Wednesday, February 29, 2012


  • Armstrong Economics: The 13 Year Curse (Martin Armstrong, 02/25/12)

  • Armstrong Economics: The Sovereign Debt Crisis (Martin Armstrong, 02/24/12)

  • Armstrong Economics: MF Global & JP Morgan (Martin Armstrong, 02/24/12)

  • Armstrong Economics: The British Pound – The Decline & Fall (Martin Armstrong, 02/23/12)


    Jim’s Formula

    Jim’s Formula:
    September 1, 2006
    1. First interest rates rise affecting the drivers of the US economy, housing, but before that auto production goes from bull to a bear markets.
    2. This impacts many other industries and the jobs report. An economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. There is no such thing in any market as a Plateau of Prosperity or Cinderella – Goldilocks situations.
    3. We have witnessed the Dow rise on economic news indicating deceleration of activity. This continues until major corporations announced poor earnings, making the Dow fall faster than it rose, moving it deeply into the red.
    4. The formula economically is inherent in #2 which is lower economic activity equals lower profits.
    5. Lower profits leads to lower Federal Tax revenues.
    6. Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.
    7. The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.
    8. The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).
    9. It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.
    10. If the investment by non US entities fails to meet the exiting dollars by all means, then the US must turn within to finance the shortfall.
    11. Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.
    12. This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.
    Therefore as you get to #12 you are automatically right back at #1. This is an economic downward spiral.
    I heard all this “slow business” as negative to gold talk in the 70s. It was totally wrong then. It will be exactly the same now.

    PAUL B. FARRELL: World Bank warns: China is a ticking time bomb

    Will Super Rich in China or U.S. be first to trigger meltdown?

    “It’s as if 2008 never happened,” warned a BusinessWeek editorial last year. A new crash is certain to complete what the 2008 meltdown started but failed to complete — reform Wall Street.

    Dollar Alternative Anyone?

    Countries around the world have been actively seeking ways to not do business in dollars for the past few years.

    Icelandic Anger Brings Debt Forgiveness in Best Recovery Story

    Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.
    Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.



    Wednesday, February 29, 2012

    Bernanke tries talking down Commodities

    Today was Fed Chairman Bernanke's chance to testisfy before the Congress' Financial Services Committee. Here is a quick synopsis of his comments as I see them.

    "The economy is getting better based on what we can see of the employment numbers but it is not growing at a fast enough clip to justify any immediate change in our accomodative monetary policy. The uptick in hiring has been helped by this policy and any change to it at the present time is not warranted. Real Estate is still a concern. Us fiscal condition is dire and faces a serious challenge at the end of this year. Inflation is not a concern although temporary rises in energy prices bear monitoring".

    There you basically have it.

    Based on this testimony, gold and silver were murdered. The supposed reason? - We are told that traders were expecting QE3 to be imminent and were disappointed because the usually dovish Bernanke did not sound quite as dovish as before. Thus the metals were hammered mercilessly lower.

    Excuse me - but as a trader who watches these markets each and every day for more hours than I would prefer anymore, I have not seen any analyst explain the reason for the heretofore rally in the metals as traders EXPECTING AN IMMINENT QE3 program to launch.

    The reason for the rally has been expectations by the market that Central Banks would keep the liquidity spighots open for the foreseeable future (near zero interest rate policy coupled with QE out of Europe and the UK) and thus create an environment in which there was little opportunity cost for buying the metals. This has been generating RISK TRADES in which traders/investors buy both stocks and commodities and generally sell off the Dollar, which was particularly pronounced after a rush back into the Euro once traders were convinced that the immediate fallout from the Greece debacle was past.

    Comments this morning trying to explain the sell off in gold mentioned the failure of the metal to make it through the $1800 level and downside stops as the culprit but ironically they are deathly quiet in regards to silver, which only yesterday had staged a MASSIVE UPSIDE BREAKOUT on strong volume out of a congestion zone. Yet today we saw a nearly 8% wipe out in silver which completey erased yesterday's breakout and then some.

    My thinking AT THE MOMENT is that Bernanke and company were watching the commodity complex begin to accelerate higher once again as a result of their free money policy and began getting extremely nervous particularly as energy prices were rocketing higher. This is an election year and one thing that the boss cannot stand for is having to deal with that pesky issue of unhappy drivers bitching and complaining about the outrageous cost of filling their gas tanks especially since he and his crew are doing as much as they can to shut down drilling on public lands and offshore.

    If one basically states that the economy is doing better - not out of the woods yet but better - and all the hedgies are leveraged to the gills because the FED GAVE THEM THE GREEN LIGHT TO DO EXACTLY THAT when it first announced that it would keep this near zero interest rate policy out to the end of 2014, then it is a simple matter of throwing a bit of uncertainty in that regards to generate a bout of selling. Toss in the same permabears as always capping at the highs of the day and the algorithms did the rest of the work as the stops were picked off.

    In the meantime today's wild move in silver was a daytrader's/scalper's heaven. As said before, there are no worse traders on the planet than the hedge funds. Those guys could not trade their way out of a wet paper bag if their lives depended upon it.

    In watching both of these metals, it does seem that we are now getting a bit of stabilizing in here around midday.

    Gold and silver shares as usual are going nowhere. They made it just to the bottom of the critical resistance zone that I noted on the chart yesterday at the gap region 555-560 before going Kerplunk.

    Interestingly enough, the long bond is down a full point right now as I write this. I am keeping an extremely close eye on this market. As stated yesterday, I refuse to believe ANY talk about an improving economy as long as the bond market does not start a solid downtrending move.

    Tuesday, February 28, 2012



    FINANCIAL TYRANNY: Defeating the Greatest Cover-Up of All Time


    "Imagine if your family had a quarter million dollars saved -- and then someone robbed you. What if the thief then told everyone what he did – but no one cared enough to do anything?
    That’s what just happened to every single family in the United States of America."

    Monday, February 27, 2012


    Though we may be stuffed and surrounded by stuff, our lives are not quite secure, because few of us own outright the roofs over our heads, as in many other countries, even if theirs are of tin or even grass. And since most of us owe more than we own, any financial slippage can mean an instant catastrophe. Surrounded by gadgets, an American can go from wealthy, by global standards, to being worse off than a Third-World slum dweller, if this Yank suddenly finds himself sleeping on a sidewalk, under a bridge or in a tent, when he’s not being shooed away by cops. With no floor under us, what good are our cumbersome arrays of possessions?
    What If Democracy Is Bunk? 
    by Andrew Napolitano

    What if you are only allowed to vote because it doesn’t make a difference? What if no matter how you vote, the elites get to have it their way? What if “one person, one vote” is just a fiction created by the government to induce your compliance? What if democracy is dangerous to personal freedom? What if democracy erodes the people’s understanding of natural rights and the foundations of government, and instead turns elections into beauty contests?

    What if democracy allows the government to do anything it wants, as long as more people bother to show up at the voting booth to support it than to oppose it? What if the purpose of democracy is to convince people that they could prosper not through the creation of wealth but through theft from others? What if the only moral way to acquire wealth — aside from inheritance — is through voluntary economic activity? What if the government persuaded you that you could acquire wealth through political activity? What if economic activity included all the productive and peaceful things we do? What if political activity included all the parasitical and destructive things the government does?

    What if governments were originally established to protect people’s freedom, but always turn into political and imperialist enterprises that seek to expand their power, increase their territory and heighten their control of the population? What if the idea that we need a government to take care of us is actually a fiction? What if our strength as individuals and durability as a culture are contingent not on the strength of the government but on the amount of freedom we have from the government?

    What if we’re seeing civil unrest around the world precisely because government is out of control? What if the cocktail of big government and democracy brings dependence and destruction? What if big government destroys people’s motivations and democracy convinces them that the only motivation they need is to vote and go along with whatever the government does?

    What if the Republican primaries we’re seeing unfold aren’t actually as democratic as they may appear to be? What if the results you have seen from the states that have voted thus far don’t match the composition of the delegates those states send to the Tampa convention this summer because the polls aren’t what counts, but what counts are the secret meetings that come after the voting? What if Joe Stalin was right when he said the most powerful person in the world is the guy who counts the votes?

    What if the greatest tyrant in history lives among us? What if that tyrant always gets its way, no matter what the laws are or what the Constitution says? What if that tyrant is the majority of voters? What if the tyranny of the majority in a democracy recognizes no limits on its power?

    What if the government misinforms voters so as to justify anything the government wants to do? What if the government bribes people with the money it prints? What if it gives entitlements to the poor, tax breaks to the middle class and bailouts to the rich just to keep all of us dependent upon it? What if a vibrant republic requires not just the democratic process of voting, but also informed and engaged voters who understand first principles of limited government and free-market economics, and the divine origin of natural rights?

    What if we could free ourselves from the yoke of big government through a campaign of education and information and personal courage that leads to a revolutionary return to first principles? What if the establishment doesn’t want this? What if the government remains the same no matter who wins elections?

    What if because of Ron Paul’s presidential campaign, because he isn’t campaigning just for votes as his competition is, because he is educating the population and winning the hearts and minds of a once free people and inspiring them to fight for their freedom once more, freedom wins? What if we can be free again? What will it take to make that happen?

    FEBRUARY 27, 2012

    Poll: Given Choice Between Romney and Santorum, Most Voters Choose Suicide

    Survey Spells Trouble for GOP, Pollster Says

    DETROIT (The Borowitz Report) – With just one day until the key Republican contests in Michigan and Arizona, a new survey of likely voters indicates that in a match-up between former Massachusetts Governor Mitt Romney and former Pennsylvania Senator Rick Santorum, a majority would choose suicide over either candidate.

    The poll, conducted by the University of Minnesota’s Opinion Research Institute, shows Mr. Romney drawing 21%, Mr. Santorum 18%, and various forms of suicide 61%.

    “Throwing yourself in front of a speeding city bus” was the most popular means of suicide at 22%, with “jumping off the roof of a really tall building or bridge” coming in second at 17%.

    According to pollster Davis Logsdon, the surging popularity of suicide bodes ill for both Gov. Romney and Sen. Santorum as presidential candidates in 2012.

    “It’s still early, but even at this stage of the game the prospect of one of those two being nominated shouldn’t be making voters want to kill themselves in these numbers,” Mr. Logsdon said.

    Reached on the campaign trail in Lansing, Mr. Romney pointed out that while he did not do as well as suicide, he still polled higher than Sen. Santorum, adding, “That’s better than a sharp stick in the eye.”

    But Mr. Logsdon was quick to throw cold water on Mr. Romney’s upbeat assessment: “In a head-to-head match-up, a sharp stick in the eye beats Romney by a two-to-one margin.”

    Elsewhere, Academy Award voters hailed “The Artist” as the ultimate fantasy film, since it depicts a world in which the French are silent.

    $15,OOO,OOO,OOO,OOO FRAUD EXPOSED in UK House of Lords


    $15 TRILLION is equivalent to the the federal debt of the U.S. Treasury Department. Lord James of Blackheath has spoken in the House of Lords holding evidence of three transactions of 5 Trillion each and a transaction of 750,000 metric tonnes of gold and has called for an investigation.

    I think there are three possible conclusions that may come from it. I think there may have been a massive piece of money laundering committed by a major government which ought to know better and that it has effectively undermined the integrity of the British bank the Royal Bank of Scotland, in doing so. The second alternative is that a major American department has an agency that has gone rogue on it because it has been wound up and has created a structure out of which they are seeking to get at least 50 billion Euros as a payoff. And the third possibility is that this is an extraordinarily elaborate fraud which has not been carried out but which has been prepared in order to provide a threat to one government or more if they don't pay them off. So there are three possibilities and this all needs a very urgent review.

    My Lords, it starts in April and May of 2009, with the alleged transfer to the United Kingdom, to HSBC of a sum of 5 trillion dollars and seven days later, in comes another 5 trillion dollars to HSBC, and then 3 weeks later another 5 trillion. 5 trillion in each case. Sorry. A total of 15 trillion dollars is alleged to have been passed into the hands of HSBC for onward transit to the Royal Bank of Scotland and we need to look at where this came from and what the history of this money is. And I have been trying to sort out the sequence by which this money has been created and from where it has come from for a long time.


    Sunday, February 26, 2012

    Bankers Are Like Pedophiles: They won't stop till they are locked up!


    Doomsday Preppers explores the lives of otherwise ordinary Americans who are preparing for the end of the world as we know it. Unique in their beliefs, motivations, and strategies, preppers will go to whatever lengths they can to make sure they are prepared for any of life’s uncertainties. And with our expert’s assessment, they will find out their chances of survival if their worst fears become a reality. 


    Mysterious Siberian Blasts Warned Point To Rapid Pole Reversal

    To how abhorrent US officials are to their citizens preparing for natural disasters, or other type emergencies, their propaganda media organs this past month launched a series of news reports, magazine articles and television programmes depicting these people as “Doomsday Preppers” who are mentally ill, at best, or deranged, at worst.

    This depiction by the US of people who prepare for the worst of times as “crackpots” stands in sharp contrast to the entirety of human civilization where it was a valued practice to store up food and supplies in preparation for any eventuality.  And to the “eventuality” one should, indeed, prepare for, as noted in Director Seleznyov’s report, is the growing global chaos that could very well ensue should his predictions prove accurate.

    To the validity of Director Seleznyov’s predictions, should they come horrifyingly true this year, one need look no further than the letter conversations held between arguable two of the greatest minds of the 20th century;  Albert Einstein (1879-1955) the German-born theoretical physicist who developed the theory of general relativity, and Immanuel Velikovsky (1895-1975) the Russian-born American independent scholar of Jewish origins.

    Immanuel Velikovsky: BEFORE THE DAY BREAKS



    Immanuel Velikovsky

    At the Lake
    A Flashback
    Before the Forum
    At McCarter Theater
    112 Mercer Street
    Before the Chair of Jupiter
    A Round Sun
    In Einstein’s Study
    July 21, 1954
    A Comet Grazing the Sun
    The Four Plans of the Universe
    March 4, 1955
    March 11, 1955
    The Last Letter
    “I Would Have Written to You”
    Jove’s Thunderbolts
    “A Near Miss”
    The Last Meeting
    The Last Week

    MAUREEN DOWD: Ghastly Outdated Party

    Republicans are getting queasy at the gruesome sight of their party eating itself alive, savaging the brand in ways that will long resonate.    

       ... Republicans, with their crazed Reagan fixation, are a last-gasp party, living posthumously, fighting battles on sex, race, immigration and public education long ago won by the other side.       

    Saturday, February 25, 2012




    About The Author

    • Author Image for Bill Bonner


      Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally, and recently updated. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning .


    The Daily Reckoning
    By Gold
    Have you ever had any doubts about gold? Does it sometimes feel like it should be performing better? Are you concerned about its volatility? Do you worry about how it might perform in the future? Have you ever wondered about its true purchasing power? Maybe you’re nervous about a big drop in price again? I decided to go directly to the source to address these concerns: Gold himself. He put his arm around me and asked me to tell you a few things...
    — Jeff Clark, Casey Research

    I hear that you’ve had some worries about me. I understand. Your world is a very uncertain place right now. And when it comes to money, it looks as though your leaders don’t understand some basic monetary principles, making things even more unsettling.

    But I want you to know that the problems you’re experiencing are actually nothing new. I’ve seen these monetary, fiscal, and economic difficulties many times before. And I can tell you this: you’re safe with me. That’s a bold proclamation, but I’ve provided monetary protection numerous times throughout history — too many to count, in fact. I’ve served all kinds of people over the centuries, from kings and counts to serfs and servants.

    To put your mind at ease, let’s review my core characteristics, along with some history, to show how I can protect you against the monetary danger that’s likely to worsen in your near future. We’ll also take a look at your peculiar set of circumstances to see how I can be of service. By the time we’re done, I think you’ll feel much better about my ability to help your portfolio withstand whatever is thrown its way.

    Enduring Characteristics

    Let’s start with the basics. I have some characteristics that no other matter on Earth has...

    I cannot be:

    • Printed (ask a miner how long it takes to find me and dig me up)
    • Counterfeited (you can try, but a scale will catch it every time)
    • Inflated (I can’t be reproduced)
    I cannot be destroyed by;

    • Fire (it takes heat at least 1945.4 degrees F. to melt me)
    • Water (I don’t rust or tarnish)
    • Time (my coins remain recognizable after a thousand years)
    I don’t need:

    • Feeding (like cattle)
    • Fertilizer (like corn)
    • Maintenance (like printing presses)
    I have no:

    • Time limit (most metal is still in existence)
    • Counterparty risk (remember MF Global?)
    • Shelf life (I never expire)
    As a metal, I am uniquely:

    • Malleable (I spread without cracking)
    • Ductile (I stretch without breaking)
    • Beautiful (I am the ultimate accessory)
    As money, I am:

    • Liquid (easily convertible to cash)
    • Portable (you can conveniently hold $30,000 in one hand)
    • Divisible (you can use me in tiny fractions)
    • Consistent (I am the same in any quantity, at any place)
    • Private (no one has to know you own me)
    I am internationally accepted, last for thousands of years, and probably most important, you can’t make any more of me.

    And by the way, don’t fret about those who say I’m not as good an asset as an income-producing vehicle. They misunderstand my role. I’m not trying to be a stock, for example. My function is as money and a store of value, so the proper comparison is to your dollars, or what you call Treasury Bills (of similar nominal value). And here is where I excel and serve my purpose: since 1913, the US dollar has lost 96% of its purchasing power. I have lost none.

    Remember, I am the only financial asset that is not simultaneously someone else’s liability. I don’t require the backing of any bank or government.

    The History Lesson

    Because I am eons old, I’ve observed something throughout history that you may not be aware of: government fiat currencies are a relatively new invention, and none has endured. 

    Eventually, they have all failed. Me? I’ve never been defaulted on or worth zero. Remember this the next time you have any doubts about my long-term worth.

    You can rest assured that over time, I will hold my value. And when you near the end of your life, you can pass me on to your loved ones, knowing full well they will have something that cannot be devalued, debased, or destroyed.

    What Color Is Your Money?

    Like you, I’m concerned about the current state of fiscal and monetary affairs. It seems your government leaders have boxed themselves into a corner. They’ve incurred too much debt and are spending too much money. It’s important that you understand some lessons from history about this kind of behavior so that you’re certain of what I can do for you.

    The common denominators that lead to the downfall of every fiat currency are the two big Ds: debts and deficits. With that in mind, consider the following:

    • Detailed studies of government debt levels over the past 100 years show that debts have never been repaid (in original currency units) when they have exceeded 80% of GDP. US government debt will exceed 100% of GDP this year.
    • Investment legend Marc Faber reports that once a country’s payments on debt exceed 30% of tax revenue, the currency is “done for.” By some estimates, the US will hit that ratio this year.
    • Peter Bernholz, a leading expert on hyperinflation, states unequivocally that “hyperinflation is caused by government budget deficits.” Next year’s US budget deficit is projected to be $1.3 trillion.
    The solution many of your leaders are pursuing is to create more currency units. The US monetary base has exploded 205.8% during the last three years, while my price is only up 65.8%. This fact, alone, implies that my price in dollars is likely to climb much higher.

    This is also the reason why I’m not in a bubble, as some have tried to claim. It is your central banks and bond markets that are in a bubble. The fact that my price is rising is a warning that what your leaders are doing is unsustainable and potentially dangerous to your currency.

    Think about this: the US has debt backed by debt, based on debt, dependent on debt, and leveraged with debt. You can, for example, buy a bond (i.e., lend money) on margin (i.e., with borrowed money). This is not a sound way to run financial markets.

    Meanwhile, the warning bells continue to sound regarding Europe’s debt crisis. In just the past 30 days:

    • Moody’s cautioned that it may cut the triple-A status of France, Austria, and the UK; and it downgraded six other European nations including Italy, Spain, and Portugal.
    • Standard & Poor’s cut the triple-A status of France and Austria, while Italy, Spain, Portugal, Cyprus, Malta, Slovakia, and Slovenia were downgraded.
    • Fitch downgraded Belgium, Cyprus, Italy, Slovenia, and Spain, and stated there was a 50% chance of further cuts in the next two years.
    • Standard & Poor’s downgraded 34 of Italy’s 37 banks.
    • Moody’s warned just last week that it may cut the credit ratings of 17 global financial institutions and 114 European ones.
    The European crisis is far from over; and the path of least resistance for politicians is to create more currency units. This action can and will have clear and direct consequences: currencies will devalue, and inflation — perhaps hyperinflation — will result.

    Once again, I encourage you to use me to protect some of your wealth.

    How Much Is Enough?

    Given the state of your monetary system, you should accumulate me (and silver) on a regular basis. Just buy some every month and put it in a safe place. After what I’ve witnessed throughout history, and based on the current path your government leaders insist on pursuing, I suggest using me as your savings vehicle instead of putting dollars in a bank.

    If you don’t own enough of me when these fiscal troubles really accelerate, I fear you will regret it. I’ve warned many in the past about the dilution of nations’ currencies, and those who didn’t heed my warnings experienced severe financial pain. Excuses won’t pay the mortgage nor feed the family when the effects of currency debasement hit your home and pocketbook.

    Make sure you own enough of me to make a difference to your portfolio. This means having more than a couple coins or a few shares of GLD, the latter of which is only a proxy for my price.

    How do you know if you own enough? Ask yourself:

    • If inflation returns, or even hyperinflation hits...
    • If the economy is flat...
    • If uncertainty and fear continue around the globe...
    • If stock markets languish...
    • If the amount of spending from the world’s governments proves futile...
    • If government interference in the economy continues to increase...
    • If the value of the US dollar takes a major fall...
    • If the world enters a recession or depression...
    • If you wonder if you have enough “safe” money...
    ..would you feel that you own enough of me?

    Buy a sufficient amount so that as your currency continues to lose value, your portfolio won’t. If you do your part, I promise I’ll do mine.

    Your monetary friend,


    Bill Bonner

    Bill Bonner
    Bill Bonner
    Austerity comes to the USA?

    Not exactly. But The Wall Street Journal reports that taxes are set to go up:

    First, the top marginal personal tax rate rises to 39.6% from 35% as the Bush tax cuts expire at the end of 2012.

    Second, a limit on itemized deductions will add a further 1.2 percentage points to the top rate.

    Third, a new 0.9% Medicare tax on incomes over $200,000 gets imposed ($250,000 for joint filers).

    Fourth, the top 15% rate on long-term capital gains rises to 20%.

    Fifth, dividends will once again be taxed at ordinary rates — 39.6% for the top income earners.

    Sixth, a new 3.8% tax on investment income gets introduced for incomes over $200,000 ($250,000 for joint filers).

    Seventh, the top estate tax rate goes from 35% to 55% (60% in some cases).
    The estate tax exemption falls to $1 million from $5 million (the gift-tax exemption also drops to $1 million and the rate adjusts hither to 55%).

    Unless action is taken, these tax increases will take some of the metal out of America’s already-anemic ‘recovery.’

    *** And here’s something else that’s blocking the path to genuine recovery: Young people no longer start off in life with a clean slate. They’re heavily burdened with debt. They can’t spend. They can’t buy. 

    Bloomberg reports:

    As outstanding student debt approaches $1 trillion, it’s one more reason record-low interest rates aren’t doing more to boost housing. The tighter lending standards that have emerged in the wake of the recession weigh particularly on younger, first-time home buyers, according to a Federal Reserve study sent to Congress on Jan. 4. These households tend to be younger, often have relatively new credit profiles, lower-than-average credit scores and fewer economic resources to make a large down payment, the report said. 

    “Potential first-time homebuyers have been disproportionately affected by the very tight conditions in mortgage markets,” Federal Reserve Chairman Ben S. Bernanke said at a homebuilders conference last week. “First-time homebuyers are typically an important source of incremental housing demand, so their smaller presence in the market affects house prices and construction quite broadly.” 

    The Fed’s white paper said 9 percent of 29- to 34-year-olds got a first-time mortgage between 2009 and 2011, compared with 17 percent 10 years earlier. “These data suggest a large decline in mortgage borrowing by potential first-time homebuyers due to not only weaker housing demand, but also the effect of tighter credit conditions,” the Fed said. 

    Outstanding education debt surpassed credit-card debt last year for the first time, according to Mark Kantrowitz, publisher of, a student loan website. Recent college graduates carry an average debt load of more [than] $25,000 each, which can limit their ability to qualify for mortgages even if they’re fortunate enough to land a job in a market with an unemployment rate of 9 percent for 25 to 34 year-olds. 

    Calling it a “student-loan debt bomb,” the National Association of Consumer Bankruptcy Attorneys warned Feb. 7 about the effects of rising student debt on recent graduates, parents who cosigned their loans and older Americans who have gone back to school for job training. 

    “Just as the housing bubble created a mortgage debt overhang that absorbs the income of consumers and renders them unable to engage in consumer spending that sustains the economy, so too are student loans beginning to have the same effect, which will be a drag on the economy for the foreseeable future,” John Rao, vice president of the NACBA, said on a conference call.
    Normally, the housing ‘escalator’ works like this. Young people buy starter houses from older people. The older people move up to the family homes, buying the houses of people who are selling out so they can buy retirement houses. If the starter houses aren’t bought, the escalator stops. Young people can’t buy; so, older people can’t sell.

    The other part of the story — not widely reported — is the enslavement of the young to the old. In effect, instead of families paying for their children’s education, they force the children to borrow the money from the government. Then, paying it back, the money is recycled to old people — through Social Security, Medicare, and so forth. Meanwhile, the government borrows trillions more to fund their giveaway programs. In the US, the total is over $15 trillion and rising — most of it destined to pay benefits for people over the age of 50.

    And guess who’s supposed to pay for all this debt? The young, of course! 

    How long before they revolt?


    Bill Bonner
    for The Daily Reckoning

    Uncle Sam’s Fire Sale. Minimum Investment: $1 Billion

    As many as 10,000 properties might be unloaded in a single transaction during the first quarter of 2012 — thanks to a government program so new it doesn’t have a catchy name yet, only the working title “Enterprise/FHA REO Asset Disposition.”

    As of last September, there were about 800,000 “real estate owned” or REO homes in the United States — homes repossessed and on the market. Close to one-third of these — 250,000 — sit on the books of Fannie Mae, Freddie Mac and the Federal Housing Administration. That is, 250,000 homes are owned by you and me, the US taxpayers.

    “The US taxpayer will get pennies on the dollar for these homes, and then be allowed to rent them back at market rates.”

    Read more: Uncle Sam's Fire Sale. Minimum Investment: $1 Billion

    Judge Napolitano's Last Freedom Watch 2/13/2012





    It's Far Worse This Time 'Round, Mr. Browne

    Government is good at one thing: It knows how to break your legs, hand you a crutch, and say, "See, if it weren't for the government, you wouldn't be able to walk." - Harry Browne




    Chief Justice Roberts rejects request for code of conduct

    Although the justices view the code as the “starting point and a key source of guidance” for themselves, Roberts said in the report, the court has “no reason to adopt the Code of Conduct as its definitive source of ethical guidance.”

    the Code of Conduct for Judges

    Clicking here will automatically add your name to this petition to Chief Justice Roberts:
    "Justices on the Supreme Court need to abide by the same judicial Code of Conduct that every other federal judge in America must adhere to."
    Automatically add your name:
    Take action now!
    CREDO Action | more than a network, a movement.Dear Friend,
    Earlier this week, Supreme Court Chief Justice John Roberts announced that he would not adopt a set of binding ethical guidelines for justices who serve on the Supreme Court.1
    Currently, justices on the highest court in the United States have no obligation to adhere the judicial Code of Conduct that every other judge in the country must abide by.
    As the Chief Justice of the Supreme Court, Justice Roberts has the ability to begin the process of adopting the Code of Conduct — but he refuses to do so, despite widespread concern about the impartiality of the Court.
    When Supreme Court justices are attending fundraisers and strategy sessions for conservative political groups, it's not enough for Chief Justice Roberts to respond to the completely legitimate concern this raises by essentially saying, 'Trust us.'
    Justice Roberts says that the justices on the Supreme Court use the Code of Conduct as a guide, but justices like Clarence Thomas and Antonin Scalia regularly engage in activities that, if the justices actually followed the Code of Conduct, would be blatant violations.
    Both have attended right-wing fundraisers by the Koch brothers. And both justices were honored at a benefit put on by pharmaceutical giant Pfizer and the same law firm that is challenging the constitutionality of the new health care law that the Supreme Court will rule on in the coming months.
    What's more, Justice Thomas's wife has advertised herself as a lobbyist who has "experience and connections" to conservative groups who have an explicit agenda to overturn health care reform — by repeal in the Congress or overturning the law in the courts.
    Justice Roberts is failing in his duty to protect the impartiality of the Court. It is absurd for Justice Roberts to ask the American people to essentially "trust" the justices on the Supreme Court to abide by nonbinding ethics guidelines when there are justices who are clearly already in blatant violation of the rules.
    Justice Roberts needs to hear from Americans that we want our Supreme Court justices to adhere to the same set of ethical guidelines as every other federal judge in our country — and that no Supreme Court justice is above the law.
    Trust in the Supreme Court is important — their decisions have the potential to affect every American, and for their rulings to be taken seriously, the justices need us to trust in their judgment and rulings.
    But if justices like Clarence Thomas and Antonin Scalia continue to flagrantly compromise the integrity of the Supreme Court, trust in this important body will begin to deteriorate. It's time for Chief Justice Roberts to require justices on the Supreme Court to abide by an ethical code of conduct.
    Tell Chief Justice Roberts: Adopt the Code of Conduct for Judges.
    Click below to automatically sign the petition:
    Thank you for standing up for ethics reforms in the Supreme Court.
    Ali Rozell, Campaign Manager 
    CREDO Action from Working Assets