I haven’t been posting too much over the past several months as things in our country continue to deteriorate at the usual pace, fast and un challenged!
The economy is fragile and the ‘medicine’ that Ben Bernanke is giving the ‘system’ will soon become the poison–it is inevitable. This is not just me spouting off at the mouth but several very good economists with pretty darn good track records as well.
Take a look at this article, read it and weep for what once was and what is coming soon.
Major Bank, Economists Agree: Market Collapse Will Strike in 2013
Wednesday, 09 Jan 2013 10:22 AM
By Christian Hill
According to a major bank, a pair of noted economists, and one controversial billionaire, 2013 will be a “year of terrible reckoning” for the stock market.
JPMorgan just released its outlook for the first quarter. Surprisingly, this regularly bullish company has reversed course and revealed an ominous chart that every investor needs to be alerted to.
As you can clearly see, stocks have retraced the pattern from the last two big market rallies (averaging over 100%), and now face a massive decline in 2013 (of over 50%).
JPMorgan isn’t alone in its stark predictions.
Economist and NYU professor Nouriel Roubini has said in recent interviews that there is a chance that an economic “perfect storm” will devastate global markets in 2013. He points to a worsening eurozone crisis, a hard landing for the Chinese economy, and a war in the Middle East that could push oil prices above $200 a barrel.
Agreeing with Roubini’s worrisome outlook is billionaire Jim Rogers. In a recent interview with Yahoo Finance, Rogers says regarding 2013, “You should be very worried, and you should prepare yourself.”
Rogers referenced a little-known economic cycle that proves the United States experiences a slowdown every four to six years (and 2013 marks four years since our last slowdown).
Perhaps most alarming of all are the predictions made by economist Robert Wiedemer.
In a recent interview for his New York Times best-seller Aftershock, Wiedemer says, “The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation . . . starting in 2013.”
Editor’s Note: Watch the disturbing interview with Wiedemer. click here to view
Now before you dismiss Wiedemer’s claims as impossible or unrealistic, consider that he and his team of economists correctly foresaw the real estate collapse in 2006, the stock market crash of 2008, and the federal debt bubble plaguing America now.
And bear in mind, Sam Stovall of Standard & Poor’s has stated that Wiedemer “makes a compelling argument for a chilling conclusion,” and MarketWatch’s Paul Farrell called Wiedemer’s work “your bible.”
When the interview host questioned Wiedemer’s latest data, the author unapologetically displayed shocking charts backing up his allegations, and then ended his argument with, “You see, the medicine will become the poison.”
The interview has become a wake-up call for those unprepared (or unwilling) to acknowledge an ugly truth: The country’s financial “rescue” devised in Washington has failed miserably.
Wiedemer says blame lies squarely on those whose job it was to avoid the exact situation we find ourselves in, including current Federal Reserve Chairman Ben Bernanke and former Chairman Alan Greenspan, tasked with preventing financial meltdowns and keeping the nation’s economy strong through monetary and credit policies.
Shocking Footage: See the eerie chart that exposes the ‘unthinkable.’
At one point, Wiedemer even calls out Bernanke, saying that his “money from heaven will be the path to hell.”
But it’s not just the grim predictions that are causing the sensation; rather, it’s the comprehensive blueprint for economic survival that’s really commanding global attention.
Now viewed over 50 million times, the interview offers realistic, step-by-step solutions that the average hard-working American can easily follow.
The overwhelming amount of feedback to publicize the interview, initially screened for a private audience, came with consequences as various online networks repeatedly shut it down and affiliates refused to house the content.
Bernanke and Greenspan were not about to support Wiedemer publicly, nor were the mainstream media.
“People were sitting up and taking notice, and they begged us to make the interview public so they could easily share it,” said Newsmax Financial Publisher Aaron DeHoog, “but unfortunately, it kept getting pulled.”
“Our real concern,” DeHoog added, “is what if only half of Wiedemer’s predictions come true?
“That’s a scary thought for sure. But we want the average American to be prepared, and that is why we will continue to push this video to as many outlets as we can. We want the word to spread.”
I urge you to take the necessary precautions as things could get rather weird in the coming days and months ahead! No one knows the exact moment, but many will point back in time and pick some arbitrary event that ’caused it all’. Ben Bernanke will most likely avoid ridicule. Many have been, are and will be responsible for our economy and none will be made responsible.
AS helicopter Ben Bernanke testifies before Congress, we see yet again that all the quantative easing that the Fed has done has yet to ‘jump start’ the economy. At best and this is a huge supposition, the economy isn’t in total shambles.
On the human end of things, most people that are still without jobs their lives are in complete shambles. I think it is fair to say that there are millions out there that would love to work, unfortunately there are damn few jobs out there.
Why can’t those that had jobs become employed you might ask? There are so many reasons such as; Age discrimination, the older you are the more likely that you are laid off first and will be the last to be hired-if at all; many have simply given up looking for a job now, after 99 weeks the benefits are all gone and the psychological toll on many is overwhelming. Calls to suicide hot lines have tripled since 2008.
The devastation to the economy just gets worse as these unemployed folds that have mortgages lose their homes, over 6 million foreclosures since 2008. Entire neighborhoods are affected as prices fall dramatically with no buyers. Many end up in shelters or if fortunate with family and/or friends.
The health consequences are also huge as the stress causes multiple health issues and without money to pay for insurance and/or treatments the medicaid system is taxed to the limits.
These are just some of the effects of our current state of affairs. The problems in our economy are now so systemic that it will take someone with incredible courage to ‘right this ship’. Again unfortunately politicians are not the guys that will do anything about this. They don’t really know enough about economics and business to make good judgement calls. They depend on special interest groups to educate them and that is really unfortunate as these groups have highly skewed view points.
Alas, it always comes down to money! Those that can pay the lobbyists get the rules that favor them to the exclusion of everyone else. It can get better but it will take the efforts of everyone united.
Why aren’t these unemployed out in the streets protesting the lack of attention on the economy? Well when you don’t have anything it is very difficult to drive down the street much less go farther afield to attend a rally….
What a system, wipe out the middle class and take away everything, even their voice! Have we become a feudal society?
Following up on yesterdays post about Stockton CA and the likelihood of having to file bankruptcy…Well it is official they are filing Chapter 9. Just a sign of the times, first the citizens then the cities themselves as real estate prices and incomes fall…
This has not stopped and as we are seeing world wide, the trend is still in place…falling real estate, employment and incomes! I expect people to get pretty mad. Can’t believe that the people here are not more vocal about it…although when we do become ‘vocal’ the press doesn’t seem to notice. While in Europe people get really vocal…of course our press doesn’t notice that too much…would be a distraction from all the great reality TV shows now wouldn’t it?
Stockton, California, to File for Bankruptcy Protection
By Steven Church and Alison Vekshin – Jun 27, 2012 7:52 AM MT
Stockton, California, said it will file for bankruptcy after talks with bondholders and labor unions failed, making the agricultural center the biggest U.S. city to seek court protection from creditors.
“The city is fiscally insolvent and must seek Chapter 9 bankruptcy protection,” Stockton said in a statement released yesterday after its council voted 6-1 to adopt a spending plan for operating under bankruptcy protection. “In addition to the bankruptcy petition, the city will file a motion with the courts to share information from the confidential mediation.”
Stockton Bankruptcy Slide Measured in Murder Surge
June 20 (Bloomberg) — Stockton, California, Mayor Ann Johnston and residents talk with Bloomberg’s Alison Vekshin about the city’s surging murder rate The number of murders in the city has more than doubled since 2008 as Stockton cuts service and staff to stay afloat. Stockton, about 80 miles (130 kilometers) east of San Francisco, is poised to become the largest city in U.S. history to seek bankruptcy protection. (Source: Bloomberg)
The budget for the fiscal year beginning July 1 calls for defaulting on $10.2 million in debt payments and cutting $11.2 million in employee pay and benefits under union contracts that could be voided by the bankruptcy court. The city of 292,000 may file its petition as soon as today.
“It’s a sad day in the city of Stockton,” Mayor Ann Johnston said before the budget vote. “I see no other solution to this.”
Municipal bankruptcies in the U.S., while still rare compared to corporate filings, became more common after the housing and financial crisis began. Ten of 42 cases filed since 1981 came in the past four years, according to court records.
The biggest municipal bankruptcy was filed last year by Jefferson County, Alabama, which is trying to restructure $4.2 billion in debt, most of which is tied to sewer bond deals tainted by corruption.
Stockton’s bankruptcy will probably resemble the 2008 case of another California city, Vallejo, which exited court protection last year, bankruptcy attorney Dale Ginter said. Both cities have been hurt by high labor costs, particularly health insurance for retirees, he said.
“Retirees are not going to be happy,” said Ginter, who represented retired Vallejo workers in that city’s bankruptcy. “My prediction is that retiree health care is cut. I wouldn’t be surprised to see it cut to zero.”
Bondholders and current employees will probably also have to take less, said Ginter, who has reviewed city financial reports.
“We think Chapter 9 protection is the only choice left,” City Manager Bob Deis told the City Council, referring to the section of the federal bankruptcy code that applies to municipalities.
Stockton’s expected bankruptcy filing won’t create a sell- off in the $3.7 trillion municipal-bond market because investors of tax-exempt debt have known about the city’s budget deficit and rising health-care expenses, Matt Fabian, managing director at Concord, Massachusetts-based Municipal Market Advisors, said in a telephone interview.
“There’s been enough talk about municipal bankruptcy and worries about it that when one actually happens, it’s a little beside the point,” Fabian said. “It’s hard to see one city’s faltering pushing the market weaker.”
Investors will buy municipal debt for its relative safety and low default rate, said Chris Ryon, who helps manage $8.25 billion of municipals, including a $367 million California fund, at Thornburg Investment Management. The average cumulative default rate in the past four decades was 0.13 percent for municipal bonds versus 11.2 percent for corporate debt, Moody’s Investors Service data show.
“The overall default rates in municipal bonds are extremely low and Stockton is a small participant in the $3.7 trillion market,” Ryon said in a telephone interview.
A taxable Stockton pension bond sold in 2007 and due September 2037 traded June 25 as high as 80.68 cents on the dollar, down from when it traded as high as 102.03 cents on the dollar on Feb. 15, according to data compiled by Bloomberg.
The City Council’s approval paves the way for Deis to proceed with the bankruptcy filing. Stockton, a river port about 80 miles (130 kilometers) east of San Francisco, ran out of options after three months of negotiations with creditors ended June 25 without enough concessions to close a $26 million deficit.
“We’ve worked really hard with our creditors and we’ve been unable to close the gap,” Deis said. “If we get any agreements in the near future, then those will be honored in Chapter 9.”
Bankruptcy would allow the city to break contracts with creditors without the threat of lawsuits, though it won’t assure the city’s recovery, he said.
“This basically is the equivalent of the pause button,” Deis told the council. “It provides you a breather to adopt a budget and maintain services during this next year. It doesn’t guarantee success in the long term. That’s going to require some negotiating and some give-and-take.”
Dale Fritchen, the only one of seven council members to vote against the plan, said he wasn’t convinced there was no alternative.
“I think it’s going to hurt Stockton more than it will help Stockton,” Fritchen said. “For heaven’s sake, I hope I’m wrong.”
In February, the city began a process during which it is required by state law to review its finances with help from a “neutral observer” who is picked in cooperation with creditors. That review is similar to a mediation process in which creditors have a right to participate, according to the law, passed last year at the request of California labor unions.
Salaries for current workers and benefits for them and former employees account for about 68 percent of the city’s general fund, the city said.
The city has cut services so much the past two years that “public safety is at a crisis level,” officials said in a June 5 fiscal report. Unemployment, at 15.4 percent in April, was almost double the national average, according to the U.S. Department of Labor.
Stockton ranked third in murders last year among large California cities, behind Los Angeles and Oakland, according to FBI data.
The collapse of the housing market left Stockton to contend with mounting retiree health-care costs and eroding tax dollars in the wake of the recession, amid accounting errors that overstated municipal revenues. One in every 195 homes in Stockton’s metropolitan area received a foreclosure filing in May, the fifth-highest rate in the U.S., according to RealtyTrac Inc.
Negotiations with creditors began on March 27 and were extended to June 25. The California Public Employees’ Retirement System, the largest U.S. pension fund, and San Francisco-based Wells Fargo & Co. (WFC), the nation’s biggest home lender, and bond insurer Assured Guaranty were among at least 18 creditors involved in the talks.
Last year, three municipalities entered bankruptcy, including Jefferson County.
Chapter 9 of the U.S. Bankruptcy Code is reserved for cities, counties and quasi-governmental bodies, such as special water or tax districts. It offers more protection from creditors than Chapter 11, which is used by companies and wealthy individuals.
Did you see the little snippet in there about the surging murder rate in Stockton. Remember this is the largest city yet to file so far…I stick to my recommendation yesterday: As the judge says “I suggest that the citizens arm themselves’…or everyone agree to become 100% nonviolent…that won’t happen today I am pretty sure!
Just a day after Greece voted to ‘stay in’ the EC, Spain’s bond yields hit Euro record highs, saying the markets are not at all convinced that this crisis is over-not by a long shot!
We will continue to see deterioration in the public markets as yields in Europe rise predicting more bailouts, read more money/liquidity injected into markets. I think this will eventually hit the U.S., may take a few more months but same result.
Europe’s economic crisis will not go away easily. The heads of the various countries there appear to be completely confounded as to a workable solution. The austerity programs that Germany wants to impose are really hurting the domestic markets where imposed and the people are not going to go along with these measures for long.
Spain, even without the terrible measures imposed on Greece, already has 50% unemployment in the under 35 age group. Where there is no hope there will always be unrest. Just look at the Mid East, unemployment and poor economies have created an explosive situation in many countries.
Already we are seeing the signs of unrest, first in Greece (which of course main stream media didn’t cover) with all the rioting that has been going on and now we begin to see these confrontations cropping out all over Europe.
Are we headed for a complete and total meltdown, the arrival of anarchy? Is there a way to be prepared for the arrival of this event?
Even if you disagree with what the Occupy participants are protesting, although I can’t see how you could,they have the right to protest..in my opinion.
Further, the actions by the police in almost every instance of the ‘clearing them out’ exercises has been rather violent and intimidating and has resulted in needless injuries and arrests. The more the police state raises its ugly head the more galvanized we should all become!
Why do Wall Street Bankers get off with but a slap on the hand, if that, yet protesters, most of whom are non violent, are being harassed and thrown into jail? Shouldn’t it be the other way around?
It is time to change America…past time!
WASHINGTON – Dozens of U.S. Park Police officers in riot gear and on horseback converged before dawn Saturday on one of the nation’s last remaining Occupy sites, with police clearing away tents they said were banned under park rules.
At least seven people were arrested in the move, which left large swaths of open space at the encampment and raised questions about exactly what would remain.
Police said they were not evicting the protesters. Those whose tents conformed to regulations were allowed to stay, and protesters can stay 24 hours a day as long as they don’t camp there with blankets or other bedding. Police threatened to seize tents that broke the rules and arrest the owners.
The police used barricades to cordon off sections of McPherson Square, a park under federal jurisdiction near the White House, and checked tents for mattresses and sleeping bags and sifted through piles of garbage and other belongings. Some wore yellow biohazard suits to guard against diseases identified at the site in recent weeks. Officials also have raised concerns about a rat infestation.
By Saturday afternoon, seven were arrested, including four who refused to move from beneath a statute and three who crossed a police line.
The National Park Service, which has allowed the protesters to remain in the park for months, has said it will give protesters notice if police decide to clear the park.
Protesters had braced for a confrontation when the park service said it would start enforcing the ban Monday, though no crackdown happened until Saturday.
Despite what police said, some protesters said the crackdown amounted to eviction.
“This is a slow, media-friendly eviction,” protester Melissa Byrne said. “We’re on federal property, so they have to make it look good.”
The officers poured into McPherson Square just before 6 a.m., some on horseback and others wearing routine riot gear. As a helicopter hovered overhead, they shut down surrounding streets and formed neat, uniform lines inside the park.
The police initially turned their focus to dragging out wood, metal and other items stored beneath a massive blue tarp — which protesters call the “Tent of Dreams” — that had been draped around a statue of Maj. Gen. James McPherson, a Union general in the Civil War. Protesters agreed to remove the tent.
Later, in a lighter moment, Park Police used a cherry-picker to remove a mask of 17th-century English revolutionary Guy Fawkes that had been placed on the statue.
The mood turned more tense, with occasional shoving, in the afternoon as protesters complained police were indiscriminately seizing tents.
Jeff Light, a lawyer who represents a couple of Occupy protesters and who was at McPherson Square, said he expected to challenge the police actions in court. He said he was frustrated because a lawyer for the government had said there were no plans to seize tents that complied with the regulations.
“Here they are,” Light said, “doing something different than what they said in court.”
The Washington demonstration is among the last remaining Occupy sites, enjoying First Amendment protections by virtue of its location on federal park service property.
Similar to the New York protesters, who strategically occupied a park near Wall Street to highlight their campaign against economic inequalities, the District of Columbia group selected a space along Washington’s K Street. The street is home to some of the nation’s most powerful lobbying firms
At every opportunity write about the police state, put up your personal experiences. Heck try to write one of the insensitive B*^&%$# in Congress…we must put forth the effort.
The not so funny thing about labor statistics, especially unemployment numbers, are the multiple ways to evaluate them and of course, Main Stream Media’s attempts to make a silk purse from a sow’s ear!
It appears that over 1 million jobs have just evaporated, thus reducing the overall workforce…ie people with real jobs. So the reverse is that some people just dropped out of the calculation of unemployment, which of course will make that number look better since there are fewer people unemployed included in the final calculation.
Also, there appears to be a ‘softening’ in the quality of jobs. Higher paying jobs are losing ground to the lower paying manufacturing and construction jobs. This is good and bad, more of the later mean that some type of rebound might be remotely possible now. Maybe, just maybe some of our manufacturing jobs are coming home! We can only hope this is the start of a trend….
Unemployment disaster: 1.2 million driven out of the workforce in a single month
It’s the headline that a President facing re-election with a dismal economic record didn’t want to see:
1.2 million people driven out of the workforce in a single month!
A frantic White House exploded into damage-control mode, as a deeply shaken President Obama retreated into his chambers. Nervous spokesmen fanned across the airwaves to stammer apologies, search for silver linings among the storm clouds, offer campaign boilerplate about “hope and change,” and desperately search for some way to blame George Bush for an absolute unemployment disaster that occurred over three years after he left office…
What’s that, you say? You didn’t see that headline? Well, of course not, silly. All you’re seeing in the headlines is good news, because the official, heavily-massaged U-3 unemployment rate fell to 8.3 percent. Fewer people in the workforce means the percentage of unemployed people in the workforce drops.
ZeroHedge is incredulous:
A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million.
No, that’s not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation.
As for the quality of jobs, as withholding taxes roll over Year over year, it can only mean that the US is replacing high paying FIRE jobs with low paying construction and manufacturing. So much for the improvement.
Now, I suspect that while a lot of people dropped out of the workforce last month, part of what we’re seeing here is some numerical mutation that caused an abnormally large chunk of the labor-force reduction from the past year to be piled into a single month. There was some decent overall job creation in January, with about 243,000 jobs added to non-farm payrolls, and a nice 50,000 job bump in the manufacturing sector. That total is good enough to modestly outpace current population growth. With the usual backwards adjustment to previous months, it looks like the final quarter of 2011 pretty much kept pace with population growth.
However, the fact remains that even as we get back to the (dismal) 8.3 percent U-3 unemployment we last saw in February 2009, the work force is about half a million people smaller in absolute numbers, and that doesn’t include the increase in the working-age population over the past two years. Throw them in, and you’re looking at roughly 1.5 million jobs completely vaporized, to the point where they don’t even count in the official, widely-reported unemployment statistics.
Measuring unemployment is a complex endeavor, but the headlines always get boiled down to a single, heavily manipulated number, compiled using data that won’t really be finalized for another month or two. It also matters what type of jobs we’re talking about, how well they pay, how long they last, and how they are distributed across both geography and demographics. Whether or not the liberal grousing about “burger flipping jobs” accounting for those low Bush unemployment figures was accurate, the basic point is sound enough – you really don’t want an economy stuffed with minimum-wage, short-term menial labor.
There is no way to have sustained, robust job growth with the anemic GDP figures we’ve been seeing, and which the Congressional Budget Office forecasts to get even worse next year, causing unemployment to rise again. If we were experiencing strong job growth, GDP would be growing more as well.
But you don’t hear any of that “burger flipper” stuff out of liberals any more. All you’ll hear today is that we’re “moving in the right direction,” even as the American workforce collapses.
So the final analysis is: Read deeper into the good news, it isn’t all roses…sure there is some of the smell of roses but in my opinion the crop has not come in yet. Remember the MSM wants you to see the world through their rose colored glasses…to what end you might ask?
Reading about the steps taken to ‘remedy’ the economic/finanical disaster in Spain (all of Europe looks pretty much the same) is like looking at 2008/2009 here in the U.S. all over again!
Merging banks, huge write downs on real estate etc. My issue is why did it take so long to hit Europe? Did they think they were immune to financial mismangement?
Spain to Unveil Bank Overhaul to Clean Up Real Estate
By Emma Ross-Thomas – Feb 2, 2012 5:51 AM MT
Spain is set to announce today its plan to shepherd struggling banks into mergers and make the industry set aside 50 billion euros ($66 billion) for real- estate assets left over from the bubble that burst in 2008.
The government will issue debt and inject the funds into banks via contingent convertible bonds, or CoCos, which convert into equity if capital ratios fall below a certain level, a person familiar with the process said yesterday. It will only support banks that merge and those lenders will also have more time to apply new provisioning rules, the person said.
Economy Minister Luis de Guindos speaks to reporters at 5:30 p.m. in Madrid today and the plan is due to be approved by the Cabinet tomorrow. The ministry gave no more details in an e- mailed statement.
Prime Minister Mariano Rajoy, in power since December, has pledged a “true restructuring” of the industry at no cost to the taxpayer four years after the decade-long property boom collapsed. Lenders have about 176 billion euros of what the Bank of Spain terms “troubled” assets linked to real estate on their books, including land and unfinished apartments, and have provisioned about a third of that.
“They don’t want it to cost the taxpayer anything, they don’t want to use EU bailout funds and they need it to be credible for the market, and those three conditions are apparently incompatible,” Fernando Fernandez, a professor at IE business school in Madrid and a former International Monetary Fund economist, said in a telephone interview.
The former Socialist government’s first initiative to help banks was to create the FROB bailout fund in 2009, which spent about 10 billion euros buying preference shares in lenders it encouraged to merge. In a second phase, the government bought ordinary shares in struggling lenders last year and in October, in a bid to shield the budget from further strain, it decreed that any losses generated by the overhaul would be absorbed by the industry.
Rajoy, who leads the pro-business People’s Party, had considered creating a so-called bad bank to buy toxic real- estate assets from lenders, two people familiar with the situation said in November. A bad bank may have clashed with Rajoy’s election pledge not to spend taxpayers’ money cleaning up lenders. Rajoy and Guindos have also ruled out using the euro region’s bailout funds to finance the overhaul.
Spain, which pays about less than 4 percent to borrow for five years, will issue debt to fund its purchase of the CoCos, which will yield 8 percent, said the person, who declined to be identified because the plan isn’t yet public. The Treasury sold five-year bonds today at 3.455 percent, down from 4.021 percent last month, as the European Central Bank’s policy of extending longer-term loans to banks bolstered demand for sovereign debt.
The plan to be unveiled today won’t have any impact on the budget deficit, the person familiar with the process said yesterday. Still, the CoCos may end up being converted into equity, Fernandez said, as the IMF forecasts Spain’s economy will shrink for the next two years, adding to pressure on banks.
“Barring positive surprises on economic growth, it’s probable the CoCos will end up being converted into shares and so we would be just postponing the cost to the taxpayer,” said Fernandez, who used to be chief economist at Banco Santander SA.
De Guindos said on Jan. 27 that banks were themselves capable of funding the 50 billion euros of additional provisions he wants them to make for real-estate. Provisioning efforts will be “especially dedicated” to foreclosed assets, particularly “land and other kinds of property,” he said in an interview in Davos, Switzerland, last week. Lenders the government thinks aren’t viable in the medium term will have to merge, he said.
To contact the reporter on this story: Emma Ross-Thomas in Madrid at email@example.com
The liklihood of a strong economic rebound worldwide is not a very high probablility in my mind, regardless of our stock market having the best January in many years etc…Economic outlook is still very bleak in my mind!
When we look at the state of our nation closely, the reality betrays a far different situation than the one painted by mainstream media. Homelessness is on the rise. Young families having to move back with mum and dad or grandparents. Unemployment numbers of 20% or more in many places. Cities emptying and halving their populations and for more and more Americans long term stay hotels with paper thin walls are becoming home. Read more below!
A long way down the US housing ladder, beneath the grisly ‘projects’ of The Wire and the trailer parks hymned by Eminem, beneath the slums of New Orleans and the ghettos of Detroit, you’ll find the long-stay hotel. Cheap, not very cheerful, and pretty much a last resort, these institutions provide four walls and a roof, for a few hundred bucks a month. It’s some of the cheapest accommodation you’ll find anywhere in the US, aside from a cardboard box.
Long-stay hotels can be found in almost every major American city. They offer none of the privacy of trailer parks, and even less of the permanency. Guests make do with postage stamp-sized rooms, paper-thin walls, and nylon sheets. You’ll rarely find them listed in tourist guides, even the section of a Lonely Planet devoted to ‘rock-bottom dives’. Staying in one isn’t exactly what you might call a holiday. It is, however, an experience. So says Kalpesh Lathigra, whose compelling photo-essay on the Wilmington Hotel in Long Beach, Southern California, is published on these pages.
A British documentary photographer, he stumbled upon the place while looking up relatives during a family holiday to Los Angeles (it is owned by his uncle, Bachu), and has since re-visited for extended periods, building close relationships with its most colourful and well-established residents.
“The hotel is one of those places with a feel that you know just has to be recorded,” he says. “There’s something in the ether. I remember walking in for the first time, and straight away realising that it had this weird character that cried out to be photographed.
“The carpet looked like it was bought in the 1970s. The doors are this ugly blue. My idea of American hotels and motels was of a place where you came and stayed for a night or two. But here, every room was occupied by someone who had been living there long-term. It felt like one of those places that has a real story to tell.”
Lathigra’s images capture some of the unlovely realities of life at the $150-a-week Wilmington, which is situated a stone’s throw from the industrial fug of Long Beach port, and a half-hour’s drive from the mansions of Beverly Hills and the Hollywood sign. They show peeling paint, filthy curtains, and nicotine-stained walls – not to mention the battle-scarred men and women who have ended up inhabiting the building’s 30-odd rooms.
Every long-stay hotel revolves around rules. Residents must forego drugs (though alcohol is allowed). They must pay their rent on time, and agree not to hog the shared bathrooms. Every 28 days, so as not to breech hotel licensing rules, they must clear everything out of their rooms, and check in all over again. There is no room service and chambermaids are non-existent: guests make their own beds and wash their own sheets.
Yet for all the superficial grimness, there is also a tangible sense of community to the Wilmington. Residents adorn their rooms with rudimentary tokens of homeliness, from family photos to kettles, computers, televisions, stoves and objets d’art.
They build relationships, looking after neighbours’ children and watching each other’s backs. You’d be hard pressed to call their situation happy, but most hold out hope for a better future, and still buy into the American dream.
“A lot of them have come from broken families, or bad situations. And this is what they’re left with. It’s pretty much the last resort, the only one they could afford,” says Lathigra.
“But they still have good relationships, play together, listen to music, and party. There’s a weird dynamic: people keep their doors open and neighbours can walk
in and make themselves at home. You could say that they rely on each other for family.”
Every resident has a story. Mike, known as ‘Jesus of Wilmington’, was working as a roofer, but lost his job in the 2008 recession. He is currently doing casual jobs in Long Beach port, hoping to save enough to buy a truck and get his career back on track.
Sandra, who suffers drug and alcohol problems, recently had the children in her photograph taken into care until she can complete a course of rehab. Ron, the dapper gentleman standing in a hallway, is a former war hero who can barely scrape by on his Air Force pension.
“I love America, but there’s this side to it that’s never mentioned to you, and I hope these photos capture that,” says Lathigra. “Here’s a place, a short drive from the Hollywood Hills, where you have people eating spaghetti four nights a week because it’s all they can afford. The US is such a seductive, successful, wealthy society, but it also has these big cracks, and I guess this kind of place shows people fall through them all the time.”
In my opinion, France will soon become the next victim of the sovereign debt fall out amongst the EU countries. Let’s fact it, there is a HUGE crisis of confidence and trust in the financial system worldwide. While the leaders are focused on the numbers, mostly from the worst possible perspective-at least in my opinion, the people are seething.
How can anyone in their right mind think that these illustrious leaders are going to get it right this time after multiple failures starting with the Lehman debacle to the recent MF Global catastrophe and, last but certainly not least, the European Sovereign debt debacle? Of course, to be fair it all really started with very loose regulations coming from decades of official deregulation of financial industries and the advice given to our leaders by none other than the people most responsible for creating this mess!!!!
Realize that the sovereign debt is just the tip of the iceberg, and it is melting down pretty quickly at this point. No matter the words you hear, because the news is tightly controlled and ‘they’ don’t want you to hear the truth of it, this entire financial system is in meltdown.
The most immediate problem, not the only one by a long shot, is that all the holders of this toxic sovereign debt which would include just about every large and medium sized bank in the world have to write down a ton of this debt. With that write down the banks have less capital and to maintain the required capital to loan ration they must either raise more capital-hardly likely right now given the economic/political disarray in the U.S. and Europe-sell assets and reduce their loan exposure and/or borrow from the Central Banksters.
As I see it, they are borrowing from the Central Bank, which just creates money out of thin air, to shore up their capital which is in itself not a long term strategy but only a very quick and short term fix and selling assets to raise liquidity while at the same time reducing their loans portfolios-which of course will put the respective economies into a recession…Does all this sound familiar?
We have been replaying this scenario from coast to coast and continent to continent for the past 3 years, over and over again with much the same results-slowing economies, rising unemployment, more real estate woes as foreclosures rise and values fall which leads to further deterioration of existing loan portfolios (did anyone catch that Fannie Mae and Freddie Mac require more billions to cover losses last quarter?) and the need to raise even more capital.
Of course as the economies slow down companies-large and small- have a harder time servicing their debts and have to layoff more people in the face of declining sales. You get the idea of how vicious this cycle is? I think we will continue to see this scenario play out except now we have entire governments/countries falling under the sheer weight of debts they cannot possibly repay!
I have very little faith, as do most people now, that our illustrious leaders can pull yet another rabbit out of the hat! We are seeing the beginnings of a ‘bank run’ on the European banks as the larger money market funds pull out of the larger European banks (Deutche Bank lost over 6 billion in one single day last week from this reaction by just one money fund). In my opinion it is just a matter of time before the people start to ask for their cash!
Once the people lose faith then to see what might happen rewind to the Argentinian crisis of the last decade! Perhaps a look at the first Great Depression from a historical perspective would be in order as well!
I hope I am wrong about the outcome here as it will make things so difficult that we cannot imagine. Not only that but very few have the grit and determination to weather such a storm! Chaos could ensue and that folks is not a pretty thing.
The good news, from the ashes comes the Phoenix…the people will get another chance at this and I hope that they will be much better informed of the possibilities than most are now!
As we have been saying for sometime now, the home/equity/mortgage issues are not going away anytime soon and BoA is acknowledging this to it’s shareholders. With the proposed settlement of 5 billion for all the crooked mortgage docs etc. (which will probably be accepted to the chagrin of all the folks screwed) on top of falling prices as more homes are foreclosed on and sold at fire sale prices affecting all the other homes in the neighborhood and no end in sight, these banks are in a very precarious situation.
If it is bad enough to warn shareholders, you and I need to pay attention here as the ‘too big to fail’ banks continue to be at risk of failing! Another bailout would come, over the protests of the citizens, to ‘save’ the system. A system that is completely bankrupt, financially and morally!
We need to find solutions for our families and communities and these WILL NOT COME FROM GOVERNMENT! We have FEMA camps as the most likely government solution to upheaval…
I urge everyone reading this to consider these ideas. That this economy is in deep trouble should be clear to anyone with half a brain.
BofA CEO: Housing Faces ‘Enormous Challenges’
Bank of America Corp. (BAC) Chief Executive Officer Brian T. Moynihan told shareholders today the nation’s housing market faces “enormous challenges” and that the lender is still struggling to contain bad mortgages.
The bank, the biggest in the U.S. by assets, is putting “legacy” loans behind it and must resolve issues that arose after the acquisition of Countrywide Financial Corp., said Moynihan, 51, at the company’s annual shareholders meeting in Charlotte, North Carolina, where the bank is based.
Refunds and legal settlements tied to defective home loans dragged down first-quarter profit 36 percent to $2.05 billion, and the mortgage unit “still struggles mightily,” Moynihan said. Bank of America is the biggest servicer of U.S. mortgages, and is among firms negotiating with state attorneys general on potential penalties for faulty foreclosures.
Fourteen of the largest servicers including Bank of America signed a consent decree in April with the Federal Reserve and Office of the Comptroller of the Currency that compels them to pay back homeowners for losses on foreclosures that were mishandled, and to overhaul procedures for seizing homes.
Earnings are suffering from excess risk taken on when the firm acquired Countrywide in 2008, Moynihan said. While regulators at the time welcomed the bank’s rescue of Countrywide — which had been the biggest U.S. home lender — “attitudes have changed,” he said.
The bank has worked over the last year to rebuild a “fortress balance sheet” and capital cushion “to make sure we can handle anything that comes our way,” Moynihan said. Capital ratios are the strongest in a decade and the core franchise is strong, he said.
Moynihan told attendees today that the company needs to resolve concern about bad mortgages and lower the perceived volatility of the firm in the eyes of regulators before trying again to win approval of its capital plan, which would allow the company to raise its dividend. The plan will be resubmitted when management is sure regulators will accept it, he said.
Bank of America was left behind as competitors including JPMorgan Chase & Co. and Wells Fargo & Co. passed a Federal Reserve review of their capital plans and then increased their payouts. Moynihan had told investors in January and March that he believed the firm could raise its dividend this year. Bank of America had a 64-cent quarterly payout until 2008; it’s now a penny a share.
Promising a dividend before knowing you could deliver it was a “rookie mistake,” said Tony Plath, a professor of finance at the University of North Carolina in Charlotte who follows Bank of America. Moynihan became CEO in January, 2010.
“You can’t be a rookie CEO when you’re running a $2 trillion company,” Plath said in an interview before today’s annual meeting.
Investor Judith Koenick, who said her income was slashed when the dividend was cut, said Moynihan and other executives should forgo bonuses until they fully restore the payout.
“I would like you to explain how you’re entitled to all this money when you’re still sticking it to shareholders,” said Koenick of Chevy Chase, Maryland. “You should not be taking more than a dollar until you get the stock back up to where it was before you and your predecessors screwed it up.”
To contact the reporter on this story: Dawn Kopecki in Charlotte at firstname.lastname@example.org.
Continue to stock up on food and other supplies. I think we will get another great opportunity to purchase silver and gold in the next few days or weeks. Silver is now at around 35.50 as I write down from over $40.00 just a week ago.