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Old June 24th, 2009 #601
James Hawthorne
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That California story is frightening. A One Trillion economy about to go south. Already White working people live in tent cities in Sacramento, Riverside and Fresno. The jewish financial system is falling apart in front of our eyes.

We have to make sure we point the finger at who is responsible for all this..

jews !
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Old June 24th, 2009 #602
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Here is more, Hawthorne. And, yes, I would say it is frightening considering the size of the economy in California, or the size it used to be. What will the methadone junkies and illegals and welfare niggers do when the money gets cut off? It could get really nasty out there later this summer. Maybe some of our California VNNers can give some updates. I just post what I find on the internet but they are on the ground.

http://www.cnsnews.com/public/conten...x?RsrcID=50058


Quote:
CNSNews.com
California Could Run Out of Money by July 28
Wednesday, June 24, 2009
By Judy Lin, Associated Press


In this Wednesday June, 17, 2009 picture, Gov. Arnold Schwarzenegger discusses the state budget deficit outside his Capitol office in Sacramento, Calif. Schwarzenegger has said state government operations will come to a "grinding halt," if lawmakers fail to pass a balanced budget by July 28. (AP Photo/Rich Pedroncelli)
Sacramento, Calif. (AP) - To hear Gov. Arnold Schwarzenegger and state finance officials tell it, July 28 is California's last stand before fiscal Armageddon.

Top financial officers say that's when the state will run out of cash to pay its daily expenses unless lawmakers pass a balanced budget.

Schwarzenegger has warned that government will come to a "grinding halt." The state controller describes "a meltdown."

But what exactly will happen just five weeks from now is less clear-cut than the dire pronouncements suggest.

California government will not come to a dead stop: Police will still patrol the highways. Prisoners will still be guarded, and state firefighters will stand ready to put out wildfires.

Still, many services normally funded by the state, such as road projects and community health clinics, would either stop or get cut back.

Counties may not have money to run a wide array of social programs. College students who rely on state assistance might have to pay their own fees or consider leaving school.

Dr. Gilbert Simon, owner of the Sacramento Family Medical Clinics, said he could go out of business, forcing his patients to find care elsewhere.

"Anyone who relies on income from a functioning California government is at risk," said Simon, whose facility is the largest privately run health clinic in the region and relies on reimbursements from Medi-Cal, the state version of the federal Medicaid health program for the poor.

California considers Medi-Cal a priority payment, but that does not comfort Simon. The state has reduced payments to his clinic in past years, and he worries that this year's fiscal crisis is so acute that he will not get paid at all.

How did California arrive at this point? The state's budgeting system was strained by years of overly exuberant spending. Then the recession caused a sharp drop in sales and income tax revenue.

The result: California's general fund, the state's main bank account, has a projected $24.3 billion deficit for the fiscal year that begins July 1. By the end of July, incoming cash will fall below the state's payment obligations if lawmakers do not enact a balanced budget, either by slashing spending, raising taxes or doing both.

By September, California could be $6.5 billion in the red.

In February, Schwarzenegger and the Legislature adopted a budget for the new fiscal year that was supposed to stabilize California's finances through mid-2010, but a precipitous plunge in tax revenue put the budget out of balance within weeks.

Revenue from personal income taxes, for example, fell by 34 percent for the first five months of the year, compared with the same time last year.

As income starts to drop below the level needed to maintain programs, the state is required to make choices about where to spend its money. Schools and bond holders have first dibs, followed by other debt payments.

State employees, who by law cannot be given an IOU instead of a paycheck, would be next, followed by Medi-Cal and pension payments.

Everyone else such as vendors and local governments will have to wait until Schwarzenegger and lawmakers agree on a plan to bring spending in line with revenue.

"Without clarity on this important issue, it is hard to plan for the future, much less to pass a state budget in bad economic times," Stephen Levy, director of the Center for Continuing Study of the California Economy, wrote in a recent memo to reporters.

On Wednesday, the Legislature began debating a Democratic plan to close the deficit, but it did not appear to have sufficient Republican support to pass. Schwarzenegger also said he opposed it because it contained tax increases.

Compounding the problem is California's system of tax collection. Because its budget relies so heavily on the personal income tax, most of the state's revenue arrives in the spring.

In a typical year, that's not a problem. The state treasurer merely gets a low-interest loan to pay the state's daily expenses from July until January, then pays it back when more money comes in.

But without a balanced budget, lenders may not be willing to provide the short-term loan, leading to a severe cash crisis later in the year.

State Treasurer Bill Lockyer says the state needs to enact a balanced budget by July 1 to give him enough time to obtain the loan.

"Another prolonged, embarrassing political stalemate would further damage California's credit reputation, hurt our ability to sell bonds, notes or warrants, and inflict unnecessary harm on taxpayers and crucial public services," Lockyer said last month when Schwarzenegger released his revised budget plan.

Bankruptcy is not an option. U.S. bankruptcy law does not cover states, which have the right to levy taxes and borrow money.

Also on Wednesday, Controller John Chiang said thousands of contractors will start receiving IOUs as soon as next week so California can conserve cash - something the state has done only once since the Great Depression, in 1992.

Paul McIntosh, executive director of the California State Association of Counties, said local governments will bear the brunt of the consequences if state spending is stripped to a bare minimum.

The spending cuts would mean reduced foster care services, fewer deputies guarding prisoners in county jails and delayed road projects.

Schwarzenegger hopes the looming threat of a cash crunch puts pressure on lawmakers to strike a deal quickly. He recently rejected Chiang's proposal for a more expensive loan to fund all state operations while budget negotiations are under way.

The governor told the Los Angeles Times editorial board that such a loan would merely enable the Legislature to delay tough decisions.

He said he would rather "let them have a taste of what it's like when the state comes to a shutdown - grinding halt." The governor later revised his statement, saying government would "shut down by itself."
Quote:
Wed Jun 24, 2009 6:25pm EDT

* Proposal voted down largely along party lines

* State controller says may have to issue IOUS next week (Adds quotes from both sides, other details)

By Marianne Russ

SACRAMENTO, June 24 (Reuters) - The California Legislature on Wednesday voted down $11 billion in cuts to state services, sending members back to the drawing board as they grapple with a $24 billion budget gap.

The proposal failed largely along party lines in both the Assembly and state Senate, as expected, with Republicans saying it fell far short of the savings needed and amounted to posturing by Democrats.

Controller John Chiang said earlier on Wednesday that he will have to begin issuing IOUs next week if the gridlocked Legislature and Governor Arnold Schwarzenegger cannot agree on a budget.

"This is June the 24th and this is serious business, and if (the Republicans) position is that they do not want the state to go into IOUs then we need to see how they would make up the magic number of 24 billion," Senate Democratic leader Darrell Steinberg said.

"If this is some sort of a thing to see whether or not we will blink ... you can't see them but I actually have toothpicks holding my eyes open," he said.

But Republican leader Dennis Hollingsworth called for both sides to get back to the bargaining table.

"We think that we need to get back to work, solve the entire problem and we need to do that very quickly before we run out of money," he said.

Hollingsworth also called on Democrats to agree to much deeper cuts that were proposed by Schwarzenegger.

"All of the cuts that were rejected by the majority party that the governor proposed are things that unfortunately have to be done," he said. "We can't afford some of those things when we're talking about revenues that are back to where we were in 1999 or 2000.

Moody's Investors Service has warned that California could face a "multi-notch" downgrade in its credit rating, citing the state's expected massive shortfall for fiscal 2010 of more than 20 percent of its general fund budget and limited options for plugging it.

Schwarzenegger and lawmakers face the task of closing a $24.3 billion budget deficit for the state's fiscal year beginning on July 1.

The gap was opened by the state's most severe drop in revenues since the Great Depression, including a steep decline in personal income taxes and sagging retail activity as consumers reined in spending, and the long-running downturn in housing.

Rising joblessness is also weighing on the state. Its unemployment rate jumped to 11.5 percent in May from 6.8 percent a year earlier. (Writing by Dan Whitcomb; Editing by Diane Craft)
http://www.reuters.com/article/bonds...23162220090624
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Last edited by Joe_J.; June 24th, 2009 at 07:46 PM. Reason: added story
 
Old June 24th, 2009 #603
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What is happening in California and it is the big elephant in the living room, is the fact.....

that large amount of White taxpayers are leaving because of the uncontrolled Mexi immigration invasion.
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Last edited by James Hawthorne; June 24th, 2009 at 08:44 PM.
 
Old June 24th, 2009 #604
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large amount of White taxpayers are leaving because of the uncontrolled Mexi immigration invasion.
That is the bottom line right there. I saw some stats once that stated nearly 65% of workers in LA work for cash. Illegal mexishits. Now, the article above states that most of Cali's revenue is in the form of income tax. So, it is obvious that White taxpayers are the ones carrying the burden. The cash-paid mexishits contribute very little to the State or its infrastructure. So, like most turd world areas, the people are there but there is no money to pay for things like streets, sewers, etc. California may well consider its methadone programs, health care and social service cuts to be a walk in the park once the ball really gets rolling.

We have seen what happens when niggers take over (Detroit, Newark, DC). Now, we will watch California turn into a latrino area and it appears to be following the course of Mexico and the rest of Latin America.

My hat is off to every White person that leaves California and takes their tax money with them.
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Old June 26th, 2009 #605
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Default Jew Finanace Analyst: California will default.

Quote:
By Jon Birger, senior writer
Last Updated: June 25, 2009: 2:21 PM ET


NEW YORK (Fortune) -- Known for his early warnings on Bear Stearns and Lehman Brothers, analyst Martin Weiss of Weiss Research is now sounding the alarm about state of California municipal bonds.

In a new report, Weiss has some rather blunt advice for California muni investors: "Sell all California paper now!" His reasoning? California is facing a $24 billion budget gap with no obvious way to close it.

The state has appealed to Washington for a federal bailout, but it got a cool response from the Obama Administration. The next step is draconian cuts in state services and payroll, but Weiss says that will only deepen the "depression" in California, where the unemployment rate is 11.5%, by further cutting into tax revenue.

Asked to put odds on California defaulting on its $59 billion in outstanding general obligation bonds, Weiss doesn't hedge. "It's unavoidable," he tells Fortune.

If he's right, the impact on investors would be far broader and deeper than Bernie Madoff, General Motors (GMGMQ) or any of the other investment implosions that have occurred over the past year. Municipal bonds tend to be a retail product, which means that those most affected by a large muni bond default are not endowments, banks, or foreign governments but mom-and-pop investors.

A California default would be especially devastating for two reasons: Munis have generally been viewed as a safe haven and California is the nation's largest issuer of tax-exempt bonds. According to Morningstar, assets in California muni bond funds now total $46 billion -- with billions more of California bonds held in national muni funds and individual bond portfolios.

But if the situation is so dire, why do credit rating agencies Moody's and Standard & Poor's still give the Golden State an investment-grade, single-A rating? Weiss says that the rating agencies have been consistently behind the curve, and this crisis is no different. "They're very hesitant to downgrade," he says.

That said, both Moody's and S&P have put the state on a watch list and warned of possible downgrades. A downgrade below triple-B would likely precipitate a mass stampede by money market funds out of short-term California notes and make it much harder for the state to roll over maturing debt.

While Weiss believes the numbers point to a California default, he doesn't rule out last-minute intervention by Congress or the Obama Administration. Washington may be suffering from bailout fatigue, but the political consequences of allowing the largest state in the nation to default on its bonds may prove too great.

The last time a leading municipal bond issuer was on the verge of default was 1975, when New York City was going through its own financial crisis. Then-President Gerald Ford gave a speech vowing to veto any federal assistance for New York -- a speech immortalized by the next day's New York Daily News headline, "Ford to City: Drop Dead."

Even though Ford later approved federal loans to New York, the political damage was done. New York had voted Republican in 1972, but four years later, Ford wound up narrowly losing the state to Jimmy Carter, which ultimately cost him the election.

Analysts think Obama is unlikely to make a similar mistake. "The most important factor here is that California has 55 electoral votes," says Greg Valliere, Washington policy strategist at Soleil Securities. "At the end of the day, that's why I think Washington blinks."

First Published: June 25, 2009: 10:31 AM ET


Find this article at:
http://money.cnn.com/2009/06/25/pf/c...tune/index.htm
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Old June 29th, 2009 #606
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High-Flying Banker Boumeester Found Dead

http://news.sky.com/skynews/Home/Wor...=searchresults

10:11am UK, Monday June 29, 2009
A Dutch financier who went missing after leaving his job at troubled banking group ABN Amro has been found dead with gunshot wounds.

Huibert Boumeester

Huibert Boumeester went missing after leaving his job

Fears grew for the safety of high-flying banker Huibert Boumeester when he missed a business appointment. He had not been seen for a week.

Police said two of his shotguns had also disappeared from his homes in London and Scotland.

The body of the 49-year-old former chief financial officer at ABN Amro was found in woodland in Winkfield, Windsor, Berkshire, on Sunday morning.

A Thames Valley Police spokesman said they could not confirm the identity of the dead man, but added: "He is believed to have died from gunshot wounds.



Banker left ABN Amro last year

"At the moment it is being treated as an unexplained death. A definite cause of death has not been established."

Mr Boumeester joined ABN Amro, the 2007 takeover of which plunged the Royal Bank of Scotland into record losses, in 1987

He worked his way up to the post of chief financial officer before leaving early last year.

It is not known whether he left the company voluntarily or was forced out.

Staff at Artemis Assets Management, where the missing businessman was appointed to the board following a merger with ABN Amro, said he resigned in March this year citing "personal reasons".

Mr Boumeester, who set up the Boumeester Foundation in a bid to conserve cultures in countries such as Vietnam, China and Bhutan, was described by police as "feeling down of late".

His car, a blue 56-registration Range Rover, also went missing last week.
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Old June 30th, 2009 #607
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HARRISBURG, Pa. (AP) - More than 20,000 Pennsylvanians are expected to exhaust their jobless benefits in mid-July.

The state Department of Labor and Industry expects them to be the first large wave of people who have gone through as many as 72 weeks of unemployment benefits.

Labor and Industry Department Deputy Secretary Patrick Beaty says the agency sent letters to 21,000 people last week notifying them.

He says there is still no letup in applications for benefits, and the agency does not expect the rising unemployment rate to ease in the coming months.

The department says an average of nearly 450,000 Pennsylvanians received benefits over the four weeks ending June 20.

Since the recession began in December 2007, Pennsylvania has lost more than 180,000 jobs, or one in every 32.

http://www.mcall.com/news/local/all-...,2193987.story
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Old June 30th, 2009 #608
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There is also a budget crisis in Pa. that may shut down the state government within the next few days. However, it's a lot more fixable than the California mess.
 
Old June 30th, 2009 #609
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Originally Posted by The Bobster View Post
There is also a budget crisis in Pa. that may shut down the state government within the next few days. However, it's a lot more fixable than the California mess.
Same here in Mississippi. The government shuts down at midnight tonight unless a budget deal is reached.

The sticking point is Medicaid: That free medical care program for elderly and /or pregnant niggers and little baby nigglets.
 
Old July 4th, 2009 #610
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One dog has yet to bark in this long winding crisis. Beyond riots in Athens and a Baltic bust-up, we have not seen evidence of bitter political protest as the slump eats away at the legitimacy of governing elites in North America, Europe, and Japan. It may just be a matter of time.


By Ambrose Evans-Pritchard
Published: 8:45PM BST 04 Jul 2009

One of my odd experiences covering the US in the early 1990s was visiting militia groups that sprang up in Texas, Idaho, and Ohio in the aftermath of recession. These were mostly blue-collar workers, – early victims of global "labour arbitrage" – angry enough with Washington to spend weekends in fatigues with M16 rifles. Most backed protest candidate Ross Perot, who won 19pc of the presidential vote in 1992 with talk of shutting trade with Mexico.

The inchoate protest dissipated once recovery fed through to jobs, although one fringe group blew up the Oklahoma City Federal Building in 1995. Unfortunately, there will be no such jobs this time. Capacity use has fallen to record-low levels (68pc in the US, 71 in the eurozone). A deep purge of labour is yet to come.

The shocker last week was not just that the US lost 467,000 jobs in May, but also that time worked fell 6.9pc from a year earlier, dropping to 33 hours a week. "At no time in the 1990 or 2001 recessions did we ever come close to seeing such a detonating jobs figure," said David Rosenberg from Glukin Sheff. "We have lost a record nine million full-time jobs this cycle."

Earnings have fallen at a 1.6pc annual rate over the last three months. Wage deflation is setting in – like Japan. Interestingly, The International Labour Organisation is worried enough to push for a global pact, fearing countries may set off a ruinous spiral by chipping away at wages try to gain beggar-thy-neighbour advantage.

Some of the US pay cuts are disguised. Over 238,000 state workers in California have been working two days less a month without pay since February. Variants of this are happening in 22 states.

The Centre for Labour Market Studies (CLMS) in Boston says US unemployment is now 18.2pc, counting the old-fashioned way. The reason why this does not "feel" like the 1930s is that we tend to compress the chronology of the Depression. It takes time for people to deplete their savings and sink into destitution. Perhaps our greater cushion of wealth today will prevent another Grapes of Wrath, but 20m US homeowners are already in negative equity (zillow.com data). Evictions are running at a terrifying pace.

Some 342,000 homes were foreclosed in April, pushing a small army of children into a network of charity shelters. This compares to 273,000 homes lost in the entire year of 1932. Sheriffs in Michigan and Illinois are quietly refusing to toss families on to the streets, like the non-compliance of Catholic police in the Slump.

Europe is a year or so behind, but catching up fast. Unemployment has reached 18.7pc in Spain (37pc for youths), and 16.3pc in Latvia. Germany has delayed the cliff-edge effect by paying companies to keep furloughed workers through "Kurzarbeit". Germany's "Wise Men" fear that the jobless rate will jump from 3.7m to 5.1m by next year. The OECD expects unemployment to reach 57m in the rich countries by the end of next year.

This is the deadly lag effect. What is so disturbing is that governments have not even begun the spending squeeze that must come to stop their countries spiralling into a debt compound trap.

French president Nicolas Sarkozy, with a good nose for popular moods, says: "We must overhaul everything. We cannot have a system of rentiers and social dumping under globalisation. Either we have justice or we will have violence. It is a chimera to think that this crisis is just a footnote and that we can carry on as before."

The message has not reached Wall Street or the City. If bankers know what is good for them, they will take a teacher's salary for a few years until the storm passes. If they proceed with the bonuses now on the table, even as taxpayers pay for the errors of their caste, they must expect a ferocious backlash.

We are fortunate that the US has a new president enjoying a great reservoir of sympathy, and a clean-broom Congress. Other nations must limp on with carcass governments: Germany's paralysed Left-Right coalition, the burned-out relics of Japan's LDP, and Labour's death march in Britain. Some are taking precautions: Silvio Berlusconi is trying to emasculate Italy's parliament (with little protest) while the Kremlin has activated "anti-crisis" units to nip protest in the bud.

We are moving into Phase II of the Great Unwinding. It may be time to put away our texts of Keynes, Friedman, and Fisher, so useful for Phase 1, and start studying what happened to society when global unemployment went haywire in 1932.
http://www.telegraph.co.uk/finance/c...y-ticking.html
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Old July 5th, 2009 #611
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Originally Posted by General_Lee View Post
Same here in Mississippi. The government shuts down at midnight tonight unless a budget deal is reached.

The sticking point is Medicaid: That free medical care program for elderly and /or pregnant niggers and little baby nigglets.
The program for the elderly is called "medicare". Medicare is not entirely free, money is deducted every month from grandma's Social Security check to fund a portion of medicare.

Medicaid is a welfare program for nogs and illegals.
 
Old July 5th, 2009 #612
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Homeowners across the country are challenging their property tax bills in droves as the values of their homes drop, threatening local governments with another big drain on their budgets. The requests are coming in record numbers, from owners of $10 million estates and one-bedroom bungalows, from residents of the high-tax enclaves surrounding New York City, and from taxpayers in the Rust Belt and states like Arizona, Florida and California, where whole towns have been devastated by the housing bust.
“It’s worthy of a Dickens story,” said Gus Kramer, the assessor in Contra Costa County, Calif., outside San Francisco. “These people are desperate. They know their home’s gone down in value. They’ve watched their neighborhoods being boarded up. They literally stand in there and say: ‘When can I have my refund check? I need to feed my family. I need to pay my electric bill.’ ”



The tax appeals and reassessments present a new budget nightmare for governments. In a survey conducted by the National Association of Counties, 76 percent of large counties said that falling property tax revenue was significantly affecting their budgets, said Jacqueline Byers, the association’s research director. Officials in some states say their property tax revenue is falling for the first time since World War II.
Some tax rates rising
The recession has already taken a significant toll on states’ budgets, as rising joblessness, a weak business climate and a drop in consumer demand have cut sharply into receipts from taxes on sales, personal income and business earnings.
The pain at the state level is trickling down to county and local governments. To compensate, about 10 percent of large counties are raising the tax rates associated with home values to minimize the revenue loss, the county association said.
Even so, most counties simply have to absorb the lost revenue. Municipalities are laying off workers, renegotiating labor contracts, freezing salaries and cutting services.
The revenue losses are coming as homeowners prod towns for new assessments, and as municipalities conduct regular revaluations of their real estate. While declining residential values weigh heaviest on many governments, the value of commercial real estate is also sliding as businesses shut down and move out of storefronts or shopping malls.
Property taxes are meted out by a disparate patchwork of cities, towns, counties, and school and fire districts, all with their own rules. Because tax formulas vary widely county to county, not every decrease in assessed values automatically lowers a household’s property taxes.
From a trickle to a flood
But officials across the country say there is no question that the number of appeals has risen from the usual trickle to a flood.


New Jersey, which has the nation’s highest property taxes, has been besieged by tax appeals from homeowners like Peggy Tombro, whose rambling home in Bound Brook is assessed at a value of $1.8 million but is languishing on the market with an asking price of $1.3 million. Her taxes are increasing to $53,000 a year. “I don’t know what else to do,” said Ms. Tombro, 63, who has gone back to work selling antiques to pay her tax bill.



In the Inland Empire of California, near Los Angeles, Joylette Lynch, 70, is challenging the assessed value of her home as she tries to scrape together $1,158 a month to pay her mortgage, taxes and other bills. Her two-bedroom house in a community for older residents was worth as much as $280,000 three years ago, but houses on her block are now selling for less than $100,000. “If the house is not worth what I bought it for, why am I paying the same amount in taxes?” she asked.
Ms. Lynch, meanwhile, lost her job at a Bed, Bath & Beyond this year, and is behind on her mortgage payments. Shaving a few hundred dollars off her annual tax bill of $4,300 might not keep her out of foreclosure, but it would help, she said.
“Everything’s in God’s hands now,” she said.
Looking for relief
Officials say stories like these are common as unemployment hits 9.5 percent and people seek to trim their budgets. Appraisers and assessors, normally concerned with land values and comparable sales, are becoming ersatz crisis counselors.

Jeff Furst, the appraiser in St. Lucie County, Fla., said a 62-year-old man recently walked into his office and described how his wife had been laid off and his salary had been cut in half. He was struggling to pay his taxes and looking for relief, Mr. Furst said. “We’re hearing from people like this every day,” Mr. Furst said. In St. Lucie, which sits along the Atlantic, property tax revenue is expected to fall 20 percent, and tax appeals are 10 times as high as they are normally. “Most people are going to see a significant decline in their tax bill.”
Mr. Kramer, the assessor in Contra Costa County, said homeowners started swamping his office with requests for new assessments in December. As many as 500 people would call in one day. His voice mail message now begins: “If you’re calling to request an informal review of your property value due to the declining real estate market.”
http://www.msnbc.msn.com/id/31741141..._times/page/2/
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Old July 5th, 2009 #613
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Default Gerald Celente - "Obamageddon" - USA will collapse with the next 3 years

Gerald Celente - "Obamageddon" - USA will collapse with the next 3 years

(My Mother's better than yo' Mama)

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Old July 5th, 2009 #614
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Thanks for posting that!
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Old July 7th, 2009 #615
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July 7 (Bloomberg) -- Treasuries fell for a second day amid concern that bond supply will overwhelm demand as the U.S. prepares for a $35 billion sale of three-year notes today, one of a record four auctions this week.

The decline pushed up the yield on the 10-year note, widening the differential with two-year securities to the most in a month. Three-year notes declined before the sale, the second of this week’s auctions. The government sold 10-year Treasury Inflation Protected Securities yesterday, and will auction 10-year notes tomorrow and 30-year bonds on July 9.
http://www.bloomberg.com/apps/news?pid=2....
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Old July 11th, 2009 #616
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CIT Hires Bankruptcy Adviser as Payment Looms; Financier to 1 Million Businesses

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JULY 11, 2009
By JEFFREY MCCRACKEN and SERENA NG

CIT Group Inc., a lender to almost a million mostly small and midsize businesses across the country, is preparing for a possible bankruptcy filing after so far failing to win a government guarantee to help it borrow, said people familiar with the matter.

To prepare for a possible filing, CIT has retained the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, which has a prominent bankruptcy practice, these people said.

The mere hiring of bankruptcy counsel doesn't mean a company will actually make a bankruptcy filing. CIT has been pressing its case "with increased urgency to the government," said a person familiar with the matter, and is hopeful because "the government has not said absolutely no to anything."


Quote:
CIT has a $1 billion payment due in mid-August and it is unclear the company "will be able to handle that," said this person. The company will give more guidance when it discusses second quarter earnings in two weeks.

CIT declined to comment on whether it was preparing a filing or why it had retained Skadden Arps. But if CIT did file, the consequences could be considerable, because the 101-year-old company, as of March 31, had $68 billion of liabilities.

CIT is registered as a bank holding company and has a bank in Utah with roughly $3.5 billion in deposits. But to get most of its funds to lend, it has historically relied on bonds and the short-term debt market known as commercial paper. It has been largely unable to tap the credit markets since mid 2007 and is trying to raise more money through its bank.

The New York-based lender has been stuck for months in a bureaucratic tangle over government assistance. It received $2.3 billion from the federal Troubled Asset Relief Program in December, after winning approval to become a bank holding company. But CIT has so far been unable to access another federal program, one that helps banks and thrifts sell debt with government guarantees. Access to that program would enable CIT, which has a below-investment-grade, or "junk," credit rating, to sell bonds at a low interest rate.

CIT confirmed Friday that the Federal Deposit Insurance Corp., which oversees the debt guarantee program, has yet to approve its application. CIT said that its application to the FDIC remains outstanding and the company "continues to be in active dialogue with the government."

A bankruptcy filing by CIT could affect thousands of small borrowers, from Dunkin' Donuts franchisees to restaurant owners and clothing retailers. "If CIT were to go away, it would take a financing option away from franchisees who want to buy stores or expand their networks," said Kate Lavelle, chief financial officer of Dunkin' Brands, the which owns Dunkin' Donuts and has had a 50-year relationship with CIT.

On Friday, many CIT bonds slumped on heavy trading, and its stock tumbled to its lowest since the lender went public in 2002, further hurting its chances of raising capital from the private sector without more government aid. CIT bonds that mature in February 2010 were trading at 83.5 cents on the dollar and yielding over 40%, indicating that debt investors think it is unlikely they will be repaid in full. CIT shares sank 33 cents, or 18%, to $1.53, after dipping as low as $1.13 during the day.

The company's most pressing issue, said those familiar with the situation, is that it has a debt payment coming due in August. In all, CIT has about $2.7 billion that comes due this year and $8 billion more due next year.

The FDIC has been considering CIT's application for a federal debt guarantee since January and hasn't reached a decision. The agency is concerned about CIT's deteriorating financial position and operating losses.

A few months ago, CIT hired former Deputy Treasury Secretary Roger Altman and his boutique investment bank Evercore Partners to try to get more TARP funds or find another financial solution with the government, said the people familiar with the matter.

One problem with getting more aid is that the government has made it clear it doesn't see the company as a systemic risk to the financial system. The people familiar with the matter said the government feels that other lenders, such as J.P. Morgan Chase & Co. or Deutsche Bank AG, can handle many of the same loans that CIT specializes in, such as loans to small retailers or rail-car leasing firms.

Meanwhile, competitors like GE Capital Corp. and GMAC LLC have been able to sell debt with the backing of the government's top credit rating.

According to confidential documents reviewed by The Wall Street Journal, CIT has in recent weeks tried to assess the consequences of a failure of the lender on Middle America. Among them: Companies would lose access to $4 billion in untapped credit lines and thousands of manufacturers could run into problems.

CIT competes with the likes of Wells Fargo, Bank of America, General Electric Capital Corp. and regional banks in the sectors in which it is active. But many CIT customers say that the lender is often willing to make loans to businesses and borrowers that most banks typically shun. CIT now ranks 20th among U.S. bank holding companies, with assets of over $75 billion.

Founded in 1908, CIT, which used to be known as Commercial Investment Trust, has had a somewhat tumultuous history, its fortunes rising and falling during past credit cycles. In the 1990s it expanded into areas such as manufactured housing and financing technology equipment, only to get burned when those bubbles burst.

In 2001, following the dot-com bust, the company was acquired by Tyco International Ltd. , but was spun off in mid-2002 when Tyco became ensnared in an accounting scandal.

In 2003, CIT appointed its current chairman and chief executive, Jeffrey Peek, a former Merrill Lynch executive. Under his leadership, it expanded consumer-finance activities such as student lending. It also increased its presence in subprime mortgage lending during the credit boom.

When the credit crunch hit, the company rushed to leave those two businesses, concentrating instead on lending to small businesses and midsize companies, leasing railcars and providing cash advances to manufacturers and companies in exchange for their receivables.

"They are our sole financing partner and we are heavily reliant on them," said Haresh Tharani, founder and president of the Tharanco Group, a company in the apparel business.

Tharanco has a loan from CIT and also gets cash advances from the lender for its receivables. "I worry about the company.... If CIT fails, it would be detrimental to the confidence of many businesses," Mr. Tharani said.
http://online.wsj.com/article/SB124726834760725751.html
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Old July 11th, 2009 #617
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July 10 (Bloomberg) -- Returning from China last month, U.S. Congressman Mark Kirk had a bearish take on a high-level visit by American officials.

Treasury Secretary Timothy Geithner claimed the U.S.’s biggest creditor voiced great confidence in its debt. Kirk, an Illinois Republican, came back with the opposite impression.

“China is beginning to cancel Congress’s credit card,” he told Fox News on June 10. It “doesn’t want to lend much more money to the United States and especially is worried about the Fed’s policy of printing money to buy new debt.”

A month later, there’s no doubt about whose assessment was more accurate. Chinese leaders are clearly very concerned about the dollar. How they will react is a key question hanging over markets, and it’s time to take the discussion to the next level.

Everyone knows China wants to reduce its dollar holdings. Little is known about how that process may unfold and how much work and preparation needs to go into it. Lots, in fact.

Think of China and the U.S. in history’s most expensive divorce. The two economies total $17 trillion of output, and polls in China show little support for adding to almost $800 billion of U.S. Treasuries.

This argument can be broadened to the rest of Asia. The idea that China or Japan -- with $686 billion of Treasuries -- can just start selling massive blocks of dollars is ridiculous. It would devastate markets the world over and the fallout would boomerang back on Asia. If you think markets are shaky now, just wait until word of a central-bank fire sale gets around.

Copycat Selling

Sure, Singapore (with $40 billion of Treasuries), India ($39 billion) or South Korea ($35 billion) could try to dump dollars on the stealth. Good luck in this highly connected, around-the-clock world. News that a key economy seeks a first- mover advantage over peers would inspire copycat selling. Expect investors and traders to respond with massive sell orders.

Warren Buffett can discreetly trim Berkshire Hathaway Inc.’s interest in a company or a currency. How a central bank divests itself of tens or hundreds of billions of dollars on the sly is another matter.

Governments that may be concerned about getting stuck with their dollars for good have a point. And by curtailing investments in dollars today, Asia is ensuring that the U.S. currency will be worth less a year from now. Bernard Madoff can tell you a thing or two about how this process works.

Dollar Accord

What may be necessary is a global framework or pact to end the dollar’s dominance. A “Plaza Accord” of sorts may be needed to dismantle the so-called Bretton Woods II system of tying currencies to the dollar that emerged after the global crises of 1997 and 1998. A Dollar Accord, anyone?

Just as stocks take a hit when additional shares are issued, Asia faces a debt-dilution dynamic for which it never bargained. The Federal Reserve’s zero-interest-rate policies don’t help. And Asia can’t do a lot on its own here.

This process will require considerable cooperation, be it through the International Monetary Fund, the Group of 20, the Asia-Pacific Economic Cooperation forum, the Association of Southeast Asian Nations or a yet-to-be-created entity. Goals must be set, mechanics discussed and timing negotiated. If ever there were a time for a currency summit, it’s now.

Politics will be a stumbling block. It’s hard to envision the U.S. signing on to scrap the dollar as the reserve currency. Neither the euro nor the yen is ready to replace it. And China’s designs on currency domination are a decade away -- or longer.

IMF Solution

The amount of scrutiny the dollar’s successor would face makes you wonder who would want to print the reserve currency. That explains why the most credible argument making the rounds involves the IMF’s so-called Special Drawing Rights, or SDRs.

They are really an account of exchange, rather than legal tender, and are calculated according to a basket of currencies consisting of the dollar, euro, yen and pound. Chinese central bank Governor Zhou Xiaochuan wants the IMF to move toward creating a “super-sovereign reserve currency.”

Or, here’s another suggestion: Brady bonds for less- troubled economies. The idea behind bonds created in the 1980s as part of Latin America’s debt restructuring was to let investors swap their claims on nations in turmoil for tradable instruments. A similar process may work with the dollar.

Rumors of the dollar’s demise are no longer exaggerated. What is being exaggerated, though, is how easy it will be for Asia to get out of the quandary it’s in. Cutting off the U.S. government’s credit card, for example, means American consumers can’t buy your goods. And any sudden divorce between the world’s two main economic powers won’t be pretty. Far from it.

It’s time to figure out what the next step is, and policy makers need to get serious. Complaining about our dollar-based system won’t get us there. Some brainstorming about where to go from here would be far more constructive.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
http://www.bloomberg.com/apps/news?p...d=aKLGZEc7qoqA
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Old July 12th, 2009 #618
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JULY 13, 2009
By SERENA NG and JEFFREY MCCRACKEN

CIT Group Inc. officials spent the weekend trying to hash out a plan that would help calm markets and convince customers and investors that it can work its way out of a deepening liquidity crunch.

Over the weekend, CIT representatives held discussions with members of congress, government officials and regulators as they became increasingly nervous hundreds of small and midsize business customers may rush to withdraw funds or try to draw down credit lines. [go down in flames, fuckers!]

CIT executives were worried that customers would be rattled by reports over the weekend that it hired a prominent law firm to prepare for a possible bankruptcy filing after so far failing to get additional government assistance.



Company officials and its advisers scrambled to accelerate a plan to address the company's long-term funding needs, in the hopes of detailing its strategy before markets opened on Monday. Part of that plan, which has been in the works for some time, involves transferring more assets to CIT's Salt Lake City bank and moving cash to the holding company.

CIT had hoped to get some sort of short-term emergency financing from the government. But it was unclear whether government officials would be willing to step up. They have long felt CIT is not a systemic risk to the financial system and other lenders could step in to provide loans and services to small and midsize businesses, a CIT specialty.

While not as widely known as the big commercial banks, CIT is an important test case for the Obama administration. It gives indications of the government's willingness to get involved with financial institutions that aren't deemed as too big to fail, but that play a significant role in the economy.

CIT is a lender to nearly a million mostly small and midsize businesses and companies, and while its failure may not jolt financial markets in a large way, it could hurt the flow of credit to many businesses to whom banks traditionally won't lend.

The government gave the bank-holding company $2.3 billion under the Troubled Asset Relief Program last year but so far hasn't included CIT in a separate program that would allow it to issue debt at low interest rates.

While CIT has limped through the credit crisis, the lender is nearing crisis point, facing $2.7 billion in debt due from now till year end that investors worry it may not be able to make.

Credit-ratings companies have cut the lender's debt ratings deep into "junk" territory, and bond analysts last week began speculating the company may be forced to file for bankruptcy. CIT shares tumbled to their lowest level since the company's 2002 initial public offering.

About 700 companies have a total of $3.9 billion in undrawn revolvers from CIT, according to documents reviewed by The Wall Street Journal. Many are small businesses that obtained revolving facilities of about $10 million to $50 million in size. CIT is the sole or main lender to two-thirds of these companies, and a failure of the lender would leave many without access to funds.

The lines act like a credit card -- borrowers are able to run up debt and pay it off. If companies tried to tap their CIT credit lines all at the same time, it could put further financial strains on CIT.

http://online.wsj.com/article/SB124744080839729811.html
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Old July 13th, 2009 #619
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An economic crisis brings unemployed Nada (Roddy Piper) to L.A. in search of work. What he finds instead is that the ruling elite of the world are aliens in disguise, their aim being to keep humans...
What an apt description of the jew.
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Old July 15th, 2009 #620
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JULY 15, 2009 6:03 PM ET

NEW YORK--(BUSINESS WIRE)--CIT Group Inc. (NYSE: CIT - News), a leading provider of financing to small businesses and middle market companies, today announced that it has been advised that there is no appreciable likelihood of additional government support being provided over the near term.


The Company’s Board of Directors and management, in consultation with its advisors, are evaluating alternatives.
http://finance.yahoo.com/news/CIT-An....html?x=0&.v=1

Quote:
A default by CIT, the troubled US commercial lender, could trigger widespread losses for investors in the $600bn market for synthetic collateralised debt obligations.

This is because it is the second most widely referenced company in synthetic CDOs after Volkswagen, with almost two-thirds of those rated by Standard & Poor’s in Europe including it in their portfolios of credit default swaps.

While many investors are already believed to have made writedowns against their CDO investments, analysts warn that a potential bankruptcy of CIT could have a psychological impact as a reminder of the potential systemic risk posed by structured credit products.

“We are likely to be reminded of the high concentration of risks in the CDO market as defaults rise in the coming months,” said Michael Hampden-Turner at Citigroup in London.

Synthetic CDOs are complex debt products that pool credit default swaps against a range of companies. In December S&P warned that the portfolios of many synthetic CDOs overlapped and that a few collapses could have widespread repercussions. The report followed a series of collapses in the financial sector that led to downgrades in the CDO market.

Analysts at JPMorgan estimated that synthetic CDOs saw $24bn of losses from the defaults of Lehman Brothers and other financial institutions.

S&P estimates that 64 per cent of synthetic CDOs rated by its European arm referenced CIT in their portfolios. Analysts said a credit event could lead to further downgrades of synthetic CDO debt.

Credit default swaps written against CIT are also included in the US CDX index of 125 of the most traded investment grade US CDS. If a potential bankruptcy or restructuring of CIT triggers a credit event under those contracts, providers of that default protection would also have to pay out on the contracts.

This week S&P put a further 136 tranches of synthetic CDOs on review for downgrade as the credit portfolios they reference continued to deteriorate.

S&P highlighted in February a similar concentration of investor risk in about €80bn of debt issued by CDOs that pool leveraged loans. It said many collateralised loan obligations were exposed to the same group of borrowers, meaning that the default of one of these borrowers could have a negative impact on nearly 90 per cent of European CLOs.
http://www.ft.com/cms/s/0/fe939e72-7...44feabdc0.html
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