Protecting Customers

I really would like to say something cheerful occasionally, but other than my personal life, the great people I meet writing, and the metals market the last few days I can’t find anything nice to say–and what’s going on in silver and gold is only jolly if your big money is tied up in physical Au and Ag.  When those are bounding upwards and the stock market is lethargic, things are not well in Bernanke Land. There were some economic stats released yesterday that do not bode well for the economic outlook next year.  I’m still vacationing with my beautiful daughter who told me in considerable dudgeon that she is NOT a “mortgage banker.”  Well, some of us say “offsides” and others say “encroachment,” but I still think that “mortgage banker” is a good description even if it now appears to mean some menial who actually deals with writing mortgages and dealing with real estate people instead of what it means to me, which is more like being a venture capitalist.  She didn’t come up with a title (we were playing Tri-Bond, a fantastic game that involves seeing connections between three items, such as that between a pie, the earth, and a loaf of bread), and it doesn’t matter because the last time the head hunters came after her she moved to a different area of banking and got the incredible joy of usually only having to go into her office once a week besides lots more money and vacation and good things like that.

Beauty and her four main assistants spend their time consulting on triage for one of the three biggest banks as a result of a very minor–or so it seemed–change to Dodd-Frank.  Congress rarely considers the fall-out (“unintended consequences”) of their actions.  For a simple example, thousands die every year from fires caused because brake linings no longer contain asbestos–a marvelous substance that is a danger only to those who spend 30 years in mines not wearing protective gear.  In this case, the goal was to ensure that the fees the buyer would have to pay remained consistent throughout the process of completing a loan and sale, with some changes allowed but if and only if the buyer is apprised of any changes within three days.  The penalties for lack of compliance can be quite nasty for the bank–$27,000 in one example she gave me–and the rules are complicated enough to make everyone involved whimper.  Since the bank has millions of loans, you can see how quickly matters could get out of hand, particularly since it is quite possible to have multiple infractions on the same loan and some of those involve such unlikely events as redrawing county lines and not informing the banking industry.  Eighteen months ago the bank tried to check one loan in ten, but the tax and penalty gang is as enthusiastic and reasonable as the IRS so untold millions–billions, for all I know–are spent on hordes of those who do nothing but be certain that the fees to the borrower remain consistent throughout two or three dozen steps.  Tiffany (NOT named after Charley’s Angels) expects to be employed lucratively so long as she cares to work being “the” expert on what a tiny subsection of the law is.  She continues to hold they have ample money to lend (check) and that the problem is not lack of customers with good credit but lack of qualified people in real estate and lower echelons of banking.  (Hmmm…)

The most recent stats are as dismal as I expected.  For the fourth month in a row housing prices have fallen, according to Case-Shiller.  To no surprise, and as the report said, ”U.S. single-family home prices fell for a fourth straight month in October pressured by a supply glut, home foreclosures and high unemployment.”  Matters are a little brighter here in the D/FW area.  Texas, as you will recall, was last into the depression and has been touched most lightly by it.  We have less unemployment and a lot of businesses are doing quite well.  Another down point was the Consumer Confidence Index coming in at 52.5 (I’m surprised it was that high) while the Pollyanna types had been anticipating 56, which is still considerably below “Happy days are here again!”

Those who think jobs are “plentiful” fell from 4.3% to 3.9%, and I can only suppose most of them are beltway bandits or friends of Barack.  If you keep up with the Present Situation Index, that fell from a horrible 25.4 to 23.5, meaning that public sentiment is three to one against the idea that recovery is anywhere in sight.  How can it be, when the only real hiring is for government jobs–jobs which consume tax dollars and add nothing to the economy?  We really cannot pull ourselves up by governmental bootstraps.  Seventy per cent. of spending is done by private consumers, and we have less money every month.  Food prices continue to rise dramatically.  I’ll say again…just wait until your first paycheck in 2011 and let me know what it does to your bottom line when the “value” of your health insurance plan is considered “income.”  Worse, try to downsize by selling your house.

Gold, Silver, and other precious metals jumped because the average man is worried, desperately worried.  We know how bad the economy is, how difficult it is to get a job, what the true inflation rate is, and what more “quantitative easing” is going to do to us.  We’re expecting Ben to run the printing presses non- stop, which will lower the value of the dollars we hold.

Regards,

Linda Brady Traynham

for the Mesh Report