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.

Mon 2010-08-16 13:54 EDT

Could The US Become Another Ireland? >> The Baseline Scenario

Peter Boone and Simon Johnson

As Greece acts in an intransigent manner, refusing to act decisively despite deep fiscal difficulties, the financial markets look on Ireland all the more favorably. Ireland is seen as the poster child for prudent fiscal adjustment among the weaker eurozone countries...Ireland's perceived ``success'' is partly due to its draconian fiscal cuts...Ireland's difficulties arose because of a massive property boom financed by cheap credit from Irish banks...Today roughly 1/3 of the loans on the balance sheets of banks are non-performing or ``under surveillance''...The government...guaranteed all the liabilities of banks and then began injecting government funds...it is planning to buy the most worthless assets from banks and pay them government bonds in return. Ministers have also promised to recapitalize banks than need more capital. The ultimate result of this exercise is obvious: one way or another, the government will have converted the liabilities of private banks into debts of the sovereign (i.e., Irish taxpayers)...The government is gambling that GDP growth will recover to over 4% per year starting 2012 -- and they still plan further major expenditure cutting and revenue increasing measures each year until 2013...The latest round of bank bailouts (swapping bad debts for government bonds) dramatically exacerbates the fiscal problem...

Baseline Scenario; Becomes; Ireland.

New Deal 2.0 Thu 2010-07-22 15:54 EDT

The Summer(s) of Our Discontent

Marshall Auerback

Virtually every profile on Larry Summers tells us that he is one of the most brilliant economists of his generation...Only Robert Rubin and Alan Greenspan played a more important role than Summers in promoting the deregulation and lax oversight that laid the foundations for the current crisis...the latest FT defense reflects Summers's fundamental lack of understanding of modern money. Contrary to his view, the late 90s surpluses was not the reason for that period's prosperity. The surpluses are what ended the prosperity. And until the public understands this, we should expect no fundamental improvement in economic policymaking from the Obama Administration...he violates one of Abba Lerner's key laws of functional finance: a government's spending and borrowing should be conducted ``with an eye only to the results of these actions on the economy, and not to any established traditional doctrine about what is sound and what is unsound.'' In other words, Lerner believed that the very idea of what good fiscal policy means boils down to what results you can get -- not some arbitrary notion of ``fiscal sustainability''...The government budget surplus meant by identity that the private sector was running a deficit. Households and firms were going ever farther into debt, and they were losing their net wealth of government bonds. Growth was a product of a private debt bubble, which in turn fuelled a stock market and real estate bubble, the collapse of which has created the foundations for today's troubles...

0; discontent; new dealing 2; s; summer.

billy blog Thu 2010-07-15 16:35 EDT

Employment gaps -- a failure of political leadership

Overnight a kind soul (thanks M) sent me the latest Goldman Sachs US Economist Analysis (Issue 10/27, July 9, 2010) written by their chief economist Jan Hatzius...It presents a very interesting analysis of the current situation in the US economy, using the sectoral balances framework, which is often deployed in Modern Monetary Theory (MMT)...some of the top players in the financial markets have a good understanding of the essentials of MMT...he US is likely to have to endure on-going and massive employment gaps (below potential) for years because the US government is failing to exercise leadership. The paper recognises the need for an expansion of fiscal policy of at least 3 per cent of GDP but concludes that the ill-informed US public (about deficits) are allowing the deficit terrorists to bully the politicians into cutting the deficit. The costs of this folly will be enormous...

Billy Blog; employment gap; failure; political leadership.

zero hedge Sat 2010-05-22 13:41 EDT

Albert Edwards: Europe Is On The Edge Of A Deflationary Precipice That Will, Paradoxically, Usher In 20-30% Inflation

A few days ago we pointed out that the latest Japanese GDP deflator came at multi-decade lows, this despite years of printing, pumping and other -ings. Today, Albert Edwards takes the observation of rampant regional deflation and concludes precisely what we have long claimed, that once rampant deflation is finally acknowledged by central bankers everywhere, and they are now running out for time, their only natural response to preserve the system will be to do what Japan has been doing for decades (successfully, they will claim) and respond with the most extreme round of monetization ever seen, "inevitably driving us towards out ultimate destination - 1970's style 20-30% inflation."...

20 30; Albert Edwards; deflationary precipice; edge; Europe; Inflation; paradox; usher; Zero Hedge.

Wed 2010-05-19 11:40 EDT

Community Development Job Guarantee

CofFEE - Centre of Full Employment and Equity

The Centre of Full Employment and Equity has developed a sustainable path to full employment, which it calls the Job Guarantee program. A major focus of our work is on articulating this program - explaining how it works, the urgency of it, and the reasons why it is the only way to achieve full employment with price stability, a combination that has evaded most economies in the last 25 years. Under the Job Guarantee policy, the government continuously absorbs workers displaced from private sector employment. The Job Guarantee employees would be paid the minimum wage, which defines a wage floor for the economy. Government employment and spending automatically increases (decreases) as jobs are lost (gained) in the private sector. The approach generates full employment and price stability. The Job Guarantee wage provides a floor that prevents serious deflation from occurring and defines the private sector wage structure. CofFEE's latest work in this area has been developed into a proposal for a Community Development Job Guarantee (CD-JG) focussing on the long-term unemployed (people who have been unemployed longer than 12 months) and youth unemployed. These two groups have been targeted because of the severe economic and social costs that result as the period of unemployment lengthens, or when unemployment occurs at the beginning of a person's working life...

Community Development Job Guarantee.

zero hedge Thu 2010-05-13 17:50 EDT

Willem Buiter Issues His Most Dire Prediction Yet: Sees "Unprecedented" Fiscal Crises, US Debt Inflation And Fed Monetization

...we were very surprised when we read Willem Buiter's latest Global Economic View (recall that he works for Citi now). In it the strategist for the firm that defines the core of the establishment could not be more bearish. In fact, at first we thought that David Rosenberg had ghost written this...Buiter presents a game theory type analysis, which concludes that the US and other sovereigns will soon be forced into fiscal austerity. Among his critical observations (we recommend a careful read of the entire 68 pages), are that the US is highly polarized, and that the Fed, which is "the least independent of leading central banks" would be willing to implement "inflationary monetisation of public debt and deficits than other central banks." The next step of course would be hyperinflation. And Buiter sees America as the one country the most likely to follow this route. Most troublingly, Buiter predicts that a massive crisis is the only thing that can break the political gridlock in the US in order to fix the broken US fiscal situation...

debt inflated; dire predictions; Fed Monetizing; fiscal crises; see; unprecedented; Willem Buiter Issues; Zero Hedge.

naked capitalism Wed 2010-04-07 19:38 EDT

Have Bloggers ``Won''? And Is That a Bad Thing?

...[MSM difficulties] Richard Kline: ...Most of the MSM is owned by large corporations which abhor any serious questioning of the status quo. Most of the MSM decided a generation ago to pitch their product at the soft middle of the demographic curve; that's `dumb down' to those ow you who need a scorecard. Most of the MSM went to recent journalism school and bought into the idea of false `balancing' which has castrated their editorial opinion in favor of whoever is driving debate by telling the latest Big Lie. Then there is the problem of self-interested 'sources,' hardly new, and manageable when journalists were allowed to have an opinion themselves, but deleterious when they are supposed to be `neutral,' i.e. readily maniplulatible. Then there is the issue that too many journalists have decided to become propagandists for the status quo of the moment, making their reportage the worst kind of bandwagon swillage. Then too, MSM has responded, or rather _not_ responded to the emergence of new kinds of media spreading current information reportage: just when the MSM needs established `quality brand' to fall back on they find that they gutted the brand to fellate large shareholders and the interests of the same.

bad things; bloggers; naked capitalism; won.

Jesse's Café Américain Wed 2010-04-07 19:00 EDT

"How to Corner the Gold Market" By Janet Tavakoli

Jesse

Janet Tavakoli wrote an interesting essay that was just posted over at the Huffington Post called "How to Corner the Gold Market" which can be read in its entirety from her website here...What struck me as odd is that I just wrote a blog piece along similar lines on the same topic today, raising many of the same issues, but that is from the opposite perspective...there is little evidence that anyone is willing to take on the exchanges, even the big players, and try and force a corner or even a squeeze against what they perceive as mispricing, such as Soros and so many other big players did with the British Pound , and most recently other big hedge funds did with mispriced products from the latest bubble in the debt markets, and financial stocks...The piece I wrote today and reference above is about a situation in the precious metals markets which has the potential to become another serious problem for almost the same basic reasons as the debt markets in our most recent financial crisis: excessive leverage concentrated in a few TBTF institutions, lack of transparency, regulatory laxity, and a mispricing of risk...

corner; gold market; Janet Tavakoli; Jesse's Café Américain.

zero hedge Wed 2010-04-07 18:26 EDT

The Latest Gold Fraud Bombshell: Canada's Only Bullion Bank Gold Vault Is Practically Empty

Continuing on the trail of exposing what is rapidly becoming one of the largest frauds in commodity markets history is the most recent interview by Eric King with GATA's Adrian Douglas, Harvey Orgen (who recently testified before the CFTC hearing) and his son, Lenny, in which the two discuss their visit to the only bullion bank vault in Canada, that of ScotiaMocatta, located at 40 King Street West in Toronto, and find the vault is practically empty..."The game ends when the people who own all these paper obligations say enough and take physical delivery, and that's when the mess will occur."...It is funny that central bankers thought they could take the ponzi mentality of infinite dilution of all assets coupled with infinite debt issuance, as they have done to fiat money, and apply it to gold, in essence piling leverage upon leverage. They underestimated gold holders' willingness to be diluted into perpetuity - when the realization that gold owned is just 1% of what is physically deliverable, you will see the biggest bank run in history.

Bullion Bank Gold Vault; Canada's; Latest Gold Fraud Bombshell; practically empty; Zero Hedge.

The Money Game Tue 2010-03-09 17:38 EST

Speculators Bid Up AMBAC CDS, As Fears Of A Municipal Default Wave Proliferate

Here's the latest from DebtWire: The CDS market is signaling increased fears that Ambac operating company Ambac Assurance will enter receivership within the year as fear of a municipal bond crisis spreads...

AMBAC CDS; fears; Money game; Municipal Default Wave Proliferate; Speculative bid.

The Economic Populist - Speak Your Mind 2 Cents at a Time Sun 2010-02-07 18:20 EST

Is Residential Real Estate a Ticking Time Bomb?

...First is the latest SIGTARP report saying the Government has become the mortgage market with U.S. taxpayers shouldering the risk. From the SIGTARP report we have a 100% government mortgage market at this point...Fannie and Freddie now have an unlimited bailout and it is estimated they have lost $400 billion dollars. The plan is to purchase $1.25 trillion mortgage backed securities from these two GSEs until the end of March...The number of homeowners who are strategically walking away from their mortgages is up to 10% this year...All of the above free money, the government pouring in trillions of dollars to prop up the housing market. Yet while price declines have slowed, prices are still declining and the above simply cannot go on forever. In fact one thing isn't going on forever. The Fed will stop buying MBSes at the end of March, 2010. So, when our government created illusion does pop, do we then have the real housing bubble implosion?

economic populist; Mind 2 Cents; residential real estate; speaking; ticking time bomb; Time.

zero hedge Fri 2010-01-29 16:36 EST

Guest Post: Government Spending, Bank Lending And Inflation

Submitted by Kletus Klump In his latest weekly commentary, Inflation Myth and Reality, Dr. John Hussman makes the argument that changes-in federal government spending dictate the future path of inflation. As shown below, his data set covers the period from 1951 through 2008 and there appears to be a decent correlation. However, his data set is incomplete in 2 respects: 1. It does not include the Great Depression years and 2. It does not include data on bank lending. The relationship between government spending and future inflation was vastly different during the years of 1932 to 1941. The correlation between the 2 series for this time period is negative 0.25. The factor causing this is change in mortgage-loan growth...fears of government-spending-induced extended inflation in terms of time and magnitude are not a concern until the lending mechanism improves.

bank lending; government spending; Guest Post; Inflation; Zero Hedge.

Wed 2009-12-16 15:38 EST

Gulf petro-powers to launch currency in latest threat to dollar hegemony - Telegraph

By Ambrose Evans-Pritchard

The Arab states of the Gulf region have agreed to launch a single currency modelled on the euro, hoping to blaze a trail towards a pan-Arab monetary union swelling to the ancient borders of the Ummayad Caliphate...``The US dollar has failed. We need to delink,'' said Nahed Taher, chief executive of Bahrain's Gulf One Investment Bank.

dollar hegemony; Gulf petro-powers; latest threat; launching currency; Telegraph.

naked capitalism Sun 2009-12-13 09:07 EST

Alan Grayson Asks Bernanke for Answers in Latest Retrade of AIG Deal

The ongoing tempest in a teapot about executive compensation at AIG appears to be a bit of Kabuki theater designed to divert attention from the real drama, which is the continuing sweetening of the deal to the troubled insurer...this deal could be considered a faked sale to generate a capital loss for the purposes of injecting Treasury funds into AIG without the consent of Congress.

AIG Deal; Alan Grayson Asks Bernanke; answers; Latest Retrade; naked capitalism.

zero hedge Mon 2009-11-30 11:15 EST

Fannie Mae Reports Massive Q3 Loss, Asks For Another $15 Billion From Government As It Is Set To Become Largest US Landlord

The latest particular does of lunacy and economic calamity coming out of the intellectual midgets at Fannie and the FHA should be sufficient to push the market well into 1,100 territory tomorrow. FNM's loss for Q3 is $18.9 billion, up from $14.8 billion in Q2, a time when the market was up a good 15%: ever wonder who keeps on subsidizing those gain? That's right - you. Credit-related expenses increased to $22 billion in Q3 from $18.8 billion in Q2. Oh, and Fannie now wants another $15 billion rescue from the Treasury (which is having some troubles with getting that pesky debt ceiling raised to one googol) so it can continue with its plan of keeping shadow inventory away from the market, rent foreclosed houses to their owners at staggeringly low rates, and continue the pretence that bank's balance sheets are well capitalized...

15; asks; becoming largest; Fannie Mae Reports Massive Q3 Loss; government; landlord; set; Zero Hedge.

The Guardian World News Fri 2009-11-20 09:45 EST

US pressure distorted oil figures, says whistleblower

Terry Macalister

Exclusive: Watchdog's estimates of reserves inflated says top official The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying. The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves. The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow -- which is used by the British and many other governments to help guide their wider energy and climate change policies.

Guardian World News; pressure distorted oil figures; says whistleblowers.

Thu 2009-11-19 19:43 EST

Jesse's Café Américain: Willem Buiter Apparently Does Not LIke Gold, and Why Remains a Mystery

Dr. Willem Buiter of the London School of Economics, and advisor to the Bank of England, has written a somewhat astonishing broadsheet attacking of all things, gold. I have enjoyed his writing in the past. And although he does tend to cultivate and relish the aura of eccentric maverick, it is generally appealing, and his writing has been pertinent and reasoned, if unconventional. That is what makes this latest piece so unusual. It is a diatribe, more emotional than factual, with gaping holes in theoretical underpinnings and historical example.

Jesse's Café Américain; likely gold; mysteriously; remains; Willem Buiter Apparently.

naked capitalism Thu 2009-11-19 10:49 EST

GMAC has been nationalized

Edward Harrison of Credit Writedowns

And you thought the bailouts were over and market discipline might be restored. Not a chance -- the bailouts will continue, come hell or high water. The latest demonstration of this is GMAC, where the government will now be majority owner. GMAC has officially been nationalized. Now the government is running auto financing in addition to running the companies making the cars.

GMAC; naked capitalism; nation.

Jesse's Café Américain Tue 2009-11-03 20:15 EST

The US Dollar Rally of 2008: The Consequence of a Bull Market in Fraud

Jesse

The theory of a short squeeze in Eurodollars which we had first put forward last year "The Dollar Rally and Deflationary Imbalances in the US Dollar Holdings of Overseas Banks" seems to be confirmed by this paper from the NY Federal Reserve bank, and the latest figures on cross border currency transactions from the BIS...the latest data from BIS shows that the dollar rally tracked the acquisition of eurodollars with a significant correlation...But much of the European outrage, as least, was in feeling that they had been 'set up' by the very banks that had sold them the foully rated instruments in the first place. A classic face ripping, as they say at Wall and Broad. And this similar to the reason is why the Chinese government declared that its own institutions could walk away from derivatives arrangements that had been sold to them by the Wall Street wiseguys under false pretenses. US towns and states are not so fortunate it appears...The foreign banks have now unwound a significant amount of the dodgy US dollar financial assets that caused the short squeeze through their fraudulent valuations.

2008; Bull Markets; consequences; Dollar Rally; fraud; Jesse's Café Américain.

Tue 2009-09-22 08:32 EDT

From Bear to Bull: James Grant on Recession and Recovery - WSJ.com

James Grant

James Grant argues the latest gloomy forecasts ignore an important lesson of history: The deeper the slump, the zippier the recovery.

Bear; Bulls; com; James Grant; Recession; recovery; WSJ.

Credit Writedowns Thu 2009-09-17 09:49 EDT

China issues bonds to ``promote the RMB in neighbouring countries''

In the latest move toward China's long-term strategy of internationalising its currency, the Chinese Ministry of Finance announced today it will issue government bonds valued at 6 billion yuan in Hong Kong. [dollar losing reserve status]

China issues bonds; credit writedowns; Neighbouring Countries; promote; RMB.

naked capitalism Tue 2009-09-01 13:10 EDT

Twenty-Five Years to Work Off the Debt Overhang?

T. S. Eliot was right. Human beings cannot stand very much reality. As much as I have an appetite for bearish views (I figure the optimist case gets disproportionate air time), the headline of Ambrose Evans-Pritchard's latest piece, ``Our quarter-century penance is just starting,'' is grim even by the standards of the bearish faithful. Great comment by DownSouth, quoting Martin Luther King and Reinhold Niebuhr to the effect that by delegating to elites what should be the role of labor unions and grass-roots organizations. Niebuhr wrote: ``when collective power, whether in the form of imperialism or class domination, exploits weakness, it can never be dislodged unless power is raised against it'' ``Before we can fix the economy, the polity must be repaired first.''

debt overhang; naked capitalism; working; years.

Jesse's Café Américain Sun 2009-08-30 11:59 EDT

US Equity Markets Look Dangerously Wobbly As Insiders Sell In Record Numbers

Jesse

"Investors Intelligence's latest survey of advisory services showed an impressive 51% bullish and a meager 19% bearish...the spread hasn't been that wide since November 2007." Alan Abelson, Barrons, Aug. 29, 2009Next week we move into September, the riskiest month of the year for financial markets, with the federals escalating preparations for a flu pandemic, while Congress considers legislation... ``selling by corporate insiders in August has surged to $6.1 billion, the highest amount since May 2008. The ratio of insider selling to insider buying hit 30.6, the highest level since TrimTabs began tracking the data in 2004.''

Equity Markets Look Dangerously Wobbly; Insider sell; Jesse's Café Américain; record number.

Credit Writedowns Wed 2009-08-26 16:38 EDT

The FDIC and the socialization of banking losses

With the Federal Deposit Insurance Corporation (FDIC) about to release its latest figures for banks it regulates and its own financial condition, now is a good time to review its role in this crisis. This post is about the FDIC's role in the credit crisis, how it seizes banks and why I believe this matters. [...] ``the way assets are seized and sold represents a redistribution of income from taxpayers to the acquiring entities''

banks losses; credit writedowns; FDIC; social.

Thu 2009-07-30 00:00 EDT

Michael Hudson: The Toll Booth Economy

Michael Hudson: The Toll Booth Economy -- by Michael Hudson ``The Latest in Junk Economics'' What is missing is a critique of the big picture how Wall Street has financialized the public domain to inaugurate a neo-feudal tollbooth economy while privatizing the government itself, headed by the Treasury and Federal Reserve. Left untouched is the story how industrial capitalism has succumbed to an insatiable and unsustainable finance capitalism, whose newest final stage seems to be a zero-sum game of casino capitalism based on derivative swaps and kindred hedge fund gambling innovations...What have been lost are the Progressive Eras two great reforms. First, minimizing the economys free lunch of unearned income (e.g., monopolistic privilege and privatization of the public domain in contrast to ones own labor and enterprise) by taxing absentee property rent and asset-price (capital) gains, by keeping natural monopolies in the public domain, and by anti-trust regulation...A second Progressive Era aim was to steer the financial sector so as to fund capital formation. Industrial credit was best achieved in Germany and Central Europe in the decades prior to World War I. But the Allied victory led to the dominance of Anglo-American banking practice, based on loans against property or income streams already in place. Todays bank credit has become decoupled from capital formation, taking the form mainly of mortgage credit (80 per cent), and loans secured by corporate stock (for mergers, acquisitions and corporate raids) as well as for speculation. The effect is to spur asset-price inflation on credit, in ways that benefit the few at the expense of the economy at large.''

Michael Hudson; Toll Booth Economy.

Thu 2009-07-30 00:00 EDT

naked capitalism: Guest post: A populist interpretation of the latest Boom-Bust cycle

-- Theory of Kleptocracy; ``U.S. ruling class is not living up to its role in either efficiency or fairness. We are getting poorer.''

Guest Post; latest Boom-Bust cycle; naked capitalism; populist interpretation.

Fri 2009-07-24 00:00 EDT

naked capitalism: Guest Post: "Ruminations on the Latest Unemployment Figures from the Bureau of Lies and Statistics"

naked capitalism: Guest Post: "Ruminations on the Latest Unemployment Figures from the Bureau of Lies and Statistics"

Bureau; Guest Post; latest unemployment figures; lying; naked capitalism; ruminated; Statistics.

Fri 2009-01-16 00:00 EST

AlterNet: The Right Wing's Latest Argument Against Public Health Care -- We'd Like It Too Much

by Lindsay Beyerstein; Cato Institute, wherein Michael F. Cannon argues that blocking Obama's health plan is the key to GOP survival...once people start getting good health care from the government at a price they can afford, they want to keep re-electing the politicians who make that possible.''

AlterNet; public health care; Right Wing's Latest Argument.

Mon 2008-06-02 00:00 EDT

Hussman Funds - Weekly Market Comment: Wall Street Decides to Close Its Ears and Hum - June 2, 2008

latest FDIC Quarterly Banking Profile "easily the most dismal report I've ever seen"

2008; closed; Ear; Hum; Hussman Funds; June 2; Wall Street deciding; weekly market comments.

Thu 2008-05-15 00:00 EDT

Mish's Global Economic Trend Analysis: Want To Fix The Fed? Get Rid Of It

Volcker's latest remarks considered

Fed; Fix; Mish's Global Economic Trend Analysis; rid; wants.