Rising Gas Prices

FACT, The United States, is a net EXPORTER of refined fuel products! If Natural Gas and Electricity are deemed so essential to life and our economy; and as such are regulated as utilities... what then are gasoline and diesel fuel, which have an equal effect on our lives... chopped liver!!!  WHY is it legal for the petroleum industry to EXPORT refined gasoline thereby (artificially) driving up prices... while at the same time receiving billions in tax breaks... and before anyone in this throws it back at the Oval Office... per the constitution, it is the responsibility of Congress to enact the legislation required to regulate an industry... this is nothing new... this situation of putting profits ahead of the country is as old as Wall Street... shame on our do nothing congress, more concerned with campaign contributions and their jobs, then doing what we the people sent them there to do... this stigma lays at the feet of both parties... the "prooooogresssives" as well as the TEA Party... shame on the lot of you... Gas and Electricity are deemed essential to life and our economy; and as such are regulated as utilities... what then are gas and diesel which have an equal effect on our lives... chopped liver!!! WHY is it legal for the petroleum industry to EXPORT refined gasoline thereby (artificially) driving up prices... while at the same time receiving billions in tax breaks... and before anyone in this tread throws it back at the Oval Office... per the constitution, it is the responsibility of Congress to enact the legislation required to regulate an industry... this is nothing new... this situation of putting profits ahead of the country is as old as Wall Street... shame on our do nothing congress, more concerned with campaign contributions and there jobs, then do what we the people sent them there to do... this stigma lays at the feet of both parties... the "prooooogresssives" as well as the TEA Party... shame on the lot of you...


I have no problem with corporations earning good profits... I have no problem with exporting EXCESS refined products... excess meaning that such exports have zero negative impact on domestic prices... with the exception of national emergencies there would be NO exceptions to this rule

What Will Congress Do About the Deficit

The mid-term elections are over, resulting in a real shift of power in Washington. Questions are being raised as to how this new "fiscally conservative" congress will address the deficit. Congress is at fault for the financial straights we are in.... by looking the other way and doing their bidding, Congress is a codependent with the banks actions and failures... the same is true of Wall Street... the crime here is that, with the members of congress full cooperation it is the lobbies for these industries who actually lay the groundwork of new legislation that is supposed to "regulate" those very same industries... they are already at work crafting any changes to existing law designed to minimize the effect of that new legislation.

The answer to my question is, as "we the people" have little to say, congress will act in its own best interest (raising campaign contributions) and only reduce the deficit in ways that can only hurt middle America. We the People will get the mookey end of the stick yet again...

Reality Check on The Housing Crisis

The time to damn people "who got in over their heads" passed three years ago... what do you say to the person with an 800 FICO score, worked hard for his or her adult life... still has "7 figures" in a retirement plan, has the Suze Orman "Gold Star" for having been perfect with their finances... and even, in 2005 bought that $500,000 dream home with $200,000 cash down... problem... that home is in Stockton, CA,... Las Vegas... Phoenix, AZ or any number of other hard hit areas... and is now, on a really great day, valued at $175,000?... The simple fact is, the "20%" took down 100% of the real estate markets... "We the People" bailed out the banks and Wall Street... effectively shunting all of the losses onto the homeowners... without a halt to the real estate crisis, the states will continue to sink into an ever deepening financial abyss... this is not just a moral decision... but a common sense business reality...

The Argument for Cram Down

It is a fact that there is a loan loss guaranty protecting banks from residential real estate loan losses... WaMu, Wachovia, Downey and Indymac were either seized or forced into selling to Chase, Wells Fargo, US Bank and OneWest Bank... Each buy/sell agreement contained a loan loss protection condition.

Thus, even though the bank's assets (loan portfolio) was sold in the range of 55-70% on the dollar, the treasury (you and me) guaranteed to cover any losses... based on not the purchase price, but instead 80% of the ORIGINAL loan amount, PLUS any delinquencies, thereby guarantying that the acquiring banks would turn a profit... AND that in the vast majority of instances they would refuse to cooperate in loan modifications... there is far more profit for them... which bodes the questions why not use cram down, forcing the banks to modify loans in principal, rate and term... and still give them the guaranty dollar amount...

Net result to the bank is identical... with the plus to the community of keeping people in their homes... stabilizing real estate values AND most important of all end the hemorrhage in real estate tax revenues... a true win - win compromise...

Credit Scoring for Wall Street Investments

The recent Goldman Sachs revelations are to say the least troublesome. The position taken by the Wall Street Investment Banks that the trader’s duped, were sophisticated buyers that ought to have done their own due diligence, exposes an unacceptable arrogance. The sale of the Mortgage Backed Securities that brought the financial world to its knees was based on that very same premise… caveat emptor. You make your own investment decision, but we are going to hide and disguise the facts. Further, with each passing day, and revelation, it is becoming clearer that my charge of a vast conspiracy or at the very least misrepresentation by the Wall Street banks in cobbling together and passing off as investment grade, these fraudulent and extremely dangerous products; “guaranteed” by the equally bogus Credit Default Swap (CDS) A.I.G mortgage insurance policies.

In this mid-term election season, congress is going through its usual and customary charade of asking “tough” questions for the media and electorate, and then turning around and asking the Walls Street bankers for their advice on future regulations of their industry! We had Senator Levin asking soft ball questions of Lloyd Blankfein, Goldman Sachs Chairman, and then seeking his advice on crafting legislation!… Does the coyote want the chicken coop gate to swing in, or out!

We need, and want our investment banks, and Wall Street brokerages to offer products that will generate income. Yes, these will always be risk based offerings. By their very nature this will be the case. However, in this computer age, but there MUST be openness, and without the subterfuge that has been the usual and customary business practice of the markets. Had the markets implemented the exact same underwriting criteria that are used in approving real estate loans, this entire economic meltdown probably could not have occurred?

Some 20 plus years ago Fair Isaac's created FICO risk/credit scoring. Each of us has a credit report derived from a scoring model and maintained by the three credit repositories. Borrower’s who have demonstrated strong credit worthiness are rewarded with the highest credit scores, and receive interest rate “bonuses.” EVERY mortgage originator hangs their hat on these scores; and then factor in loan to value as the deciding factor in approving each loan. History has proven that the default rate is directly related to higher the credit scores, and the lower the loan to value. The higher the score, the lower the loan to value, the lower the defaults rate. The converse is true, credit scores under 680 and loan to values exceeding 90%, yield a greater default rate.

A Mortgage Backed Security is, in effect a mutual fund comprised of real estate mortgage loans. The MBS must have an AAA or higher rating to qualify as investment grade sufficient to be offered to pension plans. Insofar as every loan placed in the pools already has credit scoring and a loan to value, the mathematical formula to arrive at a credit score for each MBS is quite simple to achieve.

Originators would be required to enter every credit score and loan to value for each loan into a data base… PRIOR to selling any loan into the secondary markets. Every new entry will result in a new score for the pool. Set a minimum “Investment FICO” score, say 800, to be a minimum for an AAA+ rating, 790 for AAA, 780 for AAA- and so on. Further, an MBS cannot be comprised of loans originated from any single source, further eliminating the chance for collusion. As an additional safeguard, originators MUST be required to either retain a position in every loan sold, or provide lender paid mortgage insurance in every loan sold into the markets. The originator made the loan,and must be required to retain a level of risk. Full transparency as to the quality of the loans in each pool would be guaranteed. This method would still allow a Wall Street bank to cobble together whatever garbage it chooses into lower grade loans into a below investment grade marketable security. No regulations for the Wall Street Banks, no looking over their shoulders, winking at a worthless, inept SEC.

My method would far more open… caveat emptor would still be the name of the game… however, the buyer, with proper advance “warning” would then be in the position to make an informed business decision. Congress has proven to be both incapable and unwilling to implement meaningful Wall Street regulation. The SEC has proven to be nothing more than a federal bureau designed to pay lip service to the public.

And the bleeding goes on...

There are some 90,000,000 residential housing units in the United States all

of the Wall Street darling "experts"... S&P Case Shiller, RealtyTrac, Trullia, Zillow, etc.

somewhat agree that the number of homes CURRENTLY underwater is 23%... as a

percentage "not awful".... but in a real number it is 20,700,000 homes in trouble...

For the better part of three years I have warned that these very same "experts", who

at that time estimated the number of problem loans to be around 5-8 million, were

off by a factor approaching 100%... I was wrong... by their own numbers, they

are off by about 150%...

AND, based on my no less expert analysis the number actually, currently underwater

or in trouble is closer to 25,000,000... then add that to the number that have already

been foreclosed upon or sold as a short sale, and when this is done we will have run

through over 50,000,000 homes... 50 million families devastated... ah, but Wall Street is

doing just fine...

GM invests $293 Million in China!

From Reuters: "...General Motors said on Sunday it has agreed to set up a light commercial vehicle production venture with major Chinese automaker FAW Group, with total investment of 2 billion yuan ($293 million)...." (http://www.reuters.com/article/newsOne/idUSTRE57T0IV20090830)

Now, I'm not the brightest candle in in the candelabra... but didn't I read recently, that GM had filed for bankruptcy... that in order to survive it required 10's of billions of cash from "we the people"... that this cash infusion was intended to keep it alive... keep thousands of Americans employed... save the industry and revitalize our economy. Make no mistake about it, these comments are not intended as being anti-Chinese... it is a country of very intelligent hard working people. One that over the millennia has contributed much to the knowledge of mankind... it is not us against them... this is a statement of what "we the people" were told... this lead coffin of a debt was required to save OUR economy... it has become more than slightly obvious that we were, yet again, mislead (lied to?) by our elected representatives...

This agreement is yet more evidence that the Chinese are far better traders and bargainers than we… make no mistake about it, these international “deals” are reviewed by or involve numerous government agencies, not the least of which is The State Department…

I have no qualms with the concept of this joint venture... HOWEVER, it takes time and money to build plants; and time and money to hire and train new autoworkers... So please, would someone explain to me why this "joint venture"... is not using the several existing modern, shuttered, assembly plants ... hiring EXPERIENCED auto workers here in the US or even Canada... shipping American made light trucks and vehicles to China... Was not OUR money intended to employ OUR citizens... to buoy up OUR economy... or did I misinterpret the words of Speaker Pelosi... Senator Reid and Mr. Obama... I never did, nor do I believe anything that comes from the mouths of Chairman Bernanke or Secretary Geithner... the heroes and champions of Wall Street...

Hold it.. hold it… the Congressional Budget Office has estimated that the cost of Mr., Obama’s nightmare health reform will cost “we the people” a mere$1.3 Trillion over 10 years… Would not this $293,000,000 be better spent providing health care for “we the people"

And so my fellow Americans... I believe that I will sit back, put my feet up, sip on a marvelous Napa Valley wine, and wait for one of you fans of Nancy, Harry and "B G & O" to provide any really good explanation this latest... sorry folks... fucking over of "We the people"...

For those of us who have any clue, and really care... the next national election is Tuesday, November 2, 2010... And none to soon... Throw The Bastards Out... ALL OF THEM...

Home Builder Numbers or More Smoke and Mirrors

Toll Brothers reported increased sales, and a lower number of cancellations. Wall Street then proceeded to wet its panties... Now why not do what Wall Street seems incapable of doing... look beyond those statements... I know of one builder with 13 new homes listed in the MLS... all 3,200 to 3,800 sq. ft. in size, 3 to 5 bedrooms... these are homes that would previous have been in the high "7's and "8's"... now being offer at $100-110 per foot!! Great the builder loses $250,000 per home... but not to worry, it makes it up in volume!!! Then we have the cancellation numbers... how many homes in contract were renegotiated in price to keep the sale together?? Could it be that Toll Brothers has a construction loan that required a payment??? Could it be that through tax breaks and accounting smoke and mirrors "we" are able to put a positive spin on things...Gotta be sure that the big boys of Wall Street can turn a fast buck... legalized gambling against a stacked deck...

The Greatest Generation

I watched "A Band of Brother's" again today... as I often due, I reflected on the 16,000,000 men and women who, through their sacrifices, their shedding of blood, the death of almost 500,000 of that number have made our lives possible... These brave souls all now their 80's and 90-s... protected this engine of democracy, this bread basket to the world and built our economy and America into the envy of the planet, the magnet of freedom... who had earned a right to spend the sunset of their lives in rest and retirement... a retirement now ripped from them by the insatiable greed of those thieves of Wall Street... now they have absolutely zero time to recapture anything... just imagine being forced to go back to the work force in your 80's and 90's... many will end their lives in complete destitution... this is the real crime committed by those bastards...

But only the abject gross negligence of Congress could have made it all possible…

It's the Foreclosures Stupid... It's the Foreclosures

Sunday, February 22, 2009

Congress failed to require real, true, viable loan modification in the Housing & Economic Recovery Act as well as EESA and again in the ARRA. "We the People" have now spent or committed to spent some $2 Trillion, with trillions more to come, all without ever having addressed the root cause of this crisis.... the real estate defaults and foreclosures. In addition, proper loan modification WILL eliminate the vast majority of loan defaults that have brought about the massive increase in bankruptcy filings. Should our bankruptcy judges have the authority to modify real estate loans… most probably the answer is yes, however this is and ought to be a separate issue apart from the current economic crisis.

It has been stated that some 58% of loans that have been modified to date are back in default and foreclosure. A review of these loans will reveal that the cause for these failures has been the method of modification... the rate and terms applied in these instances have been a prescription for failure. Therefore, I suggest that congress require that any lender, brokerage, insurance company, or and any other firm that has received TARP or other federal funds, either directly or indirectly; and holds a beneficial interest in an any loan secured by 1-4 unit real estate, either directly or indirectly, be required to offer to modify all real estate loans with less than 3 years remaining to the next rate adjustment along the following lines:

WITHOUT the time consuming, meaningless process of (effectively) re-qualifying for a new loan, the existing loan balance is to be modified into a 50 year amortized loan, with a 5 year reset and an initial rate of 4%. The maximum rate change each 5 years would be +/- 2%; with a 9% lifetime cap. Loans already in default would carry a forbearance agreement added as part of the process.

This method of modification will reduce the loan payment by some 55%; while at the same time preserving the amount due to the lender. The aggregated annual savings of in excess of $150 Billion realized would, most likely, go into savings, pay down revolving debt or be spent fueling the economy through the purchase of goods and services (cars?). All of these options are positive and necessary for a cure to this crisis.

In most instances, this process would eliminate the urge to simply walk away from a property in which the homeowner has no equity. They require a home for their family; and what is better than the one that they already have. This proposal will stabilize not only the real estate and financial markets... but also the lives of these millions of Americans... while at the same time providing the knowledge and hope that, given time, they will regain the lost equity in their homes... the hope and positive attitude that my proposal brings to the table cannot be overlooked.

It is quite easy to verify that the number of families currently effected by this crisis is not, as reported 13 million, but more likely over 25 million real estate loans are in jeopardy... we cannot continue to ignore these people... as to stay on the present course, impacts every American family negatively.

Every time a homes sells as an REO or "Short Sale" the real estate tax base is reduced... the states and local governments are all reeling from these loses. This plan will put an end to this hemorrhage in tax revenue too.