Look Past The End Of Your Nose For Once

This Kung Fluey shut down is going to have MASSIVE repercussions here in the not too distant future.

Like within two months, max.

I would like you to notice that this is not some Zero Hedge financial doom piece,.

Coronavirus economic threat — A mortgage industry calamity is looming

Under the CARES Act, Congress has invited millions of Americans to stop paying their mortgages. The impact of this massive unfunded mandate is that the U.S. financial system is headed for a potential default when the cash flow expected from millions of Americans does not arrive.

Bear in mind that these same Americans will stop making payments on car loans, credit cards and other obligations at the same time that they stop paying the mortgage.

The Trump administration has been slow to fashion a solution for dealing with the cash shortfall that will hit the U.S. financial system in about 30-45 days.

The mortgage industry, including banks, nonbank lenders and servicers, and the government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac, will be able to make required payments on $7.7 trillion in mortgage-backed securities in April. But by May, the system will run out of cash and neither the banks, the nonbanks or the GSEs will be able to pay the holders of mortgage bonds – bonds, by the way, which are guaranteed by the U.S. Treasury.

Snipped

 

One big obstacle facing the Trump administration in fashioning a workable solution to fund missed mortgage payments is Federal Housing Finance Agency head Mark Calabria.  Recently, the GSEs Fannie Mae and Freddie Mac had a liquidity facility ready to put in place to support conventional issuers.

Meetings were scheduled with members of Congress to discuss the plan. Then, suddenly and without any explanation, Calabria ordered the GSEs to stand down and shelve plans to support the industry. To say that people in and around the housing industry were flabbergasted is an understatement.

Following Calabria’s action to shut down the servicer liquidity facility planned by the GSEs, the Financial Stability Oversight Council or “FSOC” met and decided to take a “wait and see” approach to providing liquidity to mortgage servicers, banks and nonbanks alike. The FSOC’s decision was largely taken because of erroneous advice from Director Calabria, who has never actually worked in finance much less in the housing industry. The FSOC and Director Calabria are playing with fire.

The White House, Treasury and Federal Reserve need to put aside Director Calabria’s flawed advice and announce a “solution” to the liquidity issue for agency residential mortgages this week.

We then have a couple of weeks to work out the details, which in simple terms involves the bank and nonbank servicers running an overdraft secured by the mortgages and financed by the Fed.

If a solution is not put in place quickly, then the U.S. Treasury faces the unseemly prospect of financing the payments to agency and Ginnie Mae bond holders in extremis.

The U.S. will be on the edge of the precipice and within just days of a sovereign default.

Anybody who thinks that the market for U.S. Treasury securities can survive the collapse of the agency and government-insured mortgage markets should think again.

sham wow

 

The Coming Collapse In U.S. Auto Sales

Automobiles are not moving off the parking lot.

That’s according to an industry report that showed a sharp decline in auto sales across all auto makers—see table. Meanwhile industry inventories have been climbing up from an average of 55 days back in April of 2015 to 70 days last month.

Coming after months of sluggish sales and generous incentives, the big drop in April sales could be a sign of an impending collapse which could parallel that of 2008-9.

 

Unemployment Nightmare Lurches Economy into Depression-Era Scenario

 

  • U.S. jobless claims surged to 1,000% of financial crisis highs with 6.6 million new filings.
  • The data suggest the coronavirus recession will be deeper and longer than predicted.
  • The U.S. is on track to suffer depression-era conditions if job losses continue.

U.S. jobless claims doubled this week, with 6.6 million people filing for unemployment benefits amid coronavirus shutdowns. That’s 1,000% as high as the peak of the Great Recession. Over the past two weeks, about 10 million people lost their jobs.

Unemployment Spike Could Be Dangerous

Of course, the reason Great Recession job losses don’t look quite as shocking is because they happened over a longer period of time. The enormous spike we’re seeing today is the result of millions losing their jobs at once rather than over the space of months.

Which is more dangerous? It remains to be seen.

 

States overwhelmed by previously unimaginable layoff numbers

 

In Michigan, the state unemployment filing system crashed this week because it was overloaded. In California, it may take much longer than usual for hundreds of thousands of jobless people to get their benefits. In New York, one laid-off worker says she called the state labor department 800 times before getting through.

As previously unimaginable layoff numbers pile up across the country, the state-by-state systems for getting benefits into the hands of people who lost their jobs are stressed, inefficient and not sending money quickly enough to the people who most need it. And it may only get worse: The weekly unemployment figures that will be reported Thursday are expected to climb higher than last week’s record-shattering totals, thrusting more people into already overwhelmed systems.

I could go on and on but I think you are probably getting the picture by now.

If not, here is the condensed version,

shit sandwich

Don’t forget to say Thank You.

17 thoughts on “Look Past The End Of Your Nose For Once

  1. I owed $900 on my travel trailer, the only debt I had with the exception of medical debt I have accrued with fighting this two year venous ulcer on my leg. I paid off that said trailer with my bribe money first thing this morning once it hit. I paid everything else off over the months with my little voice in my head, the same one I share with six others… said we are heading for a hell of a fucking crash. I am being vindicated. It was a long haul, eating P&J sammichs, cheese sammiches and cheap soup and cheap veges and fruits but I did it. You are right Phil, if our grandparents were alive for one day they won’t recognize this depression we are entering. Glad I am fat, I have some back up, I fell sorry for skinny assed Phil…

    Liked by 1 person

  2. Now, the Old Testament was TO Israel, but also FOR us. Not the dietary and ceremonial laws, those were figures and superseded. But we can learn from the 7 year Sabbaths and the 49 year Jubilees. No oligarchs, no robber barons, everyone with his own land, no perpetual crushing debt.

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  3. You’re probably right Phil.

    It depends on Trump. If anyone can bring America through this, he can. Up here in Canada we are just fucked and cucked. Justin Trudeau has just spent our grandkids into penury. I can’t even pay taxes now because we all got laid off. All the relief money is going to The Usual Suspects. We are going to be in debt for the next 100 years.😔

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  4. Food left to rot in the fields, meat processors closing because the workers are sick… more fun to come!
    Haven’t seen the magical $1200 either…

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  5. I got some of my money back today. Sort of bittersweet. I did the math and I either work 11 hours a week and get unemployment, or I work 35 hours a week. Anything in between and I’m paying to work. We have about 20 hours a week worth of work if we are lucky.

    Good thing I have a greenhouse and lots of tools.

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  6. As i see it, the solution to all this is easy:
    1) shoot all the Demotard Gubernators,
    2) get back to work.
    3) wear protective equipment if you don’t test positive for the Wu Flu.

    See how easy that is?

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  7. Well, I’m still getting laid off in about 25 days but on the plus side I’m also working 12 hours a day 7 days a week it looks like all the way to the end.
    Mortgage is paid off through July.
    Bought a butchering hog and half a steer today. No auto loans, credit car, or student loans.
    Come layoff time tyrant daddy is going to be home or fishing every day. Family beware!
    Oh yeah, gardens are all planted.
    Thinking I may start welding up some hog traps for extra income/entertainment.

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  8. One thing that Zero Hedge is renowned for is being alarmist and full of conspiracy-pseudoscience. I know their stuff plays into your feelings of doom over COVID-19 and the economy but before taking what they write as fact, you should be fact-checking for your sanity if nothing else.

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      • Originally I stopped reading after seeing the reference to Zero Hedge, my bad.

        I’ve taken a look at the other links and you’re right it is all doom and gloom.

        Two things, first, what you see in the news today and just about every other day, are things that almost never happen, otherwise, these stories would not be news. And, second, these stories are written in such a way that they will hook the reader into wanting more. Think, “if it bleeds, it leads.” Since the bean counters took over, the news media has become more entertainment than a news source.

        Here’s a TED Talk that will explain what I’m trying to say a lot better than I ever could about today’s media. Take the time for a look then think about the stuff you’re seeing.

        One more thing Phil, stop reading this stuff, you’re going to make yourself sick doing it and in these trying times, that’s no way to help your family.

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  9. well, as the businessman that he is, perhaps the good ol’ USSA will file for chap 11 & all the teet’s will be released for new suckers. Like they say in the navy; “Standby for heavy rolls as the ship is coming about!”

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