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.

naked capitalism Tue 2009-10-27 11:49 EDT

Wow, judges now nixing lenders' foreclosure claims entirely in court

Edward Harrison of Credit Writedowns

Gretchen Morgenson: One surprising smackdown occurred on Oct. 9 in federal bankruptcy court in the Southern District of New York. Ruling that a lender, PHH Mortgage, hadn't proved its claim to a delinquent borrower's home in White Plains, Judge Robert D. Drain wiped out a $461,263 mortgage debt on the property. Edward Harrison: I see this as a watershed case in jurisprudence surrounding mortgage-related bankruptcies and foreclosures. The reason this is huge is that it echoes the case in Kansas...what legal rights do lenders or their agents have in foreclosure in the new byzantine world of securitized mortgages. In the New York case the judge nixed the entire claim as the mortgagee could not prove it had legal claim to the mortgage note...PHH and MERS, the two lender agents in each cases, are not the actual owners of the mortgages. They are the agents of the mortgagees. This is why these cases have a lot to do with securitization.

court; foreclosure claims entirely; judge; naked capitalism; nixing lenders; Wow.

zero hedge Fri 2009-10-23 19:30 EDT

A Stern Opponent Of Funding The FDIC's Depleted Deposit Insurance Fund, And Monetization Is... Alan Greenspan?

What a difference twenty years makes. The man whose actions basically lead to the eradication of the American middle class in its aspirational pursuit of buying massive SUVs, Prada bags, and 3rd investment properties, compliments of cheap credit, in order to appear ever so much like the upper class yet ultimately drowning itself in debt, Alan Greenspan, is probably the most critical reason why America's debt service will be nearly 90% of GDP within several decades. The adoption of his actions by the current deranged operator of the reserve currency printing press, is merely a continuation of a multiple decade long process of keeping inflation contained at the expense of devaluing the US currency, as the global liquidity pyramid recently hit one quadrillion, and continues to grow exponentially, yet...

Alan Greenspan; FDIC's Depleted Deposit Insurance Fund; funds; monetize; Stern Opponent; Zero Hedge.

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.

Jesse's Café Américain Sat 2009-10-10 13:07 EDT

Why the Feds Seized the Gold in 1933

Jesse

...The Feds acted on gold because at the time it WAS the currency of the country, and the government had some proper claims on it. When the US left the gold standard it relinquished all such claims, as gold became purely private property. Except perhaps if you are holding gold American eagles, which bear the patina of 'currency.' It should also be noted that the sole action of the government was to ask for the gold, to withdraw convertibility of gold notes from the domestic public, and to monitor the activity of safe deposit boxes taking certain categories of gold, and essentially nothing else. There were no investigations, searches, or even active prosecutions for non-compliance. The purpose of the confiscation was to prepare the way for a formal devaluation of the dollar while it was still on the gold standard.

1933; Feds seize; gold; Jesse's Café Américain.

Thu 2009-10-08 17:10 EDT

Recovering from Neoliberal Disaster - Why Iceland and Latvia Won't (and Can't) Pay

Michael Hudson

Can Iceland and Latvia pay the foreign debts run up by a fairly narrow layer of their population? The European Union and International Monetary Fund have told them to replace private debts with public obligations, and to pay by raising taxes, slashing public spending and obliging citizens to deplete their savings. Resentment is growing not only toward those who ran up these debts -- Iceland's bankrupt Kaupthing and Landsbanki with its Icesave accounts, and heavily debt-leveraged property owners and privatizers in the Baltics and Central Europe -- but also toward the neoliberal foreign advisors and creditors who pressured these governments to sell off the banks and public infrastructure to insiders. Support in Iceland for joining the EU has fallen to just over a third of the population, while Latvia's Harmony Center party, the first since independence to include a large segment of the Russian-speaking population, has gained a majority in Riga and is becoming the most popular national party. Popular protests in both countries have triggered rising political pressure to limit the debt burden to a reasonable ability to pay...

Iceland; Latvia; Neoliberal Disaster; pay; recover.

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.

Thu 2009-10-01 10:14 EDT

Mortgage Electronic Registration Systems (MERS): A System Designed to Create the Mortgage Back Security Bubble. >> Dr. Housing Bubble Blog

Mortgage Electronic Registration Systems (MERS)...claims to be a privately-held company and their function is keeping track of a confidential electronic registry of mortgages and the modifications to servicing rights and ownership of the loans. However, if you dig deeper into MERS and their shareholders you will find the same crony bankers...shareholders include AIG, Fannie Mae, Freddie Mac, WaMu, CitiMortgage, Countrywide, GMAC, Guaranty Bank, and Merrill Lynch...MERS allowed for the mortgage backed security business to explode since it allowed mortgages to be shipped off to Wall Street to be minced into tiny tranches and sold off by the big investment banks...MERS is a front for the mortgage and banking industry. It is claimed as a system of convenience but in reality, it is nothing more than the grease to lube up the housing bubble...what is significant about the Kansas Supreme Court finding has to do with the actual legal ownership of the note and deed especially when it comes to foreclosure...MERS is a straw man...provides ``an opaque veil that clouds not only the actual real ownership of the promissory note, but title to the property.''

created; Dr. Housing Bubble Blog; MER; mortgage; mortgage Electronic Registration System; security bubble; Systems designed.

Bank-Implode! Sun 2009-09-20 12:22 EDT

Bank-Implode! >> Blog Archive >> Exclusive -- Wells Fargo's Commercial Portfolio is a ticking time bomb

In order to sort through the disaster that is Wells Fargo's (quote: WFC) commercial loan portfolio, the bank has hired help from outside experts to pour over the books... and they are shocked with what they are seeing. Not only do the bank's outstanding commercial loans collectively exceed the property values to which they are attached, but derivative trades leftover from its acquisition of Wachovia are creating another set of problems for the already beleaguered San Francisco-based megabank...According to sources currently working out these loans at Wells Fargo, when selling tranches of commercial mortgage-backed securities below the super senior tranche, Wachovia promised to pay the buyer's risk premium by writing credit default swap contracts against these subordinate bonds...should the junior tranches eventually default, then the bank is on the hook.

bank implode; blogs Archive; exclusive; ticking time bomb; Wells Fargo's commercial portfolio.

Sun 2009-09-20 12:17 EDT

Michael Hudson - financial economist and historian

Publications by financial economist and historian Michael Hudson, on finance and accounting, real estate and history of ancient Near East (reform, taxation, monetary, investment, instability, poverty, development, globalisation, real estate, statistics, property, land, value, reform, taxation, rent, Henry George, international, finance, IMF, World Bank, critique, euro, policy, Sumer, economic, history, Babylonia, usury, interest, rates, ancient, U.S., imperialism, privatization, urbanization, national, income, accounts, wealth, distribution, money, credit, monetarism, criticism, creditary, financial)

Financial economist; historians; Michael Hudson.

Bruce Krasting Sat 2009-09-05 11:50 EDT

A Metro NYC Real Estate Horror Story

Bruce Krasting

In 2006 a house not too far from mine came on the market at a very rich price. $2.7mm for a five bedroom home on four acres. It was a nice place...The house was sold this week. It was a short sale. The sale price was $600,000. Less than 25% of its asking price three years ago...There are hundreds of $1 million homes within a few miles of this property. This morning they are all worth 40% less.

Bruce Krasting; Metro NYC Real Estate Horror Story.

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.

Tue 2009-06-16 00:00 EDT

Jesse's Café Américain: Second Largest US Commercial Retail Real Estate Company Files for Bankruptcy

Jesse's Café Américain: Second Largest US Commercial Retail Real Estate Company Files for Bankruptcy; General Growth Properties bankruptcy

bankruptcy; Commercial Retail Real Estate Company Files; Jesse's Café Américain; largest.

Thu 2009-01-15 00:00 EST

Calculated Risk: Real Estate and Tax Advantages

``Yes, there is a mortgage interest deduction, and a capital gains exclusion for a primary residence - but there is also a property tax for real estate. This is a tax disadvantage compared to stocks and bonds.''

Calculated Risk; real estate; tax-advantaged.

Sun 2008-11-23 00:00 EST

Thomas C. Rubin: UK Association of Online Publishers

Microsoft Chief Counsel for Intellectual Property Strategy ``The Change We Need''; gatekeeper Google reaping economic rewards

online publishers; Thomas C. Rubin; UK Association.

Mon 2008-05-05 00:00 EDT

Winter (Economic & Market) Watch >> CountryFried Whodathunk

Winter (Economic & Market) Watch >> CountryFried Whodathunk; looking inside CFC balance sheet; BAC poised to become biggest US property manager

CountryFried Whodathunk; economic; Market; watch; winter.