THE KIMCHEE KID

The Suit is in South Korea lolling it up with the Finance guys from the G-20. The stated goal is global monetary and currency accord and should he have any extra time on his hands he might try to get the world to beat their swords into plowshares although there is no promise on that score. Yeah, right.

I guess you would call me a cynic but so far we have been playing a mug's game and we're the mug. The Chinese engaged in a wonderful little exibitin of spoof or liars poker at the start of the week with the dumb-ass rise in interest rates by 25 basis points. "Ok Timmy me Boyo, now what are you going to do in return?" I suspect Timmy aint got much in his bag of tricks and if the folks to whom I am speaking have any sense of the real, nobody's listening anyway. The Power Point presentation these days is in Chinese, not English and we haven't seemed to figure that out as of yet. Sad, really. I've expressed enough of my thoughts over the past few days so let's just sit back, put our feet up and see what comes out of this thing.

Well, try as I might I can't figure out the latest stage in the housing market, to wit, the "robo-signed" foreclosure mess. I used to say to my guys whenever we looked into a new scheme, "OK, if we do this can anybody go to jail?" If the answer was "No" we looked a little harder; some we did, some we didn't but those that we did do, we did right. Frankly, I'm sure that at the origination point there was a good deal that might be considered deliberate misstatement of facts and in some cases outright fraud, but at the underwriting point in the act of securitization I suspect the problem was either lack of attention to detail, incompetence, stupidity or all of the above. Nevertheless, I have no sympathy for those institutions that played fast and loose in this market just for a quick buck. On the other hand, there should be no sympathy as well for those mortgagees who rolled the dice on the direction of the housing market and came up snake-eyes. But there is another thing that I find of interest and terrifying.

When this story first broke it was revealed that in addition to other interested parties, the Federal Reserve Bank of New York was in the midst of the mess and was also calling for a suspension of foreclosures. For my entire business career the two institutions for whom I have always had the greatest respect have been the New York Fed and the Bank of England. First class, highest integrety and some of the smartest people one could ever meet. So I frankly sit here in amazement trying to figure out how the hell the Fed got itself into this collossal conflict of interest in the manner in which they are dealing with institutions they oversee and regulate. The other thing I can't figure out is if it was necessary at some point to assume the role in which they still find themselves why the hell didn't they exit--running, not walking--as quickly as possible. There is nothing good that can come of this and an awful lot bad in this highly charged political atmosphere. For the good of the system, and I do believe the system could be very adversely affected, I hope they get out of this role that they are playing. Nuff said. See you next week. I can smell the Garlic in the Kimchee from here.