What Could Possibly Go Wrong

Is the Constitution Bailing Out the Banks?

"Scarcely touched by the nation’s housing recovery, Richmond is about to become the first city in the nation to try eminent domain as a way to stop foreclosures. The city plans to use eminent domain to buy both current and delinquent loans, with the city writing down the debt to allow homeowners to refinance at a new, lower amount through a government program. Naturally, the original lenders have warned that such a move will bring a host of lawsuits and halt mortgage lending in any city that adopts such an unconstitutional scheme. What promises to follow is a mess of epic proportions." Continue reading →

Continue ReadingIs the Constitution Bailing Out the Banks?

More Car Loans Than Mortgages in U.S.

"There are now more auto loans than mortgages in the U.S., but most of them are going to older Americans, according to New York Fed data. Borrowing for vehicles reached $814 billion in the second quarter, an increase of $20 billion from the previous quarter. The 2.5% jump was bigger than any other loan category in the quarter. The recovery has come faster for older Americans. The only group originating more loans than before the recession are people over 50, likely a result of aging Baby Boomers. But 18 to 29 year olds haven’t seen much of a recovery. Meanwhile, student loan borrowing is up 82% from prerecession levels." Continue reading →

Continue ReadingMore Car Loans Than Mortgages in U.S.

Bill Bonner: Trust is falling

"Stocks are now as expensive as they were in 2007, says our old friend Mark Hulbert. As for bonds, they are at the top of a 30-year bull market. And gold? The metal bottomed out in 1998. It's gone up ever since, with a textbook correction over the last year or so. What's happening now? Slowly, gradually, like draining a huge lock on a canal, the bond market is dropping. Bonds rise on trust. They fall when trust ebbs away. Why should trust fall now? The simple answer is because it has run its course. Trust is cyclical. As it grows, people become more confident, more sure, and more reckless. Why hold back when there is nothing to fear?" Continue reading →

Continue ReadingBill Bonner: Trust is falling

Egypt death toll soars as Obama leads muted international condemnation

"The US president interrupted his family vacation on Martha’s Vineyard to condemn the bloodshed, but stressed that any move toward peaceful democracy was a difficult process that could take decades. 'We appreciate the complexity of the situation,' he said. 'We recognise that change takes time. There are going to be false starts and difficult days. We know that democratic transitions are measured not in months or even years, but sometimes in generations.' His statement disappointed many who had hoped for a cancellation of $1.3bn in annual US military aid to Egypt, but the administration is anxious to retain this link for future leverage over the generals." Continue reading →

Continue ReadingEgypt death toll soars as Obama leads muted international condemnation

Egypt death toll soars as Obama leads muted international condemnation

"The US president interrupted his family vacation on Martha’s Vineyard to condemn the bloodshed, but stressed that any move toward peaceful democracy was a difficult process that could take decades. 'We appreciate the complexity of the situation,' he said. 'We recognise that change takes time. There are going to be false starts and difficult days. We know that democratic transitions are measured not in months or even years, but sometimes in generations.' His statement disappointed many who had hoped for a cancellation of $1.3bn in annual US military aid to Egypt, but the administration is anxious to retain this link for future leverage over the generals." Continue reading →

Continue ReadingEgypt death toll soars as Obama leads muted international condemnation

Iraq Kurds reach out to Baghdad to fight surging al Qaeda

"The Shi'ite-led Iraqi government and Kurdish authorities are now looking at examples like the Shirqat attack and considering the once unthinkable - launching joint security operations and sharing intelligence - to combat the common enemy of al Qaeda. Such cooperation has been extremely rare since U.S. troops left at the end of 2011, while the central government and the autonomous Iraqi Kurdistan region in the north have been locked in an increasingly hostile dispute over land and oil. That the two sides are publicly contemplating working together underlines how worried they are about the insurgency and the threat of Iraq slipping back into all-out sectarian war." Continue reading →

Continue ReadingIraq Kurds reach out to Baghdad to fight surging al Qaeda

The Ph.D Bust: America’s Awful Market for Young Scientists—in 7 Charts

"Politicians and businessmen are fond of talking about America's scientist shortage -- the dearth of engineering and lab talent that will inevitably leave us sputtering in the global economy. But perhaps it's time they start talking about our scientist surplus instead. I am by no means the first person to make this point. But I was compelled to try and illustrate it after reading a report from Inside Higher Ed. In short, job prospects for young science Ph.D.'s haven't been looking so hot these last few years, not only in the life sciences, which have been weak for some time, but also in fields like engineering." Continue reading →

Continue ReadingThe Ph.D Bust: America’s Awful Market for Young Scientists—in 7 Charts

U. of California economist says real US debt $70 trillion, not $16 trillion

"James Hamilton believes the government leaving out certain unfunded liabilities that include government loan guarantees, deposit insurance, and actions taken by the Federal Reserve as well as the cost of other government trust funds, which bring the total amount the government owes to a staggering $70 trillion, he says. 'The biggest off-balance-sheet liabilities come from recognition of the fiscal stress that will come in the form of an aging population and rising medical expenditures,' Hamilton says, adding, 'There are many historical episodes in which off-balance sheet liabilities ended up having quite significant on-balance sheet implications.'" Continue reading →

Continue ReadingU. of California economist says real US debt $70 trillion, not $16 trillion

Larry Kotlikoff: Detroit Today, Washington Tomorrow

"The debt Uncle Sam publicly acknowledges is now $12 trillion. But the true measure of our debt -- the one suggested by economic theory -- is the fiscal gap, which totals $222 trillion. The fiscal gap is the present value of all future expenditures, including servicing outstanding official federal debt, minus the present value of all future receipts. Detroit's main means of hiding its true liabilities was discounting its future obligations at a rate far higher than appropriate, thus giving the appearance that less saving was needed to cover the shortfall. Washington's dirtier trick has been to keep virtually all of its future liabilities off the books." Continue reading →

Continue ReadingLarry Kotlikoff: Detroit Today, Washington Tomorrow

Robert Kiyosaki: I Don’t Trust the Financial System, But I Do Trust Gold

"Financial expert Robert Kiyosaki points out, 'The rich are getting richer than ever before, but the middle class is shrinking . . . . Both Obama and Romney promised to save them, and when politicians promise to save your butt, you know your butt is gone.' Kiyosaki, author of the mega best seller, 'Rich Dad/Poor Dad,' goes on to say, 'If you trust Obama or the Republicans or the Democrats, then you don't need to buy gold. But I don't trust them. I don't trust Bernanke. I don't trust the financial system, but I do trust gold." Continue reading →

Continue ReadingRobert Kiyosaki: I Don’t Trust the Financial System, But I Do Trust Gold