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“You need to know what we know…”

Dan

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Also, plenty of new information about the completely unstable banking world and the huge mistakes investors are making right now in this major bear market rally.

Learn how major banks, with terrible balance sheets, are using your tax dollars to purchase bad assets from other major banks, at a premium…and then will use mark-to-market to mark up their own assets to these newly inflated prices. This is exactly how the fraudulent real estate scams of the early ’90’s and lately were created except this time the fraudulent appraisals are based upon mark-to-market.

While Wall Street and Washington rearrange deck chairs, listen to The Wall Street Shuffle and learn how your money is being stolen each day. After all, the “Shuffle” is not a dance but really an elaborate confidence game…and you are the mark every time. Learn the game any you will never invest the same.

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This is why we have not yet begun to face our financial crisis. Here are the next two huge waves of home mortgage refinances. Our long term interest rates must stay low to allow these mortgages to reset at a rate that the debtors can service. That means that the rate on the 10 year Treasuries must stay in the 3% range until 2012 – nearly 3 years!

051209 Mortgage Resets

And, just to add a little complexity. this does NOT include retail or commercial mortgage obligations that require permanent financing. It is important to note that distress in the commercial and retail mortgage markets happens about 18-24 months AFTER the onset of residential mortgage distress.

Our media and government should be ashamed for not reporting these statistics. To jump on the recovery bandwagon is shameful. If you assume that we will begin to require higher rates of return to compensate for greater risk and inflation, this means that asset values will go down just as rates rise. This leads to a “death-spiral” effect for real property.

Just food for thought…

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There are plenty of possible reasons the government might act the way it does right now, regarding fiscal and monetary policy, but the only logical reason for the government to act the way it does is to intentionally stoke the fires of inflation.

With a recognized national debt of nearly $12T and unrecognized additional liabilities of $60T for social programs and additional $10T plus for recently authorized federal guarantees, our government has no hope of paying the debt down and very little hope of servicing the debt UNLESS the debt and the debt service are paid back in highly inflated dollars.

There is no reason to spend trillions of borrowed or printed dollars on useless “stimulus” construction plans that neither create long term revenue, when the projects are completed, nor create many short term jobs. And the jobs created are primarily in the construction industry. To be entirely politically incorrect, a rather large number of these jobs will not go to Americans.

The very idea that we might possible face deflation is absurd. Bernanke was right when he said deflation can be cured quite easily by throwing dollars out of a helicopter. This is a guaranteed inflation inducing act, no different from borrowing or printing money that is backed by nothing but a promise.

And I’m not referring to a gold standard. The zero inflation theory is that a dollar is created only when new assets are created and the new dollars represent the increased quantity and quality of assets held. When you print a dollar and there is no concurrent increase in asset value, you create inflation and devalue the dollar. This devaluation is said to increase the attractiveness of our exports but we must actually make things that have relatively greater value than our foreign competition.

Overall, the government’s plan is very transparent but only if you keep your eye on the pea under the shell. The pea is our debt and no one wants you to focus on it. They want you to keep your eye on social issues that, while morally relevant to each of us in different ways, are entirely irrelevant to the financial survival of our economy.

The government will engineer every possible way to increase tax revenues while decreasing government services. This is the only thing that they can do. They know it. It is just the American people that I am concerned about.

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