More Bad News for Housing − New Data — Jim Willie article

by Ken Kappel on June 15, 2011

We urge you to join a new class we offer at the Use Foreclosure Law “Graduate School.”  The read below is an astonishing indictment of the economic path we’re on, and portends to our not so bright future.

Once again, we’ve chosen to reprint most of an article by the inestimable Jim Willie, CB, who holds a doctorate in statistics. Beyond being an able interpreter of what is actually going on in the Over Economy, he often drills down into the housing numbers, and here presents a shocking array of new data that will affect every homeowner. We’ve only presented the first part of the article, however, if you wish a deeper clue, be sure to read all of Jim’s article: U.S. Hurtles Toward System Failure,” here.

Access all of Jim’s public articles, here.

Access Jim’ membership site to subscribe to his private newsletter here.

To the article:

“The combination of $trillion bond fraud, dependence on inflating home equity for economic development, oversized cars, oil dependence, constant market intervention, insolvent banks, insolvent homes, outsourced industry, endless war, budget deadlock amidst runaway deficits, raided US gold treasury, mammoth future benefit obligations, and handing over the keys at USDept Treasury to Goldman Sachs has left the United States to fend off systemic failure. The creeping price inflation that stems from USFed hyper monetary inflation and total ignorance on basics of capitalism like business formation have left the US vulnerable to disorder and chaos.”

“The chaos in fact grows with the passage of time and the ruin of money, against a background of a cruel middle class squeeze. With one citizen in seven on food stamps and over 22% of the population jobless, the sunset of the American Empire is well along. The banker oligarchs are gradually killing the nation, its democracy, and its wealth engines during a sustained strangulation process.” [Emphasis Added.]

“UNDERWATER NATION THAT CANNOT SWIM  Comments by economists continue to center on consumer spending and desired job growth, without any mention of business investment and reduced regulatory impediments. The nation has no clue among leaders to engineer a recovery. Tragically, it is not possible unless the housing market rebounds convincingly, and unless the big US banks are liquidated. The negative momentum is so grotesque. It is like a man sliding backwards on a steep icy street with no objects nearby to grab.  Emphasis Added.]

“The remarkable fact in my view is that so many trained economists and market mavens are shocked that the USEconomy is entering another recession. They must have considered Clunker Car program, New Homebuyer Tax Credit initiative, and the General Motors bailout all to be genius concepts. They seem poorly trained in capitalism, and well trained in asset inflation management laced with public indoctrination. To the sound money crowd, the degradation was obvious. The landscape is taking on the same look at mid-2008 when all hell broke loose on the financial and economic fronts. It should not be so surprising, since nothing has been fixed.”

“Innovation remains prevalent among technology and telecommunication firms. Too bad so much of the product output is done by US subsidiaries in Asia. The USGovt leadership thought a green revolution would make for a solid initiative until it realized that most of the purchases would come from Asia. The high speed rail projects almost all involve Chinese equipment. The US is so badly on a slippery slope, that a simple debt default might be the best of outcomes to hope for, given the nasty added ramifications that could come from chaos. The main location for innovation within the USEconomy seems to be in financial fraud and military weapons. Former USFed Chairman Volcker once accused the financial industry of having only one productive innovation in three decades, the automatic teller machine (ATM), a scurrilous accusation indeed. ”

“The American people, having been exposed to a powerful cost surge, futile compromises to address the USGovt budget deficits, profound mortgage fraud, a series of fixes without solution that are disguised elite banker redemptions, tremendous waste of over $2.5 trillion in various policy initiatives, exemption from Wall Street prosecution, chronic housing market decline, and phony economic statistics, are awakening to the reality of a systemic failure USEconomy, punctuated by a USTreasury Bond default. The preliminary signal is full isolation by the USFed as sole buyer of USTreasurys at USGovt debt auctions. They are currently buying about 80% of USGovt debt at official auctions. ” [Emphasis Added.]

“Many dopey analysts have put forth the notion, even within the gold community, that a debt default is impossible given the control of the global reserve currency to cover the debt. This is shallow thinking in my view. Once the USFed and its monetary engines are exposed on the world stage to rely upon hyper monetary inflation to sustain the broken USGovt financial contraption where fraud and war and insolvency are the three passengers without a driver, the USDollar will be punished, avoided, and become the object of even more profound revolt. The leaders can swim only if they push others in the pool underwater. Most debt default starts with a nasty run on the currency.”

“The underwater nation suffers from massive insolvency in the banking sector. Three bad jokes are played upon the US public. 1) They are told that the banks hold large Excess Reserve accounts at the USFed, earning interest income. Lie! The funds are Loan Loss Reserves moved from the banks to the USFed, where the central bank is hiding its own insolvency. The banks will need those funds to cover losses. The USFed by loose calculations is between $1.4 trillion and $1.8 trillion in the red, mainly from purchasing overpriced mortgage assets, some of whose leveraged items are totally worthless. The housing market is not coming back. The USFed itself is starging at the abyss, and might resign its commission. 2) The big US banks claim also that they have tightened their lending standards. Lie! ”

“They are insolvent and therefore must reduce their lending on a grand scale. The big US banks are in possession of far less capital than they claim, thanks to the FASB accounting rule change put into effect in April 2009. Their plight worsens. They cannot dump REO bank owned homes on a depressed market. The big US banks are trapped in an extreme and worsening condition, insolvent to the tune of $3 trillion. ”

“The FDIC pretends to have funds to support over $7 trillion in banking deposits, but their insurance fund has long been depleted. The MyBudget360 outfit does great work in analysis of the housing market and mortgage finance. See their chart below on bank balance sheet over-statement. 3) Lastly, US corporations we are told own huge cash balances. Lie! Their foreign subsidiaries command the cash, and it will not be put to work on US soil, even with handsome benefits to repatriate the funds. Business prospects look horrible in the United States, the land of fraud, insolvency, and war.”

“The underwater nation at the domicile level is tragic:

  • “Fully 28.4% of homeowners suffer from negative equity. They owe more on their home loans than the value of their homes. Some call it being underwater, others upside down.
  • “A second mortgage misery has taken root. Almost 40% of homeowners who took out second mortgages are underwater on their loans, more than twice the rate of owners who did not draw funds in such loans.
  • “Also 38% of borrowers who took home equity loans are underwater.
  • “By contrast, 18% of borrowers who do not have these loans are underwater.

“This data is according to CoreLogic. According to Federal Reserve Board data, homeowners took out a total of $2.69 trillion from their homes at the height of the housing boom between 2004 and 2006. A grand dependence was fostered, turned into a nightmare. That tally includes cash-out refinancings. Such sources of funds have vanished altogether. In fact, the trend has reversed, as homeowners are putting more money into their home equity in attempts to relieve their insolvent condition. The risks extend beyond the borrowers to banks, in a parade of insolvency and ruin for homeowners and big banks.” [Emphasis Added.]


Ken here.  We end this remarkable indictment of Financial Elites here. But, if you’re curious − and we hope you understand that you must educate yourself in order to professionally defend your family and your home − we urge you to read the entire article, here.  Remember the so-called Too Big To Fail Banks — Wall Street Banks — who engaged in Securitization Fraud — Bond Fraud — stand between you and your home. Act accordingly.

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