I have said for the past few years that Washington Mutual (WAMU) was potentially in the worst financial shape of any large banking institution in America. My many doubters kept telling me that I was "wrong" as they thought WAMU was too big to fail.

Last night, the USA government seized WAMU and all of their assets. This is now officially the largest bank failure in American history. WAMU has over $300 billion in assets, and over $188 billion in deposits. How many billions or trillions do they have in on and off balance sheet derivatives like CDOs, SIVs, and Credit Default Swaps as well?

I kept warning friends, family, and clients to pull all of their money our of WAMU. Just yesterday (Thursday), I told two associates to pull their money out now as I thought WAMU would be taken over no later than today (Friday). Many of the recent bank takeovers by the FDIC have occured after 5 pm PST on a Friday so the government has an entire weekend to work on the problems.

Had the USA government not seized WAMU and, subsequently, sold it off to JP Morgan for a paltry $1.9 billion, then the collapse of WAMU would have bankrupted the FDIC. FDIC currently may have less than $40 to $45 billion cash on hand so their cash supply would have vanished. If the FDIC would have been "wiped out", then no other bank accounts in the U.S. would have sufficient insurace coverage for the existing $1 trillion plus in national insured savings accounts. 

JP Morgan was named after the man who primarily founded the privately owned "Federal" Reserve back in 1913. Morgan gets to pick up the prime assets of WAMU for literally cents on the dollar while the U.S. taxpayers may get stuck with all of the bad debts associated with WAMU. JP Morgan also acquired Bear Stearns earlier this year in a similar transaction type.

As I have been writing and speaking about for years, the unwinding of the $1,000 trillion (quadrillion) derivatives market is finally upon us. This is not just a "subprime" problem as the "dumbed down" mainstream media likes to tell their viewers. It is a downward plummet into a black hole-like financial Abyss. 

Most major banks, Wall Street firms (the one or two still left standing), automobile companies, airlines, and major insurance companies are technicially insolvent. If they were forced to use standard bookkeeping methods like the rest of everyday Americans, then their debts would greatly exceed their assets. As a result, these multi-billion and multi-trillion dollar companies would be in bankruptcy court.

Speaking of bankruptcies, Lehman Brothers' recent bankruptcy filing is just the beginning. With the recent Bear Stearns, AIG, Fannie Mae and Freddie Mac "bailouts", I expect many more prominent companies to collapse in the very near term. 

The continued fire sales of prime assets from these companies desperate for cash will be unbelievable. Those of us who know how to find these prime assets for 1 to 40 cents on the dollar may be some of the fortunate ones who will survive this upcoming financial depression. 

Thanks to all those people who continue to believe in me as well as my forecasts. My intent is to warn as many people as possible so those close to me do not get hurt too badly by the upcoming financial implosion. Knowledge is power, and "action" is much better than "reaction".

As I have written about for years in Creative Real Estate Magazine as well as on this website, the U.S. and world financial markets are finally beginning to officially "implode". With these on-going government and "Federal" Reserve bailouts, many stock investors' funds are getting wiped out down to ZERO.

There may be upwards of $1,000 Trillion (a Quadrillion) of derivative debt on planet Earth now. This number dwarfs all hard assets on our planet. For example, recently the U.S. stock market had a combined market value of $23 Trillion, the entire U.S. bond market had a combined value of $4.4 Trillion, and the entire existing U.S. mortgage market was somewhere in the $7 to $10 Trillion range.

I am expecting the U.S. stock market to drop dramatically in the very near term (within 1 - 6 weeks). The safest place to invest may be in gold, silver, or discounted REO (foreclosed) property pools where the purchase price ranges may range from between 10% to 35% of the latest conservative market value. For more information, please take a look at the "Real Estate Deals" tab on our website.

Throughout much of my life, I have tried to be as informed as I could be on various topics which may affect my family, my friends, and my clients. With knowledge comes power. It is sad when so many people around the world don't take the time to read or research information which may affect them and their loved ones tremendously.

Over the years, I have been fairly accurate in regard to my predictions about the unwinding of the U.S. and world's financial markets as well as many other important topics. I sounded the "warning bells" many years ago before the "laughable" mainstream media started to make the same warnings. 

As the markets continue to implode, and as we accelerate into the downward financial Abyss thanks to the mismangement of the "Federal" Reserve (a private entity) and the Bank of England, you will see "capitalistic" markets become "socialistic" in the very near term as various banks, investments banks, airlines, auto companies, and other major businesses are "bailed out" by the Fed and the U.S. Treasury. Through the "socialization" of these major companies, shareholders' investments will reach zero like they did with AIG.





            

As the Credit Crisis losses mount, Lehman Brothers officially files bankruptcy today. Lehman will then try to sell off their best assets first in Chapter 11 Bankruptcy Court. Lehman's parent company will try to shield some of its best U.S. subsidiaries away from the Bankruptcy Court first. Lehman was one of the original founders of the "Federal" Reserve so this BK filing is significant.

The scariest part of this Lehman meltdown will be the exposure of other financial institutions to Lehman via unregulated Credit Default Swaps, Collaterized Debt Obligations, Structured Investment Vehicles, and other derivatives options. Lehman's BK filing may force in some major margin and derivative option calls from various unrelated investors like major banks and other investment firms. 

Will the Lehman BK be the final card to fall in our world's financial "house of cards", and implode the rest of the worldwide financial markets? Or will the impending collapse of Washington Mutual be the financial "straw that broke the camel's back"?

We are now in the process of creating new REO (bank owned foreclosures) Pool financing in increments of $1 Million Dollars and up ($1 Billion +). As most buyers of bank owned foreclosure inventories use cash only, this new lending option allows investors to purchase larger amounts than ever before for REO pools in the 10% - 55% price range.

This "blanket" loan may be secured by 1 - 1,000+ homes within the REO purchase pool. There is no prepayment penalty, and there are individual partial release clauses built in the loan so you may refinance or sell off properties individually. The loan to value range may be up to 70% - 75% of the purchase price. Rates will vary depending upon the deal, and the loan term may be within a 1 - 3 year time range.

The borrowing entity may be a corporation, LLC, or some other type of entity as long as there is some sort of personal guarantee from one or more of the key individuals. These deals may be structured with no income verification for the borrowers or the borrowing entities, but assets verification is required. Typically, there may be interest reserves built in the loan for the 1st 6 months (negotiable though).

Imagine purchasing a $3 million REO pool of prime Southern California properties which may be currently valued at $6 million. We may bring in $2.1 to $2.4 million of the purchase price, and you and your group may have between $3 and $4 million in instant equity. You may then either rent the properties, or sell them off individually or in bulk for an excellent profit. 

This REO Pool financing option may be available in many states nationwide so bring us your deals, and call me for the best REO Pool deals currently available for purchase.

The FDIC (Federal Deposit Insurance Corporation) announced last week that it may only have $45 Billion cash on hand to "insure" against all their FDIC insured bank accounts nationwide. The current estimated cash on hand represents close to 1% as reserves against all insured bank accounts. This figure is at the FDIC's lowest level since 20 years ago when the FDIC last filed for bankruptcy protection.

The FDIC also announced that the number of "problem" U.S. banks increased last week from 90 to 117. Sadly, the FDIC will not tell the public which banks are on the "problem" list.

If just one major bank fails in the near term (i.e. WAMU, Wachovia, etc.), then the FDIC's entire cash reserves may be wiped out completely, according to various bank analysts. Will the U.S. Treasury and/or the Fed bail the FDIC out if they run out of cash?

China is beginning to unload their vast holdings in both Fannie Mae and Freddie Mac stock. China is purchasing more U.S. Treasuries instead. Russia is rumored to be thinking about selling some of their large holdings in both Fannie and Freddie.

Also, Fannie and Freddie may discontinue buying any more stated income or stated asset conforming loans ($417K or below in most areas) by September 30th (according to a "broadcast alert" from Bank of America yesterday).

As Fannie and Freddie currently own upwards of 75% to 80% of existing mortgages in America, their decision to stop purchasing stated income, Alt-A type loans by September 30th may be the beginning of the end of the financial markets in America and around the world. 

Without Fannie and Freddie available to purchase most of the loans nationwide, then most banks can not offer these loans to consumers. This will only tighten the lending market even more, and this may drive down asset values even further.

Is September 30th the day that the financial markets collapse or cease to exist in its present form? Fannie and Freddie are gigantic hedge funds which directly and indirectly affect trillions of dollars of capital around the world. Their potential implosion may change the world's financial markets more than any other "financial event" on our planet.

To date, 276 banks have failed in just the past two years. This is an average of one bank failing every two days over the past two years. The FDIC just recently announced that there may be an additional 117 "ailing banks" on their current list, but they will not tell the general public who those banks are that are on the verge of failing.

The FDIC has less than 7/10 of 1% cash on hand available as "insurance" in order to protect all of the existing bank deposits in the U.S. Right now, the FDIC's current cash on hand ($40 - $65 Billion, according to various reports) is dangerously low and potentially below the reserve ratio requirement established by Congress many years ago. 

The FDIC chairman has recently said that they may need to go to the U.S. Treasury to "borrow" some money. Will the FDIC also go to the privately held "Federal" Reserve in order to transfer more Americans assets into the hands of the international bankers who put America into this financial mess in the first place?

Breaking News!!!! Fannie fires three of their top executives today. These executives include their Chief Executive Office (CEO), their Chief Risk Office (CRO), and their Chief Business Officer (CBO). 

In addition, they halted after hours trading today (8/27) for their Preferred Stock. Is this the beginning of the end of Fannie Mae as we know it? Is Freddie Mac soon to follow. Fannie holds more open U.S. residential mortgages than any other entity in the world. Combined, Fannie and Freddie own and control up to 75% of the ENTIRE U.S. mortgages in existence.

Will these entities soon be in bankruptcy court in spite of the recent government bailouts? Will these GSEs (government sponsored entities) be broken into multiple parts and sold off to private interests? We shall see in the very near term. If Fannie and Freddie go under, then the financial markets of the entire world will be in for a severe shock.