Home Sales Drop 27 Percent In July And Things Are Only Going To Get Worse For The U.S. Housing Industry

On Tuesday the National Association of Realtors announced that existing home sales in the United States dropped a whopping 27.2% in the month of July.  The consensus among analysts was that we would see a drop of around 13 percent, so when the 27 percent figure was announced it sent a shock through world financial markets.  To say that the real estate industry is alarmed by these numbers would be a tremendous understatement. What we are seeing unfold is essentially “Armageddon” for those involved in the housing and real estate industries.  The real estate market is grinding to a standstill and a shockingly low number of people are actually in the market to buy a home right now.  In the months ahead home sales may pick up a little bit, but only if housing prices start to fall.  Why?  Because right now there are tons of houses on the market and there are very few qualified buyers available to purchase them and potential buyers are starting to realize this.  Buyers are beginning to understand that they have all the leverage now and they are waiting for prices to fall.

Anyone who has taken Economics 101 in college knows that when supply is high and demand is low prices will fall, and that is exactly the situation we have in the U.S. housing market right now.

At the moment, most home sellers in the United States are very hesitant to lower the prices on their homes too much.  Many have no intention of selling their homes below what they originally paid for them, and many others truly believe that the housing market will eventually rebound.

But the truth is that housing prices are simply not going to rebound to 2006 levels.  If anything, they are going to continue to fall.

The following are the three basic points that every American needs to understand about the U.S. housing market right now….    

1) There Is A Gigantic Mountain Of Unsold Homes On The Market

There are a staggering number of unsold homes on the market right now.  As you can see from the chart from the Calculated Risk blog below, there is now over a year’s worth of unsold homes flooding the marketplace….

So who is going to buy all of those unsold homes with so few qualified purchasers in the marketplace?

That is a very good question.

Unfortunately, all the signs indicate that the glut of unsold homes is going to get even worse.

As of this March, U.S. banks had an inventory of 1.1 million foreclosed homes, which was a new all-time record and which was up 20 percent from one year ago.

And the tsunami of foreclosures and repossessions just keeps growing….

*One out of every seven mortgages were either delinquent or in foreclosure during the first quarter of 2010.

*According to RealtyTrac, a total of 1.65 million U.S. properties received foreclosure filings during the first half of 2010.

*U.S. Banks repossessed 269,962 U.S. homes during the second quarter of 2010, which was a new all-time record.

The supply of unsold homes is already incredibly massive and it is growing at a staggering rate. 

With such a flood of homes on the market, why in the world would anyone in their right mind pay a premium price for a home in 2010?

2) There Are Not Nearly Enough Qualified Buyers Seeking To Buy Homes

The banks and lending institutions that survived the subprime mortgage crisis of 2007 and 2008 learned some very valuable lessons.  The days when even the family dog could get approved for a home loan are long gone.  Now the pendulum has swung to the other end of the spectrum.  Fearful of making more bad loans, banks and lending institutions have really, really tightened up lending standards.  So a lot fewer people are getting approved for home loans these days.

That makes a lot of business sense for banks and lending institutions, but it also means that there are a lot fewer qualified buyers out there looking for homes.

Not only that, but millions of Americans who could potentially buy homes are waiting for the market to go down even further.

When you add that all together, you get the kind of home sales numbers discussed at the beginning of the article.

The Mortgage Bankers Association recently announced that demand for loans to purchase U.S. homes has sunk to a 13-year low.  Unless the number of Americans getting approved for home loans starts increasing, you simply are not going to see housing numbers recover much.

And the truth is that Americans are not even doing much browsing for homes right now.  Even Internet searches for homes are way down.  Internet searches on real estate websites are down about 20 percent compared to this same time period in 2009.

So with a massive flood of houses on the market and with very few qualified buyers to purchase them, how in the world are housing prices supposed to go up?

3) The Housing Industry Will Never Fully Recover Without A Jobs Recovery First

In order to get qualified for home loans, Americans have to have good jobs first.  But in this economy that is a huge problem.

Robert Dye, a senior economist with PNC Financial Services Group, recently told USA Today what he believes the bottom line problem of this housing crisis is…. 

“Jobs, jobs, jobs”

Today, 14 million Americans are unemployed and millions more are underemployed.  Unfortunately, there are not nearly enough good jobs for all of them.

Today it takes the average unemployed American over 8 months to find a job.  The number of Americans receiving long-term unemployment benefits has risen a staggering 60 percent in the past year alone.

Things have gotten so bad that according to one recent survey 28% of all U.S. households have at least one person that is searching for a full-time job.

To get an understanding of how horrific the unemployment situation has become in the United States, take 38 seconds to watch the incredible video posted below….

The truth is that without jobs, Americans simply cannot buy homes.

So is there any hope that we will see a robust jobs recovery any time soon?

Well, as I have written about previously, unfortunately there is every indication that the employment market is going to get even worse.

So the bottom line is that the housing market is going to continue to suffer.

There is going to continue to be a massive glut of unsold homes on the market.

There are going to continue to be very few qualified buyers in the marketplace.

Large numbers of Americans are going to continue to be unemployed.

Yes, that is a lot of bad news, but you aren’t reading this column to get the same kind of mindless optimism that you get from the mainstream media news.

Even Tony Robbins Is Warning That An Economic Collapse Is Coming

It seems like almost everyone is warning of a coming economic collapse these days.  Do you remember Tony Robbins?  He is probably the world’s best known “motivational speaker” and his infomercials dominated late night television during the 80s and 90s.  He was always urging all of us to “unleash the power within” and to take charge of our lives.  Well guess what?  Now Tony Robbins is warning that an economic collapse is coming. In fact, he has issued a special video warning about what he believes is about to happen. Considering the incredible connections that he has at the highest levels of the financial world, it makes a lot of sense to consider what he is trying to warn us about. Robbins says that a “major retracement” is coming to financial markets and that the coming collapse is going to be a “painful process” as we go through it.  Those familiar with Tony Robbins know that he always goes out of his way to stress the positive, so if even he is openly warning the public about a coming economic nightmare than you know that things are starting to get really, really bad out there.

The video that Tony Robbins published where he gives his economic warning is posted in two parts below.  This is unlike any Tony Robbins video that you have ever seen before and it is absolutely jaw dropping….  

Part 1:

Part 2:

So is Tony Robbins right about what is coming?

Yup.

An economic collapse is coming.

You need to get prepared.

For those not familiar with my previous articles, let’s review just some of the reasons why America is headed towards an economic nightmare of unprecedented proportions….

The National Debt – The U.S. government has accumulated a national debt that is rapidly approaching the 14 trillion dollar mark.  According to Democrat Erskine Bowles, one of the heads of Barack Obama’s national debt commission, if we continue on the path we are on the U.S. government will be spending $2 trillion just for interest on the national debt by 2020.

State And Local Debt – Many of America’s state and local governments may be in even worse financial shape than the federal government is.  In fact, some state and local governments are in such a financial mess that they have starting cutting off even the most essential services.

Consumer Debt – The total amount of consumer debt that Americans have accumulated now stands at approximately 11.7 trillion dollars

The Trade Deficit – The U.S. trade deficit has exploded to nightmarish proportions over the past two decades.  Every single month tens of billions more dollars flows out of the country than flows into it.  The rest of the world is literally bleeding us dry in slow motion.

No Jobs – Today it takes the average unemployed American over 8 months to find a job.  The number of Americans receiving long-term unemployment benefits has risen over 60 percent in just the past year.

The Credit Crunch – The U.S. is experiencing a credit crunch unlike anything it has seen since the Great Depression.  Lending has really, really dried up, but without loans our economic system cannot function properly.

The Housing Crisis – Even with mortgage rates at historic lows, a shockingly low number of Americans are buying houses.  There has been a total collapse in home sales since the home buyer tax credit expired.  At the same time, mortgage defaults, foreclosures and home repossessions by banks continue to set new all-time records. 

Rising Bankruptcies – Nationwide, bankruptcy filings rose 20 percent in the 12-month period ending June 30th.

Rising Poverty – One out of every eight Americans and one out of every four American children are now on food stamps.  Approximately 50 million Americans couldn’t even afford to buy enough food to stay healthy at some point last year.

The Coming Pension Crisis – America is facing a pension crisis that is so nightmarish that it is almost impossible to adequately describe it.  State and local government pension plans are woefully underfunded, dozens of large corporate pension plans either have collapsed or are on the verge of collapsing, Social Security is a complete and total financial disaster and about half of all Americans essentially have nothing saved up for retirement.

The Derivatives Bubble – Our financial system has become a gigantic gambling parlor and we have allowed a horrific derivatives bubble to develop that could destroy the entire world economy if it ever bursts.  Nobody knows exactly how big the derivatives bubble is, but low estimates place it at around 600 trillion dollars and high estimates put it at around 1.5 quadrillion dollars.  Once that bubble pops there simply will not be enough money in the entire world to fix it.

The Federal ReserveThe Federal Reserve has devalued the U.S. dollar by over 95 percent since 1913 and it has been used to create the biggest mountain of government debt in the history of the world.  There are many economists who would argue that the Federal Reserve is at the very core of our economic problems.

As we get even closer to the economic abyss that we are racing towards, even more big names such as Tony Robbins will come forward with warnings.

The truth is that these problems did not develop overnight, and they are not going to be solved overnight either. 

Perhaps our economic future is best summed up by this one statement that economist Paul Krugman recently made….

“America is now on the unlit, unpaved road to nowhere.”

It would be great if I could write about America’s bright economic future and the unlimited prosperity that is ahead for all of us, but that would be a lie.

We are headed for an economic collapse.

It is going to be painful.

It is time to get prepared.

5 Trillion MORE Dollars To Fix Fannie Mae And Freddie Mac???

Fannie Mae and Freddie Mac have become gigantic financial black holes that the U.S. government endlessly pours massive quantities of money into.  Unfortunately, if the U.S. government did allow Fannie Mae and Freddie Mac to totally implode, both the mortgage industry and the housing industry in the United States would completely collapse.  So essentially the U.S. government finds itself between a rock and a hard place.  Prior to the financial crisis of the last few years, Fannie Mae and Freddie Mac were profit-seeking private corporations that also had a government-chartered mission of expanding home ownership in America.  But now that they have been officially taken over by the U.S. government, they have become gigantic bottomless money pits.  It is hard to even describe just how much of a mess Fannie and Freddie are in.  However, the unprecedented intervention by Fannie Mae and Freddie Mac in the mortgage market over the past couple of years has been about the only thing that has kept it from plunging into absolute chaos.  So what does the future hold for Fannie Mae and for Freddie Mac?  Well, according to one estimate, it could take another 5 trillion dollars to “fix” Fannie Mae And Freddie Mac.

Yes, you read the correctly.  According to an article in the Christian Science Monitor, Fannie Mae and Freddie Mac are facing $5 trillion dollars in liabilities that the federal government is going to have to deal with one way or another….

An exit strategy could involve adding Fannie and Freddie’s roughly $5 trillion in obligations, in effect, to a federal balance sheet that already includes $13.3 trillion in federal government debts. The GSE obligations would be a different animal, because those liabilities would need to be covered by taxpayers only if things went bad in the housing market.

It is hard to even put into words how much money that is.  If you were alive when Jesus was born, and you spent one million dollars every single day since then, you still would not have spent one trillion dollars by now.

But Fannie Mae and Freddie Mac are not a one trillion dollar problem.

They are a five trillion dollar problem.

And if the housing market gets even worse (which it will), that figure could rise substantially.

Of course the U.S. government should have never gotten into the mortgage business in the first place, but these days the U.S. government is intervening in virtually every industry.

And don’t expect U.S. government support for the mortgage industry to stop any time soon.  In fact, U.S. Treasury Secretary Timothy Geithner says that the U.S. government plans to continue to play a prominent role in back-stopping mortgages in order to keep the U.S. economy stabilized.

But if the only thing keeping the U.S. housing industry from plunging into the abyss is unprecedented intervention by the U.S. government, what does that say about the overall health of the U.S. economy?

Mortgage defaults and foreclosures continue to set new all-time records even with all of this government intervention.  In fact, major U.S. banks wrote off about $8 billion on mortgages during the first 3 months of 2010, and if this pace continues it will even exceed 2009’s staggering full-year total of $31 billion.

Not only that, but construction of new homes in the U.S. and applications to build new homes in the U.S. both declined to their lowest levels in more than a year during July.

And things are rapidly getting even worse for Fannie Mae and Freddie Mac.  Mortgages held by Fannie and Freddie are going delinquent at a very alarming pace as the Christian Science Monitor recently explained….

As of March 31 this year, 6.3 percent of mortgages held by Fannie and Freddie are either seriously delinquent or in foreclosure. Although that’s down slightly from the figure three months earlier, it represents a big one-year rise (from 3.9 percent in early 2009).

An increase in delinquencies of over 50 percent in just one year?

That is not a promising trend.

If the U.S. housing market takes another big dive in the next few years, and things certainly look very ominous at the moment, what in the world is that going to do to Fannie Mae and Freddie Mac?

So what is the solution?

Well, on Tuesday the Obama administration invited prominent banking executives to offer their thoughts on the mortgage market.

So what was the consensus?

It was something along the lines of this: “Please, oh please, oh please continue propping up the 11 trillion dollar mortgage market.”

So much for capitalism, eh?

When even the banksters are begging for massive ongoing government intervention you know that the game has changed.

Adam Smith must be rolling over in his grave.

But this is where we are at.

We are on the verge of a horrific economic collapse, and it is only enormous intervention by the U.S. government that is holding things together.

Fannie Mae, Freddie Mac, the Federal Housing Administration and the Veterans Administration backed approximately 90 percent of all home loans made during the first half of 2010.

So where would we be without the government?

Of course we could let the whole thing collapse and allow housing prices to eventually settle at a level where people could actually afford them, but what fun would that be?

No, for now the U.S. government will continue to endlessly spend billions of dollars to prop up a system that is artificially inflated and that is destined to collapse one way or another.

The truth is that the American middle class is slowly being wiped out and they just can’t afford to pay $300,000, $400,000 or $500,000 for their houses anymore.

Without good jobs, the American people are not going to be able to afford hefty mortgages.  Unfortunately, millions upon millions of middle class jobs are being offshored and outsourced every single year and they are not coming back.

There simply will never be a recovery in the housing market without jobs.  But in the new global economy, American workers have been put in direct competition with the cheapest labor in the world.  It doesn’t take a genius to figure out that jobs are going to be taken away from American workers and given to people who are willing to work for less than ten percent as much.

So, no, the housing market is never going to fully recover.  Things got dramatically out of balance over the past couple of decades, and the housing market is going to try to restore that balance regardless of what the U.S. government does. 

The U.S. government can continue to throw billions (or even trillions) of dollars at the problem, but in the end the underlying economic fundamentals are simply not going to be denied.

Will Quantitative Easing By The Federal Reserve Unleash Economic Hell?

Prior to the financial crisis of 2007 and 2008, the Federal Reserve could always count on being able to stimulate the U.S. economy with a quick cut to interest rates.  But now with interest rates just barely above zero, the Federal Reserve is searching for other ways to pump life into a U.S. economy that is staggering about like a drunken college student.  One of the ways that the Federal Reserve can do this is through something called “quantitative easing”.  In essence, what happens is that the Federal Reserve creates money out of thin air and starts buying things like U.S. Treasuries, mortgage-backed securities and corporate debt.  But many economic analysts are now warning that further rounds of quantitative easing by the Federal Reserve could end up setting off a series of events that could ultimately unleash economic hell.  In fact, there are quite a few high profile commentators who now believe that hyperinflation in the United States is absolutely inevitable.

For those not familiar with quantitative easing, Wikipedia has a pretty good definition….

The term quantitative easing (QE) describes a form of monetary policy used by central banks to increase the supply of money in an economy when the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.[citation needed] A central bank does this by first crediting its own account with money it has created ex nihilo (“out of nothing”).[1] It then purchases financial assets, including government bonds, mortgage-backed securities and corporate bonds, from banks and other financial institutions in a process referred to as open market operations.

But is it really a good idea for a privately-owned central bank to have the power to create money out of nothing and to do whatever it wants with it outside of U.S. government control?

Of course not, but we dealt with those issues in another article.

What we will concern ourselves with in this article are the negative effects that could be unleashed as the Federal Reserve further abuses this power.

Now keep in mind that disasters don’t usually happen overnight.  They usually build over time.  When the Federal Reserve begins new rounds of quantitative easing, it will take time for the effects to be felt.

And so far, the new quantitative easing measures that the Federal Reserve has implemented have been relatively mild….

*The Federal Reserve has announced that it will “continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature”.

*The Federal Reserve has also announced that it has decided to reinvest principal payments on mortgage holdings into U.S. Treasury securities.

*The Federal Reserve Bank of New York announced on Wednesday that it will purchase $18 billion in U.S. Treasury securities between now and mid-September.

But most analysts are expecting quantitative easing by the Fed to accelerate – especially if the U.S. economy continues to flounder.

So is there a reason we should be concerned about all of this?

Well, yes there is.

Marc Faber, the author of “The Gloom, Boom and Doom Report”, recently warned CNBC that all of this intervention by the Federal Reserve is going to create a “final crisis” that will destroy the U.S. financial system….

“Investors should have listened to me already six months ago when I wrote that the Fed will continue to monetize … they will print and print and print until the final crisis wipes out the whole system.”

In a recent article, Bob Chapman of the International Forecaster described some of the financial gymnastics that our “financial authorities” go through just to keep the current shell game going….

But first, we ignore things like monthly hundred billion plus mathematical discrepancies between the amount of the government’s deficits and the amount of treasury bonds being sold.  Then we give the proceeds from the bogus excess treasury sales to foreign countries, foreign central banks and sovereign wealth funds as well as Cayman Island hedge funds so they can do what with it?  Why, so they can buy US treasury paper and agency paper, among other things.  Yep, we set up the straw men, fund them with counterfeit money illegally created out of thin air beyond what is needed to fund the ever-increasing deficit being created by the drunken sailors running the US government, and we then magically create categories of new mega-buyers in our financial reports to show everyone how our treasury paper is just as “beloved” as in the old days.  Why, even the totally bankrupt UK has magically created $180 billion for the express purpose of buying up those treasuries to keep the whole rip-off party going.

What a mess they have created.

Things have gotten so bad that even CNN is publishing articles that openly acknowledge the crisis.  In a recent article on CNN entitled “Is This Finally The Economic Collapse?”, Keith R. McCullough warned that the Federal Reserve openly buying large amounts of U.S. government debt is a very dangerous threshold to cross….

Now that the US can’t cut interest rates any lower, the only option left on the table is what the Fed just announced it would start doing — buying Treasury debt. And that could lead the country to the brink of collapse: According to economists Carmen Reinhart & Ken Rogoff, whose views we share, crossing the 90% debt/GDP threshold is the equivalent of crossing the proverbial Rubicon of economic growth. It’s a point from which it’s almost impossible to return.

And that is the crux of the problem – the U.S. government has a debt that is absolutely spiralling out of control.  This is a problem that has been building for decades and there simply is no quick fix for it. 

But the truth is that it was seen as far back as 1835.  In his article for CNN, Keith R. McCullough included a very appropriate quote by Alexis De Tocqueville, the author of Democracy in America….

“The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”

Today, approximately 57% of the U.S. government budget is spent on direct payments to American citizens or is money that is spent on behalf of individual American citizens. 

For decades, the “Congress critters” have been bribing the American people (and each other) with massive payouts and have been getting away with it.

But now we are starting to pay the price.

The truth is that the U.S. government has become an expert on wasting money.  Most of the folks populating Congress are so incompetent that they should not even be hired to mop the floors of a Dairy Queen, and yet they control how trillions of our tax dollars are spent. 

The end result is that we have a financial mess that is absolutely unprecedented.

The U.S. financial system is doomed.  The U.S. government and the Federal Reserve will probably end up trying to save it with a massive flood of paper money, and in the end that will likely result in the collapse of the U.S. dollar and hyperinflation.

But hopefully all of that is still a while away yet.  For now, the Obama administration and the Federal Reserve are trying to play a very delicate balancing act and are trying to keep this giant house of cards from collapsing.

As incompetent as they are, let’s hope that they can keep things together for at least a while longer, because when things really fall apart we are all going to be feeling the pain.

15 Economic Statistics That Just Keep Getting Worse

A little over a week ago, U.S. Treasury Secretary Timothy Geithner penned an article for the New York Times entitled “Welcome To The Recovery” in which he touted the great strides that the U.S. economy was making.  But with unemployment still dangerously high and with foreclosures and personal bankruptcies continuing to set all-time records, should we really be talking about a “recovery”?  The truth is that the numbers don’t lie, and statistic after statistic shows that the economic fundamentals continue to get progressively worse.  The U.S. government can continue to try to pump up with economy with more debt, but the reality is that there is not going to be a legitimate “recovery” until consumer spending rebounds.  Consumer spending makes up the vast majority of U.S. GDP.  But without good jobs, consumers are not going to be able to spend money.  Unfortunately, our jobs base continues to be erode as millions upon millions of middle class jobs are shipped over to China, India and dozens of third world nations by the global predator corporations that now dominate the world economy.

The U.S. government cannot create real wealth out of thin air.  It can borrow even more money and flood the economy with even more paper currency, but the short-term “buzz” that creates does absolutely nothing to solve our long-term economic problems.

It is the private sector that actually creates wealth.  But unfortunately, over the last several decades we have allowed that wealth to become highly concentrated.  Now the giant global predator corporations have decided that American workers aren’t really that desirable after all.  They are slowly taking away their factories and their offices and they are moving them to where people are willing to work for one-tenth the pay. 

So where does that leave middle class American “consumers”?

Well, it leaves us in a world of hurt.

The following are 15 key economic statistics that just keep getting worse and which reveal the horrific economic plight in which we now find ourselves…. 

1 – The number of Americans who are receiving food stamps rose to a new all-time record of 40.8 million in May.  The number of Americans receiving food stamps has set a new all-time record for 18 months in a row.  But there is every indication that things are going to get even worse.  The U.S. Department of Agriculture projects that the number of Americans on food stamps will increase to 43 million in 2011. 

2 – The U.S. economy lost 131,000 more jobs during the month of July.  But the truth is that the U.S. economy has been bleeding jobs for a long time.  According to one analysis, the United States has lost 10.5 million jobs since 2007.  Meanwhile, immigrants (both legal and illegal) continue to pour into this nation in unprecedented numbers.

3 – Americans who are out of work are finding it incredibly difficult to get back into the workforce.  In the United States today, the average time needed to find a job has risen to an all-time record of 35.2 weeks.

4 – The U.S. government keeps trying to pump up the economy with debt, and in the process things are getting wildly out of control.  According to a U.S. Treasury Department report to Congress, the U.S. national debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015.

5 – The interest on all of this debt is becoming increasingly oppressive.  As of July 1st, the U.S. government had spent $355 billion so far in 2010 on interest payments to the holders of the national debt.  The total for 2010 should be somewhere in the neighborhood of $700 billion.  According to Erskine Bowles, one of the heads of Barack Obama’s national debt commission, the U.S. government will be spending $2 trillion just on interest on the national debt by 2020.  Keep in mind that the entire U.S. government budget is less than $4 trillion for the entire year of 2010.

6 – If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the annual U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion.

7 – Social Security will pay out more in benefits in 2010 than it receives in payroll taxes.  This was not supposed to happen until at least 2015.  In the years ahead, these new “Social Security deficits” are projected to be absolutely catastrophic

8 – There are simply far too many retirees and not nearly enough workers to support them.  Back in 1950 each retiree’s Social Security benefit was paid for by 16 workers.  Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers.  By 2025 it is projected that there will be approximately two workers for each retiree.

9 – Wealth continues to become highly concentrated at the top.  Since 1973, the average CEO’s salary has increased from 26 times the median income to over 300 times the median income.

10According to a poll taken in 2009, 61 percent of Americans “always or usually” live paycheck to paycheck.  That was up significantly from 49 percent in 2008 and 43 percent in 2007.

11 – The Mortgage Bankers Association recently announced that more than 10% of all U.S. homeowners with a mortgage had missed at least one mortgage payment during the January to March time period.  That was a new all-time record and represented an increase from 9.1 percent a year ago.

12 – A recent survey of last year’s college graduates found that 80 percent moved right back home with their parents after graduation.  That was up substantially from 63 percent in 2006.

13 – During the first quarter of 2010, the total number of loans that are at least three months past due in the United States increased for the 16th consecutive quarter.

14 – The total number of U.S. bank failures passed the 100 mark in July of this year.  In 2009, the total number of U.S. bank failures did not pass the century barrier until October.

15 – The U.S. dollar continues to rapidly decline in value.  An item that cost $20.00 in 1970 would cost you $112.35 today.  An item that cost $20.00 in 1913 would cost you $440.33 today.

Any rational observer (and clearly U.S. Treasury Secretary Timothy Geithner does not qualify) can see that the foundations of the U.S. economy are coming apart.  The rapidly accumulating mountain of debt that has fueled our “prosperity” is impossible to repay and is going to progressively choke the life out of our economic system.  The good jobs that we have allowed to be shipped out of our country are never coming back.  Every single day, more wealth flows out of this country than flows into it.

Anyone who claims that things are getting “better” is either ignorant, completely deluded or is purposely lying. 

The U.S. economy is not getting “better”.

The U.S. economy is dying.

You should adjust your plans accordingly.

Foreclosures Continue To Dramatically Increase In 2010

In a very alarming sign for the U.S. economy, foreclosures have continued to dramatically increase in 2010.  But there has been a shift.  Back in 2007 and 2008, experts tell us that most foreclosures were due to toxic mortgages.  People were being suckered into mortgages that they couldn’t afford with “teaser rates” or with payments that would dramatically escalate after a few years, and when those mortgages reset, the people who had agreed to them no longer could make the payments.  But now RealtyTrac says that unemployment has become the major reason for foreclosures.  Millions of Americans have become chronically unemployed during the economic downturn and many of them are losing their homes as a result.  But whatever the cause, one thing is certain – foreclosures have continued to skyrocket at a staggering rate.

According to a new report from RealtyTrac, foreclosure filings climbed in 75% of the nation’s metro areas during the first half of 2010.  At a time when the Obama administration believes that we are “turning the corner”, things just seem to get even worse. 

Some areas of the country continue to be complete and total disaster areas when it comes to real estate.  For example, you have got to feel really sorry for anyone trying to sell a house down in Florida right now.  According to RealtyTrac, Florida led the way with nine of the top 20 metro foreclosure rates in the country during the first half of 2010.

Ouch.

But the worst city for foreclosures continues to be Las Vegas.

According to RealtyTrac spokesman Rick Sharga, unemployment has replaced bad loans as the number one cause of foreclosures there….

“Las Vegas has seamlessly shifted from having a high level of foreclosures due to bad loans to defaults caused by a high level of unemployment.”

But other cities with high unemployment rates are having huge problems as well.

For those who believe that the economy is supposed to be “improving”, it must seem really odd that foreclosure rates in major cities such as Chicago continue to soar.

RealtyTrac says that foreclosure filings in Chicago have increased 23 percent year-over-year to one out of every 48 households.

But it isn’t just cities like Las Vegas and Chicago that are nightmares right now.

The truth is that this is a national crisis.

The Mortgage Bankers Association recently announced that more than 10% of all U.S. homeowners with a mortgage had missed at least one mortgage payment during the January to March time period.  That was a new all-time record and represented an increase from 9.1 percent a year ago.

Unfortunately, new all-time records are being set all over the place….

*The number of home foreclosures set a record for the second consecutive month in May.

*Banks repossessed 269,962 U.S. homes during the second quarter of 2010, which was a new all-time record.

*As of March, U.S. banks had an inventory of approximately 1.1 million foreclosed homes, which was a new record and which was up 20 percent from a year ago.

So is there any hope that things are going to get better soon?

Well, according to RealtyTrac’s CEO James Saccacio, that depends on the U.S. economy….

“The fragile stability achieved in many local housing markets hinges on improvements in the underlying economy, specifically job growth. If unemployment remains persistently high and foreclosure prevention efforts only delay the inevitable, then we could continue to see increased foreclosure activity and a corresponding weakness in home prices in many metro areas.”

Without good jobs, the American people are not going to be able to pay their mortgages.

So are the millions upon millions of jobs that have been lost coming back soon?

No, unfortunately they are not.

As we discussed at length in a previous article, the big global corporations that dominate our economy are figuring out that they don’t really need the rest of us anymore.  The American worker is becoming obsolete.  After all, why pay an American ten times as much to do the same job?  Big corporations can hire two people in China or India to do the same job and still pocket 80% of the difference.

In addition, big corporations don’t really need the headache of making employer contributions to Social Security, setting up benefit packages and pension plans or of trying to comply with the thousands upon thousands of ridiculous regulations that the U.S. government continues to spew out.

At this point, the American worker has become extremely unattractive for large corporations, and so jobs will continue to migrate to other areas of the world.

We allowed our politicians to merge us into a “global economy”, so now we are all going to have to deal with being part of a “global workforce”.

As jobs continue to be offshored and outsourced, more Americans are going to become unemployed and the foreclosure crisis is going to continue to be a nightmare.

It would be nice to put a positive spin on all of this, but there isn’t one.

Do NOT follow this link or you will be banned from the site!