More Judges Pushing Back on Dubious Foreclosure Documents

"Even though this example involves only three judges in Ohio, don’t underestimate its significance. The fact that judges of their own initiative have started insisting that all attorneys provide certifications of foreclosure-related documents, a standard now in effect in New York state, shows how much their credibility has fallen.

From the Columbus Dispatch (hat tip reader Lisa Epstein):

In response to a national outcry over fraudulent foreclosure filings, three Franklin County judges are requiring lawyers to verify that all of the documents in residential-foreclosure actions are valid..."

at http://www.nakedcapitalism.com/2011/01/more-judges-pushing-back-on-dubious-foreclosure-documents.html

World Income Inequality

"Here, courtesy of Catherine Rampell of Economix, is a remarkable chart from Branko Milanovic's book The Haves and Have Nots. Along the horizontal axis are within-country income percentiles running from the bottom 5% (1st ventile) to the top 5% (20th ventile). Along the vertical axis are world income percentiles.

The graph shows that the bottom 5% of Brazilians are among the poorest people in the world but the top 5% are among the richest. Thus the vertical range of the curve tells us about within-country inequality.

Comparing between countries we see that the poorest 5% of Americans are among the richest people in the world (richer than nearly 70% of other people in the world). The poorest 5% of Americans, for example, are richer than the richest 5% of Indians..."

at http://www.marginalrevolution.com/marginalrevolution/2011/01/world-income-inequality.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+marginalrevolution%2FhCQh+%28Marginal+Revolution%29

Sachs: America’s Ungovernable Budget

"Jeff Sachs argues that we must raise taxes:

America’s Ungovernable Budget, by Jeffrey D. Sachs, Commentary, Project Syndicate: ...In his recent State of the Union address, President Barack Obama ... rightly emphasized that competitiveness in the world today depends on an educated workforce and modern infrastructure. ...

That is why Obama called for an increase in US public investment in three areas: education, science and technology, and infrastructure... He spelled out a vision of future growth in which public and private investment would be complementary, mutually supportive pillars. ...

But Obama’s message lost touch with reality when he turned his attention to the budget deficit. Acknowledging that recent fiscal policies had put the US on an unsustainable trajectory of rising public debt, Obama ... called for a five-year freeze on what the US government calls “discretionary” civilian spending.

The problem is that more than half of such spending is on education, science and technology, and infrastructure – the areas that Obama had just argued should be strengthened. After telling Americans how important government investment is for modern growth, he promised to freeze that spending for the next five years! ...

The truth of US politics today is simple. ... Both political parties ... would rather cut taxes than spend more on education, science and technology, and infrastructure. And the explanation is straightforward: the richest households fund political campaigns. Both parties therefore cater to their wishes.

As a result, America’s total tax revenues as a share of national income are among the lowest of all high-income countries..., not enough to cover the needs of health, education, science and technology, social security, infrastructure, and other vital government responsibilities.

One budget area can and should be cut: military spending. But even if America’s wildly excessive military budget is cut sharply (and politicians in both parties are resisting that), there will still be a need for new taxes..., and that – as George H. W. Bush learned in 1992 – is no way to get re-elected..."

at http://economistsview.typepad.com/economistsview/2011/01/sachs-americas-ungovernable-budget.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EconomistsView+%28Economist%27s+View+%28EconomistsView%29%29

Here Comes The Greek Brady Plan Together With 35% Bond Haircuts...And A Caption Contest

"Just in case you were expecting a full recovery on those Greek bonds stashed away under the mattress (ahem ASSGEN) here comes Euro Intelligence to spoil your day (and maybe, just maybe, wreak some havoc with your CDS). In a nuthsell: we are about to see a Brady plan with 35% haircuts. If true, we may be seeing some pretty interesting unintended consequences in the near to very near-term future.

From Euro Intelligence:

We think this story from To Vima in Greece is true. It contains a lot detail about discussions currently under way for a future Greek debt restructuring. The paper says that the EU, IMF and the ECB have reached basic agreement that a debt restructuring for Greece is inevitable, with the following concrete options being discussed. 1. A haircut of 35%. Technically, this will be an exchange of existing bonds with bonds of 65% of their value. 2. A bond swap to 30-year bonds with low interest rates. 3. A new loan package of 25% of the previous volume. The paper recalls the Brady plan, under which the US organised a similar debt swap for Latin American debt, with the help of a Fed guarantee. The paper also quotes Greek sources as confirming that they no longer expect the rebound of growth to happen immediately..."

at http://www.zerohedge.com/article/here-comes-greek-brady-plan-together-35-bond-haircutsand-caption-contest?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

Rising Debt and Manipulation of the Gold Market

"...Gold has spent the last two years moving up in price as it challenged the US dollar for supremacy as the world reserve currency. Now, inflation is again in investor’s sights, as companies are forced to raise prices 6% to 15%, after having raised prices over the past year mostly in the form of small packaging. We’d call that stealth inflation. Manufacturers and producers think they are fooling the American public, but they are not. They are just demonstrating how deceitful they are. Raw materials costs are rising and they will continue to rise and so will real inflation, and that makes gold and silver move higher to reflect the loss in purchasing power of the public and the loss of value of all currencies versus gold and silver. In our previous report this week we pointed out the massive short covering by commercials in the gold pits. Unprecedented net short reduction, which can only portent a major upward move in gold and silver. The percentage of silver short covering was not nearly as successful for JPM, HSBC, GS and Citi. That is still yet to come. It will expedite the upside as it has done recently. All the elitists have done is ended their short bias and now will join you on the long side of the market. Their tactics have given you another opportunity to buy at cheaper prices.

The bond market yields will move slowly higher on the long end for the remainder of the year and thus, bonds should move slightly lower.

Stocks, which are way overpriced, will eventually fall probably back to 10,000 on the Dow..."

at http://www.marketoracle.co.uk/Article25949.html

Geopolitical unrest and world oil markets

"...I think the bigger worry for oil markets would be that the process may yet spill over into other key oil-producing countries. Iraq will be a huge factor in determining medium-term growth in world oil production, and Iran is twice as important as Iraq in terms of current production. And should we see the temporary cessation of Saudi production, it would be an event without historical parallel.

I do not know where current developments will lead. But I am quite confident in the conclusion from my survey of historical oil shocks:

given the record of geopolitical instability in the Middle East, and the projected phenomenal surge in demand from the newly industrialized countries, it seems quite reasonable to expect that within the next decade we will have [an additional observation] with which to inform our understanding of the economic consequences of oil shocks..."

at http://www.econbrowser.com/archives/2011/01/geopolitical_un.html

Marc Faber : Bernanke cannot print Gold

"Marc Faber : Cash at 0% doesn’t accumulate wealth either. The moment central banks implement monetary policies where they keep interest rates negative in real terms, in other words interest rates are lower than the rate of cost of living increases, then it is very difficult to value anything. The only thing I can say is, Mr Ben Bernanke, Chairman of the Federal Reserve, and other central banks, they can print an unlimited quantity of money, but you cannot print gold. Gold is limited by its annual supply of around 2,500 tonnes annually. So it is not that gold is going up, it is that the paper value of money, the purchasing power of money is going down vis-à-vis a unit of account, which is gold..."


at http://marcfaberchannel.blogspot.com/2011/01/marc-faber-bernanke-cannot-print-gold.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarcFaberBlog+%28Marc+Faber+Blog%29

Banks grip on prime shadow inventory growing: Morgan Stanley

"Whether they like it or not, the nation's banks control most of the country's shadow inventory, according to a report Friday from Morgan Stanley.

Even more, properties in imminent default are typically cheaper homes with prime mortgages. The analyst adds that their findings buck conventional wisdom that these homes are either concentrated in the slums of Detroit, or prevalent amongst cardboard cutter McMansion neighborhoods.

The shadow inventory, they say, is the biggest problem for average Americans living in the nation's major cities.

And, what's more, the homes are more and more being controlled by the banks, as opposed to Fannie Mae, Freddie Mac or private securitization trusts..."

at http://www.housingwire.com/2011/01/28/banks-grip-on-prime-shadow-inventory-growing-morgan-stanley?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+housingwire%2FuOVI+%28HousingWire%29

How can the Architects of the Crisis Investigate it?

"The Financial Crisis Inquiry Commission (FCIC) issued its report today on the causes of the crisis. The Commissioners were chosen along partisan lines and the Republicans, one-upping the Republicans’ dual responses to President Obama’s State of the Union address, have issued three rebuttals. The rebuttals follow a failed preemptive effort by the Republicans to censor the report – they insisted on banning the use of the terms “shadow banking system” (the virtually unregulated financial sector that conducts most financial transactions), “Wall Street,” and “deregulation.” The Republicans then issued their first rebuttal last month, their “primer.” The primer, following the lead of the censorship effort, ignored the contributions that the shadow banking system, Wall Street, and deregulation made to the crisis. The combination of the demand that the report be censored and the primer’s crude apologia critical role that the unmentionable Wall Street, particularly its back alleys (the unmentionable “shadow banking system”), and the unmentionable deregulators played in causing the crisis was derided by neutrals. The failure of their preemptive primer has now led the Republican commissioners to release two additional rebuttals to the Commission report. Again, they issued their rebuttals before the Commission issued its report in an attempt to discredit it..."


at http://www.ritholtz.com/blog/2011/01/how-can-the-architects-of-the-crisis-investigate-it/

Davos: Two Worlds, Ready Or Not

"...Self-anointed “fiscal conservatives” claim the budget issues we face are all about discretionary nonmilitary spending. This is nonsense. The U.S. faces an incipient fiscal crisis (a) in the shorter term, because of what the big banks did and what they are likely to do in the future, and (b) over the next few decades, if we fail to control rising health care costs (both in general and as funded by government budgets).

The gap between the CEOs’ world and the real world should be bridged by the official sector. But where are the politicians and government officials who can explain what we need and why? Who can confront the CEOs in the highest profile public forums, and push them on the social responsibility broadly defined?

The biggest disappointment at Davos was not the attitude of the corporate sector; these people are just doing their jobs (as they see it). To the extent the U.S. or eurozone official sector showed up at all, it continued to demonstrate the deepest levels of intellectual capture. The reasoning seems to be: As long as we do what the big banks and big firms want, everything will turn out all right. There was zero high-profile public debate at Davos this week on anything related to this way of seeing the world.

Corporate Davos was borderline exuberant. Even if a deeper crisis looms, does the global business elite really care?..."

at http://baselinescenario.com/2011/01/29/davos-two-worlds-ready-or-not/

Tracking The Gold "Conspiracy" - GATA's Must Read Presentation To The Cheviot Asset Management Sound Money Conference

"In September 2009 Jim Rickards, director of market intelligence for the Omnis consulting firm in Virginia, was interviewed about the currency markets on the cable television network CNBC. Rickards remarked: "When you own gold you're fighting every central bank in the world."

That's because gold is a currency that competes with government currencies and has a powerful influence on interest rates and the value of government bonds. This was documented in an academic study published in 1988 in the Journal of Political Economy by Lawrence Summers, then professor of economics at Harvard, future U.S. treasury secretary, and Robert Barsky, professor of economics at the University of Michigan -- a study titled "Gibson's Paradox and the Gold Standard"

http://www.gata.org/files/gibson.pdf

This close correlation among gold, interest rates, and government bond values is why central banks long have tried to control -- usually suppress -- the price of gold. Gold is the ticket out of the central banking system, the escape from coercive central bank and government power.

As an independent currency, a currency to which investors can resort when they are dissatisfied with government currencies, gold carries the enormous power to discipline governments, to call them to account for their inflation of the money supply and to warn the world against it. Because gold is the vehicle of escape from the central bank system, the manipulation of the gold market is the manipulation that makes possible all other market manipulation by government.

Of course what Jim Rickards said about gold was no surprise to my organization, the Gold Anti-Trust Action Committee. To the contrary, what Rickards said has been our premise for most of our 12 years, and we have documented it extensively. But while the gold price suppression scheme is a hard fact of history, it is seldom mentioned in polite company in the financial world. So it is a thrill for me that everyone here today is being so polite.

How have central banks tried to suppress the price of gold?

The gold price suppression scheme was undertaken openly by governments for a long time prior to 1971.

That's what the gold standard was about -- governments fixing the price of gold to a precise value in their currencies, a price at which governments would exchange their currencies for gold, currencies backed by gold.

Though the gold standard was abandoned during World War I, restored briefly in the 1920s, and then abandoned again during the Great Depression, that was not the end of government efforts to control the gold price. Throughout the 1960s the United States, Great Britain, and some of their allies attempted to hold the price at $35 per ounce in a public arrangement of the dishoarding of U.S. gold reserves. This arrangement was known as the London Gold Pool.

As monetary inflation rose sharply, the London Gold Pool was overwhelmed by gold demand and was shut down abruptly in April 1968. Three years later, in 1971, the United States repudiated the remaining convertibility of the dollar into gold -- convertibility for government treasuries that wanted to exchange dollars for gold. At that moment currencies began to float against each other and against gold -- or so the world was told.

In fact since 1971 the gold price suppression scheme has been undertaken largely surreptitiously, seldom acknowledged officially. But sometimes it has been acknowledged officially, and with a little detective work, still more about the price suppression can be discovered..."

at http://www.zerohedge.com/article/tracking-gold-conspiracy-gatas-must-read-presentation-cheviot-asset-management-sound-money-c?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

The Riots In Egypt And The Price Of Oil

"As if the world economy did not have enough problems already, now the riots in Egypt threaten to send the price of oil soaring into the stratosphere. On Friday, the price of U.S. crude soared 4 percent. A 4 percent rise in a single day is pretty staggering. The price of Brent crude in London closed just under the magic $100 a barrel mark at $99.42. The incredibly violent riots in Egypt have financial markets all over the globe on edge right now. Any time there is violence or war in the Middle East it has a dramatic impact on financial markets, but this time things seem even more serious than usual. Many believe that we could see an entirely new Egyptian government emerge out of this crisis, and the uncertainty that would bring would make investors all around the globe nervous. Financial markets like predictability, peace and security. If Egyptian President Hosni Mubarak's 30 year reign is brought to an end, it will severely shake up the entire region, and that will not be good news for the global economy..."

at http://theeconomiccollapseblog.com/archives/the-riots-in-egypt-and-the-price-of-oil

EXCLUSIVE INTERVIEW WITH NIALL FERGUSON: Yes, The US Is Screwed

"...Does the United States still have an economic problem? Yes. What is that problem? The problem is that having thrown massive fiscal and monetary stimulus at the economy it is still growing too slowly to bring down the unemployment rate. um what is the answer to that problem? some people say more fiscal stimulus and that indeed is what is being done and more monetary stimulus, and that indeed is what is being done in the form of QE 2. That may well have some short term impact but there is a risk that the fiscal position of the United States tips over from being stimulative to being unsustainable. And the big worry is that at some point this year, could be next year, the level of borrowing the United States engages in pushes inflation expectations or even default expectations to the point that nominal yields really start to spike and then The Fed is in a jam b/c it would then have to do QE3 on a massive scale and quite quickly we could be facing a really major dislocation either in the bond market or currency markets that is the problem. Is the U.S. screwed? No not the way Japan is screwed or even the way the Euro zone is screwed but the U.S. is certainly not out of trouble..."

at http://www.businessinsider.com/henry-blodget-interview-niall-ferguson-in-davos-2011-1?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterstock+%28ClusterStock%29#ixzz1CMUhtJ2f

Has Joe Cassano Committed Perjury: AIG Took Subordinated Pieces Of CDOs It Insured

"For more than three years, AIG’s Joe Cassano has insisted that his firm was careful only to assume the credit risk on the “super-senior” tranches of a CDO, only the most senior of tranches rated triple-A. A document released by the FCIC shows that AIG also among the largest investors in some of the most deeply subordinated tranches of the CDOs that it insured. According to a schedule of trades prepared by Goldman Sachs detailing trades on its notorious ABACUS synthetic CDOs, AIG bought subordinate tranches of ABACUS 2005-3, ABACUS 2005-CB1, and ABACUS 2005-2. The other big “investor” in the subordinated tranches was Goldman’s own CDO desk. This new information demonstrates, once again, that the CDO market was more of an orchestrated illusion than it was a reality, and that almost everything is kept secret in order to protect the guilty..."

at http://www.zerohedge.com/article/has-joe-cassano-commited-perjury-aig-took-subordinated-pieces-cdos-it-insured?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

Substantial Future Home Price Declines Predicted By Goldman Sachs And Peak Theories

"...Second, the recent decline in the volume of mortgage applications points to a decline in home sales in the near term. Given the one-month lag between existing home sales and mortgage applications, the model suggests that existing home sales will slow to a growth rate of about 2% in January and then decline by around 4% in February. New and pending home sales are predicted to decline by around 4% and 5% in January, respectively.

Taken together, the predictions from the recent decline in mortgage applications are consistent with our view that the housing market will remain weak in 2011. In particular, we expect only a moderate pickup in housing starts and home sales throughout 2011..."

at http://www.zerohedge.com/article/substantial-future-home-price-declines-predicted-goldman-sachs-and-peak-theories?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

Warning Signs

"The truth is that we have a real mess on our hands. The following are 20 economic warning signs that should be of great concern to all of us....

#1 Over the past seven days, the price of wheat has risen by 11 percent as concerns about food shortages continue to grow around the world.

#2 The price of corn is up a staggering 94 percent since last June.

#3 The United Nations is projecting that the global price of food will increase by 30 percent in 2011.

#4 According to the U.S. Department of Labor, the number of Americans applying for unemployment benefits rose last week to the highest level since last October.

#5 According to the Pew Charitable Trusts, of the 14 million Americans "officially" unemployed in December, 30% of them had been unemployed for one year or longer.

#6 Beginning in the month of March, the U.S. Postal Service will begin shutting down up to 2,000 post offices across the United States..."

#7 In an absolutely stunning move, Standard & Poor's has downgraded Japanese government debt from AA to AA-.

#8 72 percent of the major metropolitan areas in the United States had more foreclosures in 2010 than they did in 2009.

at http://theeconomiccollapseblog.com/archives/warning-signs

New Claims for Unemployment Insurance Increase Sharply and Unexpectedly

"The data on new claims for unemployment insurance brought a surprise. Claims are up sharply over last week. The Department of Labor reports.

In the week ending Jan. 22, the advance figure for seasonally adjusted initial claims was 454,000, an increase of 51,000 from the previous week’s revised figure of 403,000. The 4-week moving average was 428,750, an increase of 15,750 from the previous week’s revised average of 413,000...

...The other piece of news today was the fall in new orders for durable goods. Orders fell by 2.5% last month, an unexpected decline, and this is the fourth decline in the last five months, This is yet another signal that the economy is not yet on firm footing..."
at http://moneywatch.bnet.com/economic-news/blog/maximum-utility/new-claims-for-unemployment-insurance-increase-sharply-and-unexpectedly/1122/

Jim Rogers Extremely Bullish on Commodities

"Legendary investor Jim Rogers was Larry Kudlow’s guest on tonight’s The Kudlow Report. Jim Rogers started with predicting a $150 per barrel oil.

“It’s not going to $150 this week or this month, but the surprise is going to be how high the price of oil stays,” said Rogers. “We are running out of known reserves of oil. These are simple facts. We have not had a major elephant oil field discovery over 40 years,” he added. He doesn’t agree with T. Boone Pickens that natural gas will replace oil anytime soon.

Jim Rogers also talked about inflation. He said everywhere in the world, including Europe and Australia, there’s inflation.

“The Americans lie about it and the British lie about it,” said Rogers. He added that inflation is supply driven and he gave the decline in oil reserves as an example.

Rogers thinks that the recent decline in gold and copper is nothing more than corrections in a major bull market, and it still has years to go. Rogers argued that massive money printing will make investors put some of their money in the stock market, but that more money will go into commodities. Whenever paper money is debased, people will want to own real assets. Nevertheless, Rogers isn’t terribly bullish about stock markets anywhere in the world..."

at http://www.insidermonkey.com/blog/2011/01/26/jim-rogers-extremely-bullish-on-commodities/

U.S. Budget Deficit to Pass $1.5 Trillion This Year

""Grim" doesn't seem to be a terrifying enough word to describe the budget outlook that the CBO released Wednesday.  Oh, sure, we sort of knew this was coming--tax cuts are expensive if you don't find spending cuts to match.  And yet the numbers still hit one like a punch to the gut.  From a guy wearing brass knuckles.  Wrapped around a roll of  quarters.  Shiny new quarters that you can't really afford to use for punching people, because you've got a $1.5 trillion budget deficit this year..."

at http://www.theatlantic.com/business/archive/2011/01/us-budget-deficit-to-pass-15-trillion-this-year/70317/

Global food prices and inflation targeting

"Rising food prices once again pose central banks a tricky question. How far should they ignore food price inflation? This column suggests that food tends to have stronger predictive power on global inflation cycles than oil. The problem is more severe in emerging markets where consumption basket weights for food are two or three times larger than in rich nations. Central banks should pay close attention..."


at http://www.voxeu.org/index.php?q=node/6054