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Posted on Feb 16, 2011
AP / Mark Lennihan

American flags fly in front of the New York Stock Exchange on Feb. 10.

By Robert Scheer

Editor’s note: Read an excerpt from Robert Scheer’s latest book on this subject here.

A most dastardly deed occurred last Friday when the Obama administration issued a 29-page policy statement totally abandoning the federal government’s time-honored role in helping Americans achieve the goal of homeownership. Instead of punishing the banks that sabotaged the American ideal of a nation of stakeholders by “securitizing” our homesteads into poker chips to be gambled away in the Wall Street casino, Barack Obama now proposes to turn over the entire mortgage industry to those same banks.


The proposal, originated by Treasury Secretary Timothy Geithner, involves nothing less than a total “winding down” of the 80-year-old federal housing program, setting instead a new goal of a two-tiered America in which the masses are content to be mere renters of the American Dream. Such a deal for a country where, as the report concedes, “Half of all renters spend more than a third of their income on housing, and a quarter spend more than half.”

This is the same Geithner who during his tenure in the Clinton Treasury Department championed the total deregulation of the then-emerging market in collateralized debt obligations that sliced and diced people’s home mortgages into the toxic securities that created what his new report calls the greatest economic crisis since the Great Depression. Later, as president of the New York Fed, he cheered on the banks as they went hog-wild, conning folks into buying homes they couldn’t afford and stuffing them into the incomprehensible securities that form the rot at the core of our bankrupt economy. 

This is a made-in-the-U.S. nightmare that we inflicted on the world, thanks to an explosion in those toxic securities brought on by the deregulation that most of the Obama economic brain trust supported when they worked for President Bill Clinton and during the ensuing bubble years when they enriched themselves. As the report admits: “The U.S. is … the only high income country in which securitization plays a major role in housing finance.” Yet instead of ending that practice Obama now calls for more of the same: “The Administration believes the securitization market should continue to play a key role in housing finance.” Indeed, the plan’s goal of eliminating Fannie Mae and Freddie Mac will dry up the alternative public funding that has provided a source of mortgage support ever since President Franklin Delano Roosevelt launched Fannie Mae to check the power of the banks over mortgages. Now Obama proposes to eliminate that check and leave would-be homeowners to the tender mercy of the banking giants.

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Of course Fannie Mae and Freddie Mac also bear responsibility for the meltdown. They had morphed into for-profit enterprises and, just as with the Wall Street firms, the massive bonuses paid out to their top executives were contingent on the value of their stock prices, which in turn were fattened by the sale of those same toxic assets. As the Obama report puts it, “Fannie Mae and Freddie Mac’s profit-maximizing structure undermined their public mission.” What the administration should have proposed is to return the government-sponsored housing agencies to their original function as nonprofit entities supplementing, rather than aping, the practices of greedy bankers.

It wasn’t meant to end this way, and key Democrats, quite a few of them Clinton alums now in the Obama administration, bear the responsibility for the sad fate of Roosevelt’s dream. As the Obama proposal concedes: “Improving how housing was financed was an important part of these broader Depression-era reforms. In the 1930s, following severe mortgage market disruptions, widespread foreclosures, and sinking homeownership rates, the government created the Federal Housing Administration (FHA), Fannie Mae, the Federal Home Loan Banks (FHLBs) and several decades later, Freddie Mac to help promote secure and sustainable homeownership for future generations of Americans. Fannie Mae and Freddie Mac held true to their original mission for many years.” What the report then neglects to discuss is the demise of Roosevelt’s grand experiment at the hands of Democratic Party hustlers who turned the agencies away from their “original mission” and into their personal piggy banks while getting Democrats in Congress to approve regulations enabling their greed.

The folks around President Obama know this sad tale well because some of them were principal actors in the housing agencies’ betrayal of the public trust. Just take the case of Tom Donilon, whom Obama recently appointed to the highly sensitive position of national security adviser. It was Donilon who was the top legal counsel and lobbyist for Fannie Mae from 1999 to 2005, a period when the agency went off the tracks in backing Countrywide and other private-sector bandits in their irresponsible rip-off scams. “He was in charge of the lobbyists. … That process involved using the Hill to rein in the regulators,” noted Stephen Blumenthal, who, as director of the Office of Federal Housing Enterprise Oversight, was hindered by Donilon’s lobbying. As the report concedes without mentioning Donilon’s role, “Over the years, Fannie Mae and Freddie Mac’s aggressive lobbying efforts had successfully defeated efforts to bring them under closer supervision.”

Donilon, who received $10 million in the three years leading up to the scandal of 2004, when Fannie Mae was fined $400 million for juggling its books to enhance executive bonuses, will never have any trouble financing a home purchase. Not so the tens of millions of Americans who have lost their homes because of his reprehensible actions and the many more in the future who will be denied government support in trying to get a place of their own. 

Click here to check out Robert Scheer’s new book,
“The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.”


Keep up with Robert Scheer’s latest columns, interviews, tour dates and more at www.truthdig.com/robert_scheer.

Click here to check out Robert Scheer’s book,
“The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.”


Keep up with Robert Scheer’s latest columns, interviews, tour dates and more at www.truthdig.com/robert_scheer.



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By ardee, March 6, 2011 at 9:15 am Link to this comment

JDmysticDJ, February 22 at 1:24 am

I would love to debate further this latest angry effort of yours, though an attempt was made to (thinly) veil said angst, . I find, in all honesty, nothing of substance but only the usual democratic loyalist meaningless and formulaic image, a false one to be certain and one so often repeated that to speak against your fantasy views is a waste of my time and yours.

This is not to say that I don’t sympathize with you, as I understand your defense of a sow’s ear is quite a difficult task, made even more so with each passing headline.

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By katsteevns, March 6, 2011 at 6:03 am Link to this comment

“little Eichmanns” - I guess Ward Churchill was correct.

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By Lori F, February 21, 2011 at 9:36 pm Link to this comment

To JDmysticDJ:  Do you really believe that Democrats can get elected if they don’t do corporate bidding, even when corporations can spend unlimited budgets in campaign ads against them? Why do you think we now have so many Blue Dogs?  The Democrats could have tried to pass tax increases only for those making under $250,000 BEFORE the elections.  If they had done so, they might have got hung up by the 60-vote requirements in the Senate.  But, if so, then they could have said that the Republicans wanted to tax the middle class.  They didn’t even try to call their bluff.  Why? 

Regarding the current crisis in Wisconsin because the left didn’t come out to vote:  At least we now have people standing up and making their voices heard!  Perhaps, unfortunately, we NEED to let the Republicans win and dig us deeper into a hole.  Americans don’t seem to respond unless there’s a crisis.  My only concern there is that we need to get the progressives and the tea partiers to work TOGETHER, not fight.  That is where I believe progressives’ efforts should go, rather than shouting and calling tea partiers (and each other!) names.  ONE side needs to start respecting the other, then we can have a chance at comparing notes:  Both sides have a lot of issues in common.  I’ve been reading Glenn Beck’s “Broke”.  Even he actually makes several suggestions that I agree completely with, to try to limit the power of lobbyists!

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By JDmysticDJ, February 21, 2011 at 8:24 pm Link to this comment

By ardee, February 21 at 4:21 pm Link to this comment

Thank you for attempting to hide your wrath. Or is it that your sarcasm is difficult to decipher? Anyway, thanks for being civil. Actually, you did not, “Only give two reasons,” but I’ll respond to the two first.

“1. That Democrats speak with far more smarmy, and ultimately unfelt, passion to issues that mean something to families, children, seniors and working class folks yet, in the end, pander only to the corporate donor.”

Clearly the current crop of Congressional Democrats are inadequate, but they are who they are, because of what they are, and I dare say that you would not be much different if you were in their shoes. Clearly there are differences among Democrats, and it appears that if you were in their shoes, you would be in Kucinich shoes, rather than more corporatist Democrat shoes. If you were in Kucinich’s shoes, you would have to deal with accusations of being smarmy and unfeeling, regardless of your heartfelt sacrifices.

I have accused some of being uninformed and ignorant of political realities, if you believe the Democrats are the panderers; then you are uninformed, ignorant, or purposefully disingenuous. No offense intended, but have you been following Congressional initiatives and votes? Believing what you apparently do, it’s hard for me to believe that you have been following what has occurred in the U.S. House of Representatives, but more specifically the U.S. Senate.

“2. That many, many folks, after loyally giving their votes to Democrats who, upon election, continue Bush administration policies and projects, finally give up and refuse to participate any longer in what they now perceive to be a sham. I remind you that reducing the numbers that go to the polls is and always has been a Republican goal.”

Apparently, you expect the Democrats to be miracle workers and you will accept nothing less than miracles. The Democrats, including the much hated Obama, have indeed turned away from Bush policies and projects, if you can not see that, it is because you don’t wish to. The inability of the Democrats to achieve they’re goals relates directly to Senate rules, and again I must say, if you truly are unaware, then you need to become aware. Maybe a stint in the Congress would help you to become aware.

I disagree with Obama policies and have stated so in the strongest terms, but I will point out that your claim about Obama and the Democrats not taking action, and continuing Bush policies and agendas is, in a word, false. Some action, even inadequate action, is better than no action, and not a continuation of previous policies and agendas.

“The Democrats gave the corporatists everything they wanted and more.”

False, there is a concerted and unified effort by corporatists and business interests to defeat Obama and the Democrats.

The Tea Partiers are disappointed moderates.”

False, CBS News reports that 13% of Tea Partiers define themselves as Democrats. The Tea Partiers include a large number of Libertarians, hardly moderates.

But I’m bored with worthless quibbling.

My point has been, and continues to be that the Democrats are the lesser of evils, and that abandoning the Democrats will propel the greater of evils to power. I believe that many allow their hatred of, or disappointment with Democrats, to cloud their common sense, and that this lack of common sense will have tragic consequences for us all.

What you hide under your carpet will have to be dealt with sometime. Let me suggest that you throw it in the trash heap of history, but I feel that history will not reflect kindly on you, and other like minded individuals. (I didn’t say ilk.)

(Incidentally, it’s common knowledge that Republicans prefer smaller turnouts for elections, so I’m wondering why you would include this comment, it only reinforces my contention.)

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By Anarcissie, February 21, 2011 at 1:23 pm Link to this comment

<b>JDmysticDJ, February 21 at 2:56 pm:

I can only conclude that many people here at truthdig are uninformed, and ignorant of political realities, because they have, out of frustration, rejected our democratic process and have chosen to keep themselves uninformed and ignorant of the recent political realities of our democratic governance. In your case, my conclusion goes without saying. I understand your perspective, and I have some points of agreement with what you write, but your criticisms, and comments, are totally devoid of any rational or hopeful solution. ...

On the contrary, I think my politics gives hope, however thin, whereas yours does not.  But maybe it is just a matter of a difference of personal experience.  I have been told to ‘work within the system’ since the late 1950s, when I was a teenager.  And yet the only people who ever succeeded in modifying ‘the system’, the established political, economic and social order, were people who acted outside the system, usually in a rather abrasive if not hostile manner, like the Civil Rights activists and the radical feminists.

This led me into an analysis whereby I finally perceived the obvious: those who are at the top of a given system have little or no motivation to change it.  Their great talent is in organizing political structures which will support them in the style of life to which they have become accustomed.  Thus, they are very good at assimilating challenging newcomers as long as the newcomers agree to play their games.  What they can’t deal with, what they can’t assimilate, what makes them move, are people who play some other game, some new game than the one they know how to win.

The obvious is so hard to perceive!  It is so close to the end one’s nose it is hard to see!

In any case, suppose I voted, contributed, worked faithfully for the Democratic Party for fifty years—and perhaps I did, although in recent years rather ironically if so—what would I see?

But don’t bother with me—I am doubtless a crank, a fanatic, a hopeless case.  I would just like to see you and other fans of the Democratic Party give the poor proggies here some faint glimmer of hope based on something besides religious faith.  Please—the emptiness of this desert is killing them.

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By ardee, February 21, 2011 at 11:21 am Link to this comment

JDmysticDJ, February 19 at 9:38 pm

I must not let this three part response pass without noting its clarity and excellence in general. A response that any democratic loyalist would be proud to claim, in fact. Further, our resident loyalists should take note of how honest and peaceful debate can be achieved.

JD, all I can say in response, besides thank you of course, is that I wholeheartedly believe your premise to be wrong. I will give only two reasons for that sweeping of your lovely tri-part effort under the rug…;-)

1. That Democrats speak with far more smarmy, and ultimately unfelt, passion to issues that mean something to families, children, seniors and working class folks yet, in the end, pander only to the corporate donor.

2. That many, many folks, after loyally giving their votes to Democrats who, upon election, continue Bush administration policies and projects, finally give up and refuse to participate any longer in what they now perceive to be a sham. I remind you that reducing the numbers that go to the polls is and always has been a Republican goal.

Bush had, at most, fifty three Senators to back his positions. The Democrats had a filibuster proof majority and could have, should have, ended a horrific and ultimately doomed war, ended torture, ended the war of the middle class and the working class, revised the tax code to make corporations pay their fair share, to make the wealthy do likewise. They could have, should have strengthened regulatory powers that are failing to protect the consumer, the environment, hell, our jobs as well.

Yet what happened, JD? You know as well as I that Democrats “caved” at every opportunity, spoke with emotion and passion, and gave the corporatists everything they wanted, and more. This is what your “lesser of two evils” actually means. A slower path to fascism is still a path to fascism,JD. You are far, far too smart to continue to believe your position is the correct one, not when you peruse the history of the last two years alone.

The Tea Party arose, in my opinion, solely because of the vacuum of leadership for moderate positions. People will believe those who speak to their own needs, even when that belief turns to ashes. Thus, because belief in the Democratic Party has turned to ashes those people turn to absurdities like the well financed Tea Party.

Again, I thank you for sharing your own political position with me and hope that my feeble effort has given you a bit of insight into my own.

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By JDmysticDJ, February 21, 2011 at 9:56 am Link to this comment

By Anarcissie, February 20 at 5:00 am Link to this comment

“One’s time and energy are finite, however.  The people elected Democrats, a Black man and both houses of Congress, and got, for the most part, a continuation of the Bush administration.  One can see why some of the rank and file might be getting a bit restless, eh?  What concrete hope can you offer them to dissuade them from placing their bets elsewhere in the future?”

I can only conclude that many people here at truthdig are uninformed, and ignorant of political realities, because they have, out of frustration, rejected our democratic process and have chosen to keep themselves uninformed and ignorant of the recent political realities of our democratic governance. In your case, my conclusion goes without saying. I understand your perspective, and I have some points of agreement with what you write, but your criticisms, and comments, are totally devoid of any rational or hopeful solution.

The most credible, and persuasive, argument offered by the Tea Partiers bused into Wisconsin, directed at Union Activists is, “You lost the election, The Republicans won, now shut-up, and let democracy work” [sic]. This is hypocrisy of the worst sort, but it is also a persuasive argument for some.

The question becomes, why did the Republicans win in Wisconsin, and around the nation? Some will irrationally blame Obama and the Democrats for the Republican victories. I’ll offer that there are a variety of factors that led to Republican victory, and these factors should be easily identified by those who are knowledgeable and informed, but in the final analysis, it is you and your ilk here at truthdig who were one of the prime factors in Republican victories. It was the electorate who abandoned Obama and the Democrats, or advocate[d] the abandoning of Obama and the Democrats, who gave/ will give victory to the Republicans.

Criticisms are easy, its solutions that are difficult.


By MaxShields, February 20 at 3:10 am Link to this comment

“When you start understanding what this is about you can do some real good. Until then, I’m afraid you are squarely (and unintentionally) part of the problem”

I’ll respond,

When you start understanding what this is about you can do some real good. Until then, I’m afraid you are squarely (and unintentionally) part of the problem.

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By JDmysticDJ, February 21, 2011 at 9:56 am Link to this comment

By Anarcissie, February 20 at 5:00 am Link to this comment

“One’s time and energy are finite, however.  The people elected Democrats, a Black man and both houses of Congress, and got, for the most part, a continuation of the Bush administration.  One can see why some of the rank and file might be getting a bit restless, eh?  What concrete hope can you offer them to dissuade them from placing their bets elsewhere in the future?”

I can only conclude that many people here at truthdig are uninformed, and ignorant of political realities, because they have, out of frustration, rejected our democratic process and have chosen to keep themselves uninformed and ignorant of the recent political realities of our democratic governance. In your case, my conclusion goes without saying. I understand your perspective, and I have some points of agreement with what you write, but your criticisms, and comments, are totally devoid of any rational or hopeful solution.

The most credible, and persuasive, argument offered by the Tea Partiers bused into Wisconsin, directed at Union Activists is, “You lost the election, The Republicans won, now shut-up, and let democracy work” [sic]. This is hypocrisy of the worst sort, but it is also a persuasive argument for some.

The question becomes, why did the Republicans win in Wisconsin, and around the nation? Some will irrationally blame Obama and the Democrats for the Republican victories. I’ll offer that there are a variety of factors that led to Republican victory, and these factors should be easily identified by those who are knowledgeable and informed, but in the final analysis, it is you and your ilk here at truthdig who were one of the prime factors in Republican victories. It was the electorate who abandoned Obama and the Democrats, or advocate[d] the abandoning of Obama and the Democrats, who gave/ will give victory to the Republicans.

Criticisms are easy, its solutions that are difficult.


By MaxShields, February 20 at 3:10 am Link to this comment

“When you start understanding what this is about you can do some real good. Until then, I’m afraid you are squarely (and unintentionally) part of the problem”

I’ll respond,

When you start understanding what this is about you can do some real good. Until then, I’m afraid you are squarely (and unintentionally) part of the problem.

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By Lori F, February 20, 2011 at 2:54 pm Link to this comment

To Anarcissie:  I totally agree about credit unions.  I’ve belonged to one for 30 years.  I don’t think it’s either/or, but rather both/and.  According to a web search, ND has at least 56 credit unions with over 200,000 members!

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By Anarcissie, February 20, 2011 at 2:05 pm Link to this comment

I think credit unions—cooperative banks owned and operated by their membership—would be better.  The evidence from North Dakota is certainly interesting, however.

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By Lori F, February 20, 2011 at 1:44 pm Link to this comment

Lafayette:  Come on, you’re obviously well educated in the complexities of what happened on the housing fiasco, but it seems to me that we could all be doing much more than just playing one-upsmanship on a progressive blog.  We need to figure out constructive ways to “raise consciousness” i.e. show people how the US is a government/big business plutocracy.  We also need to spend our energies working on ways to change that.  An idea that I really like is to just LEAVE the big bank system and the Fed etc. Instead, work to have state banks in all states like North Dakota has: 

North Dakotans have a low unemployment rate and (I believe) have the only state with a budget surplus.  Some attribute this to their oil revenues, but they actually take a smaller tax than Texas and Louisiana, who are not doing so well.  The oil revenue helps, but the real difference between ND and the rest of the states is that small businesses in ND can get loans, while those same types of businesses in the rest of the country are stranded by Big Banks’ unwillingness to lend, and get charged usurious rates by credit card companies.  The reason is that North Dakotans have something that the rest of the country should have (and I suggest we all work towards in our own state) —a publicly owned banking system. 

Farmers and small businesses pushed the state legislature to develop a state bank in 1919, during the age of the Robber Barons, when farmers were being evicted from their homes because when their crops failed they couldn’t pay their mortgage (sound familiar??).  The ND bank’s stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota. The bank operates as a bankers’ bank, partnering with private banks to loan money to farmers, real estate developers, schools and small businesses. It loans money to students (over 184,000 outstanding loans), and it purchases municipal bonds from public institutions.  The ND banking system works for the little guy and local business, not the big multinational corporations.  Here are some articles, if you’re interested:  http://www.yesmagazine.org/issues/path-to-a-new-economy/bank-on-it-how-cash-starved-states-can-create-their-own-credit
Also http://www.yesmagazine.org/new-economy/washington-state-joins-movement-for-public-banking

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By Lori F, February 20, 2011 at 1:14 pm Link to this comment

To bpauk:  You write:  “…these irresponsible people lost their homes as they were not responsible homeowners - owning a home is a responsibility not a right - people were buying homes they couldn’t afford, spending beyond their means and not saving for a rainy day.  Now every man, woman and child has to pay for their irresponsibility. I don’t want people who are irresponsible buying a home as I will have to pay for them in the end.”

It really bothers me when people blame the victims by expecting them to be smarter than the con artists who scammed them.  I agree that people should be careful with their money and save for a rainy day.  IMO, many (not the flipper, but the “average joes”) who bought a home at zero down actually were trying to do that and thought they were being smart.  Their home was/is their biggest (and often only) investment.  They saw how home values were appreciating and were being urged by a plethora of ads (as well as comments by the Fed—Greenspan) to take advantage of it.  Most people are not financial whizzes who understand the concept of bubbles.  The bankers, fed, SEC, and the government are in collusion because we live in a plutocracy.  When they all start their next con, will you again blame it on the victims?

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By truedigger3, February 20, 2011 at 9:00 am Link to this comment

Re:By MaxShields, February 20 at 3:10 am Link to this comment


MaxShields wrote addressing JDmysticDJ about JDmysticDJ’s call for joining the Democratic party in order to “reform” it:

“Do some never learn. There is NOTHING to reform. There is this money-war-party called the DemRep. They operate sometimes as “good cop/bad cop”.

When you start understanding what this is about you can do some real good. Until then, I’m afraid you are squarely (and unintentionally) part of the problem”
—————————————————————————-

MaxShields,

JDmysticDJ understands exactly the situation, but he is nothing but a hired shill for the Democratic party.
All JDmysticDJ’s posts are devoted for defending the Democratic party and Obama and inventing excuses for their betrayals of the common people who put their trust and hope in them.

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By Anarcissie, February 20, 2011 at 12:00 am Link to this comment

JDmysticDJ, February 20 at 1:26 am:

‘... Neither your recommendations nor mine, necessitate, or should advocate, the abandonment of Democrats and the turning of political power over to the greater of evils.’

One’s time and energy are finite, however.  The people elected Democrats, a Black man and both houses of Congress, and got, for the most part, a continuation of the Bush administration.  One can see why some of the rank and file might be getting a bit restless, eh?  What concrete hope can you offer them to dissuade them from placing their bets elsewhere in the future?

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By MaxShields, February 19, 2011 at 10:10 pm Link to this comment

By JDmysticDJ, February 20 at 1:26 am
“Getting involved with the Democratic Party in order to reform the Democratic Party…”

God help us!!! Ground hog day is upon us. Reforming the town drunk would be an act of kindness. Trying to reform the Democratic Party (and I’ll spare you) is lunacy! Do some never learn. There is NOTHING to reform. There is this money-war-party called the DemRep. They operate sometimes as “good cop/bad cop”.

When you start understanding what this is about you can do some real good. Until then, I’m afraid you are squarely (and unintentionally) part of the problem

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By Steve E, February 19, 2011 at 9:55 pm Link to this comment

According to the LA Times, Fri. 18/11, federal prosecutors have decided that
Angelo R. Mozilo’s actions in the mortgage meltdown did not amount to criminal
wrongdoing. So it goes on and on and…....

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By BarbieQue, February 19, 2011 at 9:26 pm Link to this comment

By Lori F, February 19 at 11:35 pm:

“...We need a constitutional amendment that states only people are people and money is not speech. I believe left, right, and center can agree on this, if we keep our sights and our rhetoric on the “bottom line,” rather than bickering across the political spectrum…”

This!!! Brilliant!

I’ve signed the motion (thanks for the link) and have been a fan of Hightower for quite awhile. A little seed money + the Net, mixed with enthusiasm and it is a winner! And there’s a word for those that would say it could never happen: Egypt.

Further, Citizens should demand some kind of “Airwave Tax” or “Media Tax” or something like it be levied upon those that use our airwaves to pollute our minds with propaganda and ads to sell us the latest sleep aid, while basically becoming the new royalty.

This could raise immediate funds to, for example, keep the heating aid going to those about to lose it.

Everyone could agree that most, if not all “celebrities” are grossly overpaid. If Charlie Sheen made 1/4 of what he makes for a days “work” he would still be overpaid.

The value of *our airwaves* has risen tremendously since the early days of the FCC. How has this benefited the average Citizen?

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By JDmysticDJ, February 19, 2011 at 8:26 pm Link to this comment

Lori F

All your suggestions are good ones, but they are nothing new. I don’t have any new suggestions either. My suggestions all require commitment and sacrifice. Getting involved with the Democratic Party in order to reform the Democratic Party, and organizing political demonstration in order to bring grievances to the forefront of political debate, have been my ongoing recommendations. Neither your   recommendations nor mine, necessitate, or should advocate, the abandonment of Democrats and the turning of political power over to the greater of evils.

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By Lori F, February 19, 2011 at 6:35 pm Link to this comment

To JDMysticDJ:  I sympathize with your “lesser of two evils” argument because I’ve used it myself.  However, I now feel it’s a cop-out to defend being lazy and doing nothing to actually CHANGE the system.  We DON"T have to live with EITHER evil!  Blacks and women now have suffrage, but it took a long time and a lot of hard work.  Democracies require the continuing efforts of “we the people.”  Obama, as all politicians, must respond to the money. We obviously need to change how politicians get elected. Because corporations are considered “people,” and money is considered free speech, it’s “One dollar (or $1 million), one vote”, not “One person, one vote.”

We need a constitutional amendment that states only people are people and money is not speech. I believe left, right, and center can agree on this, if we keep our sights and our rhetoric on the “bottom line,” rather than bickering across the political spectrum. There are several websites that are dedicated to this goal.  Hightower lists them at http://movetoamend.org/news/hightower-8-ways-were-making-america-better-place

Another option is to change the Supreme Court.  We can work to impeach Justice Roberts and those who are twisting the intent of our Constitution.  It will be a long, hard road but if we don’t try, we’ll never get there, and our choices will be between ever worse and worse evils.  “WE (not Obama) are the ones we’ve been waiting for.”  If you have any other suggestions as to how to get the money out of politics and people back in, I’m all ears.

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By JDmysticDJ, February 19, 2011 at 4:38 pm Link to this comment

By ardee, February 16 at 11:21 am Link to this comment

“I trust no one is surprised at yet another betrayal of the American worker and family by the Democratic Party. I also think our resident shills for that party need to step up and explain their continued loyalty to a party that adds this betrayal to its list of such. A list which includes continuing a hopeless and far too expensive war as well as the continuation of torture and imprisonment without access to justice in addition to the repeated betrayals of the people of this nation.”

========================================================

I am not at all surprised by “Yet another betrayal of the American worker and family.” My reason for defending Obama and the Democratic Party stems from the hated, “lesser of evils,” rationale. Scheer’s condemnation of Obama’s Wall Street appointments, initiatives, and general economic philosophy is factual, yet, I dare say exaggerated. Perhaps Scheer is a futurist. Perhaps Scheer and others believe that these constant condemnations of the Democrats will lead to lesser betrayals in the future, but wait, let’s examine current and recent political realities.

Are Scheer and others oblivious to recent and current political realities? Surely these critics are aware of the results of the mid-term elections. Surely these critics are aware that our politics are shifting rapidly to the Right. Surely these critics are aware that all aspects of the meager accomplishments of Obama and the Democrats, as well as the legacies of Roosevelt, and the Old Left, are in danger of being obliterated. Surely these critics must know that it is the much hated Democrats that are resisting this obliteration.

To what end, all this criticism?

Obama is a lesser War Criminal, should we effectively turn power over to the greater War Criminals? Obama is a lesser Corporatist, should we effectively turn power over to the greater corporatists?

I concur with the criticisms, but I, unlike the vehement critics of Obama and the Democrats, see clearly where we are headed if Obama and the Democrats are defeated.

Personally I despise demagoguery, but it’s clear to me that the Right has no monopoly on demagoguery. I will oppose demagoguery wherever it rears its ugly head. Some of the comments here are the worst kind of demagoguery, and are in need of being refuted. Perhaps I’m too sensitive, but when I read, ”Olabobo,” and other such comments, I have to wonder about what motivates such comments. When someone states that Obama’s mother despaired of him developing a social conscience, out of any rational context, I must point out that his mother made the comment when Obama was 14 years old. Perhaps Obama was not precocious in his development of a social conscience, but his activities in later life give the lie to the contention that Obama is a sociopath/psychopath who lacks a social conscience.

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By JDmysticDJ, February 19, 2011 at 4:30 pm Link to this comment

(Cont.)

The contention that Obama was a poor student, a social climber, and a person that owes his success to affirmative action is also demagoguery.
 
“The only reason I bring this barely relevant history up is to show what a stud of a law student Barack Obama was. He graduated Harvard magna cum laude. This was one honor you unquestionably had to earn. It’s a very impressive feat. Back in Obama’s days at Harvard, more than 50 percent of the class graduated cum laude, a fact that made graduating “with honors” a meaningless accomplishment. But graduating magna was a different kettle of fish. Barack Obama graduated right near the top of his law school class.
That fact, along with his presidency of the Law Review, makes his uniform popularity all the more impressive. Law schools are intensely competitive places. People who thrive to an unseemly extent, as Obama did, are usually subject to an array of resentments. After all, the lawyers of tomorrow populate law schools; pettiness and insecurity reign supreme.

The people that Obama so thoroughly charmed generally weren’t the charm-prone types. I say the following as a well known Republican partisan—the fact that his classmates so universally held him in the highest regard suggests that Barack Obama may truly be a special person.”

Dean Barnett, “The Weekly Standard”

Dean Barnett, in spite of his political perspective, seems to be less prone to demagoguery than many people from the Left.

Barnett preceded the above comment by relating the opinions of his many contacts of former classmates of Obama, from all political perspectives, who praised Obama, saying he was well liked, respected, and admired by his classmates. Barnett, who made these comments in 2008, goes on to wonder why Obama was running such a stupid presidential campaign.

When a right-wing hack tells Obama in front of much of the nation that he is hated, Obama’s response didn’t strike me as being that of a social climber, a psychopath, or a sociopath.

Am I a shill? Am I complicit with Obama’s tragic wrong headedness? No I am not. I am an outspoken critic of Obama’s Foreign policy, national security, and corporatist agendas. I am also a person who sees Obama and the Democrats as being preferable to the alternative. I am a person who sees: the rapid shift to the Right in our political life, to be extremely dangerous, harmful, and cruel, a person who sees Obama and the Democrats as being an obstruction to that rapid shift to the Right, and a person who sees the personal, vehement, demagoguery coming from the Left as being counter productive, dangerous, and myopic.

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By JDmysticDJ, February 19, 2011 at 4:26 pm Link to this comment

(Cont.)

Knowledgeable, rational people; people unaffected by blind utopian ideology, are aware of the horrific consequences and failings of totalitarian Marxism. The same knowledgeable, rational people, people unaffected by blind utopian ideology, are aware of the horrific consequences and failings of democracies, previous to, and throughout the Cold War, and up to the present. The multi-millions of deaths and atrocities perpetrated, condoned, and facilitated by democratic governments in Asia, the Americas, Indo-china, Indonesia, Africa, and all points global, are beyond our ability to adequately comprehend, and can only be brought to light, and placed in context, by individual accountings of torture, atrocity and death. Democratic governments have perpetrated, or been complicit in political purges, mass executions, defacto and real genocide, people being poisoned, people being blown apart by explosives, and people being burned alive, and more. These acts in the multi-millions, are a fact of reality, but are so horrific in their contemplation, that many choose to ignore, or deny them, but they are, and have been real. The same knowledgeable people, people unaffected by utopian ideology, are aware that democracy has been subject to many forms of corruption, and that it is these corruptions that are responsible for the horror, and yet, these same knowledgeable people, unaffected by blind utopian ideology, are aware that authentic, uncorrupted democracy remains the only hope for just governance. People like Scheer, Hedges, Chomsky, Zinn, and many, many others serve to highlight the injustices and atrocities, but there is a point where their cogent commentary becomes counter productive, even dangerous. Minorities within democracies, and individuals within democracies, can not rationally demand that all their objectives will be met. All people within democracies are limited to making their best, if disappointing choices. It’s clear that large numbers of people within democracies, out of apathy or frustration, choose not to participate in democracy, or frivolously waste their votes. These large numbers of people weaken and subvert democracy. 

I am something of a futurist too. I am hoping that the future will be better than the present, but an effective diminishment of Obama and the Democrats will only serve the interests of reactionary forces. I’m hoping that won’t happen, and I will continue to defend Obama and the Democrats against demagoguery. Criticizing Obama’s policies is one thing, demonizing him is another. In the final Analysis I’ll say that Obama’s policies are in essence demonic, but less so than the policies of the alternative.

Intolerant of the lesser of two evils rationale? Go for it, facilitate the greater of evils, and you’ll be left with the greater evil. When that happens, I hope that you’ll remember, I told you so, but it will bring little satisfaction, not for me, not for you, and not for anyone.

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By Anarcissie, February 19, 2011 at 11:56 am Link to this comment

Raylan—I think in this case it’s important to understand what’s going on.  Many people seem to believe we are witnessing a rerun of the Great Depression, which was solved by (1) elevated government money-printing, borrowing, and expenditures; (2) more regulation of financial institutions; and (3) permanent war.  Now, people are trying to solve new, different problems using the old methods.  I don’t think this approach will work, for the reasons I have given.

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By RayLan, February 19, 2011 at 6:38 am Link to this comment

Annarcissie
“but in any case the money, being mostly credit, is mostly not being sent to the poor anyway. “
Yes - so. It doesn’t follow thzt the funny money was created by the government responsible only in allowing the credit debacle to happen because of its deregulation.
We’re going in circles with this. I’ve already made my point which is just a statement of the facts about Wall Street malfeasance - not really up for discussion.

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By piggybankblog, February 19, 2011 at 2:27 am Link to this comment

Well, if the President is not going to hold these piggy banks responsible, then the America people will!
.
If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!
.
WHERE IS MY LOAN MODIFICATION BANK OF DESTROYING AMERICA!
.
BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled “Piggies” I invite you to listen to this song on youtube and see if it appropriately fits.
.
http://www.youtube.com/watch?v=ovD9rTzs2q4&feature=player_embedded
.
Have you seen the little piggies
Crawling in the dirt
And for all the little piggies
Life is getting worse
Always having dirt to play around in.
.
Have you seen the bigger piggies
In their starched white shirts
You will find the bigger piggies
Stirring up the dirt
Always have clean shirts to play around in.
.
In their ties with all their backing
They don’t care what goes on around
In their eyes there’s something lacking
What they need’s a damn good whacking.
.
Everywhere there’s lots of piggies
Living piggy lives
You can see them out for dinner
With their piggy wives
Clutching forks and knives to eat their bacon.
.
When I filed my lawsuit against Bank of America, myself and Brookstone Law Firm thought of the many others out there in the same situation.  It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice.  Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath. 
.
Please stand with me and Brookstone Law firm and send an email to Bank of America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods. 
.
So please send your email directly to Bank of America and include the following:
.
1.  Your name
2.  Your complaint concerning your experience with Bank of America.
3.  Please end your email “I support John Wright vs. BofA Lawsuit!”
4.  Please send a copy of your email to .(JavaScript must be enabled to view this email address)
5.  Please send your email to BofA CEO Brian Moynihan:
    .(JavaScript must be enabled to view this email address)
.
Also, if you would like to join my piggybankblog “Elite Blogger Hit Team”, please do not even hesitate to contact me at .(JavaScript must be enabled to view this email address).  The elite team involves leaving comments on certain pre-decided Bank of Destroying America comment section on articles, blogs and other various online sites.
.
Please help me spread this youtube around, which is an announcement of my Lawsuit.  It will drive Bank of Abusing America absolutely crazy to see it all over the internet:
.
http://www.youtube.com/watch?v=PoOJMr7OJ0s&feature=player_embedded
.
.
I HAVE HAD ENOUGH AND I AM FIGHTING BACK! 

Divided we might have fell America. UNITED WE MUST STAND!
.
Let’s Roll!
.
John Wright
piggybankblog.com

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By Anarcissie, February 18, 2011 at 11:28 pm Link to this comment

Raylan—Handouts to the poor are usually pretty insignificant.  Even if they were not, they would not have an inflationary effect if goods and labor were available to correspond to the money, as apparently they were during the Great Depression.  I think the present case is different, because I think the physical, economic and social infrastructure of the country have been profoundly damaged, but in any case the money, being mostly credit, is mostly not being sent to the poor anyway.  As an example consider the bailouts of bankers, brokers and major corporations, as against the actual assistance to middle- and lower-income home mortgagors.  If the government did give them money, then I think there would be inflation because the productive capacity of the country has been allowed to waste away and no goods or services would correspond to the money.

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By RayLan, February 18, 2011 at 1:59 pm Link to this comment

Anarcissie
Your entrenched anti-government mindset has led you to invent financial myths - If this right wing shiboleth of hand outs to the poor disabling the economy had any real basis, our economy would have been on the skids since the inception of the New Deal - the very thing that sticks in the craw of the rabid capitalists. That is historically false. The current reality is that it is the rabid capitalists with the help of a Reagan deregulation who quite knowingly and with impunity conjured up false monetary instruments such as Credit Default Swaps on CDO backed by sub-prime mortages.
It is indisputable cause and effect not subject to the vagaries of political bias.
The leverage percent was illegal

• Lehman Brothers: used “Repo 105 transactions” to remove $50 billion of liquid assets from the balance sheet at quarter-end in 2008 in order to mislead investors as to Lehman’s net leverage. It also hid from view billions of dollars worth of troubled assets. The latest reveal is that Lehman CEO Dick Fuld was aware of this accounting technique. Do not be surprised to see some form of indictment of Dick Fuld over the next 12 months;

• Merrill Lynch: Engaged in a different but just as nefarious technique to hide leverage and losses , thereby to misleading public investors, the NYT reported yesterday:

“Pyxis was created at the height of the mortgage mania as a sink for subprime securities. Intended for one purpose and operated off the books, this entity and others like it at Merrill helped the bank obscure the outsize risks it was taking.”

This took place during the riegn of Stan O’Neal, who left Mother Merrill with an egregious $161.5 million in severance.

• Citigroup: Similarly shifted CDO risks and leverage off its books, failing to disclose them to investors and regulators during the era of Citi with Chuck Prince as CEO (who walked away with over $40 million in severance).

• Morgan Stanley, Bear Stearns, Wells Fargo, Wachovia, Wamu, B of A: What of the rest of the major banks and investment houses? I recently asked a very savvy credit analyst about who else engaged in these SIVs, swaps, off balance transactions, and other fraud with the intent to deceive investors and regulators.

His answer?

“Pretty much all of them. The only exceptions are probably Goldman Sachs and JP Morgan (I have no evidence they did this). The rest of the Street either are known to, or are unknown but likely to have engaged in the same behavior. Morgan Stanley, Bear Stearns, Wells Fargo, Wachovia, Wamu, B of A, all of them.”

http://www.ritholtz.com/blog/2010/08/coming-soon-bank-ceo-perp-walks-jail-time/

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By Fred, February 18, 2011 at 12:24 pm Link to this comment
(Unregistered commenter)

I have to agree to what most of this article has stated except for government involvement in providing financing for home ownership.  With Fannie Mae and Freddie Mac starting to end this government program, it will be better for everyone. This way banks will be very careful in providing loans to purchase a home rather then give out loans to anyone and then selling the loans to the Fannie Mae and Freddie Mac.  The latest article I read is that it will cost the government about 250 billion dollars in losses.  The government should not be involved in financing loans for home ownership, that is what the banks are for.

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By Anarcissie, February 18, 2011 at 10:58 am Link to this comment

Raylan—in a sense the government did invent fake securities.  Rich people’s money is different from poor people’s money.  When you give a lot of money to poor people they spend it on goods and services, and assuming the goods and services haven’t somehow increased, inflation results.  When you give money to the rich, they can’t possibly consume the goods and services it can buy, even when they buy the most grotesquely useless luxuries, so they have to invest it.  The price of goods and services do not increase; instead, the prices of the things rich people invest in, equities, real estate, collectibles, increase.  (As we observed in the Naughties.)  As the quantity of capital, however gaseous, burgeons, new ways to invest it have to be found, such as derivatives and dubious mortgages.  (The ‘laws’ of supply and demand dictate that the ROI of capital will fall as more and more of it becomes available.)  No amount of regulation will stop this process; as the money supply expands it will simply find new channels of escape.

Note in this that I am including public and private credit in the notion of money supply, not just currency or accounts.

The problem with credit, of course, is that unlike goods and paper money, it can disappear almost instantaneously.  This is what happened in 2006-2008.  Now, the Federal government is trying to restore exactly the conditions which preceded the last crash.  If they succeed I take it another and greater crash will result.

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By RayLan, February 18, 2011 at 8:27 am Link to this comment

ITW
ONe could justify any Machiavellian scheme on the basis that politics is the ‘art of the possible’.
Effectiveness is measured in terms of principles realized. Obama doesn’t prove he holds to any consistent set of principles which means he is a toady of the corporate masters.

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By Inherit The Wind, February 18, 2011 at 8:14 am Link to this comment

The problem is that while politics is the art of the possible, the President doesn’t understand that GREAT politicians find ways to make the impossible possible.  So he keeps “working with” the GOP instead of taking actions to force their hand to cut defense or show their asses by closing down the government-again.

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By RayLan, February 17, 2011 at 10:31 pm Link to this comment

Anarcissie
“I think the direct and indirect production of funny money by the Federal government was and is more of a problem than lack of financial regulation.”
You may think that - but the government didn’t invent the fake securities that caused the bubble. The bubble never would have blown as large, meaning the financial institutions would never have been leveraged out of reality, if the regulations that would have prevented such nonsense would not have been lifted by Reagan.
This gives new meaning to the phrase ‘funny money’ beyond anything you may think the government created (for which you have no facts to support)

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By ardee, February 17, 2011 at 5:34 pm Link to this comment

SteveCLT, February 17 at 4:30 am


Yes the “banks” were guilty and still are as guilty as sin. They are broke many times over. Now who is keeping them afloat with mark-2-myth? Why it’s Obobo…every communist’s dream. You need your oligarchs if you want to make that omelet.

I seldom read a post that contains such a ridiculously ignorant view of what constitutes a ‘communists dream’ than this one. Congratulations.

Our President is nothing more and certainly nothing less than a shill for the big business you recognize as “guilty as sin” yet you call him a communist and throw away all semblance of reality.

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By zonadude, February 17, 2011 at 4:16 pm Link to this comment

Quick fix: Don’t buy a “home” No mortgage nothing for the criminally insane greed masters to “bundle” and “sell”. Home ownership is WAY over rated. We save thousands with no property tax, yearly. Beat these bandits at their own lopsided game. No mortgages, no “profit” for the greed meisters!

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By Anarcissie, February 17, 2011 at 3:06 pm Link to this comment

Raylan—I think the direct and indirect production of funny money by the Federal government was and is more of a problem than lack of financial regulation.  Investors and creditors will demand regulation, oversight and transparency if they think they have something substantial at risk.  The inflation of the stock and real estate markets with funny money caused many of them to believe that bad investments weren’t risky—the government would cover the downside.  Hence the creation of dubious mortgages and dubious instruments based on them, absurd stock and real estate prices, and so on.

But this doesn’t say why the U.S. economy can’t function without large infusions of funny money, which is even more of a root cause.

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By zagostino, February 17, 2011 at 2:34 pm Link to this comment

Fits in very nicely with this article ( I wonder if Scheer
and Wolff would team up for a series)

http://www.rdwolff.com/content/february-2011-monthly-
update-capitalism

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By RayLan, February 17, 2011 at 12:15 pm Link to this comment

Anarcissie
“First of all, ‘greed’ is simply one person desiring something to a degree of which another person doesn’t approve. “

Greed can’t be regulated regardless of the definition, but the trade practices of a financial institution can. The financial crisis was the direct result of out of control investments on bad money packaged into tradeable securities as though it were good money. All of this was fraudulent and subject to federal prosecution. Bankers knew it. Brokers knew it. Because of the feverish greed for more and more profits ethics and regulatory laws (whatever were in place) were ignored and the economy tanked.
This root cause of financial ruin has not yet been addressed or corrected.

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By RayLan, February 17, 2011 at 12:03 pm Link to this comment

correction
CDO = Collateralized Debt Obligation

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By drunkfoulmouthfilthybeast, February 17, 2011 at 11:38 am Link to this comment

You know?,this reminds me of the ice cream truck roaming the residential areas where I once lived, the driver, noticing children waiting along the sidewalk, had one objective, show all the ice cream goodies to the kiddos and when they run out of money, encourage them to rush to mummy for more funds to buy that one last bar or pop-sicle, motive? get every penny, no matter what. Now, they are playing grown up games and the motive is still the same, but, instead of borrowing money from mummy, at zero interest, we are convinced by our banking friends that your unlimited wealth is just over the next hill, paying back the loan is no problem. Only the speed bump(economic slump) that wasn’t mention during the presentation with the same objective, to relieve you of you coin purse, deeds and chattlels and anything that wasn’t nailed down that had any value, just after reaching the sumit and right before the loan is due. These cretins don’t need a crystal ball concerning the future, it is already orchestrated to happen and the members of the Federal Reserve are the one who score the music.

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By Anarcissie, February 17, 2011 at 11:28 am Link to this comment

I think the present issue is more complicated than you all perceive.

First of all, ‘greed’ is simply one person desiring something to a degree of which another person doesn’t approve.  It has no objective meaning.  Almost everybody wants stuff, and almost everybody disapproves of a lot of other people.

Private, individual home ownership was encouraged by conservatives of both major parties because it was believed that it made people more conservative.  It also represented a huge opportunity for banks, other lenders, real estate manipulators and speculators, developers, and so on to make piles of money at the expense of the taxpayers, that is, working people.  The weight of the Federal government also provided a stable environment in which financiers could more efficiently exploit their customers.

The idea of individual home ownership became especially important during and after World War 2, as it moved millions of people, many of them with military experience, out of the cities, where they might interact in ways the ruling class didn’t like, into the isolation of the suburbs.  A secondary effect of this least efficient housing solution was the need to build infrastructure, especially highways and cars, to move people from the suburbs to the workplace to shopping areas and back again.  No doubt it also sold a lot of tickets to It’s A Wonderful Life as the folk romanticized and idealized what was actually a rather unpleasant existence.

The question one might want to ask here is ‘Why now?’  Why has the ruling class decided to abandon this largely successful program?  Are they going to park the folk in housing projects or concentration camps?  But performing the analysis will require more than the usual progressive knee-jerk reaction that government is good and therefore more government is better.  The state may be changing its shape, but it is not going away.

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By RayLan, February 17, 2011 at 9:55 am Link to this comment

The only problem with the past government role in makin home ownership affordable was not the amount of regulation but the amount of de-regulation - not holding banks sufficiently accountable and auditable. How else could Wall street package sub-prime mortages as ‘bonds’ that could be bet upon in the form of CDOs (collaborative debt obligations)?  The bets are called CDS , Credit Default Swaps which is insurance that guarantees that a security will not default. The buyer of course makes a killing if the security is a sub-prime mortage time-bomb.

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By JohannG, February 17, 2011 at 9:28 am Link to this comment

Agree with Mr. Scheer that turning the entire mortgage
industry over to the private sector is NOT in the best
interest of the majority of Americans. But the majority
of Americans are unfortunately too dim to vote their interests. Hence the plunder continues.

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By C.Curtis.Dillon, February 17, 2011 at 8:43 am Link to this comment

Let’s get this out of the way up front: bpawk is an idiot. Poverty is rarely a choice people make freely. Squandered savings are usually lost to medical expenses, basics of living and other unavoidable expenses. Low income people are low income because, in the new America, they are nothing but garbage. Try living on the crap wages they give at Walmart and with no medical. Try raising a family on the minimum wage they pay at McD. Education you respond? Try getting any kind of education in the 3rd world classrooms one finds in most inner cities. Or try to rise above the destitution one experiences in almost any lower class neighborhood. It’s almost impossible to survive let alone thrive in a place like that. Christ ... haven’t we gotten beyond the welfare queen bullcrap yet? That was so Reagan! And, let me add one other thought ... if I was broke and living in a rent subsidized tenement somewhere and a mortgage broker came to me and said he had a way of putting me into a house that I could afford, I’d jump in a heartbeat. Even if I knew that, 2-3 years down the road, it would blow up on me and I’d be right back where I was when it started. Why not jump at the chance to get a real house in a reasonable neighborhood, even if only for a while? What do I have to lose? My credit score! What credit score? If my score is essentially zero why would a foreclosure change anything? It is the responsibility of the mortgage originator to score my application and determine if I’m a good risk. If he refuses to do that than it’s his problem too, not just mine. I have the right to apply as often as I want and can scrape up the application fee. No where is it written that I’m breaking the law. If the originator takes my data and changes it so I “qualify” how am I responsible? He has the responsibility to verify every thing on that application. If he doesn’t, that’s his fault and failure. You ever try to actually read all the fine print on a mortgage app? Even with advanced degrees most of it is unintelligible ... and for a very good reason. Confusion is part of the game. When I bought my last home, the paperwork was over 6” thick. The lawyers were too impatient for me to actually read everything so I had to take some things on faith. I did because I trusted my lawyer but not everyone is so lucky. We had a much better system when REGULATION forced the sharks to do the right thing. Securitization has unleashed the sharks who can make money by pushing dangerous products that are designed to fail. You need to get pissed about that, bpawk.

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By Ralph Kramden, February 17, 2011 at 3:51 am Link to this comment
(Unregistered commenter)

Mr. Scheer, with all do respect, you remind me of Tonto in the Lone Ranger. Always going to town to get the information, always getting beat up. Bill Cosby’s routine comes to mind: “Tonto don’t go to town.” How many times must this duplicitous president fool you with “Dr. Feelgood” words? He doesn’t mean a single word he says about democracy or helping those in need. In foreign policy he betrayed Honduras, Haiti and now he is betraying Egypt. He grovels, begs, crawls,slithers before Israel and it’s atrocities. The man has no cojones, just greed. He has the scruples of an Al Capone: he condones torture, kidnappings, assassinations, has done zilch about habeas corpus. In domestic policy he is a poor boy who has been seduced by Harvard and Wall Street. He wants to be fabulously rich and he will be as long as he brown-noses the financial sector.
My gripe: you attack him, just as you do in this article. But then Obama will come and say something progressive and you will be the first to champion him. It’s all words, Mr. Scheer, you should know that. The man is a disaster. Cut him loose, let’s start working on an alternative candidate or a party.How about a Labor Party? We got nothing to lose but our impotence and our chains. Maybe Egypt can help resurrect the spirit of the 1930’s in the Labor movement. Hope is the last thing to die.

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By fearnotruth, February 17, 2011 at 2:21 am Link to this comment

RE: By bpawk, February 16 at 7:06 pm
...People who risk their money and lose should suffer the consequences - their greed encouraged them to not
save enough, rack up credit card debt and over-leveraged themselves…

this line argues that if you’re without savings, only your ‘greed’ is to blame - were that life be so simple

so, greed causes lack of savings for the struggling small business person who has exhausted all lines of credit just to keep the doors open

and, greed causes lack of savings for those whom no health insurance is affordable and they’re hit with
crushing medical expenses

and, greed causes lack of savings for those who’ve lost everything to fire, flood or hurricane

and, greed causes lack of savings for those who believe an education is the way out and are saddled with
massive debt service upon graduating from college and unable to find a job

Even Friedrich Hayek is not so cruel:

Hayek did write that the state has a role to play in the economy, and specifically, in creating a “safety net.” He wrote: “There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.” [48]

http://en.wikipedia.org/wiki/Friedrich_Hayek

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By SteveL, February 17, 2011 at 1:41 am Link to this comment

Marching over the cliff for corporate profits?

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By SteveCLT, February 16, 2011 at 11:30 pm Link to this comment
(Unregistered commenter)

MrFreeze is right and WriterOnTheStorm is dead wrong.

I know at least six middle class couples who were flipping properties for a few years before the music stop and wiped out their own home value. Yes, there was predatory lending. And maybe a financial IQ tests should have been given. But Barney Frank, who lied in this last election about how he tried to prevent all this, facilitated it all along with Justice Department threats of not lending enough to poorer minorities.

Yes the “banks” were guilty and still are as guilty as sin. They are broke many times over. Now who is keeping them afloat with mark-2-myth? Why it’s Obobo…every communist’s dream. You need your oligarchs if you want to make that omelet.

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By Steve E, February 16, 2011 at 5:39 pm Link to this comment

Sorry OT: Russ Feingold launches “Progressives United” to fight corporate fascism.

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By Micah Dyer, February 16, 2011 at 5:30 pm Link to this comment
(Unregistered commenter)

GREED.

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By blueworld, February 16, 2011 at 5:24 pm Link to this comment

Thanks for another & yet another & as always another great article on important issues.  I wondered when “reputable” MSM pundits reported that the FM’s insured 85% of US mortgages, how that could be true.  Are 85% of US mortgages VA or FHA?  I doubt it.  When I was sucked into an alternative mortgage in ‘84 by City-freakin-Federal, I had to purchase Private Mortgage Insurance (part of my monthly payment) in addition to title insurance & my ridiculous ARM.  So if the mortgagers were covered by PMI how did the FM’s get involved?  Another scheme to avoid depressing the greedy banks & forcing their accountability onto the taxpayers who are also forced to bail them out when they whine.  PS - I paid off my mortgage, but I never had “savings” or anything else these guys had.  Neither did my son.  God bless America.

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By gerard, February 16, 2011 at 4:41 pm Link to this comment

bpawk:  “...other countries didn’t suffer like the US because they didn’t encourage home ownership to just anyone but wanted their citizens to be prudent and responsible.”
  Other countries are not so averse to “socialistic” measures promoted in the public good, for example, government money spent on minimally adequate low-cost public housing. Hence they didn’t suffer as much, for one reason.
  Perhaps the stupidest of all stupid aspects of American life today is the inane knee-jerk aversion to any social measure that benefits the average citizen as “socialism” whether it’s social security, public health care, public education, food stamps, whatever
. Talk about cutting off your nose to spite your face!  It is utterly amazing how this myth can be promulgated with a straight face and convince millions of adherents to vote against measures that actually benefit themselves.
  It is unlikely that any other country in the world is that stupid!

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By entropy2, February 16, 2011 at 4:24 pm Link to this comment

@Anarcissie - all too true.

This line cracked me up:

It wasn’t meant to end this way…

Sez who?

This is a storybook ending for the plutocracy and their government lapdogs. A dispossessed servant class that owns nothing and has no economic power to leverage. What better way to ensure an endless supply of proles willing to take any scraps off the table just to survive?

Oh, but wait…if we just elect the right people, everything will turn out great. Uh-huh.

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By ocjim, February 16, 2011 at 4:00 pm Link to this comment

If you thought having a Democrat as president guarantees representation of the people, you continue to see how wrong you are.

Wisconsin public employees are taking to the streets as we speak, hoping to stop a Republican governor,corrupt and compromised, who would take away rights won with blood years ago.

Egypt serves as an example of what we must do to retrieve the storied democracy we once had. Perhaps only the memory of what we once had inspired them, not today’s reality.

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By tman, February 16, 2011 at 4:00 pm Link to this comment

Oblablaa is nothing more than a shill and puppet of Zionist bankers and the war mongers.

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By MaxShields, February 16, 2011 at 3:14 pm Link to this comment

Anarcissie
“Alternatively, I suggest that a more radical solution is needed: cooperative banking and cooperative housing, independent of the present major institutions, projects, policies, patterns.”

YES! This is the kind of fundamental change that is need. Stop looking for this government or its politicians and those who own them, to do anything other than what they are doing… Scheer seems determined to beat a dead, very dead horse, when he’s not pounding his head against a solid concrete wall.

Anarcissie you have put your finger smack on the key.

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By willymack, February 16, 2011 at 3:04 pm Link to this comment
(Unregistered commenter)

OK, so we have all the trappings of a representative democracy here, right? Wrong!
Oh, sure, we get to vote for the politician who lies the most convincingly, and we even call it a “secret ballot”. People LOVE secrets, doancha know?
So, instead of keeping their pledges, and working tirelessly for the benefit of ordinary citizens, they turn right around and do the same for the psychotic crooks who’ve bribed them so handsomely.
The REAL reason most politicians run for elected offices is to acquire personal wealth, and to hell with everybody else.
They get away with this time and again because most Americans refuse to use their ability to critically eveluate their intentions and ask the right questions.
As long as this situation exists, we’ll be taking it in the shorts, until there’s nothing left to steal from us.

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By Anarcissie, February 16, 2011 at 2:29 pm Link to this comment

It seems to me that once again we observe that trusting to one’s lords and masters, that is, the ruling class and their government, to provide a good life for the people, is a serious mistake.  The ruling class provided good things when they had to deal with Communist and fascist competition.  Now that those threats to their power, wealth and status are gone, the ordinary people can be and are being hung out to dry.

Some of you will say that the way to rectify this situation is a third party.  I suspect that a third party that achieves any traction will quickly be corrupted by the same forces that have corrupted current and previous major parties, but of course I could be wrong.

Alternatively, I suggest that a more radical solution is needed: cooperative banking and cooperative housing, independent of the present major institutions, projects, policies, patterns.

In any case, moaning and groaning about Mr. O and the Democrats isn’t going to help.  Forget them, as they have forgotten you.

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By TDoff, February 16, 2011 at 2:15 pm Link to this comment

While opinions may differ as to who is indeed the most dastardly-deeder, the end game of the dastardly-deeders gang/syndicate/cabal is apparent. They want to control and own it all. This Plutocratic capitalist society provides for the unrestricted, ungoverned, unregulated amassing of wealth, thanks to the Plutocrats owning and controlling the legislative, administrative, and judicial branches of ‘our government’. How convenient that the latest Plutocrat financial scheme, the alchemization of baseless mortgages into golden blue chips by amalgamation and massive mixings of deceit, resulted in not only the accumulation of personal fortunes measured in billions, but also throwing many ex-homeowners into the streets, and vastly depressing housing prices, and making the financial ‘industry’ de-facto owners of a vast number of homes. Thus the Plutos have provided another investment for themselves, available, cheap housing with a great demand for rentals by the dispossessed. The remaining problem is that the economic disaster created by the housing debacle has resulted in vast unemployment, making steady rental income uncertain. So the Plutos will require their lackeys to pass legislation requiring renters to use all available space on their rented property to raise cotton or other cash crops, which crops will be owned by the Plutos, to assure rental payments.

And thus the Plutos will have re-established the normal order of things here in the Good Old US of A, and will insist on being addressed as ‘Massa’ by their tenants.

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By bpawk, February 16, 2011 at 2:06 pm Link to this comment

Like banks, homeowners should not be helped when they take risks and lose - other countries didn’t suffer like the US because they didn’t encourage home ownership to just anyone but wanted their citizens to be prudent and responsible. People who risk their money and lose should suffer the consequences - their greed encouraged them to not save enough, rack up credit card debt and over-leveraged themselves. Nobody else should pay - there should have been no bailouts or help of any kind from the govt - the govt can help create jobs - what people do with their money is up to them but if they chose to be risky, they alone should pay the price.

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By WriterOnTheStorm, February 16, 2011 at 1:38 pm Link to this comment

Scheer’s big-picture assessment is cogent and frightening. Judging from the
commentary, however, it seems some are still fomenting the myths about the
meltdown:

1. The problem is just too complex to fix blame.

Actually, no. There’s mainly one thing to blame. A mentality of avarice that has
permeated society since Reagan and his neoliberal cronies ushered in the era of
hypercapitalism. Their scorched-earth economic policies pitted corporation
against citizen and began the greatest upward transfer of wealth in American
history.  A transfer that has culminated in the banks effectively milking out the
home equity of millions of Americans.

While a little bit of greed might stimulate competition and innovation, a whole
lotta’ greed brings the parasites out. And no one is more of a parasite on our
economy than the investment banks. They are the harbingers of
financialization, the terminal phase of capitalism. But that’s another story.

2. It’s the homeowner’s fault.

Ahh, nothing makes me feel at home quite like another dose of the right’s
favorite game, blame-the-victim. Apparently for some, the homeowner is
supposed to be able to predict the housing market with greater accuracy than
the people who do that for a living. This perverse view holds that homeowner is
equally culpable when several houses on their block go into foreclosure,
reducing the aforementioned “value” of their home until it’s upside down on the
loan, making refinancing impossible - that’s totally the homeowner’s fault for
not seeing that the Smiths across the street weren’t really good candidates for
their loan. It must be those damn venal homeowners up to no good again for
getting laid off because the economy tanked after so many people lost so much
money on their homes and other investments.

Couldn’t be the banksters, who jeopardized their (and our) future by
“leveraging” those risky loans up the 30 times their value, despite evidence
clearly showing that the banks knew they were toxic. Couldn’t be those banks,
who hid the toxic assets in complex tranches, then greased the right palms to
ensure that those tranches got triple A rated. Couldn’t be those same banks
who, when all else failed, set up bogus store fronts to “purchase” those toxic
loans so they could keep them off their books. Couldn’t be the neoliberal
mentality of avarice that enticed gov’t officials to permit these banks to get too-
big-to-fail in the first place.

Those wicked home buyers were guilty of wanting to participate in the
“American dream” of homeownership, the foundation of financial well-being.
The banksters were guilty of psychopathic cupidity, criminal negligence, and
outright fraud. Given the evidence, anyone who claims that the meltdown was
the homeowner’s fault is just riding the “free market” hobby-horse.

One wonders how much worse it will have to get before enough of us get up
and go camp out Cairo-style in front of Wall Street.

Much worse, apparently.

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By prisnersdilema, February 16, 2011 at 1:33 pm Link to this comment

OJama, the betrayer.  Is there any doubt about what he is anymore?

Soon, he will ge playing golf with Papa Bush and Bill Clinton once more while this
country circles around the drain.

Unfortunately this country cannot support a large military budget if everyone is working
at Wall Mart, if their lucky enough to have a job. In that sense Mr. Ojamas nefarious
financial plans jeopardize our security as a nation.

That being said our only hope is if some how the crazy birthers get him removed from
office. Or if there is a third party.  OJama has succeeded in destroying the Democratic
party, it’s now an official arm of the Rethuglicans.

Those who voted for OJama got swindled. He’s a fraud.

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By wageslave, February 16, 2011 at 1:14 pm Link to this comment

@aacme88, February 16 at 3:05 pm
I couldn’t have said it better and you know it has and is being said till the voice goes horse.  Just this morning Pres. Obama gave the Medal of Freedom to G.W.Bush for “a lifetime of sacrifice and service.” So that’s what you call being appointed Pres by your daddy’s hand picked supreme jackasses and lying a nation into war for profit.  Obama gave another medal to Warren Buffet for his “humble nature and making a little money along the way.”  And as that raises the bile in your throat think about this: In November 2010 the sheep will line up and vote for this corporatist again because that’s the state of registered Democrats in America.  Why?  The only answer I can come up with in my 58 years of life is people are just that god damn stupid, just that god damn weak.  While we watch a Democratic President finish dismantling the remaining crumbs of what was built from the FDR era through the LBJ era in support of corporate oligarchy the majority of Dems in this country will hold hands and sing “We Shall Overcome” at the next Democrat Convention as if the ‘dream’ has been saved and is continuing.  Makes you want to stab yourself in the eye with a fecal covered ten penny nail.  It does me anyway.
Next election I think I’ll skip voting.  The anal fissures voting causes me is creating equally painful guilt.  Or I just don’t believe anymore.

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By mrfreeze, February 16, 2011 at 1:13 pm Link to this comment

There have been 3 short-sales in my neighborhood in the last year. ALL of them were as a result of DIVORCES + falling house values. There will be more. So, as is always the case, there are the arm-chair economists on TD who think they can simply blame “the stupid buyers” because they were never capable of paying the mortgage. Well, I’m here to tell you as a consultant in the credit industry, that most of the people we’re seeing these days who are losing their homes are doing so after having lived in them for many years and they’ve lost their jobs. Certainly there are those out there who bought homes who weren’t qualified; however, let’s start being more honest in this discussion and place them in a different category: they were simply part of the ponzi scheme being run by the banks to make quick profits. Of course, these are the troubled borrowers that the Media focus on, not ordinary folks who have been caught-up in the overall mess we call our economy.

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By Lafayette, February 16, 2011 at 12:25 pm Link to this comment

TRUTHDIG THIS

BBQ: “...In October 2003 at age 42,  he was named president of the Federal Reserve Bank of New York.  His salary in 2007 was $398,200.  As President of the New York Fed, he served as Vice Chairman of the Federal Open Market Committee. In 2006, he also became a member of the Washington-based financial advisory body, the Group of Thirty.  In May 2007 he worked to reduce the capital required to run a bank.  In November he rejected Sanford Weill’s offer to take over as Citigroup’s chief executive. ...”

Yes and so what?

Just what are you trying to argue with the above? That Geithner was responsible for Toxic Waste fouling the banking and insurance systems thus causing the Credit Mechanism Seizure?

Wrong. He was president of the Fed in NYC, but the responsibility for market oversight was with his boss in Washington, Bernanke.

None of the above gives any factual evidence of any particular negligence on Geithner’s part. Yes, he was part of the entire mechanism that was at fault.

And, yes, it is entirely possible he believed that bank reserve requirements should be lessened in order to enhance Investment Bankers dealing debt-instruments. Many people wrongly believed this was necessary and that the system could not fail due to overreach. They got that wrong.

And, if Barak Obama needed someone who understood the Finance Mechanism better than most, he certainly picked the right guy.

Your throwing tomatoes because it amuses you to do so. It would be far, far better, however, were you able to “dig out the truth” and thus understand the reasons for the SubPrime Mess that nearly stopped the world in its tracks - instead of stirring the sh*t with innuendo and baseless character assassination.

The general proposes also that such is beyond your intellectual capacity. So its back to doing what you evidently know best - braising hot-dogs.

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By pyrrhon, February 16, 2011 at 12:25 pm Link to this comment

Lafayette is very accurate with his analysis, but there was even more blame to go around.  The Develper, who used no business sence in projects, the loan broker who only cared about his commission and shouldn’t even be allowed in the process, and of course the buyer who was buying a home that was overpriced and way over his head.

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By Lafayette, February 16, 2011 at 12:00 pm Link to this comment

ARROGANCE

BBQ: Didn’t get much sleep last night?

Yes, it shows in your comment.

If you think complex subjects can be reduced to “sound-bites” in order to be understood properly, or at all, then may I suggest you get a job with Karl Rove?

He needs people like you.

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By M L, February 16, 2011 at 11:01 am Link to this comment
(Unregistered commenter)

Tim Geithner is a snake in a suit and continues to do the dirty work for the Corporate Cons and the Banksters. He is a disciple of Robert Rubin and these snakes turned our treasury into their own personal ATM machine.
A medal of freedom is given to a man responsible for the deaths of tens of thousands of people.
The man who turned our economy over to Robert Rubin is now called the President of the World and a peace maker.
Tim Geithner amd his partners in crime are responsible for a housing market on life support

Either Barack Obama is giving them a lot of rope
Or I’m going to start supporting Ron Paul for President

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By madisolation, February 16, 2011 at 10:59 am Link to this comment

bpawk writes:
“I don’t want people who are irresponsible buying a home as I will have to pay for them in the end.”
May you never have a medical condition that drains all your money and/or may you never lose your job—these are the leading causes of home foreclosure, with medical problems being first. You evidently don’t know people who have had to face the heartbreak of losing their home of many years. If you want to be on the side of the banks, fine. Just don’t go around blaming hardworking people who have endured so much. It used to be that you could declare bankruptcy and still keep your home. That changed in 2005. Your lack of heart is only superseded by your callous blame.

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By Salome, February 16, 2011 at 10:32 am Link to this comment
(Unregistered commenter)

“...mere renters…”?  Why the pejorative?  In many Euorpean countries, the majority of people rent.  They seem to do just fine.    “...denied goverment support in trying to get a place of their own…”?  Won’t the FHA still be in the mortgage business?

To rephrase what “FRTothus” wrote, a mortgage ties you down to the point where it takes super-courage to speak out against a political, or economic system, that holds the paper on that mortgage, and the power to financially ruin you. A generalization is that by the time you get out from under that mortgage obligation you’re too old to have the energy to fight against the system.

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By BarbieQue, February 16, 2011 at 10:21 am Link to this comment

COMPREHENSION

Lafayette jumps right in: >>“How about understanding a word before using it?”<<

Mr. Scheer (spelling, Dear General, is important) needs a verbose arrogant anonymous poster to keep him in line, RE: Understanding words. Sheesh. Maybe check out the authors bio?

Didn’t get much sleep last night? :D

ACCURACY

The Good General continues >>”...But Tim Geithner was NOT RESPONSIBLE for either generating Toxic Waste or for selling it. Such transactions fall within the oversight purview of the Federal Reserve Bank…”<<

WIKIPEDIA

“...In October 2003 at age 42,[17] he was named president of the Federal Reserve Bank of New York.[18] His salary in 2007 was $398,200.[19] As President of the New York Fed, he served as Vice Chairman of the Federal Open Market Committee. In 2006, he also became a member of the Washington-based financial advisory body, the Group of Thirty.[20] In May 2007 he worked to reduce the capital required to run a bank.[17] In November he rejected Sanford Weill’s offer to take over as Citigroup’s chief executive.[17]...”

http://en.wikipedia.org/wiki/Geithner

ROFL

General, meet Wikipedia. Some of us are familiar with your fondness for Wikileaks but you can rest assured that the Evil Media Hound/Sex Criminal doesn’t have anything to do with this wiki.

I could continue, (like certain other annoying posters) but I have to go do some work. Gotta pay the Insurance Companies, don’t ya know?

Thanks for the morning laugh!

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By aacme88, February 16, 2011 at 10:05 am Link to this comment

People cling to the Democratic Party as the only hope for a Knight in Shining Armor. But it is increasingly obvious that there won’t be anyon riding in on a white horse to save the day.
In the wake of Citizens United, if not before, there is no party championing the regular people.
Both parties are competing for the favor of the same corporate masters.
Get used to it. You’re on your own. But you’re on your own as a class, not an individual. If you are not a millionaire, you are not represented in government. But you are taxed more heavily than those few for whom government now operates.
Does this suggest a catchy revolutionary slogan to anybody?

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By bpawk, February 16, 2011 at 9:42 am Link to this comment

Before the meltdown, a lot of people bought homes with no money down or very little, hoping their home would keep appreciating. They knew they took that risk even though they didn’t save for a rainy day and put too little $$ down - so when times got tough these irresponsible people lost their homes as they were not responsible homeowners - owning a home is a responsibility not a right - people were buying homes they couldn’t afford, spending beyond their means and not saving for a rainy day. Now every man, woman and child has to pay for their irresponsibility. I don’t want people who are irresponsible buying a home as I will have to pay for them in the end.

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By thebeerdoctor, February 16, 2011 at 9:39 am Link to this comment

Ever heard of a Maybach? Well as the Beer Doctor, I am aware of a Mai Bock, the strong golden version of bock beer. But a Maybach? Turns out that is some high priced car, the Landaulet model which sells for $ 1 million:
http://www.alternet.org/story/149918/9_pictures_that_expose_this_country’s_obscene_divsion_of_wealth

madisolation’s blistering critique of the President character reminds me (how can I ever forget?) of Barack Obama stating that he did not begrudge the Wall Street executive bonuses, because, as he stated, “that’s how our system works”. Which points to a problem that none of the political apologists will tackle, and that is, what is truly lacking from the political leadership, so subservient to the desires of the ownership elite, is any sense of wisdom.

This disconnect is everywhere. Someone may ask why is the government investing in wireless broadband, while slashing funds to help pay for heating? The short of it maybe that you can text someone that you are freezing to death?

President Obama, like the infamous President Reagan, is the product of a manufactured mythology. I recall being hammered by bloggers on The Huffington Post, when I suggested during the 2008 campaign, that how much did the average American have in common with someone who grew up in Hawaii and attended private school. Then the myth machine set in, using words like “grass roots community organizer”. And I was given my walking papers: golden boy could do no harm.

What a strange world to live in. People with next to nothing worship billionaires. Robbed of nearly everything accept illusion, they, like President Obama, seek to surrender even more to those who couldn’t care less about them. How strange it is to live in global serfdom.

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By MaxShields, February 16, 2011 at 9:36 am Link to this comment

Mr. Sheer, on this topic which he regularly pontificates, seems only to get half the problem/solution. The issue of the banks and Wall Street has been well documented. Obama’s play to them has been nearly as well documented. Nothing new here.

What is deeply problematic is what Mr. Sheer seems not to either understand or perhaps dismisses through omission. We have a deeply, an unrepairably flawed economic system that is based on endless and unsustainable growth, and hyper-consumerism. Our patterns of life style, including individual homeownership is all about a GDP which is destroying the planet, added to by the likes of India and China. I would recommend listening to this poignant statement by Robert F. Kennedy shortly before his assassination.

We need an alternative economy, not simply fixing what seems broken. This is a system beyond repair at its core. We need to think anew and begin a transformative process. The big banks and wall street is simply a mirror of this deeper failing.

RFK’s message rings as true today, and evermore, as then.
http://www.youtube.com/watch?v=NlxlWruZOV0

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By Lafayette, February 16, 2011 at 9:29 am Link to this comment

WORD GAMES

RS: The Administration believes the securitization market should continue to play a key role in housing finance.

How about understanding a word before using it?

Securitization is the process by which a mortgage or credit (meaning a debt instrument) is transacted forward to other creditors who assume the risk for the debt in exchange for the interest-revenue.

The practice is common in the Credit Industry. It permits the original creditor to obtain funds that it employs to sell new credit to consumers. And for an economy that employs heavily credit to leverage Disposable Income, it helps to further/sustain Consumer Demand and thus jobs.

Remember, Consumer Demand is ultimately the heart of ALL employment. Not Government Spending (which depends upon tax revenue, which depends upon employment. Not Business Investment, which is justified only by the return that it can make by means of Consumer Demand, which also depends upon Employment Income.

So, securitization is key to the economy.

HOWEVER

Securitization is dependent wholly upon the nature of the debt-instrument being sold. If it is backed by realty Toxic Waste, then, yes that debt is worthless. Which is precisely how the Credit Mechanism came to a screeching halt in the Fall of 2008, literally overnight, to threaten the underpinnings of the economy. And which brought about the Great Recession that began in 2009.

Which dumped the American economy into a recession from which we have yet to see the light at the end of the tunnel.

But Tim Geithner was NOT RESPONSIBLE for either generating Toxic Waste or for selling it. Such transactions fall within the oversight purview of the Federal Reserve Bank.

And it was not Geithner, but his boss at the Clinton Treasury (Robert Rubin) who convinced Billy-boy to put down the Glass-Steagal Act - which had hitherto separated Commercial Banking (a risk-averse business) from Investment Banking (a risk-prone business). Both merged, so when Investment Banking tanked due to the Toxic Waste debt-instruments it had sold forward to the world, so did the entire bank consisting of both branches.

The real culprits, as a recent Congressional Investigation reports, is the Fed in Washington (and not New York) as well as the SEC (in New York) during the period of time 2004/2008. (I.e., the dunderheads of the Bush Administration.)

Other culprits were the Rating Agencies that declared the Toxic Waste as Triple-A rated debt-instruments.

And, finally, the culprits also included previous managers of both Fannie & Freddie who decided to throw their formerly strict credit-worthiness filtering process to the wind and buy (from local credit banks) non-creditworthy mortgages (meaning, the Toxic Waste). Top Management at both these semi-governmental institutions walked away with million-dollar bonuses.

POST SCRIPTUM: The Cupidity Cure

Yes, Mr. Sheer, securitization will continue to play a clear role in housing finance. And the new Consumer Agency will have the role of protecting customers from the Predatory Pricing that nurtured the shenanigans of credit/mortgage businesses.

There is not just one or two Smoking Guns that killed the Golden Goose, but multiple guns. So, Sensational Journalism is not necessary to indict personalities.

The truth, in such matters, is always much more complex. It’s not about personalities as much as its about what motivates them/us.

And I maintain that what motivates them/us most are the low marginal taxation rates on both Income and Capital Gains. So, fix that problem and we cure ourselves of cupidity.

And with the revenues we pay-off the National Debt and/or make some long needed Social Investments.

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By FRTothus, February 16, 2011 at 9:23 am Link to this comment

“...American ideal of a nation of stakeholders”? 
Like the fish that does not know it swims in water,
the author displays such profound ignorance of the
real reasons behind the efforts to atomize them,
saddle Americans with a lifetime of debt and then
collect taxes on that property into perpetuity. 
There’s a humorous axiom that goes: “Stop making
those mortgage payments, and you’ll find out who
really owns that house”, but it can be further
extended to “Stop paying those property taxes and
you’ll find out who really owns that house”.  This is
a major point of understanding:  One does not pay
taxes on stuff one really owns.


Urban housing and finance was the mechanism of “white
flight”.  The financing schemes that netted the banks
millions were instituted in a consciously racially-
biased way, by whites, for whites. Years and years of
abusive later the more glaring were adjusted to be a
bit less glaring, but the underlying mechanism
accomplished what it set out to do.  Then the US
government went away, and the banks were able to bet
that the poor would go bankrupt if lent enough money,
and the bank would get back the property, AND be
bailed-out for their casino losses and get away with
their fraud. But let’s understand that there was
never any intent for a real redistribution of wealth
to take place, or that home ownership makes one more
of a “stake-holder” in the society than the working
poor or those who rent.  The atomization and de-
politicalization private housing and the suburbs and
indebtedness have had on our society has been very
damaging for our republic, but has had one very
welcome ancillary financial benefit, and it shouldn’t
come as a surprise to Mr Scheer or anyone else for
whom: a small class of bankers and the ruling elite. 
Tied down to a house and mortgage and debt, modern
man cannot make a peep, cannot afford to step out-of-
line.

The blight that exists in our cities, the denuding
that has taken place, the state and its boosters and
cheer-leaders sometimes soothingly excused in the
phrase “benign neglect”, or what is known as “The
Plan” on the US East Coast, the thousands evicted
after paying into this scheme for years prior, the
decline of the republic can be seen as a victory of
ruthless capital over social good. The unquestioning
acceptance of (faux) private property ownership (one
doesn’t pay taxes on what one really owns) instead of
the use of public funds to better the commons (public
transport, health-care, pensions for everyone, decent
housing, a decent life) ensures that no real wealth
is redistributed; it maintains the disparity between
rich and poor, and in fact puts the atomized common
man over an personal financial barrel that the same
government will never bail-out, while it talks of
Freedom and Democracy on TV.  “Stake-holders”? Do not
those who have no other choice but to rent not have a
stake in their neighborhoods?  Very disappointing,
such perspectives and assumptions, which represents a
failure of education and imagination, but also gives
evidence of the insidiousness of the pervading and
socially-eroding consumerist culture.

Very sad.

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By par4, February 16, 2011 at 8:44 am Link to this comment
(Unregistered commenter)

Great synopsis,Mr.Scheer. You neglected to mention the role of the DLC in the destruction of the Democratic Party.

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By ardee, February 16, 2011 at 8:36 am Link to this comment

omygodnotagain, February 16 at 1:13 pm

But you dont think these apologists for mediocrity and corporate control of government will actually step up, do you?

I thought not.

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By madisolation, February 16, 2011 at 8:19 am Link to this comment

This is what happens when people elect a President whose own mother said she despaired of him ever having a social conscience. We have a person in power who is emotionally stunted by his own narcissism, an individual who has immaturely betrayed his country, its history, and its people in order to dance with the ultra-wealthy who ultimately will never really accept him. He’s a man without conscience, who did not—as most politicians do—promise the American people grand visions no one believes the candidate can fulfill. Instead, he made specific promises—from not touching Social Security to closing Guantanamo—which he had no intention of keeping. A man without a conscience is diagnosed as a psychopath. A man without a conscience in a powerful position destroys other’s lives and doesn’t give a moment’s consideration to the damage he has wrought.
My only response is this: a day of reckoning is coming, Obama, you shameless fraud. You adolescent wannabe. I only hope you and the equally amoral company you so desperately want to be part of are as blissfully unaware of the U.S. uprising coming as you were of the the Egyptian revolution in its infancy, and I hope you’ll all have to flee in the night.

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By omygodnotagain, February 16, 2011 at 8:13 am Link to this comment

Ardee
I completely agree.

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fearnotruth's avatar

By fearnotruth, February 16, 2011 at 6:25 am Link to this comment

Obama on the Brink - Posted on Jul 22, 2008
http://www.truthdig.com/report/item/20080722_obama_on_the_brink/
By Robert Scheer

Barack Obama is betraying his promise of change and is in danger of becoming just
another political hack.

though that article focussed on geopolitics, it echoes what Webster Tarpley wrote about
the Hope and Change Candidate in “Obama: The Postmodern Coup - Making of a
Manchurian Candidate” - where the economic sell out is well predicted
- http://www.amazon.com/Obama-Postmodern-Making-Manchurian-Candidate/dp/0930852885 - published just one month before your article

amazingly (or not) voices from the so-called ‘left’ were in the mix; but, the Mighty
Whirlitzer drowned them out yet again - I didn’t vote for him, but saw so many being
played - in fact know some still dancing to the Hope and Change tune

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By ardee, February 16, 2011 at 6:21 am Link to this comment

I trust no one is surprised at yet another betrayal of the American worker and family by the Democratic Party. I also think our resident shills for that party need to step up and explain their continued loyalty to a party that adds this betrayal to its list of such. A list which includes continuing a hopeless and far too expensive war as well as the continuation of torture and imprisonment without access to justice in addition to the repeated betrayals of the people of this nation.

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