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So what I postulated in an earlier post, that the banks have positive incentives to foreclose and not to modify loans has now been said in House testimony by Adam J. Levitin Associate Professor of Law Georgetown University Law Center (thanks to James Kwak Baseline Scenario for alerting us to this): The servicing problems stem from servicers’ failed business model. Servicers are primarily . . . → Read More: House Committee hearings on foreclosure-gate Delong’s Apologeia says: what we needed more of in the run up to the Great Recession was more NINJA loans peddled by unscrupulous mortgage ‘originators’, what we need now is more foreclosures, what we need now is more QE2 money creating asset bubbles in foreign economies via the carry trade… What we need now in short is whatever the princes of Wall Street (and other people in the know) deem will pay outsized rewards. OMG . . . → Read More: Brad Delong’s Apologeia Trade and currency wars will exacerbate all tensions in the world leading to greater global conflict – perhaps even a real war. I expect this (perhaps only a vain hope) to be at a low level, but we may see a belligerent move from some countries who feel pressured in this new international game of chicken. . . . → Read More: First slips down the slope… Earlier I had written on the fact that banks may be foreclosing in a manner which will cause problems down the road. Today Reuters published an overview of the suits that banks are starting to disclose. The suits are coming from two directions: Firstly obviously from homeowners… And, secondly from the buyers of Mortgage Backed Securities (MBS), often big brokerages or banks themselves. . . . → Read More: Foreclosure gate: here come the class-action suits This is a great video by Christopher Whalen on Bloomberg. He is saying some of the things which are going to be working out over the next few years in the slow motion of foreclosures. The knock on effects will work out as a long downward pressure on asset classes, not a single Lehman like event: You guys in in the media have a very tough time. You’re looking for events. You’re trying to cover the news minute by minute. This is cancer. . . . → Read More: Foreclosure-gate is a ‘cancer’ The Fed has announced quantitative easing 2 known by the QE2 moniker. The expectations that this alone can raise the level of economic growth in the US is definitely overstated. The Financial Times however points at two other adverse consequences which may turn up in the next 12 months: …other countries are likely to counter what they view as an unnecessarily disruptive surge . . . → Read More: QE2’s like unintended consequences The U.S. government taxes expatriate citizens on their worldwide income regardless of where it is earned or where they live, making them the only people in the developed world who are taxed in both their country of citizenship and country of residence…these rules are getting tougher and the penalties more draconian by the year… experts see a declining foreign investment in America. . . . → Read More: Toxic Citizens Congress has rightly been concerned with wholesale tax evasion by fat cats, but the Foreign Account Tax Compliance Act (FATCA) provisions are designed – as a largely unintended consequence – to chill US exports and our international competitiveness. . . . → Read More: FATCA: US Export destruction act It seems to me that foreclosure-gate as the foreclosure mess is being called has the hallmarks of a classic, large scale, operational risk failure. . . . → Read More: Op Risk: Foreclosure-gate firing on all four cylinders |
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