Free Republic

<p>Most of you have probably heard by now about the family that was foreclosed on in California, their home was resold, refurbished, and they then effectively "stole it back" with their attorney and a locksmith breaking in and re-taking possession.</p>

I've taken a hell of a lot of shots at policy over the last three years, and have on occasion gone after specific policy mandates and recommendations. This will be an attempt to back the lens out and take a wider view. That is, we're going to look at first principles, not the fine details. If we want to fix America's economy, we have to address the distortions that have been exploited by those in American business, and especially those in foreign businesses. This means, broadly, two things: •Economic (wage) arbitrage •Environmental arbitrage

Now more than a month beyond the "flash crash", and having seen the "gun the market" games of the HFT boys for more than two years, it is time to call "full stop" to this arms race. The markets are supposed to be a place where capital is formed and price discovered. Neither is served, and much damage is done, by sending false signals of liquidity in the marketplace, as HFT proved during the "flash crash." Second, and at least equally-important, the HFT "algos" are severely-distorting the price discovery mechanism. Let's take a hypothetical security, "FRO" (Frobozz Corporation) and snapshot...

This ought to get interesting.... Referring to the G20 summit in Canada next weekend, Merkel said in a videotaped message that "we are going to discuss when to quit the phase of short-term measures and go on to lasting budget consolidation." Such a move was "urgently necessary, in the view of the Europeans and particularly of Germany," she said. Obama urged the world's leading economies Friday to avoid scaling back government spending too quickly or risk derailing the global recovery. Heh heh heh.... Oh Mr. President? Yes, you Mr. Obama. Chancellor Merkel appears to have figured out the meaning of...

The dichotomy of the following two pieces is rather sobering, when one considers the implications. First, from George Soros: “The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.” Soros, 79, said the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak. That, of course, is because the original medicine was incorrect....

"I told you so" Total nonfarm payroll employment grew by 431,000 in May, reflecting the hiring of 411,000 temporary employees to work on Census 2010, the U.S. Bureau of Labor Statistics reported today. Private-sector employment changed little (+41,000). Non-Farm Payrolls So much for the "strong" (+200,000) private sector job growth that everyone was expecting. The futures reaction was instantaneous and violent - southbound. There has never been a so-called "V-shaped" recovery where we only managed to add 40,000 jobs. Oh, and of that "+40,000" about five times as many were fictional jobs created by the "birth-death" model in the establishment...

Be warned: Language contained in this Ticker may not be suitable for polite company. Tell the kids to go watch cartoons or better yet, toss a football out in the yard. If you haven't read the original, penned in 2007, it's here. Here's my 2010 update. Many of you think that the rally off the lows last March is some indication of a "new bull market" or that "they saved us." Still more look around and see people spending tax refunds and think "oh wow, look at all the pretty iDouches being sold today." Let me post - once again...

Does anyone remember me ranting at the time of the TARP's passage about an obscure little sentence that allowed Bernanke to set the reserve ratio on the banks to zero? Well, Bernanke's Congressional testimony yesterday garnered a footnote on the issue, specifically: Given the very high level of reserve balances currently in the banking system, the Federal Reserve has ample time to consider the best long-run framework for policy implementation. The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system. Right....

Now this is interesting... March 5 (Bloomberg) -- Fannie Mae and Freddie Mac bondholders shouldn’t assume the government will make them whole on their investments as Congress retools the companies, House Financial Services Committee Chairman Barney Frank said. Heh, who's the biggest individual bondholder? Mr. Bernanke, the bond market is on line #1! Frank continues: A “whole range” of options is being considered for investors in the two government-seized companies, “from paying nothing to a haircut to whatever,” said Frank, whose committee oversees Fannie Mae and Freddie Mac. Nothing? You mean zero, zilch, bupkis? That would be rich. After Bernanke...

The mortgage firms are looking at every loan more than 90 days past due and “asking us basically to give them all the documentation to show that it was properly underwritten,” JPMorgan’s Scharf said. “We then go through a process with them that takes a period of time, and literally it’s every loan, loan-by-loan, and have the discussion on whether or not we actually should buy the loan back.” That's exactly what I said would happen more than two years ago. EVERY LOAN. If there was appraisal fraud OR If there was income fraud OR If there was DTI fraud...

I'm going to write today about a very somber subject. It will be, as it usually is here in one form or another, about math. First, some background. If you believe that we have "escaped" from the mess that gripped this nation in 2008 and 2009, or that said mess "suddenly appeared" and "nobody saw it coming", stop reading now and have your Thorazine dosage checked. It's way off. Assuming you accept the truth - that this mess was 20 year or more in the making, that it involved creating credit (that is, debt) which the debtor could never pay,...