FedUpUSA

Hoh hoh hoh… read this one carefully folks.

SAN DIEGO (CN) – A La Jolla man can keep his home for now, after a federal judge granted his motion for a temporary restraining order blocking Washington Mutual and JP Morgan from foreclosing on his house because the banks misled him into defaulting on his mortgage.

Kaveh Khast claimed the banks instructed him to stop making his mortgage payments so he could qualify for a loan modification.

Yep.

HAMP was a scam and a fraud.  It was designed to induce people to default on their loans on purpose in order to get a modification.

But the modification was “optional” (helped along in many cases by intentionally losing documents sent through certified mail!) and as such the banks did exactly that.

Now we have judges – finally – pushing back and recognizing the inherent fraud in that scam.

A scam hatched by The Federal Government and Treasury in collusion with the banks.

I think there’s a law against this somewhere….. will it be enforced? 

Yeah, ok….. may I ask what reserves, given that Bernanke was given the ability to set them to zero in the TARP bill? 

Dear Secretary Geithner and members of the Financial Stability Oversight Council,

I’m writing concerning the foreclosure fraud crisis and the resulting potential need for a special capital buffer for large systemically significant institutions.  I’m particularly worried about the title insurance market, and attempts to lay off title liability onto large banks without corresponding changes in capital requirements.  

Recently, Bank of America struck a deal with Fidelity National Title Insurance to indemnify the title insurer should legal problems with foreclosures create unanticipated title liability.  Title insurers are clearly worried that they may face higher legal and policy costs if foreclosures are reversed, or should legal ambiguity cloud titles they already have insured.  Bank of America’s deal with Fidelity may be necessary to help keep the housing market functioning.  Since title insurers have in some cases just refused to insure this market, someone must pay for the liability these insurers have refused to incur.

The extent of this liability is unclear.  On October 8, Bank of America CEO Brian Moynihan told the public and investors that, despite the self-imposed foreclosure moratorium, his bank had not “found any foreclosure problems”.  He said, explaining the foreclosure moratorium, that “[w]hat we’re trying to do is clear the air and say we’ll go back and check our work one more time.” The bank’s SEC Form 8-K reinforced these comments.  Yet two weeks later, the Wall Street Journal just reported that Bank of America, in reviewing 102,000 cases of problematic foreclosures, found problems “in 10 to 25 out of the first several hundred foreclosures it examined.”

Both banks and regulators are claiming that the problems are simply process-oriented document errors that aren’t really causing harm to the public at large.  I suspect that no one really knows the extent of the problem, or the potential liability.  What we do know is that title insurers are demanding indemnification.

With that in mind, it would seem prudent to require additional capital buffers for systemically significant institutions until the extent of the foreclosure fraud crisis is understood, or until title insurers decide that they no longer need indemnification for increased risk.  It may also be useful to conduct a new round of stress tests to determine the resilience of the financial system with respect to these serious problems.

Regards,

Alan Grayson
Member of Congress

Again: In order to increase something, you must first have some of it. 

Yes, FAILURE.

Not success folks.

Two things you should read….

First, here….

We all know that the current administration is harking back to the FDR’s New Deal to justify its Keynesian intrusion into our economy. We are also aware that when it is pointed out that the New Deal was an abject failure to restart the American economy and that is was only with the advent of WWII that full employment was achieved, Obama supporters will often shoot back that the initial monies devoted to the New Deal was not enough and that is was the truly MASSIVE war spending the restored America to its financial supremacy. Thus the justification for enormous stimulus bill and the passing of the current budget and talk of more stimulus. I will agree with the Democrats judgment with only a few minor caveats:

(read more at the link)

And then…. well, 37/38…..

Some background: It’s spring, 1938. The New Deal lay in shambles. The country was in what can only be called the Great Depression II. The graph embedded in this post showsunemployment had risen to near 1933 levels and was rising. The massive government spending during the first four years had run its course, and no real permanent economic foundation had been established. At the 12:56 mark, FDR gives his reason why this slide into recession happened: It was a failure of consumer demand due to lack of buying power (aka: massive unemployment had reduced consumer demand) Sound familiar?

Yep.  I’m gonna go do it here in a few minutes…

I wish there was a decent other option, but there isn’t.  So off I go to the Polls.

Whatever choice you express today, do go express it.

But while you’re doing so, spend the neural energy to contemplate that all the so-called “Free lunch” promises from the Democrats and Republicans are in fact false promises.  That avoiding bankruptcy and recession is a fraud in all economic systems where lending is permitted.

The lending of capital at interest inherently creates compound growth in that interest payment stream, which eventually, no matter what you do, will overwhelm the ability to pay.

Before we tried to tamper with this reality, we had this in the market

Lots of crashes in that chart.  But lots of recoveries too.

You only think you’re better off now.  You’re not.  All we’ve done is build the same sort of instabilities that were built in the 1920s.  We’ve tried to continually avoid the consequence of lending more than the borrower can pay. 

We tried to paper over the fraud of the 1990s in the 2000s.  We failed.  Now we’re trying to do it again, and Bernanke is debasing the dollar in a futile attempt to “rescue” a failed monetary policy. 

HIS failed monetary policy.

The very same failed monetary policy that was run in the early parts of the 1930s, and “QE-whatever” is the precise same failed policy that FDR ran with devaluation!

It won’t work.  It can’t, mathematically, work.  What it can and will do is decimate those who are in the middle class. The 200 million Americans who are in the middle class and below. Those of means will survive this, just as they did in the 1930s.  Sure, we’ll spend more on food and energy, and will have to step down our “standard of living” a bit, but we have it. 

The poor, the working poor and middle class?  They don’t have it, and those in the working class who were promised retirement funds from pensions and other similar instruments won’t get it either, because this debasement, at the same time, destroys safe returns available to the institutions that are investing those retirement funds.

Today you have all sorts of people talking in the media about “freezing spending.”  Uh huh.  Freezing eh?  Yeah.  Ok.  Freeze has to include the 70% of the budget that is the actual problem.  Remember this graph?

Quit yanking my chain.  The only way to close a $1.6 trillion budget gap is to invade – severely invade – entitlement spending.  Neither party will do it.  But it has to happen.  That they won’t do it simply means that there will be no real forward progress on this account.  Not now, not until it blows up. 

The mental masturbation slapping Bernanke and Paulson on the back for “job well done” is idiotic – just as it was in 1930. 

This will end the same way, because we’re doing the same thing we were then.