The Golden Truth: Subprime Is Back - Sponsored By The Taxpayer; Plus More On The Collapsing Economy...

Tuesday, May 31, 2011

Subprime Is Back - Sponsored By The Taxpayer; Plus More On The Collapsing Economy...

This one really irritates me. Get ready for "chapter 22" for GMAC (bankruptcy x 2). The Taxpayer-owned auto finance bank formerly known as "General Motors Acceptance Corp." and now known as "Ally Financial" (what a stupid name) is back doing what it knows how to do best: make risky loans that drive the company into insolvency. Only this time with a 74% backing of Taxpayer money. Here's the article:  LINK I knew back in 2002 that GMAC was going to hit the wall. Back then I was aware that GMAC was one of the largest users of derivatives in the world. History will once again repeat, as GMAC/Ally will go tits-up again, only this time it will be your money, not shareholder money. Both times Wall Street made billions...

I'm guessing everyone has seen the news reports this morning which show that the U.S. economy is rapidly spiraling into a depressionary abyss. I love it when my forecasts are vindicated, as the Case-Shiller home price index reported a big drop for March and is now at an 8-year low. Here's the LINK One of the bow-tie bubblevision analyst morons proclaimed that lower prices wouldn't lead to more foreclosures. Too bad he does not read this blog, otherwise he would know that there is a direct statistical correlation between negative home equity and the occurrence of strategic default, affectionately known as "jingle mail." Not only that, but this will fuel the vicious feedback loop in which prospective buyers will likely decide to intelligently postpone buying a home, as the market is getting worse. This just isn't a foreclosure inventory problem and it's not a credit-availability problem, as FNM/FRE are doing with home-loans the same thing than GMAC is doing with auto loans and have been relaxing credit standards.

Elsewhere the consumer confidence index for May fell to 60.8 and was significantly lower than was expected by the group-think, highly paid Einsteins on Wall Street, who were looking for the index to increase from April's 66 reading to 67.5. Ouch! These economists are less accurate than weathermen and they get paid a helluva lot more...insane...

Does anyone know if the company that prints up food stamps is a public company? If so, what's the stock ticker? Why? The number of people receiving food stamps just hit a new record of 44.2 million. Talk about a growth business..per zerohedge.com: LINK  That's roughly 1 in 7 Americans...

Finally, got gold? It is expected by this Einstein from HSBC that China will be settling more than half of its trade in yuan by 2015: LINK Heh heh hehhh. I expect China to be settling a much higher percentage of its trade well before 2015. I also expect that the yuan that we'll be trading with will be gold/silver-backed.

P.S. Everybody enjoying watching AIG stock melt away as much as am I?

UPDATE:   Per a comment in the comment section, JPM is the largest provider of food stamp debit cards in the U.S. They have a contract with 26 States PLUS Wash, DC!   Food stamp debit cards!!! I want one. This whole show is becoming so surreal that it wouldn't be possible to make this stuff up.

12 comments:

PurewaterTuesday, 31 May, 2011
Say what? Last month you said the Consumer Confidence Index wasn't reliable...

"The Conference Board "is a global, independent business membership and research association working in the public interest." LOL. I don't think I need to elaborate on the reliability of that metric..."
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AnonymousTuesday, 31 May, 2011
You're going to love this: ;-)

JP Morgan is the largest processor of food stamp benefits in the United States. JP Morgan has contracted to provide food stamp debit cards in 26 U.S. states and the District of Columbia.

http://www.economicpolicyjournal.com/2011/01/food-stamps-as-jpmorgan-growth-industry.html
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Dave in DenverTuesday, 31 May, 2011
now that you mention that, i do recall that JPM had that deal. this is all so surreal. can't make this shit up
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EconomicDisconnectTuesday, 31 May, 2011
That JPM snippet is criminal.
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AnonymousTuesday, 31 May, 2011
big nite tonite at wal mart.The june food stamp card goes live at 12:01 am, they start shopping at 11, and swamp the registers, ,, they are, lest we forget, hungry.

Of all the statistics that scare the shit out of me, this one is the shit, and furthermore its understated.

Its one in six americans, unable to feed themselves. Chilling.
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AnonymousTuesday, 31 May, 2011
Guess we won't see them this time....

Murray Pollitt: Electronic wheelbarrows

In sum, Western World governments are now borrowing (and printing) a total of perhaps two trillion a year, nearly all of which is destined to finance handouts. This is an
incredible contrast with the situation 60 years ago when Western governments lived on modest
taxes and local borrowings.
And who do they borrow from today?

But now misgivings and remonstrations are
commonplace, a quarter of the G20 countries are
buying gold and the much-vaunted Euro may
blow up. Gresham’s law is kicking in.

To think a few years of austerity will solve all the problems is naïve. Austerity will just further sink economic activity and tax revenues. And the worse the economy, any economy, the more governments have to print to make ends meet. This has always been a formula for hyper-inflation – the worst inflations have coincided with bad economies.

http://gata.org/node/9971
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AnonymousTuesday, 31 May, 2011
The one thing nobody can really do is time the thing. But the steam is rising in the kettle. This thing is coming down. How do they borrow another x trillion dollars, they are fully borrowed up.

Dont you just sense it, feel it. Its customary to push it out in time in order not to be wrong and look stupid.

It took, what ,40 years to get here.certainly 30.

Its no cause for celebration, even owning the metals and being somewhat prepared, this no cause for celebration.

I am now old, i have been learning for 40 years, but most of it post internet. I rode the bubble, a material part of it unknowingly, i departed the reservation in the machinations of 87, when the manipulations, i think began.

Love thy neighbour, we will need one another, but its game over for this witless credit game, humans were once pretty tribal, well, stay tuned, make alliances, be ready to share. Make many friends. 50 million Americans cannot feed themselves? Oh my lord. .
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AnonymousTuesday, 31 May, 2011
Why should it remain orderly, because it did since the 50s, with a modest interruption in the late 60s.

And that was based on principle not hardship.

Look at the character of a North American American today, well, im one of them, but lets be serious.

Look at the leadership. What leadership. Pimps, subverted pimps, and this trash will gather the strength to induce a needed generation of austerity on America today? Would that they could.

Regretfully, It seems far more likely to me that the whole thing disentegrates once the taps get turned off. A culture needs character to save itself, and we don't , shirtsleeves to shirtsleeves in three generations. WE are generation 3.

Not a prayer. No chance.
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AnonymousTuesday, 31 May, 2011
If you have been lucky enough to do precious metals and can ride the storm somewhat, thank your lucky stars. And say nothing. Quiet like mouse. make friends and be ready to share.

This thing is going to devolve, pretty much everyone has nothing, the average North American basically has no savings to speak of.

I do not honestly know how we did this to ourselves. It seems suicidal. If you have a mortgage well, you run it down, you should be terrified, REFI IT? Are you out of your cotton picking mind??? Increase it? WHAT?

In the 1930s, they held mortgage burning parties after the last payment. A very big day. A mortgage is a menace, you can end up on the sidewalk, in a tent in the park.

No purpose in scolding, sorry. An entire society went nuts , aided abetted and conned by criminals in Brooks Brothers suits. Shifty m....effers with the morals of alleycats. But they didnt carry guns.

I wish there were a way out, it seems imposs.
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AnonymousWednesday, 01 June, 2011
from tbtf to tbtj(ail)...and in your face!

Sanford's Brad Hintz Explains Why There Will Never Be Any Justice In America

From a note just released by Sanford C. Bernstein & Co. Brad Hintz:

"Goldman Sachs wont face criminal precaution related to sales of mortgage linked securities because such a move could threaten the US financial system."

Really, that's all you need to know.

http://www.zerohedge.com/article/sanfords-brad-hintz-explains-why-there-will-never-be-any-justice-america?
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Dan in utahWednesday, 01 June, 2011
Soon, there will be no police force because the govt. funds for the police will be gone.

Whose going to stop all these people that were kicked out of their houses to simply break back in and live in these foreclosed Mcmansions? There's no cops to kick em out!

I agree with the other comments, find some good neighbors, recreate a village life, that's all that will make it in the next 10 years.
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AnonymousThursday, 02 June, 2011
Also, the debit card that The Colorado Department of Labor and Employment loads Unemployment wages on, is ... wait for it ... a Chase Visa card.
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Add comment

Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.