I would have thought the ABA would be against it.

This is really too bad. Yes we can't I guess.

to income inequality because of the myth of the 'American Dream'. The study done by Brookings Institute is also pretty damning: Getting Ahead or Losing Ground: Economic Mobility in America

RebelCapitalist.com - Financial Information for the Rest of Us.

I was looking at the data last month and came up with a 90% figure, which I also ran across at several biz sites. (So either 90% -- 100%, the range itself is startling.)

MBSes, Mortgage Backed Securities, could be tranched any number of ways, so when they state they purchased so many billions, that is really open to interpretation (the problem with having securitized financial instruments, numbering in over 3,000 categories now, is that I'm unaware of anyone is truly expert in the matter, although there is no shortage of charletans claiming to be --- especially at the Fox-owned WSJ and the American Enterprise Institute, always suspect).

They may have issued x number of securities per mortgage, which is where that multiple layers of securitization comes into play, plus those who purchased these securities or CDOs could then combine them with others and issue "securitized notes" based upon their supposed value -- thus simulating the same aspects as Credit Default Swaps to a degree. Also, when they spliced and diced the mortgages into clusters, they may have issued multiple CDOs per batch (or rated tranch), and then issued synthetic CDOs on top of those. A neverending trail of credit derivatives.

What we are seeing, of course, is quantum finance (not quantitative finance), where there is a "particle-wave duality" such as one finds in the realm of quantum physics, where those MBSes may be worth nothing on one day, but worth billions, according to Bernanke and Geithner, on another!

An example of a simplified category of securitized instruments from a single ABN AMRO (now rolled into the Bank of Scotland) prospectus:

Credit Linked Notes, Leveraged Credit Linked Notes, Reverse Exposure Credit Linked Notes, Leveraged Basket Credit Linked Notes, First to Default Basket Credit Linked Notes, Tranched Basket Credit Linked Notes, Leveraged Tranched Basket Credit Linked Notes, ad infinitum....

Good post - Nowhere is the problem more evident than in the natural history of banking and credit at the retail level. Somehow, my (grown) severely mentally ill son got "pre-approved" for a $30,000 automobile loan AND a line of credit at a bank (since merged with Bank of America), despite no job, no income, and no assets. Equipped with the loan documents and a letter from his psychiatrist attesting to his illness and lack of competence in financial matters, I met with the bank manager as well as the automobile dealer -- they had no interest in taking back the car or reversing the loan. We attempted to return the car and they refused to take it. Even their regional management had no interest in undoing the deal. Well, my son drove a Camaro convertible for a year or so, and ran up $74,000 in credit card debt, despite never making a payment on any of it. His only solution was bankruptcy and leaving the car at the bank. This was 10 years ago, and I marveled at the inability of these bankers to grasp simple reality. They treated the whole affair as some sort of game. Reminds me of the "structured by cows" remark at a credit rating agency. It has been ingrained in our culture for some time, and we have seen the tragic and continuing results.
Frank T.

The MSM has been doing this on almost every indicator out there.

That's why I stopped writing up the weekly initial unemployment claims. The numbers are almost always revised (upward) from the past weeks which makes the current week look like a drop....but that's usually because the numbers were revised.

It's way too noisy of a metric, but of course, every week, the MSM runs the headline as if unemployment is dramatically improving (which it is not).

Only last week could one say we had a drop. But still, need to average it out over 4 weeks, IMHO to get even a hint of a trend.

This is it all:

“This recovery will be slower,” he said. “We can’t just pump up consumption and pump up housing again.”

Unfortunately, that is exactly what we are doing.

FYI - this was an interview with Charlie Rose on PBS.

RebelCapitalist.com - Financial Information for the Rest of Us.

MBS aren't the same as mortgages right? It's not a 1:1 ratio, involves CDOs, etc. derivatives.

I'm really under the gun on a project right now so I hope all other EPer's post to "feed the pig" and keep our readers happy with the latest outrage du jour facts.

I live in a pleasant side-by-side duplex on a treed street about three miles from the ocean in the Los Angeles area. This duplex was built for entry level renters or buyers in 1949. A young fellow who landed a job selling insurance and whose young wife had just become pregnant could easily get a mortgage and buy the duplex in the early nineteen fifties. His wife would not have to work and could spend her time raising their children. They would have a paid two week vacation a year and even health care would not be a tremendous burden. In fact that is the kind of person who first purchased the two bedroom one bathroom home where I now live. My neighbors tend to be professionals in the their mid thirties to fifties who rely on two incomes to just scrape by. For many of them a health catastrophe would bankrupt them. Many of them don't take vacations and, although I do, I have never had a paid vacation in my life. A healthcare catastrophe for my wife has just put us $50,000 in debt and now, I too, might be facing bankruptcy - and we have health care insurance.

My central point is that, whatever the direct causes of the housing market collapse, the underlying cause is that in real terms Americans are getting poorer. The discrepancy between what people earn and what it costs to put a roof over your head has been growing exponentially and now two people need to work often more than full time just to keep things going. The gap between real incomes and actual buying power and the cost of housing was bridged through granting unreasonable amounts of credit to people who just didn't make, and would never make, enough money to sustain their mortgages. And if there was a mortgage bubble it pales beside the credit card bubble that is about to burst.

This above most thinking people now probably understand. What is not so widely understood, however, is that the granting of credit shell game, was how the economy in general, and the housing market in particular, gave America's cowboy capitalism system its glowing reputation. That illusion of robustness has been shattered. But now the illusion projecting apparatus has has been transfered to the hands of apologists and spin-doctors who are creating a new myth. It is that the present economic disaster is the result of errors of oversight and uncontrolled greed. This is a kind of conspiracy theory that blames a certain type of CEO for the problem, rather than fundamental contradictions in capitalism.

Real incomes, however, fall for the vast majority of working people because those incomes are viewed as costs to the owners of businesses and capital. If means can be found to reduce the cost of labor and increase profits, whether it is by outsourcing to cheaper labor pools or just replacing backs and brains with technology, then that is what happens. It is what is happening. The contradiction that the owners of capital and businesses are colliding with is that someone has to have money to buy stuff and services, from bubblegum, to I-Pods, to homes - but you are lowering the real incomes of those someones.

In other words, as you become leaner and meaner in business you destroy your markets. This has largely already happened and the 'solution' had been to have workers borrow at a high cost their lost incomes so that they could buy those goods and services. And so bubbles are created. And bubbles burst. And bubbles become ever more subject to bursting as time wears on. But the bubbles mean that markets can be created to buy houses at absurdly elevated prices. Then the houses are turned into equity by the buyers, a form of credit, so that they can buy more stuff such as college educations and not just Beemers. As houses become one of very few means of manufacturing wealth, or the illusion there of, they become increasingly more desirable items. Thus they go up in price creating more equity. Until it all collapses.

It has to collapse doesn't it? It is collapsing here and it will in China and India. Now can someone please supply a solution to this problem?