Nailing Florida

October 26, 2010

Pretty much sums it up:

In some ways it is like the Florida Land Scandal never really ended. A failure over the last 90 years to develop an industry other than related to real estate (discounting tourism for the moment) is going to sink the ship of the state of Florida.

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Challenge the breach

October 25, 2010

implied covenant of good faith and fair dealing n. a general assumption of the law of contracts, that people will act in good faith and deal fairly without breaking their word, using shifty means to avoid obligations, or denying what the other party obviously understood. A lawsuit (or one of the causes of action in a lawsuit) based on the breach of this covenant is often brought when the other party has been claiming technical excuses for breaching the contract or using the specific words of the contract to refuse to perform when the surrounding circumstances or apparent understanding of the parties were to the contrary. Example: an employer fires a long-time employee without cause and says it can fire at whim because the employment contract states the employment is “at will.” However, the employee was encouraged to join the company on the basis of retirement plans and other conduct which led him/her to believe the job was permanent barring misconduct or financial downturn. Thus, there could be a breach of the implied covenant, since the surrounding circumstances implied that there would be career-long employment.

Parties cannot create a binding contract where either party has reason to know that the other party cannot perform.

Remember this if you should need to challenge your mortgage servicer in court.

 


Chris Whalen on Foreclosuregate

October 21, 2010

Chris Whalen:

“Every time there is a foreclosure someone stops paying their property taxes.”

“Barack Obama is walking in Herbert Hoover’s shoes. They’re making the same mistakes, almost unconsciously.”

“We’re going to have state moratoria the way we did in the ’30’s. The governors of those states are going to say ‘folks stay in your homes, keep paying your property taxes, default on your mortgage. This is Washington’s problem.'”

“MBS holders are calling their lawyers.”

“There may not in fact be any collateral underneath these securities.”


“Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.” -advice of US Secretary Andrew Mellon gave to his President Herbert Hoover in 1931.


Come and see the fraud inherent in the system

October 20, 2010

“What President Obama must understand is that fraud is endemic at every level of the home finance food chain. We were long told that securitized mortgages cannot be modified because of the complexity involved—modification of most mortgages would require consent of the holders of the securities that each have a piece of the mortgage. But actually it is impossible to tell how many—if any—of these securities holders have a legitimate claim on any of the mortgages. Simply imposing a moratorium will not be enough—it will just give the banks time to manufacture false documents, encouraging even more fraud. Meanwhile, half of all homeowners with mortgages are already underwater or are within spitting distance of being underwater. Many of these are drowning because the epidemic of fraud perpetrated by financial institutions destroyed our economy and caused housing prices to collapse.”
[ B.I. ] [ Karl Denninger ]


Inside Banana Republican HQ

October 12, 2010

Mortgagegate is discussed…


Karl Denninger Kicks More Ass

October 11, 2010

Fraud to cover up fraud. Hmmm, I guess we could call that “fraud squared.”

This is NOT about “Free Houses” or anything like that. It is about EMPTY BOXES and boxes full of dogcrap – MBS that hold nothing and assets that did not meet the credit quality requirements of the trusts but were transferred in anyway. The latter we know happened for a fact because it has been testified to in front of the FCIC and is exactly like selling someone a box of chocolates – but instead of chocolate, as you represented, you took piles of used dog food, formed it into chocolate shapes, then coated it with a thin veneer of chocolate so it looked and smelled like chocolate – right up until someone decided to take a bite of one.

These events sure look like black-letter crimes to me. Selling someone crap instead of chocolate, when you tell them it’s chocolate, is plain old-fashioned fraud. So is selling someone called a “Mortgage-backed security” without the mortgage backed part. In both cases, if and when this happened, you have people who took someone’s money – some $6 trillion of it over the “go-go” years – and sold them crap that was certified as Grade “AAA” chocolate. In each and every case where the sellers lied, they committed a serious crime.

Who got screwed? You. Your pension fund. Your annuity company – an insurance company that might not be able to pay 10 years down the road when you’re old, gray and frail.

You are the one who got screwed.

And if these clowns have their way, you’ll get screwed again.

[ The Market Ticker ]

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” -Mark Twain


Karl Denninger Kicks Ass

October 11, 2010

Debt-backed currencies require recessions. Without them you are correct. Perpetual growth is of course impossible, as the rock we live on is finite.

But recession, what used to be called “The 7 year business cycle” (before we tried to eradicate it) served to flush the weakest borrowers and lenders. It caused them to go bankrupt, and in doing so both their money AND DEBT was extinguished.

They serve as the natural and proper elimination of the imbalance that otherwise grows until collapse.

With the economy left alone on a debt-backed system, this works. It did for about 50 years, and will again if left alone. It did, in fact, for the entire period from 1789 until the 1980s, with interruptions when we tried to get rid of recessions, through both hard money and debt-backed money.

Such attempts to prevent recession always fail.

It is a natural thing to try to avoid pain. But in all economic systems where capital may be loaned at interest, no matter how you structure it and no matter how you back your currency, recessions are how you prevent the exponential function from eventually assraping you.

The answer is not found in commodity-backed currencies because the problem doesn’t lie there. The problem lies in the belief that one can avoid recession. The only way one can eradicate the need for recession is to eliminate the lending of capital. As soon as you allow capital to be lent, the lender will demand a price for his capital, which means an interest charge since there is always time value to capital – and as soon as that interest charge shows up, you’re back to this dynamic – like it or not.

[ Ticker Forum ]

“The ultimate result of shielding men from the effects of folly is to fill the world with fools.” -Herbert Spencer