Tuesday, December 28, 2010

S&P / Case-Shiller Confirms the Obvious (again)

Housing prices are indexed and tracked in many many ways. Please note the massive lag in S&P/CS price data as presented below in this post. But first, let's just look at their data for this release via Bloomberg:

Next, let's look at a few graphs from Reggie Middleton via his BoomBustBlog as well as via ZeroHedge (his post there today a must read/see). Here's a short interpretation on my part:

1.) S&P/Case-Shiller uses a methodology that clearly lags the actual market when it comes to declining sales prices.

2.) Whomever is actually responsible for foreclosing on the many delinquent mortgages out there has obviously been kicking the can down the road, and trying to buy themselves some time. Delinquencies are still running just shy of double the rate of actual foreclosures (when the house is returned to the free market and sold at public auction).

3.) Those who've just stopped paying their mortgage and stayed put in the house have made out like bankers when it comes to bailouts. Who wouldn't like to live rent/payment/tax free for one and a half or two years?

So that's fine. Folks who borrowed way over their heads are living for free. That game will be temporary. What's really egregious is that those responsible for the fraud settle out of court for a fine, and still walk away with their millions! Mortgage fraud as well as securities fraud used to be prosecuted dutifully in this country. Where in the hell is the US Attorney General? The SEC? FASB? FBI? County clerk? Basic math?

However, there are many entities with deep pockets that were hurt by the mortgage fraud and are now pressing the issue legally. They have plenty of money to get the attention of our elected officials as well as our court system.

If it weren't for Allstate's lawsuit, many of us would never see this little slice of truth about RMBS fraud. Read the last two stories linked below, and note the obvious mortgage securities fraud. The macro lesson is simple: many if not most mortgage backed securities were never properly underwritten, nor were they packaged legally into the trusts.

Do you notice how large for profit corporations are the only folks getting justice these days? Defendants settle out of court. It's just the cost of doing business. No meaningful investigations or charges or prosecutions have occurred at all. This fact alone is the single biggest failure of the Obama administration as well as our congress.

THOUSANDS went to jail after the S&L crisis in the 1990s.

How many prosecutions have occurred so far in the wake of this "little" housing crisis? Why do our elected officials continue to ignore the obvious fraud and bail out the bankers on the backs of the middle class?

Where is the rule of law? Gone forever? Private property rights?



People get ready . . . . . . . . . . . there's a train a comin'