Robert Shiller of Case-Shiller Says His Firm's Forecasts Are Turning Increasingly Pessimistic

The Robert Shiller interview yesterday with the Wall Street Journal gives us some insight to the bad housing numbers just released this week:

• Shiller admits this month's huge fall in prices caught Economists off guard. He says both Bloomberg and his firm poll Housing specialists and no one saw the pessimistic numbers just released for November coming.
• Shiller says that if this keeps up through December (numbers to be released in January 2011), the overall housing market will have lost another 10% or more for the year 2010.
• On one hand, Shiller says the latest downtrend in housing prices has only been in effect for the past few months, that a clear downtrend is not clearly seen.
• Still, Shiller admitted, "But if home prices continue on this pace down, I think the Economy has serious reasons to worry.
• "We just had six of twenty big cities we follow report new lows below the lows of 2009," points out Shiller. He believes the reason for that last plateau low in Spring 2009 is that in early February 2009 the US Government instituted the short-lived Homebuyer's Tax Credit. As he said, "That was a major turning point for the market. It suddenly turned up. And we saw price increases for much of 2009 . . . "
• Shiller speculates that there will more than six new lower lows out of the 20 cities he and Case follow in the coming months.
• He also expresses he though the 2009 Homebuyer Tax Credit was a good government stimulus but ponders, "How willing is Congress going to be to do it again?"
• Despite what is happening at this moment in housing, Shiller tells us some forecasters from his firm Macro Markets are predicting a rise in housing prices by 7% by 2014 (or three years from now). And yet, he admits, more of his forecasters are becoming increasingly pessimistic.

Business/Economic/Housing News for 29 Dec 10

Art Laffer: Get The Government Out Of Housing

Art Laffer, of the "Laffer Curve" and the Reagan White House says the Federal Government needs to get out of the business of propping up the Housing Market. He said, "Everyone knows the Bush and Obama Economic Policies have failed." More in this interview:

Paul Jay's Interview Of Professor Micheal Hudson: "The World Is Tired Of Paying The Bill For The US Military"

Paul Jay interviewed Professor Michael Hudson on Real News recently. Hudson is an ex-Wall Street Economist who is now a Research Professor at the University of Missouri, Kansas City. Hudson is the author of "Super Imperialism: The Origins and Fundamentals of U.S. World Dominance" and "Trade, Development And Foreign Debt".

Hudson starts the interview by saying he was Chase Manhattan's Balance Of Payments Director during the 1960s. During that time and the 70s he was aware the entire balance of payments defecit for the US Government was due to the US Military. Hudson continues saying that during that same time, the entire balance of payments for private business was in balance. Furthermore, the US Government actually ran a surplus with its foreign aid during this period.

Back then, it was the cost of the Vietnam War and the cost of establishing and maintaining bases in Southeast Asia which drove the defecit. In comparison, today the US has over 850 military bases around the world. (If you know anything about Gulf War II, over $12 Billion in US $100 bills (pallet loads of them) "disappeared" with no accounting.) As Hudson points out, we are still giving away free money in Afghanistan with little accounting and little to show for it. Hudson says because of such types of waste, today, "There is a huge deficit in military spending."

David Walker - Federal, State & Local Government Has Grown Too Big, Promised Too Much, And Is Based On The Past Not The Future

Watch the Honorable David M. Walker, Founder and Chief Executive Officer of the Comeback America Initiative (CAI) and Former Comptroller General of the United States (1998-2008), in an excerpt from his dynamic presentation at The American College's 2010 Knowledge Summit. Mr. Walker discusses the national debt and solutions to improve the nation's economy.

Walker asks three questions about performance when you are either a country or a company. In this case, Walker asks the three "performance" measurements about the USA.

1. How are you doing based upon your objectives?

2. Are you getting better or worse

3. And how do you compare to your peers?

His answers, as always, are enlightening and should make Americans want to change our political and economic paradigms ASAP:

Lawrence Cahoone, Ph.D. of Holy Cross College Lectures On "Marx's Critique Of The Economic Revolution"

Here's an interesting lecture on Karl Marx by Lawrence Cahoone, Ph.D. of Holy Cross College titled "Marx's Critique Of The Economic Revolution".

Some of the things you will learn about Marx is he did not hold a high view of peasants or the unemployed (lumpenproletariat) whom he viewed as conservative forces. Instead, Marx chose to pin his energies on the factory workers(the proletariat) whom he felt had revolutionary potential. Hence, "Workers Of The World Unite" was one of the best known slogans invented by Marx.

Marx was not anti-Industrialist. What he was for was more efficient Industrialism. Marx was not anti-labor, but he was very concerned as to who should own the product of labor.

One result of Capitalism which irked and angered Marx: alienation, which he attacked in his Economic and Philosophic Manuscripts of 1844. In these papers, Marx said Capitalism made workers "Entfremdung" . . . or "alien to, not friendly to, themselves".

Alienation means something which should be a part of a worker is taken away from them and made into a "power" which opposes them. Marx felt that when a worker sold his labor to a factory owner (bourgeois), that the worker was selling something valuable of their essence . . . their capacity for creative work. Then at the end of the worker's labor, the bourgeois owns the product of the labor.

There's more discussed in this lecture such as Marx's thoughts on the Ruling Class ("Government and Law serve no other function than the interests of the Ruling Class").

Especially interesting are the readings from "The Communist Manifesto".

Whether you are a Socialist, Capitalist, Anarchist, Libertarian, Communist, whatever, you will enjoy this short lecture on what Marx believed.

Rodney Anderson Says We Are "Absolutely" Heading For Double Dip Recession And In Housing; Robert Shiller Says Housing Optimism Is "Fading"

Rodney Anderson Says We Are "Absolutely" Heading For A Double Dip Recession And In Housing

Latest report from the Case-Shiller Index shows home prices in major cities across the USA dropping. At the same time, despite Quantitative Easing II, rates on 30 year mortgages are rising, not falling. As long term rates rise, houses and big ticket items become less affordable. As rates rise, the pressure will build on home prices to keep falling. As a Fox Business News anchor says in his intro to the following piece, "...no end in sight for the decline in house prices." His first guest Rodney Anderson, author of "Credit 911" tells us long rates have been going up for 6 weeks now and we have still not seen any influx of potential buyers thinking, "You know what? I want to get it (that house and lower rate loan) before it goes higher!"

Anderson also emphatically says, "Double Dip Recession in 2011? Absolutely!"

Is a Double-Dip Ahead for Housing?


Robert Shiller Says Housing Optimism "Fading"

Robert Shiller, Economics Professor from Yale University and the man who co-founded the Case-Shiller Index on Housing is every bit as glum as Rodney Anderson in the previous video. Shiller was interviewed by Bloomberg TV earlier today. He said his latest numbers are not good for the overall economy. He did say this could be a temporary "blip", but if the numbers continue downward, it will mean some big trouble for institutions and people.

Shiller, unlike Robert Anderson, is not as positive that we will suffer a Double Dip Recession. He seems to think Keynesian policy has saved us from a worse fate, that we have seen a mild recovery, but he hedges his words by saying we have to see what will happen next. The question in Shiller's mind is if this is like 1938-1939, when the economy started moving down again, and here today the people are in no mood for more stimulus or bailout packages.

Shiller also says the problem in Housing dates back to artificial government subsidies since 1934, that people are starting to question these subsidies, and that these questions are leading to anxiety and worry which hurts public optimism about the Housing Market.

As Bloomberg TV just removed the video clip from youtube moments ago, you may click here to go directly to the Bloomberg TV site to see the Robert Shiller interview.

A Tale Of Several Cities

Since the Meredith Whitney interview on 60 Minutes aired a little more than a week ago (see 60 Minutes Looks At "Day Of Reckoning" For Our Insolvent States) I have been paying closer attention to the plight of city, county and state governments whose resources are stretched to the breaking point.

I have had no trouble finding daily pieces about the travails of many US municipalities and states. Here's just a scatter shot of stories from around the nation which have run in just the past few days:

Vallejo, CA

http://www.commondreams.org/headline/2010/12/20-6

Every Vallejo man, woman, child & baby would have to fork over $1,500 each . . . just to cover the unfunded pension obligations at this moment. So the city declared bankruptcy in 2008.

Vallejo, a former US navy town near San Francisco, is still trying to emerge from the Chapter Nine bankruptcy protection it entered in 2008.

The city, now a symbol of distressed local finances, is still negotiating with the unions, which refused to accept a salary cut plan two years ago. Paul Dyson, an analyst with the Standard & Poor's credit agency, said Vallejo, which is mostly a dormitory town for Oakland or San Francisco employees, did not have enough local industry to sustain its finances and property tax - a major source of local income - plunged with the collapse of the real estate market. The S&P credit-rating agency has a C rating on the town - the lowest level.

With a population of about 120,000, Vallejo has $195m (£125m) of unfunded pension obligations and has to present a bankruptcy-exit plan to a Sacramento court by 18 January. Since 1937, 619 local US government bodies, mostly small utilities or districts, have filed for bankruptcy, Bloomberg News recently reported. US cities tend to default more than European municipalities as they usually rely on bonds issued to investors, which enter into a default if the creditor misses payments. European towns, by contrast, traditionally depend on bank loans and government bailouts.

San Francisco, CA

http://www.nytimes.com/2010/12/17/us/17bcbenefits.html?hp

Talk about kicking the can further down the road: Retirement healthcare needs of $4.4 BILLION and San Francisco has only put aside $9.7 Million, meaning, SF needs to find another $4.391 BILLION to set aside.

After months of delays, the San Francisco controller’s office announced Thursday that it expected the city to pay $4.4 billion to provide municipal retirees and their dependents with lifetime health benefits.

The city has set aside $9.7 million to cover the costs.

The estimate of San Francisco’s unmet health care liability has been closely watched by ratings agencies, labor unions and other groups concerned about the city’s long-term finances. Moody’s Investors Service downgraded San Francisco’s debt rating in November, citing the enormous retiree health-care obligations, among other factors.

The city has set aside $9.7 million to cover the costs.

The estimate of San Francisco’s unmet health care liability has been closely watched by ratings agencies, labor unions and other groups concerned about the city’s long-term finances. Moody’s Investors Service downgraded San Francisco’s debt rating in November, citing the enormous retiree health-care obligations, among other factors.

To put the $4.4 billion liability in perspective, San Francisco has borrowed $2.6 billion through general obligation bonds in its entire history.

Indiana

http://www.courier-journal.com/article/20101227/NEWS02/312270043/-1/rss

Indiana seeks to pass a new state law allowing the State of Indiana to take over insolvent municipalities and then cut their budget, renegotiate labor contracts, and approve or veto contracts, expenses, loans and hiring.

A plan backed by Gov. Mitch Daniels would allow local governments in Indiana to ask for a state takeover and declare bankruptcy if necessary. Daniels says he hopes there won't be many local governments that seek bankruptcy, but says the state needs to have the law clarified and on standby in case it happens.

Republican state Sen. Ed Charbonneau of Valparaiso is sponsoring a bill to outline the procedure. His bill would allow a local government in financial trouble to ask the Indiana Distressed Unit Appeals Board to appoint an “emergency manager” to run the government.

The emergency manager would have the power to cut the budget, renegotiate labor contracts, and approve or veto contracts, expenses, loans and hiring.

The bill states that if the emergency manager can't turn around the local government's finances, the unit would be allowed to seek federal bankruptcy protection.

The State Board of Accounts in recent audits has questioned the abilities of the city governments in Gary and Lake Station to “continue as a going concern” because of continued high city spending despite significantly reduced city revenues because of statewide property tax caps.

Hamtramck,MI

http://www.nytimes.com/2010/12/28/us/28city.html?hp

Another old working class town, near death, begs the State of Michigan to allow it to declare bankruptcy.

HAMTRAMCK, Mich. — Leaders of this city met for more than seven hours on a Saturday not long ago, searching for something to cut from a budget that has already been cut, over and over.

This time they slashed money for boarding up abandoned houses — aside from circumstances like vagrants or obvious rats, said William J. Cooper, the city manager. They shrank money for trimming trees and cutting grass on hundreds of lots that have been left to the city. And Mr. Cooper is hoping that predictions of a ferocious snow season prove false; once state road money runs out, the city has set nothing aside to plow streets.

“We can make it until March 1 — maybe,” Mr. Cooper said of Hamtramck’s ability to pay its bills. Beyond that? The political leaders of this old working-class city almost surrounded by Detroit are pleading with the state to let them declare bankruptcy, a desperate move the state is not even willing to admit as an option under the current circumstances.

“The state is concerned that if they say yes to one, if that door is opened, they’ll have 30 more cities right behind us,” Mr. Cooper said, as flurries fell outside his City Hall window. “But anything else is just a stop gap. We’re going to continue to pursue bankruptcy until the door is shut, locked, barricaded, bolted.” (Note: Rock added the emphasis in this paragraph with Italics and Bold.)

Houston, TX

http://online.wsj.com/article/SB10001424052748703548604576038080723678202.html?mod=WSJ_hp_mostpop_read

Houston is so strapped that it is attempting to hit up non-profits to help cover city infrastructure and services . . .

The issue is on display in Houston, where some flood-prone roads are in such disrepair that signs warn drivers, "Turn around, don't drown."

Houston's taxpayers in November narrowly voted to adopt a "drainage fee" to raise at least $125 million a year toward the cost of improving roads and storm-water systems. The city will charge fees to property owners, and it won't grant exceptions to churches, schools and charities.

The city has been tightening its budget. "We're cutting up the city's credit cards," says Mayor Annise Parker. "Everyone who contributes to drainage issues has to share in the cost of correcting those issues."

A number of groups—including schools, businesses, churches and senior citizens—are demanding exemptions. "We'll defeat this," says David Welch, of the Houston Area Pastor's Council, who plans to lobby state legislators in January. "This is really a tax. It is the first time that churches would not be exempt from property taxes," he says. Some opponents have filed suit claiming the ballot wording was misleading.

At a group called the National Council of Nonprofits, Tim Delaney, chief executive, says, "Governments are taking their public burdens and putting them on the backs of nonprofits, at a time when the demand for our services is skyrocketing."

These are just a few stories in the past few days which paint a very bleak picture of what James Kunstler would call "The Long Emergency" during Peak Oil times.

To neglect what is and what you do not want to see is Denial.

Denial was high during the run up to the Dot Com Crash, the Housing Crash and the Credit Bubble Crash.

Today, the stock markets have been on a tremendous bull run built on noticeably low volume. In a time of unaccountable and un-regulated derivatives trading (much of the newer bets funded by cheap money given to the Too Big To Fail boys)much of what is happening in the US stock markets is simply "churn" trades between HFT Bots from different firms, with their algorithmic programmers trying to outwit each other with daily tweaks to their programs, programs which are now, I fear, suckering in the last of the "sheeple" who follow investing newsletters and services built on the premise that Wall Street is not a casino, but Capitalism at its altruistic best.

I have a very bad feeling that in the next 18 months, as more governments big and small in the USA ask for bankruptcy protection, more pensioners and soon to be pensioners will wake up and realize they no longer have a pension. The effect on Baby Boomers realizing they have been wiped out by false promises by corrupt politicians will create an anger and panic which will spill over to the markets as Boomers head for the exits with what remaining capital they might have left in their paltry "retirement savings".

Lastly, let's look at one more frightening and sobering statistical read just published by MyBudget360. The title alone sends chills down any middle class taxpayer's spine. You will want to read the whole post and look over all the graphs and charts under the title "Retirement account fantasy and middle class erosion – 1 out of 3 Americans has zero dollars in a retirement account. From 1950 to 1989 top 1 percent earned roughly 7 to 8 percent of nationwide income. Today it is inching closer to 20 percent resembling pre-Great Depression levels"

Ron Paul, Tom Woods, Jim Rogers and Judge Napolitano Take On the Fed

Watchers of the Fed and supporters of Austrian Economics will enjoy the short interviews Judge Napolitano has with Ron Paul, Tom Woods, Jim Rogers . . . and two guys who did a youtube video of Keynesean vs. Hayek Economics.

Greed With No Bounds: How Argentina's Mafiocracy Sold Out Their Nation To Foreign Kleptocrats, Plutocrats And Oligarchs

Americans would do well to study how the lower and deconstructed middle class of Argentinian people took to the streets after decades of privatization and giveaways to a global corporatocracy. This once public or common wealth of Argentina, when privatized, was usually sold at low slanted bids to criminal insiders at Too Big To Fail Banks, Big Multi-Naitonal Oil Companies, and the like, while Argentinian "insiders" were paid off. These insiders, called Argentinian Mafiocracy in the film, bankrupted their country and destroyed the pensions and healthcare of their people who were the worker bees responsible for building up the wealth over the years.

In this film, you will learn how the richest 10% of Argentina quickly took control of 60% of that nation's wealth through the corrupt machinations of politicians from all parties, and by using corrupt union leaders, lobbyists, bankers, businessmen, the IMF, the World Bank, and other wealthy and soon to be wealthy criminals to do their bidding.

This 10/60 wealth disparity figure galvanized the students, workers and pensioners of Argentina into a Solidarity which took to the streets for years to protest against their corrupt government and Central Bank. Amazingly, here we are in America, at the cusp of 2011 A.D., with 10% of Americans owning 71% of our wealth . . . which is a bigger disparity than that which made Argentinians angry enough to take to the streets!

Instead of a movement of all American workers, retirees, the under-employed/unemployed and the 99ers we have Senators and Congress People trying to block medical care to 9/11 first responders or trying to cut off much needed aid to people who've been unemployed for longer than 99 weeks, while corporate lobbyists for Big Banks, Big Oil, Big Pharma and more are writing bills which Congress rubber stamps, and Wall Street banksters are raking in hundreds of billions of dollars in bonuses and bitching about it in the nation's media.

As you watch this enlightening film about Argentina, keep in mind the allegories your critical mind will find and overlay with what has been going down in America since the "Reagan Revolution".

In many ways, this film is disheartening as it shows un-regulated greed abetted by a compliant government will soon enough bring a country to its knees. But in another context, this film is uplifting because it shows what a angry majority of lower class and middle class people are capable of when they unite:

p.s. I had no sooner put this post up on my blog when I clicked on James Kunstler's latest from his "Clusterfuck Nation Blog" titled The Moment of Convulsion. Here are the first three (continued below Part 1 of the 12 Part Film)

Part 1

paragraphs from it which tie in nicely with the film you are about to watch:

A little ways off the curb on the Boulevard Henry IV here in Paris, you can see the memory of the Bastille outlined by a course of masonry in the pavement, in particular one of the bulbous towers of the old fortress-prison. It marks one of those threshold moments in history when things got out-of-hand - in the late afternoon of July 14, 1789 - and by the time a mob had detached the head of Warden Bernard-René de Launey from his shoulders and paraded it around on a pike, everyone in the city knew that they had crossed into the politically unknown frontier of Revolution.

Seeing this residue of history put me in mind of a riddle that one of my college professors presented to us one day years ago: why did Achilles drag Hector around the city of Troy three times? We came up with dozens of reasons ranging from conjectures out of the text of The Iliad to lame bits of Hippie numerology, but nobody could furnish the answer that the prof was looking for, which was eventually revealed: Because he [Achilles] was just that pissed off.

This was the idea that dogged me in the winter twilight of Paris late on Christmas Day as I pondered the fate of my own country back across the cold cold sea. A lot of Americans are beaten down and discouraged these days. They've lost not only jobs, incomes, and houses, but also a sense of purpose, and perhaps faith in the essential fairness of the American venture - as the propane runs out, and families try to subsist on Froot Loops, and the re-po squad turns up to haul away the Ford F-150 Raptor. Meanwhile, in their last remaining refuge from harsh reality, TV, they glimpse the likes of Jamie Dimon, Chloe Kardashian, and Jay-Z emerging from limousines looking hopelessly bored with wealth beyond imagination. When will the folks out theremove from shame and despondency to being really pissed off about the disposition of things?

Isn't that a question, though?

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Housing Will Double Dip In 2011: Two Housing Experts, Dolly Lenz & David Lykken

Douglas Elliman Vice Chairman Dolly Lenz and Mortgage Banking Solutions President David Lykken offer their outlook for the housing industry, and it isn't pretty.

Both of them are basing their bleak look on Huge Inventory + Stealth Inventory, Rising Interest Rates during Quantitative Easing II, and Rising Property Taxes.

Yves Smith of Naked Capitalism: Loan Servicing Biz Explained - Foreclosures On People Who Never Missed A Payment

Yves Smith and her blog "Naked Capitalism" are one of my weekly "must reads" and I've been linked to her blog on the Watchworld ever since our inception.

Here, we get to see Yves go through the paces on the foreclosure fraud mess, focusing mostly on the Loan Servicers link in the chain of the foreclosure mess. She more than adequately explains why foreclosing on people, instead of modifying their loan, is the top priority for Loan Servicers.

Below this video are my notes on what Yves sets down. It is not an absolute transcript, but reasonably close.

My Notes from the above interview of Yves Smith:

The Mortgage Servicing industry is a new industry sprung up around this new process of doing mortgages today called “securitization”.

In the old days of banking, the borrower would go to the bank and get the loan, and the loan would remain with the bank.

The change we had, which started in the 1980s, and which has now become the predominant way . . . at least for the way first mortgages are done . . . is you go to the bank, you might even go to the mortgage broker, and you’ll get the loan with them, but instead of keeping the loan, they will sell it. And this (loan the borrower took out) will usually not go to just one party, but it will go to a series of parties. Eventually the loan will end up with a series of investors in a legal box called a “Trust”.

Now this means someone has to somewhat play the role the bank of the old days used to play in collecting payments on the loan. So the Mortgage Servicing industry is the party which gets the payments, its the party which credits the payments, it is the party which takes all the cash from all the people the banks are dealing with and makes sure the cash is properly sent to all the parties the way the contracts are drawn up.

Lending Process Servicing Company is the company which most of the time intercedes for a bank to begin foreclosing. This company gives a lot of support to the lending Servicers in the foreclosure field. For instance, this is the company which hires a “foreclosure mill” to begin foreclosing on a homeowner.

What normally happens is the Servicer normally notifies the borrower that they are behind . . . only very late in the process. The supposed payments behind have gotten so large that the borrower is usually very surprised by the large amount of money being demanded by the Servicer . . . if its because of the compounded fees that they are in that unenviable position

Keep in mind it is the Trusts (which shelter Investors) which hires the Loan Servicers. The sequence runs like this:

1. The Trusts hire the Servicer.

2. The Servicer’s imperative is not whether someone is to be foreclosed upon. Instead it is focused on “keeping costs down”.

3. The Servicer does its work inside a big office like factory where processes are mostly automated.

4. And the Servicer has imperatives to Maximize fees. Foreclosures happen to be more profitable than routine servicing of a loan.

5. Hence, Servicers have no incentive to help people from getting in trouble. In fact, they have incentives to get people in trouble.

Yves goes on to point out one diabolical thing a Service will do. She says suppose a borrower already has one late fee. In many cases, these late fees are not bona fide late fees as the servicer applied the payment late as it circulated through the intestines of the servicing "factory". More insidious, Servicers have also been found to “hold” payments sometimes so as to purposefully make the borrowers late.

Here’s what happens with these late fees:

Let’s call the month when a first late fee payment is assigned Month #1:

1. The late fee will not be applied until the next month’s bill, or Month #2.

2. Currently, the borrower tears out another payment slip from his/her mortgage payment books and sends in their Month #2 payment. At this moment, they have no idea they are being assessed a late fee by the Loan Servicer . . . which for this example, let’s say is $75.00.

3. Eventhough the borrower sends in their regular payment for Month #2 on time - which by Federal law is supposed to go against mortgage principal and mortgage interest - the Loan Servicer instead will subtract the late fee from Month #2’s on time payment . . . which makes the second month’s payment short. This shorting of Month #2’s payment by the Servicer also makes Month #2’s . . . in theory . . . late . . . because it is (in the eyes of the Servicer) not PAID IN FULL.

4. Thus, in this example, another late fee is applied on top of a bogus late fee. And maybe an extra fee is charged on top of that.

5. Well, when a borrower has been late twice under the agreement, the investors require the Servicer to get something called a “Broker’s Price Opinion” (which Yves claims is kind of worthless). All this is is some broker drives by the house and makes some opinion about the real price of the house during his drive by.

6. This “Broker Price Opinion” costs somewhere between $150 - $250 for this “drive by”. This “Broker Price Opinion” is supposed to be charged to the investor(s) in the Securitization. Many times, the Loan Servicer has been found to “double dip” and charge the borrower also.

7. So now, we many times have a borrower who is tagged with two late payments(and maybe another surreptitious hidden charge on Month #2’s supposed late payment) AND many times they are assigned a “Broker Price Opinion” charge which legally the Investor(s) are supposed to pay, not the loan borrower.

8. These usurious, illegal fees compound.

Now here are the reasons why it is more profitable to push into foreclosure:

1. When the borrower goes into foreclosure, the Servicer is allowed to charge more and bigger Servicer Administrative fees.

2. These new fees for foreclosing come right off the top.

3. Also, if the borrower gets seriously delinquent, the Servicer still must continue to make the payments to the Investors as if the borrower were still making the payments on time.

Normally, whenever you have a borrower get in trouble, in any type of lending, the first thing the lender says is “Should I liquidate the loan, should I take what I can get, or is there some way we can restructure the loan?” Yves comments, “I’m always better taking half a loaf . . . if the borrower has enough income, I’d be better served by taking less and restructuring the loan.

Hence in our above case, the Investor(s) would be better served by having the loan restructured; however, the Servicer is having to advance principal and interest, the Servicers do not get paid for modifying loans (hence they have no Economic incentive to modify the loan), and the only way for the Servicer to recoup the money it has been sending to the Investor(s) is to foreclose on the borrower. The reason for this is the Servicer can foreclose on the house, sell it for whatever they can get, take their fees out of the sale before anyone else, and send the remaining money to the Investors.

All the incentives for the Servicers favors foreclosure. None of the incentives favor loan modification.

Yves goes on to say that academics have covered many, many stories about people being foreclosed upon and they haven’t missed a payment. She contends the reason lenders will make up fraudulent documents to take away an on time borrowers home is there is more money to be made in the foreclosure process than remediation.

Yves says banks want to paint the problem as one of where borrowers are deadbeats, and she acknowledges that many borrowers can no longer afford their homes due to loss of jobs, a medical emergency, etc. On the other hand, a very significant amount of the people who are actively fighting foreclosure are victims of Servicer error and they can’t get it straightened out . . . OR . . . they have actually filed for bankruptcy, and in bankruptcy, everybody who has filed to collect money from the borrower is supposed to wait ‘til the court sorts it out.

Yves says Servicers keep trying to take the house before the bankruptcy process has been worked out fully. She says many unsophisticated borrowers and unsophisticated borrowers’ lawyers . . . they will make deals with banks the first time banks come for the house, and the deals are very unfavorable to the borrower who might have had grounds to hold on to their house.

Lastly, the banks are drawing out the process of foreclosing s-l-o-w-l-y because the banks don’t want to sit on all this Shadow Inventory all at one time.

Banks don’t want to be responsible for paying taxes and insurance on these houses and want to keep those losses off on Servicers until the last minute. It’s better for banks in destroyed Real Estate markets to stay in the house, to maintain the house, to pay the RE taxes and insurance, than it is for the bank to take it back, add it to stealth inventory, and have the house sit empty eating a hole in the banks’ books.The Mortgage Servicing industry is a new industry sprung up around this new process of doing mortgages today called “securitization”.

Richard Wolff: Get Off The Debt Train, America

A short, but sweet observation on Americans and their credit binge from the past 30 years as seen by Richard Wolff during a GRITtv interview. Wolff is calling for fundamental changes in our Economic structure.

Wolff is telling us we cannot go back to being pinoneers who no longer "Go west", but who, instread, "Go into debt, " as that way only puts us back on a train running down the tracks into a brick wall.

Tale of Two Cities In Washington, D.C.

A director of a Washington, D.C. food bank says only 5% of her clients are homeless. The other 95% are working poor.

We also learn Washington, D.C. has the highest percentage of Food Stamp users in the nation at 21.5% of its population versus 14% average nationwide.

Jim Rogers Still Bullish On Commodities And China

The 2010 Census Data (With Sliding Look Back At Past Census Data)

This is an ingenious tool developed by the US Census Bureau. You can click on individual states to see their change in population. You can click on years at the bottom of the interactive graph to see a sliding trend in population growth overset a map of the USA.

Enjoy!

p.s. And if the tool is acting "buggy" by not supplying you with the just released 2010 data, you may click here to go directly to the US Census Bureau site where their map's features seem to work quickly and all the time.

Bilk of America: Nevada and Arizona States Attorney Generals File Lawsuits Against Bank of America For Fraudulent And Deceptive Practices

The first two lawsuits by states attorney generals have just been filed against Bank of America. These lawsuits center around Bank of America's alleged fraudulent and deceptive practices concerning loan "re-modifications".

MSNBC's "Countdown" with Keith Olbermann reports why Nevada State Attorney General, Catherine Cortez Matso (D), filed her lawsuit against Bank of America:

"Misleading consumers with false assurances that their homes would not be foreclosed while their requests for modifications were pending, but sending foreclosure notices, scheduling auction dates, and even selling consumers' homes while waiting for decisions.

Misrepresenting to consumers that they must be in default on their mortgages to be eligible for modifications when, in fact, current borrowers are eligible for assistance.

Making false promises to consumers that their modifications would be made permanent if they successfully completed trial modification periods, but then failing to convert these modifications.

And falsely notifying consumers or credit agencies that consumers are in default when they are not."

In addition to the Nevada and Arizona lawsuits, Countdown also notes that Iowa Attorney General, Tom Miller (D), is continuing to coordinate a 50 state investigation in loan servicers' documentation practices, practices which have led some loan servicers to foreclose on homeowners who had already paid off their mortgages in full.

In a meeting with homeowners last week, Tom Miller said, "We will put people in jail," and he described the current exploitive and dysfunctional loan re-modification program as "Insane".

Countdown's fill in host, Chris Hayes, then goes on to interview Terry Goddard (D), Arizona Attorney General, for an eye opening look at how pervasive the "bilking of America" really is:

Visit msnbc.com for breaking news, world news, and news about the economy

David Stockman Tells Dylan Ratigan What The Biggest Fiscal Mistake In US History Is

David Stockman, former Director of OMB during Ronald Reagan's administration, and Dylan Ratigan discuss the Tax Cut deal between Republicans and Democrats. Stockman calls the Bush Tax Cuts "the biggest fiscal mistake in history."

As Ratigan points out in the segment's beginning, the defecit has been a problem for the better part of 30 years. In 1981, under Ronald Reagan, our debt was 32% of our GDP. When Reagan left office, our debt/GDP ratio had grown to 52%.

Today, our debt is 94% of our GDP.

Ratigan and Stockman talk candidly about the reasons we are in this sad state of burgeoning debt and shrinking revenues.

As Stockman so succinctly says, "We are destroying the Economy on Uncle Sam's credit card. And the idea that (the extended Bush Tax Cuts) this will cause consumers to spend for some more junk from Home Depot that's going to be made in China . . . to me . . . doesn't make any sense at all."

And toward the end of this interview, Stockman let's loose with this:

"In January 2000, there were 72 million middle class jobs . . . manufacturing, construction, finance, insurance, real estate, the professions, transportation, distribution and so forth. Today, a decade later, there are only 65 million (middle class jobs). We've lost 10% of our middle class family supporting jobs, and we've only created temporary, part-time jobs, so there's been no real growth. What we've had instead is a Fed engineered serial bubble that's created the appearance of wealth, that has caused people to consume beyond their means through borrowing and that has flushed the income and the wealth of our society up to the top as a result of the Fed turning the financial markets into a casino.

These are pure casinos. They are NOT capital markets. They are not adding to the productive capacity of our Economy. They are simply a bunch of robots trading with each other by the millisecond as a result of the Fed giving them Zero Cost overnight money and giving them all kinds of hand signals on what to front run.

This is a very bad mess and we're not going to get our Economy solved until we get a totally new policy at the Fed and a clean up of this whole casino that used to be called Wall Street."

Jim Corr of the Irish Band "The Corrs" Talks About "Robin Hood In Reverse"

Jim Corr of the Corrs talks more economic sense than 99.9% of all Politicians and Economists in Europe.

Corr proclaims what Ireland needs to do now: quit bailing out the bondholders and private shareholders of the Too Big To Fail Banks in his country. He states Ireland needs to follow Iceland's lead and feed the failure of the big banks to the people who supported the banks by purchasing bonds and failed derivatives. He advocates not forcing the failures of the banks onto the taxpayers who did not support the banks in the first place.

He says it is massive fraud in banking which privatized gains while socializing losses.

What Corr doesn't use are the words "Moral Hazard", but Jim Corr does introduce one free mention of "The Money Masters", a film which The Watchworld recently brought to light on this very blog.

If you have never watched "The Money Masters", click here now and educate yourself as to who controls the central banks of the most powerful nations on the planet.

Meanwhile . . . why does it take a musician from an Irish band to pose hardball questions which few elected politicians dare whisper?





p.s. And for those of you who have never heard The Corrs, here's one of my favorites by them, "When The Stars Go Blue" with some guy named Bono doing a stand in, LIVE:

Business/Economic/Housing/Layoff News for 21 Dec 10

60 Minutes Looks At "Day Of Reckoning" For Our Insolvent States

60 Minutes ran an alarming, short segment last night about states which are broke and which can no longer meet their promises.

One state, Arizona, has sold off the State Capitol building (along with several other buildings) to investors. Arizona then leases back the buildings.

Insolvent states are one of the biggest near-future cataclysms facing US taxpayers which gets little notice. As Governor Christie of New Jersey states, government workers employed by states and municipalities have got to realize their pensions are at risk, that if they don't sit down and try to renegotiate their pension deals, they might all wake up ten years from now without any pensions at all.

If you think the USA is well on the road to recovery, take a few minutes out of your busy day to watch this short segment from last night's 60 Minutes:

Latest Street Riot In Greece

Judge Freezes Assets Of One Of Glenn Beck's Gold Coin Advertisers

When Will America Collapse?

Senator Bernie Saunders Tells The Truth About The War Against The Middle And Lower Classes

Had Senator Bernie Saunders (I-VT) given this speech before a million American middle class and lower class taxpayers and voters of either party, he would have been given the loudest standing ovation of any political speaker in decades.

This is one speech for the ages, folks. Pass it on to friends and family to let them know what is at stake with the lobbyists and Banksters now calling the shots in Congressional elections.

Peter Schiff on Unemployment, Gold, Silver, Taxes, Bonds and More

Rep. Jay Inslee (D-WA) Speaks Out On Fox News: Shift To Clean Energy or "China is going to eat our lunch."

A Sign Of The Times + Black Friday: Consumerism At It's Ugliest

Did You Know The US Federal Reserve Gave "Liquidity" To Foreign Banks During The Credit Crash?

The Money Masters: How International Bankers Gained Control of America

Part 1



In which you the viewer will learn about the Federal Reserve, which is neither a Federal agency of the United States Goverment, nor has reserves. It is, however, a private bank with private shareholders and not many Congress persons know these facts. Watch this video to learn how international bankers of a banking cartel now control the US Economy:

p.s. If the screen is blank or black, go down to the arrow control right below it and click on the arrow or "play" button. The movie will take a few seconds to load. By the way, Part 2 is further down the page:

(Addendum: A good synopsis of this film was recently posted at www.dailybail.com by someone under the name of S. Gompers. Gompers titled the post "A History of Stimulus, Funny Money and Central Banking" and can be read by clicking HERE or on the title of the piece.)



Part 2

The Federal Reserve Is Laundering Money: Why The Stock Market Has Been Going Up

NSFW. Salty language, black humor, and one pissed off avatar who tells it like it is:

Great Interview By Jon Stewart of Joe Nocera & Bethany McLain On Wall Street Fraud

Jon Stewart got so into this interview, that he kept the guests on for double their alloted time and told viewers to go to the internet to see the whole unedited version.

Stewart at one point, gets the two guests to agree to the following equations which Wall Street Banksters live by:

Gambling = Innovation

Clients = Idiots

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
www.thedailyshow.com
Daily Show Full Episodes Political Humor Rally to Restore Sanity

This is the unedited version not all of which was televised. There is explicit language as Stewart gets into the book "All The Devil's Are Here" written by Joe Nocera & Bethany McLain.

Again this is NSFW - not suitable for work - because of language. But is is language we all need to hear, so, if you have to, put on some headphones and watch this at lunch or on coffee break.

Some of you know Nocera's work for the New York Times and some of you know McLain's writing from Vanity Fair. Before writing this book together, Nocera said he was already "mad" about how Wall Street worked but as he co-wrote this book he got "a whole lot madder", while McLain said, "before this book, I thought it was all a big accident, and then after I finished (the book) I didn't think it was a big accident."

This is an outstanding interview as Stewart, along with Nocera and McLain, break down the Credit Crash into the easy to understand language of a gambling addict:

Matt Taibbi On MSNBC's "Young Turks" On "Foreclosure Fraud"

Watch the video, then read the link from Taibbi's latest piece in Rolling Stone Magazine




Here's Taibbi's latest piece in Rolling Stone Magazine's November 10th issue:

http://www.rollingstone.com/politics/news/17390/232611

Matt Taibbi: Courts Helping Banks Screw Over Homeowners

The foreclosure lawyers down in Jacksonville had warned me, but I was skeptical. They told me the state of Florida had created a special super-high-speed housing court with a specific mandate to rubber-stamp the legally dicey foreclosures by corporate mortgage pushers like Deutsche Bank and JP Morgan Chase. This "rocket docket," as it is called in town, is presided over by retired judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and laby rinthine derivative deals of a type that didn't even exist when most of them were active members of the bench. Their stated mission isn't to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity. They certainly have no incentive to penetrate the profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history — an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me, as taxpayers) in the guise of AAA-rated investments. Selling lead as gold, shit as Chanel No. 5, was the essence of the booming international fraud scheme that created most all of these now-failing home mortgages.

The rocket docket wasn't created to investigate any of that. It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork. The judges, in fact, openly admit that their primary mission is not justice but speed. One Jacksonville judge, the Honorable A.C. Soud, even told a local newspaper that his goal is to resolve 25 cases per hour. Given the way the system is rigged, that means His Honor could well be throwing one ass on the street every 2.4 minutes.

Foreclosure lawyers told me one other thing about the rocket docket. The hearings, they said, aren't exactly public. "The judges might give you a hard time about watching," one lawyer warned. "They're not exactly anxious for people to know about this stuff." Inwardly, I laughed at this — it sounded like typical activist paranoia. The notion that a judge would try to prevent any citizen, much less a member of the media, from watching an open civil hearing sounded ridiculous. Fucked-up as everyone knows the state of Florida is, it couldn't be that bad. It isn't Indonesia. Right?

http://www.rollingstone.com/politics/news/17390/232611

Max Keiser Loses It Several Times While Speaking His Mind On Banksters, Wall Street Rackets, Wall Street Fraud & The Manipulation Of The Silver Market

Michael Moore With Keith Olbermann On Wall Street Banksters Running Circles Around Our Government

"The Spill" - Frontline's Investigation Into BP's Corporate Push To Put Profits Over People

Business/Economic/Housing/Layoff News for October 27, 2010

US And Europe Urged To Join Forces To Produce Rare Earth Minerals

Race to Replace China's Rare Earths May Take Decade, Germany Says

Mish: Toronto Embraces Fiscal Prudence; Guillotine of Spending Cuts Coming?

The Tax Haven That's Saving Google Billions: Google uses a complicated structure to send most of its overseas profits to tax havens, keeping its corporate rate at a super-low 2.4 percent

Business/Economic/Housing/Layoff News for October 26, 2010

Treasury Department Hid $40 Billion AIG Loss Earlier This Month

Hollywood Is Hooked On iPads

Business/Economic/Housing/Layoff News for October 25, 2010

How Top Corporations Secretly Donate To The US Chamber Of Commerce To Fight Against Candidates Who Are For The Working Man And Woman

How Supply Side Economics Increases America's Deficit While Enriching Wall Street

Business/Economic/Housing/Layoff News for October 20, 2010

Must Read . . . .America On Sale: "Griftopia" . . . Excerpts from Matt Taibbi's New Book

9 Stories The Press Is Underreporting: Fraud, Fraud And More Fraud

Business/Economic/Housing/Layoff News for October 18, 2010

Japan Goes From Dynamic To Disheartened

Jim Kunstler: "The Surrealist Vista"

Mish - Smoking Gun: New Evidence of How Wall Street Shafted Pension Funds by Misrepresenting Mortgages; Rep Miller Calls for Full Audit of Fannie Mae

MBS Securitization Problems Bigger Than Those From Foreclosure Fraud?

Business/Economic/Housing/Layoff News for October 15, 2010

OPEC Members Seek $100 Oil to Counter Dollar Weakness

Foreclosure Crisis Slams Into Banks

Bank of America Downgraded by Bond Market on Foreclosures: Credit Markets

How a rickety $75,000 home and a retired lawyer in Maine brought about a national foreclosure freeze

Washington Policy Makers Resist Calls for a Big Fix in Foreclosure Crisis

Must Read: From Carolyn Walker's "Truth To Power" website, the introduction to a new book, "The Montster: How A Gang of Predatory Lenders And Wall Street Fleeced America" by Michael W. Hudson

QE 2 And The Nominal Man

Caroline Baum: Fed Wants to Hoodwink Public, Only Fools Itself