The $1.1 trillion budget bill also adds about $5.4 billion for new labor, education and health spending in addition to billions more to meet a shortfall in Pell grants for low-income college students; $1.25 billion in spending related to health care reform; including 6,600 legislative earmark provisions where $8 billion within the bill should be spent.

Unfortunately this congressional mad hatter spending will not help get the country back on track with jobs or create an opportunity for business growth.  What it will do is create further drag on the economy as greater revenue is required to pay down the interest on the debt to finance these spending programs bought on Chinese credit.

We can hope the new congress will begin to rein in spending which will still require the president’s signature for passage.

There is no stimulus to come from a one year 2% payroll tax rate cut; There is no stimulus in raising the estate tax from zero to 50%; tax credits for ethanol help an industry already on federal life support, to mention a few.   However, what has in effect happened is that America will soon get a second $858 billion Stimulus over two years, lets not forget the first Obama $814 billion 2009 stimulus package.  This time Obama got the Republicans to offer to increase spending by $858 but $630 billion of the tax bill is earmark spending above and beyond extension of the Bush tax cuts.

This is not good economic news for a future forecast that the recovery is taking hold.  Just when we thought the reckless spending was over its damn the deficit, full speed ahead with spending more borrowed Chinese dollars.

While oil prices would have to go back to their 2008 highs to slow the economy the recent run-up towards $90/bbl is already doing its damage. Gasoline prices at the pump are now over $3/gallon in 20 states and the surge has effectively drained $40 billion out of household cash flow. So, a good part of that Bush tax cut extension is going to be siphoned into the gas tank.

Those now receiving unemployment soared 523,000 to 4.2 million the latest week and they will receive continuing payments of unemployment checks instead of standing in soup lines.

Imagine embarking on more fiscal expansion at a time when structurally the budgetary gap has breached 7% of GDP and the Fed going along the road of even more radical expansion of its balance sheet with quantitative easing II, and a congress that was just spanked for creating fiscal excesses is now tapping into the Social Security fund so as to stimulate consumer expenditures.

Now Democrats opt for the tax cuts they reviled in 2008 and the lame duck congressional leadership appears in line to run up the fiscal tab even more with a trillion dollar continuing resolution/omnibus spending bill to fund the federal government through next year; remember they did not pass a federal budget yet, and this resolution contains even more democratic pork barrel spending.

WHATS HAPPENING IN THE REAL ESTATE MARKET?

It’s perplexing that the latest down-leg in U.S. home prices has gone virtually unnoticed by the media and the markets. The Case-Shiller index is down in each of the past three months and there is still roughly two years’ of unsold inventory overhanging the market once the “shadow” foreclosure backlog is included.

Housing demand is dormant as home buying intentions slipped in December to a level that can only be described as anemic. Mortgage applications remain near decade-low levels and part of this reflects lingering caution among private lenders who are still maintaining fairly stringent credit guidelines.

A FEW OF THE LATEST HEADLINES FOR DECEMBER

Housing Wire – “Robo-signing hangover slows foreclosures in Western states” (12-14-10)

“Foreclosure sales in Arizona, California, Nevada, Oregon and Washington fell 38.7% in October and November, according to ForeclosureRadar.”

CNN - “Obama’s mortgage mod plan is still lacking” (12-14-10)

“Last April, the Congressional Oversight Panel found the program to be struggling to get off the ground despite having been in action for a year and a half. The latest evaluation of the Home Affordable Modification Program (HAMP) came out Tuesday and the result was — same deal.”

San Francisco Chronicle - “Loss of estate tax leaves hole in state budget” (12-14-10)

“The proposed tax deal in Congress would fail to deliver about $2.7 billion in estate tax revenues California was counting on receiving this fiscal year and next, but some say the state should never have expected those revenues in the first place.”

Housing Wire – “LendingTree survey shows 40% of homeowners took first loan offer” (12-14-10)

“Roughly 40% of current homeowners surveyed by the online lender exchange LendingTree obtained just one mortgage loan quote before purchasing their home. LendingTree and the Harris Interactive surveyed 1,317 homeowners online, and of those 96% said they compare prices when shopping for anything – except mortgages. This, according to LendingTree, explains why only 28% surveyed feel confident they got the best possible deal on their loan.”

Associated Press – “Fewer homeowners underwater in the third quarter” (12-13-10)

“About 10.8 million households, or 22.5 percent of all mortgaged homes, were underwater in the July-September quarter, housing data firm CoreLogic said Monday. That’s down from 23 percent, or 11 million households, in the second quarter.”

Housing Wire – “Zillow: Home values crater by $1.7 trillion in 2010″ (12-9-10)

“U.S. homes are expected to lose more than $1.7 trillion in value this year, 63% more than the estimated $1 trillion lost in 2009, according to Zillow.”

Housing Wire – “Double dip in some markets drag home prices down 5.8%: Clear Capital” (12-9-10)

“Home prices in November dropped 5.8% over the previous three months and are down 2.7% from a year ago, according to real estate analytics firm Clear Capital.”

Housing Wire – “Fannie Mae survey finds traditional homeownership changing” (12-9-10)

“51% of survey respondents said the housing crisis has not affected their overall willingness to buy a home, 33% said they would be more likely to rent their next home than buy. In January, 30% of Americans surveyed said they would rent a home the next time around.”

Housing Wire – “Fitch sees 10% drop in home prices in 2011, negative outlook for MBS” (12-9-10)

“Fitch Ratings expects another 10% decline in home prices in 2011, as the supply of distressed properties continues to weigh down the housing market. Accordingly, analysts maintained the agency’s negative outlook for the residential mortgage-backed securities space and said 53% of all investment-grade RMBS rated by Fitch have a negative outlook.”

HOW ABOUT THAT GOLDEN STATE CALIFORNIA!

Governor Re-elect Jerry Brown says California’s budget deficit may hit $28 billion, and last year it was a meager 19 billion that was apparently closed by Governor Schwarzenegger this past budget year, with gimmicks to reach the balanced budget requirement like trying to borrow $3 trillion in bonds all at once.

California’s Politicians are solely responsible for this fiscal mess from spending on programs when revenues were dropping and for not having any fiscal restraint.  They are also responsible for using borrowed money to pay for current expenses until they had borrowed more than they now seem able to pay back.

REVIEW OF CURRENT GROWTH, EMPLOYMENT STATISTICS AND AFFORDABILITY

Growth is down, unemployment is up and home prices are in the tank.  These are good times for purchasing homes and reselling them, and holding on to assets that will take off when the economy turns and inflation takes off.  Home mortgage rates are now trending upward and the bond market is following suit.  California will need funding from the federal government to stay afloat, raise taxes, cut spending and pay higher rates for borrowed money due to its terrible credit standing.  Raising taxes will not help the numbers on the chart above.

The definition of insanity doing the same thing over and over again expecting different results………Einstein



California Realtors say cutting mortgage interest tax deduction will devastate nation (11-12-10)

Home prices in the affluent California county increased roughly 6% to $699,174 in October, according to the association. Its up 11% from a year ago. The National Commission on Fiscal Responsibility and Reform, proposed two options in their efforts to overhaul the tax system. One was to reduce how much homeowners could deduct by 20%, and the other was to exclude second residences, home equity loans or mortgages over $500,000.

Removing the incentive to own a home by reducing or eliminating the mortgage deduction will drive the country into a greater economic crisis.  It is not clear if Preisdent Obama will pursue this tax reform but he should be urged to oppose it.

Freddie Mac says foreclosure problems may drain recovery (11-12-10)

Freddie Mac economists said recent problems in the banks foreclosure processes could slow what little momentum the recovery holds, and perhaps send the housing market down to a new low.

Freddie Mac, itself reported $120.1 billion in nonperforming assets in the third quarter, up 33% from a year ago, and more than $6 billion in REO that needs to be sold.

Even with the Federal Reserve’s plan to purchase $600 billion in Treasury securities through quantitative easing, Freddie still expects “sub-par” growth in GDP over the near term with a slow acceleration through 2011.

The sluggish nature of the recovery means the unemployment rate will likely remain at or above 9% through much or all of next year, with a decline in unemployment only gradually providing relief to the housing market, according to the report.

Barclays Capital expects Fed to buy Treasurys beyond 2Q (11-12-10)

Barclays Capital expects the Federal Reserve will continue buying Treasury securities past the second quarter, although it appears investors feel otherwise as there has been considerable sell-off in long-term bonds this week.

Excessive risk retention may throttle mortgage finance: ASF (11-12-10)

Under the sweeping reforms of Dodd-Frank, federal financial regulators are tasked with defining a qualified residential mortgage to determine which loans will be exempt from new risk-retention requirements. The American Securitization Forum wants the regulators to establish new standards for income and asset verification, minimum borrower equity, and debt-to-income ratios that its members believe significantly strengthen the mortgage pools and ‘ensures appropriate credit can resume flowing to American homebuyers.

D.R. Horton Sees Challenging Year as Home Sales May Decline (11-12-10)

D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, expects 2011 to be a challenging year, the industry as consumer confidence and employment remain weak, Chief Executive Officer Donald Tomnitz said.

KBW says market overly pessimistic on Fannie, Freddie losses (11-12-10)

Analysts at investment bank Keefe, Bruyette & Woods said both Fannie Mae and Freddie Mac have enough in reserves to absorb losses from legacy portfolios and that market estimates of potential losses are ‘overly pessimistic.

Calif. borrowing $40 million/day for unemployment benefits (11-9-10)

California is Going Broke/ Jerry Brown and the Democratic Majority to the Rescue.  California is borrowing $40 million a day from the federal government to pay unemployment benefits.  That means California is borrowing $40 million a day from you and me to pay unemployment benefits.

The Los Angeles Times reports the state will have a $362 million bill for interest alone due on a total debt of $10 billion next fall.

Thanks to the recession and poor management, California is an economic disaster zone, with one in every eight workers unemployed. More than 1.2 million Californians have lost their jobs since the start of the recession, and they’re staying out of work for longer periods of time.  Plus in 2001, state lawmakers nearly doubled unemployment benefit levels without raising taxes. That was smart.

The result of all this is that if California keeps borrowing from the federal government, employers could face a steep hike in their unemployment taxes.

California is not alone here. 32 states in total have been borrowing from the federal government to pay unemployment benefits. The total is $41 billion. Some of these states are asking the feds for a deferral on repaying the loan until the economy improves.

Oil Prices Up thanks to Q2

Oil is now challenging the $90/bbl threshold and this is more a reflection of the Feds quest to weaken the U.S. dollar than any incipient global economic boom. The net speculative long position on oil contracts on the NY Mercantile Exchange has doubled since the Fed first started talking openly about QE2 in late August at Jackson Hole, to a near-record 208,228 contracts (1,000 barrels per contract).

When oil first tested the $90/bbl level back in October 2007, the U.S. economy slipped into recession, without anyone knowing it, including the Fed, and the long list of Wall Street economists, many of whom are still in their seats today.

WHO DO YOU TRUST, WHO DO YOU TRUST!

It is intriguing to see how Fed Chairman Ben Bernanke said for the record, just over a year ago, that the Fed had no intention of monetizing the debt.

Chairman Ben Bernanke, in response to a question during his June 3, 2009 testimony to the House Budget Committee, said, Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation…The Federal Reserve will not monetize the debt.

Just the other day, Dallas Fed President Fisher said that this is exactly what the Fed has chosen to do. The U.S. does not suffer from a lack of low interest rates. Nor does it suffer from a lack of liquidity. What it suffers from is a lack of policy credibility.

For the next eight months, the nations central bank will be monetizing the federal debt.
…………………November 8, 2010,  Dallas Federal Reserve President Fisher

Ben Bernanke reappointed as FED  chair on Tuesday means more of the same money throwing to big business while main street watches in horror as the road to recovery flushes down the toilet.  Bernanke who is touting that the economy is “on the rebound”  has no actual facts but he “forecasts” that America is pulling out of the recession.  Funny thing is that people want to believe and the New York Conference Board said that its consumer confidence index rose to 54.1 from a 47.4 in July.  Keep in mind that 90 is the level associated with a healthy economy, it is a far cry from today.

Bernanke says, “Our forecast is for moderate but positive growth going into next year. We think that by the spring, early next year, that as these credit problems resolve and, as we hope, the housing market begins to find a bottom, that the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace.”

Giving bailout trillions to the very same bankers that created the mortgage melt down in the first place instead of providing resources to poor families, those in need of health care, education, food stamps and unemployment benefits, so now that the fool Bernanke has blown America’s wad of cash into a mountain of debt, all  taxpayers are on the hook for his mistakes.

As the percent of debt to GDP is growing at an alarming rate.  Obama’s revised budget deficit is off by a mere $1.5 trillion,  last year’s deficit was $459 billion the CBO estimates the budget deficit will total $1.6 trillion this year or 11.2 percent of the GDP, and $1.4 trillion in 2010.

The only glowing report is the markets rise to 9500 at the close on Monday.  Problem is that when you give bankers trillions of dollars they have to park it somewhere, they are investing government “Bernanke dollars” in the Market, the market is responding by going up, this is funny money not business’ and mom and pop’s reinvestment, its all phony!

The depression is coming closer, as unemployment rises there are new fears on the horizon.  Monster.com ran an impromptu poll over July 6 to July 13 and found with 16,000 visitors the answers to the poll question, “If you were laid off without severance, how long would your savings cover your living expenses?

Answer: 34% said one week or less 66% had enough to last two months, six months or longer 20%.  Now when you factor in that over half the homeowners in the US are or will be upside down on their mortgage by 2010, the FDIC is out of money, broke kaput, 18 states are close to bankruptcy,  the run on the bank scenario of 1929 is shaping up for a repeat by 2010, if hyperinflation doesn’t hit from the Weimar Republic purchasing of treasury bonds by Bernanke with freshly printed greenbacks, all in the name of saving the State in lieu of the people, simply put hell is on the horizon!

How can Americans not even call intentional this Ponzi scheme perpetrated by the Fed Chair, the Secretary of the Treasury, congress and Comrade Obama himself?  From their actions Americans sit by and watch the last great economic bubble, the storm of debt, grow and expand like a Katrina about to hit shore, how can the actions of these men not be called immoral in all circumstances;  We do not complain  when nature creates immoral acts because it sends a Katrina ashore and kills, destroys and displaces thousands; how is it that only a few see the error of the former while in the latter the voluntary free will of nature is accepted?

We punish a criminal intentionally to protect ourselves and society but in the case of preservation of life from a catastrophe be it economic or through natural causes are we to accept  the perpetrators of fraud just as we do the natural disaster?  This distinction is in error?

The morality of Americans and all people for that matter in the case of self preservation will act out of necessity but in the case of evil actions by the State committed by men in power, taking advantage of the political and economic  consequences  against their fellow man to gain financial or political self-preservation is a crime commissioned on behalf of a moral good cause.

Left with no moral standards to what level should these State Criminals be held?

Are these political Marxist-fascists, whose action in the name of saving us from ourselves in this unparalleled economic storm only to allow the perpetration of thievery and the transfer of wealth from the taxpayer to the politically connected, be accepted and given a pass by Americans?

Is morality the act of watching nature or the nature of man destroy  an environment where freedom and liberty were protected by a moral constitution, to be replaced in the name of self preservation, with a new belief not in the efforts on the individual but the efforts of the new Marxist-fascist State?

To the degree that these men in STATE POWER have an understanding and intellect  that can comprehend what is best for society, with their call to protect America with socialism by nationalizing greater sectors of the capitalist economy, when men in congress whose standard of reasonableness is to name call their constituency rather than answer their questions, when their morality is the higher good that perpetuated their own self interests, how can such a nation sustain itself and freedom and liberty?

No matter the moral compass it is the man who reads the dial, it is the man who puts himself as a cog within a wheel, man is nature and nature is man.

Susanne Trimbath writing for NewGeography takes a realistic approach on the success of Bernanke in The Rogue Treasury.

The U.S. Treasury took enormous powers for itself last fall by telling Congress they would use it to “ensure the economic well-being of Americans.” Six months after passage of the Emergency Economic Stabilization Act of 2008 Americans are worse off. Since it was signed into law on October 3, 2008, here are the changes in a few measures of our economic well-being:

The U.S. government has already paid out $2.9 trillion, with further commitments to raise the total to over $7 trillion – a number that Senator Max Baucus (D-MT) said “is mind-boggling, indeed it is surreal. It’s like having a second government.” The money Treasury is passing out is more than all government spending in 2008. The Senate Finance Committee, of which Baucus is chair, held a hearing on March 31 (TARP Oversight: A Six Month Update). The three parties established as monitors in the 2008 legislation were there to testify. Without exception they “are deeply troubled by the direction in which Treasury has gone.”

Senator Chuck Grassley (R-IA) suggested [referring to former-Secretary Paulson] that Congress “was awed by a person who comes off of Wall Street, making tens of millions of dollars. … You think he knows all the answers and when it’s all said and done you realize he didn’t know anything more about it than you did.”

Bernanke has failed!

In a few months, the affect of the Obama, Geithner, Bernanke and Liberal Congress will explode on the economy.  Inflation will take off this summer and there will be nothing anyone can do to that will stop the worthlessness of the dollar or the rise in unemployment.  America’s money supply of inflated dollars will loses its purchasing power both at home and abroad. We will see a collapse in the value of the dollar that will wipe out the wealth of all Americans.  At the same time unemployment will rise beyond Great Depression highs, as an insatiable government sucks dry the private sector and those who once made a living in the free market.

Why?

America has a $11 trillion national debt and approximately $80 trillion in unfunded liabilities for bailouts, stimulus, social security, medicare and other social programs. Not to mention the $850 billion in new unfunded health care expenses or the $346 billion annual cost of giving social security, medical and all the educational support for 10% of our illegal immigrant population that is too lazy to learn English.

At a time when Americans are out of work President Obama will sign the new immigration bill that will put undocumented foreign workers in direct competition for legitimate American jobs.

America has an annual GDP of nearly $14 trillion, with 70% of that figure being consumer spending. People are uncertain of all the changes to the economy by the Obama administration so they are saving to protect them from the coming depression.

Recently the Federal Reserve expended $1 trillion to its member banks with a few keystrokes of a computer by Fed Chair Bernanke.  When the Federal Reserve expands the money supply, it is creating money out of thin air. As creditor nations that hold US debt find that the value of the US dollar is dropping the faith and confidence in the dollar and US Treasuries will create the need to find another more stable currency.  As this collapse happens it will cost more to run government, business and purchase the products we need to survive.

President Obama agreed at the G-20 summit to follow the international “high standards” for the regulation of all “systemically important” companies to be promulgated by the new global Financial Stability Board (FSB). The United States, through President Obama’s desire to be liked, will go along with whatever the FSB proposes.  Then the U.S. government will impose international rules on our economy.

So with new tax code changes being proposed by President Obama, Europe about to formulate socialist regulations to be imposed on our economy, the U.S. government taking over any large company they desire, the deficit and spending reaching unheard of levels and government control of banks and interest rates, how can any businessman in his right mind decide to invest in an uncertain economy with the added disincentive of higher taxation?

President Obama will not waste this economic disaster, knowing that Americans trust his judgment; he intends to turn America into a nation dependent on government.  He knows his budget will not improve the economy but he wants these changes, so that his legacy to America becomes a Marxist-fascist social order that will keep liberals in office by its dependence on government. He and his comrades are using the economic crisis as his justification for a subversive change contrary to the constitution.  As has been written here before, this Black President will enslave the American people.

A fitting retribution for a population that has forgotten why our forefathers signed the declaration of independence, which they knew by putting their signature to that document, they would be signing their own death warrant should King George defeat the American freedom movement.  Today and on April 15, 2009 many Americans are participating in a symbolic protest of unfair government taxation by throwing tea bags in bodies of water across America.

Almost fifty percent of Americans do not understand how precious liberty is to life.  They feel that liberty is given to them by government, rather than by keeping ever so diligent that a government does not tread on a freedom that was gained through the spilling of blood, the loss of loved ones, and the ultimate sacrifice of a hero, their life, so that their fellow Americans can live in freedom.

When an American truly understands the phrase, “give me liberty or give me death” that person knows the value of life, and that death is a better comfort than to live with the monkey of government upon your back.  Who would rather live with a government parasite sucking the blood of life from their body, watching their family reduced to begging government for sustenance, and being asked  by a Marxists-fascist regime for more sacrifice than they are entitled to.

The central principal of the Comrade President Obama Administration, is to make citizens dependent upon government at the expense of their liberty for the next 200 years.  The second American Revolution for our freedom and liberty has begun, join the fight, reaffirm the rights in the Declaration of Independance!

Idiotism or the mysterious science of idiocy is a profound descention into a bottomless well where you use art and skill of diving while sinking in government.  The swimmers are the congress and executive administration who are at the moment floundering in frigid economic water as we watch them drown.  How profound for these arrogant foolish people to promote a bottomless debt scheme to fund massive government spending when government cannot survive without its parasitic attachment to free enterprise.  There is no logic just faith and hope that the necessary change will come and save us all.  It is an idiot who would put their faith in government, rather than using the tools of their own god given ability.

Treasury Secretary Geithner and Federal Reserve Chairman Bernanke this week called for new powers to take over and regulate failing financial companies. These are no strings attached powers, that may not even be constitutional, but allow these new monarchs the authority to unilaterally and with out condition or oversight make monumental changes to the economy at their whim.  Let us free the terrorists in Gitmo, give them rights under the constitution, and ironically, give terrorist powers to government idiots to implement their fondest dreams based on hope and change not common sense.

U.S. stocks will fall and the government will nationalize more banks as the economy contracts through the end of 2009, said Nouriel Roubini, the New York University professor who predicted last year’s economic crisis, in a March 26 Bloomberg.com  article.

For the patient to get well he must receive consistent and historically tried and true methods to cure the disease.  The continued uncertainty of governments role in the market place on a daily basis with throwing money down a bottomless well is pure idiocy.  The DOW is the barometer of public sentiment in the economy, which just had a small seven percent rally on March 23 due to Geithners public private partnership to spend $1 trillion in taxpayer dollars on loan from China no doubt. This bear market rally is not sustainable, given the new powers requested by Beithner and Bernanke they see broader problems on the horizon or they are just preparing to put America in chains of socialism or both which will be much worse.

Let us hope that Americans who are now waking up to the bankruptcy of their bank accounts and their children’s and grandchildren’s futures can put a stop to this Idiotism.