Politically Correct Bedtime Stories–The Three Little Pigs

Posted on September 12, 2013 by Michigoose

Once there were three little pigs who lived together in mutual respect and in harmony with their environment. Using materials that were indigenous to the area, they each built a beautiful house. One pig built a house of straw, one a house of sticks, and one a house of dung, clay, and creeper vines shaped into bricks and baked in a small kiln. When they were finished, the pigs were satisfied with their work and settled back to live in peace and self-determination (NB: Sounds positively Libertarian, doesn’t it?)

But their idyll was soon shattered. One day, along came a big, bad wolf with expansionist ideas. He saw the pigs and grew very hungry, in both a physical and an ideological sense. When the pigs saw the wolf, they ran into the house of straw. The wolf ran up to the house and banged on the door, shouting, “Little pigs, little pigs, let me in!”

The pigs shouted back, “Your gunboat tactics hold no fear for pigs defending their homes and culture.”

Bu the wolf wasn’t to be denied what he thought was his manifest destiny. So he huffed and puffed and blew down the house of straw. The frightened pigs ran to the house of sticks, with the wolf in hot pursuit. Where the house of straw had stood, other wolves bought up the land and started a banana plantation.

At the house of sticks, the wolf again banged on the door and shouted “little pigs, little pigs, let me in!”

The pigs shouted back, “Go to hell, you carnivorous, imperialistic oppressor!”

At this, the wolf chuckled condescendingly. He thought to himself: “They are so childlike in their ways. It will be a shame to see them go, but progress cannot be stopped.”

So the wolf huffed and puffed and blew down the house of sticks. The pigs ran to the house of bricks, with the wolf close at their heels. Where the house of sticks had stood, other wolves built a time-share condo resort complex for vacationing wolves, with each unit a fiberglass reconstruction of the house of sticks, as well as native curio shops, snorkeling, and dolphin shows.

At the house of bricks, the wolf again banged on the door and shouted, “Little pigs, little pigs, let me in!”

This time in response, the pigs sang songs of solidarity and wrote letters of protest to the United Nations.

By now the wolf was getting angry at the pigs’ refusal to see the situation from the carnivore’s point of view. So he huffed and puffed, and huffed and puffed, then grabbed his chest and fell over dead from a massive heart attack brought on from eating too many fatty foods.

The three little pigs rejoiced that justice had triumphed and did a little dance around the corpse of the wolf. Their next step was to liberate their home land. They gathered together a band of other pigs who had been forced off their lands. This new brigade of porcinistas attacked the resort complex with machine guns and rocket launchers and slaughtered the cruel wolf oppressors, sending a clear signal to the rest of the hemisphere not to meddle in their internal affairs. Then the pigs set up a model socialist democracy with free education, universal health care, and affordable housing for everyone.

Please note: The wolf in this story was a metaphorical construct. No actual wolves were harmed in the writing of the story.

From Politically Correct Bedtime Stories © 1994 by James Finn Garner

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Morning Report – Richard Cordray speaks to mortgage bankers 09/12/13

Posted on September 12, 2013 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1688.5 -0.3 -0.02%
Eurostoxx Index 2863.1 -0.3 -0.01%
Oil (WTI) 108.4 0.8 0.78%
LIBOR 0.254 0.000 0.00%
US Dollar Index (DXY) 81.64 0.126 0.15%
10 Year Govt Bond Yield 2.89% -0.03%
Current Coupon Ginnie Mae TBA 103.8 0.1
Current Coupon Fannie Mae TBA 102.5 0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.56
Markets are flat this morning on no real news. Initial Jobless Claims printed below 300,000 for the first time since May 2007 on a technical glitch. Bonds and MBS are up small.
CFPB Chairman Richard Cordray spoke to a conference of mortgage lenders yesterday and told them that the new QM rules will give responsible lenders an advantage. One of the things he pointed out was that the CFPB intended to level the playing field between banks and non-banks (the banks are more highly regulated). Cordray stressed that the QM rules were intended to provide legal protection for lenders:  “You should keep this perspective in mind if you hear people dreaming up hypothetical factual disputes in an effort to sow anxiety about potential litigation,” he said.
Now that Richmond, CA has decided to go the eminent domain route, the court challenges begin. Blackrock, PIMCO, and other bondholders have asked a federal judge to halt the city’s plans to force bondholders to sell their mortgages at a discount to appraised value to a hedge fund that will modify and refinance the borrowers. The city will have to run the table on court challenges.
As the refi boom ends, banks are laying off people in their mortgage operations. J.P. Morgan is laying off 2,000, Bank of America is cutting 2,100 jobs, Wells has let 3,000 go… the list goes on. That said, while the MBA mortgage applications index fell by 13.5% last week, the purchase index fell by only 2.6%. As home price appreciation gives people equity in their homes, purchase transactions will undoubtedly increase as people can finally move. Existing home sales are just approaching historical norms of 5.5 million / year, but the difference is that 60% of these sales are cash, as estimated by Goldman Sachs. Pre-bubble, cash sales were about 20% of all sales. So, in the past, you were looking at an average 5.5 million run rate, with 80% non-cash (i.e. a mortgage), which meant roughly 4.4 million purchase mortgages a year. So far in 2013 we have averaged a 5 million run rate and with only 40% involving a mortgage, you are looking at 2 million purchase mortgages a year. In other words, purchase finance activity has to more than double just to reach normalcy. So while housing has recovered according to the home price indices and the sales volume indices, we are still in nuclear winter for the mortgage banking business. Negative equity is undoubtedly driving a lot of this, and as prices rise, this phenomenon will reverse.

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