Banks Cut Off Some Home Equity Credit Lines As They Brace Up For More Defaults-- A Scourge That Could Dwarf First-Mortgage Subprime Woes

With house prices falling fast across the US, upside-down mortgages may force more homeowners to default on their home equity loans, making first-mortgage subprime defaults look like a pre-game show.

Some banks have already begun freezing credit lines extended to homeowners who had equity in their homes during the bubble years, but who have lost most, if not all of their equity in this housing downturn.

It is estimated that the value of all home equity loans in the US exceeds $1 trillion. In 2007 alone, subprime lenders issued a whopping $125 billion in home equity loans.

The targets of subprime loans are usually people with poor credit histories or no steady income, or both. The pool of Americans in need of high-risk, high-interest loans increased in recent years, due to rising credit-card delinquencies and an unprecedented number of bankruptcies, which helped spur the subprime lendeds’ greed. Now both lenders and borrowers are faced with catastrophic losses, as the housing bubble burst.

Social Security, Madicare: Another Looming Disaster

In their annual report, trustees for the government's Social Security and Medicare said today both programs are facing "enormous challenges."

The trustees warned that financial pressures will mount much sooner than projected, as Social Security and Medicare begin forking out more money than they collect in payroll taxes.

Medicare will be first to be hit. The trustees say Medicare will be paying more than it receives as of this year, whereas Social Security will start collecting less money nine years from now as the bulk of the babyboomer generation go on full retirement.

In a recent study, it was shown that most Americans don't know what their full retirement age is. Very few know, for example, that full retirement age is not 62, although one can start claiming retirement benefits at that age.

Social Security folks have a set of age brackets that determine your full retirement age. It could be 65, 66, or 67, depending on whether you were born before or after 1937, between 1938 and 1942, or between 1943 and 1955, and so forth.

Catch 22 situation

You may begin collecting Social Security checks when you reach the age of 62. However, Social Security bureaucrats warn you that if you cash in before your full retirement age, your benefits will be drastically reduced. They advise that you should think about pushing your benefits' claim to the age of 70, unless you don't mind if the value of your monthly check is trimmed by as much as 40 percent.

What the Social Security pundits are not telling you is that by the time you reach 70, if you ever do, there's a good chance that-- like all US-made bubbles -- Social Security would have simply evaporated. So I'd say: retire early and start collecting those checks while they last.

The other advantage of retiring earlier is that you collect benefits for a longer period of time. The Government wants you to wait, perhaps hoping that the millions of baby-boomers who are coming of retirement age this year would not force Social Security into insolvency sooner than expected.

Keep in mind that there are 78 million baby boomers who are going to start collecting their social security checks at the rate of 4 to 5 million new baby boom retirees per year. So, take a number and pray that you reach that window before the last call.

401(k)’s hidden fees

Over 80 percent of 401(k) investors have no clue as to how much they pay in fees. In most cases, the fees associated with 401(K) investments range from 1.2 to 1.6 percent taken from investors’ assets each year.

With inflation inching upward, some bad Mutual Funds’ bubble investments, and the dollar rapidly spiraling downward, 401(K) participants should brace for the smell of rot in their cherished nest egg.

What’s more disturbing is that 401(k) participants are seldom told or notified how much they are paying four their investments’ upkeep. One has to dig for the information in order to get it, like searching the summary annual report on the company's website for the total plan costs incurred during the year.

It is estimated that Americans have between 2.5 and $3 trillion invested in 401(k)'s. Just in case you wonder why the financial services industry keeps encouraging Americans to stash their disposable income away in 401(k)'s, you should know that those firms take in around $30 billion annually in fees paid by millions of mostly-unsuspecting investors.

US Housing Troubles Economists And US Government

With the sub-prime mortgage crisis and the subsequent financial turmoil, the US economy is going through its worst uncertain times.

The free-market fundamentals have become lopsided as the Fed and the Bush Administration have decided to trade their regulator and Executive Branch hats for those of Wall Street financial managers. In their desperate attempt to stop the bleeding gushing out of the US financial system’s wounds, Ben Bernanke and Bush’s economic advisors have resorted to very expensive band-aid that should ultimately be paid by the taxpayer. But most analysts with a sober, detached view from the financial stampede believe those measures will only delay and magnify the pain for all Americans.

Judging from the plethora of US blogsters who come out every day venting their outrage at the Fed, the Bush Administration, and even at the Democrats in Congress and the Presidential elections hopefuls, the number of Americans opposed to government bailouts for failing financial institution and individual mortgage defaulters seems to be growing.

In a government as deceitful as this one and most likely the one that will come next, honest people are considered misfits. The entire US domestic policy is built around consumers' confidence (gullibility) and investors' psychosomatic impulse (greed-induced ecstasy).

Just imagine the hysteria that would engulf the markets had Bush or Cheney walked to the podium and said what honest experts are saying about the country's economy.

The best example is that, up until now, the government’s inflation figures are outrageously low, whereas the consumer is feeling the increasingly painful bite of costly bills.

How does the government come up with those low inflation figures? Read the Daily Telegraph on a similar ‘mysterious’ inflation figure in the UK as well. The paper says: “A loaf, the figures show, is 28 per cent more expensive than when Tony Blair left Downing Street. Butter has risen by 37 per cent. There have been rises, too, in gas bills, petrol and, of course, taxes. Yet, according to the Government, inflation is running at only 2.5 per cent. How can this be? Much of the explanation can be found in changes in how the statistics are compiled.”

It’s cheap Chinese products in the market that are offsetting the skyrocketing prices of other vital consumer goods and services. This means the US government should be thankful to China for shipping over to the American consumer all that inexpensive stuff, allowing the government to cook better inflation figures!

The real truth will never freely come out from the residents of the White House (or Congress for that matter), simply because that would ruin the corporate juggernauts whose generosity helped hoodwink those same “confident” consumers who voted them in.

It’s a vicious circle that even a thousand Stiglitzes, Spitzers and Schiffs would not be able to break. The way out of this may only be through blog-steering US public opinion away from the outrageously-complacent MSM, with the hope that, some day, this kind of blogocracy and simple people-to-people communication prevail over the corrupt corporate media and the shady media moguls.

On that score, there's widespread blogsters' disgust with what they believe is US mainstream media's coverup. (example below)

HousingPANIC - The Housing Bubble and Crash Blog with an Attitude Problem: FLASH: Used home sales crash 24%, prices down record 8% vs. year ago. Mainstream media reports home sales up, Dow rockets on NAR's great news!

Some blogsters have called for the establishment of a Bloggers' Trade Union in the US, where they can have a real voice in the elections. Others have even suggested starting a third political party to rival the GOP and the Dems.

There also are scores of new books out there that predict and warn against an Economic collapse in the US. Taken side by side, those books and the thousands of blogs bracing for doomsday may end up peddling a self-fulfilling prophecy. Knowing that the entire economic system of the US is build on consumer confidence, there’s a real possibility that a self-feeding panic hits main-street America and tears down the entire financial and political system with it.

That is why the Fed and the Administration are pedaling faster and faster everyday to keep the economy moving—not by looking for any lasting remedies to the real ills of America’s economy, but by constantly spinning the propaganda wheel, so that panic does not hit the consumer overnight.

Bernanke and Bush economic aides know all too well that Americans will have to face a real downturn in the economy, but they want to dilute the pain by stretching it over a number of years, rather than a few months. This is why I personally predict that the economic recovery from the current slump in the US won’t materialize before the Presidential elections of 2012.

Rick Falkvinge: Why the US is collapsing

Rick Falkvinge: Why the US is Collapsing

BLOGOCRAT:

I find this analysis very well researched. There are too many conflicting views out there regarding the current state of affairs in America, especially in this election year when every single person is trying to have their voice heard and understood. This view, however, is coming from Sweden. You may or may not agree with it, but it certainly makes good reading. Enjoy!

US Troops Eat Saddam's Fish! But How Safe is That Fish?

Here’s a story that got my attention today:

US Troops in Baghdad Make Fishing a Tradition (NPR RADIO)

“While U.S. troops in Iraq spend much of their time searching for high level insurgents, some soldiers at Baghdad's Camp Victory try to catch another type of "big one." They fish in the lakes surrounding Saddam Hussein's palaces. After five years, it's become a tradition — soldiers on their way out hand fishing rods to newcomers.”

Click Here to Listen to the NPR Story
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But here's the SCARY PART that the US military and NPR may not know about: (read full story below)
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Besides telling us what some of the US troops have sometimes for dinner in Camp Victory, this story is a real eye opener on how lax the discipline has become among the US military in Baghdad.

The report clearly demonstrates that the officers-turned-fishermen knew that at least some of that fish may have had human body parts as food under Saddam’s watch. Saddam’s henchmen were reportedly in the grisly business of water-boarding political prisoners in that same fish pond before throwing them to the hungry fish after they had finished torturing the prisoners to death.

As macabre as it sounds, this account did not seem to bother the US troops who have clearly developed a fondness for fat bass meat. But even more disturbing are some of the accounts I had heard during my stay in Iraq, right after the fall of Baghdad in 2003.

Of the scores of witnesses who came to volunteer stories and leads in the hope of getting media attention, I particularly remember one man who had presented himself to me as the former officer in charge of the infamous Abu Ghuraib prison (he had an ID and several photographs to prove that). At that time, I was looking for information that could lead us to locations where one could find evidence of mass graves, or to places where political prisoners could still be found alive. The man was of no significant help to me on that score, but he sat down and began telling me about some of Saddam’s novel techniques to rid his regime of political foes.

As I recall, one of Saddam’s original ideas, according to that eyewitness,involved using fish to kill his nemeses. And here’s how the story went:

Saddam, with the help of a wealthy guy from Al Saadoun family, according to the man's account, had devised a technique by which he would allegedly feed the fish some kind of chemically treated chicken droppings. This would take several weeks before the fish is ready to be taken out of the pond, cooked, and served to a particular political prisoner for lunch or dinner. The man told me that this dish would be served only once a week. Over a period of five to six months, the prisoner begins to slowly fade away, but with no symptoms, no detectable illness.

The prisoner, after he becomes weak and wasted, is then released from prison, supposedly for humanitarian reasons, and handed back to his family to take care of him, the man said. The prisoner is then allowed to have all sorts of medical exams and blood work, but Saddam allegedly knew all too well that no physician would be able to diagnose his illness. The prisoner would ultimately die in his home, and the victim’s family would even get a letter of condolence from Saddam, according to the man. This way, the man said, Saddam gets rid of his enemy, without the bad press that usually comes with killing a foe in cold blood.

My question to the man at that moment was: “But why would Saddam go to such lengths, knowing that he could just have his men shoot the prisoner?”

The man’s answer was that Saddam did it this way only to prominent political foes who had some clout or popularity in or outside Iraq. "He simply didn’t want to be blamed for their deaths,” the man said.

His answer was convincing, but I still had my doubts as to the credibility of that man. Since then, I haven’t come across any story regarding Saddam’s fish ponds, until today. I couldn’t help making the link. In hindsight, I believe the man was telling me something that deserved attention.

If the US soldiers are shrugging off the likelihood that they may have been eating human-fed fish, they should take a harder look at what they are fishing, it may just be the same fish with which Saddam used to treat his best enemies.

Lebanon, My Kind of Swiss Cheese!

I spent the last ten days in Beirut. When the airplane landed at Rafiq Al Hariri Airport, I was struck by the emptiness of an airport that has always been bustling with local travelers and foreign visitors. I took a cab to a hotel overlooking the famous Corniche of Beirut where a handful of buildings still bear the scars of Lebanon’s civil war. The hotel was similarly deserted. It was an eerie sight that reflected the sad and terrible realities of Lebanon today.

It goes without saying that I felt uncomfortable roaming through Alhamra's streets the following day. I had a nagging trepidation that a gun battle would erupt at any moment, or worse, a carload of dynamite would blow up near one of the many checkpoints I had to go through while moving about.

My anxiety was not unjustified: Lebanon is a country with no government to speak of-- the office of the President has been vacant for months and both the government and the parliament are, to say it politely, utterly dysfunctional.

Both the cause and the effect of all that is a severe factional polarization not witnessed since the civil war. The country is divided and the protagonists, each armed with pointed arguments and weapons of all kinds, are fighting a proxy war, albeit rhetorical, on behalf of other more formidable foes.

The current situation in Lebanon is obviously an extension of the July '06 war between Hezbollah and Israel. It is also, on a broader level, a side effect of the ongoing enmity between the US and Israel on one hand, and Iran and Syria on the other. Add to this volatile mix a handful of other closely or remotely implicated parties, such as France, Saudi Arabia, Egypt, and Hamas.

The presence of two US warships on the shores of Lebanon only aggravated my feeling of nervousness. Many Gulf countries restricted their citizens' travel to Lebanon, and in some cases put a moratorium on issuing visas to Lebanese nationals. US Embassy's warden messages advised extreme vigilance and directed expats living there or Americans visiting Lebanon to avoid public places. But it was those same public places that I wanted to go to, which I did. And it was only there that my fear began to slowly subside.

What I learned from watching people and talking to them was a surprise to me. People, from all sides and all walks of life, did not want to dwell on politics, but they talked freely about the hardships of their day-to-day life-- severe inflation, joblessness, dwindling business activity. Most people I met shrugged off the idea of a looming civil war. They all seem to have figured that the real issue is much bigger than just a factional fight for prime positions in a crippled government.

What I admired most was the orderly way with which the Lebanese people continue to conduct their daily living business. One of the many sayings that go around town, poking fun at the Lebanese officials, goes like this: "If you see a traffic jam at any of the intersections of Beirut, you can be certain that a police officer is there directing traffic."

This funny anecdote is indicative of how much the Lebanese people have matured since the civil war and how jaded they have become in the face of the constant political maneuvering that goes on in their country.

With such a torn social, political, and religious fabric, Lebanon looks more like a slice of Swiss cheese than anything else. Yet, Lebanon has proven to the world that people can live and prosper without a government at the helm. The Lebanese people, hardened by years and years of devastating wars, seem to be more eager to live in peace. The Lebanese people are a model of resourcefulness in the Middle East. They don't want a government. They can live without one. All they want is to be left alone-- just my kind of Swiss cheese!

MSM Finally Jumping On The Wagon

MSM BEFORE

MSM AFTER

Mainstream media is finally trying to catch up with realities on the ground, and at last we can now have some lucid views published or broadcast without the usual limits. Read this article: Homeowners and Investors, Time to Get Real.

Americans Expierience More Sleepless Nights, Study Says

Finally, mainstream media is getting to the real story, but they still are detached from main-street America, and so are the researchers who seem to be living in a different planet.

Judging from this article, they still don’t get it—they mention all the possible causes of lack or loss of sleep in America, except inflation --pizza and beer prices skyrocket--, joblessness, housing and financial crises, like the free fall of the dollar and the sub-prime mortgage disaster (see below how it all happened).

The Sub-prime Disaster Explained

This is how former Fed Chairman Alan Greenspan, the Bush Administration, US regulators and rating agencies helped create the housing bubble and the subsequent financial crisis:

- Soon after 9/11, in a panicky mood, the Fed moved swiftly to stem any disastrous impact on the US economy by lowering the Fed’s rate to near ZIR (Zero Interest Rate) and parked it there for the next five years.

- Banks, usually relying on depositors’ money to be recycled into loans and financial services, such as mortgage loans, suddenly found themselves holding an empty bag, as rich folks and people with disposable income shied away from low-yield CODs, and began investing in stocks, bonds, and other high-yield investments like Hedge Funds.

- The banks, under the cover of the deregulation policies espoused by Bush, began looking for other (dubious) ways to make money, and before too long, they came up with a new model of mortgage lending, whereby everybody could make a fortune.

- The Federal Government regulators turned a blind eye on the risky business and State and local authorities were forced to look the other way. That big departure from conventional lending, which has become known as sub-prime and Alt-A mortgages, is what is now making millions of Americans lose sleep at night.

Here is how it was all concocted by greedy bankers, realtors, and appraisers: