Comparing today’s recession/depression to the 1980 recession

Comparing today's recession/depression to the 1980 recession

"Much like today, Americans were concerned not only with high unemployment but increasing budget deficits in the early 1980s. A September 1983 Gallup poll found that three-fourths of the public agreed that the federal government's budget deficit was a great threat (42%) or some

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Why savers are getting screwed

Why savers are getting screwed

"Without the intervention of economic policymakers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits. Savers are getting screwed by the current monetary policy

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Geithner admits USA bankrupt to US Senate

Geithner admits USA bankrupt to US Senate

"Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses

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Real reason for electricity blackouts hitting southern US

Real reason for electricity blackouts hitting southern US

“Large oil companies have for a decade artificially shorted the gasoline market to drive up prices,” said FTCR president Jamie Court. “Oil companies know they can make more money by making less gasoline.” The following article was written by Paul Joseph Watson. He is t

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World economies on verge of currency revaluations to deal with debt

World economies on verge of currency revaluations to deal with debt

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford Basically what the world central banks are doing is increasing their money by devaluin

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Is Obama the next Mugabe of Zimbabwe?

Is Obama the next Mugabe of Zimbabwe?

"America, Britain, Japan, Germany, France, Sweden, Holland, Norway, Canada and Australia make up the Fishmongers Group and their meeting on Tuesday will deliberate on the state of the inclusive government, debt relief, public finance administration and the controversial economi

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US raiding foreign countries with dollars, not soldiers

US raiding foreign countries with dollars, not soldiers

""The United States is going to China and saying: we want you to commit economic suicide, just like Japan did. We want you to follow the same thing: we want you to revalue your currency, we want you to squeeze your companies, we want you to go bankrupt,” says Michael Hudson,

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FDIC wants your retirement cash to save banks: Bloomberg

FDIC wants your retirement cash to save banks: Bloomberg

“The FDIC is constantly looking at structures where we can get the greatest opportunity to tap into capital that we have not had the success reaching through previous disposition methods,” FDIC spokeswoman Michele Heller said in an e-mailed statement. “We welcome and work

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Canadian government admits recovery never happened

Canadian government admits recovery never happened

“Not only did their stimulus fail to create the jobs of tomorrow, it also failed to protect the jobs of today,” Scott Brison, the opposition Liberal Party’s spokesman for finance issues, said by telephone. "Most of us were shaking our heads in disbelief early last year w

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How Western society is brainwashed and crumbling

How Western society is brainwashed and crumbling

"The cultural embrace of illusion, and the celebrity culture that has risen up around it, have accompanied a growing system of casino capitalism, with its complicated and unregulated deals of turning debt into magical assets, to create fictional wealth for us, and vast wealth f

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Will we see double digit interest rates from the 1980s?

Will we see double digit interest rates from the 1980s?

"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." -- Thomas Jefferson Spending is

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Greenspan: credit crunch “by far the greatest financial crisis”

Greenspan: credit crunch by far the greatest financial crisis

Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.” Greenspan just said that the current credit crunch

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bank owned foreclosure

“Home buyers looking to buy out of foreclosures will step back from the market. Mortgagors considering strategic default will see less risk in doing so, thus leading to more defaults. Throw in the lawyers and the politicians and it’s a perfect storm of uncertainty, gridlock and wealth destruction. Just what we don’t need right now. ” — Jim Rickards

Senate Majority Leader Harry supports Bank of America’s decision to put a pause at foreclosures across the nation, as per the release.”I thank Bank of America for doing the right thing,” he announced, calling on various lenders to pursue the bank’s lead and expand their foreclosure moratoriums.

Bank of America would put a pause at foreclosures in all 50 U.S. states, CNBC along with the Wall Street Journal reports.

Previous week the bank, the country’s biggest in assets, declared it was uncertain foreclosures in the 23 states where foreclosures are carried out in court, saying it required to assess foreclosure documents for possible errors. Currently, the bank has extended that suspension to all 50 states as it has resolute to pause for sales of foreclosed assets, blocking a major step in the foreclosure procedure.

The conclusion turns out to be as foreclosure crisis that threatens the nation’s housing market along through larger economy.

Let’s read between the lines

The foreclosure in 95% of the cases are legitimate and inevitable. The technical legal problem here is the person signing off was rubber stamping the work done by his/her subordinate. Each case had to be reviewed by the signer. This obviously is an industry wide practice and understandable given the caseload. The banks lose out while the homeowners will be getting more free-rent time in the house. This will only prolong the duration of the housing slump in the US which is actually how the banks will be hurt the most.

Has The Foreclosure Crisis Already Triggered A Double Dip?

LL: This foreclosure fight is a very sticky situation. Not all banks are bad. Will this create more investor uncertainity?

CW: Yes. The uncertainty regarding forward earnings, revenues and particularly expenses is growing. The combinations of still record default rates and rising servicing costs related to foreclosures is making banks hyper cautious about credit. The muddle along policy of Obama and Geithner equals no net credit growth.

exposure at default

We need to understand that government intervention in the mortgage market, not the banks, caused this mess. Goes back to WWII and the New Deal. So really if you want to blame anyone, start with FDR and the Democratic Congress of the 1930s and work forward.

The U.S. banking industry is entering a new period of crisis where operating costs are rising dramatically due to foreclosures and defaults. We are less than one-fourth of the way through the foreclosure process. Laurie Goodman of Amherst Securities predicts that 1 in 5 mortgages could go into foreclosure without radical action.

JR: This will definitely create uncertainty to go along with all of the uncertainty we have already about taxes, financial rule making, cap-and-trade, currency policy and the rest. That’s important because while monetary policy may have caused the Great Depression, regime uncertainty is what kept it going so long and we’re in that mode again.

Home buyers looking to buy out of foreclosures will step back from the market. Mortgagors considering strategic default will see less risk in doing so, thus leading to more defaults. Potential buyers of servicing rights will back off. Ditto for bulk purchasers of non-performing residential portfolios. Forecasting bank earnings and therefore stock prices and the market as a whole just got much more difficult. Throw in the lawyers and the politicians and it’s a perfect storm of uncertainty, gridlock and wealth destruction. Just what we don’t need right now. Read more about this discussion at CNBC News.

Not much is better in Canada

The proof is that since the US and Canadian “stimulus plan” of billions ended, both economies have started to slide again. The ‘recovery’ was just a distortion of the extra spending. Canadian personal debt, the highest in the world, beating the US, is caused in part by low pay, high taxes and freakishly over inflated real estate.

For those who foresee a bleak housing crunch on the horizon, much opportunity will be had once obscenely high housing prices crash, but unfortunately those that bought at the market heights will be bankrupt. Unlike the US, the laws in Canada don’t allow you to just walk away.

Ultimately high housing cost has damaged Canada – the US was far cheaper at the height of their boom, and they have less land and less resources to build with. However they get paid more and taxed less, so housing was a much smaller chunk of their expenses, far far higher here. Now that housing dropped in the US it’s even cheaper down there.

All these banks swore they were so well behaved but they let Canadians become the most heavily indebted of any individuals on the planet. That has to be a recipe for disaster when interest rates climb. Not sue how Canada’s minister of Finance (Jim Flaherty) can say Canada has the greatest banking system when they let that happen.

Related posts:

  1. Bank of America halts foreclosure sales across the US“We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for foreclosure decisions are accurate. We continue to serve the interests of...
  2. World headed for second recession, or double-dip depression“When the Great Depression started after it [market crash of 1929], it’s thought that politicians actually started the Great Depression by putting through too many rules and regulations…” — CBC’s...
  3. 24 statistics US politicians too embarassed to admitDoes anyone really want to hear that America is in decline?  For decades, most of us have been raised to believe that the United States is “number one” and that...
  4. Bank foreclosure “mistake” costs woman her home, health“They came into my home and violated my dignity,” she said, indicating she is instead seeking $200,000 and asserting it is “the memories that were taken” that upsets her most....
  5. No Press: $2Tn Debt Crisis to bring down 100 US cities“Next to housing this is the single most important issue in the US and certainly the biggest threat to the US economy. There’s not a doubt on my mind that...
  6. Will we see double digit interest rates from the 1980s?“And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name...

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