There's NO Problems. OK?

Most people will not change. Too radical. Not going with the flow. Not betting against the herd.

“The best examples in the 20th century were Jews in Germany in 1933. They stayed. This included Jewish bankers, all of whom could have left. They thought they could deal with Hitler. They did not read Mein Kampf. They did not take it seriously. About 7% did leave early: 38,000 out of 523,000. More left after 1938. By 1941, about 160,000 remained in Germany. Then emigration was closed by the Nazis. Earlier, it was encouraged. The data are here.”

“How do you reason with these people? Answer: you don't, if you value your time and your privacy. If you turn out to be wrong, you will be ridiculed or at least treated as a child. If you are correct, you will be hated. You will also be hit up for money. If you are a Christian, you will be told you are heartless. You will become a line of credit for those whose mantra was "No problem!" They don't want to change. They will not change. They will not listen to you. And when things turn out much worse than even most newsletter writers are forecasting, you will be hated. Are you prepared for this? Do you have a real plan to deal with what is obviously an unfolding disaster: rising government ownership, massive deficits, rising unemployment, falling house prices, busted retirement pensions, rising interest rates (falling corporate bonds), and Federal Reserve inflation on a scale never seen in American history?
NO PROBLEM!

Look back at the economy in October 2007. The Dow was at 14,000. The banks were booming. Real estate was down a little, but the experts gave no warning. They were wrong. All of them.

The U.S. government is running a $1.8 trillion deficit this year. Federal tax receipts are down 34%, which means that the deficit will go above $2 trillion. No one cares. No one says, "This is the end. The American economy will never again be what it was."

Think "2007." Would you have believed that Chrysler and GM were both headed for bankruptcy? In October 2007 GM shares were at $43. Now they are at $1. There was an industry called investment banking. Bear Stearns, Lehman Brothers, and Goldman Sachs were not part of the commercial banking system. To survive, a few made the transition in September 2008. Some did not make the cut.

Merrill Lynch is gone. Bank of America and Citigroup were bailed out by the government. They would have gone under. They sell for a fraction of what they did in 2007.

And what do most people say? "No problem."

There is no problem for which their answer is not "no problem."

Medicare will go bust. Social Security will go bust. "No problem."

The unemployment rate keeps rising. "No problem."

When people refuse to face reality, because reality is going to be more painful than anything they have experienced, they look for signs that the problems they cannot avoid without changing are really not that bad. They look for offsetting good news.

They think the status quo ante will return. The U.S. government is about to spend another $30 billion to buy a dead carcass of a company. It has already spent $20 billion. "No problem."
More Here

Total Collapse of the Global Economy
WATCH HERE

US collapse is at breakneck speed

It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.

True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists.

Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters.

First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish.

Then their faith in God was destroyed, until their churches, all tens of thousands of different "branches and denominations" were for the most part little more then Sunday circuses and their televangelists and top protestant mega preachers were more then happy to sell out their souls and flocks to be on the "winning" side of one pseudo Marxist politician or another. Their flocks may complain, but when explained that they would be on the "winning" side, their flocks were ever so quick to reject Christ in hopes for earthly power. Even our Holy Orthodox churches are scandalously liberalized in America.

The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America's short history but in the world. If this keeps up for more then another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe.
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Government Owes a Record 63 TRILLION!

Leap in U.S. debt hits taxpayers with 12% more red ink


By Dennis Cauchon, USA TODAY
Taxpayers are on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises, a USA TODAY analysis shows.

The 12% rise in red ink in 2008 stems from an explosion of federal borrowing during the recession, plus an aging population driving up the costs of Medicare and Social Security.

That's the biggest leap in the long-term burden on taxpayers since a Medicare prescription drug benefit was added in 2003.

The latest increase raises federal obligations to a record $546,668 per household in 2008, according to the USA TODAY analysis. That's quadruple what the average U.S. household owes for all mortgages, car loans, credit cards and other debt combined.

"We have a huge implicit mortgage on every household in America — except, unlike a real mortgage, it's not backed up by a house," says David Walker, former U.S. comptroller general, the government's top auditor.

USA TODAY used federal data to compute all government liabilities, from Treasury bonds to Medicare to military pensions.

Bottom line: The government took on $6.8 trillion in new obligations in 2008, pushing the total owed to a record $63.8 trillion.

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Faber and Schiff with Beck

The Great Depression of 1930-1940 looms into view

Implications
Paul Krugman editorialized in the New York Times issue of May 25 that California is said to be where the future first appears. The recession has deeply affected the state. In particular, their housing bubble was larger than anywhere else in the nation. Unemployment is running at 11%. This has impacted state revenue. The alarming observation is that the political system is dysfunctional. With the resources available no reason exists for California’s debt burden. Does the state of California indicate what will soon be coming to the nation as a whole? California’s tax system is inequitable and unstable. Taxes are almost impossible to raise except on personal incomes which plummet with unemployment. The political tide has turned against Republicans, yet enough remain in office to block needed legislation. Professor Krugman asks if the rest of the nation will follow California. Will California soon become a banana republic? California’s problems exist at the national level too.

Analysis
Professor Krugman is clearly concerned by what he can see happening in the Golden State As a Nobelist, an economist and an original thinker, he can clearly see links to the federal budget although he is careful not to address that directly. Others do. David Walker, president of the Peter G. Peterson Foundation is frequently vocal. Nouriel Roumeni is too, famously. Even Bill Gross, CEO of Pimco and a leading player in the fixed income segment sees danger ahead. In short, as the financial crisis deepens, steadily expanding into as yet untouched or lightly touched segments of the national economy, more and more observers and commentators are speaking their piece. When General Motors enters bankruptcy in a few days, another wave of unemployment will sweep across the nation. State pension funds across the country have lost huge sums on worthless investments. Those few individuals with various types of savings plans have seen their nest eggs cut by 40%. Wages and salaries are falling month by month. The “green shoots” often alluded to by government functionaries are ephemeral. Now you see them, now you don’t. The reality is that they are illusions. The U.S. Treasury and the Federal Reserve, charged with the almost hopeless task of restoring stability are, like everyone else, at a loss to come to grips with the reality of the situation. The reality is that a high standard of living financed by borrowing is no more. The government, not knowing what to do, does what it knows. What it knows are the remedies of the New Deal and similar programs of the past. More and more, the Great Depression of 1930-1940 looms into view as the most credible model for conditions that exist today. Among the various proposed remedies for California, the convening of a state constitutional convention has emerged. Such a convention would drastically alter the financial structure of California with the objective of restoring the state to financial health. If it is true that California is a bellwether state, it is not unreasonable to think that other states will reexamine their constitutional systems too and a national constitutional convention might be on the boards as well. Many other states beside California feel the duress. Are there enough of them to put through a national referendum calling for such a convention? Would the people support one? Much depends on how far the economy falls below flattening out. Observers who have looked closely at the deterioration that continues day by day have any confidence that prosperity will return in late 2009 and few think 2010 will be any better. In looking back at the Great Depression, it is important to remember that the population at 123-132 million people was about a third of today’s population. America was then still largely rural with citizens growing vegetable and raising livestock. Even town folk had chickens running in the back yard. Hunting and fishing were not only sports but a method of augmenting meager household budgets. Some sections of the U.S. are already seeing the homeless and sorely distressed families in need of fundamentals. So far there have been no serious riots but they will surely come. Only now are questions arising about the ability of government agencies and departments to restore prosperity. Patient people can quickly become impatient when see that conditions are not improving. When it becomes clear that 2010 will look much like 2009, calls for extreme action will rise. The times are not only “interesting” but also dangerous.
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.

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What goes UP 3 times faster than GOLD?

By Andrew Mickey, Q1 Publishing

The dollar is out. The U.S. dollar index has fallen 5% last week.

Treasury bonds are quickly falling out of favor. The yield on 10-year Treasury bonds has climbed from 2.5% to almost 3.5% since March signaling inflation fears and an unwillingness to fund ballooning government borrowing.

Gold is hot. Gold prices are back on the rise and gold stocks have done even better.

Is this a sign of things to come?

Well, if you take a look at the mainstream headlines, you’d think so.

An editorial headline on Bloomberg proclaims, “Dollar is dirt, Treasuries are toast, and AAA is gone.”

Even CBS News is warning, “Inflation could be coming to a U.S. dollar near you.”

To me, it seems just like a typical overreaction in the short-term.

Yes, the long-run trend for the dollar is down as the Fed keeps printing more and more of them and monetizing government debt. And yes, the prospects for gold get brighter and brighter with each passing week.

But there’s no reason to lose your head here. It’s going to take a few years for all this to play out. And the window of opportunity is still wide open to buy precious metals, real assets, and assets not denominated in the dollar (like ADR’s).
That’s why, despite the strong interest in gold at the moment, I encourage you to continue to look for value in the sector. Right now, there seems to be some exceptional value in an asset which is so undervalued, it could outpace gold by 400% or more.
I’m talking about Silver.

When Gold Climbs, Silver Soars

In the past few weeks gold has been getting a lot of attention. With all the big money finally taking a liking to gold, the attention is justified. Remember, a turn in the big money’s attitude towards gold must happen before gold can break through the $1,000 mark and stay there.

The excitement surrounding gold’s surge has only pushed silver further onto the back burner. (You don’t hear about any major hedge funds loading up on silver do you?) And that’s the point. Gold is hot and silver is – in a relative sense - not.

So if you want to find an investment which isn’t so hot but still has a lot of potential in an inflationary environment, you’d want to look at silver. When you do, it won’t take long to realize silver – at current levels – could easily trounce gold in the months and years ahead.

That’s right. Silver has a much brighter future than gold. All you have to do is look at the silver/gold ratio to see how potentially lucrative the situation has become.
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Greatest Fools by Garth Turner

Ever been to Leaside? Some wonk paid $160,000 over asking for a place there last week, I heard.

The mid-Toronto neighbourhood is populated with 1930s-style brick houses without garages built on lots the width of two cars situated on streets with plumbing problems. A couple of blocks away is a huge industrial area where munitions were made during WW2. The dirt was so toxic it had to be hauled away before big box stores could be built. And a good chunk of Leaside’s finest street was once a garbage dump.

But hey, it’s desirable. Upscale. Expensive. Most listings are now north of a million and, local realtors tell me, they’re in hot demand.

Welcome to the parallel universe. As I have been detailing lately, the greatest fools in real estate are not those who bought at the height of the bubble in late 2007, they are the ones buying now, at the pinnacle of denial.

Let me give you a few more reasons why this is going to end badly. You can add them to relentlessly rising interest rates, the demographic tsunami, chronic unemployment, destruction of the national manufacturing base, inevitable tax increases and an energy price crunch.

Canadian household debt has red-lined. The country’s accountants have just warned that families now owe $1.3 trillion, most personal debt on credit cards and LOCs. Sadly, 85% of us have unpaid credit card bills. Worse, a third of all families could not handle an unexpected $5,000 expense. Even worse, one in ten families could not pay a $500 bill.

Two points: First, it seems almost nothing was learned by anyone in the near-death experience of last autumn. All the reasons we rushed headlong into a credit disaster are still there. Second, how are we going to have any kind of sustainable real estate recovery (especially when rates start rising again), when so many consumers are tapped out?

Meanwhile, corporate profits are non-existent, meaning any recovery will be essentially jobless. Look at BMO. Earnings down more than 40%, and 1,100 people being laid off. As I said days ago, consider GM dealerships, where 14,000 people are facing a black hole. GM, by the way, will be bankrupt by Monday. And this week we heard of record numbers of Canadian collecting pogey last month.

The news Stateside just darkens. Home prices in the latest Shiller-Case report, out Tuesday, were down a withering 19% - the greatest drop ever. This signals the bottom has not even been hit yet, after more than four years of meltdown. Said economist Robert Shiller: “There are very few V-shaped recoveries in the history of real estate, and this one is likely to be even slower…”

More troubling is the next wave of mortgage defaults, the “options ARMs” – variable rate loans which allow buyers to pay less than they owe, with the remainder added to the principal. After a time, the loans are reset to reflect the increased debt, plus higher interest rates. It means for many people monthly payments could double even as the value of their properties has plunged. Yeah. More foreclosures.

BTW, there are $314 billion in option ARM mortgages coming up for reset in the next two years. It’s estimated that as the mortgages are adjusted, most homeowners who have then will have negative equity equalling 20% to 40% of the home’s value.

Meanwhile, as you know, Canada’s finance minister has admitted the annual deficit will be more than $50 billion. Three years ago the budget was in surplus by $15 billion.

So, arrive at your own conclusions.

These are mine:

* The current real estate buzz will destroy the wealth of those now buying, especially in multi-offer situations.

* Current first-time buyers will face a double threat of rising mortgage rates and collapsing values over the next two to five years. They will truly wonder why they took such a gamble and how helicopter parents, friends and ‘experts’ could have been so wrong.

* In two years there will be virtually no move-up buyers. High-end houses will be nailed. Bye-bye Leaside.

* Houses in Canada are essentially over-valued and will correct sharply. Given our foundation of debt, the bottomless pit of US property values, unemployment, stagnant incomes and deteriorating national finances, the lunacy of paying current prices will soon be apparent.

* And as all of the above comes together in the next dozen or two months, supply will swamp demand.

Those shelling out full price in the Spring of 09 will look as equity cowboys did in the Spring of 30.
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US Inflation to equal Zimbabwe

May 27 (Bloomberg) -- The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.

Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.

“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”

Federal Reserve Bank of Philadelphia President Charles Plosser said on May 21 inflation may rise to 2.5 percent in 2011. That exceeds the central bank officials’ long-run preferred range of 1.7 percent to 2 percent and contrasts with the concerns of some officials and economists that the economic slump may provoke a broad decline in prices.

“There are some concerns of a risk from inflation from all the liquidity injected into the banking system but it’s not an immediate threat right now given all the excess capacity in the U.S. economy,” said David Cohen, head of Asian economic forecasting at Action Economics in Singapore. “I have a little more confidence that the Fed has an exit strategy for draining all the liquidity at the appropriate time.”

Action Economics is predicting inflation of minus 0.4 percent in the U.S. this year, with prices increasing by 1.8 percent and 2 percent in 2010 and 2011, respectively, Cohen said.
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Worst Investment? The US dollar.

One investment, more than any other, has proven to be a terrible storehouse of value for well over 80 years.

While some disasters unfold rapidly (Enron, subprime mortgages, etc.), this investment’s decline has occurred in slow motion, losing an average of 3.6% a year. Indeed, you can hardly find a period in the last 89 years in which this investment actually MADE money.
That investment is the dollar.

Source: Zero Hedge

The above chart shows the history of the dollar’s purchasing power going back to the 1920s. All told the dollar has lost 94% of its purchasing power since we abandoned the gold standard. The most dramatic loss in purchasing power occurred directly after Roosevelt made it illegal to own gold. However, with few exceptions, the dollar has been spiraling downward ever since 1920.

After Nixon ended Bretton Woods (legislation that pegged the dollar to gold indirectly), the pace of purchasing power destruction accelerated with the dollar losing an average of 4.4% in purchasing power annually.

Gold and the Dollar have maintained an inverse relationship ever since this time. One zigs, the other zags. One rallies, the other falls. And starting in 2000, both entered long-term trends: the dollar falling while gold rallied (see the below chart).


Now, nothing ever goes straight up OR straight down. And starting in June 2008, the dollar erupted in its strongest rally in decades, jumping 22% in eight months. The story here was easy to understand, although most of the media ignored it.

With the dollar continually in decline and interest rates well below the rate of inflation in the post-Tech Crash, foreign corporations and institutional investors borrowed heavily in dollars.

Doing this meant their debts were continually shrinking relative to their profits (sales were denominated in a currency that was rising relative to the currency in which their debts were denominated). This meant their debts were easier to pay off.

However, when the dollar started a rally in July ’08, this positioning began going horribly wrong. Anyone short the dollar got killed and had to cover their shorts (buy dollars) which in turn pushed the dollar higher. At one point there were an estimated $9 trillion in dollar shorts in the world. So the dollar rally was the mother of all short squeezes. And as you can see, it kicked gold in the teeth.
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Its going to get UGLY! A lot UGLIER

As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.

Problems Grow for Prime Borrowers
In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories.

With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.

“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”

Economists refer to the current surge of foreclosures as the third wave, distinct from the initial spike when speculators gave up property because of plunging real estate prices, and the secondary shock, when borrowers’ introductory interest rates expired and were reset higher.

“We’re right in the middle of this third wave, and it’s intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “That loss of jobs and loss of overtime hours and being forced from a full-time to part-time job is resulting in defaults. They’re coast to coast.”

Those sliding into foreclosure today are more likely to be modest borrowers whose loans fit their income than the consumers of exotically lenient mortgages that formerly typified the crisis.

Economy.com expects that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year.
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Why Interest Rates will go UP

How much longer can global central banks depress the true cost of money? If the business world has become a riskier place, then the cost of borrowing should be going up. If governments around the world need to borrow more to finance their spending programs, they should be paying higher rates on bonds, not lower rates.


Welcome to a world of inverted economics courtesy of quantitative easing and public debt issuance. The problem of course with suspending the laws of gravity for a period is that eventually the sky will come crashing down.

High inflation coming
This means a period of very high inflation at best, and at worse an inability to raise funds for public expenditure on health, welfare and education, and real spending cuts or higher taxation. Why inflation?

This is the simplest phenomenon to understand. If governments print money then this inflates the money supply and more money in circulation leads to inflation.

Of course, this only happens when this money is spent. If consumers choose to save – as they are now – then the impact of the increase in the money supply is delayed until that new money finds its way into the economy.

That buys the government time – to get re-elected perhaps – but it does absolutely noting to tackle the underlying problem, in fact it makes it worse. The longer the delay in correcting imbalances and the worse the inflationary problem will be.

Higher interest rates
Once the new money is spent, then the inflation arrives, and bank account holders will demand a higher interest rate as compensation or take their money out and spend it, adding to inflation. In these circumstances central banks have no alternative but to raise interest rates.

Imagine what an impact that will have on financially stretched consumers, quite apart from the negative implications for public spending and its impact on economies. It is nothing short of a double-dip recession scenario.

Yet there is a sense of historic inevitability of this process. It all happened before in the late 1970s. Then the only investors who did well bought gold, silver and oil, and even cash out performed equities, bonds and real estate.

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The Market is Rigged: Another Analyst

With 2 minutes 30 seconds remaining in the video, Dan Shaffer, President of Shaffer Asset Management, gives shocking evidence of direct government intervention in the stock market:

“Something strange happened during the last 7 or 8 weeks. Doreen you probably can concur on this -- there was a power underneath the market that kept holding it up and trading the futures. I watch the futures every day and every tick, and a tremendous amount of volume came in a several points during the last few weeks, when the market was just about ready to break, and it shot right up again. Usually toward the end of the day – it happened a week ago Friday, at 7 minutes to 4 o’clock, almost 100,000 S&P futures contracts were traded, and then in the last 5 minutes, up to 4 o’clock, another 100,000 contracts were traded, and lifted the Dow from being down 18 to up over 44 or 50 points in 7 minutes. That is 10 to 20 billion dollars to be able to move the market in such a way. Who has that kind of money to move this market?

On top of that, the market has rallied up during the stress test uncertainty and moved the bank stocks up, and the bank stocks issued secondaries – they issues stock – they raised capital into this rally. It was perfect text book setup of controlling the markets – now that the stock has been issued…” [interrupted by Richard Suttmeier].

Time is running out

RUSSIA Dumps US DOLLAR

The Russians are aware of the imminent threat from the USA and have dumped their U.S. Dollar for Euro as Reserve Currency.
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This dumping will increase the USD to spiral downwards at an alarming rate. The more value the USD loses, the higher inflation because it takes more dollars to acquire the same goods or services, more money is also needed just to run the countries program. And America's ability to repay back the National Debt will become an impossible task, therewith, the USA will lose her 'AAA' rating inviting other countries to follow Russia's example in dumping their own US reserve currency for the more stable EURO trickling back into the US and causing evermore inflation. But the most detrimental of all is that this outcome will tip the scales in favor for the oil producing countries (OPEC) to DUMP and replace the US dollar with a currency basket to price crude.
The above will trigger War with the Europeans-Russia proxy Iran this is a foregone conclusion, but before the War the only option let for the US administration is to Crash all American Markets and remove as much disposable capital from the System to achieve two things; (1) buy time by strengthening the Dollar into finding an economic solution to bleed the Europeans and Russians with; (2) impoverish as many Americans as possible in the process to achieve an obedient and dependent civilians that should the worst arise when the Government points finger at the enemy, you will not question!

China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed's direct purchase of US Treasury bonds.

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TIME IS RUNNING OUT!!!!


WASHINGTON - Prime Minister Benjamin Netanyahu will use his meeting with U.S. President Barack Obama on Monday to stress that "time is running out" for stopping Iran's nuclear program, so Obama must not spend more than a few months on his planned dialogue with Tehran unless real progress is achieved. If progress is not achieved within a few months, the United States must move quickly to more aggressive measures against Iran, Netanyahu will say.
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Its unfolding before your very eyes, more aggressive measures will be the outcome, Iran will not discontinue to sell their oil in EUROS causing USD to trickle into the US economy causing Dollar devaluation (inflation). The Russians will protect IRAN oil is bloodline of their com-plot, and just as the Russians used the Iranian cloak to arm Iraqi insurgent, the Americans will use the Israelis to masquerade themselves before the World.


Israel to US: We reserve 'right' to bomb Iran.
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Great 49 minute Video of the 1920 Depression!

Great video explaining how the 1920 Depression was abruptly halted: Do NOTHING.
If you don't want to hear about the 1920's depression skip ahead 30 min. to today's problems. A MUST SEE VIDEO!



LINK

Obama: We're OUT of MONEY

'WE'RE OUT OF MONEY'
Sat May 23 2009 10:32:18 ET

In a sobering holiday interview with C-SPAN, President Obama boldly told Americans: "We are out of money."

C-SPAN host Steve Scully broke from a meek Washington press corps with probing questions for the new president.

SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?

OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we've made on health care so far. This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades.

So we've got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it's putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off.

So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit.

So, one option is just to do nothing. We say, well, it's too expensive for us to make some short-term investments in health care. We can't afford it. We've got this big deficit. Let's just keep the health care system that we've got now.

Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything...

SCULLY: When you see GM though as “Government Motors,” you're reaction?

OBAMA: Well, you know – look we are trying to help an auto industry that is going through a combination of bad decision making over many years and an unprecedented crisis or at least a crisis we haven't seen since the 1930's. And you know the economy is going to bounce back and we want to get out of the business of helping auto companies as quickly as we can. I have got more enough to do without that. In the same way that I want to get out of the business of helping banks, but we have to make some strategic decisions about strategic industries...

SCULLY: States like California in desperate financial situation, will you be forced to bail out the states?

OBAMA: No. I think that what you're seeing in states is that anytime you got a severe recession like this, as I said before, their demands on services are higher. So, they are sending more money out. At the same time, they're bringing less tax revenue in. And that's a painful adjustment, what we're going end up seeing is lot of states making very difficult choices there...

SCULLY: William Howard Taft served on the court after his presidency, would you have any interest in being on the Supreme Court?

OBAMA: You know, I am not sure that I could get through Senate confirmation...

Developing...

Time to legalize counterfeiting-The Government does it!

Many Americans today believe certain illegal vices in our society should be decriminalized, taxed, and regulated. The most popular of these vices include marijuana smoking, prostitution, and all forms of gambling. The proponents for decriminalization believe that the new tax revenues produced would help support schools, healthcare, and the impoverished, ease the pain of taxpayers, and reduce the deficit. They also believe that transgressions such as these will take place no matter, but, if properly regulated, would be safer for society in general. It would be a win, win situation.

Unfortunately, when it comes to lowering taxes and helping the downtrodden, the best-laid government plans seem to fall short of expectations. However, there is one vice, one small illegal indiscretion, that, if decriminalized would solve all our problems. The United States needs to legalize the victimless crime known as counterfeiting.

Once legalized, counterfeiting would be for everyone. This could be accomplished by making Federal Reserve Note paper (complete with silk threads, watermarks, etc.) available to the public. With the correct paper, most computers with the right software would have no trouble replicating U.S. currency. If a household did not have a computer, special over- the-counter counterfeit kits could be made available, with instructions in both English and Spanish.

Once in place, universal counterfeiting would prove to be the ultimate stimulus package for the economy. Employees would always have enough money and never have to go on strike. Citizens would have no trouble paying their mortgages and never face foreclosure. Everyone would gladly pay his or her taxes and there would be no need to have an IRS.

Free market consumerism would return with a flourish. People would purchase whatever they wanted and stores would only have to worry about having enough merchandise on hand. Stores could charge the consumer whatever they wanted and the consumer could still afford. Every shopping day would be like the day after Thanksgiving and the day before Christmas.

Once legalized, counterfeiting would still have to be regulated. Parity and fairness would dictate that families earning over $250,000 would only be allowed to print $1, $2, $5 and $10 denominations. Families with combined incomes of less than $250,000 could print $20 and $50 bills. The unemployed could print $100 bills, and ACORN workers and UAW members would be entitled to counterfeit a new denomination, something even larger than the $100 bill (with President Obama on the front).

Link

Universal counterfeiting could be the entitlement program that ends all other entitlement programs and sets us free. It is time to stand up and tell our legislators we want universal counterfeiting. If they protest, "You cannot just print money," then promptly respond in kind, "Why not? It works for you."

R.I.P. Malls

CHARLOTTE, N.C. -- Malls, those ubiquitous shopping meccas that sprang up in the 1950s, are dwindling in number, with many struggling properties reduced to largely vacant shells.

On the low-income east side of Charlotte, N.C., the 1.1-million-square-foot Eastland Mall recently lost a slew of key tenants, including a Dillard's and, next month, a Sears. Sales per square foot at the venue fell to $210 in 2008 from $288 in 2001.
Death of an American Mall

View Slideshow
Here
Andy McMillan for The Wall Street Journal

As the recession alters American spending habits, traditional shopping malls like Eastland Mall are deteriorating at an accelerating pace.

The Metcalf South Shopping Center in Overland Park, Kan., is languishing after plans to redevelop it into an open-air shopping district fizzled. The stretch of shops that connects the two largest tenants -- a Sears and a Macy's -- stands mostly vacant, patrolled by security guards.

With their maze of walkways and fast-food courts, malls have long been an iconic, if sometimes unsightly, presence in the American retail landscape. A few were made famous by their sheer size, others for the range of shopping and social diversions they provided.

But the long recession is helping to empty out the promenades. Some analysts estimate that the number of so-called "dead malls" -- centers debilitated by anemic sales and high vacancy rates -- will swell to more than 100 by the end of this year.

In the 12 months ended March 31, U.S. malls collectively posted a 6.5% decline in tenants' same-store sales, according to Green Street Advisors Inc., a real-estate research firm. The recent slump was led by an average 7.3% sales drop at Simon Property Group Inc., the operator with the largest number of mall locations.
Mall Link

Visit Dead Malls Dot Com
Here

Welfare cases up 47% in B.C. CANADA since last year
Link

World Economies Nosedive-Green shoots? More like Dead Shoots

Steep declines in the economies of three of the U.S.'s biggest trading partners -- Mexico, Japan and Germany -- underscored the severity of the global recession and put pressure on major industrialized nations to revive moribund global trade talks.

On Wednesday, Mexico became the latest country to report a plunge in output. The country's gross domestic product fell at an annualized rate of 21.5% in the first quarter, the worst performance since the 1995 peso crisis led to an International Monetary Fund and U.S. Treasury financial rescue. This time, Mexico has insulated itself somewhat by arranging a $47 billion IMF credit line in advance.

Mexico's decline followed by a day Japan's report that its economy contracted in the first quarter at a 15.2% clip, its worst performance since 1955. Last week, Germany said its first quarter decline in GDP, an annualized 14.4%, was the worst since 1970.

Associated Press
Tourists enjoy at the nearly empty pool of the Hotel Gran Caribe Real in Cancun.
All three countries depend on exports to the U.S. But they have nose-dived as U.S. consumers cut back purchases of autos, electronics and other goods mass produced abroad. For the first three months of 2009, U.S. merchandise imports declined about 30% to $352.5 billion compared with the same period a year earlier. Mexico's ties to the U.S. are particularly strong because of the North American Free Trade Agreement, and Mexican auto production in the first quarter fell 41% from the year before.
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"Reporting from Los Angeles and Sacramento --

By Evan Halper and Tom Petruno
10:53 PM PDT, May 20, 2009

First came the banks and insurance companies. Then the auto industry. Now, with California on the verge of financial collapse, state leaders are demanding an unprecedented federal rescue of their own.

They say they need the Obama administration to step in and back billions of dollars in emergency loans. If Washington fails to do so, the state could start running out of cash in July and then would have to stop paying huge amounts of its bills. That, in turn, could set off dangerous ripples throughout the economy, state officials say."
Source: LA TIMES
Check out this amazing graph from the 1700's to now. Its a stunning cycle!
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Bilderberg 2009 Report.

A new Kremlin report on the shadowy Bilderberg Group, who this past week held their annual meeting in Greece, states that the West’s financial, political and corporate elite emerged from their conclave after coming to an agreement that in order to continue their drive towards a New World Order dominated by the Western Powers, the US Dollar has to be “totally” destroyed.

Even worse, a new US report on these secret Bilderberg meetings states: “Investigative journalist Daniel Estulin, whose information from inside Bilderberg has routinely proven accurate, states that the global elite’s plan to completely destroy the economy and ultimately lower global population by two thirds has stoked fears even within Bilderberg itself that the fallout from such chaos could ultimately result in the globalists losing their control over the world.”

Jesus of Suburbia

Jesus of Suburbia – Green Day

Beneath the finely groomed blissful suburban façade of America lurk desperation, denial, hypocrisy, and anger. The kids of suburbia today have an entirely different reality than the suburbs I grew up in during the 1970’s. The Ozzie & Harriet idealized version of suburbia from the 1950’s has degenerated to the Green Day nightmare vision of today. The suburbs have mansion-like homes with spotless interiors, entertainment centers, three car garages, manicured lawns, and no soul. The children of suburbia have been brought up on soda pop and Ritalin. They come home to empty mansions, as both parents must work to pay for the glorious abode. Our homes have gotten bigger and better, while our lives have gotten smaller and less satisfying. One third of all children in the United States are growing up in a single parent household. Many kids feel angry and disconnected from their families, friends and home. Fifty percent of all marriages end in divorce. The kids feel rage and hopelessness at their existence in a suburban nightmare. There are 2 million children who take Ritalin every day. Is this because they truly have ADHD, or it is the painless way out for overstressed suburban parents?
(snippet)

There is no need to worry. Jim “Mad Money” Cramer assures us that the bottom is in for housing. Here are his words:


“The bottom, well, is now. We are seeing a huge wave of buying of foreclosed homes in Northern and Southern California and in Florida. The numbers are too positive to think that these, the hardest-hit areas, aren't putting in long-term bottoms.”

Jim Cramer – April 19, 2009


Of course, Jimbo has called more bottoms than a proctologist. His housing market bottom call of 2006 was off slightly, by about 4 years. His latest call will be off by two years, so he is getting better. Jim Cramer is the best salesman since P.T. Barnum. He is able to hock his 4 books and website twenty times in the space of an hour every night, while helping clueless morons lose what is remaining of their retirement savings. You will learn more and lose less by watching Cash Cab every night from 6:00 pm to 7:00 pm rather than watching the shameless shill Jim Cramer.
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Merrill Lynch Chief: People are still in Denial

As Merrill Lynch's chief North American economist, Canadian David Rosenberg had a front-row seat for the spectacular collapse of the U.S. housing market, the meltdown of the credit markets, the evaporation of trillions of dollars of household worth and the destruction of several of Wall Street's most storied firms. If the people running those shops, including his own, had paid closer attention to his early dark warnings, they might still be occupying their lavishly furnished corner offices today.

Now, Mr. Rosenberg has taken his formidable analytical skills back to Bay Street, as chief economist and strategist with Gluskin Sheff. He remains thoroughly bearish on American prospects, but colours the outlook for the Canadian economy and markets in much brighter hues.

You remain convinced that the U.S. is nowhere close to being out of the woods. Why is that?

We had three shocks in succession [in the U.S.]. We had a housing shock, followed by a credit shock, followed by an employment shock. Although credit conditions aren't back to normal ... there's no doubt that they are measurably better than they were just three to six months ago. But the other two shocks are lingering and still very significant.

You were predicting by 2005 that U.S. housing would take a serious tumble.

I had this bad gut feeling about home prices. I was early on the call. But you could see the cracks. We know that house price deflations don't end well. But this proved to be far worse than anything we saw in the 1990s.

Because you were an early bear at the table, plenty of smart portfolio managers dismissed what you had to say. Won't that happen again, now that the market seems to be bottoming out?

I know that people will say, well, there's the boy who cried wolf. And all I can say to that is: Remember, the wolf showed up at the end of the story.

I take it that U.S. housing remains the No. 1 concern.
Link

Letter from a Dodge Dealer

May 19, 2009

letter to the editor

My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.

We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability.

I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life.

On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.

Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.

HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?

THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY

This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.

This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.

HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

I beseech your help, and look forward to your reply. Thank you.

Sincerely,

George C. Joseph
President & Owner
Sunshine Dodge-Isuzu

Job loss just keep piling up

Another 6,400 workers to lose jobs at HP
SAN FRANCISCO (AP) - Hewlett-Packard Co. is cutting 6,400 more workers—or 2 percent of the company's total work force.
Link
Medtronic to cut up to 1,800 jobs after profit dip
Medical device maker Medtronic said Tuesday it would cut up to 1,800 employees after its fiscal fourth-quarter plunged 69 percent on slipping sales and restructuring and other charges.

22 reasons why OBAMA will raise your taxes

1. Federal budget deficits/debt

Federal debt is now $11.5 trillion. Add $1.4 trillion this year. That's almost 100% of GDP.

2. Social Security unfunded debt

No longer a political "third rail," we have no choice: We must raise taxes, or cut benefits.

3. Medicare unfunded obligations

Unfunded after 2016, $65 trillion by 2041, consuming 100% of tax revenues by 2075.

4. Health care insurance liabilities

Costs rising at double the inflation rate, 47 million uninsured. Obama plans universal coverage of this mega-$2.5 trillion business. Can we trust insurers sudden offer to help?

5. Military/defense budget costs

Budget $662 billion. Add veterans affairs, Afghan, Iraq: $1.45 trillion 55% of budget.

6. Homeland insecurity risks

Ports, chemical plants, borders at risk. Black Swans are lurking; with unpredictable mega-buck consequences.

7. Real estate/mortgage losses

Global real estate from $40 trillion to $70 trillion in 5 years. Total global wealth lost since 2007, $50 trillion. U.S. mortgages shot from $7 trillion to $14 trillion in 8 years, now down $6 trillion, with 20% of homes worth less than the mortgage.
8. Peak oil and energy alternatives

Oil's soon declining. Extraction costs will exceed sale price. Nuclear energy cost: $75 trillion. Coal's dirty. Wind, biofuels: costly.

9. Cap and trade

Taxing fossil-fuel emissions will increase energy costs. But it won't change much. China won't stop. So population grows, with demand and global warming.

10. Foreign trade deficits

Annual deficits continue hovering around $600 billion. Foreigners buy 70% of our debt. Many convert to equity: Today foreigners own a net value of $2.5 trillion in America.

11. Corporate pensions

Two-thirds of them are underfunded. Taxpayers cover losses through the Pension Benefits Guarantee Corporation, also underfunded by $500 billion.

12. Local government pensions

Latest estimates of retiree benefits and health-care costs now called a "$2 trillion hole."
More Here

America's Future Job Market

GEAB: June 2009 is Global Systematic Crisis Month

Highlights:


GEAB N°35 is available! Global systemic crisis: June 2009 - When the world steps out of a sixty-year old referential framework
The financial surrealism which has been at the heart of stock market trends, financial indicators and political commentaries in the past two months, is in fact the swan song of the referential framework within which the world has lived since 1945.

Just as in January 2007, the 11th edition of the GEAB described that the turn of the year 2006/07 was wrapped in a « statistical fog » typical of an entry into recession and designed to raise doubts among passengers that the Titanic was really sinking (1), our team today believes that the end of Spring 2009is characterized by the world’s final stepping out of the referential framework used for sixty years by global economic, financial and political players in making their decisions, in particular of its “simplified” version massively used since the fall of the communist bloc in 1989 (when the referential framework became exclusively US-centric). In practical terms, this means that the indicators that everyone is accustomed to use for investment decisions, profitability, location, partnership, etc ... have become obsolete and that it is now necessary to find new relevant indicators to avoid making disastrous decisions. (UncA note: if that is even possible in a basic coordinate system change )

This process of obsolescence has increased dramatically over the past few months under pressure from two trends:

. first, the desperate attempts to rescue the global financial system, particularly the American and British systems, have de facto "broken navigational instruments" as a result of all the manipulation exerted by financial institutions themselves and by concerned governments and central banks. Among those panic-stricken and panic-striking indicators, stock markets are a perfect case as we shall see in further detail in this issue of the GEAB. Meanwhile, the two charts below brilliantly illustrate how these desperate efforts failed to prevent the world’s bank ranking from experiencing a major seism (it is mostly in 2007 that the end of the American-British domination in this ranking was triggered).

. secondly, astronomical amounts of liquidity injected in one year into the global financial system, particularly in the U.S. financial system, led all financial and political players to a total loss of touch with reality. Indeed, at this stage, they all seem to suffer from a syndrome of diver’s nitrogen narcosis – impairing those affected and leading them to dive deeper instead of surfacing. Financial nitrogen narcosis has the same effects than its aquatic counterpart.
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Link

Canadians going Bankrupt in record numbers

Declaring bankruptcy, once regarded as a shameful practice, is now a more viable option for the financially overwhelmed. But going broke can have significant repercussions.

By Gordon Powers
May 16, 2009
Although it has lost much of its stigma, declaring personal bankruptcy is still considered a last resort for many people sinking under the weight of unmanageable debt. Nonetheless, roughly 116,000 Canadians did just that in 2008, reports the Toronto-Dominion Bank.
And that number will continue to climb over the next two years, perhaps as high as 160,000, as rising unemployment takes its toll on heavily indebted households, TD estimates.
But bankruptcy is not an easy - or pleasant - fix for financial problems. It comes with substantial side effects and shouldn't be taken lightly.
How do you know when it's time to finally pull the plug? Well, if you're always behind in your payments and juggling cash advances or payday loans, you're likely a good candidate. And if your marriage is crumbling over money, then bankruptcy may help clear the deck as you split.

It's all a question of solvency. Generally speaking, you're insolvent if the money you owe outweighs your assets and you have no reasonable chance of getting out from under. But that doesn't mean you have to declare bankruptcy from the outset.
Link

CRIMINAL: Hedge Fund Managers Bankrupt Companies, SEC allows it.

Comment: This video is a must see. (27 minutes) It shows you the details surrounding the collapse of Bear Sterns and how it was done by Hedge funds through the illegal practices of "Naked Shorts".

Hedge Funds and the Global Economic Meltdown from Judd Bagley on Vimeo.

"The Worst Is Yet to Come": If You're Not Petrified, You're Not Paying Attention

Posted May 15, 2009 09:31am EDT by Aaron Task in Investing, Recession, Banking, Autos, Housing

The green shoots story took a bit of hit this week between data on April retail sales, weekly jobless claims and foreclosures. But the whole concept of the economy finding its footing was "preposterous" to begin with, says Howard Davidowitz, chairman of Davidowitz & Associates.
"We're in a complete mess and the consumer is smart enough to know it," says Davidowitz, whose firm does consulting for the retail industry. "If the consumer isn't petrified, he or she is a damn fool."

Davidowitz, who is nothing if not opinionated (and colorful), paints a very grim picture: "The worst is yet to come with consumers and banks," he says. "This country is going into a 10-year decline. Living standards will never be the same."

This outlook is based on the following main points:

With the unemployment rate rising into double digits - and that's not counting the millions of "underemployed" Americans - consumers are hitting the breaks, which is having a huge impact, given consumer spending accounts for about 70% of economic activity.
Rising unemployment and the $8 trillion negative wealth effect of housing mean more Americans will default on not just mortgages but student loans and auto loans and credit card debt.
More consumer loan defaults will hit banks, which are also threatened by what Davidowitz calls a "depression" in commercial real estate, noting the recent bankruptcy of General Growth Properties and distressed sales by Developers Diversified and other REITs.
As for all the hullabaloo about the stress tests, he says they were a sham and part of a "con game to get private money to finance these institutions because [Treasury] can't get more money from Congress. It's the ‘greater fool' theory."

"We're now in Barack Obama's world where money goes into the most inefficient parts of the economy and we're bailing everyone out," says Daviowitz, who opposes bailouts for financials and automakers alike. "The bailout money is in the sewer and gone."
Link with Video

Economic Doom is getting Worse!

The following laundry list puts the US Economy halfway between the Intensive Care Ward and the National Morgue:

- Endless War spending could subsidize every household in America with $1000 per year
- Income is trending down in the United States, England, and Japan
- US banks loan loss reserves are at a 20-year low while profound losses continue
- Of the nearly 9000 US banks, 1575 of them posted a Q1 loss
- Bernanke claims $2 trillion is needed by the big US banks, but they pass the Stress Test
- Municipal bonds and state finances are disasters, as they each appeal for USGovt aid
- A shocking 20% of US homeowners have loan balances greater than their home values
- Half of modified loans result in foreclosure within several months
- Jobs report for April revealed jobless level at 8.9% (massaged) and 15.8% (actual)
- Jobs Report for April included 66k worse revised job losses for March and February
- Continuing jobless claims at 6.56 million, grew 220k just last week
- CALPERS pension fund is insolvent, USGovt pension PBGC guarantee fund in deep deficit
- FDIC requested $500 billion in additional funds to cover bank failures (giant failure coming)
- Car sales still down 40% annually, with steep Japanese car sales declines also
- Detroit carmakers are closing down plants, with huge ripples through entire supply chain
- GM & Chrysler restructures are extremely likely to result in Chapter 7 liquidation in time
- GM burned $1.3B in Q1, burns $113 million per day, unable to transition to green cars
- Business investment down 38% in Q1, a RELIABLE LEADING INDICATOR
- Durable goods up 9% in Q1, but only after Q4 was pushed down from bank shock
- Inventory reduction not key, but rather inventory/sales ratio, since sales way down
- Economic contraction despite lower energy costs from crude oil, natural gas, gasoline
- Housing was false foundation since 2002, now in stubborn decline, the Giant Albatross
- Distress sales make up 40% of all housing sales, led by underwater sales and foreclosures
- Cramdown Law rejection means open season on foreclosures, more huge bank losses
- Banks admit that home loan are not modified after all, a revolving door to foreclosure
- Option ARMs, Jumbos, and Commercial mortgage defaults are ramping up fast
- Commercial mortgage bonds have $70-100 billion that cannot be refinanced, sure to default
- Staggering decline in consumer credit, -80% in Q3, minus $31.7B in Q4/Q1

Note that final line item. Never in modern US Economic history has consumer credit gone negative. Its growth fell sharply in 3Q2008, but it contracted (reduced, shrunk) by $31.7 billion on an aggregate basis in 4Q2008 and 1Q2009. For a debt-based economy, such is a death knell.
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Detroit City Councilman walks away from mortgage-median sales price? $5,800

DETROIT - It was their dream home, a two-story, four-bedroom colonial in one of Detroit's nicest and most stable neighborhoods.

But then, one day in December, City Councilman Kwame Kenyatta and his wife packed up their belongings, locked the doors, mailed in the keys and walked away — adding another vacant house to the thousands in a city hard hit by the nation's mortgage crisis.

"We're already underwater when it comes to what we're paying on the house versus what the house is worth," Kenyatta said.
Around the country, the practice, sometimes referred to as "mortgage walking" or "jingle mail," appears to be growing. But for Kenyatta, the decision could do more than hurt his credit rating.

It could damage his bid for mayor of Detroit this summer, particularly since he has been one of the city's most vocal supporters of measures to improve neighborhoods and clean up blight.

"If I'm going to follow you, you need to be a leader," said Patricia Dixon, a former neighbor of Kenyatta's. "You don't show leadership by walking away from your home in the city of Detroit. You have vandalism where they find out the houses are vacant. You have people stealing fireplaces."

Kenyatta, a Democrat, is not the only elected official facing mortgage trouble. The Wayne County prosecutor's Detroit home has gone into foreclosure. And California Rep. Laura Richardson nearly lost her home before she paid up delinquent home loans.

Walking away from a mortgage isn't illegal; the bank takes possession and tries to sell the house. But "it just puts more properties in foreclosures, and that's the last thing we need right now. That's just pulling the median sales price down," said Karen Kage, who runs a real estate listing service in suburban Detroit.

In Detroit, the median sales price for a home is now a pathetic $5,800, down more than $66,000 from seven years ago. An estimated 16,000 foreclosed homes are on the market in the city of about 920,000 residents. Detroit also has one of the highest unemployment rates in the nation, at around 20 percent.
Link

New York City Real Estate Prices To Fall At Least Another 35%
Link

Shelters in NY charge homeless families, pay or get out!

The Bloomberg administration has quietly begun charging rent to homeless families who live in publicly run shelters. A flier posted in one shelter last week warned residents in bold, underlined type, “Failure to make the required contributions could result in the loss of your family’s temporary housing.”

City officials said the new rent requirement had been in the works since a 2007 state audit that forced them to pay back $2.4 million in state housing aid that should have been covered by homeless families with income. They argued that homeless people with income should be expected to pay for a portion of their shelter costs, a model that echoes the federal Section 8 housing voucher program.

Quote:
“They are taking money from them that could otherwise be used to help themselves get out of the shelter system,” agreed Arnold S. Cohen, the president and chief executive of the Partnership for the Homeless. “We’re dealing with the poorest people, the people who are the most in need, and we’re asking them to pay for a shelter of last resort.

“Families have been told to pay up or get out,” said Steven Banks, the attorney in chief for the Legal Aid Society. “The policy is poorly conceived, but even more alarmingly, it’s being poorly executed. What is happening is that we have seen cases of families being unilaterally told, without any notice of how the rent was calculated, that they must pay certain amounts of rent or leave the shelter..
Source: New York Times

FDIC Planning for a Huge BANK FAILURE? GM to import Cars from China to the US

Late reports this evening are citing an anonymous source that says the FDIC is preparing some sort of superfund that could handle the failure of a large “systemically important financial institution.”
Reuters reports:
“Another source familiar with the FDIC’s plans said on Tuesday that the agency was considering seeking to create a new fund to help deal with any resolution of systemically important financial institutions.”
The details on this story out of Reuters are very vague so this is mostly speculation, but such a development would not be shocking to anyone familiar with the state of the U.S. banking sector. FDIC losses are quickly mounting and they are certainly ill-prepared to handle a major failure. Shoring up the FDIC is a wise insurance policy if nothing else. Or they could be preparing some U.S. banks for the same fate as Chrysler and GM. A welcome development in my opinion.
As regular readers know, the recent government induced rally created the perfect environment in which to raise capital, but these capital raises only place band aids on axe wounds. The patient is suffering from cancer and we’re performing chemo to no avail. The tumors must be removed. Instead, we continue to allow the banks to operate with the toxic assets on their balance sheets. The government knows real estate losses and credit card losses are mounting. They also know the TALF & PPIP will not succeed as the banks have no incentive to sell assets.
Is there a chance the economy rebounds sharply and these banks are able to earn their way out of this crisis? Certainly, but the odds of a prolonged and sluggish recovery are far too high in my opinion to allow these banks to operate in their current state. The government knows they can’t prop up 8,000 banks forever and I suspect they are none too pleased with the stress test results if the economy were to remain sluggish for longer than expected. The only resolution: FDIC receivership. In this case, perhaps a rather large one….
Link
SHANGHAI (AP) -- General Motors Corp. plans to begin exports of vehicles made in China to the United States within two years, ramping up sales to more than 50,000 by 2014, reports said Wednesday.

Source: Associated Press

Glen Beck:The Word is Dumping the Dollar

Car dealers fight rapid closures; 180,000 workers could lose jobs
DETROIT — Car dealers from around the nation will be in Washington Wednesday to urge President Obama's automotive task force to let the economics, not the government, decide which car dealers should shut down, and when.
The task force has been pushing General Motors(gm) to trim its dealer ranks faster than the several years originally planned as part of its overall restructuring. Speeding up that process will only dump 180,000 more workers onto unemployment rolls in a recession, the dealer group argues.
Link

US to become a nation of TENTS

MIAMI (AP) -- The number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates, according to data released Wednesday. Ohio was in the top 10.

More than 342,000 households received at least one foreclosure-related notice in April, RealtyTrac Inc. said. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since the Irvine, Calif.-based foreclosure listing firm began its report in January 2005.

April was the second straight month with more than 300,000 households receiving a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.

The April number, however, was less than one percent above that posted in March, when more than 340,000 properties were affected. The March data was up 17 percent from February and 46 percent from a year earlier.

"We've never seen two consecutive months like this," said Rick Sharga, RealtyTrac's senior vice president for marketing. "It's the volume that's surprising."

While total foreclosure activity was up, the number of repossessions by banks was down on a monthly and annual basis to their lowest level since March of last year, RealtyTrac said.

But that's far from positive news. Because much of the foreclosure activity in April was in the default and auction stages -- the first parts of the foreclosure process -- it's likely that repossessions will increase in coming months, RealtyTrac said.
Link

Is History is repeating itself? Take a look, AND 9 Trillion lost by the Federal Reserve?

Video: Federal Reserve Cannot Account for $9 Trillion
: Julie Crawshaw
The Federal Reserve apparently can't account for $9 trillion in off-balance sheet transactions.
When Rep. Alan Grayson (D-Orlando) asked Inspector General Elizabeth Coleman of the Federal Reserve some very basic questions about where the trillions of dollars that have come from the Fed's expanded balance sheet, the IG didn't know.

Worse, nobody at the Fed seems to have any idea what the losses on its $2 trillion portfolio really are.
"I am shocked to find out that nobody at the Federal Reserve is keeping track of anything," Grayson says.

Grayson asked Coleman if her agency had done any research into the decision not to save Lehman Brothers, which “sent shockwaves through the entire financial system,” Coleman said it had not.

“What about the $1 trillion plus expansion of the Federal reserve’s balance sheet since last September?” Grayson asked.

“We have different connotations,” Coleman replied. “We’re actually conducting a fairly high-level review of the various lending facilities collectively.”

Translation: Nobody at the Fed knows where the money went.

Link

Credit cards expected to bust to the tune of 186 BILLION Dollars. What happens to the banks?

It used to be easy to guess how many Americans would have problems paying their credit card bills. Banks just looked at unemployment: Fewer jobs meant more trouble ahead.

The unemployment rate has long mirrored banks’ loss rates on card balances. But Eddie Ward, 32 and jobless, may be one reason that rule of thumb no longer holds. For many lenders, losses are now starting to outpace layoffs.

Mr. Ward, of Arkansas, lost his job at a retail warehouse in April and so far has managed to make minimum payments on his credit card debt, which he estimates at $15,000 to $20,000. Asked whether he thinks he will be able to pay off his balance, he said, “Not unless I win the lottery.”

In the meantime, he said, “I’m just doing what I can.”

Experts predict that millions of Americans will not be able to pay off their debts, leaving a gaping hole at ailing banks still trying to recover from the housing bust.

The bank stress test results, released Thursday, suggested that the nation’s 19 biggest banks could expect nearly $82.4 billion in credit card losses by the end of 2010 under what federal regulators called an adverse economic situation.

But if unemployment breaches 10 percent, as many economists predict, the rate of uncollectible balances at some banks could far exceed that level. At American Express and Capital One Financial, around 20 percent of the credit card balances are expected to go bad over this year and next, according to stress test results. At Bank of America, Citigroup and JPMorgan Chase, about 23 percent of card loans are expected to sour.
Even the government’s grim projections may vastly understate the size of the banks’ credit card troubles. According to estimates by Oliver Wyman, a management consulting firm, card losses at the nation’s biggest banks could reach $141.5 billion by 2010 if the regulators’ loss rate was applied to their entire credit card business. It could top $186 billion for the entire credit card industry.
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