International Forecaster Weekly

A Climate of Corruption, Bailouts, Currency Rigging and Unfair Competition

Citigroup's big problems, beggars in Zegna suits, trade wars on the horizon, Philadelphia Fed report beset by weakness, record injections of liquidity, jobs slashed on wall street, a bevy of financial indicators to ponder just how much we have fallen, market losses trim size of overall economy

Bob Chapman | November 22, 2008

Citigroup’s problems are double AIG’s, which has the taxpayers and investors on the hook for $170.4 billion. We see AIG’s problems at over $500 billion so that means Citigroup could be offside $1 trillion. Citi is loaded with the same garbage AIG has. That means both AIG and Citigroup are insolvent, and you will get to pay to bail out both of them.
CEO Pandit is an idiot and worse so is Citi’s management. Citi paid Pandit $800 million for his dying hedge fund. Pandit made $185 million on the sale. The fund is now closed. Even though these firms are run by masters of the universe, they are dead meat. Do you really believe the public is going to stand still for what may be two $500 billion to $1 trillion bailouts? That is what starts revolutions. What very few know or understand is that the financial condition of the US is far worse than realized. You have to get out of all dollar denominated assets with the exception of gold, silver, oil and gas stocks and Swiss Franc Treasuries. Be very heavy in gold and silver coins.
Housing starts fell to a record low of 4.5% in October and applications for building permits fell 12%. It looks like the builders after three years are finally getting the message. Wait until you see how many of these builders go under. Stay short our builder short recommendations.
The mortgage purchase applications index fell 12.6% versus plus 9% in the previous week. The refi index rose 2.6% versus 16.1%. The 30-year fixed fell 7 bps to 6.16%.
Credit Swiss has warned that two big commercial mortgages that had been packaged into securities in the past year that are likely to default. Delinquencies of US commercial mortgage-backed securities edged up to 0.51% last month from 0.45% in September. Borrowers are facing increased difficulty accessing capital to refinance maturing loans. The spread in CMBX AAA Index is up another 65 bps to 635 bps, having surged 500 bps since September.
The Fed has lowered its 2008 GDP growth to zero from 1.3% in June. They see 2009 at 0.2%. We see it at minus 3%.
PricewaterhouseCoopers Trendsetter Barometer fell to a 16-year low in the 3rd quarter of 2008, with only 17% of CEO’s surveyed have a positive outlook. That’s 7 points lower than last quarter’s 24%. That is a decline from 64% in the 2nd quarter of 2007. CEO’s pessimistic about the economy a year out rose to 41% from 15% yoy.
There is something wrong in the Fannie Mae/Freddie Mac agency bond market. The spread has widened to 164 on 10-year paper, yet there is an explicit guarantee on the paper. Something is wrong. The foreigners are sellers and we do not know why yet.
The big world economies and their governments are all engaging in financial corruption, bailouts, currency rigging and blatant unfair competition, which can only lead to trade wars. Free trade is on the way out and it is only a matter of time before it is abandoned.
Citibank is liquidating its Corporate Special Opportunities hedge fund after it lost 53% of its value last month. This is Citi’s 9th closure of a hedge fund in recent months. SCO managed $4.2 billion at its peak, now has a net asset value of about $58 million and debt of about $800 million. Investors will probably receive $0.10 on the dollar. Genius CEO, Vikram Pandit, scores another failure. This fund was so bad off that with a Citi $450 million line of credit and equity infusions of $320 million they still couldn’t make it. Investors have been locked in for a year and now will receive a pittance. These are the Illuminist masters of the universe.
The tally of credit derivatives contracts outstanding globally fell 0.58% in the week to Nov. 14 to 2.419 million, valued at a total of $32.519 trillion as of that day, the Depository Trust and Clearing Corp. reported Tuesday.
      The total amount of CDS outstanding fell 0.5% from $32.692 trillion in the week through Nov. 14. The clearinghouse also reported 14,145 contracts, worth $172.55 billion, were traded that week.
       U.S. retail stores may be much less crowded this holiday season, as one research firm sees foot traffic sliding a record 9.9 percent as shoppers suffer from the weak economy and low consumer confidence.
       US Building Permits decrease 12% to 0.708M in October.
       Applications for U.S. home mortgages declined last week, with loans for purchases of single-family homes falling to their lowest level in nearly eight years, an industry group said on Wednesday.
       The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage application activity fell 6.2 percent to 398.6 in the week ended Nov. 14.
       The index was dragged lower as the MBA's gauge of loan requests earmarked for home purchases tumbled 12.6 percent to 248.5, the lowest level since the last week of December 2000. The index for refinancing applications edged higher to 1,281.2 from 1,248.4 in the previous week.
       The U.S. housing slump, now in its third year, will likely linger as long as the mix of falling home prices and risky mortgages keep foreclosure rates rising, economists said. The financial markets crisis that erupted in September and October has worsened the outlook, leading banks to pull back on already tight credit for mortgages and other loans.
       Fixed 30-year mortgage rates averaged 6.16 percent in the week, down 8 basis points from the prior week, the MBA said.
    Factory activity in the U.S. Mid-Atlantic region fell to another 18-year low in November, a survey showed on Thursday.
    The Philadelphia Federal Reserve Bank said its business activity index fell to minus 39.3 from minus 37.5 in October. Any reading below zero indicates contraction in the region's manufacturing sector.
    Wall Street economists had expected a reading of minus 35.0, according to a Reuters poll. Their 62 forecasts ranged from minus 45.0 to minus 24.8.
    The survey of factories in eastern Pennsylvania, southern New Jersey and Delaware is scrutinized as one of the first monthly indicators of the health of U.S. manufacturing.
    A similar gauge for New York state tumbled in November to yet another record low in its seven-year history, the New York Federal Reserve said on Monday.
    The number of Americans filing for unemployment benefits approached a 26-year high, and a gauge of the economy's future performance dropped, sending yields on benchmark Treasuries to record lows.
Initial jobless claims climbed to a higher-than-forecast 542,000 in the week ended Nov. 15, the Labor Department said today in Washington. The Conference Board's index of leading economic indicators declined 0.8 percent, and a measure of manufacturing in the Philadelphia region fell to an 18-year low.
    The New York-based Conference Board said its monthly forecast of economic activity declined 0.8 percent in October, worse than the 0.6 percent decrease expected by economists surveyed by Thomson Reuters.  Over the last seven months, the index declined at a 4.7 percent annual rate, faster than any decline since 2001.
    A U.S. Senate subcommittee is opening a probe into causes of the global financial crisis, focusing in part on whether bond-ratings firms, driven by conflicts of interest, boosted mortgage investments which have since collapsed, the Wall Street Journal said.
    The ranking Republican on the Senate's Permanent Subcommittee on Investigation, Senator Norm Coleman, told the WSJ in an interview that investigators want to know whether competition among firms led them to issue certain ratings in order to win business from banks.
    "We're going to look at the root causes of this, looking at whether the inherent conflict clouded the judgment of the agencies," Senator Coleman said.
    "We've instituted a number of initiatives to mitigate conflicts," a Moody's Investors Service spokesman told the paper.
    McGraw-Hill Cos Inc's Standard & Poor's, Fimalac SA's Fitch Ratings and Moody's could not be immediately reached for comment by Reuters.
    U.S. 30-year mortgage rates fell to an average of 6.04 percent from 6.14 percent in the week ending Nov. 20, while 15-year mortgage rates dipped to an average of 5.73 percent from 5.81 percent last week.
    One-year adjustable rate mortgages, or ARMs, also dropped in the week to an average of 5.29 percent from 5.33 percent last week.
    Freddie Mac said the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, fell to an average of 5.87 percent from 5.98 percent a week earlier. A year ago, 30-year mortgage rates averaged 6.20 percent. 15-year mortgages 5.83 percent and the one-year ARM 5.42 percent. The 5/1 ARM averaged 5.88 percent.
    The Federal Reserve Bank of Philadelphia reported Thursday that its index of general business activity moved to -39.3 from -37.5 in October and 3.8 in September. It had been expected to stand at -38.0. The November reading was the worst since October 1990.
    Readings under zero denote contracting activity and describe the breadth of the change, but not the magnitude of the change seen by survey respondents.
    Almost every aspect of the Philadelphia Fed report was beset by weakness. And given that this report is one of the first looks at activity within a given month, the weakness could herald that more nasty numbers are coming over the next several weeks.
    What's more, "most of the survey's indicators of future activity slid further into negative territory this month, suggesting that the region's manufacturing executives expect continued declines over the next six months," the report said.
    The report showed the inflationary pressures actually contracted in the current month, for the first time since July 2003, with the prices paid index moving to -30.7, from 7.2, and the prices received index hitting -15.5, from 5.3.
    The bank's employment index came in at -25.2, from -18.0, while the new orders index stood at -31.4, after -30.5 in October. The shipments index was -18.8, unchanged from the prior month.
    The composite index of leading indicators declined 0.8% in October, to 99.6, according to preliminary estimates by the Conference Board on Thursday.
    The leading index for August was revised slightly lower to show a gain of 0.1%, instead of the 0.3% first reported.
    Over the six months through October, the leading index declined 2.4%, considerably faster than the 1.2% decrease over the previous six months.
    "Taken together, the persistent and extensive deterioration of the composite indexes continues to suggest that the economy is unlikely to improve soon, and economic activity may contract further near term," the Conference Board said in a statement.
    In October, three out of the 10 indicators rose. The largest positive contributors to the index were real money supply, the interest rate spread and manufacturers' new orders for consumer goods and materials. The most significant negative contributors were stock prices, building permits and the index of consumer expectations.
    The index was equal to 100 in 2004.
    The Board also reported that the composite index of coincident indicators increased 0.2% in October, to 105.6, also from 100 in 2004. This follows five consecutive monthly declines. Employees on nonagricultural payrolls had the largest negative contribution.
    Over the six months through October, the index declined 1.2%, with none of the four components advancing.
    The index of lagging indicators was up 0.1% in October to 113.3.
    Record injections of liquidity have driven the overnight lending rate between banks to less than half the 1 percent target set by officials last month. The gap is shifting investors' focus toward the amount of money in the banking system as a better gauge of Fed intentions.
    Three-month T-Bills traded at 0.06% yesterday, which was below the one-month 0.08% yield.  This is a sign of extreme distress and fear.  Liquidity is still being hoarded.  Utmost safety is craved.
    With T-Bill yields near zero, T-Bills are effectively cash.  If fact, cash is now better than owning T- Bills because cash has no counterparty or default risk and no maturity.
    More companies that file for bankruptcy protection are shutting down, lawyers say, because they cannot obtain enough financing to operate while they reorganize.
    Credit is so tight and things are so bad, that firms cannot declare bankruptcy!!!   
    Reworking loans to make ‘payments affordable’ without permanently reducing principal balances is the worst possible thing that can be done because it ensures the housing and foreclosure crisis will be with us for a long time. If these programs are widely accepted, housing is a dead asset class indefinitely...
    This style of modification does not sit well with owners of mortgage securities either, which make up the bulk of distressed mortgages. This is because deferred interest, 40-year terms and interest only teaser periods, greatly reduces the cash flows and lengthens the duration of the security.  
    As we predicted, the S&P 500 as a group generated $142.8 billion in operating earnings in the third quarter, down 22% from the $184.1 billion in the same period in 2007. The plunge fell just short of the biggest third-quarter earnings drop in the history of the index.
    Goldman forecasts S&P 500 earnings of $65 in 2009.  In the severe bear markets and recessions of 1973- 1975 and 1980-1982 the S&P 500 PE fell below 7.  Those were periods of inflation; now it’s deflation.  
    Multiply $65 times 7 and you get an S&P 500 of 455 (806.58 yesterday).  Let’s hope $65 is accurate.
    Citigroup moved on Wednesday to end its troubled involvement with structured investment vehicles, bringing the last $17.4 billion in SIV assets back on to its balance sheet for a loss of $1.1 billion. [Anyone believe that the $17.4 billion of SIVs on Citi’s balance sheet will show only a $1.1 billion loss over time?]
    The global financial services industry faces an even bigger bloodbath than previously anticipated with job cuts now expected to hit 350,000.
    That is double the number of people who have already lost their jobs since the financial crisis led to frozen credit markets.
Banks are slashing back staff numbers around the world amid trillions of dollars in losses.
    Executive search firm CTPartners says the job losses will amount to some 20% of the global workforce before the financial crisis hit.
    'This is the financial equivalent of World War Two,' Brian Sullivan, chief executive of CTPartners, told Bloomberg. 'It's unprecedented. You're seeing a seismic shift in the population of banking.'
    Downey Financial Corp., once a big provider of adjustable-rate mortgages, shrank back further from the home loan business today.
    The Newport Beach-based parent of Downey Savings & Loan said it would eliminate its wholesale lending unit, meaning loans originated through brokers.
    The company said it would cut back on in-house lending as well.    
    The moves will slash 200 jobs and could help Downey hold on to more of its cash at a time when it is under pressure from the U.S. Office of Thrift Supervision to raise more capital.
    "Balance sheet shrinking is a classic way for a bank to strengthen itself," said banking consultant Bert Ely in Alexandria, Va.
    Charles Rinehart, an S&L industry veteran who took over as Downey's chief executive last month, is trying to keep the company afloat after it suffered massive losses on its adjustable-rate mortgages.    
    But pulling back from lending obviously isn't a growth strategy. And Downey "still has to deal with the residual problem of the future credit losses on loans it made in the past," Ely noted.
    Downey's ARMs included the now-infamous pay-option loans, which allowed homeowners to make such small monthly payments that their loan balances rose.
    The firm's nonperforming assets shot up from less than 3% of total assets in August 2007 to about 14.7% by the end of August, the latest data available. The trend is slowly moving downward, though. In June the number was 15.5%.
    Stung by outsize investment losses, some of the nation’s biggest companies are pushing Congress to roll back rules requiring them to put more money into their pension funds, just two years after President Bush signed a law meant to strengthen the pension system.
    The total value of company pension funds is thought to have fallen by more than $250 billion since last winter. With cash now in short supply for companies, they are asking Congress to excuse them from having to replenish the required amounts.
    Lawmakers from both parties seem receptive to the idea, and there was talk of adding a pension relief provision to the broad fiscal stimulus package Congress considered for this week’s lame-duck session.
    Pension relief for companies would also expose the Pension Benefit Guaranty Corporation to greater risk. The federal guarantor is already operating at a deficit.
    Companies do not dispute the risks, but they say that when Congress tightened the pension rules it did not take this year’s unprecedented market turmoil into account. If companies are now required to put new money into their pension funds, they say, they will not have the cash needed for business investments and payrolls.
    The Massachusetts public pension fund lost 13.3 percent of its value as stock markets plunged in October, officials said yesterday, crediting its diversification with preventing deeper losses.
    The state's Pension Reserves Investment Trust was worth about $40 billion as of Oct. 31, after one of the worst months for stocks in history.
    The Standard & Poor's 500 stock index fell 17 percent in October.
    For the first 10 months of the year, the state fund is down 26.9 percent from its starting point of about $53 billion.
    The average hit so far this year to large public pension funds is 28 percent, according to figures from the pension advisory firm Cliffwater LLC that the state provided.
    In a recent report, Moody's Investors Service estimated state and local systems have seen a 35 percent decline in their stock investments alone this year.
    Travaglini said losses for the Massachusetts system on US stocks are 37 percent for the year so far, while international equities are down 42 percent.
    Together, those two categories make up about half of the system's total investments.
    Offsetting those losses were better performance from bond holdings, down only 5 percent for the year, while private equity investments were off 2 percent and hedge funds were down 15 percent.
    With the median price of Southern California homes down more than 40% from its peak, the housing market has now slid further than most economists expected.
    The median sales price for homes in the region fell to $300,000 in October, a level not seen since 2003 and a 41% drop from the peak price set in the spring and summer of 2007, according to San Diego-based MDA DataQuick.
    Los Angeles County's median home sales price was $355,000, down 29% from a year ago.
    Prices were dragged down by the large number of foreclosed homes on the market. For the first time since the slump began, repossessed properties in October accounted for more than half of residences sold.
    Low prices did drive sales up 56% from a year ago. But a market bottom remains elusive, and a rebound in prices is not on the horizon.
    Barring a dramatic economic reversal, the median sales price is on track to slip below $300,000 when November sales are calculated next month.
    Christopher Thornberg, principal of Los Angeles consulting firm Beacon Economics, is among those who predicted a 25% price decline last November, making him one of the more bearish forecasters at the time. By March, he was estimating a 40% decline. Now he predicts that prices will keep dropping throughout 2009, until they've fallen 55% from their peak.
    Owners of higher-priced homes may put off selling during the early phases of a downturn, causing more expensive homes to decline in value at a slower rate. But eventually many high-end owners have to sell at prices well below peak levels, Thornberg said.
    Last month's Case-Shiller Home Price Index, which tracks home sales by price tiers, showed that Los Angeles-area homes priced in the bottom third of the market had fallen 42% from their peak prices by late last summer -- but those in the top third had dropped 21%.
    Freight shipping prices for transporting dry raw materials collapsed in November, slammed by the global financial crisis, slowing economic growth and falling commodity prices, industry experts said.
    The Baltic Dry Index, an indicator of economic trends which tracks the cost of moving goods such as coal, iron ore and grain across the oceans, has slumped over the past five months.
    The index hit a record high of 11,793 points in May but has since fallen back to earth, hitting just 815 points last week -- the lowest level since the end of 1999.
    "Anecdotal reports suggest a significant part of this has been due to difficulty in arranging trade finance as a result of the credit crunch rather than lack of demand," they said
    "Demand for commodities has also undeniably slowed, particularly for iron ore into China, which has an overwhelming impact on the dry freight market."
    Meanwhile, the Baltic Panamax Index, comprising of seven dry bulk routes, nosedived to 662 points last week -- the lowest level since its creation in 1998 and compared with a record high 11,425 points five months ago.
    Home prices fell in four out of every five U.S. cities in the third quarter, a record spurred by distressed foreclosure sales across the country.
    The median price of a U.S. home declined 9 percent from a year earlier and sales of properties with mortgages in default accounted for at least a third of all transactions, the Chicago- based National Association of Realtors said today. Prices fell in 120 U.S. metropolitan areas, rose in 28 and were unchanged in four, the biggest share of declines in data going back to 1979.
    The financial turmoil sparked by the collapse of the U.S. subprime mortgage market has caused $666 billion of losses for U.S. banks, lenders and insurers. U.S. companies slashed 1.4 million jobs in the last six months, the biggest cut since 1975.
    The steepest price declines were all in California. The area surrounding San Bernardino had a 39 percent fall in its median home price to $227,200. Sacramento saw a 37 percent decline to $212,000, and San Diego had a 36 percent drop to $377,300. The U.S. median is $200,500.
    Elmira, New York, had the biggest price increase in the U.S., with a 13 percent gain to $105,000, according to the report. Decatur, Illinois, rose 8.7 percent to $93,400, and the median price in Bloomington, Illinois, grew 8.1 percent to $168,400.
    Foreclosures boosted U.S. sales of single-family houses and condominiums to 5.04 million in the third quarter at a seasonally adjusted annual rate, up 2.6 percent from the second quarter, the report said.
    U.S. foreclosure filings totaled 279,561 in October, an increase of 25 percent from a year ago, according to Irvine, California-based RealtyTrac Inc. They include default notices, pending auctions and repossessions.
    The S&P/Case Shiller home price index that tracks 20 cities may tumble as much as 14 percent in 2008 and 7.8 percent in 2009, Freddie Mac, the world’s No. 2 mortgage buyer after Fannie Mae, said in a report this week. Combined sales of new and existing homes probably will fall to 4.87 million, down 35 percent from the record 7.46 million sold in 2005, McLean, Virginia-based Freddie Mac said.
    Retail sales have tumbled every month since July, the longest series of declines in Commerce Department data going back to 1992. Consumer confidence fell last month to the lowest ever recorded, according to the New York-based Conference Board’s index that began in 1967.
    Hedge funds worldwide shrank by 9 percent to $1.56 trillion last month, the lowest level in two years, after investors withdrew cash and stock markets declined.
    Investors pulled $40 billion from hedge funds in October, according to Chicago-based Hedge Fund Research Inc., while market losses cut industry values by $115 billion. Investors withdrew $22 billion from funds of funds, which pool money to invest in hedge funds.
    Hedge funds fell by an average 6 percent last month, pushing the year-to-date decline through October to 16 percent, according to the HFRI Fund Weighted Composite Index, which HFRI first published in 1990. In the same periods, the hedge-fund index outperformed the S&P 500 Stock Index, which decreased 17 percent last month, and 34 percent this year through October.
    Funds run by Jeffrey Gendell and John Burbank III posted their worst monthly losses in October. Peter Thiel gave back gains made earlier in the year. Nobel-prize winner Myron Scholes froze his biggest fund.
    Gendell's Tontine Capital Partners LP fund, based in Greenwich, Connecticut, plunged 65.7 percent in October, extending its decline for the year to 76.8 percent, according to investors. Burbank's Global Strategy fund fell 38 percent in the month and 44 percent year-to-date, according to a letter to clients of his San Francisco-based based Passport Capital Management LLC.
    On Thursday US Treasuries yields set new low records. The 2-year will yield .97% and the 10-year notes were 3.03%. They fell 9 bps and 31 bps respectively.
    US credit default swaps main investment grade index widened 25 bps to a record 270 bps.
    Saudi billionaire Prince Alwaleed bin Talal plans to increase his stake in Citigroup Inc. to 5 percent after the bank, once the biggest in the U.S., lost almost a quarter of its value yesterday.
    Alwaleed, who owns less than 4 percent of the New York-based company, said in a statement he's buying shares because he ``strongly believes that they are dramatically undervalued.'' The stock fell to a 13-year low of $5.42 in New York trading today.
    Citigroup, buffeted by four straight quarterly losses, has raised about $75 billion since December by selling assets and equity stakes, including a $25 billion injection from the U.S. Treasury. Alwaleed would have to spend about $350 million to boost his stake to 5 percent from 4 percent, based on yesterday's closing price.
       Shares of Warren Buffett's insurance holding company are on the ropes this month, plunging 30% in part because the famed investor dabbled in an area of the market he has long publicly derided: derivatives. And due to a tangled web of financial relationships, they may be taking Goldman Sachs shares down with them.
       Investors are concerned about a $37-billion bet that Buffett made last year that US and world equity values would be higher in 15 to 20 years than they were then, when the Dow Jones Industrials were trading around 13,000. Through his firm, Berkshire Hathaway, Buffett sold option contracts, known as "naked puts" to an undisclosed group of investors for around $4.85 billion, reportedly using Goldman as broker.
       Because of its solid-gold credit rating, Berkshire Hathaway was not required to put up collateral to make this trade. But now rumors are flying on Wall Street that the owners of the contracts have demanded that broker Goldman Sachs put up collateral for the rest of the amount due. Since the value of the trade could be infinite, the collateral demands are said to be large, and fears that Goldman will struggle to make good on its obligation has panicked shareholders.
       Indeed one theory making the rounds this week is that Buffett put $5 billion into Goldman at around $125 per share in September not as an investment but to help provide funds for the collateral.  
       Isn’t this the oracle that called derivatives, ‘financial weapons of mass destruction’?
      On Thursday, fear hit a new high as bonds soared 7 handles, the biggest rally on record, and 3-month T- Bills traded at zero.  Next stop could be slightly negative T-Bill rates, which occurred briefly during the Great Depression.  Over the past three sessions, the 30-year bond has exploded 10 handles.  Something is very wrong.  And those that insist that the fear of financial crisis ended in October are very, very wrong.
     Fed ‘Total Reserves’ soared more than 50% ($415.743B to $652.858B) during the past two weeks.  The monetary base has increased about 20% in the two weeks ended November 19.  The Adjusted Monetary Base’s compounded annual rate of change for the average of two maintenance periods ending on November 19 is a Weimar-like 1441%.
     The 542,000 initial jobless claims filed last week is the greatest number since 1983.  Continuing claims of 4.012m are the first more than 4 million reading since January 1983.  The current recession has already surpassed the unemployment metrics of the 19990-1992 recession.
      The Philly Fed Index in November registered its lowest reading since October 1990, its lowest employment reading since November 1990, the lowest new orders reading since August 1980, and the lowest prices-paid reading ever.  
     The fleecing knows no end…Nobody who knows anything about General Electric Co. actually believes it's a AAA credit. And yet the raters at Moody's Investors Service and Standard & Poor's continue to give GE their highest mark. Meanwhile, the company just landed government insurance for as much as $139 billion of debt for its lending arm, GE Capital Corp., which also is rated AAA. If GE were really that strong, it wouldn't need the help.
      The government is picking winners and losers. Instead of just a couple giant government- sponsored enterprises, now we have dozens.  With so many beggars in Zegna suits lobbying for handouts, it's easy to see why lots of Americans are aghast at what our country has become.