Friday, November 19, 2010

New candidate for Understatement of the Year: "National and global interests are trumping local concerns."

I don't have much commentary on this video, other than to say that it is all too common and ever-increasing.  If you think you're having a bad day, put yourself in the shoes of these people:

"Andes villagers resist China's claim on $50 Billion mine"

But then, of course, you might actually be one of Peruvians in the film (as unlikely as it is), or, I mean, pero, por supuesto, es posible que usted puede ser una de las personas pobres en este vídeo, y si ese es el caso, por favor, mira este vídeo, y sentirse mejor de tu condición:

Corrupt Zambian socialist government enables corrupt Chinese "state-capitalistic" socialist investors

So, in other words, corrupt anti-human rights, socialist, state-run mines are being replaced by foreign corrupt anti-human rights, socialist state-run mines.  Wow, that's progress: the people have been elevated from "disposable" to "replaceable."  

Fifty-pence a day to get blown up.  

Monday, November 15, 2010

Yeah, banksters own your parking spaces, thanks to your corrupt spendthrift city officials. What's it to you?!

Many Chicagoans still remember with bitter discontent the outrageous deal that Chicago mayor Daley forced on the city in December 2008 which transferred control of 36,000 of the city's parking meters and public parking spaces to Morgan Stanley.  The deal was sold to the equally irresponsibly Chicago city council as an absolutely must-do emergency parachute that could only be considered for mere three days, and that would save the day by generating $1.16 Billion, which the city, of course, desperately need to waste on more programs on which Chicago habitually wastes hundreds of millions of dollars.  Of course, it is history now, but the deal was approved.  Here's what was said at the time:

"...we're taking steps that no other city or state is taking to cushion our taxpayers from the bad economy and keep our city moving forward," (mayor) Daley said."

"I think it's a fair price" for the parking meter system, said Dana Levenson, head of North American infrastructure banking for Royal Bank of Scotland, who helped negotiate the parking lot lease in his former position with the city.

Now, interestingly, at the time Morgan Stanley was freshly minted a "bank holding company" for the first in its entire history as an investment bank.  If you'll remember, this is was a magical statutus granted to several investment banks (Goldman Sachs, Morgan Stanley) and even credit card companies (Captiol One, American Express) which was the sole discretion of the Federal Reserve, and which then allowed these non-bank companies to receive billions in TARP funding--TARP funding which Congress had authorized for banks only.  So, Paulson and Geithner and Bernanke just made everyone a bank!   Morgan Stanley received $10 Billion, and without the money, the irresponsible, toxic MBS-ladden firm would have met the bankruptcy it so honestly deserved within weeks of the bailout.   But, of course, this is sadly true of several other fantastically irresponsible banks (Wells Fargo, BoA, JPMorgan Chase, GS) which were likewise saved by head bankster Hank Paulson and his cohorts at the FRBNY and FRS, Mr Geithner and Mr Bernanke.   Still, it is worth remembering...

So, fast-forward to today, almost two years later.  It appears the city finally got around to reading the contract.

According to a Bloomberg report today, the "fair price" and "good deal" mayor Daley had assured Chicago of regarding the massive 75-year transfer of parking spaces to Morgan Stanley is, indeed, a very "fair price" and "good deal," but not for Chicago.  What, then, is the price tag on how much the deal will cost Chicago drivers, and how much revenue has the city itself surrendered to the bank of Morgan Stanley?

$1 Billion, $2 Billion?

Try $11.6 Billion.

That's right--a 10:1 ratio of costs to benefits.  Of course, this is only assuming that Morgan Stanley stays within a standard deviation or so of the normal parking space prices, which is no guarantee, as the city even surrendered to the bank any review or input on the price increases the bank imposes!  Morgan Stanley may very well make twice this estimate, as they have no apprehension, and no legal restriction, for jacking parking prices sky-high.  Chicagoans saw this first hand, as within weeks of the transfer, Morgan Stanley increased the parking rates by 400%!  So, as there are no contractual limits on what Morgan Stanley can charge for the 36,000 spaces it now controls for another 73 years, this $11.6 Billion number is likely a very low-ball estimate.  

Furthermore, the profits are a cake-walk: the Daley deal has granted Morgan Stanley an amazing minimum estimated return of 80 cents for every dollar paid for parking: compared to other contracts in the city, such as at the airport, the average revenue is below 5 cents on the dollar.  In other words, for every $1 a Chicagoan is paying for parking, 80 cents are returned to Morgan Stanley in pure profit.  When reviewed from the City's perspective, this means that Daley and the City could have sold the contract to Morgan Stanley for more than ten times as much as the original $1.16 Billion tag and still kept within the norm for private leases of public property within the city; or, to put in term that Chicago gangster-banksters might understand better, Daley and the City left over $9 Billion on the table, and let Morgan Stanley lapped it up. 

Now also please remember (as no truck driver can forget, given in huge increase in tolls since) that in 2004 the City and this same mayor Daley likewise leased out the Chicago Skyway for 99 years to a Spanish  company, the private-equity infrastructure consortium known as Cinta.  This is the same Cinta company that is so heavily involved in the "non-existent" North American corridor project.  The practice of leasing toll roads has become too common in these days spendthrift cities and states, and as evidenced in Pennsylvania, some governors are even trying to transform non-toll roads  into toll roads for the express purpose of then leasing the roads to banks  and investment groups!   

But getting back to the issue of parking spaces, the Bloomberg story breaks today because of the fact that two other major cities--Indianapolis and Pittsburgh--are both themselves in the process of negotiating deals.  Pittsburgh needs the money to meet its ballooning pension obligations, and recently rejected a deal with yet another corrupt bank that is a plague on the American taxpayer and the entire world, JP Morgan Chase.  Conversely, Indianapolis is not in as urgent need of cash-flow as Pittsburgh, but this city too is negotiating a deal with Xerox subsidary, Affiliated Computer Services for control and updating of the city's parking meters.

The vote in Indianapolis is tonight.  Charges of cronyism have been flying for some time, as the mayor's office, the city council president, and Xerox seem a little too close for comfort:

"ACS is a powerful player in government contracting and already plays a role in Indiana's welfare-services modernization. And the mayor's office and ACS have shared a lobbyist at Indianapolis law firm Barnes & Thornburg. Council President Ryan Vaughn works at the firm as an associate but does not perform any work for ACS, he says.

Such connections make some critics uncomfortable, even if ACS, the law firm and the mayor's staff insist that the lobbyist, Joe Loftus, didn't participate in parking-meter negotiations.

(City Council president) Vaughn, who has faced pressure to recuse himself, plans to vote in favor because he views the deal as important for his Broad Ripple district.

He acknowledges an appearance of a conflict of interest.

"But it's one that I've gone to great lengths to explain," he said.

He doesn't view his firm's association with ACS as violating the council's ethics rules. Those require recusal if a council member or a business in which he or she has an interest would directly benefit by more than $1,000."

At the least Indianapolis is deal is not a billion-dollar commitment.  Still, it is not a direly-needed project, either.  Cities need to much more carefully consider these "partnerships" before they go selling off their public property for decades at a time.  There is a long line of banksters who are just dying for the chance to get hold of infrastructure, and Morgan Stanley's Chicago strategy is their model.

Sunday, November 14, 2010

Gold-Silver Ratio breaks 1:50 level as things get interesting

Back when the US had a gold and silver standard, the dollar was pegged to gold, but silver was also pegged to gold.  This gold-silver ratio was held rather steady at about 1:15, meaning that one ounce of gold would buy the holder about 15 ounces of silver, or vice-versa.  

This gold-silver pegging was reflected in the dollar right up through 1933: before the illegalization of private gold ownership thanks to a conspiracy between the Federal Reserve, Congress, and FDR in 1933, it was a given in US commerce that twenty $1 silver coins were interchangeable for one $20 gold piece, which contained just under 1 oz of gold.  As US dollar coins were minted with 0.7734 oz of silver in each, this maintained the ratio of almost exactly 1:15.5.  Let's check this out visually:  

The Gold Confiscation Act of 1933, of course, threw everything you see above out the window.  Not only were you not going to get gold coins for your silver coins, as it was now magically illegal for the meeeeeasly American citizens to own gold coin, but you certainly were not going to get an ounce for $20: nope, even assuming you'd like to break the law to get your hands on some, you'll have to pay a whooping 75% more than you ever had--a nice $35 for an ounce.  Instantly, with the stroke of FDR's pen authorizing the Gold Reserve Act of 1934 and the revaluation of gold to $35 US dollars per ounce, the 160-year-old American standard of a 1:15 gold-silver ratio that had been a feature of the US dollar since the beginning of the Republic, was gone.  Just that quickly, the ratio had moved to nearly 1:27, or a matching increase of 75%.  Now, assuming you could get the Gaudens (which you could only do on the black market if you could do it at all, and which would have been subject to immediate confiscation if any federale found out that you had it), you couldn't bring home the Gaudens for 20 Peace dollars, but rather, you had better bring 35.  Or, to compare:

Not to mention, you had to deal with gangsters!   Yikes! (Is that one in the middle Obama?)

Of course, as covered in other posts, eventually the dollar was totally detached from silver by 1964, and has become so worthless that 29 years ago in 1981, it was even detached from copper! So, I supposed right now we are on a "nickel and zinc standard," but we have already lost the "nickel standard" part, as the coins we call "nickels" are 75% copper and cost more than 5 cents to make.  Or actually, to express the phenomenon more properly, our dollar is so devalued that it cannot buy a nickel for a nickel.  As for zinc--zinc is currently at $1.10/lb, and is up over 100% on the year, so soon we won't even be able to afford to make pennies, as those coins are 95% zinc.  This is the effect of fiat money--it is designed to made worth less and less!

So, getting back to the gold-silver ratio, where do we stand today?  The average since 1971, when the dollar was divorced from gold, has been around 1:55 to 1:60, with a dip to below 20 (during the Hunt brother's silver scheme) to a peak of 1:100 about twenty years ago in 1991.  What is interesting about the first--the dip below 1:20 that occurred during the Hunt brothers silver spike--is that even at its lowest, the ratio did not reach the pre-1933 standard of 1:15.  Even at its lowest, the ratio was 25% higher than the average for the entire period of American history (and indeed, world history) prior to 1933.  

As for the peak at 1:100, I'm rather quite enjoying this visualization thing, so here is that distortion in Peace dollar terms.  Using Peace dollar terms, this was just under 130 Peace dollars for one Gaudens, which looks like this: 

And it would have been a steal of a the reverse!  Those who exchanged that Gaudens for 100 ounces of silver in 1990 would have done better than those who didn't.  At the time, gold hit a multi-year peak of just over $420/oz, while silver staggered down to $4.2o/oz.  Assuming that someone had just wanted to trade-and-hold, a silverbug who traded an ounce of gold for 100 oz of silver would be looking at a 566% return on the silver.  Conversely, the other guy who took the gold over the silver would have a still impressive, but much smaller, 238% return, based on last weeks average prices of $1420/oz gold and $28/oz silver.  

It is a strategy of some metals investors to trade gold for silver and silver for gold based on the gold-silver ratio.  The interesting event that has occurred recently with this rally in gold and silver is that silver has convincingly broke through the 1:60 mark and, as of last week, the 1:50 mark.  Not too long ago, in early 2009, major weakness in silver was percieved due to the 1:82 level, but that was obviously short-lived.  But as I write this on Sunday night, with Asian trading now open and gold at $1,372/oz and silver at $26.37, the ratio tonight is back over 1:50, up to 1:52.  Or, 1:67.5 Peace dollars worth of silver...

One last thing to remember the with gold-silver ratio.  When the spread increases, that is, when the number gets bigger (as the gold side is always just "1"), you are seeing a greater move in gold  relative to silver; or in other words, gold strength.  Conversely, when the spread narrows (when the number decreases), you are seeing a stronger move in silver; that is, silver strength.  Many have speculated as gold increases in price, silver will appear "cheaper" simply because it won't have so many zero's behind it.  If this does indeed occur and investors move into silver as a result, the gold-silver ratio will obviously reflect this, and the spread will tighten.  Given the long term history of a centuries-old 1:15 ratio, silver looks cheap right now.  But given the average since 1971, silver actually looks a little overbought right now.  And no, I have not overlooked the massive SLV ETF move last week--the record-breaking silver ETF that added 352 tonnes overnight--as this obviously was a factor in breaking the 1:50 level, and came on the heals of a $2 price dip.  At that time last week, when silver hit a high of over $29 just before the COMEX rule change, the ratio dipped to a nearly unheard-of 1:48 mark, and was followed up by a massive support move that held the $27 level.

So, we shall see where we go from here.  Don't forget about the dollar in all of this: USD is knocking again on its all-time lows as per USDX.  Nothing comes for free: your silver and gold are getting more valuable because your US dollars are getting more worthless.  Just like the Chinese curse, we live in exciting times, indeed.  And I haven't even mentioned what Mr Zoellick at the World Bank said last week...

(Note: Please understand that my use of Peace dollars is for historical perspective only, as they really used to be exchangeable for Gaudens.  In today's market, you would want to use bullion for this, as that is what the ratio is based on.  Peace dollars have a slight rarity value that carries their average price higher than spot, and they are also more expensive than regular junk silver.  Likewise, a Gaudens is a limited-production coin, and many are numimastic and thus carry a premium as well.  My calculation with the number of Peace dollars relative to a Gauden are, as I mentioned above, based on the 0.77 oz silver per coin recognized content, and pretending that we still have an exchange system like what we did in 1933.)

Saturday, November 13, 2010

"No. We don't do mortgages in my country...I don't have any idea about mortgages when I started here."

We cannot thank the diggers at Zero Hedge enough for their incessant coverage of the biggest-crisis-that-no-one-is-talking about, ForeclosureGate.  Well, perhaps I shouldn't say no one's talking about, because the robosigners certainly are.

Check this out from Zero Hedge:  "The Nine Most 'Inconvient' Robosigning Admission BOA Would Love to Disappear."  You don't have to struggle through the long embedded videos of taped depositions from some of the MERS robosigners--just read the choice parts below each.  Here are my favorities:

"Do you know specifically what you're authorized to do for MERS?"
"Just sign the documents."
"Do you know specifically what you're authorized to do for City Residential Lending?"
"Just sign the documents."

"Why did you sign this document indicating that your address was in California if that in fact was not your address?"
"Because my name was on the document."
"So it was presented to you to sign and you signed it."

"In addition to notarizing assignments of mortgage, do you ever sign assignments as a vice president of a company?"
"For which companies have you signed as vice president?"
"I couldn't list all."
"Could you give me some examples?"
"Chase Morgan. Wells Fargo. I'm on pretty much every corporate resolution."
"Would it be accurate to say that there are maybe an excess of 20 companies or banks that you sign as vice president?"
"That would be fair to say."

"What did you study [in the one year of college]?"
"Nothin'. It was just the basic."
"General courses?"
"Do you have any other additional training or education in banking or finance?"
"Real estate?"

"When you say 'financial' are you referring to matters relating to banking?"
"No. We don't do mortgages in my country. ... I don't have any idea about mortgages when I started here."

This is what our banking system is based on--fraud, fraud, and fraud, and fraudulent documents!  We have no idea who "owns" what!  We have a group of banks who are admittedly involved in a conspiracy to fabricate official court documents and financial records, a group of banks funding a front company, MERS, that is specifically designed to circumvent the law, but don't worry, the recession is over, and everything is fine!  

The only thing more outrageous about this scandal than the acts of the banks are the acts of the so-called "watchdogs" --the media and government--in ignoring and papering-over this fantastically illegal behavior.  At least we have Zero Hedge, and hopefully some relentless lawyers who will no compromise with these fraudsters!  It remains to be seen whether or not the newly-elected AG's replacing some of the AG's involved in the 50-state probe will continue to persue the criminal enterprise known as MERS.  

Friday, November 12, 2010

LIMIT DOWN! Lofty commodities tumble: Are Chinese bankers giving us a buying oppurtunity?

[These are very exciting times for me to have taken a hiatus, but some things (namely, midterm exams!) have been gobbling up my time.  Perhaps I should stay away, as gold and silver are up a solid 20% since I last wrote one month ago.  I hope I'm not going to regret this, but I'll write anyway...]

Commodities boards around the world are nearly all red today, and some commodities (including sugar, silver, oats, soybeans, corn) have hit limit-down--even multiple times, as the massively speculative realm of margin-bought commodities comes under heat from various sundry news stories.  Oh, it is quite unfortunate that we live in a world in which the prices of commodities are largely controlled by the interpretation of "news stories" by a small collection of individuals running the commodities trading arms of about ten large international banks, individuals and banks which have absolutely no intent of ever using, let alone taking delivery, of the "assets" they purchase and sell on paper only, individuals who have likely never been on a farm or in a mine in their entire lives, but indeed this is exactly the world we have--and you can thank the banksters.  We are witnessing yet more of these whims and interpretations today.

If people didn't think the above condensed explanation of the world commodities markets to be accurate before the fabled summer of 2008--that summer when oil hit $148/barrel despite zero change in supply and a marked drop in demand--then they certainly realized this explanation to be sadly true within a few months of that summer as by December 2008 the very same "rare" commodity slid to under $30/barrel.  The international commodities trading system is perhaps the most socially destructive result of the international fiat banking system, as it manipulates the real price of real stuff, and real people need these real things and really suffer when banksters manipulate the markets with contracts on non-existent "assets" based on debt.   And just in case some goldbugs had recently come to like or even trust these banksters as they watched gold and silver prices climb in price to records--just in case they were thinking, "Well, its only bad to have massive bankster-run market manipulation when they are driving down the prices of metals--but its okay when they are driving up the prices," well then today these confused people are getting a reality check, written with lots of big red numbers indeed.  We kid ourselves if we think that the Fed is going down that easy!  No way!

We are seeing the death-grip these banksters still have on commodities today, as the "market" "responds" to "new stories."  The big story this time, the story apparently so important that these insane markets must immediately price the "news" into commodities, is that perhaps, maybe, sort of, we think, it is possible that China is going to increase interest rates.  


Market response: "Increase interest rates---do you mean that China is going to increase the price of money?  Heaven forbid!  Curse those "currency manipulators"!  How dare they!"

"By all means, we'd better move quick!  This is surely reason enough to drop the price of sugar by 12% in a single day, don't you all agree?!  To the algorithms, quick!"  

"Commodities rout, commodities rout!" 

Is this an exaggeration?  Sorrily, it is not--sugar really dropped almost 12% today "based" on the rumors of possible Chinese central banker moves.  Of course this is not a reasonable response--not in a sane world where sugar prices are controlled by supply and demand--but in this insane world of bankster-run commodities and equities markets, it is apparently a perfectly justified response.  So let us review what else are perfectly legitimate responses to a rumor about what Chinese central bankers might do:

15 Perfectly legitimate responses to rumors about Chinese central bankers:

1.)  Sell oil, down 2.8%

2.)  Sell canola, down 4.8%

3.)  Sell cocoa, down 3%

4.)  Sell corn, down 5.2% (limit down)

5.)  Sell coffee, down 3%

6.)  Sell soybeans, down 5.3% (limit down)

7.)  Sell wheat, down 4.8%

8.)  Sell sugar, down 11.7% (limit down, twice)

9.)  Sell oats, down 5.1% (limit down)

10.)  Sell copper, down 3.6%

11.)  Sell gold, down 2.8%

12.)  Sell silver, down 6.1% (limit down)

13.)  Sell platinum, down 4.5%

14.)  Sell palladium, down 4.8%

15.) Launch a mystery missile off the coast of California (wait a did that get in there...)

These are just today's numbers.  Most of these commodities were also hit yesterday, precious metals especially.  Silver is an interesting case here, as silver has been a great story over the past 90 days.  The once insurmountable $22/oz price level is now a distant memory.  Even today's $25/oz numbers are very appealing considering the $29/oz of a couple of days ago.  There can be no denying that the recent huge moves in silver are abnormal, despite what silver perma-bulls constantly claim.  I am as big a fan of silver as anyone, but you have to be realistic here: there has not been a fundamental change in the role of silver over the last 90 days that can justify a nearly 60% increase in price; what there has been is a massive devaluation of USD coupled with a corresponding massive move to commodities for value protection.  Lets look at the 6-month chart of USDX, courtesy of StockCharts:

USDX is still knocking on the tombstone of its previous all-time lows of 74 and 71: in case you cannot read it, that lowest dip is below 76.  Now, lets look at silver over the same period:

As you can see, this is not a perfect correspondence: silver was not tracking USD until perhaps September, but since then has.  Now, look at gold:

Gold is a different story, because of gold's currency status, but as of yet, silver simply does not have the same currency clout, or even alternative-currency clout as gold.  (This is not to say it shouldn't or it won't or whatever, it is just a fact that silver remains a commodity play, not a currency play like gold, in my opinion.  Please do not overwhelm me with pro-silver emails--I am already very pro-silver, and the Bankster Report mascot proves it!)  We all know that silver is quite volatile, but what we have seen over the last three months are moves several standard deviations beyond even the "normal abnormal" moves in silver.  Here is an interesting analysis of past silver spikes, and the drops coupled with them.  You'll see that historically the post-spike corrections have been between 22% and 36%.  My own research has confirmed this.

But let's discuss lovely silver a little more.  Since silver broke $20/oz during the first part of September, the metal has moved as high as 47% to the extremely short-lived November 10 high of $29.39/oz, and has since fallen to below $26/oz: in fact, silver fell 9.7% within a matter of hours after hitting that high earlier this week.  One major reason for this price drop was the fact that COMEX that very same day announced an increase of 30% on the required upfront-cash needed to support silver margin contracts: simply put, this gave the paper silver crowd the choice of selling at a profit or fronting more cash to maintain the long contracts.  Given the huge sell-off, we know what their choice was.  Honestly, this could be expected because of the huge advances in silver since this 3 1/2 month-or-so-long rally began, as investments have already been very profitable, especially for the paper crowd and even more so for those buying on margin: paper investors especially who entered the market at the beginning of this rally have already seen a 59% increase, excluding the many-times multiplier of margin contracts.  The COMEX announcement offered an excellent reason to take the chips off the table and cool-out for a little while, and a big part of the market did just that.

So whatever the reasons--China, COMEX, mystery missiles, Venus--silver sits this weekend at a level last seen a couple of weeks ago before the (unreasonable, in my opinion) 15%-per week moves of the last couple weeks.  Still, it seems like a long time ago that silver was at $25/oz, especially for those of us looking for another buying opportunity.  This weekend well may be it: since I starting writing this very post at market close, after-market silver has rebounded about 1.4%.  Gold is also in the mid-$1300's, which seems strangely "cheap," as strange as using the terms "$1300" and "cheap" in the same sentence.  Monday's prices will demonstrate to us whether or not last week's $27 and $28/oz silver levels are indeed the "normal" now, as some people are beginning to speculate.  

Tuesday, October 12, 2010

Citigroup coins crisis "Foreclosures gone wild!"

Zero Hedge founder, Tyler Durden, and his crew have been (as usual) on point with the unfolding foreclosure/mortgage/title fraud fiasco, and yesterday they brought us another report:

"Citigroup Call on Implications on Foreclosure: "Just the Tip of the Iceburg."

You know things are getting interesting when Citigroup hosts a conference call during which their expert guest speaker, associate law professor at Georgetown University Adam Levitin, calls the current visible ramifications of the foreclosure/mortgage/title fraud crisis "just the tip of the iceberg" and suggests major unseen problems to come, and then Citi, one the largest and "most respected" (ha!) banks in the world, issues its an official report on the crisis and the conference call which the bank decides to title along the lines of "Girls Gone Wild" with a Citi spin: "Foreclosures Gone Wild."

I kid you not.

Here's the document, "Foreclosures Gone Wild," available for our scribd'ing thanks to the Village Whisperer. The following are what I think are the most telling parts of the Citi document...with a little bit of my take added for good measure:

1.) Curse those "arcane" laws-- they're always getting in the way of our fraud!

Page 1: The underlying issues which have recentlyerupted involve the proper transfer of paperwork in the mortgage securitization process. Real estate law is “arcane” and requires that paperwork be physically transferred when mortgage ownership is transferred (“assigned”) from one party to another party. It appears that in many instances during the mortgage securitization process over the past few years, the paperwork was not properly transferred. If the paperwork was not transferred in the legally required manner, it raises questions not only about who owns the mortgages in question but also about the validity and tax exempt status of the trusts in which the mortgages reside. All of these issues also bear directly on the role played by the title insurance industry.

My comment: the reason why so many "instances" over the "past few years" when "paperwork was not properly transferred" were able to manifest is because of the bank-funded MERS front operation, which "appears" to have been basically attempting not only to circumvent those "arcane" laws, but actually to supersede them. MERS was hailed as a "replacement" to these damn pesky laws--and if it wasn't for those meddling judges, it'd have gotten away with it!

2.) Don't worry--everything is under control: we'll just pay people to commit perjury!

Page 1: Banks have attemptedto remedy the aforementioned problems by having employees sign affidavits that they have personal knowledge that the trust was once in possession of the necessary documents. Two problems have emerged with regards to these affidavits. First, several news stories have reported that the people signing these affidavits had no knowledge of the matters in question despite the fact that there were legally swearing that they did. Second, the affidavits may be irrelevant because the issue is not that the documents were lost but they were never properly transferred at each step of the aforementioned securitization process.

My comment: "Having employees sign affidavits" is a very interesting way to phrase the robo-signing debacle. From whom the orders came, we do not yet know. But we do have an admission from the operations supervisor at JPM's Chase Home Finance, Beth Ann Cottrell, who gave sworn deposition on May 19, that she and seven other JPM employees signed approximately 18,000 documents per month, and that they did this for several years. These so-called robo-signers often used wildly different signatures from one document to the next, and an unconfirmed report is floating around that another confirmed robo-signer Marshe Craine's signature is even on some of President Obama's mortgage paperwork. People are searching the internet for the names of these individuals, and inspecting their own mortgage/foreclosure documents. Indeed it is "just the tip of the iceberg."

3.) C’mon, America--who do you trust: us, the criminal consortium of banks hell-bent on extracting every last drop of wealth we can out of you, your house, your investments, and most especially, your government, or those damn pesky “arcane” laws of yours?! We repeat, in case you didn't hear us the first time, your laws are just stupid and "arcane," and are unnecessarily complicating the massive international fraud-based housing system we are attempting to implement, dammit!

Page 2:
The underlying problems center around the proper transfer of paperwork. It is important to appreciate that real estate law is arcane and requires the physical transfer of documents when ownership changes hands. In industry parlance this transfer is known as “assignment.”
When a mortgage is securitized and placed in a mortgage pool, there are typically four parties involved. The mortgage bank or lender originates a mortgage and then sells it to a “sponsor” who in turn sells it to a “depositor” who then sells it to the “trust” which governs the pool. Importantly, as noted above, the original paperwork must be transferred at each step of the process.

It now appears that in many cases (1) the paperwork was not properly transferred and (2) it is unclear in many cases where the actual paperwork actually rests today.

My comments: Citigroup, repeating opinions, such as calling laws "arcane", do not magically make them

4.) And how dare you people demand that we pay taxes! Taxes?! How are we
gonna completely enslave you to our evil fiat system if we have to pay taxes?!

Page 3: Most mortgage trusts were set up as REMICs (Real Estate Mortgage Investment Conduits) which are special purpose vehicles used to pool mortgages. Under the IRS code, REMIC confers a special tax status in which the cash flows to the trust are not taxed. Investors in the trust pay taxes. The tax exempt nature is important. If the trusts were in fact to be taxed, the taxes would distort the yields required by investors.
To qualify as a REMIC under the IRS code and enjoy the beneficial tax treatment, the trust (1) must be passive and (2) cannot acquire any new assets 90 days following the trust’s creation. If, as described above, mortgage documents were never correctly passed through to the trust when it was established, then the trust may not actually own the underlying mortgages it purports to own. Although it is possible that this issue could be remedied by some legal maneuvering, doing so could violate the REMIC status since the trust would be acquiring assets long after the aforementioned 90 day period has expired. Such a violation in turn could trigger a sizeable tax burden for investors. Our speaker indicated that there are a handful of open questions on this front and that this is a legal gray area.

My comments:
"...the trust may not actually own the underlying mortgages it purports to own," not to mention, it might not have any entitlement to the "underlying" asset, and if the asset was derived through fraud, those in the trust collecting through the fruits of fraud might themselves be liable for repayment. Just ask the Madoff "investors."

5.) Drat! We should have made our buddy Paulson force the taxpayers buy the title insurance companies—that's what we should have done! How dare they do this to us banks?! But its not too late---we'll show them. Call Timmy G!

Page 3:
If a scenario emerges in which title companies are unwilling to issue title insurance, in those scenarios lenders may cease lending. When a home with a mortgage on it is sold, the mortgage must be released at closing by the current mortgage owner before a new mortgage with title insurance is issued. If it is not known with certainty who owns the mortgage in question, it cannot be released. If the title company is not satisfied that there is a good release on the old mortgage, it will refuse to insure the new mortgage.

My comment: we have now reached the "scenario" of title insurance companies refusing to issue title insurance, including the nation's largest title holding company, Old Republic, refusing Ally Bank (GMAC Mortgage) and JPMorgan. I'm sure title insurance companies are searching like mad for the titles they
do insure, because many no doubt have fraudulent transfers on their hands, and in their books.

6.) So what we created MERS to help us commit fraud---you got a problem with that?

Page 4: MERS (Mortgage Electronic Registration Systems) functions as a centralized electronic registry of mortgages and tracks ownership of mortgages. MERS allows mortgage ownership to change hands efficiently and relatively quickly since it is electronic and allows all parties to forgo making a filing in local land records. Indeed,
MERS was designed to function as a substitute for local land records.

My comment: Well, hey, what's wrong with designing a bank-funded
front corporation to "function as a substitute for local land records," aka "laws"? Get outta here--I do it all the time! Just last week I finalized my latest system, "TERS" or Truck Electronic Reigistration System, which allows me to state what my rig weighs and that my axles are legal, and blah blah blah, and hit the road, baby! Its been working like a charm for all those 79,000 lbs copper loads--I just state my empty wieght as 1,000lbs! Pretty cool, huh? Oh, and wait till you see my other invention CERS--Currency Electronic Registration System--that allows me to register my junk mail are vertiable currency. Yo, let me tell you what--substitutes for laws and records are waaaaaay better than the real thing!

7.) Oh, this Levitin guys is just another one of those lawyers who are so concerned about “laws.” Doesn’t he know that laws for people, not banks?

Page 4:
Although MERS was designed to enhance efficiency in the mortgage assignment process, Levitin argued it may not conform with the law. “Slowly but surely” courts are issuing decisions which “cast validity on the MERS process.” Although ~60% of mortgages list MERS as the “nominee” which owns the mortgage, a handful of recent court cases have ruled that MERS has no standing in foreclosure actions either because (1) physical paperwork must be transferred when a mortgage is assigned by one party to another or (2) MERS has no true economic interest in the mortgage in question since it collects no payments from the borrowers.

My comments: whooops.

8.) Whatever with your “laws:” we own the government, so we have you either way.
Page 4:
Ultimately, if these issues do in fact escalate, the Administration may try to broker some sort of settlement. If such deal brokering does take place, Levitin believes that “some payment” will be exacted from the lenders and servicers. The Administration could bargain for more mortgage principal write downs.

My comment: in other words, the Administration could completely ignore the systemic fraud and outrageous criminal behavior of the banks, and placate the voters with a mortgage principal write down plan funded by other taxpayers, leaving the banks completely untouched for their several years-long fraud scheme, and further paving the path of the United States to certain doom. Of course, that is all to completely ignore that fact that the federal government has no jurisdiction over a particular state's mortgage filing rules, or its "arcane" law, but can only constitutionally intervene in cases of interstate transactions under the Commerce clause. But that's didn't stop the feds before, so why start now?

And exactly this is happening right now. The mysteriously well-greased Interstate Recognition of Notarizations Act (HR 3808) slid through both the House and Senate without even making the news, and just in time for the Congressional recess. As for now, the president has pocket-vetoed the bill by refusing to sign it, which now sends the bill back to the House (I say "as for now" because you trust this president about as much as you could trust the last one). The bill is just a couple of pages long, and sounds benign at first:

HR 3808, Section 2:
Each Federal court shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the Federal court is located if--
(1) such notarization occurs in or affects interstate commerce; and
(2)(A) a seal of office, as symbol of the notary public’s authority, is used in the notarization; or...

As this sounds a lot like each State recognizing the others' driver's licenses (it is not, but it sounds like that). Of course, the federal government would never allow the same argument with guns or drugs, but this doesn't sound too bad. However, then you get to (2)(B), the very next line of the bill, and see exactly why this slid through the most pro-bankster Congress in decades like a bankster's newly sharped and nicely heated knife through a large, mindless, cowardly block of butter:

... (B) in the case of an electronic record, the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.

In other words, in States that have those pesky "arcane" laws that require physical transfer of the necessary documents, the rule of law in States that allow for robo-signing and non-judicial foreclosure will reign supreme. In other other words, States best shut up and listen to the banks and believe whatever they say especially if they can't prove it, and even if the States have the very signatory admitting that they lied, and even if the States have knowledge of the same notary "verifying" the words of the signatory even while the notary is looking at documents from the same signatory that have three different signatures. The notaries are not off the hook in this, either, as it appears many of them facilitated this operation (probably for the right price). The real name for the bill should have been the "Mortgage Document Fraud Immunity" bill.

So why do I call the lump of butter known as our Congress "cowardly," as well as "pro-bankster" and "mindless"? Why don't I name names? Well, you know I love naming names, but you see, we can't name names and we can't know which crooks voted for these crooks because the bill was passed in the House by a voice vote, and in the Senate by unanimous consent! That is as cowardly as it gets: the members of Congress apparently learned from TARP-stain, as pro-TARP congressman after pro-TARP congressman fails in the primaries and struggles for reelection, that flicking off the people and voting with the criminal elite isn't exactly good voting policy. So, instead of deciding not to flick off the people anymore, they'll just do it under the cowardly cover of a voice vote. That's why--its disgusting.

So, now for president Obama has curtailed the Mortgage Document Fraud Immunity Act of 2010, but I remain suspicious. I have no evidence for the following speculation, but here it is anyway: I think Mr Levitin is right. I think the administration is holding out for some election-saving last minute "bargain" with the banks that presents the appearance of principal reduction, moves perhaps 25% of the currently underwater loan-owners just to the surface, restores the banks' balance sheets through a massive taxpayer funded infusion, and disables the now 50 State AG's investigating the fraud. In reality, the "bargain" will be a TARP 2 under cover of "principal reduction," and will result by another massive transfer of wealth from the American people to to elite--and immune--banks. The people moved from underwater to treading water and gasping for air will be able to continue to pay the banks for perhaps another 2 years, at which point they will run out of stream, sink under, and have their houses taken after all, and after having paid the fraud-infested bank, which probably doesn't even own the loan or the title, another 50% of their income.

Sorry to be so "Debbie-downer", but that's what happens when you ignore fraud and cover it over with "bargains." Its like watching snow fall over a dunghill: it doesn't get rid what's underneath.

Monday, October 11, 2010

Sell Gold--Buy Samarium! Chinese exports limits drive rare earth metals prices sky high!

Yttrium, europium, and neodymium: do they sound familiar? It's not likely you'll remember them any more clearly by their other names, but just in case, they are Y, Eu, and Nd. I'll give you a hint: think chemistry class. Well?

Okay, so that's not helping: you can admit it--you flunked chemistry, and actually thought that yttrium, europium, and neodymium were three of the 58 moons of Jupiter, which means you flunked astronomy, too. No sweat, because unless your bathroom is wall-papered with the Periodic Table of the Elements, you can be forgiven.

Yttrium, europium, and neodymium are three of the 17 so-called "rare earth elements." We have all been exposed to them through those periodic tables securely tacked to the wall of our high school science classrooms, but the relevance of these elements is actually much more significant than we might realize, and even more significant than it was when we were in high school. If you have ever seen the F-22, if used an iPhone, Blackberry, or any number of other "smart" devices, or if you receive electricity from a wind generator, you are actually exposed to these elements more commonly than you think, and benefiting from their unique properties. Rare earth elements (or "metals") are vital to today's new "smart" and "green" industries because of their role in enabling miniaturization and increasing the efficiency of electromagnetic generators and motors.

Of course, while these minerals allow for all kinds of so-called "green" devices, nothing in life is free, and so, not surprisingly, mining for these rare earth metals happens to be rather deleterious to, you guessed it, the environment. Therefore, also not surprisingly, countries with little or no environmental regulations have a huge advantage over those like the United States which do have such restrictions. So, not surprisingly, China is the world's leading producer of theses 17 rare earth elements.

Rare earth metals are not really that rare (its a chemistry name, not an economics name), but they are hard to extract from the earth because they do not appear as stand-alone metals. This Reuters article summarizes the importance of rare earth metals, particularly in the above-mentioned "clean" technologies. From the article:

"What are the rare earths used in? Rechargeable batteries for electric and hybrid cars, advanced ceramics, magnets for electric car motors, computers, DVD players, wind turbines, catalysts in cars and oil refineries, computer monitors, televisions, lighting, lasers, fiber optics, glass polishing, superconductors, and weapons."

And those last two, superconductors and weapons, have the focused attention of the Pentagon, to put it mildly. Superconductors are a category of special materials capable of allowing electrical flow with zero resistance when the materials are cooled to extremely low temperatures. And I mean extremely low temperatures; a "high temperature" superconductor functions at the temperature of liquid nitrogen, which boils at -321 degrees Fahrenheit. Superconductors occupy an ever increasing field in engineering, particularly for the purposes of defense (and offense), as well as power distribution, and anything having to do with supermagnets (ie, high speed trains). Weapons are, of course, one of the United States' biggest export classes and an obsession of the American military-industrial complex. Various weapons from the Pentagon's "smart bombs" to modern fighter planes cannot happen without certain rare earth metals. From this WSJ article, "China Hold on Metals Worries Washington:"

"The fins that steer precision bombs, for instance, have samarium-cobalt permanent magnet motors. The motors that run the rudder and tail fins on a high-performance fighter aircraft like the Air Force F-22 Raptor are built with lightweight, rare-earth magnets. Neodymium is found in the solid-state lasers used to designate targets."

And that is just to name a few applications. You can bet that there are dozens of classified applications about which we have no knowledge. This is exactly why the Pentagon is quite "worried" about China's dominance of the rare earth market. Advanced technology can't do a nation much good if it can't actually be produced, and the Pentagon's advanced applications can't be produced if the major material supplier refuses to supply the materials.

"Major materials supplier" is truly the only title appropriate for China when it comes to rare earth metals. Monopolistic supplier is nearly accurate, but off by a mere 3%. According to the Wall Street Journal, China supplies 97% of the world's supply of rare earth elements. Beijing has a near monopoly on the very materials the Pentagon needs. However, this is by no means invincible monopoly, of course, because the US and other large nations (particularly, Russia) could have themselves been the world's leading suppliers if they would have bothered to mine for the materials domestically. For a long list of reasons, the top ones of which are environmental, the US instead depends on buying rare earth metals from China. This plan works as long as China goes along.

But guess what?

China's not going along anymore.

Demand for rare metal metals increases everyday as new applications are discovered and "clean" technology becomes more important (and governmentally subsidized), and demand is up nearly 20% per year for the last several years. For price stability, increased demand must be met with increased supply, but China is in control of the supply, and China is not stupid. Remember, China calls the shots on 97% of the world's supply of an increasingly sought-after commodity class. Everyone wants it, and only China has it: you don't need an economist to figure this one out.

Indeed, you don't have to be an economist, but apparently, the defense center of the world's most advanced nation and largest economy, the US Pentagon, could not foresee this obvious result. They just couldn't see it coming! In mid-June, the Chinese government announced that exports for the latter half of this year would not be increasing. Notice, that is exports, not production, which means that China is either stockpiling or utilizing the supply. Furthermore, China will not increasing exports of rare earth elements in 2011, either. With announcements like this from the world's near-monopolistic supplier of a commodity class, you don't have to wait long to see an impact in the market. Within the same day, in fact, that China confirmed rumors of the supply squeeze, the rare earth market reacted. We are truly seeing the impact of this announcement on availability reflected in price, right now. Check out what has happened to rare earth metal prices since July:

Europium oxide: up 14% ($540/kg to $615/kg)

Neodymium: up 80% (from $50/kg to $90/kg)

Yttrium: up 84% ($45/kg to $83/kg)

Samarium: up 152% ($21/kg to $53/kg)

WOW! And we thought gold and silver were doing well!

Check these moves out graphically, in order left to right as listed above:

Now we can see why users and consumers, particularly the Pentagon, are "concerned." And so, of course, now Congress has to get involved: besides the House sociopathically declaring China "currency devaluator", some potentially abnormally non-short-sighted legislation passed the House last week. The Rare Earths and Critical Materials Revitalization Act of 2010 aims to jumpstart the domestic rare earth metals by (of course!) subsidizing banks through loan-backing of domestic exploration and mining ventures, among other incentives. I'll withhold further commentary on the bill until I have a chance to review it. For some reason, I just think I'm going to find some machinations in it, but maybe "this time its different," and Congressional intervention will actually help.

Why am I so skeptical? Watch this video from Bloomberg. It was Congress, itself under the "Free-Trade-will-save-us-all" mantra of the (post-likewise globalist Bush 41) Clinton Administration, that allowed China to enter the rare earth metals market in such a massive way. Despite the objections of many, in 1995, Congress approved the purchase of Indiana-based Magnaquench, the company that was at that time responsible for meeting 80% of the military's rare earth needs for laser-guided weapons. Congress "imposed" the condition that the Chinese company maintain the Magnaquench Indiana facilities, but by 1993, they were shuttered. One former Magnaquench employee recounts the now-Chinese Magnaquench as telling employees that "you guys can work for nothing, we're still going to move it."

Furthermore, with a few years of the Chinese entrance to the market, US-based Molycorp, owner of the largest non-Chinese rare earth metals mine in the world, was forced to close its massive Mountain Pass mine in the Mojave of California due to the company's inability to compete with Chinese prices. Now, after 15 years and several folds in price, Congress is getting involved again. I can see Congress passing this latest act, only to then authorize the sale of more US mines to Chinese companies five years from now: we pay for the development, the banks get the interest, and then Congress authorizes the purchase by China. (After all, China is going to start demanding some kind of collateral against this massive amount of US debt they hold, but I digress. That's so cynical, I know, isn't this what "free trade" is all about?)

So, at least until the Senate passes the Rare Metals Act of 2010, the top performer in metals this year won't be silver or gold---it will be samarium! Rare earths will likely continue to outperform even after, as China has already declined to increase exports for 2011, and mining and exploration operations take years to get off the ground. Act fast, and you too might have a chance to make millions with the rare earth bubble!

{Investment alert: I'm being sarcastic! Someone's gonna make millions, but not me! Commodities trading is for the hardcore pro's, and the pro's alone. I'll stick to gold, silver and copper pennies, and maybe a little Swissy. :) }