I was thinking last night that I’d take the evening off, but this was too ridiculous to ignore. We hear all kinds of stories of people having difficulties working with their lenders.  No wonder- apparently some lenders can’t work with themselves.  Case in point, this Fox News story of Wells Fargo suing, you’re not going to believe this, Wells Fargo.  So why would they do that? You can’t expect a bank that is dumb enough to sue itself to know why it is suing itself. Yet I could not resist asking Wells Fargo Bank NA why it filed a civil…
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Our story so far … Citadel and GS are two thriving Japanese restaurants.  Lotsa customers.  Opening nights, the stars come in after for the sashimi fugu.  Rolling in dough, so much that the local wiseguys even noticing.  Profitable, yep, but complicated to manage — a real hairball. Citadel’s top knife-wielder, guy named Misha, decides he can do better independently, so he and a couple of his buds leave and start planning to open a competitor called Teza.  Through the grapevine they hear about a pretty good sushi chef across town at GS, name of Sergey.  Teza courts Sergey and he…
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When Arizona Attorney General Terry Goddard says The violations alleged in this lawsuit are among the worst abuses of vulnerable consumers that I’ve seen in my time [as attorney general], you know he’s saying something.  Fraud in the real estate industry has reached new highs [or lows, depending on your point of view] here in recent years. The Attorney General’s Office filed a consumer fraud lawsuit in Pima County against 13 real estate agents and businesses. Affected were over 130 investors and 270 prospective homebuyers, multiple defrauded lenders and 130 properties in foreclosure: [Thanks M.R.!] The complaint states that the…
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Doomer V, who sent it along, thinks that this has a most fragrant odor to it. We’re not sure what it means that yesterday the Fed started loaning out agencies, but given that the cenbank Agency Debt holdings number we’ve been following here turned into custard 6 months ago it’s highly likely some further mischief is afoot. Meanwhile, the rather quaint post- 9/18 ’08 spectacle of early 1930s Soviet-style central planning by committees of Wall Street financial lobbyists is proceeding as usual. Twist sends this announcement of FHFA’s first Five Year Plan (PDF). This story arc would be funnier if…
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Doomers, I have a really bad feeling arising out of this recent ZeroHedge comment. . . . . . … But there is a potentially nasty side-effect to this strategy: it seems to make the market essentially isomorphic among all asset classes. At this juncture, it does not seem too big of a stretch to assume that there are algorithms A1, …, An trading against each other. Each one has a (probabilistic) trading strategy, say S1, …, Sn. Eventually, they should end up in equilibrium, according to elementary game theory (Nash eq.). … by induction we’ll end up with only…
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For all those that believe that the housing market has bottomed in the Phoenix area, I have a question.  What do you think happens to the mortgage of these folks? [Thanks L!] Phoenix-area bankruptcies doubled in June for the second consecutive month, and mounting job losses suggest the number of filings could grow before conditions improve. Reflecting the Valley’s depressed housing market and weak job picture, bankruptcy filings are rising much faster here compared with the number of national and state applications. Households and businesses around the Valley filed 2,294 bankruptcy applications last month, up 105 percent from June 2008…
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Earlier this week, following a rousing celebration of Rorke’s Drift and a moving performance of I Vow To Thee My Country, I found myself 40 feet above a sea of ceremonial weapons and dry ice smoke looking down the long axis of a hockey arena directly into the eyes of Peter MacKay.  Two thoughts: short of mutiny, we’re not really leaving in ’11, are we sir? with a roughly 130-year offset, the post-Hiroshima New Victorian colonials are living out the same classic story arc as our post-Waterloo great-great-great-… grandparents; that places us squarely at the beginning of another post-1873 Long…
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I’m sorry guys, but it’s just too tough to post this morning.  My lovely dog Sage, who has laid at my feet while I have blogged for the past several years, passed away yesterday  at the age of 13.  We’ve been together since she was two months old, and I’m feeling just a little lost. Sage was something special.  She was obedient, intelligent and beautiful.  She was an Australian Shepherd with a strong herding instinct.  My children were her sheep and she dedicated her life to watching over them.  She was a Mama’s girl though, and when the kids were…
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Apologies all around to Doomers who have been putting up with my silly sidebar comments to the sillier stories on the Sergey Aleynikov story to now.  As an excuse, I submit that as an obsolete burned out former techie who wasted much of his career doing things like trying to make MRPG work or (this one mildly successful) adapting Pascal source with MASM exits into an ANSI PL/I program to implement LZW compression on Multics multi-segment files (sorry about that, Mr. Sperry!), I sensed from early on that something important was going to come out of the Goldman IP affair. …
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It is said that to come up with a solution, you first need to identify the problem.  We know that foreclosures keep on coming like they are powered by the Energizer Bunny, but what has created this problem? Is it subprime?  Predatory lending? Mortgage resets? While those are part of the problem, check out this chart from yesterday’s Wall Street Journal: [Thanks to everyone that forwarded this!] According to author and professor Stan Liebowitz:

It’s been a very weird Goldman Sachs day. . . . . . .

  It’s no surprise to most of us when we see misleading claims about mortgages in advertisements- but how about misleading claims on the FHA’s own website? I’ve complained in previous posts that reverse mortgages are not the risk-free products that their marketers often claim.  It’s bad enough to have lenders make misleading claims.  When the FHA does it though, it’s inexcusable. Here’s one example: Reverse mortgages are becoming extremely popular for America’s seniors. FHA’s reverse mortgage is a federally-insured private loan, and it’s a safe plan that can give older Americans greater financial security. Many seniors use it to…
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It’s Monday, and Robert Samuelson of the Washington Post has noted what Doomers have been saying for years- most economists don’t understand the economy: One intriguing subplot of the economic crisis is the failure of most economists to predict it. Here we have the most spectacular economic and financial crisis in decades — possibly since the Great Depression — and the one group that spends most of its waking hours analyzing the economy basically missed it. Oh, a few economists can legitimately claim some foresight. But they are a handful. Most were as surprised as the rest of us.

Japanese mortgages are recourse loans, meaning the borrower is still liable even after foreclosure. Depending on the state, most banks in America offer nonrecourse loans, which are secured by collateral, usually the property itself. Once they foreclose, the borrower’s debts are gone. If you default on a recourse loan, you’re messed up three times: you lose your home, you lose all the money you sunk into it, and you still have debt. Wait, make that four times — your credit rating is garbage. Wow!  Sounds like Japan doesn’t have to worry about The Danish Model. Doom once again thanks the…
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NEW YORK, June 29 (Reuters) – The New York Federal Reserve said on Monday it will buy agency coupon securities maturing from Jan. 2016 to July 2032 in an open market operation on Tuesday. [1] America’s a great country.  Unique too.  Part of that exceptionalism is that it’s the only decent sized country on the planet that doesn’t actually have a central bank.  If my garbled understanding of US history is any guide, they tried having one a couple of times, but public opinion, driven by Andrew Jackson era populism, made the project impossible.  Then 99 years ago a cabal…
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