The Adventures of Charlie Champion

The obedient press. the clueless pundits and experts, and the highly connected insiders  have begun floating increasingly yet cautiously optimistic verbiage concerning the improving state of our recession.

The first two categories have no clue, the latter have the real knowledge but a very different agenda.

We are hearing that the recession is  bottoming out.

” The free fall is beginning to slow down.”

“Advertising is slowly coming back”

“Two women at a networking gathering got new jobs, at close to their former pay”

“Recovery will begin by the end of 09″

Yes, yes, the broken economy is fixed. It was easy, just like all the other busts that we have fixed in the past 30- 40 years. The formula works. It always has. All we have to do is throw a lot of money at the problem, let the insiders slide out with a minimal amount of damage, and time will heal all

Lay low for a few years, and then bring on the next game. The Fed Will Set US Free.

Oh yes, Our official unemployment is almost 9%, but when you include people forced to work part time or who have given up, the number is closer to 15%, , but numbers have grown so large so quickly that we are all numb. Ten million, twenty million, billions, trillions, numbers have begun loosing their meaning.

Housing prices, which are the major collateral asset behind this economic disaster have fallen 29 months in a row. The average value has dropped by almost 40%. Herein is the problem.

What sub prime loans really are, is another way of saying loans made to people with questionable credit rating, and income insufficient to comfortably cover the monthly payments.They had less than a prime credit rating.

To a certain extent, the social engineering which was the initiator of this type of loan , was a noble experiment, and a darn nice thought. AQ house for everyone, whether you can pay for it or not.

Who knows, the way the real estate market kept going up, these “sub prime borrowers” (S P B ERS) could live the American dream and the World would live “happily ever after”.

REALITY CHECK, Nothing keeps going up forever.When the frenzied speculation pushed real estate prices too high, the buyers stopped bidding up the prices.

The derivative instruments, (see my post from yesterday)  which were combinations of sub prime mortgaged, leveraged 20 or 30 to 1, were exposed as standing on a collateral base of over priced real estate  which was worth less than the mortgages which they carried.

These various derivitives were sort of worthless, being collateralized by aptly named ”Toxic Assets”.

World wide, the banks have been exposed with vastly over valued balance sheets, and the recession which began at least 1 year before the “experts” figured out there was one, fell deeper and deeper into the financial abyss.

It took us at least 20  years to create this credit bubble. We are in (according to the Administration) the worst economic disaster since the Great Depression, and they are now telling us that creating new debt to stagger the imagination, we are fixed in just 4 or 5 months? No No No!

There is more.

I want you to be aware, because you are my friends, and I don’t know how to help any of us, except by sounding the alarm.

When the politicians forced the sub prime issue, the bankers and brokers became creative and agressive. The Feds through FANNY & FREDDIE were providing the grease. In order to reach more buyers , and to tap new markets, they began pushing the Adjustable Rate Mortgages(ARM’S)

Very briefly, ARM’s are mortgages at a very low interest rate, enabeling a person to purchase a more expensive property. The monthly mortgage  payments would be $100’s possibly $1000’s  less than a conventional mortgage.

Sounds like a great idea. Buy a bigger house. Have lower monthly payments. The value keeps going up,. The more expensive the house, the bigger the profits. Sell the house at a profit, buy two new houses. Repeat. Live the good life.

The Catch: ADJUSTABLE. Your low interest rate, and low mortgage payment is for a fixed number of years, possibly only one or two, but usually 4, 5, or possibly 6 years. The specifics are secondary. The fact is that when the interest rate adjusts your payments go up. Usually  too much, and almost always at a very bad time.

Now is a bad time, and the end of next year and 2011 are very bad times.

That’s when the bulk of the ARM’s from the housing boom are due to adjust. In the middle of a deep recession. With major unemployment. With shaky public confidence, and a shaken banking industry.

Not Good!

More Later

Yes dear friends, the various markets have had a rather spectacular run up from their March lows.

They continue to bounce optimistically higher, then slide back as the real insiders sell into the exciting rallies. A sucker rally that is a relatively new phenomenon, in its scope.

In the past, small manipulations always existed. A case in point would be the short selling of certain related stocks in the weeks and months prior to 9/11, by terrorists with “inside information” about the impending attacks.

Many people may not remember, but the Feds tried to trace the shortselling to “follow the money”, in an attempt to catch the “bad guys”.

Of course individual stocks, and even industries have been manipulatued. It is the nature of the beast, and there have been many books and movies portraying these manipulations.

However, this is different. The scale is enormous, and the money being made and lost is now Billions or trillions, instead of millions. The power that accompanies these manipulations is potentially pandemic in scope.

As a 40 year student of economics, and a former Wall Street Trader. I have watched with amazement, as the end of 08, and the first quarter of 09 was filled with dire predictions of doom and gloom,. The most serious economic World crisis in 60 years was being decried as the end of the World. The stock markets Worldwide were crashing, and we were stampeded into blindly supporting $ trillion dollar spending bills, to stave off anarchy, looting, and  the end of civilization.

When the money was allocated and spent on blind unknown stimulus  agendas, the verbiage was stopped. The money was gone, did not create a single new job, or correct any of the real underlying problems in the economy, yet miraculously, the verbiage began to change.

I have never heard such nonsense, being spouted . Innuendo, half truths, and manipulation of statistics, are all quoted as economic facts.

Today we hear that unemployment growth is slowing down. Only 500,000 +, new jobs lost in April, when someone(who is this someone and why is their guess taken as gospel these days) had expected 600,000 + We still have almost a 9% unemployment rate, and the most people unemployed possibly ever.

Every morning I hear the news, with one or another official saying the recession will be  over by end of 09, by mid 2010, ,by next Thanksgiving..etc,

I see a concerted effort to prop up the markets and the American People by the same group that tried to pull them down so all those trillions could be pulled out.

The truth is, the economy is broken, and the World is not healthy.

Yes , those who have lied and conned us, and their minions of blind mindless pundits and parrots are well off, but the People are not better off.

When the next wave of disastrous reality crashes down on us, the insiders will be warm and secure,in their $ billion nests,, while the  rest of us will be broke scared and hungry,willing to blindly follow the new World Order that will change this Country and society for the next hundred years.

For the past 7 or 8 weeks, I have ben keeping a close eye on the rising stock market.

I has risen 25 - 30 %, and investors and speculators have begun responding with histerical glee, to the false hype being spewed by the Administration, spearheaded by the pom pom waving cheerleaders at the FED and the Treasury.

Is our economy really fixed? Is the worst of the recession over? Is recovery truly beginning, with economic growth returning by the end of 2009?

HORSEFEATHERS and MONKEY WINGS!!!!

Other than give money for bailout projects that do nothing but maintain the satus quo, what has been done?

For example, New York Sate has recieved $25 billion in stimulus money so far. Has that money created even 1 non governmental job?

I don’t think so.

The money has gone to cover the economic short falls in entitlement programs. Medicare, Medicade, foor stamps, teachers unions, government workers,and to ensure that everything is business as usual for all social services.

Have our taxes been reduced?

Sure, there has been a $9.50 / week reduction in payroll taxes, but we’ve been  hit with so many hidden taxes(.25 / ride on MTA as a case in point.) The New York State Legislature is trumpeting the fare increase on only 1 quarter..per trip this is a hidden tax increase of 12 1/2% for transit riders.

How about the increase in Motor Vehicle fees, and surcharges on taxi rides.

How about the payroll surcharge on businesses to help cover the Transit deficit.

Let me ask you ..how much cutting has the MTA done.

How much reduction in payroll.

How many layoffs have be initiated, to help[ pay for these deficits?

Very little. Let the   public eat cake…or something much less tasty…

So again I ask you, is Bernanke right? Are beginning a recovery phase due to the wonderful actions of our Federal and State Governments?

Housing prices have fallen for 29 months in a row, and are nationally almost 40% off from their highs.

“They” tell us that housing sales last month were UP slightly, for the first time in more that a year. Did “they” bother to tell us that almost 50% of those sales were purchases of foreclosed properties at distressed prices? 

The glut of houses on the market insures that prices will remain low or head lower for the foreseeable future.

According to several economic reports that I have seen, there is a second wave of Adjustable Rate Mortgages(ARM’S) that will begin to adjust in late 2010, and on into much of 2011.

Business Calls

More Later

The rally on Wall Street that has everyone so excited is a technical bounce.

Dear friends, the recession is not over, and the market has not bottomed out.

look for a back and forth movement for a while, possibly several months, but the trend over the intermediate term , according to Fat Louie the Duck, is still going to be down, down, down.( Please excuse the play on words, I just couldn’t resist.You know downe, a ducks feathers)

Anyway, the fundimental problems with the economy are still broken, and all of this stimulating action is a band aid at best, and a negative long term disaster  leading up to that Two Ton Gorilla I have spoken about in the past STAG FLATION!

Stagflation is the real problem coming our way. Just wait until the $5-10 Trillion of paper money gets into the market. We will be chasing our tails for hard good,with  increasingly worthless dollars.

Not a pretty site.

Watch your backs my dear friends.

We will prevail!

We just have to get back to our traditional American Judeo Christian values.

     Our leader keeps making the case for passing his stimulus bill in the most dire way possible.
    

      Don’t wait! The World is on the brink of Catastrophy. The sky is falling.
    

      The worst ” economic disaster since the Great Depression>”
     

      Don’t take the time to read this massive stimulation bill, the economy is in free fall over the side of the cliff.
     

      Pork Barrel? Entitlements? Nonsense. Our President told us before the election that he stood for a clear transparent government, for the first time in our history. We gotta believe him. He wouldn’t lie to us and break his promise.
    

       ” We can’t afford to wait” He said.” Trust me”  ”

      We can’t waste time postureing and bicker ing and resorting  to partisan positions.”

     The fact that this is 75% Pork maybe 10% stimulus, and possibly15% future stimulation( 2-3 years down the road) should not deter us from embracing this massive fraudulent bill.

    This bill is destined to become the largest redistribution of tax money in the history of the world.

     Federal tax dollars and newly printed $ hundreds of billions will go from the Treasury to the states in the form of bailout money.
The states will use this money to fund union pension plans, keep union workers and state employees working, and to fund certain infrastructure projects also with a heavily unionized labor force.

      No new wealth will be creeated.
   

      No reduction in State and local government.

      No reduction in bloated labor contracts.

      The same old game. The same old tired act.

      The only change will be several million municipal, state and local employees will be obligated to vote Democratic in order to keep their jobs.

      The Unions will be repayed for their Democratic party loyalty and monetary support.

      The private sector will continue to die a rapid death.

      Here come the shortages.

      Here continues a long drawn out recession, rapidly evolving into a Depression by passing an intentionally non stimulative stimulus plan.

      Nice job Obama.

      Way to go Congress.

     I can’t wait for the next elections. This is getting old after only 3-4 weeks.

      One again we are disappointed by leadership with an agenda at odds with the American publics best interests.

      Business as usual.

     The names have been changed to protect the guilty.