May 6 (Bloomberg) — A growing number of U.S. homeowners owe more than their properties are worth after prices extended their two-year decline in the first quarter, Zillow.com said.About 21.8 percent of all owners were underwater as of March 31, the Seattle-based real estate data service said in a report today. At the end of the fourth quarter, 17.6 percent of homeowners owed more than their original mortgage, while 14.3 percent had negative equity three months earlier.Property values dropped 14 percent from a year earlier in the first quarter, reducing the median value of U.S. single- family homes, condominiums and cooperatives to $182,378, Zillow said. The decline has left about 20.4 million of the U.S.’s 93 million houses, condos and co-ops with loans higher than the properties are worth. The gain in underwater homeowners will lead to more bank repossessions, Zillow said.
Archive for the ‘3c. Collapse’ Category
By Michael C. Ruppert, Thursday April 30, 2009
It is pretty clear now that we’re going for the full ride with swine flu. This is not like SARS (see FTW). It is bigger and much more ominous. There are good reasons to separate the ice cream from the bs right now — the things that should be focused on from the things that distract, lead into blind alleys or induce panic. I had an epiphany today about why the W.H.O. and all governments are so concerned… It is not just the “unknown” nature of the bug but the fact that this is just more evidence that there are too many humans on this planet. It’s so simple. With almost seven billion people, more of us are coming into contact with more of us… at a faster rate than ever; thanks to oil-powered transportation and population growth. It couldn’t be more obvious. We’re popcorn. We’re also running out of energy, water, minerals, seafood and arable land… you name it.– Now compound that with the fact that the Spanish Flu of 1918-1919 — which killed between 20 and 40 million people — was/is a variant of H1N1 Swine Flu and there’s reason for one’s ears to pick up. If it killed that many, that fast, in 1918 how many could it kill now and how fast with airplanes, cars, trucks and ships? And this epidemic/nascent pandemic is behaving more like Spanish flu that swine flu. It likes to kill young adults with healthy immune systems.
Women’s activist groups in Kenya have slapped their partners with a week-long sex ban in protest over the infighting plaguing the national unity government.
The Women’s Development Organisation coalition said they would also pay prostitutes to join their strike.
The campaigners are asking the wives of the Kenyan president and the prime minister to join in the embargo.
They say they want to avoid a repeat of the violence which convulsed the country after the late-2007 elections.
Relations between Kenya’s coalition partners, led by President Mwai Kibaki and Prime Minister Raila Odinga, have become increasingly acrimonious.
Now the dispute has moved to the nation’s bedrooms.
Patricia Nyaundi, executive director of the Federation of Women Lawyers (Fida), one of the organisations in the campaign, said they hoped the seven-day sex ban would force the squabbling rivals to make up.
by Eric deCarbonnel
The fed is planning moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion. Whether expressing approval or concern over the fed’s intentions, most commentators fail to understand the real magnitude of the projected expansion of the US monetary base because they don’t take into account the amount of dollars circulating abroad.
At least 70 percent of all US currency is held outside the country, and this means the US monetary base is considerably smaller than the fed’s overall balance sheet. Take, for example, the true US domestic money supply at the beginning of September 2008, before the fed started its quantitative easing. From the Federal Reserve’s website, we know that currency in circulation was 833 Billion. This translates as 583 Billion dollars circulating abroad (70 percent), and 250 Billion dollars circulating domestically (30 percent). Since the bank reserve balances held with Federal Reserve Banks were 12 billion, that gives us a 262 Billion domestic monetary base as of September 2008. Now compare that to the projected US domestic monetary base for September 2009 which is 3,818 billion (4,500 billion – 583 billion (dollars circulating abroad) – 99 billion (other fed liabilities not part of the money supply)). The fed’s planned balance sheet expansion results in a 15-fold increase in the base money supply.
262 Billion = US monetary base as of September 2008 (minus dollars held abroad)
3,818 Billion = projected US monetary base in September 2009 (minus dollars held abroad)
3,818 Billion / 262 Billion = 15-Fold Increase in US monetary base
This is a staggering devaluation of the US currency! It means that for every dollar in America in September 2008, the fed is going to create fourteen more of them! Below is a rough sketch of what this increase in US monetary base would look like:
This 15-Fold Increase will be impossible to reverse
Next September, when the fed realizes it has gone too far and tries to reverse its balance sheet expansion, it will be unable to do so. The realities which will hinder the fed’s control of the money supply are:
1) The toxic assets filling its balance sheet
Expanding the money supply is easy. All the fed has to do is print dollars and then use them to buy assets. There is no effective limit to how much the fed can print and spend.
Shrinking the money is much trickier. To shrink the base money supply, the fed sell assets and takes the dollars it receives for them out of circulation. The amount the fed can shrink the money supply is therefore effectively limited by the market value of assets on its balance sheets. Since the fed is in the process of loading up on toxic securities while trying to restore health to the financial sector, it is now sitting billions of unrealized losses. These unrealized losses means the fed has little ammunition available to bring the money supply under control.
Once September rolls around, If the fed wants to reverse the expansion of its balance sheet and shrink the monetary base back down from 3,818 billion to 262 billion, then it will need to sell 3,556 billion worth of assets. However, the market value of its assets will only be worth a fraction of that.
2) Political constrains on fed’s actions
Even if the fed does try to shrink the money, it is likely to run into political constrains on its actions:
A) Selling toxic assets at a loss could become a crippling source of major embarrassment for the fed, undermining its authority. For example, last year when the fed took 29 billion toxic assets to help JPMorgan’s takeover of Bear Stearns, it assured Americans that by holding those securities till maturity, the cost to taxpayers would be minimal. If the fed sells those toxic Bearn Stearns assets at a catastrophic loss, it would cause fury and outrage from voters and lawmakers.
B) Selling assets at below book value will quickly cause the fed’s equity to turn negative. The Federal Reserve would then need to be recapitalized by new debt from the treasury, which would increase the national debt.
3) The benefits from of its balance sheet expansion would be lost if the fed starts selling assets
The fed is accumulating toxic mortgage backed securities, long term treasuries, and other assets to unfreeze the credit markets and spur economic growth. Turning around and selling those assets would result in the collapse of the credit markets and the financial system, which the fed has been desperately trying to prevent.
Upwards pressure on interest rates
On top of all the issues above, the fed’s woes are going to be compounded by upwards pressure on the yields of treasuries and other US debt. This upwards pressure will likely force the fed to monetize far more treasuries than the planned $300 billion purchases it has already announced, and will greatly complicate any efforts by the fed to control the money supply.
Below are the nine factors which will cause yields to move higher.
by Matt Taibbi
The global economic crisis isn’t about money – it’s about power. How Wall Street insiders are using the bailout to stage a revolution.
It’s over — we’re officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country’s heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
I find it a bit difficult to imagine how the dollar might actually crash
in one day. In a snowball effect. This video helps educate how it might happen.
Economist and Author, David Morgan reenatcs a dramatic scene from the Movie “Rollover” (1981), a frightening worldwide currency crisis he says we should be prepared for in our lifetimes.