MACRO ANALYSIS REPORT
ECONOMICS, CENTRAL BANK POLICY
BANKS, BONDS, GEOPOLITICS

* Miscellaneous Morsels
* Systemic Home Mortgage Fraud
* Dead Banks Walking
* Inflation is All They Know
* Massive Housing Supply Overhang
* Economy Under Capital Erosion


HAT TRICK LETTER
Issue #79
Jim Willie CB, 
“the Golden Jackass”
17 October 2010

"Keynesian Economics (US definition): the science of propaganda to justify the elite theft of public and worker wealth by fraudulent means, reinforced by manufactured lies and nonsensical forecasts to perpetuate a corrupt system, furthered by a stream of  pathetic justifications of why past failed policy must be continued, aided by doctored data to cover up the latticework of falsity, all intended to maintain a power structure led by the bank & war syndicate which perpetuates bank fraud and war profiteering, using a bribed Congress for legislative channels and high priests to promote ideological dogma."
~ the Jackass (an application not planned by John Maynard Keynes)

"The cartel banks are being driven like cattle to the knocking station in the slaughter house. They are clueless where the powerful price pressure is coming from. They panic trying to cover their asses. It is only a question of time before the dam breaks and they all drown. But this is a natural process." ~ experienced European gold banker (the process is called Justice meted by Mother Nature in guardian of the true market forces)

"I conclude that further action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long." ~ Bill Dudley (New York Fed President, offering guarantees for QE2, the next grand round of monetary inflation toward debt monetization)

"At the core of this problem was a widespread, massive interconnected fraud. The fraud did not begin at foreclosure. The fraud began when these loans were first made."
~ Janet Tavakoli (of Tavakoli Structured Finance)

"Kimberly Clark (symbol: KMB) as you know, makes toilet paper. And the Federal Reserve makes dollar bills. If I take a dollar bill and deposit it in my bank account, I am lucky if I earn half of 1%. If I buy Kimberly Clark, which owns big printing presses that print real usable toilet paper, I will earn a dividend yield of 4%, eight times higher." ~ Russell Napier

"Just like street drugs, the more you take, the less effective they become. Fiscal and monetary stimulus is now barren, except for its destruction of currencies." ~ Jim Sinclair

"We just cannot seem to wean ourselves off this asset dependent economy. The attempt here is to bring asset values above their intrinsic value. An amazing way to run an economy. Whatever happened to skills, productivity, education, job creation, innovation, and thrift?"
~ David Rosenberg (Canadian economist no longer suckling from the Wall Street teat)

MISCELLANEOUS MORSELS

◄$$$ SOCIAL SECURITY BENEFITS WILL FREEZE UNTIL AT LEAST 2012. SENIORS ON THE EDGE MUST BRACE FOR CUTBACKS TO BASIC FOOD, SHELTER, AND MEDICATIONS. THEY ARE EASY TARGETS, WITH A SMALL VOICE. $$$

The USGovt plans to share the desperate measures by a continued freeze to over 58 million Social Security recipients. Seniors will endure a second straight year without an increase in monthly benefits. This year was the first without an increase since automatic adjustments for inflation started in 1975, using Cost of Living Adjustment (COLA) scales. The absence of any rise in their pristine corrupted CPI enables them to justify no price inflation, despite the chronic 7% price inflation evident in the real world. The CPI has shown negative readings in 2009 and 2010, thus payments remained unchanged. The Shadow Govt Statistics CPI has registered annual gains of 7% regularly, and in September it just rose by 8.5% in the real world. Fernando Torres-Gil is director of the UCLA Center for Policy Research on Aging. He said, "The existing COLA formula does not account for the economic reality of the true costs that most seniors faced." Medical care and housing are grossly unrepresented in the COLA and CPI indexes. Seniors mention rising food and utility costs. Other seniors can rely upon collecting pensions or clipping bond coupons, or cashing in on maturing CDs at banks. The majority, however, will cut back on food, shelter, gasoline, medications, brands of shopped products, trips to visit children, and hobbies. They will essentially forego a fund for any emergency measures, and become a slighly bigger burden to their children. That, by the way, is a Third World trait very visible here in Costa Rica.

A pervasive sentiment prevails that the USGovt does not favor seniors, seeing them as having little clout, offering the least resistance. Some believe profound waste at the federal spending level has affected the Social Security system finally. Given the US midterm elections are just three weeks away, these typically active voters will register their anger and disdain against the ruling party. A small minority realize the USEconomy has boatloads of unemployed, an inadequate number to feed the Social Security system, at a time when the ranks of senior citizens are growing big in basic demographics. More than 58.7 million people rely on Social Security checks that average $1072 per month. It was the primary source of income for 64% of senior citizens who qualified for benefits in 2008. In fact, one third relied on Social Security for at least 90% of their income. This speaks of poverty. See the Yahoo News article (CLICK HERE). Senior citizens must do their part in supporting the big bank welfare system.

◄$$$ THE USFED HAS OVERTAKEN JAPAN AS THE SECOND LEADING HOLDER OF USTREASURYS. WITNESS THE MONETIZATION CANCER. AS THE WORLD SHEDS HOLDINGS, THE USFED ACTS AS BUYERS OF LAST RESORT. REGARD THE RANK AS A SIGNAL OF THIRD WORLD FINANCES, THE DOORSTEP OF HYPER-INFLATION HAVING BEEN BREACHED. $$$

The US Federal Reserve has a new distinction of shame, indicative of Banana Republics and Third World Nations. It is buying the US national debt at such a rapid pace, that its rank as debt holder has risen. The USFed has taken over the second rank as collector of USTreasury Bonds. If foreigners wanted them in greater volume, the USFed would not gain ground. After an Open Market Operation in early October, the USFed snapped up another $2.069 billion in bonds. In doing so, the USFed boasts holdings of $821 billion, enough to officially capture the second largest account of USTreasurys. First in line, complete with the heavy exposed risk is China, with $846 billion in holdings. Compare to the Japanese total of $821 billion as of July 2010. They have discontinued further accumulation, noting the risk, and observing their own vanished trade surplus. Private investors showed little enthusiasm for the debt paper, piled upon itself in staggering volume. Other recent USFed gathering of soon-to-be toxic USGovt debt were $5.190 billion on October 5th, and $2.200 billion on September 20th. The US central bank is certain in the coming months to become the largest USTreasury creditor. It will be able to occupy the chief seat at negotiations toward future debt restructuring negotiations with itself. See the Zero Hedge article (CLICK HERE).

◄$$$ A MACRO CREDIT CYCLE CLIMAX IS IN PROGRESS. THIS IS NOT A STANDARD CREDIT CYCLE, BUT RATHER A SITUATION THAT REACTS TO THE ENTIRE FINANCIAL SYSTEM OVERLOADED WITH DEBT, EVEN COMPOUNDED BY PROFOUND FRAUD. $$$

The nation is witnessing a climax of a systemic debt cycle. Much has been written and analyzed about the Cycle in loosely stated terms, like the inventory cycle, the business cycle, the product cycle, and the ever popular credit cycle. My view is more specific and divided, between the Micro and the Macro with regard to the credit cycle. The credit cycle is very real for individual corporations, at the micro level, often discussed and analyzed. The Macro credit cycle is in the process of delivering death blows to the US financial structures, wherein financial engineering and all its reckless innovation killed the system, while offshore destinations exploited for cheaper labor removed legitimate income sources. The Macro credit cycle is in the process of declaring the USGovt debt condition as unfixable and growing worse each year, a macro bankruptcy process at work. The Macro credit cycle is in the process of recognizing that the usual methods like debt monetization, the fresh coat of paint from printing press operations to make more tainted money, accomplish nothing except granting an invitation for hyper-inflation to save us from a mountain of debt. The debt corrosion shows through the fresh paint.

The lunacy of the Rubin Doctrine is coming to the fore, which states that any reckless abusive policy that gives the system another year or decade should be eagerly embraced, adopted, and put into policy, as tomorrow will bring fresh worries. The United States Govt has joined the other important elements of the USEconomy as a wrecked entity. Notice the insolvent households, where over 20% are insolvent, owing home loans more than the value of their houses. Notice the insolvent banks, where the larger ones have negative equity on their ruined balance sheets, if proper accounting is done. Notice the absent American industrial base, long ago shipped to Japan, to the Pacific Rim, and more recently to China. The USGovt $1.5 trillion annual deficits serve as death knells.

We finally see the USGovt dealing unsuccessfully with insolvency. They doctor the USTreasury auction data. They monetize in hidden fashion much of the debt finance. They alienate the foreign creditors. They raise taxes during a recession. They build what is best described as a Sanctioned Politburo for a planned economy with sitting czars. They announce a new Quantitative Easing initiative since the last one failed. They refuse to install a second Stimulus Bill, since doing so would admit failure of the last one. The USTreasury 10-year Note is marching toward 2.0% on yield, the loudest billboard message of systemic failure in the markets. Inescapable is the Macro credit cycle, where the USEconomy is drowning in oceans of debt, the US banks are stuck with toxic debt, the US households are weighed down by excess debt, US industry with its legitimate income is long gone to Asia, and the USGovt new debt issuance is as much a burden as debt service. The credit engines are broken, just as broken as the consumer who long ago forgot how to save. The best description of banks is constipation. The best description of households is shock. The middle class is fast vanishing. The nation is plunging slowly into the Third World.

◄$$$ TAX RECORDS AT THE I.R.S. SHOW THAT THOUSANDS OF MILLIONAIRES ARE COLLECTING JOBLESS BENEFITS. THE DETERIORATION IS BROAD, DEEP, AND UNIVERSAL. THE PAIN HAS BEEN APPLIED UNIFORMLY, EXCEPT TO WALL STREET BANKERS. THEY HAVE EXEMPTED THEMSELVES FROM LOSS AND ALSO PROSECUTION. $$$

According to USGovt Internal Revenue Service data, millionaires residing inside the United States have collected a total of $18.6 million in jobless benefits. In addition to the millionaires, more than 8000 households reporting income between $500k and $1 million in 2008 claimed jobless benefits totaling $52.8 million. Americans out of work cut across all class strata. See the Bloomberg article (CLICK HERE). The above data do not pertain to big bankers.

◄$$$ THE REPORT ISSUED BY THE S.E.C. & C.F.T.C. CONCERNING THE MAY 6TH HIGH FREQUENCY TRADING CRASH EVENT WAS A SHAM. THE C.M.E. DISPUTED IT QUICKLY AND EASILY. HIGH FREQUENCY TRADING REMAINS A HOT TOPIC, MADE MORE URGENT BY THE VAST CAPITAL OUTFLOWS. $$$

The official story is pure nonsense intended to protect the prevalent dominant destructive Flash Trading practiced by Wall Street firms and their competing automated algorithms. Regulators at the Securities & Exchange and Commodity Futures Trading Commissions, in charge of the whitewash, claim that one computer driven sale worth a mere $4.1 billion by a single trader triggered the May flash crash. What drivel nonsense! The event set off a liquidity crisis that ricocheted between US futures and stock markets. Worse, the event frightened off investors, leaving the US stock market the domain of Wall Street parasites locked in combat as what is best described as a gigantic automated masturbation extravaganza. Between 75% and 85% of all NYSE stock trade volume is attributed to flash trading, the public long gone. Widely known is that the participants have some illicit access to public trades before they are executed, while in process. At some level, investors distrust the entire stock market for its layers of high frequency corrupt trades which easily peek at ordinary mortals and their orders. The Investment Company Institute is holding a secret meeting in which some influencial players are determined to restrict high frequency trading. The SEC is busily peddling a usual worthless solution of market circuit breakers that evades the problem, an effective distraction. Actual market participants have no more tolerance to see their profits eaten by HFT extractions in a manner much worse than ten years ago, when market makers and specialists did the skimming.

The supposedly guilty party within the event, actually the scapegoat, is the money manager Waddell & Reed Financial. The eagerly awaited report detailed the linkage between two highly popular securities, the E-Mini Standard & Poor 500 futures and the S&P 500 SPDR exchange traded fund. The SEC whitewash report explained in detail how high frequency algorithmic trading can drain liquidity and disrupt the marketplace. However, the CME Group which runs the exchange refuted in just two simple paragraphs the entire SEC report that spanned an impressive 104 pages. The CME explained the nature of futures and options markets as hedging and risk transfer mechanisms. It described a series of bonafide hedging transactions, totaling 75 thousand contracts, entered into by an institutional asset manager to hedge a portion of the risk in its $75 billion investment portfolio in response to global economic events and the fundamentally deteriorating market conditions. The hedge was legitimate and normal, representing 1.3% of the total E-Mini volume of 5.7 million contracts on May 6th and less than 9% of the volume during the time period in which the orders were executed. The CME described the relatively small quantities undertaken to dynamically adapt to market liquidity. It contradicted the commission report, explaining that the hedge in question was completed in approximately twenty minutes, with more than half of the participant volume executed as the market rallied, not as the market declined. Furthermore, the aggregate size of orders from this participant was not known to other market entities. During the most precarious timespan of the flash crash, the participant hedge of its portfolio represented under 5% of the total volume of sales in the market. Open questions swirl as to whether Waddell & Reed will file lawsuit against the SEC for slander and defamation, or whether their silence was bought in advance with a bribe. See the official diversionary whitewash SEC & CFTC report (CLICK HERE).

The High Frequency Trading (HFT) works to produce a churn. Usually the churn pushes stock prices upward. On May 6th though, the churn turned negative, and the SEC has worked hard to distract the public from understanding the nature of the internal HFT mechanisms that distort stock valuations. The Wall Street firms sell to each other. The SEC has allowed an HFT encroachment to the current level of market dominance. The stock market actually lacks sufficient demand from fundamental buyers or true arbitrageurs. The HFT abomination quickly buys and then resells contracts to each other, generating a 'Hot Potato' effect that lifts both volume and price without any actual external investment parties. In effect, the same positions are rapidly passed back and forth. Between 2:45:13 and 2:45:27 of May 6th, the HFT algorithms traded over 27 thousand contracts, which accounted for 49% of the total trading volume. The end result was a mere 200 additional contracts purchased on a net basis. The ratio of HFT volume to actual volume was 135 to 1. The mechanisms are designed to target limit bids and offers, grabbing penny or sub-penny profits in the process. Literally hundreds of thousands of trades that had to be abolished in the wake of HFT algorithms gone haywire. See the Zero Hedge article (CLICK HERE). Enter the Matrix.

◄$$$ VAST CAPITAL OUTFLOWS CONTINUE WITHOUT RESPITE. THE 23RD STRAIGHT WEEK OF HEAVY INVESTOR OUTFLOWS FROM STOCKS TESTIFY TO DISTRUST OF THE MARKET AND PERCEPTION OF RECESSION. IN ALL, $80 BILLION HAS EXITED STOCK FUNDS THIS CALENDAR YEAR. $$$

The Investment Company Institute tracks the stubbornly persistent weekly outflows from capital markets. The public has removed $75 billion from stock funds in the last 23 weeks, with the total year to date outflow of funds having reached $80 billion. Mutual funds suffered their 23rd consecutive outflow, as redemptions accelerated. Retail investment is undergoing a slow death. Last week saw redemptions of $5.6 billion, the highest since the beginning of September. The mavens of the stock world will have a great challenge trading to themselves to jack up prices for their own portfolios, in a grand game in a closed box. With the Algos and Freakish trading, they are doing a good job in keeping stock prices elevated, but artificially so, since value is absent. See the Zero Hedge article (CLICK HERE). Help is given by the Plunge Protection Team. Wall Street corruption has killed every market they touch.

◄$$$ INSIDER SELLING OF STOCKS IT OUT OF SIGHT BY CORPORATE EXECUTIVES. THE RATIO TO BUYS HAS MOVED FROM AN INCREDIBLE 1400 TIMES TO AN EVEN MORE INCREDIBLE 2340. THE BRASS SEES A STORM. $$$

Insider selling of corporate stock by executives within the firm has been massive, hitting historical record levels. In September, the ratio of sellers to buyers saw a dramatic improvement from 650:1 to just 290:1 in a sign of working out of a drastic condition. Not so! The ratios two months ago were bad. They have gone viral. According to Bloomberg, the data from the last week of September showed a ratio of insider sellers to buyers jumping to 1411:1, defying claims of any improvement in the business climate. Corporate insiders are totally rejecting the USFed reflation story, and the USGovt economic recovery story. Quite a loud statement indeed!! In the first week of October, the insider sell ratio was worse, as it doubled to 2341:1, raising alarm and sounding bells. The Wall Street conmen and CNBC carnival barkers clowns still demand the public investment money. In the latest reported week, corporate executive insiders sold a combined $200 million in stock in the last week alone. Oracle insider sales of $223 million made up the bulk of the effect in the previous week. Insiders seem eager to dump shares, to say the least. They took advantage of the PPTeam juice and the USFed Printing Pre$$ to dump shares. Brass from only two firms did find value. Insider buying in two companies last week of General Dynamics and Best Buy stock accounted for a whopping total of $177 thousand. Corresponding sales amounted to $414 million. Something ugly this way comes, especially if and when the official props are discontinued. See the Zero Hedge article (CLICK HERE).

◄$$$ A UNIQUE AND REVEALING HOUSING & JOBS PICTURE CAN BE SEEN. THE STATES SUFFERING FROM THE WORST UNEMPLOYMENT TEND TO BE THE SAME AS THE ONES WITH THE MOST DRASTIC DECLINES IN HOUSING PRICES. AN OBVIOUS CONNECTION EXISTS. $$$

SYSTEMIC MORTGAGE FRAUD

Editor Note: The mortgage fraud and home foreclosure outbreak makes the biggest financial scandal in modern history, and the climax defining event of the United States before its systemic failure and inevitable demise as we know it. The mortgage problem has gone viral, soon to the extreme. The battle will drag out for a few years, but the main conflict will occur in the next several months. The recent events cannot possibly be covered fully in this report in usual style. The approach taken will therefore be to summarize events, factors, risks, legal aspects, reactions, and much more. Each item will provide little more than a headline with a brief description and implication. A full treatment would require a report of at least 80 to 100 pages. Links will be provided for this collection of stories that reads like a syndicate crime novel. The scandal demonstrates that the US financial network is nothing but a series of $trillion scams, thefts, and heists as part of construction of twin asset bubbles (housing & mortgages) perpetrated on a sleepy dull public that is finally awakening to their victim role. REMIC and MERS are the formal devices used as the RICO racketeering tools for Wall Street bond fraud and tax evasion, finally discovered and not fixable. The people are learning civil disobedience at a late stage. A vast collectivism is in progress, with a whiff of marxism, in collision with democracy and the remnants of capitalism. Although inadequate, the following rendition captures the essence. My personal commentary can be seen at the end of the Crisis Coverage Report for October, on the final page. What follows are the key events and factors in summary.

◄$$$ SOME EVENTS & FACTORS IN SUMMARY

House Representative Alan Grayson sent a letter to the Financial Stability Oversight Council demanding a suspension of home foreclosures until the perverse pervasive problem is understood. What banks claim as technical errors has a prima facie look of document forgery to cover up to securities fraud. The banks failed to perfect the mortgage bonds with assigned property titles. No cure seems available within tax rules. (Zero Hedge LINK)

The MERS title registration system is the object of title fraud charges in a class action lawsuit citing RICO law violations. That is organized crime racketeering. The MERS Corporation is charged with systematic fabricating and forging documents entered into courts as evidence in order to attempt to prove legal standing to foreclose. It has taken more than a decade for the courts to recognize that MERS is grossly defective. The title database has become a system that backfired, leaving clouded titles for over 65 million loans since 1997. MERS is the key to the entire Wall Street fraud decade, since it served as the title database for mortgage bonds that changed hands in sale quickly. Citigroup and Ally (GMAC) are the objects of the class action RICO lawsuit, which will surely expand. Proof of asset purchases using racketeering profits are all subject to forfeiture. (Foreclosure Blues LINK and Bloomberg LINK)

While the MERS title registry database might be an Achilles Heel, the REMIC funding device is an Achilles Highway. Some bank analysts point to the REMIC devices as the core of the fraud, and the center of the current controversy. The REMIC appears to be a defective vehicle, a powerful foundational funding conduit, designed to avoid taxes but which skipped the detail of assigning title. Bank analysts call them empty boxes used systemically. The REMIC issues cannot be fixed. Attempting to fix them would trigger tax liabilities in the hundreds of $billions. The Wall Street banksters never expected the underlying home loans to fail, at which time the legal title holders would be pursued. (Market Ticker LINK, a powerful article on legal issues)

Title insurance firms are exiting the business of insuring foreclosed properties in response to mortgage fraud. The New York Times reported that Old Republic National Title has stopped insuring title to Ally (former GMAC) foreclosures on properties until further notice. The insurer has sent a bulletin to agents to this effect. The foreclosure pipeline will soon be clogged beyond repair, even as mortgage losses accumulate at an exponentially growing pace. (Zero Hedge LINK)


Josh Rosner is an expert bank analyst. He expects the foreclosure fraud episode to possibly dwarf the Lehman weekend. Laws at the state level govern the activity with full jurisdiction, not federal. The mortgage mess has the potential to cloud property title on foreclosed mortgages and also on properly performing mortgages. Affidavits assigned to the notes and security instruments are supposed to be endorsed over to the trust at the time of sale, but in many foreclosure scenarios the affidavits have been backdated illegally. The mortgage is still owed. Unclear is what entity leaglly owns the mortgage. (Daily Bail LINK)

Karl Denninger explains well the mortgage title fraud and layers of leverage used in the bond securities. He implies that of the $6 trillion in outstanding mortgage securities, more than half might be defective and at risk. The bank losses, if put back to the issuers, due to leverage schemes, could easily be over $2 or $3 trillion. That amount would sink the US banks finally, in ways that no accounting rules can mask. (Zero Hedge LINK)

The mortgage title recording process cost a little bit of money. The Wall Street firms typically did not complete this legally required step. They tossed the cost into the profit bin. As a result, they do not have full legal rights to foreclose properties and force homeowners out. The banks issuing the mortgage security in many cases never legally owned the home loans and thus never had the power to assign ownership to any trust. In aggregate, the cost of perfecting the securities, the skipped step, would have added less than 50 basis points to the cost of the deal. Small gain, total loss. (Institutional Risk Analytics LINK)

Officials in 49 states have launched a joint foreclosure investigation into allegations that mortgage companies engaged in document forgery and securities fraud, breaking laws in foreclosing on hundreds of thousands of homeowners. The Iowa Attorney General Tom Miller is leading the national probe. Florida, California, and Delaware were the first states to call a halt. (Zero Hedge LINK)

Bank of America has $2.3 trillion in total assets but $1 trillion in its credit portfolio, most of which is real estate related. If only 15% of the portfolio is written off, that would eliminate their entire $150 billion market capitalization. Bear in mind that due to FASB rules, the balance sheet accounting is heavily exaggerated. For realism try at minimum 30% for $300 billion in writeoffs and a true BOA market cap yesterday of zero. (My Budget360 LINK)

Bank of America was caught foreclosing homes and seizing properties that they do not own and do not hold title. In some cases, they foreclosed on homes owned free & clear without loans attached. Charlie and Maria Cardoso lost their retirement home in sunny Florida. There was just one minor detail & the Cardosa couple owned the home free & clear. Bank of America had no mortgage on the home. Now Bank of America is being sued for $500 thousand. Line them up. (ML Implode LINK)

JPMorgan Chase has expanded review of 115 thousand foreclosure cases, triple the original number. The bank conglomerate has halted foreclosure proceedings in the 23 states that require judicial review. Bank officials admitted they had previously stopped using the banking industry's controversial mortgage electronic mortgage tracking system (MERS) for foreclosures in 2007 and 2008. They must have known is not faulty. (Yahoo LINK)

Jamie Dimon of JPMorgan revealed that the average length a mortgage is delinquent before it is finally foreclosed upon is 14 months nationwide, or 448 days. The average delinquency duration at foreclosure for Florida is 678 days, while for New York it is 792 days! That is a huge hole without income on assets. On a simple income basis, its absence is sure to take down the big banks. And Dimon believes bankers would make great world leaders? (Zero Hedge LINK)

A JPMorgan executive admitted no verification of title was done before the foreclosure process. Loan documents were not verified. Thousands of JPMorgan home foreclosures lie in doubt, with potential legal reversals. This is a smoking gun, or feces hitting the fan. (Zero Hedge LINK)

Wells Fargo has been proven liars, after public denials of large scale document forgery. Wells Fargo has been caught in document forgery assembly lines, like the other big banks. Wells Fargo, the second largest US mortgage servicer, is just another Robo-Signer, but they have not halted foreclosures. (Naked Capitalism LINK)

For bank hiring of Robo-Signers to cover up sloppy past paperwork with basic forgeries, mortgage experience is clearly not necessary. Mortgage servicing departments hired hair stylists, Walmart floor workers, factory assembly lines workers, and more to provide documentation used in court to complete home foreclosure seizures. Florida lawyers unearthed how many of those workers testified that they barely knew what a mortgage was, nor what an affidavit meant. Many openly admitted they knew that fraud was laced in their activity. Often they never even looked at the documents behind the eviction notices. A smoking gun was produced in Florida.

Linda Green will become a household name soon. She forged $billions worth of mortgage documents for Bank of America, Wells Fargo, USBank, and dozens of other lending firms. She is the employee of a document processing company in Georgia, a forgery mill named Lender Processing Services. It is being investigated by a US Attorney in Florida for allegedly using improper documentation to speed foreclosures.

 

The mortgage home foreclosure process relied upon shoddy and fraudulent document paperwork, the same practices that built the gigantic housing & mortgage bubbles. Illegal and borderline activity took place in approval of home loans and packaging mortgage securities. (Huffington Post LINK)

Mortgage elimination appears to be a potential outcome, due to Wall Street and lender fraud. Most people with home loans do not know the identity of their real lender. The real lender, the true party in interest who advanced their funds was and still is hidden from the borrower intentionally. In a securitized mortgage the note was separated from the loan deed at closing, thus rendering the transaction void from the start. The mortgage pools might have designed intentionally to default for large default insurance profits, multiples of the original loan, since multiple policies were taken out on the same property. In some cases part of the default insurance proceeds were paid as hush money to the bond certificate holders. (Nesara News LINK)

The middle class anger is reaching a fever pitch, exhibited eventually in scoff of the mortgage payment. The HAMP home loan modification program appears to be a device to prevent legal action against fraud, by putting people in a mill full of false hope. They were given assistance, reworked home loans, but later the revisions were reversed in total duplicity, leaving the homeowners with extra fees. The motive seems to be diversion from legal process. Some call the angry people J Crew Anarchists. (Gonalo Lira LINK)

President Obama slammed the mortgage contract bill called the Interstate Recognition of Notarizations Act, with a pocket veto, refusing to sign it. The implications of the bill would have extended only to proper signatures, and not other fraudulent elements. At issue is recognition of documents across state lines. The bill was intended in part to limit the capability of homeowners to defend against foreclosure. Critics claim it would have made it easier for banks and other lending firms to process foreclosures without human signatures. A deception could be at work. It is not clear what is happening, a block or a ruse. (Reuters LINK and Zero Hedge LINK)

◄$$$ SOME COMMENTARY

Aaron Krown of the Mortgage Lender Implode website offered some expert opinions. He said, "This is one of the milestones I was looking for: the underlying non-enforceability of mortgage debt going public. I do not see how they are going to resurrect the process of foreclosing on people's real property, short of a Supreme Court decision that lets the banks off the hook. Such decisions have happened before, and could again, but would raise exponentially more fury this time. Foreclosures will be held up for additional years, or indefinitely. A totally frozen housing market which will not come back for economic growth for at least a generation... The Notarization Act which Obama blocked unfortunately was largely symbolic. It would only have shielded banks if their key error was failure to properly notarize the documents. In fact, the real problem is the documents themselves have flaws, do not exist (and are hence forged when presented), are otherwise are endorsed improperly (Robo-Signers). Or the assignments simply were never or made legally."

Intrepid gold community fearless leader Jim Sinclair pitched in with stern words. He does not mince words, and rarely are this champion's words off the target. He said, "Racketeering lawsuits (RICO), now as civil class action suits in two states, have hit the nail on the head. The civil suit says the banks do not have proper title to the homes on which they are foreclosing. This by direct inference questions if securitized debt on mortgages have real collateral behind them. Simply stated a long time ago by Marie McDonnell and myself, THEY DO NOT. That means legacy assets are cooked, dead, and worthless, yet are now marked up in value to cost and above. This is all thanks to FASB's capitulation that now represents a large amount of capital for the Western world's financial entities. It hit the fan today for those that understand. October 4th 2010, the essence of securitized debt on mortgages died!"

DEAD BANKS WALKING

◄$$$ NO PUT-BACK FOR THE BIG BANKS IS LIKELY. THE BIG BANKS SHOULD BE FORCED TO ACCEPT FRAUDULENT LOANS AND MORTGAGE BONDS, RETURNED FROM OTHER BANKS AND INVESTMENT FIRMS. RECALL THEY ARE TOO BIG TO PERMIT FAILURE. RECALL THE T.A.R.P. FUNDS RESCUED THEM FROM THE FIRE. WATCH THE USCONGRESS BAIL OUT THE BIG BANKS AGAIN, SINCE THEY ARE BEHOLDEN TO THEM. CONTRACT LAW MUST BE SUBVERTED AND ALTERED IN OPEN FORGIVENESS, WHEN FRAUD IS BEING PROVED. PUBLIC OUTRAGE COMES. $$$

If big banks are forced to accept in return from banks and investors a grand batch of wrecked fraudulent loans and mortgage bonds, the $2 to $3 trillion losses would submerge the US banks entirely. They should suffer the so-called put-back, since a just consequence. Politics dictates it will not happen, even though deserved. Justice will again be subverted. The Fascist Business Model will show great strain however, as its corrupt threads will invite public outrage and probably violence. The focal point for put-backs of credit assets is Bank of America, the worst alleged violater of legal statutes. They are criticized for the financial supermarket model, the acquisition of Merrill Lynch, and the absorption of Countrywide. All pieces are wrecks. Suspected heavy liabilities for faulty mortgage pools threaten the big monster bank, which has operated in a gross insolvent state for two years. The USCongress will probably not permit the financial ruin of the largest bank in the nation by a mere exercise in contractual rights, even if felonies litter the path to their rescue. Surely, the Wall Street banks, of which BOA is an adopted son, will be exempted from contract law provisions, just like they were exempted from insolvency. Let's see if the USCongress passes a law that retroactively grants mortgage pools the rights in the underlying mortgages that are the focus of extreme controversy. If so, then all the botched paperwork, lost notes (loan contracts), disconnects to titles, forged contracts, and unassigned security interests will be forgiven by a legislative act. This truly would qualify as a 'Get Out of Jail' card.

A huge difference distinguishes the financial crisis of 2008 and the new crisis in 2010. The last crisis was from the housing market decline, grand losses in the credit portfolios, and bank insolvency. Leverage added to the painful severity. The solution was to recapitalize the banks. Without the capital, the biggest US banks would have failed. They probably will anyway. The current crisis is not driven by economics, but rather legal rights and felony statutes. Refer to contract fraud, document forgery, a title registry firm without rights, and securities fraud. The last crisis was market driven. The current crisis is driven by criminal activity across an entire financial foundation. The nation is about to undergo a test of the Fascist Business Model and a criminal financial system increasingly in full view.

Next comes a severe ultimate test of the American integrity, legal backbone, and legislative indifference toward the people. Soon the examination under the microscope will be whether the people are protected from systemic grand fraud. To be sure, some home foreclosure cases are simple cut & dried failures after job loss or down & out stories. But at issue will be the people's rights when bond fraud occurred on a grand scale. The question is whether the USCongress, which receives huge donations and influence peddling from the big banks, will permit Bank of America, or Citigroup, or JPMorgan Chase, or Wells Fargo to fail because of legal issues related to grand fraud, pervasive forgery, sloppy securitization, and clumsy illegal devices. If a piece of deeply compromised legislation passes, it will happen against public desires, claimed for the national good, and done to avoid a depression. Any Representative or Senator would be immediately voted out of office. THEREFORE EXPECT THE SHRILL ELITIST LAW TO PASS RIGHT AFTER THE NOVEMBER ELECTIONS. The cost to the banks would be miniscule. They will probably be forced to make big mortgage modifications, but in the end they will not. When push comes to shove, the USCongress will obey their masters. See the CNBC article (CLICK HERE). One crucial element of reality must be considered. Any new bank bailout legislation might be too complicated to gain passage in time to keep ahead of events, which can best be described as turning viral. Confusion, bickering, grandstanding for justice, response to screams from the people, champions in the USCongress, all these might cripple and block new legislation to save the banks from death or prison.

Recall that the same bunch in the USCongress approved new Financial Accounting Standards Board rules that permitted the dead banks to continue walking and operating. These same dead banks have been caught in criminal fraud. Watch them forgiven and let off the hook again. This is America, home of the fraud kings where the US Constitution is just a 'GD' piece of paper, according to the last president. The consolation to observers is knowing that any gold & silver investments will jump another 100% just from the rescue from big bank fraud. The last solution led to the potential of gold & silver investments to jump also 100%. So a triple in the precious metals prices is the realistic potential, from a base of $800 to $2400 in gold and from a base of $16 to $48 in silver. Money will be ruined in order to keep the big banks standing, and to keep the big bankers from serving prison time. More additional rescues, bank welfare, and extended hands will assure even more ruin of money and additional jumps in the precious metals prices. The effect soon will be non-linear, as gold & silver will break out in parabolic fashion. Then will come legislation to tax windfall gold profits, even to confiscate gold assets. In fact, world players, even governments, might assist the gold rise in order to use gold as the Sword of Damocles. It will mete out justice to a land where justice faded away.

◄$$$ JAMES GALBRAITH DESCRIBES THE CURRENT FINANCIAL STRUCTURE SURROUNDING MORTGAGES AS BEING THE DIRECT PARALLEL OF ORGANIZED CRIME NETWORK. THAT IS BECAUSE IT IS JUST THAT. THE OUTPUT OF THE WALL STREET CRIMINAL ENTERPRISE IS A WRECKED USECONOMY. $$$

Economist James Galbraith spoke at the Communications, Energy & Paperworkers Ninth convention in September. His message was unique, not the typical heard from economists, more consistent with the Jackass theme. Galbraith described a progression, better known as a pathogenesis within the economic crisis, whose roots have destroyed jobs, families, and communities. He claims the crisis was a gigantic fraud perpetrated on our society and innocent victims. He explained the underlying causes of the current crisis and banking system breakdown. Galbraith is a Univ Texas Economics professor at the LBJ School of Public Affairs. He serves occasionally as the Executive Director of the Joint Economic Committee. He is the author of the 2008 book entitled "Predator State."

Galbraith lays out boldly the causes and dynamics behind the current systemic breakdown. He believes the solution must transcend and transform the financial markets. A description was given to the largest swindle in world history. An entire Lexicon has been developed, even accepted, to describe the fraudulent system. We have Liar Loans, NINJA Loans, Neutron Loans, Robo Signers, Title Repository, and Toxic Waste. The mortgage market developed a counterfeit system, wherein loans were laundered, just like done in narcotics money laundering, as defective paper was converted into accepted marketable securities. The Fences were created to broker the counterfeited products, with agencies hired in collusion to bless the products. The securities were sold by misrepresentation. The Marks were pension funds, mutual funds, and other funds typically referred to as the Dusseldorfs. The legal police staff abandoned their posts. After the 911 event, five hundred FBI officers left their financial fraud positions in order to take staff posts in counter-terrorism. The real terrorism is domestic and financial in nature. Regulators never reviewed financial documents, but when they did years after the inception of the fraudulent expansive system, they declared with shock that over 90% of cases involved evidence of fraud, abuse, sloppy underwriting, and missing documents.

In the counterfeit system, the repercussions are absolute and total, as the financial collapse has been pervasive across the entire system. It has taken down the entire system, since legitimate loans and related securities cannot easily be distinguished and separated from the fraudulent types. Recall how toxic mortgage bonds could not be distinguished from legitimate ones in the intermediate commercial paper market back in 2007. The system cannot continue without a transformation and reconstruction. The large banks are zombies, with multiple layers granted even more powers than before the crisis began. Their lobbies block necessary reform. They bestow upon themselves lavish bonuses, while they preside over balance sheets infected insidiously by toxic assets. A total absence of recovery potential exists as long as the big banks dominate the financial sector. The conditions requisite for a USEconomic recovery must include a functioning banking system, and that is absent. It is no more possible to reduce the federal deficit in an economy without strong job growth than to retrieve blood from a stone, in the words of Galbraith. Therefore, the system will hurtle toward a collapse. He described the entirety of the pathway toward systemic failure, and USTreasury default climax. See the RabbleTV video clip (CLICK HERE).


◄$$$ THE F.D.I.C. CHIEF SEEKS REIMBURSEMENTS FROM FAILED BANKS THAT RECEIVED FEDERAL FUNDS. THEY WANT MONEY RETURNED FROM BANK EXECUTIVES, MAINLY THOSE WHICH ISSUED POORLY UNDERWRITTEN OR FRAUDULENT LOANS. EXPECT 15 TO 2O YEARS OF LAWSUITS, HAGGLING, AND SETTLEMENTS. $$$

The Federal Deposit Insurance Corp has authorized lawsuits against more than 50 officers and directors of failed banks in an attempt to recoup more than $1 billion in losses stemming from the credit crisis. The lawsuits were authorized during closed sessions of the FDIC board. The agency, which has shut down 294 lenders since the start of 2008, is pursuing banks whose upper management caused bank collapses. They pursue cases believed to be sound on merits and likely to be cost-effective. Richard Osterman, the FDIC acting general counsel, showed eagerness to begin the reclamations. He said the goal is to reach as many settlements as possible. If the Savings & Loan crisis of 1990 is any guide, more lawsuits should follow over perhaps the next 20 years. During that period, the FDIC sued executives from more than 24% of the 1813 lenders that failed. FDIC Chairman Sheila Bair believes the year 2010 will be the peak year for bank failures in an accelerated collapse process. The confidential Troubled Bank List had 829 banks with $403 billion in assets at the end of the second quarter.

The agency has brought to date only one case against officers or directors tied to recent collapses, a suit filed in July seeking $300 million in damages from four executives of IndyMac Bancorp. In that case, executives are accused of granting loans that almost no likelihood to be repaid, encouraged to benefit from the compensation structure on loan originations. Letters are typically sent to officers and directors alerting them of the attempt to to recoup a portion of the losses to the Deposit Insurance Fund. One such letter was attached to a November 24th motion filed against BankUnited in Florida. The FDIC accused 15 bank directors and officers wherein the bank "blindly made loans to borrowers who, for the most part, were un-creditworthy, creating an unduly high risk of inevitable failure when the housing market began to decline." The executives were formally accused of breaching their fiduciary duties. The usual defense is that loans defaulted and banks failed as a result of harsh economic conditions that were not foreseeable, all rubbish. At issue are often No Documentation loans, and NINJA loans (no income, no job or assets). See the Bloomberg article (CLICK HERE). The only winners will be the lawyers.

◄$$$ THREE IMPORTANT GLOBAL BANKS ARE IN DEEP TROUBLE, RIGHT HERE, RIGHT NOW. EMERGENCY FUNDS ARE PROPPING UP BANK OF AMERICA. ALSO H.S.B.C. IS UNDER THE MICROSCOPE AFTER A RESTRAINT ORDER WAS POSTED. MORE GOES ON THAN MEETS THE EYE. JPMORGAN ANNOUNCED A $4 BILLION BOND OFFERING, SHOWING ITS EMPTY HAND. $$$

On the weekend of July 24th, the Bank of America (BOA) died but was revived by the following Monday morning with a cash infusion by the USFed itself. On the last week of September, BOA was again aided, this time by $13 billion in narcotics money from an ex-president, whose son carried the torch with open vigor. The infusion event was confirmed by two independent sources. It is just a matter of time before BOA is declared dead. However, the giant sprawling rotting corpse of a bank is an important player in two realms, the narcotics money laundering game and the gold suppression game. The latter activity involves naked shorting of gold & silver through futures contracts with no collateral posted. Therefore, narcotics funds are supporting the gold dam that is leaking in an important way. The same sources both mentioned that HSBC had weeks or months to live, another dead derelict vessel of fiat spew. Many factors conspire to kill the biggest global banks.

Next consider HSBC, the global conglomerate bank. The USFed has issued a restraint order against HSBC North America Holdings (HNAH). This is a highly curious and obscure event. The order is the type usually designed for podunk private and small regional banks. Something big is brewing. All the signs appear for violation of the Bank Secrecy Act and Anti-Money Laundering. The order requires HNAH to take corrective action to improve its corporate-wide compliance risk management program, including its anti-money laundering compliance risk management. The focus must be on protecting flows of secrets and cash. All major US banks are involved in drug money laundering, with direct lines either from the CIA or Mexico. Perhaps HSBC has permitted their narcotics money laundering to show unduly, a potential grand embarrassment to the clan of major banks. Bear in mind that two factors bear on the story. The first is the HSBC position as primary custodian for GLD, the corrupt fraudulent Exchange Traded Fund. Perhaps the insolvency of HSBC from wrecked credit portfolios has interfered with their role in illicit gold price suppression. They might be having trouble holding their positions. Second, HSBC has original roots in Hong Kong. Perhaps too much information has flowed regarding the illicit gold price suppression mechanisms to China from its back door in Hong Kong. The Chinese might be given too many peeks at Western vulnerability. See the USFed official published statement (CLICK HERE).

JPMorgan is caught up in the foreclosure freeeze in several states. On top of other losses, like in the gold market, they have huge credit exposures from the housing market. They have shown their hand in a scramble for capital. JPMorgan plans to raise $4 billion in debt offerings, with yield premiums between 165 and 180 basis points over the USTreasurys. The giant bank must be nervous nellies under the cool calm facade. A cash crunch could be coming, as TARP-like deals mature worth $4.35 billion on December 1st and 2nd. The ultra-low taxpayer subsidized rates must enter the world of bond reality. Even their Non-Performing Loan charge projections looks absurdly out of line. The shadow foreclosures are suddenly surging and remain in suspended animation, sure to wreck havoc on their fraudulent and mismarked balance sheets. See the Zero Hedge article (CLICK HERE).

◄$$$ MOODYS MIGHT CUT BANK OF AMERICA MORTGAGE SERVICER RATINGS AS PART OF THE CONTROVERSIAL FORECLOSURE EVENTS. WHILE NOT A CORPORATE DEBT DOWNGRADE, IT MIGHT SOON LEAD TO ONE. THE WALLS ARE CLOSING IN ON BANK OF AMERICA. $$$

Moodys Investors Service last week announced it is considering a downgrade of the servicer quality ratings of Bank of America, as a direct consequence of irregularities in its foreclosure processes. They did not mention criminal fraud. Moodys maintains an SQ1 primary servicer of prime residential mortgages on Bank of America, with SQ1-ratings for servicing of subprime residential mortgage loans, second lien loans, and government insured residential mortgage loans. Bank of America has been ordered to halt its foreclosure process in a few states, under current review as to whether documents were processed correctly. The walls are closing in on BOA.

◄$$$ CHRIS WHALEN OFFERS AN EXCELLENT EXPERT ASSESSMENT OF THE BIG BANK MELTDOWN, THE NECESSARY REFORMS, AND WHAT IS URGENTLY NEEDED TO AVERT A FURTHER DISASTER. HE CALLS THE UNITED STATES BANKRUPTCY PATHWAY ONE OF THE MOST POWERFUL STRENGTHS OF THE NATION, TO DATE UNUSED. HE EXPECTS THE COURTS TO BE OVERWHELMED FOR AT LEAST TWO MORE YEARS. HE EXPECTS BANK LAWYERS TO FACE PRISON TIME FOR SECURITIES FRAUD. HE EXPECTS COUNTLESS PEOPLE TO WIN CHALLENGES AGAINST BANKS WHO ATTEMPT FORECLOSURE. HE HOPES FOR BOND HOLDER LOSSES, AND BLAMES MUCH ON GEITHNER AND SUMMERS, WHO ARE BANK AGENTS IN USGOVT POSTS. $$$

My respect for Jim Rickards is enormous as an analyst but spotty as a player within the gold cartel, due to his role with the LongTerm Capital Mgmt fiasco. He calls Chris Whalen the best bank analyst on the planet. It is with satisfaction that such words are heard since Whalen delivers loud messages very consistent with those made by the Jackass for three years running. In a King World News interview, Whalen expounds on many aspects of the financial crisis and morass. He spoke volumes in a 20-minute piece well worth the time. The Bank of America (BOA) problem is much larger than estimated. He accepts the notion that one in five homes nationwide might go into foreclosure, gutting the banking system capital. He blames Geithner and Summers for muddling along instead of restructuring the big banks, complete with grand liquidations. They refused that path, resulting in broken credit engines for the USEconomy. They also refuse to impose deep loss (haircuts) to bank bond holders, favoring their masters. BOA and Wells Fargo, even possibly Citigroup, are in the same bind. The bigger the bank, the worse their inefficiency, as cost per revenue all run negative.

The national crisis is only 25% complete, with much more to come. The USGovt must order the restructure of big banks, a process that will be forced in the next two years by the financial markets, not leaders. Big banks are eating capital. The entire US banking system has $1 trillion in bank equity. What the nation faces is an order of magnitude worse than in the 1990 decade. He does not put all the blame on Greenspan either, since Nixon began the trend of avoiding problems, to be dealt with at a later date, a trend advanced by Rubin to perfection. The big banks hold mountains of acquired bad assets, like BOA with Countrywide and JPMorgan with Bear Stearns. BOA has thousands of servicers who are bogged down. The big banks will continue to have at least a sizeable USGovt participation after a restructure, if not nationalization. Obama runs the risk of being the Democrat Hoover, since his finance team refuses restructure. The major core problem is not the Wall Street banks so much as the USGovt, which turned the big established investment banks into loan service agents for Fannie Mae, the core problem. The entire USEconomy is leveraged to the sky, in desperate need for a restored manufacturing base and enhanced trade relationships. Housing, he argued, can never lead the economy, as only factories can serve as true engines of growth. Whalen bristles when hearing analysts and investment chiefs focus upon housing starts as the signal of recovery. He thinks they are clueless.

The bank backlog for processing home foreclosures stands at two years. Great implications come from the carnage of reduced property taxes, as local governments must scale back their budgets by 10% at least. Whalen anticipates countless lawyers will face prison time for securities fraud, since they failed to perfect titles for properties linked to the briskly traded bonds, in the mortgage securitization transfer. They took fees without doing the contracted work. As a result, hundreds of thousands of homeowners can successfully defend against the banks in legal foreclosure challenges. In most cases, the homeowner cannot legally be removed. The current home foreclosure controversy will mushroom into a national crisis in the next two years, accumulating momentum. Legal challenges to perfection of securities with titles will be in court on a routine basis. The judicial system is beginning to be overwhelmed. In fact, Florida has opened new judicial branches to handle the load, even calling some judges out of retirement. The nation must restructure the big banks, and take advantage of the national bankruptcy laws and procedures, one of the biggest strengths of the nation. The restructure is an urgently needed requirement that should not be delayed. It is the litmus test for recovery to the nation. See the King World interview (CLICK HERE). Whalen is more optimistic than the Jackass as any path toward solution being taken with conviction. Instead, the national leaders will invest in fraud and ruin the USDollar currency, putting the USTreasury Bond at risk of default from corruption and global revolt. They will show their hand in the next important piece of bank bailout legislation. The crisis will in all likelihood drag out into chaos.

◄$$$ P.I.M.C.O. HAS TURNED INTO A TAINTED BIG BANK. THE NEXT USFED POLICY CAN BE TOLD BY OBSERVING THEIR BOND SHIFTS IN PURCHASE BEHAVIOR. THEY ARE BUYING BIG, BUYING MORTGAGE BONDS AND USING MARGIN DEBT. CONCLUDE THE USFED WILL BE BUYING MORTGAGE BONDS. $$$

Bill Gross has telegraphed the imminent powerful QE2 monetization of mortgage bonds. This should be taken as a major Green Light. They are also using margin debt, which had been reduced recently. It is unclear or unfair to accuse PIMCO of taking advantage of insider trading, exploiting privileged information. The launch of Quantitative Easing amidst growing desperation seems obvious even to the novices in the room. Bernanke words and gestures need not be dissected or discerned. Tyler Durden has explained the distinctive tell on what the USFed next moves will be. It is PIMCO portfolio shifts in their Total Return Fund composition. In the report released last week on updated September holdings, Bill Gross is seen betting heavily on QE2. PIMCO has increased its mortgage backed security (MBS) holdings to the highest level since July 2009. Gross has once again gone on margin, like before QE1, reducing his net cash exposure from $5 billion to minus $7.6 billion. Durden expects that once the October data is published, a few weeks after QE2 goes into effect, the main fund will have a margin position of more than $20 billion, and will have pumped up its MBS holdings up to $100 billion.

The observers are left wondering if USTreasurys are deemed overpriced by Gross. In view of recent events on the mortgage home foreclosure front, it would seem that with or without USFed heavy twin-gun support, the mortgage bonds are at risk. Strong USFed buying might enable PIMCO an unwind of their motgage bond portfolio. Some analysts speculate that the home foreclosure fraud episode could kill PIMCO and lead to its demise. In the chart, notice the Mortgage Securities (heavy brown line), shown at $165 billion, indicated at one end of the double arrowed blue pointer, the other end at the reduced Cash Equivalent (dotted brown line). At the top, the USTreasurys (heavy blue line) show the reduced USGovt debt holdings. Notice the Total Holdings (thick dotted black line) growing to over one quarter of a $trillion. If the credit markets suffer even moderate damage, PIMCO will take tremendous losses in high volume. See the Zero Hedge article (CLICK HERE).

◄$$$ VOLCKER HARSHLY CRITICIZED THE ENTIRE AMERICAN FINANCIAL ARENA, A DEN OF SNAKES. IN PARTICULAR HE EXPRESSED AMAZEMENT THAT THE FINANCIAL REGULATORY BILL HANDED THE USFED EVEN MORE REGULATORY POWERS, NOT LESS. ITS ORIGINAL MOTIVE WAS TOTALLY SUBVERTED, AS THE HAT TRICK LETTER FORECASTED. THE TIRADE BY VOLCKER SERVES AS AN IMPORTANT SIGNPOST ON THE ROAD TO RUIN, EVENTUALLY LEADING TO SYSTEMIC FAILURE AND USTREASURY DEFAULT. $$$

History was made when former USFed Chairman Paul Volcker scrapped a prepared speech at the Federal Reserve Bank of Chicago in late September and instead delivered a blistering, impromptu, caustic critique at almost every corner of the US financial system. He left no aspect without attack in the most comprehensive criticism ever put forth in recent years. At a lectern, Volcker methodically directed frank profound criticsm to banks, regulators, business schools, the USFed, and to money market funds during the luncheon speech. It was a harsh justified verbal face slapping to the majority of the audience. Although he praised the new financial overhaul rules, he believes the system remained at risk because it is subject to too much judgment by individual regulators, which would be relentlessly lobbied by banks and politicians to undermine the reform. He reminded them that the financial reform attempt was a plea for changes in market structure and regulation, urgently needed, totally subverted.

Volcker expressed his views with precision and force on a variety of topics. The usage of the words 'Macro-Prudential Regulation' appears as guideline for judgment, but he said, "somehow those words grate on my ears." He accused investment banks of becoming trading machines instead of investment banks. He called the financial system broken still, even after the term was widely used in late 2008. He believes parts like the mortgage market are absolutely broken, widely recognized, but now the most important part of our capital markets. The mortgage market itself is the newest subsidiary of the USGovt. He pointed to the best business schools in the United States pouring out financial engineers, where many smart young mathematicians and physicists wanted to go to Wall Street. But they were swallowed up in a system that believed its own marketing brochure. It failed to properly factor in risk, even as it sold securities that off-loaded risk. He accused the USFed and the central banks of becoming too infatuated with their own skills and authority, while a certain neglect of supervisory responsibilities prevailed. The blame begins but does not end with the US Federal Reserve. He believes it is so difficult to exit from the USEconomic recession because of its basic disequilibrium.

Volcker called the council of regulators potentially cumbersome, in simple terms. He called perilous the reliance upon judgment, which makes for a very heavy burden, especially when subjected to all kinds of political and institutional interference. He emphasized the difficulty to change policy when conditions in markets appear to be going well, a major challenge within any bubble mentality. He objected to the normal distribution curve claims, when rare events that should occur every 100 years are in fact taking place every 10 years. He accused derivatives of far exceeding any pressing need for hedging against investments. He deemed money markets nothing but a regulatory arbitrage. His best was left for last. He called it a miracle in sarcastic terms that the Finanical Regulatory Bill, the so-called Dodd-Frank Rules, resulted in enhanced regulatory authorities rather than reduced regulatory authorities, despite all the criticism aimed at the USFed, and all the public motives to limit their power. See the Wall Street Journal article (CLICK HERE). Volcker described a failed system. He seemed angry because he knows the system is irrevocably broken.


INFLATION IS ALL THEY KNOW

◄$$$ PRICE INFLATION IS LACED WITHIN THE ENTIRE USECONOMY ON THE COST AND SUPPLY SIDE. AS INCOMES LANGUISH, ASSETS STRUGGLE, AND COSTS RISE, THE SQUEEZE IS ON FOR THE ENTIRE USECONOMY. SUCH IS THE HEAVY COST OF MONETARY INFLATION. $$$

Here comes price inflation, except not applied uniformly across the USEconomy. It is showing up on the commodity cost side, the cost side, in necessities. Also, big hikes in insurance costs are in the pipeline, mostly jumping in front of the Obama Care plan. A quantum cost rise is likely from China passing along its wage hikes, grudgingly granted to its workers. Richard Benson provides a laundry list of items to observe. He expects the price of food & energy to double in the next decade. People had better be prepared with a gold & silver portfolio. He cites several food items jupming 25% to 45% in price over the last year. Outlier items are iron up 103%, rubber up 62%, and pork up 68%. The Producer Price Index will surely continue to rise less than every single component within its composite, a pure statistical sham. See the Benson article entitled "An Inflationary Cocktail in the Making" (CLICK HERE). In summary, the price of items needed to maintain a standard of living are on the fast rise. The price of assets are on the decline. As the USDollar experiences hard times and loses value, the entire cost structure will continue to rise. At the same time, the value of assets will struggle to maintain an even keel, aided mostly by the destructive policies of the USFed monetary expansion efforts. Assets must rise in price in order to stay in constant value, as money continues to be utterly destroyed. For a glimpse of reality, consider the Shadow Govt Statistics CPI, which registered annual gains of 7% regularly. In September it just rose by 8.5% in the real world. They use the pre-Clinton method of calculation, without the absurd hedonic adjustments for technology improvements. One should bear in mind that the cost of money is minus 8% therefore, a continuous powerful force feed into assets of free money. Thus grand distortions will persist in the USEconomy, blowing into asset bubbles like the USTreasurys. Gold responds.

◄$$$ JAN HATZIUS OF GOLDMAN SACHS COMMENTED ON THE QE2 JUSTIFICATIONS. THEIR LEAD ECONOMIST ANTICIPATES THE THE VOLUME OF QE2 WILL BE A HEFTY $1 TRILLION, DOUBLE THE EARLY ESTIMATES PUT FORTH. TO REACH CRTICIAL MASS, A MINIMUM OF $1 TRILLION IS NEEDED. WITNESS MONETARY CANCER IN FULL BLOSSOM, SURE TO RESULT IN FULL MONETARY RUIN. $$$

The first $1.3 trillion in fresh money printed in 2009 to purchase mortgage bonds that nobody wanted, combined with purchases of USTreasury Bonds, failed to clear the obstructions and clogged pipes within the US financial sysetm. QE1 failed. So it will be done again, a repeated exercise in lunacy. In a year or 18 months, after this QE2 round fails, the failed hack engineers will probably see fit to order a QE3, since failure is all they know. Jan Hatzius has had an impeccable record in foretelling USFed policy. He should, since Goldman Sachs controls the USDept Treasury since hijacking it in 1992 with a Clinton invitation. The phone lines to the USFed are thick and oft-used. Hatzius anticipates a definitive QE2 announcement by the November 2nd national midterm elections. It might be simultaneous, since the next FOMC meeting is to be conducted on November 2-3. He said, "We continue to believe that these purchases will ultimately involve at least $1 trillion, possibly quite a lot more... More importantly, QE2 works on other elements of financial conditions, including equity prices and the exchange rate." Funny usage of the word WORKS, since it distorts instead. He openly admits how the powerful vast broad monetary inflation will affect the entire price structure of the USEconomy and US financial markets. Some expect gasoline and milk to rise past $5 per gallon in the next couple year or more, as the USDollar loses purchase power. If the cost of living doubles, expect widespread social unrest. The wild card response will come from foreign creditors, whose bond principal gains are offset by USDollar devaluation. With near 0% yields, that means bond devaluations.

Hatzius expects the initial QE2 amount is to be on the order of $500 billion, a down payment on the investment in ruin. It will most likely de devoted to longer-term USTreasury securities, which explains the broad frontrunning by the bond investment community. Hatzius believes firmly that the program will mount until a full $1 trillion in bonds are monetized, possibly much more in his view. Goldman Sachs is putting its timetable on the line, claiming QE2 is likely to be launched sometime before the end of the first quarter 2011. Given the statement, assessment, and inner circle indications from William Dudley at the September 21st FOMC meeting, Goldman Sachs expects the USFed to announce mammoth asset purchases at the conclusion of its next meeting on November 3rd. See the Dudley speech at the New York Fed (CLICK HERE). Recall that Dudley is formerly from the Goldman Sachs, the financial syndicate headquarters, where god's work is done. The lower case 'g' is used to denote their god, namely Money & Power, surely no deity worshipped by the Jackass or close friends.

◄$$$ USFED MONETIZATION AND QE2 LAUNCH IS PREPARED. YELLIN AND RASKIN ARE OFFICIALLY SWORN IN TO THE USFED BOARD. THEIR VOTES ARE SUFFICIENT TO OFFSET REASONABLE, SANE, AND WELL CONSIDERED OPPOSITION TO CANCER. THE CAPITAL DESTRUCTION IS DEMANDED, ORDERED, AND SOON TO BE CARRIED OUT. THAT IS ALL THEY KNOW. $$$

Monetary inflation has never produced anything but rising costs, lack of competition by the nation in violation, and lost wealth in a river to ruin. The USFed believes they are spewing out wealth, or at least purchasing power. Notwithstanding the destruction, the US Federal Reserve Board has two new key members. Two doves Janet Yellen and Sarah Bloom Raskin have been formally sworn in as members of its Board of Governors. Yellen will serve as Vice-Chair, whose confirmation assures the monetization process will be the USFed agenda. The monetary management team finds itself cornered with no other option than to inflate in a monstrous manner. The USEconomy and US financial system are stuck in mud, languishing in insolvency. Confirmation of both women ensures the USFed Board has sufficient majority to pursue monetization despite any negative vote by the Dallas Fed or Kansas City or StLouis Fed. See the Federal Reserve article (CLICK HERE).

The incompetent heretical high priests believe that they can inflate away the debt within the domestic walls. Instead, they will finish the process of inflating into oblivion the entire system. Most remaining viable capital that produces legitimate income will be delivered to ruin. Break out the champagne for the christening of the QE2 ship. It is a ship full of cancer. The bottle for the christening process is filled with sulfuric acid mixed with nitro-glycerine. The helm should do the noble deed, and toast with their best crystal stemware a robust portion of hemlock. If truth be told, QE2 has already been launched in secrecy. What comes is its public announcement, national blessing, and celebration of path to ruin. The opposition will be voted down and called obstructionist and maybe unpatriotic. The QE2 heralded monetary extravaganza has been a main Hat Trick Letter forecast for the previous several months. The clowns of fantasy in charge of creating money at zero cost has been talking about an Exit Strategy from the 0% corner and Green Shoots of recovery in the last year, total nonsense. The Jackass has been firmly entrenched in reality, expecting a QE2 without doubt, whose cost will be monetary death and economic ruin. Let us not mince words!! Furthermore, the heretic high priests at the USFed know full well that the next QE2 will not succeed. St Louis Fed President James Bullard as much as said so in a long CNBC interview. He strongly hinted that QE2 would not relieve the nation's ills, would not fix the banking system, and would not revive the USEconomy. He expected a temporary push upward in asset prices like stocks. He overlooked the push up in the cost structure. Unfortunately, the USFed is being urged to do heavy lifting after causing so much destruction, but without the essential tools. That is the consensus view and part of the tragedy.

Furthermore, one must love how they say NOBODY SAW ANYTHING WRONG WITH MORTGAGES while the going was good. The Jackass did and argued openly against the insanity. You gotta love how they say NOBODY EXPECTED THE HOUSING BUST while the going was good. The Jackass did, and so did half the gold community. But we are just gold bug idiots who are like a broken clock, correct once every 12 hours. The favorite expert analysts are utter economic morons with corrupted brain stems. The media anchors and teleprompter writers are mere puppeteer fools. The current disaster, powerful financial crisis, endless housing decline, and perverse landscape littered by dead banks walking proves our point. The nation needs sound money, and QE2 will go the extra distance to prove it by fixing nothing, sending the long-term USTreasury yield down to 2.0%, reducing the USDollar value, and sending the national capital base to cobwebs. Lest one forget, QE2 will take the nation one step closer to a USTreasury default, the end of the road for the big bond bubble. After reaching the 2.0% yield target, loud accusations of asset bubble will be heard.

◄$$$ THE QE2 LAUNCH IS WRITTEN IN STONE, THE WORDS YET TO COME. IT WILL SOLVE NOTHING. THE POLITICAL CONSENSUS HAD TO BUILD. THE JUSTIFICATION HAD TO FORM. THE USDOLLAR AND GOLD WARNINGS GO UNHEEDED. EXPECT NO SMOOTH SAILING. ALL KNOW QE2 WILL FAIL, BUT NOBODY CAN STOP IT. $$$

The QE2 Launch is soon to be set, complete with financial justifications, political cover, and revisionist edited history. The USFed will stress is dual mandate again, of maximum economic growth with minimum unemployment. It has achieved neither, and is reaching a climax to its failure. To celebrate the vacant empty QE1 rewards, it will redouble its failed efforts. Caroline Baum of Bloomberg pitched in with a background check and vapid peptalk. She introduced the topic of the historically unprecedented Quantitative Easing re-Launch by pointing out that when central bankers protest inflation is too low, one can be certain of extreme policy measures soon to come. The invocation of its dual mandate at the most recent FOMC meeting convinced the masses that another round of Quantitative Easing was a done deal. The high priesthood council said, "Measures of underlying inflation are currently at levels somewhat below those the committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability." These are words on a central bank tombstone epitaph. Baum offers a cheeky realistic translation, when she wrote "It is not that we want to blow up our $2.3 trillion balance sheet any further. We are compelled to by law, specifically by the 1977 amendment to the Federal Reserve Act. Prices, at least prices as measured by the consumer price index, are relatively stable. The CPI and the core index, which excludes food and energy, rose 1.1% and 0.9%, respectively, in the year through August. The six-month annualized increases are 0.5% and 1.0%. That may look stable to you and me, but it is below what the Fed claims is consistent with stable prices, which is another way of saying too low for our comfort level. Employment is hardly maximum. The monthly increase in private payrolls has averaged 95,000 in the first eight months of the year, not nearly enough to put a dent in the unemployment rate, which is stable, at an uncomfortably high level of 9.6%."  Her assessment sums up the distorted thinking of a desperate USFed. The actual CPI price inflation is running between 7% and 9%, never lose sight.

After digesting the Bernanke speech about the dual mandate at the Jackson Hole Conference, reading the many prominent analyst opinions, reading the acidic tea leaves in the financial markets, a conclusion has come that QE2 would be launched after the next FOMC Meeting on  November 2-3, which comes one day after the midterm election. What a great distraction, as the federal and banking leadership will interpret the broad voter rejection as being directed at the USCongress and conclude a mandate to inflate!! The USTreasury market is pricing in QE2 with a rally to lower bond yields. The currency and commodity markets have responded, by sending the USDollar lower and Gold higher. In fact, Baum makes a great point that in this jobless recovery, if deflation were a true threat, people would want to hold the currency, which buys more when prices fall. So observe the loud contradiction to the deflation argument.

Investors in stocks are happy to comply with monetary policy, having been trained to enjoy the ride of higher prices in response to a devaluing USDollar. Currency markets, that largest financial arena in the world, are conveying a different message. The USDollar is not worth holding because it will lose future value. The movement into USTreasurys is NOT a vote in favor of the USDollar, but rather a move OUT OF stocks, even to chase the bubble. Baum concludes with words of realism. She said, "The United States faces huge, long-term structural problems. The government has made promises to retirees it cannot keep, short of imposing confiscatory levels of taxation. Our politicians in Washington fiddle while Rome burns. Persistent long-term unemployment is sapping the nation's spirit. It is too depressing to contemplate. Even if the Fed embarks on QE2 next month, it will not be smooth sailing for the ship of state." See the Bloomberg article (CLICK HERE). It seems everyone knows QE2 will fail, but it MUST be done. Gold responds to the systemic failure.

MASSIVE HOUSING SUPPLY OVERHANG

◄$$$ HOUSING PRICES ARE CERTAIN TO DROP ANOTHER 20%. THE DRIVING FORCE IS THE BANK OWNED INVENTORY, WHICH HAS NOT YET COME TO MARKET. IT IS AN EXTRA OVERHANG BEYOND THE OVERHANG ALREADY IN THE MARKET UNSOLD. THE BLOAT IN RESERVE CONTINUES TO GROW. THUS HOUSING PRICES WILL DECLINE EVEN MORE. $$$

The movement early in 2010 into foreclosed home turnover sales, combined with the stupid $8000 tax credit, enabled a false impression of a housing market recovery, or at least its stability. At the same time the latest absurdity in home loan modification by the USGovt, the Home Affordable Modification Program (HAMP) was heralded by the Obama Admin to help three to four million homeowners with underwater mortgages. It was designed to reduce monthly payments to a manageable size, and even aid homeowners with continued payments. All perceptions ignored the gigantic elephant squatting in the housing market front room. The bank inventory of unsold homes seized in foreclosures is a juggernaut of price destruction. The Real Estate Owned (REO) properties taken back by lenders due to foreclosure continues its relentless and highly damaging climb. A large portion of the seven million houses saddled by delinquent mortgages or in some stage of foreclosure will soon be dumped on the market, adding to the currently huge excessive inventory glut. More home foreclosures will come next year. A staggering number of bank owned and foreclosure bound homes numbering  closer to eight million have yet to hit the market.

The housing prices are determined by equilibrium of Supply versus Demand, disturbed only by pointless tax credits that rob future sales, distort current prices, and offer false hope of market improvement. The REO bank property effect will push housing prices down in 2011. The degree of price decline will depend on the exhausted patience of bankers. As new REO homes come into inventory, they will jettison other properties, force sales, permit prices to fall, and accept the losses. In my view, the early sellers will realize the smallest losses. The banks that wait will suffer bigtime, but some might expect to dump inventory on Fannie Mae. See the Business Insider article (CLICK HERE) and the useful graph by Realty Trac. This graph is precisely what the bank leaders and USGovt leaders wish to ignore, and wish for the public not to see. The inability or refusal by economists to contemplate the Supply & Demand dynamics is astonishing.

Bank failures are overdue. More supply is to hit the market from their balance sheets. Home buyers will also wait for better deals. Further price declines are necessary for any hint of stability to arrive in this ruined moribund market. Economists are only beginning to express sensible viewpoints that reflect comprehension of market dynamics. Market details are devastating still, even after three years of declines. The market clearing is rendered impossible, due to layers of unsold inventory, a still growing monster of supply. Prices for homes will decline at least another 20% in the next couple years. THE HOUSING MARKET REMAINS THE VISIBLE ALBATROSS THAT IS KILLING THE USECONOMY AND USBANKS, SUBMERGING THE BANKING SYSTEM, IMPOVERISHING HOUSEHOLDS, AND LEADING THE NATION TO THE THIRD WORLD. The public insists on a USGovt response, but their efforts stretch the crisis out for a decade. Nowhere is equilibrium sought, as everywhere it is avoided. A forced liquidation is urgently needed of deeply impaired credit portfolios rotting on the balance sheets. However, such a process would bankrupt the very powers that control the USGovt.

◄$$$ FORECLOSURES  HIT AN ALL-TIME RECORD. RATHER THAN A RECOVERY FROM THE LAME TAX CREDIT EPISODE, EXPECT A COMPLETE COLLAPSE IN THE HOUSING MARKET. THE CURRENT FRAUD REACTION HAS FROZEN THE MARKET. BANK SEIZURES HIT A SINGLE MONTH RECORD IN SEPTEMBER OVER 100K UNITS. THE LATEST WEEK AGAIN SHOWED A BIG MOVE DOWN IN HOME SALES, BUT A JUMP IN REFINANCES. A HORRENDOUS 22% OF MORTGAGES REMAIN UNDERWATER, ACCOUNTING FOR $2.9 TRILLION IN BAD DEBT. THE LEGAL FRAUD CAN ONLY DEPRESS HOME PRICES FURTHER. $$$

The Mortgage Bankers Assn released its weekly mortgage applications index. It is down hard in the week of October 8th, by 8.3% from previous week. The index stands 37.1% lower than the same week last year. A ripe 21% rise in refinanced home loans sounds great, but is mere pushing paper with banker fees taken and too many still underwater insolvent in homes. Pain comes to the USEconomy. See the MBA article (CLICK HERE). The bigger news is the foreclosure data, a shocker. Any claim of economic recovery is blasted out of the water easily, as climax collapse is the more likely outcome to this tragic scenario, well documented and forecasted in the Hat Trick Letter. According to RealtyTrac, the total September foreclosures marked a 5-month high of 347,420, a full 3% higher than August and 1% above September 2009. For the first time in US history, bank repossessions (REOs) surpassed 100 thousand in a single month, reaching 102,134 units in September. Expect the foreclosure activity to hit a legal wall very soon. It will plunge, since the 24 judicial foreclosure states most affected by the foreclosure documentation issue accounted for 40% of all foreclosure activity in the third quarter and 36% of bank repossessions. The documentation issue will not be resolved quickly, requiring up to two years. As contract and document fraud expands to more lenders, a chilling effect will come to the overall housing market. Nearly one third of sales are derived from foreclosed properties, which will dry up notably. Meanwhile, the shadow inventory of distressed properties will continue to grow. Witness a complete housing market collapse in progress. My forecast had been endless decline, but with fraud finally out in the open, fought in the courts, a collapse in slow motion is equally likely. See the record seizures (in blue bars) along with the other stages of foreclosure.

The pattern is the same as previous months, led by California, which accounted for 21% of national total foreclosure activity in the third quarter. Florida and Arizona again drew great blood. Following were Georgia, Nevada, Ohio, Texas, and Washington. On a per capita basis, the biggest wreckage is Nevada. See the Zero Hedge article for details within the states (CLICK HERE). The dreadful plight of homeowners is displayed with the 22% ratio of mortgages being stuck in negative equity. Worse, 29% of all mortgage debt is underwater, at $2.9 trillion. Bigger home loans are in worse shape, skewing the data, but not distorting it. CoreLogic provides a breakdown. Incredibly, the biggest category is the most underwater, the most insolvent. Of the 11 million mortgages underwater, 1.1 million run negative by 25% or more! They are destined for foreclosures, or legal challenges for title. In the other categories, 2% translates to 220 thousand people. These people essentially rent their home with no mobility, stuck in the home, asset poor. If they wish to sell, they must produce cash.

Bear in mind that properties tied up in legal dispute over titles during foreclosure challenges will eventually come to market. Maybe more than the minority will result in successful challenges with no more payments made. The overall effect on housing prices cannot be good, in fact chilling. Buyers will be made nervous. Imagine laying down money but not being able to take possession. Months of paperwork, even side challenges, is not conducive to brisk trade. Buyers can afford to wait for homes to exit the process at lower prices. Banks will become even more hesitant to lend, since they will suffer more losses from mortgage bonds held on their balance sheets. Civil disobedience could result in reduced bank revenue stream from mortgage service. Any neighborhood with homes in the foreclosure mill depresses the price of homes around them. Homes stuck in limbo fall into disrepair and depress the price of houses in the vicinity. See the Business Insider article (CLICK HERE).

◄$$$ HOUSING METRICS ARE MISLEADING. THE DOLLAR-BASED VOLUME OF HOME SALES IS DOWN OVER 60% FROM PEAK, AND NEW HOME VOLUME DOWN OVER 84%. IN A STRANGE TWIST, SOME HOME BUILDERS HAVE BECOME HEDGE FUNDS, DEALING IN IMPAIRED MORTGAGES AND BANK OWNED (R.E.O.) PROPERTY. THEY HELP TO CLEAR THE BOOKS, OFFERING DISCOUNTS. THEIR ROLE EFFECTIVELY IS DRIVING DOWN THE PRICES, A PROPER MECHANISM. $$


The housing market decline that began in 2006 or 2007 has many statistics in portrayal of its health and condition. Market prices at the national level are the most often quoted, like with the Case Shiller index. Market sales in units and mortgage applications is another popular statistic. So are home starts and permits issued. Businesses rarely report price trends for products at their stores. Businesses rarely report unit sales. They favor dollar volume in sales, a standard element of any publicly traded quarterly report to investors. So consider the dollar volume of home sales. The little known fact about the popular Case Shiller price index is that it kept increasing in value as the economic housing activity across country dropped off three years ago. By the time the CS Home Price index turned down by a single percentage point, home sales value had already declined by 19%, indicative of a statistic that missed the mark.

Reggie Middleton wrote, "Nationwide, there is a 60% drop in existing home sales value, adjusted for inflation from peak to trough, with the trough being last month. There is a very strong chance the trough will be broken, as USGovt bubble blowing initiatives fade. Consider data for August 31st of 2010, when $766,321 billion in housing was sold. Compare to June 2005, when $1,930,471 was sold. This (only 30 days ago) is the 2nd lowest in 11 years, with the lowest being the month before. Using realistic numbers of actual sales and prices, we are doing worse than 2008, yet the Case Shiller index reflects an improvement!" A similar dollar volume approach shows the new home sales in value have fallen by 84% from peak. The crashes are actually distorted by unit sales statistics that are typically reported. Currently, volume sales have reverted to 1995 levels of activity, despite significant population growth.

In an article dated September 2nd, Middleton wrote further about how bad the home building situation looked four years after the homebuilder market had tanked. A careful review of a few home builders revealed an interesting trend in their hedge fund type activity. Rialto, whose home builder unit is Lennar, actually describes itself as a company that does advisory services, due diligence, workout strategies, ongoing asset management services, as it acquires and monetizes distressed loans and securities portfolios. In its 3Q2010 it offered a formal description of its activities. It wrote, "Simply put, we purchase large and small portfolios of loans and REO at distressed prices and then we work through those assets one at a time to resolve them at retail payoff. It is all about making money by managing the process of purchasing wholesale and selling retail, purchasing in bulk and selling one at a time. Admittedly, the assets are a little bit more complex, but this is where we excel." The most profitable division at Lennar is actually a hedge fund that buys and sells bad mortgages and REOs, bank held foreclosure properties. They are performing a vital function to clear the market inventory, but they are a home builder!!

One can conclude that the new home building market is close to dead, and will be moribund for some time. Meanwhile, the urgent need in the housing market is to deal with excess distressed inventory. Some home builders are still in business because they have transformed themselves into banking service agents, useful to dump seized properties in the foreclosure process. One can make the argument that some have transformed into USGovt subsidized hedge funds that trade with no risk, using zero cost money from the USDept Treasury through the PPIP program. See the Zero Hedge article (CLICK HERE).

◄$$$ NO PICKUP IS ANYWHERE VISIBLE IN HOUSING SALES. THE TAX CREDIT CHAPTER LIES IN THE PAST. IT ACCOMPLISHED NOTHING. THE DOWN TREND HAS RESUMED. THE LOW MORTGAGE RATES PROVE A BROKEN MARKET. $$$

◄$$$ COMMERCIAL PROPERTY DEBT MANAGEMENT IS IN THE PROCESS OF SERIOUS CHANGE. THE SO-CALLED EXTEND & PRETEND IS ENDING, PERHAPS SUDDENLY. BANKS HAVE BEGUN TO PUT PROPERTIES ON THE MARKET FOR SALE, AS THEY GIVE UP HOPE OF ANY RETURN TO NORMALCY. THEY ALREADY HAVE LIQUIDATED MANY NEW HOME CONSTRUCTION PROJECTS, RECYCLED AND ACTIVE AGAIN. $$$

Las Vegas Nevada is by far the site of the most vicious housing decline in US history. So its banker policies bear watching. Reporter Buck Wargo at the Las Vegas Sun reported that the so-called Extend & Pretend chapter for commercial real estate (CRE) might be ending. Lenders have pushed toward resolution a great many commercial foreclosures. The actions taken in Las Vegas foretell of a pickup in the pace of CRE foreclosures nationwide. Check out an amalgam of quotes from bankers, attorneys, and investment firms, not one person. They collectively said, "The tsunami of commercial foreclosures never materialized as lenders were working with owners to lower interest rates and extend loans... Now that philosophy is starting to change... A number of banks have been hesitant to pull the trigger on foreclosures, but we have seen recently banks are beginning to go ahead with the foreclosure process... Banks are beginning to realize where they are stand in the loan. They were postponing [resolutions], waiting for things to get back where they can get out of the hold, but that is not going to happen... The time for extending and pretending by the banks for a variety of commercial real estate loans has ended. There finally is a realization by the banks, regulators, and borrowers that the market will not recover sufficiently to save many commercial projects from foreclosure." See the Las Vegas Sun article (CLICK HERE) and the Calculated Risk article (CLICK HERE).

◄$$$ CONSUMER DE-LEVERAGING WILL INFLICT TREMENDOUS ADDITIONAL DAMAGE TO COMMERCIAL PROPERTY VALUES AND THE DEBT HOLDINGS BEHIND THEM. THE DAMAGE ON THE COMMERCIAL END IS DIRECTLY FELT FROM THE RETAIL DECLINE AND GRADUAL OUTLOOK SHIFT. THE COMMERCIAL ARENA IS LOCKED IN INSOLVENCY, AS SALES HAVE DRIED UP, AND MALL VACANCIES ESCALATE. A LARGE PILE OF LOANS ARE COMING DUE IN THE NEXT 18 TO 20 MONTHS. MORE HUGE BANK LOSSES ARE ASSURED. $$$

The next few years are lined up for a commercial property kill. The great Consumer De-Leveraging process, which dictates vast reduction of debt and abuse of debt for consumption, will continue to downshift. As a result, a collapse of Commercial Real Estate is assured. The process is well along, with 40% to 50% valuation declines, banks frozen, impossible refinance of deals, and increasingly empty malls. The consumption pullback will continue throughout this new decade, and render many shopping malls ghost towns. The blight on the landscape will gradually come to resemble the Third World. The Consumer De-Leveraging will play out over the next decade, with staggering momentum. Consumers will de-leverage on their debt structures, because they must. They have no choice, as the banks will curtail credit lines further. Boomers have come to the shocking realization that you cannot achieve wealth or retirement by borrowing and spending, one of the greatest ideological heresies of the modern era. As consumers buy $500 billion less per year of things often not needed, at times even to relieve boredom or depression, often impulsively, retailers across the land feel a profound effect. The commercial transactions have come down 90% from peak, and now stand below 2001 levels.

The national culture of consumption is a primary plank in the wreckage of the USEconomy and the wealth of American households. The statistics to describe the retail landscape are utterly staggering, shocking, and embarrassing. There are 105,000 shopping centers in the United States. By comparison, all of Europe has only 5700 shopping centers, and nearly equal population (20 times less). There are 1.2 million retail establishments in the US, according to the Census Bureau. There is 14.2 billion square feet of retail space in the US. This is 46 square feet per person in the US, compared to 23 sqft per capita in the United Kingdom, 13 sqft per capita in Canada, 6.5 sqft per capita in Australia. 1.5 sqft per capita in Mexico. The US stands out as a shopping beast in need of taming, subduing, or putting out of its misery. Based upon simple fundamental criteria, absolutely no chance exists that commercial real estate has bottomed. There are years of asset writeoffs, corporate bankruptcies, and job cuts that remain. The current shopping mall vacancy rate is 9.0% and 10.9% for strip malls, threatening to rise further. The regional mall vacancies have almost doubled from a stable 5% rate. With consumers in the de-leverage process for debt, the chance of such vacancy rates to decline over the next few years is next to zero. With worker wages stagnant, unemployment high, and profound retail saturation, thousands of additional retail stores are destined to shut down. Ghost malls are in our future, and in many communities the present. Some analyst expect they will come in handy as homeless shelters and soup kitchens. REIS provided data for the graph.

The fundamentals grow worse by the month. The value of all commercial real estate in the United States was approximately $6 trillion in 2007, in book value. Approximately $3.5 trillion of debt financing supports these commercial properties, and about $1.4 trillion of this debt comes due between now and 2014. Meanwhile, the delinquency rate for business locations within commercial backed securities exceeded 9% for the first time in history in September, the rate having more than doubled in the last year. From a banker perspective, Non-Performing Loans are nearly 16%, an astounding rise from below 1% in 2007. Commercial real estate prices have declined 42% in the last 15 months. The $6 trillion value of all the US-based commercial real estate has fallen to $3.5 trillion, a 41% decline. The debt remained a rotting constant in place. A fetid decaying pile of commercial loans is coming due between January 2011 and July 2012 (1Q2011 through 2Q2012), totaling over $71 billion. The 2006 and 2007 vintage are the main culprits. The majority of these loans cannot be serviced and supported from cash flow to generate rental income. Huge losses await the banks, not so much the biggest banks, but the regional banks that hold commercial loans on their portfolios. This sector will spread the pain. See the Zero Hedge article (CLICK HERE).

ECONOMY UNDER CAPITAL EROSION

◄$$$ DRASTIC STATE & LOCAL GOVT REVENUE DECLINES MAKE OBVIOUS THE PROSPECT OF SIGNIFICANT JOB CUTS AND PROJECT CANCELATIONS. THE USGOVT STIMULUS PLAN OF 2009 WAS MORE A STATE BUDGET SHORTFALL PLUG. THE LEAKY HOLES HAVE GROWN MUCH BIGGER, AS THEIR FISCAL PROBLEMS NEVER WENT AWAY. NO NEW STIMULUS PLAN MEANS NO STATE BUDGET PLUGS, SO A BIG WAVE OF JOB CUTS. $$$

A drastic revenue collapse is soon to force massive job layoffs by state and local governments. Public sector job cuts are growing after a clear trend has been established with a four-year decline in state revenue. The annual report from the National League of Cities has caused some shock waves. The fiscal condition of cities will worsen by next year, as property taxes decline, and local economies falter further. The report concluded that 87% of cities are 'Less Able' to meet fiscal needs compared to last year. Cities by legal rules cannot legally run over the budget, unlike the federal government. As they approach the limit of the red ink line, they will cancel projects, reduce work forces, and make painful cuts. Revenues have fallen for four straight years, as property tax revenues posted the largest decline in 2009 and 2010. Notice in the chart worsened revenue (in blue bars) but also the drastic cuts in expenditures (in red bars). Costs are consistently rising while income is declining across the board. Alternative forms of cost cuts include hiring freezes, reduced expense accounts, limited contractor work, and salary freezes. Increases to taxes and fees are to be the official response, a route taken but surely with extremely negative response. See the Business Insider article (CLICK HERE).

◄$$$ THE USECONOMY IS HEADED TOWARD DEPRESSION LEVELS. THE CONSUMER METRICS LAG BRIEFLY THE MACRO DATA TREND. IN PAST REPORTS, THE MONEY SUPPLY ARGUMENT WAS USED VIGOROUSLY TO ARGUE ECONOMIC DECLINE. OBSERVE THE CONSUMPTION LAG EFFECT. $$$

The recent collapse in consumer spending is on course to worsen considerably. For the past several months, the Daily Growth Index from the Consumer Metrics Institute has been a very telling series. The chart below focuses on the Trailing Quarter Growth Index, which is computed as a 3-month moving composite of a wide range of consumption categories. Consumer consumption remains (insanely) over two-thirds of the USEconomy. Therefore the well-crafted index of consumer behavior serves as a solid leading indicator of overall GDP. The chart reveals the accuracy of its predictive capability over the five-year history of the index. The lag time is actually a little longer than suggested in the graph, since the advance estimates for GDP are released early, before final figures are known. See the Business Insider article (CLICK HERE).

◄$$$ I.S.M. ORDERS HAVE FALLEN. MOMENTUM CONTINUES DOWN FOR THE USECONOMY, WHICH IS RUNNING ON PURE INTERVENTION AND MONETIZED DEBT, IN A MANNER NOT CONSISTENT WITH ANY CLAIM OF A FREE ECONOMY. THE CORRELATION WITH S&P500 PROFITS INDICATES A SERIOUS DECLINE IMMINENTLY. $$$

The Institute for Supply Mgmt showed a September report that hints of an economic disaster in the making. Components for Inventories and Price were up, while components for Orders and Employment were down. Jim Grant of the Grant Interest Rate Observer points out that the Best working indicator to focus upon is Orders minus Inventories, which plunged lower. As John Lohman explained in the ISM report, "Statistically, orders minus inventories leads ISM composite by three months (i.e. the highest correlation is at lag 3). Even when smoothed three months (slowing it down), orders minus inventories leads [corporate] Earnings Per Share estimates, and below five months typically means a peak or plateau, and by definition therefore a slowing growth rate in earnings estimates." A sizeable decline in S&P500 earnings is to be expected in coming months. The financial networks promote a recovery, so that inside sellers can sell to someone, and retail investors can be bagholders.

The USFed will not leave the USEconomy alone, not for one second. As Jim Grant criticized so eloquently, the Fed is 'lethally' committed and involved in all sorts of intervention and manipulation of the USEconomy. The tight connection cannot easily be discontinued. That can occur only if the USFed or USEconomy implode, either or both. Ruin comes. Some believe the USFed will survive, but the Jackass harbors great doubts that over $500 billion in red ink on their balance sheet will be tolerated much longer, especially if the red ink extends toward $1 trillion. See the Zero Hedge article (CLICK HERE).


◄$$$ SMALL BUSINESS OPTIMISM TICKED UP SLIGHTLY IN SEPTEMBER, BUT A MAJOR PROBLEM HAS CROPPED UP. BUSINESS OWNERS ARE SOMEWHAT FROZEN IN RESPONSE TO POLITICAL CONFUSION. $$$

The Natl Federation of Independent Business measures many factors each month. A slight uptick in optimism was registered, from 88.8 to 89.0 in the last completed month, but it is still stuck in the recession zone established over the past two years. A sluggish USEconomy remains the mainline story. The NFIB reported four of its 10 subindexes fell, four rose, and two were unchanged in September. In summary from reflections of their several cited indexes, expected business conditions six months forward rose. Earnings trends deteriorated, and hiring remained weak, and sales expectations fell. Despite this, inventory additions outlook improved, and those planning price increases rose. However, the sluggish USEconomy continued to put downward pressure on prices. Opinions on credit conditions were unchanged on the month but remained at ver low levels. Frequent commentary mentioned confusion over USGovt policies, which has frozen many business decisions. See the Wall Street Journal article (CLICK HERE).

◄$$$ THE ANNUAL B.L.S. STATISTICAL CORRECTION TO REMOVE THEIR CHRONIC MONTHLY UPWARD BIAS OCCURRED. IT REVEALED A 360K JOB UPWARD ANNUAL BIAS, NOT AS BAD AS PAST YEARS WHEN A MILLION JOBS HAD TO BE ERASED EACH YEAR IN ORDER TO ENTER THE WORLD OF REALITY. $$$

The Bureau of Labor Statistics has issued its annual update on Non-Farm Jobs data. Their report again confirms the perpetual upward bias in the data. Revisions are always downward, and strong. This year the BLS job revision is down 366 thousand jobs. So each month, a 30k positive bias is engrained in their data, within their own corrupted labs. Then one must remove the Birth-Death Model positive bias, and then remove the constantly shifting seasonal adjustment bias. While not as bad as the revision last year of almost one million for the period ending March 2009, the report demonstrates continued bias and a blow to the credibility of the BLS. By industry, the biggest hits were to Trade, Transportation & Utilities industry (-144k), Manufacturing (-114k) and Leisure & Hospitality (-91k). Losses in the revision were offset by gains in Professional & Business Services, revised up by 14k.


◄$$$ JOBLESS CLAIMS DATA CONTINUE AT HIGH LEVELS, ALTHOUGH THEY HAVE COME DOWN A LITTLE. ANY FIGURE NEAR HALF A MILLION PER WEEK IS A HEMORRHAGE FROM THE LABOR FORCE, DENOTING HARDSHIP AMONG HOUSEHOLDS, NEUTERING ECONOMIC PARTICIPANTS. THE TREND IS NOTICED BY BUSINESSES, WHO RESPOND BY NOT EXPANDING. $$$

The last several weekly jobless claims have shown very minor reductions, but still in the 500k range. Forgive any error from not capturing a revision, but the data is close to accurate. The week of October 9nd: 462k. The week of Oct 2nd: 449k. The week of Sept 25th: 456k. The week of Sept 18th: 469k. The week of Sept 11th: 453k. Rather than focus on being below 500 thousand, and whether being below that level means health restored, focus on nearly half a million losing jobs and requiring insurance to cover their living expenses, a large number. With a growing population, the nation requires between 1.0 and 1.5 million new jobs per year. The nation is going in the wrong direction. The continuing claims are steady at 4.5 million. The emergency extension claims remain in the 150k range. In a recent Wall Street Journal poll, fully 70% of the American public believe the United States is stuck in a recession. The deception and hollow optimistic viewpoint promoted by the mainstream press is bothersome, but predictable. They portrayed the 48k decline in continuing claims in a recent week as very positive. But the number of people on emergency and extended benefits increased by 257k during the same week, a horrible outcome. Instead, a more reasonable report would mention that all claims increased by 210k with the largest portion of that coming from people who still cannot find work. Revisions are a common feature. Just as the Bureau of Labor Statistics revises their Non-Farm payroll doctored data, they do the same with jobless claims. Still, despite the plain vanilla nature of jobless claims at state offices, hefty revisions do take place.

Nationwide, the US labor force is realizing that their skills are diminishing in a highly competitive world. Maybe taking more than two years of high school math is a good idea. The Jackass opted for advanced placement math in all four years. Maybe taking more than two years of high school science is a good idea. The Jackass opted for advanced placement chemistry in the senior year, unable to lock in AP physics due to scheduling problems. The best Jackass move of all was to take only three college courses in Economics, so as to avoid corrupted education. Video game expertise has never been my domain either, a small loss, or rather no loss at all. The American public might soon boast the most skilled at video games among its unemployed.

◄$$$ GOOGLE PLANS TO USE THE ONLINE MARKETPLACE TO PRODUCE AN ALTERNATIVE C.P.I. TO RIVAL OTHER PRICE INDEXES. IT WILL DRAW UPON A MULTITUDE OF ITEMS. BUT BY DEFINITION, IT WILL BE A RETAIL TYPE INDEX THAT MISSES MANY SERVICE ITEMS. $$$

Google will utilize its vast database of web shopping data to construct the alternative Google Price Index, a daily measure of price inflation. In time it could provide a snapshot for an additional perspective. Hal Varian, the chief economist at Google, emphasized how economic data can be gathered far more rapidly using online sources. The official Consumer Price Index data is collected manually from retail centers and diverse businesses, published monthly, reported with a time lag of several weeks. It is massaged and distorted and twisted and corrupted into nothing but excremental froth. One should anticipate that Google Price Index to challenge the integrity of the official CPI. It is indeed an interesting concept, however, with many service gaps. Many items will be overlooked, rendering it a retail CPI rather than an economc CPI. It probably will not include food and basic energy costs like gasoline. It will not consider or include many items, mostly service related, such as insurance, health care, medical cases, car repair, home repair, bank checking fees, credit card penalties, water & sewer costs, electricity, telephone plethora charges, tuition at colleges, certain city fees, highway tolls, bridge tolls, movies, lawn service, school tutors, and nanny care. Another dozen important items deserve mention but do not come to mind. If Google sources are very clever, they might capture some of the crucial items that comprise the cost of living, like gasoline, bank fees, and maybe certain types of insurance. See the CNBC article (CLICK HERE).

◄$$$ SHIPPING TO & FROM CHINA INVOLVES MASSIVE VESSELS ARRIVING AT THE U.S. PORTS LADEN WITH CONTAINERS. THEY RETURN  HOME EMPTY. WITNESS THE CAPITAL DRAIN TO THE UNITED STATES, AND THE RANCID TOXIC FRUIT OF AMERICAN ECONOMIC POLICY. THIS IS THE LOW-COST SOLUTION IN HIGH GEAR. $$$

The Emma Maersk, part of a Danish shipping line, is shown in the photo. Witness the shipment of what is made in China, the output of huge factory investment by US and Western firms for a decade, even using Japanese equipment. This vessel transports goods across the Pacific Ocean in only four days to California at a speed of 31 knots. It is one of three ships presently in service, with another two ships commissioned to be completed in 2012. These ships were commissioned by Wal-Mart to move their products from China, where 91% of the giant retail chain's products are made. They hold an incredible 15 thousand containers and have a 207 foot wide beam on the deck. Its full crew is only 13 people. Its length is greater than a US Aircraft Carrier, but it has more power than the military vessel to wreck an economy. It uses 11 onboard cargo cranes that can operate simultaneously to unload the entire ship in less than two hours. Silicone painting applied to the ship bottom reduces water resistance and saves 317 thousand gallons of diesel per year.

For some reason, such vessels are welcome at US ports, not considered enemies of the state. In a March 2010 documentary, the History Channel noted of these containers are almost ALL shipped back to China empty. The USEconomy sends nothing back on these ships. Trade is a one-way street, the result of colossal errors of judgment by the USGovt, like in granting China Most Favored Nation status in 1999. Recall in 2002 and 2003, the migration of industrial plants to China was called the Low-Cost Solution. My analysis called it a guarantee of systemic failure and economic depression in the United States with a four to six year waiting period. That time is up!! Who would have thought that China would accumulate $2.5 trillion in savings, enough to buy up enough of the strategic levers and commodity supplies to control the global economy? See the alliances with Brazil, Mexico, Venezuela, Iran, West Africa, Australia, Russia, and recently Greek Govt debt.

◄$$$ FOOD STAMP USAGE CONTINUES TO CLIMB. THIS HAS BECOME A SOCIAL POX, EVIDENCE OF CREEPING THIRD WORLD TYPE POVERTY. $$$

The story is a running theme. Food Stamp usage has climbed to yet another all-time record high level. According to the Supplemental Nutrition Assistance Program (SNAP) at the Food & Nutrition Service, the July food stamp usage rose 1.4% from June, hitting a new record of 41.8 million people. The current level is 17.5% higher than the 35.6 million on assistance one year ago. That screams of no USEconomic recovery and continued deterioration. Participation has set records for 20 consecutive months, with no sign of respite for the growing legion of poor. BusinessWeek has revealed, "An average of 43.3 million people, more than an eighth of the population, will get food stamps each month in the year that began October 1st, according to White House estimates." The food stamps will purchase less, as food costs have risen something like 10% this year. See the Zero Hedge article (CLICK HERE).


◄$$$ HARDSHIP WITHDRAWALS FROM 401K PERSONAL PENSION FUND ACCOUNTS HAVE RISEN SHARPLY. GRAB THEM WHILE YOU CAN, SINCE THEY ARE SOON TO CONVERT TO USTREASURYS WITHOUT A YIELD. THE USGOVT NEEDS PRIVATE PENSION MONEY, AND THEY HAVE AN INSIDE ROUTE TO IT. THE TAX DEDUCTION ON FUND CONTRIBUTIONS ENABLES THE USGOVT TO DICTATE ITS USAGE. THE GREAT USTREASURY BUBBLE MUST BE FED. NEXT ON THE BLOCK FOR SEIZURE IS SAVINGS DEPOSITS IN CERTIFICATE FORM HELD BY THE USBANKS. THEY WILL BE CONVERT TO USTREASURYS ALSO. $$$

Hardship withdrawals from 401k personal retirement saving plans rose to the highest level in 10 years during 2Q2010, according to Fidelity Investments. At the same time, the percentage of 401k participants holding an outstanding loan against their account rose to a record high of 22% in the second quarter. The most frequent reasons for loans and withdrawals were to prevent foreclosure or eviction, to pay for college, or to purchase a home. These are dreadful reflections of economic hardship, and a certain contradiction of recovery. See the CNN Money article (CLICK HERE).

A quick update on legislation to seize 401k funded accounts. Not much news actually, just a comment that the US Senate has begun the process. In the first week of October, Democrats in the Senate held a recess hearing to cover a taxpayer bailout of union pensions, but more importantly to move forward a plan to seize private 401k plans. The marxist rationale (much more severe than any socialist objective) is to more fairly distribute taxpayer funded pensions to everyone. It is doubtful to me that the American public is any more familiar with marxism in the current administration than with fascism in the previous. Those who hold 401k accounts are in for a shock. The warning signal was given to all in September and October of 2008. The topic was mentioned as warning several months ago in a warning to Hat Trick Letter clients. Obama is not what he appears to be, an agent for change, but leader whose policies would please Vladimir Lenin more than Thomas Jefferson. Democrats and Republicans simply rotate the actors on stage who take marching orders from the banking and war syndicate, after being put in office with favorable press reports.

An interesting tidbit. The Jackass knew in May 2008 that Obama would be the next president, because the damaging and inflammatory Reverend Wright story completely stopped in the mainstream US Press. In its place came the description of Obama as presidential timber after a scheduled tour in Europe to meet with leaders, who were totally unimpressed (not mentioned in accounts). The US press tipped off the Elite selection of Obama. The press networks are the controlled steering device of public opinion, an essential ingredient to national politics and selection of presidents. This one has a marxism agenda. The 401k accounts will convert to a USTreasury account yielding under 1% soon, all in time. The USCongress will probably use a lame duck session to force the bill though passage. Afterwards, at a uncertain future date, the USDollar devaluation will cut the account value down by 30% to 40%. The angle used simple. The USGovt gives tax deduction benefits to the 401k/IRA funds. Therefore, the USGovt exercises the right to seize the funds. The annual $1.5 trillion deficits will prompt a grand USDollar devaluation, obviously. The USGovt needs your money to feed a Black Hole. See the InfoWars article (CLICK HERE).

The USGovt plans next to target Bank CDs, the certificates of deposit. The USGovt needs the money set aside safely by savers to feed a Black Hole. Eventually, like in 12 to 18 months, all of the Bank CDs will probably be converted to USTreasurys that yield under 1%, then later devalued by 30% to 40%. The angle is the USGovt offers deposit insurance with the FDIC to cover the Bank CDs. Therefore, the USGovt exercises the right to seize the funds. The USGovt is no longer run by or for the People

◄$$$ CONSUMER BANKRUPTCY FILINGS HAVE RISEN 11%, NO SIGN OF RECOVERY, ONLY PROPAGANDA. THE ASSOCIATED DAMAGE FROM LOST JOBS IS ACUTE. SAVERS ARE URGED TO SPEND MORE. THEIR THRIFT IS SUPPOSEDLY RUINING THE SYSTEM. A LINKAGE EXISTS, A DESTRUCTIVE ONE. $$$

Consumer bankruptcy filings in the United States rose 11% in the first nine months of 2010, versus the same period in 2009, according to data from the Natl Bankruptcy Research Center. Filings totaled 1,165,172 nationwide during the first nine months of 2010, compared to 1,046,449 total consumer filings during the same period a year ago. The bankruptcy filings so far in 2010 represent the highest total since 2005. The rush to take advantage of the new bankruptcy laws that favored banks caused some outlier data. The most recent data surpassed the previous peak levels, a sign of reality sinking in long after legal rules changes. ABI Executive Director Samuel Gerdano said, "We expect that there will be nearly 1.6 million new bankruptcy filings by year end." He stated a full year estimate. The consumer bankruptcy total was 130,329 in September, up by 3.3% from August 2010. See the Market Watch article (CLICK HERE). Bankruptcy and mortgage default go hand in hand.

The highly destructive practice of consumption, a path toward prosperity by spending heavily with the aid of credit, is a particularly grotesque American phenomenon. The national obesity problem run parallel with shopping addictions. The nation is actually advised by leaders not to save profusely. The people are told, if not urged, to spend their hard earned money. Here the nation stands, years later, with foreclosed homes, pink slips from employers, vanished income, drained pension funds, and factories relocated overseas. The call to spend more and save less continues, although the cause of much destruction and despair. Savings is the path to self-funded capital investment, a foreign concept to US economists, who could hardly run lemonade stands. See the UK Telegraph article (CLICK HERE).


Thanks to the following for charts StockCharts,  Financial Times,  UK Independent,  Wall Street Journal,  Northern Trust,  Business Week,  Merrill Lynch,  Shadow Govt Statistics.