Home Sales!

New home sales for January 2011 were down 12.6% from December 2010, but even worse, the raw numbers were 284,000, which compares to monthly sales of 800,000 to 1 million before 2007.  That is an approximate 70% decline and suggests the recession continues on despite what the Administration, Fed, and Wall Street want you to believe.  And, mortgage applications are near the lowest levels in 15 years. 

Is the Bull Dead, Yet????

STATES!

 Karl Denninger over at the "Market Ticker" had some insightful words to say about that thing we refer to as States.  My "two cents" are in italics.

"You know, that thing that has all of the powers of government not explicitly delegated in The Constitution to the Federal government.  (Yes, we still have a Constitution, but I am beginning to wonder if those in Washington realize it.)  There are 50 of them in my last count referred to “The United States.”  Notice, that we don't call the nation "The United Federal Government."  We call it "The United STATES."  (That's because States should have supremacy, but more and more our Federal Government has forgotten about that.)  They originally joined together under a promise of a limited Federal government, which was mostly about the common defense and little more."


I am very glad to see that some States are starting to realize and wake up to the real reason why this country is referred to as THE UNITED STATES and not The United Federal Government.

What is Going on in Wisconsin with its Governor, State Employees and Teachers?

First, I am from Wisconsin and love visiting the state, especially Door County in the summer time, not in winter.  Second, I have been an educator most of my life and have a true passion for it.  Simply put, that is why I went into the teaching profession.  And, I would say the majority of individuals chose teaching as a profession, because they share the same passion.  However, we live in a period of time when everything appears to be "upside down, downside up."  In other words, nothing makes sense anymore.  What is going on in Wisconsin is just a microcosm of what is going on in each of the other fifty states.  We as a nation have become so self-centered and selfish that it will ultimately be our doom.  The handwriting is on the wall.  I hope you can see it.  

Ok, enough said about my Wisconsin interest and diatribe.  What is going on there? Wisconsin’s Governor Walker is facing a $3.6 billion budget deficit, and he wants state workers to pay one-half of their pension costs and 12.6% of their health benefits.  Currently, most state employees pay nothing for their pensions and virtually nothing for their health insurance.  (Think private sector where pensions or defined benefit plans are outdated and replaced with 401 (K) Plans or defined contribution plans.  In other words, these state employees and teachers have a good thing going and are about to blow it big time.)

What else does he want?  He would end collective bargaining for everyone except police, fire, and state troopers.  Unions could still represent workers, but they could not get pay increases above the CPI.  Also, they could not force employees to pay union dues.  And in exchange for all this, Governor Walker promises no furloughs or layoffs. 

Why is the state employee union dead set against any of this?  I believe it is all about the potential of losing its annual cash flow of millions!  Let’s look at the cash flow.  (These are estimates, because when President Obama came into office, he shielded government unions from transparency by ending their reporting requirements to the Department of Labor.  As a result it is impossible for the American people to know for sure how much of their taxpayer revenue is being diverted into union coffers.)  However, we can estimate the cash flow by looking at the most recent numbers available from the National Center for Education Statistics and U.S. Census Bureau.  The number of teachers and state workers in Wisconsin are approximately 60,000 and 57,000, respectively.  And, if we assume that each one pays approximately $750 annually in dues, that means the government union industry in Wisconsin is worth at least $88 million a year.  The question I would be asking, if I was one of these involuntary members, is what is my union doing with an annual cash flow of $88 million.  Inquiring minds would like to know! 

Debt Now Equals Total U.S. Economy as Measured by GDP

President Obama projects that the gross federal debt will top $15 trillion this year, officially equaling the size of the entire U.S. economy, and will jump to nearly than $21 trillion in five years' time, according to the Washington Times. 

Does anyone really know what the ramifications of this massive debt means to us as a free society?  I am beginning to wonder what the masses of humanity really know.  When it comes to economics, not much! If you want to get a clue you just might pick up your Scriptures and read Proverbs 22:7.  If you don't have your Scriptures readily available.  Proverbs 22:7 states, "The rich rules over the poor, and the borrower is servant to the lender."  Let's see now.  Simply substitute United States for borrower and China for lender.  Do you comprehend the picture?  I hope you do!

Who Owns What?

In the 2nd quarter of 2009, the Fed's purchases of Treasury debt amounted to 48% of the new debt issued in that period by the Treasury.  The following chart illustrates that the Fed is currently the world's largest single holder of Treasury securities, surpassing China.  And, that is what is meant by monetizing the federal deficits!

Employment Rate of the U.S. Population

On February 8, 2011, Richard Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas made the following statement: "U.S. nonfarm payrolls fell by 8.75 million jobs from their peak in January 2008 to their trough in February 2010. Estimates are that the population of Americans of working age increased by 4.4 million during the same period, creating a shortfall of over 13 million jobs. Since February 2010, the shortfall has only gotten worse: Although employers have added approximately 1 million new jobs, the working-age population has increased by an additional 1.7 million. All in all, we have approximately 6 million more people of working age than we did when the recession began—and a net loss of 7.7 million jobs. Divining policies that will encourage the private sector to increase hiring by enough to make up some of this lost ground is both an urgent and a daunting task."

The above statements by a Fed President should have everyone "pause, take notice and mediate" on his words that depict a very dire economic situation if we do not create jobs. (Look at the following graph that illustrates the negative trend of our employment rate.) Yes, it is definitely all about creating jobs.  That is, no jobs, no income, no spending, no tax revenue for Uncle Sam, no GDP growth, no nothing. Governments do not create jobs, only the private sector.  If our government is serious about job creation, it must get out of the way and implement user-friendly business polices.  Will it happen? In all sincere honesty, I don't believe it will. I, for one, am losing hope that America has the intestinal fortitude to win this battle.  It has entered that "slippery slope" of no return.

Maturing Commercial Mortgage Loans A Big Headache For Business Owners

Major problem with commercial real estate.  Fitch Rating reports that 30% of commercial mortgage-backed securities loans set to mature in 2011 do not pass their refinance test.  Say it is not true.  Can we not just forget about it and bury these problem loans in the same way that we did with sub-prime residential loans?  That is, not "mark-to-market" the true value of the loan, simply carry the loans at their face value of 100%, which once again protects the Mega-money Center Banks and Wall Street at the expense, once again. of the American taxpayers.

Food for Thought (No Pun Intended)

Visit msnbc.com for breaking news, world news, and news about the economy

Dylan Ratigan gets it right!  Thank you, Dylan

Visualization of Obama's Budget Cuts

A very simple video but yet so very powerful and profound.  Thanks to one of my Macroeconomics students for bringing it to my attention.