TIME IS UP FOR AMERICA [Posted On Market Ticker Forum]


Also read Denninger’s "Potential Economic Seizure Dead Ahead"

This is not good.

But the worst news is not in the stock market. It is in fact in some
of the other indicators in the market which were indicating potential
capital flight, along with still–extreme levels of stress.

I must caution everyone – if you are not prepared for six months to
two years of unemployment, you need to be. If you are dependent on
credit to survive [that is, if you couldn’t make it without your
credit cards] you need to fix that now.

Like today now.

Several times I have said "raise cash, get out of debt, be prepared".

I must reiterate this advice and emphasize it, as we may see a bond
market dislocation and concurrent stock market crash at any time,
without warning. It could be as early as today, in fact.

No, what happened the last three days isn’t a crash, although it has
now hit my full "bear market" target – 1070 – and in fact exceeded
it.

Unfortunately what happened the last three days forces me to reset
that target to the 2003 lows, and perhaps as low as four hundred on
the S&P 500, 4000 on the DOW.

Needless to say if that happens it will be on the back of an economic
catastrophe of a scale similar to the 1930s.

Bernanke’s latest load of crap with an "SIV" for commercial paper is
just another example of "more of the same" stupidity.

Bernanke and Paulson need to be indicted and jailed for criminal
negligence [at best] and put in the stocks where the people can serve
up some rotten tomatoes.

This evening we were "treated" to both political candidates shooting
their mouths off on matters economic, but saying nothing of
substance. Neither candidate was willing to admit the truth – that
this "bailout" hadn’t worked, that in fact the market had crashed by
15% since it was voted on, and that there is a zero chance of it
having any positive impact on one American household.

But no, not even the "moderator" was willing to ask those tough
questions, nor was anyone present.

These "debates" are a sham, a fraud and a gigantic waste of time.

Never mind that McCain embarrassed himself by claiming to be a
"maverick" and "against pork", when he had just gotten done voting
for over $150 billion of it in the Bailout Bill – pork that was not
present in the original house version.

Was that claim of being "against pork" good for a "no" vote? Nope. He
voted yes, as did Obama.

To those who dismissed the six petitions [you can go over to
supportedthebailout.org and see the old ones] over the last year, how do you feel about it
now?

To those who said that "subprime was contained", how contained is it
now?

To those who said that deterioration in consumer credit wasn’t going
to be a big deal, would you like to revisit that belief?

To those who said that "the nation would not have a recession", do
you have any regrets, apologies, or perhaps an outright retraction?

To those who told people to buy buy buy all the way down, how do you
feel now that they’ve lost 30% of their money?

To those politicians from both parties who voted for the ESSA on the
claim that it would "stabilize markets", can you show me where it has
been, in fact, stabilized? If this is "stable" I'm somewhat curious as
to your definition of "unstable".

There is chatter circulating, apparently, that "global equity markets
will be closed after the emergency G7 meeting this weekend." That
ought to induce confidence – just ask the Russians or Indonesians,
both of whom have tried this and it has resulted in an instantaneous
crash when they reopened (the Indonesian market was just closed AGAIN
this evening, after literally imploding – down by more than 10% –
within an hour of starting to trade.)

This is no longer a US problem, but the United States continues to
refuse to lead. We continue to "trust" the idiot savants Bernanke and
Paulson, both of whom have sung the same song since this crisis began
more than a year ago, have been wrong 100% of the time, and yet have
found an ear in Congress repeatedly willing to listen to and follow
their insanity.

By allowing this action and indeed following the advice of these two
each and every one of the 535 members of that body has taken unto
themselves the responsibility for the calamity that now faces
American investors and the public, as our economic system literally
"folds back" and consumes itself. Americans will not be able to
retire and have no economic security, and now are losing their jobs
in increasing numbers. This will continue.

For more than a year I have tried to get the attention of Congress
with petitions, phone calls and faxes. I have been ignored, as have
others who have been consistently right in our expectations and
beliefs, including "Mish" Shedlock, Nouriel Roubini, Charles Hugh
Smith and others. Over 200 degreed economists urged that the "Bailout
Bill" not be passed as submitted, including two Nobel Lauretes; all
were ignored.

The people of this nation have sat on their hands and watched
American Idol, now turning into the NFL, while lapping up the slop
from Paulson, Bernanke and Bush about how the "economy is
fundamentally strong", instead of showing up in Washington DC to
protest or flooding the fax and phone lines demanding that Congress
act to reign in the fraudsters.

Let me know how "fundamentally strong" the economy is when you're
walking the unemployment line and waiting for your turn at the soup
kitchen for something to eat.

Entitlements? Forget ‘em. They’re gone. Social Security? Medicare?
Done. Not today, but in the not–distant future. China, having gotten
its money from the $700 billion "bailout", will ditch our Treasuries
and refuse to buy more, as they will no more need to sterilize export
dollars as our economy collapses. We in turn will be left to twist.

We deserve it, because we could have [but didn’t] stand up to their
demands that we cover a private dispute instead of handing over $700
billion we don't have. When [not if] the foreign flow of funds inward
disappears due to the lack of need for these nations to recycle
dollars, we will suddenly find that we have a nearly $800 billion a
year hole in our federal budget – a hole that can only be filled by
chopping Social Security, Medicare and the Military. Congratulations
Congress [and America in general]; you didn’t really think you’d get
away with that, did you?

George W. Bush will go down in history as the President who held the
office while we drove our nation’s financial system off the cliff,
laughing all the while about flipping houses. And despite his
protests to the contrary, the history books will record that it was
his administration that removed the 12:1 leverage limits, sued New
York to prevent them from clamping down on predatory lending, and
willfully stuck its head in the sand while Bear Stearns prepared to
blow up, never mind ignoring the problem after Bear detonated in
February.

Henry Paulson will go down in history as the Treasury Secretary who
sold out our nation to the Chinese and London Bankers, then fled the
country with $500 million he "earned" creating and selling the very
credit instruments that later blew up and sunk the nation.

The members of the House Financial Services Committee, the Senate
Banking Committee and the Joint Economic Committee will each have
special places reserved in the history books for refusing to deal
with Ben Bernanke’s raw power grab after Bear Stearns, an act that
will ultimately be judged to be the single most important element of
the crisis, as it forever put the market in a mood to expect "rule
changes" at any time, precipitously damaging trust and liquidity.

The "no short" rule will ultimately be cited as the reason that the
market crashed, being that there were no shorts to cover and thus
hundreds of stocks, on that fateful day, went "no bid" and had their
prices collapse to zero – all at once.

Oil will collapse in price to $20/bbl. Unfortunately nobody will have
any money to buy gasoline, or a car, so it won’t matter. As in The
Depression millions of automobiles will be scrapped after being
abandoned by their owners for lack of insurance and registration fee
money. Cheap scooters will become the dominant form of transportation
for those with jobs, as they will be all most people can afford.

As credit collapses distribution of food and other essentials will
break down. Unable to access credit, trucking companies will be
unable to get goods to market. The current distribution system for
food requires travel of over 500 miles from production to
consumption; this is untenable in a market where stable credit is
unavailable. Food distribution will be severely impacted and in some
areas may break down below critical levels.

Unemployment will reach 25% within two years. Median income will fall
by 30% nationally. Foreclosures will reach 20 million homes. The
government will step in with HOLC–style remediation but it won't
matter – the unemployed won’t be able to pay irrespective of the
price.

House prices will fall to well under $100,000 nationally on a median
basis but with lending all but non–existent you’ll need 50% down. A
few people will make out like bandits near the bottom, being able to
buy up homes for $10,000 each in blocks of 10 at a time – for cash.
60% of America will be renters; nearly half of all homeowners will
ultimately lose their homes to foreclosure.

Civil unrest will break out in major cities when incomes fall but the
cost of food and essential services fail to come down materially,
leaving millions of Americans hungry, broke and homeless. Unlike in
the 1930s America will not quietly stand in soup lines – instead they
will riot, loot and burn. The National Guard will be called up but
will find it impossible to exert meaningful control without shutting
down all commerce in the affected areas. The decision will be made to
cordon off the cities and deny entry to anyone who does not live in
that specific neighborhood, essentially shutting down commercial
activity. GDP will fall by 30%.

The S&P 500 will fall to 150 and flatline, a 90% loss. CNBC and
Bloomberg will cease broadcasting. Volume will fall to 10% of former
levels.

Bleak outlook?

Yep.

Quite possible?

Yep.

Can it be stopped?

Yes, but not for much longer.

The markets are perilously close to a tipping point where they will
collapse, after which all of the above will come to pass, and
Congressional action [or inaction] will be irrelevant.

Congress will then have to face the people, as will President Bush
and his Cabinet, and may God have mercy on our Republican form of
government, because history shows that when government mismanages
things to this degree and refuses to respond to the will of the
people, a "messiah" generally appears with a "solution" – but there
will be "compromises."

Like your freedom.

To fix the problem trust must be restored. To restore trust you must
stop the lying, expose the liars, prosecute and jail them all, and
stop changing the rules in the middle of the game.

This must happen now. Today. Immediately. Not tomorrow, not next
week, not after a series of hearings.

Right now.

Market participants must be able to know that when they engage in a
transaction it will be transparent, handled fairly, and their rights
will be protected.

Our politicians must stop demanding the impossible – that home prices
"levitate." House prices cannot be maintained at more than 3x incomes
– it simply can’t be done. We must encourage home prices to contract
to sustainable, affordable levels quickly and efficiently.

Mortgages must return to 30 year fixed notes, 20% down, no more than
36% DTI. No government–linked paper in any GSE may issue outside
these guidelines. We must reliquify the mortgage market, and this is
the only way to do it – by writing only sustainable mortgages.

Strong consumer protection laws must be written that bar negative
balance auto and home loans. The practice of "rolling over" an old
car loan into a new one, producing an instant 20% or more deficiency
against the vehicles value, must end.

Usury laws must be re–imposed, limiting credit card and other
consumer loan interest to no more than a reasonable spread over
funding costs. Yes, this will limit credit to less–worthy borrowers.
So be it. Unbridled credit got us here, and we must prevent it from
happening again.

The excess, unsustainable debt in the system must be defaulted.
Whether held by corporations or individuals, it must be purged from
the system. Those firms and individuals that are bankrupt must be so
declared and their assets liquidated, so they can start over and the
market can clear.

People will say that what I ask is unreasonable, unable to be
achieved, or "needs study".

You're free to study all you want, but if these actions are not taken
immediately, right now, today, the above forecast will come to
fruition.

You are seeing the global credit markets unravel in front of your
eyes, and it is happening precisely because the fraud, avarice and
outright theft has gone unpunished and left in place to siphon off
wealth from the average American for more than 20 years, and our
President, in that environment, went on national television and
threatened the world with a global Depression unless his Treasury
Secretary got a $700 billion blank check.

The markets, correctly perceiving there was a problem, did exactly
what they did when this same gambit was run during the Fannie and
Freddie debacle – they called the bluff.

The check is now on the table and we have but two choices – either
pay it or suffer the consequences.