Foreclosure activity reaches

record Mecklenburg's filings

rise 80 percent in August as

job losses put more borrowers

at risk of losing their homes.

By Stella M. Hopkins

Posted: Friday, Sep. 04, 2009

N.C. regulators are looking for new ways to help more homeowners as the foreclosure crisis spreads, hitting another unwelcome record last month.
Statewide, foreclosure filings rose 43 percent in August, compared with a year ago, according to Observer analysis of court data compiled by the state. Filings, which mark the start of foreclosures, rose above 6,500 for the first time last month.
Mecklenburg County saw an 80 percent increase, to 1,316, the second highest number on record for the county.
The foreclosure problem that tipped the nation into recession began with subprime loans, often made to home buyers with sketchy credit and with payments they couldn't afford. The recession has pushed N.C. unemployment to double-digit levels, putting more people at risk for falling behind on payments. In addition, home values have fallen, making it harder for people to sell houses they can no longer afford.
As a result, more prime borrowers – people who had good credit – are facing the threat of foreclosure.
“We've got to do more to reach those people,” said Mark Pearce, N.C. deputy commissioner of banks.
Pearce oversees a program that helps connect homeowners facing foreclosure with counselors. In its first 10 months, the program has reached 5,632 people statewide and linked them with foreclosure-prevention counselors. So far, that's helped 1,790, or more than 30 percent, avoid foreclosure, Pearce said. In Mecklenburg, 218 home owners contacted have avoided foreclosure. ( Learn more at )

Capmark Distress May Signal Bank

Failures Topping 100
By Linda Shen

Sept. 4 (Bloomberg) -- Capmark Financial Group Inc.’s possible collapse may signal a new wave of real estate losses for banks -- this one tied to business property -- that could push the year’s tally of failures past 100.
Capmark, ranked among the largest U.S. commercial real estate lenders by Moody’s Investors Service, posted a $1.6 billion quarterly loss on Sept. 2 and said it might go bankrupt. The Horsham, Pennsylvania-based company struggled as the default rate on commercial mortgages held by U.S. banks more than doubled to the highest since 1994.
“We haven’t really experienced the full extent of the distress,” said Sam Chandan, chief economist at property research firm Real Estate Econometrics LLC in New York. “When you look at community banks and some smaller regional banks, they tend to have a far greater concentration in terms of their exposure to commercial real estate.”
Lenders are still reeling from residential real estate losses that helped push U.S. bank failures to 84 so far this year. The tally included Colonial BancGroup Inc., the sixth- largest failure in the history of the Federal Deposit Insurance Corp. The total may rise later today because the agency customarily announces the week’s shutdowns on Fridays. (learn more at )

Post-Crash Dynamics
John P. Hussman, Ph.D.

Fund News: As I've often had the occasion to announce since the inception of the Hussman Funds, I'm pleased to report that on August 5th, the expense ratio for the Hussman Strategic Growth Fund (HSGFX) was lowered again, from 1.10% to 1.04%. The expense ratio for the Hussman Strategic Total Return Fund (HSTRX) was lowered from 0.75% to 0.67%. These cuts reflect active reductions in investment advisory and fund administration fees, the addition of new fee breakpoints (approved at the July meeting of the Hussman Funds Board of Trustees), and general growth in Fund assets. Fund expense ratios are affected by a number of factors including fee breakpoints and the level of Fund assets, and may increase or decrease over time.
---
The U.S. economy lost a quarter of a million jobs in July. Meanwhile, over 400,000 workers abandoned the labor force (and are therefore no longer counted among the unemployed), which prompted a slight decline in the unemployment rate despite the job losses. In the context of an economy still strained by high levels of consumer debt and still record delinquency and foreclosure rates, labor market conditions are still troublesome. Still, the pace of job losses and new unemployment claims has clearly softened from the pace we observed early in the year.
If we knew that this was a standard economic downturn, we might conclude that the recent improvements are durable. However, nothing convinces us that this is a standard economic downturn. As for market action, the major indices have generally been strong, as has breadth (as measured by advances versus declines), but the 妬nvestor sponsorship evident from trading volume has been uncharacteristically dismal compared with initial advances of past bull markets. So here too, we have very strong concerns that the recent advance may not be as durable as investors appear to believe.
All of that said, we aren't inclined to fight even what we view as errant analysis, and the Strategic Growth Fund has about 1% of assets allocated to near-the-money index call options about enough to gradually close down about 40% of our hedge in the event that the market advances markedly higher from here, but without putting us at risk of much loss in the event of failure. With investors now anticipating and pricing in a sustained economic recovery, as well as a spectacular earnings rebound (see Bill Hester's piece Earnings Growth Forecasts May Require a Robust Economic Recovery additional link below), a lot of things will have to go right from here in order to sustain higher prices than we currently observe. ( learn more at )

Blackwater Tapped Foreigners on Secret CIA

Program Blackwater-CIA program to hunt

terrorists used foreign recruits on surveillance

missions

By ADAM GOLDMAN and PAMELA HESS

Associated Press WritersWASHINGTON

August 30, 2009 (AP)

When the CIA revived a plan to kill or capture terrorists in 2004, the agency turned to the well-connected security company then known as Blackwater USA. With Blackwater's lucrative government security work and contacts arrayed in hot spots around the world, company officials offered the services of foreigners supposedly skilled at tracking terrorists in lawless regions and countries where the CIA had no working relationships with the government.
Blackwater told the CIA that it "could put people on the ground to provide the surveillance and support — all of the things you need to conduct an operation," a former senior CIA official familiar with the secret program told The Associated Press.
But the CIA's use of the private contractor as part of its now-abandoned plan to dispatch death squads skirted concerns now re-emerging with recent disclosures about Blackwater's role.
The former senior CIA official said he had doubts during his tenure about whether Blackwater's foreign recruits had mastered the necessary skills to pull off such a high-stakes operation. Blackwater's later hiring of several senior CIA officials who were involved in or aware of the secret program, including one of the men who ran the operation, showed the blurred lines of using a private contractor for such a highly classified and dangerous project.
While Blackwater won the government's confidence by handling security and training operations in Iraq and Afghanistan, the 2004 decision by CIA officials to entrust the North Carolina-based company with such a sensitive overseas operation struck some former agency officials as highly unusual.
"The question remains: Why do we need Blackwater?" said Charles Faddis, a former department chief at the CIA's Counterterrorism Center who retired in 2008 and was not involved in the secret program. "I remain mystified. This is quintessential CIA work. You wonder what it means that the CIA has to rely on Blackwater? Why are we still funding the CIA?" ( learn more at )

The Real Grand Chessboard

and the Profiteers of War
by Prof. Peter Dale Scott

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together." Dwight David Eisenhower, "Military-Industrial Complex Speech," 1961, [1]
"My observation is that the impact of national elections on the business climate for SAIC has been minimal. The emphasis on where federal spending occurs usually shifts, but total federal spending never decreases. SAIC has always continued to grow despite changes in the political leadership in Washington." Former SAIC manager, quoted in Donald L. Barlett and James B. Steele, "Washington's $8 Billion Shadow." Vanity Fair, March 2007[2]
"We make American military doctrine" Ed Soyster, MPRI[3]
The Myth of the Grand Chessboard: Geopolitics and Imperial Folie de Grandeur
In the Road to 9/11 I summarized the dialectic of open societies: how from their energy they expand, leading to a higher level of more secretive corporations and agencies, which eventually weaken the home country through needless and crushing wars.[4] I am not alone in seeing America in the final stages of this process, which since the Renaissance has brought down Spain, the Netherlands, and Great Britain.
Much of what I wrote summarized the thoughts of writers before me like Paul Kennedy and Kevin Phillips. But there is one aspect of the curse of expansion that I underemphasized: how dominance creates megalomanic illusions of insuperable control, and how this illusion in turn is crystallized into a prevailing ideology of dominance. I am surprised that so few, heretofore, have pointed out that from a public point of view these ideologies are delusional, indeed perhaps insane. In this essay I will argue however that what looks demented from a public viewpoint makes sense from the narrower perspective of those profiting from the provision of private entrepreneurial violence and intelligence. ( learn more at )

The Economy is in Deep, Deep Trouble...

Question for Bernanke:

"Do you have the cojones to raise rates?"
by Mike Whitney

Booyah. It's morning in America. The jobless numbers are stabilizing, the stock market is sizzling, quarterly earnings came in better than expected, traders have turned bullish, housing is showing signs of life, and clunker-swaps have given Detroit a well-needed boost of adrenalin. Even Cassandra economists --like Paul Krugman and Nouriel Roubini--have been uncharacteristically optimistic. Is is true; did we avoid a Second Great Depression? Is the worst really behind us?
Maybe. But there is only one way to find out for sure. Raise rates.
Bernanke should welcome the opportunity to show everyone how he's pulled the world's biggest economy back from the brink of disaster. All he needs to do is stop giving away free money, shut down a few of his so-called lending facilities, and stop manipulating interest rates by purchasing mortgage-backed securities (MBS) from Fannie and Freddie. How hard is that? The S&P 500 has skyrocketed 48 percent since March 9. What's Bernanke waiting for; a 75 percent increase; a 100 percent increase??? How high do stocks have to go to convince Bernanke that the economy can stand on its own two feet without the torrent of cheap liquidity issuing from the Fed?
Bernanke can prove to his critics that the US economy doesn't need the Fed's monetization programs and price fixing; that it doesn't need the liquidity injections and the buying up of junk mortgages. ($80 billion last month alone) After all, as Bernanke opines, "The fundamentals of our economy are strong!"
Right. Now prove it.
All Bernanke has to do is boost rates by a point or two and demonstrate that he's willing to mop up some of the $13 trillion he's pumped into the financial markets. With just one announcement, the Fed chair could show our biggest creditor--China--that he's serious about defending the dollar and the trillion dollars of US Treasuries China purchased believing that the US was a responsible trading partner who would never write checks on an account that was overdrawn by $12 trillion. (The National Debt)
So, go ahead, Ben. Raise rates, shut down the printing presses, roll up the corporate welfare programs. Be a He-man. Make your critics eat their words. This is from Bloomberg News 8-12-09: ( learn more at )