Friday, October 15, 2010

Last Call

In the real world, Forclosuregate is being trated as a serious, if not crisis-threatening problem caused by widespread and systemic document fraud that should be punished by jail time and fines.  It is a massive issue that involves trillions in real estate and could jeopardize the economy of the entire country.  it is the genesis of the next financial collapse, plain and simple.

In the financial press, it's just a damn paperwork mishap that doesn't mean anything because everyone the banks are foreclosing on is guilty and deserves to be thrown out in the street for being poor, and the real victim here in Wall Street.

Which side Obama comes down on here will define not only his Presidency, but the direction of America.

Dear America: The Butler Did It

Several months ago, I read an article about a college graduate who was still living at home, unable to find work. He was in despair because of his college loans and was forced to live with his parents. Mom and dad tsked and sympathized. Then the other details began to emerge. For example, this student had turned down jobs because they just didn't pay enough. His highest offer had been $45,000, and that was simply not worth it. After having his living supported while attending for school he wasn't paying for yet, he decided that he deserved better. I read several follow up editorials rightfully asking why this young man felt entitled to live for free in a nice, two-story home in a middle class neighborhood and turn down work. How is earning nothing better than earning a "measly" 45k per year with no experience in the field? How did the editor not realize how ridiculous it looked that their slant clearly intended to drum up pity for this man's plight? Therein lies our problem. Some people still don't get it.

And now, ladies and gentlemen, one of my favorite scenes from one of my favorite movies: Arthur. The lines are spoken by Sir John Gielgud, in the role of Hobson the butler.

"Please remove your helmet." Smack smack. "You spoiled little bastard." Smack. "So you feel unloved. Welcome to the world, Arthur, everyone is unloved." Smack. "And incidentally, I love you."

We all need a wake up call now and then. This one is long overdue. We are spoiled little bastards. Normally, I try to refrain from mixing Dudley Moore with Ben Stein in polite company. The one time I saw Ben Stein in person, he said something that has stuck with me ever since. "We have people living below our poverty line who have air conditioning, a TV set in every room, guaranteed emergency medical care and a cell phone," he said. He is right. Make no mistake, I'm not saying that minimum wage is acceptable, or that the tax system is right or fair. I'm saying as a nation, most of us take a lot of luxuries for granted. We have bought the fairy tale that our standard of living will continue through no real effort or sacrifice on our part. We somehow trick ourselves into forgetting what poverty looks like. How can we complain about our health care system when tuberculosis, starvation and dying from a simple infection are still a threat for millions? Our law prevents an emergency room from turning anyone away, regardless of their ability to pay. Compare that to Zimbabwe and tell me we have the short end of any stick.

We do have problems in our nation that have to be dealt with, and now. One of them needs to be our perspective. Our gift of a free education should empower us to be smarter than this. Due to the economy, some of us are learning how to make choices, budget, go without and work harder for the first time ever. In the long run, that's not a bad thing. As a culture, it may be our salvation. We've been spoiled children long enough. Now it is time to live like the rest of the world and take ownership of our problems, regardless of whether we feel they are fair, or of the solution looks a little too much like work. I think we are finally waking up and shaking off the stupor that let us fall into this trap. It's about time we recognize our assets and put our energy into what matters.

And incidentally, I love you.


Bachmann To The Future

I have accused Republicans of wanting to roll back this country to the 1950's or even the 1920's.  As usual, their truth is greater than my imagination as Michele Bachmann apparently wants America to go back to 1789.

Q. If, with a snap of your fingers, you could change anything about America, what would it be?
A. Reduce the federal government to its original size and constitutional limitations and to restore the 9th and 10th amendments.

Stop and parse that for a sec.   The first Congress in 1789 had 26 Senators and 69 members of the House.  They created the Bill of Rights during that period, the first ten Amendments to the US Constitution.  Michele Bachmann apparently thinks everything since then is rubbish.

You know, like Minnesota having Senators or Representatives (not a state until 1858).  I guess she wants herself fired.  Odd reason to vote for someone, don't you think?

And hey, let's get rid of all the cabinet departments created since then.  We had Foreign Affairs(now State Department), War (now Department of Defense), Treasury, the Attorney General and Postmaster General in 1789.   Everyone not working for Hillary, Robert Gates, Tim Geithner, Eric Holder and the post office is outta there!

And since "restoring the 9th and 10th Amendments" to a 1789 state would mean getting rid of all the Amendments after them, Michele wouldn't have the right to vote.  Of course, there wouldn't be elections for Senate at all, states would determine who would be allowed to vote, own property, or you know, not be a friggin slave, and the US would basically be a pretty lousy place to live in.

If I recall, a lot of the problems with America's history stemmed from the fact that Michele Bachmann's view of a 1789 America wasn't all it was cracked up to be, and we had a nice little Civil War over it some 60 or so years later.

But going back to that is what Michele Bachmann wants, apparently.  if she could "snap her fingers" we'd be pretty much screwed.  But it's a great campaign slogan!

Zandar's Thought Of The Day

Here's why I hate election politics sometimes.

What Harry Reid had to do in order to win last night's Senate debate in Nevada:

  1. Memorize his entire Senate voting record.
  2. Memorize every word he has said on the Senate floor.
  3. Be prepared to debate every piece of legislation he has ever voted on.
  4. Be prepared to defend every vote.
  5. Memorize every dollar of income he has ever received and why.
  6. Justify every job lost in Nevada since he became a politician.
  7. Explain why every job in Nevada lost since then was lost.
  8. Speak in an exciting, dynamic, and engaging manner.
  9. Display all the gravitas of the Senate Majority Leader.
  10. Defend President Obama.
  11. Be willing to criticize President Obama.
  12. Catalog every earmark Nevada has received because of his actions and defend them.
  13. Justify every federal dollar spent in the last four years outside the state of Nevada, and what the benefit is to Nevada taxpayers.
  14. Justify every federal dollar spent in the last four years in Nevada, and what the benefit is to Nevada taxpayers.
  15. Explain everything to everybody, to everybody's satisfaction.
  16. Prounounce every word correctly.
  17. Not make any gestures that would be taken as his elitist dismissal of a real American.
  18. Emote wildly in order to prove he is a regular American and not an elitist.
  19. Satisfy the entire Village with his extreme seriousness, because the Senate is sacred.
  20. Make everyone laugh at least once to show how human he is.

What Sharron Angle had to do in order to win last night's Senate debate in Nevada:

  1. Not execute a box full of kittens with a food processor while praising Satan.

Guess who "won" the debate last night?

[UPDATE]  Steve M. argues fairly convincingly that Reid not only lost the debate, but this Senate race as well.  And that's where we are:  the Senate is now high school student council elections writ large, where the cool kid who wants to put vending machines in every locker is going to trounce the debate club nerd.

The Kroog Versus Foreclosuregate

Finally, Paul Krugman weighs in on the robo-signing, foreclosure milling, wrong-house repossessing, document-forging disaster that has been the housing market over the last several years.

Now an awful truth is becoming apparent: In many cases, the documentation doesn’t exist. In the frenzy of the bubble, much home lending was undertaken by fly-by-night companies trying to generate as much volume as possible. These loans were sold off to mortgage “trusts,” which, in turn, sliced and diced them into mortgage-backed securities. The trusts were legally required to obtain and hold the mortgage notes that specified the borrowers’ obligations. But it’s now apparent that such niceties were frequently neglected. And this means that many of the foreclosures now taking place are, in fact, illegal.

This is very, very bad. For one thing, it’s a near certainty that significant numbers of borrowers are being defrauded — charged fees they don’t actually owe, declared in default when, by the terms of their loan agreements, they aren’t.

Beyond that, if trusts can’t produce proof that they actually own the mortgages against which they have been selling claims, the sponsors of these trusts will face lawsuits from investors who bought these claims — claims that are now, in many cases, worth only a small fraction of their face value.

And who are these sponsors? Major financial institutions — the same institutions supposedly rescued by government programs last year. So the mortgage mess threatens to produce another financial crisis. 

Obama doesn't want to do anything, Krugman goes on to say, and the Village econ division seems to think the bank doesn't need any stinking paperwork.   It's going to get a lot worse before it gets better, mainly because the people who have solutions are once again being ignored in favor of hand-wringing over the banks, or trying to sweep the measure under the rug completely.

The pushback by the Village on this has been impressive.  they're acting like this is a minor inconvenience because the Masters of the Universe don't need paperwork.  They create their own reality.  Jim Cramer is not just drinking the Kool-Aid, he's made of it, like some sort of cursed elemental made of conventional wisdom and sugar. 

"This is a remarkable moment where the bears who have seized control of the media have created an atmosphere where it seems like no one believes anything could go higher," Cramer said. "While those in control of stock buying see silver linings and glasses half full everywhere, which is why we didn't go down nearly as hard as I thought we would."

Foreclosuregate is all in your head, folks.  It's too complex for anyone to understand, so just trust the banks!

Awesome.  Just like last time!

Quantitative Physics

That musical whirring sound you hear this morning is Helicopter Ben's Magical Printing Press going through its pre-flight warm up checks.

Federal Reserve Chairman Ben Bernanke gave the clearest signal yet that the Fed is about to act to further spur the sluggish U.S. economy, stating that "there would be a case for further action."

The Fed chairman, in a speech in Boston Friday morning, said persistently high unemployment poses too great a threat to the economy, and that the central bank needs to weigh the risk of weak prices, rather than focus on its traditional concerns about inflation. He suggested the battle against inflation has largely been won by the Fed.

"For the first time in many decades, [the Fed] had to take seriously the possibility that inflation can be too low as well as too high," he said.

Benny here is about to go quantitative on somebody's ass.  At this point it's just a question of how large the money nuke is going to be.  I'm glad that bernanke has finally noticed that unemployment just might be a problem, but I'm wondering what buying up a trillion and change in treasuries is going to do when American companies continue to sit on the small inland sea of cash created by the last batch of QE cooking and not spend it on expansion.

There's little to no point if businesses aren't going to hire workers because the workers have no money to buy stuff because they have no job.  This would involve crazy things like "government make work programs as the employer of last resort" and other things that would cause Tea Party embolisms in the streets.

We'll see what happens.  If it's anything like the last time, all it will do is just stall the inevitable until we fix the root cause of the problem:  the financial system.

Tea'd Up For A Beatdown

I'd like to thank the NY Times' Kate Zernike for this story, because it needs to be said.

Enough Tea Party-supported candidates are running strongly in competitive and Republican-leaning Congressional races that the movement stands a good chance of establishing a sizeable caucus to push its agenda in the House and the Senate, according to a New York Times analysis.

With a little more than two weeks till Election Day, 33 Tea Party-backed candidates are in tossup races or running in House districts that are solidly or leaning Republican, and 8 stand a good or better chance of winning Senate seats.

While the numbers are relatively small, they could exert outsize influence, putting pressure on Republican leaders to carry out promises to significantly cut spending and taxes, to repeal health care legislation and financial regulations passed this year, and to phase out Social Security and Medicare in favor of personal savings accounts. 

Scared yet, America?  You should be.  The Tea Party will effectively take control of the Republican Party if the Republican Party takes control of Congress.   Obama will actually develop some sort of elbow condition from overuse of his veto pen.  But that's what we're facing here.

The Tea Party isn't anything new, folks.  it's just the same old fringe lunacy on the right repackaged, astroturfed, and mass produced for consumption.  In fact, just about the only thing people are consuming these days in our economy is Tea Party ideas.  It's the same old litany of hate, the same old "I'm the candidate who stands for something, I stand for being against blah blah blah" and if you value any sort of two party sanity in DC or in the American system as a whole, you'll want to see these guys go down in flames roughly the same height and temperature as the sun's corona.

These guys actually make me miss the Republicans of the 80's.  So if you're going Galt with your vote this year as a progressive because you want to teach the Democrats a lesson, then the lesson that they will learn is "The Tea Party runs this country now and progressives are to be ignored" and that the country should lurch even further to the right.

Because right now a small percentage of folks on the right are about to run rampant over the country, because an even smaller percentage of folks on the left are actually planning on giving a rat's ass.  I hate to bring up, of all things, the lyrics of Rush, but here you are:

"If you choose to stand still, you still have made a choice."

There are better choices in November, folks.  Make them.

The Campaign Dollar Flood

The Wesleyan Media Project estimates some $198 million has been spent on congressional races this year... just the last five weeks.

An estimated $198M has been spent on advertising in U.S. Senate and U.S. House races in the five weeks between 9/1 and 10/7.  With September as the traditional start to the general election season, the 75 percent increase in spending (from $113M during the same period in 2008) includes an 84 percent spending increase in U.S. Senate races and a 65 percent increase in U.S. House ads.

Some $65 million has been spent by interest groups in the last five weeks.  I know, I know, the argument is "well both sides do it."  True.  But if we go by the top 10 interest groups spending cash this year,  Republicans have an overwhelming edge.

The two Democratic groups have spent about $4 million on ads.  The other 8 are backing the Republicans, and they have poured in more than ten times that amount...over $41 million.

And nearly all of that is anonymous.

More will be spent here in the final 3 weeks, too, probably as much as has been spent in these recent five.  That means tens of millions more.

Thanks, Supreme Court!

Turn On The Lights, Watch The Roaches Scatter, Part 22

A couple of Bloomberg stories highlight the real problems the banks are facing, and the fact that once again the government doesn't want to take the necessary steps to fix it.  First, Foreclosuregate is starting to rock bank stocks.

U.S. banks and government officials face mounting pressure to address concern that firms mishandled mortgage and foreclosure documents.

Shares of Bank of America Corp. and Wells Fargo & Co. yesterday fell the most in more than two months amid uncertainty about defective mortgages. Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia, raised his estimate for the cost of litigation and delays to banks to $10 billion yesterday from $6 billion.

An investigation by attorneys general in all 50 states into banks’ foreclosure practices fueled speculation about even greater losses if mortgage-bond investors successfully challenge the underlying loans and force lenders to buy them back. Industry experts also said faulty foreclosures may lead banks to agree to principal writedowns.

“The nation has been in denial about the scope of the problem, and it’s now just being revealed,” said Janet Tavakoli, founder of Chicago-based Tavakoli Structured Finance Inc., a financial consulting firm, in a phone interview. “This is a huge crisis for our country.” 

Second, the Obama administration feels like it can't touch anything here until after the election at the earliest...if at all.

Washington policy makers, who moved swiftly to calm markets during the subprime mortgage crisis in 2008, have resisted calls for similarly broad steps in response to concern that banks may have acted illegally to seize homes.

President Barack Obama and the federal agencies that share responsibility for housing finance are opposing calls for a nationwide foreclosure freeze, fearing further damage to the housing market. Even as bank stocks tumbled yesterday on concern that the mishandled loans will increase costs for lenders, the White House and federal regulators avoided any grand gestures designed to reassure investors.

Obama this week endorsed a coordinated investigation by attorneys general from all 50 states into whether lenders used false documents to justify foreclosures. Mounting a response on the federal level is complicated by the fact that responsibility for overseeing housing finance and foreclosure law is fragmented among U.S., state and local agencies, with no single regulator shaping policy. 

Any sort of call for any federal government TARP-style bailout two and a half weeks before midterm elections would be absolute political suicide for the Dems and they know it.  Obama's hands are at best completely tied behind his back, and at worst, he's not wanting to risk pissing off the banks again.  Making weak noises echoing the banks' arguments isn't going to hurt him too much (because the Republicans know they can't touch this), but it's certainly not going to help him, either.

Having said that, tearing into the banks right now would indeed help the Democrats greatly.  "The Republicans have repeatedly sided with the banks who have seemingly defrauded billions of dollars from taxpayers and taken thousands of homes from Americans without the legal right to do so.  If they regain control of Congress, justice will never be done."

Seems simple to me.  Sadly, things are always more "complicated" in Washington.


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