Obama: "I Do Think At A Certain Point You've Made Enough Money"

When Mr. President leaves the teleprompter, his alter ego The Redistributor often comes out. Here he tells people he doesn't begrudge making an honest buck, but that at a certain point you've made enough money.

We look forward to discovering what our overlords believes that limit is. His campaign promise was $250,000 and below would be safe. So we're guessing "enough" is somewhere in the neighborhood of just north of twofity.

We eagerly await learning about our next social engineering experiment, oh Great Obamanation, ruler of The Borg.

To those of us without Obamanation's all seeing, all knowing vision, prepare to be assimilated.



HT: RG

The Borg - I Mean Obama Administration - Intend To Pay Homeowners To Sell Their Houses

"Have you made a horrible decision and find your mortgage 70% underwater? Please let us give you $1500 of Chinese, I mean tax payer money as a reward! And we'll strong arm banks to let you out unscathed in the process. Congratulations on your hard won earnout."

Ah, the Borg, resistance is futile.

I am so happy they have not given up on their command and control efforts to manipulate our economy from their proverbial perch high up in the moral tower that is White House. What these puppeteers don't realize is the problem has little to do with insolvent homeowners not wanting to sell their homes via short sale and has everything to do with banks wanting to get paid back the money the lent (crazy, I know!).

The NY Times wrote about this on Sunday March 7th. Love the headline. All emphasis added [and TILB comments in brackets].

March 7, 2010
Program Will Pay Homeowners to Sell at a Loss
By DAVID STREITFELD
In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year. [TILB - ah, the political truth...]

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed. [TILB: I'm sure banks will sign up left and right to fore go their rights]

...

The problem is highlighted by a routine case in Phoenix. Chris Paul, a real estate agent, has a house he is trying to sell on behalf of its owner, who owes $150,000. Mr. Paul has an offer for $48,000, but the bank holding the mortgage says it wants at least $90,000. The frustrated owner is now contemplating foreclosure. [TILB - The guy is SEVENTY PERCENT UNDERWATER; unless he wants to keep paying for his mortgage, he should have absolutely no say in this matter! What world do I live in? What is this, Russia? HOW IS THIS EVEN A QUESTION?]

To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.” [TILB - Why does a guy that probably put close to no money down get a $1500 windfall but the lender gets ZERO?! Note, the $1000 goes to the servicer(s) of the loan(s), not the lender(s). This is crazy.]

Should the incentives prove successful, the short sales program could have multiple benefits. For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure. [TILB - Dear David Streitfeld c/o The New York Times: Use your brain. If the lender thought they'd get more back doing a short sale, they already have the ability to pull the trigger. This has zero impact on that reality.]

For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance.

For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks. By some estimates, as many as half of all foreclosed properties are ransacked by either the former owners or vandals, which depresses the value of the property further and pulls down the value of neighboring homes. [TILB - This must be heaven, because everyone wins! The lender, the borrower and the community! How exciting!]

...

Under the new federal program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept. This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it. [TILB - Right. This should work. Let's see, we're going to pay a real estate agent to come up with a price. No matter what price he/she comes up with, the bank would be FORCED to sell at that price. I bet they'll err to the high side (stop laughing at me, it hurts my feelings).]

Mr. Paul, the Phoenix agent, was skeptical. “In a perfect world, this would work,” he said. “But because estimates of value are inherently subjective, it won’t. The banks don’t want to sell at a discount.”

There are myriad other potential conflicts over short sales that may not be solved by the program, which was announced on Nov. 30 but whose details are still being fine-tuned. Many would-be short sellers have second and even third mortgages on their houses. Banks that own these loans are in a position to block any sale unless they get a piece of the deal.

“You have one loan, it’s no sweat to get a short sale,” said Howard Chase, a Miami Beach agent who says he does around 20 short sales a month. “But the second mortgage often is the obstacle.” [TILB: This is the reason short sales are less common than one might expect. Second lien holders can obstruct the process. But that is okay, that is their contractual right. They are owed money by the borrower and he/she is trying to shirk, generally, 100% of his obligation to them. I might hold up the process too if someone were trying to stiff me and then ask me for a favor.]

Major lenders seem to be taking a cautious approach to the new initiative. In many cases, big banks do not actually own the mortgages; they simply administer them and collect payments. [TILB: This is servicing] J. K. Huey, a Wells Fargo vice president, said a short sale, like a loan modification, would have to meet the requirements of the investor who owns the loan.

“This is not an opportunity for the customer to just walk away,” Ms. Huey said. “If someone doesn’t come to us saying, ‘I’ve done everything I can, I used all my savings, I borrowed money and, by the way, I’m losing my job and moving to another city, and have all the documentation,’ we’re not going to do a short sale.” [TILB: Boom. Principled.]

But even if lenders want to treat short sales as a last resort for desperate borrowers, in reality the standards seem to be looser.

Sree Reddy, a lawyer and commercial real estate investor who lives in Miami Beach, bought a one-bedroom condominium in 2005, spent about $30,000 on improvements and ended up owing $540,000. Three years later, the value had fallen by 40 percent.

Mr. Reddy wanted to get out from under his crushing monthly payments. He lost a lot of money in the crash but was not in default. Nevertheless, his bank let him sell the place for $360,000 last summer.

“A short sale provides peace of mind,” said Mr. Reddy, 32. “If you’re in foreclosure, you don’t know when they’re ultimately going to take the place away from you.”

Mr. Reddy still lives in the apartment complex where he bought that condo, but is now a renter paying about half of his old mortgage payment. Another benefit, he said: “The place I’m in now is nicer and a little bigger.” [TILB - the market at work.]

The Borg, I Mean Obama Administration, Proposes Federal Price Controls On Health Insurers

Good lord, our president has no shortage of self-assuredness in his ability to control all aspects of society. Thomas Sowell preciently warned us of this prior to the 2008 election.

The Administration is apparently going to take another crack at health insurance reform (rather than healthcare reform) by imposing federal price controls on the insurance industry. The modicum of respect that I retain for the man declines everyday as his populist exploitations accumulate.

I mean, federally imposed price controls have worked so well in other areas of the economy. Fortunately, this effort is unconstitutional and clearly impedes states' rights and oversteps constitutionally limited federal authority. Unfortunately, we all know that Obama views the constitution as a simple set of best practices recommendations rather than the fundamental underpinning of the relationship between man and his servant government.

If it is not yet screamingly obvious that price controls reduce competition, reduce service quality, and impair productivity, then it never will be. There is not one sector of the economy that the government has ever successfully improved through price controls.

Here is the New York Times article on the topic of The Administration's efforts to set prices.

What's ironic is that every industry the government is heavily involved subsequently earns a terrible reputation: public schools, health care, banking, insurance, defense, etc. These are businesses that have costs that rise in excess of inflation and productivity gains that lag it. However, industries that are relatively more free such as high tech, retail, and consumer goods reflect the opposite: improving productivity, declining costs, and increasingly customer friendly prices and products.

The obvious answer is to free the health care and insurance sector of governmental interference and watch them blossom. Sadly, this will not happen under the rule of a man that believes he can impose better outcomes than individuals would receive through freedom (or, in the case of insurance, local judgement).

The Investment Linebacker Just Saved Or Created 491 Jobs

We stand by that 491 number until we are otherwise proven wrong.

Oops, it turns out someone is actually going around trying to verify these bogus jobs "saved or created" numbers and discovering that the numbers are exactly what we all inherently already knew: they are a fantasy.

"I am shocked, shocked that gambling is going on here."

Specifically, The Sacramento Bee has been busy researching the 26,156 that the Cal State University system claims to have created or saved with their share of Federal stimulus money. Only one problem: it seems only a fraction of those were actually ever at risk - so how can they be saved or created if they never would have been lost?

So what?

TILB guaran-damn-tees you that nobody cares that The Administration has no ability to prove the accuracy of its claims. Yet that does not seem to matter.

So what if the whole number is a fraud? So what if those jobs that actually are "saved or created" are really stolen or destroyed in other areas of the global economy*? Who even cares? Our president gives great speeches, after all. What else could you realistically hope for in a leader? Hint: see video below for an answer - then visit www.schiffforsenate.com.

Anyway, here's a link to the Sac Bee's article on the Cal State reporting debacle.

* Just think about it, the capital used for the stimulus program comes from three primary sources: 1) explicit tax dollars; 2) borrowed money via Treasuries (e.g., China lending us money); or 3) freshly printed money (which is simply the theft of some value from all pre-existing money). The implication of this three source limit means that in order to "stimulate" the economy, we are actually taking money or wealth from other parts of the economy.

Who is more likely to productively deploy wealth into job creation: private citizens or 500 odd horse trading politicians inside the beltway? The answer is obvious on its face. Thus we know that stimulus is actually the opposite: it is the suction of capital/wealth out of generally productive hands and redeployed by generally non-productive hands.

It is nearly universal that stimulus programs cost jobs always and everywhere.


We can do better than the status quo.

Liberty Quote Of The Day: Cliff Asness

Cliff Asness is known for his role as the founder and intellectual leader of investment firm, AQR Capital. His below quote is directed at The Obama Administration's efforts to nationalize healthcare and establish the provision of health care services as a right.

From TILB's mouth to Asness's fingers:

"Listing rights generally involves enumerating things you may do without interference (the right to free speech) or may not be done to you without your permission (illegal search and seizure, loud boy-band music in public places). They are protections, not gifts of material goods. Material goods and services must be taken from others, or provided by their labor, so if you believe you have an absolute right to them, and others don't choose to provide it to you, you then have a 'right' to steal from them. But what about their far more fundamental right not to be robbed?"

- Cliff Asness

Amen.

We add below this video clip which neatly summarizes our view of The Administration's efforts on so many fronts:



Don't fight it. Simply hand your (formerly) free will over to The Administration and their collection of czars. Why think for yourself when silver tongued aggressors are willing to think for you?

Ah, sweet sweet mindless freedom...

[HT: LB]

T Minus 2 Days Until California Issues IOUs - Wells Fargo And Bank Of America Will Not Commit To Accepting Schwarzies

Get ready, Schwarzies are coming!

We are only two days from California issuing its own currency in the form of IOUs (dubbed Schwarzies by TILB) and we could hardly be more excited!

Schwarzenegger Scrip: we can almost taste it.

Yet, shockingly, until California gets the ratings agency granted credibility to pay off old Schwarzies with new Schwarzies (something akin to the crime Bernie Madoff received 150 years for... and the famous helicopter drop Dr. Ben Bernanke is regularly lauded for), some folks actually seem a bit timid about accepting Schwarzies.

"Who are these Schwarzie hating traitors," you might reasonably ask.

Well, your friendly neighborhood bankers at Wells Fargo and B of A - California's two largest banks - seem a tad bit hesitant to embrace the idea. As if California's mortgage default rate needed another reason to tick up...

B of A had this to say on the matter:

“Any action pursued by the state, such as issuing registered warrants, will require much greater specificity about rates, timelines, terms and many other variables for banks to determine ability to support such actions,” said BofA spokeswoman Colleen Haggerty in Los Angeles. “Speculating on a plan before the Legislature and governor have completed budget negotiations is premature.”

Ha! Is B of A pretending like it actually does credit work on borrowers and underwrites loans? Where was that discipline when it counted?

In any case, I think if we learned anything from the Hartmarx and Chrysler debacles, it is that if our president deems you strategically important (for instance, you either employ 40,000 unionized democrats or you make his suits), resistance is futile; it is not up to the lending bank to make decisions about who gets loans or how defaulting borrowers are treated.

What's that you say? The Obama Administration has refused California's requests for the federal government to help it with loan guarantees or otherwise bailout the state's finances? Now, that just seems mean. Unless, of course, you believe in conspiracies...

You may have noted that so far we have only quoted one of our two friendly neighborhood bankers on the matter of Schwarzies. Have no fear, Wells Fargo issued an equally banal statement on the matter.

However, a little more digging will show Wells Fargo's true opinion on the matter. In a recent speech at Stanford, Wells CEO John Stumpf said the following:

"The state of California is in financial ruin,” Stumpf told those attending a statewide microfinance lenders’ conference at Stanford University. “The budget deficit in California is staggering.”

Not exactly the words you want to hear from one of the largest potential cogs in the Schwarzie circulation system...

Stumpf went on to talk about the economic situation for California's citizens and corporations.

Stumpf said the recession is taking a toll on some of the loans made to creditworthy borrowers who lost their jobs and fell behind on payments.

“Today we’re charging off loans to people we should have made loans to,” said Stumpf, reiterating that the bank avoided many of the exotic mortgages offered by rivals.

...

On the national economy, Stumpf said this is his “third rodeo” or downturn. He pointed to the deep recession of the early 1980s when the prime rate hit 21 percent and the struggling economy of the late 1980s that counted most the nation’s largest thrifts and major banks in Texas among its casualties. He says the economic fallout from the dot-com bust and Sept. 11 terrorist attacks was significant but not as harsh as the earlier recessions.

“This one feels different,” Stumpf said. “It feels different in the respect that the whole world is in recession.”

Welcome to a world where economic realities, put off for decades by politicians and citizens that believed in Tooth Fairy Economics*, come forth in a burst of killjoy that makes everyone play the hand they were actually dealt.


[Hat Tip: JC-FL]



*Okay, TILB is officially copywriting the term Tooth Fairy Economics

...or, perhaps not. We had never heard the term before writing it just a moment ago and were so pleased with its goodness that we were fully prepared to laud self congratulatory genius heapings upon ourselves. However, we subsequently Bing'd it and found out some dude named Tom Woods at Campaign For Liberty used the phrase last February. Two comments: 1) as much as we want to assume he's some lucky deuchebag and keep the phrase for ourself, we love the ideals of Campaign For Liberty; and 2) we still are claiming it for our own. This is like when two scientists make an advancement at the same time and both claim credit for it...oh, dammit.

Nix our cliam. It is his even if it should be ours. He bettered us by four months.

Damn you Tom Woods and your enviable creativity and pursuit of liberty (this guy atually wrote a book that has a forward by Ron Paul; TILB considers that a major portion of a complete life).

Credit where credit is due. We bow to you, Tom Woods.

Dammit.

The Boston Globe's Union Employees Reject Contract Proposal; Imperil The Globe's Future

The future of the struggling Boston Globe was put in doubt today after the writers' guild rejected The Globe's latest and allegedly final contract proposal. Seven votes was the difference (the vote was 277 to 265 which means if seven voters flipflopped, the proposal would have passed).

The parent company (The NY Times Co.) immediately and unilaterally imposed a 23% wage and benefit cut. That will of course be challenged and arbitrated but The Globe says it's either that or shut down.
Link to The Globe's story on The Globe

It seems that blogs plus a few truly national resources may in fact be the last, best hope for investigative media.

At this point, the writers are staring down the barrel of either bankrupting their employer (but hey, as the Chrysler traveshammockery showed them, perhaps they'll end up owning the company - controlling the media seems like a nice option for The Borg, I mean The Administration to go). They cannot strike or else the paper certainly goes belly-up, so a multi-year arbitration process or a negotiated settlement (not likely from The Times standpoint, I suspect) are the most viable options.

This is all kind of sad but fascinating at the same time.

SHOCKER! U.S. Treasury (I Mean "God") Forced Chrysler Into Fiat's Hands

The WSJ is on fire today (see TILB's recent post on the slap fest between The Sheila Bear and The Panda Bear).

They are now reporting internal emails that disclose a juicy back and forth between The Administration and Chrysler. Perhaps not surprisingly, this is perfectly consistent with our Grand Unified Conspiracy Theory.

Click here to read some of the source document emails.

So, let's see:

• Chrysler has unanswered worries about Fiat's health;


• Fiat basically would not cooperate with Chrysler's efforts at due diligence. In fact, a mere "eight days before President Barack Obama announced his support for the alliance in an April 30 speech, Chrysler officials were still bristling over what they considered Fiat's unwillingness to provide even basic information about its finances";


• Chrysler executives referred to The U.S. Treasury as "God" in email (perhaps TILB's Borg references are more accurate than many people think);


• The appeals process, which has been railroaded, still ended with this great CYA quote from one of the appellate court judges, "[the Supreme Court should have] a swing at this ball."


• Government lawyers are now referring to dissident lawyer Tom Lauria as a "terrorist"


• Nardelli confirmed Fiat's role as playing a core piece in our Grand Unified Conspiracy Theory when he worried "that the introduction of Fiat in the U.S. 'may have a negative impact' on General Motors and Ford." [shocker]


• Chrysler advisory team members openly worried that "'Treasury/Chrysler' was 'in bed with a shady partner [Fiat].'"


• And, finally, we learn that Chrysler's advisor from Capstone struggles to master even the very basics of English. This gem says it all, "These washington guys want to show the market (gm, delphi....) that they can be tuff. We are the gueni pigs unfortunately."

This is all very sad. Further proof that the entire Chrysler "process" was nothing but a traveshammockery.

GM Prepares to Die...

...finally, at least almost finally, in a funny Chapter 11 bankruptcy sort of way...and, tomorrow, not yet today.

Tomorrow at 8 a.m. EST it will be final when GM admits to a bankruptcy judge what everyone and their mother (literally) already knew: GM is bankrupt.

Some quick notes on the filing and goals of The U.S. Treasury:

From BreakingNews.com. Click that link for the raw data.

• We The People will supply another $30 billion (initially) on top of the $20 billion we already have lent.
• Goverments of Ontario and Canada will combine to lend $9.5 billion.
• GM will have been lent $60 billion in the last six months, which is fairly amazing.
• Restructuring to breakeven in a 10mm cars sold a year (domestically) environment (we're annualizing nine and change right now, which is down from about seventeen million at peak, I believe).
• Will close 11 plants. Will idle 3 additional plants.
• Will attempt to 363 to assets in a quick sale to strip liabilities and form GoodGM. Will be harder to do than in Chrysler given so many more constituents, but given the Federalis are pushing it, "resistance is futile", as they say in our Administration.
• The Borg, I mean The Administration, has decided that future demand for cars will be smaller cars, so they'll be retooling to supply smaller cars.
• Will honor all warranties.
• UAW took a big haircut - allegedly even bigger than the Bush Administration was seeking (though the environment has worsened since then as well).
• Ownership:

• We The People: 60% plus appoint all the Directors other than the two (one
  each) Canadian and UAW appointees.

  Gov'ts of Ontario and Canada: 12% and a Director.

  UAW via VEBA: 17.5% (w/ warrants for 2.5%) and a Director

  Bondholders: 10% (plus warrants for 15%)

The goal is to have one of the cleanest auto balance sheets in the world and a highly competitive cost structure.

I'll go ahead and say it:

1. Sucks to be Ford (aka, "you next"); and
2. Everything about this is totally consistent with my Grand Unified Conspiracy Theory (it's almost done, I promise).