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Commodities are putting in a major bottom and the USD is putting in a major top, IMHO. Gas prices are up almost 25% in 3 months from the lows. Check out your bag of Easter Candy from Mars--you can hardly see the candy. Most food is grown in the Northern Hemisphere. If the weather doesn't cooperate or farmers can't get seed,fertilizer, etc due to credit or supply shortages, we are going to have a run on food, plain and simple. BTW California is having a major drought. Farmers have a 4 week window to plant food--if they miss this window, game over. Higher food prices will force the Japanese and Chinese to revalue their currencies higher, which will be the straw on the back of the dollar. It has taken the public 6 months to figure out the AIG heist. I suspect they will figure out why the dollar is plunging and food/energy prices are skyrocketing relatively sooner. The finger will be squarely pointed at Washington and their lavish bailout of Wall Street. The entire North East United States will be under martial law by the Fall. The waterfall crash of the US economy will have begun and the country may never be the same geographically or politically.
Originally posted by THX-1138
There will be no new low.
Buy the dips, or any time you want to, and exit when you want the money.
This market will chop along higher and higher then sprint even higher.
"In all countries there is an understandable tension between the steps that are needed to kick-start the economy and the fact that many of these steps are very expensive and taxpayers have a healthy skepticism about spending too much of their money, particularly when it is perceived that some of the money is being spent not on them but on others who they perceive may have helped precipitate the crisis," Obama said.
The Bush-Paulson bailout plan of approximately $800 billion has been followed a few months later by the Obama-Geithner stimulus-bailout plan of another approximately $800 billion. Together it adds to $1.6 trillion in new Treasury debt, much of which might have to be monetized.
The U.S. money supply as measured by cash in circulation and demand deposits (checking accounts) is currently about $1.4 trillion. If this year's budget deficit is monetized, the money supply doubles. If next year's budget deficit is monetized, the money supply would have tripled in two years. Inflation would explode. The combination of high unemployment and high inflation would be devastating.
The leaders of the Group of Twenty (G20) leading and emerging nations will agree at a summit on Thursday to refrain from currency moves that would hurt each other's economies, according to a draft statement.
"We commit to conduct our economic policies responsibly with regard to the impact on other countries and to refrain from competitive devaluation of our currencies," said the draft, obtained by Reuters.
The draft statement lists further G20 agreements to boost resources for the International Monetary Fund, multilateral development banks and for trade finance, while leaving as blanks the exact amounts of any increases.
On fiscal stimuli, it added: "We are committed to delivering the scale of sustained effort necessary to restore growth while ensuring long-run fiscal sustainability."
Defaults on home mortgages insured by the Federal Housing Administration in February increased from a year earlier.
A spokesman for the FHA said 7.5% of FHA loans were "seriously delinquent" at the end of February, up from 6.2% a year earlier. Seriously delinquent includes loans that are 90 days or more overdue, in the foreclosure process or in bankruptcy.
Since the collapse of the subprime mortgage market in 2007, most home loans for people who can't afford a sizable down payment are flowing to the FHA. The agency, which is part of the U.S. Department of Housing and Urban Development, insures mortgage lenders against the risk of defaults on home mortgages that meet its standards. FHA-insured loans are available on loans with down payments as small as 3.5% of the home's value.
The FHA's share of the U.S. mortgage market soared to nearly a third of loans originated in last year's fourth quarter from about 2% in 2006 as a whole, according to Inside Mortgage Finance, a trade publication. That is increasing the risk to taxpayers if the FHA's reserves prove inadequate to cover default losses.
As of January, the cities with the highest FHA default rates in January were Punta Gorda, Fla., at 18%; Detroit, 15.6%; Flint, Mich., 15.1%; Fort Myers-Cape Coral, Fla., 15%, and Elkhart-Goshen, Ind., 12.1%, according to a HUD report.
Foreclosed FHA homes owned by HUD totaled 39,687 in January, up 22% from a year earlier.
Desmond Lachman -- the former chief strategist for emerging markets at Salomon Smith Barney and a long-time official with the IMF (no raving socialist he) -- argues today that the most apt comparison for the U.S. now is not Japan's "lost decade," but rather, "that the United States is coming to resemble Argentina, Russia and other so-called emerging markets, both in what led us to the crisis, and in how we're trying to fix it." He begins by recounting an IMF trip to Yeltsin-era Russia:
I still recall the shock I felt at a meeting in Russia's dingy Ministry of Finance, where I finally realized how a handful of young oligarchs were bringing Russia's economy to ruin in the pursuit of their own selfish interests, despite the supposed brilliance of Anatoly Chubais, Russia's economic czar at the time.
He then describes the numerous similarities between the U.S. today and those corrupt, collapsing nations he studied in the past:
The parallels between U.S. policymaking and what we see in emerging markets are clearest in how we've mishandled the banking crisis. We delude ourselves that our banks face liquidity problems, rather than deeper solvency problems, and we try to fix it all on the cheap just like any run-of-the-mill emerging market economy would try to do. And after years of lecturing Asian and Latin American leaders about the importance of consistency and transparency in sorting out financial crises, we fail on both counts: . . . .
"Dear Mr. President, Patriotic retirement:
There's about 40 million people over 50 in the work force; I suggest you pay them $1 million apiece severance with three stipulations:
1) They retire from their jobs. Forty million job openings - Unemployment fixed.
2) They buy NEW American cars. Forty million cars ordered - Auto Industry fixed.
3) They either buy a house or pay off their mortgage - Housing Crisis fixed.
All National financial problems fixed!!!"
Earlier this week, the U.S. Treasury Department and the Federal Reserve Bank jointly announced a Public-Private Investment Program (Program). Pursuant to the Program, Treasury will co-invest in whole loans sold at auction by banks insured by the Federal Deposit Insurance Corporation (FDIC), and the FDIC will facilitate purchase money financing through a loan guarantee program. The Program is described in greater detail in our client alert of March 26, 2009 ("U.S. Treasury Announces New Public-Private Investment Program").
Yesterday, the FDIC held a conference call for bankers to provide an overview of the Program and to respond to initial questions and comments about the Program. FDIC Chairman Sheila Bair emphasized the FDIC’s desire for transparency in implementing the Program. She encouraged the public to submit comments during the next two weeks in response to questions posted by the FDIC on its Web site in order to get the Program up and running as soon as possible. Click here to view a copy of these questions.
Chairman Bair stated that the FDIC was particularly interested in comments from the private sector in three areas:
* the appropriate percentage of government equity participation to maximize returns for taxpayers while assuring integrity in the pricing of Legacy Loans by private investors
* how best to encourage a broad and diverse range of participation in auctions by private investors
* how best to manage the Legacy Loans after purchase by public-private investment funds (PPIFs).
FDIC’s Chief Operating Officer John Bovenzi indicated that there would be more conference calls in the future, as needed, to assist the FDIC in tailoring the Program to the needs of participating banks and private investors.
Nearly two years ago I was screaming about the scam called "off balance sheet" vehicles, as is found here:
Despite your claim on Cramer's show that "we'll profit from this" I believe your firm is going to be hurt badly, both from defaults (which your own 8K you filed this morning says have doubled in the last year) and from greater spreads which will make it tougher - or impossible - to sell your loans off into the CDO market at a profit. I also believe that reality is that we're looking at a price decline for homes, both new and used, and we are facing higher real interest rates - and no rate cut from the Fed. Finally, I would love to see a real look inside your kimono at that company, including all "off balance sheet" entities and everything your firm has marked to market, including the thousands of REOs that, according to another site, you currently own.
That was Countrywide. They would have outright "boomed" if not for Bank of America buying them in a shotgun marriage.
I wrote that in April of 2007.
Two years later, we have done NOTHING about the problem:
It will force card issuers -- such as Citigroup Inc., Bank of America Corp., American Express Co., Capital One Financial Corp., Discover Financial Services and J.P. Morgan Chase & Co. -- to bring off-the-books credit card loans onto their balance sheets. These companies will be taking on these securities at a time when losses on these loans are piling up amid rising unemployment.
American Express said in its annual report that if the amended FAS 140 goes through, the company would have to bring onto its books $29 billion of card loans and set aside an additional $1.8 billion in loss reserves, according to figures as of Dec. 31. American Express' loss reserves totaled nearly $3.4 billion at the end of 2008.
Citigroup, using figures as of Dec. 31, would have to take onto its books $98.2 billion of card loans, according to its annual report. The altered FAS 140 will have a "significant impact" on its financial statements, the company said in the regulatory filing. Discover currently estimates that it will have to assume $20.6 billion of card loans on its balance sheet.
This garbage must stop!
As I have repeatedly pointed out we are in this mess because our wonderful "financial system" made loans to people they could not pay back.
That is, there is too much debt in the system for the amount of earnings power that people and corporations have.
This is the root of the economic and financial problem we have in this country, and we cannot clear it, nor can we restore growth, until that excess debt is cleared from the system.
Hiding that debt will not make it go away.
There are only two ways to clear it: Pay it down or default it.
It should be obvious by now that we can't pay it down.
That leaves defaulting it.
The people have had it with outright looting operations conducted against the taxpayer, and the claims by various firms and their CEOs that are either outright false or present only half of the truth.
Distracting people with GM and Chrysler will not work any more than distracting the people with AIG's bonuses did while the real theft with AIG was the nearly $100 billion funneled to banks around the world.
There is no political capital available to further encumber the taxpayer for more bailouts, and with good cause. The people have been lied to repeatedly by both the current and previous administrations, with both having been turned into stooge departments for monied interests, much as happens in a banana republic.
Treasury has less than $100 billion left of the stolen TARP money (yes, stolen, given that none of it was spent on actual purchase of assets thus far!) and despite what President Obama might like I'm willing to bet that if he attempts to get more appropriated the result could be half the unemployed in America - over 2 million people - lay siege to the Capitol (hopefully peacefully!) and demand the resignation of all 535 clowns inside.
An even worse outcome is possible, of course - continued attempts to steal from the taxpayers for the benefit of lying bankers could easily lead to a near-immediate outbreak of widespread civil unrest or worse. Public opinion is tinderbox hot and dry at present and further looting is unlikely to be tolerated - no matter the excuse.
We are now being compared to Russia or Argentina prior to their collapses, and while that's a bit overstated, I unfortunately must agree that the overstatement is minor, and in general, it is spot-on.
Time is running out to stop the stupid as tension is building among the citizens of this nation dramatically and if we do not have actual leadership and the truth is not told and those who looted are not forced to give it back and go bankrupt - soon - the process of re-basing our economy to a sustainable level will not happen in an orderly fashion, but rather through violence and destruction.
May God visit upon our elected leaders the wisdom necessary to change their course of action, because I have seen no evidence that they possess that wisdom to date.
General Growth Properties Inc. has ended its effort to get a nine-month reprieve from bondholders after its proposal failed for the third consecutive week.
The Chicago-based mall owner continues to negotiate with various holdout bondholders regarding the bondholders' requests for better terms. However, the conclusion of General Growth's so-called consent solicitation offer without the desired number of bondholders signing on highlights General Growth's diminishing odds of avoiding bankruptcy.
"We are grateful for the support we received from the holders of the [bonds] and we are working with the [creditors] to address the credit crisis facing the company," General Growth Chief Executive Officer Adam Metz said in a statement.
General Growth has for months negotiated with its lenders to postpone its payment deadlines on portions of its $27 billion debt load as they come due. But, until this month, those lenders were primarily banks and pension funds.
On March 16, a payment deadline for $395 million in General Growth bonds passed without payment, adding hundreds of bondholders to the growing list of creditors General Growth is trying to appease.
General Growth repeatedly has warned in filings with the Securities and Exchange Commission that it might need to seek bankruptcy-court protection if it can't win reprieves on payment deadlines from its lenders. Including the $395 million in bonds, General Growth has roughly $2 billion in debt that is past due. But those lenders haven't yet demanded payment as they wait to see if General Growth can deal with its debts outside of bankruptcy.
China and Argentina have agreed to set up a 70 billion yuan ($10.24 billion) currency swap system that will enable trade between the two nations to be settled in the Chinese currency, the state-run Xinhua News Agency reported Monday.
The agreement, the largest ever between China and a Latin-American country, was signed Sunday in Columbia, Xinhua reported.
The agreement marks Argentina as the fifth nation to sign currency swap agreements with China following similar agreements with South Korea, Malaysia, Belarus and Indonesia. China ranks as Argentina's second-largest trade partner.
Separately, China and Argentina are set to push for changes to the international financial system at the Group of 20 leader's summit in London this week, Xinhua reported.
The two nations will seek a bigger representation of emerging nations at reform talks. The report did not specify what reform issues would be discussed.
Operation Date: 03/30/2009
Operation Type: Outright Coupon Purchase
Release Time: 10:15 AM
Close Time: 11:00 AM
Settlement Date: 03/31/2009
Maturity/Call Date Range: 08/15/2026 - 02/15/2039