Welcome to 1984

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

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

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

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

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

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

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

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

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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Listen To My First National Radio Show

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

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

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

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.