Fire Sign of the Times

Digby, on the South Fulton, Tennessee firefighters who stood by and watched as Gene Cranick's rural home burned to the ground - the fire department refused to respond because Mr. Cranick hadn't paid a $75.00 fire prevention fee:

"F**k yer neighbors if they don't have the money" doesn't seem like the America they used to talk about.

In related news, a relative of the homeowner has been arrested for assaulting the South Fulton fire chief, David Wilds:

Timothy A. Cranick, 44, a resident of Buddy Jones Road near South Fulton, was arrested and charged with felony aggravated assault, according to South Fulton Police Chief Andy Crocker. Crocker said the assault stemmed from a fire that occurred earlier in the day and he identified Cranick as a family member of the person whose property burned. He said Cranick allegedly came to the fire station looking for Wilds, according to witnesses. When the fire chief identified himself and asked if he could help him, Cranick allegedly struck Wilds.“He just cold-cocked him,” Crocker said, based on witness statements.

- Garry J. Wise, Toronto

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U.S. Law Prof Advocates 'Strategic' Walkaways from Underwater Mortgages

An L.A. Times article questions the ethics of commentary by University of Arizona law school professor, Brent T. White, on his recent paper, Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis:

"Homeowners should be walking away in droves," White said. "But they aren't. And it's not because the financial costs of foreclosure outweigh the benefits."

Sure, credit scores get whacked when you walk away, he acknowledges. But as long as you stay current with other creditors, "one can have a good credit rating again -- meaning above 660 -- within two years after a foreclosure."

Better yet, homeowners can default "strategically": Buy all the major items they'll need for the next couple of years -- a new car, even a new house -- just before they pull the plug on their current mortgage lender.

"Most individuals should be able to plan in advance for a few years of limited credit," White said, with minimal disruptions to their lifestyles.

What kind of law school professorial advice is this? Aren't mortgages legal contracts? In so-called anti-deficiency states such as California and Arizona, mortgage lenders have limited or no legal rights to pursue defaulting homeowners' assets beyond the house itself, White said. In other states, lenders may decide that it is not worth the legal expense to pursue walkaways, or consumers may be able to find flaws in the mortgage documents, disclosures or underwriting to challenge the original contract

- Garry J. Wise, Toronto

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The Unravelling U.S. Economy - A Case Study

Pilgrim's Pride, America's largest poultry producer, is in financial trouble.

Why?

It carries a large debt, due to its $1.3 billion acquisition of a competitor in 2007. Prices have increased for commodities like corn and oil.

Credit availability is tight. It is at the end of its temporary credit line.

And there is a glut of chicken on the market because restaurant patronage is down.

An Associated Press article today discussed the company's woes:

Chicken producers can't pass through price increases due to an oversupply on the market and weakening demand. Much of that is from a loss of key business in restaurants as consumers opt to eat at home more often to save money.

Mike Cockrell, chief financial officer for Sanderson Farms Inc., said business is tough. It's prime wing eating season, he points out -- with fans watching football and the World Series -- but the down economy is keeping people from going out. Normally the company can't keep up with demand. Now they have truckloads of extras.

"Our whole industry is challenged right now," he said. "We got high corn and soybean meal prices and very, very weak domestic demand for chicken, particularly from the consumer who eats away from home."

Pilgrim's stock prices are down 93% from its 52 week high and there is serious discussion of pending bankruptcy, buyout or liquidation.

We may be entering the next stage of an economy in deepening, spiralling crisis.

I fear we will be hearing many, similar stories in the months ahead of previously vibrant companies being swallowed whole by unyeilding market conditions.

Fasten your seatbelts.

- Garry J. Wise, Toronto

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BBC Video: Tent Cities Spring Up In U.S. Due To Mortgage Crisis

- Garry J. Wise, Toronto

Visit our Toronto Law Firm website: www.wiselaw.net

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