NesteaDerivativePlunge  (PDF version)

            "It's only when the tide goes out that you learn
           who's been swimming naked. " - Warren Buffett

Centralization of the Appraisal Institute --
Part 1: The Money Issue in Various Forms, aka Smoke and Mirrors
Part 2   Crack Up, Boom!? in the GSE Derivative Plunge
and the initial Sting setup?
How I Missed My Kondratiev?

Isn't that a great quote by the Oracle of Omaha? Free markets, under Austrian Economics, aka Messrs. Von Mises and Rothbard (See: http://www.mises.org) do not appear to operate in the precious metals markets,**or on Wall Street. This is because of what appears to be direct market intervention and control by the Federal Re$erve, the Equalization Stabilization Fund, the Working Group on Financial Markets, aka the Plunge Protection Team, as well as other behind the curtain market participants. These most likely include the U. S. Treasury, some bullion banks, as well as some really savvy derivative players in an unregulated over the counter market. See: Fed to prop up Wall St -- Shadowy committee ready to pour billions into stock markets to avert shares meltdown -- Richard Wachman and Jamie Doward @  http://www.observer.co.uk/business/story/0,6903,552535,00.html

However, dear reader, if you want to just believe that heavy metal has been in a 20 year bear market all on its own, go right ahead   However, I think we all agree that heavy metal is one of the few bull markets out there on the planet in the greatest secular bear market in 400 years of economic history.  Also, if U wish to believe that Wall Street is a level playing field and live in the Land of OZ, be my guest… after all, it is, in fact, U're money, not mine.

See: Mr. Greenspan, Pray Tell, WHY? -- Keyser Soze

See: Fedwatch @ http://www.financialsense.com/resources/fed/fedwatch.htm

See Nelson Hultberg Essays on PPT/Federal Reserve @ http://www.gold-eagle.com/research/hultbergndx.html

See: "GATA.ORG & GOLD MANIPULATION FOR DUMMIES" --
          The Gold Derivative Banking Crisis
http://www.pgtigercat.com/gatafordummies.htm

See: Jim Sinclair's MineSet.Com
http://www.jsmineset.com/s/Home.asp

Two of the latest essays from Reg Howe and James Turk on the Gold Derivative Banking Crises are More Proof and Long Con: Mother of Bank Runs linked as follows:

See: More Proof -- James Turk
http://www.gata.org/MoreProof.html

See: Long Con: Mother of Bank Runs -- Reg Howe
http://www.goldensextant.com/commentary25.html#anchor522925

Mr. Greenspan says that housing cannot be a real estate bubble, since all real estate markets are 'local." This means that there cannot be a bubble in micro realty markets. Likewise, in Greenspan's World, sewage does not gravity flow.

See: Popping the Real Estate Bubble Myth -- www.cendant.com
http://www.cendant.com/media/trends_information/trends_information.cgi/Real+Estate+Services/136

See: Home Mortgage Market, Equity Buoys Economy --  Broderick Perkins
http://realtytimes.com/rtnews/nlpages/20030306_mtgmarket.htm?opendocument&Vol=52&ID=sampleplus

Through the two tiered structured finance system in which the GSEs operate, mortgage backed securities are globalized to investors using the real estate housing bubble to hold up the consumer as the U. S. Economy. All the while these participants export the inflation of the US dollar abroad to investors who believe their GSE securities are backed by the US Congress, which they are legally not. This is the essence of G. Edward Griffin's Chapter 2, The Name of the Game is Bailout, from The Creature from Jekyll Island, a second look at the federal re$erve. I assure you that no one (JPM) is too big to fall. Ask Goliath! How many little stones did David have, anyway? Three?

From: "Structured Finance & The Bifurcated Financial System"
 

"Structured Finance includes the asset backed securities market and mortgage backed security market, all the   government sponsored enterprises, Fannie Mae, Freddie Mac, Federal Home Loan Banking system, the Wall Street Firms, and all the derivatives. What this system has mastered is it can go out and aggressively lend. It could be telecommunications loans, but today it is generally mortgages. They can take all these loans and pool them. They can put them into a trust and then they can go out and purchase different derivatives, to protect against interest rate moves and credit losses. Through this process, they then can get a AAA rating because of this structure. They can then go out and issue top-rated securities from this trust. It is a very efficient mechanism for lending and securitizing these loans. But because it is so efficient, it can be abused. And used in huge excess, it can lead to these huge lending booms and busts as we have seen in telecommunications debt and as we are witnessing today in historic proportions in the mortgage arena." -- Doug Noland  with Jim Puplava

See: http://www.financialsense.com/transcriptions/Noland2003.htm
See: Credit Bubble Bulletin @ http://www.prudentbear.com/archive_home_com.asp?category=18

Of all the financial analysts and soothsayers on the planet, perhaps Mr. Doug Noland of www.prudentbear.com in the Credit Bubble Bulletin has seen the best through the FED's smoke and mirrors…. Noland is a rat terrier when it comes to following the money and describing the real deal in the game of two tiered structured finance.
 

Federal Re$erve Notes, GSEs, Derivatives, Gravity Flow in Omaha,
  And is that a hissing sound I hear…?

Greenspan FRN & other Images of Greenspan "Dollar"
from Brady Willett, courtesy www.fallstreet.com

The classic economics definition of inflation is more legal tender fiat paper currency chasing fewer goods and services, not rising or higher prices. The GSEs use the counterparty risk instruments called derivatives to trade and hedge on interest rates, currencies, and other bets on the global markets to grow their portfolio @ 15% per year. Derivatives (sewage instruments) are "financial weapons of mass destruction," according to Warren Buffett, the Oracle of Omaha, of Berkeshire Hathaway. Mr. Buffett is the second richest man in the world. Derivatives are a financial accident in two tiered structured finance and a financial house of cards. It now appears that Mr. Buffett, the second richest man in the world, and the Maestro of international central fractional re$erve banking, Chairman Alan Greenspan, are in a urinating contest as to whom is correct on the derivatives situation in the global markets. I am placing my money on the number two richest investor on the planet from the no BS Midwest, aka the Oracle of Omaha… He's sitting on several million ounces of silver bullion he bought in 1998 or so…(along with Bill Gates of Microsoft and George Soros) and knows that sewage (Mr. Buffett's term for derivatives is financial weapons of mass destruction) runs downhill, at least in Omaha, Nebraska. Evidently, Mr. Greenspan, with his Ph.D. in economics never took any civil engineering courses, or Newtonian physics courses, thus has no inclination about gravity flow. In Missouri, in a number of rural properties, sewage disposal runs off from point of origin… over the hill… and eh…ain't disposed of "properly." This is in fact, much to the chagrin of the Missouri Department of Natural Resources. However, it generally gets cleaned up when properties sell, or if they sell. If the secondary mortgage market takes a direct derivative hit and Jumpin' Jesus Raines can't walk on water…you had better think in terms of liquidity torpedo, and use the big nasty "D" word.

From "Fed chief differs with Buffett over threat from derivatives"
 

"The chairman of the Federal Re$erve Board, Alan Greenspan, taking issue with the warnings of the billionaire investor Warren Buffett, said Thursday that the growing use of complex financial instruments known as derivatives did not pose a threat to the financial system. Greenspan said investors who bought derivatives, including banks, had been able to spread their risks and that this had helped lessen the severity of the 2001 recession. "Even the largest corporate defaults in history, WorldCom and Enron, and the largest sovereign default in history, Argentina, have not significantly impaired the capital of any major financial intermediary," Greenspan said in remarks delivered to a banking conference in Chicago. "The benefits of derivatives, in my judgment," he said, "have far exceeded their costs." Greenspan used the speech to rebut warnings about derivatives from Buffett, the president of Berkshire Hathaway Inc., in his annual letter to shareholders in March. In the letter, Buffet contended that derivatives were "financial weapons of mass destruction," saying that they posed grave risks to the financial system." From the Associated Press, The International Herald Tribune Online.

See: http://www.iht.com/articles/95721.html

From: FORTUNE.com, "Avoiding a 'Mega-Catastrophe'
For More Links On Buffett and Munger on Sewage/Derivatives: Click Here

"Another problem about derivatives is that they can exacerbate trouble that a corporation has run into for completely unrelated reasons. This pile-on effect occurs because many derivatives contracts require that a company suffering a credit downgrade immediately supply collateral to counterparties. Imagine, then, that a company is downgraded because of general adversity and that its derivatives instantly kick in with their requirement, imposing an unexpected and enormous demand for cash collateral on the company. The need to meet this demand can then throw the company into a liquidity crisis that may, in some cases, trigger still more downgrades. It all becomes a spiral that can lead to a corporate meltdown. " Derivatives are financial weapons of mass destruction. The dangers are now latent--but they could be lethal." -- Warren Buffett, Berkeshire Hathaway

See: http://www.fortune.com/fortune/investing/articles/0,15114,427751-2,00.html

"To say derivative accounting in America is in the sewer is an insult to sewage."
-- Charlie Munger, Berkeshire Hathaway

Now we have the erudite Fed Chairman speaking from the other side of the brain. Is he left-brained, or right-brained. Are derivatives right brained, or left brained… or globally neutral in the greater cosmos of the global financial markets? From the other side of the FED Chairman's Fed$peak:

Greenspan alludes to JP Morgan's derivatives risk
-- Chris Sanders and Eric Burroughs
 

"NEW YORK, May 8 (Reuters) - JP Morgan Chase found itself under the spotlight on Thursday when Federal Re$erve Chairman Alan Greenspan alluded to the bank's massive derivatives portfolio and the threat it may pose to markets. JP Morgan's $28 trillion share of the more than $100 trillion derivatives market makes the bank almost too big to fail, experts said. The No. 2 U.S. bank is by far the leader among the handful of banks that dominate the derivatives market, and Greenspan warned that troubles like credit rating downgrades at one of the firms could lead to disorder in financial markets. JP Morgan declined to comment on Greenspan's remarks. The bank's role in the derivatives markets means it has financial relationships that extend well beyond Wall Street, reaching deep into Corporate America and around the world. "The government is not going to let the derivatives market collapse because JP Morgan collapses," said Richard Bove, a bank analyst with Hoefer & Arnett. But as Greenspan warned in a Thursday speech, "When concentration reaches these kinds of levels, market participants need to consider the implications of exit by one or more leading dealers." In his role as chief bank regulator, Greenspan is letting the world know he is keeping a keen eye on the rapidly expanding derivatives market. That said, Greenspan again praised the role that complex derivative contracts have played in fortifying banks against the repeated shocks that have hit in the past few years, including the stock market crash, economic downturn, record bankruptcies and the Sept. 11 attacks." -- Chris Sanders and Eric Burroughs

See: http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=2708903
 

Isn't this just great? On the one hand Mr. Fed$peak says that everything is hunky dory in Magical My$tical Derivative Land, and that they are the greatest thing since the Federal Re$erve invented $liced Wonder Bread. In the next breath, he singles out JPChase (JPM) as posing a tiny bit of $ystemic risk to the financial $ystem with its derivative portfolio. What gives? We found Mr. Jim Sinclair's exposé of the "practical side" of derivatives "cutting to the chase" in his May 9, 2003 essay, Never Say Die, See: http://www.jsmineset.com/s/NewsArchives.asp?ReportID=61385&_Title=Never-Say-Die
 
 

"Derivatives are, as we know, unfunded contractual agreements for specific performance derived from something, anything and nothing. When markets change, these miracles of mathematics simply grow larger, supposedly offsetting the risk of the new market direction. They have no real markets because they lack standards (contracts that look alike and mature at standard dates). They hide their potential financial horror deep in the complexity of their mathematical formulation. It is like the king without clothes. Those that understand the mathematics (or think they do) look down their noses at simpletons like you and I that take a view long or short and have the courage to play our convictions. Those that do not understand them and have high positions in finance or the Federal Re$erve pretend they understand them so as not to seem an anachronism in finance." -- Jim Sinclair

Well, derivative$ are really $cary financial weapons of mass destruction according to the nice folks at Berkeshire Hathaway and Mr. Sinclair. Mr. Charlie Munger, Mr. Buffett's sidekick, can be quoted as saying: "To say derivative accounting in America is in the sewer is an insult to sewage."  According to Jim Sinclair the total global derivatives market has increased 97.22% from $72 Trillion US$s to about $142 Trillion US$s over the past nine months. That's 129.62% Annualized, Folks! JPChase has about $28 Trillion from what we have been following in the global markets. That's a lot of legal tender fiat paper change on anyone's tally sheet. With the Federal Re$erve as the lender of last resort who loves market manipulation with rate cuts pushing on a string, the Savings and Loan Bailout in the late 80s and early 90s, and the 1998 bailout of Long Term Capital Management and their fancy computer models, the Mandrake  Mechanism of creating money out of thin air (debt) could be running 24/7 (See Chapter 10, The Mandrake Mechanism, The Creature from Jekyll Island, G. Edward Griffin.) If this occurs will the US$ have any value left, as it has already lost over 95% of its value since 1914? Inflation is more legal tender fiat paper "funnie monie" chasing fewer goods and services. The Fed's $moke and mirror garbage about fighting inflation or deflation is… simply $moke and mirrors. If these money fraud$ don't inflate the holy hell out of the currency, there won't be enough money to service all this debt we as consumers have built up. Simple truth is, when you pay off a loan, it diminishes the money supply. When loans belly up, it diminishes the money supply. When financial markets implode, you had better be in heavy metal, the physical kind, and not some fancy COMEX paper gold or silver contract that ain't worth a tinker's damn upon implosion explosion. The financial system under two tiered structured finance is a Nestea Derivative Plunge off a financial abyss implosion… and with derivatives, it can happen before you poop in your jockey shorts or hit the bottom of the abyss… thanks to the global markets and electronic funnie monie. Please, Send in the Clowns! To pray for Blue Skies! -- the top tune of 1929!

According to Mr. Sinclair:
 

"Derivatives cannot contract forever, even in bankruptcy. They will grow and grow and grow and that is their weakness. They are mathematical marvels that always work in a computer simulation and always fail if called to perform as in a free market. They hide from view under their own complexity. They have been rung dry of money by dealer's spreads and commissions. There is no money behind them." -- Jim Sinclair

When we factor in the fact that the GSEs are part of this derivative house of financial cards on the planet, those who say real estate cannot be in a bubble because all realty markets are local, also believe that it never rains in the Amazon. It is a moot point whether real estate micro or macro markets are in a markets bubble as of this writing. There are enough Ph.D.'s educated in economics from Yale and Harvard floating around to convince almost anyone that Night is Day, and Day is Night… while actually, Cole Porter wrote Night and Day…

See:  Why Does Mr. Fed$peak Have To Keep Interest Rates Low? -- Paul Kasriel
http://www.ntrs.com/library/econ_research/weekly/us/030515.html

Who the hell really cares if real estate is in a markets bubble, which it is. But, consider this! If we have a derivatives meltdown of almost any kind, it most likely will impact the GSEs, and the 15% growth of Fannie Mae playing the global derivatives markets. Same can be said for the other spurious and bloated GSE rascals. Take the so called liquidity out of the secondary mortgage markets for all those non-bubble micro real estate markets, and try to sell your home to a buyer who has to pay a premium mortgage rate because the finance capital comes from Kansas, and not the bloated and spurious GSEs if they become illiquid, and cannot buy loans for a while until the US Congress, aka the US Taxpayers bail the rascals out! Illiquid real estate financing markets, in debt backed real estate, render real estate micro markets not markets which were in a bubble… they just went to instant Depression Micro Realty Markets. Guess What? Mr. Greenspan is silent on that one. I don't think he wants to bring up the subject, but we can easily debate the rascal, as we know what Depression Micro Realty Market Appraising is like, since we been there, and done that, for the FDIC in the 1980s. I wonder if Mr. Fed$peak has ever had the pleasure of performing a realty valuation inspection in micro market realty depression appraising 101, and been greeted at the front door of the property by a double barrel shotgun under the 2nd Amendment to the Constitution? Probably not.

We can only guess that since the central bank is talking about $liced Wonder Bread (aka derivatives), that some initial positive publicity may be in the works with some light warnings such as that on JPChase. Why? Who knows? But, if there is a meltdown in the financial markets, it will make it much easier for the central bank to take care of suspected future problems. It will make it much easier to pump the funnie monie to the markets with a little pre-warning -- wouldn't you more or less do a little propagandering to hide more monetary destruction of the currency in the future game of bailout? I would.

See: Has The Fed Already Gone Unconventional? -- Marshall Auerback
http://www.prudentbear.com/archive_comm_article.asp?category=International+Perspective&content_idx=23042

Mr. Auerback at www.prudentbear.com in the article recognizes the FED induced GSE money pump for exactly what it is. We find Mr. Auerback's last paragraph regarding the Frankenstein Monster and the FED as most amusing, and very well written. Real estate has always been, and will always be a depreciating asset in terms of constant and fixed monetary value, regardless of changes in a micro market which could enhance value though increased demand, hence increased market appeal, hence property price appreciation. This phenomenon can and often happens in micro real estate markets. However, a commercial or residential property is new only on one day… the day that it is sold to the first buyer. From that moment on it begins to physically depreciate.

When we have an unsound, and what I consider to be an un-constitutional monetary system of Federal Re$erve Notes, property price appreciation becomes the main fuel to help feed the GSE money pump to hold up the consumer as the U. S. Economy -- which only adds more debt burden on the consumer. The system works only insofar as the monetary base of FRNs increases to pay the debt service, and the GSEs are able to peddle their mortgaged backs to investors on the globe with the wink that they are guaranteed by the US Congress… aka the US Taxpayers. However, property price appreciation which is not linked to micro market forces of increased effective demand, but merely represents more inflation of the currency, is a visible representation of Frankenstein's Monster in the destruction of the monetary system. Add a little derivative meltdown to the global house of cards,  lock up the motor on the GSE money pump, and folks will learn very quickly about debt backed monetary systems and debt backed real estate. Without debt, real estate micro markets don't function very well putting builders, Realtors, home inspectors, realty appraisers, mortgage brokers, banks, savings and loans, and building tradesmen out of work. Do fractional re$erve bankers know that if they are not making loans creating more debt out of thin air, that they are simply out of business?** All is not right in the Land of Oz.

See: The Biggest Myth about Money -- Hans Sennholz http://www.mises.org/fullstory.asp?control=1198 .

Knowledge of the Prime Directive motivated the Ole Bear to Create Battle Plan Portfolio Analysis.

See: Has The Fed Already Gone Unconventional? -- Marshall Auerback
http://www.prudentbear.com/archive_comm_article.asp?category=International+Perspective&content_idx=23042

From our friend Rick Ackerman's Market Wise Black Box market forecast, Mortgages and the Dollar, See: http://www.marketwise.com/MW_WiseG/BBF_Archive/20030512.htm ,
we are equally amused at the comments of Howard Hill, the expert's expert as contained in Mr.Ackerman's snippet of market wisdom:
 

"I asked Hill how much stress it would take from a falling dollar to cause mortgage rates to rise significantly. His reply was that only a massive flight out of dollars would do it -- on the order of trillions of dollars, not mere hundreds of billions – with the euro moving north of 150 euros/dollar and quarterly funding by the U.S. Treasury exceeding $100 billion. This will someday come to pass, I fear, but Hill sees it happening over a period of years rather than precipitously, with the slow implosion of residential real estate reaching critical mass in about 4-5 years. He says most other forms of debt will be downgraded long before mortgages, simply because, at the level of individual, even if we are stiffing all of our other creditors, we will continue servicing our mortgages so long as we can beg, borrow or steal the amount needed to do so. In the investment world, says Hill, “Nothing on God’s green earth is safer right now than lending against a person’s home,” and long before the mortgage market sours, he adds, we’ll see corporate borrowing rates soar and huge lenders like GE Capital (!) go belly up." -- Rick Ackerman

Real estate crashes have the propensity to take a long time to crash, perhaps even longer than it will take the DOW to implode to the 7% yield corresponding to the 13-14 PE (price to earnings) ratio. Real estate crashes are a slow trainwreck to financial hell, as they destroy families, micro markets, increase the rate of suicides, crime, and you name it. Add the narco dollars economy, HUD Fraud, and other nasty stuff which "that smart lady" Ms. Catherine Austin Fitts describes in her research and essays at www.solari.com, and a little Trouble in River City can become a nightmare.

See: http://www.solari.com/gideon/articles_risk.html
See: http://www.solari.com/gideon/articles%20by%20caf.htm
See: The American Tapeworm, Part 1
http://www.scoop.co.nz/mason/stories/HL0304/S00228.htm
See:  The Solari Solution, The American Tapeworm, Part 2
http://www.scoop.co.nz/mason/stories/HL0305/S00002.htm
See: The Myth of the Rule of Law
 

Add a little mal-investment and over-building in a few micro realty markets to the above scenario, and Chairman Greenspan's comment that housing cannot be a markets bubble, as all realty markets are local, could be one of the biggest busts the Federal Re$erve ever created. The Great Depression could look like a walk in the park, if, and when a derivative accident sneaks up and bites Mr. Fed$peak on his assets. A great disscussion by Lawrence Reed on Great Myths of the Great Depression, is an easy read in pdf format, and is one of the best sixteen page synopsis of the Great Crash, as we find ourselves in the Kondratievian Winter Wave Cycle.

See: http://mackinac.org/archives/1998/sp1998-01.pdf

The following links are timely with respect to the GSE money pump inflating real estate at the current time. We view appreciating real estate in the current global economy, as a $moke and mirrors to hide the game of monetary currency destruction. Hey, if you don't inflate, where's that fiat money going to come from to service the debt?

See: Fannie Mae Distorts Markets  --  Robert Blumen
http://www.mises.org/fullstory.asp?control=986

See: Moneyfile$ -- Housing Bubble
http://www.moneyfiles.org/hbubble.html

See: Bubble-Licious
http://www.pgtigercat.com/Bastille/Bubbilicious.htm

The James Puplava Essays - www.financialsense.com
See: The Perfect Financial Storm Series
http://www.financialsense.com/series2/perspectives2.htm

Bubble Troubles Part I -- “DOUBLE, DOUBLE, TOIL AND TROUBLE; FIRE BURN AND CAULDRON BUBBLE”
http://www.financialsense.com/stormwatch/oldupdates/2002/0913.htm

BUBBLE TROUBLES PART II - Yes, Virginia, There IS a Housing Bubble!
http://www.financialsense.com/stormwatch/oldupdates/2002/0920.htm

Bubble Troubles Part III - It Ain't Over Yet for the Stock Market
http://www.financialsense.com/stormwatch/oldupdates/2002/0927.htm

In Richard Benson's The Federal Re$erve: "Moral Hazard's Best Friend"
See: http://www.321gold.com/editorials/benson/benson051403.html , or
See: http://www.gold-eagle.com/editorials_03/benson051403.html ,

we find that the mortgage industry (and the demise of the realty valuation industry) actually began in 1989 with the creation of FIRREA during the S&L Debacle (See: http://ai-dechapter.org/FIRREA.htm ) and mandatory state licensure or certification of realty valuation practitioners. This early centralization of the industries, the mortgage industry into the GSE/FED induced money pump, and the centralization process of thought/mind control over the realty valuation industry, really ramped up in the mid-1990s. By Year 2000 we have mated credit scoring of the GSEs to drive by realty appraisals, alternative valuation models, and globally satellited market values using computer models for valuation purposes. Blitzkrieg Mortgage Lending and Blitzkrieg Appraising were in full swing. Mr. Benson's comments in his essay are priceless, since they describe the Bliztkrieg mortgage lending and appraisal process in the current markets:
 
 

"Consider Housing. With $2.5 Trillion a year in new mortgages in 2002 - 2003, there is no question housing is the current bubble. FNMA and Freddie Mac are running programs to sucker every renter into becoming a homeowner. In higher quality apartment complexes, vacancy rates are up to 7%, and rising. People are buying homes at record prices, not because they have credit that justifies the purchase, but because lenders will lend. Effectively, there is no underwriting. Rising home prices justify higher LTVs. The fact that homeowners traditionally were better credits, justifies making people homeowners, because this automatically makes them better credits! No-one seems to remember when common sense ruled because people were better credits and they deserved to be homeowners. Surely, you would not be promoted at FNMA by handing out historical information that indicates that years ago the requirement for a serious 20% down payment on a home purchase was prudent, because; 1) home prices didn't always go up; 2) the cost of foreclosing and selling a house is about 10%; and, 3) if a buyer has 20% or more at risk, he might fight hard to keep his home. The Fed has just signaled it will cut interest rates again. Moreover, the market has reason to believe the Fed will never really tighten monetary policy until after the 2004 Presidential Election. The banking system remains in free re$erves. Buy Treasuries and Agencies. The Fed has promised to buy long term bonds to fix their prices. We now have another massive Greenspan put! However, by 2005, either home prices will be falling and we have deflation, or we will have rising inflation and interest rates, and a real housing crash that will force the Government to nationalize the GSEs. Credit underwriting? Fugidaboutit! Let Moral Hazard Roll. The GSEs must have over a Trillion dollars of very low down payment and sub prime mortgages either on their books or guaranteed in Agency securities. The GSE paper is "mystery meat" which explains why they are fighting so hard to give out honest data and to register their securities with the SEC. Many GSE loans are loans that would never be made by investors lending their own money. However, nobody cares because GSE paper is by definition AAA. So, every mortgage created will be financed. Most importantly, for the care and feeding of the housing bubble, financing any and all mortgages allows housing prices to rise. Rising housing prices makes all loans good, even if the owner can't afford to make any payments! FNMA's motto is "REFI because a "rolling loan gathers no loss." For every Hedge Fund, Broker Dealer, and small or large bank, it's "hold your nose, close your eyes, and buy Treasuries, Agencies, and even Junk Bonds." The Fed will finance anything and promise to buy the bonds if prices come under pressure. Take the risk; be patriotic; save the economy. The Fed will bail you out! Doesn't this encourage Moral Hazard? Think About It. $5 Trillion in new home mortgages in two years is beyond extraordinary! There are over $100 Billion of mortgages where the 5% down payment needed to qualify for a mortgage was made by a charity. However, the developer who built the home gave the charity the 5% for the down payment out of their 30% profit margin. In reality, there was no down payment, and the buyer has nothing at stake. Homeowners are sold on the idea that they should do a "cash out" refinancing and replace expensive credit card debt with lower cost tax deductible mortgage debt. Certainly, many homeowners have taken advantage of this. It's a smart thing to do. Yet, hasn't anybody noticed that in 2002 single family mortgage debt increased $700 Billion. Of that total, $200 billion were "cash out" REFIs. Common sense suggests consumer credit, such as credit cards, personal loans, and auto loans should have gone down significantly; however, consumer credit actually increased to a new record level!" -- Richard Benson

Being a professionally designated realty valuation expert in both commercial and residential specialties, we have written several internet essays on Blitzkrieg and how it works. What Mr. Benson describes in the areas I quoted above are the mechanism of Blitzkrieg Mortgage Lending and Realty Valuation. For more on the subject from inside the realty valuation profession, see my Blitzkrieg and Centralization Essays at www.pgtigercat.com at this link:

http://www.pgtigercat.com/Bastille/BastilleEssaysAnalyses.htm

Our thanks to Mr. Benson for writing The Federal Re$erve: "Moral Hazard's Best Friend". The GSEs are Moral Hazard's Number One Darth Vader. If we have enough over the hill derivative sewage, the realities of gravity flow will surely be discussed at FOMC meetings so the FED can undo Newtonian Physics. Einstein teaches us in the theory of relativity that E = mass x speed of light squared, or E = MC². We can infer that since derivatives are moving financial instruments, and that since moving clocks run slow, those of us in the know, have opportunity to get our personal financial houses in order. However, upon an atomic reaction, whether it be fission or fusion, the financial markets can become radioactive instantaneously. Some Nestea Derivative Plunge!
 

Moving on to JPChase (JPM), Amando Falcon,
and Party Pooper Poole at the St. Louie FED, or…
   How the Fox Guards the Chickenhau$

Additional articles are presented at the end of this essay to indicate the systemic risk exposure that micro realty markets in the United States, the Columbia/Boone County Missouri micro realty market included, have to a derivative banking crisis which could be of global proportions. This could occur for a number of reasons, which include metals manipulation, two tiered structured finance which includes junk bonds, packaging of credit card, automobile, and other debt instruments in a derivatives market meltdown (which is over the counter, and not regulated). With real estate being in what we consider to be a real estate markets bubble, the GSEs, as well as JPChase which has about a $26-28 Trillion Dollar Derivatives Portfolio, are highly suspect as of this writing. JPM is the banking conglomerate of JP Morgan and Chase Manhattan Bank merged a couple of years ago.  In our view, JPM is a great short or put play. Our good friend at www.zealllc.com, Mr. Adam Hamilton, has penned some most excellent essays on JPM as a Derivatives Monster. We defer to the wit and wisdom of Mr. Hamilton in his illuminating essays at Zeal Intelligence:

The JPM Derivatives Monster
http://www.zealllc.com/commentary/monster.htm
JPM Derivatives Monster Grows
http://www.zealllc.com/2002/jpmgrows.htm
JPM Derivatives Monster Crashes
http://www.zealllc.com/2002/jpmcrash.htm

Boone County, Missouri is named for Daniel Boone, of course!

See: Mortgages and the Dollar
http://www.marketwise.com/MW_WiseG/BBF_Archive/20030512.htm

See: Systemic Risk: Fannie Mae, Freddy Mac and the Role of the OFHEO
February 2003, Amando Falcon, Director (now axed)
http://www.ofheo.gov/docs/reports/sysrisk.pdf

See: Housing in the Macroeconomy -- William Poole, President, Federal Re$erve Bank of St. Louis, Missouri
http://www.stls.frb.org/news/speeches/2003/3_10_03.html
 

         RMS Titanic

Here is a sampling from Party Pooper Poole's Housing in the Macroeconomy. This should scare the pants off of anyone who thinks re-arranging the deck chairs keeps big boats from sinking:
 
 

"No one should underestimate the potential importance of the ambiguity over the financial status of the GSEs. Would "too big to fail" be extended to GSEs in a crisis, and if so how would it be effected in the absence of a federal insurance agency with an unlimited line of credit? How quickly could such a rescue be implemented? It is not sufficient for any single GSE to argue that its own financial condition is sound. If one GSE comes under a cloud, others may also. That has been our experience with financial firms again and again. It is the process economists call "contagion" whereby uninvolved or innocent firms are affected because the market has difficulty distinguishing solid firms from those at risk. In the case of the GSEs, the enormous scale of their liabilities could create a massive problem in the credit markets. If the market value of GSE debt were to fall sharply, because of ambiguity about the financial soundness of GSEs and about the willingness of the federal government to backstop the debt, what would happen? I do not know, and neither does anyone else." -- William Poole

See: Fed's Poole Says Crisis is Possible for Fannie Mae, Freddie Mac -- Craig Torres (bloomberg.com)
http://www.suite101.com/print_message.cfm/investing/23658/767061

Initially found on Bloomberg.com, and now apparently no longer available on their website,* here is a snippet from the essay:
 

"Government-sponsored mortgage lenders such as Fannie Mae and Freddie Mac may not be adequately capitalized to weather a financial shock and pose a risk to the financial system and U.S. economy, St. Louis Federal Re$erve President William Poole said. ``Fannie Mae and Freddie Mac are not'' backed by the credit of the U.S. government ``and hold capital far below that required of regulated banking institutions,'' said Poole said in the text of speech to an Office of Federal Housing Enterprise Oversight. ``Should either firm be rocked by a mistake or by an unforecastable shock, in the absence of robust contingency arrangements the result could be a crisis in U.S. financial markets.'' The government should withdraw an implied sponsorship for the institutions that financial market participants read as an implicit guarantee that the U.S. would bail out the firms in time of trouble, Poole said. Both institutions should also boost their capital to levels more similar to that required for banks and other regulated institutions."  -- Craig Torres

__________
*Anytime a really nice exposing piece is found on the major web news servers controlled by Wall Street, it usually will get removed or unlinked after a while. That ain't no surprise! I have lost more great stuff that way!

That's what I call a little $ystemic risk to financial markets and to all those localized micro realty markets were bubbles don't exist. After Mr. Amando Falcon, Director, OFHEO, presented the February 2003 report, Systemic Risk: Fannie Mae, Freddy Mac and the Role of the OFHEO, noted earlier, Mr. Falcon was given the AXE by the Bush Administration and a JPChase kool kat was found as Mr. Falcon's replacement according to what I read in the Wall Street Journal. Sounds like the Fox guarding the Hen House, don't it?

See: Official Axed, Exposed Threat Of U.S. Housing Bubble Crash -- by Richard Freeman http://www.larouchepub.com/other/2003/3010ofheo_rpt.html
 

"After pro forma formulations that Fannie and Freddie are "fundamentally sound," and that the possibility of a serious crisis "is remote," OFHEO made a stunning statement about a worst-case scenario in which either Fannie or Freddie had a severe crisis which caused it to default on its debt. Such a default, it said, "could lead to contagious illiquidity in the market for those [debt] securities, [and] cause or worsen liquidity problems at other financial institutions ... potentially leading to a systemic event." This systemic event would deliver a shock to the entire financial system, and a "substantial loss in economic activity." The report discusses the emergency credit generation that the Federal Re$erve System might have to undertake to try to stem the crisis; but concludes that were the crisis severe enough, either Fannie or Freddie might have to be put into receivership, which would mean their liquidation. Therefore, the report asks Congress to pass legislation that would give OFHEO authority to put these institutions into receivership. Further, the OFHEO report discusses the risks to the financial system posed by derivatives—not simply the derivatives held by Fannie and Freddie, but the unregulated mountain of derivatives contracts in general." -- Richard Freeman

This also did not go unnoticed by every prudent bear's prudentbear at Credit Bubble Bulletin, Mr. Doug Noland: See: http://www.investmentrarities.com/thebestofdn02-11-03.html

Derivatives are worse than sewage. In the real world, sewage does, in fact, gravity flow. The problem with this stuff is that it is all "over the hill" -- and will find itself in someone's front or back yard one day. Under the current debt backed money system using the Mandrake Mechanism of the Federal Re$erve creating debt backed money out of thin air, that front or back yard may just may be Ma and Pa Kettle on Main Street America.

Nothing Federal, nor a Re$erve of any kind…
                                 the lender of last resort?

The Federal Re$erve, that which is nothing federal nor a re$erve of any kind, is nothing but a privately held central bank with ties to the House of Rothschild in Europe. Our research concludes that fractional re$erve central banking of legal tender un-backed by specie, paper currency created out of thin air as a debt backed money system is the very nemesis of the U. S. Constitution and the Founding Fathers. Since its creation in 1913, this private central bank has destroyed at least 95% of the monetary value of the 1914 U.S. Dollar, which is defined in the Constitution as a measure of weight at 371.25 grains of fine silver.

Now that we have jumped from derivatives to constitutional money, dear reader, you are asking yourself "What does that have to do will the price of soybeans in Missouri?" Everything! A debt backed money system, debt backed real estate, and the two tiered structure financial global markets of derivatives to promote currency swaps, junk bonds, gold and silver swaps, interest rate swaps, and promote the mortgaged backed GSE securities to the global markets are  absolutely astounding to the tune of $142 Trillion US$s, and growing exponentially, according to our reading of Mr. Jim Sinclair. Where the Hell, will this all end? How much money do those nice French Folks on the Champs Elysées really have to keep our markets afloat to the tune of $1.5 billion BUX a day ($547.5 Billion BUX per year)? 1BUX = $1 US Federal Re$erve Note = Token = -90-95%+- x 1914 US Dollar at 371.25 Grains of Fine Silver = $.05 to .10, in value compared to the c.1914 US$ (eh…the US Dollar is a measure of weight as 371.25 grains of fine silver, not a FRN (federal re$erve note).

See: THE FEDERAL  RE$ERVE SYSTEM:  A FATAL PARASITE
         ON THE AMERICAN  BODY POLITIC -- Dr. Edwin Vieira, Jr.
http://home.hiwaay.net/%7Ebecraft/VieiraMono4.htm

See: Memorandum of Law: The Money Issue -- Larry Becraft
http://home.hiwaay.net/~becraft/MONEYbrief.html

See: The Forgotten Role of the Constitution in Monetary Law --  Dr. Edwin Vieira, Jr.
http://home.hiwaay.net/~becraft/VieraTexasLawReview.pdf

See: Mises on Money -- Dr. Gary North
http://www.lewrockwell.com/north/north83.html

See: US Economy is Not Depression Proof -- William L. Anderson
http://www.mises.org/fullstory.asp?control=1008

See: Great Myths of the Great Depression -- Lawrence W. Reed
http://mackinac.org/archives/1998/sp1998-01.pdf

See: How You Are Being Economically Raped -- Frederick Mann - Internet Book
http://www.mind-trek.com/reports/eco-rape/index.htm

See: Secrets of the Federal Re$erve -- Eustace Mullins
http://www.apfn.org/apfn/reserve.htm

See: The Creature from Jekyll Island: A Lecture on the Federal Re$erve
         G. Edward Griffin, author of Creature from Jekyll Island**
http://www.flash.net/~jaybanks/real/g_edward_griffin_-_the_creature_from_jekyll_island.rm
**Lecture takes about and hour and 30 minutes....excellent for beginners on the Mandrake Mechanism!

See: Eustace Mullins on audio on the Federal Reserve
http://www.apfn.net/audio/Eustace_Mullins.rm

See: Ownership of Federal Re$erve
http://www.pgtigercat.com/Bastille/BlitzkriegAppraisingPart1.htm#Federal%20Reserve%20Ownership

See: The Creature from Jekyll Island -- a second look at the federal re$erve
         G. Edward Griffin's website
http://www.realityzone.com/creatfromjek.html

See: Moneyfile$ -- Greenspan & the Federal Re$erve
http://www.moneyfiles.org/thefed.html

See: Money, Banking, and the Federal Re$erve Video (42 minutes)
http://www.mises.org/video/Fed.wmv
this rascal is excellent for beginners on the Federal Re$erve!

See: Gold, Money, and the U. S. Constitution Essays - Eugene C. Holloway
http://www.gold-eagle.com/editorials_03/holloway021003.html

See: Richard M. Ebeling Essays:
The Hubris of the Central Banker and the Ghosts of Deflation Past, Part 1
http://www.fff.org/freedom/fd0302b.asp
The Hubris of the Central Banker and the Ghosts of Deflation Past, Part 2
http://www.fff.org/freedom/fd0303b.asp

See: Ed Bugos Essays:
In the Belly of a Horse
http://www.goldenbar.com/Briefs/09Jul02Editorial.htm
Capitalism's Paradox, The Fed
http://www.goldenbar.com/Briefs/23Mar02Brief.htm
The Crumbling Pillars of U. S. Dollar Policy
Not Publicly Released, email author for a copy.

See: Jacob G. Hornberger Essays:
Economic Liberty and the Constitution, Part 1-7
http://www.fff.org/toc/EL&Ctoc.asp

Economic Liberty and the Constitution, Part 8
http://www.fff.org/freedom/fd0301a.asp

Economic Liberty and the Constitution, Part 9
http://www.fff.org/freedom/tfd0302a.asp

Economic Liberty and the Constitution, Part 10
http://www.fff.org/freedom/tfd0303a.asp

Economic Liberty and the Constitution, Part 11
http://www.fff.org/freedom/tfd0304a.asp

Economic Liberty and the Constitution, Part 12
http://www.fff.org/freedom/tfd0305a.asp

The Constitution and the Rule of Law
http://www.fff.org/freedom/0892a.asp

See: Ian Gordon with Jim Puplava
http://www.financialsense.com/transcriptions/Gordon.htm

See: Mike Alexander's work on Kondratiev
http://www.safehaven.com/Alexander_Archives.htm

See: Jay Taylor's www.miningstocks.com
Ian Gordon Introduces Kondratiev Wave
http://www.miningstocks.com/archive/sept99.pdf

Kondratiev Winter Wave Update with Ian Gordon
http://www.miningstocks.com/archive/july02.pdf

If the reader is not up on Kondratiev, the links above are provided. Although the topic is not formally discussed in this essay, the Kondratievian Winter Wave cycle is in effect, and permeates my discussion in this essay, and the market forces  operating under these economics, in our view. Simply put, the Kondratiev Winter Wave is the seasonal wave in the 60-70 year cycle in which market excesses, including debt, are purged from the economic cycle. The US was last in Kondratiev winter from the time of the 1929 market crash until the Great Depression ended in a war based military industrial complex. Japan entered the Kondratiev winter in 1989-1990 with their NIKKEI crash, and it is still in an economic Depression. The US basically entered the Kondratiev winter wave cycle in our view around 1998-1999 when the advance/decline line on the major stock exchanges started nosediving. Kondratiev is nasty stuff in Winter…. Burrrrrrrrrrrrrrrrrrrrrrr…. It may get colder.
Now back to my internet essay…

From what we read on the Internet regarding micro/macro realty markets with respect to residential and commercial realty, there appear to be several markets that have a hissing sound… Atlanta, Denver, Dallas-Ft.Worth, several micros in the Pacific Northwest including Portland and Seattle, the Southern Rust Belt, just to name a few. In commercial real estate valuation, when vacancy of space rented increases, net operating income diminishes. The formula for valuation is:

Vo = NOI / Ro
Where Vo = market value
NOI = net operating income
Ro = capitalization rate.

This is math 101, Folks. When vacancy increases, NOI goes down. When the numerator in the equation decreases, and the denominator (aka Ro) stays the same, the value of the property goes down. This isn't nuclear physics, but it is somehow some simple math that major realty valuation professional organizations and their Pundits of Pabulum don't understand in the Land of OZ… . -- Credit scoring mated to the needs of Wall Street using drive by appraisals, cheap and cheaper realty valuation appraisals, and globally satellited and masturbated valuation methods, aka Blitzkrieg Mortgage Lending and Blitzkrieg Appraising 101.

Real estate not in a bubble? Messrs. Minter and Weiner from Comstock Partners, Inc.  have penned a most excellent real estate bubble essay. This is a true gem for any micro or macro realty market. Their essay is a delightful read:

See: The Bubble, Deflation, and Implications for Real Estate
Charles Minter & Martin Weiner -- Comstock Partners, Inc.
http://www.safehaven.com/Editorials/comstock/041103.htm

More succinctly, when vacancy in commercial property increases, values go down. The flip side on residential property is that when markets are overbuilt, overbought, and still expanding… new construction steals value from the previously built homes. Nah, not nuclear science… just simple Austrian Economics, Folks. That is, in fact, the natural order of micro realty markets which don't go to bubble proportions under Mr. Greenspan's vision of micro markets in realty and gravity flow derivative sewage. However, as the FED has invented $liced Wonder Bread, the only place on the Planet that sewage flows uphill is in the Federal Re$erve building. Although Messrs. Munger and Buffett prefer to call derivatives "financial weapons of mass destruction," being from the Mississippi Delta, now living in Missouri, I like to think in terms of Newtonian and Einsteinian Physics… Sewage gravity flows around here…unless you have to have an active pump or lift station.

Hillshire Subdivision and environs…
Columbia, Boone County, Missouri…
Chapel Hill Road Corridor…

Filling the balloon, and the balloon is rising....

An Epiphany!…A Catharsis!

HUMMMMMMMMMM…. For the FED, that's the GSE money pump in the real estate sector which uses the system of two tiered structured finance to allow everyone to extract all that appreciated dollar destruction of the FRN (federal reserve note). At the same time this pump or lift station allows a lot of marginal credit risks to purchase homes who no more need to be in the market than a man in the Moon.  Burrrrrrrrrrrrrrrr! Is it getting colder in here? (Kondratievian Winter Wave Rising!)

In the 1990s continuing to today, with this money pump (pumping derivative sewage as mortgaged backed securities guaranteed by the US Congress, Wink! Wink! to the global investors, including those on the Champs Elysées), marrying credit scoring with the bulliness of the GSEs to manipulate FIRREA on the mortgage and realty valuation industries using drive by appraisals, AVM's, and GIS valuations, or in some cases, based on the right credit score, no realty valuation appraisal at all… the micro and macro realty markets under the deregulation of interstate banking and mortgage lending, have been manipulated from the gitgo of FIRREA since 1989. The Result and the Proof in the Pudding is the current derivatives mess in the secondary mortgage market, aka all that crap the GSEs have in their portfolio, or have sold to global investors. And, the GSE bloated and spurious rascals "ain't got no cash," if their derivative portfolios of credit, interest rate, currency, and other God knows what swaps in the global markets begin to self-destruct in a meltdown. Do you smell the game of bailout, here? Is that why Mr. Fed$speak is talking about  the glories of derivatives? Now don't you feel it getting colder in here?

There is only one way that is a sure fire way to Stop Blitzkrieg and the GSEs…
And it is not pretty… thermonuclear financial derivative meltdown.
Shall I mention that nasty "D" word again? Burrrrrrr, its cold!

Real Estate Is, Always Was, and Always Will Be…
   Depreciating Sticks and Bricks…

Not according to FED$PEAK…real estate is guaranteed in the U. S. Constitution to appreciate in various micro and macro markets which are all local at the rate of at least 3 to 10% per year, and that is in Section ZZTop, Article Blue Skies, Sections 1+2+3 = $28 Trillion JPChase Derivative Portfolio.

However, I can assure you that in reality, real estate is a physically wasting asset. It only goes up because your favorite central bank is destroying the money system and the value of money by inflating the currency. It the FED does not always inflate the currency, there won't be enough money to pay all the debt. Fighting Inflation or Deflation is central banker hocu$ pocu$, if you know the real deal, and how the money works.
 

"A former London banker named Teddy Butler Henderson reported to both Bill Murphy of GATA and Ian Gordon that Greenspan once told him over lunch in the late 1960's that he hoped to be the Fed Chairman one day. And that if he were Fed Chairman and if he were given the prospects of a deflationary collapse as we had in the 1930's, he would print money as fast as possible in the hope that he could outrun deflation. He also reportedly said that if that fails, the outcome would make the 1930's economic depression look like a Sunday school picnic. Given the growing stealth discussions by the Fed (Greenspan talks of declining inflation rather than deflation) it now seems that the moment of truth in this grand economic experiment for the Green man may be rapidly approaching." -- Jay Taylor

See: "Are We There Yet?" from Jay Taylor on US Gold and the Markets
http://www.gold-eagle.com/gold_digest_03/taylor051203.html

Mr. Jay Taylor's quote from the referenced passage above:
 

"And that if he were Fed Chairman and if he were given the prospects of a deflationary collapse as we had in the 1930's, he would print money as fast as possible in the hope that he could outrun deflation. He also reportedly said that if that fails, the outcome would make the 1930's economic depression look like a Sunday school picnic." -- Jay Taylor

is absolutely priceless in this Nestea  Derivative Plunge -- of two tiered structured finance, the GSE money pump (let's hope the electricity doesn't go off!), the FED, and how the money works. If you have the power to create money out of thin air as a debt backed currency system, you have the power to use $nake oil to convince financial markets that real estate is appreciating (better than $liced Wonder Bread). In the meanwhile, you destroy the currency, or the remaining 5 to 10 cents left of the value of the 1914 US Dollar at 371.25 grains of fine silver. It is either inflate, or die! See: Inflate or Die! -- Sage Richard Russell http://www.321gold.com/editorials/russell/russell050803.html

It is possible, as we explained earlier in the essay, for realty to appreciate in value because of real market forces impacting increased desirability of a property because of an increased demand reflected in the actions of buyers and sellers in a micro realty market. These are real market forces impacting realty… currency destruction is what we see in real estate markets at the present time, hence inflating "values," but is it really value?

As an interesting aside, I asked my local heavy metal dealer, "Fast Al," the price of a c.1920s circulated non-rare numismatic Peace Dollar. They are worth about 7 FRNs. Hummm… thinking to myself, that the price of silver is below $5 FRNs, and it has been capped just like gold on the COMEX with paper funnie monie contracts (alternative derivatives in our view), that the true worth of that real Peace Dollar is probably a couple of FRNs higher. This little market exercise in the real world demonstrates Federal Re$serve monetary destruction since 1914 and the early 1920s. That calcs out to about an 85-86% loss in value if you assume $7 as the past worth of a US$, or figured the other way from 1 to 7, a 600% inflation of the currency. Not exactly on par with what happened in Revolutionary France from Fiat Money Inflation in France by Andrew Dickson White, but we are well on our way.

 See: ftp://sailor.gutenberg.org/pub/gutenberg/etext04/fiatm10.txt
 See: http://onlinebooks.library.upenn.edu/webbin/gutbook/lookup?num=6949

Taking a Nestea Derivative Plunge, we might get there faster. I think I will go plant some tulips….Burrrrrrrrrrrrrr… It really is cold in here! I think I'm going to switch from Nestea to room temp Coca Cola!

Hey, How Much is the price of that Coke?

Taken December 2002… from a downtown
Building in Boonville, Cooper County Missouri

           Our monetary and economic history is all around us…
                        If we would, but open our eyes, and really see.  -- Ole Bear

Ole Bear, aka Gale Bullock, Musically Analytical Investor
www.pgtigercat.com

Thanks for all the great research, essays, and links, My Global Markets Gurus! You All, deserve Mucho Kudos and have my respect for making the Nestea Derivative Plunge possible! Merci Beaucoup!

Ole Bear -- is a professionally designated realty appraiser who plays a little with the bulls and bears on Wall Street, but recognizes that pigs can't fly. He markets exotic vintage pianofortes on his website, appraises a little real estate, and manages family portfolios in the big shell game. He is also a composer, and plays the piano. He has been watching the game of Blitzkrieg in the mortgage and realty appraisal gigs since the creation of FIRREA, and by learning how the money works on Wall Street, has correlated technical analysis, Kondratiev, Austrian Economics, histories of markets, and the central bank to the application of realty valuation. His subscriber based Bastille Day Report correlates these influences to micro and macro realty markets, and with the Socratic method, educates subscribers to the Global Markets.

FIRREA (See: http://ai-dechapter.org/FIRREA.htm ) the creator of Blitzkrieg!

Ole Bear's Essays at www.pgtigercat.com Blitzkrieg & Centralization, pour vous?
http://www.pgtigercat.com/Bastille/BastilleEssaysAnalyses.htm

Extraordinary Popular Delusions And The Madness of Crowds -- Charles MacKay - 1841
http://www.litrix.com/madraven/madne001.htm

Fed's Poole Says Crisis is Possible for Fannie Mae, Freddie Mac -- Craig Torres - Bloomberg
http://www.suite101.com/print_message.cfm/investing/23658/767061

Housing in the Macroeconomy -- William Poole - St. Louis Federal Reserve
http://www.stls.frb.org/news/speeches/2003/3_10_03.html

Fannie & Freddie Are Sitting on a $3.1Trillion time Bomb -- John Crudele -- NY Post
http://www.nypost.com/business/70599.htm

A Financial 'Time Bomb'? -- Robert J. Samuelson -- Washington Post
http://fightingdemocrat.com/modules.php?name=News&file=article&sid=820

Here's the Book Everyone Will be Talking About: Joe Mysak -- Bloomberg
Not Now Available on Bloomberg.com
See: http://books.global-investor.com/pages/book.htm?BookCode=15743

Two Years into the Worst Financial Crash in History -- John Hoefle -- Larouche Publishing
http://www.larouchepub.com/other/2002/2929two_yrs_crsh.html

"Fannie and Freddie Were Lenders":
  US Real Estate Bubble Nears Its End -- Richard Freeman -- Larouche Publishing
http://www.larouchepub.com/other/2002/2924fannie_mae.html

Hard Landing...a geopolitical and financial reality check -- Craig Harris -- 321Gold.com
http://www.321gold.com/editorials/harris/harris032203.html

Is Fannie Mae Risk Growing as Rates Fall? -- Reuters
Not Now Available

New Economy Not Resting in Peace -- Christopher Mayer- Mises.org
http://www.321gold.com/editorials/harris/harris032203.html

Balancing Act -- Ross Guberman -- Washingtonian.com
http://www.washingtonian.com/etc/business/balancingact.html

Official Axes, Exposed Threat of U. S. Housing Bubble Crash --
  Richard Freeman -- Larouche Pub
http://www.larouchepub.com/other/2003/3010ofheo_rpt.html

Market Wrap Up -- March 21, 2003 -- Jim Puplava - Financianlsense.com
War Rally is Here
http://www.financialsense.com/Market/archive/2003/0321.htm

Ten-Sigma, Part 1 - Introduction -- Jim Puplava -- Financialsense.com
http://www.financialsense.com/stormwatch/oldupdates/2003/0313.htm

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