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By Admin, August 24, 2010 8:52 pm

August 24, 2010Everything is not alrightNow and then//1929, 2009//the coming Depression. Part XII Since writing Now and then//1929, 2009//the coming Depression Part XI back in January things have only gotten worse, the lies and outright arrogant dismissal of what the American People want from our Government is appalling at best. I accept that no one President or Congress could possibly fix the economic mess we are in, certainly not in a short 18 months. What is so sad about the “fixes” coming from the Congress and President is the fact all of them have been for giant corporations, Wall Street and the labor unions, EVERY program for the middle class has not only failed but actually benefited the financial institutions. I wouldn’t feel so bad if there was some glimmer of sun light ahead of us; but, there isn’t. DO NOT, DO NOT allow anyone (of either party) tell you that everything is going to be alright. We are headed towards a full blown Depression; I have been saying this since May of 2008. There were many reasons stated throughout the series (all posted) Now and then//1929, 2009//the coming Depression.Here are some more reasons which support my thoughts that there is nothing with substance in our economic health and the Stock Market. (1) Washington is telling us that there is no inflation; actually there is ONLY the appearance that there is no inflation. For one thing, economically, the whole world is on life support-business aren’t spending(except for mergers and investment), consumers are doing with less, and unemployment will only go higher; with no spending there is no economic growth and we see what appears as deflation. Inflation is probably at about 10-12 per cent. (2) The greedy traders on Wall Street are sitting on $670 Trillion “high risk securities” called “derivatives”. If these contracts go bad, who buys them (remember-according to the Democrats in Congress and the President-there is no longer bailouts for “to big to fail”); we’ll see. (3) Without an economic recovery and some jobs the debt will soon require a Trillion dollars a year in interest. (4) America and the Dollar no longer dominate; China bought 47% of our debt in 2006, 20% in 2008 and only 5% in 2009. Last year, China bought a lot of oil from Saudi Arabia and for the first time ever Dollars were not used, same thing happened with Russia, Brazil, and India and on and on. Slowly at first, the Dollar will matter less and so will its value. How low will the Dollar be driven? If no one buys our Treasury Notes (debt), the interest on our debt is one Trillion a year, the debt is over 13 Trillion and unemployment stays at 10% (actual unemployment is 19%) or goes up the Dollar could drop 70-75%. Think about it, think about it hard; your retirement 401K of $100,000.00 would still be $100,000.00 on your statement but only purchase roughly $25,000.00 worth of goods or services. All of this could happen before the end of 2013, about a year into the Depression. (5) My grandchildren will be the first generation in over 100 years that will NOT have it better than the previous generation, what have we become? Everything we are facing today is the result of misguided and deceitful propaganda of collectivism and progressive policies of the last 24 years. In all fairness to Obama, he hasn’t done anything different that was not in place during the last 24 years, he simply has done in a short 18 months what three presidents did over 24 years and at an accelerated rate which has already destroyed our economic might and suppressed almost all individual rights. A study was done by some academics who studied 25 countries over a period of 800 years which found that EVERY TIME a nation’s debt went above 90% of GDP…the nation failed. Where is our nation’s (America) debt-to-GDP ratio today? It is above 90%. I don’t write these things carelessly, I try and choose my words with much thought and many times the truth is so ugly, so sad, so hopeless and so unbelievable that I don’t post what I wrote. Do not let anyone, not the Democrats, not the Republicans, not the President and his advisors (certainly not the Treasury or the FED), not your financial advisor, not Wall Street or anyone that is pushing the thought that everything is alright or getting better; folks, we are looking at 2017-2020 before the good times START to come back. I wrote as far back as late 2009 that the “Real Estate Bust” was far from over at a time when Obama and his people were telling us that things were picking up and that the recession was almost over, I stated then that “Commercial Real Estate” would bust and many banks would fail. Today on the news we learned that home sales fell 27% in July creating the biggest one month drop in history and the lowest we’ve been in 15 years. Is America too big to fail? Not anymore, and even if we were, who would bail us out?

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By Admin, August 10, 2010 7:50 pm

August 10, 2010Since I wrote the below nothing has changed for the good, we’ve had the Financial Bill passed which at best simply picks “winners and losers” on Wall Street and their financial giants and opens our daily financial transactions to the government. I have, however, underestimated the effect that Billions of Government Money has on the economy. I will revise my timeline for the upcoming Depression; I now believe that it will start in early 2011. By the end of 2011 or early 2012 we will be in a full blown depression. Keep in mind that if the government was listing all unemployed in their “unemployed rate” unemployment is actually close to 20 per cent. This upcoming “Depression” will probably last until 2020 no matter what party is in power. The damage this Congress and President have done to our economy will not repairable in four years. History teaches us that the Republicans rule during times of innovation and great economic upturns; the Democrats have normally ruled the country (with very few exceptions) during recessions, depressions and otherwise slow economic growth. After the “Great Depression” the Democrats controlled the House and the Senate for 40 years. This time history will NOT repeat itself because it is not Democrats in the Congress and the White House. What few REAL Democrats still in Congress have surrendered their vote and responsibility to the demands of the extreme radical progressives and the labor unions? The only question after the “mid-term elections” will be: did Congress bring down Obama or did Obama bring down the Democrats?    Now and then//1929, 2009//the coming Depression. Part XI//January 5, 2010We just lost 10 years; lost because as we come to the end of another decade it will be a decade of complete totally “negative” numbers in all areas of our economic health. I’ve been saying since May that we were heading towards a “depression” worst than the “Great Depression” of 1929. (Read all my writings on this series). As 2009 came to an end a few days ago the stock market actually ended positive and a nice 9 month upward rally; as I’ve stated more than once there is still nothing substantive about this market for it to maintain any meaningful growth. I stated back in May that upswings in the markets would be temporary, that another round of “real estate” foreclosures would precede a final “commercial real estate” bust which will result in many bank failures. I’m ready at this time to put a time table on this second round of foreclosures and the commercial real estate bust. This second blow to our economy will start in mid-march and run through September 2010. This round of real estate foreclosures, the failure of commercial real estate, office buildings and ensuing bank failures will be rapid and stunning. Now I’ve been saying that we were surely headed towards a depression since last May; now I believe that we are actually in the very beginning of that depression and would be surprised if we don’t start hearing the word “Depression” bounced around soon. Don’t be surprised if we finally hear Washington use the word “Depression” sometimes this summer. Let’s get back to the “Lost Decade”, the new millennium (2000-2009) ended with the DOW at somewhat over 10,000 (a rally of nine months) helped keep it there (but the DOW first reached the 10,000 mark in March of 1999), the S&P 500 index ended with a minus 9% and the NASDAQ took a negative to the tune of 40%; with numbers like that its fairly easy to call the last 10 years a “Lost Decade”. I also have some other numbers for you liberals out there that like to change history, manipulate data or simply spin fact with other data. During these 10 years (and particularly since Obama), our national debt has doubled, employment since Bush to Pelosi/Reid/Obama went from  4.9% to 10.2%, dollar has fallen, government stimulus efforts have failed and our leaders in Washington are doing things behind closed doors without regard to the wishes of the folks that elected them. [At the end of the “Great Depression” the 40’s ended with GDP growth of 72%, the 50’s end with GDP growth of 51.3%, the 60’s end with GDP growth of 53.1 and household net worth growth of 44%, 70’s end with GDP growth of 38.1 and household net worth growth of 28%, the 80’s saw GPD growth of 34.9% and household net worth of 42%, and the 90’s had GDP growth of 38.6% and household net worth of 58%. 2000’s end with household net worth of minus 4% and GDP only grew 17.8%] and we must remember that 14.6% was accomplished 2000-2006; the bottom line here is that things started going downhill when Pelosi/Reid  took control of Congress in late 2006 and intensified in severity during the last 12 months with Obama in office. Never in history has growth coming out of a decline (recession) been as weak as what we going through at this very moment and when you consider the Trillions in Government intervention it is more than sad and dismal, it is a disaster.

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By Admin, November 23, 2009 7:47 pm

Now and then//1929, 2009//the coming Depression. Part XTraditional economic theory tells us that the money supply may be used to stimulate an economy and obviously this Congress and Administration not only believes that but strongly support it to levels that they themselves would never agree to if the Conservatives were in power. I’m talking about this Administration pumping more than one Trillion dollars into the economy since taking office eleven months ago; this does not include the hundreds of Billions for bailouts and government takeover of the auto industry. As of lately Obama’s team has told us that these trillions have been a success, not so much evidenced by tangible results but rather by preventing matters to get worse; I guess we’ll never know if things would have been worse but what we do know  is that are no actual positive results from the government spending.  The federal balance sheet is about 137% over what it was at the end of 2008. Yes, Obama took the deficit from 928 billion to about two trillion in only eleven months. Economic common theory dictates that we should be approaching hyperinflation but that is not the case; in fact we have been deflationary since April of this year. I have stated various reasons for this throughout this series and will not repeat them here at this time. Suffice it to say at this time that wages and wage inflation are lower than should be expected if the economy was healing due to the stimulus trillions. The signs this administration points to as evidence that the economy is on a slow rebound and that the Recession is near its end are false and nothing in the economy with any substance supports the “end of the recession”. Any indication of earnings growth is due to expense reduction instead of sales growth. Prior to the financial meltdown job growth averaged about 1% over the last three years whereas now it’s falling by over 4%. At the time of this financial meltdown, Washington told us they had to do something or the “sky would fall”, it was the end of the world as we knew it and they had to do whatever it took to save capitalism; I have to ask in all honesty, who do you think is and has been in charge of solving this “global financial disaster”, the very people and institutions that got us into this mess. When government, business and Wall Street got in bed together last fall, it was the end of the “real economy” as we entered into a “government controlled” paper economy dominated by money that does exist as GDP. In all reality the economic “boom” (growth) of 2001-2007 was partially “paper economy”, it was false growth which infused itself into our GDP but it was “counterfeit”. It was based on debt spending and not on “real” purchasing power. As the “sub-prime” debt began to unravel our elected officials should have been able to see the real problem as debt, but instead of reigning in the debt Washington started spending and has not stopped for the last 18 months. The average high school dropout knows that you cannot spend yourself out of debt. I have been saying since May of this year that we are heading towards a “Depression” and I continue to stand behind those beliefs. All of the positive indicators concerning the economy are false (not lies, just false) because they are generated and driven by the paper economy and are not supported by jobs and GDP. Just today President Obama stated that the economy is starting to grow and the recession is just about over. Consider this: after nine months of a very positive DOW and Wall Street numbers, some positive comments from some businesses and a White House speaking positively of the economic health; people start to think that the recession is coming to an end, that very thought begins to renew confidence and some people start spending again which of course generates visible signs of recovery. The accepted understanding is that recessions last about two years, so it’s easy to accept that the recession is over and recovery is ahead. The only recovery at hand is in our heads, until the government gets out of the market place, the economy cannot and will not rebound. The beginning of the 20’s were recessionary/mild depression but only lasted about four years, there was no government intervention in the economy; interest rates were cut and the top tax rate of 70% was cut to 24% in three years which result in the “roaring twenties”. Those “roaring twenties” were very much like our economic boom of 2001-2007, extreme spending on debt; the result was the “Great Depression” which lasted over ten years. It lasted that long because of extreme government intervention in the economy and social fabric of society with its many entitlement programs. The recession may in fact be nearing its end but not to the tune of a recovery. I’ll say it again; there is nothing in the economy with any substance which would point to anything but a “depression” ahead.

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By Admin, November 2, 2009 9:18 pm

Rising “Gold” prices used to mean that “people” feared inflation. There are three things wrong in today’s picture: (1) there has been no inflation since February this year, inflation then was less than one per cent (.24%). March saw deflation of .38% or another way of looking at it, inflation of minus .38%; the deflationary rate continue to rise through July and went down slightly in August and September. Still, though, we have been in deflation since February to date; I have asked then why “Gold” has risen approximately 50% during this period with no inflation? What is driving Gold prices up when there is no inflation, also keep in mind that rising Gold prices (due to inflation) would normally mean rising interest rates and falling Treasury Bonds and at this time the exact opposite is happening to government debt. (2) Rising “Gold” prices used to mean falling numbers on Wall Street, yet, the Stock Market has risen (until three days ago) more than 11% since June. I now have to ask, what is driving the Market up? (3) Government intervention in the financial markets to almost 29% of GDP is beyond comprehension, (during the “Great Depression government intervention was a mere 3.2% of GDP) and has confused established factors which determine the outcome of results in the financial markets and Wall Street. Folks, something has got to give, this trend will not continue. It is foolish to think that the flooding of the financial markets with government money will cure this chaotic economic disaster we are in. I stand by what I have been saying since the beginning of these series and that is that we are now entering a severe “Depression”. I wrote a while back in one of these posts not to be deceived with the up swings in the market; the market will fall before next summer. There is absolutely nothing with substance going on to sustain the market. So what is driving gold prices up, stock market and Treasury Bonds; I don’t know but would make an educated guess that a lot of it is simply assumptions and the belief that this administration will continue to pump money into the financial markets. Wake up folks, Barack Obama is not at all concerned about the middle class, about jobs or about the economy. “Tarp” and “Stimulus” money thus far has gone to those “big businesses” that supported him, to any and all “labor unions” and to “States” that are “blue” or obey his every wish. Beware of an unusual rise in the strength of the dollar; too many other economics are just waiting to offload their dollars. They are no longer looking at just the strength of the dollar but at the following troubling facts: (1) unemployment-up 50% since November 08, (2) GDP-down 25% since November 08, (3) Housing starts-down 10% since November 08, (4) Food Stamps-up 15% since November 08,  (5) mortgages underwater-up 66% since November 08, and (very important) DEFICIT-up 300%-YES- THREE HUNDRED PER CENT. For decades we have believed that Wall Street (Financial Markets-Industry) gave us an indication of the heartbeat of the economy and/or the future of economic success; that is no longer true or even believable. Our markets, our industries, our healthcare, our freedoms and lately even our “freedom of speech” are been manipulated, coerced, controlled and hidden in lies and deceits by Washington. It is no longer a “Free Market”; it is Washington and Wall Street, it is Washington and GM, it is Washington and GE, it is Washington and SEIU and at its best this government intervention with the markets and industry has created market distortion and there we have the ONLY REASON the Stock Market has gained since last March. The fall is around the corner. We need to put a face on this illegal game which is been played with our economy, we need to put a face on the attempt to silence any that would disagree, we need to put a face on the “real brown shirts” and folks that face is NOT THE CONSERVATIVE MOVEMENT.

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By Admin, October 20, 2009 6:10 pm

Now and then//1929, 2009//the coming Depression. Part VIIIEven during the Great Depression the world turned to the United States for guidance and some answers to the financial woes of those times. For over 95 years the “Dollar” has been the dominant currency in the world and even to this day “oil” trades in dollar prices. Folks, that is fast coming to an end; there are forces at work from Russia, China, international financial experts and the (oil) Arab Gulf States to ditch the dollar as the recognized reserves currency. I stated in my last post the Dollar would collapse and that I believed it would be sooner than what we would want. Let me try and put some time frame on that statement. First I believe that the Euro and English Pound will totally fall before the dollar does and further believe that this will happen over the next 120 days. The dollar, though in a weakened state, will survive for a while due to the large amount of debt held by other nations. One thing remains very clear; America is no longer the leader of the Free World or the expressed definition of “Capitalism”. Why is this? For starters we have made the mistake of thinking that all other nations would blindly follow without questioning, and here is what the world sees and questions: an official national debt of $11.8 Trillion (this figure grew to $12 Trillion during the last three weeks), unfunded national obligations of $104 Trillion, an estimated (low figure) $9 Trillion in cumulative deficits over the next ten years and a very strong possibility of over $1 Trillion for “Health Care Reform”. All this adds up about $125, 8 Trillion; and we haven’t even considered the energy bill. If we were to assume that effective today there would be no new government spending, no new social programs, no new wars, no new disasters of nature, an immediate end to the current recession, no unforeseen economic disasters and the unemployment numbers dropped to below 5%; and the government was able to pay off the debt at one Billion dollars per day it would take the government 345 years to pay off the debt. Of course many of us know that the government will simply allow the dollar to be devalued so the debt may be paid in cheaper dollars. But the devalued dollar also affects our personal finances. For all of you hard core liberals that had that warm feeling running down your leg when Obama spoke consider this: since the democrats took control of Congress in 2006 the deficit has exploded an unbelievable 770 per cent and Reid/Pelosi/Obama are still looking for ways to spend more, that October had the lowest job openings since the year 2000, that from the day Reid/Pelosi took control of Congress the unemployment rate went up each month and since Obama took the White House unemployment went from 7.2% (Dec-2008) to 9.8% (Sept-2009), the 9.8% by the way is more than doubled what Bush has prior to the liberals control of Congress. Let me close by saying what I have been saying since part I of this series; we are entering a severe depression. I am saying this at a time when the Stock Market has held on to 10,000 for almost one week (and a seven month rally); but consider this: the Stock Market first reached the 10,000 in March 1999, WOW-some progress-back to where it was ten years ago. If you consider that the dollar has lost value (and falling) of almost 25% then we would have to accept the 10,000 as 750. The reality of the day is that the leadership of Reid/Pelosi/Obama is only giving us eternal debt, increased government spending (stimulus) and widening the “cultural of corruption” to the highest level this nation has ever seen. 

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By Admin, October 16, 2009 8:56 pm

Now and then//1929, 2009//the coming Depression. Part VIIBack in January of this year I wrote that this Administration would lie and take whatever steps necessary to cover the truth about the economy and thus far during the last ten months that is exactly what they have done. Nothing that has came out of the administration and Congress on the current economic health and the future (actual) cost of their (income distribution) “health care for all” and “energy” bills has stood the test of the CBO. The  biggest lie of this process to date is the Democratic Congress and White House blaming the GOP and Fox News for the failure of their agenda to pass; the truth: the democratic controlled Congress has not been able to get their own party to agree. We are all aware by now that this administration had no idea whatsoever what (if any) good would come of their $787 Billion “stimulus” bill. They were wrong on their expectations for the unemployment rate, they were wrong on their expectations of creating or saving “jobs” and we will soon see that they were wrong on the future strength of “bailed out” banks and auto companies. However they are not wrong on their plans for the remainder of the “stimulus” bill amount; here it is: as of September only $151 billion had been spent, they claim that $185 billion will be spent later this year. They have reserved $399 billion for next year (WOW-IRONIC isn’t that about the time that the democrats start running for “re-election”? Another $134 billion is to be spent by the end of 2011; isn’t that about the time that Obama starts his “re-election” process. What we have seen thus far is that the “stimulus” $787 billion has and will be wasted on political payback and the expansion of government intervention/influence over the economy and our daily lives. The President has surrounded himself with “inexperienced” advisors who at best are experimenting with the future of our Nation’s wealth and security. Mr. President, all your charismatic speeches and promises CANNOT change the outcome of your actions and the American People are waking up to the possibility that your inexperience prevents you from knowing the difference between “campaigning “and “governing. America, be not deceived, don’t let the recent rally in the stock market (a little over 10,000) give you comfort, I don’t see anything in the economy with any substance to back up the stock market numbers. Here it is: 70% of the U.S. economy is driven by growth in consumer borrowing and spending: in September; the FED reported that consumers slashed their borrowing in July by the largest amount on record, unemployment is the highest in 26 years, the decline of $21.6 billion in consumer credit was seven times higher than expected and if this decline in borrowing and spending continues we will very soon see corporate earnings decline. I’ve said this twice in other parts of these series and here it is again, over the next 90 days look for bad signs/news on “commercial real estate” and “bank failures” I’m not an economist or Wall Street theorist so I cannot fully explain the “10,000” wall street number but I do fully understand that there is nothing in our economy with any substance and everything out of the White House is deceitful at best. Actually the only possible bright future that Wall Street might have in the near future is “commodities”; our currency is probably going to collapse completely and it might not be as far away as we might want it to be. I’ve said this in every post of this series and I still believe it: we are probably seeing the beginning of a very long and severe economic depression. Conservatives, Republicans, faith-based and middle-class Americans of any party, ethnic back-ground, age and social status WAKE UP and GET INVOLVED: IT IS NOT EVIL, IT IS NOT GREED and IT IS NOT WRONG TO WANT TO ACHIEVE RICHES, TO DESIRE INDIVIDUAL FREEDOM, TO WORK HARD FOR SUCCESS AND MORAL FREEDOM FROM “STATE” INTERVENTION. IT IS NEITHER RACISM NOR BIGOTRY TO DISPISE THOSE THAT WANT GOVERNMENT TO TAKE FROM US AND GIVE TO THEM SO THEY WON’T HAVE TO WORK.  

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By Admin, October 7, 2009 7:49 pm

Now and then//1929, 2009//the coming Depression. Part VII had hoped to have the inflation (deflation) rate for September for this writing; they have not yet been published. Read part IV of this series for my thoughts on inflation in comparison with 1929 – 1934. Keep in mind that we have been deflationary since January of this year. Throughout these series I have also discussed our unemployment rate and my feelings on the process the government uses to arrive at their figure. There are a few internet sites (type in-real unemployment rate) where you can be enlightened on the “comical” process involved in determining the national unemployment rate; to lengthy to make it a part of this post; let me simply say that if the government (Bureau of Labor Statistics) used the same formula used 80 years ago (1929-the Great Depression) the actual national unemployment rate at the end of September would be 19.3% and a possible high of 20.10%. I wrote back in April of this year (when unemployment was 8.9%) that between October, 2009 and March 2010 unemployment would be at a low of 13%. Bureau of Labor Statistics is reporting the current unemployment rate at 9.8%. Was I ever off;  and not in a positive manner, I do indeed believe that the actual unemployment rate today is in fact between 17.5% and 19%. I stated also back then that some areas of the nation would be approaching 25% during this time frame. On September 4^th a liberal organization wrote that the actual unemployment rate at the end of August was 16.8%. This year alone 9.1 million part-time workers which would prefer full-time jobs were not counted as unemployed and 800,000 who quit looking for jobs that aren’t there are not counted as unemployed. I have stated various times throughout these series that we have not seen the bottom and worst of our economic situation; the bottom will not come until approximately 4-7 months after “commercial real estate” bottoms out. The “commercial real estate” bust will sky rocket bank failures and a surge in the unemployment rate. Here it comes; commercial real estate office space vacancy rate hit a five year high of 16.5%, office space rents fell 8.5% in the third quarter (the steepest fall since 1995) and in New York City office rents are down 18%% over the last 12 months. The Moody/commercial property price index (price index for REITS) fell 5.1% or 39% from its October 2007 high. So far this year bank failures are ten times the average for the last 8 years. If you’ve been watching the stock market over the last six weeks or so, you would be hard pressed to accept the above as anything but “corrections” in our economic downturn and possibly accept that we have seen the bottom. I just don’t see anything coming out of this administration (politically and economically) to support an upturn in the economic state of our nation. In a few weeks I will start another series dealing with the “demise of the Dollar” and eventual degradation of our standing in the world. My current research reveals that this is in the making even as I write this. On Friday I will share some thoughts with you on the word “Stimulus”. I continue to be amazed at the “left-wing” pundits and strong supporters of Barack Obama as I see them all over the “news” and talk shows. They are still blaming Bush for everything wrong and certainly ensure that we are to understand that the current economic situation is his entire fault. Consider this: In 2000 George Bush inherited an unemployment rate of 4.0% from Bill Clinton; at the end of 2002 it had gone up to 6.0%; however, from January 2003 to December 2006 he brought it down to 4.4%. What happened at the end of 2006 was that the liberal Democrats took over the House and the Senate and here are the results: unemployment January 2007-4.6%, December 2007-4.9%, January 2008-4.9%, and December 2008-7.2%. Ten months in office and this administration has taken unemploymentnfrom a January-7.6% to an October-9.8%, I don’t give any consideration to my beliefs on the “actual” rate because the Bush administration also used the same standards for their rate.

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By Admin, September 23, 2009 8:08 pm

Now and then//1929, 2009//the coming Depression. Part VThe greatest wealth building generator in America is “Real Estate” ownership, at the personal level and at the corporate level (industrial and retail space). “Foreclosure rates rose in 47 states in March; in Texas, Florida and Colorado the rate was almost double the national average. A mere 17% of California families can afford or could purchase the same house they live in. Foreclosures in middle-class neighborhoods are on the rise. Should the housing bubble deflate, as many economists and federal officials expect, the foreclosures could lead to a national crises”. The above was written as quotes from Howestreet.com and the Washington Post and available on the internet on September 2005. Since 2007, plunging home values and stock prices have wiped out a record $13.9 Trillion of household wealth. If all of this information is available to me and I have been able to acquire these facts from four years back; where in the hell is our Congress, where in the hell is our President, the Secretary of the Treasury and why do we need a FED Chairman. I wrote back in April, May and also in June that things would start looking good and that economists and Federal officials would be talking about a possible end to the bottom; I also stated at that time “be not deceived” that the Real Estate bust would not bottom until major defaults in the commercial real estate sector. Here it is: on 9 September Bloomberg reported that the default rate of office buildings, shopping malls and other commercial properties more than doubled in the second quarter of this year. While Congress, the Administration, the FED and most of our economists deal with fancy explanations, charts, rosy outlooks and projected future growth which is never supported by substance, I deal with reality, the reality of historical data, the real “what got us there” and an uncanny gut feeling for seeing things as they really are. You see, when foreclosures in commercial real estate occur, it’s more than one bad mortgage gone bad; it is the jobs of all the people employed by these retail buildings, shopping malls, professional office space, industrial space and small business owners that support the “big businesses” that occupy these commercial buildings. At one point, and this time around it will be sooner than later, this new round of “unemployed” individuals will have no choice but to also default on their mortgage. Here it is: in the second three months of this year, defaults on home mortgages hit an all time high. One in every 25 properties was in foreclosure-the greatest number ever reported. The two statements above could possibly be called “Bad” and “Worst”; now here is what follows “Worst”: bankruptcy filings among the wealthy exploded 73% from a year earlier, homes listed for sale priced at over one million surged 27.3% over the last year but those that actually sold plunged by 23%. I had wanted to discuss “real unemployment” but I want to look at the methods used by the Bureau of Labor Statistics. Let me simply say at this time that the “real Unemployment rate” at the end of August is NOT 9.7% as reported by the government but actually a minimum of 16.8% and possibly as high as 19.4%. I have to say this; I wrote back on 8 April 2009 that “between October 2009 and March 2010 unemployment would be at 13% National average with some parts of the Nation at 19-25%”, I believe that certain parts of California are in fact at 19% as I write this. Just remembered I was supposed to talk about bank failures in this writing; we will get to that also in part VI and look at some disturbing trends I had not even thought of back in April when I boldly went this route of the coming depression.

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By Admin, September 8, 2009 8:36 pm

Now and then//1929, 2009//the coming Depression. Part IVIn part three of this series I said that I wanted to share with you another element in our current economy that our nation has not seen on this scale since the “Great Depression”. That element is “deflation”; DEFLATION: BUYING POWER OF THE DOLLAR INCREASES. As good as that sounds the actual effect it has is chilling. One of the first things that happens with “deflation” is a drop in interest rates to near or zero, since I’m not a theorist maybe the lowering of interest rates created “deflation”, regardless (isn’t that where we are today), with interest rates at zero banks don’t lend money (the banks hold on to their cash) (isn’t that where we are today), when the credit markets freeze and there is no lending, business activity comes to a halt, then overall economic activity comes to a halt and profits drop/fail. When profits fall or come to a halt, businesses lay off people and people without wages don’t shop; unemployment reduces tax revenues to the treasury, no shopping reduces sales taxes to State and Federal treasury. Other businesses which depend on certain (failed) businesses now also fail and the cycle starts all over again. People that lose jobs don’t pay their mortgages and the first fall-off from that is a reduction in property taxes to local and county governments which now also have to lay off city employees and reduce services. Some of those services are police and firefighters. Why am I saying all this, anybody could have picked any “WORD” (I chose deflation) and applied that word to our current economic situation. Let me take you there with some available statistics. Except for the Carter years (which had double digit interest rates and inflation low of 12.52%/high of 14.73%) the last 6 decades managed to maintain inflation rates of between 1.59% and 5.09%; our economy survived  mild to mildly harsh recessions in the 70’s, 80’s and early 90’s. The last 16 years (8 years of Clinton and 8 years of Bush) were almost identical with Clinton having a couple of months at slightly over 5% and one month of over 6%, most of his 8 years were at 2.85% to 4.25% Bush’s 8 years were at 1.59% to 3.85%. Today as I write this we have the biggest drop in inflation rates since the 1950’s. Let’s backtrack to the “Roaring Twenties” before we compare January-August 2009. Inflation at the end of 1920 was at 15.90%, most of 1921 and 1922 had a mixed bag of low inflation and low deflation. 1923 to June 1926 had low inflation rates; that was probably the beginning of the end for the “Roaring Twenties”. Deflation ruled the “day” from July 1926 to May 1929 and the economy managed to bring back low inflation for about three months when the “Depression “began in October 1929. Big Government intervention to soften the depression provided a mixed bag of low inflation/deflation for most of 1930. Deflation devastated the economy for all of 1931-1933 and most of the country did not see the end of the “Depression until 1941. We have not seen any prolonged deflation since the “Great Depression” until now. Here are the deflation rates for January-August of this year: Jan-.03/Feb-.024/Mar-.038/Apr-.074/May-.0128/Jun-.143/Jul-2.20 and Aug-2.10. I’m a fair person, NO, I couldn’t possibly blame this President for the deflation of the last 8 months, but, I sure can blame him for failing to provide the right leadership to prevent the “soon coming” depression from lasting 10 years instead of 4. In part III of this series I stated some reasons why the government will not be able to stop this depression from occurring. I will be keeping an eye on the deflation/inflation rate and the unemployment rate over the next few months. I will probably make this series a six part series and discuss the “real” unemployment rate with you sometimes early next week. Part of that discussion will be bank failures.

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By Admin, August 28, 2009 8:59 pm

Now and then//1929, 2009//the coming Depression. Part III It is not Bush or Obama that got us into the economic situation our Nation is in. It is US, yes, we, ourselves created this chaotic financial mess we are in. It’s true that our government, both parties, did or didn’t do things right on “oversight”, “regulation” and eventually failing to realize where our Nation was headed financially. None of this is new; we saw all this happen before; in 1929, the Great Depression. The very sad part of this is that many financial and economic experts, Wall Street analysts and even some government officials were talking and writing about the direction (south) our nation was headed financially and economically; which always lead to “unemployment”. When were they writing of this, you ask? They started warning us about where America was headed in September 2005; that’s right; in 2005 there were plenty of warnings in print of the coming “real estate” bust and a down turn in the economy and the potential collapse of Wall Street. I said that Obama did not create the financial disaster we are in, but, it is Obama’s policies and vision for America that will make it worst and lengthen the period of the depression, yes, I said “depression”; it’s coming. There are a few authors and economists that have written articles and books of the coming depression, some of these folks having been writing and researching the economy for 30 plus years and at least one has perfected models which he uses to define his predictions. Where I disagree with all of these “contrarian” opinions is that almost all of them predict a mild depression which can and will be controlled by the Government and the Fed; I disagree, I believe that we are facing a depression unlike anything we have seen in 200 years and that it will certainly be a global depression. Here is why I stand by my belief even in the face of the Stock Market having gained almost 40% since March’s low. The “roaring twenties” have so much in common with the “greatest economic boom” (1983-2006); supercharged real estate prices, accumulation of multiple real estate ownership by individuals, interest only real estate loans and Yuppies (the young, 30 years old and under) having control over so much wealth and power. Yet in the midst of those golden years where nothing could possibly go wrong; we came face to face with 1929. While today we may have more government controls to soften problematic financial situations, a doubling of the national deficit in only six months is hardly the right start to head off an extended recession or prevent a depression. More importantly is what we have today that 1929 didn’t have. In the 1930’s our government didn’t have “benefit programs” going broke (social security/Medicare), an automatic tax increase (Bush tax cuts expire), a major housing bubble going bust (20 trillion lost this year), a falling dollar, an extremely large debt to foreign governments, the most unqualified and ill-prepared “White House” in the history of our nation (yes-worst than Carter) and a large percentage of Americans and Businesses that have totally lost all confidence in our Government. Normally in the world of politics and economics there would be enough smart individuals in Government that could provide a solution to alleviate the situation to at least making it like a migraine headache instead of a brain tumor. We can’t restructure the banking system, big auto companies, big insurance companies and provide government assistance to taxpayers (stimulus); we’ve already done that during the last 10 months (started with Bush) and it hasn’t worked, in fact, unemployment just kept creeping up. If the government takes over what it believes is failing while if fact those systems and business were “failed”; then we have a failed government. All of government’s bail-outs and interventions were done on the hope of “future economic progress”; all of Obama’s proposed programs depend on this “future economic progress” or “savings”. We will not see this “future economic progress” for at least 10 years unless this government immediately ends its direction of bail-outs, social programs, spending, taxing and the introduction of “new” entitlements; and even then the next sustained upward trend in economy activity will still not come before 2015. Most politicians every two or four years (time for re-election) remind us of the funding problems in social security and Medicare, budget short falls, deficits and the continued imbalances in our Economic, Social and Political issues which govern our daily lives. Soon after the elections most if not all of these “politicians” and in fact even we the voters collectively go into complete “denial” on these issues or at best put them on the after burner for a future day, why is that? These imbalances have been building for about 70 years; the reason is cost. It is “cost prohibitive” to provide everything to everyone so we all look forward to future economic growth that would provide the means for the government’s entitlement programs.This was going to be a three part series but I have some other thoughts to share with you so there will be a forth part where I will discuss something we have not seen since the 1930’s.

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