Wednesday, January 30, 2013

So Is the US Economy Screwed No Matter What the Fed Does?

The Fed has a choice:

1. It can keep interest rates low, hurt savers, and allow rich people to buy up all of America.

2. It can allow interest rates to rise, help savers, and hope that Americans buy high priced homes with even higher interest rates.

Maybe those choices suck.

While we are in number 1, at present, the Fed could stop speculation in futures markets, and ban easy money loans. Of course, easy money loans are not made much when interest rates are low. But of course, banning easy money lending has been half hearted at best, with the Consumer Protection Agency tied to the Fed.

As we move to option 2, we must absolutely stop speculation in the futures markets, or gas prices alone will tank the economy. As far as buying high priced homes with high interest rates, it isn't going to happen without a housing bubble.

And a housing bubble would suck too. Economic growth with better paying jobs is not going to happen thanks to worldwide deflation of wages. But the inflationary pressures we still feel are more related to speculation in futures markets than a function of dollar weakness, as the dollar has remained flat.

So, it is becoming apparent to many that without sound economic growth, the Fed has nothing but poor choices. The choices are all related to saving the banks, because they are in such bad shape that the middle class is not a big concern to the Federal Reserve.

If we keep doing choice 1, the middle class will get killed, with high prices for food, gasoline, etc. Couple that with no savings and a hope in a risky stock market that most cannot tolerate. Banks won't lend in a low interest rate environment.

If we head toward choice 2, the banks will get killed without support from the middle class to move real estate. If the middle class says "no" to real estate, the banks will suffer even if savers do better. Look for folks to seek safe yields in bonds and await a crash of the stock market. If easy money lending comes back, the banks will make a lot of money but the risk will be absorbed by the borrower, with risky and teaser mortgages coming back into play.

So, without economic growth, the banks want a bigger cut of a smaller pie. If you remember that be very careful that you don't satisfy their predatory greed.

As I posted at Business Insider to this article:

"Actually, Paul Krugman is partly right in his economic views. Without stimulus we are cooked. However, thanks to stimulus in speculation, main street is cooked. Main street is cooked no matter what. Main street is cooked in the low interest rate environment, where savers are starved, and it is cooked in the high interest environment when toxic mortgages are the only way you can afford a house!"
and I posted this:


Americans cannot afford homes, without easy money. We are stuck between low interest rate speculation and high interest rate housing speculation. Not much of a choice.



Tuesday, January 29, 2013

Here Is Why Henry Blodget of BI is Wrong About Innocence of Bankers in the Housing Bubble

Henry Blodget has maintained that the bankers who sold collateralized debt obligations (CDOs) throughout the world, were not guilty of breaking the law. He says that buyers were sophisticated and should have known about these products.

But last time I checked, the sophistication of investors did not determine if there was fraud involved in the packaging and reselling of the CDOs. For one thing, there are common law claims, as fraud is fraud whether it rises to the level of securities fraud or not. And as to securities fraud, representing the CDOs as being safe when they were not could violate the law.

The fact that there were disclaimers and ways for the underwriters, the big investment banks, to protect themselves may cause the claims against securities fraud to fall short. But RICO laws are in the common law and they can apply to securities violations. Investors should have been able to sue and even request criminal prosecutions for RICO laws, but the 4 year statute of limitations has passed for the housing bubble. 

That doesn't make Henry Blodget right, it just means that the prosecutors dropped the ball, probably on orders from higher up.

RICO would have required two crimes against the investors, so that could have included securities violations, mail fraud, wire fraud and a host of other fraud.

Financial services companies have been exempt from RICO charges because those are penalties that hurt, and those are penalties that reach toward the top of the companies. If the attorney general does not prosecute Henry Paulson for RICO fraud in spreading billions of dollars of fraudulent CDOs, it could be that they were attending the same cabinet meeting and were buddies, so that prosecutions were covered up.

That doesn't make Henry Blodget right. Henry knows that easy money loans were not against the law. They were immoral, and should have been against the law as they are in other countries. But they weren't against the law. Henry is right about that, but it doesn't make it right just because it isn't against the law.

Henry thinks if it isn't against the law, it must be too bad, so sad, for you folks who got a bad loan and lost your shirts. But even people who got good loans lost their shirts. What about that Henry? 

If it isn't against the law, for Henry Blodget it all must be ok, permissible. Well, Henry, they want to blow another housing bubble and it will likely be permissible. It doesn't make it right.

And there are other aspects to the housing bubble that were not strictly against the law but were a form of fraud, a legal fraud if you will. One is that so much easy money was offered that it affected the market and manipulated the price of housing. It distorted the market for the advantage of the wealthy. It isnt' right, but according to Henry Blodget it is quite alright, since there wasn't a law.

Well, Henry, you know who writes the laws don't you? You know the lobbying game don't you?

Unethical housing bubbles and toxic housing loans hurt America, Henry, whether against the law or not. There is a higher law. And that law will judge these bankers by a much different standard than you do. A Ponzi housing bubble is unethical and should be against the law. It destroys the value of a house, making it impossible to price the value of a house.

When a borrower has that happening to him, with an investment that is not liquid, he is stuck holding the bag and it shouldn't be that way Henry. I can understand and accept house price fluctation based on real economics, like a factory closing, but not because bankers are manipulating the market with toxic loans and fraudulent securities that allowed them to pawn off those toxic loans.

Henry Blodget, you don't have much of a conscience, or at least that is what I am inferring from your attitude about the housing bubble. After what you have gone through, being permanently banned from securities trading, that bothers me.

After all, Henry, you were banned, but these underwriting scumbag banks can spread crap securities the world over and no one can touch them. They got you, the little guy, but they didn't get the bankers who deserved way more than you in the form of penalties to the max!

But just know this: the courts aren't done with this matter. I hope they hit with a powerful hammer, the fraud that took place and the hurt it caused  MainStreet USA.


Thanks to Globalization, Your Furniture Could Be Making You Sick!

Thanks to Globalization Your Furniture Could Be Making You Sick - Business Insider

Furniture began being imported big time just a few years ago. It has a lot of formaldehyde in it and could be making you sick. I urge you folks to read this article and warn your friends!

Monday, January 28, 2013

We Know Why Belgium Needs to Sell a Lot of Chocolate: Broke in the Eurozone

Belgium Needs to Sell a Lot More Chocolate

Belgium is a country that is at the heart of the Eurozone. The European Union has headquarters in Brussels, and even NATO is located there. But Belgium has financial problems and an ethnic division. So I am half amused and half sad that a commercial comes on TV saying that we need to eat more Godiva chocolate rather than use it for special occasions, as is the habit in the United States.I believe that the commercial, while being a legitimate marketing tool, is also revealing of the financial trouble that is coming out of news reports in the European country. Belgium is nearly broke!
Belgium is divided into three regions.The Brussels Region, Wallonia, and Flanders, which are often at odds with one another. Brussels is capital of the French Community and the Flemish Community. A smaller Brussels city within is the capital of Belgium is the actual capital of Belgium.
The two issues that are hurting the small country these days are:
1. Flanders wants to separate and go her own way. The Flemish are conservative and the French and Wollonians are socialist. At this point, the desire to separate is more talk than action, but it is unsettling to the nation.
2. Belgium has quietly become a silent partner of the PIIGS, ie countries that owe a great deal of money and are heavily in need of European Union bailouts, or as I would prefer, of default in order to straighten up their balance sheets. The PIIGS are Portugal, Ireland, Italy, Greece and Spain. These countries were offered easy credit upon entering the European Union and they used the credit to buy products from France and Germany. France and Germany factories made a lot of money, but their banks are among the most leveraged in the world. Belgium likely needs a bailout or really should default if the European Union insists on giving these countries loans with interest rates that are outrageous.
Germany can't seem to decide whether to bail these countries out or pull out of the European Union. But Germany cannot have her cake and eat it as well. I sympathize with taxpayers in all these nations because they are bailing out rich people and banksters just like the US government has done with JP Morgan, Goldman Sachs, Morgan Stanley, Citibank, Bank of America and Wells Fargo.
Banks in Germany had been leveraged as high as over 100 to 1, while banks in the US had excessive leverage at no more than around 30 to 1. So a bailout of Belgium and the PIIGS would really be a bailout of these greedy banks. For more information just scroll past the nice chocolate videos below to the other informative links and videos regarding the sovereignty of nation states in the new financial order.

Sunday, January 27, 2013

Housing As a Store of Wealth: Real Estate Is Too Risky!

Adjustable mortgages are marketed to the masses as a benefit to them. Alan Greenspan said you could get a "better deal" with an adjustable, in February of 2004.

That was just at the start of the housing bubble. Not only was he in on the housing bubble, but he was advocating that the borrower like and prosper from the adjustable.

But who really profits from adjustables? On Business Insider at this article by Rob Wile I shared a message and an unknown fellow named Brian M responded. This exchange tells us a lot about adjustable mortgages.

I said:

"When you have fiat money you can still stop speculation and easy money lending. You can ban it like in Germany. But the bankers say they can't price a mortgage and need adjustable mortgages or they may lose their shirts. Well, that places the risk directly upon the buyer.

Who needs that?? Rob, who needs it?"

Perviously, I had written this at Henry's interview with Robert Shiller:

"Henry, nice post. Ignorance of probabilities. What a phrase. Probabilities don't capture reality, so when they assumed all mortgages would not fail at once that was one ignorant probability! On purpose too.

Thanks for interviewing him. He neglected to mention that the housing market is forever ruined by the demise of the 20 percent down fixed mortgage. IMO, cash from Wall Street plus easy money loans could prove that you are just throwing your money down a rat hole.

And the question, are we Japan or not means massive risk for a 30 year mortgage at any time. Rent and save the rest. Boycott mortgages.

And it is not just fiat money. You can stop speculation with fiat money. You can ban easy money loans with fiat money. Bankers say they cannot price a loan under these circumstances but if that is true why would you want one???"


In the Shiller article and my response, the concept of probabilities being ignorant of real world risk is a whole other subject. But the point of the above comment is that the housing market is forever destabilized by toxic loans.


Brian M responded to my post. Excuse the language:

"This is the fault of the fiat system, not the bankers. You are an old fart, so I am sure you remember why so many savings and loans went belly up under Volcker. They were holding tons of mortgages in the 5-7% range, and all of a sudden deposit rates went through the roof. So now you are a banker paying 12-15% on deposits, and only getting 5-7%. on loans. Maybe you can get through your thick skull why bankers don't want to hold long term fixed debt...it has nothing to do with making money, it has everything to do with covering your ass..."

I then responded that he made my case. Americans must either boycott all housing loans or subject themselves to massive risk that the lenders do not want. Joe Weisenthal has appeared to make a case for low interest rates as far as the eye can see, but 30 years is a long time.

As it is, we have low interest rates, cash purchases of homes by Wall Street for the first time, and many loans being FHA fixed, so that the government and taxpayer is doomed to losses if interest rates rise. A housing bubble brewed with little or no money down in a low interest rate environment is risky to the banks. The bank with the most risk is Wells Fargo.

Going forward, FHA loans are risky because the buyer is underwater immediately. Most of these loans are fixed, which is good, but with high loan to income ratios, which is very bad. Higher interest rates and PMI make the monthly payments difficult for many.

In trying to escape that prison of an FHA loan, people find themselves getting adjustables as interest rates go up. It appears the Fed wants this because you cannot blow a housing bubble without interest rates rising. And I have no doubt that the Fed wants to blow another housing bubble. 

[Update: I am convinced that big jumps in interest rates will be unlikely and if they occur they will be for a short duration of time. See my Seeking Alph article about Japan.]

No matter what, I assure you that in this age of house price instability, if Wall Street can beat you, and weaken you, and get its houses back, through foreclosure or whatever, the Street will find you easy prey if you subject yourself to a long term mortgage.
Of course, if the Fed goes away, like the libertarians want, you will be subject to risk every five years. That will surely drop the value of houses if that loan model comes to pass.

Now, regarding inflation/deflation, if we are Japan, the Fed would be in a box, and Joe Weisenthal would be right, that interest rates are almost permanently depressed, at least for a good chunk of years. 
So, if we are Japan people could wait for interest rates to just crash more. Why buy now? And if we are not Japan, but expect interest rates to rise, why buy now when house prices will go down again, either with or without a bubble and crash?

So then, there are, apparently, very few good times to buy a home on credit. That is, if you are the borrower and if you are seeking a store of value in the house. There are times when house payments are less than rent. In those times, you may want to buy but it is risky if you have to sell into a rising interest rate environment. The house may be good for your budget but may not be good as a store of value for your money going forward. 

With all this information about instability, now, and/or going forward in time, if you want to hang on to your money, you may have a better chance of doing so by simply boycotting mortgages, by living multigenerationally, and by renting and saving the rest. 
It may well turn out that money is the best store of value over time, because it is liquid, meaning it is always useful in immediate trade for goods and services, and because other stores of value are more risky. Even the Chinese are saying that there are few good stores of value left, and focus on gold. 
Yet gold is not liquid under certain circumstances. You can find instances in history where it was difficult to turn gold into cash quickly, which is the definition of a liquid investment. In the housing bubble, houses became almost liquid, but that is a very dangerous circumstance, as we all found out. 
Gold stocks or ETF's are more liquid than storing gold bullion, because selling the stocks can be transferable to cash quickly. Yet the store of value, the price of the gold and silver stocks, may fluctuate wildly.

Housing was once a great store of wealth, when the 20 percent down payment and fixed loan was the norm. But as Brian M says above, the banks are fearful of holding the bag on those most stable of mortgages, and are willing to place risk to your financial balance sheet and risk to your house as a store of value by pushing adjustable and toxic loans.
So then, money, cash, is both the most liquid investment with potentially the best store of value in an age of financial volatility. Cash is king. 

This article does not constitute investment advice. It is opinion of the author only regarding broad investment concepts.


Gary Anderson
Las Vegas, NV

World Economic Forum Ends With Stark Warning Over Global Economy - Business Insider

World Economic Forum Ends With Stark Warning Over Global Economy - Business Insider

The financial crisis is not over folks. The jobs situation is bad. The housing price situation is bad, with houses seriously overpriced. Cash from bankster investors, hedge funds and the like are driving housing comps up. 3 percent down makes for a bigger house payment for the rest. Sometimes it is better than renting but even then, it is not a store of value if you have to sell your house later on and the price declines.

Beware of the 30 year mortgage and the housing market unless you are certain about your income and don't need your house as a store of value!! 

Saturday, January 26, 2013

Henry Blodget Doesn't Think Banks Did Anything Illegal. Wrong!!!

Henry Blodget, editor of Business Insider, posted that he didn't believe the banks did anything illegal in the housing bubble:


"Sorry, I'm just tired of these drive-bys. Every prosecutor that can has looked into what the banks did, and they didn't find anything illegal. (Because the truth is that almost everything they did was legal--as outrageous as that may sound). So I think it's time we stopped just throwing around this word.

Congress deserves a lot of the blame for what happened. As, I am sorry to say, do folks who borrowed money to buy houses they couldn't afford."


The responses to his comment that was on his own article basically covered these bases:

1. The banks violated Sarbanes Oxley when the chief bank officers signed off on the financials. This was never prosecuted even though there are criminal sanctions.

2. Goldman was charged with civil fraud and settled. They could have easily been charged with criminal fraud.

3. Goldman Sachs helped Greece defraud the Eurozone.

4. Goldman screwed Libya.

5. Yves Smith (Naked Capitalism) would not say what they did was legal, and I am presuming on the spread of the bogus CDO's. That should have been securities fraud. 

6. My two responses:

A: Wrong, Henry. They never applied RICO laws of continual fraud to the selling and packaging of the CDO's. Never even applied the law. And the law says you don't have to prove intent, just pattern.

I am sorry you feel that way about the banksters. They are banksters.



B Henry, you really do believe that the bankers were not frauders in a criminal sense. That is unfortunate. It shows a lack of judgement.

The banks were not prosecuted because Tim Geithner forbade it. However, truth is, the bogus Gaussian Copula adopted at Basel 2 in 2000 was a fraud from the beginning. To assume all loans can't go bad at the same time flies in the face of the Japanese experience. Risk management became a fraud. You can't prosecute for central bank collusion in the housing bubble? Every CDO was a fraud. Every CDO sold to investors was a fraud.

Dirty Dirty Republicans: Gary Anderson: Amazon.com: Kindle Store

Dirty Dirty Republicans: Gary Anderson: Amazon.com: Kindle Store

While the Democrats are dirty, the Republicans are double down dirty. I urge folks to read this ebook or get the book. There are things that people need to know about the Republicans. These things are unchangeable and mean that the party of the once great Dwight David Eisenhower is now a prisoner to perverse desires of morally bankrupt men. 

The Housing Bubble in Phoenix Is an Utter Fraud and Scam - Business Insider

The Housing Bubble in Phoenix Is an Utter Fraud and Scam - Business Insider

My article on BI showing the Phoenix housing bubble is a cash buying scam from Wall Street. Hope you take the time to read it if you are contemplating house purchases. Keeping your house as a store of value with all the uncertainty is a gamble. 

The Great Depression: The Herbert Hoover Presidential Library and Museum

The Herbert Hoover Presidential Library and Museum

This is, of course, an indictment of failure to stop the bust in a boom and bust cycle. Look at it this way, a boom and bust is actually a way for wealthy folks to make money on the way up and on the way down. That is what they want, boom and bust. Andrew Mellon, in wanting boom and bust, wanted speculation, austerity, and supply side percolation economics. He relished panic as a way for folks to make money at the top and for the riff raff to suffer and be moral.

But really, with Mellon, it was greed, the keeping of money he had made. That is the banker mentality, unless they can foment a scam like the housing bubble where they pawn off mortgages, get bailed out, get their properties back, and start the process again.

Beware of the bankster and the bankster propaganda that ultimately will target the helpless home buyer. Boycott mortgages if you need to save your money. Otherwise, you put the money at risk. 

The Economics of Multi-Generational Living

Frugality Must Rule in the New Normal

The economics of strategic frugality becomes the economics of multi-generational living as globalization puts pressure on wages and the American way of life. I have written articles about the subject of globalization and frugality at Business Insider and these are included in the discussion here. But looking at the big picture of why all this frugality is necessary becomes a very important piece of information to the families facing permanent wage decline and permanent pressure on their way of life.
The economic picture reveals a steady decline in wages as America seeks to become competitive in the world market. The necessity to keep and accumulate wealth becomes a fierce battle as the decline of wages progresses. The cost of living certainly is not declining, as often prices for food, gasoline, and housing do not decline in proportion to the wage decline. That is because world demand and also massive speculation by investors is driving the price of the commodities up in a way that is out of our control. That is why the merits of multi-generational living are very evident.
There are many reasons why this way of life, defined as having two generations of adults or a grandparent raising children, becomes an important economic force. As the economic power of wages is taken from our society, the power to fight back can come from cost cutting. As business cut costs by mergers, so can families cut costs by merging and avoiding duplication regarding power, cable, transportation, costs of property, etc. It has come to the point where these cost cutting measures are main street's only insulation against credit and predatory behavior of bankers.
Here are just some ways families can cut costs in a multi-generational setting:
1. Power costs are reduced and though one household bill could be a little higher, it would not be as high as two households' power bills in a non multi-generational setup. This includes cable as that service has become quite expensive. Online substitutes for cable are available but are somewhat inferior as of this writing.
2. Credit frugality can be maintained in a multi-generational family because people have more money in their pockets and the temptation to charge becomes less. The responsibility to the household takes over from the desire to charge. The wisdom of multi generations is wisdom that can be lost on young people out on their own.
3. Multiple income sources strengthen the family in a multi-generational setting. There are more ways to come up for the money for bills. And the rest can go to ones own bank account and for a better quality of life, without the need to charge for things. The accumulation of wealth should be the priority of main street USA, as this will cause a resurgence of economic stability for the entire nation. It won't be the wealth builder for the banks, but these greedy predators already have enough bonuses for a lifetime.
4. Transportation becomes more effective as you can have a two car family with each family only having to own one car. This can be an important savings as a lot of money can go down the rat hole of car repair.
5. All repairs can be absorbed by multiple streams of income. It is no longer necessary that just a single adult or a married couple have to be responsible for all the costs of repairs for the car, house and appliances. Those costs continually go up at an alarming rate. The weakness of the dollar means that the purchasing power families in the 1980's is no longer available to families today. Wages have increased, but the rate of increase for housing and for gasoline have far exceeded the increases in wages. Wages have stagnated since 2000 as well.And the stock market has tread water since 2000, and it is now 2012!.
6. And the most important consideration to understand when deciding to live with relatives is that predatory lending on the part of unscrupulous too big to fail banks and their subsidiaries is not finished. The lure of easy money will cause prices for housing to rise again if these organizations are permitted to offer hurtful loans as was done in the last decade. The ability of the financial overlords to manipulate housing prices and destabilize your single family budget is troubling to be sure. As a multi-generational person, you can escape some of that stability as you don't bite for the equity loans and other gimmicks that will certainly visit us on main street in a few years. Protect yourselves from these attacks that are sure to come.

The central banks are in the process of bailing out banks, and weakening the US dollar in order to improve our trade position. However, this has the effect of increasing the cost of everything, while wages decline. This is a serious long term attack on the value of the dollar. However, our efforts at multi-generational living will offset this behavior some by slowing down the turnover of dollars and by limiting the inflationary impact of Fed policy. It will allow less credit into main street, leading to a downward pressure on prices, to offset the Fed's policy.

Non Financial Benefits of Living in a Multi-Generational Environment

The personal benefits of living together can work better in an environment of necessary space for the family members. Communication between family members is important and space for each family member needs is important. Common interests can help generate a more enjoyable experience in the family practicing strategic frugality. Avoiding or fixing conflict is important in the extended family environment. There are more and more places where all family members can go and that is a recognition of the new normal of family unity.
People must realize that they should not feel guilty about living in extended families. The guilt is placed by banks and friends and some families. Remember how guilty some families were when enticing their sisters and brothers and nieces to buy overpriced housing? All this propaganda comes from the central banks ultimately and the banker controlled media. We need to understand that this guilt must go. The guilt is what bankers use to get people to go out on their own under capitalized, and in need of their credit products. That makes money for bankers, and money making is not as available for these predators in a multi-generational family. Too bad bankers!

Friday, January 25, 2013

Ken Lewis Was a Pawn in the Federal Reserve Bank Scheme

Andrew Cuomo is only partly right in going after Ken Lewis for throwing Bank of America's shareholders under the bus in the credit crisis meltdown. As background, the bank bought Merrill Lynch, which was so underwater on bad loans that BAC stock tanked.

The reason that Cuomo is only partly right is that he needs to prosecute Henry Paulson and Ben Bernanke as well. The chain of command in getting Lewis to approve the purchase of Merrill was Bernanke ordering Paulson ordering Lewis. I wrote at my Dontpaycreditcards.com website this:

The New World Order is a fascism, an American fascism, whereby corporations rule the world. Hedge funds are an integral factor in that control. Hedge funds, for example, started the stock market rally in early March, 2009, with their ability to leverage their purchasing power. Even CNBC reported this as fact. More importantly, the CEO of Bank of America, Ken Lewis, testified in late April, 2009, that he was required to hide from shareholders the fact that Merrill Lynch was a bad investment, a distressed company, because the Treasury Department ordered him to do so.
, then Secretary of the Treasury, told the world that while Ken Lewis was telling the truth, the real chain of command came down from Ben Bernanke of the Federal Reserve. Ben Bernanke told Paulson to order BAC to keep quiet about Merrill or else Lewis and the board of BAC would be removed! This is fascism and I will explain to you why it is fascism.
While Bernanke is appointed by the President of the United States, the fed chairman is independent of the power of all government authorities. He is the authority regarding the banking system.
Bernanke is indeed the authority regarding the banking system, a surrogate of the international banker cartel. It is interesting that the NY Times article fails to mention Paulson's comments. Here is what Paulson said as he recanted blaming the Fed chief:
Hank Paulson has recanted on what he  told Andrew Cuomo, which was that Ben Bernanke asked him to threaten to oust Ken Lewis and the Bank of America board if Lewis decided not to go forward with the Merrill deal.
Paulson says his words were his own and that Bernanke did not ask him to convey a specific message to Lewis, CNBC says.
This is such an outrage. Bernanke is clearly the one in charge. The Fed is a private bank and the Fed is part of the banker cartel worldwide, controlled by just a few families. Here is information about the Federal Reserve bank that everyone should know:

Lewis v. United States, 680 F.2d 1239 (1982)

John L. Lewis, Plaintiff/Appellant,
v.
United States of America, Defendant/Appellee.
No. 80-5905
United States Court of Appeals, Ninth Circuit.
Submitted March 2, 1982.
Decided April 19, 1982.
As Amended June 24, 1982.
Plaintiff, who was injured by vehicle owned and operated by a federal reserve bank, brought action alleging jurisdiction under the Federal Tort Claims Act. The United States District Court for the Central District of California, David W. Williams, J., dismissed holding that federal reserve bank was not a federal agency within meaning of Act and that the court therefore lacked subject-matter jurisdiction. Appeal was taken. The Court of Appeals, Poole, Circuit Judge, held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations. 

Tuesday, January 22, 2013

I Posted This at Business Insider



I posted this at Business Insider in response to Henry Blodget's trip to Davos. If you click on the link you will notice negative thumbs down to my post. I personally believe those interested in Davos are interested in another housing bubble and lending toxic loans. I personally think the housing market is broken for good. Here is what I posted to BI:

Lol, Henry, don't let the goodies corrupt you. :) I would like to know what the Davos folks think of my theory. It is that without lots of 20 percent fixed mortgages, house prices must be volatile going forward. When the 20 percent mortgage was king, back in the last century, house prices were stable. Now, they cannot be stable until either, wages drastically increase, or house prices drastically fall.

All that is happening now is that people are buying or mostly renting as multigenerational households. That is reducing demand and only the cash boys of the hedge funds are keeping the house of cards afloat, pun intended. I say that risk has gone through the roof for people aspiring to buy a house going forward as long a this manipulation of prices upwards continues.

The only way to sustain it is with no money down. That happened in Canada and now the markets are tanking as they backed off back to 5 percent down. Easy money and cash buying together are a recipe for house price disaster! What does Davos think, Henry?