Tag Archives: Mortgage Crisis

Credit Rating Agencies Finally Reacting to China’s Economic Implosion

Saturday, 02 April 2016 04:52

This article was published by The McAlvany Intelligence Advisor on Friday, April 12, 2016:

English: World countries by Standard & Poor's ...

English: World countries by Standard & Poor’s Foreign Rating. Legend: Green – AAA Turquoise – AA Lighter blue – A Darker blue – BBB Purple – BB Red – B : Grey – not rated, (Photo credit: Wikipedia)

First it was Fitch. Late last year it downgraded China’s sovereign debt by two notches, from AAA to A, which, according to its own definition, signals debt that is “more vulnerable to adverse business or economic conditions than is the case for [the two] higher ratings.”

In early March, Moody’s Investors Service got on board, knocking China’s debt rating down by one notch, followed by Standard and Poor’s on Thursday, which kept China’s rating at AA but with a negative outlook.

Translation: something’s coming.

Said S&P:

Keep Reading…

Obama Intends to Bring Down Capitalism

Wednesday, 07 November 2012 14:38

ENEMY OF THE ECONOMY

ENEMY OF THE ECONOMY (Photo credit: SS&SS)

I have great respect for the work done by the Cato Institute. I attended one of their week-long economic seminars a couple of years ago, thanks to my generous brother, and was greatly impressed and informed by their work. I still refer to the copious notes I took there.

But Alan Reynolds fails to see that Obama intends the results of his actions. Reynolds explains Obama’s actions through abysmal economic ignorance:

In a recent Wall Street Journal op-ed (November 2) President Obama wrote that “in the eight years after” Bill Clinton left office, “we followed a different path. Bigger tax cuts for the wealthy we couldn’t afford. . . . The result of this top-down economics? Falling incomes, record deficits, the slowest job growth in half a century, and an economic crisis . . .”

Obama had taken up that theme during the first presidential debate, arguing that “The approach that Governor Romney’s talking about is the same sales pitch that was made in 2001 and 2003, and we ended up with . . . the worst financial crisis since the Great Depression.”

This is a remarkably imaginative theory — albeit one that reveals appalling economic illiteracy. Who else would have imagined that the housing bust and subprime-mortgage crisis were actually caused by cutting the top two tax rates in mid-2003?

He goes on say that at least Obama is consistent in his

Keep Reading…

Fed’s “Independence” Threatened by Bernanke?

Monday, 27 February 2012 11:22

With the publishing of a “white paper” about the housing market, Fed Chairman Ben Bernanke has rankled some Republicans that suggestions made appear to have transgressed some line of propriety that separates monetary policy, fiscal policy, and the Fed’s “independence.”

The study, prepared by his staff and signed by the chairman, decried the inability of the housing market to get back on its feet despite continued efforts by both Congress and the Fed to restart it. Bernanke wrote:

The challenge for policymakers is to find ways to help reconcile the existing size and mix of the housing stock and the current environment for housing finance. Fundamentally, such measures involve adapting the existing housing stock to the prevailing tight mortgage lending conditions—for example, devising policies that could help facilitate the conversion of foreclosed properties to rental properties—or supporting a housing finance regime that is less restrictive than today’s, while steering clear of the lax standards that emerged during the last decade. Absent any policies to help bridge this gap, the adjustment process will take longer and incur more deadweight losses, pushing house prices lower and thereby prolonging the downward pressure on the wealth of current homeowners and the resultant drag on the economy at large.

This crossed the line, according to Senator Orrin Hatch (R-Utah), who wrote a scathing letter to the Fed chairman: “I worry that…your…housing white paper…treads too far into fiscal policy, and runs the risk of being perceived as advocacy for

Keep Reading…

Foreclosure Settlement Bails Out the Big Banks

Tuesday, 14 February 2012 04:29

The report from The New York Times on Wednesday about the foreclosure settlement reached between five big banks and 49 states’ attorneys general made it appear that justice was being served. The $26 billion to be paid out to some 2 million homeowners (former and current) “could provide relief” to them under the terms of the settlement. It would also remove a cloud of uncertainty from the banks’ liability and might help in “halting the housing market’s downward slide.”

States’ attorneys general started an investigation in the fall of 2010 into the mortgage servicing industry when it was discovered that homeowners were being evicted or penalized through improper, incorrect or false paperwork emanating from Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, Ally Financial (formerly GMAC) with the help of Mortgage Electronic Registration Systems, Inc. (MERS).

Over the 14-month investigation the scope broadened and deepened as the extent of the costs and fraudulent abuses was revealed. The settlement means that, on the surface, the money will go to help homeowners affected by the fraud. A million homeowners can expect to have their existing mortgages reduced or their interest rates reduced. Another 750,000 former homeowners will receive, over the next three years, checks estimated to be about $2,000.

The size of the settlement fades into insignificance in light of the fact that there are more than

Keep Reading…

UBS CEO Grübel Hastily Resigns Over Rogue Trading Losses

Tuesday, 27 September 2011 05:51

UBS AG Headquarters in London, Liverpool Stree...

Image via Wikipedia

The announcement by Kaspar Villiger, Board Chairman of UBS (Union Bank of Switzerland), that CEO Oswald Grübel had resigned on Saturday caught many by surprise, partly because just the day before he had said he had the board’s complete support. According to Villiger, “The Board regrets Oswald Grübel’s decision. Oswald Grübel feels that it is his duty to assume responsibility for the recent unauthorized trading incident.” He added:

Keep Reading…

Bernanke’s Last Two Economy-Boosting Tools

Monday, 12 September 2011 05:40

Tools

Image via Wikipedia

In his talk on Thursday to the Economic Club of Minneapolis, Federal Reserve Chairman Ben Bernanke warned the Congressional Supercommittee not to cut government spending by too much, and that if the economy continues to slide into another recession, the Fed has tools to meet the challenge.

Speaking over the heads of his audience directly to the Supercommittee, Bernanke warned that

Keep Reading…

Legal Fallout From Housing Collapse Continues

Thursday, 08 September 2011 05:59

gavel

Image by s_falkow via Flickr

The announcement by the Federal Reserve of an “enforcement action” against Goldman Sachs for engaging in “a pattern of misconduct and negligence” in its handling of home mortgage loans was entirely predictable. Charges of such misconduct go back for months when it was first discovered that mortgages and other mortgage-related documents had been “robo-signed” and foreclosure documents hadn’t been properly reviewed and that Goldman’s Litton Loan Servicing unit took actions “without always confirming that documentation of ownership was in order.”

The ruling requires Goldman to

Keep Reading…

White House to NY: Accept Bank Foreclosure Deal

Wednesday, 31 August 2011 05:55

P1210013

Image by azipaybarah via Flickr

New York’s Eric Schneiderman (right) is the only Attorney General who doesn’t like the foreclosure settlement agreed to by the major banks behind the mortgage-backed-securities (MBS) and foreclosure (robo-signing and faked-documents) frauds that helped bring on the economic crisis in 2008. And he is feeling the heat. In exchange for a small fine, the settlement agreement would end the years-long investigations by New York and other states into the frauds, and would prevent them or any of the investors hurt by the frauds from ever bringing additional charges in the future.

But Schneiderman’s investigation into the shady practices behind the development and sale of MBSs isn’t complete, and signing off on such an agreement now would end his efforts and forever protect the banks from further public exposure to their back office practices.

Keep Reading…

Bank of America Blames Stock Price Decline on Analyst

Monday, 29 August 2011 05:12

The Emperor's New Clothes, by Hans Christian A...

Image by elycefeliz via Flickr

When Henry Blodgett explained that the reason for the decline in the price of Bank of America’s stock was because Wall Street thinks that Bank of America is worth less—much less—than what the bank itself thinks, bank spokesman Larry DiRita responded, “Mr. Blodgett is making exaggerated and unwarranted claims…[and that] as of June 30th, our tangible book value per share was $12.65.” At the time, BofA stock was selling for $6.42 a share.

The bank’s sharp retort caught Blodgett by surprise:

I was eating a tuna sandwich when I saw the news clip across Bloomberg TV. I almost choked.

Keep Reading…

Looking for Green Shoots in the Economy

Tuesday, 19 July 2011 06:41

Cracked Mud Texture

Image by Darren Hester via Flickr

Just a month ago one of the most accurate economic forecasters on the planet looked at the economy and concluded that another recession is 99 percent certain.

David Rosenberg of Gluskin Sheff, a Canadian private money management firm, noted at the time that consumers were still trying to reduce their debt load, which reduces their ability to purchase consumer goods and services. That continued reduction in demand is being felt all across the economy with no end in sight:

Keep Reading…

Fair Tax? Flat Tax? The Case for No Tax

Tuesday, 31 May 2011 23:05

Exterior of the Internal Revenue Service offic...

Image via Wikipedia

Stephen Moore’s math in his Wall Street Journal article is compelling: by the time the Democrats’ proposed three-percent surtax on incomes over $1 million a year is added to all the other taxes people pay, those at the high end would be paying 62 percent of their income in federal and state income taxes.

He adds together the current 35 percent top income tax bracket to the three percent surtax, along with the expected repeal of the Bush “tax cuts” in 2012, payroll taxes, Social Security and Medicare taxes, the 0.9 percent Medicare surtax, the hidden 3.8 percent sales tax in ObamaCare which begins in 2014, and state income taxes, and he comes out, inevitably, to

Keep Reading…

Bureau of Consumer Financial Protection Looms

Thursday, 26 May 2011 22:32

electrical tape

Image by Julia Manzerova via Flickr

Tuesday’s hearing of the House Oversight Committee gave Chairman Patrick McHenry (R-N.C.) a chance to vent, and witness Elizabeth Warren, President Obama’s Special Advisor for the Bureau of Consumer Financial Protection (BCFP), a chance to defend, and for the entire hearing to accomplish nothing. The BCFP was the brainchild of Warren, and the centerpiece of the Dodd-Frank Wall Street Reform and Consumer Protection Act which was signed into law last July. Its Orwellian title hides the fact that the new agency will do little to reform Wall Street and nothing at all to protect the consumer.

Keep Reading…

Evidence for Double Dip is Growing

Friday, 29 April 2011 11:55

Recession

Image by Anders V via Flickr

Establishment economists and other economic cheerleaders were disappointed to learn that, despite the government’s best efforts to revive the economy through Keynesian interventions and stimuli, the GDP (Gross Domestic Product) for the first quarter of 2011 was half the rate of growth in the last quarter of 2010.

As noted by the Wall Street Journal,

Keep Reading…

Cato Puts Budget-Cutting Debate in Perspective

Sunday, 03 April 2011 17:18

Image via Wikipedia

The Cato Institute’s just-announced ad campaign in major newspapers around the country asks rhetorically, “This is leadership?” and then neatly summarizes numerous areas where major budget cuts could be made. The ad questions the debate currently taking place over almost invisible cuts to the federal budget: “The House Republican leadership has proposed $61 billion in spending cuts—but that’s less than 4% of this year’s massive $1.65 trillion federal deficit.” And the Democrats have managed to squeeze out an even more modest proposal of

Keep Reading…

Housing Decline: Only Halfway Home

Thursday, 24 March 2011 00:37

House

Image by urbanwoodchuck via Flickr

When Reuters and CNBC.com announced the awful housing numbers from February, most observers were surprised. The housing market appeared to have found a bottom last fall, and many economists were expecting small but predictable improvements every month.

The Commerce Department, however, doused whatever positive expectations there were when they announced that new home sales for February compared to January declined by

Keep Reading…

Shutting Down Fannie and Freddie: Locking the Barn Door

Monday, 07 March 2011 23:43

House key

Image via Wikipedia

It appears that there is at least one thing the Obama administration and the GOP can agree on, and that is that Fannie Mae and Freddie Mac have got to go.

Given the immense role these two government-sponsored enterprises (GSEs) had in the Great Meltdown, they remain an embarrassment for every politician even remotely related to them. As noted cryptically in his latest book, Rollback, Professor Thomas Woods said,

Keep Reading…

Financial Crisis Inquiry Commission Report: Classic Misdirection

Monday, 07 February 2011 05:22

Image by TW Collins via Flickr

After nearly two years of investigation, reviewing millions of documents and conducting hundreds of interviews, the Financial Crisis Inquiry Commission (FCIC) released its report, pinning the blame for the Great Recession largely on Wall Street and alleged deregulation of the financial markets in the 1990s.

The report of the panel of 10 (six Democrats and four Republicans) was delayed by a month as the final report became more of a partisan attack on Wall Street and a push for more regulation of the financial markets. The Republicans ultimately decided not to endorse the report, but instead issued their own report on the cause of the financial crisis.

According to the official report issued today by the FCIC, blame for the financial meltdown beginning in 2007 can be placed on:

Keep Reading…

Is the Housing Market Beginning to Clear?

Wednesday, 02 February 2011 11:34

Image via Wikipedia

The conflicting news reports on the housing market can give the casual observer a headache: “December Sales of U.S. Existing Homes Jump to 7-Month High,” shouts Bloomberg. “Housing Starts Decline, [but] Building Permits Rise,” exults the National Association of Home Builders (NAHB). Google news drearily reports that “2010 Ends as 2nd Worst Year for Home Builders,” while CNNMoney.com warns that “Shadow Inventory Threatens Housing Recovery.”

It’s enough to “cross a Rabbi’s eyes,” as Tevye profoundly concluded in Fiddler on the Roof.

Keep Reading…

Cutting Government: Where to Start

Thursday, 27 January 2011 07:13

A small United States Postal Service truck see...

Image via Wikipedia

Once Obamacare is repealed by the House, the attention of the 112th Congress will turn to the question of where government spending can be cut for the largest immediate impact. Several observers have weighed in with their thoughts, including Dick Armey and Matt Kibbe of FreedomWorks, who have an article in today’s online Wall Street Journal. After reviewing the fiscal hot water the republic is already in, and discussing attempts to re-set government spending back to “base lines” such as 2009, 2008, or 2007, the authors get down to business.

Keep Reading…

HAMP Failure, Unemployment Numbers, and Suffering Banks

Monday, 24 January 2011 07:52

housing bubble..if i pop, you're screwed!! ......

Image by marsmet47 via Flickr

Keeping in mind that the “beige book” report from the Federal Reserve yesterday is only a compilation of anecdotal reports from businesses across the country, any conclusions in that report that the economy “continued to expand moderately,” and that it “continued to improve, on balance,” should be viewed with extreme caution. For buried in the report were the comments that “the housing sector remains a significant drag on the economy” and that “activity in residential real estate and new home construction remained slow across all Districts.”

Keep Reading…

Page 1 of 3

1
2
3
Next