Friday, December 01, 2006

Bankruptcy Vs Forclosure

If you cruze any of the other sites I have as favorites, you'll observe that a lot of the chatter is about home foreclosure's.

Click on this site Forclosures. Notice the foreclosure statistics and also the bankruptcy stats.

This is where it gets interesting. A reader pointed out something to me that I hadn't known about(his email):

One subject that is not getting covered in the press is the
inaccuracy of foreclosure statistics. This is because there are huge numbers of
"deeds in lieu of foreclosure" being taken in by lenders instead of foreclosures.

In a round about way, we are talking about bankruptcies and how lawyers handle them. It looks as if a bankruptcy lawyer goes to the bank and points out what is going to happen next (with regards to his client) and the Banker has only two options, take the deed in lieu of foreclosure or go the whole 10 yards the hard way. Notice that this circumvents the NOD (Notice of Default).

What we have here is a hell of a lot of bankruptcies, and it looks as if the NOD's will never be filed. The only conclusion you can draw from this, is that the banks are picking up a lot of real estate that is being missed by the bean counters.

Look at how much of what is happening, can be hidden from view. Neat Huh????


Anonymous said...

Interesting post, love the blog. Do you post anything in regards to what courses of action, or type of investments that your readers should be in if you are correct about the next Great Depression?

Jim in San Marcos said...

Preservation of your savings should be the first concern. Three month treasury bills are probably the best store of insured value around. There is no upper purchase limit on FDIC insured amounts as there is with a bank. Here is a link to the site: Treasury Direct There is no charge for the service. Plus you pay no state tax on the interest. If you go through your bank, you’ll be charged about $50 per transaction.

Two things that will influence the market are misallocation of assets and the collapse of hypothecated assets. Here is a link to articles on both:

Misallocation of Assets

Collapse of Hypthocated Assets

Your mutual fund could loose 80% of its value, your house 50%, stocks not paying a dividend could really drop. Oddly enough, that point in time, would be the moment to start buying what everyone else is selling. The price would definitely be right.

A lot of these million dollar cats, dogs, tulips etc are going to be marked to market. And when they are, somebody is going to take the hit. Every one of them has an owner. The really odd thing is, we could be talking about what your mutual fund owns. Who said life had to be fair?

The best advice I can suggest is to pay off all your debts and have enough savings to support yourself for 3 years, balanced between T bills and Gold. The gold is just in case Congress tries to print its way out of this mess.

Anonymous said...


I like the advice. Follow up questions?
1. Is silver just as good or better of an investment as gold if the US decides to print its way out of the mess? What about other metals like platinum?

2. What occurs if the govt makes it illegal to own gold again as they once did in the past? Would anyone currently owning gold be forced to sell it to the govt at their market rates or would selling gold for cash be "illegal" somehow? Do you know how this works?

3. What about owning foreign currencies - any recommendations there?


jb said...

Take a look at, you'll see that Casey Serin has used the "deeds in lieu of foreclosure" himself - for the Texas home if I'm not mistaken.

Jim in San Marcos said...

Dear Anon

I like gold and silver. It's the sort of stuff that all of folklore deals with. A pot of gold at the end of a rainbow or a silver chalice. Platinum never really made it. I can remember when Platinum traded below gold in price and I kick myself for not trading some of my gold for platinum.

The only drawback to silver is that if you own about 2000 ounces, it's equivalent in weight to a 180 pound Sears bar bell set. Not something you really want to lug around. The Silver 100 oz Englehart bars are very nice decorative door stops. Most people wouldn't even give them a second look, so they're not likely to be stolen. I like the $1,000 Silver face amount 50 cent pieces. The silver content for a thousand ounces is about 820 Oz's troy and there is an extra premium on the half dollars. I recommend that you buy silver from a local dealer, otherwise the postage and insurance could be a real pain. Be aware that you need to shop for a precious metals dealer, the same silver bar could fluctuate 100 dollars in cost, depending on the dealer, same date and time, .

If you own your own home, I would recommend cutting into the concrete slab and putting in a safe in the garage floor. It doesn't have to be a safe, just a storage area. Keep your car parked over the area. Put your gold and silver in there.

The government can't confiscate what it can't see. The last time it happened, gold was illegal to own, so as a good citizen, you turned it in. If you had a safety deposit box, a bank inspector had to examine the contents before you could take possession. If there was gold in the box, it got redeemed. I'm not quite sure how the process worked

I played with currencies 20 years ago using the Credit Susse Bank in Switzerland. They will hold your money in any currency of your choosing, but it's kind of like watching paint dry. It's a great way to transfer money to someone whom you can entice to sign a bank signature card. They can redeem the account upon your death without probate or estate taxes(I didn't say that).

Anonymous said...

Don’t believe one optimistic word from any public figure about the economy. They are all part of the problem. Its like a game of Monopoly. The richest 1% of Americans now hold more than 1/2 OF ALL UNITED STATES WEALTH. That is more than the upper, middle, and lower classes combined. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the state of our economy. Now, a recession is inevitable. The middle class can no longer afford to sustain their share of the economy. Their wealth has been gradually transfered to the richest 1%. But the rich won’t stop. They will do whatever it takes to get even richer. Leaving even less of the pie for the other 99% of us to share. This is going to end just like a game of Monopoly. A total collapse of the US economy. Probably within a decade. The richest 1% will live like royalty while the rest of us fight over jobs, food, and gasoline. So Don’t fall for all of this PR CRAP from Hollywood, Pro Sports, and Wall Street. Remember: They are filthy rich EVEN AFTER their tax deductable contributions. Greedy pigs. Now, we are headed for the worst economic and cultural crisis of all time. Crime, poverty, and suicide will skyrocket. SEND A “THANK YOU” NOTE TO YOUR FAVORITE MILLIONAIRE. ITS THEIR FAULT. I’m not discounting other factors like China, sub-prime, or gas prices. But all of those factors combined still pale in comparison to that simple equation at the top of this entry. Anyway, they are all related. If it weren’t for the OBSCENE distribution of wealth within our country, then the middle class would have had a much better bottom line over recent years. There never would have been such a market for sub-prime. Which by the way, was another trick whipped up by greedy bankers and executives. IT MAKES THEM RICHER. Anyway, the credit industry has been endorsed by people like Oprah, Ellen, Dr Phil, and many other celebrities. So don’t fall for their ‘humanitarian’ BS. ITS A SHAM. Bottom line: The richest 1% will soon tank the largest economy in the world. It will be like nothing we’ve ever seen before. God help us.