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.


  1. 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..."

  2. 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.


  3. now that you mention that, i do recall that JPM had that deal. this is all so surreal. can't make this shit up

  4. 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.

  5. 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.


  6. 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. .

  7. 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.

  8. 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.

  9. 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.


  10. 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.

  11. 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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