Welcome to 2009... again

Wow, we're only a month and a half into the year and most of the concerns I have are happening; perhaps you share some of them. I was going to post to all the economic news that supports the growing downturn, but there is so much it that it would be too big a task. But after seeing the article shown below, I chuckled at the title and the last statement the author made, considering my 2009 preview, Welcome to 2009.

Welcome to 2009, indeed!!!

2009-02-04: You Think 2008 Was Bad? Welcome to 2009
Eric Sprott and Sasha Solunac
By all accounts thus far, it's already been a pretty bad year... and we're only three weeks into it! If you will recall, 2008 was a pretty bad year for the banking sector. For example, the shares of Citigroup, Bank of America, and the Royal Bank of Scotland fell 77%, 66%, and 92%, respectively, in 2008. So far this year (remember, this is only three weeks) the same stocks are already down 50%, 55%, and 74%, respectively. Like we said, 2009 has already been a pretty bad year! For as bad as 2008 was, 2009 promises to be a whole lot worse. The problem isn't just the banking system anymore. The problem is the banking system and everything else. This year, the financial crisis of yesteryear is morphing into an altogether different animal. It's morphing into a financial crisis that has an economic crisis layered on top of it. In fact, to call the current environment an economic crisis is likely understating the situation. What we really have is a global economic catastrophe. One where weakness only begets more weakness, causing a vicious circle that is proving nigh impossible to reverse in spite of all the world's financial, economic, and political brain trust throwing everything they have, including the kitchen sink, at the problem.
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We believe the problems of 2009 will make people yearn for 2008 all over again. In 2008 it was only savings and assets that got pillaged. In 2009 it will be jobs and incomes that get lost. In 2008 we had the Madoff Ponzi scheme, supposedly the largest fraud in history. In 2009 we have the US dollar Ponzi scheme - no contest. But to only pick on the dollar wouldn't be fair. As governments the world over take ever increasing roles in markets and the economy, all paper currencies will be at great risk, pillaging whatever savings people have left after 2008.

Welcome to 2009.
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Christopher Warren

Christopher Warren, Loomis Wealth Solutions

Back to our regularly scheduled blog. BWAHAHAHAHA

2009-02-13: Fugitive's Safe Deposit Box Yields $400K in Gold
SACRAMENTO, CA - The mortgage fraud fugitive caught returning to the United States on Tuesday was carrying two safe deposit keys that led to more than $400,000 worth of gold coins.
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During his week-long globetrotting adventure, federal authorities believe Warren stashed some of the proceeds from his illegal activity-- including as much as $5 million in gold.
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2009-02-11: Calif. fraud suspect caught with $70,000 in boots
SACRAMENTO, Calif. (AP) — A suspect in a nationwide mortgage fraud scheme who fled the country was caught at the Canadian border with $70,000 stuffed in his cowboy boots and nearly $6,000 worth of platinum, authorities said Wednesday.

Christopher J. Warren, 26, was arrested early Wednesday while entering the United States at Buffalo, N.Y. After he disappeared Feb. 3, Warren was charged with conspiracy, fraud and conducting a continuing financial crime.

$100 Bills = Toilet Paper?

John Williams of Shadow Government Statistics provides some insights into inflation and a sign to indicate that hyperinflation has arrived. His advice to prepare: physical gold, hold assets outside of the US dollar, and have bartering goods (e.g. scotch).

Video: $100 Bills = Toilet Paper?
(click link or image; use right-mouse click to open in new window or tab)

Revolt Brews in California Counties

Not your everyday, normal recession, now is it?

2009-02-09: Revolt Brews in California Counties
Counties in California say they've had enough – and they aren't going to take it anymore.
In what amounts to a Boston Tea Party-style revolt against the state Capitol, they're threatening to withhold money.

Los Angeles is considering such an option. And Colusa County supervisors said they authorized payment delays for February.

"We didn't vote on it, because I don't think anybody wants to go to jail," Colusa County Supervisor Kim Vann said.

Closer to home, Sacramento County is planning to file a lawsuit this week against the state and Controller John Chiang for withholding millions of dollars – much of it for social service programs.

"The Legislature authorized those expenditures, and (the controller) has decided to withhold it," said Susan Peters, chairwoman of the Sacramento County Board of Supervisors. "I believe it's possible other counties will be joining in the action."

Riverside County is looking at a similar lawsuit but plans to go one step further. It authorized going to court to relieve it from having to provide state-mandated services without state funding.
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College/University Bubble...

...CHECK.

U.S. Housing Slump Has ‘Just Begun'

2009-02-05: U.S. Housing Slump Has ‘Just Begun,’
Says Forecaster Talbott

Feb. 5 (Bloomberg) -- Let’s say you own a $1 million home in Santa Barbara, California. The house seemed like a steal when you bought it with that adjustable-rate mortgage in 2005. You still love the white beaches and those yachts bobbing up and down in the harbor.

Then you awaken early one morning, troubled that your monthly payments will soon double. You go out to pick up your newspaper and see for-sale signs on five houses on the street. One identical to yours just sold for $500,000.

Are you going to pay the bank $1 million plus interest for your place? John R. Talbott, a former investment banker for Goldman Sachs, poses that hypothetical question in his latest book of financial prophesy, “Contagion.”

His answer: “I don’t think so,” he says. “If I’m right, then this housing decline has only just begun.”
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Five More Years
Talbott’s latest predictions are sobering. The U.S. is only halfway through the total potential decline in housing prices, he says. Home values will continue to deteriorate for four to five years, he forecasts. Adjustable-rate mortgages issued in 2004 and 2005, for example, are only now resetting for the first time, he notes.

Bankers may “try to blame the crisis on poor Americans with bad credit histories, but that is not the real cause of the housing crisis,” he says. “The greatest home-price appreciations and the homes most subject to price readjustment are in America’s wealthiest cities and its glitziest neighborhoods.”
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How did we get into this mess? Talbott blames everyone from average Americans who caught “the greed bug” to hedge funds and credit-default swaps. The single biggest error, he says, was for U.S. citizens to allow their national politicians to take large campaign contributions from big business and Wall Street -- a theme Kevin Phillips developed in “Bad Money.”

‘No Accident’
“This crisis was no accident,” he says. It began, in Talbot’s view, because the U.S. government was “co-opted” into deregulating the financial industry. Politicians were “paid to deregulate industry,” taking billions of dollars each year in campaign contributions.

His investment advice for this prolonged recession: Hang on to cash and invest in gold or Treasury Inflation-Protected Securities, or TIPS. If he had to invest in stocks, he would put his money in China.