RealClearMarkets.com: NY Times Cheap Shot on Freddie Mac’s Richard Syron?
I am really enjoying my recent discovery of RealClearMarkets.com. Beyond a great flow of market news it also has some clear features that I find helpful in my analysis, like Unconventional Wisdom a parallel reading of two sides of current issues. Here is a great compare and contrast of the Freddie Mac Warning Memo:
The chief executive of the mortgage giant Freddie Mac rejected internal warnings that could have protected the company from some of the financial crises now engulfing it, according to more than two dozen current and former high-ranking executives and others. -Charles Duhigg, NYT
versus
Actually, all but two of the “more than two dozen” were given anonymity to damage Richard Syron’s career while protecting their own, by my reading of this. One former Freddie Mac executive and one industry consultant are named. Nobody else is. And we are given no idea how many of the “more than two dozen” are shareholders. (Who need to protect their careers?) Or how many of them were found on Yahoo! message boards. (Hey! We don’t know that they weren’t!) –Tanta, Calculated Risk
Forbes.com: Inflated Appraisals–What? Really?
This is certainly no shocker to people in the mortgage business, but it does not negate the collateral damage these inflated appraisals with cause.
The home was appraised at $114,500. The real estate agents dropped the price by $6,000 to make the sale. “We thought it was a steal,” Marie Petrone remembers.
It was a steal – a steal from the Petrones.
As the couple would discover, they were the unwitting victims of an unscrupulous appraiser and – as uncovered by a six-month Associated Press investigation – a poorly designed system unable to keep up with such dishonesty.
The damage is obvious and the foreclosure effects are probably more frequent than expected. These mortgage refinance boom appraisals are likely to leave many homeowners with few options to prevent foreclosure.
Briefing.com: Economy Teetering on Equilibrium or Indecision?
The economy is currently at the infamously most dangerous tipping point–perfect equilibrium of good and bad news. Central Banks, Economists, and Pundits are forced to walk the dangerous fence line.
Nevertheless, the persistent deep gloom simply isn’t justified by the data. The true picture is one of a balance of bad and good, with the final result being sluggish growth. The key word there is growth, however. The U.S. economy is proving extremely resilient and growth continues.
The economic outlook is not rosy. Global economic growth is slowing. Housing remains in a deep slump. The recent rise in unemployment claims suggests an upturn in payrolls is not imminent.
WashingtonPost.com: A Walk Through History–Great Economic Recovery Wrecks
Perverse monetary policy was the greatest cause of the Great Depression. But five non-monetary missteps were important in making the Depression great, and the same missteps damaged the global economy as well. While many are thinking about the Depression, few seem concerned about replicating these Foolish Five today…
NYT: Inflation and Money Illusions
Does inflation hurt corporate profit or motivate growth?
But other things are not equal when it comes to stocks and inflation. Over the last eight decades, corporate profits have tended to grow faster when inflation is higher. In such periods, companies have been able to pass along higher costs to their customers. As a result, even though higher inflation leads to a greater discounting of future years’ earnings, those earnings tend to be bigger than they would have been otherwise. The net result is that the current value of a company’s future earnings remains relatively stable in the face of rising inflation.
Mish’s Global Economic Trend Analysis: Beware of Banks’ Scramble to Refinance Long-Term Debt
Mish cautions us to monitor the upcoming refinancing of major bank’s and insurers’ long-term debt. Based on the size, composition, and market mood this could be a big miss in expectations. Markets don’t like surprises!
In a normal market that would not be such a big deal. In this market it could be a disaster. It all depends on exactly how much the banks have to pay to secure long term financing.
However, the problem does not just stop at banks. Insurance companies, auto companies, airlines, etc, will all be competing for long term financing, some sooner than others.
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I am Bill Rice, the Managing Editor of MortgageLoan.com, providing mortgage news and analysis. These are my morning notes on the mortgage and economic news flow. You can contact me via email: bill.rice [at] mortgageloan.com or follow me on Twitter
About Bill Rice