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Debunking The Great Myth Of US Consumer Deleveraging, Or Why The US Economy Will End Not With A Whimper But A Bang
By now everyone 'knows' that the US consumer is hunkering down, paying down debt and performing other mythological tasks. Alas, as the WSJ points out today, this is not exactly true... In fact not true one bit. The reality is that over the past two years, US consumers have not been deleveraging as a voluntary act of eliminating debt, but have been actually aggressively leveraging more and more until the bank providing them credit puts them into involuntary bankruptcy, cutting off the money spigot. This is a startling realization, confirming that the average American is actually hyperleveraging to the point where all available credit is forcefully eliminated by a lender institution!
Here are the facts: as the Flow of Funds report demonstrates, total household credit, consisting of Home Mortgages and Consumer Credit, has indeed declined by $610 billion from $13.2 trillion to $12.6 trillion since the credit bubble peak in June 2008. Yet, as Mark Whitehose points out, there are two ways in which this "deleveraging" can occur. Voluntarily, in the form of actual financial discipline, whereby the end consumer makes a conscious effort to pay down their debt, and Involuntarily, which is really not deleveraging, but aggressive leveraging to the hilt, up until the point where banks eliminate all credit access to the end consumer.
Luckily there is a way to quantify which road has been more travelled by. As the WSJ points out, in the period in which consumer credit has declined by $610 billion, banks and other institutions have charged off $588 billion in mortgage and consumer loans. (Our attempts at recreating these numbers using Fed H.8 and charge off data were slightly off, in fact demonstrating that based on charge off data as calculated, forced deleveraging will only accelerate as it catches up to bank charge off runrates). Nonetheless, a good way to visualize this phenomenon can be seen in the chart below:
Putting numbers to the data confirms that of the over $600 billion in deleveraging, only $20 billion or so of it was voluntary, with the balance occurring due to continuously irresponsible borrowing practices, in which US consumers spend, spend, spend themselves into oblivion only to be cut off cold turkey, instead of entering a slow deleveraging rehabilitation which would allow them to shift into the transition to a new creditless normal far easier.
The last observation is key as it has rather startling implications to David Rosenberg's theme of the New Frugal Normal. It would appear consumers do not, in fact, moderate their spending while still in possession of credit (regardless of its cost) - quite the contrary: they accelerate spending until the charge off threshold at the lender is breached, and all credit is cut off, also resulting in a collapse in a creditor's FICO score, cutting him or her off completely from future (at least near term) credit access. Thus what is occurring at the end of a typical consumer credit lifespan, is not a whimper but a massive bang. What happens after may require Stephen Hawking's explanation rather than David Rosenberg. The conclusion is that consumers do not pass a moderate "go" on their way to insolvency, they go from hyperleverage straight into bankruptcy.
What this means for consumption as observed on the supply-side, i.e., sales at stores like Nordtstroms and Barneys, is that instead of trendlines being indicative of what is truly happening behind the scenes, we have now entered a phase where sales will spike only to drop off in a quantized, step-wise fashion, rather than a linear drop off. This would make all the sense in the world, when one considers that side by side with the observed "deleveraging" of consumers, sales at aspirational store concepts are in fact surging, as the broke middle class performs one last "swan song" rampage of purchasing every Gucci and Chanel bag available, before saying goodbye to credit for a long, long time.
And with unemployment still at record highs, and soon to take another leg higher, paychecks continuing to decline, excess capacity at record highs, 99 week EUC and Extended Claims reaching their ceiling 2 year anniversary from the Lehman collapse, and the general economy double dipping, the implications of this will be dire, as there will be no gradual decline. Instead, to borrow another cosmological term, instead of the US economy decelerating at a rate proportional to the removal of credit from the system, it will grow and grow until it hits supergiant status, only to collapse into a neutron star (or worse) singularity, in which only the Fed will be left beyond the event horizon, only to suffer a similar fate in its last ditch failed attempt to stimulate hyperinflation and rescue the US consumer and banking classes from the infinite gravitational pull of a failed Keynesian experiment.
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Within a month of putting her two-bedroom house in San Francisco on the market recently, homeowner Linda Gao had five offers, each one above her asking price of $699,000. So before accepting the most-attractive bid, she threw in an extra condition: If you want to buy my house, you have to feed the squirrels.
Two weeks later, she and the buyer hammered out a contract that included feeding the backyard wildlife, which Ms. Gao has done three times a week for the past two years. "I don't think it matters if it's a buyer's market or a seller's market," Ms. Gao says. "Anyone with a good heart would feed them."
Indeed, when Susan Butler was negotiating to buy Ms. Gao's San Francisco property, she was resigned to the feeding schedule. "At that point, I said, 'Yeah, what the hell, I'll feed the squirrels,'" she said. She signed a contract in April, paying $815,000 -- or $116,000 over the asking price. Will Ms. Butler actually feed her new furry friends? "Probably not," says the college administrator. "I don't want to encourage other rodents."
"In a Booming Market, Sellers Can Be Choosers" by Amir Efrati, Wall Street Journal
She's probably eating those squirrels now.
http://www.youtube.com/watch?v=If3IYQX6oUM&feature=related
i tried to find a buyer of my house of 30 years, to feed the birds. he said he would. kinda throw in my bear, too.... he was an ass and resold my house six months later, for a double. can you imagine.
Now, you're stuck renting a cheap apartment over a furniture shop, breathing fumes, and bitchin' to anyone that will listen. Coulda, shoulda, woulda...
your mean. how do you know so much about me?
Lawyers, Guns And Money by Warren ZevonWell, I went home with the waitress
The way I always do
How was I to know
She was with the Russians, too
I was gambling in Havana
I took a little risk
Send lawyers, guns and money
Dad, get me out of this
I'm the innocent bystander
Somehow I got stuck
Between the rock and the hard place
And I'm down on my luck
And I'm down on my luck
And I'm down on my luck
Now I'm hiding in Honduras
I'm a desperate man
Send lawyers, guns and money
The shit has hit the fan
Send lawyers, guns and money...
@Lost Wages
>>They justify it all by watching the banksters getting govt bailouts and the following year pay themselves huge bonuses.<<
Do they also consider the multitude of honest people who didn't do the stupid, wreckless things they did (high priced house, $50k credit card) that will ultimately be paying the price for their irresponsibility? I bet they conveniently block that out.
I'm sure they didn't consider what affect it has on the "honest people" any more than those who bailed out ahead of them and caused the downward housing price spiral to spin a little faster.
We can also pass some of the blame to the Teleprompter in Chief for starting class warfare while referring to Wall Street types as "Fat Cat Bankers".
I would guess that everyone has their price when it comes their credit score. How much would it take for you?
My BK two years ago wasn't voluntary and I went down for $1.8 million. My income had fallen so low, I was able to do Chapter 7.
>>We can also pass some of the blame to the Teleprompter in Chief for starting class warfare while referring to Wall Street types as "Fat Cat Bankers". <<
You hit on an example of the politization of the problem. The same politicians that set up the whole housing basis for the fiasco (Frank, Dodd, etc.) sit high and mighty accusing the bankers of all ill while they play it to the voters - same old story.
What suprises me is how many people join in on the politics of theft. Democrat/liberals hate the bankers, Republican/conservatves hate the fraudulent borrowers.
I say throw them all in jail together - no one gets a pass, a rationalization, no excuses.
One very difficult axiom to escape is " life is not fair " . Some get all the breaks , some do not . Banks get favored , consumer is abandoned . Gut it out , do the next right thing . Theres always a "golden boy" in every occupation that gets his way with the upper management , though by his work ethic never derserves the attention . Thats life . Tough . Deal with it . Life ain't fair . Sorry .
How about the debt re-structure then default feed back loop that is occurring both in housing and in consumer credit. Everybody is seeing everyone else who had high credit balances restructure their obligation by just calling up the card issuer and negotiating their debt down. Better than that just quit paying your mortgage and live free for up to two years.
Go Red Raiders! Anybody up for some Bevo burgers?
Hook'em Horns
Anecdotally, I have owned businesses and property in downtown Austin for 22 years. There is more activity down here now than ever.
Ya - college kids will always need pizza & beer ...
Ya - thank God.
But more due to population rise
http://austin.bizjournals.com/austin/stories/2010/09/06/daily49.html
unemployment fall
http://austin.bizjournals.com/austin/stories/2010/09/13/daily68.html
and high rise
http://austin.bizjournals.com/austin/stories/2010/06/07/daily56.html
The damn Californians have ruined Austin...
I come in to town and cannot recognize it. I got lost in the Courthouse area there are so many high-rise condos in the way.
Could not believe it!
There is very little doom and gloom in Dallas as well. Knock on wood, I have been lucky in Real Estate the last 3 years and just purchased 2 more properties that should prove to be extremely profitable.
I am turning myself back into the hobo i was long ago. 2 changes of clothes and a sleeping bag. Food stored and hidden, same with silver. Closed my business after 30 years, sold my diesel crew truck and work trailer. I owe a 120.00 to sears. No other bills. Lowering my profile hugely.
Internet i will keep till they cut it off. In my early years i was often on the run from the law and learned when to move and when to be still.
sold the truck now because later noone will buy it as there will be no fuel.
I figure less than 2 months, but it could be monday that the other shoe drops. Until then enjoy your life and prepare best you can realizing we will all go truh a new realization of what is really of value.
BTW i loved my truck, it had everything and was paid for long ago.Ouch If i had the slightest inkling that things would normalize i would NOT have done it.
Time to find some roommates, friend. Not only do you survive more easily, but synergies emerge. Not to mention the nourishment of company.
Love your story. Adaptation is key . . . and you are well adapted to it.
find a roommate, roommates suck big time, never had one.
time to find a lover. keep you warm and burn some calories this winter.
With a nose like that I'm sure you'll keep her happy.
s h e, i don't think so†
only grows when i lie. it should be zerØbama mascot.
h e r , i don't think so†
only grows when i lie. it should be zerØbama mascot.
Stay with us merehuman.
It must have been very hard to close your business, I had to close my first two ventures as they did not workout. No bankruptcies though, I closed them when rose-colored glasses came off.
Spending less and lowering your profile, both great ideas. But, stay with us! I value your contributions to ZH very much.
If it helps: Good Luck!
Thank you DoChenRollingBearing.
I had my failures too, but like you i got up and started over.
I assume many of us older guys will keep our heads while our communities struggle to find normalcy after the coming fall. It will be up to us to give direction, guidance to our locals who will of course be surprised by the failure of the dollar and themselves in terms of personal survival.
I bought a few musical instruments to provide entertainment and now will begin to work on post- fail humor. There will be a lot of dollar and wallstreet jokes for sure.
Komm nach Texas. Wir haben viele Möglichkeiten hier, vorläufig! Viele Deutsche auch...
http://konny-island.com/index.php
In the West, you can still find beautiful places to live off the land. When I first got off the hamster wheel, I decided to learn to be a guide/docent at an organic farm/ wilderness preserve. I learned so many things, but I think what struck me the most was the openning I saw to a different world. Most of my fellow luddites/volunteers were younger and lived in communal arraingements on the property. They had great parties, great music, great food and no money. I was kind of in shock for a while, like where's all the angst about getting ahead and consuming and all that?? After a while, they would pair up, find a likeable community to join in some mountain valley up your way and live happily ever after.
Attachment sucks. Check out this guy. He's not worried about anything.
http://en.wikipedia.org/wiki/File:NagaSadhu.jpg
Stay well man. Peace.
Bringing it, it depends on the county. Licolncity i am not allowed to have chickens or rabbits, and after so many years of being law abiding and responsible i grew my own pot plant this year despite the law. Its a pretty plant and i did it partly to get over the FEAR of Authority .
Everything i have ever been afraid of i have run towards. Turned out to be good policy.
its a good trick to remain aware and not get caught up in ones humanity/ego
especially in the western world where there is little to no respect for the spirit that we are, but lots of respect for ownership and title. Here in the west living in your heart will get you abused and killed.
I am a man
in search of himself
finding scattered pieces
of experience, each a truth
sharing itself, shaping
the man that i am not.
Sounds like you would like the Tao Te Ching.
Or The Art of War
Dialogues with the Master by Paul Twitchell, Be Here Now by Ram Das and Khalil Gibran
a Lebanese poet wrote several works, some of which had profound depth and upon each reading yet more meaning would jump out at the reader.
But honestly i have tossed aside all the religions and am relying on observational experience and experiments with thought and its consequence, experimented getting out of the body and changing my vibratory level. All in all i know i am more and less than human.
Having met 1 real guru and much good fortune(none of it material) i will leave the earth happily no matter prevailing conditions. I wish more folks could see it my way, but to each their time will come. The universe is in fact perfect at all times, if we do not see its perfection its due to our lack of larger vision. As a presence that i am i have no complaints but in my human role i can find lots to bitch about should i choose. I am far from perfect, but learned what is good enuf .
I wish you all well and hope money is not your first priority
Well said MH. I'm sure you'll be well.
I saw Ram Das in a wheel chair at a war protest in SF in (I think) early 2003.
Have you read Walden Pond? Thoreaux really shocked me when I saw that someone barely into the industrial age, when the whole continent was available for exploitation, could see the foolishness of the cult of consumption. It's a book that teaches how to be truly free.
I'm not surprised. Could it be a way for joe sixpack to get back at the banks?
Also I've heard stories of credit card companies settling debts for 50 cents on the dollar. So why not max out your credit and then tell the banks you'll give them half of what you owe?
I think Walstreetpro was going to max out his credit cards buying gold and then disappear which I believe he has.
Maybe that's Chumbawamba did, he used to talk like that.
Maybe the ghost of Chumba visits ZH from internet cafes...
C'mon back Chumba! We're your friends here (except for those IRS guys lurking around).
Come back Chumba. I hope you beat the tax thing.
Does that mean I have to borrow twice as much?
Why give them anything? What would they give you if you were 100% compliant?
Listen what Frank Zappa says:
http://www.actionext.com/names_f/frank_zappa_lyrics/cant_afford_no_shoes...
It just amazes me that this is what we have come to. Spend until you are cut off, then just regroup. I totally agree that we are going to drive over the cliff, but some of us are deleverging well and cutting back debt. Yes, paying our debt. How naive of me to think that written contracts matter, that a handshake means something and that an obligation is real. Obviously, I am of a dying generation. But I understand what is happening. And I own gold.
My daughter, who works for AAPL in Portland gets it. She says, "dad, it is so sad to see people buy our stuff but have to use 2 or 3 credit cards to complete the purchase. Really sucks she says. And, she has 0 debt except for 3 grand in college loans.
This is all going to end so badly. Our children will truly pay the price for all this.
Thank you as always, Tyler and Zero Hedge.
It ends wonderfully; a new generation of people renting from me.
You planning for your family's future: excellent.
Your icon: regrettable.
Any opinions on the article I've shared here? I had read at least two stories claiming Obama is not running like a second termer, or that he was already planning to be an ex-president. And another opinion that he would pull an LBJ.
This, if true, confirms the detached nature of the Obama WH.
( Ted Rall posted this cartoon recently, the De-Evolution of Democratic presidents
http://imgsrv.gocomics.com/dim/?fh=98e0cd4274a2216db9f412e3a48a7481&w=750.0)
Enjoy the toon and article. Worth the full read.
http://newsflavor.com/politics/world-politics/white-house-insider-what-t...
White House Insider: What The Hell Have We Done?Hello again. Hello – let me start right off by saying that your last two stories have created quite a stir. My inbox is off the charts. Congratulations.
Thank you – but let’s get right to it then. Yes, the initial two stories have indeed stirred the political pot, which leads me to ask a very basic question of you – why? Excuse me?
Why give your account of what you were seeing or hearing going on at the White House or in the Democrat Party? What is your motivation? Are you angry at the administration? This is perhaps the most common response to any story like this – why do it? Ok, fair enough. And let me be equally blunt with you then – my motivation is simple. I am doing it for me, for my party, and for my country. In my own small way – maybe it’s insignificant, maybe not, I want to see Democrats move ahead of this mess that we are in right now. It is a mess of our own making, so we need to be the ones to clean it up. If we don’t, this country is going to continue hurting, and too many people out there are really hurting these days.
Ok…but how does giving me some apparent insider information going to help the country, or help your political party? Simple – it lets others know it’s time to start talking. It’s time to get the word out. It’s time to challenge the inept status quo that is currently running things. People are scared – hell, I’m a bit scared myself. But enough is enough – this political train has got to get back on its tracks. And I’ll tell you this, my talking to you, and your little blog stories, is already helping. More people are ready to talk. It’s already happening. And more is coming. The media won’t be able to ignore it anymore. This administration, the leadership in Congress, they need to account for how they have totally mishandled the responsibilities given to them. That accounting is coming soon enough in November – we are going to get what we deserve. But I am still hopeful it is not too late to save 2012.
How do you intend to save 2012? I assume you mean the presidential elections? Well, that is the top spot of course, yes. But not just the White House. There is Congress, we need to put in place like-minded governors, all of that. Right now the term Democrat is toxic to mainstream America. It’s as bad as I have ever seen it. We are literally killing our political futures out of some need to keep supporting an administration that has in no way, shape, or form shown itself to be worthy of that support.
Those are strong words – but what exactly to do you mean by that? What do I mean!? (Voice rising) What I mean is exactly this – we got Congressmen and Senators running for re-election right now whose political careers are about to be ended because they supported a president and a Democratic Party leadership that told them to do so. They trusted they would be politically protected, that the American people would agree with the agenda. Well guess what? That hasn’t happened. Good people, good Democrats, are being tossed aside like so much trash – and this White House DOES NOT GIVE A DAMN. In my eyes that is absolutely unforgivable. You just don’t do that to your own people. And some of these politicians are talking. They are – but for the most part the media is ignoring them because they don’t want to hurt the administration. To that I say enough! Do your damn job. Report what is going on within the Democratic Party. We need to clean up this mess, and it starts by getting the truth out there. That is my motivation.
You clearly feel strongly about this. You’re damn right I do. And so should everyone else that’s got skin in the game. And we all got skin in this game.
So how exactly has President Obama failed to help members of his own party? (Leans forward – clearly agitated.) Loyalty – loyalty – loyalty. This White House doesn’t give a damn for the concept of loyalty, dedication, sincerity. This White House is the most self-centered, arrogant, and ignorant…they just don’t care to know what they are doing. And when they do it – consequences mean nothing to them. NOTHING. And that is not to say it’s all bad at the White House. There are some very bright people working there. But you know what, those people have been marginalized, pushed aside, and are now leaving. You watch – the exodus from this White House will prove to be of historical proportions.
With all due respect, you sound like a disgruntled employee. No, not even close. I wasn’t on the books. I’m a contract player – I worked the ground game, I have been at the White House during this and other administrations, done meetings both formal and informal, and talked regularly to White Housers over the last two years who enjoy top level access. That is a big thing – access. I could get at it, but let me tell you, the feedback I got, and the things I saw with my own eyes and heard with my own ears, it was a terrible letdown. This is not 2008 anymore, not by a long shot. For most of the last year, you want to know what question keeps playing in my head?
What question was that? WHAT THE HELL HAVE WE DONE? Now that may come off terribly disrespectful to the president, but so be it. What have we done? We were led to believe this man was one thing, but everything I have seen, heard, and understand, points to the indisputable fact he is not what we hoped for. Not what we were promised. Maybe he might have been. Maybe a full term or two in the Senate and he would have had the experience and maturity to handle the job of President of the United States. But right now – the man is simply not up to the task, and yet it is loyal Democrats who are paying the price for his incompetence and incoherence. The health care bill? Do you know I was told he has never read the bill? Not one part of it? NOT ONE. Sounds like something you would hear on one of the talk radio shows, right? And I wouldn’t normally consider such a possibility, but this came directly from one of those good Democrats who might now see their political careers ended because they supported that bill and now its being used against them like some political sledgehammer. How is that supposed to make someone who put their career on the line feel? Betrayed. A whole lot of us are feeling betrayed these days and it just pisses me off.
What were you told to lead you to believe the president has not read any part of the healthcare bill? I was talking to a current member of Congress who was assured – strongly assured, prior to their vote that the bill would, long before the November elections, be a positive for them. They could run on it was what they were told. Well, as we all know now, that didn’t work out, and so they attempted to get a meeting with someone higher up on the political food chain to find out what the administration was going to do to help the situation. They were ignored. They kept at it and eventually was given a meeting. You want to know the gist of that meeting?
Yes. The gist of it was this – they were told to drop it. They were told to, exact words here – “worry about your own campaign and don’t expect the White House to hold your hand over this.” Well, they were upset right? Just hearing about it made me absolutely furious. This is a person’s career, their life here. Now that answer wasn’t good enough so they pushed it a bit further – suggested the president could do some town meetings and answer questions about the bill, alleviate all the concerns and fight back against the conservative chatter that was being put out there. Guess what they were told regarding that? They were asked one question – did they read the bill? This Congressperson admitted they hadn’t. Like a lot of them, they had voted for it, but hadn’t read it. That was a mistake, sure, but the thing is over 2000 pages, right? Well, after admitting they didn’t read the bill they are told in a laughing way mind you, “That’s ok – neither has the president, so you can’t expect him to take on a bunch of town meetings on it, right?” So that was it. Nice, huh? Bye-bye, thanks for playing, and good luck with the -explitive- storm coming your way this summer.
Well, that doesn’t actually prove the president didn’t read the bill. Yeah…ok. But I followed up with this story with someone in the White House. Guess what? The president was briefed on the bill – he never read it - it was a damn running joke among all of them! But leading up to the vote, back when the battle was raging in Congress, President Obama was throwing fits over the delays, telling his aides something to the effect, “I don’t care what it is I just want something on my desk to sign. Get me a –expletive- bill. Just get me something to –expletive- sign.” And that is just what those Democrats in Congress did – they got the president a bill. And now they are paying a very high political price, and this president appears to care less. He is basically telling members of his own party “You got me my bill and thank you very much. Now go to hell.”
Was everyone on his staff on board with the president pushing so hard for healthcare? Absolutely not. There were some who voiced concerns. Some who pushed for a more clear economic agenda. Apparently Obama wanted none of it – he was obsessed, absolutely obsessed with getting some kind of healthcare legislation. And the ones who did voice concerns…they are, or will be, among the first to go. And it’s coming sooner rather than later.
So you want to repair the damage to the Democrat Party. You want to give a voice to the Democrats who are now paying the price for the administration’s faults, and you are hoping that this damage can be repaired before the 2012 election cycle. That sum it up pretty well? Sure – close enough at any rate.
And tell us again how you think all of that can be achieved? Democrats need to rise up within the party and say enough is enough. We have allowed ourselves to be carried far too far to the left of the mainstream. You know what word I cannot stand? Progressive. Enough with this “progressive” crap. Shut up about it. We are Democrats. Anyone who wants to call themselves a Progressive I say show them the door – they are doing nothing but killing the Democratic Party. And regardless of whether or not we survive the November midterms with a majority, Nancy Pelosi must step down or be removed as Speaker. That is an absolute must – I cannot emphasize that point enough. She is political poison on the national level. Second, President Obama must fully engage himself with the requirements of the job. He must surround himself with people who understand the tone and temperament of the country because he clearly does not. And if he can’t or won’t do this, he needs to not run for reelection in 2012.
So what happens if he does intend to run again, but makes none of the improvements you hope to see in him? (Prolonged silence. Looks down – then responds quietly.) I really hope that is not the situation we get to. I really hope President Obama, who I think still has the potential to improve, realizes and respects the great opportunity he now has. I don’t believe he respects any of it right now, which is a terrible shame. Such a terrible shame…but, if he does not fully engage in the job of president. If he does not even begin to live up to his own potential…Democrats must take measures to provide an alternative in 2012. The country simply cannot afford another second Obama term like these first two years. It is simply too difficult a time for America to have the Democratic Party act so irresponsibly.
Any ideas as to an acceptable alternative? Hillary Clinton perhaps? (Smiles) The Clinton angle was not missed in your last two articles, was it? I make no attempt to hide my admiration for President Clinton. Unfortunately, Bill Clinton cannot run for another term as this country’s president. As for Hillary, I do not know her as well, but I do admire her – a lot, and now regret not having been a part of her own run for president. My ties to the2008 Obama campaign feel more and more these days like a dishonorable victory.
But would you like to see her run in 2012 if President Obama, as you put it, fails to improve? Yes. I would support Hillary Clinton over Obama in 2012 if the need was still there to help ensure President Obama was given only one term. But Hillary Clinton is not the only possibility for the Democrats. We are a party with many fine leaders – many, many potential candidates for president who I would gladly support.
Such a race could tear the Democrat Party apart. You know that, right? The party is already tearing apart thanks to the Obama White House and figures such as Nancy Pelosi. If we lose 2012 so be it. Let it be the beginning the party’s rebuilding. Just like the Republicans came back in 2010, we will be back also, and much stronger than we would be with a second Obama term that is as weak and confused as this first term has been so far.
Any final comment? Keep your ear to the ground. All kinds of news is going to be coming surrounding the Obama White House and the Democrat leadership. Watch for Pelosi in particular. That will be the key when you know the door is getting kicked open and the truth of just how chaotic things have become gets out into the open. I will say it again – Pelosi is the key. It is going to be ugly for Democrats, but people need to keep the faith. The party will emerge from this – and hopefully in time for 2012.
That was a very interesting post Gully. Thanks.
Complete and utter bullshit and I'll tell you why. Only Repigs refer to the Democratic Party as the "Democrat" party. Interesting fantasy story though
That was a very obvious clue wasn't it? Something fishy about the whole thing.
Is that an "intellectual attempt" at saying the same old meme about Obama being a socialist? Couch it in terms that seemingly come from an acolyte. Didn't work.
This is why the Democratics don't stand a chance of keeping control of Congress or winning in 2012. I'll never understand how a group of people who pretend to be intelligent at every turn can spend all their time in the comment streams of blogs trying to 1UPz0r each other in finding ways to slander their opponents. Repugnicants, Repigs, etc., is that really all you people can do? Instead of defending their platform of limitless government spending and control, the Democratics whittle hours away whining about trivial bullshit, playing the race card, and sucking the anal drippings of Huff and Kos...all the while sipping Starbucks and comparing Birkenstocks.
If they're more worried about slyly associating themselves with the concept of democracy than promoting the ideals of their party(but who can blame them, Statism sucks), they deserve to lose. It's just further evidence of how completely out of touch with reality these people are. The time for parlor tricks is up. This election cycle will be about substance whether the big government Democratics and Repubs like it or not. The Statist rats like Reid, Pelosi, Barry the Terrorist, Rove, Bush and Cheney might as well pack up their dreams and flush them into the sewer where they belong.
Sorry about that rant, but this one's been boiling since I saw Pat B. and (I think)that tingle up my leg guy go at it about this Democrat vs Democratic thing a few weeks back. I mean seriously, how can a group of scoundrels that completely perverted the word liberal even try to say shit like that with a straight face? Fuck you one party system, fuck you.
Gully - Sound and fury signifying nothing. A puppet. A talking head. A shill. A frontman. He's like a blown tire at the brick yard. The pit crew has a rack full of replacements.
Democrats/ Republicans. Heglian dialectic. Who cares? MSM cares, but I don't.
The Teaparty is doing an excellent job of winning the next election for the Democrats.
This makes sense to me. The parking lot at the local mall has been full for the last two years; I found it puzzling. But can the credit card companies be that stupid? Wouldn't a sudden spike up in spending be a red flag. If your thesis is correct, perhaps the last l5 weeks of stock redemptions are not a shift to fixed income, but rather people whose credit lines are cut off. They need the dough to survive. I think I'll go to the bar now and see if my credit card is good. The next several rounds wil be on "me."
I wonder if they find the Irony of this situation?(Feds).
Monkey see, Monkey do,You screw me I screw You.(when in reality, WE are footing their bills.)
This is a pitifull sight, when basically honest Americans have allowed themselves to become JUST like their Rulers.Corrupt,and immoral, and casting aside two wrongs, do not make a right.
But, from a carnal view, I understand the actions.........
However I disagree with it totally.Your Character once lost, can never be regained..............just imagine what lessons their kids are getting out of this.
Sad, very sad.
+ 1,000,000 DosZap.
Character still counts in my book. And our (only child) daughter at 23 yrs seems to have the old-fashioned values. I too understand that those in trouble may take an easy though dishonorable route out. Even if we get screwed (which we are), that does not allow us to do the same.
"Do unto others as you would have them do unto you."
dochen "Do unto others as you would have them do unto you."
i lived my wHOLE life believing in that saying. boy, it sure didn't work out for me, but it sure made a lot of people engaged in contracts and relationships with me very successful. me, fucked over. hey, as the Buddha says, be happy for their success. OK i am happy for them.
don't be stupid, don't teach your daughter that works. she will end up like me. teach honestly that people lie, steal and cheat. my 30+ daughter tells me to stop being nice to people, don't talk to them and don't be so friendly, MOTHER. she says, she is cold and a bitch, so they don't talk to her.
Ah, the golden rule. I prefer the platinum rule:
"Do unto others as they would have done unto themselves."
Do what they want done, not what my concept of what makes them happy.
Rocky, I will have to think about the platinum rule, have not run into that one before...
Does that mean if I want your gold & silver you will give it me? I want that...
I always enjoy reading about stuff from raccoon's perspective, kind of a nice grounded feeling, scraping the earth (and trash cans) for little nuggets...
Then there is the Iron Rule.
Never do for someone what they won't take the time to do for themselves.
That's the one that is the more practical of the two.
I say "two" because the golden rule is not in my playbook.
Well, Kathy, I am sorry that things have worked out so poorly for you.
The Golden Rule is not the ONLY thing you have to do. You also have to be careful in what you say (I've been there) and do, what you sign, who you hang out with, so much else. As I age, I am trying to be more careful, in driving, with money, everything.
Our daughter is no dummy, and she is fending for herself in Chicago. She has a job and knows how to get around. She is almost as cautious as I would want her to be.
I have followed your posts with interest over the past several months. It is clear that you are a fighter, maybe your situation will get better.
Maybe you should find out if ZH-er "merehuman" lives near you...
Kathy
your name means "pure" but you probably knew that. Maybe you were living up to your name. I hope your daughters name is not Delilah.
I have made mistakes but have lived as honestly as I knew how. I just do not get up inthe morning thinking of how to screw some one. Too bad that others do. I think the mistake is to believe everyone is as liar or a cheater or a stealer and avoid them. Realizing this - teach how to recognize and not get taken by them. So one has to be smarter or wiser. This is hereditary knowledge and get lost when the school system sucks and families are fractured to the point that there isn't someone on your block who knows.
Take for instance the saying "pulling a fast one". Can you pull a fast one on a person that goes slow.
On a long enough timeline the survival rate for everyone drops to zero. I'm not sure I want to get cought up in all the " buy ammo" frame of mind. I am not unarmed but am not going to pick a side. I am happy who I am
I am not going to judge myself thru the prism of the douchebags. They sold their souls.
thanks everybody above.
I agree completely- "Character is destiny"
How I stuck it to the credit card companies and bought a house with a cash advance. All the figures are approximate.
http://patrick.net/forum/?p=25968
1. Make all credit card payments on time and establish good credit.
2. Working overtime allowed me to use credit cards for everything and make huge credit card payments every month - always on time.
3. Credit card companies continue to increase my limits. At one point in time my credit limits were over $90,000.00 (unsecured).
4. Take a $10,000.00 cash advance. Deposit some of this money into my sister-in-laws account in Mexico.
5. Continue to make credit card payments on time.
6. Start to build our house in Mexico on my wife’s land that she was given from her mother. The house is started using some of the cash advance from item #4. This money is never re-paid.
7. Continue to make on time payments to the credit card companies.
8. Take out a huge $25,000.00 cash advance and deposit into my Scottrade account.
9. Trade and sell equities in my Scottrade account - making and losing money for about a year.
10. Cash out my IRA account and pay off some credit cards (about $8,000.00)
11. Use the money in My Scottrade account for a down payment ($25,000.00) on a bank owned property. No one ever asked where the money came from in the Scottrade account (cash advance from credit card).
12. Owned a condo before buying the house. Was told by Countrywide agent to make up a fake lease contract so it would “look better” on the application.
13. Rented out the condo after we moved into the new house.
14. Take another cash advance to deposit into Scottrade account (this time will be different).
15. Use credit cards to buy trees, window treatments, appliances for new house.
16. Stock market crashes – lose all the money in the Scottrade account.
17. Hours are reduced at work.
18. First time (actually the second time) late making a credit card payment - one day. Let me repeat that again – ONE DAY LATE.
19. Interest rate increased to 29% on credit card that was late receiving payment.
20. Called Credit Card Company and asked them to lower rate because this was the first time I was ever late. They told me “no this is the second time you were late”. Oh, my mistake but I was only late one day, can you give me a break on the interest rate. Nope! There is nothing anyone can do; you are a risk to the bank.
21. Soon all other cards raise their rates to 29%.
22. Panic for about 1 minute.
23. Reduce my hours at work and stop all payments to all credit cards and condo.
24. File for bankruptcy.
25. Return security deposit I received from my condo tenants and tell them to live there rent free for as long as they can.
26. Bankruptcy finished (about $90,000.00 debt erased). Increase hours at work. Continue building house in Mexico.
27. Laughing all the way to the bank.
From December 2009......... Notice all the "hate" replies from the original post. I wonder how this post would fair today.
You should have left a forwarding address--your old mailbox was overflowing with job offers from Wall Street, fool!
patrick ROCKS, big time. he is a diligent speaker of truth. did a wonderful statistical comparison of renting before owning. i listened. he also preached when rates are low no go buying a house, want to buy when rates are high. made a poem and didn't know it.
who could have known the 2nd American Revolution would be fought with plastic instead of lead?
The plastic sabot isn't what will kill you, it's the lead slug.
Interesting article,yet to be expected article;
Third World America
By by Luiza Ch. Savage
http://www2.macleans.ca/2010/09/14/third-world-america/print/
Still getting checks in the mail for 11 months @ 0 % interest with 4% fee upfront. itching to pull the trigger but in the back of my mind I know I'm better off not trying to game the system. Figure the worst will probably happen like it always does.
I use them all the time. Usually get them for 3%. They are great, but you have to make sure you pay them on time and pay them off at the end of the term. If you are late on a payment you have to pay them off immediatly or you default to something like 29% interest on your remaining balance.
Banks are betting you either pay them late or keep a balance at the end of the 11 months. Have to be careful, but if managed right it is cheep money.
Doesn't Bekenstein-Hawking predict the Fed will still print after the singularity?
OFF TOPIC : http://news.yahoo.com/s/huffpost/721294
red dollars anyone:)
regards
Great exposition. Explains some until-now anomalies I observe every day. Things seem to be coming into focus faster recently, and the picture is grim.
Karl's piece today is similar. (Say what you will about Denninger, but don't say he's not sharp as hell.) At a minimum, he's shifted the burden of persuasion onto the banks to explain how he's wrong:
http://market-ticker.org/akcs-www?post=166915
One of these days, a piece like this will slip through MSM and hit main street between the eyes. I have a feeling that day's getting closer than anyone suspects. What with the antics since 3/09 and all.
"And finally, explain why Wells is proffering an addendum to the sale contract for these "foreclosure resales" in which the buyer is agreeing to release Wells if, in point of fact, they have no marketable title at the time they allegedly conveyed it! In other words, explain to me why a bank is putting in front of someone a paper that says that if they paid $100,000+ for an empty box that's just tough bananas - for the buyer - and Wells gets to keep the $100k!"
If I was being foreclosed on and I saw that statement writen in the document, I would balk and demand to see proof of ownership. Seeing that would be the canary in the coal mine that one has a shot of getting their house back mortgae free.
The Addendum is after the person is Forclosed upon. If they do not have marketable title when they convey it, you do not even own an empty box. You may not even know it until you go to sell.
I love the part of the Addendum that says that if the prior Owner wins a claim against the Bank (even after closing) you agree to give the House back. How about the one where they will only give you a "Special Warranty Deed", instead of a General Warranty Deed.
I knew someone who had his Attorney review one of thoes Bank Addendums and the Attorney told him not to sign it and not to Buy the House. Talk about buying a pig in a poke.
The Addendum is after the person is Forclosed upon.
Good point.
Its amazing that the process is able to even get that far without the due dilligence of deed presentation at foreclosure. What a corrupt system
I'd say Denninger has a tiger by the tail here. Say! I know. How 'bout Elizabeth Warren take this up immediately in her new job, Bureau of Consumer Financial Protection. She'd be a perfect person to bring this to light, and she has the ability to make it easily understood by the general public. A couple of network talk shows and the whole mess could be blown apart. It could happen in the best of worlds -- don't know much about this one.
Alas if one looks at the decline in GSE liabilities as per Z1 one can easily see that it is the GSEs who are receiving the cash from home sales and early pay downs, and not just the servicers, as is implied. However Denninger is right about one thing: bank financial statements needs to be far more transparent and mortgage cash flows (both in and out) should be brought front and center.
And one could force that how? They'd fight tooth and nail.
How 'bout that Lizzy Warren idea? I'd be glad to fire off an email to her. Is that investigation within her legal purview? It would seem that assuring a home buyer of having legal, unclouded title would be a tasty morsel for her. She could get some real street cred with that one. The "little people" would see that as a grand blow to the TBTF banksters.
I can't believe that Elizabeth Warren has accepted this job...dual reporting to Tim Geitner and Obama. Captured.
Doc Warren got okie-doked
To Miss Expectations and to you, Monsieur le Canoe:
How would you have had it otherwise? If not Warren, who?
Example of why I ask: I read a lot of carping here at ZH about the Obama socialist agenda, etc., etc., ad nauseum. I have yet to hear anyone say how great things would be if McCain/Palin were in office.
I'm not trying to be mean; it's just that I get somewhat discouraged by the naysayers without constructive alternatives.
There are no constructive alterntives! It will take at least 30 years, new generation, to change anything. You have layers upon layers of entrenched functionaries in government who will resist any change or allow little changes at the time. Obama or not, direction is still the same with little change in the course. If you really want to change the system you have to fire all of them and then you face situation where nobody have experience in running the business and system becomes unstable and prone to major failures.
You'll get no argument from me on your thesis.
And I'm all for "unstable and prone to major failures".
Fail already!
Doc le Rock, no meanness taken...i feel your discouragement. agreed, it's easy to criticize & naysay. i'm guilty of such on occasion, especially when the subject is our narcissist-in-chief & his magic wand of propaganda. but yes, there is a point where it becomes counterproductive in that it only fuels the dialectic of destruction. i have already seen the flip side of this energy at work firsthand during the reign of our last socialist godking GWBII and how it was misguided and ultimately led to a continuation & considolidation of the current power structure. in a pyramid, energy flows upward always, no matter which direction it originates from. whether pro or con, quibbling about the personalities in power only serves to give them more power. thanks for the gentle slap in the face.
imho, i agree with you that we must attempt to dig beneath the surface of things & begin to withdraw our 'consent of the governed' in order to even come to a point to begin discussing alternatives. there are perfectly legal and moral ways to do so (kyl mentions a quite intriguing possibility below).
TD, I don't recognize these grasshoppers (locust) you write about.
Can they really survive through the winter? If one is prudent and diligent
and a saver, then one owns all one has...there is nothing to delever. I consider
myself an average American, who discovered at a very young age that
if I desired to acquire something, I'd have to save my money up for it. Now later i
life this standing is paying real dividends and I'm in charge of my own destiny.
These folks don't even make the chart (statistics) on leveraged debt cause they
don't have any - zero,nadda, zip. So how many other prudent ants like me are out
there? I would think a large percentage. We survive the Winters while the
grasshopper's starve...and with each new Spring there are more of us than them.
If my life is so, and I also to take your analysis at face value, perhaps
your grasshopper chart is even worse than it at first appears.
Either that or the Winters have been really mild for a long long time.
Grasshoppers go on welfare and food stamps. they multiply faster too. We have broken the law of natural selection.
Boy oh boy do I agree with you on the Natural Selection. There are too many weak on Welfare and food stamps. They are killing the strong. The Middle Class.
I actually see it as reverse Slavery. It used to be that the Land Owners did not work and the slaves supported the Land Owners. Now the people that would have been slaves do not work and now the Middle Class Workers slave to support those on Welfare.
Yes this unnatural dynamic is frustrating but it cannot last long. Guard what you have because right now the fools want it to give to the peons so the peons vote for them. This will change eventually because it is as unnatural as a Harlequin Baby.
America needs to start deporting people who are, or run a credible risk of becomming, a public charge. We used to prevent such degenerates from entering, why not kick them out? I'm sure they would all love to get on a barge headed for their Statist utopia in Europe, South America, or Asia.
Better to have a system where there's no such thing as a public charge.
As in, you no workee, you starvee.
My friend is currently trying to get fired so he can go on unemployment. USSA
She started it
http://www.youtube.com/watch?v=jGC1mCS4OVo
Animal spirits, they want us to spend, feed the machine. then they just let the banks fudge it out the backdoor.
Screw those who are honest.
Law of unintended consequences.
unintended?
The Americans need to put the Congress and the Senate in Default and cut off their Credit. Stop them from Bankrupting our Country and every American Citizen in the process.
better yet force them to swim, fish, drink, breathe and eat in the gulf.
Internal bleeding , bleeding from anus and ears is becoming common among gulf residents. Mass media wont touch it and most think they are the only victim. Now there are many more victims.
Found at Theintelweb.
but what about the savings rate? didnt that turn positive some time ago?
Perhaps you thought that after years of excess, Americans were finally starting to save -- a welcome, if not somewhat painful trend.
But nope.
Mike Mandel has put together this awesome chart (via Felix Salmon) showing that our net national savings rate, which includes private, business, and government savings is the lowest it's ever been since WWII. You may be saving, but someone else (Uncle Sam) is spending for you).
Read more: http://www.businessinsider.com/you-thought-the-savings-rate-was-going-up-well-check-out-this-chart-2010-1#ixzz0zvkPLz00
I am not sure this is a fair comparison. That savings rate chart includes gov't savings (snicker!), while the chart above does not include any gov't number; it only has consumer and mortgage debt. Here is a link a the Personal Savings Rate:
http://research.stlouisfed.org/fred2/series/PSAVERT
So, are consumers saving more and just letting their debt default? Something is not making sense.
buy one , get one free ? nothing is free
Buy today, pay next year ? what if i am dead?
Save 30% off etc. you spent money you didnt have for things you didnt need. Saved!
Every dollar that is saved (not spent) is in one sense even better than another dollar earned, as it is not taxed!
So, I really don't have to pay taxes on the interest from my savings? Uh, no...
Makes perfect sense to me. Am I going to pay BofA for some crappy credit card balance for stuff that I ate/consumed/gifted or the Chinese crap just wore out or broke -- or am I going to put the money away to feed my family on a rainy day. It's looking cloudy out there.
mistake
As an American there is something that has been bugging me for the past few months.
Its a phrase I see more often than I would like and the phrase is this:
"We Americans are squandering what we have".
Your average American may not be thrifty but our ability to "preserve wealth" is really not determined by our actions so much as its determined by the actions of our leaders. It has never been harder to save and be frugal with ones money. Its also difficult to get ones money to grow in any safe manner.
If I was to go into stocks I could easily lose in a year what it took me 20 years to gain, if I invest in bonds I can lock myself into an instrument that fails to out pace inflation (guaranteed negative return), if I invest in land I run the same risk every commodity faces, if I invest in a home I am investing in a depreciating asset, and if I invest in cash my money is eroded as I earn it or taxed without my permission.
So tell me how does one preserve wealth and not squander it?
You can try to be cute and traded in and out of the market or just buy Gold and Silver.
You can trade your Dollars for something a solid currency. If someone can tell me what that is I would like to know.
The big question is how long will the USD be considered the worlds currency?
Beastie: Norwegian kroner (NOK) should be a decent bet, if you feel like holding some fiat. Mind you, one has to wonder how the currency will fare when the Norwegian sovereign wealth fund gets decimated with its 60% stocks, 40% bonds (including a recent increase n PIIGS-exposure) and some commercial property holdings. Frequently rated as the worlds riches country one might also ponder the fact that the country has one of the world's most indebted consumers and a ridiculous proportion of the working force on welfare, courtesy of a superbly generous oil-financed welfare system. Hmmm - actually, if Norway is as good as it gets, one might save oneself the hazzle and stick with the precious metals.
"Sodom like there's no Gomorrah!"
- Deleveraging Consumer
That is very disingenuous on your part. You've been here long enough to know the answer to that question. I won't lower the conversation by stating the obvious ways to preserve wealth.
That's an easy question. Gold and silver as a decent chunk (or bigger) of your wealth.
I would also suggest diversity in your holdings and the ability to be flexible and alert.
There is always something going up. There is NEVER any case where everything goes down, there is always something that does well vs. the rest. How do you find it? Diversification and research, just like you're doing.
It looks like you have thought this over pretty well. I think you will do fine.
The easy answer is "gold, silver, platinum, palladium, etc".
The slightly less easy answer is "other real, physical goods that do not degrade over time, but are practical to store in secure, hidden manners".
The best answer is "real, physical productive equipment, machinery and supplies that let you produce real, physical goods (the more basic-necessity the better)". This can be as "simple" as farmland and equipment (and plenty of weapons and ammo to protect them if it gets very bad). Start with everything you need to be 100% self-sufficient for long periods of time (several to many years, if not decades).
Without a doubt, the best answers are the most difficult to implement, and require lots of time and effort. But they are by far the most safe and secure. The easier the answer, the less secure, but don't even bother with the more difficult methods unless you will follow through and get to the point of significant self-sufficiency and ability to defend against desperate wandering humans.
You missed a few
guns, butter, cable, and bitchez, and your favorite PM. Mine are silver and gold only because I understand them. I thought they made mufflers out of palladium but....
BTW these captchas are a communist conspiracy.
"So tell me how does one preserve wealth and not squander it?"
Don't consume! But, by not consuming one dies (try NOT eating!).
It's a simple equation. Interest is based on growth. No growth means no interest. Investment is unable to find any real growth (the only thing that's happening now is a skirmish for hording $$s as the game winds down, as though anyone can really end up a winner with worthless $$s).
Wealth is an illusion. Health is not. The real choice is clear.
I see business is loaded up on cash.....2008 credit crash will not get happen again...they have debt with that cash.
not I see the American public doing the same thing...cash
Tyler: Good point, even if it's a bit overstated. Americans aren't all running full speed towards bankruptcy like a mass of lemmings. There actually are lots of people purposely deleveraging. But they are outweighed in the statistics by the horde of credit addicts blithely cruising the United Strip Malls of America until the bank says "Game Over".
Metalboy asks: "are consumers saving more and just letting their debt default? Something is not making sense."
Exactly, and it makes perfect sense. Defaulting on debts increases disposable income, allowing increased savings. Besides, these are aggregate stats, the savers and defaulters don't have to be the same people.
Spalding: You're absolutely right to point out that the US savings rate including the government is worse than ever. Treasuries are ultimately claims against the future income of US citizens and residents. They aren't getting out from under their debts if for every dollar of consumer debt they shed their government borrows another ten on their behalf.
http://keynesianfailure.wordpress.com/2010/09/10/delayed-deleveraging-meets-the-keynesian-endpoint/
Interesting point RE: the Savings Rate. I thought the two couldn't really be reconciled (increased savings rate + more leverage), but I think you have made a good argument.
No one has mentioned how wrong this is.
The savers lose the most.
Bad guys get all the money, this is all coming to a bad end.
So... a significant portion of consumer delevergaing is occurring through personal bankruptcy after tapping all available lines of credit. This is shocking? The high unemployment rate doesn't mean the same people are unemployed for several years, it means new people become unemployed every week and the extended time it takes to find a new job requires that credit cards get maxed and mortgages go unpaid. If they are living paycheck to paycheck, they can't stay solvent until the next job comes around. I have no idea how this results in a "drop off in a quantized, step-wise fashion" and the article doesn't indicate how that will occur. Am I missing something? Not the best example of a Zero Hedge post!
I think it will be a bottom -up squeeze from:
Eventually une. increases further and the contagion spreads, even to many of the wealthy. The interconnectivity of overleveraged capitalism plays out by the top feeders of the income pyramid at each successive level being unable to squeeze as much income out of the level just below them. The lower levels get hit first but it spreads to the top as it must.
The banks will get hit hard. It will be a slower demise for many retailers as the defaulters will be able to spend again, albeit on a new lowered scale.
Commodites- necessities, especially food, will survive because people will make sure that they survive by what ever means possible.
It's never been an easier time to get disability. Uncle sucker is giving it away, when someone applies they get automatically turned down, just keep reapplying and you get it. I assume medicaid is part of the deal also, win-win.
If you count Social Security disability with the other ones above, you probably have 20% of the population. 1 of 6 Americans is receiving foodstamps, also medicaid which means if you have a cold or one of your 10 kids have a cold or flu, just go to the emergency room, nothing to pay.
Tyler, apologies for joining late. The good folks at Liscio spotted this one a couple monts back, but more to the point, there's a reason Ed Harrison's bolg is called Credit Writedowns. That is ultimately the process back to (macro) financial health, doesn't matter which sector you want to highlight. The only real strategy available to policy makers is to play for time, ideally a zillion little "big bangs" happen along the way...
The riddle was how you could have a pulse - 1%-2%- at the retail cash register ( btw: follow the general merchandise category) and declining aggregate consumer credit. The write-offs are the missing link in the main, but it also means someone IS spending. I can't get too caught in Rosie's ultimate american victim/ idiot characterization.
"Harrison" is right for those picked off, and really, condolences to them. I've seen it, its gut wrenching. But, more are rebuilding their balance sheets...all characterizations aside. Thats the reason for the extended sluggish growth of this economy.
No hyperleveraging here. 43 years old, no credit cards, just finished settling my final plotzed credit card account, so all these debts have been "resolved." Sure wish that the debt consolidator lawyer would have told me at the outset that the difference between what was owed and what was settled for would be treated as 1099 income by the IRS. So, although debts dischraged still owe thousands on "income" due to this difference. But what do you expect from the contemporary equivalent of an ambulance chaser?
No plans to acquire credit cards, never owned a home, zero (minus) plans to ever own one, love renting. Absolutely zero savings. I live paycheck to paycheck and if the money is not there, it literally cannot be spent. Maybe I be a moron, but I feel like I am deleveraging...
I fought off debt with cold cash. I will be one of the last ones pulled past the event horizon. By then I would not matter. I have about one loan to pay and just about everything taken care of.
This is the year where our Innocent and naivety worshiping the consumerism and instant gratification is erased by the agony of high interest rate rapes and the crushing weight of collections and other efforts to strip you before scourging you with other punishment that will make you beg for a glass of water while you bleed on the pavement.
And for those rushing into Gold and Silver, that mass of metals will simply pull them faster and harder into the Collasping star as the Government does what they did back in the thirties, ban the stuff and take it from you.
And what is it going to take when the FUCKING nooblets coming out of school understand they can BUY a HOME to LIVE in and to take care of for a VERY long time. NOT as a investment or following the shallow tv shows about home flipping or renting out basements for the tenet to pay your mortgage for you.
And how long will it take for you effing old and aging has beens to understand that your house will never come back for a very long time to what it was when you signed the papers. The euporia of dollarsigns and great riches has evaoporated leaving only the broken and used up crap that needs repairing and replacements shoving you into BK on top of a house that you cannot live in any longer.
Would you then stagger down to the auction house and buy a old 1970's era van and a mattress to make it what you once knew so long ago? Only park the thing in a remote place and then maybe you have some peace in your final days.
The Government has done everything except one.
Pay off debts of ALL US Citizens, declare a Jubilee for the year and release all people in bondgage to start over with a clean slate. And then warn everyone that it will not happen again for 50 years. So they best make use of it.
It would be cheaper to get 300 million people debt free and cost way less than what it has been and will cost the Government now and far into the future.
I think all this stimulus talk and all kinds of crap that goes with it is nothing more than political hot air designed to give a voter a warm fuzzy feeling of the sort designed to make them go to the polls and hit the lever for another dose of the Dr Feelgood's propaganda and mindless unthinking behavior while they are raped and pillaged, looted into oblivion.
That was an interesting post HungryS.
I saw the word "Jubilee" again, I have seen that word popping up more often. Maybe Jubilee will happen, maybe in 2011. Does that mean that our Federal Debt of $13 trillion gets Jubileed too?
...
Re taking away our gold, they won't take mine, maybe a fraction. Some of my gold is very far away... Same for the guns...
I too saw that J word popping up more often and learned that thousands of years ago they used to do that apparently as a form of systematic cleasning.
I would rather to see a Jubilee for all, including our own Government. Otherwise it must fall and fail to meet obligations and that will be ruinous to us all.
Yes I have some reserves and weaponry to keep safe as well. I will not go quietly. But.. it is my great hope that somehow with these things that have happened in the last two years or so, we have a great oppertunity to fix it proper for common people who are US Citizens before it is too late.
You make a lot of sense, but you make mistakes too.
No way those predators will get very much gold this time. The humans who have gold today are not patriotic government lovers who will "do what they're told". No way, Jose! They are just the opposite. The gold holders of today are "patriotic to liberty, justice and honesty", not to the band of predators-that-be who call themselves the "authorities" and the "government of the USSA".
And the elitist authorities and their goons will not take many guns when they come after those, either. But they may take quite a few bullets.
"And how long will it take for you effing old and aging has beens to understand that your house will never come back for a very long time to what it was when you signed the papers."
It's all pretty interesting. I'm currently in the process of purchasing property. When trying to rationalize this expenditure (OK, mostly acquiring debt) by way of comparing to property that my father purchased back in 1973, I discovered that I'm paying about 8 times what he paid, but am getting 14 times the property; a quick calc puts me up about 57% greater valuation, this without factoring in the fact that the property I'm getting is higher quality (a big chunk of his is wetlands). I could not have stated this a few years ago, though, as his property was on the verge of develpment (which collapsed, just as I'd warned), and was valued at some astronomical value.
The reason that I was able to find this kind of value is because the property is zoned agriculture, meaning that I have to be engaged in the lowly practice of farming...
As an "old and aging has been" I was able to be in this position because I stayed out of debt and have focused on the fundamentals- food, shelter and water, and have come to see that being of service to your local community will ensure a shot of one in the future.
I may have used too broad of a brush with the effing old and has beens. I was partly thinking of those Economics Experts and Teachers who are not teaching our Young or even anyone else who needs to understand what it means to buy property and a home.
My own Father scraped for years to escape a way of living revolving around renting by getting a home. There was a house on 5 acres that he really wanted but did not have the $4,000 more at the time of closing, so he bought a similar size house on alot less land.
That was a long time ago for Him. In but a year or so he will finally be free from the mortgage however, the value (And the taxes) have increased. I suppose he looked ahead and made the necessary repairs and upgrades where it suited him possibly because they plan to live there forever and never go anywhere else ever again.
I myself am a home owner and find myself repeating what my father did and looking up and down the roads at the neighbors who are either BK, walked away or are renters who possibly can buy a place now and live for less than they pay in rent.
But why would anyone want to? Especially when debt is expensive with anything other than FIXED rate loans.
Maybe I have been blinded by my own hate for all things related to debt by now and that includes moving to another home and taking on a new loan (Ie going into debt again)
If we pay off that last loan, we can then certainly afford to move after selling the old place and go somewhere else. But not in this current market sitaution, we rather wait and make the necessary repairs and upgrades when necessary (And have...)
At the same time we are now realizing that we may be 80 years old and still living there. That really makes for some thinking to planning for the future.
GHammer, Lotsa people advocate all kinds of ways to get ahead (some even less than ethical IMHO). But since I'm retired (I only work for family and myself now), best advice path to preserve wealth and then make it grow that I know of is the "self directed" brokerage account. I manage two Roth IRAs (mine and the wife's) and three self directed "naked" brokerage accounts (hers, mine and ours).. "Naked" is just a name that I made up to denote that the account doesn't have any tax deferred or tax free status. "Self-directed" jut means I tells my broker what and when to buy and what and when to sell...there are no funding fees, management fees, 401-B fees etc. Therefore, all my money goes to work for me and my family - there really isn't any middleman taking his cut right off the top of my stash of hard earned money - while I take all the risk with whats left. I mostly buy individual company stocks (no mutual, index, or exchange traded funds for me). I don't need some middleman between me and the risk I'm trying to manage masking it (and wake up some day wondering just what in the hell happened). I started out investing in businesses that I knew (everybody really knows more about investing than they realize when they first start out). Also I'm a much better stock picker today than I was 20, 10, or even 5 years ago. But I'd like to say that don't get hung up on "labels," like the self-directed Roth, its just a wrapper, and as long as it is legal (and ethical) you can pretty much put anything inside this wrapper that you are good at and have a background in...for example, a gambling grubstake that you could take to Vegas would not be allowed, but you could certainly put gold coins in this wrapper. The (Roth) rules are just arms-length. But cause its self-directed I just tell my administrator what to do. Got quite a pile going in them Roth's now; latest opportunity I'm working on is putting a condo which I own outright (in Guam of all places) inside this wrapper. Basically, I'm selling it to my Roth (and the sale proceeds come right back to my self directed naked brokerage account), but its rental management fees has to come from my Roth admin, and the condo rental income has to go right back into the Roth via the Roth admin too... pretty sweet, huh? BTW its all tax free (vice tax deferred). The trick is arms length. Saved round, I had a 401(K) as well, but since the caps came off (starting 2010) I recharacterized it and rolled the whole enchilada into my Roth IRA (bypassing the annual contribution cap). I am paying the one time tax this year, but I will never pay tax on it again for the rest of my life. I wrote earlier in this thread to JD about grasshoppers, cause I didn't get his analysis about this debt and its consequences. All my life I've been the "little guy, littlest investor, littlest saver" within the 2nd lowest earned income quintile in America when I was working for someone else; such circumstances made me a resolute saver. A very good habit to acquire. Sides, who could afford the usury interest rates on that credit debt? (certainly not I). But the diligent and prudent saver wins the race in the end. It doesn't matter what you earn, it matters what you save and invest. I'm miles ahead of those that earned multiples of my income but spent it all (and then some). Statistically, I figure I'm in the 4th American quintile in net worth...and I'm just your average American joe, so you can do it too if you stick with it. Need more reinforcement or ideas? Read and absorb all you can from folks in places like ZH ;-)
Debt backed exchange notes, to me, mimic the activities of the sun, distribution of energy engines. With that in mind, me thinks we are at that stage of life, Red giant stars with radii tens to hundreds of times larger than that of the sun which have exhausted the supply of hydrogen in their cores and switched to fusing hydrogen in a shell outside the core.
Regardless of all the many activities / cycles of a massive sun (see numerical equivalent to our present financial state), the one and only clue to when a star is about to die is when it starts the silicon burning process (um present financial state), When it is impossible to perform fission or fusion on 56Fe and still liberate energy, which results in super nova see: http://en.wikipedia.org/wiki/Supernova
Beautiful when viewed from a distance...eh, no so much up close I would guess. Those with the mathematical / stellar physics should have know better aka quaints, FK the boss man and his bonus, and their pay packets.
Skippy...hay TD / crew...whats the equivalent of financial iron...eh.
Great astronomical analogy considering the debts are truly astronomical. Now if we could only worm our way through a fold in space to get there a little quicker. Maybe an outlier fiat swan approaches to help the process along.
oh for the love of fractional banking and keynesianism bernankrupt and blobama will keep blowing bubbles like lawrence welk after his first bottle of champaign....
Lawrence Welk.
wunnerful wunnerful and wunnerful blast from the past.
Gads. I feel old now. But those were the days.
Come on you ZH smarties. You are still debating the morality of paying down debt or getting high FICO scores? As you know, the monetary system is a scam. First, banks do not give you their money, they just facilitate access to YOUR credit for you and charge you ungodly amounts of interest for something you already possess. So why should anyone pay back fraudulent loans?
People are intuitive to what is going on, and they just decide to spend as much credit as they own technically. There is no money and there is no debt. There is only credit and it originates with YOU "a transmitting utility" and your signature, courtesy of the Federal Reserve Bank and the Uniform Commercial Code (posted for all to see at the Cornell Law University website).
I am proud to say that I filed a UCC 1 Financing Statement and I don't pay anything. All I do is discharge debt with 3 pieces of paper. I write Accepted for Value on the bill or presentment. I write up a money order for the amount needed on a piece of paper and I sign it-- this is the transfer instrument. Then, I write a voucher or promise to pay. These are equivalent to any green note printed by the Federal Reserve Bank as legal tender! I discharge debt by sending these pieces of paper to any and all financial institutions. It feels really good to discharge debt like a pro under the UCC and it's the law under the fiat monetary system we have in place.
No need to debate the morality of paying debts or worrying about a credit score. They are fake.
The sooner you wise up to the monetary system under the 1933 bankruptcy code, the better. Anyone who pays a lawyer their hard-earned dollars for bankruptcy court has been scammed twice over.
I assume you can only discharge "fiat debts" that your "person" (fictitious entity) is reponsible for, but not any "real debts" that you as a real, physical human being are responsible for? Correct?
What makes your scheme work, I assume, is that corporations are stupid enough to send bills to your name in all CAPITAL LETTERS... which is how all fictitious "persons" are designated. I'm assuming you just figured out this scam, and take advantage of that criminal fraud known as UCC. Since the UCC is "uniform commercial code", it only applies to commerce AKA "the commercial" AKA "corporations" AKA "fictions".
What I'm not clear about is this. When you execute these "legal frauds", do you create some kind of joinder between yourself (you the living, breathing being) and the "person"? And if so, do you not risk being unable to remove that "joinder" when it becomes inconvenient or costly? I simply don't know, but I always worry that somewhere in the 353,643,135,643 pages of UCC and endless "court precident" they have ways to "gotcha".
Please explain in more detail.
honestann,
Define real debt, if you please. There is no gold/silver backed money, so there is no real debt.
Two issues:
First, we are born into commerce with our birth certificate sold to the IMF and receive a fictitious "person" or corporate name in ALL CAPS in return. But at this point, we are considered debtors and have no power to manage our own commercial affairs. The implication is that the IMF is the creditor at this point. They can take everything you have and the shirt off your back. Hence massive foreclosures.
When you file the UCC 1 form, you claim your name in ALL CAPS as the creditor of the debtor. You as principal are the true owner of your own physical work and productivity in commerce. At this point, you have the power to access your own credit and act as a bank.
Second, only a real being has the power to create money with a signature. So you do create a valid transfer instrument with your signature.
However, the UCC section 3 is clear. If the being signing his name indicates he is clearly the agent of the debtor, then the living being cannot be held accountable for the liabilities of the debtor.
Since the bills we receive are issued "under color of law" (they seem real under our fiat monetary system), then the means to discharge debt is also done "under color of law."
There are many other critical elements to understanding the UCC, which allow a being to manage his commercial affairs properly.
The UCC is clear. Any debt must be Accepted for Value and Returned for Discharge, Settlement, and Closure of the Account. These UCC laws are the outgrowth of the 1933 Bankruptcy of the US. There is no money, and there is no debt. And it is easy to discharge debt under color of law. So any failure to do so on the part of a financial institution (accepting discharge) or a regular being attached to a fictitious "person" leaves the financial institution or living being open to dereliction of duty to the financial system.
kayl,
Everything you say seems consistent with the small amount I've figured out on my own, but you've clearly gone lots further, and I'm betting everything you say is correct.
What is a "commericial affair"? If you trade me your stereo and car for my telescope, is that a "commercial affair" (no fiat currency involved)?
The entire scheme you mention does seem to exist, but I utterly reject it all, lock stock and barrel. Nobody born before me has any right to obligate me in any part of their sicko predatory schemes, and vice versa. Which means, virtually EVERYTHING today is pure "color of law", except the 3 real fundamental "laws of civilized behavior" that every non-predator throughout history has recognized:
#1: do not harm or kill other humans.
#2: do not damage or destroy property of others.
#3: do not mislead or default on contracts, agreements, transactions.
Is a "$20 gold piece" money? Is gold "money"? Is no so-called "money" from any country "money" today?
Also, isn't the "1933 Bankruptcy of the US" a "bankruptsy" of a "fictitious entity"? I mean really! I didn't sign the declaration of independence, constitution, bill of rights, or any other government document (except a few things like drivers-license and registration (all under protest and duress)), and I've never had any debt (not rich-at-all, just frugal and hate debt). So any implication that somehow me and you are subject to some massively bogus piece of crap is absurd.
I also worry that if someday I agree to sell something very expensive to someone, they might simply discharge the damn thing and all I'll end up with is a piece of paper that does nothing for me. What about that? Once you "buy in" to this system, aren't you subject to both ends of the stick?
My desire is to do exactly the opposite --- somehow totally disconnect myself from ALL this nonsense, and stop being harrassed and subjected to bull-crap by the predators-that-be. For example, as a human being, I have an unlimited right to travel. Because the predators and their paid-thug-cops insist on assuming I am a "person", I am in serious danger if I travel around with no driver-license, no registration, no insurance, no passport, etc. That's a pile of BS. And as far as I can tell, the endless acts/statutes/regulations and other atrocities coming down the pike (carbon taxes, transaction taxes, income taxes) ALL apply only to fictitious [commercial] entities like "persons", "corporations", etc. I want OUT.
I do not denigrate your way of doing things... anyone who can escape much of the abuse is welcome to do it their own way, include "trying to play by the rules these predators established to enslave and destroy us"... I wish them luck.
I am sooooooo busy doing science, engineering and developing new technologies, I don't have time to become an expert UCC lawyer clone. Hence my desired to "opt out and be free" rather than "opt-in and stick them with their own sword".
What do you think?
PS: Thanks very much for all the tips and references.
PS: What is "real debt"? Well, that's a tricky question in a country that is 100% corrupt and run by predators-that-be who can simply create "debt-money" out of nothing with zero effort by typing on their computer keyboards. However, I guess I'd say if you agreed to trade your stereo and car for my telescope... and you gave me your stereo and car first... then my debt is my telescope that I must give you in return. I dunno, other than that.
My strong opinion about "money" is this. That the only legitimate, ethical "money" is "real, physical goods". So while "gold" is the most convenient "real, physical good" that I know of for general purpose trade/exchange with others, ANY real, physical good satisfies my definition of "money". So, I'd say "gold" is the appropriate conventional form of money, but any other real, physical, valuable good is just fine too.
that's a wonderful treatise you wrote honestann. agree that it's Just Time for each of us begin to ask ourselves these questions: what is money? what is debt? what is fair exchange? what is trust? what is wealth?
all of us will come to our own answers of course which is precisely the point. this is the foundation of a new beginning.
"Then, I write a voucher or promise to pay. These are equivalent to any green note printed by the Federal Reserve Bank as legal tender!"
You have a pin cite/link for that?
http://www.law.cornell.edu/ucc/ucc.table.html
Read thoroughly Article 3. Please note the UCC is adopted by each state, and within each state the section numbers can be slightly different.
kayl, you would do everyone a service to clearly & concisely make your hypothesis with relevant citations. methinks you're on to something (per the old saying that a vampire comes into your home only with your consent), but it's a bit too complicated right now for the meme to spread to really make an impact.
K-I-S-S
tip.e, I agree. But it has taken me two years to decode the laws, along with the disinfo that is all over the web.
First, get a Blacks Law Dictionary.
Second, read Article 3 of the UCC at the Cornell Law University website. That dictionary comes in handy.
Third, read instructions to write a proper legal Affidavit. These are contracts! They are letters to lenders that discharge debt!
Fourth, read a book by Mary Elizabeth Croft "How I Clobbered Every Bureaucratic Cash-Confiscatory Agency known to Man."
Disclaimer: Somewhat dingy and a bit of a criminal mind, but maybe that's why she caught on to them a bit earlier than the rest.
Read for the basic concepts. She provides some great quotes which I've crossed referenced to check for accuracy.
Fifth, go to the GSA forms library.
http://www.gsa.gov/portal/forms/type/GSA
Look in the Standard forms tab and search at the bottom for SF5510. Authorization Agreement for Preauthorized Payments. Read the instructions to the bank!
This is the form you fill out and send to the US Treasury with your presentment Accepted for Value (from the bank), performance, and payment bonds (bill, transfer instrument, and promise to pay) to notify Treasury that a non-cash discharge of debt is being set up with a financial institution. I always send the form to the bank itself and ask them to give me the account number where they want the discharge funds to be sent.
Technically, I don't care what they do. If I discharge under color or law, the bank must accept it.
Research I did to confirm discharge format
Look for government contract forms: the bid, the performance, and the payment bonds. Read them.
Look at the prison bonds SF 23, 24, 25 and the felony Miller Act bonds SF 274, 275. This is how they sell your dishonor in court and make you a prisoner. You can bond up your own case with the three pieces of paper. Since they don't own the claim against you, you can't be locked up.
They were the vital clues that any lawful discharge of debt must have three pieces of paper: the presentment, the money order, and the promise to pay. Cross checked and verified.
thanks for simply sharing good soap kyl.
veddy interesting stuff.
My understanding is that ch 7 costs 330.00 to file. If you have 10,20.....100 thousand in debt, it's not much more pain than your approach, maybe less.
Further a lawyer acquantence charges $900.00 for ch. 7. Not to shabby for extinguishin 5-100 x that in debt, without the time learning curve, or unsureness of your method.
There is nothing to debate regarding the current FICO score and debt/credit system in place now. Either you owe somebody money for something recieved or you have someone who owes YOU money for something you provided for them.
As far as your declaration of making debt and stuff go bye bye based on a few peices of paper... I would think that is related to COMMERCIAL DEBT and your personally still liable for whatever debts YOU incurred NOT related to Commerical.
I am not a smartie and I dont debate morals. I just go and do. But your declaration of making yourself debt free... I hope that you have had a accountant or lawyer tell you that you are indeed free because if there is even a spot of fraud that stinks or gets moldy and is sniffed out, you will be in trouble.
Just saying.
HungrySeagull, go read Article 3 of the UCC at Cornell Law University and get back to me.
There's no money. If anyone owes money, it is only under "color of law."
seagull, i agree with you that this needs to be flushed out more through investigation, but if kyl's theory is correct, this is a bit deeper than a mechanism to allow an individual to simply become 'debt free' and closer to the key to unlock the stranglehold between wealth (your time & energy that you invest as a free individual) & the current FRN debt-based bank-controlled monetary system that claims to represent your wealth (which we all know here is a straight-up lie).
tip.e, it's much, much deeper.
It involves knowledge in UCC, Common Law, Contracts, Court proceedings and jurisdiction, and Commerce like contract forms, claims, presentments, money orders, surety (insurance) or voucher and proper international format (since the US is a member of the International Association of Contract Administrators (IACA).
I'm not sure we can come up with a meme that will go viral worldwide and unlock this stranglehold on our wealth.
the devil's always in the details, ain't it kayl? thanks for sharing your research. maybe it's worthwhile to take a look at FOFOA's approach (not necessarily his argument although he does make a persuasive one), the way he distills complicated concepts down to simple metaphors that laymen can understand. it's quite a talent.
Quinn did a post on this on financialsense- I looked it up, here it is:
http://financialsense.com/contributors/james-quinn/the-great-deleveragin...
I think the de-leveraginging is forced, and not as much as one would expect, maybe compare this post and come to more conclusions.
I just finished reading a book by Charles Beard from 1913 entitled "An Economic Interpretation of the US Constitution." Beard outlines the bankruptcy of the US under the Articles of Confederation and shows the means by which the interests of the wealthy, all signers of the Constitution, were asserted. A great transfer of wealth occurred between debtors and the wealthy class back then (just as now).
Allow me to paraphrase a striking comment Beard makes in his book. He said that debtors would never be bailed out, and the wealthy always understood the government as its means of enforcement to extract the wealth of the lower classes and squash rebellion.
I don't expect anything different from our US corporate government.