Friday, August 15, 2008

New Parasites have invaded - Debt Profiteers

Like hungry pirates looking for the next booty to plunder, a new form of bottom feeders have emerged in the vast fear-based marketplace: Debt Profiteers.

Debt Pirates! Ahoy!

They market to the frightened, promising to help "keep your house". In fact, they merely take money to postpone the inevitable. Today I saw a contract for one here in South Florida that charged $1,200 to merely say "find a lawyer to enter an appearance" and then they merely called the bank to get the balance and amount needed to bring the loan current.

The joke is that by law the bank must provide that information FOR FREE WHEN ASKED!

This is going to get worse.

More people are jumping on the bandwagon. The radio is full of Debt Pirates with promises of finacial salvation. Any decent attorney knows that this seldom works...debts don't just go away.

More to come.

Thursday, August 14, 2008

The Rising Costs of Living = no chance of recovery

The inevitable outcome of real wages dropping or real costs inflating plus no access to credit = complete consumer meltdown. The result is much suffering or bankruptcy. Take your choice.

In my experience in Bankruptcy Law, airlines file Bankruptcy to avoid suffering, real people suffer and suffer and feel bad, lose everything and THEN file.

Aug. 14 (Bloomberg) -- U.S. consumer prices rose at the fastest pace in 17
years in July, limiting the ability of the Federal Reserve to lower interest
rates as economic growth slows.
The cost of living climbed 5.6 percent in
the year ended in July, the Labor Department said today in Washington. It was up
0.8 percent from the previous month, twice as much as anticipated. So-called
core prices, which exclude food and energy, also advanced more than projected.
The surge last month reflected energy prices that have since declined,
signaling July may represent the peak in inflation. Still, increases went beyond
food and fuel, including gains in clothing, airline fares and education, likely
intensifying discussions among Fed policy makers about how quickly to shift
toward raising rates.
``What we are seeing is a lot of commodity-price
spillover'' into other items, said Richard DeKaser, chief
economist at National City Corp. in Cleveland, who correctly forecast the
increase in core prices. ``Numbers like this increase the hand of hawks'' at the
Fed who argue that rates need to rise to quell inflation, he said.
costs have retreated since mid-July. Crude oil futures dropped as low as $112 a
barrel this week after topping $147 last month. Regular gasoline, which reached
a record $4.11 a gallon on July 17, has fallen about 8 percent, according to
``We're probably looking in the rearview mirror with respect to the
worst part of inflation,'' said Joseph LaVorgna, chief
U.S. economist at Deutsche Bank Securities Inc. in New York. ``Energy prices
have declined sharply in the last month.''
Treasuries, Stocks
rose, with benchmark 10-year note yields falling to 3.89 percent at 4:35 p.m. in
New York, from 3.94 percent late yesterday. The Standard & Poor's 500 Stock
Index advanced 0.6 percent to close at 1,292.93.
Separate reports today
reinforced evidence of a weakening job market and continued slump in housing.
The Labor Department reported that 450,000 Americans, more than anticipated,
filed first-time claims for jobless benefits last week. Claims averaged 321,400
last year.
The median price for a single-family home in the U.S. dropped 7.6
percent in the second quarter as bank sales of foreclosed homes caused values to
tumble in three-quarters of U.S. cities, the National Association of Realtors
Sales of single-family houses and condominiums fell 16 percent to
4.913 million at an annualized pace, a 10-year low, the realtors group also
Economists' Estimates
Consumer prices were forecast to rise 0.4
percent, according to the median estimate of 78 economists in a Bloomberg News
survey. Projections ranged from gains of 0.1 percent to 0.7 percent.
excluding food and energy increased 0.3 percent for a second month, exceeding
the 0.2 percent median forecast of economists surveyed.
The core rate
increased 2.5 percent from July 2007, the most since January, after a 2.4
percent year-over-year increase the prior month.
Energy expenses jumped 4
percent, after a 6.6 percent gain in the prior month, today's report said.
Gasoline prices increased 4.1 percent.
Procter & Gamble
was among businesses that responded to the surge in oil earlier this
year. The world's largest consumer- products company charged more for Cascade
dishwashing detergent, Iams pet food and Gillette razors to offset some of the
jump in packaging costs. McDonald's Corp., the
world's largest restaurant company, raised prices as ingredient expenses surged.
McDonald's Costs
``Beef and cheese are up, but we've been able to
mitigate that cost,'' Chief Executive Officer James Skinner said in
an interview in Beijing last week.
The consumer price index is the
government's broadest gauge of costs for goods and services. Almost 60 percent
of the CPI covers prices consumers pay for services ranging from medical visits
to airline fares and movie tickets.
Today's report ``raises the general
trajectory'' of interest rates, reducing the chance of cuts and bringing forward
the likelihood of increases, William Poole, the
former St. Louis Fed president, said in an interview with Bloomberg Television.
Poole is a Bloomberg contributor.
Food prices, which account for about a
fifth of the CPI, gained 0.9 percent after a 0.8 percent increase in June.
The increases went beyond food and fuel. Clothing expenses jumped 1.2
percent, the most since 1998. The cost of an airline ticket rose 1.3 percent and
education expenses climbed 0.5 percent for a second month.
Rent Costs
Rents, which make up almost 40 percent of the core CPI, cooled. A category
designed to track rental prices rose 0.1 percent, compared with a 0.3 percent
gain in June.
The rate-setting Federal Open Market Committee last week kept
its benchmark rate at 2 percent for a second straight meeting. In their
statement, policy makers said they expect ``inflation to moderate later this
year and next year, but the inflation outlook remains highly uncertain.''
Dallas Fed President Richard Fisher
dissented in favor of raising rates, and others have indicated concern about
leaving borrowing costs unchanged for a prolonged period. Minneapolis Fed chief Gary Stern and Charles Plosser of the
Philadelphia Fed said last month the central bank may need to raise rates even
before the housing market stabilizes.
Thomas Hoenig of Kansas
City said July 16 the current level of rates ``almost certainly raises the risk
of higher inflation.''
Wages Drop
Today's figures also showed wages
decreased 0.8 percent after adjusting for inflation following a 0.9 percent drop
in June. They were down 3.1 percent over the last 12 months, the biggest
year-over-year decline since 1990. The drop in buying power is one reason
economists forecast consumer spending will slow.
Higher gasoline bills and
tighter credit reduced automobile purchases in July, causing retail sales to
drop for the first time in five months, government figures showed yesterday.
A jump in the cost of imported goods may also give American companies leeway
to charge more, economists said. Prices of products made overseas soared 22
percent in the year ended in July, the most since at least 1982, the Labor
Department reported yesterday.

Wednesday, August 13, 2008

Sub Prime Mortgages and their devastating effect on the US Economy.

It is no secret that the Sub Prime Mortgage Crisis has caused turmoil amongst the powerful financial institutions and lending houses, but one aspect of the mammoth collapse that has not been talked about a lot is its effect on every day people.

When the Big Lenders get in trouble, obviously it is time for a bail out from the Feds.

But what is there available for the people at the other end of the equation?

The debtors.

And the only bail out that most regular people will be elgible for is to get out of jail.

The real solution of course is to own up to the reality and do the right thing.

Declare Bankruptcy, pay your dues and start over.

And in fact, despite the massive efforts of clever debt-for-profit institutions, people figure this out.

And now we are seeing bankruptcies in record numbers. Over a million anticipated for this year alone, and the real crisis, the one that affects regular people---the ones without jumbo jets, golden parachutes and private equity funds----is hardly underway yet.

This is going to be a roller coaster ride, both for the economy and for the regular folks.