It’s time to start scrutinizing unemployment as the QE starts to spew reserves into the vaults and mattresses of American Business Enterprises. Here’s the schedule for those who wish to remain awake:
—– Thursday, Oct 21st —– 8:30 AM: The initial weekly unemployment claims report will be released. Consensus is for about a decrease to 455,000 from 462,000 last week (still elevated).
Bill McBride @ Calculated Risk votes for a decrease. I expect to see an ‘unexpected’ increase of 8,000 or so. As more funds flow, look for more peeps on the unemployment line …
Meanwhile, the Fed suggests that it has more options at its disposal other than zero- percent interest rates and holding bankers hostage with the threat of more bailouts, It can also illuminate the path to enlightenment!
I’m not making this up: Sez James Hamilton:
More than one tool for the Fed
One theme that emerged from the monetary policy conference at the Federal Reserve Bank of Boston on Friday and Saturday is that, as I stressed in my discussion of the recent FOMC minutes, the Fed is not thinking of large-scale asset purchases as the only tool available in the current environment. Federal Reserve Bank of Chicago President Charles Evans made this quite explicit in his remarks at the conference:
If the Federal Reserve decided to increase the degree of policy accommodation today, two avenues could be: 1) additional large-scale asset purchases, and 2) a communication that policy rates will remain at zero for longer than “an extended period.” A third and complementary policy tool would be to announce that, given the current liquidity trap conditions, monetary policy would seek to target a path for the price level.
Huh?
I appreciate James H. interpreting ‘Fed- speak’ for me. “… seek to target a path for the price level.” What does that mean in English? What price level, exactly? High, low or medium? I love reading these guys and their total disconnection from anything that resembles ‘real’. They make me feel good about my life!
The takeaway:
A related complication is the fact that the market has already anticipated substantial additional LSAP. My guess is that an additional trillion dollars in purchases is already priced into current bond yields and exchange rates.
For all these reasons, the key message of the November FOMC statement may not be the size of purchases that the Fed announces, but instead the framework it offers as guidance for exactly what such purchases are intended to accomplish.
In other words, the entire program depends on the success of Bernanke’s bullshit.
There has to be a black swan in there somewhere …
Meanwhile, ‘Mortgage- gate’ is turning into a boil on the behinds of the ‘Too Big to Fail’ banks. Watch this CNN video:
Here’s more, the drill- down of Bank of America indicates the size of the potential fallout:
Escalating put- backs/rescission requests have the potential to bring back on- balance sheet billions of dollars of mortgages which were sold to or securitized by third parties.
How many billion$ for BAC? How about $60b. Total for the industry could be $200b. The fallout is huge because a large percentage of loans aren’t even in play; loans sold to private investors not to the GSEs or monoline insurance firms. Once private firms gain control of servicers they can pressure the TBTFs to take back defective loans in a multi- trillion dollar portfolio.
Meanwhile, the Obama regime misses yet another opportunity to do something positive and hold refractory business operations to account. Short of that, Obama could order another foreclosure moratorium – since there is a defacto moratorium, already. Instead, an obscure regulator has issued a memo:
Four-Point Policy Framework
For Dealing with Possible Foreclosure Process Deficiencies
1. Verify Process — Mortgage servicers must review their processes and procedures and verify that all documents, including affidavits and verifications, are completed in compliance with legal requirements. Requests for such reviews have already been made by FHFA, the Enterprises, the Federal Housing Administration, and the Office of the Comptroller of the Currency, among others. In the event a servicer’s review reveals deficiencies, the servicer must take immediate corrective action as described below.
2. Remediate Actual Problems — When a servicer identifies a foreclosure process deficiency, it must be remediated in an appropriate and timely way and be sustainable. In particular, when a servicer identifies shortcomings with foreclosure affidavits, whether due to affidavits signed without appropriate knowledge and review of the documents, or improperly notarized, the following steps should be taken, as appropriate to the particular mortgage:
3. Refer Suspicion of Fraudulent Activity — Servicers are reminded that in any foreclosure processing situation involving possible fraudulent activity, they should meet applicable legal reporting obligations.
4. Avoid Delay — In the absence of identified process problems, foreclosures on mortgages for which the borrower has stopped payment, and for which foreclosure alternatives have been unsuccessful, should proceed without delay. Delays in foreclosures add cost and other burdens for communities, investors, and taxpayers. For Enterprise loans, delay means that taxpayers must continue to support the Enterprises’ financing of mortgages without the benefit of payment and neighborhoods are left with more vacant properties. Therefore, a servicer that has identified no deficiencies in its foreclosure processes should not postpone its foreclosure activities.
FHFA will provide additional guidance should it become necessary.
Impressive response, no? I like the ‘avoid delay’ part. What the banks would give to be able to delay the predictable outcome of their own mismanagement for … as long as the Fed can hold the threat of bailouts open. Meanwhile, the foreclosure mills are encouraged to run the deadbeats out the door as fast as possible. “Don’t delay!”
It’s deadbeat vs. deadbeat it’s hard to know who to feel sorry for.