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Our April 15, 2008 Newsletter
Edition
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DOMINICAN REPUBLIC
REAL ESTATE:
.
Just as quick recap regarding properties in the greater metropolitan
area of Santo Domingo, the following are currently on the market.
There are many, many more for even larger two to three thousand square
foot luxury apartments or single family homes, but these are mentioned
as a reference.
.
In the Evaristo Morales section, a new luxury building is offering one
bedroom apartments (condominium ownership) starting at US$71,500.
Two and three bedroom apartments available as well for higher prices of
course.
.
In Bella Vista, a new luxury building to be ready for occupancy in
October 2009 is offering three bedroom apartments (each with it's own
bath) starting at US$128,000.
.
In El Million, new three bedroom - two bath 1,400 square foot
apartment, starting at US$128,000. New construction ready for
occupancy in July, 2008.
.
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IN THE NEWS:
.
.
DEVELOPING WORLD
COULD BEAT ECONOMIC CRISIS: IMF - April 4, 2008
.
Developing countries are well placed to weather the current economic
crisis despite growth in the US coming to a virtual halt, according to
a report by the International Monetary Fund (IMF) Thursday. The
IMF also said industrial nations with more developed mortgage and
financial markets have been struck harder by a correction in housing
prices than poorer countries, where fewer people have access to
credit. Growth in the US has come to a virtual standstill and
Europe will also experience a downturn as a result of financial market
turmoil and a tightening of credit markets, said Simon Johnson, the
IMF's economic counsellor and director of the research
department. But poorer nations by contrast will see less of a
spillover from the housing crisis into the wider economy, according to
the analytical chapters of the IMF's twice-annual World Economic
Outlook. Developing countries have a strong basis for sustaining
their growth through a rise in manufacturing exports and a surge in
commodity prices that has fuelled the integration of the world's
economies.
.
http://news.in.msn.com/business/
.
EDITORS NOTES:
So-called developing nations with commodities to export, and local
banks in such countries that do not loan out the money so easily (by
checking the credit worthiness of the borrower and demanding a hefty
down payment first) will survive, and might even do well. It is
of course some other nations that are net importers of food, and worse
if the country has their currency pegged to the USD, that is finding
both rising prices and food shortages to be a problem. No
sub-prime mortgage problems of course in such countries, but certainly
inflation and food costs are taking it's toll (see news items further
down below). However, we now hear that Canada, which is not
generally considered to be a developing or third world nation, should
come out of this mess unscathed too. In fact, holding some
Canadian Dollars may give you a five percent return for doing nothing,
if the predictions about the exchange rates hold true. Of course,
as you make your way up to Canada to open your bank account in Toronto,
you can wave hello to all the nice Canadian soldiers heading in the
other direction (see news item further down).
.
.
CANADA TO SKIRT U.S.
RECESSION
By Julian Beltrame, The Canadian Press - April 14, 2008
.
Canada's in-demand commodities have given it a new measure of
independence and enable it to sit out the U.S. recession, says an
economic outlook from CIBC World Markets. The report released
Monday said America will slide into a recession in the first half of
this year as a consequence of the worst housing slump since the Great
Depression and tight money. But while Canada is not immune to the
shock, it will be able to ride out the recession even more impressively
than it overcame the high-tech slump of 2001. For Canada, the
diminished importance of the American economy to global commodity
demand has meant downside protection for its resource rents against a
U.S. economic downturn. The CIBC investment banking division
predicts that Canada's economy will slow sharply from last year's 2.7
per cent advance to 1.6 per cent, but will rebound strongly to three
per cent growth in 2009. And it says the Canadian dollar, which
closely tracks commodity prices, will stay strong and finish the year
at about $1.05 US.
.
http://money.canoe.ca/News/Economy/2007/12/21/4736114-cp.html
.
.
US CREDIT RATING
UNDER THREAT - By Aline Van Duyn - April 14, 2008
.
The US government's need to provide financial backing to the
state-sponsored mortgage financiers that dominate the US housing market
could pose a risk to the country's triple-A credit rating, Standard
& Poor's, the credit rating agency, said on Monday. In the
event of a deep and prolonged US recession, S&P said the potential
costs of propping up government-sponsored enterprises (GSEs) like
Fannie Mae (NYSE:FNM) and Freddie Mac, which have implicit government
backing, could cost the US government up to 10 per cent of GDP.
.
http://us.ft.com/ftgateway/
.
EDITORS NOTES:
Now there is something you do not hear everyday. The Financial
Times of London reports that the US Government could loose their AAA
credit rating for its bonds (or so says Standard & Poors, a US
based bond rating company). Unbelievable, but then again so are
some other things as well.
.
.
U.S. EXPATS FIGHT
THEIR SOARING TAX BURDEN
By Brian Knowlton - April 1, 2008
.
Tami Overby, a 20-year-resident of Seoul, is as much the face of the
United States abroad as anyone could be. She drives an American car,
uses a Motorola phone, purchases American appliances, eats at
McDonald's, drinks Diet Cokes - and even rides a Harley-Davidson
motorcycle. She brags about all these things to her Korean
friends. She is also the president of the American Chamber of
Commerce in Korea, the face of American business there - which makes it
all the more surprising that her board of directors recently had a
rather anguished discussion, as she describes it, about replacing her
with a local hire. The reason: a change in the American tax code
two years ago that has raised considerably the tax burden facing many
American expatriates - and which, in turn, often makes it more
expensive for U.S. companies operating abroad to keep Americans on
their payrolls. A few Americans have even renounced their
citizenship because of soaring tax bills.
.
http://www.iht.com/articles/2008/04/01/america/expats.php
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EDITORS NOTES:
The article says that: a few Americans have even renounced their
citizenship because of soaring tax bills. I would not call
300,000 people per year renouncing citizenship just a few, but then
again, perhaps it is all a matter of perspective. On the other
hand, as domestic US taxes continue to increase (where else is the
money going to come from?), one can speculate that these numbers could
be even higher going forward.
.
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LEAVE AMERICA, PAY
AN EXIT TAX?
By Mark Nestmann - March 20, 2008
.
While Republicans and Democrats in the U.S. Congress disagree on almost
everything else, there's virtual unanimity on one issue: the need to
punish anyone who wants to permanently disconnect from the U.S. tax
system. Citizens of every major nation, save the United States,
can simply leave their own country for an extended period, and
permanently end the requirement to pay income or capital gains
taxes. But U.S. citizens are subject to all U.S. federal taxes
wherever they live, no longer how long ago they left the United
States. Even accidental U.S. citizens--e.g., people born in the
United States to non-U.S. parents, but never again lived in the United
States--are subject to these rules. Non-U.S. citizens who have
lived in the United States for at least eight of the 15 years are also
subject to these rules.
.
The only way out for
U.S. citizens who wish to legally free themselves from the oppressive
U.S. tax system is to acquire a passport from another country,
and subsequently, give up their U.S. citizenship and passport.
Yes, it's a radical step, but it's the only way to accomplish what a
citizen of almost any other country can accomplish simply by an
extended period of non-residence.
.
And that's not all. If you actually have the gumption to give up
your U.S. citizenship or long-term U.S. residence, the Tax Code has a
zinger for you. It applies if you have a net worth exceeding US$2
million or an average income tax liability exceeding US$136,000 for the
five-year period before you expatriate. Should you meet either of
these tests, U.S. law imposes an alternative tax regime for a period of
10 years after expatriation. Generally, expatriates covered by
these regulations must pay income tax for the 10-year period at rates
applicable to U.S. citizens. However,
because the rules apply mainly to U.S.-source income, it's relatively
easy to avoid U.S. taxes for the 10 years after giving up U.S.
citizenship. Congress now wants to change that with an
outrageous law that would impose the first-ever exit tax on former U.S.
citizens or long-term residents. Last year, both houses of
Congress approved legislation that would require expatriates who are
subject to the alternative tax regime to additionally pay a tax on all
unrealized gains of their worldwide estate that exceed
US$600,000. The tax would be due within 90 days of expatriation.
.
http://nestmannblog.sovereignsociety.com/2008/03/leave-america-p.html
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EDITORS NOTES:
Ralph Nader said it best in a recent news article posted on April 7, 2008 titled: Corporate America Gets a Bail-out Bonanza,
whereby he writes:
.
Is there a larger, more exploited, defenseless group of
undifferentiated Americans than the 133 million individual federal
income taxpayers? Their dollars are used to subsidize organized
corporate interests, giveaway taxpayer assets like minerals under the
public lands, and bail out speculative, self-enriching corporations and
their crooked bosses. There is no penalty for failure -- whether
on Wall Street or in Washington, D.C. for misusing or wasting the
taxpayers' monies. I asked a powerful Senator: What are the
discernable legal limits on the Federal Reserve's bailout authority and
how much total risk can the Federal Reserve heap on the
taxpayers? Can they go to a trillion dollars? He did not
know.
.
http://www.alternet.org/workplace/81518/
.
While Ralph Nader is seemingly not a fan of expatriation as a solution,
the reasons why someone would want to do so includes some of his very
own criticisms. Other reasons include loss of civil liberties,
and possibly some even worse scenarios one would rather not think
about. Now they want to try and stick it to you with a new
expatriation tax? Good luck with that one guys, and may the force
be with you. Most people are not that stupid. Many people
indeed simply go on vacation, albeit permanently, after they have
already gotten their money out before hand. Which is why we could
certainly speculate that currency controls might be the next thing to
be pulled out of the proverbial bag of tricks (which is also why
getting some cash up, up and away sometime very soon could not be a bad
idea). Regardless, it is much more palatable to watch all this
unfold from a galaxy far, far away - Don't you think?
.
.
AMERICAN DREAM HIT
BY DOLLAR'S DECLINE
By Richard Lapper in San Paulo - April 1 2008
.
Migrant workers are choosing to move to Europe, Australia or Canada
instead of the US in order to protect the purchasing power of the money
they send home to their families, according to one of the world's
leading experts on remittances. The shift is a result of sharp
falls in the value of the US dollar against other international
currencies, many of which have been boosted by the rise in commodity
prices.
.
http://www.ft.com/
.
EDITORS NOTES:
It is not just the native born US citizens that are heading for the
exit. Now the Financial Times reports that even foreign born
immigrants are preferring to move out of the US as well, in order to
earn money in something other than the US Dollar. Interesting
stuff. In any event, let us now take a look at what is going on
in the UK, which seems to have some of the very same problems.
.
.
HOUSE PRICES WILL
CRASH SOON: BANK CHIEFS WARN YOUR HOMES IS OVERVALUED BY 30 PER CENT.
By Sam Fleming and Becky Barrow - April 4, 2008
.
House prices are 30 per cent too high in the UK and could soon crash,
the International Monetary Fund warned yesterday. After a
decade-long housing boom, it fears Britain is one of the most
vulnerable countries in the world to suffer a devastating price
collapse. In a further blow, both the Bank of England and
mortgage brokers warned that the mortgage meltdown is going to get even
worse. The number of mortgage deals available has collapsed 13
per cent since Monday and 70 per cent since last summer's credit crunch
began. David Hollingworth, a mortgage broker at London &
Country, said: It has got to be one of the most rapidly changing and
volatile weeks any of us can remember. The credit crunch has really got
a grip on the mainstream mortgage market and there is nothing you can
look to that shows the situation is going to improve in the near future.
.
http://www.dailymail.co.uk/pages/live/articles/news/
.
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MIDDLE CLASSES
FORCED TO TAKE SECOND JOBS
By Lindsay McIntosh - April 4, 2008
.
Middle-Class families are being forced to take on second jobs as the
credit crunch plays havoc with their budgets. Households with an
annual income of 30,000 Pounds or more are resorting to extreme
measures to
ease the financial strain, according to a new YouGov poll. It
comes amid a deepening credit crisis which threatens to cripple the
housing market as lenders continue to withdraw mortgage products and
raise rates.
.
http://news.scotsman.com/uk/
.
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ARE AMERICA'S BANKS
BEING NATIONALIZED BY THE FED?
By Julie Satow, Staff Reporter of the Sun - March 12, 2008
.
While investors rejoiced yesterday at the news the Federal Reserve
would flood the market with $200 billion in liquidity, a throng of
economists and market commentators is fretting that the Fed's latest
approach will accelerate inflation and weaken its own balance
sheet. There is also a growing concern that the Fed's strategy of
infusing the markets with liquidity is precariously similar to an
equity investment, which could translate into the nationalization of
America's banks. What we are witnessing is an incremental,
partial nationalization of the U.S. banking system, a Ph.D. candidate
in finance at the University of Kentucky, Steven Randy Waldman, wrote
in a Web log post that has generated much discussion on the
Internet. Northern Rock in the UK is peanuts compared to what the
New York Fed is up to.
.
http://www2.nysun.com/article/72721
.
.
FED EYES
NORDIC-STYLE NATIONALIZATION OF US BANKS
By Ambrose Evans-Pritchard, International Business Editor - April 1,
2008
.
The US Federal Reserve is examining the Nordic bank nationalizations of
the 1990s as a possible interim solution to the US financial
crisis. The Fed has been criticized for its rescue of Bear
Stearns, which critics say has degenerated into a taxpayer gift to rich
bankers. A senior official at one of the Scandinavian central
banks told The Daily Telegraph that Fed strategists had stepped up
contacts to learn how Norway, Sweden and Finland managed their
traumatic crisis from 1991 to 1993, which brought the region's economy
to its knees. It is understood that Fed vice-chairman Don Kohn
remains very concerned by the depth of the US crisis and is eyeing the
Nordic approach for contingency options. Scandinavia's bank
rescue proved successful and is now a model for central bankers, unlike
Japan's drawn-out response, where ailing banks were propped up in a
half-public limbo for years.
.
http://www.telegraph.co.uk/money/
.
EDITORS NOTES:
A British newspaper reports that the US Federal Reserve is thinking
about nationalizing the US banking industry. And here I was
speculating that Hugo Chavez might be crazy enough to nationalize the
banks in Venezuela. Silly me. Who needs to worry about a
left wing socialist in South America when you have these guys right at
home in Washington, D.C.? Regardless, the fact that
nationalization of the banks in the US is being discussed is proof
enough that things are perhaps worse than what is being conveyed.
Some additional reading for you is the following article:
.
BAD LOANS LEAVE
SMALL U.S. BANKS SHORT OF CAPITAL
.
http://www.iht.com/articles/2008/04/03/business/rtrdeal04.php
.
.
DOES THE FEDERAL
RESERVE HAVE A PLAN B?
By Kathy Lien, Chief Strategist - March 31, 2008
.
The Federal Reserve has cut interest rates, bailed out a US bank for
the very first time since the Depression and announced that they are
willing to swap their safe US Treasuries for risky and dubious mortgage
backed securities. Despite their efforts however, the US economy is
still in trouble and liquidity in the money markets remain a problem,
which leads everyone to wonder whether the Federal Reserve has a Plan B.
.
According to the UK Telegraph, the Federal Reserve is eyeing the Nordic
Style Nationalization of US banks as a temporary solution to the US
financial crisis. Between 1991 and 1993, Norway, Sweden and Finland
nationalized several institutions and their efforts have been touted as
one of the most successful central bank rescues in recent history.
Nationalization will not be taken favorably by the currency market,
especially when it hits the newswires. Remember when the Bank of
England announced that they were nationalizing Northern Rock back in
April? The British pound fell 300 pips in 3 days. With interest rates
already at 2.25%, how much further could the Federal Reserve cut
interest rates? The low point in the past decade has been 1 percent,
but the continual rise in the price of consumer staples such as rice,
will force the central bank to stop turning a blind eye to inflation.
Short of printing money, the size of the Federal Reserves balance sheet
will limit what they can do. Two weeks ago, the Fed committed to
swapping 60% ($420 billion) of its $700 billion balance sheet of safe
and secure US Treasuries for risky and dubious mortgage backed
securities. These extreme measures indicate one of two things (or
both), which is that desperation is forcing the Federal Reserve to
become more creative or they are running out of options.
.
http://www.dailyfx.com/
.
EDITORS NOTES:
Ms. Kathy Lien, the author of the above article, offers two
possibilities (they are becoming creative out of desperation, or they
are out of options, which I tend to think is saying the same
thing). However, I would like to offer two more possibilities
derived from empirical outside analytical observation. Here we
go.
.
First, I have the tendency to believe these guys at the Fed are on
drugs, LSD or Peyote would be my guess. Probably put into the
water cooler, I think. How can I come to such a conclusion?
Well, for the life of me, I cannot understand how an extremely
well educated (we are talking ivy league here), moral, sensible,
logical and patriotic person would willfully, purposely and
deliberately destroy their own nations currency. I mean, these
guys are supposedly some of the brightest intellectuals in the entire
country. So much so, that we are lead to believe that even their
supermarket shopping lists are works of genius. And yet, they do
what they have done (and it worries me what they may do next). In
addition, and in tandem, I also cannot understand why such persons
would willingly run up the debt and bankrupt the country as well, not
to mention, create run-away inflation and higher priced food as a
result. I cannot understand it. It must be the drugs.
It has to be. What other explanation could there be? But
there is more ancillary proof for this hypothesis. Alan
Greenspan, seemingly now a private citizen once again (and we would
argue, no longer drinking from that spiked water cooler) has
miraculously sobered up. Ever since getting off the stuff, he now
states the obvious (the US is in a recession) and it has even been
reported that he recently advised the Saudi Government back in February
to dump the US Dollar (it's going down, don't you know). How
could it be that this guy all of a sudden has lucidity and clarity of
vision (and of speech I might add) ever since getting out of that
place. There is something in that water cooler inside the offices
of the Federal Reserve I tell you, I am certain of it. Of course,
to be fair to all points of view, the second possibility is that the
folks that are fans of some offbeat conspiracy theories could be
correct as well (perhaps water cooler induced also). Which is to
say that some do believe evil space aliens have come down to Earth and
are now running things, albeit with special suits to make them look
human. Not to dismiss everything as a crack-pot theory, some of
those politicians and guys at the Fed do look a bit, you known, alien,
if you think about it. The bottom line is, I do not know for sure
and your guess is as good as mine, but something is surely afoul
whatever the correct explanation. Regardless, despite what Amy
Winehouse says, maybe they indeed should go into rehab. What do
you think?
.
.
BANK BAILOUT IS A
PATH TO NATIONALIZATION
By James Pethokoukis - March 21, 2008
.
The phrase through a mirror darkly keeps popping to mind as I think
about where the housing/credit crisis and the government's response to
it are taking us. We are entering uncharted territory. What seemed
unthinkable a few months ago is not only possible today but maybe even
probable. The Fed's brokering and backing of the JPMorgan-Bear
Stearns deal may be just the start. Think about it: Uncle Sam might
well be on the verge of doing one or more of the following: 1)
refinancing a couple million mortgages and requiring lenders to write
down the value of loans; 2) buying via the Fed billions in
mortgage-backed securities; 3) creating a new government entity to
nationalize troubled institutions. Big Government seems to be
definitely back in the building. And if it isn't, I think it at least
just pulled into the parking lot. Intervention. Regulation.
Nationalization. No such thing as a free lunch, folks. These are prices
the private sector will pay for government help. History will judge
whether the price was too high.
.
http://www.usnews.com/blogs/capital-commerce/2008/03/21/
.
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COULD AN ECONOMIC
LESSON FROM SWEDEN WORK IN THE U.S.?
By David J. Lynch, USA TODAY - April 1, 2008
.
As U.S. officials hunt for solutions to what many economists are
calling the most serious financial crisis since the Depression, they
might draw lessons from another painful and costly banking
emergency. In the early 1990s, a massive Swedish real estate
bubble burst, littering the Nordic economy with broken finance
companies, failing businesses and jobless workers. It was the first
systemic banking crisis in an industrialized country since the 1930s
and it saw the Swedish economy actually shrink for three straight
years, something that hasn't happened in the United States since the
rapid demobilization after World War II. Sweden used taxpayer
money and lots of it to rebuild its wounded banks. In Sweden's case,
the solution ultimately ended up on the government's balance
sheet. The government ended up re-capitalizing the system, says
economist David Rosenberg of Merrill Lynch. There's a lesson
here. Sweden's successful crisis management may offer a road map
for U.S. officials. But the Swedish cleanup wasn't cheap. It cost the
public an estimated 6% of annual economic output; an equivalent bill
for the U.S. today would be nearly $850 billion.
.
http://www.usatoday.com/money/economy/
.
EDITORS NOTES:
Everyone loves a free lunch. Unfortunately, there is no such
thing despite what politicians tell you. Which is to say,
Sweden's nationalization of the banking sector resulted in a direct
reduction of annual economic output by 6 percent, or the Swedish
economy took a hit for US$850 Billion Dollars in today's
equivalent. I ask you two simple questions: Where is the
money going to come from? For an economy already in recession, is
it really such a good idea to reduce economic activity even further by
an additional six percent of GDP? Standard & Poor's is now
predicting a hit to the US economy of an estimated 10 percent, in terms
of bailouts for the FNMA and related acronyms. You should note
that the US Federal Reserve only has US$700 Billion worth of US
Treasury securities on its balance sheet, and some analysts are
suggesting a US$1 Trillion fallout will be the magic number when all is
said and done (even the IMF has recently publicly stated this number as
well). In other words, the Fed cannot bail out the entire economy
even if it wanted to, in terms of non printing press options (even they
do not have enough assets on deposit to do so before wiping out their
own capital in the process). Of course, they could always start
printing more money, and wouldn't that be just wonderful?
Speaking of which, some analysts have newly calculated that the money
supply has been expanding recently by anywhere from 17 to 20 percent
(depending upon what statistics you look at, and which analysts are
doing the calculations). As such, it would seem that inflation on
steroids is here to stay. Somebody please find Paul Volker, and
quick.
.
.
WALL STREET
BROKERAGES BORROWING $38.1 BILLION A DAY FROM FEDERAL RESERVE -
By Jeanne Aversa, Associated Press - April 3, 2008
.
Big Wall Street investment companies are stepping up their borrowing a
bit from the Federal Reserves unprecedented emergency lending
program. The Federal Reserve reports Thursday that those firms
averaged $38.1 billion in daily borrowing over the past week from the
new lending program. That compared with $32.9 billion in the previous
week and $13.4 billion in the first week the lending facility
opened. The program, which began on March 17, is part of the
Fed's effort to aid the financial system. The Fed, for the first
time, agreed to let big investment houses temporarily get emergency
loans directly from the central bank. This mechanism, similar to one
available for commercial banks for years, will continue for at least
six months. It was the broadest use of the Fed's lending authority
since the 1930s.
.
http://www.freep.com/
.
EDITORS
NOTES: In addition, it has been reported that US banks
have also stepped up their borrowing from the Fed's discount window.
Banks averaged $7 billion in daily borrowing for the week ending April
2. That compared with $550 million in average daily borrowing for the
previous week. Seven billion a day versus five hundred
million. Such numbers represent an increase of 1,200 percent in
borrowing activity between the banks and the Fed in just one
week. We would ask, what the heck is going on at these US
banks? Are they really that insolvent?
.
Wachovia Bank, the fourth or fifth largest US bank (depending upon what
criteria you use) recently announced they need to raise up to US$7 or
US$8 Billion Dollars (again, depending upon the news story) in order to
stay solvent after posting hefty losses. After already setting
aside almost US$3 Billion Dollars in the first quarter to reserve
against credit losses, Wachovia is now saying they expect another US$6
Billion in write-offs going forward. That comes out to just about
US$10 Billion Dollars in total losses for just one bank. Just one
bank. Citibank, after getting a cash infusion of US$8 Billion
from a foreign government, is now seeking an additional US$15 Billion
in capital to stay operationally solvent. How many other US banks
are out there in the same financial condition? Do the
math.
.
.
FOOD STAMP USE TO
REACH RECORD LEVEL
By Yves Smith - March 31, 2008
.
Belying the claim that (until recently) the economy was in good shape,
the use of food stamps is rising and will hit an all time high this
year. Admittedly, that is absolute numbers with underlying demographic
growth. The percentage of people using this income supplement was
highest in relative terms in 1994, when the parts of the country had
not emerged from a recession. While we may also be in one that has yet
to be officially recognized, things certainly aren't going to get
better near term. This may an indicator that economic stress among
consumers is markedly worse than is widely recognized. From the
New York Times:
.
Driven by a painful mix of layoffs and rising food and fuel prices, the
number of Americans receiving food stamps is projected to reach 28
million in the coming year, the highest level since the aid program
began in the 1960s. Citing expected growth in unemployment, the
Congressional Budget Office this month projected a continued increase
in the monthly number of recipients in the next fiscal year, starting
Oct. 1 to 28 million, up from 27.8 million in 2008, and 26.5 million in
2007.
.
http://www.nakedcapitalism.com/2008/03/food-stamp-use-to-reach-record-level.html
.
EDITORS NOTES:
In Michigan, one out of eight citizens in that state are using food
stamps (which translates into 12 percent of the population). In
New York, the figure is one out of ten, or 10 percent of the
population. In Rhode Island, the number of recipients climbed by
18 percent over the last two years, to more than 84,000 as of February,
or about 8.4 percent of the population. The number of new
applicants for food stamps has increased by 10 percent in the last year
in Arizona, Florida, Maryland, Nevada, and North Dakota.
The bottom line is, if you do not think that state income, property and
or sales taxes will be going up, you had better think again.
Someone has to pay for it, and you can be sure it will not be Wall
Street or the banking industry, which has it own version of food stamps
at the moment.
.
In an April 2, 2008 news
article from the Boston Herald titled: Budget
Forecast Bleak, Massachusetts State Treasurer Timothy Cahill is
quoted as saying: The states, cities and towns better start saving,
because they will need it to weather the states coming economic
storm. No matter how bad this year was, 2009 is going to be
worse. Methuen City Councilor Joseph Leone said he agrees with
Cahill. He is 100 percent right, he said. The state used to
be everyone's bailout, and that is going to stop. Medford Mayor
Michael McGlynn said it will be difficult for communities to save any
money. He said communities have been so hard hit by cuts in state
aid in recent years, we have used all our resources to survive.
And when you are fighting for survival, you have no opportunity to
save, he said. The taxpayers are not happy, he added. (Editor) The
taxpayers are not happy, the man says. You think? Wait
until the state sales taxes and property taxes go up, just wait.
.
.
USA 2008: THE GREAT
DEPRESSION
By David Usborne in New York - April 1, 2008
.
Food stamps are the symbol of poverty in the US. In the era of the
credit crunch, a record 28 million Americans are now relying on them to
survive - a sure sign the world's richest country faces economic
crisis. We knew things were bad on Wall Street, but on Main
Street it may be worse. Startling official statistics show that as a
new economic recession stalks the United States, a record number of
Americans will shortly be depending on food stamps just to feed
themselves and their families. Dismal projections by the
Congressional Budget Office in Washington suggest that in the fiscal
year starting in October, 28 million people in the US will be using
government food stamps to buy essential groceries, the highest level
since the food assistance program was introduced in the 1960s.
.
http://www.independent.co.uk/news/world/americas/
.
EDITORS NOTES:
It was recently reported that 80,000 US jobs were lost in March, but
like most government statistics, we think the numbers are fudged, as a
polite way to put it. Analysts at the financial research firm
Celent LLC reported recently that they expect the U.S. commercial
banking industry to lose 200,000 of its two million jobs over the next
12 to 18 months. Obviously these additional job cut estimates
represent a 10 percent reduction across the board in all banking
sectors, or better said, of the 2 million total jobs attributed to the
banking industry alone.
.
IMF Chief Economist Simon Johnson said recently that the U.S. economy
has slowed to a virtual standstill. The IMF (International
Monetary Fund) has characterized the U.S. financial crisis as the worst
since the Great Depression. Will the US need a financial bailout
from the very same institution it helped create to fight economic
problems in so-called poor, third world nations? The ironic
answer could be, perhaps. Although, if past experience of the
other foreign nations dealing with the IMF is any indicator, help like
that you may not want (or with friends like these, who needs
enemies?). Interestingly enough, the IMF has recently announced
they will sell 400 metric tons of gold? Why? Are they in
need of some quick cash also? Is the IMF broke too?
.
.
HUNGRY CROWDS SPELL
TROUBLE FOR WORLD LEADERS
By Tansa Musa, Reuters News Service - April 1, 2008
.
Is it not said - A hungry man is an angry man? commented Simon Nkwenti,
head of a teachers' union in Cameroon, after riots that killed dozens
of people in the central African country. It is a proverb world
leaders might do well to bear in mind as their impoverished populations
struggle with food costs driven ever higher by record oil prices,
weather and speculators trading in local market places and on global
futures exchanges. Anger over high food and fuel costs has
spawned a rash of violent unrest across the globe in the past six
months. From the deserts of Mauritania to steamy Mozambique on
Africa's Indian Ocean coast, people have taken to the streets. There
have been tortilla riots in Mexico, villagers have clashed with police
in eastern India and hundreds of Muslims have marched for lower food
prices in Indonesia. Governments have introduced price controls
and export caps or cut custom duties to appease the people who vote for
them, but on streets across Africa, those voters want them to do more.
.
http://www.alertnet.org/thenews/newsdesk/L23502580.htm
.
EDITORS NOTES:
Henry Kissinger is credited with saying the following in 1970:
Who controls the food supply controls the people; who controls the
energy can control whole continents; who controls money can control the
world. He is also credited with the following: Depopulation
should be the highest priority of foreign policy towards the third
world, because the US economy will require large and increasing amounts
of minerals from abroad, especially from less developed
countries. And last but not least, good old Henry is also quoted
as saying: Today Americans would be outraged if U. N. troops
entered Los Angeles to restore order; tomorrow they will be grateful!
This is especially true if they were told there was an outside threat
from beyond, whether real or promulgated, that threatened our very
existence. It is then that all people of the world will plead with
world leaders to deliver them from this evil. The one thing every man
fears is the unknown. When presented with this scenario, individual
rights will be willingly relinquished for the guarantee of their well
being granted to them by their world government (this last item
supposedly quoted from the May 21, 1992 Bilderberg Conference in Evian,
France). What does it all mean, and who cares what Henry
Kissinger says? I do not have any definitive answer, other than
to suggest it is something to ponder as you sit down for breakfast with
your US$20 box of coco puffs.
.
A news article dated April 11, 2008
from the Times (London) offers the following:
.
The UN has given warning that surging prices of staple foods could
trigger riots around the world. The alert follows a World Bank report
that 33 countries face social unrest because of food and energy
inflation. Violence has been reported in countries as far flung as
Egypt, Uzbekistan and Haiti, and workers in Argentina have gone on
strike. Countries including India have clamped down on rice exports,
and the Philippines has threatened farmers found hoarding rice with
life imprisonment. Jacques Diouf, the director-general of the UN Food
and Agriculture Organization, said: We have seen riots around the
world and there is a risk that these will spread because of rising
prices in countries where 50 per cent to 60 per cent of incomes go on
food. The problem is serious.
.
http://business.timesonline.co.uk/tol/business/industry_sectors/article3723601.ece
.
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FORECLOSURES COME TO
MCMANSION COUNTRY
By Andy Sullivan, Reuters News - April 7, 2008
.
Million-dollar fixer-upper for sale: five bedrooms, four baths,
three-car garage, cavernous living room. Big holes above fireplace
where flat-screen TV used to hang. The U.S. housing crisis has
come to McMansion country. Just as the foreclosure crisis has
hollowed out poorer neighborhoods, for sale signs are sprouting in
upscale developments so new they don't show up on GPS navigation
screens. Poor people weren't the only ones who took out risky,
high-interest loans during the housing boom. The sharp increase in
housing costs -- and the desire to live in brand-new, spacious houses
with modern features -- led many affluent buyers to take out loans they
couldn't afford.
.
The crisis has hit especially hard here in Loudoun County, Virginia,
where upscale developments have supplanted horse farms over the past
fifteen years. About an hour's drive from Washington, Loudoun is
one of the nation's most affluent counties, with a median household
income of $98,000, more than double the national figure. The
county has also ranked as one of the nation's fastest growing in recent
years as developers built thousands of super-sized, amenity-laden
houses to keep pace with the booming high-tech economy.
High-interest loans accounted for 16 percent of the total during the
height of the mortgage boom in 2005, less than other outer-ring
suburban counties in the region but more than neighboring counties
closer to Washington. Now the bill has come due. One out of every
69 households in the county was in foreclosure in the last three months
of 2008, well above the national average of one filing for every 555
households, according to RealtyTrac. At the end of 2007, 20 of
the 25 houses for sale for more than $850,000 in Loudoun County
appeared to be foreclosures, according to Tony Arko.
.
http://www.reuters.com/article/newsOne/
.
EDITORS NOTES:
The American Bankruptcy Institute reports that bankruptcy filings by
individuals have increased 27% nationwide in the first quarter of
2008. Individuals bankruptcies nationwide rose 40% in 2007
compared to 2006. According to Bloomberg: More than 90,000
bankruptcy filings were made in March of 2008 alone.
.
Realty-Trac, which is a California firm that analyzes real estate data,
expects foreclosure filings to hit TWO
MILLION nationwide this year (2008) in the US, or roughly one
per 62 American households (there were 1.3 million homes in foreclosure
in 2007). These numbers are mind boggling. Can you
imagine? Well over three million middle class people getting
tossed out of their homes (if you combine the figures from 2007 with
the projections for 2008), and Gus Faucher, director of macroeconomics
for Moody's Economy.com, estimates that 9 million homeowners currently
owe more on their home than it's worth. Of course, the latest
thing is that nobody knew what they were signing in terms of mortgage
documents. Don't these people bring their lawyers with them when
they go to a house closing, or have the contract reviewed before they
sign it?
.
In any event, we speculated before that there could be a whole lot of
angry, homeless and broke former middle class folks out there, and in
the case of the news article above, all within a one hour car ride from
Washington D.C. I wonder if this is the Calamity that
Congresswoman Jane Harman (Democrat from California) had in mind when
she sponsored that home grown domestic terrorism law thing-a-ma-jig she
put together in late 2007. Is Jane worried that a whole lot of
newly homeless and extremely perturbed people will be hoofing it to
Washington and perhaps showing up in Congress? Is she worried
that many of these folks might decide to download the anarchists
cookbook on their palm pilot (or maybe re-runs of MacGyver from
You-Tube)? Perhaps it's a stretch of the imagination to make such
a connection, but then again, maybe not. Regardless, it is
interesting that the US recently signed an agreement with Canada on
February 14, 2008 in Texas (on Valentines Day no less, you have to love
the irony) to use Canadian soldiers on US soil to address civil
emergencies (read civil unrest, domestic disturbances, civil
disobedience, or otherwise the possibility of some really angry people
with nothing to loose, since they already lost their house, their car,
etc.). Now why do you suppose the US government would do a thing
like that (sign an agreement to use foreign troops on US soil)?
Here is the news link should you wish to read it, and by the way, if
you think this upsets some Americans, the Canadians haven't been this
pissed since the time workers at the Molson brewery went on strike and
the Canadians had to drink Budweiser for a week:
.
CANADA, U.S. AGREE
TO SHARE TROOPS IN CIVIL EMERGENCIES
.
http://www.nationalpost.com/news/story.html?id=327869
.
.
SOME HOMES WORTH
LESS THAN THEIR COPPER PIPES
By Jason Szep - April 1, 2008
.
Shards of broken glass outside the basement window of 31 Vine Street
hint at the destruction inside the three-story home. Thieves
smashed the window to break in and then gutted the property for its
copper pipes -- a crime that has spread across the United States as the
economy slows and foreclosed homes stand empty and vulnerable.
They cut it here and then pulled it right out of the wall, real estate
broker Marc Charney said, pointing to broken plaster near a wrecked
baseboard heating system in the 2,774-sq-ft home in Brockton,
Massachusetts, a working-class city of 94,304 people.
.
Similar stories are unfolding nationwide as a glut of home foreclosures
coincides with record highs in the price of copper and other
metals. Real estate brokers and local authorities say once-proud
homes coast-to-coast are being stripped for copper, aluminum, and brass
by thieves. Much of it ends up with scrap metal traders who say nearly
all copper gets shipped overseas, much of it to China and India
.
http://www.reuters.com/article/newsOne/
.
EDITORS NOTES:
It has been estimated that the entire planet now only has a three day
supply of copper. China imported about 1.4 million metric tons of
copper in 2007 which represents a 134% increase from the 600,000 tons
it imported the year before. China now uses 25% of the world's copper.
China is expected to consume 50 million tons of copper over the next
ten years. So, lets see what we have here. Homes in
Massachusetts (and across the US) are being gutted for copper, which in
turn will then be sold to China. Is this what they meant by the
economic benefits of globalization and free trade? Have Americans
become so desperate that they are trashing homes for scrap metal to
sell to the Chinese junk man? It would seem so, and of course all
those abandoned homes are easy pickings. I never thought I would
see the day, but then again, almost nothing surprises me anymore.
After all, we now have a man in America who appeared on national
television to let us know that he is pregnant, so I guess the lesson
learned is never say never.
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