Market crash: are we there yet ?

[TropicCat]

Originally Posted by Cruisingdad

Oh... this is almost magical:



What say you to that, RIck and Windy!!! That is from your link, Windy. That is all it would take. Slowly buy gold, slowly dump the dollar, keep your yuan levereged well aginst other currencies that are falling, back your currency in gold, then make a really good case to dump the US dollar. Logical.

As a country, we better get our heads out of our butts and start putting in place a strong, well conceived strategy that averts what they are obviously doing or trying to do. And that strategy better not include warships (but I bet it will before it is all over).

- CD

Apparently Washington no longer has to concern themselves with what happens on Main St. USA. Both Obama and Bush brought in Goldman Sachs to run the Treasury and don't forget Bernake was New York Fed. They are only concerned with what Wall St. wants.

You are looking at their strategy. The best anyone can say about it is that it's a delaying action in preserving the dollar as the reserve currency. They all seem to feel that's the entire 'ballgame' and their answer is to pump the DOW and hope for the best.

[Cruisingdad]

1.3 million to lose jobless benefits by year's end - Yahoo! Finance

Will get interesting after 1.3 million lose their benefits!! THis does not include those that have already lost their benefits. On the positive side, the unemployment will go down!!!

- CD

[TropicCat]

Hey Unemployment will plummet to those who read the newspaper. CD, I believe you've uncovered their strategy. Just wait long enough and unemployment will be almost zero. Nobody will be working but heck, don't sweat the details.

Besides, it must be true because we'll read it in the newspaper.

[TropicCat]

Why I'm certain this is only going to get worse. Fact.. not opinion.

The Financial Accounting Standards Board implementing FAS 157 and FAS 159 November 15, 2007 at the height of the mortgage market meltdown. Under the suspension of the FSAB accounting rules, banks don’t have to write down Level 3 assets to market value, if they state that they have no plans to sell the assets for an extended period. So, if the bank forecloses on a home and then says that it’s not going to sell it, they can keep it on the bank's books indefinitely at its full book value.

So… think about the effect this has had. If you own a home on which you owe $300,000 and lost your job. You then manage to find another job but it only pays 1/2 what you were making. You call your bank and ask for a loan modification only to find that the bank isn't interested. They calmly inform you to pay up or face foreclosure. Your bank knows the house will now appraise at $150,000. They also know if they go ahead and foreclose and keep the home on their books, they won't have to write down it's value. In other words, the bank forecloses and will not have to show a loss. They don’t have to write it down because they say they’re not planning on selling it anytime soon.

You lose your home but the bank's CEO get's a bonus. And with the FDIC loan freebies, they can sit there for years before they even consider trying to sell that house. When they do sell, the odds are that the market will probably be better.

In short, there is an incentive in place to prevent banks from modifying loans. There is no incentive for banks to work with their customers. The foreclosure situation will not stabilize under these conditions until the job market stabilizes. Not the other way around. We all know why job market is still declining.



Now, there isn't an economist out there who can map a way out of this recession without a housing market recovery. Since, there is no way out, this recession can only deepen.

Here's the scary part. They all know this. Yet the rules were changed to prevent bank loses, not consumer loses. But without consumers, there is no economy. Go figure....

Lastly..this just in from itulip.com. the Bureau of Labor Statistics publishes a number from the Household survey that is comparable to the nonfarm survey (dubbed the population and payroll-adjusted Household number), and on this basis, employment sank — brace yourself — by over 1 million, which is unprecedented. Geithner got on TV and told the world things were looking up?????????????????? and the dang Stock market went up?????????????

We're screwed.

[wind_magic]

Originally Posted by TropicCat

Your bank knows the house will now appraise at $150,000. They also know if they go ahead and foreclose and keep the home on their books, they won't have to write down it's value. In other words, the bank forecloses and will not have to show a loss. They don’t have to write it down because they say they’re not planning on selling it anytime soon.

Thus the term "zombie bank" ala Japan 1990's ...

Originally Posted by Wikipedia

A Zombie Bank refers to a financial institution with an economic net worth that is less than zero, but which continues to operate because its ability to repay its debts is shored up by implicit or explicit government credit support. The term was first used by Edward Kane in 1987 to explain the dangers of tolerating a large number of insolvent savings and loan associations and applied to the emerging Japanese crisis in 1993[1][2]. Zombie institutions face runs by uninsured depositors and margin calls from counterparties in derivatives transactions. They engage in high-stakes gambles for resurrection that undermine industry profit margins and spread insolvency to healthy competitors. If their insolvency is left unresolved, more and more institutions fall into distress and a crisis develops when the wisdom of the government's bailout program comes increasingly to be called into question. [1] [2]

Neither living or dead, just existing ...

[Cruisingdad]

Originally Posted by TropicCat

Lastly..this just in from itulip.com. the Bureau of Labor Statistics publishes a number from the Household survey that is comparable to the nonfarm survey (dubbed the population and payroll-adjusted Household number), and on this basis, employment sank — brace yourself — by over 1 million, which is unprecedented.

How did they come up with 1 million and the govt submitted 220,000? I realize that it is possible that someone forgot to carry their one, but that is a hhuge difference. I wonder if they are calculating the net gain in jobs with the net loss? That is a considerable statement.

- CD

[kootenay]

Cut government spending, raise taxes, Admit the SS system has been looted by successive Federal Governments since FDR, reduce the size of the military and remove congress's ability to tack on spending to every bill. Allow the dollar to fall to a point where making things in the US is competitive abroad. Start living within your means as a country and as individuals. Reform your banking system by adopting similar regulatory controls like Canada has. The tough part is admitting that the US simply cant afford to be the worlds largest super power and really cant afford to be what it is today.

[TropicCat]

Originally Posted by Cruisingdad

How did they come up with 1 million and the govt submitted 220,000? I realize that it is possible that someone forgot to carry their one, but that is a hhuge difference. I wonder if they are calculating the net gain in jobs with the net loss? That is a considerable statement.

- CD

Ahhh... great question. There is an answer, but it's so far fetched as to be deemed unbelievable so you're going to have to verify it yourself.

BLS has several vehicles to massage employment numbers. Their are two that concern us this month.

The first is called the birth/death model. They simply removed some of these unemployed folks from their model by saying they died.

But wait, there was another unemployment reducer employed. According to BLS there was a tremendous upswing in small business hiring. These businesses are startups which BLS logically calculated that 'some' number of unemployed folks started their own business and therefor were no longer counted among the unemployed. There is no actual 'count' of these people. It's a computer program. Therefor, there can be no follow up, no monitoring to determine if they actually made money. No confirmation they actually exist. They are simply removed from the unemployment numbers and the telephone survey which has been cited by BLS as the basis for their monthly reporting .... is ignored. Why is it important? Last month we were told 225,000 lost their jobs. There were 2.5 million layoffs. Do the math.

The US requires 170,000 new jobs to appear each month to employ young folks who are just entering the workforce. Does anyone know how these new workers are handled by BLS in their numbers? Are they ignored or counted in some fashion?

I think it's a good question. Since Dec 2007 (20 months) this would add up to 3.4 million people, or 2% of our workforce which would not seem to appear in either U3 or U6 unemployment reports.

Other people are noticing the extent BLS is utilizing the birth/death model. This piece doesn't specifically mention it, it just notices the math is not even close and if you do the math it's accurate

____________________________

...From Seeking Alpha..

U.S. created 2 MILLION jobs in August, claim “experts� - Jeff Nielson -- Seeking Alpha

U.S. created 2 MILLION jobs in August, claim “experts”


There are/were 2.5 million lay-offs in the U.S. in August, the total of the weekly lay-offs for this month. With another fraudulent jobs report due out next Friday, the U.S. propaganda-machine is already brainwashing the markets and the American people to put their faith in a number with no basis in reality.

If we take the 2.5 million lay-offs, and subtract the “estimated” net job-losses for August – 235,000 jobs – this means the “experts” cited by Bloomberg (in its weekly propaganda report) are predicting that the U.S. economy created 2.265 million jobs in August.

At a time when these same “experts” state that the U.S. economy is in its worst crisis “since the Great Depression”, they expect us to believe that the U.S. economy is creating more new jobs every month than at any other time this decade.


______________________


Lastly... I posted the IRS collections graph a couple of posts ago. Collections are down 10% from last year. Unemployed people don't pay taxes. If the unemployment rate was 6% a year ago, doesn't it stand to reason that it's 16% or higher today? That BLS U6 number is reported for a reason folks, and I think it's not too far off from what's really going on.

[Cruisingdad]

Hey Rick,

I understand that you can make numbers and stats say anything you want. But if what you are suggesting is true, that is flat out fraud and manipulation. Now I understand the whole U3 and U6 thing... but what you are talking about is a whole other level.

You sure about that? Who controls that?

- CD

[wind_magic]

Originally Posted by TropicCat

Lastly... I posted the IRS collections graph a couple of posts ago. Collections are down 10% from last year. Unemployed people don't pay taxes.

While I agree with you that the unemployment numbers are at best a clever fiction, this bit about the revenue being down has a lot to do with the loss of capital gains income - when the market tanks people aren't making capital gains anymore and so they don't pay taxes on those capital gains, same for selling houses at reduced prices, etc.