The Mississippi River is at its highest level in 35 years and that has put hundreds of thousands of acres of farmland under water. There will be major agricultural losses and extensive damage. There are 855,750 acres under water and the damages will be in the hundreds of millions of dollars. Many farmers will never return to the land having gone bankrupt. The flood hit as farmers were preparing to harvest wheat and corn, soybeans and cotton. This follows a drought that left much of the region parched for several years.

    Farmers are then facing $4.00 gas, $4.10 a gallon diesel and fertilizer costs that just rose from $68.00 an acre to $100.00 an acre. Farmers had already planted and each one is facing over $100,000 in losses already. That could be solved by the Yazoo Backwater project but environmentalists are fighting to kill that project.

    Since rules took effect on April 1st for mortgage borrowers to be able to get jumbo loans over $417,000 all there has been is frustration and disillusionment, because the loans are either not available or the rates are far higher than expected. This program’s failure is now allowing a new wave of foreclosures and a rising inventory of homes for sale that will deepen and prolong the economic downturn. To illustrate the impact only 8% of loans were subprime and 14% in 2007 were jumbos. This will hit California, Arizona and Nevada the hardest. If these upper tier markets are unable to get refinancing or financing there could be contagion as we have seen in the subprime and ALT-A categories. This is a $3 trillion jumbo market and the lenders are not following through. The 30-year fixed rate mortgage was 6.07% last week and jumbo borrowers are being forced to pay 7% to 9%, when the 10-year Treasury is 3.80%. We call that greed on the part of the bankers. Loans are usually made 1% to 1-1/4% above that 10-year note rate or at 3.80% to 5.05%. You either pay the bankers toll or you are out on the street.

    We have been receiving reports that some companies are discouraging cash payments to pay bills by charging an extra service fee for accepting cash. It is called a courtesy fee or at least that is what AT&T Wireless calls it. This policy of course targets the poor and those who refuse to use checks and credit cards.

    Soldiers who need special waivers to get into the Army because of bad behavior go AWOL more and often face courts-martial. They also get promoted faster and re-enlist at a higher rate, get promoted faster to sergeant, have a lower rate of dismissal for personality disorders, have a lower rate for dismissal for unsatisfactory performance and are more decorated.

    They have a higher desertion rate, higher misconduct rate, more courts martial and a higher dropout rate due to alcohol.

    This may be rough a bunch but the Army seems to be able to handle them well.  

    The National Association of Purchasing Managers – Chicago business barometer edged up to 48.3 from 48.2 in March. The employment component fell to 353 from 44.6 in March. Prices paid slipped to 82.9 from 83.9 and new orders eased to 53 from 53.9. This is three straight months of contractions.

    The Treasury says it will bring back the 52-week bills after a 7-year absence because of higher borrowing needs prompted by falling revenues, higher spending and debt redemptions by the Fed.

    They also announced a $21 billion refunding of 10-year notes and 30-year bonds to pay down $53 billion in maturing debt in auctions next week.

    Defaults on privately insured US mortgages rose 37.2% in March, as a growing number of homeowners failed to keep up with loan payments. 58,130 insured borrowers were at least 60 days late on payments in March, up from 42,362 yoy, but down 4.6% from February’s 60,911. These are a precursor to foreclosure.

    Our Treasury Department wants to give the Fed new regulatory powers to try to stop credit and asset market excesses from reaching the point where they threaten economic stability. They call it, if you can believe this, “Macro-prudential” authority to order, hedge funds and other entities to curtail strategies that put financial stability at risk. An investment commissar or a financial SS. This is a privately held corporation run by Illuminists that will complete the marriage of corporations, finance and monetary policy with and within government to more nearly construct a corporatist fascist government. This would be a centrally controlled command economy engaged in central planning and market manipulation.

    As another example, Sheila Blair, one of the country’s top banking regulators, proposed fighting the housing crisis by using low cost government loans to assist borrowers pay down unaffordable mortgages that they lied to get by falsifying their mortgage applications.

    ADP says US companies added 10,000 jobs in April following a 3,000 gain in March. They are using the same methodology as the BLS so forget it.

    The US employment cost index rose 0.7%.

    Personal consumption expenditures fell 1% in the first quarter.

    The Gross Domestic Purchases Index grew 3.5% in the first quarter from 3.7% in the 4th quarter.

    The CEO of hedge fund Citadel Investment said, “it’s the Great Depression on Wall Street. It sure isn’t on Main Street.” Ken Malis of Malis & Co. said, “until you see Wall Street put their party hats on again and get on the tables and start dancing is going to take years.” Leon Black billionaire investor said, “the banking system has been broken since last summer and has fostered a credit crisis” the likes of which I’ve never seen in the 30 years I’ve been in the business.

    Mortgage application volume fell 11.1% last week. Refi volume fell 16.7%, while purchase application volume decreased 4.8%. Refis accounted for 45.7% of total application volume. The 30-year fixed rate mortgage fell from 6.04% to 6.01%. The 15s fell to 5.53% from 5.6% and the 1-year ARMs fell to 6.86% from 6.93%.

    Health insurance premiums are increasing ten times faster than incomes. Workers with job-based coverage for their families saw earnings rise 3% from 2001 to 2005, while their health insurance premium contribution increased 30%. The average cost for job-based family insurance in California rose more than $2,650 to $10,551 from $7,898. Part of the cost nightmare is that more than 30,000 of the 3.6-million private-sector employers offering health insurance as a benefit to workers dropped it. Four million people lost coverage and the number of people with private insurance fell by 2.4 million, or 6%. The study found that 7% of Americans said they or someone in their household decided to marry in the last year so they could get healthcare benefits via their spouse. If that isn’t a sad state of affairs, we do not know what is. In job-based insurance employees picked up 24% of that cost, the employers the rest.