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  • Some provocative comments from FSA's Adair Turner: He wants a global tax on financial transactions to shrink a 'swollen' financial sector down to size. He also says London's role as a leading financial center has made it a destabilizing force in the U.K. economy.  [View news story]
    Flash trading, Flash Taxing. There absolutely should be a taxation consequence to financial transactions.
    Aug 27, 2009. 07:46 AM | Likes Like |Link to Comment
  • It's Getting Harder to Be a Housing Bear [View article]
    Good thing for Tim Iocano that he is cute.
    Aug 26, 2009. 06:32 PM | Likes Like |Link to Comment
  • Four Important Housing Charts [View article]
    I did a brief, geographically restricted, sample of actual single family homes in central Florida that were sold in 2005/6, where the same house was also sold in 2009.
    The 2009 purchase price of these resold homes is 42.12% of the prior selling price.
    For condos (also very restricted), resales were for 35% of the prior sale at the peak.

    Aug 26, 2009. 07:40 AM | 1 Like Like |Link to Comment
  • Legalized Accounting Fraud Boosted [View article]
    Here is how the trillions of dollars can trickle down.
    1. Banks hoard Bernanke Bucks to offset horrific mortgage writedowns, preferably off balance-sheet. Banks are solid!
    2. Sell horrific written down mortgage notes to Pennymac or other Hedgies for pennies on the dollar. Investment Opportunity!
    3. Hedgies offer notes back to original mortgage-holders (if they can still find them) for dimes on the dollar. Hedgies Profit!
    5. Homeowners agree to repurchase note with funds from a new mortgage. Homeowner solvent!
    4. Banks make new mortgage loans for individuals to remortgage house at new value. Operating Profit!
    Aug 25, 2009. 12:51 PM | 2 Likes Like |Link to Comment
  • Legalized Accounting Fraud Boosted [View article]

    To Iconoclast421: I talked recently to a banker offering to sell a note on a property for 25% of the loan value. The bank did not want to foreclose because that would "endanger their future lending relationship with that developer." !!?????

    To Andrew: I've seen that stuff and Of Course they know how to value that stuff.

    On Aug 25 11:57 AM Andrew Butter wrote:>
    > The problem is that the loans were securitized, and no one has figured out how to value that stuff

    Iconoclast 421 wrote:
    ...joke about how the next bubble will be confirmed when banks start giving loans to people who are already are in default on a mortgage...
    Aug 25, 2009. 12:37 PM | 1 Like Like |Link to Comment
  • Legalized Accounting Fraud Boosted [View article]
    As you might have seen in my comment yesterday on the credit card defaults........
    There are now classes on how to max out credit cards, stash cash, live a year or two rent free, default on everything without fear of recourse, and re-establish yourself thereafter.

    And who said normal people didn't understand the wall street plan?
    Aug 25, 2009. 12:08 PM | 3 Likes Like |Link to Comment
  • Toxic Debt: Wall St. Puts Lipstick on a House of Cards [View article]
    Kind of makes you ashamed to be an American
    Aug 25, 2009. 06:22 AM | Likes Like |Link to Comment
  • Barclays goes bullish on U.S. credit card issuers, saying earnings will increase steadily over the next 3-5 year, and that it's encouraged by what appear to be signs of stabilization in default rates. Firm boosts American Express (AXP +2.4% premarket), Capital One (COF +2.7%) and Discover (DFS +7%) to Overweight.  [View news story]
    You can't make this stuff up.

    If you are one of the 10 million more Alt A & Option Arm foreclosures ahead, assuring that your credit will soon be trashed, you need a Before-Default Strategy:
    1. Keep paying your mortgage and minimum due on all credit cards until you have executed your plan.
    2. Tap all available non-recourse credit. Reactivate dormant credit card accounts, and apply for more.
    * If you have a spouse or partner you may be able to trash credit of partner A, and preserve credit of partner B.
    3. Get maximum cash advances
    4. Save the cash.
    5. Max out all cards, using proceeds to purchase easily saleable items (gold jewelry, for example), and sell for cash.
    6. Save the cash.
    7. Prepare for transition housing. Even with bad credit, you can rent with 1-2 years rent in savings. Find out the requirements of various property/apartment managers and make sure you can meet them.
    8. Consider buying a foreclosure yourself, if your acquired cash allows. Clue in family or friends who can float a private mortgage (read: cash purchase) for a new property with your ample cash downpayment. Consider any extended family co-housing offers (move-in-with-mom).
    9. Stop paying your mortgage, But Do Not Move.
    9. Stop paying on all non-recourse loans.
    10. Take minimally adequate care of the property so its appearance does not deteriorate. This slows reaction time of property preservation companies.
    11. Exploit this rent-free housing until you are actually evicted.

    Recognize that there is no longer any stigma to being "foreclosed." Further, the credit hit of a Foreclosure is so punitive that defaulting on lesser loans are not additive.

    12. When evicted, activate your alternate housing plan.
    13. Go free, go far. In seven years you will again be golden.
    Aug 24, 2009. 01:24 PM | Likes Like |Link to Comment
  • Did Bernanke Save the World? [View article]
    The Economist, in about 2003, had this great cover featuring houses soaring above the earth, carried by hot-air balloons. Cover headline: "The Houses that Saved the World."

    And we know how that turned out.
    Aug 24, 2009. 11:45 AM | 7 Likes Like |Link to Comment
  • Inflation Scorecard: Disinflation Wins This Week [View article]
    Xie Xuren for Fed Chairman. We might as well put the authority where our money is.
    Aug 23, 2009. 04:41 PM | Likes Like |Link to Comment
  • Liar Loans Not the Problem [View article]

    "I know everyone is in a mad funk about what happens when the "Re-sets" start kicking in, but I don't buy that. What matters is how much people paid for their house compared to what it's worth now, or more precisely what it will be worth in two years time."

    Reset algothorim: Take negative equity, eliminate refi possibility, add increased negative cash flow from increased payment = if you haven't walked before, now you will.
    Aug 23, 2009. 02:01 PM | 7 Likes Like |Link to Comment
  • Liar Loans Not the Problem [View article]
    Good article. Low documentation loans did not go only, and possibly not even mainly, to unqualified borrowers. Many lazy loan applicants with the blessing of equally lazy "lending professionals," chose to go with low doc loans just to avoid the annoying paperwork hassles.

    Disclosure: long low doc mortgage
    Aug 23, 2009. 01:49 PM | 1 Like Like |Link to Comment
  • Portfolio Management - Wise to Keep Some Cash [View article]
    Very good observation, and congratulations. Cash is always necessary. You may think you're a long term investor, until your business can't extend its line of credit, your mortgage can't be refinanced, your spouse is laid off, your kid has uncovered medical expenses. Cash buys you time. Cash prevents you from selling low when you know better, but have no choice.

    Wish we could vote up or down on the articles themselves.
    Aug 23, 2009. 12:53 PM | Likes Like |Link to Comment
  • Should Banks Extend and Pretend? [View article]
    New Jersey fraud case from S&L crisis, where loan appraisals were inflated 300%. The proceeds were pocketed and properties promptly abandoned. When decided 8 years later, the defense claimed it was not fraud because by the time of the settlement, the property value had risen to nearly the original appraised price.
    Aug 22, 2009. 08:53 AM | Likes Like |Link to Comment
  • The CFTC Is Needlessly Breaking Good Products [View article]
    Government regulators: Hell on widows and orphans, impotent where the real violators are.
    Aug 21, 2009. 08:28 AM | 18 Likes Like |Link to Comment