Baltic Dry Index. 2562 -66
LIR Gold Target by 2019: $3,000.
"Thank God For Bank Bailouts" “There’s danger in just shovelling out money to people who say, ‘My life is a little harder than it used to be, at a certain place you’ve got to say to the people, ‘Suck it in and cope, buddy. Suck it in and cope.’”
Charlie Munger. Winner of the Marie Antoinette Award 2010.
After Monday’s good news that the US Great Recession was over last June and that it’s time to pile back in to the US assets again, Spain’s socialist Prime Minister yesterday declared Europe’s debt crisis is over too, and it’s time to pile back in to Club Med’s debt and start once again refinancing Club Med’s Dolce Vita lifestyle. Below, “the Big Zap” on the end of the crisis, and why the United States of Europe needs to unite some more, so the German’s hard working, tax paying, savings orientated economic strengths can apply to all. “We all need to borrow on the strength of Germany’s ability to repay” apparently. The European Gospel according to Spain. Greek debt anyone? Spanish? Would anyone needing to buy a certain famous NY bridge please get in touch.
“you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?”
SEPTEMBER 22, 2010
Europe Debt Crisis Is Over, Declares Spanish Leader
NEW YORK—Spanish Prime Minister José Luis Rodríguez Zapatero declared that the European debt crisis is over but said that the governments have to work better together and with markets to stave off such events.
"I believe that the debt crisis affecting Spain, and the euro zone in general, has passed," Mr. Zapatero said in an interview with The Wall Street Journal on Tuesday.
One lesson learned from the market turbulence that hit the euro zone in recent monthsis that a single monetary policy isn't enough for the European Union, Mr. Zapatero said. "We require further convergence to boost competitiveness, and stronger principles to implement balanced economic and fiscal policies."
Mr. Zapatero, who said he expects no contractions in gross domestic product in coming quarters, offered a robust defense of Spain's economy and the austerity package he has pushed through Parliament.
Another lesson that emerged from the crisis is the need to push for greater economic policy coordination within the European Union.
Earlier Tuesday, the Spanish leader met with senior executives from major U.S. financial-services companies and investment funds to talk about Spain's economy, in an effort to shore up investor confidence on the country's fundamentals.
Mr. Zapatero said his message is that "confidence has been restored," particularly after the country released results of tests that evaluated the soundness of its banking system in late July. The risk aversion toward Spain has also subsided as the government has shown progress in reducing its deficit. Spanish banks' reliance on European Central Bank funding fell in August from record highs in June and July as international capital markets started opening up again for Spanish institutions.
---- Mr. Zapatero reiterated his government's commitment to economic reform and fiscal austerity, including plans to cut the country's budget gap to 6% next year and to 3% in 2011. The gap is forecast to be 9.3% in 2010.
Spain plans to cut spending at its ministries by 15% to 16% next year. Mr. Zapatero's government plans to submit its 2011 budget proposal to Parliament in coming days.
I am skeptical that our “recovery” in the G-7, Germany possibly excepted, is a recovery at all, rather than just the product of government sponsored and subsidized efforts at keeping the lights on in large parts of the economy. If America and Europe double dip, as I expect that they will the moment all the subsidies end, my guess is that Asia’s boom slams into a brick wall too. Stay long precious metals, in part two of the double dip, Asia joins us in the Great Recession, new Lehman’s appear out of nowhere, and social distress walks abroad again. Fiat currency goes into meltdown.
Next more on a ticking time bomb story we’ve been covering for almost 2 years. In their greed to securitize mortgages into CDOs and all the rest of the USA “triple-A” garbage that was peddled by Wall Street to the world, the mortgage originators deliberately and with malice aforethought, short circuited the necessary legal process of recording the transfers of ownership of the mortgages involved. Such was the avarice to get hold of other people’s money and pay themselves astronomic bonuses while the getting was good, they didn’t give a damn about obeying the law and filing the change of ownership with the counties involved, and incidentally in paying the filing fees on which the counties need to hold down property taxes, instead they set up a fast track (and probably illegal) clearing house to shuffle the paperwork around unofficially. The result, it’s now often near impossible to tell who owns a mortgage alleged to be in default. Now bailed out GMAC Mortgage, now a division of Ally Financial, wants to play fast and loose in court to get back the properties it may or may not actually own. “Trust me, I’m a giant rapacious US mortgage originator. What does it matter who really owns the defaulted mortgage? It was all a giant scam from beginning to end. Give me that house now!” Somehow, unless rule of law is about to collapse entirely in the USA, I suspect that Ally Financial is about to get its GMAC head served up on a silver platter. And if rule of law is dropped in America and the holders of nearly worthless triple-A paper are about to be cheated out of their collateral, who in the world will want to buy US securitized assets?
"What do I care about the law ? Hain't I got the power."
Cornelius Vanderbilt. 1794-1877.
Ally Says GMAC Mortgage Mishandled Affidavits on Foreclosures
Sept. 21 (Bloomberg) -- Ally Financial Inc., whose GMAC Mortgage unit halted evictions in 23 states amid allegations of mishandled affidavits, said its filings contained no false claims about home loans.
The “defect” in affidavits used to support evictions was “technical” and was discovered by the company, Gina Proia, an Ally spokeswoman, said in an e-mailed statement. Employees submitted affidavits containing information they didn’t personally know was true and sometimes signed without a notary present, according to the statement. Most cases will be resolved in the next few weeks and those that can’t be fixed will “require court intervention,” Proia said.
“The entire situation is unfortunate and regrettable and GMAC Mortgage is diligently working to resolve the situation,” Proia said. “There was never any intent on the part of GMAC Mortgage to bypass court rules or procedures. Nor do these failures reflect any disrespect for our courts or the judicial processes.”
State officials are investigating allegations of fraudulent foreclosures at the nation’s largest home lenders and loan servicers. Lawyers defending mortgage borrowers have accused GMAC and other lenders of foreclosing on homeowners without verifying that they own the loans. In foreclosure cases, companies commonly file affidavits to start court proceedings.
“All the banks are the same, GMAC is the only one who’s gotten caught,” said Patricia Parker, an attorney at Jacksonville, Florida-based law firm, Parker & DuFresne. “This could be huge.”
-----In December 2009, a GMAC Mortgage employee said in a deposition that his team of 13 people signed “a round number of 10,000” affidavits and other foreclosure documents a month without verifying their accuracy. The employee said he relied on law firms sending him the affidavits to verify their accuracy instead of checking them with GMAC’s records as required. The affidavits were then used to complete the process of repossessing homes and evicting residents.
Florida Attorney General William McCollum is investigating three law firms that represent loan servicers in foreclosures, and are alleged to have submitted fraudulent documents to the courts, according to an Aug. 10 statement. The firms handled about 80 percent of foreclosure cases in the state, according to a letter from Representative Alan Grayson, a Florida Democrat.
-----In August, Florida Circuit Court Judge Jean Johnson blocked a Jacksonville foreclosure brought by Washington Mutual Bank N.A. and JPMorgan Chase Bank, which had purchased the failed bank’s assets, and Shapiro & Fishman, the companies’ law firm. Documents eventually showed that the mortgage on the house was in fact owned by Washington-based Fannie Mae.
WaMu and the law firm “committed fraud on this court,” Johnson wrote. JPMorgan had presented a document prepared by Shapiro showing the mortgage was sold directly to WaMu in April 2008.
-----Iowa Assistant Attorney General Patrick Madigan said the implications of Ally’s internal review and the GMAC employee’s deposition could be “enormous.”
“It would call into question whether other servicers have engaged in similar practices,” Madigan said in a telephone interview. “It would be a major disruption to the foreclosure pipeline.”
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aCAsCjGYeLsI
Running a financial institution on small spreads with lots of leverage is a precarious way to make a living. Eventually, competition reduces lending standards until the point where everyone must go along with the lousy lending standards or go out of business. There's a very fast race to the bottom. Anything that gets as competitive as finance has naturally goes toward excess.
Charlie Munger.
At the Comex silver depositories Tuesday, final figures were: Registered 53.71 Moz, Eligible 58.48 Moz, Total 112.19 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today, an update on the developing La Nina in the Pacific. Did last year’s mild La Nina cause our severe UK and European winter? Does a another severe winter lie ahead for most of Europe? Will Europe turn into Canada? Does La Nina’s impact get magnified during periods of low sunspot numbers? I wish I knew the answers, but prudence requires planning as if it does, and the answers are likely to be: yes, yes, no, and yes. Stay around for confirmation ahead.
"I am just going outside and may be some time".
Lawrence Oates. 16 March 1912
CLIMATE PREDICTION CENTER/NCEP |
9 September 2010 |
ENSO Alert System Status: La Niña Advisory |
Nearly all models predict La Niña to continue at least through early 2011 (Fig. 6). However, the models continue to disagree on the eventual strength of La Niña. Based on current observations and model guidance, we expect the SST anomalies in the Niño-3.4 region to either persist near the present strength, or to strengthen into the winter as is consistent with the historical evolution of La Niña. Thus, it is likely that the peak strength of this event will be at least moderate (3-month average between –1oC to –1.4oC in Niño-3.4) to strong (3-month average of –1.5oC or less in Niño-3.4).
Expected La Niña impacts during September-November 2010 include suppressed convection over the central tropical Pacific Ocean, and enhanced convection over Indonesia. The transition into the Northern Hemisphere Fall means that La Niña will begin to exert an increasing influence on the weather and climate of the United States. These impacts include an enhanced chance of above-average precipitation in the Pacific Northwest, and below-average precipitation in the Southwest and in portions of the middle and lower Mississippi Valley and Tennessee Valley. Also, La Niña can contribute to increased Atlantic hurricane activity by decreasing the vertical wind shear over the Caribbean Sea and tropical Atlantic Ocean (see the August 5th update of the NOAA Atlantic Seasonal Hurricane Outlook), and to suppressed hurricane activity across the central and eastern tropical North Pacific.
http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/ensodisc.html
Goldman has the best morality of any of the big banks. From this sense, it's a little crazy to be attacking our best bank.
Goldman was in a world where Congress legalized all types of derivatives. It's an inherently dangerous world. Given that world, I see no reason to think Goldman misbehaved in some horrible fashion. Everyone was doing it, and it's only natural to increase your moneymaking activities when you can do so legally.
Charlie Munger.
The monthly Coppock Indicators finished August:
DJIA: +243 Down. NASDAQ: +366 Down. SP500: +243 Down.
The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. August is the third down month in a row and “crash season” approaches.
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