Tuesday, October 19, 2010

SAR #10292

Turns out the bankers weren't idiots, they were crooks.

Tough It Out:  Drawing a line in the sand and refusing to be deterred, no fessing up and paying up, the banks have decided to simply forge ahead.

For Sale:  Ever smiled at the sign on the lawn that says “For Sale By Owner” - like who else could sell it, right?   Turns out banks regularly 'sold' the same mortgage several times by pledging the same assets as collateral to different trusts or in MBS packaging. If you sell what you do not have the right to sell you commit a crime.  If banks do it, it's profitable.  Can you say 'epidemic'?

Doom:  “In America, the bet is still that we will somehow find ways to get people spending and investing again.”  Stanford economics professor Robert E. Hall, on our salvation.

Keeping score:  No one knows how much money is at risk at the MBS end of the foreclosure game.  A commonly cited figure is $1.3 trillion in non-government backed MBS still lurking about.  Even without the foreclosure/ownership mess or the double and triple pledging of the same mortgage,  if 20% of mortgages flounder, that's over $250 billion the packaging banks have to cough up to make the MBS holders whole after fraud is found on their doorstep.  The banks are worried, and when the banks are worried the taxpayers had best bar the door.

Money Quote:  "Nobody in this country knows for sure who owns any real estate"

Fare Fight:  The US is complaining that China is cheating by subsidizing its clean energy industries while the US only subsidies the coal and oil burning industries.  Imagine, using the people's money to benefit the people. Where's the profit in that?

Reality Check:  The only US product that increased last month was fraud. Industrial production fell 0.2% and capacity utilization decreased to 74.7%, 6 points below its long term average.

Explanations:  China is not a major economic power because, according to Professor Krugman, it doesn't behave like one.  Apparently there is a secret set of rules that major economic powers adhere to for the good of all, and China's protectionist, China first last and only approach disqualifies it for membership in the club.  China does not want to be in the club, it wants to wield it.

Bricks Without Straw:  The current Fed effort is to keep interest rates low in order to convince companies (who already have surplus capacity) to expand and for the citizenry (who are tapped out and unemployed) to refinance their homes and spend, spend, spend. Jobs? We don't need no steenking jobs.

Got'cha:  Republican 'voter integrity squads' are once more fanning out to minority precincts in order to prevent blacks from voting voter fraud. Someone should point out to them that the only case of voter fraud of late has been Ann Coulter.

Just So:  Research on Egyptian mummys and other early human remains suggests that cancer is a modern, man-made disease caused by environmental factors that arose with the industrial revolution and have been increasing ever since.  It's not just the cigarettes.

Lowest Common Denominator:  Accident and happenstance cannot explain the emergence of the type and magnitude of 'errors' in the foreclosure process.  “Willful, systemic fraud” does.  Capitalism depends on respect for and adherence to contract law and the underlying property rights.  The process is long and carefully detailed to insure that nothing falls through the cracks.  “We cannot have free market capitalism without this process. So what does it mean if banks have been systemically, fraudulently and illegally undermining this process?”

Chain, Chain, Chain: Foggy is a good description of the state of real estate, mortgages, foreclosures and MBS.  “Re-evaluating” a few, or a few hundred or even a few tens of thousands of foreclosures is one thing. Having the ownership of vast amounts of real estate and the validity of enormous quantities of real estate based financial paper in serious doubt is more than a little serious.  Read David Kotok's long essay, which concludes “if the chain of title of the note is broken, then the borrower no longer owes any money on the loan.”

Porn O'Graph:  Convention wisdom?

1 comment:

I'm Not POTUS said...

China is the first and will now and for a very long time be the most powerful Perfected Mafia in the world.

Sure you have some otherans in the race, but they are flawed mafias saddled by the requirement to bribe the will of the public.

China is in a class by itself. In China you can make all the money you want as long as you pay the "party" for the pleasure. Cross them or challenge their authority and it's off with your head. Embarrass them or threaten their legitimacy and off with your head.

The great sea of people have no entitlements, no social backstops, no defense except revolt that is kept in check with only the force of arms and currency arbitrage.

They are leagues ahead in the race to post modern oligarchy future. Modern Economic Power is so dot.com, but the banksters are coming strong up from behind in the last furlough of the fiat money race.