Trojan Horse: Stan Liebowitz's WSJ op-ed pronounced the cause of the never-ending foreclosures to be, not shoddy lending, but irresposible homeowners who didn't have enough equty in their houses. It's their fault that they are underwater after a 30% price drop. Liebowitz is at UT Dallas, where, obviously, he does not teach statistics, logic or ethics. The purpose of his article is to help ward off regulation of the lenders by shifting the blame to those who have lost their houses, and to lobby for making mortgages 'recourse' debts so the banks can come after the homeowners even after foreclosure. I don't usually run on like this over frauds, but this shoddy piece of sophistry was getting too many unthinking positive comments over the weekend. Go read it yourself. Question his statistics, his assumptions, his logic and question his motives - which are displayed at the end of the piece.
Look In The Mirror: A lot of commentary on China & its dollar holdings seems to assume that the Chinese are complete idiots. There are idots aplenty in the current debacle, but I'm reasonably sure the Chinese are not. What China does is look out for itself.
Not Much Relief: The NYTimes has officially endorsed mortgage principal reduction, in principle.
Thunder in the Distance: Junk bond defaults are steadily rising. 'Speculataive-grade debt' reached a 9.2% default rate in June when Eddie Bauer, the Fontianbleu, Lear auto parts and 15 others dropped, making it 119 sofar this year. Lemmings keep jumping into the pool, lured by the promised yield.
Lame, Duck: Palin's argument that she resigned halfway through her first term because she wasn't going to run for a second term and thus would be a lame duck executive, would suggest that any second-termer should resign shortly after being sworn in. Would have been a blessing had Bush felt that way, except for Cheney.
Surf's Up: Foreclosures are up 73% y/y, according to the Office of the Comptroller, which tracks 34 million loans. In June only 58% of the handful of mortgages modified actually lowered the borrower's payment, and those by only an average of $173 a month. And another wave of foreclosures is bearing down, which will lower prices and force more homeowners underwater.
Tick, Tick, Tick: Manufacturing capacity useage is at a record-low 68%. Hours worked are down 7% y/y. Nine million jobs have evaporated. Old fashioned unemployment is at 18.2%. Wage deflation is settingin as earnings fall at a 1.6% annual rate. Over 340,000 homes were foreclosed in April. Perhaps the government shuld stop trying to prevent what's already here and worry abut the coming riots.
What Goes Around: Losses on Alt-A mortgage foreclosures are running at nearly 65% of the original loan. Too bad the originators who gobbled up the fees don't have to gobble up the losses - an average of $144,000 per loan.
Porn O'Graph: The lost years.