The Housing Bubble

Some early morning musings:

If the dollar is being devalued to make our exports more competitive in the world market then we Americans are going to have to pay higher prices for things in order to compete for these products that are being exported.

For example, if the demand by the rest of the world for American wheat is increased then the domestic price of wheat will go up.

So therin lies a double whammy: Not only will we Americans have to pay more dollars to buy things that are imported, we will have to pay more dollars for things that are exported.

But the scarcity of dollars circulating at home is going to make it tough to pay higher prices for things.

So we are going to get hosed at both ends: More dollars will be needed to buy the goods and services we have to have, and less dollars will be available for us to buy these goods and services we have to have.

Luckily most of the jobs in the U.S. are involved in producing goods and services we have to have, otherwise we would be in big trouble.

Oh, wait…

Get what you can get for your house today… because it’s going to be much much tomorrow… for many many years to come.

First class-action lawsuit against the banksters is filed, alleging civil racketeering. Got popcorn?

Bizlexdotcom
Foreclosure Fallout
by Susan Baniak

In September, a civil-racketeering class action was filed in Louisville by Kentucky homeowners against GMAC Mortgage, Deutsche Bank National Trust Company, Citimortgage and others, alleging that they conspired with Mortgage Electronic Registry Systems Inc., or MERS, to wrongly foreclose on homes. The lawsuit holds that MERS, an electronic registry service created as a means to track the ownership of mortgage loans, did not hold title to any of the properties in question, and therefore did not have the right to initiate foreclosure proceedings.

Among other allegations, the 124-page class action complaint, the first of its kind to be filed in the country, takes issue with the conversion of mortgage loans into collateral for mortgage-backed securities (MBS) without the knowledge of the homeowners. The lawsuit argues that failure to disclose this information should make the mortgage contracts voidable under Kentucky contract law.

“As an attorney, I would make the argument that securitization is illegal, as the homeowner has agreed to pledge their home by signing a mortgage enforcing a negotiable instrument, not as a pledge for the collateral of a MBS,” said Heather Boone McKeever Haffey, the Lexington attorney representing the Kentucky homeowners in the class action, by e-mail. “Most times, the home had been pledged to a MBS and made part of the Investor Sales Prospectus before the homeowner ever made it to the closing table.”

The lawsuit also calls into question the legitimacy of REMICs, or real estate mortgage investment conduits, federally regulated securities used as “pass-through” vehicles by corporations and trusts in the pooling of mortgage loans. If the courts and the IRS were to agree, such entities could potentially lose their status as tax-exempt entities and wind up on the hook retroactively for federal and state income taxes. MERS and other entities along the hidden chain of title that did not file the proper documentation during the process could owe considerable county clerks’ mortgage recording fees as well.

The potential back taxes could amount to billions, according to McKeever Haffey.

“Avoiding and breaking mortgage recording laws was one of the goals of MERS,” McKeever Haffey said. “The recoupment of the county clerks’ recording fees alone could get Kentucky out of debt.”

US News and World Report is no more.

http://mashable.com/2010/11/05/u-s-news-world-report-shutters-print/

‘Government-controlled mortgage buyer Fannie Mae is asking for $2.5 billion in additional federal aid…Fannie’s chief executive said the latest results reflect ongoing efforts to contain losses from the high-risk mortgages it bought from 2005 to 2008…The two mortgage giants have been hit by massive losses on risky mortgages purchased from 2005 through 2008. The companies have tightened their lending standards after those loans started to go bad, and default rates on new loans are far lower.’

‘The housing market, however, remains a huge challenge. High unemployment, tepid economic growth, tight credit and uncertainty about home prices have kept people from buying.’

This is from an AP story. As important as what is happening here is, I find it baffling that we are getting such a twisted view of past present and future. Like this:

‘high-risk mortgages it bought from 2005 to 2008…The two mortgage giants have been hit by massive losses on risky mortgages purchased from 2005 through 2008′

So it was the high risk mortgages that caused all this, not the insane spike in prices, or the speculation, etc? If this is so, why were these giant corporations unable to file financials in 2005? And what about the plain-jane prime loans that now default at rates like subprime?

‘High unemployment, tepid economic growth, tight credit and uncertainty about home prices have kept people from buying’

That’s a long way around the bush. How about ‘people still can’t afford houses’? I suppose if they go there, the next question is, why? And then you get into govt/Federal Reserve efforts to ‘prop up’ prices’.

This game has really blown up in DCs face, and that was inevitable I guess. But we still have some big decisions to make about the GSEs and the how to fix the economy, and reporting like this from the AP isn’t making the situation clearer.

REHobbyist or anyone else “in the know” -

Real estate agents are obligated to present all offers to clients. However, is the caveat that they only have to present offers that are in writing, i.e. use their standard purchase offer form?

If the buyers agent passes along an offer either verbally or via email, is the listing agent still obligated to pass it along to their clients?

If (in theory) lower interest rates gets people to spend more money, then how about the credit card banks start giving their best customers these interest rates?

margin-rates

(Dang, these rates are lower than my negotiated rates at TDAmeritrade.)

If a bank ever gave me these low interest rates on a credit card, and if I had enough confidence in the bank that they are not teasing me, then I might consider borrowing on a credit card.

But - I do not have this confidence in any bankster, and I doubt that I ever will in my lifetime. The only thing these fraudsters understand is the fine science of luring the hapless into their heroin dens.

http://www.telegraph.co.uk/news/worldnews/europe/ireland/8114327/Let-them-eat-cheese-Irish-government-hands-out-block-of-cheddar-to-every-family.html

The lower-income 20% in this country are going to be especially hard hit as Bernanke’s destruction of the dollar spur steep increases in the price of food and fuel. Not to worry; we can follow Ireland’s example of using taxpayer funds to bail out the banksters while handing out that guv’mint cheese to keep the peasants from reaching for their pitchforks & torches.

Real estate agents are obligated to present all offers ?

offer either verbally or via email, is the listing agent still obligated to pass it along to their clients ?

They are obligated to present all offers ??

I believe a offer would need to be in writing for a agent to have a obligation to present it to his client although that “offer” could come in a non-binding and informal form…One that I have seen and have used is a “Letter-of-Intent”…It is used quite often in the commercial side of real estate transactions…

As far as presenting “all” offers, this is often mis-understood..There is no obligation on the part of a attorney or a Realtor to present a “Patently Frivolous” offer…A patently frivolous offer can be up to interpretation but the common sense approach is normally taken in that, you know it when you see it…

BERLIN – Germany’s finance minister is arguing that the Federal Reserve’s move to pump money into the financial system increases uncertainty in the global economy and undermines the credibility of the U.S., according to an interview published Saturday.

“It doesn’t fit together if the Americans accuse the Chinese of exchange rate manipulation and then artificially push the dollar rate lower with the help of their bill printer,” Schaeuble was quoted as saying.

Germany’s strong recovery this year was led by exports, but Schaeuble argued that his country’s surpluses aren’t one of the “many reasons” for America’s problems.

The U.S. “lived too long on tick, excessively inflated its financial sector and neglected its medium-sized industrial business,” he argued.

BINGO.
Is BB listening?

AztoORtoCOtoOR is catching himself a falling knife in OR!! Read about it in the obituary section of the HBB..

Most of you know my story, but I will recap (briefly) for those that don’t. I bought a Beazer home in Chandler, AZ in 2004 for $440,000. In July of 2005, a similiar model home sold for $910,000. I put mine on the market in Oct. 2005 for $899,000 and it finally sold in May 2006 for 705,000 after just about having it sold for $850,000 in Feb. 2006. I put over $100,000 down of my own money - I had no idea that you could buy things with nothing down at the time. This house was not purchased with the intent of flipping it.

I have now been renting in Hillsboro, OR for over 4 years. The first two years were awesome as I could get over 4% on my savings account which paid more than I was paying in rent. That all changed when the rates dropped to less then 1% and my rent increased to $1625 (from an earlier $1500).

I am now going to purchase my falling knife (er used house) with the expectation that it will really torpedo the neighborhood I am buying into. The house I am purchasing sold in 2006 for $505,000 with equivalent houses selling for $525,000 and the upgraded model selling for $585,000 in 2007. The price I am paying is $365,000 (listing price is $392,000) and it is a Fanny/Freddie house. They are paying 3% toward closing costs. There are no other houses for sale in the neighborhood I am buying into, but I expect that to change and will be wincing when i see them selling for less thanks to my purchase. The last house in the neighborhood sold in May 2010 for $440,000 which was about 500 sq. ft smaller.

I could pay cash for the house, but have chosen to take out a mortgage. I will finance $210,000 and will be paying ~2.5% on the loan on a 5/1 ARM. My payment will be ~1400 a month for PITI.

I will still have the equivalent cash in the bank that will be earning 1.35%. so my net paying of interest to the bank will be about 1.15%.

If, and a big if, interest rates ever go up, then maybe I can have a period of time where my cash in the bank could make more interest than what I am paying on the mortgage. I expect the housing to continue to fall, but with kids in high school and junior high and grade school, we are finding it very hard to move out of the area and plan to be around for a while.

I was pursuing homes down in Arizona, but everything we looked at down there and made cash offers on have been selling for more than what I am willing to pay. We tend to like the climate of OR better than AZ for our kids. They can go outside and stay during summer break. I really like AZ for different reasons and hope to be a snowbird when I am done working in 20 years.

I didn’t use a UHS to buy the house, I just dealt with the one who had the listing. We have been working with him for the past couple of years on other bank owned properties and the one thing he did for us was take the lowball offers to the bank and he didn’t hound us in between.

I fully expect the prices to keep falling, but I admit, my patience has run out. I have been in cramped quarters for the past 4 years and it has finally gotten to the point of being sick of it. Oh, did I mention the house comes with a two year home warranty.

Now that I am going to stay in Oregon, I am off to look for a Prius to replace my SUV. (Sarcasm intended)

It’s being reported that the credit score agencies are reworking their scoring system, because erstwhile creditworthy individuals are increasingly just walking away from underwater houses.

In late October, both Fair Isaac Corp., developer of the FICO score, which dominates the mortgage field, and VantageScore Solutions, a joint venture by the three national credit bureaus and marketer of the competing VantageScore, outlined modifications they were making to handle the vast credit disruptions caused by the housing bust, the recession, high unemployment and behavioral changes by consumers.

Overall, credit industry experts agree, consumer creditworthiness has deteriorated in the U.S. since 2006 — especially among what used to be considered the credit elite, people with the highest scores. For example, a study this year by VantageScore found that the probability of serious delinquency — defined as nonpayment for 90 days or more — had increased 417% among “super-prime” borrowers between June 2007 and June 2009.

http://www.latimes.com/business/realestate/la-fi-harney-20101107,0,6342122.story

Zillow now has this kind of data; Dropping it 10% more at each price point probably wou;d have sold the house, now they are just riding the curve down back to 80K.

10/31/2010 Price change * $189,000
09/20/2010 Listed for sale * $205,000
09/18/2010 Listed for sale * $205,000
01/15/2010 Listing removed * $223,900
06/23/2009 Price change * $223,900
03/11/2009 Price change * $224,900
02/16/2009 Listed for sale * $229,900
02/06/2009 Listing removed * $237,500
01/30/2009 Price change * $237,500
01/18/2009 Price change * $248,500
11/05/2008 Price change * $249,995
09/26/2008 Price change * $269,995
08/20/2008 Price change * $279,995
08/02/2008 Listed for sale * $289,995
07/02/1999 Sold $80,000

I went to visit a friend in Discovery Bay, CA. Someone they knew was having a BBQ, so off we went. Wow, lots of silicone—sure is fun to window shop the eye candy. The chatter shifted from sports to jobs to cheap vacation places to debt default. No one there, it seems, has been paying their mortgage due to being so far upside down, and the strategy now appears to be to get through your seven years of credit purgatory before everyone else so that you can get in on the next deal, first. A couple indicated they were renting a house in default from friends for a pittance; some had several places in default. Another remarked that one of their credit cards was refused at lunch, ha ha, f*** ‘em, they ain’t get’in their $18k back, ha ha ha! One of the fake blondes smiled approvingly. My thought shuddered—is the country beyond the point of no return? Another guest said that youth gangs have moved into the area stealing anything not locked up tight. My impression ten years ago of faux wealth around here was right. I feel sorry for anyone who moved here to retire, and paid their bills in full. Next stop, San Luis Obispo, CA.

Republican Governors Association Chairman Haley Barbour pledged Sunday that if Republicans take power and are not able to fully repeal the health care law passed by Democrats, they will at least change enough of it to make it no longer recognizable.

My guess is they roll back the requirements on insurance companies to insure everyone, but for some reason they won’t be able to roll back the requirement that everyone buy insurance.

I will be “Bill in Florida” in early December. had a phone interview on Wednesday and the client accepted my job shop’s bid Friday. Overtime ranges from five to twenty hour per week. I think it is long term, but will find out. Will go for furnished apartment with all amenities.

The Los Angeles client is basically saying they don’t want my job shop. The official word is “just want to reduce paperwork.” But client told me they know what the shops charge. Client wants me to go to another shop, but does not know I am probably the highest paid consultant. Client thinks I would have no problem going to the favored job shop subcontractors. Client likes me because I am a quick problem solver and I have expertise on several product lines.

Would prefer to stay in LA, but the client is urging me to take a huge pay cut. The Florida gig pays 92% of my current hourly rate, but housing is much better and cheaper than L.A.

Will be fun to go to Margaritaville, which is any good Florida beach bar and hang out with attractive Florida gals, sorta younger than me.

My Shanty Saga–

I’ll try to keep this short and focused. Mid October we made a 50% offer shanty. We had no idea that the owner filed bankruptcy until we got a call from the realtard after we went through the place but before we wrote an offer on it.

Anyways, the owner had all his debts discharged by a judge yet the owner accepted our 50% offer. Now his name is still on the deed and the house *isn’t* in foreclosure and it is marketed by a realtard for the deeded owner. We got the endorsed contract offer yesterday afternoon. Now this is precisely what I wanted in my hands. A written agreement from the deeded owner to transfer the dump for $xxx. According to the realtard, the offer will go from the bankruptcy attorney to the bank for acceptance. This scenario appears to be a short sale, post bankrupty. I’m still waiting on my attorney to return my call but I figured I’d pose this scenario to you all.

How does a post-bankruptcy short sale work?? It seems to me it is less complicated considering there are only two parties involved(we and the bank). There is no owner involved where the owner says, “I have a buyer for less than I owe, will you forgive x dollars?”

Yet i have a signed contract from the owner….

Your thoughts?

The Republicrat puppet show known as the mid-term elections largely went as planned, with the sheeple electing some new corporatist stooges to replace some of the more discredited old ones. However, for the first time since 1913 the Fed and the banksters have genuine cause to worry: Rand Paul arrives in the Senate, and Ron Paul is finally in a position to demand accountability from the Fed.

http://www.cnbc.com/id/40013227

Calling Hwy50…

http://www.seattlepi.com/local/6420ap_wa_radioactive_rabbit.html

Wascally Wadioactive Wabbit.

Joey:

The only way that American business costs can be reduced to the level of Indian business costs is to reduce US labor to approximate 5 cents/hour. You keep going on about how the bank bailout was necessary to prevent a deflationary spiral. Well, does 5 cents/hour sound deflationary to you? Is it necessary to prevent that too?

I these quotes that make it look like the FED cares about the average person in the US.

The economy hasn’t been growing fast enough to reduce unemployment, which has been stuck at a high of 9.6 percent for three straight months. The Fed worries that high unemployment, lackluster wage gains and still-weak home values will weigh on consumer spending, a major drive of overall economic activity.

Note to BB, driving up the cost of food and fuel by driving down the value of the dollar will cause people to stop purchasing services and manufactured goods. As I recall we’re a service based economy now??????????

Buy a foreclosure home, and face down the barrel of a shotgun on your move-in date.

Economy
Shattered Dreams: Foreclosure Squatters
By Peter Doocy
Published November 06, 2010| FoxNews dot com

When Chris and Thelma DiMattio bought their new house in swanky Wilton, Connecticut a few months ago, they were thrilled. The longtime Wilton residents didn’t have to uproot their family, and they got a really great deal on the home at a foreclosure auction.

They picked up their last house at a similar auction, and were excited to move into their new place. That is, until they actually got there- and realized the previous tenants were still living inside.

On the day a Connecticut state Marshall served the home with a final eviction notice, Chris DiMattio said, “essentially, we’re paying taxes, insurance, and our first month’s mortgage payment for someone else to live there.”

The following week, the DiMattio’s were able to move in to the house, which was littered with dog hair, garbage, some furniture, and even a few high school yearbooks. Apparently, the family didn’t comply with any orders to leave until the last possible hour, when the Marshall showed up.

The Marshall said when he showed up at 9am, the man of the house was drunk and had a gun in front of him, but that nobody was hurt.

After all the added expense and the heartbreak of having to watch another family deal with losing their longtime home, Thelma doesn’t know if she even wants to live in the new house. “It’s kind of a spooky karma” DiMattio said. “Cause you had to get rid of someone and move them out of their home. It’s not a fun event to do.”

Thelma also said her young children have been very upset about the way things have gone, especially after their story showed up in the local paper after the DiMattio’s called the police to report their unwanted tenants.
…

Taking On a Second Mortgage to Pay the Foreclosure Lawyer
By DAVID STREITFELD
Published: November 6, 2010

For some Florida residents, the price of getting out of foreclosure will include taking on a second mortgage — payable this time to their lawyers.

“We’re not money lenders,” said Peter Ticktin, a foreclosure lawyer who devised a “pay later” plan for troubled homeowners.

Thomas Ice and other foreclosure lawyers in Florida typically receive a few hundred dollars a month from each client.

The new mortgage, which takes effect only if the foreclosure is dismissed and the homeowner’s debt to the bank is reduced, is controversial among defense lawyers, some of whom call it “creepy” and “crass.” Yet even they acknowledge it offers a solution to a vexing question: How do they get paid?

After recent revelations that banks were sloppy in processing many foreclosures and in some cases lack standing to seize a house, potential clients seeking to challenge their lenders are flocking to lawyers. But while these distressed homeowners might have a case, they generally lack the resources to pay legal fees. Being in foreclosure usually means being broke.

“We thought, ‘Why don’t we use a bit of ingenuity to find an affordable way to represent them?’ ” said Peter Ticktin of the Ticktin Law Group in Deerfield Beach, Fla. “It’s a new model, a new paradigm.”
…

* NOVEMBER 5, 2010, 3:26 P.M. ET

US Pending-Home-Sales Index -1.8% To 80.9 in Sept - NAR

By Meena Thiruvengadam and Luca Di Leo
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–U.S. pending home sales slipped for the first time in three months in September as foreclosure moratoriums spurred by shoddy mortgage documentation practices slowed sales.

The National Association of Realtors’ index for pending sales of existing homes fell 1.8% to 80.9, the industry group said Friday. Economists surveyed by Dow Jones Newswires had expected pending home sales would increase by 3% in September.

Year over year, the pending-home-sales index is 24.9% below its level of 107.8 in September 2009. The NAR on Friday also revised its August index upward slightly to 82.4 from the previously estimated 82.3.

The NAR index is based on pending sales of existing homes, including single-family homes and condominiums. A home sale is pending when the contract has been signed but the transaction hasn’t closed. Pending sales typically close within one or two months of signing.

Pending home sales plummeted in May after the expiration of a government tax credit program but had been on the rise in July and August as rock-bottom mortgage rates and distressed property sales enticed buyers.

“Existing-home sales have shown some improvement but the foreclosure moratorium is likely to cause some disruption and contribute to an uneven sales performance in the months ahead,” said Lawrence Yun, the association’s chief economist.
…

Is this foreclosure rescue clusterfork by accident or by design?

* HOMES
* NOVEMBER 6, 2010

Foreclosure Crisis, Part 2: Modifications

By JESSICA SILVER-GREENBERG

The Obama administration’s program to help struggling borrowers keep their homes is being hurt by the same miscommunication, botched documents and other snafus that caused the original foreclosure crisis.

After J.P. Morgan Chase & Co. agreed in January to her trial loan modification under the Home Affordable Modification Program, Stephanie Lulko made six $767-a-month mortgage payments, even though the bank said it had no record of her loan and then warned in a letter that she would be foreclosed on unless she paid $4,091.94.

The 44-year-old Ms. Lulko, of Oklahoma City, says bank employees told her to ignore the letter. Their tune changed in June, when J.P. Morgan said she earned too much to qualify for a permanent modification. The problem this time: The bank’s numbers were wrong. “I wish I had never applied for this modification,” she says.

In September, the bank rejected her request for a permanent loan modification for a second time. She faces foreclosure unless she pays nearly $5,000—the difference between her original and modified loan payments, plus late fees. Ms. Lulko has been unemployed since her temporary job at the U.S. Census Bureau ended in August.

J.P. Morgan denies any wrongdoing related to Ms. Lulko’s loan. “We worked with the borrower over a number of months and communicated the status of the loan modification during that time,” spokesman Tom Kelly says. He adds that the lender has converted 29% of temporary modifications into permanently reduced payments as of September.

The foreclosure-paperwork furor is deepening criticism of the U.S. government’s high-profile mortgage-restructuring effort, which has fallen short of its goal of helping three million homeowners. More than half of the 1.4 million borrowers approved for temporary modifications have fallen out of HAMP because they didn’t qualify.

The program “has undoubtedly put people into foreclosure,” says Neil Barofsky, the special inspector general overseeing the Troubled Asset Relief Program, which funds HAMP. “It’s a parade of documentation horrors.”
…

* GETTING GOING
* NOVEMBER 6, 2010

New Ways Bankers Are Spying on You

* By KAREN BLUMENTHAL

Big Banker is watching you—more closely than ever.

With lenders still skittish about making new loans, credit bureaus and others are hawking services that help banks probe deeply into your financial closet. The new offerings include ways to look at your rent and utility payments, figure out your income, gauge your home’s value and even rate your banking habits based on details like whether your direct deposits have stopped.

All of this could influence your financial freedom—not to mention the number of junk-mail solicitations you receive.

Ken Lin, CEO of Credit Karma, a credit-score information website, knew he had a good credit score. But when he recently applied for a new credit card, he was rejected: The lender had flagged him as a higher credit risk because the value of his California home had declined and his mortgage principal wasn’t declining—giving away that he has an interest-only mortgage.

“It’s a lot more than just your credit score today,” he says.
…

Reforming the housing market by phasing out Fannie Mae and Freddie Mac

* November 6th, 2010 9:00 am ET

Taxpayers have already spent over $140 billion bailing out Fannie Mae and Freddie Mac and total losses could rise to $259 billion by 2013 according to a recent government estimate. To bring stability to the nation’s struggling housing market and take taxpayers off the hook for future financial losses, policymakers should begin reducing Fannie Mae and Freddie Mac’s involvement in the mortgage industry. A new Reason Foundation policy brief details how to reform mortgage industry by beginning to phase out Fannie and Freddie.

“Taxpayer dollars are going to Fannie Mae and Freddie Mac so they can artificially prop up housing prices,” says Anthony Randazzo, author of the Reason Foundation report. “It is going to be painful, but our leaders need to let housing prices find their natural bottom, without government interference, for a truly sustainable recovery to begin. Congress can bring stability to the economy by beginning a long-term strategy to dissolve Fannie and Freddie.”
…

WSJ Blogs
Developments
Real estate news and analysis from The Wall Street Journal

* Foreclosure Mess Slowed September Home Sales
* November 5, 2010, 12:53 PM ET

Hoenig to Realtors: Wean Housing Off Government Intervention

The boom-and-bust nature of the housing markets in recent decades needs to be addressed by weaning the market from “governmental intervention and public subsidies that have distorted the market,” said Federal Reserve Bank of Kansas City President Thomas Hoenig at the National Association of Realtors conference in New Orleans on Friday.

“The American public, including aspiring homeowners and those of you employed in the housing industry, might be best served, over time, by reducing or removing these subsidies as part of our national policy,” said Hoenig, who has led the Kansas City bank since 1991 and faces mandatory retirement next year. Hoenig was the lone dissenting vote Wednesday in the committee’s 10-1 decision to launch a new round of bond-buying, or quantitative easing, to support the economy and has been consistent in his message: Interest rates need to go up. (See Real Time Economics)

One subsidy worth reconsidering, Hoenig said, is the tax deduction offered for interest paid on home mortgages. U.S. officials might decide the deduction makes sense, he said, but the deduction must be looked at as a subsidy–it’s not free, he said. Especially in light of growing budget deficits, subsidies to encourage home ownership, and ones for agriculture and energy, all need to at least be examined, he said in response to an audience member’s question.

Fannie Mae and Freddie Mac, with their implicit government guarantees, also must be reformed, Hoenig said. (Easier Said Than Done)

“Had these institutions been held to stricter financial standards, far fewer households would have suffered the tragedy of foreclosures, the lost home equity and the loss of personal savings and wealth that today continues to hold back our economic recovery,” Hoenig said.
…

I love the URL here (snippet): “bill-moyers-money-fights-hard-and-it-fights-dirty”

Bill Moyers: “Welcome to the Plutocracy!”

Wednesday 03 November 2010
by: Bill Moyers, t r u t h o u t | Speech

Bill Moyers speech at Boston University on October 29, 2010, as a part of the Howard Zinn Lecture Series.

I was honored when you asked me to join in celebrating Howard Zinn’s life and legacy. I was also surprised. I am a journalist, not a historian. The difference between a journalist and an historian is that the historian knows the difference. George Bernard Shaw once complained that journalists are seemingly unable to discriminate between a bicycle accident and the collapse of civilization. In fact, some epic history can start out as a minor incident. A young man named Paris ran off with a beautiful woman who was married to someone else, and the civilization of Troy began to unwind. A middle-aged black seamstress, riding in a Montgomery bus, had tired feet, and an ugly social order began to collapse. A night guard at an office complex in Washington D.C. found masking tape on a doorjamb, and the presidency of Richard Nixon began to unwind. What journalist, writing on deadline, could have imagined the walloping kick that Rosa Park’s tired feet would give to Jim Crow? What pundit could have fantasized that a third-rate burglary on a dark night could change the course of politics? The historian’s work is to help us disentangle the wreck of the Schwinn from cataclysm. Howard famously helped us see how big change can start with small acts.

We honor his memory. We honor him, for Howard championed grassroots social change and famously chronicled its story as played out over the course of our nation’s history. More, those stirring sagas have inspired and continue to inspire countless people to go out and make a difference. The last time we met, I told him that the stories in A People’s History of the United States remind me of the fellow who turned the corner just as a big fight broke out down the block. Rushing up to an onlooker he shouted, “Is this a private fight, or can anyone get in it?” For Howard, democracy was one big public fight and everyone should plunge into it. That’s the only way, he said, for everyday folks to get justice – by fighting for it.

I have in my desk at home a copy of the commencement address Howard gave at Spelman College in 2005. He was chairman of the history department there when he was fired in 1963 over his involvement in civil rights. He had not been back for 43 years, and he seemed delighted to return for commencement. He spoke poignantly of his friendship with one of his former students, Alice Walker, the daughter of tenant farmers in Georgia who made her way to Spelman and went on to become the famous writer. Howard delighted in quoting one of her first published poems that had touched his own life:

It is true
I’ve always loved
the daring ones
like the black young man
who tried to crash
all barriers
at once,
wanted to swim
at a white beach (in Alabama)
Nude.

That was Howard Zinn; he loved the daring ones, and was daring himself.
…
Now, most people know what plutocracy is: the rule of the rich, political power controlled by the wealthy. Plutocracy is not an American word and wasn’t meant to become an American phenomenon – some of our founders deplored what they called “the veneration of wealth.” But plutocracy is here, and a pumped up Citigroup even boasted of coining a variation on the word— “plutonomy”, which describes an economic system where the privileged few make sure the rich get richer and that government helps them do it. Five years ago Citigroup decided the time had come to “bang the drum on plutonomy.”

And bang they did. Here are some excerpts from the document “Revisiting Plutonomy;”

“Asset booms, a rising profit share and favorable treatment by
market-friendly governments have allowed the rich to prosper… [and] take an increasing share of income and wealth over the last 20 years.”

“…the top 10%, particularly the top 1% of the United States –
the plutonomists in our parlance – have benefitted disproportionately from the recent productivity surged in the US… [and] from globalization and the productivity boom, at the relative expense of labor.”

“… [and they] are likely to get even wealthier in the coming years. Because the dynamics of plutonomy are still intact.”

I’ll repeat that: “The dynamics of plutonomy are still intact.” That was the case before the Great Collapse of 2008, and it’s the case today, two years after the catastrophe. But the plutonomists are doing just fine. Even better in some cases, thanks to our bailout of the big banks.

As for the rest of the country: Listen to this summary in The Economist – no Marxist journal – of a study by Pew Research:

More than half of all workers today have experienced a spell of
unemployment, taken a cut in pay or hours or been forced
to go part-time. The typical unemployed worker has been
jobless for nearly six months. Collapsing share and house
prices have destroyed a fifth of the wealth of the average
household. Nearly six in ten Americans have cancelled or
cut back on holidays. About a fifth say their mortgages are
underwater. One in four of those between 18 and 29 have
moved back in with their parents. Fewer than half of all adults
expect their children to have a higher standard of living than
theirs, and more than a quarter say it will be lower. For many
Americans the great recession has been the sharpest trauma since
The Second World War, wiping out jobs, wealth and hope itself.

Let that sink in: For millions of garden-variety Americans, the audacity of hope has been replaced by a paucity of hope.
…

BlackRock paves way to reshape mortgage market
Nov 5, 2010 15:17 EDT

BlackRock’s new $1 billion jumbo mortgage fund paves the way to reshape the U.S. mortgage market. If its blue-chip presence tempts others to follow, it would reopen the private mortgage securitization market, reduce the need for federal guarantees and bypass many of the conflicts and practices that contributed to the housing-led economic crisis.

The idea, first reported by Reuters, is pretty simple: rather than buying mortgage bonds from lenders, the asset manager will buy packages of loans from the banks instead and bundle them into securities itself. It’s not the first to do so — in April Redwood Trust sold the first, and so far only, mortgage bond in more than two years not backed by government-run entities like Fannie Mae and Freddie Mac.
…
There are still hurdles — not least fears of further house price declines. And the private market won’t be able to compete financing jumbo loans until Fannie and Freddie drop their guarantee limit, which was raised to $729,000 in the crisis. With the likes of BlackRock ready to take up any slack, there’s no reason such taxpayer-backed warranties should stick around for long.

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