Month: November 2010

What an Incredible World….

Doubt is not a pleasant condition, but certainty is absurd. — Voltaire

Sweet dream:

Can we make a scientific way of thinking all pervasive? — Brian Cox

Toldja! The mainstream media, in its efforts to keep the establishment — their bosses — happy will be downplaying and ignoring the Wiki State Department leaks, like this wanker here. Of course, on a certain level not so much of this should be news — we’ve known it for ages — but having it substantiated, that’s big. And let me propose Wiki and their leakers for the next Nobel peace prize.

A whole bunch of great questions about the Wiki State Department dump.

Knowledge-hating assholeRep. Peter King (R-N.Y.), a leader who makes the case for anarchy. More hereCan’t be worst than being led, as we are, by his ilk. I mean, a breaking down system of law, thoroughly corrupted leadership….

Coming from WikiLeaks?

If you don't have the strength to deal with the main Wikileaks dump site, start with a click on the image....

Obomba to homeowners: Drop dead!

Obomba: The most cowardly president ever? Is he? Will the Fails ever stop? On the other hand, President Palin is a retard.

Doomed! Structural unemeployment explained:

So where’s the evidence of a structural rise in unemployment in America? Wage growth is slowing; core inflation is falling; clearly, we’re not hitting an inflationary wall right now. Maybe the wall is closer than it seems — but then you look for evidence of skills in short supply, regions without enough workers, and so on, and it isn’t there. (Link to the rest.)

Copyright fascism on the march. Our Leaders engage in empty, pointless posturing and little more.

Attention, terrorists: The TSA let’s you all come and go as you wish if you’re an air caterer. Pilots, not. (Link.)

What else the TSA does.

Coming? Preparing for landing and disembarking and customs by stripping in flight?

Actually, the TSA is pretty much a big waste — so says someone who knows his stuff, Bruce Schneier.

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After the Holiday Weekend, a New Era Dawns. Not

Really, I’m not sure this will quite lead anywhere and the media will bore of the story soon unless Assange is arrested or whacked. But if you need to know that you were right to believe the worse about international relations and the State Department’s business, you can start here and here and here and here here.

Doomed! President Palin loves the president who enabled wild speculation that resulted in the Great Depression. Of course, when President Palin is elected, you can safely expect the worst and know that you’ll get even worse. I mean, what reasonable person is ready to bet against Worst President Ever?

Doomed! How We Got to This.

That jerk terrorist-wannabe that just got busted: Was his plot a creation of our own FBI?

Third-rate actor, but I liked “The Naked Guns” (I’m a child of Kurtzman and Mad magazine):

Same Old, Same Old, Just Less So Today….

One of the most striking differences between a cat and a lie is that a cat has only nine lives. — Mark Twain

Reminder: Our Leaders’ liberation of Iraq was and continues to be a success.

Unemployment down to 8% by late 2012? I find that overly optimistic. Then again, it’s in a report written for Obomba. ‘Nuff said.

Things look great for the Irish. On the road to being even worse off than the bogus Irish miracle.

I know you don’t read about it in the elite media, but our system looks pretty well corrupted to me. (Of course, the Teabaggers are nothing if not co-opted by the America-hating corrupters.)

Read this and tell me the Fox News audience isn’t stupid or retarded. Almost makes one wish they never lowered the voting qualifications from male landowners….

Did I note yet that the pornoscanners are unsafe? Are they?? On the other hand, I find this only a little persuasive. I mean, does the amount of embarassment and humiliation matter? And again, the gratuitous exposure of radiation for absolutely no adequate purpose? I mean, besides pork aspect of course… in a corrupt system, the need to cowtow to lobbyists’ bribes is the only reason that’s needed….

Is this me?

A Few Choice Bits From Matt Taibbi’s Rolling Stone Article on the Foreclosure Disaster

He alludes to some idea that the rush to foreclose is somehow connected to coming suits and stuff of the “investors” in the instruments created from selling sliced and diced mortgages then sold as safe, quality investments. Like not owning the mortgages now somehow protects them from responsibility for what they did. Don’t buy it. Simply may be that it’s less harmful to foreclose at any price than to keep lousy loans on the heavily cooked books.

What’s also maybe even more awful about the piece is the description of a dysfunctional system….

Now all of this — the obviously cooked-up documents, the magically appearing stamp and the rest of it — may just seem like nothing more than sloppy paperwork. After all, what does it matter if the bank has lost a few forms or mixed up the dates? The homeowners still owe what they owe, and the deadbeats have no right to keep living in a house they haven’t paid for.

But what’s going on at the Jacksonville rocket docket, and in foreclosure courts all across the country, has nothing to do with sloppiness. All this phony paperwork was actually an essential part of the mortgage bubble, an integral element of what has enabled the nation’s biggest lenders to pass off all that subprime lead as AAA gold.

In the old days, when you took out a mortgage, it was probably through a local bank or a credit union, and whoever gave you your loan held on to it for life. If you lost your job or got too sick to work and suddenly had trouble making your payments, you could call a human being and work things out. It was in the banker’s interest, as well as yours, to make a modified payment schedule. From his point of view, it was better that you pay something than nothing at all.

But that all changed about a decade ago, thanks to the invention of new financial instruments that magically turned all these mortgages into high-grade investments. Now when you took out a mortgage, your original lender — which might well have been a big mortgage mill like Countrywide or New Century — immediately sold off your loan to big banks like Deutsche and Goldman and JP Morgan. The banks then dumped hundreds or thousands of home loans at a time into tax-exempt real estate trusts, where the loans were diced up into securities, examined and graded by the ratings agencies, and sold off to big pension funds and other institutional suckers.

Even at this stage of the game, the banks generally knew that the loans they were buying and reselling to investors were shady. A company called Clayton Holdings, which analyzed nearly 1 million loans being prepared for sale in 2006 and 2007 by 23 banks, found that nearly half of the mortgages failed to meet the underwriting standards being promised to investors. Citi­group, for instance, had 29 percent of its loans come up short, but it still sold a third of those mortgages to investors. Goldman Sachs had 19 percent of its mortgages flunk the test, yet it knowingly hawked 34 percent of the risky deals to investors.

D. Keith Johnson, the head of Clayton Holdings, was so alarmed by the findings that he went to officials at three of the main ratings agencies — Moody’s, Standard and Poor’s, and Fitch’s — and tried to get them to properly evaluate the loans. “Wouldn’t this information be great for you to have as you assign risk levels?” he asked them. (Translation: Don’t you ratings agencies want to know that half these loans are crap before you give them a thumbs-up?) But all three agencies rejected his advice, fearing they would lose business if they adopted tougher standards. In the end, the agencies gave large chunks of these mortgage-backed securities AAA ratings — which means “credit risk almost zero.”

Since these mortgage-backed securities paid much higher returns than other AAA investments like treasury notes or corporate bonds, the banks had no trouble attracting investors, foreign and domestic, from pension funds to insurance companies to trade unions. The demand was so great, in fact, that they often sold mortgages they didn’t even have yet, prompting big warehouse lenders like Countrywide and New Century to rush out into the world to find more warm bodies to lend to.

In their extreme haste to get thousands and thousands of mortgages they could resell to the banks, the lenders committed an astonishing variety of fraud, from falsifying income statements to making grossly inflated appraisals to misrepresenting properties to home buyers. Most crucially, they gave tons and tons of credit to people who probably didn’t deserve it, and why not? These fly-by-night mortgage companies weren’t going to hold on to these loans, not even for 10 minutes. They were issuing this credit specifically to sell the loans off to the big banks right away, in furtherance of the larger scheme to dump fraudulent AAA-rated mortgage-backed securities on investors. If you had a pulse, they had a house to sell you.

As bad as Countrywide and all those lenders were, the banks that had sent them out to collect these crap loans were a hundred times worse. To sell the loans, the banks often dumped them into big tax-exempt buckets called REMICs, or Real Estate Mortgage Investment Conduits. Each one of these Enron-ish, offshore-like real estate trusts spelled out exactly what kinds of loans were supposed to be in the pool, when they were to be collected, and how they were to be managed. In order to both preserve their tax-exempt status anddeserve their AAA ratings, each of the loans in the pool had to have certain characteristics. The loans couldn’t already be in default or foreclosure at the time they were sold to investors. If they were advertised as nice, safe, fixed-rate mortgages, they couldn’t turn out to be high-interest junk loans. And, on the most basic level, the loans had to actually exist. In other words, if the trust stipulated that all the loans had to be collected by August 2005, the bank couldn’t still be sticking in mortgages months later.

Yet that’s exactly what the banks did. In one case handled by Jacksonville Area Legal Aid, a homeowner refinanced her house in 2005 but almost immediately got into trouble, going into default in December of that year. Yet somehow, this woman’s loan was placed into a trust called Home Equity Loan Trust Series AE 2005-HE5 in January 2006 — five months after the deadline for that particular trust. The loan was not only late, it was already in foreclosure — which means that, by definition, whoever the investors were in AE 2005-HE5 were getting shafted.

Why does stuff like this matter? Because when the banks put these pools together, they were telling their investors that they were putting their money into tidy collections of real, performing home loans. But frequently, the loans in the trust were complete shit. Or sometimes, the banks didn’t even have all the loans they said they had. But the banks sold the securities based on these pools of mortgages as AAA-rated gold anyway.

In short, all of this was a scam — and that’s why so many of these mortgages lack a true paper trail. Had these transfers been done legally, the actual mortgage note and detailed information about all of these transactions would have been passed from entity to entity each time the mortgage was sold. But in actual practice, the banks were often committing securities fraud (because many of the mortgages did not match the information in the prospectuses given to investors) and tax fraud (because the way the mortgages were collected and serviced often violated the strict procedures governing such investments). Having unloaded this diseased cargo onto their unsuspecting customers, the banks had no incentive to waste money keeping “proper” documentation of all these dubious transactions.

“You’ve already committed fraud once,” says April Charney, an attorney with Jacksonville Area Legal Aid. “What do you have to lose?”

***

Jamie Dimon, the CEO of JP Morgan, is even more succinct in dismissing the struggling homeowners that he and the other megabanks scammed before tossing out into the street. “We’re not evicting people who deserve to stay in their house,” Dimon says.

There are two things wrong with this argument. (Well, more than two, actually, but let’s just stick to the two big ones.)

The first reason is: It simply isn’t true. Many people who are being foreclosed on have actually paid their bills and followed all the instructions laid down by their banks. In some cases, a homeowner contacts the bank to say that he’s having trouble paying his bill, and the bank offers him loan modification. But the bank tells him that in order to qualify for modification, he must first be delinquent on his mortgage. “They actually tell people to stop paying their bills for three months,” says Parker.

The authorization gets recorded in what’s known as the bank’s “contact data base,” which records every phone call or other communication with a home owner. But no mention of it is entered into the bank’s “number history,” which records only the payment record. When the number history notes that the home owner has missed three payments in a row, it has no way of knowing that the homeowner was given permission to stop making payments. “One computer generates a default letter,” says Kowalski. “Another computer contacts the credit bureaus.” At no time is there a human being looking at the entire picture.

Which means that homeowners can be foreclosed on for all sorts of faulty reasons: misplaced checks, address errors, you name it. This inability of one limb of the foreclosure beast to know what the other limb is doing is responsible for many of the horrific stories befalling homeowners across the country. Patti Parker, a local attorney in Jacksonville, tells of a woman whose home was seized by Deutsche Bank two days before Christmas. Months later, Deutsche came back and admitted that they had made a mistake: They had repossessed the wrong property. In another case that made headlines in Orlando, an agent for JP Morgan mistakenly broke into a woman’s house that wasn’t even in foreclosure and tried to change the locks. Terrified, the woman locked herself in her bathroom and called 911. But in a profound expression of the state’s reflexive willingness to side with the bad guys, the police made no arrest in the case. Breaking and entering is not a crime, apparently, when it’s authorized by a bank.

The second reason the whole they still owe the fucking money thing is bogus has to do with the changed incentives in the mortgage game. In many cases, banks like JP Morgan are merely the servicers of all these home loans, charged with collecting your money every month and paying every penny of it into the trust, which is the real owner of your mortgage. If you pay less than the whole amount, JP Morgan is now obligated to pay the trust the remainder out of its own pocket. When you fall behind, your bank falls behind, too. The only way it gets off the hook is if the house is foreclosed on and sold.

That’s what this foreclosure crisis is all about: fleeing the scene of the crime. Add into the equation the fact that some of these big banks were simultaneously betting big money against these mortgages — Goldman Sachs being the prime example — and you can see that there were heavy incentives across the board to push anyone in trouble over the cliff.

Things used to be different. Asked what percentage of struggling homeowners she used to be able to save from foreclosure in the days before securitization, Charney is quick to answer. “Most of them,” she says. “I seldom came across a mortgage I couldn’t work out.”

***

Look: It’s undeniable that many of the people facing foreclosure bear some responsibility for the crisis. Some borrowed beyond their means. Some even borrowed knowing they would never be able to pay off their debt, either hoping to flip their houses right away or taking on mortgages with low initial teaser rates without bothering to think of the future. The culture of take-for-yourself-now, let-someone-else-pay-later wasn’t completely restricted to Wall Street. It penetrated all the way down to the individual consumer, who in some cases was a knowing accomplice in the bubble mess.

But many of these homeowners are just ordinary Joes who had no idea what they were getting into. Some were pushed into dangerous loans when they qualified for safe ones. Others were told not to worry about future jumps in interest rates because they could just refinance down the road, or discovered that the value of their homes had been overinflated by brokers looking to pad their commissions. And that’s not even accounting for the fact that most of this credit wouldn’t have been available in the first place without the Ponzi-like bubble scheme cooked up by Wall Street, about which the average home owner knew nothing — hell, even the average U.S. senator didn’t know about it.

At worst, these ordinary homeowners were stupid or uninformed — while the banks that lent them the money are guilty of committing a baldfaced crime on a grand scale. These banks robbed investors and conned homeowners, blew themselves up chasing the fraud, then begged the taxpayers to bail them out. And bail them out we did: We ponied up billions to help Wells Fargo buy Wachovia, paid Bank of America to buy Merrill Lynch, and watched as the Fed opened up special facilities to buy up the assets in defective mortgage trusts at inflated prices. And after all that effort by the state to buy back these phony assets so the thieves could all stay in business and keep their bonuses, what did the banks do? They put their foot on the foreclosure gas pedal and stepped up the effort to kick people out of their homes as fast as possible, before the world caught on to how these loans were made in the first place.

Why don’t the banks want us to see the paperwork on all these mortgages? Because the documents represent a death sentence for them. According to the rules of the mortgage trusts, a lender like Bank of America, which controls all the Countrywide loans, is required by law to buy back from investors every faulty loan the crooks at Countrywide ever issued. Think about what that would do to Bank of America’s bottom line the next time you wonder why they’re trying so hard to rush these loans into someone else’s hands.

When you meet people who are losing their homes in this foreclosure crisis, they almost all have the same look of deep shame and anguish. Nowhere else on the planet is it such a crime to be down on your luck, even if you were put there by some of the world’s richest banks, which continue to rake in record profits purely because they got a big fat handout from the government. That’s why one banker CEO after another keeps going on TV to explain that despite their own deceptive loans and fraudulent paperwork, the real problem is these deadbeat homeowners who won’t pay their fucking bills. And that’s why most people in this country are so ready to buy that explanation. Because in America, it’s far more shameful to owe money than it is to steal it. (Link.)

 

 

A Kinder, Gentler Post….

I ask you: Can you not believe they’re all assholes:

[State House Rep. Tom Hackbarth, a] Minnesota Republican lawmaker who was handcuffed and questioned by police after loitering with a gun near a Planned Parenthood clinic has been stripped of his leadership roles in the Minnesota House. (Link.)

How stupid and disgusting is the sewage that id Fox News? This disgusting. If this doesn’t sicken you…:

Missed in the brouhaha over Sarah Palin’s verbal flub about our North Korean “allies,” and much more telling:

According to host Glenn Beck’s own transcript, Beck’s very next utterance was to proclaim that the “mystery” jet contrail recently seen in California (explained weeks ago (even by Fox News online) as almost certainly an optical illusion created by still air and a jet contrail from a known UPS delivery flight) was in fact a secret two-stage missile launch by the Chinese government to assert their power over America, “sending a signal that the world has changed.”

Beck then went on to state that the Chinese “control the world.”

Did Sarah Palin, would-be leader of the United States, disagree with any of this?  Nope.

Palin’s verbatim response: “Well, that’s right.” (Continues at the link.)

Doomed! Because economic policy is being based on partisan slogans instead of actual solutions for actual problems:

Many of the reactions to my writing, both in comments here and more generally, seem to be along one of the following lines:

(a) You say devaluation/inflation is good — but how did it work out in the 1970s/Zimbabwe? Hah!

(b) You say Germany is being evil by running a trade surplus — but you praise it in Iceland. Inconsistent!

What such comments betray is a mindset that relies on slogans, not models — or, more kindly, a failure to appreciate that economic policy requires that you pay attention to circumstances.

Thus, on the devaluation issue: devaluation is helpful when your problem is one of inadequate demand, so that an improvement in the cost-competitiveness of your industry can help you expand. It’s not good if you’re suffering from an overheating, inflation-prone economy. It depends on thenature of your unhappiness.

On the trade issue: the world’s problem is that it’s facing a deleveraging shock, in which highly indebted players are being forced to cut spending sharply; what we need is for those not deeply in debt to spend more to compensate. Iceland is in the first category, Germany in the second. (Link.)

Doomed! This horseshit is acceptable. In a normal world, it would be a scandal:

One caution about the results was sounded by Ms. Bair, who noted that a significant part of the banks’ profit improvement has come from reducing the amounts set aside as provisions for future loan losses. “At this point in the credit cycle, it is too early for institutions to be reducing reserves without strong evidence of sustainable, improving loan performance and reduced loss rates,” she said. (Link.)

Attention, Objectivists: Sometimes, the collectivist solution is the correct solution. It’s reality (yes, I know, your philosophy requires detachment from reality.)

A key to happiness: Focus on the act.

The greatest 60-odd seconds ever on the TV:

Really, I’m Thankful for Stuff, Just Nothing in this Post :)

What I seek to transcend:

In most instances, all an argument proves is that two people are present. — /.

A prayer, a day late, likely of no help since we’re past that point:

Doomed! Dunno whether I’ve linked to this before but M. Taibbi does a fine job explaining what’s wrong with the foreclosure crisis, more particularly, note just about every way that’s wrong with it. Me, I’ve been wrapping my head around the concept that the real expansion of the federal debt pols should, but are bribed not to, worry about is the socialization of speculators’ losses, that the public sector is required to reimburse speculators for their losses. Can’t wrap your mind around the idea of the public giving speculators money for bad bets? Read this and get started….

Note: Graphic created long before the current boom topped. But even in 2006, it was clear and ugly.

Play with this while you’re waiting to get imaged in the nude and/or groped by TSA professionals — all in the name of preventing terrorists from leaving our nation.

Noted: The Islamofascist terrorists have created an industry in America and thereby created jobs and wealth. Not a joke — fact. (Crappiness of Windows has done the same thing.)

The latest version of the old rightist shibboleth: Just because a government keeps the truth about another country from its people, somehow the second nation cannot even consider that the first country knows anything that not publicized. And, for that matter, that making the secrets and/or lies public would do any significant harm. Please. There will be some embarassment and then that’s it. I say: Good for WikiLeaks. Truth is that little as knowledge is respected, in fact knowledge is power. Let all truths be revealed.

Why kill Obomba? I’d kill all Republican from voters on up and maybe throw in a bunch of Wall Street speculators. Everything you hate about what Obomba’s done is because of giving in to Republican demands so it’s pretty clear where the blame lies. I suppose the inability to perceive reality may be the basis for this guy’s insanity defense….

Rupert’s Times of London paywall: Great success or horseshit? Read this and decide.

Serious embarrassment” = horseshit.

Some Turkeys Past Their Time to be Slaughtered; Better Late than Never

Again: Is this a great country or, oh, one in serious, probably terminal decline? We report, you decide (I’ve made my mind up already).

Every man must decide whether he will walk in the light of creative altruism or in the darkness of destructive selfishness. — Dr. Martin Luther Kng, Jr.

Every generation laughs at the old fashions, but follows religiously the new. — Henry David Thoreau

Thanks for…: Elizabeth Warren. Our only leader doing any good.

Doomed! Because this is the solution for our economic problems but we’re getting too little because Our Leaders refuse to commit to it.

Doomed! Our Leaders and the establishment maybe are a little clueless.

The Times’ hyperventilating notwithstanding, does anyone really think Tom DeLay’s conviction won’t be overturned by a Texas appellate panel??

For TSA gropes: Menstruating women whose panty liners block* the porno-scanners. (*Yes, one can’t understand just how crappy these beneficiaries of political bribes and portk are.) A dump-worth of complaints is here.

In case you ever need to know how to do it....

And in honor of Black Friday (even the holiday season this year is already a month old), and possibly the last reference herein to Xmas....