Credit Death Watch

Recent economic reports show that the economic recovery, if it exists, is limping at best. This article explains why.

Once upon a time a single income household could provide a decent lifestyle. Household income was solid and so was savings. Then something happened. The bean counters took over. My favorite story about that is the hotel chain that allowed their bean counters to save money by not replacing the aging rugs in the lobby, hallways and rooms. In a short period of time, the hotels were empty and the chain was near bankruptcy. But the bean counters received bonuses for (a) saving money and more importantly (b) reporting higher earnings as a result of the “cost savings.” As obvious as that story is, the shareholders, directors, and Wall Street analysts went with the higher earnings and assumed forward earnings would be as management represented. The result was a run-up in the price of the stock at the same time that earnings were already declining because nobody was staying at their hotels.

The problem here is that many factors converge to create a disaster. That starts with the changes in accounting that began in the 1960″s that were described in detail in a long forgotten book called “Unaccountable Accounting”. Gradually management estimates of values on the balance sheet, income items, and projections were institutionalized as real even when they were patently false. And then we switched from valuing stock based upon current earnings to valuing stock at projections of forward earnings. The result is that management gets increasingly bold as to their projections in order to earn extra bonuses. The further result is that the price earnings ratio is twisted beyond recognition and more importantly beyond common sense.

Eventually the period starting in the early 1970’s and continuing to the present and beyond will be known as the period in which the American economy was completely undermined by a simple fact: in an economy based 70% on the spending by consumers, the consumers didn’t have any money. The “fix” was to offer credit on an increasingly stupid basis to replace real earnings, real savings and real household wealth, and real household income. Instead, household debt increased gradually and then more stupendously in the late 1990’s and the lead up to the 2008 crash.

Available credit amounted to an explosion of money into the housing and mortgage market. The result, according to the Case Schiller reports, was that median income and housing prices diverged on a scale never seen in human history. Hence housing PRICES launched suddenly to unsustainable heights (with the banks saying that housing NEVER goes down) while housing VALUE, related to median household income was going down. The whole credit affair was the equivalent as the crazy tulip bubble in the nineteenth century.

So now we have double income and triple income households that still can’t keep up with their expenses. It is all traceable to the decision in most companies to reduce or freeze wages and let the government make up the rest with food stamps or the banks make up the difference in available credit. This insanity looks good on paper at the beginning. But int he end, households run out of money, families break apart, people lose their homes to fraudulent foreclosures, while government adopts a policy that basically says that regardless of how the public was duped into accepting credit (under duress) in lieu of normally increasing wages, it is always the “borrower” who must bear the full weight of these mistaken policies and the failure of the American worker to make ends meet.

So despite lower gas prices and other inducements, people are NOT spending — because they don’t have the money they should have had if they were permitted to enjoy higher wages resulting from the fruits of their labor. They are out of money and out of credit alternatives and now, for good reason, have no faith in the economy, job security, fair wages, and they have nothing but household debt where they should have household wealth.

Hence that 70% consumer economy is falling apart. The consumers have no more money to spend. They can’t earn it and they can’t borrow enough to do anything other than repay the debt, this increasing their household debt without buying anything. Both the Bush administration and the Obama administration missed their cue. The tea partiers were right. The big banks should have been allowed to fail. Elizabeth Warren is right: the big banks should be split up like the AT&T monopoly.

The truth should have been told about the unenforceable mortgages that used sham entities or stand-in nominees to originate loans that were known by the underwriters to be certain to fail. It was a whole sale movement of wealth from homeowners who had homes in their families for generations to banks and servicers who didn’t spend one dime on the loans. And the banks did it using the pension money of the same borrowers they were tricking into loans that were falsely represented to be secured by mortgages.

The ONLY cure to our economic malaise is to actually react to reality, just like Iceland did. At the very least, a reduction of household debt at the expense of the banksters who caused this crisis would go a long way toward producing the stimulus necessary for our economy to really recover. But nothing replaces an honest wage — and that means honest from both sides of the table. Debt has become a cancer on our society. it needs treatment and cutting.

The current trend is to take all the wages that should have gone to the workers who produced the gross income and give it to managers, officers and directors and shareholders — as though they made the product or performed the services that produce gross revenue.

Going back to the previously successful policy of giving workers a fair share of the pie is the ONLY way out of this mess. Henry Ford understood that at the start of our economic revolution in America. He doubled worker wages while other car makers decried the move as suicidal. But he was right. He created a middle class that could afford to buy a lot of cars. By increasing wages, the workers were spending money throughout the communities in which they lived. Ford had both created and tapped into what we would later refer to as a consumer economy that drove 70% of GDP.

But for the mythological “derivatives” (and securitization) the credit market is already dead. It is only a matter of time before the reality of a debt economy sinks in and sinks the ship.

35 Responses

  1. Does anyone have any contact information for Wells Fargo Legal Department or in House Attorney’s. I need to send them a Demand Letter.

  2. Michael,

    If you look at the past 7 years, there hasn’t been much of a “We The People”. In fact, We The People” has miserably failed at organizing.

    Change is made one victorious case at a time. Look at the case law that has been created on favor of the banks by arguing issues that are not of homeowner’s resort but of the legislature and regulators’ resort. Neither has taken any action toward correcting anything.

    Until people understand it, nothing will change. If anything, it will become more and more difficult to prevail. I, for on, still want to see ONE case won on Garfield’s theories. And ONE case won by him arguing them in court. Call me stubborn: there is what works and there is what doesn’t. We The People is really… nowhere to be seen…

  3. @ Christine,

    Claiming that “Bucketeering” is the Wall Street model and has been since forever, is not anywhere related to, “… having to argue completely irrelevant issues.”.

    Hank Paulsen and Goldman Sachs are a prime example… securitization fail is a prime example.

    “Pretty much everyone paying a mortgage can find serious accounting errors.”, is a prime example.

    “Monies not applied where they should have been constitute a breach of contract.”, is a prime example.

    It is one thing to trumpet advocacy of and for a proven path, “Attack the Mortgage”, for example.

    It is also true that the path has been twisted by intentional, criminal intent and, in order to return order, it is necessary to expose these filth and bring them into the light of day.

    The conversation, beyond the immediate concerns of protecting yourself as an individual, is larger than that, and it is as necessary as it is long-overdue.

    Of course, it is a lot easier to wring one’s hands and sow discord, a la chicken little, amidst claims of imminent economic collapse…

    I say let the banks fail and good riddance.

    I say let those who, once upon their high horse, sneered at the workers – workers, that simply wanted, someday, to enjoy their pensions while earning a simple modest living, and, were, in their eyes, the subject of ridicule, hence, less than human- find themselves in the position of having to earn an honest day’s pay.

    We The People should take those filth and use them as so many wind chimes until the cacophony of their combined screeching forces the animals of the forest and the fishes of the sea to undergo an evolutionary change and thereby gain the power of speech in order to ask Humanity:

    “We wonder if you could possibly hold it down”?

    Plant more acorns, We are gonna need more trees.

  4. @ Christine,

    On the case of our primary residence, there is blatant fraud. Because this is so we are attacking the mortgage.

    Conversely, in the case of the intentionally mislabeled “Federal Reserve”, there is also blatant fraud.

    The fact the same bankers in residence to the fraud that is the US central bank also occupy the fraud that is the DTCC, DTC, and the twin, privately-owned-until 2008, GSEs, the frauds that are Fannie and Freddie, only add to the necessity this country get its financial act in order.

    Some among the more enlightened on this planet are in the midst of asserting their rights even now; the Greeks for example. They recognize the central banking cancer, based on the English system of banking has spread its filth through the IMF and world bank.

    While most in Europe are embracing the notion that the guilty should be punished and Austerity will never stand as it is simply, more of the same.

    After all, what is more fantastic:

    1: Prepare for the zombie apocalypse?


    2: Investigate Wall Street, Prosecute Wall Street, Incarcerate Wall Street and thereby return the Rule Of Law?

    The US Dollar and the reason it was elevated as the international Sovereign Currency in the first place is because this nation does operate through a system of LAW.

    Plant more acorns, We are gonna need more trees.

  5. Re read elexquisitors recent post

  6. Sometimes it’s good to go back to basics

  7. When you get/ received that NOD i dont ever remember getting one because i was supposedly in the ” modification” ” process” aka point if no return after 90 days, yes, i know we all get that point now, however when i received the notice of trustee sale i sent them a notice ( thank you Neil) within 30 days ( remember its collection of a debt – whether backed by the collateral home i say – imho, is a question of FACT ( and is as we see, the longest roughest argument in the history of asserting our constitutional, legal and if not, human rights) when the beny named is not and never was the beny nor the lender they were and are servicer)

  8. Michael,

    “@ Christine,
    There are those who repeatedly encourage those on this site to take up the cudgel and restore true title and home ownership by “Attacking the mortgage”.
    I believe that advice to be relevant, provided the defrauded, ?homeowner?, has evidence to support their case.”

    Pretty much everyone paying a mortgage can find serious accounting errors. It doesn’t have to be hundreds or thousands of dollars. $20.00 here, $30.00 there, unaccounted for or not justified in the list of “fees” disclosed by the mortgagee at the onset, add up over the years and it becomes a pattern of behavior. Monies not applied where they should have been constitute a breach of contract. Attacking the contract only means that you question the accounting and you want answers. And since most servicers cannot produce the accounting, it is really the easiest way to go.

    It becomes even more obvious when the mortgagors receives both a statement and a NOD: the accounting never jibes. Rather than waiting for foreclosure to be initiated, attacking first on the accounting puts people in the driver’s seat, without having to argue completely irrelevant issues. Besides, every judge relates to “Where the hell did my money go?” Know why? They too are either paying a mortgage or have been paying one. The idea that they’ve been screwed the same way we all have been out of a few bucks doesn’t sit well with anyone. Including judges.

  9. The Devil ate Christine Oh My God

  10. The Illuminati


  11. We have hope in California with the Yvanova Vs new Century case that will clarify Glaski.


  12. “Securirtization Fail”
    “LIBOR manipulation”
    “Derivatives- colateralized debt obligations, credit default swaps”.
    Google: “Bucketeering”.

  13. Banker Suicides: The JPMorgan-CIA-NYPD connection
    Exposing what lies beneath the bodies of dead bankers and what lies ahead for us
    By Doug Hagmann — Bio and Archives February 17, 2014
    184 Comments | Print friendly | Subscribe | Email Us

  14. “First, they laugh at you.
    “Then, they fight you.
    “Then, you win”.

  15. Thank you Elexquisitor. Reality ck

  16. Back 2 reality of recent ruling from Contra Costa County judge (extract) –
    The demurrer to the First, Second, Third, Fourth, and Fifth Causes of Action is SUSTAINED. These claims are premised on the theory that the trustee’s sale was void in that it was not authorized by the true owner of the loan because the attempt to transfer the deed to the mortgage pool trust was made after the trust was closed and was therefore ineffective. While there is a split in authority regarding this theory of relief (compare Glaski v. Bank of America (2013) 218 Cal. App. 4th 1079 with Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 514-515), this court believes the better view is that a borrower, whose obligation remains unchanged, has no standing to complain that a loan was transferred to a mortgage pool trust after the date that the trust closed (Jenkins, supra; Boyce v. T.D. Service Co. (2015) 235 Cal. App. 4th 429, 437) and that even if she has standing, she suffers no prejudice through this type of defect. See Aceves v. U.S. Bank N.A. (2011) 192 Cal.App.4th 218, 232; Knapp v. Doherty (2004) 123 Cal.App.4th 76, 94 99; Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal. App. 4th 433, 443.
    Given that plaintiff does not allege she was not in default or that there was any other defect in the foreclosure or foreclosure process, the demurrer is sustained.

    Notice the court did not state the plaintiff admitted she was in default. Notice the judge denied due process by settling (by presumption) questions of equity (“she suffers no prejudice”) before questions of law (jurisdiction of court to consider defendant as anything but a third party). Bear in mind this is right from the distributed CA judges’ playbook on ruling on foreclosures, used throughout the state.

  17. NPV,

    That’s what I’ve said all along. Even foreclosures were meant to completely destabilize people by pulling the rug under them while the truly important things were being implemented under their nose but they were too caught up in the nitty gritty to get it. There was a need for lots of money very fast: kicking people out and selling to foreign entities allowed it to happen.

    Guess what? It’s working! Look at what is going on here, with people unable to move on one way or the other and stuck in their rut.

    I went to check our lovely FEMA camp, west of the city. That thing is watched like a hawk. Impossible to get anywhere near it. At least, I tried…

  18. @ Christine,

    There are those who repeatedly encourage those on this site to take up the cudgel and restore true title and home ownership by “Attacking the mortgage”.

    I believe that advice to be relevant, provided the defrauded, ?homeowner?, has evidence to support their case.

    At the same time, isn’t it also true that the facts are in as regards American Debt and the intentional deceit that is the English Banking System; in particular, the fraud of the intentionally mislabeled, “Federal Reserve”, “IMF”, and “World Bank”?

    In other words, panic, canned hams, Glenn Beck, bottled water, cave-living and reliance upon leadership rooted in the latest Bush Varietal Species, are simply more fraud.

    No one told We The People our Constitution has been ignored for the past 100 years or so, and We are now on the hook for Trillions in debt, foisted upon US by a thieving, international criminal cartel.

    As a result, therefore, isn’t it fair to say, We The People should, “Attack That Contract” as well.

    Renounce the intentionally mislabeled “Federal Reserve”; repudiate 100 years of fraudulent usurious debt.

    Harvest the wholly discredited “Federal Reserve Notes” as evidence to fraud; pro-rate the release of presently-existing, Abraham Lincoln-created, “Greenbacks” vis-à-vis the collection of the criminally fraudulent, “Federal Reserve” variety.

    Shut down the central banks and audit them: IMF, World Bank, Federal Reserve.

    Re-open the central banks to act as PUBLIC UTILITES, geared toward enriching PUBLIC COFFERS- NOT PRIVATE POCKETS.

    Prune the Bushes and salt the garden wherein they manifest their war-mongering, shallow, witless existence; end proxy war: in particular the latest urgings to pit Sunni against Shia.

    End the Corporatocracy. Break the monopolies: power companies, media, banks, insurance monoliths.

    Force elected politicians to openly renounce the international English, Central Banking Fraud; force a repudiation of the Usury and Baseless Debt.

    Return the Rule Of Law: Investigate Wall Street, Prosecute the bankers, Jail the bankers.

    In short, “Attack the Contract”.

  19. @ iwantmynpv.

    Bravo. I am, once again, in the company of a fellow traveler.

  20. @michaelkeane – why would we need more trees. Once we started hanging bankers from them.. they would simply fund an environmental group that would protest because it is unfair to the trees, and the hanging corpses cause unnecessary stress on the limbs, thereby causing a lasting effect on the branches.

    When people wake up and see who funds most of these groups, and why, they will truly realize the extremely limited nature of our sovereign rights.

    @ christine, we may not have won WWII, but we certainly reaped the benefits of the spoils. Tough to export 70 trillion in debt without reserve status and fractional system.

    It’s pretty simple, keep the folks focused on meaningless crap… i.e. black v. white, english v. spanish, christian v. jew v. muslim etc..

    Now throw in the ridiculous reality tv and other diversion pieces and you will start to get the drift of where they focus the attentions of us average folk…

  21. … Until our children wake up homeless on the very lands our forefathers conquered.

    Sound familiar?

  22. Mike,

    Humans were stupid. They never cooperated. BRICS truly turned the tide. The rest of the world is still following this old model, going back thousand of years, only a few of them truly recorded.

    Not a pretty picture but we brought it upon ourselves. BRICS is moving forward. We aren’t.

  23. Michael,

    You won’t get an argument from me on that. As a matter of fact, the following confirms what you say (which I’ve known for a long time: there is a profound antagonism between Latin/Celtic countries and England, going back for centuries and even longer: Latin/Celtic countries were always sedentary, agricultural and close to earth. England never was. England (of Viking/Saxon origin) could only survive by invading and pillaging for many reasons, the most important one being that they were sea nomads by genetics from the onset.)

    The US fucked it up when they failed to break free from England. And that, they thoroughly failed to do.

    And Zionism wouldn’t exist without England: it was the perfect place for Jewish people, forbidden to own land by dictate of the agrarian-oriented Catholic church, unwelcome in any Latin/Celtic, agricultural country and persecuted by the agrarian Catholic culture. Nothing happens in a vacuum. Had we been taught true history centuries ago, we long would have resolved everything.

    The problem is… the tide has turned for the Western world: we blew our learning. Now, BRICS is in. We’re out. Russia, China and India are finding the peaceful balance to cooperate without war.

    Banks crap came from England. We adopted it. We’ll go down together.

  24. @ Shadowcat,

    First: Thank you for the compliment.

    Also, you are spot-on: The Private, English-banking-based, criminal cartel is fixing to pull the rug from under what is left of the revolutionary intent of our Founding Fathers.

    The “pension plans” are the target; as are proper title and financial independence as inferred through home ownership.

    Of course, nowadays, We The People are a distracted, schizophrenic remnant of what was intended by those that conspired to consign “Tyranny” into the gutter.

    Instead, We The People are now more the product of the gutter than product of rational thought.

    We have squandered our birthright and are an international patsy and laughingstock.

    We squander the lives of our soldiers and contemplate the election of some TOOL who has articulated he seeks counsel on international affairs from his treasonous, war criminal brother…

    The same fool that has articulated he would, knowing the multiple falsehoods, enter US again into yet another misadventure in Persia.

  25. @ Christine,


    The US has continually been the proxy war puppet of English banking interests.

    Google: Mossadeq and Kermit Roosevelt… for starters.

    The Iranian People fully embrace the notion the US are the puppets of British petroleum.

    The British used the American CIA to topple a democratically elected Iranian Colonel because he promised to socialize the Iranian oil fields.

    Then, the US forcibly placed Shah Pahlavi, a degenerate of the first order, as an American puppet to terrorize the populace until such time as he engendered the rise of “Shia Islamic Fundamentalism”.

    Of course, “Sunni Islamic Fundamentalism” has been the flavor of Western choice for decades because the US government, owned and operated by a self-anointed, criminal, private banking cartel, has been exploiting the OPEC nations for generations.

    You may recall Saudi Arabia has chaired OPEC since King Saud.

    I take issue with the notion “the US DID not win WWII”, but, although having studied it for some time, I will wait until another day to argue the point.

  26. @ Neidermeyer,


    The French, in particular, their leader, Charles De Gaulle, attempted to corner the market on gold after the US foolishly allowed themselves to be pimped into Indo-China; first in Korea and then Vietnam.

    The dichotomy of European influence as it relates to England or France, vis-à-vis the US, will always find its root in the American Revolution; after all, the French supported our effort in the face of British Colonialism only to be rebuffed thereafter for decades, through some flawed sense of Frenchaphobia in support of American Anglophilia.

    In other words, our elected representatives turned on our friends in order to support an English banking system.

    Neidermeyer… you and I have been on the same side of the argument before. It is also true that you have inferred disagreement when, in fact, there was never any in the first place.

    For example, you needn’t “disagree … with the Nixon reference”; it is, simply what it is. You seem to imply I disagree with his decision to close the gold window, although, I feel you missed the point…

    To wit: Our debt has been farmed-out as the product of an elaborate scheme of “Bait-and-Switch”; first gold, then petrodollars.

    Our ability, thereafter, in each instance, to collect on our own industrious nature, was, instead, converted into the focus of usurious intent.

    This, and an implacable resistance to common sense as engendered through an understanding of our history, coupled with the equivalent of “modern-day- bear-baiting” – “Bruce Jenner wants to be a girl!”- is what will prove the death knell to this once, great country.

    In the meantime, the English, central-banking system has an agenda and has had for some centuries and it is presently playing out while Rome is choking on the conflagration:

    First, our finances; now, our domiciles.

  27. Neidermeyer,

    The US NEVER fought anyone’s battle but their own. No one asked them to go to Vietnam. They wanted to keep that base in southern Asia, at the border of China. The French were gone and had no desire to stay there. No one asked them to go to Iraq, Afghanistan, Libya, Somalia or wage any war whatsoever. And just to put the proper perspective: the US DID not win WWII. Russia did. Cost them 23 million people. China was taking over Japan and winning. Cost them 20 million people.

    Repeating a lie ad vitam eternam doesn’t make it truth. US: the most violent country in the history of humanity. Ask the natives.

  28. “And banks used the pension money of those same borrowers they were tricking into loans that were falsely represented to be secured by mortgages.”

    Agreed Neil!
    Take a Bite out of Crime…Attack the Mortgage!!

  29. @ Michael Keane ,

    I disagree only with the Nixon reference…. He had to close the gold window , we had no more to sell… We were fighting Frances war to retain their colony in Vietnam and they were “repaying” us by buying short term treasuries to finance the “great society” spending and the war… then when the 1 or 2 year bonds matured France was demanding payment in gold because the world price was many many times higher than the defined $32… We die for their frigging colony , never get even a single thanks and they steal our gold and quintuple their money in a year…

    Fort Knox is empty ,, and the vaults in Manhattan have only a small amount left.

  30. It’s a hell of a lot more than the “end of the banks”. It’s the end of the dollar as reserve currency, the US as hegemon and this country as an economic power. And people better pray that whoever is buying all the private and commercial real estate will redevelop manufacturing worthy of that name. Make no mistake though: even if foreign powers do, indeed, redevelop manufacturing, salaries will never, ever return to what they once were. Indians, Chinese and Arabs aren’t known for paying well. Time to tighten your belts, people.

    Funny though… even Bill Gates is betting on the Yuan versus the dollar. Publicly too.

  31. It’s the End of the Banks as we know it….but I feel fine!

  32. I see Michael has done his Homework.
    Nice Work!

  33. After Bretton Woods, 1942, the ONLY thing the US exported was debt.

    Think about it. Once the US Dollar became THE SOVEREIGN CURRENCY ($32.00 US Dollars per 1 gold ounce as per Bretton Woods), all the countries that agreed with Bretton Woods, “Pegged” their currencies to the US Dollar…

    Therefore, US Dollars were highly sought after and the criminal clowns that own and operate our central bank, the intentionally mislabeled, “Federal Reserve”, were only too happy to export American Debt.

    They did so by inviting their playmates, in what is nothing more than an international, private banking cartel, to purchase American Debt for pennies on the dollar.

    Moreover, they not only purchased the interest on our debt- what most dummies in the US refer to as the $16 Trillion Dollar “Deficit”, they were also enabled to purchase the Treasury Bonds that I act as the true iceberg just below the surface.

    In other words, They own our interest- the “Deficit”, and our principal- the Treasury bonds.

    This ludicrous arrangement was only exacerbated when Nixon closed the “gold window” and, instead, placed the US Dollar as “Sovereign Currency” on the oil standard- hence, the term: “petrodollar”.

    Some believe President Clinton paid down our “Deficit”; he didn’t.

    Instead, he merely kept pace with the interest payments when they came due as owed to private, international, central bankers who are the only ones that derived ANY benefit from this arrangement.

    Those same bankers are in the midst of concealing the fact they are altogether INSOLVENT.

    In fact, they owe 682 Trillion Dollars to their fraudulent, bankrupt, “short-sale bets”- AKA “DERIVATIVES”.

    If their plans to capitalize on the fraudclosure scam they have created worldwide fails to “pan-out”, they want US to believe it is the end of the world; it isn’t.

    Instead, it is the end of the banking pigs and I say “GOOD RIDDANCE”.

    Plant more acorns, We are gonna need more trees.

  34. You forgot their most recent and desperate scam. Stock buybacks.

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