Merry Christmas – Open Forum

Posted on December 24th, 2008 in Mr Mortgage's Personal Opinions/Research

I want to thank each and every one of you for making this site one of the premier places to go for mortgage, housing and credit insights.  Together, we are helping people and making a difference and that’s what it’s all about.

As you know, I feel that getting the real story out as quickly as possible is paramount and part of the solution.  If not for the relentless flow of housing, mortgage and credit mis-information and corporate opaqueness beginning with the first large-named Subprime lender implosion in Nov 2006 (Own-It Mortgage) — arguably this crisis of confidence would never have led into a full-scale global rout.

If folks were not intentionally kept in the dark about the seriousness of present times for so long, perhaps the October market violence would have happened previously and over a longer period of time, creating much less devastation.

But ‘the truth’ is getting out slowly but surely.  As that happens to a greater degree, the healing process can begin.

I wish your and your’s the best Holiday’s ever. -Best, Mr Mortgage

19 Responses to “Merry Christmas – Open Forum”

  1. Seek truth from facts as an old, deceased pragmatic Chinese Communist used to say. Every society has its euphoric episodes where recourse to rationality is not only abandoned, but affirmatively ridiculed.

    Years ago, I thought Peter Eavis deserved a Pulitzer for his work decoding Enron’s elliptical accounting statements well in advance of the collapse of the company (I know, he hasn’t done so well since), and you deserve whatever similar honors and accolades exist for your work in demystifying the world of mortgage finance. While we are probably ideologically very different, we both share a belief that it is possible to inform people about what is happening around them, so that they may be empowered to take action to transform society to their benefit.

    Hope you and your family have a delightful holiday season, and, if you are interested, we would be delighted to interview you on KDVS again.

  2. It is always better to have hope and be optimistic. However, wishful thinking may lead to unpleasant results. The “experts” are saying that we are near the borrom of the housing crisis. Unfortunately, the same “experts” said that a year ago.

    Today, the situation is different. As an analogy, we take an annual physical exam, even though we feel fine. The Annual Blood Test usually identifies whether we are ill or healthy. Recently, the National Association for the Self-Employed (NASE), ,ran a survey which I created to diagnose the small business involvement in ALT-A and Option ARMs mortgages. The results were astonishing and you, Mr. Mortgage, were kind to bring it to the attention of your readers.
    The sick portion of our financial “body” is the millions of self-employed micro-business owners who have the ALT-A and Option ARMs mortgages who are expected to fail in the resets to begin in 2009. Their failure will result in an increase in Foreclosures and Job Loss.

    The Policy makers in Washington should recognize this and develop strategies to be “Proactive” rather than “Reactive” to the crisis that will enfold shortly.

    There is a solution and it requires a coordinated effort on the part of the SBA, the Banking Community, and Congress. In fact, this should be addressed by the Obama Transition Team as they develop the Economic Stimulus Package. As the Obama Administration seeks to create 3 million new jobs, they should realize that “job retention is as important and job creation.”

    Happy Holidays and a Happy and Healthy New Year for us and the Economy.

  3. Mr. Mortgage,

    Thanks for providing a wonderful site where one can turn and get a fast in-depth analysis of the latest developments. Your keen insight and the ability to break down concrete examples for the layman to understand is invaluable. You Mr. Mortgage, stand as a testament that disproves the theory that “Nobody saw this coming”.

    For better or for worse, the general public aparently still does not have a clue as to the severity of the situation. Our leadership should have implemented economic action some time ago. Instead they seem to frozen until the Obama administration comes into power.

    The growing distrust in government I see building coupled with rising unemployment could lead to a blow-off in the form of civil unrest. Let’s hope the government gets it’s act together before we have to deal with yet another episode of “Nobody saw this coming”.

    Best wishes for you and your family. We appreciate the time you devote as one of the “Paul Revere’s” of the California real estate crisis.

  4. Mr. M:

    Thanks and gratitude for the diligent work to shine a light in a climate of deception. We will need honest discovery like yours more & more as the days pass and the deception mounts. Take a break, calorie-up and get ready to spine-up for the New Year coming. RichardEstes has it right: We do live in interesting times…

    Mr. M., Bert, Peterb, Richard Estes and all the rest of you guys – Merry Christmas & Happy New Year!

    Peace –


  5. Hanson,

    You are the man and I wish you and your family a happy holiday. As I have studied your work and know the industy very well get ready for next year. But why am telling you this (you already know).


  6. Merry Christmas, Mr. M., to you and yours!

    Thank you for a quality, educational site.

    Please enjoy your celebrations.

  7. Yes, it’s 2 minutes to Decemeber 25th and I am scanning the mortgage blogs…eyecarumba! ( I am waiting till the house falls asleep so I can start wrapping (life does continue folks))

    My heartfelt thanks to you Mr.M. for your excellent insight and leading dialouge. I do look forward to scanning your posts as well as the faithfull follower comments. All the best to everyone for the new year.

    Rest assured, in time, it will get better. It truly will…

  8. It’s people like you Mr M that make a huge difference and give us an alternative to mainstream media. Thanks

  9. thank you, Mr. Mortgage, and Merry Christmas

  10. I’ve been a reader from the beginning! I give you kudos for being early and right from the beginning. Along with your other bloggers at “the housing bubble blog”, “sacramento landing”, and “sac real estate statistics”. You your analysis and supporting data are unparalleled in any medium! Look forward to reading in the days, weeks, months to come!

  11. Mr. Mortage,

    The best to you and yours in the upcoming year.

    Thanks for your due diligence.

  12. Mr. Mort. …..thanks for not lying to us.

    Wishing everyone a better New Year.

  13. Thank you for reminding us that ignorance is not bliss!
    Look forward to more you tube videos in 2009. You are going to need them to reach more people.

    The tsunami is coming! Surfs up!!

  14. Hey Mr. M.,
    Thanks for all the info and insight. Remember, that for real estate and spider webs the three most important things are location, location, location.
    Here’s to a great 2009!

  15. Well it says “open forum” here and so far, it is all these wonderful comments about Mr. Mortgage. There is a danger here and some of you may have recognized it. If Mr. Mortgage were to continuously read consecutive comments on how wonderful his blog is and what a great service he is providing, his head could grow with each post, resulting in an explosion in which we could lose him forever. If that were to happen, we would all be the loser and forced to retrieve our data and opinions from an inferior housing blog site. With that in mind, I am throwing in a “break post” to relieve the building pressure. I present to you a BertDilbert Christmas day exclusive and I am going to call it…..

    What’s in Your Wallet

    Many of you probably would not touch mortgage paper with a 10 foot pole and if you did, you would apply a steep discount to reflect true value. What if mortgage backed securities were creeping into this “backing” behind the paper that you carry in your wallet? For each dollar issued by the Federal Reserve, there is a corresponding dollar held as collateral against the note issued.

    Every Thursday at 1630hrs EST, the Federal Reserve releases a statement called the H.4.1 statement “Factors Affecting Reserve Balances”. At the very, very bottom of that report in item 9 contains the information regarding the backing of our Federal Reserve Notes. Of course when Christmas falls on a Thursday, it would be released on a Friday.

    At one time when we were on the gold standard, our notes were backed by gold in the form of certificates. That was subsequently downgraded to gold certificates, treasury and agency debt and IMF Special Drawing Rights certificates. In addition there has been another classification called “Other”. I for one think that the American public deserve to know what “other” is. In the very least, Congress should be informed. Many of you are likely aware that Bloomberg has been sniffing around the Federal Reserve asking questions about “What’s this and what is that and who got what where.” After failure to obtain the desired information under a FOIA request, Bloomberg filed a lawsuit to properly obtain this information. The answer came back “Trade Secret”.

    Does the backing on our paper dollars also fall under this “Trade Secret” status? I can understand a formula for a soft drink falling under trade secret status, but placing that on our money? Do we not deserve a note to the financial statement? This category called “other” has been creeping into the backing. It started with about 30 billion at the beginning of the year. It is now over 300 billion dollars, about half the TARP.

    Let’s take a moment and enter the time machine and go back to a time when the current crisis was having to do with Mexico and Pesos. You are entering the period of early 1995 and sitting at the table of a FOMC meeting with Greenspan at the chair. Our current crisis is mortgage paper. If Bernanke ran short, could we end up with MBS on the balance sheet backing our Federal Reserve Notes? Would Congress be notified in such an event? It is time to enter the FOMC meeting at page 135 of the document transcript.

    MR. MELZER. One last question and then I have just a couple of comments that I would like to make. This has to with the excess collateral in terms of backing U.S. currency. I recall that when we warehoused a lot of foreign currencies for the ESF before, we got into a problem with fairly narrow excess collateral. If we do this $20 billion, we will then in effect substitute these foreign currency holdings for domestic securities. And when we have to sell domestic securities, we will have less of what is viewed as acceptable collateral to back the currency. If we exceed those limits, we have to announce to Congress that we are backing our Federal reserve notes with other types of assets. What is the likelihood of having to make that sort of announcement?

    MR. KOHN. I do not know what the current situation is. My guess is–and it is a wild guess–that if the warehousing got up to $20 billion, we could be in that situation.

    MR. TRUMAN. I don’t think we have an obligation to announce to Congress. We have an obligation in the sense that Governor Partee once said to Congress that we would use our foreign exchange holdings last to collateralize our Federal Reserve notes.

    CHAIRMAN GREENSPAN. If we get to that point, we can always
    do an off-market swap with the Japanese or the Germans.

    So just exactly want is this category of “other”? Is it Yen, Euro, Mexican Peso’s or Mortgages? All we know at this time is what it is not, the gold and treasuries are already listed. The Fed might be able to brush off Bloomberg with “Trade Secret” but with BertDilbert it is just not that easy. I believe that Americans have the right to know at minimum with a footnote explanation.

    Here is a link that is one statement back from “current release” If I gave you the current link it would change tomorrow when the new release comes out. It is at the very bottom of the release and the amount in question is 336 billion and change.

  16. Happy Holidays to everyone on this site!

    MM, your work is much appreciated by me. It’s been very helpful for my asset allocation for the coming year. Your insight and analysis are as good as I’ve seen. Please keep it up.


  17. C.C.

    Strangely, we have no H.4.1 statement from the Fed today as promised…. Can’t say I have ever seen them miss a date…

    To what might you attribute this little anomaly? It seems as though a certain problem must have developed…

  18. Happy Holidays to you and yours, Mr. M.

    Many thanks for this site. I read it daily, it’s been an eye-opener to say the least. You’ve helped more people than you probably will ever know. Thanks for all the very hard work and for keeping it free on the net.

    Thanks also to all of the posters who keep it informative, lively and interesting. You make it what it is. Best wishes to all of you as well this holiday season. Let’s hope that 2009 brings better news & times for us all.

  19. Happy Holidays, Mr. Mortgage.
    Your blog is one of the most informational valuable blogs on the net.
    2009 will be a trying time for us all. I’m sure nearly all companies will go through lay offs or salary cut backs and contractions will continue to be self feeding.

    I secretly would like to be laid off and collect unemployment while I try make a new income stream. I’d be producing a product and selling it. That might be a bad idea given excess cash has and will dry up, but it’s more of a dream than a sure thing. One important thing would be another good made in the US and potentially exported.

    Although I think if my company got chopped in half, I’d be on the favorable side of the knife. Then I guess I should just be considered lucky to have a job. I guess it’s a win-win in a twisted way.

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