Surprise, surprise, our President has pardoned or commuted, or cancelled, the sentence of former White House aide I. Lewis Scooter Libby, sparing his partner in crime 2-1/2 years in jail. As former Ambassador Joe Wilson, Valerie Plame’s husband says, “The White House is rotten to the core.”
When it comes to the law, there is two sets of rules, one for George and the neocons and other Illuminist elitists and a different set for us, as we have said so may times.
Former Senator Fred Thompson, (R-TN) says, “While for a long time I have urged a pardon for Scooter, I respect the President’s decision. This will allow a good American, who has done a lot for his country, to resume his life.” This boob is running for president - can you believe this? Libby should have been tried for treason and most Americans know that. Let’s hope Thompson never gets to be president – we’ll just get more of the same.
“Only a president clinically incapable of understanding that mistakes have consequences could take the action that he did today. President Bush has just sent exactly the wrong signal to the country and the world.” This from former Senator John Edwards, (D-NC).
History will judge George Bush harshly for this act. He has sent exactly the wrong signal to the country and the world. The sentence was not excessive. It was imposed pursuant to the laws governing sentencing, which occur every day throughout the country.
The decision by Mr. Bush sends the wrong message about the rule of law in the US. How can we hold the line against injustices in other countries when our own Executive Branch deliberately sets out to smear its critics; lies about it, and then wiggles away on its stomach without having to pay the price in prison?
Whether those incentives include plasma televisions or other goodies, the bottom line is we are not seeing real values. We are seeing subsidized home sales. As an example, at Lennar, one of the top builders, incentives averaged $43,700 a home in the fiscal second quarter, up from $24,700 yoy. This mode of operation is spreading to existing home sales and the foreclosure market. As we have said over and over again these are false prices created by subsidies. The sales prices are in reality down 15% to 25%, but it does not show up in the actual sales data. Sometime ago Freddie Mac demanded that incentives be declared in the sale of mortgages to them. They obviously have the data, but whether they are using it we do not know, nor are they telling us how overpriced the mortgages are that they are buying.
The mortgage applications index is also misleading because what you are seeing is hoards of multiple applications. That is because most applications are being rejected.
When June figures are released we believe you will find May’s application numbers were not reflect equally in sales data. That data will not be robust in the hottest sales month of the year. Sooner or later the truth will be told.
GM posted June sales off 21.3%, as they moved away from rental car sales. Ford fell 8.1%, Chrysler fell 1.4% and Mercedes Benz 5.8%. Toyota’s sales rose 10.2%, Nissan 19.4% and Honda 7.3%.
Chrysler received a speculative-grade credit rating from Moody’s and S&P. Moody’s has the auto division at B3; 6 levels below investment grade and financial services were B1; 2 levels higher. S&P had both at B’s.
Phelps Dodge, the copper giant, needs to hire 600 people by the end of the year and they have exhausted the labor pools in Greenlee & Graham counties in Arizona. A housing crunch isn’t helping matters. A lot of women are being hired as truck drivers, mechanics and electricians. It sounds like WWII all over again. They are offering $4,000, signing bonuses and allowing shifts of on 7 days and off 7 days. The company plans temporary housing, a resident campus, cafeteria, fitness center and Internet Café. Workers pay no rent to live at the campus and meals are free. Three other major copper producers are also competing for help; ASARCO, BHP Billiton and Quadra Mining.
As foreclosures climb, Wall Street’s lenders and investors are claiming a bigger chunk of Main Street. The value of homes held by commercial banks swelled 53% nationwide to $2.3 billion at the end of March, the highest since 1992, from $1.5 billion yoy and those numbers are climbing and will climb for 2-1/2 more years.
These bankers must now decide whether to pay maintenance costs or dump the properties at fire-sale prices. Both options will reduce real estate values. Homes that sit vacant can become neighborhood eyesores, while rock-bottom sales prices drag down values of similar properties in the area. The lenders do not want to own real estate, but at the same time you cannot just unload these properties because they would send home prices into a freefall. As we predicted 2-1/2 years ago, housing is locked in a downward spiral. Before this is all over prices in the former 30 hot areas and other areas will fall 20% to 60%. Lenders are already dumping houses at 50% losses. The share of subprime loans entering foreclosure in the first quarter was 2.43%, the highest in five years, and subprime late payments rose to 13.77%, versus 11.5% yoy.
Bear Stearns leads the default hit parade with JP Morgan Chase, Merrill Lynch and Citigroup in hot pursuit. Countrywide Financial, the largest mortgage lender, has $110.1 million of foreclosed real estate at the end of March, quadruple the $27.4 million it held just three months earlier.
These problems have just begun. Americans are in a heap of trouble in real estate and those problems will spread to many other financial areas.
In Phoenix, in June, home building permits fell 22% and were 36% below the peak in 2005.
Worker confidence fell in June. The Hudson employment index fell to 101.2 from 106.9 in May. That is a large drop. The factors are a weak housing market, high energy prices and inconsistent job growth. Companies hiring fell from 32% to 30% while 19% of workers said they were worried about job security. Workers pessimistic about their own finances saw 43% favorable, down from 45% in May. Forty-one percent said finances were getting worse. This is the first time since last August that workers were more pessimistic than optimistic.
Confidence among workers making more than $75,000 declined. Worker sentiment in Chicago fell dramatically, which has the highest gas prices in the nation.
May factory orders fell 0.5% following a 0.5% gain in April. The experts said orders would rise 1.2%.
The housing market weakened further in May, as contract signings on sales of previously owned homes fell 3.5% to the lowest level since September 2001. Pending sales are down 13.3% yoy and are down 23% from the peak in early 2005. These numbers tell us there is no recovery in sight and our government, Wall Street, the industry, Bernanke and Paulson, as we pointed out previously, are liars. There is no hint of stabilization as the situation continues to deteriorate. As we pointed out mortgage applications are misleading. You have to go with final sales versus inventories versus real prices, not the phony ones we are getting.
In May, pending sales fell 8.9% in the Midwest and 7.6% in the South. They rose 5.6% in the West and 3.8% in the Northwest.
United Capital Markets Holdings, a brokerage run by John Devaney, halted redemptions on some of its hedge funds that invest in subprime-mortgage bonds. An investor who had put up 25% of the funds’ money wanted out, now he is trapped.
The federal debt rose $74.2 billion last Friday to $8,867,276,751.65. This is one of the largest one-day upward spikes ever. This is very inflationary.
We do not know of any other publication that continually writes about the demise of free trade and globalization as we do.
We are not the only ones in the world who do not want free trade.
This past week in South Korea, police were poised to arrest leaders of a national metalworkers’ union on the fourth consecutive day of their walkout, opposing a pending free trade deal between South Korea and the US. 110,000 of 143,000 union workers have been striking.
South Korea and the US will need their agreement ratified by legislative bodies in both countries and the unionized metalworkers vow to block the deal, arguing that the FTA will threaten their job security.