Discussion of Housing Bubble, US Dollar, Debt, Trade Deficit, Oil, Gold, Consumer Spending, Central Banks, Inflation, Outsourcing and the Bleak Future of the US economy
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The global economic meltdown has already caused bank failures, bankruptcies, plant closings, and foreclosures and will, in the coming year, leave many tens of millions unemployed across the planet. But another perilous consequence of the crash of 2008 has only recently made its appearance: increased civil unrest and ethnic strife. Someday, perhaps, war may follow.
As people lose confidence in the ability of markets and governments to solve the global crisis, they are likely to erupt into violent protests or to assault others they deem responsible for their plight, including government officials, plant managers, landlords, immigrants, and ethnic minorities. (The list could, in the future, prove long and unnerving.) If the present economic disaster turns into what President Barack Obama has referred to as a "lost decade", the result could be a global landscape filled with economically-fueled upheavals.
1. The American people elect a president with a total of 42 days Experience as a U S Senator from the most politically corrupt state in America whose governor is ousted from office. The President's first Official act is to close Gitmo and make sure terrorists civil rights are not Violated.
2. The U.S. Congress rushes to confirm an Attorney General, Eric Holder, whose law firm we later find out represents seventeen Gitmo Terrorists.
3. The CIA Boss, Leon Penetta with absolutely no experience, has a daughter Linda we find out, that is a true radical anti-American activist who is a Supporter of all the Anti-American regimes in the western hemisphere.
4. We got the most corrupt female in America as Secretary of State; bought and paid for.
5. We got a Tax Cheat for Treasury Secretary who files his own taxes.
6. A Commerce Secretary nominee who withdrew due to corruption charges.
7. A Tax cheat nominee for Chief Performance Officer who withdrew under Charges.
8. A Labor Secretary nominee who withdrew under charges of unethical Conduct.
9. A Health and Human Services Secretary nominee who withdrew under charges of cheating on his taxes.
And that's just the first two weeks. . . But who's counting.
America is being run by the modern-day Three Stooges ~ Barrack, Nancy, and Harry ~ and they are still trying to define stimulus.
Karl Denninger provides our President with some weekend advice
I just love this guy!
"President Obama and the rest of the clown-car brigade in Washington DC - you have until Sunday Night when the Asian Markets open before this last charade likely translates over into those markets."
"If that happens, and Europe has another day like it did today, the odds are we will open down so far off the support levels that were breached today that we will simply have no bid in large parts of the market - quite possibly including Treasuries and equities."
The Obama Fraud: An Open Video to Barack Obama Supporters
Hat Tip Justin!
Comments below from video originator:
Barack Obama is being hailed by his supporters as one of the greatest leaders to ever guide America. He is the voice of hope and change that this county is dying for. Unfortunately, when you look past the side issues and media hype, you discover that there is little meaning to his rhetoric. He is controlled by the same corporate and globalist interests that Bush and Clinton were controlled by. He is a C.F.R. puppet and it is very dangerous to blindly support him. For the record, I am not a McCain/Bush supporting republican nor an Obama supporting democrat; I am a concerned American that cares about the Constitution.
Consumer confidence plunged in February to a record low as concerns about jobs, income and the economy worsened considerably, according to the monthly Conference Board index. The February consumer confidence index (released Tuesday this week)fell to 25 from 37.4 in January. Most Analysts had expected a reading of 36.0.
Consumers' expectations also fell to a record low, with those anticipating fewer jobs in coming months rising to 47.3% from 36.9%. Additionally, those expecting "worse" business conditions also increased, hitting 40.5% from 31.1%, and those expecting more income fell to 7.6% from 10.3%.
Taken as a whole, the Conference Board's data are "breathtaking," said Ian Shepherdson, chief U.S. economist with High Frequency Economics.
Home Prices Continue to Plunge:
Fourth quarter 2008 S&P/Case Shiller National Home Price Index (the most widely watched measure of U.S. home prices) fell at a record pace - off 18.2%, as cheap prices failed to offset declines in income and available credit.
The decline in the S&P/Case-Shiller U.S. National Home Price Index - which covers all nine U.S. census divisions - recorded an 18.2% decline in the 4th quarter of 2008 versus the 4th quarter of 2007, the largest in the series' 21-year history. The 10-City and 20-City Composites also set new records, with annual declines of 19.2% and 18.5%, respectively.
The worst performing cities continue to be from the Sunbelt. Phoenix was down 34.0%, Las Vegas reported -33.0% and San Francisco fell 31.2%.
Initial Jobless Claims Skyrocket:
All signals point to one of the very worst reports ever for next week's monthly jobs data. Initial claims for the Feb. 21 week jumped 36,000 to 667,000 - the highest level in 26 years (prior week revised 4,000 higher to 631,000). Continuing claims are the worst ever, up 114,000 to 5.112 million in a reading that indicates the time it takes for the jobless to find work is increasing.
Cratering New Home Sales:
Sales of new single-family homes fell 10.2% in January to an annual rate of 309,000 units - a new record low and a total drop of 78% from the peak in July 2005 - the largest peak-to-trough decline on record!
Meanwhile, there was a 13.3-month supply of new single-family homes in the market in January - also a new record!
Durable Goods Orders Drop for Sixth Consecutive Month:
Durable goods orders in January fell for a record six consecutive months. Durable goods orders plunged 5.2 percent in January, following a 4.6 percent drop in December. The fall in January was far worse than the consensus forecast for a 2.5 percent decrease.
Year-on-year, overall new orders for durable goods are down 23.3 percent in January.
Overall, the January durables report indicates that the recession in manufacturing is getting worse. This will further tug down on the overall economic growth and further impact jobs and income in the consumer sector
PAY NO ATTENTION TO THE GLOOMY ECONOMIC DATA HOWEVER - BERNANKE WAVED HIS MAGIC WAND AND STATED RECESSION WILL END SOON:
Soothing words from Federal Reserve chief Ben S. Bernanke helped the stock market rebound Tuesday from a plunge to 11-year lows - If the financial crisis eases, Bernanke stated, there is "a reasonable prospect" that the recession will end this year and that a discernible recovery will get underway in 2010.
Results: The Dow jumped 236.16 points and both the S&P and Nasdaq rose about 4% after the Federal Reserve chief comments.
Damn! Why did I waste all that time finding/posting this data? I should have just posted Bernanke's Comments!
Taxpayers in St. Louis to throw "Boston Tea Party" revolt against bailout
There's already a growing revolt against the federal government bailout plan. Across the country, including in St. Louis, tax payers will protest with a "Boston Tea Party."
On February 27 at 11 a.m., people will be throwing tea leaves into the Mississippi River near the steps of the Gateway Arch.
The uprising all started when last week Rick Santelli of CNBC started ranting about using tax dollars to bail out people facing foreclosures. He posed this question to traders at Chicago's Commoditites Exchange: "How many of you people want to pay for your neighbor's mortgage that has an extra bathroom and can't pay their bills? Raise your hands." The traders around him responded with a resounding chorus of boos.
That struck a chord with St. Louis radio talk show host Dana Loesch and her listeners on 97.1 FM Talk.
"We want (Santelli) to run for president," she said.
Loesch is helping to organize the St. Louis event.
Since the peak of the economic boom in 2005/6, I've been writing that Las Vegas was extremely vulnerable and would ultimately feel the brunt of any economic downturn.
Many, based on previous history, felt that I was wrong and thought the city would be insulated from any recession, as peoples' "vices" would still need to be serviced and they would always be willing to spend in doing so..
Anyway, with the cheap-credit infused prosperity of the early decade, Las Vegas experienced one of the nation's steepest rise in home values - as the masses of soon-to-be millionaire investors flocked to the city to compete with the 6,000 or so new LV monthly residents who came to fill the many new service sector/gaming jobs created by the massive hotel/gaming construction boom - spawned by easy credit and analyst profit predictions that reached to the never-ending future... But I digress.
Ultimately, the factors above, combined with creative financing - which provided affordability regardless of price - created a massive demand for homes and inventories were quickly gobbled up - causing prices to go parabolic as they reached out and touched the stratosphere.
But the party eventually had to end - regardless of what all the kool-aid drinkers wanted one to believe.
Well, based on recent data from Housingtracker.net, which is a combined look at condo and single-family home statistics, Las Vegas's median home values are currently down 40% YoY and 53% from April 2006 (April 2006 Median=$344,900; Today's Median=$162,500).
Based on the data/trends above, combined with the significant uptick in Las Vegas's unemployment situation and lack of available mortgage credit, I anticipate foreclosures and inventories to significantly increase and prices to fall another 30% by this time next year.
Stated differently: Today's Median price is $162,500. After a 30% haircut from here, I expect to see a median of ~ $115K by March 2010 - very close to the $60 median price that I wrote about last year (link above).
But I may have been too optimistic in predicting that $60SF floor, because I'm now starting to believe that won't be the ultimate bottom...
Feb. 23 (Bloomberg) -- U.S. stocks fell, sending the Standard & Poor’s 500 Index to a 12-year low, as concern that the deepening recession will erode earnings offset the government’s pledge to give more capital to banks. The Dow Jones Industrial Average tumbled 250.89 points, or 3.4 percent, to 7,114.78, its lowest since May 1997
“Many investors simply can’t contemplate any more stock market risk in their portfolios,” said Fritz Meyer, the Denver- based senior market strategist for Invesco Aim, which oversees $357 billion. “Sentiment in the market is very weak and negative.”
“We’re still being governed by how deep the recession will be,” said Mike Ryan, head of wealth management research for the Americas at UBS Financial Services Inc. “There just don’t seem to be any clear signs that some of the problems have run their course.”
The financial crisis will be harder to end than the Great Depression and may force banks to be nationalized, “Black Swan” author Nassim Nicholas Taleb said in a Bloomberg Television interview. Rare and unforeseen events are known as “black swans” after Taleb’s 2007 book, “The Black Swan: The Impact of the Highly Improbable.” The financial crisis isn’t one, he said.
“The black swan for me would be for us to emerge out of this unscathed and return to normalcy,” Taleb said. Compared with the Great Depression, this crisis is “very different, and it requires much more drastic action.”
American International Group Inc. is preparing to report a quarterly loss that will likely top $60 billion, according to people familiar with the matter, a mammoth hole that could force the government to expand a bailout package that's already at $150 billion.
Investment losses and a series of wayward bets on derivatives and securities-lending plans have pushed AIG's expected losses for 2008 over $100 billion, a sum more than 70 times the insurer's current market value.
The losses have set off another crisis for both the newly installed Obama administration and the Federal Reserve. Letting AIG fall into deeper distress...
Feb 23 (Reuters) - The Federal Reserve stands ready to do everything in its power to combat the financial crisis and recession and buying long-term Treasury bonds could be helpful, a top Fed official said on Monday.
"Few of us imagined in our wildest dreams that our global economy could have turned so rotten so quickly," Richard Fisher, president of the Federal Reserve Bank of Dallas, told Harvard's John F. Kennedy School of Government in Cambridge, Massachusetts.
"We are duty-bound to apply every tool we can to clean up the mess that has soiled the face of our financial system and get back on the track of sustainable economic growth with price stability," he said.
With companies slashing jobs aggressively, Fisher said that "unemployment appears to me to be headed in the direction of, and possibly past, 9 percent."
He said the Fed must avoid appearing (emphasis is mine) to monetize the "exploding" fiscal deficits, as this could undermine confidence in the central bank's independence and commitment to price stability.
U.S. banks that fail a looming government stress test of their financial viability could be forced to accept government investment, pushed into shotgun marriages or simply nationalized if the institution's situation is bad enough, regulatory observers said.
Those are some of the likely options facing troubled banks that fail the tests, which are expected to begin shortly. Details of the plan are expected to be released Wednesday.
As part of the stress test, bank regulators will consider how much capital a bank has left if it were to register its losses immediately, according to Fred Cannon, managing director at investment bank Keefe, Bruyette & Woods in San Francisco. The test is expected to also examine a bank's capital position over the next two or three years by taking into consideration its losses over that period. Each bank's tax position and what credits they have available will be examined as well.
Feb. 23 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank, slashed its dividend by 87 percent to 5 cents and said it plans to maintain that level “for the time being.” The bank and its predecessors haven’t cut the dividend since 1990.
American Express wants you to leave home without them.
In a marketing turnabout, the largest U.S. credit card company by purchases, is offering select members a $300 gift card to drop its card, according to a notice on its web site.
To collect on the deal, entire card balances must be paid in full between March 1 and April 30.
American Express said in a regulatory filing that its annual net charge-off rate, which measures credit default, hit 8.29 percent in January from 7.23 percent in December, while the rate for loans at least 30 days delinquent rose to 5.2 percent from 4.8 percent.
Temporary layoffs, once confined to blue-collar workers, are hitting white-collar culture as employers dig deep to cut costs.
More companies are instituting these short-term hiatuses, called furloughs, as a humane alternative to permanent job cuts. But the spread of furloughs to new sectors and a new class of workers has created a host of issues.
"The places that are now exploring this or discussing this are not industries where it's traditional," says Joel Cutcher-Gershenfeld, dean of the School of Labor and Employment Relations at the University of Illinois, Urbana-Champaign. "I think a lot of [human-resources] offices are sort of having to figure this out. There isn't a rule book that they were given."
Now furloughs are happening in state governments and universities, publishing, technology companies and even the arts and entertainment industry.
In the past few months alone, the states of California and Maryland, Clemson University, Texas semiconductor firm Spansion, Gulfstream Aerospace, and publishing firms like Media General and Gannett have announced furloughs of professional workers.
A Watson Wyatt survey of 245 large U.S. companies to be released this week found that 6% of respondents plan mandatory furloughs over the next 12 months in reaction to the economy, with 11% having already implemented one. Many are taking these actions for the first time.
That's the case for Arizona State University. Never before in its 114-year history has the school used furloughs, says Matt McElrath, chief human-resources officer for the 67,000-student college.
"Had we not done this, we would have had to lay off about 1,000 administrative personnel," he says.
However, furloughs are no guarantee against eventual layoffs or other cuts, especially in extreme budget situations.
NEW YORK (Reuters) - Even if the government took a large common equity stake in Citigroup Inc, worries would likely persist about the bank's ability to absorb soaring losses in a deepening recession.
The third-largest U.S. bank by assets is in talks with federal regulators on a plan for the government to increase its stake, a person familiar with the matter said. Converting $45 billion of preferred stock, which the government obtained last fall, to common stock is one of many options, the person said.
An agreement could be announced Monday or Tuesday, CNBC television said.
"It can be taken as a commitment that some banks are too big to fail and the economic consequences too bad to contemplate," said Tony Morriss, senior markets strategist at ANZ Investment Bank, in Sydney.
Received this troubling email from Martin Weiss today. For those of you who follow Martin's work, you know he's been "on-the mark" in forecasting many aspects of this massive, unfolding economic crisis.
The nation’s largest banks are so close to collapse and the world economy is coming unglued so rapidly, a major Wall Street meltdown is now imminent.
Specifically, it’s now increasingly likely that virtually all of our forecasts of recent months could come to pass in a very short period of time, including …
Stock market crash: A swift plunge in stocks to about 5000 on the Dow, 500 on the S&P 500 and 900 on the Nasdaq … or lower. (For our reasons, see “Stocks to fall AT LEAST another 40%!“)
Corporate bankruptcies: A chain reaction of Chapter 11 filings or federal takeovers, including not only General Motors and Chrysler, but also Ann Taylor, Best Buy, Jet Blue, Macy’s, Saks Fifth Avenue, Sears, Toys “R” Us, U.S. Airways and even giants like Ford or General Electric.
Nationwide epidemic of small and medium-sized bank failures: Outright FDIC takeovers, with little prospect of nationalization. (I’ll give you a link to our free guide with a more extensive list in a moment.)
Insurance failures: State takeovers of companies like Ambac Assurance, Bankers Life and Casualty, Conseco, FGIC, Medical Liability Mutual, Mortgage Guaranty Insurance, Nuclear Electric Insurance, PMI Mortgage, Standard Life of Indiana and many others. (Our free guide also contains a more extensive list of insurers.)
Cities and states: An epidemic of defaults by thousands of cities, states and other issuers of tax-exempt municipal bonds.
Stock market shutdowns: Trading halts on major, big-cap stocks … plus on-again, off-again exchange shutdowns, making it increasingly difficult for investors to liquidate their holdings at any price.
Credit market deep freeze: A virtual shutdown in all debt markets except U.S. Treasuries. An avalanche of selling — and virtually no buyers — for corporate bonds, commercial paper, asset-backed securities, municipal bonds and all forms of bank loans.
Government bond collapse: A steep decline in the price of medium-and long-term government securities, as the U.S. Treasury bids aggressively for scarce funds to finance a ballooning budget deficit.
Shocking? Perhaps. Avoidable? No.
Nor am I alone in anticipating this rapid unraveling of the economy and financial markets. This past Friday, at a Columbia University dinner reported by Reuters …
George Soros said the financial system has effectively disintegrated, with the turbulence more severe than during the Great Depression and with the decline comparable to the fall of the Soviet Union, while …
Paul Volcker said he could not remember any time, even in the Great Depression, when things went down so fast and quite so uniformly around the world.
Both recognize that we’re in a new era of chaos. What’s the landmark event that separates us from the past era of relative stability?
That was the final straw that punctured the already imploding bubble. And it was the first major domino that set off the chain reaction of events now careening out of control: The collapse of consumer credit markets … surging unemployment … and now, a new set of even larger financial failures looming.
The Raging Debate Right Now Is How To Prevent A Banking Collapse: To Nationalize Or Not To Nationalize. But It’s A Moot Point.
The Worst is Yet to Come:" Americans' Standard of Living Permanently Changed
Hat Tip Jerry!
There's no question the American consumer is hurting in the face of a burst housing bubble, financial market meltdown and rising unemployment. But "the worst is yet to come," according to Howard Davidowitz, chairman of Davidowitz & Associates, who believes American's standard of living is undergoing a "permanent change" - and not for the better as a result of:
- An $8 trillion negative wealth effect from declining home values. - A $10 trillion negative wealth effect from weakened capital markets. - A $14 trillion consumer debt load amid "exploding unemployment", leading to "exploding bankruptcies."
"The average American used to be able to borrow to buy a home, send their kids to a good school [and] buy a car," Davidowitz says. "A lot of that is gone."
Going forward, the veteran retail industry consultant foresees higher savings rate and people trading down in both the goods and services they buy - as well as their aspirations.
The end of rampant consumerism is ultimately a good thing, he says, but the unraveling of an economy built on debt-fueled spending will be painful for years to come.
Note: A bit of a video/audio sync issue, but message is worth it
****HOME--MAIN BLOG PAGE**** I’m 44yrs old, retired from the USAF & manage a Telecomm organization. I have been writing about our bubble economy since 2005 & many of today’s economic events were actually anticipated and forewarned of. You should know that the U.S. Housing Bubble was only the latest symptom of much larger fundamental economic imbalances that have been building for decades - due to poor monetary and policymaking decisions. With that, I personally feel a major economic transformation is taking place right before our eyes & the prosperous “good life” that we’ve enjoyed in the US is ending. I have unrelated Telecom Eng. & Eng. Mgnt. Degrees, but have spent many thousands of hrs studying economic issues – providing me with a strong understanding of “the big picture” *****Disclaimer***** These articles reflect the opinion of this author and are by no means a guarantee of future economic conditions. Additionally, these articles are provided for INFORMATIONAL PURPOSES ONLY and are NOT MEANT to provide investment advice to anyone. For investment advice, please consult with your professional financial planner