Economic Stories of Relevance in Today's World -- May 1, 2011

The financial tipping point of peak debt – Total credit market debt owed increased from $28 trillion in 2001 to over $52 trillion in 2011. Household debt contracting while Fed juices up the banking sector with more debt. - My Budget 360 - Investing Ideas for Preserving Wealth - April 25, 2011 - At the dark heart of our financial dilemma is debt. Too much debt was used to bolster households during the real estate bubble and now too much debt is being used by the government to bail out the financial sector. Is there a tipping point in the amount of debt the American economy can shoulder? I believe there is and looking at the data carefully we begin to see unusual patterns not seen in a generation. The mosaic of tools used for this financial crisis would have worked if the problems we faced were merely issues of confidence. Of course the problems were very real and dealt with more than just perception and instead of confronting the reality of an over leveraged debt addicted machine we have only stepped on the accelerator. Yet this time instead of credit flowing to households for added game rooms or a trip to Hawaii credit is being extended to Wall Street courtesy of the Federal Reserve. Total credit market debt owed jumped from $28 trillion in 2001 to over $52 trillion today. During this time GDP went from $10 trillion to $14 trillion. You do the math where the growth is occurring.

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Home on the bear market range – the United States will face a 10 to 15 year real estate bear market. Hard to believe but we are already 5 years into this economic trend. The failure of Quantitative Easing in Japan. - My Budget 360 - Investing Ideas for Preserving Wealth - April 28, 2011 - - Can Americans cope with a 10 to 15 year bear market in real estate? On this front I have good news, and bad news. The bad news is that we are likely to face at least a 10 year bear market in real estate thanks to a lost decade in household income and the continued erosion of the middle class. Home prices can only reflect the underlying income of households paying the mortgage. Clearly with record foreclosures many cannot accomplish this financial Herculean task. The good news is we are already 5 years into this correction (so either we are half way or one third closer to a bottom). For the United States this is a new experience because we have never seen an annual drop in home prices on a nationwide basis outside of the current crisis. People point to the Federal Reserve as the knight in bailout armor for housing but look how far that has gotten us in the four years since the crisis started. It is safe to say that home prices will face a 10 to 15 year bear market so let us examine the details carefully.

2008 crash deja vu: We’ll relive it, and soon - Commentary: New bubble is hotter, bigger than the last one - Marketwatch - Paul B. Farrell - April 26, 2011 - Yes, another crash is coming, unavoidable, just like 2008. Not because our totally dysfunctional government is collapsing into anarchy, thanks to the 261,000 Super-Rich Lobbyists. Not just because our monetary system is run by the Bernanke Printing Press Company. And not just because a soulless conspiracy of Wall Street CEOs cares nothing for democracy and the public interest, only for their stockholders and their year-end bonuses... Another crash is coming soon because we’re back playing the same speculative games as we did for years prior to the 2008 crash. When we collapse, it will be because America’s leaders never learn the lessons of history. Never.

Losing Faith (In The U.S. Economy) - The Economic Collapse - Are the American people losing faith in the U.S. economy? The statistics that you are about to read might surprise you. Not everyone believes that the U.S. economy is dying (there are still millions out there that will swallow anything that the mainstream media tells them), but the reality is that there is a growing chunk of the population that has completely lost faith in our leaders and in our economic system. A brand new Gallup poll has found that the number of Americans that believe that we are in a "depression" is actually larger than the number of Americans that believe that the economy is "growing". That is absolutely shocking because according to official government figures, the U.S. economy is growing right now and virtually nobody in the mainstream media or the government has used the term "depression" to describe the economic downturn that we went through recently. In fact, according to Gallup a total of 55% of the American people believe that we are either in a recession or a depression right now. This is clear evidence that the American people are losing faith in U.S. government economic statistics and instead they are basing their opinions on what they see in their own communities. Despite the pablum about an "economic recovery" constantly being spewed by Ben Bernanke and Barack Obama, faith in our economic system continues to decline. The truth is that the American people are not stupid. They can see what is happening to the economy.

Backdoor Bailouts: Banks Play Shell Game With Taxpayer Dollars - Truthout - Senator Bernie Sanders (I-Vermont) - April 26, 2011 - The Federal Reserve propped up banks with big infusions of cash during the depths of the financial crisis in 2008 and 2009. Banks that took billions of dollars from the Fed then turned around and loaned money back to the federal government. It was a sweet deal for the bankers. They received interest payments on the government securities that were up to 12 times greater than the Fed's rock bottom rates, according to a Congressional Research Service analysis conducted for Sen. Bernie Sanders... "This report confirms that ultra-low interest loans provided by the Federal Reserve during the financial crisis turned out to be direct corporate welfare to big banks," Sanders said. "Instead of using the Fed loans to reinvest in the economy, some of the largest financial institutions in this country appear to have lent this money back to the federal government at a higher rate of interest by purchasing U.S. government securities."

* In the 1st quarter of 2008, JPMorgan Chase had an average of $1.2 billion in outstanding Fed loans with a 2.1 percent interest rate while it held $2.2 billion in U.S. government securities with an average yield of 4.6 percent.
* In the 4th quarter of 2008, JPMorgan Chase had an average of $10.1 billion in outstanding Fed loans with a 0.6 percent interest rate while it held $10.3 billion in U.S. government securities with an average yield of 1.7 percent.
* In the 1st quarter of 2009, JPMorgan Chase had an average of $29.2 billion in outstanding Fed loans with a 0.3 percent interest rate and held $34.6 billion in U.S. government securities with an average yield of 2.1 percent.
* In the 2nd quarter of 2009, JPMorgan Chase had an average of $7.6 billion in outstanding Fed loans with an interest rate of 0.25 percent interest. Meanwhile, it held $34.6 billion in U.S. government securities with an average yield of 2.3 percent.
* In the 1st quarter of 2008, Citigroup received over $5.2 billion in Fed loans with a 3.3 percent interest rate and held $7.9 billion in U.S. Treasury Securities with an average yield of 4.4 percent.
* In the 4th quarter of 2008, Citigroup received $15.8 billion in Fed loans through the Fed's Primary Dealer Credit Facility with a 1.2 percent interest rate; $11.6 billion in Term Auction Facility loans with a 1.1 percent interest rate; and $4.9 billion in Commercial Paper Funding Facility loans with a 2.7 percent interest rate. It simultaneously held $24 billion in U.S. government securities with an average yield of 3.1 percent.
* In the 1st quarter of 2009, Citigroup received over $12.1 billion in Fed loans with an interest rate of 0.5 percent while holding $14.3 billion in U.S. government securities with an average yield of 3.9 percent.
* In the 2nd quarter of 2009, Citigroup received over $23 billion in Fed loans with an interest rate of 0.5 percent while holding $24.3 billion in U.S. government securities with an average yield of 2.3 percent.
* In the 3rd quarter of 2009, Bank of America had an average of $2.9 billion in outstanding Fed loans with an interest rate of 0.25 percent while purchasing $23.5 billion in Treasury Securities with an average yield of 3.2 percent.

President John F.Kennedy, The Federal Reserve And Executive Order 11110 - Before It's News - April 24, 2011 - On June 4, 1963, a little known attempt was made to strip the Federal Reserve Bank of its power to loan money to the government at interest. On that day President John F. Kennedy signed Executive Order No. 11110 that returned to the U.S. government the power to issue currency, without going through the Federal Reserve. Mr. Kennedy’s order gave the Treasury the power “to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury.” This meant that for every ounce of silver in the U.S. Treasury’s vault, the government could introduce new money into circulation. In all, Kennedy brought nearly $4.3 billion in U.S. notes into circulation. The ramifications of this bill are enormous.

With the stroke of a pen, Mr. Kennedy was on his way to putting the Federal Reserve Bank of New York out of business. If enough of these silver certificats were to come into circulation they would have eliminated the demand for Federal Reserve notes. This is because the silver certificates are backed by silver and the Federal Reserve notes are not backed by anything. Executive Order 11110 could have prevented the national debt from reaching its current level, because it would have given the gevernment the ability to repay its debt without going to the Federal Reserve and being charged interest in order to create the new money. Executive Order 11110 gave the U.S. the ability to create its own money backed by silver.

After Mr. Kennedy was assassinated just five months later, no more silver certificates were issued. The Final Call has learned that the Executive Order was never repealed by any U.S. President through an Executive Order and is still valid. Why then has no president utilized it? Virtually all of the nearly $6 trillion in debt has been created since 1963, and if a U.S. president had utilized Executive Order 11110 the debt would be nowhere near the current level. Perhaps the assassination of JFK was a warning to future presidents who would think to eliminate the U.S. debt by eliminating the Federal Reserve’s control over the creation of money. Mr. Kennedy challenged the government of money by challenging the two most successful vehicles that have ever been used to drive up debt – war and the creation of money by a privately-owned central bank. His efforts to have all troops out of Vietnam by 1965 and Executive Order 11110 would have severely cut into the profits and control of the New York banking establishment. As America’s debt reaches unbearable levels and a conflict emerges in Bosnia that will further increase America’s debt, one is force to ask, will President Clinton have the courage to consider utilizing Executive Order 11110 and, ifso, is he willing to pay the ultimate price for doing so?

Gerald Celente on Jeff Rense - April 29, 2011
Gerald Celente Empire America is unraveling in front of us , ...The Business of America is War and The Business of China is Business , look at the difference look at the balance sheet , what we are seeing now it is not only the military industrial complex , it is the military intelligence complex , it's the same game , The CIA has now its own fleet of aircraft called drones and they have their mercenaries around the world doing their thing ?!?!

I tell people there are three things you should not do says Gerald Celente of The Trends Research Institute : Sign a petition , Send a letter to your congressman or call your senator , grow up !!!!