Sunday, November 30, 2008
What do these terms mean?
According to the BLS: Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.
So then, what is the true U.S. unemployment figure?
The real unemployment figures can be garnered by looking at the BLS U-6 data, which includes all the U-3 missing (hidden) data (see chart below).
Why then does the Gvt use U-3 data vs U6?
Remember folks, the tweaked and published unemployment data is just another Gvt. misinformation campaign (like inflation, GDP and M3) used to keep the sheeple ignorant, oblivious, dazed and confused.
Click picture for better view
Bottom Line: Today's US unemployment rate is 11.8% and growing.
Economic Reports for the week of 1 Dec:
- Dec 01 10:00 October Construction Spending
- Dec 01 10:00 Nov ISM Index
- Dec 02 00:00 Nov Auto Sales
- Dec 02 00:00 Nov Truck Sales
- Dec 03 08:15 Nov ADP Employment
- Dec 03 08:30 Q3 Productivity-Rev
- Dec 03 10:00 Nov ISM Services
- Dec 03 14:00 Fed's Beige Book
- Dec 04 08:30 Initial Claims 11/29
- Dec 04 10:00 Oct Factory Orders
- Dec 05 08:30 Nov Average Workweek
- Dec 05 08:30 Nov Hourly Earnings
- Dec 05 08:30 Nov Nonfarm Payrolls
- Dec 05 08:30 Nov Unemployment Rate
- Dec 05 15:00 Oct Consumer Credit
I don't think so. As I've stated several times in the past, the US basically has two options moving forward: (1) Continue to rely on foreigners to buy up our debt, but they probably won't, and the shortfall could lead to a US default - unless option 2 is invoked: (2) The US resorts to buying up its own debt with newly printed dollars, significantly lowering the dollar's value and driving consumer inflation through the roof - this WILL BE the chosen option!
ZIRP Fed policy (ZIRP: Our Future?) will be implemented soon, followed by a massive monetization program - end result: Hyperinflationary Depression.
With that said, I ran across this great Patrick Buchanan article today which discusses some of these issues in greater detail. Hope everyone has the time to read:
PJB: Socialist Republic
Barack Obama and George W. Bush seem to have come away from their study of the Great Depression with similar conclusions:
To wit: After the Crash of 1929, the Federal Reserve did not move fast enough to save the banks and inject cash into the economy. Second, the New Deal, far from being wastrel deficit spending, was not bold enough. So it was that America wallowed in depression for a decade until the unbridled spending and mammoth deficits of World War II pulled us out.
Bush and Obama seem determined not to make the same mistake.
We are all Keynesians now.
Thus, we have the $700 billion Bush bank bailout, the $700 billion “stimulus package” Obama wants by inauguration to “jolt this economy back into shape” and the $800 billion fund Hank Paulson created to get consumers borrowing and buying again.
These come on top of Bush $455 billion deficit, the $29 billion bailout of Bear Stearns, the $105 billion in pork to grease the $700 billion bailout, the $100 billion to $200 billion to keep Fannie and Freddie afloat, the $140-billion-and-counting for AIG, the $25 billion for the greening of GM, Ford and Chrysler, the $25 billion more to save the Big Three and the $20 billion for CitiGroup.
Now much of this overlaps, and some will be retrieved. But we are still staring at a deficit that could approach $2 trillion.
How would this stack up historically?
A deficit of $1.4 trillion would be 10 percent of gross domestic product, dwarfing the postwar record 6 percent run by Ronald Reagan in the Jimmy Carter recession.
Bewailing the “Reagan deficits” has been a staple of Democratic oratory. This will stop. But the politics of this is not the point, the policy is.
Consider what we are about to do. Bush in 2008 spent 21 percent of GDP. States, counties and cities spent another 12 percent. Thus, one third of GDP is spent by government at all levels. Obama and Co. propose to raise that by another 10 percent of GDP. We may soon be north of 40 percent of gross domestic product controlled and spent by government.
That is Eurosocialism.
And where, exactly, are we going to get the money?
Americans save nothing. We spend more than we earn. Thus the levels of consumer debt, credit card debt, auto debt and mortgage debt. U.S. foreign-exchange reserves amount to a piddling $73 billion.
The only nation with the kind of cash on hand we need now — if we don’t print the money and invite another gigantic bubble — is China, with its $2 trillion in foreign-exchange reserves.
Will Beijing lend back the dollars it has piled up by selling to us?
China certainly has an incentive to keep Americans spending. For our purchases of Chinese-made goods have often been responsible for 100 percent of China’s growth. China does not want to kill the American goose that lays those golden eggs — until the goose can’t lay any more eggs. Then they won’t need the goose.
But should China decide to lend us the money, what will Beijing demand in interest rates and assurances that we will not default. After all, the U.S. debt is 70 percent of GDP, our savings rate is near zero, and our merchandise trade deficit is still running at 5 percent to 6 percent of GDP.
Unlike the 1950s, we are today dependent on foreigners for two-thirds of our oil and for much of our manufactured goods — toys, TVs, radios, cameras, cars, shoes, clothes, bikes, motorcycles — and for the $700 billion to $800 billion we borrow each year to pay for these imports.
With U.S. homeowners, consumers, companies and banks now going bust, why must the nation borrow trillions more to bail them out? So we can maintain our status and standard of living as the last superpower.
Bush and Obama are competing to shovel out trillions of dollars, so we can return to the good times of yesterday.
But wasn’t yesterday the root cause of today? Didn’t saving nothing and spending more than we earn, purchasing what we cannot afford in cars, consumer goods and houses, buying far more from abroad than we sell abroad — didn’t that cause this crisis and crash?
A family man in America’s condition, awash in debt, spending more than he makes, would cut back consumption, find a second job and get out of debt. Or declare bankruptcy, accept the shame and humiliation, change his wastrel ways and start anew.
Is it different for a nation?
Yet we seem to believe we can borrow and spend our way out of a swamp of unpayable debt into which borrowing and spending have plunged us.
We are headed either for default on our debts and bankruptcy as a nation, or something less honorable: a quiet cheapening of the debts we have incurred by inflating and destroying the dollar, robbing our creditors of what we owe them and robbing our own people of the value of what they have earned. And so it has come to this.
What would the Founding Fathers think of us now?
Friday, November 28, 2008
With this said, I've posted numerous articles discussing many of these various LV economic issues in the past (see lower right side of this Blog under ** Las Vegas Downturn** for links), so today I plan to focus on just a few key areas.
- Real estate crisis/foreclosures
- Repo Business
- Growing local hardships
Las Vegas: Real Estate in Crisis
The subprime mortgage crisis is hitting the Las Vegas metro area particularly hard. In fact, Nevada has the highest foreclosure rate in the country and the metro area is consistently one of the top five worse in the nation.
The crisis entails homeowners losing their houses after they are unable to afford their mortgage payment. It was brought about by lenders and banks giving risky loans, or subprime mortgages, to people with poor credit scores or finances. Low interest rates first attracted such homebuyers. However, as many loans were adjustable rate mortgages (ARMs), higher interest rates down the road made payments nearly impossible, ultimately leading to foreclosure. Furthermore, predatory lenders have been accused of perpetuating the situation by unfairly taking advantage of uninformed or new buyers. There were a large number of investors who bought homes at the height of the market and expected to flip them for a profit, only to see values decline.
Few options are available for those unable to make a mortgage payment or facing foreclosure. The state of Nevada has established an 800 number for homeowners facing mortgage problems. At the national level, President Bush and lenders agreed to a plan to a five-year freeze on loan rates for those homeowners who qualify and discussion are underway to expand those eligible.
Nevada leads nation in rate of foreclosures
Nevada had the highest foreclosure rate in the nation in the second quarter of the year, according to data released today.
Calif.-based RealtyTrac Inc. said one in every 43 Nevada households received a foreclosure filing, which is nearly four times the national average of one in every 171 households. The rate was even higher in Las Vegas, where one in every 35 households received a foreclosure notice last quarter.
How Many Foreclosures?
Realtytrac currently indicates ~ 60,000 are in some state of foreclosure.
Foreclosure kills huge project near mountain
When Focus Property Group gathered eight homebuilders and purchased 1,710 acres of government land at the base of Kyle Canyon in 2005, it promised to extend Las Vegas still farther into the desert, delivering suburbia to the doorstep of Mount Charleston.
The group put down $510 million for the property, snapped up at a Bureau of Land Management auction at a time when developers of master-planned communities were paying top dollar to feed their homebuilding habits.
This project, approved by Las Vegas for as many as 16,000 homes, wouldn’t be as large as Focus Property Group’s Mountain’s Edge master planned community, but would be larger than its Providence.
This project was called Kyle Canyon Gateway.
But that was then.
Without a single home being built, the property has been foreclosed on by its lender, Wachovia Bank, said John Ritter, chief executive of Focus Property Group.
In October, Wachovia, which is being taken over by Wells Fargo, sued Focus and its eight partners for defaulting on payments for the northwest Las Vegas development.
Focus owned 23 percent of the project. The other partners were Toll Brothers, Lennar, Pulte, KB Home, Kimball Hill Homes, Woodside Homes, Meritage Homes and Ryland Homes.
Bank Owned Homes Left Trashed
Thousands of foreclosed homes fill neighborhoods all across the valley.
And the people living in those neighborhoods are putting up with a lot more than an empty house.
Three out of five foreclosed homes in Las Vegas are trashed and it not only creates an eyesore for the community, but a target for criminals.
It's not just the homeowners leaving a mess.
When a house sits empty for a while its an easy target for thieves.
At one house the entire air conditioning unit was stolen.
The bank wants to get rid of properties like this as soon as possible.
Since you get it as is, you get a good price.
"We're seeing prices in some communities where the bank owned homes are actually selling for less than the builder sold them for when the community was first sold," Heyworth says.
Now if Las Vegas can only find more buyers.
A boom era for Nevada bankruptcy lawyers
Nevada leads the nation in the per capita increase of bankruptcy filings compared with a year ago. In October, bankruptcies were up 70 percent compared with the same month last year, according to Automated Access to Court Electronic Records, a company that tracks bankruptcy data. Other Western states, including California and Arizona, are also high on the list.
The crash of the housing market, which punctured Las Vegas’ building bubble with particular force, is driving the increase. Law firms report a majority of their clients are resorting to bankruptcy because of foreclosure. (Nevada also leads the nation in the rate of home foreclosures.)
“People are using credit cards to hold onto their houses and getting cash advances to try and catch up. They do what they have to do to stay in the house. It’s a never-ending cycle,” attorney Ellen Stoebling said.
Adds Melissa Cain, of Cain Law Group: “It’s not like they come in with bills for TVs or clothing. They’re just trying to scrape by.”
On any given day, in the high-ceiling, wood-paneled courtrooms, rows and rows of lawyers wait for their turn before the judge. Many of the motions take less than a minute because much of the docket is full of unopposed motions to, in lawyer speak, lift stay. To the rest of us that means the homeowner is willingly surrendering the house.
“People are just in droves giving up their homes,” Stoebling said.
The owners don’t have to be in court for the swift but, one would imagine, gut-wrenching action.
“... the motion is brought forward ... pursuant to terms set forth ... fees are approved for the realtor...,” the judge says in a dry monotone, leaning with both arms folded on the bench.
And it’s done. The lawyer presenting the motion books it out of the courtroom.
Sometimes only one lawyer is presenting the case, but frequently a case will attract multiple attorneys, representing the debtor, the banks, the trustee and other interested parties.
“I don’t like to talk about the economy going down the drain,” he said. “While I’m busier, it’s incredibly disheartening to see this happening. I’m happy that I’m busy but very sad for the reason why.”
And some bankruptcy lawyers — the ones who represent banks — worry about getting paid. The banks had budgeted for a few filings a month, not tens and tens of filings.
“Probably a lot of the work I’m doing will be for free,” he said. “It’s not all party hats and balloons.”
Financial Cases Straining Courts
Clark County Court Administrators say the sagging economy is putting a strain on the local justice system.
With more foreclosures, evictions, and debt problems, the court is seeing a record number of economic-related cases being filed.
"We have seen a big growth in our summary eviction department," said Norma McMahan with Legal Process Service.
McMahan says the sheer volume of economic-related cases has doubled in the past year, "We are very busy, we are grateful for that, at the same time it is a true reflection of the economy and the effects that it is having on the people here."
Most cases involving foreclosures, evictions and bad credit card debts end up with the clerk of the Las Vegas Justice Court.
"With the economic downturn, the Justice Court has really seen as exponential increase in the number of documents filed. Those relate not just to evictions and foreclosure evictions but also the collection-type suits," said James Vilt. "A lot of people are clearly defaulting on their credit card payments and their creditors are coming after them."
So far this year there have been more than 20,000 eviction cases filed with the Las Vegas Justice Court. Justice Court officials say they believe they are just at the beginning of this trend where more financial-related cases are being filed than ever before.
Repo Men Reaping Rewards In Bad Economy
LAS VEGAS -- Repo men around the country are working harder than ever before.
One repo man told Las Vegas TV station KVVU that it was always an exciting and dangerous job, but now their work is exacerbated by so many people going broke.
"Volume-wise, business has doubled," said Justin Zane, co-owner of Zane Investigations.
One of Zane’s main services is repossessing property.
"Our clients are the banks -- lenders, finance companies," Zane said.
KVVU Reporters joined Zane recently as he took a car in Las Vegas.
"We're coming into these apartments where a spotter located a car we've been looking for. It’s supposed to be on the backside of the building here. She followed the guy for 45 minutes this morning. This is where he parked it. We're hoping the car is still there," Zane said.
Zane said he was looking for a newer model Dodge Neon.
Zane located and verified the car. It only took about a minute for his truck to grabs a hold of the vehicle, but he was on the lookout for anyone coming.
"It's been a little more dangerous as of late because now, we are down to stealing people's primary property -- primary modes of transportation," he said.
"A lot of people are embarrassed -- take a defensive stance. In general, most people know we're coming. They've talked to the bank, and the bank told them, 'If you don't pay, we'll be coming,'" Zane said.
Zane said he has been reclaiming motorcycles, boats, semi-trucks and more expensive cars due to the high cost of gas and the economy.
"Before it used to be mid-range … We're talking a lot of high end cars," Zane said.
He said with the economic crisis, basically everything, and anything, is fair game.
Retailers: Struggling to hang on
As businesses in shopping centers close, decreased foot traffic threatens the survivors.
Without close inspection, you could chalk up the receding monthly sales at the Maui Wowi smoothie shop to cooling temperatures. But slumping sales began in April. You could argue that fewer people today can afford a $4 or $6 smoothie. But Maui Wowi also sells 99-cent coffee.
Co-owner Paul Goldberg has a different theory: declining foot traffic at Spanish Trail Business Park, on Rainbow Boulevard near Tropicana Avenue.
In recent months, four stores near Maui Wowi vacated the 14-month-old marketplace: Jersey Mike’s sub shop, Carmine’s Pizza, Mail Trail and a Hurricane Grill and Wings. Only two remain open, the Maui Wowi franchise and LT Nails & Spa.
And it doesn’t help that most of the new office suites in the rear of the complex still don’t have tenants — another source of smoothie and spa customers.
A kind of unprecedented commercial blight in what for decades had been a boomtown is creeping over retail centers like a cancer, stigmatizing the struggling businesses that remain. Who wants to move into a shopping center where an increasing number of stores are closing and any retail synergy that might have existed has collapsed?
In the third quarter, the vacancy rate valley-wide topped 5 percent, nearly double from a year earlier, according to a report by analyst John Restrepo of the Restrepo Consulting Group.
The vacancy rate may be higher, said Rob Moore, managing director of investment sales and leasing at Gatski Commercial, which handles leasing of the Spanish Trail storefronts.
Applied Analysis, a market research firm, pegs the vacancy rate at 6.3 percent.
Paco Underhill, founder of international market research firm Envirosell, predicts the national retail vacancy rate will creep to 20 percent — and higher in some markets. The age, location and branding of shopping malls will dictate which ones have the best prospects of surviving the worsening recession.
Mike Krien, president of the National REO Brokers Association, said “retailers are having a heart attack. Everybody’s scared because no one’s spending money.”
Landlords are struggling to find replacement tenants, offering handsome incentives to little avail: rent discounts of up to 10 percent; a few months of free rent in exchange for three- or five-year leases; and site improvements.
Nevada jobless rate keeps spiking - jumps to 7.6% (Las Vegas at 7.5%)
Nevada's jobless rate hit 7.6 in the October estimate, more than a percentage point higher than the national rate and the highest for the state in almost 24 years.
In human terms, the state report showed, there were 105,300 unemployed this October. That compares with just 66,300 a year ago in the state.
"Nevada's unemployment rate is up significantly from a revised 7.2 percent in September and stands 2.5 percentage points higher than a year ago," said Bill Anderson, chief economist for the state Department of Employment, Training and Rehabilitation.
The actual October rate was pegged at 7.4 percent, according to the DETR report, but the headline rate of 7.6 percent is what the department calls seasonally adjusted. The department said the rate is the highest since May, 1985.
Las Vegas and Reno-Sparks, the state's two metropolitan regions, registered 7.5 percent and 7.2 percent rates, respectively. In Carson City's metropolitan statistical area it was 7.4 percent.
"The unemployment numbers released today underscore the importance of the legislation we passed yesterday to extend unemployment benefits," said Senate Majority Leader Harry Reid.
"This is an important step to ensure families can put food on their tables, but more needs to be done to strengthen our economy," the Nevada Democrat added.
Local hardship, sharp relief
Las Vegans in need turn out by hundreds for food in tough times.
The line of hundreds of Las Vegas’ working poor stretched around Doolittle Park’s baseball field and into its outfield before looping back.
For five hours Monday, grandmothers stood with children and grandchildren, dads with sons — just about every manner of family you could find — each awaiting a turn to take home two boxes of food.
None needed an economics expert to tell them how bad.
Born and raised in Las Vegas, Angelitte Poole, 29, recently lost her job collecting on overdue loans.
It wasn’t that business was down. Just the opposite, in fact. Poole’s problem was that the more struggling people she had to hassle about paying their bills, the less she wanted to do it.
“I wasn’t hitting my quota of $500 a day,” said Poole, in line with her mom, Janice. “It just got kind of depressing. Now I want a job, but all these temp agencies want me to pay them before I even get a job.”
In the early afternoon, Poole was about 280th in line for the handouts. But organizers said more than 1,500 people took home donation boxes before the end of the day. The line started forming at 8 a.m. in front of Doolittle Community Center, at 1950 J St., two hours before distribution began.
And these were not homeless people, Robyn Williams, one of the organizers, noted, adding that people brought in verification of their income and birth certificates for their children.
“Somebody told me about it two weeks ago,” said James Williams, a 43-year-old father of one. “I’m new to here, new to Vegas, so this is really, really going to help out.”
James Williams transferred here six months ago to help his mother, then recently lost his job as a machine operator for a cup manufacturer that closed its local operation. He’s now living on unemployment compensation, which comes to $335 a week.
“Not that surprised,” Williams said when asked about all the people in line. “People need this. Money is very tight. My own unemployment’s about to run out.”
Monday’s event dwarfed a similar one two years ago, said Las Vegas City Councilman Ricki Barlow, who helped with the food distribution.
That previous time, “we were done in three hours,” he recalled.
A few miles away, Clark County Commissioner Lawrence Weekly was seeing the same kind of need, but in a different way.
At the Martin Luther King Community Resource Center, Weekly gave away 350 turkeys with trimmings Monday afternoon. A year ago, he had about 500 turkeys to give away.
This year, he had to turn away 200 people, he said.
“We were very fortunate in previous years, because we had lots more people who were willing to step up and help,” he said. “But with the economy, turkeys are more expensive and trying to raise funds isn’t as easy.”
The need is so enormous Three Square is on pace to give away 10 million pounds of food costing about five times what the organization had expected to spend this year.
Julie Murray, Three Square’s chief executive, said her organization’s $250,000 food budget was spent by late spring. It now expects to spend $1.3 million for food this year. Murray said fundraising will cover most of the additional expense.
Several years ago I received quite a bit of ridicule for forecasting many of these issues - going against the grain of the ignorant, yet widely prevailing "Las Vegas is recession proof" goldilocks viewpoint, and up to ~ 18 months ago many "economic experts" were still in denial. Today however, the data is hard to refute - the Las Vegas economic condition is bad.
With that said, if you want to listen to and believe these same pundits who denied this downturn at every step of the way, and who now claim the local economy will rebound in mid-2009, be forewarned - it will not - though bad today, the Las Vegas economic condition will get far worse over the coming months and years.
Thursday, November 27, 2008
Note: click pictures for better view
Though massive in size, the Bailout figures used in the chart above were severely understated - or were tallied w/older data.
Currently, based on data extracted from The Motley Fool: $3.9 Trillion Was a Drop in the Bucket we're now looking at a bailout total of ~ $8.6T - with no end in sight.
Tuesday, November 25, 2008
Starts off slow but picks up pretty quick - watch through to the end
Guarantees that could not be honored thrust the world financial system into its worst crisis since the Great Depression. Will a guarantee by the United States government finally restore confidence in the American financial system?
Continued here: Another Crisis, Another Guarantee
Monday, November 24, 2008
Consider this release to be one more nail in the coffin for deteriorating consumer confidence - leading to a dismal holiday season for retailers.
Bloomberg: Home Sales Fall; Record drop in prices (40yr record price drop)
Nov. 24 (Bloomberg) -- Home resales in the U.S. dropped in October and prices fell by the most on record, signaling a deepening housing recession going into 2009.
Purchases of existing homes slid to an annual rate of 4.98 million, lower than forecast, a National Association of Realtors report showed in Washington. The median price fell 11.3 percent from a year earlier, the most since the group began collecting data in 1968.
Today’s figures indicate a renewed downturn in an industry that showed signs of stabilizing this year, hurt by the credit squeeze and record mortgage foreclosures. That may raise pressure on President-elect Barack Obama to aid homeowners and potential buyers as he assembles a record stimulus package.
“Home sales will continue to fall over the next few months because of tightening credit conditions,” said Sal Guatieri, senior economist in Toronto at BMO Capital Markets, which had the closest estimate for the sales level among 67 forecasts in a Bloomberg News survey. “Underlying demand appears very weak” because “many sales are coming from cheap prices on foreclosed properties,” he added.
At a press briefing in Chicago today, Obama said one of his objectives will be “addressing the growing foreclosure crisis,” and he called on his economic team to develop a stimulus package of the “size and scope necessary to get the economy back on track.” Obama aides and Democratic Senator Charles Schumer have said a stimulus package of as much as $700 billion may be needed to shore up the economy.
Businessweek: Housing industry wants a big government bailout
Bailouts are in fashion. The financial industry got one. The automakers have their hands out. Now the National Association of Home Builders and the National Association of Realtors are pushing their own multi-billion-dollar stimulus proposals.
The proposals are designed to get buyers off the fence and rejuvenate the flagging home sale market. The more expensive proposal comes from the home builders who want a $250 billion Fix Housing First package, which calls for a home buyer tax credit of 10% of the purchase price (up to $22,000) and a heavy subsidy from the federal government that would bring 30-year mortgage rates down to 3% for homes bought in the first half of next year and 4% for purchases in the second half, according to The Wall Street Journal.
The Realtor plan sounds is somewhat modest by comparison. The group also wants taxpayers to subsidize mortgages to bring down rates by about 2% — at a cost to taxpayers of about $100 billion. And it wants the homeowner tax credit approved by congress this year to be changed so that the $7,500 credit can be given to all buyers, not just first-time buyers and that it no longer would have to be paid back. That part of the plan would cost another $40 billion, the group’s chief economist Lawrence Yun told me today, adding that he thought the builder plan was too expensive.
Finally, the Realtors want the higher limits for federally-backed jumbo loans of up to $729,000 to be permanently extended (They’re set to expire next year).
Bloomberg: Bernanke Tells New Yorker He Underestimated Housing Meltdown
Federal Reserve Chairman Ben S. Bernanke said he underestimated the impact subprime mortgages would have on the economy, according to an interview to appear in the New Yorker magazine’s Dec. 1 edition.
“I and others were mistaken early on in saying that the subprime crisis would be contained,” Bernanke said. “The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict.”
Widespread failures of U.S. subprime mortgages, home loans to borrowers with poor credit records, started in 2007, touching off a financial crisis that has spread to other sectors of the world economy.
The article, entitled “Anatomy of a Meltdown,” said Bernanke and Treasury Secretary Henry Paulson tried what Bernanke and his Fed colleagues called a “finger-in-the-dike” strategy to keep the financial sector operating long enough so that it could repair itself. As recently as this Sept. 1, the article said, Bernanke thought that strategy would work.
Poor guy... I think I'll shed an alligator tear for him now... I'd really like to think that maybe, just maybe, if he had peeked at this lay economist's blog between.. oh say 2005 through 2008, he might have received a clue.
B.S. Flag! He knew exactly what was going on, but he, Greenspan, Paulson and the rest of this lying band of thieves are completely incapable of telling the public the truth - their entire charade game of public confidence is built on a web of lies that has been morphed, compounded and multiplied so many times over it is now impossible to utter any truth - as it may yet unveil another lie and lead to a collapse of their web-o-deceit and, in-turn, their massive pyramid of debt.
With that said, the US dollar is also declining due to technical reasons. Note the severely oversold condition (PPO Oscillator - black line top right - up towards three). Also take note of the downward turn of that same PPO Oscillator - an indication the oversold condition will soon let out some (if not much) of its excess.
This dollar downturn will be very positive for Gold/Silver, Oil and other commodities, but bad for consumer prices a little further down the road.
You won't see these important videos in the US, but International PressTV was sure to cover it.
Sunday, November 23, 2008
GEAB N°29: Phase IV of the Global Systemic crisis: Breakdown of the Global Monetary System by summer 2009
Original Article can be found here: GEAB N°29:
The G20-meeting held in Washington on November 14/15, 2008, is in its essence a historical indicator that the Western - above all Anglo-Saxon - monopoly on global economic and financial governance, is coming to an end. Nevertheless, according to LEAP/E2020, this meeting also clearly demonstrated that this kind of summits is doomed to inefficiency because they concentrate on curing the symptoms (banks’ and hedge funds’ financial difficulties, derivative markets’ explosion, financial and currency markets’ dramatic volatility, ...) rather than the fundamental root of the current crisis, i.e. the collapse of the Bretton Woods system based on the US Dollar as sole pillar of the global monetary system. Without a complete overhaul of the system inherited from 1944 by summer 2009, the failing of the current system and that of the United States at the center, will lead the whole planet to an unprecedented economic, social, political and strategic instability, and more specifically to a breakdown of the global monetary system by summer 2009. In light of the technocratic jargon and calendar of the declaration released after this first G20-meeting (totally disconnected from the speed and scope of the unfolding crisis (1)), it is more than likely that the disaster will have to happen for the fundamental problems to be seriously addressed and for the beginning of a reply to be initiated.
Four key-factors are now pushing the Bretton Woods II (2) system to collapse in the course of the year 2009:
• Fast weakening of the central players: USA, UK
• Three visions of the future of global governance will be dividing world’s largest players (United-States, Eurozone, China, Japan, Russia, Brazil) by spring 2009
• Unbridled speeding-up of the last decade’s (de-)stabilizing processes
• Increasing number of more and more violent backlashes.
LEAP/E2020 already extensively described factors 1 and 4 in previous editions of the GEAB. Therefore we will concentrate on factors 2 and 3 in the present edition (GEAB N°29).
The agitation that has seized global leaders since the end of September 2008 indicates that panic has struck at the highest level. Worldwide political leaders have now understood that the house is on fire. But they have not yet perceived something obvious: that the very structure of the building is involved. Improving fire-regulations or reorganizing emergency services will not be sufficient. To use a strong symbolic image, the World Trade Center’s twin towers did not collapse because firemen were late or because water was missing in the automatic fire-system, they collapsed because their structure was not meant to support the shock of two airliners hitting them in just a few minutes.
Today’s global monetary system is in a similar situation: the twin-towers are the Bretton Woods system, and the airliners are called « subprime crisis », « banking failures », « economic recession », « Very Great US Depression », « US deficits », … a whole squadron.
First year of major correction (Dow, as percentage, since 1900) - Source ChartoftheDay
Today’s leaders, who all belong to the collapsing world (including Barak Obama (3)), cannot possibly imagine how to solve the problem, just like central bankers in 2006/2007 could not possibly imagine the scope the unfolding crisis could reach (4). It is their world which is disappearing under their eyes, their beliefs and their illusions (sometimes similar) (5). According to our team, a 20 percent renewal of worldwide leaders is required to begin to see sustainable solutions (6) appear. This is indeed, according to LEAP/E2020, the « critical mass » needed to permit any fundamental change of perspective in a complex not very hierarchical human group. Today we are still far from reaching this critical mass: in order to contribute to finding solutions to the crisis, those new leaders must accede power in full awareness of the crisis’ specific nature.
According to LEAP/E2020, if global leaders fail to realize that in the next three months and to take actions in the next six months, as explained in GEAB N°28, the US debt will « implode » by summer 2009 under the shape of the country’s defaulting or the Dollar’s dramatic devaluation. This implosion will follow closely a number of similar episodes affecting less central countries (see GEAB N°28), including the United Kingdom whose already huge debt is ballooning at the same pace as Washington’s (7). In the same way as the US Federal Reserve saw, month after month, its « Primary Dealers » (8) being swept away by the crisis before it was itself confronted to a real problem of capitalization and therefore survival, the United States in the coming year will witness the implosion of all countries too-closely integrated to their economy and finance, and of their allies financially too-dependent on them (9).
Monetary authorities with the largest foreign reserves in 2008 - Sources FMI/BRI/Wikipedia , 10/2008
The role the Europeans can play in the matter is essential (10). The Eurozone in particular must send out a strong message towards Washington: « The United States will fall into an economic and financial pitfall in 2009 if they cling to their past « privileges ». Once the world has given up on the Dollar, it will be too late to negotiate ». With more than 550-billion USD, the Eurozone owns the third largest reserve (ex-aequo with Russia who is not very accurate on that aspect) after China and Japan, and before the Gulf oil-monarchies (see table above). It therefore has the diplomatic weight, the financial weight, the economic weight, the commercial weight and the monetary weight required to compel Washington to face realities (11). The EU altogether will follow because non-Euro EU countries are all on the verge of a severe crisis of their currency or economy or both (12). Without the Euroland, their outlook is very gloomy in the short and medium term. As a matter of fact, the Euro is the only currency a growing number of initially reluctant (Iceland, Denmark…) or skeptical (Poland, Czech Republic, Hungary…) countries now wish to join (13).
Sign of the times, the Financial Times has started to list the US federal state’s tangible assets: military bases, national parks, public buildings, museums, etc… everything has been evaluated for a total amount of approximately 1,500-billion USD, i.e. more or less the probable amount of the budget deficit in 2009 (see the detail of these assets in the chart below). No wonder why Taiwan, despite its dependence on the security provided by Washington, decided to stop buying one of the three great components of the US public deficit, the Fannie Mae and Freddy Mac securities (despite the fact that they were « rescued » by the government (14)); or why Japan is now a net-seller of US T-Bonds.
All those who, despite our advice in the past two years, invested in Fannie and Freddy securities or in stock markets or in large US private equity banks or in the banking sector in general, have no reason to worry: it will not happen because « they » will prevent it! A problem remains however: “they” are now panic stricken and “they” understand nothing to this situation “they” were never prepared to face. Like we explained in the GEAB N°28, 2008 was only the detonator of the global systemic crisis. Now comes Phase IV, phase of the aftermath!
US government balance sheet (09/2007) - Source US GOA / Financial Times
Original Article w/footnotes, etc can be found here: GEAB N°29:
Part 1 of 2
Part 2 of 2
Saturday, November 22, 2008
2) PFF Bank & Trust of California
3) Community Bank of Georgia.
- Downey Savings had total assets of $12.8 billion and total deposits of $9.7 billion
- PFF Bank had total assets of $3.7 billion and total deposits of $2.4 billion
- Community Bank of Georgia had total assets of $681.0 million and total deposits of $611.4 million
FDIC List of Failed Banks