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Chris Whalen Welcomes Our New Tyrannical Overlords, Prepares For The Taxpayer Funded Mortgage Insurer Bailout

Tyler Durden's picture





 

Chris Whalen's latest Institutional Risk Analytics is a must read letter as it highlights yet another aspect of foreclosure fraud, one which finds various analogues in the way the MBS originating banks took advantage of AIG, knowing full well it was stuffed to the gills with worthless pieces of paper and taking out enough insurance on it to require a federal bailout when mark to fraud failed and mark to market finally worked for a very short period of time. Now, it seems, it is the mortgage insurers turn: "So today the MIs are still operating, though they are not providing insurance because they can't. Observers in the operational trenches tell The IRA that virtually no MI claims are being paid - even if the claim is legitimate. The MIs are very undercapitalized and still bleeding heavily. But they get continued business because the GSEs demand MI on high LTV loans. Lenders are forced to use the MIs and consumers are made to pay the premium. Thus the auditors of the GSE continue to respect the cover from the MIs, even though the entire industry is arguably insolvent." The question is how many CDS have Goldman et al purchased in bulk in anticipation of the imminent wholesale MI Event of Default, which will force Geithner to once again use the Mutual Assured Destruction wildcard and force taxpayers to bail out those holding MI insurance, especially if the originators and servicers end up being one and the same...

From Whalen's latest:

Several mortgage market observers describe the current private mortgagre insurance market in the U.S. as a regulatory artifice -- or more accurately regulatory arbitrage. MI was re-created expressly for the GSEs to provide cover for loans with an LTV greater than 80%. It was a simple business and, if the management of an MI underwriter was not too stupid, it could make a decent return. The problem is that management of the old line MIs typically did a lot of very stupid things, acts of idiocy that were encouraged by the GSEs and their allies in Congress. A handful of the more egregious lapses in judgment by the MIs and the GSE included risk management changes that come under the familiar story of "innovation," a familiar ruse that was a key part of the push by both political parties for affordable housing going back decades:

(1) Eliminating independent risk management departments; line managers in the MIs were allowed to override corporate risk departments, particularly when insuring large bulk deals.

(2) Signing fraud, and documentation (completion) waivers in order to land large bulk deals from the largest producers.

(3) Insuring bulk deals without performing random inspections to (a) keep lenders honest and (b) assess underwriting quality.

(4) Insuring subprime loans (non GSE loans) without proper credit models; and insuring production from lenders with questionable credentials.

(5) Insuring large quantities mortgage product that was outside the knowledge base of the MIs. Remember that the MIs had almost 40 years of insuring plain vanilla F&F product. Now they were insuring 220's and every other kind of crappy paper the lenders threw at them. They had no clue how this stuff would perform. No attempt was made to model it properly.

So what happened? By summer of 2007 most of the bulk GSE pools underwritten by the MIs started to experience extremely high levels of delinquencies. But rather than curtail MI operations and shore up underwriting, the MIs made a big push and increased subprime production insuring large amounts of subprime product (lots of 220s) all the way into first quarter 2008.

The MIs tripled down and did so in hopes of making enough fee income to (1) meet plan and (2) shore up capital that had started to bleed. This push, which was not always reported honestly to share and bond holders, signed the respective death warrants for Fannie and Freddie. But the zombie dance party rocks on.

So today the MIs are still operating, though they are not providing insurance because they can't. Observers in the operational trenches tell The IRA that virtually no MI claims are being paid - even if the claim is legitimate. The MIs are very undercapitalized and still bleeding heavily. But they get continued business because the GSEs demand MI on high LTV loans. Lenders are forced to use the MIs and consumers are made to pay the premium. Thus the auditors of the GSE continue to respect the cover from the MIs, even though the entire industry is arguably insolvent.

Thus we go back to the low-income borrower, who is forced by the GSEs to pay for private mortgage insurance that will never pay out. The relationship between the GSEs and the MIs is identical to the "side letter" insurance transactions between AIG and Gen Re, and come to think of it, the AIG credit default swaps trades with Goldman Sachs (GS) and various other Wall Street dealers. In each case the substance of the transaction is to falsify the financial statements of the participants. And in each case, the acts are arguably criminal fraud. And in the case of the zombie banks, the GSEs and the MIs, the fraud is being actively concealed by Congress, the White House and agencies of the U.S. government led by the Federal Reserve Board. Is this not tyranny?

Look for topical comparisons of fraudclosure to the AIG implosion to gain far more prominence as the mortgage fraud topic just refuses to go away, and has the big 3 holders, Paulson, Och Ziff, and Caxton, cowering in semi-lit rooms, thinking of effective exit strategies that, for now, do not involve wholesale middle-class bailouts. Also look for the Treasury to soon disclose just how profitable its imminent bail out of the mortgage insurers will end up being for taxpayers...

 


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Wed, 10/27/2010 - 12:33 | Link to Comment Turd Ferguson
Wed, 10/27/2010 - 13:10 | Link to Comment Gubbmint Cheese
Gubbmint Cheese's picture

God love ya Turd I thought of exactly the same thing - thx also to Tyler for the set up.

Wed, 10/27/2010 - 12:38 | Link to Comment plocequ1
plocequ1's picture

Here we go with that fictitious word " TAXPAYER" again. Will they finally get it over with already? I feel my $300 paycheck is too much. Please Mr Taxman, take it all . Its yours. Just leave me enough for my Cablevision. I needs my WiFi and American Idol

Wed, 10/27/2010 - 13:05 | Link to Comment plocequ1
plocequ1's picture

Shit, Now that brings back memories. I used to watch that show when i was a kid way back in the 70s. I loved the opening

http://www.youtube.com/watch?v=tFhHictuBOE

Thanks for the memories.. I remember guarding my Sgt Pepper Vinyl album with my life

Wed, 10/27/2010 - 13:05 | Link to Comment Return2Sanity
Return2Sanity's picture

The taxpayer too has ceased to function, but the government is covering it up by continuing to loan money to itself and pretending like it's real.

Wed, 10/27/2010 - 13:14 | Link to Comment Joe Davola
Joe Davola's picture

Or selling erstwhile assets:   http://www.rollingstone.com/politics/news/17390/222206?RS_show_page=1

 

As a PA resident and occasional turnpike traveller, I am willing to let someone else have the turnpike - real cheap.

Wed, 10/27/2010 - 21:16 | Link to Comment ILikeBoats
ILikeBoats's picture

Not sure what you mean about the PA turnpike - if you read their CAFR, they make as big or bigger a gross profit margin as any high tech company such as Google, Microsoft, or Apple.

Wed, 10/27/2010 - 21:47 | Link to Comment Hollywood
Hollywood's picture

What's wrong with loaning money to yourself?  Oh, wait a minute...

Wed, 10/27/2010 - 12:40 | Link to Comment kaiserhoff
kaiserhoff's picture

You want clear, obvious fraud involving nearly all of the major players?  This is it.  I've said for a while now that these zombies are only being kept alive for fraudulent purposes, to make it appear that insurance is in place, when all the players know that the opposite is true.

Wed, 10/27/2010 - 12:41 | Link to Comment unwashedmass
unwashedmass's picture

 

can we just call this what it is, "extortion"

Wed, 10/27/2010 - 12:41 | Link to Comment Joe Davola
Joe Davola's picture

I'm beginning to think it would actually be cheaper to let the deadbeats keep the $800k homes that they owe $1mil on.

 

Unfortunately, that wouldn't bail out the banks.

Wed, 10/27/2010 - 12:46 | Link to Comment cougar_w
cougar_w's picture

MIs will be the first to go, but not the last. Once that domino falls I don't see how the hell this train wreck stays on the rails.

Wed, 10/27/2010 - 12:50 | Link to Comment TheMonetaryRed
TheMonetaryRed's picture

Of course Whalen can't bring himself to blame the private sector MI's themselves for being anything more than "stupid' rather than the blatant insurance frauds they are. He has to somehow blame the GSEs and government for everything so he can cling to efficient markets theory. That said, this article was very informative. 

Wed, 10/27/2010 - 13:54 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

Agreed, he gives them too much credit - go back to the earnings calls circa 2007 - their managements were BRAGGING about how much business they were getting.

The 2007 vintage loans will probably end up with 30%+ losses - almost a third of all those mortgages will go to foreclosure.

That wasn't stupidity, that was gambling that the housing bubble wouldn't burst.

Wed, 10/27/2010 - 14:02 | Link to Comment malek
malek's picture

Have you read the full original article?

Whalen is putting a huge "fraud" tag on pretty much everything there.

Wed, 10/27/2010 - 12:55 | Link to Comment DB Cooper
DB Cooper's picture

Treason in addition to tyranny.

Wed, 10/27/2010 - 13:00 | Link to Comment Turd Ferguson
Turd Ferguson's picture

"Treason doth never prosper: what's the reason? Why if it prosper, none dare call it treason." 

Wed, 10/27/2010 - 12:55 | Link to Comment Hansel
Hansel's picture

Yes, this is tyranny.

Wed, 10/27/2010 - 16:37 | Link to Comment moofph
moofph's picture

...yes, i very much agree. but, yet, it feels like such a virtual tyranny, because only the ones that know the truth to what is unraveling see it that way...everyone else is still in their virtual freedom.

the real SHTF will follow the virtual SHTF...prepare for both.

Wed, 10/27/2010 - 12:56 | Link to Comment Wyndtunnel
Wyndtunnel's picture

When will Americans finally have enough of this shit and tweet each other to spontaneously overrun Capital Hill and dare the military to shoot them dead!  Think DC is ready for such a flash revolt?? They must be...  Something will have to trigger it...but what?  The Internet going down across the board for more than a few hours? MTV going off the air? Glee being cancelled? It is getting surreal how much abuse Americans are taking sitting down.

Wed, 10/27/2010 - 13:50 | Link to Comment Oh regional Indian
Oh regional Indian's picture

It is getting surreal how much abuse Americans are taking sitting 

But the reason is obvious enough, isn't it Wynd? It was to me while I was there:

1) Programming (literal through TV and now computers and by every form of media and every kind of sterotype you can imagine, and then some. Look at all hollywood creations and then see how every following generation absorbed and emitted those archetypes (as far back as mass media, ie. Radio actually and magazines before that).

2) Bad, often poisoned food. I remember a drive through Illinois and Indiana. Through the great breadbasket of America. Indianapolis was weird. Everyone looked fat and happy. ANd all along the highway: this farm proudly uses (insert cargill, monsanto et. al.) I would highly recommend a book "My year in Meats" by I forget who. Tells a real story about the use of propaganda in food habit alteration.

3) Pathetic education system, especially public schools.

4) Fluoride in your water

5) For effect, once again with a drum roll: TV! Tee Vee! TV has the masses hooked by thier balls/hair/brains, depending.  Think Jackass. Enough Said.

and about a dozen more.

ORI

http://aadivaahan.wordpress.com

 

Wed, 10/27/2010 - 14:31 | Link to Comment MeTarzanUjane
MeTarzanUjane's picture

Long live ballywood, indians trying to replicate the worst parts of America. Fluoride in our water, copious amounts of human waste in yours.

I've met enough indians in the US who despite what their resumes claim suffer from an even worse education than rural Mexicans.

Cheers.

Wed, 10/27/2010 - 18:50 | Link to Comment CH1
CH1's picture

They don't want to face it... will do or believe almost anything rather than facing it.

Why? Because if they do face it, responsibility reverts to them. They'll take ANYTHING but that!

Wed, 10/27/2010 - 13:00 | Link to Comment Aristarchan
Aristarchan's picture

One way to stop the incestuous linkage (too interconnected to fail) is simply to ban the insuring of financial instruments. I have no problem with hedging with a derivative trade, but all this interlinked trading/insuring between firms was a distaster from the beginning.

Wed, 10/27/2010 - 13:07 | Link to Comment doolittlegeorge
doolittlegeorge's picture

Of course "Social Security is an insurance progam" too.  As I have been told "there's no such thing as a government entitlement."  So "bail 'em out because we're already Throwing Mama from the Train."  Utica NY?  "49% property tax increase."  Just for starters....

Wed, 10/27/2010 - 13:10 | Link to Comment Aristarchan
Aristarchan's picture

Theoretically pre-funded by its participants. I am not a big fan of SS, but, can you imagine a system where SS retirement monies is directly handled by Wall Street?

Wed, 10/27/2010 - 13:37 | Link to Comment TheMonetaryRed
TheMonetaryRed's picture

Social Security was never pre-funded and it's not an insurance program. It was, is and always has been a transfer payment from younger to older workers that "saves" money in the Trust Fund only to compensate for demographic changes. 

 

Wed, 10/27/2010 - 13:51 | Link to Comment DB Cooper
DB Cooper's picture

SS is the King of all Ponzi schemes.

Wed, 10/27/2010 - 14:47 | Link to Comment Aristarchan
Aristarchan's picture

I agree with you guys.....but what is the alternative?.....does it make sense to put wage workers at the mercy of stocks?

Wed, 10/27/2010 - 15:39 | Link to Comment Strongbad
Strongbad's picture

If we had sound money, people could simply save money for retirement on a 3-6% yield in CDs, bonds, savings accounts, etc. because inflation wouldn't eat them alive.  The only reason people "need" to buy stocks for retirement is because they need the capital gains on top of the dividends in order to beat inflation.

Wed, 10/27/2010 - 15:46 | Link to Comment Aristarchan
Aristarchan's picture

I agree, theoretically. However, there is a pervasive price creep that occurs independent of inflation, mainly in food, fees, services and the like. And, of course, there are always the potential of future events (wars, etc) that can drive inflation beyond our ability to control it.

Wed, 10/27/2010 - 18:56 | Link to Comment CH1
CH1's picture

Actually, minus inflation, there is a negative price creep. As things are produced more efficiently - and presuming effective competition - prices gradually decline.

How much corn was produced per acre in 1900 as compared to now? How much cheaper is it to use robots in manufacturing? And so on. (Then consider electronics!)

Think about it a bit and see if you don't agree.

Wed, 10/27/2010 - 21:34 | Link to Comment StychoKiller
StychoKiller's picture

Yeah, but expanding the size of the Leviathan Govt cannot be justified if prices are continually falling due to productivity/efficiency increases!

Wed, 10/27/2010 - 15:13 | Link to Comment Aristarchan
Aristarchan's picture

I have no problem with a government-sponsored retirement program as long as it is managed properly. It is no different than what happens in other countries, for instance in most of Asia, where parents are taken in to live with their children...it is just a different kind of wealth transfer. The problem is, banks, investment firms and companies cannot be trusted to handle other peoples money without ripping them off. I don't trust the government very far either....but give me a viable alternative? If you want to privatize retirement wealth, then I can go for that, if you also give me the legal right to hunt down the shithead that ripped me off and cut his fucking toes off till he makes it right, or gut the basterd like a chicken if he doesn't.

Wed, 10/27/2010 - 18:57 | Link to Comment CH1
CH1's picture

I have a huge problem with government programs: They are paid for by taking money from people by force.

We have a name for such people!

Wed, 10/27/2010 - 21:35 | Link to Comment StychoKiller
StychoKiller's picture

But, but...I'm from the Govt, and I'm here to HELP! (help myself to some of your property, that is!)

Wed, 10/27/2010 - 12:59 | Link to Comment sweaty7
sweaty7's picture

let's just drop the charades and nationalize all mortgages. Fed takes all mortgages and gives the banks treauries in return, let the FED then re-fi everyone out there a 2.5%. isn't that the end game anyway? the FED and the big banks have screwed this thing up so much, nothing short of a complete collapse will ever enable us a foundation to rebuild a sound ecnomic system.

Wed, 10/27/2010 - 13:43 | Link to Comment Max Hunter
Max Hunter's picture

nothing short of a complete collapse will ever enable us a foundation to rebuild a sound ecnomic system.

Indeed... Indeed

Wed, 10/27/2010 - 14:12 | Link to Comment TheMonetaryRed
TheMonetaryRed's picture

Do major financial collapses generally result in "sound economic systems"? 

Let's look at history, shall we? 

Okay, we've got the 1) Fall of Rome - that produced the Dark Ages, so no luck there. 

2) The Fourth Crusade - caused the fall of the Byzantine Empire and assorted medieval chaos. 

3) Welsh Conquest - not bad, unless you were Welsh. 

4) Philip II of Spain default - 500 years of decline for Spain. 

5) The Darien Scheme - Battle of Culloden, destruction of the Scottish nation. 

6) John Law Bubble - French Revolution, invention of fascism under Napoleon.

7) Ottoman Default - WW1

8) Russian Default - Russian revolution. 

9) Weimar Default - Hitler

10) Panic of 1907 - The Federal Reserve system

11) Great Depression - WW2

Need I go on?

Wed, 10/27/2010 - 15:42 | Link to Comment Strongbad
Strongbad's picture

"It can't happen here."

Wed, 10/27/2010 - 19:01 | Link to Comment CH1
CH1's picture

No time for a real historical overview, but that's not quite right. The "Dark Ages", for example, were a slow reset after the distortions of Rome. Crop yields rose during that time, for example.

The 'history' you were taught in school was political more than historical. (Sorry.)

Of course, you are right that there are no guarantees. I do, however, have confidence in most Americans. They are good people... and shockingly effective, once they get the state out of their heads.

Wed, 10/27/2010 - 13:02 | Link to Comment Tic tock
Tic tock's picture

This would easily swallow QE., it could be a credit event, one way or the other. ..should the govt. wish to hold this potato, it would become more than likely that housing in the US does eventually become a social provision.

Wed, 10/27/2010 - 13:05 | Link to Comment MeTarzanUjane
MeTarzanUjane's picture

How is gold doing today? I can't get to my computer to check...

Let me know, OK? Sprot predicted a pop yesterday, he said there is be a great buy in the miners. So we bought a lot on the close. Did we get it?

Can I get a quote on spot?

Wed, 10/27/2010 - 13:13 | Link to Comment Rainman
Rainman's picture

-15.90

Wed, 10/27/2010 - 13:34 | Link to Comment MeTarzanUjane
MeTarzanUjane's picture

Ouch! Fucking miners.

Wed, 10/27/2010 - 14:10 | Link to Comment flacon
flacon's picture

I'll buy your shares. 

Wed, 10/27/2010 - 13:34 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

$1320 per OZ.

Wed, 10/27/2010 - 13:10 | Link to Comment Rainman
Rainman's picture

PMI is just another fraudulent enterprise that must be sustained to keep the other fraudulent enterprises moving along. Why anyone would take a <80% LTV carrying an outrageous PMI vig in a market like this befuddles the hell out of me. The entire RE market is riddled with fraud and incompetence. Big Fail is unavoidable.

Wed, 10/27/2010 - 13:22 | Link to Comment macholatte
macholatte's picture

 

After the crash in 2008 I read somewhere that the total of all real estate loans was around $2T and the estimate of the total of MBS and/or CDO's was around $40T. Maybe someone here has better numbers.

But my point is this: the government via bail-outs and such cannot lay this entire thing onto the tax payer because it's simply too enormous. It needs to unwind and the last gang standing gets to go BK and not pass Go and not collect $200.

Had the government simply purchased ALL the mortgages and written them off to 50% then the country would be way ahead of the game at having only lost $1T. 

Wed, 10/27/2010 - 14:21 | Link to Comment robertocarlos
robertocarlos's picture

I think it's 14 trillion.

Wed, 10/27/2010 - 15:06 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

About $12-14 Trillion, according to Max Keiser, which included all mortgage and credit card debt.  Too bad the Fed dooled out about $24 Trillion in loans, money, and credit to the banks so that the people could stay in debt.  Those people could then be forced out of their house by a bank who lent out money they didn't have, to people who couldn't pay the mortgages, banks who then bet against the mortgages being paid, banks who were then bailed out by the Fed and Capital Hill, banks who then started to evict people from their homes when the the banks didn't even own the property any more. 

That was awesome.  Can I get a "WE NEED MORE TARP" from the peanut gallery. 

Wed, 10/27/2010 - 13:23 | Link to Comment bugs_
bugs_'s picture

putbackmae or putbackmac?

Wed, 10/27/2010 - 13:29 | Link to Comment RockTime
RockTime's picture

I'd say the so called "elected officials" should get rid of all pretences at this stage and just officially start making all millionaires -- billionaires, all billionaires -- trillionairs, and all those who are still delusional to believe they are still "middle class"... well, send them to the billionaires and trillionairs trash cans to look for food to feed their children. Why the fuck keep pretending like there are any other incentives that the politicians and their masters have? Sheeple will not rebel, ever. That's the definition of sheeple -- they just get slaughtered...

Wed, 10/27/2010 - 13:36 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Look for topical comparisons of fraudclosure to the AIG implosion to gain far more prominence as the mortgage fraud topic just refuses to go away, and has the big 3 holders, Paulson, Och Ziff, and Caxton, cowering in semi-lit rooms, thinking of effective exit strategies that, for now, do not involve wholesale middle-class bailouts. Also look for the Treasury to soon disclose just how profitable its imminent bail out of the mortgage insurers will end up being for taxpayers...

Perfectly writ.

Wed, 10/27/2010 - 14:09 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Duplicate.

Wed, 10/27/2010 - 13:39 | Link to Comment Oh regional Indian
Oh regional Indian's picture

The question is how many CDS have Goldman et al purchased in bulk in anticipation of the imminent wholesale MI Event of Default, which will force Geithner to once again use the Mutual Assured Destruction wildcard and force taxpayers to bail out those holding MI insurance, especially if the originators and servicers end up being one and the same...

 

Now that is never going to happen. Not again. Not in a big obvious way anyways.

Too many people on the street have had their shirts ripped off their back in the past 2-3 years.

QE 2 will be stealth or not at all. 

ORI

http://aadivaahan.wordpress.com

Wed, 10/27/2010 - 14:02 | Link to Comment MeTarzanUjane
MeTarzanUjane's picture

Shouldn't you be focusing on more regional things?

Why cast stones from such a remote location? Especially with such a limp arm...

http://www.youtube.com/watch?v=c18EQ3iRrus

Oh yes, and

http://www.youtube.com/watch?v=c18EQ3iRrus

Wed, 10/27/2010 - 14:34 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Boy, truth really gets your goat, eh? Yesterday you proved yourself to be a shallow twit, so I don't intend to respond to you again.

As for my limp, regional arm, may I suggest anything here:

http://youtube.com/user/Aadinaadam

;-)

Good for you that you are a junglee (hindi for uncouth), it'll be a survival skill in your fast approaching environment.

Be well.

ORI

http://aadivaahan.wordpress.com

 

Wed, 10/27/2010 - 14:47 | Link to Comment MeTarzanUjane
MeTarzanUjane's picture

"Yesterday you proved yourself to be a shallow twit, so I don't intend to respond to you again."

Who's the twit? Or maybe you don't understand English yet.

Hopefully the fast approaching environment will purge this country of all the scavenger indians that we have accumulated.

One can only hope.

Wed, 10/27/2010 - 13:47 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

Chris is right on about the MIs.  That is a failed model that needs to be eliminated.  I have first hand experience in dealing with the MIs, and they were no better than fronts for the GSEs - basically if the GSEs wanted to roll out a new program, the MIs rolled over and agreed to insure it.  Pure regulatory arbitrage.

Now, they are refusing to pay any and all claims, claiming they had no knowledge of what was going on in the industry.  This despite receiving loan level information on the loans they were insuring, talking daily with their customers (their top sales people would cover maybe a handful of accounts, so knew intimately each customers loan programs), attending the same conferences, etc.  But yet they claim no knowledge of the fraud that was going on in the industry, when the truth is they aided and abetted the spread of loose lending standards.

And today we have the government buying insurance on the riskiest loans from private mortgage insurers who are basically insolvent?  Talk about insanity.

Wed, 10/27/2010 - 13:50 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

BTW, all those Alt A pools the GSEs purchased (including Option ARM pools from the likes of Countrywide and WaMu)?  Only possible because the MIs agreed to provide coverage.

And now they are claiming innocence and refusing to pay claims.

Wed, 10/27/2010 - 14:08 | Link to Comment DosZap
DosZap's picture

 "Prepares For The Taxpayer Funded Mortgage Insurer Bailout"

IF this happens,prepare for  Death & Hades to be opened up.

Why?.

Because as a few here have decided to walk their Mortgages,stop paying, this will IMHO create a TSUNAMI of walk aways, and people who have done the right things, finally say to hell with it.

NO MORE!

Wed, 10/27/2010 - 14:12 | Link to Comment flacon
flacon's picture

Just wait until April 15th when the American Public REFUSES TO FILE THEIR TAX RETURNS! what are they gonna do, put us all in jail? 

Wed, 10/27/2010 - 14:15 | Link to Comment TheMonetaryRed
TheMonetaryRed's picture

Good, let's go to a complete no-tax system. 

It'll just be the Fed and Congress printing whatever money they need - just like the Constitution says they can, just like during the American Revolution. 

No good?

Not what you were thinking?

Wed, 10/27/2010 - 14:22 | Link to Comment TheMonetaryRed
TheMonetaryRed's picture

Were you thinking something more along the lines of the RepubliKeynesian Two Santa Claus Theory?

http://en.wikipedia.org/wiki/Jude_Wanniski#The_Two_Santa_Claus_Theory

Wed, 10/27/2010 - 15:56 | Link to Comment Strongbad
Strongbad's picture

The Federal government used to fund itself (what little it spent) from tariffs and a handful of excise taxes.  I would be fine with a flat 10% import tax.  It has to be flat because otherwise you get into all kinds of favoritism like raising or lowering in on behalf of certain industries or crops.

Of course this would not "replace" the income tax, but I don't want to replace that revenue.  The feds need to learn to do with less.  No one needs the Department of Urban Development, the Department of Education, Department of Energy, etc.  We need ambassadors, a military, a treasury, a court system, US marshalls, some intelligence gathering, and maybe a few other functions like post office and border guards.  States can handle schools, medicine, roads, railways, agriculture, law enforcement, energy, parks, employment law, etc on their own.  The private sector can handle most of that on its own, anyway.

Wed, 10/27/2010 - 17:04 | Link to Comment DosZap
DosZap's picture

For a FLAT 10% rate, or a Consumption tax, I would be ok with.

We DO Not need the IRS,it has 20,000+ pages of R & R's, and even the Frigging HEAD of it, has his prepared because HE CANNOT DO IT.(they do not even know their own laws!)

We need the FBI,the CIA, U.S. Marshalls,Border Patrol Expanded.

And the rest of the Alphabet soup Corps needs to be defunded, and /or sent to the Borders.

We have all but  become a POLICE state, and our local LE has become more and more militarized also.

Posse Comitatus is all but dead.

This ship needs to get back on track, the way it was mean to be.

The Patriot Act, (you know the one Bush pushed thru, and Oscumma was to get rid of?),the DHS needs to be dissolved,it is more concerned with calling people like US terrorists than tracking reaL ONES.

Powers back to the states,period.

Bottom line, UNLESS the FEDERAL GVT is cut by 50% or more, there is NO balancing any budgets.

Wed, 10/27/2010 - 14:16 | Link to Comment RichardENixon
RichardENixon's picture

Most people are due refunds so they'd kinda be shooting themselves in the foot.

Wed, 10/27/2010 - 14:44 | Link to Comment MeTarzanUjane
MeTarzanUjane's picture

They need just a little training. You can legally max out your dependents if you are a W2 employee so no money is due at year end.

Then act upon what I call Project Frosty.

Do not file electronically. Fill your tax return out manually but do it with a Mr. Frosty pen.

http://oi53.tinypic.com/v2wis7.jpg

They will attempt to scan it but white-on-white does not scan. The IRS will then have to hire many of the countries unemployed to assist in processing the paperwork and all the efficiencies once gained by technologies will be lost.

Wed, 10/27/2010 - 14:58 | Link to Comment RichardENixon
RichardENixon's picture

Employers are on the hook if they underwithhold so the smart ones will be watching this very closely.

Wed, 10/27/2010 - 15:16 | Link to Comment MeTarzanUjane
MeTarzanUjane's picture

Project Frosty does not advocate non-payment of taxes due.

Over the last 10 years the IRS has achieved massive efficiencies in processing paperwork. Which was their largest expense. Electronic submissions vs. snail mail paper submissions.

Worse yet, snail mail submissions of tax forms that use pencil/ink that is hard to read. (white pencil on a white background)

It does not break any laws, and is the type of protest that drives a point home.

Wed, 10/27/2010 - 17:06 | Link to Comment DosZap
DosZap's picture

Mr. Frosty will get you an audit, fast.

Wed, 10/27/2010 - 14:19 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

To give you an idea of how insolvent the MIs are, MGIC (NYSE: MTG) is the largest.  It's current book value is just under $2 billion.

This is from their earnings release last week - basically if they had paid all their claims instead of rescinding/denying them, they would have zero equity today - they would be insolvent.

"Historically, rescissions of policies for which claims have been submitted to us were not a material portion of our claims resolved during a year. However, beginning in 2008, our rescissions of policies have materially mitigated our paid losses. In 2009, rescissions mitigated our paid losses by $1.2 billion and in the first three quarters of 2010, rescissions mitigated our paid losses by $903 million"

Wed, 10/27/2010 - 16:12 | Link to Comment Miles Kendig
Miles Kendig's picture

Thapinggggg

Wed, 10/27/2010 - 16:15 | Link to Comment Miles Kendig
Miles Kendig's picture

Chris is a strong ridin' mf'er

+! to inf

Freedom is just another word for nothing left to lose - Janice Joplin

Wed, 10/27/2010 - 16:09 | Link to Comment tony bonn
tony bonn's picture

"And in each case, the acts are arguably criminal fraud. And in the case of the zombie banks, the GSEs and the MIs, the fraud is being actively concealed by Congress, the White House and agencies of the U.S. government led by the Federal Reserve Board. Is this not tyranny?"

and the operative words are actively concealed by CONgress and the shit house. you bet your ass its tyranny and it won't change when those blow hard republicans come to power...they will bring out a nuclear vacuum cleaner and ship the crap off to china where the forensic evidence of 9/11 and the trade towers was sent for obstruction of justice - china needed some iron ore for its iron refiners dontcha know......and don't think that the black boxes with american voices on them aren't around....they are in the bowls of the fbi....

Wed, 10/27/2010 - 18:00 | Link to Comment single digit
single digit's picture

.

Wed, 10/27/2010 - 23:33 | Link to Comment Unexpectedly
Unexpectedly's picture

Also look for the Treasury to soon disclose just how profitable its imminent bail out of the mortgage insurers will end up being for taxpayers...

Kind of like this, maybe....?

"Treasury Gets 36% Return Buying Toxic Mortgages"  -- Bloomberg.com

http://tinyurl.com/32jvg2g

 

 

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senthil456's picture

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Fri, 02/25/2011 - 00:41 | Link to Comment george22
george22's picture

Here we go with that fictitious word " TAXPAYER" again. Will they finally get it over with already? I feel my $300 paycheck is too much. Please Mr Taxman, take it all . Its yours. Just leave me enough for my Cablevision. I needs my WiFi and American Idol,

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Fri, 02/25/2011 - 00:47 | Link to Comment george22
george22's picture

Here we go with that fictitious word " TAXPAYER" again. Will they finally get it over with already? I feel my $300 paycheck is too much. Please Mr Taxman, take it all . Its yours. Just leave me enough for my Cablevision. I needs my WiFi and American Idol, badgley mischka watches|MB5-858|000-968|pandora bangle

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