Debt Relief Forum

Federal Debt Relief System is at the forefront in the battle to restore the America’s Constitution and liberty by arming millions with the sobering information and vital education designed to restore America’s freedom which today is sadly and urgently under attack and duress from all sides

With defaults on credit card debt spiraling amid a global financial downturn, banks already reeling from the mortgage crisis are losing billions more from unpaid credit card bills.

Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy.

Some York County residents say that would be bad policy, that it rewards irresponsible spenders and fundamentally punishes those who’ve avoided credit card debt by spending within their means and making pay-as-you-go purchases.

“Back in the refinancing days 10 years ago a lot of homeowners took out equity lines to pay credit card debt,” said Marion Oberdick, formerly a bank lender. “Then they ended up charging up those cards and now they have no equity in their homes and no other options.”

The new pilot program — which the banks hope will become permanent — could involve as many as 50,000 people in serious need of credit card debt relief. On an individual basis, the amount of debt to be forgiven would rise according to the severity of the borrower’s financial situation, up to a maximum of 40 percent.

Lower loss: Banks making credit card loans have reached a point where they can lose less by forgiving part of the debt than seeing the consumer walk away entirely.

Amid rising job losses, consumers — even those with strong credit records — have been defaulting at high levels on their credit cards.

And Americans are lumbering under about $900 billion in credit card debt, according to the latest available Federal Reserve figures. People who are in credit counseling, on average, carry seven cards.

People like 24-year-old Charles Bupp, who says he’s buried in debt and has been since leaving Navy a few years ago. Since then, the York City resident has defaulted on a car loan and racked up school loans and credit card debt. He said the trouble began after he left the military and during a period of unemployment.

These days, he owes about $4,500 on one credit card, although he used to have three. His payments are about three months in arrears, he’s over the limit and going deeper in the hole every day. He says he’d welcome a little help, but for now aims to use money earned as a cook to begin clearing his credit tab.

Home equity: Like Oberdick said, there are few options once residents cash in on home equity and charge beyond their means.

She said what looked like consumer confidence during the past decade was actually folks living on borrowed money. Too soon they have nowhere to turn as credit scores fall and credit limits are trimmed.

“If I lent someone money and they didn’t pay it back, I’d lower their limit, too,” Oberdick said.

The new proposal pitched to federal regulators by the Financial Services Roundtable would allow lenders to reduce by as much as 40 percent the amount of credit card debt owed by deeply indebted consumers in a pilot program.

Under the groups’ proposal to U.S. Comptroller of the Currency John Dugan, whose Treasury Department agency oversees national banks, a pilot project would allow big credit card companies to sharply reduce the amounts owed by consumers in over their heads who don’t qualify for the repayment plans now available.

Nearly all the biggest credit card banks have agreed to such a pilot program in which lenders would forgive as much as 40 percent of the amount consumers owe, allowing them to pay back the remainder over time.

The test program could reach as many as 50,000 borrowers, said Scott Talbott, senior vice president at the Roundtable.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

See Also Bailout, Credit Reform Now

credit card,bailout,debt,

Federal Debt Relief System is at the forefront in the battle to restore the America’s Constitution and liberty by arming millions with the sobering information and vital education designed to restore America’s freedom.

Federal Debt Relief System spotted this on the AP newswire recently:

Even as the company was pleading the federal government for another $40 billion dollars in loans, AIG sent top executives to a secret gathering at a luxury resort in Phoenix last week.

Reporters for abc15.com (KNXV) caught the AIG executives on hidden cameras poolside and leaving the spa at the Pointe Hilton Squaw Peak Resort, despite apparent efforts by the company to disguise its involvement.

“AIG made significant efforts to disguise the conference, making sure there were no AIG logos or signs anywhere on the property,” KNXV reported. A hotel employee told KNXV reporter Josh Bernstein, “We can’t even say the word [AIG].”

A company spokesperson, Nick Ashooh, confirmed AIG instructed the hotel to make sure there were no AIG signs or mention of the company by staff. “We’re trying to avoid confrontation, keep our profile low,” said Ashooh. “Some of our employees have been harassed.”

“What do they have to hide,” asked Congressman Elijah Cummings (D-MD) who said he had been promised by AIG CEO Edward Liddy that the company would stop such “junkets.”

“They came to us and said they were drowning and needed help. A person who is drowning doesn’t jump up and start partying,” said Congressman Cummings.

Cummings said Liddy should resign as AIG CEO. The AIG spokesman said Cummings “was mistaken” about the nature of the Phoenix event.

“What do they have to hide,” asked Congressman Elijah Cummings (D-MD) who said he had been promised by AIG CEO Edward Liddy that the company would stop such “junkets.”

“They came to us and said they were drowning and needed help. A person who is drowning doesn’t jump up and start partying,” said Congressman Cummings.

Cummings said Liddy should resign as AIG CEO. The AIG spokesman said Cummings “was mistaken” about the nature of the Phoenix event. Tambaro and other AIG executives declined to comment when approached by KNXV.

The AIG spokesman said the Casita suite was provided for free by the hotel because it had booked so many rooms.

AIG confirmed that former football quarterback Terry Bradshaw had been scheduled to appear and sign autographs. The company said it canceled Bradshaw’s appearance which was to have been paid for by another company that was a sponsor of the event.

AIG said it conducted a “top to bottom review” of expenses “to validate that only expenses required to ensure the meeting’s success are incurred.”

The president of the AIG Advisor Group, CEO Larry Roth declined to speak to KNXV.
In a written statement, he said “We take very seriously our commitment to aggressively manage meeting costs.” He said financial planners were charged a registration fee and for their travel.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

Also See: Credit Revolt, financial disaster

Federal Debt Relief System is at the forefront in the battle to restore the America’s Constitution and liberty by arming millions with the sobering information and vital education designed to restore America’s freedom.

Federal Debt Relief System spotted this on the AP newswire recently:  

That’s the size of the new financial lifeline the U.S. government threw tottering insurance giant American International Group on Monday. The big question: Will it be enough to stabilize the firm?

Here are some questions and answers about the rescue plan.

Q: Didn’t AIG already get a bailout from the government?

A: Yes. Back on Sept. 16, the Federal Reserve initially provided AIG with a $85 billion loan, in return for a nearly 80 percent ownership stake. On Oct. 8, the Fed followed up with another, $37.8 billion loan.

Then, on Oct. 31, AIG was allowed to access another $20.9 billion through the Fed’s “commercial paper” program. That’s where the Fed buys mounds of short-term debt from the companies, which often used the money for crucial day-to-day expenses, such as payroll and supplies.

Q: So, the original bailout plan didn’t work?

A: Even with the original $85 billion lifeline, AIG continued to have problems as the country’s overall financial and credit conditions worsened. The company was burning through cash and was saddled with risky mortgage-related securities that had fallen sharply in value and continued to deteriorate after the initial bailout.

AIG on Monday reported a massive third-quarter hit. It lost $24.47 billion, or $9.05 per share, after a profit of $3.09 billion, or $1.19 per share, a year ago. Revenue declined 97 percent to $898 million from $29.84 billion in the third quarter of 2007.

“This is the largest quarterly loss we’ve ever reported,” Chief Financial Officer David Herzog told investors on a conference call.

Q: What’s different about the new bailout?

A: All told, the new bailout is bigger — providing more than $150 billion to AIG.

In a new twist, the Treasury Department is now stepping in with $40 billion, which is coming from the $700 billion financial bailout package enacted last month. It marked the first time any of that bailout money has gone to any company other than a bank.

Monday’s restructuring also provides AIG with easier terms on the original Fed loan.

The new package reduces the interest rate AIG will pay and will extend the loan term to five years from two, reducing the need for AIG to sell off business lines and other assets at fire-sale prices to repay the government.

In addition, the new arrangement replaced the second $37.8 billion Federal Reserve’s loan to AIG with a $52.5 billion aid package. Under that part of the plan, the Fed will fund the purchase of both residential mortgage-backed securities from AIG’s portfolio, and collateralized debt obligations, which are complex financial instruments that combine various slices of debt.

By removing these troubled assets from AIG’s balance sheet, the bailout should take stress off the company, giving it more breathing room and helping to prevent future losses, Fed officials said. The Fed doesn’t believe it will suffer losses because it is hopeful the market for such distressed investments will recover as the economy and financial markets eventually rebound.

Q: Why is it important to keep AIG afloat?

A: AIG is a global colossus, with operations in more than 130 countries. It is so interconnected with other financial firms that its problems have a jolting ripple effect both in the United States and abroad.

AIG was pushed to the brink of bankruptcy in September when its credit rating was downgraded and it could not post the collateral for which it was obligated under the “credit default swap” contracts it had issued. Credit default swaps are a type of corporate debt insurance.

The Fed raced to the rescue at that time to prevent AIG’s failure, which could have triggered billions of dollars in losses at other banks and financial firms that bought these swaps from AIG — sending them into failure as well.

However, even after that initial rescue, AIG’s troubles cast doubt on some of AIG’s debt guarantees, leading to other problems. For instance, a Belgian bank threatened to immediately collect $43 million on a loan to the transit authority in Washington, D.C., in late October following the credit downgrade of AIG. Transit authorities in other cities feared the same fate.

Q: In exchange for the money, will the government place any restrictions on AIG?

A: Yes. Neel Kashkari, the Treasury Department official who is serving as the interim head of the $700 billion financial bailout program, said: “AIG must comply with stringent limitations on executive compensation for its top executives, golden parachutes, its bonus pool, corporate expenses and lobbying.”

Q: Is this the end of the bailout money for AIG?

A: No one is saying for sure. However, government officials are hopeful the new package will be sufficient to stabilize the company.

Q: What company might be next in line for a government bailout?

A: U.S. auto companies — General Motors Corp., Ford Motor Co. and Chrysler LLC — have been pressing the government for more financial assistance. The money would be on top of the $25 billion in loans Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds. 

Also See: Credit Revolt, financial disaster  

Federal Debt Relief System is at the forefront in the battle to restore the America’s Constitution and liberty by arming millions with the sobering information and vital education designed to restore America’s freedom which today is sadly and urgently under attack and duress from all sides

Federal Debt Relief System spotted this at Wall Street Journal  recently:  

Utilities are becoming more aggressive about collecting money from delinquent customers, leading to a surge in service shutdowns just as economic woes are pushing up the number of households falling behind on bills.

The utilities say they are under pressure to clean out accounts that are weighing down their books at a time when their stocks are being hammered and earnings growth has slowed.

Meanwhile, the increasing number of homes left without power — which could rise as economic pain deepens — is beginning to worry some consumer advocates and regulators. 

In Pennsylvania, PPL Corp. increased shutoffs by 78% in the first three quarters of the year compared with the same period a year earlier. Shutoffs at electric utilities throughout the state increased by 20% in that period. George Lewis, a spokesman for PPL, based in Allentown, Pa., said the utility had been somewhat lax in the past but decided this year to “reverse the trend and prevent people from getting further in debt” by cutting them off sooner. About 3% of the company’s residential accounts have been disconnected for delinquency.

In Memphis, Tenn., the city-owned utility that supplies electricity, natural gas and water to residents cut off 38% more people in the first eight months of the year, or 69,743 electric accounts, versus the same period in 2007. The utility raised electricity rates 20% this year, reflecting increased wholesale power costs for energy. Chris Stanley, a spokesman from the company, Memphis Light, Gas & Water, said the number of accounts owing more than $900 that were 90 days or more past due was up 148% to 1,766 accounts as of Oct. 28.

The increased number of shutoffs has attracted the attention of some regulators. Dian Grueneich, a member of the California Public Utilities Commission who has responsibility for low-income programs, has begun asking utilities to furnish information on shutoff criteria. She wants commission staff to “take a look and make sure it is being applied fairly.”

One bright spot is that many utilities will have more money to distribute next year to poor customers through the Low Income Home Energy Assistance Program. Congress boosted the program’s funds for the current fiscal year by 78% to $5.1 billion. Many utilities are trying to get the word out that people should apply because eligibility rules have been expanded, allowing people with higher incomes to qualify.

State regulators say they have noticed that power shutoffs have moved up the economic chain. “We’re seeing an uptick in middle-class people who have never been in this situation before,” said Eric Hartsfield, director of the customer-service division of the New Jersey Board of Public Utilities.

New Jersey’s biggest utility company, Public Service Enterprise Group Inc., said it saw a 10% increase compared with the year earlier in uncollectible natural-gas accounts, and slightly less on the electric side, in the third quarter. “We’ve been diligent in our shutoff activities,” said PSEG Chief Executive Ralph Izzo.

Rising delinquencies are occurring across the country. In New York, the amount of money utilities are owed on accounts at least 60 days past due jumped 22%, to $611.3 million in September compared with a year earlier, according to regulators.

Michigan has experienced a nearly 39% increase in electricity disconnections this year compared with last, according to statistics filed voluntarily by utilities with state regulators.

The rise comes as utilities are finding it more difficult to fund their operations.

Northeast Utilities, which owns electric and gas utilities in New Hampshire, Massachusetts and Connecticut, is carrying about $15 million of unpaid bills currently, up from about $11 million this time last year and about $8 million in 2006. “We’re putting more resources into collecting on accounts now,” said Chief Financial Officer David McHale.

In the third quarter, PECO Corp., a Philadelphia utility, racked up an additional $37 million of bad-debt expenses from unpaid bills compared with the third quarter of 2007, bringing its total unpaid balance to $56 million.

The company has put in place a new service-termination strategy this year that for the first time assesses credit risk, and pulls together other information used as a basis for decisions. “We ask how old, how big and how risky” an account is when prioritizing disconnections, said Denis O’Brien, president of PECO, a unit of Chicago-based Exelon Corp.

The number of shutoffs could rise further, as new technologies such as digital meters make it easier for utilities to cut off late-paying customers.

Digital meters allow power companies to do things remotely that previously required sending out work crews. For example, utilities can take meter readings wirelessly and switch a customer’s power off or on without having to send a crew to a house. They also can use a “service limiter” feature to cut power flows to a trickle until customers pay up. Utilities are installing millions of these meters across the U.S.

Southern California Edison, a unit of Edison International of Rosemead, Calif., currently disconnects late-paying customers owing as little as $30, but that could drop lower in the future. That usually would be a money-losing proposition, because it requires a crew to be sent out to disconnect service manually. But the company is in the process of installing 5.3 million digital meters, at a cost of $1.63 billion, which will allow remote, wireless shutoffs, making it economical to take action even for tiny amounts owed. In a recent filing with regulators it said it could adopt “rigid enforcement” of payment rules in the future for those owing less than $30. It hypothesized it could cut off an additional 129,000 people a year.

Lynda Ziegler, senior vice president of customer service at SoCal Edison, said the utility doesn’t have enough wireless meters to support a policy change yet. She added that notification requirements mean it still could take nearly three months to sever a delinquent account. But she said the utility may seek authority from the Public Utilities Commission in the future to act more quickly or to convert certain customers to prepaid service because “one of the struggles people have is catching up when they get behind.”

The ease with which utilities can use digital meters to cut off service has alarmed some consumer advocates. “Just because you can do it doesn’t mean you should do it,” said Irwin Popowsky, head of the Office of Consumer Advocate in Pennsylvania. “From my perspective, they’re creating a reason to not have smart meters.”

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds. 

See Also Bailout, Credit Reform Now

Federal Debt Relief System is at the forefront in the battle to defend the constitution by arming millions of Americans with this sobering information and vital education.

Federal Debt Relief System wants to address those chanting the disturbing chorus of “voter fraud,” or “ACORN!” elections are being influenced and sometimes determined by people ineligible to cast a ballot impersonating eligible voters. 

To be sure, the Americans see disenfranchising, disturbing instances of “voter fraud” every election cycle. However, the “fraud” we witness is different. We know of deceptive practices, misinformation and lies that are used to keep registered, legitimate voters away from the polls. Sadly, we also still find ourselves fighting attempts by unscrupulous election officials to disenfranchise the people in communities we represent. 

It is our experience that “voter impersonation” is actually quite rare. Nationwide, between 2002 and 2006, when a crackdown on voter fraud was one of the U.S. Justice Department’s top priorities, more than 400 million votes were cast, but an average of only 30 federal cases per year were prosecuted.

Regardless of the questionable prevalence of this type of election fraud, several states have passed discriminatory photo ID laws. Sadly, rather than addressing real voter fraud, the true effect of these laws is to disenfranchise the estimated 20 million Americans who have not purchased IDs.  Disproportionately these people are minorities, elderly and low-income Americans.

Yet, malicious voter fraud continues. In Virginia, registered voters received robotic calls stating that they could vote by telephone by pressing a number for the candidate of their choice. The call ended by stating that they had now voted and didn’t need to go to the polls.

In 2006 in Orange County, Calif., 14,000 Latino voters got letters in Spanish saying it was a crime for immigrants to vote in a federal election. It didn’t say that immigrants who are citizens have the right to vote. 

The NAACP has also seen a dramatic increase in erroneous purging of voting rolls, as well as eligible voters mistakenly not added. These are voters believing or having been told that they have done everything correctly, only to be turned away from the voting booth on Election Day. 

We know from Florida in 2000 and Ohio in 2004 that erroneous purging of the rolls, underestimating the number of needed functioning voting machines and ballots, the inadequate number and under-trained poll workers, intimidation of voters and the misuse of photo ID requirements, especially in neighborhoods with heavy concentrations of racial and ethnic minorities, along with blocked access to polling sites and intentional deception and voter intimidation, lead to disenfranchisement of eligible voters. These problems are more than just “voter fraud.” These problems are a national travesty. 

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds. 

See Also Bailout, Credit Reform Now

Federal Debt Relief System is at the forefront in the battle to defend and restore America’s constitution by arming millions with this sobering information and vital education.

Should we be concerned over election fraud in the upcoming election? If history is any guide, then the emphatic answer is “yes!” There are numerous cases, just in the last decade or so, in which elections were stolen and races were decided by a handful of votes.

An investigation of 5,000 fraudulent absentee ballots in Miami in 1997 resulted in the election results being overturned. In addition to votes by fictitious individuals and persons using false addresses (persons who didn’t actually live in Miami), votes were also bought. And vote buying is a federal crime that the Department of Justice has prosecuted repeatedly.

In 2003, the Indiana Supreme Court threw out the results of a mayoral election because of absentee ballot fraud. The results of a state senate race in Tennessee in 2005 decided by only 13 votes were declared invalid because of votes by felons, the dead, people who didn’t live in the district, and individuals whose registered addresses were vacant lots. The photographs of those vacant lots, taken by an investigator, starkly illustrate the kind of voter fraud that unfortunately still goes on in our elections.

Today, there are investigations in more than a dozen states over tens of thousands of fraudulent voter registration forms submitted by ACORN. How many of those fraudulent registrations have not been caught by election officials? How many will result in fraudulent votes? If we have a very close election, fraudulent votes may well end up deciding the results, damaging our democratic government and our confidence in our election process.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds. 

Also See: Credit Revolt, financial disaster

Federal Debt Relief System is at the forefront in the battle to restore the America’s Constitution and liberty by arming millions with the sobering information and vital education designed to restore America’s freedom which today is sadly and urgently under attack and duress from all sides

While all eyes were focused today on the Fed’s rate cut, the big news was the Federal Reserve conspiracy’s latest effort to save world.  And by “save the world” I mean destabilize and lay economic waste to.

Just when you thought the insanity couldn’t get crazier, the Fed announced it’s now going to funnel a massive $120 billion of U.S. funds into Brazil, South Korea, Singapore, and Mexico.

And that’s on top of the IMF bailouts already committed to the Ukraine ($16.5 billion), Iceland ($2.1 billion), and Hungary ($25.5 billion)!

In response, some folks are cheering with glee, blindly believing that Mr. Bernanke can play Santa Claus, the Pied Piper and the Fairy Godmother all in one act.

But anyone with any experience with the real world is quickly coming to the realization that Mr. Bernanke is desperate — resorting to the most radical measures of all time.  Playing his last cards — realizing that if these last-ditch rescues don’t work, it’s game over.

Taking huge risks — that his rescue-the-whole-world schemes will backfire in the form of falling confidence from the markets exposure of  U.S. government  ineptitude becomes obvious to the entire country?

After all the hope and prayer implied the recent stock-market surge, the market literally saw a ghost: Just in the final 12 minutes of trading — from today’s post-rate-cut high to the closing bell — the Dow nosedived by an alarming 372 points!

Not exactly a polite “thank you” note to Mr. Bernanke for his half-point rate cut!

Mr. Bernanke cannot drop interest rates below zero!  He cannot force banks to lend money! He can’t compel consumers to borrow, or make people spend. Nor can he turn back the clock to undo decades of financial sins … or repeal the law of gravity and stop investors from selling.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds. 

Also See: Credit Revolt, financial disaster  

Federal Debt Relief System is at the forefront in the battle to defend and restore America’s constitution by arming millions with this sobering information and vital education.

Federal Debt Relief System spotted this at CNN Money recently:  

Production at the nation’s factories fell into a virtual tailspin in September, declining by the largest amount in nearly 34 years, according to a report released by the Federal Reserve on Thursday.

“This is consistent with a recession, there’s no doubt about it,” said John Silvia, chief economist for Wachovia.

The report said the enormous decline was in most part due to hurricanes Gustav and Ike’s disastrous effects on the Gulf Coast industry. Mining output took a 7.8% nosedive due to the storms, and oil and gas-related production fell as well.

Recession worries

Industrial production is one of the four factors that the National Bureau of Economic Research considers to determine if the current economy problems  has fallen into a recession. The other three factors are employment, personal income and retail and wholesale sales of manufactured goods.

Though industrial production has been volatile over the past year and a half, registering up-and-down growth since January 2007, it has only recently shown the kind of huge drop off that is typical in a recession. After slight rises in manufacturing in June and July, production tanked a whopping 1.1% in August on a sizeable drop auto manufacturing.

Production fell for 12 straight months during the 2001 recession. The Fed said for the third quarter, production fell 6%, nearly doubling the 3.1% decline of the second quarter.

“Industrial production is a key input into the overall output of the U.S. economy,” Silvia said. “For all practical applications, there is a one-to-one correspondence between production and how the economy is growing.”

“GDP is gross domestic product, and this is a measure of production,” he added.

In other troubling news, The Philadelphia Federal Reserve reported that its regional manufacturing index decreased by 41.3 points, to minus 37.5 from positive 3.8 in October. It was the largest one-month decline in the history of the index. Economists polled by Briefing.com expected a decline of just 5 points.

Sign of weakness to come

The report also showed that industrial capacity utilization - a measure that tracks the percentage of factories in use - posted a seasonally adjusted decrease of 4.6% to 76.4%. Economists had expected a decrease of just 0.7% to 78%.

Manufacturing output decreased 2.6% in September, and the factory operating rate fell to 74.5%, which is more than five percentage points below the average from 35-year average from 1972-2007.

“Over the last six months we have seen utilization declines in manufacturing and mining,” Silvia said. “Historically, lower capacity utilization rates have been consistent with weaker corporate profits.” 

The Federal Debt Relief System is dedicated to sounding the alarm while there is still time to do something about it.

Learn more at Federal Debt Relief System now.

Read more about Job Losses, Public Debt Reform

Federal Debt Relief System spotted this at CNN Money recently:

While there were some encouraging signs that the credit crisis is not having as devastating an impact as some fear, the slowing economy looms large.

“We’re not seeing anything besides the normal tightening of credit you usually get at the end of an expansion,” said Bill Dunkelberg, chief economist for the National Association of Independent Businesses.

Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents smaller and mid-size manufacturers, said that most manufacturers are conservatively managed and have fairly low levels of debt. Tonelson is urging caution on any government bailout, saying banks should not be encouraged to resume their free-lending ways to consumers already overburdened with debt.

Even if businesses aren’t yet impacted by the economy collapse, they are certainly planning for slowing sales as credit to consumers dries up. That could mean fewer orders for goods - and fewer people needed to manufacture, ship, stock and sell those goods.

“It’s reasonable to expect not only job losses, but wage losses as well,” said Tonelson.

Said Daniel Penrod, an industry analyst with the California Credit Union League, a trade association for credit unions: “We haven’t really seen small businesses getting hurt because of access to money, but rather just because of the slowdown.”

With the holiday shopping season just around the corner, the next sector ripe for a hit is retail, said John Challenger, chief executive of global outplacement firm Challenger, Gray & Christmas. A survey by Challenger released Wednesday said that the number of job cuts in September rose 7.2% to 95,094.

“Consumers are tapped, it’s going to be a tough year,” said Challenger. “Unemployment is going up by leaps and bounds.”

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

Also See: Credit Revolt, financial disaster

Federal Debt Relief System spotted this at The Market Oracle recently:

In his book, The Money Men , H.W. Brands wrote of the first major test the Federal Reserve faced after its creation in 1913. In its role as arbiter of the nation’s money supply the Fed made its first policy blunder in making cheap money overly plentiful in the early 1920s, which encouraged a speculative bubble in the stock market. By 1928, the Fed recognized its error and instead of gradually slowing down the money creation, did something that has been part of their modus operandi ever since. In true reactionary fashion the Fed slammed on the monetary brakes and started raising interest rates, paving the way for the great 1929 stock market crash.

Making matters worse and adding fuel to the fire, the Fed continued its tight money policy while the U.S. government actually raised taxes and thereby greatly exaggerated the Great Depression of the 1930s. Was this a case of ignorance born of inexperience or was a sinister motive at work here? One could almost excuse their mistakes of the late 1920s and early ‘30s due to the Fed’s lack of experience. Yet such latitude can’t be so easily granted them today with more than 90 years of experience behind them.

Long-time Fed watcher Bert Dohmen of the Wellington Letter offers the following insight, “Who controls the liquidity necessary to buy stocks? It’s the Federal Reserve through its monetary policy.” Dohmen goes on to observe, “Invariably bear markets occur when the central bank tightens money. This sudden change in the availability of money causes investors to sell stocks in order to raise cash. Suddenly the buyers turn into sellers and the markets plunge….It’s a shift in the demand-supply relationship.”

One astute economist wrote in 1966 concerning the 1929 stock market crash, “The excess credit which the Fed pumped into the economy (in the late 1920’s, in order to lower interest rates) spilled over into the stock market – triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in breaking the boom. But it was too late: By 1929 the speculative excesses had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed….The world economies plunged into the Great Depression of the 1930’s.”

This economist was none other than Alan Greenspan. In the above statement he admits that whenever the Fed sees speculative excess (as they certainly did in the 2003-2004 period) it will cause them to tighten money. It has been ever thus since the Fed’s inception in 1913.

Will the Fed’s latest efforts at reflating the financial market succeed? If history is any guide then it should eventually stabilize the stock market and allow the newly formed 6-year up cycle along with the peaking 10-year cycle to work its magic in 2009 for one final cyclical bull market before the “hard down” phase of the Kress 40-year and 60-year cycles commences in 2010.

Federal Debt Relief System believes it’s important that people know the truth so that they can make up their own minds.

Also See: Credit Revolt, financial disaster