Archive for April 24th, 2012
Now here’s the problem — there are a lot of services out there that have seized upon the fraud in securitization, origination and other frauds (and there are a lot of them!) to try to sell you various services — from “audits” to “foreclosure defense” and more.
I’m in contact with a fair number of lawyers in this state on a regular basis, including some who are associates of mine locally. I can’t speak to the results elsewhere but I can tell you this – irrespective of the merits the judges here locally in this county typically will refuse to allow into hearings any sort of alleged evidence on the provenance of the note, transfers and similar things.
In other words if you buy something but it’s not admitted into evidence and doesn’t lead to something that isyou wasted your money.
In addition the law says that many of these schemes are per-se illegal in Florida.
I get variations of the loan audit scam in my office nearly every single day. Hapless consumers are either directly approached by companies and people all the time. Here’s the rap: The company or expert will audit their loan, show them how the bank committed fraud or their documents are bad or whatever and the homeowner can use that information to get a free house….for a small upfront fee of several thousand dollars…and maybe a small monthly fee if the mark can swing it.
ANY REPRESENTATIONS LIKE THIS ARE A VIOLATION OF STATE AND FEDERAL LAW!
And yet, the proliferation of these scams is mind blowing. Homeowers are pounced on by cold callers and emails and direct mail and people coming directly to their door as soon as a foreclosure lawsuit is filed. Some are pounded on just as soon as they miss a few payments….these consumers are placed on widely available lists that are purchased by the securitization scam companies and the victims are pounded on relentlessly.
I challenge any of the firms and individuals selling these services to show me the following:
- Case number(s) in which your work product have been admitted as evidence. Once it’s used in a court case your success in getting into court is public knowledge. So let’s see it. If you have actually gotten your investigatory product into court and it’s been successfully used there’s a record of it and it’s public.
- The court(s) where your representatives, investigators or others involved have been admitted into evidence as experts and who offered testimony as experts. Again, this is public record — if it exists.
- Case number(s) in which you accomplished either of the above and in addition won. After all the only thing the person filing a suit (or defending a suit) cares about is winning! The rest is arm-waving. If you have succeeded then let’s see the case numbers and courts where it happened so we can verify it.
When I posted this the last time around what I heard was…… crickets!
And it appears that Matt has also heard crickets.
My position is simply this: If you have a track record then let’s see it. If you don’t then stop leading people to believe you have something valuable to sell them, because on an objective basis you either can’t or won’t back up your claims.
I have long held that there’s plenty of fraud to go around in mortgage origination and securitization, from notes not transferred to loans sold more than once to various other irregularities, and that they probably include your mortgage.
But none of this means a thing as a matter of law unless you can get your claimed evidence into a courtroom, have it heard and get a judgment. Whether the inability to do so is due to judges being stupid, obtuse or actively corrupt is immaterial to the outcome. And what I keep hearing from real lawyers trying real cases is that judges will not permit this evidence into the record irrespective of what it suggests or even proves! Without being able to get the evidence into the record its value is zero!
Any such firm or individual selling such services should be able to produce a list of case numbers as long as your arm where they have been admitted as experts, where their testimony and documentation has been accepted into the record and where the promised or expected results have been obtained, whether it’s a “quiet title” or a dismissal with prejudice of the foreclosure that was pending.
If that’s not willingly, publicly and prominently put forward with the solicitation I stand by my belief that the odds are overwhelming that you’re going to wind up buying nothing.
Issuing debt and printing money do not create wealth. All they can create is a temporary illusion of wealth.
I could have written “if all the money vanishes,” but that would be misleading, for all unbacked money will most certainly vanish into thin air.The only question is when, not if. Frequent contributor Harun I. explains why:
Those who fail to understand that the Status Quo is impossible to maintain will be shocked when the disintegration is undeniable. But the whole thing was perverse to begin with. Words like capitalism and meritocracy are thrown around to make people feel good when, in reality, we have never owned anything, not even ourselves.How can we own ourselves when the very thing we use for subsistence can be cheapened or reduced to nearly nothing, not by market forces, but by central banks acting at the behest of governments? When a person does not control his labor, what is he?
I have been studying the monetary history of the world for the past few weeks. I can tell you that the second oldest profession is currency debasement. Nothing is new.
Of course, this should be no surprise, everything is cyclical. Humankind is like the trader looking for the Holy Grail. There is no perfect monetary system, there is only better and worse. And this one ranks among the worst.
I wait patiently for people to come to the understanding that the only way for everyone to get their money would be to destroy its value completely, meaning that a loaf of bread would be a million dollars. If a small fraction of what has to be printed to keep the system afloat has caused the price spikes in energy and everything else, imagine what happens as the disintegration picks up speed.
As the exponential debt curve moves closer to the pure vertical, the rate at which debts come due will approach infinity. Of course, while this is the ultimate mathematical outcome, the reality is that the system will collapse before this point is reached. But don’t think governments will throw in the towel. If history holds true the rise of a totalitarian government is just over the horizon.
Then there are those who get it right and wrong in the same breath. John Mauldin, in a KWN interview, thanked Europe for keeping the heat off the US. Mr. Mauldin apparently does not understand that our monetary policies are transferring what we do not want to the rest of the world, at least for a time, but not much more.
How many more food items be made smaller and sold at the same price? In effect this is a slow starvation of those at the margin. The 46 million American souls on food stamps will soon find their food stamps to be worthless.
Those who assert that a credit system cannot go hyper-inflationary may not have thought through the exponential effects on the relationship of the debt and productivity curves within the context of all money is debt and the only way to create money is for debt to be created. Eventually the debt curve accelerates away from the productivity curve, then the productivity curve collapses all together. Sovereign debt crises caused by governments stepping in to keep the debt system going is the last stage. Then comes the debt/currency collapse.
Even if the Fed stopped printing money, I fail to see the difference between too much money that is worth nothing, and no money at all. It’s not going to matter to a starving man that a loaf of bread is $1 million and he is a dollar short, or if it’s $1 and he is a dollar short.
Thank you, Harun. Many observers have addressed the key concept here, which boils down to this: paper money is an abstract representation of the real world.
This can be explained by a simple example. If there is $100 in the money supply, and $100 of goods and services to trade, then $1 will be exchanged for $1 of goods and services. If the money supply suddenly increases by $100, then the value of the existing $100 declines by half, as the money supply is now $200 and the supply of goods and services remains unchanged. Thus it now takes $2 to buy what $1 once bought in goods and services.
Holders of the currency have had half the value of their currency (what we call purchasing power) stolen by the central bank that issued the additional $100 in money supply.
Here is the primary point: issuing debt and printing money do not create wealth. All they can create is a temporary illusion of wealth.
(This is drawn from Chapter One of Resistance, Revolution, Liberation: A Model for Positive Change (Kindle); you can read Chapter One for free.)
Here is another example. Let’s say that a small group is stranded on a desert island that supports a handful of coconut palms. Each palm produces a limited number of coconuts each season. To facilitate trade, the group issues a currency that represents one coconut. (Lacking a printing press, they have to laboriously carve out a pattern on a rock to imprint a difficult-to-counterfeit stamp on the currency.)
This system works well, as the currency issued matches the number of coconuts harvested annually (for simplicity’s sake, let’s say that’s 100). 100 pieces of currency are issued to match the 100 coconuts that exist in the real world. The currency (let’s call it the quatloo) is an abstract representation of the goods available, i.e. the coconuts.
But then a wise-guy (i.e. the “central banker” on the island) realizes that if he prints another 100 quatloos, he and his buddies can buy up all the coconuts and fish without having created any real goods in the real world: the abstraction is used to con people out of their real coconuts.
The residents quickly catch on, and the “price” of coconuts rises to 2 quatloos. The wise-guy is addicted to the scam, and so he prints 1,000 quatloos, and then issues quatloos in denominations of 1 million.
Soon enough, each coconut costs 1 million quatloos.
Creating debt and paper money does not create real goods and services or real wealth.
As Harun observed, we have been promised trillions of dollars that can supposedly be traded for trillions of dollars in real goods and services, and buyers of bonds have been promised trillions of dollars of the same artificial exchange of paper for real goods.
Just as on the desert island, the growth of actual goods in the real world lags the growth of money, i.e. abstract representations of real goods.
The U.S. Central State (Federal government) has borrowed and squandered $6 trillion over the past four years, and the actual production of goods and services has not risen at all when adjusted for inflation. The central bank (the Federal Reserve) has expanded its balance sheet by $2 trillion, and yet all the assets it have tried to force higher are actually lower when measured in real goods such as gold, oil, wheat, etc.
It’s easy to expand the money supply and difficult to expand the actual production of real goods in the real world. Expanding the money supply and issuing debt that lacks collateral is just like printing quatloos on the desert island: you can print a million quatloos but that doesn’t create a single additional coconut.
If you print enough quatloos, then people will no longer accept them in exchange for coconuts. You will actually need a real coconut to exchange for fish.
This is why Greek towns are reportedly reverting to barter, the exchange of real goods for other real goods. We can anticipate that silver and gold will soon enter the barter as means of exchange that can’t be counterfeited or printed by wise-guys (central bankers).
We can also anticipate the issuance of letters of credit, a practice that stretches back to the trading fairs of Medieval Europe, as described by Fernand Braudel in his three-volume history of early capitalism, The Structures of Everyday Life (Volume 1), The Wheels of Commerce (Volume 2) and The Perspective of the World (Volume 3).
Since gold was in insufficient supply, letters of credit were issued and accepted on a basis of trust. At the end of the great fairs, the letters were exchanged and payment of balances due made in gold or silver. Thus 99 coconuts could be traded for 100 dried fish via letters of credit and the balance due in gold or silver was the value of 1 dried fish–a mere 1% of the total value of goods exchanged.
This is what happens when abstract representations, i.e. “money,” vanish into thin air. Alternative systems of exchanging goods and services arise: actual goods are exchanged via barter, tangible concentrations of value that cannot be counterfeited such as gold and silver are used as a means of exchange, letters of credit or equivalent are traded and settled with tangible goods or gold/silver, and eventually, a means of exchange (“money”) that is backed by tangible goods in the real world that can be trusted to actually represent the value being traded might enter the market.
That which is phantom will vanish into thin air, while the real goods and services remain to be traded in the real world.
Charles Hugh Smith – Of Two Minds
Anyone smell the smoke yet?
There’s a definite problem over in Euroland that “suddenly” became apparent this morning. Between the French elections (in which Sarkozy appears to be toast) and the Dutch government collapsing over an austerity fight, we now add the ECB and Bundesbank tiff:
Almost a year into his new job as the head of Germany’s Bundesbank, Weidmann, 44, has matured from ChancellorAngela Merkel’s discreet right-hand man at global economic meetings into one of the few European policy makers warning that governments are failing to do what’s needed to rescue the euro.
How do you “rescue” something when you refuse to have an honest conversation about what’s broken? Nobody over in Euroland — or here in the United States — is doing so.
There’s nothing complicated behind the reason our economies have failed to actually recover: We’re still spending more than we make.
What do we have to fix? This:
Since 1980 your earnings power, in real terms, when accounting for monetary inflation has been strongly negative.
We covered up would have otherwise been an outright revolt (really — a decade of 15-20% of annualized loss of purchasing power would have led to exactly that!) with massive credit extension to individuals and corporations. This is the history of the housing bubble — this chart — and it goes back to 1980!
There are those who will argue that this graph is a “distortion” as it includes the credit created specifically as “financial credits.” Fine, I’ll remove that.
Now how are you going to continue to play asset-price inflation games when there is no price-adjusted income growth so you can pass the bag to the next group of people, eh? There is only one way – fraud – and the refusal to address the truth is why we’re here.
This was not an accident. It was and remains a public and intentionally-covered up fraud. The coverups came in the form of the housing bubble, massive offshoring of labor and exploitation of both environment arbitrage and effective slave labor overseas along with currency and interest rate manipulation and bank credit fraud of unprecedented size.
The compounded amount of damage done since 1980 truly boggles the mind. Oh sure, a few people have made out like bandits; look at the escalation in certain asset prices! But it has come through making it utterly impossible for anyone in the current generations to follow in the footsteps of those who “enjoyed” these distortions which guarantees the collapse of these asset prices as there is no way for the current holders to “monetize” them by selling them to someone else who is young and coming up, except through attempts to further extend this scheme.
This is the very definition of a ponzi scheme — and yet we have had no honest discussion of what has happened here or in Europe.
There’s no way out of this box without recognition of both what we did and deflation of those bubbles. The acts of our government and those across Europe have all served to further these frauds rather than expose and excise them.
Those who point to temporary recovery of “asset prices” (e.g. the stock market) are missing the forest for the trees. Attempts to further continue this ponzi scheme are doomed to failure, as the only way one can “maintain” these asset prices is for a new group of people to find ways to continue to take the pass of the “bag” at ever-higher prices.
That, in turn, requires continued credit creation and that requires there be someone who is both willing and able to borrow so that credit can be created!
We ran out of suckers in 2007 folks — we’ve done the Wile-E-Coyote thing since, continuing to pretend that we won’t actually fall having stepped off the cliff.
I’m sorry, but you’re wrong.