APPAREL INDUSTRY SALES AND VENDOR OUTLOOK LOOKS BLEAK DUE TO CIT FINANCING PROBLEMS-SHOULD ANOTHER BAILOUT BE DONE, OR NOT?

When you go to your local apparel store and buy a pair of jeans polo shirt, you do not realize that it was probably part of a very intricate and vital financing circle provided by CIT or CIT FACTORING, which finances about 60% of the apparel industry.

A manufacturer of jeans who receives an order from an apparel retailer, borrows money to make the jeans from CIT, and then when the jeans are shipped to the retailer that manufacturer sells the invoice to CIT which advances some more money against the credit of the retailer providing needed cash flow to the manufacturer.

When CIT says NO, the retailer does not get the merchandise and the manufacturer loses the sale.

Do you see how important CIT is to this circle of financing?

If CIT fails, there could be total chaos in the market.

Commercial lender CIT Group Inc. said Monday in a regulatory filing it lost $1.68 billion in the second quarter, and again warned it might have to file for bankruptcy protection if it fails to restructure its business.

Losses mounted in the quarter as the embattled New York-based lender as borrowing costs exceeded income from lending to customers, and as it set aside more money to protect against future loan losses.

CIT lost $4.30 per share during the quarter ended June 30. During the same quarter last year, CIT lost $2.08 billion, or $7.88 per share, due to a $2.55 billion charge from discontinued operations.

CIT’s loss from continuing operations during the most recent quarter totaled $1.62 billion, compared with earnings from continuing operations during the year-ago period of $47.9 million.

Analysts polled by Thomson Reuters, on average, forecast a loss of $1.95 per share for the latest quarter.

In its quarterly report to the Securities and Exchange Commission, CIT said there is still “substantial doubt” about its ability to continue operating.

Just last month, CIT was bailed out with a $3 billion loan from some of its largest bondholders as it faced a cash crunch. It also launched an offer to repurchase $1 billion in outstanding debt that was successfully completed Monday, helping to stave off a potential bankruptcy filing.

Despite the completion of the tender offer, CIT is still facing some challenges. It could continue to struggle with liquidity issues as more debt is due to mature next year.

CIT Group, one of the nation’s largest lenders to small and midsize businesses, has been devastated by the downturn in the credit markets and is attempting to restructure its operations to remain in business. CIT used to rely heavily on cheap, short-term debt to fund its operations — a type of funding that essentially evaporated during the peak of the credit crisis last year.

With weak credit markets and concerns about its survival, CIT’s borrowing costs have begun to outpace the money it generates from lending to customers. CIT recorded a negative net interest revenue of $19.1 million during the second quarter, compared with positive revenue of $169.8 million during the year-ago period.

Furthermore, as the economy remains in a recession, more of CIT’s customers are falling behind on repaying loans. That has forced CIT to set aside more cash to cover those losses, a problem nearly all lenders have had during the recession. CIT set aside $588.5 million for credit losses during the second quarter, compared with $152.2 million during the same quarter last year.

Some experts fear that if CIT collapses it would deal a crippling blow to an economy still bleeding hundreds of thousands of jobs a month despite a nearly $800 billion federal stimulus program.

The retail sector would be hit especially hard. CIT serves as short-term financier to about 2,000 vendors that supply merchandise to 300,000 stores, according to the National Retail Federation. Analysts say 60 percent of the apparel industry depends on CIT for financing.

Last week, CIT reached an agreement with the Federal Reserve Bank of New York that puts the company under the oversight of federal regulators. The agreement requires CIT to submit a plan for how it will maintain sufficient cash. It must also provide budgets through the end of 2010 that include details about how the company will meet current and future capital requirements.

Stock up on your clothing now, before supplies run short at your local apparel store.

DOCTORS PROVIDING THEIR OWN FORM OF CONSUMER CHOICE-NO INSURANCE BUT PLENTY OF ACCESS TO HEALTH CARE-A NEW HEALTH CARE MODEL?

Like a lot of their patients, doctors are sick of long waits in the waiting room and dealing with insurance companies.

That’s why a growing number of primary care physicians are adopting a direct fee-for-service or “retainer-based” model of care that minimizes acceptance of insurance. Except for lab tests and other special services, your insurance plan is no good with them.

In a retainer practice, doctors charge patients an annual fee ranging from $1,500 to as high as over $10,000 for round-the-clock access to physicians, sometimes including house calls.

Other services included in the membership are annual physicals, preventive care programs and hospital visits.

Doctors argue that this model cuts down their patient load, allows them to spend more time per patient and help save the system money.

However, some industry groups caution that these emerging trends are a consequence of a health care system badly in need of reform.

“I had to change the model”: Dr. John Kihm, 51, an internist based in Durham, N.C., converted his solo private practice to a retainer-based model in May.

Until then, his daily schedule was jam-packed. “I was seeing patients every 15 minutes,” said Kihm.

He was seeing about 80 patients a week, “many were very sick with multiple systems and complications,” he said. “After 20 years, I realized that this was not doable, not sustainable.”

His goal is to continue medicine for another 20 years, “but I want to practice it the right way,” Kihm said. That means spending more than 15 minutes per patients and doing house calls. “I had to change the model,” he said, as he adopted the retainer-based structure.

He now spends 30 minutes on average per patient. He didn’t disclose his annual fees but said his fees are “less that what it could cost to smoke a pack of cigarettes a day.”

His fees covers annual exams, wellness programs and other types of preventative care typically not covered by insurance. If his patients do have insurance, it would pay for things like lab tests.

“My income is about the same as before, but I have less overhead costs from half as many patients and half the amount of supplies that I need,” he said.

Michigan-based family doctor Dr. John Blanchard has been practicing the retainer-based care for eight years. He said his patients have “unfettered” access to him whenever they need him for a fee of between $50 to $150 a month.

The model has enabled Blanchard to “cut down on everything by about 25%,” including his patient caseloads and time spent on filing insurance claims.

One industry report cited that processing claims is the second-biggest area of wasteful expenditure in the health care system, costing as much as $210 billion annually.

Prevention better than cure: MDVIP, based in Boca Raton, Fla., is one of the largest organizations of primary care physicians, numbering about 326 nationwide, that practice retainer-based medicine.

“We call it preventive, personalized health care,” said Darin Engelhardt, president of MDVIP. “Our premise is if we reconstruct primary care, what would it look like?'”

According to the MDVIP formula, it means limiting its affiliated practices to no more than 600 patients.

For an annual fee of between $1,500 and $1,800, its members receive full health assessment, 24/7 access to their doctor, including via a doctor’s cell phone or e-mail and a personal Web page on which they can access their medical records.

MDVIP-affiliated practices do take insurance, including Medicare, for other medical services such as lab tests and sick visits.

Engelhardt said MDVIP has about 110,000 members nationwide, half of whom are over the age of 65.

“This is a variation of the traditional model,” he said. “We believe it enhances the physician-doctor relationship as well as reduces costs by stressing prevention.”

Although official figures are hard to come by, Engelhardt said MDVIP’s research based on Medicare data has shown that in communities with both MDVIP and traditional practices, hospitalization rates dropped by as much as 70% for its members.

He estimates that there are about 3,000 family physicians practicing a form of retainer-based medicine in the United States.

Concerns: The rise in alternative care delivery models indicates the level of frustration, both on the part of doctors seeing too many patients and consumers not getting easy access to doctors, said Dr. Lori Heim, president-elect of the American Academy of Family Physicians (AAFP).

“I am not judging this model. We don’t have a policy against it,” she said. “But I believe it reflects the underlying problems in the system. The retainer model won’t solve all the problems in health care.”

Heim said the model works better for physicians who practice in locations where consumers can afford it.

“It won’t work in communities where I practice,” Heim, of Laurinburg, N.C., said, referring to areas with a high number of uninsured consumers and a middle class that can’t afford out-of-pocket membership fees.

At the same time, Heim warned that unless the current health care system changes, the retainer model could become more prevalent.

“If this is the model of care that we evolve into, then there could be fewer doctors for people at a time when we need more doctors,” she said.

Alywn Cassil, spokeswoman for the policy research organization Center for Studying Health System Change, said retainer-based care is having a “marginal impact” on the industry so far.

“The vast majority of physicians still have a managed care contract,” she said. “Only one in 10 don’t.”

But she agreed with Heim on one point: “If doctors further reduce their panel size of patients through these models, that will only enhance the shortage of primary care doctors,” Cassil said.

What’s more, the model creates a “tiered system” of access to care where even for the insured, if you pay more, you get enhanced access.

iT SEEMS THAT DOCTORS MAY BE ON TO SOMETHING. REASONABLE ACCESS AND PAYMENTS DIRECTLY BY THE PEOPLE WHO NEED TO USE THEM!

CHINA EXPANDING ITS ACCESS TO OIL SUPPLIES ALL OVER THE WORLD-US OIL COMPANIES EDGED OUT AS CHINA FLEXES ITS CASH!

The Chinese snapping up oil fields from Africa to South America to the Middle East. Soon it may be able to rival the Western giants.
By Steve Hargreaves

China is on an oil buying binge.

Over the past few months, the Chinese government — or its big government-controlled oil firms — have closed or floated a slew of deals in countries all over the world. These deals have expanded the nation’s oil reach and may one day position the nation to match the skills of western oil firms.

The deals include a $10 billion loan the Chinese government extended to Russia’s Rosneft in exchange for a guaranteed cut of that company’s production. The Chinese have also gotten in tight with Brazil’s Petrobras, arranging a similar deal with the firm that is developing a huge new offshore field – one of the biggest new discoveries in decades.

But it doesn’t end with loans. Last week the Wall Street Journal reported that China National Petroleum Corporation is interested in buying all or a part of Argentina’s YPF for $14.5 billion, although a deal is far from certain.

In Africa, CNOOC and Sinopec are buying a $1.3 billion stake in offshore Angolan development rights from American oil firm Marathon. Angola has recently overtaken Nigeria as Africa’s biggest oil producer, and is one of Exxon Mobil’s (XOM, Fortune 500) favorite countries to invest in.

And rumors are swirling that the China National Petroleum Corporation will take the majority stake in Iraq’s Rumaila oilfield from BP (BP). Rumaila produces over 1 million barrels a day, and is Iraq’s biggest oil field.

It’s clear what the Chinese are doing.

“They are stilting on a huge pile of cash and they’re using this as a buying opportunity,” said Greg Priddy, a global energy analyst at the Eurasia group, a political risk consultancy.

China wants to buy oil for several reasons.

First, they can. Their huge trade surplus means the Chinese have racked up a giant stash of dollars.

But this pile of dollars can be dangerous. Many worry the dollar is set to fall due to rampant American spending.

But China is stuck. It can’t sell them too fast for fear of accelerating the dollar’s weakness.

So buying hard assets like oil is a great way for China to diversify its holdings, without destabilizing the greenback.

Second, they don’t really trust the market.

The Chinese, along with many Asian countries, have less faith in the free market. This distrust was, in Chinese eyes, probably justified a few years back, after they tried to buy U.S. oil company Unocal in an open market deal that collapsed after a public outcry in the United States.

“The Chinese definitely want their own stuff that they can control and send anywhere in the world,” said Priddy.

Finally, they see the big picture.

Chinese oil demand is expected to grow nearly 20% in the next six years, and the country already imports over half of the 8 million barrels a day it uses.

“They are doing what you’d expect any country to do: They are procuring resources for the best interest of the people,” said Ruchir Kadakia, a global oil analyst with the consultancy Cambridge Energy Research Associates. “I think they watched the developed world dig itself into a deep enough hole to learn a few lessons.”

All this buying raises the question: Will the Chinese firms soon be able to rival the Western oil companies?

In many ways they already do.

China National Petroleum Corporation’s daily oil production is already roughly equivalent to Exxon’s. And PetroChina at one point had a market capitalization twice Exxon’s, although the vast majority of shares are owned by the government-run China National Petroleum Corporation so it’s hard to arrive at a true market value.

Where the Chinese firms lag is in expertise.

Complex operations – like deep water drilling or liquefying natural gas, are still the domain of the Western oil firms.

But given time, and given their need to develop those deep-water leases off Angola, the Chinese are bound to gain the technical know-how that will put them on-par with the best western firms.

That is really putting the dollars where they will do the most good for them while not selling the greenbacks to destroy their value.

maybe we need a good Chinese economist to help our hapless lawmakers here?

HOMEOWNERSHIP IS NOW MOVING TOWARD RENTING-PREVIOUS DREAMS NOW TURNING TOWARD RENTING DUE TO FORECLOSURES AND UNEMPLOYMENT

‘A man is not a whole and complete man,” wrote Walt Whitman, “unless he owns a house and the ground it stands on.” America’s lesser bards sang of “my old Kentucky Home” and “Home Sweet Home,” leading no less than that great critic Herbert Hoover to declaim that their ballads “were not written about tenements or apartments…they never sing about a pile of rent receipts.” To own a home is to be American. To rent is to be something less.

Every generation has offered its own version of the claim that owner-occupied homes are the nation’s saving grace. During the Cold War, home ownership was moral armor, protecting America from dangerous outside influences. “No man who owns his own house and lot can be a Communist,” proclaimed builder William Levitt. With no more reds hiding under the beds, Bill Clinton launched National Homeownership Day in 1995, offering a new rationale about personal responsibility. “You want to reinforce family values in America, encourage two-parent households, get people to stay home?” he said. George W. Bush similarly pledged his commitment to “an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, ‘welcome to my house, welcome to my piece of property.'”

Surveys show that Americans buy into our gauzy platitudes about the character-building qualities of home ownership—at least those who still own them. A February Pew survey reported that nine out of 10 homeowners viewed their homes as a “comfort” in their lives. But for millions of Americans at risk of foreclosure, the home has become something else altogether: the source of panic and despair. Those emotions were on full display last week, when an estimated 53,000 people packed the Save the Dream fair at Atlanta’s World Congress Center. Its planners, with the support of the Department of Housing and Urban Development, brought together struggling homeowners, housing counselors, and lenders, including industry giants Bank of America and Citigroup, to renegotiate at-risk mortgages. Georgia’s housing market has been devastated by the current economic crisis—338,411 homes in the Peachtree state went into foreclosure in May and June alone.

Atlanta represents the current housing crisis in microcosm. Since the second quarter of 2006, housing values across the United States have fallen by one third. Over a million homes were lost to foreclosure nationwide in 2008, as homeowners struggled to meet payments. The number of foreclosures reached an all-time record last month—when owners of one in every 355 houses in the country received default or auction notices or were seized by creditors. The collapse in confidence in securitized, high-risk mortgages has also devastated some of the nation’s largest banks and lenders. The home financing giant Fannie Mae alone held an estimated $230 billion in toxic assets. Even if there are signs of hope on the horizon (home prices ticked upward by 0.5% in May and new housing starts rose in June), analysts like Yale’s Robert Shiller expect that housing prices will remain level for the next five years. Many economists, like the Wharton School’s Joseph Gyourko, are beginning to make the case that public policies should encourage renting, or at least put it on a level playing field with home ownership. A June 2009 survey commissioned by the National Foundation for Credit Counseling, found a deep-seated pessimism about home ownership, suggesting that even if renting doesn’t yet have cachet, it’s the only choice left for those who have been burned by the housing market. One third of respondents don’t believe that they will ever be able to own a home. And 42% of those who once purchased a home, but don’t own one now, believe that they’ll never own one again.

Some countries—such as Spain and Italy—have higher rates of home ownership than the U.S., but there, homes are often purchased with the support of extended families and are places to settle for the long term, not to flip to eager buyers or trade up for a McMansion. In France, Germany, and Switzerland, renting is more common than purchasing. There, most people invest their earnings in the stock market or squirrel it away in savings accounts. In those countries, whether you are a renter or an owner, houses have use value, not exchange value.

For most Americans, until the recent past, home ownership was a dream and the pile of rent receipts was the reality. From 1900, when the census first started gathering data on home ownership, through 1940, fewer than half of all Americans owned their own homes. Home ownership rates actually fell in three of the first four decades of the 20th century. But from that point on forward (with the exception of the 1980s, when interest rates were staggeringly high), the percentage of Americans living in owner-occupied homes marched steadily upward. Today more than two-thirds of Americans own their own homes. Among whites, more than 75% are homeowners today.

Yet the story of how the dream became a reality is not one of independence, self-sufficiency, and entrepreneurial pluck. It’s not the story of the inexorable march of the free market. It’s a different kind of American story, of government, financial regulation, and taxation.

We are a nation of homeowners and home-speculators because of Uncle Sam.

It wasn’t until government stepped into the housing market, during that extraordinary moment of the Great Depression, that tenancy began its long downward spiral. Before the Crash, government played a minuscule role in housing Americans, other than building barracks and constructing temporary housing during wartime and, in a little noticed provision in the 1913 federal tax code, allowing for the deduction of home mortgage interest payments.

Until the early 20th century, holding a mortgage came with a stigma. You were a debtor, and chronic indebtedness was a problem to be avoided like too much drinking or gambling. The four words “keep out of debt” or “pay as you go” appeared in countless advice books. As the YMCA told its young charges, “If you can’t pay, don’t buy. Go without. Keep on going without.” Because of that, many middle-class Americans—even those with a taste for single-family houses—rented. Home Sweet Home didn’t lose its sweetness because someone else held the title.

in any case, mortgages were hard to come by. Lenders typically required 50% or more of the purchase price as a down payment. Interest rates were high and terms were short, usually just three to five years. In 1920, John Taylor Boyd Jr., an expert on real-estate finance, lamented that “increasing numbers of our people are finding home ownership too burdensome to attempt.” As a result, there were two kinds of homeowners in the United States: working-class folks who built their own houses because they couldn’t afford mortgages and the wealthy, who usually paid for their places outright. Even many of the richest rented—because they had better places to invest than in the volatile housing market.

The Depression turned everything on its head. Between 1928, the last year of the boom, and 1933, new housing starts fell by 95%. Half of all mortgages were in default. To shore up the market, Herbert Hoover signed the Federal Home Loan Bank Act in 1932, laying the groundwork for massive federal intervention in the housing market. In 1933, as one of the signature programs of his first 100 days, Frankin Roosevelt created the Home Owners’ Loan Corporation to provide low interest loans to help out foreclosed home owners. In 1934, F.D.R. created the Federal Housing Administration, which set standards for home construction, instituted 25- and 30-year mortgages, and cut interest rates. And in 1938, his administration created the Federal National Mortgage Association (Fannie Mae) which created the secondary market in mortgages. In 1944, the federal government extended generous mortgage assistance to returning veterans, most of whom could not have otherwise afforded a house. Together, these innovations had epochal consequences.

Easy credit, underwritten by federal housing programs, boosted the rates of home ownership quickly. By 1950, 55% of Americans had a place they could call their own. By 1970, the figure had risen to 63%. It was now cheaper to buy than to rent. Federal intervention also unleashed vast amounts of capital that turned home construction and real estate into critical economic sectors. By the late 1950s, for the first time, the census bureau began collecting data on new housing starts—which became a leading indicator of the nation’s economic vitality.

It’s a story riddled with irony—for at the same time that Uncle Sam brought the dream of home ownership to reality—he kept his role mostly hidden, except to the army banking, real-estate and construction lobbyists who rose to protect their industries’ newfound gains Tens of millions of Americans owned their own homes because of government programs, but they had no reason to doubt that their home ownership was a result of their own virtue and hard work, their own grit and determination—not because they were the beneficiaries of one of the grandest government programs ever. The only housing programs prominently associated with Washington’s policy makers were underfunded, unpopular public housing projects. Chicago’s bleak, soulless Robert Taylor Homes and their ilk—not New York’s vast Levittown or California’s sprawling Lakewood—became the symbol of big government.

Federal housing policies changed the whole landscape of America, creating the sprawlscapes that we now call home, and in the process, gutting inner cities, whose residents, until the civil rights legislation of 1968, were largely excluded from federally backed mortgage programs. Of new housing today, 80% is built in suburbs—the direct legacy of federal policies that favored outlying areas rather than the rehabilitation of city centers. It seemed that segregation was just the natural working of the free market, the result of the sum of countless individual choices about where to live. But the houses were single—and their residents white—because of the invisible hand of government.

But by the 1960s and 1970s, those who had been excluded from the postwar housing boom demanded their own piece of the action—and slowly got it. The newly created Department of Housing and Urban Development expanded home ownership programs for excluded minorities; the 1976 Community Reinvestment Act forced banks to channel resources to underserved neighborhoods; and activists successfully pushed Fannie Mae to underwrite loans to home buyers once considered too risky for conventional loans. Minority home ownership rates crept upward—though they still remained far behind whites. Even at the peak of the most recent real-estate bubble, just under 50% of blacks and Latinos owned their own homes. It’s unlikely that minority home ownership rates will rise again for a while. In the last boom year, 2006, almost 53% of blacks and more than 47% of Hispanics assumed subprime mortgages, compared to only 26% of whites. One in 10 black homeowners is likely to face foreclosure proceedings, compared to only one in 25 whites.

During the wild late 1990s and the first years of the new century, the dream of home ownership turned hallucinogenic. The home financing industry—at the impetus of the Clinton and Bush administrations—engaged in the biggest promotion of home ownership in decades. Both pushed for public-private partnerships, with HUD and the government-supported financiers like Fannie Mae serving as the mostly silent partners in a rapidly metastasizing mortgage market. New tools, including the securitization of mortgages and subprime lending, made it possible for more Americans than ever to live the dream or to gamble that someone else would pay them more to make their own dream come true. Anyone could be an investor, anyone could get rich. The notion of home-as-haven, already weak, grew even more and more removed from the notion of home-as-jackpot.

And that brings us back to those desperate homeowners who gathered at Atlanta’s convention center, having lost their investments, abruptly woken up from the dream of trouble-free home ownership and endless returns on their few percent down. They spent hours lined up in the hot sun, some sobbing, others nervously reading the fine print on their adjustable rate mortgage forms for the first time, wondering if their house is the next to go on the auction block. If there’s one lesson from the real-estate bust of the last few years, it might be time to downsize the dream, to make it a little more realistic. James Truslow Adams, the historian who coined the phrase “the American dream,” one that he defined as “a better, richer, and happier life for all our citizens of every rank” also offered a prescient commentary in the midst of the Great Depression. “That dream,” he wrote in 1933, “has always meant more than the accumulation of material goods.” Home should be a place to build a household and a life, a respite from the heartless world, not a pot of gold.

By:Thomas J. Sugrue is Kahn professor of history and sociology at the University of Pennsylvania. He is writing a history of real estate in modern America

LET’S GET CASH FOR 8TRACKS, OLD REFRIGERATORS, LAWNMOWERS, OLD SUITS AND SOCKS, EVEN OLD UNDERWEAR-ANY OLD CLUNKERS TO REVIVE THE ECONOMY!

Why not have the government provide billions and billions for all our old stuff? We trade in our old underwear, and buy new underwear. That keeps the sale of new underwear strong and continues to employ lots of workers in our factories.

We can get the government to buy all our old stuff: 8 track stereo players, record players, old lawnmowers, refrigerators, socks with holes in them, worn out shoes, beat up furniture and sofas that are sitting on our front porch, etc….

What a great idea! This type of cash could really have a real impact on instant spending by consumers, instead of political cronies getting money to build roads and bridges that fall apart using stimulus money! That money never provides any stimulus.

The best thing is that instead of getting 25 cents for a garage sale item like an old pair of shoes, the government could pay say $50 to trade them in for a new pair of $100 sneakers, for instance.

The economy would be instantly boosted! people would be back to work and this would be a way to recycle all our money…what we pay into the government we get back in new shoes ans stereos, for instance.

Wow, real government at work. Government we get something back from…government we can feel and believe in.

That is a stimulus! I’m forwarding my idea to the White House directly!

CASH FOR CLUNKERS COULD BE OPPORTUNITY TO SHAFT BUYERS TWICE; ONCE BY THE GOVERNMENT AND ONCE BY THE DEALER! SO WHAT’S NEW?

The enticing advertisement stated that you will get up to $4,500 for your clunker! So you gave up the clunker, but the dealer who was counting on getting the money from the government under that “great” successful idea DID NOT RECEIVE IT. I am waiting for the cash for stereos and mattresses and cash for refrigerators, and cash for lawnmowers, and cash for old yard pools, and cash for old shoes and suits and cash for leisure suits…why not!?

With big government, so far that was the ONLY big idea that actually worked even though it was just giving my money to others for FREE! Why not give away more money for literally everything. let’s just get new stuff with the government buying our old stuff?

Sometimes, a dealer will not be able to collect the cash due to ineligible buyers etc., or for other reasons, and then can demand that the customer come up with the money that was due to be paid to the dealer by the government.

So, in actuality, the buyer can be shafted twice..once by the government and once by the dealer! So, what else is new?

Now the government is telling dealers how to run their business.

The U.S. Department of Transportation is advising consumers taking advantage of the “Cash for Clunkers” program not to sign contingency agreements promising to pay back up to $4,500 if dealers don’t receive payment from the government.

No contingency agreement is required to participate, the Transportation Department, which administers the $3 billion Car Allowance Rebate System, said on its Web site.

The Minnesota Automobile Dealers Association has a form on its Web site that members can use as part of a new-car closing. By signing the form, the buyer agrees to reimburse the dealership the incentive amount if the dealer is unable to obtain the credit from the government “for any reason.” The consumer can also return the car to the dealership and pay “a reasonable charge” for use of the new vehicle, according to the form.

Consumers signing the agreement also acknowledge their trade-in vehicle may have been destroyed and can’t be returned.

Dealers may be acting improperly by asking consumers to keep their old cars until credits for their vehicles are approved by the National Highway Traffic Safety Administration, the Transportation Department said on its Web site. If the new car is in stock, the dealer must allow the buyer to take possession before the paperwork for the credit can be submitted, the department said.

Cash Demands

In some cases, dealers are demanding $4,500 in cash to avoid reporting the car as stolen when the government credit doesn’t arrive, said Rosemary Shahan, president of Sacramento, California-based Citizens for Auto Reliability and Safety.

Gloria Sharp of Woodbury, Minnesota, traded in her Jeep Grand Cherokee for a new Honda Accord and said she was called a few days after the deal closed and asked for more money. The government rejected the credit, but the problem turned out to be on the dealer’s end — they had mistakenly applied for $4,500 instead of $3,500, she said.

“They said if we didn’t give them the money, they wouldn’t submit the paperwork,” Sharp said.

San Francisco-based Consumer Action joined Shahan’s group at a news conference to ask the Department of Transportation, which administers the program, to prohibit dealers from forcing consumers to sign agreements that promise payments if the reimbursements don’t show up.

‘Bait and Switch’

“These practices are a form of ‘bait and switch,’” the groups wrote in a letter to Transportation Secretary Ray LaHood today. “Car buyers are particularly vulnerable to the dealers’ pressure because they have surrendered their traded-in vehicle and lack access to reliable information about whether or not the deal was approved by the government.”

Minnesota Automobile Dealers Association Executive Vice President Scott Lambert said the group would continue using the contingency form. The government hasn’t said the form can’t be used, and dealers have to protect their interests with so much uncertainty about the program, he said.

“I don’t think it’s NHTSA’s job to get between the customer and the dealer,” Lambert said. “If the consumer doesn’t want to sign the agreement, they can walk away.”

The state’s 250 participating auto dealers have submitted about $42 million in unprocessed credits, Lambert said. Deals are getting rejected by the government on technicalities and about 10 percent of Minnesota’s dealer claims have been accepted, he said. For the entire country, it’s about 2 percent, he said.

A Mess

“This program is administratively a mess,” Lambert said. “The dealerships are having a terrible time.”

Charles Cyrill, a spokesman for the National Automobile Dealers Association in McLean, Virginia, had no immediate comment.

The clunkers program is intended to spur new car sales and help revive the ailing auto industry. The program’s initial $1 billion was exhausted about a week after it formally began and President Barack Obama signed a bill approving an additional $2 billion on Aug. 7.

Lawmakers had expected the program to generate about 250,000 vehicle sales with enough money to last until Nov. 1. Consumers can receive up to a $4,500 credit for trading in an older car for one with better gas mileage, when certain conditions are met.

The government has received 316,189 applications for credits as of yesterday, according to the Transportation Department. The total dollar value of the submitted applications is $1.32 billion.

Congress intended that consumers get a good deal in return for trading up to more efficient vehicles, Shahan said. Dealers are using the program to reel consumers back into the showrooms to pay extra cash, a practice sometimes referred to as “yo-yo” financing, she said.

“This is yo-yo financing on steroids,” Shahan said.

SOMETIMES PRICES FOR STOCKS, GOLD, SILVER AND COMMODITES GOING UP IS NOT GOOD-LIKE WHEN THE VALUE OF THE DOLLAR PLUMMETS

Wow, the value of my stocks went up! Wow, the value of my gold in the basement safe went up! That sounds good, but is it really good? Probably NOT!

The value of the US DOLLAR determines the ratios that in turn provide the daily values of our assets, especially things like gold or commodities that trade in DOLLARS.

If the dollar loses value, the gold you hold has to cost more…because the dollar is now worth less! So did it really go up?

Just because prices are going up, we have to consider if the value of the dollar has in fact decreased and therefore we are not really ahead…just keeping up!

Those financial indicators sure can be tricky as traders in the entire world watch for price anomalies.

CLOSING THE BUSINESS IS A BETTER OPTION THAN FIGHTING ALL THE PAPERWORK, REGULATIONS AND UNIONS!

My family business was started in 1949 by my father and his brother. It now employs 24 people, and if we get to either 25 or 50 and all sorts of numbers in between, different rules will apply to us as an employer.

These rules will mandate, mandate not ask or suggest, that our little company MUST provide this or that benefit, or we can’t fire this person or that person, we must hire that person or this person. If an employee that becomes unable to do the job because he has to go up on a ladder but now has gained 250 pounds, we have to “accommodate” him-whatever that means. Never mind that the ladder manufacturer says that the ladder can “accommodate” up to 250 pounds! So what are we supposed to do in that case?

Our company provided a great living for the family and as it was handed down to us, the kids of the founders, we continued its success and provided a living to our families and those of our employees.

After reading the plans of government local and federal, the plans to increase our taxes, the plans to mandate new rules and regulations and to fine us if we do not have or provide mandated programs, we as long time company owners have decided that it is not worth while to continue to struggle every day with the countless bureaucrats that want to have a say in how we run our business.

Over the last few years, a large labor union has tried to organize our technicians and we have had to spend hundreds of thousands of dollars in costs to oppose this, even though the majority of our employees did not have an interest in joining.

We have decided to take our money, which we made sufficiently to live the rest of our lives, and just enjoy our retirement. No hassles, no fines, no inspectors, no government mandates, dozens of taxes and forced benefits-just fishing and boating and relaxing.

Statistically, we are a small business, but we are the backbone of America, and we have been forced to make a choice to close up…rather than continue solely due to the bureaucratic morass that is impeding every aspect of our business. We know other business owners who are doing the same.

For instance, after the sale of our business equipment and the real estate that our business occupies, we will have a substantial amount that does not come close to the “profits” that we can hope to generate over the next 10 or 20 years.

The government does not seem to understand this. It is more profitable for us to close than to stay open!

Down the block, the government forced a car dealership that employed about 40 people to close by pulling its GM franchise, I can’t figure that one out.

JUST WHEN YOU THOUGHT IT WAS SAFE TO GET INTO THE MORTAGE/HOUSING MARKET…MOST MORTGAGES PREDICTED TO BE UNDERWATER!

The recession is finished….it’s turning around…etc….NOT! Spokesmen for the government keep saying this is the end of the crisis.

Housing values are falling, housing values are predicted to be below the mortgage loan values even for the best credit clients. Homes are falling in value even though their owners may be current in the payments.

How do you sell a home when you need to sell for any reason? If you have a $300,000 mortgage, buy your home will only fetch $250,000 in a sale, the buyer will not be able to get a mortgage loan due to the “upside down” value to mortgage.

So this will affect home sales, home financing and may force more and more short sales that will affect lenders and borrowers negatively for years!

The housing crisis is far from over.

Reuters reported, the percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.

Home price declines will have their biggest impact on prime “conforming” loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.

“We project the next phase of the housing decline will have a far greater impact on prime borrowers,” Deutsche analysts Karen Weaver and Ying Shen said in the report.

Of prime conforming loans, 41 percent will be “underwater” by the first quarter of 2011, up from 16 percent at the end of the first quarter 2009, it said. Forty-six percent of prime jumbo loans will be larger than their properties’ value, up from 29 percent, it said.

“The impact of this is significant given that these markets have the largest share of the total mortgage market outstanding,” the analysts said. Prime jumbo loans make up 13 percent of the total market.

Deutsche’s dire assessment comes amid a bolt of evidence in recent months that point to stabilization in the U.S. housing market after three years of price drops. This week, the National Association of Realtors said pending home sales rose for a fifth straight month in June. A widely watched index released in July showed home prices in May rose for the first time since 2006.

Covering 100 U.S. metropolitan areas, Deutsche Bank in June forecast home prices would fall 14 percent through the first quarter of 2011, for a total drop of 41.7 percent.

The drop in home prices is fueling a vicious cycle of foreclosures as it eliminates homeowner equity and gives borrowers an incentive to walk away from their mortgages. The more severe the negative equity, the more likely are defaults, since many borrowers believe prices will not recover enough.

Homeowners with the riskiest mortgages taken out during the housing boom have seen the greatest erosion in equity, in part because they were “affordability products” originated at the housing peak, Deutsche said. They include subprime loans, of which 69 percent will be underwater in 2011, up from 50 percent in March, Deutsche said,

Of option adjustable-rate mortgages — which cut payments by allowing principal balances to rise — 89 percent will be underwater in 2011, up from 77 percent, the report said.

Regions suffering the worst negative equity are areas in California, Florida, Arizona, Nevada, Ohio, Michigan, Illinois, Wisconsin, Massachusetts and West Virginia. Las Vegas and parts of Florida and California will see 90 percent or more of their loans underwater by 2011, it added.

“For many, the home has morphed from piggy bank to albatross,” the analysts said.

NEW LUXYRY JET FLEET FOR NANCY PELOSI AND HER CRONIES-OUR MONEY AT WORK AGAIN DUE TO NECESSITY AND URGENCY!

You and I are being forced to stop travel, forced to trade in our clunker for a battery powered car that goes 40 MPH and we got to send our kids to public school.

But, not our congressional elites…they just ordered three new business jets to fly them around since they do not want to travel with us regular folks, as they may be recognized and yelled at.

Last year, lawmakers excoriated the CEOs of the Big Three automakers for traveling to Washington, D.C., by private jet to attend a hearing about a possible bailout of their companies.

But apparently Congress is not philosophically averse to private air travel: At the end of July, the House approved nearly $200 million for the Air Force to buy three elite Gulfstream jets for ferrying top government officials and Members of Congress.

The Air Force had asked for one Gulfstream 550 jet (price tag: about $65 million) as part of an ongoing upgrade of its passenger air service.

But the House Appropriations Committee, at its own initiative, added to the 2010 Defense appropriations bill another $132 million for two more airplanes and specified that they be assigned to the D.C.-area units that carry Members of Congress, military brass and top government officials.

Because the Appropriations Committee viewed the additional aircraft as an expansion of an existing Defense Department program, it did not treat the money for two more planes as an earmark, and the legislation does not disclose which Member had requested the additional money.

An Appropriations Committee staffer said the military was already planning to replace its passenger fleet, and the committee “looked at the request and decided they should speed up the replacement.”

The Gulfstream G550 is a luxury business jet, which the company advertises as featuring long-range flight capacity that “easily links Washington, D.C., with Dubai, London with Singapore and Tokyo with Paris.” The company’s promotional materials say, “The cabin aboard the G550 combines productivity with exceptional comfort. It features up to four distinct living areas, three temperature zones, a choice of 12 floor plan configurations with seating for up to 18 passengers.”

The version Gulfstream sells to the military is reconfigured for the government with modest accommodations, not the luxury version sold to private customers, said a source familiar with the planes.

Rep. Sanford Bishop (D-Ga.) had submitted a request to the Appropriations Committee for a $70 million earmark for one airplane on behalf of Georgia-based Gulfstream, and Rep. Jack Kingston (R-Ga.) lists the airplane as one of the earmarks that he was asked to request, though his office said he never made the request to the Appropriations Committee.

“The committee saw fit to fund it at that level” without Kingston’s involvement, his spokesman said.

Bishop’s office did not return several calls requesting comment for this story.

Air Force spokesman Vincent King told Roll Call: “This line item provides funding to purchase C-37 aircraft. The C-37 is the military variant of the commercial Gulfstream 550 executive jet. C-37s provide executive airlift for senior U.S. government officials including Congress and combatant commanders.”

The language of the appropriations bill specifies that of the three aircraft, the Air Force will provide “one aircraft each for the 201st Airlift Squadron and the 89th Airlift Wing.” Both are based out of Andrews Air Force Base in Maryland.

The 89th Airlift Wing provides “global Special Air Mission (SAM) airlift, logistics, aerial port and communications for the President, Vice President, Combat Commanders, senior leaders and the global mobility system,” according to the Andrews Web site.

King told Roll Call, “the 201st Airlift Squadron provides short-notice worldwide transportation for the executive branch, Congressional Members, Department of Defense officials and high-ranking U.S. and foreign dignitaries.”

An Armed Forces Press Service news story from 2004 said that the 201st counted “U.S. Speaker of the House Dennis Hastert [R-Ill.] and [then-Senate Armed Services Chairman] John Warner [R-Va.] among its frequent flyers.”

Steve Ellis, vice president of Taxpayers for Common Sense, said if Congress wants to buy new jets for the comfort of top government officials, “I think that all needs to be justified on the merits. … Certainly, lawmakers can fly — and many do fly — coach and business class.” While there may be reasons for flying on top-notch private jets, “it shouldn’t just be squeezed into the bill.”

Ellis said the airplanes are also part of a larger trend for the Appropriations Committee to simply decide that big-ticket items are program increases, not earmarks, so they require less public disclosure.

“The more that you push for transparency, the more of this stuff goes underneath the carpet,” Ellis said. While Congress has established new rules requiring greater transparency for earmarks, the Appropriations Committee is “the judge, jury and executioner over what is an earmark and what isn’t and how much information we get.”

But military analysts said the private jets, despite the high price tag, may be worth the money because of the security and efficiency they provide to high-ranking public officials.

Loren Thompson, defense analyst at the conservative Lexington Institute, said, “In the case of the VIP transport for the executive branch, you can easily explain the cost [of private travel] in terms of the risk of somebody being taken hostage or having their time wasted when a critical decision is pending.”

Thompson pointed out that the cost of the plane would be peanuts compared to the cost to the nation if a top official were taken hostage or harmed taking a commercial flight to a dangerous region of the world.

But Thompson also said that logic “applies to the top members of the executive branch more than it applies to the Member from the 13th district of Illinois.”

John Pike, director of GlobalSecurity.org, a defense information Web site, said military officials “need a long-range airplane — and [it’s] better to fly them on a small one than a big one.”

Pike said it is unreasonable to expect a three-star general and a staff of five people to attend meetings around the world with several stops in far-flung locales while traveling on commercial airlines.