Financial News

[lostfan]

The commodities are going crazy because of the hit in the dollar with the latest in Fed policy. Its going to be ugly when people are paying $3.50 at the pump again.

$3.50 at the pump would also mean the economy is growing again, though.

[southsider2k5]

$3.50 at the pump would also mean the economy is growing again, though.

 

Or the dollar is deteriorating from a flood of dollars into the economy.

[Balta1701]

Or the dollar is deteriorating from a flood of dollars into the economy.

Which would set the U.S. up for a boom in manufacturing job growth.

[southsider2k5]

Which would set the U.S. up for a boom in manufacturing job growth.

 

It didn't work yet.

[Balta1701]

It didn't work yet.

Because the rest of the world is trying to do the same thing...and the countries that should have their currency appreciating (i.e. China) are the ones fighting the hardest against it.

[southsider2k5]

Because the rest of the world is trying to do the same thing...and the countries that should have their currency appreciating (i.e. China) are the ones fighting the hardest against it.

 

So in other words, it isn't going to set off anything except inflating commodity prices in the immediate term.

[Balta1701]

So in other words, it isn't going to set off anything except inflating commodity prices in the immediate term.

I could be mistaken, but I believe it was you a few months/years ago who said that we're basically letting China destroy themselves...overheating their economy while dumping all their money into propping up the dollar, when eventually the value of those assets is going to drop significantly.

[southsider2k5]

I could be mistaken, but I believe it was you a few months/years ago who said that we're basically letting China destroy themselves...overheating their economy while dumping all their money into propping up the dollar, when eventually the value of those assets is going to drop significantly.

 

That was pre-almost depression. We are in a different state of economy now. With 10% unemployment, versus 5, it has a different effect on people.

[Balta1701]

That was pre-almost depression. We are in a different state of economy now. With 10% unemployment, versus 5, it has a different effect on people.

It's always different

[southsider2k5]

It's always different

 

Inflation affects those who don't have much more than it does those who do. Its not very complex really.

[southsider2k5]

http://www.time.com/time/magazine/article/...gle+Feedfetcher

 

The Robosigning Scandal: Foreclosing on Recovery?

By Zachary Karabell Saturday, Nov. 06, 2010

Click here to find out more!

 

A sign hangs outside a foreclosed home in Las Vegas

Ethan Miller / Getty

 

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Over the past few months, it has become more common to speak of the housing and financial crises in the past tense. The National Bureau of Economic Research recently announced that the recession ended in June 2009. While 2010 has hardly been a banner year, the pace of job losses has slowed and home prices have begun to stabilize. It's a tepid economy, yes, but on the road from perdition.

 

Or maybe not. In the past few weeks, the banking industry has been roiled by revelations of widespread flaws in the way it forecloses on homeowners who have stopped making their mortgage payments—a lot of people. The foreclosures were being processed by "robo-signers," a neologism that has quickly become part of the lexicon of housing-market infamy. In the face of legal constraints and investigations by state and federal officials, lenders—led by behemoths Bank of America and JPMorgan Chase and others—announced a temporary moratorium, which they then lifted. Years of litigation loom. (See "The Economy's Toughest Task.")

 

With a wave of foreclosures that could top 1 million homes with $1 trillion in mortgages this year, banks have hired staff to process the tsunami of paperwork. But a fair number of these hires had no experience or knowledge of the industry and may not have reviewed the documents—hence the term robo-signers. One employee of GMAC testified that he signed as many as 10,000 foreclosure affidavits a month—nearly 500 per business day. Unless he was a robo-reader, he could not have read what he was signing.

 

This practice alone may be illegal. Then there is the additional issue of how the massive amount of securitization of these loans—selling them off to investors in the form of bonds—may affect litigation and regulation. Only the holder of a loan can legally foreclose, but with securitization, these loans were sliced, diced and repackaged. The banks say they possess adequate documentation of titles and ownership, but the suspension signaled serious concerns.

 

In the past few weeks, Wall Street analysts have attempted to quantify the cost of the emerging foreclosure scandal. Their guesses range from tens of billions (which seems like a lot but is actually minimal relative to the balance sheet of the big banks) to hundreds of billions (a real problem).

 

The numbers remain uncertain; the consequences are quite clear. Regardless of the balance-sheet harm, the foreclosure debacle guarantees that any lasting recovery in either the consumer-credit or the housing market is nowhere near imminent. While the economy may have emerged from recession, the system of putting capital in motion for housing, business and consumption remains seriously challenged.

 

Banks have a very basic model: they earn money by taking in deposits and then lending money out at a higher rate than they pay on those deposits—but with some capital set aside to offset bad loans. Banks have urgently been trying to free themselves of the toxic remnants of the housing bubble, but with so many bad loans still on the books, that process is impaired.

 

That isn't a call for sympathy for the bankers. It is, however, a reminder that credit is essential to our economy. Good credit, that is, and not the promiscuous, no-doc credit of the mid-2000s. Banks aren't the only impediments. People became so used to easy credit that they now find demands for documentation onerous, even insulting. For lending to resume, that attitude has to change. (See pictures of new jobs in Austin.)

 

Predictions are always dicey, especially about the future. For now it seems this imbroglio, combined with the angry insurgency of an electorate that believes the government has spent too much money for not enough recovery, ensures that the U.S. will not enjoy a surge in activity, a revival of hiring or a resumption of anything but sluggish growth in the coming year. This chapter won't plunge the country back into recession, but it will lengthen the tortuous road to a new economy, especially with Washington gridlocked and the mood bleak.

 

Yet even with the foreclosure crisis, nearly 90% of those who have a mortgage remain current, and more than a third of all homes are owned outright. Those numbers dwarf the number of mortgages in distress. The fact that most Americans remain in decent shape may be incidental for a banking system that rested on high-risk loans, but it ought to shape our sense of what is possible. The U.S. is still, on balance, affluent beyond the wildest dreams of most humans who have ever walked the earth. That should be a recipe for moving forward and creating a vibrant society. Rather than being hobbled by robo-signers, we should be collectively focused on the next generation of robotics. We are not, and that says more about our culture than a thousand stories about the housing morass ever will.

This article originally appeared in the November 1, 2010 issue of TIME.

 

 

Read more: http://www.time.com/time/magazine/article/...r#ixzz14c2uZDDC

[Balta1701]

http://www.time.com/time/magazine/article/...gle+Feedfetcher

Does this mean you're starting to agree with me on this being a serious, long-term systemic risk issue?

[southsider2k5]

Does this mean you're starting to agree with me on this being a serious, long-term systemic risk issue?

 

The important part

 

The numbers remain uncertain; the consequences are quite clear. Regardless of the balance-sheet harm, the foreclosure debacle guarantees that any lasting recovery in either the consumer-credit or the housing market is nowhere near imminent. While the economy may have emerged from recession, the system of putting capital in motion for housing, business and consumption remains seriously challenged.

 

Banks have a very basic model: they earn money by taking in deposits and then lending money out at a higher rate than they pay on those deposits—but with some capital set aside to offset bad loans. Banks have urgently been trying to free themselves of the toxic remnants of the housing bubble, but with so many bad loans still on the books, that process is impaired.

[Balta1701]

The important part

I think that's pretty much what I've been saying for the past couple months. And my note has been that there is plenty of reason to believe that investors, and potentially homeowners, have a case that the banks have committed fraud here.

[southsider2k5]

I think that's pretty much what I've been saying for the past couple months. And my note has been that there is plenty of reason to believe that investors, and potentially homeowners, have a case that the banks have committed fraud here.

 

And tying up the whole system because of that means we don't move anywhere economically because that capital is still tied up.

[Balta1701]

And tying up the whole system because of that means we don't move anywhere economically because that capital is still tied up.

Oh, and if you want something to be angry at the Administration about...the HAMP program has done nothing but worsen this situation and ensure that it drags out for years, rather than even taking baby steps towards helping.

[lostfan]

Oh, and if you want something to be angry at the Administration about...the HAMP program has done nothing but worsen this situation and ensure that it drags out for years, rather than even taking baby steps towards helping.

It's got no teeth.

[Balta1701]

It's got no teeth.

Not just that, it has actively pushed people into foreclosure. People who are struggling but might have endured have gone into the HAMP program for trial modifications, made lower payments for a year, then been denied permanent modifications and billed for the entire amount that they'd underpaid plus penalties, which basically guarantees foreclosures and home losses.

[NorthSideSox72]

The commodities are going crazy because of the hit in the dollar with the latest in Fed policy. Its going to be ugly when people are paying $3.50 at the pump again.

 

We're already paying $3.10-$3.20 in Chicago, I don't think $3.50 is going to be chaos.

 

It means dollar issues and/or economic growth increasing. Since hyperinflation doesn't seem to be a near term risk (might be in the longer term though), I'd say overall, $3.50 gas means good things.

 

[southsider2k5]

We're already paying $3.10-$3.20 in Chicago, I don't think $3.50 is going to be chaos.

 

It means dollar issues and/or economic growth increasing. Since hyperinflation doesn't seem to be a near term risk (might be in the longer term though), I'd say overall, $3.50 gas means good things.

 

I filled up for $2.63 a week ago.

[NorthSideSox72]

I filled up for $2.63 a week ago.

Its been going up in recent weeks, I'll be you are higher today.

 

But of course, I also filled up in Cook County, and Chicago, so I'm always a solid 30 cents higher than NW Indiana.

 

[Cknolls]

We're already paying $3.10-$3.20 in Chicago, I don't think $3.50 is going to be chaos.

 

It means dollar issues and/or economic growth increasing. Since hyperinflation doesn't seem to be a near term risk (might be in the longer term though), I'd say overall, $3.50 gas means good things.

 

 

And it means more business for Indiana gas stations from "Cook County taxes are not high enough but that's o.k. because I buy my gas in Indiana William Beavers".....

[lostfan]

Disclaimer: I'm about to post a couple of biased links, anyway this author is making a case that the economy is about ready for some real growth, on the order of 4 or 5% and not this 1 and 2% we've had

 

http://www.theatlantic.com/business/archiv...-in-2011/66159/

 

http://www.theatlantic.com/business/archiv...-part-ii/66250/

[NorthSideSox72]

Disclaimer: I'm about to post a couple of biased links, anyway this author is making a case that the economy is about ready for some real growth, on the order of 4 or 5% and not this 1 and 2% we've had

 

http://www.theatlantic.com/business/archiv...-in-2011/66159/

 

http://www.theatlantic.com/business/archiv...-part-ii/66250/

They used some of the same reasons I have been stating in here.

 

So let's have a theoretical discussion here... let's say the economy does indeed pick up steam during the next 6 months or so. What are the political ramifications? It helps Obama, but what about Congressional GOp'ers and/or Dems?

 

[Balta1701]

So let's have a theoretical discussion here... let's say the economy does indeed pick up steam during the next 6 months or so. What are the political ramifications? It helps Obama, but what about Congressional GOp'ers and/or Dems?

Anything which makes people happier with the president = good for the entire party in 2012.