Bits Bucket For October 11, 2010
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Foreclosure freeze could undermine housing market
By MICHELLE CONLIN (AP) – 6 hours ago
NEW YORK — Karl Case, the co-creator of a widely watched housing market index, was upbeat three weeks ago. Mulling the economy while at a meeting at a resort near the Berkshires, Case thought the makings of a recovery were finally falling into place.
“I’m a 60-40 optimist,” he said at the time.
Today, Case’s mood is far more subdued. In scarcely two weeks, he and other housing analysts have watched as the once-staid world of back-office bank procedures has spawned a scandal that threatens to further unhinge the housing market.
Allegations of possible mortgage fraud against financial giants GMAC, JPMorgan Chase and Bank of America read like a corporate thriller: forged documents, faked Social Security numbers, phantom titles, disappearing paper trails, “robo-signers” and mortgages sliced and diced so many times that nobody really knows who owns them.
On Friday, PNC and mortgage servicer Litton Loan Servicing joined those three financial institutions in suspending some foreclosures while they review how documents were handled. Bank of America, which had already announced a halt for 23 states, expanded the suspension to cover the whole nation. If other banks follow suit, it raises the specter of a national foreclosure moratorium.
In all, the banks will have to review the paperwork for hundreds of thousands of mortgages. On top of that, class action lawyers and state attorneys general have filed lawsuits and called for foreclosure moratoriums.
In the near term, the freezes could actually benefit both homeowners and the housing market. Homeowners would have time to live rent-free and chip away at their debt. Prices might stabilize because so many homes are penned up.
…
‘Allegations of possible mortgage fraud against financial giants GMAC, JPMorgan Chase and Bank of America read like a corporate thriller’
OMG, they’re right, I’m on the edge of my seat! Except, it doesn’t change anything, huh?
‘Michael Holmes is one of the thousands of mortgage holders whose house was put into foreclosure by the now infamous “robo-signer,. On Oct. 1, GMAC informed Holmes that the foreclosure on his Belfast, Maine, home had been put on hold. The bank didn’t say for how long. The temporary halt has done little to subdue Holmes’ stress. …From one day to the next, he doesn’t know what will happen.’
“The one safe place you have is your home,” Holmes says. “It’s your comfort zone, and to have that in limbo, it feels like the wolves are on my porch’”
I know what will happen, the answer to this corporate thriller!
Get some boxes Mikey…
The media appears to be making it appear that there will be some miracle and these people will get to keep thier homes.
They are going to get the house on a technicality.Bank error in your favor, you get the house for free.
‘The media appears to be making it appear that there will be some miracle and these people will get to keep thier homes’
And imagine their disappointment when this turns out to not be the case.
From yesterday:
http://thehousingbubbleblog.com/?p=6229#comment-1840263
Thx, quite interesting.
The corporate-owned MSM is misleading the sheeple?! I am shocked, shocked!
‘misleading the sheeple’
There have always been some variations of this. We’re running out of land. The feds will never let housing prices fall. Remember the big cram down hub-bub? It seems that the media gets attention from these magic-bullet, good vs bad, type angles.
Just to show what BS this is, a couple of things from the AP article:
‘the long-term implications are grave. Only a month ago, housing watcher Mark Zandi, chief economist at Moody’s Analytics, predicted that a housing recovery would be under way by the third quarter of next year. Now he believes the foreclosure scandal could prolong the housing depression for at least another few years.’
‘Before a housing recovery can occur, all those foreclosed properties have to be re-scrutinized by the banks and then sold. With any foreclosure-related deal open to legal challenge, that inventory could be taken off the market while the legal challenges make their way through the courts.’
‘Since housing is the engine that in the past seven recessions has pulled the economy out of recession, any further damage couldn’t come at a worse time.’
‘As far as I’m concerned, anything that slows the foreclosure process is a bad thing,” Case said this week.’
Give me a freaking break! Do these people not remember saying how wonderful it was that DC ‘pressured’ the GSEs and most of the big banks to adopt foreclosure moratoriums back in 2008-09? Arggg…
The mass media is lazy and stupid.
This is the biggest business story in probably two generations. Instead, our local “scandals” are “Chinese Fish oil capsules” and a rental car company selling rentals that didn’t have all the optional airbags.
Where is the financial “Woodward and Bernstein” in the National Media?
‘Before a housing recovery can occur, all those foreclosed properties have to be re-scrutinized by the banks and then sold. With any foreclosure-related deal open to legal challenge, that inventory could be taken off the market while the legal challenges make their way through the courts.’
Some people will say anything to get into the press.
‘that inventory could be taken off the market’
What about the millions of houses the banks/GSEs are holding off the market now?
Perhaps this is the distraction.
“With any foreclosure-related deal open to legal challenge, that inventory could be taken off the market while the legal challenges make their way through the courts.”
Its almost the holiday season, during which there were bound to be foreclosure moratoriums anyway. Hasn’t made a difference the past two years.
Well the horror scenario is brought up by the fact that early on in the foreclosure mess, one of the title insurance companies stated that they wouldn’t issue title insurance on properties forclosed by one of the servicers involved. And now that we’re no longer in a bubble of carless lending, nobody would be able to buy one of those properties without being able to get title insurance.
Why aren’t the parties that bought this MBS securities trash not suing the TBTF banks for fraud?
That’s coming, I’m pretty sure. What is really surprising is that the rating companies like Fitch that gave these bundled MBS garbage AAA ratings haven’t been sued into insolvency.
That’s coming, too.
The only way anyone is going to get a house for free, is if the cost of straightening out the paperwork mess is more than the value of the house, or the accounts of the FBer. Even then, the banks may make/be forced into the position that they HAVE to recover as much as they can; if for no other reason, to remain solvent.
Look for the “research” portion of this to be outsourced to India.
And lawyers don’t work for free. How is the FBer going to pay a lawyer, when they (supposedly) can’t make the house payment?
Most lawyers would probably be willing to take on the more clear-cut cases of foreclosure fraud on commission, knowing that with the current mood of the country finding juries who want to stick it to the banksters won’t be difficult.
True, but the water will be muddied considerably when the Banksta’s attorneys start checking into all the “lies” on the “Liar Loan” app.
The FBers have painted themselves into a corner too, if/when the IRS gets involved. You made $500K a year picking strawberries? You either lied on your loan docs, or you lied to the IRS.
It could take 20 years to straighten out this mess.
Dueling fraudsters - I like it. What the bankstas’ attorneys might discover is that the unholy trinity of realtors, assessors, and mortgage brokers were all in on the fraud, usually with the witting participation of the future FBs. Let ‘em all sue each other - there’s plenty of fraud and liability to go around. Meanwhile I’ll just sit tight in my comfy rental house and let this low comedy play itself out.
Dueling fraudsters - I like it.
And I keep thinking about the dueling banjos scene in the movie “Deliverance.” The later scene featuring the squealing pig sounds also comes to mind. As does the final scene.
An FBer might say on the application that he makes $500K picking strawberries, but aren’t the banks responsible for making him prove that he actually makes $500K picking strawberries?
It could take 20 years to straighten out this mess.
That is probably the initially unplanned, but now planned plan.
Sammy,
IIUC,rating companies have some protections under the law. I don’t know all the details, or if it changed, but I took a class in Structured Finance a couple years back, and the Professor was asked about it. I don’t know the current status considering how nefarious the rating firms were. I’ve pondered that myself.
“Even then, the banks may make/be forced into the position that they HAVE to recover as much as they can; if for no other reason, to remain solvent.”
Exactly. Having a Level 3 asset on the books isn’t exactly the same as having cash flow.
Doug in Boone: “Stated income” is the mortgage brokers way of saying, “We TOLD you we just wrote down whatever crazy shit the borrower told us, you’re the one who thought that it didn’t matter when you bought the mortgage/pooled and tranched it into a bond/rated the bond/ bought the bond.”
“As does the final scene.”
FB’ers dead and deep underwater.
So you cannot even buy a foreclosure with the assurance that you own it fair and square. Add that to the list of reasons to boycott real estate!
This is another factor that the buyers will demand more incentive in return for buying a foreclosure. Kind of like buyers of bbb bonds demanding higher yields for riskier investing. The incentive for more risk in buying those houses will turn out to be lower prices.
Or the demand for house buying will be driven down, which should also reduce prices.
It adds a new element of confusion, which the market doesn’t like. And then there’s QE2 and the Bernanke Fed’s broken wellhead gushing more trillions of printing press dollars into the system, which punishes savers and encourages everybody to rush out and buy something tangible before hyperinflation destroys the value of their money.
I was very careful to make sure that the bank bought title insurance for me in my condo transaction two weeks ago. Who knows what kinds of liens on the property will show up in the coming years?
The bank buys title insurance for the bank.
No, for me. I hold the deed - cash = no note.
Tru dat RE Hobbyist. Title insurance covers all of these things.Only way someone gets burned buying a foreclosure - or any property - is if he skimps on title insurance. And if you do that, tough.
So you cannot even buy a foreclosure with the assurance that you own it fair and square. Add that to the list of reasons to boycott real estate!”
that’s right who wants to buy a foreclosure, fix it up and have it taken back. Like buying property in Mexico.
no thanks I’ll wait this out
Mikey’s next home might be a cardboard box.
I want to be a Robo-signer for halloween. Just can’t think of how to make the costume…
One custume accessory would be a bent-over FB. Might be a bit awkward explaining that to the good people handing out candy.
“The one safe place you have is your home,” Holmes says. “It’s your comfort zone, and to have that in limbo, it feels like the wolves are on my porch’”
Not to be a buzz-kill, Mikey, but it’s not YOUR home until you PAY OFF THE MORTGAGE!
And, even if you pay off the mortgage, you still have to pay property tax. If you stop doing that, your city/county/whatever can (and will) foreclose on you.
And since the tax base keeps shrinking, property taxes will only go up.
As I told my mom…the moment you don’t have recurring bills to pay (lights, phone, taxes, whatever), it means you’re dead. So be glad for those bills.
“Get some boxes Mikey…”
Ben, I get where you’re going with this, but in the meantime I am surrounded by empty houses with no ‘For Sale’ signs, while I pay above market rent (granted, a much better above market rent than previous joints). In 2006 I would have predicted that I would outlive the insolvent banks, but it’s 2010 and I am arguably in a worse place. Please understand I am neither playing a victim card nor asking for any sympathy — just being realistic about my little corner of the world.
Mikey can worry about the wolves on his front porch, but I’m starting to hallucinate and see wolves on my own porch, too.
I need to hold steady until the Fed extinguishes the TBTF crack pipe. Once that sucker goes out, the bankstas should be seeing some stellar, green-colored wolves on their own porches. They’ll probably see some rainbow-colored pythons, purple dolphins, fuschia grizzlies, etc., but they deserve it.
Hope, and have boxes.
Hope now, boxes soon enough…
I don’t have the time to look at the national market anymore, but if what is happening here locally any indication of what is happening nationally, then this is another attempt to forestall the crash.
Prices around town have quietly broken through the floor set by the tax credits. Conversions are listed at 20 to 30 cents on the dollar and they are dragging non-conversions down. With 50K tax exemptions and condo listing around 40 - 60 K a pop, married folks, in some cases, don’t even have tax bills. All they pay is the mortgage and HOA.
Apart from mobility, it makes no sense renting anymore. You can buy a place with a 15 yr mortgage for half the rent they are charging these days. Heck, you can pay these things off with 3 - 5 yrs rent money. IT’S A RIDICULOUSLY GREAT TIME TO BUY!!
‘You can buy a place with a 15 yr mortgage for half the rent they are charging these days’
So how long will it be before investors see the cash-flow, buy to rent and ultimately drive rents down? Everything has an equilibrium.
It’s not a bad situation to be in though. Here in my neck of the woods, the median SF house is around $300k, rents are still too high but much less than buying, empty mcmansions everywhere, unemployment is scary high, and not much is selling.
” You can buy a place with a 15 yr mortgage for half the rent they are charging these days.’
That’s not happening here, and I have a major downpayment which should help out that mortgage number. It’s $2200 to rent what I should be able to get w/a monthly payment of a couple hundred more w/a 15 year. As you know $700 - $1000/month of that is taxes.
Where in Florida are you?
I’m in Redington Beach, and cozy 3/2s are starting to drop to about $180k, which ain’t bad. I’d like to “snap one up” around $130-140.
$130-140 is about what they were going for in 1997 in Central Clearwater. I imagine Redington Beach was higher.
Ok… so I’m certainly no economic genius, but I’ve been thinking about this story for a week now. Somehow I can’t understand HOW such a move to stop foreclosures would hurt the housing market. If anything to me this seems like some sort of backroom deal. Why? Well- if all those foreclosures were stopped, wouldn’t it suddenly stop the flow of foreclosures from hitting the market? Wouldn’t that in turn artificially increase demand due to less supply? Wouldn’t it also start the process of home price inflation since foreclosures would not be dragging down the bottom? Is there something I’m missing here?
Yes, I believe it would. On the other hand, everyone knows a whole slew of foreclosures will be hitting when this moratorium if over, which will depress prices again.
Sit this out!
But the documents were still sent to the underwriters because of missed payments. And that does not change!
Exactly. The FB is going to be required to bring their past due payments current in order to get their old mortgage reinstated. That mortgage balance is higher than the market value so I don’t see a line forming at the courthouse for that.
As far as robo signing, what manager reads all the documents put in front of them to sign?
Foreclosure Freeze May Sideline U.S. Homebuyers as Legal Worry Cuts Sales
By Kathleen M. Howley and Dan Levy - Oct 10, 2010 9:01 PM PT
A halt in home foreclosures at the largest U.S. mortgage firms may sideline buyers worried about legal issues, further depressing sales at a time when distressed properties account for almost a quarter of all transactions.
Revelations of mistakes in foreclosure proceedings are causing buyers to have misgivings about property titles, the right of home possession, said Richard DeKaser, chief economist at Woodley Park Research in Washington. Confidence in the legality of repossessions will cut foreclosure sales more than a reduction of available properties because the market already is flooded with repossessed homes, he said.
“The legal problems we’re seeing will hit sales as people worry about the legitimacy of the process,” DeKaser said. “The implications are that there’s been shoddy work.”
Bank of America Corp., the largest U.S. lender, extended a freeze on foreclosures to all 50 states Oct. 8 as concern spread among federal and state officials that homes are being seized based on faulty data. JPMorgan Chase & Co. and Ally Financial Inc.’s GMAC Mortgage unit stopped repossession cases in 23 states where courts supervise home seizures, amid allegations that employees submitted documents with unverified or false information to speed the process.
…
Somehow I can’t understand HOW such a move to stop foreclosures would hurt the housing market. If anything to me this seems like some sort of backroom deal.
I tend to agree.
A halt in home foreclosures at the largest U.S. mortgage firms may sideline buyers worried about legal issues, further depressing sales at a time when distressed properties account for almost a quarter of all transactions….“The legal problems we’re seeing will hit sales as people worry about the legitimacy of the process,”
I really don’t see how this would “sideline” buyers. It did not stop them when they were signing up with no-doc loans, 0 down and neg-ams. Back then buyers were sure not worried about “the legitimacy of the process”.
‘I really don’t see how this would “sideline” buyers. It did not stop them when they were signing up with no-doc loans, 0 down and neg-ams. Back then buyers were sure not worried about “the legitimacy of the process”.’
I think the psychology is completely different now. During the Bubble, no one worried about the legitimacy of the process because most people thought that they’d hold the property for a year or two and then flip it for a huge profit. It was a game of musical chairs, and the music stopped a long time ago. I doubt that very many people are thinking about quick flips these days, and those who try it will get burned.
I do think this situation will result in some distortions in the market. For example, I suspect that a seller who holds title to a property free and clear, and has no encumbrances such as a home equity loan, will be able to command a premium in this market.
I doubt that very many people are thinking about quick flips these days, and those who try it will get burned.
Well, sorry to break the news to you, but flipping’s still alive and kicking here in Tucson. Case in point from today’s fishwrap:
DEAL MAY NOT PASS THE ‘ SNIFF TEST ‘
Josh Brodesky: City pushes big flip for struggling builder
Methinks that we taxpayers are the ones who will get burned on this deal. It’s happened before.
Posted on Sun, Oct. 10, 2010
PhillyDeals: Area banks join foreclosure moratorium
By Joseph N. DiStefano
U.S. banks have been foreclosing on more than 10,000 homes a day since 2008. But the rush slowed last week as the nation’s home-loan processing machinery tangled in its own high-speed recklessness.
GMAC Mortgage, JPMorgan Chase & Co., and Bank of America Corp. announced they would stop moving bad home loans toward foreclosure, for now, after conceding that the bank officers who declare loans defaulted and approve evictions haven’t been verifying things they’ve been swearing are true - as law requires.
Pennsylvania’s largest bank, PNC, has also paused in the rush to foreclosures. “PNC is reviewing its mortgage-service procedures to ensure that these comply with applicable legal requirements,” spokesman Fred Solomon told me.
Just technicalities, the bankers say: “We believe the accuracy of the factual loan information contained in the affidavits was not affected by whether or not the signer had personal knowledge of the precise details,” Chase spokesman Tom Kelly told me.
…
Pressure on nation’s mortgage lenders intensifies-source
Sun Oct 10, 2010 3:37pm EDT
* State attorney generals to investigate foreclosures
* Joint effort not expected to push for moratorium
* Obama opposes national foreclosure moratorium
By Corbett B. Daly
WASHINGTON, Oct 10 (Reuters) - More than two-thirds of U.S. state attorneys general plan this week to launch a joint probe into charges some banks used fraudulent paperwork to kick struggling borrowers out of their homes, a source familiar with the effort told Reuters on Sunday.
Bank of America, the nation’s largest mortgage servicer, an industry term for a firm that collects mortgage payments, on Friday said it would put a temporary halt to foreclosures nationwide as it looks into reports of shoddy paperwork.
Bank of America is the first bank to halt foreclosures in all 50 states. Bank of America, JPMorgan Chase & Co and Ally Financial Inc’s GMAC Mortgage had earlier announced plans to suspend foreclosures in 23 states pending a review of foreclosure procedures.
The mortgage unit of Ally Financial, which is 56.3 percent owned by the U.S. government after a $17 billion bailout, has said employees preparing foreclosures had submitted affidavits to judges containing information they did not personally verify.
…
Talk Back South Florida
The New “F-Word” in Foreclosures — “Fraud”
October 6, 2010 05:02 PM
By Denise Richardson
There’s old adage that goes something like this: it is impossible to fix a problem without acknowledging one exists. I was reminded of it today when I read about what’s now going on in this country with our foreclosure, credit and mortgage crises.
What’s got the media’s attention this week? It’s the reports that major banks have “voluntarily” decided to suspend or delay foreclosures in 23 states.
I have yet to see much in the news about why only 23 states.
That’s a pretty important fact to gloss over. Why less than half the country? What about the paperwork in the remaining states? In the other 27 states, foreclosure cases are not required to appear before a judge before someone’s home gets taken away. So what is being done to confirm that the people who lost their homes in those state were not also victims of this criminal activity? Does anyone care?
Last I knew, knowingly signing documents fraudulently and using them in a court of law is frowned on, right? It’s criminal, isn’t it? Or is it only criminal if you are a homeowner and not a bank? Seems we’ve gone to great lengths to create and then accept a double standard here.
Perhaps these financial crimes—yes, that’s what they are, crimes—continue to happen because we never addressed the real problems to begin with. You can’t fix a problem you don’t acknowledge. Does anyone believe that was done to help protect the rights of homeowners? Let’s call it what it is: fraud
The more we hear news accounts pointing fingers of blame at the borrowers, the deeper the problem grows. The focus and blame for every financial crises, continues to be levied at American families—pointing out that taxpayers will be forced to bailout banks again only further outrages homeowners. They don’t want bailouts, they want justice. They want someone to get to the core of the problem, expose the dirty laundry and dispose of it. Not hide it with more legislation aimed at fast-tracking foreclosures that will only temporarily hide the stains.
Labeling this latest financial crisis that thankfully was dragged out of the dark by tenacious homeowners and activists, advocates and bloggers, it would be wise to figure out why their countless complaints of mortgage servicing fraud, accounting abuses and predatory practices have been ignored? Why have so many turned a blind eye and deaf ear?
…
Megabank, Inc is a menace to the American populace. They should be shut down and broken up by the Sherman Antitrust Act.
Mortgage companies changing locks before foreclosure
Posted: Oct 11, 2010 2:58 AM PDT Updated: Oct 11, 2010 3:01 AM PDT
Imagine coming home from visiting your sick grandmother, only to find your home was broken into and your locks were changed. What may look like a robbery was really your mortgage company hiring contractors to take over your home before it is in foreclosure.
This has been the story for numerous struggling homeowners across the nation, including Darlene Decinti. The Decinti family was granted by the court four more months to make good on their foreclosure.
While away on a brief trip out of town to visit their sick grandmother, Safeguard Properties, the contractor hired by their mortgage company, took possession of the home.
“I found that these people called Safeguard Properties broke in my house. They went through my back window. They crack the glass, slid it off its tracks, got in my house, changed the locks,” said Decinti.
When confronted about the matter, Safeguard said they would not discuss this particular case but merely stated that after a property has been determined vacant, “On the mortgage company’s behalf, Safeguard will take steps to inspect and maintain the vacant property to keep it secure”.
Unfortunately it was hardly abandoned.
Nancy Jacobini had a similar experience with one of the hired “muscle men” of her mortgage company. While alone in her Orlando home, she heard someone outside of her door.
In fear, Jacobini locked herself in the bathroom and called 9-1-1. Police say the man at the door was a hired contractor from her mortgage company, JP Morgan.
The bank initially claimed Nancy was more than three months behind on her mortgage and had abandoned her home as well as cut her utilities, but she was clearly still there.
“My electric is current, it always has been…as well as the water. I’m here all the time,” said Jacobini.
The bank has since acknowledged it was a mistake.
Fight over MERS’ legal right to foreclose makes mess worse
Disputes over MERS, the company behind scores of foreclosures, are leading to heated battles over the mortgage industry’s business practices.
By Stephanie Armour, USA TODAY
When Randy Persten’s mortgage was foreclosed in 2008, he looked at the paperwork and found a mystery. A company he’d never heard of — called Mortgage Electronic Registration Systems, or MERS — was bringing the foreclosure action against him.
Something didn’t seem right. So he got a lawyer and fought the foreclosure, arguing that MERS couldn’t foreclose because it didn’t own the mortgage note he’d signed promising to pay.
Persten ultimately succeeded in getting the action dropped, only to see a new action brought by a different company that says it is the true owner of his mortgage note. Persten still isn’t sure who owns his mortgage.
…
OK here is a case problem.
I am currently looking at the property records of a debtor in a state that has judicial foreclosure. He bought a 203K house in 2006. I see two deeds of trust recorded by the lender, Countrywide, one for 80% and one for 20%, naming MERS as nominee. Zestimate is now 183k. He also has a HELOC on his previous house which he still owns. He is also up to his eyeballs in CC debt.
Is this someone who could probably just stay put indefinitely? Would anyone think it promising to go after him for other miscellaneous business debt anytime soon?
I need to advise my client, one of the creditors in this case.
Who is the servicer on his loan? Is is one of the places that has voluntarily declared a moritorium? And how agressive is your state attorney general going to be about this mess? And how many hoops must a person jump through to shift ownership of a loan secured by real property in your state?
And what on earth does any of that have to do with the other debt? If he goes to bankruptcy court, the court isn’t going to assume that his secured debt will go away. And you will have a pretty high mountain to climb claiming that the guy has lots of cash flow because he doesn’t have to pay his mortgages anymore. You need to look at bankruptcy law to see where your client’s claims fall with respect to all the other debts.
Now, if you happen to know that he is not paying the other debts and is stashing his cash someplace that is not protected (like a retirement account), go ahead and try to get it, but I still think you probably end up standing in line and waiting your turn.
…but I still think you probably end up standing in line and waiting your turn.
Which is what happens in a bankruptcy case. Meaning that, if you’re a creditor, take a number and stand in line with all the other creditors.
Yup, after I wrote it out I told my client and we’re going to punt…
But tell your client to 1099 the deadbeat.
Dumb question of the day:
Has the form of financial innovation known as “mortgage securitization” thus far proven to be a success or a failure?
For those who feel my other post is too alarmist, here’s one from the MSM. Same subject, same dif.
http://www.usatoday.com/money/economy/housing/2010-10-11-foreclosures11_CV_N.htm
Repudiate the debt. For everyone. Sweep the board and re-set.
repudiate debt … okay as long as those that get the debt absolved also get an equal amount of assets seized. I have no debt and should not get further punished for my fiscal responsibility!
Every bit as successful as quantitive easing is going to be.
After two decades of failure by the BOJ to produce the intended results, I guess the Fed is now going to show the world how to do it right!
Yup. As discussed last week, the critiques of the BOJ are many: they didn’t act soon enough, they didn’t act bold enough, they didn’t act often enough.
Yup, our boyz are gonna get that camel through the needle’s eye alright.
TTT admits he can’t even do his own taxes without f-ing it up.
The BOJ doesn’t control the world’s reserve currency.
The fleeting opportunity to do that has historically only accrued to one country at a time…
Since when were pieces of paper by themselves considered as currency?
The BOJ doesn’t control the world’s reserve currency.
Maybe they will be found lucky that they didn’t.
You are going to have to define what success is and what failure is.
Here is a partial go at my take on mortgage securitization.
Without securitization (packaging mortgages and turning them into bonds) all the capital for mortgage loans has to be located in lending institutions. Yes, banks don’t need a $1 to lend a $1, but they do need a fraction of that $1 at some point. Lending through bonds actually requires $1 in order to lend a $1, so in a way, having the capital come from bonds restricts the lending to the cash available unless people are leveraging their bonds. Hedge funds do this, but generic boring mutual fund doesn’t and granny doesn’t either.
Having banks do the lending has one really big problem. Bankers are cowards. They hate risk with a passion (despite the fact that they are paid to manage loan risks) and will reject many possible loans that would be just fine in the normal course of things. This is kind of understandable in a small local bank. After all, if the local large employer goes belly up, a ton of their loans might go bad. So they are really really stingy with loans, may reject perctly responsible applications from “the wrong” side of town because they don’t know much about that neighborhood (since they don’t live there) and generally a bunch of people who could easily pay off a mortgage when the biggest credit bubble in history isn’t going on, will get rejected. This is to their detriment at times (historical norm) when owning is a bit cheaper than renting.
Ah, but that could all be fixed by having larger, regional or national banks. Those entities don’t have to worry about the local plant closeing. They are larger and can tollerate more risk as one plant or even industy having trouble and causeing a few hundred or thousand loans to go bad won’t be an overall problem. Right? Well, no. The bank as a whole could handle more risk, but each bank branch manager probably still gets his bonus based on whether the performance of loans originated at his branch. So while the bank could handle a bit more risk and offer loans to more people, the branch manager making the decisions won’t or his income might take a hit. So the bank, despite being large enough to make more money if they take on a little more risk, it won’t act that way.
Securitization gets around this. By mushing the loans together, and issuing tranches of bonds, you can lend to people who look a little more risky, you can get riskier bonds that pay more to people who are willing to take that risk for the added return, and all that makes sense.
BUT…
Securitization failed recently because the math was completely faulty and the risks of the loans paying off were completely detatched from the originators/securitizers of the loans. The first person who decided that you could use historical data on loan failures to predict future failures when the profiles of the loans were completely different, needs to have his or her gonads shot off. And, as I have said here before, when I did securitization deals as a baby tax lawyer in NYC, the partner in charge of the deals made the securitizers (the ones who put together the pools) keep the riskiest 10% as a back up to make sure the bonds would be considered bonds (too complicated to explain here). It meant that the people buying up the bonds had a very strong incentive to make sure the loans they bought were OK. As far as I am concerned, these two issues (the crummy math and dumping 100% of the risk) are the primary places where securitization failed. If you could fix those, there would be a place for securitization of loans in our financial system.
Oh and in case anyone can’t tell, I’m sort of hoping that at least some of the mess with the legal transfers of the loans ends up with the investment banks owning a whole bunch of the unperforming ones. That would be a nice bit of karma. I can’t know if it will happen, but it would be interesting.
So, I guess my answer is yes and no. What else to you expect from a lawyer?
“You are going to have to define what success is and what failure is.”
Failure = the mortgage securitization scheme imploded in one of the greatest financial market collapses in the span of recorded history.
Success = banks captured their regulators, the legislature and the executive branch of the U.S. government to keep them afloat after their collapsed scheme would have otherwise put them out of business.
Foreclosure scandal: Double whammy for US homeowners
By IB Times Staff Reporter | October 11, 2010 6:59 AM EDT
Major U.S. mortgage lenders have announced a suspension of foreclosure proceedings in the wake of damning revelations that many banks had forged documents to hasten the foreclosure of underwater mortgage properties.
Bank of America (BofA) halted foreclosures in all 50 states in the U.S. on Friday while JPMorgan Chase, GMAC Mortgage unit and PNC Financial have stopped foreclosure proceedings in the 23 states where foreclosures should be subjected to a judicial review.
According to RealtyTrac, mortgage lenders repossessed more than 95,000 homes in August, even as bank repossession activity increased 25 percent from last year and rose 3 percent from the previous month.
The revelation that banks have taken unlawful routes to deprive U.S. homeowners of their homes has come at a time when one in every 381 U.S. housing units has received a foreclosure notice.
…
“It can be safely predicted that the Obama administration and both major parties will take as their primary duty the protection of the banks, as has been their overriding concern since the eruption of the financial crisis two years ago.”
The massive irregularity came to the fore last month when Ally Financial (formerly GMAC Mortgage) stopped foreclosures in the 23 states where a court order is needed to take over a property. Ally Financial’s move was followed by JPMorgan Chase and Bank of America.
However, it appears that all major mortgage lenders resorted to similar unlawful methods to speed up foreclosures.
THE ABUSE
Eley says the notarization system was rampantly abused by major financial institutions.
“Among other practices, it has been revealed notarizations took place at an impossible rate of thousands per month per reviewer, that they occurred even before the attested documents were actually prepared, that signatures ostensibly representing the same individual bank employee were clearly produced by more than one person, and that notarizations took place in offices far away from where documents were signed.”
Though notarized documents are required to transfer a property from one institution to another — banks typically do not produce paperwork proving they have “standing” or the legal right to foreclose. Instead they supply affidavits that have been signed by a legal services firm hired by the bank or loan servicer, Eley writes.
“Additionally, courts are finding it difficult to determine what banks actually own mortgages. This uncertainty is owed to the securitization of mortgage debt, which is routinely bundled, sold, divided, and then rebundled and resold again. The result is often that multiple banks make claims on the same properties.
However, the banks in question have said the foreclosures have all been legal as they were executed only in cases where the homeowners have defaulted payments.
I would not trust that I really would have full title to a foreclosure if I paid in cash.
I still trust my gold bullion though…
not trust that I really would have full title to a foreclosure if I paid in cash ??
Title insurance….
But then is the Title Insurance really goof proof? Paranoia is going to creep in on home buying.
Title insurance backed by AIG. Better than gold.
Title insurance backed by AIG. Don’t you mean title insurance backed by American taxpayers?
Success = banks captured their regulators, the legislature and the executive branch of the U.S. government to keep them afloat after their collapsed scheme would have otherwise put them out of business.
Expect this capture of gov to accelerate as our lofty supreme court has equated corporations iwth people and money with free speech. Foreign companies are influencing our elections now with little regulation. They just buy a company here and use it to funnel money to politicians directly or via entities like US chamber of commerce.
Any mention of too-big-to-fail bailout insurance is conspicuously missing from your explanation. If the Wall Street Megabanks had not correctly believed themselves to be too-big-to-fail, there is no possible way they would have assumed risks which the average man on the street could instantly recognize as doomed to blow up.
Here is a list of primary dealers. These are the crooks that receive government loans for 0% interest and our taxpayer bailout moneys. They rig the stock market for gains. They create collapses and benefit from them. They pay off Congress to let the fleecing continue….
BNP Paribas Securities Corp.
Banc of America Securities LLC
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies & Company, Inc.
J.P. Morgan Securities LLC
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
Nomura Securities International, Inc.
RBC Capital Markets Corporation
RBS Securities Inc.
UBS Securities LLC
http://www.newyorkfed.org/markets/pridealers_current.html
Too big to fail bailouts are not an inevitable part of loan securitizations. I worked on dozens of them just myself and nobody ever got a bailout or asked for one because of those transactions. If we’d kept doing them the way they were done when I was there, no one ever would have needed a bailout.
And bailouts were not inevitable in this situation either. I’ll peg that baby right on Hank Paulson’s shoulders. The funny thing is that the original justification for doing them was that if we didn’t do it, the banks would stop lending any money. I thought that happened anyway. Commercial lending is allegedly outrageously tight and something like 95% of the housing loans are Fannie, Freddie, FHA, etc. so any losses go right to the government. Except for Fannie and Freddie trying to force the ones that didn’t meet their underwriting standards back on the originators. I like that part.
Except for Fannie and Freddie trying to force the ones that didn’t meet their underwriting standards back on the originators. I like that part.
And I like how you phrased the conclusion to the above post. Great stuff, polly!
“Too big to fail bailouts are not an inevitable part of loan securitizations.”
I did not say that, nor did I mean to imply it. What I said was, ‘If the Wall Street Megabanks had not correctly believed themselves to be too-big-to-fail, there is no possible way they would have assumed risks which the average man on the street could instantly recognize as doomed to blow up.’
Perhaps without TBTF, securitization could work, but so long as Megabanks are provided with free TBTF insurance, I can’t see what would prevent them from stuffing their MBS sausage casings with dog crap and palming them off on unsuspecting greater fools.
Corporate securitization (the dividing up and selling of shares of a company) works because there is only one company involved and thus it is fairly easy for the buyer of the shares to determine their value.
But dividing up a pool of thousands of mortgages makes the determining the value of the shares of this pool nearly impossible because each mortgage is unique; One would have to determine the value of each mortgage one-by-one and do some fancy math to determine the value of the pool and hence the value of one share of the pool.
Unless, of course, one can find a trustworthy rating company such as Moodys or Standard & Poors that will do all the work for you.
(snark)
If you are one of Wall Street’s Republicrat stooges, it is a success, as it guarentees you a rich stream of campaign contribution from your corporatist patrons who are robbing the sheeple blind even as they blindly vote along party lines.
thus far ??
A successful way of bringing residential loans to millions of home buyers that was high jacked by greedy, reckless mega bank, wall street and the ratings agencies…I think bundling mortgages to sell to large life & pension funds is perfectly acceptable…They have been a relatively safe high yield product..It wasn’t until the parasites I describe above teamed up to create this catastrophe that it has gotten a bad name…Thats my take on it..
Monetizing debt should be illegal. Period.
FDIC prepares to sue more than 50 bank officials to recover $1 billion in losses ~ Washington Post
The Federal Deposit Insurance Corp. has authorized lawsuits against more than 50 executives at failed banks across the country in an attempt to recover more than $1 billion of the agency’s losses during the credit crisis.
More than 50 bank officers and directors were negligent, committed fraud or otherwise breached their duties and are, therefore, legally liable, the FDIC concluded after lengthy investigations into the first wave of bank failures.
The FDIC, which insures bank deposits, has lost more than $75 billion in nearly 300 bank failures since 2008, and officials view the lawsuits against the responsible parties in part as a means to recoup some of the losses.
You can only sue guys at banks that aren’t too big to fail. Megabanks practiced only good fraud.
http://www.lewrockwell.com/spl2/hr3808-is-tarp2.html
It looks like Obama sided with the lawyers over the banksters in not signing HR3808, which would have given the banks a pass on robo-signing foreclosure documents. The fact that this evil bill made it so stealthily through both the House and the Senate illustrates the extent of bankster control over their political puppets in both parties.
Thanks for the link, Sammy. The legislation was introduced innocently enough in 2006 by a congressman who wanted to protect notaries in his state, and has languished for four years. Suddenly, when it can protect the big banks from being sued, the HOR and Senate are induced unanimously but anonymously (no individual votes recorded) pass it! Last week I thought that Obama was not signing it to protect FBs. Now I’m comforted that at least the banksters are screwed by his pocket veto. He is ruled by politics, and his politics tell him that Wall Street hates him.
Not to be a cynic, but I suspect Obama’s trial lawyer pals see the motherlode in all those potential class-action lawsuits, and will reward him generously for giving them a free hand to go after the banksters. It could also force the banksters to ante up more generously to their Congressional puppets to make sure Wall Street gets a free pass for any consequences of the massive swindles they’ve perpetrated on the public. The taxpayers can pick up the tab, naturally.
The enemy of my enemy is my friend.
Go get them trial lawyers
Uncover as much filth as you can.
The MSM won’t give us all the information maybe a bunch of money hungry trial lawyers will.
He is ruled by politics, and his politics tell him that Wall Street hates him.
Wall Street hates Obama? I think not. He’s done their bidding at every turn. It’s starting to dawn on him that ordinary people are waking from from their zombified states and are starting to see the sociopaths of Wall Street and their Congressional stooges for the thieves and con men that they are. Signing HR3808 would have been a final unequivical confirmation that this Administration is wholly beholden to the banks, and I think that’s what Obama is balking at. Whatever the reason, I’ll give him props for not letting the banksters off the hook.
The bill would have allowed the market to reach the bottom faster.
Not signing is delaying the housing bubble from fully deflating.
aka “The ends justifies the means”
(From a bankster perspective)
Our notary laws were made tougher in 2009, and I don’t know why. I can’t get at the hearing transcript, but it’s as if there were some fraud going on that was never publicized here.
Chineese buy third of Chesapeake South Texas Field.
“For its part, CNOOC is looking to tap into expertise that Cheaspeake has used to cheaply tap reserves of oil and gas buried deep in shale rock formations.”
We ship dollars to China to buy their junk, China ships the dollars back and to buy up knowledge and resources.
More to come …
They could buy our whole military, probably for a sale price now that they are all done with Iraq, and put us to work making crappy stuff for pennies a day.
I’m sure the US chamber of commerce is on it.
Just think of the profits to be made??
How does the saying go
A capitalist will gladly sell you the rope you need to hang him.
“China ships the dollars back and to buy up knowledge and resources.”
Or as Paul Craig Roberts calls them: “Income generating assests”.
http://www.youtube.com/watch?v=aMGTxO66MsE
At least we have the comfort of knowing that the Chinese will invade Australian before they invade us.
Its Cheaper to invade mainland USA. They could load the troops in thousands of shipping containers and have them pop out in full-combat mode like the marines on Normandy at every Wal-Mart, Target, Sams, etc loading dock in a coordinated attack. It would be over in seconds. Holiday stocking season would be when to expect the invasion.
Sweet, the Aussie “Red Dawn”. Hey, instead of “Wolverines!”, they could go with “Kangaroos!” or maybe “Emus!”
Nah, they would yell “salties”!
(Salties is short for saltwater crocs, who are humungous man-eaters.)
You can’t ship the Barnett Shale to China. You can’t even ship the natural gas to China either.
You don’t have to. You sell the Nat Gas to Americans and accumulate even more dollars. Then you buy other tradable raw materials, food, etc. with the new steady income stream and send them back home.
You don’t have to. You sell the Nat Gas to Americans and accumulate even more dollars. Then you buy other tradable raw materials, food, etc. (FROM BRAZIL) with the new steady income stream and send them back home.
That only works aslong as Brazil continues to accept UDS for payment. But point taken.
Continuing the discussion from this weekend (my head is spinning) – So basically, the house has more or less become a hot potato that no one wants.
The FB is underwater and doesn’t want to or can’t make the payments. The foreclosures start en mass, but the paperwork is shoddy and the AGs want to investigate. And then there are the title companies that don’t want to provide title insurance when the foreclosures are sold.
Extrapolating through Polly’s thought that investors might push back and say the loans are non performing and the paperwork inadequate. As a result, the investors won’t allow the paperwork to be corrected and subsequently don’t want to take on the loans as they can only take them if they’re performing. In essence, the investors may attempt to sue the investment banks and force them to take back the bad paper and give the investors back their money. And let’s not forget Freddie and Fannie who are also pushing the banks to take back the fraudulent loans. And the courts will be clogged for years.
How do the CDS play into this? CDS protect the investment, but with the shoddy paperwork could an entity like AIG sue to recoup the losses? Might be a stretch, however, the issuers of CDS seem to be the only ones missing from the current mess. Then again, shouldn’t the various entities who either issued or purchased CDS be suing someone due to the forged documents, faked Social Security numbers, phantom titles, disappearing paper trails, “robo-signers” and mortgages sliced and diced so many times that nobody really knows who owns them. The ratings agencies were supposedly to blame, but I’m wondering if the case could be made that the banks were also negligent especially if the investors can force them to take back the loans due to inadequate paperwork.
Wonder how Bernanke feels at this point about reopening the SIV window to take on more bad paper?
“Wonder how Bernanke feels at this point about reopening the SIV window to take on more bad paper?”
What does it cost the Fed to do this, aside from the undisclosed knowledge that they may have effectively severed the invisible hand which runs the U.S. economy?
“….has become a hot potato that no one wants…..”
Technically, it’s the “mortgage” that’s become the hot potato.
Its just a scam. Gives more time to keep FB on hook to try to get him to agree to some kind of “workout” rather than just saying “come get it” as they walk away in droves. FBs check in but they don’t check out.
Bernanke will take on all the bad paper that it takes to keep the Wall Street banks afloat. That is his reason for being.
QE-2 is “in the bag” and nobody is really worried about serious consequences. What worries me is QE-10 thru QE-50 the next few years. The fall isn’t what kills you…
Talk about being off the reservation. This from an OpEd piece in the current Time magazine.
“With the exception of core Obama Administration loyalists, most politically engaged elites have reached the same conclusions: the White House is in over its head, isolated, insular, arrogant and clueless about how to get along with or persuade members of Congress, the media, the business community or working-class voters. This view is held by Fox News pundits, executives and anchors at the major old-media outlets, reporters who cover the White House, Democratic and Republican congressional leaders and governors, many Democratic business people and lawyers who raised big money for Obama in 2008, and even some members of the Administration just beyond the inner circle.”
Yeah, but the one still knows how to give a rousing campaign speech. LOL.
Linkey
http://www.time.com/time/politics/article/0,8599,2024718,00.html
Left-leaning alt-weekly here in Tucson saying the same thing.
From the above link:
I will not be the first nor the last to state this, but as a lifelong Democrat of a fairly liberal bent, I feel that, thus far, the Obama administration kinda stinks out loud. It’s almost stunning how disappointing the whole bunch has been.
Most people I’ve talked to are amazed that Obama has managed to squander virtually all of the good will that accompanied him into office. Some try to hedge their bets by claiming that since expectations were so sky-high in January 2009, it would have been impossible for him to live up to them. While that’s probably true, he hasn’t even come close, and more often than not, he doesn’t even appear to be trying. If I had to provide three adjectives for him thus far, they would be aloof, arrogant and tone-deaf … and I voted for the guy!
I believe that he decided he wanted to be President many years ago, and concentrated all his energy into making it happen.
Now he’s the puppy that spent all his time chasing the garbage truck, and doesn’t know what to do with it now that he has caught it.
We were at a point in 2008 where the next president cannot be allowed to “fail”, whoever he was. But that’s what we’re getting. Helped along by the Republicans, where a significant percentage believe that an entire societal/government collapse is a viable option, and works to their benefit.
I believe that he decided he wanted to be President many years ago, and concentrated all his energy into making it happen.
Same thing happened in the Kennedy family. After Joe Jr. was killed in WWII, JFK was groomed for the position.
BTW, President Truman had many second thoughts about the job. And these occurred throughout his presidency, and not just in the weeks and months after Roosevelt’s death.
I felt this way as soon as Obama chose his cabinet and things have only provided more confirmation ever since.
The one argument I do have with these op-eds however is they fail to point out that the other options would have probably ended w/the same poor results and refuse to entertain what exactly that means for the American people.
In the end, we’re still denying to ourselves the emperor (our entire system) has no clothes.
On the bright side, I am encouraged that Larry Summers and Rahm Emanuel are gone (I despised both of them) plus there is now a civilian in place of a DOD general as the Security Sec., I hope he puts a real civilian public servant in to replace Def. Sec. Gates too. I really don’t care what happens to Obama but if the grip the old establishment had on the office of the President is being weakened this is a good thing.
S&P: 60% of countries will be bankrupt within 50 years
Some sixty percent of the world’s economies will be so in debt by 2060 that their debt will be downgraded to “junk” status, effectively bankrupting the countries, says a report from Standard & Poor’s ratings agency, which also warns that attempts to deal with the problem could cause social instability.
http://www.rawstory.com/rs/2010/10/sp-60-countries-bankrupt-50-years/
Raters = weasels. Sixty years?! What kind of schlock is that?
If they’re headed that way then downgrade their sorry butts now. Or do the wizards at S&P think that all the parties that depend on their “ratings” will be able time the top?
They can always print more fiat money.
They cannot print silver or gold though.
“They cannot print silver or gold though.”
The can dig for it. Of course that requires the presence of ore in the ground plus that quaint old fashioned task called “work”.
Mining is a capital intenstive business. You need money to buy honkin’ huge machines to make it work. A problem if you are short on money and can’t borrow it easily.
They still mine for diamonds/gold by hand in South Africa.
And that helps “60% of the world’s economies” how?
After the first few prospectors find raw nuggets in the stream beds, the rest of the mining is more capital intensive than you would care to imagine.
Idaho’s Silver City, about 50 miles south of Boise, had few stands of trees to cut down for firewood to power the stamping mills required to extract silver from ore.
So they built the very first hydroelectric plant in the Pacific Northwest around 1900. The concrete used came in bags of Portland cement all the way from England (as ballast in sailing ships). Electric genearators came from the east coast and were brought to the site by teamsters with huge wagon trains.
http://en.wikipedia.org/wiki/Swan_Falls_Dam
Hello Experts:
If someone has investements in CDs and with $$ going down, threat of runaway inflation looming, where should a person invest to hedge against inflation and other risks:
–TO buy more RE on cash deals.
–TO buy more stocks.
–Or to wait for Dow to go back to 9K and then buy stocks?
Looks like people with cash may suffer due to value of USD being eroded. It needs to be parked properly. SUggestions please.
Combo: Is cash really king?? WOuld it be King after inflation kicks in?
“Combo: Is cash really king?? Would it be King after inflation kicks in?”
Ask yourself: Is there a shortage of cash in the world that surrounds you? Is the Average Joe flush with cash or is he desperate for cash?
If inflation kicks in then what would that mean for the Average Joe? Would inflation mean that Joe suddenly has more cash?
If inflation goes to, say, six percent, then six percent of the buying power of the cash you have goes up in smoke. Ask yourself: Is paying this six percent worth it? Is having cash that loses six percent of it value every year better than not having any cash at all?
If nobody else has cash except you then that makes you king even though six percent of the value of your cash disappears every year.
If a six-percent erosion of cash creates a fifty-percent (or more) reduction in the price of quality stocks then the cash holder will be the king when he decides it is time to buy stocks.
Thanks Combo and all others for your input.
The way I’m looking at things is this:
I’ve a coworker from China and another from India. I don’t get much info. from the Chinese person, but the Indian guy says that his peers who didn’t opt to come to US are making almost the same money as him in US. The salaries in India have more than doubled in the last 8 years. Their RUpee/USD rate has been the same during this time.
Now,here my salary has risen only 6% in the past 8 years. Moreover, I’ve been taking furlough days for the past 3 years. Here we do not have any growth and now deflation has kicked in, whereas people in India are getting 15% raises every year. This really is annoying as USD is going down and people in other parts of the world are getting richer day by day. Their salaries are doubling up, their banks pay 9% interest on CDs, their RE is more than 4 times the price in the last 4-5 years. And there is inflation too.
I even thought of moving to India and find a job there, but the family is not ready for the move.
It is just scary at this point in the US when standard of living is going down, high UE, salary cuts, crashing RE, ZERO rates for savers…WTF…
It is just scary at this point in the US when standard of living is going down,
The US standard of living has risen substantially the past generation for the top 1/3 of 1% of Americans. I think they belong to a strong union.
6% inflation over some time usually means 3-5% appreciation for stocks (historically they lose real value but they do go up), but it depends on whether companies are nationalized too. Nationalization big declines in real value of private companies (even those with little risk of nationalization).
Excellent post Combo.
“If nobody else has cash except you then that makes you king even though six percent of the value of your cash disappears every year.”
The FB man on the street is currently caught in one heckuva price vs. wage/asset price vise, that’s for sure. Savers might be falling too, but they’ll have a nice soft pile of FB bodies to land on!
one heckuva price vs. wage/asset price vise ??
Spot on….
While a deflationary collapse might be coming I wouldn’t necessarily bet on the current monetary system to survive. Holding cash you are at the mercy of people that have proven time and again that they care none about savers or little people. When backed into a corner these people will act and savers will get hurt.
We know there’s much more debt than can possibly be repaid. We also know that most money comes into existance via debt. So if debt doesn’t get repaid I would think this will have some negative consequence on the debt based monetary system. Therefore some form of default is on the horizon. How exactly this will play out is impossible to tell. Call me crazy, but I fell uncomfortable being invested in a system that is facing default.
What is there to stop the federal reserve from buying the bad debt from creditors at 100% on the dollar? I mean other than inflation?
Enough public outrage. Unfortunately, maybe 5% of the people, at best, have thrown their blinders off.
Ask yourself: Is there a shortage of cash in the world that surrounds you? Is the Average Joe flush with cash or is he desperate for cash?
If inflation kicks in then what would that mean for the Average Joe? Would inflation mean that Joe suddenly has more cash?
Inflation can only increase GDP and the dollar amount of consumption if
1. People have been saving a large percentage of their pay check and can cut savings to pay for the same goods that now cost more.
2. People can get a second job or one that earns them more money.
3. People can send their spouse to work.
4. People can dip into savings.
After that it’s just shifting where money is spent. Less on ipods and cars and eating out more on basic non prepared food. This of course reduces manufacturing jobs creating a downward cycle.
The PTB have propped up the consumer by extending unemployment and slowing foreclosures and cutting house payments by lowering rates, and they’ve penalized the saver trying to force consumption or investment.
If you want to hedge against inflation then go with commodities and agriculture.
then go with commodities and agriculture ??
Some commodities maybe but Ag. ?? As a percentage I suspect Ag. prices could rise significantly but at some point it would hit the wall…I can’t see some kind of spiral upward with something that most people could grow in their backyard or in a combine…
The increasing cost of fuel and fertilizers play a part in Ag.
Other countries are in a better position to import and bid up our Ag.
Yeah…I did not think about the fertilizer & fuel part…I guess I was just reminiscing about growing up as a kid next to my Portuguese Grandmother…90% of the food they consumed came from her backyard and it was not a farm either…It was a city lot 60 X 150…
I wouldn’t touch RE with a 10 ft pole given the uncertainty in who owns foreclosure property. If you can’t get title insurance or only limited insurance, then stay away. While on paper it might pay to be a landlord in reality it rarely does. Ever tried to get a deadbeat tenant evicted? Otherwise RE might be OK. Raw land in a good location is probably an above average investment. I got some.
I also own gold/silver/paladium/platinum bullion and dividend paying stocks (MO, PFE, COP, XOM, DD, etc.).
Stocks from stable dividend paying companies protect you against inflation (based on historic observations, Weimar Republic) and low interest on bonds. There’s too much uncertainty about our financial and monetary system right now so I don’t feel comfortable holding large sums of cash. While we may see deflation for a while it all could end very abruptly with a bank holiday and some form of currency reform.
Junk bonds have very low default rates right now with all the mad money chasing yields. While I expect this trend to continue for a while it will stop at some point with a possible sharp reversal and a stampde for the exit.
Take a good look at Obama’s economic team. The rats are fleeing the sinking ship.
All good points. However I dumped my Pfizer stock after years of annual losses of value. Even if I dollar cost averaged into PFE I would have lost big. I bought it originally in 2000 because a buddy of mine I admire for his wisdom in engineering and science bought it. He probably sold out years before I sold out.
Ask me about EVEP and BBEP though! LOL.
This new sub crisis of foreclosures that just opened up (just last week?) is certainly going to be as big as subprime.
No one saw this coming!
Up to now the worry is whether the house you buy today will get a 20% haircut in the next 24 months. The new worry to add on top of that is whether or not you have proper title to the house!
This is big news and has barely begun to sink in.
It will drive down house prices more, as buyers demand some higher incentive for the higher risk.
Buyers aren’t the only folks likely to get cold feet. Would you offer title insurance on a sale where nobody us quite sure who owns the home?
Foreclosure sales may stall if title insurance becomes scarce
October 08, 2010|By Diane C. Lade, Sun Sentinel
Sales of foreclosed properties, already stalled by mounting evidence of widespread flawed documentation practices by lenders and attorneys, may hit another roadblock: New buyers might not be able to get the title insurance required for a mortgage.
New House Title, owned by a large Tampa foreclosure law firm under state investigation, this week denied coverage for a 2009 Deerfield Beach condo foreclosure that its own attorneys had handled, citing potentially defective court filings.
The New York Times last week also claimed Old Republic National Title, the fourth largest title insurer in the country, had sent a memo to its agents in some states saying the company would not cover homes foreclosed on by JPMorgan Chase until “objectionable issues have been resolved.” Earlier, the company had taken the same stand on homes foreclosed by GMAC Mortgage, now owned by Ally Bank.
Louis Spagnuolo, vice president of mortgage banking at WCS Lending in Boca Raton, said title insurers are becoming very selective about they’ll cover as the foreclosure crisis deepens. He predicted major underwriters soon will put a moritorium on policies for foreclosures by troubled lenders.
…
While on paper it might pay to be a landlord in reality it rarely does. Ever tried to get a deadbeat tenant evicted?
My former landlady disabused me of any notion of ever being a landlady myself. I heard too many stories about dealing with tenants to ever want to manage property.
Slim, weren’t you just in up to your elbows in a rental property in Maine? Backed out of the deal at the last minute?
No, that was the Arizonan who specializes in mobile home financing. ISTR that she spends much of the year in Maine.
I think that other Arizonan’s handle is az-lender.
I am more worried about deflation right now. And for the case of deflation, cash really is king.
Sadly Martin, this is not a good time for people who need to be told what to do.
If you fear the dark, buy some candles, but not so many that you cannot enjoy the day.
If someone has investements in CDs and with $$ going down, threat of runaway inflation looming, where should a person invest to hedge against inflation and other risks:
By an amazing coincidence, there is a chemical element that has just the right properties for that. I can’t quite recall its name, but it’s element #79 in the periodic table.
I just wanted to say thanks Ben and to the others that guided me and gave me faith along the years of waiting for the crash.
I finally purchased a home at a pre bubble price and I am satisfied.
I closed last month and moved in. All I ever wanted was to pay “pre bubble” for the price.
The did the entire purchase while my husband of 10 years has been deployed. He has supported me and my housing bubble obsession since 2003.
I through out the years “witnessed” to many people on the crash and in 2005, 2006 I even incorporated educating my students on the bubble and impending crash in the training lab of the company I was employed by.
I know that I saved a lot of people from purchasing a home very early in the crash when the cracks were just showing ( 2007)
The bubble and crash became like a religion to me on many levels. I spent hours like most of you reading and talking about this.
I don’t think I have ever became more of a subject expert on anything in my life.
The house buying process was riddled with stress, the slowness of the short sale process, waiting for approvals and then along the way I even changed my mind on certain properties in my mixed emotional state.
I finally didn’t change my mind and I really have a beautiful home now and I am very happy.
I feel that my spending 18,000 per year on rentals was at the point where it was not in my financial interests to continue.
I now have a 600 per month mortgage payment.
God bless and thanks again.
SKB
“I feel that my spending 18,000 per year on rentals was at the point where it was not in my financial interests to continue.
I now have a 600 per month mortgage payment.”
Congrats! Where are you? Are there any other homes in your neighborhood?
P.S. We enjoyed a $730 mortgage ten years ago.
And if the lenders had to cough up their REO inventory, anyone who wanted to buy could be enjoying pre-bubble mortage payments. It’s interesting that in a political season, with govt money largely preventing that from happening, no one is talking about that.
Yes Ben there is a lot of shadow inventory in my area. It has been slowly but continually released in my area.
No one was ever talking during the numerous political seasons we witnessed during the run up and during the early start of the crash.
Thank you again Ben, God bless you!!
“It’s interesting that in a political season, with govt money largely preventing that from happening, no one is talking about that.”
Propaganda from Megabank, Inc, the Fed and MSM-quoted experts seem to have temporarily drowned out economic sanity.
BTW, my wife just corrected me — I guess our last mortgage was actually only $680. We bought in 1996 — five years after the official end of the early-1990s recession, when the foreclosure tide had pushed California prices into the basement after half a decade of stopped-clock serial bottom calling by the chorus of real estate estates, who always say that the market will bottom out “by the end of next year.”
As the national recession officially ended in June 2009, similar timing this cycle would suggest a bottom to California home prices around 2014. Given that the foreclosure tsunami tide has yet to crest, and foreclosures are happening faster than the willingness and ability of banks to process them, it seems quite likely that housing will not bottom out until well after 2014.
“It’s interesting that in a political season, with govt money largely preventing that from happening, no one is talking about that.”
It’s also quite interesting how, despite the chorus of economists who have proclaimed there will be no macroeconomic recovery without a housing recovery, there has generally been a great reluctance to connect the dots between government-sponsored efforts to keep home prices propped up on a quasi-permanently high plateau and a near-shutdown of the used home sales market.
So far as my understanding of Econ 01 goes, lower (not higher) housing prices would be necessary to stimulate demand and sales. What is it about basic economics which the MSM-cited experts fail to grasp?
Hello Professor Bear
Thank you for the congrats.
We live in Loxahatchee, Florida.
Of course there are plenty of homes in some stage of foreclosure in my area.
Mostly people that HELOCed themselves out of their homes.
I spend $32,000 per year in my LA rental and $38,400 per year in my NY flat. There is no way I could even come close to these annual cost with buying an equivalent space. It is really sad in NY and LA - i would love love love to leave both cities but this is where my offices are located and where most of my customers are located. guess this is why it is so expensive.
SKB,
Thank you for the post. You expressed many of the same sentiments I’ve experienced over the years. When something like the Great Housing Fraud comes along, you know damn well it’s a fraud on a global scale. Yet when so many are blind to it, indifferent or legitimize it(even to this date), my reaction to that blindness is to understand WTF is happening (it becomes a religion).
Congratulations and time will tell if you made the right decision. And once again, I tend to think Jonesy saved a whole lotta trips to the funny farm for alot of people because of this blog. Thank you BJ.
Thank you Exeter,
I love it ” the Great Housing Fraud”
Time will tell a lot of things not only on where the prices will end up but if my spinal disease will get worse. If my dog will die from his cancer faster or slower than what the vet said.
Time will tell if my son Andrew Philip ( youtube sensation) will be successful in his music career in The Philippines. God bless him and his compassionate nature and Tagalog singing talent.
Ben certainly was the beacon in my housing bubble life for many years. I have been an avid reader, not so much a poster but an avid reader.
I hope God always blesses his life and his family.
I also feel blessed for many things in my own life. Having an inquiring nature is one of them.
Someone said to me the other day “you are so lucky” in reference to my house purchase. I said “luck” had NOTHING to do with it.
Enjoy your new home skb…
I like to read about people like you saving others from the bubble. I had a girlfriend in LA a few years ago who had $500,000 in CDs and was in and out of real estate for years. I warned her then in 2006 to stay out of RE and enjoy the 4% or 5% yield on the CDs. She was paying $18,000 per year for rent in a nice 2 bedroom apartment in Culver City. So the CDs were paying for the roof over her head.
I hope she kept my advice. The only issue I had was that she was high maintenance and our meetups always included some shopping spree: $250 here, $150 there…
I think there is a word for women like that…
Wife?
I can count the number of people who listened to my bubble warnings on the fingers of my right hand. Those who ignored me outnumber those who listened, and have most likely collectively lost north of $1m bucks for their decision (these are close friends and family; I have no idea nor way to estimate how many readers of the HBB have based decisions on the discussion here).
I can count the number of people who listened to my bubble warnings on the fingers of my right hand.
Sometime between 05 and 07 a Brazilian/American friend from the OC visited me in the NorCal. He’d “made” 200K on his house and I told him to sell it and rent. He said I will either be proved a genius or a fool because nobody was saying what I was. (I then told him about this site)
He’s just divorced, just moved back to Rio last week, just sold his house in a short sale and says Obama passed a law forgiving short-sale debt relief. (I wasn’t aware).
On his return, the Rio customs agent was giving him a hard time for some expensive, potentially taxed electronics in his luggage and my friend told him something like, “I just lost my job, my wife and my house in America so I guess I can deal with any hassle you want to give me.”
The customs agent just shook his head, laughed and let him pass.
Congrats SKB !!
I sold in NoVA in 2006 & have been “waiting it out” here ever since
I, like you, hope to be in a home soon.
Here in Nova the RE Agents have learned how to “screw the system” again, by creating bidding war scenarios for SS/REO’s
I have lost out on about 6 deals so far in the past year because I wouldn’t “up my offer, someone else is offering more”
But things are different In NoVA, we have all the jobs & RE prices have crept up some, so we’ll probably pull the trigger in the dead of Winter this year.
Good to hear some one is actually getting a good, pre-bubble deal!!
Oh yeah, I had plenty of those scenarios.
I refused to play and would simply say, “ok, they can have it, as that was my best and final offer” to my realtor when he would call and tell me that the listing agent asked for my best and final.
There was so much inventory for me to select from that I simply didn’t give a bull-crap.
I might even still qualify for the tax credit due to my hubby being deployed.
He is going to love this place.
when he gets home next month. yippee!!!!
SKB,
Congratulations and I am glad you are enjoying your new home. I’m also looking to pay pre-bubble prices, but RE still has a way to go in my area. Even if I pay 100% cash, though, I won’t be able to beat $600 a month, because property taxes are ridiculous here.
http://www.youtube.com/watch?v=9kPCYcBm-C8
With all the talk this morning of “foreclosure-gate,” this Hitler parody seemed that much more hilarious.
“HR3808 will be pocket vetoed.”
BwaHaHAhHAHAHAHAHAHAHAHAHAHAHAAAA!!!!!!!!!!!!!!
Thanks again, Sammy. LOL. This blog makes chemotherapy bearable!
Not that I’m dealing with chemo, but it’s making all sorts of things in my life bearable too.
REhobbyist, I wasn’t aware you were undergoing chemo. I’m so sorry.
G E T W E L L S O O N. Life is worth fighting for, and IIRC, your prognosis is good. Now be as good a patient, as your are a Doc.
Hilarious Sammy…Thanks for the laugh to start off the week…From the video; “My Balance Sheet is F#$%&@”….
“My Fuhrer, the fraud was just too massiv”
awesome, thank you!
My favorite part: when the Fuhrer-banker rants to his “congressional puppets” that they’ll have to pay for their own whores and blow from now on, one of the “whores” listening in from the other side of the door reassures her sobbing friend, “Don’t worry, the bankers can still buy us whores with their (taxpayer-funded) bonuses.”
The Secret Big-Money Takeover of America
Thursday, October 7, 2010
Not only is income and wealth in America more concentrated in fewer hands than it’s been in 80 years, but those hands are buying our democracy as never before – and they’re doing it behind closed doors.
Hundreds of millions of secret dollars are pouring into congressional and state races in this election cycle. The Koch brothers (whose personal fortunes grew by $5 billion last year) appear to be behind some of it, Karl Rove has rounded up other multi-millionaires to fund right-wing candidates, the U.S. Chamber of Commerce is funneling corporate dollars from around the world into congressional races, and Rupert Murdoch is evidently spending heavily.
No one knows for sure where this flood of money is coming from because it’s all secret.
But you can safely assume its purpose is not to help America’s stranded middle class, working class, and poor. It’s to pad the nests of the rich, stop all reform, and deregulate big corporations and Wall Street
http://robertreich.org/post/1263581986
What, no mention of George Soros in this article?
Why do wage slaves champion the cause of their masters?
Because they believe that someday they will be the masters.
“Because they believe that someday they will be the masters.”
But only….. ONLY if they work just a liiiiiiiittle harder…. and someday too they will be rich….. maaaaaaaybe… No guarantees now!!!! Now get to work!
Seriously
I just don’t understand people who prefer corporate control of our government. Corporate America has demonstrated where their loyalty lies, and it is not to the US or anyone on this board. It is not to free markets either (it is to manipulated oligopolies) that are used to strip all the wealth from the middle class. It is not to the American dream but rather to entrenched business interests and wealth. They control both sides. The supreme court handed them teh right to bribe our elected officials and to remain anonymous in the process.
“I just don’t understand people who prefer corporate control of our government.”
Simple answer? Ignorance…. and sometimes selfishness.
An ounce of prevention is worth a POUND CAKE
Not only is income and wealth in America more concentrated in fewer hands than it’s been in 80 years, but those hands are buying our democracy as never before – and they’re doing it behind closed doors.
And the Tea Party has their backs.
along with the backs of all hopefully
… i am not so cynical although i am not sure of the actual identity of the tea party. i feel closer to a tea party member than either repub or demo
Hehh…. “tea party”… These are the same people that were wearing white hoods 30 years ago.
These are the same people that were wearing white hoods 30 years ago.
Tell me about it.
Was having a chat with my mother yesterday. We were discussing her past life as an employee of the VA. That was during the early 1950s in Oklahoma.
Thanks to Jim Crow, her boss could only get served in one restaurant and bar in the town where the VA hospital was located. And, I might add, this guy was a Congressional Medal of Honor winner.
Mom was furious over how badly he was treated. Jim Crow just made her blood boil.
Yesterday, I was happy to tell her that there’s now a VA hospital that’s named for her boss.
Should have poured some ‘Old Crow’ in a glass and chilled out!!!
Should have poured some ‘Old Crow’ in a glass and chilled out!!!
Not in my family. A lot of alcoholism in the tree, if you get my drift.
Matter of fact, one of my now-deceased relatives was one of the earliest members of AA. He actually was a friend of Bill Wilson. They both worked as Wall Street securities analysts.
how many have you met? or are you just trying to aid the polarization of society through ignorance? i imagine that most of the tea party members are just tired of big government and the growing nanny state. but who knows maybe they are the new kkk - again i am just less cynical and like to unite people.
Exactly.
Why is the tea Party full of white supremacists?
but no other organization full of white people?
Look,
anytime you get any group of white people, a certain percentage is going to be white supremacists.
So the question to all you “GOOD” white people is:
What is the acceptable percentage of white supremacists to have in an organization before you call it a “racist group?”
(shakin my head)))
anytime you get any group of white people, a certain percentage is going to be white supremacists.
Woa
Dude…..Do yourself a favor.. don’t jump the great white shark…
Are you joking? That is not true!
Hoodlums with hoods.
One wonders if the robo-signers authorizing foreclosures are the same as the robo-signers authorizing loan approvals.
The financial services industry laid off millions of middle class workers and supervisors in the past two decades, the people who used to do this sort of thing. The money became concentrated in a small number of people who make enormous money dealing in $billions at a time, not mere tens of thousands or hundreds of thousands.
Due dillegance was replaced by algorhythms. Why spend money to worry about the fate of an individual loan when you can use a computer to predict the average loss on one million such loans?
But perhaps this wasn’t a “productivity gain” after all.
I thought the “robo signer” monacher was already taken by our members of Congress.
Fraud Factories: Rep. Alan Grayson Explains the Foreclosure Fraud Crisis
Go Alan! With a few honest politicians like him, perhaps We the People can shut down Megabank, Inc’s foreclosure fraud scheme and send the perpetrators to prison.
An excellent explanation by a rare honest politician. No wonder the Establishment GOP is doing everything they can to get rid of him and replace him with a hand-picked Wall Street stooge.
Grayson is a ball fire and has been since his election. The man is brilliant and ballsy.
US chamber of commerce is targeting Feingold and Grayson, can’t have honesty or independent thought and action, in our politicians. I’d throw Ron Paul in there as well.
A little search
The U.S. Chamber of Commerce has issued its 2009 congressional scorecard, and once again, Rep. Ron Paul, R-Tex. — certainly one of the two most free-market politicians in Washington — gets the lowest score of any Republican.
How do you get a scumbag realtor parasite off your property?
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Pay him/her for the pizza.
Did you get taken to the cleaners by a realtor?
He’s married to one and she still makes more than he does.
Poor Bile… still hurling phoney info….. and my union brothers and I still live in his empty skull…. rent free.
The friend of ours that tells the best realtor stories, the ones about how you can’t turn your back on them cuz they’ll eat you for dinner…yeah, his Mom’s a realtor. These are front row seat stories. Heh, heh.
Nope.
After 10 years of rampant fraud, lies, breach of fiduciary duty, do you think NAR and NAR minions deserve your respect?
I cannot forget one time I was living with my girlfriend in the northwest side of Tucson back in the late 90s. We had pizza delivered to our door. The delivery man claimed he owned vacant land very close to Ina and Oracle roads and it was worth $1 million. I believed him at the time. If he was honest, It probably went up to $1.5 million by 2006 but is back to $1 million now. I figure he must have inherited the land. If I had property worth $1.5 million I would not deliver pizzas to strangers. Even though you are given an address and a place for the police to track down, criminals are very dumb and don’t care too much about the consequences of their actions.
How do you get a realtor to take off her panties?
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Realtors don’t wear panties, silly!
U.S. .Attorneys General in 40 States Said to Join on Foreclosures
By Dakin Campbell and Prashant Gopal -
Oct 9, 2010 11:36 AM
Attorneys general in about 40 states may announce by next week a joint investigation into potentially faulty foreclosures at the largest banks and mortgage firms, according to a person with direct knowledge of the matter.
State attorneys general led by Iowa’s Tom Miller are in talks that may lead to the announcement of a coordinated probe as soon as Oct. 12, said the person, who asked not to be named because an agreement wasn’t completed. The number of states may change because several are deciding whether to join, the person said. New Mexico Attorney General Gary King said yesterday in a statement that his office will join a multi-state effort.
http://www.bloomberg.com/news/2010-10-09/officials-in-40-states-said-to-consider-joint-foreclosure-probe.html - 55k -
Jon Stewart of the Daily show on foreclosures…
http://www.thedailyshow.com/watch/thu-october-7-2010/foreclosure-crisis
Memorable quotes from the above clip: “WTF - the banks weren’t reading the fine print?!! They’re the ones who came up with the F#$king fine print in the first place!”
“So, our choices are to improve the economy by kicking thousands of people out of their homes (just in time for the holidays) or to let them stay in their houses and crash the rest of the economy, because apparently we have a foreclosure-based economy.”
“Rube Goldberg himself could not have devised a more convoluted method to in fact f#$k us.”
Thanks for the clip, whyoung
the best MSLS caption I think I have seen to date:
“Deal fell appart due to bank willing to accept lowest of $740,000. Only show if you are willing to pay the lenders price.”
lol…well mr. lender…i beg to differ.
This blog gets better and better. I’d love to see a link on that house! Too funny.
I know a herd of goats and donkeys that we can sic on this MLS caption writer. One of the goats is a real Mercedes-hopper.
“Peter Diamond was honored along with Dale Mortensen and Christopher Pissarides with the 10 million Swedish kronor ($1.5 million) prize for their analysis of the obstacles that prevent buyers and sellers from efficiently pairing up in markets.”
ummm…price?
The found that unemployment insurance helps people find better jobs.
Some real realtor humor in my neighborhood:
Ran into a neighbor the other morning while walking the dog. She was laughing as she told me that the vacant house next to hers (the one where I put the goats and donkeys every day to eat the overgrown yard) was being shown by a realtor the day before. She heard a scream and peeked through the bushes to see one of the goats standing on the roof of the realtor’s mercedes. That realtard probably won’t be back.
LOL!
Thank goodness I’m between dialing my cold calls. Otherwise, I would have laughed at some poor innocent person on the other end of the line.
Back to the calls…
“That realtard probably won’t be back.”
Neither will the clients! Keep this up for about 19 more years, Pressboardbox, and you can own that property free and clear on the grounds that you have been “maintaining” it.
A Mercedes with goat hoof marks on the roof! Isn’t that special?
Did the goat leave a “calling card” on the hood along with the hoof marks?
Could the Federal Reserve be the driving force behind the recent surge in stock market prices? Since mid-March, the aggregate value of stocks has increased $6 trillion and experts are wondering where the cash is coming from.
Posted by John_C_Daly
Wednesday, September 29th at 10:35PM EDT
Liquidity injection into markets through the purchase of stock is not without precedent. Central banks in Asia and Japan, in the grips of economic turmoil, purchased equities to prop up their markets. The strategy was roundly criticized by Federal Reserve officials here in the US. Among the most vocal critics was Federal Reserve Chairman, Allan Greenspan. The criticism waned when the central banks pulled out of equities and realized substantial gains.
Given the dynamics of the current economic crisis and the political mind set in Washington, results might not be the same if a similar strategy is being attempted by the Fed here in the US. In fact, such a strategy could trigger a market collapse, plunging the economy into another deep recession, and possibly a depression.
http://www.redstate.com/john_c_daly/2010/09/29/back-door-bailout-is-fed-buying-bank-stocks/ - 91k
No way. It would be against the law for the government to collude with megabanks in insider trades with the sole purpose of making the banks profitable and solvent while making the economic picture brighter than it really is. They would never attempt anything like that. I trust my elected leaders fully and will do whatever they tell me I should do.
Could the Federal Reserve be the driving force behind the recent surge in stock market prices?
Is the Pope Catholic?
Barry,Barry,Barry, your supporters aren’t the ones making you look bad. Glance into the next mirror you happen be near.
~ Less than a month away from the November 2 Midterm Elections, President Obama today pleaded with a crowd of supporters in Maryland to prove the pundits wrong. Obama implored the crowd, “Don’t make me look bad.”
John F. Kennedy
Do not pray for easy lives. Pray to be stronger men.
Theodore Roosevelt
Far and away the best prize that life offers is the chance to work hard at work worth doing.
Calvin Coolidge
Don’t expect to build up the weak by pulling down the strong.
Barack Obama
Don’t make me look bad.
James Madison
Crisis is the rallying cry of the tyrant.
Goldman Sachs
If the world had balls, we would squeeze the be-Jesus out of them.
“I will consider the Republicans to have failed our country if they gain control of the Congress and fail to abolish the Department of Education.” ~Neal Boortz
What? Has Boortz lost his mind? The children would be ruined if we didn’t have the federal department of education piling on top of the state department of education which piles on top of the county boards of education.
The U.S. Department of Education was not elevated to the position of a stand-alone cabinet level agency until 31 years ago come Sunday, October 17th. It has spent billions of dollars trying to improve America’s kids and the result is a huge disappointment. If you disagree compare test scores of 1979 against those of today.
If local school boards set their minds to it they could run pretty effective schools on their own - and certainly with far more efficiency than at present with experts trying to run the system of teaching the tots from Washington, DC.
One datum usually overlooked: There is no provision in the Constitution for a federal department in charge of education. None. Nada.
You forgot the interstate commerce in brains.
Also educated kids are better for militia duty, so it’s also under Art. I sec. 8 para. 16: “to provide for…..disciplining, the Militia…”
“There is no provision in the Constitution for a federal department in charge of education. None. Nada.”
Public education was actually TPTB’s response to all those foreigners landing on the shores. They (essentially) figured they better find a way to assimilate them before they could spread around any of their funny ideas. I forgot the source (one of Slim’s book reccomendations?), but it stated that the country actually had a higher literacy rate BEFORE public education.
I forgot the source (one of Slim’s book reccomendations?), but it stated that the country actually had a higher literacy rate BEFORE public education.
John Taylor Gatto’s Underground History of American Education is the book you’re referring to. However, he was pointing out that the state of Massachusetts had a higher literacy rate, note the whole country.
Meat Market Corn Crunch Means Costliest Beef in Quarter Century
Oct. 11 (Bloomberg) — Meat prices are poised to extend a 14 percent rally this year that drove U.S. retail costs to the highest levels since the 1980s as surging corn futures prevent livestock producers from expanding their herds.
The U.S. cattle herd in July was the smallest since 1973 and the number of breeding hogs last month was near the lowest ever, government data show. Corn futures jumped to a two-year high today and the price of the main feed ingredient is more than 70 percent above the 10-year average.
U.S. per-capita beef supplies next year will be the lowest since 1952 and pork the smallest since 1976, industry researcher CattleFax said. Hog futures will rise 14 percent by July and cattle may gain 3.6 percent by April, according to a Bloomberg survey of analysts. Wendy’s/Arby’s Group Inc., the maker of the 1,360-calorie Baconator Triple burger, and CKE Restaurants Inc., owner of the Hardee’s chain, have warned investors they are contending with higher commodity costs.
“If grain prices go up, then meat prices are going to have to move up,” said Mark Greenwood, a vice president at AgStar Financial Services Inc. in Mankato, Minnesota, who oversees $1 billion in loans and leases to the hog industry. Corn costs “tempered any enthusiasm there was on expansion,” he said.
Deja vu all over again. Didn’t we just see this play-out across the globe, where people were eating sand-cakes as a result of tyrannical central bank policies? These guys really know how to wreck markets.
We’re gonna need bigger food stamps!
“We’re gonna need bigger food stamps!”
Was just at Walmart, and the young tart in front of me stayed occupied on her iPhone while waiting in line. Then out comes a food stamp card to pay for her purchases. Makes a guy feel stupid for getting out of bed early every morning.
Maybe we need to stop turning a large portion of our corn crop into government-subsidized ethanol.
Eat mor Chik’n.
Fight over who has legal right to foreclose makes mess worse
USA TODAY
When Randy Persten’s mortgage was foreclosed in 2008, he looked at the paperwork and found a mystery. A company he’d never heard of — called Mortgage Electronic Registration Systems, or MERS — was bringing the foreclosure action against him.
Something didn’t seem right. So he got a lawyer and fought the foreclosure, arguing that MERS couldn’t foreclose because it didn’t own the mortgage note he’d signed promising to pay.
Persten ultimately succeeded in getting the action dropped, only to see a new action brought by a different company that says it is the true owner of his mortgage note. Persten still isn’t sure who owns his mortgage.
“Who was this MERS? Now we have no idea who owns the paperwork,” says Persten, an appliance salesman in West Palm Beach, Fla. “If I won the lotto, I’d pay off my mortgage, but I don’t know who to pay.”
Persten’s confusion is shared by other homeowners who are fighting foreclosure by challenging the legal powers of MERS, a company set up by the mortgage industry that is behind scores of foreclosures. Some homeowners are crying foul in lawsuits alleging MERS lacks the legal right to pursue foreclosures and in some cases they allege MERS has filed flawed documents to show it has the right to take a house.
ISTR a judge stopping a Cleveland foreclosure because Deutsche Bank couldn’t prove that it held the note. I believe that this was back in ‘07, and my thought at the time was, “I’ll bet this isn’t the only one.”
MERS is deadly and impossible to kill with modern antibiotics.
A friend had MRSA. It left her so weakened that she’s barely able to walk.
“Who was this MERS? Now we have no idea who owns the paperwork,” says Persten, an appliance salesman in West Palm Beach, Fla. “If I won the lotto, I’d pay off my mortgage, but I don’t know who to pay.”
1. it’s not the paperwork they own…it’s the house.
2. “winning the lotto” is not a remedy to foreclosure.
Just for kicks, I looked up MERS on my local recorder of deeds site. It is only listed a mere 69 times, and almost half the time it was the grantor, not the grantee (meaning it was passing its interest in the property on to someone else). So essentially there are fewer than 38 or so properties in the Chicagoland area that MERS could possibly foreclose on without serious time and expenses.
MERS = Man Purse ?
New Web HTML code stirs hopes, concerns
Silicon Valley / San Jose Business Journal
The next generation of code that is used to create Web pages will give marketers and advertisers greater access to user information, something that has privacy advocates watching closely.
HTML5 is already in limited use and is one of the programs that Apple Inc.’s Steve Jobs cited in his spat with Adobe Software Inc. about why he wouldn’t support that company’s Flash animation software.
“HTML5, the new Web standard that has been adopted by Apple, Google and many others, lets Web developers create advanced graphics, typography, animations and transitions without relying on third-party browser plug-ins (like Flash). HTML5 is completely open and controlled by a standards committee, of which Apple is a member,” Jobs wrote in April.
The new HTML software lets users watch multimedia content without having to download extra software, something that is expected to be of great value in the growing mobile space.
But it also allows storage of much more personal data and tracking than currently is available to marketers and advertisers, which is what has the privacy advocates worried.
But it also allows storage of much more personal data and tracking than currently is available to marketers and advertisers, which is what has the privacy advocates worried.
Call off the panic. I’ve been developing websites for 15 years, and I’ve never built the above feature into anyone’s site.
This guys business sucks because the economy has been ‘robbing’ people.I’m telling you it’s just not fair,damn-it.
Call Of Duty DS Dev N-Space: ‘We Are Down, But Definitely Not Out’
Dan O’Leary, founder of Florida-based Nintendo Wii and DS developer n-Space has written an impassioned blog post following reports of layoffs at the studio last week.
“After supporting 70-90 employees for several months without funding,” he wrote, “Friday’s layoffs were unavoidable. I will be back in the office next week, along with our core team, to firm up a few of the many deals we are negotiating. If all goes as planned, we’ll be calling people back before the end of the week.”
The studio, whose recent developments include Marvel: Ultimate Alliance 2 on Wii, DS and PlayStation 2, Call of Duty: Black Ops and Toy Story 3: The Video Game on DS, has been struggling this year due to problems in the economy and disruption caused by Apple’s App Store, according to O’Leary.
“The games industry is, frankly, a mess,” he wrote. “The economy has robbed customers of disposable income, reducing the number of titles that purchased per year. Huge-budget titles have to sell massive numbers to return a profit and the App Store has disrupted our industry in the same way iTunes changed consumer expectations for music.”
Maybe they need to lower their prices. $60 for a new game is a lot of dough. We usually just buy used games that have been out for a year or more. A LOT cheaper, and if you haven’t played them before they are still new to you.
So a bunch of pear-shaped losers are going to have to get off their fat asses and stop playing “World of Warcraft” or whatever 15 hours a day, and go out & get a job so they can eat and keep the power turned on.
Someone hand me my violin - the tiny one, please.
Pfft. What’s wrong with a deck of cards? I mean the things printed on thick paper, and not some electronic piece of junk.
Yeah and what’s with all these cell phones? Geez do people really need to talk on the phone while out of the house? Kids today with their fancy shmancy toys.
Stocks have nowhere to go but down
FORTUNE — Don’t believe the bulls who predict a new era of rising stock prices. Sure, their arguments sound convincing: Confidence will surge following the arrival of a new, business-friendly Congress, the U.S. economy always rebounds strongly after a deep recession — it’s just taking longer this time. Or, it’s the nature of the market to post big gains after a decade or more of poor returns.
Unfortunately, the basic math doesn’t support the optimists’ case. Put simply, the stock market is in a box that makes high future returns virtually impossible for people who invest in the S&P 500 or another index replicating the overall market. The reason is that corporate earnings are far outpacing the slow, grinding recovery. In fact, they’re practically at a cyclical peak — and possibly in a mini-bubble. At the same time, investors are paying an extremely big price for those already robust profits.
Today’s premium multiples wouldn’t be a problem if profits could grow at a rapid pace — in theory at least, high price-to-earnings ratios are a signal that they’re destined to do just that.
It won’t happen this time, for a simple reason: When earnings are already at lofty levels, they typically stagnate or fall rather than grow. Hence, one route to rising equity prices is effectively blocked by the rise in profits that’s already occurred, and the other is closed by high prices. Even if the economy improves dramatically, prices are far more likely to fall than rise. The rich rewards will go the patient contrarians who buy not at these prices, but after a major correction.
Hope cocky Eddie doesn’t read this.
Cocky Eddie? OK. Sure. Why not?
I’ll keep being cocky (and right) you keep investing your money in a 0.0015% APY checking account. Whatever makes you sleep well at night.
Birmingham home sales down 24%
Birmingham Business Journal
Birmingham area home sales dropped 24 percent in September, according to the Birmingham Association of Realtors.
During the month, 723 homes sold in the area, compared to 956 in September of last year and 768 in August, said a news release.
That’s a 24 percent drop for the year and a nearly 5 percent drop for the month.
Average prices of homes sold rose to $182,455 in September from $172,602 last year. And median price remained flat at around $152,000. But inventory of homes for sale in Birmingham rose 2 percent year-over-year to 10,608 homes.
Looking for Work? Expect a Lower Salary
Applicants Find Same Job for Less Pay
Working on Wall Street always meant great pay, fabulous perks and year-end bonuses that would make you feel as if you’d won the lottery. But that was before the Great Recession. Now, unemployed traders and bankers are finding out that high-paying jobs are nearly impossible to come by, as layoffs and slow economic growth continue in the finance sector. Karen, a New York-based fixed income trader, knows this firsthand. She recently spent six months searching for a job in the finance sector and ended up accepting a position that pays 40 percent less than what she was making.
“You don’t have the upper hand anymore,” she says. As a vice president at her former firm, she says she was accustomed to base salaries ranging from $110,000 to $150,000. Heidi Shierholz, labor economist with the Economic Policy Institute, says after holding up pretty well in the first year of the recession, there’s a very clear trend that growth in nominal wages — those wages that are not adjusted for inflation — has slowed dramatically in the last few years.
Those poor laid-off bankster cronies. Can’t someone do something to help them?
AS the pie shrinks there are many who thought of themselves as the elite that will find that the true elite view them with the same disdain as the huddled masses. Their wealth will be stripped as well.
420 banks demand 1-world currency
International finance group seeks remedy to looming exchange wars
The Institute of International Finance, a group that represents 420 of the world’s largest banks and finance houses, has issued yet another call for a one-world global currency, Jerome Corsi’s Red Alert reports.
“A core group of the world’s leading economies need to come together and hammer out an understanding,” Charles Dallara, the Institute of International Finance’s managing director, told the Financial Times.
An IIF policy letter authored by Dallara and dated Oct. 4 made clear that global currency coordination was needed, in the group’s view, to prevent a looming currency war.
something tells me that a one world currency would make those 420 banks richer.
can’t put my finger on it though.
What will ir be called? The Woolong? (anybody get the reference?)
It will be called “gold”.
It will be called “bullets”. Or oil, or rice. Try eating gold or try to burn it for fuel. See also keeping your gold from the guy with the bullets.
True, those work great in a Mad Max scenario, but those 420 banks probably won’t be interested in stocking that stuff.
It will be called “gold”.
Yep.
You would think that otherwise intelligent people would realize this from a cursory study of monetary history.
But unfortunately, you would generally be wrong in thinking that.
“(anybody get the reference?)”
OK, that’s what the universal currency is called in the sci fi/anime show “Cowboy Bebop”
If there were one world currancy then the US would look like Greece. Unable to finance it’s debt. An unelected unaccountable banking system would then control money. Oh wait we already have that so no problem.
420 banks? Are those the banks that smoke dope?
Dope will get you through times of no money better than money will get you though times of no dope. -Freewheelin’ Franklin
Estate tax may become another nail-biter debate when lawmakers return ~ The Hill
Interest groups on both sides of the estate tax debate are unsure how the issue will play out when lawmakers return to Washington for the post-election lame-duck session.
“I hear all sorts of things, which means I hear nothing,” Craig Jennings, a federal fiscal policy analyst at OMB Watch, told The Hill.
“Who knows what’s going to happen?” he added.
Lawmakers face a blistering tax agenda in the lame-duck session that, left undone, will cost taxpayers trillions of dollars beginning next year. One issue is how to stop the estate tax from returning to pre-2001 levels, which means estates worth more than $1 million are hit with a tax that could be as high as 55 percent.
The levy is currently repealed but, barring congressional action, it will return next year to the aforementioned level. Republicans and more than a few Democrats oppose returning to pre-2001 law, but there doesn’t seem to be a consensus for how the tax should be modified.
“Unfortunately, I think there is a pretty good chance that they just run it out and let [the repeal] expire,” said Phil Kerpen, vice president of policy at Americans for Prosperity.
If I were an old codger with some $$ in the bank, I’d start watching my back starting around Dec 20th if you know what I mean.
I had better get ready to move! Wells Fargo is about to own my rental house and it doesn`t look like they are holding them too long.
New Listing
List Price: $169,900
6238 Leslie St
SOLD AS-IS, HANDYMAN, BANK OWNED
Property Appraiser
Property InformationLocation Address: 6238 LESLIE ST
Municipality: JUPITER
Sep-2010 24104/0178 $137,600 CERT OF TITLE WELLS FARGO BANK NA
Jun-2004 17190/1863 $266,000 WARRANTY DEED WELCER JAMES A &
Sep-2010 24104/0178 $137,600 CERT OF TITLE WELLS FARGO BANK NA
Why not offer the above price for it? Or less? Methinks that $170k is a bit much for a handyman special.
Was a decent neighborhood but headed south. I did that in the eighties, bought a place that was a fairly nice working class hood but didn`t look for the signs of it heading south. Fool me once.
Foreclosure Halt ‘Catastrophic’ to Investors Says Group
A U.S.-wide foreclosure moratorium would be “catastrophic” and could unjustly impose losses on investors in the housing market, a major securities lobbying group said Monday.
The Securities Industry and Financial Markets Association said foreclosure processing mistakes should be fixed but warned against dramatic nationwide action.
“It is imperative, however, that care be taken in addressing these issues to ensure that no unnecessary damage is done to an already weak housing market and, in turn, that there is no further negative impact on the economy,” SIFMA Chief Executive Tim Ryan said in a statement.
Key Points
SIMFA warns against damage to weak housing market.White House adviser unsure over US-wide foreclosure halt.BofA has halted evictions in all 50 states.
On Sunday, White House adviser David Axelrod said he was “not sure” about a national halt to foreclosures.
Disclosures that some big mortgage processors filed affidavits without proper scrutiny in thousands of foreclosure cases has drawn anger from Congress and advocacy groups, with some prominent lawmakers calling for foreclosures to be halted in all 50 states.
“Foreclosure Halt ‘Catastrophic’ to Investors Says Group”
Looks like those neocon “Qualified Buyers” are not getting their baked-in returns. FWIW, my hard earned chump change hasn’t been earning diddly either, so go cry me a river.
Financial regulators planning worldwide rules for large firms
Washington Post
International bank regulators are planning a fresh wave of rules for the world’s most important financial companies in an effort to ensure that firms considered “too big to fail” are better protected from collapse - and that taxpayers are insulated from the fallout if they do.
The new regulations could include demands that such firms - referred to by regulators as “systemically important financial institutions” - keep more capital on hand than other banks and companies, draft detailed “living wills” to outline how they could be eased into bankruptcy without damaging the larger economy, and be subject to more intense government supervision.
While many of the details are still to be worked out, the head of the effort said a general set of 16 recommendations will be presented at a gathering of world leaders next month in Seoul.
The companies in question “are very big and powerful,” said Mario Draghi, head of the central bank of Italy and chairman of the Financial Stability Board, the international panel working on the new regulations. “There needs to be supervision at the global level. You need supervision up to the challenge.”
Public sector workers enjoy 30 years in retirement
Typical public sector workers will soon be able to spend around 30 years enjoying an “unsustainable” taxpayer-funded retirement, a report warned yesterday. ~ UK
Lord Hutton, the former cabinet minister reviewing public sector pensions, is drawing up plans that mean government workers delaying their retirement by at least five years.
Most public sector workers are currently able to retire at 60, or earlier. This is now likely to rise to 65 by 2020.
Teachers, NHS staff and Whitehall mandarins could live for about 30 years after retirement yet are providing only a fraction of the costs of their pensions.
As life expectancy rises, the retirement age has remained the same for more than 50 years.
The cost of the taxpayer-funded pensions has risen by more than a third – with the costs met by the Government. In future, retirement ages will be linked to life expectancy, so many workers will be uncertain when they can retire.
A shake-up to make the pensions more affordable will also lead to middle-class public servants contributing more towards their retirement from next year.
Lord Hutton, the former cabinet minister reviewing public sector pensions, is drawing up plans that mean government workers delaying their retirement by at least five years.
When Lord Hutton talks, people listen….
Clipped from the 5min forecast…
“Even if the remnimbi does appreciate,” writes Dee Woo, an econ teacher at Beijing Huijia Private School, in a remarkable piece published last week in The Wall Street Journal, “it’s unlikely to reduce the U.S. trade deficit or create American jobs…
“Regardless of the yuan’s value, the U.S. trade deficit won’t be significantly reduced unless the U.S. boosts its chronically low savings rate and defuses the disincentive — caused by the dollar’s status as the global currency — for manufacturing. When other nations want imports, they must produce goods to send abroad. All the U.S. needs to do is print more greenbacks: Buy dollar-denominated commodities and goods with dollars and debt, and service the dollar-denominated debt with dollars and more debt.”
Ah, in the immortal words of Mel Brooks: “It’s good to be the king.”
Here’s guy that gets it. It’s too bad he’s Chineese.
Or, maybe he gets it BECAUSE he is Chineese. The Chineese perspective in this matter seems to be a bit different than ours.
Not that should be a big surprise; If two countries are both very happy and believe it to be a wonderful thing that one country’s wealth is being sent to the other country then one of these country’s is suffering through a massive state of financial delusion.
Amid the wreckage of the south Florida housing bust, we find sings of… a reinflating bubble?
The Viceroy condos in Miami (in the same building complex as the hotel of the same name) has sold 262 of 372 available units since January. Ninety percent of the sales are to foreigners… who pay cash.
Seems Argentines, Canadians, Colombians, French, Israelis, Italians, Norwegians and Venezuelans are swooping down on Miami’s luxury market and scooping up bargains. Prices are 52% off the 2007 peak, averaging $319 a square foot.
Brokers say they’re seeing similar booms in Washington, New York, Los Angeles, San Francisco… and Las Vegas. “The idea,” says a recent Associated Press story, “is to rent out the properties and then sell them once the economy turns around.
Heh. The first part of that proposition is probably sound. But we suspect these units will stay rentals a lot longer than the owners are counting on.
~Agora 5min forecast.
Brokers say they’re seeing similar booms in Washington, New York, Los Angeles, San Francisco… and Las Vegas. “The idea,” says a recent Associated Press story, “is to rent out the properties and then sell them once the economy turns around.
And once the economy turns around, they’re going to have to repair the tenant-caused damage — and replace items that have seen too wear and tear — before they put said condos on the market.
Repairs and replacements can cost serious money. Which cuts into ROI.
Oops! My bad. I meant to say, “too MUCH wear and tear.”
It’s Monday.
Just the right Obama speech could fix everything overnight. He needs to prepare something really great.
“And so my fellow Americans, I today announce that I have had the various Fed presidents, Angelo Mozilo, and Secretary Geithner arrested and imprisoned at our detainment camp at Guantanamo Bay in Cuba. There they will be waterboarded until they confess to the details to their evil plan to wreck the American economy.
I have directed the Attorney General, Eric Holder, to pursue a lawsuit under the RICO statute agains MERS.”
Well Dennis, I expect all three of us were disappointed.
“Five or six hundred heads would have guaranteed your freedom and happiness but a false humanity has restrained your arms and stopped your blows. If you don’t strike now, millions of your brothers will die, your enemies will triumph and your blood will flood the streets. They’ll slit your throats without mercy and disembowel your wives. And their bloody hands will rip out your children’s entrails to erase your love of liberty forever.”
Jean-Paul Marat
The Fed is more like a joke factory!
Fed’s Yellen Says Low Rates May Prompt Risk-Taking
Janet Yellen , in her first public remarks as the Federal Reserve’s vice chairman, said low interest rates may give firms the incentive to take more risks, and officials must be prepared to take away the “punch bowl” of monetary accommodation.
It is conceivable that accommodative monetary policy could provide tinder for a buildup of leverage and excessive risk-taking in the financial system,” Yellen said in prepared remarks to the National Association for Business Economics.
I wonder if she coughed up a hairball or blood after this.
The timing of this is very curious. I read earlier today that something like 93% of polled investors said the Fed will take action November 3. Why would the “doviest” dove utter anything even remotely hawkish at this juncture?
I’ll be proven wrong I’m sure, but November 3 could see a heckuva curve ball get thrown at a whole lot of people. This current situation just seems like a set up of sorts.
Well, like Greenspan et al, Janet did not see the disaster coming.
Why should anyone listen to her now?
Hey, you business owner types:
I’ve been looking through our county list of property tax properties in arrears, and needless to say it’s full of development companies, condos, builders, realtors, other high-flyers, plus some prominent house-dependent local businesses who are behind. Lots and lots of … lots! Most in arrears for 2009, but some going back to the last half of 2007.
Is it common practice for businesses to let prop tax go a year or two, under the assumption nothing will happen and they’ll be able to make it up later when things improve? One year’s worth maybe?
I’m trying to view this in the best possible light. Otherwise, we’re in for a world of hurt.
Is it common practice for businesses to let prop tax go a year or two, under the assumption nothing will happen and they’ll be able to make it up later when things improve? One year’s worth maybe?
That sure isn’t the case here in Pima County.
This county has no qualms about slapping a tax lien on you. If you don’t get current on your taxes, foreclosure can follow.
Hmm. I may have to call the county to see how unusual this is, since I’ve never looked at one of these lists before. There is very little we can access online here.
I know I bust my a** to pay on time, but then I’m pretty risk-averse, unlike these fearless entrepreneurs.
The short route to perdition is to fail to remit sales taxes collected. Around here a year is all the rope you get on property taxes.
Turns out stocks aren’t as great of an investment as the 401(K) advisers said they were!
Forget 11,000. Here’s What’s Happening in the Dow
By DAN BURROWS Posted 8:30 AM 10/11/10
Although easy money on the part of the Fed might have investors embracing riskier assets like stocks, a look at what’s happening in the blue chips shows that traders have been hedging their bets.
Expectations that the Federal Reserve will enact further measures to boost the economy have stocks on a winning streak. The Dow Jones Industrial Average ($INDU), that elite bastion of blue chips, added 1,000 points over the last six weeks and enters Monday’s session above 11,000 for the first time since May 3.
Dow 11,000 is nice and all, but all it really means is that stocks have been dead money for five months — and beyond. After all, the 11,000 level has never signified anything lasting for long-term investors before. The Dow first crossed above 11,000 in 1999 and has made the trip 37 times since then, according to Bespoke Investment Group.
…
‘Twas several years ago when I read a book by Kevin Phillips, Wealth and Democracy.
In it, he said that price/earnings ratio spikes (like the one we had in the late 1990s) are followed by long periods of volatility. As a case in point, he cited the spike that peaked in 1901. Something like two decades of volatility after that.
Does the 37 count only closing levels or intraday crossings too? Because for a few minutes late today it was looking like 38, but a little “wrist shot” at the close assured an acceptable result.
See also: Nikkei, Hang Seng
what’s the significance of how many times some number was crossed?
Pick ANY number… 5,000 or 7,000 or whatever. Being “crossed” about 37 times is probably average.
Today is a bad time to own stocks? You coulda fooled me..
Mortgage Bankers Association Strategic Default
http://www.thedailyshow.com/watch/t...
Is this stuff really legal?
Inaction by Treasury’s Paulson a boon to Wall Street
By GREG GORDON
McClatchy Newspapers
… while Paulson has been criticized, unfairly or not, because $12.9 billion of the bailout money went to Goldman, he’s drawn little scrutiny for what he did in his first 18 months in office, during the final frenzied stages of the housing bubble.
In his eight years as Goldman’s chief executive, Paulson had presided over the firm’s plunge into the business of buying up subprime mortgages to marginal borrowers and then repackaging them into securities, overseeing the firm’s huge positions in what became a fraud-infested market.
During Paulson’s first 15 months as the treasury secretary and chief presidential economic adviser, Goldman unloaded more than $30 billion in dicey residential mortgage securities to pension funds, foreign banks and other investors and became the only major Wall Street firm to exit the housing market safely. Goldman also racked up billions of dollars in profits by secretly betting on a downturn in home mortgage securities.
“No one was better positioned … than Mr. Paulson to understand exactly what the implications of his moving against the (housing) bubble would have been for Goldman Sachs, because he knew what the Goldman Sachs positions were,” said William Black, a former senior thrift regulator who delivered the harshest criticism of the former secretary.
Paulson “knew that if he acted the way he should, that would have burst the bubble. Then Goldman Sachs would have been left with a very substantial loss, and that would have been the end of bonuses at Goldman Sachs.”
Black has emerged as a leading expert on the subprime meltdown and has testified multiple times to congressional committees and to the Financial Crisis Inquiry Commission, the congressionally appointed panel that’s investigating the causes of the disaster.
A second Paulson critic, retired senior thrift examiner Richard Newsom, wrote to Congress about the regulatory lapses that he said contributed to the crisis. In a phone interview, he said that it was “simply implausible that Paulson couldn’t see the relation between delaying strong action by Treasury and the benefit to letting places like Goldman” reduce their risks.
…
During Paulson’s first 15 months as the treasury secretary and chief presidential economic adviser, Goldman unloaded more than $30 billion in dicey residential mortgage securities to pension funds, foreign banks and other investors and became the only major Wall Street firm to exit the housing market safely.
Hank Paulson is an officially sanctioned criminal.
Hank Pauslon is a traitor to his country. Dig it.
This is what we have become.
Edward Fitzpatrick:
Where was Ben Bernanke when the financial regulatory system nosedived?
01:00 AM EDT on Thursday, October 7, 2010
Federal Reserve Chairman Ben Bernanke came to town this week to speak to the Rhode Island Public Expenditure Council, and it was a big deal.
…I could hardly believe that Bernanke tied the crisis to “weaknesses in our financial regulatory system,” saying, “Nobody was looking at the system as a whole.”
I mean, isn’t that his job? I’m sure President George W. Bush and President Obama, Congress, Henry Paulson, Timothy Geithner and others had or now have key roles. But wasn’t Bernanke supposed to be looking at the system as a whole before the whole system nosedived?
Among those listening to Bernanke was U.S. Sen. Sheldon Whitehouse, a Democrat who in January opposed Bernanke’s nomination for a second term. “Ben Bernanke bears considerable responsibility for the lax regulation that brought about the housing bubble,” Whitehouse said at the time. “To make matters worse, a quick review of his public statements in the months leading up to this crisis demonstrates a troubling pattern of false confidence.”
For example, in May 2007, regarding the housing crisis, Bernanke said, “We do not expect significant spillovers from the subprime market to the rest of the economy.”
Whitehouse said that while Wall Street has recovered from the financial crisis, Main Street has not. He noted that Goldman Sachs announced a $16.2-billion bonus pool in January, when Rhode Island’s unemployment rate stood at 12.9 percent.
…
Doubt Fed’s purchases will promote growth
By Craig Torres and Scott Lanman
5:30 AM Saturday Oct 9, 2010
For US$2 trillion ($2.6 trillion), Federal Reserve chairman Ben Bernanke may buy little improvement in growth, employment or inflation over the next two years.
Firms with large-scale models of the US economy such as IHS Global Insight, Moody’s Analytics and Macroeconomic Advisers project only a moderate impact from additional Fed asset purchases.
The firms estimate that the unemployment rate will remain around 9 per cent or higher next year whether the Fed buys US$500 billion or US$2 trillion of US Treasuries in a second round of unconventional stimulus.
The meagre impact shows the conundrum US central bankers face.
Interest rates near zero have failed to produce the intended cycle of borrowing and spending among consumers and businesses.
Unemployment hovering near a 26-year high, partly a symptom of weak demand, keeps downward pressure on prices, and further declines in inflation would raise borrowing costs in real terms, making credit more expensive.
…
Unemployment hovering near a 26-year high,
and globalization “hovering” near an all time high…
but it’s not related… the Cato Institute and the Heritage foundation told me so.
If Not Now, When?
Posted on 10/11/10 at 11:02am by William K. Black
…The banking industry, in alliance with the U.S. Chamber of Commerce, with Bernanke’s blessings (and with no opposition from the Obama administration), succeeded in using Congress to extort FASB to change the accounting rules so that banks do not have to recognize their real estate losses until they sell their bad assets. This makes the entire debate about nominal capital requirement surreal. Capital requirements are accounting concepts. If you pervert the accounting rules you render the capital requirements meaningless. This was done deliberately to subvert the Prompt Corrective Action law and to allow the continued payment of bonuses to bank senior officers. There is no meaningful capital requirement for the SDIs with enormous holdings of toxic mortgage assets.
The Fed’s “stress tests” deliberately ignored the losses on these assets. There are no real hawks at the Fed on capital requirements. Not a single senior Fed supervisor has the spine to even find the truth, much less close an insolvent SDI. Bernanke’s claim that they would have placed the huge, insolvent investment banks in receivership in 2008 if the Fed had possessed such resolution authority is preposterous. The banking regulators had ample authority to place insolvent federally insured banks that were SDIs in receivership but lacked the courage and integrity to do so.
The housing market stalled in mid-2006 and the uninsured mortgage bankers began failing in late 2006. The secondary market in nonprime mortgages collapsed in spring 2007. Years later, we have covered up the causes and extent of the crisis. This must end. GMAC’s, Fannie’s, and Freddie’s managers, the Federal Housing Finance Agency (FHFA), and the GAO should conduct three studies using data available at those enterprises and the Fed.
First, what is best estimate of the market value losses on liar’s loans, subprime loans, and CDOs held by Fannie, Freddie, and as collateral by the Fed? To what extent have those losses been recognized by the entities holding the assets? To what extent are Fannie, Freddie, and the Fed under collateralized? The Fed should demand additional collateral to ensure that it is not exposed to any loan losses.
Second, examine a sample of those assets’ loan and servicing files to determine the incidence of likely fraud that can be spotted simply through file reviews. This second study should determine the lender on each fraudulent loan and the professionals involved (e.g., the investment bankers that created the CDOs, the appraiser, the outside auditor, and the rating agency). This list should be used to prioritize administrative, civil, and criminal investigations. The list of likely fraudulent loans should be cross checked against list of criminal and SEC referrals to determine which entities are failing to make referrals. The GAO should formally alert the relevant regulatory agencies about which entities are not making adequate referrals. The entities conducting the study should make criminal and SEC referrals where others have failed to do so. Fannie and Freddie should be directed by FHFA to put back fraudulent mortgages to the lenders/CDO packagers.
Third, review the loan and servicing files of a sample of GMAC’s mortgage servicing portfolio and its foreclosures during the first half of 2010. Determine the extent of likely mortgage fraud for the mortgages serviced by GMAC (and follow the steps recommended above). Determine the extent of GMAC files that lack adequate documentation to ensure the ability to conduct a valid foreclosure. Review a sample of the loan and servicing files for mortgage instruments that the Fed has taken as collateral. Determine the extent to which the file deficiencies would pose difficulties for the Fed if it sought to foreclose on mortgage assets it holds as collateral. Review a sample of GMAC foreclosures to determine the extent to which such foreclosures were invalid, unethical, or unlawful because of defects in the files or foreclosure processes used by GMAC or its agents. If the sample reveals material problems direct GMAC to cure any defects or abuses.
The fact that four years after the onset of greatest financial crisis of our lives neither the industry nor the regulators have systematically studied these basic facts essential to addressing this crisis and avoiding future crises is a demonstration of how destructive the cover up has been. We should not be forced to spell out and mandate the studies that any competent, honest decision maker would have begun nearly four years ago. The fact that Treasury Secretary Geithner, a co-architect of the cover up (with Paulson and Bernanke), is engaged in a successful propaganda campaign premised on the facially absurd claim that the entire banking crisis was resolved at a taxpayer cost of roughly $50 billion is a testament to the continued debasement of not only the Department of the Treasury, but also too much of the financial press.
Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.
Bill writes a column for Benzin
Not a single senior Fed supervisor has the spine to even find the truth, much less close an insolvent SDI.
Never mind. We all need to do the right thing.
Dead ahead, I smell an all-time low in the housing market which will serve as a cautionary tale for our grandchildren and their children as well.
Foreclosure Freeze Ties Up Title Companies
Updated: Monday, 11 Oct 2010, 6:15 PM CDT
HOUSTON - As banks face allegations of possible mortgage fraud, title companies are making it harder to write policies for those properties.
Houston-based Stewart Title is setting new rules for sales of some foreclosed homes. The company is issuing guidelines to its agents making it difficult to write policies on property foreclosed upon by four banks whose process is in question: JP Morgan Chase, Bank of America, OneWest Bank or Ally Financial’s GMAC Mortgage unit.
The move comes one week after Texas Attorney General Greg Abbott asked several loan companies to suspend all foreclosure activities over concerns about the accuracy of documents.
Michael Weaster has been selling foreclosures for thirty years.
“The problem with the current issues with Bank of America, with what’s going on with the moratorium, all its going to do in my opinion is create a larger inventory of vacant foreclosed homes,” said Weaster.
“We’re not just losing individual homeowners. A lot of the developers have gone under because they couldn’t find buyers. It’s affecting the title industry, the yard people, the sign people, the lock people. It’s affecting a lot of industries.”
…
Yes, one possibilty of this foreclosure freeze is that it temporarily stabilizes home values, however will the anticipation/fear of the repercussions that will take place after the freeze lifts cause the markets to do exactly the opposite of what’s anticipated?
Yes, it is possible that the REO freeze temporarily stabilizes home prices, however, will the fear of the repercussions cause just the opposite market response?
Mortgage foreclosure precedence set in 1969 case of the “First National Bank of Montgomery V. Jerome Daly” by instrument of “Consideration.” “And upon this revelation the court rejected the bank’s claim for foreclosure and Daly kept his home”
http://tinyurl.com/26668mn
“Mr Daly explained that the money was in fact not the property of the bank, for it was created out of nothing as soon as the loan agreement was signed. Remember what Modern Money Mechanics stated about loans? What they do, when they make loans is to accept promissory notes in exchange for credits. Reserves are unchanged by the loan transactions, but deposit credits constitute new additions to the total deposits of the banking system. In other words: The money doesn’t come out of their existing assets, the bank is simply inventing it, putting up nothing of it’s own, except for a theoretical liability on paper.”
Have not seen this mentioned anywhere, but it seems that the title of any mortgaged property where the mortgage was resold and robo-signed, would have a cloud on the title, whether the property was under foreclosure or not. A mortgage current on payments could well have title issues if the owner wanted to sell.
Another thing… title insurance policies have so many exclusions that it is no surprise title cos. payout ratios are less than 5%.
That’s a pretty clever trick, using mark-to-fantasy accounting to hide massive losses on toxic assets, while sustaining record-level Wall Street pay as Main Street continues eating cake.
Wall Street Pay: A Record $144 Billion
Pay on Wall Street is on pace to break a record high for the second consecutive year, as about three dozen of the top publicly held securities and investment-services firms are set to pay $144 billion in salary and benefits this year.
Pay on Wall Street is on pace to break a record high for the second consecutive year,
Because those firms need to retain their talent.