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Calculated Risk: Google Maps Shows Foreclosure Status
You can get data on just about anything these days. Amazing maps. Almost scary.

Fannie Mae seeks $US10.7b in aid after loss
Here’s a thought: if Citi were in government hands and taking down writedowns like Fannie, what do you think the scale of losses would be?

Confidence games and Ponzi schemes [...]

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Berkshire’s Munger Favors ‘100% Ban’ on Credit Swaps – Bloomberg.com
Berkshire Hathaway Inc. Vice Chairman Charles Munger said he supports an outright ban of credit- default swaps to prevent speculators from profiting on the failure of companies.

The Mess That Greenspan Made: Mortgage lender blowback
I was wondering when the man with a tan was going to get [...]

Last night I featured a video from Jon Stewart that skewered CNBC, and specifically Jim Cramer. The video is quite funny as Jon Stewart’s show is a comedy show.

However, since that segment aired, Jon Stewart has decided to end the comedy and take a much harder and more serious tone on this issue. Today I would like to highlight last night’s Jon Stewart interview with Jim Cramer because it is not funny. It is an indictment of CNBC, of Jim Cramer, and of the entire financial media as a complicit enabler of the most prolific credit bubble in history.

Below is an interview with an expert on the issue of mortgage cramdowns. Basically, this issue is all about debt forgiveness for borrowers and writedowns for lenders. Lenders do not like cramdowns for that reason. See below for a view on cramdowns from Paul Van Valkenburg of the Mortgage Industry Advisory Corp.

Warning: you should expect him to have a negative bias given who he works for. I actually like cramdowns. Van Valkenburg is looking at this from an investor’s perspective and wants senior creditors not to be negatively impacted by the coming cramdown legislation. Nevertheless, I am posting this video because it is informative as to the impacts on mortgage-backed securities, mortgage servicing and housing.

Here are some worthwhile contributions from the econblgger world I think you should definitely read.

In November, the U.S. federal agencies which oversee the banking system proposed new guidelines for real estate appraisals. One would imagine that these guidelines would be in keeping with the new more stringent regulatory frame of mind the financial services sector. This is not the case.

In fact, the new proposal appears to entirely eliminate mandated written appraisals in connection with cramdowns and refis.

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‘Drug money flowed into banks’ – Fin24 South Africa (This is a must-read article)
California’s First Centennial Bank Shut by Regulator – Bloomberg.com (Another FDIC Friday night special)
Older workers escaping the ax – MSN Money (Very heartening to see this trend, even if it is for legal reasons alone)
Freddie Seeks Up to $35 Billion From U.S.; [...]

The big news is the economy and President-elect Obama’s reaction to it. The pundtitocracy has really been hammering him on his staff picks and the meat of his stimulus package. To be sure, there have been a few positive notes about Obama’s plan and what he has to say, but there have also been a number of voices of skepticism.

I would say in defense of Obama that he is trying to spend stimulus money, but only on things that are not wasteful and pork-barrel spending. I don’t think his stimulus is enough but I appreciate his efforts to stop government waste.

The first section below is dedicated to that theme. Beyond that, I also have a number of news items from around the web on the global economy. Soon it will be the weekend. So enjoy and have a great weekend.

After meetings with lawmakers, Citigroup has agreed to back legislation that would allow bankruptcy judges to alter the amount due on mortgage principal, so called cram downs.

As it stands today, all other debtors including corporations have the cram down option available in bankruptcy court. However, changes to bankruptcy law have eliminated this option for mortgages, creating an impasse as house prices have dropped.

My Austrian School background has been useful as a lens through which to view the credit bubble and crash. Central to this view is the precept that easy money is the problem and not the solution. However, as the crash has unfolded, I find myself parting ways with the Austrians. I have always felt the Austrians are more useful for their economic framework. But they leave me underwhelmed when it comes to solutions for when problems occur. Their “Let them eat cake” approach comes dangerously close to Andrew Mellon’s draconian Depression era prescription and is more likely to end in a deflationary spiral and a worsening of the problem.

And so it is today. If we are to find our way out of this crisis — the worst in three quarters of a century — it will not be the ideas of Ludwig von Mises or Murray Rothbard which will guide us. It is more the work of John Maynard Keynes and his followers that is likely to offer useful prescriptions. As much as I would like to look to the Austrian School in this crisis, I cannot. These are the confessions of a former Austrian Economist.