But it would have been funny if he had said it on Hannity tonight.Trey ("Don't call me Alan")
But it would have been funny if he had said it on Hannity tonight.We are going to quickly review a few charts from Gary Shilling's latest letter, where he review the housing market in depth. Bottom line, the housing market has not yet begun to recover, and it is not only going to take longer but the decline in prices may be greater than many have forecast. I wrote three years ago that it could be well into 2011 before we get to a "bottom." That may have been optimistic, given what we will cover in this letter...The homebuilding industry, which was the source of so many jobs last decade (aka the good old days), is on its back. This country needs a healthy housing construction market to get back to lower unemployment, and until the overhang in the foreclosure market is cleared out, that is unlikely to happen.
...Shilling thinks prices are likely to fall another 20%. Given what I am writing about in the next section, that is a possibility. There is certainly no demand pressure to push up housing prices...
Finally, [a word] on foreclosures. Residential mortgages in foreclosure are near all-time highs, close to 1 in 21 of all mortgages, up from 1 in 100 just four years ago. That's got to be bad for your profit models.[Editor's Note: arrow and caption added by your beloved editor.]
The Foreclosure Mess
"Homeowners can only be foreclosed and evicted from their homes by the person or institution who actually has the loan paper...only the note-holder has legal standing to ask a court to foreclose and evict. Not the mortgage, the note, which is the actual IOU that people sign, promising to pay back the mortgage loan...
"...once mortgage loan securitization happened, things got sloppy...they got sloppy by the very nature of mortgage-backed securities. ...These various [securitized bundles of loans or] tranches were sold to different investors, according to their risk appetite... the loans were 'bundled' into REMICs (Real-Estate Mortgage Investment Conduits, a special vehicle designed to hold the loans for tax purposes)...
"But here's the key issue: When an MBS was first created, all the mortgages were pristine...none had defaulted yet, because they were all brand-new loans. Statistically, some would default and some others would be paid back in full...but which ones specifically would default? No one knew, of course. If I toss a coin 1,000 times, statistically, 500 tosses the coin will land heads...but what will the result be of, say, the 723rd toss? No one knows.
"Same with mortgages.
[Since investors didn't know which mortgages would actually default and needed to tie the loan to the tranche,] "Enter stage right the famed MERS...the Mortgage Electronic Registration System... "MERS was the repository of these digitized mortgage notes that the banks originated from the actual mortgage loans signed by homebuyers. MERS was jointly owned by Fannie Mae and Freddie Mac (yes, those two again ...I know, I know: like the chlamydia and the gonorrhea of the financial world...you cure 'em, but they just keep coming back).
"The purpose of MERS was to help in the securitization process. Basically, MERS directed defaulting mortgages to the appropriate tranches of mortgage bonds... legally [however]...and this is the important part...MERS didn't hold any mortgage notes: the true owner of the mortgage notes should have been the REMICs.
"But the REMICs didn't own the notes either, because of a fluke of the ratings agencies: the REMICs had to be 'bankruptcy remote,' in order to get the precious ratings needed to peddle mortgage-backed Securities to institutional investors.
"So somewhere between the REMICs and MERS, the chain of title was broken."Now, what does 'broken chain of title' mean? Simple: when a homebuyer signs a mortgage, the key document is the note. As I said before, it's the actual IOU. In order for the mortgage note to be sold or transferred to someone else (and therefore turned into a mortgage-backed security), this document has to be physically endorsed to the next person. All of these signatures on the note are called the 'chain of title.'
"You can endorse the note as many times as you please...but you have to have a clear chain of title right on the actual note: I sold the note to Moe, who sold it to Larry, who sold it to Curly, and all our notarized signatures are actually, physically, on the note, one after the other.
"If for whatever reason any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.
"To repeat: if the chain of title of the note is broken, then the borrower no longer owes any money on the loan.
"Read that last sentence again, please. Don't worry, I'll wait.
"You read it again? Good: Now you see the can of worms that's opening up...
"...Now, the banks had hired 'foreclosure mills'...law firms that specialized in foreclosures...in order to handle the massive volume of foreclosures and evictions that occurred because of the housing crisis. The foreclosure mills, as one would expect, were the first to spot the broken chain of titles.
"Well, what do you know, it turns out that these foreclosure mills might have faked and falsified documentation, so as to fraudulently repair the chain-of-title issue, thereby 'proving' that the banks had judicial standing to foreclose on delinquent mortgages. These foreclosure mills might have even forged the loan note itself...
"Wait, why am I hedging? The foreclosure mills did actually, deliberately, and categorically fake and falsify documents, in order to expedite these foreclosures and evictions. Yves Smith at Naked Capitalism, who has been all over this story, put up a price list for this 'service' from a company called DocX...yes, a price list for forged documents. Talk about your one-stop shopping!
"...[But the] alarm bells started going off when the title insurance companies started to refuse to insure the titles... In every sale, a title insurance company insures that the title is free -and clear ...that the prospective buyer is in fact buying a properly vetted house, with its title issues all in order. Title insurance companies stopped providing their service because...of course...they didn't want to expose themselves to the risk that the chain of title had been broken, and that the bank had illegally foreclosed on the previous owner.
..."The fact that Ally Financial (formerly GMAC), JP Morgan Chase, and now Bank of America have suspended foreclosures signals that this is a serious problem...obviously. Banks that size, with that much exposure to foreclosed properties, don't suspend foreclosures just because they're good corporate citizens who want to do the right thing, and who have all their paperwork in strict order...they're halting their foreclosures for a reason.
"[And] Bank of America halted all foreclosures, nationwide... Why do you think that happened? Because the banks are in trouble...again. Over the same thing as last time...the damned mortgage-backed securities!
"The reason the banks are in the tank again is, if they've been foreclosing on people they didn't have the legal right to foreclose on, then those people have the right to get their houses back. And the people who bought those foreclosed houses from the bank might not actually own the houses they paid for.
"And it won't matter if a particular case...or even most cases...were on the up -and up: It won't matter if most of the foreclosures and evictions were truly due to the homeowner failing to pay his mortgage. The fraud committed by the foreclosure mills casts enough doubt that, now, all foreclosures come into question. Not only that, all mortgages come into question."People still haven't figured out what all this means. But I'll tell you: if enough mortgage-paying homeowners realize that they may be able to get out of their mortgage loans and keep their houses, scott-free? That's basically a license to halt payments right now, thank you. That's basically a license to tell the banks to take a hike.
"What are the banks going to do...try to foreclose and then evict you? Show me the paper, Mr. Banker, will be all you need to say.
"This is a major, major crisis. The Lehman bankruptcy could be a spring rain compared to this hurricane. And if this isn't handled right...and handled right quick, in the next couple of weeks at the outside...this crisis could also spell the end of the mortgage business altogether. Of banking altogether. Hell, of civil society. What do you think happens in a country when the citizens realize they don't need to pay their debts?"...All those subprime and Alt-A mortgages written in the middle of the last decade? They were packaged and sold in securities. They have had huge losses. But those securities had representations and warranties about what was in them. And guess what, the investment banks may have stretched credibility about those warranties. There is the real probability that the investment banks that sold them are going to have to buy them back. We are talking the potential for multiple hundreds of billions of dollars in losses that will have to be eaten by the large investment banks. We will get into details, but it could create the potential for some banks to have real problems.
IN WASHINGTON DC, JANUARY 20, 2009
The unanimous Declaration of the Democrat-controlled House of Representatives, the Senate, and the Executive Branchhen in the course of political expediency it becomes necessary for one party to ignore its country's Constitution and legal system which hath guided it for 233 years, Gaia and Generation Investment Management require that it declare the causes which impel them to high treason.
We hold these truths to be self-evident, that all workers can be divided into races, income levels, religions, genders, and so on, to advance Statism; that they possess certain unalienable rights, that among these are health care, food stamps, iPhones, MTV, and a three-bedroom condo within walking distance of a Starbucks --
That to redistribute these rights, Governments are seized by politicians, deriving their powers by the theft of private property and the confiscation of liberty --
That whenever any form of Government becomes destructive of centralized, authoritarian Government, it is the Right of the Democrats to ignore the Constitution or to abolish it, and to institute new Government, laying its foundation on the teachings of Marx, of Engels, of Alinsky, of Cloward and of Piven.
Prudence, indeed, would reject our claim to change government for light and transient causes, seeing as how we must reject facts, logic, history and reason to advance our tyrannical measures. Indeed, we rely upon our experience that hath shewn that mankind are more disposed to suffer so long as government cheese and Jersey Shore are freely available to anyone who asks, whether citizen or not.
And when some object, after a long train of abuses and usurpations by we, the callous, unheeding Democrat leadership, it is our right, and it is our duty, to play the race card, to tar them as 'extremists' and 'crackpots', to use the media to ridicule them, and to create a "Civilian National Security Force" to ensure their ultimate destruction.
Such has been our suffering abuse of these Tea Parties; and such is now the necessity which commands us to eradicate their former Systems of Government. To prove this, let Facts be submitted to a receptive media.
- He has refused to allow the vaporization of our Laws including the Constitution, which is no more useful to Democrats than a piece of toilet paper and which, may in fact, be emblematic of witchcraft.
- He has expressed feigned outrage over so-called 'lawlessness' by our Department of Justice, which has offered reparations to the New Black Panthers, illegal immigrants, and other workers deserving special treatment.
- He has refused to accept our order to adhere to socialized medicine and death panels, despite our agitprop designed to fool the general public.
- He has harangued our House of Representatives and our Senate, causing them to skip town hall meetings because of their loaded questions.
- He has endeavoured to prevent our de-population of these States; whether through abortion or in pursuit of our green agenda; both of which command us to reduce the numbers of the human virus.
- He has resisted our dictates to nationalize more than the one-third of United States land that we already have federalized.
- He has complained endlessly about our refusal to enforce the borders, which can only strengthen our numbers in subsequent elections with cadres of dependent migrants.
- He has resisted our assignation of Wise Latina Marxists and Socialists to the Highest Court.
- He has rejected our multitude of New Offices, Agencies and Bureaucracies, and all of our swarms of Officers that must harass them to ensure we confiscate as much of their private property as is our just due.
- He has fought our imposition of new Taxes, which must be installed to combat carbon dioxide pollution, light pollution, non-conforming toilet tanks, and sound pollution.
We, therefore, the Democrats of the united States of america, in General Congress and in the Executive, Assembled, appealing to Mighty Gozar the Traveler; We ask that he will come in one of the pre-chosen forms--During the rectification of the Pelosi transjunction, the traveler came as a large and enchanted Mikulski! Then, during the third resolution of the Reid supplicants, they chose a new form for him: that of a giant Barney! Many Tea Partiers and Free-Marketeers knew what it was to be roasted in the depths of the Barney that day, I can tell you!
And for the support of this Destruction, with a firm reliance on the Proletariat, we mutually pledge to Gaia our support, unless it interferes with our pursuit of personal wealth, aggregation of power or the acquisition of our third home -- this one in the Hamptons.



Remember, folks, iOwnTheWorld doesn't have the requisite level of respect for our beloved Democrat ruling class. You know, they don't exhibit the kind of courtesy and admiration for their wonderful policies that we do here. Besides, we serve better drinks including Red White & Blue beer and Big K brand soft drinks.If you're not familiar with the state of California, it's a public employee pension management organization that runs a state on the side with a large $19 billion deficit.California governor Arnold Schwarzenegger explains it this way in today's WSJ: "The problem is stark: Over the last decade in California, spending on state employees' compensation rose nearly three times faster than state revenues. This has squeezed resources for programs, such as higher education and job training, that benefit private-sector workers. This year, for the first time ever, our state was forced to spend more on retirement costs ($6.5 billion) than on higher education."
One of the famous definitions of insanity is repeating the same mistake over and over again while expecting a different result. Whether that’s a perfect definition is open to debate, but one thing is certain: it’s as accurate a description of the California electorate at this moment in 2010 as you could get.
How else to explain that Jerry Brown and Barbara Boxer are still leading Meg Whitman and Carly Fiorina by 5.4% and 3.3% (RCP averages) in a state where unemployment is 12.4% (not including the underemployed and the astronomical number that have already given up), and from which businesses are fleeing like rats from the proverbial sinking ship? Even the storefronts on swanky Rodeo Drive are standing empty.
Nevertheless, a plurality of the voters still want the same old, same old.
Writing at National Review, Veronique de Rugy describes the money-dispensing leaf-blower that is the modern federal government.Fiscal year 2010 ended on September 30th. Looking back, the Congressional Budget Office calculated that during that year the deficit has reached nearly $1.3 trillion. The 2010 deficit is the second-highest shortfall — 2009 is the highest — since 1945, as a percentage of the economy...
...This is stunning: This table, which was put together by the Wall Street Journal, shows that overall, the government has grown by 21.4 percent in two years. We have a spending problem, not a revenue problem...
This has consequences.
Our debt is huge, it will get worse, and the interest we could end up paying on that debt might end up eating up all of our wealth if lawmakers don’t change their ways.
Dare to dream, Van Helsing, dare to dream.I posted the following article on March 22, 2010, the evening after the Democrats jammed their enormous socialized health care law down the American people's throats without even taking the time to read the bill.
I want you to remember how angry you were then.
I want you to recall your frustration, your powerlessness.
Because November is coming.
November will come. And paybacks are hell.Here's a novel idea. Instead of worrying that Social Security will go bust in 30 years (it won't) and considering absurd and unnecessary cuts in benefits for millions of Americans, why not expand this, the most popular social insurance program in the country, to provide for a universal defined benefit pension for every worker and his/her family? [Ed: Eh, because it's a giant Ponzi scheme? And the government stole all the money from the 'Trust Fund'?]It's really not such a novel idea; most modern and civilized industrial nations have in place such pension systems... [Ed: Oh. Like Greece, Portugal, Spain, Italy and Ireland? How's that working out?]
...A favorite of mine, economist Teresa Ghilarducci, of the New School for Social Research, was the first to call the 401(k) a failure for retirees and she shocked lawmakers when she suggested they be ended in favor of what she calls a Guaranteed Retirement Account that would be as safe and secure as defined benefit pension plans... [Ed: More on Teresa below.]
...Now, according to Richard Trumka, president of the AFL-CIO, "only 13 percent of workers say they are very confident about having enough money for a comfortable retirement-that's the lowest level in 16 years...With the enactment of Social Security and the growth of union-negotiated pensions, elderly Americans became [and are still] the least impoverished age group." [Ed: Because who knows better about wasting money than Trumka?]
...Ghilarducci makes the same point, that 401(k)s and IRAs, in which taxes on earnings are deferred, reduce tax receipts by $193 billion a year. But, she says, 80 percent of these tax breaks go to the top 20 percent of taxpayers. Her solution: "Guaranteed Retirement Accounts", to which employers and employees would each be required to contribute 2.5 percent of salaries, with a $600 refundable tax credit for the employee's contribution... [Ed: Net-net, confiscate the 401(k) monies, increase taxes, and create brand new revenue streams that can be stolen to bankrupt future generations even more.]
Democrats in the Senate on Thursday held a recess hearing covering a taxpayer bailout of union pensions and a plan to seize private 401(k) plans to more "fairly" distribute taxpayer-funded pensions to everyone.Sen. Tom Harkin (D-Iowa), Chairman of the Health, Education, Labor and Pensions (HELP) Committee heard from hand-picked witnesses advocating the infamous "Guaranteed Retirement Account" (GRA) authored by Theresa Guilarducci... (listen to the outstanding 2007 interview with Guilarducci by Mark Levin)
...the pressing issue for the lame duck [session] is the union pension bailout with new Financial Accounting Standards Board (FASB) rules currently set to take effect December 15. These new rules would force companies to account for the cost of penalties to extract themselves from these union pension plans against their bottom line...
...In a nutshell, under the GRA system government would seize private 401(k) accounts, setting up an additional 5% mandatory payroll tax to dole out a "fair" pension to everyone using that confiscated money coupled with the mandated contributions. This would, of course, be a sister government ponzi scheme working in tandem with Social Security, the primary purpose being to give big government politicians additional taxpayer funds to raid to pay for their out-of-control spending.
A HillBuzz contributor offers this exclusive photo of Michelle Antoinette.
In February, the aptly named Crooks and Liars all but predicted what would happen to 'a White House geared toward campaigning, not governing'.
When asked why he hasn't been campaigning recently, Harry Reid responded, "I've been running the country."
He certainly has. For four long years, Reid and Nancy Pelosi have ruled Congress with iron fists.
You like 14% unemployment? Then vote for Harry Reid.
You like the worst housing market in the country? Then vote for Harry Reid.
You like paying more and more for electricity? Then vote for Harry Reid.
You like worrying every day about your job and your pension? Then vote for Harry Reid.
You like food stamps and endless unemployment? Then vote for Harry Reid.
You like having your kids and grandkids born into massive debt? Then vote for Harry Reid.
Do you hate your state, your country and your kids? Then vote for Harry Reid.
But otherwise, vote Sharron Angle. Vote to nuke Harry Reid from office. It's the only way to be sure.Of The 11 Million Mortgage Holders Underwater Backed By $2.9 Trillion In Mortgage Debt.
...29 percent of all mortgage debt ($2.9 trillion) is underwater. This is incredible given that the number of underwater mortgages amounts to 22 percent of all mortgages which tells us that there are some big loans skewing the figure here. In fact, we can see this when the numbers are broken down further...
...The above chart should give you a good understanding of why some states will have much tougher housing markets moving forward. It is incredible that 50 percent of all underwater mortgages in Nevada are underwater by at least 25 percent. In California that number is closer to 25 percent...
...California underwater mortgages: 1,724,774... California underwater mortgages -25% equity or more: 344,954.
We can almost guarantee that those 344,000 mortgages will default in the next year or two. The 1.7 million mortgages are also in this risky pool...
In California just by statistics you can say that every one out of three people that tell you they are a homeowner is likely underwater. And every one out of five of those people is underwater by at least 25 percent. We look at certain examples even in more select cities and we realize that this is happening all over the place... And what if home prices fall as we expect in the next year?
Celebrate the passage of the Democrats' popular health care reform bill with the challenging first hole. Every 20 seconds, Speaker Nancy Pelosi's gavel slams down in front of the tee!
The BP-sponsored second hole features one of the more challenging obstacles in all of miniature golf: on a random schedule, an exploding rig sets fire to an oil slick on the four thousand gallon water hazard!
The gnarly, burned out row homes represent the successful Summer of Recovery in Detroit, Michigan.
Home of the housing meltdown and favorite employer of well-connected Democrats, this scale model of Fannie Mae's headquarters collapses -- sometimes with the ball trapped in it -- every 90 seconds!
Nothing says economic rebound like the record number of Americans on food stamps. Celebrate the Democrats' Nation of Food Stamps initiative by acing the fifth hole through challenging stacks of giant coupons earmarked for illegal immigrants.
The sixth hole commemorates one of Barack Obama's early successes: the Valerie-Jarret slum known as "Grove Parc" that cost taxpayers millions of dollars and was eventually condemned. Community-organizing at its finest!
Avoid the swinging batons at the challenging par-3 seventh hole, where New Black Panthers block your path to the symbolic voting booth (and hole)!
The Pelosi hole recognizes the most ideologically pure Speaker in American history, who conspired with our historic President to bribe, cajole, arm-twist and beat House members into submission. The tee-mat is an image of Bart Stupak upon which golfers are encouraged to wipe their feet.
The course's final hole is the most challenging: the giant pie-hole of union boss and presidential puppet-master Richard Trumka can literally slice a golf ball in half. Exercise great care if you cross the path of this beast.More American adults reported having government healthcare -- Medicare, Medicaid, or military/veterans' benefits -- in September (26.3%) than in any previous month since Gallup and Healthways began tracking it in January 2008, at which time the figure stood at 22.5%.
The increase in government insurance partially offsets the decline in employer-based insurance seen since January 2008 -- a decline that started in the fall of 2008 as the financial crisis exploded and large-scale layoffs began. The 45.4% of adults who reported they had employer-based coverage in September is statistically unchanged from the summer months, but down from earlier this year, and significantly lower than the 50% who said the same in January 2008.
The percentage of Americans without health insurance was 16.1% last month, about on par with the 16.6% in August, but still higher than the 14.8% in January 2008.
The life-insurance industry has enjoyed beneficial tax treatment for its products for nearly a century. Whenever Congress tried to change that, insurers always had a mantra at the ready: We protect widows and orphans.
Life insurance needs to be free from income taxes, the industry said, because of its special social function. It keeps survivors from a life of penury when a chief breadwinner dies.
But in a development all but unnoticed outside the industry, life-insurance companies gradually have shifted away from their broad historical base of middle-class households...
...Instead, statistics show, an increasing portion of insurers' business consists of selling large policies to wealthier Americans, often as part of complex estate-tax plans.
The shift means that a growing proportion of the tax benefits of life insurance goes to the well-off, not to the middle class that once was the industry's backbone.
The industry's safety-net role is eroding just as Congress is scouting for new revenue sources amid gaping budget deficits, raising concern among insurance executives that lawmakers could revisit the industry's tax advantages.
In fact, a comparison of the chart at left illustrates that the distribution of life insurance gains (above) is far more egalitarian than that of typical investments.3M Co., citing new federal health laws, said Monday it won't cover retirees with its corporate health-insurance plan starting in 2013... Instead, the company will direct retirees to Medicare-backed insurance programs, and will provide reimbursement for that coverage......Maplewood-based 3M (NYSE: MMM) is one of the first large companies to indicate that it won't tap a large federal-government reimbursement program created by Congress as part of the health insurance reform package... The rebate program was meant to encourage employers to keep in place their health-insurance plans for retirees.
...3M noted that these changes affect current and future retirees of 3M, regardless of their retirement date... The new policy is likely to save 3M money because it reduces the risk to the manufacturer for rising medical costs...
Unable to pay its bills, California is set to issue IOUs for the second year in a row. Harrisburg, Pennsylvania is close to complete economic collapse. Illinois is paying its bill six months late and has another looming hole in its budget in the form of interest for loans it never should have taken in the first place. And that's just the tip of the iceberg.Chancellor Angela Merkel called for calm Friday after riot police used what critics called "Rambo" tactics to disperse thousands of opponents of a contentious rail project... Demonstrators said that more than 20,000 protestors, including more than 1,000 schoolchildren, were dispersed by close to 1,000 police in riot gear using water cannons, pepper spray, tear gas and batons...

French families, students and private sector workers joined mass demonstrations on Saturday as trade unions ramped up pressure on the government to drop pension reforms... Opposition to [plans] to raise the retirement age to 62 from 60 showed no signs of abating and hundreds of thousands across the country marched in the fourth round of rallies in as many months... Unions said that about 2.9 million had marched, while police said the crowds numbered 899,000. The union figure was about the same as at the last demonstrations on September 23. The police figure was slightly lower... About 230 protests took place across the country with a bigger turnout of families,
It's hard to know what to say about Ireland's revelation that it expects the cost of cleaning up Anglo Irish Bank to come to a staggering 21% of GDP. Profanity is too weak, really. The total cost of the bank bailouts looks as if it will be well over a quarter of GDP... Ireland is massively dependent on foreign credit, and if it flees--well, the second letter in the country's name might as well be a "c". That means cutting the budget elsewhere to send a credible signal to the bond market--because without that credible signal, an even worse financial crisis seems like the most likely outcome...