MR. ROBINSON MOVES TO A NEW NEIGHBORHOOD

Remember Mr. Robinson?  This brings back childhood memories doesn't it?




While it is fun to go back and watch those SNL episodes a real life Mr. Robinson is taking advantage of the real estate crisis in Flower Mound, Tx.  It seems like his neighbors aren't too happy, but I applaud his ability to do great research and use the system to his advantage.  I'm not really sure why his neighbors don't support his action other than the fact that it seems as though he may have the ability to get a better deal than they did.  Ultimately this could be a win-win for them and him.  I normally wouldn't play the race card, but it does seem as though that may be a factor as well.



Personally I'd rather see people take advantage of a bad situation versus have the asset waste away.  Think about how our government went out handing out the "bail outs" to our banks and industries.  What if they would have simply paid a check to each family for $100,000 or $200,000 but made the requirement that each person had to pay off outstanding debts with that newly printed money.  Essentially this is what happened, but the money skipped you and me and went to banks while they were able to keep your obligation as a liability on the books.  Isn't that simply a travesty? 

No, I'm no communist or socialist, but think about it.  Your government printed and borrowed money through huge deficit spending to "create" jobs that were green jobs or were going to be stimulative.  We've learned that the creation of those jobs cost more than $200,000 each and those jobs did  not last.  Have you forgotten all of the programs that have failed?  TARP, Cash for Clunkers, homebuyer tax credits, and Shovel Ready Jobs were just a few.  While the government was spewing money to huge multi-national firms that pay little or no taxes (GE) folks like the original owner of the house in Flower Mound were laid off and lost their homes to foreclosure.  In this case the mortgage company that actually wrote the loan (and kept it) also blew up.  Where were their bailouts?

Good for this guy, I hope he gets the property and I hope that he maintains the home and I hope the neighbors grow up.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.blogspot.com/

BANKS - WHO WANTS EM?

I've taken a bit of flak over the last several days from people suggesting that I'm over-focused on banks.  Yes, I look at them, and yes they are important, but I need us to be on the same page regarding the concerns I have and where I think we are in general.

ROBOGATE / FORECLOSURE GATE / FRAUD
Ok, I've written about how dirty this whole process has been where banks have tried to forge documents and attempt to create titles where they have been lost.  These are juicy details and this is exactly the kind of item that makes a good story for a blog, but this is not really why this issue is such a big one.  The more important issue is that when the big banks were wrapping these mortgages into huge pools and securitizing them (slicing and dicing them into parts so different pension plans and investors could buy based on credit rating), they represented to them that they actually had recorded all of the documents for clear title and guaranteed or warranted that the MBS buyers were getting a solid legal claim to mortgage backed assets. 

What the sub-prime collapse and the subsequent real estate implosion has shown us is that the banks and their clearing system (MERS) did not actually do what they promised they would do by filing all the paperwork and ensuring that the MERS trust actually owned the notes and had a claim as a lien holder on the real estate asset.  By NOT doing what they promised in the prospectus or security documents, they committed fraud.  In addition, they firms are claiming that the securitizers that packaged up the deals didn't actually put the quality of loans in the deals that they promised.  This is the issue, and this is the big problem.  What this means is that the buyers of the MBS now potentially have a claim to get 100% of their money back on the investment because the trustee or the servicer, or the originator didn't actually create the MBS in the manner that they stated.  Remember, the buyers of these securities are not Joe 6 Pack.  The buyers of these MBS securities were insurance companies, mutual fund companies, hedge funds, governments, and private equity funds.  The buyers of these deals were big money players that then often leveraged these bets 10:1 or 30:1.  The total amount of mortgages wrapped up in these deals is numbering in the trillions!  So, are any of the buyers of these asking the originators to take them back?  Yes! 

http://www.bloomberg.com/news/2010-10-19/pimco-new-york-fed-said-to-seek-bank-of-america-repurchase-of-mortgages.html

I hope this provides some clarity regarding the view of the banks.  In addition, it is important to look at the chart for a technical view.  It is so interesting to me as I look at this 200 day view of XLF (big banks) that it simply cannot push through $15.00.  Look at the 5 or 6 attempts since June of 2010 to go higher.  Even in the last week we could just touch $15.00 only to be rejected.

As I am typing this, the market is ripping higher after yesterdays 165 point Dow thrashing.  This is the environment we live in now.  I truly believe that the market will not be allowed to decline for more than a day or two until after the elections.  If there were a string of 5 or 6 down days that would certainly ensure a resounding Democratic defeat.  The ability of the market to stay positive gives the incumbents a chance to retain a glimmer of hope to retain power.  Please note, that if Republicans do win, I actually believe banks will rally as the street will believe it will be business as usual and the Republicans will assist the banks in getting through this mess.  Hopefully that belief is misguided as I'm sick of the corruption and bailouts at taxpayer expense.

Be careful!

GOATMUG



MORE HOUSING COMMENTARY - GREAT READ

John Maudlin puts together information from several sources that helps describe the why the housing issues related to MERS and the subprime foreclosure mess is not gone, but in fact going to be the undoing of all of this "recovery" we've had in the last year.

If you are pressed for time skip directly to the section that says - THE FORECLOSURE MESS. 


http://pragcap.com/subprime-debacle-act-2


It is interesting that the XLF (Banking Index) got to $15.00 where I said was the level for breakout.  It NEVER busted through, and now, just days later is down to $14.35 some 4.3% in two days or so.  THIS IS A SIGNIFICANT WARNING that if anything we will see a reversal to the bottom of the range at 9,900 or 10,000 on the DOW.  It is no accident that after President Obama failed to sign the National Notarization Act that the banks began their descent AND they halted all foreclosures.  This was their hope to skirt the laws again.

Read this, as it isn't some tea-party controversy that I'm making up, this is a critical issue that will lead to correction here prior to the elections. 

Be Careful.

GOATMUG

EURIBOR RATES ARE CLIMBING - CANARY OR WASTE OF TIME?

The equity markets may be off to the races again, but Libor and Euribor rates have been signaling increased distress over the last week.  I've been monitoring these since quarter end and we have seen a distinct move up.  Yes, the move up in rates is tied to concern in Europe over Ireland and the rest of the PIIGS, but you certainly haven't heard much about it in the media.  Here is a snapshot of the rates.  I can't get a full listing of the chart I watch, so please click here for a full run down.  - http://www.homefinance.nl/english/international-interest-rates/libor/libor-interest-rates-eur.asp

Euribor rates

If you pay attention to any of the news all you will hear about is ROBOGATE and the impact on the processing of foreclosures.  Yes, this is an issue and I will write a post about it, but it is just another item being discounted and ignored by the equity markets now.  Dollar devaluation ..... errrr....QE 2 is the savior and this is all the markets are banking on.
Ags are running, metals are running, equities are higher, and yes even bonds are somehow higher!??  These days I feel like it doesn't matter what, it is all going higher.  It's not a waste of time, but God help us if we don't get QE2.

Be Careful!

GOATMUG