The Greater Depression of 2012 and Why It Is Coming

If policymakers do not understand the real cause of a problem, they will in all likelihood be unable to provide a genuine solution.

The current administration and both the current Houses of Congress do not understand the real cause of our current debt crisis.  The economic blindness is afflicting both Democrats and Republicans and they are equally clueless.  They are politicians first and foremost, and they do not understand the most fundamental economic realities of free market capitalism.  While both parties are caught up in preserving the power structure and maintaining status quo in the politically elite circles, what they don't understand is that a market correction is coming which will overtake our economy and they will be powerless to stop it.  It would be unwise to count on anyone in current office, especially some Vulcan-eared lunatic like Timothy "tax-cheat" Geithner, to tell us when the Great Recession is over, or let you know that in fact we are already into the first stages of the Greater Depression.

Look, you don't have to be a rocket scientist to understand the data.  The problem is that most of the lame-stream media has so obliterated the data as to make it virtually useless and meaningless in an attempt to confuse the population.  The cause of the Great Depression was simply this, over leverage.  Excessive debt at both a personal, corporate and government level.  Excessive debt levels are the direct result of the completely unconstitutional institution known as "The Fed" providing artificially low interest rates.  You look at what Congress encouraged in terms of lending policies which were all but shoved down the throats of lenders, and to now see the politicians using the Federal Government to sue the banks which they virtually forced to lend (and by the way, they guaranteed with the full faith and credit of our government through Fannie Mae and Freddie Mac) is it any wonder that our society is leveraged in a way not even seen during the Great Depression?

The only real and viable solution to allow the natural market forces to start the correction process and begin the required healing is for both the public and private sectors to undergo a radical period of reducing debt. The coming Greater Depression is, in actuality, that very healing process at work.  The signs to watch for to see that this over-leverage is unwinding is to watch for the selling of assets and the paying down of debt.  Are you saying any of that happening yet?  Are you seeing the bloated balance sheets of Fannie Mae and Freddie Mac being realistically put into the market yet?

Unfortunately, the natural human reaction is to resist change, so our politicians and bureaucrats are focused on fighting this natural healing process by promoting the accumulation of even more debt.  This is why the Greater Depression is coming, despite what these Keynesian idiots would like you to believe.

Getting through the coming Greater Depression is going to be a painful process, but debt reduction is the only real cure for an economy swimming in an ocean of debt. It boggles the mind that during this current crisis the administration's response has been to dramatically increase its own borrowing. I'm willing to stand corrected with fact-checks, but I believe our gross national debt was equal to 65% of GDP when Obama came into office. It has since exploded to 90% of GDP!  Compare that to the level of debt during the 1930s (which never exceeded 44% of GDP) with today's pile of government debt clearly illustrates the reason for the coming Greater Depression.

Today, gross national debt and household debt are both at or above 90% of GDP for the first time in our history.

Here is the simple truth which policymakers do not understand...that the cause of the coming Greater Depression is debt.  Get your personal house in order and eliminate your debt as quickly as you can.

Eye of the Hurricane II by Kendell Lang

EYE OF THE HURRICANE II

by

Kendell Lang, New Media Consultant

Back in September I wrote, "the Banking system is Under water; according to the FDIC website, we have already seen more than THREE times as many banks Fail this year, than the last 10 years put together.  Some industry analysts are predicting more than 200 bank failures in 2009. Does that seem like a reasonable number?"

When I wrote that article in September the list was 94 failed banks.  Anybody keeping track?  Guess what? Since that article 84 more banks failed!   CLICK HERE TO SEE THE ENTIRE LIST OF 178 BANKS CLOSED IN 2009.  We only have to see 22 more banks fail to hit the predictions and we are definitely on that pace.

Did you know:

• On Friday, November 6, 2009, the FDIC announced the closure of 5 banks.
• United Commercial Bank, San Francisco, CA was closed by the California Department of Financial Institutions, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.
• United Commercial Bank  was not just another local bank, it had total assets of $11.2 billion and total deposits of approximately $7.5 billion.
  
  
  
  
• Click the FDIC logo to go to the Press Release
• No advance notice is given to the public when a financial institution is closed. All deposit accounts, excluding certain brokered deposits, have been transferred to East West Bank, Pasadena, CA ("assuming institution") and will be available immediately. The former United Commercial Bank locations will reopen as branches of East West Bank.
• Gateway Bank of St. Louis, Prosperan Bank of MN, Home Federal Savings Bank of MI and United Security Bank of GA were also closed and taken over by the FDIC on Friday.

Here's why I believe regional banks are failing. While larger financial institutions have received aid from the federal government, local and regional banks have found themselves left adrift. Nothing has changed in the fundamentals. Like their larger counterparts, many of these banks made risky loans to individuals and real estate developers during the boom years and are now facing large numbers of defaults as the Second Great Depression drags on.

Rising unemployment (THE HIGHEST SINCE 1983) has made it difficult for many individuals to keep up with expenses, and businesses are feeling the crunch of consumers’ reduced spending power. As a result, regional banks are left holding loans their customers can’t repay.

Problem banks list LOOMS LARGE! The FDIC keeps a list of “problem banks,” though it does not disclose the names to the general public out of fear that depositors at those institutions may prompt a “run on the bank.”  In June, the agency said 416 banks were at risk of failure — the highest level in 15 years!

Federal coffers running dry. An average of 11 banks have failed per month this year, and the federal coffer is thinning under the massive strain. The fund now stands at $7.5 billion, down significantly from $45 billion a year ago.  Folks...this is UNSUSTAINABLE!!!

So is our media asleep at the wheel or what? Why aren't we hearing about the most recent bank closures? The FDIC is shutting banks every Friday as part of a recurring theme to shut them down after close of business on Friday, and then re-open them on the following Monday under the control of some other bank. The dirth of any decent news coverage is irresponsible. I am wondering how long the FDIC's funding can support the losses. What's happening to our economy is unnerving, and banks are at the center of the crisis. The problem is...through all the economic stimilus, the root problem has not been solved and the banks continue to operate (and fold) acting as if everything is "business as usual."

This is not business as usual and we will pay the piper.

We are in the Eye of the Hurricane

By Mid to Late October... It will Not feel like a Recession but rather a Depression!

Here are the reasons why...

#1. We're about to see the Largest Bulk, of the "option arm-risky Loans" written by the banks, Re-adjust from a Fixed-- "Teaser-rate" to a Variable rate.

Home owners will go from a 4.25-4.5% interest rate, to 8-10% (Libor rates). People will No longer afford their mortgage payment! Foreclosures Will Skyrocket!..

Banks will Not have equity (payments) coming in...They're going to Fail!

#2. Banking system is Under water; according to the FDIC website, we have already seen more than Three times as many banks Fail this year, than the last 10 years put together... Banking Holiday??

The FDIC has published information about yet another "stimulus" plan called Foreclosure Prevention Initiative which you can read about by clicking the above link.

#3. Unemployment is rising; many prominent economist believe Real unemployment is closer to 15%... At the height of the 1930s Depression, unemployment hit 18%...we're almost there!

#4. Housing is being artificially kept from crashing by Banks, whom are holding onto foreclosed properties, Only releasing a small amount of inventory.. They don't want to Flood the regional market with excess inventory.. Hence; Crashing Prices even further!

Nevertheless, foreclosures are rising ...They will have to release inventory at one point!

#5. The FEDS continue to bailout the banks by Buying "Toxic" Mortgage Backed Security, for both residential & commercial loans. Plus, the auto industry by their creative "Cash for Clunkers" program. Not to mention, the FEDS are Now Buying their own Bonds, at the T-Bill Auctions... China doesn't want our Debt/Bonds anymore...Who can blame them?

Ladies and Gentlemen, the writing is on the wall.

It's about to get Really Bad, Really Quick!

http://www.bankrate.com/finance/savings/q-a-with-the-fdic-s-david-barr-1.aspx

Questions for David Barr (FDIC Spokesperson):

Some industry analysts are predicting more than 200 bank failures in 2009. Does that seem like a reasonable number?

Predicting failures from the outside is a difficult thing to do. Last year we had 25 failures. To go back to when we had more than 25 failures in a given year you'd have to go to 1993, when we had 50. In 1992, we had 181.

From: http://www.bankrate.com/finance/savings/2009-list-of-failed-banks.aspx

2009 list of (94 so far by September) failed banks

Failed bankDate closedEstimated cost to DIF ($millions)

Irwin Union Bank, F.S.B., Louisville, KY*9/18/2009*850 for both

Irwin Union Bank and Trust Co., Columbus, IN*9/18/2009*850 for both

Corus Bank, National Association, Chicago, IL9/11/20091,700

Brickwell Community Bank, Woodbury, MN9/11/200922

Venture Bank, Lacy, WA9/11/2009298

First Bank of Kansas City, Kansas City, MO9/4/20096

InBank, Oak Forest, IL9/4/200966

Vantus Bank, Sioux City, IA9/4/2009168

Platinum Community Bank, Rolling Meadows, IL9/4/2009114.3

First State Bank, Flagstaff, AZ9/4/200947

Bradford Bank, Baltimore, MD8/28/200997

Mainstreet Bank, Forest Lake, MN8/28/200995

Affinity Bank, Ventura, CA8/28/2009254

eBank, Atlanta, GA8/21/200963

First Coweta Bank, Newman, GA8/21/200948

CapitalSouth Bank, Birmingham, AL8/21/2009151

Guaranty Bank, Austin, TX8/21/20093,000

Community Bank of Nevada, Las Vegas, NV8/14/20091,400

Community Bank of Arizona, Phoenix, AZ8/14/200926

Union Bank, National Assoc., Gilbert, AZ8/14/200961

Colonial Bank, Montgomery, AL8/14/20092,800

Dwelling House Savings and Loan Assoc., Pittsburgh, PA8/14/20097

Community First Bank, Prineville, OR8/7/200945

Community National Bank of Sarasota County, Venice, FL8/7/200924

First State Bank, Sarasota, FL8/7/2009116

Mutual Bank, Harvey, IL7/31/2009696

First BankAmericano, Elizabeth, NJ7/31/200915

Peoples Community Bank, West Chester, OH7/31/2009130

First State Bank of Altus, Altus, OK7/31/200925

Integrity Bank, Jupiter, FL7/31/200946

Waterford Village Bank, Williamsville, NY7/24/20095.6

Security Bank of Jones County, Gray, GA7/24/2009807

Security Bank of Houston County, Perry, GA7/24/2009807

Security Bank of Bibb County, Macon, GA7/24/2009807

Security Bank of North Metro, Woodstock, GA7/24/2009807

Security Bank of North Fulton, Alpharetta, GA7/24/2009807

Security Bank of Gwinnett County, Suwanee, GA7/24/2009807

Temecula Valley Bank, Temecula, CA7/17/2009391

Vineyard Bank, Rancho Cucamonga, CA7/17/2009579

First Piedmont Bank, Winder, GA7/17/200929

BankFirst, Sioux Falls, SD7/17/200991

Bank of Wyoming, Thermopolis, WY7/10/200927

John Warner Bank, Clinton, IL7/2/200910

First State Bank of Winchester, Winchester, IL7/2/20096

Elizabeth State Bank, Elizabeth, IL7/2/200911.2

First National Bank of Danville, Danville, IL7/2/200924

Rock River Bank, Oregon, IL7/2/200927.6

Millennium State Bank of Texas, Dallas, TX7/2/200947

Founders Bank, Worth, IL7/2/2009188.5

Mirae Bank, Los Angeles, CA6/26/200950

MetroPacific Bank, Irvine, CA6/26/200929

Horizon Bank, Pine City, MN6/26/200933.5

Neighborhood Community Bank, Newnan, GA6/26/200966.7

Community Bank of West Georgia, Villa Rica, GA6/26/200985

First National Bank of Anthony, Anthony, KS6/19/200932.2

Cooperative Bank, Wilmington, NC6/19/2009217

Southern Community Bank, Fayetteville, GA6/19/2009114

Bank of Lincolnwood, Lincolnwood, IL6/5/200983

Citizens National Bank, Macomb, IL5/22/2009106

Strategic Capital Bank, Champaign, IL5/22/2009173

BankUnited, Coral Gables, FL5/21/20094,900

Westsound Bank, Bremerton, WA5/8/2009108

America West Bank, Layton, UT5/1/2009119.4

Citizens Community Bank, Ridgewood, NJ5/1/200918.1

Silverton Bank, Atlanta, GA5/1/20091,003

First Bank of Idaho, Ketchum, ID4/24/2009191.2

First Bank of Beverly Hills, CA4/24/2009394

Michigan Heritage Bank, Farmington Hills, MI4/24/200971.3

American Southern Bank, Kennesaw, GA4/24/200941.9

Great Basin Bank, Elko, NV4/17/200942

American Sterling Bank, Sugar Creek, MO4/17/200942

New Frontier Bank, Greeley, CO4/10/2009670

Cape Fear Bank, Wilmington, NC4/10/2009131

Omni National Bank, Atlanta, GA3/27/2009290

FirstCity Bank, Stockbridge, GA3/20/2009100

Colorado National Bank, Colorado Springs, CO3/20/20099

Teambank, N.A., Paola, KA3/20/200998

Freedom Bank of Georgia, Commerce, GA3/6/200936.2

Security Savings Bank, Henderson, NV2/27/200959.1

Heritage Community Bank, Glenwood, IL2/27/200941.6

Silver Falls Bank, Silverton, OR2/20/200950

Pinnacle Bank, Beaverton, OR2/13/200912.1

Corn Belt Bank & Trust, Pittsfield, IL2/13/2009100

Riverside Bank of the Gulf Coast, Cape Coral, FL2/13/2009201.5

Sherman County Bank, Loup City, NE2/13/200928

County Bank, Merced, CA2/6/2009135

Alliance Bank, Culver City, CA2/6/2009206

FirstBank Financial Services, McDonough, GA2/6/2009111

Ocala NB, Ocala, FL1/30/200999.6

Suburban FSB, Crofton, MD1/30/2009126

Magnet Bank, Salt Lake City, UT1/30/2009119.4

1st Centennial Bank, Redlands, CA1/23/2009227

Bank of Clark County, Vancouver, WA1/16/2009120 - 145

National Bank of Commerce, Berkely, IL1/16/200997.1

Recovery...Really? It's the Economy...Stupid

Career Fair and Open House Job Matching

I recently had the opportunity to attend an IT Open House for a San Diego base life sciences company, Life Technologies...this was a career matching job fair, meet the employer kind of setup, but exclusive to this one company.  I must say, they did a great job marketing this event (posted on Yahoo!Jobs, DICE and other job boards, as well as email blasted, so that combined with the fact that it's a really horrible job market out there gave them great attendance) because the place was packed!

They had over 300 job seekers there for just the one session I attended.  When I was leaving my allotted one hour session, it appeared that each of the 3 sessions was going to be similarly well attended. They had one hour sessions at 4pm, 5pm and 6pm (which means there could have been close to 1,000 people over 3 hours for what looks like maybe 40 jobs posted on their job board). The CIO gave a brief presentation, introduced the limited staff at various stations and then encouraged attendees to go talk to them.  Everyone dutifully lined up and waited for as long as 30 minutes to introduce themselves and give their resume.

I'm not sure what will come of it, but it was an interesting (and yes, very uncomfortable) exercise.

Modern Day Great Depression Bread Lines
One of the iconic images from the Great Depression was that of the breadlines, with men in overcoats (or at least non-casual-looking clothes) queued up solemnly. Newspaper editors and photographers would publish these images as a reflection of how dire things were at the time. 

I do believe we are experiencing more than the Great Recession, I believe we are in national denial about actually being in the midst of the Second Great Depression.

Every month when the Department of Labor announces the unemployment rate, it makes front page news in papers nationwide.  It continues to amaze me the spin folks try and put on data that just can't be denied.  We are in a horrible job market and it's not getting better.  All indications are that it's going to get worse before it gets better, so when politicians start to rally around a supposed recovery, I ask, "recovery...really?"  I just don't see it.  What I saw at this IT Open House was fear, a sense of panic and terror.  Good god, look at all the other people out of work I'm competing with! I was really disappointed when I saw one of the staff actually hold out a guys resume to him and point out a typo...really bad form.

Actually, as I was standing there I had visions of those old pictures of the Great Depression when guys would line up for the day jobs and get left behind...seems like history repeats itself, just in a new form. The reality was, this company was nice enough to provide sandwiches and refreshments, so it truly is the new bread line.