We have 2 current wars (where we are dramatically draining our resources), an unemployment rate in the 10% range (after the government manipulates the reports), and a  record of bank  foreclosures. For goodness sakes, we have tent cities popping up everywhere.  We literally spent trillion of tax dollars bailing out banks, car companies, and wall street and are worse for it.  I am not one of those sheeple who buy into the argument that it would be worse if we didn’t spend the money because that is a load of crap.

Everyone likes to compare by percentages, but if you look at the raw numbers of the unemployed people, you can see how massive our current unemployment is in the big picture.    Unofficially, we actually have over 30 million people unemployed. Compare that to the raw numbers from the Great Depression and you will realize how bad it really is right now.

Because our population has grown so much, more unemployed people now will tax our resources exponentially more.  This is the first time now where people are running out of unemployment benefits before they even find jobs.

Now we even have a pro-Obama economist becoming negative.  I have watched Paul Krugman on TV  and he always seemed to be selling whatever Obama did as the right course of action.  I thought he was and is still wrong about the deficit spending.  He wants so spend even more and believes that is the solution to our economic woes.  I think he is finally opening his eyes because his latest op-ed contradicts what I heard him previously state.

NY Times:

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.

But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.

In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.

One reason why I like her views is that she explains how she gets to her conclusions.  She isn’t the mainstream media trying to cheer lead the economy into a better place because a report is not as bad as expected even though the numbers in general suck.

Meredith Whitney double dip housing video

The main reasons why these banks are shutting down is because of their delinquency rates.  There are over 15 million people unemployed which means they can not pay their bills. Some of these people have been unemployed for almost 2 years.  What the heck happened to all that taxpayer bailout money to bail out the banks? Where did that money go?  Where did all that stimulus money go?  Where are the 4 million jobs the Obama administration promised would create or save?  Our government is failing the American people. Fire them all by voting them all out.

Businessweek:

The FDIC has now closed 86 banks this year and is on pace to exceed last year’s total of 140, which was the most bank closings since 1992 as lenders across the country buckle under the weight of soured real-estate loans. The failures will drain $60 billion over the next three-and-a-half years from the FDIC’s fund, the agency said June 22. The fund dipped into deficit in the third quarter.

The Peninsula acquisition is the third this year for Bond Street, a Naples, Florida-based investment firm that was the first to use a regulatory shelf charter, which gave it advance approval to purchase failed lenders. Bond Street bought two banks in January.

Premier American

Premier American picked up $580.1 million in deposits, and added 13 branches to its existing network of 15 offices. The FDIC shared losses on $437.6 million of the failed bank’s assets.

Regulators also closed First National Bank of Savannah, Georgia, and sold its deposits and some of the assets to Savannah Bank, the FDIC said. The lender paid the agency a 0.11 percent premium to acquire $231.9 million in deposits.

High Desert State Bank of Albuquerque, New Mexico, was also closed by regulators and sold to Artesia, New Mexico-based First American Bank.

There were 775 banks with $431 billion in assets on the FDIC’s confidential list of problem lenders at the end of the first quarter, an increase from 702 banks with $402.8 billion at the end of last year, the agency said in its quarterly banking report.

I blogged about this in my Jingle Mail post awhile back and still hold the same belief.  Take care of your family first and put your pride aside.

Wall Street Journal:
If you are reluctant to give up on “your” home, realize that it isn’t “yours.” If you are in negative equity, it’s the bank’s home. You’re just renting it. And right now you may be paying way above market rates. You need to be ruthless about your cash flow.

Are you worried about the legal consequences of walking away? Certainly, you should check with a lawyer before doing anything, but the consequences will probably be more limited than you think.

In “non-recourse” states, the mortgage lender may have no right to come after you for any shortfall. They may have no option but to take the home, sell it and eat the loss. According to a survey last year by the Federal Reserve Bank of Richmond, such states include negative-equity hot spots California and Arizona. Even in “recourse” states, lenders may have limited ability to come after you. Often they’d have to jump a lot of legal hurdles, and it’s just not worth it for them. They’re swamped with cases anyway.

“In my experience, right now they’re not really going after anyone,” says Richard Nemeth, a bankruptcy attorney in Cleveland. “They just don’t have the resources.”

If you’ve taken smart steps to protect your money, you may be safer still. For example, money held in a 401(k), Individual Retirement Account or pension plan is sheltered from creditors.

Sure, a strategic foreclosure may hurt your credit score. But if you’re in financial difficulties, it’s probably already suffered. And your credit score is not the only thing in life that matters.

Still, when it comes to the idea of walking away from debts, many people are held back by a sense of morality. They feel it’s wrong to abandon their obligations. They don’t want to be a deadbeat.

Your instincts, while honorable, are leading you astray.

The economy is fundamentally amoral.

Sometimes I think middle-class Americans are the only people who haven’t worked this out yet. They’re operating with a gallant but completely out-of-date plan of attack—like an old-fashioned cavalry with plumed hats and shining swords charging against machine guns.

Do you think your lenders would be shy about squeezing you for an extra nickel if they thought they could get away with it?

They knew what they were doing when they wrote your loan. Many were guilty of malpractice, but they pocketed good money and they’ve gotten away with it. And if they thought your loan was “risk free,” how come they were charging you so much more than the interest on Treasury bonds?

If you’re only a small amount underwater on your mortgage, it’s probably the case that you’re going to be better off staying put. But if you are deeply underwater, it’s a different matter.

Whether we like it or not, walking away from debts is as American as apple pie. Companies file for bankruptcy all the time, and their lenders eat the losses. Executives and investors pocketed millions from the likes of Washington Mutual, Lehman Brothers and Bear Stearns when the going was good. They didn’t have to give back one cent of that money when the companies went into bankruptcy.

Limited liability, after all, is one of the main reasons every business from your local dry-cleaner to a major multinational gets incorporated in the first place. They’re not shy about protecting themselves if things go wrong. You shouldn’t be either.

The government has spent billions of dollars to supposedly get this economy going and get unemployment under control, but they failed to both ends. I don’t buy the reports that the economy is better or unemployment is dropping when they take actions to manipulate and distort the numbers by simply not counting people that should be included.

Everyday that I step out, I see more homeless people out on the streets.  We have spent over a trillion dollars on supposedly stimulating the economy and creating jobs, yet I don’t see any of that productivity on main street or the real world where average people live.

NY Times:

Warm, outgoing and prone to the positive, Ms. Eisen has worked much of her life. Now, she is one of 6.3 million Americans who have been unemployed for six months or longer, the largest number since the government began keeping track in 1948. That is more than double the toll in the next-worst period, in the early 1980s.

Men have suffered the largest numbers of job losses in this recession. But Ms. Eisen has the unfortunate distinction of being among a group — women from 45 to 64 years of age — whose long-term unemployment rate has grown rapidly.

In 1983, after a deep recession, women in that range made up only 7 percent of those who had been out of work for six months or longer, according to the Labor Department. Last year, they made up 14 percent.

Twice, Ms. Eisen exhausted her unemployment benefits before her check was restored by a federal extension. Last week, her check ran out again. She and her husband now settle their bills with only his $1,595 monthly disability check. The rent on their apartment is $1,380.

“We’re looking at the very real possibility of being homeless,” she said.

Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces — some embedded in the modern-day economy, others unique to this wrenching recession — might make it especially difficult for those out of work to find their way back to their middle-class lives.

Labor experts say the economy needs 100,000 new jobs a month just to absorb entrants to the labor force. With more than 15 million people officially jobless, even a vigorous recovery is likely to leave an enormous number out of work for years.

In the article below we see Morgan Stanley, who is not in default or delinquent on its loans, simply just giving the buildings back to the lender because it improves its bottom line.  Too many people do the opposite of what this company does by maxing out their credit cards, draining their retirement funds, and selling all their possessions to save a declining asset that eventually gets foreclosed on.  Would we have less homeless people if they simply recognized that they are in a losing proposition early on and cut their losses immediately by giving back the collateral to the lender?

Wall Street Journal:

So we’ve discussed the ethics of individual borrowers walking away from their mortgages. (Some say we’ve over-discussed it.) If it’s immoral, as some would say, for a borrower to walk away their mortgage, is it any different for a bank?

Morgan Stanley is doing just that. News reports on Thursday said the bank plans to give back five San Francisco office buildings to its lender–just two years after buying them at the top of the market.

“This isn’t a default or foreclosure situation,” spokeswoman Alyson Barnes told Bloomberg News. “We are going to give them the properties to get out of the loan obligation.”

Sound familiar?

Morgan Stanley bought the buildings, along with five others, in San Francisco’s financial district as part of a $2.5 billion purchase from Blackstone Group in May 2007. The buildings were formerly owned by billionaire investor Sam Zell’s Equity Office Properties and acquired by Blackstone in its $39 billion buyout of the real estate firm earlier that year, Bloomberg reports. One analyst estimates that the buildings are now worth half of what Morgan Stanley paid.

The buildings Morgan Stanley is giving up are One Post, 201 California St., Foundry Square I, 60 Spear St. and 188 Embarcadero. The bank will continue to own the five other office buildings it acquired in the deal.

Some proponents of strategic default argue that since the lender gets the collateral back, walking away is simply the termination of a business arrangement between consenting adults. Certainly, it seems as though that’s what’s happening here.

Calculated Risk hastens to point out that Morgan Stanley is current on the loan–thus this is essentially a “strategic default.” If banks can walk away from commercial buildings, does that weaken the social pressure on homeowners to stay in their home when they’re underwater on their mortgages?

The 2 stimulus packages, the massive wall street bailouts, the cash for clunkers program where we spent trillions of taxpayer dollars have been wasted.  There is no favorable result.  Quite honestly, I get sick and tired of listening to the lies that our government tells us that it would have been worse if they had done nothing.  They have actually made it worse by not focusing on real job creation and stopping foreclosures.

We are still in a housing crisis and banks are just holding on to bank REO inventory because they have new accounting techniques to hide losses.  I hope when the bailed out banks come back for more bailout money that our government listens to the American people and stop this corrupt and wasteful spending.

Dec. 10 (Bloomberg) –

Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said.

This year’s filings will surpass 2008’s total of 3.2 million as record unemployment and price erosion batter the housing market, the Irvine, California-based company said.

“We are a long way from a recovery,” John Quigley, economics professor at the University of California, Berkeley, said in an interview. “You can’t start to see improvement in the housing market until after unemployment peaks.”

Foreclosure filings exceeded 300,000 for the ninth straight month in November, RealtyTrac said today. A weak labor market and tight credit are “formidable headwinds” for the economy, Federal Reserve Chairman Ben S. Bernanke said in a Dec. 7 speech in Washington. The 7.2 million jobs lost since the recession began in December 2007 are the most of any postwar economic slump, Labor Department data show. Unemployment, at 10 percent last month, won’t peak until the first quarter, Quigley said.

Loan-modification programs and an expanded government tax credit for first-time homebuyers are helping slow the monthly pace of filings and “keeping a lid” on further foreclosures, James Saccacio, RealtyTrac’s chief executive officer, said in the statement.

November filings fell 15 percent from the July peak and dropped 8 percent from October, the seller of default data said. That was the fourth straight monthly drop