Archive for October, 2010

Many stories are appearing in the news discussing “Foreclosuregate” – original mortgage notes are lost, shredded, or improperly assigned as the original mortgage is repackaged and sold many times over. This leads to “irregularities” when MERS (for example) starts a foreclosure action against a delinquent homeowner. The legal question is, “If the note has not been properly assigned, does the claimant have the legal right to enforce an eviction to foreclose?” If this right does not exist, then forcible removal of the tenant can be reasonably compared to the theft of the home.

I have two interesting and applicable references here. The first from the Old Testament, and the second from Woody Guthrie


Micah 2:1-3

Woe to Oppressors

Woe to those who scheme iniquity,

Who work out evil on their beds!

When morning comes, they do it,

For it is in the power of their hands.

They covet fields and then seize them,

And houses, and take them away.

They rob a man and his house,

A man and his inheritance.

Therefore thus says the Lord,

“Behold, I am planning against this family

a calamity from which you cannot remove your necks;

And you will not walk haughtily,

For it will be an evil time.”


Woody Guthrie

From “Pretty Boy Floyd

Yes, as through this world I’ve wandered
I’ve seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.

And as through your life you travel,
Yes, as through your life you roam,
You won’t never see an outlaw
Drive a family from their home.


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Can our economy be fixed? Yes, but not without pain – to be borne by everyone. The alternative? Follow the current playbook – continue the bailouts to uphold property values, and kick the can down the road. Why is this a bad idea? Because the fraud was wrong the first time around, it was wrong in round two, and it will continue to be wrong. There is no “winning” in this game, unless you’re JPM or GS.


Joe-bob writes:

The robbers broke into the house. They gathered up all the valuables, got the bank account info and drained it, and most of them have already left with the loot. There’s one robber left to watch you & your family that are sitting there tied up. They stated their intention to come back to take any remaining pawnable valuables you may have, look to see if you have any gold fillings, and rip out the walls in case anything was hidden.

Suddenly you realize he messed up your bindings when he tied them – you can slip out of them and there’s a baseball bat lying 3 feet away from you. His back is turned. At that moment, your shiftless uncle Joe leans over and whispers "Hey, when the rest come back, let’s keep these guys here as long as possible. Long as they’ve got us at their mercy, we won’t have to pay our bills. Bank accounts are empty" And he gives you a sly wink as if he said something clever.

Do you pick up the baseball bat and brain the thief (and maybe shiftless uncle Joe) and call the cops, or do you try to find a way to keep the thieves in the house… tell them grandma is the one with the gold fillings, point out Jimmy’s bicentennial coin collection that they missed and so on? After all, you don’t have to realize the loss yet if the crime continues.

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Our congress has a disease – a cancer – and we need to remove the tumor.

And while we’re removing the incumbents, I’d also like to see REPRESENTATIVES back in office: two-hundred-and-thirty-seven members of Congress are millionaires. That’s 44 percent of the body – compared to about 1 percent of Americans overall.

If you’re worth millions, I’m not voting for you, either. I’ve got nothing against being wealthy – I’d like to be there, myself – but seriously, neither Al Franken nor Norm Coleman has any place representing me in office.

Republican Rep. Darrell Issa is the richest lawmaker on Capitol Hill, with a net worth estimated at about $251 million. Next in line: Rep. Jane Harman (D-Calif.), worth about $244.7 million; Sen. Herb Kohl (D-Wis.), worth about $214.5 million; Sen. Mark Warner (D-Va.), worth about $209.7 million; and Sen. John Kerry (D-Mass.), worth about $208.8 million.

All told, at least seven lawmakers have net worths greater than $100 million, according to the CRP’s 2008 figures.

Senators’ estimated median reportable worth sunk to about $1.79 million from $2.27 million in 2007. The House’s median income was significantly lower and also sank, bottoming out at $622,254 from $724,258 in 2007.

But CRP’s analysis suggests that some lawmakers did well for themselves between 2007 and 2008, even as many Americans lost jobs and saw their savings and their home values plummet.

Senate Minority Leader Mitch McConnell (R-Ky.) gained about $9.2 million. Sen. James Inhofe (R-Okla.) gained about $3 million, Sen. Daniel Inouye (D-Hawaii) had an estimated $2.6 million gain, and Richard Shelby (R-Ala.) gained about $2.8 million.

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Some interesting reading courtesy of the Consumer Metrics Institute. These guys are trying to track GDP-like stats on a higher frequency than the BEA, with the end result being that they have had a good track record of mirroring GDP stats when they’re not being manipulated, and forecasting GDP when the numbers are slightly more massaged.

Along with the measures and forecasts, they recently came out with some analysis, here’s an interesting bit, that may indicate a significant shift in attitudes among middle-class Americans:


Those consumers living through foreclosures will have suffered lifestyle and financial reversals that may require a decade or longer to rehabilitate. And even those fortunate enough to stay current with their mortgages may have had their dreams of upward mobility (or mobility of any sort) crushed. In both of these cases the damage will have caused changes in habits (the "new frugality") that could last decades, if not the rest of their lives. The "Great Depression" of the 1930’s changed an entire generation’s attitudes about banks and spending permanently. While this economic strife may not be as severe, the emotional scars may persist longer than policy makers might wish.

Also absent from the above narrative is the impact of the Federal Reserve’s extended "zero rate" policy on those attempting to live on a lifetime’s modest accumulation of wealth. On Wall Street and inside the Beltway there are no perceived victims of low interest rates, because low rates result in obscene spreads between the real cost of institutional borrowing (essentially zero) and the real rate of consumer lending (18% to 24% on real-world short term loans). Meanwhile every barrier possible has been raised to prevent those lower rates from propagating to those most in need of longer term relief.

Lost on the policy makers is the fact that what’s good for banks is not necessarily good for their depositors. Simply stated, it has become impossible to live on the earnings generated by a lifetime of middle class savings. In June 2007 an accumulation of $2,000,000 in an IRA or 401K would translate into $100,000 in annual income when invested in 1 year T-Bills, an annual income higher than the per capita income in any of the richest nations on earth. That was certainly a reasonable target for a middle class household, and one that would allow a comfortable retirement without significant changes in lifestyle.

Today the same $2,000,000 (if it was somehow preserved throughout the "Great Recession") would earn $4,200 per annum if invested similarly

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It’s starting to get some mainstream media attention, but many don’t understand what QE is. This picture explains it quite nicely.

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When he was three, his father took his favorite Teddy bear
burning it in the fireplace
time to put baby things to rest, he said

When he was four, his dad told him
there was no Santa Claus
No need to keep lying to you- We can’t afford much anyway

When he was five, his parent told him, after a series of arguments
that he had a choice
kill off his imaginary friend
or lose dessert for a month

So that day, a rainy March afternoon
he walked Avery to the corner- and told him he had to leave
before his father came after both of them

Avery left on his own accord
Whispering a small piece of advice

Get out while you can

They were words the boy wrote down,
then used, almost verbatim,

Directed at his father, 12 years later
as he walked into the kitchen with a shotgun

-by efouffe, on everything2

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Is now a “genre”, according to Barnes and Noble.

This is abject failure on so many levels.

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