This week Wall Street has been pushing the DOW to remain above 9500 on helium instead of it being supported by a true and strong wind current. The casino-style investment buying that allows large institutions to manipulate the market in order to pad their diminishing profits exists outside of the real economy.
Harvard law professor, Dr. Elizabeth Warren, the chair of the TARP Oversight Panel Committee appointed by Congress, and the only person directly affiliated with government accountability who is saying it like it really is, has warned us that the next big tsunami to sweep over the Wall Street Kool-Aid sippers is the commercial real estate collapse and coming foreclosures.
We all know where that would lead. Commercial real estate defaults would not get bailed out. There is no more money for bailouts. FDIC has already bailed out 81 banks just this year, and there are hundreds resting on the precipice of failure. FDIC is nearly broke. It has already used up its bank-rescue funds. Bernanke has already promised, pledged or issued $23T to the banking crime syndicate. How much more of the U.S. debt can he monetize? And, the Chinese have backed away from long term Treasury purchases.
As commercial real estate defaults, stores end up empty, malls become garbage dumps filled with weeds, and locust trees. Workers end up unemployed, and scared their mortgages may wind up in default, too! Consumers will tighten their spending belts even more. Treasury revenues will continue to decline.
Coming soon are more prime mortgage defaults as ARM-adjustable rate mortgages-come due. Many cannot afford the rise in the rates, and will end up walking away from the mortgages.
The financial crime syndicate’s chief financial officer (CFO), Bada Bing Bernanke, has been given a warm hug by the vacation president, Barack Obama. An endorsement that will extend Bernanke’s relationship with the financial crime syndicate’s crime bosses for another term. Bada Bing has done his best to threaten Congress from unraveling his disastrous web of worthless debt collected from his crime boss bankstas in exchange for hard cash at zero percent interest.
Back in November of 2008, Bloomberg News sued the Federal Reserve Bank of the United States, a private banking entity, yet, nevertheless, authorized by Congress to influence monetary and credit conditions, as well as the expansion and contraction of the money supply Bernanke refused to disclose any and all names of the financial companies he lent to. In addition, he would not disclose the amount of the loans, or the assets taken by the Fed as collateral under a wide range of programs. Secrecy is the bottom line. The Fed knows that if such information got out that the collateral they took in exchange for the cash give-away to the corrupt, and underwater financial institutions would likely cause the DOW to fall back to the 7000 mark or lower. This is Wall Street and the Fed’s way of window dressing the economy and making it look healthier than it really is.
Wall Street knows that these too-big-to-fail crime syndicate banks will never pay back their debts to the government. They just don’t care. If they lose stock market bets, it doesn’t matter to them, but to the average investor piggy-backing on their bets, it should matter. The Fed loaned them the betting capital at zero percent interest, while the average investor is using their precious earnings to ride the wave.
There will be no truth-telling here.
What we now have is Bernanke continuing to offer cash to these institutions allowing them to “Pump and Dump” stock prices. What the financial crime syndicate does is, no doubt, pump huge sums into specific stocks pushing up the stock prices, and then, once a price is reached that appeals to the manipulators, they sell, or dump. This pads their balance sheets. Their balance sheets have not been written down to disclose the trillions of dollars of residential toxic mortgages that they have been sitting on. They have been allowed to use imaginary market values to establish a make-believe market price for the worthless trash they claim has real value. Mark-to-market values no longer apply to them. They likely believe their toxic debt is worth 3 times what it is really worth. Their Cash-For-Toxic-Mortgage-Clunkers are not worth the actual 23 cents per dollar value, but instead they want a trade-in price of 80-90 cents per dollar value.
As they drive their investment banks down the road to fantasy recovery, what they refuse to see coming at them is a massive semi-tractor trailer filled with explosives labeled “Commercial real estate defaults”! By next year, Bank of America, PNC, Wells Fargo and Chase will see 50% of all residential mortgages underwater. Unemployment-underemployment figures will reach Depression Era levels of 20%. Mr. Barack Obama, Ben Bernanke, Congress and Wall Street will have to rope off the accident scene and perform triage. Will Mr. President decide that his vacation time has ended?
Such a scenario will create a second downturn in the economy, which will likely cause very damaging affects. I wouldn’t expect Wall Street to begin pouring the Kool-Aid anytime after that because the Kool-Aid would have turned sour. All the non-performing loans will implode like a blazing grass fire igniting the dry forest’s tree canopy.
What will happen in China when the second U.S. economic tsunami sweeps over? China has a significant overcapacity of goods, while it is busy inflating huge asset bubbles which could blow up in its face. Chinese bank regulators are telling bank lenders to increase their reserves of non-performing loans. In addition, the central bank has raised money-market rates in order to drain their liquidity swamp. Keep firing up the banking expansion. It doesn’t matter that many of their building projects have no tenants. China is determined to remain the world’s sweatshop, and anchor down deflation.
With only two years until a presidential election, and senate seat reelections, Congress may decide that the voters had had enough of the Ponzi Scheme, and the transference of wealth from working Americans into the hands of bankstas. We may just see Congress demand the Fed open its books before the primary election races. We may end up seeing Bernanke winning The World’s Most Hated Man award. He may have to shave his beard, dye his remaining hair red, and enter into the witness protection program where he will be relocated to Idaho, Montana, or Wyoming.
I keep wondering what would Truman do if he were President Obama? Knowing what I know about Harry Truman, he would not be gallivanting in Martha’s Vineyard, when the Rose Garden would have had to do.
Thanks for reading, jerry
17 comments:
Jerry, we now have perpetual "let them eat cake" moments. Rather than calling this debacle Depression II, how about The Gilded Age II? I would be willing to put these thieves, and their lying stealing ways against the previous Robber Barons anyday.
Just wait until the J6Ps of this world realize what they have done to each of us personally and collectively as a nation. These Town Hall Meetings are a warm up to what's ahead. As Celente says, "when a person loses everything, and they have nothing left to lose, they lose it".
Two other items I read about over the last couple of days. Obama wants 20,000 more troops to Afghanistan, and a new record for deaths there in August. 45 as of Friday of last week. Are they insane? Did we learn nothing with the debacle called VIETNAM? I wonder where all that Poppy Money is being laundered? They get a two-fer. First they make money with the production and distribution, and then on the user side the non-violent offenders get thrown into a CCA prison where the insiders make a killing on the huge prison population. Ain't Amerika grand?
Spectre,
"when a person loses everything, and they have nothing left to lose, they lose it"
I agree, the town halls are just a prelude to the real action.
Jerry,
Excellent analysis. We are heading down much the same road in Ireland, with the National Asset Management Agency (NAMA).
The government is going to take over billions in bad property loans. A figure of a whole years worth of tax returns is being bandied about.
This property is starting to hit the market at a tiny fraction of the loan value already. We the people are going to lose our collective shirt.
But don't worry the banks and property developers will live to steal another day.
Rory
Jerry, from Daily Kos, and damned if it ain't interesting that Bend Over Ben just got nominated for a second term by our vacationing President. This commentary below is but a prelude to what's coming in disclosure to the unknowing public which, when confronted with reality, will be rather preturbed by said revelations to put it mildly:
The Secret That Will Destroy the World's Financial System
by bink
Fri Aug 28, 2009 at 06:11:34 AM PDT
There's a secret out there.
A secret so incredible, so horrifying, so toxic that if the public ever heard about it, it would destroy the world's financial system.
bink's diary :: :: That sounds like a big claim.
Who's making it? Not some scary Chicken Littles in the Daily Kos diaries. Not some Doomer site. Not wacked-out gold bugs. Not Ron Paul.
This claim is being made by a consortium of the world's biggest and most powerful banks.
What's the secret they don't want you to know?
It all starts here:
In November of last year, the Bloomberg news organization sued the Federal Reserve bank of the United States. The goal of the suit was to force the Fed to disclose information on the alphabet soup of lending programs it created in 2008 to help prop up Wall St. banks:
Bloomberg News asked a U.S. court today to force the Federal Reserve to disclose securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans to banks.
The lawsuit is based on the U.S. Freedom of Information Act, which requires federal agencies to make government documents available to the press and the public, according to the complaint. The suit, filed in New York, doesn't seek money damages.
"The American taxpayer is entitled to know the risks, costs and methodology associated with the unprecedented government bailout of the U.S. financial industry," said Matthew Winkler, the editor-in-chief of Bloomberg News, a unit of New York-based Bloomberg LP, in an e-mail.
The suit sought to reveal which banks were getting which part of the $1.5 trillion dollars and what assets the banks were putting up as collateral for the loans.
The Federal Reserve fought the case and ...
They lost it:
(SNIP)
http://www.dailykos.com/storyonly/2009/8/28/773537/-The-Secret-That-Will-Destroy-the-Worlds-Financial-System
Rory, I second your thoughts regarding Jerry's piece. Excellent as always, and dead on as we the taxpayers are about to get hosed on the grandest scale possible.
Hello SPECTRE and Rory,
I really appreciate your analysis and your positive feedback regarding the piece. I am sitting in my parent's Chicago-area kitchen for a 10 day visit. They are celebrating their 60th anniversary. Incredible!
Bada Bing Bernanke is being celebrated by our vacation president, while the rest of the nation, as well as those around the world worry day to day, week to week, month to month if they will still have their job, their health care, their home, or just their health-period!
It is clear that the Robber Barons here in the U.S., China, and in Ireland, as well as around the world, are reaping their wealth without much constraint. The U.S. rules that were in place before the 2007 collapse continue to allow our homegrown corporate thieves to game the system in their favor.
This war in Afghanistan is whacked. The poppy money, from what I have learned, is being laundered by the Pakistanis. The military is trying to recruit agricultural experts to try and convince the Afghanis that other crops would be better for them in the long run. It appears to me that the poppy crop is what they know and have been engaged in for centuries. So, let us try and convince them to grow switch grass for biofuels.
It will be interesting if the Town Hall Meetings continue throughout this year.
Thanks for being there.
jerry
Thanks for the effort on the blog Jerry, it's one of the best I've found.
Enjoy the break, great to hear about your parents anniversary.
Rory
Jerry, pass a big CONGRATS to your parents for a milestone that impresses me more than anything else I will read today. 60 years is a lifetime of everything this world can throw at you, and to stay together through thick and thin is something very special to say the least.
Thanks for your blog Jerry. As I have mentioned before, you are a real gentleman, and your parents deserve a pat on the back for this fact as well, as said fact doesn't just happen on it's own.
Enjoy your time with your Mom and Dad, as these problems are going nowhere fast. Another day, another several billion stolen by the thieves and crooks while J6P swings in the wind.
My kicker for today is Federal Workers get a raise while SS will give retirees squat on a plate while they raise Medicare premiums for care and prescriptions. My parents are trying to figure out where else they can cut to make up for an increasing shortfall. Can we please bring the troops home from Poppy-stan, and use the savings to fund something for our citizens, or must we continue to spend and die so that some ass clown (bankers and politicians) can continue to live like a king on our damn dime?
Hello SPECTRE,
Your kind words and congratulations are deeply felt and warmly appreciated. You are kind person and I wish your parents well during this time of crisis.
Those hardworking Americans who spent their lives contributing taxes, work, Social Security payments, and more to the growth and well-being of this nation, and the productivity of the world, appear the last to be offered economic support. And as you said, federal workers are the ones receiving the raises, at this time.
Cash For Trash, or Clunkers, or whatever by the government to make sure the richest corporations, especially financial, have a cushioned collapse later on. The wars need to end, as you have said repeatedly. Those human and financial resources need to come home.
jerry
Amen Jerry on your several points. Everywhere you look in this country something needs fixing, yet we continue to drain our resources on projects in the ME, be they civilian or military. Even if we could go to a battery operated/hybred model for this country, we would crash the several grids of this nation because our infrastructure is collapsing from neglect.
One bright spot is that 57% of American Citizens are ready to replace the entire congress
which would be a real game changer and a Godsend for those that love our country and are damned tired of the graft and thievery at every frigging level of govt..
You mentioned Cash for Trash, and I have family in the business. What a cluster it was. It sounds like no one is sure when they will be paid on the vehicles, and the trade-ins are long gone. Many of these dealers stay open on cash flow. If they can't get their money, they are toast. The govt. hired hundreds of people for a program that sold over 700,000 vehicles. Talk about a paperwork nightmare.
Jerry, I hear Travelocity will be doing junkets soon :)!
Afghanistan
DEFENSE CONTRACTING IN AFGHANISTAN AT RECORD HIGH
There are more Department of Defense contractors in Afghanistan today than there are uniformed U.S. military personnel, according to a new report from the Congressional Research Service. Not only that, the ratio of contractors to troops in Afghanistan is higher than in any prior military engagement in U.S. history." As of March 2009, there were 68,197 DOD contractors in Afghanistan, compared to 52,300 uniformed personnel. Contractors made up 57% of DOD’s workforce in Afghanistan. This apparently represented the highest recorded percentage of contractors used by DOD in any conflict in the history of the United States," the CRS report (pdf) said.
U.S. arms dealer pleads guilty in Afghan weapons case
(SNIP)
Jerry, back home we have families picking out tents for themselves while the elite class lives it up just like old times. This is really sickening to watch:
A gravelly campground off Interstate 40 in central Tennessee is a last refuge for a hodgepodge of Americans: Here you can get a $275-a-month camping spot with a 30-amp electric outlet and a scratchy Wi-Fi signal emanating from "the bathhouse" down the lane. "It’s my permanent home – for now," says Terry Lee Ballard, who says he runs a small record label from his "tent condo," which is replete with "redneck engineering" such as a tent-flap air-conditioning unit.
As cities from Sacramento, Calif., to Tampa, Fla., debate the merits of tent cities to house newly homeless people (many of them young families), this recession is starting to yield scenes that evoke the Great Depression, especially at places like Timberline Campground in Lebanon, Tenn. Living in well-worn campers and tent compounds overstretched with 20-foot-long tarps, 85 percent of residents here are permanent, a good chunk of them "economic refugees." It’s an increasingly familiar scene across the country as campgrounds, RV parks, national parks, and city-owned pockets become inundated with permanent campers, and as entire tent cities spring up and expand, with some hinting at permanence by voting on village bylaws.
"It’s not quite Hoovervilles, but it’s getting there," says Leonard Heumann, a housing policy professor at the University of Illinois at Urbana-Champaign, referencing the massive tent cities and shantytowns erected during the Great Depression".
"...if the debt should once more be swelled to a formidable size... we shall be committed to the English career of debt, corruption and rottenness, closing with revolution." - Thomas Jefferson
Jerry, they are doing their best to silence the watchdog/SIGTARP to no avail thank God. Like squirells, the thieves are busy hiding every nut they find in the forest.
Treasury Retreats From Standoff With TARP Watchdog
The Treasury Department backed away from a standoff over the independence of the special government watchdog appointed to scrutinize how last year's $700 billion financial-industry bailout is being spent. Neil Barofsky, special inspector general for the Troubled Asset Relief Program, a position also known as Sigtarp, declared victory Wednesday in his effort to clarify that he doesn't answer to Treasury Secretary Timothy Geithner.
Mr. Barofsky has gained a reputation for his aggressive posture and demands for information from government officials and Wall Street. The former federal prosecutor is charged with tracking the money spent to prop up the banking system during the financial crisis and to report the results of his audits directly to Congress. In a letter Wednesday to members of Congress, Mr. Barofsky said the Treasury had withdrawn an earlier request to the Justice Department seeking a legal opinion on how much independence the Sigtarp office enjoys. Mr. Barofsky had told lawmakers he feared that being subject to the Treasury secretary's supervision would be "a threat to our independence."
"We view such withdrawal as Treasury's acknowledgment that Sigtarp is an independent entity within Treasury, and that my office and I are not subject to the supervision of the secretary," Mr. Barofsky said in his letter to a group of lawmakers, including Sen. Charles Grassley (R., Iowa) and Rep. Darrell Issa (R., Calif.), who have pushed for his independence. "We applaud Treasury's decision to bring to a close this needless distraction," Mr. Barofsky said.
The Treasury Department declined to explain the reason for the withdrawal of its request to the Justice Department. Sen. Grassley said, "The inspector general is right. It's good that this needless distraction is over." Some lawmakers viewed Treasury's request for a Justice Department ruling as an effort to rein in Mr. Barofsky. "Trying to take away the independence of this oversight reflects the arrogance of officials at Treasury who are wielding immense power over our economy," Rep. Issa said in a statement.
The Sigtarp office, created by Congress when it approved the bailout funds, is part of the Treasury Department and therefore part of the executive branch. But in establishing the office, Congress set strict directives that give Mr. Barofsky broad access to executive-branch documents and require Mr. Geithner to explain if he declines to follow any of Mr. Barofsky's recommendations. That led to constitutional questions over whether Congress violated the separation of powers and invaded the executive branch's turf.
In April, after butting heads with Mr. Barofsky, Treasury officials asked the Justice Department's Office of Legal Counsel for a ruling to clarify that Mr. Barofsky's office falls under the Treasury secretary's supervision. Lawyers in that Justice Department office have traditionally ruled that offices such as Mr. Barofsky's are in the president's line of command. That would mean that the president and the Treasury secretary have the power to fire Mr. Barofsky. The Sigtarp dispute came amid wider tensions over the role of government watchdogs. Three inspectors general have been ousted in recent months, including one fired by President Barack Obama.
My Jefferson quote of the day:
Thomas Jefferson said: "A government big enough to give you everything you want, is big enough to take away everything you have".
Jerry, from The Automatic Earth, and it sure struck a chord:
"So if the home still costs about as much to build, where does all the extra money go? Well, builders become "project developers" and drive fancy cars. Suppliers get a share; until the crash the cement and plastics industries are doing just fine, thank you. Most of it, though, goes to the banks. That is the one and only real effect of Fannie, Freddie, their brethren around the globe, and the government guarantees they offer. Instead of a hard working family paying George Bailey's Building & Loan Association in "It's a Wonderful Life" 50% of their income plus 5% interest for 5 years, that same family, if it wants a home of its own, is forced to pay 30% or 40% of its income for 30 or 40 years to a bank that runs no risk whatsoever and that will charge it fees left, right and center on top of everything else. Is it any wonder that the real wealth of American families has been falling since the early 1970's?"
Hello SPECTRE,
Here we are coming onto to Labor Day, the day to honor the working American for their their contribution to the growth of this nation. But today, they are being manipulated by the elites at the top of the Corporate Royalist pyramid. Building a home, and then mortgaging it no longer is an asset to the working American, but a debt burden filled with twice as much interest than the principal.
I am glad that we have Barofsky and Warren out in front pointing fingers on behalf of the average American.
To all the readers, and our Eye On Washington friends, such as SPECTRE, and Rory, may you all enjoy this Labor Day with friends and family.
jerry and Carl
Jerry and Carl,
Enjoy Labor Day, we don't celebrate it here (we have a holiday the first Monday in May, probably the equivalent).
Rory
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