United States Heading towards a Depression?

Lehman's Rieder Brought $5 Billion of Assets to Fund

They are just rolling out new hedge funds to take the level 3 assets of the balance sheets for a time then they may bring them back and write them off when all is clear.

Apparently these guys took the "Accounting Alchemy" class.

"Abracadabra, some of your bullshit CDOs are gone . . . for now"

 

The Foxes were watching the hen house -- Countrywide was giving out VIP preferential loans to high ranking Democratic US Senators and Cabinet officals including Senators Christopher Dodd, Democrat from Connecticut and chairman of the Banking Committee, and Kent Conrad, Democrat from North Dakota, chairman of the Budget Committee and a member of the Finance Committee

http://www.nypost.com/seven/06132008/news/nationalnews/loan_sleaze_spreads_115310.htm

 

Unemployment report is out

http://www.bls.gov/news.release/laus.nr0.htm

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HRB may be the next to have a ton of bricks fall on their small brains.

Anyone see the May home sales report for CA yesterday? Getting worse and worse.

 

The joke is the Bernake thinks that he can solve the 'subprime mess' by lowering the Fed Rate to 2%. Subprime was built on fraud making loans to underqualified people for homes with inflated prices. The trick right now is how to make investors and the taxpayers pay for it.

Unemployment and inflation unleashed by low interest rates are going to cause more and more foreclosures. CA has 6.6% unemployment so they are unwinding. In the end rates are going to have to go up. When that happens all hell is going to brake loose and prices are going to do a nosedive south.

The major US trading partners of Mexico, Canada and China all have either high or out of control inflation.

Mexico has just raised their rate a quarter percentage point to 7.75 percent

http://www.bloomberg.com/apps/news?pid=20602014&sid=a3gmwaFcmCK4&refer=ecalendar

In China inflation climbed to 8.1 percent in the first five months of 2008. Floods caused by more than 10 days of downpours this month in southern China's provinces, the most in 100 years in some areas, have spoiled 1 million hectares of farm land. Along with the US Midwest floods and drought in Austraila food prices are going to go through the roof. China will have no choice but to revalue the yuan and prices in Walmart are going to add to inflation.

The Canadian Central bank has announced that it will focus more on food and energy prices than the economy.

 

Thanks for all the good news which confirms everything I was posting in long time while some fools were speaking about "genius" Bush economy policies and even to this day have their blindfold on and talk about how great everything is.
It has been a great time for making money.

 

Democrats like Chris Dodd head of the backing committee was getting sweatheart loans from countywide.

http://forums.digitalpoint.com/showpost.php?p=8209886&postcount=1962

 

Why shouldn't he? In a society that has accepted as a part of it's culture and moral fabric that "greed is good" then everyone wants to be greedy and get some easy money in the great casino called USA.

 

Wait to Obama starts taxing Canadians to fund his giveaways and you wouldn't be laughing

 

Obviously you don't know about Belize, if you are over 45 and can show $2000 /month income, you can become a resident there under their retirement program and all your income from outside Belize is tax free.

 

Omoa (Puerto Cortes), Roatan, La Cieba, or Trujillo are a lot nicer You need $2,500 a month income or invest $50,000. You also need a sworn statement declaring that you do not belong and did not belong at any time in the past to the Communist Party.

 

Dave Ramsey is garbage. His program is a joke, he touts an amazing 14% average return from index funds, suggests you can make $2000 per month delivering pizzas part time, pushes that you drop credit altogether, and even says that you should pay off bills in the order of the lowest amount rather than highest interest. Quite frankly, Ramsey is out of touch with basic math.

Credit is not inherently bad, actually I would argue it is good. It is what people do with it that makes it so bad. I mean, if you could really get 14% out of an index fund year over year why would you turn down a loan on a car at 7% per year and instead pay cash, thats a free 7% in the market.

 

They have too many graduates from "School of America" for my comfort.

 

Credit is good when it is loaned out as savings.

Credit is not good when it is composed of fiat money inflation.

As Peter Schiff says, credit borrowed for production is self-liquidating. Credit borrowed for consumption is self-debilitating.

 

NO H&R BLOCK PARTY

Article barely touches on how screwed these guys are.

They were quickly sold to off-balance sheet trusts for which I am sure they some obligation to these trusts it they start going belly up.

 

It's becoming clear that the bubble was created by inflating home values and then dumping the toxic paper on the CDOs.

Assessors in the five-county Los Angeles area are now in the process of cutting property taxes on more than half a million homes because of plunging home values. Notifications will go out this month and next to lucky homeowners.

http://www.latimes.com/news/local/l...roperty22-2008jun22,0,2469903.story?track=rss

 

Do you guys expect rural, fertile land acreage prices to go up soon?

 

That what really drove down the big cities in the late 1970's and early 1980's

Fertile farmland to grow corn and soybeans is skyrocketing in value.

http://www.nytimes.com/2007/08/08/us/08farmers.html

Prices could drop substanially if the ethanol boom goes bust.

 

Home values continue to drop.......http://money.cnn.com/2008/06/24/real_estate/home_prices_CaseShiller_April/?postversion=2008062413

This is one helluva long and big loss in equity value....It is a long term killer.

Here was one other disturbing quote from the article.....

Underwater homes are those where the loan value exceeds the equity value.

For those with high payments, and other financial pressures, this total is an ominous sign for potentially more foreclosures and further downward pressure on real estate values. Between a now more accepted norm of people walking from mortgages, financial pressures and homes valued below their debt....its a sure sign for increased foreclosures.

The size of this problem is vast indeed. The article above references a couple of hopeful signs in a couple of markets....but the overall perspective is bleak.

This huge and growing volume of non-owned homes will take years to work through. Real estate always reacts on a local basis...so some markets will drop faster and rebound faster than others....but this is a totally ugly report.

I'd tighten all belts. Nothing is going to wipe out this market disaster but time...and more time.

 

By wipe out, do you mean a plateau or a recovery?