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Financial fuckery thread

Started by Cain, March 12, 2009, 09:14:45 AM

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LMNO

As far as the mortgage thing goes, was it here we were discussing a case where, since the whole derivitives and mortgage buying/selling, credit-default-swapping, slicing up mortages thing went down, nobody knows exactly who owns the mortgage, and some people are trying to get court precidents stating that unless you can track the paper trail of the mortgage precisely, the banks can't make a claim on it?


Wow, that was really convoluted.


I think I mean to say, if the mortgage has been repeatedly bought, sold, and sliced, the bank can't make a claim on it unless they can show exactly who owns what part of it; meaning they can't forclose.

Jenne

That would be nice.  Let's see how far it sticks and how quickly they can generate the paper to undo it, however.

Requia ☣

Quote from: LMNO on October 27, 2009, 12:40:01 PM
As far as the mortgage thing goes, was it here we were discussing a case where, since the whole derivitives and mortgage buying/selling, credit-default-swapping, slicing up mortages thing went down, nobody knows exactly who owns the mortgage, and some people are trying to get court precidents stating that unless you can track the paper trail of the mortgage precisely, the banks can't make a claim on it?


Wow, that was really convoluted.


I think I mean to say, if the mortgage has been repeatedly bought, sold, and sliced, the bank can't make a claim on it unless they can show exactly who owns what part of it; meaning they can't forclose.

Its been discussed here, and by now there's a *ton* of precedent (including one ruling that invalidates something like 60% of the mortgages in one state).  There are also explicit laws about the bank needing paperwork in a lot of states.

Something that should be pointed out to people, is that even if you lose, without the paperwork trail it'd be possible to keep your house the entire time its in trial, and the system isn't exactly fast.

Also, watch em settle out of court *really* fast if you appeal and risk creating binding precedent for the state/district you live in.
Inflatable dolls are not recognized flotation devices.

Halfbaked1

So I read this article and was wondering what you lot thought of the general gist that the government run thing is going to end up costing us bad.  I think this guy is pretty much spot on.  I do not have insurance, I would like to have it though, and if the government has a cheap option that helps me I would be willing to participate.  But I do not like the idea that whether I wanted to participate or not I am expected to carry part of the burden.

http://www.smartmoney.com/investing/economy/this-health-care-reform-might-tax-us-to-death/?hpadref=1

Cain

Not so much financial fuckery as "lol pwned", from all the way back in 2007

http://archive.redstate.com/stories/liberals/finally_a_good_idea_from_greenpeace_on_global_warming

QuoteI firmly believe that Anthrogenic Global Warming™ has jumped the shark. Dr. Gore's Academy award has cemented AGW's position as an established tenet of secular faith, along with inner-city children dropping like flies, the eeee-vil of Christianity, and the coming subprime-mortgage-induced recession.

Yeah, good thing that never materialized.

LMNO

Quote from: Halfbaked1 on October 28, 2009, 08:20:03 AM
So I read this article and was wondering what you lot thought of the general gist that the government run thing is going to end up costing us bad.  I think this guy is pretty much spot on.  I do not have insurance, I would like to have it though, and if the government has a cheap option that helps me I would be willing to participate.  But I do not like the idea that whether I wanted to participate or not I am expected to carry part of the burden.

http://www.smartmoney.com/investing/economy/this-health-care-reform-might-tax-us-to-death/?hpadref=1

1) If you make more that $280,000 a year and can't pay an extra $7 a day for the increased tax (the "1% surcharge"), you're doing something wrong.

2) The majority of "working class Joes" already have health insurance. 

3) The "top marginal" tax rate affects approximately 0.5% of the country.


Halfbaked1

Okay, I still don't much care for not having a choice.  The reason I do not have health insurance is that I currently cannot afford the crappy coverage that the company I work for offers.  But under the reform I will purchase health insurance or pay an excise tax.  So I end up looking at what will cost me less the tax or the insurance.  I still haven't seen what the public option will look like and I know from experience how Medicare works, and doesn't.  The house shot down a measure that would protect doctors from decreased compensation, a prime reason why many doctors do not take Medicare, so that will probably result in more doctors declining Medicare.  I point that out because if reid doesn't back down from the public option then I only have medicare to look at as a model for government run healthcare.  I do not see the value in buying an insurance policy that is not accepted by many doctors and will not pay for my medications.  I may as well stay uninsured if my doctors and my meds are not covered.  My wife has Medicare and has to pay EXTRA for a supplemental insurance to cover most of her medications.  Again, this does not seem like an economical idea, more like another political fuck you from the government.

Cain

http://trueslant.com/matttaibbi/2009/10/30/forget-galleon-what-about-goldmans-ex-boss/

QuoteIt's impossible to grasp the totality of Friedman/Goldman's grossness with regard to the AIG story without a little context. Remember the basic timeline. In the middle of the mortgage bubble, Goldman Sachs found a patsy-buffoon named Joe Cassano at a little corner of AIG called AIG Financial Products, or AIGFP. Cassano was recklessly writing hundreds of billions of dollars worth of credit default swaps for banks like Goldman and Deutsche, essentially insuring certain investments for these banks, including extremely risky mortgage-backed deals.

Goldman took out billions of these CDS positions with Cassano, who had written upwards of $440 billion of these CDS without having even a fraction of the money he would have needed to cover that bet in the event of a disaster of the type that actually ended up taking place, specifically a downgrade of AIG's credit rating that forced Cassano to pony up wads of cash to cover those positions.

The important thing to remember about all of this is that just because Goldman was buying "insurance" from Cassano, that doesn't mean they were being responsible. On the contrary: Goldman was creating well over ten billion dollars worth of exposure to a guy that they must have known was an absolute idiot. Now, in a world where actual capitalism existed, Goldman should then have been highly invested in making sure that AIG did not go under. A dead and bankrupt AIG should not have been good news to a company like Goldman Sachs, which had billions of dollars riding on AIG's financial health.

But if anything Goldman behaved throughout the runup to AIG's collapse like it couldn't care less if the company died. In fact Goldman accelerated AIG's demise by making margin calls against AIG, for both the CDS deals and for deals it had done with Win Neuger, who was running AIG's securities lending business. What really sank AIG was the fact that the downgrade of its credit rating permitted companies like Goldman to demand large sums of money from AIG in the form of these margin calls, and AIG could not get its hands on enough cash to meet its demands, resulting in the death spiral situation we all witnessed last September. Of all the firms making such demands against AIG, Goldman was the most aggressive (I have more on this coming out in a forthcoming book) and my sources who were involved in the AIG bailout bunker scene of a year ago almost to a man report that Goldman and its chief Lloyd Blankfein took an extremely hard line with AIG.

Why would it act like that? Well, in a normal capitalistic situation, it wouldn't. But Goldman, it turned out, had an ace in the hole. It seems that when the state stepped in and decided to bail AIG out, its former director, Stephen Friedman, was among those making the decision that AIG's counterparties should be paid 100 cents on the dollar for its CDS debts. It never made sense that AIG/AIGFP would decide on its own to pay its creditors 100 cents on the dollar for its debts, but now we know, thanks to reporting from Bloomberg, that it wasn't AIGFP and its CFO Elias Habayeb who was making that decision.

It was, instead, a group of people from the New York Fed who gave that order a group that included Tim Geithner and Friedman. Goldman ended up getting almost $14 billion from AIG after the bailout. And Friedman, we later found out, bought 50,000 shares of Goldman stock after this deal was struck. He resigned in May from the Fed, a few days after the Wall Street Journal broke the story about Friedman's stock purchases.

Friedman surely had information about key moves involving the bank — like Goldman getting paid off at par in the AIG bailout, or Goldman getting a federal bank charter overnight so that a mountain of cheap Fed money could save it from bankruptcy — before the market got it. That he bought 50,000 shares in Goldman after the AIG bailout and is not in jail right now is sort of amazing, until you consider that it will be a cold day in hell before a former head of Goldman Sachs is arrested for insider trading, even when he gets caught doing it red-handed.

All of this matters for two reasons. One, it's yet another example of how Goldman's success isn't attributable to how "smart" the bank and its employees are.

Instead of working something out with a company it had stupidly become overexposed to, Goldman instead hastened AIG's demise because it was, perhaps, the one way it could cash in fully on its reckless deals — by forcing it into the arms of the government and getting the taxpayer to pony up for Cassano's dumb calls.

Had AIG proceeded to an ordinary bankruptcy, had the company's downfall happened via normal market procedures, Goldman might have gotten 40, 50, maybe 60 cents on the dollar. If that! Instead it got completely paid off, among other things because its connections to the government actually incentivized it to cripple a company to which it was exposed to the tune of billions.

Second, the non-punishment of Friedman just stands out like a hairy, golf-ball-sized mole on the face of the American capital markets. No question about it, it's interesting that Galleon and Raj Rajaratnam are getting perp-walked by the FBI (note that it's the FBI, and not the castrated and seemingly completely captive SEC, that's going to be pushing these enforcement actions). Galleon isn't small potatoes and from what I understand there are other hedge funds with even higher profiles that may fall later on. These are surprising and meaningful moves and and it suggests that the enforcement community is not yet completely corrupted.

Emphasis mine, words Matt Taibbi's and complete and utter lack of shame, all Goldman Sachs.

The Good Reverend Roger

We're gonna have to eat these people, one fine day.
" It's just that Depeche Mode were a bunch of optimistic loveburgers."
- TGRR, shaming himself forever, 7/8/2017

"Billy, when I say that ethics is our number one priority and safety is also our number one priority, you should take that to mean exactly what I said. Also quality. That's our number one priority as well. Don't look at me that way, you're in the corporate world now and this is how it works."
- TGRR, raising the bar at work.

Cain

It also turns out that Goldman Sachs was betting on a housing market collapse before the crisis really set in, and made a major killing on this "guess".  I'll find the link in a bit.

Cain

Bleh, I lost the link  :sad:

BUT!

Green shoots are showing in Arizona's 15th Congressional District.  Shame it doesn't exist.

QuoteHere's a stimulus success story: In Arizona's 15th congressional district, 30 jobs have been saved or created with just $761,420 in federal stimulus spending. At least that's what the Web site set up by the Obama administration to track the $787 billion stimulus says.

There's one problem, though: There is no 15th congressional district in Arizona; the state has only eight districts.

And ABC News has found many more entries for projects like this in places that are incorrectly identified.

Late Monday, officials with the Recovery Board created to track the stimulus spending, said the mistakes in crediting nonexistent congressional districts were caused by human error.

Bankruptcies soar in Canadia:

QuoteThe number of bankruptcies across the country was 43 per cent higher in September than at the same point a year ago, government data shows.

The latest figures provided by the Office of the Superintendent of Bankruptcy Canada show the increase is disproportionately slanted towards consumer bankruptcies over business insolvencies. The September figure for the former was up by 45.5 per cent in the last year; the latter by only 1.6 per cent.

One in Seven U.S. Mortgages Foreclosing or Delinquent:

QuoteA record one in seven U.S. mortgages were in foreclosure or at least one payment past due in the third quarter, according to fresh data signaling the recovery in the housing market will be tepid at best.

U.S. mortgage delinquency rates and the percentage of loans that entered the foreclosure process also jumped to records from July to September, the Mortgage Bankers Association said on Thursday.

Rising job losses were behind the increasingly bleak portrait of the housing market in a trend that will continue into next year, the group said in data that adds to recent evidence of a still-struggling housing market.

Housing and related business account for about 20 percent of the economy and recovery is essential to bring unemployment down from a 26-1/2-year high and kick-start economic growth.

Yet record foreclosures will add to the growing supply of unsold homes, sapping the housing market as it attempts to recover from the worst slump since the Great Depression.

The MBA said the percentage of loans in foreclosure rose to 1.42 percent, from 1.36 percent in the second quarter and 1.07 percent in the third quarter of 2008.

"Foreclosures remain the biggest hurdle to the housing recovery," said Michelle Meyer, economist at Barclays Capital in New York.

"Foreclosures will be worse in the first part of 2010 and we do not see a peak in foreclosures until the middle of next year."

Bank of America, UBS, JPMorgan Sued Over Derivatives:

QuoteBank of America Corp., UBS AG and JPMorgan Chase & Co. were sued by a California public utility over claims they rigged sales of municipal derivatives and shared illegal profits through kickbacks.

The lawsuit, filed by the Sacramento Municipal Utility District, is based on federal and state antitrust claims. It alleges Charlotte, North Carolina-based Bank of America and more than a dozen other banks conspired to pre-select winners of municipal derivative auctions, coordinated their pricing, and accepted kickbacks disguised as fees from co-conspirators.

The allegations resemble those made by a U.S. grand jury in New York last month, according to the lawsuit filed Nov. 12 in federal court in Sacramento. CDR Financial Products Inc. founder David Rubin and two employees of the Beverly Hills, California- based company were indicted for allegedly accepting kickbacks on investments sold to local governments. CDR is also named as a defendant in the Sacramento case.

The banks engaged in "allocating customers and markets for municipal derivatives, rigging the bidding process by which municipal bond issuers acquire municipal derivatives, and conspiring to manipulate the terms that issuers received," according to the lawsuit.

The charges against Rubin and the CDR employees were the first to result from a more than three-year investigation into bid-rigging in the municipal bond market. The probe is continuing and has already drawn in some two dozen banks, insurers and local government advisers.

U.S. Posts $176.36 Billion Deficit for October:

QuoteThe federal government kicked off fiscal year 2010 by posting its widest-ever October budget deficit, the Treasury Department said Thursday.

The $176.36 billion gap is more than $20 billion wider than the shortfall recorded in October 2008, driven up by lower tax receipts, stimulus-related revenue reductions and consistently high government outlays.

Treasury's monthly budget statement shows receipts were $135.33 billion in October, down 18% from a year earlier and at the lowest level since October 2002. Meanwhile, outlays were $311.69 billion, down 3% from a year earlier and at their second-highest monthly level on record.

The October deficit figure is wider than the Congressional Budget Office's estimate for a $175 billion deficit in the month and wider than the $165.9 billion expected by analysts surveyed by Dow Jones Newswires.

The Treasury on Thursday also revised September's deficit to a slightly narrower $46.57 billion, from a previously reported $46.61 billion. Even with the revision, the U.S. in fiscal year 2009 posted a record total budget deficit of near $1.4 trillion — three times its previous record.

At the equivalent of 9.9% of gross domestic product, the figure is the widest U.S. deficit as a share of GDP since 1945.

Cain

So, who wants to invest in Dubai?

Incidentally, this one is going to hit Europe harder than the US.  A lot harder.

The Good Reverend Roger

1 in 7 mortgages delinquent or in foreclosure.

So housing prices drop FURTHER, and anyone with a new (5 years or less) mortgage will go upside down, even if they're making their payments.  Their loans will be called, making housing prices drop even further.  Rinse, repeat.

Ho ho!  The ship is capsizing!  Strike up the band!
" It's just that Depeche Mode were a bunch of optimistic loveburgers."
- TGRR, shaming himself forever, 7/8/2017

"Billy, when I say that ethics is our number one priority and safety is also our number one priority, you should take that to mean exactly what I said. Also quality. That's our number one priority as well. Don't look at me that way, you're in the corporate world now and this is how it works."
- TGRR, raising the bar at work.

Cain

I read somewhere recently that house prices were actually rising again, based on risky speculation.  Which is even worse than your scenario.

Elder Iptuous

Quote from: The Good Reverend Roger on November 30, 2009, 01:38:02 PM
1 in 7 mortgages delinquent or in foreclosure.

So housing prices drop FURTHER, and anyone with a new (5 years or less) mortgage will go upside down, even if they're making their payments.  Their loans will be called, making housing prices drop even further.  Rinse, repeat.

Ho ho!  The ship is capsizing!  Strike up the band!

wait...
why would a loan get called simply because the property is upside down?
that doesn't make sense at all...  why would they put a clause in for that scenario?