Leading Financial Newsletter Profit Confidential Warns That Next Bailout Casualty Could Be the Biggest Yet
Popular e-newsletter Profit Confidential reports that an independent annual audit of the Federal Housing Administration (FHA) has concluded that its cash reserves have fallen so low there is a 50% chance that the FHA itself will need a government-led, taxpayer-paid bailout in 2012.
- Bellingham, WA (1888PressRelease) December 01, 2011 - Mortgage payments on about 600,000 home loans insured by the FHA are three or more months past due. "This is unsustainable; something has to give," writes Michael Lombardi, lead contributor to Profit Confidential.
Rising home-loan defaults amid falling home prices are responsible for bigger losses on the sale of FHA-mortgage-insured foreclosures. About one-third of the home mortgages issued in the U.S. in 2010 to buy homes were insured by the FHA.
"I hear the ringing; U.S. government debt is going up again!" says Lombardi.
In Profit Confidential, Lombardi writes, "Our government decided to take the Keynesian approach to economics by increasing the U.S. government debt and intervening in the marketplace with taxpayer money in a big way following the 2008 credit crisis. The government censured, or took over, Freddie Mac and Freddie Mac. Thus, the government indirectly entered into the U.S. home mortgage business."
Now, the next casualty could be the FHA, an agency that may have to ask for a bailout for the first time in its three-quarter-century history. And, because of how the FHA is set up, it wouldn't need to go to Congress to get approval for a government bailout; it could simply ask the U.S. Treasury, piling more onto the U.S. government debt.
Recent reports have stated that the FHA is currently leveraged at 300 to one; $2.6 billion in reserves to cover $1.1 trillion in liabilities.
According to Profit Confidential, when President Obama's first four-year term is over, the U.S. government debt will have risen 50%, or about $5.0 trillion dollars, since he first took office. There is a huge problem with this statistic.
The U.S. government debt continues to rise at an alarming rate; meanwhile, the special debt-reduction committee in Congress failed to agree on government spending cuts or raising tax revenue.
According to Lombardi who writes in Profit Confidential, "The U.S. government debt will continue to rise, the U.S. economy is failing to turn around, and the Federal Reserve will need to do more to bolster the economy, resulting in a continued decline in the value of the greenback and rising gold prices."
Lombardi has written extensively on this issue for Profit Confidential, including the insightful article entitled, Central Banks Back Buying Gold with a Vengeance.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it "begged" its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation's free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi's current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six
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