Pretty vacant

What a country!

Why do we even need banks if 95 percent of the mortgage market is directly subsidized by the government?

A good question, asked and expounded upon by Dr. Housing Bubble:

“95 percent of the mortgage market is now backed by the government. As we know, a large part of this growth also occurred with highly risky FHA insured loans that are now imploding at record levels. Last month in Southern California 36 percent of mortgages were FHA insured loans. Now applying the Stockholm syndrome, it would appear that many instead of being angry and calling out the banking fraud for what it is, are starting to believe in what the abductors are pushing. They say things like, ‘ see, the banks are now holding off on the shadow inventory to help the market. Prices are now going up! ‘ As if the banks are concerned about the average American with some banks charging 79.9 percent on credit cards before dealing with the tougher legislation coming in 2010. As you can see from the above chart, the mortgage market is the government which raises the question, why do we even need banks if 95 percent of the mortgage market is directly subsidized by the government?.“

His very graphic graphic (not for the squeamish):

“In fact, there have been a few articles talking about the ‘ brain drain’ because of compensation limitations on Wall Street! You have got to be out of your damn mind! People mistake ‘ intelligence ‘ in kleptocracy, cronyism, and financial engineering with actual smarts. They are smart at screwing over our economy so this brain drain argument is absolute insanity. It would be one thing if they were creating life saving drugs or consumer goods but instead, they are an albatross on the rest of the economy sucking taxpayer dollars into their balance sheets. Yes, let us feel sorry for our financial kidnappers. How can they live on a few million dollars (note: read DeanBaker’s rant) a year after all the good they have done? Let us allow them to have the same system that gave them the key to drive our economy off the financial edge.”

That last paragraph was directed at the so-called “brain-drain” by Hank Greenberg’s new firm from the pool of ready able and willing AIG co-conspiratorshorts, which as you know like GMAC is having trouble paying back the taxpayer bailout that saved their nasty-asses (the perpetual bailout that is never gonna take, they’ll keep coming back for more and more throwing good money after bad, until we realize the only solution is to take ‘em out back and shoot the poor old mangy critters).

Ever get the feeling that you’re being gamed?

“Oh no! Our top commanders are leaving the ship. As it turns out, they were on their laptops all day ignoring the financial iceberg ahead. When it came time to jump ship however, they were the only people with lifesavers.”

…

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“Children need encouragement. If a kid gets an answer right, tell him it was a lucky guess. That way he develops a good, lucky feeling. ” -Jack Handy

Home ownership a toxic ideology

“The discredited ideology of home ownership is the most toxic ideology since communism.” -John Carney

[ Hoosing Doom ]

Battle Royale with cheese

The shit is wide, the shit is deep, but one man has employed a boat full of lawyers to fight the power:

This shit is global

“Countrywide’s lawsuit was filed in the name of Countrywide as loan servicer, and MERS as mortgagee. I thought it strange that some unknown entity (MERS) was in a fight with me. I started doing research. This is what I found (explained in layman’s terms). Countrywide had sold the note to a trust that had been set up by the gurus on Wall St. There were 16,000 notes in the trust owned by god knows how many investors. They of course could do this because for the first time in the history of world finance, these “gurus” had separated the mortgage (collateral) from the note. MERS holds my mortgage which is recorded per law at my county court house. They don’t and will never be my, or your, note holder. This separation of the note and mortgage gives Wall St. the ability to “transfer/sell” my note at a click of a mouse thus circumventing the age old process of recording the transfer in my county court house. This slight of the hand is the fraud that created the entire secondary mortgage market and eventually the trouble we are in today. Countrywide is my loan servicer…which means they are nothing but a bookkeeper and collection agency. The holder of my note was yet to be determined.”

[How I am beating the crap out of Countrywide/MERS]

I think he means “sleight of hand” but pedantics aside, he absolutely nails it- that moment in time when our goose went into the oven at 450 degrees.

It is not done yet, but someone should check because I think I smell something burning.

I like the way in which the author reveals the sort of institutionalized chicanery that has evolved throughout the financial system unchecked, and employed like a truncheon on the back of the head of the unsuspecting little guy walking along Main Street.

…

Additional perspectives on MERS:

Mortgage Electronic Registration System Loses Legal Shield
[ Barry Rtitholtz ]

Has a MERShole opened up?
[ Karl Denninger ]

Mortgage Electronic Registration Systems (MERS): A System Designed to Create the Mortgage-Backed Security Bubble
[ Dr. Housing Bubble ]

Waking up to discover the mortgage market was a giant criminal enterprise
[ Matt Taibbi ]

…

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Debts are not always repaid. The financial markets are not always in equilibrium.

REO bandwagon

Courtesy of Jim the Realtor:

[ H/T ]

Let us not forget

David Leonhardt wants to congratulate the gang that led us into the worse economic downturn in more than 70 years because it will not be as bad as the Great Depression. Yes, the downturn could be worse, but let’s be serious.

This crash was 100 percent preventable to anyone watching the economy and capable of doing 3rd grade arithmetic. The housing bubble was easy to see and it should have been obvious that its collapse would devastate the economy.

The “good” story is that we will have tens of millions of people unemployed or underemployed for years because of this gang’s incompetence. Millions of people will lose their homes. The country will needlessly lose more than $6 trillion ($40,000 per family) of output.

This is a complete disaster. Any custodian, dishwasher or shoe salesperson who showed the same degree of incompetence on their job would be fired instantly. There is no reason that the country should engage in this soft bigotry of low expectations when it comes to economic policy. This crew blew it just about as badly as anyone conceivably could. Saying that you didn’t give us another great depression is not exactly a winning re-election slogan.

-Dean Baker, What If the Captain of the Titanic Managed to Get Three Quarters of the Passengers on Life Boats?

Also,

Matt Taibbi has rightly directed our attention towards the talent, organization, and power that together produce damaging (for us) yet profitable (for a few) bubbles. Most of Taibbi’s best points are about market microstructure – not the technological variety usually studied in mainstream finance, but more the politics of how you construct a multi-billion dollar opportunity so that you can get in, pull others after you, and then get out before it all collapses. (This is also, by the way, how things work in Pakistan.)

In addition, of course, all good bubble-blowing needs ideology. Someone needs to persuade policymakers and the investing public that we are looking at a change in fundamentals, rather than an unsustainable and dangerous surge in the price of some assets.

It used to be that the Federal Reserve was the bubble-maker-in-chief. In the Big Housing Boom/Bust, Alan Greenspan was ably assisted by Ben Bernanke – culminating in the latter’s argument to cut interest rates to zero in August 2003 and to state that interest rates would be held low for “a considerable period”. (David Wessel’s new book is very good on this period and the Bernanke-Greenspan relationship.)

Much faster growth than expected is, of course, in today’s context a good thing. But it also brings complications. If you keep monetary policy this loose for much longer, you will feed bubbles. And if you encourage even looser monetary and fiscal policy, there will be a costly reckoning not too far down the road.

Monetary policy orthodoxy under Greenspan did not care about bubbles in the least. Now we (led by Greenspan) have massively damaged our financial system, our real economy, and our job prospects, this view is under revision.

-Simon Johnson, How To Blow A Bubble

On the Edge

With special guests, Dmitry Orlov and Dr. Housing Bubble!

How is the collapse of the Soviet Union like the on-going collapse of the USSA? One word: debt. Also: government giveaways.

How wrong they were

Benron’s frequent use of the word “healthy” makes me wonder- if he were a doctor, what would the condition of his patient be today?

Reverse Bank Heist

Bubble meter

[H/T]