KeNo's Housing and Economic Portal: Monday July 22 Housing and Economic stories

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We're Heading For A Crisis Worse Than 2007 - (www.moneymorning.com) Washington is engaged in a massive "campaign" to make Americans believe the economy is in recovery. But in reality the United States is at the brink of a devastating economic crash that will cause catastrophic market losses and impoverish millions. That's according to Peter Schiff, the best-selling author and CEO of Euro Pacific Capital, who delivered his frightening warning to investors in a recent interview on CCTV. "The problem with politicians is they don't want to level with the voters and tell them how bad the economy really is and what the cure for the disease is," Schiff said. The "disease" Schiff refers to is a toxic combination of our massive $16.4 trillion debt and the Fed's continued devaluing of the dollar through its controversial 7-year long "easing" program. The Fed is currently purchasing $85 billion a month in Treasury and mortgage bonds, a form of stimulus. President Obama and like-minded politicians claim this stimulus has pushed the economy forward, boosting GDP and keeping inflation low. But Schiff says "it's another lie." In fact, according to Schiff, the government has done nothing more than create a "phony" economy that is "completely dependent on the ability to borrow more money that we can't pay back."

Special Report: Why Brazil's new middle class is seething - (www.reuters.com) Over the past decade, the 33-year-old high-school dropout has moved into his own house, got a steady job and earned enough income with his longtime girlfriend, Rosimeire de Souza, to lead their two kids into Brazil's fast-rising middle class. Now a public health worker in a sprawling suburb east of Rio de Janeiro, Tamandaré is the kind of citizen that Brazil's government thought was fulfilled. Instead, he is one of the more than one million people across Latin America's biggest country who have hit the streets in a wave of mass protests. Brazilians are railing against poor public schools, hospitals and transport. They are protesting soaring prices, crime and corruption. They are lambasting a political class so self-satisfied that it failed to see, much less address, the mounting dissatisfaction that led to the protests.

China censors urge media to curb ‘cash crunch’ coverage - (www.ft.com) With a cash crunch roiling the Chinese economy, propaganda authorities have told local media to tone down their reporting to help stabilise financial markets. In a directive written last week, and transmitted over the past few days to newspapers and television stations, local propaganda departments of the Communist party instructed reporters to stop “hyping the so-called cash crunch” and to spread the message that the country’s markets are well stocked with money. Chinese propaganda officials regularly send guidelines to the nation’s media about sensitive political subjects, telling them which words to avoid and how to frame their reporting. But it is rare for such instructions to be sent to financial media. Last week’s directive is an indication of the concerns in Beijing about the dislocation and growing panic in the country’s markets following the onset of the cash crunch.

Mortgage funds hit with worst quarter in two decades - (www.reuters.com) Funds that focus on U.S. home loans recorded their biggest quarterly loss in nearly two decades as investors fled out of bonds in the past six weeks on fears that less stimulus from the Federal Reserve will push up interest rates. The 62 open-end, close-end and exchange-traded funds which specialize in mortgage-backed securities and tracked by Lipper - a unit of Thomson Reuters - on average posted a 1.87 percent loss in the second quarter, the steepest decline since the first quarter of 1994, Lipper said. A global bond market sell-off started in late May after Fed Chairman Ben Bernanke said the central bank might make a decision whether to pare its $85 billion monthly purchases of U.S. government and mortgage bonds later this year.

The Euro Crisis Is Back On - Portugal is Crashing - (www.money.cnn.com) Political turmoil in Portugal is threatening to re-ignite Europe's debt crisis after a year of relative calm. Having won praise for taking tough measures to restore the financial health of the eurozone state, Portugal's government has been rocked this week by the resignation of two ministers who quit because of waning public support for its program of austerity. Prime Minister Pedro Passos Coelho has refused to accept the resignation of his foreign minister, who heads a junior partner in the center-right coalition. But anxious investors sold stocks and bonds heavily Wednesday on fears that the government may collapse.

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