Chris Martenson
Tuesday, October 6, 2009
This week’s report is going to be largely free of data and news snippets and full of my opinions and broad strokes of logic.
As my long-time readers know, I consider my main occupations to be information scout, dot-connector, and analyst. But as a side job, I also provide a decisive alternative to the mainstream economic propaganda machine, which is thoroughly dedicated to maintaining the status quo, regardless of cost.
I completely understand why our fiscal and monetary leaders would seek to hide the truth from us all. We live in an economy that is based on growth and debt – which means it is a Ponzi scheme – and there’s nothing more important to such a system than faith and confidence. So economic propaganda is not just a noxious by-product spewed from our economic tailpipe; it is viewed by those in power as a form of fuel, a necessity for our peculiar economic engine. They may have a point.
For my new readers, I want to make it clear that I do not expect or wish you to believe me over anyone else. Heck, trust neither me nor them, if that works for you; instead, trust yourself and your gut instinct about what is right. I began trusting myself several years ago, and I am much better off as a consequence.
This week (ending 10/1/09), despite the massive run up in stock over the past few months, despite the outrageous amounts of bailout and stimulus money applied, despite every attempt to put a positive spin on things, jobs continued evaporating, auto sales slumped to multi-decade lows, bankruptcies soared 41% over the prior year, and tax receipts continued to slide.
States such as California are sliding into fiscal chaos, and some, like Michigan and Alabama, are already there.
We are about to enter another leg of the downturn, and this one will be even bumpier and more uncertain than the last.
It’s Time To Prepare
PREVIEWTuesday, October 6, 2009
This week’s report is going to be largely free of data and news snippets and full of my opinions and broad strokes of logic.
As my long-time readers know, I consider my main occupations to be information scout, dot-connector, and analyst. But as a side job, I also provide a decisive alternative to the mainstream economic propaganda machine, which is thoroughly dedicated to maintaining the status quo, regardless of cost.
I completely understand why our fiscal and monetary leaders would seek to hide the truth from us all. We live in an economy that is based on growth and debt – which means it is a Ponzi scheme – and there’s nothing more important to such a system than faith and confidence. So economic propaganda is not just a noxious by-product spewed from our economic tailpipe; it is viewed by those in power as a form of fuel, a necessity for our peculiar economic engine. They may have a point.
For my new readers, I want to make it clear that I do not expect or wish you to believe me over anyone else. Heck, trust neither me nor them, if that works for you; instead, trust yourself and your gut instinct about what is right. I began trusting myself several years ago, and I am much better off as a consequence.
This week (ending 10/1/09), despite the massive run up in stock over the past few months, despite the outrageous amounts of bailout and stimulus money applied, despite every attempt to put a positive spin on things, jobs continued evaporating, auto sales slumped to multi-decade lows, bankruptcies soared 41% over the prior year, and tax receipts continued to slide.
States such as California are sliding into fiscal chaos, and some, like Michigan and Alabama, are already there.
We are about to enter another leg of the downturn, and this one will be even bumpier and more uncertain than the last.
Every so often I read an article that very nearly perfectly reflects my views on the bailout and stimulus packages. This is one of them, at least from the perspective that we’ve really solved nothing but instead are actually deeper in debt than before.
How is it possible to solve a crisis rooted in debt by going deeper in debt?
That’s a good question, and more and more financial professionals are asking the same thing. The following article is well worth reading in its entirety at the link below. Be sure to pay attention to the last sentence, as we’ll be spending some time on that very topic over the next few weeks.
Sustaining the Unsustainable
PREVIEWEvery so often I read an article that very nearly perfectly reflects my views on the bailout and stimulus packages. This is one of them, at least from the perspective that we’ve really solved nothing but instead are actually deeper in debt than before.
How is it possible to solve a crisis rooted in debt by going deeper in debt?
That’s a good question, and more and more financial professionals are asking the same thing. The following article is well worth reading in its entirety at the link below. Be sure to pay attention to the last sentence, as we’ll be spending some time on that very topic over the next few weeks.
What follows is a snippet from the most recent Martenson Report (Housing and Wealth: Part II).
This is important information. What I’ve found and present below is that the Federal Reserve is not just supporting the housing market, it is the housing market.
Just as important as a person’s desire to buy a home is their ability to gain access to mortgage funding.
The mortgage market is a gigantic beast with many moving parts, but it is pretty easy to understand from a high level.
The process works like this: A homeowner secures a mortgage from a bank or mortgage company. Then the mortgage is sold off to another company, with the cash generated by that sale now available to lend to other potential homeowners. Ultimately the mortgage may pass through several sets of hands but ultimately it lands with a terminal holder.
In that chain, the mortgage might get sold off several times, or perhaps sliced and diced by Wall Street wizards, but all that matters is that some company (with cash) is there at the end to buy the mortgage to keep the whole chain moving along.
Lately, the “terminal buyers” in that chain have increasingly ended up being the federal government (through the GSEs) and the Federal Reserve.
And not just by a little bit, but by a lot.
Here are the numbers:
Federal Reserve Buys More Than 100% of Mortgages Issued in 2009
What follows is a snippet from the most recent Martenson Report (Housing and Wealth: Part II).
This is important information. What I’ve found and present below is that the Federal Reserve is not just supporting the housing market, it is the housing market.
Just as important as a person’s desire to buy a home is their ability to gain access to mortgage funding.
The mortgage market is a gigantic beast with many moving parts, but it is pretty easy to understand from a high level.
The process works like this: A homeowner secures a mortgage from a bank or mortgage company. Then the mortgage is sold off to another company, with the cash generated by that sale now available to lend to other potential homeowners. Ultimately the mortgage may pass through several sets of hands but ultimately it lands with a terminal holder.
In that chain, the mortgage might get sold off several times, or perhaps sliced and diced by Wall Street wizards, but all that matters is that some company (with cash) is there at the end to buy the mortgage to keep the whole chain moving along.
Lately, the “terminal buyers” in that chain have increasingly ended up being the federal government (through the GSEs) and the Federal Reserve.
And not just by a little bit, but by a lot.
Here are the numbers:
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