Is the Other Recession Shoe About to Drop?

A second wave of foreclosures is building:

It is conventional wisdom in the housing blog community (and the OC Register) that a giant wave of foreclosures is coming later this year, but what facts do we have that support this thesis? Today, we take a look at the available data and show this wave in its formative stage.

Foreclosure is a four step process: (1) the borrower quits making payments, (2) the lender issues of Notice of Default, (3) the lender issues a notice of Trustee Sale, and (4) the foreclosure auction occurs on the courthouse steps. Steps 1, 2 and 3 are separated by 90 days each. At any time during this period, either the borrower can get current with their payments, or the borrower and lender can agree to a loan modification. If either contingency occurs, the foreclosure process is aborted.

California passed SB1137 to force lenders to try harder to reach borrowers in default and work out a loan modification plan. Also, the GSEs and many large banks were on voluntary or mandated foreclosure moratoria. This caused a dramatic decline in Notices of Default (step 2). Unfortunately, as I noted Moritorium on Defaults Announced, stopping lenders from issuing notices does nothing to prevent borrowers from actually defaulting (step 1). Borrowers everywhere stopped making payments, and lenders merely stopped issuing notices about it.

The hope of foreclosure moratoria is that additional time will allow lenders to work out the bad loans and avoid the foreclosure process. Unfortunately, it did not work. First, very few borrowers even try to work out the loan with the lenders, and many who try fail to reach an agreement. Second, most who have agreed to a loan modification end up defaulting again; the redefault rate is running at about 50%. And third, financially it is in a borrower’s best interest to give up the house in foreclosure, so the only thing keeping them in the loan and in the home is their sense of morality concerning the payment and their attachment to their properties.

It will come – in Las Vegas, for instance, you can pick up houses which were $400,000 four years ago for $125,000 today. Anyone in a 400k mortgage feels a strong pull to work out a purchase of an equivalent home for a fraction of the price and then just bag it on the more expensive house. Lenders should realize this and thus work out ways to convince people to stay in their homes – they should, in the end, figure out ways and means to set the current mortgage amount in line with current market values with inputs for what the lender paid at the start and what the borrower has paid since the inception of the loan.

In effect, what we need is a bankruptcy re-organization of America’s housing market – its a big, old poop sandwich and everyone has to take a bite. But the banks are cowardly and short-sighted, the government is bent on saving the banks from their folly and the people are going to make rational economic decisions. Ergo, another wave of foreclosures is coming no matter how many moratoriums they have or fiscal hocus-pocus is produced to make it as if economics doesn’t matter – there’s just no economic sense in paying more for housing than you have to.

This second wave of foreclosures will eat into the (mostly mythical) profits banks have been showing of late, which will cause credit to freeze up, with will cause markets to collapse, which will cause a full blown economic depression…and all The One’s spending won’t put Humpty Dumpty back together again. All that money we’ve blown through might as well have been torched in a bonfire – spending doesn’t create wealth; making, mining and growing things does…and if you invest in such things, you’ll make money. Real money – not the bogus wealth of fiat money sifted through a usurious financial system which produces nothing but Chinese slave-goods and fat bonuses for corporate executives who did nothing at all. Liberal financial sharks have done well out of this, just as they have out of every economic debacle since the world started to go off hard money…but Soros having more money won’t make an unemployed truck driver feel very good.

Dumb and dumber, that’s all we’ve been – and we’re going to pay the price. Eventually we’ll work our way out of it, but there’s going to be a price to be paid.

Subversive Phrase of the Day

Given that we are about to have a debate on the Supreme Court:

I am certain nothing has done so much to destroy the juridical safeguards of individual freedom as the striving after the mirage of social justice. – F A Hayek

San Francisco Wants to Tax Your Butt

Trolling through America’s gutters for new sources of funding:

In what he casts as an attack on litterbugs and nicotine addiction alike, Mayor Gavin Newsom wants to impose a fee on an age-old inhabitant of city streets: the cigarette butt.

The proposal, to be introduced next month to the San Francisco Board of Supervisors, would add 33 cents to the cost of a pack of cigarettes, to offset the estimated $10.7 million the city spends annually removing discarded butts from gutters, drainpipes and sidewalks.

Ok, someone tell me how they figured that cigarette butts cost that much to be removed. Bonus question: Can San Francisco do anything else to make themselves the freak show of American politics?

The $5.6 Trillion Dollar Question

Asked by Gay Patriot:

Where’s that “Net Spending Cut” Obama Promised?

Candidate Barack Obama, October 15, 2008, third presidential debate:

But there is no doubt that we’ve been living beyond our means and we’re going to have to make some adjustments.

Now, what I’ve done throughout this campaign is to propose a net spending cut.

Economist Kevin Hassett, May 19, 2009, Bloomberg News columnist:

Extrapolating out the 2007 CBO forecast, our government plans to spend about $5.6 trillion more between 2009 and 2018 than was projected to be spent when the Democrats took over control of Congress.

To put that number in perspective, at the start of the 2007 budget year, Democrats inherited $4.8 trillion in outstanding government debt. That means that all of the deficits that have been run through all of history, funds that were used to finance the Vietnam War and the Iraq War and everything else in between, would be smaller than the spending increases of Democrats over the next 10 years if they are permitted to stay in power and keep up this pace.

Dear liberals: Obama lied. He never, not even for a moment, meant to have a net spending cut. If you believed him, you were a complete fool. If you didn’t believe him, then you deliberately supported someone you knew to be a liar. You pick: you’re either fools, or accessories to lying. Those are your only two choices.

Have fun.

Poll: Reid So Vulnerable There's a Chance Someone From Out of Nowhere Could Beat Him

Things that make you go, “hmmmm”:

Nearly half of Nevadans have had enough of Senate Majority Leader Harry Reid as the powerful Democrat heads into his re-election campaign, a new Las Vegas Review-Journal poll finds.

About a third of the state’s voters would re-elect Reid if the 2010 election were held today, according to the poll, but 45 percent say they would definitely vote to replace him. Seventeen percent would consider another candidate.

I don’t think there could be anything more fun than running for Senate when you don’t particularly care about the results – but even more fun is having a 1 in 100 chance of winning. Who wants to have some fun?

Feingold Proves There's No Such Thing as a Decent Liberal

Just pathetic:

Republicans are trying to pass legislation in the next few weeks to kick off the commemoration of the 100th anniversary of Ronald Reagan’s birth, and the only hurdle appears to be Sen. Russ Feingold (D-Wis.), who is refusing to let the Senate vote on the bill.

Because he wants some pet bill he doesn’t want to put through the regular legislative process – trying to piggy back his project on a plan to honor America’s 40th President…a man so far above the likes of Feingold that its a national disgrace to think that Feingold can even cause this sort of trouble.

Can Democrats Get Any More Chick(poop) Than This?

I mean, for crying out loud:

President Barack Obama’s allies in the Senate will not provide funds to close the Guantanamo Bay prison next January, a top Democratic official said Tuesday.

With debate looming on Obama’s spending request to cover military and diplomatic operations in Iraq and Afghanistan, the official says Democrats will deny the Pentagon and Justice Department $80 million to relocate Guantanamo’s 241 detainees.

The official spoke on condition of anonymity because the proposed changes to the bill were to be unveiled later.

The administration has yet to develop a plan for what to do with the detainees, and Obama’s promise to close the facility is facing strong GOP opposition.

It appears to be a tactical retreat. Once the administration develops a plan to close the facility, congressional Democrats are likely to revisit the topic, provided they are satisfied there are adequate safeguards.

But this is the American gulag! The place where Nazi-like Bush-bots ruthlessly torture people picked up at random for nothing at all! How can Democrats refuse to fund the closing of this miserable, inhuman hell hole?

Oh, because the campaign against Gitmo was just political BS designed to slander Bush and help Democrats to win – they don’t really want these terrorists on the loose and/or getting ACLU representation in American courts. I mean, are you kidding me? Did you leftists really think that (a) Gitmo was the horror your leaders said it was and (b) that anyone with any sense at all wanted to close the place? To be sure, it will eventually be closed – some time after November of 2012 when it can’t affect Obama’s political fortunes, plus or minus, ever again.

Won’t close it now. Won’t admit they were wrong. Of course, you lefty foot soldiers, just what will you do now? Is it too much to ask that you start thinking?

Democrats Trying to Thwart Corruption Investigation

Like anyone should be surprised:

Democrats fix sights on GOP prosecutor

Easley, Edwards probes under way

BY J. ANDREW CURLISS – Staff Writer

John Edwards admits federal investigators are asking him questions. Federal subpoenas were issued Friday related to Mike Easley.

As the separate federal probes into a former senator and the former governor are emerging, Democrats are taking steps to replace the Republican prosecutor who is spearheading the inquiries about the highest-profile North Carolina Democrats of the past decade.

All the nearly 100 top federal prosecutors across the country serve at the will of the president. Any replacement for U.S. Attorney George E.B. Holding, a Bush appointee who has kept a priority on public corruption cases from Raleigh to the coast, will be subject to U.S. Senate confirmation.

The process gives a key role in the decision to U.S. Sen. Kay Hagan, a Democrat who was in the state Senate leadership for several years until she unseated Republican Sen. Elizabeth Dole in November. Already, Hagan has formed a panel to screen candidates. It is led by Burley Mitchell, former chief justice of the N.C. Supreme Court who now works at the Womble Carlyle Sandridge & Rice law firm.

Interviews were scheduled for last week and this one, and Mitchell said he expects to forward the name of a preferred candidate to Hagan by midweek. “We’re definitely working on those right now,” Hagan said in an interview Wednesday. “And hopefully within the next few weeks we can go forward.”

Hagan said any movement is coincidental to continuing investigations.

Uh, yeah; whatever you say, Hagen. Meanwhile, back in the real world what we’ve got here is a long-time Democrat operative seeking to get rid of the GOP prosecuting looking into corruption amongst long time Democrat operatives. If this is coincidence then I’m the Tooth Fairy. We won’t be holding our breath for our liberal friends to be screaming bloody murder about the removal of a prosecutor – expect endless statements about how, hey, US Attorneys serve at the pleasure of the President (provided, in liberal-speak, the President is a Democrat and the US Attorney being gotten rid of has the goods on Democrats).

Here is the crux of the cases:

Edwards, a former senator, vice presidential nominee and presidential candidate, has acknowledged the federal investigation into whether any money given to his presidential campaign — or to nonprofits connected to his campaign — was funneled to his girlfriend, Rielle Hunter. Edwards has admitted having an affair with Hunter, who was hired to make short videos for the campaign.

Easley, governor from 2001 until January, was the subject of a federal subpoena issued Friday to the state Highway Patrol. The FBI wants records and information related to Easley’s private air travel. A separate state Board of Elections inquiry also is under way into a range of activities.

Those probes follow reports in The News & Observer about Easley receiving the free use of cars, free flights on jets owned by supporters, and his relationship with McQueen Campbell. Campbell was chairman of the N.C. State University Board of Trustees until he resigned Friday. Federal investigators have asked for information about the cars and about a Carteret County land development where Easley bought a lot.

This is the sort of stuff which brings down political classes – the sort of thing, that is, which would make Democrats, on the whole, toxic in North Carolina in 2010…and as we know, the primary concern of Democrats is the maintenance of Democrat power. Expect Holding to be removed before these cases go to court and expect Holding’s successor to eventually plea bargain the cases down to nothing. And expect this sort of thing to go on just as long as the Democrat rank and file refuse to hold their own to the standards they insist GOPers adhere to.

Subversive Phrase of the Day

A note about the press:

Hastiness and superficiality are the psychic diseases of the 20th century, and more than anywhere else this disease is reflected in the press. – Aleksandr Solzhenitsyn

Flu Update

Now that the initial panic has subsided, it is time to get down to brass tacks – and its actually looking a bit grim:

The new influenza strain circulating around most of the United States is putting a worrying number of young adults and children into the hospital and hitting more schools than usual, U.S. health officials said on Monday.

The H1N1 swine flu virus killed a vice principal at a New York City school over the weekend and has spread to 48 states. While it appears to be mild, it is affecting a disproportionate number of children, teenagers and young adults.

This includes people needing hospitalization — now up to 200, said Dr. Anne Schuchat of the U.S. Centers for Disease Control and Prevention.

“That’s very unusual, to have so many people under 20 to require hospitalization, and some of them in (intensive care units),” Schuchat told reporters in a telephone briefing.

“We are now experiencing levels of influenza-like illness that are higher than usual for this time of year,” Schuchat added. “We are also seeing outbreaks in schools, which is extremely unusual for this time of year.”

And just wait until the real flu season starts in the Fall – and wait until it hits in the much more septic cities of the Third World. We’re no where near out of the woods on this.