Archive for August, 2009

Ben Bernanke savior of the World, but can he walk on water?

Wednesday, August 26th, 2009

On Friday August 21st in a speech in Jackson Hole Wyoming, Federal Reserve chief Ben Bernanke declared” We have saved the World from disaster.

He continued, ” As severe as the economic impact has been, it could have been decidedly worse.”

Hallelujah! Praise the lord!.

Despite jobless claims increasing, and real unemployment exceeding 20%.

Despite the dollar being diluted as fast as the printing presses can print.

Despite small businesses being squeezed out of existence,

and despite a projected shortfall of $ 9 trillion over the next 8 years

Chairman Bernanke in lock step with President Obama and the socialist regime he leads, can state with a straight face that”  we have saved the economy from disaster.”

………So Far……..Maybe……..Or maybe not!!!

The government persists in putting a very one sided spin on the economic numbers, and the lap dog press spews the diluted pap that they are fed.

Their  ignorance of the dangerous times and potential disasters that they are perpetrating shows gross incompetence, and disregard for the survival of our country and our economy.

By “cooking the books” they are leaving the American public with misinformation and a lack of  knowledge necessary to survive hard times.

But they will have their social agenda.  Just no functioning society to support that agenda.

The real economic numbers are still falling, and misinforming the public is setting them up for another even harder fall.

We thought that the President could walk on water, now we find that the Fed chairman does the water walk bit too.

Competition or self deception?

The housing and real estate markets, getting better or getting worse?Beauty is in the eyes of the beholder

Monday, August 24th, 2009

The main stream media and the administration pundits continue to put a positive spin on the recovery of the housing market.

Last week they trumpeted  the proof of an emerging recovery.

Existing home sales jumped 7.4% between June and July. This represented the largest percentage increase in a decade.

The National Association of Realtors announced this increase, but also noted that the median selling price was down over 15% from the same period last year.

These encouraging sales figures were skewed by a large majority of low priced distressed properties. and were aided by very low interest rates and Federal tax credits for first time buyers.

The reality is sobering and the balance is extremely delicate and dangerous.

1. Most sales represent foreclosures and short sales, forced by financial distress,( almost 90% of the total.) Slightly over 10% can be considered normal sales

According to the Mortgage Brokers Association( MBA(, reportedly 1 in 8 mortgage holders are in some stage of delinquency or foreclosure.

The  majority of the increase in existing home sales has been seller driven by falling prices and defaulting mortgages. These pressures will continue to exert downward pressure on real estate prices.

2. There is a change in the origin of defaulting mortgages. The past two years, the pressure has been primarily from sub prime home owners unable to refinance because their  mortgages were under water.

The past 6 months has seen a shift from sub prime to prime borrowers, unable to make payments due to job loss and economic recession. According to the Mortgage Brokers Association, almost 60% of new foreclosures in current quarter were filed against prime borrowers, up from 40% last year. Sub prime was only 32% compared to 50% + last year.

3. The much larger number and size of the prime ARM’s which we have talked about extensively are set to begin adjustin in huge numbers beginning in 2010 and accelerating into 2011.

These are the infamous Alta and Option ARM’s which involve larger more extensive properties, and are arriving while unemployment continues to grow.

4. Commercial mortgages , Not heard from yet, but with all the abandoned stores and empty shopping centers, coupled with the wasteland developing in out industrial  parks, these mortgages are a problem in the works.

5. Home inventory of existing homes. In July home inventory increased by 7 1/2 % to over 4 million hoes. This is almost a ten month inventory, and does not include the shadow inventory of people who want to sell but are waiting for an uptick in the real estate market before putting their home on the market.

This is going to be a cold winter, a Madoff’d( Scrooged) Holiday season, and an even colder winter and spring for 2010.

Sorry, but the truth is the truth.

Economic Recovery- a House of Mirrors-What is the real reflection

Wednesday, August 19th, 2009

Everything is getting better.

The recession is over, and there never was a threat of a depression.

Last week 53 economists polled by Bloomberg, said the recession was over in the 3rd quarter of 09( this is the 3rd quarter) and we can expect renewed growth over the next 4 quarters of 1 1/2 – 2%.

Cool! Groovy! I wish I could be a professional economist so that

 I could make up neat fantasy stories.

It’s nice to know that the stimulus was a success.

Where did I put all of those credit cards that I swore I would no longer use?

Let the good times roll…or not…

Our economic prognosticators have overlooked a few facts, which casts a partisan pall on their judgment.

Foreclosures were up 7% in July over last year.

Housing prices are still falling.

Unemployment is still going up, and has exceeded 20% in real terms.

Consumer price index is falling. The sign of a deflationary response to shrinking demand.

Business profits are falling in real terms( more on this in a moment)

Consumer spending is down and savings are up from a negative 2% to a positive 7% + over last year.

Today’s lead article in the Wall Street Journal headlines ” Reluctant Shoppers Hold Back Recovery”

The article goes on to state that major retailers reported thet American consumers continue to hunker down, casting a cloud over the durability of the US recovery.

Retailers transcending  discount to luxury are providing foreboding results.From discount Target stores with a 6,2% drop in same store sales to luxury store Saks with a drop of 15.5%, retailers are forecasting slowing sales through the end of the year, and a “hoped for” recovery by the middle of 2010.

The Obama administration and the Democratic controlled Congress desperately need a recovering economy to maintain the justification for excessive spending. If the Stimulus spending and various other “changes to the economy” has worked then they stay in power and get to change and spend some more.

The 4th quarter numbers will reflect a healthy growth in Gross Domestic Production(GDP)

Don’t be deceived, The “healthy growth ” is compared to the 4th quarter of 2008, a period of  economic disaster.

Of course the numbers are healthy compared to the end of last year. Especially when most profit margins are being maintained by shrinking overhead, namely payroll.

Don’t be surprised by a rally in stocks in the fall and early winter, but be careful when the recession/Depression roars back with a vengeance  next year.

You can only cook the books so long. At some point reality will force its unwanted truth and the markets will have a serious correction.

Dear Friends.


Health Care Reform, Here is what I would accept

Friday, August 14th, 2009

O .K .Mr & Ms slick politicians. You want  to change the health care rules.

No problem. I am opposed to government meddling in private sector free enterprise because I don’t thing you are even 25% as able as we are to handle business decisions.

But, if you insist. Here is the only way that I would accept your new rules.


Are you really ready for a solution that will turn out equitable for all Americans.

All right, here it is.

Put all politicians, civil servants, union employees & bosses, Congress, the Judges, the President, everyone and all their families into the same program that you want for us.. If what you want to do to health care is so great then let everyone share in the bounty and the benefits of the new system.

No exceptions.

No alternates.

What is good enough for me is good enough for all.

This must be written into law, and unchangeable for a minimum of 25 years. This way if end of life savings is a hidden agenda, it will affect you as well as me. Your families as well as mine.

Of course if you accept this plan we will have to exclude all illegal non citizens, otherwise we could never afford to take care of your health needs at a reasonable level. When they become legal naturalized citizens through existing immigration laws then of course all citizens will be covered.

What do you think oh mighty elite. If its good enough for the people I love, then it should easily be good enough for your loved ones, after all you are JUST public servants.

This plan will guarantee a fair and equitable reform of health care that will protect all the citizens of the United States.

Mess this up and you will be messing up your own family,  so be careful and do a righteous job ,

A parable, Fat Louie, the duck with gout, seeks fowl health care.

Thursday, August 13th, 2009

Fat Louie was getting old.

He was a fat white duck, and he was suffering with the gout.

He had contracted the gout as a result of eating rich human  foods thrown into the lake at Snapfinger Woods Estates, a complex east of Atlanta.

Snapfinger lake was  man made, as an  amenity for the residents of the condominium complex.

Louie had been top duck when he was younger.

His flock consisted of 12 adult ducks in the spring,usually  expanding to 17 or 18 by fall.

His superior swimming ability ensured that  Louie would be the first to reach the food.He loved to showoff his  speed, and he really loved the morsels that his humans threw into the lake.

The gout is a painful form of arthritis that develops from excessive consumption of rich foods. In ducks this results in elevated levels of uric acid, which can crystallize and form painful deposits in a ducks webbed feet or ankles.

In Louie’s case the crystals settled in his right ankle causing pain and a difficulty in swimming and walking.

The gout is known as the rich ducks disease.

Ducks in the wild, subscribe to the adage,” survival of the fittest”. When Louie developed his painful affliction,the flock turned on their leader.He was chased away and forced out of the water.

Louie   spent his days alone,on dry land, He became a clown,waddling around the Snapfinger Woods grounds.  When he saw a potential  food suplier he would go into his pathetic quacking act ,hobbling with great effort. The “awwws” invariable turned into more food for Louie.

As the seasons passed, Louie became fatter and fatter. He was very lonely .

One day he looked at his reflection in the water. ” Louie, your getting old,” he said to himself. ” I think its time to get my leg fixed.”

The Greater Atlanta Duck Association (GADA) had passed the Universal Fowl Health Reform Act of 09 (UFHRA ’09) . According to GADA, every duck in the greater Atlanta area would recieve  free premium government supplied health care .

” Health care on demand. I’m ready  to get treatment for my gout. ” Fat Louie quacked. ” I’m getting old, and its time for me to get back into the water. Maybe I can even find an old Daisey to keep me warm in the winter.”

Fat Louie went to the GADA satellite office in Stone Mountain.

Two very pretty an very young Dasie’ s greeted him at the front door. “Hello Mr Louie,” they quacked. ” Please wait over there and we will add your name to the list.

Fat Louie walked through the door that they indicated.

It was a very large and very noisy room filled with several thousand assorted fowl.

The noise was deafening. There were birds of every species and every age from hatch lings to the very old.

There were wires and roosts filled with  waiting patients and the ground was crowded with non flying birds .

The floor was covered with upward of a foot of  poop, and the cacophony of  hoots, caws,quacks and assorted bird calls was deafening.

Louie looked around for someone in charge.

The scene was chaotic, and finally Louie found a small group of white ducks off to the side,

He waddled towards them glad for some familiar ducks.” Hello everyone. My Name is Louie, Fat Louie. When do I get to see the doctor?”

The group of white ducks looked at him for a moment then all began to quack at once.

” Hold on, one at a time please, I can’t understand you all talking at the same time.”

An elderly gentleman with molting feathers and a pair of spectacles perched on his nose, stepped forward.” I’m Daniel Duck. and  I have been  here the longest, so I suppose I qualify as a spokesman.”

“How do I get to see the Doctors? How long will this take? I have things to do at home this evening”

Daniel looked at him and shook his head” I’ve been here waiting to see a doctor about my failing kidneys for almost two weeks.”

“Why so long?” asked Louie,” I thought  UFHRA guaranteed us free medical care.”

“It does my friend, it does. The problem is that there are not enough doctors, and most of the good ones have gone away to other cities. Because of the shortages, the government has prioritised our access to medical care based upon our are, and the cost of treatment. ” He had a sad look in his  eyes.

” You see, I’m old, and not worth very much to the greater good, so they keep putting me at the back of the line. Eventually I’ll get a turn, but the fird flu that has hit Atlanta is keeping the nurses and doctors busy with younger more cost effective patients

They figure I don’t have much time left anyway.”

“Universal free health care my aching right foot,” squawked Louie, and he waddled out of the room and headed towards home so that he could at least die in his own pond.

While you protest against health care, why don’t you protest for help to small businesses

Sunday, August 9th, 2009

” I’m mad as hell and I don’t want to take this anymore.”

It really frustrates me to be writing about the state of our economy, and the difficult roads that appear to be our options going forward.

As I have stated many times, the economic cycle which has been riding the credit train has derailed. 

This is not a simple fix like the V recessions of the past 35 – 40m years.

Throwing $ trillions   at this problem feels like it has not created a single  job.

Most of the stimulus money has gone to maintain the status quo. The State union employees usually get to keep jobs which might been terminated.

Now they want to change health care and life choices G-d help us !

With my money, they have already  bailed out :


Wall Street!




A wooden arrow manufacturer in Arizona or Idaho or  somewhere, for heavens sakes!

All a bottomless pit of endless spending with no way to pay, and no real hope of creating new jobs.

 The government is the only stimulus that is growing.

Yet with all of this debt and all of this incredible spending, the one sector that could actually help the economy rebound and create bold new directions , is being totally ignored. 

How about small business.

 The inventor.

The entrepreneur

The small manufacturer that employs 8-10 maybe several hundred people.

How about the repair shops and the wholesale distributors.

Retail stores.

Restaurants and entertainment venues.

Where is the bail out or the stimulus to help these millions of small businesses who employ tens of millions of people.

We are bearing the brunt of this near depression,

We are being regulated and taxed to death.

A s a group we are sinking closer and closer to the abyss of bankruptcy and to defaulting  on our debts, obligations, commercial mortgages.

Survival is a daily fight, and it is very frustrating to see all the fat  cats get bailed.

Yet, we get nothing but more squeeze from taxes, unemployed customers, and a shrinking dollar.




Fat Louie, a duck with gout, a parable about fowl economic stimulus

Thursday, August 6th, 2009

Louie was a fat, fluffy, white duck.

He lived on a small private lake, east of Atlanta.

The lake was man-made as an amenity for a small condominium community of rustic, 2 story wooden apartments  known as Snapfinger Woods Estates.

The creek that ran through the small wooded area was known as Snapfinger Creek  and, hence, the name Snapfinger Woods Lake.

When Louie was younger he was the head duck of a small flock  that claimed Snapfinger Lake as their home.

In the Spring, the flock usually consisted of 12 – 14 adults  and would expand to 18-20 by the end of the Summer.

The residents of Snapfinger Estates loved to feed their flock of ducks.  They would throw bread and stale cakes into the water and watch as the ducks raced for the food.

Louie being the leader and the fastest swimmer, usually got to the food first  and he would gobble the morsels in a splashing frenzy of duck gluttony.

As the seasons passed, Louie got bigger and fatter from eating all the rich human foods.

One morning he woke up and realized his right leg hurt. It was swollen and painful for paddling. Louie had the gout.

The Ducks, being wild birds and advocates of the premise “survival of the fittest”  quickly fired Louie from his position of head duck  and expelled him from the community lake.

Louie was devastated.  For weeks he wandered around the Snapfinger Woods Apartments common areas and the parking lots.

He would waddle, dragging his right  foot for sympathy.     The residents  took pity on Louie and continued to feed him.

The following Fall, the greater economy of the Nation fell into a deep recession and many of the human residents of the Snapfinger Woods Apartments lost their jobs.

Fat Louie’s sources of  gratis food became increasingly difficult to find.

He decided that it was time to go to work ,  so that he could afford to buy his own food.

” What can an enterprising, hungry duck with the gout do to earn a living?” He  thought to himself.

“Of course!”  he quacked, ” Humans love down pillows! …And… Who knows more about down  than a duck?”

Louie did some investigating and found that there were 10 duck -owned, Down production facilities in the greater Atlanta area, employing over 10,000 ducks.

During a bad recession, demand for down pillows and comforters is sluggish, but Louie didn’t  care.  He had a business plan to establish himself and his flock as the Down Kings of  Georgia.

He contacted the Greater Atlanta Duck Association( GADA) and requested a meeting with their Drake  financial chief .

Over the years, the Federal Government had been a major recipient of bird droppings, which was valued as fertilizer .  Louie proposed that GADA call in some political favors.

The Congress and the President had appropriated massive amounts of money as part of several stimulus packages to help fight the recession.

Louie proposed a joint venture with GADA to get some stimulus money for a proposed new down factory.

With $3 million of Federal stimulus money, Louie opened a brand new state of the art down factory.

The new factory, with the massive influx of cash,  had a major competitive edge over the more established and conservative down factories.

Soon, Louie’s factory was growing geometrically and he was able to hire 4000 ducks .  He squeezed most of his competitors out of business  by lowering his prices. After they were out of business, Louie raised his prices by 50%.  After all,  he no longer had any competition.  He DID  have all that stimulus money helping to subsidize his operation though.

The net result of the government stimulus program:

6000 lost jobs.

Hundreds of thousands of $ lost tax revenue from former down manufacturers.

A heavy increase in unemployment insurance claims by the ducks of Atlanta.

Fat Louie got fatter yet, and his gout got worse.

The business cycle is like the cycle of life

Tuesday, August 4th, 2009

The business cycle is like the cycle of life.

It is born.

It learns how to walk. 

It reaches maturity.

It blossoms .

It grows old .

Eventually it must die.

Business cycles tend to follow credit cycles.

When credit is available, people borrow and spend today for things that they might otherwise not purchase until tomorrow.

Your current automobile might be only 3 years old, and in decent condition for another 3 or 4 years, but easy credit tends to encourage the consumer to buy a new car before it is necessary.

On a macro scale, when credit flows, and people spend on future necessities today, business makes profits, hires new employees , spends more on technology, expands facilities and  helps to generate growth.

When credit cycles contract, a new direction is created. Borrowing shrinks, spending contracts, savings go up and debt is reduced. Businesses contract, increase layoffs, and delay spending.

The last major credit shift experienced by the U S economy shifted to an expansion mode in the early 80’s. The Greenspan and Reaganomics agendas saw an expansion of available credit  which grew virtually unchecked until 2006-2007.

We are currently in the early stages of a Credit Contraction Cycle(CCC)

This is not a temporary pause in an ongoing expansion. We have shifted into a new direction.

The duration of this type of cycle typically lasts for an extended number of years and results in bankruptcies, foreclosures and unemployment.

The Great Depression of the 1930’s is usually shown as the standard of CCC economics, but we experienced similar but lesser extreme contractions in the 1960’s and 1970’s, with Nixon’s taking us off the gold standard as a rapid slide into Stagflation.

This is not a “bad recession” as the experts claim, hoping to keep us calm while our economy unravels.

 We are i n a Depression. It is just beginning, and it will feel more difficult because there is an entire generation of Americans who have never experienced bad times.

Savings have increased from 0% to just over 7% in slightly over 1 year, and demand is contracting because there is less money to spend.

The Administration is trying to add demand by spending money at a super record pace, but  cask for clunkers and various stimulus spending sprees are just moving money from one place to another.

 Demand is not being generated, that will only come when new wealth is created and wages and employment increases.

Unfortunately that will take years, a major shift to expending credit once again, and of course a great deal of contracting and suffering in the interim.