Mortgage Market Off the Rails, Economy to Follow - Eric Janszen

[Guest]

Re: Mortgage Market Off the Rails, Economy to Follow - Eric Janszen

Christoph,

I saw that Jim Sinclair also noted that article, and commented that it contained "large implications".

The article suggests that many large investors who purchased all this junk outside the US could suddenly awaken to the realisation that enough of a papertrail to prove actual collusion and fraudulent intent in the sale of these mortgage backed bonds now exists to plausibly initiate large scale lawsuits for recovery of the original issued values?

With Paulson now at the Treasury, the article asks us to imagine how that could put the largest Wall Street firms into the firing range of class action lawsuits from the largest investors abroad? It seems almost inconceivable ...

http://www.itulip.com/forums/showthread.php?t=2647

[jk]

Re: Mortgage Market Off the Rails, Economy to Follow - Eric Janszen

i'm holding puts on moody's in large part because i expect big time litigation. [on top of the fact that they've got a broken business model.]

[FRED]

Re: Mortgage Market Off the Rails, Economy to Follow - Eric Janszen

i'm holding puts on moody's in large part because i expect big time litigation. [on top of the fact that they've got a broken business model.]

Certainly litigation by injured pension funds. Additionally, a friend of iTulip, generally reliable, indicated recently that at least two foreign governments (France & Germany, perhaps?) are in the process of putting together law suits against US ratings agencies and investment banks for violation of domestic securities laws. Foreign governments have deep pockets, we hear.

That'll keep 'em busy. Or not.

Recall that Arthur Anderson went out of business in the post dot com era to avoid lawsuits.

One risk in the ratings agency short trade: they vanish into thin air.

[GRG55]

Re: Mortgage Market Off the Rails, Economy to Follow - Eric Janszen

Certainly litigation by injured pension funds. Additionally, a friend of iTulip, generally reliable, indicated recently that at least two foreign governments (France & Germany, perhaps?) are in the process of putting together law suits against US ratings agencies and investment banks for violation of domestic securities laws. Foreign governments have deep pockets, we hear.

That'll keep 'em busy. Or not.

Recall that Arthur Anderson went out of business in the post dot com era to avoid lawsuits.

One risk in the ratings agency short trade: they vanish into thin air.

Isn't that the perfect short seller outcome? You never have to cover...

[dbarberic]

Re: Mortgage Market Off the Rails, Economy to Follow - Eric Janszen

Our bet has been a similarly elongated and drawn out collapse, in and out of recession, ala Japan since 1992, but with inflation stubbornly in the three to nine percent range, unless outside events invoke a more sudden inflation and get the process over with more expeditiously.

AKA... stagflation, but no hyperinflation / deflation crash expected (yet).

[metalman]

Re: Mortgage Market Off the Rails, Economy to Follow - Eric Janszen

AKA... stagflation, but no hyperinflation / deflation crash expected (yet).

my read on this is that ej is optimistic that the debt deflation can be managed ala japan, but with an inflationary bias. the slow poom. that is very optimistic. assumes rest of world will years into the process still care. the only reason anyone cared to help japan for all these years was they imported a lot of great products the world needed. the usa is making its prime export, financial assets, less needed every day. maybe ej sees the usa morphing slowly back into a making-stuff export economy.

[dbarberic]

Re: Mortgage Market Off the Rails, Economy to Follow - Eric Janszen

maybe ej sees the usa morphing slowly back into a making-stuff export economy.

US export infrastructure products, alternative energy, energy efficiency products???

Supports EJ's theory on the next bubble and is something that if America wanted to, we could lead in.