muses of the moment

July 30, 2014

Blog Post from Martin Armstrong dated July 24, 2014

Click here for a post from Martin Armstrong dated July 24, 2014 entitled World Central Bank Secret Agreements.

From the link above:

That strategy depends on the rest of the world remaining strong. But if we see a turn down 2016-2020, it is hard to imagine Europe surviving the coming political storm.

groovygirl thought this was very important. This seems the only option to “control” the European debt implosion as everyone else is in a debt collapse, too. It’ s hard for a group of drowning men to save each other. May be impossible, but it gives us an idea of what the “first world”, US allies will try to do. Of course, there is that nasty unknown of shadow dark pool trading…..

March 26, 2014

The Loophole

Groovygirl has been searching for the loophole. The loophole that will keep the real estate market going (in the face of the complete fall off of mortgage apps in the last six months along with higher rates) through 2015, Martin Armstrong’s date; and the loophole that will trigger the next, and according to Martin, extended decline in the US real estate market thru 2032.

Click here for Martin’s paper and chart on the US real estate 78-yr cycle.

gg thinks she found the loophole.

Here is an article that groovygirl disagrees with, but it has some interesting information about the new Qualified Lending rules. From the linked article:

With the dislocations in mortgage lending since the housing bubble popped, Fannie Mae and Freddie Mac have increased their share of the mortgage market significantly. When combined with lending from the Federal Housing Administration and the Veteran’s Administration, the government or government-sponsored share of mortgage lending has climbed to more than 90 percent in recent years. That is an untenable situation in the long run, but is unlikely to change much this year.

The good news is that new Qualified Mortgage lending rules from the Consumer Financial Protection Bureau exempt home mortgages that qualify for purchase or securitization from Fannie and Freddie. As a result, mortgage lenders won’t have to tighten their mortgage-underwriting requirements in response to QM as long as they sell their loans to the GSEs.

Side musing: groovygirl is feeling the same way she felt in 2005 and 2006: who in the world is left to get a mortgage? Haven’t we maxed out all plausable applicants? , no, some deceased people were left to carry on the housing market boom until 2007. Groovygirl just did not think dead people could get a loan and did not factor that in. Again, gg is thinking, with unemployment at a real rate of 23%, who else can possibly qualify for a mortgage, especially with all these new rules? Aren’t we maxed out. Apparently, it’s the GSEs to the rescue to help this thing along for another year or so.

Click here, looks like even the corporate buyers are slowing. But, they are saving their capital for the big transfer from Freddie and Fannie? Read on.

And here is the loophole for the next trigger….

Replacing Fannie and Freddie with private insurance (but with government bailout, if necessary). Be careful, groovygirl actually threw up when she read this. Click here. A quote from the link at Forbes:

Our political leadership is proposing that we abolish Fannie and Freddie for the sins of the banks and the mortgage lenders, and then hand over the keys to these same architects of the mortgage disaster that brought us to the brink of financial collapse.  We are still healing and these are serious people proposing that we again legislate our way to mortgage prosperity, using no more common sense than that which got us into this mess.  What could go wrong?

gg says: yes, what could go wrong? It looks like on the surface that getting rid of GSEs and “selling” them to private underwriting companies is a good thing. It will get the government off the hook for future collapses, right? Wrong!

But, the real reason for this extremely unwise decision. The transfer of wealth.

Here is a little tidbit from Catherine Austin-Fitts. She clearly knows the possibilities. It is a repeat of the same game as 1980’s.

Click here.
gg says: But this time is totally different, we are in a global debt deflation, global currency crisis (Japanese currency trades can’t get us out of this one), and an aging population and debt-ridden younger population.

From Catherine’s link above. You pay for the detail. Bold is gg’s.

The current proposal to phase out Fannie Mae and Freddie Mac has the potential for ever greater back door shenanigans. Lot’s of money that can go out through the back door when the federal government turns huge amounts of federal credit over to private insurance companies. For example, when FHA engaged in coinsurance with private mortgage insurance providers in the 1980’s, the FHA General Fund lost 50% of the $9 billion underwritten in 3 1/2 years. They were paid a mortgage insurance premium of .50%

Given AIG’s traditional role in these and related areas, and Berkshire Hathaway’s relatively new activities in municipal bonds and local realtors, is this part of the work up to the ultimate in reengineering the federal budget and housing finance system by place? I want to see the players behind the scenes.

gg says: looks like we are right on schedule for the next mortgage/insurance/housing/banking/hedge fund crisis. The good news: fire sale housing prices for those with cash!

December 16, 2013


Click here for the zerohedge post about 2014 predictions that is making the rounds. Good info.

One thing that groovygirl would like to point out is that the debt implosion and currency reset and resulting depression is going on right now. Sometimes predictors use the future tense, these guys in the link above are better than most. We really should be using the present continuous tense (I am buying) as all these events are part of a larger shift process. Unfortunately, in English we do not have a sub tense, as some other languages do, that distinguish from a “being state” and a shorter term process state vs longer term process state. We must get that from the context. And if we misunderstand the context or it is unclear, we miss part of the message.

For example: I am buying gold. That could mean that I am buying gold continuously forever. It could mean I am buying gold in a present one time process sense (one purchase) and will stop that process in an hour, day, week, or year. Or it could mean something in between those two points.

groovygirl’s point is that we are currently in a global Depression, currency crisis, and debt implosion that is continuing into the foreseeable future. If you are not prepared for this Depression, you can get prepared now. But it will become harder and harder as the process goes on. (So start now, if you haven’t, and education is the first step.) And at some point in the future we will move out a depression and on to the next economic cycle.

When predictors say we will have another economic breakdown, people sometimes think they can wait to prepare or look for another sign post. Get ready now as best you can and continue to do so. This is a process of breakdown and reset, not a one-time event.

We are resetting now and continuing into the future.

Not we will have a reset. The reset started in 2001 or 2007, depending on who you read, and will continue into the future.

It is a paradigm shift on every level of global society and culture. It requires your continuous attention. Once you get it, you will see it automatically, get educated, and not fear. It is just a shift, we have had many others in the past that society lived through.

A reset in:

  • Economy: from dollar dominated global currency to something else. This is affecting all costs, prices, and profit margins, asset prices. Up and down. Debt implosion that is causing capital to hide or be lost. Reaction from government is money printing and higher taxes
  • Employment: going from employee jobs to a contract, consulting,  entrepreneurship driven “jobs”
  • Savings and retirement: redefining retirement in relation to economic stability to consumption to health care
  • Education: classroom to internet, debt based to cash based, industrial to informational
  • Housing markets: owning to renting
  • Infrastructure: new and improved to breakdown and lack of proper maintenance
  • Government and current institutions: central to decentralized
  • Wealth transfer: middle class to upper class
  • Debt based to more cash based economy, business, and investments
  • Peace to war

Short list: I am sure you can think of many others. And there will be many others that will be unforseen consequences of the breakdown reset and the reactions to it and the attempts to control it.

December 6, 2013

Friday Update

Everyone is very happy about the unemployment data. Groovygirl awaits the revision next year 🙂

The financial talking head today said that the “real stat” could be lower (at least he said it), but it doesn’t matter. Buy stocks and sell gold……is the mantra of the day. This could go on for a while.

Groovygirl is keeping an eye on that 30 year bond. It’s been flirting relentlessly with 4%. Many, many private and public loans (including commercial real estate) that need to be rolled over in the next 3 years are based on that number. Higher rates could turn a profitable investment into a bankrupt investment in one day. The Fed has spent the last 5 years and many billions keeping that rate down for the last roll-over from 2009-2012. That was only buying time, nothing else.

This rate moving higher will also effect the residential housing market.

If you are looking at a 10-year plan for an investment, real estate investment, or company assume this rate goes up. Make sure the forecasted profit will work (or not go negative) in an environment with an interest rate of 6, 8, or even 10%.

September 18, 2013

GEAB N 77 is here

Click here for latest free summary from LEAP 2020.

Their chart on muni-bonds is eye opening.

But it’s not only government bonds that are in freefall. Following Detroit’s bankruptcy, the Munibond market (US municipal bonds) is itself also extremely tense (7) as the following chart shows.

This is an alarming situation for many American cities which will inevitably lead to other significant bankruptcies in the coming months. In separating municipal and national debts, better numbers are shown certainly, but the risks are doubled.

September 13, 2013

US Housing Market

Filed under: Good Debt Bad Debt, Housing Market, Martin Armstrong, Real Estate Investments — totallygroovygirlfriday @ 1:36 am

This Chart of the Day is right in line with Martin Armstrong’s Real Estate Cycle.

Same Real Estate writing by Martin, but different link. Click here.

Martin predicts a return to 1950’s housing prices by 2032, with the decline halting from now until 2015 (as we can see from the chart) and then resuming its decline into 2032.

Groovygirl believes that the prices will be inflation-adjusted prices. And that the change in currency could cause the face value price to be the same when the purchasing power of the underlying currency has changed. Because we do not know what the face value will be, holding over 50% debt in investment real estate is risky. (It’s a gamble to assume deflation or inflation, when it comes to loading up on asset-backed debt.) Cash is king as another, more serious, round of housing price implosions, foreclosures, and under-water housing will begin very soon. GG suspects that the gov will buy mortgage assets out right as they are doing now but they can not do that until 2032. At some point that buying will break down and fast. It will probably coincide with the final collapse of the banking system. As we all know, the US housing market is completely dependent on debt creation to sustain itself and survive. This is time of great opportunity and great risk.

This cycle will be a major contribution in wiping out the middle class in the US. This cycle will have a major impact on the United States. I can not emphasize this enough to you.

This cycle is a huge risk to those holding equity in their own home and expecting to get it out for living expenses in retirement or for emergencies down the road. It is a huge risk for over-leveraged real estate investors. If your investment drops 30% in value, the banks, who will be hurting for any capital to save their own debt problems, will, at best, demand you refinance at a higher interest rate, stealing your cash flow, or ask for more cash capital to cover the short fall, or call in the entire debt and force you into foreclosure. This is exactly what they did in 2009-2010 before the Ben started buying mortgages. groovygirl is not confident that the government can or will save the housing market a second time. And if they do, gg doesn’t believe they can do it until 2032.

It is a huge opportunity for those with “cash” (or assets they can quickly turn into cash) to purchase real estate that will produce monthly cash flow at fire sale prices. And when I say fire sale, I mean the cheapest in over 60 years. It will be the buy of the century.

September 10, 2013

Latest Blog Post from Martin Armstrong dated September 9, 2013

Click here for Martin Armstrong’s latest blog post entitled Confiscation of Pensions dated September 9, 2013.

groovygirl says: even though Syria may or may not happen, Martin illustrates an excellent point. Some crisis will cause our creditors to stop buying US debt and sell what US debt they are holding as a consequence of ridiculous US foreign policy. Since you, individually, can not change US foreign policy, make sure your retirement money is protected.

September 4, 2013

August 14, 2013

US Housing Market

Filed under: Good Debt Bad Debt, Housing Market, The Banking Crisis, The Federal Reserve, Unemployment — totallygroovygirlfriday @ 11:58 am

Maybe this has something to do with that real stat of 23% unemployment? Mortgage apps down for 12th week in a row. Click here.

There are only so many cash buyers and hedge funds to buy up the slack to turn into rentals. More Fed easing!

August 6, 2013

It’s not all about the fiat currency…

Many people point to the Fed’s take over of currency-issuance in 1913 for the decline in the standard of living. This, of course, is a concern. But we have been through 3 economic depressions: two deflationary and one inflationary in the last 100 years. It is a slow erosion.

There are some other reasons for the place families find themselves in today: set up for failure.

Click here for 40 Percent of US Workers Make Less Than What a Full-time Minimum Wage Worker Made in 1968. This state of current US Workers is directly related to deflation of purchasing power of fiat currency and the movement of US jobs oversee without a plan (especially in the higher education industry) to create a new industry to replace medium wage (middle class) jobs.

First of all, thanks to our very foolish politicians American workers have been merged into a global labor pool where they must directly compete for jobs with workers on the other side of the planet that live in countries where it is legal to pay slave labor wages.  This has resulted in millions upon millions of good jobs leaving this country.

Click here for Trying To Stay Sane in An Insane World Part 2. There are several excellent economic charts in the link. But one of the best is the consumer credit chart. Total consumer credit in 1968 was under $2 billion dollars, it is now over $2,800 billion dollars. This is how people are keeping up with the decrease in purchasing power of the US dollar and the decreasing availability and decreasing of wages of middle-America jobs. The most current segment of society to use credit to live, a result of the recent surge on the chart, is the college student.

Debt steals two things from the debt-slave: current spending freedom and future spending freedom:

Must have higher monthly income streams to service (old and new) debt interest payments. You might need to stay in a job you hate, move to an area you don’t like, get into a field that you have no passion for. Recessions, unemployment, and depressions force people down for the count instead of allowing them to just dial back spending for a while. This is a big difference in the long-term health of the economy and health of society.

Debt is not just debt, but negative savings: compound interest makes use that your purchase on credit is at least 2 and a half times the original cost if it is not paid off right away. With payday loans it can turn into 1000% the original cost very fast. Your money is going to interest instead of savings for future needs, like emergency funds, retirement, new car, unemployment savings reserves, down payment on a house, college education, etc.

Debt keeps people trapped long-term. This is the birth of the debt-slave, chained to a cubicle.

Side musing: it is ironic that everyone is talking about taxes (government wants more, people want less). When if people didn’t spend half their paycheck on debt service, they wouldn’t be so upset about current or higher future taxes. Government policies created their own demise.

So what can you do about this? Well, you can’t do much about jobs moving overseas and you can’t do much about the Fed, but…. you do have power.

Pay down current debt and do not acquire more debt. Will it be easy and quick, nope. Will it bring you and your family more freedom, yes!

From the link above:

The citizens, formerly known as the hard working American middle class, must accept their share of responsibility for the desperate circumstances we face. Some are guiltier than others, but we only need look in the mirror to find the culprits in allowing the bankers, politicians, military industrial complex, mass media and vested corporate interests to gain control over our country. The introduction of the credit card by Wall Street bankers as a must have for every citizen in the early 1970s coincided with the inflationary demons unleashed from Pandora’s Box by Nixon and the Federal Reserve, along with the peak of cheap U.S. oil production. Thus began four decades of real wages declining and consumer debt soaring. A nation of people that believed in saving before purchasing were given the freedom to spend money they didn’t have. The statistics paint a picture of a society gone mad:

  • Credit card debt grew from $5 billion in 1971 to $856 billion today, a 17,000% increase in forty-two years. GDP rose from $1.2 trillion to $16.6 trillion, a mere 1,400% increase. Real GDP only grew by 300%. Wages have grown from $600 billion to $7 trillion, a 1,200% increase. Real disposable personal income per capita grew from $17,200 to $36,800, a 200% increase.

  • Non-revolving debt (auto, student loan) grew from $127 billion in 1971 to $1.98 trillion today, a 1,600% increase.

  • There are over 600 million credit cards in circulation within the U.S. and Americans charged over $2.1 trillion last year.

  • Over 40% of Americans carry a balance on their credit card from month to month, with an average balance of $8,200 and an average interest rate of 13%.

  • 40% of all low and middle income households must rely on their credit cards to pay basic living expenses like rent, mortgage, utilities, groceries, real estate taxes, income taxes, along with their “needed” iPhones, HDTVs, bling, stainless steel appliances, and tattoo artwork.

  • Wall Street banks have written off over $300 billion in credit card debt since 2008 (and passing the bill to taxpayers), while bilking their customers out of $60 billion per year in late fees and overdraft fees.

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