Elaine Meinel Supkis
One of the funniest shows ever on TV was the Rocky and Bullwinkle show. They actually had this cartoons about the gold standard, the Federal Reserve, mortgage companies, bankers, etc. which are still totally funny today. One episode has box tops replacing paper money with Bullwinkle holding millions of box tops because his uncle collected them. This leads to Federal agents shooting at him in a bank. I suddenly realized, maybe this is where I got my views about things! Long, long ago, when only ten years old, watching these cartoons with rapt attention!
The business of bin Laden sucked up a bit of time only because we were suddenly flooded with government propaganda aimed at justifying extrajudicial murders based on illegal torture for information. The long fall into the darkness didn’t just involve our relations with CIA-trained religious fanatic rebel leaders, it began with the Vietnam War and our dishonest ways of dealing with the costs of that war: we didn’t pay for it, we tried to hide it via first, inflation and the loss of the gold standard and then by passing tax cuts, not tax hikes so the costs became a permanent debt to be passed on to our grandchildren.
This overhang hangs over our heads and only gets bigger and bigger each year. When Clinton tried to fix this, the GOP won the next election via the Supreme Court cheating on counting votes carefully, and immediately Bush Jr. destroyed the balanced budget by cutting taxes. He and his gang thought this was very funny and nifty.
The 9/11 attacks happened that same year. The US immediately ran off to create endless wars with Muslims which made Israel very, very happy. This meant doubling and tripling military spending which made the military/industrial complex extremely happy. This also led to the Fed dropping interest rates really low while the price of oil shot up which set into motion many financial things that are getting worse and worse even today.
Then, right after 9/11, Bush grandly announced that we should not tighten our belts, pay higher taxes and go to war. He said we should borrow more money, literally go to Disneyland and party, not work at going to war. He wanted to have tons of butter slopped over the economy while having guns for war.
Now, I said way back then, in times of war, you cannot have butter. This leads to economic collapse. You can’t have luxuries and fun while fighting a war. The Nazis, by the way, refused to cut back on luxuries during war and tried to keep people happy at home with no rationing whereas the British, for example, were quite serious about rationing, etc.
During the Civil War, the South couldn’t enforce any rationing at all so the rich there spent their gold on smuggling luxuries, not things needed for war and like Germany, lost the war. The US chose this stupid path that is well worn because it would make the war more popular if no one paid for it.
During this time, China suddenly emerged as the biggest buyer of US debt. The Chinese loved this spend fest because they knew this would weaken the US terribly and eventually lead to our collapse as a global power. This collapse is happening faster than even the Chinese planned.
Our government keeps trying to convince us that we are out of the woods now but we are not. The collapse of the housing bubble was caused by the Bush tax cuts, the wild war spending with no tax base and the Fed super cheap interest rates coupled with Chinese buying our debts so they vanished from our society temporarily. When the Chinese stopped buying our debts in 2007, all these things came crashing down.
Now, the Fed buys our excess debt and this is a huge problem. Japan’s central bank is also buying its debts and is in more and more trouble, too. The US still grandly goes to war such as with Libya and promises billions to rebuild places hit by floods and tornadoes but really has no money at all. Instead, Congress cut taxes again! Leading right into another debt crisis.
So here is some mortgage news. News item #1 is, the U.S. sues Deutsche Bank, alleging mortgage fraud – The Washington Post
Between 1999 and 2009, the bank’s subsidiary, MortgageIT, got backing from the Federal Housing Administration for more than 39,000 loans worth more than $5 billion. In exchange, the firm was required to ensure that its lending met federal standards…”Borrower after borrower defaulted – often within just months of closing – because those loans were doomed to fail,” Preet Bharara, U.S. attorney for the Southern District of New York, said at a news conference.
Since bankers no longer fear losses, they don’t give a hoot who gets a mortgage. Ergo, they hand out mortgages like candy on Halloween. The Fed can have all the rules in the world and the bankers won’t give a damn since they lose nothing at all. The entire banking system was warped by Fannie Mae and the Federal Housing Administration.
The FHA has been plagued by scandals from day one due to this ‘Bankers never lose a penny’ aspect. Of course, the excuse is, all these people need homes. So have the bankers give loans but not worry about losses so poor people can buy homes. But the harsh reality is, if you are too poor for a bank, you probably can’t afford a home in the first place.
Recently, a man imitated Habitat for Humanity by using recycled or left over building materials to build houses for the poor that cost less than $10,000 to build. Virtually every one he built and gave away was put into debt by the lucky recipient who used it as their personal ATM. Then, every one of them went into default and lost their homes!
The show Extreme Makeover gives people new, fancy homes. And then the recipients rush out and…dump a mortgage on the house. Some then go bankrupt in less than 2 years. The mortgage mess hasn’t been fixed at all. It sort of slogs along with the Fed eating most losses as we shall see in the news today.
First, there was on small lawsuit against JPMorgan which has a Settlement of the Military Mortgage-Foreclosure Suits which Wins …approval of a $56 million settlement of claims that it overcharged on their home loans.
Of course, JP Morgan is one of the world’s biggest holders of the Derivatives Beast. This is the crime of the century, not this piddling mess with military mortgages. At least someone has to pay a small token amount but then, this will be fixed by the Federal Reserve massaging JPM so they will remain rich and powerful. After all, our Fed is run by JPM.
There is one Snidely Whiplash going to prison! Mortgage fraud term is 19 years
Pahutski, 48, had pleaded guilty to a house-flip scheme that involved about $15million in loans and more than 200 properties, according to the U.S. attorney’s office. Many were condominiums and homes in south Charlotte, including Sharon Lakes and Quail Run condo developments. The losses contributed to the 2007 closing of nBank, a 103-year-old lending institution in Commerce, Ga., prosecutors said….A house-flip is a familiar mortgage fraud tactic. Perpetrators buy homes at a true price, then resell them – often on the same day – at prices much higher than the properties are really worth. The perpetrators file false documents to convince banks to loan money for the higher amount. They don’t reveal the first sale at the lower price. A lawyer oversees both closings, then usually splits the difference among the players. Eventually, many of the properties go into foreclosure.
.This only happens when banks don’t do due diligence. Housing bubbles enable fraudsters which is why central banks are supposed to prevent these bubbles in the first place. Greenspan encouraged this bubble deliberately and as it swelled to historic proportions, denied there was a bubble. . We had a bubble debate that raged for several years. I detected this bubble back in 2004 and was quite loud about it but no one listens to me. I wasn’t alone, quite a few people noticed it, too. Home buyers were giddy with joy about it as the value of their homes suddenly shot skywards. Everyone noticed it one way or another except for Greenspan. . Why isn’t he in jail? He created it, he denied it existed and then ran away when it exploded in his face. Putting various chumps who gamed Greenspan’s system in prison isn’t going to stop this nonsense. We have to punish Greenspan. Maybe we can dispense with the rule of law and simply have Navy Seals storm his home and shoot him.
The insurance and derivatives game is what underly much of the frauds created by the top bankers during this bubble. The collapse of AIG still resonates. Here is one story about a couple who are suing the biggest bankers in the US and EU for the AIG bailout: Whistle-Blower Suit Claims Fraud in A.I.G. Bailout – NYTimes.com
The lawsuit names A.I.G., Goldman Sachs and Deutsche Bank as defendants, but not the Fed… The Casadys’ lawyer, Michael J. Aguirre, argued that even so, the Fed was required to comply with its own governing statutes. He said that when the Fed bailed out a nonbank, it was required to secure the loan with the same liquid, high-quality collateral it required when lending to a troubled bank.
A spokesman for A.I.G., Mark Herr, said the Casadys’ lawsuit was “devoid of merit” and said Mr. Aguirre appeared to be recycling old and discredited legal theories.
Of course, the biggest bankers dumped trash into the Federal Reserve which still pretends it is holding something of value. As the US economy continues to flounder, our central bank floats on this debris from the housing bubble, pretending to be solvent when it is not. Meanwhile, Fannie Mae Falls Back Into the Loss Column – WSJ.com .
Fannie Mae reported a net loss of $6.5 billion for the first quarter as a weakening housing market dashed hopes that the company had stabilized.
Fannie said Friday it would ask the government for a fresh taxpayer infusion of $6.2 billion after paying dividends to the Treasury. The loss follows net income of $73 million during the previous quarter.
Fannie’s loss came as it increased its loan-loss reserves after it revised down its home-price forecast for 2011, and took bigger-than-expected losses on the sale of foreclosed properties. The mortgage-finance giant booked $11 billion in credit-related expenses, up from $4.3 billion last quarter
So, losses from foreclosures went from $4.3 billion to $11 billion? This means it nearly tripled! Wow. So, the collapse in housing continues nearly unabated. This means the losses are accelerating, not decelerating.
To add to the confusion, there is this news story which increases the losses: Fannie Mae reports $8.69 billion loss for Q1. Was it $6.2 or $8.7 billion? Why the confusion? Everywhere, there is confusion about losses since no one wants to admit to losses: Wells Fargo Ups Estimate Of Possible Legal Losses which has forced a Wells Fargo to boost reserves for mortgage litigation. Namely, they have to defend themselves from lawsuits.
The foreclosure mess mirrors the housing bubble mess. Both the up and downside of the bubble involved fraud, deceptions, lies, cheating and outrageous actions. Just as the rise of the bubble led to giddy joy as money rained on Americans the downside is ugly and nasty with gnashing of teeth and of course, running for cover.
As commodity markets collapse once the government belatedly imposed limits on loans for playing gambling games on futures, the mess created by some sort of computer mistake continues to hang over markets since no one can fix this problem: One Year After Flash Crash Regulators Vexed by Fragmentation – Bloomberg
Before electronic trading, “when there was a problem, the system would kick off and trading would be handled by a human,” Hatheway said. “Now we’re putting systems in place to do what people used to do in terms of handling the unexpected. There’s no other option.”…The crash highlighted the loss of dominance for the 219- year-old New York Stock Exchange and Nasdaq Stock Market, founded in 1971. Volume in securities they list has dropped from as much as 80 percent in the last decade to less than 30 percent now. Orders are dispersed to as many as 50 competing venues, almost all of them operated by computers that match orders electronically. Twenty years ago, fewer than 10 exchanges competed for equity trades.
This is a market singularity: computers can run to infinity or zero in no time flat! Humans are somewhat slower at this so there is time to stop this from happening. Of course, regulating systems so they don’t form bubbles that pop or run to infinity or zero in no time flat is the whole point: we desperately need regulations of all systems or they go haywire.
Whether it be a machine, a computer, an intellectual thought, a fad, borrowing or printing money, whatever it is, it needs regulations or it spins out of control. I am a control freak in this way: I believe a good system has many restrictors in it and this includes human societies. You can’t have uncontrolled births, for example, any more than you can have uncontrolled consumption. What and how we control and who controls it is the question here.
There will always be battles over that! The US has handed over control to the Snidely Whiplashes on Wall Street. This has been a complete disaster for us which must be corrected. Not by having no central bank controls or no government but the opposite: a real government that prevents bubbles and protects the citizens from being exploited.
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