Archive for February, 2008

Election Results Already!

Thursday, February 28th, 2008

This is milk-coming-out-of-your-nose-funny! A must-see for those of you who can’t wait til November…

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Greenspan tells Gulf States to drop the dollar

Thursday, February 28th, 2008

Article is here. Funny how this data didn’t come out in America…so, who’s got bets that Greenspan (or his buddies)  have shorts on the dollar? You’d expect that someone, who spent 18 years trying to guide fiscal policy, wouldn’t be now spending his free time telling others how to help crash the US economy. Where are the calls of treason?

“… Alan Greenspan, the former chairman of the US central bank, or Fed, has said that inflation rates in Gulf states, which are reaching near record levels, would fall “significantly” if oil producers dropped their US dollar pegs.

Speaking at an investment conference on Monday in Jedda, Saudi Arabia, he said the pegs restrict the region’s ability to control inflation by forcing them to duplicate US monetary policy at a time when the Fed is cutting rates to ward off an economic downturn…”

Central bank pressured to weaken euro

Thursday, February 28th, 2008

Article is here. Ain’t it a bitch? Your currency tanks, things are bad (America). Your currency’s strong, others can’t afford your exports (EU zone). The only sensible policy is to get your stats up. Use ShadowTraders to increase your income, and you won’t have to worry about affording that tasty european cheese…

“…The euro has surged to an all-time high of $1.51 against the dollar, prompting bitter complaints from European industry and setting of a sharp selloff in sovereign bonds from southern states deemed least able to withstand a super-strong currency.

Germany’s car-maker BMW said it was slashing 5,600 jobs and warned of more drastic action if there was a “sustained rise” in the euro above $1.50.

Charles Edelstenne, head of France’s Dassault Aviation, told Le Monde that the euro’s rise was reaching asphyxiation level. “We can’t cope with a such an exchange gap by producing and sourcing in the eurozone. The natural step is to shift to the dollar zone or low-cost areas as they have done in the car industry. This could include parts of our factory plant and some research tasks,” he said.

…The euro’s explosive move came after US Federal Reserve chief Ben Bernanke yesterday signalled further cuts in interest rates, acknowledging that tumbling house prices risked setting off a second phase of the credit crisis. “Financial markets continue to be under considerable stress,” he said.

The Fed has already slashed rates from 5.25 to 3 percent since September, moving “ahead of the curve” to prevent the economic downturn spiralling out of control. The effect is to widen the yield gap with the euro-zone. This has drawn a flood of hot-money flows into Europe’s money markets…”

Boil, bubble, toil and trouble

Wednesday, February 27th, 2008

Full story here. I love Asia Times–mostly because they’re not compelled to keep lying to the masses to avoid panic, or even, heaven forbid, getting people to do sane actions, not encouraging buying another stupid big screen tv to “keep the economy going”. The solution to low production is to have high production. Use ShadowTraders to get your production up, up and away from any potential messes. 

“…Despite the faltering US economy, pricing pressures are accelerating â?? a dynamic Iâ??ve heard referred to as the “new conundrum”. January consumer prices were up 4.3% year on year. Major commodity price indexes surged to yet new record highs and, if anything, inflationary pressures are broadening. Iâ??ve suggested that this “reflation” will have consequences divergent from those of the past. With the historic bubble in Wall Street finance now bursting, the powerful monetary mechanism linking Fed rate cuts directly to asset price inflation (in particular, real estate, risky debt, and stocks) has been severely impaired if not completely severed. The link between US interest rates, dollar devaluation, faltering confidence in currencies in general, and inflating commodities prices has never been stronger.

During the 2001-2003 reflation, hedge fund managers were quoted as saying “the Fed wanted me to buy stocks and junk bonds”. Today, the Fed would surely hope to send a similar message, while the sophisticated interpret things altogether differently. Today, investors and speculators alike are much keener to buy precious metals, energy, and commodities. And while the US economy is succumbing to powerful recessionary forces, it is no longer the sole global engine of (credit and economic) growth.

Itâ??s worth repeating that global credit expansion remains brisk, while bubble dynamics and economic growth remain in place throughout Asia, the Middle East and in the emerging economies, especially for the powerful boom in Bric countries (Brazil, Russia, India and China). In concert with the bursting of the Wall Street bubble, global inflationary dynamics now strongly favor “things” as opposed to securities. In particular, necessities and stores of value available in relatively limited supply are seeing extraordinary inflationary effects…”

Let the lenders eat cake (or crow)

Wednesday, February 27th, 2008

Full story here. Don’t be like Blanche in A Streetcar Named Desire and “rely on the kindness of strangers”. Use ShadowTraders to make your money, get out of debt, and not wait and pray for the kindness of brokers to sort you out.

“…When, a few years ago, most of the subprime borrowers got into their mortgages on their overpriced properties with the low initial “teaser” mortgage rates that the banks dangled in front of their eyes like a worm lure on a fishing line, they were promised that they could always spare themselves the pain of the resets to higher rates and payments by using the house’s inevitable increase in market value as the equity required to refinance into more affordable fixed-rate financing.

As home prices fell, the home equity needed to refinance evaporated, so the subprime borrowers were left defenseless against to full gale force pain of the resets, and the subprime crisis commenced.

For these borrowers, negative amortization certificates provide a clear benefit – they get a much lower monthly mortgage payment. At least temporarily, the holders of the mortgage will do worse, for a good part of the value of their ownership in the mortgage has been now converted into the certificate. The plan’s originators at OTS say the banks and other holders of the mortgages, since they will save the average $50,000 it costs to foreclose on a delinquent borrower, will be fine and on board with this.

Sure they will.

When things really get hazy is if the homeowner wants to sell the house. Now he can, his mortgage balance has been reduced, so he won’t have to face a Freddy Krueger like figure at the closing table demanding tens of thousands of dollars to wake from his nightmare.

What about the negative amortization certificate? Since its creation it has become a sort of semi-secured lien on the property. When the house sells, any difference between the re-financed mortgage amount and the selling price, up to the value of the original mortgage, supposedly goes back to the holder of the certificate, the mortgage holder, after which the certificate then goes out of existence.

No recovery – what then?
But what if the house’s selling price does not recover? Who carries that debt, the value of the negative amortization certificate created when the original mortgage was refinanced? The buyer, for all eternity, like a borrowing Original Sin, paying for a financial mistake he made in his 20s all the way to the nursing home? Or does the holder of the negative amortization certificate just eat the loss, laugh it off with a hale and hearty guffaw, “win some, lose some”? Yeah, right…”

Lenders Fight Mortgage Rewrite

Tuesday, February 26th, 2008

Full story here. Don’t wait for sane and compassionate action from a bunch of money lenders. Use ShadowTraders to get out of the debt slavery game.

“…The legislation would allow bankruptcy judges for the first time to alter the terms of mortgages for primary residences. Under the proposal, borrowers could declare bankruptcy, and a judge would be able to reduce the amount they owe as part of resolving their debts.

Currently, bankruptcy judges cannot rewrite first mortgages for primary homes. This restriction was adopted in the 1970s to encourage banks to provide mortgages to new home buyers.

The Democrats and their allies see the plan as an antidote to the recent mortgage crisis, especially among low-income borrowers with subprime loans. The legislation would prevent as many as 600,000 homeowners from being thrown into foreclosure, its advocates say…”

Disaster Preparation

Monday, February 25th, 2008

Sometimes I am asked how to prepare for a worst case scenario if we experience a financial or political meltdown in the global banking system. Some of the best material to help you imagine what such a scenario would be like is to learn about the experiences of people who have lived through such meltdowns as a result of economic warfare (Cuba, Russia, Latin America) during the last two decades or as a result of a particularly lethal combination of natural disasters and economic warfare (New Orleans, Indonesia). Here is a selection of readings and videos we have found particularly useful.

Economic Warfare

Closing the â??Collapse Gapâ??: the USSR Was Better Prepared For Collapse Than The US
By Dmitry Orlov – Energy Bulletin (4 Dec 2006)

Life and Debt in Jamaica
A film by Stephanie Black
Participatory Budgeting ~ From Wikipedia

Post-Soviet Lessons For a Post-American Century
By Dmitry Orlov – SurvivingPeakOil.com (Archives)

Survival in Times of Uncertainty: Growing Up in Russia in the 1990s
By Legal Alien – Sott.net (24 Jan 2008)

The Experience of the Participatory Budget in Porto Alegre, Brazil
At Unesco.org

The Power of Community: How Cuba Survived Peak Oil
At PowerOfCommunity.org
The Rape of Russia ~ By Anne Williamson

â??The Takeâ? ~ A Documentary

The Globalization of Poverty and the New World Order
By Michel Choussudovsky

Transcript of Interview of Greg Palast, Journalist for BBC & Observer, London
Alex Jones Radio Show (4 Mar 2002)

Natural Disasters

The Year the Levees Broke
Greg Palast in New OrleansThe Rise of Disaster Capitalism
By Naomi Klein – The Nation (14 Apr 2005)

No title, no house

Monday, February 25th, 2008

Full story here. Mortgage gets sold over and over and over. When that foreclosure comes around, who’s got the real paperwork. See, those $15/hr admin people seem like a real bargain now!

But…don’t bet on your mortgage being lost and you coming away clean. Use ShadowTraders to make yourself so much money, you don’t need to worry about it.

“…Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven’t been able to prove they own the mortgages. The confusion is another headache for U.S. Treasury Secretary Henry Paulson as he revises rules for packaging mortgages into securities.

“I think it’s going to become pretty hairy,” said Josh Rosner, managing director at the New York-based investment research firm Graham Fisher & Co. “Regulators appear to have ignored this, given the size and scope of the problem.”

More than $2.1 trillion, or 19 percent, of outstanding mortgages have been bundled into securities by private banks, according to Inside Mortgage Finance, a Bethesda, Maryland-based industry newsletter. Those loans may be sold several times before they land in a security. Mortgage servicers, who collect monthly payments and distribute them to securities investors, can buy and sell the home loans many times.

Housing Boom

Each time the mortgages change hands, the sellers are required to sign over the mortgage notes to the buyers. In the rush to originate more loans during the U.S. mortgage boom, from 2003 to 2006, that assignment of ownership wasn’t always properly completed, said Alan White, assistant professor at Valparaiso University School of Law in Valparaiso, Indiana.

“Loans were mass produced and short cuts were taken,” White said. “A lot of the paperwork is done in the name of the original lender and a lot of the original lenders aren’t around anymore…”

Housing Bailout?

Monday, February 25th, 2008

Full story here. Don’t wait for a bailout. Make your money now with ShadowTraders.

“…A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government â?? now that it is in trouble.

The proposal warns that up to $739 billion in mortgages are at â??moderate to high riskâ? of defaulting over the next five years and that millions of families could lose their homes.

To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.

â??We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,â? the financial institution noted…”

Bonfire of Capital

Monday, February 25th, 2008

Full article here. Get your profits now with ShadowTraders.

“…The country is now headed into a deep and protracted recession. Low interest credit and financial innovation have paralyzed the credit markets while inflating a monstrous equity bubble that is wreaking havoc with the world’s financial system. The new market architecture, “structured finance”, has collapsed under the stress of falling asset-values and rising defaults. Many of the banks are technically insolvent already, drowning in their own red ink. Public confidence in the nations’ financial institutions has never been lower. Monetary policy and deregulation have failed. The system is self-destructing.

Now that the credit crunch has rendered the markets dysfunctional, spokesmen for the investor class are speaking out and confirming what many have suspected from the very beginning; that the present troubles originated at the Federal Reserve and, ultimately, that’s where the responsibility lies…”