The Year Was 1918
Posted By thestatedtruth.com on July 20, 2011
A New House was….$4,800
Average Annual Income…..$1,100
One Gallon of Gas….8 cents
Average New Car….$900
Loaf Of Bread….10 cents
Coffee, One Pound….29 cents
Corona Typewriter….$50.00
Existing Home Sales Miss, Drop To Lowest Level Since November, Order Cancellations Surge
Posted By thestatedtruth.com on July 20, 2011
It’s the new normal, and it’s going to be here a while…..
NAR: With job creation below expectations, excessively tight loan standards are keeping many buyers from completing deals….And proposals being considered in Washington could effectively put more restrictions on lending. An unprecedented 16% cancelled contracts in June.
According to the NAR, June existing home sales declined to 4.77MM from 4.81MM, the lowest since November, and well below the expected rise to 4.90MM. This number was 8.8% below June 2010’s 5.23MM. Total inventory increased by 3.3% to 3.77 million units, or 9.5 months of supply at the current sales rate up from 9.1 in May. The biggest surprise is the surge in order cancellations which soared from 4% in May to an unprecedented 16% in June.
The national median existing-home price2 for all housing types was $184,300 in June, up 0.8 percent from June 2010. Distressed homes “ foreclosures and short sales generally sold at deep discounts “ accounted for 30 percent of sales in June, compared with 31 percent in May and 32 percent in June 2010.
All-cash transactions accounted for 29 percent of sales in June; they were 30 percent in May and 24 percent in June 2010; investors account for the bulk of cash purchases.
First-time buyers purchased 31 percent of homes in June, down from 36 percent in May; they were 43 percent in June 2010 when the tax credit was in place. Investors accounted for 19 percent of purchase activity in June, unchanged from May; they were 13 percent in June 2010.
Single-family home sales were unchanged at a seasonally adjusted annual rate of 4.24 million in June, but are 7.4 percent below a 4.58 million pace in June 2010. The median existing single-family home price was $184,600 in June, up 0.6 percent from a year ago.
Existing condominium and co-op sales fell 7.0 percent to a seasonally adjusted annual rate of 530,000 in June from 570,000 in May, and are 18.0 percent below the 646,000-unit level a year ago. The median existing condo price5 was $182,300 in June, up 1.8 percent from June 2010.
The World We Live In Is Now Inter-Connected To The Rest Of The World Like Never Before
Posted By thestatedtruth.com on July 19, 2011
Unlike back in the day when everything was East vs. West….the Soviets and China vs NATO and the United States, we are now interconnected to everywhere and everything. There used to be an old saying, “One man’s pain is another man’s gain”, but now one man’s pain very well may end up being pain for all men (and women) the world over because the Western world no longer has financial discipline. We have never been so interlinked before. In the past, it would have been nonsense to think a small country like Greece could jeopardise the entire world economy. So you might ask why has this changed, please explain?
Well, we’ll try….lets start with unregulated derivatives. There are now so many bets in the system concerning the economy, national sovereign debt, stock market hedges, real estate and interest rate hedges etc., that nobody honestly has a clue how big or really bad a negative outcome might be. If one side of the derivative doesn’t get paid on a contract, then it will likely set off a chain reaction of dominoes, that’s because much of the action is repetitious or laid off to other players and so forth on down the line, so if one of the participants doesn’t get paid, neither will the lower rungs. That’s what threatened to happened in 2008, and that’s why the banks were saved along with the large brokerages and insurance companies. Don’t think it can’t happen again. The derivative pools are now larger than ever….so are the banks. Another negative unexpected surprise connected to derivatives could set off the greatest economic calamity in human history. The years 2012-2014 could be very tough indeed. Capice!
Here is a crude definition of a Derivative A derivative is a financial instrument whose value depends on underlying variables. The most common derivatives are futures, options, and swaps but may also include other tradable assets such as a stock or commodity or non-tradeable items such as the temperature (in the case of weather derivatives), the unemployment rate, or any kind of (economic) index. A derivative is essentially a contract whose payoff depends on the behavior of a benchmark and the bets can be made on either side of an outcome. So in a cruel example, let’s say someone could bet on their neighbors house burning down…if it burns down, they would collect on the insurance bet, but let’s say 100 other participants also held insurance in addition to the homeowner, they would all benifit from the negative event. This might also create an unintended incentive to lite the match. Get the drift. But laws don’t allow this kind of a thing on a house….but they do allow particpants to bet on the demise of countries and companies. Sometimes just the bet itself, if big enough, can make the event more likely to happen.
In todays world there are many positive and negative derivative outcomes possible. Just in the world economy itself, handsome payoffs will go to players if in the event certain things happen during a set time line covered in the contract. Sometimes those outcomes can be gamed and ganged up on especially if the players are large and multiple in number….if it happens at the wrong time or to the wrong thing (such as an unexpected interest rate rise or currency collapse etc.) we’ll all be in trouble.
The essay on Greece reviewed below is by Graham Summers of Phoenix Capital Research and was posted on ZeroHedge
07/19/2011
This is a continuation of my first essay, How Greece Could Create Another Round of Systemic Risk Pt 1. That essay focused on how Greece, while a small player in the Eurozone, could trigger another round of systemic risk as a result of the interlaced European banking system.
Now this is where things get REALLY tricky. Because of the intertwined nature of the derivatives market, a Greek default could result in systemic risk for the simple fact that if one of the banks that goes down with Greece has extensive exposure to Spain as well, then things could get ugly very, VERY fast.
Indeed, as stated before, 70% of exposure to Portugal, Ireland, Greece, and Spanish debt is from foreign entities. The below chart from BusinessInsider does an excellent job of revealing just how big systemic risk is based on EU debt.
The above chart shows the bank exposure to peripheral countries debt as a percentage of GDP. For instance, UK bank exposure to Irish debt is roughly equal to a little over 6% of UK GDP, German exposure to Spanish debt is north of 5% of German GDP, etc.
To say that systemic risk is a MAJOR problem for the EU would be the understatement of the year. For instance, if Portugal defaults, Spain’s banks will get taken to the cleaners. This in turn could trigger a HUGE systemic collapse as exposure to Spanish debt is equal to 4% or more of GDP for Switzerland, France, Germany, the UK, and the Netherlands.
And it’s not as though the US is somehow free from this either. Altogether the US has $390 billion worth of exposure to PIGS (Portugal, Ireland, Greece, and Spain) debt. While not an enormous amount of money relative to US GDP (it’s roughly 3% or so), we must remember that the US commercial banks have over $240 TRILLION in derivative exposure on their balance sheets.
And 82% of this ($200 trillion) is related to interest rates.
This is why Europe is BIG deal: a collapse in the bond markets there would push interest rates through the roof and result in various interest rate spreads (LIBOR, Treasury to Swiss Franc, etc) going haywire, which in turn could trigger another Lehman type event in the derivative market.
Remember, the financial system is even more leveraged today than it was during the Tech Bubble. So a derivative collapse from anywhere could trigger a sharp sell-off as banks and institutions have to sell positions to meet margin/ redemption calls. Which in turn would result in more selling and so forth.
Can You Name This Tune….Nope, They All Sound About The Same
Posted By thestatedtruth.com on July 18, 2011
Some opinions to be reckoned with…. it’s time to pay attention to the road everyone.
From Reuters: Former U.S. Treasury Secretary Lawrence Summers explains….The European financial crisis has entered a new and far more dangerous phase. Where the crisis had been existential for small economies on the periphery of Europe but not systemically threatening to either the idea of European monetary union or to the functioning of the global financial system, it now threatens both European integration and the global recovery.
Gluskin Sheff strategist David Rosenberg…..The situation is unraveling and so far EU policymakers have yet to come up with a viable solution for Greece, let alone Portugal, Spain or even Italy.
Sean Egan, president of an independent Philadelphia-based ratings agency, says in the latest Barron’s, U.S. investors may very well be significantly underestimating the scope of what’s going on in Europe. He observed:
This is going to be one truly big story ”on the scale of the instability of Germany’s Weimar Republic after World War I”and I can’t see the political will or politicians with enough clout to forge a broad consensus. Everything seems to point toward instability, leaving democracies open to strong-arm government.
Economist Dennis Gartman of the Gartman Letter….. doesn’t see the crisis ending anytime soon, either. Rather than giving his typical technical breakdown of the markets, he instead related a very basic, fundamental reason why he believes precious metals will go higher:
Were we a German lawyer, or doctor, or small business owners, we’d be buying gold in euro terms, swapping the latter for the former.
Not to do so, Gartman added, would seem to be illogically dependent upon the belief that Brussels, Paris and Berlin will do the right thing economically.
So far, that has proven to be a mug’s bet, he wrote.
And……A poll released by a German newspaper found that 60% of consumers now have little to very little trust in the euro.
Steve Wynn On Barack Obama: “This Administration Is The Greatest Wet Blanket To Business And Job Creation In My Lifetime”
Posted By thestatedtruth.com on July 18, 2011
Steve Wynn is very wealthy and very smart. When he talks, people tend to pay attention….no pun intended! During the Wynn corporate earnings call, Steve Wynn gave without doubt the most blistering and scathing critique of the Obama administration by anybody yet, and he’s a Democrat.
From the call transcript:
I believe in Las Vegas, I think its best days are ahead of it, but I’m afraid to do anything in the current political environment in the United States. You watch television and see what’s going on on this this debt ceiling issue. And what I consider to be a total lack of leadership from the President, and nothing will get fixed until the President himself steps up and wrangles both parties in Congress. But everybody is so political, so focused on holding their job for the next year, that the discussion in Washington is nauseating.
And I’m saying it bluntly that this administration is the greatest wet blanket to business and progress and job creation in my lifetime. And I can prove it and I could spend the next three hours giving you examples of all of us in this marketplace that are frightened to death about all the new regulations, our health care costs escalate. Regulations coming from left and right. A President that seems, you know — that keeps using that word redistribution.
Well, my customers and the companies that provide the vitality for the hospitality and restaurant industry, in the United States of America, they’re frightened of this administration. And it makes you slow down and not invest your money. Everybody complains about how much money is on the side in America. You bet. And until we change the tempo and the conversation from Washington, it’s not going to change.
And those of us who have business opportunities and the capital to do it, are going to sit in fear of the President. And you know, a lot of people don’t want to say that. They say oh, God, don’t be attacking Obama. Well, this is Obama’s deal. And it’s Obama that’s responsible for this fear in America.
The guy keeps making speeches about redistribution, and maybe’s ought to do something to businesses that don’t invest, they’re holding too much money. You know, we haven’t heard that kind of money except from pure socialists.
Everybody is afraid of the government. And there’s no need — there’s no need, you know, soft pedaling it. It’s the truth. It is the truth. And that’s true of Democratic businessmen, and Republican businessmen, and I am a Democratic businessman and I support Harry Reid, I support Democrats and Republicans, and I’m telling you that the business community in this country is frightened to death of the weird political philosophy of the President of the United States. And until he’s gone, everybody is going to be sitting on their thumbs.
Things That Could Go Bang, And Change The World
Posted By thestatedtruth.com on July 17, 2011
War between Iran-Israel……CIA veteran Robert Baer, “I think we are looking into the abyss”……“there is a warning order inside the Pentagon” to prepare for war.
If this happens, envision Gold exploding along with Oil, while stock markets and economies around the World plunge. It doesn’t take a rocket scientist to throw caution to the wind.
 Naval update per Stratfor:
The most recently updated naval map from Stratfor shows that the CVN 77 G.H.W. Bush has just entered the Persian Gulf, the first time a US aircraft carrier has passed through the Straits of Hormuz in months. What is also notable is that the LHD 5 Bataan amphibious warfare ship has just weighed anchor right next to Libya: this is odd since the coast of Tripoli had been left unattended for many weeks by US attack ships. And topping it all off is that a third aircraft carrier, the CVN 73, is sailing west from the South China seas, potentially with a target next to CVN 76 Ronald Reagan which is the second carrier in the Straits of Hormuz area.
Three carriers in proximity to Iran would be extremely troubling, yet fit perfectly with the story of CIA veteran Robert Baer, who as reported by Al Jazeera, appeared on KPFK Los Angeles, warning that Israeli PM Netanyahu is “likely to ignite a war with Iran in the very near future.””Masters asked Baer why the US military is not mobilising to stop this war from happening. Baer responded that the military is opposed, as is former Secretary of Defense Robert Gates, who used his influence to thwart an Israeli attack during the Bush and Obama administrations. But he’s gone now and “there is a warning order inside the Pentagon” to prepare for war.” There is almost “near certainty” that Netanyahu is “planning an attack [on Iran] … and it will probably be in September before the vote on a Palestinian state. And he’s also hoping to draw the United States into the conflict”, Baer explained.”
Courtesy of Al Jazeeraa and Haaretz, parts of the full take from Robert Baer:
Earlier this week, Robert Baer appeared on the provocative KPFK Los Angeles show Background Briefing, hosted by Ian Masters. It was there that he predicted that Israeli Prime Minister Binyamin Netanyahu is likely to ignite a war with Iran in the very near future.
Robert Baer has had a storied career, including a stint in Iraq in the 1990s where he organised opposition to Saddam Hussein. (He was recalled after being accused of trying to organise Saddam’s assassination.) Upon his retirement, he received a top decoration for meritorious service.
He obviously won’t name many of his sources in Israel, the United States, and elsewhere, but the few he has named are all Israeli security figures who have publically warned that Netanyahu and Defense Minister Ehud Barak are hell-bent on war.
Baer was especially impressed by the unprecedented warning about Netanyahu’s plans by former Mossad chief Meir Dagan. Dagan left the Israeli intelligence agency in September 2010. Two months ago, he predicted that Israel would attack and said that doing so would be “the stupidest thing” he could imagine. According to Haaretz:
When asked about what would happen in the aftermath of an Israeli attack Dagan said that: “It will be followed by a war with Iran. It is the kind of thing where we know how it starts, but not how it will end.”
The Iranians have the capability to fire rockets at Israel for a period of months, and Hizbollah could fire tens of thousands of grad rockets and hundreds of long-range missiles, he said.
According to Baer, we ain’t seen nothing yet.
There is almost “near certainty” that Netanyahu is “planning an attack [on Iran] … and it will probably be in September before the vote on a Palestinian state. And he’s also hoping to draw the United States into the conflict”, Baer explained.
The Israeli air force would attack “Natanz and other nuclear facilities to degrade their capabilities. The Iranians will strike back where they can: Basra, Baghdad”, he said, and even Afghanistan. Then the United States would jump into the fight with attacks on Iranian targets. “Our special forces are already looking at Iranian targets in Iraq and across the border [in Iran] which we would strike. What we’re facing here is an escalation, rather than a planned out-and-out war. It’s a nightmare scenario. We don’t have enough troops in the Middle East to fight a war like that.” Baer added, “I think we are looking into the abyss”.
Sources: www.zerohedge.com and www.stratfor.com
Sometimes The Best Ideas Are Also The Simplest…Fire Them All, Then Start Over With A New President And A New Congress
Posted By thestatedtruth.com on July 15, 2011
President Barack Obama said deficit-cutting talks are running out of time, and dismissed the plan that House Republicans will promote as not serious. The House plans to vote July 19 to increase the debt ceiling, but wants it tied to approval of a balanced-budget amendment.
The Democrats have a back up proposal that would grant Obama authority to raise the debt limit in installments unless Congress disapproves by a two-thirds percentage majority – a near impossibility with the Senate controlled by Democrats. Obama would still be required to offer some spending reductions.
Our opinion is that congressional morons don’t understand how percentages and numbers work. That’s why we’re in this predicament.
The House plans to vote July 19 to increase the debt ceiling, but wants it tied to approval of a balanced-budget amendment. This will let Republicans go on record for reaching a deficit-cutting deal by the deadline that Treasury Secretary Timothy Geithner has set for raising the $14.3 trillion debt ceiling.
House Speaker John Boehner (Ohio Republican), called the measure a solid plan for moving forward, to get through that vote, he told reporters, and then we’ll make decisions about what will come after it.
The Republicans Favor Plan A, But The Democrats Are Working On Plan B
Posted By thestatedtruth.com on July 14, 2011
A backup plan to cut the federal deficit and keep the U.S. government from default is now being discussed. Things should get very interesting.
Called plan B, it is taking shape in back room discussions between Senate Majority Leader Harry Reid (D., Nev.) and Republican leader Mitch McConnell (R., Ky.). House Republicans are not happy about this.
It would link a package of spending cuts to a plan Mr. McConnell proposed earlier this week that would give the president the power to raise the debt limit through 2012 in three installments, unless two-thirds of Congress voted to block it. It most likely would not include any tax increases, a senior Democratic aide familiar with the discussions said.
Tic Tock…Tic Tock
Posted By thestatedtruth.com on July 11, 2011
Government checks (handouts)Â are about to run out….. now what?
According to Reuters: “Close to $2 of every $10 that went into Americans’ wallets last year were payments like jobless benefits, food stamps, Social Security and disability, according to an analysis by Moody’s Analytics.” And what lies ahead could be a major and very significant crisis as “By the end of this year, however, many of those dollars are going to disappear, with the expiration of extended benefits intended to help people cope with the lingering effects of the recession. Moody’s Analytics estimates $37 billion will be drained from the nation’s pocketbooks this year.”
More at: www.drjoe-duarte.com
“Welcome To The Recovery”
Posted By thestatedtruth.com on July 11, 2011
“Welcome to the Recovery”…..oh yeah, that was a year ago. Now it’s known as the new normal! And wasn’t tech supposed to be immune from all of this? Just asking.
Cisco is preparing to fire 10,000, or 14% of its entire work force, over and above the number of people that the company said was going to be let go in May. “The cuts include as many as 7,000 jobs that would be eliminated by the end of August, said the people, who asked not to be identified because the plans aren’t final. Cisco, based in San Jose, California, is also providing early-retirement packages to about 3,000 workers who took buyouts, the people said.
Come On Tim, Tell Us Something We Don’t Already Know
Posted By thestatedtruth.com on July 10, 2011
So, the government admits 3 years later that we were headed for another great depression back in 2008…Can’t expect them to be honest with us now. Looks like a lot of unfinished business lies dead ahead.  Just a heads up!
WASHINGTON (AP) — Treasury Secretary Timothy Geithner (GYT’-nur) says many Americans will face hard times for a long time to come.
He says President Barack Obama rescued the United States from a second Great Depression and will keep working to strengthen the economy. But Geithner says will be some time before many people feel like the country is recovering.
Geithner tells NBC’s “Meet the Press” that it’s a very tough economy. He says that for a lot of people “it’s going to feel very hard, harder than anything they’ve experienced in their lifetime now, for a long time to come.”
More: http://news.yahoo.com/geithner-says-hard-times-continue-many-150523958.html
The Fall Of The European Dominoes…Italy And Spain Next Up
Posted By thestatedtruth.com on July 10, 2011
Greece is a lost cause. Next up is either Italy or Spain. Both the Dollar and the Euro currencies are in trouble. The last man standing looks to be Gold.
From the NY Times……
LONDON — Top European officials planned to meet on Monday to wrestle with threats to the currency union as fears mounted that Italy could become a victim of the debt crisis even as discussions stalled over a second bailout for Greece.
The euro zone has been shaken by the fiscal troubles of Greece, Portugal and Ireland, though their economies are relatively small. The Italian economy is more than twice the size of the combined economies of those three countries.
Pirates Of The Online Variety
Posted By thestatedtruth.com on July 8, 2011
You only get 3 strikes in baseball…..
Â
Online Piracy – Six Strikes and You Are Out
Â
Those of us that live in California have heard about the Three Strikes law. But, have you heard about the Six Strikes Plan created by U.S. Internet Service Providers? Online pirates who persist in sharing copyrighted music, movies and television episodes will be sent a series of six increasingly severe alerts from their ISP. The alerts ultimately include punishments such as bandwidth throttling, temporary suspension of service, and copyright reeducation. ISPs signed up for the plan include AT&T, Cablevision Comcast Time Warner, and Verizon. Find out more about the new “six strike” plan at CopyrightInformation.orgÂ
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More at: Â http://www.pcworld.com/Â
It’s “Elementary, My Dear Watson”
Posted By thestatedtruth.com on July 8, 2011
It’s “elementary, my dear Watson”…..Follow the floating balls in the chart below, the bigger the ball, the worse the debt/GDPÂ situation is for that country.
When it comes to the stability of the European dominoes, let’s think for a moment about Italy, which is not only the second worst country in Europe after Greece on a debt/GDP basis, but also the country with the largest amount of nominal debt, and more importantly Italy has the largest amount of net CDS outstanding. All this is summarized on the Bloomberg chart below.
Labor Force Participation Rate Drops To 25 Year Low: 64.1%
Posted By thestatedtruth.com on July 8, 2011
These ratios are looking terrible. How can anyone expect the economy or real estate for that matter to turn with these kinds of numbers. Or, are we just being too logical here? Baby boomers are screwed. Plain and simple.
The civilian labor force has declined to 64.1%.  The employment to population ratio also slumped to a multi decade low of 58.2%.
From:www.zerohedge.com
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A Different Way To Look At Unemployment
Posted By thestatedtruth.com on July 8, 2011
So…….here we go with one of the very big problems in our economy. The government continues to say that we’re in a recovery, but it’s really just a hallucination. We”re being kind when we say that! Draw your own conclusions.
The number of people not in the labor force who want a job now surged to a fresh all time high 7,124 or up by a whopping 303K, while the average duration of unemployment also is at a new record of 39.9 weeks.
Average Duration of Unemployment:
People not in labor force who want jobs now:
h/t John Lohman
More at: www.zerohedge.com
Jobs Report Looks Punk…Bad Seats, Hey Buddy!
Posted By thestatedtruth.com on July 8, 2011
Should we be surprised?
The U.S. economy barely added jobs in June and the unemployment rate rose to the highest level this year. To make matters worse, the birth/death adjustment was responsible for over 50% of the job payroll gains over the last 12 months!  And everybody thought we were just kidding when we said “bad seats, hey buddy”. This has to be a surprise to the powers that are, as they were looking for good numbers here, really….they were!   Noticeable to us, virtually everything we’ve looked at since 2009 seems to be rigged (made to look better then really is the case) in one way or another. So…you may ask, who has the power to pull this off…hint, we would start with big banks and big government. Question….Are they starting to lose there grip? It will be interesting to see.
So in review…..It’s a disaster on the job front. Total jobs per the establishment survey: +18K on expectations of 105K, Private Jobs + 57K on expectations of 132K. Last month total was revised from 54K to 25K. Combined April and May revision down 44K. The household survey was down by 445K from 139,779 to 139,334. Birth death adjustment + 131K.
“Nonfarm payroll employment was essentially unchanged in June (+18,000), and the unemployment rate was little changed at 9.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment in most major private-sector industries changed little over the month. Government employment continued to trend down.”
The chart below shows the monthly Birth/Death adjustments between June 2010 and June 2011.
Chart and other statistical data from www.zerohedge.com
We Wouldn’t Have Believed It …If We Hadn’t Seen It
Posted By thestatedtruth.com on July 7, 2011
This is ultra high tech….a 3 D printer that actually makes (literally builds) a copy of the item desired….in the case of the example below, it replicated a wrench. OMG…unbelievable!
3D printing is a form of additive manufacturing technology where a three dimensional object is created by laying down successive layers of material. 3D printers are generally faster, more affordable and easier to use than other additive manufacturing technologies. 3D printers offer product developers the ability to print parts and assemblies made of several materials with different mechanical and physical properties in a single build process. Advanced 3D printing technologies yield models that can serve as product prototypes.
http://www.youtube.com/watch?v=ZboxMsSz5Aw&feature=youtube_gdata_player
Makes Total Sense….Really, It Does!
Posted By thestatedtruth.com on July 6, 2011
“Happiness is when:  what you think…what you say… and what you do… are all in harmony”.
             Moandas K. Gandhi
The Mortgage Bankers Association Takes Down Numbers
Posted By thestatedtruth.com on July 6, 2011
Hmm, let’s see…..the Mortgage Bankers Association (village idiots) back in January targeted  $616 billion in new lending from mortgage loans covering the 2011 calendar year. It was a nice try but a stab in the dark. Guess what?  They just gutted that number…yep, down she goes, so now they expect it to come in around $432 billion for 2011. The village idiots were only off by 30% with this estimate (and it may get even worse by years end).  Better luck next year.
Lending for mortgages to buy homes probably will drop to $432 billion this year from $473 billion in 2010, according to a forecast last month by the Mortgage Bankers Association in Washington. In January, the trade group predicted a rise to $616 billion, which would have been the first increase since 2005. The association now forecasts the gain will be in 2012.
What If It Was True….Dream On My Friend! It’s All Spin
Posted By thestatedtruth.com on July 6, 2011
This from the great Art Cashin on the floor of the New York Stock Exchange……Art digs into this subject headline. “Borrowing by small U.S. businesses rose at a record pace in May”, according to data, a sign that economic growth is poised to pick up in coming months…..the insinuation is that the government and big banks have  painted a different picture then reality, we could even say they have exaggerated the recovery (what recovery).  Why is that, you ask……well the NFIB (National Federation of Independent Businesses) data indicate only a slight improvement in business borrowing, just off a 37 year low. Are they kidding? Sadly the answer is No!
Ask The Man Who Knows – Last week a Reuters report caused a bit of chatter on the NYSE floor. It was a report on small business lending. The bulk of the chatter concerned the opening section:
CHICAGO (Reuters) – Borrowing by small U.S. businesses rose at a record pace in May, data released by PayNet Inc on Thursday showed, a sign that economic growth is poised to pick up in coming months.
The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to U.S. small businesses, rose 26 percent in May from a year earlier, PayNet said.
The index is now at its highest since July 2008, two months before the collapse of Lehman Brothers and the near derailment of the world financial system.
Borrowing by small businesses is seen as a harbinger for the broader economy because they account for as much as 80 percent of new hiring. The loans PayNet tracks are typically used to buy or update plants and equipment.
The Federal Reserve has kept rates near zero since December 2008 to try to pull the economy from the worst downturn since the 1930s.
Did that mean that the sleeping giant of the U.S. recovery – the small business community – had suddenly awakened? If they were borrowing again, did that mean business was perking up?
We decided to turn to an expert in the area of small business,William Dunkelberg, Chairman of the Global Interdependence Center. You probably know Bill, or, as he prefers, “Dunk†as the affable and knowledgeable spokesman for the monthly report of the National Federation of Independent Businesses (NFIB) an amalgamation of broad sections of American’s small business. Being a bit of an underachiever, Dunk is also on the Board of a local bank and also a college professor.
Bill’s response was, as usual, quite enlightening and at some variance with the impression conveyed by the Reuters article. Here’s what he wrote:
Hi Art! Anecdotally, loan growth at the bank I have been affiliated with has not been strong, not enough good applicants, confirmed with conversations I had a few weeks ago speaking at the Consumer Bankers in Orlando. Our NFIB data indicate a slight improvement in interest in borrowing, but the level is still just off a 37 year low. The article suggests that the Fed’s keeping interest rates low is a reason, but that only helps the TBTF banks make money. I am certain that all other banks have a floor of 4.5% or higher (ours is 5%) on loans as our cost of funds at the margin is not Federal Funds but the cost of collecting deposits, so Fed actions can’t and have not lowered the bottom rate. One final note, any loan of $1 million or less is counted as a small business loan, but loans that large don’t go to small businesses, 90% of which have under 20 employees and sales no where near $1m. I’ll have June data today or tomorrow and will check for any changes. best, dunk
I think the part about cost of funds to local banks is quite eye-opening to the non-banking layman – as is the resultant floor on loan rates. Great insight! We’ll update you when Dunk adds on.
Consumer Loans Rebound, But….
Posted By thestatedtruth.com on July 5, 2011
Worry warts……from our shoes, we have never seen more shoppers out and about then on this Fourth of July weekend…..never. Spend now….worry later is the name of the game! Plain and simple.
But in a Bloomberg Television interview with Carol Massar,  Stephen Roach of  Morgan Stanley said “What I worry about now is we are creating a whole new generation of zombie consumers in the United States,†“We need to encourage balance-sheet repair and adjustment by overly indebted, savings-short consumers.â€Â  It’s the new normal……”while household obligations are at a 17-year low because of increased savings  and because of record low interest rates (and defaults) since 2007, overall debt remains high, he said. He calculates that it amounts to 115 percent of income, compared with a 75 percent average from 1970 to 2000″.
The average U.S. credit score — a predictor of the likelihood lenders will be paid back — rose to 696 in May, the highest in at least four years, according to Equifax Inc. (EFX), a provider of consumer-credit data. The ratio of consumer-debt payments to incomes is the lowest since 1994, and delinquencies have dropped 30 percent in two years, Federal Reserve data show.
Consumers have reduced debt by more than $1 trillion in the 10 quarters ended in March, according to data from the Federal Reserve Bank of New York, and Roach, nonexecutive chairman of Morgan Stanley Asia, says they will retrench “a minimum of another three to five years.†While household obligations are at a 17-year low because of increased savings and lower interest rates since 2007, debt remains high, he said. He calculates that it amounts to 115 percent of income, compared with a 75 percent average from 1970 to 2000.
“What I worry about now is we are creating a whole new generation of zombie consumers in the United States,†Roach said in a Bloomberg Television interview with Carol Massar. “We need to encourage balance-sheet repair and adjustment by overly indebted, savings-short consumers.â€
Roach’s view is supported by economists who say the credit that fueled the housing boom from 2002 to 2006 will take years to unwind.
“It’s pernicious, it’s ongoing and it’s holding back the growth because people are going to save more and spend less, and this is a process that will last for several years,†said Kevin Logan, chief U.S. economist at HSBC Securities USA Inc. in New York.
An Interesting View
Posted By thestatedtruth.com on July 5, 2011
Here’s a heads up on the United States debt debacle…….word has come from Washington that President Obama will use the 14th amendment to declare the debt limit as unconstitutional, if need be. Rock and Roll! On the other hand, it may be unconstitutional to call the 14th amendment unconstitutional, if you get our drift.
James Turk Says:
They are going to shove through this debt limit increase one way or another. If there is an impasse in Congress with Tea Party Republicans holding the line, word has come from Washington that President Obama will use the 14th amendment to declare the debt limit as unconstitutional. By removing this last piece of discipline, that will open the floodgates and will be the tipping point to send the dollar into oblivion and gold and silver into the stratosphere.â€
Happy Independence Day And Fourth Of July To All Americans
Posted By thestatedtruth.com on July 4, 2011
Today commemorates the day of the Declaration of Independence for the United States Of America. It was on this day, July 4, 1776 that the United States declared its independence from the Kingdom of Great Britain.  It is also known as …..The Fourth of July,  The Glorious Fourth and The Fourth and is a federal holiday in the United States. Â
From the outset, Americans celebrated independence on July 4, the date shown on the Declaration of Independence, rather than on July 2, the date the resolution of independence was approved in a closed session of Congress.
In a remarkable coincidence, John Adams and Thomas Jefferson, the only signers of the Declaration of Independence later to serve as Presidents of the United States, both died on the same day: July 4, 1826, which was the 50th anniversary of the Declaration. Although not a signer of the Declaration of Independence, James Monroe, the Fifth President of the United States also died on July 4, 1831.
Observances Of Note
- In 1777, thirteen gunshots were fired, once at morning and again as evening fell, on July 4 in Bristol, Rhode Island. Philadelphia celebrated the first anniversary in a manner a modern American would find quite familiar: an official dinner for the Continental Congress, toasts, 13-gun salutes, speeches, prayers, music, parades, troop reviews, and fireworks. Ships were decked with red, white, and blue bunting.
- In 1778, General George Washington marked July 4 with a double ration of rum for his soldiers and an artillery salute. Across the Atlantic Ocean, ambassadors John Adams and Benjamin Franklin held a dinner for their fellow Americans in Paris, France.
- In 1779, July 4 fell on a Sunday. The holiday was celebrated on Monday, July 5.
- In 1781, the Massachusetts General Court became the first state legislature to recognize July 4 as a state celebration.
- In 1783, Moravians in Salem, North Carolina, held a celebration of July 4 with a challenging music program assembled by Johann Friedrich Peter. This work was titled “The Psalm of Joy”.
- In 1791 the first recorded use of the name “Independence Day” occurred.
- In 1870, the U.S. Congress made Independence Day an unpaid holiday for federal employees.
- In 1938, Congress changed Independence Day to a paid federal holiday.
More at: http://en.wikipedia.org/wiki/Independence_Day_(United_States)Â
The Worlds Best Selling Wine…..Can Anybody Guess It’s Name And Exclusive Retailer
Posted By thestatedtruth.com on July 3, 2011
Should be a surprise, bet nobody guessed it.
Charles Shaw is the name of the best selling wine in the world and it’s priced at $1.99 per bottle. It’s called Two Buck Chuck (Cabernet Sauvignon, White Zinfandel, Merlot, Chardonnay, and Sauvignon Blanc), and is sold exclusively by Trader Joe’s stores in the U.S., but recently also in Australia. Incidentally, we know this wine very well, and have yet to come across anybody that could identify it as a (very) cheap wine without seeing the bottle first. So now you know!Â
Out west in California there’s a small chain of stores set up like a South Seas trading post.  They started out as “Pronto Markets” back in 1958, but decided by 1966 that its main competition 7-Eleven stores, would knock them out if changes weren’t made. Joe Columbe changed the name and the theme in 1967.  He called it Trader Joe’s, after himself and gave it an iconic South Seas trading post look. Soon there after business started to boom.  As of June 2011, Trader Joe’s had a total of 358 stores, mostly in Southern California and is still privately owned. The May 2009 issue of Consumer Reportsranked Trader Joe’s the second-best supermarket chain in the nation, after Wegmans.
Supermarket Newsestimates that Trader Joe’s total sales for 2009 were $8 billion, which gave it a ranking of No. 21 on the list of “SN’s Top 75 Retailers for 2011.”  Trader Joe’s sells what Fortune magazine recently estimated to be $1,750 in merchandise per square foot, more than double the sales generated by Whole Foods Market.
Warren Buffett’s Investing Partner For 46 Years Has A Final Few Words Of Wisdom And (Disgust Towards Banks)
Posted By thestatedtruth.com on July 3, 2011
Charlie Munger, billionaire Warren Buffett’s vice chairman of Berkshire Hathaway, imparts his  wisdom at the final Wesco annual shareholders meeting in Pasadena, California. Berkshire now owns Wesco.
In business and in personal affairs, be patient but aggressive when you know what you want, Munger advised. He also stressed the importance of continuous learning. His current field of study: Astrophysics.
(Astrophysics (Greek: Astro – meaning “star”, and Greek: physis – φÏσις – meaning “nature”) is the branch of astronomy that deals with the physics of the universe, including the physical properties of celestial objects, as well as their interactions and behavior.)
Munger used his opening remarks at the Wesco Annual Meeting to take another jab at the “megalomania” of bankers who he says brought on the real estate bubble of the last decade. A lot of banking, he said, had become “gambling in drag.”He also said some of Wall Street’s computerized traders were the equivalent of “letting rats into the granaries.”
Not surprisingly, some asked his advice on individual stocks. He said Coca-Cola Co., a longtime Berkshire stock holding, was “not nearly as good a business as 20 years ago,” but that as major companies go, it still was “one of my favorites.”
Munger also praised Costco Wholesale Corp., on whose board he sits. The retailer “is about as admirable a capitalist enterprise as ever existed,” Munger said.
More at: www.latimes.com
A Record 44.7 Million People Will Collect Food Stamps This Month
Posted By thestatedtruth.com on July 1, 2011
Records are made to be broken, especially in the foodstamp program!
The USDA, just released an updade of April participation numbrs in the Supplemental Nutrition Assistance Program (SNAP), better known as the “foodstamps” program, and it showed another record, of 44.647 million people, an increase from May’s 44.587 million.
Amazon Terminates Deal With 25,000 California Websites
Posted By thestatedtruth.com on June 30, 2011
Amazon just escalated a stink with California over Internet taxes….and emailed the termination of its affiliate advertising program to 25,000 websites. Bad seats…hey buddy, front row behind a pole!!
Gov. Jerry Brown has signed into law California’s tax on Internet sales through affiliate advertising which will immediately cut small-business website revenue 20% to 30%, experts say.
The bill, AB 28X, takes effect immediately. The state Board of Equalization says the tax will raise $200 million a year, but critics claim it will raise nothing because online retailers will end their affiliate programs rather than collect the tax.
In An Exclusive Interview With ABC, Bill Clinton Proposes Debt Impasse Deal
Posted By thestatedtruth.com on June 30, 2011
Agree…..but the economy may not improve for years….we’re in the new normal, best to get used to it!
Former President Bill Clinton sees a possible way past the bipartisan impasse over raising the debt limit: agree to cut spending AND raise taxes, but do neither until later, after the economy improves.
“If they [the Republicans] said, look, that now is not the time for big tax increases to harm the recovery, they would be right,” Clinton told ABC News in an exclusive interview at the Clinton Global Initiative America conference in Chicago. “But it’s also right to say that now’s not the time for big spending cuts.
“What I’d like to see them do is agree on the outlines of a 10-year plan and agree not to start either the revenue hikes or the spending cuts until we’ve got this recovery underway,” Clinton added. “The confidence that the Republicans say would be given to investors with a budget plan, they’d get whether we started this year or next year or the year after that, for that matter.”
The Inside Scoop…Downstairs, In The Fed’s Vault Are $1 Billion Worth Of Freshly Minted Dollar Coins
Posted By thestatedtruth.com on June 29, 2011
                                    Manganese Brass Dollar Coins
                                          Picture from Wikipedia
As these bronze looking Manganese brass dollar coins enter circulation, they soon start looking greenish and of course, ugly.  So the question is… why would anyone want them in one or more pockets?
In the basement of a Baltimore vault the size of a soccer field, 1 billion dollar coins are just sitting there at a cost of .30 each. Thanks, Congress.
NPR’s Planet Money reporters recently investigated the $1 presidential coin program, which was a Congressional effort to get more $1 coins into circulation while also trying to be educational.
The problem is that nobody really wants them. Well, not nobody. Sixty percent of the coins make it into circulation. But that other 40 percent? They’re sitting in vaults. In fact, the Fed’s even running out of space for them.
Each coin costs the government 30 cents to make, so the piles in those vaults have cost the government $300 million so far, according to NPR.
The whole thing started in 2005, when the Presidential $1 Coin Act was written into law. While the legislation seemed to have good intentions, when the U.S. Mint started producing the coins a couple years later, the demand just wasn’t there. I mean, had you even heard of the presidential $1 coins, let alone seen one?
At the same time, the legislation mandated that a certain number of Sacagawea coins be made in conjunction with the presidential coins, which has now amounted to one Sacagawea for every four presidents. And I think we know how well those coins went over.
Considering our national debt, couldn’t we just use all that money to help pay some of that off? Well, not exactly. The coins in the vault aren’t exactly money yet. They haven’t been funneled into the financial system, so in the meantime, they have no real-world value until a bank or a collector actually buys them.
At the moment, the program is still moving forward, and NPR projects that by the time it’s finished, 2 billion coins could be sitting in the Fed’s vaults. Next up for minting is our 19th president, Rutherford B. Hayes.
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Bank For International Settlements Warns Of Higher Interest Rates
Posted By thestatedtruth.com on June 28, 2011
Interest rates are at record 100 year lows, but even so, the world is sporting an unusually slow learning curve! Logically speaking, if interest rates were to climb,  it would be “lights out, game over” and the mother of all depressions. Something to think about since no one else seems to be interested.
BIS is warning of higher rates to come. “All financial crises, especially those generated by a credit-fuelled property price boom, leave long-lasting wreckageâ€Bank for International Settlements…
With the Economy still in a hungover mood from the last crisis, the World has not learnt much. We have banks that are rather leveraged again, just like some of the central banks. The ECB has a gearing of around 24 times, and would be insolvent overnight if Greece defaults. Fed has expanded it’s balance sheet hugely. What has caused the boom in many assets? What if rates start going higher?
Job Growth, Or… Lack Of Growth As The Case May Be
Posted By thestatedtruth.com on June 28, 2011
This is what we have to look forward to……2012 is supposed to be worse then 2011 for government, state and local jobs. That’s why this is going to be called the LOST decade!
In March 2010, the U.S. economy finally began to add jobs again. Every month since then, private sector employment has grown. Yet almost every month since then, state and local governments have cut jobs. Without those layoffs, the U.S. labor market would have 326,000 more people employed through May 2011. Here’s a chart showing job growth with and without the impact of state and local government cuts:
 |
You can see that the jobs picture looks better if you exclude the effect of state and local government layoffs. The only real outlier was October 2010, when state and local governments added 31,000 jobs.
Pimco Sees Rising Inflation
Posted By thestatedtruth.com on June 28, 2011
From MarketWatch.com …….Yep, PIMCO, the same one that Bill Gross founded.  So PIMCO says we have inflation, Jim Rogers says we have inflation and Lunch Pale Jack says we got inflation…but the U.S. Federal Reserve says pay attention everyone…the kind of inflation you all are looking at doesn’t count! Ok, that explains it!
– Inflation set to increase in next 3-5 years, says Pimco
– Rising commodity prices are not “transitory”
– By focusing on core inflation, Fed could risk making policy error
NEW YORK (MarketWatch) — Prospects of higher commodity prices and currency shifts will drive global inflation higher in the next few years, according to a report released Monday by Pacific Investment Management Co., the world’s largest bond fund.
The upward push from commodity prices also raises risks of a monetary-policy error by the U.S. Federal Reserve and other central banks.
Pimco expects inflation in the developed economies, including the U.S., “to average about 3% and developing market inflation to average about 5% over the secular horizon,” which is generally considered the next three to five years.
“The Goldilocks days of the ’90s where nations could have strong growth and low inflation simultaneously are gone,” says portfolio manager and Managing Director Mihir Worah, who outlined Pimco’s thinking in a Q&A article obtained exclusively by Dow Jones Newswires.
The two major catalysts will be rising commodity prices and shifts in exchange rates.
In Pimco’s view, market imbalances will keep commodity prices rising generally in coming years, with more of the inflationary pressures hitting emerging markets since commodities are a bigger share of their consumption.
Emerging markets were once a source of disinflation for developed economies because cheap imports from nations such as China held down inflation in Europe and the U.S. Higher commodity prices will change that dynamic.
“Commodities trade on global markets and to the extent that emerging markets are going through a particularly commodity and energy intensive phase of growth, their consumption affects what U.S. consumers pay, for example, at the gas station,” says Worah.
Currencies will also be a large driver of inflation.
“We anticipate policymakers in the developed world will attempt to make their economies more competitive via a cheaper currency, which likely will, for net importers like the U.S., lead to higher inflation,” says Worah.
At the same time, he says, emerging economies that need to combat domestic inflation will let their currencies appreciate. According to Worah, “This is another channel by which emerging markets may export inflation to developed nations that buy their goods.”
Pimco doesn’t view the recent increases in commodity prices as “transitory.” Total inflation rates could diverge from core rates that exclude food and energy–and core rates are the focus of central banks such as the Fed.
Consequently, Fed officials could make a policy error, says Worah.
“If, as we expect, headline inflation continues to outpace core inflation, or if the gap widens,” he says, “there is a risk central bankers could lose credibility over time, causing an unanchoring of inflation expectations.
“That could raise the risk of monetary policy error” if the Fed “allows steady erosion in consumers’ purchasing power,” he says.
The Governments Hand…In Everything
Posted By thestatedtruth.com on June 27, 2011
If not for the massive government gift giving (stimulus), we would be in a depression.
Report: Government to pass private sector as primary lender in U.S. According to Investor’s Business Daily, citing Federal Reserve data, the U.S. government, perhaps “as early as this quarter” is likely to “displace the private sector as the biggest source of outstanding home mortgages and consumer credit.” According to the report: “At the end of Q1, government-financed home mortgages and consumer credit outstanding totaled $6.32 trillion, up from $4.40 trillion at the end of 2006. Private-sector financed loans fell to $6.58 trillion from $8.48 trillion over the same span.” Back  in 2006 the private sector lent consumers $2 for every $1 dollar lent by the government, the report added.
Dr Joe Duarte
Dominoes
Posted By thestatedtruth.com on June 27, 2011
Remember the old saying, you’re only as strong as the weakest link….or links which is the case more often now days. Looks like the dominoes in Ireland are falling. They’re not alone.
“Ireland is screwed,” said a local expert. “Our property developers are broke. And they owe a lot of money to the banks. So they’re broke too. And the banks owe a lot of money to the government, so the government is broke too. And now they’re taxing pension funds and our houses aren’t worth anything, so we’re all broke.”
By way of example, lets review a lovely Georgian house…set on 400 acres…with its own ocean beach. It had been fixed up and was offered for sale for 12 million euros. Then, the crisis hit. Now, the asking price is 7.5 million.
“That’s the asking price,” said the realtor. “Naturally, in this market, the actual sales price might be a bit lower.”
How much lower is anyone’s guess. Houses in Dublin are selling for about half what they fetched a few years ago. And there are abandoned projects all over the country. Take a group of houses built near the coast. They were the equivalent of Irish McMansions…large houses with thatched roofs on small lots. There were about 12 of them…offered for sale at about $800,000 each.
“Well, that was bad timing. The developer had to cut the price in half. They’re now selling for about $400,000,” the agent explained.
“How many have you sold?”
“None.”
Hmmmm….
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Los Angeles Dodgers File for Bankruptcy
Posted By thestatedtruth.com on June 27, 2011
There she blows, it was just a matter of time…..are there now any doubts that Frank McCourt has a nose as long as Pinocchio’s. Worth as much as 1 Billion dollars……dream on, first of all Frank McCourt was the only bidder when he bought the Dodgers back in 2004 according to the commissioner…..and he paid $430 million financed mostly by debt owed to News Corp. and that was because? Uh, because News Corp couldn’t find any other buyers, so they carried the paper themselves.
The Los Angeles Dodgers filed for bankruptcy protection after Major League Baseball rejected a television deal with Fox Sports, leaving team owner Frank McCourt unable to make payroll this week.
Major League Baseball Commissioner Bud Selig last week said the 17-year TV-rights deal, which McCourt valued at about $3 billion, would harm the franchise in the long term. Baseball took over the Dodgers’ business operations about two months ago.
The team listed assets of as much as $1 billion and debt of as much as $500 million in a Chapter 11 petition filed today in U.S. Bankruptcy Court in Wilmington, Delaware. Manny Ramirez, who last played for the Dodgers in 2010 and retired from the Tampa Bay Rays in April, is listed as the largest unsecured creditor with a claim of about $21 million.
The Dodgers received a commitment for a $150 million loan from Highbridge Principal Strategies LLC, a JPMorgan Chase & Co. unit, to support operations during the team’s bankruptcy, according to court documents. The loan’s interest rate is the London interbank offered rate, or Libor, plus 7 percent.
The team doesn’t have enough cash to make payroll June 30 and needs access to at least $20 million to do so, according to court papers. Earlier this year, McCourt obtained a $30 million personal loan from Fox Sports and used $23.5 million of it to fund the Dodgers’ payroll and other expenses, according to court papers.
Moody’s Warns On Greece….Next Up Could Be Spain
Posted By thestatedtruth.com on June 27, 2011
Greece is a goner….it sounds like a run on the Greek banks are just around the corner….the ECU needs to move on to bigger fish, like Spain.
Today, as part of its Weekly Credit Outlook, Moody’s issued for the first time a very stark warning that should the rate of attrition in domestic deposits (and to see where these are going merely look at the daily EURCHF chart) persist, or accelerate, the results would be disastrous, “a sustained decline of deposits by more than 35% (roughly equal to the consolidated banking system’s liquid assets and ECB funding availability) within a short period of time, would cause a severe shortage of cash among banks.”  “With the decline in customer deposits, we expect Greek banks to find it increasingly challenging to reduce their ECB funding dependence, which is their primary objective based on their funding plans committed to the Central Bank of Greece.”
Spanish Banks Hiding Over $70 Billion In Bad Real Estate, El Confidencial Finds!
Last year, in “The Ticking Time Bomb That Are The Spanish Cajas”, it was said “Cajas are likely hiding losses on home loans by taking non-performing mortgages out of securitized pools. Absent this unsymmetrical onboarding of risk, the overall deterioration of the broader pool would have become ineligible as collateral in ECB refi operations.” it was also noted that at 264 bps, Spain CDS “is cheaper than a deserted Salamanca hotel.” (it is 320 bps today and soon going much wider). So now that Ireland (of all bankrupt countries) is slinging feces in a desperate attempt at distraction and pointing fingers at Spain, it is logical that the mainstream media would once again remind the world that Spain’s financial system is effectively hollow, and that the greatest mystery in the financial world continues to be that Spanish CDS is not trading 2 or 3 times wider than where it is now. As Bloomberg says  “Spanish banks have 50 billion euros ($70.7 billion) in unrecognised problematic real estate assets, El Confidencial reported, citing a report by the Boston Consulting Group. The consulting group estimates that Spanish banks need between 20 billion euros and 30 billion euros in additional capital and that Spain’s bank rescue fund, known as the FROB, could end up taking over 20 percent of the banking industry, El Confidencial added.” Â
  www.zerohedge.com
Soros: “Financial System Remains Extremely Vulnerable… We Are On The Verge Of An Economic Collapseâ€
Posted By thestatedtruth.com on June 27, 2011
What George Soros really means is that they’re about to kick the can down the road again and save the big banks of the world, again….at least until bonus time!
George Soros, Chairman of Soros Fund Management and famous for breaking the Bank of England in 1992, has warned that “we are on the verge of an economic collapse which starts, let’s say, in Greece but it could easily spread.” Soros said that the “financial system remains extremely vulnerable.” Soros added that “there are fundamental flaws that need to be corrected.” The core flaw, says Soros, is that the euro is not backed by a political union or joint treasury, so when something goes wrong with a participating country, there is “no provision for correction.” It is “probably inevitable” that highly indebted countries will be given a way to quit the euro.
The 80-year-old investor said that the “financial system remains extremely vulnerable.”
Soros added that “there are fundamental flaws that need to be corrected.” The core flaw, says Soros, is that the euro is not backed by a political union or joint treasury, so when something goes wrong with a participating country, there is “no provision for correction.”
Soros said that it is “probably inevitable” that highly indebted countries will be given a way to quit the euro.
Gold has been the strongest currency in the world in recent years and all major fiat currencies, including the Swiss franc, have fallen against it. Should Greece revert to drachmas, Ireland to punts, Spain to pesetas, Italy to lira and Portugal to escudos, these countries would suffer massive inflation and the price of gold would surge in terms of these local currencies.
The risk of contagion in the Eurozone and indeed a global financial contagion remains real. Peripheral European bond markets are under pressure again today with 10 year bond yields in Ireland rising to over 12.1% and to over 11.65% in Portugal.
European leaders are preparing for a default by Greece. The German finance minister, Wolfgang Schaeuble, said yesterday that Europe is preparing “for the worst”.
The Inability Of Nations And Consumers To Get Out of Debt, Weighs On Global Economy, And Will For A Long Time
Posted By thestatedtruth.com on June 26, 2011
From The Wall Street Journal…..
Today, U.S. consumers have more mortgage and credit-card debt than they did five years ago. Given the difficulties of paying down debt, “you have to get comfortable with the idea that it’s going to take a long time for the markets to adjust and for the economy to get back on solid footing,” says Tom Luster, director of investment-grade-bond research at Eaton Vance Investment Managers. History shows “that when people have borrowed too much, they stop borrowing and interest rates stay very low for a very long time,” he says.
The Federal Reserve is just days away from ending one of the major steps to aid the U.S. economy—but the effort has done little to solve the original problem: The government and individuals alike are still heavily in debt.
Around the globe, the inability of governments and households to reduce their debt continues to cast a shadow over Western economies and the financial health of individuals. Today, U.S. consumers have more mortgage and credit-card debt than they did five years ago, and the U.S. budget deficit is worsening. At the same time, European governments are having to throw billions more euros at Greece to keep it afloat.
The repercussions are likely to play out for years to come in the form of patchy economic growth, further government market intervention—such as last week’s decision by oil-consuming nations to release more oil onto the markets—and frequent financial-market swings.
The fundamental problem is that reversing the trend of piling on the debt requires some combination of cutting spending, growing income or the economy, and inflation. But wage growth is stagnant and home prices, which underpin much of the debt problem, are still falling.
Meanwhile, in a vicious circle, businesses aren’t hiring or investing because they know consumers are tapped out. Banks, for their part, are hoarding cash, being stingy with new loans.
Unlike the aftermath of typical recessions, simply lowering interest rates hasn’t been enough to get growth back on track, economists say. Central-bank efforts have boosted financial markets in the short term—raising stock prices and significantly lowering interest rates—but they have been unable to push people and governments to whittle down debt.
Quite the opposite has been the case. The lowered cost of borrowing has enabled individuals and governments to delay taking measures to change the way they spend and save.
Interesting Tid Bits About Water
Posted By thestatedtruth.com on June 26, 2011
Drinking water at certain times of the day are thought to maximize its effectiveness on the body, we will review some of these many reasons below……
2 glasses of water after waking up – could help activate internal organs
1 glass of water 30 minutes before a meal – could help digestion
1 glass of water before taking a bath – could help lower blood pressure
1 glass of water before going to bed – could help avoid a stroke or heart attack
Also, it’s said that….. water at bed time will help prevent night time leg cramps. Why, you might ask?  Well, it’s because leg muscles are seeking hydration of which without, they cramp up…. .So now you know!
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