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.

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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.

Weekend reading

The US-China Ponzi scheme
by Jon Markman

By unwittingly tying together their fortunes as they pursued their own interests, the 2 nations have put themselves on an economic path of mutually assured destruction.

Over the past decade, Americans were able to outspend their incomes by easily rolling their debts forward through serial home refinancing. The situation was never ideal, but it worked as long as the value of their collateral — their homes — kept rising.

Madoff clients’ households crashed, and now one-time millionaires are broke. The reality is that they were always broke; they just didn’t know it yet.

“People need to realize that China doesn’t actually have any real U.S. money,” Das says. “Unless they can turn in their bonds and exchange them for something else, they’re only paper assets. Yet if they try to exit the position, they’ll destabilize the dollar, and the value of the rest of their assets will plunge. And that’s not even their biggest problem. It’s that they also need to keep buying Treasurys, or interest rates will go up and their capital losses will be terrible.”

In short, Das says, Beijing thought it had discovered the perfect scheme for establishing independence from the West, yet it has instead made its dependence worse than ever. And he observes that one unspoken reason that China has gone whole-hog on its massive, $650 billion fiscal stimulus program — creating more factory capacity in a country that is already reeling from overcapacity — is that the effort gives it cover to stockpile copper, oil, iron ore and other hard assets that it considers to be better stores of value than dollars.

There is only one solution left: a long, slow, boring, lonely, soul-crushing process of digging out from under the piles of debt that got us into this mess.

[MSN]

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The Seigniorage Curse
by Gregor MacDonald

Another country that now looks quite arrested in its development is the United States. But not because of an Oil Curse. Rather, the United States appears to have finally succumbed to its multi-decade “advantage” via dollarization. In dollarization, the US Dollar has been the world’s reserve currency, and the United States economy has “enjoyed” the freedom to borrow and print ad infinitum without the usual penalties.

Seigniorage had allowed us to stop earning our living, and eventually we “bundled up and packaged” our real estate. Interestingly, it’s only in the aftermath of the burst housing bubble that we observe how many Americans are being ‘forced to sell” their homes. In fact, Americans had already sold them.

[Gregor.us]

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Washington’s Dilemma: This Isn’t a Recession, It’s a Collapse
by Gregor MacDonald

Nothing in the public record since the year 2000 indicates that Larry Summers, Ben Bernanke, or Tim Geithner understood that we had been building a skyscraper of private sector debt in textbook blow-off style, since the deflation scare of 2001. Now, two years after FED repair operations began on the broken credit system, and over 3 years since US real estate topped in price, major portions of the country are staring at further home price declines in most major markets. Indeed, it appears that the same macro cycle of the last two Autumns is about to repeat, with more waves of foreclosure, more withdrawals from savings and investment to pay for living expenses, and the attendant bailouts of financial institutions that comes around each time.

[Seeking Alpha]

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“Free is coming to an end.” -Gregor MacDonald

Madoff’s Ponzi Partner Roams Free

This guy is one of apparently many accomplices that benefited (and perhaps helped direct) such massive fraud. They are doing everything in their power to stay off the radar.

Let’s hope the Madoff “victims” continue to keep the cross-hairs zeroed on Bernie’s fellow Ponzers.

After reading this account of Jeffry Picower’s involvement (let’s call it bezzling) with big pharma (see this series of articles on Milken too), I am starting to come to the conclusion that the games these investor types  (among their cohorts: Martha Stewart) are playing with pharma is but nothing better than a very advanced shell game.

He isn’t under investigation, he isn’t answering questions, he’s laying low and and he’ll do everything he can to stonewall any and all inquiries until people just lose interest. And he’ll likely keep every cent (and then some) of his billion-dollar bezzle proceeds.

Clawback Now! Disgorgement is the Way Forward!
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Dem snake oil salesmen have come a long way, baby.

The hyperinflation argument, part deux

Perhaps the current crises in housing/credit/derivatives/leadership/good governance are not the most important problems this country is facing- just the most immediate. Perhaps this is merely just the tip of the iceberg… and the future this country is facing is an increasingly downward slope. (Got snowbaord?)

For far too long we have conveniently ignored the demographic reality of a swelling tide of retiring of boomers (and we’re still giving it the silent treatment, officially). As the event horizon comes into focus, a harsh reality intrudes into this golden time-space.

Boomers retiring in ever- large, successive waves, will undoutedly have a very significant impact on aggregate investments and retirement accounts.

By cashing out and drawing down pensions and 401(k) accounts en masse… and with fewer able bodies left to support the Social Security/Medicare Ponzi scheme debt load… the only way to mathematically meet that promise at nominal value is to (brace yourself, Sheila) inflate. Of course, the wizards behind the curtain will likely overshoot and hyperinflation could very likely result.

Due to the political expediency of growing an economy out of the last Great Depression (GD1), perhaps politicians and policy makers didn’t have any interest in listening to the few actuaries who undoubtedly realized what the end game might look like. After all, they’d be long gone…  and who listens to actuaries?

If only…

Still, it was fun while it lasted… get ready, ladies and sperms, if you are in the camp which believe hyperinflation is the final leg down (or is it up?), then it’s nearing time to pay the piper!

Baby Boomers: It’s All Your Fault

The big question, of course, is what happens when boomers start to retire. The oldest of them became eligible for Social Security in 2008, and as we move forward in time, more and more of the bulge will switch from middle age — when they’re busy earning and spending — to retirement, when they start to draw down on their savings. According to the “age wave theory,” popularized by money manager Harry Dent in the late 1990s, when the boomers hit this transition point, the U.S. will enter a long bear market, as new retirees start tapping into their pension funds and 401(k)’s, selling their stocks and bonds to pay for their golden years.

Seen in this light, the credit boom and bust was almost an inevitable byproduct of demographics. As the boomers hit their peak spending and borrowing years in the late 1990s and 2000s, they splurged on second homes, SUVs, and went crazy on credit. At the same time, pension funds and retirement accounts peaked in size. There was more money than ever, since boomers had entered their final decade before retirement, and fund managers grew desperate to find attractive returns for the huge piles of cash they managed. Hence, when charming bank salesmen came bearing AAA-rated CDOs backed by subprime mortgages, it was an offer they couldn’t refuse. The subsequent crash marked the turning point, after which the boomers will buckle down, try to rebuild their nest eggs in the final years before retirement, and soon thereafter start to draw down on the assets they’ve accumulated over a lifespan.

[Newsweek]

I don’t have to tell you what happens when everyone wants to exit the market at once.

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Proper planning prevents piss-poor performance.

The hyperinflation argument

According to this, the “very smart” money sees this as the gummint and the Fed, Inc.’s preferred option:

Ah, there’s the tough question. We know where the dumb money is…but where’s the smart money? Jeff Clark says it’s short stocks. But there’s some very smart money that is betting that the government will turn this around. They’re putting their money on inflation…or even hyperinflation. Our old friend, Marc Faber, for example, says he is sure the United States is headed for hyperinflation. If so, shorting stocks may not be such a shrewd move. Stocks could soar too – as investors try to buy anything and everything that didn’t have dollar signs on it.

You see, there are two ways to deleverage an economy.

The obvious way is the traditional, honest way – in which people actually try to pay their debts. This causes the problems we see as falling asset prices, bankruptcies, joblessness and the other hallmarks of a Great Depression.

But the feds have their hearts set on preventing a depression. And they’re doing it the only way they can…by the old ‘hair of the dog’ technique. The economy suffers from too much debt – so they’re going to give it more! Much more.

We have had many laughs following the feds and their war against capitalism. They’re gambling an amount nearly equal to the entire U.S. GDP to try to prevent people from getting what they have coming. In the process, they’re almost certain to make a mess of things.

The smart money is betting that they fail to stop deleveraging. But the very smart money is betting that they create a new, worse problem – inflation, maybe hyper-inflation. Inflation reduces the real value of debt…but in a perverse and unpredictable way. Debtors don’t pay their bills; savers pay them. Inflation – like bailouts – rewards the least responsible players…those who have gotten themselves heavily in debt…and punishes those who have done the ‘right’ thing.

[Daily Reckoning]

Dear Patrick

Patrick.net was one of the earliest sites to “point and holler” about the housing bubble. I also subscribe to his daily newsletter (as a news aggregator he’s a pip).

Patrick.net just started something new & different. The site is now open for registered users to initiate posts.

A few have been posted questions regarding their personal housing predicament. All readers can benefit from his unique vantage point as professor of bubblecology. Some of the comments aren’t too bad, either.

And thus we have the bloom of a familiar format.

Pretty interesting to watch and see how this concept develops. Certainly the questions being asked reflect and reveal some of the hard realities which people (such as homedebtors) are facing out in the real world, and which most of us (the solvent, the prudent, the renters) are likely unaware.

Of course  one should always employ a bit of skepticism about any information published on the web- mainstream sites included.

The blogosphere (trite term I know) has a unique, man-on -the-street p.o.v. which encompasses both the pedestrian and wise.

YMMV.

Walk Away or Keep Paying?

also,

Government Punishing Responsible People

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Fight the power.

Root cause of the financial meltdown

That would be the Greenspan Put. Can you say moral hazard boys and girls?

Wall Streeters figured out that they could go balls to the wall in regard to risk, because the dessicated and decrepit fraudster would always bail their ass out. So your investments, your retirement funds, your personal wealth, which was nothing more to the pirates than OPM (“other peoples money”) could be gambled and they would “earn” handsome commissions- whether you made gains or not.

Fraudsters like Madoff, Stanford, etc. could thrive and multiply because they could rely on protective coloration by hiding amongst the hedgehogs in plain sight.

When the American public finally awakes and realizes that they’ve been had, that their pensions funds have been trifled with inside help, and this most recent boom/bust cycle was clear evidence of the practice of crony capitalism at it’s most efficient, maybe they’ll decide, like I did, that they need to fight the power. The first place to start is cut up the credit cards (or freeze one in a block of ice J.I.C.), become a saver, and begin live within one’s means. Then begin to educmacate oneself about what really happened.

Then watch out, because when there is no recovery a whole lot of people are really going to be pissed.

They thought they elected Obama to fix things. Oh yeah, he is really fixing things. By keeping the same people, who were responsible for the entire mess in the first place, in positions of decision-making. And as you can see, if you’re paying attention, the Fed., Inc. is printing money (“devaluing the currency”) with the left flank, as the (not ‘your’ any longer) gummint is stealing from your future to prop up their peeps (“cronies”) with the right flank. This all comes AT YOUR EXPENSE and because the invoice hasn’t yet come in the mail, most of you HAVE NO FREAKIN’ IDEA of the size of it.

I haven’t even touched on the naked power grab by the Feds over states now they are vulnerable (and unable to print money), the abrogation of the Constitution, and the complete disinterest by the Obamanation in reforming the financial markets.

Never. Gunna. Happen.

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“Sub-prime is contained” -Benron Bukkake, 2007

Fucked we are so

Are we so fucked?

So are we fucked?

We are so fucked.

Fucked so are we.

So fucked we are.

How many ways can I say it?

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The divine right of crony capitalists [Big Daddy Economy]

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On Obama’s Pragmatism and America’s Apathy

Another example of apathy: You can’t find 100 people outside of the CPA lobby that are advocates of the current income tax system, but do you ever think its going to change? We have a super majority of citizens who agree that the tax code is damn inefficient , and wasteful, and too complex, but we can’t tackle the problem. Even the Sec. of the Treasury couldn’t get his shit straight. We are the only country that has to figure this stuff out for ourselves, rather than getting billed by the government. We have a super-majority of people who want it changed, but they don’t really want it changed, because it might be uncomfortable to do away with the loopholes and write offs that the current byzantine structure provides. The many, the masses, the voters are simply concerned with being able to keep up a certain level of consumption and access to the material fruits of the debt economy, and whatever policies most quickly deliver the maintenance of their standard of consumption will be favored by the consumers. Whether such policies are socialist or classical, liberal or laissez faire is of no concern to the American.

God, we could really use George Carlin today–he never hung out with the elites, never needed to please and social climb, so he was free to rail against the entirety of the establishment, all organized religion, all organized parties.

[Adam Young's Barricade Blog]

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Pissng in the Wind

I do not doubt their knowledge or technical ability. What I doubt is the commitment of the administration and the autonomy of the Federal Reserve. Mr. Volcker was a very independent chairman. But under Mr. Bernanke, the Fed has sacrificed its independence and become the monetary arm of the Treasury: bailing out A.I.G., taking on illiquid securities from Bear Stearns and promising to provide as much as $700 billion of reserves to buy mortgages.

Independent central banks don’t do what this Fed has done. They leave such fiscal action to the legislative branch. By that same token, Mr. Volcker’s Fed had to avoid financing the large (for that time) Reagan budget deficits to be able to bring down inflation. The central bank was made independent expressly so that it could refuse to finance deficits. But is there a political consensus that the much larger Obama deficits will not pressure the Fed to expand reserves to buy Treasury bonds?

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Indeed, big, heavily subsidized programs are rarely good for productivity. Better health care adds to the public’s sense of well-being, but it adds only a little to productivity. Subsidizing cleaner energy projects can produce jobs, but it doesn’t add much to national productivity. Meanwhile, higher carbon tax rates increase production costs and prices but do not increase productivity. All these actions can slow productive investment and the economy’s underlying growth rate, which, in turn, increases the inflation rate.

Inflation Nation [NYT]

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The Next Housing Bust

Everyone knows how loose mortgage underwriting led to the go-go days of multitrillion-dollar subprime lending. What isn’t well known is that a parallel subprime market has emerged over the past year — all made possible by the Federal Housing Administration. This also won’t end happily for taxpayers or the housing market.

Last year banks issued $180 billion of new mortgages insured by the FHA, which means they carry a 100% taxpayer guarantee. Many of these have the same characteristics as subprime loans: low downpayment requirements, high-risk borrowers, and in many cases shady mortgage originators. FHA now insures nearly one of every three new mortgages, up from 2% in 2006.

The financial results so far are not as dire as those created by the subprime frenzy of 2004-2007, but taxpayer losses are mounting on its $562 billion portfolio. According to Mortgage Bankers Association data, more than one in eight FHA loans is now delinquent — nearly triple the rate on conventional, nonsubprime loan portfolios. Another 7.5% of recent FHA loans are in “serious delinquency,” which means at least three months overdue.

The FHA is almost certainly going to need a taxpayer bailout in the months ahead.

The bill that passed last summer more than doubled the maximum loan amount that FHA can insure — to $719,000 from $362,500 in high-priced markets. Congress evidently believes that a moderate-income buyer can afford a $700,000 house.

The higher FHA loan ceiling was also supposed to be temporary, but this year Congress made it permanent.

[WSJ]

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In Other News

The “Fatal Attraction” Method Of Debt Collection

In early April Dicks fell behind on her payments again. This time, the lawsuit claims, AFN registered the URL to Dicks’ name and created a site titled “Jennifer Dicks isn’t paying for her Cavalier!”

And that’s when the relentless text message campaign of shame began.

[TPM Muckraker]

Zombie Oligarchs

At this stage in any economic stabilization process, the state-sponsored lifeboat for oligarchs starts to get a little crowded.

[The Baseline Scenario]

Why Congress Won’t Investigate Wall Street [WSJ]

The crisis today is not solely one of bank misbehavior. This is also about the failure of the regulators — the Wall Street policemen who dozed peacefully as the crime of the century went off beneath the window.

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“Oil companies ar making record $100 Billion profits not because oil is scarce, but because we believe it is.” -Jeremy Corsi

Damning with faint praise

“What’s good for General Motors is good for the country?”
[The Great Depression of 2006]

Say hello to 'Bubbles'

Banks are destroying new homes because they cannot sell them
[Daniel] [Part 2]

Bulletin From the Hindenburg: A Housing Crash Update
[Mike Whitney via patrick.net]

Fannie Mae wasted $462 million in unsecured loans to troubled homeowners to get them current on their payments
[Housing Kaboom]

Our Next Troubled Bank: The Fed

[The Big Picture]

Great Depression Rallies; Historical perspective of bear market rallies
[The Big Picture]

Naked Power Grab

By the Fed., Inc. and Treasury. Each are actively soliciting through baby steps the ‘additional powers‘ they so crave. This is  grand-standing by the very same people, all creatures of Wall Street, who now have slipped back in through the revolving door and for now hold regulatory posts (fox, meet henhouse) for this toothless regime, should make each of us very very suspicious.

Without actually acknowledging there is a problem per se, Turbo Timmeh Shitener thinks the solution is him and his cronies co-horts having more bigger, more faster, more and more power over more and more businesses, such as hedge funds and insurance (the states are supposed to regulate insurance, but the Fed was always stepping on their toes).

I think they kinda mean somthing like a politburo.

Yet where were the feds when Made-off was running his Ponzi scheme for FORTY FUCKING YEARS eh? SEC? In da house? No? Where the fuck are ye then?

SEC sock puppets got treated to a free seven-course lunch (who sez that don’t exist?) and all the coke they could snort and hookers they could screw, and gave Bernie and his merry band of Ponzis a pass until the next year. Rinse, lather, repeat. Times forty.

Sure, TT, *more power*, you stumbled upon the answer;  Oh wait, I forgot the question. How do we stop this sort of thing from happening again?

Well, um, let’s see what happens when you cannot/do not know how to use the powers and tools already provided?

Oh right, we get a big fucking mess like we have right now.

Yeah, thanks for that, TT. You are a *star*.

Meantime we’re supposed to be relieved and reassured that the next Even Greater Depression (GD3?) forty years hence will deffo not be happening.

Color me relieved! I can stop worrying now. Everyone, no need to worry anymore, the next GD ain’t never gonna happen! Whoopee!

C’mon. The regulator guys always had the tools. The just didn’t realize they weren’t supposed to be the tools.

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“Finance should be the grease that keeps the engine going. Yet in our last decade, finance became the actual engine. That is the root of the problem. ” -Dr. Housing Bubble