Thursday, February 17, 2011

Is it Time to Walk Away From Your House?

According to Dylan why wouldn't you?  The banks and the borrowers entered a contract using the house as collateral when you did your mortgage. To no one's surprise the banks still expect you to pay your mortgage back after the housing sham went south.

The problem is they didn't hold up their end of the bargain.  When their finances went south they ran to the Fed and got bailed out by the taxpayer.  Wall St argues that you must pay back your loan because you entered a contract!

I say screw that!  If you are in financial straights then why should you continue to be forced to pay your bloated mortgage when the banks couldn't hold up their end of the deal?  Just drop your keys in the mail and walk away.

I love the analogy below with the car.  When you don't pay your car loan back what happens?  The finance company repos your car.  Your credit rating then takes a hit and it's over.

Why shouldn't you be able to do the same thing with your house?

Let's be honest here:  Without the Fed, 90% of the borrowers would have no place to mail their mortgage payments to right now because the bank that they lent it from would have likely failed back in 2008.  They have a lot of balls to try and force you to hold up your end of the deal when they couldn't themselves.

The Bottom Line 

Both parties entered into an agreement that was dead from the start because most borrowers were never going to be able to pay the loan back. 

The banks no longer have to "stress out" about it because the Fed propped them up.  You deserve the same relief, and the only way you will get it is by walking away from your house and backing out of the agreement.

Avoid the 30 years of stress and just mail back the keys!  Before you do so make sure you listen to the consequences below in Dylan's clip:

Wednesday, February 16, 2011

Kyle Bass: Zero Lower Bound=ZIRP

Absolutely brilliant stuff here from hedge fund guru Kyle Bass.   Very few people on Wall St tell the truth so you need to pay attention when CNBC gives these folks an opportunity to speak.

My Take:

Kyle uses simple math to explain how we are artificially financing this Ponzi scheme using zero interest rates.  None of this is sustainable but the robots on Wall St don't seem to care.

And why would they?  They only hold stocks for 11 seconds at a time.  They could care less what happens next year, next month, or even tomorrow.   They are laughing all the way to the bank by the following day.   

I am amazed this charade has lasted this long.  So far, Ben Bernanke has been able to hide our ridiculous balance sheet by purchasing his own treasuries in order to finance the nations expenditures.

The absurdity of such thinking is really beyond belief when you think about it logically.  

Think about it:  How can a nation finance itself?  Can you finance yourself when you are 30k in credit card debt?  For a time the answer surprisingly is Yes!  How?  By getting another credit card and taking on more debt.

Eventually we all know how this plays out for us when we borrow Peter to pay Paul:  BANKRUPTCY anyone?

Why is it any different for our government?  The answer is it's not.  They can however delay the day of reckoning for a much longer period of time.   This is what we are witnessing today. 

Don't kid yourself though folks.  Our day of reckoning is coming.  It's not "different this time".  They tried to tell us that during the tech and housing booms and how did that all work out?

We were much smarter before we started blowing bubbles in the mid nineties:

Ben would have been laughed out of the room 20 years ago if he had tried to offer up this proposal as a solution to the nation's fiscal crisis.  We laughed and criticized Japan for attempting the same thing back then.

Ben's lucky he wasn't a central banker back then because he could have every well ended up in prison.  We threw bankers in jail back then following the housing bubble in the late '80's/Early 1990's.

Today we bail them out instead of prosecuting them.  When the economy turned around following our massive bailouts, we then allowed the same group of crooks to pay themselves billions of dollars in bonuses instead of forcing them to pay back the losses that caused the crisis in the first place.  

Why we ever allowed any of this to happen is beyond me.  I never thought this nation would ever become so blinded by greed and money.  Boy was I wrong.  Money talks in America. 

Today we say "fuck off" to capitalism instead of embracing it.  The rich are allowed to lie, cheat, and steal themselves into prosperity at the expense of the taxpayers.

All I can say is one day the bankers will get theirs.  Karma is a bitch and it ALWAYS comes back and bites you in the behind.

Tuesday, February 15, 2011

The Fed Must be Stopped

Busy week so I haven't had time to write.  I'll be honest here, I am glad I have been busy because I am disgusted by everything that I see and read recently.  The budget was a complete joke today. 

The unravelling of the Middle East is startling even though it should have been predictable for anyone that understands basic economics and inflation.

It's getting hard to continue to write about what I am witnessing.  The housing sentiment among builders remained at near all time lows.  Consumer spending came in at +.3 versus expectations of +.6. 

It's all unwinding all at once once, and yet our POMO pumped stock market fails to see the oncoming trainwreck.  The next 401k disaster for J6P is right around the corner as he gets caught holding the bag once again after getting sucked into the market for a 3rd time in 11 years.

It's so easy to see if you looked at the fundamentals.  However,  the greed of the bulls after a 100% rally is too strong for them to stop.  The bulls are now stampeding with huge blinders on as they become obsessed with taking the DOW up to all time highs.

If they would only stop for a second and look around they would save themselves a hell of a lot of money.

Must Read...

I  wanted to post this great article from Marketwatch's Paul Farrell before I wrap it up.

Folks, when stuff like this starts hitting the main stream media it's time to take notice.  The Fed will not stop until they run us straight into a wall and it's time for us all to take notice and stop them before it's too late.

Please click on this link to read the rest of the article.  We need to continue to keep the pressure on these thugs until they stop their easy money policies.  I don't know about you, but I have ZERO desire to watch this country turn into another Egypt.

This is right where we are heading if the Fed isn't stopped.

Enjoy the read:

"ARROYO GRANDE, Calif. (MarketWatch) — Fed boss Ben Bernanke is the most dangerous human on earth, far more dangerous than Hosni Mubarak, Egypt’s 30-year dictator, ever was. Bernanke rules a monetary dictatorship that will trigger the coming third meltdown of the 21st century.

Just as Mubarak was blind to the economic needs of the masses and democratic reforms, Bernanke is blind to the easy-money legacy that’s set the stage for revolution, turning the rich into super rich while the middle class stagnates and peanuts trickle down to the poor.

Warning, Egypt also had a huge wealth gap before its revolution. Bernanke is the final egomaniac in America’s bubbling 30-year wealth gap, where the top 1% went from owning 9% of America’s wealth to owning 23% during this dictatorship.

Bernanke’s ruling ideology is the culmination of a 30-year economic war that has forged together Reaganomics for the super rich, former Fed chairman Alan Greenspan’s toxic allegiance to Wall Street, the extreme Ayn Rand’s capitalist dogma, culminating in the toxic bailouts of Treasury Secretaries Hank Paulson and Tim Geithner, two Wall Street Trojan Horses corrupting government from within.

Since 1981 this monetary dictatorship has caused enormous collateral damage, systematically sabotaging democracy, capitalism and the American dream while fueling the rise of our most dangerous new enemy, China. See “Secret China war plan: trillions in U.S. debt.”

When Obama reappointed Bernanke a couple years ago, “Black Swan’s” Nicholas Taleb was “stunned.” Bernanke “doesn’t even know that he doesn’t understand how things work,” that Bernanke’s economic methods are so inadequate they make “homeopath and alternative healers look empirical and scientific.”

We called Bernanke, the “Captain of the Titanic,” warning that he was setting up the third meltdown of the 21st century, predicted by “Irrational Exuberance’s” Robert Shiller, a coming crash worse than the 2000 dot-com crash and the subprime credit meltdown of 2008 combined. See “Capt. Bernanke sinks the U.S.S. Titanic.”

Inside the Fed: Cassandras, Chicken Littles, governors crying wolf

Unfortunately, as with Egypt’s dictator, the 30-year dictatorship now headed by Bernanke must end soon: And this class war will not be pretty. But it is no black swan; no one can claim they didn’t see a new crash coming.

For several years before the 2008 meltdown we reported on money managers, economists and financial gurus warning of a coming meltdown. They included two Fed governors who warned Greenspan in the early Bush years. And yet, as late as summer 2008 Bernanke, Paulson and Greenspan were systematically dismissing mounting evidence of a mega crash dead ahead.

That’s why Time magazine’s cover story about Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, grabbed me. David Von Drehle’s “The Man Who Said No to Easy Money” is a warning to all America.

Like Ed Gramlich and William Poole, the two Fed Governors who warned Greenspan during the Bush years, Hoenig regularly dissented from Bernanke’s easy-money policies that have been favored by Wall Street throughout this 30-year dictatorship.

We’re paraphrasing Drehle’s interview with Hoenig as 10 warnings because it brilliantly reveals the broader historical tragedy of the Fed’s 30-year monetary dictatorship driving America to the edge of another 1930s economic revolution, one that will be triggered by a repeat of the 1929 wake-up call.

1. Commodity price inflation will soon end the Fed dictatorship

Hoenig consistently “cast his lonely ballot against the indefinite reign of easy money. Eight meetings, eight no votes … an unyielding point of view, one that has become ever more relevant now that rising commodity prices have put inflation worries back on the economic radar screen.”

In short, global commodity inflation may soon do what Hoenig could not, put an end to America’s self-destructive easy money reign of economic terror, and more importantly finally end the Fed’s 30-year “monetary dictatorship.”

Again, please click here to continue.