- Mike Shedlock has been on point for a number of years with his penetrating analysis into the economic foolishness and shenanigans associated with the Fed-inspired housing/mortgage/credit bubble. In one of his latest pieces (out of many, the dude is insanely productive) Mish explains 25 reasons you KNOW the banking system is unsound. The only question is, what kind of bill of goods will the manufactured crisis lead to in terms of terrible federal legislation?

- With that being said, the U.S. House of Representatives today passed a wholly piss-poor piece of mangled legislation that included a hodge podge of generally TERRIBLE crap, including unlimited Treasury (meaning taxpayer) credit to failed institutions Fannie Mae and Freddie Mac, fingerprinting of all mortgage bankers, and the ability of the IRS to have access to EVERY use of your credit card on the Internet. Can you say “CONTINUED CITIZEN RAPE”? Check out Ron Paul’s congressional home page and the video entitled “Congressman Paul Discusses the Housing Bill”. At least somebody gets it, but in our representative democracy (no longer a discernible Constitutional Republic), the aware individual simply gets run roughshod over. Gross.

- And what happens when all this madness and general STUPIDITY (and/or Joker-like evil) finally fully comes home to roost? John Rubino analyzes that question. And here are his parting words, well stated: “It wasn’t private property and freedom that brought down the American Empire, but their opposite: an expanding government armed with a printing press. Seen this way, the fix is simple: A return to Constitutional ideals of limited government and sound money. Convincing a voting majority of this will be a long, sometimes depressing process. But considering the alternative, there’s not much choice. So start honing your message; you’re going to need it.”

Wake up folks. We are dealing with a collection of Jokers. I can’t tell fully who is insane, evil, power-hungry, just plain stupid, or a collection of the lot, but I can say that there is a combination of such operating right now. If you care about the future of freedom, peace, and general well-being, you will stand with those speaking out against our federal insanity. Be your own personal Batman.

1. Ambrose Evans-Pritchard, the international business editor of the Daily Telegraph, is joining us in calling the present economic situation as one of “maximum danger”. Evans-Pritchard excellently pins the root of the current crisis on the inflationary credit policies spurred by global central bankers over the past decades. With bank failures potentially lurking in waves due to massive rotted asset write downs due to over-saturation of debt society-wide, the potential for a system-level dislocation is rising by the week. Greenspan and Bernanke overseeing de facto 3% bank reserve requirements for years (along with other foolish interventions and props) provide the root of the systemic risk we are now facing.

2. As years of government mismanagement and bubble-blowing, along with cartelized fractional-reserve banking, John Loeffler sees the United States in a spiral towards a popular rebuke of unjust law. With government corruption appearing to be at an all-time high, and policy-makers seeking “solution” after “solution” at the expense of American taxpayers, Loeffler rightfully wonders whether this is the road towards socialism. Quoting Bastiat only adds to the effectiveness of the analysis.

3. Mike Whitney has been a constant voice of sanity and awareness in the process towards government-and-greed-induced financial collapse. His latest piece takes on the “blank check” Treasury and Fed officials are pining for in the Fannie Mae and Freddie Mac bail out plan. Facing a crash of these ridiculous mortgage behemoths, these advisers are now hoping to link the American taxpayer directly to the liabilities of the failing institutions. For the sake of prudent, hard working, honest American taxpayers (not to mention the current incarnation of the US Dollar as the Federal Reserve Note) this “blank check” should be soundly rejected.

4. As credit is currently being vacuumed out of the system, those who benefited most from the previous credit bubble (i.e. home builders) are witnessing what takes place on the downside of an unnatural credit explosion: the Bust. Accordingly, home builder confidence has fallen to a record low in July 2008. With numerous development projects coming online from years of overbuilding, there is little reason to believe conditions will improve in the foreseeable future. The system will have to shake out before a meaningful rebound can occur.

5. Seeing how so much common taxpayer wealth has been squandered and will likely continue to be squandered in the near future, it is likely a good time to revisit your property tax bill if you believe you are being assessed at too high a value. The WSJ provides some basic insight into the process for your potential benefit.

6. Finally, with such economic trouble staring at the American people, and the populace becoming rightfully upset at the inanity and corruption of their “elected” leaders, there continues to exist an environment where the U.S. executive branch may attack Iran. This article by Justin Raimondo criticizes some fairly terrifying logic coming from certain Israeli mouthpieces that essentially goes as such: the U.S. needs to attack Iran’s potential nuclear capabilities now in order to avert a later potential nuclear attack by Israel on Iran. Blackmail via the “we’ll go REAL nuts later, so to avert that, you go somewhat less nuts now” tactic. Pretty evil, disgusting and sad. Considering that George W. Bush ridiculously sees war as good for the economy, and potentially desiring a distraction from economic spiraling, hopefully the wayward Neo-cons do not act out in such a manner.

_ _ _ _ _ _ _ _ _ _

Hopefully we survive this mess. It will take courage, principle, wisdom and preparation. Be sure to tune into Ponder This… for occasional bouts of sensibility and prescience.

Also, Robert Higgs provides a great break down of foolish government rhetoric in relation to the bail outs.

Finally - and what a gosh darn surprise this is - both the Obama and McCain campaigns have significant ties to Fannie Mae and Freddie Mac. I am baffled!

Crony Casino Corporatism hard at work fleecing the American taxpayer for those with inside ties!

Also, be sure to digg this story. Click here.

My take on this situation is thus: these entities should have never been floated by the U.S. government in the first place. There is no place for the federal government in trying to “guarantee” low mortgage rates. Whenever the body of force in society becomes involved in such issues, it ruins things. The last 10 years of the massive national housing/mortgage/credit boom and now bust has much of its roots planted firmly in the market/government position of Fannie Mae and Freddie Mac. At this point, since we cannot change the ugly past, it is a must that we work forward in a manner to get rid of these institutions with as little pain as possible. FNM and FRE should be wound down gradually in a way that maintains taxpayer wealth as much as possible. In the future such entities should not be created and there should be no bail out. These are my thoughts and I am wholly confident that they are righteous and sound.

2. Also over the weekend, large California-based bank IndyMac Bank (IMB), facing a run on its liquid assets due to its very questionable balance sheet and general aware self interest on the part of its individual creditors, was taken over by the Federal Deposit Insurance Corp. (FDIC). This is the second largest bank failure in U.S. history and could take a large chunk out of the assets available to the FDIC for bank failures.

The next bank that I am worried about for potential failure is Washington Mutual (WM). The stock is down another 33% today and over 90% over the past year. Please be aware that you are not insured for any assets over $100,000 in any “FDIC Insured” account. Additionally, you may not want to deal with the headache of working with the FDIC, so it will likely pay to avoid questionable banks like WM. Many banks hold terrible mortgage assets and will struggle to raise funds to pay out creditors. Work to protect yourself, your business and your family.

It is interesting to note that in spite of the accuracy of warnings including those here on Ponder This…, among many other sage advisers and true leaders, there remain ridiculous online misinformation or “bury” brigades. These people have been thoroughly discredited at this stage and it will not pay to listen to those with their head buried in the sand or who have ulterior motives. Much of the “mainstream” corporate media is included in the discredited portion of the message-producing population.

3. The award-winning Times of London is reporting that George W. Bush is backing an Israeli plan for a strike on Iran. This action would undoubetdly escalate to include the U.S. as an aggressive strike by Israel would clearly initiate defensive actions by Iran and her allies. The U.S. would clearly likely become involved in the idiocy and that would lead to unknown potential outcomes, including a potential destruction of U.S. forward forces as they are already highly stretched very thin. I do not know what our “leaders” are thinking, but it is not good. The U.S. population DOES NOT SUPPORT WAR ON IRAN. Now is not the time to sit around idly. It is time to talk to people, contact your representatives and DEMAND ACTION. If we are taken into war with Iran outside of our will, it will bring further destruction to our economy and well being. Please act.

4. Very excellent online sage Justin Raimondo provides further extraordinary insight into the proceedings related to the U.S. “leadership”, Israel and Iran. If you do not want the U.S. to fall victim to a significant war-and-bubble-induced depression, and you want to be aware of what’s going on in the war front, I advise staying up-to-date on Mr. Raimondo’s writings.

5. In spite of the relative chaos that is transpiring (or at least threatening to transpire) in the global political-economy, there are now indications that the U.S. government is actually realizing that it has limited ability to bail out any failing institution. This is something that we have been calling. Many people naively thought that the federal government would have the intenstinal fortitude and/or gall to bail out all failing financial and banking institutions. The problem is, there are only so many resources to throw at the problem. MSNBC is reporting that the government will not bail out any further institutions after Fannie Mae and Freddie Mac. Considering the size of Fannie and Freddie, they simply may not be able to go further.

6. And while the government is starting to find that it is reaching its limit (far too late), the esteemed Ron Paul, who has shown a tremendous understanding of the underlying issues we are currently facing, speaks of the overwhelmingly supported position that we need to start coming home from Iraq.

Given the destruction to our well being that the Iraq War has contributed greatly towards, it is not now time to go further audaciously against Iran, it is now time to end the violence, end the occupations, and bring our brave fighting individuals home to truly defend America. Enough of the death, tyranny and wealth destruction, it is NOW time for liberty, peace, and prosperity.

Well, it looks like our continuous calls for a destruction in the viability of these companies is continuing to be on the money. This week Fannie and Freddie have been crashing to new lows on news that their capital position may not be sufficient to survive the mortgage credit crunch. Additionally, the Wall Street Journal is reporting the Treasury Department has stepped up contingency plans for in case one or both of the entities goes down.

Fannie Mae:

Freddie Mac:

Both companies are down over 80% since October 2007. To reiterate, it will pay to be aware of significant potential losses in the U.S. asset classes in the coming months and/or years. Just a heads up.

And, in a related bit of news, financial guru Jim Rogers is saying the US Dollar is dead. With a trillion dollar military empire and endless war and occupation draining our coffers, it is likely true that the Dollar (currently the “Federal Reserve Note”) will continue to be debased. Check out Rogers and his candid words: