Public Debt Crisis

US Treasury Bills Decline Ahead Of Auction

2008-11-24T18:26:00.000-08:00

Federal Debt Relief System is at the forefront in the battle to defend the constitution by arming millions of Americans with this sobering information and vital education.

Federal Debt Relief System spotted this in Reuters recently:

U.S. Treasury debt prices fell Monday as traders cut prices ahead of billions of dollars of new supply and as stock market gains and a restructured bailout package for American International Group damped investors' appetite for safe-haven government debt.

The U.S. Treasury will sell $55 billion in three-, 10- and re-opened 30-year bonds this week with the first of the three auctions set for 11:30 a.m. The amount to be auctioned is significantly above the $18 billion refunding in November of last year.

The government system needs the additional funds to fund various programs intended to revive the struggling financial industry and to compensate for reduced tax revenues.

U.S fixed-income markets will close early at 2:00 p.m. EST ahead of Veterans Day on Tuesday when U.S. fixed-income markets will close to observe the holiday.

"The bond market is focused on an early closed at 2 p.m., a 3-year auction, and a holiday tomorrow," said Tom Di Galoma, Treasuries strategist at Jefferies & Co in New York. "The three-year supply should certainly be an issue for the market as the entire refunding will be this week."

Investors appeared to be showing a revived preference for stocks over safe-haven us public debt after China, the world's fourth largest economy, said it had approved $586 billion in new government spending between now and 2010, focused largely on infrastructure and social projects.

Meanwhile, shares of American International Group rose more than 25 percent to $2.66 after news the Federal Reserve said it would buy $40 billion of shares in the insurer as part of a restructured bail-out package.

Equity markets around the world jumped as the prospect for recharged growth tempered fears about a deep global recession, with Japan's Nikkei rising nearly 6 percent overnight, and benchmark indexes up about 3 percent or more in Europe.

DiGaloma said the curve steepening could fade after the refunding is complete. The Treasury will sell 10-year notes on Wednesday and re-opened 30-year bonds on Thursday.

On Friday, Treasuries prices retreated as investors looked for bargains among stocks priced at multiyear lows after a U.S. payrolls shed 240,000 jobs in October, the tenth month in a row when payrolls shed jobs.

Analysts said the weak October employment data, combined with downward revisions to two previous months' jobs figures pointed to further interest-rate cuts by the Federal Reserve.

Five-year Treasury notes fell 6/32 in price, their yields rising to 2.61 percent from 2.56 percent Friday, while the 30-year bond slipped 3/32, its yield rising to 4.275 percent from 4.20 percent.
Federal Debt Relief System believes it’s important that people know the truth so that they can
make up their own minds.

See Also Bailout, Credit Reform Now

AIG Execs Back On Vacation? WTF??

2008-11-17T13:05:00.001-08:00

Banks To Forgive Credit Card Debt Next?

2008-11-13T22:55:00.000-08:00

Federal Debt Relief System is at the forefront in the battle to restore the America’s Constitution and liberty by arming millions with the sobering information and vital education designed to restore America’s freedom which today is sadly and urgently under attack and duress from all sides

With defaults on credit card debt spiraling amid a global financial downturn, banks already reeling from the mortgage crisis are losing billions more from unpaid credit card bills.

Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy.

Some York County residents say that would be bad policy, that it rewards irresponsible spenders and fundamentally punishes those who've avoided credit card debt by spending within their means and making pay-as-you-go purchases.

"Back in the refinancing days 10 years ago a lot of homeowners took out equity lines to pay credit card debt," said Marion Oberdick, formerly a bank lender. "Then they ended up charging up those cards and now they have no equity in their homes and no other options."

The new pilot program -- which the banks hope will become permanent -- could involve as many as 50,000 people in serious need of credit card debt relief. On an individual basis, the amount of debt to be forgiven would rise according to the severity of the borrower's financial situation, up to a maximum of 40 percent.

Lower loss: Banks making credit card loans have reached a point where they can lose less by forgiving part of the debt than seeing the consumer walk away entirely.

Amid rising job losses, consumers -- even those with strong credit records -- have been defaulting at high levels on their credit cards.

And Americans are lumbering under about $900 billion in credit card debt, according to the latest available Federal Reserve figures. People who are in credit counseling, on average, carry seven cards.

People like 24-year-old Charles Bupp, who says he's buried in debt and has been since leaving Navy a few years ago. Since then, the York City resident has defaulted on a car loan and racked up school loans and credit card debt. He said the trouble began after he left the military and during a period of unemployment.

These days, he owes about $4,500 on one credit card, although he used to have three. His payments are about three months in arrears, he's over the limit and going deeper in the hole every day. He says he'd welcome a little help, but for now aims to use money earned as a cook to begin clearing his credit tab.

Home equity: Like Oberdick said, there are few options once residents cash in on home equity and charge beyond their means.

She said what looked like consumer confidence during the past decade was actually folks living on borrowed money. Too soon they have nowhere to turn as credit scores fall and credit limits are trimmed.

"If I lent someone money and they didn't pay it back, I'd lower their limit, too," Oberdick said.

The new proposal pitched to federal regulators by the Financial Services Roundtable would allow lenders to reduce by as much as 40 percent the amount of credit card debt owed by deeply indebted consumers in a pilot program.

Under the groups' proposal to U.S. Comptroller of the Currency John Dugan, whose Treasury Department agency oversees national banks, a pilot project would allow big credit card companies to sharply reduce the amounts owed by consumers in over their heads who don't qualify for the repayment plans now available.

Nearly all the biggest credit card banks have agreed to such a pilot program in which lenders would forgive as much as 40 percent of the amount consumers owe, allowing them to pay back the remainder over time.

The test program could reach as many as 50,000 borrowers, said Scott Talbott, senior vice president at the Roundtable.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

See Also Bailout, Credit Reform Now

Why Is The Fed Giving AIG More Money?

2008-11-10T15:50:00.000-08:00

Federal Debt Relief System is at the forefront in the battle to restore the America’s Constitution and liberty by arming millions with the sobering information and vital education designed to restore America’s freedom.

Federal Debt Relief System spotted this on the AP newswire recently:

That's the size of the new financial lifeline the U.S. government threw tottering insurance giant American International Group on Monday. The big question: Will it be enough to stabilize the firm?

Here are some questions and answers about the rescue plan.

Q: Didn't AIG already get a bailout from the government?

A: Yes. Back on Sept. 16, the Federal Reserve initially provided AIG with a $85 billion loan, in return for a nearly 80 percent ownership stake. On Oct. 8, the Fed followed up with another, $37.8 billion loan.

Then, on Oct. 31, AIG was allowed to access another $20.9 billion through the Fed's "commercial paper" program. That's where the Fed buys mounds of short-term debt from the companies, which often used the money for crucial day-to-day expenses, such as payroll and supplies.

Q: So, the original bailout plan didn't work?

A: Even with the original $85 billion lifeline, AIG continued to have problems as the country's overall financial and credit conditions worsened. The company was burning through cash and was saddled with risky mortgage-related securities that had fallen sharply in value and continued to deteriorate after the initial bailout.

AIG on Monday reported a massive third-quarter hit. It lost $24.47 billion, or $9.05 per share, after a profit of $3.09 billion, or $1.19 per share, a year ago. Revenue declined 97 percent to $898 million from $29.84 billion in the third quarter of 2007.

"This is the largest quarterly loss we've ever reported," Chief Financial Officer David Herzog told investors on a conference call.

Q: What's different about the new bailout?

A: All told, the new bailout is bigger — providing more than $150 billion to AIG. In a new twist, the Treasury Department is now stepping in with $40 billion, which is coming from the $700 billion financial bailout package enacted last month. It marked the first time any of that bailout money has gone to any company other than a bank.

Monday's restructuring also provides AIG with easier terms on the original Fed loan.

The new package reduces the interest rate AIG will pay and will extend the loan term to five years from two, reducing the need for AIG to sell off business lines and other assets at fire-sale prices to repay the government.

In addition, the new arrangement replaced the second $37.8 billion Federal Reserve’s loan to AIG with a $52.5 billion aid package. Under that part of the plan, the Fed will fund the purchase of both residential mortgage-backed securities from AIG's portfolio, and collateralized debt obligations, which are complex financial instruments that combine various slices of debt.

By removing these troubled assets from AIG's balance sheet, the bailout should take stress off the company, giving it more breathing room and helping to prevent future losses, Fed officials said. The Fed doesn't believe it will suffer losses because it is hopeful the market for such distressed investments will recover as the economy and financial markets eventually rebound.

Q: Why is it important to keep AIG afloat?
A: AIG is a global colossus, with operations in more than 130 countries. It is so interconnected with other financial firms that its problems have a jolting ripple effect both in the United States and abroad.

AIG was pushed to the brink of bankruptcy in September when its credit rating was downgraded and it could not post the collateral for which it was obligated under the "credit default swap" contracts it had issued. Credit default swaps are a type of corporate debt insurance.

The Fed raced to the rescue at that time to prevent AIG's failure, which could have triggered billions of dollars in losses at other banks and financial firms that bought these swaps from AIG — sending them into failure as well.

However, even after that initial rescue, AIG's troubles cast doubt on some of AIG's debt guarantees, leading to other problems. For instance, a Belgian bank threatened to immediately collect $43 million on a loan to the transit authority in Washington, D.C., in late October following the credit downgrade of AIG. Transit authorities in other cities feared the same fate.

Q: In exchange for the money, will the government place any restrictions on AIG?

A: Yes. Neel Kashkari, the Treasury Department official who is serving as the interim head of the $700 billion financial bailout program, said: "AIG must comply with stringent limitations on executive compensation for its top executives, golden parachutes, its bonus pool, corporate expenses and lobbying."

Q: Is this the end of the bailout money for AIG?

A: No one is saying for sure. However, government officials are hopeful the new package will be sufficient to stabilize the company.

Q: What company might be next in line for a government bailout?

A: U.S. auto companies — General Motors Corp., Ford Motor Co. and Chrysler LLC — have been pressing the government for more financial assistance. The money would be on top of the $25 billion in loans Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

Also See: Credit Revolt, financial disaster

Power Companies Leaving More In Dark

2008-11-06T18:10:00.000-08:00

Federal Debt Relief System is at the forefront in the battle to defend the constitution by arming millions of Americans with this sobering information and vital education.

Federal Debt Relief System spotted this at Wall Street Journal recently:

Utilities are becoming more aggressive about collecting money from delinquent customers, leading to a surge in service shutdowns just as economic woes are pushing up the number of households falling behind on bills.

The utilities say they are under pressure to clean out accounts that are weighing down their books at a time when their stocks are being hammered and earnings growth has slowed.
Meanwhile, the increasing number of homes left without power -- which could rise as economic pain deepens -- is beginning to worry some consumer advocates and regulators.

In Pennsylvania, PPL Corp. increased shutoffs by 78% in the first three quarters of the year compared with the same period a year earlier. Shutoffs at electric utilities throughout the state increased by 20% in that period. George Lewis, a spokesman for PPL, based in Allentown, Pa., said the utility had been somewhat lax in the past but decided this year to "reverse the trend and prevent people from getting further in debt" by cutting them off sooner. About 3% of the company's residential accounts have been disconnected for delinquency.

In Memphis, Tenn., the city-owned utility that supplies electricity, natural gas and water to residents cut off 38% more people in the first eight months of the year, or 69,743 electric accounts, versus the same period in 2007. The utility raised electricity rates 20% this year, reflecting increased wholesale power costs for energy. Chris Stanley, a spokesman from the company, Memphis Light, Gas & Water, said the number of accounts owing more than $900 that were 90 days or more past due was up 148% to 1,766 accounts as of Oct. 28.

The increased number of shutoffs has attracted the attention of some regulators. Dian Grueneich, a member of the California Public Utilities Commission who has responsibility for low-income programs, has begun asking utilities to furnish information on shutoff criteria. She wants commission staff to "take a look and make sure it is being applied fairly."

One bright spot is that many utilities will have more money to distribute next year to poor customers through the Low Income Home Energy Assistance Program. Congress boosted the program's funds for the current fiscal year by 78% to $5.1 billion. Many utilities are trying to get the word out that people should apply because eligibility rules have been expanded, allowing people with higher incomes to qualify.

State regulators say they have noticed that power shutoffs have moved up the economic chain.
"We're seeing an uptick in middle-class people who have never been in this situation before," said Eric Hartsfield, director of the customer-service division of the New Jersey Board of Public Utilities.

New Jersey's biggest utility company, Public Service Enterprise Group Inc., said it saw a 10% increase compared with the year earlier in uncollectible natural-gas accounts, and slightly less on the electric side, in the third quarter. "We've been diligent in our shutoff activities," said PSEG Chief Executive Ralph Izzo.

Rising delinquencies are occurring across the country. In New York, the amount of money utilities are owed on accounts at least 60 days past due jumped 22%, to $611.3 million in September compared with a year earlier, according to regulators.

Michigan has experienced a nearly 39% increase in electricity disconnections this year compared with last, according to statistics filed voluntarily by utilities with state regulators.
The rise comes as utilities are finding it more difficult to fund their operations.

Northeast Utilities, which owns electric and gas utilities in New Hampshire, Massachusetts and Connecticut, is carrying about $15 million of unpaid bills currently, up from about $11 million this time last year and about $8 million in 2006. "We're putting more resources into collecting on accounts now," said Chief Financial Officer David McHale.

In the third quarter, PECO Corp., a Philadelphia utility, racked up an additional $37 million of bad-debt expenses from unpaid bills compared with the third quarter of 2007, bringing its total unpaid balance to $56 million.

The company has put in place a new service-termination strategy this year that for the first time assesses credit risk, and pulls together other information used as a basis for decisions. "We ask how old, how big and how risky" an account is when prioritizing disconnections, said Denis O'Brien, president of PECO, a unit of Chicago-based Exelon Corp.

The number of shutoffs could rise further, as new technologies such as digital meters make it easier for utilities to cut off late-paying customers.

Digital meters allow power companies to do things remotely that previously required sending out work crews. For example, utilities can take meter readings wirelessly and switch a customer's power off or on without having to send a crew to a house. They also can use a "service limiter" feature to cut power flows to a trickle until customers pay up. Utilities are installing millions of these meters across the U.S.

Southern California Edison, a unit of Edison International of Rosemead, Calif., currently disconnects late-paying customers owing as little as $30, but that could drop lower in the future. That usually would be a money-losing proposition, because it requires a crew to be sent out to disconnect service manually. But the company is in the process of installing 5.3 million digital meters, at a cost of $1.63 billion, which will allow remote, wireless shutoffs, making it economical to take action even for tiny amounts owed. In a recent filing with regulators it said it could adopt "rigid enforcement" of payment rules in the future for those owing less than $30. It hypothesized it could cut off an additional 129,000 people a year.

Lynda Ziegler, senior vice president of customer service at SoCal Edison, said the utility doesn't have enough wireless meters to support a policy change yet. She added that notification requirements mean it still could take nearly three months to sever a delinquent account. But she said the utility may seek authority from the Public Utilities Commission in the future to act more quickly or to convert certain customers to prepaid service because "one of the struggles people have is catching up when they get behind."

The ease with which utilities can use digital meters to cut off service has alarmed some consumer advocates. "Just because you can do it doesn't mean you should do it," said Irwin Popowsky, head of the Office of Consumer Advocate in Pennsylvania. "From my perspective, they're creating a reason to not have smart meters."

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

See Also Bailout, Credit Reform Now

Voter Deception Reported

2008-11-05T13:55:00.000-08:00

Federal Debt Relief System is at the forefront in the battle to defend the constitution by arming millions of Americans with this sobering information and vital education. Federal Debt Relief System wants to address those chanting the disturbing chorus of "voter fraud," or “ACORN!” elections are being influenced and sometimes determined by people ineligible to cast a ballot impersonating eligible voters.

To be sure, the Americans see disenfranchising, disturbing instances of "voter fraud" every election cycle. However, the "fraud" we witness is different. We know of deceptive practices, misinformation and lies that are used to keep registered, legitimate voters away from the polls. Sadly, we also still find ourselves fighting attempts by unscrupulous election officials to disenfranchise the people in communities we represent.

It is our experience that "voter impersonation" is actually quite rare. Nationwide, between 2002 and 2006, when a crackdown on voter fraud was one of the U.S. Justice Department's top priorities, more than 400 million votes were cast, but an average of only 30 federal cases per year were prosecuted.

Regardless of the questionable prevalence of this type of election fraud, several states have passed discriminatory photo ID laws. Sadly, rather than addressing real voter fraud, the true effect of these laws is to disenfranchise the estimated 20 million Americans who have not purchased IDs. Disproportionately these people are minorities, elderly and low-income Americans.

Yet, malicious voter fraud continues. In Virginia, registered voters received robotic calls stating that they could vote by telephone by pressing a number for the candidate of their choice. The call ended by stating that they had now voted and didn't need to go to the polls.

In 2006 in Orange County, Calif., 14,000 Latino voters got letters in Spanish saying it was a crime for immigrants to vote in a federal election. It didn't say that immigrants who are citizens have the right to vote.

The NAACP has also seen a dramatic increase in erroneous purging of voting rolls, as well as eligible voters mistakenly not added. These are voters believing or having been told that they have done everything correctly, only to be turned away from the voting booth on Election Day.

We know from Florida in 2000 and Ohio in 2004 that erroneous purging of the rolls, underestimating the number of needed functioning voting machines and ballots, the inadequate number and under-trained poll workers, intimidation of voters and the misuse of photo ID requirements, especially in neighborhoods with heavy concentrations of racial and ethnic minorities, along with blocked access to polling sites and intentional deception and voter intimidation, lead to disenfranchisement of eligible voters. These problems are more than just "voter fraud." These problems are a national travesty.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

See Also Bailout, Credit Reform Now

We Should Be Worried

2008-11-04T17:49:00.000-08:00

Federal Debt Relief System is at the forefront in the battle to defend and restore America’s constitution by arming millions with this sobering information and vital education. Should we be concerned over election fraud in the upcoming election? If history is any guide, then the emphatic answer is "yes!" There are numerous cases, just in the last decade or so, in which elections were stolen and races were decided by a handful of votes.

An investigation of 5,000 fraudulent absentee ballots in Miami in 1997 resulted in the election results being overturned. In addition to votes by fictitious individuals and persons using false addresses (persons who didn't actually live in Miami), votes were also bought. And vote buying is a federal crime that the Department of Justice has prosecuted repeatedly.

In 2003, the Indiana Supreme Court threw out the results of a mayoral election because of absentee ballot fraud. The results of a state senate race in Tennessee in 2005 decided by only 13 votes were declared invalid because of votes by felons, the dead, people who didn't live in the district, and individuals whose registered addresses were vacant lots. The photographs of those vacant lots, taken by an investigator, starkly illustrate the kind of voter fraud that unfortunately still goes on in our elections.

Today, there are investigations in more than a dozen states over tens of thousands of fraudulent voter registration forms submitted by ACORN. How many of those fraudulent registrations have not been caught by election officials? How many will result in fraudulent votes? If we have a very close election, fraudulent votes may well end up deciding the results, damaging our democratic government and our confidence in our election process.Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

Also See: Credit Revolt, financial disaster

Expect More Job Losses

2008-11-01T21:09:00.001-07:00

Federal Debt Relief System is at the forefront in the battle to defend and restore constitutional rights to all Americans by arming millions with this sobering information and vital education.

Federal Debt Relief System spotted this at CNN Money recently:

While there were some encouraging signs that the credit crisis is not having as devastating an impact as some fear, the slowing economy looms large.

"We're not seeing anything besides the normal tightening of credit you usually get at the end of an expansion," said Bill Dunkelberg, chief economist for the National Association of Independent Businesses.

Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents smaller and mid-size manufacturers, said that most manufacturers are conservatively managed and have fairly low levels of debt. Tonelson is urging caution on any government bailout, saying banks should not be encouraged to resume their free-lending ways to consumers already overburdened with debt.

Even if businesses aren't yet impacted by the economy collapse, they are certainly planning for slowing sales as credit to consumers dries up. That could mean fewer orders for goods - and fewer people needed to manufacture, ship, stock and sell those goods.

"It's reasonable to expect not only job losses, but wage losses as well," said Tonelson.
Said Daniel Penrod, an industry analyst with the California Credit Union League, a trade association for credit unions: "We haven't really seen small businesses getting hurt because of access to money, but rather just because of the slowdown."

With the holiday shopping season just around the corner, the next sector ripe for a hit is retail, said John Challenger, chief executive of global outplacement firm Challenger, Gray & Christmas. A survey by Challenger released Wednesday said that the number of job cuts in September rose 7.2% to 95,094.

"Consumers are tapped, it's going to be a tough year," said Challenger. "Unemployment is going up by leaps and bounds."

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

Also See: Credit Revolt, financial disaster

Low Production - Recession Worries

2008-10-31T15:24:00.000-07:00

Federal Debt Relief System is at the forefront in the battle to defend and restore America’s constitution by arming millions with this sobering information and vital education.

Federal Debt Relief System spotted this at CNN Money recently:

Production at the nation's factories fell into a virtual tailspin in September, declining by the largest amount in nearly 34 years, according to a report released by the Federal Reserve on Thursday.

"This is consistent with a recession, there's no doubt about it," said John Silvia, chief economist for Wachovia.

The report said the enormous decline was in most part due to hurricanes Gustav and Ike's disastrous effects on the Gulf Coast industry. Mining output took a 7.8% nosedive due to the storms, and oil and gas-related production fell as well.

Recession worries

Industrial production is one of the four factors that the National Bureau of Economic Research considers to determine if the current economy problems have pushed the nation into recession. The other three factors are employment, personal income and retail and wholesale sales of manufactured goods.

Though industrial production has been volatile over the past year and a half, registering up-and-down growth since January 2007, it has only recently shown the kind of huge drop off that is typical in a recession. After slight rises in manufacturing in June and July, production tanked a whopping 1.1% in August on a sizeable drop auto manufacturing.

Production fell for 12 straight months during the 2001 recession. The Fed said for the third quarter, production fell 6%, nearly doubling the 3.1% decline of the second quarter.

"Industrial production is a key input into the overall output of the U.S. economy," Silvia said. "For all practical applications, there is a one-to-one correspondence between production and how the economy is growing."

"GDP is gross domestic product, and this is a measure of production," he added.

In other troubling news, The Philadelphia Federal Reserve reported that its regional manufacturing index decreased by 41.3 points, to minus 37.5 from positive 3.8 in October. It was the largest one-month decline in the history of the index. Economists polled by Briefing.com expected a decline of just 5 points.

The report also showed that industrial capacity utilization - a measure that tracks the percentage of factories in use - posted a seasonally adjusted decrease of 4.6% to 76.4%. Economists had expected a decrease of just 0.7% to 78%.

Manufacturing output decreased 2.6% in September, and the factory operating rate fell to 74.5%, which is more than five percentage points below the average from 35-year average from 1972-2007.

"Over the last six months we have seen utilization declines in manufacturing and mining," Silvia said. "Historically, lower capacity utilization rates have been consistent with weaker corporate profits."

The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.

Learn more at Federal Debt Relief System now.

Read more about Job Losses, Public Debt Reform

Has The Fed Learned Anything?

2008-10-30T17:43:00.000-07:00

Federal Debt Relief System is at the forefront in the battle to defend and restore America’s constitution by arming millions with this sobering information and vital education.

Federal Debt Relief System spotted this at The Market Oracle recently:

In his book, The Money Men , H.W. Brands wrote of the first major test the Federal Reserve faced after its creation in 1913. In its role as arbiter of the nation's money supply the Fed made its first policy blunder in making cheap money overly plentiful in the early 1920s, which encouraged a speculative bubble in the stock market. By 1928, the Fed recognized its error and instead of gradually slowing down the money creation, did something that has been part of their modus operandi ever since. In true reactionary fashion the Fed slammed on the monetary brakes and started raising interest rates, paving the way for the great 1929 stock market crash.

Making matters worse and adding fuel to the fire, the Fed continued its tight money policy while the U.S. government actually raised taxes and thereby greatly exaggerated the Great Depression of the 1930s. Was this a case of ignorance born of inexperience or was a sinister motive at work here? One could almost excuse their mistakes of the late 1920s and early ‘30s due to the Fed's lack of experience. Yet such latitude can't be so easily granted them today with more than 90 years of experience behind them.

Long-time Fed watcher Bert Dohmen of the Wellington Letter offers the following insight, “Who controls the liquidity necessary to buy stocks? It's the Federal Reserve through its monetary policy.” Dohmen goes on to observe, “Invariably bear markets occur when the central bank tightens money. This sudden change in the availability of money causes investors to sell stocks in order to raise cash. Suddenly the buyers turn into sellers and the markets plunge….It's a shift in the demand-supply relationship.”

One astute economist wrote in 1966 concerning the 1929 stock market crash, “The excess credit which the Fed pumped into the economy (in the late 1920's, in order to lower interest rates) spilled over into the stock market – triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in breaking the boom. But it was too late: By 1929 the speculative excesses had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed….The world economies plunged into the Great Depression of the 1930's.”

This economist was none other than Alan Greenspan. In the above statement he admits that whenever the Fed sees speculative excess (as they certainly did in the 2003-2004 period) it will cause them to tighten money. It has been ever thus since the Fed's inception in 1913.

Will the Fed's latest efforts at reflating the financial market succeed? If history is any guide then it should eventually stabilize the stock market and allow the newly formed 6-year up cycle along with the peaking 10-year cycle to work its magic in 2009 for one final cyclical bull market before the “hard down” phase of the Kress 40-year and 60-year cycles commences in 2010.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

Also See: Credit Revolt, financial disaster

Congress Wants Moratorium On Bonuses

2008-10-29T17:26:00.000-07:00

Federal Debt Relief System knows this is the worst financial crisis since the Great Depression, a $700 billion taxpayer bailout, public outcry over excessive pay and the demise of three of the biggest securities firms won't deter Wall Street from offering year-end rewards to employees on top of their salaries, compensation experts say.

From Bloomberg:

Morgan Stanley and Goldman Sachs, both still on track for profitable years, have set aside about $13 billion for bonuses after three quarters, down 28 percent from a year ago. Even some employees at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, will get the same bonus they received a year ago.

Goldman, the biggest and most profitable Wall Street firm until it opted to become a bank holding company last month, has set aside about $6.85 billion for bonuses, or an average of $210,300 for each employee, down 32 percent from $339,400 a year ago. Morgan Stanley, the second-biggest securities firm until it also converted to a bank, has $6.44 billion for bonuses, or $138,700 per person, down 20 percent from last year. Both firms accrue a fixed percentage of their revenue for compensation, so the decline in bonus pools matches the drop in revenue.

Merrill's Compensation

The money Merrill has set aside for bonuses equates to an average $110,000 for each of its 60,900 people, up from $108,000 a year ago because more than 3,000 jobs have been cut.

The bonus figures are based on estimates that about 60 percent of the compensation and benefits expenses reported by the companies will be paid in year-end bonuses, as occurred in past years. Average bonuses aren't an indication of how much any employee will receive, since payments range widely from assistants to top traders. Bonuses aren't paid until the end of the fiscal year, so firms could choose to reallocate the funds.

``We are in the process of determining appropriate levels of year-end compensation, and no decisions have been made,'' said, a spokesman at Morgan Stanley. A spokesman for Goldman in New York, declined to comment.

``There should be a moratorium on bonuses,'' Barney Frank, chairman of the House Financial Services Committee, told reporters last week. ``If nobody gave them, there wouldn't be a competitive aspect.''

A worldwide economy collapse, caused in part by the financial industry's losses, and a U.S. Treasury plan to spend $250 billion of taxpayer money buying stakes in banks, have made pay a political issue this year.

``I'm just flabbergasted that the financial community has failed to show any sense of leadership on this issue and doesn't seem to understand how angry people are at them,'' said the editor of Corporate Library, a Portland, Maine-based corporate-governance research firm. ``They are just a bonus away from having the villagers come after them with torches.''

Amen to that. I’ll bring the….

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

See Also Bailout, America’s Debt Revolt

Credit Freeze Increases Unemployment

2008-10-28T17:42:00.001-07:00

Federal Debt Relief System spotted this at CNN Money recently:

Job losses have been mounting, and the slowing economy and credit crunch is likely to take an even greater toll in the coming months.

Analysts on average forecast that the monthly employment report expected Friday will reveal that the economy shed 105,000 jobs in September - the largest monthly loss in five years. The economy already has lost 605,000 jobs this year.

Unemployment is expected to remain at a relatively high 6.1%.

What's more troubling is that hiring trends have deteriorated even further in recent weeks - and that won't be reflected in government statistics until later this year.

Failing mortgages and struggling banks have made it difficult for businesses and consumers alike to borrow money. If businesses can't borrow money, the thinking goes, they can't expand stores or hire more people.

"A complete lockup of the credit markets will reverberate throughout the economy in a very severe fashion," said Martin Regalia, chief economist at the U.S. Chamber of Commerce, a business lobby group. "If the economy problems continue further, we'll see truly dramatic unemployment."

Regalia expects unemployment to reach 6.5% by the end of the first quarter next year, and 7% if nothing is done by the government to free up the capital markets. While the economy may stop shedding jobs at that point, he said those stubbornly high rates of unemployment could persist until the end of 2009.

Actual job losses are more difficult to predict. Regalia said 150,000 to 175,000 a month could be likely, significantly higher than today's levels but far below the rate of 250,000 to 300,000 lost during the last recession in 2002.

The government is still negotiating a package that would enable the purchase of distressed assets from banks in the hopes of getting them to lend again. The $700 billion bailout was rejected in the House of Representatives on Monday, and the Senate is set to vote on a revised version on Wednesday night.

"If we don't have measures to correct the situation, we will see more [job] losses," said Joyce Bastoli, a vice president at Ajilon Finance Solutions, part of the staffing company Adecco. "If companies don't have access to capital, we will see it trickle down."

The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.

Learn more at Federal Debt Relief System now.

Also See: Credit Revolt, financial disaster

Ex Fed Chief Says "I Found A Flaw"... DUH!

2008-10-27T17:35:00.001-07:00

Federal Debt Relief System is at the forefront in the battle to restore the Constitution by arming millions with the sobering information and vital education designed to the multi million debt slaves all over this nation.

Federal Debt Relief System spotted this at Bloomberg News recently:

Former Federal Reserve Bank Chairman Alan Greenspan said a ``once-in-a-century credit tsunami'' has engulfed financial markets and conceded his free-market ideology shunning regulation was flawed.

``Yes, I found a flaw,'' Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. ``I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.'' Greenspan added he was ``partially'' wrong for opposing the regulation of derivatives.

Greenspan's contrition came after lawmakers and Fed watchers increasingly blamed the former Fed chairman for helping cause the crisis with lax oversight of the housing boom and derivatives markets. Normally afforded deference by Congress, he endured almost four hours of questions from lawmakers less than two weeks before a national election.

``Greenspan is finally taking some responsibility for his actions,'' said the director of economic research at Northern Trust Co. in Chicago and a former Fed official. ``The damage has been done. His reputation has definitely been tarnished.''

Greenspan, responding to questions, said only ``onerous'' regulation would have prevented the economic collapse. Stifling rules would have suppressed growth and hurt Americans' standards of living, he said.

Part of the problem was that the Fed's ability to forecast the economy's trajectory is an inexact science, he said.

``If we are right 60 percent of the time in forecasting, we are doing exceptionally well; that means we are wrong 40 percent of the time,'' Greenspan said. ``Forecasting never gets to the point where it is 100 percent accurate.''

The admission that free markets have their faults was a shift for the former Fed chairman who declared in a May 2005 speech that ``private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.''

Did you see that? He said ‘better at constraining excessive risk taking”? You gotta be kidding me. The problem is that the joke is on all of us.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

See Also Bailout, America’s Debt Revolt

Market Crashes, Big 3 Credit Rating Firms Make Record Profits

2008-10-25T22:16:00.000-07:00

Federal Debt Relief System is at the forefront in the battle to restore the Constitution and liberty by arming millions with the sobering information and vital education designed to restore America’s freedom which today is sadly and urgently under attack and duress from all sides.

Wall Street’s big three credit rating firms, Moody's Corporation, Standard & Poor's and Fitch Ratings' profits in recent years have been among the fattest on Wall Street. One firm, Moody's, rang up profit margins three to four times those of Exxon Mobil Corp. while assuring investors that complex mortgage-backed investments were safer bets than they really were, according to Bloomberg News.

In recent financial filings noted by the investor web blog Footnoted.org, however, Moody's confirmed it had "errors in the model" it used to rate some investments, and is "cooperating with . investigations and inquiries" by "states attorneys general and other governmental authorities," including the Securities and Exchange Commission.

Two former rating company employees who took issue with their firms' practices are also slated to testify Wednesday, according to the panel. A former managing director at Standard & Poor's who left in 2005, after he says he refused to go along with several clear and questionable acts of corporate corruption.

"They thought they had discovered a machine for making money that would spread the risks so far nobody would ever get hurt," the executive told a Bloomberg reporter last month.
The other former executive to testify, Jerome Fons, has become an advocate for reforming the rating industry since leaving Moody's Corp. last year.

Fons has pointed out the glaring conflict of interest on which the rating firms are based – they are paid by the firms who will profit if their investment product gets a stellar rating – and has even suggested the lucrative industry should be replaced entirely.

A Securities and Exchange Commission investigation in June found the companies faced conflicts of interest, stemming from the fact that the investment banks trying to sell the mortgage-backed securities were the ones paying the firms to rate their products. Emails uncovered by investigators showed analysts were concerned that negative ratings would hurt their firms' income.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

See Also Bailout, America’s Debt Revolt

Why The Bailout Will Fail

2008-10-23T17:38:00.000-07:00

I found this one at Federal Debt Relief System. Like many of you, all of the point-counterpoint on the current economic collapse has me searching for the answers.

Here’s the straight talk on what’s wrong with the newly passed so-called “bailout” plan. The Treasury plan was originally predicated on buying $700 billion of collateralized residential mortgage-backed securities that banks could not unload.

The idea was that the banks would get the money, which they could then turn around and lend to keep the credit markets open and credit flowing throughout the economy. In the meantime, the Treasury Department would sit on the securities until it is able to sell them, hopefully at a profit.

The idea, from a theoretical standpoint, isn’t stupid. It is, however, impossible to implement to any degree that will result in the desired economic recovery.

Here’s why:

There are more than $1 trillion worth of subprime collateralized mortgage-backed securities out there – and that’s just one type of problematic derivative security. The bottom line: $700 billion isn’t enough. Period.

Treasury is going to hire banking-industry managers to manage the process. Those managers are going to serve themselves – just as they served themselves to get us into the crisis.

The purchase plan is not limited to just residential mortgage-backed securities. Surprise! What else will Treasury buy? Experts predict that toxic credit card debt will require another multi-billion dollar “bailout” in the coming weeks as well.

This government deception is even more under-funded than people realize, for it doesn’t authorize the full $700 billion: Indeed, it starts with only $350 billion, leaving an even greater shortfall. Did we mention that $700 billion wasn’t enough?

Since Treasury can’t buy all the problem securities, if it prices what it’s going to buy too low, all remaining holders will have to mark down their holdings and take more writedowns and losses. How will that create confidence and facilitate “liquidity”?

However, if the Treasury Department prices the securities too high, several problems quickly emerge: Hedge funds will rush to sell their current holdings, and may very well speculate by buying up more securities to sell them at a higher price (profit) to Treasury, meaning that the Treasury Department plan won’t necessarily be helping banks directly. What’s more, if those securities are priced too high, and the market for them continues to fall, taxpayers will eat the losses – a reality that likely will lead to an end to further program funding.

There is no defined mechanism to determine what price the Treasury Department will pay for what it buys. For argument’s sake, even if Treasury were to only buy the problem securities its leadership speaks of in public – residential mortgage-backed securities – there are problems if it prices them too low: If that happens, some holders won’t sell them, taking the chance that if they hold them long enough they will be worth more than Treasury is willing to pay. How will those financial institutions regain liquidity if they won’t sell the securities needed to make this happen?

Who’s going to fight off the lobbying groups out to influence the managers that the Treasury Department hires to direct money to their masters? Did we mention that $700 billion wasn’t enough?

The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.

Learn more at Federal Debt Relief System now.

Financial System In Jeopardy, Colossal Credit Rating Agency Failures

2008-10-22T17:35:00.000-07:00

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds. The top dogs of the big three credit rating companies made $80 million in compensation while their firms gave bogus high ratings to trillions in dubious mortgage-related investments which led to the world's current financial crisis- and a hearing before bitter lawmakers on Capitol Hill Wednesday morning.

The top executives – Moody's Corporation CEO Raymond W. McDaniel, Standard & Poor's president Deven Sharma, and Fitch Ratings' president and CEO Stephen Joynt – are expected to say the housing bust was "unanticipated" and "unprecedented."

But confidential documents obtained by Waxman's investigators show that the firms' executives anticipated much of what has happened, and were aware that their ratings were quite possibly shaky, according to the chairman.

The story of the credit rating agencies is a story of colossal failure," Rep. Henry Waxman, D-Calif., chair of the House Oversight and Government Reform Committee will tell the men when they appear before his committee this morning, according to a draft of his prepared comments. "The result is that our entire financial system is now at risk."

"It could be structured by cows and we would rate it," one Standard & Poor's employee wrote in a company email cited by Waxman. "Let's hope we are all wealthy and retired by the time this house of cards falters," wrote another in an email obtained by Waxman's committee.

As Moody's CEO McDaniel explained in an October 2007 presentation obtained by Waxman's staff, shaky ratings came because few of the players – investors, banks or the firms which issued the securities – truly want an accurate assessment of an investment, if it isn't going to be good news.

"Ratings quality has surprisingly few friends," he observed.

Federal Debt Relief System is a powerful tool on your side in the war against credit debt.

Think Before You Shop

2008-10-21T17:37:00.000-07:00

Federal Debt Relief System knows a credit card may seem like the perfect partner to anyone with an empty wallet staring longingly at a pair of shoes with just the right fit or the newest Xbox videogame. But beware; if you're someone without a budget--or self-control--jumping blindly into a relationship with this piece of plastic can leave you badly burned.

If you don't understand what you're getting yourself into, you're not ready.

So what is it about credit cards? They seem like the perfect solution for those of us practically living paycheck to paycheck, right? How many times have you wanted to book that flight to Europe but just didn't have the funds right now? This is the beauty of charging; immediate gratification. But there is a downside to having the ability to buy whatever you want, whenever you want.

Just as compound interest is your best friend when you're saving money, it's your worst enemy when you owe money. If you can't afford to pay your credit card bill, little fees for things like late payments and going over your credit limit--not to mention interest itself--will cause your balance to balloon. Not only will your sweet plastic love affair turn sour, you could carry the load of credit card debt the rest of your life.

Let's say you're about to spend $2,500 on a shiny, new flat panel HDTV (That's what I'm looking at) with a credit card that carries an annual percentage rate (APR) of 20%. If you're like many people, you may choose to pay the minimum on your card, which is generally about 3% of the balance, $2,500 in this case. If you pay the minimum $75 each month on that $2,500 you will end up paying total interest of $1,180, and it will take more than four years to pay off.

Credit cards are sneaky little guys who deceive, entice and then entrap it’s victims in an endless banking scam. Unlike the fixed interest associated with savings accounts, credit card interest is variable and can change--mostly higher--at any time. On some cards, if you miss a payment your APR may go up substantially. In addition, that attractively low APR a credit card promises when you sign up will probably at least double after the introductory period is over. Credit cards also hit you with fees if your balance goes above your credit limit.

Credit cards can be a great companion and offer many benefits. But be smart about what you can afford to charge, and stay on top of your payments. You don't want to find yourself head-over-heels in a relationship that holds you back for the rest of your life.

Federal Debt Relief System is ready to defend and restore your family’s financial freedom.

Learn more at Federal Debt Relief System now.

Bailout Scam Exposed

2008-10-20T21:56:00.000-07:00

Federal Debt Relief System is at the forefront in the battle to restore the Constitution by arming millions with the sobering information and vital education designed to liberate the multi million debt slaves all over this nation.

Federal Debt Relief System wants to know how are the Treasury Department and the U.S. Federal Reserve going to be able to conduct objective, responsible policy regarding fiscal matters and interest rate decisions when they will have to simultaneously “manage” the government’s portfolio of securities?

There will be conflicts and there will be fallout for the U.S. dollar and fallout with regard to American interests vs. the rest of the world, with whom we trade and partner with in all manner of ways, not the least of which involves our own national security.

While the idea that taxpayers should get warrants and ownership in the entities that we buy securities from is theoretically a good idea, there are some issues. Let’s take a look at some of the biggest potential pitfalls:

Foreign banks aren’t going to be thrilled about that; yes, they are included in the list of whom the Treasury will buy from.

Are taxpayers going to be limited partners in hedge funds? What if those hedge funds implode?

Who is going to decide when to sell any of government’s ownership interests, should they turn out to be profitable? Will we own these businesses forever?

Is government going to control private enterprise? Is this a ruse? Are we heading into an era under the stewardship of a socialist government?

The U.S. Treasury Department could end up in control of our banking system. Considering how well they run the government’s fiscal house, is that what we want?

There is no direct support for homeowners in the plan and no support mechanism for falling home prices. And yet, these twin evils are the root causes of what has happened.

After the House rejected the initial bill – and U.S. stock prices plummeted – the Senate rushed through its modified plan, which the House subsequently passed and the president signed. But that was just another hose from the same firefighting gang that can’t shoot straight; which will further douse the prospect of a directed approach.

Here are some of the additions that were made to the plan that the House originally rejected – meaning they are part of the plan that was signed into law. Ask yourself this question: What do they do to actually address the credit crisis?

Extend unemployment benefits: That’s super – so when we’re all out of our houses, we’ll have enough unemployment to stay at a hotel for a day or two.

A $1,000 tax deduction for homeowners who don’t itemize. Great, I can buy a cheap inflatable raft to float away on the red ink that flows out of my house.

A reduction on the tax on dividends repatriated from foreign earnings. What?

Economic stimulus measures – such as spending on transportation projects. That will actually help; if they build canals around my house, when I float away on my red-ink raft, at least I won’t end up in uncharted waters.

Increase Federal Deposit Insurance Corp. (FDIC) deposit-insurance-coverage per bank account from $100,000 to $250,000. That will definitely calm nervous bank depositors, especially all those who have more than $100,000 in their many accounts. Personally, I wish I had that worry. Do you?

What is the common denominator to all these add-ons? They are meant to be added up so that Congress can say: “This is how much we’re going spend to help fix the problem that will benefit you, not just the $700 billion going to Wall Street.” Don’t buy into this.

However, my very favorite proposal is the push to do entirely away with fair-value – mark-to-market – accounting. This is being pushed by none other than the American Bankers Association and – guess whom else – the Securities and Exchange Commission (SEC).

That’s the same SEC that presided over the demise of The Bear Stearns Cos. (now part of JP Morgan Chase & Co., Lehman Brothers Holdings Inc., and American International Group. It’s the same SEC that eliminated the uptick rule. And it’s the same SEC that handed over to the exchanges the authority to decide who should be on the “do-not-short” list.

The truth that needs to be front-page news it that if there wasn’t Fair Value, mark-to-market accounting we would never have seen this crisis coming. Doing away with mark-to-market accounting does not change the value of problem securities. Period. Doing away with mark-to-market will only bury the bodies under the rubble. The stench will eventually suffocate us all…to death.

The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.

Learn more at Federal Debt Relief System now.

Treasury To Purchase Toxic Mortgage Securities

2008-10-18T15:35:00.000-07:00

Federal Debt Relief System is at the forefront in the battle to restore the Constitution by arming millions with the sobering information and vital education it’s going to take to wake Americans up to take action.

These are truly dark times. Now check out this excerpt from the latest government proposal. It states:

"Designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them."

Federal Debt Relief System summed it up best : "This is the de facto nationalization of the entire banking, insurance and related financial system..That's right - every bank and other financial institution in the United States has just become a de-facto organ of the corrupt and illegal government system.

Paulson thinks they should be, and he may order them to do virtually anything that he claims is in furtherance of this act.....The bill gives Paulson the ability to nationalize unlimited amount of private debt and force you and your children to pay for it."The claim is that this is intended to 'promote confidence and stability' in the financial markets, but the reality is that it will do no such thing.

It will instead strike terror into the hearts of investors worldwide who hold any sort of paper, whether it be preferred stock, common stock or debt, in any financial entity that happens to be domiciled in the United States, never mind the potential impact on Treasury yields and the United States sovereign credit rating.

Many predict that if this passes it will “precipitate the mother and father of all financial panics."

Amen. The transformation from a free market to a centralized, Soviet-style economy run by men whose judgment and credibility is already greatly in doubt; does not auger well for the markets or the country.

Paulson's plan to revive the banking system by buying up hundreds of billions of dollars of illiquid mortgage-backed securities (MBS) and other equally poisonous debt-instruments; ignores the fact these complex bonds have already been "marked to market" in the recent firesale by Merrill Lynch.

Just weeks ago, Merrill sold $31 billion of these CDOs for roughly $.20 on the dollar and provided 75 percent of the financing, which means that the CDOs were really worth approximately $.06 on the dollar. If this is the settlement that Paulson has in mind, than the taxpayer will be well served.

But this will not recapitalize the banks balance sheets or mop up the ocean of red ink which is flooding the financial system. No, Paulson intends to hand out lavish treats to his banker buddies, while interest rates soar, pension funds collapse, the housing market crashes, and the dollar does a last, looping swan-dive into a pool of molten lava. Thanks, Hank.

The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.

Go to Federal Debt Relief System now.

Credit Cards Set To Debtonate Next

2008-10-17T00:08:00.000-07:00

Federal Debt Relief System is at the forefront in the battle to restore the Constitution by arming millions with the sobering information and vital education it’s going to take to wake Americans up to take action.

Federal Debt Relief System knows these troubles sound familiar. Americans everywhere are falling behind on their payments. Defaults rising. Investors getting burned. But forget the now-familiar tales of mortgages gone bad. The next Katrina on the horizon for beaten-down financial firms is the $950 billion worth of outstanding credit-card debt—much of it toxic.

That's bad news for players like JPMorgan Chase (JPM) and Bank of America (BAC) that have largely side stepped—and even benefited from—the housing bust but have major credit-card operations. They're hardly alone. The consumer debt bomb is already beginning to spray shrapnel throughout the financial markets, further weakening the U.S. economy.

"The next meltdown will be in credit cards," says Gregory Larkin, senior analyst at research firm Innovest Strategic Value Advisors. Adds William Black, senior vice-president of Moody's Investors Service's structured finance team: "We still haven't hit the post-recessionary peaks [in credit-card losses], so things will get worse before they get better." What's more, the U.S. Treasury Dept.'s $700 billion mortgage bailout won't be a lifeline for credit-card issuers.

The big firms say they're prepared for the storm. Early last year JPMorgan started reaching out to troubled borrowers, setting up payment programs and making other adjustments to accounts. "We have seen higher credit-card losses," acknowledges JPMorgan spokeswoman Tanya M. Madison. "We are concerned about [it] but believe we are taking the right steps to help our customers and manage our risk."

But some banks and credit-card companies may be exacerbating their problems. To boost profits and get ahead of coming regulation, they're hiking interest rates. But that's making it harder for consumers to keep up. That'll only make tomorrow's pain worse. Innovest estimates that credit-card issuers will take a $41 billion hit from rotten debt this year and a $96 billion blow in 2009.

Those losses, in turn, will wend their way through the $365 billion market for securities backed by credit-card debt. As with mortgages, banks bundle groups of so-called credit-card receivables, essentially consumers' outstanding balances, and sell them to big investors such as hedge funds and pension funds . Big issuers offload roughly 70% of their credit-card debt.

Now it’s getting harder for banks to find buyers for that debt. Interest rates have been rising on credit-card securities, a sign that investor appetite is waning. To help entice buyers, credit-card companies are having to put up more money as collateral, a guarantee in case something goes wrong with the securities. Mortgage lenders, in sharp contrast, typically aren't asked to do this—at least not yet. With consumers soshaky, now isn't a good time to put more skin in the game.

"Costs will go up for issuers, "warns Dennis Moroney of the consultancy Tower Group. Sure, the credit-card market is just a fraction of the $11.9 trillion mortgage market. But sometimes the losses can be more painful. That's because most credit-card debt is unsecured, meaning consumers don't have to make down payments when opening up their accounts.

If they stop making monthly payments and the account goes bad, there are no underlying assets for credit-card companies to recoup. With mortgages, in contrast, some banks are protected both by down payments and by the ability to recover at least some of the money by selling the property.

Federal Debt Relief System is ready to defend and restore your family’s financial freedom.

Go to Federal Debt Relief System now.

Welcome To The New Socialism

2008-10-15T18:07:00.000-07:00

Federal Debt Relief System knows These are dark times. While you were sleeping the cockroaches were busy about their work, rummaging through the constitution, and putting the finishing touches on a scheme to assert absolute power over the nation's financial markets and the country's economic future.

Banking industry representative Henry Paulson has submitted legislation to congress that will finally end the pretense that Bush controls anything more than reading the lines from a 4' by 6' teleprompter situated just inches from his lifeless pupils.

Paulson is in charge now, he rose to power in a stealthily-executed banking scam in which he, and his coterie of dodgy friends, declared martial law on the US economy while elevating himself to supreme leader.

Section 8 of the proposed legislation says it all:

"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Congress, of course, is more than eager to abdicate whatever little authority they have left. They're infinitely grateful for their purely ceremonial role, the equivalent of Caligula's horse, albeit, with considerably less dignity. Has even one senator spoken out against this madness, which--according to informal internet polls--is resoundingly rejected by the voters?

Does it concern the members of congress at all, that the housing bust was brought on by the proliferation and sale of trillions of dollars of mortgage-banked garbage which were fraudulently represented as Triple A rated bonds by the very same people who now claim to need unprecedented and dictatorial powers to fix the problem?

Or are they more worried that the steady torrent of contributions which flows from Wall Street to congressional campaign coffers will be inconveniently disrupted if they fail to ratify this latest assault on democracy?

The House of Representatives is one big steaming dungheap that should be leveled and turned into an amusement park instead of a taxpayer-funded knocking shop. What a pathetic collection of cowards and scumbags.

Federal Debt Relief System is ready to defend and restore your family’s financial freedom.

Go to Federal Debt Relief System now.

More Power For Bush

2008-10-14T15:54:00.000-07:00

Federal Debt Relief System is at the forefront in the battle to restore America’s Constitution by arming millions with the sobering information and vital education it’s going to take to wake Americans up to take action to save our nation. Check this out.

"The Bush family network sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets. Through his plan, Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world's largest economy to a standstill. The bill would prevent courts from reviewing actions taken under its authority.

"He's asking for a huge amount of power,'' said Nouriel Roubini an economist at New York University. ``He's saying, `Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy."

The bankers conspiracy own this country, always have; only now they've decided to strip away the curtain and reveal the ghoulish visage of the puppet-master. It ain't pretty.

Paulson decided that the financial markets needed an emergency trillion dollar face-lift just weeks before his former business partners at G-Sax were dragged off to the chopping block. Was that the reason? Everyone on Wall Street knew that the bulls-eye had already been ripped from Lehman's bloody back and was about to be fastened on Goldman's. Now, it looks like they will escape their day of reckoning due to Paulson's eleventh-hour reprieve. Nice touch, eh?

The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.

Go to Federal Debt Relief System now.

Credit Cards and Household Debt

2008-10-13T12:33:00.000-07:00

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds. I urge anyone reading this to do more than just absorb these facts; open your mind and read between the lines and you will see the frame that holds this picture together.

· The credit card was first introduced in Brooklyn, New York in 1946.

· About 60 percent of active credit card accounts are not paid off monthly.

· Based on deposits; Cayman Islands is the 5th largest banking jurisdiction in the world.

· Credit issuing banks are the most profitable businesses in the world. Citibank profits outperform Microsoft every year.

· The privately owned Federal Reserve charges the American people 47 million dollars per hour on the paper currency it creates out of nothing!

· The best way to see how the banking system works is to imagine an inverted pyramid, ie with the tip on the ground and the large base at the top. At the bottom is a tiny amount of real money, originally represented by gold and silver coin, and above that in ever larger layers are the levels of credit lent out by the banks.

· A $1,000 charge on an average credit card will take almost 22 years to pay, and will cost more than $2,300 in interest ($3,300 total) -- if only 2 percent minimum payments are made.

· There are roughly 1.2 billion credit cards in use in the United States.

· Studies show the average consumer is exposed to more than 3,000 marketing messages every day. In the last decade, it's been estimated, solicitations jumped from 1.52 billion annually to 4.29 billion.

· Today roughly 24 percent of personal expenditures in this country are made with credit and debit cards.

· Average per household debt in the U.S., not counting mortgage debt, is about $14,500

· A typical credit card purchase ends up costing 112 percent more than if cash were used.

· Some 40 percent of American families annually spend more than they earn.

These facts are not mine and can be found online almost anywhere but the point is the picture it paints. If you realize that this thing is bigger than you and you’re ready to do more than work and worry about it; Federal Debt Relief System is ready to defend and restore your family’s financial freedom.

Go to Federal Debt Relief System now.

HUD Deception Says Fewer Homeless

2008-10-10T13:37:00.000-07:00

The Federal Debt Relief System recently asked; “At a time when Americans are dealing with rising food and fuel prices, slowing jobs and soaring home foreclosures, is it really possible that homelessness is on the decline? Perhaps, but it depends on your meaning of the word homeless.

The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.

According to a report given to Congress on Tuesday by the U.S. Department of Housing and Urban Development (HUD), overall homeless numbers, taken from a one-day national count in January, were down 12% from 2005 to 2007, to just under 672,000 people, most of whom were on the streets only temporarily. Chronic homelessness is down even more, almost 30% lower than in 2005, from 175,000 to fewer than 125,000.

There is a rather large asterisk on the new data, however, the result of an ongoing effort to more narrowly define who is actually considered homeless. This is the third annual national HUD count, and in previous years, some cities had been counting families who were living two families to an apartment, for example, or those living in RVs, as homeless. This year, they weren't. This count, say the report's authors, is the most successful to date in tallying only those who were actually in shelters or on the streets — the official HUD definition of a homeless person.

This has advocates like Michael Stoops, the executive director of the National Coalition for the Homeless, saying "It's kind of premature to say that there's less homeless people now because of all the great things that HUD and the Bush Administration are doing," he says. "Our grass-roots networks around the country see the rosy numbers as more of a government deception, being produced purely for political effect in an election year.

So why keep these vulnerable families out of the count? It's partially about the power of positive thinking. The number crunchers leading the federal fight believe that as long as Americans continue to perceive homelessness as an implacable problem, they'll never muster the will to help. But if the government can show that the numbers are actually relatively small — like the 125,000 chronic homeless they are now counting — then the public might just be up for tackling the issue.

Positive thinking is key to Housing First, which since 2000 has been the main innovation in President Bush's fight against homelessness. Basically, the idea is to identify the big users of government shelters and services and show voters that you can slowly herd them into permanent housing. With its emphasis on tangible gains and more rigorous data, it might as well be called No Transient Left Behind. And it has proven hugely popular with local politicians, like San Francisco mayor Gavin Newsom, who can boast about their measurable, if small, progress.

Dennis Culhane, the University of Pennsylvania professor who co-authored Tuesday's HUD report, says that Housing First is working. "What these data show," he told me, "is that when we make a targeted investment strategy focused on chronic homelessness, we can actually make measurable improvement."

Culhane says he's against expanding the HUD definition of homelessness. "There's a very large housing problem in this country," he says. "But shoehorning new people into the homeless category isn't going to make a hill of beans of difference. It's only going to dilute what we're doing." He points to the U.S. budget for homelessness, which is just $1.5 billion a year. That's barely enough to help fund the Housing First push; it's not going to bail out families caught up in the nations current foreclosure crisis.

Go to Federal Debt Relief System website now, before it’s too late.

Retirements on Hold

2008-10-09T18:05:00.000-07:00

This appeared yesterday at the Federal Debt Relief System website. I stopped checking my 401k three months ago and am afraid to look at in now. Does it make me feel better knowing that millions around the country are in shoes just like mine and worse? Does it make you feel better? The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.

The Dow Jones industrial average has lost one-third of its value in a year, 1,400 points in the past five trading days alone.

The stock market's prolonged tumble has wiped out about $2 trillion in retirement savings over 15 months, a blow that could force workers to stay on the job longer than planned, tighten their wallets and possibly further stall an economy reliant on consumer spending, Congress' top budget analyst said Tuesday.

For many Americans, pensions and 401(k) plans are their only form of savings. The erosion of these assets — about a 20 percent decline overall — is another setback when many consumers are grappling with higher gas and food prices, more credit-card debt, declining home values and less access to loans.

"Unlike Wall Street executives, American families don't have a golden parachute to fall back on," said Rep. George Miller, D-Calif., chairman of the House Committee on Education and Labor. "It's clear that retirement security may be one of the greatest casualties of America’s economic crash."

Public pensions also have suffered. The assets held by state and local governments' pension plans declined by more than $300 billion between the second quarter of 2007 and the second quarter of 2008, according to the Federal Reserve Bank. About 60 percent of public-pension funds are invested in stocks, 30 percent in domestic fixed-income securities, 5 percent in real estate, and the remaining 5 percent in other products.

Already, more workers are delaying retirement, a trend that analysts and economists expect to accelerate thanks to the state of the economy. The fraction of people age 55 and older who work full time grew from about 22 percent in 1990 to nearly 30 percent in 2007, according to the Bureau of Labor Statistics.

Miller, the California congressman, called the findings "very cataclysmic for middle-class families."

Go to Federal Debt Relief System website now, before it’s too late.

Tent Cities Spreading

2008-10-09T18:02:00.000-07:00

I’m running this piece from Federal Debt Relief System today because it show us just how little it takes to go from homeowner to homeless and a lot of us are facing this dilemma right now. Federal Debt Relief System is at the forefront in the battle to restore the Constitution by arming millions with the sobering information and vital education it’s going to take to wake Americans up to take action to save our nation.

A few tents cropped up hard by the railroad tracks, pitched by men left with nowhere to go once the emergency winter shelter closed for the summer.

Then others appeared -- people who had lost their jobs to the ailing economy, or newcomers who had moved to Reno for work and discovered no one was hiring.

Within weeks, more than 150 people were living in tents big and small, barely a foot apart in a patch of dirt slated to be a parking lot for a campus of shelters Reno is building for its homeless population. Like many other cities, Reno has found itself with a "tent city" -- an encampment of people who had nowhere else to go.

From Seattle to Athens, Georgia, and all across today’s declining American empire homeless advocacy groups and city agencies are reporting the most visible rise in homeless encampments in a generation.

Nearly 61 percent of local and state homeless coalitions say they've experienced a rise in homelessness since the foreclosure crisis began in 2007, according to a report by the National Coalition for the Homeless. The group says the problem has worsened since the report's release in April, with foreclosures mounting, gas and food prices rising and the job market tightening.

"It's clear that poverty and homelessness have increased," said Michael Stoops, acting executive director of the coalition. "The economy is in chaos, we're in an unofficial recession and Americans are worried, from the homeless to the middle class, about their future." Federal Debt Relief System is ready to defend and restore your family’s financial freedom.

Go to Federal Debt Relief System website now, before its too late.

5 Billion Credit Cards

2008-10-07T13:27:00.000-07:00

Many observers have expressed concern about a decline in underwriting standards as the industry strives to achieve continued growth. Credit card issuers sent over five billion direct mail solicitations during 2004, up 22 percent from 2003.

Pushing new cards and increased credit limits without evaluating whether the customer has a reasonable ability to pay violates basic principles of sound lending. For example, some people have credit card balances equal to or greater than their annual incomes.

Real and meaningful underwriting standards should be established to ensure that the customer has a reasonably forseeable ability to repay. While individuals have a responsibility to manage their finances wisely, lenders who offer credit without meaningful underwriting also bear responsibility for the resulting defaults. Federal Debt Relief System is a powerful tool on your side in the war against credit debt.

Go to fdrs.org to find out more and what you can do to restore America's Freedom!

Cost of Living Soars

2008-10-06T21:26:00.000-07:00

In the past two decades, the U.S. cost of living has climbed 88 percent while incomes for the bottom 60 percent of households have risen only 5 to 15 percent. Government policies should support efforts by families to meet the cost of living, so they are not forced to take on debt to cover basic living expenses.

The largest percentage of households using credit cards to pay essential living expenses were those with incomes of $20,000 to $50,000. In order to avoid excessive credit card debt, families must earn wages that will cover basic everyday expenses such as housing, food, and transportation.

A recent survey revealed that one-third of respondents who were without health insurance in the past three years attributed illness or other necessary medical expenses to their current level of credit card debt, and almost half of these households were using credit cards to pay for basic living expenses.

Forty-five million people lack health insurance in the United States—the majority of them employed in full-time jobs. While families struggle to cope with medical emergencies or chronic conditions, the increasing costs of health care create an additional burden on their financial livelihood.

Improved access to affordable health care would help families significantly improve their financial position. Federal Debt Relief System can help you and your family.

Go to fdrs.org for more information

Martial Law?

2008-10-02T10:43:00.000-07:00

George Bush has created many new executive orders during his term, enabling him to introduce Martial Law for a variety of reasons: A terrorist attack, civil disturbances, Flu outbreaks, weather related disasters and more. It is not impossible that he could declare the current financial crisis as a "National Disaster".

Did anyone else see this video appearing on YouTube? Rep. Michael Burgess (R-Texas) stated "I understand we are under Martial Law, as declared by the speaker last night"

This might be something that you would expect the speaker (Nanci Pelosi) to declare and the Bush administration to desire, Mr. Burgess was hopefully using the term "Martial Law" in a figurative manner, in order to express his disgust (and that of many others) at the way in which this sham"bailout" deal is being conducted.

However, the real problem lies with the Federal Reserve and the power they have to control the United States (and many other institutions around the world), including the political system of course.

The Federal Reserve is nothing more than a private bank (with no reserves), run by people who used to be called "money changers" in bygone days. They may have a fancy title today, but their motives have not changed. Total control of the global supply of money.

Having the ability to control a country´s money supply enables them to dictate the destiny of others, by creating a false crisis in order to buy up failing companies at a fraction of their real value, which later become very profitable when they decide to increase the money flow again.

These "money changers" have been around for more than 2,000 years, manipulating world events and money supplies, in order to satisfy their greed and need for power.

Martial Law is still a possibility, but the "money changer´s law" is the root of the problem and that is what needs our most urgent attention. But does anyone have the courage to take them on?
The only organized outfit I've seen that even comes close to honestly and intelligently educating and rescuing Americans from the clutches on these "money changers" is, Federal Debt Relief System.

Their mantra is "Restore America's Freedom" and they know that freedom begins with straight forward education on the most important thing most of us know nothing about; money; where it comes from, how it works for the rich and powerful and against the rest of us, and most importantly, what ordinary citizens can do to free themselves, their families and neighbors, everyone, from this plague of tyranny.

I urge anyone looking at this to go to fdrs.org to prove me wrong if you want, but if your eyes and your brain work, you will agree something has to be done by everyday Americans before the country is completely lost.

Is U.S. Bankrupt?

2008-09-30T17:30:00.000-07:00

"The United States are bankrupt. They are considered such in every part of the world. They borrow money, and promise to pay. They have it not in their power, and they are obliged to ask of the people, whom they owe, to lend them money to pay the very interest."

Founders Francis Corbin and Thomas Johnston were aghast to think of having to borrow money to pay interest on money previously borrowed! Sound familiar?

Corbin: "The consequences of deranged finances ... what confusions, disorders, and even revolutions, have resulted from this cause, in many nations! ...

"The debts due by the United States and how much is due to foreign nations! No part of the principal is paid to those nations; nor has even the interest been paid as honorably and punctually as it ought. Nay, we were obliged to borrow money last year to pay the interest. What! borrow money to discharge the interest of what was borrowed, and continually augment the amount of the public debt! Such a plan would destroy the richest country on earth."

This was the case in the 19th Century, I wonder how much we've learned since then. Maybe we should ask the bums in Washington.

Learn more at fdrs.org

Economic Collapse from Huge Debt

2008-09-29T15:22:00.000-07:00

Founders Francis Corbin and Thomas Johnston were aghast to think of having to borrow money to pay interest on money previously borrowed! Sound familiar?

Corbin: "The consequences of deranged finances ... what confusions, disorders, and even revolutions, have resulted from this cause, in many nations! ...

Learn more at fdrs.org

Universal Default Clause? Universal Ripoff!

2008-09-26T13:24:00.000-07:00

Known in the industry as “universal default” clauses, these revenue-generating policies amount to levying a fine before there’s an offense. Card issuers now routinely check their cardholders’ credit reports and may raise the interest rate on the card if there has been a change in the consumer’s score, or if there is a late payment reported to a different creditor. Interest rate increases also can be triggered when a cardholder inquires about a car loan or mortgage, gets a new credit card, or bounces a check.

This higher penalty rate also may be triggered by a cardholder exceeding the credit limit on the account. These late payment penalties—high fees and interest rate hikes—may affect millions of cardholders of all credit risk levels, because grace periods have shrunk, giving customers less turnaround time.

Nearly a quarter of households reported paying a charge for a late payment at least one or two times in the past year. And they are not alone—credit card issuers collected more than $16 billion in penalty fees in 2005.

Until 1996, a late payment on a credit card account typically resulted in a fee of $10 to $15, but now such late fees more commonly range from $29 to $39. Of even greater consequence to consumers is the cascade of costs that late payments now trigger: after just one late payment, most major issuers will raise the interest rate on the account to a high “penalty rate” or “default rate” that currently averages over 25 percent.

The new, higher default rates may be triggered under the contract without advance notice to the consumer. To create an even greater “sticker shock,” they are applied retroactively to the entire outstanding balance, rather than only to future charges.

Another increasingly common, if controversial, practice among card issuers is to extend their right to trigger the penalty rate for reasons unrelated to their own experience with the cardholder on the account.

Decades of Debt

2008-09-25T17:17:00.001-07:00

Over the past three decades, America’s savings rate has steadily declined, and recently fell below zero. Individuals who can’t save often are caught in situations where they must use their credit cards in place of funds traditionally set aside for “rainy days.”

Household savings serve two important functions: They help families to weather temporary income losses or unexpected expenses, and they help families plan for the future. Currently over a quarter of households in the U.S. are asset-poor—lacking the net worth needed to survive for three months at the poverty line.

This was demonstrated in our survey, where we found that households were more likely to use their savings to deal with unexpected expenses but used credit cards as a secondary source if savings are not available. Additionally, over half (57 percent) of households who reported using credit cards for basic living expenses had less than $1,000 in non-retirement savings.

While the federal government currently dedicates $335 billion each year to promote Individual asset-building, these benefits disproportionately help those who already have assets—less than five percent of benefits go to the bottom 60 percent of taxpayers. We encourage policymakers to increase asset- and savings-building support for working families.

Households with larger savings were likely to use their savings to pay off their credit card debt—something households with lower savings often could not do.

Go to fdrs.org for more info.

Home Equity as Safety Net?

2008-09-24T15:37:00.001-07:00

Why do some low- and middle-income homeowners continue to carry large credit card balances even after they have used equity in their homes to pay off credit card debt? Was it over-consumption?

No. The reasons were the same ones discussed earlier: bad luck and lack of other traditional safety nets such as savings and unemployment benefits.

Homeowners who use proceeds from a mortgage refinance to pay down credit card debt are more likely than other homeowners to have incurred subsequent credit card debt because of home repairs, car repairs basic living expenses, or a layoff.

For low- and middle-income homeowners who use credit cards and home equity as their primary safety net, the debt cycle continues.

Regardless of the uncertain benefits in trading home equity for credit card debt, the reality is that using home equity does not in fact decrease credit card debt levels for low- and middle-income households.

20 percent of homeowners who had paid off some credit card debt with a mortgage refinance in the last three years had added $12,000 to their mortgage debt and at the time of our survey still had average credit card debt of over $14,000.

As a result, they were carrying 18 percent more debt than homeowners in our survey who had refinanced a mortgage but not paid down credit card debt—even though their incomes were almost identical. Adding to secured debt and incurring more credit card debt is a recipe for financial disaster—and one faced by millions of Americans. Federal Debt Relief System wants to help you.

Go to FDRS.org now to learn more and find out how you can free yourself from eternal debt slavery!

Saving Lives

2008-09-23T15:18:00.001-07:00

Federal Debt Relief System saved my life. When I first looked into them I will admit I was somewhat skeptical. At the same time I was sinking in debt and really needed to do something and decided to take an open mind and check them out. Then I talked to one of their debt specialist and he put it to me straight-told me what they could do for me and what they couldn’t-the benefits and the pitfalls. They did work for me and I can only sing praises for such an incredible patriotic organization! I know my experience with FDRS has been very positive.

I always assumed there was some corruption hovering over our government and America's Banking system. Now I can look on their website, or watch documentaries like "Freedom to Fascism." It's very empowering to have the proof in front of you; down to every law, or absence thereof. It's also motivating to know that Federal Debt Relief System is fighting to remove this corruption. The burden of debt is being removed from people's lives!

Credit Reform Needed Now

2008-09-22T17:43:00.000-07:00

Credit card reforms are needed to stem the rise of credit card debt, particularly among low- and middle-income families, a troubling indicator of the current and future well-being of average, hard-working Americans.

Families are using credit cards to cope with rising costs, stagnant incomes and the lack of alternative safety nets. The findings of this survey indicate that for many low- and middle-income households, credit cards are the primary safety net available to weather job losses and deal with unexpected expenses.

In borrowing to make ends meet, these households are further draining their resources as they struggle to pay down their credit card debt, often inundated with high interest rates, excessive penalty fees and capricious contracts terms. Federal Debt Relief System is ready to help you.

Go to fdrs.org to find out more and what you can do to restore America’s Freedom!