What Happens When Everyone Says, ‘The Hell With It’?
Readers suggested a topic on goverment housing proposals and self enrichment. “How many Congressfolk would be direct beneficiaries of the Dodd-Frank mortgage rescue?”
Two answers, “‘Only 100%.’ ‘More like 170%. Most would go for second helpings.’”
One looked at the wider trend, “Does anyone see mass debt forgiveness out there on the horizon?”
“I cannot imagine today’s young workers willingly paying for boomer pensions, student loans, credit cards, medical care, taxes for social services, inflated housing, food, energy, AND interest on our unfathomable US national debt forever-there’s just not enough income to sustain it all and still live a semblance of a life.”
“What happens when everyone just says, ‘The hell with it. I quit,’ and walks away from their credit card debt like they now do their upside down mortgages?”
“We’re already seriously considering letting mortgagees off the hook; forgiving student loans is an obvious next step. So after that…? Do we all end up working either for the government or a collection agency? Is The System about to go bye-bye?”
From Portfolio.com. “Two U.S. senators, two former Cabinet members, and a former ambassador to the United Nations received loans from Countrywide Financial through a little-known program that waived points, lender fees, and company borrowing rules for prominent people.”
“Senators Christopher Dodd, chairman of the Banking Committee, and Kent Conrad, chairman of the Budget Committee and a member of the Finance Committee, refinanced properties through Countrywide’s ‘V.I.P.’ program in 2003 and 2004, according to company documents and emails and a former employee familiar with the loans.”
“Other participants in the V.I.P. program included former Secretary of Housing and Urban Development Alphonso Jackson, former Secretary of Health and Human Services Donna Shalala, and former U.N. ambassador and assistant Secretary of State Richard Holbrooke.”
“James Johnson, who had been advising presidential candidate Barack Obama on the selection of a running mate, resigned from the Obama campaign Wednesday after the Wall Street Journal reported that he received Countrywide loans at below-market rates.”
“Most of the officials belonged to a group of V.I.P. loan recipients known in company documents and emails as ‘F.O.A.’s’-Friends of Angelo, a reference to Countrywide chief executive Angelo Mozilo.”
“The V.I.P. loans to public officials in a position to advance Countrywide’s interests raise legal and ethical questions. Countrywide’s ethics code bars directors, officers and employees from ‘improperly influencing the decisions of government employees or contractors by offering or promising to give money, gifts, loans, rewards, favors, or anything else of value.’”
The LA Times. “Conrad got a Countrywide loan on his beach house after talking to Mozilo. Dodd got two loans. California Sen. Barbara Boxer also borrowed from Countrywide on two occasions. All said they believed they received no special treatment.”
“Dodd said there was nothing untoward about his dealings with Countrywide. ‘When my wife and I refinanced our loans in 2003, we did not seek or expect any favorable treatment. Just like millions of other Americans, we shopped around and received competitive rates,’ he said in a statement released Friday.”
“A Countrywide spokeswoman declined to comment about VIP loans. In a statement, the company said it was ‘very concerned about the improper disclosure of confidential customer information. . . . We regret any impact this may have had on our customers.’”
“The son of House Speaker Nancy Pelosi, Paul Pelosi Jr., has worked as a sales manager and loan officer for Countrywide in the San Francisco Bay Area and received about $1 million in loans from Countrywide on a condo. The younger Pelosi obtained a $916,000 mortgage from Countrywide in 2004 and a $114,500 line of credit the same year.”
“He has since paid off the loans, which he said were made at market rates. His mother said through a spokesman that she had no knowledge of her son’s mortgages.”
“Conrad said Jim Johnson, a former CEO of Fannie Mae who also received VIP loans from Countrywide was the friend who put him together with Mozilo.”
“‘My memory is that I called Jim’ to ask for advice on obtaining a mortgage for the summer house property in Bethany Beach, Del. ‘And he said, ‘Here’s a guy that you should talk to right now.’ And he handed the phone over to Angelo Mozilo. That conversation lasted about 30 seconds. I told him what I was looking for and he said, ‘We’d be happy to take a look at it,’ or something like that.’”
The New York Post. “Others who received ‘FOA’ loans include Alphonso Jackson, the secretary of Housing and Urban Development under President Bush who resigned in April, and Donna Shalala, who was secretary of Health and Human Services in the Clinton administration.”
“Jackson took out loans totaling $653,331 in 2003 and 2004 while he was deputy HUD secretary, with the latter loan coming through a week before he was named secretary.”
From The Hill. “Embattled Rep. Laura Richardson remained mum on Friday following more news about her personal housing crisis. Richardson, who has dodged repeated calls for information regarding her multiple defaults on three home mortgages and her financial disclosure reports, failed to report a heavily indebted mortgage on her initial 2007 financial statement.”
“After falling too far behind on mortgage payments on a home she purchased in Sacramento in January 2007, Richardson was forced to watch the home sold at auction last month. In the aftermath, it was revealed that Richardson has defaulted on mortgages for three California homes since 1999.”
“According to records pulled from Los Angeles and Sacramento counties, Richardson has defaulted five separate times on her primary residence in Long Beach, a home she purchased in 1999 and refinanced in the summer of 2006 for a new $446,250 mortgage.”
“The prior summer, Richardson took out a loan from Wells Fargo, in the amount of $359,000, to purchase a second home in San Pedro.”
“After defaulting twice - in September 2007 and again in January - and owing $367,436 on an original loan of $359,000, Richardson received notice from her lender in April that her San Pedro home was going to be sold at auction. According to reports, that auction is scheduled for July 14.”
“A senior House Democrat close to leadership on Thursday afternoon said he had spoken to Richardson about the matter and she had assured him that, with regard to her Sacramento home, the ‘bank screwed up.’”
“On Wednesday the Los Angeles Times reported that James York, the real estate investor who bought Richardson’s Sacramento home at a May 7 auction for $388,000, is now claiming that Richardson’s lender, Washington Mutual, reclaimed the property on behalf of Richardson. York had recorded the deed on May 19 and had begun renovations, the Times reported.”
“‘They took the property back, and they didn’t even send back the money,’ York was quoted in the Times. ‘It’s clear what’s happening is Ms. Richardson is abusing her political power and using it for her own political needs.’”
The Tauton Call. “U.S. Sen. John Kerry said his Mortgage Revenue Bond Program will provide the state with more than $200 million to help struggling homeowners stave off foreclosure, among other things.”
“Kerry, the featured speaker at Pro-Home Inc.’s annual meeting on Friday, May 30, said he has never seen as big a ‘disconnect’ between what is happening in neighborhoods as a result of the mortgage crisis and what is ‘not happening’ in Washington D.C. to address it.”
“Improving the economy means ’stemming the tide of foreclosures’ and helping ordinary people hold onto their homes, Kerry said. ‘It shouldn’t just be when the pain reaches Bear Stearns and Wall Street that we get a response,’ Kerry said.”
“In Massachusetts, there has been a 37 percent increase in foreclosures over last year, he said. Meanwhile, home values have fallen 11 percent, the steepest decline since 1990, and sales are down 32 percent since March of last year in the commonwealth, he said.”
“Homeownership helps build strong communities and families, he said. ‘It’s people sharing in the excitement and personal rewards of drawing those lines on the bathroom wall when kids grow older. It’s a place to have a barbecue and going home and knowing it’s your castle,’ he said.”
“Pro-Home is a non-profit corporation that helps people ‘attain and retain’ affordable housing, Pro-Home President Dave Tipping said.”
“Kerry said affordable housing is one area where the marketplace is not self-regulating. The reason is that developers can make more profit building luxury housing, so government has to step in to create incentives for them to build moderately priced homes.”
“‘We always have to try to attract that investment,’ Kerry said.”
“Economist John W. Bitner, the keynote speaker at the lunch, said he believes the economy is in a mild recession. The term’s technical definition is two quarters of negative growth, and that hasn’t happened.”
“But an alternate definition is a ’significant decrease in economic activity,’ and that is occurring, said Bitner. In some places, home prices have plummeted 25 or 30 percent, Bitner said.”
“Bitner said part of the problem is that banks gave mortgages to some people who can’t afford home ownership. ‘It’s like giving an alcoholic a drink. It might make them happy, but you’re not doing them a favor,’ Bitner said.”
“It’s a vicious cycle, he said. With home prices falling, people aren’t buying because they want to wait until the market bottoms out. ‘No one wants to catch a falling knife,’ Bitner said.”
“Kerry and Bitner both said government intervention is necessary to address the housing crisis. ‘The free market forces will resolve the issue, but they’re vicious and will resolve it in an ugly way,’ Bitner said.”
“What happens when everyone just says, ‘The hell with it. I quit,’ and walks away from their credit card debt like they now do their upside down mortgages?”
Is this not more or less what happened in Argentina? I know it is different here because we are such a huge part of the world economy, but it cannot end well.
More pork, and bigger cookie jars for everyone!
In Argentina a large percentage of small business owners and self-employed people went bankrupt when the banks folded (and reopened later with debts intact, but savings ravaged by the devaluation). The US situation does not look that critical to me (well, maybe in a few years if the politicians won’t listen).
I hope so. We need about three years to get everything paid off. Otherwise we’ll just have to manage the best we can.
The Argentina Currency Crisis of 2001 was h*ll on everyone, but it hit the middle class the worse. Can you imagine having 3/4 of your savings evaporate, and all your fugality become worthless. The banks closed for 90 days, and when they opened, you could only take out $300- week.
I did a lot of reading on the subject. The U.S. looks worse to me. Replace the IMF with the Asian Central Banks, and we’re in bigger trouble, imo.
“What happens when everyone just says, ‘The hell with it. I quit,’ and walks away from their credit card debt like they now do their upside down mortgages?”
That’s when the fangs come out. Two ways to survive 1) lots of ammo and a good aim (I have neither) or 2) live near a police substation (I do).
Because someone’s going to have to pay.
Isn’t “Communist” China our biggest creditor? Will their 20 million man army invade the USA and go door to door collecting? Or will they simply lob hundreds of neutron bombs to get rid of all the inconvenient life forms in the USA and move in to the US?
At least there would not be any more tree huggers and the Chinese would put up the oil rigs all over the continental shelf when they move in. They are no wussies.
Wow, I hadn’t thought of the neutron bombs. I’m sure the extra space would be attractive to China.
I had thought of the entire midwest as an enormous pig farm to provide pork to China’s population. (Myself, I kind of appreciate the rural midwestern equivalent of tree-huggers that try to limit the size of the existing pig farms to preserve water, land and quality of life myself - but I second you that the Chinese are no wussies about things like that.)
Yeah, China has done to their environment (polluted air and water) in about a dozen years, what it took US about 150 years to accomplish. They aint’ wussies, indeed. To hell with tree huggers and their clean beaches and wildlife, we need oil for our guzzlers.
I don’t give a hoot if gas goes for $10 per gallon. I can get by without wheels. The point is tree huggers have a big share of the blame for our energy dependence and lack of timely building of power plants.
Myself, I like breathing clean air and I like clean beaches. But what I like is irrelevant compared to what the Chinese like. In a couple generations, they too will have enough nuclear energy plants coming on line to phase out the use of fossil fuels in cars and order all new cars be electric. In four generations their air will be clean.
Since I am for clean air, I welcome this peak oil crisis. I won’t welcome the horrible world war that it will bring.
Heck, what’s a little air pollution in Peking in time for the Olympics?
the Chinese did not write u.s. trade policy. Yes, they could
buy Florida and Manhattan. The American population
sends our lawmakers to Washingon, D.C. So we become our
worst enemy.
There is a lot of fiddling going on. And it ain’t The Foggy Mountain
Boys.
And yes, an aroma of burning pervades.
Globalization just fans the flames.
RE: That’s when the fangs come out. Two ways to survive 1) lots of ammo and a good aim (I have neither) or 2) live near a police substation (I do).
After attendance at a pair of sold out Tom Petty shows over the weekend, and watchin’ the rude actions and drunken, destructive behavior’s of the 20-something set, (especially the spoiled brat, females-HEY, IT’S ALL ABOUT ME-SO GET OUTTA MY FACE-as a phalanx of ushers throws out a gaggle who crash the isles figuring they had a right to block everyone else’s views in their glorious vain dance theatrics), all I can say is, you better believe this country is totally fooked.
No fails to impress me when I go out to a big public event, just exactly how watered down the genetic strain of this country’s inhabitants have become.
HD, your descriptions sure ain’t watered down.
I, too, have noticed a decline in the measure of consideration for our fellow humans…last concert I went to was exactly like you describe.
And it was classical! Stravinsky.
(Just kidding, it was actually the Dead Politicians, they’re a hoot.)
I also recall once stealing the umbrella from an older woman who sat in front of me at the Edinborough Tattoo in Scotland and kept sticking it in my face, so maybe it isn’t generational.
Whoops, you’re probably wondering who that band is (the Dead Politicians), what I meant was the Brain Dead Politicians.
RE: I, too, have noticed a decline in the measure of consideration for our fellow humans…last concert I went to was exactly like you describe.
LIS- I only report on what I see and experience. From your comments, I guess I’m not alone in what I’m seeing.
I’ll give the drunks their due, (I just hunker down with my binoc’s and go into my own little world, however from various blogs dealing with TP&H’s current tour, I guess the blatant rudeness and indifference shown to ex-Traffic’s Stevie Winwood (he’s 60-and in incredible form/played for an hour) as the opening act has been unreal.
That type of disrespect (which is out there in spades) I have little tolerance for.
Sure glad I’m 55 and pretty much done with the concert circuit. Overall, though-it’s been a great ride until the last couple of years.
Personally, I think people in general are mentally losing it.
a piece of advise for banksters and politicians of all hues– keep a one way ticket out of this country in your back pocket. Its going to be a long hot summer and you never know what lights the fuse…
keep a one way ticket out of this country in your back pocket Good luck if the air line goes belly up in the meantime. Better keep a fueled-up personal aircraft with crew ready 24×7 at a private airstrip near home.
Name me a place that respects the Bill of Rights and Declaration of Independence more than the USA and I’ll be on the same flight.
agree, thats why the folks threatening these freedoms (habeas corpus anyone?) may have to leave.
That’s my point. Name me a country that has anything better for the RKBA than the United State’s second amendment. You cannot.
The second Amendment + the words in the first paragraph of the Declaration of Independence = the justified revolution for individual liberty.
Author/lecturer Lindsey Williams (The Energy Non-Crisis) describes our $4+/gal gas as a tax to pay off the third world debt that the World Bank had forgiven about 3 years ago. For his video go here:
http://thehousingbubbleblog.com/?p=4637#comments
Whether or not you believe what this man of God has to say (like my grandpa always said) there’s no free lunch.
“What happens when everyone just says, ‘The hell with it. I quit,’ and walks away from their credit card debt like they now do their upside down mortgages?”
If this happens, it will end almost all discretionary buying, not to mention a lot of non-discretionary buying. The CC companies will fall to their knees. They will do anything and everything to entice/threaten people to pay their CCs enough to start the circus again. Shopping and many other transactions revolve around CCs in the way they’re structured, it’s nearly impossible to shop online w/o a CC, as well as buy airline tickets, rent a car, etc. etc. So long, eBay, and I bet they’re already worrying. Sure, you can use a debit card, but that’s different, it’s real money.
But the real ramification will be psychological, when people realize that they won’t go to debtor’s prison and they can continue their lives w/o a CC, just in a much different way - the realization that their lives may be more difficult in some ways, but being free from the CCs is good (although how free they’ll be is another question, there would be a lot of harassment from the CCs to pay up). It would be a major paradigm shift and could also have huge political ramifications if Americans wake up from their long slumber in Candyland.
Along that line, I gave a ride to a pack of gnats (flock of gnats? no, I got it, GANG of gnats) over to Colorado yesterday, they were in my car and wouldn’t get out, so now they’re having a vacation over there, hope they DON’T come back, little blood-sucking bast*rds follow you clear across the desert.
Where was I, I had a point here somewhere…oh, yeah, and I went SHOPPING. It was pure hell. I had to get a few things, went into Lowes, it was empty, then went into Rosses to get some towels and it was crammed full of…how do I say this w/o sounding elitest…full of people who had a dozen little rugrats each and spoke no English. I heard one American say to her friend, “Hurry up, I gotta get outta here” and I felt the same way. All these people were paying with CCs. The thing that struck me was the environment all these little kids were growing up in - shop - consume - shop - and I wondered at how old and quaint I must be for thinking kids should be outside playing in the trees and dirt on a beautiful Saturday afternoon instead of hyper shopping.
God everytime I see the word “paradigm” I think of twenty cents…
“Conrad got a Countrywide loan on his beach house after talking to Mozilo. Dodd got two loans. California Sen. Barbara Boxer also borrowed from Countrywide on two occasions. All said they believed they received no special treatment.”
Senators are accustomed to and expect special treatment!
“‘My memory is that I called Jim’ to ask for advice on obtaining a mortgage for the summer house property in Bethany Beach, Del. ‘And he said, ‘Here’s a guy that you should talk to right now.’ And he handed the phone over to Angelo Mozilo. That conversation lasted about 30 seconds. I told him what I was looking for and he said, ‘We’d be happy to take a look at it,’ or something like that.’”
Yeah, there I was, thinking I should get a loan. So, who do I call but the former CEO of Fannie Mae. And who does he happen to be talking with? Oh yeah, the CEO of Countrywide. I mean hey, who do YOU call when you are thinking about a loan?
And of course why would a CEO of a loan company EVER think of granting a favor to a Senator calling him for a loan out of the blue? I mean, there are no implied expectations there, are there?
Christ, can this be any more obvious?
PS. What kind of “advice” does one need that only the CEO of Fannie can provide? It’s a matter of qualifying, terms and interest rate. I don’t know whether to be more insulted at the graft or his implication we are so stupid as to believe this crap.
Auger,
Don’t you love the legalese BS embedded in their statements. “My memory ……….. blah, blah, blah…….”.
Or “I have no knowledge………… blah, blah, blah………………………….”.
Isn’t everybody tired of this by now?
I say throw the bums out. I wont vote for any encumbent unless they have shown real leadership and fiscal conservatism.
I’m fully aware of the class sytem but our system is out of control.
Oh, happy fathers day.
Mike
I agree Mike, the whole congress is starting to appear crooked (like I should be surprised). Happy fathers day to you as well (I assume)!
“The bank screwed up” Riiiiight Ms. Richardson, then prove it! She was nothing more than a fliptard like many others. Now she doesn’t want to pay her debt, pure and simple!
“A senior House Democrat close to leadership on Thursday afternoon said he had spoken to Richardson about the matter and she had assured him that, with regard to her Sacramento home, the ‘bank screwed up.’”
How is mortgage debt any different then credit card debt?
Because I was smart enough to sit on the sidelines during this mess, I have to pay for the retards that were not, and get nothing in return?
F that. I want my credit card and gambling debts wiped out. My bookies name is Vinnie the Three Fingered Mick, Congress can talk to him about settling.
“How is mortgage debt any different then credit card debt? ”
One to secured to property, the other is unsecured debt. I have both and plan on using my unsecured CC line of credit in lieu of having my property liened. I see the entire country and banking system based on providing cheap credit to folks to push consumer spending and allowing those folks who are underwater or borrowed irresponsiblity to simply walk away or reduce their principal without much financial penalities(A LA L. Richardson). All based on political expediency. Fine then i can do the same and simply run up the CC as i have a boatload of available unsecured credit. Then simply do a chapter 7 and wipe it out. Three years later i can built back my credit. I will incorporate and start another small independent biusiness to further run up credit, then file a businees BK if things get bad.
Not an honorable way to do things according to bens bubble tenent of saving, living cheaply and reducing debt but what do i have to lose? Gov’t is devaluding the dollar anyway and destroying the $ value of savings and investments . Better to work the system and run with inflation, borrow to the max on a business, run it a few years till it goes belly up, and then screw the banks thru BK.
The US gov’t system sucks anyway -it is a system like a third world banana republic which is designed enrich those in power and their allies the wall street bankers and shysters, and screw responsible savers and investors especially the middle class.
RE: Fine then i can do the same and simply run up the CC as i have a boatload of available unsecured credit. Then simply do a chapter 7 and wipe it out. Three years later i can built back my credit. I will incorporate and start another small independent biusiness to further run up credit, then file a businees BK if things get bad.
PeteM (laughing)
Years ago, I’d have been aghast at your plan.
Today, it all makes legitimate sense to me, and I’m the guy who has always said I couldn’t be bought for a million bucks.
The honest and ethical man is a dead species in this country.
You only have to look to the Feds to see the entity that’s brought this all about.
The repudiation of all debt.
The Real.American.Dream.
“Stave off foreclosure, among other things” Wonder what ‘other things’ are?
Old Lurch is no different than the rest of the D.C. dimwits, but I have to give me credit for be able to bag very rich nut jobs.
“U.S. Sen. John Kerry said his Mortgage Revenue Bond Program will provide the state with more than $200 million to help struggling homeowners stave off foreclosure, among other things.”
Politicians will do stupid things to get votes. This behavior of politicians is pretty much universal. Same applies here.
Reality will be hitting this country hard
(Kerry said) “developers can make more profit building luxury housing” (so govt must provide incentives to build affordable housing)
Developers make no profit on luxury housing when there are no customers. They are already falling all over themselves to build affordable housing, since that’s all anyone can afford! duhhh…Kerry will use any rhetorical excuse to interfere in the free market.
“Free Market” is a myth. We don’t have free markets. That’s why we’re in the mess we’re in today.We have heavy Gov regulation, heavy Corporate manipulation, and the workers/tax payers have gotten inflation, lower standards of service, and a mass exporation of high paying jobs over seas.
Think about it. Coporations don’t wan’t compition. They want monopolies/oligopies. That’s what we have today. A few compaines controling vast markets. That’s what all the mergers and aquistions are about. Look at what has happened to consumer choice over the last three decades. Look at what deregulation did to the banking industry, the airline industry, power companies, etc. Look at the ARMY of lobbyists all over Wash. DC, every State Capitol, and even locally. They are not representing workers or even consumers, they are there to get laws/policies changed in thier favor.
THIS IS NOT “FREE MARKET” capitolism. This is socialism for the wealthy class. This is Perdatory Capitolism! That’s why wall street banks are being bailed out but not home owners. The politians are paying lip service to the idea of saving home owners. But just like in the last Great Depression the things that were done did not help (at least overall).
It’s all just been a show to keep you working, paying taxes and mass consuming/going into debt! Those of us who have the largest stupidest debt will be the first to go belly up. But make no mistake we are all going to be pulled down by this perfect financial storm that is coming.
Commercial real estate and Alt-A loans are next. Coming to a theatre near you this fall.
The best way to make housing actually affordable is to not provide easy and cheap credit that artificially prop up demand for “luxury” homes (and I use the term loosely).
It’s not that complicated: residential construction was a relatively well functioning market until 2003/4. Then an exogenous shock temporarily created false incentives for overconstruction of 3000sqft McMansions on 5000sqft lots. Speculators and subprime borrowers were able to sustain the mania for a few years until the MBS market collapsed.
Remove the easy money from the system and future residential construction will supply homes that meet future demand.
I’m hardly a right-winger, but Ronald Reagan had it right when he said more government is not the solution when government itself is the problem.
According to the NY Times, fraudster Chris Dodd is on the “short list” to be Barack Hussein Obama’s VP.
I think if we should get Obama/Dodd in office and they’re successful getting their confiscatory tax hikes in place to pay for a mortgage bailout that will cost at least $200,000,000,000 a lot of honest businessmen will be pushed over the line and start finding ways to avoid the tax man…..
Something tells me the “short list” just got a wee bit shorter.
The economy is in a mild recession crowd needs a wake up nudge:
Central bank body warns of Great Depression -BIS article
The Bank for International Settlements (BIS), the organisation that fosters cooperation between central banks, has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s.
In its latest quarterly report, the body points out that the Great Depression of the 1930s was not foreseen and that commentators on the financial turmoil, instigated by the US sub-prime mortgage crisis, may not have grasped the level of exposure that lies at its heart.
According to the BIS, complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.
The report points out that between March and May of this year, interbank lending continued to show signs of extreme stress and that this could be set to continue well into the future.
It also raises concerns about the Chinese economy and questions whether China may be repeating mistakes made by Japan, with its so called bubble economy of the late 1980s.
EDITORS NOTE: Quite a few comments have been made that there is no direct reference to the Great Depression in this month’s BIS report.
While this is strictly true, BIS warned in June 2007 - just before the Credit Crunch really hit - that the global economy was vulnerable to a major economic set-back because of extraordinary exposure to collateralized credit.
BIS directly made references to the 1930’s as an example of a similarly serious credit bubble, and this month’s BIS report describes the conditions of this being lived out.
So, to be pedantic, the warning “BIS warns of Great Depression” is actually a year old already. What BIS discusses now is the fragility of existing conditions of the fall-out from a massive credit bubble bursting - which has already been made clear across their reports historically can be similarly referenced to the 1930’s, though stated in a typically conservative and non-alarmist language.
Even what optimism BIS had about a weak recovery to the end of May 2008 have been dashed by extreme shorting of financial stocks across the US and UK - Lehman Brothers, HBOS, and property developers such as Barratts, have all taken extreme beatings in June 2008.
So back to the headline - BIS have indeed already warned of repeat of conditions that could be as extreme as the Great Depression, and are now describing that process as we move through it.
In the meantime, unemployment is already on the rise on both sides of the pond, and the analogy some people have concerns about I’m afraid are still salient.
- Brian Turner, Editor, Banking Times. 06/09/08
interesting post
Most of this country has no clue that the US is in the first stages of what will be the second depression in the past 100 years.
The game is over for the US economy, folks. US consumers have hit the wall. They can’t borrow any more, they can’t save any less, and they can’t earn any more in most cases:
- Consumers can no longer extract equity from their homes to pay for their consumption, and the terms on various forms of consumer borrowing are much tougher for all but the most creditworthy consumers.
- The savings rate is near zero.
- Wages adjusted for inflation are dropping significantly for most of those who are not business owners or self-employed benefiting in some way from offshore activity (e.g. hiring offshore, selling offshore, outsourcing functions offshore).
There are four things to do to survive the depression that has already started:
- Get and keep a job.
- Rent so you can be mobile for your job. Even if it costs more to rent than to buy–that is the case in very few areas even now–mobility will be much more important than reducing housing costs.
- Spend at least 25% less than your after-tax income. Save or invest the difference conservatively.
- Eliminate debt
Keep the popcorn popping,
Red Baron
“There are four things to do to survive the depression that has already started….Save or invest the difference conservatively.”
Sure, but what about $$ in the bank and in MM funds? Poof. I better polish up my bartering skills…
Even having your money in a safe bank with insured funds (CD”s), and having a MM fund that is not invested in MBS (mortgage backed securities, how do you think they pay higher interest than normal saving accounts?), INFLATION is eating our saving and earnings.
I don’t get the last point (eliminate debt), please explain. Say I have debt, financed at a fixed long-term rate below what I expect inflation to be, and similarly below what I expect to get as a return on conservative investments. Why would I want to reduce my investment amount to eliminate the debt? It doesn’t make sense to me… help me out.
Beacuase you need a steady income to service that debt. If you lost that income can your investments make up the cost of living and service your debt?
Goes back to point #1. Keep your job (assuming it pays enough).
Nick,
If you have enough money now to pay off your debts in full if you lost your job or your business, then you could certainly follow your strategy. I doubt most Americans have the money to do that.
Keep the popcorn popping,
Red Baron
Maybe depends on what the debt is for. If it’s for things you don’t mind losing, then the risk is OK. If it’s for important things, like your car or house, maybe not so OK. Walk through the scenario of what would happen if you lost your job, then act accordingly. FICO will become less relevant in the future when banks won’t have a very big pool of high scores and will have to relax their standards…wait, that already happened…LOL!
Obviously one can choose options based on how conservative one wants to be. Some options to weather the coming depression would be to put money into:
- Treasury inflation protected securities
- Precious metals (gold or silver)
- Stuff (land, food, water, guns, etc.)
Keep the popcorn popping,
Red Baron
Yes, canned food, clean water, land and guns to protect you and yours. And Ham radio to communicate.
RE: There are four things to do to survive the depression that has already started:
- Get and keep a job.
- Rent so you can be mobile for your job. Even if it costs more to rent than to buy–that is the case in very few areas even now–mobility will be much more important than reducing housing costs.
- Spend at least 25% less than your after-tax income. Save or invest the difference conservatively.
- Eliminate debt
From all my reading on the first Depression, many people in the Northeast retreated to self-sufficent family farms to ride the storm out.
You butchered a steer, raised veggies, crapped in an outhouse, drove a clunker with 15 cent gas, and scrounged for some kero to keep the lamps lit.
No can do today.
When the energy and food delivery systems crash, you can forget any of the above noted in your survival outline.
I recently saw a woman at the train station tryin’ to get her “welfare cash stipend” out of an ATM machine-I figure the account was dry because the “cow” wasn’t giving. And you could tell from her demeanor she was not a happy camper.
Things are gonna get real interesting in the big cities when all those welfare ATM accounts suddenly don’t work anymore.
keep in mind that BIS has their own objectives in this game; objectives that are entirely different from those of ordinary world citizens.
“Kerry, the featured speaker at Pro-Home Inc.’s annual meeting on Friday, May 30, said he has never seen as big a ‘disconnect’ between what is happening in neighborhoods as a result of the mortgage crisis and what is ‘not happening’ in Washington D.C. to address it. . . Improving the economy means ’stemming the tide of foreclosures’ and helping ordinary people hold onto their homes, Kerry said. ‘It shouldn’t just be when the pain reaches Bear Stearns and Wall Street that we get a response,’ Kerry said.”
He tries to make himself almost sound liberal, and in his mind he probably thinks he is. As we all know, however, foreclosure is a form of debt forgiveness, as very rarely are the individuals sued for a deficiency regardless of state recourse laws, and the people can rebuild their lives (including renting for a fraction of their mortgage costs associated with a depreciating asset in which they dont have equity in any event). Even if this isnt or wasnt the case, however, there are bankruptcy protections that would accomplish a similar goal. If one is truely worried about “ordinary people” and the economy as he claims to be, they should encourge en masse foreclosure and price drops so we can rebuild and move towards long term affordability and sustainability for ourselves and our children. I never really know if these ppl cant grasp simple economics or whether they are lying out of self interest.
And for those that think I am changing my tune, I still support targeted injections and support to prevent the collapse of the banking and finance industry to the extent necessary to prevent a greater harm. I am one of the few ppl that think wall street assistance, to the limited extent necessary, is actually a greater social good than homeowner bailouts, as a banking collapse is a real risk to us all but individual foreclosures have limited downside (and some could argue actually have a postive side).
Agree. Banks are the allocators of capital in our financial system. Without them to decide the risk/reward factors of each loan risk would become disconnected from reward and we would have a misallocation of capital and a screwed up economy.
Proof of this statement is apparant with the observation of what has happened when CDOs became involved in the capital allocation process. With the CDOs rewards for originating loans were kept while the risks were passed off onto somebody else. It’s only when the risk of the loan is kept that the loan originators care about the quality of the loans.
We need the banks because the banks feed money into our financial system and they decide where this money needs to go. Without the banks we will end up with no financial system at all and all h*ll would be unleashed.
Kerry, the featured speaker at Pro-Home Inc.’s annual meeting on Friday, May 30, said he has never seen as big a ‘disconnect’ between what is happening in neighborhoods as a result of the mortgage crisis and what is ‘not happening’ in Washington D.C. to address it. . .”
Here’s the disconnect, Kerry: Dont TAZ me BRO!
The Tauton Call. “U.S. Sen. John Kerry said his Mortgage Revenue Bond Program will provide the state with more than $200 million to help struggling homeowners stave off foreclosure, among other things.”
Nobody realizes how much money it would actually take to “stave off forclosure”. In order to effect a $500/month reduction in monthy costs for someone paying 7% interest, you’d have to cut the principal by $85,000 for the median home. Let’s face it….with the new increased gas prices pushing people monthly expenses up $200 or so, a $500/month haircut is a realistic minimum reduction needed to “stave off foreclosure”
Now, most FBs are paying more than 7%, so let’s figure you’d have to cut the interest by a point and reduce the principal by $85,000. That raises the handout considerably, but let’s just call it $100,000
If you add in the lost income tax that you won’t collect after lowering people’s monthly payment by $500/month, we get some more money that the rest of us will have to pay. Let’s raise our total to $125,000/FB. This is extremely conservative.
For $200,000,000 you’ll be able to “help” 1600 people! That’s it!
These handouts will drain every last penny from the 5% of Americans who actually save money and pay taxes.
“… whether they are lying out of self interest.”
If a politician is talking, they are lying.
“Most of the officials belonged to a group of V.I.P. loan recipients known in company documents and emails as ‘F.O.A.’s’-Friends of Angelo, a reference to Countrywide chief executive Angelo Mozilo.”
….now a group of V.I.P. loan recipients known in company documents and emails as ‘F.O.A.’s’ - F**k off Angelo, a reference to Countrywide chief executive Angelo Mozillo.
Is there any chance that the appearance of a Vast Left Wing Conspiracy between Angelo and Democrats in high places to exchange special lending favors for bailout support will make our President more reluctant to sign the Dodd-Frank mortgage rescue bill? The situation at hand appears to offer a perfect opportunity for Republicans to distance themselves from this brewing scandal.
Bear,
do add to your list, Donna Shalala, Alphonse Jackson and Richard Holbroke. All of them were on the “friends” list. I know you don’t want to edit the facts to make a partisan point.
I am not a partisan, but I do not see Republican congressfolk preaching from the bailout soapbox while accepting special favors from lenders into outstretched hands behind their backs.
If you know of any instances of vocal Republican support for the Dodd-Frank mortgage bailout program, please share.
They voted for it in congress didn’t they (and are about to do it in senate)? at least democrats are not hypocritical about their stance.
Please. I don’t want to think about repubs and their stances.
tap tap
19 for 2 against.
“Eight Republicans joined all of the panel’s Democrats to support the plan”
http://thehill.com/business–lobby/panel-easily-oks-housing-bill-2008-05-20.html
Which is why I don’t understand all the political one-upsmanship going on between (otherwise) very smart and astute people. Regardless of one’s political orientation, be honest and admit that whenever really serious wreckage results from government action, you can be certain that the original actions were almost always overwhelmingly bi-partisan. For all the overheated political rhetoric, differences in bottom-line policy between the two PTB are mostly at the tiniest of margins. That certainly is the case in my own field, energy.
True exceptions to this are few and far between. They have the biggest of fights over insignificant dollar amounts on one piece of legislation, then they get together and sell us all down the river on the next.
While the republicans did want to appear to pander to the FBs and not be targeted by the MSM as uncaring, that proposal contains more than one poison pill which guarantees it’ll never become law.
Just because you don’t see it doesn’t mean is not happening. Besides, who’s bailing out the private investment banks?
“…If you know of any instances of vocal Republican support for the Dodd-Frank mortgage bailout program, please share.”
Obviously you’ve never been arrested with co-conspirators (including brothers & sisters)
I’ll share this: vocal support?
“shut up”…do not volunteer anything or I’ll beat the sh!t out of you”
Does this make “silence” a friend or an enemy?…
Or rather maybe there is another explanation for being not so conspicuous?
What do they mean: “silence is golden” ?
‘The free market forces will resolve the issue, but they’re vicious and will resolve it in an ugly way,’
Free market will resolve this quickly, if left to its own devices. Government attempts to bail out speculators will lead to a prolonged downturn aka Japan style. Now were finally seeing why Congress is so hip to bail out fraudsters…they themselves need to be forgiven of their debts and are coming to the responsible taxpayers to help them out.
I thought that affordable housing was an explicit government policy objective? Now that Mr Market is doing everyone the favor of delivering what Fannie Mae, Freddie Mac, HUD, the FSA and myriad other government-sponsored affordability programs have collectively failed to deliver, it seems that every commentator quoted in the MSM laments the fact.
‘The free market forces will resolve the issue, but they’re vicious and will resolve it in an ugly way,’
That’s a great quote, Anthony. Since when did America officially repudiate capitalism? Vicious and ugly…says who? How about this…
The Free market forces will resolve the issue, in a fair,speedy and impartial way.
That’s a great quote, Anthony. Since when did America officially repudiate capitalism?
When Corporations took over America.
hmm.. I’ve always felt that corporations were plenty capitalistic enough for my tastes. Are you saying there’s something even better?
Some would say that the policy objective of most government-sponsored programs aimed at the poorer segments of society is not about affordable-anything.
The objective is instilling within them and acclimating them to a dependence on government.
Walmart started discounting drugs .. something like $4 for generic brand rescriptions.. a boon to retirees on fixed incomes. Low prices.. who could complain?
Walmart was providing something the govt failed to provide and got nothing but heat for the effort.
For every one (1) thing that Walmart does for the economy it does three (3) bad things.
Walmart is a net loss to the American (and global) economy and many economists see it this way.
The Mafia used to do “good things” for the community and this behavior is continued today by other gangs. They try to win over the community by doing small “good things” hoping everyone will gloss over the net negetive effect they have on society at large.
For every one (1) thing that Walmart does for the economy it does three (3) bad things.
It would’ve been nice if you had provided examples.
I’ll have to guess that by “bad things” you mean like their resistance to big labor unions and by “economy” you mean your own, personal economy?
There’s another important reason that the effects of the bubble should be resolved, and that we return to stable, historical pricing levels as quickly as possible.
Whatever we think about the causes and effects of the sudden spike in energy prices, and regardless of what we think about the likely outcomes, one thing is certain: there will be economically driven dislocation. Many activities that either made sense or at least were feasible at $20/bbl oil will no longer be able to be sustained at over $100/bbl oil. People will need to move, either closer to their places of work, or to new places or work.
Unfortunately, we are at close to a standstill in many regions of the country right now, because for the time being there is no longer any general level of agreement on real estate pricing. We HBB’er believe we know the answer, but not enough others agree with us yet. So housing sits, and those that should be moving, to adjust to new energy-cost driven realities, can’t.
Heart of Darkness (SPF: off the scale) has snared many people that won’t be thought of as very important, much longer…
“Most of the officials belonged to a group of V.I.P. loan recipients known in company documents and emails as ‘F.O.A.’s’-Friends of Angelo, a reference to Countrywide chief executive Angelo Mozilo.”
Not only can Senators get cheap loans, but they can also pass mortgage bailout bills which will help make the value of their investment properties go higher at the taxpayer’s expense.
School for Scandal
Want A Cheap Loan? Run For Senate
# On Wednesday we mentioned Jim Johnson, the Obama adviser who was forced out of the campaign when it emerged that he had taken “real estate loans totaling more than $7 million from Countrywide Financial Corp. through an informal program for friends of the company’s CEO, Angelo Mozilo.” Countrywide, you’ll recall, was a driving force behind the subprime mortgage mess, and Mozilo is now a recognized symbol of evil. But surely Johnson wasn’t the only one to avail himself of Mozilo’s largesse, was he?
Uh, no: “Two U.S. senators, two former Cabinet members, and a former ambassador to the United Nations received loans from Countrywide Financial through a little-known program that waived points, lender fees, and company borrowing rules for prominent people.” Your lucky recipients were Sens. Chris Dodd (D-CT) and Kent Conrad (D-ND), former HUD Secretary Alphonso Jackson, former HHS Secretary Donna Shalala, and Richard Holbrooke, the former UN Ambassador who is frequently mentioned as the next Secretary of State in a Democratic administration, particularly when it’s Holbrooke doing the mentioning.
Most of the beneficiaries claim that they had no idea they were receiving any kind of special treatment, which makes perfect sense; if someone was cutting us a sweetheart deal on a mortgage, we wouldn’t ask too many questions either.
“Do we all end up working either for the government or a collection agency? Is The System about to go bye-bye?”
Our country’s ancestors, the Anasazi, went bye-bye around 800 years ago, largely because their society got too complex.
They built the largest buildings in North America, not equaled until we built bigger ones in the 20th century.
Or maybe their civilization failed due to severe climate cycles/drought. Or maybe it was a combination of events. My understanding from many around me who study the history, as I live here in the center of the old Anasazi territory, is that we simply don’t know.
It was indeed a combination of events exacerbated by a long drought, and the keep in mind that the Anasazi did not contribute to their climatic decline, as fire was their only energy source…
I was thinking about making that point myself, that radical climate change long pre-dated anthropogenically-induced high levels of atmospheric CO2, but I already beat that drum pretty hard here at times, so I decided to give it a rest for once.
Much like the mystery of the Anasazi (at least at this point in time, given the evidence) - the verdict about man-made GW is far from in. Others are certain, I’m intensely skeptical, but the truth is that we simply don’t know, and probably won’t in our lifetimes.
They were wiped out by European diseases, for which they had no defense. They also outgrew their food supply, such as buffalo. The Great Drought didn’t help. They were also cannibals. Not nice people at all.
ha ha…
Which European diseases did they acquire in 1150 a.d., and where did the buffalo roam in the Southwest?
Unbeleivably, they made trips to hunt buffalo. Complex societies can do that.
As to the european diseases, dates are not precise, as GPS was not working then. One thing we know, there were a whole lot of Native Americans, then some Euros came over, then there were not so many Native Americans at all, and not all died from spear wounds.
Sorry, but the Anasazi “disappeared” long before any Europeans came to this continent. In reality, we believe they migrated to the Rio Grande area and to Oraibi.
And they didn’t “outgrow” buffalo, there were millions of buffalo left, though not in the SW, until the Europeans slaughtered them. Depleted food sources is not a given. And there is no evidence that the Anasazi themselves were cannibals, just that they’d been cannibalized. Some believe that the Aztecs had something to do with that. There are rock art figures not too far from me (one is 20 miles) that are very very similar to Quetzalcoatl. SW archaeologists have found a lot of Aztec trade items in various Anasazi sites.
So…hold your critiques of their character until we find more evidence - their descendents, the Hopi, might appreciate that.
Lewis and Clark noted instances of what they called ‘buffalo jumps.’ Indians, lacking horses and guns, grouped together to stampede buffaloes off cliffs. Thousand of corpses rotted after the Indians took what they wanted and left the rest, there being way too much.
Mastodons and Mammoths roamed what is now the US a few thousand years ago. They were hunted to extinction by the indians.
The buffaloes were not really wiped out until late in the 19th century. This was not by Europeans, but by Americans. Americans of all nationalities- whites, blacks, indians, etc. They skinned them and left the insides rotting and shipped the outsides to the railroad.
In the olden days, all people slaughtered animals when it suited them.
I think you got more than a few different groups mixed up in that one.
They also ran out of water and got eaten (literally,) by their more belligerent neighbors.
“F.O.A.’s’”
Perhaps a redefinition of this moniker is warranted.
I suggest F’d Over A-holes.
Any others?
Fatal Onerous Assistance
Fatuous Overt Allurement
Friends of A$$holeAnthony
Flagrantly Owe Angelo
Fully Owned (by) Angelo
F’d over americans
“Most of the officials belonged to a group of V.I.P. loan recipients known in company documents and emails as ‘F.O.A.’s’-Friends of Angelo, a reference to Countrywide chief executive Angelo Mozilo.”
Call me naive, but this is one of the most corrupt things that I have heard yet. At least among the semi-legal variety of corrupt things.
So, Conrad, Boxer, Dodd. I guess that I can’t hold Pelosi responsible for actions by her son, Paul (initials P.P. ha!), as long as she was unaware of any attempt to influence her. I guess that Alexandra was the good child. http://en.wikipedia.org/wiki/Journeys_with_George
Nice job, Tom Hamburger, Chuck Neubauer and Kathy M. Kristof of the LA Times!
Democrat Party: Championing the poor, derailing free trade, asking for higher taxes, and reaping the rewards (kickbacks, stock inside buying) of capitalism as they take the USA down to the bottom of the ocean.
Judging by the young crowd’s fixation on Obama as the next JFK, they don’t care if they will inherit the now $9 trillion debt and be presented with the bill.
Young sheople are not much different from old sheople.
Bill,
What part of Murlin are you hanging out in? Just a curious born-and-raised, but ex-Balamoron, asking.
I’m hanging out very close to “The Avenue” (near White Marsh Mall). I can see the AMC movie theator and I-95 from my window. Note I’m a native Californian and my main apartment is in Arizona. I’m here for the $ and will likely move on in early September. My next address could be 95 miles north of here in Southern NJ.
My nephew lives over your way. His dad and I grew up in Govans, in the vicinity of York Rd and Northern Parkway.
I can remember when White Marsh Mall was built, and no one could understand why they would put such a huge mall out in the middle of nowhere. Heh.
I’m likely to go your route here soon and live in temporary situations for the work, for at least 3 years until (hopefully) the dust from the bubble bust may begin to settle and we can decide where we want to land for the longer term.
I live on the other side of 43, honeygo and beaconswood, cheers. (engineering background as well)
I drive up your way in Perry Hall once a week for a good bottle of wine at that Honeygo Wine and Spirits store by Klein’s (near Liberatore restaurant).
Beuatiful place from my western point of view, and this is just a year long vacation. There’s a lot of nice people in these parts.
I’ve read your posts here for a while and have to say i am envisous of your gypsy like-better than avg income lifestyle. Not practical with a wife and two chitlen’s (me). Spent 12 years in the mortgage biz until recently. I knew something was amuk long before I found Ben’s blog. Thank god i did find it though-circa 2004 I think. It affirmed my decsion to stay put in the same 1400sf townhome I bought for 118k in 1998 (now worth 270k in monopoly money). You wouldn’t beleive how hard it was for a guy who graduated number 1 in his class from Maryland to find new employment at age 38.
All is not rosy. I envy your type, with a loving family. Money is not everything. But this is my lot and my rut that I’m in (being a lone professional) and I accept it. My best ex-girlfriend called me from Texas a few weeks ago out of the blue and it really made me happy. But I’m a soldier of fortune at heart. I sometimes think it would be great to be a family with her and her two young children. And I only get older.
I congratulate you. Honor your wife and enjoy watching your children grow. See yourself in your children. See your wife in your children. Oh, and a belated happy Father’s day. I thought well of my late father on Sunday.
As for your purchase of the townhome in 1998, I am positive you are doing fine and have nothing to worry about in this housing bust ahead.
Wow Bill, if you have this to say about Democrat’s you must REALLY be pissed off at Republicans! Especially considering that 7 of the last 10 presidential elections were won (or stolen) by Republicans, and they have had almost complete control of Congress since 1992. Basically just about everything that has gone wrong with this country has gone wrong on their watch. For instance, you do know almost 98% of the Federal deficit was created on their watch, with Reagan and Chimp.
You must be livid, Bill!
I am very pissed off at the Republicans. Hate GWB for destroying the Republican Party and making it just another wussy party, so I’m a Libertarian Party member now.
Happy now?
GOP didn’t take control over the House until 1994 elections (taking control Jan. 1995) - although they did gain 10 seats in the 1992 elections. And, of course, they lost control in the 2006 elections.
History of Senate control (per real clear politics) — “In 1980, the Democrats lost control of the Senate and it went Republican, with Democrats retaking control in 1986. Republicans retook control in 1995, with Democrats regaining it on Jan. 3, 2001, until Jan. 20, 2001. Thereafter, Republicans were in control until June 6, 2001. Democrats again retook control until Jan. 7, 2003, and Republicans”
– [with the GOP again losing the Senate in 2006 elections].
Republican’s vs Democracts, Conservatives vs Liberals is all show to keep you working, paying taxes, and mass consuming/going into debt!
Both parties represent the wealthy class and vote the same on globilist matters (anti-US worker). Both parties draw heavaily fron the CFR (council on forgien relations) to staff the top posts in GOV (hunderds deep).
Isn’t it obvious that both paties are the same? Don’t for get Clinton signed NAFTA.
The real struggle (and always has been) in this country is between the working class and the wealthy class!
“Don’t for get Clinton signed NAFTA.”
Clinton also signed the repeal of the Glass-Steagall act, which was authored by Republican Phil Gramm, which made possible the MBS disaster. Gramm is now the Chairman of UBS, which has lost 30+ billions in the ensuing securitization disaster. Now Gramm and his lovely wife Wendy (she of Enron fame) are the economic advisors to McCain.
Kinda scary, isn’t it.
Exactly!
It’s a club and we’re not invited.
Bill, bill, bill, you are barking up the wrong tree. The dough kicked back by the GOP to their crony subcontractors in Iraq (we still have never accounted for the $2 billion in CASH sent there on pallets) makes your tired example pale in comparison. ANd where, pray tell, did this $9 trillion debt come from, eh? Spend and cut taxes the GOP way is just as bad (if not worse, since it conveys the false belief that we don’t need to pay for things) as tax and spend that the Dems abide by.
Read the above note that I am Libertarian Party member. I was a Republican when Ron Paul ran for President. The Demopublicans (Republicrats) are the problem. Libertarianism is the solution. Real substantial cuts in spending. Real substantial Tax cuts.
“Libertarianism is the solution. Real substantial cuts in spending. Real substantial Tax cuts”.
You are 100% spot on IMHO, but it’s a complete waste of time when the folks you volley with have never read our Constitution or were unable to comprehend it’s meaning and foundation. They prefer to pitch out slight minded cheap shots. To bad we are descending into the crapper with both parties, it really is a one party system in many ways.
They call Ron Paul a kook, wonder if they have ever gazed into a mirror?
Paul sold out his libertarian principles when he implied in debate (1/5/08) that the money being spent in Iraq could be used for healthcare, i.e., the same socialized medicine scheme the Dems are selling.
His appeal is strictly to antiwar crowd who are also pro-life and 2nd amendment and know that going democrat is a nonstarter.
“The web of our life is of a mingled yarn, good and ill together. Our virtues would be proud if our faults whipped them not, and our crimes would despair if they were not cherished by our virtues.”
- All’s Well That Ends Well,
Act. 4, Scene 3
William Shakespeare
Agreed, NIM - Paul has a few unnecessary oddities despite his impressively principled and maverick voting record, and is an inferior candidate to Bob Barr, IMO, despite Barr’s lesser “purity.” I still say the Libertrian Party should reorganize itself and rename itself the Anti-Socialist Party. 35 years of failure is enough.
“Homeownership helps build strong communities and families, [Sen. John Kerry] said. ‘It’s people sharing in the excitement and personal rewards of drawing those lines on the bathroom wall when kids grow older. It’s a place to have a barbecue and going home and knowing it’s your castle,’ he said.”
What this country needs is to destroy the cult of homeownership. The average household moves about once every seven years. Most households would be much better off renting than buying because most of any “profits” they get from their house are just siphoned off by Realtors (TM), mortgage brokers, title companies, and other housing-related parasites.
Keep the popcorn popping,
Red Baron
“I cannot imagine today’s young workers willingly paying for boomer pensions, student loans, credit cards, medical care, taxes for social services, inflated housing, food, energy, AND interest on our unfathomable US national debt forever-there’s just not enough income to sustain it all and still live a semblance of a life.”
Which is why I believe that the US will dissolve before I give up the ghost. Once DC can no longer provide pork, the states will flee. Aztlan will be the first to bail.
interesting to read all these publications about self-enrichment of politicians in the US. This would NEVER happen in the Netherlands (the publicity, I’m sure the bribery behind the scenes is even worse here). There is zero chance that any newspaper etc. would dare to publish such a list of politicians involved including the financial details (of course, sometimes there is a leak and publication about ONE high level person, but that is usually because other politicians are behind it).
We had some HUGE RE related fraud scandals some years ago, the big RE developers systematically stole billions from the government with help of corrupt gov. workers and politicians (I’m sure this is still happening, same story with mortgages and financing). But no one was convicted, all the companies involved got away with proforma sentences or fines on the order of 1% of their yearly profit. The only guy who dared to publish sensitive documents about this high level fraud went from wealthy to bankrupt very quickly, and none of the big political parties want to even touch him now. The guy is finished, and that is thought to be a good warning for anyone else who thinks about standing up against corrupt politicians.
Although the press in the US is not as free as it should be, in cases like this it apparently works a lot better than the ‘free’ press in Europe.
–
“It’s a vicious cycle, he said. With home prices falling, people aren’t buying because they want to wait until the market bottoms out. ‘No one wants to catch a falling knife,’ Bitner said.”
“Kerry and Bitner both said government intervention is necessary to address the housing crisis. ‘The free market forces will resolve the issue, but they’re vicious and will resolve it in an ugly way,’ Bitner said.”
‘No one wants to catch a falling knife?’ What country are you talking about?
“Government intervention is necessary?” And no intervention on the up side? Where and how do we breed these idiots?
Jas
Since this is a somewhat Washington-centric topic - you might be interested to see the Washington Post’s main, center-above-the-fold was a first-of-3-part-series on the housing boom, bubble and bust. Some pretty good quotes from a few of the mortgage brokers involved - one admission of a loan officer happy to send documents down to a guys trial (he was defendant), and of course, the ubiquitous McDonalds guys making 35k a year getting a half-million dollar loan. Dead-tree version of the story has a full page of nicely done charts/graphics - but I couldn’t find it poking around the online version. Enjoy.
“….deep down, we knew it couldn’t last forever.”
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/14/AR2008061401479.html?hpid=topnews
On a KS to TX drive recently I listened to the audio book of Maxed Out by James D Scurlock. If anyone wants to listen to it and then pass it on (either w/in or outside the HBB community) I will send it to the first person who replies.
Or you can get the video version at Google videos.
Shall I send it to Yellowcat books PO?
That would be great, much appreciated, Hip.
“Kerry and Bitner both said government intervention is necessary to address the housing crisis. ‘The free market forces will resolve the issue, but they’re vicious and will resolve it in an ugly way,’ Bitner said.”
Has anyone looked into how many alligators these guys are feeding?
I count seven here; am I missing something?
June 15, 2008
The Countrywide Six
John Bender
The news that former Secretary of Housing and Urban Development Alphonso Jackson was one of the sleaze bags who enriched themselves with sweat heart deals on mortgages from Countrywide Financial makes it a bipartisan scandal and eliminates the slim possibility that any of them will be brought to justice.
The ruling political class doesn’t like to bring its members to justice. But if one political party can gain political advantage by going after a few members of the political class who happen to be in the other party, they will grab that opportunity.
Until it was discovered that Jackson, a Republican who resigned from his post as Secretary of H.U.D to avoid an investigation of his alleged corruption, was one of the political hacks who took below market loans from the corrupt corporation, the Countrywide scandal was a strictly Democrat scandal. As such it had the potential to provide Republicans a chance to make it an issue this election year. That potential is gone now.
Until it was revealed that Jackson was also involved those exposed in reports of the scandal were:
* Jim Johnson former chief of Fannie Mae, Obama advisor, and longtime Democratic Party power broker.
* Franklin Delano Raines, the former chairman and chief executive officer of Fannie Mae who served as White House budget director under President Bill Clinton, and “retired” from Fannie Mae to halt a U.S. Securities and Exchange Commission investigation into accounting irregularities. He was accused by The Office of Federal Housing Enterprise Oversight (OFHEO), the regulating body of Fannie Mae, of abetting widespread accounting errors, which included the shifting of losses so senior executives, such as himself, could earn large bonuses.
* Donna Shalala, former Secretary of Health and Human Services, who in 1993, the Association of American Physicians and Surgeons, along with several other groups, filed a lawsuit against Donna Shalala over closed-door meetings related to the HillaryCare socialized health care plan, and since leaving the administration was embroiled in scandals at the University of Florida due to her extravagant lifestyle at the University’s expense.
* Richard Holbrooke, former U.N. ambassador and assistant Secretary of State, who as U.N. Ambassador ignored whistleblower reports about the infamous Oil-for-Food scandals
* Senator Christopher Dodd – D. Connecticut, who oversees the U.S. mortgage industry as chairman of the Senate Banking Committee.
*Gaylord Kent Conrad – D. North Dakota, the chairman of the Senate Budget Committee and one of the first politicians to support Obama over Hillary.
However, like other bipartisan scandals of the past, this scandal will now go nowhere. And none of the slime balls will be brought to justice. Like the Keating Five scandal, the House bank scandal, and so many others, everyone will walk away from this with no real consequence for their actions. There is no political advantage for either of the ruling parties so there is no appetite to harm a member of the ruling political class.
The crooks are on the run now! GO WSJ!!!
REVIEW & OUTLOOK
Beltwaywide Financial
June 16, 2008
The Countrywide Financial sweetheart loan scandal continues to grow, spreading to Senators and other Beltway potentates. We are about to find out if Congress’s passion for investigating business ethics extends to conflicts of interest and cash that involve fellow Members.
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For the sake of its shareholders and the taxpayers who are ultimately on the hook, Fannie should immediately launch an internal investigation into the terms offered to Countrywide, and exactly what role Messrs. Johnson and Raines played in the negotiation of these terms. Did these men exert any pressure on Fannie employees to do business with Countrywide?
Congress also needs a full accounting of the contacts between Countrywide and the politicians receiving favors from the lender. Did Countrywide ask for and receive assistance from the Friends of Angelo? With Senate Banking Chairman Dodd at the center of the scandal, ranking member Richard Shelby (R., Ala.) and House Financial Services Chairman Barney Frank (D., Mass.) will have to lead the inquiry.
But taxpayers should not have to wait for the results of an investigation. Democrats in Congress are trying to pass a bailout for mortgage borrowers and lenders like Countrywide, and they have been holding reform of Fannie Mae and its cousin Freddie Mac hostage to get President Bush to agree. Mr. Dodd is one of the main hostage-takers. It is time he and Mr. Frank dropped this political ransom-taking and finally subjected Fannie and Freddie to tough oversight. This means giving a regulator the power to set their capital ratios and portfolio securities limits, so that taxpayers have some protection against their potential losses.
Meanwhile, until it is clear how much Countrywide will benefit from Senator Dodd’s proposed $300 billion mortgage rescue – and exactly how Mr. Dodd came to do business with Countrywide – Congress should call a halt to legislating bailouts. Taxpayers deserve no less.