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Frontrunning: July 28
- Must read: Arizona set to implement recourse mortgages - this could be the beginning of the end (Housing Doom, h/t Credit Trader)
- Congratulations Ben - you have succeeded; dollar reaches 2009 low (Bloomberg) (yet less than $90 billion in foreign liquidity swaps left to pull... then what?)
- And here's to a healthy Euro: Lithuanian economy shrank 22.4% in Q2 (Bloomberg)
- High frequency traders say speed works to everyone's advantage (Bloomberg)
- Judge Drain does not lead to the sewer, stands up to pressure and follows arcane, little-appreciated thing known as the law: leaves Platinum Equity in the cold on Delphi (AP)
- Michael Lewis: Lots of bull about Goldman (Bloomberg h/t John and Scott)
- Corporate insiders more bearish than at any time in two years (MarketWatch, h/t SB)
- The new stock market bubble... is in Zimbabwe (Bloomberg)
- McGraw Hill profit falls 23%, full year outlook is cut, crony S&P sure ain't contributing (Bloomberg)
- Coach profit drops 32% as upscale shopper cut back (MarketWatch)
- US Steel reports Q2 loss as demand remains low (AP)
- Deustche Bank posts 68% rise in net income, bad loan provisions skyrocket, stock tumbles (Bloomberg and WSJ)
- Viacom profit drops 32% on falling ad sales (Bloomberg)
- Dethrone King Bernanke and court to keep recovery (Bloomberg)
- CFTC will pin 2008 price sruge on speculators (i.e., GS) in a reversal from Bush findings (WSJ, h/t Goerge)
- The psychology of trading (FX Solutions)
- Surviving the end of civilzation "2050" (MarketWatch)
- Libor-OIS spread below 30 bps; in other news BBA still highly credible (Bloomberg)
- Sprint Nextel to buy Virgin Mobile for $5.50/share, still too many cell phone providers in the US (Bloomberg)
- New home sales jumped higher in June (Wells Fargo via Real Clear Markets)
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Score another one for the banking lobbyist in getting that Arizona recourse mortgage law passed. This goes into effect on Sept. 30, and will end up hurting alot of folks.
http://www.azcentral.com/arizonarepublic/news/articles/2009/07/26/200907...
SO is the system run for the bankers or the people who elect politicians? There is your answer....again. I was listening to a radio program and a listener asked if we will ever see debtors prisons in the US ala Dickensian London in the Victorian era. The host said I doubt it. I am not so sure.
Re the US currency, looks like Geithner et al are showing off to our Chinese guests. You want a strong dollar? Look what we can do at the touch of a button. Ramp the dollar and hammer gold, all with just one stroke.
Aren't free markets wonderful Mr. Jaibo?
The link about Arizona and recourse mortgages is great, thanks. Though I read the Arizona Republic article and I am still not sure who will be effected if the law does come into force at the end of September. It says something about it only impacting people who haven't lived in their houses for the last six month period. But then it also says it will not be retroactive. If the law is not retroactive it should only impact new mortgages in which case I don't really see a huge problem, only good credits with big deposits are getting mortgages at the moment anyway. And while recourse mortgages in the UK and Ireland didn't stop a housing bubble, after it popped there hasn't been the same downward foreclosure spiral as in the US. This is because people are doing anything to meet their mortgage because they have to.
The recourse mortgage thing is not that big a story. If homeowners are told they are liable for the difference between a mortgage and a depressed home price, then they shrug and say "well, it's not a student loan. I will declare bankruptcy, and guess what, I still get to walk." Come on, people. Think. From whom could you collect? If these are homeowners, it is the bulk of their assets. They don't have money elsewhere (401Ks are generally shielded from bankruptcy) so they declare and walk. If they are *house owners* rather than homeowners and own 10 of them, they are all underwater and even THEY declare bk and walk. This whole thing is going to capture money from maybe one person in 100. Insignificant.
I think this is a bigger issue than you might think.
I'm guessing there are more then a few people who live up North that have a second home or a retirement home in Arizona. These people surely will be unable to prove that they have lived in their homes for more then 6 months. In effect, these people are screwed.
Secondly, I think this as another poster suggested is another step out on a slippery slope that takes us to a theoretical debtors prison.
Lastly, this creates an environment where any banker would be stupid to foreclose beofre the September law change. Thus creating ANOTHER backlog of foreclosed mortgages that have yet to go on the market. AND, banks will really not care how low they sell these houses for being that the owner of the mortagage now has to make up the difference, no matter how great.
The overall point should be, in an already depressed housing market, especially in Arizona, this is not going to help housing prices in any way.
Maybe Ben wants the dollars back before the euro crashes!
In (Eastern) Europe no one has even heard of non-recourse mortgages. Quit whining.
True same here in Oz.
But Euro interesting in view of ECB policies and what is happening in the various countries associated therein.
Just needs one to stumble ... then Russia with a very weak outlook ..