Following the Foreclosure Issues

Although most of the posts for this blog are written to help you with your preparedness goals or share how one family or other is doing things to give you ideas; it is never-the-less important to stay abreast of issues going on in our nation that could impact you personally, financially, etc. Issues in the news can also impact the urgency of your preparedness activities or could make you change your focus of priorities for purchases, etc.

If you have not been following the events related to the Foreclosure nightmare that is unfolding, or if you have just been going by the blips of information you have received from the main stream media regarding it, then you really do not have a good picture of the urgency of this situation and how significant the impact could be for all of us financially regarding this mess.

I highly recommend the following blog - The Market Ticker - for putting the information out about this for the past 3 YEARS and telling people that this would all blow up one day - and for keeping it real and letting us know what's going on in terms and definitions we can all understand.

So, if you haven't been keeping up, please go do some reading and educate yourself. My thought is while I can't be an expert about everything myself - I can better prepare for myself and my family if I keep up with important events around me by reading about them from the experts that are out there.

Here is a good place to start - and you can search his blog for Foreclosuregate to see all the past entries that will spell it all out for you in understandable detail.

The Market Ticker on Foreclosuregate

Excerpt:

" . . . .These events sure look like black-letter crimes to me. Selling someone crap instead of chocolate, when you tell them it's chocolate, is plain old-fashioned fraud. So is selling someone called a "Mortgage-backed security" without the mortgage backed part. In both cases, if and when this happened, you have people who took someone's money - some $6 trillion of it over the "go-go" years - and sold them crap that was certified as Grade "AAA" chocolate. In each and every case where the sellers lied, they committed a serious crime.

Who got screwed? You. Your pension fund. Your annuity company - an insurance company that might not be able to pay 10 years down the road when you're old, gray and frail.

You are the one who got screwed.

And if these clowns have their way, you'll get screwed again. The Senate knows, and is holding hearings on how to steal your 401ks - your private money - to make up the money the banks stole from Union pension funds. That's right folks - they know, and they're trying to figure out how to make it "more fair" - which is code in Washington DC for taking money from those who didn't get robbed by the banks and giving it to those who did, instead of making the robbers pay back what they stole and unjustly bonused out to their much-vaunted "talent."

Through all this we can't seem to find a prosecutor, perhaps because they're all bought and paid for by those same banks, who threaten "the end of the world" if they would be forced to eat their own cooking - or in this case, their own packaging of the dogcrap they foisted off on you.

What's worse is that we're letting all these people cover it up, even though the game had to go right through the executive suite of these big banks - you simply can't make the argument that which comprises "how one makes their money" wasn't known to the guys at the top.

Everyone talking about this in the mainstream media - with a handful of exceptions like myself on Dylan Ratigan's show, is trying to play this down as a mere technicality.

It's not.

It's a coverup that is now coming unraveled.

Why now?

Because the cash flow - or rather, the lack there - on these defaulted instruments is now becoming a serious problem, and as such you have banks furiously attempting to keep from coming to light the entirety of what happened - and they sure as hell don't want you to look closely at their practices over the last five years!

I said three years ago and have maintained since that in the end the cash flow would kill these games, because while all sorts of lies can be put on a balance sheet, you will never get away with falsifying the deposit ticket.

Guess what? That day has arrived.

Wake up America.

You've been robbed - by the bank."

The Market Ticker


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Will "Normal" Return??

According to Karl Denninger at The Market Ticker, with support from many others, the answer is NO.

He had an excellent post on Sunday to explain his reasoning. It includes a one hour and thirty minute video by William Black, the former liquidation director who was in charge of investigating the S&L disaster.

Here's an excerpt - then get on over there sometime when you can pay attention for about as long as a bad movie - you'll be glad you did and will walk away with a much better understanding of why we're in the economic mess we are in today:

Sunday Lesson: Why "Normal" Will Never Return - The Market Ticker

Be warned - this is a long presentation, lasting more than an hour and a half. It is worth every minute of your time and is in fact essential to understanding both what happened and more importantly why the economy cannot recover on a durable basis.

Note that one single bank, IndyMac, lost more money than all of the S&Ls combined.

Folks, the key "take away" here is what is called "control fraud." In order for trust to be restored - that is, in order for markets to function normally, this fraud must be eradicated from the system so that normal levels of business trust can be restored.

It hasn't been.

Watching the Dollar Today

Important Market Ticker post here today (31Jul09) about the dollar currently getting trashed and gold skyrocketing as the GDP numbers for 2Q also show a revision to 1Q GDP of a -6.4%

Link: The Market Ticker - Uh Oh . . . .(GDP Interpretation)

Excerpt:

What is this all telling us?

It appears to be that traders in the FX market (who by the way tend to be smarter than the average equity or bond trader) have deduced that the entire "improvement" in 2Q GDP came from government spending.

Well that's not hard to figure out - it did.

They also appear to be making a bet that the US Government will attempt to continue this, along with The Fed monetizing the debt through its buyback programs to destruction of both the government and currency.

This is not positive for our economy. At all.

But this is the meme today - traders are piling into bonds expecting more Fed buybacks, they are shorting dollars like crazy, and Gold is of course reacting to these two facts.

This is a "collapse of government due to spending into bankruptcy" play folks, or at minimum "currency crisis around the corner."

Right or wrong this is the trade being put on in size; the dollar selling in particular is especially pernicious and troublesome - that chart is essentially straight down since the GDP release this morning.

Read the whole post (and all the others for today while you're there) at The Market Ticker

Basic Math 101

I know that I mention The Market Ticker on here a lot, but his no-nonsense explanation of what is going on with America's economy, why the stimulus plans aren't working and what we need to do to get America on positive economic terms once again are so straight-forward and easy to understand that it should be required reading.

So, I'm sharing yet another excellent post from The Market Ticker today, one that clearly illustrates the reason we are in such bad financial shape in America today - overuse of credit. Spending what we did not have to spend. And thousands continue to do so each day.

Read and understand. Then act.

Excerpt: Economic Fundamentals

Steve Forbes is yammering about how "we must restart securitization" instead of putting forward the truth about the matter: we have hit the wall because we have spent twenty years pulling forward demand via more and more debt load; the current economic mess is a consequence of what happens when you start to pay interest on interest - debt levels spiral upward until you hit the wall of debt service requirements .vs. income - a mathematical fact that is staring all of these commentators square in the face and cannot be refuted.

The gap between "as reported" consumption as a part of GDP and per-capita income is impossible to ignore and cumulatively, since 1981, is close to 40%.

40% X 70% of GDP = 28% GDP contraction, and this assumes that the debt and its service requirement is simply wiped out - that is, it is discharged in bankruptcy.

But nobody is willing to talk about forcing all this unsustainable debt to be discharged in bankruptcy and re-basing the economy to a sustainable level - to return to a time when most of our GDP is in fact a function of human production (wages earned) instead of cheating by charging up the credit card, intending to pay by HELOCing the money out of your house!

This is the math folks. It is the math that nobody wants to debate or discuss. It is what CNBC, The Wall Street Journal, Bloomberg, ABC, CBS, NBC and Congress and President Obama all refuse to put on the table, despite the fact that it is staring us in the face.

Notice that nowhere up above is there any complex derivation, differential equations or calculus. There is in fact no math contained in any of this that an ordinary fifth-grader cannot handle and understand.

How is it that we have 300 million Americans with over 250 million of them able to understand the above, but we still refuse to sit down as a nation and address the facts?

How do we "get the economy growing again" when the math is crystal-clear and obvious: Per-capita income is up 2.95 times from 1981 to 2005, but GDP was up 4.0 times over the same period, a gap of 30%, or almost exactly the GDP contraction up above that I have, for more than two years, cited as what must happen to bring the economy back into equilibrium with incomes, ignoring debt service requirements added since 1981.

More here.

This is one of the main reasons why "preppers" are "preppers". Americans simply do not seem to be willing to understand this basic math principle and continuing down this road of credit will lead us to our financial ruin.

TN Families Living in Tents

Sobering article - happening right here in Tennessee. So many are just a lost paycheck or two away from this very circumstance.

Link: After Losing Homes, Families Move Into Tents
Tennessean.com
July 12, 2009

Excerpt:

Home these days is a cluster of tents covered by a blue tarp in a back corner of the Timberline Campground in Lebanon. Surrounding them are the tents, campers and recreational vehicles of other families in similar straits, living full time in campgrounds because they can no longer afford to live anywhere else.

No one knows how many people are living in campgrounds in Middle Tennessee. But visit any area campground and it's easy to pick out the permanent residents among the vacationers.

Look for the decks built on to campers with scrap lumber, and gardens planted next to campfire pits. Look for the air-conditioning units hooked up to tents. Look for the children boarding school buses at the front gates, and parents closing up the camper before they head off to work.

The space between a comfortable life, a nice home and a good job and living out of a campground is closer than most people could imagine. Lose a job, fall suddenly ill or end a marriage, and quickly the bills and mortgage payments start piling up high enough to bury an entire family.

More . . .

Knowledge Is Power

Okay folks. You know, I'm not one to hop onto the bandwagon of whatever latest "conspiracy" theory is running rampant out there in internet land.

However, I think most of you are quite able to see that our economy is in a shambles, with no end in sight of the slow bleed that seems to be taking place every day. True, many of us are still able to go about our day to day activities without a significant impact other than our 401k being lower than we'd appreciate.

But others are feeling the pain - and it is getting worse, not better.

So, I offer for your urgent reading the following links. Remember, knowledge is power and we as individuals simply must read and understand where things have been, where we are now and where they are going, and we need to know it quickly, for time is of the essence.

Read these links in order and form your own opinion. Feel free to come back here and share your thoughts.

~1. From the Market Ticker: Our Tier 1 Ratio Is Strong - this was written on Friday, 27 Feb 09, by Karl Denninger - who just won an Accuracy In Media Award and AIM's 2009 Reed Irvine Award for Grassroots Journalism. Read and understand this one - then move to:

~2. Straight from today's headlines on FoxNews: World Markets Fall on U.S. Slump, Bank Woes

~3. Next is another from Market Ticker: The Challenge Before America

As I said, feel free to share your thoughts.

Federal Reserve Minutes from 2/18

Policymakers project high unemployment through 2011, vow aggressive action:

Federal Open Market Committee Minutes - January 2009

Scroll about half way down to start reading the staff reviews, staff projections, meeting participants views and policy action to get sense of how they are all looking at our economic recovery - it is not at all comforting to realize that those supposed to be "in the know" seem relatively unsure about most things and between the lines it appears to me that they themselves are relatively uncertain that the stimulus will really be a stimulus at all:

An excerpt: "Participants were, however, quite uncertain about the outlook. All but a few saw the risks to growth as tilted to the downside; in light of financial stresses and tight credit conditions, they saw a significant risk that the economic recovery would be both delayed and initially quite weak. In particular, most participants saw the renewed deterioration in the banking sector's financial condition as posing a significant downside risk to the economic outlook absent additional initiatives to stabilize the banking system. . ."

Another excerpt: "Participants indicated they had been surprised by the speed and magnitude of the slowdown in economic growth abroad and the resulting drop in demand for U.S. exports. . ."

Another excerpt - something we all know to be true:

"Staff Review of the Economic and Financial Situation
The information reviewed at the meeting indicated a continued sharp contraction in real economic activity. Sales and starts of new homes remained on a steep downward trend, consumer spending continued its significant decline, the deterioration in business equipment investment intensified, and foreign demand weakened. Conditions in the labor market continued to deteriorate rapidly in December: Private payroll employment fell sharply, and the unemployment rate rose. Industrial production dropped more severely than in earlier months. Headline consumer prices fell in November and December, reflecting declines in consumer energy prices; core consumer prices were about flat in those months. While conditions in some financial markets showed limited improvement, extraordinary financial stresses remained apparent and credit conditions became still tighter for households and businesses. . . ."

Summary of Economic Projections - January 2009

An excerpt:

"Participants anticipated that labor market conditions would deteriorate substantially further over the course of this year, and nearly all expected that unemployment would still be well above its longer-run sustainable rate at the end of 2011. Participants' projections for the average unemployment rate during the fourth quarter of 2009 had a central tendency of 8.5 to 8.8 percent (emphasis added), markedly higher than last December's actual unemployment rate of 7.2 percent the latest available figure at the time of the January FOMC meeting."

Another excerpt:
"In addition, some participants noted that a substantial degree of uncertainty was associated with gauging the stimulative effects of nontraditional monetary policy tools that are now being employed given that conventional policy easing was limited by the zero lower bound on nominal interest rates. Others referred to uncertainties regarding the size, composition, and effectiveness of the fiscal stimulus package--which was still under consideration at the time of the FOMC meeting--and of further measures to stabilize the banking system. . ."

HOMEWORK: Are you prepping yet????