From The Ramparts

Ominous Signs

Ominous Signs

“CHICAGO: Pulte Homes, Beazer Homes USA and Ryland Group have reported quarterly losses as the deteriorating U.S. housing market forced them to write down the value of property and abandon land purchases. Beazer and Ryland withdrew their earnings forecasts for 2007 and Pulte declined to provide an outlook for the rest of the year. The Beazer chief executive, Ian McCarthy, said the market was "extremely challenging" and he did not see any signs of a housing recovery. Pulte, Beazer and Ryland had a combined $300 million in costs for land and options on parcels they no longer need. Each posted a decline in new home orders. U.S. home builders are in their second year of a slump as tightening credit standards and a glut of unsold homes reduces potential buyers and prompts some to wait for prices to fall further before making offers.Pulte, one of the largest U.S. home builders by revenue, reported a first-quarter net loss of $85.7 million, compared with a profit of $262.6 million a year earlier. Revenue fell 37 percent to $1.87 billion, the company said late Wednesday. Ryland, the biggest U.S. home builder for first-time buyers, said Wednesday after the close of regular trading that its net loss in the three months ended March 31 was $24.4 million, compared with a profit of $90 million a year earlier. Revenue fell 34 percent to $706.4 million, the company said. Beazer's net loss for the three months ended March 31 was $43.1 million, compared with net income of $104.4 million a year earlier, the company said Thursday. Revenue slid 35 percent to $826.3 million.” http://www.iht.com/articles/2007/04/26/news/bxhomes.php

Things are really getting ugly when the three largest home builders in the US each reported losses during the first quarter of 2007. Many of us are just discovering the implosion of the Sub prime mortgage market and the record home foreclosures it has sparked. The mainstream corporate media as usual, is not telling the whole story. They must remain loyal to their class interests and treat the public like mushrooms, kept in the dark feed a steady diet of manure. The truth of the matter is the US housing industry is headed for the bottom. The sub-prime scandal is just the tip of the iceberg. Keep in mind mortgage brokers in concert with banks and lending institutions hyped exotic mortgages to folks they knew had poor credit histories who were especially vulnerable to the push of “home ownership” and the “AmeriKKKan dream” the Bu$h administration, was touting to low income Blacks, Latinos and fixed income elderly. These particular demographics were deliberately targeted for the shady loans by brokers whose fees were higher when they steered borrowers to sub-prime lenders. (It’s all about he Benjamins) This was not by accident or coincidence. It’s all part and parcel of the way they (meaning the US central bank Wall Street their cronies) planned to “boost” the economy by printing more worthless paper money and opening the credit spigots to help fund the largest housing expansion in the nation’s history. The down side of all this is the massive infusion of worthless money and easy credit are now taking a heavy toll on the US economy. And there is nothing the Fed can do to reverse the trend. It is another example of the predatory nature of this system!
Keep in mind so far fifty companies that specialized in loans to folks with poor credit scores have gone belly up and several of these companies are subsidiaries of major lending, banking and/or financial institutions. Cracks are now forming in the Alt A level mortgages, loans given to folks with decent credit ratings and payment histories. In their cases they are getting behind because the appreciation on their house has halted, so their equity in the house has leveled off, their wages are stagnant and they can no longer use the house as an ATM machine to borrow or refinance to keep up with the Jones and their bills! “Borrowers who take out Alt-A mortgages are considered less risky than subprime borrowers because of their higher credit scores. But as the housing market cooled and loan volume declined, some lenders lowered their standards for Alt-As. Now a rising number of borrowers who took out these loans are running into trouble. Data from UBS AG show that the default rate for Alt-A mortgages has doubled in the past 14 months. ‘The credit deterioration has been almost parallel to what's been happening in the subprime market,’ says UBS mortgage analyst David Liu. The UBS report contrasts with testimony Federal Reserve Board Chairman Ben Bernanke gave to Congress yesterday. ‘Our assessment is that there's not much indication that subprime issues have spread into the broader mortgage market,’ Mr. Bernanke said.” Mortgage Defaults Start to Spread New Data Show That Nontraditional Loans Are Beginning To Haunt Borrowers With Midlevel Credit; Prime Still Fine By RUTH SIMON and JAMES R. HAGERTY http://online.wsj.com/article/SB117271866822722900.html?
One of the most curious features of these Alt A loans is the borrowers don’t have to document their income or the ability to repay the loan?! This is a sure fire opening for abuse. And that is what is happening. Ben Bernanke is the head of the US central bank that sets money supply and credit policy. He knows better but is not telling the truth to avoid a panic. The US dollar is falling rapidly, it’s losing its status and the US trade deficits continue to spiral out of control so the last thing the head of the central bank wants to do is tell folks the mid level mortgage industry is in trouble. Stop and take a look at the signs, the US economy is in big trouble. The US auto industry is about to go belly up unless it restructures and refashions the way it does business which means massive layoffs or buyouts for US workers and more outsourcing of jobs overseas. The US housing industry is at a standstill and the impact will reverberate throughout the economy. On the government front, the Bu$h administration is spending and borrowing like a drunken sailor. All of these issues will impact the quality of life for the average AmeriKKKan.
Gasoline prices are souring, the corporations are making huge profits but wages are stagnant and the standard of living is eroding for most AmeriKKKans. AmeriKKKans have a minus savings index and are in debt up to their armpits. These are troubling times and the ruling elites have no intention of righting the ship. “Consider the figures for 2005: the top hundredth of 1 percent, about 10,000 households, averaged $25.7 million in income, three times the money in 1928. This amounted to 882 times more than the bottom 90 percent average — an economic inequality gap in 2005 that’s almost identical to the 891-to-1 divide in 1928! Welcome to the modern billionaire world of the rich getting much, much richer, while everyone else stagnates. Of course, the top 1 percent of households are also extremely rich – some 1 million families or 3 million people – relatively to the bottom, majority 90 percent.
Married couples with children now account for fewer than one-quarter of American households – the lowest in history. It is the Upper Class that now emphasizes marriage with children. Married households with children are twice as likely to be in the top 20 percent of income. Some 13 percent of the increase in the nation’s income inequality since the 1970s results from the marriage of high income earners. Marriage is now for the rich. What does that say about American democracy and culture? That the Upper Class is like an inbred aristocracy. Children of the rich will marry other children of the rich.
Another critically important change in the real (ugly) America is the bursting of the traditional fantasy-belief that people can educate themselves into wealth. Is getting more Americans educated and trained all we need to do to attack economic inequality? If so, then inequality should fall over periods of time when people become more educated. Right? Americans have become more educated over the last three decades. In 1970, only three out of four Americans aged 25-29 had completed high school. In 2004, nearly nine of ten Americans that age had a high school education. In 1970, only 16 percent of Americans in their late 20s held a four-year college degree. By 2004, that had nearly doubled to 29 percent. Something else has nearly doubled since 1970: the share of national income that goes to America’s richest 1 percent.That means that the share going to average Americans has dropped. Lower Class Americans in the bottom 90 percent of the nation’s income distribution took home 67 percent of U.S. income in 1970, but only 53 percent in 2004, despite their greater education and productivity. American reality: We’ve become more unequal at the same time we’ve become more educated. Why? Education doesn’t determine how income and wealth – or macro domestic and global prosperity – are distributed in our unfair system. The Upper Class ensures that increasing fractions of income and wealth go to them.” US Government Policy Separates Americans into two Classes: the wealthy Upper Class and the Lower Class. http://dissidentnews.wordpress.com/2007/04
This is not pretty, in fact it is down right ugly! Keep in mind, it will not get any better on its own. The ruling elites have a vested interest in keeping things the way they are. Don’t say you weren’t warned. The ominous signs will continue through 2007 and beyond.

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posted by Junious Ricardo Stanton @ 1:07 PM