Real News Group Blog

After Dumping 30% Of Its Treasury Holdings In Half A Year, Russia Warns It Will Continue Selling US Debt

2011-06-22T22:47:00.004-05:00

From Zero Hedge
After Dumping 30% Of Its Treasury Holdings In Half A Year, Russia Warns It Will Continue Selling US Debt
Just in time for the end of QE2, when the US needs every possible foreign buyer of US debt to step up to the plate, we get confirmation that yet another major foreign central bank has decided to not only not add to its US debt holdings, but to actively sell US Treasurys. The WSJ reports that “Russia will likely continue lowering its U.S. debt holdings as Washington struggles to contain a budget deficit and bolster a tepid economic recovery, a top aide to President Dmitry Medvedev said Saturday. “The share of our portfolio in U.S. instruments has gone down and probably will go down further,” said Arkady Dvorkovich, chief economic aide to the president, told Dow Jones in an interview on the sidelines of the St. Petersburg International Economic Forum.” Well, with Russia out, at least we have China and Japan continuing to buy US debt…. Oh wait, China is contemplating dumping two thirds of its debt you say? And the biggest buyer of Japanese bonds is now in the process of selling Japanese bonds in the open market for the first time (so not really in the market of US bonds). Well, surely US households will step up to the plate. After all they all have so much “cash on the sidelines” courtesy of the RecoveryTM ©® that they can’t wait to dump it all into paper yielding less than 3% a year, and has negative real rates of return. Wait, what’s that: according to the Fed, in Q1 US “households” sold $1.1 trillion annualized in Treasurys to the Fed? So, let’s get this straight: China, Japan, and now very much openly Russia, the three countries with the largest financial reserves in the world, are threatening, if not already dumping US bonds, just in time for US households to sell their holdings of US paper to Brian Sack. And this is happening 2 weeks before QE2 ends… Um… Are we and Bill Gross (and certainly not Morgan Stanley) the only ones to see a problem with this?
More on the latest confirmation that the time of US superpower supremacy has ended…
Asked if U.S. dollar was as solid an investment now as it was 10 years ago, Mr. Dvorkovich said: “On an absolute basis, yes. On a relative basis, compared to other investments, of course not.”
“When we take decisions and compare, we’re not thinking in absolute terms,” he said.
Russia’s financial reserves—which stood at $528 billion as of June 10—are the world’s third largest, after China and Japan’s. As of May, according to Russia’s central bank, 47% of reserves were in dollars and 41% in euros, compared with 45.2% in dollars and 43.1% in euros on Jan. 1.
The central bank recently diversified the stash to include the Canadian dollar, which makes up 1% of the total, and plans to put 0.8% into the Australian dollar starting in September.
And next, presenting the monthly status update of the second cold war, which is now held entirely between central bank trading accounts. Russia has now cut 30% of its Treasury holdings in the past 7 months. When the caption above the blue thingy hits zero, the “Evil Empire” wins.
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J.P. Morgan, HSBC sued for silver manipulation

2010-10-28T00:23:00.003-05:00

NEW YORK (MarketWatch) — Two separate lawsuits filed in federal court in Manhattan Wednesday allege that banks J.P. Morgan Chase & Co. (JPM 37.60, +0.06, +0.16%) and HSBC Holdings Inc. (HBC 51.99, -0.29, -0.55%) manipulate the price of silver futures by “amassing enormous short positions.”

The suits allege that by managing giant positions in silver futures and options, the banks have influenced the prices of silver on the New York Stock Exchanges’ Comex Exchange since early 2008.

The Commodity Futures Trading Commission has been in the midst of a high-profile, two-year-old investigation of the silver market.

J.P. Morgan declined to comment on the lawsuits. HSBC wasn’t immediately available to comment.

A suit filed by Peter Laskaris, who traded COMEX silver futures and options contracts, says the banks colluded on the silver market and informed each other of large trades. It says the banks used their large positions to effect the market by “flooding” it with a disproportionate number of orders.

The suit says J.P. Morgan and HSBC in August 2008 together held 85% of the net short position in silver and by the first quarter 2009 held $7.9 billion in precious metal derivatives.

According to the other lawsuit filed by Brian Beatty, who also traded silver contracts, says he was hurt by J.P. Morgan’s alleged anticompetitive acts and market manipulation. Specifically, the suit said Beatty, a Connecticut resident, bought and sold silver contracts on Aug. 14 and Aug. 15, 2008, when the price of silver suffered an 18% drop from $14.86 to $12.23.

Laskaris, a New York resident, also was hurt by the alleged “artificial market in COMEX silver futures” from June 2008 to June 2009, according to the lawsuit.

The suit by Laskaris further alleges that when the public began complaining about the banks’ high positions and the government began an investigation in March silver prices, silver went from underperforming to outperforming the price of gold.

The silver market, no stranger to controversy, has long been the focus of manipulation theorists. At a CFTC hearing Tuesday to consider new rules to strengthen its commodity-enforcement powers, commissioner Bart Chilton said market players have made “repeated” and “fraudulent efforts to persuade and deviously control” silver prices.

J.P. Morgan and HSBC traditionally have been big players in the silver market. A CFTC weekly report for Oct. 19, the most recent period, shows that less than four market players hold 24.3% of all net bearish bets in the silver market. J.P. Morgan and HSBC are among those market participants, The Wall Street Journal reported, citing silver traders and a person close to the investigation.

In recent months, however, the banks with large futures positions have sharply reduced the size of their holdings.

The lawsuits request the banks’ “unjust” enrichments from the collusion and manipulation

Gallup Survey Shows Unemployment Jumps From 9.4% to 10.1%

2010-10-07T16:16:00.001-05:00

Mike Shedlock

As economists up their forecasts for tomorrow's jobs report, I am lowering mine.

First, the recent ADP report suggests private nonfarm employment dropped by 39,000 with expectations of a gain. Second, Gallup Finds U.S. Unemployment at 10.1% in September

Unemployment, as measured by Gallup without seasonal adjustment, increased to 10.1% in September -- up sharply from 9.3% in August and 8.9% in July. Much of this increase came during the second half of the month -- the unemployment rate was 9.4% in mid-September -- and therefore is unlikely to be picked up in the government's unemployment report on Friday.

The increase in the unemployment rate component of Gallup's underemployment measure is partially offset by fewer part-time workers, 8.7%, now wanting full-time work, down from 9.3% in August and 9.5% at the end of July.

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Existing-home sales plunge 27.2%

2010-08-24T15:44:00.001-05:00

Inventory of unsold homes jumps to 11-year high

WASHINGTON (MarketWatch) — The sale of existing U.S. homes sank 27.2% in July — the biggest one-month drop ever — largely because of the phase-out of a federal tax credit, according to an industry trade group.

The National Association of Realtors said existing-home sales fell to a seasonally adjusted annual rate of 3.83 million in July from 5.26 million the month before. Sales of single-family homes fell to the lowest rate in 15 years.

A year earlier, existing home sales totaled 5.14 million in July.

Inventories of unsold homes rose 2.5% to 3.98 million, representing a 12.5-month supply, the highest level since at least 1999. Read the full report on the NAR website.

Economists surveyed by MarketWatch forecast the pace of annualized sales to fall to 4.70 million. See our complete economic calendar and consensus forecast.

Many buyers took advantage of a temporary tax credit earlier this year to save up to $8,000, but they had to sign contracts before the end of April to qualify. As result, sales that might have taken place later in 2010 were squeezed into the first few months of the year.

Home purchases were expected to decline after the expiration of the tax credit and that is exactly what’s happened. After rising 7.6% in April, existing-home sales fell 2.2% in May and 7.1% in June.

Home sales are likely to remain sluggish over the next few months despite the lowest 30-year fixed-mortgage rates in the modern era. Rates slipped to a record-low 4.56% in July from 4.74% in June, according to Freddie Mac.

The latest data suggests the U.S. economy might be slowing again and the unemployment rate is stuck at 9.5%, near a 27-year high. Until the economy shows big improvement and hiring begins to pick up, the housing market will remain weak, economists say.

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Weekly Unemployment Claims Hit 500,000, Exceed Every Economist's Estimate; No Lasting Improvement for 9 Months

2010-08-19T13:59:00.004-05:00

Weekly Unemployment Claims Hit 500,000, Exceed Every Economist's Estimate; No Lasting Improvement for 9 Months

I don't understand the top economists in America, every month the unemployment numbers unexpectedly rise or remain steady for the last six months. At some point the unemployment numbers should be expected and the top economists should not be so overoptomistic. Here is an article from a real economist, click on the link to see the charts data.

Once again the pile of overoptimistic economist estimates continues to mount. Today, weekly unemployment claims hit 500,000 exceeding every forecast. This is (at minimum) the 4th time since March every economist was overly optimistic regarding unemployment claims. Nicely done guys.

Bloomberg reports Jobless Claims in U.S. Rose to Highest Since November

Applications for unemployment benefits in the U.S. unexpectedly increased last week to the highest level since November, showing companies are stepping up the pace of firings as the economy slows.

Initial jobless claims rose by 12,000 to 500,000 in the week ended Aug. 14, Labor Department figures showed today in Washington. Claims exceeded all estimates of economists surveyed by Bloomberg News and compared with the median forecast of 478,000.

Estimates of the 42 economists surveyed by Bloomberg ranged from 460,000 to 495,000. The government revised the prior week’s claims figure to 488,000 from a previously reported 484,000. Initial filings last week were the highest since the week ended Nov. 14, 2009.

Claims have increased in four of the last five weeks.

Weekly Claims Report

Please consider the Unemployment Weekly Claims Report for August 19, 2010.

In the week ending Aug. 14, the advance figure for seasonally adjusted initial claims was 500,000, an increase of 12,000 from the previous week's revised figure of 488,000. The 4-week moving average was 482,500, an increase of 8,000 from the previous week's revised average of 474,500.

The 4-week moving average is still near the peak results of the last two recessions. It's important to note those are raw numbers, not population adjusted. Nonetheless, the numbers do indicate broad, persistent weakness.

To be consistent with an economy adding jobs coming out of a recession, the number of claims needs to fall to the 400,000 level.

At some point employers will be as lean as they can get (and still stay in business). Yet, that does not mean businesses are about to go on a big hiring boom. Indeed, unless consumer spending picks up, they won't.

Questions on the Weekly Claims vs. the Unemployment Rate

A question keeps popping up in emails: "How can we lose 400,000+ jobs a week and yet have the unemployment rate stay flat and the monthly jobs report show gains?"

The answer is the economy is very dynamic. People change jobs all the time. Note that from 1975 forward, the number of claims was generally above 300,000 a week, yet some months the economy added well over 250,000 jobs.

Also note that the monthly published unemployment rate is from a household survey, not a survey of payroll data from businesses. That is why the monthly "establishment survey" (a sampling of actual payroll data) is not always in alignment with changes in the unemployment rate. At economic turns the discrepancy can be wide.

With census effects nearly played out, It may be quite some time before we weekly claims drop to 400,000 or net hiring that exceeds +250,000.

Unemployment claims are clearly in reverse.

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US Bankruptcies Surge To 5 Year High

2010-08-18T14:18:00.001-05:00

Zerohedge

The Administrative Office of the U.S. Courts reports that personal bankruptcy filings for the year ended June 30, 2010 surged to a five year high, hitting 1.57 million, a 20% increase from the prior year. Furthermore, in the period between April and June, there were 422,061 bankruptcy filings, a 9% increase from the 388,148 in the previous quarter, and up 11% from 381,073 a year earlier. As Reuters highlights, quarterly filings surpassed 400,000 for the first time since a record 667,431 bankruptcies were begun in the fourth quarter of 2005, when Congress overhauled federal bankruptcy laws and made it harder for people and businesses to file. Yet while that was an administrative adjustment to bankruptcy law, this time it is all organic, and an indication of the ongoing incapability of America's politicians to fix the economic collapse. Indicatively, Nevada had the highest rate of filings on a per capita basis in the last year, with 11.74 per 1,000 people, while Alaska had the fewest, with just 1.58 per 1,000. The states with the most bankruptcies were California (241,975), Florida (107,373), Illinois (80,801), Georgia (77,809), and Ohio (72,924).

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Putting Government First

2010-08-14T22:28:00.001-05:00

Putting Government First

by Patrick J. Buchanan

If you would know where the heart of the Obama party is today, consider. In the dog days of August, with temperatures in D.C. rising above 100, Nancy Pelosi called the House back to Washington to enact legislation that could not wait until September.

Purpose: Vote $26 billion to prevent layoffs of state, municipal, and county employees whose own governments had decided they had to be let go if they were to meet their constitutional duty to balance their books.

Workers their own governments thought expendable, Congress decided were so essential, it borrowed another 26 thousand million dollars from China to keep them on state and local payrolls.
A nation whose national debt is approaching the size of its gross national product, that goes abroad to borrow money to keep non-essential workers on government payroll is a nation on the way down and out.

And anyone who thinks this Obama party is ever going to cull the armies of tens of millions of government workers or scores of millions of government beneficiaries to put America’s house in order is deluding himself.

As long as this Congress and White House remain in power, a U.S. default on its national debt is inevitable. The only question is when.

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Patrick Buchanan is the author, most recently, of Churchill, Hitler, and "The Unnecessary War": How Britain Lost Its Empire and the West Lost the World and The Death of the West: How Dying Populations and Immigrant Invasions Imperil Our Country and Civilization.

Bank repossessions drive up July foreclosures

2010-08-12T11:39:00.005-05:00

Is the House of Cards Falling?

NEW YORK (Reuters) – More Americans fell into foreclosure in July as a sour job market kept them from making payments, and banks took over homes at a near record pace.

Banks repossessed the second highest monthly number of homes ever last month, working through distressed loans already on their books rather than sharply stepping up new default notices, real estate data company RealtyTrac said on Thursday.

This reflects problem management instead of a fix of the root problem, said the company, which expects more than 1 million homes to be repossessed this year.

“What’s driving most of the foreclosure activity is unemployment and other types of economic displacement,” RealtyTrac senior vice president Rick Sharga said in an interview.

Banks took over 92,858 properties in July, up 9 percent in the month and 6 percent in the year. This was a shade below the peak of 93,777 homes in May, the largest since RealtyTrac began tracking repossessions in April 2005.

In 2005, before the housing bust, banks took over just about 100,000 houses, according to the Irvine, California-based company.

Overall foreclosure activity, including notice of default, scheduled auction and repossession, rose 4 percent in July from June. Actions were taken on 325,229 properties, with one in every 397 housing units getting a foreclosure filing.

“Repossessions coupled with the fact that we’re still looking at 5 million seriously delinquent loans, many of which would normally already be in foreclosure, really suggests that what the banks are doing is managing inventory levels,” said Sharga.

The Obama administration on Friday acknowledged it had underestimated the number of homeowners who fell seriously behind on mortgages even after getting government aid.

On Wednesday the Treasury Department expanded a program to help unemployed homeowners avoid foreclosure.

A measured flow of foreclosure sales keeps home prices from falling much more after plunging nearly 30 percent, on average, in four years, economists agree. Relatively tame single-digit price declines are now seen, with a flood of foreclosure sales at any one time seen unlikely.

More…

Jobs Picture Worsens With 131,000 Losses

2010-08-08T11:24:00.006-05:00

Reuters

U.S. employment fell for a second straight month in July as more temporary census jobs ended while private hiring rose less than expected, pointing to an anemic economic recovery.

Private employment, considered a better gauge of labor market health, rose 71,000 after increasing 31,000 in June. In addition, the government revised payrolls for May and June to show 97,000 fewer jobs than previously reported.

Analysts polled by Reuters had forecast overall employment falling 65,000 and private-sector hiring increasing 90,000.

The unemployment rate was unchanged at 9.5 percent in July for a second straight month, just below market expectations for a rise to 9.6 percent. The steady jobless rate largely reflected a drop in the labor force as discouraged workers gave up the search for jobs.

Job growth has taken a step back after fairly strong gains between February and April, putting in jeopardy the economy’s recovery from its worst downturn since the 1930s.

Growing unease over the health of the economy is weighing on President Barack Obama’s popularity and hurting the Democratic Party’s prospects of keeping control of Congress in November’s mid-term elections.

The state of the labor market is one of the factors that will determine the timing of the Federal Reserve’s first interest rate rise since reducing overnight lending rates to near zero in December 2008.

Fed Chairman Ben Bernanke has said the U.S. central bank could take steps to further ease monetary policy if the recovery were to falter. The central bank holds its next policy-setting meeting on Tuesday.

Economic growth slowed to a 2.4 percent annual rate in the second quarter after expanding at a 3.7 percent pace in the first three months of this year.

Despite the tepid private sector jobs growth, the pace of layoffs has moderated significantly from the first quarter of last year, when employers were culling an average of 752,000 jobs a month.

Last month, the dominant service sector added 38,000 jobs after June’s 34,000 gain. More disturbing, temporary help services, seen as a harbinger of future permanent hiring, fell 5,600 after increasing 11,200.

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Chinese rating agency strips Western nations of AAA status

2010-07-13T16:04:00.003-05:00

By Ambrose Evans-Pritchard, International Business Editor

Published: 9:17PM BST 12 Jul 2010

Dagong Global Credit Rating Co used its first foray into sovereign debt to paint a revolutionary picture of creditworthiness around the world, giving much greater weight to “wealth creating capacity” and foreign reserves than Fitch, Standard & Poor’s, or Moody’s.

The US falls to AA, while Britain and France slither down to AA-. Belgium, Spain, Italy are ranked at A- along with Malaysia.

Dominique Strauss-Kahn, chief of the International Monetary Fund, agreed on Monday that the rising East is a transforming global force. “Asia’s time has come,” he said.

The IMF expects Asia to grow by 7.7pc in 2010, vastly outpacing the eurozone at 1pc and the US at 3.3pc. Emerging nations hold 75pc of the world’s $8.4 trillion (£5.6 trillion) of reserves.

Dagong rates Norway, Denmark, Switzerland, and Singapore at AAA, along with the commodity twins Australia and New Zealand.

Chinese president Hu Jintao said in April that the world needs “an objective, fair, and reasonable standard” for rating sovereign debt. Dagong appears to have stepped into the role, saying its objective was to assess countries using methods that would “not be affected by ideology”.

“The reason for the global financial crisis and debt crisis in Europe is that the current international credit rating system does not correctly reveal the debtor’s repayment ability,” said Guan Jianzhong, Dagong’s chairman.

The agency, known in China for rating companies, said its goal is to “correct the defects” of the existing system and offer a counter-weight to Western agencies.

Dagong appears to base growth potential on past performance but this can be misleading, especially in states enjoying technology catch-up. Japan was a high-flyer in 1970s and 1980s before stalling when the Nikkei bubble burst. It has been trapped in near perma-slump ever since.

China may start to face some of Japan’s demographic problems by the middle of this decade when the working age population peaks.

The Western rating agencies put a high value on a long-established rule of law and government institutions that have proved resilient over many decades, or even centuries. China’s political system may appear strong – as did the Soviet Union’s – but only time will tell whether its foundations are brittle. The violent upheavals of the Cultural Revolution are still a very fresh memory.

LINK...

How The Oil Spill Will Affect The Economy

2010-06-20T03:11:00.008-05:00

Here's an article from Lou Scatigna, he really seems to have a grasp on what is happening in the U.S. economy. You wont see this type of comment in the main stream media.

The Oil Spill’s Effect On Average Consumer And the Economy

by Louis Scatigna

1. Unemployment will rise significantly in the Gulf states at a time when unemployment rates in those states are already above the national average.This increase in gulf region unemployment will pull up the already high national average from 9.7% to 11-12%. Consumer spending in the reason will drop sharply as employment insecurity results in consumers holding back further damaging the regional economy.

2. Housing prices which have shown signs of stabilization will fall dramatically in the oil spill affected are, especially property on or close to the water. This will result in a dramatic increase in regional foreclosures that will threaten already weakened southern banks.

3. Toxic rain being created by gases being created by the spill is creating acid rain that has been affecting crops in the south. Expect food prices to skyrocket if this continues to get worse. There are also significant health concerns that people in the south are breathing in unhealthy levels of toxic chemicals like hydrogen sulfides, benzene and the dispersment chemical Corexit 9500A. Expect health care cost to rise if this continues.

4. The Obama administration has reacted to the spill by suspending off shore drilling and using the crisis to push cap and trade legislation. These position would most likely increase gasoline and heating oil prices by as much as 100% over time.

5. The Administration is proposing an energy tax to fund regulation and green energy initiatives. If enacted this will result in higher gasoline, heating oil, and electricity bills

Link...

Read Lou's Book.......

Bernanke Admits Printing $1.3 Trillion Out Of Thin Air

2010-04-26T16:54:00.012-05:00

Fed Chairman Ben Bernanke admitted the central bank created $1.3 trillion out of thin air to buy mortgage backed securities. This shocking admission came from the Joint Economic Committee hearing on Capital Hill last week. I was dumbfounded when I saw Bernanke shake his head in the affirmative as Representative Ron Paul said, “Well, where did you get the money? You created this money. So you did monetize debt, and that went into the banking system.” I was amazed he admitted this. I looked up the original hearing on C-Span to make sure the clip was not edited. It was not.

What is even more shocking is I could not find a single mainstream news agency that covered this revelation. Congress just finished voting on the bitterly contested Obama health care bill that is supposed to cost nearly a trillion dollars over ten years. (Some contend it will be more than twice that amount.) The mainstream media doesn’t even bat an eye over the Fed creating $1.3 trillion in a little more than a year to buy worthless debt no one else will touch. I do not get it. I guess we could have asked the Fed to print up a trillion dollars to pay for health care and avoided that drawn out battle in Congress.

Then, Rep. Paul brings up printing another $105 billion to bailout Greece. Bernanke answers by saying, “. . . I think one of the agreements that the G20 leaders came up with was sort of a mutual commitment to put more money into the IMF as a way of addressing the financial crisis around the world. . .” Notice how Bernanke used the term “mutual commitment.” I think what that really means is an agreement between all the G-20 nations of a “mutual debasement of their currencies.” I think this is why gold has been rising in price around the globe. I have been saying for months that we are going to have some very big inflation. (Real inflation is already at 9.5% according to shadowstats.com.) I wrote about this last November in a post called “The Fix Is In.”

I think Bernanke just opened the Fed playbook and revealed money will be printed to fix all financial problems. I don’t think he’s even trying to hide it anymore. Rep. Paul also brought up the big debt trouble coming soon with many, many bankrupt cities and states such as Los Angeles and California. I think they will all be bailed out one way or another by the printing press.

New York Fed President William Dudley seems to be on the same page as his boss. Dudley recently said, “The fact that our foreign indebtedness is for the most part denominated in our own currency is a huge advantage in the event the dollar were to come under significant downward pressure.” (Zero Hedge has a complete text of Dudley’s speech, click here) Is Dudley making a not so subtle hint about devaluing the U.S. dollar? Once again, I say yes.

Anyone with a savings account or money market denominated in dollars should be terrified. You have scrimped and saved only to have the Fed print money and devalue what you have worked so hard for! Inflation has been chosen for you by the Federal Reserve, and we the taxpayers can’t even audit its actions. Below is the video from the Joint Economic Committee Hearing last week. Watch for yourself Bernanke nod yes to printing $1.3 trillion:

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Fannie Mae: Delinquencies Increase in January

2010-04-01T02:26:00.003-05:00

Fannie Mae reported today that the rate of serious delinquencies - at least 90 days behind - for conventional loans in its single-family guarantee business increased to 5.52% in January, up from 5.38% in December - and up from 2.77% in January 2009.

"Includes seriously delinquent conventional single-family loans as a percent of the total number of conventional single-family loans."

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Panic on Main Street?

2010-03-03T23:34:00.003-06:00

Massive U.S. Debt

U.S debt is massive, now well over $12 trillion; that is $40,000 plus for every person in America! It is not unthinkable or unprecedented although unlikely that the government could default and repudiate all debts including Social Security obligations, Medicare coverage, and military pensions along with all foreign debts. If that happened, millions of over-fifty people would storm the White House and Congress producing anarchy and maybe a Second American Revolution. Emulating the Reign of Terror in France in the 1790s, they might bring back the guillotine for procrastinating, privileged, and prevaricating politicians. Remember that the bloody French Revolution was precipitated by a looming bankruptcy as the politicians spent far more than their income. “But that could never happen here,” says the naïve one. Of course not!

When Argentina defaulted on their financial obligations in the amount of $145 billion which they owed various banks, bondholders, and international entities, it caused ripples there and in the U.S. Major U.S. and European banks are using a lot of red ink in recent days in their bookkeeping departments!

Generous U.S taxpayers gave billons to bankers so they could continue to give themselves astronomical bonuses, salaries, and “golden parachutes.” To solve our financial woes, VP Joe Biden told AARP in July of 2009, “We have to go spend money to keep from going bankrupt.” Say what! How can you spend money if you have none and no credit? How can businesses expand when they have laid off workers and much of their business overhead continues?

Dr. Martin Weiss reports that a Depression is “inevitable and unavoidable” and the FDIC reveals that 552 U.S. banks are in grave danger of default. During 2009, 140 U.S. banks went belly-up and twenty banks have toppled so far in 2010 with many more to follow. Banks, brokerage firms, and insurance companies are being hammered hard by the bankruptcy of major companies, credit card default, home foreclosures, corporate and personal loan delinquencies, while other blows will destroy many of the most prestigious financial institutions. To add to the pain, the FDIC fund fell to a negative $8.2 billion at the end of September; however, the government has guaranteed your savings, but who will guarantee the government?

On Nov. 24, headlines screamed, “Most global banks are still unsafe, warns S&P,” followed by an ominous assessment: “Standard & Poor’s has given warning that nearly all of the world’s big banks lack sufficient capital to cover trading and investment exposure, risking further downgrades over the next 18 months unless they move swiftly to beef up their defences.”

On Feb. 28, 2010, the media reported that Barack Obama’s home state of Illinois is near the point of fiscal disintegration! “The state is in utter crisis,” said Illinois Representative Suzie Bassi. “We are next to bankruptcy.” Englishman Ambrose Evans-Pritchard reported on the Illinois crisis declaring, “The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs.” The school Superintendent added, “It’s a catastrophe.” Moreover, in Alexander County, the county patrol cars have been repossessed; seventy-five percent of the deputies have been laid off; and the local prison has refused to take county inmates until debts are paid. Of course, what could they expect with generations of systemic corruption?

We are all aware of California’s massive debt and constant cash flow problems forcing them to use unfunded vouchers to pay state workers! Furthermore, the state has cut teachers’ salaries five percent. Florida, Arizona, Michigan, New Jersey, Pennsylvania and New York are all facing financial meltdowns.

With millions of Americans out of work, banks failing, retirement funds disappearing or being renegotiated, homes being foreclosed, commercial properties boarded up, police departments cutting back, with black clouds on the horizon, look for massive problems on Main Street.

Evans-Pritcherd added, “If the governments of America, Europe, and Japan are to retrench – as they must – their central banks must stay super-loose to cushion the blow. Otherwise we will all sink into deflationary quicksand.”—Worldwide Depression.

This problem is a world problem with the Baltic’s, Ukraine, Latvia, Hungary, Ireland, Greece, Spain, Portugal, Britain, Japan, and other nations standing in economic quicksand—slowly sinking. We face a Depression followed by massive inflation. Fed chairman Ben Bernanke told us in his 2002 speech “Deflation: Making Sure It Doesn’t Happen Here” that a “determined government” has the means to stop deflation, if necessary by use of the “printing press.”—Are you ready to pay $15 million dollars for a hamburger or how about thirty-five billion for an egg as reported in the Black Paradise of Zimbabwe?

Because of corporate scandals, auditing irregularities, insider trading, and CEOs’ excessive salaries and benefits, people have lost confidence in the market and in politics. In the last few months, people (and institutions) have been taking money from their mutual funds in unprecedented amounts. Some have cashed their funds simply to make house and car payments! (What will happen when those cashed-in funds are gone?) Then foreign investors started taking out their money, and while this was happening, the dollar continued a faster plunge. Main Street all over the world is hurting and has been for many months.

Gold is over $1100 heading, some say, for $5,000 as bankruptcies explode, unemployment climbs to 10%, (and the Fed tells us it will be “staying high”), retailers are scared to death and the commercial real estate bubble is about to pop! Look for “ghost” malls across the nation.

When Wall Street panics, Main Street feels the pain. I see a major train wreck in the making or to change metaphors, the sharks have tasted blood and are circling their victims. Get out of the water!

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Illinois has a bigger economy than Greece and so does New Jersey

2010-03-03T05:23:00.004-06:00

Illinois has a bigger economy than Greece and so does New Jersey, New York and definitely California, I would be more worried about the U.S. than Europe - Editor

Barack Obama’s home state of Illinois is near the point of fiscal disintegration. “The state is in utter crisis,” said Representative Suzie Bassi. “We are next to bankruptcy. We have a $13bn hole in a $28bn budget.”

The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. “It’s a catastrophe”, said the Schools Superintedent.

In Alexander County, the sheriff’s patrol cars have been repossessed; three-quarters of his officers are laid off; the local prison has refused to take county inmates until debts are paid.

Florida, Arizona, Michigan, New Jersey, Pennsylvania and New York are all facing crises. California has cut teachers salaries by 5pc, and imposed a 5pc levy on pension fees.

The Economic Policy Institute says states face a shortfall of $156bn in fiscal 2010. Most are banned by law from running deficits, so they must retrench. Washington has provided $68bn in federal aid, but that depletes the Obama stimulus package.

This is not to pick on America. Belt-tightening is the oppressive fact of 2010-2012 for half the world. Hungary, Ukraine, the Baltics and the Balkans are already under the knife. Latvia’s economy may contract by 30pc from peak to trough as it carries out an “internal devaluation”, ie wage cuts, to hold its euro peg.

The eurozone’s fiscal squeeze is well advanced in Ireland. Brussels has told Greece to cut by 10pc of GDP in three years, Spain by 8pc, Portugal by 6pc. Britain must slash soon, or face a gilts strike.

The Bank for International Settlements says Britain needs a primary surplus of 5.8pc of GDP for a decade to stabilise debt at pre-crisis levels, given the ageing crunch as well. The figure is 6.4pc for Japan, 4.3pc for the US and France. It warns of “unstable dynamics”, posh talk for a debt spiral. “Action is needed now.”

Indeed, though cutting too fast would tip the West back into slump and kill tax revenues, solving nothing – a risk that austerity priests rarely acknowledge. Pacing is everything.

Mervyn King, the Bank of England’s Governor, seems strangely alone in facing the implications of this for central banks, and in seeing the absurdity of a recovery strategy where everybody tightens at once and surplus states keep on dumping excess capacity abroad. “I was struck by the mood at the G7, where several of the major economies around the world said quite openly that they were relying on external demand growth to generate growth. That can’t be true of everybody,” he said.

The West risks a slow grind into debt-deflation unless central banks offset fiscal tightening with monetary stimulus – QE, of course – to keep demand alive. Yet the Fed and the European Central Bank are letting credit contract.

Bank loans in the US have fallen at a 14pc rate this year, caused in part by Basel III rules pushing banks to raise capital ratios.

The M3 money supply has fallen at a 5.6pc rate since September. The Fed’s Monetary Multiplier dropped to an all-time low of 0.809 last week.

The contraction of eurozone bank credit to firms accelerated to 2.7pc in January, while M3 fell by a further €55bn. Japan’s GDP deflator has dropped to a record low of -3pc.

These are epic warning signals, with echoes of 1931. Yet the Fed has just raised the Discount Rate. It is winding up liquidity operations, and preparing to reverse QE, even though the housing market has tipped over again. New home sales fell 11pc in January to 309,000 units, the lowest since data began, and 24pc of mortgages are in negative equity.

More…

CNN Poll: Majority says government a threat to citizens' rights

2010-02-27T18:51:00.003-06:00

Fifty-six percent of Americans say the government poses an immediate threat to individual rights and freedoms.

Washington (CNN) – A majority of Americans think the federal government poses a threat to rights of Americans, according to a new national poll.

Fifty-six percent of people questioned in a CNN/Opinion Research Corporation survey released Friday say they think the federal government's become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens. Forty-four percent of those polled disagree.

The survey indicates a partisan divide on the question: only 37 percent of Democrats, 63 percent of Independents and nearly 7 in 10 Republicans say the federal government poses a threat to the rights of Americans.

According to CNN poll numbers released Sunday, Americans overwhelmingly think that the U.S. government is broken - though the public overwhelmingly holds out hope that what's broken can be fixed.

The CNN/Opinion Research Corporation poll was conducted February 12-15, with 1,023 adult Americans questioned by telephone. The survey's sampling error is plus or minus 3 percentage points for the overall survey.

Link...

Greeks Scramble To Pull Out €8 Billion From Local Banks As Greece Responds With Money Control Measures

2010-02-24T23:21:00.004-06:00

We previously wrote about the possibility of a bank run in Greece following unsubstantiated reports that Greek citizens don't trust the Greek financial system all that much anymore, courtesy of the whole bailout and GDP reporting fraud thing. The rumor was not only just confirmed and also quantified: Dow Jones reports that in the past three months Greeks have moved about €8 billion out of local banks "fearing a possible new tax on bank accounts, increased government scrutiny on assets and a run on the banks if Athens is forced to turn to the International Monetary Fund." This represents over a quarter of the money held by private banks in the country. This also represents about €400 billion in total money leaving the system courtesy of fractional reserve banking and the money multiplier. Yet the worst news for Greeks: money controls are coming.

"There is a lot of uncertainty out there," said a senior private banker at a Greek bank. "We've had a number of customers asking to move funds out of Greece, mostly to Cyprus, Luxembourg and Switzerland."

Clients of private banks also fear that Greece may be unable able to raise the EUR54 billion it needs this year to pay back maturing bonds and will therefore have to turn to the IMF for help.

"Some of our clients are concerned about a run on the banks if the IMF gets involved," said another private banker, this one from a foreign bank. "They believe the situation in Greece will get worse before it gets better. There is also very little clarity from the government about its intentions on new tax measures."

"We estimate that €8 billion has moved out of Greece to accounts abroad since December. It's money from bank accounts, stock sales, property sales and other sources. This is pretty substantial considering that there is only €30 billion under management in private banks here," he added.

All is fine and well if this was all: just your plain vanilla run on the bank. But it's not - the Greek response to this capital outflow: upcoming money controls.

Wealthy individuals may have good reasons to be concerned, however. Finance Minister George Papaconstantinou earlier this month urged Greeks with accounts abroad to repatriate their money and said the capital will be taxed at a 5% rate. He said those who choose to keep their money abroad should declare their deposits and pay a tax of 8% for the first six months.

Thereafter he threatened that Greece will use all laws at its disposal, such as double-taxation agreements, to ask foreign banks for information on Greek account holders.

"For us this is the first step towards taxing all accounts in Greece," said the chief financial officer of a major Greek shipping company. "The line is minimum deposits here and moving all assets abroad,"

By Submitted by Tyler Durden
From Zerohedge

Meanwhile In America "What's up with Citibank"

Citi Notice Causes Customer Angst

If a recent notice in your bank statement from Citigroup has you fretting that you won’t get your money out when you need it, the bank has a message for you: Don’t sweat it.

Citi recently sent notices to a large majority of its checking account customers informing them – in no uncertain terms – that the bank has the right to require account holders to provide advanced notice before withdrawing money. The notice had some customers buzzing over whether the cryptic language meant Citi was preparing for an onslaught of customer withdrawals – an old-fashioned, “It’s a Wonderful Life” kind of bank run.

“Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change,” the notice read.

But according to Citi officials there is nothing nefarious behind the notification, which they say amounts to nothing more than a technical requirement for all banks that offer interest on checking account balances. Citi says that when the FDIC began offering unlimited account protection in 2009, the bank converted all of its interest- and promotion-eligible accounts that did not currently pay an interest payment into what is known in bank circles as a Demand Deposit Account to take advantage of the FDIC change.

When the bank moved back to standard FDIC coveragethis year, it converted the accounts back to interest-eligible accounts – known as NOW accounts – triggering the account notification. According to a spokeswoman for Citi, all banks that offer NOW accounts are required to reserve the right to require advanced notice of withdrawals.

“However, we have never exercised this right and have no plans to do so in the future,” according to a statement from the bank explaining the notice.

It was unclear if the notice caused Citi customers to attempt to withdraw funds at a higher rate than normal. However, a person familiar with the notice pointed out that customers would have been notified by their branches that it was a technical matter.

Spokespeople for Bank of America (BAC: 16.21, n.a., n.a.%) and JPMorgan Chase (JPM: 40.87, n.a., n.a.%) did not immediately return calls for comment.

LINK...

Regulators report 27 percent jump in problem banks

2010-02-23T15:25:00.001-06:00

WASHINGTON (Reuters) - The number of "problem" U.S. banks jumped 27 percent during the fourth quarter of 2009 to 702, the highest level since 1993 and a sign the industry's recovery is still shaky, regulators reported on Tuesday.

The Federal Deposit Insurance Corp said the industry overall eked out a profit of $914 million for the quarter, benefiting from a healing economy, but said the improvement was concentrated in the largest banks.

FDIC Chairman Sheila Bair said the profit was a huge improvement over the $37.8 billion loss the industry reported in the fourth quarter of 2008. "It's not that this was a strong quarter. It's simply that everything was so bad a year ago," Bair said in a statement.

Smaller institutions are still struggling with deteriorating loan portfolios, especially with loans tied to commercial real estate. The FDIC set aside an additional $17.8 billion during the fourth quarter for expected bank failures.

Regulators have closed 20 U.S. banks so far this year and 185 since January 2008, as banks continue to struggle with loan portfolios stocked with souring loans.

Link...

It's Over For U.S. Economy

2010-02-23T05:42:00.003-06:00

Buffett’s Partner: ‘It’s Over’ for U.S. Economy

Charlie Munger, Warren Buffett’s longtime business partner in Berkshire Hathaway, warns in a new column that the U.S. economic empire is crumbling before our eyes, thanks to federal debt and poor planning.

In an article penned for Slate.com, Munger uses the form of a parable to explain how Wall Street’s love affair with gambling has destroyed America’s Main Street.

The article leads with this headline: “Basically, It’s Over.”

The Berkshire Hathaway vice chairman describes the economic history of Basicland, which happens to match U.S. history.

Early in its history, debt is unknown except for home mortgages and some consumer loans, and people live within their means. Speculation is discouraged, and commodities markets are small and tightly regulated.

Under this rational system, economic growth skips merrily along at a steady 3 percent, Munger explains.

Taxes are limited and pay for only “essential services” like fire protection, courts, and defense. Most taxes are collected on imports, and government spending matches that tax income. Debt via government bonds is limited.

Then things take a turn for the worse.

“The extreme prosperity of Basicland had created a peculiar outcome: As their affluence and leisure time grew, Basicland’s citizens more and more whiled away their time in the excitement of casino gambling,” Munger writes.

Financial services soon grow to account for too big a portion of the economy, Munger says.

“The winnings of the casinos eventually amounted to 25 percent of Basicland’s GDP, while 22 percent of all employee earnings in Basicland were paid to persons employed by the casinos, many of whom were engineers needed elsewhere.”

Then, a shock: Imported energy costs rise, and low-cost labor competition from abroad appears, Munger writes.

“Suddenly Basicland had to come up with 30 percent of its GDP every year, in foreign currency, to pay its creditors,” Munger writes.

The U.S. deficit — just the gap between spending and income in one year — is projected to hit $1.6 trillion in 2010. Total debt is project to exceed 100 percent of GDP starting in 2011.

In the parable, Munger strongly suggests that the United States take seriously the campaign of Reagan-era Fed Chairman Paul Volcker, who wants the big banks to cease pretending to be banks if they expect the freedom to trade securities on the side.

“He suggested that Basicland should strongly discourage casino gambling, partly through a complete ban on the trading in financial derivatives, and it should encourage former casino employees — and former casino patrons — to produce and sell items that foreigners were willing to buy,” Munger writes.

As the parable ends, none of the politicians listen, and Basicland turned into “Sorrowland,” Munger concludes

LINK ...

Doomsday is here for Illinois

2010-02-23T05:31:00.001-06:00

‘Doomsday is here for the state of Illinois’

It will take a massive tax increase — and $2 billion more in cuts — to reach solvency, group says

SPRINGFIELD — To become solvent, the state must enact the largest tax-increase package in Illinois history, whack another $2 billion from already starved government programs and wrest major financial concessions from the state’s unionized work force, a nonpartisan government watchdog contends.

In a new analysis of Illinois’ “horrific” finances, the Civic Federation lays out the painful choices awaiting Gov. Quinn and the Legislature as they stare down an epic $12.8 billion budget deficit that has choked the flow of state cash to public universities and schools, transit systems and social-service agencies to the point of economic collapse.

Doomsday is here for the State of Illinois,” said Laurence Msall, the organization’s president.

The Civic Federation recommends that the state income tax be increased from 3 percent to 5 percent for individuals, that retirees’ pension and Social Security checks be taxed for the first time at the same rate as workers’ paychecks, and the tax on cigarettes be raised by another $1 per pack. The group also favors getting rid of $181 million in corporate tax breaks.

Those tax increases, which would generate more than $8 billion, should come only if the state first can persuade its unionized employees to pay more toward their pensions and health care, cut pension benefits for new workers and reduce overall spending by $2.1 billion to 2007 levels. Medicaid programs and elementary and secondary schools would be spared from those cuts to avoid sacrificing federal stimulus dollars, Msall said.

“This is an economically reasonable approach to a horrific situation,” he said.

But AFSCME Council 31, state government’s largest union, has shown no interest in having its members — who have accepted furloughs and deferred pay increases — pay more toward their pensions and health care or in establishing what is known as a two-tier pension system where new employees would receive a less-generous retirement package than existing workers.

“Since this proposal to slash $2 billion exempts education and health care, it would mean reducing human services and public safety,” AFSCME spokesman Anders Lindall said. “We think that’s reckless, especially in a recession that’s driving demand for public services up, not down.”

More…

Bad economies in states to get worse: Governors

2010-02-22T13:24:00.007-06:00

Bad economies in states to worsen: Governors

WASHINGTON (Reuters) – The already gloomy conditions of states’ economies are set to worsen, according to preliminary survey findings from the National Governors Association released on Saturday.

“The situation is fairly poor for a lot of states around the country. In fact, most states,” Vermont Governor Jim Douglas, who is chairman of the association, said at a press conference at its annual meeting.

“What we’re finding out from a fiscal standpoint is that the worst is yet to come,” Douglas said.

In a survey conducted last week of 45 of the 50 states, the group found that states have $18.8 billion of budget gaps yet to be closed in fiscal 2010. This comes after they have already imposed measures to eliminate budget imbalances totaling $87 billion in the fiscal year, which for most started last summer.

In the budgets they are drafting for fiscal 2011, states foresee shortfalls of $53.6 billion and for fiscal 2012 $61.6 billion.

“Economists have declared the national recession over. But for those who are still unemployed, for those who have lost their homes, it’s clear that as a nation we have a long way to go,” said Douglas, who added that states’ revenues have plummeted for four quarters in a row.

States’ economic recoveries usually lag national recoveries because of state governments’ increased spending on help for the unemployed and declines in tax payments.

All states except for one, Vermont, are required to balance their budgets, so during the recession they have drastically cut spending on basic programs, laid off workers and boosted revenue through raising taxes and fees.

The $787 billion stimulus plan the U.S. Congress passed a year ago included the largest transfer of money from the federal government to states in the nation’s history. But for many states, most of its funding will run out by December.

New Jersey Governor Chris Christie, also at the press conference, said the stimulus had delayed problems but not solved them.

Douglas said the governors will press President Barack Obama for more help when they visit the White House on Monday.

The survey also found that this fiscal year 38 states are bringing in far less revenue than what they had estimated at the beginning of the year and 21 states had to cut their budgets by more than 5 percent.

Just as states are gasping for money, they are confronting a crisis in healthcare, said Montana Governor Brian Schweitzer.

Over the weekend the governors will discuss how to reduce healthcare costs as the federal push to reform the country’s health insurance and medical treatment systems bogs down in Congress.

“I expected… we would be talking about implementing a new national health plan,” Douglas said about preparing for the meeting. “Here we are. It hasn’t happened.”

The healthcare program for those with low incomes, Medicaid, is jointly administered by the states and the federal government and eats up large parts of most states’ budgets. As people have lost their jobs and employee-sponsored health insurance during the longest and deepest recession since World War Two, they have turned to Medicaid and further strained the system.

LINK...

FDIC Leases Large Office Space

2010-02-19T03:59:00.009-06:00

The Federal Deposit Insurance Corp. is opening a satellite office in Schaumburg that will accommodate up to 500 temporary staffers and contractors.

The banking regulator recently began running recruiting advertisements for the new office, saying it’s looking for people with skills and experience in such areas as loan management, contract oversight and asset marketing. Its Web site lists more than 330 job openings in Schaumburg.

The FDIC, which has a downtown office, said the new location will open in March. It will manage receiverships and liquidate assets from failed Midwest banks.

That suggests that the pace of Illinois bank failures is likely to remain brisk. In 2009, regulators seized 21 banks statewide, topped only by Georgia.

The FDIC’s new office is at 200 N. Martingale Road. It said it’s occupying 105,700 square feet of the 150,705-square-foot building, or seven out of its 11 floors. It’s a three-year lease with an option to renew one to two years.

The FDIC has similar offices in Irvine, Calif., and Jacksonville, Fla., and the number of bank failures in those states picked up dramatically after the FDIC opened those quarters.

In 2008, only about a half-dozen banks failed in California despite being home to some of the nation’s most overheated real estate markets, according to bank data tracker SNL Financial. In 2009, coinciding with the opening of a West Coast FDIC office, the failure numbers tripled, SNL pointed out. Similarly, after adding its Jacksonville office, the regulator had more resources to handle collapsing lenders, and bank seizures in Florida also became more common.

LINK...

Real American News

2009-05-13T23:46:00.019-05:00

Ignoring less important matters like our troops fighting and dying in Afghanistan, the Iranian nuclear threat, and other such matters, the Vacationer in Chief, Barack Obama, has announced plans to travel to Copenhagen to persuade the International Olympic Committee to choose Chicago as the site of the 2016 Summer Games. Canada Free Press Article...

Public Education or Indoctrination?

N.J. Principal Unapologetic for Videotape of Kids Praising Obama, Parents Say...
This one is in 6000 schools Already...Leftist type Green peace Stuff..

Notice how she portrays the government with a tank, notice how she doesn't mention that America has more trees and lawns than it ever had in it's history, notice the fat evil corporation, is half of America employed by corporations? Hmmm.. I though the military budget was only 20 percent of the Gov, aren't the social programs the biggest portion of taxes? Why would are public schools not challenge these facts? Public Education or Indoctrination?

"Liberty News, the micro media Minutemen of the Truth"

"The mainstream media's omission of an objective opposing view can be considered the commission of a lie"
"Eventually, the macromedia will lie it's self out of existence"