POSTED ON 11-10-07
$9 trillion National Debt & $50 trillion in hidden unfunded liabilities; mandatory social security & Medicare payments, government & military pensions, interest on debt. To make matters worse; falling dollar, falling Equity markets where major indices are down by over 10% so far this year from their highs, falling US Treasury now yielding 3.87% down from 5.3% just 3 years ago, 20 year high commodity prices, ever rising energy prices & worst ever credit markets. All of this has made us biggest debtor nation in the world because American public, our state & Federal governments are living beyond their means. On top of this America is at war in Iraq & Afghanistan besides 38 other countries to fight serious threats of terrorism at home & American interest abroad. On top of every thing 4 million illegal immigrants are crossing US borders every year which is a National Threat.
Falling Real Estate Prices & Mortgage crisis is due to one of the debt derivatives RMBS and “Pulse Only” Loans given to people with bad or no credit history by crooks in Banking & Real Estate for points & other dubious fees. Merrill Lynch write down for 3rd quarter of $7.9 billion for its portfolio backed by sub prime mortgages is the biggest quarterly loss since it was founded in 1914. Citibank has taken a $7 billion write off for Q3 due to sub-prime mortgages and whispered to media they have another $15-17 billion like Merrill Lynch has another &12-15 billion. Countrywide Home Loans the biggest Mortgage lender took a $2 billion Q3 write off for the first time since its inception 25 years ago. Countrywide in Sep & Oct took out $22 billion from different banks from unused credit limits. By the time Banks realized what they were doing it was too late. Rumors are Citibank or Wachovia is going to take their worthless equity so that they don’t have to disclose to its shareholders the money has been lost. On their heel is No. 2 buyer & guarantor of home loans Freddie Mac posted it largest Q3 loss of $2 billion, Wachovia $1.75 Billion and the list goes on and on. Conservative estimate for such write offs combine of all Banks & non-Banks of America is around $130 billion and will go up to $350-$400 billion if one trust the numbers of US Congressional Report of estimated 2 million Sub Prime Mortgage foreclosures by 2009. Yesterday Citi repeated history again; in 1991 it sold over 4% equity to Saudi Prince and now 4.9% to Abu Dhabi for $7.5 billion to cover its anticipated $11 billion Q4 losses stemming from sub prime loans. Citi’s desperation to sell itself to Middle East is an indication all US Banks & Non Bank institutions like AIG, Zurich Re are for sale. American public must act now and demand full disclosures for debts based on crafty derivatives.
Housing wealth has already lost $71 billion; states will lose $920 million in Property Taxes revenues alone in 2007 because of foreclosures. US housing market is valued at $22 trillion; down turn is going to have wider implications than Tech Boom burst 7 years ago. Housing Slump, bad equity market, bad credit market, rising debts & falling US Treasury are all based on crafty debt derivatives a nuclear bomb; is going to keep entire US economy on life support for next 2-3 years which in turn keep the world economy in intensive care for 3-5 years.
Debt derivatives RMBS’s, CDPC’s, CDO’s & CLO’s a creation of Thugs from Wall Street & world bankers is like a rug on the world financial problems. These derivatives represent about $345 trillion, which is 9 times the GDP of entire world. General public & majority of Politicians have very little or no knowledge of such derivatives based on other debts. In lay men terms each time a debt is repackaged and sold it grows in some cases exponentially to take care of the brokers fees, advertising, marketing, funding to Politicians and mark up for Wall Street/similar firms as the case may be around the world. These debt derivates have created an enormous inverted pyramid of global debt thousand times greater than the value of the underlying assets and Americans hold majority of it.
Think of it what will happen if the underlying assets (like real estate) upon which all of this pyramiding debt are based; declines in value? Think of other derivates CDPC’s, CDO’s & CLO’s which are based on other debts unlike RMBS’s which is based on Real Estate; decline in value in fact are already declining in value. Who gets sucked up holding these worthless uncollectible Debts? The answer is American Public & America’s trading partners around the world!
Just to make it simpler for the general public here is the explanation for the looming biggest financial crisis in the world. Majority of the sub prime defaulters are in the category of loans between $100,000.00 to $300,000 where people are not too smart to understand the finer prints created by attorneys like John Edward running for President. On paper a home owner took a loan of $100 and in reality was given $82-$85 after deducting points, administrative fee & broker fee for a property which was actually worth $80.00 but inflated to $100.00 to cover the mark up of crooks in Banking & Real Estate.
Now these kinds of loans from different parts of USA are clubbed by a genius at Wall Street and the repackaging cost is $30.00 which includes mark up for this genius, marketing, advertising, broker fee & donations to political parties with a face value of $100 on a under lying asset of $80.00 with an assumption the market will go only North not south. Unfortunately the market has gone South and real estate is down from 40- 45%. So the underlying asset now after losses & $30.00 repackaging cost is $10.00 -15.00. That much this Bond with a face value of $100.00 is worth today based on this under lying asset which big Pension Funds & individuals are holding in their Portfolios. Imagine if every one wants their money back! These Bonds are worthless.
That is what Main Stream Media & American Politicians does not want the Public to know that US Govt. pumped in over $50 billion to keep the liquidity in the market and forced their European & other allies to pump in another $ 200 billion to put a thick rug on the crisis which is 10-20 times bigger than the Tech burst of 2000. People like Hillary Clinton who is being heavily financed by Wall Street, Hollywood & main stream Media wants to rescue with American Tax Payers Dollars these highly qualified crooks well versed in Laws who with full understanding & knowledge of financial markets including derivatives gave Pulse only loans to people with no or shaky credits and then created worthless Bonds which has been sold to these loan takers and others in their personal portfolios, Retirement & Pension Funds. Bravo! Bravo! Bravo!
Last week 5 biggest Wall Street Firms shamelessly announced they are going to give out $38 million in Bonuses which is $5 million more than last year to their employees for doing frauds with American public. It works out to be $200,000.00 for each employee. It is an insult to American public & their share holders.
Still this minority controlled mainstream Media is dictating; Americans must elect their new President rather a radical Pastor with no character & integrity, no vision & understanding of economy may be a con artist or a money machine dependent on Wall Street, defense contractors & Hollywood or a born again Christian or an Ambulance chaser all with vast inexperience.
History is our witness we American have always come out of much bigger crisis than what we are facing now. Federal Reserve Chairman Ben Bernanke does not mind inflation to avoid recession. Higher inflation will create more poor in America so we have tough decisions to make as well as we all have to make sacrifices to save our country from recession & terrorists.
In the coming Presidential election Americans will use their judgment in selecting a Leader who will be able to bring us out of this looming recession created by inverted Debt Pyramid based on imaginary assets and non existent earnings and terrorism. Every American including a new born child has a debt of over $35,000.00 to pay because of these massive debts. Rember this figure is changing every minute because of the carrying cost "Interest" and massive cost to fight terrorism at home and abroad. We need a Leader who should be able to solve to certain extent all our domestic problems and serious threats to our domestic & national security. That Leader we have very much present among us we just have to look beyond our Media endorsed candidates with vast in-experience and fake conservative mask.
God bless America & Every Human on this planet Earth.
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AMERICA HEADING FOR RECESSION
by Dave Makkar Published in Nov. 2007
So far more than $175 billion has been taken as write offs by US Financial institutions leading the pack is Citi with almost $50 billion.
Citi has also assumed another $49 billion of Structured Investments on its books which can be priced in reality.
New Home Sales are down 26.4% in 2007 which is the largest annual decline in 27 years in US history since 1980 when the sales plunged 23.1%