Coming Financial Crisis Worse Than ’29?

[Jimmy Chitwood]

advisor: market about to turn nasty; buy land, barbed wire, and guns. link includes video of interview, as well. here's an excerpt:

Anthony Fry, senior managing director at Evercore Partners (onCNBC Monday) ... is telling investors to play it safe andbuy physical assets like land.
"I don't want to scare anyone but I am considering investing in barbed wire and guns, things are not looking good ... "

meanwhile, "our" Government continues its madness ...

Senator Jim DeMint: 94% of all Senate bills passed secretly with no debate, no vote.
[tube]http://www.youtube.com/watch?v=2B751mhY-QE[/tube]

 

[Jimmy Chitwood]

Tax hikes and the 2011 collapse.

<H1>Tax Hikes and the 2011 Economic Collapse </H1>
<H2 =sub>Today's corporate profits reflect an income shift into 2010. These profits will tumble next year, preceded most likely by the stock market. </H2>
<H3 =byline>ARTHUR LAFFER </H3>


People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.


It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.
Likewise, who is gobsmacked when they are told that the two wealthiest Americansâ€"Bill Gates and Warren Buffettâ€"hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.




People can also change the timing of when they earn and receive their income in response to government policies. According to a 2004 U.S. Treasury report, "high income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992â€"over $15 billionâ€"in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994."


Just remember what happened to auto sales when the cash for clunkers program ended. Or how about new housing sales when the $8,000 tax credit ended? It isn't rocket surgery, as the Ivy League professor said.


On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.


Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.

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Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be. <A name=U308604196264jF></A>


Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.


In 1981, Ronald Reaganâ€"with bipartisan supportâ€"began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn't take effect until Jan. 1, 1983. Reagan's delayed tax cuts were the mirror image of President Barack Obama's delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.


But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don't work until they take effect. Mr. Obama's experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.<A name=U30860419626sBI></A>


Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market.



In 2010, without any prepayment penalties, people can cash in their Individual Retirement Accounts (IRAs), Keough deferred income accounts and 401(k) deferred income accounts. After paying their taxes, these deferred income accounts can be rolled into Roth IRAs that provide after-tax income to their owners into the future. Given what's going to happen to tax rates, this conversion seems like a no-brainer.


The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain't seen nothing yet.

 

[Jimmy Chitwood]

uh oh ...

Via Clustershock:
<BLOCKQUOTE>


We've dubbed this chart the "Scariest Job Chart Ever,"Â￾ as it shows how the decline in employment is WAY uglier than in past recessions.


Calculated Risk has updated it with the latest numbers from this morning, and now it looks even scarier.


Why?


Check out the two red lines at the bottom. The solid one includes Census hiring, while the dotted line doesn't include it.


What's clear is that while we still have a rebound including Census hiring, we're already flattening out on the dotted line. This is a shape not seen on the other lines. suggesting that the fall is extremely deep, and the recovery is shallow.</BLOCKQUOTE>

We're fairly confident that the "Scariest Job Chart Ever"Â￾ is going to get even scarier. The President says that our economy is improving by the day and our Vice President says we will add 1.5 million jobs by the end of the year. Once the Census jobs go away and government stimulus runs out we'll likely renew the downward trend on this chart. It will become evident in negative GDP growth in the last half of 2010 that we have not recovered.


After having read these 50 Statistics about the US Economy, is there any doubt that we are nowhere near the end of this?

 

[Jimmy Chitwood]

since he lives out in Nevada, i'd be especially interested in hearing Don's thoughts of the following commentary.

<TABLE border=0 cellSpacing=0 cellPadding=0 width="98%" align=center>
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<TR>
<TD =title colSpan=2>The Death Of Las Vegas </TD></TR>
<TR>
<TD =textsmall>Published on06-11-2010</TD></TR></T></TABLE>




By Michael Snyder - BLN Contributing Writer

There are quite a few U.S. cities that are complete and utter economic disaster zones in 2010 (Detroit for example), but there is something about the demise of Las Vegas that is absolutely stunning. In recent decades, Las Vegas has become a symbol for the over-the-top affluence and decadence of America. But now it is a microcosm of the economic nightmare that has gripped the entire nation. When the subprime mortgage crisis stuck, no major U.S. city was more devastated than Las Vegas. When the recession went from bad to worse, Americans decided that they really didn't need to gamble so much and casino revenues plummeted.Suddenly unemployment started to increase dramatically in Vegas and even today it continues to soar. Like so many other cities that are highly dependent on tourism and entertainment, Las Vegas has gone from boom to bust. Local officials are hoping that the worst will soon be over, but the truth is that the worst is yet to come.As the U.S. economy continues to unravel,average Americans will be spending what little money they do have toput a roof over their heads and to feed their families. The truth is that the glory days of Las Vegas are over and they are not coming back.


Already, the number of unemployed in Las Vegas is reaching unprecedented levels. Unemployment rates for the state of Nevada and for the city of Las Vegas bothsetnewrecordsduring the month of April. In Las Vegas the unemployment rate in April was 14.2%. For the entire state the unemployment rate was 13.7%.


Of course those are just the "official" numbers. We all know that the "real" unemployment numbers are much higher.


For example, the "official" unemployment figure is about 14 percent in the state of Michigan right now. But if you actually believe that 86 percent of able-bodied workers in the state of Michigan are employed, then perhaps you would be interested in an offer to purchase the Golden Gate Bridge as well.


Elliott Parker, an economist at the University of Nevada, Reno says that the record-setting unemployment numbers inNevadaare just part of a larger trend....


"Nevada has been losing jobs since March 2008, and we are continuing to do so."


But where the state of Nevada and the city of Las Vegas have really been hammered is in the housing industry.


Itis estimated thata whopping 65 percent of all homes in the state of Nevada are underwater.


Let that sink in for a bit.


65 percent of all home owners with a mortgage in the state of Nevada owe more than their homes are worth.


Talk about an implosion.


Nationally, the number of homes that are "underwater" is about 24 percent. That is an all-time record for the entire nation, but it doesn't come anywhere close to the nightmare that is unfolding in Nevada and in Las Vegas.


And the number of foreclosures taking placein Nevada is absolutely breathtaking.


According to RealtyTrac, Nevada is still ranked number one for foreclosure filings. In fact, oneout of every 79 Nevada homes received a foreclosure filing in the month ofMay alone.


Nevada's foreclosure rateis now five times the national average.


By just about any measure, the economy of Nevada is a complete and total disaster.


A reader recently sent an email describing the economic horror that is unfolding in Las Vegas. No matter what you may think about the city, the truth is that it is sad to see any great U.S. city fall to pieces like this....


"Las Vegas is a goner. The homeless population is out of control. The real estate is far worse than I have seen in the media (no surprise there). The towers of condos are ninety five percent vacant with zero activity. The streets and parks are in decline. Local governments are busy making cuts and fighting unions. When I ride the streets they are deserted, a big change from 2006. The major casino companies have all but moved the casinos out of Nevada. Rooms and restaurants have been closing for years, even while they finished the new projects. The entire town is a skeleton staff providing substandard service and decaying properties. I still work for one of the majors which is in bankruptcy. When the next wave hits there is nowhere to cut. It will be a game of dominoes with the Wynn properties the only ones left standing. I see the ninety nine cent breakfast making a comeback. The bullet train a day late and a few billion dollars short."


So is there any hope for Las Vegas?


Well, if the U.S. economy gets back up off of the operating table and roars back to life there is little doubt that millions of Americans would once again soon be flying there to gamble away their discretionary income.


But the truth is that any "revival" that is going to happen in Vegas is going to be very short-lived.


The U.S. economy as a whole is caught in a death spiral, and we are about to see a repeatof the housing crash that devastated Las Vegas so badly the first time around.


No, there really isn't any way that the death of Las Vegas can be avoided. Just like the U.S. economy as a whole, it is inevitably doomed. The numbers don't lie.


The grand total of all government, corporate and consumer debtin the United States is now equal to360 percent of GDP. That is a far greater level than the U.S. ever approached during the Great Depression.


The entire U.S. economy is a house of cards built on a gigantic pile of debt and paper money, and it is only a matter of time until it all comes crashing down.


But of course that isn't stopping the U.S. government from spending even more money and getting us all into even more debt.


According to a recent Treasury Department report to Congress, the U.S. national debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015.


But as many of you who have experienced this on a personal level know, getting intocontinually increasingamounts of debt never ends well.


So do any of you have a tale to tell about the city where you live? Do you find yourself caught in the middle of an economic nightmare? Feel free to leave a commenttelling us what ishappening in yourarea of the United States....

 

[DixieDestroyer]

This current Depression will be "double-dip" for certain (if not "triple dip"), as hyperinflation is upon the horizon. Anyone still investing in investments pegged to fiat currency is setting themselves up to be fleeced (by design). This is ALL part of the intentional economic downfall to destroy & eliminate the shrinking middle class. The Elite want a 2 class dystopia consisting of 90-95% impoverished serfs (subject to the Orwellian, One World government & their mass eugenics/population reduction tactics) & a 5-10% ruling Elite.

 

[whiteCB]

This current Depression will be "double-dip" for certain (if not "triple dip"), as hyperinflation is upon the horizon. Anyone still investing in investments pegged to fiat currency is setting themselves up to be fleeced (by design). This is ALL part of the intentional economic downfall to destroy & eliminate the shrinking middle class. The Elite want a 2 class dystopia consisting of 90-95% impoverished serfs (subject to the Orwellian, One World government & their mass eugenics/population reduction tactics) & a 5-10% ruling Elite.

I went to my cousin's college graduation this past weekend. She attended a MAC school so it was a big commencement of about 2,000 students. I kept telling my family the sad part is all these kids need JOBS! Oh and not to mention I was at the morning graduation and there was an afternoon one of another 2,000 students. So here's 4,000 kids just from one school alone and they all need jobs!!

However, as usual the proverbial moniker among speakers was "well the economy is bad but the best and hardest working will do well". Oh really? Tell that to the graduates of 2007 who got straight A's in college and are working a temp job while still living at home paying off their $50k in student debt. Or anyone for that matter. It's soooo bad out there that the hardest working/smartest people do end up getting f'ed over and it is not looking good.

Sometimes I get this feeling that the whole "college" thing is an elitist ponzi scheme. I am not talking about the original "university" idea of higher learning and getting a law degree or accountancy degree as you needed higher institutes of learning back in the day and they served a real function. No I am talking about the whole college "boom" that came about the last 50 years or so. This notion that to be successful you need to go take out a $75,000 loan from the gov't so you can go enroll at State U. and learn about the "socio-economic" impoverished hardships that plague "urban" families. Then you can graduate in 4 yrs(more like 5 yrs to be honest) with a worthless degree in Communication Studies or Political Science or Sociology. You're promised a false automatic "future of success" by everyone from family, high school faculty, and the media. That a great job is possible by taking out loans and learning about AIDS Awareness for 4 years. When in reality your getting 4 years of absolute drunken debauchery (trust me I lived it), random sexual partners (good and bad lol) with a chance of STDs which my best friend ended up with for the rest of his life, and my personal favorite thousands upon thousands of dollars of DEBT!!!

So basically this whole college scheme is just one more tool helping to make this coming financial crisis worst then '29!

 

[Paleocon]

With so many people getting degrees it takes more education to stand
out. Now to possibly qualify for a good job you need to go to graduate
school. A bachelor's degree is the new high school diploma. This is a
great arrangement for the Education establishment, but wretched for
their victims... I mean, students. It is also wretched for society
because it is the result of lowered standards at every level and it creates huge numbers of people under massive debt.

This is a good article on higher education:
http://www.memoriapress.com/articles/Russell-Kirk.html

 

[jaxvid]

I agree too much college. Problem is, what's the other option? A friend of mine was bemoaning the closing of a local high school that prepared kids for a trade. He said it was a shame that they were forcing everyone to go to college.

OK but what "trades" are out there anymore? Most of the manufacturing base has been shipped over seas so those jobs are gone. Construction has been given to the illegals with no end in sight. Sure a few jobs remain in plumbing and electrical but how many kids that are spending all of their day going from video games to computers are going to want or be able to do that?

It is a downward spiral.

 

[Paleocon]

Computers and IT was supposed to fill the gap left by the departed manufacturing and foreign labor filled trades, but, surprise of all surprises, they found foreign labor for that too. It is quite obvious that once a field becomes widely attainable it will be filled with non-white foreigners (often educated at taxpayer expense).

 

[white is right]

I agree too much college. Problem is, what's the other option? A friend of mine was bemoaning the closing of a local high school that prepared kids for a trade. He said it was a shame that they were forcing everyone to go to college.

OK but what "trades" are out there anymore? Most of the manufacturing base has been shipped over seas so those jobs are gone. Construction has been given to the illegals with no end in sight. Sure a few jobs remain in plumbing and electrical but how many kids that are spending all of their day going from video games to computers are going to want or be able to do that?

It is a downward spiral.

In a dooms day scenario even trades aren't worth much as the economy shrinks. Millwrights, machinists and tool and die makers need humming factories for work. If the economy slows to a halt good luck in finding any work in these fields........

 

[whiteathlete33]

My friend started his own business a while back while the economy was still in decent shape. He does roofing and now he's paying the price. He works maybe two days a week if he's lucky. At least before when he worked for a private company he had very good pay and steady work.

 

[FootballDad]

If he's a roofer, he should move to Oklahoma. Always lots of work there as the hail really tears up roofs.

 

[whiteathlete33]

If he's a roofer, he should move to Oklahoma. Always lots of work there as the hail really tears up roofs.

That would be kind of tough for him considering he's now divorced as his daughter stays with his ex-wife in Philadelphia which is about a 90 minute ride from were he lives in North Jersey. He wouldn't see her much at all then and plus he gets some of his jobs from the company he used to work for. No one wants to pay anymore. Rather than give him a job and pay a bit more(since he is insured of course) they will find someone who doesn't have insurance and can do the roof much cheaper.

 

[DixieDestroyer]

Depression 2.0+ continues onwards...

Out-of-work job applicants told unemployed need not apply

Chris Isidore, senior writer, On Wednesday June 16, 2010, 4:26 am EDT

The last thing someone who is unemployed needs to be told is that they shouldn't even apply for the limited number of job openings that are available. But some companies and recruiters are doing just that.

Employment experts say they believe companies are increasingly interested only in applicants who already have a job.

"I think it is more prevalent than it used to be," said Rich Thompson, vice president of learning and performance for Adecco Group North America, the world's largest staffing firm. "I don't have hard numbers, but three out of the last four conversations I've had about openings, this requirement was brought up."

Some job postings include restrictions such as "unemployed candidates will not be considered" or "must be currently employed." Those explicit limitations have occasionally been removed from listings when an employer or recruiter is questioned by the media though.

That's what happened with numerous listings for grocery store managers throughout the Southeast posted by a South Carolina recruiter, Latro Consulting.

After CNNMoney called seeking comments on the listings last week, the restriction against unemployed candidates being considered came down. Latro Consulting refused to comment when contacted.

Sony Ericsson, a global phone manufacturer that was hiring for a new Georgia facility, also removed a similar restriction after local reporters wrote about it. According to reports, a Sony Ericsson spokesperson said that a mistake had been made.

But even if companies don't spell out in a job listing that they won't consider someone who currently doesn't have a job, experts said that unemployed applicants are typically ruled out right off the bat.

"Most executive recruiters won't look at a candidate unless they have a job, even if they don't like to admit to it," said Lisa Chenofsky Singer, a human resources consultant from Millburn, NJ, specializing in media and publishing jobs.

She said when she proposes candidates for openings, the first question she is often asked by a recruiter is if they currently have a job. If the answer is no, she's typically told the unemployed candidate won't be interviewed.

"They think you must have been laid off for performance issues," she said, adding that this is a "myth" in a time of high unemployment.

It is not against the law for companies to exclude the unemployed when trying to fill positions, but Judy Conti, a lobbyist for the National Employment Law Project, said the practice is a bad one.

"Making that kind of automatic cut is senseless; you could be missing out on the best person of all," she said. "There are millions of people who are unemployed through no fault of their own. If an employer feels that the best qualified are the ones already working, they have no appreciation of the crisis we're in right now."

Conti added that firms that hire unemployed job seekers could also benefit from a recently-passed tax break that essentially exempts them from paying the 6.2% of the new hire's wages in Social Security taxes for the rest of this year.

Thompson said he also thinks ruling out the unemployed is a bad idea. But he said that part of the problem is that recruiters and human resource departments are being overwhelmed with applications for any job opening that is posted. So they're looking for any short-cuts to get the list of applicants to consider down to a more manageable size.

"It's a tough process to determine which unemployed applicants were laid off even though they brought value to their company and which ones had performance issues," he said. "I understand the notion. But there's the top x percent of unemployed candidates who are very viable and very valuable. You just have to do the work to find them."

Have you had trouble even applying for a job because you are out of work? If so e-mail us here to tell us your story.

http://finance.yahoo.com/news/Outofwork-job-applicants-told-cnnm-3498252371.html?x=0

Edited by: DixieDestroyer

 

[Jimmy Chitwood]

83rd bank failure of the year; pace more than double last year's.

<DIV =inside-copy>WASHINGTON (AP) â€" Regulators on Friday shut down a Nevada bank, raising to 83 the number of U.S. bank failures this year.
The 83 closures so far this year is more than double the pace set in all of 2009, which was itself a brisk year for shutdowns. By this time last year, regulators had closed 40 banks. The pace has accelerated as banks' losses mount on loans made for commercial property and development.
The Federal Deposit Insurance Corp. took over Nevada Security Bank, based in Reno, with $480.3 million in assets and $479.8 million in deposits. Umpqua Bank, based in Roseburg, Ore., agreed to assume the assets and deposits of the failed bank.

The failure of Nevada Security Bank is expected to cost the deposit insurance fund $80.9 million.
<DIV id=tagCrumbs>
In addition, the FDIC and Umpqua Bank agreed to share losses on $368.2 million of Nevada Security Bank's loans and other assets.
The number of bank failures is expected to peak this year and be slightly higher than the 140 that fell in 2009. That was the highest annual tally since 1992, at the height of the savings and loan crisis. The 2009 failures cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008, the year the financial crisis struck with force, and only three succumbed in 2007.
As losses have mounted on loans made for commercial property and development, the growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, and its deficit stood at $20.7 billion as of March 31.
The number of banks on the FDIC's confidential "problem" list jumped to 775 in the first quarter from 702 three months earlier, even as the industry as a whole had its best quarter in two years.
A majority of institutions posted profit gains in the January-March quarter. But many small and midsized banks are likely to continue to suffer distress in the coming months and years, especially from soured loans for office buildings and development projects.
The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years.
The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to replenish the insurance fund.
Depositors' money â€" insured up to $250,000 per account â€" is not at risk, with the FDIC backed by the government.

 

[Charlie]

John T. Reed is a real estate writer best known to the general public as a debunker of claims made by persons like Robert 'Rich Dad/Poor Dad' Kiyosaki.

'How to Protect Your Life Savings from Hyperinflation and Depression' is Reed's new book.

Reed thinks the U.S. will default on its debt, but only after some seriously bad times. The justification for default is 'The Doctrine of Odious Debt'. Debt incurred by a regime hostile to the people is not a debt belonging to the people but rather to the regime. Russians do not have to repay loans made to the USSR. Americans, perhaps, will follow suit and suggest creditors look up Bush, Clinton and Obama for repayment.

I hoped Argentina would default during the 2002 crisis. Of course that would mean no more borrowing, but it would also mean no debt and a greatly reduced government. But it's hard to do when people are rioting in the street and claiming starvation. And if one major country defaults then others will follow suit. And that would be a problem for the IMF and creditors.

Default may be psychologically easy for the U.S. since so much is held by China and Japan.

In the meantime the problem is how to avoid becoming a modern hobo or coolie. Reed dislikes gold and all the claims made about it.

 

[Jimmy Chitwood]

according to this author, there is another coming real estate crisis.

The Coming U.S. Real Estate Crash

This week headlines across the United States screamed thatnew home sales in theU.S.had declined to the lowest level since the U.S. government began keeping track in 1963. But in the news stories covering this data in the mainstream media, they were always very careful to give their readers lots of reasons why things are going to "get back to normal" very soon. But the truth is that is simply not going to happen. Right now the United States is heading for another real estate crash. The only thing that has been holding it back was the huge bribe (called a tax credit) that the U.S. government was giving people to buy houses. Now that the tax credit has expired, there is no artificial incentive to buy homes and the real estate market has fallen through the floor. Unfortunately, there is every indication that things are going to get even worse.Read on to find out why....


The following are 7 reasons why the U.S. real estate market is already a total nightmare....


#1) In May, sales of new homes in the United States dropped to the lowest levelever recorded.To be more precise, new home salesdropped 32.7 percentto a seasonally adjusted annual rate of 300,000. A "normal" level is about 800,000 a month. New homes have never sold this slowly ever since the U.S.Commerce Department began tracking this data back in 1963.


#2) The median price of all new U.S. homes sold in May was $200,900, which representeda 9.6% drop from May 2009. If prices are still falling on new homes that means that the real estate nightmare is not over.


#3)New home salefigures for the previous two months were also revised down sharplyby the government. Apparently their previous estimates were far too optimistic. But those were supposed to be really good months for home sales with so many Americans taking advantage of the tax credit right before the deadline. So the fact that the data for the previous two months had to be revised downward so severely is a very bad sign.


#4) Newly signed home sale contracts in the U.S.dropped more than 10% in May.


#5) According to the U.S. Commerce Department, housing starts in theU.S. fell approximately 10 percent in May, which represented the biggest decline since March 2009.


#6) Internet searches on real estate websites are downabout 20 percent compared to thissame time periodin 2009.


#7) The "twin pillars" of the mortgage industry are acomplete and total financial mess. The Congressional Budget Officeis projectingthat the final bill for the bailouts of Fannie Mae and Freddie Mac couldbe as high as$389 billion. Both Fannie Mae and Freddie Mac continue to hemorrhage cash at an alarming rate, but the truth is that without them there wouldn't be much of a mortgage industry left in the United States.


The following are 7 reasons why things are going to get even worse....


#1) Themassive tax credit that the U.S. government was offering to home buyershas expired. This tax credit helpedstabilize the U.S. real estate market for many months, but now that it is gone there is no more safety net for the housing industry.


#2) Foreclosures continue to set all-time records. In fact, the number of home foreclosuresset a record for the second consecutive month in May. Not only that, but the number of newly initiated foreclosures rose 18.6 percent to 370,856 in the first quarter of 2010. A rising tide of foreclosures means that there is going to be a growing inventory of foreclosed homes on the market. As of March, U.S. banks had an inventory of approximately 1.1 million foreclosed homes, which wasup 20 percent from a year ago. There is no indication that the number of foreclosed homes that need to be sold is going to decrease any time soon. This is going to have a depressing effect on U.S. home prices.


#3) Anothergiant wave of adjustable rate mortgages isscheduled to reset in 2011 and 2012. This"second wave" threatens to be as dramatic as the first wave that almost sunk the U.S. mortgage industry in 2007 and 2008. Unfortunately, what this is going to cause is even more foreclosures and even lower home prices.


#4)Banks and lendinginstitutions have beensignificantly tightening their lendingstandards over the past several years. It is now much harder to get a home loan. That means that there are less potential buyers for each house that is on the market. Less competition for homes means that prices will continue to decline.


#5) Home prices are still way too high for most Americans in the current economic environment. Based on current wage levels, house prices should actually be much lower. So the market is going to continue to try to push home prices down to a point where people can actually afford to buy them. Right now Americans can't even afford the houses that they already have. The Mortgage Bankers Associationrecently announced thatmore than10% of all U.S. homeowners with a mortgage had missed at least one mortgage payment during the January to March time period. That wasa new all-timerecord andrepresented an increase from9.1 percent a year ago.


#6) The overallU.S. economyis caught in a death spiral. Unemployment remains at frightening levels,a large percentage of Americans areup to their eyeballs in debt and more than 40 million Americans are now on food stamps. If people don't have jobs andif people don't have money then they can't buy houses.


#7) The Gulf of Mexico oil spill is the greatest environmental disaster in U.S. history, and it is threatening to become one of the greatest economic disasters in U.S. history. Already, real estate agents along the Gulf coast are reporting that the oil spillhas completely killed the real estate industry in the region. As this disaster continues to grow worse by the day, homes in the southeast United States will continue to look less and less appealing. In fact, many are now projecting that the crisis in the Gulf will actually crush the housing industry from coast to coast.


So honestly there is not a lot of reason to think that the housing industry in the U.S. is going to rebound any time soon. In fact, for those waiting for a "rebound" the truth is that we have already seen it. Where we are headed next is the second dip of the "double dip" that so many of the talking heads on CNBC have been talking about. For those seeking to sell their homes this is really bad news, but for those looking to buy a home this is actually good news.


Who knows? Home prices may actually come down to a point where many of us can actually afford to purchase a home.

 

[white is right]

If you live in depressed areas ie Las Vegas, Phoenix, Cleveland. Cheap prices might still get cheaper. I saw former 100K town homes going for 1/5 of their original prices on one real estate site. True depression type prices.....

 

[Westside]

"Investor Type" friends of mine bought cluster of modest homes in Cleveland, Ohio for 10K each. Right now are struggling to break even. The deadbeat Section 8 tenants ( and we here CF know the pigmentation of these bottom feeders) are destroying the homes and this loser tenant pool is drying up.

These friends of mine talked a big game a year ago, now they have lost their voice and bluster. Glad I did not go that route.

 

[DixieDestroyer]

WS, sounds like the same time of hucksters than constantly harp on the ponzi scheme that is Wall $treet.

 

[Jimmy Chitwood]

i don't want to gum up the thread by posting all of these, but the link is definitely worth taking a look at. if your eyes aren't already open, looking at these will likely cause your jaw to become so ... in stunned disbelief.

20 must-see charts on America's disastrous levels of government spending.

 

[DixieDestroyer]

More stealthy tinkering with market(s) by the Central Banking Cartel's BIS.

Secret gold swap has spooked the market

It takes a lot to spook the solid old gold market. But when it emerged last week that one or more banks had lent 380 tonnes of gold to the Bank of International Settlements in return for foreign currencies, there was widespread surprise and confusion


By Garry White and Rowena Mason
Published: 6:10PM BST 11 Jul 2010

The news that a mystery bank has just pawned the family jewels gave traders a jolt â€" nervous about the sudden transfer of almost 20pc of the world's annual gold production and the possibility of a sell-off.

In a tiny footnote in its annual report, the bank disclosed its unusually large holding of gold, compared with nothing the year before. The disclosure was a large factor in the correction of the gold price this week, which fell below $1,200 for the first time in more than a month.

Concerns hinged on whether the BIS could potentially sell on this vast cache of bullion in the event of a default, flooding the market with liquidity. It appears to have raised $14bn for whoever's been doing the swapping â€" small fry on the currency markets, but serious liquidity in the gold market.

Denominated in euros, gold has fallen 8pc since the beginning of the month and is now trading at a seven-week low of €937 per troy ounce.

The big gold exchange traded funds (ETFs) â€" having peaked at record inflows in May â€" have also been showing net outflows over the past few days.

Meanwhile, economists and gold market-watchers were determined to hunt down which bank is short of cash â€" curious about who is using their stash of precious metal for what looks suspiciously like a secret bailout.

At first it looked like the BIS was swapping gold with a troubled central bank. After all, the institution is the central bankers' bank and its purpose to conduct transactions with national monetary authorities.

Central banks in the troubled southern zone of Europe were considered the most likely perpetrators.

According to the World Gold Council, central banks in Greece, Spain and Portugal held 112.2, 281.6 and 382.5 tons of gold respectively in June â€" leading analysts to point fingers at Portugal, or a combination of the three.

But Edel Tully, an analyst from UBS, noted that eurozone central banks would be severely limited with what they could do with the influx of extra cash â€" unable to transfer it straight to governments or make use of the primary bond markets.

She then listed the only other potential monetary authorities with enough gold as the US, China, Switzerland, Japan, Russia, India and Taiwan â€" and the International Monetary Fund.

This led to musings that the counterparty was the IMF, making sense because the lender of last resort is historically prone to cash shortages and has been quietly selling off gold in the first half of the year.

Renowned gold expert Jim Sinclair adopted this explanation. The panic came when people mistook a lease for a swap, he argues. Far from being a big release of gold into the market, it is simply a commercial arrangement between the IMF and BIS with a favourable rate of interest paid for the foreign currency.

"Gold swaps are usually undertaken by monetary authorities," he writes on his industry blog, MineSet. "The gold is exchanged for foreign exchange deposits with an agreement that the transaction be unwound at a future time at an agreed price.

"The IMF will pay interest on the foreign exchange received. Historically swaps occur when entities like the IMF have a need for foreign exchange, but do not wish to sell the gold. In this case, gold is a leveraging device for needed currency to meet requirements.

"The many reports that characterise the large IMF gold swap as a sale of gold into the markets do not understand the difference between a swap and a lease."

However, the day after original reports about the swaps, BIS emailed a statement saying that the swaps had not been conducted with monetary authorities but purely with commercial banks.

This did nothing to quell the sense of mystery surrounding the deal or deals. It is almost inconceivable that a single commercial bank could have accumulated so much gold alone. And cynics have suggested that the whole affair still looks like a secretive European bailout that a single country wants to keep quiet.

In this case, one or more of the so-called bullion banks â€" which act as wholesale market-makers and include Goldman Sachs, Deutsche Bank, JP Morgan, HSBC, Barclays, UBS, Societe Generale, Mitsui and the Bank of Nova Scotia â€" would have agreed to act on behalf of a monetary authority.

This would add an extra layer of anonymity. "So the BIS swaps look like a tripartite transaction," writes Adrian Douglas of the Gold Anti-Trust Association. "The commercial bank or banks made a swap with a central bank or banks and then the commercial bank or banks made a swap with the BIS."

Analysts for Commerzbank note that in the meantime, "The price of gold is tending weaker at present."

http://www.telegraph.co.uk/finance/markets/7884272/Secret-gold-swap-has-spooked-the-market.html#disqus_thread

Edited by: DixieDestroyer

 

[Jimmy Chitwood]

gentlemen, i urge you all to watch this. it's possibly the most important economic documentary you will ever see.

it's about the current financial state of the USA ... Meltup.

also, since the above documentary was released in May of this year, there has been a short update released. 6-minute Update.

 

[Jimmy Chitwood]

22 statistics that prove the Middle Class is being Wiped Out.

<H1 style="BORDER-BOTTOM: medium none; TEXT-ALIGN: left; BORDER-LEFT: medium none; : transparent; COLOR: #000000; OVERFLOW: ; BORDER-TOP: medium none; BORDER-RIGHT: medium none; TEXT-DECORATION: none" itxt="1">22 Statistics That Prove The Middle Class Is Being Systematically Wiped Out Of Existence In America</H1>
<DIV style="BORDER-BOTTOM: medium none; TEXT-ALIGN: left; BORDER-LEFT: medium none; : transparent; DISPLAY: none; COLOR: #000000; OVERFLOW: ; BORDER-TOP: medium none; BORDER-RIGHT: medium none; TEXT-DECORATION: none" id=slide-container =slide-module itxt="1">
<DIV =container itxt="1">http://www.businessinsider.com/22-s...m-49-percent-in-2008-and-43-percent-in-2007-2
<DIV =" post- margin-none" itxt="1">
<DIV =post-top itxt="1">
<DIV =byline itxt="1">Michael Snyder | Jul. 15, 2010


<DIV style="BORDER-BOTTOM: medium none; TEXT-ALIGN: left; BORDER-LEFT: medium none; : transparent; COLOR: #000000; OVERFLOW: ; BORDER-TOP: medium none; BORDER-RIGHT: medium none; TEXT-DECORATION: none">
The 22 statistics that you are about to read prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.
The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.
So why are we witnessing such fundamental changes? Well, the globalism and "free trade" that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects. It turns out that they didn't tell us that the "global economy" would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations. The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.

<DIV style="BORDER-BOTTOM: medium none; TEXT-ALIGN: left; BORDER-LEFT: medium none; : transparent; COLOR: #000000; OVERFLOW: ; BORDER-TOP: medium none; BORDER-RIGHT: medium none; TEXT-DECORATION: none">
The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world. After all, what corporation in their right mind is going to pay an American worker ten times more (plus benefits) to do the same job? The world is fundamentally changing. Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money. Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new "global" labor pool.
What do most Americans have to offer in the marketplace other than their labor? Not much. The truth is that most Americans are absolutely dependent on someone else giving them a job. But today, U.S. workers are "less attractive" than ever. Compared to the rest of the world, American workers are extremely expensive, and the government keeps passing more rules and regulations seemingly on a monthly basis that makes it even more difficult to conduct business in the United States.
So corporations are moving operations out of the U.S. at breathtaking speed. Since the U.S. government does not penalize them for doing so, there really is no incentive for them to stay.
What has developed is a situation where the people at the top are doing quite well, while most Americans are finding it increasingly difficult to make it. There are now about 6 unemployed Americans for every new job opening in the United States, and the number of "chronically unemployed" is absolutely soaring. There simply are not nearly enough jobs for everyone.
Many of those who are able to get jobs are finding that they are making less money than they used to. In fact, an increasingly large percentage of Americans are working at low wage retail and service jobs.
But you can't raise a family on what you make flipping burgers at McDonald's or on what you bring in from greeting customers down at the local Wal-Mart.
The truth is that the middle class in America is dying -- and once it is gone it will be incredibly difficult to rebuild.
<DIV ="slide-module slide-intro-bottom" itxt="1">See proof of the Middle Class extermination &gt;

<DIV ="slide-module slide-intro-bottom" itxt="1">
<DIV ="slide-module slide-intro-bottom" itxt="1">oh, and if that's not enough ... Obongo and Company's latest "plan to save America" is Biggest expansion of government power over banking, markets since Depression. great, just great ...

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<DIV ="slide-module slide-intro-bottom" itxt="1">this picture says it all:
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[DixieDestroyer]

JC, good post/article sir. The PTB have sought the dismantling of the middle-class (via NAFTA/CAFTA, outsourcing, insourcing (H-1Bs), etc.). The Globalist Elite want a 2-class dystopia with a 90-95% impoverished, serf class (being widdled down via eugenics...toxic vaccines, "frankefoods",flouride in the H2O, etc.) & a 5-10% "ruling Elite" (& their puppet minions). Plus, the PTB see's the American middle class as the biggest hurdle/challenge to the long desired (end of sovereignty) One World government (ruled by their true master...the antichrist).