Fox News Poll: 79% Of Americans Say U.S. Economy Could Collapse:

Fox News Poll: 79% Say U.S. Economy Could Collapse:

Updated March 23, 2010
By Dana Blanton - FOXNews.com

Most American voters believe it’s possible the nation’s economy could collapse, and majorities don’t think elected officials in Washington have ideas for fixing it.

The latest Fox News poll finds that 79 percent of voters think it’s possible the economy could collapse, including large majorities of Democrats (72 percent), Republicans (84 percent) and independents (80 percent).

Just 18 percent think the economy is "so big and strong it could never collapse."

Moreover, 78 percent of voters believe the federal government is "larger and more costly" than it has ever been before, and by nearly three-to-one more voters think the national debt (65 percent) is a greater potential threat to the country’s future than terrorism (23 percent).

Who has a plan for dealing with the economy?

Overall, 35 percent of voters think the Obama administration has a clear plan for fixing the economy, down from 42 percent last summer (July 21-22, 2009).

At the same time the number saying the White House doesn’t have a plan for the economy has increased from 53 percent in July to 62 percent in the new poll. That includes almost all Republicans (88 percent), two-thirds of independents (67 percent), as well as a third of Democrats (33 percent).

Even fewer people think Democrats in Congress (24 percent) and Republicans in Congress (16 percent) have clear plans to fix the economy.

There is a large gap in party support, as Democrats (46 percent) are significantly more likely than Republicans (25 percent) to think their party has a strategy for the economy.

The national telephone poll was conducted for Fox News by Opinion Dynamics Corp. among 900 registered voters from March 16 to March 17. For the total sample, the poll has a margin of sampling error of plus or minus 3 percentage points.

"These results reveal a deep anxiety about the fragility of our economy, as voters face continued uncertainty about jobs and an expanding commitment to public sector spending," said Ernest Paicopolos, a principal of Opinion Dynamics.

Three in 10 American voters (30 percent) say they are comfortable with the size and role of the federal government right now, while 65 percent say the government has become too big and "is restricting American freedoms."

Sizable majorities of Republicans (84 percent) and independents (74 percent) think the government is too big, while just over half of Democrats (51 percent) are okay with the size of government.

http://www.foxnews.com/politics/2010/03/23/fox-news-poll-say-economy-collapse/?test=latestnews

Health Reform: A Year-by-Year Rundown of What Happens and When:

Health Reform: A Year-by-Year Rundown of What Happens and When:

Jill Lawrence
Posted: 03/23/10

The historic health overhaul that President Obama signed on Tuesday (in advance of further "fixes" in a reconciliation bill) will make sweeping changes in our health system. They include new consumer protections, expanded coverage of the uninsured, penalties for people and businesses who don't buy insurance, attempts to control rising costs, and Medicare savings and new taxes to pay for it all. Here is a year-by-year look at what's in store, assuming final Senate passage later this week of a package of amendments to the landmark bill both chambers already have passed:

2010

Adults who can't get coverage because of a pre-existing medical condition can join a high-risk insurance pool (this is an interim step pending the launch in 2014 of competitive health insurance marketplaces and premium subsidies).

Insurance companies will have to issue policies for children with pre-existing conditions. They will not be allowed to revoke existing policies if people get sick. Lifetime limits on coverage will be banned in new coverage and annual limits will be restricted. Preventive services will be fully covered, with no co-pays or deductibles. Coverage will be available for dependent children until they turn 26.

People in the Medicare prescription drug program will receive a $250 rebate as the first step in closing the coverage gap, or "doughnut hole," that requires them to pay full freight after they have spent $2,700 on drugs. The gap would be phased out entirely by 2020.

Certain small businesses will start getting tax credits to offset up to 35 percent of the cost of insuring their employees. That will rise to 50 percent in 2014.

Plans must have "an effective appeals process" for decisions and claims. States will get grants to set up programs that help consumers with complaints or questions about health insurance. The federal government will set up a website to help people in different states figure out their insurance options.

The first tax increase kicks in: A 10 percent tax on indoor tanning services.

2011

Medicare changes will include free annual wellness visits; little to no cost-sharing for preventive care, like immunizations and cancer screenings; bonuses to primary care doctors and general surgeons; a new Center for Medicare and Medicaid Innovation to test ways to provide better, more efficient care; and, the start of a phase-out of overpayments to private Medicare Advantage insurers. People in the prescription "doughnut hole" will receive discounts on prescriptions.

2012

There will be new money for primary care services and new incentives to encourage doctors to join together in "accountable care organizations." The government will track re-admission rates at hospitals and impose penalty fees on hospitals with the highest rates.

2013

This is when higher taxes will begin for households with income above $250,000 and individuals above $200,000. The Medicare payroll tax on earnings above those amounts will rise from 1.45 percent to 2.35 percent. Unearned income above those amounts, such as dividends, will now be subject to a 3.8 percent tax.

In addition, maximum contributions to pre-tax Flexible Savings Account contributions will be limited to $2,500 a year (down from the current $3,050 for individuals).

There will be a new 2.9 percent excise tax on medical devices.

Medicare will sponsor a national pilot program on "payment bundling" -- paying hospitals, doctors and other providers based on patient outcome, not services provided.

2014

More consumer protections begin. Insurance companies will not be able to deny policies to anyone based on their health status or to refuse coverage of a treatment based on pre-existing health conditions. Their ability to charge higher rates to people based on age, geography, family size or tobacco use will be limited. Annual limits on coverage will be abolished.

Each state will open a health insurance exchange, or marketplace, for individuals and small businesses without coverage. People will be able to comparison shop for standardized health packages. There will be a multistate private plan available nationwide, supervised by the U.S. Office of Personnel Management. Tax credits will be available to make insurance and care affordable for people who make too much to qualify for Medicaid, but have incomes below 400 percent of poverty.

Most people will be required to buy insurance coverage or pay penalties that start at $95 in 2014 and rise to $695 or 2.5 percent of income in 2016. Employers with 50 or more workers who do not offer coverage will have to pay annual fees.

Medicaid eligibility will increase to 133 percent of the poverty level ($14,404 for individuals) for everyone under 65 (when they qualify for Medicare).

2015

A new Independent Payment Advisory Board will be formed to come up with ways to lower Medicare costs and promote better care. The recommendations will go to Congress and private insurers.

2018

This is when the most controversial new tax begins, a 40 percent excise tax on insurance companies and plan administrators for any family plan that costs more than $27,500. The tax applies to the cost above that threshold. There are higher thresholds for retirees over 55 and plans that cover workers in high-risk jobs.

2019

The new system will have reduced the number of uninsured people by 32 million, according to the nonpartisan Congressional Budget Office. That will leave an estimated 23 million uninsured, one-third of them illegal immigrants. Coverage of legal residents too young for Medicare (under age 65) will be 94 percent, up from 83 percent now.

http://www.politicsdaily.com/2010/03/23/health-reform-a-year-by-year-rundown-of-what-happens-and-when/?icid=main|htmlws-main-n|dl1|link7|http://www.politicsdaily.com/2010/03/23/health-reform-a-year-by-year-rundown-of-what-happens-and-when/

New Health Care Bill Pros and Cons:

New Health Care Bill Pros and Cons:

by Tracy Edenloft
March 22, 2010

Obama Health Care Plan Explained

With the recent passage of the proposed Health Care Reform Bill in the House of Representatives, a lot of Americans are now looking for the explanation of the pros and cons of this new health care bill. They are asking themselves: “What does the health care bill mean to me?”

How can you explain the Obama Health Care Plan? Well, we all know that most Democrats agreed and voted “yes” to this new health care bill on the ground that it will help a lot of Americans with their health insurance costs.

In contrast, Republicans voted for a “no” simply because they claim that this Health Care Reform Bill is so expensive that it may hinder the growth of the US economy given that the total expenses of the US Government is pegged at $940 billion.

So given the contrasting ideas of both Democrats and Republicans in this Health Care Reform Bill, what are the pros and cons of this new health care bill to the millions of ordinary Americans? Let’s enumerate some of them.

Health Care Bill PROS:

1. Discrimination of health insurance companies will be eliminated. No more pre-existing conditions clauses in health insurance contracts.

2. Given the fact that millions of Americans will be insured by this new health care bill, the US Government can negotiate among health insurance firms to lower the premiums of their health insurance. This would mean less health insurance costs for a lot of Americans.

3. Tax credit will be given to those Americans who still cannot afford to avail health insurance to help them to have one.

4. Stiff competition among health insurance firms will possibly result to much lower insurance costs and more quality health insurance products and services.

5. Aside from the elimination of pre-existing conditions stated above, the coverage amount or sum insured will also be waived by health insurers.

Health Care Bill CONS:

1. Given the huge amount of expenses pegged at $940 billion in a spread of about 10 years, it might slow down the growth of heavily burdened US economy.

2. Insurance Availment Mandate. You have no choice but to get a health insurance. Otherwise, you will be subjected to a 2% tax increase which will be used to subsidize the insurance costs of other Americans. Healthy people who take care of themselves will have to pay for the burden of those who smoke, are obese, etc.

3. There will be a tax increase on people with very high income. If you are making more than half a million per annum, you will have about a 1% tax increase.

4. The US Government will have more control in the health insurance industry causing patients’ confidentiality to be more likely compromised since centralized health information will likely be maintained by the government.

5. Chances of bribery may possibly increase as health care equipment, drugs, and services may end up being rationed by the government.

http://www.worldcorrespondents.com/new-health-care-bill-pros-and-cons-obama-health-care-plan-explained/881955

VIDEO - Technical Analysis of the S&P 500's Daily & Weekly Charts:

Every Sunday evening, I post a video here and on a few other sites that shows the technical analysis of the $SPX daily and weekly charts. I also show the Russell 2000 and the TZA charts, and talk about what kinds of news, earnings reports, and economic reports to pay attention to in the coming week.

Happy Trading next week,
zigzagman

THE Most Important Chart of the Century...

THE Most Important Chart of the CENTURY!:

by Nate
Published on 03-20-2010 02:24 PM

The latest U.S. Treasury Z1 Flow of Funds report was released on March 11, 2010, bringing the data current through the end of 2009. What follows is the most important chart of your lifetime. It relegates almost all modern economists and economic theory to the dustbin of history. Any economic theory, formula, or relationship that does not consider this non-linear relationship of DEBT and phase transition is destined to fail.

It explains the "jobless" recoveries of the past and how each recent economic cycle produces higher money figures, yet lower employment. It explains why we are seeing debt driven events that circle the globe. It explains the psychological uneasiness that underpins this point in history, the elephant in the room that nobody sees or can describe.



This is a very simple chart. It takes the change in GDP and divides it by the change in Debt. What it shows is how much productivity is gained by infusing $1 of debt into our debt backed money system.

Back in the early 1960s a dollar of new debt added almost a dollar to the nation's output of goods and services. As more debt enters the system the productivity gained by new debt diminishes. This produced a path that was following a diminishing line targeting ZERO in the year 2015. This meant that we could expect that each new dollar of debt added in the year 2015 would add NOTHING to our productivity.

Then a funny thing happened along the way. Macroeconomic DEBT SATURATION occurred causing a phase transition with our debt relationship. This is because total income can no longer support total debt. In the third quarter of 2009 each dollar of debt added produced NEGATIVE 15 cents of productivity, and at the end of 2009, each dollar of new debt now SUBTRACTS 45 cents from GDP!

This is mathematical PROOF that debt saturation has occurred. Continuing to add debt into a saturated system, where all money is debt, leads only to future defaults and to higher unemployment...

This is just a teaser. The full article has many graphs that your really should see. Read the rest of the article here:

http://www.swarmusa.com/vb4/content.php/282-THE-Most-Important-Chart-of-the-CENTURY

ObamaCare: The Slaughter House Three:

ObamaCare: The Slaughter House Three:

by Dr. David Janda
Mar 20th 2010 at 9:29 am

In Kurt Vonnegut’s 1969 novel, Slaughterhouse Five, the main character, Billy Pilgrim, is an American POW who hides in a meat cellar as Dresden is being fire bombed.

In 2010, the Slaughterhouse Three, Obama, Pelosi and Reid, shove every American in a meat cellar as they fire bomb America with their rationing-based health care plan. ObamaCare is a plan designed to strip Freedom and Liberty from every American.

Obama, Pelosi and Reid now have decided to avoid an up/down House vote on the Senate Bill and to enforce the “Slaughter House Rule”. In other words, when you do not have the votes, just change the rules, pass the changes to the bill and pretend you passed the “real” bill. Previously, the public was outraged that members of Congress did not read the bill prior to voting. This is even worse. With this latest charade, Obama, Pelosi and Reid are forcing House members to pass the bill without voting on the bill. …So much for a democratic republic and The Constitution.

The latest version of ObamaCare is troubling on many fronts. ObamaCare takes control of every American’s health care life. This plan would not improve the current system, and is fatally flawed because it:

* Rations and denies access to healthcare. Denying access to healthcare is the most inhumane and unethical means of cutting costs;

* Costs $1 TRILLION ($100 Billion more than The Senate Bill);

* Creates over 110 Federal Agencies, commissions and boards;

* Creates The Health Insurance Rate Authority….a direct violation of States’ Rights;

* Establishes a “ Comprehensive Database” on Americans;

* Establishes Individual and Employer Mandates (Mr. Obama’s own Chair of Council of Economic Advisors has stated that this alone would cost 5.5 Million jobs….more unemployment;

* Institutes $748 Billion in new taxes;

* Cuts Medicare by $500 Billion, over a period when 30% MORE Americans will be added to Medicare rolls, (You do the math;

* Imposes $136 Billion in tax hikes on working families making LESS THAN $250,000 (Americans for Tax Reform Analysis);

* Ends Medicare Advantage Program for Seniors and forces them to a more expensive plan with less benefits;

* Applies Medicare Tax to unearned income;

* Increases Medicare Payroll Tax from 2.95 to 3.8%; and

* Increases unfunded mandates on every State;

* Increases Capital Gains tax rate as of 2014 to 23.8%;

* Creates 16,000 jobs for the IRS to implement penalties for those not buying insurance.

The Slaughterhouse Three, Obama, Pelosi and Reid, have authored the legislation that will make every American a POW, strip them of their Freedoms and Liberty and shove them in a meat cellar for cold storage. So how is that Hope and Change working for you now?

http://biggovernment.com/djanda/2010/03/20/obamacare-the-slaughter-house-three/#more-92930

Fundamentals Don't Matter Until They Do:

Fundamentals Don't Matter Until They Do:

Comstock Partners, Inc.
March 18, 2010

The market rallied when the FOMC said it would keep the Fed Funds rate at current levels for an extended period just as it rallied when it became likely that the EU would paper over (at least temporarily) the Greek financial crisis. The market apparently continues to have great faith that the various central banks throughout the globe will continue to bailout and guarantee that they would never let any entity fail and would assure continued economic growth indefinitely. In other words, what economists and strategists used to refer to as the "Greenspan put" has now essentially become the "Bernanke put". We at Comstock have no such conviction that piles of additional debt issued or assumed by governments can cure the problems that were brought on by too much debt in the first place.

In this connection the delusions and hopes associated with the current rally bear a lot of resemblance to the unwillingness of investors to recognize reality at the market tops of March 2000 and October 2007. In the late 1990s and into early 2000 the market gave enormous valuations to tech stocks with no earnings and, in many instances, little or no sales as thousands of people with no market experience spent their time day trading their way to huge profits that evaporated, along with their initial capital, in the ensuing market carnage.

When the game ended with big losses and a potentially deep recession, the Fed stepped in by keeping interest rates at 1% for an extended period and encouraging, along with others, a massive boom in housing. Despite warnings by reputable individuals such as Paul Volcker and by institutions such as the IMF and the World Bank, the stock market soared.

Even when the dangers of the housing boom started to become evident in the media and the industry began to weaken, the stock market surge continued unimpeded. In August 2006 an article in Barron's described in detail the number of new mortgages and home-equity loans that were interest-only, no-money-down and adjustable-rate. Other articles explained so-called "liar loans" whereby purchasers were able to get mortgages with no documentation of income or assets. In the same period various mortgage lenders went public with their dire problems. These companies included, among others, H&R Block, Impac Mortgag, Countrywide, Accredited Home Lenders and Washington Mutual. During the following period revelations came out almost daily how mortgages were packaged and sold, sliced and diced and distributed all over the globe. In June 2007 two big Bear Stearns hedge funds came close to collapse and still Wall Street didn't get it. The stock market kept rising into October as investors belittled the importance of subprime mortgages, and, in any event, assumed the Fed would take care of everything.

Now, once again the markets are assuming that central banks around the world will save the economy despite the severe problems that are known to all and despite the fact that the S&P 500 has already experienced two declines of more than 50% within the same decade. The economic recovery remains extremely weak, plagued by consumer deleveraging, a weak labor market, tight credit, a hidden inventory of homes to be foreclosed, significant amounts of toxic debt still on the books of major financial institutions and the dire financial condition of state and local governments.. In addition there are the continuing problems of sovereign debt, the unsustainable boom in China and the threat of "beggar thy neighbor" policies as illustrated by the current trade and currency tensions between the U.S. and China.

Meanwhile, as in 2000 and 2007, the stock market is once again flying upward, feeding on its own momentum and the faith that governments will never let bad things happen. The general feeling seems to be that fundamentals don't really matter any more as long as the market is rising. As past massive declines have proven, however, fundamentals don't matter until they do.

http://www.comstockfunds.com/default.aspx?MenuItemID=29&&AspxAutoDetectCookieSupport=1

My Latest Video: $JOEZ - Support & Resistance at the Middle Bollinger Band"

This is the second lesson in a four part series that explains how important the middle Bollinger Band is in relation to my trading strategy...

It also explains the relationship between the middle BBand, the zero line of the CCI, and the fifty line of Stochastics...

It also ties the Buy & Sell Signals the MACD gives into the equation...

JPMorgan, UBS and Deutsche Bank Charged with Derivatives Fraud:

JPMorgan, UBS and Deutsche Bank Charged with Derivatives Fraud:

Posted by Jesse at 9:20 AM
17 March 2010

More like international crime families sending out enticing emails trying to lure and trick the unsuspecting than serious financial institutions. This is banking?

Notice that these were operating out of their London units, similar to the AIG derivative scandal that helped to worsen the US financial crisis. The FSA is apparently working hard now to enforce its rules and bring these banks to heel. Contrast that with the SEC in the States which seems reluctant to do anything regarding enforcement, and even when a judge puts them to the task, are able to administer only the mildest of financial chastisement to be passed on to the shareholders.

There is speculation that the US government cannot reform these banks because it is deeply involved in financial transactions of a questionable nature with them itself, ranging from enormous individual campaign contributions to market manipulation in various financial instruments in support of government policy which is otherwise failing badly. The opacity of markets and government bodies like the ESF makes this difficult to assess, but the outrageous size of positions amongst some of the banks, together with the occasional slip in the redacted transcripts is the smoke that indicates more heat beneath the surface than we might imagine.

The US Treasury Secretary himself is recenly implicated in an outrageous accounting fraud perpetrated by Lehman Brothers with the apparent complicit silence of the NY Fed which he was leading at the time.

And yet the Congress seems to be able to do little or nothing, it is so controlled by the monied interests. The Senate has the temerity to propose giving Consumer Protection to this very Fed as it is revealed to be complicit in bank fraud of epic proportions, and a track record of fighting and delaying consumer reforms and sensible regulation of OTC derivatives for years. The Republicans are unashamed of their venality, and the Democrats are seemingly leaderless.

The banks must be restrained, the financial system reformed, and balance restored to the economy before there can be any sustained recovery.

****

Deutsche Bank, JPMorgan, UBS Are Charged With Derivatives Fraud

By Elisa Martinuzzi and Sonia Sirletti

March 17 (Bloomberg) -- Deutsche Bank AG, JPMorgan Chase & Co., UBS AG and Hypo Real Estate Holding AG’s Depfa Bank Plc unit were charged with fraud linked to the sale of derivatives to the City of Milan.

Judge Simone Luerti scheduled the trial of the four firms, 11 bankers and two former city officials for May 6, Prosecutor Alfredo Robledo said after a hearing in Milan today. The banks allegedly misled the city on swaps that adjusted interest payments on 1.7 billion euros ($2.3 billion) of borrowings.

Prosecutors across Italy are probing banks as local and national government agencies face potential losses of 2.5 billion euros on derivatives, lawyers say. The Milan probe may also affect cases as far away as the U.S., where securities firms have faced charges for price-fixing and bid-rigging in the sale of derivatives to municipalities, though not for fraud, according to former regulator Christopher “Kit” Taylor.

“This case could have repercussions over here if the trial showed deliberate intent,” said Taylor, a former executive director of the Municipal Securities Rulemaking Board, the national regulator of the municipal-bond market. “What happened in Europe was the continuation of a pattern in the U.S.”

UBS, JPMorgan and Deutsche Bank officials didn’t have an immediate comment. Officials at Depfa couldn’t immediately be reached.

Robledo alleges the London units of the four banks misled Milan on the economic advantage of a financing package that included the swaps and earned 101 million euros in hidden fees.

He also claims the banks violated U.K. securities rules by failing to inform Milan in writing that for the swap deal the city was a counterparty to the lenders rather than a customer. Banks abiding by the rules of the Financial Services Authority are required to shield customers from conflicts of interest and provide them with clear and fair information that isn’t misleading.

The prosecutor, who seized assets from the banks equal to their share of the alleged profit, is claiming JPMorgan charged about 45 million euros in commissions that were hidden from the municipality, while Deutsche Bank made about 25 million euros, Depfa Bank earned 21 million euros and UBS made 10 million euros, court documents show.... http://tiny.cc/oe7oo


Posted by Jesse at 9:20 AM

http://jessescrossroadscafe.blogspot.com/2010/03/jpmorgan-ubs-and-deutsche-bank-charged.html

Huge (53%) Tax Increase On SAVERS!:

Huge (53%) Tax Increase On SAVERS by Karl Denninger

Posted at 11:52
Wednesday, March 17. 2010

If you were wondering where the hidden taxes are in "Health Reform", guess what - President Obama has just given you something to sit on.

"The forced march to pass ObamaCare continues, and all that matters now is raw politics. But opponents should go down swinging, and that means exposing such policy debacles as President Obama's 11th-hour decision to apply the 2.9% Medicare payroll tax to "unearned income."

That's what savings and investment income are called in Washington, and this destructive tax wasn't in either the House or Senate bills, though it may now become law with almost no scrutiny." ( ObamaCare's Worst Tax Hike http://tiny.cc/mD5V0 )

This is unbelievably destructive to capital formation.

For the person who is "short-term trading" (e.g. daytrading, etc) this is a relatively small tax, an increase of about 7% in the tax (2.9% applied to the 39.6% maximum rate on "ordinary income", which short-term capital gains are.)

But for the person who is INVESTING for the long haul, that is, who is holding stocks for more than one year, this takes the marginal rate from 15% to 17.9%, an increase of almost 20% in the tax owed.

This, of course, comes on the back of President Obama's fraudulently engineered "rally", which was created through Congressional intervention to permit - surprise surprise - legalized accounting fraud through "mark to model."

So you got your stock market rally, and now President Obama and The Democrats are going to cram a 20% tax increase down your throat if you profited from it - and at this point, being 2010, there's not a thing you can do about it.

It gets better. Since ordinary investors can only write off $3,000 in capital losses, when you lose you don't get a tax credit. Oh yeah, you get to carry forward the loss to future years, but you paid the tax on the gains already - this is a putative future credit back.

Oh, and let's not forget that there was already a huge tax increase coming this year - the long term capital gains rate goes to 20% at the end of this year anyway as the Bush tax cuts expire.

So in fact the rate goes from 15% to 22.9%, a fifty-three percent increase in the tax rate.

And oh, if your AGI goes over $200,000 by even a dollar you are subject to this tax from the first dollar of your investment income.

A fifty-three percent increase in taxes on long-term (that is, capital-forming, long-term investment) capital gains - exactly the sort of investment activity you want to form businesses and invest for the long haul in America's future, not to mention generating jobs by forming those enterprises.

That's slammed the door on any interest I might have in forming a new business as I did in the 1990s - ever - and I suspect I'm not alone.

When this goes into effect my capital, other than that which I can shelter from taxation, is no longer going to be put at risk in the markets. I'd rather live in a nice little cottage on the beach and simply expend what I have rather than contributing to capital formation in any way, shape or form under a punitive system like this.

Why?

Because if Congress demonstrates that it will put 53% on the capital gains rate once I've already committed my capital (thereby destroying my return) I will not take the risk of them doing it again and making the rate even more punitive.

http://market-ticker.org/archives/2090-Huge-53%25-Tax-Increase-On-SAVERS.html

US Making Preparations for a Pre-Emptive Strike on Iran:

US Making Preparations for a Pre-Emptive Strike on Iran
(or Some Other Eastern Destination)

Posted by Jesse at 3:18 PM
15 March 2010

Although one would doubt that the US would 'go it alone,' one has to question whether or not they would act in support of a pre-emptive strike by Israel on Iranian nuclear facilities.

Although this news piece assumes Iran is the target, other easterly destinations come to mind in the vicinity of Afghanistan.



The implications of such a strike on the world financial and commodity markets is obvious, and bears careful watching.

I would doubt the US would circumvent a discussion at the United Nations. Even George W had to at least pay lip service to international support prior to his attack on Iraq.

Final destination Iran?

SundayHeraldScotland
By Rob Edwards
14 Mar 2010

Hundreds of powerful US “bunker-buster” bombs are being shipped from California to the British island of Diego Garcia in the Indian Ocean in preparation for a possible attack on Iran.

The Sunday Herald can reveal that the US government signed a contract in January to transport 10 ammunition containers to the island. According to a cargo manifest from the US navy, this included 387 “Blu” bombs used for blasting hardened or underground structures.

Experts say that they are being put in place for an assault on Iran’s controversial nuclear facilities. There has long been speculation that the US military is preparing for such an attack, should diplomacy fail to persuade Iran not to make nuclear weapons.

Although Diego Garcia is part of the British Indian Ocean Territory, it is used by the US as a military base under an agreement made in 1971. The agreement led to 2,000 native islanders being forcibly evicted to the Seychelles and Mauritius.

The Sunday Herald reported in 2007 that stealth bomber hangers on the island were being equipped to take bunker-buster bombs.

Although the story was not confirmed at the time, the new evidence suggests that it was accurate.

Contract details for the shipment to Diego Garcia were posted on an international tenders’ website by the US navy.

A shipping company based in Florida, Superior Maritime Services, will be paid $699,500 to carry many thousands of military items from Concord, California, to Diego Garcia.

Crucially, the cargo includes 195 smart, guided, Blu-110 bombs and 192 massive 2000lb Blu-117 bombs.

“They are gearing up totally for the destruction of Iran,” said Dan Plesch, director of the Centre for International Studies and Diplomacy at the University of London, co-author of a recent study on US preparations for an attack on Iran. “US bombers are ready today to destroy 10,000 targets in Iran in a few hours,” he added.

The preparations were being made by the US military, but it would be up to President Obama to make the final decision. He may decide that it would be better for the US to act instead of Israel, Plesch argued.

“The US is not publicising the scale of these preparations to deter Iran, tending to make confrontation more likely”, he added. “The US ... is using its forces as part of an overall strategy of shaping Iran’s actions.”

According to Ian Davis, director of the new independent thinktank, Nato Watch, the shipment to Diego Garcia is a major concern. “We would urge the US to clarify its intentions for these weapons, and the Foreign Office to clarify its attitude to the use of Diego Garcia for an attack on Iran,” he said.

For Alan Mackinnon, chair of Scottish CND, the revelation was “extremely worrying”. He stated: “It is clear that the US government continues to beat the drums of war over Iran, most recently in the statements of Secretary of State, Hillary Clinton.

“It is depressingly similar to the rhetoric we heard prior to the war in Iraq in 2003.”

The British Ministry of Defence has said in the past that the US government would need permission to use Diego Garcia for offensive action. It has already been used for strikes against Iraq during the 1991 and 2003 Gulf wars.

About 50 British military staff are stationed on the island, with more than 3,200 US personnel. Part of the Chagos Archipelago, it lies about 1,000 miles from the southern coasts of India and Sri Lanka, well placed for missions to Iran.

The US Department of Defence did not respond to a request for a comment.
http://www.heraldscotland.com/news/world-news/final-destination-iran-1.1013151

Posted by Jesse at 3:18 PM
http://jessescrossroadscafe.blogspot.com/2010/03/us-preparing-for-pre-emptive-strike-on.html

Senator Dodd to Unveil a Broad Financial Overhaul Bill:

Dodd to Unveil a Broad Financial Overhaul Bill:

The most sweeping overhaul of financial regulations since the Depression.

By Sewell Chan
March 14, 2010

WASHINGTON — The chairman of the Senate Banking Committee will unveil on Monday a proposal to revamp the nation’s financial regulations that would empower shareholders to have advisory votes on executive pay and to nominate directors for the boards of public companies through company proxy ballots, several people briefed on the draft legislation said Saturday night.

The shareholder provisions, which have been vigorously opposed by many corporations and by Republicans, will be part of a bill that would amount to the most sweeping overhaul of financial regulations since the Depression. But with no Republican support yet for the proposal, Democratic lawmakers and the White House have been gearing up for a potentially bitter partisan fight.

The impending proposal by the chairman, Christopher J. Dodd of Connecticut, hews in many ways to a proposal advanced last summer by the White House, the people briefed on the legislation said.

Mr. Dodd said Thursday that Democrats would proceed on their own after months of stop-and-start negotiations with Republicans over a bipartisan compromise yielded little progress.

As Senate aides worked through the weekend on drafting the legislation, key elements became clear, according to the people briefed on the negotiations, who spoke on the condition of anonymity because the situation was still fluid.

The bill would create a consumer financial protection agency under the umbrella of the Federal Reserve, but with a director appointed by the president and the ability to write rules governing mortgages, credit cards, payday loans and a wide range of other financial products.

It would have some ability, within certain parameters, to ensure that the rules are followed; how the rules would be enforced has been a major source of partisan division. As in a House version of regulatory overhaul adopted in December, the bill would, in some circumstances, restrict states from writing their own, stronger consumer protection rules.

The Federal Reserve would see its bank supervision powers significantly diminished. It would continue to oversee bank holding companies with $50 billion or more in assets, and would be entrusted to regulate systemically important nonbank financial institutions. Mr. Dodd had considered setting the threshold at $100 billion, which would have been even worse for the Fed.

Smaller bank holding companies, if they have a federal charter, would be overseen by a new regulator formed out of the Office of the Comptroller of the Currency, which already oversees national banks. The Federal Deposit Insurance Corporation, which already oversees state-chartered banks that are not members of the Fed system, would gain oversight over those that are.

The bill would also create a council to detect systemic risks to the financial system, and trigger, if necessary, a process to seize and dismantle a large financial firm on the verge of failure, so as to limit the possibility of a broader meltdown and the need for a government bailout.

The risk council would be headed by the treasury secretary and including representatives of the Fed, the new consumer agency, the F.D.I.C., the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Housing Finance Agency — along with an official appointed to monitor the insurance industry, which is largely regulated by the states.

The bill would also impose, for the first time, comprehensive regulation of the sprawling market in over-the-counter derivatives. Standardized swaps and derivatives would have to be traded on exchanges or clearinghouses.

But companies that do not primarily deal in derivatives and are not major participants in the swaps market — that is, companies that use derivatives to hedge commercial risk — would be exempt from the new requirements. The size and extent of that exemption has been a key focus of behind-the-scenes negotiations over the past several months.

Several people briefed on the negotiations over the weekend said it appeared that Mr. Dodd was focused on advancing a proposal that could advance through the Banking Committee with united support among its Democratic members.

He appeared to be taking steps to satisfy concerns by several Democrats on the committee, including Jack Reed of Rhode Island, who has advocated for an autonomous consumer agency, and Charles E. Schumer of New York Democrat, who has advocated for shareholder rights.

Mr. Dodd hopes to have a committee vote on the bill before Congress recesses on March 26. There are 13 Democrats and 10 Republicans on the committee, and the Republicans have urged Mr. Dodd not to move ahead on Monday but instead to continue further talks.

http://www.nytimes.com/2010/03/14/business/14bank.html?partner=rss&emc=rss

Record Advance in S&P 500 Futures Shows Confidence in Economy:

Record Advance in S&P 500 Futures Shows Confidence in Economy:

By Lynn Thomasson and Rita Nazareth

March 13 (Bloomberg) -- The longest-ever gain in futures linked to the Standard & Poor’s 500 Index shows growing investor confidence in the U.S. economy.

“It’s a bullish indication,” said Stephen Lieber, chief investment officer of Alpine Woods Capital Investors LLC, which manages more than $7 billion in Purchase, New York. “There’s greater confidence in the equity market. Earnings have been relatively positive.”

Contracts to buy the S&P 500 in June 2010 have climbed for 11 days since Feb. 25, rallying 4.5 percent to 1,146.6. While futures on the U.S. equity benchmark usually track the index, they don’t move in lockstep as the S&P 500 retreated less than 0.1 percent yesterday following a drop in consumer confidence. Caterpillar Inc. helped lead the Dow Jones Industrial Average higher on signs of growing demand for machinery in China.

The S&P 500, which is near its highest level in 17 months, has risen 9 of the past 11 days. The index increased 1 percent this week as economic reports showed a rebound in consumer demand after retail sales unexpectedly rose last month and wholesale inventories fell in January.

Forecasts for the biggest two-year rebound in profits since 1994 also fueled the advance. Analysts’ estimates show income for S&P 500 companies may climb 26 percent this year and 20 percent in the next. More than 72 percent of firms in the equity index beat earnings projections for the fourth quarter, the second-highest percentage on record, according to data compiled by Bloomberg.

“People are looking to buy stocks,” said Mark Bronzo, an Irvington, New York-based money manager at Security Global Investors, which oversees $21 billion. “Risk appetite seems to be growing as people become more comfortable with the sustainability of the economic recovery.”

The 11-day gain in S&P 500 futures exceeds a 10-day advance in January 1987. During that period, the stock benchmark jumped 9.6 percent and rose 5.4 percent the following month. The futures contracts were created in 1982 and trade on CME Group Inc.’s Chicago Mercantile Exchange.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aJrxozH8Bx6s&pos=3

Here is the daily and the weekly charts for the $SPX:

Daily:



Weekly:

Senate Finance Bill Includes Agency to Track Financial Risk:

Senate Finance Bill Includes Agency to Track Financial Risk:

By Edward Wyatt and Sewell Chan
March 10, 2010

WASHINGTON — Senate Banking Committee members from both parties said on Wednesday that they had agreed to include in their regulatory overhaul bill a new Office of Research and Analysis that would provide early warnings of possible systemic collapses.

The proposed agency, which has sometimes been referred to as the National Institute of Finance, is intended to give federal regulators daily updates on the stability of individual firms as well as that of their trading partners, including hedge funds.

By standardizing financial instruments and reporting mechanisms, the agency would give regulators a broader view of the health of participants in the financial markets and the potential for problems to spread. The idea’s supporters say that kind of information was lacking in recent years as the housing bubble burst and troubles spread from firm to firm.

“One of the problems we observed in the recent crisis is that nobody knew who had what,” said Senator Jack Reed, a Rhode Island Democrat who last month introduced a stand-alone bill to establish a National Institute of Finance. “The result was a cascading effect of uncertainty and doubt.”

The new agency, which was also endorsed Wednesday by Senator Bob Corker, Republican of Tennessee, would have no policy responsibilities but would instead collect and analyze data, building models to assess relative risks and predict how one firm’s problems might affect others.

As proposed, the new agency would be housed in the Treasury Department with a director, appointed by the president and confirmed by the Senate, who would be an ex-officio member of a systemic risk council that would be created by the bill. The agency would draw its budget from assessments on the largest financial firms, according to people who are close to the negotiations but who were not authorized to speak publicly.

The agency would gather data from the largest firms and from a broad set of market participants, including all United States-based financial institutions, which would be required to report all their financial transactions, regardless of whether the counterparty was based here or abroad. The agency would take steps to safeguard proprietary trading information, while also shining a light onto the so-called shadow banking system of mortgage brokers, subprime lenders and unregulated hedge funds that contributed to the financial crisis.

The financial reform bill approved last year by the House would create a systemic risk council that would collect similar data without establishing an independent agency, a difference that will have to be resolved before a bill is sent to the president.

A group called the Committee to Establish the National Institute of Finance — made up of current and former financial executives, statisticians and economists, including six Nobel laureates in economics — has been lobbying for such an agency for much of the last year.

Allan I. Mendelowitz, a former director of the Federal Housing Finance Board who was a founder of the group, said in an interview that regulators were unable to assess expanding risk in the recent crisis in part because they relied on independent contractors, like the credit rating agencies, for data.

If a security was rated triple-A by the ratings agencies, for example, as were many mortgage-backed securities, regulators wrongly assumed that it posed little systemic risk, Mr. Mendelowitz said.

The agency would require a vast array of computing capacity, supporters said, and it would probably take a couple of years to establish data standards and build analytical models. But it could immediately begin to assess counterparty risk based on existing data.

Senate negotiators also tentatively agreed to establish a $50 billion fund to finance the dissolution of failing firms that could not be rescued through bankruptcy proceedings. The fund is intended to support companies that are forced to wind down their operations, without having to resort to taxpayer bailouts.

People who have been briefed on the negotiations said two proposals were under consideration. One would require financial companies to pay into a fund upfront and the other would have them buy interest-bearing shares in a trust that would allow the firms to keep the assets on their balance sheet.

Also on Wednesday, five Senate Democrats, including two members of the Senate Banking Committee, Jeff Merkley of Oregon and Sherrod Brown of Ohio, introduced a bill that would ban deposit-taking banks from owning or investing in hedge funds or private equity funds and from making market bets for the company’s own benefit.

President Obama put forward the idea in January and called it the Volcker Rule, in recognition of its champion, Paul A. Volcker, the former Federal Reserve chairman.

The bill has been endorsed by John S. Reed, a former Citigroup chairman; the economist Joseph E. Stiglitz; and Robert B. Reich, a former labor secretary, among others. But it faces significant resistance in Congress and is unlikely to be part of the revised bill that is expected to be introduced this month by Senator Christopher J. Dodd, chairman of the Banking Committee.

http://www.nytimes.com/2010/03/11/business/11regulate.html?partner=rss&emc=rss

Unemployment Rises in 30 States in January:

Unemployment rate rises in 30 states in January as joblessness remains widespread:

Christopher S. Rugaber, AP Economics Writer, On Wednesday March 10, 2010, 12:54 pm EST

WASHINGTON (AP) -- Unemployment rose in 30 states in January, the Labor Department said Wednesday, evidence that jobs remain scarce in most regions of the country.

The data is somewhat better than December, when 43 states reported higher unemployment rates, but worse than November, when rates fell in most states.

Still, five states reported record-high joblessness in January: California, at 12.5 percent; South Carolina, 12.6 percent; Florida, 11.9 percent; North Carolina, 11.1 percent; and Georgia, 10.4 percent.

Michigan's unemployment rate is still the nation's highest, at 14.3 percent, followed by Nevada, with 13 percent and Rhode Island at 12.7 percent. South Carolina and California round out the top five.

There were some signs of job creation. Thirty-one states added jobs in January, up from only 11 in the previous month. But the job gains weren't enough, in many cases, to lower the unemployment rate.

For example, California reported the largest job gains, of 32,500, though its unemployment rate also rose. Illinois, New York, Washington state and Minnesota reported the next highest totals of new jobs.

The lowest unemployment rates are still found in upper Plains states, with North Dakota's jobless rate of 4.2 percent the lowest in the nation. Nebraska and South Dakota had the next lowest rates, at 4.6 percent and 4.8 percent, respectively.

In January, the national unemployment rate fell to 9.7 percent from 10 percent the previous month. Last week, the Labor Department said the national rate was unchanged in February at 9.7 percent, a better reading than most analysts expected.

State unemployment data for February won't be released until later this month.

http://finance.yahoo.com/news/Unemployment-rises-in-30-apf-1676881351.html?x=0&sec=topStories&pos=8&asset=&ccode=

Diviners Divided: Economists Clash, Sow Confusion:

Diviners Divided: Economists Clash, Sow Confusion:

Bernard Condon, AP Business Writer, On Sunday March 7, 2010, 3:07 pm EST

http://finance.yahoo.com/news/Diviners-Divided-Economists-apf-2346209182.html?x=0&sec=topStories&pos=8&asset=&ccode=

NEW YORK (AP) -- If you're confused about the outlook for the economy and stocks one year after the market hit bottom, then you've got good company -- the Wall Street economists and strategists who are supposed to have this all figured out.

Rarely have the experts seemed so divided about the future.

We're either beginning the type of robust recovery that typically follows a deep recession, or we're on the cusp of another contraction, the dreaded double dip. Prices could climb fast as they did in the U.S. during the 1970s, or fall to devastating effect as they did in Japan during the 1990s.

Stocks? We're on the verge of a long bull market a la the 1980s. Then again, maybe not. To hear some tell it, the present is more like the 1930s, when stocks were viewed less as vehicles to riches and more as a boring source of dividends.

The collapse we feared last March 9 when the major stock indices fell to their lowest levels since 1997 never did come to pass. But what replaced it is still unnerving -- bewilderment.

The Dow Jones industrial average returned 61 percent during the past year, up 4,019 points to 10,566.20. The Standard & Poor's 500 returned 68 percent. The Nasdaq Stock Market did even better, surging 81 percent. Those gains were largely a payoff on a correct bet that corporate profits would surge from their recession lows.

This year the Dow and S&P 500 have lost momentum, rising 1 percent or less. And the Dow is still 25 percent off its all time high of 14,164.53 set in October 2007.

Part of the problem in predicting the future lately is that the economic signals that drive the market have been so mixed.

The nation's gross domestic product grew at a 5.9 percent annual rate in last year's final quarter, its best showing in six years. But it's expected to expand at a slower rate this year.

Consumer confidence plunged unexpectedly in February. But last Thursday retailers posted their biggest sales increase in more than two years. The so-called fear index, the VIX, which measures expectations of future stock market volatility, is hovering at a 1 1/2-year low, suggesting calm seas ahead. But new home sales have fallen to their lowest level in nearly five decades.

The experts can't even agree on what to make of a single number. Pessimists see bad news in good news and optimists vice versa.

Encouraged by the Commerce Department report on March 1st showing a surprising surge in consumer spending in January? Not so fast, says David Rosenberg, chief economist at money manager Gluskin Sheff in Toronto.

He notes in a report that some items bought in great quantities -- books, up 2.1 percent and sewing items, up 1.6 percent -- suggest a "frugal stay-at-home" or "do-it-yourself" mood among Americans.

The end is nigh.

Or you can listen to James Paulsen, the chief strategist at Wells Capital Management in Minneapolis.

Not even high unemployment can get this man down. His interpretation of the near double-digit unemployment rate: All the more reason to buy shares.

In a report looking back over the past half century he notes that periods of high unemployment rates -- greater than 6.6 percent -- have been great for stocks, which have generated average annual returns of 20 percent. One reason, he says, is that high unemployment often presages big recoveries, and investors drive the market up in anticipation of the recovery.

Of course, you can find Wall Street soothsayers staking out extreme positions in any era. But the hunt is perhaps never so easy as in the aftermath of a deep recession.

One reason is the shock of the downturn feeds fears that the natural corrective forces of the economy won't kick in. Barclays Capital economist Dean Maki calls it the "This Time Is Different" school of thought. He says such worries were rife after the two recessions of the early 1980s. Indeed, oldtimers may recall some investors expected a "triple dip," sidelining them during the start of one of the greatest bull markets in history.

Maki is not mincing words about his view on the recovery today. The title of one of his reports: "This Time Is Not Different." He predicts the U.S. economy will grow by 3.6 percent this year, a percentage point higher than the average estimate.

Seth Glickenhaus, who worked on Wall Street as a trader in the Great Depression, calls the optimist-pessimist divide now the "big gulf."

For his part, the 95-year-old Glickenhaus, who still oversees $1 billion in assets, is siding with the pessimists. He thinks the Dow Jones industrial average will flatline, trading no higher than 11,000 for at least another 5 years.

One reason he's so glum: The unemployment picture is actually a lot worse than the widely cited headline number suggests because many people have stopped looking for work and aren't counted. On Friday, the Labor Department reported unemployment held at 9.7 percent in February. A broader measure that includes frustrated part-timers and other discouraged workers was 16.8 percent.

Glickenhaus likens Wall Street optimists to the guys he used to beat in bridge games as a student at Harvard in the early 1930s. "They were great scholars but not necessarily bright," he says. His winnings "paid all my tuition, though it wasn't much back then."

The professional bulls today, he says, are "just stupid."

But money manager Richard Bernstein, the former Merrill Lynch strategist who created a stir years ago with bearish reports, says he's turned bullish on stocks now -- though it hasn't been easy.

"People who thought I was so insightful as a bear think I'm an idiot," he says. He adds, wistfully, "Hopefully, I'm still a likable guy."

Bernstein says he's optimistic because much of Obama's $787 billion stimulus plan passed last year has yet to be spent, and that means a big boost to growth is still to come. He also notes a reliable predictor of a strong recovery -- a big gap between yields on short- and long-term bonds -- is at a historical high.

But perhaps the best reason is also the quirkiest.

While at Merrill, he came up with something called the "sell-side indicator." It tells you whether to buy or sell stocks based on changes by Wall Street strategists in their recommended allocations.

The quirky part: Bernstein discovered that strategists were wrong on stocks so often that it paid to do the opposite, that is, buy when they're selling and vice versa.

Right now, he says they're underweight stocks, on average, or telling people to sell. So he thinks you should buy.

Or maybe the real takeaway here is to just ignore the professionals and do what you think is right -- if amid the data you can figure that out.

US Congressional Estimates See Grimmer Deficit Picture Than Obama Administration:

US congressional estimates see grimmer deficit picture than Obama administration:

Fri Mar 5, 5:18 PM
By Andrew Taylor, The Associated Press

http://www.google.com/hostednews/ap/article/ALeqM5ib3KqdpvjY_RfC7wEboQtJRC3YCQD9E8P2180

WASHINGTON - A new congressional report released Friday says the United States' long-term fiscal woes are even worse than predicted by President Barack Obama's grim budget submission last month.

The nonpartisan Congressional Budget Office predicts that Obama's budget plans would generate deficits over the upcoming decade that would total $9.8 trillion. That's $1.2 trillion more than predicted by the administration.

The agency says its future-year predictions of tax revenues are more pessimistic than the administration's. That's because the report projects slightly slower economic growth than the White House.

The deficit picture has turned alarmingly worse since the recession that started at the end of 2007, never dipping below 4 per cent of the size of the economy. Economists say that deficits of that size are unsustainable and could put upward pressure on interest rates, crowd out private investment in the economy and ultimately erode the nation's standard of living.

Still, the Feb. 1 White House budget plan was a largely stand-pat document that avoided difficult decisions on curbing the unsustainable growth of federal benefit programs like the health care program for the elderly and the health progam for the poor and disabled.

Instead, Obama has created an 18-member fiscal reform commission that's charged with coming up with a plan to shrink the deficit to 3 per cent of the economy within five years. But the Republicans to be named to the panel by congressional GOP leaders are unlikely to go along with any tax increases that might be proposed, which could ensure election-year gridlock.

The report says that extending tax cuts enacted in 2001 and 2003 under Republican President George W. Bush and continuing to update the alternative minimum tax so that it will noy hit millions of middle-class taxpayers would cost $3 trillion over 2011-2020. The tax cuts expire at the end of this year and Obama wants to extend them - except for individuals making more than $200,000 a year and couples making $250,000.

For the current budget year, the report predicts a record $1.5 trillion deficit. That is actually a little better than predicted by the White House, but at 10 per cent of gross domestic product, it's bigger than any deficit in history other than those experienced during World War II.

The new report predicts that debt held by investors, including China, would spike from $7.5 trillion at the end of last year to $20.3 trillion in 2020. That means interest payments would more than quadruple over 2011-2020.

Commercial Real Estate Heading for the Mat:

Commercial Real Estate Heading for the Mat:

From theTrumpet.com
March 3, 2010

Will the one-two punch of residential and commercial real-estate implosions KO the economy for good?

If you thought the housing market bust felt like a haymaker, wait until you experience the punch to the solar plexus that commercial real estate is about to land. With the economy already gasping for air, this next big blow threatens to knock the economy off its feet for long after the 10-count.

Just when popular media suggests that the economy is back off the ropes, the Congressional Oversight Panel, which is charged with monitoring the banking system bailout, is warning that the economy could be headed into round two of the worst downturn since the Great Depression.

“There’s been an enormous bubble in commercial real estate, and it has to come down,” Elizabeth Warren, chairman of the oversight panel, told the Washington Post on February 19. “There will be significant bankruptcies among developers and significant failures among community banks.”

So far this year, America is on track to see well over 100 banks fail—and this despite unprecedented government action to prop up the sector. During 2009, 140 banks failed—most of them related to the residential mortgage market.

But if Warren is right, America is just experiencing the opening jabs and the main event is yet to come.

“Over the next few years, a wave of commercial real-estate loan failures could threaten America’s already weakened financial system,” revealed the Congressional Oversight Panel’s report, titled “Commercial Real-Estate Losses and the Risk to Financial Stability.”

“Between 2010 and 2014, about $1.4 trillion in commercial real-estate loans will reach the end of their terms.”

Unlike residential mortgages, which can be locked in for 30 years, almost all commercial loans come due in periods between three to five years. Typically, when a loan comes due, the commercial property owner will simply roll over the loan—that is, pay back the original loan with a new loan—provided that his property collateral has not depreciated.

That is the problem facing commercial property owners. Commercial loans that were issued during 2005, 2006 and 2007—at the very height of the property bubble—are now up for renewal. But according to Warren, by next year half of all commercial property owners with mortgages will be “underwater” and owe more than their properties are worth. This means that it may be impossible for them to roll over their loans, and their properties will be forced into foreclosure.

This means that property owners are not the only ones in trouble. Foreclosing on real estate when the property market is declining is like asking for a beating. Losses could range between $200 to $300 billion, according to the report.

“There is a strong potential to see a thousand commercial real-estate bank failures in the next couple of years unless Congress acts to bail them out,” predicts economic analyst Mike Shedlock. “Of course no banks should be bailed out. [T]he correct decision is to let failed banks fail. The last thing we need is further bank zombification.”

And when the banks go down you can be sure they will not go down alone.

A second banking crisis would trigger economic damage that could touch the lives of nearly every American. Think empty office complexes, hotels, retail stores. Think job losses. Think families being forced out of their apartments even though they never missed a rent payment. Think social unrest.

And when the losses start hitting the banks as we head into next year, expect further reductions in lending as financial institutions scramble to shore up bottom lines. For a borrow-to-spend debt-based economy, a reduction in credit supply is like slipping a boxer enough tranquilizer to euthanize an elephant.

As the Trumpet has warned in the past, the current stock market and economic rally will eventually come to an end—and probably an abrupt one. If the economy was a prize fighter, you can picture it bouncing off the ropes, with legs wobbling, a loose jaw and a glazed look in the eye—with a freight-train-size fist labeled commercial real estate barreling straight toward it.

http://www.thetrumpet.com/index.php?q=7021.5553.0.0

The 2009 Financial Report Of The U.S. Government Is Out - America's Economic Goose Is Cooked:

The 2009 Financial Report Of The U.S. Government has finally been released, and the news is not good. It basically confirms much of what we already know - that the United States government is a complete financial mess.

The U.S. government budget deficit for 2009 was a record-setting 1.417 trillion dollars. The total liabilities of the U.S. government rose from 12.178 trillion dollars at the end of 2008 to 14.123 trillion dollars by the end of 2009.

At their present rates of growth, the interest on the national debt and spending on entitlement programs will gobble up almost every single dollar of federal revenue by the end of the decade.

Throughout the report, the word "unsustainable" is repeatedly used. The authors of the report understand that the U.S. government simply cannot keep spending and borrowing like it has been recently.

But if the U.S. government slows down this reckless spending even a little bit it could literally plunge the U.S. economy into a deflationary depression. In fact, even with all of the "bailouts" and "stimulus packages" there are many who would argue that we are already in a depression. In any event, the authors of the report make it clear that the United States government is facing a financial crisis of unprecedented magnitude.

Read more: http://theeconomiccollapseblog.com/archives/the-2009-financial-report-of-the-u-s-government-is-out-americas-economic-goose-is-cooked

(I would have posted the article in it's entirety, but there are many interesting graphs that are best viewed on the original website)

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