bank of america – The Burning Platform [PDF]

The Burning Platform Tag: bank of america

What Happened When I Tried to Take $1,500 Cash Out of Bank of America – Bank Holiday is Near Guest Post by Dave Hodges A funny thing happened on my way to writing on a very controversial topic. It just so happens that I inadvertently made my own news. To those who expected to read how the criminal elite are going stop Donald Trump short of singular assassination plot, that story will be printed on this site, tomorrow. Yesterday, I went to Bank of America to withdraw $1500 cash. You would of thought I had a sign around my neck saying that I was a heroin dealer. The teller went and got a bank officer who began to question me:

Bank Officer: Sir, what are you using the money for? Me: I am using it for a legal personal matter. Beyond that, it is none of your business. Bank Officer; Sir, we can put a hold on your account. Me: Mr. Bank Officer, I will remove my entire account and deposit it to another bank if I do not have my money in five minutes and I want my money in $100 bills. Bank Officer: Sir, your threats will not work here and if you are not cooperative and fill out this form, I will call the police and notifiy the IRS. (He wanted me to fill out a Cash Transaction Report which is not required unless your withdrawing $10,000 or more) Me: Mr. Bank Officer, I refuse to fill out your report because it is not required unless I withdraw $10,000 and your may call who you want…. You obviously do not know the law and who I am. Between my writing and broadcasting, I reach over 2 million people per month. I would say that statistically about 400,000 people have B of A accounts who listen to me or read my articles. Before the end of this month, you will see sizable withdrawals based upon my recantation of this conversations in the public domain. By the way, I am recording this. The bank officer walked away and disappeared and then came back in a few moments. He instructed the teller to process my request. Bank Officer: I have reviewed your account history and you have been an excellent customer. You are obviously using the money for honorable purposes. I apologize for any misunderstanding. Me: Thank you. The purposes for the use of my money, is none of your business, it is a matter for law enforcement. You should think about this when you try to bully the next guy. Continue reading

Share this: Facebook 1

Twitter

Administrator

Reddit

November 29, 2016

WhatsApp

Google

Economy, Politics, Social Issues

Email

bank holiday, bank of america, cash withdrawal, Dave Hodges, IRS, SAR

29 Comments

TOO BIG TO TRUST

Courtesy of: Visual Capitalist Continue reading

Share this: Facebook

Twitter

Administrator

Reddit

January 26, 2016

WhatsApp

Economy

Google

Email

bank of america, Citigroup, JP Morgan, Too Big To Trust, Wall Street banks, Wells Fargo

13 Comments

THEY’RE GONNA NEED A BIGGER BALANCE SHEET Driving home from work on Friday night I found it terribly amusing listening to the “business journalists” on the local news station trying to explain the 531 point plunge in the Dow and the 1,105 point plummet from the Tuesday high. The job of these faux journalist mouthpieces for the status quo is not to report the facts, analyze the true factors underlying the market, or seek the truth. Their job is to calm the masses, keep them sedated, and paint the rosiest picture possible. The brainless twit who reported the stock market bloodbath immediately went into the mode of counteracting the impact of what was happening. She said the market is overreacting, as the country has strong job growth, low inflation, a strongly recovering housing market, and an improving economy. The fact that everything she said was a complete and utter falsehood was exacerbated by her willful ignorance of the Fed created bubble leading to the most overvalued stock market in history. How can these people pretend to be business journalists when they haven’t got a clue about stock market valuations and just say what they are told to say? Anyone who listens to a mainstream media pundit, talking head, or spokes bimbo deserves the reaming they are going to receive. They are paid to lie, obfuscate, spin, and propagandize on behalf of their corporate media executives, who are beholden to Wall Street bankers, mega-corporations, and the government for their advertising dollars. The mainstream media is nothing but entertainment for the masses, part of the bread and circuses designed to distract the dumbed down, iGadget addicted, ignorant masses. The entire stock market bubble has been created and sustained by the Federal Reserve and their QE and ZIRP schemes to prop up insolvent Wall Street banks, enrich corporate executives, and produce the appearance of a recovering economy. The wealth was supposed to trickle down to the masses, but the trickle has been yellow in appearance and substance. The average American is far worse off today than they were in 2007, with the Greater Depression Part 2 underway. Continue reading

Share this: Facebook

Twitter

Administrator

Reddit

August 23, 2015

WhatsApp

Google

Economy, Politics, Social Issues

Email

$300000 speeches, $4.5 trillion, bank of america, Ben Bernanke, CEOs, CNBC, collapse, correlation, Deep

State, Fed Balance sheet, Interest rates, Janet Yellen, Ludwig von Mises, QE1, QE2, QE3, QE4, S&P 500, stock buybacks, Stock market crash, ZIRP

37 Comments

THE DAY THE SPINELESS FASB ACCOUNTANT WEENIES AGREED TO ALLOW WALL STREET BANKS TO REPORT FRAUDULENT FINANCIAL STATEMENTS

The captured corporate MSM is celebrating the six year anniversary of when the stock market bottomed in March 2009. They will spin a false narrative of Bernanke, Obama and Geithner saving the world with TARP, QE, and the $800 billion Porkulus bill. What great heroes. Bernanke now gets $300,000 for a lunchtime speech at Bank of America gatherings. He is raking in north of $10 million per year now. He made $200,000 per year as the Fed Chairman. His wisdom must be on par with Jesus Christ to get $300,000 for a one hour speech. Bernanke’s Sermon on the Mount tour:

The millions he is getting paid by the Wall Street banks for speeches isn’t a payoff. Right? Bernanke and Geithner stopped the market from falling in March 2009 by threatening the accounting geeks at the FASB and forcing them to allow fraudulent reporting by the insolvent Wall Street banks. The crisis ended – precisely – on March 16, 2009, when the Financial Accounting Standards Board abandoned FAS 157 “mark-to-market” accounting, in response to Congressional pressure from the House Committee on Financial Services and threats from Bernanke and Geithner on March 12, 2009. That change immediately removed the threat of widespread insolvency by making insolvency opaque. Mark to fantasy was born. Profits for everyone!!! The fix was in. Every Wall Street bank was insolvent in March 2009. Citicorp and Bank of America were dead. There were hundreds of billions in worthless toxic mortgage securities, derivatives, auto loans, and credit card debt sitting on their books. FAS 157 required them to price those assets at what they could sell them for in the market. You remember free market capitalism? Something is worth whatever an independent party is willing to pay. The fat cats love free market capitalism when they are making billions. Not so much when they blow up the financial system and are faced with the consequences of THEIR actions. Continue reading

Share this: Facebook

Twitter

Administrator

Reddit

March 9, 2015

WhatsApp

Google

Economy, Politics, Social Issues

fantasy, mark to market, Wall Street

Email

bank of america, Bernanke, Citicorp, Congress, FAS 157, FASB, fraud, Geithner, March 2009, mark to

21 Comments

PIN MEET HOUSING BUBBLE 2.0 Housing bubble 2.0 just met Pin 2.0

The 30 Year U.S. Treasury bond yield hit 2.35% yesterday. That is the lowest rate in U.S. history for the 30 Year Treasury. During the deepest darkest depths of the recession in March 2009, after the stock market had fallen over 50%, the yield was 3.5%. One year ago it was yielding 4.0%. Long term interest rates are not controlled by Yellen. They reflect the economic prospects of the country. When they are rising it means the economy is doing well. When they are plummeting to all time lows, the economy is either in recession or headed into recession. Take your pick. No amount of government data manipulation, feel good propaganda spewed by the captured mainstream media, or Ivy League educated Wall Street economist doublespeak, can change the fact this economy is in the dumper and headed much lower. The Greater Depression is resuming its downward march toward inevitable war. ust30low

KBH SEES 1Q BOTTOM LINE ABOUT BREAK-EVEN (against expectations of a 17c rise!) KB HOME CFO SAYS FIRST-QUARTER MARGINS EXPECTED TO BE DOWN KB HOME PULLED OUT OF `COUPLE’ HOUSTON LAND DEALS, CEO SAYS LENNAR CFO SAYS MARGINS ARE POISED TO NARROW ON LESS PRICING POWER LENNAR GROSS MARGIN DECLINED & SALES INCENTIVES GREW LENNAR CEO SAYS “ACROSS THE BOARD, WE’RE SEEING INTENSIFIED COMPETITION AS BUILDERS GO OUT AND CHASE VOLUME” KB Home had revenues of $2.4 billion in 2014. They are one of the largest home builders in the country. It’s stock has dropped 30% in the last few days. It’s down 40% from its February 2014 high. It’s down 85% from its 2005 high. It had $9 billion of revenues and delivered 60,000 homes in 2005. Then Pin 1.0 popped the first bubble. Revenues collapsed to $1.3 billion and they lost hundreds of millions from 2007 through 2012. Lennar had revenues of $7.0 billion in 2014. They are the largest home builder in the country. It’s stock has dropped 9% this week. It had been trading at a seven year high, but is still trading 33% below its 2005 bubble high. It had $14 billion of revenues and delivered 42,000 homes in 2005. Then Pin 1.0 popped their bubble. Revenues imploded to $3 billion and they also lost hundreds of millions from 2007 through 2012. Their admissions earlier this week are proof Bubble 2.0 has met Pin 2.0. KB Home’s 85% increase in revenue and Lennar’s 130% increase in revenue since 2011 have been nothing but a Federal Reserve/Wall Street/U.S. Treasury engineered scheme to repair the balance sheets of the insolvent Too Big To Trust Wall Street banks. The financial industry oligarchs and their servile lackey puppet politicians decided an easy money, Wall Street created scheme to boost home prices would benefit the .1% and restore some of their fraudulently acquired wealth. It isn’t a coincidence home prices rose in parallel with the Fed’s QE programs. And it isn’t a coincidence the bubble is rapidly deflating now that QE3 is over. The fraudulent nature of the supposed housing recovery can be deciphered by analyzing a few pertinent data points. 30 year mortgage rates were in the 5% to 6% range during the first bubble. Mortgage rates have been consistently below 4% for the last three years. In a healthy market driven economy, these low rates should have brought in first time home buyers and led to a sustainable long-term recovery.

Instead, the number of homes bought by first time buyers has languished at record low levels. The majority of homes sold in 2011 and 2012 were distressed foreclosures and short sales, and the vast majority of sales in the last two years have been to Federal Reserve financed Wall Street investors, Chinese billionaires and fast buck flippers. New home sales of just above 400,000 five years into an economic recovery are at previous recession lows, despite record low mortgage rates. They languish 65% below 2005 levels, when KB Home and Lennar were minting money. Existing home sales of 5 million are back at 1999 levels and 30% below the 2005 highs. This pitiful result is after $3.5 trillion of QE, extremely low mortgage rates, and tremendous hype from the NAR and the corporate MSM (It’s always the best time to buy).

The falsity of the housing recovery storyline can be seen in the fact that mortgage applications linger at 1995 levels, even though mortgage rates are 400 basis points lower than they were in 1995. A critical thinking individual might ask how home prices could rise by 20% since 2012 even though mortgage purchase applications are 20% lower than they were in 2012 and 65% below 2005 levels. The answer is they couldn’t have risen by 20% without massive monetary manipulation and insider deals between Wall Street banks, Wall Street hedge funds, FNMA, Freddie Mac, The Fed, and the U.S. Treasury. gt10mbap

You see, average Americans buy houses not as an investment, but as a place to live. They save enough for a down payment by spending less than they earn, and then make monthly payments for 30 years from their rising household income. Of course, that was the old days. Real median household income is exactly where it was in 1995. It is currently below the level of 1989. Average Americans have made no headway in 20 years. The median price of a home in 1995, according to the Census Bureau, was $128,000. The median price of a home today is $281,000. When prices go up 120% and your real income remains stagnant, even record low mortgage rates is just pushing on a string. With real wages continuing to fall, young people saddled with a trillion dollars of student loan debt, the full impact of the Obamacare neutron bomb (kills small business, doctors and jobs, but not insurance conglomerates or government bureaucracy) just detonating, and an economy clearly going into the tank, there is absolutely no possibility of a real housing recovery in the foreseeable future. nnnnffffff

The Too Big To Trust banks have consistently accounted for 35% to 55% of all mortgage originations in the U.S. over the last four years. Wells Fargo is the undisputed leader. All of these banks have reported dreadful financial results this week, with plunging revenues and profits, even with accounting shenanigans like relieving loan loss reserves and marking their balance sheets to fantasy rather than true market values. In the midst of a supposed housing recovery, with mortgage rates at historic lows, the largest mortgage originator in the world, saw their mortgage originations FALL by 12% over last year. They are down 65% from two years ago. JP Morgan and Citigroup also saw their mortgage businesses contracting. These banks have been firing thousands of people in their mortgage divisions. This is surely a sign of a healthy growing housing market. Right?

Essentially, the entire housing recovery storyline has revolved around the Federal Reserve providing free money to Wall Street banks, who then withheld foreclosures from the market, sold them in bulk at inflated prices to Wall Street hedge funds like Blackstone, who then created a nationwide rental business, driving prices higher. FNMA and Freddie Mac did their part by selling their bulk foreclosures to the same connected hedge funds. The average person had no opportunity to bid on foreclosed homes and reap the benefits of lower prices. Blackstone has since created a new derivative, by packaging their rental income streams into an “investment” to sell to muppets. Their rental properties are concentrated in the previous bubble markets of Arizona, California, Florida, and Nevada. What a beautiful business concept. Free money from their Federal Reserve sugar daddy, kicking people out of their homes and then renting their houses back to them, driving prices higher by restricting supply and stopping new household formations, double dipping by creating a new exotic subprime investment opportunity, and then exiting stage left before it all blows sky high again. Continue reading

Share this: Facebook

Twitter

Administrator

Reddit

January 16, 2015

WhatsApp

Google

Economy, Politics, Social Issues

Email

bank of america, Ben Bernanke, Blackstone, buy and rent, Citigroup, depression, Derivatives, Energy,

existing home sales, Federal Reserve, FNMA, foreclosures, fraud, Freddie Mac, Housing bubble, housing bust, jobs, JP Morgan, KB Home, Lennar, mortgage originations, Mortgage rates, Muppets, New home sales, oil prices, real household income, Recession, scheme, shysters, Texas, Too Big To Trust, Wall Street, Wells Fargo

26 Comments

TAKE IT TO THE BANK

Reports like the recent one from SNL Financial – Branch Networks Continue to Shrink really get my goat. As I travel the increasingly vacant highways of Montgomery County, PA I’m keenly aware of my surroundings. If I were a foreigner visiting for the first time, I’d think Space Available was the hot new retailer in the country. I’ve detailed the slow disintegration of our suburban sprawl paradise in previous articles: Available Are you Seeing What I’m Seeing? More than 30 Blocks of Grey and Decay Extend & Pretend Coming to an End Thousands of Space Available signs dot the bleak landscape, as office buildings, strip malls, and industrial complexes wither and die. Gas stations are shuttered on a daily basis as the ongoing depression results in less miles being driven by unemployed and underemployed suburbanites. At least the Chinese “Space Available” sign manufacturers are doing well. The only buildings doing brisk business are the food banks and homeless shelters.



The sad part is that I live in a relatively prosperous county with a low level of SNAP recipients and primarily occupied by a white collar college educated populace. If the clear downward spiral in my upper middle class county is an indication of our country’s path, the less well-off counties across the land must be in deep trouble. While hundreds of thousands of square feet of retail, restaurant, office and industrial space have been vacated in the last six years, the only entities expanding in my area have been banks, drug stores, municipal buildings and healthcare facilities. I have been flabbergasted by what I’ve viewed as a complete waste of resources to create facilities that weren’t needed and wouldn’t be utilized. I have seven drug stores within five miles of my house. I have ten bank branches within five miles of my house. While two perfectly fine older hospitals in Norristown were abandoned, a brand new $300 million super deluxe, glass encased Einstein Hospital palace was built three miles away by a barely above junk bond status non-profit institution. None of this makes sense in a contracting economy. This is another classic case of mal-investment spurred by the Federal Reserve easy money policies, zero interest rates, and QEternity. Cheap money leads to bad investments. I’m all for competition between drug store chains and banks. CVS, Walgreens, and Rite Aid are the three big chains in the country. I have my pick of multiple stores close to my house. There are clearly too many stores competing for a dwindling number of customers, with a dwindling supply of disposable income. The only reason Rite Aid is still in the picture is the easy money policies of the Federal Reserve. They have been teetering on the verge of bankruptcy for the last five years, but continue to get cheap financing from the Wall Street cabal, who would rather pretend they will get paid, than write-off the bad debt. Who in their right mind would continue to lend money to a company with $6 billion in debt, NEGATIVE $2.3 billion of equity, and losses exceeding $2 billion since 2008? They are the poster child for badly run businesses that over expanded, took on too much debt and should be liquidated. There are over 4,600 zombie Rite Aid stores littering the countryside waiting to be put out of their misery. rite-aid-corner-abandoned



Rite Aid will never repay the $6 billion of debt. They know it. Their auditors know it. Their Wall Street lenders know it. The Federal Reserve Bank regulators know it. Anyone with a functioning brain knows it. Tune in to CNBC for those who are paid to keep clueless investors from knowing it. Interest rates that actually reflected risk and weren’t manipulated to an artificially low level by the Federal Reserve would make financing for a dog like Rite Aid a non-starter. Creative destruction would be allowed to work its magic, with winners separated from losers. Instead Rite Aid continues as a zombie entity, barely surviving for now. This exact scenario applies to J.C. Penney, RadioShack, Sears and a myriad of other dead retailers walking. Rather than suffering the consequences of appalling management judgment, dreadful strategic decisions, and reckless financial gambles, they have been allowed to remain on life support compliments of Bernanke, his Wall Street chiefs, and the American taxpayer. In a truly free, non-manipulated market the weak would be culled, new dynamic competitors would fill the void, and consumers would benefit. Extending debt payment schedules of zombie entities and pretending you will get paid has been the mantra of the insolvent zombie Wall Street banks since 2009. The Federal Reserve is responsible for zombifying the entire country. And it wasn’t a mistake. It was a choice made by those in power in order to maintain the status quo. The fateful day in March 2009 when the pencil pushing lightweight accountants at the FASB rescinded mark to market accounting rules gave birth to zombie nation. And not coincidently, marked the bottom for the stock market. Wall Street banks were free to fabricate their earnings, pretend they didn’t have hundreds of billions in bad loans on their books, and extend the terms of commercial real estate loans that were in default. With their taxpayer funded TARP ransom, ability to borrow at 0% from Uncle Ben, and the $3 trillion of QE cocaine snorted up their noses in the last four years, the mal-investment, fraud, and idiocy of the Wall Street drug addicts has reached a crescendo. Commerce Bank

The mal-investment by zombie drug store chains has only been exceeded by the foolish, egocentric, insane bank branch expansion by the Too Big To Trust Wall Street CEOs. In the last ten years dozens of bank branches have been built in the vicinity of my house and across the state of Pennsylvania. These gleaming glass TARP palaces are on virtually every other street corner across Montgomery County. Stunning, glittery, colorful branches stuffed with bank employees pretending to loan money to nonexistent customers. They have become nothing but a high priced marketing billboard with an ATM attached. By 2010, the number of bank branches in this country had reached almost 100,000. The vast majority are run by the usual insolvent suspects: Wells Fargo – 6,500 J.P. Morgan – 6,000 Bank of America – 5,700 The top ten biggest banks, in addition to holding the vast majority of deposits, mortgages and credit card accounts, operate 33% of all the bank branches in the country. The very same banks that have paid out $66 billion in criminal settlement charges over the last three years and have incurred $103 billion of legal fees to defend themselves against the thousands of actions brought by victims for their criminal misdeeds, decided it was a wise decision to open new bank branches from 2007 through 2010. Only an Ivy League educated MBA could possibly think this was a good idea.

It was almost as if the CEO’s of the biggest Wall Street banks didn’t care about pissing away the $2.5 million to build the average 3,500 square foot bank branch, which would require $30 million of deposits to breakeven. This level of deposits isn’t easy to achieve when your customers are unemployed due to your bank destroying the American economy, broke due to their real household income declining by 10% over the past fourteen years, and your bank paying them .15% on their deposits. It also probably doesn’t help when you charge them $3 every time they withdraw their own money from your bank and you charge them $25 when their bank balance falls below $1,000 because they just got laid off from Merck on Christmas Eve. It is now estimated that one-third of all bank branches in the country lose money. Who can afford to run something that consistently losses money, other than our government? Wall Street bankers can when the taxpayer is footing the bill and Bernanke/Yellen subsidizes their mal-investment by lending to them at 0%, providing them $2.5 billion per day of QE play money, and paying them $5 billion per year in interest to park the excess reserves that aren’t getting leant to small businesses and consumers at their thousands of gleaming bank branches. Hasn’t one of the thousands of highly educated MBA vice presidents occupying offices at the Too Big To Control Wall Street banks explained to Stumpf, Dimon and Monyihan that bricks and mortar are dead? A new invention called the internet has made in-person banking virtually obsolete. Why does anyone need to go into a bank branch in this electronic age? I’ve been in my credit union branch five times in the last ten years, twice for a refinance closing on my home and a couple times to get a certified check. With ATM machines, direct deposit and on-line bill paying, why would the country need 100,000 physical bank locations? I pay 90% of my bills on-line. If I need cash, I hit the ATM at Wawa, where there are no ATM fees (my credit union doesn’t charge me to get my own money). The only people who go into bank branches on a regular basis are old fogeys that don’t trust that new-fangled internet. The older generations are dying out and the millennial generation has no need for bank branches. Their iGadgets function as their bank connection. Plus, since they don’t have jobs or money, a bank account at the local bank branch of J.P. Morgan seems a bit trite. The writing had been on the wall for a long time, but the reckless bank executives continued to build branches in an ego driven desire to outdo their equally irresponsible competitor bank executives. Now the race is on to see which banks can close the most branches. Bank consultant Jim Adkins succinctly sums up the pure idiocy of physical bank branches: “There’s almost nobody in the branches. You could shoot water balloons all over the place and not hit anybody.” It seems my humble state of Pennsylvania leads the pack in closing branches in the past year, with 149 abandoned and only 43 opened. Only two states in the entire country had more branch openings than closings.

After shuttering 2,267 branches in 2012, the industry is on track to closing another 2,500 in 2013. Shockingly, the leader of the Wall Street zombie apocalypse, Bank of America, led the pack in bank branch closings with 194 in the last year. Staying true to his hubristic arrogance, Jamie Dimon actually opened 62 more branches than he closed in the last year, despite his upstanding institution having to pay tens of billions in fines, settlements and pay-offs for their criminal transgressions.

There are now 93,000 bank branches remaining in this country, and one third of them don’t generate a profit. That percentage will grow as the older generations rapidly die out and are replaced by the techno-narcissists who never leave their family rooms. Online banking already accounts for 53% of banking transactions, compared with 14% for in-branch visits. Younger bank customers increasingly prefer online and mobile banking, as advancing technology enables them to make remote deposits, shop for loans and manage accounts more efficiently from their desktops or smartphones. This trend will only accelerate in the years to come. Banking industry profits reached a record level of $141 billion in 2012 as more vacancy signs appeared on Main Street. Now that the Wall Street cabal have syphoned every ounce of blood from their customers/victims through ATM fees, overdraft fees, minimum balance fees, credit card fees, late payment fees, and paying no interest on deposits, they are forced to focus on the $300,000 average loss per bank branch. QE and ZIRP might not last forever. Yeah right. AlixPartners, a New York consulting firm, expects the number of bank branches to drop to 80,000 over the next decade. They are wrong. They have failed to take into account the lemming like behavior of Wall Street banks. As their accounting gimmicks to generate fake profits dissipate, the increasingly desperate insolvent zombie banks will rapidly vacate their prime corner locations in droves. With approximately 30,000 locations already generating losses, the Wall Street MBAs will be closing branches quicker than you can say “mortgage fraud”. There will be less than 70,000 branches within the next five years. That means another 20,000 to 30,000 Space Available signs going up on Main Street. That means another 200,000 to 300,000 neighbors without jobs. But don’t worry about Jamie Dimon and the rest of the Wall Street bankers. They’ll be just fine. In addition to being endlessly fed by the Fed, they’ll get creative and charge their customers a new bank branch access fee of $50 for the privilege of entering one of their few remaining outlets. By now we should know how cash flows to Main Street in this corporate fascist paradise.

Do your part to starve the beast. Move your bank accounts to a local credit union. Don’t support criminals.

Share this: Facebook

Twitter

Administrator

Reddit

November 17, 2013

WhatsApp

Google

Economy, Politics, Social Issues

Email

accounting fraud, bank of america, banks, Bernanke, branches, closings, CVS, default, FASB, Federal

Reserve, fraud, Jamie Dimon, JP Morgan, Main Street, mal-investment, mark to market, Moynihan, openings, QE, Rite Aid, SNL Financial, Space Available, Stumpfl, Too Big To Control, Too Big To Trust, vacant, Walgreens, Walking Dead, Wells Fargo, Yellen, ZIRP, zombie apocalypse, Zombies

77 Comments

APPARITIONS IN THE FOG



After digesting the opinions of the shills, shysters and scam artists, I am ready to predict that I have no clue what will happen during 2013. The weekend weather last week was a perfect analogy for attempting to forecast the future. The professional highly educated meteorologists predicted sunny warm weather, just as the PhD Wall Street paid economist mouthpieces assure the multitudes 2013 will be the year when zero interest rates and $1.2 trillion deficits will finally lead to sunny economic skies. Instead, the weekend was overcast and damp. As I was writing this article and watching the miraculous Baltimore Ravens comeback against Denver, I received a two minute warning from my wife. I had to pick up my son and his buddies at the Montgomery Mall. As I pulled the car out of the garage, I backed out into fog that was thicker than pea soup. I’ve driven the roads to the Montgomery Mall hundreds of times, but the fog was so thick I couldn’t see ten feet ahead. I drove hesitantly, wondering what might be just over the horizon or what might dart out from a side street. I see 2013 as a year of maneuvering through thick fog with startling apparitions lurking to surprise us and force a deviation in our normal course. As I proceeded cautiously through the murky mist there were few cars on the roads and the strip centers and fast food joints resembled haunted houses and grave yards. I expected to see Dracula, Frankenstein’s monster, and Wolfman panhandling on the corners. The fog of uncertainty is engulfing the nation, making consumers hesitant to spend and businesses reluctant to hire or invest. It was like being in a commercial real estate horror film, with SPACE AVAILABLE, NOW LEASING, and STORE CLOSING signs startling me everywhere I turned. The trip took a spooky turn as I passed branches of those zombie banks – Bank of America and Citigroup. They don’t even know they’re already dead. I finally arrived at the Mall passing thousands of empty parking spaces with a few cars huddled close to the zombie starring in Night of the Retailing Dead – Sears. In the miasma, the few visitors appeared to be automaton like consumers programmed to shuffle through the mall and buy things they don’t need with money they don’t have. To say the road ahead for this country in 2013 is foggy would be an epic understatement. Let’s hope it doesn’t have a Nightmare on Elm Street like ending.

Virtually all of the mainstream media, Wall Street banks and paid shill economists are in agreement that 2013 will see improvement in employment, housing, retail spending and, of course the only thing that matters to the ruling class, the stock market. Even among the alternative media, there seems to be a consensus that we will continue to muddle through and the day of reckoning is still a few years off. Those who are predicting improvements are either ignorant of history or are being paid to predict improvement, despite the overwhelming evidence of a worsening economic climate. The mainstream media pundits, fulfilling their assigned task of purveying feel good propaganda, use the 10% stock market gain in 2012 as proof of economic recovery. The facts prove otherwise: Real GDP, using a dramatically understated inflation rate, has barely grown by 1% in 2012. Using a true measure of inflation, the GDP was -2% during 2012. Even this pitiful growth was generated by 0% interest rate deals for subprime auto loans through Ally Financial (85% owned by you the taxpayer) and 7 year 0% home furnishing financing deals through GE Capital and the other government subsidized Too Big To Control Wall Street banks. The Federal government chipped in by guaranteeing FHA subsidized 3% down payment loans on houses and handing out billions in loans to students so they can find themselves, keep the unemployment rate down, get drunk, and if they graduate – enter debt servitude for decades.

The number of people who have left the workforce since last December (2.2 million) almost matched the number of newly employed (2.4 million), as the labor participation rate has collapsed to a three decade low of 63.6%. The propagandists attempt to peddle this dreadful condition as a function of Baby Boomers retiring. This is obliterated by the fact the 55 to 69 age bracket has added 4 million jobs since Obama became president, while the younger age brackets have lost 3 million jobs. The working age population has grown by 13 million since 2007 and there are 4 million less people employed.

Another 1.5 million Americans were forced onto food stamps during 2012, bringing the total increase to 17 million since Obama assumed office. With 47.5 million depending on assistance to feed them, a full 20% of all households in the U.S. are dependent on this program, costing taxpayers $76 billion, versus $34 billion in 2008. Another 4.8 million have joined the ranks of the disabled since 2009, with a dramatic surge when the 99 week unemployment benefits began to run out. These trends are surely signs of recovery.

Real average hourly earnings were flat in 2012, and have fallen 1.5% since Obama became president. The average middle class worker is making less than they were forty years ago. Using a true measure of inflation would reveal the true devastation wrought on the middle class. As the things we need (food, energy, shelter, education, healthcare) have grown more expensive and the things we are brainwashed to buy (iGadgets, HDTVs, luxury autos, bling) by the masters of propaganda have been made easily accessible through credit, the middle class has enslaved themselves in chains of debt. The declining average wages since 1973 have forced families to have both spouses work outside the home, with the consequence of more divorces, children raised by strangers, and the proliferation of depressed human beings. The lost real income has been replaced by credit card, auto, mortgage, and student loan debt.

The reason Bernanke, Geithner, Obama, Wall Street, corporate titans, and media pundits focus their attention on the stock market is because they are looking out for their fellow 1%ers. The working middle class, once the backbone of this country, own virtually no stocks. The 88% stock market increase since March 2009 hasn’t benefitted the middle class one iota. The Federal Reserve engineered stock market recovery has benefitted moneyed bankers and wealthy corporate executives, the very people who collapsed the worldwide financial system and received the bailouts when they should have gone to jail.

Those who continue to tout a non-existent economic recovery have focused on the manufactured stock market and housing recovery, extrapolating those trends without understanding how it has been achieved. A master plan implemented through the collusion of the Federal Reserve, Treasury Department, Executive branch, Wall Street cabal, and corporate media conglomerates has created the illusion of recovery. Make no mistake about it, those in power held clandestine meetings and had covert discussions that will never see the light of day in transcripts or recordings. They developed a strategy to save themselves, their fellow cronies, and the corporate interests that run this country. They threw the middle class, senior citizens, and young people under the bus in their sordid determination to retain their power, wealth and control. Their multi-faceted scheme has been rolled out as follows: 1. Reduce interest rates to 0% so Wall Street banks could borrow for free and reinvest in Treasuries, therefore earning risk free profits so they could rebuild their nonexistent capital. The Wall Street banks also used the free money to generate trading profits using their HFT supercomputers, with only the occasional glitch (JP Morgan London Whale $9 billion slipup, Corzine blowing up his firm and stealing $1.2 billion from ranchers & farmers). The ability to borrow at 0% has spurred these financial institutions to make 0% loans to subprime auto buyers and offer 7 year 0% interest deals on behalf of furniture, electronics, and appliance retailers. This Keynesian solution is supposed to spur demand and generate new jobs. The reality is that Bernanke’s ZIRP has transferred $400 billion of annual interest income from savers and senior citizens to the Wall Street bankers, while setting the table for more massive bad debt write-offs when the millions of subprime borrowers default. 2. The Federal Reserve and the Treasury Department forced the FASB to scrap mark to market accounting, allowing the Wall Street banks to fraudulently value their worthless assets. The Federal Reserve than tripled their balance sheet from $900 billion to $2.95 trillion by purchasing almost $1 trillion of toxic mortgage debt from the Wall Street banks at full face value of the debt. The Fed purchased Treasuries to artificially lower mortgage rates and attempt to spur a housing recovery. 3. The Wall Street banks have purposely manipulated the foreclosure process and restricted the inventory of foreclosures available to purchase. In conjunction with Fannie Mae and Freddie Mac, large inventories of foreclosed properties have been sold in bulk to connected Wall Street firms at above market prices and positioned as rental properties. The FHA has done their part by guaranteeing 3% down payment mortgages and putting taxpayers on the hook for the billions in losses to come. Fannie and Freddie have already lost $200 billion of taxpayer money since 2008 on behalf of the Wall Street banks. The concerted effort to restrict the supply of homes available for sale resulted in the price of homes sold rising in 2012. Those in power are attempting to resuscitate the millions of heavily indebted underwater home occupiers at the expense of the young and frugal who would buy when home prices dropped to a clearing level. The same people who created the first housing bubble are attempting to re-inflate it as a solution to our economic woes. 4. Despite the fact that individual investors have pulled billions out of the stock market over the last three years, the stock market has managed to approach all-time highs. This has been the lynchpin of their plan. The sole purpose of every QE initiated by Bernanke has been to elevate the stock market. Academics like Bernanke and Krugman sell the “wealth effect” storyline to the masses as a way to spur consumer spending. The only wealth effect is to shift the wealth of the working middle class to the ruling class who own the stocks and control the markets. As each QE has further enriched the 1%, the inflationary impact on energy, food, and clothing has destroyed the lives of millions in the middle class who own virtually no stocks. The gap between the uber-rich ruling class and the peasants has never been wider.

The master plan has succeeded in delaying the worst of the Crisis, further enriching the oligarchs, further impoverishing the middle class, fanning the flames of revolution across the globe, provoking foreign adversaries, inciting anger among the populace and darkening the mood of the country. Those predicting a return to the peaceful autumn like days of the late 90s reveal their ignorance of history. Winter is here and there are many dark days ahead before Spring is discernible. The linear thinking crowd who hang their hats on never ending progress spurred by technological innovation and a limitless supply of cheap resources are denying reality. Delusion and hope for a better tomorrow is not a strategy. We have entered the 5th year of this ongoing Crisis. Fourth Turnings do not fizzle out; they build to a societal earth shattering crescendo (American Revolution, Civil War, Great Depression/WWII). Economic, financial, social and global conditions do not progress during a twenty year Crisis period, driven by the generational configuration that arises once every 80 years. An epic struggle between good and evil, rich and poor, government and governed, young and old, nation and nation, awaits us over the next fifteen years. No matter what happens in 2013, it will be driven by the core elements of this Crisis – Debt, Civic Decay, and Global Disorder. “In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe -1996 Until Debt Do Us Part The storyline of austerity and deleveraging perpetuated through the mainstream media mouthpieces is unequivocally false, as consumer debt has reached an all-time high of $2.77 trillion, driven by a surge in subprime auto loans and subprime student loans. The reason for the surge in these loans, while credit card debt lingers 15% below the 2008 peak, is because the Federal Government is doling out these loans with your tax dollars. Ally Financial (aka GMAC, aka Ditech) is under the complete control of the Federal Government and doesn’t care about future losses. The taxpayers won’t notice another $1 billion in losses. There are Cadillac Escalades, Silverados and RAM pickups to peddle to morons without money.

Could there be a more subprime borrower than a 20 year old majoring in African literature or a 40 year old former construction worker enrolled at the University of Phoenix with 500,000 other schmoes? The Federal government assumed control over the student loan market in 2009 and has proceeded to blow a new bubble. They have driven tuition higher and enabled millions of barely functioning morons to enter college, where they will not only fail, but also be burdened by un-payable levels of nondischargeable debt. Now the government solution is to pass those bad debts onto you the taxpayer while encouraging even more debt for students. Here is an assessment of the new “Pay as you Earn” program from your owners: “(BusinessWeek) We have one example of someone who might look similar to an MBA student. He starts out with a starting salary of $90,000 and by the end of 20 years is making $243,360. Under the old IBR program, he’ll have paid $409,445 by year 25 and be forgiven $23,892 of his loan balance. Under the new IBR repayment plan he’ll pay less than half of that, or $202,299, and be forgiven $208,259 by year 20. The old IBR plan was punitive if you borrowed a lot of money, made you pay more over time and trapped you, so there were serious consequences to doing that. It was a downside and a pretty big risk, which is why you didn’t see people borrowing without regard to how much it will cost. The new plan essentially eliminates any downside or risk for that type of behavior, and cuts payments in half and then some.” The enslavement of our children in student loan debt and handing them the bill for $200 trillion of unfunded entitlement liabilities will be the spark that ignites the worst part of this Crisis.

Those in power realized very quickly that without continued credit growth, their entire corrupt, repugnant, fiat currency based debt system would implode and they would lose all of their fraudulently acquired wealth. That is why total credit market debt is at an all-time high of $56 trillion, and 350% of GDP. The National Debt of $16.5 trillion is now 103% of GDP, well beyond the Rogoff & Reinhart level of 90% that always leads to economic crisis and turmoil.

As Wall Street bankers acted like lemmings leading up to the 2008 financial collapse the famous July 2007 quote from Charles Prince, CEO of Citigroup, summed it up nicely: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,” Now central bankers across the globe are dancing an Irish Jig. Every major central banker in the world is lemmingly following Bernanke’s lead and printing money at hyper-speed. The Europeans have surpassed the Japanese in their quest to become the first casualty in the coming debt collapse. Bernanke, in his quest to not be outdone, has committed to taking his balance sheet to 25% of GDP within the next year. Japan has vowed not to be outdone. The currency debasement race is gathering steam. The devastation, anger, resentment and ultimately war caused by these bankers will engulf the world when it reaches its apocalyptic ending.

Will the grain of sand that collapses the pile be a debt ceiling crisis as postulated by Strauss & Howe? “An impasse over the federal budget reaches a stalemate. The president and Congress both refuse to back down, triggering a near-total government shutdown. The president declares emergency powers. Congress rescinds his authority. Dollar and bond prices plummet. The president threatens to stop Social Security checks. Congress refuses to raise the debt ceiling. Default looms. Wall Street panics.” – The Fourth Turning – Strauss & Howe – 1996 I don’t think so. The Democrats and Republicans are playing their parts in this theater of the absurd. Neither party has any desire to cut spending, reduce our debt, or secure the future of unborn generations. In 2013, I see the following things happening related to our debt crisis: The debt ceiling will be raised as the toothless Republican Party vows to cut spending next time. The political hacks will create a 3,000 page document of triggers and create a committee to study the issue, with actual measures that slow the growth of annual spending by .000005% starting in 2017. The National Debt will increase by $1.25 trillion and debt to GDP will reach 106% by the end of the fiscal year. The Federal Reserve balance sheet will reach $4 trillion by the end of the year. Consumer debt will reach $2.9 trillion as the Feds accelerate student loans and Ally Financial, along with the other Too Big To Control Wall Street banks, keep pumping out subprime auto loans. By mid-year reported losses on student loans will soar and auto loan delinquencies will show an upturn. This will force a slowdown in consumer debt issuance, exacerbating the recession that started in 2012. The Bakken oil miracle will prove to be nothing more than Wall Street shysters selling a storyline. Daily output will stall at 750,000 barrels per day and the dreams of imminent energy independence will be annihilated by reality, again. The price of oil will average $105 per barrel, as global tensions restrict supply. The home price increases generated through inventory manipulation in 2012 will peter out as 2013 progresses. The market has been flooded by investors. There is very little real demand for new homes. Young households with heavy student loan debt and low paying jobs will continue to rent, since the oligarchs refused to let prices fall to a level that would spur real demand. Mortgage delinquencies will rise as job growth remains stagnant, leading to an increase in foreclosures. Rent prices will flatten as apartment construction and investors flood the market with supply. The disconnect between the stock market and the housing and employment markets will be rectified when the MSM can no longer deny the recession that began in 2012 and will deepen in the first part of 2013. While housing prices languish 30% below their peak levels of 2006, the stock market has prematurely ejaculated back to pre-crisis levels. Declining corporate profits, stagnant consumer spending, and increasing debt defaults will finally result in a 20% decline in the stock market, with a chance for losses greater than 30% if Japan or the EU begin to crumble.

Japan is still a bug in search of a windshield. With a debt to GDP ratio of 230%, a population dying off, energy dependence escalating, trade surplus decreasing, an already failed Prime Minister vowing to increase inflation, and rising tensions with China, Japan is a primary candidate to be the first domino to fall in the game of debt chicken. A 2% increase in interest rates would destroy the Japanese economic system. The EU has temporarily delayed the endgame for their failed experiment. Economic conditions in Greece, Spain and Italy worsen by the day with unemployment reaching dangerous revolutionary levels. Pretending countries will pay each other with newly created debt will not solve a debt crisis. They don’t have a liquidity problem. They have a solvency problem. The only people who have been saved by the actions taken so far are bankers and politicians. I believe the crisis will reignite, with interest rates spiking in Spain, Italy and France. The Germans will get fed up with the rest of Europe and the EU will begin to disintegrate. Civic Decay Accelerates “History offers no guarantees. If America plunges into an era of depression or violence which by then has not lifted, we will likely look back on the 1990s as the decade when we valued all the wrong things and made all the wrong choices.” – Strauss & Howe – The Fourth Turning The liberal minded Op-Ed writers that decry the incivility of dialogue today once again show their ignorance for or contempt for American history. They call for compromise and coming together. They should see Spielberg’s Lincoln to understand the uncompromising nature of Fourth Turnings and how conflicts are resolved. They should watch documentary film of Dresden, Hiroshima, and Guadalcanal during World War II. Compromise and civility do not compute during a Fourth Turning. It is compromise that has brought us to this point. Avoiding tough decisions and delaying action occur during the Unraveling. We’ve known the entitlement issues confronting our nation for over a decade and chose to do nothing. The time for delay and inaction is long gone. The pressing issues of the day will be resolved through collapse, confrontation and bloodshed. It’s the way it has always been done and the way it shall be. The current conflict over banning guns is just a symptom of a bigger disease. Government, at the behest of the owners, has been steadily assuming more power and control over the everyday lives of citizens who just want to be left to live their lives. Government has used propaganda, fear and misinformation to convince large swaths of the populace to voluntarily sacrifice their freedom and liberty for the promise of safety and security. Warrantless surveillance, imprisonment without charges, molestation by TSA agents, military exercises in cities, drones in our skies, cameras watching our every move, overseas torture, undeclared wars, cyber-attacks on sovereign countries, and now the threat of disarmament of the people have all contributed to the darkening skies above. A harsh winter lies ahead. Civic decay is being driven by two main thrusts. Lack of jobs and destruction of middle class wealth by the oligarchs is resulting in the anger and dismay overwhelming the country. The chart below reveals the truth about our economy and the fraudulent nature of BLS reported data, skewed to paint a false picture. The 25 to 54 year old age bracket captures Americans in their peak earnings years. In 2007 this age bracket had 83% of its members in the labor force and 100.5 million of them employed. Today, according to the BLS, only 81.4% are in the labor force and there are 6.3 million less employed. The BLS has the gall to report that since 2009, even though the number of employed people in this age bracket has declined by 1 million, the number of unemployed people has dropped by 1.5 million people. To report this drivel is beyond laughable. The horrific labor market situation is confirmed by the fact that despite a 3.6 million person increase in this age demographic since 2000, there are 7.8 million more people not employed.

The reduced earnings and savings of the people in this demographic is having profound and long-lasting impact on our society. Household formation, retirement savings, tax revenues, and self-worth are all negatively impacted. The mood of desperation and anger is materializing in this age bracket. The resentment of these people when they see the well-heeled Wall Street set reaping stock market gains and bonuses while they make do on food stamps, extended unemployment and the charity of friends and family is palpable. More than 100% of the employment gains since 2010 have gone to those over the age of 55, further embittering the 25 to 54 workers. There is boiling anger beneath the thin veneer of civility between Millenials, GenXers, and Boomers. The chasm between the ultra-rich and the masses widens by the day and is leading to a seething animosity. The country has lost 2.4 million construction jobs and 2 million manufacturing jobs since 2007, but we’ve added 250,000 fry cook jobs and 440,000 University of Phoenix jobs stimulated by $500 billion in student loans. The complete transformation of a producing society to a consumption society has been accomplished.

When the average person sees Wall Street bankers not only walk away unscathed from the crisis they aided, abetted and created through their fraudulent inducements and documentation, but be further enriched at taxpayer expense, their hatred and disgust with high financers like Corzine, Dimon and Blankfein burns white hot. The mainstream media propaganda machine tries to convince the average Joe that stock market highs and record corporate profits are beneficial to him, even though the gains and profits have been spurred by zero interest rates, fraudulent accounting and outsourcing their jobs to third world slave labor factories. A critical thinking human being (this rules out 95% of the adult population) might question how corporate profits could surpass pre-collapse levels when the economy has remained stagnant.

Shockingly, the entire profit surge was driven by Wall Street. Accounting entries relieving billions of loan loss reserves, earning hundreds of millions in risk free interest courtesy of Bernanke, and falsely valuing your loan portfolio can do wonders for profits. We’ve added 6.9 million finance jobs in the last 20 years as this industry has sucked the lifeblood out of our nation. A country that allows bankers to syphon off 35% of all the profits in the country without producing any benefits to society is destined to fail, with the dire consequences that follow.

My civic decay expectations for 2013 are as follows: Progressive’s attempt to distract the masses from our worsening economic situation with their assault on the 2nd Amendment will fail. Congress will pass no new restrictions on gun ownership and 2013 will see the highest level of gun sales in history. The deepening recession, higher taxes on small businesses and middle class, along with Obamacare mandates will lead to rising unemployment and rising anger with the failed economic policies of the last four years. Protests and rallies will begin to burgeon. The number of people on food stamps will reach 50 million and the number of people on SSDI will reach 11 million. Jamie Dimon, Lloyd Blankfein, and Jeff Immelt will compensate themselves to the tune of $100 million. CNBC will proclaim an economic recovery based on these facts. The drought will continue in 2013 resulting in higher food prices, ethanol prices, and shipping costs, as transporting goods on the Mississippi River will become further restricted. The misery index for the average American family will reach new highs. There will be assassination attempts on political and business leaders as retribution for their actions during and after the financial crisis. The revelation of more fraud in the financial sector will result in an outcry from the public for justice. Prosecutions will be pursued by State’s attorney generals, as Holder has been captured by Wall Street. The deepening pension crisis in the states will lead to more state worker layoffs and more confrontation between governors attempting to balance budgets and government worker unions. There will be more municipal bankruptcies. The gun issue will further enflame talk of state secession. The red state/blue state divide will grow ever wider. The MSM will aggravate the divisions with vitriolic propaganda. The government will accelerate their surveillance efforts and renew their attempt to monitor, control, and censor the internet. This will result in increased cyber-attacks on government and corporate computer networks in retaliation. Global Disorder Spreads “Eventually, all of America’s lesser problems will combine into one giant problem. The very survival of the society will feel at stake, as leaders lead and people follow. The emergent society may be something better, a nation that sustains its Framers’ visions with a robust new pride. Or it may be something unspeakably worse. The Fourth Turning will be a time of glory or ruin.” – Strauss & Howe – The Fourth Turning The entire world resembles a powder-keg in a room full of monkeys with matches. As economic conditions worsen around the world the poor, destitute and unemployed increasingly have begun to revolt against their banker masters. Money printing, reporting fraudulent economic data and pretending to make debt payments with newly issued debt does not employ anyone or put food in the mouths of the people. With worldwide unemployment surpassing 200 million, food and energy prices surging, peasants in the Far East treated like slave laborers, politicians stealing from the people to enrich their banker owners, and young people losing hope for a better tomorrow, the likelihood of strikes, protests, armed revolution, and war is high.

The world is about to find out the downside to globalization, as turmoil in Europe or Asia will swiftly impact those in the rest of the world that are interconnected through trade and financial instruments. The trillions of derivatives that link financial institutions across the world will ignite like a string of firecrackers once a spark reaches the fuse. Treaties and alliances between countries will immediately enlarge localized military conflicts into world-wide confrontations. Dwindling supplies of cheap oil and potable water, a changing climate (whether cyclical or human activity based) that is creating droughts, floods and super-storms on a more frequent basis, and religious zealotry set the stage for resource wars and religious wars around the globe and particularly in the Middle East. Fourth Turnings always intensify and ultimately lead to total war, with no compromise and clear winners and losers. The proxy wars that have been waged for the last 60 years will look like kindergarten snack time when the culmination of this Fourth Turning war results in death on a scale that would be considered incomprehensible today. And it will happen within the next fifteen years. The climactic war is still a few years off, but here is what I think will happen in 2013: With new leadership in Japan and China, neither will want to lose face, so early in their new terms. Neither side will back down in their ongoing conflict over islands in the East China Sea. China will shoot down a Japanese aircraft and trade between the countries will halt, leading to further downturns in both of their economies. Worker protests over slave labor conditions in Chinese factories will increase as food price increases hit home on peasants that spend 70% of their pay for food. The new regime will crackdown with brutal measures, but the protests will grow increasingly violent. The economic data showing growth will be discredited by what is happening on the ground. China will come in for a real hard landing. Maybe they can hide the billions of bad debt in some of their vacant cities. Violence and turmoil in Greece will spread to Spain during the early part of the year, with protests and anger spreading to Italy and France later in the year. The EU public relations campaign, built on sandcastles of debt in the sky and false promises of corrupt politicians, will falter by mid-year. Interest rates will begin to spike and the endgame will commence. Greece will depart the EU, with Spain not far behind. The unraveling of debt will plunge all of Europe into depression. Iran will grow increasingly desperate as hyperinflation caused by U.S. economic sanctions provokes the leadership to lash out at its neighbors and unleash cyber-attacks on Saudi Arabian oil facilities and U.S. corporations. Israel will use the rising tensions as the impetus to finally attack Iranian nuclear facilities. The U.S. will support the attack and Iran will launch missiles at Saudi Arabia and Israel in retaliation. The price of oil will spike above $125 per barrel, further deepening the worldwide recession. Syrian President Assad will be ousted and executed by rebels. Syria will fall under the control of Islamic rebels, who will not be friendly to the United States or Israel. Russia will stir up discontent in retaliation for the ouster of their ally. Egypt and Libya will increasingly become Islamic states and will further descend into civil war. The further depletion of the Cantarell oil field will destroy the Mexican economy as it becomes a net energy importer. The drug violence will increase and more illegal immigrants will pour into the U.S. The U.S. will station military troops along the border. Cyber-attacks by China and Iran on government and corporate computer networks will grow increasingly frequent. One or more of these attacks will threaten nuclear power plants, our electrical grid, or the Pentagon. So now I’m on the record for 2013 and I can be scorned and ridiculed for being such a pessimist when December rolls around and our Ponzi scheme economy hasn’t collapsed. There is no disputing the facts. The economic situation is deteriorating for the average American, the mood of the country is darkening, and the world is awash in debt and turmoil. Every country is attempting to print their way to renewed prosperity. No one wins a race to the bottom. The oligarchs have chosen a path of currency debasement, propping up insolvent banks, propaganda and impoverishing the masses as their preferred course. They attempt to keep the masses distracted with political theater, gun control vitriol, reality TV and iGadgets. What can be said about a society where 10% of the population follows Justin Bieber and Lady Gaga on Twitter and where 50% think the National Debt is a monument in Washington D.C. The country is controlled by evil sycophants, intellectually dishonest toadies and blood sucking leeches. Their lies and deception have held sway for the last four years, but they have only delayed the final collapse of a boom brought about by credit expansion. They will not reverse course and believe their intellectual superiority will allow them to retain their control after the collapse. “Washington has become our Versailles. We are ruled, entertained, and informed by courtiers — and the media has evolved into a class of courtiers. The Democrats, like the Republicans, are mostly courtiers. Our pundits and experts, at least those with prominent public platforms, are courtiers. We are captivated by the hollow stagecraft of political theater as we are ruthlessly stripped of power. It is smoke and mirrors, tricks and con games, and the purpose behind its deception.”– Chris Hedges Every day more people are realizing the con-job being perpetuated by the owners of this country. Will the tipping point be reached in 2013? I don’t know. But the era of decisiveness and confrontation has arrived. The people will learn there are consequences to our actions and inaction. The existing social order will be swept away. Are you prepared?

“The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place we are entering a period of consequences…” – Winston Churchill survival seed vault

Share this: Facebook

Twitter

Administrator

Reddit

January 22, 2013

WhatsApp

Google

Economy, Politics, Social Issues

Email

Ally Financial, bank of america, Bernanke, Charles Prince, China, Chris Hedges, Citigroup, Crisis, Drought,

EU, Federal Reserve, foodstamps, Fourth Turning, GDP, GE, GM, Inflation, Iran, Israel, Jamie Dimon, Japan, Jeff Immelt, JP Morgan, Lloyd Blankfein, Montgomery Mall, Obama, real wages, SNAP, Spain, SSDI, Strauss & Howe, subprime auto debt, Syria, Unemployment, Wall Street, war, Winston Churchill

85 Comments

SUBPRIME AUTO NATION Have you heard the news? Auto sales are booming. Total sales for the month of August were 1,285,202 vehicles, according to Autodata Corp, the highest monthly sales figure for any August since 2007, when 1.47 million autos were sold in the United States. Year to date auto sales have totaled 9.7 million and are on track to reach 14.5 million. Between 2006 and 2007, auto sales ranged between 16 million and 18 million. They crashed below 10 million in 2009. The Keynesians running our government have pulled out all the stops to restart this engine of consumer spending. First they wasted $3 billion of taxpayer funds on the Cash for Clunkers debacle. Almost 700,000 perfectly good cars were destroyed in order to keep union workers happy. This Keynesian brain fart distorted the used car market for two years, raising prices for cars needed by the working poor. After that miserable failure, they realized the true secret to selling vehicles is to give them away to anyone that can scratch an X on a loan document, with 0% interest for 60 months, financed by Federal government controlled banking interests. Add in some massive channel stuffing and presto!!! – You’ve got an auto sales boom.

General Motors sales are up 3.7% over 2011. Ford Motors sales are up 6% over 2011. The Obama administration continues to tout their saving of the U.S. auto industry with their bailout in 2009 that saved unions and screwed bondholders. If this strong auto recovery is not an illusion, how do you explain the two charts below? General Motors stock is down 42% since 2011. The highly proclaimed success story called Ford Motors has seen their stock collapse by 50% since 2011. This is surely a sign of tremendous success and anticipation of soaring profits for these bastions of American manufacturing dominance. Chart forGeneral Motors Company (GM)

Chart forFord Motor Co. (F)

This is America, land of the delusional and home of the vain. The appearance of success is more important than actual success. The corporate mainstream media dutifully reports the surge in auto sales is surely a sign the economy is recovering and the consumer has finished deleveraging and is ready to spend again. The government propaganda machine proclaims the surging auto sales are due to their wise and forward thinking policies (like the Chevy Volt). Luckily for them, there are millions of gullible Americans who believe the storyline and are easily convinced that driving a $30,000 new car, financed over seven years, makes them a success. The decades of Bernaysian marketing propaganda has worked its magic on the government educated, math challenged citizenry. There are only two things that matter to the non-thinking auto buyer (renter) – the monthly payment and what the next door neighbor and his coworkers will think. Buying a fuel efficient car they can afford, paying it off in three or four years, and driving it for ten years, while saving the monthly car payment, is what a practical, rational thinking person would do. The fact that only 20% of the 9.7 million vehicles sold this year have been small cars and the average sales price of new cars sold is now $31,000 proves Americans are still living in a delusional fantasyland of cheap gas and monthly payments for eternity.

As gas prices surpass $4 per gallon across the country, somehow 4.7 million of the 9.7 million vehicles sold in 2012 have been pickups, vans, crossovers or SUVs. Three of the top eight selling vehicles are pickups. Luxury vehicle sales are booming, with Mercedes, BMW, Porsche, Land Rover and Audi showing double digit percentage sales gains over 2011. We’ve entered a recession, gas prices are approaching all-time highs, job growth is pitiful, and Americans continue to buy luxury gas guzzlers on credit. This will surely end well. The average payment on a new car in 2012 is $461. For used cars, the average monthly payment is $346. Today, 77% of new car purchases are financed. About half of all used vehicles involve financing. Of those cars financed, 89% are through a loan vs. 11% with a lease. A critical thinking person might wonder how a country with 4 million less employed people than we had in 2007, median household net worth down 35%, and real wages lower than they were in 2007, could be experiencing an auto boom. The answer is a government/corporate/banker/media effort to funnel taxpayer funds to deadbeats across the land in a fruitless attempt to create a facade of recovery. Our governing elite are convinced that more debt peddled to the masses is the path to recovery for an economy that imploded due to excessive debt peddled to the masses in the first place. Essentially, it comes down to who benefits from the peddling of debt. It isn’t the masses, as they become enslaved in the chains of debt and monthly payments in perpetuity. Debt peddling benefits Wall Street bankers, politicians, and mega-corporations selling crap to the masses. The storyline being sold to the vegetative dupes (watching Honey Boo Boo) that occupy space in this delusional paradise we call America, by the corporate media, is that consumers have deleveraged and are ready to resume their “normal” pattern of spending money they don’t have on stuff they don’t need. Of course, the facts always seem to get in the way of a good yarn. Consumers have never deleveraged. Consumer credit outstanding is at an all-time high of $2.58 trillion. The decline from $2.55 trillion in 2008 to $2.4 trillion in 2010 was NOT deleveraging. It was the Wall Street Too Big To Fail banks taking a big dump on the American taxpayers. They passed their bad debts to you through TARP, the Federal Reserve buying their toxic “assets”, and ZIRP.

Revolving credit (credit card) debt peaked at just above $1 trillion in 2008 and “declined” to $850 billion during 2010. The media storyline is that you buckled down and paid off your credit cards, therefore depressing consumer spending and creating a recession. Sounds convincing except for the fact that it’s a load of bullshit. The Federal Reserve’s own data proves it to be false. Your friendly Wall Street banks have written off $213 billion of credit card debt since 2008 and passed the bill to the few remaining taxpayers in this country. For the math challenged, this means that consumers have actually INCREASED their credit card debt by $68 billion since 2008. The bad news for our Chinese crap peddling mega-retailers is that the significantly poorer average middle class American household is using their credit cards to pay their property tax bills, IRS bills, and utility bills in order to survive. Credit Card Charge-off in Dollars 2005 – 2011 — Not Seasonally Adjusted:

Year

Dollar Amount $46,017,459,67

2011

1 $75,090,106,35

2010

0 $83,179,901,00

2009

0 $53,506,353,60

2008

0 $38,149,440,00

2007

0 $32,111,934,40

2006

0 $40,634,994,40

2005

0

Year & Quarter

Dollar Amount

2012Q1

$8,772,385,443

The category of debt that barely budged in the 2009 collapse was non-revolving credit. It stayed in the $1.5 trillion range in 2009 and has since surged to over $1.7 trillion in 2012. What could possibly have made this debt skyrocket by $200 billion when the GDP has only grown by 12% over the same time frame? You guessed it – your corporate fascist friends in Washington DC and on Wall Street. Non-revolving debt consists of auto loan debt of $663 billion and student loan debt of approximately $1 trillion. Student loan debt has shot up by $300 billion since 2008. This student loan debt is being distributed, like candy by a pedophile, from the Federal government in an effort to artificially hold down the unemployment rate.

Approximately $500 billion of the student loan debt is held directly by the Federal government, up from $100 billion in 2008. The Feds guarantee the majority of the remaining student loan debt. Can you think of a more subprime borrower than a 40 year old former construction worker getting a liberal arts degree from the University of Phoenix, sitting at his computer in his underwear scratching his balls, and paying with a $10,000 Federal student loan from you? This fraudulent attempt to obscure the true employment situation will end in tears for the borrowers and the American taxpayer. It’s tough to make a loan payment without a job. The student loan bailout is just over the horizon and will cost you at least $300 billion. Delinquencies are already off the charts.





When has offering low interest debt in ample portions to people without jobs, income or assets ever backfired before? The bankers and politicians that control this country seem to be a one-trick pony. They will never admit that debt is the problem and reducing it the solution. The real solution would make them poorer, so their solution is to pour gasoline on the fire with more debt at lower interest rates to more people. The addict will keep injecting more poison into their system until sudden death. The bankers and politicians know we are a car-centric society and appeal to our vanity and poor math skills to keep the game going. During the first quarter of this year, total U.S. car loans totaled $52.5 billion. That’s 49% higher than the same period in 2009. Also during the first quarter, the average amount financed on new vehicles rose by $589, to $25,995, and for used cars by $411, to $17,050. Furthermore, buyers are stretching out payments for longer terms: The average length of new- and used-vehicle loans jumped a full month during the first three months of this year, to 64 and 59 months, respectively. The surge in auto sales is being completely driven by doling out more loans for a longer time frame to deadbeat borrowers. Subprime auto loans now make up 45% of all car loans and the vast majority of all used car loans. They have even created a category called Deep Subprime. Borrowers classified as “deep subprime” (i.e. those with Vantage scores below 600) account for 10.7% of auto loans. You can also classify them as loans that will never be repaid.

Two thirds of all car sales are for used cars, so the fact that 37% of all new cars are being sold to subprime borrowers is exacerbated by the ridiculous lending practices for used cars. The fine folks at Zero Hedge have provided the outrageous data and a chart that proves beyond a shadow of a doubt what awaits the American taxpayer – another bailout. Zero Hedge has already revealed the GM fake recovery by detailing their channel stuffing over the last two years. Now they’ve dug up more dirt on why car sales are surging. What could possibly go wrong providing loans for more than the value of the asset to people with a history of not paying their debts? Subprime borrowers received 56.46% of loans on used cars in the quarter, up from 52.70% a year earlier. The average loan-to-value on new cars was 109.55% The average used car loan-to-value ratio rose to 126.62% 77% of Subprime Auto Loans are for a period greater than five years It’s amazing how many cars you can sell when you aren’t worried about getting paid. This is the beauty of a fiat currency, a printing press, and a taxpayer available to pick up the tab after the drunken party gets out of hand. The chart below provides the details of our superhighway to disaster. The percentage of used car loans to prime borrowers is now at an all-time low, while the percentage of loans to subprime borrowers is near all-time highs reached just prior to the 2008 crash. When lenders cared about being paid back in the early 2000’s, they rarely made loans longer than five years. Today, more than 77% of all subprime used car loans are longer than five years and average FICO scores are now well below 600. Just to clarify – if your FICO score is below 600 – YOU ARE A DEADBEAT.

When you start to connect the dots, things that didn’t seem to make sense begin to crystallize. This is all part of the master plan concocted by Bernanke, Geithner, Obama and the Wall Street Shysters. The auto section of my local paper now makes sense. Offers of 7 year financing at 0% interest and monthly lease offers of $150 to $200 for brand new cars now are understandable. The newer model BMWs, Cadillac Escalades, Volvos, and Jaguars I see parked in front of the low income luxury gated townhome community in West Philadelphia now makes sense. A pizza delivery guy driving a new Lexus is now explainable. The master plan is fairly simple. The Federal Reserve lends money to the Wall Street banks for 0% interest. These banks then turn around and provide credit card debt at 13% interest, new & used car loans to prime borrowers at 5% interest, and new & used car loans to subprime borrowers at 16%. When you can borrow for free, you can take a chance that a significant number of your borrowers will default. Essentially, Ben Bernanke is screwing the prudent savers and senior citizens by paying them 0.15% on their savings in order to subsidize the bankers that destroyed the country so they can make auto loans to the same people who took out the zero percent down interest only no doc mortgage loans in 2005. In addition, Wall Street knows the Bernanke Put is still in place. If and when these subprime loans explode in their faces again, Bennie, Timmy and Obamaney will come to the rescue with your tax dollars. Its heads you lose, tails you lose, again. The chart below is like a who’s who of TARP recipients. The top 20 auto lenders control half the market. And look at the leader of the pack. Our friends at Ally Bank are the market share leader. You remember Ally Bank – they conveniently changed their name from GMAC (also known as Ditech – biggest subprime mortgage lender) after losing billions and being bailed out by you. They still owe you $11 billion and are 85% owned by the U.S. Treasury. No conflict of interest there. You have the biggest auto lender on earth controlled by the Obama administration. Do you think they have an incentive to make as many loans as humanly possible to help Obama create the illusion of an auto recovery? The only downside is for the American taxpayer when we have to eat billions more in Ally/GMAC losses. This insolvent excuse for a lending institution has been extremely aggressive in the subprime auto lending market and has forced the other wannabes – Wells Fargo, JP Morgan, Capital One and Bank of America – to lower their lending standards. Does this scenario ring a bell?

We’ve become a subprime auto nation, addicted to easy debt, living lives of hope, delusion and minimum monthly payments. Storylines about economic recovery, fraudulent government statistics showing lower unemployment, feel good propaganda from the corporate mainstream media, and a return to easy money debt fueled spending does not constitute a real recovery. Until the bad debt is purged from the system and saving takes precedence over spending, the country will stagger and ultimately fall under the weight of its immense debt. We are lost in a blizzard of lies. This subprime fueled engine of recovery will propel the country into the same canyon of reality we entered in 2008. The crack up boom approaches.

survival seed vault



Share this: Facebook

Twitter

Administrator

Reddit

September 7, 2012

WhatsApp

Google

Economy, Politics, Social Issues

Email

auto loans, bank of america, Bernanke, BLS, BMW, Cash for Clunkers, Channel stuffing, Chevy Volt,

credit card debt, Federal Reserve, Ford, Geithner, GM, JP Morgan, Keynesianism, lies, Mercedes, MSM, Obama, student loans, subprime debt, TARP, Wall Street, Wells Fargo, writeoffs, Zero Hedge, ZIRP

123 Comments

80 YEARS LATER – SAME CULPRITS, SAME RAGE The young man stands on the edge of his porch The days were short and the father was gone There was no one in the town and no one in the field This dusty barren land had given all it could yield I’ve been kicked off my land at the age of sixteen And I have no idea where else my heart could have been I placed all my trust at the foot of this hill And now I am sure my heart can never be still So collect your courage and collect your horse And pray you never feel this same kind of remorse Dust Bowl Dance – Mumford & Sons langesquatter.jpg (31737 bytes)



The song from Mumford & Sons called Dust Bowl Dance is as pertinent to today as it was in describing the Great Depression. I was taken by the lyrics and the rage in the song. The setting for the song is the Dust Bowl of the 1930’s in the US Midwest. Picture the Joads in Grapes of Wrath. As I listened to the song again this morning I was struck by the similarities between the time period described in the song and our present situation. The lyrics by Marcus Mumford tell the story of a young man who’s lost everything. His family is either dead or forced off their land. My interpretation of the lyrics is that the bank has foreclosed on his farm after their crops failed during the dust bowl. I picture a Mr. Potter like character who held the mortgages on all the farms and houses in a small community. The evil banker didn’t care that families had lived on this land for decades, raising their families along with the crops. These hard working farmers had done nothing wrong. They were victims of circumstances. But bankers didn’t care about ruining lives. The family farmers didn’t participate in the Roaring 20’s, borrow on margin to invest in stocks, or reap ungodly profits. The farmers were victims of land speculators and bad weather. The only son in the song took the law into his own hand and shot the evil banker. He was ready to do his time, because his act was righteous payback. Eighty years ago the last Fourth Turning was also in its infancy. They generally last 15 to 20 years. The catalyst for the last Fourth Turning was the great stock market crash of 1929. The 1920s “boom” enriched only a fraction of the American people. Earnings for farmers and industrial workers stagnated or fell. Farmers were barely getting by during the roaring 20s. Only the Wall Street crowd was getting rich. The economic growth of the 1920s did not reach most Americans: 60% of American families earned less than the amount necessary to support their basic needs ($2,500 was considered enough to support a family’s basic needs). The agricultural sector was similarly stagnant: farm prices dropped after World War I when Europe again began to feed itself and new grain exports from South American further depressed prices. The lack of purchasing power of rural people and farmers resulted in declines in consumer purchasing in those areas, as well as increased defaults on debt. Rural, urban, and suburban consumers began to increase their personal debts through mortgages, car loans, and installment plans to buy consumer goods, such as radios. The ever-growing price for stocks was, in part, the result of greater wealth concentration within the investor class. Eventually the Wall Street stock exchange began to take on a dangerous aura of invincibility, leading investors to ignore less optimistic indicators in the economy. Over-investment and speculating (gambling) in stocks further inflated their prices, contributing to the illusion of a robust economy. The crucial point came in the 1920s when banks began to loan money to stock-buyers since stocks were the hottest commodity in the marketplace. Wall Street banks encouraged Wall Street investors to use the stocks themselves as collateral. When stocks dropped in value, and investors could not repay the banks, the banks were left holding near-worthless collateral. Banks went broke, pulling productive businesses down with them as they called in loans and foreclosed mortgages in a desperate attempt to stay afloat. The Federal Reserve was responsible for regulating the banks. They were responsible for the easy money policies during the 1920s. The biggest financial institutions in the country included: Citibank, Bank of America, Goldman Sachs, JP Morgan & Co., Chase National Bank, and Wells Fargo. Sound familiar? The Great Depression was caused by the Federal Reserve and their owners, the biggest Wall Street banks, aiding and abetting reckless speculation, greed and extreme risk taking with mountains of debt. The rich got richer and the poor got poorer. The income inequality in the U.S. reached an all-time peak in 1928. It stayed at a high level until World War II. The glory years of the American Empire were from 1941 through 1979, when the middle class was growing, and the income distribution in the country was fair and equitable, as our manufacturing based economy raised all boats.

The income inequality in the country reached the same extreme level in 2007, just prior to the Wall Street created financial implosion. It has not improved in the last four years. In the early 1930s there was the feeling of revolution in the air. With unemployment at 25% and people in desperate straits, the government feared communists or fascists gaining power. The New Deal was really a way to keep the citizens occupied so that a revolution would not take hold. There was much anger towards the bankers and aristocracy who caused the Great Depression. The anger is reflected in the Mumford & Sons lyrics: Your oppression reeks of your greed and disgrace So one man has and another has not How can you love what it is you have got When you took it all from the weak hands of the poor? Liars and thieves you know not what is in store Dust Bowl Dance – Mumford & Sons The 2008 financial crash was caused by loose Federal Reserve monetary policies, lack of Federal Reserve regulation over criminally reckless Wall Street banks, and incredible levels of bad debt rampant throughout our economic system. The true unemployment rate today is 23%. Another parallel between the early 1930s and today can be seen in the chart below. Almost 11,000 banks, or 40% of all the banks in the U.S., went out of business. Predictably, these were all small banks. None of the connected Wall Street banks went out of business. They benefitted, as 40% of their competition disappeared. Too Big to Fail existed 80 years ago. You may also note that savers were punished, as interest paid on savings plunged from 5% to below 1% and the earnings of middle class workers collapsed.



Banks in operation

Prime interest rate

1

1

9

9

2

3

9

3

2

1

5,

4,

5

7

6

7

8

1

5.

0.

0

6

3

3

% % 1. Volume of stocks sold (NYSE)

1 B

Privately earned income

6 5 B

$

$

4

2

5.

3.

5

9

B

B

$ 1 Personal and corporate savings

0.

5. 3 B

$ 2. 3 B

Historical Statistics of the United States, pp. 235, 263, 1001, and 1007.



During the early years of the current depression more than 400 banks have gone insolvent and another 800 banks are on the FDIC endangered species list. Therefore, approximately 15% of all the banks in the U.S. will no longer compete with the Wall Street banks that caused the financial crisis. Since 2008, the top five biggest banks in the U.S. have dramatically increased their market share and power. They are: Bank of America, JP Morgan Chase, Citigroup, Wells Fargo, and Goldman Sachs. Amazing how the exact same banks that caused the 1929 and the 2008 market crashes came out unscathed and more powerful after each crisis.



The mainstream media tries to convince the American public that the stock market going up means the economy is improving and they are doing better. The chart below shows that the stock market bottomed in 1932 and proceeded to go up almost 500% by 1937. It’s too bad only the bankers and richest people in society could afford to own stocks. While the stock market soared, the average person struggled to survive. Only the privileged stock owners prospered. The common man suffered.

The unemployment rate remained at elevated levels until World War II. The New Deal policies of Franklin Roosevelt did not end the Great Depression. The common man had trouble putting bread on their table during the entire decade of the 1930’s. The storyline about FDR’s Keynesian spending ending the Depression is false.

The 1930s were filled with seething anger. The Liberty League and Father Charles Coughlin, the Rush Limbaugh of his time, used anti-communist and socialist rhetoric to convince millions of Americans that the model used in Nazi Germany was better than FDR’s New Deal policies. This pushed Roosevelt further to the left against big business and toward more socialist programs to insure getting the votes of the poor. These were bleak days in our country’s history. General Smedley Butler revealed a plot to overthrow the Roosevelt administration and replace it with a fascist dictatorship. The country roiled with furious rage. In 1932, approximately 80 years ago, 43,000 marchers (17,000 veterans) descended upon Washington D.C. The Bonus Expeditionary Force, also known as the “Bonus Army”, marched on Washington to advocate the passage of the “soldier’s bonus” for service during World War I. They set up a camp with tents to bring attention to their cause. After Congress adjourned, bonus marchers remained in the city and became unruly. On July 28, 1932, two bonus marchers were shot by police, causing the entire mob to become hostile and riotous. The government turned the U.S. military upon its citizens. Army cavalry units led by General Douglas MacArthur dispersed the Bonus Army by riding through it and using gas. Fifty five veterans were injured and 135 were arrested. Critics of the marchers described them as communists, troublemakers, and criminals. Fast forward 80 years and we have protestors setting up camp in a public square, not far from where the same exact banks that caused the Great Depression have created the Greater Depression. The biggest Wall Street banks have gotten bigger. The Federal Reserve, in collusion with the Wall Street banks, has engineered a two year stock market rally, while the average American has seen their wages decline, food and energy prices soar, home prices fall, and banks paying them .1% on their savings. Anger and disillusionment continue to build in this country like a volcano preparing to blow. Some people are angry at Washington politicians. Some are angry at Wall Street. Others aren’t sure who to be angry at. The evil oligarchy of bankers, corporate titans, and bought off Washington politicians that control the agenda and mainstream media, continue to scorn, ridicule and denigrate the middle class of America. Their financial engineering is failing. They’ve gone too far. The debt accumulation is unsustainable. The mood of the country has darkened and talk of revolution and the shadow of impending violence is growing. The Great Depression was not an event, it was an era. It was an era of discontent, pain, suffering, and ultimately war and death. The people who lived through this era have mostly died off. We have entered a new similar era. The average citizen sees the American Dream of a better life slipping away due to the corruption, greed, and immorality of our political and financial systems. The Federal Reserve’s current chosen mandate is to make the stock market go up, while impoverishing the middle class. The 1% better hope the police and military continue to obey their orders, because the 99% are angry and heavily armed. This Fourth Turning has ten to fifteen years to go. Every previous Fourth Turning has included violence, war and death on an epic scale. Winter has arrived and it will be a long arduous journey until we reach Spring. The choices we make in the next few years will decide the fate of our country. I hope we choose wisely.



“Thus did a handful of rapacious citizens come to control all that was worth controlling in America. Thus was the savage and stupid and entirely inappropriate and unnecessary and humorless American class system created. Honest, industrious, peaceful citizens were classed as bloodsuckers, if they asked to be paid a living wage. And they saw that praise was reserved henceforth for those who devised means of getting paid enormously for committing crimes against which no laws had been passed. Thus the American dream turned belly up, turned green, bobbed to the scummy surface of cupidity unlimited, filled with gas, went bang in the noonday sun.” Kurt Vonnegut, God Bless You, Mr. Rosewater

There will come a time I will look in your eye You will pray to the God that you always denied The I’ll go out back and I’ll get my gun I’ll say, “You haven’t met me, I am the only son” Dust Bowl Dance – Mumford & Sons

Share this: Facebook

Twitter

Administrator

Reddit

October 23, 2011

WhatsApp

Google

Economy, Politics, Social Issues

Email

bank failures, bank of america, Citibank, Dust Bowl Dance, FDR, Goldman Sachs, Great Depression, JP

Morgan, Mumford & Sons, National Debt, Obama, Occupy Wall Street, Stock market crash of 1929, Unemployment, wealth inequality, Wells Fargo, World War II

112 Comments

EXTEND & PRETEND IS WALL STREET’S FRIEND “We now have an economy in which five banks control over 50 percent of the entire banking industry, four or five corporations own most of the mainstream media, and the top one percent of families hold a greater share of the nation’s wealth than any time since 1930. This sort of concentration of wealth and power is a classic setup for the failure of a democratic republic and the stifling of organic economic growth.” – Jesse – http://jessescrossroadscafe.blogspot.com/

Source: Barry Ritholtz “All of the old-timers knew that subprime mortgages were what we called neutron loans — they killed the people and left the houses.” – Louis S. Barnes, 58, a partner at Boulder West, a mortgage banking firm in Lafayette, Colo

The storyline that has been sold to the public by the Federal government, Wall Street, and the corporate mainstream media over the last two years is the economy is recovering and the banking system has recovered from its near death experience in 2008. Wall Street profits in 2009 & 2010 totaled approximately $80 billion. The stock market has risen almost 100% since the March 2009 lows. Wall Street CEOs were so impressed by this fantastic performance they dished out $43 billion in bonuses over the two year period to their thousands of Harvard MBA paper pushers. It is amazing that an industry that was effectively insolvent in October 2008 has made such a spectacular miraculous recovery. The truth is recovery is simple when you control the politicians and regulators, and own the organization that prints the money. A systematic plan to create the illusion of stability and provide no-risk profits to the mega-Wall Street banks was implemented in early 2009 and continues today. The plan was developed by Ben Bernanke, Hank Paulson, Tim Geithner and the CEOs of the criminal Wall Street banking syndicate. The plan has been enabled by the FASB, SEC, IRS, FDIC and corrupt politicians in Washington D.C. This master plan has funneled hundreds of billions from taxpayers to the banks that created the greatest financial collapse in world history. The authorities had a choice. This country has bankruptcy laws. The criminally negligent Wall Street banks could have been liquidated in an orderly bankruptcy. Their good assets could have been sold off to banks that did not take their extreme greed based risks. Bond holders and stockholders would have been wiped out. Today, we would have a balanced banking system, with no Too Big To Fail institutions. Instead, the years of placing their cronies within governmental agencies and buying off politicians paid big dividends for Wall Street. Their return on investment has been fantastic. The plan has been as follows: In April 2009 the FASB caved in to pressure from the Federal Reserve, Treasury, and Wall Street to suspend mark to market rules, allowing the Wall Street banks to value their loans and derivatives as if they were worth 100% of their book value. The Federal Reserve balance sheet consistently totaled about $900 billion until September 2008. By December 2008, the balance sheet had swollen to $2.2 trillion as the Federal Reserve bought $1.3 trillion of toxic assets from the Wall Street banks, paying 100 cents on the dollar for assets worth 50% of that value.

In November 2009 the Federal Reserve and IRS loosened the rules for restructuring commercial loans without triggering tax consequences. Banks were urged to extend loans on properties that had fallen 40% in value as if they were still worth 100% of the loan value. By December 2008 the Federal Reserve had moved their discount rate to 0%. For the last two years, the Wall Street banks have been able to borrow from the Federal Reserve for free and earn a risk free return of 2%. The Federal Reserve has essentially handed billions of dollars to Wall Street. When it became clear in October 2010 that after almost two years of unlimited liquidity being injected into the veins of zombie banks was failing, Ben Bernanke announced QE2. He has expanded the Fed balance sheet to $2.6 trillion by injecting $3.5 billion per day into the stock market by buying US Treasury bonds. Bernanke’s stated goal has been to pump up the stock market. While taking credit for driving stock prices higher, he denies any responsibility for the energy and food inflation that is spurring unrest around the world. The Federal Reserve has increased the monetary base by $500 billion in the last three months in a desperate attempt to give the appearance of recovery to a floundering economy.

Beginning on December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. The unlimited insurance coverage is available to all depositors, including consumers, businesses, and government entities. This unlimited insurance coverage is separate from, and in addition to, the insurance coverage provided to a depositor’s other deposit accounts held at an FDIC-insured institution.

When You’re Losing – Change the Rules Wall Street banks had absolutely no problem with mark to market rules from 2000 through 2007, as the value of all their investments soared. These banks created products (subprime, no-doc, Alt-A mortgages) whose sole purpose was to encourage fraud. Their MBA geniuses created models that showed that if you packaged enough fraudulent loans together and paid Moody’s or S&P a big enough bribe, they magically became AAA products that could be sold to pension plans, municipalities, and insurance companies. These magnets of high finance were so consumed with greed they believed their own lies and loaded their balance sheets with the very toxic derivatives they were peddling to the clueless Europeans. They didn’t follow a basic rule. Don’t crap where you sleep. When the world came to its senses and realized that home prices weren’t really worth twice as much as they were in 2000, investment houses began to collapse like a house of cards. The AAA paper behind the plunging real estate wasn’t worth spit. After Lehman Brothers collapsed and AIG’s bets came up craps for the American people, the financial system rightly froze up. After using fear and misinformation to ram through a $700 billion payoff to Goldman Sachs and their fellow Wall Street co-conspirators through Congress, it was time begin the game of extend and pretend. Market prices for the “assets” on the Wall Street banks’ books were only worth 30% of their original value. Obscuring the truth was now an absolute necessity for Wall Street. The Financial Accounting Standards Board already allowed banks to use models to value assets which did not have market data to base a valuation upon. The Federal Reserve and Treasury “convinced” the limp wristed accountants at the FASB to fold like a cheap suit. The FASB changed the rules so that when the market prices were not orderly, or where the bank was forced to sell the asset for regulatory purposes, or where the seller was close to bankruptcy, the bank could ignore the market price and make up one of its own. Essentially the banking syndicate got to have it both ways. It drew all the benefits of mark to market pricing when the markets were heading higher, and it was able to abandon mark to market pricing when markets went in the toilet.

“Suspending mark-to-market accounting, in essence, suspends reality.” – Beth Brooke, global vice chair, at Ernst & Young Wall Street desired all the billions of upside from creating new markets for new products. Their creativity knew no bounds as they crafted MBOs, MBSs, CDOs, CDSs, and then chopped them into tranches, selling them around the world with AAA stamps of approval from the soulless whore rating agencies. When the net result of a flawed system of toxic garbage paper was revealed, there was no room at the exits for the stampede of investment bankers. The toxic paper was on the banks’ books and no one wanted to admit the greed induced decision to purchase these highly risky, volatile “assets”. The trade had not gone bad, the ponzi scheme had unraveled. Suspending FASB 157 has been an attempt to hide this fraudulent business model from investors, regulators and the public. By hiding the true value of these assets, the financial system has never cleared. The banks remain in a zombie vegetative state, with the Federal Reserve providing the IV and the life support system.

Let’s Play Hide the Losses Part two of the master cover-up plan has been the extending of commercial real estate loans and pretending that they will eventually be repaid. In late 2009 it was clear to the Federal Reserve and the Treasury that the $1.2 trillion in commercial loans maturing between 2010 and 2013 would cause thousands of bank failures if the existing regulations were enforced. The Treasury stepped to the plate first. New rules at the IRS weren’t directly related to banking, but allowed commercial loans that were part of investment pools known as Real Estate Mortgage Investment Conduits, or REMICs, to be refinanced without triggering tax penalties for investors.



The Federal Reserve, which is tasked with making sure banks loans are properly valued, instructed banks throughout the country to “extend and pretend” or “amend and pretend,” in which the bank gives a borrower more time to repay a loan. Banks were “encouraged” to modify loans to help cash strapped borrowers. The hope was that by amending the terms to enable the borrower to avoid a refinancing that would have been impossible, the lender would ultimately be able to collect the balance due on the loan. Ben and his boys also pushed banks to do “troubled debt restructurings.” Such restructurings involved modifying an existing loan by changing the terms or breaking the loan into pieces. Bank, thrift and credit-union regulators very quietly gave lenders flexibility in how they classified distressed commercial mortgages. Banks were able to slice distressed loans into performing and non-performing loans, and institutions were able to magically reduce the total reserves set aside for non-performing loans. If a mall developer has 40% of their mall vacant and the cash flow from the mall is insufficient to service the loan, the bank would normally need to set aside reserves for the entire loan. Under the new guidelines they could carve the loan into two pieces, with 60% that is covered by cash flow as a good loan and the 40% without sufficient cash flow would be classified as non-performing. The truth is that billions in commercial loans are in distress right now because tenants are dropping like flies. Rather than writing down the loans, banks are extending the terms of the debt with more interest reserves included so they can continue to classify the loans as “performing.” The reality is that the values of the property behind these loans have fallen 43%. Banks are extending loans that they would never make now, because borrowers are already grossly upside-down.

Extending the length of a loan, changing the terms, and pretending that it will be repaid won’t generate real cash flow or keep the value of the property from declining. U.S. banks hold an estimated $156 billion of souring commercial real-estate loans, according to research firm Trepp LLC. About two-thirds of commercial real-estate loans maturing at banks from now through 2015 are underwater. Media shills proclaiming that the market is improving, doesn’t make it so. The chart below details the delinquency rates from 2007 through 2010 as reported by the Federal Reserve:

Real estate loans

Consumer loans



Booked in domestic offices All Residential

Commercial

All

Credit cards

Other

2010 4th Qtr

9.01

9.94

7.97

3.71

4.17

3.10

2010 3rd Qtr

9.77

10.90

8.69

4.03

4.60

3.39

2010 2nd Qtr

10.02

11.32

8.74

4.25

5.07

3.37

2010 1st Qtr

9.78

10.97

8.66

4.63

5.76

3.48

2009 4th Qtr

9.48

10.29

8.74

4.64

6.36

3.48

2009 3d Qtr

9.00

9.67

8.57

4.72

6.51

3.61

2009 2nd Qtr

8.19

8.69

7.84

4.85

6.75

3.69

2009 1st Qtr

7.19

7.89

6.55

4.62

6.50

3.52

2008 4th Qtr

5.99

6.57

5.49

4.29

5.65

3.37

2008 3rd Qtr

4.88

5.26

4.66

3.73

4.80

3.05

2008 2nd Qtr

4.21

4.39

4.15

3.55

4.89

2.80

2008 1st Qtr

3.56

3.70

3.50

3.48

4.76

2.76

2007 4th Qtr

2.89

3.06

2.75

3.41

4.60

2.66

2007 3rd Qtr

2.40

2.78

1.98

3.20

4.41

2.48

2007 2nd Qtr

2.01

2.30

1.63

2.99

4.02

2.37

2007 1st Qtr

1.77

2.03

1.43

2.93

3.97

2.29

Delinquency rates on residential and commercial loans in early 2007 were in the range of 1.5% to 2.0%. Now the MSM pundits get excited over a decline from 8.7% to 8.0%. These figures show that even after trillions of Federal Reserve and Federal Government intervention, delinquencies remain four times higher than normal. In the real world, cash flow matters. Payment of interest and principal on a loan matters. Actual market values matter. According to Trepp, LLC, a data firm specializing in commercial data, non-performing commercial real estate loans makes up 72% of the $320 million in non-performing loans reported by banks in February. These figures are after the “extremely” relaxed definition of non-performing allowed by the Federal Reserve. The game is ongoing. Misinformation abounds. The SEC now issues press releases saying they are worried that banks are covering up losses, when they were involved in encouraging the banks to cover-up their losses. Last week the SEC announced they have become concerned that extend and pretend, along with another practice known as “troubled debt restructuring” that allows banks to break loans into pieces, may have been abused in order to diminish the volume of reserves banks are holding. What a shocking revelation. Who could have known?

Are You Smarter than a Wall Street CEO? The Federal Reserve paid shills and Wall Street front men are out in droves declaring that TARP was a success and the banking system is recovering strongly. Columnists like Robert Samuelson declare TARP was a great investment and will profit the taxpayer. Samuelson says that the Treasury has recouped $244 billion of the $245 billion it invested in banks and that, when it winds down its last investments, it likely will show a $20 billion profit from the banks. This type of propaganda is ludicrous, as Barry Ritholtz succinctly points out: “No, we are not profitable on the bailouts. TARP has $123B to go before breakeven, and the GSEs are $133B in the hole. All told, the Taxpayers have a long way to go before we are breakeven. That’s before we count lost income from savings, bonds, etc., the increased costs of food stuff and energy due to inflation (the Fed’s has done this on purpose as part of their rescue plan), the higher fees the reduced competition of megabanks has created, and the future costs our Moral Hazard will have wrought in increased risks and disasters.” – Barry Ritholtz

Source: Barry Ritholtz Fannie Mae and Freddie Mac have hundreds of billions in bad loans sitting on their balance sheets. Their total cost to taxpayers will reach $400 billion, and never be repaid. The Federal Reserve has over $1 trillion in toxic assets on its balance sheet, off loaded by the TARP recipient banks in 2009. The taxpayer will never be repaid for this toxic waste. The government is implementing the Big Lie theory. If you tell a big lie often and loud enough, the non-thinking masses will believe it. That leaves us with today’s fantasy world. The reality on the ground does not match the rhetoric coming from the government, Wall Street and the corporate mainstream media. The truth is as follows: The vacancy rate for office space in the U.S. is currently 16.5%. The vacancy rate for industrial space in the U.S. is currently 14.2%. The vacancy rate for retail space in the U.S. is currently 13%. Delinquencies within collateralized debt obligations in commercial real estate loans rose to 14.6% in February. The increase signals a trend of higher delinquencies in the segment. Signs of pressure surfaced as early as January when the delinquency rate on CDOs within commercial real estate loans hovered well above 13%. According to Moody’s, CRE prices are down 4.3% from a year ago and down about 43% from the peak in 2007. The delinquency rate on loans packaged and sold in commercial mortgage-backed securities rose to a record 9.2% in February, according to a March 15 report by Moody’s. Regional and local community banks have as much as 80% of their balance sheets tied up in commercial real estate, and very few other sources of significant fee income to offset CRE losses. CRE once had an estimated national value of $6.5 trillion. Today it stands at an optimistic $3.5 trillion. There are 1.8 million homes seriously delinquent, in the foreclosure process or REO that are not currently listed for sale. There are about 2 million current negative equity loans that are more than 50% “upside down”. Home prices are off 31.3% from the peak. The Composite 20 is only 0.7% above the May 2009 post-bubble bottom and will probably be at a new post-bubble low soon. In the face of this data, mouthpieces for the Federal Reserve go before Congress and try to paint an optimistic picture. “While we expect significant ongoing CRE-related problems, it appears that worst-case scenarios are becoming increasingly unlikely,” Patrick Parkinson, the Federal Reserve’s director of banking supervision and regulation, told Congress. Parkinson said that since the beginning of 2008 through the third quarter of 2010, commercial banks had incurred almost $80 billion of losses from commercial real estate exposures. Banks are estimated to have taken roughly 40% to 50% of losses they will incur over this business cycle, he said. The Federal Reserve will be forced by the Federal Courts to reveal the banks they have saved from failure since 2008 by funneling billions of practically interest free tax payer dollars into their hands. The Fed is expected to release this week documents related to discount window lending from August 2007 to March 2010, including the peak month of October 2008, when loans hit $111 billion. It will be revealed they kept alive hundreds of banks that should have died. Shockingly, the supposedly taxpayer protecting Dodd-Frank law exempts past discount window lending from an audit by the Government Accountability Office, that’s examining much of the central bank’s other crisis-era programs. That champion of the little people, Barney Frank, said such disclosures might have “a negative market effect. If people saw the data the next day, they come to the conclusion that the bank must be in trouble.” Openness and transparency are evidently grey areas for Mr. Frank. Despite the non-disclosures, free Fed bucks, accounting fraud and uninterested regulators, over 300 banks managed to go out of business in the last two years, essentially bankrupting the FDIC. Have no fear. The Treasury gave the FDIC an unlimited line of credit with your money.



It is fascinating that every Friday afternoon the FDIC announces approximately three bank failures. Steady as she goes. No panic. Just a slow trickle of failure. But the reality is much worse than the show. Despite the gimmicks of extending and pretending, there are 900 banks essentially insolvent sitting on the FDIC “Problem” list. This is after closing the 300 banks. There are at least a couple hundred billion of losses in the pipeline, to be funded by the American people/Chinese lenders. A critical thinking American might ask, if things are getting better, why does the number of troubled banks continue to rise week after week, month after month?

One year ago the website www.businessinsider.com listed the 10 major regional banks with the highest risk from commercial real estate loans. These 10 banks had $133 billion of commercial real estate loans on their books. Most, if not all, are still in business today. The fact is those real estate loans are worth 30% to 50% less than they are being carried on the books. A true valuation of these loans would put all 10 of these banks out of business. They are dead banks walking. In a world where transparency, honesty, and true free markets reigned supreme, these banks would pay for their poor risk taking choices. They would be liquidated and their assets would be sold off to banks that did not make horrific lending decisions. Failures would fail.

Bank

CRE Loans (bil.)

% of Tier 1 Capital

NY Community Bank

$22.0

915%

Wintrust Financial Corp.

$3.4

419%

M&T Bank

$20.8

378%

Synovus

$11.2

376%

Wilmington Trust

$4.0

369%

Marshall & Iisley

$13.8

283%

Zions Bancorporation

$13.4

253%

Regions Financial

$28.3

218%

UMB Bank

$1.3

156%

Comerica

$14.3

97%

How could anyone deny the world is back on track after examining the following chart?



It should warm your heart to know that Financial Profits have amazingly reached their pre-crash highs. All it took was the Federal Reserve taking $1.3 trillion of bad loans off their books, overstating the value of their remaining loans by 40%, borrowing money from the Fed at 0%, relying on the Bernanke Put so their trading operations could gamble without fear of losses, and lastly by pretending their future losses will be lower and relieving their loan loss reserves. The banking industry didn’t need to do any of that stodgy old school stuff like make loans to small businesses. Extending and pretending is much more profitable. The big four of JP Morgan, Citigroup, Bank of America, and Wells Fargo should have undergone orderly bankruptcy liquidation in 2008. They took on a vast amount of leverage and a vast amount of risk. Their greedy bets went bad. In a true capitalist system, they would have failed. Instead, in our crony capitalist system, they were bailed out by taxpayers and continue to function as zombie banks pretending to be healthy. They reported profits of $34.4 billion in 2010. Every dime of these profits was generated through accounting entries that relieved their provisions for loan losses. These “brilliant” CEOs who virtually destroyed the worldwide financial system in 2008, looked into their crystal balls and decided their loan losses in the future would be dramatically lower. I’ll take the other side of that bet. I dug into their SEC filings to get the information in the chart below. Just the fact that Citicorp and Bank of America have still not filed their 10K reports after 3 months tells a story.

Mortgage

Credit

Total

Loss

% of

s

Card

Loans

Reserve

Loans

$53,635

$174,211

$137,676

$692,927

$32,266

4.7%

9/30 10Q

$79,281

$209,678

$216,759

$654,311

$43,674

6.7%

9/30 10Q

$77,062

$394,007

$142,298

$933,910

$43,581

4.7%

$337,105

$22,375

$757,267

$23,022

3.0%

Bank

Source

CRE

JP Morgan

12/31 10K

Citicorp Bank of America Wells Fargo

12/31 10K

$129,78 3

These four “Too Big To Fail” bastions of crony capitalism have $340 billion of commercial real estate loans on their books. That’s a lot of extending and pretending. Just properly valuing those loans at their true market value would wipe out most of their loan loss reserves. I wonder if Vikrim and his buddies have noticed that home prices have begun to plunge again. Deciding to not foreclose on home occupiers that haven’t made a mortgage payment in two years is not a long term strategy. These four banks have $1.1 billion of outstanding mortgage debt on their books. I wonder what a 20% further decline in home prices will do to these loans. Throw in another half a billion of credit card loans to Americans being hammered by soaring energy and food prices and you have a toxic mix of future losses. These banks are gonna need a bigger boat. The game of extend and pretend at the expense of the American working middle class is growing old. When this game is over, Wall Street will be looking for another bailout. The American people will not fall for the lies again. Wall Street’s oppression reeks of greed and disgrace. They are liars and thieves. They have pillaged and stolen all that was left to steal. I will be surprised if they get out alive. Well you are my accuser, now look in my face Your opression reeks of your greed and disgrace So one man has and another has not How can you love what it is you have got When you took it all from the weak hands of the poor? Liars and thieves you know not what is in store There will come a time I will look in your eye You will pray to the God that you always denied The I’ll go out back and I’ll get my gun I’ll say, “You haven’t met me, I am the only son” Dust Bowl Dance – Mumford & Sons

Share this: Facebook

Administrator

Twitter

March 30, 2011

Reddit

WhatsApp

Google

Economy, Politics, Social Issues

Email

bank of america, Bernanke, Citigroup, Commercial real estate collapse, cover-up, CRE, extend and pretend,

FASB, FDIC, fraud, Geithner, IRS, JP Morgan, Obama, Paulson, SEC, TARP, Wall Street, Wells Fargo

The Burning Platform

Proudly powered by WordPress

44 Comments