He must be paying attention to all the snarky blogmeisters out there who have been wishing for more populism out of the Republican Party.
He must be paying attention to all the snarky blogmeisters out there who have been wishing for more populism out of the Republican Party.
About the most liberal Republican and about the most liberal Democrat in the Senate, John McCain and Elizabeth “Dime Store Indian” Warren, want to re-impose Glass-Steagall (good). Strangely, people associated with a left-wing President are opposed:
The fact that Geithner and Summers don’t support a re-imposition of the Glass-Steagall style regime is no surprise. Lloyd Green writes in The Daily Beast, reviewing Neil Barofsky’s 2012 book Bailout, that “that Geithner ‘made the preservation of the largest banks, no matter the consequences, a top priority of the U.S. government,” blaming “perversion of the U.S. criminal justice system,’ for the hands-off approach toward prosecution of financial crimes under Obama. Barofsky, I should note, is a former federal prosecutor, a Democrat, and a contributor to the Obama 2008 campaign.”
Treasury Secretary Jack Lew is no friend of Glass-Steagall-type legislation either and has already dismissed the idea in congressional testimony.
Meanwhile, Sam Francis saw it coming.
Season 4, Episode 16, “Ward’s Millions.” At about the point of this screenshot, Ward is asking June about an $8.69 check stub without a requisite returned canceled check from the bank. (Remember when banks actually did that?) She responded that she couldn’t get the checkbook to balance, so she wrote herself a check for $8.69 then tore it up. Ward responds: “June, they could use you in Washington.”
Immediately after this, Ward tells The Beaver that you just can’t keep on writing checks for money you don’t have. Because…he’s Ward Cleaver, not Ben Bernanke.
Speaking of “today,” was today just a bump in the road, or is it the day when the legalized Ponzi scheme called fractional reserve banking starts to unravel and go splat all over the world economy? If not the entire world economy, then definitely all over Europe.
Downtown St. Louis
St. Louis has a division of the Federal Reserve, but it’s hardly where the action is. For that, you’ll have to go to New York and Washington, D.C.
But St. Louis’s Fed office is really good at one thing: Research and publications.
That said, if you want to keep an eye on our ever expanding money supply here in our world of infinite quantitative easing, here you go. Once a month, the St. Louis Fed officially quantifies what is officially called BOGUMBNS, but is colloquially called M0 (M-Zero), that is, the total amount of real cash and coins in common circulation.
For the record, the amount that it was at before the first scary spike in the newest gray area on this graph (gray areas correspond to times of at least two straight quarters of negative GDP growth, aka an official recession) was only $848 billion, in August 2008. The most recent reading, for February 2013, is $2845 billion.
Even if the trillion dollar coins happen, they probably won’t present in BOGUMBNS, because the insane “plan” for a trillion dollar coin is for them not to be in common circulation.
Click to enlarge.
“Economic optimism at 15 year low…DJIA at all time high.”
Therefore, nobody is really buying into the holy sacrament of the DJIA anymore. Nobody except the people who are responsible for determining what is our money supply. Remember, M0 has gone up from $800 billion in September 2008 before the heart of the financial crash to $2700 billion (*) today, due to quantitative easing, which is done mainly for the benefit of stock indexes. Hell, it SHOULD be depressing that with more than three times as much real physical money floating around out there, the DJIA has only gotten back to par and now slightly above that.
(*) – The reason I’m writing $2700 billion instead of $2.7 trillion is for the benefit of the low information undertow, who might be so innumerate that they might think that $2.7 trillion is far less than $800 billion.
I still think all the talk about a trillion dollar coin is SVNT.
But the fact that so many “credible” people are even halfway seriously considering it I think means something. Historically, this is the economic rhetoric of a slowly crumbling empire. I’m sure you can find plenty of similar analogues in recent history (decline and end of the USSR) and ancient history (decline and dismemberment of the Western Roman Empire).
Oops, I mean Jack Lew. Honest mistake.
Get ready for a slinky signature on our
worthless quantitatively eased money. Only sig on Earth worse than mine.
Though he has some plausible deniability — How can anyone actually prove it was him? It’s not as if we can actually decipher his signature on all that paperwork.
Bank of America Freezes Gun Manufacturer’s Account, Company Owner Claims
Bank of America has reportedly frozen the account of gun manufacturer American Spirit Arms, according to its owner, Joe Sirochman.
In a Facebook post dated December 29, Sirochman wrote the following:
“My name is Joe Sirochman owner of American Spirit Arms…our Web site orders have jumped 500 percent causing our Web site e-commerce processing larger deposits to Bank of America. So they decided to hold the deposits for further review.
“After countless hours on the phone with Bank of America, I finally got a manager in the right department that told me the reason that the deposits were on hold for further review — her exact words were — ‘We believe you should not be selling guns and parts on the Internet.’”
BofA received TARP money.
It’s called crony capitalism.
And here I was, actually considering Obama’s gun-control-via-crony-capitalism a backdoor feature for our side as late as yesterday.
If you have a BofA account, and you have the ability to switch banks, go to BofA ASAP and demand to close your account, but ask for cash money. Let’s run that MoFo. We’ll see how quickly they do some unfreezing. It has happened in the recent past — CitiBank tried this trick in very early 2000 to suck up to the Clinton White House when they were trying to engineer some “settlement” with firearms makers in a phony baloney lawsuit that the Clinton White House filed to begin with. It started with CB trying to close the account that the Nevada Pistol Academy had with it, then they tried it with others, gun stores, gun accessory makers, gun schools. But CitiBank customers ran the bank demanding to close their accounts and get their balances in cash, and CitiBank quickly had to reverse course.
Fractional reserve. We have leverage.
I’m looking over my queued up list of news stories and URLs that I’ll cover in tomorrow’s wrap-up. I think I’ll get one out of the way right now.
Rush talked about some nut professor who will go unnamed, simply because we all know, (and this nut professor knows) his proposal is pure SVNT (shock value nut talk). And he knows it because he, like everyone else with a brain, knows it will never happen, and that the only reason he’s “proposing” it is to become a celebrity. It’s this business about striking $1 trillion platinum coins and using that to “pay” the deficit.
But in thinking about this non-story, I wondered what the real money supply is these days. For a long time, the metric referred to in the vernacular of economics education as M0 (M-Zero), but not officially by the Fed (their official name for it is some long acronym), which is defined as all the American paper and coin currency in common circulation, wasn’t even $1 trillion, so a single $1 trillion coin would more than double it. But to my shock, it wouldn’t do that now: While M0 was only around $800 billion as late as the fall of 2008, before you-know-what happened, thanks to several rounds of quantitative easing, it now stands at about $2,700 billion ($2.7 trillion).
People are claiming that things aren’t that bad, because DJIA is now riding at about the same 13k it was in the summer of 2008, pre-crash. Yeah? So what? Does 13k in an America with $2.7 trillion of open currency and coin floating around mean the same thing as 13k in the America of yore with only $0.8 trillion ibid.? It’s actually scary that with more than three times as much physical currency floating around out there, that your oh-so-important metric based on the current selling prices of mostly long-ago issued shares of common stock of the thirty given large publicly traded corporations that some cigar-munchers in some room deem currently “important” can only get back to par. What’s more scary is that everything isn’t more than three times as expensive as it was in September 2008 — A lot is significantly more expensive, but not everything is literally (2.7/0.8) = 3.375 times more expensive. But that must mean one or more of several things: (1) Things are about to get more expensive, and it’s just taking time for the increased money supply to work its way through the economy, (2) “Official” CPI is artificially low, (Duh, when Social Security checks and tax brackets are indexed to CPI, do you think the Feds/Fed have a big incentive to nuance/lie it down as far as possible?), (3) There are other economic factors why there are things that are not yet or will not eventually become 3.375 times more expensive than they were in 9/08, (4) M0 is not the be-all end-all metric of money supply: Ron Paul actually thinks M3 is a better “real” metric for money supply, and M3 is all “M0″ coin/currency floating around plus banks’ deposits with the Fed plus checking accounts plus travelers checks plus savings accounts plus almost all money market funds and mutual funds plus almost all certificates of deposit, if my memory serves. Since the financial crisis, M3 has increased, but not at the same ridiculous rate as M0.
So, maybe an extra $1 trillion coin wouldn’t be the uber-disaster I would otherwise fear. Though it doesn’t mean it’s at all desirable.
Your Blogmeister’s Desk
Like many days, my mother called me late today to chit-chat about what she did today. Usually, I’ll let it go in one ear and out the other, but she had something interesting to say today.
Not long after I was born, anticipating that I would suffer from diaper rash, she bought a pound jar of something called “A&D Ointment.” Of course I did, but I didn’t suffer it so often that she had to use up that whole jar before I got potty trained. Long after I was, she found that the stuff was effective for rashes and burns and cuts and scrapes other than what comes from a diaper. I know she had that jar for a very long time, and today she told me that the jar finally ran empty more than a month ago. The stuff was still effective and didn’t lose its texture even being 35 years old — I’m convinced that in a Life After People (TM), A&D Ointment might last thousands of years.
She bought the bottle in April 1977 at K-Mart, the dominant big box of the day, for $2.99. I know that, because nobody ever peeled off the K-Mart price label indicating the store and the price.
She bought a new bottle, again, a pound-weight plastic container, today, from Target, a very similar big box retailer. Guess how much it cost.
You might think Wal-Martinez is significantly cheaper for their volume buying, but as it turns out, their website charges $10.17, and so is probably the case in their stores.
Do a little division. 1,017 cents divided by 299 cents = 3.4. Do you think the average person of December 2012 is making 3.4 times more in real dollar take-home pay than the average person of April 1977? I highly doubt it.
More Americans opting out of banking system
In the aftermath of one of the worst recessions in history, more Americans have limited or no interaction with banks, instead relying on check cashers and payday lenders to manage their finances, according to a new federal report.
Not only are these Americans more vulnerable to high fees and interest rates, but they are also cut off from credit to buy a car or a home or pay for college, the report from the Federal Deposit Insurance Corp. said.
The study also found that one in four households, or 28.3 percent, either had one or no bank account. A third of these households said they do not have enough money to open and fund an account. Minorities, the unemployed, young people and lower-income households are least likely to have accounts.
The kind of people who “rely on check cashers and payday lenders to manage their finances” can’t be counted on to make several years of monthly car payments (hence the ghetto or barrio hooptee), or if they do buy new cars, they pay the full cost up front for their Escalade or Chrysler 300 and the chrome spinners to go with them (that’s a hint on how they make their money), they won’t have to worry about credit to buy a house because Section 8 pays their rent, and they won’t exactly have to worry about “paying” for college if they can get admitted to any college at all — That’s what honkey taxpayers and sports scholarships are for.
When you sling dope for a living, you can’t afford to put your money on the grid where the U.S. Attorneys can have it frozen and eventually confiscated. When you’re a “DREAMer” and you’re on welfare, and your quasi-husband is working one or more under-the-table jobs, you can’t afford for him to put his money on the grid so that the welfare agencies can see it.
God, I hate it when first world people are so blissfully ignorant that they assign first world motivations to third world people.
Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates
The Federal Reserve fulfilled expectations of more stimulus for the faltering economy, taking aim now at driving down mortgage rates.
First off, you’re not supposed to use gun analogies in the Era of Gabby Giffords. And also…incivility.
Second, “driving down mortgage rates?” Which, as we all know, are way too high. I guess the Fed is worried that some retired senior citizen is living the high life getting a big whopping 0.25% on his CDs.
C’mon W3C, where’s that sarcasm markup tag we all want?
In his own way, President Obama helped create the economic mess that he inherited that isn’t his fault, unless it is.
And also, the other side of what I’m sure are American efforts to conspire to keep interest rates artificially low so that governments can borrow money with low interest rates.
This means that LIBOR et al. was nothing more than a tax on upper middle aged and retired people to save money and live on interest income. I remember Ron Paul saying this numerous times during the debates, and the only thing it got him was Mark Levin threatening to take out his son.
Albany, New York
Attorneys General of New York State and Connecticut are bitching about seven banks based in their states engaged in LIBOR-like and LIBOR-related interest rate fixing.
Irony: The banks colluded to keep interest rates low that that governments could borrow money with low interest rates. It was the way the banks, bailed out by TARP in the U.S. and equivalent piecemeal measures in Britain, paid the governments back.
You can see where I’ve walked, because there will be fist-sized parallel depression lines in the ground a few feet apart.
I know I’m a knuckledragger, because I opposed TARP.
Duh. You think? TARP was engineered by banksters for banksters?
Thomas Jefferson (or someone of his era) said that if people truly grokked banksterism, there would be an instant and brutal revolution.
Later rather than sooner. But, a win’s a win.
But that’s kinda been my point all along with Ron Paul — As much as I (mostly) supported his political ambitions, he really has a thin legislative record to show for it, in spite of twenty-four years in Congress. It only took him all this time and some dire circumstances to get what will be his keystone accomplishment, and even that came in the lame duck time of his career.
Meanwhile, it won’t take his son in the Senate anywhere near that length of time to figure out a way to get the Senate to pass it. The first thing Rand can do is to print this out and stick it in front of Hairy Ass Reid’s snoot.
Palo Alto, California
What if we enter a hyperinflationary climate? What did Zuck offer for collateral for the bank to have a hedge against that? Zuck’s FB stock?
Even beyond that, what is this bank supposed to gain by giving Zuck a 1.05% rate for even a short length of time, when there’s a better rate than that to be made by parking that money elsewhere? I guess First Republic Bank presumes that it’s essentially buying good advertising and PR with all the Facebook users by giving a sweetheart dealer to one of Facebook’s co-founders, so if they grow up, they’ll look to FRC for their more conventional principal and interest rate mortgage. Sort of a loss leader.
I know why Zuck did it, because it’s better that he re-finances the remaining principal balance of his mortgage at a gift interest rate than pay off the whole house while he has the money to do so, because he thinks he can park the money he could have used to pay off the entire principal balance of his house and get a good enough return to come out ahead.
You have $150,000 remaining principal balance left on your house. You refinance at 1.05% for 30 years, and your monthly payment will be $485.91 a month. You could have easily taken $150,000 to pay off your whole principal and have been done with the mortgage, and have no monthly payment. BUT…if you can find some investment that gives you even one iota above ((485.91*12)/(150000) ≈ 3.89% return, you will come out ahead.
The big differences between that hypothetical and reality is that no bank is going to give you a 1.05% rate for a piddly 150k principal on some nobody’s house, and Zuck’s millions are fare more likely to find a return higher than the break-even rate than you will with your 150k. Also, my hypothetical calculations left out insurance and tax escrows.
I asked what compensation the bank that drew the original mortgage would receive.
The city pays fair market value to the owner of the mortgage. That is usually a securitization trust, an otherwise passive financial entity used to bundle mortgages and sell pieces to investors that became a bigger part of the mortgage market during the 2000s housing boom.
“Securitization trust” is probably a fancy way of saying “IOU.” Certainly, the cities can’t afford to pay the banks for the outstanding principal balances, especially since most of them are so bankrupt that they can’t pay for trash collection.
The company says everyone should wind up happy: The homeowners get lower payments, cities help clean up the mortgage crisis and shore up their tax base, and the mortgage-owning trusts unload a risky asset.
Robert Burns knew how these best laid schemes turn out.
I should note that as long as the “underwater” homeowner is paying their mortgage notes on time every month, it’s not a “risky asset” for the bank, even if the outstanding principal is higher than the current market value of the house.
Your Blogmeister’s Pocket
Among the many things in my pockets right now is a 1965 quarter.
When that quarter was coined, it could buy: Five whole first-class stamps, 0.8 gallons of gas, about six eggs, a tad more than a quart of milk.
That exact same quarter in my pocket now could buy me: Barely more than half of one first-class stamp, 0.077 gallons of gas at the station I use most often, little more than one egg, and little more than a cup of milk.
I hear public service announcements about the “need to save,” brought to you by the same system that has quantitatively eased the money of people who save into continuing worthlessness. (Yes, Dave, I know. It was worthless all along. I’m making a point here.) QE is basically a hidden tax on savers.
France sells bonds at negative interest rate
PARIS (AP) — France’s government has sold short-term bonds at negative interest rates for the first time, a sign of investor confidence despite concerns about French debts and the wider eurozone.
Despite the dropping rates, France’s economic outlook is stagnant. President Francois Hollande said Monday that growth in the first half of this year is expected to be “nil.”
Yields, or borrowing rates, have been falling on French medium and long-term bonds in auctions over the past couple of months, as investors flock to the perceived safety of Europe’s larger economies.
In a sale Monday, the treasury sold three-month bonds at -0.005 percent, and six-month bonds at -0.006 percent. The treasury agency says it’s the first time they have registered negative yields.
They “sold” negative interest rate government bonds, which means someone was dumb enough to buy them.
That. Scares. Me.
The only way that would be a sane move is if the French money market is anticipating serious deflation, and an instrument just south of zero is as good as it’s going to get.
Cities Consider Seizing Mortgages
A handful of local officials in California who say the housing bust is a public blight on their cities may invoke their eminent-domain powers to restructure mortgages as a way to help some borrowers who owe more than their homes are worth.
Investors holding the current mortgages predict the move will backfire by driving up borrowing costs and further depress property values. “I don’t see how you could find it anything other than appalling,” said Scott Simon, a managing director at Pacific Investment Management Co., or Pimco, a unit of Allianz SE.
Eminent domain allows a government to forcibly acquire property that is then reused in a way considered good for the public—new housing, roads, shopping centers and the like. Owners of the properties are entitled to compensation, which is usually determined by a court.
But instead of tearing down property, California’s San Bernardino County and two of its largest cities, Ontario and Fontana, want to put eminent domain to a highly unorthodox use to keep people in their homes.
The municipalities, about 45 minutes east of Los Angeles, would acquire underwater mortgages from investors and cut the loan principal to match the current property value. Then, they would resell the reduced mortgages to new investors.
The eminent-domain gambit is the brainchild of San Francisco-based venture-capital firm Mortgage Resolution Partners, which has hired investment banks Evercore Partners and Westwood Capital to raise funds from private investors. The company’s chief executive, Graham Williams, is a mortgage-industry veteran who helped pioneer lending programs for low-income borrowers at Bank of America Corp. BAC -1.74% in the early 1990s. Its chairman, Steven Gluckstern, is an entrepreneur who once owned the New York Islanders hockey franchise. Evercore’s founder and co-chairman, Roger Altman, served in the Clinton administration and is raising funds for President Barack Obama’s re-election effort.
For a home with an existing $300,000 mortgage that now has a market value of $150,000, Mortgage Resolution Partners might argue the loan is worth only $120,000. If a judge agreed, the program’s private financiers would fund the city’s seizure of the loan, paying the current loan investors that reduced amount. Then, they could offer to help the homeowner refinance into a new $145,000 30-year mortgage backed by the Federal Housing Administration, which has a program allowing borrowers to have as little as 2.25% in equity. That would leave $25,000 in profit, minus the origination costs, to be divided between the city, Mortgage Resolution Partners and its investors.
Proponents say this would help residents shed debt loads that are restraining economic growth, while preventing foreclosures that are eroding the tax base. But unlike the beneficiaries of most recent mortgage-modification efforts, who must show hardship, these borrowers would have to be current on their payments to participate. And the program initially would focus only on mortgage-backed securities that aren’t federally guaranteed—about 10% of all outstanding U.S. mortgages.
The move is yet another sign of the desperate measures taken by cities still reeling from the effects of the housing bust. Several have declared bankruptcy.
“A number of cities, mayors, city managers have come to me and said, ‘How soon can we get in?’ ” said Greg Devereaux, San Bernardino County’s chief executive. He said he learned of the program last year from a California state official. He said county officials haven’t yet made a firm decision on whether to proceed. “We think it would be irresponsible, given the size of the problem in our county, not to at least explore it,” he said.
Unemployment in San Bernardino County, the nation’s 12th-most-populous county, is among the nation’s highest and tops 30% in some parts. More than two in five borrowers with a mortgage owed more than their homes were worth at the end of March.
The seizure of home-mortgage liens, but not the underlying homes, hasn’t ever been conducted through eminent domain, as far as the group’s principals can tell. And while they believe they have a strong legal case, they expect loan owners to sue.
“California legal precedent and political posture favor the program and constitute an ideal proving ground,” Mortgage Resolution Partners said in a presentation to investors reviewed by The Wall Street Journal.
The document said it would begin with a $5 billion effort in California that could grow to three million mortgages as part of a $500 billion multistate effort.
Several states have authorized the taking of other intangible property, such as insurance policies, shares of stock or rights of way, according to Robert Hockett, a Cornell University professor of law and adviser to Mortgage Resolution Partners.
In 1984, the U.S. Supreme Court upheld the state of Hawaii’s use of eminent domain to transfer residential tracts of land to renters to break up a landownership oligopoly and stabilize home prices. In 2005, the court affirmed the right of a Connecticut town to use eminent domain to transfer non-blighted homes to a private developer to spur redevelopment. That spurred several states to pass laws restricting such powers.
The three local California governments have created joint powers authorities that don’t need permission from their city councils or board of supervisors to move forward unless they need public money. That means if the agencies back proposals that are privately financed, the plans could only be stopped from moving forward in court.
Mortgage-bond investors—who are the property owners, for eminent-domain purposes—say the program would do nothing to deal with the biggest problems—borrowers already in default. “Shouldn’t that be the first priority?” said Laurie Goodman, senior managing director at broker-dealer Amherst Securities Group LP.
A letter sent last week to city leaders from 18 trade associations, led by the Securities Industry and Financial Markets Association, warned that such a move “could actually serve to further depress housing values” by making banks less willing to lend. The plan’s backers are unfazed. “The exact opposite is true. There’s no private market right now,” said Mr. Gluckstern of Mortgage Resolution Partners. “Until you clear out this problem [of underwater loans], private lending will not come back.”
1. The original intent of eminent domain has to do with real property (land), not abstractions like mortgage contracts. And real property taken in ED has to be used for a public purpose — I fail to see how helping underwater homeowners is a public purpose.
2. Fuzzy Math. See the paragraph in bold above. The $300 house at its current mortgage now worth $150 is deemed by a judge to be worth $120. So these new financiers ride in and help the current mortgage note payer start a whole new mortgage for $145, five less than its current market value. It is said that there will be $25 profit because the $120 that a judge deemed the property worth from $145 gained from the new mortgage is $25, to be split among the financiers.
These clever geniuses are forgetting something.
The bank that currently holds the $300 principal mortgage.
This doesn’t say whether the banks that hold the high dollar mortgages will get anything, but it does not seem that they will. What’s going happen to the banking system when all these banks holding high dollar mortgages are told that their mortgages and the remaining principal on them (which is most of the principal amount, in most cases) has suddenly been decreased to zero? Even if you want to construe eminent domain to apply to abstract property, you can’t seize them without “just compensation” to the original owner. And this scheme has no compensation, much less just, for the original owner.
Cameron warns the euro can’t work without a single government as fears grow Greece could crash out
Making sense of the euro for me would mean that those eurozone countries would have to have much more co-ordinated economic policy, much more co-ordinated debt policy.
‘There’s nowhere in the world that has a single currency without having more of a single government.’
You don’t say, slappy. I guess your Eton and Oxford educations were good for something after all!
In related news, there’s no sidewalk in the world that has been rained on without getting wet.
A Breitbartista co-authors a long piece in News Weak (sic) (!) about the vast disconnect between Obama rhetoric and Obama action on financial crimes that may have contributed to the Crash of 2008. The usual theories about revolving doors, the culture of corruption, and extortion rackets abound.
I’m going to dive into this cold swimming pool without any acclimation.
No investigation or prosecution because Wall Street didn’t commit any crimes.
The only reason anyone thinks they did was because the Democrat-Left had to develop a meme and peddle it like soap flakes in order to distract from the complicity of their own elected politicians, appointed prosecutors and career regulatory bureaucrats, and the same actions taken by Republican-lamestream conservatives operating under the same egalitarian mentality, to make affirmative action in mortgage lending a Federal government commandment.
Steve the Sailer Man took up this issue today, saying almost the same thing — No crimes, no perfidy, just the hubris of what were thought to be perpetually increasing real estate values, and the increasing real estate values were purely a function of eviscerating mortgage lending standards for the sake of affirmative action.
The top of Drudge most of this past weekend is just what this city needed for a morale and reputation boost.
I had to work on Saturday, and work a very long day, (’tis life in the big city during tax season), so I couldn’t go.
Hoft has more photos. Note the second photo — Cherish it, for this is the only positive publicity that will come out of Beaumont High School in our lifetimes. Even if they are toy soldiers.
A Breitbartista has even more photos, but also the blockbuster news that Bank of AmeriKa didn’t allow spectators to stand on its property. That BoA got a TARP bailout I don’t think is a coincidence — New York City won’t have an Iraq parade because Bloomberg said that the Pentagon is advising agaisnt it. Pentagon = Obama, and BoA = TARP = Obama.
It’s probably a vast stretch to think that Obama personally ordered BoA not to allow people in St. Louis to stand on its property in Downtown St. Louis to watch an Iraq Vets parade. However, it’s not so crazy to think that BoA did this on their own out of fear of Obama.
Because Ending the Fed and repudiating the concept of state-franchised central banking would be so dangerous.
After all, where would be without its clairvoyance?
While everyone with a three digit IQ flashed on heavy weather ahead in the housing market in 2006:
Transcripts of 2006 policymaker meetings illustrate a glaring absence of alarm.
Despite signs of trouble for the nation’s overheated housing market in 2006, there was plenty of banter and laughter around the big mahogany and granite table inside the Federal Reserve where top policymakers gathered one day in March.
Running his first meeting as chairman of the central bank, Ben S. Bernanke, in his collegial style, solicited observations about the economy from colleagues. Some of the Fed’s staff earlier had talked about the potential risks, but in that meeting and in subsequent ones that year, there was a glaring absence of alarm about the dangers of the housing bubble and what might lie ahead for the broader economy.
Instead, concerns about a housing bust were largely dismissed by most officials, according to meeting transcripts released Thursday.
“We believe that, absent some large, negative shock to perceptions about employment and earned income, the effects of the expected cooling in housing prices are going to be modest,” said Timothy F. Geithner, the current Treasury secretary, who then was president of the Federal Reserve Bank of New York.
When Geithner was finished, Bernanke asked, to a round of laughter, “Anything to report on co-op prices in Manhattan?”
“As in many cases, I am not sure what you can take from the anecdote, but I guess some people say that you see a little of the froth dissipating,” Geithner replied. “But I don’t think the adjustment is acute.
“If you see hiring at the New York Fed go up substantially in the market, that will be a good leading indicator of housing prices reverting somewhat,” he said, prompting more laughter.
Who sent Geithner to Treasury? Oh yeah.
Queue a Ron Paul bump in the polls in three, two, one…
Here’s your ad: “They laughed. (Images of the Los Angeles Times headline banner, highlighting this article and the words ‘banter and laughter around the big mahogany and granite table’). (Images of Bernanke and Geithner, with laughter noises in the background.) They laughed. (‘Concerns about a housing bust largely dismissed’ highlighted) They laughed. (Images of the unemployment lines, housing foreclosures, shuttered businesses) They laughed. (Image of Newt Gingrich, background audio of Gingrich calling Ron Paul’s call to audit the Fed ‘nutty’). I’m Ron Paul, and I approved this message.”
Study reveals an association between impatience and lower credit scores
NEW YORK – December 13, 2011 – A study conducted by Columbia Business School’s Prof. Stephan Meier, Regina Pitaro Associate Professor of Business, Management, and Charles Sprenger, Assistant Professor, Stanford University Department of Economics, determines that there may be a psychological reason for why people default on their mortgages. The research, which will be featured in an upcoming issue of Psychological Science, a journal of the Association for Psychological Science, finds that the participants in the study with poor credit scores were more impatient and were more likely to choose immediate rewards rather than wait for a larger reward in the future.
While working at the Federal Reserve’s Center for Behavioral Economics and Decisionmaking in Boston, Massachusetts, the researchers created a study that would help determine if there are factors beyond the screening for mortgage applicants or other institutional reasons that leads to people to make the decision to default. Meier and Sprenger recruited 437 low-to-moderate income people at a community center in Boston that offered tax preparation help. Each person was given a questionnaire that featured choices between a smaller, immediate reward and a larger reward they would receive in the future. The participants also agreed to let the researchers access their FICO credit scores.
The study shows that time discounting and FICO scores were significantly correlated, and that this correlation was comparable to previously found correlations between time discounting and health behavior. Participants who were the most willing to delay rewards and exhibited more patience had FICO scores that were approximately 30 points higher than those of participants who were the least willing to delay. Also, the impatient participants fell below the subprime lending cutoff of 620. At this score, individuals generally face substantially elevated borrowing rates.
“Conceptually, it does make sense that how people discount the future, i.e. how impatient they are, affects their decision to default on their loans,” Meier says. “Individuals accumulate debt and then have to decide whether to repay the money or use the money for something else.”
The researchers acknowledge that defaulting on a loan isn’t always a deliberate choice. People may default for a variety of reasons, such as when they lose their job. However, as Meier explains, “There is a little bit of strategic defaulting going on, where some people make a cost-benefit analysis and choose to have more money now and deal with the repercussions later.”
Okay, now I get it. Their bad credit score psychologically traumatizes them, and that causes them to engage in spending for instant gratification instead of making wise long-term financial decisions. It can’t possibly be because their microeconomic behavior is the reason why they have low credit scores to begin with. To put it in more simple terms, Official America thinks that people are impatient and impulsive because they know they have low credit scores, Sensible America knows that people have low credit scores because they are impatient and impulsive.
I know the Occutards are against credit scores, and want credit ratings agencies either abolished or everyone’s scores reset to perfect. Remember, the Boston Fed is where that junk social science study in 1992 originated, (hence, my emphasis in the blockquote), the study that was used as the basis for affirmative action in mortgage lending, which fed the whole subprime crisis and the financial crisis. Are they greasing the skids for the prohibition of credit scores and ratings as a sop to the left wing? History doth repeateth itself, methinks. I guess this time, the Fed is worried about being eliminated entirely (President Ron Paul) or having its power and authority cut back substantially (a few other Republican contenders), and they’re trying to buy protection with the left wing.