Banksters Get Shafted

[hypnodoc]

With US debt approaching a completely unrepayable debt of almost 15 trillion dollars and a collapsing dollar and their 51st state "Australia" even worse off on a pro rata basis, the GFC of 2008 is nothing compared to what must come for the so called global economy. One little country has had the balls to tell the IMF and it it cohorts to Go Get Fcuked . I wish our lying so called pollies had the balls and the honesty to do the same, its going to be really interesting here when the so called big 4 banks can't refinance their 3 to 6 monthly 14 trillion dollars worth of borrowings that has created our massive housing bubble.

By Bill Wilson – Iceland is free. And it will remain so, so long as her people wish to remain autonomous of the foreign domination of her would-be masters in this case, international bankers.

On April 9, the fiercely independent people of island-nation defeated a referendum that would have bailed out the UK and the Netherlands who had covered the deposits of British and Dutch investors who had lost funds in Icesave bank in 2008.

At the time of the bank’s failure, Iceland refused to cover the losses. But the UK and Netherlands nonetheless have demanded that Iceland repay them for the “loan” as a condition for admission into the European Union.

In response, the Icelandic people have told Europe to go pound sand. The final vote was 103,207 to 69,462, or 58.9 percent to 39.7 percent. “Taxpayers should not be responsible for paying the debts of a private institution,” said Sigriur Andersen, a spokeswoman for the Advice group that opposed the bailout.

A similar referendum in 2009 on the issue, although with harsher terms, found 93.2 percent of the Icelandic electorate rejecting a proposal to guarantee the deposits of foreign investors who had funds in the Icelandic bank. The referendum was invoked when President Olafur Ragnur Grimmson vetoed legislation the Althingi, Iceland’s parliament, had passed to pay back the British and Dutch.

Under the terms of the agreement, Iceland would have had to pay £2.35 billion to the UK, and €1.32 billion to the Netherlands by 2046 at a 3 percent interest rate. Its rejection for the second time by Iceland is a testament to its people, who feel they should bear no responsibility for the losses of foreigners endured in the financial crisis.

That opposition to bailouts led to Iceland’s decision to allow the bank to fail in 2008. Not that the taxpayers there could have afforded to. As noted by Bloomberg News, at the time the crisis hit in 2008, “the banks had debts equal to 10 times Iceland’s $12 billion GDP.”

“These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks,” Iceland President Olafur Grimsson told Bloomberg Television.

The voters’ rejection came despite threats to isolate Iceland from funding in international financial institutions. Iceland’s national debt has already been downgraded by credit rating agencies, and now those same agencies have promised to do so once again as punishment for defying the will of international bankers.

This is just the latest in the long drama since 2008 of global institutions refusing to take losses in the financial crisis. Threats of a global economic depression and claims of being “too big to fail” have equated to a loaded gun to the heads of representative governments in the U.S. and Europe. Iceland is of particular interest because it did not bail out its banks like Ireland did, or foreign ones like the U.S. did.

If that fervor catches on amongst taxpayers worldwide, as it has in Iceland and with the tea party movement in America, the banks would have something to fear; that is, the inability to draw from limitless amounts of funding from gullible government officials and central banks. It appears that the root cause is government guarantees, whether explicit or implicit, on risk-taking by the banks.

Ultimately, such guarantees are not necessary to maintain full employment or even prop up an economy with growth, they are simply designed to allow these international institutions to overleverage and increase their profit margins in good times — and to avoid catastrophic losses in bad times.

The lesson here is instructive across the pond, but it is a chilling one. If the U.S. — or any sovereign for that matter — attempts to restructure their debts, or to force private investors to take a haircut on their own foolish gambles, these international institutions have promised the equivalent of economic war in response. However, the alternative is for representative governments to sacrifice their independence to a cadre of faceless bankers who share no allegiance to any nation.

It is the conflict that has already defined the beginning of the 21st Century. The question is whether free peoples will choose to remain free, as Iceland has, or to submit.

Read more at NetRightDaily.com: http://netrightdaily.com/2011/04/iceland-declares-independence-from-international-banks/#ixzz1JYOIC5rJ

Edited 15/04/11 02:19 AM by hypnodoc

[ktford]

Hey Ricardo, typical interesting stuff from you sir.

Bring on the world revolution I say, all I need is one of those zillion rounds per second gun

Here's hoping the banks go upside down and then some

Im so sick of the cost of living and the widening gap of rich v poor

With 1/3 of this countries work force employed by some form of government we are in a hopeless situation

I fear for my 4 young children as to what chances I'll be able to provide them with

p.s. Good to hear you still passionate Ric

[hypnodoc]

Hey Mate. Yeah still got the passion. It's getting very interesting out there, about 5 banks a day going belly up in the USA, below is the latest from last Friday. Not to worry though, Krud and Queen Joolia have assured us that it can never happen here, hollow echo's from the the past lies of Gordon Browne, the Greek Govt, The Irish Govt, The US Govt, The Spanish Govt, and every other Govt and all the international Banksters before 2008 .

They are still full on applying band aids, but soon the main artery will burst and then the $hit will hit the fan bigtime. One thing is for sure as the artificial currencies continue to fail, and Bernanke keeps the US dollar printing running 24/7 Gold and Silver will keep rising even if only by the grace of currencies devaluing.

I bought 45,000 ounces of Silver at $9.30 an Oz three years ago and everybody said I was nuts and should buy property and stocks. Now, despite what the experts say, in the real world stocks and property have gone down the toilet while silver is about to break $50 and I still tripping into the Perth Mint once a week to keep the pile growing. Who needs a stock market or a financial advisor, how good were those armchair experts in late 2008 . Plus a 100 Oz silver bar is a lot nicer to hold than some trader paper.

The main thing over the next year is to get out of Debt. Despite what the newspapers would have you believe Australia does have a 14 trillion derivatives bubble that nobodies talking about . Because of the way FIAT money is created out of thin air by central banks it always end up worthless and we are witnessing the results of that reality shaking through our so called Global Economy, and if the old adage "When America Sneezes Australia Catches A Cold" holds true then we are in deep deep do do. No good owning property if there are no banks left to finance any potential buyers .

And just because a few forign owned multi nationals are paying huge wages to a few thousand people while pumping billions of dollars worth of commodities out of the ground in WA, that does not mean that our national economy is in any kind of good shape, any average Joe will tell you that. Get out of debt, keep some or most of your cash under the mattress and hang on for the ride, its going to get interesting.

Heres the latest list of this weeks failed US banks

Good morning Ladies and Gentlemen:

Before beginning, I would like to announce our latest entrants into the our banking morgue, having taken their last breath last night. Last week, Sheila gave the troops a week off and she made up for it last night in the closing of 5 banks. Here is the bank closing information courtesy of Jim Sinclair :

Bank Closing Information April 29, 2011

Community Central Bank, Mount Clemens, MI

The Park Avenue Bank, Valdosta, GA

First Choice Community Bank, Dallas, GA

Cortez Community Bank, Brooksville, FL

First National Bank of Central Florida, Winter Park, FL

http://www.fdic.gov/

[hypnodoc]

In August 2005, The Times ran the headline, “US heading for house price crash, Greenspan tells buyers.“

His warning came just a few months before his retirement. After years of propping up bubbles and keeping interest rates at dangerously low levels, Greenspan was obviously thinking about his legacy… making sure in years to come he could say, “I told you there was a bubble.”

The Times wrote:

“In a pre-retirement speech to fellow central bankers at Jackson Hole, Wyoming, Mr Greenspan said that people were investing in houses as if they were a one-way bet, not allowing for the risk of price falls. He said ‘history had not dealt kindly’ with investors who kept ignoring risks.”

No bubble here, move along

“Thankfully” for the US housing industry, but not for those thinking about taking a plunge into the housing market, future Federal Reserve chairman, Dr. Ben S. Bernanke was on hand. Two months after Greenspan’s comments, Bernanke downplayed fears of a house price collapse.

In a testimony to the US Congress, Dr. Bernanke said:

“House prices are unlikely to continue rising at current rates… a moderate cooling in the housing market, should one occur, would not be inconsistent with the economy continuing to grow at or near its potential next year.”

In other words, in October 2005, Dr. Bernanke thought the US housing market would [cough] plateeeeeeeeau. Sound familiar?

One year later, The Washington Post headlined, “Housing Slump Slows Economy“. It wrote:

“The cooling housing market sent a chill through the economy in the third quarter, helping to slow growth to its weakest pace in more than three years.”

Interestingly, the Post also wrote:

“Heading into the final campaign stretch, President Bush [Ed note: remember him?] and other Republicans have emphasized the good economic news, such as the low 4.6 percent unemployment rate…”

[Needle scratches off record]

What’s that? The unemployment rate in the US was just 4.6% in October 2006. More on that in a minute…

Then by the end of May 2007, MarketWatch reported that “U.S. home prices fall for first time since 1991“.

It noted:

“U.S. home prices dropped 1.4% in the first quarter compared with a year earlier, the first year-over-year decline in national home prices since 1991, according to the S&P/Case-Shiller index…

“A year ago, home prices were rising at an 11.5% pace. Prices have been falling for the past three quarters.”

MarketWatch even included a chart showing the price growth and price decay:

Source: MarketWatch

Unemployment lags house price falls

Before I go on, back to that US unemployment number. Take a look at it on the chart below [Ed note: click on the image to view annotations]:

Source: Google

In a nutshell, this timeline disproves one of the key arguments made by spruikers – an idea we’ve never believed anyway – that Australian house prices can only fall if there’s a major shock to the economy.

The chart above proves that isn’t the case.

The S&P/Case-Shiller index revealed house price growth was in a steep decline from early 2006… and went negative in the first quarter of 2007.

During that period, what was the US unemployment rate? That’s right, it was around 4.5%. That’s lower than the current Australian unemployment rate. It also tells you the US unemployment rate is just as rigged as the Australian unemployment rate.

At that time there was no major shock to the economy. In fact, the first of the big financial firms to collapse – Bear Stearns – didn’t collapse until March 2008. A full year after house prices had started to fall.

And even if you take the first signs of trouble at Bear Stearns – the USD$3.2 billion “self” bailout of two of its hedge funds – that was only in June 2007… months after house prices started to sink. And still long before the market received a genuine shock to the system.

As I wrote in yesterday’s Money Morning, in response to Jessica Irvine’s terrible Sydney Morning Herald article:

“All that’s required for house prices to fall is for people to think that house prices will fall. Just in the same way that share prices can fall when they reach a peak. Sellers look to get out first before everyone else gets the same idea.”

This is what’s playing out in Australia right now.

Housing discounted by half!

Each day we’re getting letters into the Money Morning mailbag with examples of falling property prices. Money Morning reader Rick sent us a flyer showing a Port Adelaide development having slashed up to 59% off the original listing price of some properties.

Or this one with a 51% discount to the original price:

Source: Brock Harcourts

And if that wasn’t a sign of desperation, check out what the vendor is prepared to do in order to shift a dog of a commercial property:

“A single waterfront commercial property – offered at a price representing extraordinary value discount by 59%. All State Government ‘Stamp Duty Conveyance’ to be paid by the vendor saving thousands of dollars.”

Wow! Desperate? You bet it is.

Today, Money Morning reader Katie sent us an article from The Advertiser in Adelaide, “Glut gives homebuyers an edge“:

“The number of homes for sale is at levels comparable to peak spring season, forcing greater competition, industry experts say.”

You know what more competition means don’t you? That’s right, it causes prices to fall.

Money Morning reader Phil, sent us this from Smartcompany.com.au, “Expert tips property prices on Sunshine and Gold coasts to fall 7% as region becomes a ‘basket case’”.

And the rest. Only 7%? We don’t think so. Try 40% in both those areas.

Few people are even thinking about buying investment properties or holiday homes at the moment. And we’ll guess the Sunshine and Gold coasts rely on these buyers for a big share of the annual property turnover.

Gold Coast prices to fall by 70%?

In fact, the article quotes Louis Christopher – the only property guru we’ve come across who seems to make any sense:

“For the Sunshine and Gold Coasts especially we’re going to see a decline, but it could potentially be worse [than 7%]. We’re seeing similarities to the Florida markets here, and they corrected by 70%.

“We’re not saying it’s going to be the same as that… But could we end up with a cumulative decline? Absolutely, we’re heading that way.”

Zoiks! Mr. Christopher doesn’t think Queensland properties will fall by 70%. But why not? Why shouldn’t they? There’s no reason they shouldn’t.

Still holding that Queensland property? I’d do the numbers if I were you. If you’re mortgaged up to the eyeballs, you might want to offload it while you can.

So much for the – what Jessica Irvine calls – “some large external shock”.

Can you see any large external shocks where you are? No, me neither.

What I can see, is an economy and a consumer that’s fast running out of money… borrowed money that is.

The mainstream press and the Reserve Bank of Australia (RBA) can put any spin on it they like, the facts are facts, house prices are plummeting and over-leveraged homeowners are already copping it in the eye.

Not that the RBA will admit that. In its recently released Financial Stability Review, it states:

“Between August 2008 and April 2009, the average standard variable mortgage interest rate fell by almost 4 percentage points. There is evidence to suggest that some households used this period as an opportunity to pay down their mortgage ahead of schedule, for example by maintaining the size of their regular repayments despite required repayments falling. Around 58 per cent of the households with mortgage debt reported being ahead of schedule on their mortgage payments as at the 2009 survey…”

When extra repayments aren’t extra repayments

This is a good one. The only problem is that it omits an important fact. Notice this is a survey of households, not of banks. Ask banks the same question and they’ll quote a much, much lower number.

Why? Because as Money Morning reader Andrew points out:

“To the point on “people being ahead on their payments” providing a buffer to tough times in housing, people should recheck to see if that buffer can be accessed if they lose their job, or if the value of the property falls. I’m fairly certain the former is explicitly written to most bank contracts (it was in my NAB one), and that the latter could fall into the ‘terms subject to change’ clause.”

The fact is, people only think they’re ahead on their mortgage. With most banks, even though interest rates had fallen, unless you contacted the bank to ask for the monthly required payment to be recalculated, the “extra” repayments don’t actually count as extra to be withdrawn.

The “extra” just went towards repaying more of the principal.

In other words, it’s not available for re-draw, and if you did want access to it, you’d have to withdraw it from your so-called equity… which as we know, equity is just a smart banking trick of making you think a debt is an asset.

So forget this nonsense about home owners being ahead, because most aren’t… it’s just that they think they are.

But even more than that, the mainstream have fallen into the trap of thinking the large external shock must come first. Wrong. What comes first is the slowing and then contraction of credit.

It is the slowing and the contraction of credit that causes the shock, not vice versa.

Simply because – as we’ve written before – any economy built on Ponzi finance will ultimately become a victim of Ponzi finance.

That is, as less credit is created and less credit is demanded due to borrowers being maxed out, there is less air being pumped into asset bubbles.

Ponzi schemes must always have an ever greater net inflow of new money. As soon as that inflow slows, credit slows, price growth slows, and the consumer begins to see reality.

House prices can’t grow when credit is slowing and then contracting. If you want to call that a large external shock, then you can. The evidence is already around you that this is already happening.

If you’ve been looking at unemployment numbers as a sign of a future shock, I’m afraid – as experience in the US shows – you’ve been looking in the wrong direction.

Unemployment will rise, but only after house prices have already fallen.

But don’t panic, because our old pal, Peter Switzer writes:

“The judgement is in on the housing bubble in Australia and the decision is that there is no bubble but we are “uniquely positioned” with house prices 25 per cent to 35 per cent overvalued. But the question is when will this be reversed?”

He’s referring to a report from Goldman Sachs – you know Goldman Sachs, the firm that needed emergency cash flows from Warren Buffett and the US government to bail it out of bets it had made on the US housing market.

As always, I encourage you to make up your own mind. Which sounds more credible? The evidence I’ve give you above and in previous editions of Money Morning, or the idea that Australian house prices are overvalued by 25-35%, but there’s no bubble because Australia is “uniquely positioned”.

Which is just another way of saying, “Australia is different.” Er, no it’s not. The bubble-deniers really do need to lift their game… it’s getting quite embarrassing now.

[SuckSqueezeBangBlow]

interesting, our place is on the market and we are going to sit on a whole pile of $$$ for a while and lease instead.

[sexual harrassment panda]

if you think the gold and sunshine coast will be hit hard then check out Cairns

[hypnodoc]

I Couldn't Resist this one.

Charlie Reese is a former columnist of the Orlando Sentinel Newspaper.

What you do with this article now that you have read it… is up to you.

This might be funny if it weren’t so true.

Be sure to read all the way to the end:

Tax his land,

Tax his bed,

Tax the table,

At which he’s fed.

Tax his tractor,

Tax his mule,

Teach him taxes

Are the rule.

Tax his work,

Tax his pay,

He works for

peanuts anyway!

Tax his cow,

Tax his goat,

Tax his pants,

Tax his coat.

Tax his ties,

Tax his shirt,

Tax his work,

Tax his dirt.

Tax his tobacco,

Tax his drink,

Tax him if he

Tries to think.

Tax his cigars,

Tax his beers,

If he cries

Tax his tears.

Tax his car,

Tax his gas,

Find other ways

To tax his ass.

Tax all he has

Then let him know

That you won’t be done

Till he has no dough.

When he screams and hollers;

Then tax him some more,

Tax him till

He’s good and sore.

Then tax his coffin,

Tax his grave,

Tax the sod in

Which he’s laid…

Put these words

Upon his tomb,

‘Taxes drove me

to my doom…’

When he’s gone,

Do not relax,

Its time to apply

The inheritance tax.

Accounts Receivable Tax

Building Permit Tax

CDL license Tax

Cigarette Tax

Corporate Income Tax

Dog License Tax

Excise Taxes

Federal Income Tax

Federal Unemployment Tax (FUTA)

Fishing License Tax

Food License Tax

Fuel Permit Tax

Gasoline Tax (currently 44.75 cents per gallon)

Gross Receipts Tax

Hunting License Tax

Inheritance Tax

Inventory Tax

IRS Interest Charges IRS Penalties (tax on top of tax)

Liquor Tax

Luxury Taxes

Marriage License Tax

Medicare Tax

Personal Property Tax

Property Tax

Real Estate Tax

Service Charge Tax

Social Security Tax

Road Usage Tax

Recreational Vehicle Tax

Sales Tax

School Tax

State Income Tax

State Unemployment Tax (SUTA)

Telephone Federal Excise Tax

Telephone Federal Universal Service Fee Tax

Telephone Federal, State and Local Surcharge Taxes

Telephone Minimum Usage Surcharge Tax

Telephone Recurring and Nonrecurring Charges Tax

Telephone State and Local Tax

Telephone Usage Charge Tax

Utility Taxes

Vehicle License Registration Tax

Vehicle Sales Tax

Watercraft Registration Tax

Well Permit Tax

Workers Compensation Tax

STILL THINK THIS IS FUNNY?

Not one of these taxes existed 100 years ago, & our nation was the most

prosperous in the world.

We had absolutely no national debt, had the largest middle class in the

world, and Mom stayed home to raise the kids

[Guest XR09]

Hospitality on the coasts is just stuffed. Noosa is really suffering. Rent here is just ridiculous. I was paying $3700 a week for 100sq back in the nineties for my restaurant . God knows what they are paying now. And as interest rates go up. So will rent. And restaurants will close. And for most up here there is no other work.

Funny how the boom and gloom starts on the fringes and works it's way into the cities. A wise old guy told me you could tell how the economy was by the amount of cranes working in the CBD. Stuff all working up here. Houses are at the same price they were back in the early 00ties, units are even less.

I just went halves in an investment house in Buderim. No way could I have got into a place here back then. Coolum prices are really down. I think that place will be the last to come back though. Shame, nice place, I could live there.

What will the US do ?? Start another war ?? Through history there has been a biggy at the top and bottom of every economic cycle. Funny how they go uninvited into Pakistan and get Bin baby just before this debt is due. England has gone to the dogs as well. Highest ever debt.

It's hard to imagine the world and system we know going to crap. Or even worse crap than it's in now. Could this be the start of the end of globalization ... Hope so. We might see the Falcon stay RWD for a bit longer.

[hypnodoc]

Hey XR09. Its going to get a lot worse before it gets any better, especially if we in Aus get the flu when America sneezes. They have run out of the ability to print any more money, they are broke. Instead of following the constitution the head of the Fed Tim Geithner is just going to print more toilet paper and nobody ever dares metion the uncountable trillions coming in the form of the Derivatives bubble. All the optimism in the world cannot over ride mathematical reality. Banks have been creating paper money (debt) for so long now that its close to end game. I found this today.

We have a quick question for the Treasury Secretary: according to today's DTS, as of close yesterday, the Treasury had $14.274 trillion in debt subject to the ceiling of $14.294 trillion, or a $20 billion "buffer." To the best of our knowledge there were no redemptions today, and certainly none in the non-Bill pipeline this week. So, uh, how exactly did Tim Geithner auction off $32 billion today? (and plans to auction off another $40 billion tomorrow and Thursday)

[sexual harrassment panda]

I was actually looking at buying a unit in a cairns resort complex a couple weeks ago. Once I looked into it I worked out I could rent one for $50 a week more than the body corp and rates. loan repayments would have been an extra $300 over renting a joint. Plus the arse is falling out of the market so I'll just wait me thinks.

Might by me a street in the USA next year