NOTOWN BLUES

As the dreads continue to rain down in Detroit for the seventh month in a row, the pedal just ain't anywhere close to hittin' the metal-- Motown is on the way to becoming Notown-- July auto sales took a major nosedive and for the first time in history Asian autos out-performed, meaning out-sold, American companies for market share in America itself-- Sour news made more bitter with this kicker, they did so with falling sales themselves-- GM hit the skids with a 22.3% drop in light vehicle sales, followed by a 19.1% flop from Ford and Daimler-Chrysler dipped 9.1% all three exceeding expert expectations by a long shot-- No wonder Michigan is in the top five states in the upward spiking foreclosure arena--

If people can't make their mortgage payments on overpriced houses, they damn sure can't afford to buy a brand new pick-up truck no matter how Ford Tough it advertises itself-- People are choosing between home and hearth and energy using suddenly non-cheap credit to do so-- Legions of economists are spouting unadulterated horse-hooey when they say the sub-prime debt market's collapsing milieu can be contained-- Debt world wide is interwoven with mutual dependency and liability and if it defaults, the reverberation, depending on the magnitude, can be felt every-where world-wide-- Banks and investors across the speculative gamut laid their money down on some pretty poor paper and it should not make them less nervous to hear that alt-A loans as well as prime loans are now hitting the redundant wall of delinquency-- Did they not also choose to buy beyond their real afford-ability range??--

After all, the major selling point the shoeshine-and-a-smile hucksters employed on the sub-prime deadbeat prey was identical to the one used on middle and upper-middle class up-traders... Home prices would rise ad infinitum-- Why not buy a house with your own private bowling alley in the basement if you can pilfer a 50% profit from some common sense-challenged sucker five years down the road??-- Put a couple of French doors into that garage studio and increase the value of the property by a $100,000, dude, sky is the limit--Go for it, dude, even Alan Greenspan and his buddy Gordon Gecko think it's a good deal-- What?!!!..... are you waiting for??-- You......... can't ......... lose!!!!--

Then one fine morning the newspaper he never really reads as he cruises down that proverbial Easy Street displays a headline that slams like a bad medicine ball into his softened solar plexus-- MORTGAGE FALLOUT WIDENS and suddenly he sees home foreclosures having popped-up out of the blue up and down his Easy Street-- Nerves begin to fray-- Nerves that denial can no longer calm nor buffer from the impending gloom-- Those same economists and experts nowhere near overloaded by the fatigue of their previous failure on the prognostication front, hedge nothing by rushing to shore up the flagging morale with even more exotic disconnected rationale--

On the way to the demoralized office he pulls the blubber of his whale sized SUV into a Starbucks lot and finds the price of his triple fat latte has risen not a whole lot but enough to make him slow down and notice a slight psychological sting that at that very moment is being felt in the corpulent edifice over at the DuPont Corporation-- Sales for the coffee giant rose considerably last month but the fast rising cost of milk, that's right.........Milk!!.... ( pardon the unintentional pun) diluted profits knocking a roughly 20% uptick down to a mere 12%, certainly plenty enough profit to fend off the boo-hoo of bankruptcy but in a game where maximize is the operative buzz on the public relations battlefield, no one jumped overboard with joy-- The cost of Milk the man from Easy Street was finally informed is due to the rising cost of corn but this aberrant iota from out of the blue clearly baffles the boy--

A disheveled oldster drifts in wearing a rather clean pair of painter's overalls, finds a used newspaper in the trash container and fills Mr. Suburbia in on the secret-- Corn is higher because alternative energy speculators believe corn in the form of Ethanol can fuel our automobile fantasia into the next millennium while making themselves a handsome profit in the process and therefore the higher cost of corn drives up the cost of feeding cattle which milk producers then slough off onto consumers like Mr. Suburbia and producers of lattes like the groovy corporate titans over at Starbucks-- Tangentially the cost of beef rises also not only from the expensive feed corn but also the high price of oil used not only to harvest the corn but also transport the milk, the corn and the beef to various markets, almost neglecting to mention the cost of delivering diesel to the cattle and the corn farms themselves-- Containment!!!!?????

The high, nearly record high, price of oil has many bastard fathers though none of course find their lineage in the ubiquitous SUV Mr. Suburbia feels entitled to drive three blocks for his Easy Street triple-fat Latte--The old man's clean painter pants are due to the fact that the high cost of maintenance and upkeep inside the collapsing housing bubble means fewer folks are painting their houses which can only diminish home prices as well as the look of the neighborhoods-- Furthermore since automobile production is being trimmed less paint is being used on old Henry Ford's manufacturing floor-- New construction in homes has also turned down, indicating even less utilization of paint pigments Mr. DuPont would be normally called on to supply-- Not to mention of course the deleterious effect on all the outlets where contractors and construction men purchased those pigments-- Now employees in the pigment sector of the behemoth DuPont Corp. can look forward to layoffs and lower income resulting in fewer home purchases, F-Series pickups, cheeseburgers, and long distance road trips to a double chubby-chuck theme park four hundred miles down a Highway 61 his children will never be able to revisit-- Did someone say contagion??--

THE ECONOMY IS SOUND, the new headline from the Federal Reserve Chairman blares across the blather-sphere-- Such and Such a CEO from Such&Such Company 90% of whose workers toil in third world ambience reports record profits/sales/earnings (take your pick) most of which adds more wealth to the already bloated embarrassment of riches suffered by the company's few top dogs in the upper echelon and while all of that does indicate a statistical rise in fudgy GDP reports (an infotainment canard that no sub-primer can take real nourishment from) it also fails to translate into advancement for the harried over-worked yet over-fed middle class of America-- The economy is solid at the top, so the experts say, but the foundation beneath it is trembling with an anxiety of viral proportion no one wishes to announce-- Collapse!!!............. like that freeway bridge to Easy Street, Minnesota-- Metaphor, USA!!!!

GOLDILOCKS

Throughout most of 2006 as oil prices fluctuated wildly and gasoline prices rose steadily until manipulated downward at the ingress of Autumn in a vain bid to aid repo-men and their bid for re-election, vast majorities in the economic/financial punditry professed a flatulent notion that no matter how high the oil vector went the larger economy would be immune to damaging effects basically of any kind-- Apparently oblivious to the ridiculous canard that simply removing the volatile energy sector (and food) from CPI statistics in a dishonest effort would make the true inflationary impact of high energy prices seem.....well, less inflationary, economists from vaunted Academia and Wall Street sold out to the rosy scenario and began courting Goldilocks-- 'Let us pretend the negative repercussions of such simply don't apply' went the delusional credo-- Innocuous paeans extolling the mindless resilience of spendthrift consumers, who armed with cheap and easy credit continued to reserve space in the debtors dungeon for their own children, peppered the financial blather-sphere with phony optimism and forced denial--

However as 2006 approached its finality the delinquencies of sub-prime mortgage debt began like termites to make their presence felt-- Their numbers were too large to ignore but that didn't stop the Goldilockians from trying-- Chipping away at Wall Street's false paradigm until even the Fed had to finally acknowledge the problems in the sub-prime sectors-- How could so many sub-primers come a cropper at the same time??-- How could so many hit the default button at once??-- Certainly, since energy prices and their integral function in the economic life of nearly everyone on the planet had been surreptitiously extracted from the fundamentals of CPI measurements due to their 'volatility', the rising cost of fuel and heating oil couldn't be the culprits-- An extra $30 to $50 a week in added commuting costs shouldn't have any major effects on the ability of sub-primers to meet their monthly payments even in those areas where mortgage interest rates were reset and monthly payments nearly doubled, say the professionally addled optimists...... proponents of just another Big Lie--

Now as the sub-prime fiasco becomes evident to nearly all, the Denialists diligently create new fictions to obviate concern that the collapsing netherworld of lying deadbeat mortgage holders, who were used by crooked financier sharpies to enrich themselves ultimately at the expense of the entire financial system, will spread to the second tier of mortgage chicanery and thereby further infectious foreclosure eventually leading to a full blown insurgency of contagious bankruptcy-- Mortgage company insiders everywhere have been and continue to dump their own stocks onto a delirious market whose frightened minions continue to be greased by rising oil prices and military maneuvers in the Persian Gulf--

Each new tank of gas diminishes the dollars of every mortgage holder...... even the primers-- It is not as if even the A+ rated credit risks were not counseled by smooth-talking real-estate sweeties into buying bigger castle-taffy than they could actually afford even with their high salaried jobs-- Many millions more may have overbought, after all, rising home prices no sky could ever limit were bound to continue ad infinitum -- pure common sense to herd mentality at every class level-- The Banks were going to make you rich if only you would reach for the sky!!!!!!-- Who could resist such spiel frothing from the mouths of boomer salesmen-- Hell, even dime a dozen Biff Loman bought it--



Rampant foreclosures damage more than just the person losing his, perhaps, misguided dream of home ownership-- If all the foreclosures were congregated in the same neighborhoods perhaps the damage might be palliated or confined-- However lower-middle and average middle class neighborhoods are speckled with houses the troubled 'owners' were driven from by a foreclosure lenders knew would eventually arrive en masse-- These houses deteriorate in upkeep, lawns go to seed and weeds take over-- Graffitti may begin to appear--The unkempt look adds to neighborhood devaluation and prospective house buyers even of foreclosed properties begin to look elsewhere-- Prices fall and so too assessed valuation--

Property taxes on foreclosed units go uncollected and municipal coffers feel the effect immediately-- Education budgets suffer shortfalls as well as street repair crews and every other kind of city maintenance services-- Priority emergency services feel the same pinch and are forced to triage the area in support of those neighborhoods who pay the higher property taxes-- Squatters and even crackheads begin to occupy the foreclosures and before too long the area is enveloped in major blight-- In fact the speed at which this deterioration can take effect would surprise most observers-- Not to worry it can't spread upward goes Wall Street's pablum-- Business investment as well as big ticket orders grew much less than experts expected in February and Fed chief Bernanke feigns the inability to see any connection to the sub-prime troubles, the oil price crises, the vain hope of dumbing down the dollar and faltering consumer demand for credit-- There are no consequences for cheating!!!-- There are no consequences for lying!!--The down cycle has been abolished!!-- We are in a new business paradigm!!!!! ......... hardly!!-- Who said that??__


The CPI fiction will obviously continue as the DC Government literally cannot afford to acknowledge the real cost of living-- The phantasmal solution to foreign oil addiction in the minds of those incapable of reading the true scale of the problem is now for bettor and worse corn-based ethanol-- Speculators have grabbed this tail of sudsidies by the dog and it now seems almost certain the remaining topsoil across the our once vaunted Breadbasket in the midwest will be burned in the gas tanks of suburban SUVs--

The price of corn rockets skyward never mind that it is one of, if not, the most expensive of all grains to raise with regard to energy/oil inputs-- Voracious water and nitrogen feeder as well as a highly skilled soil depleter-- The race is on for new acreage to grow corn and take advantage of the rising in price, now double that of two years past-- Food costs can only follow the upward price trend but not to worry there either, since the CPI doesn't include food in its fictional measurement so the inflationary effect will be minimal.....in faux theory only!!-- The cost of raising the energy-intensive corn, defending it against pests, harvesting it, transporting it to market, then to the ethanol plants and then back to the ethanol stations to be pumped into your SUV tanks guarantee way beyond reasonable doubt that the ethanol outcome to this meandering mega-energy process will be anything but inexpensive-- Corn could become too expensive to process-- As food prices and energy prices rise and housing payment resets rise into falling house prices only an idiot, or maybe a ringleader from a Federal Reserve Circus that considers as part of GDP all the treasure(almost $10billion/month) being pumped down the rathole, Shock and Awe fashioned out of Iraq, would suggest that the 'larger economy', whatever that is, could avoid the hostility of such destructive side-effects--

There is a convergence of negative forces merging toward a financial storm of a magnitude higher than any of DC's leaders can summon the courage to face-- Denial is currently the coin of the realm--Throw the gigantic debt/deficit/trade-imbalance, the extreme paucity of American Savings, and the defeat in Iraq into this mix of rising food and oil prices and falling housing prices and it becomes a rather drastic firestorm-- Who knows what the demies are currently hoping to accomplish by their transparent charades while the repos seem intent on mere political survival(Live to be bribed another day!)-- Neither side has the best interests of our country at heart-- Foreclosures will number in the millions, and living arrangements for most all of us are about to confront a very new paradigm-- Not one major world oil producer increased its oil production while country after country, some with gigantic populations increased their demand for oil-- This formula does NOT compute !!!--

The inexpensive oil that fueled indulgent affluence for almost a century and bred such dreams that single individuals could or even should attain ownership of an entire house, with multiple cars, boats and whatnot is clearly gone-- Can we maintain our mobility and eat it too???--Can you spell trainwreck!!!!?-- ....... G.... O.... L.... D.... I.... L.... O.... C.... K.... S.......... NOT!!!!