Wednesday July 2 Housing and Economic stories

Top Stories:

Conspiracy theory? Congress Secret Session March 13, 2008 and Imminent Collapse of the US Economy - (www.dailypaul.com). I am usually not a conspiracy theorist but this one is very interesting and the question is posed to Ron Paul on the Ron Paul website. The March 13, 2008 Closed Door Session was only the 4th time in 176 years that Congress has closed its doors to the public. Word has begun leaking from the special, closed-door session of the United States House of Representatives. Not only did members discuss new surveillance provisions as was the publicly stated reason for the closed door session, they also discussed:
- The imminent collapse of the U.S. economy to occur by September 2008,
- The imminent collapse of US federal government finances by February 2009,
- The possibility of Civil War inside the USA as a result of the collapse,
- Advance round-ups of "insurgent U.S. citizens" likely to move against the government,
- The detention of those rounded-up at "REX 84" camps constructed throughout the USA,
- The possibility of retaliation against members of Congress for the collapses,
- The location of "safe facilities" for members of Congress and their families to reside during expected massive civil unrest
- The necessary and unavoidable merger of the United States with Canada (for its natural resources) and with Mexico (for its cheap labor pool),
- The issuance of a new currency - THE AMERO - for all three nations as the proposed solution to the coming economic armageddon.
Members of Congress were FORBIDDEN to reveal what was discussed. Several are so furious and concerned about the future of the country, they have begun leaking info.

Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks - (www.dft.nl ) – TRANSLATED FROM DUTCH: Fortis expects a complete collapse of the US financial markets within a few days to weeks. That explains, according to Fortis, the series of interventions of last Thursday to retrieve € 8 billion. “We have been saved just in time. The situation in the US is much worse than we thought”, says Fortis chairman Maurice Lippens. Fortis expects bankruptcies amongst 6000 American banks which have a small coverage currently. But also Citigroup, General Motors, there is starting a complete meltdown in the US”

Barclays warns of a financial storm - (www.telegraph.co.uk) - Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero". "We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."

Ron Paul Speaks Out Forcefully Against War with Iran - (www.dailypaul.com ) Another Ron Paul must watch video.
MUST SEE: Startling Images from Iran You Don't See Every Day - (www.lucasgray.com)
Preparing the Battlefield: The Bush Administration steps up its secret moves against Iran - (www.newyorker.com) Late last year, Congress agreed to a request from President Bush to fund a major escalation of covert operations against Iran, according to current and former military, intelligence, and congressional sources. These operations, for which the President sought up to four hundred million dollars, were described in a Presidential Finding signed by Bush, and are designed to destabilize the country’s religious leadership.The Joint Chiefs of Staff, whose chairman is Admiral Mike Mullen, were “pushing back very hard” against White House pressure to undertake a military strike against Iran, the person familiar with the Finding told me. Similarly, a Pentagon consultant who is involved in the war on terror said that “at least ten senior flag and general officers, including combatant commanders”—the four-star officers who direct military operations around the world—“have weighed in on that issue.”
What War With Iran Would Mean - (www.globalresearch.ca) We bring to the attention of our readers David DeBatto's scenario as to what might occur if one of the several contingency plans to attack Iran, with the participation of Israel and NATO, were to be carried out. While one may disagree with certain elements of detail of the author's text, the thrust of this analysis must be taken seriously. It’s no secret that the U.S. is currently putting the finishing touches on several contingency plans for attacking Iranian nuclear and military facilities. With our ground forces stretched to the breaking point in Iraq and Afghanistan, none of the most likely scenarios involve a ground invasion. Not that this administration wouldn’t prefer to march into the seat of Shiite Islam behind a solid, moving line of M1 Abrams tanks and proclaim the country for democracy. The fact is that even the President knows we can’t pull that off any more so he and the neo-cons will have to settle for Shock and Awe Lite. If we invade Iran this year it will be done using hundreds of sorties by carrier based aircraft already stationed in the Persian Gulf and from land based aircraft located in Iraq and Qatar. They will strike the known nuclear facilities located in and around Tehran and the rest of the country as well as bases containing major units of the Iranian military, anti-aircraft installations and units of the Revolutionary Guard (a separate and potent Iranian para-military organization).

IndyMac denies that it's close to collapse - (www.latimes.com ) Battling rumors that it may collapse, Pasadena-based IndyMac Bancorp (whose stock is down 90% this year) acknowledged Monday that its financial position had deteriorated but described the fears as overblown and said it was working with regulators to improve its "safety and soundness." IndyMac, a national home lender burned by the mortgage meltdown, went public after depositors lined up at San Gabriel Valley branches starting Friday to pull out their money. Striving to reassure them, the thrift said nearly all their deposits were insured by the Federal Deposit Insurance Corp. Nonetheless, Elizabeth Brown closed four accounts totaling $200,000 Monday at an Arcadia branch where about 20 customers were lined up at noon, saying: "The only reason I'm panicking is if anything happens, my money is tied up.

Lehman speculation blamed on short-sellers - (www.ft.com ) – As usual, the banks are blaming everything. Maybe it has something to do with Lehman being leveraged to the hilt (over 50 to 1 ratio) on mortgage garbage and are now trying to get bailed out by the Fed???? According to Lehman, “the problem for Lehman is that similar rumours circulated about Bear Stearns (NYSE:BSC) in the weeks leading to the investment bank's collapse and emergency sale to JPMorgan Chase. Those rumours, mainly that the bank had run out of cash, were also untrue until they became a self-fulfilling prophecy. People close to Lehman say the bank is now convinced that it is the target of an orchestrated campaign by short-sellers attempting to force it into sharing the same fate as befell Bear. “

A Cringing Quarter for Venture Capitalists - (www.nytimes.com ) venture capitalists experienced a very poor second quarter. The industry’s trade association said Tuesday that for the first time since 1978, not a single venture-backed company went public in the quarter. From the perspective of the venture capital industry, it turns out that the news was worse than I reported. The other bad news was the industry’s disclosure early Monday morning that acquisitions of venture-backed companies are down sharply, too. In the second quarter, 50 mergers or acquisitions of venture-backed companies were completed. That’s down from 70 in the first quarter. In the first half of 2008, there were 120 such deals altogether, down 28 percent from the 169 in the first half of 2007.

Slowdown Squeezes Vegas Casinos - (online.wsj.com) The gambling slowdown that began early this year is taking a serious toll on Las Vegas, with banks, investors and private-equity funds growing as tightfisted as the consumers who are gambling less in the slumping economy. Once believed to be recession-proof, casinos are proving to be highly vulnerable to the economic downturn, which is striking the industry at a bad time. Several casino companies have defaulted on debt or have sought bankruptcy protection, tripped up by costly land acquisitions and ambitious new development. Kentucky-based Tropicana Entertainment LLC filed for Chapter 11 bankruptcy protection in May, defaulting on $2.67 billion in bank and bond debt. Greektown Holdings LLC of Detroit and Illinois-based Legends Gaming, which has casinos in Louisiana and Mississippi, have also sought bankruptcy protection. Shares of several gambling companies have tumbled dramatically this year, washing out billions of dollars in market valuation. Las Vegas-based Boyd Gaming Corp. has fallen to about $12 a share, a five-year low, from a high of $54 last summer. After topping $98 last fall, shares of casino giant MGM Mirage now trade below $35. The public debt of Harrah's, which is highly leveraged after a $17 billion private-equity buyout last year, has traded as low as 52 cents on the dollar. Mr. Loveman, the chief executive, says Harrah's is profitable and is not in danger of default or a bankruptcy filing. The company, he says, is spending money to expand and improve existing properties, and is boosting visits to its regional casinos by chartering airplanes to fly in loyal customers.

PIMCO bond guru Bill Gross, a Republican, writes an open letter to President Barack Obama - "You have inherited a mess" - (housingpanic.blogspot.com) “You have inherited a mess. Your predecessor, fixated on emulating a former Republican icon from a far different economic era, chose to emphasize tax cuts for the rich and excessive consumption for all Americans. He promoted deregulation and free markets when, in fact, the markets and their institutions needed tough love. Over eight years, he failed to put forth a coherent energy policy. He needlessly invaded Iraq and lowered worldwide esteem for this nation as a symbol of freedom and benevolence."

BIS slams central banks, warns of worse crunch to come - (www.telegraph.co.uk) The central bankers' bank renews fear of second depression, writes Ambrose Evans-Pritchard. A year ago, the Bank for International Settlements startled the financial world by warning that we might soon face challenges last seen during the onset of the Great Depression. This has proved frighteningly accurate.



Other Stories:

GM Shares Near 54 Year Low - (money.cnn.com) Will GM survive this downturn without filing for bankruptcy? Shares of General Motors fell Monday, at one point trading at their lowest level since 1954, on the eve of what's expected to be a dismal report on June vehicle sales. GM stock ended down 5 cents to $11.50 a share after hitting a low of $10.57 earlier in the session. That was the lowest level for the company's stock since Sept. 22, 1954, when it traded at $10.49 on a split-adjusted basis, according to data from the University of Chicago's Center for Research in Security Prices.
Chrysler to Close Another Plant, Reduce Output - (www.nytimes.com) Both plants affected by the announcement are in Fenton, Mo., 20 miles southwest of St. Louis. About 2,400 of the company’s 3,500 hourly jobs in Fenton will be eliminated within four months, Chrysler said. Thomas W. LaSorda, one of Chrysler’s two presidents and vice chairmen, said in a conference call that the minivan plant, which opened in 1959 and was closed for several years in the early 1990s, would be idled “indefinitely,” meaning there was no expectation that it would reopen.
Detroit's Mood Grim as Automakers Face the Brink - (ww.reuters.com) Martinez, 50, must choose between retiring and making a long and expensive commute across state lines to stay with General Motors Corp (GM.N). Any future he can imagine is going to be costly and tough. "My whole family is under stress," he said. With four kids, retirement is not an option for Martinez. But driving more than 100 miles daily between home in the Detroit suburb of Lincoln Park and Toledo, Ohio -- where GM has a job for him -- is going to hurt with gas over $4 a gallon. Moving from Detroit, one of the markets hit hardest by the ongoing housing slump, could prove impossible.
"I can't probably sell my home for what it's worth," said Martinez. "I will owe more than I sell it for." When Martinez joined GM in the late 1970s, it controlled 46 percent of the U.S. vehicle market. A union job in the U.S. auto industry was seen as steady work with good wages and rock-solid benefits -- for life.

Ron Paul on Federal Reserve and Inflation - (www.youtube.com)
Crash not be an altogether bad thing - (www.atimes.com)
Next Victim of Real Estate Bubble: Government - (www.businessweek.com)
Who owns my mortgage? - (msnbc.msn.com)
OPEC pres sees oil at $170 this year, blames Fed - (www.marketwatch.com)

Whodathunk - (www.wallstreetexaminer.com) - In the Whodathink Department we now see bank credit quantity in a major free fall. The reason for this is straightforward, the bank system as a whole simply does not meet capital requirements even with all the fictitious capital accounting and lack or proper reserving being employed. And they know it, so loans are being called, and new ones capped. The latest report from the Fed of assets and liabilities of commercial banks in the U.S. showed the sharpest 13-week contraction in bank credit - loans and investments - in the history of the series, which dates back to January 3, 1973. In the 13 weeks ended June 18, bank credit contracted at an annualized rate of 9.14%.
Fitch: Non-Agency REO Volume Jumps 441 Percent - (www.ml-implode.com) - "Unprecedented growth of U.S. real estate-owned property volumes and the costs needed to maintain these assets are hindering rec...
IndyMac: Mini Bank Run, Thanks to Schumer - (www.ml-implode.com) - "IndyMac Bancorp, Inc. felt the pain of a mini bank run this past week, thanks to a leaked letter from New York Senator Charles ...
MBA Says Home Construction Loan Delinquency Rate Misleading - (www.ml-implode.com) - "Constructions loans for single and multi family projects in the United States are incorrectly included in commercial real estat...
Subprime, Alt-A Bonds to Extend Drop as Banks Retreat - (www.ml-implode.com)
Same As It Ever Was - (www.ml-implode.com)
Lender Clears Out Possessions Of Home Not In Foreclosure - (www.ml-implode.com)
Australia Home Lending At Lowest Level Since 1991 - (www.ml-implode.com)

BIS: Global economy could face deeper downturn - (www.chicagotribune.com)
Manufacturing in U.S. Unexpectedly Expanded in June - (www.bloomberg.com)
Global slowdown could be the next crisis for business - (www.financialweek.com)
Broad Says U.S. Economy in Worst Recession Since World War II - (www.bloomberg.com)
At Midyear, the Economic Pain Persists - (www.nytimes.com)

SAC's Bad News for Bankers - (online.wsj.com)
Regulators mull letting PE firms take stakes in U.S. banks - (www.financialweek.com)
IPOs Fall to Five-Year Low as Economy Slows, Loan Losses Climb - (www.bloomberg.com)
Fears for US disclosure rules after CSX ruling - (www.ft.com)
Few signs of deals returning to table - (www.ft.com)

Starbucks Plans to Close 600 U.S. Stores, Fire 12,000 - (www.bloomberg.com)
Chrysler to close 1 plant, cut production at 2nd - (www.chicagotribune.com)
Fortune Brands issues earnings warning - (www.chicagotribune.com)
CIT to sell home lending business for $1.5 billion, shares jump - (www.financialweek.com)
Honda, Hyundai Motor Avoid Slump as Asians Again Top U.S.-Based Automakers - (www.bloomberg.com)
Wachovia quits offering risky mortgage loan - (www.signonsandiego.com)
Airlines try to hedge against soaring fuel costs - (www.signonsandiego.com)
Promise of Biofuel Clouded by Weather Risks - (www.nytimes.com)
Doctors get temporary reprieve on Medicare cuts - (www.chicagotribune.com)

Stagflation grips Eurozone as interest rates look set to rise - UK (www.telegraph.co.uk)
Hot money floods China - (www.economist.com)
Soaring Asian commodity costs feed worldwide inflation - (www.iht.com)
Recession Clips Denmark - (online.wsj.com)
Subprime Losses Hit Japan - (online.wsj.com)
U.K. House Prices Drop Most Since 1992, Manufacturing Contracts - (www.bloomberg.com)
U.K. June Manufacturing Contracts Most Since 2001 - (www.bloomberg.com)
Japan's Tankan Sentiment Falls; Profits to Drop 7% - (www.bloomberg.com)