The Economic Truth That Nobody Will Admit: We're Heading Back Toward a Double-Dip

Addressing the issues that created the recession was never done; hence, the susceptibility to a double-dip recession shouldn't surprise anyone. The FDIC is pushing to grant Banks the capacity to make more of the same loans that mortgagors were making with the stipulation that Banks 'make sure' that borrowers understand the financial responsibility that they are accepting - not whether or not the borrower 'can' pay the loan on time!

In addition to making loans easier to obtain, Banks will be allowed to do exactly as the mortgagors did - bundle the loans into derivatives without the obligation of responsibility for those bundled loans. As proposed by the FDIC, the lender will only have to hold a 5% interest in the bundled derivative!!

I think that the Banks should hold a 40% interest in their bundled loans. This will force the Banks to except only applicants that are qualified to secure a mortgage loan. It will also force Banks to pay the price of not having cash-flow as a result of bad holdings. If your bundles are on the up and up, you can borrow against them; if they are the scum of the earth, you suffer personally, and not the industry!

On second thought, why don't we just let the Housing Industry go to hell in a hand-basket and be done with it!

Read the Article at HuffingtonPost

In a democracy, silence is not golden; it is condonance in the face of injustices; it is fear, where the thought of reprisal fosters control – Rodney A. Davis

Greed...

The latest debacle involving Bernard Madoff is just another instance whether the worst in human behavior has been exhibited by the white-collar workforce.  Here is a man that was one of the most respected individuals in the financial arena.  He owned accolades from some of the most revered and was so highly regarded that the SEC gave him a clean bill of health when others were saying that he was in violation on a number of fronts.  The Securities and Exchange Commission plans to investigate the relationship between the niece of financier Bernard L. Madoff and a former official at the agency, according to a report in The Wall Street Journal on Wednesday. 

Christopher Cox and the SEC should themselves be investigated for a number of reasons directly related to the current state of affairs within the Stock Market.  The SEC has failed to exercise prudent authority over the Stock Market, the Banking Industry, and those who have manipulated the Futures Market at the expense of consumers the world over.  The speculation in Oil Futures, in this writer’s opinion, is directly related to the sudden and dastardly increase in the price of oil – 140.00 per barrel.  Sending the fox to check the integrity of the hen house is ludicrous! 

On a personal note, I filed a complaint with the Securities and Exchange with regard to the improper manipulation of funds within an account owned by my wife with a bank that is no longer, thank God, an independent institution within the banking system.  Agents within this particular banking institution withdrew funds from one of my wife’s accounts and invested said funds in a Real Estate Mutual Fund.  This bank was so blinded by the need (greed) to invest our money that they violated banking protocols, risking admonishment by the SEC.  Little did we know that the SEC was never going to investigate them?  They knew what we did not know – you can violate the rules and not have to worry about being penalized for having done so. 

Our case was found to be not valid, even though the agent for that banking institution admitted that he had moved the funds; even though the paper trail showed that he had done so without out permission – no signature of any kind indicating that he had permission to move the money into the fund.  In answer to the question, did you remove (sic) money from the account of one (sic) and with the intentions of investing it in a certain mutual fund, the agent answered… “I believe that Mrs. (sic) told me to do that.”  On grounds that we have yet to discern, the arbitrator for SEC dismissed our case. 

Mortgage lenders have destroyed the legitimacy of the banking system with poison loans that, by design, were never going to be in the borrowers favor.  ARMS, and all of their variants, have been introduced to the public knowing that the borrower would never meet the requirements – in other words, they knew that the borrower would fail.  Option ARMS are uniquely designed for a particular type of borrower and if you don’t fit these criteria completely, you will default. 

Narrow-minded banking institutions bought up these loans, I suppose, because they had every intention of foreclosing on the property and reselling it to another sucker.  What they didn’t figure on was the great loss of jobs across America, the slow-down in the consumer market, and how all of these things happening in America would affect the global economy.  These poison pill loans were bundled up and sold to everyone that would venture to speculate in the Real Estate Market of the United States.  Sub-prime loans, in the form of ARMS, Option ARMS, and the marketing of over-priced housing to individuals served to rip the foundations from under the banking system. 

With a slowdown in consumer spending, the Bush Administration began to cut back on every program that would have made it possible to recover by using stimulus packages and more tax cuts.  Infrastructure programs that would have created jobs suddenly were gone.  States that were depending on subsidies from our government could no longer depend upon delivery of those subsidies.  Suddenly, budgets were no longer being balanced and the alternatives were even worst.  States had to choose which programs are more important out of a group of programs that are all vital to sustained growth within the State.  We have more than thirty States, at last count, that were financial distress.

Greed… when allowed to grow is all consuming.