Gonzalo Lira On The Second Leg Down Of America's Death Spiral

Tyler Durden's picture

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Dagny Taggart's picture

a possible—silver bullet that will fix this whole Mortgage Mess

funny timing for the post, silver just blew through $24.55.

Henry Chinaski's picture

Tough for those who are waiting to buy the dip.

caconhma's picture

The situation is quite simple: both Bush and Obama administration together with the Congress declared that fraud and financial crimes are OK. Nobody will be punished, nobody goes to a jail, and everybody is entitled to keep the stolen loot and bonuses...

The situation will not have a "happy" ending without a collapse of US political and/or economic system. There are no silver bullets to fix it. It is not an economic issue anymore. It is a political collapse. It is a coming of guillotine times.

Jean Valjean's picture

I remember the last guillotine times .... good times...., good times.

Ripped Chunk's picture

Man, you must be really old.

This time it will be a pay-per-view event. That is until the mob storms all of the TV stations and earth stations and makes it free for all.

groucho_marxist's picture

ah, yes. the joy of the reign of terror.


Robespierre, where are you now? see:


cossack55's picture

Again, go long knitting needles and rocking chairs.

Cognitive Dissonance's picture


Knitting needles as the last line of defense and rocking chairs as winter fuel for the wood stove.

What else?

Dagny Taggart's picture

I see you are just being practical, but by that line of thinking, you'll have my kittens in a crock-pot.

Cognitive Dissonance's picture


If I need to consider your kittens as a food source, I'm in a whole heap of trouble and they might or might not be worth the effort. Besides, there's something to be said about food for the soul over food for the belly. Your little kittens seem to be of more value to the former than the latter.

Of course, I'm not presently hungry. :>)

groucho_marxist's picture

don't forget too that the Mediaeval hatred of cats is part of why they had plague.

RabidLemming's picture

a little soy, brown sugar and a good hot grill are all you need.

also the age old adage:

Cats are hats and kittens are mittens.

We must not waste in these dire times.

Dagny Taggart's picture

That's so bad. I do threaten to stew them when they're moshing in my charts, but kittens as mittens?

BobPaulson's picture

Agree 100% with paragraph 1. Whether it's the end times as a result, it seems likely, but I'm not completely convinced. When basically everybody is involved in the corruption, I expect this is more likely to end in some currency devaluation, a reconciliation commission, and some dead people or Madoff equivalents blamed for all the worst crimes. Justice comes at the hands of competing nations, and right now the US has the biggest army. I seriously think the carrier fleet is what is keeping the US afloat now. 

ZakuKommander's picture

This may not be as big a deal as some think.  A note is a promise to pay.  One does not need an original to prove up a promise to pay in court; otherwise a fire would absolve the borrower of all obligation.  Yes, there will be a delay in foreclosure, but a delay means relatively little in the scheme of things.  Remember, we all understand that just because a foreclosure takes place does not mean that the bank who obtains the property is putting it on the market and cashing in.  Many, many foreclosed homes are just left sitting, out of the market so as not to depress prices.  So sitting in a delayed foreclosure case and sitting in a holding situation wouldn't necessarily cause the books of the bank to be cooked any more or less.

Now of course without foreclosure the homeowner (so to speak) remains in place, paying nothing, and using his or her money to buy gadgets.  A good thing for retail, no?  

Don't count on the "missing documents" problem leading the banks to losses, either.  The law will come up with a fix, so no major financial donor is left out in the cold.  This is America.

DosZap's picture

WHO has the original TITLE is the issue I see.

If you cannot come up with that,OR WHO the  lien holder is .............your screwed.

still kicking's picture

Who has been promised to be paid?  The original bank sold that promise.

DosZap's picture

My point.

THEY do not have the TITLE DEED.

If they do not have that, their SOL.

Fox Moulder's picture

It then becomes an unsecured loan.

ZakuKommander's picture

None of this commentary is off the mark.  It's just that in the inevitable court case, it gets sorted out.  The people that owe money have to pay it.  Promises made (all down the line) are enforced.  And yes, thre may be unsecured debt, but that doesn't help the homeowner; it's just a fight among creditors over who gets rights to the house.  Which in the end gets put up for sale.

Actually, in real life -- and that's kinda what counts -- there are huge fights, then 99% of civil litigation will get settled, and it won't end up that much differently.

Except the lawyers will be richer!

StychoKiller's picture

Moral of the story:  No one in their right minds is gonna be buying foreclosed property for a looonnnggg time.

swmnguy's picture

If disposition of the house were the issue in question, I'd agree with you.  Seems to me the issues with the actual houses will get sorted out one way or another, in some ugly foul way.  The real money, however, is in the hierarchy of MBS products, derivatives on those, etc. etc.  That's where the faults in the chain of title become heavily leveraged and really deadly.  And I'm not sure how the sausages get made--or hidden--to work that mess out.

StychoKiller's picture

Tranches are gonna be exchanged for Truncheons! (and tar, feathers, pitchforks and Torches!)

CH1's picture

Can you imagine the overflow of the court system? A tidal wave into a cup.

Kayman's picture

Hey Lloyd ! You've been invited to a guillotine party. And you've got to bring your own basket !

Going long on wicker.

Dr. Richard Head's picture

I just picked up a couple hundred oz this morn.  YEAHHHH

DosZap's picture

Dr.,Dr., Mr. M.D., can you tell me, where you buy?.

APMEX seems to be the best I have found.

Problem Is's picture

"silver just blew through $24.55."

I love my silver... genuine coin of the realm...

"For one ounce of this, you can by 24 dollars of talk..."


spdrdr's picture

Has anyone noticed that the recent gyrations in the silver price are moving at a regular 20:1 ratio with the PoG?

Gold goes up $4.00, silver goes up $0.20. Gold goes up $20.00, silver goes up $1.00.  Et cetera.

Given that the PoG/PoS ratio remains at 56:1 to 58:1, this creates significant leverage - is this a market based reaction to the true PoG/PoS ratio's historical norms, and can we finally be seeing a return to the norm?



Cognitive Dissonance's picture

Looks like Gold has found support at $1,372. I love my Silver. I love my Gold. I love me.

The original menage-a-trois.


duo's picture

AGQ.  Nice leverage.  Actually moving up faster than the miners.

Cognitive Dissonance's picture

Is that a parabolic move in your pants or are you just happy to see me? :>)

downrodeo's picture



I know i've seen a picture of silvio burlusconi with the exact same expression on his face as the guy in the postcard from the link. It is a kind of malicious mirth. I love (to hate) that guy. To me, he seems like the Italian Rod Blagojevich; or at least, that is the aura he projects.


this was it:




DosZap's picture

IF we were at( TRUE) historical NORMS, there would not be an ounce above ground on the planet.

william.smith61's picture

Navigation Screen Meanwhile, Iran's Press TV reported that a very large contingent of US ground forces had massed in Azerbaijan, near the Iranian border. The independent Azerbaijani news website Trend confirmed the report

BobWatNorCal's picture

Ruh roh, indeed!

"And President Obama’s pocket veto of the measure?"
On another thread someone said that Sen Reid had technically left the Senate in session even though the senators had physically gone home.
Because of that the pocket veto did not apply and the law would go into effect when the time period expired.

Does anyone know how this turned out?

iDealMeat's picture

The bill originated in the house..  so it went back to the house.. No one is home at the house..

I was seriously concerned that Pelosi would sneak in a recall session but I think we're past the 10 days..

Milestones's picture

The veto of HR 3808 was over the House vote which had already passed. What the Senate status was is of no cosequence.

If the Congress wants to pass this after the election on the 3rd there may more than a matter of conscience; some ropes may well be involved with a wrong vote.

More and more politicians had better dial in to their caculations- what is more important, money or getting a next breathe.

Push is coming to meet shove very quickly. Remember there are 11,000,000 houses under water. Thats a lot of pissed off people.


moneymutt's picture

I'd like to see the real numbers if you figure some certain percentage of additional defaults if they don't find a political solution soon...and there will be no political solution til late Nov.

Some numbers questions:

1) so how many previously foreclosure takings of house will be contested?, maybe 1 out of 100? a lot of people never contested, a lot of people put keys in the mail etc...but some fought it and lost due to forged documents. So what does 1 out of 1000, 1 out of 100, 1 out of 50 houses already taken and sold now being contested in court, do to banks.

2) how much does this accelerate existing strategic defaults...what percentage of 11,000,000 underwater houses have already strategically defaulting? how much does this increase that percentage, how much in certain states? While someone with equity and good credit would need high level of confidence to default as they have lot riding, someone way underwater has little to lose now by going for it and defaulting...even if realize they may never get their house for free,  they now know, depending on their state and the type of loan they have, they may get house rent free for 2-3 years...thats a lot of encouragement. In addition, now the banks are shown publicly to be cheating, less moral reason to honor contract, gives people an excuse to quit their end. And strategic defaulting is contagious.

I'd love to see what the datamining guys at the bank who are looking at loan performance in the next month, I bet there will be a huge spike in underwater folks stopping payment. Even if banks get these houses eventually, loss of income and great increase in expense in meantime.

3) How much is this going to cost the banks in legal fees and additional staffing? Is this significant to their bottom line? Now foreclosures will be fought tenaciously by every laid-off lawyer in town. They will have to address the now-building back log. There will be class action law-suits, depositions of their staffs. The will be new legal challenges to previously foreclosed and closed loans. There is the AG and DOJ investigations to respond to and, and there is having to do more expensive, more thorough job on tracking title on all new sales.

4) Plus, any foreclosed REO they try to sell make less as the REO will be brand tainted for some time, even if they are cleaned by political court action, individual homeowners will be wary, value of REOs will go even lower. How much?

If you put some conservative estimates each of these increase costs/losses, even if we factor in some sort of political/court stick save for these too big to jail types, I bet we see a blood bath. And if there isn't a political save that holds up in court, ouch.

Reggie, where are you, I need some numbers...


StychoKiller's picture

HR3808 is only a sideshow now, the Tiger (MBS, CDO holders) is out of the bag (and (S)He is pissed!)

midtowng's picture

This isn't going to get fixed anytime soon. It's election season. Congress isn't even in session, and won't be in session for another month.

AnonymousMonetarist's picture

'Bernanke and his ilk are not just trying to boost the US economy, they are trying to salvage their reputations and theories. The crime is that they are savaging average Americans and have bet the country in a desperate attempt to prove that they know best.'
-Bill King, the King Report 10/14/2010

'The effect of QE2 on interest rates could be small and limited to an announcement effect...many believe that the effect on output or employment would be small...unlikely to stimulate aggregate demand...little effect on aggregate demand implies a corresponding small effect on output and, hence employment. QE2 could have adverse effects.'
-Federal Reserve Bank of St. Louis

'The folks at the Fed are frozen in fear. They don't know what to do.'
-Chris Whalen

'But they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in destruction and perdition. For the love of money is the root of all evil...'
- 1 Timothy 6:9-10

'There hath no temptation taken you but such as is common to man...'
- 1 Corinthians 10:13

'Don't Task Don't Smell', the central plank of the 'I Can't Believe it's Not Capitalism Plan', has given us Sugar Mountain, where stupidity is cupidity.

Ringfencing the multitude through financial pulchritude is but Federales psych ops, masquerading debasement as growth, as the plutocracy sips sweet ambrosia from the skull cap of the common man.

Phat, Plummed and Cupid is no way to go through strife son. Mr. Hand's strong dollar policy is the chimera of currency debasement masquerading as America's wealth exporting machine that is regularly promulgated by our leaders as an exceptional example of America's resiliency(AM Rule #5). Timmy G even takes credit for the creation of the 'strong dollar' policy.'Nuff said!

As the epigram, 'Yes Virginia , there is no collateral' becomes an accepted norm, as the metaphorical fork in the middle of the road er scratch that kicked can hangs with horsehair, the splinter of our disconnect in the deep bosom of our equity buried is proclaimed by the Federales as nothing but a thorn discovered as they fervently hope not to be cast to the lions.

Is it Back to the Future of folly and bubbles or Fade to Back as we peer down the chasm of the black diamond demographic? Building a bridge to nowhere is at least doing something, but please don't peer down dear citizens lest ye randomwalkers realize the gravity of our situation.

The Oracle at Eccles and assembled throngs of Nancy Capitalists beseech their models that show 100% chance of 'no fail' when the money is easy and free to deliver them like Aesop's Shepherd so when the masses see that which healed them, they will pardon and not attack.

Golden goose or scrambled eggs?

The answer it would seem as we destroy our standard of living to create a Potemkin recovery, is both, in an ever increasing divergent measure.

The insouciance of elites and the Antoinette economy.

Verily, let them eat debt.

SWRichmond's picture

The Oracle at Eccles and assembled throngs of Nancy Capitalists beseech their models that show 100% chance of 'no fail' when the money is easy and free to deliver them like Aesop's Shepherd so when the masses see that which healed them, they will pardon and not attack.

That one's a keeper.

Oh regional Indian's picture

AMet, your writing is just awesome. Ah laihks it, a lot!


Papa Legba's picture

Just because you can always use a metaphor doesn't mean you should.