The Slow Burn

Dr. Paul on the flood of cash into the markets last week:

Part 1:

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And the Kudlow Response:

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<!-- headline start --> <table border="0" cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td colspan="2"></td> </tr> <tr> <td colspan="2"></td> </tr> <tr> <td style="font-size: 20px; font-weight: bold;" valign="top" width="99%">Countrywide Borrows $11.5B From 40 Banks</td> <td rowspan="3" align="right" valign="top"></td> </tr> <tr> <td colspan="2"></td> </tr> <tr> <td valign="top" width="99%">Aug 16 08:51 AM US/Eastern
By STEPHEN BERNARD
AP Business Writer</td> </tr> <tr> <td colspan="2"></td> </tr> </tbody></table> <!-- date/author end --><!-- article start --> NEW YORK (AP) - The nation's largest mortgage lender borrowed $11.5 billion from a group of 40 banks to fund new loans, in a move that shows just how deep the lending crisis has become. Countrywide Financial Corp. said Thursday it made the move amid a credit crunch that has driven a number of its smaller peers to bankruptcy.
"Countrywide has taken decisive steps which we believe will address the challenges arising in this environment and enable the company to meet its funding needs and continue growing its franchise," Countrywide President and Chief Operating Officer David Sambol said in a statement.
The credit worries have grown as the secondary market for mortgages all but disappeared in recent weeks. Investors have worried about the value of loans and rising delinquencies and defaults.
Mortgage lenders rely on the secondary markets to borrow money to make more loans. The problems started as subprime mortgages—loans given to customers with poor credit history—started going delinquent and defaulting at faster rates.
The problems have spread to the broader mortgage market, making investors nervous about nearly all types of loans that cannot be purchased by Fannie Mae or Freddie Mac.
Such "conforming" loans are considered safer because Fannie and Freddie are government-sponsored entities. Countrywide said some 90 percent of the loans it originates from now on will be conforming loans or will meet its internal bank criteria.
By adjusting its product mix to originate Fannie and Freddie-approved loans almost exclusively, Countrywide will be cutting out most subprime, alt-A and jumbo loan products.
Alt-A mortgages are given to customers who either have minor credit problems or who cannot provide full income documentation required to get a traditional prime loan. Jumbo loans are mortgages for more than $417,000, the cap at which Fannie and Freddie will purchase loans. Jumbo loans typically are given to customers with excellent credit history.
Shares of Countrywide fell $3.67, or 17.2 percent, to $17.62 in premarket trading Thursday.
On Wednesday, a Merrill Lynch & Co. analyst downgraded Countrywide to "Sell," just days after calling it a "Buy," attributing the change to the rapid deterioration of the credit market. Friedman, Billings, Ramsey Group Inc. said Thursday a continued liquidity crunch for more than three months could send Countrywide into bankruptcy.
Asian stocks plunged overnight and European markets fell sharply Thursday as U.S. credit worries continue to spread to other countries.

 

I hereby declare the SB over.
We have accelerated beyond a slow burn. Time to turn over the soil and let the field rest for a few yrs.

Game over. Implosion of the system. All that's left is a liquidation of the population.

I had been looking for a timeline... The news looks at this in terms of daily ups and downs. Shrink the past 2 months into a week and you'd see blood in the streets. I couldn't have said the following any better:

http://goldismoney.info/forums/showthread.php?t=167003

 

<big class="pr">AP</big>
U.S. Foreclosures Rise Sharply in July
Tuesday August 21, 8:19 am ET
By Alex Veiga, AP Business Writer <table border="0" cellpadding="0" cellspacing="0" height="4"><tbody><tr><td height="4">
</td></tr></tbody></table>U.S. Foreclosures Rise Sharply in July With Nev., Ga. and Mich. Accounting for Highest Rates LOS ANGELES (AP) -- Foreclosure filings rose 9 percent from June to July and surged 93 percent over the same period last year, with Nevada, Georgia and Michigan accounting for the highest foreclosure rates nationwide, a research firm said Tuesday.The filings include default notices, auction sale notices and bank repossessions. The figures are the latest measure of the ailing housing market, which has seen defaults and foreclosures soar as financially strapped borrowers have failed to make payments or find buyers.
In all, 179,599 foreclosure filings were reported during July, up from 92,845 in the year-ago month, according to Irvine-based RealtyTrac Inc.
A total of 164,644 foreclosure filings were reported in June.
The national foreclosure rate in July was one filing for every 693 households, the firm said.
"While 43 states experienced year-over-year increases in foreclosure activity, just five states -- California, Florida, Michigan, Ohio and Georgia -- accounted for more than half of the nation's total foreclosure filings," said RealtyTrac Chief Executive James J. Saccacio.
Nevada posted the highest foreclosure rate: one filing for every 199 households, or more than three times the national average. It reported 5,116 filings during the month, an increase of 8 percent from June.
Georgia's foreclosure rate was more than twice the national average, with one filing for every 299 households. The state reported 12,602 foreclosure filings, up 75 percent from June.
Michigan reported 13,979 filings in July, a 39 percent spike from June.
California, Florida, and Ohio were among the states with the highest number of foreclosure filings in July, the firm said.
California cities continued to dominate top metropolitan foreclosure rates.
The state reported 39,013 foreclosure filings last month, the most by any single state, but the number of filings rose less than 1 percent from June's total.
The state's foreclosure rate was one filing for every 333 households, RealtyTrac said.
Florida's foreclosure filings fell 9 percent between June and July to 19,179. The July figure represents a 78 percent jump from a year ago.
RealtyTrac did not say if a single property received more than one notice. The company did not break out the exact property count.
In recent months, the mortgage industry has been battered by rising defaults and foreclosures, primarily driven by borrowers with subprime loans and adjustable rate mortgages.
Lagging home sales and flat or decreasing home prices have made it more difficult for homeowners who fall behind on payments to sell their homes and clear the debt, spurring the rise in foreclosure activity.

 

Take a look at this when you get a chance. More info than you want to know.http://www.tickerforum.org/cgi-ticker/akcs-www?post=502

 

As bad as the real estate market is, and as bad as it is going to get, it's working to my advantage. I'm a renter, with aspirations to buy in a bit less than a year. I like the market falling, I like it a whole lot. The nervous part is hanging tough with the money supply propped up, including my, um, nest egg. If the money supply goes before I buy, I'm stuck with a single wide (fixer upper) in the swamps some place. If my timing is lucky, it'll be a doublewide on dry ground.

Cross your fingers, folks. Looks to me it is just about time to lay in the hard goods, the durables, get your bux tied up in something either useful or tradable that will hold up for ten years or so at least. One thing worth the investment is a post hole digger for caching 8" plastic pipes full of MN and ammo.

 

<big class="pr">AP</big>
Home Prices: Steepest Drop in 20 Years
Tuesday August 28, 9:58 am ET
By Vinnee Tong, AP Business Writer <table border="0" cellpadding="0" cellspacing="0" height="4"><tbody><tr><td height="4">
</td></tr></tbody></table>S&P Says Housing Prices Fell in 2Q by Steepest Rate Since Its Index Was Started in 1987 NEW YORK (AP) -- U.S. home prices fell 3.2 percent in the second quarter, the steepest rate of decline since Standard & Poor's began its nationwide housing index in 1987, the research group said Tuesday.The decline in home prices around the nation shows no evidence of a market recovery anytime soon, one of the architects of the index said.
MacroMarkets LLC Chief Economist Robert Shiller said the declining residential real estate market "shows no signs of slowing down."
The report came a day after the National Association of Realtors said sales of existing homes dropped for a fifth straight month in July while the number of unsold homes shot up to a record level.
The S&P/Case-Schiller quarterly index tracks price trends among existing single-family homes across the nation compared with a year earlier .
A separate index that covers 20 U.S. cities fell 3.5 percent in June from a year earlier. A 10-city index fell 4.1 percent from a year earlier.
Housing is among the economic indicators closely watched by Federal Reserve policymakers.
After five years of rapidly rising home prices, the market stalled last year, with prices holding steady or falling as sales slowed. Since then, lenders have made it more difficult for some people to get mortgages by tightening standards just as foreclosures rise and some who borrowed at adjustable rates facing higher payments they can't meet.
Problems have spread from those with poor credit repayment histories to more creditworthy borrowers.
The Fed has taken a number of steps aimed at stabilizing the situation, and market watchers look further for a possible cut in the federal funds rate, which is the rate commercial banks charge each other for short-term loans. That rate has been kept steady at 5.25 percent for more than a year.
The Fed has its next regularly scheduled meeting on Sept. 18.
Fifteen of the cities surveyed for S&P's 20-city index showed a year-over-year decline in prices in June.
Prices in Boston dropped in June at a slower rate than they did in May, continuing a trend that started at the beginning of the year. In April 2006, Boston was the first metropolitan area to show a year-over-year decline, so any turnaround there could be an early sign of recovery.
S&P said it needed more data to determine whether Boston would be the first area to improve.
Detroit led the cities with the biggest price declines, with an 11 percent drop from June of last year. Other cities with falling prices included Tampa, Fla., San Diego and Washington, D.C., which all recorded drops of at least 7 percent.
Seattle and Charlotte, N.C., were on the small list of cities that saw prices rise in the same period. Seattle prices rose 8 percent in June while Charlotte saw a 6.8 percent increase.
In Monday's report, the National Association of Realtors said sales of existing homes dipped by 0.2 percent in July from June to a seasonally adjusted annual rate of 5.75 million units.
The median price of a home sold last month slid to $230,200, down by 0.6 percent from the median price a year ago. It marked the 12th consecutive month that home prices have declined, a record stretch.

 

If this question is on my mind, maybe it is on others as well. I have been watching all of this and frankly I just don't get it. What's all the hoopla about?

I can see if you had a large stock portfolio or if you made your living from the real estate market how you would be worried about the "bubble" bursting or the NASDAQ, INDEX, WIDGIT, WHACHAMACALLIT, THINGY being down. But for the average guy on the street, or the dirt road, how does all of that affect me?

I am not being fecetious, I really don't understand all of that. I have never played the stock market, all of the anagrams and numbers and this is up and that is down, S&P, hedgefunds, that's all Greek to me.

All of my assets are things I can put my hands on. I can shoot them, drive them, eat them, or live in them. My investments are gold and silver that I can go to the safe and count. I have a mortgage that is less than a years salary and a couple of vehicle notes.

I believe that some kind of economic meltdown is inevitable. The impetus for a world currency that the world bankers have been wanting for years.
But other than that manufactured "emergency" how does this current trend affect me?

If the housing sector slows down aren't there are other areas to work in? I haven't been able to stay in my chosen career exclusively. When the oil industry slowed down I would find work somewhere else. I have worked construction, as a welder, a bouncer, anything to make ends meet.

So other than those directly affected by a housing bubble burst, or a devaluation of a stock portfolio, how will all of this trickle down to John Q.?

 

Minuteman, Others here can better explain this but what you are asking is exactly what is going to blindside the masses when this thing falls over on it's side. It's not sub-prime mortgages, stock market dips, or lending institutions failing... All of those things are things that keep every aspect of our lives going in this Consumer Spending Economy.

Everything is so interconnected. It's so freaking stupid, irresponsible and interconnected that any of this BS can cause the World as we know it... etc. It doesn't matter that you are not in the markets and have no mortgage. The availability of eggs, paper and low cost air fare depend on those things. It's a lack of available cash to all large business. Sub-prime is a scape goat in this mes... the problem is the Fed itself


I hope Bear chimes in as he is so much better at drawing pictures for us to better understand.

 

MM, you ever read Patriots, by Rawles?

 

To Melbo, Oh yeah. I was thinking of "Patriots" watching all the news on the economy.

Bear, thanks. I didn't think that I would remain unaffected ,just wondering where the biggest hit would come from. I have been watching the ramifications of peak oil on the economy. I could see energy prices raising the price of everything through the roof. A financial hardship on a lot of folks and loss of a lot of jobs. But the creation of a lot more in the energy sector. Traditional and alternative.

Every action has an opposing reaction. That's kind of what I was wondering about. All the talking heads keep harping on the housing sector. So I figured if it slowed or stalled then those workers would go somewhere else.

But if the ups and downs of the stock market takes money out of the economy and causes astronomical price increases then I can see how it would affect everyone.

So what do you do? Stock up on essentials? Buy gold and silver? Ammo and beans. Most of us here are doing or have done that. So what else is there to do but sit back and watch.

I think what I was after was more of what do we watch for. What would it take to start the avalanch? What Wall Street anagram fund or market, or number on the board is the signal to batten down the hatches?

And I would imagine that those of us without a stake in the stock market and living in a rural area with little debt, we would be the least or perhaps the last affected?

 

Idle thoughts on above --
Get rid of all debt, period. If you have none, they won't look to get even by snatching your assets, at least not right away.
Get your land paid off, so it really is yours. (Yeah, I know about eminent domain, but if it comes to that, TPTB will be busy on other things.)
Get your appliances renewed, so the price increase won't affect you.
Stock up for a year of basic consumables, and learn how things grow on that land you purchased.
IMHO, if you have no need to spend on hardware, you can get by on not a lot of cash equivalents.
Sure, PMs will go up in value against an FRN, but remember the FRN is not a firm amount of trade. In other words, the value of PMs is demand driven based on what you can trade it for. This will draw huge flak, but PMs strike me as suitable for jewelry and art, not (directly) as a medium of exchange. (It'll do for backing another currency, no doubt about that. But we are dealing in tonne quantities for that purpose, not a tenth of a gram for a tube of toothpaste.) Find something else to sink FRNs into NOW that will maintain value for barter LATER. (There are damn few assayers around with scales that can weigh minute amounts of PMs, and even fewer that can determine the purity. Hacking off pieces of bullion makes the mint marks useless.) The only guys that got rich on gold rushes were the merchants, ditto for the traders in the fur era.

 

<!-- headline start --> <table border="0" cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td colspan="2"></td> </tr> <tr> <td colspan="2"></td> </tr> <tr> <td style="font-size: 20px; font-weight: bold;" valign="top" width="99%">Fed injects 31.25 billion dollars into markets</td> <td rowspan="3" align="right" valign="top"></td> </tr> <tr> <td colspan="2"></td> </tr> <tr> <td valign="top" width="99%">Sep 6 11:01 AM US/Eastern
</td> </tr> <tr> <td colspan="2"></td> </tr> </tbody></table> <!-- date/author end --><!-- article start --> The Federal Reserve added 31.25 billion dollars in temporary reserves to the US money markets Thursday in three different operations, the latest move to keep credit markets from drying up. The New York Fed added 7.0 billion dollars in 14-day repurchase agreements, 16 billion in seven-day repurchase agreements and 8.25 billion in one-day repos.
The Fed has injected some 200 billion dollars into the financial system since August 9 in a bid to boost credit flows which have seized up due to problems linked to the distressed US mortgage market.
The US central bank typically buys billions of dollars worth of securities from major banks, pumping extra cash into the banking system, which the banks are obliged to repurchase at a later date.




PUMP AWAY......more devalutation of your currency in action.

 

Why PM's..world wide portability. 100 troy oz of gold ([FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=+1]6 lb and 13.7142 oz[/SIZE][/FONT]) could be transported easily and give one the ability to start over in another country. You would be surprised how small 100 troy oz of gold actually is.

Why Silver? When the paper gets used for TP and flushed down the toilet, people will be using a barter system. With the fresh awareness of what paper currency flooded across the world can do, people who do not have barter items will be able to acquire items with a true currency and silver would fall into that catagory.