Posts Tagged ‘lenders’

Mortgage Investors To Bank Of America: We’re Pissed And We Want Our 47 Billion Dollars Back

Mortgage Investors To Bank Of America: We’re Pissed And We Want Our 47 Billion Dollars Back

Courtesy of Michael Snyder at The American Dream

Everyone knew that the foreclosure fraud crisis was going to spawn a festival of lawsuits, and now it looks like it is already beginning.  The New York Federal Reserve Bank is part of a consortium of eight large institutional investment firms that has launched an effort to force Bank of America to repurchase $47 billion worth of mortgages packaged into bonds by its Countrywide Financial unit.  It turns out that most mortgage bond contracts explicitly require the repurchase of loans when the quality of the loans falls short of promises made by the sellers.  As most of us know by now, many of these mortgages that were packaged together into "AAA rated" securities were actually a bunch of junk.  But this is just the beginning.  There are going to be hordes of lawsuits stemming from this crisis and it is going to take years and years for this thing to work through the legal system. 

All of the big players in the U.S. mortgage industry are going to be paralyzed for an extended period of time by this crisis, and that means that buying a home and achieving the American Dream is going to become a lot harder for millions of Americans.  Not only that, if mortgage lending institutions end up being forced to take back gigantic mountains of bad mortgages it could end up sinking a whole lot of them.  The implications for the U.S. financial system would be staggering. 

And it turns out that the effort by the consortium of eight large institutional investment firms to get Bank of America to take back $47 billion in mortgages is not the only action already being taken.  An even larger mortgage repurchase initiative involving investors holding a total of more than $500 billion in mortgage debt is being coordinated by Dallas lawyer Talcott Franklin.…
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The Age of Mammon

"Never have so few, done so little, and made so much, while screwing so many."  Jim Quinn

Courtesy of Jim Quinn of The Burning Platform

The Age of Mammon

“Financiers – like bank robbers – do not create wealth. They merely distribute it. While the mob may idolize holdup men in good times, in the bad times it lynches them. What they will do to the new money men when their blood is up, we wait eagerly to find out.”  - Mobs, Messiahs and Markets

  

As our economy hurtles towards its meeting with destiny, the political class seeks to assign blame on their enemies for this Greater Depression. The Republicans would like you to believe that Bill Clinton, Robert Rubin, Chris Dodd, and Barney Frank and their Community Reinvest Act caused the collapse of our financial system. Democrats want you to believe that George Bush and his band of unregulated free market capitalists created a financial disaster of epic proportions. The truth is that America has been captured by a financial class that makes no distinction between parties. These barbarians have sucked the life out of a once productive nation by raping and pillaging with impunity while enriching only them. They live in 20,000 square foot $10 million mansions in Greenwich, CT and in $3 million dollar penthouses on Central Park West.

These are the robber barons that represent the Age of Mammon. The greed, avarice, gluttony and acute materialism of these American traitors has not been seen in this country since the 1920′s. The hedge fund managers and Wall Street bank executives that occupy the mansions and penthouses evidently don’t find much time to read the bible in their downtime from raping and pillaging the wealth of the middle class. There are cocktail parties and $5,000 a plate political “fundraisers” to attend. You can’t be cheap when buying off your protection in Washington DC.

Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal: But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal: For where your treasure is, there will your heart be also. No one can serve two masters, for either he will hate the one and love the other; or else he will be devoted to one and despise the other. You
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The Bernanke Cycle

The Bernanke Cycle

Courtesy of Joshua M Brown, The Reformed Broker 

“Eighty-one percent of the jobs lost in America were from small business,”

-Senator Mary L. Landrieu, (D) Louisiana and chairwoman of the small-business committee

One of my pet topics here is the utter neglect of small businesses, which have been completely ignored during the race to stimulate and reflate The Systemic Six banks.  In a press release from something called Industry Source Network, this systemic neglect is given a name - The Bernanke Cycle…

The Bernanke Cycle works as follows:

1. Small business gets battered by the economy.  The business is still profitable but less so than before.

2. The business sees its lending facility pared back or eliminated by their bank.

3. Small business cuts jobs, moves to a smaller building or stops future equipment orders so that their expenses reflect the reality of their new lower revenues.

4. These cuts also negatively impact other small businesses associated with the small business’ supply chain which gives the cycle a multiplier effect.

5. Small business owner takes their austerity program to their lender in hopes of restoring some of their lost borrowing capabilities.  The lender looks at the lower revenues, layoffs and downsizing as a further deterioration of the business.  The lender lowers the business’s line of credit even further.

6. The business now has to run on even less cash and is not able to replenish inventory at the levels needed to grow its business.

7. Go back to step 1 and repeat until the business becomes truly uncreditworthy and eventually becomes insolvent.

I couldn’t agree more, and I see very little being done to help, either nominally or tactically.

Source:

The Bernanke Cycle is Crippling Small Business (PRLog) 


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ND20 Interview: Elizabeth Warren Says Big Banks Must Stop Blocking Reform

ND20 Interview: Elizabeth Warren Says Big Banks Must Stop Blocking Reform

Courtesy of Lynn Parramore at New Deal 2.0

elizabeth-warren-150Senate Dems are making the final push on financial reform this week, but will big banks really change the way they do business? Or will we still be pawns in a game rigged in their favor?  I caught up with Elizabeth Warren to talk about the need to reform Wall Street culture, the pernicious influence of bank lobbies, and the debt-fueled threat to America’s middle class. **Warren will discuss these issues and more at this weekend’s Hamptons Institute symposium, sponsored by Guild Hall in collaboration with the Roosevelt Institute (details below).

LP: Has the financial crisis changed the culture of Wall Street?

EW: I would have expected the financial crisis to sweep through Wall Street like a hundred-year flood — wiping out old business practices and changing the ecology profoundly. So far, the financial services industry has seemed to treat the crisis like a little rainfall — inconvenient, but no significant changes needed. The real question moving forward is how the industry will respond to Wall Street reform and growing public anger. Will it react to all the new cops on the beat just by hiring more lobbyists? Will it continue to spend $1.4 million a day to beat back anything that could mean more accountability and oversight? Or will the financial services industry finally begin to rethink its business models, lobbying approach, and attitude toward the public?

LP: Have unregulated financial products slowed our economic recovery?

Let me put it differently: meaningful rules in the consumer credit market can accelerate economic recovery, I really believe that. Rules would increase consumer confidence and, more importantly, weed out all the tricks and traps that sap families of billions of dollars annually. Today, the big banks churn out page after page of incomprehensible fine print to obscure the cost and risks of checking accounts, credit cards, mortgages and other financial products. The result is that consumers can’t make direct product comparisons, markets aren’t competitive, and costs are higher. If the playing field is leveled and the broken market fixed, a lot more money will stay in the pockets of millions of hard-working families. That’s real stimulus — money to families, without increasing our national debt.

LP: Why is marketplace safety so much harder for people to accept than safety in…
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BILL GROSS: EVERY NATION FOR ITSELF

BILL GROSS: EVERY NATION FOR ITSELF

Courtesy of The Pragmatic Capitalist 

As always Mr. Gross’ monthly outlook is a must read:

It is this lack of global aggregate demand – resulting from too much debt in parts of the global economy and not enough in others – that is the essence of the problem, which only economists with names beginning in R seem to understand (there is no R in PIMCO no matter how much I want to extend the metaphor, and yes, Paul Rugman fits the description as well!). If policymakers could act in unison and smoothly transition maxed-out indebted consumer nations into future producers, while simultaneously convincing lightly indebted developing nations to consume more, then our predicament would be manageable. They cannot. G-20 Toronto meetings aside, the world is caught up as it usually is in an “every nation for itself” mentality, with China taking its measured time to consume and the U.S. refusing to acknowledge its necessity to invest in goods for export.

Even if your last name doesn’t begin with R, the preceding explanation is all you need to know to explain what is happening to the markets, the global economy, and perhaps your own wobbly-legged standard of living in recent years. Consumption when brought forward must be financed, and that financing is a two-way bargain between borrower and creditor. When debt levels become too high, lenders balk and even lenders of last resort – the sovereigns, the central banks, the supranational agencies – approach limits beyond which private enterprise’s productivity itself is threatened. We have arrived at a New Normal where, despite the introduction of 3 billion new consumers over the past several decades in “Chindia” and beyond, there is a lack of global aggregate demand or perhaps an inability or unwillingness to finance it. Slow growth in the developed world, insufficiently high levels of consumption in the emerging world, and seemingly inexplicable low total returns on investment portfolios – bonds and stocks – lie ahead. Stop whispering (and start shouting) the words “New Normal” or perhaps begin to pronounce your last name with an RRRRRRRRRRRR. Our global economy, our use of debt, and our financial markets have changed – not our alphabet or dictionary.

Source: PIMCO 


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Why is US revolving credit decreasing?

Why is US revolving credit decreasing?

Courtesy of Edward Harrison at Credit Writedowns 

Revolving Door

This morning David Rosenberg noted:

We also received the U.S. consumer credit data for April yesterday afternoon and the $1.0bln rise in total outstanding should be viewed in the context of the sharp revision in March (to now show a $5.0bln decline versus the initially reading of a $2.0bln increase). What really caught our eye in the guts of the report was the significant retrenchment in credit card usage. Revolving credit sagged $8.5bln in April and is down an epic $88.8bln in the last 12 months (-9.6%).

Rosenberg goes on to write that household sector demand for mortgages is at a 13-year low. His conclusion is that consumers have discovered frugality in the aftermath of the great noughties asset bubble. Certainly, revolving lines of credit are down.  But the real question is who is doing the cutting – consumers or lenders?

I mention this because Rosenberg later notes that banks are still in deleveraging mode, questioning whether lenders or consumers are responsible:

Whether this is due to a lack of demand (the National Association of Credit Managers index fell in May) or supply, the reality is that banking sector is contracting and once the fiscal largesse is through the system, so will the economy. Banking sector assets contracted at a 10.8% annual rate and the declines were broad based:

  • Residential mortgages fell 10.4% at an annual rate;
  • Home equity loans of credit fell 4.5%;
  • Commercial real estate loans slipped 8.9%; and,
  • Consumer credit slid at a 16.6% pace (with credit cards down an amazing 24.8%).

I say it is more about lenders than consumers.  After all, in the last post I wrote about the psychology of change, saying:

If something works, people keep doing it.  The repetition creates a sense of complacency such that when people are confronted with the initial need to change, they resist. That means people don’t change unless they are forced to do so, making crisis inevitable.

-A few thoughts about the euro crisis and the psychology of change

I don’t think consumers are frugal in the least. Debt to GDP levels are not down substantially for households. If consumers were frugal, then why are premium priced non-essentials like iPads selling like hotcakes? Why until last month was the personal…
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Phil's Favorites

What is an inverted yield curve? Why is it panicking markets, and why is there talk of recession?

 

What is an inverted yield curve? Why is it panicking markets, and why is there talk of recession?

Markets know what has happened each time the yield curve has turned negative. The idea of a negative curve without a a recession would take some getting used to. Shutterstock

Courtesy of Mark Crosby, Monash University

Since President Trump tweeted about imposing new tariffs on China, global equity markets have gone into a tailspin.

Trump’s more recent announcement that the new tariffs would be ...



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Zero Hedge

Morgan Stanley: "The Global Economy Is Deteriorating Faster Than Offsetting Policy Action"

Courtesy of ZeroHedge View original post here.

Sunday Start, submitted by Jonathan Garner and James Lord of Morgan Stanley

As regular readers know, Morgan Stanley is pretty bearish on global risk assets. This applies to emerging markets (EM) too, where we've been calling for wider credit spreads, weaker EM currencies, particularly in Asia, and lower equity prices. However, not so long ago the narrative guiding investors ran something like this: The Fed was ahead of the curve, EM bond yields looked attractive in a world of negative interest rates and a US-China trade deal seemed within reach...



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The Technical Traders

Negative Yields Tell A Story Of Shifting Economic Leadership

Courtesy of Technical Traders

Negative yields are becoming common for many of the world’s most mature economies.  The process of extending negative yields within these economies suggests that safety is more important than returns and that central banks realize that growth and increases in GDP are more important than positive returns on capital.  In the current economic environment, this suggests that global capital investors are seeking out alternative solutions to adequately develop longer-term opportunities and to develop native growth prospects that don’t currently exist.

Our research team has been researching this phenomenon and how it relates to the continued “capital shift&rdq...



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Insider Scoop

Heavy Volume Drives Low-Float Stock Plus Therapeutics Up 200%

Courtesy of Benzinga

Plus Therapeutics Inc (NASDAQ: PSTV) is the latest and one of the most extreme recent examples of the powerful combination of low float and heavy trading volume.

Plus shares traded higher by more than 215% on Friday. The biotech stock more than tripled after the company reported ...



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Lee's Free Thinking

Long Term Stock Market Chart Perspective

Courtesy of Lee Adler

After a big day like yesterday, I like to get a little long term stock market chart perspective. (Yes, this stilted verbiage is for search engine optimization ).

We do that with a monthly bar chart, which I update when relevant in Lee Adler’s Technical Trader. That’s in addition to the regular daily bar/cycle charts covering the past year, and a weekly cycle chart covering the past 4 years.

I wrote on July 14, in reference to the price and indicator patterns on the weekly chart:

The market has overshot a 3-4 year cycle projection in terms of both price and time. There are no long term projections. A 4 year cycle high is ideally due now. A 4 ye...



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Kimble Charting Solutions

S&P About To Decline 14%, Catching Up With The Crude Oil Declines?

Courtesy of Chris Kimble

This chart looks at the performance of the S&P 500, Crude Oil and the Yield on the 10-Year note over the past 4-months.

Crude Oil has declined around 14% more than the S&P during this time frame. Yields have declined, even more, around 36%. The is a huge spread between these assets over this short of a time period.

A few importa...



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Chart School

Bitcoin 2019 fractal with Gold 2013

Courtesy of Read the Ticker

Funny how price action patterns repeat, double tops, head and shoulders. These are simply market fractals of supply and demand.

More from RTT Tv

Ref: US Crypto Holders Only Have a Few Days to Reply to the IRS 6173 Letter

Today's news from the US IRS has been blamed for the recent price slump, yet the bitcoin fractal like the gold fractal suggest the market players have set bitcoin up for a slump to $9000 USD long before the IRS news hit the wire.

Get the impression some market players missed out on the b...

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Digital Currencies

New Zealand Becomes 1st Country To Legalize Payment Of Salaries In Crypto

Courtesy of ZeroHedge View original post here.

Bitcoin and other cryptocurrencies have been on a persistent upswing this year, but they're still pretty volatile. But during a time when even some of the most developed economies in the word are watching their currencies bounce around like the Argentine peso (just take a look at a six-month chart for GBPUSD), New Zealand has decided to take the plunge and become the first country to legalize payment in bitcoin, the FT reports.

The ruling by New Zealand’s tax authority allows salaries and wages to b...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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