FedUpUSA

Archive for January 4th, 2011

….which begs the question, why in the hell is the nationwide consortium of attorneys general SETTLING with the mortgage lenders?!

Florida Attorney General Fraudclosure Report | Unfair, Deceptive and Unconscionable Acts in Foreclosure Cases

Seems to me they see the fraud.  They’ve documented the fraud.  They have evidence of the fraud – and yet – there are no ‘criminal violations’?!  HOW CAN THIS BE?!  If there is no criminality here, exactly why did the ‘Economic Crimes Division’ of the Florida Attorney General’s Office write the report?  This wasn’t the ‘civil infraction’ division.

STOP THE LOOTING & START PROSECUTING!

You think I’m kidding, right?

The 50 state attorneys general probing U.S. foreclosure practices will first settle with the five largest loan servicers, including Bank of America Corp. and JPMorgan Chase & Co., Iowa Attorney General Tom Miller said.

Oh, so 150,000+ bogus affidavits – each an alleged count of perjury (and perhaps forgery) will lead to a felony criminal charge, right?

The group isn’t pursuing a criminal investigation, Miller said. “Our focus is to reform the servicing process and that’s inherently civil, not criminal,” he said.

I see.

So the standard is that if you’re a bank, you can break the law. 

Any law – and it’s not criminal.  At worst it’s a civil matter.  Maybe.

It’s not criminal to break into someone’s home when you have no right to be there (as has been documented in multiple cases) – if you’re a bank, or employed by one.  And it’s not criminal to falsely swear before a court – if you’re a bank, or employed by one.

This is sorta like how it wasn’t criminal to launder drug money – if you’re a bank, or wire money to a prohibited nation (for alleged terrorist uses) – if you’re a bank, or to be involved in a massive bribery and other associated events scheme over a sewer system – if you’re a bank, or to rig bids in the municipal debt markets – again, if you’re a bank.

Well, it seems to me that if this is the standard for a bank, then the people are well within their rights to decide that the precise same standard shall apply to conduct directed at a bank. 

That would be fair and just, right?

One would hope not.  But hope is not a strategy, nor is it a reasonably expectation.  Instead, we have the mealy-mouthed so-called “law enforcement” folks from our states who cannot in fact be bothered to….. enforce the law.

And here I thought our State AGs would actually perform their jobs and prosecute.

I guess not – after all, nobody has when it was drug money laundering, terrorist funding or ripping off state and local governments.

Why change the record now?

The global economy seems to be facing a Brave New World envisioned by Aldous Huxley where the world is operating under a command economy and all citizens are psychologically conditioned from to birth to value consumption.  The Federal Reserve is the ultimate spend more than you earn machine.  It is amazing that a few hours after the US national public debt crossed the $14 trillion threshold (yes, we crossed this line on the last day of the year) that this euphoria is setting in only because people spent money during the holiday season.  “Ending is better than mending” is a platitude repeated in Brave New World.  It would seem that with credit cards burning holes in wallets many went ahead and spent money they did not have this holiday season.  The conditioning has been strong and has provided substantial distraction from the bigger heist committed by the Federal Reserve.

The Fed doesn’t even attempt to hide the fact that they are bailing out some of the worst toxic waste in the market.  This was accomplished through many archaic mechanisms including the oddly named Maiden Lane Special Purpose Vehicles (SPV).  Take for example Maiden Lane II:

Source:  New York Fed

The above is from a report conducted in April of 2010.  You would think that this data would be hard to find but the Fed and Wall Street is starting to come to the conclusion that they can simply create complicated names with weird acronyms and most of the public will be consumed with spending instead of mending.  Just look at the above closely.  This Maiden Lane is full of option ARMs, subprime, and junk Alt-A loans.  This is the waste found in the financial sewers of Wall Street and here it is sitting on the balance sheet of our central bank.  Not only is it sitting there, this data is publicly available and is a clear indication that the Fed has bailed out many banking institutions through shadow methods.  They simply shifted junk from one entity onto the backs of the American taxpayer.  It is interesting that BlackRock Financial Management is the manager of this SPV:

“BlackRock Financial Management, Inc. (the “Investment Manager” or “BlackRock”) manages the investment portfolio of the LLC under a multi-year contract with FRBNY that includes provisions governing termination. BNYM provides administrative services and has been appointed to serve as collateral agent under multi-year contracts with FRBNY that include provisions governing termination.”

In other words, you have banks shifting junk from one garbage can to another and letting the excess expenses run off and pollute the average American either through dilution of their currency or creeping inflation.  This is not the only Maiden Lane out there.  We have others that are heavily leveraged with commercial real estate debt:

More toxic mortgage waste that was bailed out with no Congressional approval.  This Maiden Lane is specifically setup for the Bear Stearns fiasco.  Maiden Lane II was focused on waste run off from the AIG debacle.  In the end the Federal Reserve is the waste management solution for the banking industry using the American taxpayer as the filter to wash off the financial sewage of Wall Street and their years of bad gambles.  They do not even bother to hide this since this is all accessible from the New York Fed website.  Of course what they do hide is the larger trillions of dollars that are currently sitting on their balance sheet.

While much of this junk sits in ruin the stock market seems to have forgotten about this and is bursting upwards and has taken a pill of soma:

Source:  Bloomberg

The above is the TED spread which reflects the difference in interest rates between interbank loans and short-term US government debt.  A lower TED spread reflects lower credit risk in the economy and as you can see during the crisis months the spread went to 465 basis points.  Today it stands at 16.69 which is lower than the days prior to the economic crisis and when the stock market peaked!  In other words, forget about the European debt problems or the $14 trillion in US national debt or the fact that many states are facing bankruptcy.  Things are looking up just because people shopped a bit during the holidays with credit cards.  Keep taking that financial soma.

The amount of bad debt banks have is still incredible.  Look at the amount of negative equity in the US still looming in the ether:

The banking system is largely insolvent and the FDIC is trying to put out a forest fire with an eye dropper.  As long as people can collectively pretend things are fine then the system can go on for a bit longer.  This is why the Fed can publish data like the above which frankly is outrageous and outright robbery yet nothing is done about it.  Our politicians need to protect the financial interest of the people yet with so much money tied up in the political arena the interests of Wall Street are first and foremost.  That is why we have 17 percent unemployment and underemployment and 43 million Americans on food stamps.  At the same time Disneyland over the holidays set a park record for attendance.  Just like the questionable assets in these SPVs, the Fed and Wall Street are trying to figure out another method of putting the horrible employment and wage stats of average Americans into a SPV so the media can keep feeding the public a line that all is well.

My Budget360

Arianna, this one’s for you – incoming…..

As we get ready for John Boehner to take the gavel from Nancy Pelosi on Wednesday, I find myself thinking back to the last time a Republican speaker took control of the House from a Democrat — and reflecting on how far down the wrong road we have traveled since then.

You’re right about us going down the wrong road.  This, unfortunately, was the last thing in your article you were right about.

“The balanced budget is the right thing to do,” he said. “But it does not in my mind have the moral urgency of coming to grips with what is happening to the poorest Americans.”

For the incoming Republican speaker, reducing poverty and lifting the poor into the middle class was a moral imperative beyond the left vs. right battlefield — not just the purview of lefties, socialists, and community organizers.

Oh really?  So let’s see – we have tried it that way for what….. 15 years?  What did we get?

• An internet bubble, which exploded.  Predicated on fraud, it cost US Citizens (and others) a few trillion dollars in saved funds, put into companies that were worth zero.  You can count the prosecutions of said people responsible on the fingers of one hand.  Most-notably, you can’t find any of the bank executives that were involved in bringing these firms public and earning their fees from same among the indicted, say much less charged or convicted.

• A housing bubble, which exploded.  Also predicated on fraud, this one cost virtually all US Citizens.  Millions of foreclosures, goading people to spend beyond their means, and now, once again, no indictments of the big bank executives.

We also “charged it” on the credit card.  In point of fact, President Clinton was the last one to have any smattering of discipline when it came to spending, and virtually all of that was imposed by those same Republicans you hate so much.

So now, with poverty higher than it was 16 years ago, with greater income inequality, and with the middle class struggling to hold on, what will Speaker Boehner make his number one priority? According to the Washington Post, it’s “cutting spending,” followed by repealing the healthcare law, and “helping get our economy moving” (no specifics on how he plans to do that).

Yet we saw on 60 Minutes that he’s very aware of how fragile the American Dream has become, telling Lesley Stahl, “I can’t go to a school anymore. I used to go to a lot of schools. And you see all these little kids running around. Can’t talk about it.” And he choked up when he did try to talk about “making sure these kids have a shot at the American Dream, like I did. It’s important.”

And why can’t you go to school any more?  If we’re talking about college, it is precisely because the government started handing out “Free Cheese” – and allowed the banksters to treat student debt as a loan that would be shackled around your neck for life.  This in turn caused the schools to turn a college into a luxury playground, complete with gilded dorms, er, “housing units” and $200+ textbooks.  Even in subjects such as a mathematics, which, last time I checked, hadn’t changed with regards to things like Calculus in far longer than I’ve been drawing breath.  Yet every year there’s a “new edition”, edited for the purpose of forcing kids to blow yet another $200 – per class – or more.  Ordinary people simply can’t afford that.

But the trajectory of our political discourse over the last decade and a half has meant that taking on poverty has gone from a moral imperative and shared national objective to an afterthought — or no thought at all.

And exactly how do you take on poverty Arianna?  Do you teach people that sitting at home sucking on the government teat is the way to prosperity?  Do you protect those who sell debt to students that they cannot possibly pay by passing laws that make that debt non-dischargeable?  Do you promote a housing bubble that drives house prices beyond those of modest means, goad those people into taking on debts they cannot pay, and then evict them when they lose the house that was priced at 3x what it should be?  Do we refuse to recognize wage and environmental arbitrage that leaves us with only jobs that ask “would you like fries with that?” instead of engineering, hard science, and blue-collar production – all so we can have $200 TVs instead of $400 ones and you can run your yap on an iPhone application that runs on hardware built by virtual Chinese slaves and peddled to US consumers as yet another debt ponzi (who think that phone costs $100 – yet another “pulled forward demand” game)?

All of this is part and parcel of the Liberal Left, along with the Radical Right.  Neither side will tell the banksters to go stick it up their tush and die in a fire.  Neither one will get rid of the illegal immigrants that depress wages in the United States, nor deal with the wage and environmental arbitrage that dumps raw chemicals into rivers and lakes – in China – all so we can have our “cheap consumer goods” while the workers there live in conditions that our former African Slaves would consider beneath them!

None of this is on YOUR radar Arianna.  No, instead you want to “soak the rich and give to the poor”, but in point of fact we’ve been doing that now for the last three years.  $1.7 trillion in budget deficits is proof.  How much more do you think we can put on the credit card Arianna?  Are you one of those who thinks there’s no limit?

Robert Reich does:

Republicans are telling Americans a big lie, and Obama and the Democrats are letting them. The Big Lie is that our economic problems are due to a government that’s too large, and therefore the solution is to shrink it.

Oh really?  I suppose you would like to deny this?

This isn’t evidence that the government is too large?

The short-term solution is for government to counteract this shortfall by spending more, not less. The long-term solution is to spread the benefits of economic growth more widely (for example, through a more progressive income tax, a larger EITC, an exemption on the first $20K of income from payroll taxes and application of payroll taxes to incomes over $250K, stronger unions, and more and better investments in education and infrastructure.)

Sorry, the short-term solution is to force the bad debt into the open and by doing so force recognition of its true value.  The long-term solution is as I’ve noted above – remove the special exemptions for debt on education, forcing the colleges to either go broke or reduce costs dramatically so you can earn your way through working part time flipping burgers, along with putting a stop to wage and environmental arbitrage with wage and environmental-parity tariffs.  Flush all the bad debts and make those “rich bastards” on Wall Street eat their own cooking.  They’ll choke on it and go broke.  Good.  Now you get your “vengeance” and, more-importantly, there will be new banks that are set up by ordinary people and entrepreneurship along with capital formation will once again return.

You know, the process by which we create jobs?  Yeah.

Exponential equations are mathematical facts.  The curve they produce is a fact.  That periodic recessions and bankruptcies are necessary in any system where capital can be lent is also a fact, and that fact extends to the “fat cats” who are doing the loan-making!  Every act that protects the foolish from the consequence of their folly is one that attempts to violate the laws of mathematics.  Such attempts, which are often mis-named “regulatory capture”, are how you get depressions instead of recessions, as you try to prevent those who do imprudent things (both in business and as individual acts) from having to face the music for their foolishness.

The big lie is, in fact, stating that such exponential functions and “protection” for any group – whether it be “the less fortunate” or “the fatcat banker” can proceed apace for any sort of “indefinite future” without periodic purges that restore these functions to the baseline.

The longer this lie goes on, and both The Left and Right are equally-complicit in spewing it, the worse the outcome for our nation.  And make no mistake – since I presume that both Arianna and Robert are intelligent, I therefore am forced to conclude that these lies are not told out of ignorance but rather with an intent to deceive – and destroy.

The primary problem with partisan politics is that the true “Big Lie” is the willful refusal to deal with the reality of exponential functions.  These functions are not suggestions – they’re mathematical laws.

And whether we like it or not the longer we allow this lie to be told, and the longer we continue to play the game of allowing people like Arianna and Robert to spew these lies, along with Boehner, the more pain we will inflict on the nation and its population as a whole.