midtowng's blog

Time to worry about the banking system

Submitted by on

"Never believe anything until it has been officially denied."
- Otto Von Bismark

Otto may have been one of history's great bastards, but he was also a Machiavellian genius when it came to modern politics.
For instance, on March 10, Bear Stearns denied rumors that they were having a liquidity problem. On March 15, Bear Stearns was effectively bankrupt.
On February 7, 2002, WorldCom denied rumors that it was about to go bankrupt. On July 19, WorldCom went bankrupt.

This pattern gets repeated almost every single year like clockwork. Which is why the news today is more worrying than normal.

The Greatest Taxpayer Rip-Off in American History

Submitted by on

Eventually the unsustainable will end. It's an immutable law of both physics and economics. For the American dollar, it appears that this day of reckoning is approaching quickly.

Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.

The Looting Of America

Submitted by on

Who's to blame for the economy?
It's not just a political question, it's an economic question as well. It is essential that this question be answered because without an answer we won't know what to do to fix it.

Remember 1999? The federal budget was balanced. The trade deficit was still manageable. The unemployment rate was low, as was the poverty rate. There were plenty of good paying jobs out there. Corporations were making record profits.

It was also the year that the economy was broken.

"Let's hope we are all wealthy and retired by the time this house of cards falters."
- email sent Dec. 15, 2006, from one rating agency to another

Wall Street's Haute Con Job

Submitted by on

For those of you who are familiar with my writing, you've probably seen me use the term "Wall Street exists to separate you from your money."

It occurred to me the other day that I need to justify that opinion. Therefore here is a partial list of reasons why you should keep your money out of the hands of the Wall Street crooks and banksters. This article will not encompass every way that Wall Street steals from average people like you and me, but it might inform you of a few ways that you may not have been aware of.
As the old saying goes, "Forwarned is forearmed."

So without further delay, here's a list of ways that you are being robbed, day after day, year after year.

Paradigm Shift: "Think the unthinkable"

Submitted by on

Individual economic predictions are usually pretty useless, and predictions of catastrophe are as ubiquitous as rednecks at a NASCAR race. Therefore when I see general doom-and-gloom predictions for the economy I tend to ignore them.

On the other hand, there is a tipping point. When both official and private sources all over the world that aren't known for being alarmist start screaming "fire!" then it is time to pay attention.

Before I make a few personal comments let me quote my sources.

IMF:

The International Monetary Fund today warned authorities worldwide to "think the unthinkable" in planning to cope with a mounting crisis in the global financial system.

Is this a great country (for bankers), or what?

Submitted by on

It sure is great being a banker these days.

Let's take the example of Countrywide Financial.
Today both California and Illinois opened lawsuits against Countrywide for "using misleading advertising and other unfair business practices to trick borrowers into taking on risky home loans they didn't fully understand". Also today, Washington State is moving to pull Countrywide's licenses after it found "evidence of predatory practices aimed at minorities".
This is after a year in which Countrywide stock has dropped from nearly 40 to just 4.58.

McCain's economic ideas

Submitted by on

"I'm very well versed in economics."
- John McCain, January 24, 2008

Senator McCain may think he knows a few things about economics, but his latest comments show an increasingly widening gap between reality and his version of reality. This is one of those "Oh. My. God" moments.

The presumptive Republican presidential nominee regularly asserts that 1.3 million people worldwide ``make a living off EBay.'' He holds up the figure as evidence the world's largest Internet auctioneer is a model for job and economic growth.

Something tells me that selling beeny babbies on EBay isn't a real economic plan. In fact, the idea of selling used stuff online is some sort of economic model that we should aspire to as a country shows such a complete lack of understanding of fundamentals that it should scare you.

The de facto nationalization of the housing bust

Submitted by on

Congress may be still debating a bailout bill, but the bailout of the housing market is already in progress.

Freddie Mac and its fellow GSE Fannie Mae are now financing more than 80 percent of all mortgages in the U.S., up from 40 percent a year ago.

As lenders rely on Freddie Mac to buy their loans, the company is charging higher prices and increasing market share. Freddie Mac, which has a $738 billion portfolio of mortgage bonds and guarantees $1.78 trillion in home loans, is raising prices next month for the fourth time.

"We are nearly the only game in town, and we think we are going to be able to enjoy that position for a number of years," Piszel said.

Considering the implied promise of taxpayer backing for these government-sponsored entities combined with the collapsing real estate market, this should scare everyone.

The REAL reasons for high gas prices

Submitted by on

Just a quick glance at the headlines will tell you all you need to know about high gas prices. Senate Dems aim to stop oil speculators, Stop the oil speculators, These Are the Folks Behind the Price Spike.

Yep, it's pretty clear that all of our energy woes can be attributed to a small group of evil speculators who are driving up the price of gas. They must have made a fortune when the price of oil spiked $16 a barrel just Friday to $139 (an entire barrel of oil was going for $11 in 1998).

Well, actually... reality is slightly different. In fact, reality is pretty much the opposite of what the media and politicians are telling you.

You better get used to $4 gas

Submitted by on

A news article came out yesterday that received almost no attention. Yet its significance cannot be overstated to those still hoping for a large drop in energy prices.

Hedge-fund managers and speculators reduced bets on higher oil prices by 80 percent since July as crude futures rose to records and U.S. regulators started investigating trading, government data show.

So-called speculative net long positions fell to 25,867 contracts on the New York Mercantile Exchange in the week ended May 27 from a record 127,491 on July 31, according to a U.S. Commodity Futures Trading Commission report on May 30.

Quite simply, this destroys every single sound bite you've heard out of Washington and the mainstream news media over why energy prices are so high.

Pages