Wednesday, November 17, 2010

News Links of Interest

Fed Sees 4.25 Million More Foreclosures Through 2012

The Federal Reserve expects about 4.25 million more foreclosure filings through 2012, and problems with the home-seizure process may threaten the U.S. housing and economic recovery, Fed Governor Elizabeth Duke said in prepared testimony.

“In the end, an overhang of homes awaiting foreclosure is unhealthy for the housing market and can delay its recovery, as well as that of the broader economy,” she said in remarks that will be presented to a congressional subcommittee tomorrow.

The Fed estimates that the U.S. will have about 2.25 million residential foreclosure filings this year, and again next year, followed by 2 million more in 2012, she added in the statement to the Subcommittee on Housing and Community Opportunity.

“Financial institutions face a number of risks if inadequate controls result in faulty foreclosure documents or failure to follow legal procedures,” Duke said. “We are gathering information to ensure that the institutions we supervise have adequately assessed these risks and have accounted for them properly

US launches criminal probes into bank officials

The federal government has opened criminal investigations into approximately 50 executives and directors of U.S. banks that have collapsed during the financial crisis.

Deputy Inspector General Fred Gibson said Wednesday the inspector general's office at the Federal Deposit Insurance Corp. has been probing the role of the executives in bank failures around the country.

The criminal investigations are separate from civil lawsuits approved by the FDIC's board against some 80 bank executives, employees and directors. The FDIC is seeking to recoup about $2 billion in bank losses that the regulator says were the result of negligence or misconduct by executives or directors.

The FDIC has shut down or seized 311 banks since January 2008 at a cost of around $77 billion. The criminal probes were reported earlier by The Wall Street Journal.

Bank executives could face prison terms if convicted of criminal charges. But the burden of proof is higher than in civil cases and usually involves showing deliberate intent to commit fraud or other violations.

California Will Default On Its Debt, Says Chris Whalen

Municipal bonds have plummeted in recent days, as investors have suddenly focused on huge state and city budget deficits that there's no easy way to fix.

Nowhere has this collapse been more visible than California, which faces a massive $25 billion shortfall and red ink for as far as the eye can see.

After years in which every looming financial crisis has been met with a government bailout, you might think that the same solution awaits California, as well as all the other states that have huge obligations that they can't afford to meet.

But this time that may not happen, says Chris Whalen, a financial industry analyst and Managing Director of Institutional Risk Analytics.

In fact, Whalen thinks that California will default on its debt--hammering all the pension funds and other investors who have loaded up on apparently safe state bonds.

The state won't immediately default, Whalen says. It will start by issuing the same sort of IOUs that it issued to by itself time during its budget crisis last year. But, eventually, the debts will have to be restructured, and this will result in those who own California's bonds receiving less than 100 cents on the dollar.

EU Officials Fly to Dublin as Talk Shifts to Bailout

European Union and International Monetary Fund officials jet into Dublin today as the Irish government edges closer to accepting a bailout for its national finances and the banking system.

“We are in the end game,” said James Nixon, co-chief European economist at Societe Generale SA in London. “A bailout is desperately needed, not just for the sovereign but for the banking sector.”

Ireland’s banking woes are “spilling over to the sovereign,” Rehn told reporters on Nov. 16. The decision to send EU officials to Ireland “should be considered as an intensification of preparations for a request from Ireland for an EU-IMF program.”

ECB President Jean-Claude Trichet may make his first public comments on a potential Irish bailout when he speaks on a panel at 2:30 p.m. in Frankfurt today.


At 11/19/2010 11:39 PM, Anonymous Anonymous said...


I couldn't find your contact info on your website, but I wanted to alert you to some good funnies. Here they are:

John K.

At 11/22/2010 12:58 AM, Anonymous Anonymous said...

I'm of two minds about the foreclosures mess...

One one hand, these numbers represent families who are already struggling with unemployment shortcomings, rises in health care costs, a cold winter on the flip of the next calendar page... Makes me sad (and in many ways, I know 1st hand...)

Although on the other hand, threatening a "recovery" may be a good thing. I've once read, "all experience hath shewn that mankind is more disposed to suffer..." and with that in mind, this could actually be a *good* thing.

It's that wallowing in the mire of a system that, like a home in detriot right now, has been corroded from within and really, honestly... disrespected from without. A shadowy hulk flickering in the lights of Devil's Night.

Who really wants to save the house anyways? The bank who is pretending it's not stuck with the hot potato?

While I'm no propenent of suffering for suffering's sake, it might do a body well by shaking it to the core nonetheless. Just do it, no?

btw, crash jp morgan, buy silver!

At 11/22/2010 4:21 AM, Blogger Randy said...

Thanks John K - I used a couple of the funnies from the site you directed me to.

Anon 12:58, I agree - dealing with difficulty is what made our WWII generation the "Greatest Generation".

As I wrote in American Wakeup Call (back in Jan 2006 BTW), we've become too soft:


So, what will it take change all this? How will the U.S. ever be competitive in the world again? Answer: change will be made through a Substantial devaluation of the U.S. Dollar… It is the only way!

Both the US government and consumer are in debt up to their eyeballs, foreign central banks are becoming concerned, oil markets are shaky, the housing market is cooling and it is predicted that US growth will slow in 2006. In this light, I foresee the dollar declining in value as (1) foreign central banks seek to diversify their enormous holdings, (2) helicopter Ben turns up the presses full-blast and (3) the U.S. economy stumbles into a recession. In the end (probably 5-10 years from now), dollar hegemony will be a thing of the past.

Ultimately, this adjustment of the dollar will be painful for the world, and the average American’s standard of living will suffer significantly (much lower). Many Americans will become unemployed early on, but those who live through this era will eventually be put back to work and things will begin to get better… However, the trivial issues we concern ourselves with today (Politics, American Idol, Survivor, keeping up with the Jones’, etc) will no longer be the forefront of our daily lives, as we struggle to keep food on the table and a roof over our heads. The ACLU-type concerns of today will become irrelevant and family values/religion will become the center-stage of the new America.

Another bright side to the issue: This dollar devaluation will allow the United States to eliminate much of its foreign debt and American citizens will demand that our government leaders LEAD (rather than today’s sickening ego power plays, rampant corruption and partisan politics). Welfare will probably become a thing of the past, and people will have to work to earn an honest days pay. Companies and the Government will again start to invest in infrastructure, American expectations will begin to rise, factories will once again start to billow smoke, and ultimately, our country will be competitive in the world once again…

I personally believe it will be a long, very difficult ride ahead, but in the end, it will probably make us a better, stronger nation. We, as a people, have become way too self-centered and soft, trivial issues have become important, important issues are ignored, people are completely ignorant to the world, values are gone, family means little, government is completely out of touch and ineffective, everyone wants something for nothing, etc. This wake-up call will probably do us some good.


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