Black: US Using “Really Stupid Strategy” to Hide Bank Losses

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Source:
Bill Black: U.S. Using “Really Stupid Strategy” to Hide Bank Losses
Peter Gorenstein
Yahoo TechTicker, Aug 11, 2010
http://finance.yahoo.com/tech-ticker/bill-black-u.s.-using-”really-stupid-strategy”-to-hide-bank-losses-535317.html

Category: Video

Guess Who Benefits Most From Foreclosure Abatements?

Just in case you missed this article in The Hill, the headline will save you from any suspense: Banks to benefit most from White House program to help fight foreclosures. Here’s the bad news: “Banks will get the biggest benefit from an Obama administration housing program designed to help unemployed homeowners escape foreclosure. Housing experts…Read More

Category: Bailouts, Credit, Real Estate

Monday Reads

Here are the items that I found most intriguing today: • Yield Curve as Recession Harbinger (WSJ) • Ports wary of stunted holiday rush  (LA Times) • Rates Fall as Market Fears Economic Weakness (NYT) • Can the Nation Stimulate Its Way to Prosperity? (Federal Reserve Bank of Dallas) • Turbocharged Germany: Their economy is…Read More

Category: Financial Press

Mormons, Mullets, and Maniacs New York Viral Media

Mormons, Mullets, and Maniacs New York Viral Media Meetup August 12, 2010 > Jonah Peretti Viral Meetup Talk

Category: Digital Media, Think Tank

Spending + Tax Stimulus = $1 Trillion Dollars

With the passage of a $26 billion state aid package last Tuesday, Congress has now approved over $1 trillion in spending and tax measures to stimulate the economy , according to economists Alan S. Blinder of Princeton University and Mark Zandi of Moody’s Analytics. The Washington Post breaks down the spending: > click for larger…Read More

Category: Economy, Taxes and Policy

I Love Gold

Hat tip Jesse

Category: Gold & Precious Metals, Humor, Video

2012 Ford Mustang Boss 302 Laguna Seca package

USA Today:

Proving that there’s almost limitless potential for new versions of its iconic pony car, Ford Motor is reaching back 42 years to dust off one of its most famous names.

It’s bringing back the Mustang Boss 302. The original Mustang Boss 302 made its debut in 1968. Following its pattern, Ford is adding performance parts, a fancy paint job and a famous name to try to evoke nostalgia for a more carefree era.

Power is 440 HP; Ford hasn’t disclosed prices yet, but Ford marketing says the Boss 302 will be more than a Mustang GT ($29,645), but less than the Shelby GT 500 ($48,645).

Photos after the jump . . .

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Category: Weekend

Unsuck It

Tired of playing buzzword bingo ? Then you need Unsuck-it.com — its the cure for terrible business jargon: > click to unsuck

Category: Digital Media

How to Thwart the Assassins of the American Dream

Janet Tavakoli is the president of Tavakoli Structured Finance, and has more than 20 years of experience in senior investment banking positions, trading, structuring and marketing structured financial products. She is a former adjunct associate professor of derivatives at the University of Chicago’s Graduate School of Business.  Author of: Credit Derivatives & Synthetic Structures (1998, 2001), Collateralized Debt Obligations & Structured Finance (2003), Structured Finance & Collateralized Debt Obligations (2008), and Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street (2009).

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Arianna Huffington’s new book, Third World America: How Our Politicians are Abandoning the Middle Class and Betraying the American Dream, paints a grim picture of the State of the Union:

“Every day, Americans, faced with layoffs and tough economic times, are forced to use their credit cards to pay for essentials such as food, housing, and medical care—the costs of which continue to escalate.  But, as their debt rises, they find it harder to keep up with their payments.  When they don’t, banks, trying to offset losses in other areas, turn around, hike interest rates, and impose all manner of fees and penalties…”
Third World America,  P. 77.

Our mediocre grammar school and high school educational system continues its downward slide.  The Great Recession is squeezing school budgets.  We are failing our children, our most important resource of all.

In 2009, the American Society of Civil Engineers gave the nation’s infrastructure a near failing D rating:

“Flip on a light switch, and you are tapping into a seriously overtaxed electrical grid.  Go to the sink, and your tap water may be coming to you through pipes built during the Civil War.  Take a drive, and pass over pothole-filled roads and cross-if-you-dare bridges.  The evidence of decay is all around us.” P. 95.

The over-hyped American Recovery and Reinvestment Act of 2009 earmarked only $72 billion of the $787 billion appropriation of taxpayer dollars to projects to improve the country’s infrastructure.

Meanwhile, multi-national corporations avoid taxes, sheltering $700 billion in foreign earnings to end up with a measly $16 billion (2.3%) tax bill.  GM is among those companies, yet it took almost a half billion dollars in bailout loans.  Boeing and KBR Halliburton are among the defense contractors that avoid taxes, while enjoying government contracts worth tens of billions.

Banks (not Fannie and Freddie) Crippled the Housing Market

Fannie and Freddie do not make loans.   They purchase mortgage loans and earn fees for guaranteeing payments on the loans.  According to the Mortgage Bankers Association, in 2006, Fannie and Freddie accounted for 33% of total mortgage backed securities issuance.  In the first half of 2010, they accounted for around 64% of new issuance.  They were forced to pick up the slack and buy more when Wall Street’s private label securitization Ponzi scheme blew up.

Fannie and Freddie are Wall Street’s dumping ground.  They would have had problems on their own, but their problems would not have been close to their current scale, and they did not create the housing bubble.

Congress twisted arms to make Fannie and Freddie buy more than $300 billion of phony “AAA” rated mortgage-backed securities from banks, not counting loans that didn’t meet their stated requirements.  Today Fannie and Freddie want banks to repurchase tens of billions of these loans, since they fail to meet representations and warranties, and the banks are fighting this obligation.

Top subprime lenders included Wells Fargo;  Countrywide, purchased by Bank of America; Washington Mutual, now part of JPMorgan Chase; CitiMortgage, part of Citigroup; First Franklin (now closed), purchased by Merrill Lynch, which was purchased by Bank of America; ChaseHome Finance, JPMorgan Chase; Ownit, partly owned by Merrill Lynch, which was later purchased by Bank of America; and EMC, part of Bear Stearns, which was purchased by JPMorgan Chase.  Most of the rest depended on massive loans from Wall Street.  Many of these lenders were sued by states for fraud and paid billions in settlements.

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Category: Books

Homebuilders still depressed

The Aug Nat’l Assoc of Home Builders index was 13, 2 pts below expectations, down from 14 in June and at the lowest since March ’09 when it was at 9. Both Present conditions and the Future outlook fell while Prospective Buyers Traffic remained unchanged at a depressed 10. In particular, buyers traffic in the…Read More

Category: MacroNotes