Archive - Oct 2011

Where's the good news?

Now in the election silly season, Obama Administration foreign policy proceeds on autopilot.

Two days ago we posted the first episode in the must watch four part "Meltdown" series from Al Jazeera looking at the key events that brought the world to the edge 3 years ago. With the final quarter of the year upon us, and with massive redemption requests hitting deeply underwater hedge funds, not to mention with a macro and micro economic global financial environment that is the worst it has been since the fall of 2008, we once again stand on the verge of yet another Great Financial Crisis. And although our politicians and leaders refuse to learn from the past, we are confident our readers are far more intelligent. Which is why here is the next part in the Meltdown Series: "A Great Financial Tsunami." Because while insanity may be doing the same thing over and over expeting a different result, sheer idiocy is constantly refusing to learn from the past, and expecting a present which "is different this time."

Anyone exiting the third quarter with a Bank of America (or Wells, or JPMorgan, or Citi) short on their books will be delighted to learn that the "other" mortgage fraud scandal, not the putback litigation which is sure to cost Bank of America billions in incremental legal fees now that that particular settlement appears to be challenged and banks even across the Atlantic are joining in the legal free for all, but the "Linda Green" robosigning affair, which various conflicted attorneys general had held a tenuous grasp over with a settlement in process, has just blown out wide into the open once again, after California joined New York AG Schneiderman in pulling out of the talks, and leaving Iowa Atty. Gen. Tom Miller with a completely lost cause. We expect all other states to promptly follow New York and California's examples. The net impact is quite adverse for all mortgage lenders, as this development will merely snarl the traditional foreclosure process for even longer, and while beneficial to borrowers, it will put even less cash into the depleted coffers of the banks that so desperately need it. Since few if any will actively pursue distressed, or any, housing sales, it will not only hinder further balance sheet repair of the banking sector, but will keep a lid on any potential housing market improvement, which as BCG indicated a few days ago, is the most critical missing link to any economic recovery. Without it the hands of the Fed chairman are  tied even more, and leave him (and the middle class) with just one, nuclear as it may be, option.

We are going to hear several carefully fashioned talking points concerning the economic collapse over the course of the final quarter of 2011, especially in light of the dismal end of the stimulus driven bull market that sustained public optimism since the derivatives implosion in 2008. Let’s not forget, three years ago mainstream economists and the Obama administration were calling for a near full recovery by 2011. Obviously this never materialized, and so, the game has to shift to a new dynamic to keep us all guessing. The deflationary boogieman will be resurrected to frighten taxpayers into taking on even more debt in order to feed the fiat machine, but this is going to meet extraordinary resistance. If you think the protests on Wall Street today are gaining momentum, just wait until Helicopter Ben announces QE3! The next logical step in the progression of banker planning is the call for “Globally Coordinated Action”; global initiatives tying numerous countries together in a unified effort to whitewash the crisis and solidify their real purpose of economic centralization.

Tahrir Square 2.0 ...