The U.S. credit card industry may withdrawal up to $2 Trillion plus in credit card lines over the next 18 months due to the on-going Credit Crisis as well as new, tighter underwriting and regulatory guidelines. After income from jobs, credit cards are the number #2 source for consumer liquidity for most Americans.

An analyst from Oppenheimer & Company was recently quoted as saying the following about the potential decline in credit card lines: "In other words, we expect available consumer liquidity in the form of credit card lines to decline by 45 percent".

As consumer spending typically represents up to 2/3 of total overall spending in America, a credit card spending reduction of up to 45% will be devastating to the overall American economy. Retail store sales and shopping malls will be especially hit hard.

You may expect record near term residential and commercial foreclosures nationwide as a result of a slowdown in consumer and business spending. If you have the cash or access to third party capital, then there will be some excellent bargain basement real estate buying opportunities.

It was just announced today that the British (UK) government will take over the Royal Bank of Scotland by "acquiring" a majority 60% equity position within the bank. Again, shareholders will probably end up with little to nothing after the British government nationalizes this well known banking institution.

The $31 Billion (U.S. $) bailout deal will make dividends on common stock shares be worthless, and all bonuses to RBS executives will be cancelled just in time for the Christmas holidays. Over the past year, the total market value of RBS's stock plummeted over 85%.

RBS is the second largest bank in the U.K. after only HSBC. Last week, HSBC discontinued their entire national residential wholesale lending division in the United States. This event usually happens prior to the shutting down or national takeover of a bank so HSBC may be taken over by the British government in the near term as well. 

Approximately 6 months ago, RBS' Chief Economist predicted that the world's financial markets may collapse by the Fall. As the financial markets actually did collapse in late September to early October, he was very accurate in his forecasts. 

Remember, we had all of those "banker bailout plans", a 40% year to date collapse in the U.S. stock market, a 40% median price drop in California real estate in one year alone, and the continued unwinding of the Quadrillion (1,000 Trillion) to a Quadrillion & A Half (1,500 Trillion) of primarily unregulated derivative assets. 

Governments around the world have scrambled to bailout and nationalize most of the world's financial institutions (banks, investment banks, etc.), and they have continued to change the rules so the world's financial markets would not entirely "freeze up" and collapse like they did recently in Iceland. 

The "old school" style of the world's financial markets did, in fact, change altogether in late September. I am most proud of my prediction earlier in the year that the U.S. stock market would plunge over 20% within a two week time period beginning the week of September 29th. It did happen, and many of my friends, family, and clients have thanked me for encouraging them to sell all of their stocks prior to that week. 

The best remaining investments are gold, silver, and REO pool foreclosure investments for potentially cents on the dollar. The remaining investors who still own stock investments in financial institutions or insurance companies should think twice about continuing to hold these investments. If these same banks are later nationalized, then those same stock investments may later be worth as little as ZERO. 

***For financial solutions, please visit my other website at www.realloans.com .

As demand for gold continues to escalate, there is currently a shortage of gold coins or bars (physical gold, not paper gold via COMEX) worldwide. Central Banks around the world (including the "Federal" Reserve (a private entity which is neither "federal" nor do they maintain a "reserve" - a double misnomer), the Bank of England, etc.) continue to try to print their way out of the ongoing financial meltdown worldwide by monetizing any and all forms of debt.

Sadly, the current balance sheet for the "Federal" Reserve is now approximately 95% higher than prior to the start of the Credit Crisis late last year. The U.S. money supply (M-1 SA) is now growing at an annual rate of between 25% and 30%. This inflationary printing rate can only lead to a massive loss of purchasing power for the U.S. Dollar. As a result, the future U.S. Dollar may then purchase less and less goods and services. 

As a result, we may be experiencing a near term hyperinflation scenario similar to South American countries in the '80s and '90s as well as the Weimar Republic in Germany in the early 1920s. The combination of currency devaluation coupled with asset deflation is a real possiblity for the USA in 2009. We have never experienced both currency devaluation and asset deflation at the same time before here in America.

Due to these concerning events, many investors are cashing out of the stock, bond, and real estate markets in order to purchase precious metals like gold and silver. Some precious metal analysts are predicting that gold may hit anywhere from $2,000 to $21,000 per ounce as demand continues to exceed supply.

Olivier Blanchard, the chief economist of the IMF (International Monetary Fund), believes that the world's financial crisis will only worsen in the near term. He does not believe that the financial markets will improve until at least 2010 (yeah, right. I guess 3010), and that the markets will not stabilize until at least 2011.

Blanchard says that the IMF does not have enough money to solve the world's financial problems. The combination of the lack of liquidity as well as the potential insolvency of many of the world's largest financial institutions is something that may not be solved by any entity. 

This includes the almighty IMF and the World Bank. It seems to me that both the IMF and the World Bank have caused more economic and financial problems around the world rather than have actually helped resolve these problems like in countries such as Peru, Chile, Argentina, Brazil, Russia ('90s), various Asian nations ('90s), Poland, and many others around the world. 

Talk continues that most to all financial institutions in both the UK and the USA may have to be completely nationalized by 2009 as the unwinding of the Quadrillion (1,000 Trillion) to a Quadrillion & a half (1,500 Trillion) of primarily unregulated derivatives (the root cause of the Credit Crisis) continues at hypersonic speed. 

For example, Citibank was just BAILED OUT TODAY by the U.S. government. Our government has agreed to cover up to $306 billion in potential losses for Citibank as well as to "lend/invest" $20 billion in cash to them. Sadly, Citibank may have potential financial losses of at least another $2 to $3 TRILLION (per the Wall Street Journal). Wow!!! I have been saying and writing for years that Citibank was on the verge of melting down, yet few people believed me. Wake up, Sheeple!!!

Oh joy!!! Let's socialize everything so the government owns and controls everything. Fools are the only ones left who currently own stock in these insolvent financial institutions. Once these financial institutions are nationalized, then the stock values typically hit a big, fat ZERO. What happened to free markets, capitalism, and what is left of the "middle class" here in America?

Wow!!! In October 2007, the U.S. Dow Jones Index (a composite of 30 key stocks) reached a peak of 14,160+. Yesterday (Nov. 20th), the Dow fell almost 445 points to a 5 1/2 year low of 7,552. While the Standards & Poor's 500 Index (a broader and truer range of 500 stocks) fell to 752. This is the lowest S & P 500 number since April 1997 (11 1/2 years ago).

Ouch!!! Remember, I kept warning anyone who would listen that the Dow Jones index would begin it's long descent toward financial armageddon beginning the week of September 29th. I told many people that the Dow would initially drop over 20% within a two week time period. No one believed me, yet it still happened.

Recently, I wrote articles and blogs as well as I told many co-workers, clients, family, and friends that the Dow index would hit 7,000 by the end of November. In addition, I believe that the Dow Jones index may hit 5,000 or below by Spring 2009.

I have been studying the risks associated with derivatives worldwide for over 15 years. There may be close to 1,000 to 1,500 TRILLION in unregulated derivatives currently unwinding. The Credit Crisis is primarily about the collapsing values associated with derivatives (Credit Default Swaps, Mortgage-Backed Securities, Structured Investment Vehicles, Interest Rate Option Swaps, Collaterized Debt Obligations, and other complex financial instruments).

Gold, Silver, and REO foreclosured properties for cents on the dollar are a much safer alternative investment than anything associated with the U.S. stock or bond markets. I still can't believe that the 10 year Treasury Yields hit a 50 year low at 3.00 just yesterday. 

Investors are fleeing the equities markets in droves, and they are trying to find anything which seems "safe". U.S. Treasuries are backed by the U.S. government so they must be "safe" right. Sadly, I keep hearing rumors that the U.S. government may be close to defaulting on our debt obligations by early next year so that is another major concern for all investors worldwide. Good times!!! Welcome to Great Depression II. This time it not just in the USA, but it is worldwide!!!!!

Here is a breakdown of some of the most recent economic data thanks to the spiraling Credit Crisis woes. The information is as follows:

* The U.S. consumer is "tapped out". Since consumer spending typically represents almost 2/3s of our overall national annual economy, the following data is very troubling:

The average annual debt to annual disposable income went from 70% in the early 1990s to 100% in 2000 (which means that the average American spent ALL of their annual income on debt). Sadly, the average debt to disposable income numbers are now projected to be close to 140% in 2008. This means that the average American now spends 40% more this year than they earn in disposable income. 

Mortgage equity withdrawal (via cash out 1sts, 2nds, or Home Equity Lines of Credit) reached a high of $700 billion nationally in 2005. Since most lenders have restricted their underwriting guidelines dramatically over the past year to year and a half, it is now very challenging to pull cash out of our homes in order to cover our bills. 

As a result, only $20 billion was pulled out nationally via cash out loans in just the 2nd quarter of 2008. This will only hurt consumer spending more as we head into the Christmas shopping time period. 

Finally, the average value of existing home equity wealth has fallen 50% nationally in just the past year or two. As I have written several times before, 40% of all homes in the USA which currently have mortgages are projected to now be "upside down" with negative equity. As the financial and real estate markets continue to fall, these "negative equity" numbers may only increase more in the near term.

The combination of poor consumer spending numbers, less access to cash, and falling stock and real estate values may cause the economy to fall even further toward the "Abyss". If you have the cash or access to capital, there will be some incredible buying opportunities if you know how to find the deals.

Fannie Mae, Freddie Mac, and several large banks are considering a new loan modification program that actually is not truly a true "loan modification program". These new proposed loan programs just primarily help keep the loan payments coming into the financial institutions instead of relieving homeowners of their financial pressure.

The new and improved loan programs may involve allowing existing mortgagors (borrowers) to modify their 30 year loans to 40 year loans for lower payments. In addition, they may be able to add or defer existing mortgage loan balances to their loans, and they may be able to reduce their interest rates down to much lower "teaser" rates.

In essence, this may allow people with "upside down" mortgages (negative balances) to remain within their homes as "glorified tenants". These new proposed loan programs may reduce the record numbers of homeowners from walking away from their existing homes. This, in turn, may at some point stabilize home values.

In 2008, nearly 40% of all residential homes in the U.S. with mortgage balances are now currently "upside down". As the Credit Crisis continues to worsen, we may soon see 50% of all U.S. homes with mortgages loans with zero or negative equity. The more people who walk away from their properties and drag down home values in their respective neighborhoods, then the more likely that their neighbors may soon walk away from their homes. This becomes a "negative feedback loop" or a "vicious downward cycle" for all of us!!!!!

The USA may lose it's AAA credit rating (the highest and safest bond rating) due to our enoromous debt levels. We are now spending more than we ever have in our nation's history. If our bond ratings begin to drop to AA or below, then long term interest rates will begin to increase (10 year Treasury yields).

In addition, less foreign buyers like Japan and China may buy our Treasury debt in the near term. Japan and China have purchased over 50% of our annual U.S. Treasury debt in recent years. With less foreign demand and the real potential of a credit downgrade for the USA, then long-term interest rates (30 year fixed mortgages, etc.) may soon increase to over double digits (10%).

Higher borrowing costs for both consumers and the U.S. government may cause an even worse economic depression in the near term. In addition, the U.S. Dollar's value may decline dramatically as well. This may lead to hyperinflation as the dollar may buy less goods and services in the future. In turn, there is a real possibility that the U.S. government may default on our government debts at some point early next year.

I am sorry that I don't have more encouraging words about the state of the U.S. economy. Please don't blame me as I am just the messenger!!!

Ouch!!! Fannie Mae recently cut the existing value of their existing mortgage-backed security pool by almost $21.4 billion due to the crumbling real estate values which support these existing mortgages. They also announced a record $29 billion dollar 3rd quarter loss, which is the largest reported quarterly loss for any company this year.

Fannie Mae, the largest holder of mortgages in the U.S, had a stock price of over $50 per share just one year ago. Now, the same stock is trading near 75 cents per share. Fannie Mae's overall stock market value was estimated near $39 billion at the beginning of this year. As of the first week of November (2008), the total market value has plummeted to close to $4 billion. 

Fannie Mae and Freddie Mac are the two largest investors in U.S. mortgages. Their financial problems are a major reason why the U.S. housing market losses continue to spiral out of control. Many banks across our country rely upon both Fannie and Freddie to purchase their existing mortgage loans. 

If banks can't sell of their mortgage loans to third party investors like Fannie and Freddie, then these same banks are unable to make new loans to their existing customers as they will not have the fresh capital available. 

I am expecting both Fannie and Freddie to start liquidating their existing mortgage and real estate pools for cents on the dollar in the near term as they will need new money any way possible. We will do our best to gain access to these discounted real estate and mortgage pools for our client base.

The main reason that the U.S. Dollar has maintained it's value so well the past few decades is that the American consumer kept purchasing foreign goods from areas like Asia and Europe. China, Japan, Germany, the UK, France, and other nations could traditionally rely upon the strong American consumer to purchase their goods and services.

However, the typical U.S. consumer is now tapped out. In addition, many Americans have significantly less access to credit in order to continue purchasing consumer goods. Typically, consumer spending represents almost 2/3 of the overall U.S. economy. Now, many of us have minimal cash reserves available to continue to buy new goods and services.

Since American consumers are now purchasing less foreign goods and services, then our foreign trade partners (China, Japan, etc.) now have less cash available to purchase U.S. Treasury Bonds. Remember, China and Japan have consistently purchased almost 50% of our entire annual U.S. Treasury Bond supplies the past several years. If they now purchase less U.S. Bonds, then both the U.S. Dollar will weaken and long-term interest rates (10 Year Treasuries) will begin to increase more.

We have never faced both the "twin threat" of a potential near term economic depression as well as a collapsing Dollar. Since the Credit Crisis officially began in August 2007, the world has lost over $35 Trillion dollars worth of value in the financial markets. Now, we are also beginning to see much higher unemployment numbers as more companies like Circuit City (just today) are forced to file for bankruptcy protection. 

The world's financial markets are increasingly deleveraging. The 1 Quadrillion (1,000 Trillion+) of primarily unregulated derivatives are unwinding at escalating amounts each week. President Bush, and the G20 leaders, are meeting this weeking (Nov. 15th) in order to discuss ways to save the world's financial markets. Some of the proposed topics may include a new, supplemental worldwide currency. How will a new potential one world currency affect all forms of existing investments (stocks, bonds, real estate, etc.) around the world???