July 2011

The More Things Change The More They Remain the Same

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While we think something is going to be done about illegal foreclosures and robo-signing of documents, Reuters exposes it's still going on:

Reuters reviewed records of individual county clerk offices in five states -- Florida, Massachusetts, New York, and North and South Carolina -- with searchable online databases. Reuters also examined hundreds of documents from court case files, some obtained online and others provided by attorneys.

The searches found more than 1,000 mortgage assignments that for multiple reasons appear questionable: promissory notes missing required endorsements or bearing faulty ones; and "complaints" (the legal documents that launch foreclosure suits) that appear to contain multiple incorrect facts.

These are practices that the 14 banks and other loan servicers said had occurred only on a small scale and were halted more than six months ago.

Reuters doesn't go into a financial analysis, but while the settlement originally reported was $20 billion for robo-signing, the reality is the final deal isn't done. Bottom line, when fines are so weak they are about the cost of the toll token for traveling down the screwing over homeowners road, you can bet banks will continue to forge documents to foreclose. Robo-signing is illegal.

Residential New Construction June 2011

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The June 2011 Residential construction report showed Housing starts increased 14.6% from May to a level of 629,000. This is 16.7% above June 2010 and a 6 month high. New Residential Construction has a margin of error often above the monthly percentage increases, so take these monthly changes with a grain of salt. June, for example, has a error margin of 10.9 percentage points.

Running Rupert to Ground – Vox Populi, Vox Dei

How will they get rid of Rupert Murdoch and his toxic enterprises?

July 4, 2011 may turn into the people's Independence Day.  On that day, stellar journalist Nick Davies of the Guardian released his story; Missing Milly Dowler's voicemail was hacked by News of the World.  Twelve year old Milly Dowler had been kidnapped with foul play feared.  The Murdoch tabloid couldn't resist.  News of the World (the News) hired a private detective to hack Milly's voicemail.  Finding the mail box full, the News or its hired dick deleted existing messages to make room for new ones, all to fuel their ongoing coverage.  The deleted messages raised hopes by Milly's parents that she was still alive and using her voicemail. (Image)

The Davies story elicited a reaction of near universal shock, outrage, and revulsion.  Milly had already been murdered by the time the Murdoch paper began its illegal tapping.

The public revulsion resulted in immediate and fervent popular demands for justice.  Those demands were compounded by follow-up stories on other Murdoch media hacking.  As it turned out, the News also broke into the voicemails of war widows to capture their most intimate exchanges on the loss of fallen soldiers in Afghanistan and Iraq.   All in all, at least 4,000 citizens had their voicemails hacked to boost the Murdoch publication's circulation and profits.

Driven by broad public ire, Murdoch's empire began unraveling immediately.  He became a target for those he'd tormented, particularly in politics.  In just a few days, he became anathema for those he'd placed in power, indicating the focused intensity and force of public outrage.   Conservative Prime Minister David Cameron fell in line with Labour Party Leader Ed Milliband's call to stop Murdoch's critical acquisition of pay TV network BSkyB.  The Independent spoke of Murdoch having to abandon his United Kingdom media properties.

The crisis spread across the Atlantic when Senator John D. (Jay) Rockefeller demanded that law enforcement look into possible voicemail and other electronic surveillance of 9/11 survivors in the United States by  Murdoch's News Corporation.

Job JOLTS - Job Openings for May 2011

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JOLTS stands for Job Openings and Labor Turnover Survey. The July 12th report on May 2011 data shows there were 4.68 official unemployed people hunting for a job to every position available. There were only 2,974,000 job openings for May 2011, almost the same, +0.7%, from the previous month. Below is the graph of number of official unemployed per job opening for May 2011.

 

European Banks Fail Stress Test

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Eight banks out of 90 failed the European Stress Tests, five in Spain, two in Greece and one in Austria. Sixteen banks are close to failing, defined as below the 5% capital ratios for the next two years. Another German bank would have failed, but they refused to disclose their data.

Banks were allowed to cheat and raise capital months before the actual test:

For the 2011 exercise, the EBA allowed specific capital increases in the first four months of 2011 to be considered in the results. Banks were therefore incentivised to strengthen their capital positions ahead of the stress test.

In spite of raising €50 billion in 2011 before the tests, 8 banks failed anyway with 16 being damn close to failing. Without the raising of additional capital cheat, 20 banks would have failed. The test involved a lowering by 4% of GDP, but no exposure to sovereign default. From the EBA press release:

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