Our Awful Situation

Fed Chief Gives Gloomier Outlook On US Economy

Posted in Ben Bernanke, Economy, Federal Reserve by Charlie Kilo on July 15th, 2008

Its just the beginning, Ben. But you already knew that:

A weakening housing market, a strained banking system, and rising oil prices threaten the U.S. economy, and restoring financial market stability is a top priority, Federal Reserve Chairman Ben Bernanke said on Tuesday.

It was a gloomier assessment than the central bank’s policy-setting panel gave in late June, when it said risks to economic growth had diminished somewhat.

Ben Bernanke

Bernanke, in his semi-annual testimony on economic conditions to lawmakers Tuesday, acknowledged that financial markets had grown increasingly anxious in recent weeks, particularly over the financial condition of mortgage finance companies Fannie Mae and Freddie Mac.

He stressed that the outlook for economic growth and inflation was unusually uncertain.

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Jim Rogers: Fannie and Freddie … let it die!

Posted in Banking, Bankruptcy, Economic Depression, Federal Reserve, Mortgages, Recession by Charlie Kilo on July 15th, 2008

Way to go Jim Rogers!

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Confidence Ebbs for Bank Sector and Stocks Fall

Posted in Banking, Credit Crisis, Economic Depression, Economy, Federal Reserve, Foreclosure, Housing Crisis, Inflation, Mortgages, Recession, Wall Street by Charlie Kilo on July 15th, 2008

The house of cards begins to fall:

Even as the Bush administration moved to rescue the nation’s two largest mortgage finance companies, confidence in the banking sector spiraled downward Monday. 

In Southern California, lines snaked around branches of IndyMac Bancorp, the large lender that was seized by federal regulators on Friday, as customers hurried to withdraw their money. As the anxiety spread through the financial markets, two other big banks, one in Ohio and another in Washington State, were compelled to assert that they were sound.

Even as federal regulators issued assurances that depositors’ savings were safe, Wall Street analysts circulated lists of lenders that might be vulnerable. Shares of regional banks plunged in one of the sharpest declines since the 1980s.

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No More Surprises!

Posted in Banking by Charlie Kilo on July 15th, 2008

FDIC can only cover 1% of all deposits:

In the case of bank collapse, the FDIC has to step in to insure the value of deposits. Normally the FDIC attempts to maintain a fund at 1.25% of the value of its potential obligations. In recent months, however, this fund has slid to 1.19%, driven primarily by a rise in deposits, said Sheila Bair, chair of the FDIC. If this figure slides further to 1.15% it forces the FDIC to make moves to shore up the fund.

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The Biofuel Con

Posted in Biofuel, Energy, Global Warming by patriot on July 13th, 2008

The wonders of government intervention:

Rarely in political history can there have been such a rapid and dramatic reversal of a received wisdom as we have seen in the past 18 months over biofuels – the cropping of living plants, such as soya beans, wheat and sugar cane, to generate energy.

Two years ago biofuels were still being hailed as a dream solution to what was seen as one of the most urgent problems confronting mankind – our dependence on fossil fuels, which are not only finite but seemed to be threatening the world with the catastrophe of global warming.

In March 2007 the leaders of the European Union, in a package of measures designed to lead the world in the “fight against climate change”, committed us by 2020 to deriving 10 per cent of all transport fuel from “renewables”, above all biofuels, which theoretically gave off no more carbon dioxide than was absorbed in their growing.

Since then, however, the biofuels dream has been disintegrating with the speed of a collapsing card house. Environmentalists, formerly keen on this “green energy”, expressed horror at the havoc it was inflicting on the world’s eco-systems, not least the clearing of rainforests to grow fuel crops.

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Breaking: Paulson Seeks Authority to Shore Up Fannie, Freddie

Posted in Federal Reserve, Housing Crisis by Charlie Kilo on July 13th, 2008

Unbelievable:

Treasury Secretary Henry Paulson sought authority from Congress to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, aiming to stem the collapse of confidence in the largest sources of U.S. mortgage financing.

Paulson proposed that Congress enact legislation giving the Treasury temporary authority to buy equity “if needed” in the firms, and to increase their lines of credit with the department from $2.25 billion each. The Federal Reserve authorized the companies to borrow directly from the New York Fed, in a step that could provide funding before the bill is passed.

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The Week Ahead: Heavy Turbulence

Posted in Economic Depression, Stock Market by Charlie Kilo on July 13th, 2008

I predict that the Dow will hit 10.5 this week. I think we’ll look back on this week as the final economic act. The end game. The tipping point:

Expect heavy turbulence in the week ahead.

Analysts say hurdles for the stock market in the coming week include continued uncertainty about financial sector—specifically mortgage giants Fannie Mae and Freddie Mac —as well as the unrelenting pressure of rising oil prices.

There is also a heavy calendar of economic data, corporate earnings reports, plus two days of testimony on the economy from Fed Chairman Ben Bernanke.

“The financials are going to have a tough go of it next week,” said Jefferies and Co. Chief Strategist Art Hogan. In addition to the swirl of speculation that has driven Fannie and Freddie shares lower and lower, major banks are reporting results and are expected to unveil more write downs.

The announcement late Friday of the second biggest U.S. bank failure ever also adds to the gloom. After the bell, regulators reported that they seized IndyMac Bank, an aggressive mortgage lender with $32 billion in assets.

Also worrying Wall Street is Lehman Brothers stock, which has been spiraling downward on credit worries. “A resolution (for Fannie and Freddie) would help. Whether it’s a government take out or a back stop committing access to capital,” said Hogan.

James Paulsen, chief investment strategist at Wells Capital Management said oil will be a concern for stocks in the coming week but Freddie and Fannie could be more worrisome. “The meltdown of Freddie and Fannie (stocks) will not reduce the ability of what they can do,” but the market remains fearful, he said.

The Dow lost 1.7 percent, falling to 11,100 in the past week. For the first time in two years, it dipped below the key 11,000 level. The Nasdaq lost just 0.3 percent for the week and the S&P was down 1.9 percent, finishing at 1239. The financial sector declined 6.3 percent for the week, followed by consumer discretionary with a 4 percent loss. The winner was the S&P healthcare sector, up 1.3 percent.

“We’ll have a plethora of economic data but none of it will take away from the earnings data,” said Hogan.

Hogan said most earnings will be routine, like those from General Electric Friday which was in line with expectations. Yet, “I think we could get some upside surprises because we’ve priced in worst case scenario in a lot of areas,” he said.

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Massachusetts to consider allowing out of staters to marry

Posted in Homosexuality, Marriage by patriot on July 13th, 2008

No doubt some will start planning a road trip:

Lawmakers in Massachusetts are resurrecting a once-abandoned bill that would allow out-of-state duos to visit, obtain a Massachusetts “marriage” and then return home and create “havoc” with it, according to a pro-family organization.

“This bill would destabilize the Massachusetts marriage laws,” wrote Brian Camenker in his Mass Resistance alert on the issue. “Currently no out-of-state couple can get ‘married’ in Massachusetts if that marriage would not be legal in their home state. This would overturn that law.”

Massachusetts was the first state to allow same-sex duos to obtain a “marriage” license, several years ago. The action followed orders from state officials that county clerks must start issuing those certificates to duos other than the traditional one-man, one-woman couples. That in turn followed a Massachusetts Supreme Court opinion that said such couples could be recognized as “married.”

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Bill Moyers: Is the Fourth Estate a Fifth Column?

Posted in Conspiracy, Corruption, Fascism by Charlie Kilo on July 13th, 2008

Alas…Fascism:

Our media institutions, deeply embedded in the power structures of society, are not providing the information that we need to make our democracy work. To put it another way, corporate media consolidation is a corrosive social force. It robs people of their voice in public affairs and pollutes the political culture. And it turns the debates about profound issues into a shouting match of polarized views promulgated by partisan apologists who trivialize democracy while refusing to speak the truth about how our country is being plundered.

Our dominant media are ultimately accountable only to corporate boards whose mission is not life, liberty and the pursuit of happiness for the whole body of our republic, but the aggrandizement of corporate executives and shareholders.

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Europe faces Russian nuclear missile threat

Posted in European Union, Missile Defense, Russia by Charlie Kilo on July 13th, 2008

History repeats itself:

Russia is thinking of aiming nuclear weapons at western Europe for the first time since the end of the cold war, according to defence sources in Moscow.

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