Bill Gross Releases Latest Monthly Outlook: The Lending Lindy

I'm shooting for tip over. The walls far exceed the foundation, so there's nothing there to support it. Have you ever seen a house that slid off it's foundation? It's very nasty to deal with and more often than not, the house has to be torn down and started over, and that's just what we got going on in the financial system. They cheated on the PSI (pounds per square inch) (think capital retained) of the concrete in the foundation (think how money is made)and then built a sky scraper on it,
If they'd have stuck to an average size house, we'd have seen a few cracks in time. A pain in the ass for sure, but still capable of function. The sky scraper on the other hand leans more and more daily, most people can't see it, but if you're a builder you can, and you know what out come is. It's going to drop as fast as the Twin Towers did, right out of the blue, except this time it doesn't go straight down like a controlled demo, this time it spread and is so heavy it takes everything surrounds it, with it.

Having operatied for years under ZIRP, and with the NIRP neutron bomb just around the corner, and already implemented in various European countries, one question remains: can banks be banks, i.e., can they make money, in a world in which borrowing short and lending long, no longer works, courtesy of ubiquitous and pervasive central planning which is now engaged solely and almost exclusively (the other central bank ventures being of course to keep FX rates and equities within an acceptable range) on the shape of the yield curve. Since 2009 our answer has been a resounding no. Today, Bill Gross speaks up as well, and his answer is even more distrubing: "If the dancing has slowed down, then the reason is not just an overweight partner. It’s that the price of money (be it in the form of a real interest rate, a quality risk spread, or both) is too low. Our entire finance-based monetary system – led by banks but typified by insurance companies, investment management firms and hedge funds as well – is based on an acceptable level of carry and the expectation of earning it. When credit is priced such that carry is no longer as profitable at a customary amount of leverage/risk, then the system will stall, list, or perhaps even tip over." Indeed, according to Gross central banks have now clearly sown the seeds of the entire financial system's own destruction. That he is right we have no doubt. The only question: how soon until he is proven right.

From Bill Gross of Pimco

The Lending Lindy

Oh BILL! BILL GROSS! Calling You Out Dude

http://market-ticker.org/akcs-www?post=168176

A little classic Karl, doing what Karl does best
Interpreting the bullshit that others spew.


From Twitter:

Gross: In many cases the servicers also originated the mortgage loans: This may lead to potential conflicts in interpreting foreclosure law.

Interpreting?

Let's talk about that a bit, and rehash some of the things that I've been hollering about since 2007.

Let's specifically talk about REMICs and MBS.

Let's talk about whether the notes - wet-ink signatures - were properly conveyed from the originators (or more-properly, the warehouse funders who are in fact the servicers most of the time) to the MBS Trusts (the REMICs.)

Let's talk about the Pooling and Servicing agreements - public documents filed with the SEC - which all said that those notes were conveyed at the time of the funding and formation of the Trust. That would mean that if they weren't the investors who bought those MBS were bamboozled. In common parlance one might call that "Securities Fraud", since that would leave the buyer holding an empty box for which they paid good money, and at best they got an unsecured note (and at worst they got nothing!)

Let's talk about IRS code, and the requirement that those conveyances (and in states where required, recorded conveyances) happen, and the iron gate that bars the REMIC from taking in new assets once that time period has expired, lest its "pass-through" (that is, non-taxable) status be retroactively voided.

Let's also talk about the IRS code provisions that make it non-permissible for a REMIC/MBS Trust to take in a non-performing asset.

Between these two provisions a failure to convey, once beyond 90 days or so when the closing date of the MBS passes, becomes essentially impossible to cure. Therefore, trying to "fix it" once a loan defaults and is headed to foreclosure is quite-literally impossible (other than by counterfeiting documents to show assignments and transfers that never actually happened, that is.)

It is my belief that these "problems", rather than "shortcuts", are why we're seeing all these allegedly-fraudulent backdated assignments and other similar games when foreclosures happen.

Could you address these issues Bill, with particular attention paid to PIMCO's trading in these MBS and what you might know - or suspect - about this?

After all, you are the "Bond King", and I suspect that the rapt viewership of CNBS would love to hear your explanation for what are now cascading claims being filed in real courts with regard to these "minor technicalities."