Market crash: are we there yet ?

[kootenay]

I dont disagree with you one bit Cruising. However on the Ag side there is a huge need for Society to support agriculture. Its a bloody risky business that requires huge capital inputs and competes with for its land base with generally recreational and residential uses. The amount of our disposal income we spend on food is a mere portion of what it was 20 years ago. And an ever decreasing portion of our population has any connection to the land. That means ever decreasing political power. If things go as I expect you will see decreasing production in North America due to that competition and due to ever decreasing supplies of water. California is really the place at risk. It represents 25% of North American food production and with no end to a drought in sight it is not looking good. You want to talk about market bubbles I predict a food bubble and its going to burst in due course.

[TropicCat]

Has anyone read an obsure article written by Ellen Brown detailing the next banking crisis?

OpEdNews - Article: LANDMARK DECISION PROMISES MASSIVE RELIEF FOR HOMEOWNERS AND TROUBLE FOR BANKS

In short, the banking crisis was triggered by mortgages. The author is an attorney and her article covers recent judicial decisions by a United States Federal judge in Ohio and the Kansas Supreme Court concerning foreclosure procedures. These rulings and the effect they will have on foreclosures are instilling outright panic world wide. As a result, it's not only possible, it's almost a certainty that all large international banks will collapse.

We all know how mortages were sliced and diced and sold as secured collateral until the market collapsed in 2007. The issue is when these securities change hands as they must, the mortgage note.. meaning the actual mortgage instrument becomes legally separated from the security. In foreclosure courts, judges ask two questions. First if the homeowners have defaulted on their obligation, and 2nd who the debtor is demanding payment. The slicing and dicing of CDO's has resulted in the forclosure parties not being able to prove they are the mortgagor. All across the country, judges are throwing the foreclosures out of court.

The real problem is the holder of the CDO's. If foreclosures aren't enforceable, they can't get paid. Their bonds are worthless. They are now suing the originating investment bank for fraud. This will be the end of banking as we know it and why none of you have heard of this. No one wants to talk about it, yet the problem is growing and can not go away. 39% of those sub-prime mortgages are in default and heading for foreclosure as are over 6% of every American mortgage written. The basis of a mortgage is historical. There is so much law written on this there can be no possible legislation proposed that can change 200 years of the body of law.

This is a train wreck that can not be prevented and no one at CNBC or Bloomberg is talking about it. This is like the crew of the Titanic discussing diesel fuel economy as their ship is sinking.

Read the article.

[wind_magic]

Trop,

What I don't like about that is that no matter what the technicality used by a judge to "help people", in the end someone borrowed money from someone else and agreed to pay a rental on it (interest) so that they could buy a house, and that money and the rental should be paid back to the party that loaned it, or the house turned over since it was pledged as security. Yes, the mortgages were broken up into bits and pieces and sold to a variety of people, but those people still loaned the person money, and no matter what kind of tricks and non-sense someone tries to pull, it is a morally just debt that should be repaid in kind either with money or property. That a judge would even consider throwing it out of court is reprehensible and demonstrates just how corrupt our system can be at its worst.

When you borrow money you are expected to return it, just like if you went to a neighbor and borrowed their lawn mower, and you are expected to pay the rental on it as well (interest), else why would the person who owned the money have ever loaned it to you in the first place ? It only takes one loan to go bad for a money lender to have to have 20 go well (at about 5% interest) just to cover the loss of principal.

[wind_magic]

If there is one message that money lenders are getting loud and clear in this current environment it is this one - don't lend anyone any money! Judges throwing foreclosures out of court, the administration giving GM to the UAW and leaving bond holders with nothing, Congress going after banks, etc, etc. If you have money, hide it, and whatever you do don't loan it to anyone! That's the message everyone who has money is hearing, you can't trust borrowers anymore, they have too many "friends". Even the Fed and Treasury are sending that message to its lenders, you can't buy Treasuries, because we're just going to do quantitative easing and devalue your investment! Everywhere you turn its the same message, don't lend money, or if you do, charge a huge amount of interest for it so that you can afford to have some loans go bad. That's the kind of thing that creates an on-going credit crisis, when lenders can't trust borrowers anymore.

[kootenay]

That is a very interesting article. I dont profess to understand your property law but if what the article says comes to pass then these mortgage backed security's that have had their value questioned will have their value set at zero. Question answered. What though is the obligation under the sale of the security for the issuer to "guarantee" the value of the security. I kind of doubt the ability of the holder to sue the issuer when any investment can well go to zero and the issuer by setting the return so high was in fact sayig something about the risk of the investment. It could be that all that paper evaporates and those folks have their mortgages paid in the end.

Yeah that would have a huge impact on the investor and lawyers as usual will do real well but it would have no real impact on the security position of a "traditional" mortgage. Simply on the lenders ability to lend assuming they get to keep the cash they were paid for the security.

[fjon]

The lenders ran the economy into the ground. Those that held the mortgages they made, also hold the title and can therefore prove their right to the property in question. Thousands, maybe 10's of thousands of folks just quit paying and haven't been evicted because the banks don't want the properties, they want the income stream. And in many cases, foreclosures have failed because no one can find who holds the title. The moronic end to criminal feeding frenzy.

The next deflationary shoe is already dropping and will continue well into 2011 as the option arm mortgage resets really hit their stride. All, of course, just IMHO.

[fjon]

I see I can't attach a chart until I have two posts.

[fjon]

here ye be.

[wind_magic]

Originally Posted by fjon

The lenders ran the economy into the ground. Those that held the mortgages they made, also hold the title and can therefore prove their right to the property in question. Thousands, maybe 10's of thousands of folks just quit paying and haven't been evicted because the banks don't want the properties, they want the income stream. And in many cases, foreclosures have failed because no one can find who holds the title. The moronic end to criminal feeding frenzy.

The next deflationary shoe is already dropping and will continue well into 2011 as the option arm mortgage resets really hit their stride. All, of course, just IMHO.

I agree completely the deflation will continue for the next few years, its in the cards already, the hands have already been dealt out!

I can't agree with you that lenders are totally to blame, though of course they shoulder much of the responsibility. It takes two to enter into a transaction like that - a borrower and a lender.

[Cruisingdad]

Predatory lending practices... what is that exactly (And I know what THEY think it means, I am making a point). No one stood next to the borrowers and stuck a pistol to their head. That is predatory. Signing on to a 1 month arm resetting with no top percentage when rates are at 5% is not predators taking advantage of sheep. It is dumbies leveraging themselves to the nth degree and they should lose their freaking houses as they are too stupid to own one in the first place. THat is why there is this thing called an apartment, and for those too stupid to pay that, a bridge.

Just my opinions, but I am sick of reading about these 'predatory lengding practices'. Give me a break. No one wants to take responsibility for themselves anymore. There is always someone else to blame. I am not saying that there might not have been instances of people being deceived, but the vast majority of these people knew exactly what they were doing.

- CD