muses of the moment

October 21, 2010

Printing press set for higher gear

Filed under: Bank bailout, Dollar Crisis, Housing Market, The Banking Crisis, The Dollar Crisis, US Government Debt — totallygroovygirlfriday @ 7:48 am

The Fed/Gov is getting to the point where they will have to choose what gets bailed out/saved and what doesn’t. I guarantee that you and I are not on the bailout list.

The expenditures listed below are estimates complied from news releases of the last few months and are above and beyond regular government expenses. So, talk about cutting government expenses and raising taxes misses the point. That is pocket change compared to the following.

Already spent or under obligation in the last 2-10 years:

  • 4-6 trillion on 2 wars in last 10 years for actual combat expenses and care for wounded vets
  • 50 billion for medicare and social security future obligations for current US population
  • 2 trillion on 2008-2009 bank/AIG/etc bailouts
  • 1 trillion plus on Fannie and Freddie purchase of toxic mortgages from banks in 2008-2009
  • 1 trillion plus in revolving debt for bank discount window and loans to foreign banks
  • 1 trillion on economic stimulus in 2009-2010
  • 100 billion on covering liabilities and deposits of failed banks (2007-2010) FDIC keeps saying they will get some of that back. Right.

To be spent, when looking at the current economic crisis (Oct. 2010):

  • 4-40 trillion on buy-backs of worthless or over-valued mortgage back securities (another bank bailout)
  • 2 trillion plus on interest on outstanding debt for the next 5-10 years, depending on how much more debt is issued and how high rates are
  • 1 trillion plus on another round of economic stimulus
  • 1-2 trillion on continued war efforts
  • 1-10 trillion to bail out of bankrupt States plus their pension funds (CA needs 5 trillion alone for the next 5-10 years)
  • 1-20 trillion on bailout-loans to foreign banks for current bank collapse and bailouts due to mortgage mess (we have no idea how this new mortgage mess will effect the rest of the globe, last time, it didn’t go well).
  • at least 10 billion on unemployment and care for the poor for next 2-5 years depending on severity of unemployment
  • 500 billion to 1 trillion to cover deposits for continued closing of US banks (at least 50% will go under in next 5-10 years)
  • The Fed is officially talking about QE2 starting Nov.2, 2010 and injecting 100 billion per month on the above listed items.

This is really starting to add up. That’s a lot of debt the Fed has to issue. How long do you think the world is going to continue to purchase US debt, when we are looking at numbers like these? How could a creditor possibly think we could pay that kind of debt back or even meet the interest payments?

Potential problems not listed above:

  • 400 trillion in (non mortgage-related) global “secured” debt obligations
  • Peak oil/peak energy (that will effect food prices and all other aspects of modern life)
  • Lack of capital investment in maintenance of US infrastructure
  • Lack of capital investment in non-fossil fuel energy infrastructure in US
  • Raw material trade war
  • Complete breakdown in global credit/debt availability just to sustain business activity
  • Aging population and rising health care costs for first-world countries
  • Rising wealth and consumer demand in emerging market countries
  • Currency war as global countries move away from USdollar as trading currency and store of capital.

We are not just talking about a trillion here and a trillion there anymore, we are talking tens to hundreds of trillions of dollars in losses that will have to be printing away or collapse. The end result will be the same.

This is what a K-wave Winter cycle is all about. A collapse of unsustainable debt and all that goes with it.

There will be a run on US Treasuries.

The USDollar will be revalued (it will lose at least half its current purchasing power).

Hyperinflation will occur.

The US population nor its government officials are prepared for this.

You must be prepared.

Side musing: if you really want to freak out, check this out.

Mortgage Mess…foreclosure-gate…fraudclosure

Filed under: Bank bailout, Economic Crisis, Housing Market, Odds 'n ends, Taxes — totallygroovygirlfriday @ 1:04 am

Automatic Earth did a great job of summing up the latest “can of worms” in the mess currently known as “foreclosure-gate”.

Click here.

If for whatever reason any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.

To repeat: if the chain of title of the note is broken, then the borrower no longer owes any money on the loan.

Read that last sentence again, please. Don’t worry, I’ll wait. You read it again? Good: Now you see the can of worms that’s opening up.

Therefore, get your attorney and start suing.

Home owners should start suing. Investors, hedge funds, and pension funds who hold securities based on the mortgage market should start suing. Taxpayers who now own 80% of this toxic mess (thru Fannie and Freddie) should start suing.

If the IRS can rack up penalties and interest for a skipped step, groovygirl thinks the American people can do the same thing to banks and the government who is bailing them out with taxpayer money.

This post, of course, is only groovygirl’s humble and insignificant opinion.

Side musing: gg really liked this article from a Miami attorney on the mortgage mess. Gives a little perspective about when law meets reality. Click here.

Side-side musing: another great one from Click here. Investors, grab your attorneys. You are holding a load of complete crap.

Then, we worked with underwriters of the deal to perform due diligence.  That is where this process breaks down. They use sampling to verify the makeup of the pools.  There is a lot of pressure to get the deals done in a timely manner so they don’t have time to check every asset.  The most I’ve ever checked on a deal is 30%. We’ve done some pools that came back very different from what the trader originally told us.  I’ll give a personal example and show how  it relates to the foreclosure crisis.

it still leads me to my big problem, that there were far too many instances of incorrectly labeled loans, incorrect documentation such that the pool information which went on the deal book could be very different from the actual makeup of the pool.

Ladies and gentlemen, that is FRAUD.

And this, click here.

April Charney – a consumer lawyer with Jacksonville Area Legal Aid – and CNBC’s Dennis Kneale noted in February 2009 that courts have found that some mortgages have been sold again and again to different trusts, when they should have only been sold once.

Oops. Try and collect on that asset. The state pension funds are full of this crap. Do not count on your pension for very long.

The rabbit hole just keeps getting deeper and deeper.

Update: China is showing the world they mean business, the US is clueless. From Jim Sinclair’s site:

Jim Sinclair’s Commentary

The biggest news today is buried. It is not the .25 basis point rise in China rates. It is China embargoing the US on strategic material.

The Strategic Material War I wrote about in 1983 has been declared today. The United States’ strategic metals and materials stockpile is a joke. It is made up of old science, the wrong things, and is most likely packed and stored incorrectly, therein leading to its downgrade over time.

These items are key ingredients in all advanced weapons systems and high tech devices.

China did the same to Japan over a disagreement. In one day Japan folded.

I imagine there is no one in Washington that even knows what a rare earth item is. They are probably wondering why China would embargo worthless dirt.

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