Follow Me To The New Website

I have updated my website and will no longer be using this blogger format. This will be the last post on this site.

Here is the address of the new blog:
http://www.thefinancialphysician.com/blog/

Also we are now archiving both the National XM Radio show and the WOBM AM 1160 show in the Radio section of the website.

Here is the link:
http://thefinancialphysician.com/scatigna-radioshow.htm

So come on over to the new site and make sure you bookmark the new blog and radio archive page.

Also make sure you register in the members section it's free and gives you access to excerpts from my book as well as other stuff (to be determined)

Banks To Insure The FDIC?

The FDIC is supposed to insure the banks, not the banks insuring FDIC. This is a very strange turn of events.-Lou

Broke FDIC May Borrow Money From BANKS

Bill Seeks 3% Social Security COLA for 2010

Good news for our seniors who are struggling to make ends meet with CDs paying 1% (if they are lucky to have money to put in CDs). I hope the bill passes.-Lou

New Bill Introduced in Congress Would Give 37 Million Seniors an Estimated $415 More in Social Security Payments Next Year

Emergency COLA Bill Would Boost 2010 COLA from Zero to Three Percent

WASHINGTON--(Business Wire)--A new bill introduced in the U.S. House of Representatives would give the average beneficiary an additional $415.20 in Social Security payments in 2010, a boost of $34.60 per month. Without such intervention, the Congressional Budget Office (CBO) forecasts that seniors will see no increase in next year`s checks.

The Emergency COLA Bill (H.R. 3557), encouraged and promoted by TSCL from the beginning, was introduced earlier this week by Rep. Walter Jones (R-NC). The bill would provide a COLA for 2010 equal to the average of the COLA over thepast ten years. That average is roughly three percent. In June, The Senior Citizens League (TSCL) became the first national group tocall for an Emergency COLA for 2010. In addition to Rep. Jones` bill, VermontSen. Bernie Sanders announced plans to introduce an Emergency COLA bill,possibly later this month.

"Our nation`s seniors will no doubt be grateful to Rep. Jones for introducing legislation that will help them keep up with inflation," said Daniel O`Connell,TSCL chairman. "But the work has just begun - we need every senior citizen to immediately contact their entire Congressional delegation and encourage them to pass the Emergency COLA Bill."

Almost 70 percent of beneficiaries depend on Social Security for 50 percent or more of their income. Social Security is the sole source of income for 15 percent of beneficiaries. "I am extremely disappointed that our nation's seniors are being refused a modest Social Security COLA in 2010," said Rep. Jones.

"As seniors struggle topay their mounting bills, Congress needs to reign in unnecessary spending and instead focus on actual needs, like ensuring that our seniors are granted the COLA they need to help make ends meet." Since automatic Cost of Living Adjustments went into effect in 1975, seniors have never before failed to get an increase. Without an Emergency COLA, millions of seniors will receive cuts due to the soaring costs of prescription drug plans, which many beneficiaries have automatically deducted from Social Security checks.

Visit www.SeniorsLeague.org for more information.

Treasury Bond sales A Ponzi Scheme?

From Washingtonsblog.com

Are U.S. Treasury Bond Sales a Ponzi Scheme?

I have heard at least 5 different theories by very smart people about how
U.S. treasury bond sales are being faked.

I do not have either the background or the inside knowledge to be able to
comment on whether any of them are true.

(1) PhD professor of economics Michel Chossudovsky - who is a very savvy
observer of international dynamics - claims in an interesting 8-minute
video:

In a bitter irony, the recipients of the bailout under TARP and Obama's
proposed $750 billion aid to financial institutions are the creditors of the
federal government. The Wall Street banks are the brokers and underwriters of
the US public debt, although they hold only a portion of the debt, they transact
and trade in US dollar denominated public debt instruments Worldwide.

They act as creditors of the US State. They evaluate the creditworthiness
of the US government, they rank the public debt through Moody's and Standard and
Poor. They control the US Treasury, the Federal Reserve Board and the US
Congress. They oversee and dictate fiscal and monetary policy, ensuring that the
State acts in their interest...

While the Federal Reserve can create money "out of thin air", the
multibillion outlays of the Treasury (including the Bush and Obama bank
bailouts) will require the emission of public debt in the form of Treasury Bills
and government bonds. Part of these T-Bills will of course also be held by the
Fed.

US financial institutions oversee the US public debt. They are involved
in the sale of treasury bills and government bonds on financial markets in the
US and around the World. But they also hold part of the public debt. In this
regard, they are the creditors of the US government. Part of this increased
public debt required to rescue the banks will be financed or brokered by the
same financial institutions which are the object of the bank rescue plan.

We are dealing with a pernicious circular relationship. When the banks
pressured the Treasury to assist them in the form of a major bank rescue
operation, it was understood from the outset that the banks would in turn assist
the Treasury in financing the handouts of which they are the recipients.

To finance the bank bailout, the Treasury needs to run a massive budget
deficit, which in turn requires a staggering increase of the US public debt.

Congress To Stop Bank Robbery? (of us)

Congress doing something positive for a change? It's about time, these banks have been getting away with robbery.-Lou

Democrats Target Bank Overdraft Charges

Bailed-Out Firms Lean More Heavily on Fees

Washington Post Monday, September 21, 2009

A backlash is brewing on Capitol Hill against banks that charge large fees for overdrafts without asking or telling customers, the latest sign that the financial crisis is shifting the balance of power from banks toward borrowers.

Banks struggling to survive have become increasingly reliant on the fees, which could total $38.5 billion this year.

But congressional Democrats, who pushed through new restrictions on credit cards this spring, now are promising a crackdown on overdraft fees, using words like "criminal" and "rip-off" to describe the practice of letting people overspend and then charging them fees without warning. Most overdrafts are now incurred on debit card transactions.

Sen. Christopher J. Dodd (D-Conn.) plans to introduce legislation requiring banks to get permission from customers, rather than allowing overdrafts automatically. If customers decline and then try to overspend, the transaction would be rejected. A similar bill is pending in the House.
Dodd dismissed concerns about the impact on ailing banks.
"People out there are getting whacked," he said. "They should have the right to say, 'Deny me the transaction.' "

The attack on overdraft fees comes as Congress is considering a fundamental overhaul of financial regulation. The Obama administration has proposed the creation of a new agency empowered to write and enforce rules protecting consumers in financial transactions, removing that power from banking regulators. Dodd also favors the creation of a single agency to oversee the health of banks, consolidating a responsibility held by four agencies.

More...

Listen To This Week's Radio Shows

Listen to this past Sunday's "The Financial Physician" national radio program on XM Satellite radio. This link allows you to listen to the last 4 week's shows. I also have a link to Sunday's morning show on WOBM-AM 1160 in New Jersey

XM National Show Here

WOBM AM 1160 Show Here

Have a Garage Sale, Lose Your House

In effort to protect your financial health I give you the following warning. The government can now fine you as much as $15 million if you sell certain items at your garage sale. More government bullcrap-Lou

New Government Policy Imposes Strict Standards on Garage Sales Nationwide

FoxNews

Americans who slap $1 pricetags on their used possessions at garage sales or bazaar events risk being slapped with fines of up to $15 million, thanks to a new government campaign.

The "Resale Round-up," launched by the Consumer Product Safety Commission, enforces new limits on lead in children's products and makes it illegal to sell any items that don't meet those limits or have been recalled for any other reason.

The strict standards were set in the 2008 Consumer Product Safety Improvement Act after a series of high-profile recalls of Chinese-made toys.

The standards were originally interpreted to apply only to new products, but now the CPSC says they apply to used items as well.

"Those who resell recalled children's products are not only breaking the law, they are putting children's lives at risk,” said CPSC Chairman Inez Tenenbaum. "Resale stores should make safety their business and check for recalled products and hazards to children."

In order to comply, stores, flea markets, charities and individuals selling used goods — in person or online — are expected to consult the commission's

24-page Handbook for Resale Stores and Product Resellers (pdf) and its Web site for a breakdown of what they can't sell.
Violators caught selling anything on the enormous list face fines of up to $100,000 per infraction and up to $15 million for a related series of infractions.

CPSC spokesman Scott Wolfson says the fines are intended for large companies with serious infractions.

"CPSC is an agency that has used its penalty powers over its 30-year history against companies," Wolfson told FOXNews.com. "CPSC is not seeking to pursue penalties against individuals hosting a garage sale or yard sale, we are encouraging them to take the right steps to not resell recalled products."

But FOX News Legal Analyst Bob Massi says the law makes no distinction for families and small resellers.

"Most people having garage sales at this point don't have much anyway, so to have a fine levied against them is tantamount to harassment," Massi told FOXNews.com. "And if you or I asked 100 people about this, they would never even know the law exists."

More...

A Little Sunday Humor

A funny and entertaining video. Also sad but true.-Lou

45% Of Doctors To Quit If Healthcare Passes?

If true this would totally destroy the healthcare system. We would have to wait months for a doctor appointment. This is nuts.-Lou


45% Of Doctors Would Consider Quitting If Congress Passes Health Care Overhaul

Two of every three practicing physicians oppose the medical overhaul plan under consideration in Washington, and hundreds of thousands would think about shutting down their practices or retiring early if it were adopted, a new IBD/TIPP Poll has found.

The poll contradicts the claims of not only the White House, but also doctors' own lobby — the powerful American Medical Association — both of which suggest the medical profession is behind the proposed overhaul.
It also calls into question whether an overhaul is even doable; 72% of the doctors polled disagree with the administration's claim that the government can cover 47 million more people with better-quality care at lower cost.

The IBD/TIPP Poll was conducted by mail the past two weeks, with 1,376 practicing physicians chosen randomly throughout the country taking part. Responses are still coming in, and doctors' positions on related topics — including the impact of an overhaul on senior care, medical school applications and drug development — will be covered later in this series.

Major findings included:

• Two-thirds, or 65%, of doctors say they oppose the proposed government expansion plan. This contradicts the administration's claims that doctors are part of an "unprecedented coalition" supporting a medical overhaul.

It also differs with findings of a poll released Monday by National Public Radio that suggests a "majority of physicians want public and private insurance options," and clashes with media reports such as Tuesday's front-page story in the Los Angeles Times with the headline "Doctors Go For Obama's Reform."

Nowhere in the Times story does it say doctors as a whole back the overhaul. It says only that the AMA — the "association representing the nation's physicians" and what "many still regard as the country's premier lobbying force" — is "lobbying and advertising to win public support for President Obama's sweeping plan."

The AMA, in fact, represents approximately 18% of physicians and has been hit with a number of defections by members opposed to the AMA's support of Democrats' proposed health care overhaul.

More...

Hyper-Inflation Nation?

This is an interesting video series on inflation and hyper-inflation. How it happens and the likely chance it's coming here and soon.-Lou

Chart Of The Day

click on chart to enlarge

Why is the 30 day U.S. Treasury Bill yield plunging to 0%? Is there some economic or financial calamity around the corner? Why is smart money buying the safest securities when they yield nothing? Why are corporate insiders selling their stock like mad? Why is the U.S. dollar declining on almost a daily basis? Why is gold stubbornly holding above $1,000 ounce? But the stock market keeps going up, you say. Things must be fine you say. Something just isn't right. Stay tuned.-Lou

The Next Housing Wave

This next wave of the housing crisis will be much worse than the sub-prime problem. These mortgages were taken out on expensive homes so a default is more costly to bank or entity holding the mortgage. Also the dollar resets on the monthly payment will be much higher because the interest increase is against a large balance. The next leg down in the economy, financial institutions and financial markets is just around the corner. Disregard all the happy talk on financial TV.-Lou

"Option" mortgages to explode, officials warn

WASHINGTON (Reuters) - The federal government and states are girding themselves for the next foreclosure crisis in the country's housing downturn: payment option adjustable rate mortgages that are beginning to reset.

"Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama's administration to discuss ways to combat mortgage scams.

"That's the next round of potential foreclosures in our country," he said.
Option-ARMs are now considered among the riskiest offered during the recent housing boom and have left many borrowers owing more than their homes are worth. These "underwater" mortgages have been a driving force behind rising defaults and mounting foreclosures.

In Arizona, 128,000 of those mortgages will reset over the the next year and many have started to adjust this month, the state's attorney general, Terry Goddard, told Reuters after the meeting.

"It's the other shoe," he said. "I can't say it's waiting to drop. It's dropping now."

The mortgages differ from other ARMs by offering an option to pay only the interest each month or a low minimum payment that leads to a rising balance in the loan's principal.

When the balance of the loan reaches a certain level or the mortgage hits a specific date, the borrower must begin making full payments to cover the new amount. The loan's interest rate also may have been fixed at a low level for the first few years with a so-called teaser rate, but then reset to a higher level.

Because the new monthly payments can be five or 10 times what borrowers are accustomed to paying, they "threaten a much greater hit to the consumer than the subprimes," Goddard said, referring to the mortgages often extended to less credit-worthy borrowers that fed the first wave of the financial crisis.

More...

FDIC Running On Empty

The FDIC better decide what they are going to do soon, the insurance fund is running on fumes. The $100 billion credit line with Treasury will need to be tapped. The real question: Is $100 billion enough?-Lou

FDIC to consider ways to replenish deposit fund

WASHINGTON (Reuters) - U.S. bank regulators are considering tapping a line of credit with the U.S. Treasury Department and may explore other lesser-known options to replenish the dwindling fund that safeguards bank deposits.

Federal Deposit Insurance Corp Chairman Sheila Bair said on Friday that the agency would meet at the end of the month to discuss options to rebuild the fund, which has been significantly drained by a sharp increase in bank failures.

"We are carefully considering all our options, including borrowing from Treasury," Bair said, referring to the agency's $500-billion line of credit with the Treasury Department. She was speaking at a global finance conference in Washington.

But regulators are still reluctant to tap the line of credit because they want to avoid temporarily using taxpayer money to clean up the banking mess, she said.

Bair said the FDIC also had lesser-known alternatives for replenishing the fund, such as prepayments of assessments on banks and issuing a note. She did not give further details on those options.

Other options include more special assessments on banks. The FDIC has already charged the industry one emergency fee of $5.6 billion this year, and is authorized to levy two more.

Bair said the FDIC would seek comment on these options before making a final decision.

So far this year, 92 U.S. banks have failed, compared with 25 during all of last year and only three in 2007. Those failures have whittled the balance of the insurance fund down to $10.4 billion from $45 billion a year ago. The FDIC is careful to note that it has $42 billion in reserves to handle failures over the next year.

"There are a few options available to the fund - none of them very palatable," said Brian Olasov, a managing director with McKenna, Long & Aldridge in Atlanta. He said the long-term solution to replenish the fund will be higher quarterly assessments.

MARK-TO-MARKET

Bair's comments touched on a range of topics, from her view that regulators should not have the option of extending "open-bank assistance" to troubled financial firms, to her concerns about accounting proposals that could imperil banks in times of stress.

She said she generally agrees with actions by the Financial Accounting Standards Board but is worried about a proposal to further extend "mark-to-market" accounting to bank loans.

"During periods of market stress, losses could be exacerbated," Bair said. "We don't need to deepen the crises."

FASB met last month to discuss whether to force companies to value nearly all financial instruments on their balance sheets, including loans, at market value, and to reflect them in earnings. Banks oppose such a change. FASB is expected to release a proposal in the first half of 2010

More...

A Watch that Watches Your Kid

Sounds like a great product to me, although I don't think I would have felt that way when I was 8. I wonder if this is a public company.-Lou

The satellite link that keeps watch on your children

Its vivid colour is clearly designed to appeal to youngsters. But this watch is really aimed at their parents.

For its key selling point is a satellite positioning system that locates the wearer to within ten feet.

The makers claim the GPS tracking device will offer anxious parents peace of mind.

But critics have said the 'tagging' is a step too far in the climate of paranoia over child safety.

The num8 watch, pictured above, costs £149.99 and can be securely fastened to a child's wrist, triggering an alert if forcibly removed.

Parents will be able to see their child's location on Google maps by texting 'wru' to a special number, or clicking 'where r you' on the secure website linked to the device. The street address and postcode will be displayed.
Safe zones can also be set up in which children can play. An alert will be sent to the parents if the child strays out of that area.

Steve Salmon, of makers Lok8u, said: 'Losing your child, if only for a brief moment, leads to a state of panic and makes parents feel powerless. The overriding aim of num8 is to give children their freedom and parents peace of mind.'

But Dr Michele Elliott, director of children's charity Kidscape, said: 'Is the world really that unsafe that parents need to track their children electronically?

Link

Bank Failure Friday Claims 2 More Banks

Only two banks were closed Friday by the FDIC bringing the year total to 94 banks.-Lou

Two Irwin Union Bank failures bring 2009 total to 94

SAN FRANCISCO (MarketWatch) -- Two Irwin Union Bank subsidiaries in Kentucky and Indiana were closed by regulators Friday, bringing the total number of U.S. bank failures this year to 94 and punching an $850 million hole in the federal deposit insurance fund.

The Federal Deposit Insurance Corp. said that Irwin Union Bank and Trust Co. in Columbus, Ind., and Irwin Union Bank F.S.B. in Louisville, Ky., were each closed.

Irwin Union Bank and Trust Co. had $2.7 billion in assets and $2.1 billion in deposits as of Aug. 31, the FDIC said. Irwin Union Bank F.S.B. had $493 million in assets and $441 million in deposits as of Aug. 31.
Hamilton, Ohio-based First Financial Bank has agreed to assume the failed banks' deposits. First Financial Bank said in a statement that assumption of the Irwin Union Bank subsidiaries brings with it 27 banking centers in nine states.

The effect on the subsidiaries' parent, bank holding company Irwin Financial Corp , was not immediately clear. An external spokeswoman for the company was unable to comment. Shares of Irwin Financial tumbled more than 50% to 22 cents a share in late trading.

Irwin Financial had disclosed in a regulatory filing on Wednesday that it was told by the Federal Reserve Bank of Chicago and the Indiana Department of Financial Institutions that they disagreed with its view of the timing and recognition of certain loan losses at Irwin Union Bank and Trust Co., requiring it to submit amended reports to the FDIC.

The failures marked the first this year both in Indiana and Kentucky. However, bank failures have become a regular occurrence since the economic calamity late last year the ensuing credit crunch.
The FDIC said the last bank closed in Indiana was seized in 1992, while last closure in Kentucky occurred in 1991.

I'm BAAACK!!

We are back in business at thefinancialphysician.com

The website is finally up and running again. I was forced to take it down for update and then encountered technical problems. Sorry for the delay.

Thanks to everyone who emailed and called wondering if I was ok.

Go to the main website and http://www.thefinancialphysician.com/ and click on the MEMBERS tab. Register (it's free) and you will become part of my email list. Those registered were kept informed of the status of the website via email. If not I had no way of communicating with you.

Anyway back to business

Credit Card Defaults Spike

Didn't Bernanke say the recession was over?-Lou

U.S. credit card defaults up, signal consumer stress

Bank of America Corp and Citigroup Inc customers defaulted on their credit card debts in August at the highest rates since the onset of the recession, a sign that the banks' consumer lending woes are far from over.

"The defaults are a wake-up call for those expecting a V-shaped recovery," said Elliot Spar, options market strategist at Stifel Nicolaus & Co.Bank of America said its charge off-rate -- loans the company does not expect to be repaid -- rose to 14.54 percent in August from 13.81 percent in July.

Citigroup, the largest issuer of MasterCard-branded credit cards, said its charge-off rate rose to 12.14 percent in August from 10.03 percent in July.The charge-off rates for both Citi and Bank of America, two of the biggest recipients of U.S. government bailouts, were the highest yet during the financial crisis.

JPMorgan Chase & Co, the largest issuer of Visa-branded credit cards, said its charge-off rate rose to 8.73 percent from 7.92 percent, while smaller Discover Financial Services said its rate rose to 9.16 percent from 8.43 percent.

American Express Co's default rate fell to 8.5 percent from 8.9 percent as the company increased its lending portfolio.

JPMorgan, Discover and Capital One Financial Corp reported late payments on credit cards -- an indicator of future defaults -- rose in August after several monthly declines.As credit card losses rose to record highs in recent months, credit card companies closed millions of accounts, trimmed lending limits and slashed rewards.

Lenders are also raising fees and interest rates ahead of a new law that increases protection for consumers. The law is expected to shrink the industry and limit subprime borrowers' access to plastic money.

More...

Gold and Silver Blast Off

click on chart to enlarge

Got Gold?

Gold and Silver remain on a tear as the U.S. dollar continues to fall against the world's major currencies this week. There is a different feel to this gold rally. The Gold Cartel is trying hard to get gold significantly below $1,000 ounce but they are failing big-time (for now). What is gold telling us? Perhaps everything is not as good as the fianancial media and politicians are telling us. Keep an eye on gold, silver and the dollar.-Lou

1930 The Greatest Sucker's Rally In History

Seems familiar does it not?-Lou

Headlines 1930

1. February 2, 1930: Market Recovering Faster Than Expected

2. February 2, 1930: Banks Have Started Hiring Again

3. February 5, 1930: The Cash On The Sidelines Is Coming Back!

4. February 7, 1930: Easy Money Driving Recovery

5. February 9, 1930: "New Era" Not Over Yet!

6. February 14, 1930: More Green Shoots!

7. February 16, 1930: Speculators And IPOs Come Back

8. February 28, 1930: Uh Oh, The Market's Getting Overbought

9. March 2, 1930: Loving The Volatility

10. March 4, 1930: That Wasn't A Crash--It Was Just A Dip!

11. March 6-7, 1930: More Easy Money

12. March 7, 1930: The Crash Wasn't So Bad After All

13. March 9, 1930: Unemployment Is Finally Under Control

14. March 12, 1930: But What Happens If Foreigners Stop Financing Us?

15. March 14, 1930: Even More Easy Money

16. March 22, 1930: Is It A New Bull Market Or A Sucker's Rally?

17. March 25, 1930: More Green Shoots!

18. March 26, 1930: The New Bull Market Is Great For Business

19. April 16, 1930: But Wait, Are The Fundamentals Really That Good?

20. April 17, 1930: The End. The sucker's rally peaks. The DOW hits a level it will not see again until July, 1954

LINK

Trade War On

The President has made a HUGE mistake picking a fight with our banker. Economic warefare with China would not be a fair fight. We have a pea shooter they have a machine gun-Lou

China and the U.S. - A Good Old-Fashion Trade War

China has the upper hand in a trade war with the U.S. and is about to use that hand to proves its supremacy.

China has voiced unusually strong objections to tariffs put on its tire exports to the U.S. The American government believes that the Chinese are targeting the industry, which is costing U.S. jobs. Labor unions will like the decision, as will a number of members of Congress who think

China does not work on a level playing field when it comes to trade.

China has already begun the process of retaliation. It has the upper hand in a trade war with the U.S., and it is about to use that hand to proves its supremacy.

The mainland government has said it will scrutinize U.S. imports of chicken and auto products and may put limits on them. The Chinese Ministry of Commerce said "China has consistently opposed trade protectionism, and the country's actions since the financial crisis have reflected this stance."

The fear of China using its financial and manufacturing muscle to compete effectively in the U.S. and elsewhere abroad has grown as the global recession has taken a toll on jobs. There is also increasing resentment over China using capital from its $2 trillion in foreign currency reserves to buy up cheap assets, particularly commodities and real estate, which have been pushed down by the economic crisis.
China has a large advantage over the U.S. on the trade issue.

Large American companies like Wal-Mart (WMT) source so many goods from China that the supply chain could not be replaced by getting manufactured goods elsewhere. China does not rely as much on American imports as the balance of trade shows every month.

The temptation to take actions against China for instances where it ships goods to America at what appear to be below-market prices will increase as unemployment moves to 10% and beyond. But it is a sucker's game for the U.S. China has the factories and America has the consumers. All that locking out China's products does is drive up consumer prices and drive down consumer spending, which is still the engine of U.S. GDP.

Link

Great article by Dylan Ratigan. He's right, we are hostage to a corrupt system that is going to make us all broke.-Lou

Americans Have Been Taken Hostage

Dylan Ratigan

The American people have been taken hostage to a broken system.
It is a system that remains in place to this day.

A system where bank lobbyists have been spending in record numbers to make sure it stays that way.

A system that corrupts the most basic principles of competition and fair play, principles upon which this country was built.

It is a system that so far has forced the taxpayer to provide the banks with the use of $14 trillion from the Federal Reserve, much of the $7 trillion outstanding at the US Treasury and $2.3 trillion at the FDIC.

A system partially built by the very people who currently advise our President, run our Treasury Department and are charged with its reform.
And most stunningly -- it is a system that no one in our government has yet made any effort to fundamentally change.

Like health care, this is a referendum on our government's ability to function on behalf of the American people. Ask yourself how long you are willing to be held hostage? How long will you let our elected officials be the agents of those whose business it is to exploit our government and the American people at any cost?

As hostages -- was there any sum of money we wouldn't have given AIG?
Why did we pay Goldman Sachs and all the other banks 100 cents on the dollar for their contracts with AIG, using taxpayer money, while we forced GM and others to take massive payment cuts?

Why hasn't any of the bonus money paid to the CEOs that built this financial nuclear bomb been clawed back?

And more than anything else -- why does the US Congress refuse to outlaw the most anti-competitive structure known to our economy, one summed up as TOO BIG TOO FAIL?

It has become startlingly clear that we as a country, and I as a journalist, had made a grave error in affording those who built and ran those banks and insurance companies the honorable treatment of being called capitalists. When in fact the exact opposite was true, these people were more like vampires using the threat of Too Big Too Fail to hold us hostage and collect ongoing ransom from the US Government and the American taxpayer.

This was no unlucky accident. The massive spike in unemployment, the utter destruction of retirement wealth, the collapse in the value of our homes, the worst recession since the Great Depression all resulted directly from these actions.

More...

The Ghost Fleet

The 'ghost fleet' near Singapore. The world's ship owners and government economists would prefer you not to see this symbol of the depths of the plague still crippling the world's economies

World trade has plunged to Depression-like levels indicating that the world economy is still on the brink of disaster.-Lou

Revealed: The ghost fleet of the recession

The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination - and is why your Christmas stocking may be on the light side this year

The tropical waters that lap the jungle shores of southern Malaysia could not be described as a paradisical shimmering turquoise. They are more of a dark, soupy green. They also carry a suspicious smell. Not that this is of any concern to the lone Indian face that has just peeped anxiously down at me from the rusting deck of a towering container ship; he is more disturbed by the fact that I may be a pirate, which, right now, on top of everything else, is the last thing he needs.

His appearance, in a peaked cap and uniform, seems rather odd; an officer without a crew. But there is something slightly odder about the vast distance between my jolly boat and his lofty position, which I can't immediately put my finger on.

Then I have it - his 750ft-long merchant vessel is standing absurdly high in the water. The low waves don't even bother the lowest mark on its Plimsoll line. It's the same with all the ships parked here, and there are a lot of them. Close to 500. An armada of freighters with no cargo, no crew, and without a destination between them.

More...

Jim Rogers: Currency Crisis Coming

I expect one too Jim.-Lou

I Expect a Currency Crisis or Semi-Crisis': Jim Rogers

The worst of the economic crisis is not over and a currency crisis can happen this year or the next year, because the problem of too much debt in the system has not been solved, legendary investor Jim Rogers told CNBC MondayThe current recovery is just a consequence of the fact that consumption fell so dramatically in 2008 and people have to buy things they need in 2009, Rogers told "Worldwide Exchange."

"How can the solution for debt and consumption be more debt and more consumption? How can that be the solution to our problems?," he said.
I would expect there to be a currency crisis or a semi-crisis this fall or next year. It's crony capitalism, Bernanke and Greenspan have brought crony capitalism to America … but that's not going to solve the world's problems," Rogers added.

There are still "gigantic amounts of horrible, horrible debt that hasn't been dealt with" in Central Europe, while hopes that China will pull the World out of recession are overblown, according to Rogers.

"China saved up a lot of money for a rainy day, it's raining and it's spending it," he said. "But China cannot pull out America or India or Europe from all this. Their economy is a 10th of the US. Hallelujah, let them do good things but they're not going to save the world."

The Federal Reserve has tripled its balance sheet and the US government's debt skyrocketed, which may cause currency problems next year, while protectionist tendencies have already started, he warned.
On Monday, China has requested World Trade Organization talks over US-imposed duties on Chinese-made tires, which China has branded protectionist.

"We're going to have some serious problems in currency markets, we're going to have serious problems in the world markets if we see protectionism rising and rising again," he said.

LINK..

Audit The Fed: 75% Say Yes

Although the Fed should be audited, it will never happen. Too much to see and its not pretty.-Lou

Three In Four Americans Support Federal Reserve Audit

National Poll Shows Vast Majority of Americans Want Transparency for the Fed, Underscores Campaign for Liberty’s Efforts to Pass Audit Bill

ALEXANDRIA, Va.--(BUSINESS WIRE)--A recent poll conducted by highly respected Rasmussen Reports found that 75 percent of Americans support an audit of the Federal Reserve, our Nation’s secretive, quasi-governmental central bank. Only 9 percent of respondents opposed an audit, a further indication of overwhelming support for Fed transparency.

View the survey here.

Congressman Ron Paul’s bill H.R. 1207, the Federal Reserve Transparency Bill of 2009, and S. 604, its Senate companion bill, are experiencing tremendous momentum on Capitol Hill.

H.R. 1207 currently has 279 bi-partisan cosponsors, including every Republican and 101 Democrats. S. 604 enjoys 20 cosponsors including Independent Bernie Sanders (I-VT), progressive Russ Feingold (D-WI), and conservative stalwart Jim DeMint (R-SC).

Campaign for Liberty has been the leader in a push for a Federal Reserve audit, using its nationwide grassroots network to educate millions of Americans about sound monetary policy and the need for transparency in our banking system. The groups has generated hundreds of thousands of petitions and phone calls to lawmakers, distributed massive amounts of educational material and canvassed countless neighborhoods across the country.

“Campaign for Liberty is proud to be the leader in the nationwide push for Federal Reserve transparency, and this Rasmussen poll is a strong indication that efforts are working,” said Campaign for Liberty President John Tate. “The Fed is at the heart of so many of our Nation’s financial problems and Americans deserve to know what is going on behind the shroud of secrecy. Through innovative mobilization efforts, both online and on the ground, we are bringing this critical issue to the American people with overwhelming success.”

“Politicians everywhere should take note: Americans are demanding transparency at the Fed. Campaign for Liberty will continue our fight to pass legislation to produce a full audit of the Federal Reserve,” continued Tate.

Campaign for Liberty was founded in July of 2008 to continue the grassroots momentum generated by Congressman Ron Paul’s presidential campaign. The group has over 180,000 activist members and enjoys leadership and support in all 50 states.

Listen To This Week's Radio Show

Listen to Sunday's "The Financial Physician" radio show on WOBM AM 1160 in New Jersey. The national show is 2 posts below.

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The Protest The Media Says Never Happened

The overhead picture proves that the March on Washington was attended by more than the "thousands" the media has reported. The NY Times, Washington Post, LA Times had not one prominent story about the protests. CNN, ABC, NBC and CBS barely reported on what was a huge protest in Washington. Has the mainstream media become Pravda, a tool of the state? Scary stuff.-Lou

Listen To The National Radio Show

Listen to last night's "The Financial Physician" radio program on XM Satellite Radio.

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Trade War On

Just what the world economy needs a trade war between the world's largest trading partners. This is big stuff folks. The unions now have total influence over the federal government, God help us.-Lou

US Tire duties spark China clash

A full-blown trade row erupted between the US and China after Beijing accused Washington of “rampant protectionism” for imposing heavy duties on imported Chinese tyres and threatened action against imports of US poultry and vehicles.

Trade relations between two of the world’s biggest economies deteriorated after Barack Obama, US president, signed an order late on Friday to impose a new duty of 35 per cent on Chinese tyre imports on top of an existing 4 per cent tariff.

In his first big test on world trade since taking office in January, Mr Obama sided with America’s trade unions, which have complained that a “surge” in imports of Chinese-made tyres had caused 7,000 job losses among US factory workers.

Chen Deming, China’s minister of commerce, condemned the decision, saying that it “sends the wrong signal to the world” at a time when Washington and Beijing should be co-operating to deal with the worst economic and financial crisis in decades.

“This is a grave act of trade protectionism,” Mr Chen said in a statement. “Not only does it violate WTO rules, it contravenes commitments the US government made at the [April] G20 financial summit.”

Beijing said it had requested WTO-sanctioned consultations with the US over Washington’s new duties on tyres. Yao Jian, a commerce ministry spokesman, said the duties were in ”violation of WTO rules”.

China said it would now investigate imports of US poultry and vehicles, responding to complaints from domestic companies.

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Register and Members Page

There is now a "Members" page at www.thefinancialphysician.com. It's free all you have to do is register once. 

The "Members" section will contain excerpts of my book "The Financial Physician: How To Cure Your Money Problems and Boost Your Financial Health" due to be published December 15th and other articles, newsletter etc.

The first entry on the members section is the introduction to the book.

My email is lou@thefinancialphysician.com  Feel free to send me any comments or questions, I will be sure to respond. 

Quote of the Day

Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies...What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment.

-Alan Greenspan, 9 Sep 2009

This is Kinda Creepy

Freaky Numbers

The Dow closed Friday at 9,605.41. On September 11, 2001, the Dow closed at guess what? 9,605.51.

Hey your up a whole 1/10 of a point over the last eight years, not bad. Oh by the way the dollar lost over 20% purchasing power over that time.

Gold tripled over that time frame, rember that the next time some lame brained financial commentator says that gold is bad because it pays no interest or dividends.-Lou

Gold Makes Record Weekly Closing High

click on chart to enlarge

Gold soared this week taking out $1,000/ounce after a rough and tumble battle with The Powers That Be who want gold below the magical millenial level. Cash Gold closed at $1005/oz the highest weekly close EVER. Look for more upside fireworks in the weeks and months to come. The debasement of the US currency is fully underway, when the average Joe understands whats happening all hell will break loose in the gold and currency market.-Lou

Trade War With China?

This is a great mistake Mr. President. A. You don't want to piss off the Chinese who can destroy our country economically by just selling a portion of their $ trillion plus US bond reserves. Interest rates would skyrocket, the dollar would plunge (more than it is already) and inflation would soar. B. Protectionism and trade wars with your biggest trading partner is suicide. This is what made the depression as bad asit was, trade protectionism.-Lou

China Slams U.S. Tariffs on Tires as 'Serious Act of Trade Protectionism'

The new tariffs set a bad precedent in light of the global economic crisis and China reserves the right to react, Ministry of Commerce spokesman Yao Jian said according to a statement on the ministry Web site.

BEIJING - China strongly opposed President Barack Obama's decision to impose punitive tariffs on imports of car and light truck tires calling it protectionism that violates World Trade Organization rules.

New tariffs send a wrong signal to the world ahead of the upcoming Group of 20 nations in Pittsburgh Sept. 24-25, and could spark a chain reaction of trade protectionist measures that slow economic recovery, a notice on the Ministry of Commerce Web site said Saturday.

Such actions will harm U.S.-China economic and trade relations, it said.
China reserves the right to react, Ministry of Commerce spokesman Yao Jian said Saturday, without giving details.

For the Chinese government, the tire dispute threatens an economic relationship crucial to the country's economic growth. Chinese officials had previously appealed to Washington to avoid taking steps that might harm relations.

"China strongly opposes this serious act of trade protectionism by the U.S.," the ministry statement said. "This act not only violates the rules of the World Trade Organization but also violates the relevant commitments made by the U.S. government at the G-20 financial summit."

Obama had until Sept. 17 to accept, reject or modify a U.S. International Trade Commission ruling that a rising tide of Chinese tires into the U.S. hurts American producers. A powerful union, United Steelworkers, blames the increase for the loss of thousands of American jobs.

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Bank Failure Friday Claims 3 More Banks

I did not see any news this morning about any bank closures last night. I was just about to put up a post saying it was finaly nice to go a week without a bank failure. I went to FDIC website and found these three press releases. The failure of these three banks will cost the FDIC Insurance fund another $2 billion plus dollars. The FDIC has to be running on empty-no? -Lou

MB Financial Bank, National Association, Chicago, Illinois, Assumes All of the Deposits of Corus Bank, National Association, Chicago, Illinois

FOR IMMEDIATE RELEASE

September 11, 2009

Chicago, Illinois, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with MB Financial Bank, National Association, Chicago, Illinois, to assume all of the deposits of Corus Bank, N.A.

The eleven branches of Corus Bank will reopen on their next normally scheduled business day as branches of MB Financial Bank. Depositors of Corus Bank will automatically become depositors of MB Financial Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until MB Financial Bank can fully integrate the deposit records of Corus Bank.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $1.7 billion. MB Financial Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Corus Bank is the 90th FDIC-insured institution to fail in the nation this year, and the sixteenth in Illinois. The last FDIC-insured institution closed in the state was Platinum Community Bank, Rolling Meadows, on September 4, 2009.

First-Citizens Bank & Trust Company, Raleigh, North Carolina, Assumes All of the Deposits of Venture Bank, Lacy, Washington

FOR IMMEDIATE RELEASE

September 11, 2009

Venture Bank, Lacy, Washington, was closed today by the Washington Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company, Raleigh, North Carolina, to assume all of the deposits of Venture Bank.

The eighteen branches of Venture Bank will reopen during normal business hours beginning tomorrow as branches of First-Citizens Bank & Trust Company. Depositors of Venture Bank will automatically become depositors of First-Citizens Bank & Trust Company. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until First-Citizens Bank & Trust Company can fully integrate the deposit records of Venture Bank.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $298 million. First-Citizens Bank & Trust Company's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Venture Bank is the 92nd FDIC-insured institution to fail in the nation this year, and the third in Washington. The last FDIC-insured institution closed in the state was Westsound Bank, Bremerton, on May 8, 2009.

CorTrust Bank National Association, Mitchell, South Dakota, Assumes All of the Deposits of Brickwell Community Bank, Woodbury, Minnesota

Brickwell Community Bank, Woodbury, Minnesota, was closed today by the Minnesota Department of Commerce, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with CorTrust Bank N.A., Mitchell, South Dakota, to assume all of the deposits of Brickwell Community Bank.

The sole branch of Brickwell Community Bank will reopen on Saturday as a branch of CorTrust Bank. Depositors of Brickwell Community Bank will automatically become depositors of CorTrust Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branch until CorTrust Bank can fully integrate the deposit records of Brickwell Community Bank.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $22 million. CorTrust Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Brickwell Community Bank is the 91st FDIC-insured institution to fail in the nation this year, and the third in Minnesota. The last FDIC-insured institution closed in the state was Mainstreet Bank, Forest Lake, on August 28, 2009.

FDIC WEBSITE

Gold and Silver Take Off, Dollar Falls

As has been the norm this week, gold continued higher blasting through $1,000/ounce and the dollar index continues to hit new lows.-Lou

US gold rises above $1,010 on dollar deterioration

NEW YORK, Sept 11 (Reuters) - U.S. gold futures broke above$1,010 an ounce on Friday, reaching their highest level sinceFebruary, as a steadily weakening dollar increased the statusof bullion as an alternative investment. For the latest detailed report, click on [GOL/]. GOLD * December gold GCZ9 up $13.80, or 1.4 percent, at $1,010.60 an ounce at 10:26 a.m. EDT (1426 GMT) on the COMEX division of the New York Mercantile Exchange.

* Ranged from $996.30 to $1,013.70, which marked the
highest level since Feb. 20.

* The U.S. dollar fell to a one-year low against major
currencies as optimism about the outlook for the global economy
encouraged investors to favor higher yielding currencies and
stocks instead of the safety of the greenback.

* Gold continues its steady upward move, helped by
technical buying, stronger euro and crude oil rally - George
Gero, vice president of RBC Capital Markets Global Futures. * COMEX gold open interest continues to expand, signaling strong investment demand from funds - Gero.

* COMEX estimated 9 a.m. volume at 47,223 lots. * Gold/oil ratio at 13.96, down from the previous session's 13.89.

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A Day Of Remembrance

We all remember where we were that crystal clear, late summer morning when we heard the news. I was stranded in Las Vegas away from my family and friends. I will never forget the feeling of distance from home. The country pulled together in the days after 9-11 in a way that I had never seen before.

Unfortunately we are now more divided than ever.

Let us take this day to remember those killed on September 11, 2001. Let us also remember all the first responders who are now ill from the toxic air they breathed on the pile. They are suffering horribly and need our support.

Here is the organization most worthy of your donations, I will be attending their charity event tonight.

Feal Good Foundation

Something Doesn't Seem Right

I'm getting a strange feeling that things in the world are beginning to fall apart and the months ahead are going to be very dangerous and frightening in many ways. A large number of problems seem to be developing all at the same time. These problems are integrated and while each is important and potentially disastrous the synergies of them all happening at the same time is horrible to contemplate. I have had an underlying feeling of anxiousness lately, a feeling that we are about to witness historic changes in the world. I hope I'm wrong. Maybe I'm just too immersed in the news.-Lou

Here are some links to the issues facing the world today:


Is another 9/11 set to unfold? Scariest

Dr Byron Weeks: War may be imminent in the Middle East

'Israel link' in Arctic Sea case

Netanyahu's 'secret visit to Moscow

Beijing Backs Derivatives Fights

Treasury: Millions more foreclosures coming

The Dollar Collapses

China alarmed by US money printing

Gov. Baldacci proclaims civil emergency due to H1N1

China may back out of derivative contracts,

Why This Fall and Winter Could Get Ugly

Why $200 Oil Is Just Around the Corner

Job outlook hits worst-ever level

Will The Collapse Of FDIC Insured Banks Cause Another Stock Market Crash?

Massive Government Market Manipulation?

A long article but an interesting read. I too have been wondering how the stock market can levitate when the economy is still very much in the dump. One massive government intervention according to J.S. Kim. I believe him-Lou

The Coming Consequences of Banking Fraud

J.S Kim

The Double Dip Recession, or the “W” shaped recovery that a minority of economists, such as Joseph Stiglitz, is now stating as a strong possible outcome of this current rally, should not be discussed in the realm of economics but rather in the more apropos realm of financial fraud.

The fact that the upleg of the “W” shaped recovery that is occurring now will inevitably crumble in spectacular fashion will not be a result of any free market principle, but rather the direct consequence of a fraudulent scheme executed by an elite global financial oligarchy, otherwise known as Central Banks. If the mission of this current manufactured leg-up in Western stock markets was to fool the world into believing that global economies are recovering, then clearly, up until this point, the mission has been a resounding success. For those unfamiliar with the term “blowback”, it's a CIA term that was first used in March 1954 to describe the unintended consequences of US government international activities kept secret from the American people.

Though this term has primarily been used to describe the consequences of covert military operations, “blowback” is an appropriate term to use to describe the coming consequences of banking fraud because the US government, US Federal Reserve, Wall Street, the US Treasury, and the Exchange Stabilization Fund have all engaged in domestic and international financial and monetary transactions that have been kept secret from the world, and that will have severe and negative consequences in the not so distant future.

In fact, I predict that the blowback of these activities will not only exceed, but far exceed, the fallout the world experienced in 2008 at the prior apex of this current crisis. Most people today can not even fathom how bad the situation will become primarily because of all the secrecy that the banksters have engaged in – in US Treasury markets, the gold markets, the US dollar markets, agriculture commodities, stock markets, and financial markets – in hiding reality from the people.

In an article I wrote three months ago, on June 10, 2009, titled, “Can Rising Stock Markets Serve as a Confirmation of a Crashing Economy?”, I stated, “Whether I am right or wrong about US markets tanking by summer’s end/fall’s beginning, if [we] position [our] investment assets based upon an understanding of the fraudulent monetary system, [we] can still continue to create wealth.” While true, I was a bit early in raising the proposition of a stock market correction the month before; I amended my prediction in June upon realizing the breadth of the manipulation schemes occurring in Western stock markets.

In today’s markets, only a complete investment novice would try to predict market behavior without accounting for the massive government intervention schemes and forays into stock markets as well as the computerized manipulation of daily trading volume. One of the main reasons, but not the only one, that I amended my target for the end of this rally this past June to the fall season is the fact that fall normally marks the return of much higher daily trading volume from the traditional summer lulls.

Thus, it is a much more difficult proposition for Central Banks and computerized trading programs to manipulate a continued rise in stock markets in the face of higher daily trading volumes.

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How Banks Steal From Their Customers

This is an outrage. I have had the same problem with my bank. If you do not have funds in your account to pay for something with your debit card it should be rejected. The banks want you to go over so they can charge you $35 everytime you use your card that day. They also do not credit deposits until the end of the day so debits will cause an overdraft even when you deposited money earlier in the day. This is criminal and needs to be dealt with.-Lou

Overspending on Debit Cards Is a Boon for Banks
When Peter Means returned to graduate school after a career as a civil servant, he turned to a debit card to help him spend his money more carefully.

So he was stunned when his bank charged him seven $34 fees to cover seven purchases when there was not enough cash in his account, notifying him only afterward. He paid $4.14 for a coffee at Starbucks — and a $34 fee. He got the $6.50 student discount at the movie theater — but no discount on the $34 fee. He paid $6.76 at Lowe’s for screws — and yet another $34 fee. All told, he owed $238 in extra charges for just a day’s worth of activity.

Mr. Means, who is 59 and lives in Colorado, figured employees at his bank, Wells Fargo, would show some mercy since each purchase was less than $12. In addition, a deposit from a few days earlier would have covered everything had it not taken days to clear. But they would not budge.

Banks and credit unions have long pitched debit cards as a convenient and prudent way to buy. But a growing number are now allowing consumers to exceed their balances — for a price.

Banks market it as overdraft protection, and the fees it generates have become an important source of income for the banking industry at a time of big losses in other operations. This year alone, banks are expected to bring in $27 billion by covering overdrafts on checking accounts, typically on debit card purchases or checks that exceed a customer’s balance.

In fact, banks now make more covering overdrafts than they do on penalty fees from credit cards.

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