Category — Housing

Each parcel of assistance caused by government trepidation prolongs the problem. Strewing capitalism’s path are the financial statements of failed businesses. The demise of the weak merely reinforces the rest.

The bankers’ profits went to the stockholders; the losses must reside there as well.

Uncle Subprime

Mortgage foreclosures haven’t yet hit their peak, it’s an election year, and Congress is back in session. Hold onto your wallets because a housing bailout is moving forward unless the White House says no.

Senators from both parties agreed late yesterday to throw about $11 billion more at the housing market, and we’ll have more to say about that later. But think of Uncle Sam as the subprime lender of last resort and you are getting close to what the Beltway is contemplating. In the name of preventing foreclosures, House Financial Services Chairman Barney Frank wants to transfer the risk of further declines in home prices to taxpayers from lenders and borrowers.

Mr. Frank’s idea is that, for mortgages originated between the start of 2005 and mid-2007, a lender and borrower would be able to agree on a federal refinancing plan. Lenders would have to write down their loan to no more than 85% of the current appraised value of the property – which means the banks will use this opportunity to unload the biggest stinkers in their loan portfolios.[snip]

The only thing similar is a proctologic examination and finding both the doctor’s hands on your shoulders.

Prayer won’t work

Fed takes boldest action since the Depression to rescue US mortgage industry

All “real” Americans living within ones means, who save money and have little or no debt, the Fed has drawn a huge target on your back. The ammo used is freshly printed cash, replacing the principal lost in the housing bust. Doesn’t work for the capital lost in the bubble burst is gone. It does not exist for the lenders or the government.
What the bankers and lenders want now is the Government to print more money to replace the loss. Nice of them, isn’t it?
What is backing that extra money? Nothing! This money is courtesy of Gutenberg’s invention; it has the same value as if you printed it, except they won’t go to jail for the act.
So, what’s with the target on your back?
Think of this occurrence as one losing their monthly paycheck on the way home from work. When someone else finds it, that one is enriched by that amount. Creating money from air to give to you is progressive economics.
Increasing the amount of money to compensate you with no commensurate increase in value of the coinage will diminish the value of the total capital. Call it what is, debasing the currency. Your savings, house, IRA, 401(k) and piggy bank are worth what the adjusted currency is worth.

The Fed’s in a desperate race with spectre of collapse
The latest news and analysis of the UK and world economy
Read more by Ambrose Evans Pritchard

The US Federal Reserve has taken the boldest action since the 1930s, accepting $200bn of housing debt as collateral to prevent an implosion of the mortgage finance industry and head off a full-blown economic crisis.

“The agency crisis was a Tsunami event,” said Tim Bond, global strategist at Barclays Capital.

“The market was starting to question the solvency of bodies that stand at the top of the credit pile. These agencies together wrap or insure $6 trillion of mortgages. They cannot be allowed to fail because it would cause a financial disaster. The fact that this sector has blown up has caught everybody’s attention in Washington,” he said.

The Fed action set off a powerful relief rally, lifting the Dow Jones index over 340 points in early trading. Both US and European equities have been hovering on key support lines in recent days, threatening to break down through 18-month lows in a second, brutal leg to the bear market.
[snip]
Stress indicators across almost all parts of the global credit system fell from extreme levels on the Fed news. The CDX and iTraxx Europe indexes that serve as a default barometer for corporate bonds retreated from record highs, although it is too early to judge whether the latest action will start to thaw the credit freeze. The stock market rally after the last central bank intervention in December fizzled out after just one day.
[snip]
“This is not going to be enough,” said Hans Redeker, currency chief at BNP Paribas.

The travails at Fannie Mae and Freddie Mac — once rock-solid institutions — had combined in a deadly cocktail with a fresh wave of panic over the solvency of the investment banks with heavy exposure to sub-prime debt.

Bear Stearns was forced to deny reports that it was running out of capital and may seek Chapter 11 bankruptcy protection. The spreads measuring default risk on its debt rocketed from 246 to 792 on Monday.

Mr. Bond said the mortgage agencies may ultimately need to be nationalized. Fannie Mae has already seen its stock price drop 70pc since October at a cost of $50bn in market value, even though it has an implicit federal guarantee. “There is going to have to be a very big bail-out,” he said.

So I ask you, just what do you think is going to happen?

As the politicians are so happy to tell you, ”You are the Government” translates into you are going to pay for our screwup. Starting with Carter, going through Clinton and the current Congress, all of the insane economic policies now fall on the taxpayer.

All power to the presidential candidates for they have plans to clean up the deflationary power spiral, institute universal health care and rid the world of acne. Not to be out done, Congress puts forth wonderful ideas of how the bank shareholders can bear the entire weight of saving morons from themselves and world financial markets from meltdown. That way it’s not just some widows and orphans losing their mite.
Remember how the banks needed to be “more aware, more inclusive.” We get this; “Congress presents multiculturalism in banking and displays progressive results.”

‘Ninja’ loans explode on sub-prime frontline

It is now pretty well established, too, that these loans tended to go not merely to the poorest families, but, in general, were marketed at America’s black and Hispanic populations. They were the most likely to take on the so-called “ninja” loans (no income, no job, no assets).

Strange days are upon the residents of many a suburban cul-de-sac. Once-tidy yards have become overgrown, as the houses they front have gone vacant. Signs of physical and social disorder are spreading.
At Windy Ridge, a recently built starter-home development seven miles northwest of Charlotte, North Carolina, 81 of the community’s 132 small, vinyl-sided houses were in foreclosure as of late last year. Vandals have kicked in doors and stripped the copper wire from vacant houses; drug users and homeless people have furtively moved in.

The subprime crisis is just the tip of the iceberg. Fundamental changes in American life may turn today’s McMansions into tomorrow’s tenements.

Since the politicians caused the debacle, each idea conveyed by them compounds the problem. Depositing this genie back in the bottle is unachievable, for the economic missteps are global. Caught in the liquidity trap are Europe and Asia for they bought the sub-prime loan packages through their banks. Led by Germany, the EU bankers sit in the headlight of the oncoming train.
It is instructive to do some reading about the history of the Dutch tulip debacle. More recently, look at the Beanie Baby craze for a macro of herd mentality. Follow up with the dot com bubble to get the reader to the 201 level. To round out the lesson, inquire into the silver speculation by the Hunts in the early ‘80’s.
The one common thread is the one foisted on the electorate by Washington: you can have something for nothing; get rich without work. Life under socialism is risk free.

Congress cannot fix the problem; the money is gone. It is this simple, if you borrow a dollar to purchase a pencil and when you want to sell, all you can get is $0.50, where’s your other $0.50? For you it is gone. However, you still owe one dollar to the pencil company. This is the terminus for congressional abuse of fiscal prudence; the dollar has devalued. The following expands on the condition:

The Federal Reserve’s rescue has failed

The verdict is in. The Fed’s emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation. Much more drastic action will be needed.

Yields on two-year US Treasuries plummeted to 1.63pc on Friday in a flight to safety, foretelling financial winter.

The debt markets are freezing ever deeper, a full eight months into the crunch. Contagion is spreading into the safest pockets of the US credit universe. [snip]

Why won’t it end? Because US house prices are in free fall. The Case-Shiller index for the 20 biggest cities dropped 9.1pc year-on-year in December. The annualised rate of fall was 18pc in the fourth quarter, and gathering speed. [snip]

“There probably will be some bank failures,” said Ben Bernanke. [snip]

Untouched by regulation is a secret banking system built on derivatives called shadow banking. For a quick study of this go here and here.

Bill Gross of giant bond management company PIMCO says losses on credit default swaps could reach $250 billion based on historical default rates.

The candidates will need something else to occupy their time. So take a peek here for what the next president and congress will deal. Platitudes won’t work anymore. Neither will socialist panaceas or raising taxes. They cannot raise taxes high enough to stall the downturn.

The $34 trillion problem

Medicare is poised to wreak havoc on the economy. And our presidential candidates are avoiding the issue.
[snip]
Unfortunately, the day of reckoning is imminent. Sometime in the next President’s first term, Medicare Part A (hospital insurance) will go cash-flow-negative, and it’s all downhill from there. [snip]

Demand answers; how they are going to fix this mess. From where does the money come? The entire government is broke; we’ve sold out to buy votes with entitlements, special funds and all the pork spending. Barney Frank wants the government to buy up worthless mortgages. That lays the entire cost on the taxpayer. Let Frank’s constituents pay for his marvelous idea.

I’d suggest converting much equity in to metals or currency. I don’t think holding U.S. currency is a good financial choice. Look at what the rest of the world investors are doing for cues. Diversify holdings among safe harbors.

New-Home Sales Plunge to Lowest Level in More Than 12 Years, Heighten Recession Fears

WASHINGTON (AP) — The housing market plunged deeper into despair last month, with sales of new homes plummeting to their lowest level in more than 12 years.

The slump worsened even more than most analysts expected, heightening fears that the country might be thrust into a recession.

New-home sales tumbled 9 percent in November from October to a seasonally adjusted annual sales pace of 647,000, the Commerce Department reported Friday. That was the worst sales pace since April 1995.[snip]

By region, sales fell in all parts of the country, except for the West.

In the Midwest, new-home sales plunged 27.6 percent in November from October. Sales dropped 19.3 percent in the Northeast and fell 6.4 percent in the South. In the West, however, sales rose 4 percent.

Over the last 12 months, new-home sales nationwide have tumbled by 34.4 percent, the biggest annual slide since early 1991, and stark evidence of the painful collapse in the once high-flying housing market.

“I think you can classify what we are seeing in the housing market as a crash,” said Mark Zandi, chief economist at Moody’s Economy.com. “Sales and home prices are in a free fall. The downturn is intensifying.”[snip]

On the news here in Vermont, the “ones in the know” piously reassure all that houses are selling. Well, not the McMansions that coat the landscape like crumbs on the kid’s bedroom floor. The handyman specials erected just after the signing of the Magna Carta, they aren’t moving rapidly either. Unless houses are traded in MA and CT like Pokémon caps, somebody is lying.

“A lot of borrowers are being disqualified for loans. If you can’t qualify for a mortgage, the game is over. For those who do qualify, it takes longer to get loans,” said Brian Bethune, economist at Global Insight. [snip]

Ah, Hmmmm, guess that covers the midrange houses. What’s left?

Foreclosures have soared to record highs and probably will keep rising. A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Other home buyers were clobbered as low introductory rates on their mortgages jumped to much higher rates, which they couldn’t afford.

Problems in housing are expected to persist well into 2008 — a major election year.

The housing and mortgage meltdowns have raised the odds that the country will fall into a recession. And, the situation has given Democrat and Republican politicians– including those who want to be the next president — plenty of opportunities to spread blame around. [snip]

Let us spread it around. Liberals for insisting that it’s racist to withhold mortgages from persons unable to afford public housing, Congress for going along. Bush signed those spending bills that allowed this excess to grow. Republican greed is second only to the likes of Democrats Murtha and Rangel.

To help bolster the economy, the Federal Reserve has sliced a key interest rate three times this year. Its latest rate cut, on Dec. 11, dropped the Fed’s key rate to 4.25 percent, a two-year low. Many economists are predicting the Fed will lower rates again when they meet in late January. [snip]

The problem evinced in this downturn is not a liquidity problem. Money is available. The banks merely tightened up the requirements.

Look back at the Dutch tulip crash, after the meltdown there were plenty of tulips around. Tulips, Beanie Babies and houses are the same fiscal condition. Houses are not worth the asking price so bailing out the homeowner will not ease the market. Even with interest rates artificially low, the borrower still needs to qualify. since we are not a saving nation, down payments are hard to find.

With an owner still paying $400,000+/- for a residence that is worth what?, $200,000 now, do you keep paying or do you walk away and cut your losses? Forget not that banks must maintain a reserve; bad loans cut into this. The available funds for lending get pulled into the reserve, drying up mortgage money.

A recession involves pain to some; deflation causes everyone to lose. Either way we’re going to have an “attitude” adjustment.

Every dark cloud has a silver lining; the lining here is a big bunch of illegals self-deporting because of NO WORK.

We need to start doing our own lawns.

This bit of information posted after I put up the House of credit cards post reinforces the previous data.

Crisis may make 1929 look a ‘walk in the park’

As central banks continue to splash their cash over the system, so far to little effect, Ambrose Evans-Pritchard argues things are rapidly spiraling out of their control. [snip]

“It cannot deal with the underlying fear that lots of firms are going bankrupt. The banks and the hedge funds have not fully acknowledged who is in trouble. That is the critical issue,” she adds. [snip]

York professor Peter Spencer, chief economist for the ITEM Club, says the global authorities have just weeks to get this right, or trigger disaster. [snip]

When a credit system implodes, it can feed on itself with lightning speed. Current rates in America (4.25 per cent), Britain (5.5 per cent), and the eurozone (4 per cent) have scope to fall a long way, but this may prove less of a panacea than often assumed. The risk is a Japanese denouement across the Anglo-Saxon world and half Europe.

Bernard Connolly, global strategist at Banque AIG, said the Fed and allies had scripted a Greek tragedy by under-pricing credit long ago and seem paralysed as post-bubble chickens now come home to roost. “The central banks are trying to dissociate financial problems from the real economy. They are pushing the world nearer and nearer to the edge of depression. We hope they will eventually be dragged kicking and screaming to do enough, but time is running out,” he said. [snip]

“The kind of upheaval observed in the international money markets over the past few months has never been witnessed in history,” says Thomas Jordan, a Swiss central bank governor.

“The sub-prime mortgage crisis hit a vital nerve of the international financial system,” he says.

The market for asset-backed commercial paper - where Europe’s lenders from IKB to the German Doctors and Dentists borrowed through Irish-based “conduits” to play US housing debt - has shrunk for 18 weeks in a row. It has shed $404bn or 36pc. As lenders refuse to roll over credit, banks must take these wrecks back on their books. There lies the rub.

Professor Spencer says capital ratios have fallen far below the 8 per cent minimum under Basel rules. “If they can’t raise capital, they will have to shrink balance sheets,” he said. [snip]

Maastricht rules may force the Government to raise taxes or slash spending into a recession. This way lies crucifixion. The UK current account deficit was 5.7 per cent of GDP in the second quarter, the highest in half a century. Gordon Brown has disarmed us on every front. [snip]

The ECB’s little secret is that it must never allow a Northern Rock failure in the eurozone because this would expose the reality that there is no EU treasury and no EU lender of last resort behind the system. [snip]

Goldman Sachs caused shock last month when it predicted that total crunch losses would reach $500bn, leading to a $2 trillion contraction in lending as bank multiples kick into reverse. This already seems humdrum.

“Our counterparties are telling us that losses may reach $700bn,” says Rob McAdie, head of credit at Barclays Capital. Where will it end? The big banks face a further $200bn of defaults in commercial property. On it goes.

When I posted this about 2 weeks ago, 17 reasons America needs a recession, I still searched for the current post’s data. The title to that post now is “One reason America is getting a recession.” The train wreck is speeding up to a “cornfield meet.” Oh, the pain-the pain! It is not just the citizenry; the government has it’s mammary in the wringer too.

Talk of Worst Recession Since the 1930s

Unpaid Credit Cards Bedevil Americans

SAN FRANCISCO (AP) - Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come. [snip]

“Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa,” said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. “We’re starting to see leaks now.” [snip]

Serious delinquencies also are up sharply: Some of the nation’s biggest lenders - including Advanta, GE Money Bank and HSBC - reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago. [snip]

Investors also are backing away from buying securitized credit-card debt, said Moshe Orenbuch, managing director at Credit Suisse. But that probably has more to do with concerns about the overall health of the U.S. economy, he said.

“It’s been getting tougher to finance any kind of structured finance - mortgages, automobile loans, credit cards, student loans,” said Orenbuch, who specializes in the credit industry.

Capital One Financial Corp. (COF) reported that delinquencies and defaults are highest in regions where troubled mortgages are concentrated, including California and Florida.

Among the trusts examined, Bank of America Corp. (BAC) had the highest delinquency volume, with overdue accounts valued at $5 billion. Bank of America defaults in October were almost 200 percent higher than in October 2006.

A spokesman for Charlotte, N.C.-based Bank of America declined to comment.

Other trusts - including those linked to Capital One, American Express Co. (AXP), Discover Financial Services Co. and those containing “branded” cards from Wal-Mart Stores Inc. (WMT), Home Depot Inc. (HD), Lowe’s Companies Inc., Target Corp. (TGT) and Circuit City Stores Inc. (CC) - also reported striking increases in year-over-year delinquency and default rates for October. [snip]

“You’re looking at more and more distress - consumers desperately trying to preserve their credit lines, but there’s nowhere else to go,” said Robert Manning, director of the Center for Consumer Financial Services at Rochester Institute of Technology. “It’s like a game of dominoes.”

When (not if) housing prices drop, many who bought and still make payments will face houses not worth the mortgage, aka being upside down. Do they walk away or continue to overpay? What would you do?

Ask any homeowner what their house’s value is; you’ll get answers like $200,000, perhaps $400,000 or some other number. The correct answer is “Whatever someone else is willing to pay for it.” Will that be what you owe?

Town clerks become inundated with reappraisal requests to lower property taxes; what’s that going to do to the school budget, road maintenance and fire/police protection? From where does the money come for all the liberal programs so dearly loved? Lost tax revenue curtails borrowing for essential projects. The impact on the local, state and federal level leaves bad choices. Raise taxes and kill the goose. Print money and produce inflation rivaling Zimbabwe. Cut spending and kill the socialist programs. (Well, that’s not a bad choice)

On the corporate side, somehow the money lost through credit cards needs correction. Do companies go bankrupt, downsizing or closing altogether? Either way, people are let go which contributes to more delinquencies in mortgages and unsecured debt. Then the stocks take a hit wiping out investments unless you are ahead of the curve and sold.

Since the Federal Government is the worst offender, would someone enlighten me as to how the Feds can solve the problem?

Think positive, this ’slow motion train wreck’ is good for the U.S.

Yes, America needs a recession. Bernanke and Paulson won’t admit it. And investors hate them. We’re all trapped in outdated 1990s wishful thinking about a “new economy” and “perpetual growth.” [snip]

Let’s focus on 17 benefits from this recession. [snip]

1. Purge the excesses of the housing boom
No, it’s not heartless. Not like wartime calculations of “acceptable collateral damage.” Yes, The Economist admits “the economic and social costs of recession are painful: unemployment, lower wages and profits, and bankruptcy.” [snip]

2. U.S. dollar wake-up call
Reverse the dollar’s free fall and revive our global credibility. [snip]

3. Write-offs
Expose Wall Street’s shadow-banking system. [snip]
A lack of transparency is killing our international credibility. Write it all off, now!

4. Budgeting
Force fiscal restraint back into government. [snip]

5. Overconfidence
A recession will wake up short-term investors playing the market. [snip]

6. Ratings
Rating agencies have massive conflicts of interest; they aren’t doing their job. They’re supposed to represent the investors, but favor Corporate America, which pays for the reports. Shake them up.

7. China
Trigger an internal recession in China. [snip]

8. Oil
Force the energy and auto industries to get serious about emission standards and reducing oil dependency.

9. Inflation
Expose the “core inflation” farce Washington uses to sugarcoat reality.

10. Moral hazard
Slow the Fed from cutting interest rates to bail out speculators.

11. War costs
Force Washington to get honest about how it’s going to pay for our wars, other than supplemental bills that are worse than Enron-style debt financing.

12. CEO pay
Further expose CEO compensation that’s now about five hundred times the salaries of workers, compared with about 40 times a generation ago.

13. Privatization
Stop the privatization of our federal government to no-bid contractors and high-priced mercenary armies fighting our wars.

14. Entitlements
Force Congress to get serious about the coming Social Security/Medicare disaster. [snip]

15. Consumers
Yes, we’re all living way beyond our means, piling up excessive credit-card debt, encouraged by government leaders who tell us “deficits don’t matter.” Recessions will pressure individuals to reduce spending and increase savings.

16. Regulation
Lobbyists have replaced regulation. Extreme theories of unrestrained free trade plus zero regulation just don’t work; [snip]
Get real, folks.

17. Sacrifice
“We have not seen a nationwide decline in housing like this since the Great Depression, says Wells Fargo CEO John Stumpf. As individuals and as a nation Americans have always performed best in crises, like the Depression or WWII, times when we’re all asked to make sacrifices. Pampering us with interest-rate cuts and tax cuts… setting the stage for this new subprime/credit crisis.
Wake up, the train wrecked. Time to think positive, find solutions, demand sacrifices.

The only difference between the hard times of yesteryear is the surfeit of liberal thought eg. “Let the government save me while I idle away my time.” Perhaps an economic wedgie of hard conditions might change their aversion to self-sufficiency. Then again, they may just starve.

Call Compassionate George!

Yup. That’s me. Compassionate George Dubya Aint-Nobody-Gonna-Suffer Bush. Y’all findin’ that you can’t make yore big ol’ house payment ’cause you bought more’n you can ‘ford? No problemo!

Ya’ll need a nuke-you-ler option to save yore dumb butt from foreclosure? Hang on, Bubba, ’cause I’m comin’.

I got me a big ol’ FHA thingy that can help y’all out, and while I’m at it, try my Perscription Drug thingy on fer size too. Ain’t nobody in the good ol’ U S of A gotta be cryin’ like a mule eatin’ briars while I’m in charge. Yonder lies he’p.

So turn off that DVD and pick up that ’spensive cell phone, ‘less yer drivin’, and call old George Dubya at 1-888-995-HOPE. That’s 1-888-999-HOPE. Gummint folks are standin’ by!

Regular readers of the blog won’t be shocked by the state’s impending budget crisis. MA faces a $1.3 billion budget deficit next year according to budget honcho Leslie Kirwan. She says that’s a conservative starting point because mandatory increases and inflation will mostly likely push the total higher.

How does Governor Patrick respond? He wants to spend $250 million more on affordable housing. And don’t forget about the billion for biotech, billions for transportation, and the rest of his Christmas wish list. There isn’t a spending initiative out there this guy won’t get behind.

But are the governor and budget chief on speaking terms? How else to explain the plethora of new spending in the midst of another budget crisis? And strangely enough, I haven’t seen any of the governor’s promised property tax relief. I’m sure the check’s in the mail though.

It’s too bad Patrick backed Obama. The only real hope we had in a Hillary win was Patrick heading to Washington. Now we’re stuck as he spends and taxes all of us into bankruptcy, but don’t blame me because I voted for Muffy.

Welch caters to flatlanders over long time residents. Sanders waffles better than an IHOP cook.

Let us not forget the campaign donations benefiting the elected position.

Earlier this week, by a 52-42 margin, senators voted to table an amendment (SA 3277) sponsored by Sen. David Vitter (R-La.) to the commerce, justice, and science (CJS) spending bill (H.R. 3093), which, if adopted, would have prevented Federal Community Oriented Policing Services (COPS) grants from being awarded to states and municipalities with sanctuary policies in place. It is believed that if the Vitter amendment had been adopted, most cities would have stopped providing sanctuary to illegal aliens in order to retain COPS funding.

Recently, Illegals ran from the Lowe’s construction site in South Burlington over to the Hannaford parking lot were ICE arrested them. Contractors deny hiring them instead of Vermonters, yet they are on the job site. How does that happen?

By hiring illegals, the contractors avoid Workmen Comp payments, income tax thus increasing the bottom line. Pay them in cash; if they get hurt, tough darts. According to Bernie, this is a UGE! problem, because, “The rich get richer and the poor get poorer.” He still votes for the program however.

Farmers are crying poverty, hire illegals and now collect high milk prices. Again, Vermonters take the hit from two directions, more costly milk, and fewer jobs. Illegals get housing and low wages, again no worker comp or income tax. Vermonters cannot afford to work for wages that low; we’re required to pay taxes and pay rent; we have to buy our own health care. The illegals aren’t paying taxes and high rents and don’t have to pay for health care. For them IT’S FREE! We pay for them.

We have Senator Leahy coming back to Vermont, getting on the WVMT Charlie & Ernie talk show, telling us how the pork is benefits the state. Am I not a swell guy he asks?

Meanwhile, the state is losing good jobs and pay, students leave the state after school, never to return and taxes go up because of that compassionate gang called a legislature gives away your tax dollars.

Giving affront to the workers still left in Vermont, our Congressional poobahs vote to allow illegals to acquire their jobs, while the state legislature raises the sales and property taxes.

This next amnesty allows illegal children to become legal, AND THEN bring all the relatives who promptly get every social benefit existing and anything more the Donks can fabricate. All compensated for by the tax dollar of residents who are put out of work by these self same illegals.

How will this help Vermont? Ask Leahy and Sanders how; they will vote for the Dream Act coming up in the Senate just as soon as Harry Reid can sneak it on to the floor. Welch said he will vote for the bill in the House. Each vote cuts the bottom line for businesses by allowing cheap labor to enter the work force as farm labor without going through H2-B.

The high tech employers desire fast track green cards for skilled workers through H1-B which push our college post grads out of their field of work by age 30. The reason is lower wages and employees that are more compliant.

The quotes in this Boston Globe article on the MA-05 election between Niki Tsongas and Jim Ogonowski summarize this race. 

The pro Ogonowski quote: 

“I feel strongly that we’re not going to get out of Iraq as quickly as we want to,” Dunlop said. “I hear the ads saying he’s `another George Bush on Iraq,’ but I just don’t believe that. I think we need someone who’s going to be honest with us about the whole situation.”

It’d be easy for Jim to repudiate the war and agree to bring our troops home now.  However, he’s giving you an honest assessment of the situation.  Isn’t that the kind of leadership we need? 

The pro Tsongas quote:

“Niki is from a person she was married to, Paul Tsongas, one of the finest people we ever knew,” said Tom Salem, a Dracut Housing Authority member who introduced the candidate at the senior center. “Niki will hopefully carry the ball where Paul left off.” 

In other words, vote for Niki because she was a politician’s wife and you recognize her last name.  That’s not exactly a ringing endorsement.

If you want the status quo and name recognition, vote Tsongas.  If you’re looking for leadership and change, vote Ogonowski.

What free really costs

As I posted the other day, the Loonie and a Washington are at par and closed just shy of 1:1. With no real differential, now one perceives what are socialism’s real costs in every day terms.

Gas in Vermont is about $2.75 USD; Quebec around $4.30 CAD and varies quite a bit.

I know the Canadian gallon contains 5 liters, which isn’t all that much more. Convert values here.

You can check other New England states via a search at the linked site for Vermont.

Even at parity, everything costs more north of the border. Why not name MickeyD’s value meal a dollar meal in Canada; (dollar meal-$.99USD, $1.39CAD that’s why) beer, food, housing, movies, oh name it and it costs more.

Why do all these great free social programs, free health care, and free education, free this, and free that, have this price tag? Why do the hordes of pen pushers with the distended pensions cost so greatly? It is FREE, no?

There must be some social engineer (read Marxist) with an explanation; after all, they are the creators of this Xanadu. Anybody want to answer?

Bush says economy is in good shape despite recession fears.

more below from him

Fears of dollar collapse as Saudis take fright

Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.

China threatens ‘nuclear option’ of dollar sales

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

· Blog - Dollar to collapse?

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Canada’s Dollar At Parity on U.S. Weakness, Commodity Surge

Canada’s dollar rose, trading equal to the U.S. dollar for the first time in 31 years, as climbing commodity prices boosted the outlook for the world’s eighth-biggest economy.

Oil prices jump above $82 a barrel

Commodities prices on Wednesday rose with crude oil hitting its sixth consecutive record high above $82 a barrel and spot gold approaching a near 28-year high of $730 an ounce troy. Base metals registered rises of between 2 and 10 per cent.

Agricultural commodities were down on profit-taking and signals that some food importing countries, such as India, had bought enough cereals for their inventories.

Crude oil jumped to a $82.51 after a larger-than-expected fall in US crude oil inventories last week.

China Freezes Some Prices in Move to Contain Inflation

BEIJING (AP) — China’s government has ordered some prices frozen and told officials to closely monitor others in its most drastic step yet to contain a surge in inflation.

The order, issued late Wednesday, came after inflation rose to 6.5 percent in August — its highest monthly rate in 11 years — propelled by a double-digit rise in politically sensitive food prices.

The order stressed the importance of maintaining “market stability” ahead of a key Communist Party meeting next month. It said controlling inflation would affect China’s development, reform and stability.

Oil Up Again As Low Dollar Spurs Buying

Crude Futures Surpass $83 a Barrel, Driven Largely by Weakening Dollar

NEW YORK (AP) — Crude oil prices surged further into record terrain Thursday, breaching $83 a barrel as the weak dollar and some worrisome weather in the Gulf of Mexico spurred buying.

Gasoline futures jumped as well. {snip]

A weak dollar supports oil prices by making futures cheaper for foreign investors, noted Antoine Halff, head of energy research at Fimat USA LLC.

It also prompts buying by domestic investors, who sense that demand for Nymex oil is rising overseas, said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill.

Bush Optimistic About Economy

WASHINGTON (AP) - President Bush on Thursday cited “some unsettling times” in the U.S. housing and credit markets as he sought to assure jittery Americans that the economy basically is in good shape despite worries about a recession.

…and the question is, what’s this all about?”

For starters, it’s about our failure to save for the future. With childish glee we buy anything we see in a hedonistic frenzy: plasma screen TV, cars with a 60 month loan package, 5000 sq ft houses with ARMs, lavish vacations, spa treatments, plastic surgery, every electronic gewgaw, and oversized waistlines. If not borrowed through a bank, then on plastic it goes.

Given that we ceased manufacturing most of these items through offshore means and outsourced many more jobs, our capital (dollars) followed the production and jobs. This is one reason.

Here’s another. We will not fix the drain on the tax base by Medicare, Medicaid, Prescription drug plan, and Social Security. Instead, we financed this huge burden by selling Treasury bonds and T-bills. Worse, the government uses abnormal accounting methods to cover the gaps. When they amalgamated the Social Security fund with the general fund, it permitted the Great Society programs to survive until they enrolled too many voters to scrap it. When one robs Peter to pay Paul, Paul never complains.

So what happens?

The entire outflow of capital (dollars) goes somewhere; they convert to treasury notes with a guaranteed rate of return of principal and interest (future taxes). Countries are investors like everyone else; they go where the return rate is best.

The pop of the housing bubble forced banks and mortgage companies, by banking law, to initiate foreclosure proceedings. By law, at 120 days, bad loans are collected or written off against profit, which really electrifies the stockholders. The market saw them bail out of lending institutions, resulting in the drop in stock prices: Countrywide, Citi, Stanley Morgan, and Merrill Lynch to name some.

The Fed jumped in to improve liquidity by reducing interest rate by 50 basis points. The stock market went up, the banks took happy pills, and there was joy in Mudville.

Except

Other countries didn’t like the rate change (they lend money from overnight to 30 year investment bonds) and cashed in dollars for something other than greenbacks. Anything worked fine. The US is required to redeem these notes, which we pay for with Pounds, Euros, Swiss Francs, Ryials, clamshells, or worse gold. The US just became poorer.

To correct this, we will have to reduce the National Debt, (not just the deficit) by either cutting spending, raising taxes plus manufacturing goods here once more. Putting Americans to work in jobs we offshored starts the program. Getting the illegals out and cutting welfare programs forces the non-workers to change or get hungry.

We will find foreign imports more expensive; buying them will be inflationary (Remember Carter’s stagflation). To cut off the outflow of money, interest rates go up on short term borrowing which cuts into corporate growth, further damaging the economy. What say you Yogi. Something about Deja?

We can correct all this. We will have to put the socialist/liberals/Marxists on Thorzine to quiet them down

Now read the above links again to see just how serious this will be.

One more item needs addressing. China is threatening to utilize the “nuclear option” of dumping dollars onto the open market ($1.33 trillion), which would require our redeeming them, or suffer bankruptcy.

In past times, this construed an act of war.

A number of fiscal storms are brewing in MA. Let’s start with the health care reform law, which as predicted here, will consume more and more of our tax dollars:

“Clearly, what’s going to have to happen in the long run is more money will have to be injected in the program,” said Jonathan Gruber, an economist at the Massachusetts Institute of Technology who helped to write the state’s plan. “We don’t have to in the next year or two, but if you look five or 10 years down the road, if this program is going to continue to exist, it’s going to take more money to keep it going.”

Next, we visit the Tip O’Neill Tunnel. Sadly, it’s consuming our tax dollars just like its namesake did as Speaker of the House:

Some 500 leaks at the roof-wall joints in the Tip O’Neill Tunnel have never been sealed by contractors despite widespread knowledge of the problem as far back as 2001, state officials said. Money disputes and infighting among contractors essentially caused work on those fissures to come to a halt more than a year ago. The work was further delayed by the fatal Interstate 90 Seaport connector ceiling collapse.

And if those aren’t big enough albatrosses around taxpayers’ necks, there’s always our governor:

Efforts to repair bridges are included in Gov. Deval Patrick’s $613 million plan to improve the state’s transportation infrastructure. The upgrades are included in Patrick’s $12 billion spending plan that includes funding for higher education facilities, housing and environmental protection.

I doubt that figure includes the cool $1 billion he wants to give the state’s biotech companies. It’s also interesting to note the 2 pieces of the Patrick campaign you don’t hear a lot about anymore—property tax relief and trimming waste from government.

Add it all up and it’s probably time to join the MA refugees who fled to other states.

Vermont’s economy would be a basket case if the State could afford a basket. Liberals and Progs believe social engineering is more important than the state’s economy. Revenues in the state are not as projected; the housing fiasco and the planned healthcare disaster looms like a monster in 1950’s movie. Attack this problem with Social engineering first.

Vt. Marriage Commission Begins Work

MONTPELIER, Vt. — Vermont’s new commission charged with studying whether residents would accept same-sex marriage held its first meeting Thursday at the Statehouse where it was immediately derided by conservative activists as “a farce.” [snip]

“This is a divisive issue,” Little (Former Rep. Tom Little of Shelburne) acknowledged as he opened the session. “But that is no reason to avoid it, because constitutional rights are in play here.”

(Little was the architect of the Civil Union law)

Rep. Tom Little, please show me in the State Constitution where the word marriage is used in relation to any of the four known and one indeterminate sexes wishing to form a union. Failing to so do, kindly remove the term “constitutional rights” from use. Let us use the term “rights because the libs like them.”

So we get gay marriage instead of solutions to a worsening economy. The reason why is simple, liberals cannot solve a failing economy

The following was posted on 8/5/07

Vermont’s financial future tentative

Projected tax revenues are “…a lot more vulnerable than we’ve seen in a long time,” said Tom Kavet, an economist hired by the Legislature…. Over the last year, housing starts are down 44%. The splatter effect from this reaches into many other markets, all which affect sales and income taxes. That drop represented a “$300 million economic downdraft,” he said, noting it could have broad impacts. [snip]

For Vermont’s financial future go here.