Discuss the ticker thread at http://market-ticker.denninger.net/2007/.... here!

KD,

Are you saying the new BK law can force the sale of your home in states that protect the primary home from debt judgments (FL, TX)?

Unless your home is the collateral, I was under the impression that it was off limits to creditors during legal judgments in civil cases (Florida and Texas).

I wasn't aware that the FEDs can trump state property laws like that.

E

They can't directly force your home to be sold.

But consider this - let's say you go file a BK.

Under the new federal law, you make too much, so you can't discharge the debt. Instead, you are forced into garnishment of your wages.

Ok, so now you walk out of court with a garnishment order. By the way, that's 50% of your gross as a maximum. Take out your taxes and I'm sure you know how much is left!

You can't possibly make the mortgage payments with what's left, say much less the property taxes and insurance, pay the electric bill, and eat. Not possible.

So what choices do you have?

1. Die.
2. Sell the house and turn the equity over to your creditors.

So while no, you can't have the house taken, the fact remains that you're still ****ed and will be forced to sell.

That little ditty in the bill was a cute circumvention of the laws in several states, including Florida, that placed primary residences "off limits" to bankruptcy judgments.

Nice.

I don't know if what I am about to say is economic or political, but here goes...

I think the idea of shifting the burden of bad credit risk away from the issuer is bad policy. It entices them to avoid their due diligence and anc conducting a thorough vetting the borrower.

If the issuer knew he could get stuck with a huge load of bad debt, he would be very particular about who was walking around with his money and what they were doing with it.

Of course, this lends itself to even more reckless lending, higher consumerism, lower productive capital investment, and all the unintended consequences you outlined in today's Ticker.

Bottom line: easy money is thoroughly corrosive to the economy at-large. Money without value is not really money.

Exactly.

The problem here for the broader economy is that destroying a consumer for 10 years will screw the economy far worse than forcing an issuer to write it off.

Beyond the moral hazard problem there is the issue of broader economic impact. It ia always better to take the short, sharp recession over the slow burn because policy mistakes made during that downturn can lead to the kind of thing we had happen in the '30s.

1929 was bad, but Smoot/Hawley was the final nail. It gets VERY VERY hard to politicians to say "no" to coming to the rescue, but anything they do in a situation like this usually makes the problem worse, not better.

For those that are

1. Bankrupt
2. Mortgage underwater
3. Uder garnishment order

Solution -- Buy a new identity from a Mexican street vendor and start over.

or get a job at walmart, pull a bigscreen tv off top rack and drop it on yourself. then grab your back and neck. get declared permantly disabled. then work under the table like half the population in this area.

Btw from the FX markets...

Quote:

Some potentially negative [USD/YEN] news has been circulating in the market today amid the lack of US data on tap, with talk centering on a possible bullish think-tank report regarding the Yen, alongside rumours that another US investment house hedge fund is in problems due to recent sub-prime woes in the US.

.......

No confirmation - yet.

in market ticker you said the market would show the credit increase as a positive sign, you were right. http://www.bullandbearwise.com/

Ultimate solution to bankruptcy: Move to another country that has sound currency and is not run by bankers and lawyers. start a new life there. easier said than done but better than languishing under a pile of debt.

I love the US but the way this is playing out makes it seems like this is going to be a pretty crappy place to live 10 years from now when the economy is stuck in a depression after being gutted by debt and entitlements. If you had to live off shore where would you go? A lot of variables to consider before ex-patriation.

"Breakout to new highs in a strong Bull run? I don't see it - at least not yet."
What's up with this last line?
Sounds like you may be considering capitulation.....no?
Also, whatta ya think of AA closing a/h session UP, ostensibly on China demand?

Nope; not capitulating; I don't like the internals a bit, especially the VIX. They're not buying it and neither am I.

As for AA, I ain't buying that EITHER. After-hours don't mean a thing. Futures aren't going anywhere good and I'm looking forward to the morning.

We're 2 for 2 on the bad reports so far. This keeps up and it might get very bloody. Note that despite the games in AA all those $42.50 and $45 calls are worth zero and will be - you have to be over $44 for any of those to pay. That's a ****load of money that got flushed on expectations of a STRONG beat.

We didn't get it, but that was what the street was looking for.

How's that translate? Not sure, but I wouldn't bet on it being good.

cool...thanks again.

Lexmark threw some cold water on the tech "I'll buy anything that breathes" game with a nice big fat earnings warning. A bit over 20% miss expected eh? Hmmm.... and blamed on...... slower consumer sales of consumables. They got whacked for about 10% premarket - signs of sanity?

Naw, Chucky's fine...... booya!

Actually, I think Chucky is still smilin' while 'Rome' burns.

Who's trying to kid whom here? Consumer debt is up at a record, vastly surpassing wage growth. So how the hell do you service all this debt? Ultimately you do not, which means that when the wheels come off it will not just be foreclosures but a massive wave of bankruptcies on top of it.

The NASDAQ 100 (NDX) moved slightly higher today on negative 'advances minus declines'.

Thus..

'By the pricking of my thumbs, something wicked this way comes'.. (MacBeth, William Shakespeare)

...

Anyway, I suspect that a 'market turn' of some magnitude is right around the corner..

nasdevelopment wrote: "Move to another country that has sound currency and is not run by bankers and lawyers. start a new life there. easier said than done but better than languishing under a pile of debt."

What country would you advise?

Maybe assume new identity as Don Knotts. http://www.worldofcheese.org/knotts/

I love the new avatar! COOL!

thanks i just got "inspired" during my rant in the politics forum! Who says talking to yourself isn't productive?

What country would you advise?


The US after the revolution.

revolution isn't a word that should be tossed about frivolously.

Funny how you say that. I was just thinking about the state of freedom in the US. When I typed that little quip, it was obviously tongue-in-cheek, but there was a small fear that the FBI might show up and give me an anal probe.

I can understand how in the PRNK you might have that fear, but in the US?

its just that the last time the people challenged the federal government, it started stupidly, and ended badly.

True. I'm no proponent of a violent overthrow of our gov't. Revolution is a word associated with Reagan in 1980, and the 104th Congress.

If our gov't had as a priority the protection of individual liberties, rather than the view of a citizen is an endless supply of money who needs to be highly regulated, watched, controlled, and manipulated, people would not want to seek out other nations as a place to live.

Thanks for the opportunity to clear that up. I wouldn't want the DHS/US-STASI to get confused on the issue. Heaven only knows they are busy enough interrogating 9yo girls on why they were carrying 8oz of water through a TSA checkpoint.

im probably on the watch list since i sent a sizzling e-mail to fritz hollings after his senate vote on clintons impeachment. we are both citadel grads and i pretty much called him for breaking the honor code.