Screw the Banks and Investment Firms

[garcialovesme]

[quote="can't sit still"]How did you choose that particular "pen Name' :?: :?: :?: :?:
What you say is quite true. Nobody was forced to borrow. The problem is that if you want to go to college or have a house for your family, you pretty much have to borrow. Everyone thought that they deserved the middle class life. Most people listened to advertising that told them that they had to keep up with the Joneses. Damn near everyone believed that house prices were going to go up forever. Willful blindness, I guess.
Survival-of-the-fittest originally selected for physical traits. As man gets more and more control over his environment, the selection is more for mental traits. I think that deviousness comes near the top of the list. :([/quote]

The pen name was down to my wife's father. He named her Garcia as a middle name (Jerry being the influence here) and she loves me, so garcialovesme is my chosen name.

Don't get me wrong about lending. Everyone has to lend at some point and home ownership and education are good things I think. But lending to fulfilll a dream the is ulitmately flawed and misguided is not a good thing. Education, travel to broaden your outlook on life and having a home are, as I see it, worthy of borrowing. But keeping up with the Jones' to get the latest 32" plasma television is not. I'd like to bet that the vast majority of consumer debt is through feeling empty inside. A lack of fullfillment in yourelf and the life you lead. Spending doesn't change this at all. You'll still be deep in debt but shallow in life itself.

A percentage of people will try to make you think that you need something you dont' and a much larger percentage of people will fall for it. All I'm saying is that you don't have to fall for it. A capitalist culture is the best answer so far but don't forget everyone else who has less than you. That's where socialism comes in. The spread of wealth is far too thin. We need to spread it far and wide so people without opportunities benfefit from those who have. Too long have I winced at people saying 'I'm not working to support others'. Why not? So you work for 2 hours a week so that others can have a better life? Why not indeed. Look hard, lok far and look deep. You'll soon see that you are worthless without everyone else.

Peace and love guys. Peace and love.

[cowboyangel]

This is a great song, ought be the anthem for the financial crash...



"We Can't Make it Here"
Lyrics

Vietnam Vet with a cardboard sign
Sitting there by the left turn line
Flag on the wheelchair flapping in the breeze
One leg missing, both hands free
No one's paying much mind to him
The V.A. budget's stretched so thin
And there's more comin' home from the Mideast war
We can't make it here anymore

That big ol' building was the textile mill
It fed our kids and it paid our bills
But they turned us out and they closed the doors
We can't make it here anymore

See all those pallets piled up on the loading dock
They're just gonna set there till they rot
'Cause there's nothing to ship, nothing to pack
Just busted concrete and rusted tracks
Empty storefronts around the square
There's a needle in the gutter and glass everywhere
You don't come down here 'less you're looking to score
We can't make it here anymore

The bar's still open but man it's slow
The tip jar's light and the register's low
The bartender don't have much to say
The regular crowd gets thinner each day

Some have maxed out all their credit cards
Some are working two jobs and living in cars
Minimum wage won't pay for a roof, won't pay for a drink
If you gotta have proof just try it yourself Mr. CEO
See how far 5.15 an hour will go
Take a part time job at one of your stores
Bet you can't make it here anymore

High school girl with a bourgeois dream
Just like the pictures in the magazine
She found on the floor of the laundromat
A woman with kids can forget all that
If she comes up pregnant what'll she do
Forget the career, forget about school
Can she live on faith? live on hope?
High on Jesus or hooked on dope
When it's way too late to just say no
You can't make it here anymore

Now I'm stocking shirts in the Wal-Mart store
Just like the ones we made before
'Cept this one came from Singapore
I guess we can't make it here anymore

Should I hate a people for the shade of their skin
Or the shape of their eyes or the shape I'm in
Should I hate 'em for having our jobs today
No I hate the men sent the jobs away
I can see them all now, they haunt my dreams
All lily white and squeaky clean
They've never known want, they'll never know need
Their sh@# don't stink and their kids won't bleed
Their kids won't bleed in the da$% little war
And we can't make it here anymore

Will work for food
Will die for oil
Will kill for power and to us the spoils
The billionaires get to pay less tax
The working poor get to fall through the cracks
Let 'em eat jellybeans let 'em eat cake
Let 'em eat sh$%, whatever it takes
They can join the Air Force, or join the Corps
If they can't make it here anymore

And that's how it is
That's what we got
If the president wants to admit it or not
You can read it in the paper
Read it on the wall
Hear it on the wind
If you're listening at all
Get out of that limo
Look us in the eye
Call us on the cell phone
Tell us all why

In Dayton, Ohio
Or Portland, Maine
Or a cotton gin out on the great high plains
That's done closed down along with the school
And the hospital and the swimming pool
Dust devils dance in the noonday heat
There's rats in the alley
And trash in the street
Gang graffiti on a boxcar door
We can't make it here anymore

Music and lyrics © 2004 by James McMurtry

[can't sit still]

Some firm that tracks investments by bank officials reported that for every dollar that bank officials buy in financial stocks, they sell $ 53 worth.
The financial industry is worse off than it was several months ago.
"junk in order to create earnings and value where none is available. Of course, as can be seen in the graphs, the banks share prices have responded accordingly, increasing by one hundred percent while the market value of their assets drop by 20 to 50%,"
Bank Investments/Common Equity
JPM Chase 744% (Whoa!! - more on them in my next post)
Wells Fargo 373%
Bank of America 371%
PNC 359%
Sandy Spring Bancorp 311%
BB&T Corp 245%
U.S. Bancorp 212%
SunTrust 200%
http://www.safehaven.com/article-14292.htm
It's easy to see that bank equity is minuscule compared to potential liabilities.
This crash may have been manufactured at some level,,, maybe the Illuminaughty. It's sure as hell obvious that the banks weren't prepared for it.
Defaults are RAPIDLY accelerating. If a bank forecloses on a property, it has to mark down the value of the loan AND pay about $ 50,000 for the procedure. Banks are leaving non-performing loans in limbo to avoid the cost and markdown. Banks are even servicing some of the loans themselves. How long can the banks carry the loans in limbo?
Prime and Jumbo loans are now defaulting faster than sub-prime.
It seems that the rich are screwed too;
"But, overall, there have been no gains in the stock market for more than 10 years. None. Factor in the effect of inflation and the story is worse; investors have lost about 25% to 30% of their money." " Who lost $50 trillion in stock and real estate? It wasn't the poor. " " And now nearly half of all jumbo mortgages are underwater"
"Last year, the number of Americans with a net worth of at least $30 million dropped 24 percent, according to CapGemini and Merrill Lynch Wealth Management" America lost about 2500 millionaires last year. Bill Bonner

Y'all may have noticed; the rich are not spending their money. It is not trickling down to us peons.
The banks built up this huge financial bubble. WE have walked away. The banks still have a bubble on their hands. We mail in the keys and walk away. It's not so easy for the banks. They blew a bubble of something like $ 3 quadrillion in contracts. This includes ALL RE plus all the resulting derivatives. They completely had their collective heads up their collective assholes because they KNEW that the RE appraisals were phony. They KNEW that credit card debt is unsecured. They KNEW that the car loans and RE loans were to people with insufficient earnings.
They tried to cover themselves on the RE with CDOs. They never paid attention to the fact that the nominal value of the CDOs and other derivatives had reached $ 1.4 quadrillion.
Our GDP is $ 13 trillion and they wrote "insurance" for $ 1.4 quadrillion. They were asleep at the wheel. They're wide awake now. They managed to mutually cancel many of the derivatives. There's still about $ 600 trillion left. Estimates are that they'll need $ 175 trillion in the next 2+ years.
80 banks have gone under and the FDIC is broke. The Canadian central bank ? said that they expect 1,000 banks to go under. The more optimistic estimates from US GOV hope that only 500 fall.
ALL the financial indicators are accelerating downwards.
The banks are screwed no matter how you look at it. They hold the notes on tons of commercial buildings. Since the US is non-competitive, these buildings won't be used for manufacturing. At the end of the day a commercial building is only worth whatever it's utilitarian value is. US industry is diminishing like "Starbucks" The buildings have no value in many cases.
The banks hold notes on tons of residential RE. No matter how you look at it , houses are in oversupply,,, compared to eligible buyers and renters. Investors may buy houses to rent but, they can't ever get enough rent from impoverished renters,,,,, unless the price is low enough to where the potential renter would be able to afford to buy anyway. 50% of loans against foreclosed property, fail again within one year.
At the end of the day, the price of a house depends on the wages in the same area.

SO, the banks can't get sales or a decent price,,,, mostly because of unemployment. Who's fault is that? Why, the banks,,, of course. 50 % of the cost of any item is for financing,,, on average. It's 19 % for trash collecting and 78 % for low-income housing.
Since China and other countries have state credit at MUCH lower rates, the US is non-competitive because the banks charge too much for financing.

The economy of China is about the same size as the economy of California. Calif goes in the RED about $ 500,000,000 a week. China has about $ 2 trillion in foreign reserves. The difference in labor rates is obvious. But, that can't possibly account for the surplus money that china has. As long as the US banks suck the lifeblood out of the economy, there won't be any positive changes.
Dan

[can't sit still]

The 2 biggest problems in the Anglo-American banking system are parasitism and fractional reserve. They just aren't sustainable. If all the wealth is tucked away by the bankers, it's not available for the general economy. The lack of money coupled with the ongoing destruction of job niches results in unemployment. Britain is ahead of the US in unemployment but, the US is trying hard to catch up.
http://www.guardian.co.uk/business/2009 ... less-homes
Dan

[cowboyangel]

Economic 9-11: Did Lehman Brothers Fall or Was It Pushed?
Ellen Brown, Huffington Post

Why did the naked short sellers pick that Goddamn date of Sept 11 to pull these collapses? This is too strange, even for me.....


A year after the bankruptcy of Lehman Brothers on September 15, 2008, questions still swirl around its collapse. Lawrence MacDonald, whose book A Colossal Failure of Common Sense came out in July 2009, maintains that the bank was not in substantially worse shape than other major Wall Street banks. He says Lehman was just "put to sleep. They put the pillow over the face of Lehman Brothers and they put her to sleep." The question is, why?

The bankruptcy of Lehman Brothers on September 15, 2008 is considered the watershed event that changed the rules of the game for those Wall Street banks considered "too big to fail." The bankruptcy option was ruled out once and for all; the taxpayers would have to keep throwing money at the banks, no matter how corrupt, ill-managed or undeserving. As Dean Baker noted in April 2009:

Geithner has supposedly ruled out the bankruptcy option because when he, along with Henry Paulson and Ben Bernanke, tried letting Lehman Brothers go under last fall, it didn't turn out very well. Of course, it is not necessary to go the route of an uncontrolled bankruptcy that Geithner and Co. pursued with Lehman. . . . [But] the Geithner crew insists that there are no alternatives to his plan; we have to just keep giving hundreds of billions of dollars to the banks . . . , further enriching the bankers who wrecked the economy.

Although Lehman Brothers filed for bankruptcy on Monday, September 15, 2008, it was actually "bombed" on September 11, when the biggest one-day drop in its stock and highest trading volume occurred before bankruptcy. Lehman CEO Richard Fuld maintained that the 158 year old bank was brought down by unsubstantiated rumors and illegal naked short selling. Although short selling (selling shares you don't own) is legal, the short seller is required to have shares lined up to borrow and replace to cover the sale. Failure to buy the shares back in the next three trading days is called a "fail to deliver." Christopher Cox, who was chairman of the Securities and Exchange Commission in 2008, said in a July 2009 article that naked short selling "can allow manipulators to force prices down far lower than would be possible in legitimate short-selling conditions." By September 11, 2008, according to the SEC, as many as 32.8 million Lehman shares had been sold and not delivered -- a 57-fold increase over the peak of the prior year. For a very large company like Lehman, with plenty of "float" (available shares for trading), this unprecedented number was highly suspicious and warranted serious investigation. But the SEC, which was criticized for failing to follow up even on tips that Bernie Madoff's business was a Ponzi scheme, has yet to announce the results of any investigation.

More Questions

Other questions about the Lehman collapse are raised in David Wessel's July 2009 book In Fed We Trust. Why was Bear Stearns saved from bankruptcy but Lehman Brothers was not? How could the decision makers not realize the dire consequences of letting Lehman go down?

One possible explanation is that they actually thought the bank would be bought out at the last minute, just as Bear Stearns was. In both cases, the parties worked feverishly over the weekend after the stock's collapse to try to negotiate a deal. For Bear Stearns, the negotiations succeeded, with the help of the New York Federal Reserve, which provided the loan used by JPMorgan Chase to complete the deal. With Lehman, however, the interested buyer was British, and the help that was needed was from the UK Chancellor of the Exchequer, Alistair Darling. The weekend after the September 11 stock collapse, intense negotiations were pursued with Barclays Bank, which was prepared to underwrite Lehman's debts; but it needed a waiver from British regulators of a rule requiring shareholder approval. Negotiations continued until the market was getting ready to open in Japan on Sunday, but UK Chancellor of the Exchequer Alistair Darling would not give the necessary waiver. He said something to the effect that he did not want to infect Britain with America's cancer. The sentiment was understandable, but the question was, why did he wait until it was too late for the Treasury or the Federal Reserve to move in with other arrangements?

The issue takes on more significance in light of the fact that Chancellor Darling played a similar role in another 9-11 collapse the previous year. On September 11, 2007, frantic customers were lining up outside Northern Rock, the UK's fifth largest mortgage lender, in the first British bank run in 141 years. The bank's shares plunged 31% in a single day. Like the collapse of Lehman Brothers in the U.S., the bankruptcy of Northern Rock changed the rules of the game. Britain's major banks too would now be saved at any cost, in order to avoid the loss of customer confidence, panic and bank runs that could precipitate a 1929-style market crash.

With Northern Rock, as with Lehman Brothers, Alistair Darling could have saved the day but backed down. Northern Rock had a willing buyer, Lloyds TSB; but the buyer needed a loan from the Bank of England, which the Bank's Governor, Mervyn King, had denied. Darling was advised by his staff to overrule the Governor and grant the loan, but this would have cost political capital for UK Prime Minister Gordon Brown, who had been widely lauded for giving the Bank of England its independence in 1997.

Brown is criticized domestically for precipitating the financial crisis with errors made as Chancellor of the Exchequer before he became Prime Minister. Critics maintain the British Treasury has abdicated its responsibility as the financial overseer of the British economy to the Bank of England, which in many ways controls the government, because its advice is always followed regarding the British budget. The whole scenario suggests that the much-vaunted virtues of an independent central bank are overblown. Some economists, including Milton Friedman and Ben Bernanke, blame poor policymaking by an independent Federal Reserve for bringing on the Great Depression of the 1930s.

Shock Therapy?

According to Representative Paul Kanjorski, speaking on C-SPAN in January 2009, the collapse of Lehman Brothers precipitated a $550 billion run on the money market funds on Thursday, September 18. This was the dire news that Treasury Secretary Henry Paulson presented to Congress behind closed doors, prompting Congressional approval of Paulson's $700 billion bank bailout despite deep misgivings. It was the sort of "shock therapy" discussed by Naomi Klein in her book The Shock Doctrine, in which a major crisis prompts hasty emergency action involving the relinquishment of rights or funds that would otherwise be difficult to pry loose from the citizenry.

Like the "bombing" of Lehman stock on September 11, the $550 billion money market run was suspicious. The stock market had plunged when Lehman filed for bankruptcy on September 15, but it actually went up on September 16. Why did the money market wait until September 18 to collapse? A report by the Joint Economic Committee pointed to the fact that the $62 billion Reserve Primary Fund had "broken the buck" (fallen below a stable $1 per share) due to its Lehman investments; but that had occurred on September 15, and the fund had suspended redemptions for the following week. What dire reversal happened on September 17? According to the SEC, it was another record day for illegal naked short selling. Failed trades climbed to 49.7 million -- 23% of Lehman trades.

The Larger Question Is Why?

All of this suggests that Lehman Brothers did not just fall over the brink but was pushed. Judge James Peck, who presided in the bankruptcy proceedings, said "Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets."

If Lehman was indeed sacrificed, who pushed it and to what end? Some critics point to Henry Paulson and his cronies at Goldman Sachs, Lehman's arch rival. Goldman certainly came out on top after Lehman's demise, but there were other possibilities as well, involving more global players. The month after Lehman collapsed, Gordon Brown and the EU leaders called for using the financial crisis as an opportunity to radically enhance the regulatory power of global institutions. Brown spoke of "a new global financial order," echoing the "new world order" referred to by globalist banker David Rockefeller when he said in 1994:

We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the new world order.

Richard Haas, President of the U.S. Council on Foreign Relations, wrote in 2006:

Globalisation . . . implies that sovereignty is not only becoming weaker in reality, but that it needs to become weaker.

Sovereignty is one of these cherished rights that nations will give up only with "the right major crisis." Gordon Brown put it like this:

Sometimes it takes a crisis for people to agree that what is obvious and should have been done years ago, can no longer be postponed. . . . We must create a new international financial architecture for the global age.

In April 2009, Gordon Brown and Alistair Darling hosted the G20 summit in London, which focused on the financial crisis. A global currency issue was approved, and an international Financial Stability Board was agreed to as global regulator, to be based in the controversial Bank for International Settlements in Basel, Switzerland. The international bankers who caused the financial crisis are indeed capitalizing on it, consolidating their power in "a new global financial order" that gives them top-down global control. Just some food for thought as September 11 rolls around again.

[can't sit still]

Cowboy, great article. Just as Pearl Harbor and 9/11 were used to elicit the correct response, it does look like Lehman and Northern Rock were sacrificed to achieve the right regulatory changes. There is the possibility that sharks saw a chance at profit by cannibalizing Lehman but, I think that less likely.
The destruction of sovereignty seems to be the cause du jour all over the world. Leaders like Blair and Bush have gulped the Koolaide. The Illuminaughty have convinced them that a 1 world financial system would bring peace and prosperity for everyone. The illuminaughty say that they will forswear war. Our dimwitted leaders actually believe that rubbish. The machine-age society would soon be overflowing with goods if allowed. People wouldn't have to work because AI and robots would take over almost all jobs. Profit would go to nothing in a peace economy. They need constant war to destroy the products of the machine age,,, else prosperity would appear.

Oboomerang's "war of necessity" is necessary to destroy materials. It keeps 1/2 million out of the productive labor force and at the same time creates lots of profits for Raytheon and General Dynamics. Do you think that the PTB are going to give up on this proven money-maker?
A Rand study years ago said that Americans must be regularly fleeced to keep them destitute and working. Otherwise, they would just sit around all day. World GOV is not going to bring world peace. World banking will just usher in worldwide fleecing. It sucks !

[cowboyangel]

A long long time ago in another country (where the people spoke French) they came up with an "iron clad" solution to the problem of a voracious ruling class.....

[can't sit still]

The French proved to be surprisingly thorough. It bought them a lot of time. The Romanians, on the other hand, were too selective. They executed Ceausescu and his wife;
http://www.toxicjunction.com/get.asp?i=V3860
While staying in Dublim, I met a Romanian woman who had to flee because she wrote a book' "The Revolution Stolen" She claimed that after the revolution, all the old bosses were back in power.

[Ugly Dougly]

I am going to go way out on a limb and say that the DJ will be at 10,000 by year's end.

[can't sit still]

Dougly, we'll still love you if you're wrong. We're you aware that china is now a net seller of US bonds. They went negative $ 30 billion last month. Will that affect your projections? Also, the Chinese central bank told Chinese banks that they can repudiate any US paper that they believe was misleading or fraudulent. I believe that china is in a huge bubble that they are trying to ignore. I think that the banks needed some slack to survive. China was trying to tip-toe off-stage. Now, they're ready to gallop.

[can't sit still]

I am going to go way out on a limb and say that the DJ will be at 10,000 by year's end.

And after 10,000,,, then what?
http://money.cnn.com/2009/09/10/news/ec ... 2009091107

[can't sit still]

It would be pretty funny if this idea went viral;
http://www.huffingtonpost.com/2009/09/1 ... 85394.html

[Ugly Dougly]

I am sure that you are puzzled that the DJ is about 9700 right now. I hope you are not disappointed.

[can't sit still]

Dougly, I own no stocks so, I don't follow the market. I have NO desire to see the economy melt down. It will hurt a lot [more] people. I wish it could all go along peaches and cream. I started a couple of threads on the economy because history doesn't favor aging empires that try to spend their way to prosperity. I don't wish an economic crash on anyone. I'm not disappointed. Dan

[cowboyangel]

Bernanke says "Recession is Over"

Yeah Ben!!! But what about what Mike Whitney is saying Ben? Ben????

Post-Bubble Malaise. No Economic Recovery...

We keep hearing that "The worst is behind us", but the spin doesn't square with the facts. Sure the stock market has done well, but scratch the surface and you'll find that things are not as what they seem. Zero hedge--which is quickly becoming the "go-to" market-update spot on the Internet--recently posted an eye-popping chart which traces the Fed's monetization programs (Quantitative Easing) with the 6-month surge in the S&P 500. The $917 billion increase in securities held outright equals the Fed's $1 trillion increase to its balance sheet. In other words, the liquidity from the Fed is following the exact same trajectory as stocks, a sure sign that the market is being manipulated. Surprisingly, traders seem to know that the Fed is goosing the market and have just shrugged it off as "business as usual". Go figure? Perhaps it pays to take a philosophical approach to market rigging. Who needs the gray hair anyway? The result, however, has been that short-sellers (traders betting the market will go down) who have placed their bets according to (weak) fundamentals, have gotten clobbered. They appear to be the last holdouts who still place their faith in the unimpaired operation of the free market. (Right) Here's how former hedge fund manager Andy Kessler sums it up in a recent Wall Street Journal article, "The Bernanke Market". Here's a clip:


"By buying U.S. Treasuries and mortgages to increase the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn't put money directly into the stock market but he didn't have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. Stock and bond funds saw net inflows of close to $150 billion since January. The dollars he cranked out didn't go into the hard economy, but instead into tradable assets. In other words, Ben Bernanke has been the market."

So, the Fed has given a boost to stocks while keeping the bond market priced for deflation. That's quite a trick. One market is flashing "recovery" while the other is signaling "contraction". Bernanke has worked this miracle, by simply changing the definition of "indirect bidders" (which used to mean "foreign buyers" of US Treasuries) to mean just about anyone-anywhere. Here's an explanation of this latest bit of chicanery from the Wall Street Journal in June:

"The sudden increase in demand by foreign buyers for Treasuries, hailed as proof that the world's central banks are still willing to help absorb the avalanche of supply, mightn't be all that it seems.

“When the government sells bonds, traders typically look at a group of buyers called indirect bidders, which includes foreign central banks, to divine overseas demand for U.S. debt. That demand has been rising recently, giving comfort to investors that foreign buyers will continue to finance the U.S.'s budget deficit.

“But in a little-noticed switch on June 1, the Treasury changed the way it accounts for indirect bids, putting more buyers under that umbrella and boosting the portion of recent Treasury sales that the market perceived were being bought by foreigners." ("Is foreign Demand as Solid as it Looks, Min zeng)

Pretty clever, eh? So, if the Treasury doesn't want dupes like us to know when foreign demand drops off a cliff, they just twist the definitions to meet their needs. My guess is that the Fed is building excess bank reserves (nearly $1 trillion in the last year alone) with the tacit understanding that the banks will return the favor by purchasing Uncle Sam's sovereign debt. It's all very confusing and circular, in keeping with Bernanke's stated commitment to "transparency". What a laugh. The good news is that the trillions in government paper probably won't increase inflation until the economy begins to improve and the slack in capacity is reduced. Then we can expect to get walloped with hyperinflation. But that could be years off. For the foreseeable future, it's all about deflation.


No matter how you look at it, the economy is on the ropes. Yes, there should be a rebound in the next few quarters, but once the stimulus wears off, its back to the doldrums. According to David Rosenberg of Gluskin Sheff, "All the growth we are seeing globally this year is due to fiscal stimulus.... For 2010, the government’s share of global growth, by our estimates, will be 80%. In other words, there are still very few signs that organic private sector activity is stirring."

The question is, how long can the Obama administration write checks on an account that's overdrawn by $11 trillion (The National debt) before the foreign appetite for US Treasuries wanes and we have a sovereign debt crisis? If the Fed is faking sales of Treasuries to conceal the damage--as I expect it is--we could see the dollar plunge to $2 per euro by the middle of 2010. Imagine pulling up to the gas pump and paying $6.50 per gallon. Ouch! That should be revive the economy.

For the next year or so, the demon we face is deflation; a severe contraction exacerbated by household deleveraging and massive financial sector defaults. The Fed's money-printing operations just can't keep pace with capital-hole that continues to expand from delinquencies, foreclosures, and failed loans. Workers have seen their credit lines cut and their hours reduced, households are $3 trillion above trend in their debt-to-equity ratio, and unemployment is soaring. Industry analysts expect a $1.5 trillion cut-back in credit card spending. That's why Bernanke is firehosing the whole financial system with low interest liquidity, to stimulate speculation and reverse the effects of a slumping economy.

Here's a clip from an article in the UK Telegraph:

"Both bank credit and the M3 money supply in the United States have been contracting at rates comparable to the onset of the Great Depression since early summer, raising fears of a double-dip recession in 2010 and a slide into debt-deflation...

Similar concerns have been raised by David Rosenberg, chief strategist at Gluskin Sheff, who said that over the four weeks up to August 24, bank credit shrank at an "epic" 9pc annual pace, the M2 money supply shrank at 12.2pc and M1 shrank at 6.5pc.


"For the first time in the post-WW2 [Second World War] era, we have deflation in credit, wages and rents and, from our lens, this is a toxic brew," he said. (Ambrose Evans-Pritchard, "US credit shrinks at Great Depression rate prompting fears of double-dip recession", UK Telegraph)

The Fed has pumped up bank reserves, but the velocity of money has sputtered to a standstill. There won't be an uptick in economic activity until consumers reduce their debt-load, rebalance their personal accounts and find jobs. That's a long way off, which is why San Francisco Fed chief Janet Yellen sounded more like Nouriel Roubini in this week's presentation "The Outlook for Recovery in the U.S. Economy" in S.F.:

"With slack likely to persist for years, it seems likely that core inflation will move even lower, departing yet farther from our price stability objective. From a monetary policy point of view, the landscape will continue to present challenges. We face an economy with substantial slack, prospects for only moderate growth, and low and declining inflation. With our policy rate already as low as it can go, it’s no wonder that the FOMC’s last statement indicated that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.â€

[can't sit still]

Cowboy, good post. At this point nobody wants the applecart to tip over. Foreign central banks are buying dollars to buy time. There is currently NO substitute for the dollar. GOV has the pedal to the metal on spending and other central banks just suck it up. We've really got them over a barrel for now. It looks like things will just struggle along,,, like Japan. Japan has done 11 stimuli.
The one? wild card is israel. If they attack Iran, that will close the Straights of Hormuz. That would really wake people up. But, for now, nobody can escape the dollar. There is talk of producing new exchange mechanisms that will bypass currency. It might happen. The market is the strongest force in the end. In the meantime we'll just continue to bleed jobs with a non-competitive business model.
It will get real gritty for those trying to hang on without a job.

[cowboyangel]

Dan, isn't the Fed creating just another kind of bubble by surreptitiously buying treasuries? And other central banks doing the same thing? More bubbles? Like the reaction that sent us into a tail spin after Lehman, aren't we just buying a little time before the next explosion? and won't that be an explosion rather than a pop? This is nutty. Things are so fucked now that lying is the only way they can manage the thing. Tension levels are only escalating...look at Afghanistan and JCS's request for more troops...and Israel's telling Obama "fuck you" over building more West Bank settlements, not to mention Iran.

Something will pop. I like the discussions over at zero hedge. Neat place, check it out.

What's your opinion on the Elliott Wave?

[can't sit still]

Since banks / GOV are the problem, they can't possibly fix the problem. All they can hope to do is buy time. Ellliott wave looks good. If you look at Martin Armstrong's graphs, they look real similar to Elliott wave stuff. Martin Armstrong really knows his stuff. That's why he's in prison. FDIC and FHLB are in trouble. Freddie and Fanny and AIG didn't go away.

I know what you mean about tension levels. Pakistan could blow. Eastern Europe is off the radar but, It's bad news. N Korea could freak out Japan again. Putin is backing Iran. Europe can't afford to piss off Russia as long as Europe needs Russian gas. The stupid shit maneuver they did in Osseita didn't help. Since the FED is owned by European banksters, they probably don't want to have to depend on Russia. Too complicated for me to figure out.
I've been to Zero Hedge before. I read anything that interests me.

[can't sit still]

Here's a post from Bill Bonner. It's an interesting perspective;
"
"30% of Americans making $100,000 or more each year are living paycheck to paycheck, reports a CareerBuilder.com study this week. That's up from 21% last year - a number that still seems awfully high.

"61% of all American's say they are in a similar bind...making just enough to finance their lifestyle every month. Just a year ago, 49% were living paycheck to paycheck.

"The number one way to make ends meet on a tough month? Cut savings. Check out these quick stats:

21% of correspondents have reduced or eliminated 401k contributions in the last six months 36% don't put any money towards retirement 33% don't save at all 30% that do put some away, save less than $100 a month

"Puts an interesting twist on the much belabored rising savings rate, doesn't it? The personal savings rate as reported by the government has nearly doubled from this time last year - from roughly 2.5% to 5%. But to what end? Sounds like we're just saving money today to help pay for next month's heating bill."
Sad, sad, state of affairs,, especially for would-be retirees.
Dan

[Ugly Dougly]

Markets opened at about 9800 today.

[littleflower]

Markets opened at about 9800 today.

true .... but october is 12 days away. take note ... the investors i know are ready to get out.

[cowboyangel]

is your mother "big Flower" and are you the mother of all negative predictions?

[littleflower]

i would accuse you of sour grapes for not getting the chance to make that prediction yourself if it wasn't so mundane ...!

[cowboyangel]

contact your congress reps and tell them to audit the Fed.


What exactly did the Fed do with Two Trillion Dollars ?

by Dean Baker

.
Global Research, September 20, 2009
The Guardian - 2009-09-07

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Despite Ben Bernanke's protestations, Congress must be given full access to audit the Federal Reserve's loans expenditure

To combat the financial crisis set off by the collapse of the housing bubble, the Federal Reserve Board has lent out more than $2tn through various special lending facilities. While the Fed discloses aggregate information on the loans made through each of the facilities, it will not disclose how much money it lent to specific banks or under what terms. By contrast, the Treasury puts this information about its $700bn TARP bailout up on its website.

Partly in response to this huge increase in the Fed's power (its secret lending is equal to two-thirds of the federal budget), more than 270 representatives in Congress have co-sponsored a bill that would have the Government Accountability Office audit the Fed. In principle, this audit would examine the Fed's loans and report back to the relevant congressional committees, which could decide to make this information public.

Most people might consider it perfectly reasonable to have Congress's auditing arm review what the Fed has done with $2tn of the taxpayers' money to ensure that everything is proper. After all, we wouldn't let other government agencies spend one millionth of this amount ($2m) without some sort of record that could be verified.

However, the Fed and its chairman Ben Bernanke, do not see it this way. Bernanke warned Congress last month that such an audit could jeopardise the Fed's independence, which in turn, "could raise fears about future inflation, leading to higher long-term interest rates and reduced economic and financial stability".

OK, Bernanke warned Congress that if the Fed had less independence, it could lead to "reduced economic and financial stability." We have just been through a year in which the Great Depression was a more frequent topic of conversation than the Superbowl, World Series, and Oscars combined. In fact, Bernanke is given credit for preventing another Great Depression. The Congressional Budget Office is now projecting that unemployment will average in the double digits throughout 2010 and it will not be until 2014 that the unemployment rate falls back to its normal level.

Did Bernanke forget about the current state of the economy and the financial collapse that he was frantically trying to head off when he warned Congress that if the Fed were less independent, it could lead to "reduced economic and financial stability"? After all, how do you get less economic and financial stability than the Great Depression?

This is not the first time that Bernanke's memory appears to have failed him when addressing Congress about an important policy issue. Last September, when he was telling Congress that the economy would collapse if it did not approve the $700bn TARP bailout, he warned that the commercial paper market was shutting down. This was hugely important because most major companies rely on selling commercial paper to meet their payrolls and pay other routine bills. If they could not sell commercial paper, then millions of people would soon be laid off and the economy would collapse.

What Bernanke apparently forgot to tell Congress is that the Fed has the authority to directly buy commercial paper from financial and non-financial companies. In other words, the Fed has the power to prevent the sort of economic collapse that Bernanke warned would happen if Congress did not quickly approve the TARP. In fact, Bernanke announced that the Fed would create a special lending facility to buy commercial paper the weekend after Congress voted to approve the TARP.

Bernanke has taken extraordinary measures in the last year that have been successful in preventing a much worse downturn. Nonetheless, Congress should not forget that it was incredible mismanagement by Bernanke and his predecessor Alan Greenspan that brought about this disaster in the first place. If Bernanke is approved for another term, as seems likely, Congress should not hesitate to use more oversight than it did in past years. And, it certainly should not let the Fed send $2tn out the door without a verifiable paper trail.

Given the track record for Bernanke's version of bank independence, it is hard to imagine that greater congressional oversight would lead to worse outcomes.

[Ugly Dougly]

DJ dips below 9800. Time for the aluminum foil hat.

[cowboyangel]

AND FINALLY SOME GOOD NEWS AND THIS VERY VERY BIG FOLKS
FOR THOSE OF YOU FOLLOWING THIS TOPIC.....









Ellen Brown
Ellen Brown

Author, "Web of Debt"
Posted: September 21, 2009 03:03 PM

Landmark Decision Promises Massive Relief for Homeowners and Trouble for Banks


A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose -- on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.

Eliminating the "Straw Man" Shielding Lenders and Investors from Liability

The development of "electronic" mortgages managed by MERS went hand in hand with the "securitization" of mortgage loans -- chopping them into pieces and selling them off to investors. In the heyday of mortgage securitizations, before investors got wise to their risks, lenders would slice up loans, bundle them into "financial products" called "collateralized debt obligations" (CDOs), ostensibly insure them against default by wrapping them in derivatives called "credit default swaps," and sell them to pension funds, municipal funds, foreign investment funds, and so forth. There were many secured parties, and the pieces kept changing hands; but MERS supposedly kept track of all these changes electronically. MERS would register and record mortgage loans in its name, and it would bring foreclosure actions in its name. MERS not only facilitated the rapid turnover of mortgages and mortgage-backed securities, but it has served as a sort of "corporate shield" that protects investors from claims by borrowers concerning predatory lending practices. California attorney Timothy McCandless describes the problem like this:

[MERS] has reduced transparency in the mortgage market in two ways. First, consumers and their counsel can no longer turn to the public recording systems to learn the identity of the holder of their note. Today, county recording systems are increasingly full of one meaningless name, MERS, repeated over and over again. But more importantly, all across the country, MERS now brings foreclosure proceedings in its own name -- even though it is not the financial party in interest. This is problematic because MERS is not prepared for or equipped to provide responses to consumers' discovery requests with respect to predatory lending claims and defenses. In effect, the securitization conduit attempts to use a faceless and seemingly innocent proxy with no knowledge of predatory origination or servicing behavior to do the dirty work of seizing the consumer's home ... So imposing is this opaque corporate wall, that in a "vast" number of foreclosures, MERS actually succeeds in foreclosing without producing the original note -- the legal sine qua non of foreclosure -- much less documentation that could support predatory lending defenses.

The real parties in interest concealed behind MERS have been made so faceless, however, that there is now no party with standing to foreclose. The Kansas Supreme Court stated that MERS' relationship "is more akin to that of a straw man than to a party possessing all the rights given a buyer." The court opined:

By statute, assignment of the mortgage carries with it the assignment of the debt ... Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust. [Citations omitted; emphasis added.]

MERS as straw man lacks standing to foreclose, but so does the original lender, although it was a signatory to the deal. The lender lacks standing because title had to pass to the secured parties for the arrangement to legally qualify as a "security." The lender has been paid in full and has no further legal interest in the claim. Only the securities holders have skin in the game; but they have no standing to foreclose, because they were not signatories to the original agreement. They cannot satisfy the basic requirement of contract law that a plaintiff suing on a written contract must produce a signed contract proving he is entitled to relief.

The Potential Impact of 60 Million Fatally Flawed Mortgages

The banks arranging these mortgage-backed securities have typically served as trustees for the investors. When the trustees could not present timely written proof of ownership entitling them to foreclose, they would in the past file "lost-note affidavits" with the court; and judges usually let these foreclosures proceed without objection. But in October 2007, an intrepid federal judge in Cleveland put a halt to the practice. U.S. District Court Judge Christopher Boyko ruled that Deutsche Bank had not filed the proper paperwork to establish its right to foreclose on fourteen homes it was suing to repossess as trustee. Judges in many other states then came out with similar rulings.

Following the Boyko decision, in December 2007 attorney Sean Olender suggested in an article in The San Francisco Chronicle that the real reason for the bailout schemes being proposed by then-Treasury Secretary Henry Paulson was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. Olender wrote:

The sole goal of the [bailout schemes] is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value -- right now almost 10 times their market worth. The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.


... The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC . . . .

What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back.

Needless to say, however, the banks did not buy back their toxic waste, and no bank officials went to jail. As Olender predicted, in the fall of 2008, massive taxpayer-funded bailouts of Fannie and Freddie were pushed through by Henry Paulson, whose former firm Goldman Sachs was an active player in creating CDOs when he was at its helm as CEO. Paulson also hastily engineered the $85 billion bailout of insurer American International Group (AIG), a major counterparty to Goldmans' massive holdings of CDOs. The insolvency of AIG was a huge crisis for Goldman, and Goldman was the largest recipient of public funds from the AIG bailout.

In a December 2007 New York Times article titled "The Long and Short of It at Goldman Sachs," Ben Stein wrote:

For decades now ... I have been receiving letters [warning] me about the dangers of a secret government running the world ... [T]he closest I have recently seen to such a world-running body would have to be a certain large investment bank, whose alums are routinely Treasury secretaries, high advisers to presidents, and occasionally a governor or United States senator.

The pirates seem to have captured the ship, and until now there has been no one to stop them. But 60 million mortgages with fatal defects in title could give aggrieved homeowners and securities holders the crowbar they need to exert some serious leverage on Congress -- serious enough perhaps even to pry the legislature loose from the powerful banking lobbies that now hold it in thrall.

Follow Ellen Brown on Twitter: www.twitter.com/ellenhbrown


Read more at: http://www.huffingtonpost.com/ellen-bro ... 92333.html

[Ugly Dougly]

Now did we ask you for good news, sunshine?

Dow is above 9800 again, and flirting with 9900.
Only 94 shopping days until Xmas!

[cowboyangel]

...only because I don't want to fuck with the magnetic balance of the poles

(too much negative in a positive petri dish? )

[can't sit still]

Bill Bonner;

"You wouldn't know it by his pay stubs, but Jiang Jianqing heads the world's largest bank.

"Jiang, chairman of Industrial and Commercial Bank of China, made just $234,700 in 2008. That's less than 2 percent of the $19.6 million awarded to Jamie Dimon, chief executive of the world's fourth-largest bank, JPMorgan Chase & Co.

"The contrast illustrates the massive differences in pay among the CEOs of the world's top banks. The compensation of the CEOs of the largest US banks towers above what's paid to banking chiefs in other parts of the world, according to a Reuters analysis of pay at the 18 biggest banks by market value.

"The United States is home to four of the nine largest banks in the world - JPMorgan, Bank of America Corp, Wells Fargo & Co and Citigroup Inc. It is also home to four of the six most handsomely rewarded bank CEOs.

"China, for example, boasts three of the world's four biggest banks, yet the leaders of those banks - Industrial and Commercial Bank of China, China Construction Bank Corp and Bank of China - are among the lowest paid of those surveyed by Reuters. The chairman and the president of each of the banks are paid roughly $230,000 per year."

If America's make-believe capitalists want to pay their CEOs exorbitant wages, that's their business. A pox on all of them. But in come the feds...and now we're all paying the price. And if the program ends in December, as scheduled, we'll get to see how far the economy without taxpayers' money in the gas tank. Let's see...it comes to a complete stop?"

[cowboyangel]

there's always a new war don't forget....