Showing posts with label Mortgage Crisis. Show all posts
Showing posts with label Mortgage Crisis. Show all posts

Saturday, November 12, 2011

Reconciliation

I'm trying to reconcile these two statements from the MERS Mortgage Registry.

“The MERS System is not a legal system of record or a replacement for public land records. No interests are transferred on the system—they are only tracked,” Smith, Merscorp vice president of corporate communications, wrote in a response to emailed questions. “MERS does not have or maintain any document recording system, public or private, and does not do anything to compete with or supplant the public records for land located in the County records.”
OK. That could be true.
MERS is the true owner of the mortgage, and is not, in the complaint’s words, a “straw man” placeholder listed in public records.“The ‘owner of the loan’ is the party who has possession of the promissory note, but the promissory note is not, and has never been, and is not required to be disclosed or filed in the public records”
I'm now totally confused. I'm a mere engineer with a small understanding of electron flows. This legal stuff has me confused.

Congress to the Rescue.
A new Senate bill proposing to wind down the GSEs by at least 10% a year also includes a provision that would replace the private MERS System with an identical platform run by the Federal Housing Finance Agency (FHFA) — along with new national standards for mortgage title transfers.

The bill outlines the director of the FHFA to establish “MERS 2” and incorporate a single national database for all mortgage title transfers, to be maintained and operated by FHFA.
Well they accidentally let the cat out of the bag.
In his first-ever, and so far only, media interview since becoming president and CEO of Merscorp in April, Bill Beckmann told MT that Merscorp can and must succeed as a revamped company with a higher level of scrutiny on its operation.

“If this model doesn't work, there are only two outcomes I could see,” Beckmann said in the interview, which appeared in the September issue of MT. “One would be a nationalized approach. Personally, I think that's nuts. Why would you go that route when you're already 60% of the way there with something the regulators and the constituents say is OK?”
And who is behind this little proposed bail out of the mortgage slicers and dicers? Sen. Bob Corker, R-Tenn.

So real estate will no longer be a state issue but a Federal one based on Federal preemption. I predict that if they actually try to pull this off the transition will be a bitch.

As my grand pappy used to say, "They are all crooks."

H/T Zero Hedge

Cross Posted at Classical Values

Sunday, October 02, 2011

Who Is Linda Green?

Linda Green

Saturday, September 17, 2011

We Know Nothing

Democrats in the House are having trouble getting ∅ to articulate a plan that he promised them in June would be ready by September.

The lawmakers — encouraged by Obama's mention of mortgage relief in his address to Congress last week — were quickly deflated just days later when their efforts to learn the details of the White House plan proved unsuccessful.

"The administration has been AWOL on this issue," charged Rep. Dennis Cardoza (D-Calif.), "and the American people are suffering because of the mismanagement."

"In my entire political career, I've never seen anything this irresponsible," he added.
Me either. But to expect a socialist to come up with a plan to fix the problems caused by socialism is expecting a bit much. Especially with the House being currently majority Republican.

Tuesday, May 17, 2011

Domestic Terrorists



May I suggest a visit to the YouTube page this video came from to watch more videos? Also the Forclosure Diaries home page.

The video was suggested in the comments to You Have Got to be KIDDING - Nancy Jacobini's Home was Broken Into AGAIN.

The question is: why would the banks be doing this? I have a theory (gleaned from the comments at "Nancy Jacobini..."). Suppose through Credit Default Swaps (CDS)and other financial instruments the banks get paid several times the value of the property when they foreclose? What is the incentive to accept home owner payments? The incentive is to reject mortgage payments because the property is worth more in default than with an "owner" actually living in it.

With ordinary insurance once one company pays the others are off the hook. You can't collect several times the value insured. But CDSes are more opaque than real insurance. Thus the banks can get away with this sort of fraud.

Cross Posted at Classical Values

Monday, January 17, 2011

They Are Walking Away From Their Mortgages

Who is this "they" kimosabe? Home owners? Nope that is old news. The Banks are walking away from mortgages they have underwritten.

...the United States, much of Europe, and China have severe balance sheet issues that are ravaging their respective economic prospects. The media, analysts, and investors are gingerly mozying along as if this is not the case. Well, no matter how hard you ignore certain problems, no matter how hard you try to kick the can down the road – the issues really do not just “disappear” on their own.

With these points in mind, let’s peruse this piece I picked up from the Chicago Tribune: More banks walking away from homes, adding to housing crisis blight: the bank walkaway.
Research to be released Thursday, the first of its kind locally, identifies 1,896 “red flag” homes in Chicago — most of them are in distressed African-American neighborhoods — that appear to have been abandoned by mortgage servicers during the foreclosure process, the Woodstock Institute found.

Abandoned foreclosures are increasing as mortgage investors determine that, at sale, they can’t recoup the costs of foreclosing, securing, maintaining and marketing a home, and they sometimes aren’t completing foreclosure actions. The property, by then usually vacant, becomes another eyesore in limbo along blocks where faded signs still announce block clubs.

“The steward relationship between the servicer and the property is broken, particularly in these hard-hit communities,” said Geoff Smith, senior vice president of Woodstock, a Chicago-based research and advocacy group. “The role of the servicer is to be the person in charge of that property’s disposition. You’re seeing situations where servicers are not living up to that standard.” City neighborhoods where 80 percent of the population is African-American account for 71.1 percent of red-flag properties, according to Woodstock.
So why is the concentration so heavy in African American (which used to be Black and before that Negro - changing demographics dontcha know) neighborhoods?
...this is definitely not an “African American” thing. As a matter of fact, the reason that this is concentrated in this primarily “African American” community is that this is one of the demographic groups that have been heavily targeted by predatory lenders. You will see other demographic “concentrations” start to show similar attributes and behavior from the banks – lower income, lower educated, higher LTV, lower mean rental income, lower property value, higher mean time to disposition from commencement of marketing areas, etc.
Shades of the Great Depression where people were going hungry and farmers were destroying food.

Speaking of the Great Depression it reminds me of Amity Shlaes' book:

The Forgotten Man: A New History of the Great Depression

The book discusses in great detail how government intervention made that Depression worse. In the current instance we have government interventions like the Community Reinvestment Act (CRA) which got the whole ball rolling. Downhill. (What? You were expecting the ball to roll uphill? Well actually it did for a while. You can do a LOT of anti-entropic things if you burn enough green).

Cross Posted at Classical Values

Thursday, April 15, 2010

Not What I Want Them To Hear

Senator Chris Dodd has a problem. With Republicans. They are not telling the American people what Dodd wants them to hear.

Senate Banking Committee Chairman Chris Dodd threatened Wednesday to end negotiations with Republicans on a financial regulatory reform bill if they continue to lead what he called a misinformation campaign based on Wall Street talking points.

“My patience is running out,” Dodd said on the Senate floor. “I’ve extended the hand. I’ve written provisions in this bill to accommodate various interests. But I’m not going to continue doing this if all I’m getting the other side is a suggestion somehow that this is a partisan effort.”
That was certainly forthright. Now if he would only explain the connection with campaign donations the circle would be complete.

So what was this "misinformation" he was in a snit about?
Congressional Republicans, led by Senate Minority Leader Mitch McConnell, began an effort Tuesday to paint the bill as doing little to curb future taxpayer bailouts of large financial firms. The White House responded sharply pushing back on the claims all day Tuesday.

The GOP points to the inclusion in the bill of a $50 billion fund, which is paid for by the firms and would be used to wind down a failing institution. But Republicans say it will act as a safety net for Wall Street to continue to push their businesses to the brink of collapse.
And no mention of Fannie and Freddy you Republican cowards.

Friday, April 09, 2010

China's Real Estate Bubble



I'd say China's growth is unsustainable. There are indications.
The popping of China's current housing bubble -- considered inevitable by regional experts such as Andy Xie -- could have widespread consequences. If housing turns down in China, China's growth could slow or even decline. And since the entire world is looking to China to lead global growth, then that could spell major trouble for the "global economy is recovering" story.

The reflation of China's real estate bubble has a number of causes, and the most obvious one is that nation's stupendous $586 billion stimulus, which was packaged with efforts to promote real estate lending and development to boost growth. According to China's central bank, new home mortgages in the first nine months were quadruple the amount borrowed a year earlier.

In terms of GDP -- China's GDP is $3.3 trillion compared to $13.8 trillion for the U.S .-- China's $586 billion stimulus is three times as large as America's $787 billion stimulus. China's stimulus spending is a heart-pounding 17.8% of their GDP, as opposed to America's comparatively modest 5.7% of GDP.
I can't see this turning out well. Of course China has large reserves of other country's currencies. And if they spend it all? Then what?

Tuesday, December 02, 2008

No Little Screw Ups Will Be Rewarded


Fred is hilarious. Sadly. (about 8 1/2 minutes)

You can keep Fred's videos coming by donating to Fred PAC.

Cross Posted at Classical Values

Saturday, October 25, 2008

China Is Having Some Problems

The world wide economic crash is affecting China in some good ways and some not so good ways.

Tao built River Dragon from a start-up with four employees into one of China's biggest textile printing firms in just five years. He had even grander dreams: He wanted to see his company's stock trade on Nasdaq alongside the likes of Microsoft and Intel.

The dreams are dead. River Dragon shut down on Oct. 7. Tao and Yan have vanished, leaving behind more than $290 million in debt and a lot of anger in this city 140 miles south of Shanghai in the Yangtze River Delta. The company's demise put 4,000 workers on the street and jilted hundreds of suppliers and creditors.

The speedy rise — and speedier fall — of River Dragon is a depressingly familiar story in China these days. Thousands of Chinese factories have shuttered in the past year, done in by:

•An export-killing global slowdown that began with the collapse of the U.S. housing market and the ensuing financial crisis. Local textile merchant Fang Xingquan, a River Dragon creditor, is among many who believe a sharp drop-off in exports was a key factor in the company's demise.
China has not been immune to the property crisis.
The Chinese economy is absorbing another blow beyond crumbling exports: collapsing home prices. Nicholas Lardy, senior fellow at the Peterson Institute for International Economics in Washington, D.C., reckons a slowdown in construction could shave another 1 to 2 percentage points off China's economic growth.

"The property bubble is already starting to burst," says Yan Yu, a business management scholar at Peking University, researching the export center of Dongguan in southern Guangdong province. "House prices here in Dongguan have fallen by up to 50% this year," leaving many homeowners owing more on their mortgages than their homes are worth.

"People have worked all their lives and believed the hype and bought overvalued properties, then saw their savings vanish," says independent economist Andy Xie in Shanghai. "That carries more political risk" than rising joblessness.
Well that is the bad news. How about the good stuff?
"Chinese authorities appear to be well aware of the global economic situation," JPMorgan Chase reported this month. The bank expects government to turn the spigot on spending, quadrupling the budget deficit to the equivalent of 2% of economic output from 0.5% this year.

The authorities aren't going to save everyone. The Chinese government has put pressure on small firms that foul the environment, pay miserly wages and turn out cheap products. "Beijing no longer wants to be the world's sweatshop for junk," CLSA Asia-Pacific Markets says in a recent report.

First, China cut tax breaks for exporters and imposed new export taxes on polluters, even targeting producers of disposable chopsticks. Then it introduced a labor law in January, requiring companies to give workers written contracts and making it harder for them to lay off employees or to hire informal part-time help.

The combination of tougher regulations, weakening exports, rising costs and a stronger Chinese currency has hammered thousands of small factories. The pain has been especially agonizing in Guangdong, a low-cost manufacturing center across the border from Hong Kong in southern China.
So it seems that even the silver clouds have a dark lining. Pollution will be declining, but so will jobs.

It will be interesting to see if China can weather the current economic storm.

Wednesday, October 22, 2008

Ripping Them A New One

Orson Scott Card is a Democrat. He is also a fierce critic of the press. The in the tank for Obama press.

An open letter to the local daily paper — almost every local daily paper in America:

I remember reading All the President's Men and thinking: That's journalism. You do what it takes to get the truth and you lay it before the public, because the public has a right to know.

This housing crisis didn't come out of nowhere. It was not a vague emanation of the evil Bush administration.

It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people. Fannie Mae and Freddie Mac were authorized to approve risky loans.

What is a risky loan? It's a loan that the recipient is likely not to be able to repay.

The goal of this rule change was to help the poor — which especially would help members of minority groups. But how does it help these people to give them a loan that they can't repay? They get into a house, yes, but when they can't make the payments, they lose the house — along with their credit rating.

They end up worse off than before.

This was completely foreseeable and in fact many people did foresee it. One political party, in Congress and in the executive branch, tried repeatedly to tighten up the rules. The other party blocked every such attempt and tried to loosen them.
And then he goes on to name names. You know. The usual suspects. Barney Frank, Chris Dodd, Barack Obama, Franklin Raines (referred to as Freddie Raines). And then he says that the media today has no honor because it is helping to blame the crisis on Republicans when the Democrats were in fact the main drivers. That by not treating both parties at least somewhat equally they have lost their way.
If you want to redeem your honor, you will swallow hard and make a list of all the stories you would print if it were McCain who had been getting money from Fannie Mae, McCain whose campaign had consulted with its discredited former CEO, McCain who had voted against tightening its lending practices.

Then you will print them, even though every one of those true stories will point the finger of blame at the reckless Democratic Party, which put our nation's prosperity at risk so they could feel good about helping the poor, and lay a fair share of the blame at Obama's door.

You will also tell the truth about John McCain: that he tried, as a Senator, to do what it took to prevent this crisis. You will tell the truth about President Bush: that his administration tried more than once to get Congress to regulate lending in a responsible way.

This was a Congress-caused crisis, beginning during the Clinton administration, with Democrats leading the way into the crisis and blocking every effort to get out of it in a timely fashion.

If you at our local daily newspaper continue to let Americans believe — and vote as if — President Bush and the Republicans caused the crisis, then you are joining in that lie.

If you do not tell the truth about the Democrats — including Barack Obama — and do so with the same energy you would use if the miscreants were Republicans — then you are not journalists by any standard.

You're just the public relations machine of the Democratic Party, and it's time you were all fired and real journalists brought in, so that we can actually have a news paper in our city.
Sorry to say Mr. Card, but the internet is taking over the function of your local daily paper. Just a bunch of ordinary Joes with an interest in having their point of view heard. However, as is already obvious to you, there is a place for you on the internet. Keep up the good work. Oh yeah. Read the whole thing. En Fuego.

Cross Posted at Classical Values

Monday, October 06, 2008

Money Following The Money Followers

Spengler explains why America with all its problems is still a safe haven for the world's capital. He blames it on hockey moms.

Why do Asian investors depend on American capital markets? Given the near breakdown of key sectors of the American market, one might expect Asians to bring their money home. Quite the opposite has happened: Asian currencies have fallen sharply against the American dollar.
Spengler says Asian markets can't absorb Asian savings. Which is rather odd. Given the low state of economic development and high returns on capital it would seem Asia would be an ideal place for Asian money. Yet it is not.
What does America have that Asia doesn't have? The answer is, Sarah Palin - not Sarah Palin the vice presidential candidate, but Sarah Palin the "hockey mom" turned small-town mayor and reforming Alaska governor. All the PhDs and MBAs in the world can't make a capital market work, but ordinary people like Sarah Palin can. Laws depend on the will of the people to enforce them. It is the initiative of ordinary people that makes America's political system the world's most reliable.

America is the heir to a long tradition of Anglo-Saxon law that began with jury trial and the Magna Carta and continued through the English Revolution of the 17th century and the American Revolution of the 18th. Ordinary people like Palin are the bearers of this tradition.
It is the basic honesty of ordinary people that make America work. When dishonesty rears its ugly head ordinary people go to work to clean out the pigsty. They wipe the lipstick off the pig and take it to the abattoir to eliminate the problem.
The fact that ordinary people safeguard their rights and have the means to challenge established interests does not exclude the possibility of fraud on a grand scale.

Asian investors were cheated by a conspiracy of the financial industry and the ratings agencies, which sold them ostensibly low-risk securities that turned out to be toxic. The just-approved US$700 billion support package for American banks sets America back to a regime of oligarchy, according to New York Times columnist David Brooks. Despite this fraud and its attendant humiliation, and despite the deterioration of governance in American markets, Asian investors are putting more rather than less money into America, judging from the decline of Asian currencies against the dollar in the course of the crisis.

One doesn't see demonstrations by wronged peasants in the small towns of America. There never were peasants - American farmers always were entrepreneurs - and the locals avenge injury by taking over their local governments, which have sufficient authority to make a difference. At the capillary level, school boards, the Parent Teachers' Association, self-administered religious organizations and volunteer organizations incubate a political class entirely different from anything to be found in Asia. There are tens of thousands of Sarah Palins lurking in the minor leagues of American politics, and they are the guarantors of market probity.
Rights. That is the key. In most of the world the people are servants of the government. In America they have this peculiar notion that government is the servant of the people. And where did that peculiar idea originate? In Anglo Saxon Culture. From the Magna Carta to the Constitution of the US of A. In Anglo Saxon Culture there is not just a belief in honest government but also a demand for it.
It is true that Asian economies depend on American consumers and an American recession is bad for Asian currencies. But why don't Asians consume what they produce at home? The trouble is that rich Asians don't lend to poor Asians in their own countries. Capital markets don't work in the developing world because it is too easy to steal money. Subprime mortgages in the US have suffered from poor documentation. What kind of documentation does one encounter in countries where everyone from the clerk at the records office to the secretary who hands you a form requires a small bribe? America is litigious to a fault, but its courts are fair and hard to corrupt.

Asians are reluctant to lend money to each other under the circumstances; they would rather lend money in places where a hockey mom can get involved in local politics and, on encountering graft and corruption, run a successful campaign to turn the scoundrels out. You do not need PhDs and MBAs for that. You need ordinary people who care sufficiently about the places in which they live to take control of their own towns and states when required. And, yes, it doesn't hurt if they own guns. Popular gun ownership places a limit on the abuse of state power.
You know maybe that old f**ker Mao was on to something when he said political power comes from the barrel of a gun. His problem was that he did not trust his own people with guns or political power. Uprisings of the people against their presumed masters can be so inconvenient. And that in a nutshell is the weakness of the rest of the world and the strength of America. Americans are jealous of their rights and will defend them with the barrels of their guns if push comes to shove.

The Battle of Athens, Tennessee should be a lesson to all American politicians. Let us hope the politicians learn their lesson before they wind up on the wrong side of the guns.

Cross Posted at Classical Values

Europe Takes A Dump

The EU Referendum has the details in a piece called Oh Shit.

"We face extreme danger. Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars."

This is Ambrose Evans-Pritchard giving his take on the fast unravelling crisis in Germany. Mind you, The Times is not much more encouraging and Euronews is citing an IMF spokesman saying that the Eurozone is facing its first "trial by ordeal".

Clearly, the "colleagues" see the danger. The Independent is reporting: "EU leaders tear up rules of eurozone". The headline is misleading as it seems to apply to the whole of the EU. The story tells us that: "Public spending curbs and rules against state subsidies will be thrown – temporarily – out of the window to rescue European banks from the abyss of the global financial crisis."
The EU guys have more with links. Give them a visit.

Bloomberg says the dollar is doing good against the Euro.
Oct. 6 (Bloomberg) -- Treasuries rose for a fourth day, sending two-year notes to their longest winning streak in six weeks, as stocks fell and European bank rescues added to evidence a global credit crunch is deepening.

Investors sought the safest assets as European governments rushed to shore up their faltering financial systems, pushing yields to a two-week low. Germany's government and financial institutions agreed a 50 billion euro ($68 billion) rescue package for Hypo Real Estate Holding AG and BNP Paribas SA joined a state-backed bailout of Fortis, Belgium's largest financial services company.

``The flight to quality into Treasuries is still king as we now see the financial crisis hit Europe at full scale,'' said David Schnautz, a fixed-income strategist in Frankfurt at Commerzbank AG, Germany's second-biggest lender. ``Treasuries are the overall safe haven.''
Big surprise there considering the state of the U.S. economy. I guess our consolation prize is that Europe is in much worse shape. It is a case of our central bankers being morons and theirs being idiots.

Friday, October 03, 2008

Spreading The Wealth While Robbing You Blind

Naming Names



Thanks to Eric of Classical Values I have this bit of news about the housing crisis.
Of all the characteristics of a successful politician, none is more essential than bare-faced cheek. Never has this been more evident than in the past fortnight, as senior Democrat members of the US legislature have sought to lay all the blame for the country's financial crisis on the executive arm of Government and Wall Street.

Neither of these two institutions is blameless - far from it. Yet when I see such senior Democrats as Barney Frank, Chairman of the House Financial Services Committee, and Christopher Dodd, Chairman of the Senate's Banking Committee, play the part of avenging angels - well, I can only stand in silent awe at the sheer tight-bottomed nerve of it. These are men with sphincters of steel.

What is the proximate cause of the collapse of confidence in the world's banks? Millions of improvident loans to American housebuyers. Which organisations were on their own responsible for guaranteeing half of this $12 trillion market? Freddie Mac and Fannie Mae, the so-called Government Sponsored Enterprises which last month were formally nationalised to prevent their immediate and catastrophic collapse. Now, who do you think were among the leading figures blocking all the earlier attempts by President Bush - and other Republicans - to bring these lending behemoths under greater regulatory control? Step forward, Barney Frank and Chris Dodd.
I think the video clip above has given us a truly fine example of Barney Frank's a**hole of steel. I wonder if he can still get a date with out paying for it? You know what is really sad? He is probably going to get re-elected. And you know what is sadder? The Community Reinvestment Act has not been rescinded. So we will get to do this all over again in a few years.

Update: It seems Barney had a Fannie Buddy.
Now that Fannie Mae is at the epicenter of a financial meltdown that threatens the U.S. economy, some are raising new questions about Frank's relationship with Herb Moses, who was Fannie’s assistant director for product initiatives. Moses worked at the government-sponsored enterprise from 1991 to 1998, while Frank was on the House Banking Committee, which had jurisdiction over Fannie.

Both Frank and Moses assured the Wall Street Journal in 1992 that they took pains to avoid any conflicts of interest. Critics, however, remain skeptical.

"It’s absolutely a conflict," said Dan Gainor, vice president of the Business & Media Institute. "He was voting on Fannie Mae at a time when he was involved with a Fannie Mae executive. How is that not germane?
How is it that these mopes keep getting elected and reelected to Congress? And how is it that a Democrat from one of the most Corrupt cities in America looks like he is in line to become the next President of the United States? Isn't flushing a trillion dollars down the drain enough? H/T for this update is Save Liberty in the comments at Classical Values.

Cross Posted at Classical Values

Bailing On The Bailout

My Congressman Don Manzullo had this to say:

“Everything we’re doing to reach out to members is predicated on the fact that failure is not an option,” said Blunt spokeswoman Antonia Ferrier.

But not all of those efforts were fruitful. Blunt’s visit to the meeting of the Republican Study Committee (RSC) was met with criticism that leadership was asking them to vote for a bill that members now considered “impure” because of alleged pork projects.

Two sources said that Rep. Don Manzullo (R-Ill.) raised his voice to Blunt at the RSC meeting, telling him, “We elect you to represent us, and you aren’t doing it.”
Tell it like it is Don.

This turkey will not pass.

Without a clean bill it will not get enough Republican votes. Without a dirty bill it will not get enough Democrat votes. Do the math.

Update: It passed. So much for my powers of prediction.

Cross Posted at Classical Values

Thursday, October 02, 2008

What's Wrong With This Picture?



H/T Hot Air

Wednesday, October 01, 2008

Obama Tied To Acorn



What a community organizer does. Or in the words of Stanley Kurtz: A community organizer helps get high risk loans for low credit customers. What ACORN does. What is ACORN then? An organization full of community organizers committed to mortgage fraud and vote fraud. Some real nice friends that Obama has.

Cross Posted at Classical Values

Nationalizing Banks

In Europe. And you thought we had it bad in America.

The Dutch-Belgian bank Fortis, Britain's Bradford and Bingley, and Iceland's Glitnir, were all partially or fully nationalized after failing to roll-over debts in the short-term money markets, while the French state pledged support for the Franco-Belgian lender Dexia after the share price collapsed on reports of a capital shortage.

"The European financial sector is on trial: we have to support our banks." said French President Nicolas Sarkozy. He has reportedly ordered the state investment arm Caisse Des Depots to shore up Dexia, even though the bank is based in Belgium.

Germany's Hypo Real Estate, a commercial property lender, was rescued with a €35bn lifeline from a consortium of local banks. The lender has $560bn in liabilities, almost as much as Lehman Brothers.
Not only that money from Europe is rolling into America. Why? Look at some of the other problems in Britain alone.
Mortgage lenders were warned by the City watchdog on Tuesday to batten down the hatches and brace for “very difficult” market conditions next year as at least 1.4m homeowners face a sharp jump in loan repayments.

The Financial Services Authority said that there was “a very real prospect that conditions will worsen further into next year, in terms of both liquidity and credit risks”.

The bleak warning from the FSA comes as pressure builds on the Bank of England to cut interest rates as it prepares to meets for its monthly meeting.

Fresh evidence from Halifax, the country’s biggest mortgage lender, showed that the rate of the slowdown in the housing market is quickening. Last month prices fell by 1.1 per cent twice the rate of the previous month. The annual rate of growth fell to 6.3 per cent.

Halifax said the drop was the biggest monthly fall since last December and the first time it had recorded three months of consecutive falls since 1995.
So lets have a look at the Dollar vs the Euro.
The dollar mounted an explosive rally in the third quarter, persuading some investors that its long decline had finally touched bottom.

By late September, however, as markets grappled with the immensity of the U.S. financial crisis, the buck was back under pressure. It managed to finish the quarter on a high note, surging 2.6% against the euro Tuesday from a day earlier amid signs of turmoil in European banks.

Over the course of the quarter, the dollar strengthened 11.8% versus the euro, rallied 12% against the British pound and was little changed versus the Japanese yen. It was the dollar's best quarter against the euro since the European currency's inception in 1999 and the best against the pound in at least a decade.

Measured against a broad range of currencies in a Federal Reserve index, the dollar gained about 5% from the end of June through Monday, putting it back at levels that prevailed a year ago.

Still, problems may lie ahead. The size of the U.S. government's proposed bailout package and the numerous interventions by the U.S. Federal Reserve could hurt the dollar in the months and years to come.
A 2.6% rise in one day is pretty spectacular and indicates just how bad Europe's problems are.

So how bad is the mortgage crisis in Europe? Pretty bad.
The weekend’s events have highlighted European fragility in the financial crisis, note Citigroup analysts. In the UK, the eighth biggest mortgage lender (in terms of mortgage lending in 2007) has been nationalised. In all, four of the top 10 mortgage lenders have now been nationalised or required an emergency rescue since mid-07.
A major Benelux bank has required a public sector bailout, with the governments of Belgium, the Netherlands and Luxembourg jointly taking a 49% stake.
In Germany, the German government and a consortium of banks provided EUR35 bln to a large German Bank that is specialized on real estate and government funding.
In Denmark, trading in the shares of a small bank was stopped on Friday after the failure of one of the bank’s large customers, a property speculator, and the bank was sold over the weekend. In total, six minor Danish banks have now been sold/merged or bailed out by the state so far in recent months.

European house value erosion
Although each of these cases has particular features, they are not isolated events. Rather, they are symptoms of Europe’s major vulnerabilities to the credit crunch, note Citigroup analysts. These vulnerabilities stem from the large rise in corporate and household debt in recent years, international linkages, and the banking sector’s relatively low overall cushion of capital and underlying profitability.

Although the overall European housing boom has been smaller than that in the US, the surges in house prices in some countries – notably the UK, Spain, Ireland and France – have all exceeded the US so far this decade. In turn, house prices are now flat or falling across most European countries, with adverse economic and financial effects. The drop in house prices is causing weakness in housebuilding (especially in Ireland, France and Spain), adverse wealth effects on consumers (especially in the UK, Spain and Ireland) and widespread erosion of the value of mortgage collateral on lenders’ balance sheets. But, whereas the US housing adjustment has been underway for over two years, the European housing adjustment has only started last year. Most of the decline in European house prices probably still lies ahead.
Uh oh. What does that mean? While the US is coming out of the problem Europe is still in the middle.

So where am I on this? I have instructed my Congressman, Don Manzullo, to vote no on the bail out unless the Community Reinvestment Act which is at the core of the American mess gets fixed.

Cross Posted at Classical Values

What A Community Organizer Does

A community organizer helps get high risk loans for low credit customers. - Stanley Kurtz

Tuesday, September 30, 2008

Clinton: The Democrats Did It