Apr
22

Thinking Out Loud… Über-Trendy Rich New Yorkers & Ethiopian Cuisine

 

Manhattan is where the trendy chic food trends begin, for the most part, right?  It has always seemed that way to me anyway, although I think LA may be able to take most of the credit for strip mall sushi, and Mexican fare.

 

Every time I’m in NYC, it seems that someone always suggests dining at some new kind of restaurant that until that moment, I didn’t really know existed.  It’s always good in some ways, but it’s never the kind of food of which anyone takes large bites, and I can’t tell you how many times I’ve gone out for spaghetti and meatballs after dinner and goodnight.

 

I was in the city on business some years ago, dining with the CEO of an international conglomerate type of company who had wanted to dine at what looked to be a Chinese restaurant, but was supposedly representative of some far out province near the Mongolian border where yak was a delicacy, or whatever.

 

I’ll never forget it because he ordered the unbelievably expensive Bird Nest Soup for the table… if memory serves it was about $600 for maybe eight of us… and I am not making this up, you can ask someone else or look it up online.  As I was blowing on a spoonful wondering how I was going to get out of this gracefully… he leaned over to tell me what a delicacy it was because, he said in a hushed tone, it was made with “real bird spit.”

 

“WHAT?”  Unexpectedly taken aback for a moment, I had inadvertently blurted it out much louder than I would have liked.  Not really noticing my reaction in any detail, he only repeated himself.

 

“Oh,” I said.  “Real bird s-p-i-t… got it…wow, that is amazing.  I thought you said… “

 

Spoon in hand, he had returned to focus on the contents of the ornate blue and white lacquered soup bowl in front of him.  “Never mind,” I mumbled almost to myself.

 

Real bird spit, while considerably more palatable than its misheard alternative, was still not doing much for me.  I remembered that I once had pretty much gagged on a spoonful of egg-drop soup that my daughter ordered and insisted that I try.  And I figured that if I didn’t like egg in my soup, it seemed unlikely that I would end having a taste for a soup made from the nest in which the egg could have been laid.

 

 

And besides… REAL bird spit?  As opposed to what, perhaps?  Was there a company manufacturing fake bird spit and passing it off in cans as being the real thing to chefs in Mongolia?  That was only my first thought on the subject.  My second thought was that, although I detested that stuff referred to as imitation crabmeat, it was quite possible that bird spit would prove to be one of the few things in the world that given the choice, I’d probably just as soon opt for the fake one.

 

I peered into my spoon’s contents noticing the soup’s undeniable spit-like texture, and then as I watched him slurp it down like it was Campbell’s Chicken Noodle, I pretended it was still a bit too hot and returned my spoon to the bowl.  Recognizing that a diversion was going to be needed, I simply waited a minute before knocking my water glass over and in the flurry of apologies and confusion, fed my bird’s nest soup to the oriental carpet.  “Mmmm…” I said a few minutes later.  Delicious,” and thankfully no was the wiser.

 

But, it was far too close a call and I made a mental note to do more to avoid getting pinned down in such dicey dining situations.  I had learned this lesson before too… people with the means to eat absolutely anything are often drawn to really primitive peasant food and you have to watch them carefully or you could end up having to make a run for the relative privacy of a restaurant’s back alley in order to heave beyond the purview of the other guests.

 

I was in Helsinki some years ago for a couple of weeks and in case you get the chance to visit Finland… my knee-jerk response would be to yell out… No, don’t do it!

 

For one thing it never gets dark there so you can have the front desk book your tee time at midnight.  But trust me on this, golf is frustrating enough during the hours in which it’s normally played.  No one needs to be teeing off straight into the wind on a narrow 200-yard Par 3 with water on both sides at 3:15 AM, especially right after some 6’6” chick with blond hair and unusually muscular forearms named Maijuska, just opened your seventh beer at the turn.

 

For another, never attempt to spend time in a country where they have street names that make use of the letter ‘N’ five times, three of which being consecutive.  Just try finding “Uudenmaankatu Ullanlinna,” after a couple shots of vodka at the hotel bar.  Actually, it’s not that hard… it’s just past the intersection of Hietassaarenkuja and Porvoonk and if you hit Teollisuuskatu, you’ve gone too far.  If you rent a car, you’re all but certain to be killed in a rear end collision as you attempt to decipher enough of the data involved in the decision of turning one way or the other.

 

I was there at a conference of the World Health Organization, my father’s doing, not mine, and so we were attending these hoity dinners at which I can only assume the academics and government officials had simply eaten everything the world had to offer and so were being fed things that the rest of us would likely view as “experimental” before we’d identify with it as food we might want to eat.

 

I remember breakfast vividly, for the most part, it was always a herring buffet… all different kinds of herring prepared in every conceivable way, although some of which I’m certain I would never have been able to conceive.  And if you’re thinking that the problem was that herring alone isn’t all that filling, don’t worry… that was not the problem, and it was all the herring you could eat.

 

With that as breakfast fare, it was barely a surprise to find out that these world-renowned intellectuals with means eat porridge for dinner, but we’re not talking about Cream of Wheat with brown sugar, in this porridge there was invariably either reindeer or blood sausage involved.

 

 

I’d offer to describe its taste, but for 10 straight days, I consumed only two foods and one drink: 1. Boxes of what appeared to be the Finnish equivalent of Lorna Doones.  2. Very large bowls of Beluga and Osetra caviar on toast points with a squeeze of lemon and chased by innumerable ice-cold shots of Finnish vodka.

 

After that, while traveling in the Baltic, First Class on a cruise ship headed for St. Petersburg, I quickly discovered that I was unable to come within six feet of a huge vat sitting right in the middle of the breakfast buffet table every morning.  I was told that it contained oatmeal, but I knew they were lying because although I will readily concede that “oatmeal” can spoil… it doesn’t die.  And there was no question in my mind that whatever was now inside that giant vat, it had not walked among living creatures for many years.

 

So, you’d think that I’d have learned my lesson after all these years, but the last time I was in Manhattan someone said, “Hey, let’s go have Ethiopian food,” and inexplicably, I replied saying, “Okay, sounds good.”  I heard myself say it… wanted to take it back, but it was too late, my host was already into telling me how much I was sure to love it.

 

Ethiopian food?  Really?  To my ears, it sounded like “jumbo shrimp.”  I thought food in Ethiopia was at least somewhat a rarity… maybe not compared with Chad or Somalia, but up against Tribeca or the East Village, for sure.

 

Twenty years ago the epicurean daredevils would have been touting “Sushi,” which today, I admittedly find delicious, but that doesn’t change the fact that a country’s cuisine made up of small pieces of raw fish could only develop in a country where you can’t afford a whole fish per person and you lack the electricity or gas to allow most people to own stoves.  If you have the yen, you order up a filet at Morton’s way before you develop a diet based on bite size pieces of raw fish… and rice.

 

And it makes sense to me because Japan is a rock about the size of New Jersey in the middle of the ocean; only one-seventh of the rock is arable… and historically speaking, the land nearby is generally jam packed with marauding hordes of one kind or another.  Much safer if you learn to feed the people on your rock without anyone having to leave it, no question about it.  So, rice and small pieces of raw fish rules the day, and I completely understand.

 

Another example is found in the tortillas with which so many Americans have become enamored.  I mean, they’re fine for holding whatever you put inside them, as long as it’s beans, rice, and some kind of meat, and the whole thing will taste great given sufficient amounts of salsa, guacamole and sour cream, which is the same sort of principle under which some consider snails to be a delicacy, just replace the condiments with garlic and butter.  Actually, I’ve often thought that I might be able to eat most of an economy car, given copious amounts of garlic and butter.

 

But tortillas couldn’t have been everything their inventors were striving for, right?  They had to be the result of people not being able to afford whatever they needed to make bread. They weren’t anyone’s first choice.  Like they got sick of eating so much bread that they switched to tortillas?  I seriously doubt that.  Every time I hear someone ask, “Flour or corn?”  I can’t help but think to myself, “Paper or plastic?”  I mean, who cares?

 

How about this for an answer: Whichever promises to most significantly reduce the probability of food inside ending up in my lap.  With that in mind, you make the call.

 

Just like matzo, for the Jews in the audience, which was also no one’s recipe, but rather is the sort of outcome possible when a bunch of slaves, on their way to a 40-year trek in the Sinai Desert, unexpectedly have to leave town in a hurry.  Why we have to relive the outcome of planning so poorly thousands of years after the event is beyond me.  I mean, come on already… let my people go.

 

And don’t start with that “tradition” nonsense.  I don’t need a Tevya in my life unless he’s being played by Zero Mostel, capisce?

 

 

You don’t see any Jews volunteering to wander around for extended periods in the desert for tradition’s sake, do you?  Not a chance.  The closest thing to that you’ll ever see from today’s Jews occurs when Walter Annenberg and his wife spend a week or two at their place in Rancho Mirage.

 

No one WANTS to eat matzo, which is why even Jews only consider doing it over the course of maybe a week a year.  I somehow manage to choke down half a sheet sheet of the stuff annually, but only if I can find the Egg & Onion flavor and slather it in butter and salt, which is basically the same sort of scenario under which I would be willing to eat shirt cardboard.

 

And, by the way, eating matzo without some sort of liquid within reach kills more people each year than any other food except improperly prepared blow fish.

 

Matzo was simply the best the Jews could do in a pinch.  If you don’t have a pharaoh on your tail who’s bent on exterminating your entire clan, and there isn’t a guy named Moses running from hut to hut yelling, “Let’s go, for Christ’s sake,” then you let the bread rise and leave the following day.

 

 

So anyway, that’s what we did… we went out for Ethiopian food, which I soon learned is not all that far from what I expected would be the cuisine of a poor African nation that, for most of my life, was at war with neighboring Eritrea.  And, why a country plagued by drought would attempt to develop an economy based almost exclusively on agriculture is one of those head scratchers for smarter minds than mine.

 

Didn’t they learn anything from Las Vegas?  I know they know about Vegas because half the cab drivers in Vegas are either from Ethiopia or Eritrea, so you’d think that by now someone would have sent a postcard home with a few tips, at the very least.

 

Or maybe it’s that, “what happens in Vegas stays in Vegas,” thing at work.  (Okay, I apologize for that.  It was entirely uncalled for and just plain wrong.  You have my word that it won’t happen again.)

 

So, after being seated at a table for four, the six of us perused the menu in complete silence until it was awkward.  And just my luck, our waiter, who was a dead-ringer for Ziggy Marley, approached my side of the table first, saying…

 

“Are you ready to order, Mon?” 

 

“Yes. I think I’ll have three small bowls of paste and a basket of sandy sponges.”

 

“Very good, sir.  What color pastes would you like?”

 

“Hmm… let’s stay with Earth-tones… oh, and nothing purple,” the last thought having been inspired at the last moment as a table nearby received its order as I was finishing mine.

 

“Great, and to drink?”

 

“Let’s see… which do you recommend… the Desert Brush Tea or the Clay-aide? Never mind, I think I’ll have the tea.”  The waiter had already turned his attention to the next order but when I mumbled under my breath, “I drank too much clay last night,” he turned back to me.  “I’m sorry, did you want to change something?”

 

“No, I’m fine,” I replied.  “Absolutely perfect.”  Great, I thought.  Now he’d probably spit in my tea before bringing it to the table.  I started imagining that I was Larry David in an episode of “Curb Your Enthusiasm.”

 

Our host loved his meal.  You could tell that he was literally enthralled by the overly cultural experience… he even knew how to pronounce his selection, although I decided not to ask him to translate it, even though I was 90 percent sure that he didn’t order goat entrails, so it probably would have been fine if he did.  At moments like that, I guess I just figure… why tempt fate, if you know what I mean.

 

So, would you like to know how I liked my Ethiopian meal?  I’ll tell you… it made me want to starve to death.  I hadn’t realized it before, but the occurrence of starvation in Ethiopia is probably a choice in many instances… people just can’t face another bowl of paste and sponges.  The country’s slogan could easily be changed to read…

 

Come to Ethiopia – A Wonderful Place to Miss a Meal

 

As I sat there, at first strategically moving my food around on my plate, and then generously offering everyone at our table and even those seated close by the opportunity to try what I had ordered, describing its taste like someone hosting an infomercial, I could tell that Ethiopian food was so 2010.

 

 

It had shown the world the many ways that sand, clay and brush could be transformed into dishes with varying amounts of moistness… some merely damp, others entirely soupy.  And now there would be something new… something with even less appeal than eating what falls on the floor of the African continent.

 

These multicolored pastes and play-doughs, it occurred to me, had been brought from the Horn of Africa to Manhattan for no discernable reason other than to provide upscale foodies a taste of what it feels like to be malnourished.  I decided that I would endeavor to impress my friends back in L.A. by finding out which country’s cuisine was likely to become the next trendy eatery for the recession-proof, restaurant addicted segment of our population before I left town.

 

I asked around… nothing.  I tried the Zabar’s shoppers, and still… no ideas.  Then, I figured that maybe the best way to find America’s next trendy dining experience might be to check the other countries where starvation has traditionally flourished.  Would there be restaurants serving food from Darfur or Somalia, for example?

 

Doesn’t it just figure that in this country, where we have so much food we that throw away inconceivable amounts on an hourly basis and literally pay farmers millions of dollars not to grow stuff… that we’d have trendy intellectuals gravitating towards the trappings of the impoverished?  It’s a lot like the untold millions of Americans who claim to be, “lactose intolerant.”  Is anyone lactose intolerant in Darfur?  I’m thinking… not, but what do I know?

 

So, unable to find anything worse than Ethiopian dining to hang my hat on as being the next new thing, but with the rich getting ever richer in this country every day, I started thinking that perhaps I should design the next trendy chic haute cuisine for those with discerning taste and sophisticated pallets, and open a restaurant myself.

 

But what could be even more primitive than eating Ethiopian style? It’s hard to beat sand and clay for dinner in terms of making a foodie with bank feel like he or she’s living large.

 

And then it hit me… Cuisine de Composti… A menu of delights made exclusively from refuse.  The toniest locales could have their compost trucked in daily… fresh from Central Jersey, or in LA’s case, flown in fresh from Fresno.

 

 

Perfect!  What’s even worse than eating in Ethiopia… eating right here at home in these United States.  Heck, we’ve got closing in on 50 million on food stamps and at least four million homeless already… by next year those numbers will have both gone up.  I’ll market the chance to experience the dining during America’s Great Depression, Part 2, to those not being given the chance to participate in it.

 

Opening the restaurant won’t cost much because it will be in a foreclosed and already decrepit building that we could be evicted from any day now.  We’ll keep trying to get the sale postponed and letting the patrons know what’s happening so they’ll never know when the sheriff might arrive and have them removed… how exciting for them.

 

This is going to be huge… a way for the uber-rich to live like the neo-poor, but instead of Ethiopian poverty, we’ll let them experience what our own country’s bottom rung people get to taste and smell every day.

 

We could call the place… La Maison des Ordures (French for “House of Garbage”), and I’d write the first review…

 

New LA Dining Experience Says You Won’t Refuse the Refuse at

La Maison des Ordures

 

I recommend the Rancid Chicken in Curdled Cream for sure.  Consider starting with the Romaine a’la Ptomaine, which is the chef’s signature salad. 

 

For meat lovers, don’t miss out on trying the Putrescence of Pork which is prepared with a Diphtheria Glaze, and it is something you’ll likely remember for days or even weeks afterwards.  And what this place does with its Decomposing Flap-Steak Fat is already said to be inspiring chefs around the world.

 

Don’t forget that upon request any of the meat dishes can be prepared to be served “extra rank,” which uses a rub made from a balanced blend of “miscellaneous droppings, lint scrapings and soap powder.”

 

Other popular items include the Stinking Fish with Reeking Cheese Potatoes and Insufferable Sauce, and for the real gourmand who isn’t allergic to petroleum-based products, the Eel du Oil is in a class by itself, but check the signs in front of the Arco across the street before ordering, as the price of this dish does fluctuate. 

 

And for pasta lovers don’t pass up the Petrified Noodles, which are traditionally served with various larvaes in a mucous-based marinara… portions are generous so consider ordering one dish for the table and sharing.

 

On the lunch menu is the Canine Rigatoni… it’s a brand new addition so ask your server for details, and there’s the fabulous Hirsute Herring Chowder, which is served unshaven with a selection of moldy breads and crusty sponges. 

 

And for either the children, or the un-tenured assistant professors from New York City College, along with any other budget conscious guests, there’s the always hearty, “Fetid Franks & Things,” a casserole dish that looks every bit as interesting as it smells.

 

Desert is certainly worth leaving room for… and the most popular are the Spoiled Crèmes in Kleenex, which is served sprinkled with a mix of coffee grounds, dust and acetaminophen… and who could forget, the dish that started it all, the Crème du Stench, which is truly a bouquet of aromas that shan’t be forgotten. 

 

And for those adventurous diners, who don’t shy away from diseases born south of the border, there’s the Lumpy Crème de Cagada, which for a few dollars more can be ordered without lumps but this change does add about 20 minutes to the preparation time, so be sure to order ahead of time.

 

After dinner, patrons are welcome to linger over a cup of what appears to be the restaurant’s own coffee, look for it to be listed on the menu as “Steaming Hot Brown Fluid.”  Its further description only says that it’s, “a proprietary blend,” and it seemed that by stopping short of disclosing what exactly was being blended, our table’s after dinner conversation was much more lively than usual.

 

 

Or, maybe not.  I don’t know… now I seem to have lost my appetite…

 

Besides, I’m just thinking out loud.

 

Mandelman out.

Apr
22

Thinking Out Loud… Über-Trendy Rich New Yorkers & Ethiopian Cuisine

 

Manhattan is where the trendy chic food trends begin, for the most part, right?  It has always seemed that way to me anyway, although I think LA may be able to take most of the credit for strip mall sushi, and Mexican fare.

 

Every time I’m in NYC, it seems that someone always suggests dining at some new kind of restaurant that until that moment, I didn’t really know existed.  It’s always good in some ways, but it’s never the kind of food of which anyone takes large bites, and I can’t tell you how many times I’ve gone out for spaghetti and meatballs after dinner and goodnight.

 

I was in the city on business some years ago, dining with the CEO of an international conglomerate type of company who had wanted to dine at what looked to be a Chinese restaurant, but was supposedly representative of some far out province near the Mongolian border where yak was a delicacy, or whatever.

 

I’ll never forget it because he ordered the unbelievably expensive Bird Nest Soup for the table… if memory serves it was about $600 for maybe eight of us… and I am not making this up, you can ask someone else or look it up online.  As I was blowing on a spoonful wondering how I was going to get out of this gracefully… he leaned over to tell me what a delicacy it was because, he said in a hushed tone, it was made with “real bird spit.”

 

“WHAT?”  Unexpectedly taken aback for a moment, I had inadvertently blurted it out much louder than I would have liked.  Not really noticing my reaction in any detail, he only repeated himself.

 

“Oh,” I said.  “Real bird s-p-i-t… got it…wow, that is amazing.  I thought you said… “

 

Spoon in hand, he had returned to focus on the contents of the ornate blue and white lacquered soup bowl in front of him.  “Never mind,” I mumbled almost to myself.

 

Real bird spit, while considerably more palatable than its misheard alternative, was still not doing much for me.  I remembered that I once had pretty much gagged on a spoonful of egg-drop soup that my daughter ordered and insisted that I try.  And I figured that if I didn’t like egg in my soup, it seemed unlikely that I would end having a taste for a soup made from the nest in which the egg could have been laid.

 

 

And besides… REAL bird spit?  As opposed to what, perhaps?  Was there a company manufacturing fake bird spit and passing it off in cans as being the real thing to chefs in Mongolia?  That was only my first thought on the subject.  My second thought was that, although I detested that stuff referred to as imitation crabmeat, it was quite possible that bird spit would prove to be one of the few things in the world that given the choice, I’d probably just as soon opt for the fake one.

 

I peered into my spoon’s contents noticing the soup’s undeniable spit-like texture, and then as I watched him slurp it down like it was Campbell’s Chicken Noodle, I pretended it was still a bit too hot and returned my spoon to the bowl.  Recognizing that a diversion was going to be needed, I simply waited a minute before knocking my water glass over and in the flurry of apologies and confusion, fed my bird’s nest soup to the oriental carpet.  “Mmmm…” I said a few minutes later.  Delicious,” and thankfully no was the wiser.

 

But, it was far too close a call and I made a mental note to do more to avoid getting pinned down in such dicey dining situations.  I had learned this lesson before too… people with the means to eat absolutely anything are often drawn to really primitive peasant food and you have to watch them carefully or you could end up having to make a run for the relative privacy of a restaurant’s back alley in order to heave beyond the purview of the other guests.

 

I was in Helsinki some years ago for a couple of weeks and in case you get the chance to visit Finland… my knee-jerk response would be to yell out… No, don’t do it!

 

For one thing it never gets dark there so you can have the front desk book your tee time at midnight.  But trust me on this, golf is frustrating enough during the hours in which it’s normally played.  No one needs to be teeing off straight into the wind on a narrow 200-yard Par 3 with water on both sides at 3:15 AM, especially right after some 6’6” chick with blond hair and unusually muscular forearms named Maijuska, just opened your seventh beer at the turn.

 

For another, never attempt to spend time in a country where they have street names that make use of the letter ‘N’ five times, three of which being consecutive.  Just try finding “Uudenmaankatu Ullanlinna,” after a couple shots of vodka at the hotel bar.  Actually, it’s not that hard… it’s just past the intersection of Hietassaarenkuja and Porvoonk and if you hit Teollisuuskatu, you’ve gone too far.  If you rent a car, you’re all but certain to be killed in a rear end collision as you attempt to decipher enough of the data involved in the decision of turning one way or the other.

 

I was there at a conference of the World Health Organization, my father’s doing, not mine, and so we were attending these hoity dinners at which I can only assume the academics and government officials had simply eaten everything the world had to offer and so were being fed things that the rest of us would likely view as “experimental” before we’d identify with it as food we might want to eat.

 

I remember breakfast vividly, for the most part, it was always a herring buffet… all different kinds of herring prepared in every conceivable way, although some of which I’m certain I would never have been able to conceive.  And if you’re thinking that the problem was that herring alone isn’t all that filling, don’t worry… that was not the problem, and it was all the herring you could eat.

 

With that as breakfast fare, it was barely a surprise to find out that these world-renowned intellectuals with means eat porridge for dinner, but we’re not talking about Cream of Wheat with brown sugar, in this porridge there was invariably either reindeer or blood sausage involved.

 

 

I’d offer to describe its taste, but for 10 straight days, I consumed only two foods and one drink: 1. Boxes of what appeared to be the Finnish equivalent of Lorna Doones.  2. Very large bowls of Beluga and Osetra caviar on toast points with a squeeze of lemon and chased by innumerable ice-cold shots of Finnish vodka.

 

After that, while traveling in the Baltic, First Class on a cruise ship headed for St. Petersburg, I quickly discovered that I was unable to come within six feet of a huge vat sitting right in the middle of the breakfast buffet table every morning.  I was told that it contained oatmeal, but I knew they were lying because although I will readily concede that “oatmeal” can spoil… it doesn’t die.  And there was no question in my mind that whatever was now inside that giant vat, it had not walked among living creatures for many years.

 

So, you’d think that I’d have learned my lesson after all these years, but the last time I was in Manhattan someone said, “Hey, let’s go have Ethiopian food,” and inexplicably, I replied saying, “Okay, sounds good.”  I heard myself say it… wanted to take it back, but it was too late, my host was already into telling me how much I was sure to love it.

 

Ethiopian food?  Really?  To my ears, it sounded like “jumbo shrimp.”  I thought food in Ethiopia was at least somewhat a rarity… maybe not compared with Chad or Somalia, but up against Tribeca or the East Village, for sure.

 

Twenty years ago the epicurean daredevils would have been touting “Sushi,” which today, I admittedly find delicious, but that doesn’t change the fact that a country’s cuisine made up of small pieces of raw fish could only develop in a country where you can’t afford a whole fish per person and you lack the electricity or gas to allow most people to own stoves.  If you have the yen, you order up a filet at Morton’s way before you develop a diet based on bite size pieces of raw fish… and rice.

 

And it makes sense to me because Japan is a rock about the size of New Jersey in the middle of the ocean; only one-seventh of the rock is arable… and historically speaking, the land nearby is generally jam packed with marauding hordes of one kind or another.  Much safer if you learn to feed the people on your rock without anyone having to leave it, no question about it.  So, rice and small pieces of raw fish rules the day, and I completely understand.

 

Another example is found in the tortillas with which so many Americans have become enamored.  I mean, they’re fine for holding whatever you put inside them, as long as it’s beans, rice, and some kind of meat, and the whole thing will taste great given sufficient amounts of salsa, guacamole and sour cream.

 

But tortillas couldn’t have been everything their inventors were looking for, they had to be the result of people not being able to afford whatever they needed to make bread, right? They weren’t anyone’s first choice.  Like they got sick of eating so much bread that they switched to tortillas?  I seriously doubt that.  Every time I hear someone ask, “Flour or corn?”  I can’t help but think to myself, “Paper or plastic?”  I mean, who cares?

 

How about this for an answer: Whichever promises to most significant reduction in the probability that the food inside will end up in my lap.  With that in mind, you make the call.

 

Just like matzo, for the Jews in the audience, which was also clearly no one’s recipe, but rather is the sort of outcome possible when a bunch of slaves, on their way to a 40-year trek in the Sinai Desert, unexpectedly have to leave town in a hurry.  Why we have to relive the outcome of planning so poorly that we were left with matzo thousands of years after the event is beyond me.  I mean, come on… let my people go already.

 

And don’t start with that “tradition” nonsense.  I don’t need a Tevya in my life unless he’s being played by Zero Mostel, capisce?

 

 

You don’t see any Jews volunteering to wander around for extended periods in the desert for tradition’s sake, do you?  Not a chance.  The closest thing to that you’ll ever see from today’s Jews occurs when Walter Annenberg and his wife spend a week or two at their place in Rancho Mirage.

 

No one WANTS to eat matzo, which is why even Jews only consider doing it over the course of maybe a week a year.  I somehow manage to choke down half a sheet sheet of the stuff annually, but only if I can find the Egg & Onion flavor and slather it in butter and salt, which is basically the same sort of scenario under which I would be willing to eat shirt cardboard.  Eating the stuff without some sort of liquid within reach kills more people each year than any other food except improperly prepared blow fish.

 

Matzo was simply the best they could do in a pinch.  If you don’t have a pharaoh on your tail who’s bent on exterminating your entire clan, and there isn’t a guy named Moses running from hut to hut yelling, “Let’s go, for Christ’s sake,” then you let the bread rise and leave the following day.

 

 

So anyway, that’s what we did… we went out for Ethiopian food, which I soon learned is not all that far from what I expected would be the cuisine of a poor African nation that, for most of my life, was at war with neighboring Eritrea.  And, why a country plagued by drought would attempt to develop an economy based almost exclusively on agriculture is one of those head scratchers for smarter minds than mine.

 

Didn’t they learn anything from Las Vegas?  I know they know about Vegas because half the cab drivers in Vegas are either from Ethiopia or Eritrea, so you’d think that by now someone would have sent a postcard home with a few tips, at the very least.

 

Or maybe it’s that, “what happens in Vegas stays in Vegas,” thing at work.  (Okay, I apologize for that.  It was entirely uncalled for and just plain wrong.  You have my word that it won’t happen again.)

 

So, after being seated at a table for four, the six of us perused the menu in complete silence until it was awkward.  And just my luck, our waiter, who was a dead-ringer for Ziggy Marley, approached my side of the table first, saying…

 

“Are you ready to order, Mon?” 

 

“Yes. I think I’ll have three small bowls of paste and a basket of sandy sponges.”

 

“Very good, sir.  What color pastes would you like?”

 

“Hmm… let’s stay with Earth-tones… oh, and nothing purple,” the last thought having been inspired at the last moment as a table nearby received its order as I was finishing mine.

 

“Great, and to drink?”

 

“Let’s see… which do you recommend… the Desert Brush Tea or the Clay-aide? Never mind, I think I’ll have the tea.”  The waiter had already turned his attention to the next order but when I mumbled under my breath, “I drank too much clay last night,” he turned back to me.  “I’m sorry, did you want to change something?”

 

“No, I’m fine,” I replied.  “Absolutely perfect.”  Great, I thought.  Now he’d probably spit in my tea before bringing it to the table.  I started imagining that I was Larry David in an episode of “Curb Your Enthusiasm.”

 

Our host loved his meal.  You could tell that he was literally enthralled by the overly cultural experience… he even knew how to pronounce his selection, although I decided not to ask him to translate it, even though I was 90 percent sure that he didn’t order goat entrails, so it probably would have been fine if he did.  At moments like that, I guess I just figure… why tempt fate, if you know what I mean.

 

So, would you like to know how I liked my Ethiopian meal?  I’ll tell you… it made me want to starve to death.  I hadn’t realized it before, but the occurrence of starvation in Ethiopia is probably a choice in many instances… people just can’t face another bowl of paste and sponges.  The country’s slogan could easily be changed to read…

 

Come to Ethiopia – A Wonderful Place to Miss a Meal

 

As I sat there, at first strategically moving my food around on my plate, and then generously offering everyone at our table and even those seated close by the opportunity to try what I had ordered, describing its taste like someone hosting an infomercial, I could tell that Ethiopian food was so 2010.

 

 

It had shown the world the many ways that sand, clay and brush could be transformed into dishes with varying amounts of moistness… some merely damp, others entirely soupy.  And now there would be something new… something with even less appeal than eating what falls on the floor of the African continent.

 

These multicolored pastes and play-doughs, it occurred to me, had been brought from the Horn of Africa to Manhattan for no discernable reason other than to provide upscale foodies a taste of what it feels like to be malnourished.  I decided that I would endeavor to impress my friends back in L.A. by finding out which country’s cuisine was likely to become the next trendy eatery for the recession-proof, restaurant addicted segment of our population before I left town.

 

I asked around… nothing.  I tried the Zabar’s shoppers, and still… no ideas.  Then, I figured that maybe the best way to find America’s next trendy dining experience might be to check the other countries where starvation has traditionally flourished.  Would there be restaurants serving food from Darfur or Somalia, for example?

 

Doesn’t it just figure that in this country, where we have so much food we that throw away inconceivable amounts on an hourly basis and literally pay farmers millions of dollars not to grow stuff… that we’d have trendy intellectuals gravitating towards the trappings of the impoverished?  It’s a lot like the untold millions of Americans who claim to be, “lactose intolerant.”  Is anyone lactose intolerant in Darfur?  I’m thinking… not, but what do I know?

 

So, unable to find anything worse than Ethiopian dining to hang my hat on as being the next new thing, but with the rich getting ever richer in this country every day, I started thinking that perhaps I should design the next trendy chic haute cuisine for those with discerning taste and sophisticated pallets, and open a restaurant myself.

 

But what could be even more primitive than eating Ethiopian style? It’s hard to beat sand and clay for dinner in terms of making a foodie with bank feel like he or she’s living large.

 

And then it hit me… Cuisine de Composti… A menu of delights made exclusively from refuse.  The toniest locales could have their compost trucked in daily… fresh from Central Jersey, or in LA’s case, flown in fresh from Fresno.

 

 

Perfect!  What’s even worse than eating in Ethiopia… eating right here at home in these United States.  Heck, we’ve got closing in on 50 million on food stamps and at least four million homeless already… by next year those numbers will have both gone up.  I’ll market the chance to experience the dining during America’s Great Depression, Part 2, to those not being given the chance to participate in it.

 

Opening the restaurant won’t cost much because it will be in a foreclosed and already decrepit building that we could be evicted from any day now.  We’ll keep trying to get the same postponed and letting the patrons know what’s happening so they’ll never know when the sheriff might arrive and have them removed… how exciting for them.

 

This is going to be huge… a way for the rich to live like the poor, but instead of Ethiopian poverty, we’ll let them experience what our own country’s poor people get to taste and smell every day.

 

We could call the place… La Maison des Ordures (French for “House of Garbage”), and I’d write the first review…

 

New LA Dining Experience Says You Won’t Refuse the Refuse at

La Maison des Ordures

 

I recommend the Rancid Chicken in Curdled Cream for sure.  Consider starting with the Romaine a’la Ptomaine, which is the chef’s signature salad. 

 

For meat lovers, don’t miss out on trying the Putrescence of Pork which is prepared with a Diphtheria Glaze, as it is something you’ll likely remember for days or even weeks afterwards.  And what this place does with its Decomposing Flap-Steak Fat is already said to be inspiring chefs around the world.

 

Don’t forget that upon request any of the meat dishes can be prepared to be served “extra rank,” which uses a rub made from a balanced blend of “miscellaneous droppings, lint scrapings and soap powder.”

 

Other popular items include the Stinking Fish with Reeking Cheese Potatoes, and for the real gourmand who isn’t allergic to petroleum-based products, the Eel du Oil is in a class by itself, but check the signs in front of the Arco across the street before ordering, as the price of this dish does fluctuate.  And for pasta lovers don’t pass up the Petrified Noodles, which are traditionally served with various larvaes in a mucous-based marinara… portions are generous so consider ordering one dish for the table and sharing.

 

On the lunch menu is the Canine Rigatoni, it’s a brand new addition so ask your server for details, and there’s a fabulous Hirsute Herring Chowder, which is served unshaven with what we assumed was a selection of moldy breads and dried out sponges. 

 

And for either the children, or the un-tenured assistant professors from New York City College, along with any other budget conscious guests, there’s the always hearty, “Fetid Franks & Things,” a casserole dish that looks every bit as interesting as it smells.

 

Desert is certainly worth leaving room for… and the most popular are the Spoiled Crèmes in Kleenex, which is served sprinkled with a mix of coffee grounds, dust and acetaminophen… and who could forget, the dish that started it all, the Crème du Stench, which is truly a bouquet of aromas that shan’t be forgotten. 

 

And for those adventurous diners, who don’t mind diseases from south of the border, there’s the Lumpy Crème de Cagada, which for a few dollars more can be prepared without lumps but this does require about 20 minutes longer to prepare so be sure to order ahead of time.

 

After dinner, patrons are welcome to linger over a cup of what appears to be the restaurant’s own coffee, look for it to be listed on the menu as “Steaming Hot Brown Fluid.”  Its further description only says that it’s, “a proprietary blend,” and it seemed that by stopping short of disclosing what was exactly was being blended, our table’s after dinner conversation was much more lively than usual.

 

 

Or, maybe not.  I don’t know… now I seem to have lost my appetite…

 

Besides, I’m just thinking out loud.

 

Mandelman out.

Apr
22

Thinking Out Loud… Über-Trendy Rich New Yorkers & Ethiopian Cuisine

 

Manhattan is where the trendy chic food trends begin, for the most part, right?  It has always seemed that way to me anyway, although I think LA may be able to take most of the credit for strip mall sushi, and Mexican fare.

 

Every time I’m in NYC, it seems that someone always suggests dining at some new kind of restaurant that until that moment, I didn’t really know existed.  It’s always good in some ways, but it’s never the kind of food of which anyone takes large bites, and I can’t tell you how many times I’ve gone out for spaghetti and meatballs after dinner and goodnight.

 

I was in the city on business some years ago, dining with the CEO of an international conglomerate type of company who had wanted to dine at what looked to be a Chinese restaurant, but was supposedly representative of some far out province near the Mongolian border where yak was a delicacy, or whatever.

 

I’ll never forget it because he ordered the unbelievably expensive Bird Nest Soup for the table… if memory serves it was about $600 for maybe eight of us… and I am not making this up, you can ask someone else or look it up online.  As I was blowing on a spoonful wondering how I was going to get out of this gracefully… he leaned over to tell me what a delicacy it was because, he said in a hushed tone, it was made with “real bird spit.”

 

“WHAT?”  Unexpectedly taken aback for a moment, I had inadvertently blurted it out much louder than I would have liked.  Not really noticing my reaction in any detail, he only repeated himself.

 

“Oh,” I said.  “Real bird s-p-i-t… got it…wow, that is amazing.  I thought you said… “

 

Spoon in hand, he had returned to focus on the contents of the ornate blue and white lacquered soup bowl in front of him.  “Never mind,” I mumbled almost to myself.

 

Real bird spit, while considerably more palatable than its misheard alternative, was still not doing much for me.  I remembered that I once had pretty much gagged on a spoonful of egg-drop soup that my daughter ordered and insisted that I try.  And I figured that if I didn’t like egg in my soup, it seemed unlikely that I would end having a taste for a soup made from the nest in which the egg could have been laid.

 

 

And besides… REAL bird spit?  As opposed to what, perhaps?  Was there a company manufacturing fake bird spit and passing it off in cans as being the real thing to chefs in Mongolia?  That was only my first thought on the subject.  My second thought was that, although I detested that stuff referred to as imitation crabmeat, it was quite possible that bird spit would prove to be one of the few things in the world that given the choice, I’d probably just as soon opt for the fake one.

 

I peered into my spoon’s contents noticing the soup’s undeniable spit-like texture, and then as I watched him slurp it down like it was Campbell’s Chicken Noodle, I pretended it was still a bit too hot and returned my spoon to the bowl.  Recognizing that a diversion was going to be needed, I simply waited a minute before knocking my water glass over and in the flurry of apologies and confusion, fed my bird’s nest soup to the oriental carpet.  “Mmmm…” I said a few minutes later.  Delicious,” and thankfully no was the wiser.

 

But, it was far too close a call and I made a mental note to do more to avoid getting pinned down in such dicey dining situations.  I had learned this lesson before too… people with the means to eat absolutely anything are often drawn to really primitive peasant food and you have to watch them carefully or you could end up having to make a run for the relative privacy of a restaurant’s back alley in order to heave beyond the purview of the other guests.

 

I was in Helsinki some years ago for a couple of weeks and in case you get the chance to visit Finland… my knee-jerk response would be to yell out… No, don’t do it!

 

For one thing it never gets dark there so you can have the front desk book your tee time at midnight.  But trust me on this, golf is frustrating enough during the hours in which it’s normally played.  No one needs to be teeing off straight into the wind on a narrow 200-yard Par 3 with water on both sides at 3:15 AM, especially right after some 6’6” chick with blond hair and unusually muscular forearms named Maijuska, just opened your seventh beer at the turn.

 

For another, never attempt to spend time in a country where they have street names that make use of the letter ‘N’ five times, three of which being consecutive.  Just try finding “Uudenmaankatu Ullanlinna,” after a couple shots of vodka at the hotel bar.  Actually, it’s not that hard… it’s just past the intersection of Hietassaarenkuja and Porvoonk and if you hit Teollisuuskatu, you’ve gone too far.  If you rent a car, you’re all but certain to be killed in a rear end collision as you attempt to decipher enough of the data involved in the decision of turning one way or the other.

 

I was there at a conference of the World Health Organization, my father’s doing, not mine, and so we were attending these hoity dinners at which I can only assume the academics and government officials had simply eaten everything the world had to offer and so were being fed things that the rest of us would likely view as “experimental” before we’d identify with it as food we might want to eat.

 

I remember breakfast vividly, for the most part, it was always a herring buffet… all different kinds of herring prepared in every conceivable way, although some of which I’m certain I would never have been able to conceive.  And if you’re thinking that the problem was that herring alone isn’t all that filling, don’t worry… that was not the problem, and it was all the herring you could eat.

 

With that as breakfast fare, it was barely a surprise to find out that these world-renowned intellectuals with means eat porridge for dinner, but we’re not talking about Cream of Wheat with brown sugar, in this porridge there was invariably either reindeer or blood sausage involved.

 

 

I’d offer to describe its taste, but for 10 straight days, I consumed only two foods and one drink: 1. Boxes of what appeared to be the Finnish equivalent of Lorna Doones.  2. Very large bowls of Beluga and Osetra caviar on toast points with a squeeze of lemon and chased by innumerable ice-cold shots of Finnish vodka.

 

After that, while traveling in the Baltic, First Class on a cruise ship headed for St. Petersburg, I quickly discovered that I was unable to come within six feet of a huge vat sitting right in the middle of the breakfast buffet table every morning.  I was told that it contained oatmeal, but I knew they were lying because although I will readily concede that “oatmeal” can spoil… it doesn’t die.  And there was no question in my mind that whatever was now inside that giant vat, it had not walked among living creatures for many years.

 

So, you’d think that I’d have learned my lesson after all these years, but the last time I was in Manhattan someone said, “Hey, let’s go have Ethiopian food,” and inexplicably, I replied saying, “Okay, sounds good.”  I heard myself say it… wanted to take it back, but it was too late, my host was already into telling me how much I was sure to love it.

 

Ethiopian food?  Really?  To my ears, it sounded like “jumbo shrimp.”  I thought food in Ethiopia was at least somewhat a rarity… maybe not compared with Chad or Somalia, but up against Tribeca or the East Village, for sure.

 

Twenty years ago the epicurean daredevils would have been touting “Sushi,” which today, I admittedly find delicious, but that doesn’t change the fact that a country’s cuisine made up of small pieces of raw fish could only develop in a country where you can’t afford a whole fish per person and you lack the electricity or gas to allow most people to own stoves.  If you have the yen, you order up a filet at Morton’s way before you develop a diet based on bite size pieces of raw fish… and rice.

 

And it makes sense to me because Japan is a rock about the size of New Jersey in the middle of the ocean; only one-seventh of the rock is arable… and historically speaking, the land nearby is generally jam packed with marauding hordes of one kind or another.  Much safer if you learn to feed the people on your rock without anyone having to leave it, no question about it.  So, rice and small pieces of raw fish rules the day, and I completely understand.

 

Another example is found in the tortillas with which so many Americans have become enamored.  I mean, they’re fine for holding whatever you put inside them, as long as it’s beans, rice, and some kind of meat, and the whole thing will taste great given sufficient amounts of salsa, guacamole and sour cream.

 

But tortillas couldn’t have been everything their inventors were looking for, they had to be the result of people not being able to afford whatever they needed to make bread, right? They weren’t anyone’s first choice.  Like they got sick of eating so much bread that they switched to tortillas?  I seriously doubt that.  Every time I hear someone ask, “Flour or corn?”  I can’t help but think to myself, “Paper or plastic?”  I mean, who cares?

 

How about this for an answer: Whichever promises to most significant reduction in the probability that the food inside will end up in my lap.  With that in mind, you make the call.

 

Just like matzo, for the Jews in the audience, which was also clearly no one’s recipe, but rather is the sort of outcome possible when a bunch of slaves, on their way to a 40-year trek in the Sinai Desert, unexpectedly have to leave town in a hurry.  Why we have to relive the outcome of planning so poorly that we were left with matzo thousands of years after the event is beyond me.  I mean, come on… let my people go already.

 

And don’t start with that “tradition” nonsense.  I don’t need a Tevya in my life unless he’s being played by Zero Mostel, capisce?

 

 

You don’t see any Jews volunteering to wander around for extended periods in the desert for tradition’s sake, do you?  Not a chance.  The closest thing to that you’ll ever see from today’s Jews occurs when Walter Annenberg and his wife spend a week or two at their place in Rancho Mirage.

 

No one WANTS to eat matzo, which is why even Jews only consider doing it over the course of maybe a week a year.  I somehow manage to choke down half a sheet sheet of the stuff annually, but only if I can find the Egg & Onion flavor and slather it in butter and salt, which is basically the same sort of scenario under which I would be willing to eat shirt cardboard.  Eating the stuff without some sort of liquid within reach kills more people each year than any other food except improperly prepared blow fish.

 

Matzo was simply the best they could do in a pinch.  If you don’t have a pharaoh on your tail who’s bent on exterminating your entire clan, and there isn’t a guy named Moses running from hut to hut yelling, “Let’s go, for Christ’s sake,” then you let the bread rise and leave the following day.

 

 

So anyway, that’s what we did… we went out for Ethiopian food, which I soon learned is not all that far from what I expected would be the cuisine of a poor African nation that, for most of my life, was at war with neighboring Eritrea.  And, why a country plagued by drought would attempt to develop an economy based almost exclusively on agriculture is one of those head scratchers for smarter minds than mine.

 

Didn’t they learn anything from Las Vegas?  I know they know about Vegas because half the cab drivers in Vegas are either from Ethiopia or Eritrea, so you’d think that by now someone would have sent a postcard home with a few tips, at the very least.

 

Or maybe it’s that, “what happens in Vegas stays in Vegas,” thing at work.  (Okay, I apologize for that.  It was entirely uncalled for and just plain wrong.  You have my word that it won’t happen again.)

 

So, after being seated at a table for four, the six of us perused the menu in complete silence until it was awkward.  And just my luck, our waiter, who was a dead-ringer for Ziggy Marley, approached my side of the table first, saying…

 

“Are you ready to order, Mon?” 

 

“Yes. I think I’ll have three small bowls of paste and a basket of sandy sponges.”

 

“Very good, sir.  What color pastes would you like?”

 

“Hmm… let’s stay with Earth-tones… oh, and nothing purple,” the last thought having been inspired at the last moment as a table nearby received its order as I was finishing mine.

 

“Great, and to drink?”

 

“Let’s see… which do you recommend… the Desert Brush Tea or the Clay-aide? Never mind, I think I’ll have the tea.”  The waiter had already turned his attention to the next order but when I mumbled under my breath, “I drank too much clay last night,” he turned back to me.  “I’m sorry, did you want to change something?”

 

“No, I’m fine,” I replied.  “Absolutely perfect.”  Great, I thought.  Now he’d probably spit in my tea before bringing it to the table.  I started imagining that I was Larry David in an episode of “Curb Your Enthusiasm.”

 

Our host loved his meal.  You could tell that he was literally enthralled by the overly cultural experience… he even knew how to pronounce his selection, although I decided not to ask him to translate it, even though I was 90 percent sure that he didn’t order goat entrails, so it probably would have been fine if he did.  At moments like that, I guess I just figure… why tempt fate, if you know what I mean.

 

So, would you like to know how I liked my Ethiopian meal?  I’ll tell you… it made me want to starve to death.  I hadn’t realized it before, but the occurrence of starvation in Ethiopia is probably a choice in many instances… people just can’t face another bowl of paste and sponges.  The country’s slogan could easily be changed to read…

 

Come to Ethiopia – A Wonderful Place to Miss a Meal

 

As I sat there, at first strategically moving my food around on my plate, and then generously offering everyone at our table and even those seated close by the opportunity to try what I had ordered, describing its taste like someone hosting an infomercial, I could tell that Ethiopian food was so 2010.

 

 

It had shown the world the many ways that sand, clay and brush could be transformed into dishes with varying amounts of moistness… some merely damp, others entirely soupy.  And now there would be something new… something with even less appeal than eating what falls on the floor of the African continent.

 

These multicolored pastes and play-doughs, it occurred to me, had been brought from the Horn of Africa to Manhattan for no discernable reason other than to provide upscale foodies a taste of what it feels like to be malnourished.  I decided that I would endeavor to impress my friends back in L.A. by finding out which country’s cuisine was likely to become the next trendy eatery for the recession-proof, restaurant addicted segment of our population before I left town.

 

I asked around… nothing.  I tried the Zabar’s shoppers, and still… no ideas.  Then, I figured that maybe the best way to find America’s next trendy dining experience might be to check the other countries where starvation has traditionally flourished.  Would there be restaurants serving food from Darfur or Somalia, for example?

 

Doesn’t it just figure that in this country, where we have so much food we that throw away inconceivable amounts on an hourly basis and literally pay farmers millions of dollars not to grow stuff… that we’d have trendy intellectuals gravitating towards the trappings of the impoverished?  It’s a lot like the untold millions of Americans who claim to be, “lactose intolerant.”  Is anyone lactose intolerant in Darfur?  I’m thinking… not, but what do I know?

 

So, unable to find anything worse than Ethiopian dining to hang my hat on as being the next new thing, but with the rich getting ever richer in this country every day, I started thinking that perhaps I should design the next trendy chic haute cuisine for those with discerning taste and sophisticated pallets, and open a restaurant myself.

 

But what could be even more primitive than eating Ethiopian style? It’s hard to beat sand and clay for dinner in terms of making a foodie with bank feel like he or she’s living large.

 

And then it hit me… Cuisine de Composti… A menu of delights made exclusively from refuse.  The toniest locales could have their compost trucked in daily… fresh from Central Jersey, or in LA’s case, flown in fresh from Fresno.

 

 

Perfect!  What’s even worse than eating in Ethiopia… eating right here at home in these United States.  Heck, we’ve got closing in on 50 million on food stamps and at least four million homeless already… by next year those numbers will have both gone up.  I’ll market the chance to experience the dining during America’s Great Depression, Part 2, to those not being given the chance to participate in it.

 

Opening the restaurant won’t cost much because it will be in a foreclosed and already decrepit building that we could be evicted from any day now.  We’ll keep trying to get the same postponed and letting the patrons know what’s happening so they’ll never know when the sheriff might arrive and have them removed… how exciting for them.

 

This is going to be huge… a way for the rich to live like the poor, but instead of Ethiopian poverty, we’ll let them experience what our own country’s poor people get to taste and smell every day.

 

We could call the place… La Maison des Ordures (French for “House of Garbage”), and I’d write the first review…

 

New LA Dining Experience Says You Won’t Refuse the Refuse at

La Maison des Ordures

 

I recommend the Rancid Chicken in Curdled Cream for sure.  Consider starting with the Romaine a’la Ptomaine, which is the chef’s signature salad. 

 

For meat lovers, don’t miss out on trying the Putrescence of Pork which is prepared with a Diphtheria Glaze, as it is something you’ll likely remember for days or even weeks afterwards.  And what this place does with its Decomposing Flap-Steak Fat is already said to be inspiring chefs around the world.

 

Don’t forget that upon request any of the meat dishes can be prepared to be served “extra rank,” which uses a rub made from a balanced blend of “miscellaneous droppings, lint scrapings and soap powder.”

 

Other popular items include the Stinking Fish with Reeking Cheese Potatoes, and for the real gourmand who isn’t allergic to petroleum-based products, the Eel du Oil is in a class by itself, but check the signs in front of the Arco across the street before ordering, as the price of this dish does fluctuate.  And for pasta lovers don’t pass up the Petrified Noodles, which are traditionally served with various larvaes in a mucous-based marinara… portions are generous so consider ordering one dish for the table and sharing.

 

On the lunch menu is the Canine Rigatoni, it’s a brand new addition so ask your server for details, and there’s a fabulous Hirsute Herring Chowder, which is served unshaven with what we assumed was a selection of moldy breads and dried out sponges. 

 

And for either the children, or the un-tenured assistant professors from New York City College, along with any other budget conscious guests, there’s the always hearty, “Fetid Franks & Things,” a casserole dish that looks every bit as interesting as it smells.

 

Desert is certainly worth leaving room for… and the most popular are the Spoiled Crèmes in Kleenex, which is served sprinkled with a mix of coffee grounds, dust and acetaminophen… and who could forget, the dish that started it all, the Crème du Stench, which is truly a bouquet of aromas that shan’t be forgotten. 

 

And for those adventurous diners, who don’t mind diseases from south of the border, there’s the Lumpy Crème de Cagada, which for a few dollars more can be prepared without lumps but this does require about 20 minutes longer to prepare so be sure to order ahead of time.

 

After dinner, patrons are welcome to linger over a cup of what appears to be the restaurant’s own coffee, look for it to be listed on the menu as “Steaming Hot Brown Fluid.”  Its further description only says that it’s, “a proprietary blend,” and it seemed that by stopping short of disclosing what was exactly was being blended, our table’s after dinner conversation was much more lively than usual.

 

 

Or, maybe not.  I don’t know… now I seem to have lost my appetite…

 

Besides, I’m just thinking out loud.

 

Mandelman out.

Apr
20

Bank of America tells gun manufacturer it no longer wants their business?

Really?


I’m thinking there has to be more to this story, not because I doubt that there are lefty corporate execs who find guns and gun owners loathsome but because from a business standpoint this is the highest of high insanity. My strong suspicion from years of following news on the right is that gun enthusiasts [...]

Read this post »

Apr
20

Introducing 30 MINUTES OF TALKING – A Mandelman Matters Podcast

OF TALKING

A Mandelman Matters Podcast

 

Introducing a new Mandelman Matters Podcast… 30 Minutes of Talking.  Look for it Fridays… on Mandelman Matters.  Unlike Mandelman Matters Podcasts, which are in-depth interviews with subject matter experts, on 30 Minutes of Talking you’ll get… well, you get 30 Minutes of… RIGHT!

This week’s show focuses on the Obama Administration’s handling of the foreclosure and housing crisis, by examining the statements made during the press conference the administration held to announce the settlement between the 49 state attorneys general and the five largest mortgage servicers… even though it would be weeks before the settlement would actually be finalized and court approved.

To say the process lacked transparency would be dramatic understatement, and many have written about the shortcomings of the settlement’s terms, whether related to the monetary inadequacy or servicer standards.  I take no issue with either of those aspects, instead focusing in on the statements made by the administration that day when they prematurely announced that a settlement had been reached.  Their rhetoric represented a significant departure from anything we’ve heard over the last three years… and that makes it interesting.

This week’s show also features Talcott Franklin, the attorney representing RMBS investors… the solution to the housing and consumer debt crisis favored by Harvard professor, and former economic adviser to the Reagan Administration, Martin Feldstein, and even draws from words spoken by CNBC’s Diana Olick.

I hope you enjoy it… it’s supposed to be entertaining, but one never really knows.  Give it a try by making sure your speakers are turned up and clicking PLAY below.  And if you want to hear anything specifically discussed on a future show, email me at mandelman@mac.com.

30 Minutes of Talking… I do the talking… you do the listening. 

So, we both have a role to play.

 

Mandelman out.

Apr
19

Holy Crap | Game Over – The Mother Of All Infographics: Visualizing America’s Derivatives Universe

Derivatives: The Unregulated Global Casino for Banks SHORT STORY: Pick something of value, make bets on the future value of “something”, add contract & you have a derivative. Banks make massive profits on derivatives, and when the bubble bursts chances are the tax payer will end up with the bill. LONG STORY: A derivative is … Read more Related posts:
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  2. Bank of America Debt Collection Calls: “You little, lazy ass bitch, get your mother f—ing ass up and go pick some mother f—ing cotton fields, bitch.”
  3. Holy Fraudclosure! | Cantwell to Justice Department: Fully Investigate Fraudulent Foreclosures before Bank Settlement
Apr
18

Sit Back and RadLAX

I'm having trouble getting excited over RadLAX going before SCOTUS.  Ronald Mann has written that RadLAX "well might be the most important business bankruptcy case since its 1999 decision in Bank of America National Trust & Savings Ass’n v. 203 North LaSalle Street Partnership." I think that statement is literaly true, but that's not saying much; the Supreme Court doesn't hear very many business bankruptcy cases, period.

As it stands, I don't think the outcome in RadLAX is going to have much of an impact on bankruptcy practice on the ground.  If the creditors prevail, the world will look like status quo, say 2009:  credit bidding is allowed in sales under plans (and there will be little reason to teach RadLAX in a bankruptcy course).

If the debtor prevails, then de jure there will be no right to credit bid, but there will be one de facto in most cases (making the case well worth teaching).  If there's a DIP financing agreement, that agreement will almost certainly provide for the DIP lender to have a right to credit bid.  That means a ruling for the debtors will affect a narrow class of creditors and cases.  It will affect secured lenders not in the DIP consortium, and it will affect secured lenders in cases where there is no DIP financing. That's cases financing themselves on cash collateral or unrestricted cash or trade credit or unsecured insider DIP loans.  In other words, no impact whatsoever on the mega-cases.  Maybe a greater impact on middle market. We'll also see syndication agreements including provisions to deal with cash bidding situations.  In other words, a ruling for the debtors in RadLAX is unlikely to result in a major realignment of power in bankruptcy cases.  

Sadly, SCOTUS taking RadLAX (which is reasonable to deal with a circuit split) is a reminder that SCOTUS hasn't addressed the two key issues in Chapter 11:  the use of DIP financing agreements and asset sales as sub rosa plans.  Obviously SCOTUS has to have a proper case to deal with these problems, and SCOTUS generally has discretion on hearing appeals.  The Court could have dealt with this in Chrysler, but because of the macroeconomic impact of Chrysler (via GM), it was not the ideal case for addressing the interaction between the DIP loan, the sale, and the plan. So while it's nice to see a business bankruptcy case before the Court, I don't think too much rides on this one.  

Apr
18

Crimes of Hubris, Ineptitude & Folly: Geithner, Summers and Obama

 

I’d like your opinion on the following purely hypothetical scenario…

 

If a small group of individuals working within a nation’s government made a series of decisions that destroyed the economic security of tens of millions of the country’s citizens… decisions that literally cost thousands of lives, and in all likelihood shortened the life expectancies of hundreds of thousands more… failed to such a degree that it would be more than a decade before any recovery would be possible… then claimed economic recovery knowing that 93 percent of gains had gone to the top one percent… and they did all of this while failing to address the core issues that led to the crisis in the first place…

 

… should such individuals be prosecuted… impeached… or imprisoned?  

 

And I can’t help but wonder… again, purely hypothetically, of course… what sort of harm would such “leaders” have to cause before they should they be executed?  Because, it would seem obvious to say that they damn sure should not be reelected… or at least not allowed to continue on their chosen path.

 

Please don’t get agitated… I’m not suggesting President Obama be prosecuted, impeached, imprisoned… and, good Lord… certainly not executed.  Nor am I suggesting such fates as being appropriate for Messrs. Geithner or Summers.  It was a purely hypothetical scenario that I posed… not one I am suggesting exists in reality in the United States of America today.

 

But, you do know what I’m saying, right?  

 

And that you just answered that query in the affirmative… should alone be enough to give one pause.

 

Now, I’m not going to get involved in the mincing of words, nor am I going to suggest that the policy decisions made by the Obama Administration were in any way nefarious.  In fact, to the contrary… I’m willing to accept that the administration’s decisions to-date were made in the face of such unprecedented complexity and political impenetrability that some amount of reasonably momentous error was all but preordained.

 

I am also not writing this as some sort of political diatribe designed to potentially influence for whom one should or shouldn’t vote in 2012.  Our presidential elections are a choice between two, or perhaps more, candidates, and Americans are all quite familiar with a thought process that results in a vote against one… as often as for another.

 

And, while you should read these words as an indictment of the decisions made by the Obama Administration during its first term in office, you may also rest assured that the fact that the Republican party as a whole has done nothing to help the administration contend with the catastrophic economic situation our nation continues to face, has in no way been lost on me.

 

In point of fact, the Republicans have engaged in obstructionist politics during a time of national crisis and should be ashamed.  I don’t think there’s any question that were our crises made from war, their acts would have been seen as nothing short of treasonous and therefore would have been unthinkable.

 

 

20:20 Vision…

 

All told, as related to our nation’s economy, every American citizen today should view the on-going inaction on both sides of the aisle, as utterly intolerable.

 

The fact is that I could very easily make a list of government programs, each with budgets in the billions, all promoted as somehow mitigating the damage being caused by the foreclosure crisis, and all whose outcomes would have been identical to those reported… had the programs been administered by farm animals.

 

And that would be funny, were it not so literal and entirely accurate.

 

This past week, Kristin Roberts and Stacy Kaper, writing for the National Journal, documented the appalling story of the incomprehensible failure of the Obama Administration to arrest the damage being caused by the foreclosure crisis that’s still tearing through American families and households with the destructive force of a category five storm.

 

Roberts and Kaper began their article recounting a recent meeting at the Treasury Department, at which they said, civil-rights and housing advocates were “presenting a brutal reality check to President Obama’s Treasury secretary. The administration’s housing programs, they said, were ill-conceived, had failed woefully, and would be indefensible in an election year.”

 

Apparently, a woman by the name of Janet Murguia, president of the nation’s largest Latino-rights organization, gave Mr. Geithner an ultimatum:

 

“Make dramatic changes to your housing program, or the National Council of La Raza will be unable to carry Obama’s message to Hispanic voters in 2012.”

 

(I don’t know what if anything Secretary Geithner said after that meeting ended, maybe he said nothing… out loud.  But, I just have to believe that in his head the words sounded something like, “Si no le gusta Obama, estoy seguro de que vas a amar a Romney.” Assuming Tim speaks Spanish, of course.  Roughly translated it means… “Yeah, well if you don’t like Obama, I’m sure you’re going to love Mitt Romney.”)

 

Make no mistake about it, whether as a society or as an economy, we are unlikely to fully “recover” in my lifetime.  And truth be told, all I have left are tears, for never before in history has so much been so needlessly extinguished sans the millions of body bags that come home from a world at war.

 

It is incomprehensible that our plight is not even close to being over, but it should be sincerely humbling that, as I write these words, we don’t even have a plan on a drawing board that one could credibly claim has even the remotest chance of abating a crisis that can only continue to break the economic back of our middle class, ultimately destroying our citizenry’s faith in what has been referred to as “The American Dream” for more than 200 years.

 

For ours is not so much a financial crisis… nor a liquidity crisis… nor a credit crisis… nor a crisis caused by over-leverage and excessive debt.  What we are experiencing is a crisis that is being perpetuated by the near complete loss of trust on the part of investors and consumers.

 

And… “Once you lose trust you just don’t get it back… you just don’t.”

 

Investors lost trust…

 

During the summer of 2007, investors around the world lost trust in the mortgage-backed securities and their complex derivatives.  We haven’t had a meaningful private securitization of such debt since that time, and we aren’t going to see such private securitizations of mortgage debt anytime soon.

 

In fact, the only securitizations of mortgage debt we have today are government guaranteed via Fannie, Freddie, FHA, VA, et al.  Absent the government guarantee, there would essentially be no mortgages available… period.

 

Over the handful of years between 2003 and 2007, investors bought into securities rated AAA… but soon found out they should never have been rated AAA.  Almost overnight, demand for these securities dried up, and the banks that were holding Collateralized Debt Obligations (CDOs) on their books found that they couldn’t be sold… and if they couldn’t be sold, then what were they worth?  And the answer was that no one knew.

 

These are the “toxic assets” that then Treasury Secretary Hank Paulson was planning to buy with the TARP funds… until he realized that banks wouldn’t sell them at a discount, and that it would be political suicide for him to buy them at face value.

 

The result of all this was that housing prices that had started dropping during the summer of 2006 after Alan Greenspan raised interest rates 17 times in a row, now went into a credit crisis inspired free fall.  The further they fell the more people went underwater… and the more that went underwater… the more fell into foreclosure.

 

Without credit being available and with home equity evaporating, spending by consumers fell off a cliff… companies started laying off workers and unemployment had nowhere to go but up… which in turn increased the number of foreclosures, which in turn lowered housing prices… forcing more underwater, thus leading to more foreclosures still.

 

So… with the number of defaulting loans continuing to rise each year since 2006, investors have incurred losses that now total well into the trillions.  Some of these losses were the result of some variation of securities fraud, to be sure.  But as the crisis has been allowed to grow in size and scope, it’s become more and more difficult to tell which securities were fraudulently packaged and which were destroyed by the damage our government failed to mitigate at every single opportunity.

 

Not that I imagine investors care why, at this point.  They got burned big time, and their burning isn’t nearly over yet.  So, as far as selling them more mortgage-backed securities rated “investment grade” by Moody’s or S&P… I don’t think you need an MBA from Harvard to come to the conclusion that the prospects of that happening anytime soon are… shall we say… “BLEAK.”

Chris Whalen knows banking…

 

Just a few weeks ago, Institutional Risk Analytics (“IRA”) Vice Chairman, Christopher Whalen, speaking to the audience at American Enterprise Institute, described quite succinctly why talk of housing recovery is premature.  Not to put too fine a point on it but the phrase used was “dead cat bounce.”  As the IRA blog stated:

 

“… you won’t here that from any politicians from either of the institutional political parties in this election year.  Politicians and their enablers in the economics professional all want to believe that the US housing sector is on its way back.”

 

Yes, well… I want to believe that maybe I’ll win the Masters one day as a senior citizen, but although I wouldn’t want to rule out the possibility, I likewise wouldn’t want to find out that policymakers in Washington D.C. are basing anything on such fanciful ideas.

 

As Mr. Whalen said at the conference…

 

“There is no private label market nor is it likely that the private label market for RMBS is going to recover anytime soon. Memo to Peter Wallison, Rep. Scott Garret (R-NJ) and our other friends in Washington working to eliminate Fannie and Freddie: Stop talking about a private sector alternative to the GSEs in the near term. There is no private sector alternative to the government housing agencies.”

 

“The lack of credit availability is the chief reason that housing will not recover in the near term.”

 

Whalen also points out that beyond the issue of investors losing trust, until the Fed raises interest rates the private label market for non-conforming loans and RMBS won’t be back no matter what.  It’s not hard to understand… with rates at zero there is simply no incentive for private investors to take on the risk of non-conforming residential mortgages.  Or, in other words, if the spread isn’t there, you might as well just buy Treasuries.

 

Things are getting tighter…

 

According to Jonathan Corr, Chief Operating Officer of Ellie Mae, a company that tracks the characteristics of loans, credit standards are tightening.

 

Corr told Nick Timiraos of the Wall Street Journal that conforming loans, which are those made by Fannie Mae and Freddie Mac, that were approved for purchases in February of this year had an average credit score of 764 and an average down payment of 22%.  Applications that were DENIED had an average credit score of 732 and an average down payment of 19%.

 

And as far as refinancing goes, Ellie Mae’s report shows Fannie and Freddie February borrowers had an average credit score of 770.

 

With the FHA looking like the next mega-billion dollar bailout, even FHA loans are getting harder to qualify for… in February, the average credit score for someone trying to refinance through an FHA loan stood at 722, which is up from 706 last August.  Purchase loans approved by the FHA had an average credit score of 701 with an average down payment of 5%.

 

In addition to all of this, according to Laurie Goodman at Amherst Securities, the total population of homebuyers in the US has declined by roughly 20% since 2005.  She points out that Americans are not deleveraging in terms of reducing debt.  More accurately, “the remaining 80% of homeowners/buyers continue to labor under excessive levels of debt.  If these families are ever able to sell their homes, it is a pretty good bet that they will either downsize to smaller dwellings or rent.”

 

Chris Whalen said it more bluntly to the audience at AEI few weeks ago…

 

“… forget the economist twaddle about consumer deleveraging. We have merely charged-off the worst defaults in the population, leaving the survivors to service mortgages that are at or below water in terms of LTVs.”

 

None of this should be difficult to understand…

 

Historically, at least two-thirds of homebuyers are also home-sellers, that is to say they are selling a home in order to buy another.

 

But, if half of today’s homeowners are underwater or effectively underwater, meaning they owe more than their homes are worth, or they would if sales commissions and other moving expenses were factored in… then they can’t sell… so they can’t buy.  Many won’t be able to sell for a long, long time, and with housing prices continuing to fall (more on that in a moment), more and more are being cemented into this group all the time.

 

As Goodman explained in a recent presentation, at best all we’re doing is charging off the debt of defaulted borrowers, thus leaving behind a smaller pool of homeowners who have too much debt to function in the housing market.

 

Just do the math… if historically two-thirds of homebuyers were also home-sellers, but half of those home-sellers now can’t sell… then the future demand for homes is going to be significantly lower than it has in the past.

 

Yes, there are first-time buyers, although not nearly as many as in the past.  Many aren’t rushing to buy after seeing their parent’s equity evaporate over the last few years, and student loan debt is causing a delay in family formation and hence reducing first time home purchases.  And yes, there are investors, but it should be easy to see that the number of investors is nowhere near large enough to make up for half of the two-thirds of buyers we’re used to seeing in our housing markets.

 

All told, demand for homes in the future will be significantly lower than in the past… period.  And if demand is going down, prices cannot be going up… simple as that.

 

The Elephant in the Room…

 

And, all of that ignores the elephant in the room that is the increasing numbers of foreclosures and their associated backlog, referred to as the “shadow inventory,” neither of which are capable coexisting with a recovery in housing prices.

 

You see, in 2011 the number of foreclosures slowed down, in some states quite significantly, but not because of borrowers becoming more able to pay their mortgages.  Foreclosures fell because of banks holding back as they awaited final determinations on things like the Attorneys General national mortgage settlement, and some states, specific court decisions.

 

I haven’t seen any conclusive numbers yet, but I’d bet money that 2011 will look flat when compared with 2010 instead of increasing as it otherwise should have, and this will make for some deceptive statistics showing the crisis being somehow nearer its end… when it’s not.  In fact, all reports already indicate that the number of foreclosures is increasing as we speak.

 

Here’s how Reuters reported such news on April 4, 2012…

 

Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

“We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010,” said Mark Seifert, executive director of Empowering & Strengthening Ohio’s People (ESOP), a counseling group with 10 offices in Ohio.

“Last year was an anomaly, and not in a good way,” he said.

In 2011, the “robo-signing” scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.

Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28 percent in January (of this year).

More conclusive national data is not yet available.

 

However, RealtyTrac has published estimates showing that the number of foreclosures in February of this year as compared with January’s numbers increased in 21 states and, “…jumped sharply in cities like Tampa (64 percent), Chicago (43 percent) and Miami (53 percent).”

 

According to RealtyTrac’s CEO, Brandon Moore, the “numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed.”

 

Other evidence of foreclosures not happening in 2011, but set to happen this year are seen in a January 2012 report by the Neighborhood Economic Development Advocacy Project (“NEDAP”) in New York.  According to Reuters, that group’s study found that…

 

 “… in the first half of 2011 the number of 90-day pre-foreclosure notices in New York City outnumbered court foreclosure actions by a ratio of 14 to one, indicating that while proceedings were initiated against many homeowners, they were left incomplete.”

 

“Now the banks have a settlement, foreclosure numbers for 2012 are going to be high,” said NEDAP co-director Josh Zinner.

 

Reuters went on to report that…

 

“One big difference to the early years of the housing crisis, which was dominated by Americans saddled with the most toxic subprime products — with high interest rates where banks asked for no money down or no proof of income — is that today it’s mostly Americans with ordinary mortgages whose ability to meet payments have been hit by the hard economic times.”

 

This statement, however, is really just twaddle, to borrow Chris Whalen’s word.

 

Other than some fringe number of truly unfortunate borrowers who bought at the worst time under the worst terms… or those that were speculating on the edge who lost homes as soon as the home loan market froze… foreclosures have always been caused by negative equity colliding with a “life event.”  If you’re underwater and something bad happens… with divorce, illness/injury, or job loss being the BIG 3… you’re a foreclosure waiting to happen.

 

It can and does literally happen to anyone and everyone.  I speak with homeowners at risk of foreclosure every day and have been doing so for over three years.  I’ve seen people whose incomes were $50,000 a month for twenty years lose homes to foreclosure… and people whose incomes temporarily dropped from $3,000 a month to $2200, do the same.

 

Of course, it’s true that the foreclosure crisis has hit minorities harder than middle class whites, but that’s just a function of two things: predatory lending practices that preyed on lower income minorities… and people with further to fall taking longer to do so.  (That’s why when people ask me if I’m losing my home I always answer by saying, “not today.”)

 

Life events are called “life events” for a reason… they happen as a result of life happening.  And they happen to everyone… eventually.

 

A friend of mine who is a banker explained to me that lending is really just a game of hoping a loan is refinanced before a life event hits.  If I loan you money for one year, I can charge you a very low interest rate because it’s unlikely that you’ll get hit by lightning… or divorced, laid off, injured or seriously ill… within a year.  But, if I loan you money for 30 years… well, now all kinds of crap can happen that can impair your ability to repay the loan as agreed.  Pretty simple stuff, right?

 

When Countrywide originated a mortgage, it may have said 30 years on it, but no one at Countrywide thought that the loan would be around for 30 years… in fact, they figured it would be around for maybe seven years… tops.  By then it would either be refinanced or paid off when the house was sold.

 

But… what’s happening today?  Millions of people cannot refinance or sell their homes… so, that means millions of loans are going to be around a lot longer than anyone expected.  And the longer a loan is around, the greater the likelihood that a life event will show up and slap you off your track at least for some period of time.  And when that happens while you’re underwater you can’t sell… so, BINGO!  You’re a statistic in the foreclosure crisis… an “irresponsible borrower,” a deadbeat debtor… shhhh… whatever you do don’t tell anyone.

 

 

Tell your own mother and she may very well launch into a diatribe about how you have always spent too much on “those kids.”  Tell Dad and he’s likely to lecture you about how you shouldn’t have bought the car you’re driving.  Your next-door neighbor finds out and he or she will be looking in your garage for a jet ski or your living room for a flat screen television.

 

I’ve explained this before… in behavioral economics it’s called the “just world hypothesis.”  We need to believe that when something bad happens to someone, it’s somehow that person’s behavior that caused the bad thing to happen.  That’s how we make ourselves feel safe… by believing that we live in a just world.  Random bad things that could happen to anyone are terrifying… like shark attacks, lightning striking… 9-11.

 

Our foreclosure crisis is a tragic and awful thing that has literally caused thousands to take their own lives out of shame and despair. And it’s a quiet crisis because no one tells anyone when they’re at risk of foreclosure, or when they lose their home… or when they save it through some sort of loan modification.  You can’t see or feel the foreclosure crisis until it touches your life, and then you say… “I can’t believe this is happening to me… or to (insert someone you know).

 

Until then, you look the other way… assume that the person losing a home was irresponsible… shouldn’t have bought a home in the first place… is nothing like you.

 

Consumers lost trust…

 

The National Journal’s reporters, Roberts and Kaper, whose story titled, Out of their depth,” I referenced near the beginning of this article, tells of an Obama Administration that, in their words, failed to help homeowners because it just “didn’t have the stomach for it.”

 

Their article starts out talking about the administration’s more recent posture as being determined to do something right about the foreclosure crisis… as follows…

 

“The turnabout followed three years of tepid, halfhearted, and conflicted policies driven by a desire among Obama’s most senior advisers to avoid political risks and insulate the financial sector from further losses. It was a disastrous approach that did little for a market in free fall or for the millions of Americans still underwater and facing foreclosure.

 

National Journal spoke with more than two-dozen sources involved in creating and implementing the Obama administration’s many housing initiatives, from Election Day 2008 to the present. The result is a story of missed opportunities, competing priorities, out-of-whack expectations, and a few subtle, yet noteworthy, successes—all impelled at least as often by political, rather than economic, calculations.

 

The approach remains haunted by a primal decision made almost immediately after Obama’s economic team took office. Although the federal government would spend reams of cash to stanch, to some degree, the losses suffered by the financial sector, the auto industry, and state and local governments, suffering homeowners would see no such relief, at least not on a widespread basis. Their bailout never arrived. It appears that the administration simply didn’t have the stomach for it.”

 

Now, first of all… no, never mind… keep going…

 

“Housing clearly was an area where Obama’s team thought it needed to take quick action simply to stop the bleeding. “Housing was 30 months in the hole when Obama was elected,” said Peter Swire, a member of the transition team who, after the inauguration, became one of the economic officials leading the effort. “The first goal was to stabilize.”

 

To its credit, Obama’s policy group recognized just how unprecedented the crisis was, and that realization helped to elevate the discussion about solutions to the highest levels, placing decision-making authority in the hands of Lawrence Summers, who would be director of the National Economic Council, and Geithner. Others, such as Housing and Urban Development Secretary Shaun Donovan and bank regulators, were called to the table inconsistently. Treasury was the department running the nation’s housing policy.

 

But the task was enormous—and enormously complicated. The economic team was committed to some form of government intervention, but it could find little consensus on the scope and scale necessary for that effort to succeed. Compounding the problem, the deterioration of housing markets throughout the country, and of the U.S. economy overall, accelerated between the election and Inauguration Day.”

 

Okay, so look… HORSEPUCKY!

 

The “task” as Roberts and Kaper phrase it, was not so terribly complicated that it was beyond these genius IQs’ abilities to do something right… something at least marginally effective in the eyes of America’s homeowners.  They didn’t because they didn’t care to… and every single American homeowner who has paid the least bit of attention should recognize that as being the truth.  My Lord… what do they need to do, come to your door and spit in your face?  They didn’t because they didn’t care… and my problem isn’t even that… I could forgive them for that, somehow… not easily, but somehow.

 

My problem is that they still don’t care… and yes, I’m talking today… right now… headed into the election and clearly they still have learned essentially nothing about a crisis that’s plain as day, completely out of control.

 

 

And that’s just unacceptable in so many ways that I can’t talk about it without wanting to smack someone across the face… Larry Summers would do just fine… Geithner… sure, why the hell not?  Obama… no.  Him I want to grab by the shoulders and shake.

 

Amherst Securities forecasts another 9.5 MILLION homeowners at risk of foreclosure… almost ten million more coming soon to a theater near you.  That’s in the neighborhood of being twice as many as we’ve had to-date… not quite, but in the neighborhood.

 

And why on Earth anyone with any critical thinking skills would possibly think that after another 9.5 million foreclosures they’d be over… well, it’s sheer lunacy, that’s what it is.  Another 9.5 million foreclosures and the only homeowners with equity will be those who own their homes free and clear.  And the closest I’d let my wife or daughter get to a bank would be the ATM at a 7-11.

 

Here’s what the article by Roberts and Kaper says about the two principles that drove the administration’s housing policy…

 

From the start, two principles would drive the housing-policy team’s debate about the form that government intervention would take. First, Geithner and Summers sought to preserve the sanctity of contracts, and that commitment determined the structure of the president’s core housing programs.  The government would not force banks to modify loans, and any changes made to mortgage terms would have to work for investors as well as homeowners.  Those requirements led to hours of discussion and proposal drafting around the idea of “net present value,” or NPV—a formula used to determine whether modifying or foreclosing on a mortgage would result in higher profitability for investors.

 

(First was “the sanctity of contracts?”  How about the sanctity of accounting principles, you pompous pair of pathetic Pecksniffians.)

 

Now I’m not saying that there was anything wrong with the idea of a Net Present Value test, in principle… it’s in the execution that fell apart.  That’s what caused Americans to lose trust in government.  Summers and Geithner were simply the wrong people to execute this sort of program, and Obama should have known that by… oh, I don’t know… how about by 2010 or 2011?

 

And here’s their second guiding principle…

 

Moral hazard was the other debate driver. Having witnessed Main Street’s reaction to the Wall Street bailout under the Troubled Asset Relief Program, Obama’s team went to great lengths, time and again, to promise Americans that taxpayer money would not be used to help people who had simply purchased too much house. This was assistance built for “responsible” and “deserving” homeowners, the story went. So your neighbor got in over his head? Or a friend bought a house to flip and then couldn’t sell it? Their fault, the White House was saying. “That narrative is one we had to be careful with,” a senior administration official said.

 

Taken together, contract sanctity and moral hazard set the parameters for the president’s housing policy. And within four weeks of Obama’s swearing-in, his team proclaimed itself ready to unveil the sharply tailored strategy.

 

Okay, so there you have it.  The two individuals in charge were more concerned with the possibility of helping a homeowner who “got in over their head,” which by the way they didn’t give a rat’s petute about when discussing laws to prevent predatory lending or any other restriction on mortgage lending that might stop someone from getting in over their head, but never mind that nauseating hypocrisy.

 

The article says something else worthy of note…

 

“… housing had so quickly turned from tremendous boom to disastrous bust that the mortgage industry was unable to cope. Lenders and loan servicers had never operated in that kind of environment and had no mechanism to respond to the dramatic surge in delinquencies and foreclosures. One senior administration official called the servicing system “dysfunctional” in 2008 and 2009, and an industry representative agreed. “The system was not designed to deal with massive foreclosures,” he said. “It simply was not clear what was the response to take.”

 

Okay, so that being the case, and I have no trouble believing that absolutely was the case… let’s not worry about what you do… instead, let’s look at what you don’t do:

 

You don’t announce your “sharply tailored strategy” within four weeks of being sworn in. 

 

“A handful of core officials—at least one each from the White House, Treasury, and HUD—bought coffee and doughnuts and then wheeled chairs into an empty conference room. They listened to the loan servicers’ concerns and questions, discussed the complexity of their operations, and hammered home what servicers needed to do.

 

One of the main questions centered on up-front documentation: Did Treasury want the process to happen so rapidly that servicers should put mortgagees into trial loan modifications based on verbal statements alone? Yes, the officials said. Don’t worry about the documents. Just put loans into the “trial mods” and then get the documents in order before the time comes to make the changes to the loan permanent, they said. “Just do it,” was the message.”

 

And you absolutely don’t instruct mortgage servicers that they should just put everyone into trial modifications with no systems, no training, no infrastructure and no real solid idea of what will happen next.

 

You don’t do any of that.  These are people’s homes you’re talking about.  And sure, there were some small percentage of folks that went out and bought their homes without a contingency plan for the Great Depression Part 2 coming around the corner… and yes there were some that should not have borrowed as much as they did for any number of reasons.  The proliferation of television ads and even television programs instructing people to do just that, come to mind.

 

 

Marlboro wants to run a beautiful 30-second commercial showing me a handsome man riding a horse in the snow while smoking a cigarette and the federal government loses its mind taking them off the air.  But a 60-minute infomercial that provides detailed instructions and fake testimonials on how to get rich safely by borrowing 125 percent of your home’s value in order to buy condos in the middle of the desert… no problem at all, right?

 

And better yet, why not do so using a spring-loaded, snapping turtle-styled mortgage that requires neither down payment nor job and increases in balance owed and monthly payment whenever Greenspan feels itchy… but hey… who are we to stand in the way of the American Dream, is that about right?

 

And, finally this…

 

“They (servicers) insisted to us they could not do this program, they were not ready to do this program, and we told them they had to,” said Treasury’s Tim Massad, then chief counsel in the department’s financial stability office.

 

And therein lies the rub… I’m going to say something many are not going to like… I’m tired of blaming the banks alone for this mess because in large part it’s simply not their fault… this failure belongs to the Obama Administration… from start to flummoxed… plain and simple and in no uncertain terms.

 

And what a spectacular failure it continues to be… absolutely stunning in its completeness… in its flagrant ineptitude… in its degree of insensitivity… in its ongoing utter folly.  It’s down right peerless, that’s what it is… it stands without equal.

 

The core problem: Estimates for both programs were based on faulty, incomplete data. “There was always a huge degree of uncertainty around those forecasts, which reflected the limitations of the data available at that time,” said John Worth, who helped design the two initiatives as director of Treasury’s Office of Microeconomic Analysis. “We were sort of building the airplane as it was trucking down the runway, because there was a real sense of urgency to deliver help to homeowners.”

 

Yeah, it reminds me of the real sense of urgency that must have surrounded the readying of the Space Shuttle Challenger back in 1986.  I’m sure those NASA managers were in a hurry to help school teachers get into space, so they disregarded warnings about the O-rings, launching in low temperatures, and whatever else, so that the damn thing exploded 73 seconds into its flight as tens of millions of young children watched on national television.

 

So… bang up job there, Mr. Geithner, Mr. Summers… and President Obama… absolutely crackerjack work all around.

 

 

Is it the banks that are to blame?

 

Admittedly, I’ve done more than my share of bank bashing over the last few years, and I haven’t been alone by any means.  But, I’ve gotten to know more about the crisis from some of the banks’ perspectives, and I think we should consider what’s really gone on here.

 

Don’t start throwing tomatoes at me in your mind… just yet.  I’m serious about this… so, hear me out.

 

Tens of millions of Americans saw themselves lied to and abandoned by their obviously unfeeling government, who then walked them right into the totally unprepared arms of financial institutions bound by no rules, responsible only to shareholders, as they were reeling from a crisis that had bankrupted all of the investment banks on Wall Street in one fell swoop.

 

Oh, don’t get me wrong… I’m not ready to give the entire banking industry a pass by any means.  Fannie Mae and Freddie Mac… are certainly among the worst offenders of all.  And Wells Fargo is inexplicably immoral and entirely malevolent at every single opportunity.

 

But, Bank of America was doing principal reductions before the ink was even close to dry on the AG settlement… I personally have seen several dozen of them.

 

BOA is the first to admit that it’s a long way from perfect, but I’ve seen them resolve things quickly and fairly every single time they’ve been at fault.  And they have modified more than 200,000 mortgages over the last couple of years.  Not enough, you say?  Perhaps, but they appear to me to be an organization trying hard to make things better and get things right as they continue to deal with the now infamous acquisitions of Countrywide and Merrill Lynch.

 

And Ocwen has been doing principal reductions as part of their shared equity program for almost a year, as far as I know… maybe even before that.  They were founded on the principal that loans should be modified before foreclosed if at all possible.  I’ve even seen the executives at One West Bank jump through hoops to stop sales and get loans modified that had fallen through the cracks.  Oh, and Impac Mortgage… well, they’ve always been leading the pack on the loan modification front.

 

I don’t think there’s any question about it… getting your loan modified is much easier than it was two years ago, or even last year… unless you’re with Wells Fargo, of course.

 

Conversely, what have I seen from the Obama Administration?  Nothing but intermittent lip service and an ongoing stream of ill conceived, half-hearted programs, each entirely predictable as to its ultimate failure.

 

On January 15, 2009, Larry Summers made a written commitment to spend $50 to $100 billion on, “a sweeping effort to address the foreclosure crisis.”

 

And yet… as of the end of 2011, the administration had spent less than $3 billion on a situation their chief economic advisor acknowledged to be a “CRISIS” almost three years earlier… without so much as an apology to those whose lives their inaction had ruined.

 

Dodd-Frank made $1 billion available for an emergency program that was purported to help those unemployed people in their homes.  But, the money had to be out the door by a specific date and HUD delayed issuing application requirements, which left potential beneficiaries with only weeks to assess qualifications, apply, and submit the necessary paperwork.

 

And that was a $1 billion “emergency program” to help the unemployed save their homes.  If HUD handled medical emergencies, everyone would die.

 

The Fraud in the Foreclosure Process…

 

It’s hard to imagine, but even with a presidential election coming up, an election in which the winner must carry such foreclosure-riddled swing states as Ohio and Florida, there’s just more and more and more and even more… and none of it good as far as the Obama Administration is concerned… and yet the administration appears wholly unconcerned.

 

The Attorney General settlement with the five largest servicers is another example of a cowboy that’s all hat and no cattle.  To listen to the Obama Administration, it’s an important settlement, meaningful to the homeowners in America, many of whom… according to the administration, were foreclosed on either illegally, fraudulently, or improperly… it’s kind of hard to tell which.

 

Regardless, if the homeowner lost a home to foreclosure between 2009 and 2011, they are said to be receiving between $1,500 and $2,000 as compensation for some unspecified degree of improper or fraudulent foreclosure having taken place.

 

The absurdity of this component of the overall settlement was not lost on anyone, even for a moment, and in Obama’s typical fashion, he held a single press conference, said some great sounding things about justice for homeowners and making banks pay, and we haven’t heard from him on the subject since.

 

Meanwhile, if you really did lose a home to a wrongful foreclosure, you now know no one cares, as two grand is hardly compensation for losing a home that shouldn’t have been lost.  And if you didn’t lose your home improperly, then you just got two grand for absolutely nothing.  As settlements go, this one managed to do something not often seen… it managed to please no one, and since it hasn’t even begun to disperse checks, no one is even sure how the whole thing will or won’t work.

 

The only thing that’s certain about the settlement is the level of skepticism present among homeowners, and that’s either being expressed through jeers or barbs.

 

 

Mickey Mouse signed it, and Donald Duck notarized it… but who cares?

 

The problem with the whole “fraudulent or improper foreclosure” aspect of the crisis is that it’s not helping homeowners, in fact in many instances its caused more harm then good.

 

For one thing, it’s driving false hope.  For another, it’s driving bad decisions.

 

Even when used successfully as a defense in a foreclosure proceeding, the improper signing of affidavits or assignments has proven itself, at least in the vast majority of instances, to at best result in a delay.  The servicer attempting to foreclose may be forced to re-file with proper documents, but they almost always do… and the foreclosure proceeds in almost every single case.

 

More importantly, however, the use of improperly signed documents as a defense in a foreclosure is more often than not, simply ineffective from the homeowner’s perspective.  No delay is granted and the foreclosure proceeds as if the documentation was flawless.  Judges simply care more about a borrower not having made a payment in two years than who signed the assignment of the deed of trust.

 

Foreclosure defense lawyers all tell me that they raise issues pertaining to document signing as they might visit any port in a storm… hoping to gain some leverage that leads to their client’s loan getting modified.  None seem to believe that borrowers are truly damaged by such improper signing, and most judges evidently agree.

 

The moral of the story about foreclosure defense is that, in almost all cases, if you haven’t made your mortgage payment for a couple of years, the safest path to saving your home is through a loan modification.  And don’t shoot the messenger, but if you’re trying to save your home… you should also be saving money.

 

You may need the money to save your home, and even if it turns out that you don’t, once your situation gets resolved, you’ll definitely need a vacation so having extra money saved is a no lose proposition.

 

The other problem with our current fascination with who signed what is that it’s driving homeowners to buy forensic loan audits, securitization audits and countless other reports of questionable value to those trying to save homes from foreclosure.  They find out that something was done improperly and think that it means that they can use it to save their home from foreclosure.  In almost every single instance, they find out they were wrong… and by then, it’s too late to get their loan modified.

 

My point is that these are the facts… the unpopular and perhaps unfair facts that are the result of the Obama Administration’s handling of the foreclosure crisis.  You can continue to blame the banks and mortgage servicers if you want to, but their role has never been to ensure societal fairness… they are, after all, bill collectors and as such they are responsible to their shareholders and investors… not to you or me as delinquent borrowers.

 

When you want companies to all do something that’s not in their financial best interests, that’s when government has to step in.  For example, if you want cars to have safety belts or catalytic converters, you don’t just leave it to GM, Chrysler and Ford to figure it out… you pass legislation that mandates the adoption of such things because its been decided that they are for the good of our society.

 

That’s precisely what the Obama Administration has failed to do during this crisis… mandate what is best for our society, and instead its just been left to the for profit corporations to figure it out for themselves.  And we’re surprised that didn’t work?  Really?  Why?  Who thought it would, besides Larry Summers and Tim Geithner?  Because for sure I could have told them it wouldn’t… saved everyone a lot of aggravation, to say nothing of several trillion dollars.

 

We tried the same thing during the Great Depression of the 1930s… a voluntary loan modification program, I mean.  It’s true.  Didn’t work then either, and the St. Louis Federal Reserve has a paper all about it.  Do you think Geithner and Summers missed reading it?

 

In Conclusion…

 

It’s year six of the most severe balance sheet recession that this country has experienced in 70 years and once again we’re right in the middle of our annual faux recovery.

 

The global credit crisis that ended our housing bubble in 2007 left us with housing prices in a free fall and a growing foreclosure crisis about which essentially nothing has been done, or at least nothing has been done right.  The result of the collapse in credit card availability and home equity have left American consumers with only two options: default or attempt to repay massive debt burdens.

 

We’ve seen something like $10 trillion in accumulated wealth evaporate, mostly in the form of lost home equity, and so it should come as no surprise, except to economists unable to see things beyond their charts and models, that consumer spending as measured by consumption has gone down enormously since 2006.

 

Simply put… we are earning less today because we are consuming less today.

 

And yet, we continue to ignore or mishandle the foreclosure crisis that is clearly THE ISSUE that prevents any sort of economic recovery from talking hold.

 

That’s not the fault of banks and mortgage servicers… and it’s not the fault of courts failing to prevent foreclosures based on improperly signed documents used in the foreclosure process.  Clearly, this monumental failure belongs to our elected officials in federal and state governments… and to the policy decisions made by the Obama Administration.

 

Again, I’m not saying you should vote for Mitt Romney… or that you should vote for Barack Obama, for that matter.  What I am saying is that we should not be tolerating any more of what we’ve been fed since the crisis began, because for six years we’ve been told things about our housing markets and the impact of foreclosures that have been proven repeatedly to be wrong and by a long-shot.

 

As 2008 began, the Congressional Budget Office (“CBO”) forecasted that the budget deficit in 2009 would be just 1.4 per cent of GDP.  As it turned out, 2009’s budget deficit skyrocketed to 10 percent of GDP.  (And to the CBO I would just like to say… “Thank you for playing.”)

 

The cause of the dramatically increasing deficit in 2009 is found in the fallout from the housing bubble… not irrationally exuberant spending programs and not excessive tax cuts.  The CBO’s 2008 forecasts were obviously made before our government understood the impact that the housing bubble’s collapse would have on the economy.  The question is, do they understand it even now?

 

According to a disturbing recent study, while during the Clinton Administration the top one percent got 45 percent of our economic growth and during the Bush Administration that affluent group got 65 percent of our growth… in 2010, the top one percent picked up an unconscionable 93 percent of the gains in that year… and 37 percent of the gains went to the 15,600 uber-rich households that make up the top one-tenth of one percent.

 

So, very well done there.

 

Perhaps even more alarming, there were no gains at all for those in the bottom 90 percent, and in fact, this sizable group has seen their average annual adjusted gross incomes fall by $4,843 since 2000 to $29, 840 (adjusted for inflation, by the way).

 

Don’t be confused by any of this, once again, the culprit is housing.  If you’re in the top 10 percent club, you’re doing well in large part because of your investments in the stock market, which saw an increase in value of $1.46 trillion in the fourth quarter of 2011 alone.

 

But, if you’re in the bottom 90 percent, chances are you don’t own a whole heck of a lot of stocks… for you it’s your home’s value that makes up the lion’s share of your wealth, and home prices once again fell in 2011.  The median home was worth 6.2 percent less in February of this year as compared with the prior year.  And yes… if you haven’t figured it out yet, home prices are still falling with no end yet in sight.

 

According to a recent article on Bloomberg/Businessweek, “Home prices seen dropping 10% in U.S. on Foreclosures”

 

“A lot of people look at bumps in the monthly data and say we’re reaching a bottom,” said Joshua Shapiro, chief U.S. economist at MFR Inc. in New York. “We won’t be there until this supply of foreclosures clears.”

 

It’s also worth noting that the sinking housing market has hit minority households much harder than whites.  According to the Pew Research Center, Hispanic households have lost 66 percent of their net worth during the recession while whites have endured only a 16 percent loss.

 

Fed Chief Ben Bernanke says our economy needs to grow faster in order to reduce unemployment, and thank you Professor Bernanke for that brilliant insight.  But, as former labor secretary Robert Reich pointed out recently…

 

“We can’t possibly grow faster if the vast majority of Americans, who are still losing ground, don’t have the money to buy more of the things American workers produce. There’s no way spending by the richest 10 percent – the only ones gaining ground – will be enough to get the economy out of first gear.”

 

All of this should paint a clear picture… even under the most optimistic set of assumptions we’re not looking at any sort of real recovery… the kind you can feel as well as read about… being a possibility this year… and not next year either… or even during the year after that.  Our accumulated wealth has been stripped, and Bernanke can lower interest rates until he literally can’t and we’re still going to save for quite a while before we spend again.

 

Economists point out that savings rates are only hovering around 5 percent, but you have to consider that represents savings at roughly zero interest.

 

Of course, at some point rates will have to rise, and while some point out the benefits that come along with higher rates, I’m pretty confident that the Fed Chief is in touch with the concept of what will happen to the millions of underwater adjustable rate mortgages when rising rates make for higher monthly mortgage payments that cannot be refinanced.  Get ready, ‘cause when rates do rise, there’ll be a whole new group of the “irresponsible,” arriving on the scene.

 

 

Where the crisis will meet the people… all the people. 

 

On “AUSTERITY STREET.”

 

Allow me to offer you a glimpse into the future… the near future… as in a year or two from now when the foreclosure crisis will collide with the realities of state budget deficits, which are the kind of budget deficits that can’t be addressed by printing money.

 

Remember President Obama’s very first bill… the economic stimulus bill that finally passed with a $700 billion price tag, but ended up stimulating almost nothing, economically speaking?  Well, it may not have accomplished what the administration wanted it to, but it did accomplish something.  It provided roughly $500 billion for the states, which is why we haven’t had any state budget crises making headlines over the last couple of years.

 

Well, guess what?  The money’s gone… there was something like $6 billion left going into this year.  But, the states fiscal problems are still very much around.

 

According to the Center on Budget and Policy Priorities

 

The Great Recession that started in 2007 caused the largest collapse in state revenues on record.  As of the third quarter of 2011, state revenues remained 7 percent below pre-recession levels, and are not growing fast enough to recover fully soon.

 

State budget estimates for the upcoming fiscal year show that states still face a long and uncertain recovery. For fiscal year 2013, thirty states have projected shortfalls totaling $49 billion.

 

Meanwhile, states’ education and health care obligations continue to grow. Some 5.6 million more people are projected to be eligible for health insurance through Medicaid in 2012 than were enrolled in 2008, as employers have cancelled their coverage and people have lost jobs and wages.

 

Extremely large shortfalls addressed in recent years have led to deep cuts in critical public services like education, health care, and human services; the new shortfalls likely will prompt legislators to make further cuts in those areas on top of those already enacted.

 

So state budgets are poised to continue to be a drag on the national economy, threatening hundreds of thousands of private- and public-sector jobs, reducing the job creation that otherwise would be expected to occur.

 

These shortfalls are all the more daunting because states’ options for addressing them are fewer and more difficult than in recent years. Temporary aid to states enacted in early 2009 as part of the federal Recovery Act allowed states to avert some of the most harmful potential budget cuts in the 2009, 2010 and 2011 fiscal years. But that aid expired at the end of fiscal year 2011, leading to some of the deepest cuts to state services since the start of the recession. The federal government is now moving ahead with spending cuts that will very likely make states’ fiscal situation even worse.

 

Unfortunately, the hole is so deep that even if revenues continue to grow at last year’s rate — which is highly unlikely, it would take seven years to get them back on a normal track.

 

Continued slow job growth will restrain the rise in state tax receipts. This is especially true for the sales tax. High unemployment and economic uncertainty, combined with households’ diminished wealth due to fallen property values, will continue to depress consumption, keeping sales tax receipts at low levels.

 

Spending cuts are problematic during an economic downturn because they reduce overall demand and can make the downturn deeper. When states cut spending, they lay off employees, cancel contracts with vendors, eliminate or lower payments to businesses and nonprofit organizations that provide direct services, and cut benefit payments to individuals. This directly removes demand from the economy.

 

Tax increases also remove demand from the economy by reducing the amount of money people have to spend.  At the state level, a balanced approach to closing deficits — raising taxes along with enacting budget cuts — is needed in order to maintain important services while minimizing harmful effects on the economy.  Ultimately, however, the actions needed to address state budget shortfalls place a considerable number of jobs at risk.

 

Want to know what all of that refers to in a nutshell: AUSTERITY.

 

As the states cut services and programs, people feel them from the bottom up, and the deeper the cuts get, the bigger their impact on our society.  For example in California and Florida over the last two years, state college tuitions have risen by roughly a third… that’s a 33% increase in the cost of going to college, and it means that many students won’t be attending as planned.

 

This is life-altering stuff, and the impact to states can last for decades.

 

The foreclosure crisis is only making the picture bleaker each year, as spending drops, so do sales tax receipts, and as property values fall, so do property tax receipts.

 

So, we cut services available to those near the bottom of the economic ladder, and raise taxes on those at the top.  Together, although budget deficits are closed, the impact causes more harm to the economy, thus making recovery that much further away.

 

The situation is dire for many, if not most states.  It isn’t a hypothetical scenario, or a potential one… it’s our very certain reality in the years just ahead.  This is where everyone starts to feel the pain, and in the most extreme situations… it’s Greece.

 

One last thing…

 

The National Journal story I’ve quoted throughout this article, wrapped up with the following statement from former FDIC Chief Sheila Bair… (Warning: You may want to bite down on a pencil before reading what Sheila has to say.  The first time I read it, I bit my tongue and couldn’t eat salsa for almost a week.)

 

“I think the president really wanted to do something aggressive and meaningful here, and I just think Larry and Tim were not as committed to it,” the FDIC’s Bair said. “It was not a priority for them. They were focused on the big financial institutions. I think they just wanted to get a program and a press release out to make the president happy.”

 

If that doesn’t say it to you… I’m not sure what else would.

 

We need to let our elected officials know that we will no longer tolerate pointless inaction caused by inane debates over such things as “moral hazard,” and the selective preservation of the sanctity of contracts.

 

If the federal government can handle the unbelievable amounts of moral hazard they’ve created with TBTF, they can certainly handle someone getting help under less than ideal circumstances SIX YEARS into the bungling of the crisis.

 

And as far as the sanctity of contracts goes, if they can deal with pretending the maturity dates on commercial mortgages haven’t arrived when they have, surely they can recover from making some new rules under such extreme circumstances.  After all, they figured out how to have Japanese-Americans hauled off to internment camps in Utah during WWII.

 

We need to let them know that we hold them responsible for what’s transpired, because we do listen to what the President of the United States says to the American people… in fact, we were under the impression that once elected it’s to be considered more than a campaign speech.

 

Decisions made by Larry Summers have been disastrous for this nation… that much is abundantly clear.  Tim Geithner’s been no peach either.  Together their folly has cost our country incalculable amounts of money, but further, they have caused people to take their own lives.  Geithner must resign.  Summers should be banned from the economics profession for life.  Both should be sentenced to three years selling shoes at JCPenny.  Repeat after me: “Would you like to see that in a pump or a loafer.”

I don’t want to get funny about this… I mean every word of what I’ve said here.  While we are begging for crumbs off of Linda Green’s table, stomping our feet because Wells Fargo won’t change, it is our government that has created this mess… our government who said they’d done something to solve it… and our government who has obviously failed.

 

So, fix it… damn it.  We won’t tolerate anything less.  We want accountability, and if we are not listened to, we will have your seat in public office.

 

And maybe we can’t get all of them… but we can get some of them.  And I’m thinking maybe that’s enough.

 

Mandelman out.

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11

NY AG Eric Schneiderman Pushes Objection to BofA $8.5 Billion Mortgage Pact

NY Pushes Objection to BofA $8.5 Billion Mortgage Pact (Reuters) – Bank of America Corp’s proposed $8.5 billion mortgage bond settlement received fresh opposition on Tuesday from New York’s attorney general, who said the accord appears unfair to investors who may deserve to recover more. Eric Schneiderman, the attorney general, filed papers on Tuesday asking … Read more Related posts:
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  2. Let’s Make A Deal | Fraudclosure Settlement to be Filed in Federal Court on Monday? as Government Seeks Court Approval of $25 Billion Pact
  3. Mortgage Electronic Registraton System (MERS) Subpoenaed by NY Attorney General Eric Schneiderman
Apr
10

WTF? Bank Of America Sues Itself In Unusual Foreclosure Case

To be clear, the cases are styled Bank of America, NA vs Bank of America, NA even though the BofA rep says they are suing on behalf of a trust… Accounting fraud anyone? You cannot sue yourself… ~ Bank Of America Sues Itself In Unusual Foreclosure Case WASHINGTON — Bank of America is suing itself … Read more Related posts:
  1. Pot, Meet Kettle | Bank of America Sues HOA’s, Trustees and Collection Agencies Over Foreclosure Fees
  2. Rhonda D. McLaughlin vs Bank of America – Sandusky Woman Sues Bank of America Over “Robo-” Foreclosure
  3. Consumer Fraud – Arizona Sues Bank of America Over Mortgage Servicing
Apr
10

Occupy Raleigh Home Defense Against Illegal Foreclosure 2633 PEBBLE MEADOW LANE 4.9.2012 (VIDEO)

On 4.9.2012 Occupy Raleigh along with Occupy Greensboro, Take Back The Land, Save Our Homes, and Mortgage Fraud NC attempted to defend the home of a family illegally foreclosed on in Southeast Raleigh. This is a recap of the day’s events including the eventual arrests. IMPORTANT NOTES: This was not an attempt by Occupy to … Read more Related posts:
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  2. Homeowner Credits Occupy D.C. With Saving Her Home from Bank of America / Freddie Mac (VIDEO)
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Apr
09

Rigby v. Wells Fargo Bank Reversed | “A party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing.”

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT January Term 2012 DAVID RIGBY and KATHLYN RIGBY, Appellants, v. WELLS FARGO BANK, N.A., AS TRUSTEE FOR OPTION ONE MORTGAGE LOAN TRUST 2007-FXD2 ASSET-BACKED CERTIFICATES, SERIES 2007-FXD2, Appellee. No. 4D10-3587 [April 4, 2012] This appeal stems from a complaint of foreclosure filed an the … Read more Related posts:
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  2. WELLS FARGO BANK, N.A., v. SANDRA A. FORD | NJ APPELLATE DIVISION Reverses Foreclosure Due to Lack of Standing
  3. FL 4th DCA Fraudclosure Reversed | McLEAN vs JP MORGAN CHASE BANK – The record lacked any evidence that Chase had standing to foreclose at the time the lawsuit was filed
Apr
06

Stop, Thief!!! West Palm Beach-Based Ocwen Loan Servicing Attempts Foreclosure on Paid off Home

Pasco couple stymied in trying to fix lender’s “mistake” ARIPEKA — Joe Manzo and Lisa Stowell paid off their mortgage – in full – late last year. But their lender threatened to foreclose anyway. “There was no doubt that it was paid off,” Manzo said. “I just assumed that the bank was lagging behind and … Read more Related posts:
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  2. Simultaneous Protests in West Palm Beach FL and Seattle WA Target Ocwen Financial Today
  3. Veteran’s Four Year Foreclosure Fiasco Finally Comes to an End – Ocwen Gives Back Stolen Title to Paid Off Home
Apr
05

KABOOM | Bank of NY Mellon Must Face Lawsuit on Countrywide

Bank of NY Mellon must face lawsuit on Countrywide April 3 (Reuters) – A federal judge rejected Bank of New York Mellon Corp’s bid to dismiss a lawsuit by investors over its role as trustee for mortgage-backed securities that led to an $8.5 billion settlement by Bank of America Corp. U.S. District Judge William Pauley … Read more Related posts:
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  2. New York Attorney General Accuses Bank Of New York Mellon Of Fraud, Moves To Block Bank Of America’s Mortgage Deal
  3. BAM! | US Judge Takes $8.5 Bln BofA Deal from State Court in Bank of New York Mellon vs Walnut Place
Apr
05

KABOOM | Bank of NY Mellon Must Face Lawsuit on Countrywide

Bank of NY Mellon must face lawsuit on Countrywide April 3 (Reuters) – A federal judge rejected Bank of New York Mellon Corp’s bid to dismiss a lawsuit by investors over its role as trustee for mortgage-backed securities that led to an $8.5 billion settlement by Bank of America Corp. U.S. District Judge William Pauley … Read more Related posts:
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  2. New York Attorney General Accuses Bank Of New York Mellon Of Fraud, Moves To Block Bank Of America’s Mortgage Deal
  3. BAM! | US Judge Takes $8.5 Bln BofA Deal from State Court in Bank of New York Mellon vs Walnut Place
Apr
04

NY Appeals Court Dismisses Fraud Suit Brought by Investors – Says Investors can take care of themselves.

The investor in a synthetic CDO who claimed that fraud on the part of Swiss banking giant, UBS, is what led to its incurring losses of over $500 million, has found a wholly unsympathetic ear in the appellate division of the New York State Supreme Court, who dismissed the suit on March 27, 2012, saying that investors are capable of protecting themselves.

# # # 

 

In a judgment handed down by the appellate division of the New York State Supreme Court on March 27, justices said German bank, HSH Nordbank could not characterize itself as a simple commercial bank that did not understand the product.

 

HSH Nordbank is a commercial bank headquartered in Hamburg, Germany.  Its core business, historically, included ship financing, private banking and corporate clients, and its operations spanned the globe including operations in Luxembourg, New York, London and Singapore.

 

By 2009, after losing close to 2.8 billion euros in 2008, HSH was in trouble.  With no one willing to partner with, much less acquire the bank, the government bailout of 13 billion euros, came with the understanding that more could be required.

 

It’s the classic tale of a bank gone bad.  How do these things happen?  You raise them… teach them right from wrong… and then one day they come home wearing a navy pinned-stripe suit and wingtips, talking about net present values and obsessing over ROI.

 

Usually, when a bank like this one goes bad, there were warning signs.  First, it’s hidden fees on checking accounts, then a 29 percent bump on credit card interest, and before you know it, that nice, clean cut bank you once knew is hip deep in a mortgage-backed security, shooting credit default swaps, and talking up a synthetic CDO-squared like housing prices will never go down.

 

As is often the case, it could be that HSH started going downhill after it started hanging out with a certain unsavory element… bankers from the short side of the trade… or in other words, when Goldman Sachs alum, J.C. Flowers, bought a 24 percent stake in HSH… followed by UBS arriving on the scene hawking its wares.

 

Next thing anyone knew, HSH was agreeing to act as the “protection seller for the trade,” and “assume exposure to the first $500 million of losses on a $3 billion portfolio of US real-estate-linked securities,” in return for premiums paid by UBS… who was actively managing the underlying pool of assets.

 

And baby, that’s a long way from financing a ship or helping rich people with their banking needs.  (It reminds me of Warren Buffett talking about how he never invests in companies whose products he doesn’t understand, and why it’s probably a good rule of thumb.)

 

Referred to as the “North Street” transaction, for the first six years no credit events occurred in the reference pool, and HSH collected the full interest due on its notes.  But in 2008… as stated in the German bank’s complaint… as the financial crisis intensified, credit events spiked to the extent that HSH lost almost all of its $500 million investment.

 

Ouch.  That’s gotta’ sting.

 

All it took was a drop of 19 percent in the value of the underlying portfolio to wipe out the investment HSH Nordbank’s made in the North Street notes… but the HSH lawsuit alleged that while it was busy losing everything, UBS came out smelling like J.C. Flowers used to when he was still at Goldman Sachs… with a gain of over $275 million.

 

Like most of the CDO-related lawsuits, HSH’s claim was that the portfolio was managed in such a way that the risks to the protection seller increased significantly.  HSH accused UBS of substituting riskier assets into the deal when no one was looking, and selecting assets with spreads to wide for their respective credit ratings.

 

In dismissing the suit, the court didn’t so much weigh in on UBS’ behavior, but rather made its view clear that HSH was quite capable of taking care of its own interests.  From the court’s decision…

 

“At bottom, HSH is complaining that UBS – which HSH agreed was not acting as its adviser or fiduciary in this matter – induced it to enter into a deal that would enable UBS to exploit, at HSH’s expense, a feature of the relevant securities market that was common knowledge among participants in that market. This does not constitute a legally sufficient cause of action for fraud, certainly not when pleaded by a sophisticated business entity that disclaimed reliance on the party it now accuses of fraud.”

 

Oooh, snap!

 

HSH-Nordbank tried to make the case that it was just a simple commercial bank hardly capable of understanding the big-city-type investment product UBS was offering… which must have been hysterical to watch especially with Goldmanite and zillionaire, Flowers on everyone’s mind at least once or twice during the case.

 

Again, from the courts decision…

 

“HSH – a sophisticated commercial entity – cannot satisfy the element of justifiable reliance, inasmuch as the undisputed documentary evidence establishes that HSH agreed it was not relying on any advice from UBS; assented to the inherent conflicts of interest that would result from UBS’s multiple roles with regard to the reference pool; and was explicitly warned of the risks it was undertaking in this highly leveraged and complex transaction.”

 

Some are saying the case may set a precedent for the packagers of CDOs, making their only responsibility to disclose risks and conflicts of interest involved.  A lawyer said to be “deeply involved” in the case, was quoted as saying…

 

“This is one of the most, if not the most, comprehensive decisions the appellate division in New York has ever issued in a case involving sophisticated parties to a structured credit transaction.”

 

“The court unanimously held that a sophisticated commercial bank cannot justifiably rely on alleged misstatements or omissions regarding an investment when it had the means to uncover the alleged fraud through the exercise of reasonable diligence. The decision could have far-reaching implications for other cases involving sophisticated plaintiffs claiming they were fraudulently induced to enter into complex financial transactions.”

 

A spokesperson for the German bank said: “HSH Nordbank has based its lawsuit primarily on three charges: fraud, misrepresentation and breach of contract. The charges of fraud and misrepresentation have now been rejected by a New York court in an appeal hearing. The charge of breach of contract still applies. We shall carefully examine the ruling of the New York court to decide what legal consequences it will have for us.”

 

But the court didn’t exactly give UBS a free pass either. 

 

The judges told the Swiss bank that their alleged conduct “leaves much to be desired as a matter of business ethics,” and made very clear that UBS should not interpret the judgment to mean that “if UBS did in fact engage in the sharp dealing alleged by HSH, it is to be commended; such practices are indeed troubling”.

 

My commentary on this decision…

There are no doubt going to be those that will find this decision a blow to the “punish-Wall-Street-for-fraud” movement.  They will say that this decision inhibits the ability of investors to sue the bankers that defrauded pension plans, insurance companies and  sovereign wealth funds all over the world, leading to the global financial crisis.  “They” have been waiting with bated breath for these investor lawsuits to come and save the day, in what might be considered the modern day version of “The Clash of the Titans.” 

It’s as if to say that what consumers couldn’t accomplish, the investors will… and now, as a result of this decision… maybe they won’t after all… and the thought of the bankers getting off scott free is simply intolerable. 

I disagree.

I think this ruling shows that the justices that make up NY’s appeals court are smart.  Twenty-five percent of HSH-Nordbank is owned by J.C. Flowers, as I mentioned in the article above, do you know who and what he is?

First of all, J.C. Flowers graduated from Harvard with degree in applied mathematics, which in many ways makes him the worst kind of Wall Streeter, or at least the most dangerous.  His mathematical models tell him what to do, which is not all that different from someone who is directed by mysterious voices. 

After Harvard he worked at Goldman Sachs for 20 YEARS, becoming a partner in 1988.  Not only that, but he founded Goldman’s immensely profitable, financial institutions merger practice.  Think about that for am moment… Flowers is considered to be one of the world’s leading experts on the value of financial institutions.

After leaving Goldman in 1998, he was the main partner in a venture that acquired Long-term Credit Bank of Japan and turned it into Shinsei Bank, where Flowers is still a Director. When Shinsei went public a few years later, Flowers made about a billion.

In 2001, he started J.C. Flowers & Co., which is a private equity firm that owns large stakes in Shinsei, HSH-Nordbank, NIBC Bank, Hypo Real Estate… have you ever heard of any of those banks or whatever they are?  No one has, and you can bet that Flowers knows stuff regular folk don’t. 

During the collapse, Flowers was called upon by Bank of America to advise it on the potential acquisition of Lehman Bros. and a couple days after that he was brought in by AIG to advise it on how it might avoid falling apart at the seams.  He was one of the first to warn, then Treasury Secretary Hank Paulson, of the coming collapse of AIG and Lehman, and was depicted by the actor, Michael O’Keefe in the movie “Too Big to Fail,” on HBO.

Back in 2008, he even bought the First National Bank of Cainesville in Missouri and renamed it… “Flowers Bank.”

And he owned 24 percent of HSH-Nordbank.

And he was unhappy, I suppose, because UBS pulled a Goldman on one if his banks, who came into court acting as if they were the savings and loan from “It’s a Wonderful Life.”  And the court didn’t buy it for a second… so, good for them.  Bravo!  What’s good for the goose is good for the gander, as my mother used to like to say.

Not every mortgage-backed security deal ever done was a fraud.  There were certainly some that were, and Goldman Sachs did more than their share, I’m sure.  In fact, a good part of Wall Street’s culture is based on being able to find, “dumber money.”  So, if you get involved in a deal so complicated that you get the short end of the stick, you don’t get to cry foul and use the courts system to go after one of your peers for doing what you wish you would have done.

Sorry, Mr. Flowers… this time you didn’t come out smelling like a rose.  But, don’t worry too much… I’m sure you’ll get to stick it to someone else in similar fashion soon enough.

If a pension plan comes to court and can establish that “reps and warranties” were actually “lies and more lies,” then I’m sure the courts will respond appropriately.  But everyone lost during this last raping of the planet… EVERYONE… except maybe a few dozen guys now in the Hamptons watching their statute of limitations clocks and  hoping the U.S. Attorney’s office doesn’t show up at their door before their time runs out.

So, just because you lost, doesn’t mean you get to cry fraud.  Let’s get the bad guys, no question.  But let’s be smart about it… because that’s what will act as a deterrent for future fraudsters.  No one is afraid of being caught by the dumb and dumber. 

I’m just saying…

Mandelman out.

 

The case related to a 2002 synthetic CDO transaction that HSH Nordbank entered into with UBS termed ‘North Street Reference Linked Notes 2002–04’.

 

A link to the complete story can be found at RISK.net.

Apr
03

Chris Whalen (Bank Shill) on Lien State vs Title State (VIDEO)

~ 4closureFraud.org TweetRelated posts: Chris Whalen on Radio Free Dylan | A 30 minute podcast of Chris Whalen and Dylan Ratigan on Bank of America Foreclosuregate Video – Bloomberg Interview of Chris Whalen “Foreclosure Issue is a Cancer” Up with Chris Hayes | Eliot Spitzer on the 50 State Fraudclosure Settlement “NO, NO, NO, NO” … Read more Related posts:
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Apr
03

American Banker on Credit Card Debt Collections

Jeff Horwitz at the American Banker has been doing some great reporting on abusive debt collection practices in the credit card industry. Joe Nocera's column took up the subject today. Robo-signing and other abuses have been a problem for a while with credit card debt collections, and Horwitz and Nocera do a public service by drawing attention to the problems. The situation cries out for congressional hearings and for regulatory investigation. It is great to see the Consumer Financial Protection Bureau make debt collection practices one of its top priorities.

Horwitz's articles at the American Banker include:

Maria Aspen at American Banker separately reported how the sloppy sales of delinquent credit card accounts and shoddy debt collection practices were a nightmare for one Maryland woman.

Apr
03

Osorto v. Deutsche Bank National | Foreclosure Ruling Gives Palm Beach County Family Another Chance at Keeping their Home

Foreclosure ruling gives Palm Beach County family another chance at keeping their home A Palm Beach County family that lost its home in a 2010 foreclosure judgment is getting another shot at its case after the 4th District Court of Appeal said a lower court was premature in ruling for the bank. In the case, … Read more Related posts:
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