Saturday, February 27, 2010
We learned that he was thrown into the “hole” this past Wednesday and is still there today. What we have garnered is that conditions inside of Ft. Dix are deteriorating ever since a new Warden took over just a few months ago. Many “privileges” have been suspended for the entire 400 person population at the “working” facility that was only designed for 200. It is now, perform your job then head immediately back to the bunk – that’s it all day long type of routine. Tensions are very high inside, this is an open barracks type of facility with bunks literally so close that only one person can stand between them. You can imagine being locked up with 400 guys day in and day out under more stressful conditions than they have to be and you get a recipe for violence. That’s what happened just two weeks ago as riots broke out inside the facility.
Armstrong’s job inside the prison is as a clerk, this is how he is able to also write while he’s there. What we learned is that they searched his locker and discovered that he is helping other inmates with their legal work – something that is completely legal for him to do, but they claim that he is not supposed to have copies of other inmate’s legal documents in his locker and this is the excuse for the solitary confinement – as yet unconfirmed.
But what we hear is that they also found letters he had written complaining about conditions inside the facility. We also know that certain people in power have taken an interest in his case and that the prison is not happy about that or about the media requests or the papers that he is getting to the outside like this one.
Armstrong’s sister has hired an experienced criminal attorney to go into the prison on Tuesday to find out what exactly is going on. We’re afraid that they may be using this game to brand him a trouble maker in order to justify moving him as they attempted to move him out before. Since most of this is third hand type of information we must learn more about the facts and we should know more later this week – I’ll keep everyone informed.
Now to the paper…
This is his most comprehensive look “Behind the Curtain” to date. He examines many issues surrounding what has transpired and mostly focuses on Goldman Sach’s involvement and ties into the government. This is more of a very small book that he breaks down into chapters. I think you’ll find it an interesting read as he blends his experience, his knowledge of history, and the rule of law to bring us a unique look and his view of what has and is transpiring behind the scenes of government and investment banks.
She is an expert Technician and points out the same H&S pattern that I have been pointing out for quite some time in long bonds:
Here is the chart showing the interest rate cycle, rates peaked in 1980 and are now effectively zero:
Head of IMF Proposes New Reserve Currency
By HARRY DUNPHY Associated Press Writer
WASHINGTON February 26, 2010 (AP)
Dominique Strauss-Kahn, the head of the International Monetary Fund, suggested Friday the organization might one day be called on to provide countries with a global reserve currency that would serve as an alternative to the U.S. dollar.
"That day has not yet come, but I think it is intellectually healthy to explore these kinds of ideas now," he said in a speech on the future mandate of the 186-nation Washington-based lending organization.
Strauss-Kahn said such an asset could be similar to but distinctly different from the IMF's special drawing rights, or SDRs, the accounting unit that countries use to hold funds within the IMF. It is based on a basket of major currencies.
He said having other alternatives to the dollar "would limit the extent to which the international monetary system as a whole depends on the policies and conditions of a single, albeit dominant, country."
Strauss-Kahn, a former finance minister of France, said that during the recent global financial crisis, the dollar "played its role as a safe haven" asset, and the current international monetary system demonstrated resilience.
"The challenge ahead is to find ways to limit the tension arising from the high demand for precautionary reserves on the one hand and the narrow supply of reserves on the other," he said.
Several countries, including China and Russia, have called for an alternative to the dollar as a reserve currency and have suggested using the IMF's internal accounting unit.
Strauss-Kahn said the IMF also needs to do a better job of tracing how risk percolates through the global economy.
"Here it will be essential to improve our ability to monitor several dozen large complex financial institutions that make up the `plumbing' through which global capital flows," he said, while leaving national regulators the job of monitoring the solvency of individual institutions.
This is THE set up, folks. You can bet that plans for this are in full motion behind the scenes. Remember who the IMF is. They are the very same central bankers who run the systems that are now failing in the United States and Europe. They are the very same people who create money from nothing indebting people and countries and taking mostly gold in return as payment. This is how they became the world’s third largest holder of gold.
If a one world currency is put in place, who controls it??? They do? That’s a great status to endow on one’s self, is it not? Take a look at their charter and see who the voting members of the board are, "The governor is appointed by the member country and is usually the minister of finance or the governor of the central bank."
There is absolutely NO REASON to have a one world currency whatsoever – and for that matter there is no reason to have any “reserve currency” either. The only real reason for doing so is to place more power and control in the hands of the central bankers – they use the power of money creation to get what they want, but the power of money creation does not belong to them, it belongs to the people.
Remember, “It’s WHO controls the quantity” that matters.
People still refuse to admit that there are major changes coming to world of currencies, although more and more people are seeing the bad math and are coming to the same conclusion that I, and others, came to quite some time ago. Now the question is going to become, do we want a world controlled by central bankers or do we want FREEDOM?
With the central bankers in power, you will be forced to make this decision at the height of crisis, I can guarantee you that. This crisis will be one of THEIR making. You are about to be blackmailed AGAIN and this article tells you the direction in which you are being led.
Tell the central bankers to pound sand. Support Freedom’s Vision and join the coming Swarms!
Friday, February 26, 2010
We are continually asked to simplify Freedom’s Vision so that it is clear to even the novice what it will accomplish. If only it were as easy as a one liner – “All we need to do is ______!”
But the truth is that the world is a much more complex place, in many cases made that way to obscure what is actually pretty simple. Freedom’s Vision is designed to be much more simple compared to our current monetary system and is completely transparent. What is complex is transitioning from our current system to one that is fair, sustainable, and prosperous, built upon what people know and expect from their dollar system and yet will build people’s confidence in the system, not destroying it during the transition.
First we have to agree that the current system is not working. We contend that at the root of the problem are private central bankers and other special interests who have taken control of our money system, they produce the money, not our government. Most of that money is backed by debt. This creates an unworkable and unsustainable math situation. We also have to agree that the forces of greed always seem to find a way to eventually creep into a system and that this is repeated over and over again throughout history. Finally, we need to agree that moving backwards to systems that have already proven they don’t work is no solution at all and that it’s time to take a step forward.
If we can agree on all that, then we can boil Freedom’s Vision down into the major points that it will accomplish by replacing the current Federal Reserve Act:
1. End the practice of debt backed money at the federal level, returning the power of money creation to the people via Congress as the U.S. Constitution dictates.This is a permanent fix that can successfully get us from our current situation to a sustainable and prosperous future without crashing global markets in the process. It is fair and it is just. It puts the long term math on the side of the people, not working against them. Furthermore, it is repeatable and the same procedures can and should be used by other nations to solve their debt backed money problems as well. It does not matter what condition the economy is in before implemented, Freedom’s Vision can be made to work.
2. Clear out excessive debt and derivatives from the entire financial system, thus repairing balance sheets and producing workable debt to income ratios. The following will be accomplished:3. Ensure the quantity of money remains under control in the long term by:
a. People’s balance sheets will be repaired by returning tax dollars to the people to be used to directly pay down existing debt.
b. All banks and financial businesses are run through a special bankruptcy procedure to cleanse away unserviceable debt and derivatives. All banks will survive this process and will exit with 10 to 1 fractional reserve ability, a level of leverage that is safe and will be capped by law.
c. State balance sheets will be repaired and all states will create State Chartered Banks based on the successful model of the Bank of North Dakota. Additionally, these banks will assume the roles and functions formerly held by the 12 “Federal” Reserve banks, thus decentralizing control but in a coordinated manner where all states are benefitting equally.
a. Ensuring accurate and unbiased economic measurements and reporting. This is easily achieved with 100% transparency in all data gathering and statistical methods, allowing the market to 'police' the government.
b. Create controls that tie overall money quantity to PRICE of ALL asset classes. Target ZERO price inflation and adjust quantity of money spent into existence without debt. Interest rates are set by the free market. This means no more long term inflation or deflation.
c. Separate special interest money from politics. This targeted political reform is necessary to keep the political system functioning for those who it is supposed to serve. Without this piece history proves that the other pieces will not last long, as those with large reservoirs of money will eventually co-opt the system for themselves.
Please learn more by reading this simple introduction and by following the links to learn even more:
LINK: Welcome to Swarm USA!
There are four ways to get involved to help get us all on the right path!
1. Please make sure that you REGISTER for the Swarm while you are there, and PARTICIPATE in the Swarms!
2. Please share the site with others and encourage them to REGISTER & PARTICIPATE in the Swarms.
3. Volunteer to help either on the National or State Level.
4. Donate to the American Party PAC.
Equity futures are roughly flat this morning following yesterday’s “miraculous” stick save. Below is a 60 minute view of the DOW on the left and on the right is a 5 minute view of the S&P:
The dollar is flat and bonds are UP. Bonds being up is generally not favorable to stocks and yesterday bonds were up as well and did not fall back during the afternoon pump. This is yet another sign that the action in the equity side was not real. Oil was down hard yesterday but is back up a little this morning, gold held up well both yesterday and this morning.
To me that action yesterday afternoon was nothing but proof that our markets have been taken over by computers and thugs. Someone (who?) floated a rumor that AAPL was going to do a 4 for 1 stock split just as prices were trapped below the very important 1,090 level following more very negative economic data. This morning ZeroHedge produced data showing that Goldman placed a huge long in the futures market just prior to the rumor being floated – the rumor was later denied, by the way, and Goldman was selling into the close after pocketing a tidy seven figure profit on the day.
Here’s what my Schwab account daily summary stated:
Unless you are a day trader, this is a difficult market to make a big directional bet. On Tuesday, the DJIA dropped 100 on the dismal consumer confidence number. Yesterday, it rose 90 on Ben's comments on easy money. Today, it was 190 points down in the morning on an unexpected rise in jobless claims and renewed concerns about Greece. But, amazingly, it suddenly popped higher in the afternoon to close with only a 53.13 point (-0.51%) loss at 10321.03.
Oh yes, “Amazingly.”
This type of action is absolutely driving out small investors. Frankly I think a person is nuts to put any money in any market in which any of the big banks have any input whatsoever. I also reiterate that your money should not be on deposit at those institutions, I can assure you that not one penny of my money is.
Since our government has been taken over by the very same interests, the regulators not only look the other way, but they encourage and support this type of market activity. But since the bankers own the markets, they now can and are holding them HOSTAGE, in the same exact manner that they held the economy hostage when it was on a gold standard. Study your history and you will see this same game being played time and again – “favor our crimes against the people, OR ELSE!” This is what happens when you turn the power of money creation over to them – be it backed by gold or debt, doesn’t matter – as Bill Still says, “it’s WHO controls the quantity that matters.”
This morning the 4th quarter GDP data was revised upwards from the previously reported 5.7% annual rate to 5.9% annual rate. My thoughts, Commrade, can be summed up in one word – JOKE:
Highlights: Fourth quarter real GDP was revised up but the details indicate that the revisions were not for the good. Real GDP growth for the fourth quarter was revised upward to an annualized 5.9 percent from the initial estimate of 5.7 percent. The market forecast was for a net unrevised second estimate. The higher estimate reflected more positive contributions from private inventory investment, exports, personal consumption expenditures (PCE), and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased. But overall strength for the quarter increasingly was in the inventory component as businesses slowed the pace of destocking. Final sales growth was revised to a more modest 1.9 percent increase from the original estimate of 2.2 percent. Nonetheless, the fourth quarter GDP advance is the second in a row. The change in real private inventories added 3.9 percentage points to fourth quarter GDP, compared to 3.4 percentage points in the initial estimate. Business inventories fell a modest $16.9 billion, following a sharp $139.2 billion plunge in the third quarter. Within final sales, there was some strength in investment in equipment & software, posting an 18.2 percent jump, while residential investment advanced 5.0 percent. PCEs rose 1.7 percent in the latest period. Net exports shrank by $10.3 billion with exports spiking 22.4 percent and imports gaining 15.3 percent annualized. Nonresidential structures fell 13.9 percent. Year-on-year, real GDP improved to up 0.1 percent from minus 2.6 percent in the third quarter. On the inflation front, the GDP price index was revised down to a 0.4 percent rise, compared to the original estimate of an annualized 0.6 percent. Analysts expected no net revision to the initial GDP price inflation number. Markets should focus on the downward revision to final sales and this should weigh on equities and help interest rates ease.
Well, I can think of one other word... "Whatever." Where to begin? Do I need to explain every flaw in this data every time it is released? The miscalculations and flaws in this report stack high, one upon the other until it is just simply not representative of what is actually occurring in the real world. This type of totally false reporting of economic data doesn’t really fool anyone, what it does is lead to a loss of confidence in government. More and more people are waking up.
Yesterday afternoon I watched one portion of Obama being questioned about the math of his healthcare proposal by a Congressman. It was quite interesting to see Obama sit there after being told about all the accounting gimmicks and mathematical lies that are contained within the release of their healthcare plan. Didn’t seem to faze Obama a bit… But I can assure you that the real math does not lie and that it ALWAYS expresses itself over time. The bankers, the politicians… they are at the root of the bad math, but they will eventually fall victim to their own doing as the math cannot be defeated with lies and it WILL have the final word.
Citizen Sentiment and Existing Home Sales will come out right around 10 Eastern.
Yesterday’s market action produced several unnatural looking hammers, most were inside type of affairs, but on the Transports it created a large outside hammer. This one is at the end of the wave 2 ramp, it may be an indication of a top, but we need to see prices close lower today to validate it as a possible reversal signal:
The up action produced a lower high yesterday and it did set up a channel boundary.
Again, I still don’t think that action was natural at all, it was a manipulated short covering rally pimped along by a company whose survival was based solely on the use of YOUR funds which you did not authorize. So we’ll just have to watch and see what happens. The economic data is turning horrendous very quickly once again. The up action only comes on game playing but the down action when it comes is on higher volume.
Hey, Goldman had a ticket to ride yesterday, did you?
Beattles – Ticket to Ride:
Thursday, February 25, 2010
Equity futures are considerably lower this morning already erasing all of yesterday’s gains. Below is a 60 minute chart of the DOW on the left and a 5 minute chart of the S&P on the right showing the overnight action:
The dollar and bonds are higher, oil and gold are both lower.
Durable Goods orders came in better than expected for January, largely on transportation orders. Ex-transportation, the number was actually negative. Here’s Econoday:
HighlightsThe weekly Jobless Claims jumped back to nearly the 500K mark, coming in at 496,000, the consensus was for 460,000.
The durables report has lived up to its reputation as one of the most volatile indicators. Taking into account upward revisions to December numbers, January numbers look decent. At the headline level, new orders for durable goods in January posted a healthy 3.0 percent gain, following a revised 1.9 percent rebound in December. The December increase had previously been estimated to be 0.3 percent. The latest number topped expectations, compared to analysts' forecasts for a 1.5 percent boost. But we have a different picture for January excluding transportation. Excluding the transportation component, new durables orders fell 0.6 percent after a 2.0 percent gain in December. But the ex-transportation component was revised up for December from the original 0.9 percent rise. Overall, the headline number exaggerates strength but the core number is OK for such a volatile series after the upward revision to December.
The number of jobless filing for initial unemployment claims increased in February, pointing to trouble for the February employment report and sending equities and commodities lower in immediate reaction. Initial claims jumped to 496,000 in the Feb. 20 week, the highest level since November. The four-week average, up 6,000 to 473,750, is also the highest since November and is more than 15,000 higher than January levels. In an ominous note for the monthly jobs report, claims offices said heavy weather increased the number of claims in the week. Continuing claims, where data lags by a week, were slightly higher at 4.617 million and are little changed from January levels. The unemployment rate for insured workers is unchanged at 3.5 percent.
What’s there to say about that? Can't you just see the A,B,C wave action in that chart? It’s a tragedy for every single one of those people. Millions have gone all the way through their benefits and are now no longer counted. Oh yeah, the “recession” is over, remember? Still no talk and understanding of debt saturation and the role DEBT plays in squeezing out productivity and workers. These are real people who are being damaged by their own government’s incompetence and greed. Throw the Central Bankers out on their asses and take back the money power! No sustainable fix will occur until that happens.
Is everyone shell shocked again? No one has the guts to take action? How about spreading the word about Freedom’s Vision? Please place links to http://www.swarmusa.com/vb4/content.php/125-Welcome and let people know that there is a way out but that it is THEY who must make it happen.
Did everyone catch that the FDIC admitted they were bankrupt? $20 Billion in the hole in December. Have to beg to Congress and scratch what they can from the zombie banks just in order to keep shutting down the ever growing list of “troubled” banks, now numbering more than 700 by their own account. Of course this means that functionally you are left with only the government standing behind deposits, that would be you and your money system. By the way, the FDIC was actually never solvent! You see, the money they collect in “insurance” was actually immediately SPENT by the government leaving the FDIC only an accounting credit. That’s right, all the FDIC insurance money was never actually there to begin with, and now we’re just catching up to the reality. How can you fix the still insolvent banking system without money? Simple, you perform the special bankruptcy procedure within Freedom’s Vision, but first you return taxpayer money to the taxpayers for the express purpose of paying down debt and making their balance sheets healthy first.
Okay, if the markets break below SPX 1,090 it is your queue that wave 3 down is underway. Wave 3 should take 1,000 points or possibly more off the DOW. The next lower pivot is down at 1,061.
Folks, it’s time to take action if we are going to have any chance of preventing the “other events” that are coming quickly. We are going to have the Grand Opening Swarms soon, but you can help by sending others to the site so they can register and start leaning more about the issues. The Hive is there for discussions and I appreciate everyone going there and on Facebook to get the discussion going for outsiders who may not understand the issues like you do. PLEASE, when you are reading articles at other sites, drop a word about how the issues can be solved by Freedom’s vision and provide the link to www.SwarmUSA.com. It’s past time that we stop all the bull, all the infighting, and we simply come together to effect meaningful change!
The Beattles – Come Together:
Wednesday, February 24, 2010
Please keep in mind that the bond market means DEBT market. (Ht – Centerline)
Perhaps a little review of bubbles is in order? Pay particular attention to the part about “Some wise voices will stand up and say that the bubble can no longer continue. They argue that long run fundamentals, the ratios and measurements, defy sound economic practices.” Note which sequence in the 7 bubble stages you are seeing bonds in now, then think about where housing, commercial Real Estate, and equities in general are now.
Ludwig Von Mises noted that the size of the bust is commensurate with the size of the boom and it was Hyman Minsky who accurately described the seven bubble stages (the following excerpt is from my book Flight to Financial Freedom – Fasten Your Finances, written during 2005/2006):
HYMAN MINSKY’S SEVEN BUBBLE STAGES
The late Hyman Minsky, Ph.D., was a famous economist who taught for Washington University’s Economics department for more than 25 years prior to his death in 1996. He studied recurring instability of markets and developed the idea that there are seven stages in any economic bubble:
Stage One – Disturbance:
Every financial bubble begins with a disturbance. It could be the invention of a new technology, such as the Internet. It may be a shift in laws or economic policy. The creation of ERISA or unexpected reductions of interest rates are examples. No matter what the cause, the outlook changes for one sector of the economy.
Stage Two – Expansion/Prices Start to Increase:
Following the disturbance, prices in that sector start to rise. Initially, the increase is barely noticed. Usually, these higher prices reflect some underlying improvement in fundamentals. As the price increases gain momentum, more people start to notice.
Stage Three – Euphoria/Easy Credit:
Increasing prices do not, by themselves, create a bubble. Every financial bubble needs fuel; cheap and easy credit is, in most cases, that fuel. Without it, there can’t be speculation. Without it, the consequences of the disturbance die down and the sector returns to a normal state within the bounds of “historical” ratios or measurements. When a bubble starts, that sector is inundated by outsiders; people who normally would not be there. Without cheap and easy credit, the outsiders can’t participate.
The rise in cheap and easy credit is often associated with financial innovation. Many times, a new way of financing is developed that does not reflect the risk involved. In 1929, stock prices were propelled into the stratosphere with the ability to trade via a margin account. Housing prices today skyrocketed as interest-only, variable rate, and reverse amortization mortgages emerged as a viable means for financing overpriced real estate purchases. The latest financing strategy is 40, or even 50 year mortgages.
Stage Four – Over-trading/Prices Reach a Peak:
As the effects of cheap and easy credit digs deeper, the market begins to accelerate. Overtrading lifts up volumes and spot shortages emerge. Prices start to zoom, and easy profits are made. This brings in more outsiders, and prices run out of control. This is the point that amateurs, the foolish, the greedy, and the desperate enter the market. Just as a fire is fed by more fuel, a financial bubble needs cheap and easy credit and more outsiders.
Stage Five – Market Reversal/Insider Profit Taking:
Some wise voices will stand up and say that the bubble can no longer continue. They argue that long run fundamentals, the ratios and measurements, defy sound economic practices. In the bubble, these arguments disappear within one over-riding fact – the price is still rising. The voices of the wise are ignored by the greedy who justify the now insane prices with the euphoric claim that the world has fundamentally changed and this new world means higher prices. Then along comes the cruelest lie of them all, “There will most likely be a ‘soft’ landing!”
Stage Five is where the real estate industry is today [2005/2006]. This stage can be cruel, as the very people who shouldn’t be buying are. They are the ones who will be hurt the most. The true professionals have found their ‘greater fool’ and are well on their way to the next ‘hot’ sector, like the transition from real estate to commodities now.Those who did not enter the market are caught in a dilemma. They know that they have missed the beginning of the bubble (gold, silver, and oil today [2005/2006]). They are bombarded daily with stories of easy riches and friends who are amassing great wealth. The strong will not enter at stage five and reconcile themselves to the missed opportunity. The ‘fool’ may even realize that prices can’t keep rising forever… however, they just can’t act on their knowledge. Everything appears safe as long as they quit at least one day before the bubble bursts. The weak provide the final fuel for the fire and eventually get burned late in stage six or seven.
Stage Six – Financial Crisis/Panic:
A bubble requires many people who believe in a bright future, and so long as the euphoria continues, the bubble is sustained. Just as the euphoria takes hold of the outsiders, the insiders remember what’s real. They lose their faith and begin to sneak out the exit. They understand their segment, and they recognize that it has all gone too far. The savvy are long gone, while those who understand the possible outcome begin to slowly cash out. Typically, the insiders try to sneak away unnoticed, and sometimes they get away without notice. Whether the outsiders see the insiders leave or not, insider profit taking signals the beginning of the end (remember who has sold their rental properties?).
Stage seven – Revulsion/Lender of Last Resort:
Sometimes, panic of the insiders infects the outsiders. Other times, it is the end of cheap and easy credit or some unanticipated piece of news. But whatever it is, euphoria is replaced with revulsion. The building is on fire and everyone starts to run for the door. Outsiders start to sell, but there are no buyers. Panic sets in, prices start to tumble downwards, credit dries up, and losses start to accumulate.
This is where you may see the “lender of last resort” who is usually the government. The government, although they were talking up a soft landing, are now forced to step in to prevent the crises from spreading to other sectors. Ironically, this is where the savvy investor who profited before, really profits now. With government backing, they are asked to step in and return “normalcy” to a now damaged sector.
The government’s attempt to “put out the fire” usually works. However, the conditions beyond the year 2010 will require oceans of water that the government does not posses. You must be ready!
January is a difficult month for the housing sector, made difficult this year by still soft prices, heavy inventory, and the still distant April deadline for buyer credits. New home sales fell to a much lower-than-expected annual rate of 309,000 in January.
Prices fell with the median down 5.6 percent in the month to $203,500 for another year-on-year decline, now at minus 2.4 percent. Inventory jumped to 9.1 months, reversing eight months of incremental improvement.
Today's results evoke this morning's mortgage-application report where the Mortgage Bankers Association warns that housing demand remains weak and that buyers see no urgency to lock in prices. Existing home sales will be posted on Friday.
Those who didn’t see this coming have their eyes closed. This is not and never has been a normal economic cycle. This is a Grand Super Cycle top the excesses are everywhere, and especially in housing, they are simply tremendous in scale. Houses are still too expensive in relation to incomes. People, businesses, and all levels of government are saturated with debt while those in power simply work harder to push even more debt into the situation – it is literally insane.
Remember this chart?
Here’s Bloomberg’s report:
And you thought you were living in an "investment," lol, no, not quite. "We all live in a..."
Feb. 24 (Bloomberg) -- Sales of new homes in the U.S. unexpectedly fell in January to the lowest level on record, a sign that an extension of a government tax credit may not be enough to rekindle demand.
Purchases declined 11 percent to an annual pace of 309,000, below the lowest forecast in a Bloomberg News survey of economists, from a 348,000 pace, figures from the Commerce Department showed today in Washington. The median sales price dropped 2.4 percent from January 2009 and the supply of unsold homes increased.
The government’s first-time buyers tax incentive, extended and expanded to include current homeowners, may provide less of a boost to the market as many purchases were pulled forward late last year. Builders also face competition from foreclosed properties that have driven down prices at the same time the economy is having trouble creating jobs.
“New-home sales may be at rock-bottom levels, but it looks like the housing correction is not over yet,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “Everyone who was going to buy for the tax credit has already purchased a new home.”
Sales were projected to climb to a 354,000 annual pace from an originally reported 342,000 rate in December, according to the median estimate in a Bloomberg survey of 72 economists. Forecasts ranged from 325,000 to 386,000.
Three of the four U.S. regions showed declines in new-home sales last month, led by a 35 percent plunge in the Northeast. Purchases fell 12 percent in the West and 9.5 percent in the South. They rose 2.1 percent in the Midwest.
Median Price Fell
The median price of a new home in the U.S. decreased to $203,500 in January, the lowest since December 2003, from $208,600 in the same month last year.
The supply of homes at the current sales rate increased to 9.1 months’ worth, the highest since May 2009.
Housing, the industry that spawned the sub-prime mortgage meltdown and triggered the worst recession in seven decades, appeared to be recovering in 2009 after a three-year decline.
Purchases of new homes have declined from an all-time high of 1.39 million reached in July 2005. They have declined 6.1 percent from January 2009.
New-home purchases, which account for about 6 percent of the market, are considered a leading indicator because they are based on contract signings. Sales of previously owned homes, which make up the remainder, are compiled from closings and reflect contracts signed weeks or months earlier.
Rising foreclosures are the main threat to a sustained housing recovery. A record 3 million U.S. homes will be repossessed by lenders this year as unemployment and depressed home values leave borrowers unable to make their house payment or sell, according to a RealtyTrac Inc. forecast last month. Last year there were 2.82 million foreclosures, the most since the Irvine, California-based company began compiling data in 2005.
The lack of jobs is another hurdle. Consumer confidence in February fell to its lowest level since April 2009 and a gauge of current conditions declined to the lowest level in 27 years on concerns about the labor market and the economy, the Conference Board reported yesterday.
Economists surveyed by Bloomberg at the beginning of this month forecast unemployment this year will average 9.8 percent, just a percentage point below the historic post-war peak of 10.8 percent reached in November 1982.
The end of Federal Reserve purchases of mortgage-backed securities, aimed at keeping borrowing costs low, represents another challenge for the housing industry. The program is scheduled to expire at the end of March.
‘Years to Recover’
“The housing market took several years to recover, following the downturn of the late 1980s and early 1990s,” Robert Toll, chief executive officer of Toll Brothers Inc., said in a statement today.
Toll Brothers, the largest U.S. luxury-home builder, said its first-quarter loss narrowed. The Horsham, Pennsylvania-based company’s new orders almost doubled in the three months ended Jan. 31 as the housing market showed signs of stabilizing.
Beattles – Yellow Submarine:
Equity futures are up slightly this morning, below left is a 60 minute view of the DOW, you can see that we are resting on the bottom of the current channel, and on the right is a 5 minute version of the S&P 500 showing the overnight action:
Both the dollar and bonds are slightly lower, oil is flat and gold is down about $8 and ounce, now below the important $1,100 level again and coming up on support at $1,080. The HUI did have a very large move lower yesterday, the miners getting hit hard.
We will receive New Home Sales at 10 Eastern, meanwhile the still worthless MBA Purchase Applications Index moved lower another 7.3% last week which follows a 4% drop the week before. The only clue we truly have about history from this report is that the MBA now claims this reading is the lowest since 1997 – here’s Econoday:
HighlightsYes, even at the lowest interest rates in history people cannot refinance anymore and homes are still overpriced even at these levels. Keep in mind that as taxpayers we have spent literally trillions buying these rates down. We are so saturated with debt that we are failing to even maintain with a Fed Funds Rate of Zero.
The purchase index fell a steep 7.3 percent in the Feb. 19 week to the lowest level since 1997 in what the Mortgage Bankers Association calls another indication that housing demand remains weak: "With home prices continuing to drift amid an abundant inventory of homes on the market, potential home buyers do not see any urgency to lock in purchases." The refinance index also fell, down 8.9 percent. (Note MBA does not provide index levels, only percentage changes.) New home sales for January will be posted at 10:00 a.m. today.
Efforts aimed at the banks were the largest mistake in history. They did absolutely nothing to cleanse and repair anyone’s balance sheets but the very largest firms. If we would have spent that money on the bottom up, the entire system would have been given more time. But in the end, it may be evolution at work as the debt backed money system that the private Federal Reserve manipulates is destined to fail. This mistake will make that failure come sooner and hopefully we will take the next step forward.
Speaking of making failure happen sooner than later, little Timmy Geithner is giving that his all:
Geithner May Give Regulators Leeway in Applying Volcker RuleI guess it depends on how you define the word “incest.” Note, once again who these people really serve. They do not serve YOUR interests, they serve the private banks’ interests. This is why our system is failing and it is why the “Federal” Reserve system is going to fail. It is also why Freedom’s Vision is the next step forward in the progression of our country.
Feb. 24 (Bloomberg) -- The U.S. Treasury Department wants to give regulators discretion to define proprietary trading as the White House tries to revive its plan to bar banks from making hazardous bets that could cause another financial crisis.
One month after President Barack Obama said firms “will no longer be allowed” to trade for their own accounts, officials say they need flexibility to avoid impairing the $7.2 trillion Treasury securities market.
And remember all the lip service about pulling support?
Treasury to expand Supplementary Financing programThey will simply steal as much money as you allow them. The government’s spending is in a parabolic blow-off phase and it is going to come to an end sooner rather than later. When the spending by the government subsides, the debt backed economy will be laid bare.
By Greg Robb
WASHINGTON (MarketWatch) -- The Treasury Department announced Tuesday that it is expanding its Supplementary Financing Program to help the Federal Reserve manage its enormous balance sheet. In a statement, Treasury said it will boost the SFA to $200 billion from its current level of $5 billion. The fund had been up to $200 billion but was scaled back when Congress delayed passage of an increase in the debt limit.
Now that an expansion of the debt limit has been signed into law, the department is able to resume the program. Starting on Wednesday, Treasury will conduct the first of eight weekly $25 billion 56-day SFP bills to restore the program. The department said it will then roll the bills over. "We are committed to work with the Fed to ensure they have the flexibility to manage their balance sheet," a Treasury official said.
Speaking of revealing clothing, our government statistics are simply flat out LYING. They are so distorted and off the mark that very little can be taken at face value. This is a major part of the confidence problem. Did someone say confidence? Yesterday’s Citizen Confidence level for February plummeted nearly 18% from 56 all the way back to 46. Do they believe that retail sales are positive? No, and despite what your government says, retail sales are still down year over year. Proof? Again, we turn to sales tax data:
New York Sales Tax Receipts In Unprecedented CollapseStill predicating growth estimates on words and statistics coming from the government is a HUGE mistake. The “value of all goods and services subject to the sales tax shrank by 7.1%!” Good thing they had multi-billion dollar bonus payouts, what would this figure have been without? Of course those bonuses were not only not deserved, they are criminal and based solely upon marked to fantasy models – the regulators long since bought off and bowed to pressure.
It's a good thing Wall Street bonuses rebounded in 2009 because otherwise the State of New York would be totally screwed.
Yesterday the Comptroller released its survey of the state's sales tax receipts -- a proxy for consumer spending that shows a trend opposite to Wall Street.
Here's the top-line view:
Counties across New York State, including New York City, saw one of the sharpest declines in sales tax collections on record, according to a report released by State Comptroller Thomas P. DiNapoli. The report, which compares 2009 to 2008 collections, found a 5.9 decrease in collections statewide. Only four counties saw an increase but these numbers were primarily due to administrative and technical adjustments, not better economic performance.
“This is yet another sign that the Great Recession
is having a continuing impact on our communities across New York,” said DiNapoli. “These numbers are sobering. Fortunately, many local governments have taken sometimes painful budgetary steps to stave off disaster. It’s a struggle, but all levels of government have to make every taxpayer dime count.”
Among the report’s findings:
* Fifty-three of New York’s 57 counties outside of New York City saw a sales tax decline and many of these counties share sales tax revenues with their municipalities;
* The largest decline occurred in the Lower Hudson Valley, at 8.4 percent;
* In state fiscal year 2009-10, the state’s sales tax base (value of all goods and services subject to the sales tax) shrank by 7.1 percent;
* Among New York’s counties, Westchester saw the steepest drop at 10.3 percent;
* The Mohawk Valley region saw the smallest downturn at 2.5 percent;
* Only Oneida, Chautauqua, Schuyler and Seneca counties saw increases, but this growth was mostly attributable to factors other than economic growth; and
* According to the New York State Association of Counties, most counties prudently budgeted little or no growth in their sales tax revenues for 2010.
Yesterday’s price action obviously satisfied the large movement forecast by last Friday’s small move in the McClelland Oscillator. Yesterday's 85% down day left all of the short term oscillators oversold, so a bounce of some type can be expected.
Despite mark-to-fantasy, the XLF is one of the POOREST performers of this recovery, retracing only a very small portion of their losses over the past couple years. Yesterday the XLF was hit hard, engulfing the prior days’ candle with volume coming up off of the pathetic ramp job, game playing, levels of the week prior:
The bond market bounced very strongly right off the support level I showed on Monday. That was the game, it was indeed time to make a choice. They can continue to hold down rates, but if they continue to pump all the markets simultaneously then they will have chosen a quick death to our monetary system. Of course it’s already dead, they can only decide how quickly the funeral services are held and which path they want to drive to get there. Dead man walking.
Yesterday’s move very likely was the beginning of wave 3 down but we need to see prices drop below the SPX 1,090 level to be sure. We are sitting right on the uptrend line of support now. There’s a possibility we could run higher, but really… are there any legitimate buyers left in the market? Only ones who don’t do math! While she may be able to make one last trip around the dance floor, I’m thinking we’re already witnessing Mary Jane’s last dance…
Tom Petty – Mary Jane’s Last Dance:
Tuesday, February 23, 2010
CAMPAIGNING FOR STATE-OWNED BANKS
My comment regarding this piece is that while I fully support State Chartered Banks and they are a part designed into Freedom's Vision, by themselves they will not solve the fiscal and debt problems faced by the states in the short and medium term. This is because a State Chartered bank creates credit... entities that are saturated with debt do not need more credit as their income cannot support the credit they already have. This is why Freedom's Vision works to clean the state's balance sheets up first.
In the long term, low and no interest loans can be made turning the interest equation around to work for the people instead of against them.
After yet another no volume ramp job overnight, the rug was pulled out and now futures are lower this morning. Below is a 30 minute chart of the DOW on the left and 5 minute S&P on the right to show the overnight action:
The dollar is higher, bonds are higher, both oil and gold are lower.
The S&P Case-Schiller Index came in lower for the month of December. The year over year rate of price decline did slow somewhat, from -4.5% to -3.1%.
The ICSC and Redbook are also out, but not worth discussing, I feel sleazy even typing their names they are so worthless and deceiving.
Citizen (consumer) Confidence is released at 10 Eastern.
Speaking of sleazy, Bank of England’s Mervyn King says he’ll just do “whatever seems appropriate” for the economy, lol. Nice plan, Mervyn, I’m sure the people of England will rest well knowing that:
King Says BOE Will Do ‘Whatever Seems Appropriate’ for Economy
Feb. 23 (Bloomberg) -- Bank of England Governor Mervyn King said officials are prepared to do “whatever seems appropriate” to prevent a relapse in the U.K.’s economic recovery.
“Our central view is still that the most likely set of outcomes are along paths which involve a gradual recovery,” King said in testimony to Parliament’s Treasury Committee today. “But anyone who has lived through the last two years will surely know there must be enormous uncertainty on either side of that.”
The U.K. economy is entering a “very grave stage” and the Bank of England should expand its 200 billion-pound ($309 billion) bond-buying plan to fight the risk of a relapse, former Treasury adviser Roger Bootle said yesterday. Officials paused the program this month to gauge the strength of the recovery.
“Monetary policy can either be more expansionary or more contractionary as the situation demands,” King said. “We stand ready to do whatever seems appropriate.”
Yeah, like print money until the cows come home? Indebt the people to the tune of 300, 400, 500 percent of GDP, whatever… no biggie, no plan, but by golly he’s there to do whatever seems appropriate. Is there any doubt these people have no idea what they are doing? They don’t, and that includes all the central bankers – they have created a debt backed money machine that is spinning wildly out of control. There is a known outcome, that outcome is approaching faster than most are willing to acknowledge.
Yesterday’s price action did not resolve the small change on the McClelland that occurred Friday. That means the odds are high that there will be a large directional change today.
The futures have broken a small rising trend line, so some type of correction is expected today, whether it’s the start of wave 3 down or not has yet to be seen, but I am expecting that to occur soon.
I see a small H&S formation on the NDX 5 minute chart, a break below about 1,812 would break the neckline and confirm the pattern:
The short term stochastic indicators are all in the middle with room either way, but the daily is now overbought again.
Yesterday the VIX produced its ninth down day in a row (RUT nine up days) and produced an inverted candle that is close to being an inverted hammer. Watch to see if it rises today, if so it could mean a change of direction for the market:
The HUI, gold bug’s index, has developed a H&S top formation. I’ve been watching gold and it does not have such a clean pattern as the HUI, but I think this pattern needs to be watched. A break below the neckline would be quite bearish for gold and this pattern is aligning with what I’m expecting for the coming wave 3 down:
LOL, love the Mervyn King comments…
Beattles – We can Work it Out:
Monday, February 22, 2010
It can be demonstrated that the math of debt just doesn’t work in many different ways, today we’re going to take a snapshot at the long end of the yield curve so that we can illuminate the deep, dark, and dank corner in which our politicians and central bankers have painted themselves with their debt backed money.
I keep talking about the math of debt and how it is expressing itself in several ways:
Death by Numbers
Zombie Nation – The Rise of the Mathematical Plague
The Impossible Math of Debt Backed Money
All of these articles point to the same mathematical conundrum of debt backed money. The bond market, otherwise known as the DEBT market, is saying the same thing.
A little over a year ago I wrote Bond Market Hide & Seek – A Domed House & 3 Peaks, that explained the topping formation in long bonds and why I was forecasting that the blow-off parabolic move occurring at the time was ending and that it would collapse back to its base. That’s exactly what happened, and now here we are at the base yet again.
This base is an inflection point. A decision must be made.
Below is a 5 year chart of TLT showing the phases of that formation and subsequent collapse. The overall formation is now a very large Head & Shoulders. The head was formed as interest rates on the short end of the curve reached ZERO. Therefore, I believe that was it – as high as TLT can possibly get (price moves up as rates move lower). The green up-sloping line is the ten year trendline, note that we are sitting right on it or even just below it depending on how it’s drawn. A break of that trendline will signal higher rates are coming:
IF that neckline is penetrated and that H&S pattern confirmed, the target on that formation is all the way down at 56! That would represent a disaster of massive debt proportions to our economy. Each uptick in interest rates makes the chasm between debt and income even wider.
How do rates get below the neckline? By first breaking the smaller H&S formation found on this 9 month chart of the TLT:
That 9 month H&S pattern is the right shoulder of the larger H&S pattern. Here you have a neckline that is now at 89 to 90, right in the present position. A break below here breaks the long term trendline and validates the smaller H&S pattern that has a price target of 78. That’s well below the larger H&S neckline and now you have a disaster target of only 56 and you basically doubled the cost of carrying long term debt.
Could that happen? Absolutely. Many are calling for a bounce upwards, and that may happen, but only if choices are made that allow it to happen.
If you look back up at that 9 month TLT chart, I do note that I see 5 distinct waves down into our present location, the daily, weekly, and monthly stochastics are oversold and look prime for a bounce. Definitely up against long term support. But a bounce here will likely mean that equities take it on the chin. Which is it going to be?
The Point & Figure charts say that the necklines are going to break. Below is the TLT P&F chart, the bearish target is 82.
Now let’s look at the 30 year bond fund, USB. Below is a weekly chart and here you can see the same H&S pattern with prices approaching the red neckline. If that neckline is broken, the target would be 86, again a long way down. I contend that we reached a critical juncture when interest rates on the short end reached zero… that means that the future will not look like the past 30 years as interest rates have been descending since 1980:
Below is the USB P&F diagram, bearish target is 94:
Yes, there are still choices to be made, but none of them are good ones. “Johnny, show ‘em what’s behind door number 1!”
Door #1. “Well, Bob, behind door number one…” we can let interest rates rise, break the neckline and watch in slow motion as all the holders of debt slowly get killed… that would include our Federal Government. Sure, the stock market can go higher for awhile as money flows out of bonds but eventually the economy simply grinds to a halt as the cost to finance our national debt skyrockets, as the cost to finance homes, autos, and consumer debt skyrockets, and as the expense to finance business skyrockets. It won’t be a pretty sight, but it may take awhile longer to be noticed and fully realized. Bernanke just signaled this is his option by raising rates .25%. This option is the option that kicks the can down the road just a little farther.
Door #2. We take the pressure off the debt markets by withdrawing stimulus, letting equities roll over, people again seeking safety into the debt markets. No, bond prices will not, in my opinion, get anywhere near as high as they were before, this is because of debt revulsion – investors have already been burned and now see the massive deficits somewhat as the threat that they are. If we play by the rules of the game, this is the option that will win the day. Of course accounting standards like mark-to-fantasy aren't exactly in accordance with Hoyle already. This option is being jawboned, we'll see if they really mean it and pull support.
Door #3. This is the option of changing the rules of the game. A lot of this has occurred already, but this option is a confidence destroyer. It means more Q.E. (money printing), it means more buying up of toxic waste assets, and it means other “creative solutions” could be coming.
“All this, and more, can be yours IF the Price is Right!”
“Thank you, Johnny!” Bob graciously hosted as he turns to a red faced Bernanke, “Well, Ben, you are damned if you do and damned if you don’t – which door will it be?”
The Monday morning mark to fantasy crack-up boom continues once again so far with equity futures higher, below is a 60 minute chart of the DOW on the left and a 5 minute chart of S&P futures on the right:
Both the dollar and bonds are down slightly, oil and gold are roughly flat.
No economic data today although Bernanke flaps his monetary and rule of law destroying lips at 11 Eastern as well as twice more later in the week. Tomorrow is Citizen Confidence, then comes New Home Sales, Durable Goods, GDP revision and a host of the regular cast of distorted and twisted statistics.
Greece is still smoldering, nothing accomplished but lip service. Debt still rotting all across Europe and around the world – nothing solved, debt will continue to cause problems around the world, do not be fooled.
Schlumberger is evidently buying Smith International for $11 Billion in an all stock deal – note the lack of cash. This will create a giant drilling and oil field servicing company, and is of course, a great topic for pump on CNBS with no real meaning or implications to the broader market from a realistic perspective. Again, no cash, not even any movement in the debt pushers’ world.
Friday produced a small movement in the McClelland Oscillator which means we can expect a large movement either today or tomorrow. It seems to be a part of this Monday morning ramp phenomena that stocks produce a low volume ramp on Friday in order to get in front of it. Of course last Friday was Options Expiration and that played a part too, the volume was low for what you would expect.
Here is a chart of the XLF, again, nothing but a low volume melt up to the 50% retrace and to the 50dma which it could not penetrate so far:
The SPX is sitting just above the 1,107 pivot which is now support. The next higher pivot is at 1,133, and next lower support is at 1,090 with 1,100 also a support level. Most of the indices did manage to barely close above the 50dma, but others like the Transports did not.
This retrace has now performed a textbook 61.8% retrace for what I have been tracking as a wave 2. Wave 2s can retrace up to 100% of wave 1 and still be valid. There is another turn date on the 26th of February and McHugh believes that since it is close to the one last week that we’ll likely see one turn in the middle, that would be this week. Hey, timing is the hardest part to pin down, especially in these hot money manipulated markets. If there’s no turn downward this week, or if we go on to make a new high, then we start to look at what else is going on. For now, we are tracking what I and McHugh are calling a wave 2.
I note that Tony Caldero is starting to waffle on his wave count and is talking up the new bull market alternative. Basically in that scenario, the last down move instead of a wave 1 is a wave 4 and this is wave 5 up. I do not buy that wave count and note that wave 2 here is doing its job of sucking people and their money in. Volume confirms price, no bull market, in fact, historic volume divergence.
I want to make it clear, however, that while I don’t see the possibility of a genuine bull market, I am always open to a money printing crack-up boom, but again, I just don’t see it unless we go on to make a new high here and produce an obvious 5th wave higher. A 5 wave movement higher would be an indication that wave B was not really a 3 wave movement a,b,c – that is was wave 1 up. Again, that is not the primary count in any way, shape, or form, instead I believe that we are still very close to producing a top here as the most likely scenario. Nothing fundamentally from a debt perspective has been solved. Incomes are further away from servicing the debt, not closer. That is the ball to keep your eye upon - until that is resolved there will be no genuine bull market in equities.
I note a downdraft occuring on the open, I can just visualize all of Bernanke’s debt backed money fluttering in the wind while being stirred up by his helicopters! Funny, but I can also see that the breeze flows unimpeded in one ear and out the other…
George Benson – Breezin’:
Sunday, February 21, 2010
Will this “debt forgiveness” simply be written off and not accounted for properly? By taking from money owed Medicare (an accounts receivable), this when properly accounted would put Medicare in an even deeper hole. Perhaps that hole is so deep that they don’t think anyone will notice?
Where exactly in the rule of law does it allow for Medicare debt forgiveness? Is this not monetizing? This is not a little question or a minor detail, the rule of law and accounting standards need to be followed or confidence in the system will continue to deteriorate.
States get extra Medicaid aid but two want more
NEW YORK (Reuters) - U.S. states will get an extra $4.3 billion to pay for drugs for elderly or disabled people covered by Medicaid and Medicare, but at least two of the states with the biggest health plans said they need more cash.
“This relief will help states continue to provide critical health care services to the nearly 60 million beneficiaries who depend upon it," U.S. Health and Human Services Secretary Kathleen Sebelius said in a statement on Thursday evening.
Medicaid is the joint state-federal health plan for the poor, disabled and elderly. Medicare covers people who are at least 65 years old or have long-term disabilities and the federal government pays for it.
Both New York Democratic Governor David Paterson and California Republican Governor Arnold Schwarzenegger applauded the federal assistance Sebelius announced. New York's share is $400 million; California will get over $675 million.
But like many states whose tax revenues have crumpled during the recession, New York's deficit has soared and now is expected to top $8 billion, while California must shut a nearly $20 billion budget gap -- and Schwarzenegger expects the federal government to chip in nearly $7 billion.
To underscore the cash crunch in the most populous state, Schwarzenegger last month traveled to Washington, D.C., and met with Sebelius, a former Democratic governor of Kansas.
On Thursday the Hollywood icon turned politician also thanked the White House, a sharp contrast with the criticism he recently heaped on its healthcare overhaul plans.
In a statement Schwarzenegger said that "our bipartisan efforts for a more fair and equitable relationship with the federal government are paying off."
"These funds are important, and while we still have more work to do, I appreciate the commitment of the Obama Administration in responding to our requests for these much-needed funds that are owed to our state."
New York's governor also welcomed the extra dollars but added that, "Given the serious nature of the fiscal crisis that states across the country continue to face, further action is still needed."
He urged Congress to include President Barack Obama's proposal to give states an extra two quarters of increased reimbursements for Medicaid in any job-growing legislation.
The number of New Yorkers whose health care is covered by Medicaid hit a record of 4.2 million in October 2009, 13 percent above the previous high set in August 2005.
On Friday, Paterson, whose short-term savings plans include possibly delaying income tax refunds owed to New Yorkers by several weeks, released a list of parks to be closed.
Jones Beach State Park, one of Nassau County's most crowded parks on Long Island, will shut one swimming pool and cancel fireworks on the July 4th U.S. Independence Day holiday.
And here’s more from California. Writing off Medicare debt frees up their budget in a robbing Peter to pay Paul process. Make no mistake, $4.3 billion is a huge sum of money, and yet it is truly just the tip of the iceberg. This type of thing is occurring against a background of HUGE shortfalls and rising taxes. The numbers are spiraling out of control, these types of actions are an indication that the end of current debt backed money game is near.
Simply “an extension of the stimulus act passed last year?” Amazing how dysfunctional our money system and politics are. Freedom’s Vision would cure most of this and end these increasingly desperate attempts at piecemeal monetization, piecemeal default. While they default in this corner, they are backfilling with even more debt in another. Our nation has no accounting standards at this point, it is very close to a free for all.
Feds grant $675 million in budget relief to California
WASHINGTON — Sometimes pleading pays.
The high-profile lobbying campaign that Gov. Arnold Schwarzenegger launched with the state's Democratic senators for more cash from the federal government yielded a $675 million dividend Thursday, a welcome bit of relief for the state's deficit-riddled budget.
U.S. Health and Human Services Secretary Kathleen Sebelius said the Obama administration will forgive $4.3 billion in health care payments owed by states to the federal government through the end of the year. California's share is $675 million.
The news came a month after Schwarzenegger made a high-profile trip to Washington to lobby for some $7 billion in federal relief he said the state is due. California faces a nearly $20 billion budget shortfall.
"Today's announcement shows that our bipartisan efforts for a more fair and equitable relationship with the federal government are paying off," the governor said in a statement. "While we still have more work to do, I appreciate the commitment of the Obama administration in responding to our requests."
The money at issue is part of the states' share of prescription drug costs for low-income seniors who were once covered by the state Medicaid programs but are now enrolled in the federal Medicare Part D program.
The decision to forgive some of those costs is essentially an extension of the federal economic stimulus act passed last year.
"We believe today's action will help states as they struggle to maintain Medicaid and other budget priorities in these difficult economic times," Sebelius said in a news release.
If a provision in President Barack Obama's budget plan is approved, California could net an additional $160 million in relief, the governor's staff said.
Schwarzenegger gave credit to Democratic Sens. Dianne Feinstein and Barbara Boxer, who argued as far back as 2006 to the Bush administration that California was being shortchanged under the prescription drug program.
Recession over, or simply an Enron style paper mirage?
James McMurtry - "We Can't Make Here" Anymore:
It’s a debt backed money process that is simply out of control. We're Doing Something About it! Come Join the Swarm!