ASF Lies Yet Again, Brazenly Asserts That Ibanez Ruling Validates Reliance on PSA for Transfers, Blank Assignments – Yves Smith – If the ASF keeps this sort of nonsense up, it’s soon going to have the status of Pravda in the later stages of the Soviet Union, a mouthpiece of falsehoods that the officialdom is particularly eager to promote. Immediately after the Ibanez ruling, in which two foreclosure actions were voided due to the failure of the servicers to prove that the trusts who allegedly owned the mortgages had standing, the American Securitization Forum issued a press release that said: The ASF is pleased the Court validated the use of the conveyance language in securitization documents as being sufficient to prove transfers of mortgages under the unique aspects of Massachusetts law. Importantly, unlike the lower court, the Court also said assignments of mortgage can be executed in blank, as long as a complete chain of transfers can be shown through the applicable deal documents. Even odder, people who ought to know better, ranging from Amherst Securities to FT Alphaville, are uncritically parroting the ASF party line. Let’s look at what the decision actually says.
Exclusive: America has ‘reached the point of no return,’ Reagan budget director warns – The Obama administration’s $78 billion cut to US defense spending is a mere "pin-prick" to a behemoth military-industrial complex that must drastically shrink for the good of the republic, a former Reagan administration budget director recently told Raw Story. "It amounts to a failed opportunity to recognize that we are now at a historical inflection point at which the time has arrived for a classic post-war demobilization of the entire military establishment," David Stockman said in an exclusive interview."The Cold War is long over," he continued. "The wars of occupation are almost over and were complete failures — Afghanistan and Iraq. The American empire is done. There are no real seriously armed enemies left in the world that can possibly justify an $800 billion national defense and security establishment, including Homeland Security." Short of that, he suggested, the United States has "reached the point of no return" with its artificial creation of wealth, and will eventually face a sharp economic decline. Stockman last fall criticized the extension of the Bush tax cuts while the federal government continued to borrow money abroad to pay for its public welfare and warfare programs. His solution to deficit spending — a huge across-the-board tax increase — is contrary to the current anti-tax ideology shared among tea party activists as well as fiscal conservatives in the Republican Party.
The Future is Grey, Small and Female – Good MIT talk on how the future is likely to be dominated by the aged and the infirm, especially women living alone once we messed-up men die, and what that means for reengineering society.
Queensland Under Water – interactive from november – Brisbane Times
Adam Levitin Takes Apart Securitization Industry Posturing on Ibanez, Harp Decisions – Yves Smith – There’s a great post up by Georgetown law professor Adam Levitin on the implications and misreading of two mortgage decisions last week, the Massachusetts Ibanez case and Harp in Maine. Here are key sections: Ibanez means that to foreclosure in Massachusetts, a securitization trust needs to prove: (1) a complete and unbroken chain of title from origination to securitization trust (2) an executed PSA (3) a PSA loan schedule that unambiguously indicates that association of the defaulted mortgage loan with the PSA. Just having the ZIP code or city for the loan won’t suffice. I don’t think this is a big victory for the securitization industry–I don’t know of anyone who argues that an executed PSA with sufficiently detailed schedules could not suffice to transfer a mortgage. That’s never been controversial. The real problem is that the schedules often can’t be found or aren’t sufficiently specific. So what does this mean? There’s still a valid mortgage and valid note. So in theory someone can enforce the mortgage and note. But no one can figure out who owns them
Gingrich Touting State Bankruptcy Bill to Gut Pensions – 01/11/2011 – Yves Smith – There has been an interesting lack of commentary on an effort underway by Newt Gingrich and his allies to enable state governments to declare bankruptcy as a way to slash pension obligations, and given the lack of mention of other creditors, perhaps only pension obligations. The latest sighting was via an article today in Pensions & Investments: Former House Speaker and possible GOP presidential contender Newt Gingrich is pushing for federal legislation giving financially strapped states the right to file for bankruptcy and renege on pension and other benefit promises made to state employees… Mr. Gingrich discussed the proposal in a Nov. 11 speech before the Institute for Policy Innovation, an anti-big-government group based in Lewisville, Texas. According to a transcript of the speech on Mr. Gingrich’s website, http://www.newt.org, he said: “I … hope the House Republicans are going to move a bill in the first month or so of their tenure to create a venue for state bankruptcy, so that states like California and New York and Illinois that think they’re going to come to Washington for money can be told, you know, you need to sit down with all your government employee unions and look at their health plans and their pension plans and, frankly, if they don’t want to change, our recommendation is you go into bankruptcy court and let the bankruptcy judge change it, and I would make the federal bankruptcy law prohibit tax increases as part of the solution, so no bankruptcy judge could impose a tax increase on the people of the states.”….
Group: Exclude Foreclosure Protection From New Mortgage Rules – Protections for homeowners facing foreclosure should be excluded from mortgage-lending rules being developed by federal bank regulators, an industry group said Monday. The Mortgage Bankers Association said in a letter to regulators that the two issues should be considered separately. Combining them “runs the risk of giving short-shrift to two highly complex and critically important issues,” Federal regulators have been working on defining which home loans are considered safe enough to be exempt from a new requirement that issuers of mortgage-backed securities hold on to 5% of the risk. The Federal Deposit Insurance Corp. has been arguing that these so-called risk-retention rules should also contain standards for mortgage-servicing companies, which collect home-loan payments and distribute them to investors. It has been battling behind the scenes with the Federal Reserve and Office of the Comptroller of the Currency, which question whether those standards should be included.
China Owns Lots of Paper – Bloomberg details: China’s foreign-exchange reserves climbed 18.7 percent to a world-record $2.85 trillion at the end of 2010 from a year earlier and domestic lending exceeded the government’s full-year target. The currency holdings, reported by the central bank on its website today, were bigger than the $2.76 trillion median estimate in a Bloomberg News survey of nine economists. How fast have reserves been built? 26.4% annualized since 1978 (reserves crossed $2 trillion in 2009 and $1 trillion in 2006). This level of growth will be mathematically impossible to continue at some point (in my view sooner than later). The current $2.85 trillion is a whopping 20% of US GDP and 5% of World GDP, but if growth were to continue at this pace it would grow to 50% of US GDP by 2015 and 125% by 2020 (assuming the US grows at a 5% / year nominal pace). So what is much more likely in my opinion? In the years to come perhaps a slower growing China, a much stronger Chinese currency, or a less export driven / more internal demand driven China… or perhaps all three.
Big Banks To New Jersey: Stop Bugging Us About Foreclosure Documents – When New Jersey tightened its rules for foreclosures in response to the crisis over false loan documents, it took the unprecedented step of ordering the six largest servicers — Ally Bank/GMAC, Bank of America (BAC), Citibank (C), JPMorgan Chase (JPM), Wells Fargo (WFC) and OneWest — to explain why they should be allowed to continue with their foreclosures. If any of them couldn’t adequately justify itself, New Jersey would suspend all the foreclosure actions by that bank in the state and appoint a special master to investigate its past and proposed processes. On Jan. 5, the banks responded, and in essence each said: Look judge, we’re good guys committed to keeping people in their homes whenever possible, and while we admit that in the past we had problems — teeny-tiny problems — we’ve fixed them already. Most of the banks’ briefs then argued, with varying degrees of aggressiveness, that the court doesn’t have the power to impose a foreclosure moratorium or appoint a special master because that would break court rules, violate New Jersey’s Constitution and the U.S. Constitution — including the banks’ due process rights — and overstep the judiciary’s role. They also claimed it was generally wrong because the banks were regulated federally. Only Chase declined to challenge the court’s authority to impose the moratorium or appoint a special master.
Judges Berate Bank Lawyers in Foreclosures – With judges looking ever more critically at home foreclosures, they are reaching beyond the bankers to heap some of their most scorching criticism on the lawyers. In numerous opinions, judges have accused lawyers of processing shoddy or even fabricated paperwork in foreclosure actions when representing the banks. Judge Arthur M. Schack of New York State Supreme Court in Brooklyn has taken aim at an upstate lawyer, Steven J. Baum, referring to one filing as “incredible, outrageous, ludicrous and disingenuous.” But New York judges are also trying to take the lead in fixing the mortgage mess by leaning on the lawyers. In November, a judge ordered Mr. Baum’s firm to pay nearly $20,000 in fines and costs related to papers that he said contained numerous “falsities.” The judge, Scott Fairgrieve of Nassau County District Court, wrote that “swearing to false statements reflects poorly on the profession as a whole.”
Crushing State Budget Cuts Wiping Out Stimulative Effects of Tax Deal – Today, Jerry Brown announced his fiscal plan for the next 18 months, and it’s not pretty at all. He’ll make an effort to save current tax increases which are set to expire, reducing the pain somewhat, but you’re still looking at major budget cuts to almost all sectors. If you’re going to deal with the budget honestly, there aren’t many other options on a way forward, at least in the interim. Maybe after a few years of sound budgets you can ask Californians to tax the rich. Saving the current tax increases, which have mostly to do with the regressive sales tax, while hoping to cut some corporate tax breaks at the margins, is maybe the best possible option. In Illinois, they’re skipping the intermediate steps and going right to the taxation. Between California and Illinois, you’re looking at about $45-48 billion dollars to balance budgets, between tax hikes and program cuts. The anti-stimulative effect of that almost totally wipes out the $55-60 billion in stimulative measures that aren’t just extensions of current law in the tax cut deal.
Governor Brown’s Budget Slashes State Spending by $12.5 Billion…The spending plan eliminates an 18-month budget gap estimated at $25.4 billion, comprised of a current year shortfall of $8.2 billion and a budget year shortfall of $17.2 billion. A combination of $26.4 billion in actions is needed in order to have a $1 billion reserve. In addition, the deficit will grow to $26.6 billion if the proposed sale of state office buildings, blocked by court order, does not proceed, requiring $27.6 billion in budget actions in order to have a reserve. Brown’s budget proposes $12.5 billion in spending reductions, $12 billion in revenue extensions and modifications, $1.9 billion in other solutions to close the gap and provide for a $1 billion reserve. Major spending reductions include $1.7 billion to Medi-Cal, $1.5 billion to California’s welfare-to-work program (CalWORKs), $750 million to the Department of Developmental Services, $500 million to the University of California, $500 million to California State University, and $308 million for a 10 percent reduction in take-home pay for state employees not currently covered under collective bargaining agreements. Brown also plans to trim state government operations by $200 million through a variety of actions, including reorganizations, consolidations and other efficiencies.
The economic impact of the foreclosure slowdown – Lord, give us a housing market in which foreclosures are initiated and processed quickly and where prices reflect market fundamentals … but not yet. Or anytime soon, really. With apologies to Saint Augustine, that seems to be the message of an article in The New York Times on Friday, by David Streitfeld: The Obama administration, in its most recent housing report, said foreclosure activity fell 21 percent in November from October, the biggest monthly decline in five years. As Streitfeld explains, the slowdown is the result of the increased regulatory and legal scrutiny on the way banks initiate foreclosures. So, among the positives: fewer houses coming to market, increased consumer confidence in housing, more loan modifications.There are other considerations too. As Mike Konczal has written, foreclosures are “mini-neutron bombs on property values and neighborhoods.” Not to mention what foreclosures do to households’ credit and wealth, and consequently on their willingness to spend in the rest of the economy.
Downturn’s Ugly Trademark: Steep, Lasting Drop in Wages – In Massachusetts, Kevin Cronan, who lost his $150,000-a-year job as a money manager in early 2009, is now frothing cappuccinos at a Starbucks for $8.85 an hour. In Wisconsin, Dale Szabo, a former manufacturing manager with two master’s degrees, has been searching years for a job comparable to the one he lost in 2003. He’s now a school janitor. They are among the lucky. There are 14.5 million people on the unemployment rolls, including 6.4 million who have been jobless for more than six months. But the decline in their fortunes points to a signature outcome of the long downturn in the labor market. Even at times of high unemployment in the past, wages have been very slow to fall; economists describe them as "sticky." To an extent rarely seen in recessions since the Great Depression, wages for a swath of the labor force this time have taken a sharp and swift fall.
Australia’s “Tulip Mania” About to Crash; 44% Jump in Property Listings Proves the Proposed Housing Shortage is Gargantuan Myth – For years I have been hearing about a housing "shortage" in Australia. That myth has been shattered by latest stats that show a 44% jump in property listings. The property market could be set for early-year price falls due to a build up of unsold properties, with new figures by property research company SQM Research showing the number of listings swelled 44% over 2010. Managing director Louis Christopher says overall the huge number of listings means prices are now hanging by a thread and a market downturn is imminent.The Daily Telegraph reports Australians sinking under debt burden AUSTRALIA is heading for an economic crunch as family finances collapse under the burden of record debts, rising interest rates and utility bills.
China Trade Surplus for December 2010 – You think the United States government produces imaginary numbers for economic reports? Try China. Consider the heat on the U.S. trade deficit, jobs, currency manipulation and China. Now we have a trade report from China claiming their surplus was cut almost in half in a month. China’s trade surplus was 40% smaller than expected in December, as export growth softened while imports expanded faster than expected, potentially easing some of the trade tensions between China and the U.S. ahead of a state visit by Chinese President Hu Jintao’s later this month. Figures released by the General Administration of Customs on Monday showed a surplus for the month of $13.08 billion, down from $22.9 billion in November. How misleading! The keyword is expected. The reality is China’s trade surplus dropped 7% for all of 2010. Below are the numbers to pay attention to. Can you imagine the word slow used in the same breath if these were United States trade deficit monthly percentage changes?
FDIC Calls for Better Disclosure of Servicer Conflicts of Interest in Second Mortgates –– Yves Smith – There are lots of reasons why servicers are failing to make deep enough mortgage mods to salvage viable borrowers (ones who still have a decent level of income). One of the most troubling is that the parent bank often also has a large book of second mortgages, and writing down first mortgages would require them to ding their second mortgage book. Various conservative estimates have indicated that more realistic valuations of second mortgages would blow a big hole in the balance sheets of the four biggest banks in the US. (The banks’ defense is that borrowers are often still paying their second mortgages when they’ve defaulted on their first. And that occurs because borrowers who are stressed try to stay current on as many obligations as they can, so if they can’t pay both their first and second mortgage, they will often default on the first but keep paying like clockwork on the smaller second mortgage). The FDIC seems to be the lone regulator trying to protect investors. And this is simply common sense. Investors are refusing to buy any new deals save those with some sort of government guarantee precisely because securitization industry participants behaved so badly during the housing bubble. Yet the industry refuses to implement even minor measures to make it safe for investors to get back into the pool (no pun intended).