How To Guarantee A Depression, 12/8/08 Edition [Ticker]

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How To Guarantee A Depression, 12/8/08 Edition in forum [Ticker]

Genesis
Posts: 71431
Incept: 2007-06-26

KD^2

http://market-ticker.org/archives/677-Ho....

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"The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me

2008-12-08 12:42:57
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Statusquojoe
Posts: 2397
Incept: 2008-11-20

Land of the fees Home of the slaves.

Buy up MBS? With what money? Are they going to nationalize the entire economy? Lets see, historically how many socialist governments actually succeeded?

Thanks Gen for staying up on top of so many things I am sure it gets tiresome, but you are providing a valuable service, kudos.

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"In short, you are the definition of moral hazard." Senator Bunning to Bernanke

2008-12-08 12:54:04
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Lugnut
Posts: 187
Incept: 2008-09-24

New Jersey

It is to laugh. My kids could probably do a better job at running this freak show.

2008-12-08 12:59:12
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Mo
Posts: 5502
Incept: 2007-06-26

Florida

I don't think you can sue the federal government in a case like this.

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"The World has been cancelled. It doesn't even look like the world. There is one island that is maintained and is said to be owned by the Sheikh and the rest looks like a pile of muck."

2008-12-08 13:03:02
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Genesis
Posts: 71431
Incept: 2007-06-26

KD^2

Oh yes you can.

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"The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me

2008-12-08 13:05:55
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Adrenaline_junky
Posts: 1606
Incept: 2007-09-14

Chicago

And to think that we have gone to war, either directly or indirectly, against countries that have pulled this sort of socialist crap. Is Fidel secretly running things now??

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Back from Peru. And yes, we bought some beach property there.

2008-12-08 13:10:09
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Vegasradar
Posts: 3956
Incept: 2007-07-11

[You will need to go long Georgia Pacific and International Paper as the number of lawsuits that will be filed will instantly deplete the available inventory of paper across the United States. This will be highly stimulative to that part of the economy.]

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Remember, all Bennie has is dollars. He destroys the currency, he destroys himself. �Karl
Filling in the Pieces- an economic overview:
http://storage.denninger.net/ppt/teapart....

2008-12-08 13:17:21
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Az
Posts: 1659
Incept: 2008-09-22

Looking down the Rabbit Hole

Quote:

Administration officials are allegedly considering using eminent domain to buy up MBS, with the justification for doing so being invocation of "national security".

Again the misuse of these two elements: eminent domain/"national security", dilute and taint the true meaning of their intent and creation.

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Whistleblowers R my heros

2008-12-08 13:21:45
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Eaglewwit
Posts: 1890
Incept: 2007-11-30
SoCal

Wow, just WOW.

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"Not even I imagined we would see trillions of dollars being created and given to the culprits as a means of allegedly "saving" the system. This is not mere Keynesianism; it is Keynesianism on steroids and crystal meth."

2008-12-08 13:24:19
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Mo
Posts: 5502
Incept: 2007-06-26

Florida

Quote:

The Eminent Domain Process

In the classic case of eminent domain, the government determines that it needs certain privately owned land to create some public benefit, such as construction of a new highway. The government may offer the landowner a price to which he or she agrees, or it might initiate what is called a condemnation proceeding, when they cannot agree on value. The property owner has a right to notice of the government's decision and an opportunity to respond, and to just compensation for the land taken. The government pays the landowner, the landowner leaves the property, and the government builds the road.

You can challenge the price offered, but not the 'taking'???

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"The World has been cancelled. It doesn't even look like the world. There is one island that is maintained and is said to be owned by the Sheikh and the rest looks like a pile of muck."

2008-12-08 13:29:03
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Genesis
Posts: 71431
Incept: 2007-06-26

KD^2

Actually, you can challenge the taking as invalid under the essential purpose.

This would be an insane reach (to "take" a financial instrument) and if they tried it they'd run into a major problem immediately - a counterclaim by everyone butt****ed by the Bear Stearns and Fan/Fred "takings", which would result in immediate lawsuits to reclassify those actions as the same thing.

Down this rabbit hole lies a Depression of unbelieveable depth.

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"The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me

2008-12-08 13:30:48
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Az
Posts: 1659
Incept: 2008-09-22

Looking down the Rabbit Hole

Good question Mo. I thought Eminent Domain was created for the sole purpose you quoted above, hwys/roads for mainly transportation purposes of society at large. Not individual homeowner property that is in default. This stinks to high heaven.

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Whistleblowers R my heros

2008-12-08 13:38:57
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Genesis
Posts: 71431
Incept: 2007-06-26

KD^2

They're talking about ED'd not the property but the MBS!

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"The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me

2008-12-08 13:40:45
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Mo
Posts: 5502
Incept: 2007-06-26

Florida

In a 'normal' case, if they apply eminent domain to a mortgaged property, what happens?

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"The World has been cancelled. It doesn't even look like the world. There is one island that is maintained and is said to be owned by the Sheikh and the rest looks like a pile of muck."

Last modified: 2008-12-08 13:49:40 by mo

2008-12-08 13:44:16
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Az
Posts: 1659
Incept: 2008-09-22

Looking down the Rabbit Hole

Thanks for the headsup.

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Whistleblowers R my heros

2008-12-08 13:47:58
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Asimov
Posts: 26714
Incept: 2007-08-26

east tennessee
Online

We need a term that's somewhere inbetween "depression" and "collapse."

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It's justifiably immoral to try to deal in a moral fashion with an immoral entity.

If you trade based on what other people say, you will lose money. Especially what I say. I won't be held responsible. Festina lente.

2008-12-08 13:49:49
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Rickysa
Posts: 293
Incept: 2007-08-22

Southern Pines, NC
Online

Please forgive my ignorance as a layman...

Can someone explain why this particular event would lead to what you describe (and if you would rather email that's great) so that I can explain it to my laymen friends/family.

Many thanks,

Rick: rickysa@aol.com

2008-12-08 13:53:48
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Genesis
Posts: 71431
Incept: 2007-06-26

KD^2

Ricky, if the government seizes MBS and assigns them a value of their choosing (which is what eminent domain is) then private contract rights have been destroyed in the securitization marketplace.

Now, going forward, how much will you demand in risk premium to compensate for the possibility that this might happen AGAIN?

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"The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me

2008-12-08 13:54:49
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Statusquojoe
Posts: 2397
Incept: 2008-11-20

Land of the fees Home of the slaves.

Ok I see it now, this is reactionary government at its finest. First historically, we had Presidential actions that defied the constitution on certain "grounds". Then we have congressional actions for immediate legislation that defied the constitution on certain "grounds" (TARP). So logically the result is actions taken against any existing laws without legislation on the premise of certain "grounds" by interpretation of language in existing legislation to fit the situation as "need" arises. The greater the "need" the looser the interpretation.

I am convinced that my fellow Americans would have never passed a 5th grade civics test in the 1800's.

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"In short, you are the definition of moral hazard." Senator Bunning to Bernanke

2008-12-08 14:09:17
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Lumpeninvestor
Posts: 883
Incept: 2007-10-16

98072, USSA
Online

Look up Command Economy (and related topics) do your own reflection on how the definition compares to what has been happening recently. We appear to be headed there. I don't attribute this to some conspiracy to turn the US into one, but more of the result of entropy as a bunch of fools (Congress) who don't understand economics try to fix things for the popular votes. They know not what they do.

http://en.wikipedia.org/wiki/Command_eco....

2008-12-08 14:11:39
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Rickysa
Posts: 293
Incept: 2007-08-22

Southern Pines, NC
Online

Thank you Karl, so it seems to be as much a political (socialism) catastrophy as a financial one.

2008-12-08 14:11:46
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Sniffmom
Posts: 1015
Incept: 2008-02-16

Oslo, Norway

Would this news be part of the deal?

Quote:

Frank:Bankruptcy law changes could be on the table next year

By Ronald D. Orol
Last update: 2:10 p.m. EST Dec. 8, 2008
WASHINGTON (MarketWatch) - House Financial Services Committee Chairman Barney Frank on Monday said that if foreclosures are not on the decline early next year he expects lawmakers to revive efforts to change bankruptcy law and let judges adjust the terms of mortgages. "If we come back in February and there is frustration that efforts at reducing foreclosure are not working, we can do bankruptcy law changes to get at the problem," Frank told participants in an Office of Thrift Supervision conference. "Bankruptcy cuts through that." In September, many Democrats sought unsuccessfully to include bankruptcy law modification as part of the larger $700 billion bank bailout package that passed Oct. 3. Should lawmakers consider the measure again, it would give judges the authority to modify mortgages such as reduce principal or interest rates or lengthen the amount of time to pay back the mortgages.

http://www.marketwatch.com/news/story/Fr....

2008-12-08 14:15:31
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Adrenaline_junky
Posts: 1606
Incept: 2007-09-14

Chicago

No, just the opposite, Sniffmom. Bankruptcy modifications are actually within the normal scope of contract law and wouldn't upset the investment applecart nearly as much. Second homes can still be subject to bankruptcy modification today, and primary homes used to be until the bankruptcy laws were changed. This would just be a return to the way things were before, and putting more foreclosures through bankruptcy would likely be an improvement in the long run.

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Back from Peru. And yes, we bought some beach property there.

2008-12-08 14:24:04
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Genesis
Posts: 71431
Incept: 2007-06-26

KD^2

No, not really.

There is a distortion in the bankruptcy laws in that investment property mortgages can be crammed down in a BK but primary residence ones cannot.

This is IMHO wrong and should be fixed, and that's what Barney is talking about. Part of the reluctance MAY be due to this anomaly, but in reality a BK and foreclosure lead to the same place from the lender's point of view; the divergence was justified due to some states have an unlimited primary residence exclusion from BK consideration.

In a situation where you have no equity tho its a distinction without a difference.

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"The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me

2008-12-08 14:25:19
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Sniffmom
Posts: 1015
Incept: 2008-02-16

Oslo, Norway

Junky & Gen,

Thanks! Much appreciated! :)

Last modified: 2008-12-08 14:27:09 by sniffmom

2008-12-08 14:26:44
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