Really!
1) _The U.S. housing market will not revive any time soon_.
Seasonally adjusted December housing starts fell by 14.2% (15.2% net
over revisions) on a monthly basis. Year-over-year, December starts
were down by 38.2%. Subprime mortgage resets are projected to
continue for many months. The mortgage securitization business, which
in recent years helped facilitate lots of easy lending, is now
seriously impaired due to increased default rates, “dark liquidity”
concerns, and the credit crunch.
2) The _re****ted official annual CPI inflation_ rate of 4.1%
exceeded re****ted annual growth in December, 2007 retail sales.
“Though still shy of reality, the December CPI inflation rate was high
enough to take the re****ted 4.1% annual growth in December retail
sales into contraction, net of inflation. Such rarely is seen outside
of recessions and is particularly ominous where retail outlets often
make or break their year with holiday sales.”**
_Real Consumer Price Inflation_ (i.e. the SGS, Shadowstats Government
Statistics, Alternative Consumer Inflation Measure, which reverses
gimmicked changes to official CPI re****ting methodologies since 1980)
_was roughly 11.7% in December, 2007_. (shadowstats.com, January 19,
2008, Flash Alert).
3) _The Municipal Bond “Insurers’ business model is irreparably
broken’_. Municipal bond insurers are extremely im****tant because it
is their insurance which provides the basis for the bond ratings
(often AAA) which allows municipalities to get low-cost credit. But
the viability of several leading insurers is now seriously in
question. Thus, Municipal Bond financing will likely be seriously
impaired, as will the “market” value of those bonds held by banks in
their ****tfolios. In a domino effect, Banks will be forced to write
down the value of these ****tfolios which will impair their credit
ratios.
And lest anyone think that massive public works projects, of which the
U.S. is in great need given its deteriorating infrastructure, can pull
the financial system out of its doldrums, just consider that this
vehicle for obtaining high ratings (and thus low interest rates) on
bonds for public works projects has just crashed.
4) Manufacturing, which used to be the engine of the U.S. economy,
has been severely weakened - - the U.S. has lost more than 3 million
manufacturing jobs since 2001, due to NAFTA, CAFTA, (and other
globalist projects) and the refusal of the U.S. government to protect
U.S. industry and American workers jobs with tariffs.
5) Consequently, foreign made goods now account for 1/3 of all
goods consumed in the United States, tripling their share over the
last quarter century.
6) Thus, the 1980s claim that the U.S. could profit by replacing
bricks and mortars factories with financial services has now been
shown to be a paper falsehood. The “Paper Emperor” of Financial
Services Sector Excesses has been shown to have no clothes. Those
Financial Services Entities which overreached are now in the process
of imploding.
This implosion should have been expected since the strength (or
weakness) of the financial services industry is ultimately derived
from the real underlying economy which provides _tangible_ goods and
services. With a diminished manufacturing base, massive and increasing
deficits and downstream-unfunded liabilities, and a weakened and
compromised financial services market sector, the U.S. economy is in
deep trouble.
7) A tem****ary “solution” to the “debt” and related crises has
been the now ongoing sale of key U.S. assets to foreign investors. But
this is another tem****ary “cure” which is worse than the disease. U.S.
industries remain on sale at discount prices. Given the recent
weakness in the U.S. Dollar, in 2007 foreign investors poured a record
$4.14 billion in buying stakes in American companies, factories, and
other properties. That was up 90% from 2006 and more than double the
average of the past decade.
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