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War on Americas Middle Class


just because people have more income their buying power has collapsed.

Jobs are so important to keeping a solid middle class.  This should be obvious but current policy being driven by the corporatacracy is simply focusing on keeping prices inflated for the big ticket items (i.e., housing and healthcare).

California Budget Woes

The current mantra in the conservative circles of California government is those darn employees with their “cadillac pensions and benefits”. When painted with a broad brush, as the story goes, its these same government employees that are bankrupting the state and local municipalities.

In order to combat a crushing budget deficit of $450,000 the City of Maywood last month planned to layoff all of its employees and outsource its operations to a neighboring community.

Maywood, a small working-class community south of downtown Los Angeles, plans to lay off all its employees, disband its Police Department and turn over its entire municipal operations to a neighbor – an action that appears to be without precedent among California cities.

Maywood a largely hispanic community has a population of 28,991 people. Maywood’s cost of living is 13.60% Higher than the U.S. average. The unemployment rate in Maywood is 18.20 percent.

So who was handling city services for Maywood?  

I’m Calling “Bull$hit!”

In the most recent week it was divulged by the WSJ that the Bank of International Settlements (BIS) official gold holding have tripled! Where did all this gold come from and why is it suddenly moving around remains a mystery.

Why should care? Because gold is being recognized as the worlds only real money once again and colored paper is being called into question … even by banks.

However yesterday the official denial arrived in the WSJ when they reported this:

“The operations concerned were purely market operations with commercial banks,” the BIS said in an email statement.


I still … got nuthin’

Last week I admitted that I got nuthin when the latest developments in financial reform were announced. The picture is bleak in regards to any oversite.

Today we have further developments and I have to say once again … I still … got nuthin.

I …. got nuthin’

This morning I read that lawmakers are on final approach for banking reform.  

What I didn’t find in Afghanistan

Borrowing from Joe Wilson’s take on “What I didn’t find in…” comes a story today from the NY Times that Afghanistan is rich in untapped natural resources.

WASHINGTON – The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

Do you remember Osama Bin Laden? The reason we went to war. Or was it?  

Bernie Madoff: F*** My Victims

Sometimes there is an event which puts every other event leading up to it into perspective.

Bernie Madoff summed it all up recently with 3 words.

“Fuck my victims.”

My Pound of Flesh

In case you haven’t heard and before they remove it all together.

SAN FRANCISCO (MarketWatch) — A small airplane crashed into an office building in Austin, Texas which reportedly housed an Internal Revenue Service office, according to media reports Thursday. However, Austin officials said the crash is not terror related. So far, two people have been sent to the hospital and one person is unaccounted for, the authorities said. They declined to comment on the pilot. But the Wall Street Journal reported that a Texan named Joseph Stack made an Internet posting that indicated that he was responsible for the crash.

Here is the original link:  

Who is HAMP Helping?

h/t to Huffington Post

This will be relatively short as my outrage meter seems to be peaking again.

As the next wave of defaults is churning its way through the prime mortgage market our saviors in Washington have come up with a new way to scam the general populace. Its called bailing out the banks, part II.

Housing Again


When I hear about arguments about the triumphant return of housing values I simply look at the above chart and realize that it is mathematically impossible.  Since the government is now the lender of first, second, and last resort at least they are verifying income even with FHA insured loans.  Yet the chart above showed how absurd lending standards got and were exploited especially here in California.  This was the fuel that flamed the housing price bubble.

Yet the major source of housing appreciation in the state is now gone.  The leverage to lift the world has been removed.  With Alt-A and option ARM products buyers were able to get 10 and even 15 times leverage to purchase a home.  Countless people making $50,000 a year went no doc and bought $500,000 homes.  The $500,000 home in California was the median home back at the peak.  Without this leverage, prices can only go up so high when they do start going up.  Real incomes are unable to support current prices in many places.  The $250,000 median price only reflects the large volume of sales in the lower end.  Next year we will see more price reductions at the mid tier as prices reflect the current economy and lack of maximum leverage products.

Reasons #5 – Option ARM Recasts

option arm loans outstanding

The bulk of option ARMs have yet to hit recast dates.  60 percent of current outstanding option ARMs find their home in California.  This is largely a one state problem.  Florida, Nevada, and Arizona have the remaining large share of the loans but no state comes close to matching California.  The problem with these loans are many are in the mid tier markets.  The subprime debacle has already washed away much of the lower end of the market.  Borrowers had less of a buffer in those areas.

Yet the option ARM does a good job hiding problems for a long time.  The teaser payment can last for a few years and once that first recast hits, it is game over.  Currently, 40 percent of all option ARMs are already 60 days late and we have yet to hit the major recast points.  Once these homes start selling at lower prices comps will also take a hit.

Years and Years and Years of supply

Jim Cramer Media Shill or Housing Whore?

On December 17th, 2008 Jim Cramer pronounced that the housing bottom will be in by June 30, 2009.

Well, I now have another contrarian point of view to proffer: The converted bears, as well as the panicked sellers desperate to bail out and nervous buyers afraid to jump in, will be dead wrong nine months from now, when housing prices bottom. In fact, I’ll call the precise date of the housing-market turnaround. It will begin on June 30, 2009.

In 2007 housings subprime market was just beginning to melt down all the while candidates were proclaiming that ours was a strong economy, and the Fed chairman was stating that subprime was contained, and there was no spill over into the broader economy.

These are the experts and yet they have been wrong at almost every turn. Listen to these asshats at your own peril. The government, media and banks are lying to you.

Take the jump to look at some numbers.

Law of Unintended Consequences

There are those that would like you to believe that the worst for housing has passed. Stories about depleted inventory, or multi-year lows.

Government programs, first-time home buyer tax credits and gifts to the builders…. heck even our propaganda machine is pushing the idea of getting people to buy a home.

(CBS)   Real estate experts in many parts of the country are saying now’s the time to buy.


Early Show money maven Ray Martin weighed in on the Saturday Edition about whether buying is indeed the way go to now,


Yes, it is, and for a number of reasons. For one thing, housing prices are declining just about nationwide. Plus, mortgage rates are at a serious low. Rates on a 30-year, fixed-rate mortgage are at a level we won’t see again in our lifetime. Finally, if you buy before December 1, you’ll get an $8,000 tax credit if you’re a first-time buyer. For all those reasons, there’s really never been a better time to go shopping for real estate.

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