Here is the first article I saw when I woke up:
Food Prices Soaring Worldwide
How Deep is the Economic Abyss?
10% of Ohio is on Food Stamps
_By the end of 2007, 36 percent of consumers' disposable income went to food, energy and medical care, a bigger chunk of income than at any time since records were first kept in 1960, according to Merrill Lynch.
_People are treating themselves less often. The National Restaurant Association says 54 percent of restaurants reported declining traffic in January, and the government says eating at home increased last year for the first time since 2001.
_Financial planners say that more than ever, parents are calling for advice on how to deal with grown children who have moved back in with Mom and Dad after losing a job or just to save money.
_Less trash is being set on the curbs of Mesa, Ariz., where surging home foreclosures are leaving more houses empty. That means fewer homeowners paying the city $22.60 a month for pickup. And William Black, the city's solid-waste management director, says people aren't throwing out as many appliances and bulk items, like furniture. They're sticking with what they have.
_________________________________________________________________________________________
Tycoon JIM ROGERS said this one year ago, as he ditched all his US dollars:
"You can't believe how bad it's going to get before it gets any better. It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops. It is going to be a huge mess. Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history.
_________________________________________________________________________________________
GEORGE SOROS predicted the current situation three years ago:
"The soft landing (for the US economy) will turn into a hard landing." He predicted a slowing housing market would trip up the economy and about the federal reserve, he said: "Almost inevitably, they have got to overshoot because they can't stop (raising interest rates) until the economy shows signs of a slowdown. By the time it shows these signs it may be a little too late." He maintained that rising housing values had at first counteracted the effect of higher energy prices but that this could not be sustained.
_________________________________________________________________________________________
"A Coordinated Effort to Destroy Effective Regulation"
Fred Block, an economic sociologist at UC Davis and author of Mortgage Meltdown for Dummies, explains the political changes that led to the financial crisis and how our current problems are a direct result of the policies pushed by Republican Presidents from Ronald Reagan to George W. Bush.
Ronald Reagan dramatically reduced regulation of the financial markets, which transferred massive wealth to the highest income households. He rolled back regulation of the financial sector and he cut taxes for the very rich. This policy initiative was taken up again by George W. Bush.
The richer rich put their money in hedge funds with higher risk but higher returns. The government didn't regulate hedge funds because they weren't available to most investors anyway. Pension funds wanted a piece of the action so put some of OUR retirement money into these unregulated funds, as did investment banks. Some even created their own hedge funds.
Mortgage brokers figured out that they could profit by lending money to poor people who could not qualify for regular mortgages. They acted like pawn shops, who charge high interest to the desperate. Housing prices were rising, cancelling out some of the risk to the lender, who could always foreclose. Bankers packaged these risky mortgages and resold them to hedge funds and greedy investors, often bought with borrowed money.
Subprime lending expanded to the point where foreclosures began to hit, which started sending housing prices down, so that many Americans owed more on their houses than they were worth.
_________________________________________________________________________________________
The moral:
1. Start regulating the financial sector.
2. Start taxing the rich.
There is no other way.
UPDATE: From a year ago - BARACK OBAMA
Dear Chairman Bernanke and Secretary Paulson,
There is grave concern in low-income communities about a potential coming wave of foreclosures. Because regulators are partly responsible for creating the environment that is leading to rising rates of home foreclosure in the subprime mortgage market, I urge you immediately to convene a homeownership preservation summit with leading mortgage lenders, investors, loan servicing organizations, consumer advocates, federal regulators and housing-related agencies to assess options for private sector responses to the challenge.
Recent Comments