Fri 2010-10-08 21:53 EDT

MERS 101

MERS - Mortgage Electronic Registration Inc. - holds approximately 60 million American mortgages and is a Delaware corporation whose sole shareholder is Mers Corp. MersCorp and its specified members have agreed to include the MERS corporate name on any mortgage that was executed in conjunction with any mortgage loan made by any member of MersCorp...Thus in place of the original lender being named as the mortgagee on the mortgage that is supposed to secure their loan, MERS is named as the ``nominee'' for the lender who actually loaned the money to the borrower. In other words MERS is really nothing more than a name that is used on the mortgage instrument in place of the actual lender. MERS' primary function, therefore, is to act as a document custodian. MERS was created solely to simplify the process of transferring mortgages by avoiding the need to re-record liens -- and pay county recorder filing fees -- each time a loan is assigned. Instead, servicer's record loans only once and MERS' electronic system monitors transfers and facilitates the trading of notes...MersCorp was created in the early 1990's by the former C.E.O.'s of Fannie Mae, Freddie Mac, Indy Mac, Countrywide, Stewart Title Insurance and the American Land Title Association... MERS, as has clearly been proven in many civil cases, does not hold any promissory notes of any kind. A party must have possession of a promissory note in order to have standing to enforce and/or otherwise collect a debt that is owed to another party. Given this clear-cut legal definition, MERS does not have legal standing to enforce or collect on the over 60 million mortgages it controls and no member of MERS has any standing in an American civil court. MERS has been taken to civil courts across the country and charged with a lack of standing in reposession issues. When the mortgage debacle initially, and inevitably, began, MERS always routinely brought actions against defaulting mortgage holders purporting to represent the owners of the defaulted mortgages but once the courts discovered that MERS was only a front organization that did not hold any deed nor was aware of who or what agencies might hold a deed, they have routinely been denied in their attempts to force foreclosure. In the past, persons alleging they were officials of MERS in foreclosure motions, purported to be the holders of the mortgage, when, in fact, they not only were not the holder of the mortgage but, under a court order, could not produce the identity of the actual holder. These so-called MERS officers have usually been just employees of entities who are servicing the loan for the actual lender. MERS, it is now widely acknowledged by the courts, has no legal right to foreclose or otherwise collect debt which are evidenced by promissory notes held by someone else...

MERS 101.

New Deal 2.0 Fri 2010-09-03 18:57 EDT

The Real Lesson from the Great Depression: Fiscal Policy Works!

Marshall Auerback

...At the outset of the Great Depression, economic output collapsed, and unemployment rose to 25 per cent. Influenced by his ``liquidationist'' Treasury Secretary, Andrew Mellon, then President Hoover made comparatively minimal attempts to deploy government fiscal policy to stimulate aggregate demand...This all changed under FDR...The government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York's Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown...once the Great Depression hit bottom in early 1933, the US economy embarked on four years of expansion that constituted the biggest cyclical boom in U.S. economic history. For four years, real GDP grew at a 12% rate and nominal GDP grew at a 14% rate. There was another shorter and shallower depression in 1937 largely caused by renewed fiscal tightening (and higher Federal Reserve margin requirements)...

0; Fiscal policy worked; Great Depression; new dealing 2; Real Lesson.

PRAGMATIC CAPITALISM Mon 2010-08-23 19:11 EDT

SAY IT AIN'T SO JOHN....

TPC

I am saddened to say that John Hussman is worried about inflation and default in the USA. I guess the inflationistas and defaultiastas have made a substantial mid-season pick-up. Unfortunately, however, Mr. Hussman makes all the same claims that have driven these worrywarts astray for so many years. Specifically, Mr. Hussman is now discussing the inevitable ``collapse'' of the U.S. dollar due to Quantitative Easing...There is substantial historical evidence showing that QE is nothing more than an asset swap and has little to no impact on the real economy, inflation rates or currencies. Japan is again the best historical precedent...there is a long-term threat of inflation or that we have attempted to paper over many of our mistakes, however, there is very strong evidence showing that QE will not be the cause of a collapse in the dollar...

ain't; John; PRAGMATIC CAPITALISM; says.

billy blog Thu 2010-08-19 16:25 EDT

There is no credit risk for a sovereign government

Bill Mitchell

...UC Berkeley economist Brad DeLong...likes to think of himself alongside Krugman as part of the ``Keynesian'' army against all the neo-liberals. Both are in fact New Keynesians. In that sense, they are not very dissimilar to Mankiw and his gang. Interestingly, they appear to be continually trying to one-up Mankiw as part of some internecine struggle within the American economics academy. But from a Modern Monetary Theory (MMT) perspective, it is hard to tell their various narratives apart...a sovereign government is never revenue constrained because it is the monopoly issuer of the currency. That is a basic starting point in exploring the differences between spending and taxation decisions of a sovereign government and the spending and income-earning decisions/possibilities of the private sector entities (households and firms). The two domains -- government and non-government -- are very different in this respect and any attempt to conflate them as if both are subject to budget constraints is wrong and starts the slippery slide down into the total mispresentation of how the macroeconomics system operates...When a government runs a surplus it is not ``saving'' anything. The surpluses go nowhere! They are just flows that are accounted for and the aggregate demand which is drained by the surpluses is lost in that period forever...DeLong is actually teaching some bastardised course in Political Science here and only allowing the conservative side of the debate to be aired...HSBC economist Steven Major ...[writes in the Financial Times (FT)]...so contrary to what is being peddled each day in the financial press that a medal for bravery should be awarded...

Billy Blog; credit Risk; sovereign Government.

Sat 2010-07-24 16:05 EDT

CynicusEconomicus: Reforming Money - Fixed Fiat Currency

I have long promised a discussion of a system of fixed fiat currency, and the discussion that follows is my first attempt at this. It is a very long discussion, and I hope that you will have the patience to plough through such volume (I guess that many will not). However, I do hope that it will prove to be an interesting potential system that might help prevent a repeat of the current economic crisis...The article is sparsely referenced, but includes ideas such as the value of labour which is rooted in the work of Karl Marx, critiques of fiat money which owe a debt to the many articles on the von Mises Institute website, and the overall theory and work of Adam Smith in the Wealth of Nations is an important overall inspiration...The only way that a system of money might offer both stability and fairness is to instigate a system of money that represents each individual's actual input of value of labour into the wider economy that is utilising the money. The only way to do this is to fix the currency against the actual value of labour in the economy...

cynicuseconomicus; Fixed Fiat Currency; reform money.

Wed 2010-07-21 10:31 EDT

Social Democracy for the 21st Century: A Post Keynesian Perspective: Galbraith versus Krugman on Deficit Spending

In a recent post, Paul Krugman has criticised James K. Galbraith's view of deficit spending. The latter is obviously influenced by Modern Monetary Theory...Krugman has misunderstood Galbraith...Galbraith understands that there are real constraints on deficit spending, not phantom ``financial'' ones. Moreover, it is perfectly clear that Galbraith is talking about deficit spending during a period of high unemployment and low capacity utilization, and perhaps even in the face of a double dip recession. In his response to Galbraith, Krugman adopts the flawed quantity theory of money and attempts to prove mathematically what is perfectly obvious: that hyperinflation can result from continuous budget deficits that are monetized by the central bank. But, since Modern Monetary Theory already acknowledges that inflation is a real constraint on deficit spending, Krugman's analysis seems rather pointless.

21st century; deficit-spending; Galbraith versus Krugman; Post Keynesian Perspective; social democracy.

billy blog Thu 2010-07-15 16:58 EDT

We have been here before ...

The daily rhetoric being used to promote fiscal austerity maybe couched in the urgency of the day but we have heard it all before. In this blog I just reflect on history a little to remind the reader that previous attempts to carve public net spending, based on the ``expectations'' belief government was not going to tax everybody out of existence, failed to deliver. The expected spontaneous upsurge in private activity has never happened in the way the mainstream macroeconomic supply-siders predicted. Further, the chief proponents usually let it out in some way that the chief motivation for their vehement pursuit of budget cuts was to advance their ideological agendas. Of-course, the arguments used to justify the cuts were never presented as political or class-based. The public is easily duped. They have been in the past and they are being conned again now. My role is to keep providing the material and the arguments for the demand-side activists to take into the public debate...

Billy Blog.

naked capitalism Tue 2010-06-01 20:06 EDT

When Will Europe Have Its Wile E. Coyote Moment?

...The current program instead is ultimately about protecting Eurobanks from losses, and is destined to fail. John Mauldin, in his newsletters, has been featuring the work of Rob Parenteau, as featured first here on Naked Capitalism (and a source of much reader ire): that deleveraging the public sector and the private sector at the same time is impossible absent a big rise in exports. Pretty much every major economy is on a ``reduce government debt'' campaign. Many are also on a ``deleverage the private sector'' program too (which is warranted, given the amount of profligate lending that occurred). The problem, however, is that these states can't all increase exports, particularly to the degree sought...Rob Parenteau drew out the implications in an earlier post: ``...if households and businesses in the peripheral nations stubbornly defend their current net saving positions [continue to reduce debt levels], the attempt at fiscal retrenchment will be thwarted by a deflationary drop in nominal GDP. ''...This feels like 2007 all over again, with the authorities insistent that Things Will Be Fine, when a realistic assessment suggests the reverse.

Europe; naked capitalism; Wile E. Coyote Moment.

Sat 2010-05-22 19:45 EDT

billy blog >> Blog Archive >> Zimbabwe for hyperventilators 101

Zimbabwe is the new Weimar Republic. Not! Zimbabwe is the front-line evidence that shows that government deficits will generate hyper-inflation. Not! Zimbabwe is the demonstration of the folly of a fiat monetary system. Not! Zimbabwe is an African country with a dysfunctional government. Yes!...Now at the risk of repeating myself a million times, this is the macroeconomic sequence that defines responsible fiscal policy practice. This is basic macroeconomics and the debt-deficit-hyperinflation hyperventilating neo-liberal terrorists seem unable to grasp it: [Mitchell summarizes modern monetary theory (MMT)]...So a responsible government will attempt to maintain spending levels sufficient to fill any saving....

Billy Blog; blogs Archive; hyperventilators 101; Zimbabwe.

Mon 2010-04-19 15:42 EDT

Why The World Is Headed For A Balance Sheet Recession - Credit Writedowns

...[Richard Koo] believes the US, Europe and China are headed for a period of incredibly weak consumer spending not unlike what Japan has been through...what US policymakers are trying to do is to both increase asset prices and consumption in order to short circuit the D-Process i.e. prevent the debt deflation that results from deleveraging and asset and price deflation. Almost all measures taken to date are attempts to prop up asset prices (artificially I believe)...we are in for a debt restructuring across Europe, and in America and China because of the accumulation of debt and malinvestment. Policy makers are reverting to the same old game of asset price inflation to stave this off...It leaves us with chronically weak consumption trends acutely exacerbated by the demographic trends of an aging populace...these dynamics are particularly problematic for Europe because of the strictures imposed by the Euro, the large public sector debt-to-GDP ratios and the advance age of the populace. The Greek problem is the tip of the iceberg and the Europeans are seriously deluded if they think their troubles are over...

Balance Sheet Recessions; credit writedowns; Head; world.

zero hedge Wed 2010-04-07 18:31 EDT

Quantitative Easing And Its Effect On Inflation And The Economy

Sancho Ponzi

The Fed's response to the financial meltdown was twofold: Interest rates were effectively set at zero, and the monetary base was increased 140%. While it is not known exactly what formula the Fed used to arrive at the 140% increase of the monetary base, the expansion from roughly 800 billion to 2.2 trillion roughly correlates with the asset backed securities since purchased by the Fed...Rather than an attempt to spur bank lending, Bernanke, like Paulson before him, employed QE strictly to offload toxic assets from bank balance sheets in an attempt to make banks and other financial institutions whole, with the effect of preserving historically inflated asset valuations for residential real estate. As a result, massive increases in federal spending have been required to offset the erosion of private sector GDP...

economy; effect; Inflation; Quantitative Easing; Zero Hedge.

zero hedge Mon 2010-04-05 15:14 EDT

Former Goldman Commodities Research Analyst Confirms LMBA OTC Gold Market Is "Paper Gold" Ponzi

When we put up a link to last week's CFTC hearing webcast little did we know that it would end up being the veritable (physical) gold mine (no pun intended) of information about what really transpires in the commodities market. First, we obtained direct evidence from Andrew Maguire (who may or may not have been the target of an attempt at "bodily harm" as reported yesterday) of extensive manipulation in the silver market. Today, Adrian Douglas, director of GATA, adds to the mountain of evidence that the commodities market, and the CFTC, stand behind what is potentially the biggest market manipulation scheme in the history of capital markets (we are assuming for the time being that all allegations of the Fed manipulating the broader equity and credit markets are completely baseless). Using the testimony of a clueless Jeffrey Christian, formerly a staffer at the Commodities Research Group in the Goldman Sachs Investment Research Department and now head and founder of the CPM Group, Douglas confirms that the "LBMA trades over 100 times the amount of gold it actually has to back the trades."

Goldman Commodities Research Analyst Confirms LMBA OTC Gold Market; paper gold; Ponzi; Zero Hedge.

Jesse's Café Américain Tue 2010-03-09 17:47 EST

Iceland Voters Reject Bank Bailouts in Crushing Electoral Defeat; Neo-Liberalism In Context

Jesse

...Iceland is a victim of the neo-liberal economic deregulation of the 1990's, in which a few bankers can buy the government, and rack up enormous profits for themselves in Ponzi like leverage, and then attempt to socialize the debt back to the people when their schemes collapse...

context; crushing electoral defeat; Iceland Voters Reject Bank Bailouts; Jesse's Café Américain; neo-liberalism.

China Financial Markets Thu 2010-03-04 08:47 EST

Stuck in neutral -- what Japan's rebalancing can teach us

Michael Pettis

...A few days ago I read a good article (``Stuck on Neutral'') about Japan [from] the Economist...about Japan's post-1989 rebalancing, ...discusses why, in spite of every attempt, Japan has not been able supposedly to rebalance the economy and achieve any real growth during the two lost decades after 1990. Private consumption never took off to drive economic growth...After many years of excess investment driving growth, Japan's rebalancing process, which occurred after corporate, bank and government debt levels prevented the investment party from continuing, locked the country into many years of slow growth because it had to grind through years of debt-fueled overinvestment...it doesn't matter what individual policies we take to boost consumption if these polices don't in the aggregate represent a real transfer of income to the household sector, as they did not in Japan...Japan's experience suggests one of the risks China faces...Chinese household consumption will undoubtedly rise as a share of Chinese GDP over the next decade or two, but the process nonetheless can be disappointing for growth. It depends on lots of other moving parts, most importantly perhaps the change in investment and the speed with which income is transferred to households. And the change in investment might depend on debt capacity constraints and the extent of earlier overinvestment.

China Financial Markets; Japan's rebalancing; neutral; stuck; teach.

Sun 2010-02-28 13:27 EST

Janet Tavakoli: Washington Abandons Greece: Beware of Geeks Bearing Grifts

Janet Tavakoli

The European Union (EU) is shocked--shocked I tell you!--that Greece used financial engineering to qualify for admission. Exactly how did they think that weaker countries managed to meet the requirements?...A few years ago, Greece engaged in derivatives transactions which essentially gave it a disguised loan, a gift from geeks. Greece may or may not have had plans to invest the money to create national wealth instead of say, blowing it all on national bling. Either way, Greece used its national credit card in a futile attempt to keep up with the EU Joneses...Today, rumors are that crony capitalists are using derivatives to profit from Greece's misery. There are allegations that investment banks and hedge funds used their knowledge of Greece's hidden debt to drive up its borrowing cost and drive down the Euro. Then these speculators reversed their positions, when they had advance information of a potential bailout for Greece. Other rumors suggest customized trades on the sovereign credit derivatives index also exploited Greece's problems. Still other rumors point to a campaign to manipulate Greek debt prices and knock down the Euro.

Beware; Geeks Bearing Grifts; Janet Tavakoli; Washington Abandons Greece.

Tue 2010-01-12 23:32 EST

Dr. Edwin Vieira, Jr. on the Failure of the Public Sector, the Coming Military Crackdown and What Can Be Done to Stop It

...The foremost problem-because it is the source of, or contributes significantly to, almost every economic difficulty now plaguing this country-is the inherent and ineradicable instability of the present monetary and banking systems centered around the Federal Reserve System. The second problem derives from the first. It is the ever-accelerating development of a first-class para-militarized police-state apparatus centered around the United States Department of Homeland Security, with its tentacles reaching down into every police force throughout the States and localities. Fundamentally, this apparatus is not, and never was, designed to deal with international "terrorism". If that were its goal, its first task would be absolutely to secure the southern border of the United States, which it has never seriously attempted to do. Rather, it is being set up to deal with what the political-cum-financial Establishment anticipates (and I believe rightly so) will be massive social and political unrest bordering on chaos throughout America when the monetary and banking systems finally implode in the not-so-distant future-surely in hyperinflation, and probably in hyperinflation coupled with a gut-wrenching depression. Of these two problems, the second is actually the more dangerous...

Coming Military Crackdown; Dr. Edwin Vieira; failure; Jr; public sector; stop.

Unqualified Reservations Fri 2009-12-18 10:03 EST

Expiring liquidity facilities: bad plan, Stan

Mencius Moldbug

I predict: serious financial disturbances will occur on or before February 1, 2010. Or soon thereafter...I also have a serious - ie, verifiable - prediction. I predict that before the end of 2010, probably well before the end of 2010, possibly even before the beginning of 2010, the Fed will be forced to renew these facilities or others like them. In other words, I predict that its attempt to kick the liquidity junk will not succeed. In the end, I believe all these "temporary" facilities will become substantively permanent - just like the original LF, deposit insurance.

Bad plans; Expiring liquidity facilities; Stan; Unqualified Reservations.

Mish's Global Economic Trend Analysis Wed 2009-11-25 12:05 EST

What Is Inflation and How Does One Measure It?

Michael Shedlock

...Inflation is a net expansion of money supply and credit, where credit is marked to market. Deflation is the opposite: a net contraction of money supply and credit, where credit is marked to market...Credit (and credit problems) dwarf monetary concerns at the present...I still expect the US to slip in and out of deflation and recession for years to come just as happened in Japan...banks aren't lending, consumer credit is contracting, credit writeoffs are likely to exceed monetary printing, and symptoms like treasury yields are in generally in agreement...To bail out the banks' poor bets on Dot-Com companies and Latin America in 2001-2002, Greenspan purposely ignited a credit bubble that led to the mother of all housing crashes. In response to the housing bust, the Fed refused to let failed banks go out of business and is attempting to force another credit bubble...However, this is the end of the line. Housing was the bubble of last resort, nothing can come close to the number of jobs created by the global housing bubble. Further attempts to reflate will do nothing but create a currency crisis, crash the economy, and add to future liabilities that cannot be paid back.

Inflation; measured; Mish's Global Economic Trend Analysis.

naked capitalism Thu 2009-11-19 10:33 EST

Guest Post: Herding the Sheep

George Washington of Washington's Blog

Financial insider and commentator Yves Smith wrote an essay last week entitled ``MSM Reporting as Propaganda'' arguing that the government has been using propaganda to make people think that things are getting better, no one is angry, and -- therefore -- no one should get upset...Is Smith right? And even if she is, isn't ``propaganda'' too strong a word?...Even if true, propaganda is too strong a word for attempts to convince people that important issues are boring, that no one else is angry about them, and that everything is normal. Perhaps ``herding the wayward sheep'' would be better . . .

Guest Post; Herd; naked capitalism; sheep.

Mish's Global Economic Trend Analysis Tue 2009-11-03 20:30 EST

Is Debt-Deflation Just Beginning?

Michael Shedlock

You should not be afraid of deflation. You should be afraid of policies attempting to fight it. Deflation (rather price deflation) is actually the natural state of affairs. As productivity increases, more goods and services are produced relative to the population and prices would therefore be expected to drop. It is the Fed, along with misguided Keynesian and Monetarist economists who think falling prices are a bad thing. Who amongst us does not like falling prices (except of course on things we own like houses, but even then who is not sick of higher property taxes that result)? The reality is inflation benefits those with first access to money. Guess who that is? The answer is easy: banks, government, and the already wealthy. Inflation is actually a tax on the middle class and the poor who get access to money last. During the housing bubble, by the time the poor could get access to to money easily, it was far too late to buy. Given that inflation benefits those with first access to money, any targeted inflation at all is morally wrong.

Debt-Deflation Just Beginning; Mish's Global Economic Trend Analysis.

Jesse's Café Américain Tue 2009-11-03 20:12 EST

Nine More Banks Fail with CIT on Deck for a Packaged Bankruptcy While Gold Shines

Jesse

...The current state of economics is most remarkable for its arrogant complacency in the face of two failed bubbles, a near systemic failure, a pseudo-scientific perversion of mathematics exposed, and an incredible capacity for spin and self-delusion. The people wish to believe, and Wall Street and the government economists are all too willing to tell them whatever they wish to hear, for a variety of motives. And there is an army of salesmen and lobbyists and econo-whores touting this fraud around the clock...There are good reasons for this failure of American "monetary capitalism," and it has to do with an oversized financial sector and a surplus of white collar crime that both distort and drain the productive economy. The current approach is to pump money into a failed system without attempting to reform it, to fix its fundamental flaws, to make an honest accounting of the results. The result are serial bubbles and the foundation for long duration zombie economy with a grinding stagflation that may morph into a currency crisis and the fall and reissuance of the dollar, as we saw with the Russian rouble. It will stretch the political fabric of the US to the breaking point. This is how oligarchies and their empires fall.

banks failed; CIT; deck; gold shines; Jesse's Café Américain; packaged bankruptcies.

ClubOrlov Wed 2009-08-26 14:22 EDT

That Bastion of American Socialism...the United States military

kollapsnik

Over the past few months the American mainstream chatter has experienced a sudden spike in the gratuitous use of the term "Socialist." It was prompted by the attempts of the federal government to resuscitate insolvent financial institutions. These attempts included offers of guarantees to their clients, injections of large sums of borrowed public money, and granting them access to almost-free credit that was magically summoned ex nihilo by the Federal Reserve. To some observers, these attempts looked like an emergency nationalization of the finance sector was underway, prompting them to cry "Socialism!" Their cries were not as strident as one would expect, bereft of the usual disdain that normally accompanies the use of this term. Rather, it was proffered with a wan smile, because the commentators could find nothing... ``Since the end of the Civil War, Americans have become accustomed to thinking of war as something that happens elsewhere, to other people. Thus, the news that the US is bombing this or that land, for no adequate reason, killing and maiming numerous civilians, produces in us neither the normal human reaction of revulsion, nausea and disgust, nor the conviction that we must take the fight to our own monstrous leaders, lest we too become monsters. Life under domestic military occupation might bring home some welcome realizations, and start Americans down the long road of atoning for the sins of their forefathers, who have run roughshod over much of the rest of the planet for far too long.''

American social; bastion; ClubOrlov; United States military.

Thu 2009-02-26 00:00 EST

Daily Kos: State of the Nation

Chocolate Covered Cotton, by billmon; ``taking a look at how the stinking heap was created''; securitized lending morphing to fatal innovation, collateralized obligations; ``full nationalization still would be less expensive and messy than creating the kind of Potemkin markets the Geither plan seems to envision''; ``ncreasingly desperate attempts to maintain a phony façade of free markets and private enterprise, in an economy now utterly dependent on the federal safety net''

Daily Kos; nation; state.

Tue 2008-10-07 00:00 EDT

Mish's Global Economic Trend Analysis: Pushing on a String In Academic Wonderland

``The credit markets are choking on credit, yet Bernanke is attempting to force more credit down everyone's throats''

Academic Wonderland; Mish's Global Economic Trend Analysis; push; string.

Mon 2008-01-07 00:00 EST

Money Matters: Yen Rises, Nikkei Falls

by Elaine Meinel Supkis; "Thus is the inglorious end to globalization: the simultaneous attempt at kamikaze-inspired crashing of currencies into the flight decks of trade rivals."; Japanese use of forex reserves to weaken the yen caused the Asian currency crisis

money matters; Nikkei falls; yen Rises.

Thu 2007-10-18 00:00 EDT

Mish's Global Economic Trend Analysis: Super SIVs - A Fraudulent Attempt at Concealment

MLEC critique

concealed; fraudulent attempts; Mish's Global Economic Trend Analysis; Super SIV.