By Rob Kirby

Most widely accepted and reported accounts of our current global financial difficulties place its beginnings in the August 2007 timeframe, when sub-prime [mortgage] credit markets “seized up”.

The precarious state of our financial system was echoed some time before August 2007, when none other than Dallas Fed President, Richard Fisher, espoused [in a rare moment of clarity and candor] back on April 16, 2007,

“I have spoken in previous speeches of our “faith-based currency,” a term I use only slightly tongue in cheek. The dollar—like the euro, the yen, the British pound and other currencies—is what economists call a fiat currency. It is backed only by the federal government’s power to raise the revenues needed to meet its obligations and by the rectitude of the U.S. central bank. If the market were to lose faith in either assumption, the dollar would be debased.”

Fisher’s [then] words elicit connotations of “a sales job” – to make believers out of skeptics. After all, instilling faith in skeptics “IS” fundamentally what any religion is all about anyway, ehhh?

Why We Should All Be Skeptical

Generally speaking, Central Bankers are paid to lie. We know this because former Federal Reserve Vice Chairman, Alan Blinder, “slipped” back in the 1990’s when, on national television, he uttered the words,

"The last duty of a central banker is to tell the public the truth."

When one stops and connects the thoughts of these two esteemed Federal Reserve officers one can easily arrive at the conclusion that lies [or omissions of truth, if you prefer] are in all likelihood, tied to “keeping the faith”.

Recent changes in accounting procedures of FASB [Financial Accounting Standards Board] at the behest of the assemblage of Central Bankers at the latest G–20 meeting in London will serve to obfuscate the true financial condition of financial institutions. As Trace Mayer recently articulated, FASB Changes Perpetuate Fair Value Lying;

THE SPINELESS GELATINOUS FASB

Financial companies [read: the privately owned Federal Reserve] have used their agents, U.S. lawmakers, to pressure the FASB to relax fair-value accounting rules. Yahoo! Finance reports,

“The changes will allow the assets to be valued at what they would go for in an “orderly” sale, as opposed to a forced or distressed sale. The new guidelines will apply to the second quarter that began this month.”


You see folks, the real reason behind the lies of the bankers and their owned, puppet politicians through ACCOUNTING CHICANERY is, yet-again, to “keep the faith” in a dying, irredeemable fiat currency regime that has long past its due date.

This same mob would like us all to believe that they are doing their level-best to “unfreeze credit markets” and get the banks lending again.


If this were truly so, we must ask why the Obama Administration last week chose to villain-ize hedge funds and make spurious claims that they “stood” with ‘reasonable banks’ and the Chrysler employees.

The reality, folks, is that this issue has been severely [and purposely, perhaps?] mischaracterized:

You see, the hedge funds that were cast in the role of “villains” in this case just happened to be the most senior, secured debt holders of Chrysler.

When one contemplates what debt is, as an asset class [as opposed to common equity] and why an investor chooses secured / unsecured debt over equity, one must consider where each of these assets stands in a receivership. Secured debt or fixed income, by virtue of its FIXED coupon, limits the upside return of investor in favor of SECURITY – that of being first in line for repayment of principal should a company fail. Investors in equity [common stock] of a company have consciously and willfully chosen more risk and the prospect of greater, unbridled returns, but assume that risk at the expense of knowing – in the case of receivership – they stand BEHIND the secured lenders of said company. A recap of President Obama's remarks,


He [Obama] lauded the company's management and the United Automobile Workers, for making concessions. He even praised J.P. Morgan and other financial firms that "agreed to reduce their debt to less than one-third of its face value to help free Chrysler from its crushing obligations" and German automaker, Daimler, for agreeing to give up its stake.


Then he slammed unnamed hedge funds that rejected the government’s settlement offer in hopes of getting a taxpayer-funded bailout. "They were hoping that everybody else would make sacrifices, and they would have to make none," he said. "Some demanded twice the return that other lenders were getting."


Then, with pointed anger, the president added:


I don't stand with them. I stand with Chrysler's employees and their families and communities. I stand with Chrysler's management, its dealers and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don't stand with those who held out when everybody else is making sacrifices.

President Obama’s proposed solution to the Chrysler crisis would see secured debt holders recoup the same amount [percentage] of their investments as unsecured debt holders and equity holders.

Because secured debt holders would not agree to this proposal, the Obama Administration has forced Chrysler into bankruptcy, where they hope to use the power of the courts to “stuff” secured debt holders with their prescribed outcome.

If the Obama Administration is successful in enforcing this solution on the secured debt holders of Chrysler, this might constitute a “wooden stake through the heart” of global debt markets – effectively shuttering them forever.

Remember folks, President Obama is being counseled in this regard by an esteemed list of current, as well as former, Central Bankers. Should this action end up irreparably shuttering the debt markets forever, it would run contrary to the stated goals of Fed and Treasury officials that they are doing their level best to “unfreeze” credit markets and get banks lending again, wouldn’t it?

But then again, if Alan Blinder was telling the truth when he said that “the last duty of a Central Banker is to tell the public the truth”, should any of us really be surprised?

Got physical gold yet?

By James West

The irony of the emergence of a Swine Flu pandemic amidst an economic contraction brought on by glutinous gorging on credit and real estate in the United Casinos of America is surely not lost on barbed minds. The insistence by the World Health Organization that it be termed the far less ominous sounding H1N1 is evidence of our collective predisposition to avoid calling a spade a spade if it has negative implications. That predisposition will be viewed by posterity, should there be any, as a terminal flaw in the human character of our era.

The manifestation of a Swine Flu pandemic in the midst of a global economic meltdown does not bode well for the ‘recovery’, which, depending on who you listen to, is either well under way or years away. Our insistence on ignoring the simple solutions to both problems may yet herald the biggest historic instance of mass delusion and subsequent extinction of our kind.

Close the airports, and unwind the global entanglement of trade temporarily pending a recalibration of its mechanisms, and enjoy the inevitable return to mental and physical health, albeit amidst diminished financial circumstances.

Such simplistic yet idealistic pontificating sounds feasible superficially, but we’ve devised and installed such a pervasive metaphysical infrastructure of mis-information, that its only on our death beds that we catch a brief glimpse of the reality behind our fabulous global amusement park.

Economists, (the academic variety, I mean – not the “one who acts economically” of archaic definition) are the copywriters for the tanned and coifed anchormen who translate economic data from mathematical complexity into street form.

“Stocks Rise on Renewed Optimism.”

“Gold Down as U.S. dollar rallies.”

“Green Shoots of Economic Growth Seen”.

Its as if the real driving forces of economic fluctuation are too menacing to identify plainly. Instead they must broadcast in the language of kindergarten students.

More realistic headlines are conceivable.

“Swine Flu Pandemic Caused by Too Many Pigs”

“Stocks and Gold’s Daily Price Fluctuation Irrelevant to Bigger Picture”

“Economy Won’t Recover Until Transparency Across Derivatives, Commodities and Credit Implemented”.

Its not so hard.

The Swine Flu outbreak is being compared in the press to the Spanish Influenza outbreak of 1918-19. That outbreak was caused by “an unusually virulent and deadly Influenza A virus strain of subtype H1N1”, according to Wikipedia.

The Swine Flu outbreak of 2009 has been described as a virus “that was produced by reassortment from one strain of human influenza virus, one strain of avian influenza virus, and two separate strains of swine influenza virus.

The Spanish Flu outbreak was not Swine Flu. At least, that’s what the Center for Disease Control in Atlanta says. The question is, then “why are they being labeled identically?” The same question could be asked of currency and gold. Gold is money, and currency is merely paper printed with a value that fluctuates according to its perceived value. Gold takes gargantuan effort to produce from mines, which explains its cost and value, whereas paper money is fabricated with a minute fraction of the effort.

Why, then, is paper currency accorded the same utility as gold?

Historically, paper money evolved from the fact that you stored your gold with a banker, and he issued you pieces of paper acknowledging the fact that there was gold that you owned stored in the banker’s vault. That evolved into governments issuing currency backed by gold in the government’s vault. Through various manifestations the Gold Standard determined the value of the world’s currencies, until Richard Nixon terminated the relationship with the end of the Bretton Woods Agreement, that governed the last albeit bastardized version of the original gold standard.

The motivation for the United States Government in adopting a floating currency backed by nothing but the willingness of a counterparty to accept its face value is obvious enough. Gold takes enormous effort to produce, and is limited in quantity.

Confidence is manufactured comparatively easily, and is limitless under the right conditions. The inherent value of gold undermined the confidence game required to perpetuate the U.S. dollar into the global reserve currency, and so it evolved that it was against the government’s interest to have a global Gold Standard, and very much within its interest to have a global U.S. dollar standard, which is what we have now.

Unfortunately, the same inability of humanity to temper its responsible stewardship of currencies throughout history has once again manifested itself in the virulent fabrication of U.S. dollars, facilitated by the media. No currency has lasted more than a hundred years in history, and it appears that the inflation of the U.S. dollar supply should soon enough lead to a Weimar-esque price hyper-inflation, where the price of a loaf of bread doubled every 15 seconds that will spell its doom.

Unfortunately, or fortunately, depending on your position in the food chain, the information distribution apparatus that has been hijacked by the richest of the rich and the power hungry mob in three piece suits is now so powerful, that even in the face of irrefutable tangible plain-as-the-nose-on-your-face evidence to the contrary, the U.S. dollar continues to appear strong, and gold performs weakly.

For those of you entranced by the information apparatus so described, here are a few basic facts that should help you prepare for the worst.

Gold is money (So is silver). Currency, especially the U.S. dollar, is not.
There is no recovery underway, and won’t be for at least another 2 years, if even then.
Swine Flu, despite its emerging ‘preferred’ name H1N1, is still Swine Flu.

DISCLOSURE: The author owns some gold and some U.S. dollars but no pigs.

April 28 (Bloomberg) -- Bank of America Corp. Chief Executive Officer Kenneth Lewis lost the support of the largest U.S. pension fund as an analyst said the bank needs as much as $70 billion of capital.

The California Public Employees’ Retirement System said it will vote against Lewis and all 18 directors at the annual meeting tomorrow in the bank’s hometown of Charlotte, North Carolina. The lender needs $60 billion to $70 billion, according to Friedman, Billings, Ramsey Group Inc. analyst Paul Miller, who cited stress tests performed by his firm.

Bank of America should consider converting preferred shares to common stock, including $27 billion in private hands “as soon as possible,” Miller wrote in a note to clients today. Miller said his firm’s versions of the stress tests were “somewhat tougher” than those performed by U.S. regulators...

Comment:

"The recent stock market rally was sparked by encouraging $3 Billion earnings from Citigroup and Bank of America. Less than a month later we learn THEY NOW NEED $70 BILLION???? How long before citizens and the markets wake up and realize what is really going on here. Very soon we will all discover the emperor has no clothes.

Got gold?

The big run up in silver prices yesterday in the thinly traded Asian market and the subsequent Comex session turn around is such a common playbook. With options expiry yesterday JP Morgan et al couldn't let the $13 strike finish in the money so the Comex (sorry CRIMEX) price closed right below that level. Thursday 30th is the first notice day for the May silver futures contract so expect another big take down in price to enable the manipulating investment banks to cover their shorts at the expense of unsuspecting traders who actually believe we have free markets.

Long time silver investors will be well used to this volatility. Newer investors don't be spooked, the price will recover once the notice period has cleared. Silver is technically set up for a big move within 6 months so please hold on.......

For your interest here are the key dates for the next few months. Follow the pump and dump playboook yourself, you will amazed.

April 27 Comex May gold options expiry
April 27 Comex May silver options expiry
April 27 Comex May copper options expiry
April 27 Comex May aluminum options expiry
April 28 Comex April gold futures last trading day
April 28 Comex April silver futures last trading day
April 28 Comex May miNY silver futures last trading day
April 28 Comex April copper futures last trading day
April 28 Comex May miNY copper futures last trading day
April 28 Comex April aluminum futures last trading day
April 28 Nymex April platinum futures last trading day
April 28 Nymex April palladium futures last trading day
April 28 Nymex May Asian gold futures last trading day
April 28 Nymex May Asian platinum futures last trading day
April 28 Nymex May Asian palladium futures last trading day
April 30 Comex May gold futures first notice day
April 30 Comex May silver futures first notice day
April 30 Comex May copper futures first notice day
April 30 Comex May aluminum futures first notice day
April 30 Nymex May platinum futures first notice day
April 30 Nymex May palladium futures first notice day
May 20 Nymex June platinum options expiry
May 26 Comex June gold options expiry
May 26 Comex June silver options expiry
May 26 Comex June copper options expiry
May 26 Comex June aluminum options expiry
May 27 Comex May gold futures last trading day
May 27 Comex June miNY gold futures last trading day
May 27 Comex May silver futures last trading day
May 27 Comex May copper futures last trading day
May 27 Comex June miNY copper futures last trading day
May 27 Comex May aluminum futures last trading day
May 27 Nymex May platinum futures last trading day
May 27 Nymex May palladium futures last trading day
May 27 Nymex June Asian gold futures last trading day
May 27 Nymex June Asian platinum futures last trading day
May 27 Nymex June Asian palladium futures last trading day
May 29 Comex June gold futures first notice day
May 29 Comex June silver futures first notice day
May 29 Comex June copper futures first notice day
May 29 Comex June aluminum futures first notice day
May 29 Nymex June platinum futures first notice day
May 29 Nymex June palladium futures first notice day
June 17 Nymex July platinum options expiry
June 25 Comex July gold options expiry
June 25 Comex July silver options expiry
June 25 Comex July copper options expiry
June 25 Comex July aluminum options expiry
June 26 Comex June gold futures last trading day
June 26 Comex June silver futures last trading day
June 26 Comex July miNY silver futures last trading day
June 26 Comex June copper futures last trading day
June 26 Comex July miNY copper futures last trading day
June 26 Comex June aluminum futures last trading day
June 26 Nymex June platinum futures last trading day
June 26 Nymex June palladium futures last trading day
June 26 Nymex July Asian gold futures last trading day
June 26 Nymex July Asian platinum futures last trading day
June 26 Nymex July Asian palladium futures last trading day
June 30 Comex July gold futures first notice day
June 30 Comex July silver futures first notice day
June 30 Comex July copper futures first notice day
June 30 Comex July aluminum futures first notice day
June 30 Nymex July platinum futures first notice day
June 30 Nymex July palladium futures first notice day
July 15 Nymex August platinum options expiry
July 28 Comex August gold options expiry
July 28 Comex August silver options expiry
July 28 Comex August copper options expiry
July 28 Comex August aluminum options expiry
July 29 Comex July gold futures last trading day
July 29 Comex August miNY gold futures last trading day
July 29 Comex July silver futures last trading day
July 29 Comex July copper futures last trading day
July 29 Comex August miNY copper futures last trading day
July 29 Comex July aluminum futures last trading day
July 29 Nymex July platinum futures last trading day
July 29 Nymex July palladium futures last trading day
July 29 Nymex August Asian gold futures last trading day
July 29 Nymex August Asian platinum futures last trading day
July 29 Nymex August Asian palladium futures last trading day
July 31 Comex August gold futures first notice day
July 31 Comex August silver futures first notice day
July 31 Comex August copper futures first notice day
July 31 Comex August aluminum futures first notice day
July 31 Nymex August platinum futures first notice day
July 31 Nymex August palladium futures first notice day
Aug. 19 Nymex September platinum options expiry
Aug. 26 Comex September gold options expiry
Aug. 26 Comex September silver options expiry
Aug. 26 Comex September copper options expiry
Aug. 26 Comex September aluminum options expiry
Aug. 27 Comex August gold futures last trading day
Aug. 27 Comex August silver futures last trading day
Aug. 27 Comex September miNY silver futures last trading day
Aug. 27 Comex August copper futures last trading day
Aug. 27 Comex September miNY copper futures last trading day
Aug. 27 Comex August aluminum futures last trading day
Aug. 27 Nymex August platinum futures last trading day
Aug. 27 Nymex August palladium futures last trading day
Aug. 27 Nymex September Asian gold futures last trading day
Aug. 27 Nymex September Asian platinum futures last trading day
Aug. 27 Nymex September Asian palladium futures last trading day
Aug. 31 Comex September gold futures first notice day
Aug. 31 Comex September silver futures first notice day
Aug. 31 Comex September copper futures first notice day
Aug. 31 Comex September aluminum futures first notice day
Aug. 31 Nymex September platinum futures first notice day
Aug. 31 Nymex September palladium futures first notice day
Sept. 16 Nymex October platinum options expiry
Sept. 24 Comex October gold options expiry

from LeMetropole

The much touted "stress test" of the U.S. banking system is nothing but a PR sham and in reality, completely meaningless. The "worst case scenario used is a 3+% drop in GDP, and a 10% unemployment rate. If real GDP and unemployment numbers were ever offered up, my guess is that we already have had a minimum 5% contraction in GDP and true unemployment is approaching 13-15%. The stress test only addresses "tier one capital", my question is this, what about all the "off balance sheet" crapola that surely renders these reckless banks insolvent? No, really, I WANT TO KNOW! By trying to control and manipulate ALL markets, these banks have taken $ trillions upon $ trillions worth of fraudulent transactions on (and according to their accounting, off) their books. They are walking corpses that cannot be saved.

On books, off books, what is this crap!? If you enter into a transaction, is it not still a transaction whether you "account" for it or not? Are you not responsible to perform on the contract, no matter how you account for it? I did business my entire life on a handshake, I never had "off balance sheet" business because A DEAL IS A DEAL. Period. Even if it was a bad deal, it was still a deal and I would learn a lesson but still perform.

The "originator", the biggest abuser, the teacher if you will, for off balance sheet shenanigans, IS the U.S. government. They have used fraudulent accounting for nearly 50 years. The have used a fraudulent currency for nearly 40 years, invoking the "never pay" model. And now they are providing a stress test for the banks? How quaint, how brazen of them. I believe that the biggest stress test of all time will be imposed on the U.S. Treasury and Federal Reserve very soon by Mother Nature (the markets). The Dollar has completed it's short covering rally, it has made no headway since last November. The Treasury market has retraced all of it's gains since the "quantitative easing" announced by the Fed in mid March. The 10 year has moved up from sub 2.5% to an even 3% in the span of 6 weeks, a move higher from here should accelerate this move. The equity market is at a moment of truth, in that it's momentum has also stalled but it must continue higher in order to "prove" all the talk of "green shoots" and to spur consumer spending and confidence.

Should ANY of these markets fail, the jig will be up for the other 2. Should the Dollar collapse, it will spur Treasury selling and thus higher interest rates. Should Treasuries collapse, the laughable "bottom" in real estate will be proven to be false, and thus will spur further negative sentiment and consumer retrenchment. Should stocks collapse, well, you will have pension shortfalls, even more consumer retrenchment, in short, a "depressionary environment". But here is the "big enchilada", it is the government who will be most harshly affected by this market imposed stress test. Uncle Sam cannot afford higher rates, the debt service alone will kill him. He cannot afford a lower exchange rate currency because this will spook foreigners into a "bank run", nor can he afford a lower equity market as that will expose the invalid "stimulus plans" and spook the entire world.

The current "remedies" virtually guarantee a lower Dollar and higher interest rates, the correct remedies (necessary almost 10 years ago) will result in the same, a collapsed currency and a debt market with few bids. In short, this credit contraction is now becoming a self fulfilling prophecy. Tax revenue is imploding while at the same time they decided to spend like drunken sailors. This is rapidly becoming a sovereign bankruptcy that will spread faster than swine flu. Upon further thought, the real stress test will be how we, as individuals and family units, cope with the conditions thrust upon us. The past rewarded those who were blatantly reckless, now, even those who were prudent and played by the rules will get swept away by this perfect, man made storm. Only those that understand the difference between real money and fake fiat will stand a chance to survive and thrive as the paper promises get swept away. Quite stressful to say the least.

China called Sunday for reform of the global currency system, dominated by the dollar, which it said is the root cause of the global financial crisis. "We should attach great importance to reform of the international monetary system," Chinese Vice Finance Minister Li Yong told the spring IMF/World Bank Development Committee meeting in Washington. A "flawed international monetary system is the institutional root cause of the crisis and a major defect in the current international economic governance structure," Li said, according to a statement.

"Accordingly, we should improve the regulatory mechanism for reserve currency issuance, maintain the relative stability of exchange rates of major reserve currencies and promote a diverse and sound international currency system." As the world's main reserve currency, US dollars account for most governments' foreign exchange reserves and are used to set international market prices for oil, gold and other currencies. As the issuer of the key reserve currency, the United States also pays less for products and can borrow more easily. Li did not name the dollar but in late March the People's Bank of China Governor Zhou Xiaochuan said he wanted to replace the US unit which has served as the world's reserve currency since World War II. "The outbreak of the crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system," Zhou said, suggesting the International Monetary Fund could play a greater role. Zhou's remarks sparked uproar and concern since China has the world's largest forex reserves at 1.9 trillion dollars. China became the world's top holder of US Treasury bonds last September, and currently holds around 800 billion dollars, according to official US data. Beijing has voiced increasing concern over its massive exposure to the US dollar as the global crisis has steadily deepened but after some tense exchanges, the issue appears to have eased in recent weeks…

-

by Mike Whitney

Due to the lifting of the foreclosure moratorium at the end of March, the downward slide in housing prices is gaining speed. The moratorium was initiated in January to give Obama's anti-foreclosure program---which is a combination of mortgage modifications and refinancing---a chance to succeed. The goal of the plan was to keep up to 9 million struggling homeowners in their homes, but it's clear now that the program will fall well-short of its objective.

In March, housing prices accelerated on the downside indicating bigger adjustments dead-ahead. Trend-lines are steeper now than ever before--nearly perpendicular. Housing prices are not falling, they're crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high. These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 MILLION MORE FORECLOSURES BETWEEN NOW AND 2011. It's a disaster bigger than Katrina. Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be forced into bankruptcy. 40 percent of delinquent homeowners have already vacated their homes. There's nothing Obama can do to make them stay. Worse still, only 30 percent of foreclosures have been relisted for sale suggesting more hanky-panky at the banks. Where have the houses gone? Have they simply vanished?

600,000 "DISAPPEARED HOMES?"

Here's a excerpt from the SF Gate explaining the mystery:

"Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

"We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."

In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as "shadow inventory." ("Banks aren't Selling Many Foreclosed Homes" SF Gate)

If regulators were deployed to the banks that are keeping foreclosed homes off the market, they would probably find that the banks are actually servicing the mortgages on a monthly basis to conceal the extent of their losses. They'd also find that the banks are trying to keep housing prices artificially high to avoid heftier losses that would put them out of business. One thing is certain, 600,000 "disappeared" homes means that housing prices have a lot farther to fall and that an even larger segment of the banking system is underwater.

Here is more on the story from Mr. Mortgage "California Foreclosures About to Soar...Again"

"Are you ready to see the future? Ten’s of thousands of foreclosures are only 1-5 months away from hitting that will take total foreclosure counts back to all-time highs. This will flood an already beaten-bloody real estate market with even more supply just in time for the Spring/Summer home selling season...Foreclosure start (NOD) and Trustee Sale (NTS) notices are going out at levels not seen since mid 2008. Once an NTS goes out, the property is taken to the courthouse and auctioned within 21-45 days....The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium."

JP Morgan Chase, Wells Fargo and Fannie Mae have all stepped up their foreclosure activity in recent weeks. Delinquencies have skyrocketed foreshadowing more price-slashing into the foreseeable future. According to the Wall Street Journal:

"Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels. More than 2.1 million homes will be lost this year because borrowers can't meet their loan payments, up from about 1.7 million in 2008." (Ruth Simon, "The housing crisis is about to take center stage once again" Wall Street Journal)

Another 20 percent carved off the aggregate value of US housing means another $4 trillion loss to homeowners. That means smaller retirement savings, less discretionary spending, and lower living standards. The next leg down in housing will be excruciating; every sector will feel the pain. Obama's $75 billion mortgage rescue plan is a mere pittance; it won't reduce the principle on mortgages and it won't stop the bleeding. Policymakers have decided they've done enough and are refusing to help. They don't see the tsunami looming in front of them plain as day. The housing market is going under and it's going to drag a good part of the broader economy along with it. Stocks, too.