Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.

Wednesday 09.01.2010

Bernanke Out Of Bullets But Not Bombs
Michael Pento - Forbes.com
Federal Reserve's ability to buy assets and spark inflation is unlimited.
There is an abundance of market pundits squawking about the Federal Reserve being out of bullets. They believe that since interest rates are near zero, and commercial banks have a superfluous amount of reserves, that Fed Chairman Benjamin Bernanke has been rendered financially impotent.
They contend there would be no impact in the battle against deflation if the Fed were to add on yet more excess reserves and there is nothing Bernanke can do to increase the money supply because banks aren't lending and consumers aren't borrowing--despite near-zero interest rates. Therefore, they contend that expanding the Fed's balance sheet would have no affect on markets or the economy.

Can the Fed's Helicopter Drop Money on Treasury?
by Felix Salmon - Seekingalpha.com
Ricardo Caballero has an interesting idea:
The economy is barely muddling through. While some of this is unavoidable given the magnitude of the financial shock that is slowly working its way out of the system, macro-policy still has an important role to play in preventing a relapse. Unfortunately, the Federal Reserve has the resources but not the instruments, while the US Treasury has the policy instruments but not the resources. It stands to reason that what we need is a transfer from the Fed to the Treasury.
Caballero doesn't give an indication of how big this transfer should be. But presumably he thinks the transfer should be substantially larger than the sums that the Fed is already remitting to Treasury.

30 Statistics That Prove The Elite Are Getting Richer, The Poor Are Getting Poorer And The Middle Class Is Being Destroyed
TheEconomicCollapse.com
Not everyone has been doing badly during the economic turmoil of the last few years. In fact, there are some Americans that are doing really, really well. While the vast majority of us struggle, there is one small segment of society that is seemingly doing better than ever. This was reflected in a recent article on CNBC in which it was noted that companies that cater to average Americans are doing rather poorly right now while companies that market luxury goods and services are generally performing exceptionally well. So why aren't all American consumers jumping on the spending bandwagon? Well, it seems that there are a large number of Americans who either can't spend a lot of money right now or who are very hesitant to. A stunningly high number of Americans are still unemployed, and for many other Americans, there is a very real fear that hard economic times will return soon. On the other hand, there is a significant percentage of Americans who are blowing money on luxury goods and services as if the economy has fully turned around and it is time to let the good times roll. So exactly what in the world is going on here?

Michael Pento Says Fed Will Buy Stocks And Real Estat
In Its Next Attempt To Create Inflation
ZeroHedge.com
As part of the Fed's latest QE iteration, it has already been made clear that despite initial disclosures that the Fed would stay in the 2-10 Year bound of Treasurys, Ben Bernanke is now also gobbling up the very long end of the curve. For all those who are, therefore, still confused why bonds continue to surge to record levels, don't be: when there is a guaranteed bidder just below you in the face of the Fed, and who you can turn around and sell to at will, there is no pricing risk. The problem, from a bigger stand point, is what happens when the Fed is actively buying up 30 Year bonds with impunity and the much desired (by the Fed) inflation still does not appear? Well, the Fed then, in Michael Pento's opinion, will begin to purchase stocks and real estate. And as all those who enjoy comparing the US to Japan can attest, outright purchases of securities by the Japanese government is a long-honored tradition in the ongoing fight with deflation in Japan. However, and as the recent BOJ (lack of) intervention demonstrated, Japan never could do anything with the required resolve, and bidding up one stock here and there would never achieve anything.

Seven lean years: No recovery till 2016
By Paul B. Farrell, MarketWatch
10 reasons Jeremy Grantham's betting $100 billion on historic game-changer
ARROYO GRANDE, Calif. (MarketWatch) -- Summer of recovery? Dead. How dead? Remember Genesis? The Seven Lean Years? Add seven years to the handoff from Bush to Obama in early 2009 and you get no recovery till 2016. Get it? No recovery till the end of Obama's second term, assuming he's reelected -- a big if.
"The idea behind 'seven lean years' is that it is unrealistic to expect to overcome the several problems facing most developed countries, including the U.S., in fewer than several years." That's Jeremy Grantham talking; he's responsible for investing $100 billion in the next seven lean years. And like the biblical Joseph, whose life was on the line while interpreting dreams for the Egyptian pharaoh, Grantham can't afford mistakes.

Don't get fooled by Bernanke
Reassurances from Fed chief sound hollow
By Brett Arends
BOSTON (MarketWatch) -- When are investors going to stop getting suckered by Ben Bernanke?
The Dow Jones Industrial Average (DJIA 10,053, +43.36, +0.43%) jumped nearly 200 points Friday after the Federal Reserve chairman's pep talk on the economy. Worldwide markets followed suit. And long-term interest rates rose on his sunnier outlook.
Yes, the Fed chairman seemed to rule out a double dip. And yes, he said he stands ready to pump more money into the system if it should falter.
But so what?
On forecasts, the Fed chairman is about as useful as a New England weatherman.
As for the talk of more quantitative easing: A close reading of Bernanke's word's make you wonder if he even understands the crisis at all.

US economy continues sinking = print more money!?

Bernanke to address financial crisis inquiry panel
By DANIEL WAGNER - AP - MSNBC.com
WASHINGTON - Federal Reserve Chairman Ben Bernanke will testify this week about his role in the bank bailouts that sent billions of taxpayer dollars to banks deemed "too big to fail."
Bernanke will testify Thursday before the bipartisan Financial Crisis Inquiry Commission. The panel was created by Congress to investigate the roots of the financial panic that rocked Wall Street and the global economy starting in 2008.
Bernanke and other officials considered the banks "too big to fail" because they feared the banks' failures could spread panic and bring down the broader financial system. The government rescued insolvent companies such as Bear Stearns, Merrill Lynch and American International Group Inc. by brokering their sale to competitors or putting them under government control.

Fed minutes show debate on economic outlook
By Chris Isidore,
NEW YORK (CNNMoney.com) -- The Federal Reserve is the last line of defense against a weakening economy, but there has been sharp disagreement among members over what action the central bank should take.
Minutes from its most recent meeting released Tuesday show that Fed policymakers openly worried about the impact of its latest move: reinvesting the proceeds of maturing mortgages and debt into U.S. Treasurys. It's a step that keeps the Fed's $2 trillion balance sheet intact, and keeps money flowing through the U.S. economy.

FOMC August Minutes: Both employment and inflation to fall short of dual mandate
Posted by CalculatedRisk
From the Fed: Minutes of the Federal Open Market Committee
Economic outlook:
Members still saw the economic expansion continuing, and most believed that inflation was likely to stabilize near recent low readings in coming quarters and then gradually rise toward levels they consider more consistent with the Committee's dual mandate for maximum employment and price stability. Nonetheless, members generally judged that the economic outlook had softened somewhat more than they had anticipated, particularly for the near term, and some saw increased downside risks to the outlook for both growth and inflation. Some members expressed a concern that in this context any further adverse shocks could have disproportionate effects, resulting in a significant slowing in growth going forward. While no member saw an appreciable risk of deflation, some judged that the risk of further near-term disinflation had increased somewhat. More broadly, members generally saw both employment and inflation as likely to fall short of levels consistent with the dual mandate for longer than had been anticipated.

The Great Bond Market Crash of 2010
Written by Mad Hedge Fund Trader - OilPrice.com
OK, maybe it hasn't really crashed yet. But the two day, 3 ? point sell off in the futures for the 30 year Treasury bond (TBT), at the end of last week was the sharpest drop in 18 months. Winston Churchill's great 1942 quote, which marked the turning of the tide for Britain in WWII, comes to mind. "This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."
In my recent piece on the extreme overvaluation of government debt, I pointed out that the last time rates were this low, Treasury bonds brought in a miserly 1.9% yield for a decade. Professor Jeremy Siegel at the Wharton School at the University of Pennsylvania has one upped me. After yields bottomed in 1956, bonds suffered negative returns for 30 years!

Bullish on Bullion
Brian Kelly, president of Kanundrum Capital, tells CNBC why he's still long on gold.

Gold, silver forge ahead, post solid monthly gains
By Claudia Assis and Wallace Witkowski, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold futures rose to a two-month high Tuesday, pushing August gains past 5%, and silver hit a three-month high as investors sought out both metals to protect against a faltering economic recovery.
Gold for December delivery added $11.10, or 0.9%, to $1,250.30 an ounce on the Comex division of the New York Mercantile Exchange, the highest since late June and less than 1% from bullion's record settlement high of $1,258.30 an ounce on June 18.
Gold rallied 5.6% in August. That compares to a decrease of 5% in July and is gold's largest advance since April.

Gold and Silver Market Suppression Failures Flash Buy Signal, Part 2
Robert Kientz - SeekingAlpha.com
.... What about the US gold stocks?
In a book written by Chris Weber and summarized on Lew Rockwell's site, we noted that in the one audit of Fort Knox:
The shocking admission Ft Knox holds very little good delivery gold was made to Mr. Durell by the chief official of the General Accounting Office (GAO).
By February 1975 Saxbe was Ambassador to India, so Durell communicated his displeasure through his local Virginia congressman.
As a result of this, the GAO sent four men to Durell's Virginia farm to try to convince him of the validity of their accounting practices. In charge was Hyman Krieger, the GAO's Washington regional manager.

Gold Forecast to Hit $1500 During 2011
By: GoldCore - MarketOracle.co.uk
Concerns that the US economy is sliding back into recession has led to equities internationally coming under pressure and further flows into safe-haven assets. Gold and silver have consolidated from last week's gains and remain near closing levels from yesterday and last week. The yen - a preferred carry trade at times of financial stress - rose back to a 15-year high against the dollar as doubts remain about Japan's attempt to weaken the currency. Interestingly, despite the yen's recent strength, gold remains near multiyear record highs in the Japanese currency.

Gold Rallying to $1,500 as Soros's Bubble Inflates
By Nicholas Larkin
Aug. 31 (Bloomberg) -- Investors are accumulating enough bullion to fill Switzerland's vaults twice over as gold's most- accurate forecasters say the longest rally in at least nine decades has further to go no matter what the economy holds.
Analysts raised their 2011 forecasts more than for any other precious metal the past two months, predicting a 10th annual advance, data compiled by Bloomberg show. The most widely held option on gold futures traded in New York is for $1,500 an ounce by December, or 18 percent more than the record $1,266.50 reached June 21. Holdings through bullion-backed exchange-traded products are already at more than 2,075 metric tons, within 0.1 percent of the all-time high.

China's Insatiable Appetite for Gold
Written by Mad Hedge Fund Trader - OilPrice.com
Gold bugs and naysayers alike take note. When the world's second largest and fastest growing economy liberalizes gold ownership by individuals, who happened to be the planet's most fastidious savers at a 17% rate, you better pay attention.
Among other reforms, the Middle Kingdom is repealing the death penalty for the illegal importation of the yellow metal. The potential demand this will unleash boggles the mind. China historically has been a hard currency culture, and only started using paper banknotes when they were forced upon them as a way to repay debts by foreign colonial powers in the late 19th century.

Gold and Silver Market Suppression Failures Flash Buy Signal
by Robert Kientz - SeekingAlpha.com
I am writing this in a 5-part series. The first three parts will document in as much detail as space allows the methods and actors involved in the historic and current price suppression of the gold market.
The fourth piece will tell you how to profit from gold, and the fifth from silver. These last two parts are really how to survive it first, and then profit from it. I say this because the gold market is an economic signal that cannot be ignored, no matter how much the powers that be want you to. If the powers that be are trying this hard to suppress this invaluable economic signal, then this is one ominous sign that we are in for a large economic 'adjustment' period.

An Addendum to the 'Flations - Gold $5,000'
By Frederick Sheehan - The DailyReckoning.com
08/31/10 North Weymouth, Massachusetts - Federal Reserve Chairman Ben S. Bernanke delivered a much-anticipated speech on Friday, August 27, 2010. There was no reason to think this talk would be more or less important than his other talks except for the degree of hysteria whipped up by the media in advance.
Bernanke was addressing an audience of fellow central bankers and their camp followers at an annual gathering in Jackson Hole, Wyoming. There have been memorable comments at these late summer getaways, such as, in 2005, when past-Federal Reserve Board Vice Chairman Alan Blinder claimed then-current-Federal Reserve Chairman Alan Greenspan might be the "greatest central banker who ever lived."
But Ben Bernanke said nothing new. The post-mortem analysis of the world's most influential central banker can be reduced to four of his claims from Jackson Hole:

Silver is Hot, Hot, Hot
Written by Mad Hedge Fund Trader - OilPrice.com
Those who followed my advice to watch silver should by now have the precious coins raining down upon them.
Since then, the precious white metal has jumped 8% to $19.30, just pennies short of a multiyear high, compared to a more pedestrian 4% move by gold (GLD). It is thus fulfilling my prediction that it would outperform the barbaric relic by 2:1 on the upside.
The action has spilled over into the miners, with Coeur D Alene Mines (CDE) rocketing by 19% in two weeks, while Silver Wheaton (SLW) is up 14% and Hecla Mining (HL) has tacked on an impressive 16%.

There is NO GOLD in Fort Knox!
Joke From Casey Research
I have heard this joke many times but I still laugh every time.
It goes like this:
When George W. Bush became President he said there were a few things he always wanted to do but never could; and now that he is President, he gets to.
The first was that he always wanted to see the Gold in Fort Knox. His aides tried to discourage this by assuring him that the Gold and Fort Knox itself was very boring and that perhaps he would like to do something else.
"No", said the new President. "I want to see the Gold in Fort Knox".
"Whatever you say, Mr. President".
So they went to Kentucky and went inside the building at Fort Knox. An aide aptly pointed out that they really were behind schedule and perhaps they should go; once you've seen an ounce of Gold you've seen them all anyway.
"I want to see the Gold" said an increasingly perturbed President. "Let's go in the vault".
"Ok, sir". And in the vault they went.
"Where's the Gold?" asked George W. as he stood inside a large, brightly lit, but empty room.
"Ah, there is no Gold, sir" came the reply.
"What! No Gold?"
"No, sir, I'm afraid not."
And with that the new President turned on his heel and headed for the door.
As he left the vault, President George W. Bush addressed the officer in charge and said:
"Double the guard!"

More Money Printing, More Problems
By: MISES - MarketOracle.co.uk
CJ Maloney writes: The recent decision by the Federal Reserve to keep its balance sheet stuffed to bursting with whatever the Wall Street banks decide to throw onto it came as no surprise and crushed any hope that the Fed would tone down its policy of quantitative easing (QE) - or credit easing (CE), as Mr. Bernanke prefers to call it. With the US economy stalled despite the trillions of "stimulus" funds larded out to the politically connected, the people who helm the Federal Reserve likely felt they had no other choice. This was too easy to predict; for the past few decades the response of US monetary authorities to any crisis has been the same - print more money.

Currency Trading Soars
Market Hits $4 Trillion a Day as Investors Chase Profit in Growing Economies
By TOM LAURICELLA And DAVE KANSAS - WSJ.com - $$
Currency trading volume around the world has hit $4 trillion a day, fueled by investors in the wealthiest nations looking to diversify beyond their home markets in a time of economic turmoil.
The $4 trillion mark represents a 20% gain from $3.3 trillion in 2007, the last time the global foreign-exchange markets were surveyed, according to the Bank for International Settlements. While the survey found continued growth in currency trading, it did reflect a slowdown in the market's growth from the prior survey, when trading volumes had soared 69% from $1.9 trillion in 2004.

The Death Of Cash?
All Over The World Governments Are Banning
Large Cash Transactions
TheEconomicCollapse.com
Are we witnessing the slow but certain death of cash in this generation? Is a truly cashless society on the horizon? Legislation currently pending in the Mexican legislature would ban a vast array of large cash transactions, but the truth is that Mexico is far from alone in trying to restrict cash. All over the world, governments are either placing stringent reporting requirements on large cash transactions or they are banning them altogether. We are being told that such measures are needed to battle illegal drug traffic, to catch tax evaders and to fight the war on terror. But are we rapidly getting to the point where we will have no financial privacy left whatsoever? Should we just accept that we have entered a time when the government will watch, track and trace all financial transactions? Is it inevitable that at some point in the near future ALL transactions will go through the banking system in one form or another (check, credit card, debit card, etc.)?

China Currency Won't Spur Higher Duties by Obama Administration
By Mark Drajem
Sept. 1 (Bloomberg) -- The Obama administration rejected a plea from U.S. manufacturers to increase duties on imports from China to compensate for the effects of a weak yuan.
Makers of aluminum and glossy paper said an undervalued currency acts as a subsidy for Chinese producers, letting them undercut their American competitors. The Commerce Department rejected those arguments in two decisions released yesterday.
The cases became the focus of advocates for manufacturers after the Treasury Department declined to label China a currency manipulator during a recession in which U.S. manufacturing employment stagnated. Lawmakers have vowed to seek legislation requiring the Commerce Department to act if it failed to do so on its own.

Federal Reserve Board: China Can Own Up to 10% of Morgan Stanley
By MATTHEW SCOTT
The Federal Reserve Board on Tuesday cleared the way for China Investment Corp. (CIC) to acquire up to 10% of the voting shares of Morgan Stanley (MS). The move required approval under the Bank Holding Company Act of 1956, which restricts foreign government ownership of U.S. financial institutions.
CIC, a Chinese sovereign wealth fund which invests the government's foreign-exchange reserves, already owns 2.49% of Morgan Stanley's voting common stock through subsidiaries with U.S. bank branches. The fund first invested in the Morgan Stanley in December 2007 through a subsidiary, which bought preferred shares and obtained an agreement enabling in to buy voting common stock through August 2010.

Peter Schiff on CNBC Fast Money Aug 31, 2010

Banks Post $21.6 Billion Profit, Problem Lenders Rise
By Phil Mattingly - BusinessWeek.com
Aug. 31 (Bloomberg) -- U.S. lenders posted their biggest quarterly profit in almost three years, even as the number of banks at risk of failure rose to 11 percent of insured institutions, the Federal Deposit Insurance Corp. said.
Bank-industry profits totaled $21.6 billion in the three- month period that ended June 30, an increase from $18 billion in the first quarter, the FDIC said today in its quarterly report on industry performance.
"The economic recovery that began last year is beginning to be reflected in the rising earnings and improving credit quality," FDIC Chairman Sheila Bair said at a briefing. "Given economic uncertainties, we believe all banks should continue to exercise caution and maintain strong reserves," she said.

SEC drops Moody's fraud case
by Colin Barr - CNNMoney.com
The Securities and Exchange Commission let Moody's off the hook for failing to heed its own rating guidelines.
The SEC blamed "uncertainty" tied to the regulatory reforms enacted last month in dropping the widely watched case, which stemmed from Moody's 2007 failure to fix some European debt ratings after it discovered an error in their calculations. The Dodd Frank Act limits the SEC's jurisdiction to cases with a strong tie to the United States, the agency said.
But the securities regulator sternly admonished Moody's and other officially favored rating agencies -- known as nationally recognized statistical ratings organizations, or NRSROs -- not to let it happen again.

Global Collapse of the Fiat Money System:
Too Big To Fail Global Banks Will Collapse
Between Now and First Quarter 2011
When Quantitative Easing Has Run Its Course and Fails
by Matthias Chang - GlobalResearch.com
Quantitative Easing (QE I) spearheaded by the Chairman of Federal Reserve, Ben Bernanke delayed the inevitable demise of the fiat shadow money banking system slightly over 18 months.
That is why in November of 2009, I was so confident to warn my readers that by the end of the first quarter of 2010 at the earliest or by the second quarter of 2010 at the latest, the global economy will go into a tailspin. The recent alarm that the US economy has slowed down and in the words of Bernanke "the recent pace of growth is less vigorous than we expected" has all but vindicated my analysis. He warned that the outlook is uncertain and the economy "remains vulnerable to unexpected developments".
Obviously, Bernanke's words do not reveal the full extent of the fear that has gripped central bankers and the financial elites that assembled at the annual gathering at Jackson Hole, Wyoming. But, you can take it from me that they are very afraid.

Problem bank list climbs to 829
By Hibah Yousuf
NEW YORK (CNNMoney.com) -- The government's list of troubled banks hit its highest level since 1993 during the second quarter, although the pace of growth continued to slow, according to a government report released Tuesday.
The number of banks at risk of failing rose by 53 to 829, the Federal Deposit Insurance Corp. said in its quarterly survey of the nation's banking system. That increase marks the smallest rise since the first quarter of 2009.
However, it's still nearly double the 416 banks that were on the FDIC's watch list a year ago and is up from 775 in the first quarter of this year.

FDIC Finds 829 U.S. Banks at Risk
More Than One-Tenth of Total Are on 'Problem List
as Smaller Lenders Take Time to Recover
By MICHAEL R. CRITTENDEN - WSJ.com - $$
WASHINGTON - More than a 10th of U.S. banks remain at risk of failure even as some industry indicators, including credit quality, show some nascent signs of revival.
The Federal Deposit Insurance Corp. said Tuesday that 829 of the nation's roughly 7,800 banks were on its "problem list" at the end of June, up from 775 at the end of the first three months of the year. Already 118 banks have failed this year, well ahead of the pace set last year when 140 were seized by regulators.

Bond 'Bubble' Inflating Faster Than Dotcom
By: John Melloy - Executive Producer, Fast Money - MSNBC.com
Analysis from one Wall Street strategist shows that the pace of money flowing into bonds is faster at this stage than the infamous dotcom bubble of the late 1990s. And that's not necessarily bad news for those Treasury investors.
Almost two years into the bond flight, about $550 billion has poured into U.S. bond mutual funds and exchange-traded funds, according to BNYConvergEx Group Chief Market Strategist Nicholas Colas. Using inflation-adjusted figures, investors had put $499 billion at this same stage of the Internet bubble. Colas selected December 1996, the month of Alan Greenspan's "irrational exuberance" speech, as the estimated start of the bubble in equities. For bonds, he uses the collapse of Bear Stearns in March 2008.

Bond bubble - with Peter Schiff and Marc Faber

Citigroup Gets Burned on Caribbean Resort
Bank to Sell Mortgage on Viceroy Anguilla to Starwood Capital
at Big Discount in the Latest Move to Shed Ailing Assets
By KRIS HUDSON And LINGLING WEI - WSJ.com (free)
The eye of Hurricane Earl passed by the Caribbean island of Anguilla on Tuesday, blowing roofs off buildings and damaging phone and power lines. But for Citigroup Inc., far more damage was done on the tiny British territory by the storm ravaging the real-estate industry.
In 2006, Citigroup originated a big construction loan for a Viceroy resort described by developer Kor Hotel Group as "an exquisite rendition of the residential resort concept" on Anguilla. Four years later, after construction delays and cost overruns, Citigroup is getting out of this corner of the Caribbean at a huge loss.

Rounding Up the Culprits of Rising Prices
By The Mogambo Guru - The DailyReckoning.com
08/31/10 Tampa, Florida - From Bloomberg.com we get the bad news that "Bank of England Governor Mervyn King said inflation is likely to exceed the UK government's upper 3% limit in coming months as higher sales taxes drive gains in consumer prices," which "rose 3.1% in July from a year earlier after climbing 3.2% in June."
Apparently, he has to write a letter about it, probably something along the lines of "Dear British taxpayer, Our stupidity and incompetence have caused prices to rise more than 3% in a year, which means you are all doomed unless we government lowlife halfwits stop being incompetent, especially as regards monetary policy in general and creating far too much new money in particular, which we won't. Terribly sorry, old chap. Respectfully yours, Mervyn."

Flying Blind
by Peter Schiff - LewRockwell.com
Watching economists and media analysts react to breaking economic news is a bit like looking at a flock of pigeons flying over the New York skyline. A true wonder of the urban landscape, the flocks can include hundreds of individuals who show an uncanny ability to stay in tight formation as the group quickly zig-zags between buildings. What may be even more remarkable than their ability to randomly fly while maintaining cohesion is the flock's refusal to stick to any particular direction for very long, and their determination to fly feverishly without actually going anywhere. Sound familiar?

Harrisburg Defaults as Localities Struggle
By ROMY VARGHESE - WSJ.com $$
Pennsylvania's capital of Harrisburg said it will skip a $3.29 million municipal-bond payment due in two weeks, marking the second-largest general-obligation municipal-bond default this year.
The city's inability to make the payment, which is expected to be covered by its bond insurer, may feed worries about parts of the $2.8 trillion municipal-bond market, particularly bonds issued by smaller entities that may have fewer resources than states or larger governments.
Paying bondholders is typically a top priority for governments, which want to ensure investors will lend to them the next time they seek to borrow.

These are the Most Underwater States
Francesca Levy - Forbes.com
Nowhere is the aftermath of the housing crisis more clearly illustrated than in Nevada, where nearly three quarters of homes with mortgages are worth less than what borrowers owe on them.
In that state, a whopping 68% of mortgages are in negative equity, also known as "underwater". When you add in the homes that are "near negative equity," - defined as being within 5% of underwater, the number jumps to a whopping 72%, according to a recent report by CoreLogic, a real estate research firm.
In the U.S., negative equity is rampant - values have declined and debt risen such that 28% of homes are in or near negative equity.
The good news is that the number of underwater homes fell in the second quarter of 2010 from the first. The bad news is why it fell: most of those homes went from being underwater to entering foreclosure.

Keiser Report No73:
This time Max Keiser and co-host Stacy Herbert look at the year of records, from the record collapse in US house sales to new record temperatures, to a record year for payouts and to zombies. In the second half of the show, Max talks to Kate Sheppard, an environmental journalist at Mother Jones, about the ongoing crisis in the Gulf of Mexico and about the proliferation of corporate front groups.

Little Hope for the Housing Market
BY JON D. MARKMAN, Contributing Writer, Money Morning
Just when you thought the housing market couldn't get worse, it did.
New single-family home sales slumped 12.4% in July to a record-low annual rate of 276,000 units, as homebuyers shunned their realtors in the absence of government support. The consensus expectation was for a slight up-tick to a 333,000 unit annual rate, so I suppose it's time to throw out the models. Sales over the prior three months were also revised lower by 9,000 units.
No section of the country was spared, though the West led the parade with a 25.4% plunge. On a year-over-year basis, sales were down 32.4%, the fastest decline since April 2009.

Housing quagmire: Is it time to remove relief?
by Nin-Hai Tseng - CNN.com
FORTUNE -- For the growing number of struggling homeowners in this country, more help is on the way. Additional aid from the federal government will begin making its way to them next month -- one program would help qualified homeowners refinance their mortgages after seeing their property values fall below the amount they owe, and the other includes another round of funding to help the unemployed or underemployed with their payments.
It's easy to see the need for such programs. Theoretically, they keep people in their homes and bring some stability to fragile housing market. But the plethora of programs announced since the housing crisis started have largely been failures, suggesting that any effort to fight foreclosures and boost home sales is going to be a futile one.

On Case-Shiller House Prices: October is the "Witching Hour"
by CalculatedRisk
As we've discussed for some time, the Case-Shiller index is seriously lagged to real time data. The release today was for "June", but it is really an average of April, May and June.
Home sales were strong in April, May and June, and then collapsed in July. And prices have probably been falling for two months now - but that won't show up in Case-Shiller until the end of next month or even October (the Case-Shiller release at the end of October will be for June, July and August).

Social Security Bait and Switch
'Harry, am I making this up?' Yes, Mr. President, you are.
Democrats are trying to keep control of Congress by scaring the wig off grandma with a phantom GOP plot against Social Security. That is not news. Social Security scare tactics have been regular campaign themes since FDR. President Obama's unique contribution is to do this even as he's begging Republicans to help him reduce the deficit and reform entitlement spending.
***
On the one hand, Mr. Obama has charged his deficit commission with crafting a bipartisan plan to restrain entitlements. "Everything's on the table. That's how this thing's going to work," he said when he created the commission in February. "We now have to, in a gradual way, reduce spending, particularly on those big ticket items" like Social Security, he later added in Racine, Wisconsin. "That's going to be our project for the next couple years."

Record number in government anti-poverty programs
By Richard Wolf, USA TODAY
WASHINGTON - Government anti-poverty programs that have grown to meet the needs of recession victims now serve a record one in six Americans and are continuing to expand.
More than 50 million Americans are on Medicaid, the federal-state program aimed principally at the poor, a survey of state data by USA TODAY shows. That's up at least 17% since the recession began in December 2007.
"Virtually every Medicaid director in the country would say that their current enrollment is the highest on record," says Vernon Smith of Health Management Associates, which surveys states for Kaiser Family Foundation.

Indigent bodies must be offered to med schools
Attorney says county must comply with law before burial.
By NICHOLAS BERGIN - TheHawkEye.com
The bodies of poor and indigent people for whom Des Moines County would be required to pick up the bill for burial or cremation will soon be offered up to medical schools to use for educational purposes before being laid to rest at public expense.
During a recent review of state law while helping update the county's general assistance manual, Senior Assistant County Attorney Amy Beavers turned up an old law, previously unenforced by the county, requiring bodies being buried with taxpayers' dollars must be offered for use by medical science. Once the college or medical school has finished with the body, it will be properly buried or cremated.

Dear Patients: Vote to Repeal ObamaCare
Don't believe Democrats who promise to fix the bill once they're re-elected.
By HAL SCHERZ - WSJ.com - (free)
Facing a nationwide backlash, Democratic congressional candidates have a new message for voters: We know you don't like ObamaCare, so we'll fix it.
This was the line offered by Democrat Mark Critz, who won a special election in Pennsylvania's 12th congressional district after expressing opposition to the law and promising to mend it-but not to repeal it. As a doctor I know something about unexpected recoveries, and this latest attempt to rescue ObamaCare from repeal needs to be taken seriously.
For Democrats who voted for ObamaCare, this tactic is an escape route, a chance to distance themselves from the president with a vague promise to fix health-care reform in the next Congress.

Why you should care about palliative care
Patients who received counseling, symptom management lived longer By Kristen Gerencher, MarketWatch
SAN FRANCISCO (MarketWatch) -- For many patients facing a serious illness, the last thing on their minds is decoding what the phrase "palliative care" actually means, let alone asking for it in their moment of need.
But palliative care encompasses a kind of whole-person care their doctors may not have the time or knowledge to perform, experts say, and finding a specialist in the field for at least a consultation can help patients improve their quality of life.
Unlike traditional hospice care, which is available to patients expected to live no more than six months and typically requires them to forgo curative treatment, palliative care can be offered in addition to regular care, and can start immediately after a diagnosis.

California's safety-net health insurance premiums rise
State regulators have quietly given insurers permission to raise maximum premiums for most of the 20,000 who depend on the coverage of last resort. Some are paying an extra $7,500 this year.
By Duke Helfand - Los Angeles Times Staff Writer
As state leaders blast giant health insurers for raising rates, Gov. Arnold Schwarzenegger's administration has quietly allowed hefty increases for thousands of sick or jobless Californians who must rely on expensive safety-net coverage -- if they want insurance at all.
To the frustration of policyholders, state regulators have given insurance companies permission to raise maximum premiums for most of the 20,000 Californians who depend on the coverage of last resort. Some who buy the insurance will have to pay an extra $7,500 annually, pushing their bills to nearly $25,000.

TV News for Early Risers (or Late-to-Bedders)
By BRIAN STELTER - NYTimes.com
Last season, the big battle in television was fought over late night. This season, the battleground is shaping up to be the early morning. Very early.
The television business, it seems, is learning what the predawn buyers at the fish market already know: starting the day earlier can be a competitive advantage.
Stations in Boston, New York, Washington and other cities are adding 4:30 a.m. newscasts this month, joining a backward march that started in earnest a few years ago. And those are not even the earliest. One station in New York, WPIX, will move up its start time to 4 a.m. on Sept. 20.

Amazon Grabs the TV Remote
By SAM SCHECHNER And GEOFFREY A. FOWLER - WSJ.com (free)
Amazon.com Inc. is working on a new subscription service that would deliver TV shows and movies over the Internet, ramping up the battle among Web companies to control entertainment in the living room.
The Internet retailer has in recent weeks pitched a Web-based subscription service to several major media companies, including General Electric Co.'s NBC Universal, Time Warner Inc., News Corp. and Viacom Inc., among others, according to people with knowledge of the proposal.
Amazon's subscription push is a challenge to rivals such as Netflix Inc. and Google Inc. as they race to dominate digital delivery of TV shows and films, encroaching on turf traditionally controlled by cable- and satellite-television providers.

Alaska's Murkowski Concedes Defeat in Senate Primary
By Brian Faler and Amanda Coyne
Aug. 31 (Bloomberg) -- U.S. Senator Lisa Murkowski of Alaska conceded defeat to Republican primary challenger Joe Miller, becoming the latest candidate to fall to a Tea Party- backed newcomer.
In what may be the biggest upset so far this year, Murkowski bowed out of the race after failing to overcome Miller's lead from the Aug. 24 primary when absentee ballots were counted today.
"It's been a long week," Murkowski told reporters at her campaign headquarters in Anchorage. "I don't see a scenario where we could win."

The Beck-Palin Show Is No Joke
By Bill Boyarsky - Truthdig.com
It's easy to laugh off the weekend's Glenn Beck-Sarah Palin show at the Lincoln Memorial. Palin was her usual squeaky self. Beck was bombastic and self-important, explaining how God had assisted him in this enterprise, just as the almighty helped Moses lead the Jews out of Egypt.
But don't laugh just yet. The rally was a major event in the right wing's effort to take over Congress and the presidency.
It marked the end of a big conservative weekend in Washington. The other event was the two-day "Defending the American Dream Summit" of the Americans for Prosperity, an organization founded by the energy conglomerate billionaire brothers, Charles and David Koch. As reported in Jane Mayer's New Yorker profile, they have put many millions into ultraconservative organizations whose goal is to drive President Barack Obama and the other Democrats from office.

MURDER-SUICIDES: Economic worries taking toll in recent deaths
Victims' families blame financial stress
By MIKE BLASKY - LAS VEGAS REVIEW-JOURNAL
Donald and Barbara Romano had been residents of Las Vegas for more than 50 years.
He was a former Marine, a Korean War veteran and a respected member of the community. She was a loving mother, described as "very kind and generous" by her daughter.
But the couple, heavily involved in the real estate business, had been financially crippled by the recession.
On Aug. 20, a Friday, the couple was found dead in the bedroom of their million-dollar Summerlin home by their housekeeper, Las Vegas police said. A gun was found in Donald's hand and a note was left near the bed. Both were 74.

Is a 'Mega-Drought' on the Way?
by Robert Morley | From theTrumpet.com
Just one bad harvest away from the unthinkable
Seven years without rain. Three and a half years without rain. Have you ever read biblical accounts of drought and wondered if it could happen here? Could America survive seven years without rain? Studies indicate that the Dust Bowl of the 1930s, the worst drought America has survived to date, was small compared to what North America commonly experienced before European colonization. Could it happen again?
This is an important question because more than ever the world is depending on America to feed it.

FBI: No Probable Cause Required For Surveillance
by William Fisher - AntiWar.com
The bitter controversy over the building of a Muslim community center and mosque near the site of the terrorist attacks in New York on Sept. 11, 2001, is sparking new fears of government snooping on Islamic holy places - which it now claims it can do without a warrant.
The American Civil Liberties Union (ACLU), the Asian Law Caucus (ALC), and the San Francisco Bay Guardian newspaper, are suing the Federal Bureau of Investigation (FBI) in San Francisco over the agency's failure to respond to a five-month-old request for information on its investigation of Bay Area Muslim groups.

The Ball Is in Our Court
By Anwar Ibrahim
Skeptics and cynics alike have said that the quest for the moderate Muslim in the 21st century is akin to the search for the Holy Grail. It's not hard to understand why. Terrorist attacks, suicide bombings and the jihadist call for Muslims "to rise up against the oppression of the West" are widespread.
The radical fringe carrying out such actions has sought to dominate the discourse between Islam and the West. In order to do so, they've set out to foment anti-Americanism and anti-Semitism. They've also advocated indiscriminate violence as a political strategy. To cap their victory, this abysmal lot uses the cataclysm of 9/11 as a lesson for the so-called enemies of Islam.

Sharia for Dummies
by Nonie Darwish - BigPeace.com
Imam Feisal Abdel Rauf claims that the US constitution is Sharia compliant. Now let us examine below a few laws of Sharia to see if Imam Rauf is truthful or a fraud:

1. Jihad defined as "to war against non-Muslims to establish the religion" is the duty of every Muslim and Muslim head of state (Caliph). Muslim Caliphs who refuse jihad are in violation of Sharia and unfit to rule.
2. A Caliph can hold office through seizure of power meaning through force.
3. A Caliph is exempt from being charged with serious crimes such as murder, adultery, robbery, theft, drinking and in some cases of rape.
4. A percentage of Zakat (alms) must go towards jihad.
5. It is obligatory to obey the commands of the Caliph, even if he is unjust.
6. A caliph must be a Muslim, a non-slave and a male.
7. The Muslim public must remove the Caliph in one case, if he rejects Islam.
8. A Muslim who leaves Islam must be killed immediately.
9. A Muslim will be forgiven for murder of : 1) an apostasy 2) an adulterer 3) a highway robber. Making vigilante street justice and honor killing acceptable.
10. A Muslim will not get the death penalty if he kills a non-Muslim.

read more from the list in the online article. . .
what part of the above is compliant with the US constitution?

Obama marks the end of Iraq combat operations
U.S. has paid 'huge price,' President says;
'It is time to turn the page'
By John Letzing, MarketWatch
SAN FRANCISCO (MarketWatch) - U.S. President Barack Obama formally declared the end of the combat mission in Iraq late Tuesday, saying in a speech delivered from the Oval Office that it was time to turn to domestic concerns like the economy.
"Operation Iraqi Freedom is over, and the Iraqi people now have lead responsibility for the security of their country," Obama said.
Obama had earlier announced plans to pull combat troops out of Iraq by the end of this month, and shift responsibility to Iraq's own security forces.

President Obama's Oval Office speech on Iraq -- text
Oval Office Remarks by President Obama, as provided by the White House

The Ambiguity of War's End
By Eugene Robinson - Truthdig.com
Now that the Iraq war is over - for U.S. combat troops, at least - only one thing is clear about the outcome: We didn't win.
We didn't lose, either, in the sense of being defeated. But wars no longer end with surrender ceremonies and ticker-tape parades. They end in a fog of ambiguity, and it's easier to discern what's been sacrificed than what's been gained. So it is after seven years of fighting in Iraq, and so it will be after at least 10 years - probably more, before we're done - in Afghanistan.

Bob Chapman interviewed by Dr.Stan Montieth part 1 - Aug 30, 2010

Bob Chapman interviewed by Dr.Stan Montieth part 2 - Aug 30, 2010

Bob Chapman interviewed by Dr.Stan Montieth part 3 - Aug 30, 2010

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