Political Lesson: Run Against the Banks

Posted on November 9, 2016 by Neil Garfield
Don’t wait until we find out what Trump really means to do as President. We should make up his mind and express outrage to him and all sitting Senators, Congressman, Governors, State legislators, law enforcement, County and City Government and even the Courts. This election is not over, unless we let it be over and accept more of the same.
Ever since I took my first peek at what was going on in the marketplace for residential mortgage loans, I have been saying that if politicians want to win and be loved, they should run against the banks. The election last night was determined by hatred and disgust. The pundits tells us it was because of bigotry. But if you take the long view you can easily see how most of the population of the U.S., and indeed around the world, has been subjected to the overall view that they don’t matter. If the election of Obama told us anything it was that as a whole we are NOT a bigoted country. We are an indifferent country, if you measure that by who leads us. The arrogance with which average working people have been treated has been virtually unprecedented. The voters were not indifferent last night. Any politician who continues to be aloof and arrogant about the little guy who doesn’t matter should be challenged at the polls in the next election cycle.
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While the politicians refused to see it, comfortable in their world view and talking points, the anger of working class Americans has grown rather than diminished by the recognition that the banks and other big businesses pulled the rug out from under us by patently illegal acts — and price gouging — especially in drugs and medical services. The anger consumers felt when the financial system was portrayed as collapsing in 2008-2009 grew, rather than diminished in time.
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Consumer/voter rage is directly related to the fact that government did nothing about it except to allow working families to bear the entire brunt of a loss created by the banks. People lost their homes, their jobs, their lifestyle while government touted all the progress we were making. That progress never reached tens of millions of Americans. Meanwhile the banks received trillions upon trillions of dollars from the U.S. Treasury, the Federal reserve, and the theft of investor money capped by the bonus of getting ownership of homes that should never have been subjected to foreclosure proceedings.
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If this election is being called an upset, ask Bernie Sanders whose meteoric rise in the polls was only tempered by the view that he couldn’t win. He couldn’t win because the democratic party apparatus had already set up a rigged system that made it impossible for Hillary Clinton to lose. Between the 400 “super delegates” already pledged before the primaries began, and tipping the procedures and scales by the DNC in so many ways, no candidate stood a chance of becoming the nominee against Hillary Clinton.
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Up until now politicians have been largely successful at misdirection: instead of accepting blame for failure to do their job in office, they have succeeded in getting us to blame each other. Between the Trump and Sanders supporters we actually have a vast majority of Americans who are now insisting that the system change for the benefit of all its citizens. The consistent surveys of people who think the country is headed in the wrong direction clearly point to the fact that their lives are not getting better, their hope is diminished and their world view arises from despair over their economic position in the world.
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Trump was right: this was an election of the people versus a corrupt, aloof and arrogant establishment. Despite the obvious advantages of allowing a fair fight in which Sanders could have won the Democratic nomination and possibly the general election, the Democrats chose a candidate who was deeply flawed and deeply indebted to Wall Street. The Democrats may well have selected the only candidate who would lose against Trump. Such is the “wisdom” at the top.
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While Trump was also literally indebted to Wall Street through his loans, he never lost track of the fact that people were mad as hell. The party apparatus of both major political parties ignored that, which made the angry voters even angrier. A review of the numbers shows that in virtually every county and precinct the strength of that hatred resulted in lop-sided support for Trump as high as 80% or more.
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We have all heard the scream. Now it is time to inform those who are still in Washington DC know that the rigged system has expired. It is the follow through by voters that will determine how the country goes- writing to Congressman and Senators, law enforcement and even the courts, will seal the deal. Let them know that you were voting for real change where the average American citizen is priority #1. There is nothing like an active, informed citizenry to make changes that throw out old self-serving ideas and the politicians who espouse them.
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Don’t wait until we find out what Trump really means to do as President. We should make up his mind and express outrage to him and all sitting Senators, Congressman, Governors, State legislators, law enforcement, County and City Government and even the Courts. This election is not over, unless we let it be over and accept more of the same.

Filed under: foreclosure | Tagged: , , , , , , , , , | 15 Comments »

MORTGAGE BACKED SECURITIES: LEGAL COUNTERFEITING

Posted on February 6, 2011 by Neil Garfield

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

EDITOR’S NOTE: If you want to get the FEEL of what just happened in our world of finance and the ensuing effects on our economy, you might be better off reading a book like “Moneymakers: The Wicked Lives and Surprising Adventures of Three Notorious Counterfeiters” (Penguin, $27.95), Ben Tarnoff. It might come as some surprise that proprietary issuance of currency was all the rage in this country and was used not only legally and illegally, but as an instrument of warfare. Ben Franklin and others saw the “moral hazard” of allowing for paper money because the paper had no intrinsic value — unlike the universal perception of gold or silver.

Eventually in 1862 the U.S. Government made government issued currency “legal tender” but there were so many loopholes that while it had an effect, it has yet to take hold 150 years later.

Banks issued their own Banknotes in early U.S. History and lately, for the past 20 years, they have returned to the same practice calling them derivatives, mortgages backed securities and other exotic names. The Bank Notes, as observed by many during that period had no value except that they supposedly DERIVED their value from the gold that the bank had on deposit. They were not the first “derivatives” but they were the most important up to that point in history.

In a 1996 article Alan Greenspan articulated the free market view that the value of those bank notes or proprietary currency would be resolved in a free market as people found out which banks were issuing more bank notes than they could support. In fact, he predicted that proprietary currency would take over as a the principal currency stock of the world — hardly a difficult prediction since it had already happened by the time he wrote that article.

Now for every monetary unit of value issued by any government in the world, the private sector has issued 12 units. In other words the proprietary currency volume is 12 times as big as the fiat currency — fueled largely by the use of derivatives that derived their value from credit instruments, most of which were loans that were supposedly backed by notes and mortgages and which now are like rare earths when it comes to producing one in the flesh.

In 1998, Congress passed and Clinton signed into law the death knell of the American economy. The law specifically excluded this proprietary currency from regulation of ANY sort from government. In short, they created a sovereign country out of the oligopoly that controlled Wall Street and hence the world of finance. Counterfeiters are usually put in jail. But certain types of counterfeiters have prospered as this article and the book it reviews shows clearly.

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Early America, Ripe for Counterfeiters

By NANCY F. KOEHN

NY Times

“THERE is properly no history; only biography,” Ralph Waldo Emerson wrote in 1841. In “Moneymakers: The Wicked Lives and Surprising Adventures of Three Notorious Counterfeiters” (Penguin, $27.95), Ben Tarnoff lends ample credence to that notion. He shows how three con men were able to thrive in America’s early days because of a weak central government, an often-chaotic banking system, a turbulent economy and an entrepreneurial populace.

Few countries, Mr. Tarnoff writes, “have had as rich a counterfeiting history as America.” Creating fake currency, he states, “gave enterprising Americans from the colonial era onward a chance to get rich quick: to fulfill the promise of the American dream by making money, literally.”

Mr. Tarnoff, who graduated from Harvard in 2007 and has worked at Lapham’s Quarterly, focuses on the lives of three counterfeiters who lived in the 18th and 19th centuries. Taken together, he writes, these three biographies “tell the story of a country coming of age — from a patchwork of largely self-governing colonies to a loosely assembled union of states and, finally, to a single nation under firm federal control.”

The first subject of this rollicking good read is Owen Sullivan, an Irish immigrant who was born around 1720 and originally was a silversmith in Boston. In the seven years he was a counterfeiter, he built a loosely organized team called the Dover Money Club.

Like his partners, Sullivan was behind bars several times in the course of his career. Until his final arrest, however, these encounters with the law were small detours on an entrepreneurial journey in pre-industrial crime. When he was hanged in New York City in 1756, he claimed to have forged more than £25,000 worth of colonial money.

Sullivan capitalized on a number of prevailing conditions in the colonies: the collective thirst for liquidity to fuel a growing economy, the often unruly nature of the financial system, and scanty law enforcement.

Underlying these factors was a deep, abiding ambivalence about paper money. Many early Americans, like Benjamin Franklin, recognized the pressing need for paper money as a medium of exchange and a store of value in a world where specie like that made of gold and silver was in short supply.

At the same time, paper money made the economy more mercurial. Unlike precious metals that could be bought and sold as commodities, paper money had no intrinsic value; it could become worthless overnight. Paper money had other dangers, including a greater vulnerability to inflation. Cognizant of all this, the delegates to the Constitutional Convention in 1787 voted against giving the federal government explicit authority to print paper notes, coming down squarely “on the side of a hard currency under national control.”

But the demand for a ready medium of exchange and a recognized measure of value in the burgeoning American economy continued to outstrip the meager supply of precious metals in circulation.

By the early 1800s, paper money in the form of individual bank notes had returned in force. And with it came enterprising counterfeiters like David Lewis (1788-1820), who worked the rural counties of southwestern Pennsylvania forging notes and stirring up populist rage against financial elites.

Lewis became something of a popular hero, known for audacious jailbreaks and sporadic generosity toward strangers. Mr. Tarnoff argues that in the financial panic of 1819, crime acquired a certain status. “Not only was it a way for the dispossessed to make a living, but compared with the perfectly legal frauds perpetuated by the nation’s banks, lawbreaking seemed honest.” Lewis was apprehended for the last time after being shot in the arm and leg. He died from these injuries in a jail in central Pennsylvania.

Finally, Mr. Tarnoff recounts the story of Samuel Upham (1819-1885), a Philadelphia shopkeeper who, in 1862, began printing $5 Confederate notes, which he sold as “mementos of the Rebellion” for a cent each. Along the bottom of each note, he included a strip with the following lettering: “Fac-Simile Confederate Note — Sold Wholesale and Retail by S. C. Upham, 403 Chestnut Street, Philadelphia.”

Backed by heavy newspaper advertising, Upham’s souvenir notes became best sellers, and at some point he must have known that they were no longer being viewed as facsimiles, Mr. Tarnoff says. Borne by Union soldiers, they found their way into the Confederate money supply as counterfeits, and helped fuel rampant inflation and monetary disruption.

As the war progressed, Confederate authorities became convinced that Upham and others were part of a Union campaign to wage economic war on the South. There is no historical evidence that Abraham Lincoln or his administration was involved in such tactics.

But Upham and other moneymakers did play a de facto role in the Union war effort. As Lincoln and his Treasury head, Salmon Chase, understood all too well, the military prospects of either side owed much to the reliability of their respective money supplies. Without a stable, trustworthy form of liquidity, neither combatant could continue to wage war while sustaining its citizens.

Responding to this imperative, Congress in 1862 passed a law that, for the first time since the Revolutionary War, made money printed by the federal government legal tender. A year later, legislation set up federally chartered banks that printed a uniform national currency — making counterfeiting more difficult, though not impossible.

Mr. Tarnoff is an engaging writer who has a fine eye for detail and the relevance of larger, historical forces. But the book ignores a larger question, raised by its description of early American capitalism as an “evolving confidence game” that oscillated “between manic exuberance and total collapse”: Is there something in the speculative nature of the American character and the nation’s economic beginnings that continues to produce people like Bernard Madoff, as well as excessive volatility in the system itself?

Though this and similar questions are unanswered, they do not tarnish the power of the stories that Mr. Tarnoff so delightfully uses to teach us history.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , | 4 Comments »

COAL ECONOMICS AND POLITICS: REALITY CHECK — OBAMANOMICS

Posted on May 10, 2008 by Neil Garfield

 

It is Obama who will ironically do the most to preserve the way of life in West Virginia, Kentucky and other states — even though they vote overwhelmingly against him out of fear, prejudice and disinformation

The reality is that coal is going to be with us for a while and perhaps permanently. Regardless of who is President, despite all the concerns about the noxious fumes and heat emanating from mining and firing coal, it will be many years before demand for coal decreases. Technology, innovation, and alternative energy sources will play an increasing role in providing the power to run our homes, offices, hospitals and factories. But the process will take many years and perhaps many decades before the time comes that demand for coal decreases.

Thus the people of West Virginia, Kentucky and other coal producing states are not in jeopardy — but their children or grandchildren might be doing something other than mining. This is the reality.

Politics being what it is, results in pandering to the worst fears of voters and getting them to believe that the candidate speaking is the only one who will not let coal mining decline and will fight to keep them in business. It is a lie.

No candidate can stop this progression and no candidate is going to fight in favor of coal, which is perceived now as a major source of emissions and heat. It is political suicide for a candidate to say what Clinton is saying anywhere outside of West Virginia. She doesn’t care because she has no chance of elected but she wants to make a big finish.

The problem with that is once again people are being mislead and are being coerced into voting against themselves. Coal’s survival depends not on running against global warming but running with it. Someone who promises to fight for you against the environmentalists is telling you a whopper.

But someone who promises innovation and technology dividends might just be the person who can save you in spite of yourselves. And supporting that person will hasten the resurgence of coal and your economic security as well as the economic security of your country, your children and your grandchildren. 

Recapture of the heat from coal fired plants, some of which spew 650 degree or more superheated air into the atmosphere could turn any coal fired plant making steel, concrete or even electric power into augmented power.

Every coal fired plant could be a clean source of additional energy if we recapture the energy being wasted.  Every emission being discarded randomly into the environment could be captured as well and buried where it will do no harm.

Paradoxically it is the resistance of the mining lobby and mining interests, who are ill-informed about Obama and ill-advised in their direction, who could derail what would otherwise be a perfect outcome for West Virginia and Kentucky.

The abundance of coal reserves in the U.S. could thus paradoxically become one of the major green initiatives of the next administration and congress. Who would lead this?

Fortunately, whether you vote for him or not, Obama is very likely to be our next President. It is fortunate because he is the first person in politics to break the logjam, break the hold of special interest lobby groups and actually use innovation, technology and creative -in depth thinking and action to create an army of 750,000 active volunteers, 1,300,000 donors who have freed him from having to respond to any BIG DOG, and who will use the same techniques to overwhelm the opposition.

Obama is unstoppable precisely because he alone understands the significance of community organizing and he is unique in being the only one who has a successful track record in doing it, even under the most despondent circumstances. In this case, the community to organize is more daunting than the South Side of Chicago — it is now the country and eventually the world. But the dynamics of despair, fear, hopelessness versus empowerment, hope and relevance are the same. 

For him, American innovation and problem solving from the bottom up is his first priority. For every other candidate in recent years it has been through regulation and selling out to groups who already had too much power. With the support of the American people and indeed the world behind him, Obama is the one who can make this happen for coal and hundreds of other industries, large and small. 

It is therefore Obama who will ironically do the most to preserve the way of life in West Virginia, Kentucky and other states — even though they vote overwhelmingly against him out of fear, prejudice and disinformation

Filed under: CORRUPTION, currency, education, energy, foreign relations, oil, politics | Tagged: , , , , , , , , | Leave a comment »

Thomas Friedman Calls Out Clinton and McCain on Gas Tax Proposal

Posted on May 2, 2008 by Neil Garfield

The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

Good for Barack Obama for resisting this shameful pandering.

 

April 30, 2008
OP-ED COLUMNIST

Dumb as We Wanna Be

By THOMAS L. FRIEDMAN

It is great to see that we finally have some national unity on energy policy. Unfortunately, the unifying idea is so ridiculous, so unworthy of the people aspiring to lead our nation, it takes your breath away. Hillary Clinton has decided to line up with John McCain in pushing to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for this summer’s travel season. This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.

When the summer is over, we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit.

No, no, no, we’ll just get the money by taxing Big Oil, says Mrs. Clinton. Even if you could do that, what a terrible way to spend precious tax dollars — burning it up on the way to the beach rather than on innovation?

The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

Good for Barack Obama for resisting this shameful pandering.

But here’s what’s scary: our problem is so much worse than you think. We have no energy strategy. If you are going to use tax policy to shape energy strategy then you want to raise taxes on the things you want to discourage — gasoline consumption and gas-guzzling cars — and you want to lower taxes on the things you want to encourage — new, renewable energy technologies. We are doing just the opposite.

Are you sitting down?

Few Americans know it, but for almost a year now, Congress has been bickering over whether and how to renew the investment tax credit to stimulate investment in solar energy and the production tax credit to encourage investment in wind energy. The bickering has been so poisonous that when Congress passed the 2007 energy bill last December, it failed to extend any stimulus for wind and solar energy production. Oil and gas kept all their credits, but those for wind and solar have been left to expire this December. I am not making this up. At a time when we should be throwing everything into clean power innovation, we are squabbling over pennies.

These credits are critical because they ensure that if oil prices slip back down again — which often happens — investments in wind and solar would still be profitable. That’s how you launch a new energy technology and help it achieve scale, so it can compete without subsidies.

The Democrats wanted the wind and solar credits to be paid for by taking away tax credits from the oil industry. President Bush said he would veto that. Neither side would back down, and Mr. Bush — showing not one iota of leadership — refused to get all the adults together in a room and work out a compromise. Stalemate. Meanwhile, Germany has a 20-year solar incentive program; Japan 12 years. Ours, at best, run two years.

“It’s a disaster,” says Michael Polsky, founder of Invenergy, one of the biggest wind-power developers in America. “Wind is a very capital-intensive industry, and financial institutions are not ready to take ‘Congressional risk.’ They say if you don’t get the [production tax credit] we will not lend you the money to buy more turbines and build projects.”

It is also alarming, says Rhone Resch, the president of the Solar Energy Industries Association, that the U.S. has reached a point “where the priorities of Congress could become so distorted by politics” that it would turn its back on the next great global industry — clean power — “but that’s exactly what is happening.” If the wind and solar credits expire, said Resch, the impact in just 2009 would be more than 100,000 jobs either lost or not created in these industries, and $20 billion worth of investments that won’t be made.

While all the presidential candidates were railing about lost manufacturing jobs in Ohio, no one noticed that America’s premier solar company, First Solar, from Toledo, Ohio, was opening its newest factory in the former East Germany — 540 high-paying engineering jobs — because Germany has created a booming solar market and America has not.

In 1997, said Resch, America was the leader in solar energy technology, with 40 percent of global solar production. “Last year, we were less than 8 percent, and even most of that was manufacturing for overseas markets.”

The McCain-Clinton proposal is a reminder to me that the biggest energy crisis we have in our country today is the energy to be serious — the energy to do big things in a sustained, focused and intelligent way. We are in the midst of a national political brownout.

Filed under: bubble, CORRUPTION, currency, education, energy, foreign relations, GTC | Honor, inflation, interest rates, oil, politics | Tagged: , , , , , , , , | 2 Comments »

Mortgage Meltdown: Fixing Broken Mortgages — Getting New terms

Posted on May 1, 2008 by Neil Garfield

CLINTON — MCCAIN FORECLOSURE FREEZE GETS COLD SHOULDER BUT SOUNDS GOOD

Well here is a version (SEE ARTICLE BELOW) of what we have been pushing for months —- changing the terms of the mortgages so that the homeowner can stay in the house and the mortgage can be modified, sold or recast for capital accounting. This is a lot more sophisticated than the “mortgage freeze” proposed by Clinton and McCain and it is working already so we can’t dispute the success.

  • The problem with a “mortgage foreclosure freeze” is that it is a sound bite that doesn’t really mean anything — like the gas tax holiday. It doesn’t address any of the problems but it gives rise to the illusion that the homeonwer is getting some relief.
  • The problem for Obama is that he sounds like he is against providing relief because he understands the nuances of how to get that relief — without pandering for votes. People don’t like nuance and don’t have the time for complex answers. So they vote against themselves based on sound bites, hoping gas prices will go down (they won’t) and that their house will be saved by just doing one thing like a freeze on foreclosures that lasts ninety days (that won’t work either).

There is no Clinton-McCain plan for relief because no order, legislation or rule is pending that will freeze anything and nothing is pending. Hillary and John are just blathering. They haven’t ACTUALLY proposed the plan by introducing a bill on the Senate floor. The plan of these pandering politicians is get elected (the people be damned): the method is to make use of time-honored sound bites that consist of misleading statements and outright lies. The truth is that neither McCain nor Clinton has a clue about gas prices or mortgages.

Although this trading of mortgage obligations is obviously providing some relief, it doesn’t address the root cause of the mortgage meltdown. And much as I don’t care for the people or their methods who perpetrated this fraud on the world, there is no REAL solution unless some value is restored to the balance sheet of financial institutions and investors who purchased the collateralized mortgage obligations. Thus combining attributes of this plan with a more comprehensive plan to restore the capital reserves of financial institutions and investors would be preferable.

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HOUSING

Investors move in to save broken mortgages

Homeowners who owe more than their property is worth are offered new terms.

By E. Scott Reckard
Los Angeles Times Staff Writer

May 1, 2008

Jared Lanning, struggling to pay a home loan on which he owed more than his house was worth, was thinking he might just let the lender take back the property. Then he got a call one evening from an Orange County investor who had bought his mortgage.

“I want out of your loan,” said the investor, Evan Gentry, chief executive of G8 Capital of Ladera Ranch, who offered to lower the balance and the interest rate.

Lanning, a crane operator in Englewood, Colo., was skeptical. A phone pitch, after all, had led to his getting the unaffordable loan in the first place. But Gentry was legit: He helped Lanning get a new Federal Housing Administration-insured mortgage — with a $12,000 lower balance. Gentry also paid $5,000 in closing costs for the new loan. Lanning’s new monthly payment is $200 less than before.

Investors — including big fish like former Countrywide Financial Corp. President Stanford Kurland as well as smaller fry like Gentry — are buying loans on the cheap from lenders who want them off their books. By paying less than face value for the mortgages, the new holders can modify loan terms, including shrinking the amount owed, and still make money.

With some economists projecting 2 million foreclosures this year, legislators and regulators are hoping to encourage wide use of this model. They want lenders and investors in mortgage bonds to mark down what borrowers owe and then provide them with lower-cost loans. It’s a tricky business: No one wants to be seen as bailing out speculative buyers or imprudent lenders, but they also don’t want mass foreclosures to devastate neighborhoods and the economy.

The Federal Deposit Insurance Corp. described the problem Wednesday as “a self-reinforcing cycle of default, foreclosure, home price declines and mortgage credit contraction, the likes of which we have not experienced since the 1930s.” The agency is proposing that the government lend $50 billion to 1 million borrowers to help them replace unaffordable loans.

Sub-prime mortgages with interest rates ratcheting higher have proved less of a problem than once feared, because interest rates overall have dropped. But a “toxic combination” of falling home prices and borrowers who can’t afford even the initial low rates on adjustable loans is now the issue, FDIC Chairwoman Sheila C. Bair said in an interview this week.

“Many more borrowers are under water,” she said. “And many more are just walking away.”

Many people bought homes with nothing-down loans at the peak of the housing boom — 29% of all buyers in 2007 made no down payments, Treasury Secretary Henry S. Paulson Jr. said recently. Others have sucked all their equity out of their properties with refinancings.

According to Moody’s Economy.com, some 8.8 million Americans — more than 10% of all homeowners — owe more than their houses are worth, although a Mortgage Bankers Assn. economist contended the figure was lower, perhaps 8%. In any case, there is wide agreement that many of those troubled borrowers have proved surprisingly ready to abandon their properties, even when lenders offer to modify their loan terms as they were encouraged to do by the Bush administration.

“We are working with borrowers to keep them in their homes, but a lot of them really don’t want to stay,” said Babette Heimbuch, chairwoman of FirstFed Financial Corp. of Los Angeles, a savings and loan operator that specialized in adjustable-rate mortgages, including many that were made without full documentation of borrowers’ incomes.

FirstFed has about $6.3 billion in loans on its books. It said that $667 million of that balance, more than 10%, was delinquent or in foreclosure as of March 31, up from just $46 million a year earlier. FirstFed said Wednesday that it lost $69.8 million, or $5.11 a share, during the first quarter this year compared with a profit of $8.4 million, or 61 cents, a year earlier. It set aside $150.3 million for loan losses during the quarter, up from $3.8 million during the first quarter of 2007.

Because FirstFed kept most of its loans on its books rather than selling them, it should have been easier for the company to work with borrowers to modify the loans. Heimbuch said FirstFed forecloses only after analyzing 10 other options to offer the borrower, including lowering the interest rate; changing to a five-year, fixed-rate loan requiring payment of interest only; and writing down the loan balance.

Still, she said, up to 50% of borrowers who miss payments don’t respond to letters and repeated telephone calls to see if something can be worked out.

Some customers had acquired second mortgages and couldn’t make new arrangements with the other lender, she said. “I think some know they told us the wrong income and are afraid to come clean, though we would still work with them . . . to keep them in their homes if possible.”

For struggling borrowers, it’s a big mistake not to return such calls these days, said Gus A. Altazurra, a veteran mortgage executive who recently raised $10 million from private investors to buy and modify loans for which homeowners are still making payments.

“They’re probably going to help you, given the current situation,” said Altazurra, whose Irvine-based Vertical Fund Group has been negotiating with lenders of all sizes to buy loans. He said “a flood” of mortgages went up for sale in April after lenders closed their books on a horrendous first quarter.

Altazurra, who has paid as little as 31 cents on the dollar for some loans, said the terms of some mortgages made at the peak of the boom were hard to believe. One loan he bought from a Texas bank was to a borrower with a very low credit score — 484 — who refinanced and cashed out 100% of the equity in the property, he said.

Gentry, the other Orange County loan buyer, said he had obtained commitments from investors to provide $100 million in capital for workouts on loans that have stopped paying, current loans that can no longer be sold and foreclosed properties. He has bought nearly $50 million in mortgages and property so far.

Gentry purchased Lanning’s loan in a pool of mortgages from a San Diego lender that was going out of business. He said that on average his private venture was paying 70 cents to 80 cents on the dollar for loans like Lanning’s that were still current, and “less if the loans are nonperforming.”

Lanning had no home equity left — and thus had little incentive to keep sacrificing to make payments — before he got the smaller, cheaper FHA loan. Now his outlook has changed.

“We can’t do anything frivolous now,” he said. “But if we do it right, we have enough. That other loan was just pushing us over the top.”

Filed under: bubble, Bush, CDO, community banks, CORRUPTION, credit unions, currency, education, Eviction, foreclosure, foreign relations, GTC | Honor, inflation, interest rates, Investor, McCain, Mortgage, Obama, politics, securities fraud | Tagged: , , , , , , , | 3 Comments »

Clinton Gas Tax is Vapor

Posted on April 30, 2008 by Neil Garfield

Gas prices are up for several reasons, the primary one being that the oil companies are squeezing every last penny of profit out before the inaugeration of the new, presumably Democratic President and a congress that is heavily weighted Democratic. 

  • THERE IS NO CLINTON PLAN OR PROPOSAL: Any Gas Tax “proposal” submitted by a Presidential candidate is straight pandering. Clinton is not President, there is no strong Democratic congress, and she has not neither the existing executive power nor any proposed bill on the floor of the Senate to reduce Gas Prices or Gas Taxes. She knows it will never happen and hopes that voters won’t figure that out.
  • Her suggestion that the plan would go into effect this summer is a blatant lie. 
  • Her suggestion that she would pay for it with a windfall profits tax on oil companies is also made to the voters of Indiana but not to the Senate where it could be considered. Of course it won’t pass as long as oil money continues to flow into the DC lobbyists and the Senators and Congressman they own. 
  • Obama’s answer is reality — no recourse without reforming Washington. Clinton’s view is that Indiana voters are more interested in sound bites than good sense. I hope she is wrong.
  • OBAMA SAYS IT IS NOT PRUDENT TO EVEN MENTION IT AND ALL ECONOMISTS AGREE WITH HIM:Even if Clinton’s Plan was eventually adopted, it would not take effect until over one year from now. It can’t take effect this summer because she isn’t President and she has proposed the tax holiday to the people but not to Congress where it could happen. 
  • What would happen is that one year from now, when Gas prices are $6 per gallon, and it costs $90 to fill your tank some ten times over the summer ($900!!), you might save $30 over the summer. AND that $30 would be taken out of the infrastructure money for repairing roads, bridges and tunnels, reducing employment. 

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Clinton Scheme Blows Up: Barbara Reynolds Set Up Wright Press Club Appearance

Posted on April 30, 2008 by Neil Garfield

May 3, 2008: Two interesting things about this posting.

The first is that while I posted it many days ago it has been the number one posting on this site every day.

The second is that it obviously attracted the attention of the Clinton attack machine who have tried to get me to allow comments that suggest that this entire story, which has done so much obvious damage to Obama, was actually a plot by Obama.

I almost let it go up as a comment until I heard the exact same words spoken by Clinton surrogates on TV. I concluded it was a plant and I rejected it. I also concluded that Errol Louis might have stumbled onto something important and that the thought of having the Clintons back in the White House is not nearly as appealing to me as it was a few months ago.

ALSO SEE 

http://www.nydailynews.com/opinions/columnists/louis/index.html

New York Daily News columnist Errol Louiswrites:

The Rev. Jeremiah Wright couldn’t have done more damage to Barack Obama’s campaign if he had tried. And you have to wonder if that’s just what one friend of Wright wanted.
Shortly before he rose to deliver his rambling, angry, sarcastic remarks at the National Press Club Monday, Wright sat next to, and chatted with, Barbara Reynolds.

A former editorial board member at USA Today, she runs something called Reynolds News Services and teaches ministry at the Howard University School of Divinity. (She is an ordained minister).

It also turns out that Reynolds – introduced Monday as a member of the National Press Club “who organized” the event – is an enthusiastic Hillary Clinton supporter. …

I don’t know if Reynolds’ eagerness to help Wright stage a disastrous news conference with the national media was a way of trying to help Clinton – my queries to Reynolds by phone and e-mail weren’t returned yesterday – but it’s safe to say she didn’t see any conflict between promoting Wright and supporting Clinton.

Filed under: CORRUPTION, healthcare, Mortgage, Obama, politics | Tagged: , , , , , | 6 Comments »

Mortgage Meltdown: Conservatives do not Conserve and Liberals do not Liberate

Posted on April 13, 2008 by Neil Garfield

The bottom line is that regardless of who steps into the oval office next January, nothing will actually change unless the dynamics of political participation by U.S. Citizens changes. It isn’t enough to vote. It isn’t wise to trust any leader to do the right thing. And it isn’t wise to trust that once a policy or program has been approved it will be ever be executed. It is up to us to hold their feet to the fire and to remain interested despite the constraints and demands of our lives. That fire will burn us and not them if we don’t wake up to this essential obligation of citizenship.

 

Both the Conservative and Liberal seek “assistance” from government, which explains that despite the slogans and speeches, government has grown to mammoth proportions regardless of whether it was dominated by democrats (generically liberal) or republicans  (generically conservative). Both seek access to the Public Treasury for their agendas, which explains why spending increases regardless of who is in power. The conservatives seek to direct the money to the top while the liberals seek to direct the money to the bottom.

 

Our citizens end each month further in debt, with less value in assets, and declining income that even a second or third job won’t cure. This is explains why no fiscal stimulus package, and no bailout will “assist” anyone. The ONLY thing that will save our economy, our sovereignty and our economic and political power here and abroad is a fundamental shift in perception and action directed toward revitalizing our population. 

This starts with taking the stress out of where they are going to live (STOP THE FORECLOSURES AND EVICTIONS) and whether they will have something to eat (10% of our population is already on food stamps). It includes medical care (we pay more for medical care than any other country on the planet, yet we deliver less, die earlier and have a higher infant mortality rate) and education (having slid to third world status) that is meaningful for their participation in society and the world. And it means telling the truth to them without using nice-sounding names of programs that are based in self-interest and potentially evil intent. 

 

 

 

Perhaps more than anyone else the one person the current “Conservative” economic policy can be traced to is Andrew Mellon, who served under the three Republican Presidential administrations as Secretary of the Treasury. The roaring 20’s, having antecedents dating back to the Civil War, and fueled by unbridled greed inspired by Mellon and his group of “leaders” created the events leading up to the Great Depression . Mellon of course made a ton of money in various endeavors, just like the other “robber barons” of his age. He was ardently “conservative” in his economic and political philosophy, or so he thought. 

 

If you asked for a definition of a conservative from Mellon or anyone else who is of like mind it would all boil down to one central idea: that the purpose of government is to “assist” private enterprise in creating jobs and wealth for the country. In fact, conservatives conserve nothing and have no desire to conserve anything, except their own rising wealth and power. Looking after one’s own interests is hardly sufficient for condemnation. Catering to one group (corporate interests, and specifically the largest of them) does nothing to conserve the most precious resource any country posses: the people who are citizens and residents of that country. 

 

The inevitable consequence of the so-called conservative philosophy is to concentrate wealth and power into the hands of an ever smaller number of people who eventually will be so taken with themselves that they will commit acts of outright theft and fraud with the assistance of a government that either passes laws to make such acts legal or which does not enforce the laws that clearly describe those acts as illegal. This is clearly the outcome we have been dealing with repeatedly with the boom and bust cycles wherein the corporate titans wring every last piece of value from the treasury of the of the government, from the citizens of this country and from the governments and citizens of other countries. 

 

And yet “conservatism” masquerades as freedom from government interference when in truth without government, the greatest fouls committed in the economic marketplace could never have succeeded without the active assistance of government including direct subsidies for acts that were and are contrary to the interests of the country — like giving tax breaks to corporations that ship jobs overseas. Like most things in politics it is a lie masquerading as the truth through the mouths of “leaders” who speak with a stright face and a forked tongue. 

 

We have a habit in politics to name things in a way that will distract the public from the real intent of the perpetrators of any particular agenda. We’ll stick with conservatism and liberalism here since that is a current topic of political discourse in this presidential season. 

 

If you asked for a definition of a liberal a/k/a progressive from anyone on that side of the spectrum it would boil down to one central point: that everyone in the country, especially the poor and disenfranchised should receive the assistance of government in seeking a better life.

 

So both the Conservative and Liberal seek “assistance” from government, which explains that despite the slogans and speeches, government has grown to mammoth proportions regardless of whether it was dominated by democrats (generically liberal) or republicans  (generically conservative). Both seek access to the Public Treasury for their agendas, which explains why spending increases regardless of who is in power. 

 

Differences do emerge however. As to conservation of resources (especially our people) conservatives treat our resources as infinite and relatively unimportant, relying upon technology to make up the difference when we run out of something. They completely miss the point that when you run your people into the ground, you have the figurative equivalent of an army that is too exhausted to fight. The battle and the war will be lost if you press forward in that condition. 

 

This is at least an adequate description of the vast majority of the American public — they are exhausted, beleaguered, and demoralized. It is not hard to see how innovation, education, the dollar itself, and the financial markets are in a near state of collapse. Led by trickle down enthusiasts, we have depleted our human resources to the point where we have nowhere to go and the rest of the world knows it. 

 

Our citizens end each month further in debt, with less value in assets, less relevant knowledge that is valued in the marketplace, and declining income that even a second or third job won’t cure. This is explains why no fiscal stimulus package, and no bailout will “assist” anyone — except the usual culprits at the top. 

 

The ONLY thing that will save our economy, our sovereignty and our economic and political power here and abroad is a fundamental shift in perception and action directed toward revitalizing our population. 

 

The Liberal  also treats our resources (natural and human) as infinite but differs in that they identify such resources as important. A nice step, but useless without positively pursuing policies that (as an actual result) conserve and revitalize our people, our economy and our societal fabric. Like their conservative cousins they tend to rely on slogans and speeches rather than accountability and results.

 

The rather obvious conclusion is that we must seek a new political route. It appears as though the American public has been awakened to this need but has been so misinformed and denied access to the truth that they cannot identify by themselves which policies hold the most promise for relieving the ever-worsening conditions in this country and around the world. The voters have been bombarded by interesting but unimportant facts and theories and slogans and speeches. We are seduced into voting against our own interests by exchanging one “leader” for another without knowing that both subscribe to the same dogma and both are seeking to further their own self aggrandizement of power and wealth.

 

In that sense, while the words could have been different, Obama correctly identified the problem with certain voters. They have been abandoned, lied to, and defrauded by promises that were never intended to be kept. They are angry and bitter about their loss of jobs, wealth, and prospects. When voters get angry they seek change, but rarely get it. Obama’s “small town” remarks were extremely uncomfortable for a lot of people to hear, but they were true. 

 

Whether you are a supporter of Obama, Clinton or McCain, if you want change, you are going to have to work for it from the ground up. If you rely on the person onstage to cure your ills because they will “fight” for you, they are telling you they have no intent to win — but they would very much like to create the illusion that they are trying to do something for you. They are not and they won’t unless you insist on it. Obama at least, as been courageous enough to speak the truth and to pursue a nuance in politics that I don’t think we have seen since Kennedy or Lincoln. Most people, even the ones that support him, get it at a gut level but really do not understand the dynamics involved. There is no way to say that without sounding condescending. 

 

The bottom line is that regardless of who steps into the oval office next January, nothing will actually change unless the dynamics of political participation by U.S. Citizens changes. It isn’t enough to vote. It isn’t wise to trust any leader to do the right thing. And it isn’t wise to trust that once a policy or program has been approved it will be ever be executed. It is up to us to hold their feet to the fire and to remain interested despite the constraints and demands of our lives. That fire will burn us and not them if we don’t wake up to this essential obligation of citizenship.

Filed under: bubble, CDO, currency, Eviction, foreclosure, GTC | Honor, inflation, Investor, Mortgage, politics | Tagged: , , , , , , | 3 Comments »

MORTGAGE MELTDOWN REMEDY: SEND THIS NOW TO YOUR STATE SUPREME COURT AND LOCAL COURT SYSTEM

Posted on March 8, 2008 by Neil Garfield

The problem for homeowners is that however many ideas are put forward they won’t be effective in time to save most people, they won’t be in time to save the economy, and they won’t be in time to save our currency from further wrenching devaluation. It is the fierce urgency of now that cannot even wait to the election or January 20, 2009. There is only one place where immediate relief can be achieved — the Court System. There are constitutional impediments to interference with the mortgage foreclosure process. Yet there is authority in the judicial system to change the rules as long as it does not significantly impede or in this case, it should enhance access to the courts and the ability to mount a credible defense to foreclosures on predatory or fraudulent loans. 

These are the rules that could be enacted by each court in the land that would [a] slow down the process and [b] protect borrowers from the steamroller of lender foreclosures and [c] protect lenders, investment bankers and investors from themselves. These rules preserve and enhance due process so that the unsophisticated borrower is not wiped out again by his or her lack of knowledge. 

 

Emergency Provisional Rules

Mortgage Foreclosures

These emergency rules of civil procedure apply to all foreclosures on all property, real or personal, initiated on or before January 1, 2007. No Judgment shall be executed, or if already executed, enforced, and no order of removal or eviction or seizure related to foreclosure shall be executed, or if already executed, enforced unless a Court of competent jurisdiction shall have executed an order finding as a matter of law and fact that the foreclosing party(ies) have complied with each and every provision contained herein.

1. Every Petition for Foreclosure and/or every action undertaken by a foreclosing party prior to seeking recovery or seizure, or occupancy of property, shall require the foreclosing party(ies) to file a verified complaint or affidavit alleging the facts supporting the claim for relief, executed by a person with actual knowledge of all facts alleged. The executing party on said verified Petition or affidavit shall affirmatively allege and actually be available for the taking of testimony by deposition or at an evidentiary hearing in the jurisdiction in which the property is located.

2. Each such Petition or Affidavit shall state the names and addresses of all parties involved in the loan transaction and shall be served under the rules governing service of process upon each of said parties as third party non-party litigants, if such parties were not the lender or borrower.

3. Each such Petition or Affidavit shall account for all funds that were passed through or to each party named in the action, the disposition thereof, and the manner and time in which the passage of said funds were dispersed, together with a citation to the mortgage documentation, including a quote of the relevant passages in the body of the Petition or Affidavit wherein said funds are disclosed and wherein said funds are authorized. 

4. Each such Petition or Affidavit shall state with particularity whether any changes occurred after the closing of the subject loan transaction in which parties or persons were changed including the names and addresses of all parties and persons related to the transactions subject to the mortgage.

5. With respect to sale or assignment or any joint or sharing arrangements concerning ownership, distribution of risk, or securitization in which the subject loan was referenced as collateral or otherwise, each such Petition shall state with particularity the details of each such transaction, the distribution or re-distribution of funds, and the documents employed by said parties after said closing.

6. Each and every such Petition or Affidavit shall affirmatively state that the foreclosing party(ies) have standing and authority to bring the action, defend counterclaims and answer affirmative defenses. The signature of the attorney on said pleading shall be mandatory and shall constitute a representation to the COURT that the filing attorney has performed proper due diligence to ascertain the truth of the allegations of legal standing and all other allegations.

7. Each such Petitioner or Affidavit shall be accompanied by attachments of the referenced documents to be included with the first service of such Petition or Affidavit.

8. Each such Petition or Affidavit shall state with particularity and specificity each disclosure made to the borrower and any third parties involved in the transaction under the Truth in Lending Act and the corresponding provision of the mortgage documents executed by the borrower which supports said disclosure.

9. Each such Petition or Affidavit shall state with particularity and specificity each disclosure made to the borrower and any third parties involved in the transaction under the Truth in Lending Act and the corresponding provision of the mortgage documents executed by the borrower which does not support said disclosure. If any allegation other than “none” is made under this paragraph, the foreclosing party(ies) shall state with specificity the law or fact upon which they should be excused from compliance.

10. Each such Petition or Affidavit shall attach a full and complete accounting of all money, value or funds transmitted, paid or or promised between all parties involved in the loan transaction before or after the loan transaction. In the event the borrower has been overcharged, undercharged, or charged correctly, the Petition or Affidavit shall so state affirmatively, providing a full accounting of said funds. 

11. No answer or response from the borrower shall be due unless and until the foreclosing party(ies) are in complete and full compliance with the provisions of these rules. Any prior answer or response may be amended by the borrower after a determination is made that the foreclosing party(ies) are in full compliance. No prior Judgement, order or other document or rule shall prevent the borrower from filing a response or answer after the foreclosing party(ies) are found to be in compliance with these rules.

12. In the event that the foreclosing party(ies) fails or refuses to comply with these rules, the foreclosure shall be barred with prejudice and until the terms of the mortgage are determined with certainty by the Court by clear and convincing evidence, no payments to the mortgagee shall be due. This provision that not apply to payment to taxing authorities. In such event of delay caused by the the foreclosing party(ies) the court may fashion such equitable remedies as the Court deems fit in its discretion. for example, the Court could apply delinquent payments to the end of the mortgage, thus extending the terms. 

13. In the event of non-compliance with these rules wherein the foreclosing party(ies) demonstrate to the Court the probability that they could amend their filing to conform to the requirements herein, the foreclosing party(ies) shall file an amended Petition or Affidavit on or before thirty (30) days from the date of the order of the Court allowing the amendment. Failure to file within said thirty period shall be grounds for a mandatory immediate dismissal with prejudice. 

14. In the event of the filing of a verified amended Petition or Affidavit, Borrower shall have sixty (60) days in which to answer or respond. Failure to answer or respond shall not relieve the burden of proof of the foreclosing party(ies) in compliance with state, local and Federal law, and in compliance with these rules.

15. The Court may grant attorney fees and costs to the prevailing party in each case where a motion or other filing occurs, wherein a determination is made in an adversary proceeding that the filing is in or out of compliance. 

16. In the event a foreclosure has already been completed and all subsequent and customary actions have occurred and no bona fide third party has taken control or occupancy of the property, these rules may applied retroactively. 

17. Once compliance has been established and the issues are joined, the Court shall enter an order requiring the parties to enter into a process of mediation. The purpose of the mediation shall be to fashion a settlement which provides relief and incentives to all affected parties, including non-party litigants. Mediation shall take place no earlier than thirty (30) days after the entry of the mediation order, and not later than is reasonably possibly given the volume of cases and the availability of competent mediators.

These rules are subject to review by the Court but are effective immediately. Comments and applications to be heard shall be available in keeping with the usual and customary methods of proposed rule changes. Said rules shall be effective unless and until stated otherwise by the Court.

 

Filed under: bubble, CDO, community banks, credit unions, currency, Eviction, foreclosure, foreign relations, GTC | Honor, inflation, Investor, Mortgage, Obama, politics, securities fraud, Uncategorized | Tagged: , , , , , , , , , , | 2 Comments »

Mortgage Meltdown Movement: Start Now, Obama

Posted on March 8, 2008 by Neil Garfield

OBAMA MOVEMENT IS LAST CHANCE FOR ECONOMY AND HOMEOWNERS.

CHANGE THE RULES OF CIVIL PROCEDURE REGARDING FORECLOSURES OF ALL TYPES.

As we have have repeatedly pointed out, there is no time for stimulus packages, legislative bailouts, or executive orders. 

The evidence is mounting because [a] the situation is as bad as it looks and it is getting worse and [b] the administration ran out of places to hide the mounting losses to the economy. 

The dollar continues its slide which will create devastating inflation within 6 months. Consumer buying power is now the lowest it is had been since 1945. Job losses are at record levels and more people, especially men are starting to simply walk away from their jobs because the pay does nothing for them. People are also getting ready to walk away from their homes and just leave the keys with banks who will try to dump their real estate inventory, perhaps with some new derivative security plan.

The financial industry cannot bail us out, the U.S. Treasury can’t bail us out, China can’t bail us out, the congress cannot bail us out, the President won’t or can’t bail us out, and the candidates for President will inherit the second Great Depression (GDII) unless something is done right now. The plain truth is that if you do the arithmetic, there isn’t enough money in the world to buy our way out of this. Leadership, agreements, cooperation and sharing are the commodities that will settle the financial claims and avert a general collapse.

Start with the obvious — 900,000 foreclosures and mounting. At the center of this meltdown is the mean fact that prices were artificially inflated and, as in every Ponzi scheme, eventually collapsed. The debt was as fake as the prices. But we are still pretending it is real. The monthly payments were in many cases procured by fraud and numerous violations of the Truth in Lending Act. 

Change the procedure, not the substance of the law. 

The change needed is to enumerate the requirements for initiating foreclosures such that Ponzi operators are deterred from filing foreclosures, the entire foreclosure process is slowed down, and the loans are reinstated, re- negotiated, or modified on some basis that will result in continued occupancy of homes, restoring capital to balance sheets of financial institutions, restoring some degree of quality to CDO’s that were sold, and adding liquidity to the economy without pumping more funny money into it — thus adding value to the dollar, and adding purchasing power to consumers and industry. We encourage immunity from criminal prosecution those players who are still in the chain and assist in the process of recovery. Those actions and investigations by State attorney generals will at best provide an empty victory in an empty marketplace.

CHANGE THE RULES OF CIVIL PROCEDURE REGARDING FORECLOSURES OF ALL TYPES.

The only hope is the judiciary, which handles the foreclosures. Everyone agrees, including the parties initiating the foreclosures and evictions, that the goal is slowing down the process, giving everyone a little hope and incentive, and creating a process where these cases are settled equitably by agreement or by the equitable powers of every court in which an eviction or foreclosure matter is pending. Foreclosure is an equitable remedy which grants wide latitude to the Judge. Procedures should be in place that force the initiators of foreclosure proceedings to slow down, force everyone into mediation and give some breathing room so the marketplace, the financial sector, and government has time to catch up with events that have overtaken them.

In order to accomplish this, the authority is usually vested in the State Supreme Court of each state. The State Supreme Court is usually the authority that creates, amends or changes rules of civil procedure. This plan is not sexy but it is quick and it will work. Change the rules as we have suggested in our recent posting “Send this to Your State Supreme Court”. 

As for the PRESIDENTIAL candidates it is a dismal picture. The candidates for all other public offices don’t look any better in any of the State, local or Federal elections.

While we applaud McCain for his honesty in admitting he doesn’t know much about economics, that is hardly the person we want making executive decisions during a deep recession or depression. 

While Clinton is good at creating four point plans, ten point plans etc., she has not demonstrated any understanding of the economics at work here. Her husband didn’t have any experience in economics beyond a small state with niche industries. Her “experience” might sell but it isn’t true. She was a tea and cookies first lady in Arkansas and in the White House. This is no Eleanor Roosevelt. We can only hope that, like her Husband, if she is the candidate, she will be lucky enough to have people around like Alan Greenspan, Robert Rubin and others who not only understood the economy but knew how to grow it and that her personal political ambitions for a second term don’t get in the way of good judgment.

While Obama does have a close-up understanding of the economics of poverty, because he gave up Wall Street to work on Main Street, he also lacks experience in the macro-economic events that are in the process of burying our economy. He also is an academic, having taught constitutional law for 10 years, and brilliant analyst and fast learner. He also energizes people to out-perform which is exactly what we are going to need in the White House if we get through this in one piece. 

Obama is about leadership while Clinton is about tactical maneuvering. Both are valuable talents. But the truth is that Clinton would probably be one of the best Senate Majority leaders in history and at best a mediocre President for precisely those reasons. With Obama in the White House and Clinton and Pelosi in charge of Congress, it is hard to imagine a scenario where we can’t emerge from all this a little smarter and rebounding from the worst economic times in our lives.

There are no guarantees. Yet it seems like an Obama presidency will be a populist presidency directed by the people and for the people, while a Clinton presidency will be a Hillary presidency. McCain appears best suited to go to war and least suited to deal with any domestic issues. But none of them will like what is delivered to them on “Day One” unless something is done now. Obama too is at least as likely to attract energized geniuses in their respective fields to manage the difficult terrain ahead of us.

What Obama should do is what Obama does best — create a movement that moves the Supreme Courts of every state into action. All candidates for public office should sign on and all present office holders should introduce and pass remedial legislation in support of the movement. Obama is best suited to initiate this movement because his core constituency is the sector hardest hit by predatory lending practices, job losses, and NAFTA failures. 

The Obama Presidency should, as much as possible, start now. 

It is highly unlikely that Clinton’s last gasp pf political maneuvering and attack ads is going to change the math — Obama ends up with more popular vote, more states won, and more delegates one. Unless the convention turns to a compromise candidate like Gore, who probably won’t take the job, Obama is the only candidate that can be the nominee without tearing the Democratic party apart.

Filed under: bubble, Bush, community banks, CORRUPTION, currency, Eviction, foreclosure, foreign relations, GTC | Honor, inflation, interest rates, Investor, Mortgage, Obama, politics, securities fraud | Tagged: , , , , , , , , , , | Leave a comment »

Mortgage Meltdown: The Candidates

Posted on March 6, 2008 by Neil Garfield

It’s 3a.m., the phone rings. A girl with an apron answers and says “Thanks for calling Crispy Creme.” Hillary places her order for Bill. The fact is that none of the three candidates — McCain, Obama, or Clinton have ever had that 3am call nor have they ever had to make an executive decision in a national crisis. On experience in public office, McCain is the clear winner, with Obama having about twice as much as Hillary. 

On voting critical issues, they all have pluses and minuses. The Iraq War resolution was clearly a mistake because it delegated to the President the authority to declare war — a clear violation of the U.S. Constitution. It doesn’t matter whether the war was right or wrong, the resolution was wrong. Obama did have that right.

The scare tactics, while interesting for the Press, tell us nothing about the executive decision-making abilities of any of the candidates. They pretend to say something negative about one candidate implying that the critique is not equally applicable to the author and the target.  

Meanwhile, the real issues confronting voters are getting totally confused. NAFTA, even if it was a good idea in the long run, was rushed to judgment, with Hillary’s concurrence. Like the Iraq war it was executed miserably because of lack of congressional oversight which is the real issue confronting the American voter. It is the failure of congress to do its job which allowed the two previous chief executives (Clinton and Bush) to run amok. We;ll get the same result regardless of who is President if we don’t change that.

The Mortgage Meltdown occurred also because of lack of congressional oversight and a green light from the executive to go ahead and invent money.  Want more of the same? Just keep focussing on only the Presidential race instead of the people who are supposed  to provide checks and balances — congress. 

Filed under: Bush, currency, Eviction, foreclosure, Mortgage, Obama | Tagged: , , , | Leave a comment »

Personality not Plans

Posted on March 5, 2008 by Neil Garfield

What we know is that nothing constructive is happening now, the usual ideological gridlock is preventing progress, and that the curiosity about a brilliant new face might just get the right people to the right table at the right time.  

Bernanke is completely right that the ONLY way out of this mess is not throwing more money at it, further damaging the credibility and value of the dollar. The real answer, the one that that actually reverses the crisis is admitting the simple fact that a $250,000 house was sold for $400,000. 

And the solution lies not in legislation but in executive leadership. The key component of the solution is a reduction of the principal balance of the mortgage loans out there — and that includes virtually all loans that were initiated over the last 5 years. All homes were affected by the appearance of rising prices that turned out to be false.

The only way this is going to happen is with persuasive executive leadership. Teddy Roosevelt said speak softly and carry a big stick. That is pretty much what need to happen here but somehow you need to get all the players into the room and sitting at the same table. 

McCain won’t do it out of stubborn ideology. Clinton can’t do it because of resistance just to her name let alone credibility in her policies. That leaves Obama — an untested but brilliant strategist who not only survived but prospered in highly contentious environments consisting of diverse antagonists and rivals.  His credentials are necessarily sparse but still solid in this respect. If Obama can’t get everyone to the table, nobody will. And if they don’t come, the economy will sink like a stone. 

Bernanke could be the one but he isn’t. Paulson could be the one but he isn’t. And of course Bush is in the right position, but is so out of touch with the reality of the situation that he is worse than useless.  

Consensus that offers olive branches and incentives to everyone CAN solve these issues. Lower the mortgage balance but give the lenders a chance to participate in the comeback on a contingent basis. State the reduction as a contingency so the capital requirements of banks can be met without begging for money around the world. This will also minimize the write-downs of investment banking houses and restore investment value to balance sheets.

Avoid criminal and civil prosecutions and even offer immunity of there is cooperation. Strengthen regulation and abandon the new round of loosening regulations in Basel II in favor of tighter standards with oversight on risk assessment. Strengthen disclosure requirements and enforcement of violations by the SEC using the methods employed in the CDO fraud as the template.

These are the a few of the important things that need to be done. In order for Republicans, Democrats, Independents, businessmen, Wall Street executives, Bankers, borrowers and investors to play nice together though, it will take executive leadership of a type we haven’t seen since Jack Kennedy talked down steel prices. 

There is no guarantee that anyone including Obama will be successful at staunching the bleeding. What we know is that nothing constructive is happening now, the usual ideological gridlock is preventing progress, and that the curiosity about a brilliant new face might just get the right people to the right table at the right time. 

Obama, like any president, will need advice and counsel dealing with the complexities of currency, derivative securities, arcane, conflicting mortgage laws and provisions in notes that defy explanation. 

He has an advantage in perception, however, His campaign is clearly not owned by one large interest group over another. And there is no perception that runs to the contrary. Enmity between ankle biting bankers and investment bankers won’t be mixed with suspicion that they are being led into a trap. 

It will be 10 months before Obama can use his powers of the Presidency to start this process. But there IS something he can do now. Start acting like a President and fill the void. His backing includes people of enormous political power who can help invite the decision-makers to secret meetings now. Win or lose, he should do that now without regard to whether it is politically expedient. 

Filed under: bubble, Bush, community banks, credit unions, currency, Eviction, foreclosure, GTC | Honor, inflation, interest rates, Investor, Mortgage, Obama, politics | Tagged: , , , , , , | Leave a comment »

Mortgage Meltdown: People First, It’s Not the Numbers

Posted on January 9, 2008 by Neil Garfield

A Few Tears and the Polls Were All Wrong

Maybe she was being tactical and maybe it was real. Maybe it was both. It doesn’t really matter. The results in New Hampshire underscore a serious flaw in the delivery of information to the American public and an even more serious flaw in the way we make decisions. Clinton’s narrow win over Obama proved one thing beyond all doubt: that people matter more than pundits. And the clear error of all the polls proves another thing without any doubt: that pollsters are measuring the wrong things. And the news organizations that spent so much airtime and print space reporting the polls proved one more thing: that they are giving out information which is false and misleading. 

Tactics and strategy are not nearly as important as character and judgment. Electability is not nearly so much a question of polls and analysis as it is the belief in the character and judgment of a candidate. Experience matters when people get information on that experience, not when buzz words are passed from pundit to pundit. What did the candidate do and how well did he or she do when they did it? 

This is completely congruent with the postings here on the mortgage meltdown and credit crisis. The asset bubble has burst (again), the losses are mounting, the sea of money has swamped our society and our economy creating vast changes in the demographics and standard of living for ordinary Americans. 

We are now left with our largest financial institutions on the ropes and the smallest ones — Community Banks and Credit Unions looking pretty good. The small financial institutions got locked out of the great credit scam, and thus lost nothing to stupid loans, sales of CDOs, and liability for potentially criminal behavior — all that was saved for the big institutions that grabbed market share with smoke and mirrors. 

Your deposits are probably safer in the small institution than they are in the large ones which will probably collapse.  In other countries where similar things have happened ALL the banks failed. Here because of the death grip that big business has on government and the “free” marketplace, they kept the goodies for themselves, and now face responsibility for the worst financial disaster in American History. Fortunately, they left out most of the small players. But the decline in asset values, devaluation of currency and hyperinflation building to a crescendo will have its effect on all financial institutions and all Americans.

How is a political contest related to the mortgage meltdown? For one thing, it would be nice if someone started introducing proposals that would help the people who are already getting the second or third reset on their mortgage payments, where their payments have skyrocketed from $1500 to $4,000 per month. More importantly, as we look beyond the “correction” (read that “crash”) of 2008, it should remind us that if we use data we should do so skeptically and cynically and as a second tier of making decisions. The first tier should be the character of the people we are dealing with. 

We measure FICO scores that reward people for going into debt and punish them for savings, we use the SAT and ACT that predict nothing of a student’s future performance, polls for figuring out who to follow in the political races, and government statistics which first report politically expedient data, second change the components in order to come out with the politically expedient result and third are adjusted later (after the desired effect has been obtained) to make our investment decisions. Do you see something wrong here?

Let’s rerun this using a different approach. Numbered or indexed scores are used so extensively now that both authority and accountability are removed from a person’s life who is a “decision-maker.” Let’s put authority and accountability back into the equation.

When we pick a depository institution to hold our money, do we interview them to find out where they loan money and to whom? Do we decide on whether that fits with our world view? When they make loans, is the loan officer prohibited from making a loan to someone of great character who has a wonderful history of payments — because of a low FICO score (let’s say caused by the fact that he paid off all his debts, cancelled his credit cards, and had several hits by companies looking for his credit score)? Is the loan officer coerced into making a loan to someone with a high FICO score because they have just the right history and numbers that move the score up, but just the wrong circumstances and character to pay off THIS loan?

Do you really want your life and the society we live in to be governed by indexes, data and numbers that are fixed to mislead us into making decisions that are catastrophic for us but great for the people in suits who look you square in the eye and tell you how great this deal is? If so, welcome to the biggest Ponzi scheme in history — the great Mortgage Meltdown. 

Filed under: CDO, community banks, CORRUPTION, credit unions, currency, Eviction, foreclosure, GTC | Honor, inflation, Investor, Mortgage | Tagged: , , , , , , | Leave a comment »

A Jail called Mandatory Health Insurance

Posted on December 7, 2007 by Neil Garfield

A Jail called Mandatory Health Insurance

 

This is arithmetic not ideology. We make it ideology when we defy the numbers. We are already paying for full and complete coverage for all American citizens. In fact, we are paying 40% more than is required to give everyone complete health services. That we are paying for it and not getting what we are paying for (including a rebate or dividend on the many billions we are overspending) is testament to our ideology getting in the way of good judgment and concern for American citizens. It also gives you an idea on how and why the Pharmaceutical companies alone spend more than $5,000 on each and every one of the more than 500,000 doctors licensed in the United States, rewarding them with free samples, free trips, free seminars, free equipment, free supplies, and a host of other things that would make anyone other than a saint turn their heads.

 

In fact, it isn’t even ideology, it is myth. The myth is that American medicine is better than anywhere eels in the world. This is one of those myths that come from facts once holding morsals of truth. It is no longer truth. Our rate of medical advances is dwarfed by work done in dozens of other countries, our education is in a nose-dive, people are dropping out of the system, retiring early and otherwise getting out of the cancerous system we call our medical establishment.

 

We are already paying far more than we need to and far more than any other country in the world for the exact same medical facilities, medical care, medical treatment and medical prescriptions — AND we don’t have access without digging into the bottom of our pockets to treatments that are available, more effective and far less expensive than medical protocols in the U.S. because Big Pharma dictates those protocols through its absolute control of the FDA. And Big Pharma has a blank check from Big Insurance, because Big Insurance wants everyone to perceive the need to pay premiums for medial insurance. It’s like the credit card industry — they want to convert your assets into their fees without giving you anything of value in return.

 

Insurance is not the solution. It is the problem. Mandatory insurance locks us into the problem instead of heading for a solution. Wind down the need for medical insurance and the hold that Big Pharma has would likewise wind down. Putting people on the front line of what is available and how much it costs would put them “in the know” — instead of removing them from their sight the obvious tyrannies of the medical-insurance complex. This will create outrage. And outrage is what we need here — before we pass outrage and go straight to social unrest, riots, and other troubles that shake even the foundations of our form of government. We are corrupted and we the voters must make the changes that elected officials are unwilling to do. The only thing left that is made in America and for sale are our politicians.

 

Our insurance driven system causes us to spend about 40% more money than it would take to give full, total and robust health care to every man, woman and child in the United States. Instead, our citizens get partial coverage, no coverage and limitations on what therapies “qualify” for coverage — not on the basis of safety but on the basis of revenue production for Big Pharma, Big Insurance and Big medical. We need e little trust busting here like a hundred years ago. The corporate trusts, creating anti-competitive barriers to both older and newer treatments that are readily available, preventative care that would reduce the need for medical services and products, are literally ruining our lives.

 

Krugman, Clinton and the rest of those who subscribe to mandatory health insurance have it flat wrong on the numbers, the policy, and the purpose. Obama is a lot closer to the truth when he says we should NOT tie ourselves to the insurance model. Insurance is the problem, not the solution.

 

Under the Clinton plan we would be locked into the current cycle for the foreseeable future. Insurance companies would control how well we are cared for, what procedures are available (i.e., “covered), and perpetuate the medical fraud perpetrated on the public whereby spiraling higher medical costs for services, procedures and treatments are completely controlled in the lockbox created by the mighty triumvirate of Big Insurance, Big Pharma, and Big Medicine.

 

Under mandatory insurance the jail cell we are in would become a life sentence and the key thrown away. Transfer of wealth on the backs of those need help would continue on its merry way — a perfect Republican solution conceived in fear and deceit, servile to their own greedy agendas and creating cruel results but never brave solutions, to paraphrase Thomas Paine in “the Crisis.”

Filed under: alternative medicine, Chelation, CORRUPTION, healthcare, medical insurance, Medical Treatment, politics | Tagged: , , , , , , | 1 Comment »

Polling Results on Democratic Debate

Posted on November 16, 2007 by Neil Garfield

In a Poll of 208 responding registered Democrats and Independents, Kucinich, Richardson, Biden, Edwards and then Obama came out ahead in the debate for honesty. Clinton came in dead last. But when asked about their likely vote, the differences were remarkable. Clinton leads by a slight edge, followed closely by Obama. The rest of the candidates, including the ones with highest “straight answer” ratings are far back in the pack. 

Asked the following “straight answer” question, this was the result of the a poll of likely voters in the primaries. The results show that honesty and integrity do not rank as high among likely voters as idealists would like.

A “straight answer is defined as the direct answer to a direct question that contains a definite statement of the candidate’s position, clear enough so that you feel confident that you know what they would do if they become President. With ten being the highest grade for straight answers and 1 being the lowest, how would you grade the following.” RESULTS—>AVERAGE

Barack Obama: 6.0

Bill Richardson: 7.2

Chris Dodd: 4.8

Dennis Kucinich: 7.2

Hillary Rodham Clinton: 4.3

Joe Biden: 6.3

John Edwards: 6.2

 

Filed under: politics | Tagged: , , , , , , , , , , | Leave a comment »

John Edwards For President

Posted on October 21, 2007 by Neil Garfield

The lie we live with and that we all participate in is that we don’t want candidates to say anything when they run for office and then we are disappointed when they start doing things we hate. We know nothing about what any of the candidates will really do — except for Edwards.Edwards is the exception that proves the rule. He is specific, competent, knowledgeable and passionate about the issues he raises.Clinton gives us a word bullet like “I’ll start drawing down troops as soon as I am in office.” everyone claps. Excuse me, exactly how many troops? She doesn’t know. She says she will negotiate with oil companies, credit card issuers, medical establishment, and others who drain the last penny of what could be purchasing power in our economy. What is there to negotiate?They already have the power and they want to keep it. They already have the money and they want to keep it. They have converted our country into a corporatocracy, which is another way of saying fascism. We as voters, the real boss according to the constitution,  we let them do it.Edwards tells it like it is. He calls on the same good qualities of Americans that galvanized the country when JFK was president. He says don’t negotiate with credit predators, with drug companies, with the medical establishment, with oil companies, the environment, you have to take them on and beat them. And he isn’t getting traction or money from those huge lobbies because he means it.Why are we not excited about Edwards? He’s the only one who has not fallen lockstep with the handlers who manage campaigns. He runs his own. Isn’t that a leader we want?Are we really serious about wanting change? Or are we so obsessed with staying alive that we can’t hear the screams and outrage of Katrina victims whose pleas still go unheard, Georgia running out of water, the Southwest running out of water, depletion of our buying power by legitimizing usury, letting the drug and oil companies take money out of our pockets by spending our tax money, raising prices, and preventing our children from being educated so that they can see what is happening to them. We are depleting every important resource we have. We are running out. What will it take for people sit up and realize that this stuff DOES affect them, their children and grandchildren — and not some time in the future. It is happening right now before your eyes.Come on Iowa, New Hampshire, show your stuff. reward the candidate who has put his cards on the table for you to see instead of those who hide behind ambiguous generalities. 

Filed under: politics | Tagged: , , , , , | Leave a comment »

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