Friday, April 22, 2011

DEBT DEBACLE by Martin Hutchinson And WEEKEND POST

Prudent Bear article MUST READ!

Today is Good Friday, and to all my friends who celebrate JC may you have the best day you can with friends and family! But I'm hardly in the mood to end my post here, and I appologize in advance, let's get to it.
The reason you SHOULD be reading articles posted here and elsewhere deemed reliable and worthy, is you cannot afford to lay dormant while the events of your lifetime are taking place. I am NOT saying you MUST confirm and come to the same conclusions as I do, we all process information differently, but it is important to be able to make informed conclusions of current events and be prepared.

We all know that there was a wild housing BOOM, that turned into a speculative BUBBLE, that burst seemingly without warning. Even as some in 2005-2006 were writing about the coming events....the same goobahs in position of power then are now...and they weren't listening as their Insider buddys were making money hand over fist and contributing to their re-election funds....

It seems, throughout our history, Recessions and other financial bouts of aingst have been met, especially since Greenspsn and Bernanke came on board, with SWIFT and AGGRESIVE FED monetary action. VOLKER stands out as the lone logical voice when he raised rates to 17% to battle raging inflation.....which when under control did set up the longest post war expansion into the 80's and 90's this country has seen. It also set up situation where for DECADES, interest rates have been falling, bond prices have been rising.

After battling a tech bubble (not effected financials) after 2000, the FED dropped their drawers to a jaw whopping 1% FED FUNDS RATE, the rate banks could borrow from the FED.....even though the fight was against over building and speculation in tech land.....the 1% rate was held for 2 years running and led to? OVER SPECULATION and a Housing DEBT BUBBLE (there is a FAMILIAR pattern here).

Now NO ONE in charge could see the ZILLIONS of Miami condo's going up with no one moving in, but a HORDE OF FLIPPERS? And in our history HOMES have been the #1 savings and retirmenet account for the average American......a nice steady rise was welcomed....and when it was time to retire...the sale and downsizing aided a comfortable retirement and achieving the American Dream....most held jobs, even with avg education (in manuf) usually for life.....all was good.

ALSO remember it was these same FED policies which led to the debasement of the $ and shipped all those HIGH PAYING jobs overseas and with the FLOOD of $'s fleeing this country to those manufacturing the cheap krap all seem to need to have....there went our jobs....and their went our status as worldd economic power and lender....we now enterred their pawn shops.....and with those new found $'s those who now had them began a BUYING BINGE of stuff and natural resource ALL OVER THE WORLD!!!! we did this!!!  ALSO remember if you spit in public a camera or CELL PHONE will capture it and you might land in jail! YET Those responsable for the worst financial crisis since Great Depression...not ONE has been's that make you feel? I guess OK as long as you have your Mocha Latte'?

SAVERS actually got a return on the money they lent to banks, which in turn could use for investment, making loans....all was good. NOW SAVERS GET NADA> ZIPPO< ZERO on SAFE MONEY DEPOSITS....and believe it or not this is exactly what the FED wants.....that YOU CANNOT FIND A SAFE HAVEN, SAFE YIELD...YOU ARE BEING FORCED TO ENTER RISKY ASSETS...or because of the inflation they say is not here LOSE ON YOUR SAVINGS AS IT LOSES BUYING POWER!!!!!!!!!!!

Like the tech bubble, when the janitors were passing stock tips in the bathroom, people you hadn't heard from in years were offering partnerships in the FLIP THE CONDO BIZ.....I began warning in early 2007...trouble was coming...I'd seen this before.

The $ was 120.00 in late 2001, early 2002 just about the time the FEDERAL RESERVE aggresively lowered rates to what was then a near historical low 1%. BY 2005, even though the recovery was well in hand, the value of the $ dropped to about 80.00 GOLD WAS UNDER $300 when this all began!!!!
IN 2008 the US $ slid to nearly 70, finishing the month at 71.00. After briefly rallying to 88.00 the $ has now fallen to 74.00, only the 2008 lows remain between today and lowest value ever.....what lies beyond that?

A WEAK US $ makes everything denominated in it MORE EXPENSIVE, LIKE OIL......and other food COMMODITIES. Just this weak, some food chains incl McD's told of how rising prices are eating into profits and they would need to boost COnsumer did P&G.

The AIRLINES have been crushed by rising jet fuel prices and most have swung to losses.. PRICES AT THE PUMP have topped $4 a gallon...a BIG DEAL to avg Joe's..cost of transporting anything by truck is going through the roof, lots of which starts on West Coast and ends up on East Coast.

There has been NO HALT to rising health care costs.ALL the talk about alternative energy will be too little too late. MONEY SENT to states to create jobs went instead to plug some of their fiscal holes.

With so many STILL Out of work, housing values declining so property taxes will have to come down...and all those in foreclosure are not tax paying residences...Municipalities in are rough will have to be brought in somehow....taxes raised....stuff cut...layoffs

The Federal Gov't LIE about inflation, The FEDERAL RESERVE LIE about inflation.

As Hutchinson points out small business is starved for capital, these guys are the lifeblood of our economy, create jobs....but BIG BUSINESS it is said is at or near record is good....and they want it to stay that if at all jobs added will come TOO SLOW to help most avoid financial destruction.

The efforts, in open speaches by the Federal Reserve are to RAISE ASSET PRICES....remember trickle down? it ain't trickling.....but the gulf between the haves and nots has never been greater.

2.5 years of a ZIRP FED policy...yet little if any headway for the housing industry can be seen..home values still falling most places......too many are upside down....equity has been VAPORIZED. Most of these avg Americans own LITTLE stocks to make a difference, yet THIS LIBERAL PRESIDENT extended the BUSH tax cuts! WTF????? WTF????? allowing those with BIG STOCK DIVIDEND positions to pay as little as 15% taxes!
LOOPHOLES or in some cases a chummy relationship with DC, like GE pay as little as 3% tax cool is that?

THOSE IN CHARGE decided in 2008-2009 it was good idea to take the BANK LOSSES and hoist them onto the public, in most cases ALL OF IT! You see they said it had to be done or ELSE. How well would you be doing if all your debts just vanished? Or in the case of the paper.....they just changed on the way the banks had to account for it...with PRESTO an accounting rule change....NO LONGER did those pieces of shit mortgages, now maybe worth nothing......the value of such could be made up by the convienent...they could show HUGE profits and pay HUGE bonuses, maybe to some of the same dudes in charge when this mess began.

Now a BRILLIANT idea is being put forth that we just BULL DOZE most of these vacant homes...see that way they just dissapear from view....BRILLIANT!!!


Inflation is better than Deflation? MAYBE SO, if you are connected insider...who has someone else pump their many MILLIONAIRES reside in Congress?

WHAT would interest rates be if the FED hadn't bought $trillions of Treasuries? SAVERS GRAB YOUR ANKLES...or go into the STOCK market and buy pieces of worthless stock the INSIDERS can keep cashing out handing YOU the bag.

Maybe we should sell all our stocks and invest on basket of foreign currencies? HOW's GOLD AND SILVER DOING?
WHAT backs up our currency? Read what it says on the paper..."full faith........" but what about the soaring what year will it improve? OH the S&P just issued a warning on the US a possible downgrade of our debt might be coming....
WHO CARES? not many obviously as stocks continued their historic march higher, like a meteor, like never before in I the ONLY one who thinks something is out of whack?

As DENT suggested, do we move higher but come Sept/Oct or earlier begin a viscous CRASH CYCLE TAKING US BACK TO NEAR 4,000????
It is true all bubbles retrace their origin. Tech lost nearly 90% from their highs of 2000....and even now are some 50% BELOW those highs some 10 plus years later!
The inflation may have given the appearence of Recovery and stabilizing what was ailing, banks have been able to borrow at 0% and then buy US treasuries and pocket the dif......a SURE THING means they don't have to take ANY chances with anyone else.

Inflation is rearing an even uglier HEAD in Asian and arab Nations who have been lending us plenty....and as all that DEBT they have gorged IS denominated in US $'s...which have been???????????? DYING AND UGLY LOSING VALUE money printed out of thin air....makes it MUCH easier to pay debts incurred at he OLD $ VALUE? see how the game is played?

THIS ABHORRENT MANIPULATION will bite us in the ass IMHO when US DEBT gets sold.....remember over last 6 months the FED has bought near $600B of debt.....with a little help from their friends, who in turn buy the SPX and other things......if you dont play along you get SQUAT!!!!! that simple, or worse.

When the end comes to this dangerous game, most likely outcomes could be MUCH HIGHER INTEREST RATES, the LOW LOW rates we currently see (EVEN AS COMPANIES ROLL IN RECORD PROFITS>???????? and almost 3 years into Recovery???) could vanish....taking it all down with it.....of course the FED says they have EXIT STRATEGY......mandate for stable currency by the FED must have been swept under the rug....all BUBBLES POP...GD help us.


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