Money & Markets ~ Charts 4.16.09

2 Comments

1. Flash emails from Nick

   From: Nick

   Date: April 17, 2009

   Subject: Economy going to hell in a hand basket

   Wall Street Insiders

   Flash Email

   “The Ugliest set of economic reports

   I have ever seen”

   They prove we are not in a recovery — as Obama and his gang of government spin doctors would have you believe. Far from it. The data shows the depression keeps getting worse…

   Nick note: There is no economic recovery. There is no relief in sight. The much-ballyhooed stimulus is not working. The economy is not improving.

   There certainly is no inflation. There will be no inflation in the future. In fact, inflation is the last thing you need to worry about.

   There is a depression: the worst the U.S. has ever seen. There is massive deflation. There is a banking crisis that will cause 3000 banks or more to close. It has left every major bank stone, cold broke: even the lying whores who try to spin that they made profits. In fact they have lost the most, tens of trillions of dollars each.

   In this report I show you the true numbers — not the fraud banks and government want you to believe. I also show you investments that have turned the depression into a huge, ongoing profit center…and one simple trade that could be the biggest money-maker of them all.

   Dear Insider,

   The next round of U.S. economic reports has come in. Also, America’s corporations are in the heart of earnings season.

   Let me be blunt. Never have I seen financial statements so full of b.s. Never have I seen economic reports as bad as these.

   America’s biggest banks must be the biggest bull-shitters of all. They are completely broke. They are dragging the entire nation under with them.

   Yet they claim they are making profits – even while they beg government for hundreds of billions more in bailout funds!

   Take Wells Fargo. America’s 2nd largest home mortgage lender. Holds tens of trillions worth of wiped-out derivatives.

   These derivatives are worth 20 cents on the dollar. At most. Yet Wells Fargo values them at 100% of their value! Even though they know many of the loans in the derivatives bundles will never be paid.

   How does Fargo get away with this? Because government is letting them get away with murder. Thanks to new accounting rules, forced by the Obama administration on the accounting boards, banks don’t have to value derivatives at their real market value. (Called “mark to market”.)

   No, banks get to use theoretical black-box valuations. That is what they hope and pray their dog-shit derivatives might be worth — 10, 20 even 30 years in the future. This is known as “mark to fantasy” by snickering accountants. With a stroke of the pen, they erase/ignore tens of trillions in losses.

   It gets worse. Most of Wells Fargo’s mortgages are in California: the state with the highest foreclosure rate in the nation. California real estate keeps crashing lower and lower. Foreclosures increase by the day. Fargo sinks deeper into default each week.

   Yet Fargo just announced it not only isn’t losing money. It made $3 billion profit last quarter!

   Complete bull. Look how they pulled this scam.

   Wells Fargo counts bailout money as “profits”

   Government gave Wells Fargo billions of bailout dollars. They should have set aside this money for bad mortgages. Instead, they recorded it as profits.

   Remember, overnight Wells Fargo’s bad mortgages miraculously aren’t going bad anymore. No need to set aside so much money for potential loses.

   A few days later, Wells Fargo added insult to injury. After magically reporting its multi-billion dollar profit, the bank quietly asked the U.S. government for another $50 billion in emergency bailout money.

   Do you see? Wells Fargo tells the public it just made billions of dollars in profits…yet applies for another $50 billion from the government to keep its doors open.

   Welcome comrade to the world of Wall Street accounting fraud. Aided and abetted by the U.S. government and our new socialist president.

   More lies from America’s leaders

   Meanwhile, every new economic report proves how bad things really are for the U.S.

   The Producers Price Index (PPI) fell over 6%, year on year. This confirms the fact that not only is there no inflation. There is massive deflation.

   The PPI has never dropped like this in modern U.S. history. It shows we are indeed in a depression.

   But the real bad news was the CPI. Consumer prices fell over 1% in March. Year over year they are down 0.4%. This is the first time the CPI has dropped for a full year since 1955. It shows the deflation is starting to move into the retail marketplace.

   Remember that the PPI is a forward-looking indicator. i.e. it tells you what is coming. And it fell more than the CPI. Together, these two reports signal even more falling prices…and a bigger, growing depression. They clearly show the economy will not improve any time soon.

   And there’s more. Retail sales fell 1.1% in March. Off 9.4% year over year. The U.S. economy is 70% based on consumer spending. Normally even a fraction of one percent is seen as a big move. 9.4% is a staggering drop.

   Desperate businesses are lowering their prices. The PPI and CPI reports prove that. But the retail sales report shows this isn’t working. Even with lower prices, retailers can’t attract customers.

   Another key report is the “Capacity Utilization Rate.” It shows you how much of the nation’s factories are actually being used. In March the number collapsed to 69.3%. The lowest in history. Disaster.

   This tells us factories are closing en masse. Naturally. People are buying less and less.

   It’s a vicious cycle. Factories close. So people lose their jobs, and stop spending. Retail sales drop. That means more factories close, since no one is buying their products.

   This is the depression death spiral. And my fiend we are no in it!

   The huge drop in the factory utilization rate stunned me. You see, factory utilization shows you the real unemployment rate. It’s a simple but accurate formula: the fewer factories in use, the fewer people working.

   When the economy was strong, we had 92% to 96% factory utilization. Everyone had jobs. Business could not find workers to fill all the vacancies.

   Workers were fat and sassy. America’s factories were humming. Everyone was making money hand over fist.

   Now, in effect, 30% of U.S. factories are mothballed. Forget the politically correct b.s. spin from Washington. America’s real unemployment rate is close to 30%.

   Count the people who have given up looking for work. Count those who take part-time work, because they could not find a full-time job. Add in highly skilled people who had high-paying jobs, but now must take low-paying jobs in desperation. (Like grocery shelf stockers making minimum wage.) America’s real unemployment rate is nearly 30%.

   30% unemployment is unheard of in the world’s biggest economy. It is the stuff you expect in poverty-stricken basket cases. It shows you this depression will be more severe than anything we have seen before.

   You are facing only the beginning of the depressionary crash. Not the end, as the politicians’ spin would have you believe.

   People who are unemployed or under-employed don’t make mortgage payments. Their homes go into foreclosure. Because no matter what the workout terms, if they don’t have steady income, they can’t pay.

   People who have taken part-time jobs can’t pay their credit card debt. They default. People without jobs don’t go on shopping sprees. So retail sales plunge.

   All this works together. The staggering increase in unemployment. The soaring home foreclosures. The record credit card defaults. The mind-boggling drop in retail sales.

   Now add to that the plunges in factory utilization rates… and the plunge in consumer spending. It proves we have entered a Great Depression. What’s more, the data show that things are getting worse…and will get much worse in the future.

   Imagine one-third of everything in America shut down. That is what is happening. It’s called a depression.

   Car sales are off by more than 30% from last year alone. That’s big cars, little cars, American cars, Japanese cars. No wonder GM is broke. No wonder states like California (among others) are opening up soup kitchens and tent cities.

   And no surprise that the second-largest U.S. mall owner just filed for bankruptcy. General Growth Properties owns or operates more than 200 malls in 44 states. They are dead broke. This is the biggest real estate bankruptcy in U.S. history.

   You are getting an incredible reality check. The joke government “stimulus” programs are doing nothing to stop it. I hope to God you don’t bury your head in the sand.

   Now is not the time to go into denial. More than any time in your life, you must get the real facts. You must avoid the traps Wall Street is setting for you.

   Above all, you must embrace the opportunities that are presenting themselves to you. I tell you more about that, later in this report.

   Meantime, the bad reports keep pouring in. Last week the Commerce Department reported that Wholesale Inventories fell 1.5% in February. The 6th straight monthly drop. Also, the biggest in history. Another sign of the deepening depression.

   When businesses can’t sell goods, they lower inventories as fast as they can. The deflation means that with each passing month, goods are worth less and less: their prices keep falling. Inventories lose more and more money. Cash is king.

   But people don’t understand deflation. They have no experience with it. All they know is inflation. So they make the exact wrong decisions. Housing is one example.

   Foreclosures soared 24% last quarter –

   but 70% of all foreclosures haven’t even hit the market yet!

   Contrary to myth, home prices are not going up. They have not stabilized. Just the opposite. Home values keep plunging. They will do so for years.

   Foreclosures alone guarantee this. They are soaring. We have all heard the spin. “Mortgage modifications [where they give better terms to people in trouble] will stop foreclosures. They will stop the plunge in home values.”

   Nothing could be further from the truth. Mortgage workouts are a sick joke. Most people can’t qualify, since you must have a job. And the few who do get a mortgage modification soon default again.

   The numbers prove it. In the last three months, 804,000 more families received foreclosure notices. That’s on top of the 10 million families who already are in foreclosure, or are behind on their payments and defaulting. It’s a 24% rise from the previous quarter.

   In other words, foreclosures are going up. Not down, as the government spin would have you believe.

   Here’s the really scary part. The vast majority of foreclosures still have not hit the market. 70% of foreclosed homes haven’t even been listed for sale. That’s according to RealtyTrac, which tracks foreclosure listings around the nation.

   What happens to home prices when these foreclosed homes come to market? Let me tell you. Take that home that sold for 1.5 million dollars (with a ha-ha-ha “appraisal”). Now it’s “worth” $700K. In a few months it will go for $400K. By year end, it might sell for $200K. If you get real lucky.

   Before it’s over, you will get your pick of multi-million dollar mansions…for under $50K.

   It’s critical you understand this. The depression is years from ending. A decade or more may pass, before we hit bottom. Then it will take even longer for prices to start creeping back up.

   Wholesale prices are crashing. Retail prices are crashing. Inventories are plunging. Retail sales are wiping out. Factory are closing en masse, as utilization is at record lows.

   Unemployment — the real number — is at all-time highs and climbing: foreclosures keep soaring through the roof. Property values have a long, long way to go before they hit bottom.

   These are the clear signs of a spreading depression. One that gets worse by the day. Any bailout strategy that assumes the bad times are behind us…that consumer spending and inflation will increase…that the economy has stabilized…is doomed to fail.

   Please don’t listen to the “if you’re happy and you know it” smiley faces. You will indeed be wiped out. In fact if you insist on listening to this spin, you deserve your place in line at the soup kitchen.

   As you see, it’s not one economic report. Dozens of economic reports shout out the same thing. Warning. Warning. Depression. Deflation. WIPEOUT.

   Yet Wall Street and government want you to believe the recovery has started. Things are looking up. There are “glimmers of hope.” We’ll soon see a recovery with massive inflation.

   What bull shit. Don’t make me vomit.

   America had decades of growth. We had on-going inflation. Massive consumer spending, that kept growing bigger and bigger.

   But it was built on a house of cards. On hundreds of trillions of dollars in fast, easy credit.

   Those days are gone. Now all that is completely reversing. It’s time to liquidate all that bad debt.

   We will have decades of plunges. In everything from employment and foreclosures…to debt wipeouts and economic stagnation. Economic activity will collapse, like we have never seen before.

   America never saw retail sales grow 10% a year. But we’ve now seen those same sales fall 10%. A drop of earth-shaking proportions. It behooves you to pay close attention to what is going on here. These are third-world shit-hole numbers.

   Any claim of a “recovery” is total b.s. A lie from the gates of hell. If you have any doubt about that, look at what has happened to two of America’s biggest, most important industries…

   House construction plunged

   even more than cars

   I told you before how U.S. auto production has collapsed. Already down 55%, with further huge drops to come.

   Incredibly, housing construction is in even worse shape.

   The Commerce Department said Thursday construction of new homes and apartments dropped 10.8 percent last month. The adjusted annual rate now is just 510,000 units. Down over 75% since 2005. Not even the Great Depression of the 1930’s saw these kind of plunges.

   It’s going to get a lot worse, too. Applications for building permits are a great barometer of future activity. They also plunged in March, dropping 9 percent.

   In just a few years, two of America’s major industries — cars and housing — have been cut by more than half. In 12 months more, they will be cut by more than three-quarters. This has never happened in U.S. history.

   It’s not ‘just’ housing and cars, either. Industrial production dropped the biggest amount since World War II. Down 13.3%. Industrial output fell even more: 20%.

   Production of consumer goods fell 8%, year over year. Business equipment production fell 14% year over year.

   In essence we are shutting our economy down. Industry is sucking shut at unprecedented levels. Millions and millions of people will lose their jobs.

   Unemployed people can’t pay their bills. They wipe out. They take the economy with them, in the depression death spiral.

   You might expect this from African dictatorships in economic collapse.

   But from the U.S.? The world’s largest, strongest economy?

   The tragic reality is, our glory days are long gone. This is not a matter of not loving America. It’s a matter of truth. Truth is, the U.S. economy is wiping out before your eyes.

   We have always been told America has a secret economic weapon. Its high technology. When all else fails, that is supposed to give us an edge over the rest of the world.

   Well, no longer. Production of high-tech equipment collapsed 23% the past 12 months. This is unprecedented. I shudder to think what it means for future employment, and for the economic future of America.

   Meanwhile, what is Washington doing? Looking for scapegoats…and helping the bankers hide their staggering losses. Losses that are increasing geometrically. Don’t let them kid you. America is only beginning to feel the pain.

   Even the Fed just admitted how bad things are:

   “Economic activity in the United States contracted further or remained weak amid prolonged recession,” the Federal Reserve said in its Beige Book report Wednesday.

   But our leaders don’t know what to do. They don’t what to say the truth. All they can come up with is trillion-dollar pork barrel programs. These so-called bailouts waste even more money. They don’t have a snowball’s chance in hell of working.

   The new administration in Washington is frozen at the switch. Things are falling apart. Yet they tell you not to worry, the economy is in recovery. They do little else but give great carefully scripted speeches.

   We need leadership and truth. Instead we are getting rhetoric and spin.

   The good news is that you don’t have to get caught up in this insanity. We’ve given you the tools to survive the depression. We are showing you what to buy. What NOT to buy. What to sell. How to keep your money safe from the massive losses — and even where you could make some nice profits while everything else collapses.

   Never have the financial spin-meisters given the investing public so much bad advice. The stock market is doomed. So is gold. Don’t touch either one with a hundred-foot pole.

   Cash is king. You better have it where you can get it, if you want to survive. That means NOT in the banks, or the S&L’s.

   For years I warned you this day would come. Well guess what the day is upon us. You either figure it out, or you wipe out.

   There is no question. No maybe’s. This depression is ruining our economy. The worst is yet to come. By far. All the numbers prove it.

   The spin is phenomenal. Fed Chairman Bernanke says he sees early signs that the economy is stabilizing. Obama’s economic advisor Summers says the economy is more positive than two months ago. Fed’s Fisher says the U.S. stimulus is kicking in. Obama himself sees light at the end of the tunnel.

   Really? On what planet? These are out and out lies. Every economic report proves it. We are sinking deeper in the hole.

   All these “experts” forget to tell you that U.S. banks are broke. That the foreclosure rate increases dramatically every quarter. That in reality nearly 30% of Americans are unemployed…while more go on the dole every day.

   They forget to tell you that more and more people are seeing their credit card debt go bad. These people can’t make even the minimum payments.

   The numbers are staggering. Card companies like American Express are writing off nearly 10% of all their credit card debt. And we’re still early in the depression. Those numbers will soar in the coming months and years.

   Millions more people will get wiped out this year. Then the depression will really take root. The figures will go higher next year and the year after that.

   Politicians are desperate. They are trying to stop rioting in the streets. That has already started in England. In France, people are kidnapping their bosses rather than be fired.

   Our leaders want to distract you from reality. Their careers have taught them one key lesson: spin a load of b.s., buy some time and hope by some miracle things improve. Their wont be any cavalry to the rescue this time.

   There will be no miracle. No last minute reprieve. The debt orgy is over and now its pay back time. There is no way out of the debt hell hole America created. And it’s not only business that faces ruin. Government is taking huge hits, too. As reported in the Baltimore Sun:

   State and local sales-tax revenue fell more sharply in the fourth quarter of 2008 than at any time in the past half century and has continued to erode through the beginning of 2009, according to a report released Tuesday.

   The report by the Nelson A. Rockefeller Institute of Government at the State University of New York underscores how swiftly the consumer slowdown has eaten into municipal budgets. The drop in tax revenue has forced cities and towns of all sizes to cut everything from police to summer pool hours, and has sent legislatures scrambling for federal economic-stimulus funds to help ease budget gaps.

   “The sales tax has been absolutely hammered,” said Don Boyd, senior fellow at the institute.

   State and local sales taxes, among the largest sources of revenue for municipalities, fell 6.1% in the fourth quarter of last year, as consumers bought fewer clothes, ate out less and canceled vacations. Revenue from personal income taxes was down 1.1% in the fourth quarter; corporate income taxes dropped 15.5%, reflecting weaker profits.

   The declines have continued through the beginning of this year. In the first two months of 2009, the 41 states that have reported tax revenue saw total receipts decline 12.8%, versus the same period a year ago.

   America is firing police. Social services are getting cut back. You see that more than just the economy is at stake.

   Without key services, basic health in the U.S. will soon deteriorate. Without police protection, lawlessness becomes epidemic in our cities.

   The ranks of the angry poor will explode. These are very ugly times.

   A footnote: I am adamant that long-term U.S. Treasuries and zero-coupon bonds are a fantastic opportunity. I told you about quantum easing, where the Fed lowers long-term rates over and over. It’s taking place, as we speak.

   I told you not to buy gold: since then it has dropped $200 an ounce. I also showed you how you could make a fortune selling gold. You still have time to do that. See the special report later in this email for full information on how.

   I told you for a fact the Fed is NOT printing money! They are not inflating. Just the opposite. We are in the biggest deflation we have ever seen. The feds can and will borrow all they need.

   You are seeing that now. Each T-bill auction keeps setting new records. They keep raising more and more money; and long-term interest rates keep falling lower and lower.

   In the past 48 hours alone, the Treasury called billions of dollars worth of 30-year bonds. These bonds were issued in the mid-1980’s. They paid 12% interest. Treasury replaced those 12% bonds, with short-term government debt that pays under 1%!

   They save 11% interest, on hundreds of billions of dollars a year. And that’s just the 30 year bond. They are doing the same thing up and down the yield curve. In all, this saves them a trillion dollars a year in interest payments.

   Government can only do this in a depression. It is working. Doesn’t it make sense for you to do so as well?

   You have two choices. You can listen to the people who say inflation is coming. They tell you an economic recovery is right around the corner. They assure you that the banks aren’t losing trillions: in fact, they are supposedly making money. They want you to buy gold and real estate. Even though the signs of a prolonged deflation are everywhere.

   Listen to these people and you will get wiped out. Just like the masses, who are deep in debt.

   Anyone who tells you to buy gold, doesn’t know what the hell they are talking about.

   If they tell you the economy is recovering, they must be high.

   If they are telling you the government is printing money, they are sold-out has-beens who have never gotten it right.

   Your survival depends on one critical thing: understanding what is really going on in the economy. We are in a deflation. A depression. It has ten years or more to run. There will be no quick fixes.

   Never has it been so important that you get accurate financial information, and the correct interpretation of the critical data.

   Our leaders don’t have a clue of what’s about to take place. Please don’t wait for them to figure it out. By then, you and your loved ones could be starving to death.

   That has happened before in this countries early history. It can and will happen again. In fact, it is happening again.

   The signs of economic and social disaster are everywhere. Are you watching? Are you listening? Are you understanding?

   Look, this is no joke. This is not about some nifty trade or philosophical debate. It’s all or nothing. Get it right and you could survive and become rich. Get it wrong and you go broke and starve. Not so hard to understand.

   Every foreclosed home you see is someone’s dream shattered. Someone’s life destroyed.

   Every closed factory is a business in trouble and in failure. It is people whose life dreams have gone up in smoke.

   Every unemployed person is a house loan not getting paid…a car getting repossessed. It’s someone who has gone from the good life to the bad life. To poverty and food stamps.

   It’s all about understanding what’s going on, and knowing what to do. That’s our business. That’s what we do. It’s what we’ve done for 30 years.

   You better choose and choose correctly. There ain’t no second chances. I wish you well. In furtherance of my duty to you I am doing a Special Report on this latest economic news and upcoming trades. I will post my latest to you over this weekend. When its up I will flash and SMS you.

2. Catherine,

   Heard your interview with George tonight. You mentioned how there is too much retail space. I would add medical office space, office space in general, hotels and movie theaters. I find it breath taking (at least here in Denver) at the bastardization of existing retail, medical and general office space. Places that generally had been running around 95% occupied are lucky to have 50%. New space typically 25-50% occupied…if that. Who’s the bagholder on these properties? Pension plans? Insurance companies?

   Have you ever seen a chart of retail space(sq footage)/population? Three or 4 years ago I saw a chart that showed this data that went back about 70-80 years. The ratio was constant until approximately 1995/6 and then retail space begins to (rather robustly as I recall) outpace population growth year after year. Unfortunately, I don’t recall where I saw this.

   regards, doug

   ps Who was the ignoramus who callec in to ask a question? hahaha

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