Are these the underwater home-owers mortgage broker Calla was targeting with her radio ads?

The other day we pondered if Underwater Mortgages were a Sign of the Times?

It was prompted by the fact that Angela Calla, mortgage broker and host of CKNW radio's 'The Mortgage Show', was running radio ads targeting home-owers who may currently find themselves in an underwater mortgage position at mortgage renewal.

Could it be that the market has entered this volatile condition already?

We've often talked about how some area's, Richmond in particular, have been hard hit the last couple of years. 

So are some owner's in underwater trouble?

We note a recent listing by one of our favourite Richmond realtors, Alphabet Arnie. It's for 222-7551 Minoru Blvd, a 2 bedroom condo in Richmond (click on image to enlarge).

Promoted as having just had it's asking price reduced, it's currently available for $309,800.

A deal?

The property is currently assessed at $291,700...

Even more interesting is that a quick google search turns up that this property was listed for sale back on Sept 14, 2009 for $340,000 and it subsequently sold.

Presumably whomever bought it then are the ones now selling.  Now we're not sure what this sold for in 2009.  $340,000 probably seemed like a steal at the time.

But as values in Richmond have plunged, and the current owner tries to hawk a $291,700 assessed condo for $309,800... you can't help but wonder if this is exactly the type of home-ower that Angela Calla was targeting with her ads.

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Car Cam Realtor Ian Watt bids farewell to the video blog

Ian Watt had hair?

That and other tidbits in Ian Watt's final video blog as Watt's parks the video cam along with his car.

For nostalgia purposes, here is one of Ian's first cam car vids from May 1, 2008 talking about car cam video blogs. Ian asks, "who watches this stuff?"

To date it's only attracted 65 views. :

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Bank of England warns banks of risk of sharp global interest rate rise

Reuters is out with an intriguing bit of news.

Mervyn King, the governor of the Bank of England, has issued a stunning warning:

The Bank of England warned banks and borrowers on Wednesday about risks from a potential abrupt rise in global interest rates, and said banks might need to further bolster their capital cushions to protect against this.

The past week has seen a sharp rise in global bond yields since U.S. Federal Reserve Chairman Ben Bernanke said that the U.S. central bank may scale back bond purchases later this year.

BoE Governor Mervyn King said on Tuesday that markets had "jumped the gun" in their sharp reaction to Bernanke's comments, but the BoE's half-yearly Financial Stability Report said more bond yield rises could hurt UK banks, insurers and borrowers.

The BoE said that it had ordered an investigation into the vulnerability of Britain's financial institutions and borrowers to higher interest rates, to report back by September to its new risk watchdog, the Financial Policy Committee.

"Financial institutions and markets are also vulnerable to an abrupt rise in global interest rates. And some UK borrowers remain highly indebted, which could result in losses for UK banks," the FPC said.

It's an intriguing statement because King, as we all know, steps down at the end of this month as the head of the Bank of England.

His replacement? Former Canadian central bank chief Mark Carney, who many economists expect to advocate a long-term commitment to low interest rates as a way to keep down bond yields.

King's call for higher capital requirements has bankers privately complaining that higher capital requirements and limits on leverage are hampering their ability to lend. But this is strongly disputed by the BoE, which says healthier long-term capital levels make it cheaper for banks to borrow.

Wednesday also saw the BoE allow banks to scale back some of the short-term cash they hold against shocks to encourage more lending to the economy.

Many believe the BoE is a long way from tightening monetary policy, and a minority of BoE rate-setters have been voting for more stimulus for the past few months due to the weak state of Britain's economic recovery.

So what gives with Mervyn King and his warnings of a sharp global interest rate rise on the eve of his departure of BoE governor?

Is his looming retirement giving him the freedom to say what he really fears?

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Underwater mortgages a sign of the times? Mortgage Broker radio advertisement targets underwater mortgage holders.

In the comments section of today's Vancouver Condo Info discussion thread, contributor De La Riva Guard shares what he aptly terms a 'watershed moment' in our real estate bubble.

At the 10:51:53 mark of today's CKNW 980 AM broadcast (access the radio station's audio vault here), you can hear a new commercial from mortgage broker Angela Calla. For those who don't know her, Calla also hosts "The Mortgage Show" on CKNW. From her website bio:

Angela Calla, Host of "The Mortgage Show" on CKNW AM980 Saturdays at 7pm, was named the "AMP of the Year" in 2009 by CAAMP. Angela has also ranked in the Top 50 Mortgage Brokers in Canada 5 years in a row!

And what did she say in her new commercial that warrants a post?

You opened the envelope a few months ago to find out that your mortgage is actually higher than the assessed value of your property. So now what? Call the Angela Calla mortgage team...

So leading mortgage brokers are now starting to advertise to attract customers who are suddenly finding themselves underwater on their Greater Vancouver home mortgages?

With this now happening, you know the situation must be far worse than the media has led us to believe.

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Don't worry. Be Happy. There will be no housing crash... at least according to Dan Cayo

Meet Dan Cayo.

He's a columnist with the Vancouver Sun.

According to his bio, Cayo has worked in journalism all his adult life. At one time or another he has served as a newspaper writer and editor, a radio and television reporter and commentator, a wire service reporter, and a journalism teacher. From mid-1997 until mid-1999 he took a leave of absence to run the Atlantic Institute for Market Studies, a business-funded think-tank based in Halifax, but he continued to write regular columns for eight newspapers across Canada. He came to the Vancouver Sun as editorial page editor in 2000. In the fall of 2003, he made the switch to column writing.

Like many who follow real estate, Cayo made note of US economist Paul Krugman's comments about our real estate bubble.

His response?  'Phhffft'

Of course we're paraphrasing here.  Cayo outlined his thoughts in a column titled, "Don't worry, city's house prices won't tank."

Don't worry about alarmist economists - those at the Organization for Economic Cooperation and Development, for example, or Nobel Prize-winner Paul Krugman - who are predicting a real estate crash.

Because house prices in Canada are poised to edge up, not plunge down, according to a new analysis from the Conference Board of Canada. And Vancouver - despite having the highest real estate prices in the country, and despite being the target of incessant warnings from worrywarts who see a bubble poised to pop - will turn out to be one of the most resilient markets of all.

You gotta love those bold enough to go on the record and make such confident predictions.

Cayo constructs the article around the comments of Mario Lefebvre, the Director of the Centre for Municipal Studies at the Conference Board of Canada. According to Lefebvre:

Vancouver's steady population growth, in particular its unusually high percentage of foreign-born residents, is the basis of this confidence.

"The foreign-born population can significantly alter the landscape of a country's housing market," Lefebvre wrote. "In many instances, immigrants arrive in a new country with some pre-established wealth. If a specific market welcomes a relatively large share of wealthy immigrants, their arrival creates a new source of demand that not only stimulates demand for housing, but can also raise house prices significantly without any changes to personal disposable income per capita."

In other words... that's why it's different here (or at least why it's different in those housing bubbles that still exist).

This is true not only in our market, but also in another seven of the 27 countries that the OECD identified, using two different measures, as having housing stock that is over-valued by 20 per cent or more. (The others with demographics similar to ours are Belgium, Norway, New Zealand, France, Austria, Sweden and the United Kingdom.)

You will recall that Krugman's gloomy view echoes former Bank of Canada governor Mark Carney and others who worry that Canadians are too deeply indebted and over-leveraged to a dangerous degree.

These factors lead the OECD to concluded earlier this month that, nationally, Canada's housing market is over-valued as much as 30%, based on the ratio of house prices to disposable income, and up to 60% if the comparison is to the historical value of rent. Cayo observes thatit is a safe bet, I think, that Vancouver's numbers would look even worse.

So why isn't this a concern to Lefebvre?

"You've seen some declines (in house prices). But that seems to be slowly, slowly ending. You're actually bottoming out."

An upward trend will continue says Lefebvre because it's not just the steady influx of foreign money, but our endless population growth.

"As long as you have population growth," he said, "people will need housing."

For as far as Lefebvre can see into the future, he is confident Vancouver will continue to have population growth. And this region will continue to lead the way in attracting a steadily expanding proportion of foreign-born residents, many of them arriving with quite a lot of money.

The bottom line: Most parts of Canada will see, very soon, a modest upward trend in housing prices, and those that don't are unlikely to see anything worse than a small decline. Meanwhile, Vancouver is high on his list of the least likely places to see any problem at all.

See?  Rich people will keep moving here and bring buckets of money with them to support our housing market.

Sounds like a sound economic argument to us.

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Flipper fails to have pre-sale contract ruled invalid. Ordered to pay $750,000.

 

Last night CBC-TV ran a story which shows the danger of condo pre-sales when they profiled the story of a man who signed a pre-sale contract for a luxury condo in Vancouver and has now lost almost three quarters of a million dollars after he failed to complete the final sale on the unit.

Lawrence Austin signed a deal to buy the condo at 1499 West Pender in the spring of 2008, just months before the global financial crash.

Austin agreed to pay Reliance Properties $2.71 million for the 25th floor Coal Harbour condo, and put down a 10% deposit of $271,000.

But within a few months the global real estate market had crashed and Austin began looking at his options to get out of the deal.

Initially, he argued that at the time of the sale he had made an oral agreement to be able to assign the pre-sale agreement to another buyer, regardless of price.

But the developer told him his pre-sale agreement restricted him from assigning it to another buyer for less than the purchase price.

Austin then tried to get out of the contract by arguing that the developer failed to give him a copy of the original disclosure statement before he signed the contract, as required by law.

The developer disagreed on both points, and in the winter of 2011 when the building was completed, Austin didn't pay the balance of the purchase price.

Six months later, the developer sold the unit for just over $2.05 million and sued Austin for the difference in price, minus his deposit.

In her ruling issued last week, Justice Catherine Bruce dismissed Austin's claims that he had not received the disclosure statement, noting he had signed a statement saying he had received it at the time he inked the deal.

She also found nothing substantial to support Austin's claims that he had an oral agreement with the developer permitting him to assign the pre-sale agreement without the developer's agreement.

The Court ordered Austin to pay the developer nearly $500,000 to cover the difference between the pre-sale and final sale price, minus his deposit.

Austin was also ordered to pay the maintenance fees and property taxes for the six months it took the developer to sell the condo.

Meanwhile it seems the industry is fighting hard to prevent future buyers from trying to escape their contract based on changes to the disclosure statement.

CBC reports developers, through the Urban Development Institute (UDI), are lobbying the Province to change the act because buyers are using it as a loophole.  The UDI says buyers simply want out of contracts signed before the market had fallen.  "To allow them to do so leads to uncertainty and... slows down the industry and the economy as well as impacting housing supply and prices."

(hat tip Kabloona on VCI)

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BC-CTV poll: Do you think a condo is a good investment in Metro Vancouver?

BC-CTV has a poll running tonight and the question is: Do you think a condo is a good investment in Metro Vancouver?  You can find it on their website here.

The poll is also running on their Facebook page. They say that your answer could be used during CTV News at 5:00pm tomorrow.

Naturally, since this is one of the networks employees from MAC Marketing Solutions used as a vehicle through which to lie to to the public about Asian demand for condos during Chinese New Year, the tie in is irresistible:

"If it were... marketing companies wouldn't go on your TV station and deceive vieweres about the demand for those condos from offshore Asians."

Feel free to share your thoughts with them too.

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Making the news in China - Canada vulnerable to 'big deleveraging shock'

The Chinese headline reads: 诺奖得主：加拿大经济极端脆弱 楼市泡沫要破灭

If your Mandarin is a little rusty, it reads: "Nobel Laureate: Canadian economy is extremely fragile. Housing bubble about to burst” (hat tip VMD on Vancouver Condo Info)

It's Paul Krugman's article, which on this side of the ocean has been headlined: Paul Krugman warns Canada vulnerable to a ‘big deleveraging shock’

The Nobel prize winner suggested Canada is an important test case for what lies behind the 2008-09 recession and the sluggish recovery. In other words, if the U.S. experience is anything to go by, Canada might be undergoing a housing and debt bubble, and if so, he advised people to watch what happens next.

With interest rates at ultra-low levels and Canadian household debt and housing market stabilizing, market strategists and economists like Krugman here are scrutinizing every bit of economic data for clues on what the economic outlook will bring....

Krugman sees potential red flags in the large spread between U.S. and Canadian house prices, and the fact that Canadian household debt levels are climbing even as U.S. ones are declining.

"So if the new non-centered bank view is right, Canada ought to be quite vulnerable to a big deleveraging shock despite its boring banks," he wrote. “Of course, people have been saying this for several years, and it hasn’t happened yet — but remember, the U.S. housing bubble took a long time to pop, too."

So Krugman now joins the chorus waiting for the Canadian bubble to burst, it's lofty real estate values not appearing to have realistic means of support.

And more importantly that viewpoint is gaining coverage in China.

Meanwhile Scotiabank is out with a report that notes:

"housing corrections often last years...and this one is unlikely to be any different"

So if HAM (Hot Asian Money) is going to come flooding back to support our housing values, it's going to have to buck the conventional wisdom that Vancouver is overvalued and a sure investment loser.

Meanwhile locals continue to insist Vancouver isn't overvalued.  The latest tidbit comes from our bud Helmut Pastick who insists:

"Prices in Vancouver are... fairly valued... It's a wonder that prices aren't even higher"

Are you ready for another round of R/E hype about how 'now's the time to buy?'

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An update on the real estate outlook in Richmond

Richmond realtor James Wong is out with his June Report and at first blush it appears market conditions have improved a bit:

Total home sales in Richmond for May 2013 totaled 375 units were 7% higher than the 350 sales recorded a month ago. Higher home sales the past 2 months helped to improve the housing market in Richmond slightly. The slow down in new listings, and improved sales helped to improve the market outlook for townhomes and condos. The slow down in the supply of new listings the past 3 months helped to improve the housing market in Richmond significantly.

Total active listings in May at 2,230 units was at around the same level compared to the previous month’s total listings of of 2,225 homes. With an average past 3 months home sales of 335 units, the MOI for homes in Richmond at 6.66 months for May is a vast improvement compared to the previous 2 months.

Sounds promising.  But that's for the market in total.  What's happening with detached homes, presumably one of the big draws about moving to one of Vancouver's suburb communities:

The situation for detached homes in Richmond did not improve much. The MOI for Richmond detached homes for May at 9.35 months will continue to exert pressure on home sellers. The only way out for home sellers who must sell is to reduce their prices significantly.

Yikes!

Wong continues:

Richmond detached home prices are under pressure to decline further due to the high supply of homes and lower than expected demand from home buyers.

Currently, there are 642 detached homes over $1,000,000 for sale in Richmond. The average monthly sales the past 3 months for homes over $1.0 million was 49 homes. With 13 months of supply, detached home sellers are not seeing much demand for their homes. 

The situation for detached homes over $1.5 million is far worst. With 357 homes listed for sale and average monthly sales of 17 homes, these home sellers are confronted with 17 months of supply, with little hope of finding buyers. The demand for detached homes over $1.5 million is not expected to improve much. 

There are not signs of the market changing for the better for million dollar homes in Richmond.

Hmmm. What about townhouses?

The market for townhouses in Richmond appeared to have stabilized and home prices are holding at current level.

On the face of it, decent news.

How about condo owners?

On the other hand, resale condo sellers in Richmond are in a dire situation trying to sell their condos. The Richmond condo MOI for May at 6.6 months is not a true reflection of the market situation for condos in Richmond. When the unlisted inventories of new condos are added to the pool of resale condos for sale on the MLS® system, there are far more condos for sale than buyers. The competition for buyers by resale condo sellers and new condo developers will inevitably result in lower condo prices in the coming months.

James Wong, telling it like it is.

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New Blog: Vancouver Flippers in Trouble

It seems another new blog charting the perilous condition of our Vancouver Real Estate bubble has emerged.

Titled Vancouver Flippers in Trouble, the site purports to set out to document real estate losses during the bursting of the bubble.

It's appears to have surfaced about a week ago and offers us such treaties as 2603-8 Smithe Mews:

This 2 bedroom, 2 bath, 1577 sq ft sub penthouse in Coal Harbour was purchased for $2,000,000 in a 2007 pre-sale.

It's currently on the market.  Asking price: $1,670,000.

That's quite the drop from the original purchase price. Factor in the GST paid at the time of the purchase ($100,000), the Property Transfer Tax ($39,000), the Real Estate Commission ($61,950) and it means this seller is already looking at a loss of  loss of  - $530,950, assuming he/she gets the current asking price.

Ouch!

And if misery loves company, then solace can be found in the plight of the seller of 2106-8 Smithe Mews:

This 1 bedroom, 2 bath 1055 sq foot condo was purchased in a 2007 pre sale for $1,030,000.

Currently it's listed with an asking price of $799,900. Once GST on the original sale is factored in ($51,500),  Property Transfer Tax ($19,600) and Real Estate Commission ($51,500), this seller is looking at a loss of -$332,697.

Should be interesting to keep our eyes on this site and see if they can continue to provide such interesting examples in the coming months.

We've also added it to the reading list on the sidebar.

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RECBC issues suspension order for a realtor

On the heels of complaints about the lack punishment for realtors by the Real Estate Council of British Columbia (RECBC), the council has just issued a suspension order for John Salanga of Sutton Group-West Coast Realty and Royal Pacfic Realty.

SUSPENSION ORDER: Johnson Castaneto Salanga, Sutton Group-West Coast Realty and Royal Pacfic Realty (Kingsway) Ltd., Vancouver

Published 2013/06/13

Upon reading the Affidavit of Sonya Jakovickas, Compliance Officer of the Real Estate Council of British Columbia, sworn June 11, 2013,

I AM OF THE OPINION that:

There has been conduct on the part of Johnson Castaneto Salanga in respect of which a Disciplinary Committee could make an Order under section 43 of the Real Estate Services Act. 

The length of time required to complete an investigation or hold a disciplinary hearing, or both, would be detrimental to the public interest. 

I CONSIDER IT in the public interest to, and hereby make an Order under section 45(2) of the Real Estate Services Act suspending the licence of Johnson Castaneto Salanga effective immediately and Order that he not provide any real estate services to or on behalf of any member of the public.

I CONSIDER IT in the public interest to, and hereby make an Order under section 46(3) of the Real Estate Services Act requiring the Royal Bank of Canada, located at Fraser St. and 49th Avenue, Vancouver, British Columbia, branch 003, to hold any and all accounts, trust account, client funds, securities, term deposits, registered savings accounts, and/or general accounts on deposit for, or in the name of any of: “Johnson Castaneto Salanga”, “Johnson Salanga”, “John Salanga”, and “Sutton Group – Johnson Salanga”, held solely or jointly, until further order of the Real Estate Council, including but not limited to:

1. Account Number XXXXXXX

2. Account Number XXXXXXX

I CONSIDER IT in the public interest to, and hereby make an Order under section 46(3) of the Real Estate Services Act requiring the Vancouver City Savings Credit Union (“Vancity”), Branch 809, located at Fraser St. and 47th Avenue, Vancouver, British Columbia, to hold any and all accounts, trust account, client funds, securities, term deposits, registered savings accounts, and/or general accounts on deposit for Johnson Castaneto Salanga, or in the name of any of: “Johnson Castaneto Salanga”, “Johnson Salanga”, “John Salanga”, and “Sutton Group – Johnson Salanga”, held solely or jointly, until further order of the Real Estate Council.

From Salanga's 'about me' page on his (now suspended) website (click on image to enlarge): 

So it appears that you can do something that will trigger an immediate suspension from the RECBC as 'the length of time required to complete an investigation or hold a disciplinary hearing, or both, would be detrimental to the public interest. '

Perhaps there is hope we will see the RECBC take assertive action for the exposed liars in the MAC Marketing fiasco.  It's still difficult to fathom how an organization can go on TV, blatantly lie to the public, and the members who lied can still be allowed to work in a field where the public trust is paramount.

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Summarizing the known rigged markets. By process of elimination does that mean Gold and Silver are the only non-manipulated ones?

Following up on yesterday's third post of the day where it was revealled traders at a number of major banks have been manipulating spot foreign-exchange rates for at least a decade, altering the values of trillions of dollars worth of investments, we now have the link to the original Bloomberg News story.

Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice. 

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

It may be difficult to prosecute traders for market manipulation, as spot foreign exchange, the trading of one currency with another at the current price for delivery within two days, isn’t classified as a financial instrument by regulators, said Arun Srivastava.

The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives, the two traders said. The Financial Conduct Authority, Britain’s markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter.

As Zero Hedge notes, as FX trading becomes the latest addition to the "rigged" market column, we now have quite the list of known market manipulation scandals. They are:

• Libor - interest rates (link)
• ISDAfix - swaps (link)
• Platts - oil prices (link)
• WM/Reuters - FX
• High-Frequency Trading - equities (link)

We also know that the Fed and world central banks are engaged in a full blown (and unprecedented) Treasury curve modeling exercise courtesy of both ZIRP (short-end) and QE (long-end), and that courtesy of some $12 trillion in extra liquidity in the past 5 years, stocks are at an artificial "weath effect" sugar high.

Faithful readers will recall that over the past couple of years we spent a considerable number of posts outlining how gold, and particularly silver, are highly manipulated as well.  We received a considerable amount of criticism for that viewpoint.

But as ZH wryly observes:

We can therefore deduce that, following the process of elimination, gold and silver are the only markets that are unmanipulated and where transparent price discovery is allowed to take place without intervention from key players. Sarcasm off.

Exactly.

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Tues Post #3: Bloomberg News - Dealers rigged forex spot benchmarks

MarketWatch is out this evening quoting Bloomberg News that traders at a number of major banks have been manipulating spot foreign-exchange rates for at least a decade, altering the values of trillions of dollars worth of investments.

LOS ANGELES (MarketWatch) -- Traders at a number of major global banks have been manipulating spot foreign-exchange rates for at least a decade, altering the values of trillions of dollars worth of investments, Bloomberg News reported Tuesday, citing five unnamed dealers. The scheme involves the WM/Reuters Closing Spot Rates, which are used to provide daily benchmarks to value portfolios. However, market participants have been front-running client orders to rig the rates by pushing through trades before and during a 60-second window when the rates are set. British regulators are considering a probe into allegations of this practice, the report said.

You don't say?

Next they'll be discovering that the spot price of Gold and Silver is manipulated too.

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Tuesday Post #2: Port Moody Snapshot - houses priced above $900,000 have a 3.2% sold rate

We haven't really focused specifically on the Vancouver suburb of Port Moody before, but at first blush high end homes there are faring just as bad as Richmond.

The above info comes to us via realtor Bill Coughlin's blog and his report covers Belcarra, College Park PM, Barber Street, Anmore, Glenayre and all the sub-areas of Port Moody Real Estate Market.

Coughlin tells us Port Moody has a 12% sold rate... but take a look at the wild swing in home sale success.

• Homes priced below $600,000 have 41.7 %SOLD rate. Not bad.
• But homes priced above $900,000 have an abysmal 3.2 %SOLD rate. And given that Belcarra is almost exclusively houses assessed with multi-million dollar homes, that's a disaster.

Couglin tells us that the Pt Moody RMR Home Price Index (another franken number formula?) shows that prices decreased $25,245 in 2012. He says Pt Moody has a high Listing supply; 148 homes are for sale with 8 months of inventory. At this sell through rate approximately 111 of these listings will not sell. Currently 28% of the active listings have reduced their price by $47,449 on average.

Sounds pretty ugly, doesn't it?

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Tuesday Post #1: Real Estate Crossword Puzzles

Hilarity ensued over in the comments section of one of Vancouver's leading real estate chat sites yesterday.

The first post of the day to Vancouver Condo Info advised that the infamous MAC Marketing Solutions (you remember them... the condo marketing firm exposed for lying to and deceiving the public on various Vancouver TV news stations) has come out with a Vancouver real estate-themed crossword puzzle contest to celebrate their 50th contributing article to the publication New Condo Guide.

New Condo Guide readers are invited to overlook the fact this marketing firm has very publicly deceived potential customers by being offered a chance to win a $50 Home Depot gift card if they succumb to this direct marketing ploy.

The post generated a slew of responses on VCI, most making suggestions for MAC about potential crossword clues and answers:

(click on images to enlarge)

But perhaps the best was submitted by VMD who crafted VCI's own version of a crossword (click on top image to enlarge or fill it out and solve online here).

There's no gift card to be won, but you will get an unbiased insight into the Vancouver Real Estate  scene with the answers.

And that's worth more than $50 bucks any day of the week. 

Besides, answering VCI's crossword won't trigger a slew of marketing pitches by the very liars we saw on TV, one of whom is apparently still selling real estate to those gullible enough to trust them.

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Monday Post #2: Inside Story: Gold, Trust, And The Federal Reserve - The Video Documentary

A National Geographic documentary that is a fascinating look inside of the Federal Reserve's gold vault (where we are told one quarter of the world's bullion resides) to NYC's diamond district and the gold-dealers on the streets.

This documentary takes you on a walk through the reality of trust, money, and gold.

As the narrator notes, "the Fed's discretion is so trusted that few depositors have ever asked to see if their gold is still here," except of course Germany.

This  must-watch video then progresses to the reality of our financial world where the narrator explains the trillions in money that is transacted every day "used to be backed gold, but is now supported by the promise of our government... The fact that it all works based on trust alone is simply taken for granted." 

As Zero Hedge notes, this leaves the ominous question of "who is in charge" of that 'trust'? 

Cue Ben Bernanke - who answers the question of what the world would look like without a Fed... bank runs, stock market crashes, and financial chaos.

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Monday Post #1: The most important news story since Watergate.

If you follow our twitter feed, you know we have had a keen interest in the PRISM whistleblower story going on in the United States right now.

This may well be THE most important news story since Watergate in the early 1970s.

The very idea that a government organization has been collecting information for seven years on every phone call, domestic and international, that Americans make was long rumoured and dismissed as the ramblings of the tin foil hat crowd.

Warrants for wiretaps? Constitutional protection against unreasonable search and seizure by government agents? Silly formalities the conspiracy theorists alleged.

But it turns out these aren't the ramblings of wing nuts.

 It turns out it's all true.

The NSA has recorded and logged every phone call, every email, every internet post you have made and stored it. They have done this with the implicit support (and granted access by) organizations such as Facebook and Google.

It's all been saved, waiting for the day you come under 'suspicion' of having done 'something' in the future.  At which point all of this data will be brought up and analyzed.

As investigative journalists report on what whistleblowers are telling us, the growing awareness of the intrusions of America's National Security Agency (NSA) into the everyday lives of Americans is of profound significance.

If you haven't been following this story, go to this link for a video interview with NSA whistleblower Edward Snowden: 'I don't want to live in a society that does these sort of things'

From The Guardian newspaper, an editorial by the author of The Pentagon Paper titled "Edward Snowden: saving us from the United Stasi of America":

In my estimation, there has not been in American history a more important leak than Edward Snowden's release of NSA material – and that definitely includes the Pentagon Papers 40 years ago. Snowden's whistleblowing gives us the possibility to roll back a key part of what has amounted to an "executive coup" against the US constitution.

Since 9/11, there has been, at first secretly but increasingly openly, a revocation of the bill of rights for which this country fought over 200 years ago. In particular, the fourth and fifth amendments of the US constitution, which safeguard citizens from unwarranted intrusion by the government into their private lives, have been virtually suspended.

The government claims it has a court warrant under Fisa – but that unconstitutionally sweeping warrant is from a secret court, shielded from effective oversight, almost totally deferential to executive requests. As Russell Tice, a former National Security Agency analyst, put it: "It is a kangaroo court with a rubber stamp."

For the president then to say that there is judicial oversight is nonsense – as is the alleged oversight function of the intelligence committees in Congress. Not for the first time – as with issues of torture, kidnapping, detention, assassination by drones and death squads –they have shown themselves to be thoroughly co-opted by the agencies they supposedly monitor. They are also black holes for information that the public needs to know.

The fact that congressional leaders were "briefed" on this and went along with it, without any open debate, hearings, staff analysis, or any real chance for effective dissent, only shows how broken the system of checks and balances is in this country.

Obviously, the United States is not now a police state. But given the extent of this invasion of people's privacy, we do have the full electronic and legislative infrastructure of such a state. If, for instance, there was now a war that led to a large-scale anti-war movement – like the one we had against the war in Vietnam – or, more likely, if we suffered one more attack on the scale of 9/11, I fear for our democracy. These powers are extremely dangerous.

There are legitimate reasons for secrecy, and specifically for secrecy about communications intelligence. That's why Bradley Mannning and I – both of whom had access to such intelligence with clearances higher than top-secret – chose not to disclose any information with that classification. And it is why Edward Snowden has committed himself to withhold publication of most of what he might have revealed.

But what is not legitimate is to use a secrecy system to hide programs that are blatantly unconstitutional in their breadth and potential abuse. Neither the president nor Congress as a whole may by themselves revoke the fourth amendment – and that's why what Snowden has revealed so far was secret from the American people.

In 1975, Senator Frank Church spoke of the National Security Agency in these terms:

"I know the capacity that is there to make tyranny total in America, and we must see to it that this agency and all agencies that possess this technology operate within the law and under proper supervision, so that we never cross over that abyss. That is the abyss from which there is no return."

The dangerous prospect of which he warned was that America's intelligence gathering capability – which is today beyond any comparison with what existed in his pre-digital era – "at any time could be turned around on the American people and no American would have any privacy left."

That has now happened. That is what Snowden has exposed, with official, secret documents. The NSA, FBI and CIA have, with the new digital technology, surveillance powers over our own citizens that the Stasi – the secret police in the former "democratic republic" of East Germany – could scarcely have dreamed of. Snowden reveals that the so-called intelligence community has become the United Stasi of America.

So we have fallen into Senator Church's abyss. The questions now are whether he was right or wrong that there is no return from it, and whether that means that effective democracy will become impossible. A week ago, I would have found it hard to argue with pessimistic answers to those conclusions.

But with Edward Snowden having put his life on the line to get this information out, quite possibly inspiring others with similar knowledge, conscience and patriotism to show comparable civil courage – in the public, in Congress, in the executive branch itself – I see the unexpected possibility of a way up and out of the abyss.

Pressure by an informed public on Congress to form a select committee to investigate the revelations by Snowden and, I hope, others to come might lead us to bring NSA and the rest of the intelligence community under real supervision and restraint and restore the protections of the bill of rights.

Snowden did what he did because he recognised the NSA's surveillance programs for what they are: dangerous, unconstitutional activity. This wholesale invasion of Americans' and foreign citizens' privacy does not contribute to our security; it puts in danger the very liberties we're trying to protect.

And lest you think in Canada we are immune: NSA Spying On Canadians, CSEC Capable Of Similar Surveillance - Expert

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