Archive for July 5th, 2011
The Federal Reserve is primarily concerned with one thing and that is to protect the interests of the banking industry. The Fed has no desire or need to protect the underlying economy. If they can get away with allowing banks to jump from one bubble to another they will do so. The success of the overall economy is only consequential if it aligns with the deeper interests of the banking cabal. This weekend former Fed Chair Alan Greenspan mentioned that simply bailing out Greece was a temporary measure. When pressed he went back into “Greenspeak” and rambled on in his typical obtuse language. The reason why global banks fear Greece is not because of the country itself, but because the country has billions of dollars in debt that global banks hold. These banks do not want to pay for their bad bets and would rather shift the cost to the overall population in general. The Fed balance sheet here in the U.S. is now up to $2.84 trillion, another record that gets no airtime in the press. The Federal Reserve continues with clandestine bailouts only to protect the interests of the banking elite.
Fed balance sheet reaches $2.84 trillion
The Federal Reserve balance sheet is now up to $2.84 trillion. The Fed has become the silo for shadow bailouts including bailouts for the commercial real estate industry, toxic residential loans, mortgage backed securities, and even loans that have no business being on its books. Yet all this is seen as providing more liquidity for the banking system in the country. Since the crisis started four years ago little benefit has been seen in the underlying economy. Keep in mind the fiscal stimulus which is a fraction of what the Fed now holds on its balance sheet is what many Americans see on infrastructure projects. The total amount spent since August of 2008 approximates $550 billion (roughly 3 percent of GDP). On the other hand the Federal Reserve balance sheet specifically targeted to the banks now is up to 20 percent of GDP.
Of course little is discussed in the press about the Fed balance sheet. The Federal Reserve has specially focused on bailing out the banking sector and this has worked well. The too big to fail banks are now larger and profits are back to record levels. Their biggest success was ripping off the public and more specifically have kept most of their hidden secrets buried deep in the belly of the un-audited Federal Reserve balance sheet. We know that the Fed is holding $2.84 trillion in various “assets” but what exactly is being held? They would like the public to believe that only pristine assets are being held in exchange for U.S. Treasuries but in reality the Fed is purchasing every questionable asset under the sun. The Fed is ignoring the needs of the economy and simply focusing on protecting the interests of the banking elite.
Read More at My Budget 360
This month’s Double Feature: Cognitive Dissonance and Wishful Thinking, two thrillers about floundering Central Banks and frantic Ministries of Propaganda.
The global economy is now dominated by Cognitive Dissonance and Wishful Thinking on a grand scale. The push to convince us of “normalcy” and a “return to growth” are strongly reminiscent of the Phony Year of 2007, when the subprime mortgage meltdown was toppling the entire global credit market, yet we were constantly reassured by financial authorities that it was all safely “contained.”
We were promised a happy ending to the second feature, Wishful Thinking.
As the second half of 2011 begins, the level of cognitive dissonance between what we’re presented as reality by the central banks, media and government–that the “soft patch” is over and the “recovery” is once again full steam ahead–and what the data says is extreme.
All available evidence suggests that credit is tightening as fear awakens in the credit markets. To mention just one such point: as the excellent Acting Man financial blog noted recently, the yield on short-term Treasury bills is now negative, meaning that investors buying these bonds are paying for the privilege of having the U.S. Treasury as the counterparty.
This strongly suggests they care only for security, that is, getting their principal returned to them, and not at all for yield (interest on their cash). If the global credit markets were healthy, why would anyone choose a negative yield?
In Survival+, I used the word derealization to describe the disconnect between what we experience and what the propaganda/marketing complex we live in tells us we should be experiencing.
The Status Quo–in the U.S., in China, and in Europe–has staved off reality for a full 2.5 years since the 2008 global financial meltdown by adding unprecedented sums of public debt to “solve” the crises of private overleverage, overindebtedness and malinvestment.
This “fix” has already failed, but the EU has bought a few months at best with the latest bailout of Greece’s Kleptocracy.
Note that the time bought by each new “fix” is diminishing with every intervention. I have likened this process to the onset of diabetes, where the body’s sensitivity to insulin declines even as the body attempts to overcome the desensitizing by producing more and more insulin. Eventually the system breaks down.
Massive, unprecedented interventions bought 2.5 years of bogus “recovery” 2008-11, but that level of intervention–roughly $100 billion a month in Federal Reserve “stimulus” and $130 billion in Federal borrow-and-spend stimulus a month–cannot continue at that pace, as it is destabilizing the entire system.
In the same pattern of reduced effect from greater applications of borrowed money, the EU bought a year of “recovery” with last May’s bailout of Greece. Now the latest ECB bailout, which exceeds the previous bailout in size and complexity, is buying perhaps two months before the crisis reappears, like a 1950s movie monster, even stronger and more destructive.
This systemic decline in sensitivity to central-bank/State interevention suggests the end-state of “extend and pretend” and “mark to fantasy” is drawing nearer, as the next round of stimulus, quantitative easing, bailouts, etc. will buy considerably less time for the Status Quo than the last fix.
At some point, the announcement of a new bailout or Fed “fix” will boost spirits and markets for a few days rather than a few months. At the very end of this process, the announcement of the next “fix” will crash the credit and stock markets because participants finally understand that the fixes are only floundering, last-ditch acts of desperation which have zero chance of actually working.
In other words, neither Cognitive Dissonance nor Wishful Thinking have happy endings.
The $1 trillion in cuts would probably be spread out over the next decade or so, meaning roughly $100 billion less in federal spending each year, although the savings might be larger in later years.
As opposed to this:
Hmmm….. $100 billion .vs. $1.6 trillion. Yeah, that’s gonna make a big difference.
But already, $1 trillion in cuts is entering uncharted territory. The cuts would be some of the biggest in history.
Doesn’t that define the problem?
First, we build a Ponzi in the tech industry. Companies with no profit (and no reasonable expectation of ever having one) sell for hundreds of dollars a share, get 100% (or more) first-day price ramps and then, when the bubble bursts, crashes.
Not content to accept that we built a Ponzi Bubble in tech during a Democrat Presidency, and that the fluff had to come out of the economy, we do it again under a Republican one, this time in houses. This culminates in giving people $500,000 loans with no income, no job and no assets, creating price ramps of 100% or more in significant parts of the economy. At the same time we accelerate the offshoring of our job base to an insane degree, decimating the tax base.
That blows up and now we’re left with the need to accept a thirty percent short-term contraction in the economy. Our tax base dwindled severely during these years, with again huge parts of labor being either offshored or shifted toward illegal immigrants. This latter bubble once again pumped up stock prices to ridiculous levels as the so-called “earnings” were gained by gaming the means of production.
Allowing that correction was unacceptable and we’ve now done it again, but this time it’s much more tenuous, as only stock and similar prices have skyrocketed. Have we actually blown a “new bubble”? Well, no – we’ve borrowed and spent ~12% of GDP for three years running in the government, and that cannot continue.
But thus far, the so-called “proposals” to take care of this problem are limp-wristed and dishonest scams. Representatives and Senators on both sides of the aisle know full well that should they actually address these structural imbalances and stop spending more than the government takes in that the full force of the economic adjustment that should have occurred in 2007 and 2008 will immediately re-assert itself.
The problem with not correcting the imbalances is that the longer they go on the worse the damage is, just as we went from a ~10% of GDP contraction in 2000 to where we are now today – ~20-30%.
If we keep it up the consequence, when the wall is hit, will be collapse.
It is time to be adults folks.
Entire Cobb Mtn. Estate to be demolished by couple with dueling dozers rather than allow Bank of America to auction it off in the fraudulent foreclosure Ponzi scheme, bogus modification scam now sweeping our nation! An estimated 15 Million homes/families’ lives hang in the balance! We’re all in this together – How are you fighting back?
This was originally posted and flagged down within an hour the first time I posted two nights ago on Craigslist under: real estate and in just 18 minutes the second time I posted it under: free stuff. Please leave this up as it a serious commentary about the very real, current state of our nation!
NOT… Just another Foreclosure Story
NOT ..an America Birthday or 4th of July Celebration
Sadly – it’s another Bank of America foreclosure story………OR IS IT ???
Over the last few days everyone had emailed or linked me to the below insane HEADLINES
Craigslist Couple to give away contents of entire home….or
Couple to deploy Dueling Dozers in demo of own home
As it was, the only reason their story came out…was in trying to give away the contents of their home as “Free Stuff“ on Craigslist… What! ..Can you believe it? Someone trying to give away ALL the contents of their home!…Well no…and neither could Craigslist…so the ad was quickly flagged and taken down. Surely it was some type of fraudulent posting or someone “pranking” this couple…you know..trying to give away all their stuff. Frustrated – homeowner Robert posted again…..this time under Craigslist “Real Estate” Once again the ad was flagged and taken down. So Robert tried posting it – a third time. Yet again it was removed. By this time …Robert was so frustrated he attached “an explanation” to assure any Craigslist monitors….they were giving away…everything ….adding…..they(Ana & Rob) were going to bulldoze the house. Finally – Craigslist allowed his posting…..but only in the “Politics” category with the bizarre explanation of dueling dozers.
So we (OHIO FRAUDclosure) had to find out….Who was this “Insane Guy” and what kind of ”Crazy People”…give everything away and then plan – to bulldoze their home.
Behind the sensational headlines – I found a real couple – suffering real pain. And no matter how the Bank of America spokesperson tries to spin this story….it stops HERE and NOW. This is NOT another California family looking for a “Free Home.” This is NOT some crazy couple that ”overbought” during the real estate boom. And NO… they didn’t refinance 2 or 3 times to buy boats and cars so they could live it up somewhere near the California Coastline.
This is…the story ……of Ana and Robert Somerton…..real people & real victims – first suffering through a Counrtywide FRAUDulent loan, then with all Bank of Americas (BOA) failures with phony servicing attempts to implement …any of the Goverments’ failed “FRAUDclosure prevention” programs.
In 1990 Robert’s father (Ronald) bought a small 1.3 acre parcel of land, on which he planned to build a small 820 sq foot 1 bedroom 1 bath retirement cabin. Robert was excited for his father, who slowly, was building the home “out of pocket” (no loans) on weekends. Some six years later, and nearing completion of his dream home ..sadly.. Ronald passed away. Robert could not bear to have the home and property…slip away. He was determined to finish the home that his dad had so wanted. But, in order to buy out his sisters half of the estate and finish the home …Robert took out a loan against the value the property.
It was at this same time that he decided he should slightly increase the size … to a more usable 1275 sq. ft. He and his wife – Ana – eventually decided they would finish ”Ronald’s dream”. Robert told me ”We first painted the place, then we fenced in the yard for our dogs Magic and Pascual. We also converted the garage into our master bedroom, and added a new walk-thru closet and master bath to the end of house. I did all the drawings and most of the construction …with Ana helping out… on her days off.”
Be sure to check out the rest here…