Mega-Storm Signposts (Jim Willie CB)

  by Jim Willie CB -- Hat Trick Letter

  Oct 13, 2006 -- The mega-storm develops slowly. Small regional home builder Kara Homes of New Jersey has filed for bankruptcy. Depositors have reason to worry. Other builders like Hovnanian, which serves the same northeastern area, have begun to ax executive and field jobs. Construction jobs had primed the labor pump for four years, and now will provide drag. No evidence yet, so it lies just over the horizon. Chain reaction linkage in home sales grows as a problem. Sellers must dispose of their current homes in order to free funds, but are having trouble doing so. New home builders do not return deposits in such cases, ouch!

  A war has been triggered between Wall Street and lending institutions over damaged loan portfolios, the new "hot potato" in the game. Technical violations, any legitimate angle, are being cited for sending loans and packaged portfolios "back to sender" by Wall Street, which has open eyes. Mortgages are acidic on balance sheets, soon to be felt but fully anticipated from such squabbles. Bear Stearns has entered lawsuits in an ugly public display. New home unsold inventory has grown in volume by 29% year over year, but is under-reported since cancellations are resold but do not re-enter the inventory ledger column. Existing home unsold inventory has grown by a whopping 82% yr/yr.

  Let this piece be a synopsis of the October Hat Trick Letter planned to be posted this coming weekend. Housing is the main focus, as in the September report, with huge impact on both the economy and bank sector. My best analysis and most important information is laid out fully.

  A quick editor personal note. This U.S. national election might be the most controversial in our history, as concerning the role of electronic voting machines. The entire democratic voting process is at risk. Eligible voter lists can be deleted in midnight raids on databases (see Maryland, Sept 2006). Votes can be altered with random number generator software (see Broward County Florida, Nov 2004). Votes can be simply switched to "full party line vote" with software (see Tallahassee Florida, Nov 2004). Convenient laws installed by the majority party have prevented paper trails, as no accounting is possible for votes. Ohio requires a $1.5 million bond to be posted for any voting machine integrity challenge, an obstacle. Stalin cleverly claimed he cared more about who counted votes, than ensuring that all votes be counted. Have we as a society advanced at all? Cast a suspicious eye on electronic voting machines !!!

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