Ghost Equity — the House Next Door

The biggest problem I encounter when speaking with people who are up to date on their payments is why should the others get a break when they are still paying. My answer of course is that they probably shouldn’t be paying because their debt was probably paid long ago through multiple sales of the same loan.

The OTHER major reason is that whether you think the person next to you is being foreclosed and is not deserving any relief, is that while you are standing on principle, the banks are standing on your money. Homes that were unaffected by direct foreclosure lost nearly $2 Trillion in equity as a result of the foreclosure mess and the unwillingness of the banks who created it, to cure it.

So your equity just flew out the window with the guy who is being foreclosed. But it doesn’t stop there. Housing drives the economy as the biggest consumer item offered for sale. The entire economy went into a near greatest of all time depression because the housing sector had, as President Lincoln once remarked (“the bottom has fallen out of the tub”).

So ALL marketplace activities were depressed which caused massive layoffs of up to 800,000 jobs per month as Bush handed the problem off to Obama. This caused an even greater loss in real median income, making it unlikely that your house will ever see the equity that you thought it had — at least not in your lifetime.

Then you have pension funds who have already announced they are under funded because of losses associated with buying the mortgage bonds that are being used as an excuse to foreclose on your neighbor and thus depress the value of your home. 2013 will be the year that pension funds cry for bailout because they don’t have the money to pay current pensioners their share of the pension money that they were promised. People on fixed income of social security plus pension won’t be happy. Are you one of those people?

foreclosures-wipe-out-2-trillion-equity-neighboring-homes

HELOC LOANS WORTHLESS

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EDITOR’S NOTE: It is ironic how reality eventually catches up with illusion. While we have been pounding on the issue of principal reduction as the only realistic way out of the recession, and while the financial industry has been busy convincing people that principal reduction is somehow immoral, the contraction of home prices back to reality is having its own consequences.

In the article below the art and necessity of strategic default is revealed as mainstream in the current housing market. In the case of home equity loans or home equity lines of credit the bloating of appraisals at the time of the transactions has blown up in the face of the financial industry. Many of those home equity loans were in reality part of the initial transaction without which the buyer would have been unable to purchase the home. The transaction would have been valid if the appraisal had been valid. It wasn’t.

A simple analysis of basic fundamental figures published monthly over the last 120 years easily demonstrates that the appraised values that were unverified by the alleged “lender” as part of a nonexistent “underwriting process” could not sustain the test of time or circumstance.

In point of fact most new homeowners quickly found out within weeks or months of the initial transaction that their property was worth far less than the representations made to them at the time of closing. The true value was so far below the so-called appraised value that it didn’t cover the home equity part of the transaction even at the time that the transaction was closed.

The reaction of homeowners to the disappearance of the illusion of wealth has been entirely predictable. For the present the number of home equity loans which are going unpaid is soaring both in numbers and percentages, regardless of the borrower’s ability to pay. Any party that wishes to assert itself as the “owner” of the loan is stuck in the position of holding a predatory loan subject to numerous defenses that is completely unsecured by any equity in the home. According to this article there is at least one debt collector that won’t pay more than $500 per loan regardless of the principal amount due.

The rising number of strategic defaults on primary loans is also rising, also predictable and also inevitable. This is the obvious reaction of a marketplace seeking equilibrium and dependable valuations. Until policy makers accept the reality that the wealth of our economy is largely buried under the illusion of debt that is neither secure nor perfected arising from transactions that were illegal, predatory and fraudulent, there is no way out.

Restoring consumers to the position they were in before they were defrauded is the only way to restore confidence in our society that has permitted the privatization of the issuance of money. Financial reform without providing an easy path to restoration of wealth in the middle-class is meaningless.

August 11, 2010

Debts Rise, and Go Unpaid, as Bust Erodes Home Equity

By DAVID STREITFELD

PHOENIX — During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.

The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.

Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.

The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.

“When houses were doubling in value, mom and pop making $80,000 a year were taking out $300,000 home equity loans for new cars and boats,” said Christopher A. Combs, a real estate lawyer here, where the problem is especially pronounced. “Their chances are pretty good of walking away and not having the bank collect.”

Lenders wrote off as uncollectible $11.1 billion in home equity loans and $19.9 billion in home equity lines of credit in 2009, more than they wrote off on primary mortgages, government data shows. So far this year, the trend is the same, with combined write-offs of $7.88 billion in the first quarter.

Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. “People got 90 cents for free,” Mr. Combs said. “It rewards immorality, to some extent.”

Utah Loan Servicing is a debt collector that buys home equity loans from lenders. Clark Terry, the chief executive, says he does not pay more than $500 for a loan, regardless of how big it is.

“Anything over $15,000 to $20,000 is not collectible,” Mr. Terry said. “Americans seem to believe that anything they can get away with is O.K.”

But the borrowers argue that they are simply rebuilding their ravaged lives. Many also say that the banks were predatory, or at least indiscriminate, in making loans, and nevertheless were bailed out by the federal government. Finally, they point to their trump card: they say will declare bankruptcy if a settlement is not on favorable terms.

“I am not going to be a slave to the bank,” said Shawn Schlegel, a real estate agent who is in default on a $94,873 home equity loan. His lender obtained a court order garnishing his wages, but that was 18 months ago. Mr. Schlegel, 38, has not heard from the lender since. “The case is sitting stagnant,” he said. “Maybe it will just go away.”

Mr. Schlegel’s tale is similar to many others who got caught up in the boom: He came to Arizona in 2003 and quickly accumulated three houses and some land. Each deal financed the next. “I was taught in real estate that you use your leverage to grow. I never dreamed the properties would go from $265,000 to $65,000.”

Apparently neither did one of his lenders, the Desert Schools Federal Credit Union, which gave him a home equity loan secured by, the contract states, the “security interest in your dwelling or other real property.”

Desert Schools, the largest credit union in Arizona, increased its allowance for loan losses of all types by 926 percent in the last two years. It declined to comment.

The amount of bad home equity loan business during the boom is incalculable and in retrospect inexplicable, housing experts say. Most of the debt is still on the books of the lenders, which include Bank of America, Citigroup and JPMorgan Chase.

“No one had ever seen a national real estate bubble,” said Keith Leggett, a senior economist with the American Bankers Association. “We would love to change history so more conservative underwriting practices were put in place.”

The delinquency rate on home equity loans was 4.12 percent in the first quarter, down slightly from the fourth quarter of 2009, when it was the highest in 26 years of such record keeping. Borrowers who default can expect damage to their creditworthiness and in some cases tax consequences.

Nevertheless, Mr. Leggett said, “more than a sliver” of the debt will never be repaid.

Eric Hairston plans to be among this group. During the boom, he bought as an investment a three-apartment property in Hoboken, N.J. At the peak, when the building was worth as much as $1.5 million, he took out a $190,000 home equity loan.

Mr. Hairston, who worked in the technology department of the investment bank Lehman Brothers, invested in a Northern California pizza catering company. When real estate cratered, Mr. Hairston went into default.

The building was sold this spring for $750,000. Only a small slice went to the home equity lender, which reserved the right to come after Mr. Hairston for the rest of what it was owed.

Mr. Hairston, who now works for the pizza company, has not heard again from his lender.

Since the lender made a bad loan, Mr. Hairston argues, a 10 percent settlement would be reasonable. “It’s not the homeowner’s fault that the value of the collateral drops,” he said.

Marc McCain, a Phoenix lawyer, has been retained by about 300 new clients in the last year, many of whom were planning to walk away from properties they could afford but wanted to be rid of — strategic defaulters. On top of their unpaid mortgage obligations, they had home equity loans of $50,000 to $150,000.

Fewer than 5 percent of these clients said they would continue paying their home equity loan no matter what. Ten percent intend to negotiate a short sale on their house, where the holders of the primary mortgage and the home equity loan agree to accept less than what they are owed. In such deals primary mortgage holders get paid first.

The other 85 percent said they would default and worry about the debt only if and when they were forced to, Mr. McCain said.

“People want to have some green pastures in front of them,” said Mr. McCain, who recently negotiated a couple’s $75,000 home equity debt into a $3,500 settlement. “It’s come to the point where morality is no longer an issue.”

Darin Bolton, a software engineer, defaulted on the loans for his house in a Chicago suburb last year because “we felt we were just tossing our money into a hole.” This spring, he moved into a rental a few blocks away.

“I’m kind of banking on there being too many of us for the lenders to pursue,” he said. “There is strength in numbers.”

John Collins Rudolf contributed reporting.

Mortgage Meltdown: Enough Distress to go Around

It is hard to compute the total damage to everyone, but it seems pretty clear at this point that EVERYONE is effected. Every government agency involved with real estate taxes, and government service funded by real estate taxes, every homeowner who sees his home equity decline, every neighborhood that turns into a “deferred maintenance” junkyard with organized crime and vandals destroying unoccupied homes, every borrower who got roped into refinancing when he/she had not need or intention to refinance, every buyer of a home from a developer who got nailed by their reliance on the appraised value of the home, every investor who bought an ABS, every pension holder or shareholder in an entity that invested in ABS instruments as “cash equivalent” etc.

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Abandoned homes distressing
Untended eyesores hurt local values

The view from Tina Osborne’s backyard isn’t pretty.

From her deck in Florence, she overlooks several feet of grass and weeds – a serious eyesore in the cul-de-sac of her Carters Mill subdivision where neighbors have a tradition of putting down mulch and working together in their yards each summer.

A few weeks ago, the front yard of that same abandoned home didn’t look much better – until a neighbor took it upon himself to cut the grass. He fears the untidy conditions will turn away potential buyers from his home, which is up for sale.

• Search foreclosure listings, repossessed properties, and other real estate in distress.
• Survey: Tell us how the economy is affecting you
• See our special section on foreclosures

Similar scenes are playing out all across Greater Cincinnati and Northern Kentucky as the surge of home foreclosures has led to a surge in complaints about vacant, unkempt properties.

In the last month alone, Colerain Township trustees were asked to declare 115 properties as nuisances. Liberty Township had nearly 60 complaints in May. Neighboring West Chester identified 19 problem homes late last month, and the township’s community development director says he expects more to be added to the list in June.

Delhi Township officials plan a special meeting to discuss the issue.

Not every nuisance complaint is linked to a foreclosed house, but officials say that’s the driving force behind the increase in complaints.

“Ohio is one of the leading states in foreclosure. When people leave their homes, they usually leave their responsibilities behind. That’s where we come in,” said Ronnie Caldwell, code enforcement officer in Deerfield Township, where about 30 complaints have been filed this year.

“This is a problem everywhere; we’re no different,” Caldwell says.

Compounding the problem: Heavy rainfall through May has led to an explosion of grass and weeds, making vacant homes especially noticeable.

For the first six months of the year, many communities say they are seeing twice as many high-grass complaints as they did during the same period last year. In some areas, nuisance complaints have already surpassed all of 2007.

But according to an Enquirer request for e-mails about the foreclosure fallout, the concerns go beyond unmowed grass. People are complaining about landscaping disasters, mosquito-infested swimming pools, collapsed ceilings, burst pipes, and foul odors.

The unkempt properties are frustrating on several levels.

Some say their own yard work goes for naught because people get distracted by the unsightly house next-door.

Some are frustrated by the slow responses – if they get any at all – when making complaints.

Some people get so irritated they end up doing the yard maintenance themselves.

EYESORES ABOUND

Jane Young moved into her Hickory Woods subdivision almost a decade ago. Over the years, the Mason resident has watched as homes were built around hers.

Recently, she noticed an overgrown yard and a utility notice on the front door of an empty home across the street, a home that had been valued at just under $300,000.

“This is not a dandelion neighborhood. We don’t do dandelions,” Young said. “Right now, this house sticks out – a lot.”

In Lebanon, neighbors complain about a house that has been vacant for months in a neighborhood where homes had been selling for $250,000 and up.

Cold weather caused the pipes to burst this winter. Water spilled all over, leading to black mold staining the walls, fungus growing on soggy carpet, and a buckled floor pushing the back door open – exposing the house to rodents.

The stench is so bad that neighbors noticed a bank representative wearing a mask to go inside and evaluate the property. The recent 90-degree heat has made the smell worse, says neighbor Ann Stengl.

“What used to be a great house is awful for the neighborhood. … I think it’s getting worse by the day,” she said.

In an already soft real-estate market, people find it becomes even more difficult to sell a house that is near a vacant property.

Rose and Jeff MacInnis did everything they thought had to be done to sell their Burlington home. They painted, replaced the carpet, planted flowers and kept their yard carefully mowed and edged.

Yet, nearly one year later, they’re paying two mortgages and maintaining two yards – their old home in the Pebble Creek subdivision and their new place in Cincinnati’s Bridge Point.

“The comments are always the same: ‘The house is nice, but we don’t like other people’s yards.’ We get the negative feedback even though our house is in perfect condition,” said a frustrated Rose Mac- Innis.

In Madisonville, Heather Poe has had her house on the market for 18 months. Part of the problem, she says, is the abandoned house next door.

The lender who holds the lien for the house has started to cut the grass occasionally, she said. But that does nothing for the pool falling apart in the backyard or the stair railing that was ripped from concrete and now leans against the side of the house.

“Even if they like your house, that place is the deal killer almost every time,” she said.

WHO CUTS THE GRASS?

The process to declare a property a public nuisance varies from community to community. Complaints get official attention once the grass reaches certain heights, or if the conditions can be deemed a public health risk.

Then the process begins.

First, the property owner receives notice, usually a letter, from the local government. If the government knows who is responsible for the property, a letter is enough to get maintenance work started in most cases.

But if property owners don’t act within the allotted time, typically a couple of weeks, the grass is cut by public crews or private contractors hired for the job.

Owners will either get a bill in the mail, or the county auditor places a lien on the property. Charges could range from rental costs for mowing equipment to worker compensation and administrative fees. Total price is anywhere from $200 to $400.

Most communities set a high rate on purpose. “We don’t want to become a lawn mowing service,” said Brian Elliff, director of community development in West Chester Township.

WHERE TO CALL OFTEN UNCLEAR

All of this assumes that neighbors know where to call – which varies from place to place.

People who contacted The Enquirer said they often did not know whom to call. They’ve been bounced from homeowners associations to local governments, health departments, sheriffs’ offices and banks.

“It’s just kind of annoying. We have no idea who’s supposed to do it,” Tina Osborne said of the problem in her Florence neighborhood. “If we want to stop looking at it, we have to get out there and do it ourselves. … But then we’re told we’re not supposed to do that. And we’re right back at square one.”

Meanwhile, the increased number of complaints either strains public budgets, bogs down response time, or both.

In Covington, officials added $7,000 to the maintenance budget this year to handle this kind of work; the same will be done next year. In Boone County, a two-person code enforcement team has been overwhelmed with 144 nuisance complaints since April, said Brad Horn, code enforcement supervisor.

“We’re way behind right now,” Horn said. “We’re barely keeping our head above water.”

In Ohio, some of the delays related to property upkeep may improve in the months to come.

Ohio Gov. Ted Strickland signed a bill last week that requires sheriffs to record deeds within 14 days of a judge signing off on a foreclosed sale. The goal is reduce the legal limbo period for vacant homes as ownership is transferred.

Neighbors say they’ll be waiting to see if the grass gets cut.

Staff writers Kari Wethington, Cliff Radel, Scott Wartman, Mike Rutledge and Cindy Schroeder contributed to this story.

Abandoned homes distressing
Untended eyesores hurt local values

The view from Tina Osborne’s backyard isn’t pretty.

From her deck in Florence, she overlooks several feet of grass and weeds – a serious eyesore in the cul-de-sac of her Carters Mill subdivision where neighbors have a tradition of putting down mulch and working together in their yards each summer.

A few weeks ago, the front yard of that same abandoned home didn’t look much better – until a neighbor took it upon himself to cut the grass. He fears the untidy conditions will turn away potential buyers from his home, which is up for sale.

• Search foreclosure listings, repossessed properties, and other real estate in distress.
• Survey: Tell us how the economy is affecting you
• See our special section on foreclosures

Similar scenes are playing out all across Greater Cincinnati and Northern Kentucky as the surge of home foreclosures has led to a surge in complaints about vacant, unkempt properties.

In the last month alone, Colerain Township trustees were asked to declare 115 properties as nuisances. Liberty Township had nearly 60 complaints in May. Neighboring West Chester identified 19 problem homes late last month, and the township’s community development director says he expects more to be added to the list in June.

Delhi Township officials plan a special meeting to discuss the issue.

Not every nuisance complaint is linked to a foreclosed house, but officials say that’s the driving force behind the increase in complaints.

“Ohio is one of the leading states in foreclosure. When people leave their homes, they usually leave their responsibilities behind. That’s where we come in,” said Ronnie Caldwell, code enforcement officer in Deerfield Township, where about 30 complaints have been filed this year.

“This is a problem everywhere; we’re no different,” Caldwell says.

Compounding the problem: Heavy rainfall through May has led to an explosion of grass and weeds, making vacant homes especially noticeable.

For the first six months of the year, many communities say they are seeing twice as many high-grass complaints as they did during the same period last year. In some areas, nuisance complaints have already surpassed all of 2007.

But according to an Enquirer request for e-mails about the foreclosure fallout, the concerns go beyond unmowed grass. People are complaining about landscaping disasters, mosquito-infested swimming pools, collapsed ceilings, burst pipes, and foul odors.

The unkempt properties are frustrating on several levels.

Some say their own yard work goes for naught because people get distracted by the unsightly house next-door.

Some are frustrated by the slow responses – if they get any at all – when making complaints.

Some people get so irritated they end up doing the yard maintenance themselves.

EYESORES ABOUND

Jane Young moved into her Hickory Woods subdivision almost a decade ago. Over the years, the Mason resident has watched as homes were built around hers.

Recently, she noticed an overgrown yard and a utility notice on the front door of an empty home across the street, a home that had been valued at just under $300,000.

“This is not a dandelion neighborhood. We don’t do dandelions,” Young said. “Right now, this house sticks out – a lot.”

In Lebanon, neighbors complain about a house that has been vacant for months in a neighborhood where homes had been selling for $250,000 and up.

Cold weather caused the pipes to burst this winter. Water spilled all over, leading to black mold staining the walls, fungus growing on soggy carpet, and a buckled floor pushing the back door open – exposing the house to rodents.

The stench is so bad that neighbors noticed a bank representative wearing a mask to go inside and evaluate the property. The recent 90-degree heat has made the smell worse, says neighbor Ann Stengl.

“What used to be a great house is awful for the neighborhood. … I think it’s getting worse by the day,” she said.

In an already soft real-estate market, people find it becomes even more difficult to sell a house that is near a vacant property.

Rose and Jeff MacInnis did everything they thought had to be done to sell their Burlington home. They painted, replaced the carpet, planted flowers and kept their yard carefully mowed and edged.

Yet, nearly one year later, they’re paying two mortgages and maintaining two yards – their old home in the Pebble Creek subdivision and their new place in Cincinnati’s Bridge Point.

“The comments are always the same: ‘The house is nice, but we don’t like other people’s yards.’ We get the negative feedback even though our house is in perfect condition,” said a frustrated Rose Mac- Innis.

In Madisonville, Heather Poe has had her house on the market for 18 months. Part of the problem, she says, is the abandoned house next door.

The lender who holds the lien for the house has started to cut the grass occasionally, she said. But that does nothing for the pool falling apart in the backyard or the stair railing that was ripped from concrete and now leans against the side of the house.

“Even if they like your house, that place is the deal killer almost every time,” she said.

WHO CUTS THE GRASS?

The process to declare a property a public nuisance varies from community to community. Complaints get official attention once the grass reaches certain heights, or if the conditions can be deemed a public health risk.

Then the process begins.

First, the property owner receives notice, usually a letter, from the local government. If the government knows who is responsible for the property, a letter is enough to get maintenance work started in most cases.

But if property owners don’t act within the allotted time, typically a couple of weeks, the grass is cut by public crews or private contractors hired for the job.

Owners will either get a bill in the mail, or the county auditor places a lien on the property. Charges could range from rental costs for mowing equipment to worker compensation and administrative fees. Total price is anywhere from $200 to $400.

Most communities set a high rate on purpose. “We don’t want to become a lawn mowing service,” said Brian Elliff, director of community development in West Chester Township.

WHERE TO CALL OFTEN UNCLEAR

All of this assumes that neighbors know where to call – which varies from place to place.

People who contacted The Enquirer said they often did not know whom to call. They’ve been bounced from homeowners associations to local governments, health departments, sheriffs’ offices and banks.

“It’s just kind of annoying. We have no idea who’s supposed to do it,” Tina Osborne said of the problem in her Florence neighborhood. “If we want to stop looking at it, we have to get out there and do it ourselves. … But then we’re told we’re not supposed to do that. And we’re right back at square one.”

Meanwhile, the increased number of complaints either strains public budgets, bogs down response time, or both.

In Covington, officials added $7,000 to the maintenance budget this year to handle this kind of work; the same will be done next year. In Boone County, a two-person code enforcement team has been overwhelmed with 144 nuisance complaints since April, said Brad Horn, code enforcement supervisor.

“We’re way behind right now,” Horn said. “We’re barely keeping our head above water.”

In Ohio, some of the delays related to property upkeep may improve in the months to come.

Ohio Gov. Ted Strickland signed a bill last week that requires sheriffs to record deeds within 14 days of a judge signing off on a foreclosed sale. The goal is reduce the legal limbo period for vacant homes as ownership is transferred.

Neighbors say they’ll be waiting to see if the grass gets cut.

Staff writers Kari Wethington, Cliff Radel, Scott Wartman, Mike Rutledge and Cindy Schroeder contributed to this story.

Mortgage Meltdown: The High Cost of Racism

There are lots of things we do as human beings that are counterproductive in the sense of preventing ourselves from getting what we want. One of them is racism. Whether you harbor some small or large negative feeling toward one race or another consider this:

Negative red lining: In order to carry off the largest economic scam in history, bankers and Wall Street had to find a population that was deprived of sufficient education to know about the world, to know how to conduct their affairs legally, and to be able to reason things so they could make an informed decision. 

It was obvious where they were going to find this demographic: (1) people who spoke no English and (2) black people, especially from the deep South. They were perfect targets and it all went “swimmingly” with everybody touting their new equity in their modest homes as though they were watching the ticker on the New York Stock Exchange.

People refinanced to take more money out of their house like an ATM machine, and they spent the money. But the value wasn’t really there, and neither is the income for original targets and then the secondary “refi” targets who got caught up in the whole frenzy. And now millions of lives are being uprooted, millions of jobs are being lost, and millions of people are stuck in retirement with insufficient income because of failed investments by their pension funds, their mutual funds et al..

You see, it is the poor in our country who are exposed, who are vulnerable. They are the ones that predators attack with tactics they could never get away with elsewhere. But the effects, if the predators succeed on a large scale, are felt by everyone. And they are felt deeply.

And the income isn’t there either for all the individuals, institutions, banks, government entities, corporations and other invetors who bought mortgage backed securities that were, for the most part, not worth the paper they were written on.

And the income isn’t there for people who earn a living wage but now find that it isn’t a living anymore because the value of the dollars they earn is also not worth the paper it is written on.

And so when these poor people protest that they were treated unfairly, the racist in us tends to turn a less sympathetic ear to them than to someone “like us.” That is where racism costs us.

By waiting for the shoe to drop on us instead of protecting those who could not protect themselves, by depriving people of the education they need to be able to avoid these predators, we have now created the worst possible outcome: nobody in the entire world trusts the United States policy on money and finance. And we lost our moral high ground to influence the policies of other nations. 

And the benefits that we have long expected from our dominance of world finance is fast vanishing as the dollars we issued have turned into vast sweeping IOU’s to countries we could not imagine would have such power over us — China, S. Korea etc.

That Obama has come this far is amazing, even astonishing. Especially in view of the secrets we harbor, the driftwood of hundreds of years of shameful history and rationalization of that history. Notwithstanding all we have learned there are many among us who do not understand that we are wasting precious time and human resources when we withhold empathy, when we withhold funding for education, when we flee from those who are different.

How much money has been lost in home equity due to white flight? It was whites that lost the equity!

How much time and productivity did the South lose because they refused to allow blacks to participate in their economy or in education — even right after the civil war when it was ONLY the blacks that knew how to run the farms and plantations. 

How much innovation did we lose by red lining employment opportunities in the North?

How many Einsteins have we completely missed amongst the black and Latin populations?

 

Racist Incidents Give Some Obama Campaigners Pause
By Kevin Merida
Washington Post Staff Writer
Tuesday, May 13, 2008; A01

 

Danielle Ross was alone in an empty room at the Obama campaign headquarters in Kokomo, Ind., a cellphone in one hand, a voter call list in the other. She was stretched out on the carpeted floor wearing laceless sky-blue Converses, stories from the trail on her mind. It was the day before Indiana’s primary, and she had just been chased by dogs while canvassing in a Kokomo suburb. But that was not the worst thing to occur since she postponed her sophomore year atMiddle Tennessee State University, in part to hopscotch America stumping for Barack Obama.

Here’s the worst: In Muncie, a factory town in the east-central part of Indiana, Ross and her cohorts were soliciting support for Obama at malls, on street corners and in a Wal-Mart parking lot, and they ran into “a horrible response,” as Ross put it, a level of anti-black sentiment that none of them had anticipated.

“The first person I encountered was like, ‘I’ll never vote for a black person,’ ” recalled Ross, who is white and just turned 20. “People just weren’t receptive.”

For all the hope and excitement Obama’s candidacy is generating, some of his field workers, phone-bank volunteers and campaign surrogates are encountering a raw racism and hostility that have gone largely unnoticed — and unreported — this election season. Doors have been slammed in their faces. They’ve been called racially derogatory names (including the white volunteers). And they’ve endured malicious rants and ugly stereotyping from people who can’t fathom that the senator from Illinois could become the first African American president.

The contrast between the large, adoring crowds Obama draws at public events and the gritty street-level work to win votes is stark. The candidate is largely insulated from the mean-spiritedness that some of his foot soldiers deal with away from the media spotlight.

Victoria Switzer, a retired social studies teacher, was on phone-bank duty one night during the Pennsylvania primary campaign. One night was all she could take: “It wasn’t pretty.” She made 60 calls to prospective voters in Susquehanna County, her home county, which is 98 percent white. The responses were dispiriting. One caller, Switzer remembers, said he couldn’t possibly vote for Obama and concluded: “Hang that darky from a tree!”

Documentary filmmaker Rory Kennedy, the daughter of the late Robert F. Kennedy, said she, too, came across “a lot of racism” when campaigning for Obama in Pennsylvania. One Pittsburgh union organizer told her he would not vote for Obama because he is black, and a white voter, she said, offered this frank reason for not backing Obama: “White people look out for white people, and black people look out for black people.”

Obama campaign officials say such incidents are isolated, that the experience of most volunteers and staffers has been overwhelmingly positive.

The campaign released this statement in response to questions about encounters with racism: “After campaigning for 15 months in nearly all 50 states, Barack Obama and our entire campaign have been nothing but impressed and encouraged by the core decency, kindness, and generosity of Americans from all walks of life. The last year has only reinforced Senator Obama’s view that this country is not as divided as our politics suggest.”

Campaign field work can be an exercise in confronting the fears, anxieties and prejudices of voters. Veterans of the civil rights movement know what this feels like, as do those who have been involved in battles over busing, immigration or abortion. But through the Obama campaign, some young people are having their first experience joining a cause and meeting cruel reaction.

On Election Day in Kokomo, a group of black high school students were holding up Obama signs along U.S. 31, a major thoroughfare. As drivers cruised by, a number of them rolled down their windows and yelled out a common racial slur for African Americans, according to Obama campaign staffers.

Frederick Murrell, a black Kokomo High School senior, was not there but heard what happened. He was more disappointed than surprised. During his own canvassing for Obama, Murrell said, he had “a lot of doors slammed” in his face. But taunting teenagers on a busy commercial strip in broad daylight? “I was very shocked at first,” Murrell said. “Then again, I wasn’t, because we have a lot of racism here.”

The bigotry has gone beyond words. In Vincennes, the Obama campaign office was vandalized at 2 a.m. on the eve of the primary, according to police. A large plate-glass window was smashed, an American flag stolen. Other windows were spray-painted with references to Obama’s controversial former pastor, the Rev. Jeremiah Wright, and other political messages: “Hamas votes BHO” and “We don’t cling to guns or religion. Goddamn Wright.”

Ray McCormick was notified of the incident at about 2:45 a.m. A farmer and conservationist, McCormick had erected a giant billboard on a major highway on behalf of Farmers for Obama. He also was housing the Obama campaign worker manning the office. When McCormick arrived at the office, about two hours before he was due out of bed to plant corn, he grabbed his camera and wanted to alert the media. “I thought, this is a big deal.” But he was told Obama campaign officials didn’t want to make a big deal of the incident. McCormick took photos anyway and distributed some.

“The pictures represent what we are breaking through and overcoming,” he said. As McCormick, who is white, sees it, Obama is succeeding despite these incidents. Later, there would be bomb threats to three Obama campaign offices in Indiana, including the one in Vincennes, according to campaign sources.

Obama has not spoken much about racism during this campaign. He has sought to emphasize connections among Americans rather than divisions. He shrugged off safety concerns that led to early Secret Service protection and has told black senior citizens who worry that racists will do him harm: Don’t fret. Earlier in the campaign, a 68-year-old woman in Carson City, Nev., voiced concern that the country was not ready to elect an African American president.

“Will there be some folks who probably won’t vote for me because I am black? Of course,” Obama said, “just like there may be somebody who won’t vote for Hillary because she’s a woman or wouldn’t vote for John Edwards because they don’t like his accent. But the question is, ‘Can we get a majority of the American people to give us a fair hearing?’ ”

Obama has won 30 of 50 Democratic contests so far, the kind of nationwide electoral triumph no black candidate has ever realized. That he is on the brink of capturing the Democratic nomination, some say, is a testament to how far the country has progressed in overcoming racism and evidence of Obama’s skill at bridging divides.

Obama has won five of 12 primaries in which black voters made up less than 10 percent of the electorate, and caucuses in states such as Idaho and Wyoming that are overwhelmingly white. But exit polls show he has struggled to attract white voters who didn’t attend college and earn less than $50,000 a year. Today, he and Hillary Clinton square off in West Virginia, a state where she is favored and where the votes of working-class whites will again be closely watched.

For the most part, Obama campaign workers say, the 2008 election cycle has been exhilarating. On the ground, the Obama campaign is being driven by youngsters, many of whom are imbued with an optimism undeterred by racial intolerance. “We’ve grown up in a different world,” says Danielle Ross. Field offices are staffed by 20-somethings who hold positions — state director, regional field director, field organizer — that are typically off limits to newcomers to presidential politics.

Gillian Bergeron, 23, was in charge of a five-county regional operation in northeastern Pennsylvania. The oldest member of her team was 27. At Scranton’s annual Saint Patrick’s Day parade, some of the green Obama signs distributed by staffers were burned along the parade route. That was the first signal that this wasn’t exactly Obama country. There would be others.

In a letter to the editor published in a local paper, Tunkhannock Borough Mayor Norm Ball explained his support of Hillary Clinton this way: “Barack Hussein Obama and all of his talk will do nothing for our country. There is so much that people don’t know about his upbringing in the Muslim world. His stepfather was a radical Muslim and the ranting of his minister against the white America, you can’t convince me that some of that didn’t rub off on him.

“No, I want a president that will salute our flag, and put their hand on the Bible when they take the oath of office.”

Obama’s campaign workers have grown wearily accustomed to the lies about the candidate’s supposed radical Muslim ties and lack of patriotism. But they are sometimes astonished when public officials such as Ball or others representing the campaign of their opponent traffic in these falsehoods.

Karen Seifert, a volunteer from New York, was outside of the largest polling location in Lackawanna County, Pa., on primary day when she was pressed by a Clinton volunteer to explain her backing of Obama. “I trust him,” Seifert replied. According to Seifert, the woman pointed to Obama’s face on Seifert’s T-shirt and said: “He’s a half-breed and he’s a Muslim. How can you trust that?”

* * *

Pollsters have found it difficult to accurately measure racial attitudes, as some voters are unwilling to acknowledge the role that race plays in their thinking. But some are not. Susan Dzimian, a Clinton supporter who owns residential properties, said outside a polling location in Kokomo that race was a factor in how she viewed Obama. “I think if it was somebody other than him, I’d accept it,” she said of a black candidate. “If Colin Powell had run, I would be willing to accept him.”

The previous evening, Dondra Ewing was driving the neighborhoods of Kokomo, looking to turn around voters like Dzimian. Ewing, 47, is a chain-smoking middle school guidance counselor, a black single mother of two and one of the most fiercely vigilant Obama volunteers in Kokomo, which was once a Ku Klux Klan stronghold. On July 4, 1923, Kokomo hosted the largest Klan gathering in history — an estimated 200,000 followers flocked to a local park. But these are not the 1920s, and Ewing believes she can persuade anybody to back Obama. Her mother, after all, was the first African American elected at-large to the school board in a community that is 10 percent black.

Kokomo, population 46,000, is another hard-hit Midwestern industrial town stung by layoffs. Longtimers wistfully remember the glory years of Continental Steel and speak mournfully about the jobs shipped overseas. Kokomo Sanitary Pottery, which made bathroom sinks and toilets, shut down a couple of months ago and took with it 150 jobs.

Aaron Roe, 23, was mowing lawns at a local cemetery recently, lamenting his $8-an-hour job with no benefits. He had earned a community college degree as an industrial electrician, but learned there was no electrical work to be found for someone with his experience, which is to say none. Politics wasn’t on his mind; frustration was. If he were to vote, it would not be for Obama, he said. “I just got a funny feeling about him,” Roe said, a feeling he couldn’t specify, except to say race wasn’t a part of it. “Race ain’t nothing,” said Roe, who is white. “It’s how they’re going to help the country.”

The Aaron Roes are exactly who Dondra Ewing was after: people with funny feelings.

At the Bradford Run Apartments, she found Robert Cox, a retiree who spent 30 years working for an electronics manufacturer making computer chips. He was in his suspenders, grilling shish kebab, which he had never eaten. “Something new,” Cox said, recommended by his son who was visiting from Colorado.

Ewing was selling him hard on Obama. “There are more than two families that can run the United States of America,” she said, “and their names aren’t Bush and Clinton.”

“Yeah, I know, I know,” Cox said, remaining noncommittal.

He opened the grill and peeked at the kebabs. “It’s not his race, because I got real good friends and all that,” Cox continued. “If anything would keep him from getting elected, it would be his name. It might turn off some older people.”

Like him?

“No, older than me,” said Cox, 66.

Ewing kept talking, until finally Cox said, “Probably Obama,” when asked directly how he would vote.

As she walked away, Ewing said: “I think we got him.”

But truthfully, she wasn’t feeling so sure.

Staff writer Peter Slevin and polling analyst Jennifer Agiesta contributed to this report.

Irrational Economics: What You Should know About Money

Gambling establishments know it, amusement parks know it, retailers know it — anything that separates your perception of spending your own money from the reality results in your spending more. And in the case of the American consumer, we are spending consistently more than we earn and more than we could ever pay back. 

 

We are all participating in a Ponzi scheme, relying on the next influx of credit from our home, credit card, auto loan or other lending scheme to pay the minimum payment on past debts. Meanwhile when we use chips at the gambling casino, we are not spending “money” so we spend more of it. When we use credit cards, we are not spending “money” so we spend more of it. When we use debit cards, we are not spending money so we spend more of it.

 

The result is that we walk out of the casino either broke or possibly in financial ruin. We get the credit card bill at the end of the month and we didn’t realize how much we spent. We see “over-limit” fees, late fees, and all kinds of interest and fee items that result in a “minimum payment” that is guaranteed to keep us in debt for life. We get our bank statement at the end of the month and for the 20% of us who even look at it, we get the same surprise — we spent more than we realized using our debit card, in stores and on the internet. We borrow on our home equity credit lines and increase our monthly payments to a level that is out of reach, or in the case of most Americans, to a level that is simply more out of reach that before (what’s the difference, I can’t pay it anyway).

 

For those of you who revel in conspiracy theory, here is one that is true. The deck is stacked against everyone by a tacit agreement between government and business. They want us stupid and ignorant. The Government, the retailers, the gaming establishments, the banks, the banking networks, non-bank credit card issuers and others on the receiving side of the dollars you spend all want you to avoid paying actual cash. Because they know that if you have cash in your hand you will regard it as yours, as you will be less inclined to part with it. They know that at the end of the month, if you are spending actual currency, you will be the one with money in your pocket and not them. 

 

Millions of Americans are steadily increasing their spending on credit cards, because they have no other place to go for the money to pay for their normal monthly bills — groceries, utilities, etc. Many are taking down the full amount of their home equity lines of credit for fear that these sources of credit will be frozen — a trend that is growing in the industry. People are taking this money and socking it away in investment accounts, which I hope are in Euro’s because the dollar is going to continue taking a major hit and inflation, while it is a global problem, is headed for far worse territory than most other places on the planet. 

 

The United States is a place of negative savings (i.e., debt) from top (Federal government) to bottom (you). And nobody is going to help you or your children or grandchildren because all the players have a vested interest in lying to you, misleading you and encouraging you to look at your finances as something other than your future wealth and security. If you are looking for help, look only to yourself and your family members. Get yourselves together and decide on how you are going to navigate the this mess. 

 

Here are some tips that will help:

 

  1. If you must use credit cards to “make the month” then you are headed for a disaster. So plan for the disaster instead of burying your head in the sand. Get one card that you bring the balance down to zero and use it sparingly, making payments exactly on time and allowing the revolving credit option to be used. So you don’t want to pay the card in full each month, you want to pay it in two or three months. Get a new telephone line and give out the number to your friends. Put the old line on voice mail and unplug it, because the creditors are going to be calling. If you don’t hear the call, it will be less stress. Most card companies do not sue, they hound you through collection agencies. So don’t enter into payment  arrangements with them, and don’t use bankruptcy just because you piled up credit card debt. 
  2. For Debt that you already have incurred and will incur in the near future, keep this in mind. You can game the system just like they have gamed you.  Inflation normally is not a  major factor in long term debt. But it is now. If you put off paying the debt, whether it is fixed or revolving, as long as possible, it is VERY possible that inflation will outpace the interest charges. There is no guarantee on this, but at this moment it looks highly probable. So if you pay these debts in 3-5 years it might cost you a fraction of the VALUE of what you owe now. 
  3. Pay in cash for the things you are buying if at all possible. It will keep you focussed on what you are spending and if you put the known expenses in envelopes at the beginning of the month, you will still have money at the end of the month.
  4. Your mortgage or rent payment takes priority. if that means not paying a credit card, so be it. Keep your house. It is the one non-dollar denominated asset you have. It is your inflation hedge.
  5. If you can’t pay the minimum on the credit card, don’t pay it at all. It doesn’t make any difference.
  6. Credit card payments should be the last thing on your list to pay after food, housing, medical etc. 
  7. If you think you are headed for bankruptcy try to hold out until the next congress gets to work. It is highly probable that the Republican changes will be reversed and that the old rules will return along with higher exemptions. 
  8. If you can’t get to an ATM to withdraw the cash and spend cash, then  use the debit card and your PIN, knowing that this is coming out of your bank account. But remember that each time you use that plastic card, you are one step removed from the financial decision as to whether to spend. The one who ends up holding the bag is you.
  9. Take advantage of credit card balance transfers with zero interest wherever you can. Play the game. 
  10.  If you owe taxes, make some minimum payment that you choose arbitrarily. Don’t enter into an agreement or make contact with the IRS unless they contact you.
  11.  If you are falling behind in your mortgage or under stress, don’t wait until the breaking point. Call your mortgage company NOW and tell them you need an accommodation. Get a moratorium on part or all of the payments. Even skipping one payment might make all the difference in the world.
  12.  Do NOT overdraft your account and do NOT go for a payday loan. There is NO benefit for you to do either. Both put you in the hole deeper. Work out something with your utility, borrow from a relative (AND PAY IT BACK!), but don’t go for these short-term options. All they do is take more money out of your pocket. 
  13.  If your credit score is very high, but YOU know you are headed for disaster, then get as many cards as you can and use them judiciously, keeping in mind the above. If you are screwed anyway, the amount does not make any difference. 
  14.  GAME THE SYSTEM: Think of your own ways to “Create” money or money supply in your life. Have Plan B for when you lose that job — what business could you get into on your own that takes very little money to start and which will give you SOME income. Look around and see what people need. You’d be surprised at what people are willing to pay for if it involves making their life easier, or making something convenient — like shopping for seniors etc.
  15.  Eat Healthy and exercise: It will reduce your stress level and bring more oxygen and nutrients to your brain. You are going to need your brain for everything it is worth to game the system and escape from the trap that was paid for you and the rest of us. 

 

These tips are contrary to what you will hear from Suze Orman and other people. They are controversial. While I believe this is the best advice, I could be wrong. Use your own brain and when you consult with others remember the 80-20 rule. 80% of the people you ask, don’t know much and will give you stock answers. Those are the people that will end up broke when this is all over. But by all means seek out the smartest people you know and talk about these things. 

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