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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Zero Hedge

Europe Warns Of An Upcoming "Trade Apocalypse"

Courtesy of ZeroHedge. View original post here.

As European officials struggle to do everything they can to save the WTO, which appears headed for an all-but-certain demise thanks to President Trump's aggressive trade policies, EU leaders have apparently circulated an "internal memo" drafted by the European Commission that accuses the US of deliberately instigating the collapse of the global trade order, and warns of an upcoming "trade apocalypse." In short, if this document is any guide, the trade war is about to get worse - as if Trump's threat to impose 20% tariffs o...



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Insider Scoop

50 Biggest Movers From Friday

Courtesy of Benzinga.

Gainers
  • Apollo Medical Holdings, Inc. (NASDAQ: AMEH) shares jumped 50.6 percent to close at $30.00.
  • Zomedica Pharmaceuticals Corp. (NYSE: ZOM) gained 49 percent to close at $2.98.
  • Autolus Therapeutics PLC (NASDAQ: AUTL) gained 47.06 percent to close at $25.00. Autolus priced its 8.8 million ADS IPO at $17 per ADS.
  • OncoCyte Corporation (NYSE: OCX) shares rose 36.96 percent to close...


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Phil's Favorites

Visualizing The Global Export Economy In One Map

By RaulHowMuch.net

Visualizing the Global Export Economy in One Map

President Trump has loudly complained for quite some time about U.S. trade deficits with the world, most recently following the latest G7 summit in Canada. Trump’s rhetoric implies that other countries are enjoying massive surpluses at the expense of American workers. This got us thinking about how the U.S. actually compares as an exporter in the world economy, so we create our newest map.

...

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Chart School

Semiconductors Accelerate Losses

Courtesy of Declan.

There was no real change on the end-of-week position of markets. The Semiconductor Index was the most active with an undercut close of the week's swing low Next support level is the 50-day MA.


Despite the swing low undercut in the Semiconductor Index there were no breakout reversals for the Nasdaq or Nasdaq 100; indeed, the weakness may be viewed as a buying opportunity with a test of support.

...

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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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Digital Currencies

Crypto-Collapse Resumes After Japan's Largest Exchange Halts Account Creation

Courtesy of ZeroHedge. View original post here.

What started off as a hopeful week of broadening user adoption is ending on a sour note as Japan's chief regulator launched a probe of crypto-exchanges, prompting the largest to halt account creation sending the entire crypto space lower...

As CNBC reports, the order...



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Biotech

Opioids don't have to be addictive - the new versions will treat pain without triggering pleasure

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

Opioids don't have to be addictive – the new versions will treat pain without triggering pleasure

shutterstock.

Courtesy of Tao Che, University of North Carolina – Chapel Hill

The problem with opioids is that they kill pain – and people. In the past three years, more than 125,000 persons died from an opioid overdose – an average of 115 people per day – exceeding the number killed in ...



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ValueWalk

Buffett At His Best

By csinvesting. Originally published at ValueWalk.

Bear with me as I share a bit of my history that helped me create SkyVu and the Battle Bears games. The University of Nebraska gave me my first job after college. I mostly pushed TV carts around, edited videos for professors or the occasional speaker event. One day, Warren Buffet came to campus to speak to the College of Business. I didn’t think much of this speech at the time but I saved it for some reason. 15 years later, as a founder of my own company, I watch and listen to this particular speech every year to remind myself of the fundamentals and values Mr. Buffett looks for. He’s addressing business students at his alma mater, so I think his style here is a bit more ‘close to home’ than in his other speeches. Hopefully many of you find great value in this video like I have. Sorry for the VHS...



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Kimble Charting Solutions

The Stock Bull Market Stops Here!

 

The Stock Bull Market Stops Here!

Courtesy of Kimble Charting

 

The definition of a bull market or bull trends widely vary. One of the more common criteria for bull markets is determined by the asset being above or below its 200 day moving average.

In my humble opinion, each index above remains in a bull trend, as triple support (200-day moving averages, 2-year rising support lines, and February lows) are still in play ...



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Members' Corner

Cambridge Analytica and the 2016 Election: What you need to know (updated)

 

"If you want to fundamentally reshape society, you first have to break it." ~ Christopher Wylie

[Interview: Cambridge Analytica whistleblower: 'We spent $1m harvesting millions of Facebook profiles' – video]

"You’ve probably heard by now that Cambridge Analytica, which is backed by the borderline-psychotic Mercer family and was formerly chaired by Steve Bannon, had a decisive role in manipulating voters on a one-by-one basis – using their own personal data to push them toward voting ...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

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All About Trends

Mid-Day Update

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

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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