The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

If you have ever wondered where search rankings come from, then you will find this to be a pretty cool tool: PageRankGraph:

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Play with it a bit: http://pagerankgraph.com/

A pair of fascinating NYT/Census/Google map mash ups from the NYT  this morning. Using US Census  data, they look at a variety of data points: Race & Ethnicity, Income, Housing and Families, Education.

Click the link, then select View More Maps, choose topic:

click for full interactive versions

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Median Household Income

Change in Median Household Income

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Here is the amazing full project of The New York Times with United States census :

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Source:
Sen. Kaufman: GOP Sacrifices Deficit at Altar of Lower Taxes for the Rich
Aaron Task
Yahoo Tech Ticker, Dec 14, 2010
http://finance.yahoo.com/tech-ticker/sen.-kaufman-gop-sacrifices-deficit-at-altar-of-lower-taxes-for-the-rich-535718.html

It appears that the web editors at the AEI have been busy.

Peter Wallison, currently a member of the Financial Crisis Inquiry Commission,
was also the co-director of AEI’s Financial Deregulation Project, along with his co-director, Columbia professor Charles Calomoris.

Over at Calomoris’s bio, his status as co-director of AEI’s Financial Deregulation Project is the first sentence;

Not so on for his co-director Wallison. Indeed, any reference to his participation on the Financial Deregulation Project is gone from Wallison’s AEI bio.  Instead, the language has been replaced with the more benign “codirector of AEI’s program on financial policy studies.”

Why the change? After all, it is the AEI’s position that deregulation was not a cause of the crisis.

The language change is a poor attempt to hide Wallison’s role in the radial deregulation of derivatives, banking, leverage and sub-prime mortgages from casual inspection.

This Intellectual dishonesty is telling, but unnecessary. Many people from across the political spectrum agree with the AEI that the bank bailouts were wrong, that corporate giveaways are inappropriate, and that the government created Moral Hazard.

However, some of those people consider data, facts, details, as part of their analysis.

Wallison, like most idealogues (on the Right and the Left), suffers from cognitive dissonance: When presented with facts that challenge or contradict his ideology, their brains get flummoxed. Rather than accept the possibility that deeply held beliefs are wrong, the mind fabricates rationales and excuses for the evidence in front of them. The same cognitive factors that lead sports fans to blame the referees when their teams fail to impress also lead idealogues to ignore facts and focus on beliefs. Hence, the wingnut obsession with the CRA, Fannie Mae, even Acorn as the prime cause of the crisis.

Somehow, it was apparently not dissonant enough to recognize how bad that looked — and so, it appears the title on Wallison’s bio was changed (I know I saw it there previously). You can find the same title on a few other AEI pages — see for example this — and on Google’s cache, but you better hurry, its disappearing. (Its still at his Wikipedia entry, but I would bet not for long).

Why someone who writes articles with titles such as “Deregulation Not to Blame for Financial Woes” can possibly be a fair minded member of this panel is another story that references the incompetency of the Obama White House, but that is an entirely different post.

This morning, we learned that all 4 GOP members are refusing to participate in the panels findings, and instead are releasing their own set of findings that conflict with their ideology.

My views are simply to follow the data where it leads and you and draw conclusions from that, rather than start with your conclusions and focus only on items that support those predilections . . .

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UPDATE DECEMBER 21 2010 10:19am

I wrote Wallison asking about this — his (unedited) response follows:

“Sure, happily. Several years ago, I was named the Arthur F. Burns Fellow in Financial Policy Studies at AEI. At that point, it seemed sensible to me to change the name of the policy area that I was co-heading. I forgot to tell Charlie Calomiris, who was my co-head, and he did not make the change in his bio. Never having read his bio, I didn’t notice this. That’s all there is to it.”

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Update: December 15, 2010 4:05pm

Dan Gross adds to the ouevre here:

Scrubbing History at the American Enterprise Institute

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Previously:
AEI: Continually, Unrepentently, Embarrassingly Wrong (September 2010)

Headline Nov CPI rose .1% (expectations up .2%) as did the core rate (in line). The y/o/y gain is up 1.1% and the core is up .8%. Benign inflation right? Not. The absolute CPI price index (aka cost of living) is now at the 2nd highest reading on record at 218.88 seasonally adjusted, just a hair off the all time high of 219.10. The core rate, which the Fed loves to focus on, is at an all time record high. The Fed said this yesterday, “measures of underlying inflation are somewhat low…” The rate of change may square with this but the absolute level certainly does not. Sorry for the digression from the details of the report but this talk of deflation and Fed actions in response doesn’t square with the reality that we experience everyday in what we purchase. OER and vehicle prices kept a lid on the figures and commodity prices rose just .1%.

By popular request, I have been tweeting more.

Why? Because what this nation needs more of is gross over simplification of nuanced, complex issues.

But mostly, ’cause you guys asked for it. In addition to the usual fare, stuff that is simply to small for the blog finds it way there. I try to focus on interesting, money-making or amusing stuff. Occassionally, we hit the trifecta.

Towards that end, please sign into to Twitter (or StockTwits) and sign up to follow @Ritholtz at Twitter.

I’ll try to make it worth your while . . .

At 1am ish, Asian markets fell across the board after Moody’s put Spain on review for a possible downgrade and that weakness spilled over into Europe and to the Euro. To put into full perspective though, Moody’s has Spain at one notch above S&P and therefore would just be playing catch up to S&P’s last downgrade back in April. Portugal sold 90 day paper at yield of 3.4%, well above the last one sold on Nov 3rd yielding 1.82%. Following the continued rise in US yields, Bankrate.com last night said the avg 30 yr mortgage rate was 5% for the 1st time since May 12th. For the week ended Friday, the MBA said purchases fell 5% to a 4 week low and refi’s fell for a 5th week by .7%. ABC confidence rose 2 pts to -43, a 3 month high and 3 pts above the 1 yr average and confirms the general sense of economic improvement.

The historical knee jerk reaction to an improving economy is that stock investors get more bullish as common sense would imply as the coincident rise in interest rates take a back seat in the analysis. II said Bulls rose to 56.8 from 56.2 to the highest since Dec ’07 while Bears fell to 20.5 from 21.3 to just shy of the lowest since May ’10. As I wrote last week though, “the 64k question for stocks is what level of interest rates matter both in terms of impacting valuations due to the rising risk free rate and in affecting US economy activity. Yes, rates are still very low but because of our economy’s drug like dependency on cheap money, a sharp move of any kind will likely matter.” There is plenty of historical precedent that a better economy doesn’t equal a better stock market if higher interest rates are a corollary result.

Washington’s Blog strives to provide real-time, well-researched and actionable information.  George – the head writer at Washington’s Blog – is a busy professional and a former adjunct professor.

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Bill Gross, Nouriel Roubini, Laurence Kotlikoff, Steve Keen, Michel Chossudovsky and the Wall Street Journal all say that the U.S. economy is a giant Ponzi scheme.

Virtually all independent economists and financial experts say that rampant fraud was largely responsible for the financial crisis. See this and this.

But many on Wall Street and in D.C. – and many investors – believe that we should just “go with the flow”. They hope that we can restart our economy and make some more money if we just let things continue the way they are.

But the assumption that a system built on fraud can continue without crashing is false.

In fact, top economists and financial experts agree that – unless fraud is prosecuted – the economy cannot recover.

Fraud Leads to a Break Down in Trust and Instability in the Markets

As Alan Greenspan said recently:

Fraud creates very considerable instability in competitive markets. If you cannot trust your counterparties, it would not work

Similarly, leading economist Anna Schwartz – co-author of the leading book on the Great Depression with Milton Friedman – told the Wall Street journal in 2008:

“The Fed … has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible.”

So even though the Fed has flooded the credit markets with cash, spreads haven’t budged because banks don’t know who is still solvent and who is not. This uncertainty, says Ms. Schwartz, is “the basic problem in the credit market. Lending freezes up when lenders are uncertain that would-be borrowers have the resources to repay them. So to assume that the whole problem is inadequate liquidity bypasses the real issue.”

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Today, the banks have a problem on the asset side of their ledgers — “all these exotic securities that the market does not know how to value.”

“Why are they ‘toxic’?” Ms. Schwartz asks. “They’re toxic because you cannot sell them, you don’t know what they’re worth, your balance sheet is not credible and the whole market freezes up. We don’t know whom to lend to because we don’t know who is sound. So if you could get rid of them, that would be an improvement.”

And economics professor and former Secretary of Labor Robert Reich wrote in 2008:

The underlying problem isn’t a liquidity problem. As I’ve noted elsewhere, the problem is that lenders and investors don’t trust they’ll get their money back because no one trusts that the numbers that purport to value securities are anything but wishful thinking. The trouble, in a nutshell, is that the financial entrepreneurship of recent years — the derivatives, credit default swaps, collateralized debt instruments, and so on — has undermined all notion of true value.

Robert Shiller – one of the top housing experts in the United States – said recently that failing to address the legal issues will cause Americans to lose faith in business and the government:

Shiller said the danger of foreclosuregate — the scandal in which it has come to light that the biggest banks have routinely mishandled homeownership documents, putting the legality of foreclosures and related sales in doubt — is a replay of the 1930s, when Americans lost faith that institutions such as business and government were dealing fairly.

Nobel prize-winning economist Joseph Stiglitz says about the failure to prosecute Wall Street fraud:

The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that’s really the problem that’s going on.

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I think we ought to go do what we did in the S&L [crisis] and actually put many of these guys in prison. Absolutely. These are not just white-collar crimes or little accidents. There were victims. That’s the point. There were victims all over the world.

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Economists focus on the whole notion of incentives. People have an incentive sometimes to behave badly, because they can make more money if they can cheat. If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties.

Read the rest of this entry »

Back in October, I mentioned the website that gone viral: “Where’s the Note.com.” It allowed homeowners to easily request to see a copy of their mortgage note.

Yesterday, I noted that at least one Homeowner had made a “wheresthenote.com” Mortgage Note request, only to see Bank of America report the request as a dispute to the credit agencies, knocking 40 points off his FICO score. If these facts check out, that is a violation of the Fair Credit reporting act, and possibly other state and local laws.

As it turns out Wheresthenote.com has received numerous complaints about this. Their response has been to set up a form to file a complaint to your State Attorney General about illegal bank intimidation.

This may turn out to be a smart tactic. Elected Senators and Congressmen seems to be bought lock stock and barrel by the banking lobby. And the State AGs seem to be harder to buy off. Congress does the bidding of their banking masters, so looking for any positive outcome there is futile. But ion the Fraudclosure issue, the state AGs have been dead on.

Here is the Wheresthenote announcement:

Update: Homeowners are sending us reports of banks responding with threats and intimidation.

It is your legal right to demand to see your original, signed mortgage note.

It is illegal for banks to negatively report to your credit file during the 60 day period after requesting your note simply because you made a request to see it.

If you received a response that you feel is threatening or intimidating in nature, contact your state’s Attorney General and push them to hold the banks accountable under the law.

UPDATE: December 15, 2010 11:05am

Here is a stunning example of this: A state legislator in Arizona was sued for asking Colonial Savings about their Note.  Michele Reagan is current on her mortgage, never missed a payment, was never even late.

Her and her husband were sued for even asking. Here is local TV station CBS 5 (KPHO):

“Arizona Rep. Michele Reagan, R-District 8, is better known for fighting for new laws, but now, she is speaking about her fight against a lawsuit.

Reagan is being sued by her mortgage company after she questioned who owned held the note on her home. “It’s really scary,” she said, “I think that this really needs to be brought to light that this is happening to people in Arizona.”

Reagan had wanted to find out she and her husband, David Gulino, could refinance their south Scottsdale home. “In doing research, I began to wonder if the lender even owned the note to my home,” she said. “So I sent them a letter and asked them and asked them several things. I want to know who owns my property. Am I paying the right person?”

Soon after, Colonial Savings filed a lawsuit in U.S. District Court against Reagan and her husband. The company says the couple is trying “to rescind their home loan,” or back out on the loan. “We’re not interested in walking,” Reagan said. “We’re not interested in saying we’re not going to pay. We just need a little help with the interest rate.”

Bank Sues State Lawmaker
Sarah Buduson
KPHO.com 8:55 pm MST March 30, 2010

http://www.kpho.com/money/23008529/detail.html