First off, the mortgage rate freeze plan is voluntary. Thus, there will be no contract abrogation. The mortgage issuer probably no longer owns the mortgage, as it has been tossed into a CDO and sold off in tranches. For example, a Countrywide mortgage that Fred in Boston got may be residing in a CDO issued by an investment bank with his tranche owned by a US pension fund or a Scottish bank, or whoever. Thus, the owner of that tranche needs to ok any rate change.

Also the plan only applies to a small subset of those with mortgage problems, about 7% or so. So, it’s difficult to see how this will help many people.

My take: It’s for political show. The government needs to be seen as doing something.

Tanta at Calculated Risk has an exhaustive analysis, concluding with -

The authors of this plan believe it is liability-proof (that it basically meets the requirements of the existing PSAs, with the caveat that it isn’t a legally binding mandate on all servicers and securities, so a deal with a very restrictive PSA that this isn’t compatible with can just opt out.

Is it all kind of anemic after all the build-up? Yep. Does it mean contracts are now invalidated in the U.S.? Not as far as I can see; in fact, I’d say the contracts were the part of this that got the most thorough protection. In my reading of this, giving a deal to a borrower almost seems incidental.

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Rob Paterson, a libertarian whose “greatest joy” is his work in public TV and radio, blogs about why he decided to help Blackwater.

Our world does not work any more and I think that deep down we all know this. Surely this must be someone’s fault?

My bottom line is that I believe that Blackwater has become the Scapegoat for all of this unease and fear.

So finally this is why I choose to help.

Here’s what he sees as the core of the problem.

I have a vision of how the world is today that I call “The Messy World”. In the Messy World, our large institutions in the west can no longer serve those that they purport to serve. Health, Education, Police - even the military itself that plans to fight the Russians or China in WWIII but finds itself fighting insurgents. Our institutions have become the core problem of our society. They consume vast resources and cannot do their job. This is deeply unsettling for all of us that have put our trust in them. A consequence is that we increasingly seek to pay others to do their job. While we don’t mind paying doctors or teachers or security guards, we have a profound problem with paying soldiers.

Sounds a lot like John Robb’s hollowed-out state, doesn’t it? As governments increasingly become unable to perform their given tasks, those tasks will be done by third parties. This trend, given the decentralized coming world, is probably irreversible. Long term, decentralization is a good thing, but getting there will be chaotic and, well, messy.

I think that the facts - such as they are - mean nothing. Something else is going on. This is no debate. Debate is not allowed. Facts are ignored. Interests are ignored. We don’t want to know the facts.

This could also easily apply to the current presidential race, with opposing sides screeching at each other, caring little if at all for actual truth.

Read his post, it’s long, thoughtful, and not PR blather. The first thing he did was set up a blog so Blackwater personnel could tell their own story in their own words, a huge and probably scary step for a “Navy Seal/Special Forces culture that never talks.” This, he hopes, will get some actual communication going, rather than just more rage storms.

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In a previous post I referred to Wall Street “perkies,” my name for those in the financial world who diligently and unceasingly attempt to make bad economic news appear to be good.

Here’s how a perkie views things.

“We’ve received word from the captain that our ship, the Titanic, has hit an iceberg. However there’s is no confirmation of this from other sources and in fact, the ship is still moving forwards. That it is listing badly to one side could quite plausibly be due to rough waters and not a ruptured hull. Also, no water has entered our compartment as yet. It should also be mentioned that swimming and rowing are useful ways to maintain physical fitness.”

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The latest National Intelligence Estimate on Iran was the final factor in a military equation that now appears to guarantee that there will be no war with Iran during the Bush Administration.

The Pentagon’s intelligence units were instrumental in forming the NIE’s conclusions.

Some critics have suggested that the military simply found a public way to quiet the drumbeat for war coming from Vice President Dick Cheney and his shrinking band of allies in the Administration.

So not only were factions within the Pentagon instrumental in forming the conclusions, they also made sure the results were made public. Sounds like a palace revolt to me.

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Hillary Clinton says she’ll ignore the law and constitutional issues so as to aid those whose mortgages are about to reset. Mish says this makes her no better than the current inhabitant of the White House, who also ignores the law.

She wants protection from lawsuits for those who want to freeze rates. In other words, legally binding contracts should be ignored or be made invalid. Not a good idea. Because once you start ignore one batch of laws, then it’s a slippery slope down to ignoring more of them.

And this country has had quite enough of that.

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