Subprime Mortgages

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Guest Post: Trying To Stay Sane In An Insane World - Part 2





This insane world was created through decades of bad decisions, believing in false prophets, choosing current consumption over sustainable long-term savings based growth, electing corruptible men who promised voters entitlements that were mathematically impossible to deliver, the disintegration of a sense of civic and community obligation and a gradual degradation of the national intelligence and character. There is a common denominator in all the bubbles created over the last century – Wall Street bankers and their puppets at the Federal Reserve. Fractional reserve banking, control of a fiat currency by a privately owned central bank, and an economy dependent upon ever increasing levels of debt are nothing more than ingredients of a Ponzi scheme that will ultimately implode and destroy the worldwide financial system. Since 1913 we have been enduring the largest fraud and embezzlement scheme in world history, but the law of diminishing returns is revealing the plot and illuminating the culprits. Bernanke and his cronies have proven themselves to be highly educated one trick pony protectors of the status quo. Bernanke will eventually roll craps. When he does, the collapse will be epic and 2008 will seem like a walk in the park.

 
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Guest Post: 10 Reasons Why Obamacare Is Going To Ruin Your Medical Care... And Your Life





The bottom line is that Americans are losing more and more of their medical freedom.  By 2015, so many workers will be trapped in the government-run health insurance exchanges that there will be no going back to the private plans we have today. At this rate, single-payer proponents will drive private insurance companies out of business, which has been their intention all along. Obamacare is a hodgepodge of new regulations, requirements, and penalties. Here are the ten most important points that doctors should tell their patients.

 
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Frontrunning: June 3





  • BIS lays out "simple" plan for how to handle bank failures (Reuters) - Are we still holding our breath on Basel III?
  • Deficit Deal Even Less Likely - Improving U.S. Fiscal Health Eases Pressure for a 'Grand Bargain' Amid Gridlock (WSJ)
  • IRS Faulted on Conference Spending (WSJ)
  • Deadly MERS-CoV virus spreads to Italy (CNN)
  • Turkish PM Erdogan calls for calm after days of protests (Reuters)
  • Financial system ‘waiting for next crisis’ (FT)
  • Russia to send nuclear submarines to southern seas (Reuters)
  • China Nuclear Stockpile Grows as India Matches Pakistan Rise (BBG)
 
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The Gods Of The Marketplace





Investors borrowed $384.4 billion in April, a 1.3% gain from the previous month and a 29% rise from the same month last year. This is an all-time record for margin debt and it exceeds the previous high mark set in June 2007. Some may see this as an increased sign of investor confidence but we are not among them. To me this is a giant red warning flag blowing in the financial breeze indicating the leveraging of dumb money making very risky bets. We are once again in the crack house of substance abuse! In each age the gods of the marketplace show up once more. The packaging may be different but the powder is the same. Each dealer uses the same line, "Nothing addictive here."

 
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Ben Bernanke Speaks - Live Webcast





The Chairman is about to take the lectern to discuss bank structure and competition at the SIFI conference at the Chicago Fed. His prepared remarks are likely to be a little less exciting than the Q&A where the world will be watching for the words "buy, buy, buy", "mission accomplished", or "taper". Charles Evans will be his lead out man. Finally, since Bernanke will be discussing shadow banking, or the source of some $30 trillion in shadow money always ignored by Keynesians, Monetarists and Magic Money Tree (MMT) growers, a topic we have discussed over the past three years, here is the TBAC's own summary on how Modern Money really works.

 
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11 Reasons Why The Federal Reserve Should Be Abolished





If the American people truly understood how the Federal Reserve system works and what it has done to us, they would be screaming for it to be abolished immediately.  It is a system that was designed by international bankers for the benefit of international bankers, and it is systematically impoverishing the American people. The Federal Reserve system is the primary reason why our currency has declined in value by well over 95 percent and our national debt has gotten more than 5000 times larger over the past 100 years. The Fed creates our "booms" and our "busts", and they have done an absolutely miserable job of managing our economy. So why is the Federal Reserve doing it?  Sadly, this is the way it works all over the globe today.  In fact, all 187 nations that belong to the IMF have a central bank.  But the truth is that there are much better alternatives.

 
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Bill Gross: "There Will Be Haircuts"





The highlights from Bill Gross' monthly letter: "The past decade has proved that houses were merely homes and not ATM machines. They were not “good as money.” Likewise, the Fed’s modern day liquid wealth creations such as bonds and stocks may suffer a similar fate at a future bubbled price whether it be 1.50% for a 10-year Treasury or Dow 16,000.... if there are no spending cuts or asset price write-offs, then it’s hard to see how deficits and outstanding debt as a percentage of GDP can ever be reduced....  Current policies come with a cost even as they act to magically float asset prices higher, making many of them to appear “good as money”. And the take away: "PIMCO’s advice is to continue to participate in an obviously central-bank-generated bubble but to gradually reduce risk positions in 2013 and perhaps beyond. While this Outlook has indeed claimed that Treasuries are money good but not “good money,” they are better than the alternative (cash) as long as central banks and dollar reserve countries (China, Japan) continue to participate....a bond and equity investor can choose to play with historically high risk to principal or quit the game and earn nothing."

 
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Guest Post: The Global Status Quo Strategy: Do More Of What Has Failed Spectacularly





A key goal of propaganda is to mystify and obscure the Power Elites' real quandary and agenda. For example: we're just trying to help you out here, folks, by inflating another "wealth effect" bubble that will make you feel more prosperous. You're gonna love the warm fuzzy feeling of a return to the good times, even if you own zip-zero-nada in the way of productive assets. Or: we're raising your taxes and expropriating your money via inflation to stabilize the system that benefits you. (And yes, you may kneel and kiss Janet Yellen's ring.) The current level of mystification is truly extraordinary. But fortunately, we own a demystification device that scrubs out the mystification, leaving only stark, unforgiving reality. The global Status Quo--the U.S., the E.U., China, Japan, Cyprus, Greece, Italy, Spain, et al.--has only one choice: do more of what has failed spectacularly.

 
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Guest Post: Why The Government Is Desperately Trying To Inflate A New Housing Bubble





Many people claim the Federal government and Federal Reserve are trying to inflate a new housing bubble to trigger a new "wealth effect," i.e. people seeing their home equity rising once again will feel encouraged to borrow and blow money like they did in 2001-2008. But if we look at current income (down) and debt levels (still high), there is little hope for a renewed wealth effect from housing. That leaves us with this conclusion: The Federal government and Federal Reserve are trying to inflate another housing bubble to save the "too big to fail" banks from a richly deserved day of reckoning.
 
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Guest Post: It's Always The Best Time To Buy





I really need to stop being so pessimistic. I’m getting richer by the day. My home value is rising at a rate of 1% per month according to the National Association of Realtors. At that rate, my house will be worth $1 million in less than 10 years. Every mainstream media newspaper, magazine, and news channel is telling me the “strong” housing recovery is propelling the economy and creating millions of new jobs. Keynesian economists, Wall Street bankers, government apparatchiks and housing trade organizations are all in agreement that the wealth effect from rising home prices will be the jumpstart our economy needs to get back to the glory days of 2005. Who am I to argue with such honorable men with degrees from Ivy League schools and a track record of unquestioned accuracy as we can see in the chart below? These are the facts. But why trust facts when you can believe Baghdad Ben and the NAR? It’s always the best time to buy.

 
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Frontrunning: February 25





  • Risk of instability hangs over Italy poll (FT), Protest votes add to uncertainty in close Italy election (Reuters), and... Risk On
  • Czech inspectors find horsemeat in IKEA meatballs (Reuters)
  • China’s Slower Manufacturing Casts Shadow Over Recovery (Bloomberg)
  • So much for reform: China Prepares for Government Shuffle as Zhou Stays at PBOC (Bloomberg)
  • France to pause austerity, cut spending next year instead: Hollande (Reuters)
  • Sinopec to buy stake in Chesapeake assets for $1.02 billion (Reuters)
  • White House warns states of looming pain from March 1 budget cuts (Reuters)
  • China Quietly Invests Reserves in U.K. Properties (WSJ)
  • Osborne Keeps Austerity as Investors See Downgrade as Late (BBG)
  • South Korea's new president demands North drop nuclear ambitions (Reuters)
  • Russia accuses U.S. of double standards over Syria (Reuters)
 
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Guest Post: All Is Well





“Facts do not cease to exist because they are ignored.” Aldous Huxley

The entire system is corrupt to its core. Both political parties, regulatory agencies, Wall Street, the Federal Reserve, and mainstream media are participants in this enormous fraud. They grow more desperate and bold by the day. The lies, misinformation and propaganda being spewed on a daily basis become more outrageous and audacious. They are using the Big Lie method on a grand scale. They frantically need to lure the muppets into the stock market and the housing market to keep the game going a little longer. You can sense we are reaching a tipping point. The system they have created is mathematically unsustainable. Therefore, it will not be sustained.

 
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Frontrunning: February 6





  • Tunisian opposition politician shot dead, protests erupt (Reuters)
  • China says extremely concerned after latest North Korea threats (Reuters)
  • Postal Service to cut Saturday mail to trim costs (AP)
  • Debt Rise Colors Budget Talks (WSJ)
  • Obama proposes short-term budget fix, Republicans swiftly object (Reuters)
  • S&P Analyst Joked of Bringing Down the House Before Crash (BBG)
  • Dell’s Bigger Challenge Ahead in Turnaround After Buyout (BBG)
  • Some of the Mark Carney Gloss Is Coming Off (WSJ)
  • Japan Official Says BOJ Tools Sufficient as Shake-Up Looms (BBG)
  • S&P Lawsuit Undermined by SEC Rules That Impede Competition (BBG)
  • Heavy Clashes Erupt in Syrian Capital (WSJ)
 
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The World Is In Trouble





We make more than we’ve ever made, we owe more than we’ve ever owed, and we have less than we've had in decades which is distributed to those that did not earn the money. This is a working definition of Trouble. The stock market is at an all-time high while the financial condition of the country has seriously deteriorated. The world is in a gigantic bubble and it is going to get pricked. You cannot keep printing money without consequences and when absolute and intrinsic valuations replace relative valuations then the game is afoot. When the survival of the State puts its people in dire straits then, eventually, the citizens will rebel as the nation has forgotten just who composes its constituents. The people and institutions that have the capital will only go along quietly for so long when nations try to take what they have earned and dispossess it for others. The rich will become poorer and the poor will become poorer and when those with the capital have been deprived of it so that everyone is worse off then the Lords of Chaos will be in control once again.

 
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