Archive - Oct 16, 2010
I don't mean to sound cynical (which I am), but has anyone in the media bothered to ask: why did the SEC decide to settle with Mozilo this week?
The Clusterfuck Is Complete: Meet Those Most Hurt By The Earls' Squatting: Conejo Capital Partners... And Soon Millions Of Other "Soon To Be Ex" Home-BuyersSubmitted by Tyler Durden on 10/16/2010 22:14 -0500
By now the 30 minutes of media fame of the Simi Valley's most (in)famous squatters - the Earls is running out. Yet the consequences of the their actions will resound for a long, long time. The victims: all those may have bought a house in a foreclosure auction, or any other form of existing property sale, without a "lis pendens" or other form of pre-existing legal action, will suddenly think twice about purchasing a home from a bank, or any other owner who may have had a mortgage on the property (now in MERS limbo), and simply end up unwinding the sale. The reason, as Conejo Capital Partners notes, is that nobody will now know when some other set of squatters, who may have owed as much as the Earls (almost a million), and did not contest their loan in good standing with a bank, decide to take the law into their own hands and move right back in. "The most innocent of all victims in this situation
are the new buyers who had signed a contract to purchase the Mustang
property. They are a family of 4 who are adopting their first child this
month. They had already funded their loan, spent money on appraisals,
given notice at their current residence and were scheduled to take
possession of 5893 Mustang Drive on Tuesday the 12th. They
have now cancelled the transaction and are scrambling to find a place to
live as they will be homeless at the end of the month. They are scared.... We
especially feel for the children who are being subjected to this, and the
new buyers who will be temporarily homeless as a result of these events. In all likelihood, there is no way for us to recover the damages we have
suffered, this is no longer about winning; it is about what is right." And the tragedy in all of this, is that there is no clear guily party, as everyone is to blame: the banks, for rushing on the original sale to rake up the NINJA fees, the foreclosure experts for robosigning to accumulate the lowest possible cost basis on the subsequent MBS resale for the mortgage servicer, and the squatters, for deciding to take the law into their own hands, when suddenly there is no law. One thing is certain, this incident will propagate and will make existing home sale next to impossible. And yes, inventory will accumulate, but demand will plunge, resulting in a total collapse of the supply-demand equilibrium point, better known to those idiots a/k/a economic Ph.Ds, as price. But that is precisely what happens when in the pursut of material gains, by everyone, the rule of law is now completely trampled in the USA.
Let me state this another way: two trading firms were predominantly involved in handing investors’ losses of 60 per cent or more in their stocks on May 6 but a staid old mutual fund company trading an S&P futures contract in Chicago has been fingered as the culprit of the Flash Crash.
A financial insider makes a big claim ...
According to a new survey, more than three-quarters of Canadians support increasing Canada Pension Plan benefits. Is Canada on the right track?
In today's interview with King World News, Art Cashin confirms that through its endless meddling, intervention and manipulation over the past two years, the Fed has essentially broken the market: "You used to have markets that were not particularly correlated. The asset classes now seem to be so heavily dominated and in inverse relationship to the dollar, and in direct relationship to the euro... It's frustrating having honed my skills over 50 years to be able to interpret news, and look at a piece of economic data, and try and outwit the rest of the world by figuring out how it would work, and now all you have to do is look and see how the dollar is reacting and know how everything else works. And that huge correlation is not good for people because if everything is correlated in a basket like that, it is very difficult for people to hedge and protect themselves, and therefore when assets move they tend to move altogether." In other words, step aside Value Investor Congress - meet Lack of Value Dollar Correlation Congress. But readers have known that for over three months. Just as they know that lately the biggest concern on Cashin's mind is hyperinflation "the difficulty is while you can get what appears to be nominal benefit out of [hyperinflation], when you try to convert to a hard asset, or even use it to try to buy a needed good, and the perfect example is Zimbabwe. If you were from out of space, and just could get the records of the Zimbabwe stock market you would say, "wow, they are having a pretty good time down there." But they are going up because the assets they hold are going higher and higher in a debased currency." And Cashin on his hyperinflationaty musings from earlier in the week: "My hope is that we don't get anything like that - hyperinflation would be destructive to civilization... But you are right, not only Zero Hedge, I think that was the most emailed comment that day all over the country." He may well be right. And he is certainly right about the Shazam moment: "Money only gets velocity when you lend it or spend it. The difficulty with studying things like the Weimar republic, is that the money supply growing drastically the initial reaction was small. There was very little doing, and it went slowly, until it went suddenly, and when it went suddenly, it went parabolic."
In a stunning turn of honesty, Goldman's David Kostin does a 180 and renounces everything that the Fed wishes the gullible public would swallow hook line and sinker. But first the facts: while the strategist has no choice but to raise his 12 month S&P forecast (this is a new development for all the headline chasers) from 1,250 to 1,275, which is a token nothing compared to the recent 12 month gold price boost from $1,365 to 1,650. This merely reinforces the Zero Hedge view that gold has now become the natural, higher beta, and unlimited upside short hedge to stocks. Indeed, a 1% boost in the S&P PT, is meager compared to the 20% expected gold appreciation. And digging between the facts, we encounter this stunning admission, that would force all current and former Fed chairmen to spin in their graves, assuming a deceased state is attributed them all: "The economy is not the market and QE2 is not a panacea." Read that again, because this is only the first time in history a sellside advisor, especially one who works for Goldman Sachs, has said this truth so fundamental, that nobody actually dares to admit it, least of all the public or the Fed. Below, we present the latest strategy piece by David Kostin which is probably about the most bearish note released by the traditionally permabullish successor to Abby Cohen.
All the gasoline I want at 24 cents a gallon. That is the de facto price that PG&E is billing me for a full charge on the all-electric Nissan Leaf. Thumbing my nose at OPEC. The new electric cars will be total game changers.
The critical issues in America stem from minimally a blatantly ineffective public policy, but overridingly a failed and destructive Economic Policy. These policy errors are directly responsible for the opening salvos of the Currency War clouds now looming overhead. Don’t be fooled for a minute. The issue of Yuan devaluation is a political distraction from the real issue – a failure of US policy leadership. In my opinion the US Fiscal and Monetary policies are misguided. They are wrong! Now after the charade of Extend & Pretend has run out of momentum and more money printing is again required through Quantitative Easing (we predicted QE II was inevitable in March), the responsible US politicos have cleverly ignited the markets with QE II money printing euphoria in the run-up to the mid-term elections. Craftily they are taking political camouflage behind an “undervalued Yuan” as the culprit for US problems. Remember, patriotism is the last bastion of scoundrels. - Gordon T. Long