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Archive for November 17th, 2009

GMAC, de Molina, and Everything

A quickie supposition here. If GMAC’s mortgage arm ResCap is so unfixable that recognized fix-it guy Al de Molina could not fix it, and if Golden West is to Wells Fargo and Countrywide is to Bank of America as ResCap is to GMAC, what do we think is going to happen with those mega-banks?

Put still another way, WFC has $1.1 trillion in off-balance sheet exposure it swears the Federal Housing Administration can fix up if need be. The FHA has to take care of a total 37 million mortgages with about $50b. in reserves. BAC’s Countrywide hangover is still substantial as well. Official policy is to continue to ignore this dreck and hope — pretend? — that the banks can “grow” their way out of this hole.

Put a final way, we are growing a new bubble to replace the old one that popped.

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Eastland: Who Gets Fired?

Just a wild guess, but anyone working in the private sector who made $400,000 go poof while being told it would go poof would probably be told to pack up their desk. (Unless they had a federal backstop, which would then put them in America’s growing fascist economic sector.)

Yet here we are with the city of Charlotte having spent $400K on options to buy parcels of Eastland with absolutely nothing to show for it. This was a straight-up riverboat gamble and city staff lost. Totally. They demonstrated zero understanding of the market dynamics surrounding the property and absent the rejection of the city’s $7.4m. offer to buy the property, the city would today own a 90-acre blackhole. There was and is nothing good to be had with such dealings.

For an idea of just how out-of-whack even that $7.4m. offer was, check out what a beat-up but still functional dome just sold for: $583,000. Granted, it is the Pontiac Silverdome outside of Detroit. Still, tens of millions are not required to immediately re-develop it. However, the city had to sell the Silverdome given the upkeep costs and to get the thing back on the property tax rolls. Gee, that sounds very much like the pressures we warned about back when Charlotte city staff first started down this Monopoly-board path with Eastland.

Except that they were playing at real estate mogul with real taxpayer dollars instead of the pink and blue variety. By rights they should be pink-slipped and told to roll the dice elsewhere.

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IRS Wants Part of Tax Credit Back

Another reason to hate tax credits. Get ready to repay some of your “credit” because the IRS can’t do math.

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November 2009
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