000, an amount growing by at least $5,000,000,000,000 per year, it will be statistically impossible for the United States to pay its obligations unless it repudiates them in large measure, or the dollar is sacrificed on the altar of searing, society-altering inflation.

Congress and much of the nation are in utter denial about the country’s unfolding fiscal catastrophe, as evidenced by federal spending that is actually accelerating, producing all-time debt and deficit records that exceed anything ever experienced by any nation on earth, at any time in history.

Denial is a psychotropic, mind-altering drug that by comparison makes crack cocaine look like health food, and addiction to it shuts down the brain. America’s denial about its out-of-control spending, non-repayable debt, financial sector fraud and deceit, decadent political institutions, epic dereliction of leadership duty, fiscal and monetary immorality, and disastrously dishonest system of cronyism is leading the nation into an economic nuclear winter of desolation and chaos. Aside from Ron Paul, there is not one politician telling the people the truth about their oncoming debt enslavement and impoverishment; nor is there even one sign of constructive fiscal change on the horizon. Our visionless, gutless and greed-stricken leaders have transformed the United States into a cowardly new world.

LONG ARTICLE HERE

Barney Frank: The Fed to be Audited bill to be passed by October?

Max Keiser: Us Banking Collapse in a few weeks?

1000 Banks to Fail over the next 2 years
The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May.

“We’ve already lost 81 this year,” he told CNBC. “The numbers are climbing every day. Many of these institutions nobody’s ever heard of. They're smaller companies.”

Failed banks tend to be smaller and private, which exacerbates the problem for small business borrowers, said Kanas, who became CEO of BankUnited when his firm bought the bank and is the former chairman and CEO of North Fork bank.

1000 Banks to Fail LINK

Bailed Out Banks Threaten Systemic Collapse If Fed Discloses Information

Comment: In other words most banks are finished. The public is not allowed to know this.

(snippet from zerohedge)
And so the guns come out blazing. The Clearing House Association, another name for all the banks that were bailed out over the past year with the generous contributions from all of you, dear taxpayers, are now threatening with another instance of complete systemic collapse if Bloomberg's lawsuit is allowed to proceed unchallenged, let alone if any of the "Audit The Fed" measures are actually implemented.

As a reminder, The Clearing House Association consists of ABN Amro, Bank Of America, The Bank Of New York, Deutsche Bank, HSBC, JP Morgan Chase, US Bank and Wells Fargo.

In a declaration filed in the Bloomberg Case (08-CV-9595, Southern District of New York), the banks demonstrate no shame in attempting to perpetuate the status quo with regard to the Federal Reserve and demand that the wool over the eyes of the general population remain firmly planted in perpetuity.

The Clearing House submits this declaration because the Court's Order threatens to impair the ability of our members to access emergency funds through the New York Fed's Discount Window without suffering the severe competitive harm that public disclosure of their identity will cause.
Our members have accessed the New York Fed's Discount Window with the understanding that the Fed will not publicly disclose information about their borrowing, especially their identity. Industry experience, including very recent and searing experience, has shown that negative rumors about a bank's financial condition - even completely unfounded rumors - have caused competitive harm, including bank runs and failures.
LINK

Full Suit by Bloomberg Here

In the Tank Forever, we are in a Death Spiral for 10 YEARS

Retail maven Howard Davidowitz paid another visit to Tech Ticker this week. And despite signs of improvement in consumer confidence and retail stocks rising, Davidowitz is steadfast in his belief the consumer is dead.

Rather than summarize, let me just highlight some of his best one-liners:

On retail:
"The retail business is terrible... It's almost all negative."
"We're going to close hundreds of thousands of stores."
On the consumer:

"They’re still over leveraged, they're losing jobs, their credit has been cut back."
On America:

"We are in the tank forever. As a country we are out of control, we're in a death spiral."
On the stock market:

"We're in terrible shape. That's what the fundamentals tell me. I can't explain the stock market."

Listen to the Video Here

We are Facing the Worst Depression in 500 Years

America is in a depression not a severe recession. If it were not, why would the Fed and our Treasury Department commit us for $23.7 trillion, and why would our entire financial industry have to be bailed out? Along with this fiat solution comes the political goals of corporatist fascism. Taken away have been the natural solution of growth within the private sector and the purging of excesses within the system. Those arguments are only heard on the Internet and talk radio. The people who our President wants to put on terrorist lists, or better yet has probably already put on terrorist lists, as you and me who speak up and demand our rights.

Our government for the past 20 years has been the most corrupt in American history. This is in your face corruption in banking, Wall Street, corporate America, in our congress and Senate and among our bureaucrats. Our legislation is written in secret by special interests and passed with very few even having read the legislation.

Then we have the change our President and his masters have planned for us. A health reform plan that rations healthcare, Health benefits and procedures will be made by bureaucrats. Everyone will carry a National Health Card ID that will contain your health records as well as federal access to very financial holdings. You will also get to subsidize union health plans and community organizer health plans, such as those of ACORN. Our new Government will be free of judicial review and price fixing. The government will set wages in the healthcare industry including those for doctors.

Insurance is mandatory and your employer will pay for it if he stays in business. Medicaid will be reduced as will services for the old and chronically ill. All doctors would be paid the same no matter what their specialty, training and experience. Hospital doctors will be penalized for what the government deems preventable re-admission. Government will prepare your taxes prior to death as they provide an approved list of end of life resources, to help guide you to your demise. If you do not take your own life government will arrange it for you. The list goes on and on. This is the same list used in Nazi Germany.
(snippets)
The average person now pays about 40% in taxation, direct and indirect. If Health Care Reform and Cap & Trade are passed you can add another 40%. That is 80% Americans. This is exactly what the gang from the CFR has planned for you. That, of course, does not factor in inflation.

We are facing the worst depression in America’s history and perhaps in the last 500 years. Eventually due to higher taxes and less opportunities people will close up businesses and walk away from their jobs. These are the jobs that make the economy work.

How far away is collapse? We just do not know, but a good bet is within three years and perhaps a lot sooner. The trigger will probably be a collapsing dollar or a derivate collapse. Maybe it could be the passage of the HR 1270 to audit and investigate the Fed. When the public discovers what the Fed has been up to there will be thunder and lightning. Could it be that finally the public and professionals will demand front-running Goldman and 15 other Illuminist firms to return the money they have stolen? As you can see the media has buried the story. This gives you an idea of the shape of things to come. Get ready for hard times and protect your wealth in gold and silver related assets.
Link

34 Percent of U.S. Workers Surveyed Have Only One Week or Less of Savings

MAYNARD, Mass.--(BUSINESS WIRE)--Despite the fact that most financial advisors caution workers to save the equivalent of six months’ salary in preparation for troubled economic times, a recent Monster Meter Poll reveals more than one-third of U.S. workers surveyed on Monster.com admit they have only one week or less of savings to cover living expenses if they were to be laid off from work. Monster.com is the leading global online career and recruitment resource and flagship brand of Monster Worldwide, Inc. (NYSE: MWW).

Over a one week period beginning July 6 and running through July 13, more than 16,000 visitors to Monster.com participated in the Monster Meter Poll question “If you were laid off without severance, how long would your savings cover your living expenses?” Thirty-four percent of U.S. workers report their savings would last one week or less if they were laid off, compared to 20 percent who say their savings would last six months or longer, according to a nationwide poll conducted by Monster.com®.

“In a recent Monster.com Career Advice article, Laid Off? Six Steps to Manage Your Finances, most financial advisors suggest saving the equivalent of six months’ salary to tide you over if you lose your job,” said Norma Gaffin, director of career content, Monster.com. “However, experts also agree, workers will likely need more savings, especially if they have a family and are the primary wage earner.”

If You Were Laid Off Without Severance, How Long Would your Savings Cover Your Living Expenses?

* One Week or Less: 34%
* 2-4 Weeks: 16%
* 1-2 Months: 16%
* 3-5 Months: 14 %
* 6 Months or Longer: 20%
Link

Green Shoots or Depression 2?

Note: I took this photo today. Its green shoots for these 2 Georgia Plated Government Official Rolls Royces?

Could the economy really recover this quickly from the traumatic trifecta of a record real estate bubble, leviathan levels of debt, and a global credit collapse? We don’t see it as remotely possible, but yet… but yet… there for everyone to see are countless happy headlines and breathless exhortations that the worst is behind us.

So, is it Green Shoots or Greater Depression?

Getting the answer right is critical, because from it flow serious consequences to each of us. And not just in our investment portfolios but in how we organize our lives.

Looking for an evidence trail leading to the correct conclusion, Casey Chief Economist Bud Conrad once again put in very long hours digging through the data. Here’s what he uncovered, about the claims of green shoots, and what may actually be in store for the economy moving forward.

Link


Full 7 Page Report Here as a PDF File:
HERE

Is this the reason why Bernanke was hastily renewed as Chairman of the Fed?

Monetization of USTreasurys is occurring in a profound blatant fashion. Such action infuriates the Chinese creditors, while at the same time creates a huge rift between the US Federal Reserve and the USDept Treasury. The rift is political and will come to a head when Chairman Bernanke is due for renewal of his post in a few months. . China exerts its constant pressure on the USFed to end the Quantitative Easing efforts. Like doctors, they wish to apply a tourniquet to a gaping leg wound that bleeds a red river onto the pavement. The term is a funny euphemism, a sophisticated economist term for Heavy Duty Money Printing that results in destruction of a currency if not kept under control. The USDollar stewards are NOT demonstrating control, discipline, or even anything remotely resembling honesty or integrity. The USDept Treasury wants to continue funding the federal deficit, and for yucks, add any and every conceivable new program onto the books while the federal insolvent bankruptcy makes marginal additions not so noticeable.

The USFed engages in almost immediately permanent operations to snag the primary dealer USTreasurys gatherings bid at auction, for a simple shell game shuffle. The USFed engages in a sneakier but still obvious hidden bidder game with foreign central banks. They use USDollar Swap Facilities (with gargantuan funds) and bid heavily on the USTreasurys, evidence being the ‘Indirect Bid’ component. If not for the USFed buying most of the USTreasurys issued, the long-term interest rates would be rising quickly and with alarm.
If not for the USFed heavy buying, the USDollar would be doing a swan dive off a cliff into rough waters. As has been claimed in past work, the USGovt stewards of the wrecked buck can save the USTreasury or save the USDollar, but not both. Their monetization efforts here and abroad indicate a clear intention to save the USTreasury Bond. They put the USDollar at grave risk. The Weimar Territory lies directly ahead!
Link

Bernanke is the worlds most DANGEROUS MAN

Debt and the Dollar
The dollar is coming under pressure from U.S. monetary and fiscal policy, according to Chuck Butler of EverBank World Markets, who also talks about investing in currencies and precious metals. Jonathan Burton reports.


(snippet)
..In fact, Bernanke now appears to be America's (and the world's) most dangerous man, far more dangerous than Hank Paulson and the "Goldman Conspiracy" ever was. He's now acting like the supreme dictator of that larger conspiracy Jack Bogle called the "Happy Conspiracy" in "The Battle for the Soul of Capitalism: How the Financial System Undermined Social Ideals, Damaged Trust in the Markets, Robbed Investors of Trillions -- And What to Do About It."

This indictment of Bernanke as a dictator leading Wall Street's "Happy Conspiracy" became clear after reading "Dismantling the Temple," William Greider's brilliant essay in The Nation magazine. Greider is the author of "Secrets of the Temple: How the Federal Reserve Runs the Country." Greider's essay is an absolute must-read for anyone interested in the future of capitalism, the decline of democracy, the next mega-meltdown, and the real "Great Depression 2" ... from which Bernanke cannot save us.

Why worry? Because the danger really is imminent. The same clueless Congress that did nothing when Paulson and the Goldman Conspiracy nearly bankrupted America is now about to give Bernanke's out-of-control "Happy Conspiracy" even more power, and another bigger chance to destroy our capitalism.

Here is a summary of Greider's history about how the Fed is sabotaging America:

READ IT HERE

The Fed Questioned by the Public

Ultimate Economic Doom Scenerio

Note: I have had this pic of a trillion dollars on a previous post, stacked double pallet high. Here it is again. (click to enlarge)

(snippet)
The U.S. dollar rubbing shoulders with the Zimbabwe dollar?

Mainstream economists and financial journalists shrug: "So what? We are not watching the basis of frozen pork bellies trading either when we make monetary policy." These gentlemen betray a lack of comprehension of the nature of the present financial and credit crisis. Whatever else it may be, this crisis, first and foremost, is a gold crisis with an incubation period measured in scores of years. It is about to reach its climax.

The world appears to be totally unprepared for it -- witness the silence surrounding the gold nexus.

Even the so-called sound-money Internet sites misread the situation. They are talking about an imminent breakout of the dollar price of gold from its holding pattern below $1,000 per ounce. Such breakouts have occurred from time to time since 2001, when gold broke through the "resistance levels" of $300, $400, etc. The coming breakout is not distinguished by the fact that $1,000 is an even rounder figure than the previous round figures that have been surpassed. It is distinguished by the fact that we are confronting a world event the like of which has never happened.

It has never happened that gold was unobtainable at any price. It has never happened that all governments have defaulted on their debt obligations simultaneously.

Still, we have to explain the relevance of this to the credit crisis. It is no secret that the bonds, notes, bills, and other obligations of the U.S. government, or any other government, for that matter, are irredeemable. That is, they are redeemable in nothing but more of the same. For example, the bonds of the U.S. Treasury are redeemable in Federal Reserve credit, which is itself irredeemable and is "backed by" the self-same bonds of the U.S. Treasury. Why is it, then, that these Treasury obligations are in demand where one might think that redeemability is a sine-qua-non of issuing them? What makes people participate in this shell game? How can such a crude check-kiting scheme mesmerize the entire population?
(last paragraph)
Yet the Last Contango in Washington will be different from all previous crises. It will be elemental, devastating, and apocalyptic. It will destroy virtually all paper wealth and render virtually all physical capital idle. It will involve hordes of unemployed people roaming the streets, caring for no law and order, pillaging homes and institutions. It will destroy our freedoms. It may destroy our civilization unless we take protective action.

On the positive side, it will sweep away the complacency of the managers of the regime of irredeemable currency and fundamentally weaken the sway of Keynesian and Friedmanite economics as it has a stranglehold on the teaching of economic science.
The Last Contango in Washington will eclipse the Great Depression of the 1930s. Be prepared.
Link

Obama Administration admits unemployment, deficits far worse than previously stated:
Link HERE

Wall Street has taken over the Government

Consider what multibillionaire banker David Rockefeller wrote in his 2002 memoirs:

"Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as 'internationalists' and of conspiring with others around the world to build a more integrated global political and economic structure -- one world, if you will. If that's the charge, I stand guilty, and I am proud of it."


Read Rockefeller's words again. He actually admits to working against the "best interests of the United States."


Need more? Here's what Rockefeller said in 1994 at a U.N. dinner: "We are on the verge of a global transformation. All we need is the right major crisis, and the nations will accept the New World Order." They're gaming us. Our country has been stolen from us.
(snippet)
I'm calling for a national strike, one designed to close the country down for a day. The intent? Real campaign-finance reform and strong restrictions on lobbying. Because nothing will change until we take corporate money out of politics. Nothing will improve until our politicians are once again answerable to their constituents, not the rich and powerful.

Let's set a date. No one goes to work. No one buys anything. And if that isn't effective -- if the politicians ignore us -- we do it again. And again. And again.

The real war is not between the left and the right. It is between the average American and the ruling class. If we come together on this single issue, everything else will resolve itself. It's time we took back our government from those who would make us their slaves.
LINK

Rhode Island to shut Government down for 12 days: Out of Money

PROVIDENCE, R.I. (AP) - Rhode Island will shut down its state government for 12 days and hopes to trim millions of dollars in funding for local governments under a plan Gov. Don Carcieri outlined Monday to balance a budget hammered by surging unemployment and plummeting tax revenue.

The shutdown will force 81 percent of the roughly 13,550-member state work force, excluding its college system, to stay home a dozen days without pay before the start of the new fiscal year in July.

The closures come as the worst recession in decades has eliminated hundreds of millions of dollars in tax collections and pushed unemployment to 12.7 percent, the second-highest jobless rate in the nation behind Michigan.

Carcieri predicted the state's fiscal future could grow even bleaker.

"There are going to be inconveniences for the public, and there are going to be sacrifices, as I said, for state employees," Carcieri said at a Statehouse news conference. "These steps right now are unavoidable if the state is to live within its budget, live within its means."
LINK

Former Congressional Budget Office Director: Obama Administration Spun the Numbers

Attention: Some posters (that have purchased)may have not received their Depression Survival Guides, please email me if you have not! Email Me Here



By: SUSAN FERRECHIO
Chief Congressional Correspondent
08/24/09 5:21 PM EDT
Former Congressional Budget Office Director Douglas Holtz-Eakin says the Obama administration's claim that the Obama's updated figures on the deficit that will be released Tuesday are "spin and nothing more."

Holtz-Eakin, who was a top advisor to the presidential campaign of Sen. John McCain, R-Ariz., sent a memo Monday to House Minority Leader John Boehner, R-Ohio, accusing Obama of manipulating the numbers about future bailout costs in making the claim that the deficit will shrink by more than $260 billion from what was predicted three months ago.

"Bottom line, the budget outlook is worse, and dangerous," Holtz-Eakin writes to Boehner.

The White House and the CBO are scheduled to release separate mid-session reviews on Tuesday, but the Obama administration has already leaked to the press some of the details of its report, including the rosier deficit forecast of $1.58 trillion for this year, lower than the $1.8 trillion predicted in June.

Holtz-Eakin said that said the Obama administration wrongly assumes it will receive $640 billion in revenue from the creation of a cap-and-trade system for polluters, which would rely on the passage of an energy reform bill that many Democrats oppose, plus another $200 billion from a controversial proposal to tax international businesses. The Obama administration is also counting on the idea that health care reform will not increase the deficit, which some believe is impossible.

"They will continue to assume that they raise taxes on small businesses in 2011," Holtz-Eakin added. "If the economy remains weak, they will not."
LINK

US Needs 1.6 Trillion and can't get it anywhere

The United States needs to borrow nearly $10 trillion over the next decade, including about $1.6 trillion this year.

Where's it going to come from?

This is critical question, because resistance on the part of creditors will drive up interest rates, clobbering the housing market and demolishing the value of whatever cash savings Americans have left. The other answer--our government lending the money to itself--will destroy the value of the dollar, and that wouldn't help too many people, either (except debtors--it would help debtors because they will be able to repay nominal debts with toilet-paper dollars.
LINK

Zimbabwe proposes introduction of gold-backed Zim dollar
Zimbabwe’s central bank governor Gideon Gono on Thursday proposed the introduction of a gold-backed local currency, which was destroyed by hyperinflation and replaced by multiple foreign currencies in January.

LINK HERE

Stock Rally is the Final Kiss of "ECONOMIC DOOM"

Thank you to the "2 DONORS" that graciously donated to this blog yesterday!
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With almost a year of housing inventory yet unclaimed, one wonders who is supposed to be buying homes? Unemployment rates - calculated the way the government used to do it before it was changed in the 1990s - pegs the real unemployment rate around 20%, or 30 million people. During the Great Depression, unemployment reached 25%, the non-farm peak figure of the 1930s clocked in at 35%.

If you think 30 million unemployed is bad, consider the following which puts a face on an otherwise stale statistic. Each of the 30 million unemployed US residents probably supports a family, whether a spouse with children, or just a spouse. Based on 2-4 dependents per unemployed worker, a range of 60 to 120 million Americans are already affected by unemployment; that's 20 - 40% of the US population.

Light at the end of the tunnel, where?

Research shows that the decline in industrial production over the last nine months has been as bad, if not worse than the nine month following the 1929 peak. The world stock markets have fallen even faster this time around, compared to 70 years ago. The volume of world trade is drying up at a faster pace than the Great Depression and government surpluses are the lowest in 100+ years.

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How did gullible investors, who allowed themselves to be swept away by unfounded optimism, fare during the Great Depression? The author mentioned at the outset of this article, John Kenneth Galbraith, described it like this:

'The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. The bargains then suffered a ruinous fall. Even the man who waited until trading conditions returned to normal, saw the common stocks they purchased drop to a third, and in some cases even a fourth of their purchase price over the next 24 months. The bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.'

Already, this decline has dwarfed the 1973-74, or 1981-82 bear market. Comparing this recession to the recessions of the 70s and 80s, is like comparing Hurricane Katrina to your average summer storm.

LINK

$300 Million CASH Stimulus for Refrigerators?
Link HERE

More Swine Flu Scare Tactic Propaganda
90,000 could die from Swine Flu
..and here
$1000 a day Fine

Social Security and Medicare: Unfunded Liability of 107 Trillion

AS Americans listened to people yammer on about "death panels" and other distortions of some of the health "reform" proposals circulating in Congress, larger and more important questions have gone unasked and unanswered.

First on the list should be: Are members of Congress out of touch with reality?

The nation can't pay for Social Security and the health entitlement programs it has now.

The Social Security and Medicare Trustees Reports for 2009, released in early May, laid out the situation plainly:

Social Security and Medicare have a combined unfunded liability of almost $107 trillion.

According to Pamela Villarreal, a senior policy analyst with the National Center for Policy Analysis, that's about seven times the size of the American economy, and 10 times as much as today's national debt.

Members of Congress have, over the decades, promised Americans $107 trillion more in benefits under these two existing programs over the next 75 years than they have provided for in taxes.

Medicare alone has an unfunded liability of almost $38 trillion.

By some people's reckoning, when today's college students reach retirement in about 2054, the burden of paying Social Security and Medicare benefits would consume one in three dollars of taxable payroll.

Yet some in Congress would create a costly new medical entitlement program to deflect attention from the fact that they don't want to deal with the problems they already face.

All responsible Americans should insist on better than that.
LINK
Kickstart the Fed Audit from RON PAUL
SIGN HERE

Congress to take Pension Funds to pay off DEBT?

Congress may confiscate every state pension fund into the bankrupt social security system. Indications that this strategy is being discussed in Washington have come in to us from several sources over the last few days.

Tonight, a correspondent who has just come home from a Tea Party Townhall Meeting in Salado, Texas with US Representative John Carter (R-Round Rock) issued the warning. She said, “Representative Carter informed the crowd that talk has been bandied about Congress to appropriate every state’s pension plans into the bankrupt Social Security System.” She is absolutely 100% sure that she understood him correctly.

Dear readers, please understand that we are bloggers, and not professional journalists. Our information comes from ordinary folk who do the best they can to understand the political scene. Ordinarily, this would seem so outrageous that we would wait to share the news until we could get more clarification. But the current administration has moved with such breathtaking swiftness to federalize private assets and plunge our country into socialism, that we feel the need to sound the alarm, just in case.
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The Argentine government seized control of the private pension funds in that country last fall. At that time the Telegraph considered the possibility that other countries would follow suit — Argentina seizes pension funds to pay debts. Who’s next?, October 21st, 2008:

Here is a warning to us all. The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.

Should we worry about our pensions?

It is a foretaste of what may happen across the world as governments discover that tax revenue, and discover that the bond markets are unwilling to plug the gap. The G7 states are already acquiring an unhealthy taste for the arbitrary seizure of private property….
LINK HERE

Marc Faber: Total collapse ahead with a World Scale War

The big question is when is the Chinese economy also implode " may be it will happen in 2010 , in China there is an investment bubble ...the total collapse is ahead of us and probably a world scale war...(listen just past half way)

Shoppers Leaving Items in the Aisles as we search for better deals

NEW YORK (AP) -- Penny-pinching Americans are getting cold feet at the checkout -- thinking twice about spending and ditching items before they're rung up.


They're leaving sweaters in the dress department, dumping cookies near the grocery cashier and waiting until the last minute to weigh wants versus needs. Online, shoppers are abandoning their virtual carts as they search for better deals.

People "want to be in the act of shopping, but they don't want to be in the act of buying," said Joel Bines, a director at AlixPartners, a turnaround consultant.

It means more lost sales for stores at a time when there are already fewer customers because of the recession. For bricks-and-mortar shops already working with fewer staff, it also means more work because orphaned items have to be restocked.

Hard numbers are difficult to come by, but Burt P. Flickinger III, a retail consultant, estimates that in 25 percent of shoppers' trips to the store, they're ditching at least one item. In the recession of the early 1990s, it was 15 to 20 percent. In good times, it's more like 10 percent.

Ashley Nichols Guttuso of Midlothian, Va., dumped a red cardigan last week at the counter at the local Limited store after she found out she couldn't use a $15 store coupon on the $15 sweater.

Guttuso says she could have afforded it, but she has focused on necessities since losing her job as a copywriter for Circuit City in January, as the chain was preparing to go out of business.
Link

Noble Prize Economist: US Dollar is Risky and Questionable

Columbia University professor and Nobel Prize-winning economist Joseph Stiglitz is the latest commentator to weigh in on the debate about the dollar, saying Friday that the US currency’s role as a good store of value is “questionable” and warning about the USD’s high degree of risk.

Stiglitz told a conference in Bangkok that the world needs a “global reserve system,” reports Bloomberg. Support from countries like China should ensure orderly discussions on a new reserve system, he added.

The dollar has lost 12 per cent since March 5 against an index comprising the euro, yen and four other major currencies - all the while, China, the world’s largest holder of forex reserves, Russia and the other Brics have been calling for a new global currency to replace the dollar as the key reserve currency.
The current reserve system is “in the process of fraying,” said Stiglitz, adding: “The dollar is not a good store of value. Right now, the dollar is yielding almost no return and yet anybody looking at the dollar has to say there’s a high degree of risk”.

Bloomberg quotes Pimco portfolio manager Curtis Mewbourne, who predicts the dollar will weaken as the US pumps “massive” amounts of money into the economy. But others, including David Woo, BarCap’s global head of forex strategy in London, argue that pessimism over the dollar’s prospects may be excessive and that its status as the world’s reserve currency is still intact.
Link

GREAT VIDEO that MUST BE WATCHED! (sent by an astute reader)
HERE

Buffet: US Trying to Stave off another GREAT DEPRESSION with a mountain of Debt

A highly influential American has finally hit the panic button about the tremendous mountain of debt the country is piling up.

Last year, Warren Buffett says, we were justified in using any means necessary to stave off another Great Depression. Now that the economy is beginning to recover, however, we need to curtail our out-of-control spending, or we'll destroy the value of the dollar and many Americans' life savings.

Some not-so-fun facts from Buffett's editorial today in the New York Times:

Congress is now spending 185% of what it takes in
Our deficit is a post WWII record of 13% of GDP
Our debt is growing by 1% a month
We are borrowing $1.8 trillion a year
$1.8 trillion is a lot of money. Even if the Chinese lend us $400 billion a year and Americans save a remarkable $500 billion and lend it to the government, we'll still need another $900 billion.

So, where's it going to come from? Most likely the printing press. And, ultimately, Buffett says, that will destroy the value of the dollar.
Link

Huge Income earners almost destitute
Link

Are We Days Away from Economic Chaos?

America is just a few days away from a possible day of reckoning. I again call attention to this day, August 25, when the Federal Deposit Insurance Corporation issues its 2nd Quarter report for 2009 on the state of health of American banks.

It has not particularly alarmed Americans that its growth and prosperity have been built upon debt. The American public is a bit desensitized, particularly since the Y2K threat fizzled. We must wait and see how Americans respond to the upcoming FDIC report.

The following charts tell the story. There are roughly 8400 American banks that set aside a small portion of their profits to aggregately insure bank depositors should their local bank fail. A plethora of bank failures has depleted the FDIC reserve fund from $52.8 billion in 2008 to $13 billion in the 1st Quarter of 2009. (See chart above)
Alison Vekshin, writing for Bloomberg, indicates

"The failure of 77 banks this year is draining the fund, prompting the agency in May to set an emergency fee of 5 cents for every $100 of assets, excluding Tier 1 capital, to raise $5.6 billion in the second quarter. The agency has authority to set fees in the third and fourth quarters, if needed, to prevent a decline in the fund from undermining public confidence."

Vekshin goes on to report that 56 bank failures since March 31 have cost the FDIC an estimated $16 billion. (For comparison, in the 1st Quarter, bank failures only cost the FDIC $2.2 billion.) That $16 billion bank rescue would fully deplete the FDIC fund as it only had $13 billion at the close of the 1stQuarter. It’s possible the FDIC has already tapped into its line of credit at the Treasury Department without setting off alarm bells to the public.
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The mother of all bank runs?

Now if just a small portion of American bank depositors hear that the FDIC had to tap into the US Treasury for funds, and these depositors feel their banked money is at risk and want to withdraw some of it, the mother of all bank runs could ensue. This could create the day of reckoning that many have predicted. A short banking holiday would have to be declared and who knows what happens from there – troops in the streets, issuance of new currency, martial law? Don’t think those in the Federal government haven’t made plans for such an occurrence.
Link with Lots Of Graphs
CLOSED BANKS FOR FRIDAY:
The latest came Friday with the seizures of two small banks in Georgia and one in Alabama: ebank, located in Atlanta, with $143 million in assets and $130 million in deposits; First Coweta, based in Newnan, Ga., with $167 million in assets and $155 million in deposits; and CapitalSouth Bank, based in Birmingham, Ala., with $617 million in assets and $546 million in deposits.

Peter Schiff interrupted over and over: Mainstream News Afraid of Truth

Big Trouble ahead: The Dollar (81 Days Left) and Bonds

Every few months a chart comes along that needs almost no follow-on paragraphs to make the point of the issue. The chart provided by CIGA Eric covers several important types of US$-based bonds, their inflow and outflow, and the aggregate GrandNet. The financial data is publicly available from the USGovt TIC Reports. The messages are clear. Inflows of foreign funds are dwindling. In the case of USAgency Mortgage Bonds and USCorp Bonds, the nation is witnessing something unprecedented, the net outflow of funds. This is outright rejection. This chart exposes the isolation problem of the USDollar in the bond world, clearly the most important market beneath the currency market. The printing press is the last option.
Ominous is a strong word. Abandonment is better, but disaster is better still. “I find this simple chart so ominous I had to send it. Decelerating year-over-year inflows and outflows across the board. Stick your head in the sand if you like, but string this trend out a little longer and you’re going to have flight from the dollar.” So wrote CIGA Eric. See the article that displays this graph and his few words on the JSMineset weblog (CLICK HERE).

The foreign creditors are moving away from the United States, plain and simple. The big bold red series shows the Grand Net US$-based bond reduction in net flow change from a high around $950 billion in early 2007 to a figure now approaching only $200 billion, thus a severe cut in net inflow.
Link

The Funniest Comment from Berneke (some people may believe him):
Link

Learn to live with the "New Depression"

Comment: I graciously thank the 2 donations 3 this week.

A V-shaped recovery?

A W-shaped recovery?

Forget it…there ain’t no letter in the alphabet that describes a “recovery” we’re likely to have.

We say that in the spirit of mischief as well as elucidation. Of course, the world won’t stay in a depression forever. And even depression ain’t so bad, once you get used to it. The world economy will probably drag around a bit on the bottom…with low, or negative, growth rates in most places…until it finds a new model. The old model is dead. The authorities can put on as much rouge and powder as they want. They could even give the corpse jolts of electricity to make it sit up. But they can’t revive it. It’s finished. Over. Kaput.

The old model involved lots of players playing lots of different roles. But the main protagonists were the USA. and China. Not to put too fine a point on it, but China was the maker; the United States was the taker. It was a relationship that seemed to serve both parties well…but one that actually enabled foolish and, ultimately, destructive behavior – especially on the part of the United States.
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Look for more depression, dear reader…

And learn to like it; it will be with us for a long time.

The Dow bounced yesterday…up 82 points, after a sell-off on Monday. This leaves it still about 1,000 points shy of the comparable rally of 1930. Will it continue bouncing until it equals the 1930 level? Or is the rally over? We wait to find out…
LINK HERE


Check out the Credit Card Delinquency Rate Article.
Credit card charge-offs -- accounts that the banks deem as uncollectable -- increased to a staggering 9.55 percent (up 1.91 percent since the first quarter of 2009).
HERE

Chinese Execute Scammers Americans Reward Them

There's a reason why the Chinese are ascendant while America is in decline. Because the Chinese walk upright and aren't afraid to apply justice to the pigs who are ruining their country; while at the same time, Americans bow and scrape to the same people who loot them, dreaming like peasants of the day they can become Donald Trump's "Apprentice." It's a grotesque role-reversal, and we ought to be ashamed.

I've written about the wonderful Chinese "Mobile Execution Bus Fleets" as the solution to America's banker problem, but you folks are all too damn squeamish and worried about "class war." So while you roll over and take it as AIG announces yet another new round of bonuses stolen from your bank account, the Chinese get down to the business of executing their millionaire traitors. Can't reform ‘em, folks. Gotta put ‘em down for the good of the country. Three more big ones this week, including two put to death because they "seriously damaged the country's financial regulatory order and social stability":

BEIJING // China has executed two people for defrauding hundreds of investors out of millions of yuan in beauty parlour, cosmetics and property scams, crimes which the government described as a serious blow to social stability.

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Meanwhile, in the peasant states of America, here's how we mete out justice to our rich and powerful. We hand over to them whatever they haven't stolen already, and apologize for the delay:

Banks Paid $32.6 Billion in Bonuses Amid U.S. Bailout
Link Here

The World is Digging its Economic Grave

Nobody knows where the tipping point lies on public debt, though anything above 100pc of GDP in a currency union is courting fate. Some are already there. The European Commission says Italian debt will jump to 116pc in 2010. Greece is vaulting back to 109pc, Belgium to 101pc, France to 86pc.

Even German finances are falling apart. After screwing down spending to balance the books, discipline has broken down. Berlin says the deficit is heading for 6pc next year, taking debt to 82pc. This is happening all over the world, of course. But the ECB is compounding the effect, whether for reasons of politics, Bundesbank fetishism, or misjudgment. By refusing to join the US, Japan, Canada, Britain, and Switzerland in quantitative easing (QE) the ECB has allowed a contraction of private credit this summer. The M3 "broad" money supply has shrunk since February.

Ignore M3 at your peril. It flashed awarning signal in the US months before the collapse of Lehman Brothers last September; it is flashing the similar warning signals in Europe now.

Professor Tim Congdon from International Monetary Research said the eurozone money figures are "horrifying" and portend a serious crunch ahead. "My verdict is that the senior people in the ECB [and the Fed] have little organised understanding of the debt-deflationary processes initiated in late 2008," he said.

Ireland's M3 contracted at a 30pc annual rate last month, a death sentence for a hyper-indebted economy. The wreckage will be evident just in time for the Irish to vote again – under extreme duress – on the EU's Enabling Act in October. This should make for interesting political chemistry.

In Germany, the Mittlestand lobby (BVMW) says half its members are facing a liquidity squeeze, while the strutting finance minister, Peer Steinbrück, has assumed a ghostly pallor. "We must take seriously the threat of a credit crunch in the second half of this year," he said.
Link

Karl Denninger: Depression Assured? Maybe. (Swine Flu)

First, we will have an economic depression. If the CAR, or "attack rate" (the percentage of people in the population) who get the flu is in the typical range of 40-60% of the population, then a CFR of 2-3% means one million or more dead Americans this fall and winter, or more succinctly, somewhere around one in a hundred. If your kid goes to school with 1,000 other people, 10 of them will die (on average.)

This sort of disruption in the economy, given where it is now, guarantees a contraction of GDP of 10% or more from the top, which is the definition of economic depression. We can argue about "how bad of a depression" later.

Second, if these numbers are anywhere close to reality the entire US medical care system will effectively collapse. We do not have 10% of the medical infrastructure necessary to treat 1 million Americans presenting to hospitals over a 2-3 month time frame with critical (and ultimately terminal!) symptoms, nor can we possibly treat the ten times greater count of people who will present to a hospital with what look to be critical symptoms but ultimately survive.

If these numbers are anywhere close to accurate the quality of medical care available in The United States will almost instant return to 1950s-style medicine - that is, little more than aspirin and perhaps some antibiotics for secondary bacterial infections, plus careful observation.
Link

Peter Schiff: OIL is going well above $200

Case Shiller: Another Housing Collapse Coming

The housing market, which already has been battered by the worst collapse since the Great Depression, could be setting itself for another bubble, well-known economist Robert Shiller told CNBC.

With home affordability at a 40-year high, there is "absolutely" a possibility that the housing market will face another bubble in the next five years, said Shiller, an economics professor at Yale, co-founder of MacroMarkets and co-developer of the monthly Case-Shiller home price index.

"The low interest rates, the affordability is leaning that way and the ratios are back down," Shiller said in a live interview. "I get glimmers of excitement among some people, but we still have a high inventory of unsold homes, and we still have a lot of weariness because of the recent experience."
LINK

Worlds Largest Bond Traders say Dollar to Lose its Status

Aug. 19 (Bloomberg) -- Pacific Investment Management Co., the world’s biggest manager of bond funds, said the dollar will weaken as the U.S. pumps “massive” amounts of money into the economy.

The dollar will drop the most against emerging-market counterparts, Curtis A. Mewbourne, a Pimco portfolio manager, wrote in a report on the company’s Web site. The greenback is losing its status as the world’s reserve currency, he said.

“Investors should consider whether it makes sense to take advantage of any periods of U.S. dollar strength to diversify their currency exposure,” Mewbourne wrote in his August Emerging Markets Watch report. “The massive amounts of U.S. dollar liquidity produced in response to the crisis” have helped reduce demand for the currency, he wrote.

The Dollar Index, which tracks the greenback against a basket of currencies, touched 78.823 today, the lowest this week. It has fallen 12 percent from this year’s high in March as U.S. authorities pledged $12.8 trillion to combat the recession. China, the world’s largest holder of foreign-currency reserves, and Russia have both called for a new global currency to replace the dollar as the dominant place to store reserves.
Link

Massive Crash Coming with New Lows: Royal Bank Of Scotland

Britain's Uber-bear is growling again. After predicting a torrid "relief rally" over the early summer, Bob Janjuah at Royal Bank of Scotland is advising clients to take profits in global equity and commodity markets and prepare for another storm as winter nears.
"We are now in the middle of a parabolic spike up," he said in his latest confidential note to clients.
"I expect this risk rally to continue into – and maybe through – a large part of August. What happens after that? The next ugly leg of the bear market begins as we get into the July through September 'tipping zone', driven by the failure of the data to validate the V (shaped recovery) that is now fully priced into markets."
The key indicators to watch are business spending on equipment (Capex), incomes, jobs, and profits. Only a "surge higher" in these gauges can justify current asset prices. Results that are merely "less bad" will not suffice.
He expects global stock markets to test their March lows, and probably worse. The slide could last three months. "A move to new lows is highly likely," he said.
Mr Janjuah, RBS's chief credit strategist, has a loyal following in the City. He was one of the very few analysts to speak out early about the dangerous excesses of the credit bubble. He then made waves in the summer of 2008 by issuing a global crash alert, giving warning that a "very nasty period is soon to be upon us" as – indeed it was. Lehman Brothers and AIG imploded weeks later.
This time he expects the S&P 500 index of US equities to reach the "mid 500s", almost halving from current levels near 1000. Such a fall would take London's FTSE 100 to around 2,500. The iTraxx Crossover index measuring spreads on low-grade European debt will double to 1250. ...
The elephant in the room is the spiralling public debt as private losses are shifted on to the taxpayer, especially in Britain and America. "Ask yourself this: who bails out Government after they have bailed out everyone?"
Mr Janjuah said governments might put off the day of reckoning into the middle of next year if they resort to another shot of stimulus, but that would store yet further problems. "If what I fear plays out then I will have to concede that the lunatics who ran the asylum pretty much into the ground last year are back in control."

LINK

Read about the disturbing Morgan Stanley SILVER FRAUD. Any investor doing this would get MANY YEARS in Prison!
PDF FILE HERE

China Reducing it's Debt Holdings with U.S.

China reduced its holdings of US government debt by the largest margin in nearly nine years in June, according to data from the US Treasury.
China holds more US government debt than any other country and cut its holdings of US securities by more that 3% in June, said the BBC's Chris Hogg.
Japan and the UK - second and third largest holders of US debt - increased their holdings over the same period.
China's holding of US debt is about 7% higher than at the turn of the year.
Inflation fear In recent months the US government's budget deficit has widened thanks in part to the Obama administration's costly stimulus plan.
Our correspondent in Shanghai says that China is worried about this, and fears the stimulus efforts will fuel inflation in the US, reducing the value of the dollar. This would then erode the value of the debt China holds in the US currency.
In June, China cut its holdings of US securities by about $25bn, a fall of 3.1%.
'Dollar alternative'
The sales were made as the US treasury secretary was visiting Beijing to try to reassure the Chinese that their investment in his country's government debt is safe. In 2008, the Chinese increased their holdings in US debt by 52% over 12 months.
"China has said it would like to establish an alternative to the US dollar as the world's favoured currency for foreign exchange reserves," said our correspondent.
"So far there is no evidence that there is a suitable alternative. But these figures suggest they are exploring ways to diversify their investments where they can."
Link

David Cameron: 'British Government could default on its debts'

Comment: Do we see anything familiar here?

Gordon Brown is running the risk that the British Government will be unable to pay back the money it is borrowing from international investors, the Conservative leader said.
Mr Cameron said Labour’s plan to borrow an extra £700 billion over five years and take the national debt to £1.4 trillion was a “disgrace” that exposes the UK to serious economic risks.

Governments borrow by selling bonds – a form of IOU note – to investors, who then receive interest payments on the loan.


The Treasury forecasts that paying the interest on the national debt will cost taxpayers £42.9 billion in 2010/11, more than the annual budget of the Ministry of Defence. Grant Thornton, an accountancy firm, estimates that by 2013, debt interest will cost £58 billion.

Normally, governments can borrow much more cheaply than other institutions, because investors are confident they will get their money back.

But speaking at the Royal Society of Arts, Mr Cameron warned that Labour is now borrowing so much that some investors will demand higher interest rates to reflect what they see as the increased risk of British government debt.

Link

Do you live in Georgia? 100 Banks going down

Screws tight
 on Georgia banks

By Russell Grantham
The Atlanta Journal-Constitution

Federal and state regulators have put as many as one-third of Georgia’s 300 banks under intensified monitoring and recovery plans, mostly strict enforcement orders a step or two short of seizure, according to banking experts.


Thomas Oliver
A majority of these 90 to 100 banks, these experts say, are operating under “cease and desist” orders that require them to complete tough turnaround plans within strict deadlines.

While regulators can be flexible on deadlines or other requirements if banks fall short, many banks that have previously been put under such sanctions have failed.

Such actions are aimed at restoring a bank to health by boosting capital and improving operations, much as a doctor might order his patient to quit smoking and lose weight, said Patrick Frawley, a former regulator with the federal Office of the Comptroller of the Currency who now works as a consultant helping banks comply with such orders.
Link

Is This the Start of the Big One?

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More bank woes. We may be two thirds of the way through the losses, but it could also be as little as half. And despite the stress test baloney, the banking system is undercapitalized by a large margin..
Consumers tapped out. The lousy retail sales report was a reminder of a rather central fact most have chosen to forget.
Foreclosures set to rise. We are not having a housing bounce.
More AIG losses, I am told more AIG losses are in the offing.
Lack of political leadership. The health care fiasco is going to be a defining event for Obama, in a negative way. His inability to respond effectively to simply absurd distortions of his plan and of the record of public supported programs overseas (including that many are government funded but still privately run, for instance) may dispel the illusion that he is or can be an effective leader. His banking policy, which is vital to recovery, became hostage to Geithner and Summer's deep loyalty to the industry, and his lack or interest in rocking any boats. All Team Obama has done on the banking front is write a lot of blank checks, hold some bogus "stress tests" in lieu of doing the real thing, and raise a stink on a few symbolic issues to try to paper over the failure to embark on real and badly needed reforms.

Ed Harrison has called him a black Herbert Hoover. If the economy takes another down leg, it will further confirm his inability to do anything other than compromise and try to spin it as success. The confidence game worked when he was a new President, but nice talk and not much action is already wearing thin. We could use someone at the helm who is willing to plot a course and stick with it, and instead what we have is someone long on charisma and short on resolve.
Link

THE MYTHICAL FDIC FUND

THE MYTHICAL FDIC FUND
By William M. Isaac
William Isaac, former Chairman of the Federal Deposit Insurance Corporation, (FDIC)

…When I became Chairman of the FDIC in 1981, the FDIC's financial statement showed a balance at the U.S. Treasury of some $11 billion. I decided it would be a real treat to see all of that money, so I placed a call to Treasury Secretary Don Regan:

Isaac: Don, I'd like to come over to look at the money.
Regan: What money?
Isaac: You know . . . the $11 billion the FDIC has in the vault at Treasury.
Regan: Uh, well you see Bill, ah, that's a bit of a problem.
Isaac: I know you're busy. I don't need to do it right away.
Regan: Well . . . it's not a question of timing . . . I don't know quite how to put this, but we don't have the money.
Isaac: Right . . . ha ha.
Regan: No, really. The banks have been paying money to the FDIC, the FDIC has been turning the money over to the Treasury, and the Treasury has been spending it on missiles, school lunches, water projects, and the like. The money's gone.
Isaac: But it says right here on this financial statement that we have over $11 billion at the Treasury.
Regan: In a sense, you do. You see, we owe that money to the FDIC, and we pay interest on it.
Isaac: I know this might sound pretty far-fetched, but what would happen if we should need a few billion to handle a bank failure?
Regan: That's easy - we'd go right out and borrow it. You'd have the money in no time . . . same day service most days.
Isaac: Let me see if I've got this straight. The money the banks thought they were storing up for the past half century - sort of saving it for a rainy day - is gone.
If a storm begins brewing and we need the money, Treasury will have to borrow it. Is that about it?
Regan: Yep.
Isaac: Just one more thing, while I've got you. Why do we bother pretending there's a fund?
Regan: I'm sorry, Bill, but the President's on the other line. I'll have to get back to you on that
I don’t know whether Treasury Secretary Don Regan ever answered Isaac’s question, Why do we bother pretending there's a fund? But the answer is obvious. Modern economics, i.e. central banking, is a shell game, a shell game where bankers with the aid of governments have foisted a highly lucrative fraud on society; and, while the fraud of the FDIC fund is egregious, it is no more egregious than the fraud of the Fed or of the economy itself.

In economies based on the fraudulent issuance of money as debt, there are only predators and victims. Bankers are the predators, society is the victim (businessmen are victims who often believe they’re predators) and governments are the well-paid-off referees in the rigged game being played out in today’s capital markets.
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