Economy is Still Choking on Housing — When Will Obama Act?

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EDITOR’S NOTE: I am tired of reading about how economists express surprise at the sluggish economy. The same goes for when they express hope at slightest uptick in any index that is followed, none of which are real representations of economic activity. As the recent new York Times Editorial stated, as housing goes, so goes the economy. Housing is corrupted by the ongoing fraud being perpetrated by Wall Street. We have fraudulent loans compounded by fraudulent foreclosures, covered over with the appearance of having modification and short-sale programs that fall short of any reasonable expectations. We have a synthetic inventory of homes for sale or in the pipeline that are said to be owned by the banks but legally are still owned by the homeowners who were victims of fraudulent lending, fraudulent foreclosures, fraudulent auctions and other violations of statutory and common law.

The solution lies in housing and being honest about it, going on the facts and getting rid of ideology that creates the myth of a false moral dilemma. Pull back the curtain, let the facts roll in and apply existing law. Stop assuming that the obligation is in default just because some third party comes in and says so. Stop assuming that the obligation still exists.

  • Stop assuming that the payments weren’t being made to the investor -lender even as the forecloser declared a default.
  • Just because the homeowner-borrower didn’t make a payment doesn’t mean the payment was due and doesn’t mean that the payment was not received by the creditor.
  • Stop assuming that the foreclosure paperwork is just a snafu and take it for what it is — intentional fabrication and forgery in support of a fraudulent scheme for the banks to get a free house damaging both the investors who put up money and the borrowers who put up their homes.
  • And stop assuming that just because a bank shows up through counsel that they are entitled to buy the property at auction without paying any money and without being the actual creditor; their credit bid is a nullity.

Stop throwing people out of their homes without any evidence that it is legally right and proper to do so. And restore people to their homes with whatever equity is left in the home after Wall Street has trashed the housing market and took down the economy with it. You want an economic recovery? Give the homes back to their real owners and make any would-be forecloser prove their case with real evidence. You’ll end up with virtually no foreclosures and an economy in which the middle class wealth has been restored to the tune of trillions of dollars, without a penny coming out of the treasury from taxpayer money. Now that is a stimulus I can live with.

The Economy Is Wavering. Does Washington Notice?


The latest economic numbers have not been good. Jobless claims rose last week, the Labor Department said on Thursday. Another report showed that economic growth at the start of the year was no faster than the Commerce Department initially reported — “a real surprise,” said Ian Shepherdson of High Frequency Economics.

Perhaps the most worrisome number was the one Macroeconomic Advisers released on Wednesday. That firm tries to estimate the growth rate of the current quarter in real time, and it now says annualized second-quarter growth is running at only 2.8 percent, up from 1.8 percent in the first quarter. Not so long ago, the firm’s economists thought second-quarter growth would be almost 4 percent.

An economy that is growing this slowly will not add jobs quickly. For the next couple of months, employment growth could slow from about 230,000 recently to something like 150,000 jobs a month, only slightly faster than normal population growth. That is certainly not fast enough to make a big dent in the still huge number of unemployed people.

Are any policy makers paying attention?

When the economy weakened in the first quarter, Ben S. Bernanke, the Federal Reserve chairman, and Obama administration officials said the slowdown was just a blip and growth would soon pick up. Today, many Wall Street economists are saying much the same thing: any day now, things will improve.

Maybe they will. But the history of financial crises shows that they produce weak, uneven recoveries, with unemployment remaining high for years. That history also shows that aggressive government action — the kind of action Washington took in 2008 and 2009, but not for most of 2010 — can make the situation much better than it otherwise would be.

The latest signs of weakness suggest that policy makers remain too sanguine. It is easy to see how the rest of 2011 could end up disappointing, much as 2010 did.

For one thing, there are specific forces holding back growth. Oil prices, though down in the last few weeks, are still 40 percent higher than a year ago and continue to siphon money away from the American economy to overseas economies. When I filled my gas tank last weekend, it cost $74, more than I think I have ever paid.

The housing market also remains in terrible shape. Europe is still struggling with its debt troubles. State and local governments continue to cut jobs.

These specific problems worsen the broader insecurity of both households and business executives — insecurity that is typical in the wake of a financial crisis. Long after the crisis itself is over, businesses are slow to hire and quick to fire. Thursday’s report on new jobless claims showed that they rose by 10,000, to 424,000, which is not a number associated with a solid recovery.

“Labor market gains may be faltering somewhat,” Joshua Shapiro, chief United States economist at MFR, a New York research firm, wrote to clients after the report’s release.

For households, already coping with miserly wage growth, that is another reason not to spend. The Commerce Department’s updated gross domestic product figures showed that consumer spending grew at an annual inflation-adjusted rate of only 2.2 percent in the first quarter, not the 2.7 percent rate the department initially reported.

The economy does still have some bright spots, and they could grow in coming months, just as policy makers and private forecasters are, once again, predicting. If North Africa and the Middle East do not become more chaotic, oil prices may continue falling. Vehicle production will probably pick up as the parts shortages caused by the Japanese earthquake end. The falling dollar will continue to help American exporters, as well as any domestic businesses that compete with foreign importers.

But there is no doubt that the economy has performed considerably worse in the last few months than most policy makers expected. The situation is now uncomfortably similar to last year’s, when the economy sped up in the first few months only to stall in the spring and summer.

The most sensible response for Washington would be to begin thinking more seriously about taking out an insurance policy on the recovery. The Fed could stop worrying so much about inflation, which remains historically low, and look at how else it might encourage spending. As Mr. Bernanke has said before, the Fed “retains considerable power” to lift growth.

The White House and Congress, meanwhile, could begin talking about extending last year’s temporary extension of business tax credits, household tax cuts and jobless benefits beyond Dec. 31. It would be easy enough to pair such an extension with longer-term deficit reduction.

Any temporary measures will eventually need to lapse, of course. But the current moment remains a textbook time to use them — when the economy is struggling to emerge from the aftermath of a terrible recession. The one thing not to do is to turn to deficit reduction too quickly after a crisis, as Europe is painfully learning.

Almost four years after the mortgage market first began to quiver and unemployment began to rise, Americans are understandably eager for good economic news. But wishing for it doesn’t make it so. You have to wonder whether the people in Washington have learned that lesson yet.


25 Responses

  1. cubed2k,

    Ahh — but the pot goes deeper — insurers were paying on false defaults — just to get the “loan” out of GSE hands. (then not a UCC note) — into supbrime collection transfer. Then claim the refinance was a valid note. NOT!!!

    This will also eventually surface.

    Insurers — however — were they sleeping??? What the heck what they doing???

    Not going to say security investors were duped — many know how I feel about that — but will state — – insurers were duped — MAYBE.. Because, insurers may have invested in the very products they insured – and paid out upon – knowing pay-out was fraudulent. .

    GSEs — played the game — they invested in their own charge-off debt (and resulting collection rights). Why not the insurers???

    Anything for profit. And, all on homeowners backs. The only ones really duped.

  2. E. Tolle,

    Yes — the bottom line.

  3. The bottom line is taht “WE the PEOPLE” are not being represented by our legislators. A six year old could see that. The banks are however, being very well represented.

    This can’t go on. It’s totally unsustainable. We cannot continue to be thrown under the bus while Wall Street drives away in to the sunset with all of the loot, our loot.

    We HAVE to start pressing the right buttons, forcing our elected officials to tow the line or face our boots on their collective necks. They won’t do it without our threats en masse.

  4. angry & NOT TAKING IT!,
    Good to see that I’m not the only one with that immediate response.

  5. What are you talking about?


  6. From the A Man link:

    “Foreclosures accelerated last summer, but they have fallen in all but one month since last September, when the “robo-signing” scandal, where bank employees were improperly signing high volumes of foreclosure filings, erupted.”


  7. Actually E. Tolle s idea is brillant. Instead of Elizabeth Warren representing the Consumer Financial Protection Bureau on her own you could make it a Consumer Financial Protection Bureau Coalition of representatives.

    I think you really got something. That would be a sight seeing Warren, William Black, Neil Garfield, others all facing Congress. Then article writers and comments couldn’t bash on one of them.

    Heck, you could do the same as the banks and lenders making the Consumer Financial Protection Bureau Coalition the parent company and Neil, Warren and Black would be their own subsidiary. That would really put a spin on things.

    Divided we Fall. United we Stand.

  8. so here we have this:

    Morgan Stanley vs MBIA over bonds.

    “MBIA, once the largest municipal bond insurer, piled up big losses by insuring mortgages”

    OK, but what about the people at our level, who in supposedly owe the mortgages? Somehow this is not tried into the fraud on the people with homes.

  9. I’d love to, E.Tolle…didn’t somebody try something like that recently? They approached the Chase Bank shareholder meeting (even crossed a “moat”),and got MACED!!!
    But, I feel like things are happening—little by little—we just have to keep figuring out ways to “stoke the outrage” and reveal the truth!!

  10. and yes, there is help like you and other posters here. But it is still up to only you.

  11. thus, your only security is you.

  12. well E.Tolle,

    I’m afraid the only security in life is you.

    That is not directed at you, but

    at you, reading this, as an individual.


    Security has to be compared to related concepts: safety, continuity, reliability. The key difference between security and reliability is that security must take into account the actions of people attempting to cause destruction.

    We are on our own, whether you like it or not.

    Freedom from want.


  13. Someone wrote:

    Neil: Excellent analysis…..and we obviously have (mostly) intelligent and articulate responses to it. But just talking about it will not solve the problem, folks. You need to do something about it.

    OK poster, I’m all ears…lay it on me! Have you a plan? A formula for relief? What’s all this about Neil doing something about it? Can he? Why should Neil fix all of our problems? Isn’t Neil Garfield doing enough by single handedly shouldering the burden of awakening thousands to the fraud as he’s done for several years now by operating this website that brings in not a dime?

    Let’s consider this for a moment. They, TPTB, will not entertain our wants and needs, so that’s out the window right off the bat.

    So, what can we do? Anyone? Hear me out and post your responses please. It seems incumbent on those of us who truly see the fraud, who know the score absolute to try and push this issue up the food chain. It’s plain to see that no one else will. The burden falls on us….we the people, at a very grass roots level.

    One thing I know, Neil Garfield has a unique insider’s view to this whole mess, one not shared by many in the business or the body politic, and I for one would happily contribute towards a fund to get him to D.C., albeit truthfully stating that I have no idea what that would look like at first blush. Who better to explain this mess, demand answers, and offer meaningful solutions than Neil?

    Taking the reins into our own hands, if I could ask anything from Congress, it would be that they listen to and understand the true issues confronting homeowners in foreclosure, not the crap being thrust upon them by the banking industry lobbyists.

    Trust this….that’s the only view these elected officials in Washington see on a daily basis. It’s all about access, and this access is a purchased commodity in D.C. It’s what assures re-elections and dollar disbursements. We need to undermine that process through rational thought and then through threat, if necessary.

    I’d give my last folding money to get a panel of OUR experts together and demand that OUR representatives hear them out in broad daylight.

    BTW, that’s what they’re supposedly there for, isn’t it? It’s about time they worked for us for a change, with full transparency, instead of for the lobbyists in the dark.

    A small kick-ass panel of hand picked, knowledgeable speakers who know the truth representing average citizens, not lobbyists, that’s the key. Citizen/consumer representatives sent to Congress with the express demand that they listen to our issues and concerns, with the full admission that political repercussions would be sure to follow if the status quo were maintained over and above the rights and well being of the citizenry. That just might be enough to tip the scale.

    Middle Eastern Spring? How’s about North America’s Summer of Outrage and Discontent?

    How’s about we let our so-called leaders know that we know which side they’ve chosen up until now and that it’s not working, for them or for us. A change is sorely due. We know that they’ve chosen the wallet padding vote, over their constituents. Let’s explain to them in no small way that those days are over. They either S*** or get off the pot, or their day is done if they don’t protect the Constitution and the Americans who put them in office.

    Bill Black, L. Randall Wray, Joseph Stiglitz, Neil Garfield, and anybody else of similar pedigree speaking on behalf of the millions who have lost their homes, and the millions who are due to shortly…. that’s where it’s at. The real hope and change this time around would go a long way passed Obama’s failed HAMP dreams and hollow speeches, our conversations with our so-called reps need to address real threats of “taking it to the streets”, if in fact positive change doesn’t result.

    I for one won’t blink again if Geithner et al threaten tanks in the streets and financial Armageddon. I say bring it on. We’ll have our own little Tiannmen Square block party on Pennsylvania Avenue, with simultaneous get togethers on Wall Street.

    If the social contract is broken, the people must revolt. Screw those who disagree. An old fashioned party involving tar and feathers suddenly seems appropriate. Start the bonfires folks, the heat’s way overdue. It’s a sticky situation, and needs to get even stickier if not handled appropriately. We shall overcome.

  14. The banks are noting but crooks .We lost ed everything because of them and I am fighting to the end to keep my home. Obama should give home to homeowner free and clear for all they been threw and losed.If Obama dose something for the homeowner he will get my vote and I am sure he will get it from all the home owner if he dose the right thing by homeowner.He will not have to accept dirty campaign money from these crooks. I am sick of hearing that they are investigating banks congress no dam well what they have done.They sue and us the homeowner get noting out of it.Stop the bull sh_t alright and do something for the homeowner’s.

  15. You have my deepest sympathy, rebecca—

    There but for the grace of God and digging in my heels go I…

    By doing NOTHING, Obama helps the banks throw people out of their houses —then helps throw them under the bus…

    Jim Cramer is clueless—he’s got the banksters whispering in his ear big time—what an idiot—

    How ’bout this solution—give the stolen houses back to the people —have the banksters/wall street/government con artists give the stolen money back to —whomever they stole it from—that would jump start the economy…but of course it would mean TOTAL HONESTY AND DISCLOSURE…something sociopathic materialists simply can’t do…

  16. he’s ben acting the ENTIRE TIME, much to our determent i might add.

  17. If Obama acts, it will either be close to the election or shortly thereafter. Whether you like him or not, our government is owned and operated by the banks. Wasn’t JFK assassinated because he wanted to give the Fed. Reserve the heave ho? I believe that Obama knows our government is owned by the banks. His life is probably on the line, too. If he goes against the banks, he better beef up security at the WH.

  18. Yes mr Garfield, your message needs to get to a wider audience. It’s comforting to have this site in a world gone mad, but the message still isn’t out there. No need for those liars to change anything when almost no one understands what’s happening. I watched in horror assomeone named Cramer I think on fox giving investment advice (not that I invest) declaring with great authority “why should homeowners pay the banks when they can live free for years. They’re hurting the banks ladies and gentlemen. Their homes are underwater so they just make an economic decision….”. Such an idiot. Apparently he thinks people think nothing of gambling with their homes. But that the prevailing wisdom. Nothing will improve until people like that are silenced in embarrassment.

  19. Here’s the text of an email that I just sent to the author of the NYT article I recommend that you send this guy an email and give him a piece of your mind too:

    “I totally agree with Neil. The US economy will not recover until the massive amounts of unlawful foreclosures are stopped. And, even if that happens, it will still take years for the economy to recover because the damage has already been done.

    Because of all the foreclosures which have already happened, the former occupants are now homeless. We’re one such family, and within just our local network there are thousands of us. Right now we’re living in a motel. Some families are on the verge of the Sheriff knocking at their doors waiting to be thrown out of their homes. That’s what happened to us. We’ve been living in a motel for three months; we see displaced families come and go all the time — when they run out of money, they leave. Where do they go? Who knows, but I have a pretty good idea: To a homeless shelter, to their cars (if they still have a car; one of our motel neighbors had the car repossessed, so they had to leave on foot with their stuff), to relatives if they have any, to the streets if they don’t. And this is happening to former Middle Class Americans all over the country. The hardest hit are the states with nonjudicial foreclosure laws because a court order isn’t necessary to foreclose.

    So, now there are displaced homeowners all over the country. In many cases, the breadwinners have been unemployed for quite some time due to layoffs; sometimes people find new jobs but get laid off again because the economy is still shaky. Breadwinners who don’t have jobs cannot make the mortgage payments or rent payments for that matter. Even if a family has enough money to rent an apartment, pay the security deposits, and pay to have the utilities turned on (which often involves deposits if the family fell behind on their utility payments in the past), if they fail the credit check (which many now do because of financial distress which has destroyed their credit rating), they will often be turned away and cannot rent the apartment at all.

    It’s a downward spiral that is affecting more and more people in our country. Once you’re homeless, it’s harder to make it back up the financial ladder because now it’s steeper. If you’ve lost your car and you live in a place like LA, you’re dead in the water unless you decide to get a job at a nearby gas station or something. Public transit is not comprehensive in LA, and there are some part of LA you can’t even get to using public transportation and, even if you could, it could take you all day and that might not even be enough time. The price of gas has been running around $4.25 in LA. That’s a lot of money to get from Point A to Point B in LA, especially when you have to sit in traffic most of the time.

    So now you have families who are homeless, some of which no longer have cars (or have become their homes which can make it less mobile) or jobs, or money. So now who is going to buy homes? Maybe the Chinese, but most Americans cannot buy homes now because, even if they have jobs, chances are they can’t qualify for a loan because the banks have upped the ante — 30% down, requiring FICOs over 700, etc. Also, in most cases, the titles on these homes are clouded, making it impossible to get title insurance. So, unless you can buy a home for cash (which is preposterous for most of the US population unless you’re a drug lord or a white collar criminal), you’re SOL.

    Do you see what I’m getting at? From my perspective, I don’t see the economy getting any better at all. Frankly, I see it getting worse by the day, but heaven forbid anyone tells the truth about what’s really going on in our country: Financial genocide of the American people, a sacrifice to the Bankster gods. It just makes me sick. This is not the same country I was born into 53 years ago.”

  20. Obama or his crew are a bunch of morons.
    He is a one term President.

    His Economists want to keep their jobs so they are telling us what obama wants to hear.

    The Real Economists and Politicians like Paul Krugman, Economic Nobel Prize Winner and people like James Baker and even the evangalist Franklin Graham pretty much agree with Neil Garfield

    We are in Deep Sh##t. or as James Baker said. We are broke bankrupt broke and really broke.

    But I believe in the American People Spirit so that gives me hope.

    The World is run by evil people.

    Leapfrog enjoy your weekend.

  21. When will Obama act? He’s ALREADY acted – in favor of the banksters and Wall Street. I voted for a liar and a cheat who sold me out.

  22. Washington knows full well what it is doing. Timing is everything and they are waiting for the Iraqi economy to take hold and pay off the U.S. debt.

    Just my opinion!

  23. Almost four years after the mortgage market you have to wonder whether the people in Washington have learned that lesson yet.

    No. They’re just earning a BS degree and I don’t mean science.

  24. I thoroughly enjoy your editorials, Neil. They make clear something that is so confounding. I would love to see YOUR editorials in the NY Times, among as many other papers who would carry them. Please send them to publications. This needs to get out there, more and more and more. Can’t ever say it often enough for it to finally (hopefully) sink in and make a dent.

    I’m sure you’ve mentioned the excellent book “Griftopia” by Matt Taibbi. If not, please pass it along.

    thanks for what you do.

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