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Wednesday 10.12.2011

A Greater Depression is coming
By Thomas H. Kee Jr. - MarketWatch.com
Amazing as it sounds, the degree of uncertainty has actually increased on the heels of last week's rebound, and the debates running through the Streets, from "Occupy Wall Street" to "My Big Fat Greek Default," have investors at odds with each other. Quelling such emotional behavior takes time, but the emotions that run high at the tail end of market drubbings are almost always the same. We have all probably read the Book, "The Tipping Point," and the Market seems to be at a trough - based emotional tipping point right now. Everyone wants answers, but no one is getting the answers they are looking for, at least not yet, and therefore volatility and debate run rabid through the Streets. In every respect, my reference to The Street is to Wall Street, and to Pennsylvania Avenue. Unfortunately, I find these joined at the hip in the debate that has now gone viral.

Who will put Humpty together again?
Harrisburg Is Said to File for Bankruptcy After Council Vote
By Romy Varghese - Bloomberg.com
The city of Harrisburg, Pennsylvania, facing a state takeover of its finances, filed for bankruptcy protection late yesterday following a vote by the City Council, according to a lawyer hired by the council.
Mark D. Schwartz of Bryn Mawr, hired following the bankruptcy vote, said he filed the documents by fax to a federal bankruptcy court. The filing couldn’t be confirmed with the U.S. Bankruptcy Court in Harrisburg.
The state capital of 49,500 faces a debt burden five times its general-fund budget because of an overhaul and expansion of a trash-to-energy incinerator that doesn’t generate enough revenue. Bankruptcy, which would mean the loss of state aid under a law passed in June, is preferable to a proposed recovery plan, said Councilwoman Susan Brown-Wilson.

The next shoes to drop
By Steve Saville - 321Gold.com
The US economy is definitely in recession and the recession will probably extend into next year. This isn't necessarily a reason to be concerned about downside risk in the broad stock market, because the stock market attempts to discount the future and might already have priced-in the sort of earnings decline that a recession would bring about. The reason to be concerned about downside risk in the stock market is that the recession is not widely recognised and most analysts are still projecting growth in earnings over the next 12 months.
Earnings forecasts suggest that even though indicators of stock market sentiment reflected extremes of fear and/or pessimism at times over the past two months, the longer-term outlooks of most investors are too optimistic. There's a good chance that analysts' estimates and investors' expectations will be forced downward over the months ahead, leading to a sequence of declining tops in the senior stock indices.
Widespread realisation that 2012 earnings will be lower -- perhaps much lower -- than 2011 earnings could be the next shoe to drop.

The World Doesn't Owe You a Living
Some grandfatherly advice for the permanently aggrieved.
By AARON GOLDSTEIN - The American Specator.org
When I think about the Occupy protests in New York, Washington, D.C., and here in Boston (as well as in other cities across this country) I think about what my maternal grandfather used to tell me and my siblings. In his deep, authoritative baritone he would exclaim, "The world doesn't owe you a living."
Now I don't want to leave anyone with the impression that my grandfather was speaking harshly or was anything less than generous with us. Quite the contrary, he would spoil us during my grandparents' annual visits, giving us liberal helpings of gum, candy bars, and potato chips. Occasionally he would sing, "Roses are red, violets are blue, honey is sweet and so are you." On our birthdays, he would send us cards accompanied by a crisp Canadian $20 bill. I even remember the handwriting on the envelopes. It would be written in block letters. I wasn't addressed merely as Aaron Goldstein but rather as MASTER AARON GOLDSTEIN. He made us feel important.

Wall Street Sees 'No Exit' From Financial Woes as Bankers Fret
By Max Abelson - Bloomberg.com
Wall Street executives, facing demonstrators camped for a fourth week in New York’s financial district, say they’re anxious and angry for other reasons.
An era of decline and disappointment for bankers may not end for years, according to interviews with more than two dozen executives and investors. Blaming government interference and persecution, they say there isn't enough global stability, leverage or risk appetite to triumph in the current slump.

Only 10% of U.S. Population Now 'Middle-Class'
By Jeff Nielson - BullionBullsCanada.com
Having made a point of closely monitoring mainstream economic propaganda, a number of obvious tactics are used again and again. One of the most popular of these tools of deception is to lie by "redefining" terms.
In this case, the propagandists at Reuters are endeavouring to hide the annihilation of the U.S. middle-class through their very clumsy effort at redefining the word "affluent". The context of the article was an attempt by Reuters to continue to portray the U.S. as the world’s "most affluent" nation. However, any realistic examination of their data must lead to a nearly opposite conclusion.
How does Reuters choose to define "affluent"? It considers any household with a net worth (or "wealth") of merely $100,000 to be "affluent". In order to avoid being guilty of the same offense as Reuters, let me be more careful in my own efforts at definition.

The Recovery's Silent Assassin:
How Debt Deleveraging Killed the Economy
When U.S. consumers, businesses, and government all pay down debt at the same time, the inevitable outcome is lower growth, higher unemployment, and lower standards of living.
By Harris Collingwood - TheAtlantic.com
Heather Anderson ruefully admits that she should have known better. A veteran of nearly two decades in the credit-union industry, she had spent her career warning would-be borrowers about the perils lurking in home-equity loans, bells-and-whistles mortgages, and the seductive fantasy that debt was interchangeable with wealth. But the housing boom was roaring ahead, and "I started to feel left out," Anderson recalled. So in 2005, she and her boyfriend bought a house in San Diego with a no-money-down, interest-only mortgage and a home-equity loan.

JIM ROGERS CNBC Interview October 10th 2011

Politicians, Financial Regulators, Banking Officials and Gold.
The global financial system is in a bad state and it seems to be getting worse, says David Levenstein, so it is important to protect what wealth one does have.
Author: David Levenstein - Mineweb.com
JOHANNESBURG - Over the last few years we have seen some amazing developments occur in the global financial sector, none of which are good or encouraging. The sovereign debt debacle in the Eurozone threatens the very existence of the euro as well as many banks. And, it is no news that the US is technically bankrupt. But, what amazes me more than anything else is the action taken by so called financial regulators, politicians and leading banking officials around the world.
With regard to the recent sell-off in gold, I am absolutely certain that there is a great deal of truth to the commentaries that suggest that this sell-off was engineered by central banks and their agents the bullion banks, in an attempt to thwart the upward momentum in gold and thus take the spotlight away from the yellow metal.

Gold price will hit $2000 in 3-6 months
By Tony Hall
NEW YORK (Commodity Online): The price of Gold will shoot up and hit the magic $2000 within the next 3-6 months, says Tony Hall of Duet Commodities Fund, one of the top performing hedge funds this year.
"The decline is more of a healthy retracement than a change of the trend. I do think the trend is still in place and in the next three to six months we're going to reach the $2,000 mark" Hall said in a Bloomberg interview.
"Gold s quite a chameleon in terms of what it's used for. If things are going well then it can be an inflation hedge or a store of value. If we do have a crisis, it can be a safe haven. I personally think we're going to avoid a recession", he went on to add
He believes that the US will avoid the recession but gold will sill remain a solid bet.

Comex Gold ends sharply higher on bullish outside markets
By Jim Wyckoff - CommodithyOnline.com
(Kitco News) - Comex December Gold futures closed sharply higher and closed at a fresh three-week high close Monday. The precious yellow metal was boosted by a sharply lower U.S. dollar index and sharply higher Crude Oil prices. Precious metals traders Monday decided Monday to focus more on the aforementioned bullish “outside markets” and to ignore the potentially bearish aspect of the improved prospects for shoring up the European Union’s sovereign debt problems. December gold last traded up $37.50 an ounce at $1,673.30 an ounce. Spot gold last traded up $33.00 an ounce at $1,672.25. December Comex Silver last traded up $0.997 at $31.99 an ounce.

'Gold prices advance on strong Asian physical demand'
LONDON (Commodity Online): The largest Gold ETP, SPDR, slipped lower on Monday by 1.52 tonnes but overall metal held remains stable. But, more importantly, physically demand for gold from Asia remains very strong from India and from China following the week-long holiday. Gold bar premiums in Hong Kong have risen to $3/oz, their highest since February and are at 50 cents/oz in Tokyo.
Although prices have surrendered some of Monday’s gains in early trade this morning, they continue to trend higher. As the dollar weakened against the euro, Palladium was the strongest performer Monday gaining 4.2% to close at $610.3/oz while gold gained 2.2% to settle at $1674.9/oz ahead of Slovakia’s first vote in Parliament today on the approval of the enlarged powers of the EFSF.

Gold: Be Patient, Be Diligent
By Kevin McElroy - SeekingAlpha.com
We're at an important crossroads for this bull market in commodities.
Every bull market enters these crossroads, and even the most fearless bulls are tempted to give up - to sell out of their positions and consider themselves lucky that they were able to be along for the ride - and to escape with any profits at all.
I'm going to post a chart that I've posted before to help remind you of the real danger in "getting out" now.

Shanghai gold hits record turnover,
platinum subdued by margin hike
NEW YORK (Commodity Online): Decline in Gold prices have attracted a record turnover at the Shanghai Gold Exchange (SGE) as retail interest strongly picked up during China's golden week holiday.
-The annual festivities was expected to be “busy like crazy” as a spokesman for the Chinese gold and Silver exchange said. The weekly turnover at the SGE hit a record high as the national holiday and lower gold prices spiked investor interest and volumes.

Gold Confiscation
Here's how it could happen - and what you can do about it
By David L Ganz, J.D. - USAGold.com
The economy is causing a number of people to query my law office about a number of gold seizure scenarios. The questions that arise from it are

(a) what they can do to prevent seizures in the first instance,
(b) in the second instance, what they might be able to do if seizures are authorized, and
(c) what type of gold coins are likely not to be seized in such an event- and why.

Inquiries are coming from sincere believers - not in conspiracy theories, but rather in the "staying power" of gold in both the short term and the long run. This is not a measure of their sincerity but rather concerns that are expressed are real - these are hard money strategists, not people who go off with half-baked ideas that are politically motivated.
There's a difference. I remember about 30 years ago a well-dressed gentleman made an appointment to see me, sat in my office, and inquired if I "knew" about gamma rays. Fair enough. I assumed it was a discussion about patents, and was prepared to refer the matter to experienced patent counsel. We made small talk for another minute or two when my putative client renewed the question, and then took out a hat made of aluminum foil, put it atop his head, and proclaimed, "because they are aiming them at me, right now!" Patent counsel was not in his immediate future.

Gold Standard Is Not The Answer
Carlos X. Alexandre - SeekingAlpha.com
I would like to start this article with a different premise. If gold was black and dull, while holding all the same properties – malleability, corrosion resistance, etc. - would the metal’s history have been different? Without a doubt. One thing I learned is that gold can be dissolved by "aqua regia," a mixture of hydrochloric acid and nitric acid, and, ironically, the Latin words "aqua regia" mean "royal water," implying that the solution surpasses gold’s royalty status by destroying it.
Although I’ve written a few pieces about the misconceptions about gold – inflation, money, etc. – I have always recognized that gold is an asset and, like all other assets and commodities, it has its place and provides the opportunity for profit. As a matter of fact, I track gold’s short and long term trends and trade it as I see fit. And if one wants to refer to it as a store of value, that’s fine as well.

Top Currency Forecasters Say
Best Over for Dollar as Fed Embraces Easing
By Garth Theunissen and Allison Bennett - Bloomberg.com
The most accurate foreign-exchange forecasters say the dollar’s best quarterly rally since 2008 has no chance of continuing to year-end as a slow economy spurs the Federal Reserve to flood the world with more U.S. currency.
Led by JPMorgan Chase & Co., the five best strategists as measured by Bloomberg News in the six quarters through September see the currency averaging $1.34 per euro in the final three months of 2011, from $1.3387 on Sept. 30. They estimate it will average 76.6 yen, from 77.06.
Reports on everything from jobs to housing and incomes show the world’s largest economy may be in jeopardy of slipping back into recession, forcing the Fed to print more money for the third time in three years to inject into the financial system through bond purchases. Forecasters say the strategy would debase the dollar, which is down 22 percent since March 2009 even with last quarter’s gains.

Debt committee could raise risk of U.S. downgrade
By Jeanne Sahadi - CNNMoney.com
NEW YORK (CNNMoney) -- As if finding consensus on debt reduction in a hyper-partisan environment isn't hard enough.
The other mission of the congressional debt committee is to prove to the world -- and credit ratings agencies -- that Congress isn't completely dysfunctional.
"The public is watching very closely to see if we can show this country that this democracy can work. I carry that weight on my shoulders as does every member of this committee," Sen. Patty Murray, the bipartisan committee's Democratic co-chair, told CNN last week.
That's a lot of pressure for the 12 lawmakers who have until Nov. 23 to demonstrate they can reach across the aisle.

Hedge fund guru warns of period of very high inflation
By Suzan Uzel - YorkshirePost.co.uk
A LEADING hedge fund investor has said it is "as plain as a pikestaff" that Britain is heading for a period of "very high inflation" with interest rates "nailed to the floor".
Jonathan Ruffer, who predicted the credit crunch, and whose company Ruffer LLP has more than £12bn invested, believes the fact that the UK has kept its own currency means it has a "safety valve" which the Eurozone lacks. But he says the UK's reliance on world trade makes it more vulnerable to a global slump than many of its competitors.
Mr Ruffer, from Stokesley, North Yorkshire, was speaking to the Yorkshire Post ahead of a talk he was giving to the business community in Leeds, organised by M2B, Ministry to Business.

The Uncredible Dog and Pony Show: Merkel and Sarkozy
by Charles Hugh Smith - OfTwoMinds.com
Does anyone take the Merkel-Sarkozy dog and pony show seriously any more? Perception management is not a solution.
For the past 18 months, every time reality threatens to intrude in Europe, Merkel and Sarkozy rush onto the global stage for a repeat performance of their dog-and-pony show. The global media declares it an artistic triumph and the "solution" to Europe's insolvency.
The fact that we've seen the exact same performance repeated again and again appears to be lost on the financial media, which never tires of declaring "this is the solution that will end the European bank crisis."

German push for Greek default risks EMU-wide 'snowball'
Germany is pushing behind the scenes for a "hard" default in Greece with losses of up to 60pc for banks and pension funds, risking a chain-reaction across southern Europe unless credible defences are established first.
By Ambrose Evans-Pritchard - Telegraph.co.uk
Officials in Berlin told The Telegraph it is "more likely than not" that investors will suffer fresh losses on holdings of Greek debt, beyond the 21pc haircut agreed in July.
The exact level will depend on findings by the EU-IMF "Troika" in Athens.
"A lot has happened since July. Greece has fallen back on its commitments, so we have to assume that the 21pc cut is no longer enough," said one source.

The real euro crisis
By MARTIN WALKER, UPI Editor Emeritus
STUTTGART, Germany, Oct. 10 (UPI) -- It has taken a while but the real problem of the euro is just starting to command the attention of Europe's leaders. And so far no one, not even the Germans who first began to articulate it, can see a solution.
It is this: Even if Europe's banks are fixed and even if Greece is bailed out and the markets are intimidated by a great wall of euros into backing away from speculation against Italy, Spain and France, the euro crisis won't go away.
No financial engineering can be more than a short-term fix. No new European treaty, however clear and rigid its rules over sovereign debts and budget deficits, can address the underlying problem.

Slovakia rejects enhanced bail-out fund, government falls
Slovakia's lawmakers have rejected a revamp of the eurozone's European Financial Stability Facility (EFSF) rescue fund in a crunch vote that also toppled the country's centre-right government which had staked its future on the motion.
By Louise Armitstead, and agencies - Telegraph.co.uk
Only 55 of 124 lawmakers present in the room voted in favour, while nine were against and 60 did not vote, effectively blocking the fund and toppling the four-party coalition cabinet of Prime Minister Iveta Radicova.
The country's leaders said earlier they would try to pass the EFSF revamp in a repeated vote with support from the opposition, but no date has been fixed for that vote yet.
"What we are deciding on today is the good name of Slovakia, reliability, where it will belong... or if we exclude ourselves from the community of the successful," Prime Minister Iveta Radicova said ahead of the vote.

Slovakia blocks euro rescue fund
By Jan Lopatka and Ingrid Melander
(Reuters) - The parliament of tiny Slovakia stalled the expansion of a bailout fund to rescue the euro zone from its debt crisis on Tuesday, but international lenders said they were likely to grant a loan to Greece next month, buying time for a broader response.
European Central Bank chief Jean-Claude Trichet said the debt crisis had become systemic and must be tackled decisively.
Slovakia is the only country in the 17-member currency zone that has yet to approve giving new powers to the European Financial Stability Fund. The expansion was agreed by euro zone leaders in July but must be ratified by each country.

China’s Pan Asia Gold Exchange:
A New Playing Field for Speculators?
By Vivian Ni - China-Briefing.com
Oct. 11 – In an age when the assets of insolvent Western economies are becoming less reliable and international investors appreciate gold as a safe haven, the Chinese know it is time for them to play a larger role in the global gold market. The Pan Asia Gold Exchange (PAGE) – opened earlier this year allowing gold trade in China’s own local currency RMB – may make China the new epicenter of the global gold market and even trigger a bigger wave of speculative gold buying and selling.
Established on March 31 this year, the PAGE is located in Kunming, the capital city of China’s southwestern Yunnan Province (an area well-known as a major gateway to Southeast Asia). The new gold exchange – which markets itself as China's "gold supermarket" – will allow individuals to buy physical gold or speculate in gold future contracts through an RMB account with a bank or broker. Initially, all the clients of PAGE’s two settlement banks – the Agricultural Bank of China and Yunnan’s local Fudian Bank – will be able to buy 10-ounce T+D contracts on the PAGE.

China's debt spree returns to haunt
Bail-outs are coming thick and fast in China. In less than a week the authorities have had to step in to prop up the banks, rescue the insolvent railway system and save the near bankrupt city of Wenzhou from a spectacular debt crash.
By Ambrose Evans-Pritchard - Telegraph.co.uk
It is proving harder than expected for the central bank to manage a calibrated "soft-landing" after letting rip with credit to counter the Great Recession. The loan spree raised credit from 100pc to almost 200pc of GDP (on IMF estimates), including off-books trusts, letters of credit and sub-radar loans from Hong Kong.
The 30pc annual pace of loan growth is unprecedented in any major country in modern history. It is double the pace of America's housing boom and Japan's Nikkei bubble in the late 1980s. It may match US loan growth in the late 1920s.

Senate Passes Bill to Pressure China on Yuan
By Melinda Peer - TheStreet.com
WASHINGTON (TheStreet) -- The U.S. Senate approved a bill to pressure China into allowing its currency rise on Tuesday, ignoring warnings from Beijing that such legislation could ignite a trade war.
The legislation would permit the U.S. to put duties on goods from countries that intentionally undervalue their currencies to boost their exports. According to a Reuters report, some U.S. policymakers believe that China undervalues the yuan by as much as 40%, giving exports an advantage in global markets.

Keiser Report: Ground Zero of Financial Terrorism (E195)

Greek debt haircut seen exceeding 60 percent
By GEORGE JAHN and ELENA BECATOROS - AP - Forbes.com
VIENNA -- Greece's bondholders may have to settle for a cut of more than 60 percent in what Athens owes them, the head of the eurozone's finance ministers has said, the first open admission that such a drastic move is being considered.
Jean-Claude Juncker, who is also prime minister of Luxembourg, was quoted late Monday by Austrian state broadcaster ORF as saying that eurozone countries are "talking about more" than a 50 to 60 percent haircut for Greece.
Experts and investors believe Greece's debt situation is untenable, even with more reforms and austerity measures, and will need to write off some of the money it owes bondholders.

Foreign Central Banks
Selling US Treasuries at Unprecendented Levels
BY LEE ADLER - FiancialSense.com
Two weeks ago I began to report to subscribers of the Wall Street Examiner Professional Edition Fed Report that foreign central banks (FCBs) had begun to engage in unprecedented levels of disgorgement of their massive holdings of US Treasury and Agency paper. Prior to this year, the FCBs had typically absorbed the equivalent of 25% of new US Treasury issuance month in and month out. That was effectively a subsidy of US financial markets. It lowered long term interest rates artificially and injected cash into the US markets and banking system.

Exchange merger is Step 1 toward Moscow goal
Moscow aims to become financial center but quest will be arduous
By Polya Lesova, MarketWatch
LONDON (MarketWatch) — Moscow has a lot riding on a new exchange.
The city’s RTS and Micex exchanges recently announced they will merge, in hopes of simplifying the investment process, boosting liquidity and attracting more investors. The consolidated group would rank ninth world-wide in market capitalization and somewhere below 15th in revenue as of 2010—and officials hope to reach the top 10 in both within five years.
Russian officials see the marriage as the first step in a much broader effort: turning the capital into a financial hub that draws businesses and investors from abroad. But the quest is likely to be long and arduous.

Are Americans Finally Waking Up?
by WashingtonsBlog
Americans Are Finally Waking Up to the Fact that the Federal Reserve, Big Banks and Government Have Robbed Us Blind
Compare Zbigniew Brzezinski’s statement that the whole world is becoming awakened, and people everywhere are aware of inequities, lack of justice and lack of respect.
With this statement by Christopher Greene that Americans are finally waking up to being ripped off by the big banks, Federal Reserve and their enablers in the executive and legislative branches (as confirmed by Nobel prize winning economists):

End to Fed: 'US to see more violence as protests spread'

Goldman:
"We Doubt The Current Market Optimism
Can Be Sustained Over The Medium Term"
Submitted by Tyler Durden - ZeroHedge.com
In yet another ironic twist, traditional market cheerleader Goldman Sachs, which discusses the factors for the "strong start to the week for equity markets" in the form of the 100 S&P point surge on nothing but hope and more rumor speculation, concludes with rather ominous: "beyond the headlines, it is only the process of grappling with the details and concrete plans that will force the political leadership in these countries to face the difficult tradeoffs involved. And as such, as long as there is not more clarity around concrete proposals – the distribution of legacy losses and the mechanisms for mutual support in the Euro-area going forward – and the details on implementation, we doubt that the current market optimism can be sustained over the medium term, and beyond the upcoming G20 meetings." In other words, precisely what we have been saying: rumors and "plans of plans of plans" are great for short term squeeze induced, bear market bounces, but in the long, or even medium-term, do nothing to address the fundamental math fail which states, quite factually, that going from point A (where we are now) to point B (where Merkozy wants Europe to be), will be virtually impossible absent massive equity losses. Yet, as also pointed out before, Wall Street career risk is always in the "here and now" never in what may happen a day or even an hour from now, now that markets are no longer a discounting mechanism, but a purely headline reactionary one.

Wall Street's Gullible Occupiers
The protesters have been sold a bill of goods. Reckless government policies, not private greed, brought about the housing bubble and resulting financial crisis.
By PETER J. WALLISON - WSJ.com
There is no mystery where the Occupy Wall Street movement came from: It is an offspring of the same false narrative about the causes of the financial crisis that exculpated the government and brought us the Dodd-Frank Act. According to this story, the financial crisis and ensuing deep recession was caused by a reckless private sector driven by greed and insufficiently regulated. It is no wonder that people who hear this tale repeated endlessly in the media turn on Wall Street to express their frustration with the current conditions in the economy.
Their anger should be directed at those who developed and supported the federal government's housing policies that were responsible for the financial crisis.

Goldman Sachs 'escaped paying
£20m National Insurance bill in HMRC deal'
Goldman Sachs escaped paying up to £20m on a disputed National Insurance bill for bankers' bonuses, according to leaked Government documents.
By Helia Ebrahimi, and Harry Wilson - Telegraph.co.uk
The Wall Street bank – which last year paid $15.3bn (£9.5bn) in bonuses to its employees – is understood to have made a sweetheart deal with HMRC which allowed it to avoid paying the full interest on a failed tax avoidance scheme set up in the 1990s.
Around that time, Goldman is understood to have set up an offshore company in the British Virgin Islands called Goldman Sachs Services Ltd. This employed all of Goldman's London bankers, who were then "seconded" to work there.

Millionaire's Tax: Hedge Fund
'Carried Interest' Tax - 15% -
May Be Biggest U.S. Tax Loop Hole
By IBTimes Staff Reporter
Senate Majority Leader Harry Reid, D-Nev., is expected to introduce his 5 percent millionaires tax surcharge Tuesday in the Senate, but another issue regarding tax fairness is making the rounds on Capitol Hill: raising the "carried interest" tax.
Carried interest is the portion of hedge fund/alternative investment manager's income that stems from a manager's performance, and it's nice work, if you can get it. Here's why:
Management fees are taxed at the ordinary U.S. income tax rate: 35 percent, 33 percent, 28 percent, 25 percent, or 15 percent, depending on the person's income.

The arrival of housing purgatory –
Why is housing experiencing one of its worst sales years
even with the 30 year fixed rate mortgage
breaking into the 3 percent range?
A case as to why housing will remain
a poor investment deep into 2015.
DrHousingBubble.com
This week the 30 year fixed rate mortgage entered into supernatural territory breaking the 3 percent barrier. The Federal Reserve is getting its desired result of pushing mortgage rates into the absurd. Yet rates have been low throughout the entire housing crisis and for most of the last decade. Access to cheap debt is not some kind of Holy Grail of housing. This year we have seen mortgage rates break records almost on a weekly basis. So why is the housing market not reviving? In spite of all this cheap debt households in large measures have lost their insatiable appetite for housing but more importantly, with consumer debt. Some are simply trying to make ends meet. For the past five years the obsession has been on banking policy and forcing mortgage rates low. The only true winners with this policy move are the banks who continue to hoard millions of properties in the shadow inventory so they can inflate their gluttonous balance sheets. Housing is likely to experience weak performance deep into 2015 for a variety of reasons. Let us lay the case out and you be the judge.

Greenspan: Govt. should destroy houses.
Peter Schiff destroys Greenspan's idea

Buckle Up: America Is Getting Very Angry
And The Protests Are Going To Become Much More Frightening
EndOfTheAmericanDream.com
The Occupy Wall Street protests and the rise of the Tea Party movement have both changed America, but you haven't seen anything yet. You better buckle up, because America is getting very angry and as the economy continues to decline the economic protests are going to become much more frightening in the years ahead. Americans have become very accustomed to prosperity. Now that our prosperity is vanishing, people are starting to become very angry. The scary thing is that the vast majority of our population now lives in tightly congested urban areas. That makes the potential for mass rioting and civil unrest much greater. Back in 1910, 72 percent of Americans lived in rural areas. Today, only 16 percent of Americans live in rural areas. So what happens when you have millions of incredibly angry people crammed into tightly congested metropolitan areas? Well, we are about to find out.

N.Y. faces 10,000 Wall St. cuts through 2012
By Greg Morcroft and Matt Andrejczak, MarketWatch
NEW YORK (MarketWatch) — The securities industry in New York City faces likely job cuts of nearly 10,000 through 2012 as Wall Street banks cope with lower trading revenue, new regulations restricting their activities, and bruised stock prices, according to a new report.
State Comptroller Thomas DiNapoli also said in the report that industry bonuses are likely to shrink this year.
"It now seems that profits will decline sharply from last year’s level, job losses will grow, and cash bonuses will be smaller," DiNapoli said in his yearly report that makes predictions on the state of Wall Street.

Apple’s iMessage Could Lower Your Wireless Bill
By Quentin Fottrell - SmartMoney.com
Thumb war! Tomorrow Apple is expected to introduce a free alternative to text messaging that could spell savings for avid texters. The program, callediMessage, will allow iPhone, iPad, and iPod touch users to exchange messages with each other over WiFi or 3G Internet connections.
Although there are already free instant-messaging apps, this latest foray is more akin to BlackBerry Messenger, the popular Berry-to-Berry service. iMessenger will be embedded in the operating system and available only on Apple devices, which means most users won’t be able to ditch text messaging completely, unless they restrict contact only to people sporting Apple gear.

US jobless epidemic masked by govt statistical shenanigans

Millions to lose unemployment benefits if Congress doesn't act
By Tami Luhby - CNNMoney.com
NEW YORK (CNNMoney) -- Millions of unemployed Americans are waiting for Congress to do something other than trade barbs over their job creation plans.
If lawmakers don't act soon, the jobless see their unemployment checks start to disappear come January.
More than 6 million Americans are set to lose federal unemployment benefits in 2012, with 1.8 million running out in January alone, according to new figures from the National Employment Law Project.
President Obama's $447 billion American Jobs Act would extend the deadline to file for federal unemployment benefits for another year. Though the Senate is expected to take up the controversial jobs bill on Tuesday, it's unlikely to get very far.

Bill Gross: "Class Warfare By The 99%? Of Course, They're Fighting Back After 30 Years Of Being Shot At"
Washington's Blog
Richest Capitalists Decry Class Warfare … By the Wealthy Against the Poor

Pimco boss Bill Gross – one of the 1% – tweeted today:
Class warfare by the 99%? Of course, they’re fighting back after 30 years of being shot at.
(No word on whether the protesters marching on New York City billionaires' houses had any influence on the timing of Gross' tweet.)

Gross joins Warren Buffet, who pointed out in 2006:
There’s class warfare, all right, but it’s my class, the rich class, that’s making war ….

The Chief Investment Officer for Calpers –
California's $235 billion dollar pension fund – said today:
I understand why people are protesting: Wall Street is a rigged game.

And Asher Edelman – the well-known corporate raider who helped inspire the character Gordon Gekko in the 1987 film "Wall Street" – supports the protests and says:
The greed of the banks are the cause for the terrible economic situation that we have today.

Obama says may have to "break up" jobs bill
By Laura MacInnis
PITTSBURGH, Oct 11 (Reuters) - President Barack Obama said on Tuesday he could "break up" his jobs bill to push it through Congress, acknowledging the risk that the legislation may fail to advance as the U.S. Senate prepared to vote on the plan.
The Democratic president was in Pittsburgh as part of a campaign to get lawmakers to pass his $447 billion proposal.
It is the latest stop in a tour of swing states in advance of next year's election to raise pressure on Republicans resisting big chunks of the jobs bill.
"If they don't pass the whole package we're going to break it up into constituent parts," Obama told a meeting of his Jobs Council.

You Know That Your City Has Become A Hellhole When….
TheEconomicCollapseBlog.com
All across America there are cities and towns that were once prosperous and beautiful that are being transformed into absolute hellholes. The scars left by the long-term economic decline of the United States are getting deeper and more gruesome. The tax base in many areas of the nation has been absolutely devastated as millions of jobs have left this country. Hundreds of cities are drowning in debt and are desperately trying to survive. Last year, city government revenues in the United States fell by another 2.3 percent. That was the fifth year in a row that we have seen a decline. Meanwhile, costs associated with health care, pensions and virtually everything else continue to explode. So what are cities doing to make ends meet? Well, one big trend that we are now witnessing is that many U.S. cities have been getting rid of huge numbers of employees. If you can believe it, 72 percent of all U.S. cities are laying workers off this year. Social services and essential infrastructure programs are also being savagely cut back in many areas of the country. The cold, hard truth is that most of our cities are flat broke and things are going to get even worse in the years ahead.

Obama Is Occupying America
By David Limbaugh - PatriotPost.us
Rational people realize that President Obama's policies have been an abysmal failure, which is why his only hope for re-election is to try to sow confusion among the voters, such as those populating "Occupy Wall Street."
People often say the success of democracy depends on an informed electorate. Given his record, that's the last strategy Obama can afford to embrace. Short of a fortuitous economic miracle falling into his lap, his only hope for re-election is that enough voters are misinformed.

Tuesday Evening Looks @ S&P500 Futures
post Iranian Plot To Assassinante
the US Saudi Arabian Ambassador
By Sellputs - HedgeAccording.ly
Chop Chop said the suey master... hard to believe the market's were red today despite the US Saudi ambassador assassination plot by Iran. Which as you know are always bullish for equities. Anyway the dollar saw some buyers as the us equities session opened 10 points in the red but of course was DX gains were faded as the ES pushed over 1190. The war is between 6E and DX.

Would Iran Really Want to Blow Up
the Saudi Ambassador to the U.S.?
The alleged Iranian plot would make great material for a spy novel, but it would go against Iran's own interests and past behavior -- By Max Fisher - TheAtlantic.com
It's entirely possible that U.S. Attorney General Eric Holder's announcement today is exactly what it looks like: the U.S. discovery and foiling of a plot by Iranian government agents to assassinate the Saudi ambassador to the U.S. in a bomb attack, possibly in Washington, DC. Iran has a record sponsoring terrorism, and Iran-Saudi competition can sometimes look like a Cold War of the Middle East. But, for all the plausibility that Iran might be willing to blow up a Saudi ambassador, it's not at all apparent what they would gain from it. Iran has never been shy about sponsoring terrorism, but only when it was within their interests, or at least their perceived interests. It's hard to see how they could have possibly decided on a plot like the one that Holder claimed today.

Iranians charged in US
over plot to assassinate Saudi ambassador
US claims elements of Iranian government directed bomb plot with alleged involvement of Mexican drug cartel
By Ewen MacAskill in Washington and agencies - Guardian.co.uk
A dangerous confrontation was developing on Tuesday between the US and Iran after the Obama administration directly blamed the Iranian governnment for an alleged plot to blow up the Saudi ambassador and scores of others at a Washington restaurant with the help of a Mexican drug cartel.
The US attorney-general Eric Holder said Iran would be "held to account" over what he described as a flagrant abuse of international law. While the US says military action remains on the table, it is at present seeking instead to work through diplomatic and financial means to further isolate Iran.

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