Another Tent City in Cali....Is Florida next?

http://www.latimes.com:80/news/local/orange/la-me-tents18mar18,1,7073495.story

Yet another reprecussion from the foreclose fallout in California. Can a situation like this be far off for other hot housing markets that are now facing escalating foreclosure rates?

Bear Stearns....A Story of Leverage

Bear Stearns this week has demonstrated clearly my earlier point about leverage and what it can do when it works against you. There will be a few more shoes to drop they will not be the last. What you have just witness is a $170 last year, and one of Wallstreets darlings, reduce to $2 a share in literally and instant.

Lenders and banks are not aware of their own sickness. It took Bear 24 hours from the CEO saying their balance sheet was fine to being insolvent. That is the nature of being leveraged to hill with debt you have lent out that you don't actually have. Fractional Reserve banking compounds bank returns, but in in reverse can snuff them out of existance literally overnight. It is a shame our banking system is built on this "ponzi scheme" but that is the nature of big business I guess. Try to understand that every bank that lends in America is structured this way and all of them lack the visibility to give adequate warning to impending doom on the horizon. Who is next? Keep your eye on the birdie.

FED Injects More Liquity (Round 2 or is it 3?...)

So here we go again, another attempt to prop up the collapsing credit system. Will it work? It is indeed a good thing that the FED is stepping in to take on Mortgage Backed Securities and provide liquidity to the market. However, something must be done to stop the sweeping tide of defaults that is causing the severe dislocation in the credit markets. Deleveraging in the credit system is more destructive than folks realize. The fact of the matter remains that in our "fractional reserve" banking system, where banks only hold 1/9th of what they are willing to securitize and lend out, means massive credit defaults will be magnified. Leverage is a double edge sword. During an expansion it will allow you to realize far larger gains with less capital, but in a contraction it will have the very same implications to the downside. In a nutshell it won't take much to erase a banks book value and make them insolvent.

It appears to me we are on the verge of seeing a very large bank (dare I say a Citigroup or Washington mutual) implode right out of existence. I believe it to be a certainty that before this pandemic of the credit markets runs its course there will be one more shoe to drop, and it will be the a very well known financial institutions total collapse. Stay tuned!!

Ron Paul vs Ben Bernanke on the Dollar and Inflation..

Listen to some of the key point made by congress man Ron Paul in relation to inflation, controlled recession, and deliberate debasing of the US Dollar.