From Calculated Risk and Business Week…..

Hat tip to Disempowered Paper Pusher (the backbone of our industry!) for this excellent BusinessWeek piece on homes abandoned by both borrower and lender, “Dirty Deeds.”

An anecdote with all the right motifs:

In 1998, Elizabeth M. Manuel obtained a $34,500 mortgage on the property from IMC Mortgage (since acquired by Citibank). By 2002, the loan had been sold into a securitization trust administered by Chase Manhattan (now JPMorgan Chase) as trustee. It also went into default, and Chase began foreclosure proceedings. In a court filing, Manuel (who could not be located for comment) said she left the home while the foreclosure action was pending. More than five years later, though, the title remains in her name. The house, although still standing, has become a fire-gutted wreck.

In May 2007, Nowak issued a default judgment against Chase for $9,000. But these cases can be notoriously difficult to untangle. Thomas A. Kelly, a spokesman for the bank, notes that Chase sold its trustee business to the Bank of New York Mellon (BK) in October, 2006, and couldn’t locate anyone at Chase able to comment. But he reiterates the industry view that Chase can’t be held responsible for maintaining a property it never owned. He acknowledges that if a home didn’t seem worth taking as collateral, the bank may have made a decision to “just walk away.”

Besides amusing myself by trying to figure out just what documents I’d have to give Judge Boyko to prove standing to foreclose in this case, I am of course deeply impressed by the social acceptability of “just walking away.”

From Cnews….

The Vancouver-based company that makes much of the world’s methanol — the main ingredient in windshield washer fluid — has had to curtail production in Chile.

The company is having trouble getting natural gas, another key ingredient, from neighbouring Argentina because the country has imposed a hefty export tax.

Methanex is now posting a price of $832 US per metric tonne, up from a low of $309 earlier this year.

In October, the company reported a severe shortage of methanol because of closed plants throughout the industry — including its own in Chile — combined with strong demand. It’s since restored some natural gas supply.

Consumers haven’t noticed the impact yet.

But retailers will soon be running out of inventory and buying — and selling — the product at new, sky-high prices, Paquette said.

On Tuesday the 18th I received an invitation to a meeting on Wednesday the 19th to discuss the implementation of Oracle software to replace our current factory software. Some of the high-level people who were part of the A-Team had assigned various people in the plant to be on teams to document critical functions of Click Here to continue reading.

Lean Production, based on the Toyota Production System, recognizes 7 wastes:

Transportation. Moving something from one spot to another does not make it worth more.
Inventory. If a miser saves all of his money, what good does it do him? If a company has more product than someone is ready to pay for, what is it worth?
Motion. Click Here to continue reading.

From the UPS Web Site….

UPS Ground and UPS Standard to Canada services will increase 4.9%.

Air and International express services will increase a net 4.9% through a combination of a 6.9% increase in rates and a 2% reduction in the air and international fuel surcharge.

From Naked Capitalism…

The latest policy is a regulatory change by the Equal Employment Opportunity Commission that says employers can reduce benefits when retirees reach age 65 and become eligible for Social Security and Medicare.

Another instance of the Bush Administration, while having come into office claiming to be a compassionate conservative and anti-large-scale government, being anything but that. This allows corporations to shift their obligations on to taxpayers, and will make it politically more difficult to implement changes in Medicare and Social Security.

From Calculated Risk….

According to the Fed, the discount rate spread is 145 bps. This graph was released this morning.

From The Age….

The depth of the housing crisis was underscored by the head of one of America’s largest banks, Bank of America, the straight-speaking Kenneth Lewis, who warned of a completely new attitude by Americans to their homes amid fears that as many as 20 million householders may “walk” from them, further deepening the crisis.

Lewis’ comments came as a new expression – “jingle mail” – referring to the growing trend where Americans mail the keys to their homes to the lenders before vacating, entered the US lexicon. Figures for November revealed more than 200,000 US homes were foreclosed, a 68% increase on November 2006.

Robert Folsom via Financial Armageddon…..

At the end of 2006, the financial assets of financial institutions surpassed 20% of annual GDP (those assets had never even eclipsed 5% of GDP until the early 1990s).

Since a picture is worth a thousand words, follow the link and look at the graph. It will do a much better job of communicating the dramatic nature of the change then mere words will.

If I was good with graphs, I would take the graph that Robert Folsom made and I would slap a graph of the national savings rate over it. Unless my memory is playing tricks on me, the growth of the financial assets of financial institutions matches the dramatic fall of America’s saving rate over the same period.

Over at the Marginal Revolution, Tyler Cowen asks….
The question is, when inflation comes, why doesn’t the expectation of that inflation lead to proportional increases in nominal interest rates, thus keeping the real rate constant?
In the comment section on his post I said…
I am going to reveal my ignorance here, but it would seem to me Click Here to continue reading.