In a previous issue we discussed that over the last 25 years the destruction of General Motors and Ford were being executed deliberately. Operating losses in the first quarter from automotive operations including special items was $2 billion. Those losses were offset by gains of $729 million at GMAC, GM’s financial arm. GM said it had a positive cash flow of $2 billion, that was then “adjusted” and they announced a negative $2 billion cash flow. That was not the truth. Bloomberg said GM had a first quarter, one-time special charge cash flow loss of $1.7 billion to cover the severing of ties to Italian car manufacturer Fiat, and an additional negative cash flow of $3 billion on regular operations, for an astounding negative $4.7 billion cash flow during the first quarter alone. That means overall reserves of $25 billion could be exhausted in 15 months. Quarter to quarter GM produced 12% fewer vehicles, and sales fell 5%. We expect that trend to continue as the US and world economy slows and competitors with no pension and health benefits make inroads into GM’s market share. As GM’s situation gets more difficult, they have stated that they would draw $6 billion in cash over the next 18 months from a $20 billion fund set up to provide for retired US union workers and their dependents. They would loot the funds in the health-care trust. This is what American steel companies did prior to their bankruptcy in the 1980s and 90s. The result was retired workers ended up with no health care benefits.
The response from the investment banking industry is to break up GM into pieces. For starters shut four assembly plants and put 30,000 out of work. Eliminate the Buick line and reduce health-care benefits and cut off laid-off workers from benefits. That will be accompanied by a plan to eliminate production of one million cars and trucks as excess capacity, that is as China exports 300,000 cars to the US in 2007, manufactured by workers earning slave wages.
As this all transpires GM’s bonds are now rated junk and when they raise over $100 billion next year they will pay between 11% and 14% for the privilege of rolling its debt and getting fresh capital. That puts their borrowing status four levels below that of Brazil, which owes $500 billion. When the lunatic in the White House was asked about the situation he said, “GM is going to have to learn to compete.” The problem is that the playing field is not level. It is unbalanced to favor our foreign competitors to deliberately destroy our manufacturing capabilities and our markets. The collapse of GM could be the event that finally brings down our financial system and few have taken that into consideration.
Ford isn’t much better off. It has $172 billion in outstanding debt and has virtual junk status. First quarter profits were $1.21 billion but over 60% of that profit, which was 38% below the level of the comparable quarter a year ago, was earned by Ford Credit. Ford’s answer to Chinese inroads is to cut production. While this goes on at GM & Ford, suppliers in trouble such as Dana Corp, Delphi and Visteon are on the verge of collapse.
These are all revolting developments that can easily be solved by tariff trade barriers, and until they are put in force our economy will continue to be destroyed, so that elitist transnational corporations can get richer.
America is a superpower and China, Europe and Russia have the basics of also becoming superpowers. We will not be a superpower long if we continue to export our industrial capacity and technology to China with its huge pool of slave labor, which has so often become cannon fodder. Communist China is emerging as a major economic and military power and we are helping them attain that status. While these others stand in the wings we are rapidly depleting our domestic wealth and military strength in endless foreign conflicts for the profit of elitists who run our government. Our military is supposed to be defending our country and the interests of its citizens, not the interest of a select minority who happen to wield great power. These foreign conflicts are also being used to abet the growth of government beyond its constitutional limits. Our great defense has been replaced by a massive offensive war machine. We are not preventing lethal acts of warfare against us – we are the aggressors. This creates the problem of the sacrificing of our military personnel and their exploitation by a policy-making elite that has perverted the purpose of our military for profit. We are not defending our country, we are promoting global governance. This irrational commitment to being a globalist superpower is unsustainable economically and financially and it is another method of destroying our country. Along with our fiscal and monetary policies and the fiat nature of our currency, we are fast headed into bankruptcy. We have been betrayed by our government and the elitists who control it.
We again bring to your attention that military recruitment is bottoming out and it will get worse as our occupation of Iraq and Afghanistan wears on. Enlistment bonuses have been raised for the third time since last August, but to no avail. Thus an expanding military and diminished recruitment can only lead to a return of the draft. If drafted, your sons, daughters, grandsons and grand daughters will either go into the military or be compelled to participate in national service. Those not forced into the military would be drafted into AmeriCorps, homeland security, etc. Those on active duty would receive shorter service terms and more generous benefits. No matter which way you cut it, if you survive, you will lose three to five years of your life as we post WWII veterans did up until the 1970s. Those are some of the best years of your lives stolen by a maniacal group of megalomaniacs. Our federal government is utterly shameless in wasting our money and our lives. You should quickly prepare for such events. We already know of young people who are leaving the US. Many are headed to New Zealand, which will not extradite and Mexico, which may extradite. The presidential election should be won by socialist/’populist Andres Manuel Lopez Obradar and if he is elected, we do not believe he will extradite. If he did you could move to Paraguay, Uruguay, Argentina, Brazil or Venezuela. Remember what Major General Smealey Butler said in 1933, “War is a racket.”
Depending on the region and area 30% to 40% of real estate loans are now interest only loans. They are attractive due to low loan payments and the fact that buyers are speculating on higher sale prices. On a $320,000 mortgage payments are $1,367 versus $1,842 on a 30-year fixed. In some hot areas 55% of mortgages are interest only. Just five years ago they made up 2% of all loans. The risks are enormous and the market cannot rise forever.
The average Bay area luxury home is $2.7 million, up $329,000 from a year ago. California median prices were up 10.9% from a year ago with unit volume up 5.7%. Annualized value rose 17.2%. Y-t-d sales are up 8% with new houses up 13.3%. California median price rose $12,698 during April to $509.203. Condo prices were up 14.4% y-o-y to $401,830. The two-year gain is 49%.
The MBA says the total volume of new commercial mortgages totaled $31.4 billion in the first quarter, up $8.9 billion or 39.6% y-o-y. For April Freddie Mac’s Book of Business increased $18.3 billion, or 14.4% annualized to $1.548 trillion. The retained portfolio expanded $5.3 billion, or 9.8% annualized. Fannie’s book declined at a 54.3% annualized rate to $2.297 trillion, while its retained portfolio sunk at a 16.3% pace to $851.9 billion.
We reported on this before, but now the WSJ has decided to spill the beans. FedEx has voluntarily become a government snitch by turning over to our government names, addresses, credit card information and lists of when and where FedEx customers send and receive packages. This under the guise of fighting terrorism. Now FedEx has gone a step far, too far. They have granted US Customs inspectors access to the company’s database of international shipments, including names and addresses of shippers, package origin and destination, credit card information and payment details (names of banks), all things the US government is not entitled to outside a criminal investigation. We than assume the FBI, CIA, DEA, IRS and state and local police get some of the information they need or want via Patriot Act powers, supposedly aimed at suspected terrorist. Many illegal operations have been busted via this illegal procedure. We want criminals to get caught, but within constitutional bounds.
It wasn’t but four years ago the IRS went after credit cards issued by offshore banks, alleged to be used to evade taxes via MasterCard and Visa. Much to their credit American Express refused to cooperate. About 1,000 people out of millions were evading taxes. Thus, millions had their rights abridged to satisfy the IRS goons.
We stopped using FedEx three years ago when we first reported what they were doing. Even if you have nothing to hide you should not use FedEx because they are violating our rights. Use UPS, which still follows traditional rules. For that they deserve the business.
George W. Bush is an absolute lunatic who has to have obedience, disregards the facts and does whatever he pleases. He has cleared the CIA of most of its best people because they wouldn’t stand still for his lies. Porter Goss is a lapdog. George is a switch hitter and a pedophile and the White House is full of his kind. We can’t figure out if Carl Rove is the Queen or it’s George. Maybe we should ask Mr. Gannon who services them frequently.
George was elected by a rigged election twice, which were essentially coups. George is assisted by many other fascist elitists whose only God is money and power. Due to these predilections George has surrounded himself with massive security because he is afraid of a coup or assassination. Cheney is equally terrified. That grenade found in Georgia during George’s visit really put fear into him.
John Bolton is being put in place to militarize the UN and Paul Wolfowitz is going to bring Pentagon thinking to the World Bank. Both individuals emphasize militance. George and his neocons evidently believe that the UN and the World Bank are going to come to the assistance of his collapsing occupation in Iraq and Afghanistan and his collapsing economy. It is a little late for that, conspirators. The money is not available for either, never mind both. No matter which way you look George is stretched every which way. That means Wolfie will be pouring money into Iraq and Israel. Not loans, but grants, which are not repayable. If after members, like the Europeans complain, he will simply tell them he will invade them or at best make their lives miserable. That means the European elitists could back a coup or have George whacked. If you ever wondered why Stanley Fischer of MIT and the IMF is now a newly minted Israeli citizen and head of the Israeli Central Bank, you can now understand, the world bank is going to subsidize war and occupation and finance Israel as it expands throughout the region This is all an extension of US and Israeli looting as well. The move will be reminiscent of the Harvard sponsored looting of Russia after the Wall fell. The Office of Reconstruction and Stabilization will be the vehicle from this end to accumulate the loot. Those in charge will all be ex-Marxists. What a cozy den of thieves. Ideology means nothing – it is the money stupid.