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anecdote Topic in The Credit Debacle Catalog

Anecdotal Economics (1); anecdotal evidence (1).

naked capitalism Sun 2010-10-10 12:54 EDT

FUBAR Mortgage Behavior: Florida Banks Destroyed Notes; Others Never Transferred Them

...But to give readers the latest report of modern FUBAR, mortgage edition, let us continue with the sorry saga of ``Where's My Note?'' For the benefit of newbies, what everyone calls a mortgage actually has two components: the note, which is the borrower IOU, and the mortgage (in some states, it's called a deed of trust) which is the lien on the property. In 45 states, the mortgage is a mere accessory to the note; you must be the real party of interest in the note in order to foreclose. The pooling and servicing agreement, which governs who does what when in a mortgage securitization, requires the note to be endorsed (just like a check, signed by one party over to the next), showing the full chain of title...The endorsements also have to be wet ink; no electronic signatures permitted. I've had a lot of anecdotal evidence to support the idea that these procedures, which were created in the early days of mortgage securitizations, were simply not observed on a widespread, if not a universal basis...

Florida Banks Destroyed Notes; FUBAR Mortgage Behavior; naked capitalism; transfer.

Tue 2010-04-27 08:22 EDT

Anecdotal Economics: A Chicken in Every VAT

...The retail consumer is back, and she* is in the mood to shop, we reliably are told. The Census Bureau reported March 2010 Advance Retail and Food Service Sales improved 7.6 percent from a year ago, and for 1Q2010 are 5.5 percent above 1Q2009...So why do state sales tax revenues tell a different, disconnected story? In the Nelson A. Rockefeller Institute of Government's April 2010 State Revenue Report, which chronicles the woeful status of state tax collections, concludes that sales tax collections fell almost 9.0 percent in 2009, a statistically significant 2.8 percent more than the reported decline in retail and food service sales made up estimated by the Census Bureau...It's a significant disconnect between theory (Census Bureau) and reality (actual sales tax collections), much as the similar, significant disconnect between the Employment Situation reported by the Bureau of Labor Statistics (theory), which appears to be masking the true extent of unemployment in America with all those marginally attached and discouraged workers, and the meaningful decline in actual payroll tax withholdings (reality), as reported by the Treasury Department in its Daily Treasury Statements...

Anecdotal Economics; chickens; VAT.

The Big Picture Wed 2009-10-14 11:36 EDT

Andy Xie: Here We Go Again

Former Morgan Stanley Analyst Andy Xie explains why China is a potential bubble: [Consider] the US Savings and Loans crisis of the late 1980s and early 1990s. The US Federal Reserve kept monetary policy loose to help the banking system. The dollar went into a prolonged bear market. During the descent, Asian economies that pegged their currencies to the dollar could increase money supply and lending without worrying about devaluation, but the money couldn't leave home due to the dollar's poor outlook, so it went into asset markets. When the dollar began to rebound in 1996, Asian economies came under tightening pressure that burst their asset bubbles. The collapsing asset prices triggered capital outflows that reinforced asset deflation. Asset deflation destroyed their banking systems. In short, the US banking crisis created the environment for a credit boom in Asia. When US banks recovered, Asian banks collapsed. Is China heading down the same path? There are many anecdotes to support the comparison. Property prices in Southeast Asia became higher than those in the US, but ``experts'' and government officials had stories to explain it, even though their per capita income was one-tenth that of the US. Their banks also commanded huge market capitalizations, as financial markets extended their growth ad infinitum. The same thing is happening in China today. When something seems too good to be true, it is. World trade -- the engine of global growth -- has collapsed. Employment is still contracting throughout the world. There are no realistic scenarios for the global economy to regain high and sustainable growth. China is an export-driven economy. Bank lending can support the economy for a short time, however, stocks are as expensive as during the heydays of the last bubble. Like all previous bubbles, this one, too, will burst.

Andy Xie; Big Picture; Go.

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