Friday, 22 October 2010

G-20 The Fix?

Baltic Dry Index. 2720 -09
LIR Gold Target by 2019: $3,000.

I’m from the government and I’m here to help.

Will the G-20 finance ministers meeting in South Korea come up with a fix to our now rapidly failing fiat dollar reserve standard? Will it make any difference even if they did, given the rapidly escalating mortgage scandal in the USA that now threatens the banking system again via put backs? Stay long precious metals. The latest twist in the mortgage scandal is that the same mortgages seem to have been double or triple pledged into various mortgage securities. Deadbeat homeowners seems to be the least of the growing scandal. But first this news from South Korea. Unsurprisingly, when a score of self important finance ministers meet, agreement is the last thing on the agenda. I wonder if any of them will ask US Treasury Secretary Geithner to prove to the world just how much gold the USA has in Fort Knox, or why the dollar should continue to be a “reserve standard” at all. After all, debtors aren’t the best people to be issuing world currency, and with Dr. Bernanke about to start another round of Quantitative Easing again right after November 2nds US elections, it’s pretty timely to bring the subject up. I wonder if any of them will stay on for Sunday’s inaugural Formula 1 South Korean Gran Prix?

“It’s our dollar but it’s your problem.”

US Treasury Secretary Connally. 1971.

Geithner Push for G-20 Trade Gap Goal Hits Opposition

Oct. 22 (Bloomberg) -- Group of 20 finance chiefs are struggling to agree whether to set targets for their current account imbalances as a way of defusing tension over currencies before it sparks a trade war.

G-20 finance ministers and central bankers began talks in Gyeongju, South Korea, today after weeks of wrangling over whether nations from the U.S. to China are relying on weaker exchange rates to spur growth.

Seeking a solution, U.S. Treasury Secretary Timothy F. Geithner entered the meetings proposing G-20 members pursue policies to reduce trade imbalances “below a specified share” of their economies in coming years, according to an Oct. 20 letter obtained by Bloomberg News. That suggestion today ran into opposition even before the discussions began.

“I think that setting numerical targets would be unrealistic,” Japanese Finance Minister Yoshihiko Noda told reporters. “I’ll need to hear about it, including how it will be done.”

Repeating themes he has pushed for the last month, Geithner also told his colleagues not to seek “competitive advantage by either weakening their currency or preventing appreciation of undervalued currency.” He urged countries with persistent current account surpluses to “undertake structural, fiscal, and exchange rate policies to boost” domestic demand.

-----The G-20 officials are meeting in a bid to end what Brazilian Finance Minister Guido Mantega calls a “currency war.” China’s restraint of the yuan and the recent slide of the dollar as the Federal Reserve shifts toward easier monetary policy are in the spotlight. Nations caught in the middle such as Brazil and South Korea are embracing capital controls to stay competitive with China and limit inflows of speculative cash from the U.S. and Europe.

This has raised concern from policy makers and investors that the tensions will spark a surge of protectionism, derailing an already fragile global economic recovery. Focusing on current account imbalances takes debate beyond the thorny topic of currencies and allows policy makers to address excess U.S. demand and Chinese savings, according a South Korean official.

Now back to the story that threatens to usher in the next Lehman. Increasingly it looks like many destroyed the mortgage note, so as the pass off the same mortgage into multiple mortgage derivatives securities. With 65 million mortgages clouded and at least $1.1 trillion dollars in distress, there is no way that this story won’t end in another US bankster bailout next year. The days of the dollar are numbered.

The reason “many firms file lost note counts as a standard alternative pleading in the complaint” is because the physical document was deliberately eliminated to avoid confusion immediately upon its conversion to an electronic file. See State Street Bank and Trust Company v. Lord, 851 So. 2d 790 (Fla. 4th DCA 2003).

Florida Bankers Association

Mortgage Mess: Shredding the Dream

The foreclosure crisis isn't just about lost documents. It's about trust—and a clash over who gets stuck with $1.1 trillion in losses
October 21, 2010, 1:45PM EST

In 2002, a Boca Raton (Fla.) accountant named Joseph Lents was accused of securities law violations by the Securities and Exchange Commission. Lents, who was chief executive officer of a now-defunct voice-recognition software company, had sold shares in the publicly traded company without filing the proper forms. Facing a little over $100,000 in fines and fees, and with his assets frozen by the SEC, Lents stopped making payments on his $1.5 million mortgage.

The loan servicer, Washington Mutual, tried to foreclose on his home in 2003 but was never able to produce Lents' promissory note, so the state circuit court for Palm Beach County dismissed the case. Next, the buyer of the loan, DLJ Mortgage Capital, stepped in with another foreclosure proceeding. DLJ claimed to have lost the promissory note in interoffice mail. Lents was dubious: "When you say you lose a $1.5 million negotiable instrument—that doesn't happen." DLJ claimed that its word was as good as paper. But at least in Palm Beach County, paper still rules. If his mortgage holder couldn't prove it held his mortgage, it couldn't foreclose.

Eight years after defaulting, Lents still hasn't made a payment or been forced out of his house. DLJ, whose parent, Credit Suisse, declined to comment for this story, still hasn't proved its ownership to the satisfaction of the court. Lents' debt has grown to about $2.5 million, including unpaid taxes, interest, and penalties. As the stalemate grinds on, Lents has the comfort of knowing he's no longer alone. When he began demanding to see the I.O.U., he says, "I was looked upon like I had leprosy. Now, I have probably 20 to 30 people a month come to me" asking for advice. Lents is irked when people accuse him of exploiting a loophole. "It's not a loophole," he says. "It's the law."

----Even if the documentation problems turn out to be manageable—as Bank of America (BAC) and others insist they will be—the economy will still suffer long-term consequences from the loose underwriting that caused the subprime housing bubble. According to an Oct. 15 report by J.P. Morgan (JPM) Securities, some $2 trillion of the $6 trillion in U.S. mortgages and home-equity loans that were securitized during the height of the bubble, from 2005 through 2007, are likely to go into default. The report says the housing bust will ultimately cause losses of $1.1 trillion on those bonds.

While banks and investors take their hits, millions of homeowners continue to be punished by unaffordable mortgage payments and underwater home values. Laurie Goodman, a mortgage analyst at Amherst Securities Group, said in an Oct. 1 report that if government doesn't step up its intervention, over 11 million borrowers are in danger of losing their homes. That's one in five people with a mortgage. "Politically," she wrote, "this cannot happen. The government will attempt successive modification plans until something works."

-----J.P. Morgan predicts that bondholders will absorb most of the estimated $1.1 trillion loss—but may succeed in foisting about $55 billion on banks. If the bank losses turn out to be steeper than J.P. Morgan and most other analysts expect, taxpayers may be asked to inject more capital into the financial institutions. Fannie Mae and Freddie Mac, already wards of the state, might require more capital as well.

Foreclosure Fraud the Florida Default Law Group and Erin Collins Cullaro from the Office of the Florida Attorney General

Posted by Foreclosure Fraud on July 2, 2010

One of the avid readers of this blog alerted me to this very interesting development…

Now, how brazen, or maybe just plain incompetent, is this?

-----With that said, there are pending requests for depositions of these individuals, but their attorneys are fighting like bloody hell to not let them happen.

Reason being? They pull the affidavits when questioned so their theory is, why depose someone that is not relevant to the case anymore since we pulled the affidavit.

My response to that is, just because you got caught filing documents that are questionable, pulling them does not make you immune from filing them in the first place…

Kind of like when a shoplifter gets caught walking out of the store with some merchandise, then trying to give it back promising never to do it again to avoid being prosecuted, right?

Knowing what we all know, how can these affidavits still be allowed to be filed in the courts across this state to disposes people of their homes???

How can these affidavits be allowed while there is an internal investigation within the attorney generals office being conducted on these practices???

How many of these affidavits are in files that have not been submitted yet???

How much longer will the people put up with all of the frauds that are being perpetrated by these foreclosure mills, in which the courts are allowing, before they take matters into their own hands???

Guess it is time for this homeowner to send out their request to depose these nice young ladies.

I bet they will first try to pull the affidavit, then move for protective order…

Maybe they will replace it with one from Erin’s Husband… Wouldn’t that be nice…

Why run and hide if you have done nothing wrong?

to be continued…

More on the weekend blog.

"It is the greenback which is unstable, and not the bullion."

Dr. Franz Pick

At the Comex silver depositories Thursday, final figures were: Registered 52.18 Moz, Eligible 59.95 Moz, Total 112.13 Moz.


Crooks and Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

Today, a Keynesian view of modern Britain. Don’t cut back, says the NY Times Paul Krugman spend more. Maybe one day Mr. Krugman will recognise it’s all down to the 1971 error of Nixonian fiat currency. By then though, we will probably have hit hyperinflation and fiat currency revulsion.

"All of the government's monetary, economic and political power, as well as its extensive propaganda machinery, will be enlisted in a constant battle to drive down the price of gold - but in the absence of any fundamental change in the nation's monetary, fiscal, and economic direction, simply regard any major retreat in the price of gold as an unexpected buying opportunity."

Irwin A. Schiff

British Fashion Victims

By PAUL KRUGMAN Published: October 21, 2010

In the spring of 2010, fiscal austerity became fashionable. I use the term advisedly: the sudden consensus among Very Serious People that everyone must balance budgets now now now wasn’t based on any kind of careful analysis. It was more like a fad, something everyone professed to believe because that was what the in-crowd was saying.

And it’s a fad that has been fading lately, as evidence has accumulated that the lessons of the past remain relevant, that trying to balance budgets in the face of high unemployment and falling inflation is still a really bad idea. Most notably, the confidence fairy has been exposed as a myth. There have been widespread claims that deficit-cutting actually reduces unemployment because it reassures consumers and businesses; but multiple studies of historical record, including one by the International Monetary Fund, have shown that this claim has no basis in reality.

No widespread fad ever passes, however, without leaving some fashion victims in its wake. In this case, the victims are the people of Britain, who have the misfortune to be ruled by a government that took office at the height of the austerity fad and won’t admit that it was wrong.

Britain, like America, is suffering from the aftermath of a housing and debt bubble. Its problems are compounded by London’s role as an international financial center: Britain came to rely too much on profits from wheeling and dealing to drive its economy — and on financial-industry tax payments to pay for government programs.

Over-reliance on the financial industry largely explains why Britain, which came into the crisis with relatively low public debt, has seen its budget deficit soar to 11 percent of G.D.P. — slightly worse than the U.S. deficit. And there’s no question that Britain will eventually need to balance its books with spending cuts and tax increases.

The operative word here should, however, be “eventually.” Fiscal austerity will depress the economy further unless it can be offset by a fall in interest rates. Right now, interest rates in Britain, as in America, are already very low, with little room to fall further. The sensible thing, then, is to devise a plan for putting the nation’s fiscal house in order, while waiting until a solid economic recovery is under way before wielding the ax.

But trendy fashion, almost by definition, isn’t sensible — and the British government seems determined to ignore the lessons of history.

Both the new British budget announced on Wednesday and the rhetoric that accompanied the announcement might have come straight from the desk of Andrew Mellon, the Treasury secretary who told President Herbert Hoover to fight the Depression by liquidating the farmers, liquidating the workers, and driving down wages. Or if you prefer more British precedents, it echoes the Snowden budget of 1931, which tried to restore confidence but ended up deepening the economic crisis.

The British government’s plan is bold, say the pundits — and so it is. But it boldly goes in exactly the wrong direction. It would cut government employment by 490,000 workers — the equivalent of almost three million layoffs in the United States — at a time when the private sector is in no position to provide alternative employment. It would slash spending at a time when private demand isn’t at all ready to take up the slack.

Why is the British government doing this? The real reason has a lot to do with ideology: the Tories are using the deficit as an excuse to downsize the welfare state. But the official rationale is that there is no alternative.

Indeed, there has been a noticeable change in the rhetoric of the government of Prime Minister David Cameron over the past few weeks — a shift from hope to fear. In his speech announcing the budget plan, George Osborne, the chancellor of the Exchequer, seemed to have given up on the confidence fairy — that is, on claims that the plan would have positive effects on employment and growth.

Instead, it was all about the apocalypse looming if Britain failed to go down this route. Never mind that British debt as a percentage of national income is actually below its historical average; never mind that British interest rates stayed low even as the nation’s budget deficit soared, reflecting the belief of investors that the country can and will get its finances under control. Britain, declared Mr. Osborne, was on the “brink of bankruptcy.”

What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it.

"The gold standard, in one form or another, will prevail long after the present rash of national fiats is forgotten or remembered only in currency museums."

Hans F. Sennholz

Another weekend and just over a week to go before America votes in their mid term elections. By all reports, a major change is coming to their House and Senate. The possibility exists, according to the pollsters, of the Republican’s gaining both the House and the Senate. Whatever happens, a far more conservative Congress will likely be taking over in 2011, with the new 2 year Presidential campaigning season starting once it takes office in January next year. Time to enjoy another of God’s great autumn weekends before winter arrives and the chill of austerity sweeps in to Washington. Have a great weekend everyone.

The monthly Coppock Indicators finished September:

DJIA: +227 Down. NASDAQ: +321 Down. SP500: +221 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. September is the fourth down month in a row.

No comments:

Post a Comment