Infinite Unknown

2008 World Press Photo Foreclosure

NEW YORK, May 28 (Reuters) – One of eight U.S. households with a mortgage ended the first quarter late on loan payments or in the foreclosure process in a crisis that will persist for at least another year until unemployment peaks, the Mortgage Bankers Association said on Thursday.

U.S. unemployment in April reached its highest rate in more than a quarter century and is still rising, helping propel mortgage delinquencies and foreclosures to record highs.

Such economic weakness drove up foreclosures of prime fixed-rate loans, which are made to the most creditworthy borrowers. The foreclosure rate on those loans doubled in the last year and represented the largest share of new foreclosures in the first three months of this year.

“We clearly haven’t hit the top yet in terms of delinquencies or the bottom of the housing market,” Jay Brinkmann, the association’s chief economist, said in an interview.

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Tags: Economy, Foreclosures, Housing, Housing market, Mortgages, U.S., Unemployment

“In Debt We Trust.”

Yes, we can … spend the U.S. into oblivion:

- Famous investor Marc Faber: U.S. will go into Hyperinflation, Approaching Zimbabwe Levels

- Richard Fisher, president of the Dallas Federal Reserve Bank:
The“very big hole” in unfunded pension and health-care liabilities is over $99 trillion.
(Full article: Here)

- Glenn Beck: United States Debt Obligations Exceed World GDP

- Federal obligations exceed world GDP

The US is totally broke.

Leap in U.S. debt hits taxpayers with 12% more red ink

Taxpayers are on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises, a USA TODAY analysis shows.

The 12% rise in red ink in 2008 stems from an explosion of federal borrowing during the recession, plus an aging population driving up the costs of Medicare and Social Security.

That’s the biggest leap in the long-term burden on taxpayers since a Medicare prescription drug benefit was added in 2003.

The latest increase raises federal obligations to a record $546,668 per household in 2008, according to the USA TODAY analysis. That’s quadruple what the average U.S. household owes for all mortgages, car loans, credit cards and other debt combined.

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Tags: Debt, Economy, Government, Medicare, Politics, Social Security, Taxpayers, U.S.

Commodities rally as expected. Just that there will be no recovery for the economy and the stock market. This is a bear market rally and it will end.

May 29 (Bloomberg) — Commodities headed for the biggest monthly rally in 34 years, led by energy, as the slumping dollar boosted demand for raw materials as a hedge against inflation.

In May, the Reuters/Jefferies CRB Index of 19 energy, metal and agricultural prices has gained 13 percent, the most since July 1974. The dollar headed for the biggest monthly drop this year against a basket of six major currencies.

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Tags: Commodities, Economy

US and South Korean forces raised their military alert level today, a day after North Korea renounced the 55-year-old truce on the peninsula and threatened war if its ships are searched for weapons of mass destruction.

Three days after North Korea carried out an underground nuclear test, the US-South Korea combined forces command moved its level of surveillance to the second-highest level on its scale of five, the highest since North Korea’s first nuclear test in 2006.

Meanwhile, the North’s state media accused the allies of plotting an attack, and warned that small incidents could have disastrous consequences. “The northward invasion scheme by the US and the South Korean puppet regime has exceeded the alarming level,” the Workers’ Newspaper said in an editorial. “A minor accidental skirmish can lead to a nuclear war.”

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Tags: Military, North Korea, Politics, South Korea, U.S.

May 21 (Bloomberg) — The odds on the dollar, Treasury bonds and the U.S. government’s AAA grade all heading for the dumpster are shortening.

While currency forecasting is a mug’s game and bond yields can’t quite decide whether to dive toward deflation or surge in anticipation of inflation, every time I think about that credit rating, I hear what Agent Smith in the “Matrix” movies called “the sound of inevitability.”

Several policy missteps suggest that investors should stop trusting — and lending to — the U.S. government. These include the state’s pressure on Bank of America Corp. to buy Merrill Lynch & Co.; the priority given to Chrysler LLC’s unions over the automaker’s secured creditors; and the freedom that some banks will regain to supersize executive bonuses by giving back part of the government money bolstering their balance sheets.

Currency markets have been in a weird state of what looks almost like equilibrium for the past couple of months. What’s really going on is something akin to an evenly matched tug of war that fails to move the ribbon tied around the center of the rope, giving the impression of harmony while powerful forces do silent battle until someone slips.

“All currencies are being debased dramatically by their central banks at extraordinary speeds and so in relative terms it appears there is no currency problem,” Lee Quaintance and Paul Brodsky of QB Asset Management said in a research note earlier this month. “In reality, however, paper money is highly vulnerable to a public catalyst that serves to acknowledge it is all merely vapor money.”

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Tags: Bonds, China, Dollar, Economy, Government, Politics, Rating, U.S.

Earlier this year, President Obama’s Supreme Court nominee joined an opinion with the 2nd Circuit Court of Appeals ruling that Second Amendment rights do not apply to the states.

Sonia Sotomayor smiles as President Barack Obama announces her as his Supreme Court nominee at the White House.

Judge Sonia Sotomayor could walk into a firestorm on Capitol Hill over her stance on gun rights, with conservatives beginning to question some controversial positions she’s taken over the past several years on the Second Amendment.

Earlier this year, President Obama’s Supreme Court nominee joined an opinion with the 2nd Circuit Court of Appeals ruling that Second Amendment rights do not apply to the states.

A 2004 opinion she joined also cited as precedent that “the right to possess a gun is clearly not a fundamental right.”

Ken Blackwell, a senior fellow with the Family Research Council, called Obama’s nomination a “declaration of war against America’s gun owners.”

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Tags: Constitution, Government, Guns, Obama administration, Politics, Second Amendment, U.S., White House

I may have said it a trillion times but this is too important to not repeat myself every day.

When the bond bubble bursts, then the US dollar will be destroyed.
This will be the greatest financial collapse in history.
The ‘Greatest Depression’ (A hyperinflationary depression.).

And again: Got gold … and silver? (… and food and water for several months?!!)

Is gold a good investment? Consider John Paulson:
- World’s top hedge fund manager has a gold position of at least $5.5bn

It looks like John Paulson really knows what he is doing:
- Paulson May Have Made $428 Million Shorting Lloyds
- Paulson Fund Makes at Least $420 Million Shorting RBS

Remember when Gerald Celente said that those who weren’t listening to the many warnings (Ron Paul, Peter Schiff, Gerald Celente, Marc Faber, Max Keiser) deserve their fate?

If you prepare yourself, then you have a destiny. If you don’t, then what’s left for you is fate.

May 27 (Bloomberg) — The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.

Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.

“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”

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Tags: Bonds, Debt, Economy, Fed, Federal Reserve, Gold, Government, Hyperinflation, Inflation, Marc Faber, Politics, U.S.

Related article: U.S. Treasury Blues: The Bond Bubble Has Burst (Barrons)

Oliver Quillia for CNBC.comA New York Stock Exchange trader.

The stock market is watching the bond market, wary a spike in interest rates will derail a fragile economic recovery and snuff the market’s rally.

Stocks tumbled Wednesday, but the real drama was in Treasurys and mortgages.

A selling spree in Treasurys pushed rates higher, taking the yield curve to its steepest on record as spreads between the 2-year and 10-year widened by over a dozen basis points on Wednesday alone.

The 10-year saw its yield move above 3.70 percent, after trading at 3.55 percent the previous day. The selling wave hit bonds shortly after 1 p.m., even after the auction of $35 billion in 5-year notes was well received.

“It was a great auction. It was just the follow through that was a problem,” said Brian Edmonds, head of interest rate trading at Cantor Fitzgerald.

Traders are bracing for more of the same Thursday. The Treasury is auctioning another $26 billion in notes, this time 7-years.

The heavy issuance – more than $100 billion this week alone – has been pressuring the market.

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Tags: Bonds, Bubble, Debt, Economy, Stock Market, U.S.

“The Obama administration had asked the court to overturn Michigan v. Jackson, disappointing civil rights and civil liberties groups that expected President Barack Obama to reverse the policies of his Republican predecessor, George W. Bush.”

WASHINGTON (AP) – The Supreme Court on Tuesday overturned a long-standing ruling that stopped police from initiating questions unless a defendant’s lawyer was present, a move that will make it easier for prosecutors to interrogate suspects.

The high court, in a 5-4 ruling, overturned the 1986 Michigan v. Jackson ruling, which said police may not initiate questioning of a defendant who has a lawyer or has asked for one unless the attorney is present. The Michigan ruling applied even to defendants who agreed to talk to the authorities without their lawyers.

The court’s conservatives overturned that opinion, with Justice Antonin Scalia saying “it was poorly reasoned.”

Under the Jackson opinion, police could not even ask a defendant who had been appointed a lawyer if he wanted to talk, Scalia said.

“It would be completely unjustified to presume that a defendant’s consent to police-initiated interrogation was involuntary or coerced simply because he had previously been appointed a lawyer,” Scalia said in the court’s opinion.

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Tags: Barack Obama, Civil liberties, Civil rights, Interrogation, Law, Obama administration, Politics, Society, Supreme Court

BERLIN — Germany’s financial regulator warned of serious problems at Hypo Real Estate Holding AG six months before the lender was rescued in a massive bailout, but the regulator lacked powers to act and the government ignored its warnings, according to documents viewed by The Wall Street Journal.

The documents — brought to light in preparation for parliamentary committee hearings Thursday to examine the government’s handling of Hypo’s bailout — are likely to prove politically charged ahead of national elections in September.

For months, Germany has lectured the U.S. and others on the need for stricter regulation of financial markets, holding itself up as a model. The German parliament probe into the €102 billion ($142.6 billion) rescue of Munich-based Hypo, however, suggests Germany struggled as much as the U.S. or Britain to control the risks the country’s banks were taking.

Hypo’s funding problems and huge losses on complex securities make it the worst of Germany’s problem banks, though it is one of many. German banks could face total losses in the current financial crisis of €200 billion to €300 billion, according to several estimates, of which only around €100 billion has been written down.

Spokesmen for Hypo and the Deutsche Bundesbank, Germany’s central bank, declined to comment.

Overall, banks in Western Europe could lose about $1.4 trillion in this crisis, more than expected losses in the U.S. banking system, according to the International Monetary Fund.

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Tags: Economy, Germany, Government, Hypo Real Estate