On the Political Horizon

I received recently an email from one of the leading minds of the financial and political state of the USSA, er I mean the USA. We have experienced just these last few months the affects of the Mortgage Bubble burst that was created by our politicians to compensate for the mitigating affects of the Dot-Com Bubble bursting.

Unfortunately, there is still more on the Political Horizon that WILL affect us everywhere. Here is the jest of what he was saying, “What I fear next is what will turn off the lights in your shopping malls, what will turn off the lights in your office buildings and strip malls, what will shut down the economic model so that the current recovery plans seem like rain to the ocean. What I fear next is the coming wave of commercial melt downs.

The credit lock up caused by mismanagement in Washington, DC and the related financial capitals have created (and the blame has to stop with the idiot decisions of those in power and the lack of leadership from those in power,  coupled to the “idea desert” taking place at the top), a frigid environment – the looming risks of the commercial loan market. Why is this such a huge fear? Why would this fear hit you and your small businesses next?

The fact is most commercial loans are not the regular 30 year fixed mortgages. Rather there are three to seven year balloon notes in which the entire total for the high rise the mall the office building is due every sixty months. (Rolling 3 to 7 year sometimes ten years) loans with no way now to reset themselves. They are being called-in in record numbers. They are being paid late now in record numbers.

Trillions and trillions of new bad debt coming from DEFLATION as the value of everything from gas to a high rise sinks into depression.  Business owners have relied on refinancing these rolling jumbo notes every renewal date. This December there are 20 billion dollars worth of these renewals coming due. In December 2009 there is no loan sources (as you so well know)  to renew the 20 billion due right this second. The fear storm gets worse when one considers this number just grows each and every consecutive month.

Consider what happens when the mall owners go into default and the entire mall chain, not just one mall, closes. Start to think about the unemployment as the car wash and every commercial business from strip malls to every store you see as you drive, businesses that creates all our jobs is the NEXT coming victim of the financial abuse that has taken place while the idiots fiddle and Rome burns. Our Rome. (Their fiddle is detailed in the red list below)

In 2009 the banks that used to hold the mortgages, before Greenspan removed the Depression Regulations that kept banks from reselling such securities to super high risk off shore portfolio Hedge Funds, no longer hold the mortgage. The local owner can’t reset their mortgage. The entire system has never been TESTED for this deep a recession.

The Fed is now guarantor for some 8 trillion in bad loan paper, and the number is soaring, while the FDIC has about 42 billion in cash to pay off on anything. If any of us gave guarantee’s FDIC gives with the marginal reserves they hold we would be called frauds and put into prison. The public just buys the ink.

A recent President stated “if the public ever discovered how their money system is really run there would be a new people’s revolution that would make the Boston Tea party look like a cake walk”.

One hope was some of the 700 billion for the bailout would be used to buy this good commercial paper from the banks. However our Treasury Secretary announced that he had changed his mind from the original plan. Now, there is zero safety net and 20 billion has to be paid right now. In states like California, New York, Texas and Florida are simply over the top in exposure. Florida is already facing 2.8 billion in shortfalls in 2009 which will crash education to base services without a creative fix. Also now many properties in commercial space are worth less than their mortgages (sound familiar?). The perfect storm has not brought its eye on shore.

The soaring unemployment as this next wave of defaults hits is so sobering that one needs a GPS to plan by.

The SEC is trying to help by easing the rules that let banks report that the sick horrible loans are actually ok and solid. This would let them lend more in theory. However everyone knows the truth and the new rules are not likely to fool the market into credit movement.

In the shell game going on, a shell game we call “legal theft”, no one wishes to take loan losses. Everyone wishes a way to pass on the loss to tax payers or some other willing taker.

If you’re counting:


1.8 trillion in Fed Reserve purchases of just top rated commercial paper.

800 Billion in Fed support for mortgage and consumer credit

600 Billion in Fed purchases of US dollar commercial paper and CD’s protecting money market accounts

1.9 trillion in guarantee’s for banks

900 Billion in Fed Trm Auction Facility Credit ( more bank hand outs )

700 Billion for Treasurary to buy troubled financial institutions

249 billion in loose guarantee from Citicorp on risky loans

152 Billion for AIG risky loans

29 Billion for Bear Sterns

200 Billion to backstop Freddie and Fannie

300 Billion for the FHA

50 Billion for Money Market support

25 Billion for Treasury Direct purchases of mortgaged backed securities (month to month) MBS’s.

Up to 144 Billion more in Freddie and Fannie sick MBS purchases by treasury

There is more (in many billions);  but you get the picture on the 8 trillion of our “debt illusions”  and climbing. We are nowhere near done yet. The world doesn’t have a plan. There is no integrated plan.”

If you were to start counting to one million today it would take you just over 3 months (without sleeping) to do it. To count to one billion would take you near 34 years of time to do it. To count to only one trillion would take the greater portion of 32,000 years to accomplish. Just how much time would it take you to earn that amount? Probably the 32 Millennia to count it and our Elected Officials and a couple appointed hacks Paulson and Bernanke have got us in the tank for 8 TRILLION and counting!

Understand that no one wants the American Citizen to get any of this information all  in a list, all in one place. They want to keep you in the dark to the dry creek without a paddle they have sold you and me up to a dozen times over. Now, because you do you have more information and can make better decisions, you can prepare for that perfect simultaneous tsunami, tornado and earthquake bearing down on us.

As the Captain of the ship says, batten down the hatches and pull in the sails, it’s going to bear down on us boys! Be self reliant. Stop waiting for some one to save you. Save yourself and those you love. Because its here on our Horizon, and there is no escape to be had from it.