-- 20 November 2007 --

IT’S YOUR TURN TO ACT.

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STOP THE SQUEEZE WEEKLY NEWSLETTER
In Debt We Trust director Danny Schechter reports on the film and campaign.
Comments to Dissector@mediachannel.org

November 20: A Happy Thanksgiving to one and all, but watch carefully and see if we get a repeat performance this year as in years past on the reporting on the day after Thanksgiving. Because retailers do so much volume on that day that it takes them out of red ink for the year, it’s called “BLACK FRIDAY.” (Wasn’t that also what they called the day the Stock Market crashed in 1929?)

Friday is traditionally the “biggest shopping day of the year,” the start of the Christmas/holiday shopping season (although many big stores are trying to jump the date this year by opening on the holiday or staging all night sales beginning at 12:01 AM.) For decades, we’ve over-consumed at the dinner table and then gone out and shopped until we dropped. And we are about to do it again---at those of us who can afford to.

And as we do, despite all the economic problems I will tell you about, the local TV news stations are likely to recycle their annual coverage routine.

They show up at the biggest mall (where many of their advertisers hope to pack in the shoppers) and “go live” to show how crowded the parking lot is and how the Christmas giving spirit is upon us. (Hint, hint!) The impression: the economy is booming, and all is festive with cash registers ringing and products moving off the shelves. That’s the news they want us to see because it hypes more consumption. Last year they showed fights in the aisles for the latest gadgets as cattle-like herds of consumers charge for gifts and goodies and then charge them on their cards.

What they don’t report is what happens next: the annual VISA sales report AFTER Christmas which has steadily shown that the results are “disappointing,” or a week later, the returns in January after we get our credit card bills and find we can’t afford to keep the loot. In other words, the frame of the story is deceptive and wrong.

For weeks, the Stop the Squeeze newsletter has been echoing warnings that many of our leaders have been in denial about. The Democrats who “debated” last week in Las Vegas did not even mention this coming disaster as if there have been no predictions that our debt load and financial crisis are leading to a recession and worse. Those warnings have been ignored, almost like that Presidential Briefing Memo of August 6, 2001 that forecast an imminent terrorist attack.

Now, an economic 9/11 is on the horizon. Only this time, it will not be for a day, but possibly for weeks, months, even years. This will be the attack that keeps on attacking.

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News Dissector Danny Schechter’s new book on this crisis is called SQUEEZED and deals with The Financial Tsunami, The Crimes of Wall Street and In Debt We Trust. We will send you this l82 page E-book for free for tax-deductible a donation of $25.00 or more to support this website and the In Debt We Trust Educational outreach campaign.

Send your email and a check made out to the Financial Awareness Education Project at The Global Center, 575 8th Avenue, #2200, New York, New York 10018

Give The Gift Of Awareness In This Holiday Season. No Credit Cards.

WARNINGS, WARNINGS, WARNINGS

Last week, the overlords of OPEC met in Saudi Arabia where many expressed fears about the dangers of a recession that their high oil prices are contributing to. The latest warning came just last weekend from the Goldman Sachs, the world’s most powerful investment bank. The Telegraph in London reported:

"Goldman Sachs has sent a shudder through the debt markets, warning that sub-prime mortgage losses could force banks to slash lending by $2,000bn (£980bn) and push the United States into a deep recession.

Jan Hatzius, US chief economist for the Wall Street bank, said potential losses of $400bn from the whole debacle did not begin to capture the scale of any squeeze on bank lending.”

Note—he uses the term “SQUEEZE” too. This forecast mirrors an earlier warning by the The National Association for Business Economics which asserted months ago: “The combined threat of subprime loan defaults and excessive indebtedness has supplanted terrorism and the Middle East as the biggest short-term threat to the U.S. economy.”

WHAT WILL THIS MEAN FOR CONSUMER SPENDING?

As the debt bomb goes off, it doesn’t look good. Not at all. The Wall Street Journal spoke to some top economists. Here are some of their predictions. Says Richard Moody of Mission Residential “Consumers haven’t fallen off of the proverbial cliff, but they appear to be hanging on for dear life.”

Morgan Stanley Research says: “The consumer is facing the twin headwinds associated with high energy costs and a negative wealth effect tied to lower housing prices. One of the keys going forward will be whether the labor market continues to provide sufficient income support to prevent too much of a slide in consumer demand.”

David Resler of Nomura Securities: “ Looking ahead, the sluggish start to the fourth quarter points to a marked slowdown in consumer spending — and in GDP growth.”

Joseph Brusuelas, IDEAglobal Economics worries:

“We are heading towards ‘Black Friday’ with the economic path of the economy, as it always is, firmly in the hands of a stressed consumer.”

CREDIT IS AT THE CORE OF THE TROUBLES

Higher prices are part of the problem but the credit squeeze is a major factor. Here’s an article from Britt Beemer of America’s Research Group:

“Holiday spending will be anemic in the U.S. as consumers worry about overextending their credit.”

Of the many negative financial issues affecting families today, credit pressures certainly top the list. Research performed by our firm, America’s Research Group, attests to it.

First, based upon our survey of 1,000 adults from Nov. 1 to Nov. 4, we found 47.5% have higher credit balances today than a year ago. Of those, 47% say they will spend less because of that debt. Also, 52.2% have noticed their monthly payments are higher today, and of those, 52.5% believe these higher minimum payments will cause them to spend less this holiday season. So it’s not surprising that 31.8% feel worse today than a year ago. Last year, 18.5% felt worse. In other words, that negative feeling had nearly doubled.

This Christmas, 30.4% feel they will spend less, compared with only 20.5% last year. That means 46.5% will wait until the 50%-off sales before doing most of their Christmas shopping. This number was 39.5% last year—it has gone up 20%....

GUESS WHO IS DOING WELL: DEBT COLLECTORS

Long Island Business News reports:

Rising debt and climbing delinquencies are leading to sleepless nights for many consumers and corporations. For debt collectors, it’s Christmas in November.

Consumer debt has escalated 5 percent per quarter since 2006 and Americans now owe a record $2.5 trillion. Though not all of it is delinquent, as minimum payments rise, so do the number of people unable to write a monthly check on time, if at all.

And the corporate markets are on shaky ground as well. Though corporate defaults are slated to remain at about 1.4 percent in 2007, ratings agency Standard & Poor’s said earlier this month it projects more companies will default on loans in 2008. A credit analyst at the New York-based firm said credit market turbulence will push defaults higher well into 2009.

The finance industry is already spinning out of control because of bad loans. Capital One, North Fork Bank’s new parent, said it expects to take fourth-quarter charges of $1.2 billion and HSBC said this week that its loan business has gone so bad it wrote off $3.4 billion in the third quarter. Citigroup has also struggled to plow through the subprime mess and the banking sector as a whole has seen lower profit because of reduced mortgage earnings.

But for debt agencies and lawyers working on collections, business couldn’t be better.

WHY CARE ABOUT THIS?

The reason is obvious. Our whole economy is built around shopping. That’s why we are “issued” all those credit cards to make it so easy, to advance us the money we can then hang ourselves with. And Xmas shopping is critical to the fourth quarter and the fortunes of the retail sector. A bad season can be a sign of worse to come, as the Wells Fargo Bank contends:

“All eyes are on the U.S. consumer. A significant consumer retrenchment could spell doom for the current economic expansion. The list of obstacles for the consumer is long and daunting: falling national home prices, a struggling stock market, a softening labor market, rising energy and food prices, resetting mortgage rates, and high debt levels. Indeed, financial markets have begun to bet that the U.S. consumer will not survive this financial tsunami.”

In fact, as I read in the local paper on a visit to Minneapolis last week to screen IN DEBT WE TRUST, the President of Wells Fargo is freaked out about the mortgage mess. He is using the D-Word.

SAN FRANCISCO (AP) -- Evoking Depression-era memories, Wells Fargo & Co. President John Stumpf became the latest banker to predict continuing difficulties in the U.S. housing market as risky mortgages made to overextended borrowers disintegrate into large loan losses.

Speaking at an investment conference in New York, Stumpf said the current real estate conditions are the worst he has experienced during his 30-year career. He then punctuated his gloomy assessment by harking back to the deepest downturn of the 20th century.

"We have not seen a nationwide decline in housing like this since the Great Depression," he said.

IT AFFECTS RENTERS TOO…

The New York Times warns that its not only house owners who are at risk: “In the growing foreclosure crisis, thousands of families who rent their homes face eviction when owners default on their mortgages.”

AND IT WILL TAKE YEARS TO FIX….

Others are even more pessimistic. They fear it will take YEARS to bounce back from the self-inflicted ravages of the subprime disaster. HousingWire.com reports that the “Bank of America is predicting that the housing slump will persist well into 2010."

EVERYWHERE YOU LOOK:

In Minneapolis, Foreclosures are up. I met one journalist who can’t sell his home in this market. In fact, Minnesota is not alone:

Foreclosure Activity Increases in 45 Out of 50 States- " Foreclosure filings were at an all time high in August and September. Foreclosures increased 300 percent during the third quarter.”.

In some places, it is already a disaster. Example:

CALIFORNIA HOME SALES PLUNGE OFF A CLIFF

AP: “Reluctant buyers and tightened mortgage lending combined to drag down California home sales last month to the lowest level for October in more than 20 years, a real estate research firm said.”

Remember: Jesse Jackson has announced a March On Wall Street on December 10th at high noon. This is a clear sign that this problem is becoming an issue. It will soon—I predict—become a major campaign issue since all of this has happened while President Bush has done little except repeat his support for the “free market” which comes with no regulation, financial transparency, or moral accountability.

This is the message of our film IN DEBT WE TRUST. We need to screen it in every church, school and community in America. Will you help organize a screening? Buy copies from InDebtWeTrust.org

ALSO NEW: THE IN DEBT WE TRUST FAMILY FINANCIAL SECURITY VIDEO FEATURING FINANCIAL ADVISOR GARY KORNEGAY.

YOU CAN ORDER IT HERE.

WE NEED YOU

We can only continue this work of informing you about the crisis with the news we need to know with your support. Tax Deductible donations to the Financial Awareness Project at the Global Center are urgently needed. The Global Center is at 575 8th Avenue #2200, New York, N.Y. 10018

Comments to Dissector@mediachannel.org

Danny Schechter
Editor Mediachannel.org
Director IN DEBT WE TRUST
InDebtWeTrust.com
212 246-0202x3006

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Economist Milton Friedman was wrong in his theories, and terribly complicit in their horrific applications in countries like Chile, but he may be right about crises opening the door for change.

We are in a crisis right now. And it’s a big one…and we want to continue to do what our media is not doing—inform you about what’s behind it and how we can fight back to insure our economic survival and social justice for all.

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* * *

PROTESTS ARE BREAKING OUT ALL OVER

A reader on Ml-impode.com announces:

Los Angeles. A number of organizations are planning a series of public actions targeting Countrywide Home Loans in cities throughout California—where it is estimated the company services 50,000 loans. While Countrywide CEO, Angelo Mozilo, has taken literally millions of dollars from the company before the initial decline of its stock, thousands of homeowners are set to lose their homes, and some 12,000 Countrywide employees will be fired before the holidays of Thanksgiving and Christmas. Mr. Mozilo will be the Grinch who stole the home, hearth, and the American dream.

Who – MABUHAY Alliance, the Greenlining Institute, the California Hispanic Chambers of Commerce and the Mexican American Political Association.

What – Public actions planned against Countrywide; the coalition of organizations demand that Countrywide not pursue foreclosures on its borrowers, that it re-structure the loans with the goal of keeping families in their homes, that it convert all adjustable rate mortgage loans (ARMs) to fixed low interest loans within the income reach of its borrowers, and that it become a good corporate neighbor.

When and Where – Wednesday, November 21st in San Diego (at the Countrywide Main Foreclosure Office at 1455 Frazee Road, 92108); Tuesday, November 27th in Santa Ana; Thursday, November 29th in Ontario; and Tuesday, December 11th in Los Angeles.

Why – The coalition is committed to continue public actions in different cities throughout California during the remainder of 2007 and demand that its investors and shareholders step up to the table and demand accountability and transparency from Countrywide. This is only the beginning.

* * *

Charles Yaker writes:

I just watched your DVD on Debt. It's a shame you can't get wider distribution. The general public especially the willfully ignorant who
watch FOX need to see things like that.