Things Happen in Threes

North Korea has renounced that its truce. originally established in 1953 with South Korea. Within the past decade it also abandoned this truce in 2003 and 2006.  I'm observing that this is the third time, but also that about every three years, this intention occurs. Given that the leader is priming his son for the top spot, I think that he will take whatever steps he deems necessary to transfer that power to his son.  He does not seem to have any concern for the well-being of his people at the survival level, so he is unpredictable. 

Some tidbits:

*  The dollar has lost 96% of its value since 1913.  Keep an eye on it to gauge how we are doing creating and managing the escalating debt. The lower it goes, the less stable we appear to other countries who buy it.  Also Standard and Poor reaffirmed our AAA rating as a country. What else can they do? So goes the U.S. and the affect on the world will be devastating.

*  There were 616,000 foreclosures in the first three months of this year, a record high.  Fixed rate loans represented more than half, where in the past adjustable rate mortgages were in the lead.  

*  12% of the homeowners are behind or in foreclosure.

We are all in this together. The 'bump' that I referred to before has yet to arrive.  I call it a bump because it won't take much given the momentum of government spending.

It Is All In The Perspective

Today Standard and Poor issued a shot over the bough by saying that the outlook on Britain has gone from stable to negative because of massive borrowing to deal with the recession and bank crisis.  This is not a formal downgrade, but it might as well have been given the impact. The projected Britain government's net debt burden will rise close to 100% of economic output by 2013.  As of April 2009, it was 53.2%.  In my opinion, this is the orange flag that I have been waiting for given my concern about the U.S. increasing debt.

As of early May 2009, the U.S. debt is 80.1% Gross Domestic Product based on the current GDP.  The President's 2010 budget estimates indicates that debt will be 97% by 2010 and stabilize at 100% after that.  Looks like this country is going to finish the race before Britain with 100% debt.  Given that, how are we going to fair with Standard and Poor's rating?

Also, today, there was a statement that the offers for homes for sale in the Northeast are 20-30% less than the asking prices.  The bottom in the housing market has yet to show up with steep discounts like this.

For those who are active investors in this market, be very selective and fully conscious of buying and selling.  Remember, I am optimistic in the long run, but I think we are going to experience a giant bump in the investment road, sooner than later.  

Reality versus Illusion

We are hearing words that the financial system is 'healing' and the housing market has 'bottomed.'

Here are some facts:

*  The national median home price is $169k, falling 13.8% for the 1st quarter of this year, another 6.2% since 4th quarter of last year.  Half the sales were foreclosures and short sales. Both sell for about 20% less than traditional housing asking prices.  This process will continue.

*  Foreclosure notices rose 32% in 1st quarter of this year compared to 1st quarter last year, and the banks are active in moving the process along.

*  Bank of America, Citi, and J P Morgan Chase represent 60% of all unused credit lines. They cut $320B in lines during the 1st quarter of this year.  This is in addition to $408B in the 4th quarter of last year.  The outlook is that closing these lines is gaining momentum, which is really going to put the squeeze on the consumer in even meeting their basics needs, let alone their discretionary spending.

*  The government is borrowing almost $.50 for every dollar spent.  Imagine if we as individuals were leveraging like this.

*  Social Security and Medicare are running out of money faster than forecasted.

*  Recently, a group of General Motors executives sold all of their shares for around $1.60 and up.  Look at what the price is today.  That points to what is going on behind the scenes and as the current CEO keeps suggesting, bankruptcy seems closer than around the corner.  

It is important that we keep our attention on the details versus the words coming out of Washington.  As I have reiterated several times in my blogs, there has to be a level of U. S. debt that when reached will lower our AAA credit rating. I don't know what that number is, but we are moving vigorously in that direction. Invest accordingly and follow your own truth.

Prudence and Caution

The best gift we can give ourselves is to be objective and self-aware. This is very important right now around the energy of money.  Here are some recent statistics that you have probably read, but I want to emphasize:

* 70% of the $14T GDP depend on consumer spending.

* This country has around $13T in debt.

* 33% of homeowners are underwater (the media said 22%).

*   67% of homeowners have approximately 15% equity.

*   6M car owners are underwater (value of car less than the loan).

* 8.41% the is uncollectible debt from consumers reported by the banks 2/09.

*   10 banks send out 5B credit solicitations a year.

When you look at these facts and the amount of debt averaged over each person in this country, you can see that this market is rising from 'optimism' energy, versus looking at the financial foundation and the amount of debt that holds it up. We need to look back to see beyond today for the probabilities that rest on the horizon.  For example, look at a year ago and look at today. We have loaned approximately 11T to banks here and in the U.K., all from increasing debt. 

I am a patriotic person and that is my motivation for sharing my views. I want this country to pull out of this and not end up a debtor nation. Here's a quote that I put in an earlier blog that deserves to be reread by Thomas Jefferson in 1802.

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers found."

I'll leave you with this thought from Henry David Thoreau. He believed in civil disobedience and less government. The recent 'tea parties' across the U.S. is heartening and shows that we as individuals have the strength and influence to make a difference. We need to stay awake and be independent when we get that nudge or gut feeling that the government has stepped over the line.  Be prudent and know that every thought and action counts.

Government Bailout Loans

Today, I read that Chrysler will NOT be repaying the $7B in government bailout loans as part of their bankruptcy filing. I am angry that the public was mislead by the Federal Government. We are led to believe that these are loans, not outright grants.  Given this precedent setter, GM would be discriminated against unfairly if they file bankruptcy and their loans are not forgiven. This business of rescuing 'too big to fail' companies or industries reflect the lack of business acumen for the long term on part of our government. Here is the first repercussion resulting from heading in this direction.  I think the government has lost sight on how much $7B is.  When you take it to the level of individuals, like you and I, then 1% is a sizable amount.  This is what happens when our government gets too big.

I have decided not to right to our congress members that I usually do because I haven't heard back from my last input, and I'm feeling that it is a waste of my energy. I'm glad that I have this blog to express what I see. This is my only outlet other than those around me willing to 

listen. :)

I am glad to see the bankruptcy judge overseeing Chrysler's bankruptcy put a halt to the rush to ram it through the court.  I do believe in our justice system and am watching to be reassured that it prevails over the pressure from our government.

The Human Hell

For those who do not know my past, my father shot himself in the chest 4 years ago. Yesterday, his younger brother called me for the second time. I have been calling him regularly for the past 6 months because his heart troubles and frequent hospital visits have put him on the edge of dying daily.  In this recent exchange, my uncle told me that I was 'the apple of dad's eye' during my career phase of life. This was a shock for me given my lifelong view of dad thinking, feeling, and acting the opposite with me. Dad never showed me any energy in the direction that my uncle's words indicated.  This input took me into a thick darkness and I have been there for the last 24 hours. Here I see that the 'hell' we experience on earth only exists within each of us, amongst the demons - the disowned aspects of the self - that we create in this lifetime and those who came along for the ride from previous incarnations. In this place lies All That Is, our soul, our potential creativity, and everything else that we, as humans, have the ability to imagine and feel. It can be our friend, but most of us do our best to avoid it, only seeing it as the enemy.

Now I understand the meaning of what Kahlil Gibran meant when he said that 'solitude and melancholy precede all spiritual exaltation.'

As this intense energy of self-judgment, created from dad's judgment of me, eases and feelings of relief start to penetrate this dark space, I decided to share this with you. May the suffering times in your life bring enlightenment to permanently change the way it is created.