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Archive for October 20th, 2010

Bob Chapman on Mortgage Crisis: ‘The Banks are Bankrupt’

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EU Gripped by Growing Class War?

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from The Daily Bell
Originally posted Monday, October 18, 2010

Nicholas Sarkozy

Anti-austerity protests rock Europe … People demonstrate to say ”no to austerity” on September 29, 2010 in the Belgian capital, Brussels. Hundreds of thousands of people across Europe have taken to the streets to protest austerity plans, as major EU nations were hit by a wave of strikes. France has witnessed the most massive demonstrations as protesters in Paris and other large cities rallied to decry French President Nicolas Sarkozy’s (left) plans to increase retirement age from 60 to 62. The strikes have closed hundreds of schools, refineries and train stations and grounded flights amid concerns that the situation could get worse. – Press TV

Dominant Social Theme: EU citizens will simply have to swallow their medicine and realize that their greedy ways must be curbed by logical austerity. Their protests are nothing but tantrums.

Free-Market Analysis: We have tried as best we can to offer a counter-narrative when it comes to the EU, austerity and protests. The “alternative Internet news” approach is that the crisis has been cynically fomented to create a greater European Union. This has been our argument as well. But in our view, the elite has been caught by surprise by the truth-telling of the Internet and by the depth of monetary unraveling. This is having all sorts of unintended ramifications and is upsetting elite plans. The EU promotion is beginning to fail.

The mainstream press sees none of this. It has its own narrative of course, described in this article’s initial dominant social theme (above). But we would argue that what is going on now is increasingly a protest against the EU itself and the perspective that the EU elites expect middle class and working-class Europeans simply accept the radical diminishment of their lifestyles and opportunities. We see signs that these protests represent a populist statement that has as much to do with EU policies generally as any specific austerity measures.

Certainly, the protests continue to pick up – and the severity remains unreported in our view. In Greece the Acropolis is now being picketed. In Italy, thousands (or maybe a lot more) rallied against the Italian government and marched in Rome. Union leaders called for a general strike. In France, rolling strikes hit oil refineries and panicked the French government, which is now asking airlines to refuel overseas. In Iceland, as we reported the other day, protestors chased Iceland legislators out the back door of the Parliament building.

Perhaps the most interesting wrinkle was in dowdy old Britain. We have speculated in the past that the British psyche, conditioned from birth to a kind of institutional subservience to the upper classes and the Queen, would take a good deal of beating-up before responding. Certainly that thrashing has taken place. The arrogant upper classes have pounded unmercifully on the plebes. (As an aside, we cannot help but liken the Brits to hobbits with “proud feet” – slow to anger and determinedly attached to modest creature comforts and local society. Is it any coincidence that Tolkien presented the evil Sauren who wants to rule the earth as an all-seeing eye in his great Lord of the Rings fantasy trilogy?)

But for now, cameras watch the Brits wherever they go. If they attempt to defend themselves with guns or knives from burglars, even at home, they are apt to be cast in prison. If they throw away the wrong kind of garbage they may be brought up on charges. The school system barely functions. The health care system leaves women giving birth in taxis – as they have been refused entrance to hospitals. The government pursues a war on terror that is evidently and obviously fraudulent and continues to fight a war to conquer Afghanistan (for the second time!) and with no more success. For the privilege of living in a dysfunctional society, with its academics that still stubbornly celebrate global warming and global governance, British citizens are charged ever-higher amounts of taxes – even though most of Britain’s modern laws are now made in Brussels.

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The Second Leg Down of America’s Death Spiral

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by Gonzalo Lira
Originally posted October 12, 2010


I swear to God Almighty: Mortgage Backed Securities are America’s Herpes — the gift that keeps on oozing.

LAST FRIDAY, BANK OF AMERICA ANNOUNCED THAT IT WAS SUSPENDING ALL FORECLOSURE PROCEEDINGS, presumably until further notice. Other banks have already suspended foreclosures in a whole truckload of states. A nationwide moratorium on foreclosures might soon happen— which would be a big deal: Global Financial Crisis, Part II— Longer, Wider and Uncut.

But the mainstream media—surprise-surprise—has downplayed the whole shebang. They’re throwing terms out there into the ether, but devoid of context or explanation: “Robo-signings”, “foreclosure mills”, forged signatures, “double booking”, MERS—it’s confusing as all get-out.

So the mainstream media just mentions it casually—“and in other news tonight…”— like it’s no big deal: A couple-three lines, lots of complicated, unfamiliar terms, an attitude like it’s a brouhaha over paperwork of all things!— and then zappo-presto-change-o!: They’re showing video footage of a cute koala nursing in the arms of a San Diego zookeeper. But even the koalas know that something awful is heading America’s way. Smart little critters, they’re heading for the treetops, to get away from this mess.

So what the hell is going on with the God-forsaken mortgage mess in the United States?

It’s got a lot of bells and whistles, but it’s basically quite simple: It’s all about the fucking Mortgage Backed Securities (MBS). Again.

So this is what happened, more or less— the short version:

In the crazed frenzy to get as many mortgages securitized during the Oughts, banks took shortcuts with the paperwork necessary for the Mortgage Backed Securities. The reason was because everyone in the chain of this securitization mania got a little piece of the action — a little slice of the MBS pie in the shape of commissions.

So in the name of “improved efficiencies” (and how many horror stories are we finding out, carried out in the name of “improved efficiencies”), banks digitized the mortgage notes—they didn’t physically endorse them, like they were supposed to by the various state and Federal laws.

Plus — once the wave of foreclosures broke, and the holes in this bureaucratic paperwork became evident and relevant — some of the big law firms handling the foreclosures for the banks started doing some document fabrication and signature forgery, in order to cover up the mistakes—which is definitely illegal.

Long story short (since this is the short version): A lot of the foreclosed properties might not have been foreclosed legally. The people evicted might still have a right to their old houses. The new buyers might not actually own the REO’s they bought off the banks. The banks could be on the hook for trillions of dollars, and in the sights of literally millions of lawsuits.

In short: This could become another massive oozing sore, complete with yellow-green pus drip-drip-dripping out of some unmentionable places on the Body Economic.

Now— the long version:

Homeowners can only be foreclosed and evicted from their homes by the person or institution who actually has the loan paper—only the note-holder has legal standing to ask a court to foreclose and evict. Not the mortgage—the note, which is the actual IOU that people sign, promising to pay back the mortgage loan.

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