Baltic Dry Index. 2696 +34
LIR Gold Target by 2019: $3,000.
“If government policy does not change, over 11.5 million borrowers are in danger of losing their homes (1 borrower out of every 5)”.
Amherst Securities Group LP. October 2010 Report.
They came, they talked, then they walked away. And so ended the annual meeting of the men who would promote themselves as the saviours’ of our dysfunctional, failing, fiat currency, global financial system. As meetings of this ilk went, it made the Bank of England and the ECB look like Batman and Robin. Below, The Telegraph covers the wasted opportunity to set out a pathway back to sanity and sound money. With “the next Lehman” hovering in the wings in the shape of Bank of America and its ability to collapse the US mortgage foreclosure system, and to cloud the titles of millions of US real estate properties, this may go down in history as the meeting that sealed the fate of the fiat currencies.
In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.
John Kenneth Galbraith
IMF fails to agree on anything
By Jeremy Warner Last updated: October 9th, 2010
Few IMF communiques are good for anything other than providing tomorrow’s fish and chip paper, but even by its own gloriously low standards, the International Monetary Fund has managed to surpass itself with its latest statement. Such a meaningless load of waffle is hard to recall.
Even Dominique Strauss-Kahn, the IMF’s managing director, appeared embarrassed by it. “The language is ineffective”, he said, “and the language won’t change things. Policy has to be adapted”. Then again at a press conference I’ve just sat in on, he said: “The problem is that we can talk and talk. What we need is real action but don’t believe it can be done in another way, in a non co-operation way”. Self evidently wearied by the lack of progress in agreeing reform to give the developing world a bigger say in the IMF, he joked: “There is only one obstacle, which is the agreement of the members”.
And so to the communique itself. On the main issue of contention among central bankers and finance ministers here in Washington this weekend for the IMF’s annual meeting – continued trade and capital imbalances in the world economy – there was a breakthrough of sorts. Members agreed to “work toward a more balanced pattern of global growth, recognising the responsibilities of surplus and deficit countries”. Progress, then? Unfortunately not.
There’s no movement whatsoever on Chinese currency reform, seen by the IMF and the US as key to addressing these imbalances. Nor is there any agreement on what to do about inflows of hot money into emerging markets, another distorting feature of currency markets right now which the Brazilian finance minister has depicted as part of a “currency war”.
http://blogs.telegraph.co.uk/finance/jeremywarner/100008074/imf-fails-to-agree-on-anything/
Next the man who broke the Bank of England, UK Chancellor of Exchequer Lamont, and John Major’s Conservative government, all on the same day, September 16, 1992, although John Major’s conservative government did seem to have a death wish, warns of a currency war with China. That, he thinks, could lead to the collapse of the world economy. Stay long precious metals. Preserving the Great Nixonian Error of fiat currency, and US dominance as a reserve currency, is now evermore bizarre and ludicrous. Besides with Bank of America auditioning for the role of the next Lehman, Lucky George may be tilting at the wrong windmill. BoA has just tossed a grenade into a very sophisticated machine, and as the machine now goes ever more wrong, we are flirting with triggering imminent cross defaults if hundreds of billions in CDS gambling contracts start to detonate.
“Paper money eventually returns to its intrinsic value - zero.”
Voltaire
George Soros warns China of global 'currency war'
George Soros has warned that a global “currency war” pitting China versus the rest of the world could lead to the collapse of the world economy.
By Rupert Neate Published: 3:01PM BST 09 Oct 2010
Mr Soros, the hedge fund manager best known as the man who broke the Bank of England” after he made a billion betting against the value of Sterling on Black Wednesday in 1992, said the China had created a “lopsided currency” system.
He criticised China for deliberately keeping the yuan - its currency - low in order to keep exports cheap, which is hurting US competitors.
Mr Soros told BBC Radio 4’s Today programme that China had a “huge advantage” over international competitors because it can control the value of its currency.
He said China could also influence the value of other world currencies because they have a “chronic trade surplus”, which means the Chinese have a lot of foreign currencies. “They control not only their own currency but actually the entire global currency system,” he said.
Writing in the Financial Times, Mr Soros added: “Whether it realizes it or not, China has emerged as a leader of the world. If it fails to live up to the responsibilities of leadership, the global currency system is liable to break down and take the global economy with it.”
China’s central bank governor Zhou Xiaochuan defended the world’s second largest economy, however.
Now back to Bank of America, doing its best to become “the next Lehman”. How do you manage to foreclose on a property with no mortgage? You make a nonsense of due process and rule of law, and turn the US court system into that of a banana republic, and by separating the note and title, then destroying the note, and saving the filing fees on recording title transfers by not recording them with the counties, effectively stealing a billion in filing fees from the counties, you reduce the system to a morass of muddle and confusion where black is white, up is down, and no one can be certain of who owns what, if the property has changed hands since 1997 when the banks set up a parallel transfers system called MERS, the Mortgage Electronic Registration System. Not to worry, they’ve only clouded some 60 million US properties in the banksters’ rush to slice and dice, and pay themselves telephone number bonuses, and rip off county taxpayers along the way. I suspect that this will go on to become a triggering event on BoA CDS. Until this gets resolved, all US residential MBS will trade as junk if it can trade at all.
Banks are an almost irresistible attraction for that element of our society which seeks unearned money.
J Edgar Hoover
Man Who Had No Mortgage Faced Foreclosure Anyway: Ann Woolner
October 07, 2010, 9:18 PM EDT
Oct. 8 (Bloomberg) -- Jason Grodensky paid cash for a South Florida home last December. With no mortgage and full ownership, he had no fear of foreclosure.
And yet, Bank of America foreclosed on the house seven months later, according to the South Florida Sun Sentinel. The court-ordered foreclosure took place July 15.
Grodensky tried for months to get answers from the lawyers and lenders involved. He got nowhere until he contacted the newspaper which started poking around. Now, Bank of America says it will straighten out the mess at its own cost, the Sun Sentinel reports.
Banks that are suspending foreclosures in much of the country call mistakes in paperwork mere technical errors. This implies that the foreclosures, or most of them, were otherwise on solid legal ground and that any mistakes were the unintended result of trying to handle too many cases in too little time.
No harm. No foul, right?
Not true. A great deal of harm has been inflicted, and not just on the rare homeowner wrongly judged to be delinquent.
What’s happened over the past few years is that the very system of keeping track of who owns what property in the U.S. has been undermined by banks too busy to bother with doing it correctly.
This bad record-keeping became an enormous problem for banks when the housing market collapsed and borrowers defaulted. Missing the proper paperwork, foreclosure mills turned out documents misidentifying mortgage holders and containing multiple errors and omissions.
More.
Bank failures are caused by depositors who don't deposit enough money to cover losses due to mismanagement.
Dan Quayle.
At the Comex silver depositories Friday, final figures were: Registered 52.27 Moz, Eligible 60.28 Moz, Total 112.55 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
No not more on BoA’s efforts to become “the next Lehman”, nor even the startling admission below, by the “Florida Bankers Association” that they deliberately destroyed the notes evidencing the mortgage loan, no this is not made up, today the October report by Amherst Securities Group, which predicts over 11 million US homeowners will default and get evicted if present policies aren’t altered. Thanks to the banksters setting up MERS, I’m not so sure of the “evicted” part.
The reason “many firms file lost note counts as a standard alternative pleading in the [foreclosure] complaint” is because the physical document was deliberately eliminated to avoid confusion immediately upon its conversion to an electronic file.
Florida Bankers Association.
A Mammoth One in Five Borrowers Will Default
October 3, 2010
A leading mortgage analyst predicts over 11 million homeowners will default and lose their home if the government fails to take more radical intervention.
Amherst Securities Group LP, one of the most respected names in mortgage research, has trumpeted an ambitious call-to-government arms in its October mortgage report.
“The death spiral of lower home prices, more borrowers underwater, higher transition rates (to default), more distressed sales and lower home prices must be arrested.”
The authors dismiss recent talk of mortgage performance improvement as statistical sleight-of-hand magically conjured by modifications.
“This ‘improvement’ (in mortgage performance) simply reflects large scale modification activity having served to artificially lower the delinquency rate”.
The current crop of mortgages is already “impaired” at the one-of-five level. Nine of 100 are seriously delinquent. Six of 100 are “dirty current” (made current by modification). Five of 100 are seriously underwater (LTV greater than 120%) (Please see the chart above categorizing the forecast of 11 million defaults.).
The authors, who describe current conditions as leading to “an impossible number” of defaults and one that is “politically unfeasible”, unveil a major arms race of measures to counteract the default tide.
The solutions include mandatory principal reductions, looser underwriting of new mortgage loans, leveraged capital pools for investors, and penalties for defaulting homeowners. Amherst reports that a family who defaults can live rent-free for 20 months on average. They propose that missed mortgage payments, including property taxes and insurance, be counted as W2 income.
They make note of recent new signs of distress including two record-low readings of existing home sales in the last two reports. Another block is that underwriting standards have grown much stricter at Fannie and Freddie. Only 2% of Freddie purchases are now bad-credit borrowers where they represented about 20% of borrowers in 2006. FHA purchase mortgages, however, which have by definition much more lenient lending guidelines, have exploded upwards from roughly 10% of their lending in 2006 to more than 50% today.
The buyer pool is also compromised by the fact that 17% of borrowers now have a seriously compromised credit history. After mortgage default a typical wait-time to qualify again is anywhere from 3 to 7 years.
---- Risk is so high in today’s real estate market that private money has largely left the mortgage category. The retreat is most easily seen in the jumbo mortgage market. Total jumbo mortgage origination has fallen from a high of $650 billion in 2003 to $92 billion in 2009 (see the chart above). Government loans account for 90% of current originations.
http://housingstory.net/2010/10/03/a-mammoth-one-in-five-borrowers-will-default/
"While boasting of our noble deeds, we are careful to control the ugly fact that by an iniquitous money system, we have nationalized a system of oppression which, though more refined, is not less cruel than the old system of chattel slavery."
Horace Greely
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.
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