Sunday, March 29, 2009

Future mortgaging woes and the Shadow Banking Industry

"Throughout 2007 and 2008, one hedge fund after another failed and investment banks like Bear Stearns Cos. followed, and the system began to shut down.

The plunge in credit was precipitous. Investors bought $900-billion (U.S.) of securities backed by car loans and other consumer and small-business loans in 2006. By 2008, that had plunged to $150-billion. And in the first three months of 2009, before TALF, investors were willing to buy a measly $2-billion.

In Canada, the disappearance of the market for riskier mortgage-backed bonds means that companies like Xceed Mortgage Corp. are unable to renew mortgages for many customers. That could leave as many as 25,000 borrowers unable to renew their home loans."

David Dodge and others as well, weigh in on the issue of regulating the Shadow Banking Industry. Many seem to be of the opinion that TALF may not achieve it's desired effect due to greatly reduced demand for credit.

"It's the wrong way to go if we think that encouraging people to borrow more and leverage up more and to spend more will get us out of this mess, because that's what got us into this mess in the first place," Ms. Tavakoli said.

It's far from clear that people who are struggling with the recession are even willing to step up to buy new cars and consumer goods, no matter what the governments in Canada and the U.S. do to try to get people borrowing and spending again.

"The demand for credit is way down," said Bill Dunkelberg, chief economist for the U.S. National Federation of Independent Business. Mr. Dunkelberg is also chairman of a small community bank in New Jersey, where he said he sees a big decline in loan applications. Because of that, he said, the Fed and the Treasury may be "pushing on a string" with TALF."


  1. CHARLES! I found your old buddy, the Hairy Monster!

    You will find him here,

    He is posting under two names, both old favorites of his. Harry S and Observant. Must be that Multiple personality disorder thing that's been bothering him for a while.

  2. 58 comments on the G+M story so far and not one supports the governments action plan.

    We knew last spring the economy was in big trouble, they said, solid as the Canadian Shield.

    We all knew last fall government was headed for big deficits but they said, a small surplus.

    We know the `credit crunch` is really consumers that have spent their credit into deficit leaving little if any borrow and spend ability.

    Either the stupidity of a government without an economic clue or the sheer arrogance of the lies is historic, and it`s bringing the LPC back to life.

    If given a choice between a clueless government, or the biggest liars, or the biggest crooks, the people will choose the LPC because if they have enough savvy to run elections on the tax payers dime the`re smart enough to let a few crumbs slip to the floor for the peasants.

    lol, choose wisely

  3. Not disagreeing with anything you wrote IP, but will add that I predicted long ago that the only strategy Iggnatieff has is to wait his turn. He's not impressive in anyway that I can see. In fact, as a political opponent, I would almost think that Harper would include him in his prayers.

    God bless mummy, God bless Daddy, and God, I know I have been a good boy because you made Micheal Iggnatieff leader of those woe begotten Liberals.

  4. "the only strategy Iggnatieff has is to wait his turn"

    And yet the LPC is polling like a contender.

    Just goes to show how fed-up with the clueless lies the people are.

  5. The Liberals were polling well before the last election was called too, and Ontario looked strong until that idiotic political strategy of Green Shift hit the fan. Not saying it was a terrible plan, just that it was a political death sentence. I've read that it was Igg's idea, but I have never seen that discussed at length.

  6. "idiotic political strategy of Green Shift hit the fan"

    My view differs. I think the green shift helped, they lost ground in Ontario because they lacked an action plan to counter the CPC `steady as she goes` plan and deal with an obviously troubled economy.

  7. I take part of that back. The Green Shift concept wasn't idiotic, the ease of tagging it as a crazed liberal tax scheme was what made it an idiotic strategy. Proof is in the pudding. Liberal support tanked as quickly as the CPC seized on the golden opportunity laid at their feet.

  8. There is nothing like throwing someone drowning in debt a concrete block in the shape of a life preserver.

    Pretty soon I will be asking the chicken-or-egg question: What came first, debtors not servicing their debts, thus causing the collapse of the financial and then the economic sector; or collapse of the financial sector due to lack of substance, leading to economic downturn, leading to reduction in employment income, thus making it impossible for debtors to service their debts?

    Was not the real problem of the financial sector the fact that "priced-to-market" pokes without pigs - ABCP and similar instruments - no longer were bought by greater fools, ending the Ponzi scheme and causing the implosion of the sector?

  9. Ignatieff will become PM by default just as Harper did. Harper won because the country was tired of the Liberals, and Ignatieff will win because the country will be tired of the Conservatives by then.

    Dion was a poor SOB who did not have the party behind him. The problem with the Green Shift was that neither Dion nor the LPC exploded the Conservative lies turned against it. Dion could not communicate well enough in English to do it on his own, and the party stalwarts left him twisting in the wind to force his replacement after two years of "buyer's regret".

    My vote in the next election will be ABCOL, Anything But Conservative Or Liberal.

  10. Clint Eastwood, Raquel Welch, Sean Connery, Zsa Zsa Gabor and I are starring in a new film, scheduled for release Christmas Day 2009.

    Titled "The Good, The Bad and the hairy", it portrays one man's longing, and ultimately futile search for a crosswalk painted black on a black background, set in the magnificent Himalayas.

    A crossbreed between a spaghetti western / thriller / horror / comedy / adventure, the film lasts 2 1/2 seconds!

    Thank you C.One for the link to life in hell, and occasionally I will pop in and, on behalf of all of of us, say hi to PleaseFondleMyBum!
    This is a newer version of How Pilots Welcome Passengers. --

    More to the point, The Flea wants a holiday (commentary by Dustin Hoffman). --

    "Since the modern world recognizes only wage earners as "productive" members of society -- housewives, traditional farmers and the elderly suddenly become identified as "unproductive." -- Helena Norberg-Hodge, anthropologist, speaking about the changes in traditional societies as they modernize

    Wage-earners are being discarded across the globe, thus becoming unproductive and inefficient, wasting space.

    There was an episode of Star Trek: The Next Generation, where the inhabitants of a planet had to commit suicide by age 60, so this would keep the population relatively young and healthy.

    Will this happen here, now that humanity is becoming obsolete?
    Beee-youuu-ti-fulllll day dans L'Okanagan -- sunny, breezy and cool. Well below the norm.

    This should screw the worldwide financial system up completely, and Russia says go for it! --

    Looks real good on Gordon Brown, the pathetic zionist lap-dog! --

    'Owzabout a global 'false flag' cyber-attack? In other words, the grid suddenly goes blank. --

    Another 'false flag'? Who benefits from involving other countries to do their dirty work? --

    "Although the Canadian researchers said most of the computers behind the spying were in China, they cautioned against concluding that China's government was involved.

    "Ronald Deibert, a member of the research group and an associate professor of political science at Munk, said: "This could well be the CIA or the Russians. It's a murky realm that we're lifting the lid on."
    Webmaster's Commentary: "I notice that they give out no information that would help computer users determine if their computers were indeed targets."

  11. Don Werry and B. AppyMarch 29, 2009 at 9:18 PM

    "the ease of tagging it as a crazed liberal tax scheme was what made it an idiotic strategy"

    Absolutely. The LPC committed to collect $15 billion in new taxes and promised to give back $9 billion took the entire country back to the 93 axe the tax promise. The LPC should avoid tax issues at election time even though we`ll be seeing a huge increase in taxes to pay for an explosion on government spending and an implosion of government revenue.. The PM said it won`t be a structural deficit, yep, solid as the Shield.

  12. You are right all day long Don. It's all in the Salesmanship. Something that they don't teach in the course of earning a PHD in Sociology apparently. But something that is inherent in the political animal.

    I have a feeling, we won't be burdened by heavy intellectual considerations when it comes to Iggnatieff's political campaign platforms.

  13. Comrades,I will respond to your thoughts tomorrow. I received news earlier today that my favorite young Soldier has received orders to deploy in Afghanistan, and I am having trouble dealing with that.

  14. Hope you'll be able to work through it Comrade.

    Ditto what Herb said about ABCOL.

    Not up on the CBC site yet but they had a good Sunday Edition this morning with a panel of Canadian economists.

    Peace dudes.

  15. C.O.,

    I bet you have more trouble dealing with that than the young soldier. He's going for the real thing, what he has been trained and training to do. There will be challenges, companionship, adventure, professional recognition, good money, and a medal at the end. Besides, he will be indoctrinated in the importance of the mission, and the casualty rate actually is minimal.

    Sorry to sound hardnosed, but soldiers look at their jobs differently. That's why they chose a career with a purpose greater than their selves. It's old farts who question missions and worry about them.

  16. Morning Comrades. Dee, it's only for me to worry and wonder.

    Herb, for those who are new to it, you pretty much covered it. You even covered money, which may be a factor for this fellow. But he is within a year of the 20 mark, already been to Bosnia and Kosovo and planned to retire at 20 and begin the process of taking over his father in laws business. He's still young by old fart's standards, if you get my drift. Given his assignments in recent years, I thought him likely to miss this, and that is part of my confusion.

    There could be a number of factors that are bringing this about, and I have my suspicions, but in the end, there's nothing I can do about it. Except worry.

  17. Charles, re: PleaseFondleMyBum. I thought about signing up for the site just to torment old Hairy some more. He was such a codswallop.

  18. C.O.,

    if he is looking at the 20-year release point with an unreduced annuity, he is an Old Sweat who knows the score. And with tours in Bosnia and Kosovo, he should have no problem dealing with his situation in Afghanistan.

    No guarantees against IEDs, of course, but the odds are low, and the soldier's normal fatalism should protect him from undue concern. The worst part will be another separation from the family, but it will be the last one.

    Tell him "Pro Patria" from me.

  19. absolutely nothing

    "it's only for me to worry and wonder"

    For the many that seek resolution through solution, military might is a waste of resources.

    For the few that wield the might war, it is an oversimplified and overrated resolution of the winner, none the less still considered a victory.

    Fact 1. The stimulus plans has little chance of reversing the course of the global economy.
    2. The Democrats have put US troops in armed conflict more than the Republicans.
    3. Cliton once stated the big losers in war were women. How she feels about men removes conscionable objection from the equation.
    4. VP Bidens has a self interest history of pitting one group against another.
    4. Both China and Russia having been increasing military spending.
    5. Obama is a lawyer.

    I`d be more worried about the global civilian population than well armed military personal and that should cheer all us worries up.

  20. I will do that when I get a chance Herb. This all happened in a very hurry up manner and he goes in couple of days.

  21. Watts, I remember that statement about women being the big losers in war, and thought it a very curious thing to say. I hardly think that defining winners and losers in war can be achieved through that approach.

  22. "defining winners and losers in war"

    Nor can I understand the process when resolution through solution is not defined by losers but by achievement.

    Will the future be defined by achievement or the centuries old tried and failed winners and losers?

    Earlier you touched upon the effect of wealth on politics. I believe this is the one time wealth should look beyond letting politicians decide the winners and losers and cast a vote for achievement.

    resolution through solution

  23. Watts, don't be holding your breath waiting, k?

    There were and still are a number of options that would have eased the fear and the crunch so to speak. Such as refinancing debt at the source, consolidations and in some cases pro rata programs. Better to keep people in their homes, than watch property values fall off the cliff. Better to bundle individuals debt loads, than call it and force them into bankruptcy, better to extend flexible terms to small businesses when they still have a chance of survival rather than have them close altogether, and end up selling the assets for pennies on the dollar. Better to let people commit to extended payment terms, or pro rata payment structures, than sink 'em outright.

    But that doesn't fit with modern credit granting and administration procedures, as there aren't enough people on the ground to work out the terms for all those who could be salvaged. And it doesn't fit in the perspective of government paper shuffling twits either. Their feet aren't close enough to the ground to want to, or possible have any idea how to do that.

    So they pour in taxpayers money from the top of the system instead, expecting these very people who created the problems to somehow miraculously fix them, to somehow restore confidence in a system that is based on gross over leverage of capital. It seems clear the focus is to salvage as many wealthy and influential parties as is possible, at the expense of everyone else. Even the unborn.

    On top of that,just to add insult to injury, we have to listen to Wall Streets Oliver's snivel about not enough porridge in their bowls.