Fri 2010-10-08 21:45 EDT

NO. THERE'S NO LIFE AT MERS

Damian ``DinSFLA'' Figueroa

...MERS was founded by the mortgage industry. MERS tracks ``changes'' in the ownership of the beneficial and servicing interests of mortgage loans as they are bought and sold among MERS members or others. Simultaneously, MERS acts as the ``mortgagee'' of record in a ``nominee'' capacity (a form of agency) for the beneficial owners of these loans...More than 60 percent of all newly-originated mortgages are registered in MERS. Its mission is to register every mortgage loan in the United States on the MERS System. Since 1997, more than 65 million home mortgages have been assigned a Mortgage Identification Number (MIN) and have been registered on the MERS System...Since MERS is a privately owned data system and not public, all mortgages and assignments must be recorded in order to perfect a lien. Since they failed to record assignments when these loans often traded ownership several times before any assignment was created, the legal issue is apparent. MERS may have destroyed the public land records by breaking the chain of title to millions of homes...

Life; MER; s.

zero hedge - on a long enough timeline, the survival rate for everyone drops to zero Wed 2010-08-25 10:47 EDT

Illinois Teachers' Retirement System Enters The Death Spiral: AIG Wannabe's Go-For-Broke Strategy Fails As Pension Fund Begins Liquidations

Two few months ago we disclosed how the Illinois Teachers' Retirement System (TRS) was doing all it can to become the next AIG. In addition to, or maybe precisely due to, its deplorable fundamental condition, which can be summarized as being 61% underfunded on its $33.7 billion in assets, with a performance record of down $4.4 billion in 2009 and 5% in 2008, the fund, courtesy of a detailed analysis by Alexandra Harris of the Medill Journalism school at Northwestern, was found to be on its way to trying to become a veritable self-made TBTF: as was described then, "TRS is largely on the risky side of the contracts, selling and writing OTC derivatives, including credit default swaps,..."

AIG Wannabe's Go; Broke Strategy Fails; Death Spiral; dropped; Illinois teacher; long; Pension Fund Begins Liquidations; Retirement System Enters; survival rate; Timeline; zero; Zero Hedge.

naked capitalism Sun 2010-08-22 09:32 EDT

Auerback: News Flash-- China Reduces US Treasury Holdings, World Does Not Come To an End

Marshall Auerback

In a post titled ``China Cuts US Treasury Holdings By Record Amount,'' Mike Norman makes the excellent observation that while China is moving its money out of Treasuries, interest rates are hitting record lows. In other words, the sky still isn't falling. So, Mike wonders, ``Where is the Debt/Doomsday crowd?'' He rightly concludes: ``They're nowhere to be found because they can't explain this. This is a `gut punch' to them. Their whole theory is out the window. They just don't understand or don't want to understand, that interest rates are set by the Fed...PERIOD!!!''...Also of note today: Tokyo's Nikkei QUICK News reports that the #309 10-year Japanese benchmark government bond, the current benchmark, traded to a yield of 0.920% Tuesday morning, down 2.5 basis points from yesterday's close. This is the lowest yield since August 13, 2003. This, from a country with a public debt-to-GDP ratio of 210%!...These are facts. Inconvenient for those who like to perpetuate the lie that the US or Japan faces imminent national insolvency as a means of justifying their almost daily attacks on proactive fiscal policy...

Auerback; China reducing; comes; ending; naked capitalism; News Flash; Treasury holds; world.

Sat 2010-08-07 19:56 EDT

Why founding a three-person startup with zero revenue is better than working for Goldman Sachs. | AdGrok

I joined Goldman Sachs in 2005, after five flailing years in a physics Ph.D. program at Berkeley...I was a pricing quant on the Goldman Sachs corporate credit trading desk...Giving sophisticated models and fast computers to traders is like giving handguns and tequila to teenage boys. Only complete mayhem can result (and as we saw recently, complete mayhem did result)....The quants were there to make sure the guns were loaded, but also to make sure the traders didn't shoot themselves in the foot...

AdGrok; better; Found; Goldman Sachs; person startup; working; zero revenue.

Wed 2010-08-04 20:48 EDT

Janet Tavakoli: Stranguflation: Deflation and Inflation Where it Hurts America Most

Janet Tavakoli

The U.S. is suffering from high unemployment combined with too much consumer debt in a weak economy...our bloated financial sector has been sucking the life-blood out of the U.S. economy for years, and recent decisions insure it will continue to feed off taxpayers, while the host economy struggles for life...The bailouts were a perversion of capitalism and the principles upon which The Republic was founded. This was the result of influential interested parties reaching into the U.S. Treasury with no accountability. Capitalism doesn't call for bailouts, instead investors take losses. Shareholders in failed financial institutions should have been wiped out, debt holders would have had to accept discounts combined with debt for equity swaps, and financial institutions would have then been recapitalized without taxpayers footing the bill. Instead banks lobbied for relaxed accounting and ineffective "financial reform." No one, including bank managers, can tell how much capital is truly needed, and taxpayers' ongoing heavy subsidies give these financial institutions the appearance of stability.

deflation; hurting America; Inflation; Janet Tavakoli; Stranguflation.

Tue 2010-08-03 14:34 EDT

Rajiv Sethi: The Economics of Hyman Minsky [2009-12-03]

There has been a resurgence of interest in the economic writings of Hyman Minsky over the past few years, and for good reason...Minsky's theoretical framework combines a cash-flow approach to investment with a theory of financial instability...expectations of financial tranquility are self-falsifying. Stability, as Minsky liked to put it, is itself destabilizing...An essential feature of Minsky's financial instability hypothesis is that a long period of sustained stability gives rise to changes in financial practices which are not conducive to the persistence of stable growth...A sustained period of stability gives rise to optimistic expectations and a rise in speculative financing...if a large number of investments which are prompted by the availability of speculative finance are found to be inept, so that immediate cash flows are significantly lower than expected, then the need for short-term refinancing becomes acute while at the same time banks are less willing to roll over existing debt. A sharp rise in short-term interest rates occurs which can lead to present value reversals, a rush towards liquidity, a plunge in the prices of illiquid assets, both real and financial, and a corresponding drop in new investments...described as a credit crunch, a state of financial distress, or a financial crisis...

2009-12-03; economic; Hyman Minsky; Rajiv Sethi.

Credit Writedowns Thu 2010-07-29 17:00 EDT

James Montier does MMT

It seems that a lot of analysts have caught onto the MMT framework popularized by the late economist Wynne Godley and made topical in this downturn by Rob Parenteau of the Richebacher Letter...Now, it's James Montier's turn...He concluded: ``There is a danger the proposed fiscal tightening in the eurozone will lead to further deflation and economic collapse. The Spanish government faces what Mr Parenteau calls ``the paradox of public thrift'': the less it borrows, the more it will end up owing. It is unfortunate that it has taken a severe global recession to vindicate Prof Godley's macroeconomic analysis. If economic policymakers start to pay more attention to financial balances, they might forestall the next crisis. European politicians might also understand the potentially dreadful consequences of their new-found frugality.'' ...A downward shift in the government's net fiscal deficit means a downward shift in the private sector's net fiscal surplus -- totally doable except for this little thing called debt in places like Spain, the US, Ireland or the UK. Moreover, the savings rate is already incredibly low in countries like the U.S. and the U.K. If the government tries to pare its fiscal deficit, the result will not be less private sector savings to meet the lower public sector deficit, but rather lower aggregate demand and a larger deficit -- that's the paradox of thrift...

credit writedowns; James Montier; MMT.

zero hedge Wed 2010-05-19 11:37 EDT

Guest Post: Goldman's CDOs Had Nothing to Do With the Real Estate Bubble

David Fiderer

If Goldman Sachs wanted to reduce its exposure to subprime mortgage investments, why didn't it simply sell the assets it owned? Two reasons: First, those large sales would have sent a signal that something was terribly, terribly wrong, and thereby pushed prices down further. That's how supply and demand normally works. Second, Goldman professed to be market maker, which uses its trading book to instill confidence. It ostensibly bought, sold and inventoried mortgage securities to provide stability and liquidity to the marketplace. Of course, we now know that such market confidence was entirely misplaced. To sidestep these issues, Goldman and other major banks found a solution that subverted the laws of supply and demand, and escaped the price discovery of a transparent marketplace. They fabricated synthetic CDOs, such as Abacus 2007 AC-1. These toxic assets, invented out of thin air, made the meltdown worse than it otherwise would have been...

Goldman's CDOs; Guest Post; real estate bubble; Zero Hedge.

Jesse's Café Américain Sun 2010-05-09 08:30 EDT

Guest Post: The Perils of Credit Money Systems Managed by Private Corporations

Jesse

...The paper system being founded on public confidence and having of itself no intrinsic value, is liable to great and sudden fluctuations, thereby rendering property insecure and the wages of labor unsteady and uncertain.The corporations which create the paper money cannot be relied upon to keep the circulating medium uniform in amount. In times of prosperity, when confidence is high, they are tempted by the prospect of gain or by the influence of those who hope to profit by it to extend their issues of paper beyond the bounds of discretion and the reasonable demands of business. And when these issues have been pushed on from day to day until the public confidence is at length shaken, then a reaction takes place, and they immediately withdraw the credits they have given; suddenly curtail their issues; and produce an unexpected and ruinous contraction of the circulating medium which is felt by the whole community. The banks, by this means, save themselves, and the mischievous consequences of their imprudence or cupidity are visited upon the public. Nor does the evil stop here. These ebbs and flows in the currency and these indiscreet extensions of credit naturally engender a spirit of speculation injurious to the habits and character of the people...Recent events have proved that the paper money system of this country may be used as an engine to undermine your free institutions; and that those who desire to engross all power in the hands of the few and to govern by corruption or force are aware of its power and prepared to employ it... Andrew Jackson, Farewell Address, March 4, 1837

Credit Money Systems Managed; Guest Post; Jesse's Café Américain; peril; private corporations.

Jesse's Café Américain Wed 2010-04-07 19:06 EDT

Banks Come Back For Another Bailout in Ireland While the US 'Manages Perceptions'

Jesse

The whole notion of bank bailouts is a tremendous injustice when not accompanied by personal bankruptcy and civil and criminal prosecution for those banks managers who created them and are found guilty of fraud. In addition, the owners of the banks, whether through debt or shares, should be wiped out and the bank placed in a proper receivership while its books are sorted out. The US is an accounting mirage. The notion that it will make money from its stake in Citi is a sleight of hand. The enormous subsidies to the banks both in terms of direct payments, indirect payments through entities like AIG, and subsidies such as the erosion of the currency and the deterioration of the real economy, will never be repaid. ...the facts seem to indicate that the US is still pursuing a policy of managed perceptions, accounting deceptions, and old fashioned insider dealing and other forms of corruption that always accompany government, but reach a feverish pitch in times of crisis. It is the establishment's form of looting.

Bailout; banking comes; Ireland; Jesse's Café Américain; managing perception.

Mon 2010-04-05 15:16 EDT

Eleven lessons from Iceland

Thorvaldur Gylfason

Iceland's economic crisis has destroyed wealth equivalent to about seven times its GDP. The damage inflicted on foreign creditors, investors, and depositors amounts to about five times its GDP, while the asset losses thrust upon Icelandic residents account for the rest. These figures do not include the cost of Iceland's increased indebtedness. Iceland's gross public debt, domestic and foreign, is estimated to increase by more than 100% of GDP as a result of the collapse of the banks, or from 29% of GDP at the end of 2007 to 136% by the end of 2010. In 2009, the government spent almost as much on interest payments as on healthcare and social insurance, the single largest public expenditure item. The damage due to Iceland's tarnished reputation is harder to assess...the absence of checks and balances that had led to an unbalanced division of power between the strong executive branch and the much weaker legislative and judicial branches came to haunt the country when unscrupulous politicians put the new banks in the hands of reckless owners who then found themselves in a position to expand their balance sheets as if there were no tomorrow -- and no supervision. Politicians who privatise banks by delivering them on a silver plate to their friends are not very likely to subject the banks to stringent supervision or other such inconveniences...What can be done to reduce the likelihood of a repeat performance -- in Iceland and elsewhere?

Iceland; Lessons.

Mon 2010-03-01 09:20 EST

AlterNet: Hey, America: It's Time to Redefine the "Good Life"; excerpted from the The Spirit Level: Why Greater Equality Makes Societies Stronger

Richard Wilkinson and Kate Pickett

...We are social epidemiologists; people who usually spend their time trying to understand how social factors affect population health. Our work has focused on different aspects of wellbeing in rich market democracies. Rather than looking at subjective measures, such as happiness, we have looked at objective measures, such as life expectancy, homicide rates, drug abuse, child well-being, levels of trust, involvement in community life, mental illness, teenage birth rates, children's math and literacy scores, and the proportion of the population in prison. Instead of finding that each society does well on some of these outcomes and badly on others, we found that countries tend to be consistently good or bad performers, across the board. If a country has high life expectancy, it also tends to have stronger community life, a smaller proportion of its population behind bars, better mental health, fewer drug problems and children doing better in school. The differences in the performance of more and less equal countries are very large. Rather than things being just a bit worse in more unequal countries, they are very much worse. More unequal countries have three times the rates of violence, of infant mortality and of mental illness. Their teenage birth rates are six times as high, and rates of imprisonment are eight times higher...

AlterNet; America; excerpts; good life; Greater Equality Makes Societies Stronger; redefines; Spirit Level; Time.

naked capitalism Thu 2010-02-25 19:45 EST

The U.S. opts for the bailout hustle over the Swedish banking crisis response

Edward Harrison of Credit Writedowns

...my post: The Swedish banking crisis response -- a model for the future? from August 2008 which describes a piece by former Riksbanks head Urban Bäckström from way back in 1997! This is the number one entry on the Internet when you search for `Swedish banking crisis.' Now, this was before the Lehman debacle. And I anticipated massive credit writedowns for the global financial system which would precipitate a major financial crisis. Of course, this is what happened. But, pre-Lehman, I was looking for a banking crisis response model which would prove effective. I looked at the Japanese model and found it wanting. The Nordic model is more promising... Now, the information about these financial crisis strategies was readily available in the public domain for years. I mean, my blog post was based on a 1997 article for goodness sake. Clearly, the Obama people didn't want this solution because they are captured by the financial services industry. That's why the U.S. is going the Japanese route of bailouts and accounting dodges.

Bailout Hustle; naked capitalism; Swedish banking crisis response; U.S. Opts.

Fri 2010-02-12 21:32 EST

Priceless: How The Federal Reserve Bought The Economics Profession

Ryan Grim

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found. This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too...

economics profession; Federal Reserve bought; priceless.

zero hedge Wed 2009-11-25 12:13 EST

Two Opposing Amendments Emerge That Seek To Either Perpetuate The Fed's Secrecy, Or Overturn It

As the time to make or break the Fiat Money Overlords (no, not Chrysler), aka the Successor to the Second Bank of The United States which President Andrew Jackson managed to disassemble in 1832, yet which came back with a vengeance in 1913 under the guise of the Federal Reserve, approaches, two independent amendments emerged today: one drafted by Fed transparency proponents Ron Paul and Alan Grayson (found here) and one by Bank of America and Citigroup's favorite Congressman, North Carolina democrat Mel Watt (found here). As a reminder, here is a list of the Congressman's top contributors and sources of money in 2007-2008, which may explain some of his motivations: #1 Bank of America;#2 Wachovia Corp;#3 American Express;#4 American Bankers Assn.

Fed's Secrecy; Opposing Amendments Emerge; overturn; perpetual; seek; Zero Hedge.

naked capitalism Tue 2009-10-27 12:37 EDT

Why is Zero Hedge claiming the Fed is intervening in equities markets?

Edward Harrison of Credit Writedowns

I just came across a post on Zero Hedge called ``An Overview Of The Fed's Intervention In Equity Markets Via The Primary Dealer Credit Facility.'' Now, that's a mouthful. As far as I can discern, the post's purpose is to expose alleged equities market manipulation by the Federal Reserve. However, I found the argument rather conspiratorial. And despite claims of an alleged smoking gun, there is no evidence in the post that that Federal Reserve is manipulating anything except interest rates. And the Fed made clear that that was what it intended to do.

equity markets; Fed; intervening; naked capitalism; Zero Hedge claiming.

Fri 2009-10-23 08:30 EDT

How Moody's sold its ratings - and sold out investors | McClatchy

Kevin G. Hall

As the housing market collapsed in late 2007, Moody's Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression. A McClatchy investigation has found that Moody's punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings. Instead, Moody's promoted executives who headed its "structured finance" division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now: "toxic assets."

Investors; McClatchy; Moody's Sold; rate; SOLD.

Calculated Risk Fri 2009-10-23 08:29 EDT

McClatchy: "How Moody's sold its ratings"

CalculatedRisk

Kevin Hall at McClatchy Newspapers writes: How Moody's sold its ratings -- and sold out investors (ht Atrios) A McClatchy investigation has found that Moody's punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings. Instead, Moody's promoted executives who headed its "structured finance" division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk.

Calculated Risk; McClatchy; Moody's Sold; rate.

Thu 2009-10-01 17:56 EDT

98489 -- Landmark National Bank v. Kesler -- Leben -- Kansas Court of Appeals

J. J. LEBEN

Landmark National Bank brought a suit to foreclose its mortgage against Boyd Kesler and joined Millennia Mortgage Corp. as a defendant because a second mortgage had been filed of record for a loan between Kesler and Millennia. In a foreclosure suit, it is normal practice to name as defendants all parties who may claim a lien against the property. When neither Kesler nor Millennia responded to the suit, the district court gave Landmark a default judgment, entered a journal entry foreclosing Landmark's mortgage, and ordered the property sold so that sale proceeds could be applied to pay Landmark's mortgage. But Millennia apparently had sold its mortgage to another party and no longer had interest in the property by this time. Sovereign Bank filed a motion to set aside the judgment and asserted that it now held the title to Kesler's obligation to pay the debt to Millennia. And another party, Mortgage Electronic Registration Systems, Inc. ("MERS"), also filed a motion to set aside the judgment and asserted that it held legal title to the mortgage, originally on behalf of Millennia and later on behalf of Sovereign. Both Sovereign and MERS claim that MERS was a necessary party to the foreclosure lawsuit and that the judgment must be set aside because MERS wasn't included on the foreclosure suit as a defendant. The district court refused to set aside its judgment. The court found that MERS was not a necessary party and that Sovereign had not sufficiently demonstrated its interest in the property to justify setting aside the foreclosure. ...The district court properly determined that MERS was not a contingently necessary party in Landmark's foreclosure action. The district court also was well within its discretion in denying motions from MERS and Sovereign to intervene after a foreclosure judgment had been entered and the foreclosed property had been sold. The judgment of the district court is affirmed.

98489; appealing; Kansas court; Kesler; Landmark National Bank; leben.

Mish's Global Economic Trend Analysis Mon 2009-09-21 14:09 EDT

Is Pent-Up Inflation From Fed Printing Waiting On Deck?

Michael Shedlock

Inquiring minds are wondering about the possibility of "pent-up" inflation from the massive expansion money supply by the Fed...Hardly. A funny thing happened to the inflation theory: Banks aren't lending and proof can be found in excess reserves at member banks. Because of rising credit card defaults, commercial real estate defaults, foreclosures, walk-aways, and other bad debts, banks need those reserves to cover future losses...banks are insolvent, unable or unwilling to lend. Moreover, tapped out consumers are unable or unwilling to borrow.

deck; Fed Printing Waiting; Inflation; Mish's Global Economic Trend Analysis; pent.

The Full Feed from HuffingtonPost.com Thu 2009-09-17 10:06 EDT

Priceless: How The Federal Reserve Bought The Economics Profession

Ryan Grim

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found. This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists.

com; economics profession; Federal Reserve bought; full Feeds; HuffingtonPost; priceless.

naked capitalism Sun 2009-09-13 13:59 EDT

Why Economists Rarely Say Bad Things About the Fed

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found...DownSouth comments ``The collusion between state and academe is the post-Enlightenment version of the old alliance that existed between church and state in the Ancien Régime. Academe currently fulfills the same function that the church did before, and that is to give the state the imprimatur of moral and intellectual legitimacy.''

Economists Rarely Say Bad Things; Fed; naked capitalism.

Bruce Krasting Fri 2009-09-04 18:31 EDT

Fannie Has .9 Trillion in Troubled Loans - 8K

Bruce Krasting

Fannie Mae's 8k has an interesting slide. It is a look at their questionable assets. The slide is not easy to read. It can be found in the 2009 Second Quarter Supplement, on page 5. The report describes FNM's exposure to problematic classes of mortgages on their book. That total comes to a whopping .9 Trillion. The total book of business is $2.7 Trillion, fully 32% of their book is troubled.

8k; 9 trillion; Bruce Krasting; Fannie; troubled loans.

Fri 2009-01-16 00:00 EST

naked capitalism: Cautionary Tales: Central Bank Liquidity Injections Made Crises Worse in Latin America

Carmine Reinhart and Kenneth Rogoff; ``authorities found it difficult to mop up the liquidity they had created. Rapid growth in money supply stoked serious inflation''

cautionary tale; Central Bank Liquidity Injections Made Crises Worse; Latin America; naked capitalism.

Thu 2009-01-08 00:00 EST

Tom the Dancing Bug | Salon Comics

The original investment scam, courtesy of the Founding Fathers. By Ruben Bolling. Founder's Ponzi

Dancing Bug; Salon Comics; Tom.

Thu 2008-06-26 00:00 EDT

Mish's Global Economic Trend Analysis: Phoenix Commercial Real Estate Financier Files Bankruptcy

CEO Scott Coles found dead

Mish's Global Economic Trend Analysis; Phoenix Commercial Real Estate Financier Files Bankruptcy.

Tue 2007-12-04 00:00 EST

Mish's Global Economic Trend Analysis: Paulson's Plan Is Nothing But Lip Service

anonymous industry insider: "how are rate cuts going to help anything when what the system needs is "more balance sheet," and there's none to be found, and in fact credit continues to contract?"; plan will because underwater buyers should and will walk away

lip services; Mish's Global Economic Trend Analysis; Paulson's Plan.

Thu 2007-11-15 00:00 EST

PRINT THIS | Page Not Found

Money market funds at risk? Bank of America plans a $600 million cushion, by John Waggoner (USA Today); "breaking the buck"

Found; page; print.

Wed 2002-07-03 00:00 EDT

GS: Document Not Found

Goldman Sachs Chairman Hank Paulson Calls For Action To Restore Investor Confidence

documentation; Found; GS.