From Housing Wire:
Residential: -
"All loans 60+ days delinquent increased from 834,831 as of November 30 to 1,229,051 as of January 31, representing an increase of 47% over the period, the FHFA said. "
"However, prime loans 60+ days delinquent increased by 69.6% while non-prime loans increased by a significantly lesser 23%."
"Reasons for default: 34.1% of homeowners cited curtailment of income as the main cause of default, 19.8% reported excessive obligations, 8.1% said unemployment, 6.5% said illness and 3.5% cited marital difficulties, such as the loss of a spouse’s wages. "
C'MON GUYS! Can't you just be honest and admit it is UNEMPLOYMENT that is "THE REASON?"
How about the government's mortgage relief plans to help homeowners?
"In January 8,953 loan modifications were completed compared to 8,688 in December and the prior 3-month average of 7,926, the FHFA reported. This represents a 3 percent increase in loan modifications by Fannie Mae and Freddie Mac from December 2008 to January 2009."
WOW, 8,953 loan modifications out of 1,229,051 delinquent mortgages! Unfortunately, that will probably be the high water mark for loan mods. The government, quiet as it was kept, on April 9th agreed that bank's did not have to report the losses sustained in its residential mortgages!!!
These losses were the primary drivers behind the banks willingness to consider modifications, short sales, etc. That has been removed!
On the commercial side, we had a hush hush collapse of the 2nd Largest owner of shopping malls in the US! I did see the bankruptcy of General Growth Properties mentioned on CNBC (24 hr Infomercials for Wall St!) and a passing mention on MSNBC.
THE 2ND LARGEST OWNER OF SHOPPING MALLS DECLARED BANKRUPTCY and the stock market went up about 122 points!
Is this amazing or what? Do you really think we are getting the real picture of what is going on with the economy?
This is stunning news, but the worst is yet to come! There are 5 other behemoths in this category as well that will probably be gone by the end of the year!
My sources estimate that up to 30% of all commercial loans will go bad in this Depression!
What will that do to banks and especially insurance companies that are big lenders to commercial real estate? What will it do to the value of the CRMBS, the Commercial Real Estate Mortgage Backed Securities held by municipalities, benefit funds, retirement funds?
The one thing you can count on is that the Fake Reserve Bank, the Government, Wall St and the Mainstream Media will keep the bad news hidden from you, no matter what the cost!
Check out my Tuesday radio broadcast where I bring you up to speed on what is really happening in this economy: http://MyMoneyShow.com
Wednesday, April 22, 2009
Friday, April 10, 2009
Do NOT Take Out Retirement Funds to Cover Mortgage Payments!
You Are Screwing Yourself!
"A survey by the Greater Georgia Counseling service found that 29.6 percent of people who called the nonprofit agency for foreclosure prevention counseling received an early distribution from their 401(k) or other retirement plan within the six months prior to contacting the agency.
The fact that people are taking early withdrawals and falling behind on their bills again indicates they only got a temporary solution to their problem,” said Suzanne Boas, president of CCCS of Greater Atlanta."
Also, as the quote says, they fell behind anyway, therefore they will probably end up losing the home and their retirement funds.
Over 90% of respondents were younger than 59 1/2 meaning that they lost 35-45% of the withdrawn funds to early withdrawal penalties and income taxes! Wow, what a blow.
But that is not the worst of it. Assuming the average age of the respondents was 40, they would forfeit a quarter century or more of tax deferred growth on the withdrawn funds, which most likely could never be recovered.
Let me say it again. Wall St has said that Banks are too big to fail, homeowners are too small to Bail!
There ain't no bailout for you Bub! The Fed does not seem to want Obama to offer true relief for the homeowners, which would be a government purchase of mortgages at 80% of the current value of the home and recasting a new 30 year mortgage at that value.
This would certainly make the homeowner's mortgage payments much more affordable as well as eliminate the ridiculous Bubble Premium many homeowners are suffering under. And Please! Don't give me any "irresponsible homeowner" crap! This has to be a universal solution. There is NO Group more irresponsible and undeserving of a bailout, let alone Million dollar bonuses than the banks that created the problem in the 1st place!
Such a solution would stabilize the consumer, allowing them to start spending again and although the banks would get a well deserved spanking in terms of getting less than face value for their mortgages, it would flush out the toxic securities, appropriately disciplining the stock holders and bond holders and allow the rebuilding process to begin. Government support of insolvent banks only prolongs the problem and increases its severity.
My advice to homeowners in homes that are underwater, who cannot afford their mortgage payments, is to STOP paying your mortgage; stay in your home and husband what cash you can to make a clean start.
You don't want to lose your home, you say? You lost it when you signed the mortgage papers. You probably were not represented by an attorney. The loss of your home is the price you pay for that folly.
What about the Moral Hazzard, wu wu! When I was a kid growing up in the streets of Bed Stuy, we learned the lessons of Self Defense. If someone hit you, you hit them back!
The Fed triggered this mess by flooding the banks and the economy with excess credit, which is their classic way to kick off a recession or in some cases like now and 1930, a depression.
The banks and brokers then shoveled the money out to whoever had a pulse, in abject violation of their rules and regulations.
Wall St then did their part in the scheme, securitizing, insuring (for cash in violation of their rules and possibly the law) and leveraging, (with the help of relaxed government regulations) the bad mortgages to Stratoshperic heights, while collecting ungodly profits at every stage. About $13 Trillion in mortgages were pumped up to over $200 Trillion in garbage backed securities.
So tell me again who is acting irresponsibly and who is acting in self defense?
Banks now are refusing to foreclose on delinquent homeowners across the country because they are choking on those toxic loans they made, sort of poetic justice; so you may find that you will be able to stay in your home a lot longer than you think, especially if you live in a mortgage state.
In fact, when you are served with the foreclosure papers, the Notice of Default, or Lis Pendans, contact me. I may be able to help you negotiate with the bank. We find that in about 40% of the cases, we can negotiate a much lower payment because we know where to put the pressure on the banks.
YOU MUST BAIL OUT YOURSELF!
"A survey by the Greater Georgia Counseling service found that 29.6 percent of people who called the nonprofit agency for foreclosure prevention counseling received an early distribution from their 401(k) or other retirement plan within the six months prior to contacting the agency.
The fact that people are taking early withdrawals and falling behind on their bills again indicates they only got a temporary solution to their problem,” said Suzanne Boas, president of CCCS of Greater Atlanta."
Also, as the quote says, they fell behind anyway, therefore they will probably end up losing the home and their retirement funds.
Over 90% of respondents were younger than 59 1/2 meaning that they lost 35-45% of the withdrawn funds to early withdrawal penalties and income taxes! Wow, what a blow.
But that is not the worst of it. Assuming the average age of the respondents was 40, they would forfeit a quarter century or more of tax deferred growth on the withdrawn funds, which most likely could never be recovered.
Let me say it again. Wall St has said that Banks are too big to fail, homeowners are too small to Bail!
There ain't no bailout for you Bub! The Fed does not seem to want Obama to offer true relief for the homeowners, which would be a government purchase of mortgages at 80% of the current value of the home and recasting a new 30 year mortgage at that value.
This would certainly make the homeowner's mortgage payments much more affordable as well as eliminate the ridiculous Bubble Premium many homeowners are suffering under. And Please! Don't give me any "irresponsible homeowner" crap! This has to be a universal solution. There is NO Group more irresponsible and undeserving of a bailout, let alone Million dollar bonuses than the banks that created the problem in the 1st place!
Such a solution would stabilize the consumer, allowing them to start spending again and although the banks would get a well deserved spanking in terms of getting less than face value for their mortgages, it would flush out the toxic securities, appropriately disciplining the stock holders and bond holders and allow the rebuilding process to begin. Government support of insolvent banks only prolongs the problem and increases its severity.
My advice to homeowners in homes that are underwater, who cannot afford their mortgage payments, is to STOP paying your mortgage; stay in your home and husband what cash you can to make a clean start.
You don't want to lose your home, you say? You lost it when you signed the mortgage papers. You probably were not represented by an attorney. The loss of your home is the price you pay for that folly.
What about the Moral Hazzard, wu wu! When I was a kid growing up in the streets of Bed Stuy, we learned the lessons of Self Defense. If someone hit you, you hit them back!
The Fed triggered this mess by flooding the banks and the economy with excess credit, which is their classic way to kick off a recession or in some cases like now and 1930, a depression.
The banks and brokers then shoveled the money out to whoever had a pulse, in abject violation of their rules and regulations.
Wall St then did their part in the scheme, securitizing, insuring (for cash in violation of their rules and possibly the law) and leveraging, (with the help of relaxed government regulations) the bad mortgages to Stratoshperic heights, while collecting ungodly profits at every stage. About $13 Trillion in mortgages were pumped up to over $200 Trillion in garbage backed securities.
So tell me again who is acting irresponsibly and who is acting in self defense?
Banks now are refusing to foreclose on delinquent homeowners across the country because they are choking on those toxic loans they made, sort of poetic justice; so you may find that you will be able to stay in your home a lot longer than you think, especially if you live in a mortgage state.
In fact, when you are served with the foreclosure papers, the Notice of Default, or Lis Pendans, contact me. I may be able to help you negotiate with the bank. We find that in about 40% of the cases, we can negotiate a much lower payment because we know where to put the pressure on the banks.
YOU MUST BAIL OUT YOURSELF!
Thomas Jefferson's View of The Federal Reserve Bank
Jefferson said, “If the American people ever allow private banks to control the issue of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”
Wow! Did he nail it? nearly 150 years before the creation of the Federal Reserve Bank, he foretold its creation and the disasterous consequences.
Fortunately, I can subordinate my feelings on the slavery thing and give the man my highest accolades for his prescience; sort of like appreciating a fine cognac from a broken teacup.
Note the part about "deprive the people of all property until their children wake up homeless.."
The Fed is busy issuing "money" Trillions of dollars in Federal Reserve notes which we, our children and grandchildren will have to pay back, along with Billion in interest, (hmmm isn't it odd that one part of the Federal Government could legally bind another part to pay it interest?) as well as scoffing up other assets, like the two prime divisions of AIG it just picked up, while 1 in 50 children are homeless and tent cities of the homeless are growing more plentiful every day.
Wow! Did he nail it? nearly 150 years before the creation of the Federal Reserve Bank, he foretold its creation and the disasterous consequences.
Fortunately, I can subordinate my feelings on the slavery thing and give the man my highest accolades for his prescience; sort of like appreciating a fine cognac from a broken teacup.
Note the part about "deprive the people of all property until their children wake up homeless.."
The Fed is busy issuing "money" Trillions of dollars in Federal Reserve notes which we, our children and grandchildren will have to pay back, along with Billion in interest, (hmmm isn't it odd that one part of the Federal Government could legally bind another part to pay it interest?) as well as scoffing up other assets, like the two prime divisions of AIG it just picked up, while 1 in 50 children are homeless and tent cities of the homeless are growing more plentiful every day.
Thursday, April 9, 2009
Economists Agree, Bailouts Suck Money From Taxpayers to Fed!
We have been saying that the major banks and AIG are insolvent, that the securities they carry on their books are wishfully overpriced, even if they have gotten the Accounting Standards Board to go along and ease up on the Mark to Market valuation requirements.
These banks and others like insurance companies and AIG, despite what Bernanke says (what would you expect the Fed to say?) are zombies, or more accurately, Parasites, Sucking up taxpayer dollars which are Graciously loaned to us by the FED to be paid to the banks that own the FED! Talk about double dipping.
In other words these Parasites are draining their host, the American taxpayer, while enriching their owners; the European bankers that own the Fed, the ones responsible for the coming 2nd Great Depression.
Here is what several prominent economists from Harvard and Princeton are saying:
April 9th 2009:
Many prominent economists--including such diverse types as Anna Schwartz and Paul Krugman--have taken with this official view, saying the government was mistaking a solvency crisis for a liquidity crisis. This latest paper effectively demolishes the "fire sale" view. It draws three important conclusions.
* Many banks are now insolvent. "...many major US banks are now legitimately insolvent. This insolvency can no longer be viewed as an artifact of bank assets being marked to artificially depressed prices coming out of an illiquid market. It means that bank assets are being fairly priced at valuations that sum to less than bank liabilities."
* Supporting markets in toxic assets has no purpose other than transferring money from taxpayers to banks. "...any taxpayer dollars allocated to supporting these markets will simply transfer wealth to the current owners of these securities." (the owners of the FED!)
* We're making it worse. "...policies that attempt to prevent a widespread mark-down in the value of credit-sensitive assets are likely to only delay – and perhaps even worsen – the day of reckoning."
You can read the whole paper by Harvard's Joshua Coval and Erik Stafford and Princeton's Jakub Jurek here: http://www.businessinsider.com/insolvent-banks-and-imaginary-fire-sales-2009-4 Warning, it is an Academic paper!
The striking conclusion is that the low prices of toxic assets actually reflect the fundamentals,In short, the government cannot save the banks by improving liquidity or changing mark to market rules because the problem isn't illiquidity or accounting.
The problem is that highly leveraged financial firms own assets that are worth far less than they thought they would be, and the firms are insolvent as a result.
This is why the latest bailout plans secretly give huge subsidies to banks--because the only way to keep the insolvent zombies afloat is to transfer billions of dollars to banks, bank stockholders, and bank creditors.
The alternative--allowing the insolvent banks to fail, seizing the assets, wiping our shareholders, giving bond holders a serious haircut--is still not on the official agenda. (And will never be, as long as the Fed can hold out!)
See also: http://silverpros.blogspot.com/2009/04/what-would-happen-if-your-life.html
These banks and others like insurance companies and AIG, despite what Bernanke says (what would you expect the Fed to say?) are zombies, or more accurately, Parasites, Sucking up taxpayer dollars which are Graciously loaned to us by the FED to be paid to the banks that own the FED! Talk about double dipping.
In other words these Parasites are draining their host, the American taxpayer, while enriching their owners; the European bankers that own the Fed, the ones responsible for the coming 2nd Great Depression.
Here is what several prominent economists from Harvard and Princeton are saying:
April 9th 2009:
Many prominent economists--including such diverse types as Anna Schwartz and Paul Krugman--have taken with this official view, saying the government was mistaking a solvency crisis for a liquidity crisis. This latest paper effectively demolishes the "fire sale" view. It draws three important conclusions.
* Many banks are now insolvent. "...many major US banks are now legitimately insolvent. This insolvency can no longer be viewed as an artifact of bank assets being marked to artificially depressed prices coming out of an illiquid market. It means that bank assets are being fairly priced at valuations that sum to less than bank liabilities."
* Supporting markets in toxic assets has no purpose other than transferring money from taxpayers to banks. "...any taxpayer dollars allocated to supporting these markets will simply transfer wealth to the current owners of these securities." (the owners of the FED!)
* We're making it worse. "...policies that attempt to prevent a widespread mark-down in the value of credit-sensitive assets are likely to only delay – and perhaps even worsen – the day of reckoning."
You can read the whole paper by Harvard's Joshua Coval and Erik Stafford and Princeton's Jakub Jurek here: http://www.businessinsider.com/insolvent-banks-and-imaginary-fire-sales-2009-4 Warning, it is an Academic paper!
The striking conclusion is that the low prices of toxic assets actually reflect the fundamentals,In short, the government cannot save the banks by improving liquidity or changing mark to market rules because the problem isn't illiquidity or accounting.
The problem is that highly leveraged financial firms own assets that are worth far less than they thought they would be, and the firms are insolvent as a result.
This is why the latest bailout plans secretly give huge subsidies to banks--because the only way to keep the insolvent zombies afloat is to transfer billions of dollars to banks, bank stockholders, and bank creditors.
The alternative--allowing the insolvent banks to fail, seizing the assets, wiping our shareholders, giving bond holders a serious haircut--is still not on the official agenda. (And will never be, as long as the Fed can hold out!)
See also: http://silverpros.blogspot.com/2009/04/what-would-happen-if-your-life.html
Wednesday, April 8, 2009
What Would Happen if Your Life Insurance Carrier Collapsed?
Some of the biggest, safest insurance companies in the US have lost over 50% of their capital in the last 2 years.
That is Not the bad news.
The bad news is that much of the remaining capital the companies report are of suspect valuation, since mortgage backed securities, especially commercial mortgage backed securities, CMBS, are about to implode.
Recently, a major office building in Boston was sold for 50% of its “value.” I doubt that the securities that mortgage supported reflected the true value of the property, do you? How much of it are owned by insurance companies? I don't know.
Or how about the impending blow up of one of the biggest Mall owners in the world, in the next 30 days, think that will have an impact on the assets of the insurance companies? (See post, The Next Big Bang)
Update! General Growth Properties, the company hinted at above, today, April 16, declared bankruptcy! The stock market gained over 100 Points!
With 10% of life insurers capital invested in commercial real estate, it is estimated that a decline in value of the real estate of 25% would wipe out 1/2 of the insurers nominal capital, including of course the hidden losses mentioned above.
This would crush their stock and may incite shut downs of many companies by their State Legislatures.
Estimates I am seeing are that about 30% of all commercial mortgages will fail!
Did you ever think what would happen if your life insurance company collapsed, went out of business?
On paper, you would be covered for $100,000 in life claims. On paper.
In reality, most life insurance policies are backed by a State Insurance Guarantee.
How many States are currently facing bankruptcy? About 40 out of the 50.
But even if your family did receive the full $100,000, out of the $500,000 you were paying for with the other $400,000 blowing away with the debris from the insurance company itself; along with your premiums you paid for it over the years, what then?
Take out $10,000 for your burial, $20,000 for final hospital, medical and other bills and your family will have between $30-$50,000 to ‘Maintain Their Lifestyle.”
Obviously, that ain’t gonna help!
What to do?
I am assuming you have a whole life policy with cash value.
Remember how much equity you had in your house back in 2006! How much do you have now?
The same with the cash equity in your insurance policy. I would borrow out as much of the cash value as possible, before it evaporates like your home equity and invest it in precious metals, gold and especially silver.
If you should die in the near future, your family’s insurance proceeds would be lessened by the amount of the loan, but would still total the face value, including your investment in precious metals.
We are predicting that the precious metals are going to go on the greatest Bull Run in the history of the world, once the economy is “saved” by devaluing our currency, as that is the only way the gigantic debts we owe can ever be repaid.
There is precedence for such a move. In the ancient world, Emperors would either decrease the size of their coins or in Rome, dilute the gold or silver with other, less valuable fillers, while proclaiming the coins were worth the same amount of money.
In the First Great Depression, Roosevelt devalued the dollar by raising the price of gold, to which the value of the dollar was pegged, from $20 Oz to $35 Oz. This meant that what it used to take $20 to buy now took $35 or 57% more.
Looked at another way, the supply of money was increased by 57%, enough to pay off the huge debts which of course remained fixed in value; albeit with cheaper dollars. This is China's big fear.
There is simply not enough money in the world to pay off the Trillions of dollars in debts and unfunded mandates like medicare and social security facing the US.
If the dollar is devalued by only 10%, it is estimated that gold will go to over $5,000 per ounce and silver over $100. It is also likely that the devaluation will have to be even greater, maybe 20% which would mean gold at $10,000 Oz. Of course we would no longer call it a "dollar." OMG! They are already with the "new dollar" called the Amero, after the Euro; but that is a different discussion.
For reasons discussed in other posts on this blog, I believe that silver will outperform gold, real estate, and the stock market when the economy is re-flated.
That is Not the bad news.
The bad news is that much of the remaining capital the companies report are of suspect valuation, since mortgage backed securities, especially commercial mortgage backed securities, CMBS, are about to implode.
Recently, a major office building in Boston was sold for 50% of its “value.” I doubt that the securities that mortgage supported reflected the true value of the property, do you? How much of it are owned by insurance companies? I don't know.
Or how about the impending blow up of one of the biggest Mall owners in the world, in the next 30 days, think that will have an impact on the assets of the insurance companies? (See post, The Next Big Bang)
Update! General Growth Properties, the company hinted at above, today, April 16, declared bankruptcy! The stock market gained over 100 Points!
With 10% of life insurers capital invested in commercial real estate, it is estimated that a decline in value of the real estate of 25% would wipe out 1/2 of the insurers nominal capital, including of course the hidden losses mentioned above.
This would crush their stock and may incite shut downs of many companies by their State Legislatures.
Estimates I am seeing are that about 30% of all commercial mortgages will fail!
Did you ever think what would happen if your life insurance company collapsed, went out of business?
On paper, you would be covered for $100,000 in life claims. On paper.
In reality, most life insurance policies are backed by a State Insurance Guarantee.
How many States are currently facing bankruptcy? About 40 out of the 50.
But even if your family did receive the full $100,000, out of the $500,000 you were paying for with the other $400,000 blowing away with the debris from the insurance company itself; along with your premiums you paid for it over the years, what then?
Take out $10,000 for your burial, $20,000 for final hospital, medical and other bills and your family will have between $30-$50,000 to ‘Maintain Their Lifestyle.”
Obviously, that ain’t gonna help!
What to do?
I am assuming you have a whole life policy with cash value.
Remember how much equity you had in your house back in 2006! How much do you have now?
The same with the cash equity in your insurance policy. I would borrow out as much of the cash value as possible, before it evaporates like your home equity and invest it in precious metals, gold and especially silver.
If you should die in the near future, your family’s insurance proceeds would be lessened by the amount of the loan, but would still total the face value, including your investment in precious metals.
We are predicting that the precious metals are going to go on the greatest Bull Run in the history of the world, once the economy is “saved” by devaluing our currency, as that is the only way the gigantic debts we owe can ever be repaid.
There is precedence for such a move. In the ancient world, Emperors would either decrease the size of their coins or in Rome, dilute the gold or silver with other, less valuable fillers, while proclaiming the coins were worth the same amount of money.
In the First Great Depression, Roosevelt devalued the dollar by raising the price of gold, to which the value of the dollar was pegged, from $20 Oz to $35 Oz. This meant that what it used to take $20 to buy now took $35 or 57% more.
Looked at another way, the supply of money was increased by 57%, enough to pay off the huge debts which of course remained fixed in value; albeit with cheaper dollars. This is China's big fear.
There is simply not enough money in the world to pay off the Trillions of dollars in debts and unfunded mandates like medicare and social security facing the US.
If the dollar is devalued by only 10%, it is estimated that gold will go to over $5,000 per ounce and silver over $100. It is also likely that the devaluation will have to be even greater, maybe 20% which would mean gold at $10,000 Oz. Of course we would no longer call it a "dollar." OMG! They are already with the "new dollar" called the Amero, after the Euro; but that is a different discussion.
For reasons discussed in other posts on this blog, I believe that silver will outperform gold, real estate, and the stock market when the economy is re-flated.
The Next Crash You Hear Will Be This One...
. "We currently have approximately $1.179 billion of past due debt and approximately $4.09 billion of debt that could be accelerated. However, our lenders have not yet exercised any of their remedy rights with respect to such debt. In addition, we have an additional $1.44 billion of consolidated mortgage debt and approximately $595 million of unsecured bonds scheduled to mature in the balance of 2009 that remains to be refinanced, repaid or extended. In the event that we are unable to extend or refinance our near and intermediate term loan maturities, we may be required to seek legal protection from our creditors. "
Excerpt from 2008 Annual Report of...The Company currently has an ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, including Baltimore's Harbor Place, as well as ownership in master planned community developments and commercial office buildings. The Company portfolio totals approximately 200 million square feet of retail space and includes over 24,000 retail stores nationwide.
It's stock has fallen 98% and is now a penny stock in danger of being de-listed from the NYSE.
The almost assured collapse of this Giant will send a Tsunami throughout the commercial real estate world, the insurance world which are huge investors in CRMBS,
or commercial real estate backed securities; banks and brokerage houses and the greater world economy.
The stock market will crash below 6,000 and gold and silver will soar on massive new "bailouts" before summer, we predict if this bankruptcy occurs.
Excerpt from 2008 Annual Report of...The Company currently has an ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, including Baltimore's Harbor Place, as well as ownership in master planned community developments and commercial office buildings. The Company portfolio totals approximately 200 million square feet of retail space and includes over 24,000 retail stores nationwide.
It's stock has fallen 98% and is now a penny stock in danger of being de-listed from the NYSE.
The almost assured collapse of this Giant will send a Tsunami throughout the commercial real estate world, the insurance world which are huge investors in CRMBS,
or commercial real estate backed securities; banks and brokerage houses and the greater world economy.
The stock market will crash below 6,000 and gold and silver will soar on massive new "bailouts" before summer, we predict if this bankruptcy occurs.
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