Archive for the ‘Housing Bubble’ Category

Market Crash in 2011?

December 30, 2010

Analysis by Greg Hunter:

usawatchdog.com

From the very beginning of QE2, it was no secret the Federal Reserve wanted the stock market to rise. The Fed got its wish. Many people see the stock market increase of nearly 20% in a few short months as a sign things are turning around. The turnaround is really a mirage of the printing press. Even so, some pundits think the economy is on the mend. Maritime News reported last week, “It has been successful,” Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York, said of Bernanke’s policy of pumping money into the financial system, dubbed QE2. “It’s contributed to the rally in the stock market” and has “been important in reducing substantially the downside risk of deflation.” (Click here for the complete story.) Pumping money into the stock market to get stocks to go up is not the same as hiring people and making products so share prices grow. With the stubbornly high unemployment rate of 9.8% (or more than 22% according to Shadowstats.com), this is just one of the dismal facts of this economy. Other gloomy indicators are the million plus foreclosures this year and next. The auto industry just had its fourth month of decline in new orders. The FDIC has shut down 157 banks so far this year, and all the banks look solvent only because of rule changes that amount to government sanctioned accounting fraud. You cannot have the banks, housing and auto sales all tanking at the same time and expect the party to last.

For the life of me, I cannot see how share prices going up are going to get businesses hiring again. This stock market rally is good for one group of people – insiders. They are selling at a rate of more than 80 to 1 over buyers. It is obvious this market is not growing organically but is simply being pumped. Now, people should look out for the dump. Will the market continue to rise? Will there be QE 3, 4, 5, 6, 7 or to infinity? Is printing money the true road to wealth and prosperity? I think you know where I’m going.

A funny and clever way to illustrate what is going on has been put together by a group called Xtranormal. They have produced a series of financial cartoons that explain the economy. Below is one of their latest called “Suckers rally: Pimp Bernanke and the Psychopathic Super-Whores of CNBC.” (Yes, this the actual title.) Enjoy the cartoon below:

Quantitative Easing Explained

November 18, 2010

(FoundingFather1776 says: This pretty much says it all.  The juxtaposition of having animated characters speaking the raw truth of our financial situation – a truth you will NEVER hear spoken on the “main-stream-media” – seems amusing, until you remember how horribly serious it all is!

Here is a simple 100% formula for successfully revitalizing our economy:

1) End the Fed

2) Arrest Bernanke, Dudley, Geithner, Greenspan, Paulson, and the ENTIRE Goldman Sachs wrecking crew.  Send everyone of those sonofabitches to prison!

3) Outlaw fiat-currency and central banking!

That’s it boys & girls.  Three simple steps to unleash the economic might of America from the shackles of the central banksters.

Regards,

FoundingFather1776)

If you wanted to refinance – do it now.

January 23, 2009

Economic analysis by Bob Chapman

The real estate crisis is probably about 40% over. They’ll be further declines, residential and commercial, and then a basing out period that will take several years. The injection of cheap interest rates and a stimulus package of $825 billion are going to temporarily delay the downside. Instead of ending in 2011 it could extend to 2012.

Citigroup is bankrupt. Its 4th quarter loss was $8.3 billion. Bank of America posted its first loss since 1991 of $1.8 billion. One day they requested $10 billion from the government. The next day it was $20 billion.

Citigroup is being dismantled as a failed financial supermarket. Sanford Weill who created this monster some years ago created a total failure. In order to keep this loser business a new bad bank is being created to dump all of Citi’s mistakes into. Those would be toxic securities and worthless derivatives. That is $850 billion of Citi’s $1.95 trillion of total assets. What a disaster. Almost half their assets are near worthless, something we pointed out 3-1/2 years ago. Government has already sunk $45 billion into the bank and backs $301 billion of its toxic garbage and securities. Citi is a major shareholder in the Federal Reserve.

Bank of America has now received $45 billion with guarantees on $118 billion of toxic waste. It too is a Fed shareholder and it too is broke.

There is now no question that all the legacy or money center banks will be merged into one nationalized bank, which we believe was the intention from the beginning. This will make it easier later in the formation of a One-World government to merge US banks into a world bank that will disperse a world currency. Government is going to take an ever-increasing role in bank ownership and in credit policy, as would be expected in any fascist government.

We are still in the earliest stages of an economic and financial collapse, which was deliberately engineered to bring about eventual total control of our economy and financial system. Except for government and the Fed, Wall Street finance has been incapacitated. The government and the Fed are left to do as they please. Our bought and paid for Congress will rubber stamp anything handed to them. Bank credit will surpass $1 trillion this year to keep the elitist banks solvent and to delay the forces of deflation and depression. Overall credit expansion will expand to $2 trillion plus as many more banks, brokerage houses, lenders, insurance companies and illuminist corporate giants are served up all the cash and credit they need to survive. Very little will ever be paid back. Once the grip of the Fed and our Treasury is complete it will be almost their sole responsibility to extend credit. The excuse will be it has to be done to save the system as they chip you and give you a debit card and set up currency and exchange controls, devalue the dollar and institute wage and price controls. We then become wards of the state. They have allowed the banks to get into such awful shape, that they will tell you that they and America have no other option but to have government and the Fed mandate what will be done to save the system.

These conclusions can only be reached if you understand the powers behind government, their history, and what their goals are. This is why we have been able to predict what has been going on for years. Very few writers understand and many choose to keep their mouth’s shut because they fear for their lives. This has been an almost 50-year odyssey for us and we refuse to hide the truth. If you do not understand the history of the Illuminati you are in a quandary. It is the missing link that ties all the events together. You cannot use macro analysis without knowing the history of what these evil butchers are up too.

We get the question – why was Lehman Brothers allowed to go under? This was a seminal event in US and global finance. It had to be done to take the system down even though Lehman’s owners were ultimate insiders. Why do you think you do not hear a peep out of Wall Street? It is because the key people in the key firms are in on it and taking orders – that is why. In the blink of an eye trillions of dollars were lost. That amount of money is meaningless when you own the system. You can just create more. It is the power to create and control money and credit that always wins the day. The loss of confidence and trust now worldwide was deliberate. It allowed central banks and governments to totally control their fiscal and monetary systems. Essentially there was no one left to do so. Within the financial community those who understand what is happening dare not say a word or they’ll lose their companies or their lives. That is why there is no opposition from within. How can any thinking person put their trust in a government or a private Fed that has gotten us into war after war and one financial debacle after another be trusted? They can’t be trusted. They are the enemy. Think it through and you will get it. Read the “Creature from Jekyll Island” by G. Edward Griffin and other books we recommend and you will finally understand what is being done to you and who is doing it. The most corrupt people on earth. The ability to print money and create credit is the ultimate power. It allows you to control everything.

Today we have allowed our government and the Fed via our elected representatives to use money and credit to control our financial system. These deficits and guarantees will not be sufficient to stabilize and save our current financial system. Hyperinflation will rage and depression will ensue. Out of this the elitists hope to create their World Government while the world is financially and economically on its knees.

First will come repudiation of debt via default and devaluation. Then a new national currency to be followed by a world currency, followed by a chip or a debit card. Everyone throughout the world will be controlled. If you say or write anything negative regarding the New World Order your chip will be disabled or your debit card will be disengaged. Then you become a fugitive to be hunted down and exterminated. This is what is in store for us. This is what these people are up too. This isn’t intrusion, this is dictatorial government and this is where we are headed.

The answer is clear and we saw this year’s ago. The financial system is to be collapsed in stages that are manageable. You are seeing that in part with the collapse of the financial sector and the securities of these companies. This is caused by eventual government and Fed control of and nationalization of the financial industry. This will be followed by the collapse of stock markets worldwide.

This is not gloom and doom…. This is reality and the truth. The financial system will not stabilize. It is being deliberately changed. The Treasury is crowding out corporate borrowers in their quest for liquidity, as corporations rush to raise what funds they can to allow them to keep functioning and so that they won’t be absorbed by an elitist mega-company of our new corporatist state. At the same time municipalities are raising all the money they can to keep from going under having far overextended themselves.

Don’t be fooled by the respite you will see over the next nine months. It won’t last. It will be a consolidation period. Government and the Fed will be planning their next moves, as the stock market moves lower, along with bonds as long dated interest rates move higher. If you wanted to refinance do it now. You will never get a better opportunity.

The crisis is here and ongoing. The financial stocks are telling us there is a rocky road ahead. If the market was going to rally it would have already happened. It tried to breakout over Dow 9,000 and was unsuccessful. Underlying everything are lies, corruption and acute stress not visible to the public. Even many old Wall Street types do not get it and that is because they refuse to believe the actuality of what is happening behind the scenes. Those behind the scenes know full well what is going on and they are not going to fill in the rest of Wall Street, banking, government and corporate America that do not have a need to know. Housing will fall another 10% to 25% dependent on area and circumstances and more and more foreclosures will hit the market, as millions of jobs are lost. In addition, the entire world will experience this process, which worsens the situation. There is still de-leveraging to be dealt with along with the monstrous derivative problem. Focus has to be on wealth preservation and safety of person and assets. The core is your water filter, freeze dry and dehydrated food, family protection and gold and silver related assets.

The subprime and ALT-A borrowers will have reset or fallen by the wayside by the end of June. Now those in trouble are not lower income borrowers, but middle-class and upper-middle class homeowners. Some own Option ARM-pick-and-pay loans they cannot now afford or homeowners who never thought they will lose their business or get laid off. We do not see the downside nightmare hitting bottom until 2011. It may well be later due to trillions of dollars in artificial stimulus. About half of borrowers are under water and all are seeking a break from their lenders. The lenders are making few concessions. There are now no stereotypes, anyone can become a victim.

The Option ARMs are clustered in California, Arizona, Nevada, and Florida and outside the Washington, DC area.

On top of these underlying mortgages are unemployment and crashing home prices that have left a great percentage of homeowners under water.

The latest statistics we have show long-term unemployment at 17.8%, intermediate U6 at 13.8% and the phony government media figure at 7.2%. In one of the hot spots we estimate U6 to be near 16%. In 2005 and 2006 this region saw construction make up 11% of the job base.

There are many formerly prosperous people who had equity, no debt, great FOICs who have lost jobs, closed businesses, have no equity, just debts. They have maxed out the credit cards and gone through all their savings and retirement.

There are lenders who are making deals to help homeowners, but not many.

Some borrowers walk away in spite. The home next door is in foreclosure and is selling at a deep discount, which in turn put the neighbor under water. It feeds on itself.

Then there are those who refuse offers. Many of them just do not like owning their own home.

All we can say is there is plenty of pain ahead.

The players who made this all possible, the Fed, lenders, rating agencies, mortgage originators, appraisers, salespeople and buyers are for the most part walking away. The buyers and lenders are stuck, but government is bailing out the lenders not the buyers. The rest are going out of business or losing their jobs. The exception is the rating systems.

The raters, S&P, Moody’s and Fitch were the key to the biggest economic and financial calamity since the Great Depression. Why didn’t we have criminal charges brought against these crooks or at least civil action? These miscreatants gave complex, opaque toxic mortgage-backed securities AAA ratings when they knew they should have had BBB ratings, in conclusion with the Fed and the lenders. This stamp of approval allowed other crooks to market destructive securities worldwide. Some would have us believe that putting a financial floor under these players would solve our problems.

That is not the way it works. Bailing them out accomplishes nothing. It just extends the problems into the future.

www.theinternationalforecaster.com

 

“Grand Larceny” on a Monumental Scale: Does the Bailout Bill Mark the End of America as We Know It?

October 3, 2008


Richard C. Cook
Global Research
October 2, 2008

Tonight the Senate passed the $700 billion Wall Street bailout bill by a vote of 74-25. This follows the rejection of the bill by the House on Monday. In an MSNBC poll, 62 percent of Americans oppose the giveaway, but the lobbyists are doing everything possible to assure the rejection is overturned. According to Bob Borosage, co-director of The Campaign for America’s Future, House leaders “are bringing in the small business lobby and the banking lobby to buy the twelve Republican votes they need.”

The Senate took up the bill in order to pressure House members who voted against it to change their positions when it returns to a vote on the House floor on Friday. This procedure may be unconstitutional, because revenue bills must originate in the House, but there is no time or political will for anyone to mount a challenge on constitutional grounds. As another means of inducement—or blackmail—the bill includes the repeal of the wildly unjust alternative minimum tax.

Every reputable economist commenting on the bill opposes it, including NYU’s Nouriel Roubini, who says the plan is “totally flawed.” He says the plan is:

“a disgrace: a bailout of reckless bankers, lenders, and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer.”

My own view is that the plan is worse than that: a crime; grand larceny on a monumental scale.

Here’s why: We know that the debacle started with homeowner defaults on subprime mortgages and that it has now spread to other types of mortgages as foreclosures spread. We know that the unhealthy use of subprime mortgages started during the Clinton administration, as did the bundling and sale of these mortgages into mortgage-backed securities sold in the financial markets.

What has not been reported is that the Bush administration turned these acts of reckless lending into a national program of mortgage fraud. Soon after George W. Bush became president in 2001, meetings at the White House between Federal Reserve Chairman Alan Greenspan and administration officials became more frequent. According to mortgage industry insiders I have interviewed, direction soon began to come down from the banks to mortgage brokers to falsify borrower income information to allow them to qualify for loans that were otherwise out of reach.

The FBI has investigations underway to prosecute some of these cases of mortgage fraud. But they are not reaching above the brokers’ level. The FBI is not gaining access—or at least they have not reported it publicly—to information about collusion at the political level or at the level of the banks which provided the leveraged funding for mortgage money.

But at the time the housing bubble was inflating, no one was watching. Note that when Secretary of the Treasury Henry Paulson testified before the Senate Banking Committee last week, he said he was shocked to learn when assuming office in June 2006 that no federal agency regulated mortgage lending. Rather this was an area left to the states.

What Paulson did not say was that when the states attempted to intervene, they were blocked by the Treasury Department’s Office of the Comptroller of the Currency. In a February 14 article in the Washington Post written before he resigned, New York governor Eliot Spitzer wrote:

“In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.”

Why did the Bush administration do this? The only possible answer is that it had every intention of producing the housing bubble, one that had the effect of not only inflating the cost of homes and real estate but also pumping billions of dollars of borrowed cash into the economy through mortgage and home equity loans.

The bubble enriched huge numbers of executives, managers, and shareholders throughout the financial and real estate industries, and provided jobs to millions of people. The bubble also brought back foreign capital to U.S. markets that had been scared away by the dot.com bust of 2000-2001.

Everyone seemed to benefit, but it was those at the top who skimmed the greatest profits. And for an economy that had already given away millions of its best manufacturing jobs through NAFTA, Most-Favored-Nation trading policies with China, World Trade Organization agreements, etc., the bubble acted as a kind of substitute economic engine.

It also resulted in tax revenues that allowed the Bush administration to implement its 2001 and 2003 tax cuts for the rich and provide funding for the Afghanistan and Iraq wars. Of course these tax revenues were not enough, as the national debt soared to over $9 trillion during the Bush years as well.

Economist Dean Baker of the Center for Economic and Policy Research makes the point:

“The near hysterical discussion (count the times ‘Great Depression’ appears in news stories) of the bailout still largely fails to recognize the roots of the economy’s current problems in the collapse of the housing bubble. Much of the discussion assumes that the problem is just bad subprime loans and that house prices will bounce back once the credit markets are working properly.”

The point is critical, because what the Senate and House leaders are telling us, as are President George W. Bush, presidential candidates Barack Obama and John McCain, and Federal Reserve Chairman Ben Bernanke, is that the bailout is to get the American economy moving again. Credit, they say, is the lifeblood of the economy, and without credit no one can make a move.

But credit is the lifeblood of the economy only because people are broke. Purchasing power in the U.S. has collapsed, and it is getting worse as the recession which has now begun worsens.

People can’t get loans, not because the credit markets are stalled, but because they have no savings for down payments and can’t afford to repay what they wish to borrow. If they could repay their loans, plenty of credit would be available. But there is no money—and no savings—within the economy for it to get moving again. The only possible source is more federal borrowing to prime the pump Keynesian-style. That is what the politicians claim the bailout will do. But it won’t.

Then what is happening?

What is happening is that the Bush administration is engineering a massive raid on the Federal treasury to pay off the people within the financial industry who have been operating the housing scam because the politicians told them to do it. This is hush money.

The people in the financial institutions who are getting the money will be passing it on to the big banks that leveraged their criminal lending practices. The giant sucking sound you hear is almost a trillion dollars of future taxpayer earnings going into the vaults of the nations’s biggest banks, such as Citibank, Bank of American, and—the pet bank of the Rockefeller family—J.P. Morgan Chase. Much will also go into the vaults of foreign investors such as the Bank of China.

And these banks have no intention of recycling the money into productive U.S. investments. Despite the political posturing, where much of it will go at the second or third tier is into executive salaries and bonuses. The fat cats are “gittin’ out while the gittin’s good.”

What happens next?

Well, it is already happening. In the post-bubble era there will be no more economic engines for the American economy. A long term recession and depression are inevitable, and they are expected by those in the know. In fact, there has been a plan in the works for a very long time to bring down the U.S. economy, and it will be happening over the coming months.

This is why the government is also preparing to implement martial law, or something close to it, in case public unrest breaks out. We will likely also see a clampdown on free speech, the right to protest, and use of the internet. Federal facilities are being prepared all around the country to backstop state prisons and local jails that are already bursting at the seams.

This is the plan, so people need to begin to take whatever measures they can to cut their cost of living, get out of debt, and protect themselves and their families.

Mortgage Market Musing

July 28, 2008

Essay by: Catherine Austin Fitts

Sometimes, it helps to step back and see the big picture.

Let’s say that I serve as the depository for a large government and I also own the central bank. I get my partners appointed to run the government’s treasury and key funds on a regular basis so I can also control financial system policies and regulation that help me finance what I want to do and mess up my competitors. Even that is getting cumbersome so I am arranging to move most of the regulatory control over to my central bank because I can control all of it privately.

Frustrated with having to deal with democratic processes, I decide to move a significant amount of money out of the government between 1997 and 2001 for reinvestment abroad. I and my partners and our syndicates engineer a series of steps to bubble the economy so that when I move the money out the currency is high and because everyone was making money they did not notice that lots of capital was leaving. To ensure no one notices, I suppress the gold price which turns off the financial burglar alarm and shifts gold out of the government into my private control at below market prices.

Normally moving money out of a government in excess of the total taxes that year would be hard to do. However, I could use securities fraud. I could issue a lot more government securities and government agency (like mortgage agencies) securities than I recorded on the government books and sell them abroad. I would have to make sure not to publish audited financial statements as that would increase the liabilities of engaging in this kind of fraud. It would help a lot if I could pool mortgages and sell government agency securities to finance those mortgages in a process where the same mortgage could be sold many times into the same pool. Investors would not notice or care because the securities were government guaranteed.

I also engineer an internet and telecom stock bubble, and move trillions more out through that mechanism.

OK, so as I move the money out of the country at a high price because my currency is high, what do I invest? Well if places like Asia, Latin America and Russia experience economic crashes as a result of credit crunches that result as my cutting off credit, then their currencies will be low and they will welcome investment. Or if they don’t welcome investment, I can make sure that the IMF and World Bank can strong arm. So I can buy in really really cheap. Meantime, these currencies rise as I move manufacturing and jobs into the places where I now have big investment positions. So my investments go up.

Well, back in the U.S. the bubble bursts, and the institutions like Fannie and Freddie that financed the housing bubble experience significant losses. Their stocks drop by a lot. That hits the pension funds, 401ks, IRAs and other savings of the people who have lost money on their homes. It’s a double whammy. A lot of them also lose their jobs. Triple whammy.

The currency drops in value a lot. This means that the dollar I pulled out and put into other currency that has been going up, up, up, is now worth multiple dollars. As asset values drop, each remaining dollar can buy things cheaply.

Indeed, with Fannie and Freddie’s stock dropping like a stone, I could have one or more of my offshore investment vehicles fund a recapitalization plan and buy control of the senior positions directly or indirectly controlling 50% of the residential mortgages in the country with my profits – that is for a small portion of that which I shifted out of the government.

Think of it. The housing bubble has reached it’s logical conclusion. If you can get enough people to buy a home for no money down, you can buy their country for no money down.

www.solari.com/blog/

 


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