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Original Message
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Hello all, im back for a while.
Starting work in the mining sector soon,( IF the economy doesn't bomb.. it will soon enough, gulp ) but got a month or so before i leave by the looks of things now. I hope. :-)
Al my plans went up to shit lately, but all is good.
I see the $$HIT is about to hit the fan well and truly with the economy, yet many will keep watching comets instead. HELLO!
Sorry ladies and gents, but we need a wake up call.
And it's not just the housing bubble ready to go pop.
Still, sadly, all too many people will deny it.
The Great Leesburg Bust of 2006
Bankers Association Warns of Bust
by Lyndon H. LaRouche, Jr.
[link to www.larouchepac.com]
part post
April 8, 2006
The world as a whole is currently teetering on the edge of the greatest financial collapse in modern history. In keeping with the nature of the freedom of the human's power of choices, there is no fixed date for this already onrushing event. However, since even the freest of human wills is bound within the limits defined by the reality of current processes, the crash will be soon, perhaps very soon. Nonetheless, most people will deny this reality until after the crash has hit with hurricane force; after the crash has come, even then, many of them will continue to deny what has occurred, that for a lapse of time of months, or, in some cases, as after 1929, for several or more years.
So today, when the basic economic infrastructure and industry of the U.S.A. have been eroding visibly since 1977: at a time, even now, when entire states and regions are already in a deep physical-economic, depression, there are many poor souls who continue to support an intellectually crippled President George W. Bush, Jr.'s insistence that our actually collapsing U.S. economy is growing. When the crash hits with full force, as it will soon, many of these protesters will fly into a rage, tearing themselves to pieces, as did the fabled Rumpelstiltskin, denouncing every statement and every thing which points out that the great crash has actually occurred.
I have observed, especially since January 1996, that, there was then, and, is still now, a strong tendency toward a virtually schizophrenic form of quality of disassociation in reaction to any hard "bad news" about the economy. This wishful neurotic tendency was widespread, and has spilled over even among those associated with me here in the U.S.A., and also abroad. I can report from such close experience, that the form this denial takes, has often occurred in the form of an emotional disconnection between the discussion of a forecast financial crisis, and the sense of the real world of personal daily life. Such is often the state of mind, among that generation of modern sophists born between the end of World War II and the deep economic U.S. recession of 1957-1958.
Even forecasts presented by persons with the greatest relative authority in this field, as my record in this field is now an outstanding example of such success, are treated by today's popular sophists as "merely academic" matters, even when the forecast might involve a threatened extinction of entire communities. Such is the case in the, virtually doomed micro-societies represented by the mushrooming "Hollywood set"-style hamlets of Loudoun County, Virginia. Many, even in financial "ground zero," otherwise called Loudoun County, will protest that their mortgage is solid, even at the point assessable market value of the mortgaged property has fallen way below the marketable value of that item.
It is notable here, that I have made less than a dozen professional's forecasts in the course of my career as an economist. The first was my 1956 near-term forecast of a February 1957 recession. Each of these significantly less than a dozen forecasts, beginning Autumn 1956, have each and all either come true, or are now currently in the process of coming true in an appropriately timely fashion. There is no other person on the public record who has a more consistently successful record than I do on this account, not even a record which could approach my own nearly perfect performance in this matter.
The world is now threatened, during the immediate months ahead, with the most severe breakdown in global economy since the so-called "New Dark Age" crisis set off by the mid-Fourteenth-Century crash of the ultramontane Venice's tool, the "hedge funds" of that time, then known as the Venice-controlled Lombard League's banking system. What is rumbling now from under the burgeoning, saturated drain-fields of Loudoun County, Virginia, is a twitch of panic to come. Week by week, there is, an accelerating rate of a margin of unsold, empty houses, an ironical warning of a great crash of Alan Greenspan-created mortgage-based-securities bubble: a crash about to hit with panic force.
Some silly people will say that I am "threatening to talk the economy into a recession." Denying the existence of a crocodile already moving about in the children's bedroom will not make the hungry crocodile go away. Matters have reached the point, that some very responsible Federal and related banking circles are now issuing carefully crafted warnings to the witting, of the great U.S. real-estate crash about to strike, probably as early as this Summer, or even, perhaps, earlier.
Especially now: no relevant kinds of responsible agencies, here or in Europe, have any sane reason to doubt that my forecasts are to be treated as representing exceptional authority in such matters.
For example, my first long-term forecast was made during mid-1958: that if the trends established over the course of the 1950s were continued during the sweep of 1960s, we must expect a series of monetary crises in the world system by the second half of the 1960s, followed by the arrival of a threatened breakdown of the Bretton Woods monetary system itself. I reaffirmed that forecast, with some slight refinements during 1959-1961 and 1965. The 1967 Sterling and 1968 Dollar crises were typical of the developments leading into the 1971-72 dissolution of the Bretton Woods system.
My second long-term forecast, was first published in August 1971, in the immediate aftermath of the Nixon Administration's wrecking of the Bretton Woods system. I stated, at that time, and later, up to the present moment: that the policies adopted by the Nixon Administration confronted us with the long-term prospect of a threatened fascist transformation of the world financial-political system.
That transformation, as I described in that forecast of 1971, has shaped the long-term economic-policy trend in the Americas and Europe to date. For this nightmare, the role, in pushing deregulation, by Zbigniew Brzezinski as Trilateral Commission leader and Carter Administration National Security Advisor, has been more crucial in long-term effects than even the ruinous actions of the Nixon Administration. The role of Dick Cheney as Secretary of Defense under President George H.W. Bush, and as Vice-President under the nominal President George W. Bush, Jr., when compared with the ultramontane policies for Nazi-like privatization of the military, associated with former Pinochet-backer Felix Rohatyn, are the most notorious expression of the lunge toward an attempted global fascist tyranny under "globalization" today.
Now, the crash itself can be prevented no longer. In earlier times, there had been options for preemptive action by the U.S. government which might have changed the system itself in appropriate ways, before the full-scale panic-phase had actually occurred. President Clinton was thinking in such directions during September 1998, but the relevant political circles attempted to remove him by a Bush-circles-led impeachment campaign, and no effective action has been attempted by the U.S. government since September 1998.
As we should have recognized by the sudden, February 2006 backdown to Bush, Cheney, and Rohatyn, by the Democratic forces of the U.S. Senate, the political system is no longer prepared, at this time, to take any of those effective forms of timely action which were under consideration in 2005. There is no significant current effort in either party, to take the needed action to deal with the onrushing general breakdown-crisis—until after the crash has actually occurred. Amelioratives of mass suffering of the suddenly unemployed auto-industry workers is like providing pain-killers instead of the surgery which is required.
You might have supposed that experts in the field, especially persons associated with me, would have recognized my forecasts as warnings of the conditions under which they, personally, might expect to live in the forecasted near-future time to come. Some did, but, until now, most of the relatively older generation in power have not acted, and do not consider themselves situated in a position of advantage in which they would attempt to launch competently preventive action.
In most circles, such as among the members of the U.S. Senate, for example, the post-January 2006 disassociation by the dupes of former Pinochet-backer Felix Rohatyn and his like, is more consistent and clearly manifest still today.
It is now, as typified by the statements of John M. Reich and others, that official and related U.S. banking institutions have issued a very sharp warning of a threatened crash of much of the U.S. mortgage market. The Business section of the Washington Post carried an accurate summary of this official warning. Yet, even the editors and readers of the Washington Post react, as if emotionally and intellectually disassociated, acting as if to say, "So what; it could never affect me"! Granted, the Post is noted for its adherence to sophistry; but, there should be a point at which even modern sophists in the tradition of Pericles' and Thrasymachus' self-doomed Athens bow to the unavoidable importance of the simple truth of their own situation.
Indeed, the Post, whose controlling interests are deeply involved in what might be deemed legalized real-estate scams in the region, is among the institutions which might be swept away in the outgoing monetary-financial tide.
I explain as follows:
John M. Reich's Warning
With delicious taste of irony on my tongue, I can report that page one of the Washington Post Business section of Friday, April 7, 2006, featured a warning to the such locations as the vicinity of Leesburg, Virginia, of a threatened major real-estate bubble collapse in certain parts of the U.S.A., especially the area of the real-estate bubble built up around the nation's capital. The Post account features the warning presented to the New York Bankers Association by John M. Reich, the director of the Office of Thrift Supervision.
The Post's account includes the following three paragraphs, which point accurately to that threat of the "Great Leesburg Bubble" against which I have warned publicly, repeatedly since the beginning of 1996:
"About two-thirds of all people who bought homes in the Washington [D.C.] area in 2005 used interest-only or option mortgages, many of which have adjustable interest rates, up from 2.5 percent in 2000, according to statistics compiled by Loan Performance, a real-estate information firm. These loans generally have lower monthly payment requirements than traditional fixed-rate loans, at least at the start, but carry the risk that payments could jump steeply.
"Local mortgage brokers say borrowers are taking out these loans because it is the only way they can afford to buy a home today. These loans allow borrowers to pay just the interest on the debt, not to pay down the principal, which reduces the monthly expense at the beginning of the loan term."
According to the Post account's third paragraph of these three, Christopher Cruise, a Silver Spring-based mortgage trainer who runs classes for lenders and regulators around the country, stated, "Without these products, homes couldn't be purchased." That paragraph concludes by citing Cruise: "If they are taken off the market, it could precipitate a disaster of epic proportions."
There is nothing new to me or other leading U.S. economists of whose views I know, in the warning delivered by that edition of the Post. As I have warned repeatedly since the January 1996 beginning of the Democratic Presidential Primary campaign, the real-estate bubble described by Reich and others is simply a warning to the witting that the great financial bubble-collapse of 2006 has reached the point it is ready to burst almost any time soon, and that the Washington, D.C.-centered region is one of the most important areas to be struck by a financial-collapse disaster beyond the imagination of most among the many wishful citizens in the region still today.
Every leading economist of importance, and relevant financial specialists, have shared the expert knowledge for some time: that the state of Alan Greenspan's cancerously layered U.S. financial bubble in mortgage-based securities, represents a monster which could suddenly bring down the U.S. economy, and, could, as well, set into motion a world-wide, hyperinflationary collapse of the present monetary-financial system outside the U.S.A.
When the bankruptcy of leading banks behind the present global hedge-fund bubble is taken into account, the world monetary-financial system is presently in such a state, that nothing less than putting the IMF system itself into bankruptcy reorganization, would be indispensable for preventing the collapse of the world economy. This would be a collapse into a planetary new dark age comparable to that of Europe's Fourteenth-Century collapse of the Venetian system represented by the Lombard League's "hedge-fund" peddlers, such as the Bardi's infamous "Biche" and "Mouche."
The most significant thing about the Post's Business-section report, is that leading circles around the Federal Reserve System, have signaled, that now is the time to rush a warning to those insiders of the financial community who need to take action to minimize the damage this oncoming crash will deliver to their particular interests. Among such circles, the feasible economic goal of investors and managers in the wake of super-inflationary Alan Greenspan's departure, is no longer merely loss-minimization; it is now bare survival.
Therefore, I say again, that the center of the coming mortgage-crisis storm in the area of the nation's capital, is Loudoun County, Virginia, where the most extremely dangerous over-stretching of mortgage obligations has occurred. Not a whisper of a sense of appropriate reaction to that reality was overheard from the streets of Loudoun County as the Post report was being circulated in this area Friday and Saturday.
One thinks of a story about a woman who has cooked the meal and set the table for the husband who had deserted her a decade or more ago. "But, he deserted you more than ten years ago, Mom!" her daughter pled.
"I know that," her mother replied, but continued to set that same place at the evening table, at a measured, much rehearsed pace, as she had done so for thousands of desperate evenings before.
That is the way an all-too-typical Loudoun County resident, for example, responds to the reality of the onrushing crash of the super-inflated, John-Law-style, mortgage-based securities bubble.
It is not only the ordinary citizen in the middle to lower income-brackets, who reacts with indifference to plain evidence that the great housing bubble is about to pop. Look at the higher political ranks of society, where they ought to be better informed. Look at the rate of denial among these circles, despite the fact that the most important economists and financial circles know of my forecasting successes. For that reason, to understand the presently desperate situation, you must look at the state of hysterical, official and other denial of what has become, among serious professionals inside the U.S.A. and in many leading circles abroad, my widely known economic forecasting over more than four decades so far.
It is therefore important to reference, once again here, some of my now proven earlier published forecasts of this trend in this direction. My warnings of the Ponzi-scheme-like characteristics of recently retired Federal Reserve Chairman Alan Greenspan's role in a giant, cancer-like U.S. real-estate bubble, include the following warnings delivered by me in published statements focussed on a first-hand overview of the situation in the Leesburg-centered Loudoun County.
I Warned You!
I had already warned publicly, repeatedly of the threat to Loudoun County in a recent Washington, D.C. webcast. Consider several typical and prominent instances of this. (See box.)
1. The 'Triple Curve': What It Means
My first, and often repeated warning of the coming general financial breakdown-crisis of the world's current monetary-financial system, was the featured element of the address which I delivered at the 1996 public conference at which I launched my campaign for the Democratic Party's 2000 Presidential nomination. I explained the nature of the oncoming general financial crisis of the world system by a rather simple chart, which I named "The Triple Curve" (Figure 1).
That chart, as shown here, has four explicit elements. First, there is an hypothetical straight line, which corresponds to the assumption that the U.S. economy had continued to operate in constant relative, per-capita value of financial, monetary, and physical values, comparable to the ratios of the early 1970s, until as late as 1977. The latter point, 1977, is the point at which the average physical income of the lower eighty percentile of the U.S. population's households had definitely proceeded to collapse over the 1977-1996 interval.
The three curves featured in the chart were; first, the declining of the real (physical) income of the households of the lower eighty percentile of the population, as measured in combined public and private components of net real income; second, the soaring rate of accelerating financial inflation; and, third, the soaring rate of the monetary inflation now being driven, most visibly, by the combination of real-estate bubbles and the so-called "hedge funds." This portrays a type of economic function which has current characteristics akin to those of the post-World War I Germany under Versailles Treaty terms over the 1921-1923 period, leading into the sudden explosion of hyperinflation during the second half of 1923 (Figure 2).
The particular feature of the 1996 Triple Curve presentation, was that by 1995-1996, the Anglo-American beneficiaries of the 1989-1991 collapse of the Soviet system had neared the limits of the possibility of continued looting of the former system. In Western Europe, for example, the Maastricht conditions which Britain's Margaret Thatcher and France's President Mitterrand imposed on post-1989 Germany, induced a forced shrinking of the economy of Germany, while imposing a virtual paying of tribute, by Germany, tribute issued by Germany as tribute paid to imperial overlords, paid to support the declining economies of the United Kingdom, France, and others. Although the states of Eastern Europe have enjoyed political freedom from Soviet hegemony, the economic conditions in those regions of Europe today are usually far worse, physically and otherwise, than under Soviet hegemony!
The global monetary-financial crises of 1997 and 1998, the so-called "Asia Bubble" crisis and the "hedge-fund" blowout of August-September 1998 are typical of the kinds of trends against which I have warned in the January 1996 presentation of my Triple Curve.
In the aftermath of the August-September 1998 hedge-fund blowout, it was a relatively short run to the 2000 end of the Y2K sophistry, and with that, the beginning of a qualitatively new phase in the great financial bubble, the global financial-derivatives bubble, which Paul Volcker's successor Alan Greenspan had launched, in 1987, as his proposed solution for what I had precisely forecast, during the previous Spring, as the U.S. stock-market crash of that October.
What Greenspan launched was a descendant of the John Law "bubbles" of early Eighteenth-Century England and France. His immediate objective in this action was to bail out leading banks which had been drained by the process leading into the 1929-style stock-market crash of October 1987. The included result was the birth (and death) of the Enron which was to play a leading part in funding Texas Governor George W. Bush, Jr.'s campaign for the Republican Party's U.S. Presidential nomination and subsequent election. In effect, Greenspan legalized what had been considered the form of crime for which Enron was brought down. In effect, Greenspan's actions flooded the banking system, in particular, with a purely fictitious form of financial asset, an asset which he, in effect, legalized. This was used, among other purposes, to flood the emptied coffers of the leading banks of October 1987 with purely fictitious financial capital.
One of the pivotal features of Greenspan's operation was to transform Fannie Mae and Freddie Mac into engines of a mortgage-based-securities system of speculation, and to use that mechanism as a way of creating an intrinsically hyperinflationary form of apparent real-estate-mortgage boom: thus creating a new version of an Eighteenth-Century John Law-style bubble. That bubble has now reached the point at which it has been overstretched to the popping-point.
What has brought the Loudoun County real-estate wing-ding to the verge of catastrophe, is the global effect of Greenspan's blowing of bubbles. What has just happened in poor Iceland illustrates the point.
The possibility of preventing Greenspan's bubbles from popping during the 1990s, was chiefly the combination of post-1989 looting of the physical assets of the former Soviet Union and Comecon (and also Germany), and, above all, the willingness of the governments and banking systems to launch and sustain what is often identified as Japan's overnight zero-interest-rate lending policy.
Credit borrowed from Japan is used to buy blocks of currency which are then loaned, at significantly greater lending charges, to private firms and governments in other parts of the world. This practice of layering one stratum of fictitious assets on top of another, has become known as "the carry-trade." This "carry-trade" has become the principal engine of today's worldwide hyperinflationary impulses, as in the price of petroleum, and precious and other metals. All of this depends upon the use of a U.S. and British system of mortgage-backed securities, and risk-insurance hedges.
As long as the system depending upon the continued expansion of the carry-trade functioned, it was possible to maintain the mortgage-bubble in such locations as Loudoun County, Virginia. However, it is now recognized that Alan Greenspan's hyperinflationary games must be ended. The soaring prices of primary materials, shows us that the world has already entered the phase of growing, second-order, hyperinflation, a state of global affairs which must be fairly compared to what happened in Weimar, Germany, during the second half of 1923. The greatest single threat to the world's monetary-financial system today, is the onset of a Weimar, Germany-like, global, hyperinflationary spiral, a spiral which has now reached the point of over-ripeness at which it could blow out the entire world system during a short period of time, even within the remaining months of 2006, probably by the time of the U.S. mid-term elections, probably as early as Summer, if it were not triggered by a virtual accident, at almost any time between now and then.
Greenspan's actions to that effect must be compared with the way in which Weimar Germany led itself into the great hyperinflationary explosion of late 1923. There are differences between Germany then, and the world of the 1987-2006 interval; but, the principle is the same. There are some leading circles in the U.S.A. and elsewhere who are not so ignorant, or stupid, as not to recognize the fact of the current situation. If some of them do not maintain public silence on what they know, that is because they fear that no government, or leading political party of the U.S.A., the British Commonwealth, or western and central continental Europe would be willing, voluntarily, to take appropriate measures for bringing the crisis under control. Some among those leading circles consider the case a hopeless one. Even brave soldiers are not wont to fight when their governments, such as the Bush Administration today, have already surrendered the nation to the financier rogues of the hedge-fund system.
So, the effort to check the rate of increase of global hyperinflation impels well-informed central bankers and comparable others, to say, "Put the lid on hyperinflation, if you can!" This means, shutting down the mechanisms of hyperinflation on which Greenspan's mortgage-based securities inflation was based. This means a crushing of the hottest areas of investment in real-estate speculation. The wild-eyed gambles in the Washington, D.C. area, are the warning to shut off the spigot. Waves of bankruptcy are soon to be expected. Loudoun County beware!
continued here
[link to www.larouchepac.com]
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