There is Only One Way Out of the Foreclosure Crisis

George Washington's picture Submitted by George Washington on 10/08/2010 15:29 -0500

AIGAmerican International GroupBen BernankeCapital MarketsChris WhalenFailFederal Deposit Insurance CorporationGraysonJanet TavakoliJon StewartKarl DenningerMain StreetMarsObama AdministrationTARPToo Big To FailUnemployment

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We’re the fish.

The giant “too big to fail” banks are the bird. They’ve got their talons in the American consumer and the economy.

The only way out for us – the fish – is if someone “shoots” the bird … or at least captures it and removes its talons from our hide.

In other words: Unless the mega-banks are broken up and reined in, we’re in quite a pickle.

As I’ve previously noted, virtually all leading independent economists have said that the too big to fails must be broken up, or the economy won’t be able to recover, and that smaller banks actually lend more into the economy than the mega-banks (and see this).

Unless we break up the mega-banks:

Competition will remain impaired, there will be less loans extended to Main Street and larger banker bonuses, our debt problem will worsen, markets will be rigged and derivatives will never be reined in Unemployment will keep rising The big banks will continue to dominate American politics, destroying any chance of restoring a representative form of government

And now there’s the foreclosure crisis.

You’ve probably heard about it. Even Jon Stewart is talking about it.

We’re in tough spot, alright.

As Yves Smith notes:

The problems facing deals where the notes were not properly conveyed (which we think are pervasive) are not easily remedied. As we have discussed, the “fixes” for the note conflict both with the provisions of the pooling and servicing agreement and New York Trust law.

Breaking up the giant banks is the only way out.

As Congressman Grayson wrote to Geithner, Bernanke, the SEC, FDIC, and the rest of the financial overseers:

The liability here for the major banks is potentially enormous, and can lead to a systemic risk. Fortunately, the Dodd-Frank financial reform legislation includes a resolution process for these banks.

The Dodd-Frank legislation is the recently-passed “financial reform legislation” that lets regulators force insolvent banks – no matter how big – into bankruptcy.

Banking analyst Chris Whalen wrote on Thursday:

The U.S. banking industry is entering a new period of crisis where operating costs are rising dramatically due to foreclosures and defaults. We are less than ¼ of the way through the foreclosure process.

***

The largest U.S. banks remain insolvent and must continue to shrink. Failure by the Obama Administration to restructure the largest banks during 2007?2009 period only means that this process is going to occur over next three to five years –whether we like it or not.

The issue is recognizing existing losses ?? not if a loss occurred. Impending operational collapse of some of the largest U.S. banks will serve as the catalyst for re?creation of RFC?type liquidation vehicle(s) to handle the operational task of finally deflating the subprime bubble.

He also said that the next three to six months is when things are going to get out of control, and agrees that Dodd-Frank legislation – the “financial reform legislation” that lets regulators force insolvent international banks into bankruptcy – may be used to restructure banks:

Similarly, Janet Tavakoli says:

This is the biggest fraud in the history of the capital markets.

***
When we had the financial crisis, the first thing the banks did was run to Congress and ask for accounting relief. They asked to be able to avoid pricing this stuff at the price where people would buy them. So no one can tell you the size of the hole in these balance sheets. We’ve thrown a lot of money at it. TARP was just the tip of the iceberg. We’ve given them guarantees on debts, low-cost funding from the Fed. But a lot of these mortgages just cannot be saved. Had we acknowledged this problem in 2005, we could’ve cleaned it up for a few hundred billion dollars. But we didn’t. Banks were lying and committing fraud, and our regulators were covering them and so a bad problem has become a hellacious one.

***

In order to make the financial system healthy, we need to recognize the extent of our losses and begin facing the fraud. Then the market will be trustworthy again and people will start to participate.

***

This can be done with a resolution trust corporation, the way we cleaned up the S&Ls.

And Ellen Brown points out:

Karl Denninger … writes:

Those who bought MBS from institutions that improperly securitized this paper can and should sue the securitizers to well beyond the orbit of Mars… [I]f this bankrupts one or more large banking institutions, so be it. We now have “resolution authority,” let’s see it used.

The resolution authority Denninger is referring to is in the new Banking Reform Bill, which gives federal regulators the power and responsibility to break up big banks when they pose a “grave risk” to the financial system – which is what we have here.

 

***

 

Financial analyst Marshall Auerback … writes:

Most major banks are insolvent and cannot (and should not) be saved. The best approach is something like a banking holiday for the largest 19 banks and shadow banks in which institutions are closed for a relatively brief period. Supervisors move in to assess problems. It is essential that all big banks be examined during the “holiday” to uncover claims on one another. It is highly likely that supervisors will find that several trillions of dollars of bad assets will turn out to be claims big financial institutions have on one another (that is exactly what was found when AIG was examined–which is why the government bail-out of AIG led to side payments to the big banks and shadow banks)… By taking over and resolving the biggest 19 banks and netting claims, the collateral damage in the form of losses for other banks and shadow banks will be relatively small. What we need to avoid at all costs is “TARP II” – another bank bailout by the taxpayers. No bank is too big to fail. The giant banks can be broken up and replaced with a network of publicly-owned banks and community banks, which could do a substantially better job of serving consumers and businesses than Wall Street is doing now.

Either the giant banks’ talons are removed from us, or the economy is not going to make it.

For details on the foreclosure crisis, see this, this, this and this.

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by Chartist
on Fri, 10/08/2010 – 15:42
#636521

We can beat the banks.  just don’t consume more that your paycheck allows.

The real problem is the healthcare insurance business.  They have us and the economy by the balls.  I just received a 25% increase in my small business premiums.  There’s no way any small business will hire with this healthcare cost structure.

Login or register to post comments by knukles
on Fri, 10/08/2010 – 15:46
#636543

Same experience here.

Login or register to post comments by LowProfile
on Sat, 10/09/2010 – 12:02
#637950

http://www.reuters.com/article/idUSTRE62L3B820100322

http://www.tenthamendmentcenter.com/2010/08/24/states-rights-and-respons…

Quit yer bitchin’ and get busy.

Login or register to post comments by Bob
on Fri, 10/08/2010 – 15:48
#636555

That was the point of the Health Care Reform–getting everyone’s balls into their grip, including the taxpayers. 

We wouldn’t want to have a public system like the rest of the civilized world.  Or the better health outcomes it yields, would we?  That would make it a bad “S” word.

Login or register to post comments by Ripped Chunk
on Fri, 10/08/2010 – 17:18
#636727

There was no reform whatsoever. Just allowed for an excuse to raise rates over the next 4 years.

Anti trust exemptions for both health insurers and medical malpractice insurers was left intact. That is the main reason costs have FAR OUTPACED inflation. Until there is some real competition we will continue to be hosed.

Login or register to post comments by nmewn
on Fri, 10/08/2010 – 20:03
#637023

“We wouldn’t want to have a public system like the rest of the civilized world.  Or the better health outcomes it yields, would we?  That would make it a bad “S” word.”

Would you call Britain part of the “civilized world.”?

“Practical details of the plan are still sketchy. But its aim is clear: to shift control of England’s $160 billion annual health budget from a centralized bureaucracy to doctors at the local level.”

You may call the “S” word socialism…I call it shit. You cannot “expect” another person to labor for your price forever, if ever. If they won’t do it for your price what will you do then, force them?

This would be the “C” word Bob…and it doesn’t stand for capitalism or charity.

 

Login or register to post comments by Bob
on Fri, 10/08/2010 – 20:52
#637063

At some point capitalism must man up to acknowledging its shortcomings without the romantic bullshit pushed by its enraptured direct beneficiaries.  This would, imo, include the reality that some people would die for their lack of what the society can well afford. 

It disappoints me that ideologues refuse to just spit it out: They don’t give a fuck if those people die.   

There’s no denying it, since it is a reality inherent in their “political” philosophy, but they refuse to say it.  That’s a deficit of integrity, imo. 

Sorry that they feel so robbed by “socialistic” grabs of their precious, but when it comes to life and death, I really really don’t give a fuck what they feel.  The poor are plenty valuable to them when it’s time to labor in their fields or die in their wars. 

Those are the reasonable terms of a reasonable social contract, imo.  It’s the price the haves should pay for not getting slaughtered by the have-nots.  They do outnumber the haves, so it should be obvious that this is a good deal for all, imo.  Unless you really want to push the noble law of the jungle thing to its logical conclusion. 

I’m still puzzling over the “c” word . . . oh, yeah, communist.  Bullshit. 

It’s a civilized compromise that a christian people should be able to comprehend.  Even an atheist can understand it as a matter of conscience. 

But, hey, not everybody sees everything the same way.  Like you and me, at least in this instance. 

Damn, it’s easy to get worked up about this stuff!

There are times when you and I are back-to-back against other mobs.  That’s what I mean about reasonable compromise–absolutist, black and white ideologies don’t do justice to either human beings or reality. 

I see that I’ve gone off on a rant here.  Your question was whether medical professionals should be forced to provide care at what I would consider reasonable prices.  It’s no surprise that the Brits are paring their social programs down–that’s the magical wonder of capitalist austerity . . . once the criminals of the priviledged class have pillaged their society of most of its wealth and humanity. 

My position is obviously that, yes, if push comes to shove, those prices/costs should be enforced.  I’m also opposed to abortion, so at least I’m consistent. 

Login or register to post comments by robertocarlos
on Fri, 10/08/2010 – 21:08
#637117

I thought it was the bad C word.

Login or register to post comments by Bob
on Fri, 10/08/2010 – 21:31
#637154

Alright, that was my first interpretation!

Login or register to post comments by nmewn
on Fri, 10/08/2010 – 21:53
#637185

“I see that I’ve gone off on a rant here.”

It didn’t take much…just challenge Karl Marx’s stupid little theories 😉

Dreamed up when there was no middle class to speak of.

Now there is.

And they are not really keen on going back into poverty on the shakey notion that another group of oligarchs…still run by powerful people will somehow take care of their every want and need…just re-read your own words dude.

“It’s a civilized compromise that a christian people should be able to comprehend.  Even an atheist can understand it as a matter of conscience.”

Puuuhlease…your not going to try the “Am I my brothers keeper?” progressive meme on me are you? You do realize it was an attempt on Cain’s part to obfuscate before God, a murder he had committed don’t you? A “what me?” kind of thing.

“My position is obviously that, yes, if push comes to shove, those prices/costs should be enforced.”

And if I refuse to work for that price?…will you then ask the government to kill me for you or will you do it personally?

You will say, again, the same thing Cain said won’t you?

I point out socialized healthcare’s failure in Britain and I get from you it’s a failure of capitalism itself…LOL…good grief.

Login or register to post comments by Bob
on Fri, 10/08/2010 – 22:51
#637251

It was a rant.  It’s getting late.  Hey, we can all choose where we work, what we do, and what we are willing to do it for–at least this is true of the health care professionals I have worked with for the last 30 years.  Surely it comes through that I don’t condone killing people, though? 

As for the gov taking care of “every want and need,” it was not some sort of right to a fun day at the circus I was talking about.  It was health care, which is genuinely a matter of life and death. 

Honestly, I don’t know about the British health care situation. I’ve followed the general financial and political climate there, though.  Banks get bailed out, seniors get admonished for expecting interest on their savings, etc. 

I’m not a Marxist, don’t believe in Santa, either. 

My progressive “sermon” is a founded upon a belief in compromise, finding middle ground. 

Guilty liberal disclaimer: Please don’t take my indictment personally. 

Did my characterization of what has been called “Conservative Compassion” hit a sore spot?  Should we just let “those people” die if they haven’t successfully positioned themselves in this “everybody has an equal chance” society to buy their own health care?

Login or register to post comments by StychoKiller
on Sat, 10/09/2010 – 02:24
#637431

Once the “Massive Mortgage Mess” becomes better known, huge amounts of people are gonna be needing health care, only it’ll be as scarce as hen’s teeth!

Login or register to post comments by nmewn
on Sat, 10/09/2010 – 06:45
#637500

“Surely it comes through that I don’t condone killing people, though?”

No…it really doesn’t.

When you start believing in a system, like using faceless apparatchiks to “enforce” your vision of quality of outcome upon the rest of society it’s only one small step further to remove any and all impediment’s to your utopian vision isn’t it?

“As for the gov taking care of “every want and need,” it was not some sort of right to a fun day at the circus I was talking about.  It was health care, which is genuinely a matter of life and death.”

There was never a lack of healthcare. It was always a discussion of the price of health insurance. The socialists/progressives/statists used the peoples personal aversion to paying for anything they can get for “free” as a lever against their (the peoples) own best interest and set themselves (the bureaucracy) up as arbitors between the people, their doctors and the method of payment for a service. They, and people like you, decided to put the burden on the taxpayers ultimately.

Exactly the thing I see you rail against on ZH day after day. Government in bed with the banks against the taxpayer. Government in bed with corporations against the taxpayer etc…ad nauseum. Your apparent hypocrisy knows no bounds.

Bob, you can’t have it both ways.

Now comes news that companies are asking for waivers (and being granted them for political reasons) because the cost of compliance with the new law is to great…they will get the waiver or the insurance will be withdrawn as a benefit of employment. This forces the people toward government healthcare plans (funded by taxation)…exactly what was wanted by statist/progressive/socialists.

Equality of opportunity does not equal quality of outcome. The quality doctors are opting out already…back to the labor equation I started from & the charging for it.

Your state funded utopian healthcare dream will be administered by young fresh out of college med graduates as the price on them of paying back their government student loans. This is the Castro communist model and why I believe it was part of the legislation. Watch for it.

Or the legislation will be repealed or rendered mute by not funding the bureacracies and we can start over on the issue of price.

It is my belief that you are basically a good person Bob. But you (in my opinion) are woefully naive about the responsibility you have as a free person to guard jealously against any invitation to government to come into your life and set things right. When you abdicate that responsibility you lose a piece of your freedom.

I find it amusing that the true “liberals” these days are more often found on the right side of the political spectrum than the left…LOL.

Think about it…have a good day.

Login or register to post comments by Bob
on Sat, 10/09/2010 – 09:34
#637707

The discussion about healthcare was always about price, rather than availability?

If true, that would certainly support your argument.  But Econ 101 taught us that there is a relationship between the two.  The problem here is that increasing cost inherently decreases accessability to more and more people.  That’s a “capitalist” reality. 

While health care doesn’t get the attention that banking does, it is to a certain degree itself a racket.  As one example, what would it cost if there were more doctors?  Well, the AMA completely controls the available supply of doctors.  It’s kept artificially low by political machinations of the parties invested in the existing system with the clear goal of keeping prices high.  Would we be unable to get more “good” doctors if the AMA weren’t controlling supply?  Have we really tapped out the available supply of smart people who would make good doctors?  Having worked in the industry for so long and seen for myself what it’s like there, I don’t think so.  To argue otherwise reminds me of what you hear about Wall Street traders and corporate CEO’s everywhere: The best and brightest must be paid what they are or we would lose them.  I don’t buy it. 

It gets old fighting the desperate (however sincere) fear of creeping socialism. Yeah, anything is possible and–to be fair to you–it should be vigilantly recognized as a threat.  But the “one small step from X” (x=whatever boogie man one wants to conveniently insert wrt to any issue) argument has to be viewed from a reasonable perspective.  Hey, giving police guns and the authority to use them is one small step from giving them a license to murder–and it does happen.  But that does not reasonably support the position that cops shouldn’t have them. 

I’m taken aback by your perception of me as a hypocritical ranter ad nauseum.  No doubt I am not perfectly consistent–no one is.  It’s humanly impossible.  Ranting seems appropriate to me wrt the gov and banks, as the future of civilization now seems compellingly at risk.  I note that I am nonetheless often in the company of folks with philosphies like yours in this, however. 

Interesting, perhaps (it has always been to me, at least), is that both here and in “real life” I have always been as much in agreement with principled “conservatives” as I have with so-called liberals.  Both doctrinaire camps see me as a hypocrite, btw, so no big deal. 

We’re never gonna agree on this argument.  We have different values, asssumptions, and beliefs that seem to make agreement impossible.  No big deal.  Intelligent and good people disagree alot–at least those who do their own thinking do. 

And thanks, btw, I have thought about it, and will continue to do so.  That makes this a good experience, imo. 

Have a good one yourself, nmewn. 

Login or register to post comments by Mercury
on Sat, 10/09/2010 – 06:21
#637487

Capitalism isn’t an ism, it just is.

You couldn’t kill it anymore than you could kill off the human drive for sex or food or shelter (or the forces of supply and demand). Even in a repressive political system it’s still there, squeezed into the margins of society, official corruption and black markets.

Actually, free enterprise is a much more accurate term in this context. Capitalism is a Marxist term, his straw man.

Login or register to post comments by nmewn
on Sat, 10/09/2010 – 07:12
#637507

Indeed…and agree.

“Actually, free enterprise is a much more accurate term in this context. Capitalism is a Marxist term, his straw man.”

An honest left of center person has to admit the fault when forced to actually read what has been done.

Leaving aside Bob’s thoughts for a moment, to his credit, George Washington did this long ago when I pointed out the fallacy of calling something a “human right” and then placing a penalty/fine on it for not exercising it…LOL.

This garnered respect from me toward GW. We should always value integrity and honesty over good intentions.

Login or register to post comments by LowProfile
on Sat, 10/09/2010 – 12:12
#637964

Except that Capitalism hasn’t been allowed in this country for about seventy years.

What you call Capitalism is actually Corporatism.

Capitalism is a great idea, we should really try it sometime.

Login or register to post comments by Djirk
on Fri, 10/08/2010 – 16:34
#636602

criminal, forced insurance at higher rates……is there a way to hire “free lancers” who can qualify for pooled insurance somehow?

 

Login or register to post comments by groucho_marxist
on Fri, 10/08/2010 – 16:58
#636683

yes. its called single payer

Login or register to post comments by spanish inquisition
on Fri, 10/08/2010 – 20:30
#637064

Half drunk.. read your post as single prayer

hope this helps

Login or register to post comments by Mad Mad Woman
on Fri, 10/08/2010 – 19:39
#636981

Rots of ruck with that.

Login or register to post comments by alien-IQ
on Fri, 10/08/2010 – 20:56
#637103

As long as we’re considered “consumers” instead of “people” we’re fucked.

Today I noticed something on CNBC. Granted it’s not something terrifically new, but nevertheless I took notice: they were talking about wheat prices and mentioned how commodities were looking very “bullish” and that wheat prices were up 9% today and how that was “good”.

Yes, well, “good” wasn’t the first thing that crossed my mind. It occurred to me that the alternate way of phrasing that would have been “the price of a loaf of bread jumped by .25 today, good luck if you’re on welfare because there is no end in sight for this”. Granted, my version of that story would not have been as “good” for the market…but is it less or more accurate?

Login or register to post comments by Mercury
on Sat, 10/09/2010 – 06:41
#637488

Commodities are up because your government is debasing your currency. That’s the big story.

Grain prices spiked yesterday because it is now apparent that Aug/Sept. wasn’t great weather-wise for many crops. Shit happens.

Login or register to post comments by Precious
on Fri, 10/08/2010 – 21:06
#637116

Look.  This is a good point.  But the banks can be beaten back.  First is to move your money to a smaller, local bank.  They are just as insured as the big ones. 

Second, you can cancel or reduce insurance in many cases.  Eliminate collision coverage on your cars.  If you wreck one and its your fault, too bad.  But don’t put money into the auto insurance industry for no reason.  Your car is probably worth a lot less than you think anyway.

Is your home debt free?  Then cancel your fire insurance.  When was the last time you heard of a residential home burning down in your neighborhood.  Never?  Me too.  Firefighters have become paramedics.  There are almost no residential fires to put out anymore.  Smoke alarms and better construction have put an end to most residential fires.  Yet the insurance industry is still charging thousands of dollars per home per annum.  Forget it.  You’re wasting your money.

Third.  If you pay for your own health insurance, only pay for major medical. Cancel dental, cancel optical.  You don’t need insurance for things that only cost a few hundred a year at most. You will soon find out how much private practice doctors love patients who pay cash.  The only real risk is major hospitalization.  If you don’t participate in dangerous activities, don’t smoke, drink moderately, and have parents who lived a long time, then forget about all this excessive medical insurance.  In the end, they pay for a lot less then you think anyway.  Take a chance.  Anyway, what’s the worst thing that can happen.  You die?  So what.  If you are at peace with your maker, then there is nothing to be afraid of.

Take the money you save, and invest it in India in the name of your children.  They might take care of you some day in return.

Login or register to post comments by torabora
on Fri, 10/08/2010 – 21:43
#637165

60% increase in my capped insurance…it now costs $480/mo to go to work.

Login or register to post comments by NotApplicable
on Fri, 10/08/2010 – 15:42
#636524

But we’re flying along! Isn’t that wonderful?

Login or register to post comments by schoolsout
on Fri, 10/08/2010 – 15:55
#636590

Birds of Prey are illegal to kill….they made a law for that.

Login or register to post comments by Azannoth
on Fri, 10/08/2010 – 16:35
#636611

I think the few seconds of being air borne is totaly worth it 😉 

Login or register to post comments by blindman
on Fri, 10/08/2010 – 17:06
#636707

fun knee, love your spirit!

Login or register to post comments by MarketTruth
on Fri, 10/08/2010 – 15:47
#636531

“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.” John Adams 1826

 

“And I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property — until their children wake-up homeless on the continent their fathers conquered… The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.” — Thomas Jefferson wrote on May 28, 1816

 

“It took 169 long years and seven major wars — from 1776 to 1945 — to rack up a cumulative deficit that matches the gaping budget hole of just 28 short days in February 2010.” — Marty Weiss

 

Obama legalized bribes and legalized non-disclosure:
Here’s the exact language the Obama agency used in its recent court filing: “Any records created by or held in the custody of the Enterprises (Fannie and Freddie) reflecting their political campaign contributions or policies, stipulations and requirements concerning campaign contributions necessarily are private corporate documents. They are not ‘agency records’ subject to disclosure under FOIA.”

So there you have it. American taxpayers are paying the tab for the collapse of Fannie and Freddie but are not allowed to obtain any information about why it happened. The Obama administration is saying, in effect, “None of your business.”

 

What country ever existed a century and a half without a rebellion? And what country can preserve it’s liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance? Let them take arms. The remedy is to set them right as to facts, pardon and pacify them. What signify a few lives lost in a century or two? The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. — Thomas Jefferson

 

“Those who stand for nothing fall for anything.”
— Alexander Hamilton

Login or register to post comments by metastar
on Fri, 10/08/2010 – 16:47
#636652

You must be a terrorist. How dare you quote the founding fathers.

Login or register to post comments by Bob
on Fri, 10/08/2010 – 17:24
#636745

Kind of funny that there is such a large contingent of folks here at ZH who continually scorn nationalization of the banks as “socialist.”  Yeah, right, just like those commie founding fathers. 

Login or register to post comments by RockyRacoon
on Fri, 10/08/2010 – 17:39
#636780

I thought you meant “funny” odd, but I think it’s “funny” ha-ha as well.  Buncha clowns who can’t define socialism yet manage to carry a sign with mis-spelled words.

Login or register to post comments by MarketTruth
on Fri, 10/08/2010 – 18:47
#636911

Bob,

First, the Founding Fathers were ok with banks provided they used ‘honest money’ as measured in gold and silver. The Founding Father were indeed treasonous… against Britain. The real question may be, will history repeat itself anytime in the future?

Login or register to post comments by Bob
on Fri, 10/08/2010 – 22:56
#637266

Ya got me–but I’m all for change.  The currrent set is unsustainable, even in the short term. 

Login or register to post comments by 1100-TACTICAL-12
on Fri, 10/08/2010 – 17:52
#636811

I recently learned to play the Star Spangled Banner on my geetar (Nugent style of course) your patriotic post has made me put down my beer & warm up the Amp.

GOD Bless America.

Login or register to post comments by torabora
on Fri, 10/08/2010 – 21:45
#637170

Most transparent Administration evah!

Login or register to post comments by Bob
on Fri, 10/08/2010 – 15:45
#636537

Works for me. 

Who would supervise the process–the FDIC?  Or the Fed (as was debated at one point.)  Who would pull the trigger–a committe, after a six month study?

Specifics, Geo?

Login or register to post comments by George Washington
on Fri, 10/08/2010 – 23:03
#637273

Specifics: Put Bill Black in charge of breaking ’em up…

Login or register to post comments by knukles
on Fri, 10/08/2010 – 15:46
#636538

Yorp.  Like Japan.  Keep the monstrosities afloat, massive fiscal stimulus, Petri Dish loose monetary policy, graft and corruption galore, roads to nowhere, shrinking demographics (when accounting for departures) liquidity trap.  
Nada, zip, zero, naught, none, negatory.

Login or register to post comments by technovelist
on Fri, 10/08/2010 – 15:50
#636560

There is another way, in fact the only way that this can play out: Jubilee, in which all debts are forgotten.

Login or register to post comments by pyite
on Fri, 10/08/2010 – 16:29
#636600

This is the typical end result of a proper full blown hyperinflation, e.g. Zimbabwe.

If only there were a way to avoid the starvation that happens along the way 😦

 

Login or register to post comments by Non Passaran
on Fri, 10/08/2010 – 17:28
#636763

I, for one, wouldn’t be happy to see debt financed by (among other things) my tax money – forgiven. 

But if jubilee becomes a possibility I’ll max out all my credit cards and borrow as much as I can. 🙂 

Login or register to post comments by Mad Mad Woman
on Fri, 10/08/2010 – 19:45
#636993

Why not? We’re propping up the banks. We GAVE them free money. The Treasury was practically emptied for them.

I’d rather bail out Main Street and forgive loans than Wall Street. Besides, forgiving all debts for Main Street would really be a boon for the economy. People could spend again. It would get the economy going.

With all the money we GAVE Wall Street & Banksters we could’ve forgiven the debts of Main Street and had cash left over. I’m for the people & NOT Banksters or Wall Street. Screw them like they have been screwing us.

Login or register to post comments by Bob
on Fri, 10/08/2010 – 20:59
#637106

The Treasury was practically emptied for them.

Hey, the Treasury was already empty.  What “we” did was empty the life savings of our grandchildren for them. 

As for favoring “the people” . . . careful, that smacks of socialism, you know.

Login or register to post comments by robertocarlos
on Fri, 10/08/2010 – 21:21
#637139

America should have given every person in the USA 200k or some such amount. Those people in debt would be bailed and those with savings would have more savings.  

Login or register to post comments by Bob
on Fri, 10/08/2010 – 21:57
#637191

Moral hazard, moral hazard, moral hazard. 

Seriously, though, that would be $6 * 10^13, according to my calculator.

That’s $60,000,000,000,000 . . . $60T.  That’s about global GDP and/or total global wealth.  Seems we wouldn’t be able to afford that much.  But if we cut back by a factor of, say, 6, it would become a more managable $$33,333 each.  If we did it by family/household, rather than individually, it would be something like, say, $100,000 per?  

We would have roughly broken even, I suspect.  Of course, in order to maintain the status quo, payments of all private debts would have to be made mandatory. 

Damn, I’d still have a lot more money than I do, though. 

Too bad it’s all bogus money.  You can see that this whole charade is going down.  Too damn bad. 

Login or register to post comments by tamboo
on Fri, 10/08/2010 – 15:53
#636568

boycott has historically been their favorite weapon;

use it against them and await the stereotypical screech.

i pay my bills with postal money orders, screw their checking accounts

Login or register to post comments by Bringin It
on Fri, 10/08/2010 – 21:16
#637131

I have no debt.  I pay no bills.  I have no f’n insurance, credit cards or checking account.

Don’t need any of it and neither do any of you. 

Most illness starts in your head/ is self-inflicted, ie. lifestyle and diet choices.  Fix your collective head.

The Ponzi tries to teach you what you need.  Stop listening and smell the freedom.

 

Login or register to post comments by win
on Fri, 10/08/2010 – 15:52
#636575

They could simply nationalize the banks.

The any and all encumbrances either for sale or foreclosure would be removed, by fiat

Login or register to post comments by OldTrooper
on Fri, 10/08/2010 – 20:49
#637088

Yeah, cause we all know how forgiving the Feds are if a commoner owes them any money.

http://www.sfgate.com/cgi-bin/blogs/scavenger/detail?entry_id=59241

Do you really want to have the Feds hold your mortgage?

Login or register to post comments by AR15AU
on Fri, 10/08/2010 – 15:52
#636578

Nice post… 5 stars…

Login or register to post comments by RecoveringDebtJunkie
on Fri, 10/08/2010 – 15:54
#636580

I like the drug dealer (banks) – addict (us) analogy better. We’re not helpless little fish, no matter how much easier that is to believe. We need to voluntarily withdraw support from these destructive institutions, because our government is not going to do it for us… in fact they have become one of the most destructive.

http://peakcomplexity.blogspot.com/2010/09/confronting-our-complicity.html

Our local and state governments, on the other hand, may still be at operating at a level at which they could do something useful for their people. Unlikely, but possible.

http://peakcomplexity.blogspot.com/2010/10/choice-architecture-capitalizing-on.html

Login or register to post comments by tony bonn
on Fri, 10/08/2010 – 15:56
#636592

“In other words: Unless the mega-banks are broken up and reined in, we’re in quite a pickle.”

absolutely correct….they must be destroyed and the evil squids running them thrown into jail and shot.

Login or register to post comments by Mad Mad Woman
on Fri, 10/08/2010 – 19:46
#636996

Don’t throw them into jail, just shoot them. That will save US a lot of money.

Login or register to post comments by Djirk
on Fri, 10/08/2010 – 16:26
#636597

Who is the biggest bank? The FED and their charter seems to be “make” money.

The only way out is to start a liquidation process like they had in the S&L crisis.

But it will be politically easier to inflate away the debts, the social security and medicaid liabilities.

How about creating a supply shock if you want to keep your hands clean?

 

Login or register to post comments by Bob
on Fri, 10/08/2010 – 17:28
#636761

I always wonder just how much keeping the Fed has actually cost us–over its lifetime.  Hell, even over just the past year.  Something tells me that all of the “entitlement” programs that taxpayers have paid for over the last 75 years–and are now being told cannot be afforded–would be a drop in the bucket compared to what the leeches at the Fed have cost the nation. 

Login or register to post comments by Bringin It
on Fri, 10/08/2010 – 21:19
#637137

Re. Leeches at the Fed – You’re 100% right Bob.  Funny you got junked.  Fed trolls are everywhere.

Login or register to post comments by Bob
on Fri, 10/08/2010 – 22:02
#637205

Hard to say–there are a whole lotta folks who just deeply despise so-called “entitlements.”  And then there’s the “who have you offended” factor to consider. 

Fortunately, I don’t do ZH for love or money. 

Login or register to post comments by Ieetseelmeet
on Fri, 10/08/2010 – 16:56
#636621

The quick and expedient answer is

 

Eminent Domain

 

America is a land of communities and they must find that strength again.

Let the local community government take this action.

The compensation to the homeowner is forgiveness of the value of the back taxes.

The previous owner has a clear credit rating. Not his fault the town took the property.

Having done this, the house is taken off the foreclosure playing field and out of the CDO tranche.

The house is then sold at the current fair market value by the municipality with no problems with title insurance.

The mortgage is taken by the local small town bank.

All this is done at the community level.

 

Eminent Domain

The fish is snatched by a flock of local starlings.

 

Login or register to post comments by RockyRacoon
on Fri, 10/08/2010 – 17:41
#636789

Wonderful thought, but let the federal crooks cede authority?  Let local financial institutions show the big banks how the job is done?  Not likely.  I do like your panoramic view, however.

Login or register to post comments by Azannoth
on Fri, 10/08/2010 – 16:42
#636636

If you repealed the FED would you at the same time be repealing all the debt the FED has ? hmmmm sounds lika a plan

Login or register to post comments by metastar
on Fri, 10/08/2010 – 16:47
#636651

.

Login or register to post comments by Mitchman
on Fri, 10/08/2010 – 16:49
#636657

Thank you, GW.  While many on ZH are focused on the delinquent homeowners who are apparently getting off “scott free” in the mortgage foreclosure mess, the real crux of the matter is that it appears that the banks that sponsored the mortgage securitizations engaged in outright fraud, often “selling” into securitization vehicles loans that they did not own.

You can bet that investors that have been burned in this particular scheme are going to be suing these banks so regardless of whether a foreclosure becomes enforceable, the basic securitizations themselves will come into question.  This is the real risk to the banks.

I hope this bankrupts each and every one of them as to hope for legislative action to break them up is way too much to hope for.

thanks again for a great post.

Login or register to post comments by gillimus
on Fri, 10/08/2010 – 18:31
#636885

You can bet that investors that have been burned in this particular scheme are going to be suing these banks so regardless of whether a foreclosure becomes enforceable, the basic securitizations themselves will come into question. 

 

That’s the key, Mitchman.  If you or I are injured by fraud or deceit it doesn’t matter much, but when Jaime Dimon is buttfucked by his Golbal Superpals there will be hell to pay.

Login or register to post comments by swamp
on Fri, 10/08/2010 – 17:09
#636713

End the Fed, the private unlawful unFederal unReserve.

Login or register to post comments by Bringin It
on Fri, 10/08/2010 – 21:21
#637140

Until the Fed goes, there is no solution.

Login or register to post comments by Mercury
on Fri, 10/08/2010 – 17:43
#636777

Man, that is an osprey (aka a fish hawk) and it looks like he just got dinner out of some McMansion backyard koi pond.

But, yeah, I’m generally in favor of more, smaller banks as opposed to fewer, larger banks.

What the hell ever happened to regional deposit share limits anyway.  That outlasted Glass-Steagall didn’t it?

Login or register to post comments by Buck Johnson
on Fri, 10/08/2010 – 17:44
#636794

Chris Whalen wouldn’t have said what he said if he didn’t have inside information about many of these banks.  I think he is correct and this push for legislation is being done to give the president more power to unwind these banks via other methods. 

Login or register to post comments by Shell Game
on Fri, 10/08/2010 – 17:48
#636799

‘Since this won’t be solved on the soap box, nor the jury box, nor at the ballot box, it is time to solve this with the ammo box.’

Buying PMs is not only wealth preservation, it’s an act of civil disobedience against the TBTFs.  Hide that gold, bitchez!

Login or register to post comments by gwar5
on Fri, 10/08/2010 – 18:11
#636844

I think every American that is able ought to buy at least one ounce of gold per month until they cry, which will just make gold go up even more.

Login or register to post comments by Shell Game
on Fri, 10/08/2010 – 19:06
#636940

Absolutely. Real money is the only way to fight this paper hell.

Login or register to post comments by nicholforest
on Fri, 10/08/2010 – 17:50
#636804

There might be a moment there when the fish thinks – WOW this flying is cool!

But just a moment.

The big banks are the psycopathic servants of the Predators who now target the middle class in a move towards economic feudalism.

See my earlier post here: http://www.zerohedge.com/forum/predator-drones-target-middle-class

Login or register to post comments by gwar5
on Fri, 10/08/2010 – 18:05
#636829

Better idea: burn them down for the insurance money.

Login or register to post comments by Milestones
on Fri, 10/08/2010 – 18:11
#636845

On 6-15-10 I posted a rather lenghty document contending that because neither Congress nor the President had the authority to delegate the authority to the Federal Reserve that was given; under Marbury v Madison (1803) any law contrary to the Constitution is not only illegal; the act is VOID. If anyone is interested in reading it I guess it is posted under my handle and was #415414.    Milestones

Login or register to post comments by w a l k – a w a y
on Fri, 10/08/2010 – 20:33
#637066

here is the link

Login or register to post comments by gwar5
on Fri, 10/08/2010 – 18:17
#636853

The banks own us, and the health care system is how they will repossess what is left when they make us take the blue pill. 

Serious. You will not be allowed to spend down your own money to try to live, or the doctor will face criminal charges, and the FED can now directly track every digital transaction you do and can debit your accounts (before they even debit you!).

 

 

 

Login or register to post comments by ptolemy_newit
on Fri, 10/08/2010 – 18:58
#636933

American pussy’s are fucking talking heads with 300 million hand guns and not a single patriot left.

What!

Its not clear enough, you know who the terrorist threats are from within!

Login or register to post comments by non-anon
on Fri, 10/08/2010 – 19:06
#636939

these final days are like the dying gasps of a dying beast, already dead

Login or register to post comments by Kina
on Fri, 10/08/2010 – 19:12
#636946

The only way out for us – the fish – is if someone “shoots” the bird ..

I think it is becoming clearer where all this is going to end up. The US ending up as a steaming pile of crap circled by flies (banksters).

When this economy falls apart entirely as it inevitably will the issues will no longer be economic, they will be about justice and vengence. People will demand blood sacrifices for systemic collapse of the country, they will want a focus for all their rage.

And one thing we know about the modern American politician is if it is their skin on the line thye will sell their mothers into a brothel. So when the public turn their rage on them they will deflect it onto their current paymasters. The employee will sell out their current bosses and deflect all community rage and desire for vengence on the banks.

The scum in the Senate and so forth who currently do all they can to help banks fuck over America, will turn on them and make them the source of all evil, and the resting place of all anger and revenge.

People will want blood and will get it, given to them by the same craven politicians who are currently working against them.

 

So those banksters and corrupt regulators out their ought to be feeling a bit of a shiver, people are dancing on their graves, there will be no safe place for them in the US or Europe.

 

 

 

Login or register to post comments by enobittep
on Fri, 10/08/2010 – 19:21
#636955

Banks broken up – yes.

Outlaw fractional reserve banking (no more Mandrake magic) – yes

Repeal of the Federal Reserve Act – yes

Gold backed currency – yes

Ability to run a trade surplus or deficit outlawed – yes

Torture and kill fuckers that did this shit – yes

Login or register to post comments by The Navigator
on Sat, 10/09/2010 – 01:57
#637408

+2 Quadrillion (due to inflation and exponential numbers)

And wear the mask of your choice

http://www.philipcoppens.com/vforvendetta.html

http://scrapetv.com/News/News%20Pages/Entertainment/images-4/braveheart-…

Login or register to post comments by surfsup
on Fri, 10/08/2010 – 20:06
#637027

I think quite the opposite is true in regard to the pic above.  Eventually criminal acts beget the talons of quantitative Law.  Time is the only distilling agent.   All wrong action falls on its own sword — every time — in time.  Manipulation is not power and it can’t stand the Light of Truth being thrown on it.  Nothing fails like success…  The fish is the fraud, the Bird is the Law.   She’s always hungry…

Login or register to post comments by blindman
on Fri, 10/08/2010 – 23:30
#637307

http://www.billcurtsingerphoto.com/page08tigersharks.html

http://video.google.com/videoplay?docid=6092993659340429522#docid=-7004909622962894202

.

http://dsc.discovery.com/sharks/great-white-sharks/great-white-shark-pics.html

Login or register to post comments by Bringin It
on Fri, 10/08/2010 – 21:05
#637112

Look George – just End the Fed, go back to MTM and we’re done.  Yes banks will fold … and they should.

Login or register to post comments by Jim in MN
on Fri, 10/08/2010 – 21:13
#637124

Mr. Washington, there are other ways out.  Even if the TBTF brethren are broken up, the loans are still bad, the assets impaired. 

What if we let markets work and just required mark to market and took the bond haircuts?  Any attempt to shift these bad debts away from the private holders is a certain Japanification policy; indeed, that is our contemporary policy.  However many lost decades it takes.

Here is a new, fresh, glowing idea for you: Progressive (income-graduated) Haircuts.  I made this up a couple years back when the crisis hit, and have stuck it up on Krugman’s blog, Naked Capitalism, and here several times.  It is quite elegant.  You do the mainline cure, mark all the shit to market, take the hit.  But, you allow lower and middle income Americans a tax credit to partially, or what the hell, totally compensate. 

Is simple, no?  The system gets purged, we get on with things without the horrific damage to our economy, polity and lives that is the inevitable outcome of the current imbicility and corruption we are facing.

Progressive Haircuts.  Please, somebody at least try to get the Big Policy Call (“no bond haircuts please, we’d rather end it all”) back on the table.  It will be the death of our nation. 

Login or register to post comments by Bringin It
on Fri, 10/08/2010 – 21:25
#637143

What, not multiple posts?  Easy on the save button there tiger.

Login or register to post comments by Jim in MN
on Fri, 10/08/2010 – 21:35
#637156

My fuckups in no way dim my patriotism. 

 

Login or register to post comments by Bob
on Fri, 10/08/2010 – 22:22
#637221

Oh, no, it’s YOU! 

Jim, I have never laughed so hard or so long “in” a web forum before.  You really inspired people with that postpostpostpostpost . . . 

Can’t exactly explain it, but that was funny!  Like one of those dreams where you’re naked in class . . . but, thank god it ain’t you!

Oh, yeah, this post.  Interesting concept.  Deflation seems to be the problem.  I would be fine with that.  But, unfortunately, the financiers have a real problem with it. 

Systemically, it makes sense, provided we outlawed the derivatives that would be triggered.  Of course, there are all the state and muni bk’s coming.  And the apparently unpayable federal debt. 

Seems to me we are royally screwed, no matter what. At least in this country.  My realistic hope is that we don’t trigger another Dark Age or suffer culling by TPTB. 

Login or register to post comments by Bringin It
on Sat, 10/09/2010 – 02:09
#637274

++ for patriotism Jim.  I appreciate your posts.

Login or register to post comments by Troy Ounce
on Fri, 10/08/2010 – 21:42
#637166

What about:

abolish the fedintroduce a gold and/or silver based monetary standardgo after the corrupted

Chances: 0.000001%

Login or register to post comments by anolmec
on Fri, 10/08/2010 – 21:50
#637180

“Shoot the bird and remove its Talons from our hide”, but then you suggest its the bankers Talons. I am not so sure. Lets see who passed laws that allowd these banks to get TBTF??ummm that would be politicians……..and who passed laws that allowed mortgages to be securitized…..again politicians…..and who pray tell has sat on their asses wile there constituents are being foreclosed on by the holders of nothing….politicians……I agree with the shooting part, but disagree with which way the lead should fly.

 

 

 

 

 

 

Login or register to post comments by stuartbramhall
on Fri, 10/08/2010 – 23:50
#637326

After a close encounter with the first Resolution Trust Corporation (which ripped me off for about $300,000), I would be very opposed to creating another one. At the time, people were extremely about the head of the RTC – a once and future Goldman Sachs executive – selling Goldman Sachs a lot of deeply discounted real estate (non-competitively) – at the cost of billions of dollars to the taxpayer. And they simply ran over little people like me like a herd of elephants. In 1992 I bought a commercial building in a foreclosure sale (the bank I bought it from held the note). Then a month later they went bankrupt, and the RTC took them over and refused to honor the sales contract which required them to evict the hostile tenants. I got both my senators and my congressman involved – and filed a complaint. The RTC agreed to a settlement, then renigged on it, and told me if I wasn’t happy I should get a lawyer and sue them (and pay legal costs equal to my original investment). I write about this, as well as close encounter with other federal crooks who worked for US intelligence, in my recent memoir THE MOST REVOLUTIONARY ACT: MEMOIR OF AN AMERICAN REFUGEE (www.stuartbramhall.com). I currently live “in exile” in New Zealand.

Login or register to post comments by MarketFox
on Sat, 10/09/2010 – 08:06
#637524

GW….

This truly good bottom line….point A to point B thinking….I like it a lot….

………….

So let’s succinctly review where we really were….are…and where we are really going….

2006/7 100 = total credit and assets

2010 = 60

2012 = 40

……………………….

Proposed and utilized govt. solutions:

Money counterfeiting

Accounting Fraud

Tax increases on capital

……………………….

100 – 40…..is not going to go away until there is debt destruction….and lots of label changing on assets…..which is what you have mentioned…

………………………..

Recovery can occur once 40 is acknowleged…and then the 40 can move higher….

……………………………

And this time around….coming from better overall structure….

regarding both the banking and securities markets….

……………………………

The current administration to date….are doing just the opposite of what they really need to be doing….

………………………..

Add to the mix….tax structure change

Eliminate individual/corporate income taxes….

Recreate the securities exchange for RETAIL….for the new internet age of efficiency and information…thus allowing banks to service RETAIL…and not game them….

……………………….

Entrepreneurship has to get big….and govt. has to get small….

In order to compete with BRIC…..

This means a lower dollar….

This means dramatically reducing the size of government…

This means permanent tax structure change…to be replaced by the broadest smallest tax possible….ie a small monthly basis point charge on all cash balances…

And govt. cannot exceed 10% of the economy by law….

…………………………………..

And another item of significant importance….is THIS….

To end FASCISM in the US….the big banks HAVE to be broken up and placed in history as one of the biggest US mistakes never to be repeated again…..

Login or register to post comments by blindman
on Sat, 10/09/2010 – 08:15
#637546

you lost me with the tax on savings.

i don’t think my mind will ever be big enough

to wrap itself around that one?

Login or register to post comments by MarketFox
on Sat, 10/09/2010 – 08:31
#637555

Money is money….and the broadest possible distribution….ie making tax as small as possible….would be a small basis point charge on cash balances….ie 10 basis points per month….

When you pay tax….you convert something to money….

This has to be coupled with a small government mandate….

………………………. 

And this is not just savings….this is any cash balance….

ie loaned money….

 

………………………

Another possibility would be some form of a consumption tax….however this would be less well distributed….

 

Login or register to post comments by blindman
on Sat, 10/09/2010 – 09:11
#637668

the “government” / people could operate, flush, with no tax at all.

i know, it sounds crazy,  but it is just sanity in an insane world. 

http://maxkeiser.com/

.

Guest Post: Money, Myth, and MachiavelliOctober 9th, 2010 by Damon Vrabel
.

 and it is not “socialism” it is republicanism as was conceived in

1787 or so.  not federalism.  not communism etc… and has nothing

to do with the republican party or democratic party as empowered, by

the banksters, today. 

why do the banks have power, the power of the people, in their hands?

simply because they stole it.  and tax you through the “government”,

not the people, to rub it in and prove it.!

watch the vid?

Login or register to post comments by kevinearick
on Sat, 10/09/2010 – 12:52
#638053

it’s a slow motion train wreck because the public is just learning to increase taps in the filter and improve its contextual “sight” in a self-reinfocing feedback cycle.

The relativity circuit is slow, with lots of small disordly events building, but they have not reached the threshold required to catalyze the big picture in linear time.

What would happen to all the people clinging to that bridge, which has aleady been separated from its abutments if 40+ million fully functional taps were activated instantaneously?

Login or register to post comments by Matto
on Sat, 10/09/2010 – 13:44
#638135

it’d be a flood!

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