Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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professor
as the WORLD ARENA gets set to take center stage , the players have been picked and the playing field has been chosen .  many of you don't even understand politics. I have decoded many prophecies , TODAY  , marks a sad day in the eastern world . In the BIBLE , it is written that a day will come  a true Political believer will perish at the END of 2007 . This prophecy has come true .

" and I will put emmity between thee and the woman , and between thy seed and her seed; He shall be on the watch for thy head , and thou on the watch for His heel . "

2008 will be GOD'S FINAL WITNESS  :   the prophesied end-time reveals the
                                                    demise of the U.S. and the beginning
                                                    of man's final war !

ARE THESE THE LAST DAYS ?     Prophet predicts the execution of Benazir
                                            Bhutto over 2700 years ago

" and I saw the woman drunken with the blood of the saints , and with the blood of the martyrs of Jesus and when I saw her , I wondered with great admiration. and the angel said unto me , wherefore didst thou marvel ? I will tell thee the mystery of the woman , and of the beast that carrieth her , which hath the seven heads and ten horns ."

for man's time is coming near

_______________________________________________________

you all must come together and see the light .  your gov't  will besiege your interest and cast you into the ring of Fire !  your fight against msfraud will deteriorate because of your gov't planning of your collapsed economy . this is written in the BIBLE  , I can't say it any other way . it's the truth  !  there is so much turmoil in your country .   the left doesn't know what the right is doing
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the Blame Game !

Blame abounds for housing bust

 

2007-12-27washingtontimes.com

Just a sampling of the many causes and contributing factors covered in this excellent article:

While Americans have grappled with ballooning mortgages and adjustable interest rates in the past, the epidemic of resetting loans today is unprecedented and is the result of a bewildering array of mortgage options for consumers that banks and securities firms developed and mass marketed for the first time this decade.... Consumers often were given the option of not paying principal on their loans and even deferring some interest.

...

The complexity of the loans was exceeded only by the complicated schemes banks developed to package the loans and market them to sophisticated investors, which involved setting up off-balance-sheet investment vehicles and slicing mortgage securities into segments that supposedly allocated the risk of default away from top-rated tiers to junk-rated bottom tiers.

...

"The Fed played an important role" by encouraging people to shift resources to real estate speculation, said Michael D. Larson, analyst with Weiss Research. "The Fed replaced one bubble, mostly confined to the technology sector, with another, far-larger bubble, encompassing most of the housing market."

...

Besides the "greedy mortgage industry" and the "suicidal" loans they peddled, Mr. Martin blames regulators and legislators in Congress who were "all asleep at the switch with respect to ridiculous mortgage products."

...

With their low introductory monthly payments and easy terms, the loans were easy to sell to the public. In many ways, mortgage brokers followed the playbook of auto dealers, who swamped their showrooms with people on car-buying binges in 2002 and 2003 by advertising zero-interest loans on their cars.

As they did with the car loans, many borrowers who acquired subprime and exotic mortgages with low starter rates rarely looked at the loan's overall costs or terms other than the initial monthly payments that were loudly trumpeted in ads and brochures.

...

"The housing boom was good politics, " Mr. Martin said, noting the housing and lending industries are among the biggest campaign contributors to legislators. Moreover, Congress since the 1990s has pushed lenders to offer more credit to blacks, Hispanics and other minorities — a drive that led to an explosion of subprime mortgages that went disproportionately to minorities during the housing boom.

...

Widespread fraud also fed the crisis, Mr. Martin said, particularly the inflating of house assessments by appraisers under pressure from mortgage brokers, developers and real-estate agents eager to make sales at ever-higher prices.

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Ed Cage

Mr "Blame Game" wrote:
"Widespread fraud also fed the crisis, Mr. Martin said, particularly
the inflating of house assessments by appraisers under pressure
from mortgage brokers, developers and real-estate agents eager
to make sales at ever-higher prices."


Well said Mr "Blame Game" whoever you are..
MR

;^D
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Falling faster than a roc

New-home sales plunge by 9 percent


By JEANNINE AVERSA, AP Economics Writer 1 hour, 13 minutes ago

WASHINGTON - Sales of new homes plunged last month to their lowest level in more than 12 years, a grim testament to the problems plaguing the housing sector.

The Commerce Department reported Friday that new-home sales tumbled by 9 percent in November from October to a seasonally adjusted annual rate of 647,000. That was the worst showing since April 1995, when the pace of sales was 621,000.

The sales pace for November was much weaker than economists were expecting. They were predicting sales in the weakest sector of the economy to drop by around 1.8 percent, to a pace of 715,000.

The median sales price of a new home dipped to $239,100 in November. That is 0.4 percent lower than a year ago. The median price is where half sell for more and half for less.

By region, sales fell in all parts of the country, except for the West, where they rose.

New-home sales dropped by 19.3 percent in the Northeast. They plunged by 27.6 percent in the Midwest and they fell by 6.4 percent in the South. However, sales increased by 4 percent in the West.

Over the last 12 months, new-home sales nationwide have tumbled by 34.4 percent, the biggest annual slide since early 1991, and stark evidence of the painful collapse in the once high-flying housing market.

That market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. Sales turned weak as did home prices. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.

Foreclosures have soared to record highs and probably will keep rising. A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Other home buyers were clobbered as low introductory rates on their mortgages jumped to much higher rates, which they couldn't afford.

With credit now harder to get to finance a home purchase, the problems in housing have grown worse. Unsold homes have piled up. The problems are expected to persist well into next year.

The housing and mortgage meltdowns have raised the odds that the country will fall into a recession. And, it has given Democrats and Republicans politicians_ including those who want to be the next president — plenty of opportunities to spread blame around.

To help bolster the economy, the Federal Reserve has sliced a key interest rate three times this year. Its latest rate cut, on Dec. 11, dropped the Fed's key rate to 4.25 percent, a two-year low. Many economists are predicting the Fed will lower rates again when they meet in late January.

The economy's growth is expected to have slowed to a pace of just 1.5 percent or less in the October-to-December. Analysts believe that the housing and credit troubles will force consumers and businesses to tighten the belts, causing the economy to lose considerable speed. The housing slump has been a drag on overall economic activity, lopping more than a full percentage point off growth during the summer alone.

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Lending 101


 

Search

2007-12-28theage.com.au

 

Americans 'walk' from loans

Lewis' comments came as a new expression - "jingle mail" - referring to the growing trend where Americans mail the keys to their homes to the lenders before vacating, entered the US lexicon. Figures for November revealed more than 200,000 US homes were foreclosed, a 68% increase on November 2006.

...

Lewis was no doubt speaking for all the banking and mortgage monoliths when he said he was "astonished" at the change of attitude Americans were showing to their homes in a country that, with Australia, has the highest home ownership rates in the world.

This piece is a few days old, but that last comment, from Bank of America's Kenneth Lewis, caught my eye and spurred me to post this.

There is serious delusion here, or perhaps denial. The fact is, the attitude of Americans towards home "ownership" has not just now changed. It changed a few years ago when people became willing to occupy homes with no (or nearly no) money down, often times with the hopes of easy flipping gains; and when bankers became willing to underwrite such loans (again, often with a similar flipping intent, except in the secondary MBS market).

So this should be no surprise. This is "lending 101". When the borrower has no skin in the game, they have little to no interest in sticking around to see what happens as a result of their going delinquent. A banking czar like Lewis should be ashamed for feigning surprise.

This is why I put "ownership" in quotes above; it is nonsense to speak of "ownership" when the "owner" doesn't have a dime on the line. Beware of the term "home ownership" being used in demagoguery. Whether victimized or themselves the abusers, borrowers with no equity or no money down are not the same as "homeowners" in the traditional sense. In reality, they probably shouldn't be true homeowners until prices correct and they are better prepared financially. We worry about panicky policy being set in the amidst this crisis that ignores this underlying reality.

Indeed, it is silly to point to America's "high" home ownership rate when so much of that rate is due to a rapid increase in recent years precisely because of all the unsound lending. This was "fictitious" homeownership at best, and it says the exact opposite of what a naive read of the statistics would suggest. That is, it says the opposite of what politicians, bankers, and mega-lenders like Mozilo want people to believe: that America has some sort of manifest destiny to have unusually high levels of home ownership, fundamentals be damned.

America is less of an "ownership society" than it has been at perhaps any time---unless you count debt as an "asset" (amazingly, that is what politicians and mainstream economists have been doing). Hopefully one day we will be that ownership society---when we've actually earned it.

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AND let there be light

AND  to the wise ,  stand tall for someone is watching over you  !

LCC vs. ML-Implode Lawsuit Over

Search

2007-12-30ml-implode.com

Exclusive: for immediate release.

Bay Area-based pay option ARM lender Loan Center of California (LCC) and Aaron Krowne/Krowne Concepts Inc. ( Mortgage Lender Implode-O-Meter ) have settled the lawsuit which was filed by LCC on May 7, 2007, in LCC's home county of Solano, CA.

The suit stemmed from a report from a former LCC employee, that was posted anonymously on ml-implode.com for about a day in mid-April, 2007. The report alleged that LCC was suffering from financial difficulties and had engaged in improprieties. LCC disputed the content of the report and sued Krowne and ml-implode for libel, claiming that LCC was damaged by the post itself as well as by the implication that the company had "imploded".

ML-Implode refused to divulge the identity of the former LCC employee who had provided the information on the principle that the anonymity of news information sources is sacrosanct.

By the terms of the settlement, LCC has dismissed its claims against ML-Implode, without any admission of liability or any monetary payments.

The suit was formally dismissed by the court on December 24, 2007.

Supplementary Resources

Epilogue

We thank our supporters in the mortgage lending community for rallying forth to keep us running. Without the approximately $25,000 donated by the public, we probably wouldn't have survived (the total direct costs of the suit were about $40,000---and keep in mind we never entered litigation). We really couldn't have done it without you, and so it really is your site. Our sincere thanks goes out to the good people of the mortgage lending and banking community for "adopting" us and giving us the opportunity to contribute to greater transparency and public dialog in such an important area.

We feel that the outcome of this suit represents only a partial victory for bloggers and internet-based public forums in general. The judge in our suit did agree that the site was indeed fundamentally focused on an important topic of public discourse. However, almost incomprehensibly to us, he did not dismiss the suit in line with the letter and intent of the CDA (section 230) and California's "anti-SLAPP" law. We strongly believe this was a grave mistake.

As is made clear by the costs we faced in the suit, providing a forum for whistleblowing and debate on critical contemporary issues remains a risky and expensive proposition. It is virtually "death upon challenge" for any individual or small-scale operation. It is thus unclear to us why anyone would ever get involved in such an enterprise if they truly understood the peril they were placing themselves in. We certainly would not have, if we knew then what we know now.

At a time when the internet's promise of lower communication barriers for average citizens is becoming a reality, the legal system remains the greatest threat to the public's receiving the benefit of this gift. Now, more than ever, we need to provide mechanisms which enable regular people to organize and fight back against entrenched corporate and government interests which have deeply corrupted our economy and society. This starts with, and relies centrally upon grassroots communication. So-called anti-SLAPP laws, such as California's law that we attempted to invoke, seem to be more of a fig leaf put out by these interests rather than a genuine attempt at reform. Sadly, this seems to be the state of affairs across the country, and the entire country is worse-off for it.

So we ask for your continued support in fighting this fight---because we cannot accepted that outcome as a permanent one.

—apk

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Professor Crum
get ready , this is going to be the roughest ride you will ever encounter  !
the BIGGEST DEPRESSION anyone has ever seen  !

Friday, January 4, 2008

Robert Shiller is Very Bearish on the Future of the US Housing Market

The following from the Financial Times gives a few brief comments from Robert Shiller (the Shiller in the Case/Shiller house price index) concerning the potential future of the US housing market. Basically, he believes that , the US slides into a recession the US will have a prolonged “Japanese style” real estate market. As an aside I do not have the reputation that Robert Shiller has, but I believe that the US housing market is undergoing some fundamental changes and the “rules” that have governed the real estate market since the end of WWII will not hold in the future. For this next generation of Americans a house will be a place to live and not an investment. Text in bold is my emphasis.

Losses arising from America’s housing recession could triple over the next few years and they represent the greatest threat to growth in the United States, one of the world’s leading economists has told The Times.

Robert Shiller, Professor of Economics at Yale University, predicted that there was a very real possibility that the US would be plunged into a Japan-style slump, with house prices declining for years.

Professor Shiller, co-founder of the respected S&P Case/Shiller house-price index, said: “American real estate values have already lost around $1 trillion [£503 billion]. That could easily increase threefold over the next few years. This is a much bigger issue than sub-prime. We are talking trillions of dollars’ worth of losses.” (I assume he is discussing loss of real estate values for home owners and not losses at various financial institutions due to bad loans.)

He said that US futures markets had priced in further declines in house prices in the short term, with contracts on the S&P Shiller index pointing to decreases of up to 14 per cent.

“Over the next five years, the futures contracts are pointing to losses of around 35 per cent in some areas, such as Florida, California and Las Vegas. There is a good chance that this housing recession will go on for years,” he said.

Professor Shiller, author of Irrational Exuberance, a phrase later used by Alan Greenspan, the former Federal Reserve chairman, said: “This is a classic bubble scenario. A few years ago house prices got very high, pushed up because of investor expectations. Americans have fuelled the myth that prices would never fall, that values could only go up. People believed the story. Now there is a very real chance of a big recession.”

He pointed out that signs at the beginning of 2007 that had indicated that some states were beginning to experience a recovery in house prices had proved to be false: “States such as Massachusetts had seen some increases at the beginning of the year. Denver also looked like it had a different path. Now all states are falling.”

Until two years ago, each of America’s 50 states had experienced a prolonged housing boom, with properties in some – such as Florida, California, Arizona and Nevada – doubling in price, fuelled by cheap credit and lax lending practices to borrowers who ordinarily would not have been able to secure a mortgage. Two years ago, the northeastern states of America became the first to slide into a recession after 17 successive interest-rate rises between June 2004 and August 2006 hit the property market.

Last week, new numbers from the S&P/Case Shiller index showed that house prices had declined in October at their fastest rate for more than six years, with homes in Miami losing 12 per cent of their value.

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666
the MARK OF THE BEAST !

Bush Says Markets 'Strong and Solid'
Jan 4 02:17 PM US/Eastern
By DEB RIECHMANN
Associated Press Writer
15 Comments


View larger image





Bush: ‘Financial Markets Are Strong And Solid’


WASHINGTON (AP) - President Bush ( 666 )said Friday that while there is some uncertainty about slowing economic growth, the nation's "financial markets are strong and solid."

Bush spoke after meeting with his top economic advisers about possibly drafting a package to stimulate the U.S. economy as it weathers the housing slump, rising oil prices and an uptick in unemployment.

"This economy is on a solid foundation," Bush said. But he also said it can't be taken for granted, and there are some signs of concern that require the administration and Congress to be careful to ensure economic strength.

"There are signs that cause us to be ever more diligent in making sure good policies come out of Washington," he said.

Sitting around a table with his economic advisers in the Roosevelt Room, the president warned Congress against taking steps that would increase taxes. "If the foundation is strong yet indicators are mixed, the worst thing Congress could do is raise taxes," Bush said.

He said legislation could be passed to help Americans refinance their homes. He also called for expanding petroleum refining capacity and exploring for energy in "environmentally friendly ways."

Bush met with the group of advisers—his first with them as a group—the same say that the Labor Department reported that hiring practically stalled in December, driving the nation's jobless rate up to a two-year high of 5 percent. The report, which fanned fears of a recession, indicated that employment conditions are deteriorating, strained by the housing crisis and credit crunch that are sapping economic strength. On Wall Street, stocks tumbled.

"While there is some uncertainty, the report is that our financial markets are strong and solid," Bush said.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

WASHINGTON (AP)—President Bush said Friday that while there is some concern about slowing economic growth, the "financial markets are strong and solid."

Bush spoke after meeting with his top economic advisers about possibly drafting a package to stimulate the U.S. economy as it weathers the housing slump, rising oil prices and an uptick in unemployment.

"This economy is on a solid foundation," Bush said. But he also said it can't be taken for granted and there are some signs of concern that require the administration and Congress to be diligent in ensuring economic strength.

Sitting around a table with his economic advisers in the Roosevelt Room, the president said the worst thing lawmakers could do is raise taxes.

He said legislation could be passed to help Americans refinance their homes. He also called for expanding petroleum refining capacity and exploring for energy in "environmentally friendly ways."

 

2008-01-04breitbart.com

' "This economy is on a solid foundation," Bush said.' The man is a pathological liar.

original article | permalink to this page



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Doomsday ?
 
 

On the money

Housing tilting economy down

Some expect mortgage problems to get worse, but could all this have been headed off by less greed?

It's not a pretty picture, and it didn't have to come to this.

The worst housing slump since World War II is showing no sign of abating. Manufacturing activity is hinting at recession. Employment is weakening. The Standard & Poor's 500 has dropped about 4 percent during the last week. The mistakes banks and brokers made with mortgage-related bonds have left a lingering credit crunch, or a reluctance by lenders to make affordable loans to consumers and businesses.

Investors have gone into the new year with a dreary attitude, and Wall Street analysts are warning investors to be careful.

"Batten down the hatches," Lehman Brothers economist Michelle Meyer said in a recent report.

Meyer estimates that the housing mess, which set off the economy's problems, is only half over, and that home prices will be down at least 15 percent when they hit bottom in 2009.

Only about 1.5 million of the most troubled mortgages, or adjustable-rate subprime loans, have reset to higher monthly payments so far. Meyer is expecting another 2.8 million in the next two years. With those resets, homeowners typically will have to pay about 30 percent more than they do now, a difficult nut for anyone, and especially for subprime borrowers, who were financially stressed in the first place.

To make matters worse, options are dwindling for the people who will be strapped. About half of the borrowers have less than 10 percent equity in their homes, said Meyer, and as foreclosures quadruple to about 1 million in both 2008 and 2009, the supply of discounted homes on the market will cause prices to fall further.

Of course, falling prices means dwindling equity in a home. So homeowners caught with a higher mortgage payment won't have the equity they need to refinance and escape. The result will be more foreclosures and more fire sales in an already glutted home market.

The questions hanging over the economy, and consequently the stock market, are: How badly will the housing mess spiral through the economy? Will homeowners feel poor and spend less? Will that crimp corporate profits and induce layoffs?

And as a new round of subprime-mortgage defaults strips the value out of mortgage-related bonds and loans held by banks and brokers, will that cut into their willingness to lend money to those who want or need it? Already, the financial institutions have been hobbled to some extent by $50 billion in write-downs.

The economy and investors might be about to get a lesson in manias similar to the early 2000s. Whether it is technology stocks or housing, people get carried away with excesses, miss the early warning signs and suffer the consequences.

Certainly, if this cycle turns out as bad as some imagine, analysts will look back at a plethora of warnings that should have been taken seriously.

Homeowners didn't have to overdose on mortgage debt they couldn't afford. Mortgage lenders didn't have to push poisonous adjustable-rate loans at homeowners when they knew the individuals couldn't afford them.

Wall Street investment banks didn't have to ignore the poison, while bundling the mess into the esoteric bonds that eventually would set off a credit crunch. Investors who bought the bonds didn't have to be as naive as the homeowners when they indulged, without question, in a financial product they didn't understand. Bond rating firms, which are supposed to safeguard investors by probing into the construction of bonds, didn't have to swallow Wall Street's numbers and give the toxic stuff a stamp of approval.

And Congress and banking regulators didn't have to ignore consumer advocates, who have been testifying for years that abusive mortgage-lending practices eventually were going to cause millions to lose their American dream.

Warnings of problems

Ironically, some of the early warnings came from within the investment banking firms that gained so much over the years creating bonds out of mortgage payments and then suffered recently as homeowners defaulted and the bonds plunged in value.

While not forecasting problems specifically for banks, Merrill Lynch economist David Rosenberg was among the economists sounding the early warnings. In September 2004, he said there was a clear housing bubble, and it could turn ugly.

In particular, he raised concerns about consumers overindulging in adjustable-rate mortgages, the loans that a few years later would cause a surge in defaults and undermine the value of the bonds Wall Street created.

When Rosenberg wrote his report, home prices in such markets as San Diego and Los Angeles already had climbed 80 percent, and Rosenberg described classic bubble characteristics: overheated prices, overownership, too much debt, speculation, complacency and denial.

more in /business/yourmoney

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Job Security ?


Nearly 90,000 mortgage jobs eliminated

Countrywide shed most jobs in mortgage disaster;California hit hardest; more cuts expected.

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countrywide.03.jpg
The nation's largest lender was responsible for nearly 14% of all mortgage jobs lost last year.
Branson's bank run
Is the Virgin founder getting into subprime mortgage bailouts?

DALLAS (AP) -- More than 86,000 mortgage jobs were cut in 2007 because of the weakening real estate market, according to a new report released Monday by MortgageDaily.com.

Countrywide Financial Corp., (CFC, Fortune 500) the nation's largest lender, shed the most staff in 2007. Net job losses at the Calabasas, Calif.-based lender totaled 11,665, or about 14 percent of all mortgage jobs lost during the year.

The numbers would have been worse, if not for JPMorgan Chase & Co. adding 4,465 mortgage jobs in 2007.

The mortgage industry faced a tumultuous year as housing prices declined and delinquencies and defaults rose rapidly, especially among subprime mortgages given to customers with poor credit and among home equity products.

California, where dozens of mortgage lenders are based, was the state hit hardest by the downturn. Nearly 16,000 mortgage jobs were cut in California in 2007. California was home to one of the nation's largest subprime lenders, New Century Financial Corp., before it filed for bankruptcy protection in April 2007. New Century's closing led to 5,200 lost jobs.

MortgageDaily.com expects the job cuts to continue but slow in the coming year.

"While more layoffs are anticipated for the mortgage sector during 2008, we expect the pace of job cuts to slow significantly," Sam Garcia, publisher of MortgageDaily.com, said in a statement. "In addition, employment growth is projected in mortgage servicing as delinquencies and foreclosures rise."

MortgageDaily.com analyzed layoffs and hirings involving at least 50 people at 205 mortgage companies in 2007 for the study. To top of page

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srsd

I guess there will be 90,000 more people that can`t pay their mortgage and some of them probably are part of the reason we are in this mess to start with.  I hate it for the one`s or just the one that was honest but now the shoe is on the other foot for the one`s that committed fraud.  Let`s see how they like the situation they are in.

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Professor's take
as I teach my students , which I will have them write a thesis on , this economy and it's down swing .  what you have here is a failure to communicate  , first , with all of this mortgage fraud and servicing problems , what is being created is a false sense of hope by these politicians . banks are tightening up the money to qualify for a loan . so lending becomes an obstacle for borrowers  , here's what you are looking at :
a borrower applies for a 200,000 loan  , credit is o.k.  , they need to put forth  20 %  no lender is working with less money down , most borrowers don't carry this kind of money in their back pocket . so a borrower comes out of pocket w/ closing cost  totaling  $  49,000   .  90 % of borrowers don't have this kind of cash . this leads to an economic down swing on real estate , then this leads to 100's of other jobs that are related to this field. starting to see the point here , soon there will be economic paralysis. homes decline in value , but , where do they stop ? those of you that do qualify , why would you even think of investing at a time like this . CASH IS ALWAYS KING .  now that most consumers are tightening up on their spending , this leads to sluggiest  sales  and then to job layoffs.  the more the economy tightens up on spending the more down swing you will see.  laws of gravity , what goes up must come DOWN .  nobody knows what the future holds for us , but one thing is true , the up coming years look to be very bleek.  our country has the most fraud in our society, our politicians breed this kind of greed for the purpose of political gains , where will this lead us  ? alot of uncertainty
next , I was reading about this lease to own , same scenario , these companies that say they can put you into a house , well , it's cheaper to rent , then own ., but they work on the same pricipal , on average they want  $ 10,000 down then you can move in .  what a topic ! in the upcoming years - your credit score will be a thing of the past .  if you have NO cash then you will have no standing in our society .  as criminals steal your identity and what ever money you have  , try getting help in this area , and those of you that this has happened to , what HELP is out there ,  NONE  !  just my point . we will become a lawless society , only the strongest will survive.  as i see the title up above , what salvation does the BIBLE hold for us  !  as my final thought , we can go on & on & on about this topic , there are so many factors that will lead to our collapse of our society  , it's all how you look at it .
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Knock , Knock
who's there ?

recession  !

recession who  ?

deep recession  , thats who  ......................................................


Recession in the US 'has arrived'
Workers erect scaffolding in Albany, New York
Merrill said Friday's employment figures confirmed the recession
The feared recession in the US economy has already arrived, according to a report from Merrill Lynch.

It said that Friday's employment report, which sent shares tumbling worldwide, confirmed that the US is in the first month of a recession.

Its view is controversial, with banks such as Lehman Brothers disagreeing.

But a reserve member of the committee that sets US rates warned that it could do little about the below-trend growth expected in the next six months.

"I am concerned that developments on the inflation front will make the Fed's policy decisions more difficult in 2008," Charles Plosser, president of the Federal Reserve Bank of Philadelphia said.

He was referring to the problems faced by the US Federal Reserve, which might want to cut interest rates to avoid a recession, but is worried about inflationary factors such as $100-a-barrel oil.

'Significant decline'

An official ruling on whether the US is in recession is made by the National Bureau of Economic Research, but this decision may not come for two years.

The NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months".

It bases its assessment on final figures on employment, personal income, industrial production and sales activity in the manufacturing and retail sectors.

Merrill Lynch said that the figures showing the jobless rate hitting 5% in December were the final piece in that puzzle.

"According to our analysis, this isn't even a forecast any more but is a present day reality," the report said.

'Actual downturn'

But NBER president Martin Feldstein denied Merrill's claims.

"I think we're not in a recession now," he told CNBC.

"But I think there is a serious risk that it could get worse and we could see an actual downturn," he added.

Merrill said that the current consensus view on Wall Street that there is a good chance of avoiding a recession is "in denial".

It also objected to the use of euphemistic terms for the state of the economy.

"To say that the backdrop is 'recession like' is akin to an obstetrician telling a woman that she is 'sort of pregnant'," the report said.

Housing figures

There were further signs of the housing slowdown that has sparked off the problems in the US economy in home sale figures.

Pending sales of existing homes fell 2.6%, according to the National Association of Realtors, which saw its pending sales index drop to 87.6 in November, 19.2% below the point it was at a year ago.

The figures were better than expected, however, because October's index reading was revised upwards from 87.2 to 89.9.


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Gold.......
Goldman's prediction  :



 
Company Bond Risk Jumps to Record as Goldman Predicts Recession

By Hamish Risk and Shannon D. Harrington

Jan. 9 (Bloomberg) -- The risk of companies defaulting on their debt rose to a record after Goldman Sachs Group Inc. said the U.S. economy is probably slipping into recession.

Credit-default swaps tied to U.S. mortgage lender Countrywide Financial Corp. rose to a record, and those for U.K. retailer Marks & Spencer Plc increased to the widest in more than two years. The Markit CDX North America Investment Grade Index and Markit iTraxx Hi Vol index both jumped to the highest since they were created in 2004.

Goldman forecast today that the Federal Reserve will need to cut interest rates to 2.5 percent by the third quarter from 4.25 percent now. The global default rate on bonds will climb more than fivefold by the end of this year as the economy weakens, Moody's Investors Service said yesterday.

``Contagion jitters are spreading,'' said David Brown, chief European economist at Bear Stearns Cos. in London. ``Things could get a lot worse before they get better. In this environment, the overriding investor strategy should continue to be dominated by risk aversion, safe haven and flight to quality.''

Contracts on the CDX investment-grade index of 125 North America companies jumped 5.25 basis points to 101.5 as of 11:45 a.m. in New York, for a rise of 24 basis points in the first six trading days this year, according to Deutsche Bank AG. Contracts on the Markit iTraxx Hi Vol index of 30 European investment-grade companies rose 8 basis points to 100 basis points, according to JPMorgan Chase & Co.

Debt Repayment

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.

Contracts on New York-based Alcoa Inc., the world's third- largest aluminum company, rose 12 basis points to 77 today, according to CMA Datavision in London. The company is scheduled to report earnings after the close of trading today.

Credit-default swaps on Countrywide, the biggest U.S. mortgage lender, rose for a second day on concern that rising defaults on home loans and the collapse of the subprime market will force the Calabasas, California-based company into bankruptcy. The company  faces bankruptcy.

Sellers of credit-default swaps were demanding 29.5 percent upfront and 5 percent a year for contracts protecting Countrywide bondholders from default for five years, according to broker Phoenix Partners Group in New York. That compares with 28 percent upfront and 5 percent a year at the close of trading yesterday. The price means it costs $2.95 million upfront and $500,000 a year to protect Countrywide bonds from default for five years.

Countrywide today said foreclosures doubled to 1.44 percent of unpaid principal in December from 0.7 percent a year earlier at the company's unit that handles billing and processing.

Washington Mutual

Contracts on Washington Mutual Inc., the largest U.S. thrift, climbed 75 basis points to a record 645 basis points, Phoenix prices show.

Concerns that the economy will enter a recession is growing after the Labor Department said last week unemployment is at the highest in two years amid the worst housing slump in 27 years.

Former U.S. Treasury Secretary Lawrence Summers said in Stockholm today there's a 60 percent or greater chance that the U.S. economy will go into recession this year because of declining home prices and a loss of consumer confidence.

Economic growth will average 1.5 percent in the first six months of 2008, matching the fourth quarter's pace and skirting a recession, a Bloomberg News survey of 62 economists shows.

Marks & Spencer

In Europe, credit-default swaps on retailers soared after London-based Marks & Spencer, the U.K.'s biggest clothing retailer, said sales unexpectedly declined.

Contracts on Marks & Spencer jumped 20.5 basis points to 110.5 and the company's shares dropped the most in 19 years after revenue fell 2.2 percent at stores open at least a year in the fiscal third quarter.

Credit-default swaps on Paris-based LVMH Moet Hennessy Louis Vuitton SA, the world's largest maker of luxury goods, rose 5 basis points to 61.5. U.K. clothing retailer Next Plc increased 16 basis points to 123.5. London airports operator BAA Ltd., which manages 65 duty free outlets, rose 30 basis points to 247.5.

Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-risk, high-yield credit ratings increased 9 basis points to 401 today, according to JPMorgan.

A basis point on a credit-default swap contract protecting 10 million euros ($14.7 million) of debt from default for five years is equivalent to 1,000 euros a year.

To contact the reporters on this story: Hamish Risk in London hrisk@bloomberg.net ; Shannon D. Harrington in New York at sharrington6@bloomberg.net

Last Updated: January 9, 2008 11:53 EST
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