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

The domino effect of rising interest rates The first thing that will happen in this country when interest rates go up, as they eventually will, is that a huge percentage of homeowners won't be able to make the payments on their home. Their credit card payments are due, and those are higher, too (thanks to higher interest rates). Then their house payment comes due. They were paying $500 a month. Now they have to pay $1,000 a month because interest rates are 12 percent. What happens? They can't make the payment. What do they do?

The Big Fat Health and Fitness Lie Craig Pepin-Donat See book keywords and concepts

It was based on selling long-term contractual memberships with high interest rates and few options for getting out of the contract. Memberships are advertised with extremely low enrollment and monthly dues. A typical promotion for Bally Total Fitness is something like "$5 Gets you Started." The catch is that the affordable enrollment and monthly dues are based on a long-term contract (typically 36 months) that generates big profits from huge interest rates.

Exposed: The Toxic Chemistry of Everyday Products and What's at Stake for American Power Mark Schapiro See book keywords and concepts

News of interest rates in Frankfurt, he suggested, could shake up economic planning instantaneously in New York, Tokyo, and around the world.28 Americans would soon learn that environmental principles could be subject to similar, though far slower, shake-ups emanating from Brussels. REACH, though, would take more than three years before coming to a final vote. First the Europeans' attempt to reform a global industry would jump-start lobbying on a global scale never seen before. While REACH was being hotly debated in Europe, U.S. industry had little to worry about in Washington.

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

Their credit card payments are due, and those are higher, too (thanks to higher interest rates). Then their house payment comes due. They were paying $500 a month. Now they have to pay $1,000 a month because interest rates are 12 percent. What happens? They can't make the payment. What do they do? They sell the house, or they try to hang in there for a while until the house gets repossessed, and the bank sells it. Either way, the house is getting sold. The house then goes on the market, adding to the supply glut of homes for sale.

The coming financial collapse of the U.S. government: Fed papers reveal what's in store for Americans Mike Adams, the Health Ranger See article keywords and concepts

This could arise in the context of the Federal Reserve “being forced” to buy Treasury bills and bonds to reduce interest rates. Specifically, once the financial markets begin to understand the depth and extent of the country’s financial insolvency, they will start worrying about inflation and about being paid back in watered-down dollars. This concern will lead them to start dumping their holdings of U.S. Treasuries. In so doing, they’ll drive up interest rates, which will lead the Fed to print money to buy up those bonds.

Safe Trip to Eden: Ten Steps to Save Planet Earth from the Global Warming Meltdown David Steinman See book keywords and concepts

The combination of international debts at high interest rates, rising unemployment, and national economic depression brought on by stifling international profiteering as one of America's preeminent banana republics led the Costa Rican government to embark on a campaign of rapid deforestation, for cheap timber and to raise cattle, as a means of raising foreign currency. It was a road to oblivion. Costa Rica's climate was not conducive to raising catde, and the country was destroying its real assets for short-term gains to pay off the stifling international debt.

The Big Fat Health and Fitness Lie Craig Pepin-Donat See book keywords and concepts

The catch is that the affordable enrollment and monthly dues are based on a long-term contract (typically 36 months) that generates big profits from huge interest rates. The sales staff is notorious for not fully explaining the terms of the agreement, bending the truth or flat out lying to the consumer to get them to join. In 2004, a settlement was reached with the New York State Attorney General's office in which Bally Total Fitness received a large fine and was forced to change both their advertising and sales practices.

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

Anyone could have anticipated that our attitudes about debt, the widespread availability of borrowed money, and low U.S. interest rates would encourage Americans to borrow first and ask questions later. It was so easy, in fact, that the ratio of total debt to gross domestic product, a measure of U.S. economic output, rose to more than 300 percent by 2005, exceeding the record of 290 percent last seen just prior to the 1929 stock market crash.

Safe Trip to Eden: Ten Steps to Save Planet Earth from the Global Warming Meltdown David Steinman See book keywords and concepts

Industrial America is aging and has not been investing capital in this infrastructure, and if energy prices stay high and interest rates stay low, these types of projects will finally make the private sector budget cuts. Another motivation is one of social responsibility. "Everyone you meet now wants to say they are doing something important about being carbon-neutral and energy conservation," Davis said. "They are greening their facilities. But at the end of the day, most companies in their very competitive world of financial performance must look at things through strict economic terms.

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

Aside from being "off balance sheet," many of the liabilities were obscured through the use of nebulous accounting practices and unrealistic assumptions about future interest rates, investment returns, and health care inflation. Another problem with the vast majority of OPEBs is that they were accounted for on a pay-as-you-go basis, where only current-year program revenues and expenses were recorded. That made it difficult to grasp the full extent of what is referred to as the "benefits gap," or the difference between the present value of what had been promised versus what had been set aside.

For credit-challenged households, higher interest rates will translate into credit card balances that grow bigger each month. And with new rules in place, cardholders will have to remit larger minimum payments than in previous years. Many will be unable to afford those higher bills and will likely stop paying, adding to the relentless drag on the financial position of banks and other lenders.

Barring major spending cuts or tax hikes, the combination of higher interest rates, the costly war in Iraq, and various other forms of public sector profligacy could help boost the national debt by another $3 trillion by 2010, according to experts cited by USA Today in November 2005 And that figure does not even take into account other obligations, such as Social Security and Medicare. Like individuals and companies, governments have often relied on debt to make up for shortfalls when current income is lacking.

In addition, half of the mortgages underwritten in 2005 and 2006 were ARMs, while nearly 10 million mortgages—a quarter of the total outstanding—carried adjustable interest rates. And during 2006 and 2007, up to $2.5 trillion of those loans would be "reset," meaning payments would spike from their initial low levels after more than two years of interest rate hikes by the 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.

The coming financial collapse of the U.S. government: Fed papers reveal what's in store for Americans Mike Adams, the Health Ranger See article keywords and concepts

Doing so could have spectacularly bad implications for the value of the dollar and the level of U.S. interest rates." By "spectacularly bad implications," Kotlikoff means the value of the U.S. dollar would plummet, the level of U.S. interest rates would skyrocket, and hyperinflation would be well underway. U.S. citizens would find not only their dollars to be near-worthless on the global market, but their savings to be all but wiped out as well. Sure, you'll still have the same number of dollars in your bank account, but they won't be worth anything.

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

As lenders aggressively courted business with an almost singular focus on generating fees and turnover, many invariably acted foolishly. The Federal Bureau of Investigation, for example, estimated that lenders had been ripped off to the tune of $1 billion in mortgage-related fraud in 2005 alone. Still, there were plenty of willing participants in the ever-expanding credit bubble, many of whom already found themselves under the gun even before things began to unravel.

Worldchanging: A User's Guide for the 21st Century Alex Steffen See book keywords and concepts

But for the poor people of the world, especially in developing nations, available services are usually limited to pawnbrokers or moneylenders who charge interest rates of up to 1000 percent per year—and even those loans are mainly available to people who already have some assets. On the whole, state-sponsored rural banks in developing countries have also proved to be a disaster. Microfinance is an invaluable strategy for generating income for people with limited financial resources. It involves minimal risk on the part of the lender with potentially lifechanging results for the borrower.

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

Other players benefited from trading in world currencies, securities, commodities, and interest rates at minute differentials that existed because, since the 1970s, all monies and fungible financial instruments pegged to money floated on a collective hallucination of relative value, rather than being pegged to a fixed medium of value, such as gold. This aggravated the tendency, in a financial climate of extreme relativism, to create increasingly abstract vehicles of investment that were pegged to little more than wishes.

General Motors derived its profits and paid its dividends on the basis of auto sales, not as today, primarily from leveraging interest rates and other abstract numbers games removed from the actual making of products. In sum, the public attitude about the role of finance was extremely conservative. Finance was not an "industry" per se, but a set of institutions designed to keep the idea of money and its accessories credible, so as to allow real industries to function.

Meanwhile, the cumulative price shocks of two years running had sent the global economy into deep recession. interest rates in the United States soared above 20 percent. Demand for oil fell as economies slumped. By the early 1980s, the American gas-guzzler fleet had been replaced with much smaller cars, most of them foreign-made. The electric power industry was shifting massively to natural gas. Conservation practices were finally having an effect.

Home loan tips to avoid being conned by home mortgage companies Mike Adams, the Health Ranger See article keywords and concepts

My advice is learn how to crunch the numbers, learn how to calculate interest rates, understand your mortgage, get the vocabulary down so you can talk about principle versus interest and pre-payment penalties and so on. Educate yourself about your money or you're going to be surrounded by companies who will be more than happy to help you part with it.

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

Other factors favored a flight of capital from other avenues of investment into houses. With interest rates under 2 percent, normal savings accounts and money market funds had become a joke. Economic pundits beat their breasts about America's pitifully low rate of savings—the conventional means for raising honest capital before the something-for-nothing fever seized the collective national imagination—but only chumps would save in passbook accounts at 1.75 percent. The dot-com meltdown had left a lot of the moneyed middle class feeling hosed by, and wary of, the equities sector.

The supernaturally low interest rates provoked an orgy of buying, and the org}' of buying bid up the prices of the houses, and as the prices of the houses levitated, the owners entered another new and strange zone of hallucinated wealth accumulation using the latest contrivance: the refinanced mortgage. Re-fi's allowed house owners to use their houses as though they were automatic teller machines.

Soon, the nation was gripped by rampaging inflation, surging interest rates, rising unemployment, and paralysis in productive activity. "Stagflation" appeared to baffle the conventional economists, but it was obvious that the interruption of utterly reliable supplies of cheap oil had queered the self-organized hypersystems that Americans had come to depend on for daily life—namely, all the motor-vehicle-based social and economic relations of dispersed living and production in a suburban nation.

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

The laws of economics have not been rewritten. When interest rates rise, this real estate balloon party is history.

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. If you know anything about personal finances, you know that normal home loans are structured as interest and principal.

It's not just this one family that's affected, because interest rates affect everyone. Suddenly, a large group of homeowners can't make the payments all at once. So, what happens to the price of houses when, say, a mere 4 percent of all homeowners suddenly decide to sell their homes at the same time? Prices plummet, and they plummet so fast that all the people who own homes can't sell them quickly enough. The condo you paid $100,000 for is only worth $80,000, and then it's only worth $70,000, and then it's only worth $60,000, and it continues to drop.

Worldchanging: A User's Guide for the 21st Century Alex Steffen See book keywords and concepts

Between 1970 and 2002, debt-cancellation advocates point out, the lowest-income countries in Africa paid $298 billion on their original debts of $294 billion, and still owed over $200 billion as a result of extremely high interest rates, according to the Web site MakePovertyHistory.ca. These funds could otherwise suppport education and poverty alleviation.

The coming financial collapse of the U.S. government: Fed papers reveal what's in store for Americans Mike Adams, the Health Ranger See article keywords and concepts

In so doing, they’ll drive up interest rates, which will lead the Fed to print money to buy up those bonds. The consequence will be more money creation—exactly what the bond traders will have come to fear. This could lead to spiraling expectations of higher inflation, with the process eventuating in hyperinflation." It's not like it hasn't happened before. Hyperinflation is actually the norm, not the exception, and it's the escape route taken by virtually every country suffering under the burden of payment promises is cannot possibly keep.

U.S. interest rates would skyrocket, and hyperinflation would be well underway. U.S. citizens would find not only their dollars to be near-worthless on the global market, but their savings to be all but wiped out as well. Sure, you'll still have the same number of dollars in your bank account, but they won't be worth anything. This is what eventually happens, by the way, when a government eliminates the gold standard and separates its currency from precious metals. The U.S. dollar, a green piece of paper, technically stands for nothing other than the U.S. government's promise to pay.

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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.