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Warning signs of the housing bubble crash (part two) Mike Adams, the Health Ranger See article keywords and concepts

A recipe for disaster: variable rate mortgages Here's how it works: You've heard of the variable rate mortgages, where you have a low interest rate today, but that rate is tied to the prime rate. If the Fed raises the interest rate, mortgage payments go up. There's really no limit to how high it can go. In the late 1970s, interest rates were 18 percent, and today people are complaining about how much interest they're paying on a house at 6.5 percent. Wait until it's 18 percent. If it gets that high, your monthly payment will essentially triple.

The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century James Howard Kunstler See book keywords and concepts

The severe inflation and interest rate hikes of the 1970s threatened to drive the thrifts out of business. In 1980, Congress began eliminating the interest rate ceilings on S&Ls, and simultaneously raised deposit insurance from $40,000 to $100,000 per account for S&Ls. The 1982 Garn-St. Germain Act allowed S&Ls to invest up to 40 percent of their money in ventures not related to housing.

The house buying-and-selling orgy of the early twenty-first century was set off by the Federal Reserve's policy, over a five-year period from 1998 to 2003, of steadily reducing to nearly nothing the interest rate that it charged banks to borrow money, which worked its way through the lending system so that mortgage rates fell to historically supernatural lows. The low interest rates were joined by a further decay of lending practices so that practically anyone over age twenty-one with no record of creditworthiness could get a low or even zero down-payment mortgage.

Stop Prediabetes Now: The Ultimate Plan to Lose Weight and Prevent Diabetes Jack Challem See book keywords and concepts

The situation is a little like getting a new credit card without paying attention to the fine print stating the interest rate. If you ignore the fine print, you could end up paying a steep price. With food labels, you must distinguish between the advertising that tries to sell you the product and information stating what it actually offers in terms of good or bad nutrition. If you don't read labels, you will pay with your health. Even we have occasionally been victims of a "gotcha" when we took something for granted and skipped reading the fine print.

Big Brother U.S. Government Subpoenaed Amazon.com to Obtain Book Purchasing Records of Customers Mike Adams, the Health Ranger See article keywords and concepts

When the largest banks desperately need high interest rate loans to bail themselves out of bankruptcy, you know something is seriously wrong with the debt bubble...) Oil is now flirting with $100 a barrel, a price level that virtually all economists and politicians thought was laughable just two years ago. But smart-minded economics like Stephen Leeb saw this coming well ahead of the masses. If you want to know what's in the picture for the near future, I recommend Leeb's newest book: The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel.

Financial Armageddon: Protecting Your Future from Four Impending Catastrophes Michael J. Panzner See book keywords and concepts

Using the earlier example of an interest rate swap, for instance, if a deal was struck that made reference to an underlying value of $1 million, it would not necessarily mean that one counterparty would stand to lose that much if the other side defaulted. In this case, the amount of potential loss would tend to be linked to the difference between the fixed-rate and floating-rate interest payments, which would be significantly smaller than the reported value.

Banks, for instance, have often used interest rate swaps. In a hypothetical example, they might agree to make fixed payments over five years in exchange for receiving floating-rate payments that might normally fluctuate over time. This enables the institutions to better match the cash flows of the loans they have granted and the bonds they own to the payments they must make to depositors and other creditors, thus reducing the risk of loss if market rates move the "wrong" way.

They also made use of the rapidly expanding market for interest rate and other complex derivatives, which are, at their core, leveraged bets on a particular event or outcome. Instead of being exposed solely to honoring a guarantee on some proportion of the securities they backed, Fannie and Freddie would have to deal with many other potential uncertainties. And they had to do so successfully if the banks, which owned a combined $1 trillion of direct debt and MBSs issued by the two behemoths, were to avoid paying a devastating price.

This exposed Fannie and Freddie to enormous interest rate, credit, and repayment risk. The latter danger reflects that borrowers can pay off the underlying loan at any time, and if a number of borrowers whose debts collateralize the MBS make the same decision, their collective actions can shorten or lengthen the effective maturity date—and hence the value—of the security, creating costly pricing uncertainty. But it seemed that Fannie Mae and Freddie Mac were not just going to roll the dice. They decided that the key to managing risk was to actively buy and sell securities.

Along with the direct economic impact, however, developments in the credit markets dramatically altered the distribution and structure of interest rate and default risk in the American financial system. For a start, with the gradual move from unsecured towards secured lending, debtors assumed a greater financial burden in the event that they could not pay their bills.

Warning signs of the housing bubble crash (part two) Mike Adams, the Health Ranger See article keywords and concepts

If the Fed raises the interest rate, mortgage payments go up. There's really no limit to how high it can go. In the late 1970s, interest rates were 18 percent, and today people are complaining about how much interest they're paying on a house at 6.5 percent. Wait until it's 18 percent. If it gets that high, your monthly payment will essentially triple. Interest-only home loans The second part of this is that lenders are qualifying people for home loans and structuring these loans so that you are not required to pay principal for the first few years.

The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century James Howard Kunstler See book keywords and concepts

In 1980, Congress began eliminating the interest rate ceilings on S&Ls, and simultaneously raised deposit insurance from $40,000 to $100,000 per account for S&Ls. The 1982 Garn-St. Germain Act allowed S&Ls to invest up to 40 percent of their money in ventures not related to housing. This freed the owners of the S&Ls to invest in any cockamamie scheme, routinely awarding their banks substantial "points" for lending large sums to construct shopping centers, malls, condo complexes, and so forth, things associated with suburban sprawl development.

Financial Armageddon: Protecting Your Future from Four Impending Catastrophes Michael J. Panzner See book keywords and concepts

Federal Reserve. It was going to be ugly, that's for sure. Not all of the borrowing was for the purchase of new homes. According to the National Association of Realtors, a record 39.9 percent of the properties that Americans bought in 2005 were for vacation or investment, with many owners counting on a buoyant rental market and continually rising prices to keep the juggling act going.

The New Dictionary of Cultural Literacy: What Every American Needs to Know James Trefil, Joseph F. Kett, and E. D. Hirsch See book keywords and concepts

The interest rate that banks charge to corporations that are considered excellent risks. fa The prime rate is usually the lowest prevailing interest rate; if it rises, rates available to consumers will soon rise. principal The original amount of money lent, not including profits and interest. private enterprise Business carried on for profit and not owned by the government; also, the system that discourages public ownership of business; the same as free enterprise. (See private sector.

Critical Condition: How Health Care in America Became Big Business Donald L. Barlett and James B. Steele See book keywords and concepts

Let's suppose the Silvas could find a credit-card company willing to accept a charge of $128,281, with a preferred-customer interest rate of 17 percent, and give the couple forty years to pay it off. Interest payments alone would add up to $648,872—or five times the proposed discounted settlement. Combined interest and principal payments would top out at $777,153. The Silvas would be indentured servants for the rest of their lives. With annual credit-card payments of $21,833, there would be just enough money left for food and a ghetto apartment. But nothing else. No electricity. No heat.

The Dictionary of Cultural Literacy E. D. Hirsch See book keywords and concepts

The interest rate that banks charge to corporations that are considered excellent risks. fa The prime rate is usually the lowest prevailing interest rate; if it rises, rates available to consumers will soon rise. principal The original amount of money lent, not including profits and interest. private enterprise Business carried on for profit and not owned by the government; also, the system that discourages public ownership of business; the same as free enterprise. (See private sector.

Hemp Today Ed Rosenthal See book keywords and concepts

Manning's final net estimate of 15C per pack assumes a 5% interest rate. By estimating the equivalency between joints and cigarettes, one can translate these costs to marijuana. On a weight-for-weight basis, pot smokers inhale about four times as much noxious tars as cigarette smokers;14 as we have seen, however, the average joint weighs about half as much as a cigarette. Also, cannabis lacks nicotine, a leading factor in tobacco-related heart disease.

The New Dictionary of Cultural Literacy: What Every American Needs to Know James Trefil, Joseph F. Kett, and E. D. Hirsch See book keywords and concepts

The prime rate is usually the lowest prevailing interest rate; if it rises, rates available to consumers will soon rise. principal The original amount of money lent, not including profits and interest. private enterprise Business carried on for profit and not owned by the government; also, the system that discourages public ownership of business; the same as free enterprise. (See private sector.) private sector That part of an economy in which goods and services are produced by individuals and companies as opposed to the government, which controls the public sector.

The Dictionary of Cultural Literacy E. D. Hirsch See book keywords and concepts

T-bills are auctioned by the Treasury each week; the auction determines the six-month interest rate. trust A combination of firms or corporations for the purpose of reducing competition and controlling prices throughout a business or industry. Trusts are generally prohibited or restricted by antitrust legislation. (Compare monopoly.) trust busting Government activities aimed at breaking up monopolies and trusts. (See antitrust legislation.) tycoon Someone who has made a fortune in business, such as Cornelius Vanderbilt.

The New Dictionary of Cultural Literacy: What Every American Needs to Know James Trefil, Joseph F. Kett, and E. D. Hirsch See book keywords and concepts

T-bills are auctioned by the Treasury each week; the auction determines the six-month interest rate. trust A combination of firms or corporations for the purpose of reducing competition and controlling prices throughout a business or industry. Trusts are generally prohibited or restricted by antitrust legislation. (Compare monopoly.) trust busting Government activities aimed at breaking up monopolies and trusts. {See antitrust legislation.) tycoon Someone who has made a fortune in business, such as Cornelius Vanderbilt.

The practice of charging more than the legal interest rate. utility See public utility. value-added tax (VAT) A tax on the value added to a product at each stage of its production, from raw materials to finished product. Widely employed in Europe, value-added taxes have the advantage (for governments) of raising revenue "invisibly," that is, without appearing as taxes on the bill paid by the consumer. Cornelius Vanderbilt Vanderbilt, Cornelius An American business leader of the nineteenth century; the founder of the Vanderbilt fortune.

The charge for borrowing money or the return for lending it. interest rate The usual way of calculating interest — as a percentage of the sum borrowed. Internal Revenue Service (IRS) A federal agency, part of the Department of the Treasury, that collects most federal taxes, including income and Social Security taxes. International Monetary Fund (IMF) An agency, dominated by wealthy nations, that lends money to developing nations. Interstate Commerce Commission (ICC) A federal agency for regulating commerce that takes place in more than one state.

Gary Nulls Ultimate Anti Aging Program Gary Null, Ph.D. See book keywords and concepts

We consolidated our debt to a low interest rate. I took care of an older sick person against my husband's will and she rewarded me with her life insurance. I feel I can do what I want to achieve. When I began the program I had to stand up to my husband, who does not believe in this program. He fought me tooth and nail and gave me every argument in the world. I convinced him that it was the right thing for me because of my body and my health and that I was going to do it no matter what. He still wants his meat and potatoes, but slowly he tries vegetarian meals.

The Dictionary of Cultural Literacy E. D. Hirsch See book keywords and concepts

The practice of charging more than the legal interest rate. utility See public utility. Vanderbilt, Cornelius An American business leader of the nineteenth century; the founder of the Vanderbilt fortune. The family's money originally derived from railroads. Cornelius Vanderbilt When asked by a reporter whether the public should be consulted on a business issue, Vanderbilt replied, "The public be damned!

CDs have terms ranging from a few months to several years; in general, the longer the term, the higher the interest rate that they bear. At the expiration of the term, investors may withdraw both the principal and the accrued interest. Penalties are imposed for early withdrawal. chain store One of many retail stores owned by a single corporation and offering similar products. Examples include Sears and Safeway. Cesar ChAvez. Chdvez at a news conference in Miami, after negotiating a contract for 1200 citrus harvesters. Chavez, Cesar An American labor leader of the twentieth century.

The charge for borrowing money or the return for lending it. interest rate The usual way of calculating interest — as a percentage of the sum borrowed. Internal Revenue Service (IRS) A federal agency, part of the Department of the Treasury, that collects most federal taxes, including income and Social Security taxes. International Monetary Fund (IMF) An agency, dominated by wealthy nations, that lends money to developing nations. Interstate Commerce Commission (ICC) A federal agency for regulating commerce that takes place in more than one state.

The prime rate is usually the lowest prevailing interest rate; if it rises, rates available to consumers will soon rise. principal The original amount of money lent, not including profits and interest. private enterprise Business carried on for profit and not owned by the government; also, the system that discourages public ownership of business; the same as free enterprise. (See private sector.) private sector That part of an economy in which goods and services are produced by individuals and companies as opposed to the government, which controls the public sector.

The New Dictionary of Cultural Literacy: What Every American Needs to Know James Trefil, Joseph F. Kett, and E. D. Hirsch See book keywords and concepts

CDs have terms ranging from a few months to several years; in general, the longer the term, the higher the interest rate that they bear. At the expiration of the term, investors may withdraw both the principal and the accrued interest. Penalties are imposed for early withdrawal. chain store One of many retail stores owned by a single corporation and offering similar products. Examples include Sears and Safeway. Chavez, Cesar (cHAH-vez, shah-vez) An American labor leader of the twentieth century.

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ABOUT THE CREATOR OF NATURALPEDIA: Mike Adams, the creator of this NaturalNews Naturalpedia, is the editor of NaturalNews.com, the internet's top natural health news site, creator of the Honest Food Guide (www.HonestFoodGuide.org), a free downloadable consumer food guide based on natural health principles, author of Grocery Warning, The 7 Laws of Nutrition, Natural Health Solutions, and many other books available at www.TruthPublishing.com, creator of the earth-friendly EcoLEDs company (www.EcoLEDs.com) that manufactures energy-efficient LED lighting products, founder of Arial Software (www.ArialSoftware.com), a permission e-mail technology company, creator of the CounterThink Cartoon series (www.NaturalNews.com/index-cartoons.html) and author of over 1,500 articles, interviews, special reports and reference guides available at www.NaturalNews.com. Adams' personal philosophy and health statistics are available at www.HealthRanger.org.