Foreclosure Fraud 101 – How (not) to Fraudclose on a Default When There is No Default in Order to Steal Money from the Government (FDIC)
Jamie Dimon tells Meet the Press he thinks we’re resenting “success.” He’s wrong.

This past week, JPMorgan Chase CEO Jamie Dimon announced that his bank lost $2 billion trading credit default swaps. It was destined to become a major news story, and sure enough everyone and their cousin wrote about it from every conceivable angle, the consensus being that the loss exemplifies the need for Dodd-Frank, the Volker Rule, and even Glass-Steagall type legislation.
So, no surprise there, right? I mean, JPMorgan Chase losing $2 billion in a little over a month betting on credit default swaps is pretty much why U.S. taxpayers ended up having to pump trillions into TBTF banks just a few years ago.
Dimon was quoted as having said that just because his bank had been stupid, it didn’t mean that all the other banks would be equally stupid. But, see… it sort of does, right? That’s why the sort of risk we’re talking about is termed, “systemic,” right? That’s why all the Wall Street banks became insolvent at the same time, right?
The simple fact is that if JPMorgan Chase is being an idiot in it’s proprietary trading strategies, history shows us that chances are overwhelmingly that the other bankers are going to be idiots too. Maybe not on the same day; okay fine. But, within a matter of weeks or certainly months… for sure.
Oh, I know Wells Fargo will deny having done whatever it is that the other idiots have done, whenever bets go bad, but then we’ll soon find out that they were lying and not only did the same thing, but they did it to an even greater degree than the other morons du jour of the financial aristocracy.
The story of Dimon’s $2 billion loss got so big that Jamie even showed up to issue a mea culpa, Sunday morning on this week’s “Meet the Press.” Among other things, he said…
“This is a stupid thing that we should never have done, but we’re still going to earn a lot of money this quarter, so it isn’t like the company is jeopardized. We hurt ourselves and our credibility, yes – and that you’ve got to fully expect and pay the price for that.”
A billion here and a billion there…
The point that JPMorgan Chase is going to “earn” a lot of money this quarter is not only completely irrelevant, but it highlights another part of the problem we’re having with our mega-banks.
For one thing, and I can’t believe I even have to say this, losing $2 billion in a quarter at any corporation is supposed to be a significant problem. If it’s not, then the corporation is gouging its customers with the expectation that it will need a multi-billion cushion to make up for its tendency to lose billions through stupidity at any given moment.
And for another thing, saying that this time around the stupidity isn’t going to jeopardize JPMorgan Chase’s future solvency, is not the point.
The point is, what will happen when the bank’s stupidity and obvious addiction to gambling does threaten to jeopardize the bank’s solvency. What happens then?
Does the bank file bankruptcy? Does the FDIC take it over, fire the executives, clean it up and re-sell it to the private sector? Or, does it just mean that the U.S. taxpayer is forced to bail out the bank once again because it’s deemed too big to fail? Because as long as it’s the latter… that’s the point.
Dimon also commented on the things he said a few weeks ago during a conference call, when he referred to the danger of what ultimately happened as being “a tempest in a teapot,” which is an idiom that refers to a small thing that’s been blown out of proportion. On “Meet the Press,” Dimon said…
“So first of all, I was dead wrong when I said that. I obviously didn’t know because I never would have said that. And one of the reasons we came public was because we wanted to say, ‘You know what, we told you something that was completely wrong a mere four weeks ago.’”
Yes, and that’s also the point, is it not? Like all human beings, even the CEO of JPMorgan Chase can simply be wrong. And the American taxpayer doesn’t want to be on the hook for however many billions wrong he or she is from time to time because what happened here that cost the bank $2 billion didn’t have anything to do with commercial banking. So, there’s no reason in the world for us to be involved.
If we weren’t involved… if we could be sure that we weren’t going to be on the hook for the bank’s insolvency, then we wouldn’t care about any of this. JPMorgan Chase could place multi-billion bets on which side of a room a fly will land on for all we would care. We’d gladly sit on the sidelines and cheer as the bank gambled hundreds of billions on the derivatives of derivatives of derivatives. We’d even go pay-per-view, like the ultimate poker challenge.

We like gamblers and big bets… we’re just too wimpy to be involved in making them ourselves. Besides, we never seem to get to participate in the upside of these things, only the downside.
Success-haters hurt our recovery…
Lastly, Dimon said something during his interview that really got my goat. Basically, he said that he’s sick of Americans being resentful of “success,” that “attacks on successful people,” were somehow harming our economic recovery. And I have to say something about that because it’s just out of control ridiculous.
Americans are absolutely NOT resentful of success, in fact, we adore success… worship it, even. In fact, success is like… our favorite thing in the whole world. We’re success junkies.
In truth, we don’t resent failure either. What we do resent is failure that comes as a result of irresponsible gambling in entirely unregulated environments and for which we have no choice but to pick up the tab. That, we most definitely resent, at the very least. We actually hate that with the white-hot intensity of a thousand suns.
We also resent that JPMorgan Chase was bailed out by taxpayers in 2008 and 2009, and continues to be allowed to profit based on a slew of special loan programs and accounting accommodations, while simultaneously foreclosing at will on homeowners who are only in their current situation because of Wall Street’s unregulated gambling addiction, appalling lack of judgment, and non-existent risk management systems.
Oh, and admittedly we’re not exactly nuts over Jamie’s $20.8 million in compensation for 2010 either, I suppose. In 2010, his compensation went up by 1500 percent increase over the $1.3 million he was paid in 2009, if I’ve got my numbers right… and I do. That’s one heck of a raise, I’d say. What in the world did he do in 2010 that justified a 1500 percent raise?
(According to Reuters, he did quite a bit better than that in 2010, cashing in options and grants awarded during previous years for a grand total of $42 million that year. And that same year his compensation also included $421458 in “moving expenses,” which would make total sense had he relocated from Chicago to the Uhuru Peak of Mount Kilimanjaro maybe.)

And all of that is to say nothing about the $35.8 million he received in 2008, the year he piloted his ship directly into the rocks and sunk it, were it not for the largesse of the U.S. taxpayer. That was certainly a “successful year,” right Mr. Dimon?
You see, it’s not because we resent success that we give Jamie Dimon such a hard time, it’s because these days, we have a hard time viewing Dimon as “a success.”
Now, maybe if he would disclose his bank’s credit default swap counterparty positions, and off-balance sheet transactions, and conformed to GAAP accounting principals for valuing assets and recognizing losses… maybe then…
Or, maybe if his bank modified mortgages that were NPV positive even if it required a principal forbearance or, God forbid, a reduction, because keeping people in homes under these circumstances is simply the right thing to do. Or, maybe if he just supported some sort of reasonable plan to handle things better than they’ve been handled to-date for America’s homeowners…
I’m sure then, we’d see Jamie Dimon as a major success, and wouldn’t care so much how much money he made…
Ya’ think?
Mandelman out.
In case you missed JPMorgan Chase’s CEO, Jamie Dimon on Meet the Press, hereeees… JAMIE!
Visit msnbc.com for breaking news, world news, and news about the economy
Attention Homeowners & Lawyers: AG Mortgage Settlement Launches Online Complaint Sites

Finally, there are places online where homeowners, lawyers and other advocates can go to lodge complaints about a mortgage servicer’s handling of mortgage modifications, et al. And all I can say is, it’s about time.
A story by Ben Hallman in the Huffington Post, quoted Joseph Smith, the ex-banking commissioner charged with enforcing the national mortgage settlement…
“This allows me, as monitor, to hear complaints and learn more about advocates’ impressions of how the settlement is working,” he said. “Although I’ll extensively review reports and monitoring from the banks and my own team of auditors, it is still critical for me to receive information from the heart of each community this settlement serves.”
Now, it’s probably at least somewhat important to remember that Smith has no power to investigate individual complaints or help individual homeowners in any way. Here’s what it says on the complaint form in bold…
“Please note that the Monitor cannot intervene with the servicer on behalf of your individual client.”
Of course, I’d also guess that he doesn’t have the manpower to read the hundreds of thousands of complaints the sites would no doubt receive if homeowners and their lawyers were actually to hear about the website. (I’m also betting that there’s not much of an advertising budget with which they’ll be getting the word out across the nation.)
But, so what? There may be another way to view these new online complaint sites.
Sure, there won’t be any action taken based on the complaints filed online, and nothing will likely change as a result. And I realize that if a homeowner is being dual-tracked, can’t get a response from a mortgage servicer for months, or is losing a home to a wrongful foreclosure, these sites may only represent websites effectively dedicated to ignoring complaints online.
But, wait… there may be more. Here’s what it says on the new sites…
“The Monitor and the Office of Mortgage Settlement Oversight can assist you by providing information about the organization in your state that is appropriate for you depending on your situation. By filling out the simple form below, you will open a webpage that has state-specific contact information of various organizations that may be able to help you. The Monitor will use this information to better understand how the servicers are treating their customers and detect any patterns in violation of the agreement.”
So, I really do hope that everyone takes advantage of the new websites should they have problems with their servicers related to the National Mortgage Settlement. Here’s what Mr. Smith says about the two new sites…
“Lawyers, caseworkers and other consumer advocates are the eyes and ears on the ground who will know first, and know intimately, what kind of difference these payments, adjustments and programs are making,” Smith said. “That’s why we’ve created this dedicated tool -– to see what they’re seeing.”
Look, people… the man used to be the banking commissioner in North Carolina, but now Mr. Smith has gone to Washington and he says he needs us to be his “eyes and ears on the ground,” as far as the AG settlement’s effectiveness goes. So, let’s not let him down, okay?

Besides, if you consider the math, the whole thing becomes that much more fun…
Assuming one person can read a complaint in 10 minutes, and they were to read them 6 hours each day, working the standard 2080 hours a year, it would take 1.3 years to read 100,000 complaints.
So, if the same numbers applied and there were a million complaints, it would take 13.3 years for one person… they’d need to hire a thousand people to get it done in 1.3 years. And that assumes everyone is writing fairly short complaints. Stretch those babies out to a 20-minute read and now we’re talking two thousand people to read them in 1.3 years.
So, look… do you want to help create jobs in this country or what? Oh, and don’t forget to attach a large file to your complaint, I’m sure the servers are quite robust, and someone may want to read the details. Like they said back in the 60s… can you dig what I’m saying here?
So, for HOMEOWNERS who want to file a complaint having to do with the National Mortgage Settlement, click here: WHERE CAN I FIND HELP?
For LAWYERS or ADVOCATES. click here: REPORT CLIENT ISSUES HERE.
Here’s a list of topics under which your complaint may fall, as listed on the new sites…
Documentation: Documentation problems with foreclosure, bankruptcy or your loan file
Fees: Improper assessment of fees, including default, foreclosure, bankruptcy, attorney, late, or third party fees.
Loan Modification: Failure to modify or refinance loan.
Customer Service: Poor customer service, including no single point of contact or no customer portal.
Third Party Firms: Failure to properly oversee firms working for servicer on your mortgage.
Military Personnel: Failure to comply with legal protections afforded military personnel.
Bankruptcy: Improper failure to provide relief to homeowners in bankruptcy.
Force Placed Insurance: Required purchase of property insurance unnecessarily or improperly.
Community Blight: Failure to minimize community blight.
Tenant Rights: Violation of the rights of tenants in foreclosed properties.
Other: __________. No issues. I just would like further information
The Huffington Post story also pointed out that the federal government has also made available two other avenues where borrowers can appeal for direct assistance.
1. CFPB
One is the Consumer Financial Protection Bureau (“CFPB”), which you can access here: File a Mortgage Complaint. According to the Huffington Post, the CFPB,
“… promises to forward a grievance to the financial institution, assign it a tracking number and keep borrowers updated on the status.”
So, that’s very exciting, I would think. I mean, if nothing else it sounds like you’ll have your very own individual tracking number, so that’s something right there. I wonder how effective it will be when trying to persuade a judge not to have you evicted?
“But, hold on Your Honor… not so fast… have I showed you my tracking number?”
2. The OCC
And for homeowners who were in foreclosure during 2009 and 2010, don’t forget about the OCC’s infamously dishonest and entirely corrupt, Independent Foreclosure Review, which you can access here: Submit a Request for Review. I visited the site to check out what would be involved and the best part was that right in the middle of the page there’s a warning for homeowners that reads:
“Watch out for scams – There is only one Independent Foreclosure Review.”
So, for parents reading this who have been looking for a really good example with which you could teach your children the meaning of the word “IRONY,” I’d have to say that your search has ended.
The deadline to submit your complaint is July 31st, so if you’re planning to be condescendingly placated by the equivocation of your claims, you don’t want to put it off. Fewer than three percent of eligible homeowners have submitted their cases for review, so the Obama Administration is no doubt planning to announce that 97 percent of those foreclosed on during those two years were okay with it. I think that’s really taking one for the team, and I, for one, salute you.
And although it would seem that no flaws have been uncovered as yet, that’s no reason not to participate in the process. I mean, look… someone has to win something, right? Like the lottery. Or, maybe not in this case… I really don’t know.
Here’s what the OCC’s site says about the review:
“The Independent Foreclosure Review will determine whether individual borrowers suffered financial injury and should receive compensation or other remedy because of errors or other problems during their home foreclosure process.”
The OCC’s site also STRONGLY WARNS HOMEOWNERS who want to file their case for independent review NOT TO PAY A LAWYER to help them do it under any circumstances.
Good heavens no… who would ever think of doing such a thing? I mean, give us some credit, would you?
I think everybody knows by now that when it comes to authoring a document that alleges the suffering of financial injury for which damages or other remedy may be assessed in conjunction with errors committed by a party purporting to be the holder in due course or to have been assigned the rights of a beneficiary to a deed of trust, and or the substitute trustee who is seeking to enforce said rights as part of a foreclosure or unlawful detainer action… the last thing you’d ever want to do is hire a lawyer.
Sheesh, it’s not like we’re children.
After all, we handled getting our mortgages all by ourselves, initialing and signing all those contractual pages containing 3 point type about how our snapping turtle, spring loaded mortgage might result in payments that exceed our monthly income by three-fold at a time when the credit markets would require a 780 FICO and 30 percent equity to refinance.
And if we can competently handle that sort of complicated transaction, surely we all know not to pay a lawyer a nickel for something as simple as filing a complaint with the Office of the Comptroller of the Currency.
Look, even if the OCC finds nothing was wrong with the foreclosures in 2009 or 2010, I think we’ll all be able to join in a giant collective sigh of relief. At least we’ll know that no one “suffered financial injury” because of errors in the foreclosure process during those two years, and we can finally move from insult to injury as we close the chapter on the unnecessary destruction of some two million family’s lives.
It reminds me of the stress tests they use with the banks… you know, the ones where every bank always passes. Like something from a Monty Python skit. Aren’t those the best?
Move along people, there’s nothing to see here.
Mandelman out.
Attention Homeowners & Lawyers: AG Mortgage Settlement Launches Online Complaint Sites

Finally, there are places online where homeowners, lawyers and other advocates can go to lodge complaints about a mortgage servicer’s handling of mortgage modifications, et al. And all I can say is, it’s about time.
A story by Ben Hallman in the Huffington Post, quoted Joseph Smith, the ex-banking commissioner charged with enforcing the national mortgage settlement…
“This allows me, as monitor, to hear complaints and learn more about advocates’ impressions of how the settlement is working,” he said. “Although I’ll extensively review reports and monitoring from the banks and my own team of auditors, it is still critical for me to receive information from the heart of each community this settlement serves.”
Now, it’s probably at least somewhat important to remember that Smith has no power to investigate individual complaints or help individual homeowners in any way. Here’s what it says on the complaint form in bold…
“Please note that the Monitor cannot intervene with the servicer on behalf of your individual client.”
Of course, I’d also guess that he doesn’t have the manpower to read the hundreds of thousands of complaints the sites would no doubt receive if homeowners and their lawyers were actually to hear about the website. (I’m also betting that there’s not much of an advertising budget with which they’ll be getting the word out across the nation.)
But, so what? Sure, there won’t be any action taken based on the complaints filed online, and nothing will likely change as a result. But, at least now, if a homeowner is being dual-tracked, can’t get a response from a mortgage servicer for months, or is losing a home to a wrongful foreclosure, there’s a website effectively dedicated to ignoring complaints online.
Very cool, don’t you think?
I for one am glad to see that this country is finally taking the foreclosure crisis seriously and that my tax dollars are being put to good use, and I really do hope that everyone take advantage of the new websites. Here’s what Mr. Smith says about the two new sites…
“Lawyers, caseworkers and other consumer advocates are the eyes and ears on the ground who will know first, and know intimately, what kind of difference these payments, adjustments and programs are making,” Smith said. “That’s why we’ve created this dedicated tool -– to see what they’re seeing.”
Look, people… the man used to be the banking commissioner in North Carolina, but now Mr. Smith has gone to Washington and he says he needs us to be his “eyes and ears on the ground,” as far as the AG settlement’s effectiveness goes. So, let’s not let him down, okay?

Consider the math, and the whole thing becomes much more fun…
Assuming one person can read a complaint in 10 minutes, and they were to read them 6 hours each day, working the standard 2080 hours a year, it would take 1.3 years to read 100,000 complaints.
So, if the same numbers applied and there were a million complaints, it would take 13.3 years for one person… they’d need to hire a thousand people to get it done in 1.3 years. And that assumes everyone is writing fairly short complaints. Stretch those babies out to a 20-minute read and now we’re talking two thousand people to read them in 1.3 years.
So, look… do you want to help create jobs in this country or what? Oh, and don’t forget to attach a large file to your complaint, I’m sure the servers are quite robust, and someone may want to read the details. Like they said back in the 60s… can you dig what I’m saying here?
So, for HOMEOWNERS who want to file a complaint having to do with the National Mortgage Settlement, click here: WHERE CAN I FIND HELP?
For LAWYERS or ADVOCATES. click here: REPORT CLIENT ISSUES HERE.
The Huffington Post story also pointed out that the federal government has also made available two other avenues where borrowers can appeal for direct assistance.
One is the Consumer Financial Protection Bureau (“CFPB”), which you can access here: File a Mortgage Complaint. According to the Huffington Post, the CFPB,
“… promises to forward a grievance to the financial institution, assign it a tracking number and keep borrowers updated on the status.”
So, that’s very exciting, I would think. I mean, if nothing else it sounds like you’ll have your very own individual tracking number, so that’s something right there. I wonder how effective it will be when trying to persuade a judge not to have you evicted?
“But, hold on Your Honor… not so fast… have I showed you my tracking number?”
And for homeowners who were in foreclosure during 2009 and 2010, don’t forget about the OCC’s infamously dishonest and entirely corrupt, Independent Foreclosure Review, which you can access here: Submit a Request for Review. I visited the site to check out what would be involved and the best part was that right in the middle of the page there’s a warning for homeowners that reads:
“Watch out for scams – There is only one Independent Foreclosure Review.”
So, for parents reading this who have been looking for a really good example with which you could teach your children the meaning of the word “IRONY,” I’d have to say that your search has ended.
The deadline to submit your complaint is July 31st, so if you’re planning to be condescendingly placated by the equivocation of your claims, you don’t want to put it off. Fewer than three percent of eligible homeowners have submitted their cases for review, so the Obama Administration is no doubt planning to announce that 97 percent of those foreclosed on during those two years were okay with it. I think that’s really taking one for the team, and I, for one, salute you.
And although it would seem that no flaws have been uncovered as yet, that’s no reason not to participate in the process. I mean, look… someone has to win something, right? Like the lottery. Or, maybe not in this case… I really don’t know.
Here’s what the OCC’s site says about the review:
“The Independent Foreclosure Review will determine whether individual borrowers suffered financial injury and should receive compensation or other remedy because of errors or other problems during their home foreclosure process.”
The OCC’s site also STRONGLY WARNS HOMEOWNERS who want to file their case for independent review NOT TO PAY A LAWYER to help them do it under any circumstances.
Good heavens no… who would ever think of doing such a thing? I mean, give us some credit, would you?
I think everybody knows by now that when it comes to authoring a document that alleges the suffering of financial injury for which damages or other remedy may be assessed in conjunction with errors committed by a party purporting to be the holder in due course or to have been assigned the rights of a beneficiary to a deed of trust, and or the substitute trustee who is seeking to enforce said rights as part of a foreclosure or unlawful detainer action… the last thing you’d ever want to do is hire a lawyer.
Sheesh, it’s not like we’re children.
After all, we handled getting our mortgages all by ourselves, initialing and signing all those contractual pages containing 3 point type about how our snapping turtle, spring loaded mortgage might result in payments that exceed our monthly income by three-fold at a time when the credit markets would require a 780 FICO and 30 percent equity to refinance.
And if we can competently handle that sort of complicated transaction, surely we all know not to pay a lawyer a nickel for something as simple as filing a complaint with the Office of the Comptroller of the Currency.
Look, even if the OCC finds nothing was wrong with the foreclosures in 2009 or 2010, I think we’ll all be able to join in a giant collective sigh of relief. At least we’ll know that no one “suffered financial injury” because of errors in the foreclosure process during those two years, and we can finally move from insult to injury as we close the chapter on the unnecessary destruction of some two million family’s lives.
It reminds me of the stress tests they use with the banks… you know, the ones where every bank always passes. Like something from a Monty Python skit. Aren’t those the best?
Move along people, there’s nothing to see here.
Mandelman out.
California Homeowner in Foreclosure Wins Quiet Title – It’s a Free House!

Well, just when I thought I’d seen everything…
A Riverside, California homeowner, Denise Saluto, who was in foreclosure filed for quiet title against Deutsche Bank National Trust, as trustee for Long Beach Mortgage, and its successors and/or assigns, and Washington Mutual Bank, successor in interest to Long Beach Mortgage Company… and won by default. (And Washington Mutual, turned into JPMorgan Chase.)
That’s right… neither Deutsche Bank nor JPMorgan Chase responded to the lawsuit.
When this happens, the Plaintiff still has to present his or her case, but it’s unopposed so it’s not exactly the highest of hurdles. After considering the evidence presented by the Plaintiff, the court entered judgment in favor of Plaintiff and against the Defendants, thereby voiding her Trustee Sale and the Deed of Trust. So, presto-change-o… no more mortgage… as in… it’s a free and clear house! Ms. Saluto may still owe the debt, but the mortgage company is now like Visa or Mastercard, insecure because they’re unsecured. And no one wants to be unsecured, especially in bankruptcy court.
Now, some will say that Deutsche Bank/JPMorgan Chase didn’t respond because they just forgot or whatever, but I don’t know whether that’s the case or not. In fact, when their lawyer tried using this excuse, the judge was quick to point out that the file had been with the lawyer for NINE MONTHS before any efforts were made to get the default judgment set aside.
When a party loses by default like that, assuming it was an oversight of some kind, they usually appeal the decision as soon as they’re notified of the judgment by coming back into court to ask the judge to set aside the default judgment, claiming they weren’t properly served or something like that. And depending on the reason they defaulted, and almost certainly in the case of a bank and a foreclosure, the judge will set aside the default judgment and let the case start over.
As a matter of fact, if it’s within six months of the default, and the lawyer takes the blame, the court MUST vacate the default judgment. It’s actually the only time you ever get to see a lawyer willingly accept blame for anything.
So, in this case, as one would think, Deutsche Bank did appeal the decision, but the thing is, they waited almost a year to do so, in legalese… the bank, “failed to establish diligence in bringing their motion for relief.”
“On February 5, 2009, Saluto filed a complaint against JPMorgan Chase Bank and Deutsche Bank to set aside a trustee sale for violations of title 15 of the United States Code section 1601 et seq. and 12 Code of Federal Regulations part 226.1 et seq., to cancel the trustee deed upon sale, and for quiet title.
Defendants failed to respond to the complaint, and on March 16, 2009, Saluto served a request for entry of default on defendants. The next day, Saluto filed the proofs of service and the request for default with the trial court. The trial court entered default on each defendant on March 17, 2009.” An entry of default just means that the defendant cannot file a response. The Plaintiff still must file a “default judgment package,” which contains evidence supporting their claims.
In July 2009, Saluto filed a request for entry of default judgment, and on December 15, 2009, default judgments were entered.

Then… a year went by before…
“On June 15, 2010, defendants filed a motion to set aside the defaults and default judgments under section 473, subdivision (b), which allows relief from an action taken against a party through mistake, inadvertence, surprise, or excusable neglect when the motion for relief is made “within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.”
To support the motion, defendants filed the declarations of their attorney, Jenny L. Merris; a vice-president of Deutsche Bank, Ronaldo Reyes; and a research analyst of JPMorgan Chase Bank, Harold Galo. The declarations stated that defendants had no record of receiving service and were not aware of the lawsuit until March 2010.”
So, on October 28, 2010, Judge Mark E. Johnson heard the banks’ motion.
At the hearing, Judge Johnson stated:
“I’m going to deny the motion. I do believe that I am outside of the six-month limit. . . . I also don’t see the due diligence. So if you want to re-bring it under [section] 473.5, I will look at that, but at least as to this ground I have before me, [section] 473 subdivision (b), I’m denying the motion.
On December 3, 2010, defendants filed a motion to set aside the defaults under section 473.5. Defendants submitted new declarations of Reyes, Galo, and Merris in support of the motion.”
Deutsche Bank claimed the bank had “no actual knowledge of this action until in or around early April 2010 when JPMorgan Chase Bank’s counsel informed it that Plaintiff had recorded the Default Court Judgment against this property.” Deutsche Bank’s declaration claimed, “This was the first time that Deutsche Bank became aware of the existence of this action.”
JPMorgan Chase claimed that it “had no actual knowledge of this action until on or around March 2010 when JPMorgan was informed that Plaintiff was seeking to refinance the property . . . and that Plaintiff had recorded the Default Court Judgment against this property.”
This time, Commissioner Barkley granted the motion brought by the banks thereby vacating the default judgment the Plaintiff had obtained about a year earlier. Saluto then appealed the decision to California’s Court of Appeals, Fourth District, Division Two, contending that the defendants’ motion under section 473.5 was, in essence, a motion for reconsideration, and defendants failed to comply with the procedural requirements of section 1008. (Don’t worry about section 1008 for a moment.) Saluto also argued that Commissioner Barkley simply got it wrong, and that the default judgment should have been upheld.
Now, this gets kind of technical, but Section 473.5 says that when service of a summons fails to result in actual notice to a defendant in time to defend the action… and therefore a default or default judgment is entered… the defendant may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action.
Section 473.5 says that the notice of motion has to be served and filed within a reasonable time, but not exceeding the earlier of two years after entry if a default judgment, or 180 days after service of a written notice that the default or default judgment has been entered.

Basically, because JPMorgan Chase Bank said it discovered the default in March 2010 and Deutsche Bank said it discovered the default in early April 2010, but they didn’t file their motion under section 473.5 until December 2010, the appeals court found no evidence that the two banks acted “diligently” in bringing their motion for relief under section 473.5, and therefore the trial court should not have granted the motion that set aside the default judgment.
As far as complying with the procedural requirements of section 1008, mentioned above, the court said the following…
“Because we have found reversible error based on defendants‟ failure to establish diligence in bringing their motion for relief, Saluto’s additional contentions are moot.”
So, that’s that for Denise Saluto… she won, quieted her title and now she has no mortgage on her home. She may still owe the money to some entity, but the debt is unsecured… like credit card debt… whatever she owes it’s no longer tied to her home.
Pretty amazing, right? If you would have asked me last week, I would have said there’s absolutely no chance that filing for quiet title will result in your loan being unsecured. And I would have been entirely wrong because Denise Saluto just did it.

And again… did it happen because Deutsche Bank and JPMorgan Chase somehow let this slip through the cracks? Maybe. Or, was it that the banks weren’t prepared to defend the quiet title action… as in, they couldn’t find the note, or the assignment was a forged and fraudulent mess.
Honestly, I have no idea what happened here, and I don’t think anyone else can know for sure either. All we can know is what happened.
So, what could happen next?
I started thinking about what could happen from here for Denise Saluto. Would she simply walk away with her free and clear home and that would be it? Or, would the banks have another move on the chessboard that would reverse the decision and cost Denise her home?
I called around to various lawyers and other experts, asking if the banks could somehow get the decision reversed? The answer: No. The decision by the Court of Appeal is essentially final. Sure, the California Supreme Court could overturn a decision by this court, but I’m told that the chances of that happening are so remote that it’s not worth considering.
So, there are no legal maneuvers that will change what’s happened, but I can’t believe that the bankers are just going to give up and go home on this either. Maybe they will, but maybe they won’t, right? So, what else could happen next to threaten the title to Denise’s home?
Ooops, we forgot… we sold it to someone else?
I’m not saying this is going to happen, but it occurred to me that a “new owner” of Denise’s note could show up on the scene with paperwork showing they bought it from the prior owner, either Deutsche Bank or JPMorgan Chase, before all this transpired.
You know, like a surprise owner that just happens to have appropriately dated paperwork showing that they are the owners of Denise’s loan and therefore the quiet title doesn’t apply… she’s behind on her payments, and therefore they are moving to foreclose.
Would this be fraud? I would certainly think so. Would that stop the bankers from doing it? I would certainly think not. And would it work and cause Denise to lose her home?
The lawyers, however, all tell me the answer is no. None of that would happen… it simply wouldn’t work.

So, Denise Saluto does now own her home free and clear. However, it seems very likely that she still owes the amount of her mortgage as an unsecured debt. Lawyers have told me that she could potentially have the debt discharged in a Chapter 7 bankruptcy, but it would depend on a few things lining up just right, including the value of her home being less than the homestead exemption.
In general, a judgment creditor cannot force the sale of your home unless your home can be sold for an amount that would satisfy all superior liens PLUS the amount of your homestead exemption. It looks to me like equity of up to $75,000 is exempt if you’re under 65 years of age, and $150,000 if over 65, and if you’re married it’s higher still.
But, as with everything having to do with the law, there are plenty of caveats, limitations and nuances. I found many of them in the California Code of Civil Procedure Section 704.730, but as always, check with an attorney before assuming anything because my experience has been that just because it says one thing doesn’t mean that it doesn’t mean another.
Okay, so what does this mean to me?
Well, in my opinion… that’s an interesting question.
For one thing, filing quiet title did work out well for Denise Saluto, and since I would never have predicted it happening in her case, I’m certainly not going to tell you it won’t happen again in yours, because as I said earlier… I don’t know why it happened. It might have slipped through cracks, or might have been caused by other factors.
Ever since yesterday when I started reading the decision by the California Court of Appeal, I’ve been trying to come up with a reason not to file one myself.
The lawyers I spoke with all told me that you have to have legitimate doubt about who holds title to your home, or else you’d be filing fraudulently, but I don’t see that as being a problem for me or anyone else in this country whose been paying attention to the news these last few years.
I mean, since I do know that Mickey Mouse has been signing the Assignment of the Deed of Trust in most cases, and Donald Duck has been notarizing it, and since the President of the United States recently told the country that there have been thousands of fraudulent foreclosures, and with countless lawsuits alleging that Mortgage-backed securities are in fact, less filling, as opposed to tasting great… let’s just say that I would not want to be asked under oath who owns my note.
As far as my having legitimate doubts as to the holder of title to my home, I could assure any court under oath that when it comes to my hizzle, my doubt is rizzle… it’s legit. Word.
(That was me trying to be “hip,” but let’s not tell my daughter because she will be so embarrassed.)
This decision got me thinking about all sorts of possibilities, truth be told. Like, what if many thousands of people all filed for quiet title around the same time… like maybe a million homeowners… LOL. I would definitely have to go pay-per-view to see that shiznit go down.
If JPMorgan Chase and Deutsche were caught bo janglin in Denise’s case, I’d have to wager that many thousands of quiet title filings would leave them in a tizzle. (Oops, I did it again.)
So, realizing that I wouldn’t be the only one thinking this way, I went online to see how many sites there were offering to teach homeowners how to file quiet title, or represent homeowners who want to file for quiet title… and not surprisingly, there were plenty of them… some want thousands of dollars for their services, and some want anywhere from many hundreds to a couple thousand dollars for a kit that claims to help you do it yourself.
And because, even though I think it’s a long shot, I don’t think it’s more of a long shot than winning the lottery or having a slot machine pay off, so I got together with some lawyers and other experts and am putting together a comprehensive guide to filing quiet title, which won’t cost more than $100, and will offer everything the more expensive versions have to offer, and probably even more.
Will it work? I have no idea, and I’d have to guess that the answer will be no a lot more often than it’ll be yes. But, if you’ve decided to try it, at least this way you won’t have to spend a lot of money doing so. For a hundred bucks, you can spin the wheel and if it doesn’t work… oh well. And if it does… well, then… Woohoo!
(Look for the new site in the next few days at www.filequiettitle.com and www.quiettitlecalifornia.com)
If you want more information on the Mandelman Guide to Filing Quiet Title, email me at mandelman@mac.com and I’ll send you an email response with more details. The guide will be packed with easy to understand insight and instructions, tricks and tips, rules and limitations, and even sample templates to make it easy to file your own complaint with the court.
It will help you do it right… do it cheap… and do it safely. And I’ll be consulting with lawyers in each state, so I’ll have the specifics for your state included, if applicable.
I’m not saying you should do it… and after Denise Saluto’s outcome, I’m sure as heck not saying you shouldn’t. All I am saying is that I’m going to make sure that you don’t need to spend a bunch of money trying it. And it shouldn’t become the primary strategy to keep your home, because no one knows why it worked in the Saluto case… or whether it will work for you.
But, it does prove one thing fo’ shizzle… when it comes to the foreclosure crisis, no one knows what will happen tomorrow, because the only thing that’s consistent about this mess is its glaring and scandalous inconsistencies.
Mandelman out.
White Powder in Envelopes Mailed to Wells Fargo in NYC – Idiots happy it’s not toxic

Well, here we go. In our race to the bottom… our attempt to see how far we can push it before we break something… our desire to see chaos American style… ABC News reported yesterday that at least seven locations in Manhattan, “primarily Wells Fargo Banks,” according to the story, received envelopes in the mail containing “suspicious white powder,” police officials said.
Well, thank heaven it wasn’t the non-suspicious form of white powder… you know, the kind we’re all used to getting in our mail every day.
The message that arrived in the envelopes read as follows:
“This is a reminder that you are not in control. Just in case you needed a little incentive to stop working we have a little surprise for you. Think fast you have seconds.”
AP reported that the powder in the envelopes caused evacuations at bank branches, but no injuries, as if that last part mattered in the least. Idiots appear to be happy that the powder was found to be cornstarch… as opposed to Anthrax, I suppose.
Gee, now that’s certainly a relief. Whew, I guess we dodged a bullet there, didn’t we?

Manhattan police, about ready to round up the usual suspects and get a rope, initially suggested based on absolutely nothing that the envelopes could have been mailed by “militants from within the Occupy Wall Street movement.”
Luckily, a spokesperson for Occupy Wall Street denied any connection to the mailings… and that seemed to accomplish what exactly? I guess the NYPD said, “Oh, okay… sorry about accusing you guys of potentially mailing Anthrax to banks in Manhattan? Our bad.”
The police say they thought that Wells Fargo was the target of the mailings because it’s based in San Francisco, and what they described as “about half of a key dozen Occupy Wall Street members have backgrounds in Oakland, San Francisco and Berkeley… and SIMILAR INCIDENTS OCCURRED IN CALIFORNIA EARLIER THIS WEEK, police sources said.”
“A key dozen Occupy Wall Street members?” So, now there are probably a few hundred who are convinced that phrase was referring to them… perfect. And what exactly was similar about the incidents that occurred in California that no one seems to have heard anything about until now? Was it the cornstarch… the mailings… the scary message inside? How similar were these events exactly and why were they mentioned before now?
Another theory I just made up is that Wells Fargo was targeted because it’s stage coach logo is reminiscent of the old West, when Native Americans were the victims of genocide, so the FBI is said to be investigating Indian casinos in several states.
What? My theory makes every bit as much sense as theirs does.
Others on the list of potential suspects include any number of the 8 million Americans whose lives have been destroyed by the foreclosure crisis, or any of the hundred million or so that are beyond pissed over bailing out banks with trillions while leaving the country’s working class to die on the proverbial vine.
Or the commies, it could always be the commies. And let’s not forget the Jews, al-Qaeda, ex-military wackos, or a prankish band of Ivy League college students, saddled by student loans and out to have some fun. Or foreigners, don’t forget foreigners.
In other words, police had no idea whatsoever who sent the mailings.
Embarrassingly, ABC reported that the Manhattan mailings, “mainly appear to have reached low-level workers.” And New York police spokesman Deputy Commissioner Paul Browne incoherently blathered to ABC News:
“Apparently, the message was aimed at the mail room workers among the 99 percent.”
The police are saying that the mailings were intended for May Day delivery, but arrived a day early. One official, according to ABC News, inexplicably said…
”They underestimated the efficiency of the U.S. Postal Service.”
Ha! So, the joke’s really on them after all, right? Didn’t think the USPS could foil your plans with their efficient inner city delivery, now did you? Ha! So there.

I’m reporting, however, that regardless of who the mailings appear to have reached, senior executive seat cushions at Wells Fargo and other banks are all being replaced today after being soiled as the news of the mailings and their enclosed powdery substance spread through the executive ranks.
I’m also reporting that I have instructed my wife and daughter not to go inside the bank for any reason, and instead only use the ATM after hours. And I’m not kidding about that in the least.
No one should be the least bit surprised that this is happening, and it’s nothing to take lightly or brush off as nothing to be worried about… it’s scary as all hell because it’s a certainty, in my opinion, that it’s only a matter of time before people are killed in one way or the other as a result of what this country has allowed to happen to untold millions.
“This is a reminder that you are not in control. Just in case you needed a little incentive to stop working we have a little surprise for you. Think fast you have seconds.”
There’s a word for that sort of message, it’s “terrorism.” And it can strike without warning and claim the lives of thousands… and there’s no way to stop it, and no one who cares about being punished for it after the fact.
The Oklahoma City bombing, April 19, 1995, claimed 168 lives, including 19 children under the age of 6 years old. More than 680 were injured. The bomb destroyed or damaged 324 buildings in a 16-block radius, destroyed or burned 86 cars, and shattered glass in 258 buildings nearby.

Timothy McVeigh believed that the bombing had a positive impact on government policy. And what angered him then is nothing compared to the potential for rage that exists today.
During the 1930s, after the attack and attempted lynching of a judge (who was signing eviction orders) by 200 Iowa farmers who stormed into Judge Bradley’s courtroom in April 1933, the Governor of Iowa placed the state under martial law.
In Minnesota, similar degrees of civil unrest and the threat of violence led Chief Justice Hughes to declare a moratorium on foreclosures.
Expressing frank understanding that the nation’s economic catastrophe threatened political stability, Hughes remarked, “the policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worthwhile.”
Hughes found that the mortgage crisis in Minnesota justified the stay of “immediate and literal enforcement of contractual obligations” insofar as the emergency was real and no mere legislative subterfuge; the statute was designed for the benefit of society as a whole rather than particular individuals; and the legislation was temporary and no broader than necessary to accomplish its purpose. Hughes also denied that the statute violated due process or equal protection.
A foreclosure moratorium is not what we need… it is a last resort.
What we need is a fairer and more compassionate process through which we can get through the foreclosure crisis. The way in which foreclosures have been handled to-date has been wrong to the point of being barbaric, and we will continue to deny and ignore this truth at our peril.
Mandelman out.
We know they’re not evil, because they’re simply not smart enough to be evil.
In Hollywood movies, we’ve been introduced to villains that have real game. In the Harry Potter films, for example, there’s “Voldermort… The Dark Lord… He Who Shoud Not Be Named.” In the movie, “Star Wars,” we were introduced to the infamous and intergalactic, “Darth Vader.” And few will ever forget “Dr. Hannibal Lecture,” telling Clarice that he was “having an old friend over for dinner,” in “The Silence of the Lambs.”
Most everyone, I would think, has at one time or another, seen a “James Bond” movie, maybe it was “Goldfinger,” a story with a villain whose elaborate plan to use nerve gas to rob Fort Knox and ultimately steal the world’s gold, was first released in 1964. Or perhaps it was, “Live and Let Die,” in which a villain attempts to hatch an ingenious scheme to addict the world’s population to heroin, after seizing control of the drug’s world-wide production and distribution.
In real life, we’ve never had to worry about such evil actually destroying our world, because throughout our collective history, we’ve never seen a villain show up with that kind of game.
Adolf Hitler was looking somewhat promising for a few years during the 1930s, but after the Battle of Stalingrad ended in a disaster for the German troops in the early part of 1943, he was little more than a screaming lunatic with bad hair and genocidal tendencies. We’ve had our share of “empires” that for a time, appeared capable of dominating our planet, but regardless of whether we’re talking Roman, Ottoman or British… they all ultimately fell like flan.
And, although I realize that at the moment, we’re very concerned about our TBTF financial institutions having the power to destroy our nation forever, it occurs to me that it’s probably not the case, even if it does seem like it at certain moments. As far as our corporate dynasties go, if history is any sort of guide, they’ve proven to have shorter lifespans that some MLB player careers.
Don’t get me wrong, I’m not at all happy about how our government seems set on providing us with tangible evidence of its ineffectiveness on at least a monthly basis. But, it does remind me that it’s at least reasonably likely that the TBTF problem will be overwhelmed by the general incompetence of man, long before it destroys our world or way of life.
Like, it’s not at all inconceivable that five years from now we could be laughing at how we were so worried about Goldman Sachs… before the investment-bank-turned-bank-holding-company in 2008, quietly filed for bankruptcy in 2015. Remember Lloyd Blankfein, someone would say? And someone else would reply, “Was he the bald one?”
I can remember when the Vietnam War was never going to end… and then it did. I can recall a time when drugs were sure to be on the verge of destroying our country’s youth, and then they didn’t. Without an Equal Rights Amendment we would never survive as a great nation, or maybe we would. Our hostages would all die in Iran, unless they wouldn’t. And the crash of ’87, which soon morphed into the S&L crisis, was reported so severely at the time, that I never even questioned but that it would be my grandchildren that would be worrying about paying its astronomical bill… until that wasn’t the case anymore.

After that, the Internet was going to change absolutely everything… even replacing our old economy with a “new one,” or not. AOL bought Time Warner… for a year. And Enron was the corporate Titanic, that along with Tyco, HealthSouth, Adelphia, WorldCom, Arthur Andersen and a myriad of others, had led us to Sarbanes Oxley, a bill that was sure to signal the end of American business… until it didn’t.
Years ago, the Sears Catalog was a permanent institution in this country, and so was the airline, TWA… and bicycle maker, Schwinn… or camera-maker, Polaroid… and we bought albums, 8-tracks and CDs, but always at Tower Records. And yet they’re all gone today.
Remember when we might not survive Y2K, and when the president said he didn’t have sexual relations with that woman, and when Larry Craig said he had a wide stance, and when we knew there were weapons of mass destruction… even though we didn’t know for sure, but it didn’t matter because that’s not why we went into Iraq anyway, and besides al-Qaeda had cells around the world that would end our lives soon enough anyway?
Remember when Wall Street had investment banks on it, and Fannie Mae and Freddie Mac stood for fairness? When membership had its privileges, when the Catholic Church and Penn State were both safe places for boys to be, when you could press five to increase your credit limit and there were things called usury laws that made charging more than a certain amount of interest illegal?
I still remember when there was an impenetrable Iron curtain across Europe, and on its other side lived the people who wanted to kill us with their collective thinking. They’re gone now, replaced by a smaller, nuttier guy in a Members Only jacket that makes him much harder to fear.
I can remember when none of those things were thought of as fleeting… like the blips on an ever-changing landscape that time would flip, shake and erase like an Etch-a-Sketch whenever we turned our backs to enjoy a moment.

The Worst Economic Crisis Since the Great Depression…
We are now six years since the end of a real estate boom that was only around for some four years anyway, and we’re going on four years since Hank Paulson said that he needed $700 billion in unmarked small bills by morning or our gig would be up.
Since then, we’ve all watched as Secretary Geithner… his trusted ward, Lawrence of Summers, and the Professor sans MaryAnn, all ran about shoveling trillions around Wall Street, while engaging in crazy tea party inspired chatter about how, as far as U.S. homeowners were concerned, there was too much “moral hazard” involved to consider offering them any real help.
Obviously, their thinking was that by bailing out the deadbeats who borrowed the money for houses that they had now lost trillions on, collectively speaking, they would rush out and do the same thing again thinking they’d be bailed out again. And don’t laugh… that’s pretty much what they thought… and still think for that matter.
So, the announcement went out across the land in so many words. For America’s homeowners… the beatings would continue. And so they have.
The Rich Getting Richer…
About a week ago, a study showed that 93 percent of the gains since President Obama took office went to the top one percent.
By anyone’s standards, that statistic is alarming… no one can be in favor of that continuing, not even the top one percent. It’s not like it’s debatable to say that enormous income disparity between rich and poor is a problem in any society.
The question, I suppose, is whether all that’s occurred since 2007 has been part of some nefarious plot perpetrated by evil villains that might have starred in a James Bond movie, or whether the guys in charge have simply been wrong… you know, handled things badly.
Well, I think the picture is becoming ever clearer that what we have are over-confident leaders who think certain things based on what they’ve been taught and learned in the past… but they’re wrong. What they view as precedent isn’t applicable to the economic situation we’re facing today.
It’s not like the administration wouldn’t have preferred to have created more jobs and stopped more foreclosures, right?

To those in charge it’s a duck because it looks like a duck, walks like a duck and talks like a duck… but it isn’t a duck… it’s a goose, and a flightless one at that. In the parlance of business books, it’s a “black swan.”
The Geithner/Summers/Bernanke clan believed (and continue to delude themselves into believing) that by pumping trillions into the financial system and into the TBTF banks, two things would result:
- The banking system would stabilize.
- The economy would start to grow again, as measured by GDP.
The funny thing is… and by funny I mean inconceivably sad… that you could argue that neither outcome materialized, or you could say that the first objective was achieved, in an accounting-rules-don’t-matter sort of way. But, no one could argue that the second goal was reached in the least.
Basically, Geithner and Bernanke thought that lowering rates pumping liquidity into the financial system would stimulate growth because it has in the past. They sacrificed homeowners thinking that once the financial system was stable again, the rest of the economy would be pulled out by the health of the financial system.
So, here we are… the growth they counted on failed to materialize, as I’m sure they would phrase it, but of course what truly failed to materialize were their critical thinking skills because there was no chance that their plan was going to work in terms of creating real growth.
It’s simple really.
There are fewer of us working, so we’re producing less and therefore we’re earning less… and so we’re spending less. And that means we’re paying less in taxes to both state and federal coffers, which means the states are spending less, and lower state spending means reduced GDP… do you see the dynamic at work here?
Take a quick peek at what’s happening in Spain today and you’ll see clearly the fallacious nature of banker-think.
Unemployment in Spain is now 25 percent… among the country’s youth, it’s 50 percent, but the European banks to which Spain owes money are demanding that Spain reduce its deficit spending by 5.5 percent over the next two years. Now guess why.
They want Spain to do that so that the country will have enough money to make its payments to the bankers of course.
But, you might ask… if Spain reduces its GDP by 5.5 percent over the next two years, which is the same as reducing its spending by 5.5 percent, won’t that cause unemployment to rise even higher?
Well, of course it will… and very well done there indeed.
And if the country’s unemployment goes even higher, won’t that reduce the country’s GDP, as fewer people will be working, and won’t that also reduce the revenues that go into the country’s coffers?
Yes, that’s right again!
But, won’t fewer people working result in property values falling even further causing more people to go underwater and into foreclosure driven by fewer able or ready to buy homes?
Very good, right yet again. This is so exciting…
And if property values fall, and more people default, won’t that cause further harm to the Spanish banks that made the loans that are increasingly defaulting?
Yes, yes, yes… keep going…
Well, the more the Spanish banks lose as a result of property values falling, and while unemployment rises, the less credit the banks will provide, and won’t that also reduce GDP even further?
I think you’ve got it… now bring it all home for me…
… and won’t all of that combined actually reduce the amounts that Spain will have to make payments to the central and EU bankers who are the ones demanding the 5.5 percent reduction in government spending in the first place?
Thank you, Lord! Why yes, I would have to say that would be the case.
Do you see ANY OTHER OUTCOME that was POSSIBLE?
Please… take your time… the answer is NO, NO, NO.
So, why are the EU bankers doing this? Isn’t it stupid?
Yep. It’s stupid.
So, why are they doing it? Are they evil? Do they have a nefarious plan?
No, it’s just stupid. But the EU bankers are just like Geithner, Summers and Bernanke, they are forecasting Spain to have GDP growth this coming year because they are being bailed out.
But the bailout funds are only to repay the EU bankers that are lending them in the first place.
That’s correct.
So, how can Spain grow its GDP as bankers are forecasting they will?
We already covered this point… THEY CAN’T… and wont.
And we’re doing the same thing here at home, the only difference being we can print money… or rather the Federal Reserve can… and then it can lend it to us and charge us interest, albeit a small amount of interest… it’s still interest.
That printing and lending to the U.S. government machine is what gets called “quantitative easing,” or a “twist,” or whatever new not-in-the-Scrabble-dictionary type word they come up with next. It has a tendency to prop up the stock market, which is why the rich are getting richer as the rest of us die on the proverbial vine.
And just like the EU bankers, Geithner and Bernanke are forecasting GDP growth once again for the U.S. but once again none of us will feel it because we’re not rich and making trillions as the stock market remains artificially propped up by the Fed’s money creation and lending scheme.
The best part is that, all the while, foreclosures will accelerate and continue unabated… actually much faster than before, now that the banks have their settlement and to large degree can’t be prosecuted for their foreclosure related improprieties… not that such prosecutions were going on anyway.
The European bankers are no different than is the FHFA, which is led by Ed DeMarco, the guy stopping Fannie and Freddie from reducing principal balances of mortgages. He says he won’t do it because his job is to return Fannie and Freddie to profitability, and all that means is that in his forecasts… even if principal is not reduced… we’ll all still pay off the debts, or at least enough of us will that it’s not worth writing down the amounts owed.
Translation: He’s forecasting growth in future years, just as the European bankers are for Spain and elsewhere. He’s wrong, and so are they. He won’t share his assumptions used in his forecasts, but if he was forecasting that more and more will default if principals aren’t reduced, then he’d be concluding that they should be.
So, you might ask… what should we do?
Well, for one thing, I’d suggest yelling out: “Look out below! We’re coming down… and coming down fast,” in order to avoid hurting those below us on the economic ladder… you know, the poorer people.
It’s not that they can actually do anything to get out of the way, so they’ll still get crushed by our fall, but I still think it’s rude not to yell. “Look out below!”
But, that wasn’t my point…
What I wanted to say is that we shouldn’t despair. We should keep up and even intensify the fight because if you understood what’s going on, then one thing should be clear…
They’re not evil… they’re wrong. And we can know they’re not evil, because they’re simply not smart enough to be evil.
Mandelman out.
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.
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.
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.
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.
MM PODCAST: From Fannie Mae to FHA – Edward Pinto Wants Government Out of Housing Finance

Edward J. Pinto
Former Chief Credit Officer, Fannie Mae
Resident Fellow, American Enterprise Institute
An executive vice president and chief credit officer for Fannie Mae until the late 1980s, Edward Pinto has done groundbreaking research on the role of government housing policies in the lead-up to the financial crisis. His data have revealed striking facts about the contributions of housing policy to the mortgage crisis.
Two of his major research papers have been submitted to the Financial Crisis Inquiry Commission: “Government Housing Policies in the Lead-up to the Financial Crisis: A Forensic Study,” and “Triggers of the Financial Crisis.”
Today, Ed is continuing his work on how housing policies impacted the financial crisis and researching policy considerations and options for rebuilding our housing-finance sector. He earned his B.A. at the University of Illinois, and his J.D. at Indiana University.
Ed and I first came in contact with each other a couple of years ago, and although we haven’t always agreed on everything, I have followed his work closely and have come to have a great deal of respect for his work and for him as a person.
On this Mandelman Matters Podcast, I ask Ed about the results of his extensive research into the FHA, which he refers to as the “new sub-prime,” and “the next bailout.” His extensive study of the FHA’s data in terms of leverage and default rates will flat out shock you. And when you hear him explain how the government is perpetuating the foreclosure crisis… well, to say it’s infuriating would be an understatement.
Okay, so make sure your speakers are turned up and I’d make sure you’re sitting down to avoid falling over when you hear some of the things Ed Pinto has to say.
~~~
This Mandelman Matters Podcast is presented in two parts. Part 1 is just under 60 minutes and focuses on the FHA and the big picture facts about our government’s role in housing finance, and Part 2 is about 40 minutes, and goes further into the causes of the crisis, and where Ed sees us going from here.
Like I said, you may not always agree with his conclusions or cures, but his research is always fascinating, his facts are bulletproof, his experience as an “insider”at Fannie Mae is invaluable… and I don’t think there’s any question that his motives are pure.
Just click on PART ONE below to start listening to…
From Fannie Mae to FHA –
Why Ed Pinto Wants Government Out of Housing Finance
A Mandelman Matters Podcast
And Coming Soon…

Two of Ed’s latest articles:
Truth in Government Lending is Long Overdue
Empty promise: The holes in the administration’s housing finance reform plan
~~~
And you can SUBSCRIBE to Ed Pinto’s blog and FHA WATCH bulletins.
He can be contacted via Email at: edward.pinto@aei.org
Mandelman out.
MM PODCAST: From Fannie Mae to FHA – Edward Pinto Wants Government Out of Housing Finance

Edward J. Pinto
Resident Fellow, American Enterprise Institute
An executive vice president and chief credit officer for Fannie Mae until the late 1980s, Edward Pinto has done groundbreaking research on the role of government housing policies in the lead-up to the financial crisis. His data have revealed striking facts about the contributions of housing policy to the mortgage crisis.
Two of his major research papers have been submitted to the Financial Crisis Inquiry Commission: “Government Housing Policies in the Lead-up to the Financial Crisis: A Forensic Study,” and “Triggers of the Financial Crisis.”
Today, Ed is continuing his work on how housing policies impacted the financial crisis and researching policy considerations and options for rebuilding our housing-finance sector. He earned his B.A. at the University of Illinois, and his J.D. at Indiana University.
Ed and I first came in contact with each other a couple of years ago, and although we haven’t always agreed on everything, I have followed his work closely and have come to have a great deal of respect for his work and for him as a person.
On this Mandelman Matters Podcast, I ask Ed about the results of his extensive research into the FHA, which he refers to as the “new sub-prime,” and “the next bailout.” His extensive study of the FHA’s data in terms of leverage and default rates will flat out shock you. And when you hear him explain how the government is perpetuating the foreclosure crisis… well, to say it’s infuriating would be an understatement.
Okay, so make sure your speakers are turned up and I’d make sure you’re sitting down to avoid falling over when you hear some of the things Ed Pinto has to say.
Two of Ed’s latest articles:
Truth in Government Lending is Long Overdue
Empty promise: The holes in the administration’s housing finance reform plan
~~~
And you can SUBSCRIBE to Ed Pinto’s blog and FHA WATCH bulletins.
He can be contacted via Email at: edward.pinto@aei.org
~~~
This Mandelman Matters Podcast is presented in two parts. Part 1 is just under 60 minutes and focuses on the FHA and the big picture facts about our government’s role in housing finance, and Part 2 is about 40 minutes, and goes further into the causes of the crisis, and where Ed sees us going from here.
Like I said, you may not always agree with his conclusions or cures, but his research is always fascinating, his facts are bulletproof, his experience as an “insider”at Fannie Mae is invaluable… and I don’t think there’s any question that his motives are pure.
Just click on PART ONE below to start listening to…
From Fannie Mae to FHA – Why Ed Pinto Wants Government Out of Housing Finance
A Mandelman Matters Podcast
And Coming Soon…
Mandelman out.
Ellen Brown, President of the Public Banking Institute, Has a Plan – A Mandelman Matters Podcast

Click cover to buy on Amazon.com
ELLEN BROWN
EXPLODING THE MYTHS ABOUT MONEY
Author of the book, “Web of Debt“
President of the Public Banking Institute
A Mandelman Matters Podcast
If you’re not already familiar with Ellen Brown, then I might as well just go ahead and say: “Your welcome,” because I can’t imagine anyone not liking this prolific blogger, author of 11 books, attorney, and President and Chairman of the Public Banking Institute. Ellen and I have been reading each others’ work for some time now, as it turns out, but we’ve only gotten to know each other personally since first speaking on the phone only a few months back.
I think it took me about five minutes into our first conversation before I asked her be my guest on a Mandelman Matters Podcast. What she has to say about public banking is fresh and fascinating… and she says that something like 17 states have public banking up for votes this year… and I did not know that.
Excerpts from the site: Webofdebt.com and from the book itself…
“The 1890s were plagued by an economic depression that was nearly as severe as the Great Depression of the 1930s. The farmers lived like serfs to the bankers, having mortgaged their farms, their equipment, and sometimes even the seeds they needed for planting. They were charged so much by a railroad cartel for shipping their products to market that they could have more costs and debts than profits. The farmers were as ignorant as the Scarecrow of banking policies; while in the cities, unemployed factory workers were as frozen as the Tin Woodman from the lack of a free-flowing supply of money to “oil” the wheels of industry. In the early 1890s, unemployment had reached 20 percent. The crime rate soared, families were torn apart, racial tensions boiled. The nation was in chaos. Radical party politics thrived.”
###
“Our money system is not what we have been led to believe. The creation of money has been “privatized,” or taken over by private money lenders. Thomas Jefferson called them “bold and bankrupt adventurers just pretending to have money.” Except for coins, all of our money is now created as loans advanced by private banking institutions — including the privately-owned Federal Reserve. Banks create the principal but not the interest to service their loans. To find the interest, new loans must continually be taken out, expanding the money supply, inflating prices — and robbing you of the value of your money.”
###
Web of Debt unravels the deceptions in our money scheme and presents a crystal clear picture of the financial abyss towards which we are heading. Then it explores a workable alternative, one that was tested in colonial America and is grounded in the best of American economic thought, including the writings of Benjamin Franklin, Thomas Jefferson and Abraham Lincoln. If you care about financial security, your own or the nation’s, you should read this book.
###
And there’s no question about it, we’re NOT in Kansas anymore…
I think everyone is going to really enjoy listening to Ellen discuss the financial issues of the day… from the Wall Street meltdown of 2008 and how we handled things from there, to the impending default of Greece and other members of the EU… Ellen knows what she’s talking about, and a joy to listen to, not only because she makes the most complicated economic concepts easy to understand, but because she makes them personal, never academic.
This podcast is presented in two parts, so we might as well turn up those speakers and get started. I can promise you this… you’ll never look at “The Wizard of OZ” the same way again… and it’s just fascinating to me that we’ve been here before in this country… more than once.
Click the Scarecrow for Part 1:
And the Tin Man for Part 2!
Mandelman out.
Max Gardner & Nye Lavalle Together in Concert – A Mandelman Matters Podcast


It’s almost been 15 years since Max Gardner and Nye Lavalle met at a conference sponsored by National Consumer Law Center that was held in Colorado, and quickly found themselves viewed as, well… heretics might be the right word. The two became fast friends based on their shared views related to the mortgage servicing industry… and I think both knew that one plus one was about to equal eleven.
Nye was a successful sports marketer and entrepreneur, credited with correctly predicting that Nascar and figure skating would draw huge crowds back in the 1990s, but after being forced to contend with his own mortgage mess, he focused on learning everything about the mortgage industry. As Gretchen Morgenson said in her article about Nye that appeared recently in the New York Times… “In hindsight, the problems he found look like a blueprint of today’s foreclosure crisis.”
It’s hard to imagine two people more tenacious that Nye and Max. Nye became a shareholder in Fannie and stayed on Fannie’s case for two years until finally the GSE hired a DC law firm to investigate his claims. The 147-page report that resulted from that investigation verified that Nye’s suspicions were correct.
Having Nye Lavalle and Max Gardner together is a rare event. Together, they would have to be considered the founding fathers of today’s foreclosure defense movement, so this is an opportunity to learn how it all began and where two of the country’s leading experts see things going from here. Turn up your speakers because it’s time for a very special 2-part Mandelman Matters Podcast… Nye Lavalle & Max Gardner Together in Concert.
Mandelman out.
Bringing Up the REAR – Charles Gasparino, Fox Business Network

“It’s hard to imagine a less-deserving group of victims: people who gambled during the housing bubble by purchasing homes with borrowed money that they knew or should have known they couldn’t afford, but who are now able to stay in the homes they should have never bought because of what amounts to paperwork errors on the part of the nation’s big banks.”
That’s how Fox Business reporter, Charles Gasparino opened his column that appeared in the New York Post back on February 10, 2012. Titled, “A Deadbeat Bailout,” he was writing in response to the settlement agreement between 49 state attorneys general and the five largest banks that had just been announced.
“But that’s essentially what went down, thanks to the Obama administration’s latest re-election gimmick — the nationwide mortgage-foreclosure settlement.”
Now, I’ll bet you think I’m going to tear this guy apart for being such an insensitive idiot, right? Well, you’re wrong. In fact, I’ve decided that “the Gasp” is absolutely right on target with his analysis of the situation.
It’s clear what happened here…
Millions of middle and working class people, and some richer folks too, all decided at the same time that their lives were not exciting enough. They longed for the days when they were losing their retirement savings through investments in profitless dot-coms attempting to monetize eyeballs, and whose stocks were regularly pumped up by analysts paid for their favorable opinions. Yes, those were some good times.
So, they all got together and decided they would take up gambling in a much bigger way than ever before… they’d literally bet their farms. They started gambling with their entire net worth AND the homes in which they lived, and perhaps because they were relatively new to the whole gambling thing… or maybe because they were once again following the lead of Wall Street’s investment bankers… they lost their shirts and their farm houses.

Today, as a result, there are literally millions of these irresponsible failed gamblers aimlessly wandering around the country looking for justice… very much like Kwai Chang Caine in the 1970s television show, Kung Fu…
Young Caine: Is it good to seek the past, Master? Does it not rob the present?
Master: Only banks may rob the present. You must try to rob the banks.
Caine: But we are merely deadbeats, what about a bailout?
Master: For that you must seek out the one they call “Obama.”
Caine: But was it not Obama who bailed out the banks?
Master: Yes, he did my son… along with the second Bush. But, have you not heard of “the election?”
Caine: No, Master, I have not.
Master: Well, when you can snatch the election from Obama’s hand, then you will receive the bailout.
Okay, Charlie… work with me here… you’re fluttering all over the place like Woodstock, that little yellow bird that hangs out with Snoopy in a Charlie Brown cartoon. And it’s not very becoming for a journalist of your stature.
Let’s start with your initial premise… it’s the “Obama administration’s latest re-election gimmick.” No question about it… you nailed that one. And the whole thing about how the administration “would like us to believe that the nation’s largest banks are finally paying for their bad behavior during the housing bubble and its aftermath, etc. etc.” Bingo… you nailed that part too.
After that, however, you started getting your facts all mixed up. For one thing, the banks still haven’t signed any final settlement agreement, and you have to know that. For another, the banks aren’t paying out $26 billion to anyone, under any set of circumstances. I think cash out the door is about $5 billion, and if it reaches that amount net, I’ll pick up a cake and celebrate.
Here’s how it appears to break down… of the $5 billion, there’s $4.25 billion that goes to the states with the $750 million balance going to the federal government for whatever and who cares. Now, from the $4.25 billion you have to subtract the $1.5 billion that’s going to the deadbeats who lost homes in faulty and fraudulent foreclosures between 2009-2011.
And I’m with you on this “robo-signing” nonsense… I mean, the only reason they call it “forgery” is because someone forged someone’s signature… what’s the big deal about that? I mean, if I had a nickel for every time I forged an affidavit… I mean, grow up. And don’t even get me started on the whole ‘standing’ thing. Just because I can’t prove I own a house means I can’t evict the deadbeat living there? That’s just stupid.
Anyway, the deal is supposed to pay out $1,500 – $2,000 per deadbeat, and I realize that you and Dick Bove are concerned because you know these people are deadbeats, but apparently the Obama administration and the AGs do too, so calm down.
First of all, you have to realize that five or six million have lost homes to foreclosure during the last four years. But, the settlement only applies to about a million or a million and a half of the “victims.” To cover everyone equally they’ll only be getting $1,500-$2,000 each, which really isn’t bad for fraudulently foreclosing on a home. If you think about that way, it’s kind of a deal. I don’t know about you, but I’d be willing to throw in two grand of my own money to watch Diana Olick get tossed out in the street… just to have some fun on a Sunday.
And even if we assume that you’re right and the “fraud” being talked about only amounted to insignificant dalliances with meaningless paperwork, I think that message is sure to be heard loud and clear when, as compensation for losing a home, someone picks up a check that’s two grand shy of the downpayment required to lease a new Hyundai. Just think about it… when it comes to “victim compensation,” few things say “insignificance” better than half the downstroke on a leased Hyundai. I guess you could spit in the person’s face at the same time, but that would require hand delivering the checks and who wants to go to that sort of trouble.
I’m not sure how to handle the five percent issue though. You said that, “95 percent of the victims weren’t victims at all,” but that means that five percent were? Well, that’s kind of a bummer, right? They got tossed out of homes, but really shouldn’t have? That sort of sucks, wouldn’t you say? I mean, okay… I guess on Wall Street it’s also sort of hysterical… like, I hate it when that happens. I guess it’s not that big a deal though, I mean in 10 or 15 years they’ll be right back where they were, mortgaged to the hilt in some spring-loaded, snapping turtle of a loan. And hey… stuff happens, right?
I have no idea how they’ll divide the remaining $2.75 billion among the 49 states, if divided evenly it’s about $56 million each. Not that they’ll do it that way, but it’s worth noting that in California, that amount would cover one year of incarceration costs for a little over one-half of one percent of the state’s prison population.
My prediction is that states will end up taking whatever they get and putting it towards the currently incalculable and certainly undisclosed budget deficits coming in 2013 and 2014. One or two states have already said they’d be doing that, and you’ll no doubt be happy to hear that Ohio is going to use much of their share to demolish foreclosed homes.

I know you’re concerned about what we teach this generation of homeowners, because as you said, “If there are no consequences to risk, why not just roll the dice again and again?” Well, I can’t think of anything that’s more effective at teaching ex-homeowners a valuable lesson… I mean, if you get thrown out of your home… just so the bank can tear it down… well, if you didn’t know it already, you know you’re a deadbeat for sure after that.
But, either way… whether the money goes to state budget deficits, or pays to tear down homes… or even if they end up sliding a grand or two into the pockets of some number of ex-homeowners, I really don’t think it’s anything to get all worked up over. I mean, yes… technically it’s still a bailout, but as bailouts go, it’s fairly meager. Besides, I don’t think we have to worry that the recipients of the two thousand dollar checks are going to stash their windfalls in Cayman National or anything, so it’ll just bolster the demand deposits at the major U.S. banks where it can be eaten away by fees and 29 percent interest payments. Worst case, they’ll spend it on an iPad, use it for the down payment on a new car, or maybe repay a student loan, so Wall Street types really should relax.
Most importantly, the people that are being refinanced that are underwater aren’t the “victimized” deadbeats; you got this whole part wrong. The people that are being refinanced are current on their payments… they’re underwater, yes… but they’re current. Refinancing them is the right thing to do… if you’re the bank or maybe the government. For those homeowners, however, it’s pretty much the equivalent of handcuffing them to the bedframe and setting the house ablaze on your way out.
And, although I know that they’re talking about refinancing, but lets just wait and see what happens when a homeowner is presented with a refi in the amount of … $400,000… and the place across the street just sold for $178,000. You’d have to get me drunk before I’d sign that loan, and my guess is others won’t rush to sign theirs either. And that assumes that the banks are actually going to be offering 200% LTV refis, because there’s certainly no indication of that happening to-date.
The rest of the money, something like $17 billion or slightly more, is supposed to go to foreclosure prevention, and that includes principal reductions. And, I’m happy to be able to say that within a week or two of the settlement having been announced, I received and confirmed reports that Bank of America has already started offering its borrowers loan modifications that include some very significant principal reductions. In fact, one lawyer I know that helps homeowners through the loan modification process just told me that of the last 5-6 modifications that he saw come from BofA, ALL included principal reductions to current market value.
(And, by the way… Ocwen, although not a part of the AG settlement, has been granting principal reductions under its “Shared Appreciation Modification,” or SAM program for some time now. It’s not part of a bailout for deadbeats, however, it’s because they have people who can do math.)
But once again, Bank of America as large as they may be, is not America’s $10 trillion residential mortgage market, and since neither Freddie, Fannie or FHA are participating in the principal reduction part of the plan, I’d say we’re in very little danger of doing anything terribly beneficial for deadbeats on a widespread basis. Besides, even if the government and the bankers, for the first time ever, actually fell into something productive in this regard, $17 billion in principal reductions, or $40 billion for that matter, which is the other number being tossed around for whatever reason, would be like removing sand from the beach with a teaspoon, when viewed in the context of $1 trillion in underwater loans.
So when Big Dick Bove says: “What this settlement did was to help 1 million people who were deadbeats,” it’s not really the case. Okay, sure… maybe a few deadbeats are technically getting a tiny bit of help, but I’m confident that we’ll be pulling the rug out from under them before anything would rise to the level of actual help. Let Dick know… I’m sure he’ll be relieved to hear it.
Also, I’m wondering something… when you say that, “foreclosures are a necessary ingredient to the housing market’s recovery,” how many do you figure we’re going to need in order to really “recover?”
I only ask because we’ve had something like 6-8 million so far, Amherst Securities says about 11 million are coming. Do you think 20 million foreclosures, roughly one out of four mortgages in this country, will that be enough to get my equity back and put us on easy street once again? If not, maybe we should start lobbying the Obama administration to extend that HAMP loan modification thing, because that sure was effective at generating foreclosures. Although, maybe FHA will be able to pick-up any slack. They’re numbers certainly look promising, if the last couple of years are any sort of gauge.
Let me know… I’m anxious to hear your thoughts.
Mandelman out.
Frank & Brian in Arizona for Spring Training: Think… Not, Work… Not.

Look, I like Frank and Brian of Think Big/Work Small… I really do. A lot. In fact, I would say that we’re friends.
But, seriously guys… after reporting the facts on today’s video story, which include that banks are running the other way from mortgage lending, and that the federal government is something of an uncertain mess related to mortgage lending, you’re concluding in this video that “we might make it through,“ and, “we’re gonna’ find ourselves in a recovery,“ because… drum roll please…
“… something’s gotta’ give?”
You guys and your technical talk. Click “PLAY” and see what I’m referring to before reading on…
Now, I like attending Spring Training in Arizona as much as anyone… probably more than most. But, after touching on the exodus from mortgage lending by the largest commercial lenders… a house in Gary, Indiana actually BLOWING UP while being shown by a Realtor (although reportedly, not for any nefarious reason… just an explosive coincidence), the federal government’s uncertain future as related to interest rates and the bond market, and a home in Arizona that you claim will sell for $290,000, but that can be “lived in for a couple hundred bucks a month”… assuming, of course, that you can find a “granny” willing to pay a grand a month to rent the anything-but-grand, “granny flat,” and someone looking to euthanize a harras of horses by boarding them in the middle of the Senoran Desert for $500 a month… after all of that, you found a way to conclude that we may have hit bottom in the housing market?
And the thinking behind your conclusion is that Fortune magazine ran someone’s press release and all in you figured that, “… something’s gotta’ give?” I mean, fellas… I like Spring Training… and I like the beer they serve at Spring Training too, but… seriously?
And what was that about the inventory of homes being at normal levels? Hysterical. Or, the absolutely precious comparison of the number of homes sold in 2011 with the number sold in 2010? I’m not going to say anything more about those “stats” because… well, because we’re friends, that’s why. In fact, I wasn’t going to say anything about the whole video, except that I became afraid that if no one did, it might lead you guys to believe that no one like me is paying attention and Lord only knows what could happen from there.
See, here’s the thing… the “granny flat” for a grand… well, not so much.
I checked on Trulia… for about three minutes… and for an asking price of $41,500, Granny could have bought the 1829 square foot home with a pool, which is located at 8224 West Flower Street, Phoenix AZ 85033 described below. Apparently, it’s sold… but just as an example…
“Great 3 bedroom, 2 bathroom home in Phoenix features a pool with a large, near 8,000 square foot lot size. This Great 3 bedroom, 2 bathroom home also has a full bath master bedroom, guest bedrooms, fireplace and a large covered patio round out this nice home.”
Or, throw caution to the wind and go for this one at $46,500 located at 7555 West College Drive, Phoenix… I’m told it’s also been sold, but the pool is just gorgeous, by the way…
This is a fantastic 4 bedroom 2 bathroom home in Phoenix. This 4 bedroom 2 bathroom home features include; master bedroom with french doors, gated pool in the backyard, patio, and very spacious floor plan.
But, I realize that in your $290,000 example, you were talking 5 ACRES. So, how about this one with 9 ACRES for only $57,000, which is located at 2933 West Palmaire Avenue, Phoenix. It’s got central air and heat and looks pretty darn nice from the photos. My best guess puts the monthly payment at something like $335/month, so with the $665 Granny has left over, she could buy and board her own horse.
Even though it says “Most recent information provided by epropertysites.com on 03/20/2012 03:37 AM:” I’ve been informed that this property is also long-since sold, but still… I’m just saying…
- Price: $57,000
- Status: For Sale
- MLS/Source ID: 4630950
- 4 Bedrooms
- 2 Bathrooms
- 2,038 sqft
- Single-Family Home
- Built In 1971
- Lot Size: 9.0 acres
- Pool
Now, I’m not trying to say that it’s in any way comparable to the one you focused on… yours is probably at least $233,000 nicer (even if it is 4 ACRES smaller), and of course Granny would have to live somewhere else if she wanted to smell horses living outside her door in 120 degree heat. And besides, well… heck… it’s sure as shootin’ that I’m no real estate expert and the only thing I know about a mortgage is how to get one without reading it.
And if you really wanted to go all out, you could have taken the leap to $145,000 and had 10 ACRES and a POOL… in a nice neighborhood to boot, at 3149 McRae Way in North Phoenix… and yes, I’m told this one is also sold, but just as a starting place…

- Price: $145,000
- Status: For Sale
- MLS/Source ID: 4597515
- 3 Bedrooms
- 2 Bathrooms
- 1,842 sqft
- Single-Family Home
- Built In 1979
- Lot Size: 10.0 acres
“Gorgeous home in North Phoenix, Country Ridge. This 3 bedroom, 2 bathroom beauty features slate tile in the living areas and kitchen, granite counter tops, river rock fireplace in the living room, and tiled bathrooms. Back yard is perfect for entertaining. Covered paver patio, elevated patio in yard, pool and lush landscaping. Centrally located. This Phoenix home is located in the Deer Valley Unified School District with neighboring schools such as Desert Valley Elementary and Jr High and Deer Valley High School. Must see. Call Corinne Hale for more info at 480-420-REAL.”
And this one, last year anyway… was a bit of a slow mover… you know, like yams on Thanksgiving…
“Added on Trulia: 180+ days ago“
Call me crazy, but I’m thinking… should you be interested… you could have probably thrown in an offer at least a smidge under the asking price of $147k. I don’t think you’d be at too much risk of insulting the owner.
And, lest you think you need to find distressed properties in this category, go up to an asking price of $207,000 and you might have had this beauty… not a short sale, just a regular listing… on 8 ACRES, and again with a POOL… and it even has a “mother-in-law” deal with separate entry, so she won’t bother the rest of the house when she comes in late after a night on the town. It’s also no longer on the market, apparently Trulia isn’t the best place to go house hunting, but I’m guessing there are more where this one came from, wouldn’t you think?.

- Price: $207,000
- Status: For Sale
- MLS/Source ID: 4492330
- 4 Bedrooms
- 3 Bathrooms
- 2,121 sqft
- Single-Family Home
- Built In 1963
- Lot Size: 8.0 acres
- Pool (very nice)
PRIDE OF OWNERSHIP NEIGHBORHOOD-HIDDEN IN DEAD END Cul-de-sac. Mother-N-Laws area with separate entry/exit and bathroom. Extra large CORNER LOT adjacent to wash and public walking-jogging trail with access to the MOUNTAIN PRESERVES. SPLIT GUEST QUARTERS FROM OTHER BEDROOMS-TILED FLOORS- Great CURB APPEAL WITH REDBRICK VENEER COURTYARD ENTRANCE. FORMAL LIVING ROOM-FAMILY ROOM. Beautiful FIREPLACE. Beautiful Pool and block fencing. Existing tenant on month-to-month lease. NOT a SHORT SALE or Lender/Bank Owned property.
So… as far as being at “the bottom,” as Fortune magazine would have us believe, let’s see… the home in your video had a loan of $733,000… and you think it’s going to sell for $290,000. If it does sell for $290,000, then the next time it’s in foreclosure, which I’d guess would be by 2014 at the latest, it’ll pop back up on the market around… hmm… let’s see… carry the three, minus 14… at around, what do you figure… $149,900? No? Okay, what about $169,900? $199,000… $229,000… maybe?
Who knows… trying to pick the bottom has long since proven itself to be a fool’s errand anyway, right? It certainly should have by now. My advice would be to try buying on the way up. Missing the bottom by a few bucks as prices rise by maybe four percent a year can’t hurt all that much, but finding out that the bottom isn’t actually $290,000, but instead is actually $90,000… why that just makes you part of the next wave of foreclosures, and Dudes… we all know how much fun that can be.
However, all of that being said, here’s a marketing idea… why not find whoever wrote the article in Fortune and see if he or she is interested in making an offer on the $290k pad with the potential for hot horsey home rental income? Let me know and I’ll take down this post immediately. It’ll be fun to watch…
look… I hate being a porcupine in a balloon factory, so I’m not trying to take anything away from the current numbers that are certainly better than they’ve been in the recent past. In fact, I’m an optimist by nature, so I hate being the one that comes off otherwise.
Now, that doesn’t mean that people shouldn’t buy homes in the valley, but the structural problems we face haven’t changed, so I see no possibility that we aren’t going to see some continued weakening in the housing market both in the Phoenix area and throughout the country.
However, nothing goes down in a straight line.
For example, the Dow nearly doubled between March of 1935 to March of 1937 as the economy appeared to be back on track, but it gave up those gains the following year in a sharp, violent slide as a new recession pushed unemployment back near 20%. From there the DOW puttered along for the rest of the 1930s, never coming close to recapturing its March 1937 high.
Since our economy went off a cliff in 2007 we’ve had several periods during which “experts” have proclaimed that the worst is behind us… none has been anywhere close to correct… many have a vested interest in what they’re reporting. I understand that optimism is a hard thing of which to let go, but the result of such blind optimism is that we continue to fail to deal with the structural problems that will continue to drag us back from any real recovery until we do.
Lending in this country is, in a phrase, a complete train wreck. To begin with, the federal government has taken over huge swaths of consumer lending, most notably the $10 trillion home mortgage market. The government’s share of new loans now approaches 100%. Today, the three fastest growing government insurance programs are the FHA, the USDA’s single-family guarantee program, and Ginnie Mae. FHA is flat out bankrupt and after the election will be making headlines as the next giant bailout. Over the last few years it’s become the new sub-sub-prime. It’s leveraged at a little under an eye-popping 1,000 to one, which dwarfs Fannie’s previous record of 174 to one… and we know how well that’s working out.
The US Department of Agriculture’s (USDA) single-family guarantee program is the poster child for underpricing risk. A borrower with a FICO score of 620 (a score in the twentieth percentile) is able to get a zero down payment loan of say $150,000. The all-in cost of the USDA loan is at least $12,000 below what Freddie Mac would require for the same borrower paying five percent down. What’s going to happen here shouldn’t be much of a mystery.
We haven’t had a private securitization of mortgage debt since 2007, and we won’t have for a long time… certainly not until we correct the inadequacies of the system that created our current economic catastrophe. That means a market dependent on the government for essentially all lending, and that’s just not good. The credit markets remain broken and we won’t see a real rebound until they have been substantively repaired.
Demand for residential real estate is simply going to be much lower than at any time in the past… more than half of Arizona is still underwater and therefore unable to move. First time buyers are delaying family formation and therefore purchases of homes. The unemployment picture is little more than pre-election propaganda. And foreclosures were simply suppressed last year as banks awaited the settlement with the state AGs… they’re headed higher as we speak.
That makes some comparisons between 2010 and 2011 appear favorable, but it is a meaningless illusion… similar to the illusion of a housing rebound in 2009-10 when we saw the impact of tax incentives and the Fed buying trillions in mortgage-backed securities.
Add to those factors the demographics of our aging baby-boomers, 78 million of us who will de facto be moving less and downsizing as we age… and the certainty of a European default at some point in the next couple of years, and it’s just not anywhere near as pretty a picture as we’re going to have painted for us during the election year that’s ahead.
And all of our lackluster data is occurring in an environment of record low interest rates. What do you suppose will happen to the housing market as those rates rise? Defaults will unquestionably spike once again, and credit will tighten even further. Prices simply have to fall farther before demand will increase enough to stabilize prices, let alone support any real broad based appreciation.
But again… nothing goes down in a straight line, so there will be moments where things will feel like the worst is behind us… followed by times where it will feel like it’s not.
example of a home that had a $733k mortgage that will now sell from a listing price of $290k is just goofy. What it was, in terms of its price in the past, is entirely irrelevant. Real estate prices are not set based on their past price, no more than stock prices are priced that way. And as to whether $290k is some sort of bottom is, as I said, a fool’s errand. Some may choose to believe that it is a bottom, and they’re certainly entitled to their view, but it’s not a sound methodology for making buying decisions in today’s economy.
And did you see the “granny flat” that came along with that house Frank and Brian were showing? The one they claim will rent for a grand a month? I have a friend who recently rented a home in Glendale that’s about 2500 square feet… has a lagoon pool, a 6-hole putting course in the back yard, a wonderful kitchen, incredible patio, cathedral ceilings, etc. etc. It’s renting for $1350/month. If that Frank and Brian’s “granny flat” rents for a grand I will make you a watch out of wood. And as far as finding 5 horses to bring in $500/month… well, don’t even get me started.
For $290,000 there’s a whole lot you can buy in Maricopa County and five undeveloped acres is not unheard of the the Sonoran desert. I’m not saying it’s a bad deal either… it could certainly be “perfect” for someone. But as far as the guys’ claim that someone is going to be living there for “a couple hundred bucks a month,” based on a sales price of $290k… well… would anyone want to bet on that outcome? Because I’ll take as much of that action as I can find… and I’ll be betting against.
I will admit that I do get frustrated with the baseless cheer leading of the NAR and Arizona Mortgage Lenders Association because blowing sunshine up our skirts is preventing us from dealing with the very real structural problems we are most assuredly still facing today… as we were four years ago. To-date we continue to largely run-in-place, economically speaking, and we wouldn’t be were we to stop considering “hope” to be a strategy for future growth. Hope is nice feeling, I do agree, but it’s a poor substitute for a growth or recovery strategy considering today’s economic realities.
Watching Arizona State Senator Reagan’s mortgage reform bill get drop-kicked by the banking lobby was to be expected, but seeing lackluster public support for such a proposal was truly stunning. You may not think the proposal was perfect, but to disregard it out of hand, without testimony or debate in the legislature is beyond irresponsible and seals the state’s fate as far as the potential for breakthrough change is concerned. I don’t think there’s any question that continuing the status quo in Arizona can only lead to a long hard slog, to expect anything else simply can’t be supported by facts… unless you’re okay with Frank and Brian’s “something’s gotta’ give” path to prosperity… and I’m just not.
Still friends though, right? Go Giants?
Mandelman out.
Atty. Bruce Levitt of Kemp v. Countrywide – A Mandelman Matters Podcast

The more you learn about the Kemp v. Countrywide case, the more you realize how unlikely it is that anything like it will ever happen. This was the case on which the banking industry went to school. On behalf of the plaintiff, was New Jersey’s own, bankruptcy and foreclosure defense attorney, Bruce Levitt, of South Orange, who actually had taken over the case from another lawyer only a couple of weeks in advance of the trial. Not a whole lot of time to prepare, as big, complicated law suits go.
However, as luck would have it, Bank of America’s star witness was Linda DeMartini. (See graphic at top of page, lol.)
Linda kind of stole the show right from the beginning, and made the plaintiff’s case seemingly within a few minutes of taking the stand, not that Bruce Levitt didn’t handle everything brilliantly, mind you… he absolutely did.
Join Bruce and me, as we talk about the Kemp v. Countrywide case, about a much anticipated New Jersey Supreme Court decision, and a whole lot more. Just turn up your speakers and click PLAY, on this… A Mandelman Matters Podcast.
Mandelman out.
Wells Fargo Warns Shareholders – it’s own behavior may hurt the bank’s performance.

Wells Fargo
2011 ANNUAL REPORT TO STOCKHOLDERS
Furthermore, there can be no assurance as to when or whether a
definitive agreement regarding the settlement will be reached and
finalized or that it will be on terms consistent with the settlement in
principle.
Risk Factors (continued)
Page Report 107 PDF 72
Negative publicity, including as a result of protests, could damage our reputation and business.
Reputation risk, or the risk to our business, earnings and capital from negative public opinion, is inherent in our business and increased substantially because of the financial crisis and the increase in our size and profile in the financial services industry following our acquisition of Wachovia.
The reputation of the financial services industry in general has been damaged as a result of the financial crisis and other matters affecting the financial services industry, and negative public opinion about the financial services industry generally or Wells Fargo specifically could adversely affect our ability to keep and attract customers. Negative public opinion could result from our actual or alleged conduct in any number of activities, including mortgage lending practices, servicing and foreclosure activities, corporate governance, regulatory compliance, mergers and acquisitions, and disclosure, sharing or inadequate protection of customer information, and from actions taken by government regulators and community or other organizations in response to that conduct. Because we conduct most of our businesses under the “Wells Fargo” brand, negative public opinion about one business could affect our other businesses and also could negatively affect our “cross-sell” strategy.
The proliferation of social media websites utilized by Wells Fargo and other third parties, as well as the personal use of social media by our team members and others, including personal blogs and social network profiles, also may increase the risk that negative, inappropriate or unauthorized information may be posted or released publicly that could harm our reputation or have other negative consequences, including as a result of our team members interacting with our customers in an unauthorized manner in various social media outlets.
During the past several months, Wells Fargo and other financial institutions have been the targets of numerous protests throughout the U.S., such as the “Occupy Wall Street” protests and other movements designed to cause customers to close their accounts with large financial institutions. These protests have included disrupting the operation of our retail banking stores and have resulted in negative public commentary about financial institutions, including the fees charged for various products and services.
There can be no assurance that continued protests and negative publicity for the Company or large financial institutions generally will not harm our reputation and adversely affect our business and financial results.
Thanks for the warning, Wells Fargo. So far, I’d say you’re right on track to be referring to this warning as part of your defense one day. I’m just saying…
By the way, is Warren Buffet okay with this whole thing? Amazing.
Mandelman out.
Wells Fargo Warns Shareholders – it’s own behavior may hurt the bank’s performance.

Wells Fargo
2011 ANNUAL REPORT TO STOCKHOLDERS
Furthermore, there can be no assurance as to when or whether a
definitive agreement regarding the settlement will be reached and
finalized or that it will be on terms consistent with the settlement in
principle.
Risk Factors (continued)
Page Report 107 PDF 72
Negative publicity, including as a result of protests, could damage our reputation and business.
Reputation risk, or the risk to our business, earnings and capital from negative public opinion, is inherent in our business and increased substantially because of the financial crisis and the increase in our size and profile in the financial services industry following our acquisition of Wachovia.
The reputation of the financial services industry in general has been damaged as a result of the financial crisis and other matters affecting the financial services industry, and negative public opinion about the financial services industry generally or Wells Fargo specifically could adversely affect our ability to keep and attract customers. Negative public opinion could result from our actual or alleged conduct in any number of activities, including mortgage lending practices, servicing and foreclosure activities, corporate governance, regulatory compliance, mergers and acquisitions, and disclosure, sharing or inadequate protection of customer information, and from actions taken by government regulators and community or other organizations in response to that conduct. Because we conduct most of our businesses under the “Wells Fargo” brand, negative public opinion about one business could affect our other businesses and also could negatively affect our “cross-sell” strategy.
The proliferation of social media websites utilized by Wells Fargo and other third parties, as well as the personal use of social media by our team members and others, including personal blogs and social network profiles, also may increase the risk that negative, inappropriate or unauthorized information may be posted or released publicly that could harm our reputation or have other negative consequences, including as a result of our team members interacting with our customers in an unauthorized manner in various social media outlets.
During the past several months, Wells Fargo and other financial institutions have been the targets of numerous protests throughout the U.S., such as the “Occupy Wall Street” protests and other movements designed to cause customers to close their accounts with large financial institutions. These protests have included disrupting the operation of our retail banking stores and have resulted in negative public commentary about financial institutions, including the fees charged for various products and services.
There can be no assurance that continued protests and negative publicity for the Company or large financial institutions generally will not harm our reputation and adversely affect our business and financial results.
Thanks for the warning, Wells Fargo. So far, I’d say you’re right on track to be referring to this warning as part of your defense one day. I’m just saying…
By the way, is Warren Buffet okay with this whole thing? Amazing.
Mandelman out.
NPR | Did The Fed Help Banks While Ignoring The Risks? (AUDIO)
Mandelman on “Saving the California Dream” on Fox 11 News KTTV Los Angeles

Okay, late one night this past week I got a call from Heidi Cuda, a producer from Fox 11 News in Los Angeles. She explained that she’d been producing a week long series about the foreclosure crisis in California, titled, “Saving the California Dream,” and several people including an attorney friend of mine, Walter Hackett, said that she should be talking to me.
“Why?” I asked. ”I’m not in foreclosure, did Walter say I was a deadbeat borrower?” I think I threw her off with that line.
“No,” she said. ”Everyone says you’re the guy that knows everything about the foreclosure crisis.”
“I’m going to kill him,” I replied.
“Noooo,” she said. ”Everyone said you were wonderful. I want to interview you for the final segment.”
“Where the hell have you and the rest of the mainstream media been for the past three years?” I asked.
She took the bait. ”Well, I’ve been going all over the state talking to homeowners and I’ve learned all about… blah, blah, blah.”
I wasn’t really listening.
“So, what makes you think you’re qualified to interview me?” I asked in earnest.
“I’m not, but that’s why I need you, you’ll make the series and I need to learn from you,” she said sounding sincere.
Ooooh, she was good. Very slick. Soooo L.A. Like she just got off the set of “Entourage,” on HBO.
“What time,” I asked.
“Noon on Friday.” She replied.
“Okay, I’ll try.” I said.
“I can’t wait to meet you,” she fired back still sounding sincere.
Yep, she was a “producer” all right. ”Alright, see you then.”
Ciao.
Click.
“Love ya’ babe…” I said under my breath, after she’d already hung up.
So, I drove up to LA, we taped the interview and I drove home. Then I went back to my desk, started writing and promptly forgot all about it, so I missed it at 6:00 PM, or whenever it was on, and missed it again at 10:00 PM, when it aired for the second time.
The next day people kept asking me if I’d seen it, so I watched it on-line. Didn’t think much of it. Hated it, actually. What a waste of time. Never doing that again.
Then she called me today. ”Hi,” I said. I was wimping out. She tells me Part 2 is on tonight and it’s going to be great. I didn’t know anything about a second part. So, this time my wife called me when it was starting… so, I watched it. And it was much better than Part 1, I thought. You, however, can decide for yourself, if you’re so inclined.
I’d skip Part 1, if I were you… but that’s just me.
Mandelman out.
PART ONE…
Saving The California Dream: Foreclosure Toolbox Part 5: MyFoxLA.com
PART TWO…
Saving The California Dream: Foreclosure Crisis Part 2: MyFoxLA.com
Economy Recovering? No, it’s not. Housing? NO. Unemployment? NO. Stock Market? NO.
A couple of quick clarifications related to stories now in the news:
A. NO, housing has NOT hit bottom. If anyone tells you they think it has, just reply by saying: “Shut up, shut up, shut up, shut up.” Until they go away.
The way things stand today, housing won’t “bottom” this year, it won’t bottom next year, and it won’t bottom the year after that, and should you come across someone who has money and disagrees vehemently, please give them my email so I can make some extra cash on the side.
How do I know this? Well, I’ve been right since 2007 and that would be pretty remarkable if there was anything else that could possibly have happened… but there couldn’t have been, so the more interesting question is how can all these people running our show be so consistently wrong? That’s the question, and I’ve asked it before… are they stupid or lying?
Housing can’t bottom because there’s essentially no demand for housing, okay… very little demand for housing… and you don’t need a calculator to figure this one out. Follow me here…
- At least half the homeowners in this country are under water or effectively underwater, so they can’t move. And they used to be about 66 percent of home sales, those who would sell a home in order to buy another one.
- Getting a loan today requires 20 percent down at least and a fairly high credit score, and we’re short a few million people with either of those things going for them, right? (Average FICO at Fannie Mae still over 760.)\
- The only people selling now are those who have to, because this isn’t exactly the best time to cash in your equity position. And the only people buying are trying to steal something.
- The burden of student loan debt continues to cause people to delay family formation, and that means fewer first time buyers than in the past. (Allan Carlson PhD, president of The Howard Center for Family, Religion & Society has an excellent research paper here.)
- There’s a shadow inventory, made up of homes that have gone back to the bank but are not being put on the market. Why? Because there’s no one to buy them, silly. In Maricopa County, which is Phoenix et al, has about 16,000 properties listed in the MLS and roughly 112,000 REOs. Beverly Hills has a dozen homes on the market at the moment, and 186 REOs. Just for future reference, that’s not what a “bottom” looks like, millions of distressed and deteriorating homes being kept off the market.
- Foreclosures haven’t slowed down. No they haven’t. No… they haven’t. Banks slowed down on foreclosing this past year because they were waiting for the AG settlement to provide them with immunity from the whole fraudulent paperwork thing. They’re about to kick foreclosures back into high gear again, so NO THEY HAVEN’T. And there’s no reason for them to.
- Is that enough, or do you want to hear about aging baby boomers, changing attitudes about homeownership, or consumer debt ratios? ‘Nuf said, right? If you want more, it looks like Michael Olenick has a great piece on this subject this morning on Naked Capitalism here. (I haven’t read it all yet though, so let me know if I missed something important. I’m pretty sure that he and I agree on most everything related to this subject.)
Just try to remember what I’ve said countless times… NOTHING goes down in a straight line.

Warren Buffett admitted yesterday that he was “dead wrong” about housing when he predicted it would recover by now. That’s cute, isn’t it? The billionaire made a boo-boo. Ooopsie! But, he’s still a billionaire and the people that listened to him in 2009 and 2010 are the current wave of foreclosures at FHA, which by the way, is the new sub-prime and the next bailout for sure.
Buffett has no idea what he’s talking about. He’s been living in the same house in Omaha, Nebraska since 1958. Have you been to Omaha, Nebraska? Well, I have. And the fact that some multi-billionaire is still living in the same house he bought in 1958 in Omaha is not quaint… it’s not “old school.” It’s f#@king nuts. Insane. Weird. Like, as in… needs some sort of clinician to diagnose it, sort of weird.
I don’t know what his deal is… but I’ll bet it’s difficult to pronounce.
B. NO, unemployment is NOT “down.” The only thing that changed to any significant degree is the participation rate, which dropped to its LOWEST point in 29 years.
That means that more people stopped looking for work, not that more people found it.
The participation rate sunk to 63.7 percent last month, which is the lowest since May of 1983! Do you remember 1983? I do, and it was God awful. It means that roughly 88 million people in this country over 16 years old not only didn’t have a job, but weren’t even trying to find one. Not even trying.
I’ll bet they’re a cheery, upbeat bunch. Probably all out looking for houses to buy now that we’re hitting the bottom and all. Maybe Buffett will put them to work so they can all buy homes in Omaha…. and then kill themselves.
The employment-to-population ratio, which is the percentage of Americans that have jobs… HAS NOT CHANGED AT ALL. It’s 58.5… the SAME as it was in January 2010. Oooh baby… what our dust, we’re recovering now.

Oh, wait. That’s right… I totally forgot… everything’s fine… it’s a “jobless recovery,” remember? So, why is Bernanke so worried about the whole unemployment thing anyway? It’s “jobless” so we’re right on track, we’re in line with the forecasts… hitting the numbers perfectly.
The “headline” unemployment rate in which we like to bathe in this country only counts people who answer the phone and tell the survey taker that they’re actively looking for work. And if more people were looking, then the unemployment rate would be a lot higher. So, what Obama really needs is for more people to STOP LOOKING. And if that doesn’t make you want to chew on glass all by itself, then I don’t really know what to say to you.
Seems like most folks are cooperating though, because at the beginning of this month, based on the latest census data, the Labor Department increased the number of working age people by 1.5 million, and of those 1.25 million were not even looking for work, so you gotta’ figure they’re all Obama supporters, right? Just doing their part.
Bloomberg’s got the data here, in case you feel a need to check my numbers.
C. NO, the stock market at 13,000 doesn’t mean anything good. Think of it as Bernanke pushing string.
The Fed chief continues to do the only thing he can do, I suppose… come right out and promise low interest rates until at least 2014 and pump money into the system like a mad man. The problem is that money isn’t exactly going places.
Since the recession in 2008, M1 money supply has increased by an absolutely jaw-dropping 60 percent, coming in over $2.2 trillion in January of this year, and with no end in sight… it’s going higher for sure. And tons of cash makes the stock market happy, but today’s cash flood isn’t doing much for the economy.
Money supply is one part of the equation, but the other component to the deal is called “velocity,” and the velocity of money in this country has fallen off a cliff, going from 10.37 in late 2007 to 7.09 as of late 2011. Ouch.
Velocity of money is about how fast money is changing hands, buying goods and services… you know, making for economic activity. And the scads of money Bernanke continues to pump into the system with reckless abandon isn’t moving… it’s not changing hands… he’s just pushing string, get it?

As a result of all this, what they call the M1 “multiplier” has stayed below the 1.0 level for the last three years. The multiplier effect is an economics term that refers to the amount of commercial bank money that’s created by central bank money. So, it’s like the Fed increases it’s loans to banks and its purchases of government securities (called bonds) and by doing so pushes money into the commercial banks who are in turn supposedly “encouraged” to loan it out and earn interest, and thereby turn the Fed’s one dollar into more than one dollar.
Except it’s not happening, right? In fact, between August 2008 and November 2009, bank reserves grew by 500 fold, from $2 billion to one trillion. The banks didn’t lend it out. They didn’t find the excess money very encouraging. Do you know why? Because they knew that we were getting screwed, that’s why.
They knew we were in debt big time, because they’re the ones that put us there, and they knew that we’d be getting no help from the government, so there weren’t a whole lot of people to lend it to without taking on too much risk. So, they just kept it. And that’s why I keep saying, it’s not a liquidity crisis, it’s a credit crisis.
So, you know you have a credit crisis if the money multiplier is 1, right? Because if banks were lending the money out, the multiplier would have to be greater than one, right?
And when you have a credit crisis, then many people can’t buy houses, and that means that the prices of houses will go DOWN. And that means that we won’t spend like we used to when our houses were worth a lot more and there was credit available, and that means companies will make less money and lay people off. And that leads to more foreclosures, which puts additional downward pressure on house prices, which leads to more foreclosures still.
So… super low interest rates for an extended period of time… literally trillions in cash sitting in bank reserves with more being pumped into the system every day, but with the velocity of that money falling and a multiplier that stays at 1… add it all up and what do you get?
Well, on one hand you get a stock market that’s artificially pumped up by the Fed’s assurance of continued low rates, and a free flowing money supply. But on the other hand you have anemic velocity, a multiplier stuck on 1, and unemployment that’s only getting worse, which means company’s won’t be growing they’ll be shrinking… so you has is an economy that’s deflating.
Bernanke would rather deal with just about anything than deflation, so he just keep a-printing and a-pumping hoping against hope that one day the banks will be so bloated with cash that they loan it to anyone that asks. It’s really quite sad, if you think about it. Poor little man… only knows one trick and when it isn’t working all he knows to do is just try it over and over again. Makes me get all teary eyed, poor guy. Someone should really teach him a new trick.
Last thing… take the artificially pumped up stock market and hold it up next to the dog-doo economy and what do you see? You see some seriously over valued stocks, which is another way of saying that you see stocks priced to deliver some exceptionally poor returns to investors.

Because one day, the Fed won’t be able to pump, because the pump she will run dry, as all pumps do. And then what will be holding up the market at these levels… uh oh… no clothes… run away!
Then you’ll hear, “Come Mr. Tally man, tally me banana,” and daylight will come and you’ll want to go home.
So… housing is not, not, not at bottom, – check. Unemployment not improving – check. And does the stock market at 13,000 mean something to the economy? Nothing good – check.
Oh yeah… and then there’s always Greece, et al. Can’t forget them. Opah!
You might want to bookmark this page, so as the election gets closer and thing get even better than they are today, you’ll be able to contain yourself.
Mandelman out.
ROFL! Buffett Calls Banks “Victims” of Evicted Homeowners
- Matt Stoller | The Big Banks Win Again and Foreclosure Victims Get Little Help in Mortgage-Settlement
- Former FDIC Chair William M. Isaac “Very few banks had anything to do with creating the crisis and most are victims of it”
- JOHN L. O’BRIEN, JR. Register of Deeds Calls for Criminal Action Against the Big Banks, Says they acted like “criminal enterprise”
Bank sues itself, wins, and then forces itself into bankruptcy to satisfy judgment

During the mortgage madness of 2003 – 2006, banks wore many hats related to the complex derivatives and mortgage-backed securities being packaged and sold to investors all over the world. Then, the meltdown forced many mortgage originators into bankruptcy and saw numerous financial institutions become insolvent. When the surviving banks acquired the various assets of the fallen… it became difficult or in some cases near impossible to ascertain from where certain risks might come.
Of course, the banking lobby has successfully resisted efforts aimed at breaking them up into more manageable entities, less capable of causing systemic damage to the global financial system. The industry’s position seems to be that every thing is just fine. Goldstein Such’s CEO, Lord Blankcheck, speaking at the dedication ceremony of the American Securitization Memorial, had the following to say…
“The size of our financial institutions is not the problem. Just because in some instances I have not been aware that we created a market in which we took a significant position and then on another floor were aggressively shorting that position, should not be a cause for concern. Remember, when that happened last year, we were able to unload our position as soon as we discovered it, and it was the Germans who ultimately took the hit. That’s what we mean when we say our systems are both agile and resilient.”
Critics, however, point to a recent case involving HPMagnum Chaste who, after acquiring the assets of Snare Burns and Punxsutawney Federal, buying some of the default servicing rights of Hemann Bros., the trustee division of Bakeley’s, a pool of loans once owned by World Slavings that had been originated by Dog Beach Mortgage before being sold to Dowdy Savings & Moan, which was later acquired by USA Bunko, and then buying Credit Default Swap counterparty positions once owned by Goldstein Suchs, but used as collateral for repo agreements involved in the hedging of assets tied to the commercial paper markets, until in 2008, the global financial behemoth began to arbitrage by becoming the bond holder and master servicer of a sub-set of loans that had been originated by Countrywide before BofA sold put options and preference shares to Morgan Stanley under an agreement whose terms may not be disclosed.
Apparently, Citibank was serving as trustee for the mezzanine tranches of some of the loans, and was the investor in the AA- 2-year CDO squared, but says the bank hired Wells Fargo to short AIG in order to protect itself from volatility in the asset-backed commercial paper market and the possibility of margin calls resulting from exposure to default by Greece, if it occurred in the third quarter of 2011, but through leveraging inverse interest rate swaps against bonds offered by Wachovia, through Merrill Lynch as trustee, IndyMac ended up as custodian, and servicer, with Deutsche as depositor.
In a bizarre twist of fate, when a homeowner is Shitsburgh, Tennessee lost his job at the local crayon manufacturing plant, and failed to make three months of mortgage payments, the entire structure unwound like a spring load bear trap, causing Moody’s to downgrade the country of Luxembourg from AA- to BB+, which forced MBIA to file for bankruptcy protection, and one of Jamie Dimon’s vacation homes to be sold at a trustee sale.
Goldman Sachs, however, says that it will record an $11 billion profit from the compound transaction although a spokesperson from the investment bank says the firms is not yet exactly sure why. “We know it’s a gain,” said Mimi Guffaw, a partner in charge of Goldman’s Double-barreled Default Anticipation Yield desk, known as D-DAY. “It’s always a gain. We just can’t put our finger on precisely where it’s coming from.”
The Tennessee homeowner says that the whole thing started when his bank called him to tell him that he qualified and should apply for a loan modification. He tried to explain that he had just bought the home a couple months back and had paid cash, but the Citibank representative said that it didn’t matter he would be receiving a Notice of Default later that month if he didn’t apply, or agree to pay 14 years of back taxes on the adjoining lot owned by a Danish concern.
In a related story, Bloomberg News is reporting that senior partners from cordovan loafer law firm, Mammoth, Pervasive & Bland LMNOP will testify in front of Senators Shelby and Bachus, along with several other members of the powerful Senate Banking Committee. The two partners, Godim Pervasive and Arenti Bland told the senators that the new regulations imposed under Doss Frank requiring banks to keep track of their capital positions and disclose derivatives that leverage defaulting sinking funds with option-adjusted durations, are far too onerous and if not repealed, will make our nation as a whole unable to compete globally and deprive hundreds of thousands of retired rail workers of their dental plans.
Heinreich Svenerrrson Bjork-Hadern, Assistant Monday Morning economist for the International Literary Fund said they are studying the problem carefully, but at this point all they could say with certainly is that either Spain is on much more solid financial footing than previously assumed, or Canada has unexpectedly just gone into default, causing firefighters in Muncie, Indiana to ask AIG for $4 billion in collateral and leaving U.S. taxpayers to pick up the tab.
President Oblabla held a press conference to try and calm global currency markets by introducing the head of his new Global Asset and Confounded Equity Derivatives Exposure Security Task Force, known as GAACEDESTF. No one noticed, however, and the president went to play golf with Herman Cain.

The Treasury Department is trying to unravel the global conflagration taking place in the over-the-weekend debt markets, which nobody had ever heard of, but apparently are crucial to keeping the power grid functioning in the mid-Atlantic states. Former SIGTARP Neil Barofsky has promised to try to figure things out, but again suggested that in the future Ben Bernanke refrain from accepting baseball card collections as collateral for loans made by the Federal Reserve, that the too-big-to-fail banks not be allowed to do more than three or four things at a time, and that leverage of 200,000 to 6 is taking things a bit far.
Bernanke says he doesn’t see the problem, noting that the Fed didn’t actually take possession of the baseball cards in question; rather it created a new form of security that is being called a “Promise to Insure Structure and Securitize.” Bernanke claims that by accepting PISS as collateral, the Fed is protected from fluctuations in the commodities markets that might otherwise lead to hyperinflation once oil prices have collapsed and the ongoing deflationary spiral has stalled.
“If something goes wrong, we won’t have the exposure that we might have had were we to be holding the actual cards, Bernanke explained. Under this structure, no matter what happens, all we’ll have as collateral for the loans is the PISS.”
Bernanke closed by saying that he thinks the U.S economy remains strong, even though the reverse opportunity swaps now secured by the Social Security Trust Account will like cause the Singapore Sovereign Wealth Fund to foreclose on The second and third floors of The White House sometime this summer.
Clearly, the obfuscation of information conveyance from financial institutes to the end consumer is a paradigm best explained by specialist terminology synergizing with superfluously convoluted modes of communication.
# # #
So, why did I write this? Because it makes just as much sense as everything else that’s going on in this country, and at least it made me smile.
Mandelman out.
Best Picture Nominees Meet the Foreclosure Crisis at the 84th Annual Academy Awards
This year at the 84th Annual Academy Awards
The nominees for Best Picture are…
“The Con-Artist”
The Scary Scummers story, filmed in black & white. Growing up with prominent professors of economics at the University of Pennsylvania as parents, and the nephew of two Nobel laureates in economics, a young Scary Scummers realizes he can’t follow the conversations at the dinner table. In one scene, after scoring a combined 480 on his SATs, he overhears his parents saying the family’s genes have obviously skipped a generation.
About to start a job sweeping up in a bagel bakery, his life takes a dramatic turn when a friend fakes his resume. Because of his last name, no one thinks to check, and next thing we know, he’s chief economist at the World Bank. When a charismatic, but inexperienced community organizer from Chicago’s south side inexplicably finds himself in the Oval Office, Scary convinces the new president, who knows nothing about economics, that he’s the one who should drive the nation’s economy. And he does… straight off a cliff. (Warning: May cause motion sickness.)
“The Defendants”
This fantasy-drama follows a dozen Bank of America senior executives as they are forced to travel from courtroom to courtroom all over the country defending hundreds of lawsuits of all kinds. Each time the bank execs think things are going well, but invariably lower level employees are called to the stand, completely blowing the bank’s defense.
As the judgments mount into the billions, new suits are being filed each day. Law school enrollment skyrockets as the country starts churning out lawyers all anxious to take their shot at BofA or any of the too-big-to-fail banks. As the law firms and the companies that support the new industry grow, so much money is being made beating the banks, that the U.S. economy starts turning around and soon the middle class is debt free. 99% on Putrid Potatoes: “It’s the feel good movie of the year!”
“No HELP”
The story centers on attorneys litigating on behalf of homeowners in foreclosure throughout California where judges actually favor MERS’ assignments, sincerely do not care who owns which house, and believe that “securitization,” is what happens when having a home alarm system installed.
As their clients become more and more dissatisfied, they start blackmailing the lawyers, threatening to file bar complaints in order to get their money back. The frustrated lawyers finally turn to their own state’s bar association for support, but when they do the bar promptly has them arrested. Filmed in a hand-held style best described as “gritty realism,” the film is based on a true story.
“HUGE”
In this 3-D animated fantasy, Crazy Jamie Diamonds and Johnny Stumpedwells travel together to find Lord Blankcheck, in the hopes that he will do God’s work and tell them how to find King Angelo Mozillion, the one they call Too-Huge-to-Jail. Along the way they come across all sorts of familiar characters including GS egghead, Fab Faberge, who keeps repeating, “I did nothing wrong, but I could have been more careful,” and Kenny Lewser, who roams the country wide belching as he says, “I can’t believe I bought the whole thing… twice.” Rated PiG.
“2:00 PM in Paris”
When Frugal Williams lost his job as a loan officer in 2008, he knew he was in trouble. But then one day, after a year spent living on his savings and a few loans from his parents, he’s about to put his Paris, Texas home up for sale, until he finds himself watching the country’s recently elected president describe a new federal program designed to help him save his home.
That night, he has the best night’s sleep in over a year, but he wakes up on a different planet. His life is turned upside down from the moment he sends in the package of forms to his his servicer… First Infidelity Bank (FIB). Theater owners across the country report audiences screaming out, “No! Stop! Don’t!” as he slides the package into the Fed-Ex drop-box.
Soon his life is entirely consumed by requirements of his loan modification. Unable to keep up, his wife is forced to quit her job, as well, in order to help him, and soon the Kinko’s bills for faxing and photocopying drive the family into bankruptcy. Now there’s a sale date. But with Hitchcockian flair, no one knows what will happen for sure… tomorrow at “2:00 PM in Paris,” TX. (NC-17 – Not for viewers over 17 yrs.)
“Moneyballers”
This futuristic thriller stars ex-Morgan Stanley bond trader Howie Hubler, the man who lost Morgan $9 billion in a single trade, inadvertently kicking off the new favorite competitive-craze among the country’s wealthiest individuals. The year is 2016, and every megalomaniac hedgefunder wants to be a “Moneyballer.”
In games of Moneyball, the whistle blows and seated at screens equipped with trading platforms, the uber-rich compete to see how fast they can irrationally pump up various stocks, bonds and/or commodities in order to wipe out the retirement savings of middle class Americans, referred to as “pawns,” who follow them as prices rise to disastrous ends.
In an opening scene, we see Hubler in his Central Park South penthouse. He is laughing almost uncontrollably.“There’s no question, it can be expensive to play. Last week, I had to throw away $4 million and change just to bankrupt this small business owner from New Rochelle. He was quite guarded and pretty tenacious, but in the end he took the bait. When everything collapsed, I swear to God, I think he and his wife both soiled themselves… I’m not kidding… I almost choked on my foie gras.”
“The Free for Life”
In this reality-based comedy, John and Jane Q. Public are seen taking their shot at the lottery wheel of justice. Couples appear before judges in courtrooms across the country hoping to wipe out their mortgage and walk away with a free house. The laughs come from watching the pro per/pro se litigants go up against lawyers from JPMorgan Chase and Wells Fargo, attempting to explain to judges why it matters that the assignment of the deed of trust was illegally notarized, and why it doesn’t matter that they haven’t made their mortgage payment in 36 months.
“War House”
Brighton Badass and his son, Redneck, have lived in their home all their lives and they don’t plan on leaving it just ‘cause some bankster says so. In an opening scene, we see and hear Bright talking on the phone, “Well, you just tell the sheriff… she comes out her looking for me and my boy to leave, she better be armed to the teeth, ‘cause I sure will be. That’s all we invest in out here in the woods… guns and gold,” he laughs as he hangs up the handset.
The camera pulls back and we see that this home is more than just well fortified. There are snipers in trees, and trenches dug six feet deep for 50 yards all around the property. Bright pops a few pills in his mouth and washes them down with some white lightening whiskey. Then he blows his whistle and the hundred or so men, women and children come out from their positions to receive their orders.
The “War House” trailer, voted #1 in 2011, ends when the camera zooms in on Redneck Badass as he says laughing, “Come on, ya’ll… sheriff’s a comin’ so get yourself some amo… time to show the law how we practice foreclosure defense round here. They robo-signing, so we robo-shooting.”
“Extremely Quiet & Incredibly Corrupt”
This semi-historical docudrama chronicles a year of negotiations between 50 state attorneys general and five bankers. From the beginning we see that neither side knows what in the world they’re doing, as the discussion mostly consists of one side saying, “$20 billion,” and the other side yelling back, “$10 billion.”
Along the way rumors start to swirl as the senseless drama leads to enormous amounts of press coverage, only to end with nothing being accomplished and little being disclosed. This film concludes Steve Stealbanks’ social commentary on meaningless media hype and corrupt, unfeeling politics, a quadrilogy that began with, “OMG IT’S Y2K,” followed by, “WMD & ME,” and then, who could ever forget, “Hope & Change, 2008.”
OMG, did you see what SHE was wearing?
Mandelman out.
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