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Zombies Foreclose ?

March 28, 2013

Florida. Of course it’s Florida

In the Orlando Sentinel: “Florida leads U.S. in number of ‘zombies’ foreclosures” By Mary Shanklin

Florida by far leads all other U.S. states in the number of “zombie” foreclosures — vacant houses that are in some stage of being repossessed by mortgage lenders.

and

Of the 868,218 houses in foreclosure throughout the country, 35 percent were vacant in the first quarter. In Florida, 39 percent of the 231,378 houses in some stage of foreclosure had no one living in them.

and

Florida was one of three states in which the listed inventory of foreclosures was up from a year ago; New York and New Jersey were the other two.

See similar issues in Spain – at Bloomberg: “Spain’s Zombie Developments” about unfinished building developments losing funding. And should you worry at Fox Business: “Should You Worry About Zombie Foreclosures?” by Justin Harelik

These are different kinds of foreclosure zombies. The Fox version is about homeowners who get stuck holding title and related expenses even after walking away in (incomplete) foreclosure. This is similar to the problem of zombie titles discussed earlier by Michelle Conlin for Reuters.

But the much bigger concern is global and systemic. Recall Carney’s invisible synthetic CDO zombies. The Spanish developments and Florida mortgages are parts of collateralized debts absorbed onto banking sheets and dark money pools.

And see BNL TImes “Plight of zombie firms in troubled capitalism” by Brian Ligomeka about effects of Cyprus on international economic policy perspective:

the term ‘zombie company‘ was first used around 2002 to describe Japanese companies which were saved from liquidation by the government. Of late the same term has been used to describe US companies which have received bailouts from the government. Zombie companies are those which are burdened with debt, most of which was accumulated over the years. Despite continuing servicing their debts, there are no real prospects of repaying them fully at any time in the foreseeable future.

Concluding –

As far as I am concerned Malawi is now a ‘zombie nation’ with zombie consumers who have no money to spend due to inflation and some of our zombie financial institutions have no alternative but to lend money using loan shark (katapila) rates. With high interest rates even firms, which were blue chips, are now zombie companies. Since countries which were godparents of capitalism are offering bailouts to the private sector such as their zombie banks as is the case in Cyprus, can African governments do the same to its private sector without provoking the wrath of the usual suspects?

Who is too big too fail? Who gets foreclosed on and who gets bailed out? All a bunch of zombies in limbo.

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From → economics, money

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