Mr. Martenson,
Your post is spot-on. So much so, I can’t even take the devil’s advocate in this case to try to see this from another perspective. This situation is as black and white as it can get.
I’m a responsible homeowner and I can’t quite work up a dudgeon about this. I have a neighbor who got laid off and is giving up his house. He’s apologized to me and the neighbors profusely but he has no other options. So his foreclosure will drag down our property values. I have no idea whether Obama’s plan will work (it seems a bit of a stretch) but after all the bail-out money going to tycoons and fat cats, the relative pittance going to overextended homeowners seems minor.
It’s important to remember the finacopathy that was at the heart of our economy just a few years ago. If you tuned in CNBC or read The Wall St Journal, it was all about the housing market and "new paradigms" and how everything was different this time. Alan Greenspan was vouching for ARMs, financial advisors were telling their clients to buy more house than they needed, and many people without pensions or savings were told that homeownership was destined to be their only path to financial security. Aside from a few doomers and Austrian School types, who was blowing the whistle on this charade? Really, I was getting nervous in 2005 but people just looked at me like I was crazy when I said home prices were too high to be sustainable.
At any rate, I’m grateful for Chris and this site since it gives me a sense of sanity about the economic double bind we’re all in. I’m still getting "crazy" looks from people when I talk about these issues even with the global economy crashing around us. I’m not sure if it’s denial or if most people just accept the conventional wisdom that things will get better later this year. This crash will define us probably for the rest of our lives. It’s a profound counterweight to the mindless and oblvious consumption of post-war prosperity. It’s also a touchstone for the new reality, which is really the old reality: life is tough.
Daddy, Can we have a full fledged tax revolt now? If not, can we have a tea party in Boston? Let us not forget these words.
[quote]
When, in the course of human events, it becomes necessary for one
people to dissolve the political bonds which have connected them with
another, and to assume among the powers of the earth, the separate and
equal station to which the laws of nature and of nature’s God entitle
them, a decent respect to the opinions of mankind requires that they
should declare the causes which impel them to the separation.
We hold these truths to be self-evident, that all men are created
equal, that they are endowed by their Creator with certain unalienable
rights, that among these are life, liberty and the pursuit of
happiness. That to secure these rights, governments are instituted
among men, deriving their just powers from the consent of the governed.
That whenever any form of government becomes destructive to these ends,
it is the right of the people to alter or to abolish it, and to
institute new government, laying its foundation on such principles and
organizing its powers in such form, as to them shall seem most likely
to effect their safety and happiness.[/quote]
and then what happened?
so what.
I don’t believe it is correct or productive to blame or direct anger toward the individual borrowers - their participation was required to make the scheme work - they are the marks. If the banks had been required to hold the mortgages there would have been no housing bubble as they would have done due diligence on the borrowers and the number of bad loans would have been minimal. The scheme depended on the ability of the mortgage lenders to sell the loan - sooner the better. The easier the credit was to obtain the faster the housing prices would inflate as the demand increased. The more loan originations and re-finances the more profit to be skimmed. The financial industry skimmed billions from this trade - and now the Obama plan will reimburse them - that is the crime here, not that a few homeowners, "deserving" or not, will be able to keep paying the banks interest on their loans for a little longer. Realestate prices will not magically reinflate and consumers will not go back to borrowing beyond their means - the party is over. This is nothing more than a payout to the banks that has the political dressing of "help for homeowners".
Greenspan says a number of interesting things in the "House of Cards" interview. Two that stood out to me were 1: he could have stopped the bubble but it would have caused financial pain (and displeased his friends on Wallstreet) and 2: the firms that got hurt in the meltdown were just too stupid to get out while the music was still playing - what a mentality! What a bunch of crooks!
Anyone here have a map to the place? I’m out on the Interstate with my thumb in the air, but I’m not sure which way to go just yet. Help a brother out?!?!
I can still day dream about moving to a land where men and women live free and honorably and respect one another, can’t I?
Yes, I’m often chastised for being an "idealist". Shame on me.
Davos,
That auto mechanic video was a hoot…thanks for the laugh. I emailed the link to Tom and Ray of NPR CarTalk fame.
It was less than twenty years ago when I saved for many years to make a 20% down payment on a house. My grandfather did the same . My father did the same. What the hell has happened to this country in the last twenty years? Why does everyone have to own a house? It used to be that the American dream was a house and that meant something because dreams aren’t achieved by handouts or giveaways.
Now the American dream for me is to get the government out of my wallet, my car, my job, my privacy, and everywhere else. A sad state of the union.
Pretty well anywhere pretty soon.
When they printed money to give to bankers and corps the outcry was a bit muted. Now no one can possibly pay back the debt but they are printing money to give to your fellow citizens and there is a huge outcry.
The money is meaningless isn’t it.?
Why pretend?
Or have you got the makings of ‘divide and conquer’?.
Don
7 billion people can be wrong, very wrong
All this bailout money is, is another loan from private bankers. By this logic, they are saying that we can borrow our way out of debt.
[quote=cmartenson]Crikey! People are mad about this one.[/quote]
This is wrong. Stop fanning the flames of envy. Is it right to pay people our money to help their mortgage payments? Of course not, but mainly because it won’t work, not because little people don’t deserve help sometimes.
But whatever…let’s focus on the REAL PROBLEM. This is an irrelevant $85B given the $10T game of robbery that’s been happening since Sep. Fanning the flames on this little story is about pitting groups of individuals against other groups…the same thing the mass media does with the left/right political paradigm…pit half the population against the other to ensure we’re distracted with envy, hatred, violence toward our fellow man/woman. This keeps the masses distracted fighting each other while the big boys get to laugh from their British castles at the serfs arguing with each other.
150% of our anger, rage, violence needs to be directed at the power elite…the banking oligarchy. It shouldn’t be directed at the proletariat. It shouldn’t even be directed at the bourgeois business types, though they could use a dose of better morality/philosophy. IT NEEDS TO BE DIRECTED AT THE RULING CLASS…those that rule the world’s financial system. Don’t let the Rothschilds and their ilk through the mass media they own make you angry at each other!
[quote=azzenstudent]I have no idea whether Obama’s plan will work (it seems a bit of a stretch) but after all the bail-out money going to tycoons and fat cats, the relative pittance going to overextended homeowners seems minor.[/quote]
Thank you deeply for saying this.
Were some homeowners dumb? Sure. Were the real estate flippers totally out of line? Absolutely. But a ton of the buyers were just people buying houses like people normally do at stages in their lives. It just so happened their timing was off because the rigged system screwed them. The entire system…government, regulators, bankers, realtors, lawyers, neighbors, friends, family, the wizards at Wharton and Harvard b-school, and the Greenspan media-god himself…was saying it’s just a new way of valuing risk that created a step-change in the way the real estate market worked. You’re suggesting the little individual was supposed to know the entire world was wrong? Blaming homeowners for this situation is like blaming a restaurant owner who gets sucked into the NJ mafia system and has his whole life savings taken. THE HOUSING BUBBLE WAS A GLOBAL FINANCIAL MAFIA SHAKEDOWN OPERATION. It sucked people in so there would be a ton of wealth and houses transferred to bankers once deflation ran its course.
Now, as I said, this Obama plan won’t work. What I wish they would do is pass legislation forcing banks to do what every other darn business in the world has to do…be flexible and work with customers during downturns in the business cycle. Banks are the idiots who valued THEIR ASSETS (loans) irresponsibly. That’s the real sin…not the borrower evaluating the liability wrongly. They should be forced to rework their failed assets (now valued at 50 cents on the dollar) with the borrowers liabilities (still valued at 100 cents on the dollar), i.e. maybe they agree to write down their assets to 75 cents on the dollar depending on the borrower’s situation. That’s the only thing that would work. And it saves the banks from foreclosing their entire balance sheet and getting only 50 cents.
Banks are the only institutions that are so in bed with government that they get to have ridiculous products (like ARMs that suddenly shoot up and charge usury rates) totally backed by government enforcement. Every other business has to talk with and cooperate with customers when the business cycle turns down. Banks don’t. They just say "F you, get out of the house, I’m giving your house to this rich developer, and the government endorses it, ha ha ha." That’s BS folks. THEY SHOULD BEAR PART OF THE RISK…IT’S THEIR ASSET FOR F SAKES. Their attitude kills community and human tenderness. What was portrayed in "It’s a Wonderful Life" was true back then and it’s much much much more true today…we have no sense of community anymore…all because of the banksters running the world. F them.
[quote=cmartenson]Does the current administration really want to foster this sort of a mindset right at the outset of a nasty recession/depression?[/quote]
Of course they do Chris. They foster this mindset all the time. This depression provides the perfect opportunity to amp it up big time. They want serfs, i.e. make as many people addicted to empire government as possible. Republicans do it in terms of security dependence ("just sit home and watch TV, we’ll make you safe"). Democrats do it in terms of economic dependence ("just sit home and watch TV, we’ll send you a check"). 2 sides of the same coin…all in the name of dumbing us down so the banking/DC oligarchy becomes even more elite in terms of relative power…fills their narcissistic emptiness.
[quote=cmartenson]Does the current administration really want to foster this sort of a mindset right at the outset of a nasty recession/depression?[/quote]
Of course they do Chris. They foster this mindset all the time. This depression provides the perfect opportunity to amp it up big time. They want serfs, i.e. make as many people addicted to empire government as possible. Republicans do it in terms of security dependence ("just sit home and watch TV, we’ll make you safe"). Democrats do it in terms of economic dependence ("just sit home and watch TV, we’ll send you a check"). 2 sides of the same coin…all in the name of dumbing us down so the banking/DC oligarchy becomes even more elite in terms of relative power, which fills their narcissistic emptiness.
Well guys from my point of view this is what I see every day in the medical field. They want to run the housing problem exactly like they run the Medicaid system. It appears this is all they understand?
What I see everyday are patients with 90% self inflicted disease states. Like the 30 year old 350+ lb way over obese person that smokes & drinks while on a very bad over indulgent diet of food the Govt provides via food stamps.
Now this slob has high cholesterol, diabetes & high blood pressure. Hum how do we fix this problem?? That is simple right? We put him on meds that cost somebody (Joey tax payer) $2000 a month or more. The way we fix that smoking problem is by sticking the tax payer again by providing this guy with a breathing machine & lots of inhalers. Works every time right??LOL. What do we get for this investment but a never ending dependent idiot that refuses to take any responsibility for themselves & what they have created?
These types will tell me I just don’t understand how I could be falling apart like this…just bad luck or genes I guess?
These are all black holes with no end in sight.
Maybe the best way to fix this depression is to put everyone on antidepressants.
Just yesterday I posted a forum topic here on this, for anyone interested in my two cents:
https://peakprosperity.com/forum/obama-mortgage-bailout/13539
Hello GreenDoc:
Super, I’m sure Click and Clack will have fun with that. Smart MIT guys those 2. Take care
As long as the people who control goverment perpetuate (and they will) the system of "economic welfare" ,the USA and similar "Democracies" are doomed to face the inevitable…
I’m not being negative, I’m being a realist
[quote]
Maybe the best way to fix this depression is to put everyone on antidepressants. [/quote]
Soma Holidays anyone?
In all honesty, the dystopia we're seeing emerge from WADC isn't going to just "stop".
The Bankers are never going to have enough money. The Politicos are never going to have enough power.
So what do they do? Team up and play "Good Cop, Bad Cop" against the citizenry.
Kinda makes you wonder about public education and social programs. More and more I'm seeing "Indoctrination" rather than education.
My question is this: How do we end the Federal Reserve and take their boot away from our collective throat?
Cheers!
Aaron
“You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that, my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it." ~ Dr. Adrian Rogers
Things like the housing debacle happen when all parties - in this case lenders, buyers, investers, and regulators - fail to do due diligence to look at the risks and raise a red flag.
The greatest crime here I see is that it pays for businesses to be reckless with lending because government will step in to support when needed.
I don’t see a return to stability until govenment intervention ends, the rules stop changing, and markets self adjust.
The State will ensure producers and savers pay dearly for those who don’t.