The BIGGEST Story of the Day

September 4, 2007 on 11:44 pm | In Old Posts | 2 Comments

Sense of growing crisis over interbank deals

This is from the Financial Times tonight at 1734 EDT/2134 GMT. My friends, my readers, Steve Quayle has been kind enough to read this article tonight.

This is it. This is the “big kahuna” that many of us have been trying to warn you all about. The fact that the system of interbank lending is seizing up means that a true banking crisis can and probably will occur without any notice, no warning (other than what I have been ranting about) and a liquidation of American equities to raise cash around the world. It could start in Japan or China. It could start in Europe. It could start at 2 o’clock during NYSE trading hours. Who knows thus far. But the implications of this are beyond the pale.

It would make 1929 look like a Sunday Church social.

Prepare now. Please.

“Pottersville”

September 3, 2007 on 1:19 am | In Old Posts | 2 Comments

(This was my 2nd Op-Ed back in the old days on Timebomb2000.com from when I first started to warn everyone about the upcoming economic fiasco. Since some of the ideas I spoke of then are now more relevant than ever, I felt a reading for my new fans is in order)

“Pottersville” 

by John Galt

December 10, 2005

Merry Christmas! At least that’s what the bankers are muttering under their breaths these days. For their Christmas has been delayed by the PPT. Oh, I know, you may begin your hand wringing now all you pollyanas, but in the spirit of TGMGAAS (The Great Mogambo Guru’s Arrogance and Sarcasm) I have come to biotch slap you one more time.

Do I hate bankers? Not the honest ones that play by the rules. But then that eliminates the Federal Reserve and 90% of all United States based banks. So of the trillions of dollars allegedly being managed, er, invested, er, held by these trusting souls, 1 in 10 is to be trusted. And when that 10% is found by the other ninety, remember that the phrase “acquisition” will be used.

So what does all this have to do with the theme of this essay, editorial, or 500 word whinefest (that’s for the cheerleaders)? Simple. America is about to face a major economic reversion into a time and standard of living that about 99.5% of the American people are not prepared to face. The banking cartel is about to cash in on the ignorance and cowardice of the average American citizen. How you dare ask? Well, let’s look at some new realities:

1. Eminent Domain - If your home has a view, is paid off and in a semi-desirable area, or sits on a fresh water aquifer, then the banks and politicians want it. And now that the Supreme Imbeciles have upheld the 1933 Reichstag Constitution, bypassing ours written in 1776, you had best sell that home to the state at 50% of the market value or be prepared to be “rescued” (That’s Mayor Michael Brown’s term, not mine) by the powers that be. Bottom line: If you as a middle class citizen was smart enough to purchase, invest in, or inherit some prime real estate, so what. It’s not yours and if the Bank of America thinks it would serve a better purpose such as Mayor Brown’s gold plated outhouse, there’s not a government in the world that can’t be purchased to make this happen. Bye, bye speculative boom or why should I invest in something that someone else can steal from me….

2. Mortgage Crisis - But there’s a boom? So there’s no crisis. Believe that if you’d like. But the reality is that the baby boomers made a major faux pax. Can you believe those fools actually believed that a company they worked for all their lives would actually honor a contract? I mean hell, so what if they took 12% of their annual pay and produced mimeographed printouts of how hunky dorey their retirement program was doing. The CEO’s momma needs a new Gulfstream so how dare you peons think that you should get the retirement you were promised, even if you paid into it. So now, you’re 64 years old, retired in the Sunshine/Hurricane State, and your Social Security aka, other defaulted pension program, pays you enough for 7 cans of Alpo and a 12 pak of Natural Light per week for meals, and that’s if you elect to heat your home, and you have a mortgage payment due on your original second home, which became your first home after that home up north you sold was dumped at a loss. Well, welcome to Florida and them thar happy sunny retirement days. Your pension was just cut 66% by the Federal Bankruptcy court and your homeowner’s insurance just increased by 66%. Hmmm. guess it’s never to late to go back to work and surrender that Social Security blanket. But you’ve retired where it only gets cold for a little while, so to save money you turn off the heat and get a job at the local 7-11.

Knock, knock…it’s the court. Here’s your foreclosure papers and before you leave, can you clean up the frozen cat in the corner. Oh, and because you work, you don’t qualify for any Federally assisted housing and that wouldn’t matter because it’s all being used right now by those poor pathetic illegal, er, migrants from Mehico.

Ain’t retirement great?

3. What’s gold got to do with it? (Sung to the tune by Tina Turner “What’s Love got to do with it?”)

Hmmm. Gold is causing a real estate crash and people to live like crap in that holiday movie, It’s a Wonderful Life. By now, many of my loyal readers, detractors and online moderators are debating if I’ve lost it, should be censored, or just mailed some Xanax to keep the flow of this editorial rocking and rolling.

Gold has nothing to do with the current real estate deflation, but everything to do with foretelling it. Many of us evil doomer and gloomers warned of the real estate deflation when gold was cheap, so to speak. I preached like a fool that when your neighbors, barber and best friends (who will become my former best friends when they swear they never heard me say “get out” like in 1999) were the warning sign when they all said they were taking out their home equity and buying speculative real estate. For some, at the start, this worked great. But as they expanded, what happened? Hmmm, non-performing assets. That’s funny, the $179.95 video I purchased on real estate investing at 2 a.m. off of HSN never mentioned that phrase. Well, isn’t that a mess. The (fill in the blank) now has an asset which is costing them $1800 per month to own and they are using the income from their other investments to try to cover this loss, but now they are becoming non-performing because the other renters invested $179.95 and now are buying more junk from the old time real estate investors who are laughing their way to Antigua to retire and watch this circus.

And gold? Well, that bellwether is over $525 as I write this, and that indicates that the guy in Antigua, the central bank in China and Russia, and those loving, caring, American hugging Saudis are buying more gold because they think the party is up. So as the dollar is devalued, in reality, the value of real estate investments is dropping also. This is known as inflation boys and girls. Jimmy Carter educated me about that in the late 1970’s and wow, it was great. I was unemployed by 1977 and couldn’t afford anything but that miserable sweater the SOB told me to wear to save energy.

But I digress. Gold is the bellwether. GM is a bellwether. The dollar is a bellwether. And they all tie into Pottersville, that mythical place from a Christmas movie that most ignore or watch only to feel good, without realizing that we could be living it soon.

Because soon, all you’ll be able to do is rent from the banks if you’re a debtor. And creditors do not care one iota about your hardships. They want money or property.

So be prepared to rent. And be prepared to enjoy your new homes.

Mortgage Crisis Solved by CFC: Get a Roommate

September 2, 2007 on 5:36 pm | In Old Posts | No Comments

I’ve read some unreal stories before, but the depths of the stupidity being uttered by the banksters never ceases to amaze me. The story from the Sacramento Bee this weekend titled “Foreclosures Stacking Up” provides a clear concise insight into the absolute moronic stupidity our nation has sunk to and the total lack on a grasp of reality the banksters have on the average person’s existence. From the article, you just have to read this brief snippet:

“Bottom line: Neither Trammel nor Calabasas-based Countrywide has yet been able to work out a deal to spare her small house in Citrus Heights from foreclosure. There are no loan modifications. No refinance options. No waiving of a pre-payment penalty that stings a borrower for thousands of dollars to get out of trouble.

“I asked, ‘What’s your solution? Give me some ways I can keep this from happening,’ ” says Trammell of her dealings with the nation’s leading lender. “They said, ‘Get a roommate.’ That’s what she told me. I said, ‘OK. Well, I guess we’re done talking.’ “

Now in most cases, this would be deemed amusing, sort of like the technical support people from a PC manufacturer telling you work on your defective PC while it’s powered up in a bathtub full of water to improve conductivity. However in this case, we see the futility of dealing with the house when they think that they hold all the cards. The problems we are about to see in this nation should cause most to shudder. The markets overseas open tonight and I look for a wholesale dollar liquidation being countered with a wholesale mass dump of Yen to try to counter the common sense reaction. The story about this young lady is indicative of our nation’s dilemma:

We are screwed.

Link to Citigroup FX Story Mentioned on the Air

September 1, 2007 on 10:56 am | In Old Posts | No Comments

This is the link to the Kingsland Report blog which had the story on Citigroup FX’s crash scenario last night.

Bushnanke Just Doesn’t “Get It”

September 1, 2007 on 2:17 am | In Old Posts | No Comments

September 1, 2007

By John Galt

So the grand proposal to save the real estate market, bond market and stock market was announced today by Bushnanke:

Deflate assets, inflate the currency.

Wow. So simple, pure and astounding, I’m speechless. Well, not so much. But the commentary today was so beyond the pale, I give up. These folks are looking at problems of historic proportions and one opens a textbook called “Being Fed President for Dummies” and the other one reads from “U.S. President for Dummies” and poof, all the problems are gone and the stock market skyrockets up today. Heck, if the Dow is up, the economy is great, right?

Sure, Larry Kudlow said so today. If Bushnanke succeeds in these bizarre plans, we are going to create two trains heading out of the same station in different directions pulling on one super long rubber band that eventually breaks. Bush’s proposal of eliminating the punishing debt forgiveness tax, the 1099 issued by the banksters for the income they lost from the bad loans they issued, will create larger problems than he could ever envision. The message boards immediately lit up with concerns about “short sales” of homes, but that’s not the bigger issue. This proposal actually encourages people to bog the banksters down further in fruitless negotiations that eventually lead up to the same ending, a sale at a loss to the bankster and extra time for the homeowner to live there essentially rent or payment free. While not all folks will abuse this concept, it doesn’t take a rocket scientist to figure out the end result. Then to add insult to injury, how does Senor El Presidente explain to everyone else in the neighborhoods that this occurs why their property values are trashed even further, causing them problems when they try to re-finance thus exacerbating the problem even more. The system should allow this house of cards to collapse but by introducing this proposal and the hare-brained idea of even more government intervention, we are looking at a nightmare that will be dragged on for a decade. Especially since the opposing socialist party is encouraging immediate enactment of these ideas immediately.

There’s your Hoover moment, W; enjoy your place in history.

Then we have beanie head Ben, trying to imitate Greenspan with an academically inspired version of the solution instead of a central banker solution. The best solution would be to promise liquidity to the banksters to keep the doors open for the general public and maintain the integrity of the banking system. Logic has not been a hallmark of his short term thus far however, and he’s indicated and acted to preserve the hedgies and their investors (see “The Unbank Run” below) instead of the general health of the banking system. The historical blunder I pointed to several months ago, might just have happened and the consequences will take about 24 to 32 months to unwind. Instead of allowing the faux investment vehicles to implode and the weak hands crash into oblivion, he’s standing at the end of the runway trying to pump helium into the Hindenburg while the rest of it is burning in flames. Sadly, you and I are standing under the flaming portion about to hit the ground. The U.S. retiree, investor or average schmuck like you and I have no way to stop this fiasco from unfolding and the blunder is under way.

Bushnanke has best enjoy it’s time in history that it has reached. These schemes will have a not so happy ending where you can lose your home, have your neighbors hate you for destroying the value of theirs, and as you look for another place to live, not have a currency strong enough to buy groceries for the family or gasoline for your new home. Gasoline for your new home? That’s right, you’ll be living out of your station wagon for quite a while. I would train my SUV or econobox in tomorrow for that old classic “Woody” from National Lampoon’s Vacation or an old LTD wagon as soon as you can. You’ll need the living space.

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