Don’t Quit Your Day Job

English: The Marriner S. Eccles Federal Reserv...

English: The Marriner S. Eccles Federal Reserve Board Building (commonly known as the Eccles Building or Federal Reserve Building) located at 20th Street & Constitution Avenue, NW in the Foggy Bottom neighborhood of Washington, D.C. Designed by architect Paul Philippe Cret in 1935, construction of the Art Deco building was completed in 1937. Its 2009 property value is $109,029,200. (Photo credit: Wikipedia)

February 9, 2013

The bread and circuses news this week, of course, is the big snowstorm with blizzard conditions that Mother Nature delivered to the upper east coast in her ongoing attempt to let us know she is still the “boss of things” around here.  The storm is not expected to be anywhere near as economically costly as Superstorm Sandy, but an estimated 600,000 are without electricity so far and more is to come today.

Meanwhile, there are some disturbing perturbations in our slow growing economy here in the US, where eleven million homeowners are still under water and foreclosure will begin to go up in those states where they were held up by the “robo-signing” lawsuits.  One is a rise in home equity loans and lines of credit as homeowners feel more secure with rising home prices and a (slowly) growing economy.

Yet the steady, but uneven rise in housing prices around the country may not be all that it seems.  Much of this rise has been due to hedge funds and other investors buying up bank-owned repossessed houses for cash, driving up prices in a bidding war in areas hardest hit by foreclosures.  Although prices have risen in some of these areas as much as 20% or higher, they are nowhere near prices before the collapse.  However, it does raise red flags for some over fears of a new housing bubble – as this article explains.

Subprime mortgages are making a comeback ahead of new mortgage lending rules from the FCPA going into effect next year, which do not prevent subprimes, but are purported to do away with many of the excesses that made them so very risky.  And lenders who make subprime loans are not protected from lawsuits by the “safe haven” rule which protects from lawsuits those banks whose mortgages meet the lending criteria in the new rules.

Nevertheless, “The subprime market for risky mortgage backed securities is hot again and its revival is exceeding many people’s expectations, the chief market strategist at Rosenblatt Securities said. However, he expects it will end badly …

“… And it has noticed another huge development this week. The Wall Street Journal reported that a joint venture between AIC and Fortress will be issuing a securitization of personal loans.”

Any one of these things is enough to make this old gal’s heart go into palpitations.  To have all three of them highlighted in the same week, makes me right giddy with anxiety.

So, is all this just fearmongering by the press?  Well, I’m certainly no economist, but when the Federal Reserve, in it various permutations of QE 1-4, has bought up nearly four trillion dollars (so far) of toxic assets from the banks by creating money out of thin air (as explained by Chris Martenson in his article, “Quantitative Easing for Dummies”,) it seems to me the only way the Fed will ever get rid of this toxic waste is if the housing bubble re-inflates so they can sell them off at some value above zero.  Perhaps I’m just not seeing the genius at work in all of this?

Yesterday, Bloomberg News announced that, “Record petroleum exports helped shrink the U.S. trade deficit in December to the smallest in almost three years as America moved closer to energy self- sufficiency, a goal the nation has been pursuing since the 1973 Arab oil embargo.”

Yet, with all our vaunted 100 years of energy resources, a still fragile economy – built to run on cheap energy – still circles the upper limits of the price at which energy costs make growth impossible.  Mother Nature continues to ratchet up the costs of burning fossil fuels with more – and more costly – natural disasters each year.

And this morning, another Bloomberg article announced that, “China surpassed the U.S. to become the world’s biggest trading nation last year as measured by the sum of exports and imports, ending the U.S. supremacy in global commerce that emerged after the end of World War II in 1945.

U.S. exports and imports last year totaled $3.82 trillion, the U.S. Commerce Department said yesterday. China’s customs administration reported last month that the country’s total trade in 2012 amounted to $3.87 trillion. China had a $231.1 billion annual trade surplus while the U.S. had a trade deficit of $727.9 billion.”

What does all this mean for the average American?  I’m pretty sure it means the foundations of the Empire still tremble and we are still on course for the next hard leg down in its decline.  For fellow doomers, my advice would be to keep on prepping.  And for the rest, just don’t quit your day job.

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6 Responses to Don’t Quit Your Day Job

  1. Nadia says:

    An illuminating film, (in my opinion), on this is Inside Job 2010. Watched it and understood so much more about the Bank shenanigans because of well-done discussions and layouts within the film. Thanks to you for the links for more information as well. This commentary certainly demonstrates your previous column in that the more things change; the more they stay the same….. How are you mending? Stay warm!

    • theozarker says:

      Hi Nadia. I haven’t seen that film, but there’s certainly been no shortage of information out there. Makes you think of Einstein’s definition of insanity as doing the same thing over and over and expecting different results, doesn’t it?
      I’m mending fine, thanks for asking. Been going up and down all the stairs, inside and out, regularly now. Even spent an hour last week doing the monthly grocery shopping I hadn’t been able to get to. Been sunny and cool here, today. Some pretty good rain over the last couple of days, but no unseasonably cold weather. In fact, it seems like much of the winter here has been above normal temps interrupted by a week of cold weather every other week or so. Hope there’s been enough below freezing days in a row to kill of the bug eggs – at least, the bad bugs. 😀

  2. graveday says:

    Einstein wasn’t big on quantum mechanics. Anyhow, I’m thinking, based on what I have seen the various branches of government do, that insanity is also doing the same thing over and over and expecting the same results. Perhaps, on second thought, that isn’t insanity, just magical thinking.

  3. Nadia says:

    Thought that you might appreciate the article and photo that is gained from the following link at the bottom. It is an article I read a while ago – but the picture is certainly appropriate for your words on “slow demise” of the empire.

    In other news; my 86 yo mother fell and fractured her pelvis in 3 places. I will be relocating from MO to MN to work with my sister in her care. The provisions and the health care nightmare is in full force. Those who think medicare/medicaid a free ride for “moochers” should come with me and experience such new “standard” protocols as the 3 day rehab rule – refuse to climb stairs 1 week post injury 3 days in a row, regardless of injury – w/b discharged and you can figure it out.
    Steady pinching since the program was started. Reimbursements vary for providers based on “efficiency and note the use of the word “standard” – not equivalent to best practice but fair practice. Again – that “slow demise” concept in play.

    We have discovered that being direct without apology about concerns gets results – so feel free to exercise your fierce at this system next time. *sigh*. Take care and tread carefully!

    crumbling house link:

    • theozarker says:

      Hi Nadia, my gosh, I’m so sorry to hear about your mom. I hope she’s mending and that you and your sis are getting some rest as you take on the health”care” industry. You’re certainly right about having to be direct without apology to get your concerns addressed – more and more true in any service industry these days. As for the “free ride for moochers” crowd, I guess they’ve never had to navigate the various governmental (or non-governmental, for that matter) bureaucracies for anything. Takes a fair amount of fortitude and I suspect will only get worse as things spiral down. I can sort of understand the reasoning behind the 3 day clause – blood clots are a real worry after an injury, especially with us elderly, if you can’t keep the injured person moving. But the problem with bureaucratic rules is they rarely have a “mercy” clause attached. It’s good your mom has you and your sister to fight for her and especially just to know you’re there for her. Sending you much love and healing thoughts for her and strength and energy for you and your sis.

      Also, thanks for the article on Detroit. Makes me sad, but I suspect stories like that will be ever more frequent, too, as climate related disasters and rising energy costs take their toll at the same time federal aid cuts back.

      Do keep us abreast of how your mom is doing. (Sending you a virtual big hug.)

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