Just read this blog article on ForeclosureDump.com
Posted on February 1, 2010 by livinglies
Editor’s Note: Reality has a nasty way of getting in the way of solutions, especially when the solutions are theoretical, and even worse when the theories are wrong. These are the wrong assumptions:
- The Worst is over. In fact, we have the probability of at least 7 million MORE homes that will be foreclosed, causing massive dislocation from available housing to unavailable housing. The additional pressure on housing prices will be relentless.
- Modifications by Servicers: You might as well ask the robber of a convenience store to negotiate the restitution. The intermediaries have nothing to gain and everything to lose by modifications.
- The Financial Crisis is Over: In fact, we have a whole new wave of bad news coming. Finance is trust. There is no trust without truth. The truth is that the paper, the houses and the policies are all based upon false values and the marketplace knows it. Owning up to the truth will be painful for some and windfall for others — but it is the only path of restoring confidence in our institutions. With confidence we can again build trust. With trust, our financial system can recover. There is no current scenario in play that is likely to restore trust. Hence, there is no reason to believe that our crisis is over or that it won’t get worse.
- The current recovery model is working: Take a look next door at Canada. No crisis, no crash, no currency devaluation, no problem. Why? Because their policies are focused on protection of the consumer instead of advancement of big business. Their banks are all too big to fail (see Krugman today in New York times) but they didn’t fail because they operated in an environment that mandated acting in a “boring” manner. It is obvious that 80% of American citizens understand all this, why don’t our leaders?
- Millions, perhaps tens of millions of homeowners owe more than their houses are worth: In fact, those obligations have been dispersed into cyberspace and a fair reckoning must (a) face the reality of real fair market values and (b) spreading the losses out amongst all the players. Instead our policies are aimed at preserving the appearance of transfer of wealth to a select few on Wall Street — parties who don’t own, never owned and never will own the “troubled assets” for which they received “bailout” money. The money that was taken out of the securitization chain without the knowledge or consent of the investors and the homeowners is a third party payment of the original obligation. The truth is that if normal legal and accounting principles are followed, those people have substantial equity in their homes but they are being convinced everyday that they don’t.
- The Crisis was Caused by Bad Decisions: In fact, the crisis was caused by deliberate decisions that worked perfectly for those who made them. The plan was to create loans that were too bad to succeed. The plan worked and the money flowed to Wall Street which in turn admits to having the best year ever, and which is hiding the rest of its profits with perfect confidence that they can report higher and higher earnings for years to come as they repatriate dollars they secreted off shore in unreported financial transactions.
- What is Good for Wall Street is Good for the Country: In fact, this is no more true than when it was said about General Motors. A strong financial center is important — but not a financial center that becomes 40% of our economy. This is nothing more than a parlor trick of moving paper back and forth between the players and claiming a profit. The truth, as ANY economist will tell you is that what is good for the middle class is good for the country. Any other policy leads to social chaos and financial ruin.
- Eventually, this will all even out and everything will go back to normal: Sorry. In fact as long as the government is regulated by big business instead of the other way around, no correction is possible and the country continues down the path to ruin. Picture a basketball game where the players were able to tell the referees how they may rule and what they should look at. No, this cannot fix itself without the people breaking the power grip of big banks and big business. There is currently no scenario in play that points in this direction. So it is wrong to think that it will all work out in the end as things now stand.
- The Crisis Caused a Deficit in Government Finance: Actually, no, it didn’t. Just as the homeowners actually have equity in their homes, the government is owed more in taxes, fees, fines and penalties than all the deficits —Federal and State — put together. But they won’t collect those taxes from their bosses — Wall Street big business.