The Financial Physician

The Financial Physician's 2010 Financial Resolutions

2010-01-14T08:10:00.003-05:00

CLICK ON VIDEO TO ENLARGE

UK Telegraph: U.S. Sliding Deeper Into Depression

2010-01-12T12:00:00.003-05:00

You will not read this stuff in U.S. newspapers. To keep fully informed on the financial state of the U.S. you must read international news as well as domestic. No worries, I do it for you and bring it to you on my blog.-Lou

America slides deeper into depression as Wall Street revels

December was the worst month for US unemployment since the Great Recession began.

The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.
Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.
The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy –– just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.
Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody's Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck's Grapes of Wrath.
Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor "harsh, repugnant, shocking and repulsive". We are not far from a de facto moratorium in some areas.
This is how it ended between 1932 and 1934, when half the US states declared moratoria or "Farm Holidays". Such flexibility innoculated America's democracy against the appeal of Red Unions and Coughlin Fascists. The home siezures are occurring despite frantic efforts by the Obama administration to delay the process.
This policy is entirely justified given the scale of the social crisis. But it also masks the continued rot in the housing market, allows lenders to hide losses, and stores up an ever larger overhang of unsold properties. It takes heroic naivety to think the US housing market has turned the corner (apologies to Goldman Sachs, as always). The fuse has yet to detonate on the next mortgage bomb, $134bn (£83bn) of "option ARM" contracts due to reset violently upwards this year and next.
US house prices have eked out five months of gains on the Case-Shiller index, but momentum stalled in October in half the cities even before the latest surge of 40 basis points in mortgage rates. Karl Case (of the index) says prices may sink another 15pc. "If the 2008 and 2009 loans go bad, then we're back where we were before – in a nightmare."
David Rosenberg from Gluskin Sheff said it is remarkable how little traction has been achieved by zero rates and the greatest fiscal blitz of all time. The US economy grew at a 2.2pc rate in the third quarter (entirely due to Obama stimulus). This compares to an average of 7.3pc in the first quarter of every recovery since the Second World War.

More...

Listen to This Week's Radio Show

2010-01-12T11:53:00.002-05:00

Listen to this past Sunday's "The Financial Physician" radio shows

Listen Here

Follow Me To The New Website

2009-09-23T06:05:00.007-04:00

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?

2009-09-22T15:03:00.003-04:00

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

2009-09-21T08:13:00.002-04:00

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?

2009-09-21T08:05:00.003-04:00

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)

2009-09-21T07:36:00.003-04:00

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

2009-09-20T08:49:00.005-04:00

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

2009-09-20T07:10:00.004-04:00

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

2009-09-20T06:59:00.001-04:00

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

45% Of Doctors To Quit If Healthcare Passes?

2009-09-19T07:37:00.003-04:00

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?

2009-09-19T07:17:00.001-04:00

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

2009-09-19T07:08:00.003-04:00

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

2009-09-19T06:42:00.004-04:00

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

2009-09-19T06:32:00.002-04:00

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

2009-09-19T06:18:00.004-04:00

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

2009-09-19T06:13:00.003-04:00

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!!

2009-09-18T15:18:00.003-04:00

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

2009-09-16T07:23:00.002-04:00

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

2009-09-16T07:10:00.002-04:00

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

2009-09-16T07:03:00.002-04:00

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

2009-09-16T06:57:00.003-04:00

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

2009-09-16T06:04:00.001-04:00

2009-09-15T07:21:00.002-04:00

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

2009-09-15T06:52:00.005-04:00

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.

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Jim Rogers: Currency Crisis Coming

2009-09-15T06:33:00.003-04:00

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

2009-09-15T06:27:00.003-04:00

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

2009-09-14T10:04:00.003-04:00

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

Listen Here

The Protest The Media Says Never Happened

2009-09-14T08:44:00.003-04:00

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

2009-09-14T08:38:00.002-04:00

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

Listen Here

Trade War On

2009-09-14T08:05:00.002-04:00

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.

More...

Register and Members Page

2009-09-13T13:13:00.003-04:00

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

2009-09-13T05:52:00.001-04:00

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

2009-09-12T13:24:00.005-04:00

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

2009-09-12T13:09:00.003-04:00

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?

2009-09-12T12:57:00.004-04:00

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.

More...

Bank Failure Friday Claims 3 More Banks

2009-09-12T12:43:00.003-04:00

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

2009-09-11T11:17:00.006-04:00

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.

More...

A Day Of Remembrance

2009-09-11T07:30:00.002-04:00

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

2009-09-11T06:44:00.002-04:00

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?

2009-09-11T05:48:00.003-04:00

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.

More...

How Banks Steal From Their Customers

2009-09-10T08:16:00.003-04:00

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.

More...

Debtors Revolt?

2009-09-10T07:43:00.001-04:00

Housing Still A Big Problem

2009-09-10T07:14:00.002-04:00

Housing will be a drag on the economy and the banks for a long time. Housing started this mess and it will not end until foreclosures begin to decline.-Lou

U.S. foreclosures near record, peak in late '10: report

NEW YORK (Reuters) - U.S. mortgage foreclosure filings in August hovered near July's record high despite broad efforts to keep borrowers in their homes and will probably rise for another year, according to a report released on Thursday.

Filings -- including notices of default, auction and bank repossession -- dipped 1 percent last month from July's all-time high and were up 18 percent in August from the same month a year earlier, real estate data firm RealtyTrac said.

"The pipeline of early stage foreclosures and delinquent loans is still probably going to overwhelm the system's ability to quickly modify" terms so struggling homeowners can make their monthly mortgage payments, said Rick Sharga, senior vice president at the Irvine, California-based company.

One in every 357 U.S. households with loans got a foreclosure filing in August.

Though lenders are moving in the right direction, Sharga said, RealtyTrac is revising up its estimate for filings this year and now expects a more prolonged foreclosure crisis.

Some 3.4 million households will get a filing this year, up from the prior estimate of 3 million to 3.2 million, and sharply higher than 2.3 million filings last year.

If the forecast is realized, it will be more than four times the filings in 2005, before the deepest housing crash since the Great Depression began.

"We had been thinking that this year would be the peak, but at the rate things are going right now, it's appearing more likely that late 2010 might be the peak year before things start to moderate," Sharga said.
A quick recovery is not in the cards, either.

"I don't expect it to be that 2010 will peak and 2011 will be the wonderful land of Oz," Sharga added."

More...

Chart of the Day

2009-09-09T10:27:00.003-04:00

This is a chart of the U.S. dollar index. As you can plainly see the dollar is falling out of bed. Today the dollar index broke 77 and is sitting at a year low. Todays $20 billion 10 year bond auction better go well or the dollar will fall much further. September gold futures are trading over $1,000 ounce and should actually be trading much higher. This is the price you pay when you run $1.5 trillion budget deficits and the Federal Reserve prints money to monetize the debt. This is a VERY ominous situation and will result in inflation in the not too distant future.-Lou

Ron Paul On Pending Nightmare

2009-09-09T07:12:00.000-04:00

Listen To This Week's Radio Show

2009-09-08T07:25:00.002-04:00

Listen to this past Sunday's "The Financial Physician" radio show on WOBM-AM 1160 in New Jersey. My national show is linked in a earlier post below.

Listen Here

Got Gold?

2009-09-08T06:25:00.004-04:00

A very interesting article to say the least. If this does not give you confidence in the long term value of holding gold nothing will. The Chinese are smart and know exactly what they are doing and why.-Lou

China's hidden gold purchase policy

Evidence suggests that China is continuing to buy gold for its reserves, but is doing so in a manner designed not to over-disrupt the global gold market

LONDON - There seems to be little doubt that China continues to buy gold for its reserves, but surreptitiously, as it has no desire to move the markets unduly, and it knows full well that any announcement of a big gold purchase will likely do just that.

It is not exactly a secret that Chinese government economists and bankers are disturbed about the U.S. Quantitative Easing moves. They feel that this has ultimately to lead to significant inflation and a corresponding big decline in the value of the dollar within the next few years and with some $2 trillion in reserves this is not something they are keen to precipitate by announcements of a major gold purchase programme - or even by showing the world that its gold reserves are increasing.

In an interesting article in the U.K's Daily Telegraph, International Business Editor Ambrose Evans-Pritchard comments on views expressed by Cheng Siwei who he describes as being "until recently Vice-Chairman of the Communist Party's Standing Committee, and now a sort of economic ambassador for China around the world" and thus in a good position to understand the country's policies vis-a-vis gold purchases and the dollar.

The gist of the comments was that China has fundamentally lost confidence in the dollar and is looking towards a more significant proportion of gold in its reserves.

But this is easier said than done without causing huge disruption in the gold market itself and Cheng is quoted thus: "Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as to not stimulate the market".

This looks as though it means not only is China buying on dips in the gold price - and there is evidence of strong support from somewhere every time gold falls to a certain level - but is also concealing its purchases by not moving the gold into official reserves, but the holding of it by some other government entity so it stays off the official books.

When China relatively recently announced its big jump in gold reserves it was apparent the purchases had actually taken place over about five years and were only moved into the official reserves this year, and thus only then reported to the IMF. Thus it is likely that purchases are continuing in the same manner - off the open books.

If all this is correct it does mean that there is little in the way of downside risk for gold holders with potentially massive support coming in at about $930, but perhaps a cessation of this major support buying at around current gold price levels which could keep gold range-bound. But, of course, if and when China announces its next significant rise in its gold reserves this could have a substantial impact. But on past performance such an announcement may not happen for a few years - when it may suit China to do so.

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The Most Important News Of The Day

2009-09-08T06:14:00.002-04:00

The road to the dollar's destruction goes straight through China. If not for the dollar's reserve currency status it would already have already been severely depreciated by now. Gold is reacting to this news by taking out $1,000/oz (1004.50 as I write) and the dollar index has fallen to 2009 lows. Silver is up a huge $0.50 (3.1% 16.72/oz). Stocks look to be up sharply as well. Is the stock market reflecting coming inflation?Should be an interesting day.-Lou

U.N. body calls for dollar's reserve role to be dropped

LONDON (MarketWatch) -- A United Nations panel weighed into the dollar reserve currency debate, arguing for a new system of soft pegs to correct severe deficits in debtor nations like the U.S. and surpluses in countries like China.

The report from the United Nations conference on Trade and Development, issued on Monday, said the world economy would be better off with a system where governments intervene when necessary to either defend or depress their own currencies.

"A viable solution to the exchange-rate problem would be a system of managed flexible exchange rates targeting a rate that is consistent with a sustainable current-account position, which is preferable to any 'corner solution.' But since the exchange rate is a variable that involves more than one currency, there is a much better chance of achieving a stable pattern of exchange rates in a multilaterally agreed framework for exchange-rate management," said the U.N. body.

The role of the dollar reserve's status has been criticized of late, notably by Russia and China, which have called for the International Monetary Fund's special drawing rights to be used instead, a proposal that many see as impractical given the lack of availability or purchase power outside of settling international obligations.

The U.N. sees the impracticalities of the SDRs but also highlighted problems with the current system.

"An economy whose currency is used as a reserve currency is not under the same obligation as others to make the necessary macroeconomic or exchange-rate adjustments for avoiding continuing current account deficits. Thus, the dominance of the dollar as the main means of international payments also played an important role in the build-up of the global imbalances in the run-up to the financial crisis," the U.N. said.

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Listen To My National Radio Show

2009-09-07T07:34:00.002-04:00

Listen to last nights national "The Financial Physician" radio program on XM Satellite Radio.

Listen Here

Wall Street To Trade In "Death Bonds"

2009-09-07T07:28:00.006-04:00

Wall Street financial engineers have destroyed the world with derivatives and now they want to trade in death. These people must be stopped.-Lou

'Life settlements' bonds could be Wall Street's next big act

SAN FRANCISCO (MarketWatch) - Wall Street is developing a product that packages life-insurance policies into investable bonds, and the plan already is generating controversy, according to a media report Sunday.

Investment banks expect to buy life insurance policies that ill and elderly people sell for cash, then package hundreds or thousands of them into bonds. Institutional and other buyers would be the primary buyers of these bonds, receiving a payout when people with the insurance die, the New York Times reported in its online edition.

With $26 trillion of life insurance policies in force in the U.S., the market for these "life settlements" bonds could be immense, the Times said.
Investment banks stand to profit from the creation, sale and trading of the bonds.

Wall Street has been searching for a product to replace the once-lucrative mortgage business, and life settlements policies are being seen as the answer, the Times said.

The article cited industry predictions that the market for the bonds could reach $500 billion. It noted that Credit Suisse Group, for example, bought a firm that originates life settlements and has dedicated efforts to structuring deals and selling the bonds.

In addition, Goldman Sachs Group Inc. has developed a tradable index of life settlements, allowing investors to bet on whether people will live longer than expected or die sooner than planned, the Times said, adding that spokesmen for Credit Suisse and Goldman Sachs declined to comment.

The report said that investment banks are following the model used with the packaging of subprime mortgages, which were supposed to be high-quality and less risky, but proved otherwise.

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China Fed Up With US

2009-09-07T07:16:00.005-04:00

China holds our economic future in their hands. This is a national security issue. They hold over a $trillion of our Treasury and Agency debt and can dump it at anytime crashing the dollar and causing interest rates to skyrocket. If China does not show up at our autions (and they are not lately) the Fed will be the buyer of last resort (with printed money). We are in big trouble folks.-Lou

China alarmed by US money printing

The US Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.

Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing".

"We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.
China's reserves are more than – $2 trillion, the world's largest.

"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," he added.

The comments suggest that China has become the driving force in the gold market and can be counted on to buy whenever there is a price dip, putting a floor under any correction.

Mr Cheng said the Fed's loose monetary policy was stoking an unstable asset boom in China. "If we raise interest rates, we will be flooded with hot money. We have to wait for them. If they raise, we raise.

"Credit in China is too loose. We have a bubble in the housing market and in stocks so we have to be very careful, because this could fall down."

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USA Faces Argintine Type Fall: Paper

2009-09-07T07:10:00.002-04:00

Where are the economic statesman in our government? We are on the road to ruin and it seems that nobody in government realizes it.-Lou

Barack Obama accused of making 'Depression' mistakes

Barack Obama is committing the same mistakes made by policymakers during the Great Depression, according to a new study endorsed by Nobel laureate James Buchanan.

His policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says.

There are "troubling similarities" between the US President's actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.

In particular, the authors, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute, claim that the White House's plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run.

They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the US economy and may risk delaying full economic recovery by several years.

The study represents a challenge to the widely held view that Keynesian fiscal policies helped the US recover from the Depression which started in the early 1930s. The authors say: "[Franklin D Roosevelt's] interventionist policies and draconian tax increases delayed full economic recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows."

Although the authors support the Federal Reserve's moves to slash interest rates to just above zero and embark on quantitative easing, pumping cash directly into the system, they warn that greater intervention could set the US back further.

Rowley says: "It is also not impossible that the US will experience the kind of economic collapse from first to Third World status experienced by Argentina under the national-socialist governance of Juan Peron."

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Weekend Funnies

2009-09-06T16:41:00.000-04:00

Bank Failure Friday Claims 5 More Banks

2009-09-05T08:34:00.003-04:00

Another 5 banks bite the dust, brining year total to 89.-Lou

SAN FRANCISCO (MarketWatch) - Five banks in Missouri, Iowa, Illinois and Arizona were closed by regulators Friday, bringing the number of U.S. bank failures in 2009 to 89 as the effects of the credit crisis continue to ripple through the financial system.

Two suburban Chicago banks failed in Illinois, the Federal Deposit Insurance Corp. said:
InBank, the 14th bank to fail in Illinois this year, had $199 million in deposits as of Aug. 3, the agency said. Chicago-based MB Financial Bank has agreed to assume its deposits. InBank's failure will cost the deposit insurance fund $66 million.

Platinum Bank of Rolling Meadows was closed by the Office of Thrift Supervision, which appointed the FDIC as receiver. As of Aug. 29, the bank had total assets of $345.6 million and deposits of $305 million, the FDIC said. The FDIC authorized payout of insured deposits and estimated the cost to its Deposit Insurance Fund will be $114.3 million. MB Financial Bank will accept the failed bank's direct deposits from the federal government.

Kansas City, Mo.-based First Bank of Kansas City also was closed by regulators. The FDIC said. De Soto, Kan.-based Great American Bank has agreed to assume the failed bank's deposits. First Bank of Kansas City had $16 million in assets and $15 million in deposits as of June 30, the regulator said. Its failure is expected to cost the federal deposit-insurance fund $6 million. First Bank of Kansas City is the second Missouri-based bank to fail this year, the FDIC added.

Sioux City, Iowa-based Vantus Bank and Oak Forest, Ill.-based InBank also were closed. Vantus Bank had roughly $368 million in deposits as of Aug. 28, the FDIC said, and Springfield, Mo.-based Great Southern Bank has agreed to assume the failed bank's deposits. The failure of Vantus Bank will cost the deposit insurance fund $168 million. It's the first bank to fail in Iowa this year, according to the FDIC.

In Arizona, First State Bank in Flagstaff was closed and Sunwest Bank of Tustin, Calif., will assume all of its deposits, the FDIC said. As of July 24, First State had total assets of $105 million and total deposits of about $95 million, the FDIC said. The failure will cost the deposit insurance fund an estimated $47 million, the FDIC said

China Buys $50 Billion of New World Currency

2009-09-04T14:00:00.003-04:00

This is the beginning of the dollar losing world reserve status. Perhaps that is why gold is close to $1,000/oz. Make no mistake, this is terrible for the U.S. dollar.-Lou

China Set to Buy $50 Billion in IMF Notes

WASHINGTON -- China is on track to become the first purchaser of notes issued by the International Monetary Fund, a move that would diversify its foreign asset holdings and could give the IMF's quasi-currency more clout.

The IMF on Wednesday said China has signed an agreement to purchase approximately $50 billion in notes from the fund. The notes are denominated in Special Drawing Rights, a quasi-currency issued by the fund and promoted by China as a potential replacement for the dollar as the world's reserve currency.

The agreement is the first of its kind for the fund and marks China's most visible step toward shifting its investment focus away from the U.S. Treasurys market.

"The symbolism is very important here. It is no longer the U.S. dollar alone that the Chinese have access to," said Eswar Prasad, a senior fellow at the Brookings Institution and former head of the IMF's China division.

Countries including Brazil, Russia and India also have expressed interest in purchasing IMF notes, whose issuance is meant to bolster the fund's lending capacity and help fulfill a Group of 20 pledge to strengthen the Fund's own capital position.

Still, "For China this is particularly significant in the context of their strong desire to have an alternative to the dollar for parking their reserves," Mr. Prasad said. "Having a large stock of IMF bonds in circulation that are denominated in SDRs is definitely going to give a boost to the Chinese proposal of increasing the importance of the SDR."

But with a limited market for IMF notes, Eurasia Group Associate Nicholas Consonery doesn't expect the agreement will spur sharp declines in China's purchases of Treasury securities. "At the margin they are trying to make efforts to diversity future asset purchases, but we have no expectation that this, in any immediate sense, will present a real viable alternative for China," he said.

China in June held more than $776 billion worth of U.S. Treasury securities, several times the total amount of notes the IMF is expected to issue. China is the largest foreign holder of U.S. Treasury Securities.

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Unemployment Rate Hits 7.7%

2009-09-04T10:25:00.004-04:00

While non-farm payrolls report shows that "only" 216,000 were lost in August, the unemployment rate rose to a 26 year high of 9.7%. If we take into account "discouraged" workers the unemployment rate is over 17%.

Please someone explain to me how we can have an average of 560,000 filing first time claims for unemployment each WEEK and only lose 216,000 jobs for the month. I have never been able to figure that one out. The only way that works if there were 2,024,000 new jobs created to offset the ones lost.

Ok now let's take a look at the Birth/Death model of phantom jobs created by new businesses. How does the BLS know this? They just think so, that's all.

Hmmm let's take a look shall we?

15,000 new jobs in construction, yea right
26,000 professional services
24,000 leisure and hospitality

A total of 118,000 jobs were created by new business according to the BLS. Some say that BLS stands for Bureau of Labor Statistics, I think it stands for bullshit.-Lou

U.S. unemployment rate jumps to 26-year high of 9.7%

Nonfarm payrolls fall 216,000 in August, 20th consecutive monthly decline

WASHINGTON (MarketWatch) -- The U.S. unemployment rate jumped to a 26-year high of 9.7% in August as nonfarm payrolls fell by 216,000, the 20th consecutive monthly decline, the Labor Department estimated Friday.

U.S. payrolls have dropped by 6.9 million to a total of 131.2 million since the recession began in December 2007, the government data showed. Unemployment has increased by 7.4 million during the recession to stand at 14.9 million.

The 216,000 decline in payrolls was close to market expectations of a 233,000 drop, but the unemployment rate rose higher than the 9.5% level expected. The unemployment rate was 9.4% in July.

It was the smallest decline in payrolls since August 2008.

Payroll losses have moderated in most industries in the past two months after severe declines earlier in the year. In the past three months, payroll losses have averaged 318,000 per month, compared with 491,000 in the previous three-month period.

Payrolls declined an upwardly revised 276,000 in July. In June and July, payroll losses were revised up by 49,000.

Details of the August report were generally weak, however.

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New Website Launched

2009-09-04T06:50:00.008-04:00

In anticipation of the publication of my first book "The Financial Physician: How To Cure Your Money Problems and Boost Your Financial Health" (December 2009) I have redesigned the homepage of this website. I will be changing the blog design as well (today or tomorrow).

Make sure you link to this blog via the homepage. This link will no longer bring you to the current blog postings.

Link to the new site now and when we switch over later today you will have the proper link.

Make sure to click on the "members" (will be activated shortly) and register. This free member's section will have special postings, newsletters and excerpts from my book. The introduction from the book will be the first thing available for members only.

You can pre-order the book at Amazon for only $10.19 (I'm almost giving them away at that price)

You can reach me with comments questions and suggestions at my new email lou@thefinancialphysician.com .

All national radio shows will be available in the "Lou TV-Radio Show " box. Also Watch my TV pilot there, we are meeting with a number of networks next week in Los Angeles and hope to make a series of it.

These are exciting times, thanks for sharing them with me. Let me know what you think of the new website.

Here is the new website link :

www.thefinancialphysician.com

Bookmark it and send it to your contact list. Now more than ever it is important to stay informed about what is really happening in the financial world.

Thanks for visting and thanks for your support.

Lou

One Scary Article

2009-09-03T12:50:00.002-04:00

Welcome to the new police state. Read this entire article, it will give you chills.-Lou

POLICE STATE, USACops jump on swine-flu power: Shots heard 'round the world

Pandemic bill allows health authorities to enter homes, detain without warrant

A "pandemic response bill" currently making its way through the Massachusetts state legislature would allow authorities to forcefully quarantine citizens in the event of a health emergency, compel health providers to vaccinate citizens, authorize forceful entry into private dwellings and destruction of citizen property and impose fines on citizens for noncompliance.

If citizens refuse to comply with isolation or quarantine orders in the event of a health emergency, they may be imprisoned for up to 30 days and fined $1,000 per day that the violation continues.

Massachusetts' pandemic response bill

"Pandemic Response Bill" 2028 was passed by the Massachusetts state Senate on April 28 and is now awaiting approval in the House.

As stated in the bill, upon declaration by the governor that an emergency exists that is considered detrimental to public health or upon declaration of a state of emergency, a local public health authority, with approval of the commissioner, may exercise the following authorities (emphasis added):

* to require the owner or occupier of premises to permit entry into and investigation of the premises;

*to close, direct, and compel the evacuation of, or to decontaminate or cause to be decontaminated any building or facility, and to allow the reopening of the building or facility when the danger has ended;

*to decontaminate or cause to be decontaminated, or to destroy any material;
to restrict or prohibit assemblages of persons;

*to require a health care facility to provide services or the use of its facility, or to transfer the management and supervision of the health care facility to the department or to a local public health authority;

*to control ingress to and egress from any stricken or threatened public area, and the movement of persons and materials within the area;

*to adopt and enforce measures to provide for the safe disposal of infectious waste and human remains, provided that religious, cultural, family, and individual beliefs of the deceased person shall be followed to the extent possible when disposing of human remains, whenever that may be done without endangering the public health;

*to procure, take immediate possession from any source, store, or distribute any anti-toxins, serums, vaccines, immunizing agents, antibiotics, and other pharmaceutical agents or medical supplies located within the commonwealth as may be necessary to respond to the emergency;

*to require in-state health care providers to assist in the performance of vaccination, treatment, examination, or testing of any individual as a condition of licensure, authorization, or the ability to continue to function as a health care provider in the commonwealth;

*to waive the commonwealth's licensing requirements for health care professionals with a valid license from another state in the United States or whose professional training would otherwise qualify them for an appropriate professional license in the commonwealth;

*to allow for the dispensing of controlled substance by appropriate personnel consistent with federal statutes as necessary for the prevention or treatment of illness;

*to authorize the chief medical examiner to appoint and prescribe the duties of such emergency assistant medical examiners as may be required for the proper performance of the duties of office;

*to collect specimens and perform tests on any animal, living or deceased;

State and local agencies responding to the public health emergency would be required to exercise their powers over transportation routes, communication devices, carriers, public utilities, fuels, food, clothing and shelter, according to the legislation.......

........... to treat individuals exposed to or infected with disease, provided that treatment must not be such as is reasonably likely to lead to serious harm to the affected individual. An individual who is unable or unwilling to submit to vaccination or treatment shall not be required to submit to such procedures but may be isolated or quarantined … if his or her refusal poses a serious danger to public health or results in uncertainty whether he or she has been exposed to or is infected with a disease or condition that poses a serious danger to public health, as determined by the commissioner, or a local public health authority operating within its jurisdiction. (emphasis added)

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Gold and Silver Take Off

2009-09-03T12:20:00.004-04:00

SILVER

GOLD

click on charts to enlarge

Major breakout in silver and gold last few days. Is the precious metals market forewarning a dollar collapse and inflation tsunami? A close above $1,000 an ounce on gold for three days will bring in much higher prices. -Lou

Bank CEOs Get Rich On Taxpayer Bailouts

2009-09-03T12:10:00.004-04:00

Where is the outrage here? These CEOs ran their banks and the country into the ground, the average guy has lost his job and half of his 401 k and taxpayer bailouts inflate bank stocks and executive's stock options make them rich. This is totally immoral. You have just witnessed the biggest heist in world history. Instead of people robbing banks, the banks have robbed the people.-Lou

TARP CEOs Make More Money Than Almost Everyone Else

Being the CEO of a bank that got bailed out was pretty rewarding before the crisis.
And even after the government rescue, the rewards to the guy at the top only dropped by one-third.

The top five execs at ten of the top 20 TARP banks have enjoyed a combined increase in the value of their stock options of nearly $90 million in the past year, which is better than being the chief exec at an S&P 500 company. (TARP CEOs' comp is 37% higher than that S&P average.) This suggests, however, that the notion that the executives didn't have "skin in the game" is largely mistaken. They had plenty at stake.

The same set of CEOs also had a three-year pay total of $3.2 billion. But that represents a huge drop. They made $1.2 billion in 2006 and 2007, and last year only took in $800 million. So the crisis and bailout crunched their pay totals by about one-third.

From a study by the Institute for Policy Studies:

From 2006 through 2008, the top five executives at the 20 banks that have accepted the most federal bailout dollars since the meltdown averaged $32 million each in personal compensation. One hundred average U.S. workers would have to labor over 1,000 years to make as much as these 100 executives made in three.

Since January 1, 2008, the top 20 financial industry recipients of bailout aid have together laid off more than 160,000 employees. In 2008, the 20 CEOs at these firms each averaged $13.8 million, for a collective total of over a quarter-billion dollars in compensation. These 20 CEOs averaged 85 times more pay than the regulators who direct the SEC and the FDIC.

While the study is interesting, the fact that it includes pre-crisis years and comps set up before the crisis, mitigates some of the impact. It just comes off as the usual "rich getting too rich" complaint. After all, pay did drop by almost one-third at the bailout banks.

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2009-09-02T07:42:00.001-04:00

Let's pray this guy is wrong.-Lou

Russian Professor: Collapse Of America Could Begin In Two Months

Paul Joseph Watson Tuesday, September 1, 2009

Russian Professor Igor Panarin says that events are continuing to confirm his doomsday prediction first made over 10 years ago, that the United States will completely collapse like the Soviet Union before the end of 2010, and warns that the chaos could begin to unfold in as little as two months.

Panarin, doctor of political sciences and professor of the Russian Diplomatic Academy Ministry of Foreign Affairs, told journalists during the unveiling of his new book yesterday that President Obama has done nothing to forestall the fast approaching crisis and that it could begin to properly unfold in November.

“Obama is “the president of hope”, but in a year there won’t be any hope,” said Panarin. “He’s practically another Gorbachev – he likes to talk but hasn’t really managed to do anything. Gorbachev at least had been a secretary of a regional communist party administration, whereas Obama was just a social worker. His mentality is totally different. He’s a nice person and talks nicely – but he’s not a leader and will take America to a crash. When Americans understand that – it will be like a bomb explosion.”

Since 1998, Panarin has been warning of a future disintegration of the United States and the collapse of the dollar. The recent election victory for Japan’s Democratic Party is another sign that the economic collapse of the U.S. is imminent, according to Panarin.

“Today I received another confirmation that the collapse of the dollar and the US is inevitable. Japan’s Democratic Party won the election, and I’d like to remind you that its leader [Yukio Hatoyama] has the snubbing of the dollar among his economic plans. In plainer words, he plans to transfer Japan’s monetary reserves from US dollars into another currency. The move will seriously accelerate the dollar’s exchange slump as early as this November. Disintegration will follow shortly,” he said, adding that next year China would also begin to massively dump the dollar and that Russia would begin to sell oil and gas for roubles.

Panarin previously stated that the dollar would eventually be replaced with “a common Amero currency as a new monetary unit”, referring to the Security and Prosperity Partnership agreement between the U.S., Canada and Mexico.

He foresees the U.S. breaking up into six different parts, roughly along lines similar to those of 1865 during the Civil War, “The Pacific coast, with its growing Chinese population; the South, with its Hispanics; Texas, where independence movements are on the rise; the Atlantic coast, with its distinct and separate mentality; five of the poorer central states with their large Native American populations; and the northern states, where the influence from Canada is strong,” according to Panarin.

History Repeating Itself?

2009-09-02T07:25:00.005-04:00

click on chart to enlarge

I stumbled upon this chart while surfing the web and thought I would share it with you. This is a chart of the Dow Jones Industrials between 1929 and 1933. Look at the rally on left side of chart after the 1929 crash. It was a 46% bounce off the low. People were feeling optimistic that the worst was over and good times were ahead. They were obviously wrong. There were nice bear market rallies along the way but a brutal bear market took hold over the next two years. Will history repeat itself? Unfortunately, I believe so.-Lou

Welcome to 1984

2009-09-02T07:00:00.003-04:00

When I read stuff like this I feel like I'm living in a movie. This is straight out of George Orwell's book 1984 (you should all read it because it's happening right now). This is scary stuff folks.-Lou

Obama White House Has Secret Plan To Harvest Personal Data From Social Networking Websites

Ken Boehm on Mon, 08/31/2009 -

NLPC has uncovered a plan by the White House New Media operation to hire a technology vendor to conduct a massive, secret effort to harvest personal information on millions of Americans from social networking websites.

The information to be captured includes comments, tag lines, emails, audio, and video. The targeted sites include Facebook, Twitter, MySpace, YouTube, Flickr and others – any space where the White House “maintains a presence.”

In the course of investigating procurement by the White House New Media office, NLPC discovered a 51-page solicitation of bids that was filed on Friday, August 21, 2009. Filed as Solicitation # WHO-S-09-0003, it is posted at FedBizzOps.com. Click here to download a 51-page pdf of the solicitation.

While the solicitation specifies a 12-month contract, it allows for seven one-year extensions. It specifies no dollar cap. Other troubling issues include:

extremely broad secrecy terms preventing the vendor from disclosing to the public or the media what information is being captured and archived (page 7, “Restriction Against Disclosure”)
wholesale capturing of comments by non-White House staff on publicly accessible sites
capturing of content of any type (text, graphics, audio, or video)

capturing of comments by both Obama critics and supporters, with no restriction as to how the White House would use the information.

This is the third controversy involving the White House internet operations in less than a month. First, Obama’s New Media operation asked supporters to send information about critics of the White House health care effort to a White House email. This provoked a storm of criticism and the White House retreated. Then large number of people complained of getting email spam from the White House supporting the President’s health care position. Again the White House was forced to back down.

LINK

Here is more on this story

Cities and States Going Broke

2009-09-02T06:49:00.002-04:00

As the financial crisis deepens (yes it will deepen regardless of what the media is now saying) states and cities will be financial disasters. Unlike the federal government, cities and states can't print money to fund their deficits. I expect a significant number of municipal bond defaults next year.-Lou

Budget Crisis: City Takes Out $275M Loan

PHILADELPHIA (CBS 3) ― Philadelphia is taking out a short-term loan to help with cash flow as Pennsylvania's budget crisis continues.Mayor Michael Nutter announced Tuesday the city will take out the $275 million loan from JP Morgan Chase. The loan comes with a 3 percent interest rate if paid in full by November 30.

On December 1, the interest rate increases to 8 percent.Mayor Nutter expects the city will re-finance the loan at a lower interest rate in the public markets – once Pennsylvania's budget crisis is solved.Mayor Nutter also said Tuesday that by the end of next week, he will submit a new pension plan to the public agency that oversees the city's pensions. Officials in Harrisburg are forcing the mayor to take that step.

Last week, the State Senate signed off on the mayor's plan to raise the city sales tax by a penny and delay about $150 million worth of pension payments this year – but only if the city cuts the costs of its pensions.Going forward, the city must freeze pension benefits for current workers and reduce pension costs for new workers by 20 percent.

The mayor has said a new pension plan might include some type of 401(k) option to cut costs.Pensions eat up a large share of the city's budget – this year it's expected to be some 12 percent, or $450 million out of a $3.7 billion budget.According to the Pension Board, the city owes pensions to roughly 65,000 workers – but less than half, 29,215 are still on the job. Most of the rest are already retired and collecting those checks.

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Clunker Of A Program: Auto Dealers

2009-09-01T13:08:00.003-04:00

Do people really want government to run healthcare? NO!-Lou

Dealers Still Waiting For Clunker Cash

Auto makers will release their monthly sales reports Tuesday and they're expected to show the first year-to-year increase since 2007. While the Cash for Clunkers program is getting all the credit, local car dealers are still waiting for their cash.During the month long program, Billion Automotive sold close to a thousand vehicles but has only been reimbursed for 272 of them.

Vern Eide sold over 200 cars and has only been paid for 27 of them, and that's fueling lots of concerns in the auto industry. Billion Automotive cashed in during Cash for Clunkers, but owner Dave Billion is still waiting for the rest of his money from the government run program, $3.2 million. "I wonder how long they'd wait if I owed them $3.2 million.

I think they'd be at my door or at least my banker's door," Billion said. Even though Billion is beginning to get some of his reimbursement money, he's still concerned because he says there doesn't seem to be any rhyme or reason to the program.

When Cash for Clunkers was first announced, dealers were supposed to be reimbursed within 10 days of a sale. Billion says that hasn't happened. "The program started in July and we haven't gotten paid for cars we sold back then, but then on the other hand we got paid for a car we sold last week. They don't have an accurate format. It's not like they're taking the first deals that were submitted and working those.

I don't know how they're doing it, no idea. I know it's very random" Billion said. Plus, he's had problems getting some vehicles qualified. "We had a situation where we had a submission, they rejected it for multiple reasons. We didn't see anything wrong with it, so we resubmitted it. They rejected, we resubmitted it.

They rejected it, seven times and finally they paid it, and we never changed a single thing on it," Billion said. But Billion thinks he'll get his money eventually, it just may take longer than what the government first said.

LINK

I'll Be Guest On Radio Show This Afternoon

2009-09-01T11:38:00.003-04:00

I'll be a guest on Jay Taylor's radio show 3:15 ET Listen live on link below or listen at your leisure

Listen Here:

http://www.modavox.com/voiceamerica/vepisode.aspx?aid=40772

Dr Doom Feeling Gloomy

2009-09-01T07:20:00.001-04:00

Not the best way to start your day, but I believe him

"moderator: “last time you were on you said to buy a farm and a gun”

faber: “now you need a machine gun.”

moderator: “is there anything that could possibly derail your incredibly pessimistic scenario?”
faber: “Ahhh, no.”

Yikes

Foreclosures To Soar In Months To Come

2009-09-01T06:55:00.003-04:00

FDIC will have to borrow billions to cover bank failures over the next 12 months, make sure your seatbelt is fastened, turbulents ahead.-Lou

Banks Hiding Tsunami of Foreclosures

Source: News Max

U.S. banks face a tsunami of home foreclosures soon, says David Karsbol, chief economist at Saxo Bank.

Homeowners may be faced with no choice and will just stop paying their mortgages, he warns.
“I believe we are about to see a tsunami of foreclosures in the U.S. A lot of homes have been held back because if the banks are foreclosing on them they will have to do a writedown on the mortgages they have on their balance (sheets),” Karsbol told CNBC.

“That’s why they have been reluctant to do so.”

Soon homeowners may be looking around their neighborhoods and realizing that their neighbors have opted to stop paying their mortgages and are living scot free, he said.

“The fact that many homeowners are allowed to stay in their houses without paying on their mortgages begs the question: Why should you pay on your mortgage when your neighbor doesn’t?” Karsbol said.

Rising unemployment in the United States is the main cause behind foreclosures, economists and bankers told the Washington Post. Subprime mortgages are becoming less of a culprit.
"It's a much harder nut to crack, unemployment," says Mark A. Calabria, director of financial regulation studies at the Cato Institute.

"It's much easier to bash lenders than to create jobs."

In 2009, the first three months reported the largest share of foreclosures moved to prime loans from subprime loans, according to the Mortgage Bankers Association.

“Rising unemployment, for the sake of this downturn, has magnified things considerably,” notes John Snyder, manager of foreclosure programs for NeighborWorks, a large housing counseling group.

“It's less about the payment adjustment.”

Market Risk Now Extreme

2009-09-01T06:26:00.003-04:00

This is not a sign of a healthy market when wealthy investors want their money back, immediately. I believe that a serious downturn in the stock market is near. I have not been this concerned about the market since last August. The market is fundamentally more overpriced than it was last year at this time. Now is the time to protect yourself by lowering your stock exposure. Now may be your last chance.Lou

A Run On The Funds: Majority Of Cerberus Investors Want Out--Now

When investors or depositors ask for the immediate withdrawal of 71% of their money there is only one thing to call it: a run on the bank.

The selling in the markets is still quiet, and overshadowed by some of the visible bubbles in financial assets and rosy headlines. The bank bailouts are working, but only to produce a false Spring to lure in the last of the greater fools.

The economy is not improving fundamentally, the recovery is not sustainable, and the wealthy insiders are increasingly trying to liquidate investment positions to raise cash and diversify their holdings into cash and hard assets.

Risk is once again being spread from the financial sector to the public, which is what Fed Chairman Greenspan had said was one of the objectives of the Fed in their positions on the regulation of complex financial products. We were assured that the markets were sound, no additional regulation was required, the pensions were adequately funded. And finally when disaster struck and the facade fell away, that a generation's ransom was required by the banks, in order to heal themselves and avert disaster.

And then they took the money for themselves.

"He's mad, that trusts in the tameness of a wolf, a horse's health, a boy's love, or a whore's oath."

The Fool, King Lear And so they have made fools of us all.

Cerberus clients overwhelmingly want outFri Aug 28, 2009

(Reuters) - Cerberus Capital Management has been swamped with redemption requests with the Wall Street Journal reporting that investors are asking to pull out $5.5 billion or 71 percent of assets from its hedge funds.Cerberus last month tried to entice investors into staying with the firm, but found that its clients overwhelmingly wanted to leave, the newspaper reported.

"We have been surprised by this response," Cerberus chief Stephen Feinberg and co-founder William Richter wrote in a letter delivered to clients late on Thursday, according to the newspaper.A spokesman for the firm was not immediately available for comment.

The bulk of investors elected to put their money into a fund that will liquidate hard-to-sell assets over time.The news comes as several prominent hedge fund managers have closed their funds and as investors are less willing to leave their money locked up in potentially risky hedge funds.Last year, when the average hedge fund lost 19%, Partners lost 24.5% percent on investments.

LINK

The Next Shoe To Drop

2009-09-01T06:11:00.002-04:00

I have been telling you for some time that defaults on commercial real estate will be the next big challenge for the banking system. Regional banks will be the ones taking the largest hit. Commercial real estate includes office buildings, strip malls, large box stores and full blown malls. The contracting economy is hurting the consumer resulting in declining retail sales.-Lou

Commercial Mortgage Defaults Jump for U.S. Banks

Aug. 31 (Bloomberg) -- The default rate on commercial mortgages held by U.S. banks more than doubled in the second quarter from a year earlier amid falling rents and occupancies for malls, office buildings and warehouses.

Loans that were 90 days or more past due climbed to 2.88 percent of outstanding balances in the second quarter, from 1.18 percent a year earlier, according to New York-based property research firm Real Estate Econometrics LLC. Defaults increased from 2.25 percent in the first quarter.

“A delinquency may have resolved itself two years ago,” said Real Estate Econometrics President and Chief Economist Sam Chandan. “Today, even one missed payment may be more indicative of an underlying problem, so banks have to be very proactive in addressing the issue.”
Banks held $1.087 trillion of commercial property loans in the quarter, up from $1.077 trillion in the previous three months. That’s almost 15 percent of all loans and leases held by banks, Real Estate Econometrics said. Defaults are rising both for lenders who hold commercial mortgages and for bondholders in the $700 billion U.S. market for securities backed by commercial mortgages.

The CMBS market accounts for about 22 percent of the nation’s $3.4 trillion in commercial real estate debt, according to the Real Estate Roundtable. Defaults and late payments on loans bundled into CMBS could surpass 7 percent by the end of this year, research firm Reis Inc. said on July 30.

Falling Behind

Banks are beginning to recognize that more past due commercial property loans are unlikely to be paid in full. Commercial mortgages labeled as “non-accrual” more than doubled in the second quarter from a year earlier, to $27.76 billion, according to Real Estate Econometrics. The figure reflected a 31 percent increase from the previous three months.

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Good Gold Article

2009-08-31T14:45:00.002-04:00

Here is a great although somewhat complicated article on gold and why it may go to $5,000/oz by Martin Armstrong, President Princeton Economics.-Lou

Gold has been one of the most misportrayed mediums of wealth since the 1970's. Usually it has been marketed as the hedge against inflation during the good old days of the 1970's and 1980's. However, this has been a great misconception of the role gold truly plays. It is coming into its own and is still poised to rally to at least test the $3000 level if not much higher.

But this portentious view harbors within a lot of correlations on a global scale that truly needs some in-depth understanding. Gold is not about to make such a rally without critical developments in government. Gold is not the hedge against "inflation" but against the "collapse in the confidence of government". Government holds power only for as long as the people allow it. People are complacent and will not tolerate much.

During the 1970's and the days of OPEC, I will never forget a riot in Philadelphia of white middle class workers overturning cars and setting them on fire because people could not even get to work. There is a thin line between civilized conduct and a mob. When peop can no longer function in a basic way, holy hell breaks loose.The US political government has just become the greatest threat to our way of life, it is hard to understand how we have degenerated with no sense of posterity.

This recent incident going after UBS is a very serious departure in the entire rule of law. Switzerland has existed with its secrecy banking laws for a very long time. It was neutral during the world wars and its own rule of law has been respected by all nations until now. Why has the US now sought to destroy the civilization as we have known it?

The refusal of government to live within its means is destroying every- thing. Instead of reforming, they are lashing out against our own people as well as the whole world. They justify their actions by their own self-interest. Whatever they decree the courts merely rubber stamp. We have no one left in our corner to prevent the economic suicide that is taking place

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2009-08-31T10:39:00.001-04:00

Listen To My First National Radio Show

2009-08-31T09:41:00.004-04:00

Listen to my very first national radio show broadcast last night on XM Satellite Radio Talk Channel 165. My friend Peter Grandich joins me to talk markets and the economy-Lou.

Listen Here

Listen To MY 500th Radio Program

2009-08-31T09:35:00.003-04:00

Listen to this past Sunday's "The Financial Physician" radio program. This past Sunday was my 500th weekly broadcast on WOBM-AM 1160 in New Jersey. Ironically Sunday was the same day as my very first national broadcast of "The Financial Physician" (different than my NJ broadast) on XM Satellite Radio Talk Channel 165 6-7 PM.

Listen Here

A Great Family Weekend

2009-08-31T09:27:00.003-04:00

This Saturday my family celebrated my parents 50th Wedding Anniversary at my home. After days of torrential rain, prayers were answered and the sun came out minutes before the party started and a fabulous time was had by all.

During these turbulant times we are living in, we must always remember what is most important-the love of friends and family.

Bank Failure Friday Claims 3 More Banks

2009-08-30T07:55:00.004-04:00

Just another average Friday at the FDIC with 3 banks failing. This week's closures will deplete the FDIC's insurance fund by $454 miilon, better than the last two weeks hit of $ 7 billion. It's almost time for the taxpaers to start paying for failed banks (not that we have not already with Citigroup)-Lou

2009 bank-failure tally rises to 84

SAN FRANCISCO (MarketWatch) -- Three more banks were closed by regulators Friday, bringing the 2009 toll to 84.

The largest of Friday's three closures announced by the Federal Deposit Insurance Corp. was Affinity Bank, based in Ventura, Calif.

Affinity, which had total assets of $1 billion, deposits of $922 million and 10 branches in Northern and Southern California as of July 10, will be taken over by San Diego-based Pacific Western Bank, the FDIC announced.

The FDIC said former Affinity branch offices in San Francisco and San Mateo will be-open Saturday and the rest will re-open on Sunday.

The FDIC said it and Pacific Western entered into a loss-share transaction of approximately $934 million of Affinity Bank's assets.

The federal agency estimated the cost to the Deposit Insurance Fund at $254 million.
Earlier Friday, regulars closed Baltimore-based Bradford Bank and Forest Lake, Minn.-based Mainstreet Bank.

Bradford Bank, the second bank to fail in Maryland this year, had $452 million in assets and $383 million in deposits as of June 30, according to the Federal Deposit Insurance Corp.
Buffalo, N.Y.-based Manufacturers and Traders Trust Company has agreed to assume the failed bank's deposits, the regulator said.

Bradford Bank's failure will cost the deposit-insurance fund $97 million, the FDIC added.
Mainstreet Bank had $459 million in assets and $434 million in deposits as of June 30, the FDIC reported.

Stillwater, Minn.-based Central Bank has agreed to assume the failed bank's deposits. Mainstreet Bank is the second bank to fail in Minnesota this year.

The FDIC estimated that Mainstreet Bank's failure will cost the deposit-insurance fund $95 million.

2009-08-28T17:00:00.001-04:00

NEWS FROM:

FOR IMMEDIATE RELEASE Contact: Drew Granchelli

Contact #: (617) 202-4109
andrew.granchelli@newmancom.com

“The Financial Physician” Hits XM Radio

Lou Scatigna Takes Popular Financial Show to National Spotlight

Louis Scatigna, financial guru known to tens of thousands of devoted radio listeners in New Jersey as “The Financial Physician,” will kick off the national version of his popular weekly call-in show on Sirius-XM Satellite Radio on Sunday August 30 from 6-7pm ET. The August 30 edition of “The Financial Physician” will also mark the 500^th episode of the program on 1160 WOBM-AM in New Jersey. “The Financial Physician” will be heard on XM’s “Talk Radio” station, channel 165, following The Glenn Beck Program.

Scatigna’s weekly “The Financial Physician,” already a successful radio talk show, features live call-ins on 1160 WOBM -AM, broadcasting to southern New Jersey. During the show, Scatigna employs his special approach to money, treating finances like medicine. He stops the bleeding, performs triage, assesses the symptoms, renders his diagnosis, and then provides his Rx. Scatigna is able to shed light on many potential financial catastrophes through this no nonsense approach to money.

“It’s exciting to take ‘The Financial Physician’ to the national level on Sirius-XM Satellite Radio,” said Scatigna. “I have been helping clients cure their own financial issues for nearly 30 years, and for 500 episodes of my radio show on 1160 WOBM-AM. There are a lot of folks around the country, especially these days, who can identify with the financial problems others are facing. Each week I’ll help callers, and many other listeners like them, diagnose and solve their financial ailments.”

The Financial Physician: How to Cure Your Money Problems and Boost Your Financial Health, the first book from Lou Scatigna, is due out from Career Press on December 15.

More information on Lou Scatigna, The Financial Physician, is available at: HYPERLINK "http://www.thefinancialphysician.com/"www.thefinancialphysician.com.

For more information, or to schedule an interview with Lou Scatigna, please contact Drew Granchelli: 617-202-4109; HYPERLINK "mailto:andrew.granchelli@newmancom.com" andrew.granchelli@newmancom.com

For more information or to schedule an interview with the author, please contact

Newman Communications at (617) 254-4500.

1,000 Banks to Fail In Next Two Years: Bank CEO

2009-08-28T08:14:00.002-04:00

The big banks are "too big to fail" and the smaller banks are "too small to bail". The small banks are paying the price for the crazy risk taking of the big banks. The FDIC will no doubt have to be bailed out by the government with printed dollars.-Lou

The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May.

“We’ve already lost 81 this year,” Kanas told CNBC. “The numbers are climbing every day. Many of these institutions nobody’s ever heard of. They're smaller companies.” (See the accompanying video for the complete interview.)

Failed banks tend to be smaller and private, which exacerbates the problem for small business borrowers, said Kanas, who became CEO of BankUnited when his firm bought the bank and is the former chairman and CEO of North Fork bank.

“Government money has propped up the very large institutions as a result of the stimulus package,” he said. “There’s really very little lifeline available for the small institutions that are suffering.”

This comes at a time when the FDIC has established new rules on bank sales. Private equity, for instance, would have to hold double the capital of their competitors in order to buy such an institution, said Kanas.

“This will have somewhat of a chilling effect on our participation,” he said. “As a result of having to keep higher capital levels, we’ll see lower prices coming from that sector.”

Of the 81 failed banks this year, two have been successfully acquired by private equity, he said. Kanas’ private equity firm bought UnitedBank, the failed Florida-based bank, from the FDIC in May. Regulators also allowed the sale of IndyMac Bank of California earlier this year.

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National Radio Show Launch This Sunday

2009-08-28T07:54:00.003-04:00

The first national broadcast of "The Financial Physician" radio show is this Sunday 6pm ET on Sirius/XM Satellite Radio Talk Channel 165. If your a Sirius XM subscriber please join me every Sunday 6 PM for my national broadcast.

This Sunday also marks the 500th broadcast of my radio show on WOBM-Am 1160 in New Jersey. Join me at 11Am for this special program.-Lou

What About The 9 Billion Hit Since June 30th?

2009-08-27T10:29:00.003-04:00

These are numbers as of the end of June. In just the last 2 weeks the FDIC took a $7 billion hit. Since June 30th the fund has lost over $9 billion. The FDIC is virtually broke and will be hitting up the taxpayers very shortly. This is only the 3rd inning of the banking crisis, many more banks will be failing in the months to come. Stay within FDIC limits in all your accounts.-Lou

FDIC Insurance Fund Shrinks to $10.4 Billion

WASHINGTON (WSJ)-- The Federal Deposit Insurance Corp.'s fund that protects more than $4.5 trillion in U.S. bank deposits fell to just $10.4 billion at the end of June, as the banking industry continues to struggle with souring loans and regulators brace for pain in trying to clean up the mess.

The level of the FDIC's fund, the lowest since the savings and loan crisis, almost guarantees that the government will have to hit the banking industry with another special fee to recapitalize its reserves. Officials could also consider borrowing up to $100 billion from the Treasury Department, but government officials have avoided this option so far.

The FDIC was created specifically for times such as these," FDIC Chairman Sheila Bair said. "No matter how challenging the environment, the FDIC has ample resources to continue protecting depositors as we have for the last 75 years."

The deposit insurance fund topped $45.2 billion a year ago.

The agency said it had 416 banks on its "problem" list at the end of the second quarter, up from 305 at the end of March. Banks on the problem list are considered a higher risk of failure and face tougher regulatory scrutiny. The FDIC said the total assets of banks on the problem list was $299.8 billion, which suggests that Citigroup Inc. and some of the country's other largest banks, remained off the list.

..........The FDIC also said borrowers are falling behind on loans at record levels and across most major loan categories. The number of loans at least 90 days past due climbed for a 13th consecutive quarter, while the percentage of loans at least three months overdue hit 4.35%, the highest level recorded since the FDIC began collecting this data 26 years ago.

"Deteriorating loan quality is having the greatest impact on industry earnings as insured institutions continue to set aside reserves to cover loan losses," Ms. Bair said.
The biggest problem areas continued to be property-related loans, suggesting the housing market is still under stress despite some recent good news. The FDIC said residential mortgage loans at least 90 days past due climbed 12.7% in the quarter, construction and development loans at least three months behind increased 16.6%.

Quote of the Day

2009-08-27T07:14:00.001-04:00

'The nearest thing to eternal life we will ever see on this earth is a government program.' -

Ronald Reagan

How The Fed Is Monetizing the Debt

2009-08-27T06:55:00.002-04:00

For some time I have been wondering why interest rates have not been rising in the U.S. Treasury market given the huge issuance of new debt. One would think that a drastic increase in supply would result in lower prices and higher yields. In a normal market that would be the case but there are no normal markets anymore.

Chris Martenson has a great article detailing how the Fed is monetizing (funding U.S. debt with printed money) using a "backdoor" method in an effort to cover up their actions. Buying Central Banks agency bonds (Fannie Mae & Freddie Mac) and enabling them to reinvest in U.S Treasurys is the same thing as the Fed just printing money and buying the bonds themselves.

The dollar is doomed.-Lou

From Chris Martensens "The Shell Game - How the Federal Reserve is Monetizing Debt":

The US government has record amounts of Treasuries to sell.

Foreign central banks, which have a big pile of agency bonds in their custody account, would like to help but want to keep things somewhat under the radar to avoid scaring the debt markets.

The Federal Reserve does not want to be seen directly buying US government debt at auctions (and in fact is not permitted to, but many rules have been 'bent' worse during this crisis), because that could upset the whole illusion that there is unlimited demand for US government paper, but it also desperately wants to avoid a failed auction.

For various reasons, the Federal Reserve cannot just up and start buying all the Treasury paper that becomes available in record amounts, week after week, month after month. Instead, it uses this three-step shell game to hide what it is doing under a layer of complexity:

Shell #1: Foreign central banks sell agency debt out of the custody account.
Shell #2: The Federal Reserve buys those agency bonds with money created out of thin air.
Shell #3: Foreign central banks use that very same money to buy Treasuries at the next government auction

The Federal Reserve has effectively been monetizing far more US government debt than has openly been revealed, by cleverly enabling foreign central banks to swap their agency debt for Treasury debt.
This is not a sign of strength and reveals a pattern of trading temporary relief for future difficulties.This is very nearly the same path that Zimbabwe took, resulting in the complete abandonment of the Zimbabwe dollar as a unit of currency. The difference is in the complexity of the game being played, not the substance of the actions themselves.

The shell game that the Fed is currently playing does not change the basic equation: Money is being printed out of thin air so that it can be used to buy US government debt.

When the full scope of this program is more widely recognized, ever more pressure will fall upon the dollar, as more and more private investors shun the dollar and all dollar-denominated instruments as stores of value and wealth. This will further burden the efforts of the various central banks around the world as they endeavor to meet the vast borrowing desires of the US government.

One possible result of the abandonment of these efforts is a wholesale flight out of the dollar and into other assets. To US residents, this will be experienced as rapidly rising import costs and increasing costs for all internationally-traded basic commodities, especially food items. For the rest of the world, the results will range from discomforting to disastrous, depending on their degree of dollar linkage
Here is the link to Chris Martensen's interesting article

Chart Of The Day

2009-08-27T06:49:00.004-04:00

Click on chart to enlarge

This is one scary chart folks. Foreign investment into U.S. assets is plunging. As a matter of fact there are now net outflows of foreign capital. Can a dollar crisis be far off?-Lou

Half Of Americans Are Broke

2009-08-27T06:29:00.002-04:00

A scary situation indeed. Half of all American workers do not have enough savings to support their families for 1 month. This is because Americans are consumers, addicted to debt and spending. Although these people do not hav enough savings to last just one month, most have big screen TVs, drive new cars, have large cable bills and have cell phones. We all need to prioitize our financial lives and build up some emergency savings. Tough times are here to stay, we must be prepared for it.-Lou

34 Percent of U.S. Workers Surveyed Have Only One Week or Less of Savings to Cover Expenses if Laid Off from Work

MAYNARD, Mass.--(BUSINESS WIRE)--Despite the fact that most financial advisors caution workers to save the equivalent of six months’ salary in preparation for troubled economic times, a recent Monster Meter Poll reveals more than one-third of U.S. workers surveyed on Monster.com admit they have only one week or less of savings to cover living expenses if they were to be laid off from work. Monster.com is the leading global online career and recruitment resource and flagship brand of Monster Worldwide, Inc.

Over a one week period beginning July 6 and running through July 13, more than 16,000 visitors to Monster.com participated in the Monster Meter Poll question “If you were laid off without severance, how long would your savings cover your living expenses?” Thirty-four percent of U.S. workers report their savings would last one week or less if they were laid off, compared to 20 percent who say their savings would last six months or longer, according to a nationwide poll conducted by Monster.com®.

“In a recent Monster.com Career Advice article, Laid Off? Six Steps to Manage Your Finances, most financial advisors suggest saving the equivalent of six months’ salary to tide you over if you lose your job,” said Norma Gaffin, director of career content, Monster.com. “However, experts also agree, workers will likely need more savings, especially if they have a family and are the primary wage earner.”

If You Were Laid Off Without Severance, How Long Would your Savings Cover Your Living Expenses?

One Week or Less: 34%
2-4 Weeks: 16%
1-2 Months: 16%
3-5 Months: 14 %
6 Months or Longer: 20%

According to a recent Marketplace public radio broadcast, the size of the suggested emergency savings pot has evolved in recent years. “For a long time, the rule of thumb was to set aside 3 to 6 months of easily accessible savings. That number is now 6 months to 1 year.” Additionally, finance experts featured in SmartMoney.com’s article – 4 Smart Money Moves for a Down Economy – also advise workers to watch every dime by creating and sticking to a budget.

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Clunkers Program Advances Asian Automakers

2009-08-27T05:46:00.002-04:00

Nice to know that U.S, taxpayers paid $3 billion to help the Asian automakers take a larger piece of the U.S. car market. Next is cash for appliances. Does the U.S. make any appliances anymore?-Lou

Japanese, Koreans gain most from cash for clunkers

WASHINGTON (Reuters) - Japanese and South Korean automakers registered the biggest market share gains in the U.S. government's "cash for clunkers" program that ended this week with bankruptcy related inventory shortages hurting General Motors Co GM.UL and Chrysler.
Toyota Motor Corp, Honda Motor Co Ltd, Nissan Motor Co Ltd, Hyundai Motor Co capitalized on the program's goal of pushing consumers away from gas guzzling sport utilities and pickups, to more efficient cars and trucks, preliminary sales figures showed on Wednesday.

Overseas manufacturers dominate in car sales, while U.S. companies have been stronger in the light truck segment. Cars outsold trucks 2-1 under the "clunker" initiative.

Ford Motor Co was the only domestic manufacturer to hold its own in market share compared with its performance so far this year, while GM slipped and Chrysler stumbled noticeably.
GM spokesman Greg Martin said the company, which slowed production significantly during the spring and its early summer bankruptcy, recorded brisk sales of Malibu, Cobalt and other car models in the first weeks of the program.

"We were running thin going into the summer to begin with and, as the program went on, inventory levels play(ed) a part," Martin said.

Ford was the only domestic manufacturer with top-selling models in the "clunkers" program.
Transportation Department figures on the "clunkers" incentive, which offered consumers up to $4,500 when they traded in their older vehicles for more fuel efficient new models, showed on Wednesday that total sales amounted to just under 700,000 with $2.87 billion in rebates.

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Geithner: Auditing The Fed Is A Line We Don't Want To Cross

2009-08-26T07:21:00.002-04:00

A visibly uncomfortable Geithner attempts to dismiss the question by saying “I’m sure people understand that you want to keep politics out of monetary policy.” When Geithner is again pressed on the issue, he makes the startling assertion that conducting an audit of the Federal Reserve is a “line that we don’t want to cross,” stating that such a move would be “problematic for the country.”-Lou

Government Out Of Control

2009-08-26T06:37:00.006-04:00

A measly $ 1 million

$1 Billion Dollars

$1 Trillion Dollars (each square is a billion)

When large numbers are thrown around it's easy to lose site over how much money is really involved. To most of us a million dollars seems like a lot of money, after all it's a thousand thousand. Just picture what a thousand piles of ten $100 bills would look like. A billion is a thousand million, now we are talking some major dough, a thousand piles of a million bukeroos, sweet. A trillion is a thousand billion or 1 million piles of a million bucks. So a 1.5 trillion dollar deficit means our government is spending 1,500,000 million more dollars than it is taking in. Try to picture what 1 1/2 million piles of a million dollars is. And they are doing it at least two years in a row for a total of 3 million million dollars. This is pure insanity and some wonder why I am so concerned about the value of the U.S. dollar and believe an inflationary storm is on the horizon.-Lou

$1.5 trillion deficits eyed for '09, '10

Washington Times August 29, 2009

The U.S. budget deficit will exceed $1.5 trillion both this year and next year, the White House Office of Management and Budget projected Tuesday in its Mid-Session Review.

Both the OMB and the nonpartisan Congressional Budget Office (CBO), which issued a separate report Tuesday, estimated that the U.S. unemployment rate would average about 10 percent next year.

The budget deficit for fiscal 2010, which begins Oct. 1, is projected to total $1.502 trillion, nearly a quarter of a trillion dollars higher than the White House forecast in May, when it released its detailed 2010 budget.

In 2011, the projected deficit of $1.12 trillion would top $1 trillion for the third year in a row.
For the 2010-2019 period, cumulative budget deficits are expected to exceed $9 trillion, averaging more than $900 billion per year. That's nearly double the $459 billion budget deficit recorded in fiscal 2008, which set the previous record before fiscal 2009.

The $9 trillion in cumulative budget deficits over 10 years is about $2 trillion higher than the Obama administration projected in February and May, but it is in line with March and June estimates by the CBO.

"Whatever their cause, the administration is very concerned about these out-year deficits, and getting those deficits under control is a top priority of the administration," said OMB Director Peter R. Orszag. He added that the administration's fiscal 2011 budget, which will be released in February, will "include proposals to put the nation back on a fiscally sustainable path."
The budget deficit in fiscal 2009, which ends Sept. 30, is expected to total $1.58 trillion, well below the $1.84 trillion deficit that the White House projected in May.

However, the difference relates to the $250 billion "placeholder" that appeared in the Obama administration's earlier budget estimates for 2009. The "placeholder" was for additional funds for the bank-bailout program. In the end, the administration did not need those funds.

The federal debt held by the public, which totaled $5.8 trillion at the end of fiscal 2008, is expected to more than triple by the end of fiscal 2019, when it will approach $17.5 trillion, according to the administration's latest estimates.

"These numbers are simply alarming," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan budget-watchdog group. "Even as the economy appears to be stabilizing, we are seeing unmanageable levels of red ink for the foreseeable future."

The Senate's top Democrat on the budget was also concerned.

"These deficit levels confirm what I have said for months - that we are on an unsustainable fiscal course for the future," said Sen. Kent Conrad, North Dakota Democrat, who chairs the Senate Budget Committee

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Rhode Island Shutdown

2009-08-25T10:52:00.002-04:00

States, cities and towns are in terrible fiscal shape, everyone's standard of living will be affected.-Lou

RI gov to shut down state government for 12 days

PROVIDENCE, R.I. (AP) - Rhode Island will shut down its state government for 12 days and hopes to trim millions of dollars in funding for local governments under a plan Gov. Don Carcieri outlined Monday to balance a budget hammered by surging unemployment and plummeting tax revenue.

The shutdown will force 81 percent of the roughly 13,550-member state work force, excluding its college system, to stay home a dozen days without pay before the start of the new fiscal year in July.

The closures come as the worst recession in decades has eliminated hundreds of millions of dollars in tax collections and pushed unemployment to 12.7 percent, the second-highest jobless rate in the nation behind Michigan.

Carcieri predicted the state's fiscal future could grow even bleaker.

"There are going to be inconveniences for the public, and there are going to be sacrifices, as I said, for state employees," Carcieri said at a Statehouse news conference. "These steps right now are unavoidable if the state is to live within its budget, live within its means."

The governor ordered the shutdown in an executive order but said he's willing to negotiate a different deal with state employee unions so long as it saves the same amount of money, roughly $22 million. But time is short: the first shutdown day has been scheduled for Sept. 4. Additional shutdown days have been scheduled every month through June.

Critical workers such as state police, prison guards and child abuse investigators still will report to work during the shutdown, Carcieri said. He ruled out raising taxes to balance the budget and said the state cannot lay off more workers since it deeply trimmed its work force last year.

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Cash For Appliances

2009-08-25T10:37:00.005-04:00

Good grief, what's nest "Cash For Anything"? Forced consumerism is not the way to bring us out of the financial mess we find ourselves in. "Cash For Clunkers" is being hailed as a great success. But is putting people who have a running car with no monthly payments into a new one with a large payment a smart thing to do? Many of these cars will be repossessed in the months to come.-Lou

Latest in Stimulus: 'Cash for Refrigerators'

A $300 million cash-for-clunkers-type federal program to boost sales of energy-efficient home appliances provides a glimmer of hope for beleaguered makers of washing machines and dishwashers, but it's probably not enough to lift companies such as Whirlpool and Electrolux out of the worst down cycle in the sector's history.

Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications. The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November. (Unlike the clunkers auto program, consumers won't have to trade in their old appliances.)

"These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy," Energy Secretary Steven Chu said in a statement announcing the plan. Only appliances covered by the Energy Star seal will qualify. In 2008, about 55% of newly produced major household appliances met those standards, which are set by the Energy Dept. and Environmental Protection Agency.

The money can't come soon enough for the home appliance industry, which is mired in an unprecedented sales slump that began when the housing market cooled in 2006. Since then that slump has worsened considerably. Shipments of washers, dryers, refrigerators, and ovens dropped 10% in 2008 and are down 15% through July, according to the Association of Home Appliance Manufacturers. "It's brutal," says Raymond James analyst Sam Darkatsh.

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A Marine Speaks For Many Of Us

2009-08-25T07:35:00.002-04:00

This guy draws quite a response from the audience. His words refect the feelings of the majority of Americans at this time. The political temperature will hit the boiling point this fall-Lou

2009-08-25T06:54:00.002-04:00

Yea right, if you believe this I have some cheap land for sale in Florida.-Lou

Geithner Says No Tilt to Goldman

By DEBORAH SOLOMON

WASHINGTON -- Treasury Secretary Timothy Geithner said Friday that government officials acted appropriately in their dealings with Goldman Sachs Group Inc. during the heat of the financial crisis last year.

Some lawmakers have questioned whether ties between government officials and Goldman Sachs influenced their decisions about which financial firms should be saved. The government's rescue efforts weren't intended to benefit Goldman but to prevent a broader collapse of the financial system, Mr. Geithner said in an interview with The Wall Street Journal and Digg, an online site where 39 million users share articles with one another and rate their popularity. Mr. Geithner was responding to questions submitted and voted on by Digg users in partnership with the Wall Street Journal.

We have been forced to do just extraordinary things and, frankly, offensive things to help save the economy," Mr. Geithner said. "I am completely confident that none of those decisions…had anything to do with the specific interest of any individual firm, much less Goldman Sachs."
Questions were raised about the government's decision to allow the collapse of Lehman Brothers, a Goldman Sachs competitor, and the decision to prop up American International Group Inc., a counterparty to Goldman that subsequently paid the Wall Street firm about $13 billion.

Much of the criticism has been aimed at former Treasury Secretary Henry Paulson, the onetime chief executive of Goldman Sachs who was aided at Treasury by a bevy of advisers with ties to the firm.

Mr. Paulson told lawmakers during a congressional hearing last month that government ethics lawyers gave him a waiver allowing him to talk with his former company last fall "when it became clear that we had some very significant issues with Goldman Sachs." While he was instrumental in the rescue of AIG, he told lawmakers he "had no role whatsoever in any of the Fed's decision regarding payments to any of AIG's creditors or counterparties."

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Fed Must Release Reports on Emergency Bank Loans, Judge Says

2009-08-25T06:40:00.003-04:00

This should be interesting. Ben will be reappointed to another term today-Lou

Aug. 25 (Bloomberg) -- The Federal Reserve must make records about emergency lending to financial institutions public within five days because it failed to convince a judge the documents should be exempt from the Freedom of Information Act.

Manhattan Chief U.S. District Judge

Loretta Preska rejected the central bank’s argument that the records aren’t covered by the law because their disclosure would harm borrowers’ competitive positions. The collateral lists “are central to understanding and assessing the government’s response to the most cataclysmic financial crisis in America since the Great Depression,” according to the lawsuit that led to yesterday’s ruling.

The Fed has refused to name the borrowers, the amounts of loans or the assets put up as collateral under 11 programs, saying that doing so might set off a run by depositors and unsettle shareholders. Bloomberg LP, the New York-based company majority-owned by Mayor

Michael Bloomberg, sued Nov. 7 on behalf of its Bloomberg News unit.

“When an unprecedented amount of taxpayer dollars were lent to financial institutions in unprecedented ways and the Federal Reserve refused to make public any of the details of its extraordinary lending, Bloomberg News asked the court why U.S. citizens don’t have the right to know,” said

Matthew Winkler, the editor-in-chief of Bloomberg News. “We’re gratified the court is defending the public’s right to know what is being done in the public interest.”
‘Involuntary Investor’

Bloomberg said in the suit U.S. taxpayers need to know the risks behind the central bank’s $2 trillion in lending because the public is an “involuntary investor” in the nation’s banks.

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Rolling Stone Exposes Goldman Sachs

2009-08-25T06:10:00.009-04:00

Although my late father-in law was a floor traded on the NYSE for Goldman Sachs for years, I truly dislike the firm (so did he). As I have stated many times on my radio show and on this blog, I believe Goldman Sachs operates the largest insider trading operation in the world. All important financial positions both in the public and private sector are headed by ex Goldman executives. They have infiltrated the U.S. Treasury and the Federal Reserve. It is my guess that they have advanced knowledge of interventions in all financial markets incuding currency, bonds and especially the gold market. It's not hard to make money when you know ahead of time which way a market will move. Goldman CEO Lloyd Blankfein made 20 calls to former Treasury Secretary (and former Goldman CEO) Hank Pauson in the week leading up to the bailout of AIG that resulted in over $16 billion flowing through AIG to Goldman. Read this article and learn what Goldman Sachs is all about. I wonder why this information is published in Rolling Stone and not the mainstream financial media.-Lou

Inside The Great American Bubble Machine

Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression

Matt Taibbi

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.

Read Article Here

Listen To This Week's Radio Show

2009-08-24T08:59:00.003-04:00

Listen to this past Sunday's "The Financial Physician" radio program.

Listen Here

2009-08-24T07:14:00.001-04:00

2009-08-24T07:12:00.000-04:00

No COLA For Social Security Next Year

2009-08-24T06:18:00.003-04:00

Well the good thing is that by law Medicare Part B premiums can not rise more than the COLA increase which will be zero. It's getting real tough for our seniors with low interest rates on savings, a diminished stock portfolio and rising medical expenses.-Lou

Millions face shrinking Social Security payments

WASHINGTON (AP) - Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise. The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975.

By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.

"I will promise you, they count on that COLA," said Barbara Kennelly, a former Democratic congresswoman from Connecticut who now heads the National Committee to Preserve Social Security and Medicare. "To some people, it might not be a big deal. But to seniors, especially with their health care costs, it is a big deal."

Cost of living adjustments are pegged to inflation, which has been negative this year, largely because

energy prices are below 2008 levels.

Advocates say older people still face higher prices because they spend a disproportionate amount of their income on health care, where costs rise faster than inflation. Many also have suffered from declining home values and shrinking stock portfolios just as they are relying on those assets for income.

"For many elderly, they don't feel that inflation is low because their expenses are still going up," said

David Certner, legislative policy director for AARP. "Anyone who has savings and investments has seen some serious losses."

About 50 million retired and disabled Americans receive Social Security benefits. The average monthly benefit for retirees is $1,153 this year. All beneficiaries received a 5.8 percent increase in January, the largest since 1982.

More than 32 million people are in the Medicare prescription drug program. Average monthly premiums are set to go from $28 this year to $30 next year, though they vary by plan. About 6 million people in the program have premiums deducted from their monthly Social Security payments, according to the

Social Security Administration.

Millions of people with Medicare Part B coverage for doctors' visits also have their premiums deducted from Social Security payments. Part B premiums are expected to rise as well. But under the law, the increase cannot be larger than the increase in Social Security benefits for most recipients.

There is no such hold-harmless provision for drug premiums.

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Accounting Rules Allow Banks To Lie About Health

2009-08-23T07:43:00.004-04:00

Large banks have reported better than expected earnings and their stocks have risen dramatically. The main reason for the perceived health of banks is the FASB allowing banks to value their loans a ficticious levels thereby misleading investors into believing they are not as sick as they really are. Colinial Bank's loans were worth a third less than they disclosed just a few weeks before they failed? How many other banks are fudging the value of their loans?-Lou

What are bank loan values worth?

Forbes NEW YORK --

It took the liquidation of Colonial Bank to reveal an ugly truth: the loans on its books were worth a third less than what the failed regional lender had declared them to be just weeks before.
It's an ominous sign about weaknesses that may be lurking in other banks' loan portfolios. Regulations give banks wide latitude about whether to recognize potential loan losses on their balance sheets, so they remain largely out of view.

This is exactly why many investors were up in arms when the Financial Accounting Standards Board, which sets U.S. accounting rules, seemingly buckled under pressure from Congress earlier this year. Its board backtracked from rules that forced banks to be more transparent about the true value of assets.

Bank lobbyists and their congressional backers argued that it was needlessly destructive, in times of market disruptions when few buyers are available, to require lenders to base the value of assets on what they could be sold for at that time, using what is known as mark-to-market accounting.

But those who support mark-to-market counter that present rules allow banks to just delay their day of reckoning by not being upfront about their assets' value.

Take the case of a commercial real estate loan for a near-empty Florida strip mall. Even though it may never be repaid in full, the bank can keep the loan on its books at the historical valuation as long as it says it is holding it until maturity or for investment.

"We have plenty of banks holding loans at face value that they could never sell at face value," said Len Blum, managing partner at the investment-bank Westwood Capital.

All this gives banks less incentive to modify loan terms, because doing so would force them to acknowledge lower valuations on balance sheets. Instead, they have reason to keep up the facade that they will get paid back, and hope that they can hold out until the economy improves and real estate prices rebound.

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