Stephen Bové - Art, Technology, Right Action

Thursday, February 07, 2008

Neutron-loans - the delayed fuse component of the sub prime crisis


_394930_blast300
Originally uploaded by sbove
Exploding ARMs Roil Bernanke's Drive to Calm Markets

"We call them neutron loans because they're like a
neutron bomb,'' said Brock Davis, a broker with U.S.
Express Mortgage Corp. in Las Vegas. ``Three years
later the house is still there and the people are
gone.''

Once option ARM borrowers' loan balances reach a
predetermined limit, called a negative amortization
cap, usually 110 percent to 120 percent of the
mortgage amount, their payment rates immediately
increase. They also automatically shoot up after five
years. Otherwise, increases typically are capped at
7.5 percent of a borrower's initial payment per year.

One in Five

``These could be called long-fuse, exploding ARMs,''
said Kathleen Keest, former assistant Iowa attorney
general and now senior policy counsel at the Center
for Responsible Lending in Durham, North Carolina.
``I've heard people say they are the most complicated
product ever offered to consumers. They are the real
liar loans.''

The loans accounted for 8.9 percent of the almost $3
trillion in U.S. home loans made in 2006, up from 8.3
percent in 2005, according to an estimate by industry
newsletter Inside Mortgage Finance.

Bush Squeals Like a Colicky Baby


Bush Baby
Originally uploaded by sbove
Bush squeals to Senate like a colicky baby over his 200 unconfirmed appointments.

"Stop treating them like ``political pawns.'' he cries...

The vacancies to be filled also include two on the White House Council of Economic Advisers and 28 judgeships.

The three-member Council of Economic ("world domination") Advisers is down to one person.

Senate Majority Leader Harry Reid said yesterday that senators are reluctant to vote on many nominees because approval would put them in office well past Bush's presidency.

To confirm them ``would greatly limit the ability of a new president to change the direction of those boards through new appointments,'' he said.

``Democrats, and I think the majority of Americans, think that the nation desperately needs a new direction on the economy,'' he said. ``I don't think they want to ensure that the legacy of the president's bad economic policies live on for 14 years through his Fed nominees.''

The Senate Banking Committee has delayed voting on Bush's Fed nominees, with lawmakers expressing concerns about their ability to protect consumers from the abusive lending practices that contributed to the subprime mortgage crisis."

Write your Senators and encourage them to continue stonewalling these confirmations!

Tuesday, February 05, 2008

Bush Legacy - Screw Your Air, Kids, Military, Bank Accounts!


BushLegacy
Originally uploaded by sbove
Reed and weep me droogies!

Is anything this administration touched not FUBAR? Oh, yes, the bank accounts of the top .01 %...they're doing very nicely.

We need a new verb: "to bush" = "reduce to radioactive cinder for benefit of the already ultra-privileged"

Reserves in US Banks are Negative for 1st time EVER!

From Economist John Williams at his very informative service Shadowstats .

"Fed Emergency Actions Are Keeping Banking System
Afloat.

Nonborrowed reserves of U.S. depository institutions
have turned negative (greater than 100%) for the first
time since before the Great Depression

In December 2007, total borrowings from the Fed topped
36% of total reserves, then the highest proportion
seen since 46% in March 1933, when President Franklin
Roosevelt declared a "bank holiday" and closed the
banks.

In January 2008, the U.S. banking system met its
reserves only by borrowing an amount in excess of 100%
of total reserves from the U.S. central bank."

And also from http://rubenfield.com/?p=25

"Currently there are 52 banks borrowing 40 billion dollars to keep afloat. Nobody knows which banks, whichI assume is deliberate.

The big questions for the following few days are -

Will MBIA and AMBAC (Bond insurers) get downgraded? They’re largely fucked, but if they’re downgraded, everyone who uses them is fucked. Like 140+ billion fucked. Like Municipal bonds, banks, and more, all get downgraded as well.

I don’t believe they’ll do the right thing and downgrade them. It”ll cause too much damage, and the plate spinning must go on.

In a similar vein, Do we get more rate cuts? They’ve been betting on it all week but today people don’t seem as positive. Once again, not a good thing but more of an expected outcome. Can’t have any reality in our financial markets."

And more great analysis here:

http://globaleconomicanalysis.blogspot.com/2008/01/bank-reserves-go-negative.html

Now, I'm not an alarmist, but I observe soberly that we are in all actuality, one "black-swan" moment from a world-wide financial disaster of unprecedented proportions...

I recommend to all my friends moving a "survival" portion of your holdings out of the dollar and/or out of potentially non-liquid/valueless financial instruments.

George Soros: The US Dollar is History


George Soros
Originally uploaded by sbove
Who do you believe more about what's happening in the world financial markets?

A. Henry "How long did I sign up for this Treasury post?" Paulsen
B. Ben "GreenSpin Jr." Bernanke
C. George W. "Bring 'em on while I run and hide" Shrub
D. Darth "I''m so evil, sometimes I just have to pinch myself" Cheney
D. Billionaire investor and humanist George Soros

``The current crisis is not only the bust that follows
the housing boom, it's basically the end of a 60-year
period of continuing credit expansion based on the
dollar as the reserve currency,'' billionaire investor
George Soros said yesterday at the World Economic
Forum in Davos, Switzerland. ``Now the rest of the
world is increasingly unwilling to accumulate
dollars.''

To the Thugs go the Spoils. $7 Trillion of your money.


Dick and Dolt
Originally uploaded by sbove


It took all of $100 billion of VC to fund the entire
information economy (1994 through 2001) - massive
capital allocation efficiency, massively positive
impact. "The largest (and I might add, most positive)
legal creation of new wealth in History." (J. Doerr)

For the price of the Iraq war alone, we could have
bought 4.5 Million Priuses, that's 15,000 miles of
45 MPG Priuses bumper to bumper. $7 trillion in
Priuses = 318 Million...one for every US citizen...a
row of green cars stretching around the equator 40
times!!!

For the 7 trillion in new National debt, we could have
financed every start-up and every artist in the entire
country more-or-less indefinitely, or put every kid in
America in private school (K-12 + college) for FREE
for 70 years.

We could have installed an equatorial solar array
(using productized & readily available technology) in
swaths throughout the tropics that would power all
the electricity for the entire planet (Global
Electricity consumption: 16.33 trillion kWh (2007
est.) x "cost at massive scale" of installed solar
panels and related transmission infrastructure @
.45/KW of output.

The whole raging success of the Internet economy, its
entire positive impact on the world was a flea on the
back of this gigantic FRAUD. It is the single most
astounding waste in the history of the world.

The attached sheet is a small accounting of the vast
and horrific devastation these people have brought to
our nation.