If there is one chart out there that will do more damage to financials while simultaneously channelling investors worldwide into precious metals, it is the one below. Unlike most economic data sets, which are backward looking, this chart of Notices of Defaults (NOD's) for the state of California is very forward looking and key to the future prosperity or pain of banks not just in the U.S. but across the world.

If one remembers, the subprime issue started with the Bear Stearns' hedge funds in early 2007. According to the chart below, NOD's were relatively only a blip just prior in 2006 at just over 100,000 units. However, they are presently at 450,000 units. Here are a few other gruesome points:

- NOD's are up 124% YOY from Q2-07 to Q2-08.

- Last quarters NOD's were the highest on record since data has been collected by DataQuick.

- Last year 52% of all NOD's "emerged from the foreclosure process". Currently, this number has fallen to only 22%, which is an historic low.

- 40% of all sales activity in California are foreclosure resales.

Also, for those interested, Professor Roubini was just interviewed and provides the worsening details via the link below.

http://tinyurl.com/5abom2

Regards - VHF

-

Chart 1: NOD's for CA from 1992-2008