If you want to understand what’s coming ahead and why a short sale is a better option than a foreclosure click this link. WARNING! U.S. Hyperinflation to Collapse Economy
(Source: DS News) RealtyTrac released its U.S. Foreclosure Market Report for January, 2014. The report noted an 8 percent increase of reported properties from the previous month, citing 124,419 properties in foreclosure filings.
Quick REO Facts
- This was the largest monthly increase since May 2012!!!
- January foreclosure starts increased from a year ago in 22 states.
- States with the highest foreclosure rates in January were Florida, Nevada, Maryland, Illinois, and New Jersey.
The Crisis Circle Is Complete: Wells Fargo Returns To Subprime
Submitted by Tyler Durden on 02/14/2014 11:46 -0500
Those of our readers focused on the state of the housing market will undoubtedly remember this chart we compiled using the data from the largest mortgage originator in the US, Wells Fargo. In case there is some confusion, as a result of rising interest rates (meaning the Fed is stuck in its attempts to push rates higher), the inability of the US consumer to purchase houses at artificially investor-inflated levels (meaning housing is now merely a hot potato flip fest between institutional investors A and B), and the end of the fourth dead-cat bounce in housing (meaning, well, self-explanatory), the bank’s primary business line – offering mortgages – is cratering.
So what is a bank with a limited target audience for its primary product to do? Why expand the audience of course. And in a move that is very much overdue considering all the other deranged aspects of the centrally-planned New Normal, in which all the mistakes of the last credit bubble are being repeated one after another, Reuters now reports that the California bank “is tiptoeing back into subprime home loans again.”
And so the circle is complete.
For those who may have forgotten the joys of a subprime lending bubble, here is a reminder from Reuters.
The bank is looking for opportunities to stem its revenue decline as overall mortgage lending volume plunges. It believes it has worked through enough of its crisis-era mortgage problems, particularly with U.S. home loan agencies, to be comfortable extending credit to some borrowers with higher credit risks.
The small steps from Wells Fargo could amount to a big change for the mortgage market. After the subprime mortgage bust brought the banking system to the brink of collapse in the financial crisis, banks have shied away from making home loans to anyone but the safest of consumers.
Any loosening of credit standards could boost housing demand from borrowers who have been forced to sit out the recovery in home prices in the past couple of years, but could also stoke fears that U.S. lenders will make the same mistakes that had triggered the crisis.
And in a world in which the new Wells Fargo is the old Wells Fargo, surely there will be companies willing to be the new New Century. Sure enough:
So far few other big banks seem poised to follow Wells Fargo’s lead, but some smaller companies outside the banking system, such as Citadel Servicing Corp, are already ramping up their subprime lending. To avoid the taint associated with the word “subprime,” lenders are calling their loans “another chance mortgages” or “alternative mortgage programs.”
Also, remember when lenders swore they were very conservative with who they make loans to, and their strict loan standards? Yup: that particular lie is also back.
Lenders say they are much stricter about the loans than before the crisis, when lending standards were so lax that many borrowers did not have to provide any proof of income. Borrowers must often make high down payments and provide detailed information about income, work histories and bill payments. Wells Fargo in recent weeks started targeting customers that can meet strict criteria, including demonstrating their ability to repay the loan and having a documented and reasonable explanation for why their credit scores are subprime.
Uh, there is a reason those borrowers are subprime. And it is: because they traditionally do not pay back their loans! But this appears to be one of those rocket surgery things that a strapped C-Suite has no choice but to confuse as it scrambles to compensate for structural revenue losses, and is willing to boost short-term revenues by offering anyone “who can fog a mirror” a mortgage. Surely, by the time the bank’s balance sheet implodes, it will be some other CEO’s problem.
It is looking at customers with credit scores as low as 600. Its prior limit was 640, which is often seen as the cutoff point between prime and subprime borrowers. U.S. credit scores range from 300 to 850.
But don’t worry, this time it’s different. Really
Subprime mortgages were at the center of the financial crisis, but many lenders believe that done with proper controls, the risks can be managed and the business can generate big profits.
Naturally, once Wells opens the floodgates, every other bank will promptly follow:
With Wells Fargo looking at loans to borrowers with weaker credit, “we believe the wall has begun to come down,” wrote Paul Miller, a bank analyst at FBR Capital Markets, in a research note.
Lenders have an ample incentive to try reaching further down the credit spectrum now. Rising mortgage rates since the middle of last year are expected to reduce total U.S. mortgage lending in 2014 by 36 percent to $1.12 trillion, the Mortgage Bankers Association forecasts, due to a big drop in refinancings.
The only missing pillar of the next subprime crisis is the spin that makes subprime lending seem not only ok, but in fact, necessary.
Some subprime lending can help banks, but it may also help the economy. In September 2012, then Federal Reserve Chairman Ben Bernanke said housing had been the missing piston in the U.S. recovery.
A recent report from think tank the Urban Institute and Moody’s Analytics argued that a full recovery in the housing market “will only happen if there is stronger demand from first-time homebuyers. And we will not see the demand needed among this group if access to mortgage credit remains as tight as it is today.”
The straw on the camel’s back: just like last time, when this subprime bubble bursts, it will once again drag down Fannie and Freddie. Because humans apparently have a genetic inability to recall any historical lessons older than five years.
Wells Fargo isn’t just opening up the spigots. The bank is looking to lend to borrowers with weaker credit, but only if those mortgages can be guaranteed by the FHA, Codel said. Because the loans are backed by the government, Wells Fargo can package them into bonds and sell them to investors.
The funding of the loans is a key difference between Wells Fargo and other lenders: the big bank is packaging them into bonds and selling them to investors, but many of the smaller, nonbank lenders are making mortgages known as “nonqualified loans” that they are often holding on their books.
And not only the GSE: any and all idiots who buy subprime exposure direct, deserve all they get:
Citadel Servicing Corp, the country’s biggest subprime lender, is trying to change that. It plans to package the loans it has made into bonds and sell them to investors.
Citadel has lent money to people with credit scores as low as 490 – though they have to pay interest rates above 10 percent, far above the roughly 4.3 percent that prime borrowers pay now.
No story about subprime would be complete without the human touch, and one person’s story.
As conditions ease, borrowers are taking notice. Gary Goldberg, a 63-year-old automotive detailer, was denied loans to buy a house near Rancho Cucamonga, California. Last summer he was forced to move into a trailer park in Las Vegas.
Going from 2,000 square feet to 200 – along with his wife and two German shepherd dogs – was tough. He longed to buy a house. But a post-crash bankruptcy of his detailing business had torched his credit, taking his score from the 800s to the 500s.
“There was no way I was going to get a mortgage,” said Goldberg. “No bank would touch me.”
But in December, he moved into a 1,000-square-foot one-story home that he paid $205,000 for. His lender, Premiere Mortgage Lending, did not care about his bankruptcy or his subprime credit score. That is because Goldberg had a 30 percent down payment and was willing to pay an 8.9 percent interest rate.
Brilliant – an 8.9% interest rate for a person who can barely make ends meet: what can possibly go wrong. Oh wait, we know: maybe the fact that Wells picked the absolutely worst moment to return subprime – just as the broader housing market is about to take yet another steep plunge for the worse, as the recent foreclosure report from RealtyTrac confirmed, when it reported a dramatic 57% increase in California foreclosure starts from a year ago.
“The monthly increase in January foreclosure activity was somewhat expected after a holiday lull, but the sharp annual increases in some states shows that many states are not completely out of the woods when it comes to cleaning up the wreckage of the housing bust,” said Daren Blomquist, vice president at RealtyTrac. “The foreclosure rebound pattern is not only showing up in judicial states like New Jersey, where foreclosure activity reached a 40-month high in January, but also some non-judicial states like California, where foreclosure starts jumped 57 percent from a year ago, following 17 consecutive months of annual decreases.”
In short – the party is over, and the banks are once again scrambling to delay the day of reckoning as much as possible.
9/11, Bernanke, broken window fallacy, budgets, CNBC, cold, Delusion, Facebook, fallacy, Federal Reserve,Frederic Bastiat, GDP, Henry Hazlitt, ICE, iGadgets, Ivy League, Jim Cramer, Keynesian, National Debt, Obama,Obamacare, Paul Krugman, Philadelphia, reality, Taxes, Twitter, Upton Sinclair, Wall Street, winter storm
“Economics is haunted by more fallacies than any other study known to man. This is no accident. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.
In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of man to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.” –Henry Hazlitt – Economics in One Lesson
Saturday was the first day since a double shot of snow and ice storms hit the Philadelphia metro area on Monday and Wednesday I had a chance to drive around Montgomery County and witness the devastation firsthand. Over 750,000 homes lost power at the height of the ice storm on Wednesday and over 100,000 remained without power this past weekend. The mainstream media has become such a farce and propaganda machine for vested interests, it is essential to verify with your own eyes everything they report as fact. Their purpose is to entertain the consciously ignorant, exaggerate threats to keep the low IQ multitudes fearful, and function as mouthpieces for the ruling class. Deceitful corporate executives, mendacious government apparatchiks, and oblivious teleprompter reading media talking heads have been utilizing cold weather as an excuse for every poor earnings announcement, horrific employment report, and dreadful decline in retail sales. It certainly has nothing to do with decades of stagnant household income, awful monetary and fiscal policies, or the consequences of Obamacare.
We have become a delusional state dependent upon fallacies to convince ourselves our foolhardy beliefs, ludicrous economic policies, corrupt captured political system, and preposterously fraudulent financial system are actually based on sound logic and reason. Some fallacies have been perpetrated intentionally by the ruling class to manipulate, sway and deceive the populace, while others have been willfully employed by millions of techno-narcissistic iGadget addicted zombies as a substitute for thinking, reasoning and taking responsibility for the course of our nation.
You have men who constitute the unseen true ruling power of the country making a conscious and intentional effort to peddle fallacies to the masses in order to manipulate, mold, and corral them in a manner beneficial to the ruling power, financially, politically, and socially. The ruling class has been hugely successful in their capture of the public mind, creating a vast majority of the willfully ignorant who desperately grasp at fallacious concepts, beliefs, and storylines in order to avoid dealing with reality and being accountable for their actions and the actions of their leaders.
The fallacy being flogged by government drones and the legacy media about companies not hiring new employees because it has been cold and snowy during the winter is beyond absurd, except to someone who lives in the cocoon of Washington D.C. or regurgitates words processed on a teleprompter by paid minions of the ruling class. If you live in the real world, run a business, or manage employees, you understand weather has absolutely nothing to do with your decision to hire an employee. An organization takes weeks or months to hire employees. They don’t stop hiring because it snowed on Wednesday or the temperature was below normal. The contention that hiring has been weak for the last two months due to weather is outlandish and based upon flawed logic and warped reasoning. It is so illogical, only an Ivy League economist could believe it.
The other fallacy being pontificated by retail executives in denial, cheerleaders on CNBC and the rest of the propaganda press is weather is to blame for terrible retail sales over the last quarter. Again, this argument is specious in its conception. The retail executives use weather as an excuse for their failure in execution, hubris in over-expanding, and arrogance in pursuit of quarterly earnings per share and bonuses. CNBC and the rest of the Wall Street media pawns must provide lame fallacies for the corporate fascists regarding our downward economic path or the masses my wake up to reality. Protecting and expanding the wealth of the parasitic oligarch class is the one and only purpose of the corporate media.
Think about whether cold and snow in the winter will really stop purchases by individuals. If you need a new shirt for work or a pair of sneakers and it snows on Wednesday, you will wait until Saturday to make the purchase. Groceries will be consumed and replenished whether it is cold and snowy, or not. If an appliance or car breaks down, weather will be a non-factor in the new purchase decision. The proliferation of on-line retailing allows everyone to shop from the warmth of their homes. If anything, bad winter weather often spurs stocking up of groceries and the purchase of items needed to contend with winter weather (salt, shovels, coats, hats, gloves). Only an asinine spokes-model bimbo on CNBC could non-questioningly report the press release excuses of retailers. Critical thinking skills and journalistic integrity are non-essential traits among the propaganda mainstream press today.
Revealing the truth about pitiful employment growth and dreadful retail sales would destroy the fallacy of economic recovery stimulated by the monetary policies of the Federal Reserve and fiscal policies of the Federal government. The ruling class must perpetuate the myth that central bankers pumping $3.2 trillion of debt into the veins Wall Street banks and Obama dumping $6.7 trillion of debt onto the shoulders of future generations in order to cure a cancerous disease created by debt, has revived our economy and cured the disease. The unseen governing class cannot admit their traitorous actions have impoverished the working middle class, destroyed small businesses, depleted senior citizens of their savings, and warped our economic system to such an extent that recovery in now impossible. If the ignorant masses were to become sentient, the ruling class would become lamppost decorations.
After discovering water pipes at my rental property had burst due to the extreme cold weather and witnessing the widespread damage caused by the mid-week ice storm, I immediately thought how overjoyed my favorite Keynesian, Ivy League, Nobel Prize winning, New York Times scribbler, Paul (destruction is good) Krugman must be. All this destruction and devastation will be a tremendous boost to the economy according to Krugman and his ilk. This intellectually deceitful, morally bankrupt, despicable excuse for a human being spoke these words of wisdom three days after the 9/11 attacks:
“Ghastly as it may seem to say this, the terror attack – like the original day of infamy, which brought an end to the Great Depression – could even do some economic good. So the direct economic impact of the attacks will probably not be that bad. And there will, potentially, be two favorable effects. First, the driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings. As I’ve already indicated, the destruction isn’t big compared with the economy, but rebuilding will generate at least some increase in business spending.”
He had expanded his broken window beliefs to broken buildings, broken nations, and a broken people. You can’t keep a cunning Keynesian down when they need to propagate discredited fallacies in order to feed their own ego and promote foolish debt fueled spending by government, consumers and corporations as a solution to all economic ills. It makes no difference to a statist like Krugman that Frederic Bastiat had obliterated the preposterous notion that destruction and the money spent to repair the destruction was a net benefit to society, 164 years ago in his essay – That Which is Seen, and That Which is Not Seen. Bastiat’s logic is unassailable. Only the most highly educated Princeton economists don’t get it.
Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation – “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.
I wonder whether the myopic focus on only immediate impacts and inability of ideologues to understand unintended consequences is premeditated or just erroneous reasoning. The broken window fallacy can now be extended to broken limbs and burst pipes across the Northeast. Huge trees have been toppled, limbs and branches are strewn on the properties of homeowners across the region, homes and businesses have been physically damaged, and power outages wrecked profits at small businesses. Society has gained no benefit whatsoever from the mass destruction wrought by these storms. Thi
s weather induced ruin exposes GDP calculations as useless and misleading regarding the true economic health of the nation. The hundreds of millions in destruction will not be factored into the GDP calculation, but the spending by homeowners and businesses to remove downed trees, fix broken roofs, replace burst pipes and clean-up debris will be factored positively in the GDP calculation. The inevitable politician response will be increased government spending to repair damage to infrastructure. This will also be additive to GDP. Krugman will get a tingle up his leg.
CNBC’s Cramer & Liesman will rave about the unexpectedly strong GDP in the first quarter as proof the economy is doing great. The fallacy that GDP growth and stock market gains are beneficial to the average American will be flogged by the propaganda press at the behest of the ruling class until the last vestiges of national wealth are confiscated by the oligarchs. In the real world, the destruction caused by the harsh winter weather will not benefit society one iota. GDP will reflect the immediate short-term seen impact of the cleanup and repair of property damage. GDP will ignore the unseen opportunity costs which were lost and the long-term consequences of expenditures made to put property back in the condition in which it started. Destruction does not create profit, except in the Keynesian world of Krugman and his Ivy League educated sycophant cronies.
There are 2.5 million households in the Philadelphia metro area. There are hundreds of thousands with trees down, pipes frozen, gutters smashed, roofs leaking and electrical infrastructure damaged. An individual homeowner with a couple of large trees down will need to pay $500 to $1,000 for a tree service to remove the debris from their property. Considering the median household income in Montgomery County, PA is $75,000, that is not an insubstantial sum.
The homeowner did not anticipate this expenditure and will react by not dining out, taking a shorter vacation, not buying that new couch, or not investing in their small business. A landlord who has to repair busted pipes will incur added expense, resulting in less profit. Less profit means less taxes paid to the state and federal government, exacerbating their budget deficits. The landlord will defer replacing that old air conditioner for at least another year. Multiply these scenarios across the entire Northeastern United States and you have the long-term negative financial implications outweighing the short-term boost to GDP.
The Keynesian fallacy of increased economic activity being beneficial is annihilated by the fact homeowners and business owners are left in the same condition as they were prior to the storms, while the money spent to achieve the same property condition was not spent on other goods and services that would have truly expanded the economy. The fallacious government engineered GDP calculation will portray destruction as an economic boost. Keynesian worshiping economists and government bureaucrats observe this tragedy as only between two parties, the consumer who is forced to repair their property and is denied the pleasure of spending their money on something more enjoyable and the tree service company who experiences a positive impact to their business. They exclude the appliance store, restaurant, or hotel that did not receive the money spent on repairing the property. It is this third unseen party who is left out of the equation. It is this third party that shows the absurdity of believing destruction leads to profit and economic advancement. The national economic output is not increased, but highly educated government drones and Wall Street captured economists will point to GDP and disseminate the fallacy.
This leads us to government in general and the fallacy that government spending, government borrowing, and government programs are beneficial to society and the economy. Legalized plunder of the populace through income taxes, real estate taxes, sales taxes, gasoline taxes, cigarette taxes, license fees, sewer fees, tolls, and a myriad of other ass raping techniques is used to subsidize crony capitalist special interests, the military industrial complex, faux wars on poverty, drugs and terror, a failed public education system, vote buying entitlement programs, and a tax code written to benefit those who pay the biggest bribes to the corrupt politicians slithering around the halls of congress.
Government is a criminal enterprise designed to take from the weak and powerless while benefitting the connected and powerful. The government extracts the earnings of citizens and businesses at the point of a gun and redistributes those funds to special interests; funding boondoggles, wars of choice, foreign dictators, and the corporate and banking interests who control the puppet strings of Washington politicians. State organized and legal plunder designed to enrich everyone at the expense of everyone else is the delusional fallacy permeating our cultural mindset today.
President Obama declared my region a disaster area, allowing for government funds to supposedly help in the cleanup efforts. Again, the fallacy of government intervention benefiting society is unquestioned by the ignorant masses. Local and State governments are required by law to balance their budgets. The never ending progression of storms and record cold temperatures has already blown the winter storm budgets of transportation departments across the region. Gaping potholes are swallowing vehicles and will need to be repaired.
Government spokespersons and politicians tell the public not to worry. The government will come to the rescue, even when the funds officially run out. They won’t react the way a family would react to a budget overage, by cutting spending in another area. We have had mild winters in the recent past when the winter road budgets were far under. Did the government set aside this surplus for winters like the one we are currently experiencing? Of course not – they spent it on some other boondoggle program or useless shovel ready bridge to nowhere. Government politicians and their lackeys do not look beyond their 2 year election cycle.
The government budget overages due to winter storms will show up in the GDP calculation as a positive impact. A snowplow pushing snow to the side of the road and a crew filing a pothole has put the roadway back into the condition it was prior to the bad weather. The roadway is exactly the same. The money spent could have been used to pay down debt, fund the government pension shortfalls which will overwhelm taxpayers in the foreseeable future, or be given back to citizens to spend as they choose. There has been no net benefit to society.
No government spending provides a net benefit to society. Every government program, law, regulation, subsidy, tax or fee gives rise to a series of effects. The immediate seen effect may be favorable in the eyes of myopic politicians and an ignorant populace, but most government intervention in our lives proves to be fatal and unsustainable in the long-term. Whatever short-term benefits might accrue is far outweighed by the long-term negative implications on future generations. All government expenditures are foisted upon the public either through increased taxation or state created surreptitious inflation.
We have a country built on a Himalayan mountain of fallacies. We are a short-term oriented people who only care about our present situation, giving no thought about long-term consequences of our policies, programs, laws or actions. Critical thinking skills, reasoning abilities, and a basic understanding of mathematical concepts appear to be beyond our grasp. We’d rather believe falsehoods than deal with the harsh lessons of reality. We choose to experience the severe penalties of burying our heads in the sand over using our God given ability to think and foresee the future consequences of our irrational choices. We suffer from the ultimately fatal disease of ignorance, as described by Bastiat.
This explains the fatally grievous condition of mankind. Ignorance surrounds its cradle: then its actions are determined by their first consequences, the only ones which, in its first stage, it can see. It is only in the long run that it learns to take account of the others. It has to learn this lesson from two very different masters – experience and foresight. Experience teaches effectually, but brutally. It makes us acquainted with all the effects of an action, by causing us to feel them; and we cannot fail to finish by knowing that fire burns, if we have burned ourselves. For this rough teacher, I should like, if possible, to substitute a more gentle one. I mean Foresight.
It’s a big country and one fallacy doesn’t fit all. Some fallacies are committed purposefully by evil men with evil intent. The Wall Street financial elite, big corporations, big media and their politician puppets fall into this category. Other fallacies are executed by people whose salary depends upon the fallacies being believed by the masses. Middle level bankers, managers, journalists, and bureaucrats fall into this category. And lastly you have the willfully ignorant masses who would rather believe fallacies than look up from their iGadgets, Facebook, and Twitter and think. The thing about fallacies is they eventually are buried under an avalanche of reality. If you listen closely you can hear the rumble of snow beginning to give way on the mountaintop. Fallacies are about to be crushed and swept away by the real world of consequences.
“Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid. It was an experience for which the captains of industry were not entirely prepared; they had forgotten the public. It was like some great convulsion of nature, which made mockery of all the powers of men, and left the beholder dazed and terrified. In Wall Street men stood as if in a valley, and saw far above them the starting of an avalanche; they stood fascinated with horror, and watched it gathering headway; saw the clouds of dust rising up, and heard the roar of it swelling, and realized it was only a matter of time before it swept them to their destruction…
But it is difficult to get a man to understand something when his salary depends upon him not understanding it.”
Upton Sinclair – The Moneychangers
Treasury pulls back as U.S. hits debt limit again
The first of several “extraordinary measures” to avoid the debt limit has gone into effect.
WASHINGTON – The Treasury Department stopped issuing securities to state and local governments at noon Friday, instituting the first of what will likely be several steps to stay under the debt limit enacted by Congress.
Under the budget deal passed by Congress last November, the debt limit was temporarily suspended — but only through Friday. Beginning Saturday, the debt limit will be reset to its current level, about $17.2 trillion.
Congress has voted to raise the debt ceiling three times since 2011. But it’s missed the deadline each time, forcing the Treasury Department to use what it calls “extraordinary measures” to avoid hitting the debt ceiling.
The first of those measures is to stop accepting deposits from state and local governments, which often need a short-term place to park their proceeds from issuing bonds. Those are called State and Local Government Series bonds, or SLGS.
“From the state and local government’s perspective, it’s more money and more nuisance to them, and that’s unfortunate,” said Bob Eidnier, a tax lawyer with Squire Sanders in Cleveland. “State and local governments that have to deal with this get very flustered.”
The next steps available to the Treasury would be to delay payments to some pension funds, and to spend down an emergency currency reserve fund.
In the past, those measures have lasted as long as five months. But this time, Treasury Secretary Jacob Lew has warned Congress that they have only until late February before the United States would be forced to default. That’s because the Treasury has more money going out than coming in as tax season begins and the IRS starts issuing tax refunds.
Senate Budget Chairwoman Patty Murray, D-Wash., said the expiration of borrowing authority signals “another round of Republican debt limit drama.”
“We’re now at a point when the Treasury Department will have to take extraordinary measures to ensure the United States can continue to make the payments it owes, including Social Security checks and even tax refunds,” she said. “There’s no reason to drag this out any longer.”
But House Speaker John Boehner, R-Ohio, said Thursday that lawmakers were “still looking for the pieces to this puzzle” and that “no decision has been made” on how to package a debt limit increase.
In the past, Republicans have demanded spending cuts and other budget changes as part of any deal to increase the debt limit, and Boehner said any vote to increase the limit would be controversial. “If Congress wanted to make Mother Teresa a saint, and attach that to the debt ceiling, we probably couldn’t get 218 votes.”
You Can Buy A House For One Dollar Or Less In Economically Depressed Cities All Over America
Would you like to buy a house for one dollar? If someone came up to you on the street and asked you that question, you would probably respond by saying that it sounds too good to be true. But this is actually happening in economically-depressed cities all over America. Of course there are a number of reasons why you might want to think twice before buying any of these homes, and I will get into those reasons in just a little bit. First, however, it is worth noting that many of the cities where these “free houses” are available were once some of the most prosperous cities in the entire country. In fact, the city of Detroit once had the highest per capita income in the entire nation. But as millions of good jobs have been shipped overseas, these once prosperous communities have degenerated into rotting, decaying hellholes. Now homes that once housed thriving middle class families cannot even be given away. This is happening all over America, and what we are witnessing right now is only just the beginning.
The photo that I have posted below was sent to me by a reader just the other day. It is a photo of a house in Yakima, Washington that is apparently being given away for free. At one time it was probably quite a lovely home, but now nobody seems to want it…
This piqued my curiosity, so I started doing some research and I discovered that homes all over the nation are being sold off for a dollar or less. The following are just a few examples…
–Buffalo, New York: “The Urban Homestead Program that is offered by the City of Buffalo enables qualified buyers to purchase a home that has been deemed ‘homestead eligible’ for $1.00 and there are plenty of properties left. There are three main requirements when purchasing a homestead property; the owner must fix all code violations within 18 months, have immediate access to at least $5000, and live there for at least three years. You also have to cover the closing costs of the purchase.”
–Gary, Indiana: “Officials say that a third of the houses in Gary are unoccupied, hollowed dwellings spread across a city that, like other former industrial powerhouses, has lost more than half its population in the last half-century.
While some of those homes will be demolished, Gary is exploring a more affordable way to lift its haggard tax base and reduce the excess of empty structures: sell them for $1.”
–South Bend, Indiana: “How could you refuse this offer? The city of South Bend, Indiana wants to give this handsome circa-1851 Italianate farmhouse away to anyone willing to properly restore it. Aside from the boarded up windows (the boards are painted to look like real windows), the place is in pretty good shape, with a completely restored exterior, new roof, and all new HVAC, plumbing and electrical systems. All you’ll need to do is restore the gutted (but clean as can be) interior.”
–Detroit, Michigan: “Now that the motor city has effectively run out of gas and declared bankruptcy, some rather eye-popping deals are presenting themselves to first time home buyers who appreciate the challenge of a fixer-upper.
Hundreds of Detroit homes currently listed on Zillow have asking prices below $5,000, with at least one seller so desperate as to offer his house for just $1, ABC News reported.”
And guess who is selling more “one dollar homes” than anyone else?
If you guessed “the federal government” you would be correct.
Right now, the federal government is selling foreclosed homes to low income families all over the country for just one dollar…
HUD’s Dollar Homes initiative helps local governments to foster housing opportunities for low to moderate income families and address specific community needs by offering them the opportunity to purchase qualified HUD-owned homes for $1 each.
Dollar Homes are single-family homes that are acquired by the Federal Housing Administration (which is part of HUD) as a result of foreclosure actions. Single-family properties are made available through the program whenever FHA is unable to sell the homes for six months.
By selling vacant homes for $1 after six months on the market, HUD makes it possible for communities to fix up the homes and put them to good use at a considerable savings.
Before you get too excited, there are a whole bunch of reasons why you wouldn’t want to actually buy any of these one dollar homes.
First of all, most of them have been totally trashed. Just to get them up to livable condition would take thousands of dollars in most cases. Many of them are full of asbestos, and severe wiring and plumbing issues are quite common.
Secondly, you assume all of the liability for a home when you buy it. So if a homeless person stumbles in and injures himself, you could be liable for his injuries.
Thirdly, many of these homes are in very high crime neighborhoods. In some of these areas, people will literally rip up and carry away anything that is not bolted down.
Fourthly, property taxes are very high in many of these cities. Local governments are desperate to get people into these homes so that they can get the taxes flowing again. In many cases, what you would pay in taxes for a year is more than the true value of the home itself.
So, like I said, these homes are not the “great deal” that they may appear to be at first glance.
But that is not really the issue.
The real question is this: What is causing our communities to decay so dramatically?
And of course a big part of the answer is that the middle class in America is dying.
According to Time Magazine, one new report has discovered that nearly half the country is constantly living in a state of “persistent economic insecurity”…
But as evidenced by a report out Thursday from the Corporation for Enterprise Development, nearly half of Americans are living in a state of “persistent economic insecurity,” that makes it “difficult to look beyond immediate needs and plan for a more secure future.”
That same report also found that 56 percent of all Americans now have “subprime credit”.
We are a nation that is losing our independence and sinking into poverty.
Right now, 49.2 percent of all Americans are receiving benefits from at least one government program, and the U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.
Millions of our jobs have been shipped overseas, the control freak bureaucrats that are running things are absolutely killing “the little guy”, and poverty in the United States is exploding at a frightening pace.
Things are “changing” in this country, and not for the better.
One way that the death of the middle class is manifesting itself is in the death of shopping malls all over America. The following is an excerpt from a recent Business Insider article…
All across America, once-vibrant shopping malls are boarded up and decaying.
Traffic-driving anchors like Sears and JCPenney are shutting down stores, and mall owners are having a hard time finding retailers large enough to replace them. With a fresh wave of closures on the horizon, the problem is set to accelerate, according to retail and real estate analysts.
According to that same article, one prominent retail analyst believes that we could see up to 50 percent of the shopping malls in America close within 20 years…
Within 15 to 20 years, retail consultant Howard Davidowitz expects as many as half of America’s shopping malls to fail. He predicts that only upscale shopping centers with anchors like Saks Fifth Avenue and Neiman Marcus will survive.
And did you catch that last part? Only the shopping malls in wealthy areas will survive because the wealthy will be the only ones with enough money to support them.
For much more on this phenomenon, please see my previous article entitled “What Recovery? Sears And J.C. Penney Are DYING“.
At this point, things have already gotten so bad that now even Wal-Mart is having trouble. In fact, Wal-Mart is blaming the recent slowdown in sales on cuts to the federal food stamp program…
Wal-Mart announced today that cuts in a federal food stamp program as well as record cold temperatures hurt its fourth quarter profits.
After previously reporting “relatively flat” sales for the quarter, Wal-Mart Stores Inc. now says that sales for its namesake store and its Sam’s Club locations would be “slightly negative” for the November-January quarter, according to Agence France-Presse.
Wal-Mart’s Chief Financial Officer, Charles Holley, blamed the revised forecast on deeper-than-expected cuts to the U.S. Supplemental Nutrition Assistance Program (SNAP) and the extreme cold weather occurring in the past month.
This is how far the middle class in America has fallen. So many people are now on food stamps that even a slight reduction in benefits has a huge impact on the largest retailer in the entire country.
And actually, many rural communities could end up losing their Wal-Mart stores in the years ahead as the economy continues to deteriorate. In a recent CNBC article entitled “Time to close Wal-Mart stores? Analysts think so“, it was suggested that Wal-Mart should close about 100 “underperforming” supercenters in rural locations around the nation.
We are rapidly becoming “two Americas”. In the “good America”, the wealthy will still have plenty of retail stores to choose from within easy driving distance from their million dollar homes.
In the “bad America”, which will include most of us, our shopping malls will be closing down and the rotting, decaying homes of our neighbors will be sold off for next to nothing.
So which America do you live in?
all cash sales, Bernanke, Blackrock, BLS, case-shiller, CNBC, distressed sales, Doctor Housing Bubble, Federal Reserve, flippers, home prices, Larry Yun, Mortgage applications, Mortgage rates, NAR, QE, Realtytrac, Wall Street, Yellen
The report from RealtyTrac last week proves beyond the shadow of a doubt the supposed housing market recovery is a complete and utter fraud. The corporate mainstream media did their usual spin job on the report by focusing on the fact foreclosure starts in 2013 were the lowest since 2007. Focusing on this meaningless fact (because the Too Big To Trust Wall Street Criminal Banks have delayed foreclosure starts as part of their conspiracy to keep prices rising) is supposed to convince the willfully ignorant masses the housing market is back to normal. It’s always the best time to buy!!!
The talking heads reading their teleprompter propaganda machines failed to mention that distressed sales (short sales & foreclosure sales) rose to a three year high of 16.2% of all U.S. residential sales, up from 14.5% in 2012. The economy has been supposedly advancing for over four years and sales of distressed homes are at 16.2% and rising. The bubble headed bimbos on CNBC don’t find it worthwhile to mention that prior to 2007 the normal percentage of distressed home sales was less than 3%. Yeah, we’re back to normal alright. We are five years into a supposed economic recovery and distressed home sales account for 1 out of 6 all home sales and is still 500% higher than normal.
The distressed sales aren’t even close to the biggest distortion of this housing market. The RealtyTrac report reveals that all-cash purchases accounted for 42% of all U.S. residential sales in December, up from 38% in November, and up from 18% in December 2012. Does that sound like a trend of normalization? There were five states where all-cash transactions accounted for more than 50% of sales in December – Florida (62.5%), Wisconsin (59.8%), Alabama (55.7%), South Carolina (51.3%), and Georgia (51.3%). In the pre-crisis days before 2008, all-cash sales NEVER accounted for more than 10% of all home sales. NEVER. This is all being driven by hot Wall Street money, aided and abetted by Bernanke, Yellen and the rest of the Fed fiat heroine dealers.
The fact that Wall Street is running this housing show is borne out by mortgage applications languishing at 1997 levels, down 65% from the 2005 highs. Real people in the real world need a mortgage to buy a house. If mortgage applications are near 16 year lows, how could home prices be ascending as if there is a frenzy of demand? Besides enriching the financial class, the contrived elevation of home prices and the QE induced mortgage rate increase has driven housing affordability into the ground. First time home buyers account for a record low percentage of 27%. In a normal non-manipulated market, first time home buyers account for 40% of home purchases.
Price increases that rival the peak insanity of 2005 have been manufactured by Wall Street shysters and the Federal Reserve commissars. Doctor Housing Bubblesums up the absurdity of this housing market quite well.
The all-cash segment of buyers has typically been a tiny portion of the overall sales pool. The fact that so many sales are occurring off the typical radar suggests that the Fed’s easy money eco-system has created a ravenous hunger with investors to buy up real estate. Why? The rentier class is chasing yields in every nook and cranny of the economy. This helps to explain why we have such a twisted system where home ownership is declining yet prices are soaring. What do we expect when nearly half of sales are going to investors? The all-cash locusts flood is still ravaging the housing market.
The Case-Shiller Index has shown price surges over the last two years that exceed the Fed induced bubble years of 2001 through 2006. Does that make sense, when new homes sales are at levels seen during recessions over the last 50 years, and down 70% from the 2005 highs? Even with this Fed/Wall Street induced levitation, existing home sales are at 1999 levels and down 30% from the 2005 highs. So how and why have national home prices skyrocketed by 14% in 2013 after a 9% rise in 2012? Why are the former bubble markets of Las Vegas, Los Angeles, San Diego, San Francisco and Phoenix seeing 17% to 27% one year price increases? How could the bankrupt paradise of Detroit see a 17.3% increase in prices in one year? In a normal free market where individuals buy houses from other individuals, this does not happen. Over the long term, home prices rise at the rate of inflation. According to the government drones at the BLS, inflation has risen by 3.6% over the last two years. Looks like we have a slight disconnect.
This entire contrived episode has been designed to lure dupes back into the market, artificially inflate the insolvent balance sheets of the Too Big To Trust banks, enrich the feudal overlords who have easy preferred access to the Federal Reserve easy money, and provide the propaganda peddling legacy media with a recovery storyline to flog to the willingly ignorant public. The masses desperately want a feel good story they can believe. The ruling class has a thorough understanding of Edward Bernays’ propaganda techniques.
“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of.”
Ben Bernanke increased his balance sheet by $3.2 trillion (450%) since 2008, and it had to go somewhere. We know it didn’t trickle down to the 99%. It was placed in the firm clutches of the .1% billionaire club. Bernanke sold his QE schemes as methods to benefit Main Street Americans, when his true purpose was to benefit Wall Street crooks. 30 year mortgage rates were 4.25% before QE2. 30 year mortgage rates were 3.5% before QE3. Today they stand at 4.5%. QE has not benefited average Americans. They are getting 0% on their savings, mortgage rates are higher, and their real household income has fallen and continues to fall.
But you’ll be happy to know banking profits are at all-time highs, Blackrock and the rest of the Wall Street Fed front running crowd have made a killing in the buy and rent ruse, and record bonuses are being doled out to the men who have wrecked our financial system in their gluttonous plundering of the once prosperous nation. Their felonious machinations have added zero value to society, while impoverishing a wide swath of America. Bernanke, Yellen and their owners have used their control of the currency, interest rates, and regulatory agencies to create the widest wealth disparity between the haves and have-nots in world history. Their depraved actions on behalf of the .1% will mean blood.
Just as Greenspan’s easy money policies of the early 2000’s created a housing bubble, inspiring low IQ wannabes to play flip that house, Bernanke’s mal-investment inducing QEternity has lured the get rich quick crowd back into the flipping business. The re-propagation of Flip that House shows on cable is like a rerun of the pre-bubble bursting frenzy in 2005. RealtyTrac’s recent report details the disturbing lemming like trend among greedy institutions and dullard brother-in-laws across the land.
- 156,862 single family home flips — where a home is purchased and subsequently sold again within six months — in 2013, up 16% from 2012 and up 114% from 2011.
- Homes flipped in 2013 accounted for 4.6% of all U.S. single family home sales during the year, up from 4.2% in 2012 and up from 2.6% in 2011
The easy profits just keep flowing when the Fed provides the easy money. What could possibly go wrong? Home prices never fall. A brilliant Ivy League economist said so in 2005. The easy profits have been reaped by the early players. Wall Street hedge funds don’t really want to be landlords. Flippers need to make a quick buck or their creditors pull the plug. Home prices peaked in mid-2013. They have begun to fall. The 35% increase in mortgage rates has removed the punchbowl from the party. Anyone who claims housing will improve in 2014 is either talking their book, owns a boatload of vacant rental properties, teaches at Princeton, or gets paid to peddle the Wall Street propaganda on CNBC.
Reality will reassert itself in 2014, with lemmings, flippers, and hedgies getting slaughtered as the housing market comes back to earth with a thud. The continued tapering by the Fed will remove the marginal dollars used by Wall Street to fund this housing Ponzi. The Wall Street lemmings all follow the same MBA created financial models. They will all attempt to exit the market simultaneously when their models all say sell. If the economy improves, interest rates will rise and kill the housing market. If the economy tanks, the stock market will plunge, creating fear and killing the housing market. Once it becomes clear that prices have begun to fall, the flippers will panic and start dumping, exacerbating the price declines. This scenario never grows old.
Real household income continues to fall and nearly 25% of all households with a mortgage are still underwater. Young people are saddled with $1 trillion of government peddled student loan debt and will not be buying homes in the foreseeable future. Dodd-Frank rules will result in fewer people qualifying for mortgages. Mortgage insurance is increasing. Obamacare premium increases are sucking the life out of potential middle class home buyers. Retailers have begun firing thousands. The financial class had a good run. They were able to re-inflate the bubble for two years, but the third year won’t be a charm. In a normal housing market 85% of home sales would be between individuals using a mortgage, 10% would be all cash transactions, less than 5% of sales would be distressed, and 40% would be first time buyers. In this warped market only 40% of home sales are between individuals using a mortgage, 42% are all cash transactions, 16% are distressed sales, 5% are flipped, and only 27% are first time buyers. The return to normalcy will be painful for shysters, gamblers, believers, paid off economists, Larry Yun, and CNBC bimbos.
Wednesday, January 29, 2014
Just ahead of the housing collapse that triggered the economic collapse and jobless drift, this man, Angelo Mozilo, then CEO at Countrywide, and Bilderberg Steering Committee member James A. Johnson, then CEO of Fannie Mae, were granting Congresspeople preferential “VIP” loans – while Goldman Sachs (with James A. Johnson a board member) bet on its collapse, and of the AIG insurance backing it.
Congress investigated and found some… issues… but these (apparent) criminals go free and remain in the shadows of public knowledge.
With Johnson a Bilderberg steering committee member, multiple-presidential campaign advisor and Goldman Sachs board member, it is perhaps significant to note that at the 2006 Bilderberg Meeting in Ottawa, Canada, investigative journalist Daniel Estulin reported that sources were telling him that Bilderberg had essentially decided to pop the housing bubble and that concerns over the housing crisis would be used to further bring the economy down This was two years before the housing collapse would trigger the worst economic crisis in the United States since the Great Depression – no one could have just made this stuff up. There is the clear indication here of insider trading and racketeering – a real investigation needs to take place to point fingers and arrest the banksters committing racketeering.
Mozilo’s compensation during the United States housing bubble of 2001–06 later came under scrutiny. During that period, his total compensation (including salary, bonuses, options and restricted stock) approached $470 million.
Mozilo testified before the United States House Committee on Oversight and Government Reform on March 7, 2008, calling reports of their pay “grossly exaggerated” in some instances and pointing out that they lost millions as well. He defended the pay: The compensation was a function of how the company did ahead of the mortgage crisis.
(Though there is obvious corruption, no prosecutions or further investigations have taken place.)
IX. Countrywide and Fannie Mae Were Closely Aligned
From the U.S. House of Representatives Committee on Oversight and Government Reform(Darrell Issa, Chairman) report from July 5, 2012, titled “How Countrywide Used its VIP Loan Program To Influence Washington Policymakers.”
In 1999, Fannie Mae CEO Jim Johnson and Countrywide CEO Angelo Mozilo reached a strategic agreement giving Fannie Mae exclusive access to many of the loans originated by Countrywide in exchange for a discount on fees Fannie charged when buying loans. The agreement linked the growth and success of Countrywide to Fannie Mae’s continued desire to acquire a large volume of loans. Fannie Mae designed the deal to lock competitor Freddie Mac out of the market for Countrywide’s loans. 218 The agreement amounted to a volume discount. According to Paul Muolo and Matthew Padilla, co – authors of Chain of Blame , the arrangement linked Fannie Mae and Countrywide “at the hip.”
E – mail from Maritza Cruz to Kay Gerfen (Sep. 19, 2002) (CW – COGR2 – 0007149). Instead of assessing the standard fee a 75 of 23 basis points (0.23 percent) for every loan it guaranteed, Fannie Mae charged Countrywide only 13 basis points, “the lowest ‘g – fee’ deal Fannie had ever granted.” 220 While negotiating the volume discount, Countrywide CEO Angelo Mozilo leveraged his company’s position as the nation’s largest residential housing lender to extract concessions from Fannie Mae CEO Jim Johnson, who himself received more than $10 million worth of Countrywide VIP loans. 221 Fannie Mae General Counsel Alfred Pollard stated that he is “not aware of a general industry practice of other purchasers of mortgages entering into similar agreements during this timeframe . . . .”
FINDING: A strategic alliance forged in 1999 between Countrywide and Fannie Mae linked the growth of the two companies. The agreement was unique – there was not a general industry practice of giving a volume discount to a mortgage originator. In 2005, the two companies agreed to work together to expand lending to low – income borrowers. Countrywide and Fannie Mae further expanded their relationship with another strategic alliance agreement in 2005. During each quarter, Countrywide was required to sell to Fannie Mae at least 70 percent of all “Expanded Criteria Mortgages,” and at least 65 percent of those mortgages each month. Fannie Mae also agreed to “provide special marketing and other assistance” to Countrywide in its efforts to reach low – income borrowers. 224 Both parties pledged to continue a “Favored Relationship” in which they were “committed to the business success of the other party.” 225 The 2005 agreement required both companies to “maintain the complete confidentiality of the existence and terms of this agreement.”
In September 2005, Fannie Mae lobbyist Sharon Canavan wrote an e – mail to Countrywide lobbyist Pete Mills. Canavan, whose own loans were processed by Countrywide’s VIP unit, stated: “We just signed a new alliance deal with you guys. Pleasure doing business with you Mills replied: “Good. I like you guys!!!” 228 Fannie Mae Employees Gave Countrywide Inside Information Throughout 2005, Fannie Mae and Countrywide continued to expand their alliance. In April 2005, Fannie offered Countrywide “improved pricing for investor loan products,” the goal of which was “to offer an execution that is more competitive with private label execution.” 229 Days later, on April 19, 2005, a Fannie Mae official provided Countrywide executives with “a valuable heads up” on a change in loan collection policy.
David Battany, former Director of Single – Family Business in Fannie Mae’s Western Region office located in Pasadena, California, emphasized the sensitive nature of the information. In an e – mail to Countrywide Chief Risk Officer John McMurray, Battany stated: The above policy is not public, and you should be the first in the country to know this information. Please do not share this information outside of Countrywide at this time.
Fannie Mae Senior Executives Received the Highest Level of VIP Service Documents and information obtained by the Committee show the extent of Countrywide’s efforts to align the company with the most senior leadership at the GSEs. Documents show that Mozilo was personally involved in helping obtain discounted loans for former Fannie Mae executives James Johnson, Franklin Raines, Jamie Gorelick and Daniel Mudd. The documents also show Mozilo’s close personal relationship with Johnson, with whom he negotiated the first strategic partnership agreement that formally linked Countrywide and Fannie Mae for the first time. Jimmie Williams was familiar with Johnson and Raines. He received referrals from Fannie Mae and passed them to the VIP unit. He stated:
Q And did you regularly get referrals from Fannie Mae, or was this sort of a unique experience?
A I remember getting a couple from Fannie Mae. Q And when you got referrals from Fannie Mae, what did you do with them?
A The same process. It was the same thing, same process, same number, same desk. 232 Countrywide processed loans for Fannie Mae employees who participated in an employee assistance program, which provided money that could be put toward a down payment. Cruz testified that the VIP team was familiar with these complicated loans and processed them frequently. She stated:
Q: Do you recall that Fannie Mae and Freddie Mac employees were frequently referred into the program?
A: Yes. Actually, more Fannie Mae than Freddie Mac, but anybody that wanted to access our unit would get an application in and we would process it. In fact, we were aware of the employee assistance program for Fannie Mae, which requires a little bit of process that some people didn’t want to get involved when you have to take care of that. So we did, being that they knew among their employees, they knew how we were able to take care of those things, then they would refer themselves to us to take care of those loans.
Q: So Fannie Mae employees who took advantage of their internal employee assistance program
Q: — would be made aware of Countrywide’s A: Yes, that we were able to process that part of their transaction. Because it entailed to fill out some forms, get signatures, send it to another underwriter in Fannie Mae that would sign off and say , okay, the loan is okay for this part of the assistance. Because what it was, part of the down payment came from funds from Fannie Mae for them to purchase the property.
Jim Johnson James “Jim” Johnson became chairman and CEO of Fannie Mae in 1991. David Maxwell, former general counsel for the Department of Housing and Urban Development , had initially recruited him to join Fannie Mae.
Williams Tr. at 115 – 116. Shortly after assuming the top position at Fannie Mae , Johnson went on tour to meet with top executives at the 233 Rose Tr. at 162 – 165. Muolo and Padilla at 111. mortgage banking firms with which Fannie had business. In California, Johnson met Angelo Mozilo, whose company Countrywide was already selling conforming loans to Fannie Mae. 236 Fannie’s handled its business with Countrywide from Fannie Mae’s west coast office, “conveniently located right across the street from Countrywide’s headquarters.”
Johnson and Fannie Mae accountants in charge of tracking the sources of the loans purchased by the GSE noticed Countrywide’s rapid growth. 238 Realizing Fannie Mae would be buying the majority of its loans in the future from non – bank mortgage companies like Countrywide, Johnson made an effort to court Mozilo. At the time, Countrywide was originating billions in loans and was on its way to becoming “the largest residential lender in the United States.”
“When Jim realized how much volume Countrywide was taking down, especially in California, he made it his mission to get to know Angelo,” said a Johnson aide. As the business ties between Countrywide and Fannie Mae grew stronger, so too did the personal ties between the two CEOs. When Mozilo ordered discounts and other forms of preferential treatment for Johnson and his friends and family, he frequently reminded staff how important Johnson was to the company. After waiving one and a half points on a loan for Johnson, Mozilo reminded David Kovnesky: “Jim Johnson continues to be a source of many loans for our Company and this is just a small token of my appreciation for the business that he sends to us and for his loyalty to the Company.” He did. Johnson and Mozilo became closely aligned. 242 When Mozilo was helping Johnson arrange a loan for his son, he e – mailed Carlos Garcia: “I agreed to make a loan to Jim Johnson’s [son’s] trust . . . . [I]f Jim need s to cosign, he will. It is important that we make this loan because of Jim’s help to the Company over many years. Please call Jim directly . . . and let me know if you need anything else.” 243 In an e – mail to Andrew Gissinger, Mozilo stated: “Jim is a very important customer.”
Johnson was described as a “big time FOA” in another internal e-mail. Mozilo’s message got through. When Underwriter Gene Soda was uncomfortable approving a loan to Johnson because of credit issues, he knew to seek further instructions rather than deny Johnson’s loan application. In the past these loans were just approved as directed. However, based on [the credit report] I’m concerned about signing on these loan s. These are obviously very high profile borrowers and lack of performance will be reported. I need some direction on how to proceed. In an e-mail to Managing Director David Spector, Soda wrote:
Mozilo ordered the loan approved, and gave Johnson a break. He instructed the VIP unit: “Charge him ½ under prime. Don’t worry about [the credit score]. He is constantly on the road and therefore pays his bills on an irregular basis but he ultimately pays them.”
When Condé Nast Portfolio and The Wall Street Journal broke the story of the VIP program in June 2008, Johnson’s legal team requested help from Countrywide in developing a public relations strategy. In an e-mail to Countrywide’s Chief Legal Officer, Johnson’s lawyer wrote: On behalf of Jim Johnson, I wanted to solicit Countrywide’s willingness to put out a brief statement simply noting that this was part of a regular business program at Countrywide that served hundreds of senior corporate executives and high – net worth clients (much as any private banking unit would at any lender), and was not specific to Johnson’s Fannie Mae connection.”
Mozilo obliged. He notified Countrywide’s public relations staff that Johnson was enrolled in the VIP program because he referred a lot of business to Countrywide. Mozilo wrote: Jim received no ‘special’ treatment . He has been the source of much business to Countrywide because of his confidence in us and knowing that we would treat anyone who comes to us fairly.
In fact, Countrywide gave Johnson special treatment to a greater extent than it did for any other VIP borrower. Mozilo made sure Countrywide went to great lengths to reward Johnson for his personal and professional relationship with the company. Johnson received the full suite of benefits from Countrywide’s VIP unit – from keeping Johnson’s purchase of a condominium in the Ritz Carlton secret from his wife so he could surprise her, to giving discounted loans to his son 252 and his maid, E – mail from Maritza Cruz to Gene Soda, Apr, 27, 2005 (CW – COGR – 0073839). to ignoring 80 credit issues and debt ratios 255 Additionally, Johnson was able to refer borrowers to the VIP unit.
Johnson referred John Potter, Kent Conrad, and Donna Shalala to Countrywide, among others. when Johnson’s loans did not comply with lending standards. To assist Johnson’s lawyers, Countrywide quickly gathered data about the various loans Johnson received from Countrywide. The company’s own audit showed that Johnson received loans at below – market rates.
In an interview on National Public Radio’s Fresh Air, Morgenson described Johnson as “corporate America’s founding father of regulation manipulation.” Morgenson stated: This is a person who really, really wrote the blueprint for how to neutralize your regulator, how to manipulate Congress to get your way and, you know, essentially how to destroy your critics. And they just took no prisoners over those years. They were extremely hard – nosed, extremely aggressive and abrasive, and really understood how to make sure that they had friends in Congress at all times. Now, their regulator at that time was very weak. It was HUD, the Housing and Urban Development, and essentially what Johnson did, which was really amazing at the time, was to help write legislation in 1991 and ’92 which became the Safety and Soundness Ac t that was designed to prevent Fannie Mae and Freddie Mac from calling on taxpayers in a time of failure. Also according to Morgenson, Johnson changed Fannie’s executive compensation plan to reward volume rather than quality of loans. Johnson earned over $200 million while working at Fannie Mae.
Aaron Dykes is a co-founder of TruthstreamMedia.com, where this first appeared. As a writer, researcher and video producer who has worked on numerous documentaries and investigative reports, he uses history as a guide to decode current events, uncover obscure agendas and contrast them with the dignity afforded individuals as recognized in documents like the Bill of Rights.
American Citizens Are One Step Away From Being Chinese Slaves
January 23, 2014
As Mark Twain once said, “There are lies and there are damn lies”. There is a rumor floating around the internet and it has gone viral. The rumor states that when Hillary Clinton went to China, she pledged the ownership of our homes as collateral to the Chinese so that they would continue to purchase our debt.
What Are the Chinese Purchasing?
Before I subscribe to this rumor, I would like to know which debt the rumor is referring to. Is the debt consist of the United States selling 17 trillion dollars in budget debt and the Chinese are purchasing that debt? Would the purchased debt consist of the unfunded liabilities debt totaling 240 trillion dollars? Or, would the Chinese be so kind as to purchase the really big debt of 1.5 quadrillion dollars of derivatives debt created by the bankster Ponzi schemes gone bad?
Are the Chinese just plain stupid or are they just dumb like a fox?
Applying Common Sense
Ask yourself, why would the Chinese ever purchase our derivatives debt of 1.5 quadrillion dollars when the entire GDP of the planet is only 65 trillion dollars? We can safely assume that the Chinese are not insane enough to purchase this debt.
It is a certainty that the Chinese did not purchase the unfunded liabilities debt of 240 trillion dollars for the same reasons that they would not purchase the derivatives debt in that there is no way to ever pay this debt off.
If I put on my tinfoil conspiracy hat, I might suggest that the Chinese would purchase the derivatives debt and/or the unfunded liabilities debt as a means to declare eminent domain over all US property. Following the transfer of all American deeds, the Chinese could boldly do what our Congress should have done decades ago, repudiate this debt owed to the central banksters. But I almost forgot, there is going to be no repudiation of the debt because the Chinese are playing for the same team as the Russians and the Obama administration, namely, the Bastards from Basel.
And then finally, there is the notion that the Chinese would be dumb enough to even purchase our 17 trillion dollar debt. Why would any country purchase a debt from a single country when that debt is more than 25% of the entire value of the planet? In this scenario, where is the return on investment? This would be a totally foolish financial move by the Chinese and just the simple math alone, would suggest that this is not true. Yet, the Chinese are still purchasing our debt, why? And I have to agree with the rumor mongers about one thing, there is something of ours that is of enough value to get the Chinese to continue to throw good money after bad. And there is that trip that Clinton took to China and she did come away with a guarantee that the Chinese would continue purchase our debt. In other words, this internet rumor, regarding the collateralizing our homes, does indeed have some basis in fact because something is collateralizing the Chinese actions as they continue to bail out water on a sinking ship with no hope of realizing a return on investment from a monetary standpoint.
World Net Daily Receives the Standard Denial
The fact does remain that Secretary of State Hillary Clinton did indeed go to China for the express purpose of convincing the Chinese to continue to purchase our debt. With our economy in the mess that it is in, that had to be one tough sell. There can be no question that the Chinese had to be promised something really, really, really big to continue investing in the sinking American economy.
I completely understand why many people would jump to the conclusion that Clinton pledged the homes of American citizens. However, this has never been legislation or adjudicated. Private debt is not public debt and the United States government has taken no overt legislative action, nor have Executive Orders been issued to this effect.
Therefore when the State Department says there is “no factual basis” to an Internet rumor that went viral over the weekend claiming Secretary of State Hillary Clinton was willing to pledge American homes to China as collateral for Beijing buying the U.S. debt, I believe the government. However, what is most disturbing here is not what the State Department is saying. What is most disturbing is what they are not saying. Something was pledged to get the Chinese to continue to buy our debt and nobody from the government is being forthcoming enough to tell the public what the Chinese have been promised.
There is one thing that I will say in defense of our criminal enterprise government, they at least try to appear to have the power of law behind them in everything that they do. In other words, they do legitimize tyranny and make it sound so legal. For example, they can force you to buy Obamacare by calling it a tax. They spy on our every move by saying it is for our safety and that they can only do so by having to violate our rights. Therefore, if the Chinese were going to be granted the authority to seize our homes, we would see some legal justification for such an action. Still, there can be no doubt that Clinton had to pledge something to get something from the Chinese. What could be big enough that the Chinese would be willing take on a 17 trillion dollar debt with no hope of repayment? Let’s examine some possibilities which have already been legitimized by the actions of the rogue Obama administration.
America Is Not Broke As America Has Buried Treasure
Far beneath the ground, the federal government owns the rights to mineral and energy leases, from which they receive royalties, rents, and bonus payments, states the Institute for Energy Research, an industry group. According to their estimates, the government states that the assets are worth $128 trillion. That’s almost eight times the national debt.
Further, the unleashing of these assets would reduce the costs of energy for consumers and businesses. Now, the owners of the utilities, the same people who are the owners of the oil companies, could not permit that. The utilities have invested billions toward the installation of smart meters and a new infrastructure smart grid, in which they control all energy pricing.
Another factor that comes into play on why these assets are not being unleashed is because plentiful, reliable and cheap energy supplies would greatly accelerate economic growth and jump start the economy out of the doldrums. But when the globalists’ goal is the creation of a one world economic system controlled by a tyrannical one world government, the old government and economy must be brought down and this economic boon to the economy cannot be allowed to transpire. Therefore, the government acts as a procurement agent for the Chinese, who will eventually unleash these assets to themselves, after the collapse of the dollar. However, if I was taking on a debt the size of the United States, I would think bigger.
Chinese Debt Collection
There is no doubt that the Chinese are being granted authority to control our international inland ports in which eventually all commerce will flow through. If the Chinese own the Inland Ports, then they own the American trade system, by default. This is a likely asset that would have been pledged by Clinton. However, if I was taking on a debt the size of the United States, I would think bigger.
All Material and Human Capital
I have written extensively on Executive Order 13603. This EO sets up the most draconian martial law authority on the planet. Literally, everything is controlled by the government. All food, all industry, all energy and you are controlled by the President. The interesting thing about EO 13603 is that does not require an emergency declaration to be acted upon.
Can there be any doubt?
A review of EO 13603 reveals that Obama not only can seize every material asset in the country, he can seize you and your family and assign anyone and everyone to duties of his choosing. An examination of this EO reveals that the “new draft” would be controlled by the Secretary of Labor. The military draft would be administered by the Selective Service as it always has been done. The civilian draft will be overseen by the Secretary of labor.
EO 13603 is the whole enchilada. I have written four articles on different aspects of EO 13603 and I would suggest that everyone spend some time Googling this EO and come to your own conclusions. I think there is no doubt that it would take this type of pledge to keep the Chinese from withdrawing their support and it would be a good deal for them. If I could own all of America, including its people, in perpetuity, I would certainly make the deal the Chinese have apparently made with Hillary Clinton.
Handing over all capital resources to the Chinese, including human capital, makes a great deal of sense because this is the one thing that Clinton could have pledged which might have convinced the Chinese to continue to purchase our out-of-control-debt. If only our homes had been pledged to the Chinese as collateral for their investment in our debt, that would have been the deal of the century for all Americans.
We need to demand the full scope of what Clinton pledged to the Chinese. And as a man, I say this to all of you: If this possibility is not enough to get you to realize that you have no choice but to get into this fight, then nothing will and maybe then, we do deserve to be China’s slave colony!