Mortgage Fraud Epidemic: How the FBI Blew It and Why There's No 'Perp Walks'

Mortgage Fraud Epidemic: How the FBI Blew It and Why There's No 'Perp Walks'

US details toxic asset programme

US details toxic asset programme

(Source BBC)
Mr Geithner said the plan would be better for taxpayers
The US is set to announce details of a $500bn (£343bn) plan to encourage investors to buy up toxic assets.
The plan will offer subsidies in the form of low-interest loans to private investors to encourage them to buy troubled mortgages and other loans.
Writing in the Wall Street Journal, US Treasury Secretary Timothy Geithner said the measures were needed to help the financial system recover.
The plan is due to be formally launched later on Monday.
The "Public-Private Investment Programme" will purchase the troubled mortgages and securities that have been at the root of the credit crisis from banks.

Business / Economy
U.S. Rounding Up Investors to Buy Bad Assets (NY Times Permalink)
By ANDREW ROSS SORKIN, ERIC DASH and RACHEL L. SWARNS
Published: March 23, 2009
A day before unveiling the government’s plan to buy troubled assets, the Obama administration worked to persuade private investors to participate.

Geithner Banks on Private Cash (Source WSJ)
Treasury Secretary Says Investors Needed to Help U.S. Rid Balance Sheets of Bad Assets

WASHINGTON -- Treasury Secretary Timothy Geithner said the only way to remove troubled assets clogging banks' balance sheets -- which lie at the heart of the financial crisis -- is to work with the private sector, even at a time when Wall Street moneymakers are being vilified by the public and politicians.
In an interview with The Wall Street Journal Sunday, Mr. Geithner said the government cannot fix the financial crisis alone. "Our judgment is that the best way to get through this is if we can work with the markets," he said. "We don't want the government to assume all the risk. We want the private sector to work with us."

My Plan for Bad Bank Assets (Source Financial Times)
The private sector will set prices. Taxpayers will share in any upside.

The American economy and much of the world now face extraordinary challenges, and confronting these challenges will continue to require extraordinary actions.
No crisis like this has a simple or single cause, but as a nation we borrowed too much and let our financial system take on irresponsible levels of risk. Those decisions have caused enormous suffering, and much of the damage has fallen on ordinary Americans and small-business owners who were careful and responsible. This is fundamentally unfair, and Americans are justifiably angry and frustrated.
http://online.wsj.com/article/SB123776536222709061.html

Mr Geithner is due to give a briefing on the plan at 8.45 a.m. (1245 GMT) Monday, March 23

Franse werkloosheid onverwacht sterk gestegen

Franse werkloosheid onverwacht sterk gestegen


(Source DFT, De Telegraaf) PARIJS (AFN) - De werkloosheid in Frankrijk is in het laatste kwartaal van vorig jaar onverwacht sterk gestegen tot 8,2 procent van de beroepsbevolking. Dat maakte het Franse bureau voor de statistiek donderdag bekend.
Een kwartaal eerder zat 7,6 procent van de Franse beroepsbevolking zonder baan. Analisten hielden voor het vierde kwartaal rekening met een stijging tot 7,7 procent. Het aantal werklozen in Frankrijk nam, afgezien van de overzeese departementen, in de laatste drie maanden van het jaar met 187.000 toe tot bijna 2,2 miljoen.
Werkgevers verwachten dat de werkloosheid de komende maanden door de economische recessie steeds sneller zal oplopen. Vorige week maakte het Franse ministerie van Werkgelegenheid al bekend dat er alleen in januari van dit jaar alweer 90.000 nieuwe werklozen bij zijn gekomen.

French January jobless figures at historic high
Wednesday 25 February 2009
The number of unemployed people in France jumped 90,200 in January (+4.3%), according to figures released by the economic ministry.

Inside the Bear Stearns boiler room

Inside the Bear Stearns boiler room
Exclusive book excerpt: Bestselling author William Cohan uncovers the inner workings of the misadventure that brought down Bear Stearns and foreshadowed the financial crisis to come.
By William D. Cohan Last Updated: March 3, 2009: 9:45 AM ET

NEW YORK (Fortune) -- Years from now, when academics search for causes of the stock market crash of 2008, they will focus on the pivotal role of mortgage-backed securities. These exotic financial instruments allowed a downturn in U.S. home prices to morph into a contagion that brought down Bear Stearns a year ago this month - and more recently have brought the global banking system to its knees.
What scholars should not miss is the role that the human element - call it greed or ignorance - played in this tragedy. In an exclusive excerpt from William Cohan's new book, "House of Cards: A Tale of Hubris and Wretched Excess on Wall Street," to be published March 10 by Doubleday, the bestselling author sheds light on the bankers who thought they had mastered what Warren Buffett has called "financial weapons of mass destruction."


By looking back to the roots of the misadventure in which Bear Stearns traders Ralph Cioffi and Matthew Tannin lost roughly $1.6 billion while allegedly misleading investors, Cohan illustrates how the missteps of the few can have consequences for the many.

Banks Face Eastern Europe Downgrades, Moody’s Says

Banks Face Eastern Europe Downgrades, Moody’s Says

Feb. 17 (Bloomberg) -- Moody’s Investors Service said some of Europe’s largest banks may be downgraded because of loans to eastern Europe, sending UniCredit SpA to its lowest in 12 years.
Moody’s sees “continuous downward rating pressure” in the region as a result of worsening asset quality and western banks’ reliance on short-term funding, the ratings company said in a report published today. UniCredit earned almost half its pretax profit from eastern Europe, Raiffeisen International Bank-Holding AG almost 80 percent in 2007 and Erste Group Bank AG of Austria more than 60 percent, Moody’s said.
The MSCI East Europe Financials Index dropped 9.9 percent to the lowest in almost six years after the Moody’s statement today. The International Monetary Fund has offered aid worth about $52 billion to Latvia, Hungary, Serbia and Ukraine. It may extend bailouts to Bulgaria, Romania, Lithuania and Estonia, according to Capital Economics research.
“The most risky parts of the western European banks’ businesses are in eastern Europe and when you decide to cut risks, you cut back on the most risky assets first,” Lars Christensen, an analyst at Danske Bank A/S in Copenhagen, said by telephone today. “This could add further risk in the region as the economies there may face large current account deficits if funding from western European banks is withdrawn.” Read more...

On the first trading day of 2009 Asian Markets kick off higher

The first trading day of the new year started with the Asian Markets opening higher and closing with healthy gains. Despite signs of further deterioration for local economies in Asia optismism was the prevailing factor.
Europe opened with moderate gains between 1% and 2%.
More clarity about the current situation and the reaction of the markets is expected next week when normal trading is resumed and in about two weeks time when we get the first earnings reports. It is however clear the credit crisis is affecting consumers, cities, states, countries, governments and industries on a global scale, from high street to main street.
US Markets are expected to open today on a higher note as well.
North American motorists can expect higher gasoline and diesel taxes in 2009, to fund the high way infrastructure.
Motorists are driving less and buying less gasoline, which means fuel taxes aren't raising enough money to keep pace with the cost of road, bridge and transit programs.

Asia stocks kick off 2009 up
(01:33) Reuters VideoReport
Jan 2 - Asian shares begin 2009 trying to recover from one of the worst years ever.
Australian stocks declined slightly on Friday, erasing earlier gains in a light-volume start to the new year, as mining heavyweight BHP Billiton lost ground.

The first half of 2009 will be the time of more global financial trouble, deleveraging, refinancing and the second wave of bailout requests.

The first half of 2009 will be the time of more global financial trouble, deleveraging, refinancing and more bailout requests.

Let's start at the top. Some of the world's saviest people have lost an awful lot of money in the collapsing stock market and the speedy downturn of the world economy. Cars, real estate, banks, hedge funds, the retail sector, newspapers and magazines will not be among the best investments for 2009.

Kerkorian, best known for his ties to the ailing U.S. car industry, this week said he had sold off his remaining shares in Ford Motor Co (F.N), completing a retreat that cost him hundreds of millions of dollars.
Forbes magazine, which tracks the world's richest people, puts Kerkorian's worth at $11.2 billion from investments in casinos and other businesses. His losses made him one of the poorest performers on this year's list, it said.

Iranian-born Tchenguiz draws most attention through newspapers citing his jet-set lifestyle, including an expensive house in an upmarket London district and a sumptuous Louis XIV-style party he is reported to have thrown for his 40th birthday.
His Globe Tenanted Pub Co Ltd, which runs 424 leased pubs across the United Kingdom, said this week it would appoint an external adviser, after narrowly breaching its debt covenants -- early warning signs of financial trouble.
And business publication The Estates Gazette in October said Tchenguiz had dropped off its list of the 500 wealthiest people in UK property after losing 1 billion pounds ($1.45 billion) when Icelandic bank Kaupthing collapsed.

Germany's Merckle, ranked by Forbes among the world's 100 richest people, was caught out by wrong-way bets on shares in Volkswagen AG (VOWG.DE), incurring massive losses.
His investment vehicle VEM Vermoegensverwaltung said on Wednesday it would sign an agreement to obtain a bridge loan from banks as it worked on refinancing the group.

German tycoon Adolf Merckle commits suicide
(Yahoo News, Tuesday January 6)

General Motors (GM) Indicator

(From Investopedia) The General Motors (GM) Indicator

What does it Mean? An indicator based on the theory that the performance of U.S. automaker General Motors (GM) is a pre-cursor to the performance of the U.S. economy and stock market. The GM Indicator relies on the assumption that when people are confident and making money one of the first things they would do is buy a new car.
Investopedia Says... There is still some talk behind this strategy as there is a correlation between auto sales and the overall economic standing of individuals. But this theory had more weight in the 1970s-80s when GM was by far the largest carmaker in North America. Since then GM's importance to the U.S. economy has declined due to greater competition.

During the financial crisis of 2007/2008, GM saw sales decline due to a decrease in demand for their "less" fuel efficient vehicles, and a decrease in available funds for financing due to credit restrictions. Their stock price dropped over 70% compared with a general market decline of around 30%. Although a correlation exists, the overall market and economy relies less on the performance of one automaker than it did in the 1970s.
During the financial crisis of 2007/2008, GM saw sales decline due to a decrease in demand for their "less" fuel efficient vehicles, and a decrease in available funds for financing due to credit restrictions. Their stock price dropped over 70% compared with a general market decline of around 30%. Although a correlation exists, the overall market and economy relies less on the performance of one automaker than it did in the 1970s.

The Investopedia Website

A VAT European style Tax for the U.S.?

How to pay for the deficits? A new Tax system? VAT (Value Added Tax)?
It will be a very complex and long-term operation. It could be a way to satisfy the Government's insatiable appetite for money, a boost and a stabilizing factor for the economy. The Jury is still out.
(Living in a country , with a government having an obese appetite for money -the Netherlands, where there has been VAT for about 40 years now, VAT is not so bad, although it should be less, the highest tariff should be 10% or 12% instead of 19% - it can also act as a break on economic activities. Governments should also learn not to waste money or simply use VAT to fill in holes in the budget.)

Like it or not, there's only one way we're going to be able to pay for our ballooning deficit: a value-added tax. (Full article on CNN Money)

NEW YORK (Fortune) -- It's highly possible, if not inevitable, that Americans will soon live under a radically different tax system - one that the pundits and politicians aren't talking about.
It's called a value-added tax, or VAT, and it's been used for decades to pay the bills and sustain the immense growth of governments around the world, from France to Mexico to Australia. Created in 1954 by a French (Maurice Lauré) economist, the VAT is the most potent, efficient machine for revenue generation yet invented.
The genius of the VAT is that, while the consumer pays it, the actual cash is mostly collected from producers before it reaches the retailer. Since the VAT is essentially a hidden charge embedded in the price of goods and services, raising the VAT doesn't arouse nearly the uproar caused by increasing income taxes.
The ease with which a VAT can be increased points to one of its big drawbacks: Governments see it as an easy way to pay for increased spending, which is a potential drag on economic growth.

Foster's Russia Tower falls victim to credit crisis

Foster's Russia Tower falls victim to credit crisis

The British architect Norman Foster became the latest high-profile victim of the global economic crisis yesterday when developers in Russia said they were scrapping plans to build his design for Europe's tallest skyscraper.
Moscow's 600-metre high Russia Tower, which was supposed to dwarf Canary Wharf in London, would no longer be constructed, real estate magnate Shalva Chigirinsky said. His firm had run out of money, he admitted.
"Say thanks to [former US federal reserve chairman] Alan Greenspan and George Bush," Chigirinsky told Reuters last night, adding that since the financial crisis in the US it was impossible to get any credit.

Foster and Partners official website

Olivier Blanchard (IMF Economist) said the crisis should last for another year, but normal growth would return only in 2011.

Olivier Blanchard (IMF Economist) said the crisis should last for another year, but normal growth would return only in 2011.
ZURICH (Reuters) - The financial crisis that has engulfed many top banks is spiraling into a broader economic crisis that has yet to peak, International Monetary Fund's top economist Olivier Blanchard told a Swiss newspaper on Saturday.
Blanchard said the crisis would continue for another year and called on governments to promote fiscal expansion and on central banks to cut rates toward zero.
"The worst is yet to come," he was quoted as saying in Finanz und Wirtschaft as he noted how the banking sector's woes had started to spill over into the real economy by hitting the carmaking industry.
"This is only the beginning," he added. "The risk exists that the data will get worse and worse, which would then lead to more pessimistic expectations and accelerate a fall in demand."
"It will take a long time before we go back to normal conditions."


Obama economic plan aims for 2.5M new jobs by 2011
Saturday November 22, 12:36 pm ET
By Will Lester, Associated Press Writer
Obama economic plan focuses on job creation, public works projects, alternative energy sources
WASHINGTON (AP) -- President-elect Barack Obama promoted an economic plan Saturday he said would create 2.5 million jobs by rebuilding roads and bridges and modernizing schools while developing alternative energy sources and more efficient cars.
"These aren't just steps to pull ourselves out of this immediate crisis. These are the long-term investments in our economic future that have been ignored for far too long," Obama said in the weekly Democratic radio address.
The goal is to get the plan quickly through Congress, with help from both parties, after Obama takes office Jan. 20. The plan, which envisions those new jobs by January 2011, is "big enough to meet the challenges we face," he said.

Report: Soros says more needed for US bailout
BERLIN (AP) - American investor George Soros said he would like to see Washington put $300 to $600 billion more into the $700 billion U.S. economic bailout package, the German magazine Der Spiegel reported in an advance of Monday's edition.
The weekly quoted the billionaire as saying that the United States needs a bigger economic program than the existing Troubled Asset Relief Program package to accommodate American cities and states with the money they need to get out of the financial turbulence, and that the country needs an infrastructure investment program.
Soros also criticized U.S. Treasury Secretary Henry Paulson for not seeing the economic crisis earlier.
Paulson "reacted to the problem once it was already out in the open. He didn't have the ability to see the problem coming," Soros was quoted as telling Der Spiegel.


Balkenende presenteert plan voor economie
DEN HAAG (ANP) - Het kabinet komt met een pakket van maatregelen om de economie te ondersteunen. Dat heeft premier Jan Peter Balkenende vrijdag gezegd. Het gaat onder andere om een tijdelijke WW-uitkering voor werknemers die tijdens de economische tegenwind overbodig zijn.
Naast deze zogeheten werktijdverkorting kondigde Balkenende verder aan dat de overheid bedrijven gaat ondersteunen door rekeningen voor verleende diensten eerder over te maken aan ondernemers. Bovendien mogen zij investeringen versneld afschrijven. Bedrijven kunnen op die manier gemakkelijker nieuwe investeringen doen.

Paulson wil TARP breder maken

De treuzelaar Henry Paulson wil het $ 700 miljard TARP Plan (Troubled Assets Relief Plan) uitbreiden naar het consumenten krediet, autoleningen, studie leningen en de credit card sector. Oorsptonkelijk was TARP alleen bedoeld om de hypotheek (sub-prime mortgage) markt te redden, maar -het kwartje is blijkbaar gevallen- en men ziet nu in dat de hele consumentenmarkt in gevaar is. Nu is het wachten op op de volgende fase (al dan niet voor de overdracht aan Obama) van het bailout programma, iets van waarschijnlijk minstens nog eens $1.5 biljoen extra ($ 1.500.000.000.000,-)

De man kan in elk geval niet worden beschuldigd van een overdaad aan 'foresight', of misschien werkt dat bij hem alleen in een bull markt.
Paulson Shifts Focus of Rescue to Consumer Lending (Update2)

Wij zijn benieuwd hoe de Amerikaans begroting in 2009 rondgebreid gaat worden.

Amerikaanse beurzen 2.5 tot 3% omlaag, de retail sector heeft het te verduren, BestBuy.com onderuit. (Wed 12:30pm ET)
Zie: Retail was among traders’ main concerns. Best Buy, down 6 per cent to $22.46, sent a chill through the sector and wider market when the electronics chain warned of “rapid, seismic” reduction in consumer spending.

It's remarkable

Today(Nov 6th) stock markets worldwide tumbled. The ECB cut rates, the Bank of England cut rates by 150 basis points and still the markets plunged. According to Yahoo Finance the 'retailers (except Wall Mart) reported steep sales declines in October', the hedge funds reported results going from bad to worse, jobless benefits on 25 years high and recession fears worlwide. But of course, the market is allways right, although it takes a while before people (or computer programs) begin to realize something is wrong. We have a credit crisis, it popped up more than a year ago in the real estate market. What is the second largest financed property most people have? A car of course. After months with record prices per barrel for oil and at the pump, and financial troubles everywhere, people look for cheaper cars, especially in the U.S. where people need a car. The big auto makers have simply failed to read the market signals and come up with cheaper and better alternatives. And now they are close to a bailout, because the public can't afford their products anymore. There is a credit crisis, frugality is trump for the moment, a recession is unavoidable. And it is very remarkable it takes so long to get through!
But it's NOT the end of the world, it's a perfect time for innovators.