News, Research & Insights for American Homeowners, Patriots & Constitutional Conservatives
It's come to this.
Why any American of goodwill, much less the political party currently occupying the White House, would want to support or be affiliated with the violent, anti-capitalist occupy movement in any way is beyond me. But this…now this has to be the last straw. A global economic crisis has brought a new Great Depression to the doorsteps [...]
"You're on your own" vs. "We refuse to leave you alone."
We won’t win the race for new jobs and new businesses and middle-class security if we cling to this same old, worn-out, tired `you’re on your own’ economics that the other side is peddling. It was tried in the decades before the Great Depression. It didn’t work then. It was tried in the last decade. [...]
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If you’re not already familiar with Ellen Brown, then I might as well just go ahead and say: “Your welcome,” because I can’t imagine anyone not liking this prolific blogger, author of 11 books, attorney, and President and Chairman of the Public Banking Institute. Ellen and I have been reading each others’ work for some time now, as it turns out, but we’ve only gotten to know each other personally since first speaking on the phone only a few months back.
I think it took me about five minutes into our first conversation before I asked her be my guest on a Mandelman Matters Podcast. What she has to say about public banking is fresh and fascinating… and she says that something like 17 states have public banking up for votes this year… and I did not know that.
Excerpts from the site: Webofdebt.com and from the book itself…
“The 1890s were plagued by an economic depression that was nearly as severe as the Great Depression of the 1930s. The farmers lived like serfs to the bankers, having mortgaged their farms, their equipment, and sometimes even the seeds they needed for planting. They were charged so much by a railroad cartel for shipping their products to market that they could have more costs and debts than profits. The farmers were as ignorant as the Scarecrow of banking policies; while in the cities, unemployed factory workers were as frozen as the Tin Woodman from the lack of a free-flowing supply of money to “oil” the wheels of industry. In the early 1890s, unemployment had reached 20 percent. The crime rate soared, families were torn apart, racial tensions boiled. The nation was in chaos. Radical party politics thrived.”
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“Our money system is not what we have been led to believe. The creation of money has been “privatized,” or taken over by private money lenders. Thomas Jefferson called them “bold and bankrupt adventurers just pretending to have money.” Except for coins, all of our money is now created as loans advanced by private banking institutions — including the privately-owned Federal Reserve. Banks create the principal but not the interest to service their loans. To find the interest, new loans must continually be taken out, expanding the money supply, inflating prices — and robbing you of the value of your money.”
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Web of Debt unravels the deceptions in our money scheme and presents a crystal clear picture of the financial abyss towards which we are heading. Then it explores a workable alternative, one that was tested in colonial America and is grounded in the best of American economic thought, including the writings of Benjamin Franklin, Thomas Jefferson and Abraham Lincoln. If you care about financial security, your own or the nation’s, you should read this book.
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I think everyone is going to really enjoy listening to Ellen discuss the financial issues of the day… from the Wall Street meltdown of 2008 and how we handled things from there, to the impending default of Greece and other members of the EU… Ellen knows what she’s talking about, and a joy to listen to, not only because she makes the most complicated economic concepts easy to understand, but because she makes them personal, never academic.
This podcast is presented in two parts, so we might as well turn up those speakers and get started. I can promise you this… you’ll never look at “The Wizard of OZ” the same way again… and it’s just fascinating to me that we’ve been here before in this country… more than once.
Mandelman out.
Look… I hate being a porcupine in a balloon factory, so I’m not trying to take anything away from the numbers that are even slightly better than they’ve been in the recent past. In fact, I’m an optimist by nature, so I hate being the one that comes off like Calamity Jim.
And, nothing I say should ever stop someone from buying a house in which they plan to live.
But, the structural problems we face have NOT changed, so I see no possibility that we aren’t going to see some continued weakening in the housing market in the years ahead, and I don’t care whether we’re talking Phoenix, or wherever else.
Nothing goes down in a straight line.
The Dow nearly doubled between March of 1935 to March of 1937 and smack dab in the middle of the Great Depression the economy appeared to be back on track. But, it gave up those gains the following year in a crack-that-whip sort of slide slide and a new recession saw unemployment back at 20%. After that, the DOW barely puttered along for the rest of the 1930s, never coming close to recapturing its March 1937 high.
Well, since our economy went off a cliff in 2007 we’ve had several periods during which “experts” have proclaimed that “the worst is behind us.” None has been anywhere close to correct… and many have had a vested interest in what they’re reporting. I understand that optimism is both fun, and a hard thing of which to let go, but the result of blind optimism during a crisis is that we won’t deal with the structural problems that are sure to continue kicking of our collective ass for years to come, and by years I do mean decades.
Lending in this country is… in a phrase, a complete train wreck.
To begin with, the federal government has essentially taken over consumer lending, at least as far as the $10 trillion home mortgage market is concerned. The government’s share of new loans now approaches 100%. Today, the three fastest growing government insurance programs are the FHA, the USDA’s single-family guarantee program, and … yawn… Ginnie Mae.
FHA is flat out bankrupt and after the election will be making headlines as the next bailout. Over the last few years it’s become the new sub-sub-prime. It’s leveraged at a little under an eye-popping 1,000 to one, which dwarfs Fannie’s previous record of 174 to one… and we know how well that never worked out. I want to say defaults are in the 20% range, but that number could be one or two points off in either direction.
The US Department of Agriculture’s (USDA) single-family guarantee program is the poster child for underpricing risk. Ed Pinto, a former chief credit officer at Fannie Mae, and an expert on government lending programs, recently explained that a borrower with a FICO score of 620 is able to get a zero down payment loan of say $150,000. According to Pinto, the all-in cost of the USDA loan is at least $12,000 below what Freddie Mac would require for the same borrower paying five percent down. What’s going to happen down this path shouldn’t be much of a mystery.
Going, going… it’s gone.
We haven’t had a private securitization of mortgage debt since 2007, and we won’t have one for a long time… certainly not until we correct the inadequacies of the system that created our current economic catastrophe, or until institutional investors take stupid pills en masse. That means a market dependent on the government for essentially all lending, and with Europe living on a razor’s edge, that’s just not good. The credit markets remain broken and we won’t see a real rebound until they have been substantively repaired. The way we’re facing facts lately, that could take a generation.
Demand for residential real estate is simply going to be much lower than in the past… half of homeowners are underwater and therefore unable to move. Saddled with debt and unable to find good paying jobs, first time buyers are delaying family formation and therefore their purchases of homes. The unemployment picture is little more than pre-election propaganda… the most recent numbers being largely the result of a warmer than usual winter. And foreclosures in 2011 were simply suppressed last year by litigation, and as banks awaited the settlement with the state AGs… they’re headed higher as we speak.
That makes some comparisons between 2010 and 2011 appear favorable, but it is a meaningless illusion… similar to the illusion of a housing rebound in 2009-10 until we saw the impact of tax incentives and the Fed buying trillions in mortgage-backed securities coming to an end.
What’s next? How about: “CASH FOR CRAP?”
Bring in an old toaster and the federal government will give you $500. Betcha’ that’s going to make for some very encouraging third quarter numbers.
Add to those factors the demographics of our aging baby-boomers, 78 million of us who will de facto be moving less and downsizing as we age. And don’t forget the certainty of a European default at some point in the next couple of years, and it’s just not anywhere near as pretty a picture as we’re going to have painted for us during the election year that’s ahead.
And all of that lackluster performance is occurring in an environment of record low interest rates. What do you suppose will happen to the housing market as those rates rise? Defaults will unquestionably spike once again, and credit will tighten even further. Prices simply have to fall farther before demand will increase enough to stabilize prices, let alone support any real broad based appreciation, because demand isn’t coming to the rescue, we’ve drowned it in a sea of judgmental punishment.
But again… nothing goes down in a straight line, so there will be moments where things will feel like the worst is behind us… followed by times where it will feel like it’s not.
What a house cost in the past, is entirely irrelevant. Real estate prices are not set based on their past, no more than stock prices are priced that way, which is why no one should still be holding Cisco at $84.
A few days ago, to make my point, all the news was “happy-in-homeland.” Today… well… not nearly as much…
From Bloomberg today…
The S&P Supercomposite Homebuilding Index fell 2 percent today. New-home sales fell 1.6 percent to a 313,000 annual pace, the slowest since October, from a 318,000 rate in January that was weaker than previously reported, figures from the Commerce Department showed today in Washington. The median estimate of 78 economists surveyed by Bloomberg News called for 325,000.
KB Home (KBH), the Los Angeles-based homebuilder that targets first-time buyers, sank 8.9 percent to $10.24. Revenue in the first-quarter was $254.6 million, falling short of the average analyst estimate of $328.6 million.
And here’s Dave Rosenberg from CNBC today…
The current recovery is the weakest one ever and being driven by warm weather, not by fundamental improvements taking place in the economy, says Gluskin Sheff economist David Rosenberg.
Deficit spending and loose monetary policies have further propped up the economy, which is much weaker than otherwise improving economic indicators would suggest.
“Is it growing? How could it not be growing,” Rosenberg said on CNBC.
“We’ve got four years of trillion-dollar-plus deficits, we have a Fed balance sheet that’s tripled in size, zero policy rates for three years. Of course you’re going to get some growth.”
It’s that kind of artificial growth that should worry the country.
“If you want to take a big-picture perspective, this goes down as the weakest economic recovery ever, despite all the ramp up in government stimulus, and that really tells you something.”
While unemployment rates continue to fall, warm weather deserves more credit than policy.
Up to 40 percent of those jobs are weather-related, such as construction jobs coming on line earlier than scheduled.
Warm weather also gave more Americans money to spend due to lower heating bills, which further distorts economic reality. “Employment data were affected by the seasonal adjustments,” Rosenberg says.
“It felt like March in February, and if you apply the March seasonal factors to February, employment would have actually declined.”
Mandelman out.
Messaging.
Is it really “news” that he’s saying this? I’m going to argue yes, but purely for what it signals about the state of the race. Hours after he secured the endorsement of former Florida Gov. Jeb Bush, Mitt Romney credited his brother, President George W. Bush, with keeping the country from a great depression in [...]
I really don’t care how that headline sounds. I’m going to make my point regardless, and I think it needs to be made bluntly. I’m far too angry and way too upset to do anything else. This is it for me.
I started this blog three years ago for ONE reason: Because the government and banking PR machine was blaming the crisis on “irresponsible borrowers,” and I KNEW then that would prove to be an ultimately destructive thing because, as I wrote back then… when they realize what’s really happened, that it’s not “irresponsible borrowers,” they will have destroyed the political will to do what’s needed to fix it. No one was going to support a bailout of the “irresponsible.”
I wrote all of what I’m about to say hundreds of times and in so many ways I couldn’t even count them all. Recently, I wrote an article titled, “Our future depends on just one thing.” Abigail Field worked on it with me. I don’t know… maybe it was 15,000 words. I was shocked at how many people actually read it… maybe 5,000, which is a lot when you consider how much time it required.
I knew what would come, but I also voted for Barack Obama and I believed that his administration would do something about the foreclosure crisis. And as I’ve sat and watched this administration’s policies and performance, I have to admit that up until recently, I didn’t know why they were doing the abysmal, seemingly unfeeling and irresponsible job they so obviously have done. The kind of job that led Neil Barofsky to make the comments he made this week… his comments you’ll read below.
Now, however, I know what’s happened and why it happened. It happened because the Obama Administration continues to be afraid of being seen as bailing out irresponsible borrowers… quite a coincidence, right? Actually, not so much. (Here’s another of my past attempts to explain this situation in writing: “Why Americans Are Allowing the Foreclosure Crisis to Continue.”)
But, you’ve heard what I have to say, so try this on for size and see what you think. The book, “Confidence Men,” by Ron Suskind, tells the inside story of the first three years of the Obama Administration, based on hundreds of interviews with insiders… including interviews with President Obama himself. It’s not pro or con… it just is. Jon Stewart interviewed Suskind a couple of months ago… it’s fascinating and I’ve included part one and two of that interview below. Watch it. Please.
| The Daily Show With Jon Stewart | Mon – Thurs 11p / 10c | |||
| Exclusive – Ron Suskind Extended Interview Pt. 1 | ||||
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| The Daily Show With Jon Stewart | Mon – Thurs 11p / 10c | |||
| Exclusive – Ron Suskind Extended Interview Pt. 2 | ||||
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Is it becoming clear?
I’ve written 600 articles now, and I suppose if I could get anyone to read a few hundred of them it might change their mind… but that would take some time. This is an election year, as I’ve pointed out many times lately, and we need to shatter the “irresponsible borrower” misperception now if we expect anything to change for the better any time soon.
Last summer, when I returned from a week working with people at the Hawaii legislature, I knew there was only one thing to do… produce an open and shut case in a broadcast quality documentary-style program… and make it entertaining enough that it would go viral on the Internet…. maybe raise a hundred grand and get it on cable television. Anything else would take too long to influence the number of people that had to be reached. Nothing is absorbed as fast as high-quality video programming.
I didn’t want to produce a documentary program… I’ve done it many times in my career and it’s a lot of work. But there was no choice, I’d been trying to get everybody on board for two and a half years at that point, and it was simply taking too long. And I knew I was probably the only person who could do it. I spent 20 years in corporate America as a creative director and communications strategist and I know I’m the only person in that world that could do it, because I’ve successfully shattered similarly erroneous views many times.
But… and it’s certainly all my own fault… I just haven’t been able to promote it effectively enough to get others to fund it to any real degree. And I didn’t want to seek an investor that would want to make it into a money-making proposition and not a viral Internet campaign.
The truth is, I’m not all that comfortable with self-promotion to begin with, and this space is packed with scammers and fast talkers, which makes it that much harder to get people to write checks no matter the purpose. They don’t know who to trust, and I don’t blame them. So, I resigned myself to the fact that I would have to fund it myself, and that would mean that it would take a lot longer to get it done… but, it was what it was.
I’ll probably do a book at some point too, but not now because it’s too time consuming and we have an election year in front of us. If we’re going to succeed at influencing politicians on this key point… this would be the year. If we fail… it’s over. What will happen… will just happen… and it will be a tragic failure for me, and an awful period in our nation’s history.
Just last night, I was talking to a homeowner in Pennsylvania and he asked me what was stopping the administration from doing anything effective about the crisis and I said right away, “Oh, it’s Rick Santelli… it’s only one thing… the ‘irresponsible borrower.’ There’s simply NO SUPPORT to help people that the country largely perceives as having been irresponsible borrowers.” I don’t really know if he believed that I was 100% right…. maybe he thought I was partially right, but not all the way, I really don’t know.
People want it to be more complicated that that. They don’t want to think of our government as just a bunch of guys making decisions. People want to imagine that there’s a puppet master pulling strings and that they just aren’t privy to the information. It’s reassuring to think that way. Last year, I remember saying about the Obama Administration:
“Tell me there’s a plan… I don’t care if it’s an evil plan… as long as there’s A plan, I’ll be fine. Because this looks like a bunch of people not knowing what to do and doing at terrible job at whatever they try… and that is scaring me to death.”
I started calling bankers and servicers and those on the other side because I realized that no one was winning, and with so many people losing… someone SHOULD be winning. But no one was or is… everyone’s losing… we’re literally circling the drain. Oh, I know… there’s a handful of bankers still getting obnoxious bonuses, and that’s wrong… but in the big scheme of things… it’s nothing really. In a world where losses are measured in trillions, even a $100 million bonus is a rounding error.
Very quickly I realized two things… that those on the other side of this fight weren’t all that concerned with us one way or the other… and that they had no idea what to do to improve things either. Our politicians are obviously clueless… they’re not even afraid of people not voting them back into office. My guess would be that most of the elected representatives in the Hawaii legislature didn’t even view what’s happening as a “crisis.” And the jackass in Arizona, Harper, think the problem is people walking away that can otherwise afford the payments no problem.
No… we’re not winning.
By the way, it’s not like I’m not used to being right way ahead of everyone else when it comes to things like this… I’ve got a 20-year track record of being exactly that. But I never wanted to come off like that to people as a homeowner advocate and blogger, and I knew no one knew of my professional career in this world of homeowners and their lawyers.
Now, it just doesn’t matter. I don’t really care how I “come off.” It is what it is… and I’m not a person capable of deluding myself or others into believing something that’s not true.
Here’s the story from American Banker… it’s short, so I’m posting the whole thing… read it, please.
Barofsky Blasts Treasury, Obama for Housing Mess
Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, hammered the Obama Administration and Treasury Department Tuesday night at a panel discussion on the foreclosure crisis, saying fears of a political backlash led to the administration’s tepid response to the housing crisis and refusal to back principal reductions.
Barofsfky, a former assistant U.S. attorney who is now a senior fellow at New York University’s School of Law, said the administration’s Home Affordable Modification Program was “a failure” because the Obama White House feared being labeled as helping “undeserving homeowners.”
Asked if there was any hope for homeowners at risk of foreclosure, Barofsky said: “Um, no.”
The panel was organized by the non-profit news organization ProPublica. The other participants included ProPublica reporter Paul Kiel, Alyssa Katz, editor of Columbia Journalism School’s New York World, and this reporter.
“The crisis is an example of how people lose their faith in government, which has costs that are hard to quantify,” Barofsky said during the two-hour event at the Tenement Museum in New York’s Lower East Side. “Everything that has happened since [Tarp] has been something of a mess.”
When the administration introduced the Hamp program in 2009, Rick Santelli, an editor at CNBC Business News, went on a rant” calling defaulted homeowners “losers” and accusing the government of “promoting bad behavior.” Santelli is credited with sparking (and naming) the Tea Party Movement by suggesting that people opposed to the government form a “Chicago Tea Party.”
Barosky said the White House, out of concern that aiding homeowners would cause a political backlash, quickly backed away from its goal of helping 3 million to 4 million homeowners avoid foreclosure.
There was a fear of “moral hazard,” the idea that homeowners who were not financially strapped would default to get a principal reduction, Barofsky said.
He argued that the $28 billion left in the Tarp program should be used to modify loans, but he faulted the Treasury for never spending the money, calling it a “lost opportunity.”
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Homeowners, lawyers and fellow bloggers… we ARE NOT winning. And we won’t win. I’ve tried to say this numerous times in more politically correct ways, but it obviously needs to be said in less uncertain terms.
The foreclosure crisis is has only affected less than 15 percent of America’s homeowners. More than 85 percent aren’t having the problem… yet. Ninety-five percent of homeowners just go through foreclosure without any representation. And with at least 3,000 homeowners evicted every single day, seven days a week… we get all hip-hop-happy because a literal handful have some very moderate levels of success… we tell ourselves we are gaining on it… but we’re not.
We’re not gaining on it because there is no WE… so, WE can’t be fighting it. At best we represent a speed bump to the banking industry, and that won’t change for several years when there will be so many more people swept under that there will be societal pain to a degree we’ve never even imagined.
Lawyers… fighting your cases one by one… in your own small universes, without any sort of data being reported… without any sort of association… you’ve had some great cases, but their impact is akin to a Bandaid on a severed limb. Loan modifications are the only way people are staying in their homes in any number, but the banking industry has turned those helping homeowners get loans modified into something close to drug dealers, as they echo the familiar refrain… “Call your bank directly or call a (bank funded) HUD Counselor.”
And my fellow bloggers… we continue to limp along writing perhaps bravely and perhaps helpfully, but we’re trying to outrun a tsunami in our individual small canoes. It’s never boring… it’s stimulating even. But it’s just nowhere near enough.
I’m not saying we should stop what’s going on… in fact, we need to do more… we need about 10,000 more lawyers and that wouldn’t be near enough. Maybe it’s all we can hope to do as the collection of individuals that we are, but I can’t not call it as it unquestionably is. And I can’t just sit back, write my articles and pretend that I’m changing the world.
So… here’s the deal… I need to know how many DOERS are out there.
If you’re a DOER I need to hear from you by email. If you’re a DOER, willing to support a campaign to strategically target and then attack chosen opportunities, I need to hear from you now. My DOERS have saved three homes in a row by sending emails in a coordinated way. Raise your hand now and tell me your on board, because I’ll need to be able to reach you to tell us what WE are doing via email, so as not to tip our hand.
We’re going to “OCCUPY,” but in a very different way than OWS… we’re going to OCCUPY without leaving our homes. It’s going to be a game of inches… it’s going to take 3-4 months before we reach the critical mass that moves the proverbial needle. It’s not just about reading, it’s about doing. But, we will gain momentum and WE WILL shatter the “irresponsible borrower,” stereotype.
We’ve already proven that we can inspire a bank to take immediate action by sending some number of emails in a coordinated and targeted way. Imagine when I can write something that results in 1,000 or 10,000… or even 100,000… or maybe someday 1,000,000 people sending a letter and a bag of pretzels to a specific individual’s office.
We’re not wining the way we’re going. I’m sorry to say it that way, but then again maybe I’m not. We have to fight as a WE. I’m not trying to be a king… in fact, I’ve never wanted to be a king. I want to be a member of a team… but I just don’t see anyone else with any plan to inspire real change. And yet the banking lobby is well-funded and relentless.
Raise your hand and be counted… and counted on. Email me at mandelman@mac.com now.
No one helps those who don’t help themselves. We need to be WE… and now. Because as long as the country believes that irresponsible borrowers are the problem, nothing will change for borrowers… not enough lawyers will join the fight and as they say… we’ll see you in the soup line.
I need a core group from which we can build. It shouldn’t be painful, there are many of us.
The country hasn’t changed. The power of the people remains intact.
WHEN I POST A NEED FOR DOERS ARE YOU COMMITTED READING IT… AND DOING SOMETHING… SENDING AN EMAIL, SENDING A LETTER AND A BAG OF PRETZELS, OR WHATEVER? LET ME KNOW NOW.
I HAVE A PLAN TO IMPLEMENT A SERIES OF TACTICS DESIGNED TO ATTACK THE IRRESPONSIBLE BORROWERS STEREOTYPE. ARE YOU WILLING TO HELP FUND THAT INITIATIVE FOR THE NEXT 120 DAYS? LET ME KNOW.
Any answer is fine… but I do need to know now.
Mandelman out.
If there was a Hall of Fame for the foreclosure crisis, and perhaps one day there will be, there is no question that attorney April Charney would be one of the first to be indoctrinated. She’s been fighting for the rights of homeowners for decades, and training other lawyers to do the same since 1994. Of course, the advent of securitization and the meltdown of our financial and credit markets, combined with the effects of our housing bubble, has caused an economic catastrophe not seen since the Great Depression of the 1930s, changed everything, but April has been right there on the front lines of the fight to keep people in their homes. I’d say she knows as much about securitization and what went so terribly wrong as anyone in the country, and she has a way of explaining it, so that judges… and anyone else for that matter can understand it.
April and I have gotten to be friends over the last couple of years, and I have an enormous amount of respect for her, both as a person and as a professional. She is someone that will not keep quiet… she will not back down… and she will never give up when fighting for what she knows to be right. She is one of the few people on the planet that I trust unconditionally. I may not always agree with every single position she takes, but whenever she tells me something, I always give it great consideration, because I know that she does not take positions without having done the same. In my view, April Charney is one of the lawyers in this country that reminds us that some attorneys should be revered by our society. If the foreclosure mill attorney David Stern had a polar opposite or arch nemesis… no question it would be April.
Okay, so there no reason for me to say anything more to introduce April, she really is someone that requires no introduction. She’s been quoted by the media countless times related to the foreclosure crisis, and anyone involved in representing homeowners at risk of foreclosure knows her name and what’s she’s accomplished for homeowners in Florida. And by the way, she’s also a good friend of Max Gardner’s, another hero of this crisis.
So, whether you’re a homeowner fighting to keep your home… or a lawyer who represents homeowners in foreclosure, here’s an opportunity to hear what April has to say about where we’ve been, where we are today, and where she thinks we might be tomorrow… it’s one solid hour of April at her candid best… you really don’t want to miss it.
Mandelman out.
The New York Times ran a story yesterday under the headline: Gloom Grips Consumers, and it May Be Home Prices. And all I could think to say was… “MAY?”
It “MAY” be home prices? Like maybe it’s NOT home prices? Okay, I get it… maybe it’s that Charlie Sheen isn’t on “Two and a Half Men” anymore? That could be it, I suppose, it’s sure as heck got me down.
The Times story quotes the patriarch of the Markey family, who apparently lost his stone cutting business in 2009, sold the family home for half a million less than its value during the bubble and moved into a smaller one, gave up two new cars and bought a used one… you know, they Obamasized.
(I think that’s what we should call it when that sort of thing happens. You know, there’s downsize, there’s upsize and then there’s Obamasize.)
The Times quoted Mr. Markey…
“For two years I kept thinking that things would get better,” Mr. Markey, 51, said as he stood in his empty store on a recent weekday. “Now I think the future doesn’t look so good.”
According to the Times, we the people have a “confidence problem.” They say we’ve “turned gloomy about tomorrow,” and as consumers we’re “holding back.”
I’m sorry, but is that the problem? It’s a crisis of confidence? Like, all we need is a little counseling? Like, a thousand Dr. Phils is all we need to save the economy?
I think the nice folks at the New York Times have been spending too much time at Zabars? Because I’m pretty sure it’s not a confidence deficiency… I think it’s money we’re missing… as in income, and the lack of available credit, isn’t that right?
Okay, whatever… so, then the Times story said the following:
“There are good reasons for gloom — incomes have declined, many people cannot find jobs, few trust the government to make things better — but as Federal Reserve chairman, Ben S. Bernanke, noted earlier this year, those problems are not sufficient to explain the depth of the funk.”
The first part is fine… incomes down… check. Homes haven’t just declined… they’ve been cut in half or more. No jobs… okay. Trust the government to make things better… ummm, well… that would be… absolutely no one.
But Ben Bernanke noted that the problems aren’t sufficient to explain the depth of the funk? Bernanke noted that, did he? Are you f#@king kidding me? Is that what that dismal-science-doofus said? Well, therein lies the heart of the problem. You want top know why no one trusts the government to make things better? Well, there you have it… ladies and gentlemen… I give you Ben Bernutcase.
Okay, back to the Times story…
“That has led a growing number of economists to argue that the collapse of housing prices, a defining feature of this downturn, is also a critical and underappreciated impediment to recovery. Americans have lost a vast amount of wealth, and they have lost faith in housing as an investment. They lack money, and they lack the confidence that they will have more money tomorrow.”
Did I read that correctly? Economists are arguing as to whether the collapse of housing prices is a “CRITICAL AND UNDERAPPRECIATED IMPEDIMENT TO RECOVERY?”
Critical AND underappreciated? How can something be critical AND underappreciated? Doesn’t someone get fired if something is found to be both critical AND underappreciated? Because I can think of situations in which you get killed because of something being critical AND underappreciated.
Alright… I have to calm down. I have a daughter.
What in the… No, I can’t… it’s just that… oh my God… but did they just… I’m going to… you know what… no, no way am I going to… even if they aren’t… or even if they are, because… what I want to say is… no, they shouldn’t… how can they… stop, wait… calm… should I just… Holy Mother of… if he doesn’t shut the… I think the only way… but not if… don’t they ever… but what about… no, as I walk through the valley of the shadow of death I shall fear no evil… arrrggghhhh.
You see… that wasn’t even productive. They’ve reduced me to being a babbling brook, I’m starting to talk like Mark Zandi on Lithium. Sure, you can laugh, but what if someday, I read something like that… critical AND underappreciated… and my head explodes? What then, right? Who will be laughing then, I ask you?
Critical AND underappreciated… hmmm… kind of like essential but unrecognized. I really can’t take much more of this sort of thing.
Are those grown up economists they’re referring to, or are we talking about 8 year-old economists? Are they human economists… is it possible we’ve got armadillo economists on the job. Because I would totally understand if an armadillo economist got that wrong. I mean armadillos don’t even talk or anything, right? They’re like possums from New Mexico, right? Someone please… tell me we’ve hired armadillo economists.
And then the Times said the following:
Many say they believe that the bust has permanently changed their financial trajectory.
Well, let me tell you about that, since there’s obviously no chance whatsoever of you figuring anything out on your own. They didn’t think that way when the economic downturn happened. But after watching you guys botch everything you’ve touched over the last few years, while telling us we’re having a recovery, and well… you know, had someone read my blog for the last two years, you could have avoided all of this, does anyone realize that?
And back to the Times story…
“People don’t expect their home to regain value, and that’s really led to a change in consumer attitudes about the economy that we’ve just never seen before,” said Richard Curtin, a professor of economics at the University of Michigan who directs its Survey of Consumers. The latest data from the survey, released Friday by Thomson Reuters, shows that expectations for economic growth have fallen to the lowest level since May 1980.
I’ve had professors like this guy Richard Curtin before, unable to think without instructions and a road map. The guy’s probably a brilliant something-or-other, but we wouldn’t recognize what that might be if someone drew up a picture.
Now, that’s nothing… wait until you read this next paragraph…
Economists have only recently devoted serious study to how a decline in housing prices affects consumer spending, not least because this is the first decline in the average price of an American home since the Great Depression. A 2007 review of existing research by the Congressional Budget Office reported that people reduce spending by $20 to $70 a year for every $1,000 decline in the value of their home.
Okay, that’s it… ball four… take a hike… you’re done. Stop it right now. Back away from the research report, guys… you’re going to get us killed. Seriously, if this isn’t scaring the heck out of you, then let me just remind you that this is The New York Times we’re reading here… this is the smart newspaper. God help those who get their news by looking at the pictures in USA Today.
Alright, I wasn’t going to do this but give me one more… sure I’m scared, but go ahead…
“This “wealth effect” is significantly larger for changes in home equity than in the value of other investments, such as stocks, apparently because people regard changes in housing prices as more likely to endure.”
Oh dear God. Okay, I have two very important things to say:
A. I’m not going to go search for it now, but I wrote about that very concept two years ago. I wrote that the “wealth effect” that economists have been studying and linking to the stock market was actually wrong. It was always housing, not the stock market, with the possible exception of 1998-1999, and even then, not really.
When they would correlate the stock market to the wealth effect, it was always at a time when housing prices were at least stable and more than likely appreciating. So, they thought it was the stock market, but really the stock market was never a primary or independent variable, homes were always primary and independent.
Why the heck do you think I’ve been writing what I’ve been writing for the last three years? Oh God… talk about wasting time and money, do you know how much money I’ve spent to accomplish absolutely nothing… I feel sick… this is what NASA must feel like all the time.
B. And “apparently because people regard changes in housing prices as more likely to endure?” No, no, no… which one of your robot reports told you that, genius? That’s wrong, wrong, wrong. Don’t you know any actual people… I mean real people… not like my parents kind of people, but real, regular people? You really don’t, do you?
Okay, look… and pay attention please, you need to understand this or we’re all screwed. Houses are America’s long-term savings account… money we can’t get out of an ATM. Stocks we know go up and down, but we also know that we have a very definite tendency to buy high and sell low.
You can’t even find a CPA in this country who can tell you what his or her average return on stocks has been for the last ten or twenty years… or five, for that matter. No one knows the answer to that question, and it’s not because they can’t do the math. It’s because they don’t want to know the answer.
But, you see… our homes are our retirement safety net. We don’t care what our ROI is, we’ll pay them off in 30 years and then have something significant no matter what. We’ll start saving at 55 too, and probably put away something more as well, but no mater what… we’ll have our homes… and they’ll be worth a significant amount, and there’s no way we’re willing to drive this country through our consumer spending without them.
You can’t even find a CPA in this country who can tell you what his or her average return on stocks has been for the last ten or twenty years… or five, for that matter. No one knows the answer to that question, and it’s not because they can’t do the math. It’s because they don’t want to know the answer.
But, you see… our homes are our retirement safety net. We don’t care what our ROI is, we’ll pay them off in 30 years and then have something significant no matter what. We’ll start saving at 55 too, and probably put away something more as well, but no mater what… we’ll have our homes… and they’ll be worth a significant amount, and there’s no way we’re willing to drive this country through our consumer spending without them.
But, what you’ve allowed to happen is inconceivable to us. You stood by while Wall Street gazillionaires defrauded the planet and shut down the credit markets completely and possibly forever. Then you let that fester and grow such that housing prices went into a free fall. And you did all that right after allowing mortgage bankers to sell us a bunch of loan products expressly designed to be refinanced every few years.
Worse still, when you had a chance to do something about it, you blew it at every single turn in the road… HAMP being one of your greatest hits, but there were lots of others. And like sprinkles on top of a cupcake, you did nothing while our mortgage servicers did everything they could think of to abuse us… except literally peeing in our hair.
Hey Democrats… remember the midterms? When you guys got shellacked, as the president put it? Are you picking up on why that happened yet? Is any of this ringing any bells, you collection of oblivious potted plants? I knew Obama was actually surprised that you guys lost so badly… I knew it. He really was surprised. And I’m sure it’s because someone’s research report didn’t indicate the proper coordinates or some such nonsense.
Here’s a tip for next time… LEAVE YOUR OFFICES. You’re welcome to call me and I’ll take you for a drive around real America anytime. Actually, you probably don’t recall, but I offered that several times last time around too. Leave your research reports behind, you won’t need to determine anything statistically significant, I promise. It’ll be overwhelmingly in one direction.
Okay, NYT… let me have it…
“A recent paper by Karl E. Case, an economics professor at Wellesley College, and two co-authors estimated the decline in home prices from 2005 to 2009 caused consumer spending to be $240 billion lower in 2010 than it otherwise would have been. That figure is equal to about 1.7 percent of annual economic activity, enough to be the difference between the mediocre recent growth and healthy growth. And it does not include all the other effects of the housing crash, including the low level of new home construction, that are also weighing on the economy.”
You guys would turn checkers into chess, wouldn’t you? It’s checkers, damn it… just checkers. This is America… we play checkers. Chess is for communists. Just go on, I’m not even going to respond to that paragraph… it’s too stupid for words and I don’t want to encourage you to do more of that sort of thing. That’s the kind of crap that got you and us in all this trouble, got it? Cut it out right now.
And someone please say the following to Professor Case… “Alrighty now, we’ll let you go back to bed now.”
Let’s move along…
“Roy Pugsley, who owns a pool supply stor 2010ore in Winter Garden, another suburb here, said that he made 2,500 fewer sales during the first eight months of 2011 compared with the same period in 2007. That translates to one less person walking through the doors to buy chemicals or toys or spare parts in each hour that the store is open.”
Hey, now you’re getting closer… was that so difficult to do? Was Ron Pugsley too busy to speak with you in 2008, 2009, or 2010? Did you have trouble getting a meet up with the Pugmeister? Call me next time, I’ll make sure you get in.
Is there really more? Seriously? And people say I write long articles….
“Mr. Pugsley said business actually increased in the early days of the recession; customers had told him they were spending more time at home. But now people buy only what they need for maintenance. “People realized that it wasn’t going to get any better, and they stopped spending on their pools, too,” he said.”
Now, do you see how quickly old Pug figured out what was happening there? He didn’t need a research report. He was just using his good old, God-given common sense. All business owners have it. We keep our finger on the pulse, because if we don’t… we go broke, our children can’t keep up with their peers, and our wives leave us for their dentists. That’s some seriously motivating stuff, right there, let me tell you. Plus there’s payroll, which for us, doesn’t just show up on a cloud from above.
Okay, next slide:
“At Milcarsky’s Appliance Center in the adjacent town of Longwood, business now comes from people remodeling their own homes rather than builders, and customers are picking cheaper models, said Doug Morey, a sales manager.”
Ahhh, good old Milcarsky’s… a darn fine place to pick up an appliance. But, one question… why are we talking to Doug the sales guy? Only time we need to talk to Doug is when we’re in the market for an appliance.
“People who might have bought that” — he taps a stove with chunky burners, designed to look like it belongs in a restaurant kitchen — “are double-thinking it. Everyone has had to cut back.”
See what I mean. Double-thinking it? Everyone had to cut back, so duh? That’s not helpful. Keep going…
“That means Milcarsky’s has cut back too. The company, which employed 26 people three years ago, now has about a dozen workers, and they are making less in salary and commissions.”
See, you didn’t get that from Doug, now did you? Nope, you got that information from old man Milcarsky himself, am I right. Or, maybe from his wife if she still comes in to look over the bookkeeper’s shoulder one a week. Right? Yes, I’m right. Doug wouldn’t know that, and if I have to explain why that is, then you need serious lessons in small business management.
Next slide…
“I might like to think that I’m middle class, but I’m not. I’m not anymore,” said Rae-Anne Crotty, a customer service manager at the store. She now shops for groceries at discount stores, she said, and buys gifts for her children at Christmas but not on their birthdays.
No, no, no… you don’t need this information. Anne may have liked to think she’s middle class, but she wasn’t before and she’s not now. She should have been shopping at discount stores all along, and it’s not her whose lifestyle has changed… it’s the Milcarskys.
Also, don’t let Anne fool you. If she really didn’t buy her kids birthday presents, and I doubt that very much, then it’s because she either took them on a vacation instead or her parents spoiled them both with new bikes and a day at the amusement park. Care to bet on whether I’m right?
Next slide…
“It remains the prevailing view of economic policy makers that economic activity will eventually return to the same trajectory as before the recession. Mr. Bernanke and others have said that they see no evidence of any permanent change in the economy. Previous bouts of economic pessimism, as in the early 1980s and early 1990s, went away once growth picked up.”
See, we’re in real trouble, that man runs the Fed. But at least we’ve identified the source of the problem, or at least one of the sources. I should have known it was him. My parents are college professor types, as are their friends, and none of them could keep a hot dog stand open for the summer either.
Bernanke hasn’t been right yet, since the meltdown began during the summer of 2007, and in fact he doesn’t even seem to know that the meltdown began during the summer of 2007.
Just the fact that he and others could possibly say that they see no evidence of permanent change in the economy is more than enough for me… can I meet with him for an hour please? I’m serious… I could get this problem fixed in a jiffy… all I need is an hour… two if he’s as obtuse as he appears. How do I go about getting a sit down with Gentle Ben?
How about this for something of which he and his pals could take note… I’ll make it a riddle:
Of all of the events and factors involved in this meltdown, what’s the one thing that has never happened before in our history? What’s the one thing that is entirely unprecedented?
Want a hint? Okay, it began on July 10, 2007. No? Okay, whatever it was, we haven’t seen another one of these sold, since the summer of 2007? Still no? Come on, work with me here… this isn’t that hard.
The securitization market froze solid… the credit markets… there have been no private securitizations to speak of since the credit markets froze beginning on July 10, 2007. The credit markets are frozen because no one trusts the ratings.
I know I used this line in one of my last articles, but I’m going to use it again. Instead of calling it the “abrupt re-pricing of risk,” I suggested we call it, “the abrupt reduction in trust.”
We’re a credit-based economy and our credit markets are frozen stuck because no one trusts the credit ratings on bonds anymore. So, 97-98% of all lending is the government ever since the summer of 2007. Hasn’t Ben noticed that? He must have been too busy taking in garbage assets so he could loan $3 trillion trillion or so.
So, no credit markets in a credit-based economy… doesn’t that sound like it could put a crimp in things? Of course, now that you’ve let us drive directly off the cliff, we have precious few qualified buyers anyway. But even when that gets better, no one is going to buy MBSs, or ABSs, or anything derived from those vehicles until we fix what was broken about ours. Capisce?
And only government credit won’t cut it. That will lead to deflation and a permanent change. And Ben better wake up to that fact soon, or we really are going to starve to death and in more ways than one.
Oh, and did you notice the last sentence above… from the economists and Bernanke…
“Previous bouts of economic pessimism, as in the early 1980s and early 1990s, went away once growth picked up.”
That has nothing to do with now. This is a demand side recession, not a supply side recession. What happened in the early 1980s is entirely irrelevant. For one thing, it was the end of a 16-year bear market that went from 1966-1982, during which the Dow returned -6% a year. (And I don’t need to look that up for a source, just trust me, it’s right.)
And the beginning of the 1990s wasn’t saved by anything but the dot-com bubble, so what does that have to do with broken credit markets and housing down by 50% plus… and has it occurred to anyone that there’s also the aging population… baby boomers… lots older now than in the early 90s. Older means spends less, right?
So, stop looking in your review mirror Ben… and keep you eyes on the road… you’re driving me crazy looking backwards like that, and one of these days we’re going to run straight into a cement divider and burst into flames.
Last slide… remember Mr. Marjey from the beginning of the article… okay good…
The business Mr. Markey created, Stone Giant, grew to include two factories and 60 employees, and it installed granite countertops in up to 15 new kitchens every day.
His new company, Winter Park Granite, now installs two kitchens on the average day. He has eight employees but cannot afford health insurance for them or himself.
The family income last year was less than a third of the $175,000 that he and his wife made in 2007, their last good year.
And he sees little room for growth. He has stopped spending money on advertising.
“We’re never going to get that big again,” he said. “I was someone employing people and taking people to the good life. Now I’m just trying to survive.”
So, what do you suppose that looks like to Ben? Someone who is absent adequate confidence? From 60 employees to 8, and even at that they can’t afford health insurance… and income that’s one third of what they made in 2007… plus no money for advertising… just trying to survive. Anyone think this guy is voting for Obama in 2012? Or bouncing back in 2013 or 2014?
Yep, sure sounds like a blip on the map to me. Probably pick back up… well, maybe never.
Are we ready to get behind something to fix this Keystone Cops movie? Or isn’t the pain acute enough yet?
Mandelman out.
The New York Times ran a story yesterday under the headline: Gloom Grips Consumers, and it May Be Home Prices. And all I could think to say was… “MAY?”
It “MAY” be home prices? Like maybe it’s NOT home prices? Okay, I get it… maybe it’s that Charlie Sheen isn’t on “Two and a Half Men” anymore? That could be it, I suppose, it’s sure as heck got me down.
The Times story quotes the patriarch of the Markey family, who apparently lost his stone cutting business in 2009, sold the family home for half a million less than its value during the bubble and moved into a smaller one, gave up two new cars and bought a used one… you know, they Obamasized.
(I think that’s what we should call it when that sort of thing happens. You know, there’s downsize, there’s upsize and then there’s Obamasize.)
The Times quoted Mr. Markey…
“For two years I kept thinking that things would get better,” Mr. Markey, 51, said as he stood in his empty store on a recent weekday. “Now I think the future doesn’t look so good.”
According to the Times, we the people have a “confidence problem.” They say we’ve “turned gloomy about tomorrow,” and as consumers we’re “holding back.”
I’m sorry, but is that the problem? It’s a crisis of confidence? Like, all we need is a little counseling? Like, a thousand Dr. Phils is all we need to save the economy?
I think the nice folks at the New York Times have been spending too much time at Zabars? Because I’m pretty sure it’s not a confidence deficiency… I think it’s money we’re missing… as in income, and the lack of available credit, isn’t that right?
Okay, whatever… so, then the Times story said the following:
“There are good reasons for gloom — incomes have declined, many people cannot find jobs, few trust the government to make things better — but as Federal Reserve chairman, Ben S. Bernanke, noted earlier this year, those problems are not sufficient to explain the depth of the funk.”
The first part is fine… incomes down… check. Homes haven’t just declined… they’ve been cut in half or more. No jobs… okay. Trust the government to make things better… ummm, well… that would be… absolutely no one.
But Ben Bernanke noted that the problems aren’t sufficient to explain the depth of the funk? Bernanke noted that, did he? Are you f#@king kidding me? Is that what that dismal-science-doofus said? Well, therein lies the heart of the problem. You want top know why no one trusts the government to make things better? Well, there you have it… ladies and gentlemen… I give you Ben Bernutcase.
Okay, back to the Times story…
“That has led a growing number of economists to argue that the collapse of housing prices, a defining feature of this downturn, is also a critical and underappreciated impediment to recovery. Americans have lost a vast amount of wealth, and they have lost faith in housing as an investment. They lack money, and they lack the confidence that they will have more money tomorrow.”
Did I read that correctly? Economists are arguing as to whether the collapse of housing prices is a “CRITICAL AND UNDERAPPRECIATED IMPEDIMENT TO RECOVERY?”
Critical AND underappreciated? How can something be critical AND underappreciated? Doesn’t someone get fired if something is found to be both critical AND underappreciated? Because I can think of situations in which you get killed because of something being critical AND underappreciated.
Alright… I have to calm down. I have a daughter.
What in the… No, I can’t… it’s just that… oh my God… but did they just… I’m going to… you know what… no, no way am I going to… even if they aren’t… or even if they are, because… what I want to say is… no, they shouldn’t… how can they… stop, wait… calm… should I just… Holy Mother of… if he doesn’t shut the… I think the only way… but not if… don’t they ever… but what about… no, as I walk through the valley of the shadow of death I shall fear no evil… arrrggghhhh.
You see… that wasn’t even productive. They’ve reduced me to being a babbling brook, I’m starting to talk like Mark Zandi on Lithium. Sure, you can laugh, but what if someday, I read something like that… critical AND underappreciated… and my head explodes? What then, right? Who will be laughing then, I ask you?
Critical AND underappreciated… hmmm… kind of like essential but unrecognized. I really can’t take much more of this sort of thing.
Are those grown up economists they’re referring to, or are we talking about 8 year-old economists? Are they human economists… is it possible we’ve got armadillo economists on the job. Because I would totally understand if an armadillo economist got that wrong. I mean armadillos don’t even talk or anything, right? They’re like possums from New Mexico, right? Someone please… tell me we’ve hired armadillo economists.
And then the Times said the following:
Many say they believe that the bust has permanently changed their financial trajectory.
Well, let me tell you about that, since there’s obviously no chance whatsoever of you figuring anything out on your own. They didn’t think that way when the economic downturn happened. But after watching you guys botch everything you’ve touched over the last few years, while telling us we’re having a recovery, and well… you know, had someone read my blog for the last two years, you could have avoided all of this, does anyone realize that?
And back to the Times story…
“People don’t expect their home to regain value, and that’s really led to a change in consumer attitudes about the economy that we’ve just never seen before,” said Richard Curtin, a professor of economics at the University of Michigan who directs its Survey of Consumers. The latest data from the survey, released Friday by Thomson Reuters, shows that expectations for economic growth have fallen to the lowest level since May 1980.
I’ve had professors like this guy Richard Curtin before, unable to think without instructions and a road map. The guy’s probably a brilliant something-or-other, but we wouldn’t recognize what that might be if someone drew up a picture.
Now, that’s nothing… wait until you read this next paragraph…
Economists have only recently devoted serious study to how a decline in housing prices affects consumer spending, not least because this is the first decline in the average price of an American home since the Great Depression. A 2007 review of existing research by the Congressional Budget Office reported that people reduce spending by $20 to $70 a year for every $1,000 decline in the value of their home.
Okay, that’s it… ball four… take a hike… you’re done. Stop it right now. Back away from the research report, guys… you’re going to get us killed. Seriously, if this isn’t scaring the heck out of you, then let me just remind you that this is The New York Times we’re reading here… this is the smart newspaper. God help those who get their news by looking at the pictures in USA Today.
Alright, I wasn’t going to do this but give me one more… sure I’m scared, but go ahead…
“This “wealth effect” is significantly larger for changes in home equity than in the value of other investments, such as stocks, apparently because people regard changes in housing prices as more likely to endure.”
Oh dear God. Okay, I have two very important things to say:
A. I’m not going to go search for it now, but I wrote about that very concept two years ago. I wrote that the “wealth effect” that economists have been studying and linking to the stock market was actually wrong. It was always housing, not the stock market, with the possible exception of 1998-1999, and even then, not really.
When they would correlate the stock market to the wealth effect, it was always at a time when housing prices were at least stable and more than likely appreciating. So, they thought it was the stock market, but really the stock market was never a primary or independent variable, homes were always primary and independent.
Why the heck do you think I’ve been writing what I’ve been writing for the last three years? Oh God… talk about wasting time and money, do you know how much money I’ve spent to accomplish absolutely nothing… I feel sick… this is what NASA must feel like all the time.
B. And “apparently because people regard changes in housing prices as more likely to endure?” No, no, no… which one of your robot reports told you that, genius? That’s wrong, wrong, wrong. Don’t you know any actual people… I mean real people… not like my parents kind of people, but real, regular people? You really don’t, do you?
Okay, look… and pay attention please, you need to understand this or we’re all screwed. Houses are America’s long-term savings account… money we can’t get out of an ATM. Stocks we know go up and down, but we also know that we have a very definite tendency to buy high and sell low.
You can’t even find a CPA in this country who can tell you what his or her average return on stocks has been for the last ten or twenty years… or five, for that matter. No one knows the answer to that question, and it’s not because they can’t do the math. It’s because they don’t want to know the answer.
But, you see… our homes are our retirement safety net. We don’t care what our ROI is, we’ll pay them off in 30 years and then have something significant no matter what. We’ll start saving at 55 too, and probably put away something more as well, but no mater what… we’ll have our homes… and they’ll be worth a significant amount, and there’s no way we’re willing to drive this country through our consumer spending without them.
You can’t even find a CPA in this country who can tell you what his or her average return on stocks has been for the last ten or twenty years… or five, for that matter. No one knows the answer to that question, and it’s not because they can’t do the math. It’s because they don’t want to know the answer.
But, you see… our homes are our retirement safety net. We don’t care what our ROI is, we’ll pay them off in 30 years and then have something significant no matter what. We’ll start saving at 55 too, and probably put away something more as well, but no mater what… we’ll have our homes… and they’ll be worth a significant amount, and there’s no way we’re willing to drive this country through our consumer spending without them.
But, what you’ve allowed to happen is inconceivable to us. You stood by while Wall Street gazillionaires defrauded the planet and shut down the credit markets completely and possibly forever. Then you let that fester and grow such that housing prices went into a free fall. And you did all that right after allowing mortgage bankers to sell us a bunch of loan products expressly designed to be refinanced every few years.
Worse still, when you had a chance to do something about it, you blew it at every single turn in the road… HAMP being one of your greatest hits, but there were lots of others. And like sprinkles on top of a cupcake, you did nothing while our mortgage servicers did everything they could think of to abuse us… except literally peeing in our hair.
Hey Democrats… remember the midterms? When you guys got shellacked, as the president put it? Are you picking up on why that happened yet? Is any of this ringing any bells, you collection of oblivious potted plants? I knew Obama was actually surprised that you guys lost so badly… I knew it. He really was surprised. And I’m sure it’s because someone’s research report didn’t indicate the proper coordinates or some such nonsense.
Here’s a tip for next time… LEAVE YOUR OFFICES. You’re welcome to call me and I’ll take you for a drive around real America anytime. Actually, you probably don’t recall, but I offered that several times last time around too. Leave your research reports behind, you won’t need to determine anything statistically significant, I promise. It’ll be overwhelmingly in one direction.
Okay, NYT… let me have it…
“A recent paper by Karl E. Case, an economics professor at Wellesley College, and two co-authors estimated the decline in home prices from 2005 to 2009 caused consumer spending to be $240 billion lower in 2010 than it otherwise would have been. That figure is equal to about 1.7 percent of annual economic activity, enough to be the difference between the mediocre recent growth and healthy growth. And it does not include all the other effects of the housing crash, including the low level of new home construction, that are also weighing on the economy.”
You guys would turn checkers into chess, wouldn’t you? It’s checkers, damn it… just checkers. This is America… we play checkers. Chess is for communists. Just go on, I’m not even going to respond to that paragraph… it’s too stupid for words and I don’t want to encourage you to do more of that sort of thing. That’s the kind of crap that got you and us in all this trouble, got it? Cut it out right now.
And someone please say the following to Professor Case… “Alrighty now, we’ll let you go back to bed now.”
Let’s move along…
“Roy Pugsley, who owns a pool supply stor 2010ore in Winter Garden, another suburb here, said that he made 2,500 fewer sales during the first eight months of 2011 compared with the same period in 2007. That translates to one less person walking through the doors to buy chemicals or toys or spare parts in each hour that the store is open.”
Hey, now you’re getting closer… was that so difficult to do? Was Ron Pugsley too busy to speak with you in 2008, 2009, or 2010? Did you have trouble getting a meet up with the Pugmeister? Call me next time, I’ll make sure you get in.
Is there really more? Seriously? And people say I write long articles….
“Mr. Pugsley said business actually increased in the early days of the recession; customers had told him they were spending more time at home. But now people buy only what they need for maintenance. “People realized that it wasn’t going to get any better, and they stopped spending on their pools, too,” he said.”
Now, do you see how quickly old Pug figured out what was happening there? He didn’t need a research report. He was just using his good old, God-given common sense. All business owners have it. We keep our finger on the pulse, because if we don’t… we go broke, our children can’t keep up with their peers, and our wives leave us for their dentists. That’s some seriously motivating stuff, right there, let me tell you. Plus there’s payroll, which for us, doesn’t just show up on a cloud from above.
Okay, next slide:
“At Milcarsky’s Appliance Center in the adjacent town of Longwood, business now comes from people remodeling their own homes rather than builders, and customers are picking cheaper models, said Doug Morey, a sales manager.”
Ahhh, good old Milcarsky’s… a darn fine place to pick up an appliance. But, one question… why are we talking to Doug the sales guy? Only time we need to talk to Doug is when we’re in the market for an appliance.
“People who might have bought that” — he taps a stove with chunky burners, designed to look like it belongs in a restaurant kitchen — “are double-thinking it. Everyone has had to cut back.”
See what I mean. Double-thinking it? Everyone had to cut back, so duh? That’s not helpful. Keep going…
“That means Milcarsky’s has cut back too. The company, which employed 26 people three years ago, now has about a dozen workers, and they are making less in salary and commissions.”
See, you didn’t get that from Doug, now did you? Nope, you got that information from old man Milcarsky himself, am I right. Or, maybe from his wife if she still comes in to look over the bookkeeper’s shoulder one a week. Right? Yes, I’m right. Doug wouldn’t know that, and if I have to explain why that is, then you need serious lessons in small business management.
Next slide…
“I might like to think that I’m middle class, but I’m not. I’m not anymore,” said Rae-Anne Crotty, a customer service manager at the store. She now shops for groceries at discount stores, she said, and buys gifts for her children at Christmas but not on their birthdays.
No, no, no… you don’t need this information. Anne may have liked to think she’s middle class, but she wasn’t before and she’s not now. She should have been shopping at discount stores all along, and it’s not her whose lifestyle has changed… it’s the Milcarskys.
Also, don’t let Anne fool you. If she really didn’t buy her kids birthday presents, and I doubt that very much, then it’s because she either took them on a vacation instead or her parents spoiled them both with new bikes and a day at the amusement park. Care to bet on whether I’m right?
Next slide…
“It remains the prevailing view of economic policy makers that economic activity will eventually return to the same trajectory as before the recession. Mr. Bernanke and others have said that they see no evidence of any permanent change in the economy. Previous bouts of economic pessimism, as in the early 1980s and early 1990s, went away once growth picked up.”
See, we’re in real trouble, that man runs the Fed. But at least we’ve identified the source of the problem, or at least one of the sources. I should have known it was him. My parents are college professor types, as are their friends, and none of them could keep a hot dog stand open for the summer either.
Bernanke hasn’t been right yet, since the meltdown began during the summer of 2007, and in fact he doesn’t even seem to know that the meltdown began during the summer of 2007.
Just the fact that he and others could possibly say that they see no evidence of permanent change in the economy is more than enough for me… can I meet with him for an hour please? I’m serious… I could get this problem fixed in a jiffy… all I need is an hour… two if he’s as obtuse as he appears. How do I go about getting a sit down with Gentle Ben?
How about this for something of which he and his pals could take note… I’ll make it a riddle:
Of all of the events and factors involved in this meltdown, what’s the one thing that has never happened before in our history? What’s the one thing that is entirely unprecedented?
Want a hint? Okay, it began on July 10, 2007. No? Okay, whatever it was, we haven’t seen another one of these sold, since the summer of 2007? Still no? Come on, work with me here… this isn’t that hard.
The securitization market froze solid… the credit markets… there have been no private securitizations to speak of since the credit markets froze beginning on July 10, 2007. The credit markets are frozen because no one trusts the ratings.
I know I used this line in one of my last articles, but I’m going to use it again. Instead of calling it the “abrupt re-pricing of risk,” I suggested we call it, “the abrupt reduction in trust.”
We’re a credit-based economy and our credit markets are frozen stuck because no one trusts the credit ratings on bonds anymore. So, 97-98% of all lending is the government ever since the summer of 2007. Hasn’t Ben noticed that? He must have been too busy taking in garbage assets so he could loan $3 trillion trillion or so.
So, no credit markets in a credit-based economy… doesn’t that sound like it could put a crimp in things? Of course, now that you’ve let us drive directly off the cliff, we have precious few qualified buyers anyway. But even when that gets better, no one is going to buy MBSs, or ABSs, or anything derived from those vehicles until we fix what was broken about ours. Capisce?
And only government credit won’t cut it. That will lead to deflation and a permanent change. And Ben better wake up to that fact soon, or we really are going to starve to death and in more ways than one.
Oh, and did you notice the last sentence above… from the economists and Bernanke…
“Previous bouts of economic pessimism, as in the early 1980s and early 1990s, went away once growth picked up.”
That has nothing to do with now. This is a demand side recession, not a supply side recession. What happened in the early 1980s is entirely irrelevant. For one thing, it was the end of a 16-year bear market that went from 1966-1982, during which the Dow returned -6% a year. (And I don’t need to look that up for a source, just trust me, it’s right.)
And the beginning of the 1990s wasn’t saved by anything but the dot-com bubble, so what does that have to do with broken credit markets and housing down by 50% plus… and has it occurred to anyone that there’s also the aging population… baby boomers… lots older now than in the early 90s. Older means spends less, right?
So, stop looking in your review mirror Ben… and keep you eyes on the road… you’re driving me crazy looking backwards like that, and one of these days we’re going to run straight into a cement divider and burst into flames.
Last slide… remember Mr. Marjey from the beginning of the article… okay good…
The business Mr. Markey created, Stone Giant, grew to include two factories and 60 employees, and it installed granite countertops in up to 15 new kitchens every day.
His new company, Winter Park Granite, now installs two kitchens on the average day. He has eight employees but cannot afford health insurance for them or himself.
The family income last year was less than a third of the $175,000 that he and his wife made in 2007, their last good year.
And he sees little room for growth. He has stopped spending money on advertising.
“We’re never going to get that big again,” he said. “I was someone employing people and taking people to the good life. Now I’m just trying to survive.”
So, what do you suppose that looks like to Ben? Someone who is absent adequate confidence? From 60 employees to 8, and even at that they can’t afford health insurance… and income that’s one third of what they made in 2007… plus no money for advertising… just trying to survive. Anyone think this guy is voting for Obama in 2012? Or bouncing back in 2013 or 2014?
Yep, sure sounds like a blip on the map to me. Probably pick back up… well, maybe never.
Are we ready to get behind something to fix this Keystone Cops movie? Or isn’t the pain acute enough yet?
Mandelman out.
The Great Recession, or whatever we’re calling it, began in December 2007.
And we found that out when the National Bureau of Economic Research (“NBER”) announced it on November 28, 2008.
According to the NBER:
“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”
Wow… now that is some very euphemistic writing right there. It begins with a peak, and we all like peaks, right? And even though it ends when we reach a trough, until we reach that trough, we’re in an expansion! So… yay! If that’s what a recession is, I think I’ll have two please.
Okay, so the Great Recession ended as of June 2009.
And we were told that by the NBER on September 20, 2010.
The NBER’s president, James Poterba said that a plunge in household wealth, along with financial crises in the U.S. and overseas are what contributed to the long duration of the recession. The NBER say it lasted 18 months, which it also says is the longest slump since the Great Depression.
Now, a new study just released yesterday by Sentier Research, a firm founded by two former Census Bureau officials, shows that during the Great Recession real median household income fell by 3.2%. In American money that’s from $55,309 to $53,518.
The interesting thing about the study is that the study also shows that since the Great Recession officially ended real median household income fell by an additional 6.7%, which means it dropped from the $53,518 down to $49,909.
Wow… that kinda’ makes you long for the good old days of the Great Recession, doesn’t it?
Want to know what else you can draw from those numbers? Well, since December of 2007, real median household income dropped by 9.8%… that’s a TEN PERCENT DROP in the median household income in this country. Gordon W. Green Jr., one of the guys who wrote the report referred to the decline as: “a significant reduction in the American standard of living.”
Ya’ think?
Look people… don’t get bummed out about this study, because a few years from now the NBER is probably going to refer to today as having been a peak.
Now, there’s another study that just came out courtesy of Henry S. Farber of Princeton University. It’s titled: Job Loss in the Great Recession, and it’s a page- turner, let me tell you. Among numerous other distressing things, Farber’s study found that the folks that lost their jobs during the Great Recession and were lucky to find work again, on average earned 17.5% less than they did in their old jobs.
You see, that whole finding work thing is really getting to be kind of a long haul. According to the Bureau of Labor Statistics, on average, if you lost your job in December of 2007… you know, when the Great Recession began, it took you 16.6 weeks to find a new job. … that’s 4-5 months.
When the Great Recession ended in June of 2009, if you lost your job it took you 24.1 weeks on average to find work… about six months. But since the Great Recession ended… and we’ve been “recovering” for what, about two and a half years since then… as of September of 2011… if you lose your job, it takes an average of 40.5 weeks, or roughly 10 months to find that new lower paying one.
I don’t want to speak for everyone, but I’m not sure we can take much more of this recovering. If we recover much more, the average person who loses a job will be out of work over a year! And since 2008, we’ve got 6.5 million officially unemployed for over six months, and a few million more that we’ve stopped counting because they’re no longer even looking for work, referring to them as having “dropped out of the labor force.”
If you listen to Carmen Reinhart and Kenneth Rogoff, the academics that authored the book, “This Time is Different,” an absolutely fabulous read that came out last year, we’re not even halfway through our decade of high unemployment that follows the typical financial crisis. (By the way, these two university professors say the Great Recession began in July of 2007… sound familiar to anyone?)
Of course, Reinhart and Rogoff could be wrong. Their book only examined such crises in 66 countries over the last 800 years. And besides… maybe this time IS different. (Don’t look at me like that… and yes, I can see you.)
Yeah, this time is different all right… this time is worse.
Of course, our government economists will continue to trot out the standard list of advantages that no other country has. You know… the reasons people are always saying that you shouldn’t bet against the USA whenever we’re in a slump..
Like what, you ask?
Well, like we’ve got the the world’s best venture-capital network, for one. Okay, fair enough… I’m not going to argue that one. What else?
Number two on the list is always: “A well-established rule of law.” You know, that one never used to sound funny to me when I’d read it, but for some reason today, it made me LOL. What else you got?
Then there’s the old favorite… “A culture that celebrates risk taking.” Also very funny stuff… go on, go on…
Okay, how about: “An unmatched appeal to immigrants.” Oh boy… I just hope they weren’t watching the last Republican presidential candidate debates, because the candidates spent about a third of their time talking about the fence that most of them want to build around the entire country, if they could figure out a way to do it. And then there’s Arizona stance on immigration… not exactly a give us your tired, poor, and huddled masses kind of place, is it?
Wait, you mean that’s it? That’s the list of America’s advantages that no other country has? Uh oh. We’d better do more to talk up the venture capital thing. Come on… grab a napkin and a pen, I’m feeling a brainstorm coming on…
President Obama is just about begging for his “jobs bill” to be passed, and it goes without saying that the Republicans are… wait for it… saying NO! And normally, I might care about that sort of thing, at least have an opinion or two, but today… oh, whatever… flip a coin. Tax cuts for business aren’t going to create jobs at this point any more than the home buyer tax credits were going to rejuvenate the housing market back in… well, whenever that was.
Businesses are not going to expand or start hiring until consumers are spending again, and if you’ve been paying attention to what I’ve been pointing out thus far in this admittedly upbeat, yet pithy little article, then you have some idea when that might be… like, ummm… how does “not anytime soon” grab you?
The American auto industry, assuming its sales for the first half of this year hold up throughout the second half, which I would tell you is impossible, is on pace to sell just about 30% fewer new cars this year than it did a decade ago.
And if that statistic didn’t bother you enough, then tell me when ten years ago was, genius… 2001… you remember 2001, don’t you? That was the year that we spent in a deepening recession, reeling from the trillions in consumer wealth lost as a result of the dot-com bubble’s demise. Ahhh, 2001… an absolutely horrendous year for the economy, that is to say until things really went south after 9-11. And this year, if we’re impossibly lucky, we’ll sell 30% fewer new cars than back then?
The Federal Reserve Bank of New York, that temple of transparency… that cathedral of capitalism… well, they recently published a report on discretionary service spending, which is how much we spend after you deduct housing, food and health care. Such spending has NEVER fallen more than three percent during a recession, even going back decades… except during this “recovery” it’s already down by seven percent.
See, I’m telling you… what we need to do is get back to into a recession. It’s this recovery that’s killing us… the proof is popping up all around you like popcorn.
But what about Wall Street, I hear you cry… isn’t America still rich and strong because of our Wall Street banker-people? Aren’t they going to lead us back to the future? Actually… no. What we’ve allowed our banker-friends (and by friends I mean… well, I don’t mean friends, let’s just say that), what we’ve allowed them to do is increase income inequality significantly in this country… and we’ve allowed them to do it big time.
Well, guess what? More good news… a brand spanking new report from the International Monetary Fund, or IMF for those in the know, shows that income inequality is actually a major impediment to economic growth.
According to the IMF’s report new report:
“Beyond the risk that inequality may amplify the potential for financial crisis, it may also bring political instability, which can discourage investment. Inequality may make it harder for governments to make difficult but necessary choices in the face of shocks, such as raising taxes or cutting public spending to avoid a debt crisis. Or inequality may reflect poor people’s lack of access to financial services, which gives them fewer opportunities to invest in education and entrepreneurial activity.”
You’ll be relieved to hear that bonuses on The Street are on track to at least equal the egregious, if not unconscionable… no, how about kingly sums paid out last year… I just read it in the WSJ. So, very well done there.
I can dream, can’t I?
And with all of this economic recovery happening all around us, what are our elected officials talking about? They’re trying to save us, aren’t they?
For Obama’s part, it seems that he’s just going to keep whining about how “the Republicans won’t pass my jobs bill.” And if that makes you throw up in your mouth a little bit, then try on the Republicans for size. It goes without saying that they’re blaming the Obama Administration, but its what they’re blaming Obama for that’ll make you want to throw yourself from the 52nd floor of the closest Bank of America building.
According to the Republicans talking points, it’s Obama’s increased regulation of financial institutions and promised future tax increases that are hurting business and consumer confidence.
Wow, is that right? It’s the increased amount of regulations we’ve heaped onto our beloved financial institutions? Did I get that right, Republicans? The “increased” amount of regulation. The “increased” amount. Increased. That’s the one that means “more,” right?
And it’s the promised future tax increases that are playing havoc with my feelings of confidence? See… I did not know that. It’s weird because, these days, when I think about the future I don’t even think I consider tax increases… I think more about being so marginalized that I won’t have to even pay taxes. Maybe that’s just me though.
Okay, it’s time to wrap this up. I know, it’s fun and all, but you know what they say about too much of a good thing. Well, that even true about “recovery.”
You want to know how bad this recovery has gotten? I mean, forget the rest of the disquieting and even down right terrifying news I’ve written about thus far… the Wall Street Journal just ran an article under the headline:
“We Can’t Ignore Housing Anymore.”
If you don’t read the WSJ you probably can’t really grasp how troubling that headline is, but trust me on this… it’s about as unsettling as finding out the New York Times has come out in support of Perry/Bachman in 2012.
The writer’s name is Neal Lipschutz and to understand how distorted these WSJ types are, check out how he kicks it off:
“In the end, we can’t dodge housing.
The U.S. recession and financial crisis of the late aughts began with housing and the scourge of subprime mortgages, which were so messily dispensed. It spread to Europe and its banks.
For a few years we tried to work around the paralyzed housing sector – the drip, drip of steadily lower home prices, the unresolved status of the wounded Fannie Mae and Freddie Mac — and it seemed to be working.”
Oh, did it Neal, you fruit loop? Is that what your obviously diminished cognitive ability is allowing you to think? You’re seeing an entire team of mental health professionals, aren’t you Neal?
Then Neal says:
“Now that worries mount about an ever more likely return to recession amid a significant equities markets decline, we are hearing again about housing.”
Hearing “again” about housing? I wouldn’t worry too much about you hearing anything, Neal. I just don’t think you’ve heard anything in maybe twenty years. I think you should consider donating your head to the particle physicists at CERN’s laboratories as they’re studying the beginnings of the universe and are apparently trying to find the densest matter on earth.
And Neal goes on…
“There’s the foreclosure mess, the underwater mortgage mess, the tight mortgage lending standards and all the rest. There’s displaced construction workers. There’s consumers unwilling to spend as their perceived real estate wealth evaporates.
There’s housing, traditionally the leader out of recession, still generally in decline, and harder to ignore.”
It’s only my perceived wealth that’s been evaporating, Neal? Well, that certainly is a relief. As long as it was only my perceived wealth. Hey, here’s an idea, since it’s only perceived wealth, how about you write an article in favor of the bankers granting everyone reductions in perceived principle? You’d be in favor of that right… as long as it’s only perceived and all.
Tell you what I’m thinking right now. I’m wondering if you’d perceive my size 12 boot going up your hard to ignore ass.
Ready for what Neal thinks we should consider… you know, in order to fix the housing thing he’s having a hard time ignoring…
“… more people who are current on their mortgage payments have to be able to refinance their mortgages to take advantage of rates near 4%.
That savings for many would go into additional spending, a stimulative measure, and would boost their economic psychology, which is important. Even if they used the savings to pay down their own debt it would do long-term good.”
Okay, well first of all, what kind of a word is “stimulative,” Neal? Let me guess… were you a triple-digit SAT score kind of guy? You know, math and verbal combined, what… about 770? And then straight to the local community college to get your Associates in North American Egotistical Studies or possibly Recumbent Illiteracy?
And just whom did you have to blow to get a job at the WSJ? Wait a minute… I know… maybe I should be calling you Kneel.
Okay, I’m done. There’s no point in going on about Kneel anyway. If I’m not going to get to kick his callous, insensitive and entirely ignorant behind around a parking lot, then what’s the point? I guess I could challenge him to a ballet of wits, but that wouldn’t be right either because he’s unarmed.
People, in case you haven’t picked up on it yet, even though you’ve read me saying it about a thousand times over the last three years, our economy is in a deflationary spiral that as it stands today, will end in a deflationary collapse. Housing prices are in a free fall… incomes are decreasing… people have stopped spending… companies will lower prices which will lead to lower profits… unemployment will rise… foreclosures will increase… and so on, and so on…
In Neal’s column is the answer to why we’re not solving the problem by the way. I’m serious. He pointed out that according to Dow Jones, in Ben Bernanke’s recent testimony to congress, the Fed Chief asked the legislators to develop a “future path” for housing,
And about that, Neal said the following:
“Given political realities, it’s hard to imagine much of a fiscal push, in housing or elsewhere.”
Neal may be in idiot, but he’s no dummy… well, maybe he is, but not really. He’s right. We’re not solving the foreclosure crisis because at least half the country doesn’t even understand that it is a crisis. They only think that people irresponsibly bought homes they couldn’t afford. And no one is in favor of bailing out the bad decisions of irresponsible sub-prime borrowers. And as we fiddle… Rome burns.
Think about the numbers you’ve just finished reading. Incomes dropping, foreclosures rising, unemployment lasting longer and longer… and no possibility for change in next two tears… see the trend lines dropping… now imagine you’re in Boston last night and at about 1:30 AM, the police line up in riot gear. You’re told you have two minutes to evacuate the park in which you’re protesting. Before you know it the police are on everyone. You’re thrown on the ground and handcuffed, put into the back of a van. You’re not allowed to protest what’s happening and if you do, we’ll take you down…
Now close your eyes, and imagine all of the numbers being two years worse… and the organizers are planning to take to the streets. Only it’s two years from today and now they’re expecting a crowd of at least 35,000. The police continue to use force to suppress the people.
What do you see? What do the video clips of Occupy Boston or Occupy Wall Street look like then… two years from now, when everything is that much worse?
Mandelman out.
Oh, no he didn't ...
There is a lot of criticism raining down on Barack Obama’s head for taking a 10-day working vacation at Martha’s Vineyard this month while the American economy slides further towards a new recession. Considering that all Presidents take vacations — even FDR during wartime and the Great Depression — and the fact that modern Presidents [...]
Duh.
What caused the United States to lose its AAA rating for the first time in 94 years, a rating that withstood two world wars, the Great Depression and (most of) the Great Recession, and a costly military buildup that bankrupted and demolished our Cold War foe, the Soviet Union, without a direct shot fired? Was [...]
You know, some people like Christmas, others Thanksgiving… still others are partial to The 4th of July, I suppose. But my favorite special days of the year are fast becoming the “Pretend Your Surprised About the Economy Days!” which I suppose are sponsored by the Obama Administration in conjunction with the United States Treasury Department, underwritten by the Federal Reserve.
Here’s how it works… I give you the headline straight out of the news of the day, and when you’re done reading it, you say out loud… “Oh my God, I can’t believe that!” Or something to that effect. Got it? Ready to play? Here we go…
March’s S&P/Case Shiller Home Price Indices show we’re having a “double dip” in U.S. home prices. In the first quarter of this year, the U.S. National Home Price Index dropped by 4.2% and that’s after it fell 3.6% in the fourth quarter of last year, while the declining National Index fell by 5.1% in this year’s first quarter as compared with the first quarter of 2010.
They’re saying that we’re back to 2002 housing price levels. Here’s what David M. Blitzer, Chairman of the Index Committee at S&P Indices had to say:
“This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation. The National Index, the 20-City Composite and 12 MSAs all hit new lows with data reported through March 2011.”
“Since December 2010, we have found an increasing number of markets posting new lows. In March 2011, 12 cities – Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland, and Tampa – fell to their lowest levels as measured by the current housing cycle.”
“The rebound in prices seen in 2009 and 2010 was largely due to the first-time home buyers tax credit. Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession. Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains.”
See… isn’t this fun? Try another one…
The executive chairman of Templeton Asset Management’s emerging markets group, Mark Mobius, who oversees more than $50 billion, has said publicly that yet another financial crisis is INEVITABLE because we haven’t addressed the real causes of the last financial crisis.
Mobius was in Tokyo attending the Foreign Correspondents’ Club of Japan when he told the group:
“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis. Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”
Mobius also explained that the total value of derivatives in the world today exceeds total global gross domestic product by a factor of 10. “With that volume of bets in different directions, volatility and equity market crises will occur,” he said.
The global financial crisis three years ago was caused in part by the proliferation of derivative products tied to U.S. home loans that ceased performing, triggering hundreds of billions of dollars in write-downs and leading to the collapse of Lehman Brothers Holdings Inc. in September 2008.
Mobius also explained that the freezing of global credit markets caused governments to pump TRILLIONS into the financial system to shore up the global economy.
See… it’s more fun than fireworks, don’t you think?
TransUnion’s latest study revealed that those who only default on their mortgage are much better credit risks than those who are delinquent on multiple credit accounts. And this held true across all credit scores.
Not only that, but the study failed to find evidence in support of the widely accepted “excess liquidity theory,” which says that those that stopped paying a mortgage during the recession had increased cash flow, and could repay other debts. And guess what else… homeowners in foreclosure performed similarly, IF NOT BETTER, on accounts opened further in the process.
Steve Chaouki, group vice president in TransUnion’s financial services business unit said:
“There appears to be a pocket of opportunity among mortgage-only defaulters that is NOT the result of excess liquidity, but rather the unique circumstances of the recent recession. This new market segment that the recession created is an important one for lenders to understand. They have the potential, today, to be stronger and more reliable customers.”
And, Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit said it best of all, when he said:
“This recession was unique in that certain consumers who defaulted on mortgages would otherwise be good credit risks. It appears their actions were driven by difficult economic circumstances than by any inherent inability to manage debt.”
Okay… I’ll drive from here if that’s okay with you…
GWEN IFILL: A new report out today shows the state of the housing market has grown even more bleak. But what is driving this stubborn downward pressure?
(I couldn’t even guess.)
For that, Gwen turns to Rick Sharga, senior vice president of RealtyTrac, a website that publishes data on real estate and foreclosure trends, and Mark Zandi, chief economist at Moody’s Analytics. If they can’t tell us, no one can.
GWEN: Rick Sharga, are these numbers proof of a double-dip recession, that term we have all feared?
(Very scary term.)
RICK SHARGA: Well, certainly not a double-dip recession in the overall economy. But you can make an argument about the double-dip in the housing market. It just depends on your definition of a double-dip.
(Oh, well thank the good Lord for that. It’s not in the overall economy, just the one I live in.)
RICK SHARGA: Is a 5 percent drop compared to a 20 percent drop a couple of years ago really a double-dip, or is it just a continuation of a downward trend that the market is trying to correct?
(Hey, who’s asking the questions around here? And, which is worse: a double dip, or a continuation of a downward trend? I’m freaking out over here. Which one, Rick, which one?)
GWEN: Mark Zandi, in your opinion, what are the driving factors, to say the two or three big driving factors here?
(The suspense is KILLING me.)
MARK ZANDI: Well, obviously, a 9 percent unemployment rate is a problem. A tough job market makes it hard for people to go out and buy homes.
(Don’t you hate it when economists get all technical like that? What’s he trying to say?)
MARK ZANDI: I think the foreclosure crisis is a very serious weight on the housing market. We have millions of loans in the foreclosure process that are going to go through and are going through to a distressed sale. And those homes get sold at a big discount, a big price cut. And that’s driving prices down as well.
(He thinks the foreclosure crisis is a very serious weight on the housing market. I suppose it could be… never really thought about it.)
MARK ZANDI: And confidence — if you look at the consumer confidence numbers, people are still very nervous and scared. And, of course, nothing takes a higher level of confidence than signing on the dotted line to buy a home. So, if people aren’t feeling really good about their financial situation, that’s going to be hard on the housing market.
(Damn it, people… we’ve talked about this before. You’re screwing up our economy with your lack of confidence again. Come on… buck up… get confident.)
GWEN: Rick Sharga, what — would you agree with that, and what would you identify as the major driving factors in this?
(Here’s your moment, Rick. Hit one out of the park, show Zandi what you’re made of…)
RICK SHARGA: I think Mark is dead on. I think he’s probably hit the major identifying factors.
(Oh, well… there you have it then. A swing and a miss… Thanks fellas.)
RICK SHARGA: I think one of the exacerbating factors is that it continues to be stubbornly difficult for the average homebuyer to qualify for a loan. We have historically low interest rates, and relatively few people who qualify to get these loans.
(Really? Now why would that be?)
RICK SHARGA: And I don’t think the foreclosure problem can be overestimated.
(Oh, sure it can, Rick… I’m quite sure you can overestimate anything.)
GWEN: Mark Zandi, you talked about confidence. I wonder if that’s not affected when we talk about these foreclosure numbers. People look at how badly this all went after the bubble, and they think to themselves, you know, I don’t really need to own a home anymore. How much of that is playing a part in this?
(Yeah… Bubble, bubble, toil and trouble… I got burned and I won’t down double. With apologies to Billy Shakespeare.)
MARK ZANDI: Well, I think that is certainly playing a role. I mean, I think nobody wants to catch the proverbial falling knife. So when prices are weak and falling, you don’t want to take the plunge, buy a home, and then, of course, lose value six, 12 months down the road. So, it’s a bit of a chicken-and-egg kind of problem.
(Oooohhhh nooooo, a chicken and egg type problem? That’s not good. I think that means it’s unsolvable, right?)
MARK ZANDI: People are very nervous that if they buy today, that the value of their home will be worth less in the future. And it’s probably a deeper longer-term issue as well. Many people are viewing housing very differently than they did in the past.
(Yeah, like in the past, people viewed a home as a place they would live for a long time. Now they view it as a place they’ll get evicted from over the summer.)
GWEN: Mark — Mark — Rick Sharga, is there another vicious cycle here, which is, if you worry that you cannot get a home, if you worry that you can’t get a loan, if you’re worried that you cannot keep a job, that all of that drives lessened demand as well for all these homes clogging up the market?
(I’m not sure. What’s the answer, what’s the answer, damn it…)
RICK SHARGA: You know we recently surveyed potential homebuyers across the country. And the number that jumped off the page at me was that 40 percent of the renters we surveyed said they have decided never to buy a house.
(Must be surveying renters that went to college.)
RICK SHARGA: That number just — just hit me right in the face, because we’re coming only a few years off historically high levels of homeownership, I think almost 69 percent. And the next generation of homeowners, to Mark’s point, 40 percent of them have already opted not to participate in the housing market. So, it’s a frightening number. The only reassurance I can give is that we do know that consumer sentiment has a way of swinging wildly back and forth.
(It does? I swing wildly back and forth? I didn’t know that about me. Live and learn, I suppose.)
RICK SHARGA: So, if we do begin to see job creation, if we do begin to see a return of consumer confidence, if the housing market begins to stabilize, hopefully, that consumer sentiment can swing back toward where we have a more active buying market.
(Is that all we need? Jobs, confident consumers, and a stabilized housing market? Oh, thank heaven. For a minute there, I thought we might be in real trouble.)
GWEN: Mark Zandi… Is this a regional problem that we’re talking about now, or are we talking about a true national overhang, a hangover from the boom years here?
(It could be regional I guess… it’s pretty much contained to the planet Earth region.)
MARK ZANDI: Well, it’s a national problem.
(If you’re in the EU, don’t be insulted by that… it’s not his fault. A lot of Americans don’t really know there are other countries.)
MARK ZANDI: And every corner of the country has been impacted. Prices are down almost everywhere. There are some bright spots, you know, Texas, for example, parts of the Farm Belt. But outside of that, we have seen foreclosures increase, house prices decline.
(I can’t decide… Texas or the Farm Belt… Texas or the Farm Belt… I think I’ll… EAT A GUN.)
MARK ZANDI: So, yes, I think you could — you would consider this a national house price decline. And, in fact, it’s — it’s unprecedented. The — you would have to go back to the Great Depression in the ’30s to find a time when so many markets have suffered such large price declines. So, it is a national phenomena.
(I kind of like that terminology… we could start calling it “The Great Phenomena.”)
GWEN: Well, let me stay with you for a moment because you mentioned the Depression. That was obviously the biggest economic shock that any of us have — had experienced or perhaps our parents experienced. How much of this slowdown in the housing market is going to end up driving the entire economy’s recovery off-track?
(Oooooo… Oooooo… I know this one… Ooooo… Oooooo… she never calls on me when I have my hand up.)
MARK ZANDI: Well, that’s a good question. You know, I think the economy, it is growing. And it can continue to grow without housing, but it certainly cannot flourish. I don’t think this economy really can engage, it can’t create the kind of jobs we need to bring down unemployment in a substantive way, unless housing is headed north.
(I’ll tell you who needs to flourish and head north.)
MARK ZANDI: And in every economic recovery that we have experienced since the Great Depression, housing has led the way. So we need housing. And we need it to come back. I think there are some good things that are coming together. But the longer we have to wait, the more nervous I get about the recovery and the economic expansion.
(Good things are coming together? Which good things are those? Tell us now. And how much more waiting will make him more nervous? I need specifics, I can’t plan my life around his degree of nervousness.)
GWEN IFILL: Rick Sharga, do you see any good things that are coming together? And should they be given by the federal government or by the private sector or the — even state governments?
(Yeah, ’cause the state governments are flush with all that extra cash…)
RICK SHARGA: You know, neither of the government initiatives that we saw last year, either HAMP to suspend foreclosure activity, or the homebuyer tax credit, really had the intended effect.
(How does he know that? What the hell was the intended effect? If I knew the answer to that question, I’d die a happy man.)
RICK SHARGA: In fact, after the second tax credit, sales volume drove — went so far down, that it pulled home prices down perhaps even further than they would have gone otherwise. I think, unfortunately, the remedy to the housing market right now is probably time. We need time to create more jobs. We need time for consumer confidence to come back.
(If I could save time in a bottle… the first thing that I’d like to do… Hey, wait a doggone minute here… the second tax credit pulled down housing prices further than they would have gone without it? The tax credit pulled the prices down… this guy is no economist, I’ll say that for him.)
RICK SHARGA: We need time for lenders to actually feel comfortable enough to start making loans on properties that have values that are stabilizing. And then the market will start to recover on its own. But I don’t see government intervention as being a part of the solution right now.
(No, don’t be ridiculous… absolutely no government intervention… there’s no way that would help. Government intervention only helps banks, and auto manufacturers, and the stock market and big businesses. It doesn’t work anywhere else, everyone knows that. Anywhere else and government intervention just drags prices down… I think I’ve got it now. We just need to give it more time, simple as that. Like in Japan… they’re giving it lots of time… like 21 years… so maybe figure we give it 30-35… would that be enough time Rick?)
GWEN: Is this a way to — is there any way to know whether this is an anomaly for now or it’s a long-term problem?
(For some people, I think yes, but not for Gwen.)
RICK SHARGA: The continuing falling of home prices?
(Do you believe this exchange? He lost his train of thought? No, Rick… she was asking you how long you might remain stupid.)
GWEN: Yes.
(I’m going to chew on glass in a minute.)
RICK SHARGA: I think there’s probably a little bit more to go. I would be interested to hear what Mark said.
(Arrrggghhhhhh… a little bit more? Probably? Rick, you are such a jackass. You don’t really have the foggiest idea how you got here, do you Rick? Did your Mom get you the job?)
RICK SHARGA: But I think we’re very close to the bottom. And, unfortunately, we will probably bump along that bottom for a couple of years while we go through this inventory of distressed properties.
(I think you’re already bumping along the bottom, and you’ve hit your head and now have the IQ of a summer squash.)
GWEN: Do you agree with that, Mr. Zandi?
(Yeah Zandi… does rick have the IQ of a summer squash?)
MARK ZANDI: Yes. You know, I think the key statistic for house prices are the homes for sale that are distressed that are foreclosure and short.
(Was that even a sentence? Oh Lord, he’s going to start babbling… waiter, check please?)
MARK ZANDI: And as that share rises, prices will fall. Almost the arithmetic of it is that prices will fall. And I do expect the share of sales that are distressed to continue to rise through the end of the year. And so prices probably will bottom out at the end of this year.
(LMAO… what did I tell you? He has no clue what he just said… and, of course, neither do we. “Almost the arithmetic of it is that prices will fall.” He’s a babbling brook. And then he wraps it up with we’ll hit bottom at the end of THIS YEAR? Right after he said that, he was thinking, “Why the f#@k did I just say that, oh well… too late to do anything about it now, maybe no one noticed.”)
MARK ZANDI: And then by this time next year, I think we will start to see some true price stability, some price gains. So, I think we have to get through this last mountain of foreclosed property. And on the other side of it, I think we will be in measurably better shape.
(So, I guess, based on what he said earlier, by this time next year good things will be coming together. We’ll have jobs coming out of our ears… oodles of confidence everywhere, and a stabilized housing market, is that about right, Mr. Zandi… you spineless sycophant?)
GWEN: Mark Zandi at Moody’s Analytics, and Rick Sharga at RealtyTrac, thank you both very much.
MARK ZANDI: Thank you.
RICK SHARGA: Thank you.
(Okay, Clown #1 and Clown #2… back to your padded cells, or wherever the attendant lets you play during the daytime. Orange soda and crackers at 11, so listen for the cuckoo clock… cuckoo, cuckoo, cuckoo.)
According to Clifford J. Treese on BROKERDIRT’S Real Estate Brokers Discussion Group…
“On April 21, 2011, the Michigan Court of Appeals determined that MERS is not eligible to take advantage of the non-judicial statutory foreclosure process in Michigan because MERS does not own or have an interest in the indebtedness secured by the mortgage, nor is MERS the servicer agent of the mortgage, as required by the statute. Most of the major title insurance company underwriters have ceased issuing title insurance for any properties where MERS foreclosed by advertisement.”
But… according to April Charney…
Bill Hultman, representing MERS, just testified this week that there was NO PROBLEM at all with title insurance as a result of MERS’ involvement in foreclosures. And, this ignores the essential underlying problem that MERS cannot produce evidence of corporate authority delegated to Hultman to appoint the first signer, much less the 20,000 signers that Hultman testified about. (Hultman’s testimony is available online at: http://4closurefraud.org/2011/05/26/)
April also says we should take note that once again, Mr. Hultman promised evidence of the signers’ authority. He said he’d produce the “resolution” authorizing a single signer, but failed to offer to produce evidence of authority to issue that resolution or any other resolution “appointing” a MERS’ signer. In a previous deposition in another case, Hultman agreed to produce the documents showing that MERS gave him authority to issue the signer resolutions, but to-date, it would appear that he couldn’t produce he has failed to produce any such documentation.
April says she would think that if MERS had the docs, they’d be showing them all over town.
“Look, honey… isn’t the Emperor wearing a fine suit of clothes?”
(Don’t worry though because I think Congress may be making the Emperor an invisibility cloak yea as we speak. Isn’t that right, banker-people? And won’t we be surprised… is that what you’re thinking?)
Mandelman out.
Americans are angry, and they are getting angrier. Entire life savings were stolen, they’ve vanished. Men are embarrassed, humiliated and hopeless because they cannot work and cannot provide for their families. Unemployment is at all time highs. People are hungry and food lines are getting longer. The country is crumbling at its foundations because the economy has been utterly decimated.
The country’s economy has not been decimated because the workers and the people broke their social contract to work, to contribute and to provide. The economy has been decimated because a small group of men in New York City and Washington, DC conspired to take from Americans all across this country, using every lie and scheme and trick they could employ to do so. The bankers and brokers and Wall Street serpents convinced the American people to believe in a sophisticated web of lies and deception. They convinced the American people to believe in them because they are the titans at the pinnacle of American Exceptionalism, the heads of the banks and of the venerable trading houses that fund the American mythology.
They have bought and paid for the leaders in state houses and in Washington DC that normal Americans think they elected. The truth is, these titans elected these leaders and the leaders serve the titans. The American people buy into the lies and the deception and the fraud of the titans. Not figuratively, but explicitly and literally. They invest their entire life savings into the stocks and the financial products that the titans are ever more aggressively peddling. Our leaders are complicit because they create systems and policies that require Americans to buy into the lies of the titans.
And then it all come crashing down.
I’m talking of course about The Great Depression and 1933. Not today. But we are there all over again. And we are to be dammed because the very same thing has happened all over again….and some of the same players are involved all over again. In 1933, the vipers were National City Bank…today’s Citibank and J.P. Morgan. The term “bankster” first appeared. Prior to the crash, the Wall Street vipers were sucking every single dollar out of America, from the east coast to the west coast and everywhere in between. The life mission of the Wall Street vipers was to suck every last dime out of the pockets of every single American and every municipality and sucker and rube and dope from coast to coast. And if things got slow or they weren’t quite meeting their goals, their elected friends in Washington and state capitals passed laws or enacted policies or did whatever was necessary to help them march toward the goal.
Our nation was dumbstruck when it all came crashing down. How could this happen? Where did it all go wrong? Some facts are complex, but the primary reasons are very clear. What no one knew then was that the titans were betting against them all. In 2008 we had the credit default swap, in 1930 we had “shorts”. While the titans were busy whoring out their “well secured bonds” to the dupes that were the American people, they were putting their shorts on the failure of those very bonds. And the titans were making salaries that were exorbinate even by today’s standards…the titans then were making up to 33 times the average salary of Americans in 1929. The most notorious of the Wall Street viper of the day was the chairman of Citbank, Charles Mitchell earned the equivalent of $500 billion dollars over a three year period, 1927-1929. And just like today when the titans of industry and the vipers of Wall Street reap all the benefits, that you provide and do nothing to contribute….it was later determined that Charles Mitchell engaged in sophisticated transactions that resulted in him not paying one single dime in income taxes in 1929…a year when he took home $1.1 million in salary and bonuses.
America was dumbstruck in 1932, but today we’re just dumb. History is repeating itself all over again, and we’re all just sitting back and watching it happen. In 1933, a young lawyer named Ferdinand Pecora was picked to lead a congressional investigation of the Wall Street crime scene and his cross examination of the Wall Street vipers is legendary. The book is required reading for anyone who has even the slightest idea of the trouble we’re in in this country…click here for an audio version and review.
The Great Depression had Ferdinand Pecora, and we have Elizabeth Warren. Now I beg of each of you to watch this Video and see how this snivleling little twit of a Congressman calls Elizabeth Warren a liar. Just watch the reaction on her face after this twit breaks all rules of etiquette and frankly just lies right through his own teeth. Now go here for an excellent story on the whole dust up.
If you’re really committed, log on to the congressman’s Facebook page and tell him what you think.
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I want you all to take a moment to watch the video that is linked here below. I’ve watched this scene quite literally hundreds of times and even today, after all those times, it still gives me chills. Years after watching this scene I did a dissertation on this particular scene because it is one of the most intense interpersonal exchanges captured on film. The intensity of the emotion and the enormity of its impact have always served as a very powerful inspiration for me.
Scenes like this don’t really happen in the courtroom, but I think every lawyer spends his whole life preparing and working and building for that one moment when something like this plays out. I think we are heading to a nationwide example of this scene, a moment when Wall Street and the banking industry will be cornered on the stand and the entire country tear them apart in righteous indignation just like this snotty bastard Lt. Kaffe takes down this infallible imperial force, Cl. Jessup.
It happened once before in this country in 1933, when a young and unknown attorney Ferdinand Pecora cross-examined the titans of Wall Street after the crash of the Great Depression. I will detail more of that later when I finish the book, “The Hellhound of Wall Street”. For now, watch this scene over and over. The American people are Tom Cruise. The banks, Wall Street, the Imperial judges, our out of control government are Jack Nicholson. As you head out for battle every day, as you defend yourself pro-se or if you’re an attorney who is fighting this fight, put in your mind that you want the end result to be a glorious moment like the one in this scene where they are finally cornered and can no longer run from the truth.
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Americans have no idea just how close to absolute and catastrophic catastrophe the United States and in fact the entire world came to an absolute collapse in 2008.
The fact that every American needs to understand is that we were quite literally on the verge of an economic and societal collapse that would have dwarfed the consequences we faced during the Great Depression. While the Great Depression was bad, our entire world is exponentially far more dependent upon banks and Wall Street and credit than we could have even imagined in 2008. These are not my opinions, they are the widely expressed opinions of virtually every knowledgeable expert.
The next part of the equation and the far more disturbing fact that we all need to consider is that there is consensus among most experts that we will almost certainly experience another crash in the future. Again, this opinion comes from the experts. The real question and the one that should keep us all up at night is….just what will be the consequences when the crash comes again????
Watch the trailers below…..
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Watch this story. Listen to the stories of these crying kids. Look at the tears in their eyes. Listen to their questions. Pay particular attention to the quote from the one young girl, “I feel like it’s my fault.”
No, it’s not the fault of this crying, devastated, damaged 11 year old girl.
IT’S THE FAULT OF THE CRIMINALS ON WALL STREET AND THE CRIMINALS THAT WE ELECTED TO STATEHOUSES ALL ACROSS THIS COUNTRY WHO GUTTED THIS COUNTRY, WHO BLED US ALL DRY AND WHO HAVE LEFT MILLIONS OF PEOPLE DEVASTATED.
It remains a sad country that we’re living in when kids are homeless, homes are vacant and in this state our “leaders” have introduced legislation that would throw families into the streets more quickly. Mind you no one in any position of purported leadership has taken any steps to punish the Wall Street titans that caused all this misery….NOT ONE.
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Nothing in this current economy makes any sense. The stock market should not be humming along….and I don’t even trust what that means anyway. Wall Street should not have reported its fourth most profitable year on record in 2010. Our unemployment numbers quoted are wholesale lies. Real people in this country are hurting like no time since the Great Depression. The economics that led up to the real estate crisis were not plausible to anyone with a 5th grade education. And things are not getting any better. So what is going on in this country? One potential explanation is that we are already at war and our impotent government is trapped, unable to formulate a strategy to response to this new war.
First Read the Newspaper Accounts of Emerging Information About Financial Terrorism HERE
Serious risks to the global economic system were exposed by the crisis of 2008, raising legitimate questions regarding the cause of the turmoil. An estimated $50 trillion of global wealth evaporated in the crisis with more than a quarter of that loss suffered by the United States and her citizens.
A number of potential causative factors exist, including sub-prime real estate loans, a housing bubble, excessive leverage, and a failed regulatory system. Beyond these, however, the risks of financial terrorism and/or economic warfare also must be considered. The stakes are simply too high for these potential triggers to be ignored.
The preliminary conclusions of the research suggest that, without question, there were actors who had the motive to harm the U.S. economy. These motives can be categorized as both economic and non-economic. In addition, these same actors have clearly demonstrated the means to carry out such an attack. Finally, the opportunity was clearly present given the existing economic condition and regulatory framework in operation.
The hypothesis under consideration is that a three-phased attack is underway with two of those phases completed to date.
The first phase was a speculative run-up in oil prices that generated as much as $2 trillion of excess wealth for oil-producing nations, filling the coffers of Sovereign Wealth Funds, especially those that follow Shariah Compliant Finance. This phase appears to have begun in 2007 and lasted through June 2008.
Economic Warfare: Risks and Responses
The rapid run-up in oil prices made the value of OPEC oil in the ground roughly $137 trillion (based on $125/barrel oil) virtually equal to the value of all other world financial assets, including every share of stock, every bond, every private company, all government and corporate debt, and the entire world‘s bank deposits. That means that the proven OPEC reserves were valued at almost three times the total market capitalization of every company on the planet traded in all 27 global stock markets.
The second phase appears to have begun in 2008 with a series of bear raids targeting U.S. financial services firms that appeared to be systemically significant. An initial bear raid against Bear Stearns was successful in forcing the firm to near bankruptcy. It was acquired by JP Morgan Chase and the systemic risk was averted briefly. Similar bear raids were conducted against various other firms during the summer, each ending in an acquisition. The attacks continued until the outright failure of Lehman Brothers in mid-September. This created a system-wide crisis, caused the collapse of the credit markets, and nearly collapsed the global financial system.
The bear raids were perpetrated by naked short selling and manipulation of credit default swaps, both of which were virtually unregulated. The short selling was actually enhanced by recent regulatory changes including rescission of the uptick rule and loopholes such as ―the Madoff exemption.‖
While substantial, unusual trading activity can be identified, the source of the bear raids has not been traceable to date due to serious transparency gaps for hedge funds, trading pools, sponsored access, and sovereign wealth funds. What can be demonstrated, however, is that two relatively small broker dealers emerged virtually overnight to trade ―trillions of dollars worth of U.S. blue chip companies. They are the number one traders in all financial companies that collapsed or are now financially supported by the U.S. government. Trading by the firms has grown exponentially while the markets have lost trillions of dollars in value.‖1
The risk of a Phase Three has quickly emerged, suggesting a potential direct economic attack on the U.S. Treasury and U.S. dollar. Such an event has already been discussed by finance ministers in major emerging market nations such as China and Russia as well as Iran and the Arab states. A focused effort to collapse the dollar by dumping Treasury bonds has grave implications including the possibility of a downgrading of U.S. debt forcing rapidly rising interest rates and a collapse of the American economy. In short, a bear raid against the U.S. financial system remains possible and may even be likely.
The recent seizure of $134 billion face value in supposedly counterfeit U.S. Federal Reserve bonds underscores the reality of the economic threat. This may be as significant as the Japanese radio intercepts were before December 1941.
Immediate consideration of the issues outlined in this report is vital. Further study is essential and prospective responses must be crafted to address future risks. Finally, there are legitimate questions about the performance of the regulatory regime and Wall Street institutions. Implications that these parties have been complicit or otherwise co-opted cannot be ruled out. Therefore, it is strongly recommended that this study and any task-force response be conducted outside of traditional Washington and Wall Street circles.
―This paper outlines a theory concerning why Muslim terrorists attacked the World Trade Towers on Sept. 11, 2001, bombed London‘s subway during the G-8 economic summit on July 7th, and detonated blasts in an Egyptian resort on 23rd July. The reason for these attacks was to create „Economic Terrorism.‟ Economic Terrorism is defined here as the attempt to assault and destroy a foe through decimation of the enemy‟s tax base via rank economic sabotage. Such attacks on economic infrastructures lower net tax yield, thereby shrinking the capital pool for military spending. There is historical warrant for the belligerent use of strategic economic destruction. This is detailed in an iconoclastic book on the Roman Empire‘s demise, by peerless Orientalist Henri Pirenne, called ‗Charlemagne and Muhammad‘ (1943). This work challenged Gibbon‘s thesis that Germanic barbarian assaults doomed Rome, posited in the Decline and Fall of the Roman Empire (1776). As we shall see, ‗Economic Terrorism‘ is the most potent weapon for Muslim radicals can deploy in their siege against the West. There is hard evidence Islamicists employed Economic Terrorism on Sept. 11 to mangle the US economy, which vicariously damaged the tax base. By extension, this was meant to prune U.S ability to pursue aggressive foreign policy, mount defense and wage war. Radical Islam has long reacted with ambivalence and rage towards capitalism. Framing this debate is a larger ideological struggle, pitting ‗atheistic‘ Western capitalistic economics against the Islamic idee fixe – the formulaic Muslim theocracy. Accordingly, a famous radical Muslim intellectual felt that, ―…democracy is a form of idol worship. So, too…capitalism, which is…is a form of idolatry.‖ We now know Al Qaeda was fixated on casing New York financial institutions for years before they attacked. If Islamic terrorists further pursue Economic Terrorism without an organized Western response, the impact upon economy and tax-derived defense will be massive. Also, such attacks won‟t be isolated, but recurrent — given the small cost of assaults and massive potential reward. Therefore, we must study Economic Terrorism and prepare an answer. Ultimately, as the poor and overmatched Islamic terrorists pursue their struggle against the West, they realize this is the best „small war‟ strategy of all
The Full Report is Below:
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That’s just half a million people, by the way…
According to RealtyTrac, 1,050,500 homes we repossessed by banks last year.
In 2006… that number was 268,532.
In 2007… 404,849.
In 2008… 861,644.
In 2009… 918,376.
Now… in 2010… we’ve broken through the one million mark at 1,050,500. So, for those that think foreclosures are somehow a good thing, I guess congratulations are in order. For those not afflicted by such diminished cognitive abilities, I can only request that the last person to leave, please turn off the lights and bring the flag.
And remember… that just over a million homes with 2010’s fourth quarter foreclosure freezes imposed by the largest banks in response to the robo-signer scandals coming to light as a result of sworn testimony by various employees of those banks. Had those freezes not taken place, that number would most assuredly be significantly higher, and with the foreclosure-gates now reopened, we will likely see whatever number was suppressed last year carried over into the current year’s records.
James Saccacio RealtyTrac’s CEO had the following to say…
“… 2010 foreclosure activity still hit a record high for our report, and many of the foreclosure proceedings that were stopped in late 2010 — which we estimate may be as high as a quarter million — will likely be re-started and add to the numbers in early 2011.”
Also according to RealtyTrac’s 2010 report…
“… a total of 3,825,637 foreclosure filings – including default notices, scheduled auctions and bank repossessions – were reported on a record 2,871,891 U.S. properties during the year.”
Here a quote from Bloomberg’s New Years’ story on the topic:
“The number of U.S. homes receiving a foreclosure filing will climb about 20% in 2011, reaching a peak for the housing crisis, as unemployment remains high and banks resume seizures after a slowdown, RealtyTrac Inc. said.
This past week, Zillow.com announced that its index of home values fell for the 53rd consecutive month in November, and that since June 2006, home values have now fallen 26% nationwide.
Zillow’s Katie Curnutte, in a blog post, pointed out…
“That’s more than the 25.9 percent decline in the Depression-era years between 1928 and 1933.”
And lest you think that Zillow’s numbers show too much decline, Case-Shiller’s index has fallen even further, now showing a 30% drop over that same period.
“The foreclosure crisis is the biggest threat to U.S. economic growth, according to Mark Zandi, chief economist for Moody’s Analytics Inc.
So… don’t you just love it when we break records in this country? Chant with me… U.S.A. U.S.A. U.S.A. And it’s nice to see that real estate market analysts are finally starting to get it. The question is… why isn’t the Obama administration?
Mandelman out.
My Grandmother, Standard Oil & the Banks
We Are On the Brink of a New Age of Rage
Obama Asks for Help from Public to Reform Housing Finance System?
Senate Investigation Says Banks Caused Crisis, Not Borrowers
Almost as soon as the polls had closed this past November and the midterm elections were behind us, Senate Minority Leader Mitch McConnell (R-KY) stated that making sure that Obama is a one-term president was the GOP’s most important priority.
Well, first let me state the obvious… McConnell is a jackass. If the United States Senate has a Human Resources department, someone needs to get this guy a copy of his job description because he’s completely lost touch with what he and all of our other elected officials are sent to Washington D.C. to do.
I know that a politician’s job is to win elections, but no one elected Mitch or anyone else to work in opposition to the best interests of the American people.
And don’t start accusing me of being a member of the “Obama Fan Club,” because I’m not. Obama has proven himself to be a terrible crisis president. He has single-handedly managed to take what was unquestionably an inherited economic disaster on the scale of The Great Depression, and make it, not only his problem, but also his fault.
He went from being a man of the people, to being the best friend Wall Street could ever have hoped for, and for that the Republicans accuse him of being a socialist, while the left accuses him of being too much the centrist who has turned his back on their progressive agenda. He makes seeking bipartisan consensus look like a pathetic need to be liked by everyone at school. It’s flat-out dizzying to watch, and makes John Stewart’s job on The Daily Show far to easy.
Coincidentally (and proving that great minds do think alike), The Atlantic published an article this month about McConnell, titled, “Strict Obstructionist,” and it’s certainly worth reading. Here’s a quote…
“McConnell called TARP’s passage “one of the finest moments in the history of the Senate.” Obama took over expecting this spirit to endure. But from the outset, McConnell blocked or frustrated just about everything the administration tried to do, including the government’s distribution of TARP funds, in January 2009, just three months after McConnell voted to authorize them.”
Although, at many times in our history, when our nation has faced real problems, the Republicans and Democrats have put their differences aside, placing the interests of the nation ahead of anything related to partisan politics in order to do what’s right for the people of this country. But this idea is entirely foreign to McConnell.
McConnell and the GOP have made it clear that they will spend the next two years blocking anything that has even the slightest potential to make Obama look good in 2012, regardless of the impact to the American people. It would seem that the brain trust over at the GOP actually believes that even if Americans are starving in the streets come 2012, it’s a good thing for them.
Obviously, what we have here are some low three-digit SAT scores at work. Let’s play it out and see where the GOP’s strategy is headed.
As I write this, the Obama Administration has all but finalized a so-called compromise that will extend the Bush tax cuts for Warren Buffet and Bill Gates in exchange for extending unemployment benefits for another 13 months. It’s either that, or something like six or seven million people in this country will soon have no income as they struggle to survive in our depressed economy that hasn’t even begun to replace the tens of millions of jobs lost over the last few years. I don’t want to play economist here, but that doesn’t sound like it will lead to an increase in consumer spending does it? Or am I missing something here?
At the same time, extending the Bush tax cuts for those with annual incomes over $250,000… which is about one percent of the population, by the way… besides increasing the deficit, will do what exactly?
The Republicans want me to believe that we need to keep the tax cuts in place because of something about small business owners creating jobs and rich people trickling down their good fortune on the rest of us, but that hasn’t happened for the last ten years, so what the heck are they talking about? It’s as if they think that by repeating something they heard Art Laffer say during the Reagan years over and over again, it makes it true. Like when they go into that incessant drumbeat about reducing the deficit being the country’s number one priority, even though you’d be hard pressed to find 100 people on the streets of any major U.S. city that would pick that for our top priority off a list of alternatives.
So, here we go… Mitch McConnell, who has been described as having “the natural charisma of an oyster,” and his GOP pals proceed to block anything that might make our lives better for the next 18 months, after which time we’re not going to do anything but return to the moronic mudslinging on Fox News, which will be in its fear-mongering glory by that point as they point out all the ways Americans are either circling the drain or have already gone down it. Because by that time we will be two years worse off than we are now, unemployment benefits, assuming they are extended for 13 months this time, will have provided recipients with enough money for bread and water, we will have lost another five million homes to foreclosure and even the reported unemployment rate will be solidly in double digits.
Now, close your eyes and picture what you know it’s like today all over America and imagine that everything that’s keeping you up at night now, at least on occasion, is two years WORSE than it is now. Your house that had already lost much of its value, has dropped another fifty grand, not that it matters because there aren’t anymore people left in this country who have 860 FICO scores, 30% down payments saved up, who don’t already have the homes they want and aren’t worried about losing their jobs.
So… whose running for President in 2012… or, the better question might be… who isn’t running, because economic times as I’ve just described lead to things like the Tea Party… Ron Paul… Ralph Nader… can you say “H. Ross Perot in 1992?”
The Republican primaries stage a debate with 12 hopefuls on stage… everyone from Sarah Palin to Mitt Romney… to Bobby Jindal… to God only knows. The Christian Right doesn’t like one side, and the Tea Party can’t stand the other.
For a single candidate to emerge victorious, he or she would need to be a conservative-populist-Christian-Wall-Streeter-Deficithawk-Pro-Militarty individual who claims to be committed to stopping the wars still raging in Afghanistan and Iraq, while preventing Iran from building nukes, that is friendly to the global concerns of China and the G20, and has a vision for lowering taxes without increasing the deficit. If you thought McCain had problems last time getting the support of his party, this next time out is going to be indescribable.
Of course, Obama is running for reelection in 2012, and he’s out on the campaign trail touting accomplishments like health care and financial reform, trade deals with South Korea and the like, and sniping at Republicans for standing in the way of change.
Want to know what happens?
The election is a three- or maybe even a four-way race, a’la 1992. The Tea Party candidate actually manages to win 10 percent of the Republican vote, and Ron Paul or at least a reasonable facsimile wins another 12 percent. The main stream Republican, who has had to try to please so many masters that he’s got enough wholes in him to do a pretty good Swiss cheese imitation, has become the party’s choice because he or she is the banking industry’s favorite. There’s an Independent candidate as well, siphoning votes from the middle that is so totally disenchanted with Obama that’s they’d rather vote for Dubya again.
And as the dust settles, Obama wins his second term with 34 percent of the vote, as the Republicans keep control of the House, and the Senate officially becomes the political equivalent of the 1960s children’s television program, Romper Room.
Oh sure, Obama’s approval rating is 28 percent, and no president has ever been reelected with unemployment over 10 percent, but it doesn’t matter because the alternative candidates have either destroyed each other during the campaign, or were just plain too nutty to begin with to win a national election. And unless Obama is caught having sex with Bill Clinton under the desk in the Oval Office, and then lies about it on national television, he’ll get 35 percent of the vote from the youth, inner city, college, and dyed-in-the-wool Democrat crowds, and that’s all he’ll need in the sort of open field race that will result from our economy being that much worse 18 months from now.
Mitch McConnell, who doesn’t come up for reelection until 2016, will be sporting one of his stupid deer-in-headlights looks as he tells the cameras that the Republicans are prepared to work towards bipartisan solutions to the nations problems and that what we need are further tax cuts. But Obama, now safely in his second terms can’t stop picturing McConnell in a clown suit as he watches him bemoan the election’s outcome.
Yes, it’s 2012… roughly five years into our Great Recession, if we’re still calling it that positive a euphemism. Obama is back for another four years, absent any real mandate, and with a completely dysfunctional legislature, as he stares at the worst U.S. and global economy ever. At the end of his second term we will be wrapping up our first “lost decade,” and hoping for the sort of recovery we had back in 1936.
Obama’s first priorities will be to stabilize our nation’s financial institutions, who by then with every third or fourth house in or near foreclosure, will need to be bailed out once again… and the passage of an economic stimulus bill that will put Americans back to work. Oh yeah, and something about reducing our dependence on foreign oil with green jobs, education, and infrastructure… and bridges… I’m thinking we’ll need to fix lots more bridges.
It’s a fate accompli, I’m afraid, because Mitch’s plan is already set in stone and underway. And, since I will likely be drinking heavily most days when all this happens, I’d better congratulate him now…
Nicely done, Mitch! Crackerjack work, as a matter of fact.
Laissez les bon temps roulez!
Mandelman out.
I’ve been doing some thinking, and I have several questions for the real estate and mortgage experts. I’m fairly new to all this… so please forgive me if these questions seem really basic…
1. The following sentence appeared this past weekend in the LA Times in an article that featured “experts” discussing when California’s real estate market might start to “come back”.
“Although California’s housing market free-fall ended in spring 2009, the weakness after the expiration of federal tax credits for buyers last year has called into question the sustainability of the recovery.”
My first question is… isn’t that one of the dumbest sentences ever written? I mean, to me that sentence says that the “free fall” never ended, it was just placed on pause as a result of the tax incentive, and once that tax incentive ended, the free fall simply continued. Just like the auto sales market after Cash-4-Clunkers came to an end, no?
And, why are we all pretending there’s a real estate “market” in the first place?
I mean, the only people selling are those who have to, and the only buyers are looking to steal something. The only lender is the U.S. Government through Fannie, Freddie or FHA… there are no securitizations to speak of… and the average credit score for a Fannie Mae loan is 763 for the last two years. There are millions living in homes they haven’t made payments for over a year, and there’s a shadow inventory large enough to keep the entire continent of Africa in the shade.
Housing is still in free fall, it just doesn’t fall in a straight line, and with the foreclosure crisis ongoing and nothing in place to stop it, it’s certain to both continue and worsen. So, why are we pretending there’s a real estate “market” let alone asking when the real estate market might “come back”?
There is no “market,” right? We really don’t know how low prices have already gone down to, because if the foreclosures were on the market or if banks were actually kicking all the people out that haven’t made payments for a year, they’d be much lower than they are today, right? And there are no loans, right? I mean there are government loans, but with an average credit score for Fannie of 763… and that’s AVERAGE… I mean, come on now.
And how could “the expiration of tax credits call into question the sustainability of the recovery?” That means it wasn’t really a RECOVERY, right? I mean, if the expiration of tax credits destroy a country’s economic recovery, it wasn’t really recovering, right?
Oh, and maybe I’m missing something here, but since there are really only government loan programs, what about all the homes that were $2 million and up, or even $1 million or up. Are we just selling those to cash buyers, or those with 50% down with 900 credit scores?
And besides… why would a lender want to lend into this market, I mean… let’s say we owned a bank… would we want to lend a million bucks out at a low interest rate for a long period of time, secured by an asset certain to depreciate, to someone who might lose their job or see their income fall significantly? Seriously? Who would want to do that?
And just how many people are there out there who have perfect credit, tons of cash to put down, who don’t already own the house they want, and aren’t already underwater… who aren’t worried about losing their job or the house depreciating in the next few years?
2. A whole cadre of so-called experts keep forecasting how many foreclosures are coming, and they keep extending their forecasts out, and saying things like: We’ll have 4 million foreclosures next year and then five million the year after that, and so the foreclosure crisis will be with us until 2013.
Assuming they are right in whatever numbers their forecasting, or even if they’re not… why would it stop after 2013… or ever, for that matter? I mean… don’t foreclosures lower the values of homes down the street? So, wouldn’t the last million foreclosures cause another 10 million people to be underwater, or further underwater… and wouldn’t that lead to more foreclosures?
I understand why the foreclosure crisis started, and although we did have a housing bubble pop and people love to blame it on that bubble popping, it was and is really the credit crisis that set hosing into its free fall. It was July 10, 2007 when Standard & Poors and Moody’s did something they had never done before… they announced that they were downgrading the ratings on 1,032 bond issues from AAA to A and even BBB.
It only affected less than 1% of the bond issues, but overnight investors freaked out and dumped their bonds because they thought… if you botched those ratings what about the other 5 trillion in bonds out there?
That day the secondary market froze because no one would buy mortgage backed securities because no one trusted the ratings anymore, and with no secondary market, banks started hoarding cash. The availability of loans would soon evaporate and the Fed started their emergency lending programs to try to keep liquidity going… to no avail.
All of a sudden there were no mortgages and prices, which were already falling because of the bubble that was being deflated by rising rates, started to fall off a cliff. The Fed started lowering rates but it was too late. There were no loans, so the low rates didn’t matter… sound familiar?
So, now we have a free fall… although as I said prices won’t fall in a straight line down… but the further down they go the more foreclosures, right? Because when people are underwater and they have to move… it’s more than likely a foreclosure… I know, it could be a short sale, but really now. And then the foreclosures breed more foreclosures, right?
And the lower property values fall, the less we all spend, so the less companies sell and the more people get laid off… which leads to even more foreclosures. So, why would it just end? Would someone ring a bell and say that’s it and that’s all? I mean, I know eventually they’ll stop… once the housing market has burned to the ground, but why would they stop before then?
Am I missing something here?
3. What’s a “jobless recovery?” We recover economically, but people don’t have jobs? How does that work out exactly? I mean, we’ve got like 40 million people out of work in this country and that number is growing. From what I’ve read, we need to produce between 125,000 and 165,000 jobs every month just to keep up with our population and immigration, so if we lost 11,000 jobs in November, doesn’t that mean that we’re a lot further behind than just the 11,000 jobs lost?
How do we recover economically as a country with 40 million people that don’t have jobs?
People say this isn’t the Great Depression because they don’t see people standing in soup lines, but isn’t the reason we don’t have people standing in soup lines is because we’ve got 43 million Americans on food stamps? I mean, we didn’t have food stamps during the 1930s, right? If we did, we probably wouldn’t have had all those soup lines either, right? In 2005, we only had 11 million people on food stamps, so isn’t that number growing kinda’ fast?
Is that all part of the jobless recovery… is it a foodless recovery too?
4. Last one for now… So, am I missing something… do we even have a program on the drawing board that might turn any of this around? I mean, is there some federal program they’ve cooked up secretly that they’re going to spring on us that has a shot at creating jobs or stopping foreclosures? I try to keep up but perhaps I’ve missed something… what’s the name of the program that’s in place or that’s being voted on in Congress that has even a small chance of reversing these trends of joblessness, falling home prices?
And what about the broken credit markets that have made the U.S. Government into the only lender in this country? Is there a program in place that’s trying to fix that? In fact, what are we doing to fix anything? I must have lost track and I can’t seem to find anything online either.
I know what a smashing success HAMP has been, but I’m not trying to split hairs or even criticize the administration… I just don’t remember hearing about any other wonky acronyms for programs that are in the process of fixing things. Are we working on any? Am I going to wake up one day and hear an announcement that things are better because… why?
Will the economy just fix itself? It doesn’t seem to have worked that way in Japan, ever since their housing bubble popped in 1990. I read that property values in Japan today are 60% of where they were in 1990 when their bubble deflated. That’s twenty years ago… they tried economic stimuli and quantitative easings… and all the same stuff we’ve tried… and their economy didn’t fix itself… why will ours?
And shouldn’t our politicians look more worried than they do now? Why are they all so calm that they can sit around debating the reforming of health care reform, and the like? Why aren’t they proposing some sort of program that might not work, but at least sounds like it could? I mean, the Dems just got their butts kicked in the mid-terms… why aren’t they at least pretending to be doing something? I mean, besides extending tax cuts and unemployment benefits?
Is it just me, or do our elected representatives now look like they think they work for some corporation and don’t really report to us anymore? Like they’ll decide what they want to work on and it doesn’t really matter what we want them to do… they’ll just decide on their own?
Like they want a raise, so they vote themselves one and it’s late a night and that’s that. Why do they think that way… we still vote for them, don’t we? When did they stop caring about us? I must have been busy and not paying attention… was it the year that “spaghetti” became “pasta,” and “sherbet” became “sorbet?” ’Cause I do think I missed a lot that year, whenever it was.
So, in conclusion…
Well, that’s all I’ve got for now… I really appreciate anyone’s help solving any of these issues… it’s probably just me… like my mother always said, I’d forget my head if it weren’t attached to my neck. And I’m probably just overlooking some simple thing that will make it all fall into place. That’s it, right? I’m being an idiot and they’ve really got a plan.
I just don’t understand how things work, economically speaking… right? Because I’d be okay with an evil plan… as long as I knew someone had a plan.
I hear some people saying that there’s some sort of evil plan at work, but see… the thing is… I’m having a hard time seeing who’s winning here. And with so many people losing… shouldn’t someone be winning… I mean, besides a few hundred bankers who have won the lottery a hundred times over? Are we hoping to pay them enough that they’ll buy all of the houses? Like 300 fat-cats will show up and buy 40 million homes all of a sudden… that can’t be right, can it?
A little help would be very much appreciated because frankly… although I used to think of myself as a fairly bright guy… I’m completely stumped.
Thanks in advance for your help…
Mandelman out.
I’ve been doing some thinking, and I have several questions for the real estate and mortgage experts. I’m fairly new to all this… so please forgive me if these questions seem really basic…
1. The following sentence appeared this past weekend in the LA Times in an article that featured “experts” discussing when California’s real estate market might start to “come back”.
“Although California’s housing market free-fall ended in spring 2009, the weakness after the expiration of federal tax credits for buyers last year has called into question the sustainability of the recovery.”
My first question is… isn’t that one of the dumbest sentences ever written? I mean, to me that sentence says that the “free fall” never ended, it was just placed on pause as a result of the tax incentive, and once that tax incentive ended, the free fall simply continued. Just like the auto sales market after Cash-4-Clunkers came to an end, no?
And, why are we all pretending there’s a real estate “market” in the first place?
I mean, the only people selling are those who have to, and the only buyers are looking to steal something. The only lender is the U.S. Government through Fannie, Freddie or FHA… there are no securitizations to speak of… and the average credit score for a Fannie Mae loan is 763 for the last two years. There are millions living in homes they haven’t made payments for over a year, and there’s a shadow inventory large enough to keep the entire continent of Africa in the shade.
Housing is still in free fall, it just doesn’t fall in a straight line, and with the foreclosure crisis ongoing and nothing in place to stop it, it’s certain to both continue and worsen. So, why are we pretending there’s a real estate “market” let alone asking when the real estate market might “come back”?
There is no “market,” right? We really don’t know how low prices have already gone down to, because if the foreclosures were on the market or if banks were actually kicking all the people out that haven’t made payments for a year, they’d be much lower than they are today, right? And there are no loans, right? I mean there are government loans, but with an average credit score for Fannie of 763… and that’s AVERAGE… I mean, come on now.
And how could “the expiration of tax credits call into question the sustainability of the recovery?” That means it wasn’t really a RECOVERY, right? I mean, if the expiration of tax credits destroy a country’s economic recovery, it wasn’t really recovering, right?
Oh, and maybe I’m missing something here, but since there are really only government loan programs, what about all the homes that were $2 million and up, or even $1 million or up. Are we just selling those to cash buyers, or those with 50% down with 900 credit scores?
And besides… why would a lender want to lend into this market, I mean… let’s say we owned a bank… would we want to lend a million bucks out at a low interest rate for a long period of time, secured by an asset certain to depreciate, to someone who might lose their job or see their income fall significantly? Seriously? Who would want to do that?
And just how many people are there out there who have perfect credit, tons of cash to put down, who don’t already own the house they want, and aren’t already underwater… who aren’t worried about losing their job or the house depreciating in the next few years?
2. A whole cadre of so-called experts keep forecasting how many foreclosures are coming, and they keep extending their forecasts out, and saying things like: We’ll have 4 million foreclosures next year and then five million the year after that, and so the foreclosure crisis will be with us until 2013.
Assuming they are right in whatever numbers their forecasting, or even if they’re not… why would it stop after 2013… or ever, for that matter? I mean… don’t foreclosures lower the values of homes down the street? So, wouldn’t the last million foreclosures cause another 10 million people to be underwater, or further underwater… and wouldn’t that lead to more foreclosures?
I understand why the foreclosure crisis started, and although we did have a housing bubble pop and people love to blame it on that bubble popping, it was and is really the credit crisis that set hosing into its free fall. It was July 10, 2007 when Standard & Poors and Moody’s did something they had never done before… they announced that they were downgrading the ratings on 1,032 bond issues from AAA to A and even BBB.
It only affected less than 1% of the bond issues, but overnight investors freaked out and dumped their bonds because they thought… if you botched those ratings what about the other 5 trillion in bonds out there?
That day the secondary market froze because no one would buy mortgage backed securities because no one trusted the ratings anymore, and with no secondary market, banks started hoarding cash. The availability of loans would soon evaporate and the Fed started their emergency lending programs to try to keep liquidity going… to no avail.
All of a sudden there were no mortgages and prices, which were already falling because of the bubble that was being deflated by rising rates, started to fall off a cliff. The Fed started lowering rates but it was too late. There were no loans, so the low rates didn’t matter… sound familiar?
So, now we have a free fall… although as I said prices won’t fall in a straight line down… but the further down they go the more foreclosures, right? Because when people are underwater and they have to move… it’s more than likely a foreclosure… I know, it could be a short sale, but really now. And then the foreclosures breed more foreclosures, right?
And the lower property values fall, the less we all spend, so the less companies sell and the more people get laid off… which leads to even more foreclosures. So, why would it just end? Would someone ring a bell and say that’s it and that’s all? I mean, I know eventually they’ll stop… once the housing market has burned to the ground, but why would they stop before then?
Am I missing something here?
3. What’s a “jobless recovery?” We recover economically, but people don’t have jobs? How does that work out exactly? I mean, we’ve got like 40 million people out of work in this country and that number is growing. From what I’ve read, we need to produce between 125,000 and 165,000 jobs every month just to keep up with our population and immigration, so if we lost 11,000 jobs in November, doesn’t that mean that we’re a lot further behind than just the 11,000 jobs lost?
How do we recover economically as a country with 40 million people that don’t have jobs?
People say this isn’t the Great Depression because they don’t see people standing in soup lines, but isn’t the reason we don’t have people standing in soup lines is because we’ve got 43 million Americans on food stamps? I mean, we didn’t have food stamps during the 1930s, right? If we did, we probably wouldn’t have had all those soup lines either, right? In 2005, we only had 11 million people on food stamps, so isn’t that number growing kinda’ fast?
Is that all part of the jobless recovery… is it a foodless recovery too?
4. Last one for now… So, am I missing something… do we even have a program on the drawing board that might turn any of this around? I mean, is there some federal program they’ve cooked up secretly that they’re going to spring on us that has a shot at creating jobs or stopping foreclosures? I try to keep up but perhaps I’ve missed something… what’s the name of the program that’s in place or that’s being voted on in Congress that has even a small chance of reversing these trends of joblessness, falling home prices?
And what about the broken credit markets that have made the U.S. Government into the only lender in this country? Is there a program in place that’s trying to fix that? In fact, what are we doing to fix anything? I must have lost track and I can’t seem to find anything online either.
I know what a smashing success HAMP has been, but I’m not trying to split hairs or even criticize the administration… I just don’t remember hearing about any other wonky acronyms for programs that are in the process of fixing things. Are we working on any? Am I going to wake up one day and hear an announcement that things are better because… why?
Will the economy just fix itself? It doesn’t seem to have worked that way in Japan, ever since their housing bubble popped in 1990. I read that property values in Japan today are 60% of where they were in 1990 when their bubble deflated. That’s twenty years ago… they tried economic stimuli and quantitative easings… and all the same stuff we’ve tried… and their economy didn’t fix itself… why will ours?
And shouldn’t our politicians look more worried than they do now? Why are they all so calm that they can sit around debating the reforming of health care reform, and the like? Why aren’t they proposing some sort of program that might not work, but at least sounds like it could? I mean, the Dems just got their butts kicked in the mid-terms… why aren’t they at least pretending to be doing something? I mean, besides extending tax cuts and unemployment benefits?
Is it just me, or do our elected representatives now look like they think they work for some corporation and don’t really report to us anymore? Like they’ll decide what they want to work on and it doesn’t really matter what we want them to do… they’ll just decide on their own?
Like they want a raise, so they vote themselves one and it’s late a night and that’s that. Why do they think that way… we still vote for them, don’t we? When did they stop caring about us? I must have been busy and not paying attention… was it the year that “spaghetti” became “pasta,” and “sherbet” became “sorbet?” ’Cause I do think I missed a lot that year, whenever it was.
So, in conclusion…
Well, that’s all I’ve got for now… I really appreciate anyone’s help solving any of these issues… it’s probably just me… like my mother always said, I’d forget my head if it weren’t attached to my neck. And I’m probably just overlooking some simple thing that will make it all fall into place. That’s it, right? I’m being an idiot and they’ve really got a plan.
I just don’t understand how things work, economically speaking… right? Because I’d be okay with an evil plan… as long as I knew someone had a plan.
I hear some people saying that there’s some sort of evil plan at work, but see… the thing is… I’m having a hard time seeing who’s winning here. And with so many people losing… shouldn’t someone be winning… I mean, besides a few hundred bankers who have won the lottery a hundred times over? Are we hoping to pay them enough that they’ll buy all of the houses? Like 300 fat-cats will show up and buy 40 million homes all of a sudden… that can’t be right, can it?
A little help would be very much appreciated because frankly… although I used to think of myself as a fairly bright guy… I’m completely stumped.
Thanks in advance for your help…
Mandelman out.
I just don’t think we can get out of this mess without major chaos…the depths and magnitude of the problems just run too deep and the cons, the lies, the corruption and incompetence are far too pervasive. The following is not mine….I plagiarized every single word…but the fact that very smart people are now saying the kinds of things that me and a few isolated nut jobs have been screaming about for years is what is really scary….
Get ready for more backroom deals made by the Fed and Treasury to rescue firms like Bank of America. If you loved the first three rounds of this financial crisis, you will love the next six rounds as markets pummel Wall Street banks, with Uncle Sam as referee applying the smelling salts to revive it for yet another round (whilst its CEOs skim more billions off the top in compensation). Ultimately, it will not work. Wall Street will go down for the count — but probably not until it drags Main Street through a great depression that your great grandkids will study in the history books. And, by the way, they will laugh at the misguided efforts of the thoroughly compromised one-term Obama administration that focused its efforts at budget-balancing in the face of the worst headwinds America had ever seen.
If all that is true, then the destruction of documents and the creation of falsified documents by “Burger King” robo-signers was not planned back in 1999. But it is still go-to-jail fraud. And the big banks are still on the hook for hundreds of billions — maybe trillions — of dollars. In other words, it is still a big problem.
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It took three days before New Orleans dissolved into civil unrest. How long do you think it will take before the world as we know it goes nuts when the next banking crisis hits?
Do you think this country has the backbone, sense of community or values to get us through years of deprivation that characterized the Great Depression?
Just think about it……
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