Minta doesn't get it

Minta Garcia, a bus driver, and her husband, a construction worker, don't understand economics or finances. You see, Minta and her husband bought a house a few years ago in suburban Washington for $800,000. Somehow, they couldn't figure out that a bus driver and a construction worker can't afford a house approaching $1 million.

She hasn't asked for help, but says she is waiting to see if she qualifies for help from you and I (through the confiscation of our taxes by the federal government). Sorry, Minta, time to move into an apartment and save up for a down payment on a house that a bus driver and construction worker can afford. I'm sure you wouldn't stick a gun in my face to steal my wallet. Then why ask the federal government to do it for you?

Turn off your TV!

Turn off your television and no longer watch the loons in Washington, D.C. or the crazy financial pundits talk about how they are going to fix all of our financial problems. As you can see by this article, a major U.S. bank has gone under. This is serious stuff. Lehman Brothers, a Wall Street investment bank, is also looking quite shaky. Remember, Bear Stearns became insolvent and went away a few months ago. May it rest in peace.

Mark my words: the government will step in and make things worse. They'll spin it and make it sound good, and they'll even blame the free market and laissez-faire capitalism. They'll say we're here to save the day, and only the Fed, acting in concert with Congress and the Treasury, can fix our problems.

Nothing is further from the truth! There will be more regulation and oversight, and things will get worse. The rest of this year and the next will be brutal. The market will get hit, more banks will fail, unemployment will rise, and the foreclosures will continue.

Start saving your weak dollars, which are only worth four cents. Don't buy that new car or big screen TV. You might need the money to get out of Dodge.

A no responsibility society

This article provides us with the clue we've been looking for! Why people are losing their homes all over America. No, it's not the people who took out the loan. They're not responsible just because they didn't read the contract and closing papers. It's not the government and the Fed, who flooded the country with money printed out of thin air - and a lot found it's way into real estate.

No! Just read the article. It's the greedy lenders. Those greedy lenders. You know, the ones who held guns to people's heads, forcing them into signing and moving into nice new homes. The greedy lenders. It wasn't poor old you and me - we couldn't help ourselves because of those greedy lenders.

Please, give me a break. It's amazing how America has turned into the "no responsibility society."

Nixon, I mean Bush wants to . . .

The decider-in-chief wants to pull a Richard Nixon and suspend the fundamental laws of economics. He says he wants to "freeze" all mortgages that may reset to a higher interest rate. What a disaster this will be. Just like the disaster in the '70's when then President Nixon did almost the same thing and suspended all wages and prices for 90 days! Isn't it a good thing that government officials can't suspend the fundamental laws of physics too?

Amazingly, the decider-in-chief's plan is backed by the equally incompetent Secretary of the Treasury. Read the amazing news here.

Spin and her cousin, denial

Interesting article on the outlook for this year and how Wall Street is still in denial. There will be no recession, Wall Street says, just a correction. Everything will be fine, they say, the bubble was small. Financial pundits who make dire predictions are in the minority as the majority don't want to face the music.

A Joan Olsen bailout?

Seventy three year old Joan Olsen, as you can read in this article, admits she signed a stack of papers she didn't understand. Her payments were $788 a month and are now $847 a month. However, the payment could balloon to over $2,000 a month. Who's fault? She admits it hers (bravo to her), but the broker filled in her income as higher on the application. The district attorney should simply go after the broker, and Joan needs to find a new place to live.

Unfortunately, the government has, and will continue to, dream up bailout plans for people like Ms. Olsen. Why should you and I be forced to pay for someone else's mistakes? And it's not just Ms. Olsen, it's millions more.

Housing bust worst since Great Depression

This article states how bad the bursting of the housing bubble is, and the quote from Jack Malvey at Lehman Brothers sums it all up: “In the end, the story of 2008, 2009 and possibly 2010 will be about the extent and consequences of what promises to be the worst US housing correction since the Great Depression in the 1930s.”

What's so amazing is that the government is trying to fix what they caused while blaming the bubble on "predatory lending." The cause is the massive increase in the money supply since the early 1990's. Excessive money supply by the Federal Reserve leads to easy credit. Easy credit dupes investors into making decisions they would not ordinarily make. The low interest rate and availability is too intriguing and attractive. So easy credit leads to malinvestment. Sure, there are some nefarious types in every industry, but when you're telling that couple they don't qualify for the house and then the Fed drops a pile of money on the table next to you, predictable human behavior kicks in. The mortgage broker or bank lends the money.

The same excessive money supply growth led to the dot.com bubble bursting in 2000. Now more government intervention will lead to messing up the mortgage market even further.

The chickens are coming home to roost

There are a few sayings that have been around awhile, and the longer they're around, the more important they become. You know, like "you reap what you sow." Or, "there will be a reckoning." And don't forget: "you made your bed, now lie in it." Lastly, though, my all time favorite is the following, which means the same as the others above: "the chickens are coming home to roost."

Where am I going with these antiquated sayings? Federal Reserve policy, of course. When the Fed and other central banks around the world simply print money out of thin air, eventually the chickens come home to roost. This means you can't repeal the fundamental laws of economics and not expect bad things to happen. What is happening? A worldwide credit implosion. See the headlines the other day about the giant Swiss bank UBS? They're writing down another $10 billion in losses! That's on top of the billions they've already lost. And check this article out. The Arab world, the one the U.S. government is making out to be the most evil people on the planet, is now buying stakes in major banks around the world, including U.S. banks. Makes you feel safe, doesn't it?

This article is also quite alarming. The Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Loan Mortgage Association, nicknamed Freddie Mac, are hurting big time. The bottom line is that U.S. government monetary policy, which also caused the stock market crashes in 1929 and 2000, is at it again and the chickens are coming home to roost.

Time to purchase the two most important books of your life: The Case Against the Fed and What Has Government Done to Our Money? Both books are by Murray Rothbard and they're available at mises.org. Then you'll know what's going on and you'll see through the liars at the Fed.

Severe problems

The mortgage mess and the credit liquidity mess (mother of all bubbles) will be causing some severe pain in 2008 and 2009, and probably even after that. Thanks to lewrockwell.com for linking to Mr. Greenberg's blog where he has a mortgage expert, Mark Hanson, discuss the subprime and prime mortgage meltdown. Read the informative article and then go out and get a lockbox to hoard some gold, euros, yen, and maybe a few American dollars.

Nightmare economic scenario

When a nation's central bank prints money out of thin air like our Federal Reserve does, the chickens always come home to roost. The fundamental laws of economics can't be refuted, just like a fundamental law of physics can't be refuted. There's always a reckoning, and it's starting now. Read the article here.

Commodity-based sound money is the key. It imposes discipline on bankers, so they oppose it. But look at the alternative. 2008 and 2009 are going to be rough. Do you have a spare bedroom for your foreclosed friends?

Living beyond your means?

TheFox News Channel ran a story last night about foreclosures, especially in Stockton, California, which is the unofficial "foreclosure capital" of America. The station interviewed a woman on the phone who lost her house. Why did she lose it? Her and her husband bought a house that cost almost $500,000! And when asked how much money she put down as a down payment, she said $1,000! How can anyone in their right mind buy so much of a house when they can't afford it? She also remarked how this was their first home.

The payments were $3,300 a month for the first two years, re-setting with the adjustable rate kicking in after two years. New payment: almost $5,000! What should society's (other people, government, etc.) response be? "Oh well, you learned from that one. Next time don't buy so much of a house, and next time wait for a low fixed rate." Remember, no one held a gun to their head to buy the house.

Unfortunately, the federal government might come in and tax you and me more to help these "poor, unfortunate people" who might lose their home. Write your representative in Congress now, stating that you oppose a bailout. If we don't, it will cost us billions!