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This Is Hauntingly Familiar Of Legacy Agency Behavior Precrisis

Three reports from the Wall Street Journal. “Last spring, a real-estate lender hired three ratings firms to rate a series of bonds backed by speculative real-estate loans. Only one of the three got to rate all the bonds. Moody’s Corp. said about half were triple-A. Another firm said about 61% merited that grade. DBRS Inc. said two-thirds. The winner was DBRS, which had just changed its methodology for rating this type of debt. Moody’s was only hired to rate one of the eight bonds in the deal, and rival Kroll Bond Rating Agency Inc. for a handful. DBRS rated all eight.”

“The ratings-selection wasn’t unusual: It has become standard industry practice. Fierce competition among ratings firms in a fast-growing corner of the bond market is allowing issuers to cherry pick the most favorable ratings. The result is that securities deemed safe by the ratings firms have increasingly smaller cushions against losses.”

“To turn risky loans into investible debt, bankers use something called credit enhancement. In late June, the head of Kroll’s real-estate group, Eric Thompson, accused DBRS of easing rating standards to win business. ‘This is hauntingly familiar of legacy agency behavior precrisis,’ Mr. Thompson told the Commercial Mortgage Alert.”

“‘They are definitely lowering the bar now,’ said Henry Song, who owns some commercial real estate CLO deals in a $1.2 billion portfolio he manages at Diamond Hill Capital Management, Inc. in Columbus, Ohio, speaking generally about ratings firms. ‘You definitely can’t buy these bonds based on ratings.'”

“DBRS revamped its methodology this March. The change included a new ratings model that assigns a lower probability of default to multifamily versus other property types, according to Erin Stafford, DBRS’s head of North American commercial mortgage-backed securities analysis. Ms. Stafford acknowledged that credit enhancement has been lower under recently rated transactions but said the trend shouldn’t worry investors because the firm’s changes to its multifamily default assumptions were ‘historically proven out’ by DBRS data analysis.”

“The student-housing sector, which had become a darling of real-estate investors in recent years, is running into turbulence. About 3.9% of the debt backed by student housing that was converted into commercial mortgage securities was more than 60 days late at the end of November, according to Fitch Ratings Inc. That is up from 2.78% one year earlier, Fitch said.”

“Loan delinquencies for student-housing properties have increased to about 56% of all apartment sector delinquencies in November 2019, from 42% in November 2018. The problem is partly that student enrollment is flat or declining at some schools. Meanwhile, new and often amenity-rich student-housing developments have been sprouting in many markets. ‘Student housing remains a subsector of concern,’ a June Fitch report said. Problem loans were suffering ‘performance deterioration due to new supply and significant competition,’ the report said.”

“Rents for these higher-end developments ‘are hitting a rarefied universe and there is less demand,’ said Alexander Goldfarb, senior REIT analyst for Sandler O’Neill + Partners LP. ‘The [loan] delinquencies probably have…a lot to do with rents the developer was seeking but were not achieved.'”

“The 2019 market for Manhattan residential real estate was one of the worst in nearly a decade, data show, with some brokers walking away from their jobs because of a sales slump. Sales of existing Manhattan apartments this year fell to the slowest pace since 2011, according to a Wall Street Journal analysis of city property records. Overall apartment prices tumbled to a four-year low in the third quarter, and remained at the same low levels in the fourth quarter.”

“Frederick Peters, the chief executive of Warburg Realty, said that newer listings are coming on at more reasonable prices and asking prices on older listings are being cut, making it more likely that buyers will finally pounce. ‘Every day we get hordes of emails about price reductions, 20 to 25 a day.'”

From SocketSite in California. “The weighted average asking rent for an apartment in San Francisco, including one-off rentals as well as units in larger developments, dropped a little over 5 percent over the past quarter to $4,050 per month. While an end of year drop is typical, keep in mind that the average asking rent in the city is currently down around 2 percent on a year-over-year basis and 9 percent below its 2015-era peak of around $4,450 per month, with the average asking rent for a one-bedroom having slipped to $3,500 per month (which is around one (1) percent lower than at the same time last year and roughly 4 percent below peak).”

The Seattle Times in Washington. “City officials, urbanists and developers all agree that streamlining permitting for multifamily housing could help alleviate Seattle’s affordability crunch by bringing more units online faster. Yet in the years since that consensus emerged, it’s also started to take longer to build an apartment than ever before. That doesn’t mean growth has slowed — on the contrary. Seattle has seen booming multifamily construction that added nearly 100,000 rental units this decade, most of them since 2014, according to Fannie Mae. True to predictions, the apartment oversupply has been accompanied by a virtual rent freeze, though rents are starting to rise again.”

“That spurt of new construction, builders and the city agree, is the ultimate cause of the permitting backlog. But each camp claims the other has been overwhelmed by the building glut. Developers say the permitting office hasn’t staffed up quickly enough. And the city says developers are taking longer to make required corrections.”

The Central Oregonian. “Single-family home development appears to be slowing in Crook County, but multifamily apartment complexes have kept housing start numbers up in 2019. ‘It really kind of tapered off a few months ago,’ said Planning Director Josh Smith regarding the single-family dwelling numbers. ‘Pahlisch Homes is trying to plat its third phase, so there is probably going to be some pickup on their site, but for the most part, there are just a couple of little builds going on — single-family has really fallen off.'”

“City Associate Planner Casey Kaiser agreed, noting that the numbers for single-family permits will be down from the previous year, though multifamily unit numbers will be much higher. ‘So overall, the number of dwelling units I think will be up pretty significantly from last year,’ Kaiser continued, ‘but the deceiving thing is I think the single-family units are really more of the barometer for the appetite for builders and developers. Multifamily is a little bit more of an unknown quantity because we haven’t had a lot of big multifamily projects built (in Prineville).'”

“As they wait to see what the future holds in that regard, they are equally curious how the glut of multifamily units will impact the local real estate market. ‘The 135-unit, private-market-rate complex will be a pretty new and significant chunk of the market,’ Kaiser remarked. ‘When you think about it, it’s 135 dwellings being dumped into the market when it’s complete. That’s enough to move the needle in Prineville.'”

“Another curiosity is whether such a development will positively impact what has been a substantial lack of rental vacancy in Crook County in recent years. Smith notes that rent vacancy remains low locally but is not as severe as it was a couple of years ago. People are no longer showing up at Prineville City Council meetings voicing concerns about housing, he said. ‘It will be interesting to see how that (apartment complex) changes the market,’ he concluded.”

This Post Has 77 Comments
  1. ‘The student-housing sector, which had become a darling of real-estate investors in recent years, is running into turbulence. About 3.9% of the debt backed by student housing that was converted into commercial mortgage securities was more than 60 days late at the end of November, according to Fitch Ratings Inc. That is up from 2.78% one year earlier, Fitch said.’

    ‘Loan delinquencies for student-housing properties have increased to about 56% of all apartment sector delinquencies in November 2019, from 42% in November 2018.’

    I said this was coming years ago. I got no crystal ball people. I simply could see these a$$-hats were paying way too much for everything and generally operating on a greater fool basis.

    BTW WSJ, there should never be a multi-year “party” in real estate. That should have been a red flag for the media – you dropped the ball again.

    1. Media like the Seattle Times can try to spin a glut of airboxes into some REIC boosterism thing, but I’m calling horsesh!t on that.

      ‘While an end of year drop is typical, keep in mind that the average asking rent in the city is currently down around 2 percent on a year-over-year basis and 9 percent below its 2015-era peak’

      That’s right, bay aryan rents have been falling for 4 years. Gosh, this means that 99% of the crap the media puts out is baloney!

    2. The whole concept of “Luxury Student Housing” is utterly idiotic. Students can’t even afford the tuition and have to borrow huge sums to pay for it, and these ding dongs were really expecting them to pay top dollar for housing?

      Yeah, there were some who borrowed even more to rent those overpriced apartments, but as we are seeing, most didn’t.

      1. LOL I once paid $131.25 a month ($525 for four people) while renting in the late 1990’s near Football Factory State University. A year after that I rented a 3 bedroom apartment for $420 a month with only one other roommate. When I had my own place in Columbus I never paid more than $325 a month.

        1. Columbus has historically been cheap though, while Ann Arbor is crazy expensive for garbage quality housing and has been for decades. I see the students here filling those luxury apartments whether they’re taking loans out or not because the alternatives are often disgusting and just a little cheaper . When our disgusting developer-beholden pretend liberal city council approved like 20 new student high rises to deal with university’s expansion of it seems sometimes mostly international students while building hardly any more student dorms people argued it would cause a reduction in the rents of surrounding smaller apartments and single family homes cut up into rentals etc. It did not. Rents are still 800 a bedroom minimum anyplace approximately liveable and luxury starts at 1000 with the newest at least 1200 a bedroom per month usually in configs of 3 to 5 100 SF each BR apartments. They keep approving more all the time. They just gave the nod to a 20 friggin story building aimed at students and yps to mess up the vibe at one of the only parts of downtown still worth visiting, the lovely old Michigan theater.

    3. BTW WSJ, there should never be a multi-year “party” in real estate. That should have been a red flag for the media – you dropped the ball again.

      Well, let’s face it, the financial narrative today is about getting rich quick and the everything bubble fits perfectly into such a narrative. It’s not about hard work, careful investment, sacrifice and patience.

      Growing up and in my young adult years I met many people older than me who had built viable, profitable businesses from nothing. One guy built a large injection molding business over 20+ years. Others built up a machine shop, a large independent auto repair business, a small accounting firm, a medical supply business, etc. They all lived very well, had tons of cash, no debt and their businesses cash flowed positive.

      No one wants to do that anymore, because it takes time; plus it’s harder because big biz has encroached on their turf. Not to mention that .gov has made things much harder for Main St. So yeah, the WSJ won’t wave any red flags. Why would they? They believe in bubblenomics.

      1. Think of how many profitable businesses could have been created with the TRILLIONS OF DOLLARS the Fed has given to the banks.

      2. That big business and .gov have both made things harder for the little guys are very correlated and lobbying plus financialist based. This isn’t rocket science, it’s citizens united. It’s repeal of glass steagall . It’s corporate lawyers writing tax law. It’s obscene property tax capture adding local government to the list of beneficiaries from out of control housing costs when one of their only reasonable functions should be to encourage livable communities.

  2. ‘Every day we get hordes of emails about price reductions, 20 to 25 a day’

    We probably read something similar this time last year. And the year before that, and the previous year too, etc.

    In other words – worser and worser. Isn’t that more like a bubble popping than a “cycle”? The bubbles have popped at various times but it’s popped.

    1. Three reports from the Wall Street Journal.

      To turn risky loans into investible debt, bankers use something called credit enhancement. In late June, the head of Kroll’s real-estate group, Eric Thompson, accused DBRS of easing rating standards to win business. ‘This is hauntingly familiar of legacy agency behavior precrisis,’ Mr. Thompson told the Commercial Mortgage Alert.”

      “‘They are definitely lowering the bar now,’ said Henry Song, who owns some commercial real estate CLO deals in a $1.2 billion portfolio he manages at Diamond Hill Capital Management, Inc. in Columbus, Ohio, speaking generally about ratings firms. ‘You definitely can’t buy these bonds based on ratings.‘”

      ——————————————-

      “The game isn’t over until it’s over.” – Yogi Berra
      “It’s déjà vu all over again.” – Yogi Berra
      “Curiouser and curiouser!” – Lewis Carroll, Alice in Wonderland
      “Oh, you can’t help that,’ said the cat. ‘We’re all mad here.” – Lewis Carroll, Alice in Wonderland

      “It would be so nice if something made sense for a change.” – Alice, Alice in Wonderland

      “As a dog returns to its vomit,
          so fools repeat their folly.” – Proverbs 26:11

      – Related article, or what the repo brouhaha is really all about. Hint: Central banks buying sovereign government debt is a shell game. It’s really the government buying it’s own debt, since the central bank is an agent of the federal government. They are joined at the hip. The Fed buying U.S. Treasuries (IOUs/debt) because foreign buyers have had enough is essentially borrowing from “Peter to pay Paul.” This is the very definition of debt monetization. Banana republic stuff. The article below references a paper written by Fed economists. You can’t make this stuff up. I’d be laughing if I weren’t crying.

      https://www.cnbc.com/2019/11/25/fed-economists-warn-of-inflation-and-economic-ruin-if-mmt-is-adopted.html
      Federal Reserve
      Fed analysis warns of ‘economic ruin’ when governments print money to pay off debt
      Published Mon, Nov 25 2019 12:29 PM EST Updated Tue, Nov 26 2019 1:28 PM EST | Jeff Cox

      Federal Reserve economists warn that printing money to pay for deficit spending has been a disaster for other nations that have tried it.

      In a paper that discusses the burgeoning U.S. fiscal debt, Fed experts note that high levels are not necessarily unsustainable so long as income is rising at a faster pace. They note that countries that have gotten into trouble and looked to central banks to bail them out haven’t fared well.

      A solution some countries with high levels of unsustainable debt have tried is printing money. In this scenario, the government borrows money by issuing bonds and then orders the central bank to buy those bonds by creating (printing) money,” wrote Scott A. Wolla and Kaitlyn Frerking. “History has taught us, however, that this type of policy leads to extremely high rates of inflation (hyperinflation) and often ends in economic ruin.

      “Insanity: doing the same thing over and over again and expecting different results.” – Albert Einstein (misattributed) – Narcotics Anonymous

      1. Lowering the debt bar at a time when yields are pretty much lower than ever. In a mania, you seen the nuttiest behavior near the end.

        ‘You definitely can’t buy these bonds based on ratings’

        What then? Coin flip? Magic eight ball?

        1. Yes, “scraping the bottom of the barrel” to keep the gravy train going. Not only borrowers and FICO scores, but actual MBS/CLO loan credit ratings. “Lipstick on a pig.” I’m sure “it’s different this time” and “it will end well.”

          Dodd-Frank Act is 20K+ pages of legislation; put in place allegedly to “prevent” another financial meltdown. Where are the watchers and who’s watching the watchers? Turtles all the way down…

          There were no consequences last time for the crimes during the GFC. Many bad actors and guilty parties. Bernie Madoff was the scapegoat and went to jail, but for a tangentially related crime. Only Iceland had banksters go to jail then. I don’t see how anything will change until there are consequences. Congress now only does stuff “to” the citizenry, rather than “for” us, in our best interests.

          https://www.nytimes.com/2019/07/11/opinion/politicians-voters.html
          Opinion
          Politicians Don’t Actually Care What Voters Want
          Does that statement sound too cynical? Unfortunately, the evidence supports it.
          By Joshua Kalla and Ethan Porter
          Dr. Kalla and Dr. Porter are political scientists.
          July 11, 2019

          Over the past two years, we conducted a study to find out. We provided state legislators in the United States with access to highly detailed public opinion survey data — more detailed than almost all available opinion polls — about their constituents’ attitudes on gun control, infrastructure spending, abortion and many other policy issues. Afterward, we gauged the willingness of representatives to look at the data as well as how the data affected their perceptions of their constituents’ opinions.

          https://osf.io/c2sp6/

          What we found should alarm all Americans. An overwhelming majority of legislators were uninterested in learning about their constituents’ views. Perhaps more worrisome, however, was that when the legislators who did view the data were surveyed afterward, they were no better at understanding what their constituents wanted than legislators who had not looked at the data. For most politicians, voters’ views seemed almost irrelevant.

          No one wants or expects politicians to march in lock step with their voters. Politicians are not supposed to mechanically replace their own views with the views of their constituents. But constituents’ perspectives should carry considerable weight. Our study suggests that for most politicians, voters’ views carry almost no weight at all.

        2. How about doing your own homework?

          If you are a dumbed-down puke who trusts these rating agencies after it has been well establised that these rating agencies have proven to anyone who cares to look that they cannot be trusted the what does say about you?

          The only way to win a rigged game is to not play.

        3. To spot a bubble in advance requires a judgement that hundreds of thousands of informed investors have it all wrong – Greenspan, 1999

          1. To spot a bubble in advance requires a judgement that hundreds of thousands of informed investors have it all wrong – Greenspan, 1999

            Maybe you don’t have to know if they are wrong if you figure out they’re not really investors. Momentum “investing” isn’t really investing. Taking advantage of stupid people also isn’t investing.

    1. From about a month ago …

      This home mortgage disaster is ready to punish housing markets – MarketWatch
      https://www.marketwatch.com/story/this-home-mortgage-disaster-is-ready-to-punish-housing-markets-2019-11-19

      (snip)

      “Cash-out refis are gaining popularity again — and are still dangerous. According to Freddie Mac’s refinance report, the percentage of refinance originations in dollars that were cash-outs soared to 23% by the end of 2018 from 3% at the close of 2012. The report notes that 82% of all refinances in the final quarter of 2018 were cash-outs refis. This chart based on Freddie Mac data shows the surge in cash-out refis over the past five years.”

      A nation of broke-assed dummies.

        1. The other day I looked at the loans on a shack going to auction. It had a purchase ARM loan in 2005 around $260k. Term – 74 years, and it was a HUD loan. Two years later the guy got a $350k HELOC ARM. Term – 76 years, another HUD loan. I don’t know if he ever tapped the HELOC. At the auction last week it went back to the lender for the $210k opening bid.

          1. Some years ago we heard some noises about 40-year mortgages, but at some inflection point the interest payments for the long term cancel out any reduction in payment, so those mortgages never came to be. So I don’t know where a 75-year mortgage comes from.

      1. Our various mortgage handlers (ours has changed hands without our consent about three times since I closed) have been hounding us incessantly, by phone, by mail and even by FedEx overnight, to do this for several years now.

        Just for grins, I opened up one of the mailed offers a while back — they wanted to reset our amortization clock back to the start of a 30 year, I can’t remember if it was fixed or variable now, for a lousy $10K check.

        We just ignore them as best we can.

      2. The report notes that 82% of all refinances in the final quarter of 2018 were cash-outs refis. This chart based on Freddie Mac data shows the surge in cash-out refis over the past five years.”

        A nation of broke-assed dummies.

        Bah, they’re cashing out to buy up more property for their retirement income gotta be! Seriously I’ve. Even hearing reports from husband that peers of his are buying properties here and there for you know investments. Isn’t that the bigger pockets guide to get started making RE money?!

        1. “The report notes that 82% of all refinances in the final quarter of 2018 were cash-outs refis.”

          Haha…said for years here on the HBB that “cash-out refinancing” [is] the economy.

    2. Americans Are Taking Cash Out of Their Homes

      How else can they afford those super expensive pickup trucks and Suburbans? If you don’t have one and instead drive a Corolla or a Civic the neighbors will know you’re a loser.

      1. If you don’t have one and instead drive a Corolla or a Civic the neighbors will know you’re a loser.

        Speaking of which my ex is finally getting forced to understand that she can’t afford her Mercedes money pit. It contributed to our divorce and has continued to be her pride and joy in the intervening years. She needs to drive a reliable economy car but still has to finish hitting rock bottom to accept that. She *loves* hanging out at the dragstrip with her V8 car and feeling like one of the gang…she hangs on to that identity like a monkey with a hand in a trap…and the hunter is now in view.

        1. I’m sure that when people see me driving in my paid for, 7 year old sedan that the last thing they think is that I make about 3x the local median income and thus probably a lot more than they do. Instead they probably feel sorry for me while driving a $40K SUV they really can’t afford.

          1. “…I’m afraid to ask…”

            I remember keywords to be used in queries, and I have a strong background of how to leverage strict and fuzzy string matching techniques and knowledge of search engine semantics. However, SCADA systems are my area of interest. FWIW, retired civil engineer.

        2. I drive an ancient Honda I’m determined to get 200k from and husband is trying to force us to buy a crappy overpriced shack this year. I love my Honda and hate the idea of buying now, THAT might force our divorce.

    1. The everything bubble is literally in everything. I think we’ve reached peak pricing just about everywhere.

    2. Even in my little burg I see the Amazon delivery vans and the UPS and FedEx guys were conspicuous by their near absence. From what I have observed, if you buy something from Amazon, if it fits in your mailbox is goes via USPS, otherwise the Amazon van delivers it.

      1. Shameless plug for WMT. Just to level the playing field a little, I buy online from WalMart.com whenever possible. Same or better price. Same delivery time for standard delivery and often no charge. One to two week delivery works for me. Even if purchase other than WMT, I often find better prices than Amazon. It pays to shop around. AMZN is a monopoly IMHO. No need to feed the beast. I’m also in CO.

        1. I typically only use Amazon for hard to find things. If the local WalMart has it, or it can be shipped there, they are tough to beat. I recently picked up a couple of bags of ice melt. About half the price that Blowes or Home Despot charge.

          Still, there are things that Wally doesn’t carry, not even online, though I have noticed they are getting better about that. Though the other day I was forced to go to Blowes, as I needed to replace a toilet paper dispenser spindle that gave up the ghost. Wally didn’t have it.

    3. “…UPS and FedEx are both raising prices…”

      They’d better be careful as Amazon’s army of private contractor shippers is growing exponentially!

  3. ZH playing straight man for HBB…

    https://www.zerohedge.com/markets/different-acronyms-same-disaster-bond-ratings-are-once-again-sale
    Different Acronyms, Same Disaster: Bond Ratings Are Once Again For Sale
    by Tyler Durden
    Tue, 12/31/2019 – 10:55

    “So how accurate is the comparison of CLOs with the mortgage bubble? Pretty damn accurate, unfortunately. But not surprising. As expansions enter their latter innings, the people making fortunes by doing various kinds of financial deals realize that the only way to keep the deals (and thus their massive incomes) coming is to relax standards beyond what is normally considered prudent.”

    “So lending standards fall, true risk is hidden in various ways, and hot money pours into ever-less-appropriate places. See, for instance, Signs Of A 2020 Top: “Buyers Return to Riskiest Junk Bonds”.”

    “You see the dilemma here, right? If normal credit standards are maintained, the deal flow ceases and the economy tanks. But if safeguards are corrupted and/or abandoned, the game goes on, and all that capital gravitating towards extreme risk creates a debt bomb that has to blow up eventually. At which point the economy tanks.”

    “In Austrian school of economics terms, over the course of a credit cycle an economy moves from “hedge finance” where debt is used for productive things that actually lower systemic risk, to, eventually, “Ponzi finance” where debt can only be paid off with the proceeds of new, even more risky debt. If past is still prologue, we’re either there or very close.”

    1. My battery died at a gas station in El Cajon CA yesterday so I got a jump and went to the closest cars parts place to get a battery. There was a homeless guy sleeping on a cardboard box mattress under the bushes in the parking lot. I bought a battery pulled out of the lot and started to head towards the highway and around the corner there was a homeless woman with a shopping cart sprawled out across the side walk. You would have had to step over her to get by. I got home to my San Diego neighborhood and walked to buy groceries. In the three blocks to the grocery store there was one homeless person on each block. It just keeps getting worse. Rent control can’t help these people.

        1. P.S just compare the amount of coverage of the Australian drought to this situation in India. Yet the record cold in India is significantly more abnormal. It is how the media perpetuates the greatest lies, the ignoring of stories which do not fit the narrative.

  4. The Andy Griffith Show (1960–1968)

    Season 5 | Episode 16

    Barney Fife, Realtor

    After speaking to the local real estate agent, Barney decides that selling houses would be the perfect sideline for him. He starts by targeting some of the families in Mayberry who may want to change houses and soon has a chain of four buyers and sellers lined up. Even Andy has gotten involved. Having recently admonished Opie for trying to sell his bicycle without revealing the problem with the brakes, Andy finds himself being less than honest with the prospective buyer of his house about the leaky roof or the noisy pipes. Opie practices what his father preaches and mentions these things to an interested buyer, much to Andy’s annoyance. When Andy visits the house he’s interested in buying, he finds that it may not be perfect as well.

    https://www.imdb.com/title/tt0512442/

    1. Then Lassie shows up, barking up a storm. Timmy shows up just in time to interpret Lassie’s warning: “Realtors are liars!”

  5. I can easily “afford” to buy a house in Denver with over 20% down on a 15 year loan, but I won’t.

    Because I’m not some howmuchamonth looser who can’t math and gets sold on a payment. The prices are too high, and the used houses available for sale are just not worth it.

    REALTOR, please starve and die.

  6. There’s a revealing scene in the film version of Michael Lewis’s The Big Short. It’s 2007; the subprime mortgage crisis has yet to unfold. Two hedge fund managers visit a Standard & Poor’s executive in her office on Water Street in Manhattan. One asks the exec to name a time in the past year when the company didn’t give a bank the AAA rating it was seeking. She demurs. “If we don’t work with them,” she says, “they will go to our competitors. It’s not our fault. It’s simply the way the world works.”

    https://www.bloomberg.com/news/articles/2017-08-02/the-great-escape-how-the-big-three-credit-raters-ducked-reform

  7. James Kunstler says with regard to the Deep State attempted coup against Trump, “… if Barr & Durham fail to deliver a bale of indictments, they will be putting a bullet in the head of this republic. There will be no hope of restoring trust in the system …” There’s more.

    “What is most perilous for our country now, would be to journey through a second epic crisis of authority in recent times without anybody facing the consequences of crimes they might have committed. The result will be a people turned utterly cynical, with no faith in their institutions or the rule of law, and no way to imagine a restoration of their lost faith within the bounds of law”.

    The first epic crisis was the finance debacle of 2008,

    “… fraudsters and swindlers in that orgy of banking malfeasance were never marched into a courtroom, never had to answer for their depredations, and remained at their desks in the C-suites collecting extravagant bonuses”.

    1. Agreed and it should be noted Kuntsler is a pretty far left jewish liberal – he can say what the right is thinking and not be accused of being “literally Hitler”.

      The undercurrent of rage in this country lying just below the thin veneer of fake prosperity-induced fantasy is palpable.

    1. Back in the 60s and 70s when the Ford and GM assembly plants in Milpitas and Fremont were open that 3br/2ba spec rancher was a typical blue collar purchase.

    1. So is sum ting wong? Excerpt from the story:

      China’s central bank is to cut the reserve requirement ratio for financial institutions — excluding finance companies, financial leasing companies and automobile financing companies — by 50 basis points from January 6.
      This is to support the development of the real economy as well as to reduce the real cost of social financing, according to the People’s Bank of China.
      The central bank said the cut is an across-the-board reduction reflecting counter-cyclical adjustment, which would unleash more than 800 billion yuan (around US$115 billion) in long-term funds, effectively increase the stable sources of funds for financial institutions to support the real economy and reduce the capital costs for financial institutions to support the real economy.
      Currently, the required reserve ratio is 13 percent for large financial institutions and 11 percent for smaller ones since the last adjustment came into effect on September 16.

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