The US government IS the US housing market.

The US Government underwrote 96.5% of the mortgages in the 1st quarter 2010, up from 90% 2009. How many homes do you think would have sold without the US government intervening in the mortgage markets through Fannie, Freddie, Ginnie and the FHA?

Do you think mortgages rates would be 5.12% without the US government writing 96.5% of the mortgages? Would mortgages be this low without the Fed holding interest rates at near 0% at you the savers expense, and the Fed buying $1.2 trillion in securitized mortgages so, among other things, Fannie and Freddie can keep buying up pumped out mortgages?

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Photo: Courtesy Bloomberg

Morgan Stanley, long time Wall Street investment house with a history of regulatory fines and fraudulent activity, is walking away from mortgages on 5 San Francisco commercial properties. Morgan Stanley owes $8 billion on the five office buildings purchased at the top of the market in 2007 in the highly overpriced real estate market of bubble central, California. This latest Morgan Stanley act of borrower irresponsibility is in addition to a walk away default on a $6.5 billion, 17 million square feet of office buildings to Barclays Capital. The reason: The mortgages are 50% underwater. 

According to Bloomberg:

Morgan Stanley to Give Up 5 San Francisco Towers Bought at Peak

Alyson Barnes a Morgan Stanley spokeswoman, said yesterday, "This isn't a default or foreclosure situation. We are going to give them the properties to get out of the loan obligation."

Morgan Stanley: TARP Bailout-ee

Morgan Stanley bled US tax payers for $10 billion in TARP money in 2008. Morgan Stanley, like the infamous Goldman Sachs, are hedge funds that bellied up to the Fed's deposit bank discount window by fraudulently claiming to be deposit banks. The Fed approved the regulatory change September 21, 2008, for "Friends of Hank Paulson and Lloyd "Doin' God's Work" Blankfein" while denying the same status to Goldman competitor Lehman Brothers.

Wall Street has tried to lay the blame for the financial fiasco of securitization and Wall Street MBS fraud continually on "irresponsible people who took out mortgages they could not afford." The hypocrisy of Wall Street banks shirking their loan obligations and walking away simply "to get out of the loan obligation" is undeniable to anyone, even the tone deaf Obama administration's "No Wall Street banker Left Behind" crowd.

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Photo: Courtesy Wiki

President Evo Morales of Bolivia, we are honored to have you here to accept the 2009 Nobel Prize for Peace. As the first person of indigenous decent to occupy the democratically elected position of President of Bolivia, your tireless work on behalf the poorest citizens in your country for equality, fighting poverty, pushing for economic fairness and land reform initially brought your nomination before this committee.

President Morales it was your opposition to repression, your outspoken criticism of militarism and violence, your unwavering support of the democratically elected President of Honduras Manuel Zelaya in the face of the illegal, heinous coup and your efforts for peace that have inspired the world. These are the actions, President Morales that have brought you here tonight.

At great personal risk, you have time and time again battled military juntas and European descendant oligarchies within your own country and militarily and covert assaults from the centralized security apparatus of the world's corporate hegemonic power. You have been a long time farmer and union farm activist highly respected among your peers.

You have answered the call of your people time and again to public service. In that public service, you have remained true to your principles and held a moral compass by implementing the very policies to your people that you have campaigned upon. "Promises" of change, duplicity, bait and switch politics and Faustian bargains for power know not Evo Morales.

There was a sign by a member of the public at the recent summit in Copenhagen, "Politicians talk, Leaders act." While others are lauded for their fine speeches, you President Morales are a leader who not only speaks with wisdom but acts with wisdom.

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The Obama administration desperate for any positive economic news in the face of the increasing failure of Obama's "No Banker Left Behind" economic program has now resorted to reporting statistical noise on unemployment as a "Green Shoot."

As we have highlighted before if you run out of unemployment benefits you are no longer counted as unemployed. Guess what?

Obama's Bullshit Express

As our man on statistical and data analysis Bill the Brain at Calculated Risk points out:

Unemployment: Record Number Unemployed Over 26 Weeks

According to the BLS, there are a record 5.887 million workers who have been unemployed for more than 26 weeks (and still want a job). This is a record 3.8% of the civilian workforce. (note: records started in 1948)

Graph Courtesy Calculated Risk

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Tasteful Photo: Courtesy Jesse's Cafe Americain

We have discussed the phoniness of the U3 measure of unemployment. We have discussed the "marginally attached" worker not being counted as unemployed by U3 when their unemployment benefits run out... even though they are obviously still unemployed by U-Reality measure...

We have discussed the Birth/Death Ratio model used by the Bureau of Labor Statistics before. The BLS invented this model to account for jobs created by the Births and Deaths of small businesses that add or subtract employment (mostly add) that are supposedly missed by the BLS monthly surveys.

The BLS claims these jobs are added, yet the only hard data the BLS uses is payroll and payroll tax data, which they choose to ignore or give less weight to. After all if the IRS is collecting payroll tax payments monthly for businesses with payrolls over $50k of payroll and quarterly for businesses under $50k in payroll... why believe that kind of hard data on payroll expansion?

On October 2, 2009, the BLS admitted it had overstated job creation by 824,000 jobs mostly in the first quarter 2009. According to Bloomberg:

U.S. Job Losses May Be Even Larger, Model Breaks Down (Update1)

"About 824,000 more jobs may be subtracted from the payroll count for the 12 months through last March when the figures are officially revised early next year, a Labor Department report showed today. The revision would be the biggest since at least 1991."

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Courtesy Houston Chronicle

"Perhaps the biggest lie - the equivalent of smoking is good for you - is Obama's announcement that the US is leaving Iraq, the country it has reduced to a river of blood. According to unabashed US army planners, as many as 70,000 troops will remain 'for the next 15 to 20 years'."

"... It is not surprising that the polls are showing that a growing number of Americans believe they have been suckered - especially as the nation's economy has been entrusted to the same fraudsters who destroyed it. Lawrence Summers, Obama's principal economic adviser, is throwing $3 trillion at the same banks that paid him more than $8 million last year, including $135,000 for one speech. Change you can believe in."

John Pilger, Obama's 100 Days - The Mad Men Did Well

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Photo: Courtesy Truthdig.com

"He has blundered into a deepening quagmire in Afghanistan, has continued the Bush policy of buying off Wall Street hustlers instead of confronting them and is now on the cusp of bargaining  away the so-called public option, the reform component of his health care program."

Robert Scheer,  Obama's Presidency Isn't Too Big to Fail

The New Democrat is the Old Republican. Just as the Old Republicans devolve into some sort of deranged regional Confederate Party full of Michael Douglas' "Falling Down" character, taking the perceived demise of the white male in society as some sort of personal attack on their world.

The religious fanatics populating the Old Republicans are an angry unintelligible mass of screamers without logic. Raised by not sparing the rod, these beaten little Christers are now lashing out in the anger as the adults of abused children. The abused become the abusers in Max Blumenthal's well researched analysis of the angry white mobs of the Christian right... the New Confederate Party.

The New Democrat is really the old Rubin-McAuliffe corporate Democrat. McAuliffe whose guiding political philosophy is "Hey pal, payola for me not the other guy's party..." witnessed for the first time in 2006 Democrats receiving more campaign bribes from corporations than the Republicans by 60% to 40% advantage. Pelosi and Reid behaved like it. Not able to find the votes to stop anything or for any traditional Democrats populace position promised in the elections. From 2006 to 2008, Reid and Pelosi's marching orders came from their corporate owners whose bidding was carefully followed with excuses to the public.

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Warning! May contain Conspiracy Theory Related Materials!


Courtesy eons.com

So you are an NRA member.

You proclaim and support your right to bear arms under the constitution. Why not? Like religion and press, you have your own constitutional amendment in the Bill of Rights.

Currently, your amendment ranks #2. So why not be proud and celebrate it.

Bearing arms is useful. With real unemployment, U6...

Not that phony U3 where you are only unemployed as long as you are collecting unemployment insurance payments... once you run out of unemployment insurance you are no longer counted as unemployed by U3... are you any less unemployed?

I thought so.

What if you are an unemployed construction worker and there are no construction jobs in your area for you to apply for? You are then marginally attached according to U3 and therefore not unemployed...are you any less unemployed?

I thought so.

So real unemployment, U6 is closer to 16% and will probably rise close to 20% by that fine election year of 2010.

With millions of people running out of unemployment insurance and no new jobs under the Bush implosion and Obama no plan/ no recovery team of Save Wall Street Bankers Summers and Save Wall Street Bankers Geithner, the food budgets of Americans may get a little meager during record Wall Street bonus season.

That is when it may pay to have a shotgun and a hunting rifle. Deer and pheasant. Many of us may need to put some food on the table.

So you 2nd amendment fans have a practical side as well.

But I have to ask you something:

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The US government has reached the $1 trillion budget deficit level for fiscal year 2009 which will end September 30, 2009. The forecast budget deficits for 2010 are in excess of $1 trillion. The US Treasury traditionally finances deficits by having the Federal Reserve auction US Treasury bonds. So, in the face of record US national debt and record yearly budget deficits, how much debt is there a market for? How many Treasuries will Fed be able to hoist onto an already saturated market.

While the corporate news media reports the daily fluctuations in bond prices and interest spreads, there is little analysis of the overall trend, the big picture. There are a few independent commentators and bloggers who truly understand the ramifications of debt, service of the debt and an economies ability to carry that debt. Interest is a tax on an economy. It is rent for the money borrowed. When debt levels become too high, an economy cannot generate enough earnings to keep servicing exponentially growing levels of rent (interest)... Euler's magic number "e" with those wonderful properties...

The debt saturated US consumer is perfect example. The US consumer has spent the last 30 odd years since that policy genius Reagan helped us out by replacing falling real incomes (as opposed to non inflation adjusted or nominal income) with consumer debt to continue consumption growth.

We all know now the routine. Run up credit cards, take out a 2nd from the home as ATM machine, pay off the credit cards, buy an SUV, rinse and repeat. Which was all good and well keeping standards of US consumption in the needed (?) zone of flat screen tv's, club med vacations, and blackberries.

The same scenario faces our wonderful Federal Government. Rent, interest on the national debt is eating up more and more discretionary income, our tax revenue. Unlike consumers, the Federal Government is still issuing more and more debt.

Ilagri at The Automatic Earth posted an excellent analysis on who owns all the Treasury bonds now by category. Of these 11 categories, who has the capacity to step up and triple their purchases to finance this new massive 2009 and fiscal year 2010 Federal deficits. The analysis is done by Eric Sprott and David Franklin at Sprott Asset Management.

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Cockburn Becomes US Citizen

From the Nation:

Alexander Cockburn... columnist and one of America's best-known radical journalists, was born in Scotland and grew up in Ireland.

Wait, they are letting radicals into this country? Radical journalists no less?

Dick Cheney is right... This current administration is failing to protect America from these radicals.

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Note: Sorry I had to repost this... my learning curve is often steep...

This is why we like Bill the Brain at Calculated Risk.

Bill writes excellent analysis on economic issues and trends in general, mortgages, foreclosures in particular with great clarity. Now that I praised Bill's clarity, under the odd title "Another Involuntary Landlord and Summary"...Bill covers unemployment with his usual insight and links to his previous top notch posts on the subject.

Another Involuntary Landlord and Summary

Known for is ironic wit, the picture of the "Another Involuntary Landlord" with for lease sign in front is? Click on his photo and read the plaque:

The National Association of Homebuilders, National Housing Center in Washington DC.

But I thought sentiment among homebuilders was up on increasing month over month new home sales??

As Bill has taught me... Real Estate is cyclical on an annual basis. Sales always go up in April through August. People always try to buy and get moved in before school starts for their kids and/or the holiday season. These trends have repeated in the US, year after year, decade after decade. Believe the trend line.

Never pay attention to month over month, always pay attention to year over year... this month last year. Month over month is used to mislead... like the National Association of Realtors and Homebuilders.

Bill on unemployment:

 

Courtesy Calculated Risk

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Paul Farrell at Market Watch gives us some summer school in macroeconomic policy theory:

"BS-1. Don't give the recovery to the same idiots who created the mess"

From Mr. Farrell's piece:

'Pretty Boy' Paulson and the Goldman Gang Commentary: 'Public Enemies' run, not rob, our banks today

ARROYO GRANDE, Calif. (MarketWatch) -- Yes, two Great Depressions linked in a mysterious time-warp: Bank robbers and robber banks. Back in the dark days of the first Great Depression John Dillinger was admired, a dapper Robin Hood. Banks were the real villains.

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This is why we like Ilargi and Stoneleigh at the Automatic Earth:

 Is That the Sound of a Baton Dropping?

"Ilargi: When the New York Times starts publishing articles on how bad the financial crisis really is, despite all the green recovery shooting stories sprouting from government circles and media such as, among others, the New York Times, I'm going to have to guess that it's official now."

Ilargi is commenting on two NY Times financial reporters, Floyd Norris and Bob Herbert. Herbert's op-ed "No Recovery in Sight" and Norris' article "Off the Charts: A Recession Measured by New-Home Sales" both appeared in June 26, 2009 in the NY Times online.

Let us have Ilargi, a person with a written history of clarity summarize this:

"Can the editorial staff wash their hands clean of revered writers like Floyd Norris and Bob Herbert? Or should we perhaps look at this from another angle? Is the Times changing its stance on the entire Obama government politics? Is it going to give up the noble art of cheerleading? Is that the sound of a baton dropping?

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From Reuters 6/26/09:

"Ruth Madoff forfeits assets, left with $2.5 million"

 WHAT???

"Court documents filed on Friday night showed Ruth Madoff, 68, who has said nothing in public about her husband's crimes in the six months since his arrest, would be left with $2.5 million in cash."

Our DOJ prosecutors are as corrupt and useless as the SEC, our Congress people, Dodd, Shumer et al.?

Now of course Ruth Madoff should receive a fair trial, but she was the bookkeeper for Bernie from the start. There is strong evidence her father was in on the Madoff frauds from way back when.

So what part of her inheritance from her father and "her" money is not traceable right back to Bernie's crimes?

So where are the indictments against the brother, sons, nieces and Ruth?

In a related article it was reported the Madoff's relinquished claims to loans... does that mean the millions "loaned" to Mark, Andrew and Peter for property purchases are not viewed as payola in the scheme?

"The Madoffs will also lose their interest in "tens of millions of dollars" in loans they had made to family, employees and friends."

Read this completely misleading CNN title:

"Madoff reduced to nothing"

Ruth's $2.5 million ain't nothing you morons at CNN...

Add the useless Corporate News media to the list.

Prosecutors have a lot of explaining to do. Our federal government teeters on the edge of both financial and moral/legal bankruptcy.

20 years ago, within a year of Michael Milken's junk bond fraud implosion, he faced a 98 count felony indictment.

Wall St. has perpetrated fraud on an exponentially larger scale and we see NO INDICTMENTS of the MBS junk bond crowd. Not one. In fact the opposite. Wall Street received the greatest asset shift from the US tax payer in human history as a reward for their crimes courtesy of our elected representatives.

Can any one say "Regulatory Capture" ?

These issues are not unrelated. It has taken the Fed 20 years to become completely corrupt and ineffective in law enforcement against the "HAVES" as opposed to the have nots... yet we the latter pick up the tab.