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Is Lowering All Mortgages to 4% the Answer?

By Rick Ackerman Posted on October 13, 2011, 12:01 am EDT Last Updated October 13, 2011, 12:50 pm EDT

[We wrote approvingly a while back about a think-tank plan that calls for allowing millions of Americans to re-finance their homes, even if underwater, at today’s record-low rates. This gift to debtors would come at the expense of bondholders, who would see their income reduced because of lowered monthly mortgage payments. Sounds like a pretty good idea, right?  Perhaps not, since, as we later came to understand, letting homeowners off the hook would require some very tricky legal maneuvers, some of them unprecedented. Rick’s Picks forum regular John Skerencak (aka “John Jay”) thinks it’s just a bad idea, plain and simple. In the guest commentary below, he responds to the proposal as presented in a recent Wall Street Journal op-ed piece. RA ]

Following is my response to a WSJ op-ed piece, “We Can’t Ignore Housing Anymore,” that suggested that a 4% refinancing scheme be enforced by government fiat to free up spending money to boost the economy:

You have got to be kidding!  A government edict that would refinance everyone in order to support still-bloated housing prices?  Determining real estate values is the job of the market. The banks and Fannie/Freddie still hold millions of upside-down loans thanks to previously outlawed MBS financing and the $250k/$500k tax-free gains on housing accelerant, as well as ZIRP, and Greenspan/Bernanke cheerleading the entire debacle. Why don’t you argue for RICO indictments for the Ponzi tactics of Wall Street instead of pouring more trillions down the rat hole of housing that will only serve to cover up those crimes and enslave mortgage debtors  to overpriced real estate?

The U.S. economy is not going to recover because we have been sending  jobs and factories offshore for thirty years while admitting millions of immigrants who have suppressed real wages. The government should acknowledge that their policies have resulted in the greatest malinvestment in history, with serious repercussions that are likely to persist for many years. The money should have been directed toward manufacturing, not some giant Ponzi scheme. The “tight lending standards” noted in the editorial are not a “problem,” as suggested;  rather, they are there to prevent the mess we now face from getting even worse.

Blocking a Debtor’s Escape

Housing is a forlorn sideshow of the looting that has taken place for decades in the USA. The last thing we need is more government fiat anything. I might add that refinancing $600k houses now worth $200k will leave property taxes inflated. In California, it might also mean that refinancing will remove non-recourse protections on first trust deeds. I have read that the banks are doing some refinancing at enticing terms to accomplish just that – i.e., blocking the debtor’s last-ditch escape route. Before anything is done en masse, there should at least be a simple audit of all mortgage-backed securities to ensure that each address does not show up in more than one MBS bundle. I have heard that some mortgages were bundled into as many as ten MBS securities. This is outright fraud if it happened, and it needs to be ferreted out before anything else is done. Surely it can’t be that difficult to have matching addresses  filtered out?

In any event, I would suggest removing government meddling so that the market can set house prices. Even more important, ultimately, is the task of rejuvenating employment, since restructured mortgages won’t mean much to those who have no jobs.

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  • F. Beard October 17, 2011, 11:09 pm

    @Robert,

    What are you going on about? If it was up to me, you could use anything for private debts including gold, silver, chickens or anything else.

    And don’t call me a tool of the moneyed class. In fact, gold is a traditional tool of oppression of the usury and counterfeiting class.

    But here is my position: Separate government and private money supplies per Matthew 22:16-22 (“Render to Caesar …”).

  • F. Beard October 15, 2011, 9:55 pm

    ALL DEBTS ARE PRIVATE. THERE IS NO SUCH THING AS PUBLIC DEBT. Robert

    Then what about gasoline taxes or do you use a horse and buggy?

    Also, your examples with the chickens, goat, and gold are examples of barter not money. So should barter be our only option to FRNs? That is my point, we have no practical options to FRNs and that is probably by design. And if we are forced to use FRNs for private debts, then we are also effectively forced into debt by the counterfeiting cartel that extends credit in them.

    • Robert October 17, 2011, 7:09 am

      Gasoline taxes are debt…?

      I’m sorry, I’m going to need further elaboration on that point- I honestly have no idea what you are talking about.

      “Also, your examples with the chickens, goat, and gold are examples of barter not money.”

      -ok, kindly educate me as to the difference. In fact- why don’t you everyone on the planet Earth a humongous favor and re-define money?

      Money is an abstraction. If you have a chicken and I offer you gold for it, yet you do not personally value gold, then HOW on God’s green Earth am I going to convince you that gold is money…?

      FRN’s are barter- (most) people will accept them in trade.

      Man, I can sit here for days trying to make you understand that the Big Green Head is being controlled by a meak little man behind the curtain, but you simply seem to refuse to take your eyes off that big green head…. I can not help you.

  • Seawolf October 14, 2011, 3:09 am

    Since you folks are talking about Federal Reserve credit theft I thought you might find these two paragraphs from here http://www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx of interest.

    “Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are “backed” by all the goods and services in the economy”.

    “Both United States Notes and Federal Reserve Notes are parts of our national currency and both are legal tender. They circulate as money in the same way. However, the issuing authority for them comes from different statutes. United States Notes were redeemable in gold until 1933, when the United States abandoned the gold standard. Since then, both currencies have served essentially the same purpose, and have had the same value. Because United States Notes serve no function that is not already adequately served by Federal Reserve Notes, their issuance was discontinued, and none have been placed in to circulation since January 21, 1971”.

  • mava October 14, 2011, 2:20 am

    I see your point, F. Beard.

    I think you would agree that this is an age old excuse that people as a crowd use. First, against all good advice, they authorize the counterfeit money. They have fun. Once fun ends, they always look for the scapegoats, never looking right back at themselves.

    We did authorized the FED. We authorized the government to go off the gold standard. For 95 years, we lived off theft. All that growth, – it was simply a ledger of stolen interest. And now? Nobody is guilty. Some are even proud of it and blame it on the foreigners.
    Everybody was doing it, so we did it too. Now we say we didn’t not know what all that meant.

    • F. Beard October 14, 2011, 7:44 am

      No. We are not all to blame. We were forced into a rat race by the bankers. Consider business loans. Let’s say A decides to expand by using his earnings which takes time. However B decides to expand by borrowing from the counterfeiting cartel. Who will likely capture the market, A or B?

      As for gold, it is a silly money form and fascist to boot if it is made legal tender. Government money should be pure fiat for ethical reasons. However, genuine private money supplies must be allowed too in addition to fiat.

  • F. Beard October 14, 2011, 12:39 am

    According to you, if I were offered to buy a stolen car, then I should be excused if I agree, as not doing so, will definitely put me behind all those who did agree. Further, this would mean that the offer was “predatory”. mava

    Indeed, the first borrowers are not innocent since they had a choice to NOT borrow. And if everyone had refused to borrow from the counterfeiting cartel then NONE of us would need to. But once the process is started, it becomes increasingly difficult to not borrow from the cartel till it finally becomes impossible not to borrow from the cartel. It is akin to a stampede. Once the stampede has reached a certain magnitude the choice is run with it or be run over by it.

    • Robert October 15, 2011, 8:30 pm

      “Once the stampede has reached a certain magnitude the choice is run with it or be run over by it.”

      Or seek stable footing high enough to let the herd run right under you…

      or, do you assume that the herd is running down a corridor?

      Not every lemming jumps, ya know…

    • F. Beard October 15, 2011, 9:31 pm

      Or seek stable footing high enough to let the herd run right under you… Robert

      If there was stable footing, people would not be buying a silly, obsolete money form, gold, in desperation. The entire economy is criminally dependent on a government enforced money monopoly.

    • Robert October 17, 2011, 7:00 am

      “If there was stable footing, people would not be buying a silly, obsolete money form, gold, in desperation. The entire economy is criminally dependent on a government enforced money monopoly.”

      OH…. MY…… GOD.

      You are killing me. You seriously think economic activity will stop if the currency cartel loses control? That is the lie they want you to believe, and by propagating it here to me, you demonstrate that you are a puppet. Or, perhaps it indicates that you live in fear of them, or that you feel your allegiance to them will endear you long enough to collect your precious SS and Medicare in order to prolong your miserable existence.

      Every morning the sun rises, and the light makes the corn grow, and after 60 days the farmer takes his corn to market…

      And, what you call “buying” Gold, many people simply call “saving money”

      As to your assessment that it is somehow silly or obsolete… hey- I can only respect your opinion. If it is true that the majority of physical gold off take from global markets today is being done out of fear, then I stand to be very secure over the next decade, because if conditions today are worthy of a fear response, then brother, you ain’t seen NOTHING yet….

      Good luck with your FRN’s and alternative pure fiat Treasury dollars… whatever.

  • mava October 14, 2011, 12:23 am

    Btw, speaking of F.Beard.

    He is absolutely right when he point finger at credit out of nothing. This is the sole technical reason that this fraudulent system cannot continue.

    What is credit? Simplified to the core it is saved product, loaned out.

    I can make an arrow, and loan it out to a hunter. My interest would likely be a deer leg. If a hunter was doing good, he would not need my arrow to begin with, as he would buy it for half a deer leg. But, my credit allows, let us say, a beginner hunter to start producing.

    Now, can I loan one arrow to two hunters at the same time? Nope. So, what is the counterfeit credit we are talking about here? Since there is no way I can loan one arrow to two hunters (much less currently US legal to NINE hunters), how can this be done? Not without theft!

    We can talk till sundown about credit, the way bankers lie about it. But the truth still remains, where do I get the other arrow to loan? There is ONLY ONE ANSWER. I steal it.

    Yes, steal. But, I will give it back, except, I will keep the deer leg, which is the item I earned by loaning the stolen arrow, and KEPT to myself! The stolen arrow was returned alright, extinguishing the credit, and no one was the wiser!

    This is why all fractional credit is an outright theft of interest, and a violation of property rights to boot!

    If you still not sure if this is OK or not, do you mind if I take your car to tax around at night, and keep the earnings?

  • mava October 14, 2011, 12:11 am

    F.Beard,

    Amazingly, you have managed to disagree with Robert.

    You’re right, all credit out of nothing is counterfeit.
    This, however, is not an excuse to create a myth of “predatory banking”.

    According to you, if I were offered to buy a stolen car, then I should be excused if I agree, as not doing so, will definitely put me behind all those who did agree. Further, this would mean that the offer was “predatory”.

    Also, it is a mistake to say that counterfeit money drives up prices, as it does not. People with access to counterfeit money drive up prices through their criminal spending, as well as all those who do not ever care what they are doing until it is the time to pay the piper, at which time they cry “predatory banking”.

    Here again, you take the path of purchaser of stolen goods, however, still blaming the thieves.

    I am partially with you, as you can see. I agree with counterfeit definitions. I just can’t see how living openly criminal and obviously stupid should create an excuse, and/or bailout.

  • Chris T. October 13, 2011, 11:06 pm

    Onc must agree with John about the folly of the proposed mortgage cut.

    Two extensions:
    “The U.S. …[has] been sending jobs and factories offshore for thirty years while admitting millions of immigrants who have suppressed real wages”

    This is really two sides of the same coin.

    That coin is: coping mechanism to escape the manifestation of inflation, ie. higher costs/prices.

    When the activity was mobile, it was off-shored to cope (production), when the activity was not (very) mobile, the off-shore labor was brought to it (most services).
    There are gray zones, such as people traveling abroad for some services, dentistry in India/Hungary for example.

    But it is the same thing, and many of the actors doing this (small businesses, contractors, etc) are only reactive. They are no more cause of the problem, than the ultimate victims, the consumer.
    This is of course not true for the big actors, the fin-corporatocracy, who are the ones causing it.

    Second point:

    Besides all the valid reasons mentioned for opposing this hare-brained proposal is the “have not” perspective.

    Higher home prices, or ones that won’t drop as much as they should, are seen by so many as being a good thing.
    This is the “have” perspective.

    But for those that do NOT have a house, higher prices are certainly not a good thing.
    In what other expenditure that someone will have to make are higher prices ever seen as a good thing?
    Cars, appliances, furniture, electronics, clothing, food, etc?
    Of course not.

    But because homes have come to be seen as something different from the list above, people approach them differently.
    Homes truly do belong with that list above, as it is ordered in terms of longevity, thus ahead of cars.
    But just because they have a longer life-span/depreciation schedule, does not make them a different sort of item:
    They are still consumptive items, not assets.
    The latter delusion has been implanted so firmly, that people like climbing prices, or ones artifically propped up, when they would shoot that down as fallacious for all other items of consumption.

    That across-the-board fallacy is at play here.
    But from the consumer point of view, falling inventory prices are a god-send, something to be desired.

    Once upon a time, it was generally believed that it was not legitimate to borrow for consumption of any sort, and people paid for what they consumed out of savings, often saved for just that purpose.

    For the benefits of the fin-corporatocracy, a way to get people to be debtors was found, thus your home mortgage for everyone, at first with some sort of standard, then the declining to non-existent standards at the end.
    Now people even borrow for short-term consumption clothing and ephemrals such as vacation.

    This has made it, even in year 3 after the crisis, that those wishing not to follow the above path, have no choice, because the old avenue is no longer possible.

    But in housing, one just has to wish for a regression to the decades long mean, about 2-3 annual income.

    • Farmer Tom October 14, 2011, 3:41 am

      Well said Chris. I had never looked at housing quite like that but you are right. We are happy for our expensive, well located or fabulously designed homes if they give us bragging rights. So proud. We learn to hate them too when the debt exceeds their value. At the end of the day though, houses are indeed consumption items. They are places to live, not chips on a poker wheel at the casino. Bring on the regression. We need affordable homes if we are ever going to get this economy pumped back up again. What I mean by that is; we need to see the end of this problem before the beginning can start anew. So lets not mess with it anymore.

  • Robert October 13, 2011, 10:16 pm

    Wow- fun topic. Seems everyone has some real emotional energy regarding this one… Thanks John Jay for stirring the pot a little bit.

    Now- regarding refis and interest rates. Please consider the ethics behind the term “interest” as it is applied in a monetary or financial sense.

    When one purchases via finance, the “interest rate” is merely the premium one agrees to accept as a consequence of taking delivery now of something they do not expect to be able to afford until later.

    When a contract is signed, both parties extend good faith that the terms are favorable to their position.

    Hence, when you took that mortgage for 8%, you made a gesture of good faith that you would pay it. Nobody forced you into the contract- simply put, there is no such thing as a predatory lender- there is only such thing as a really (and I mean REALLY) stupid borrower. So, when your “interest” in owning a home changes simply because everyone elses’ cumulative “interest rate” has declined by some factor, you really only have two ethical options:

    1) Default on the original contract, or

    2) Suck it up and deal with it like a grown up.

    Crying foul and throwing your arms in the air because other people are now being offered the chance to play a new game with revised rules that suddenly makes your game less fun is juvenile; as is the expectatation that the only fair thing is to go back and give everyone the chance to re-play old games according to the new rules.

    • F. Beard October 13, 2011, 10:23 pm

      When one purchases via finance, the “interest rate” is merely the premium one agrees to accept as a consequence of taking delivery now of something they do not expect to be able to afford until later. Robert

      It’s not quite that simple. So-called “credit-creation” in a government enforced monopoly money supply drives up prices so that people are forced to borrow or be left behind by those who do borrow.

    • F. Beard October 13, 2011, 10:34 pm

      Nobody forced you into the contract- simply put, there is no such thing as a predatory lender- Robert

      Wrong. All bankers are credit counterfeiters. They create (by virtue of their money monopoly) credit in OTHER people’s goods and services. Hence their credit is counterfeit. By means of that counterfeit credit bankers drive up prices thus REQUIRING that people borrow from them. Bankers are thus predatory lenders.

    • Chris T. October 13, 2011, 11:09 pm

      see my comment below, actually agree more with F. Beard there than Robert, there is a force-by-system.
      What more devious device than to create a system whereby those wishing not to participate still have no choice not to.

    • Robert October 15, 2011, 12:13 am

      I’m sorry, but I’m calling BS on both of you.

      “So-called “credit-creation” in a government enforced monopoly money supply drives up prices so that people are forced to borrow or be left behind by those who do borrow.”

      -This is only true if you accept that said government credit is the only true and viable form of money. For a man who has quoted the Bible more often than most others in Rick’s forum, I am surpised to see a fallacy of this magnitude posted by F. Beard. Weak.

      Does the US dollar qualify as “God’s money” pray tell?

      “By means of that counterfeit credit bankers drive up prices thus REQUIRING that people borrow from them. Bankers are thus predatory lenders.”

      – No, they are not. The decision to borrow or not NEVER lies with the creditor. The contract can only be originated by the borrower via the loan application. Up and until that point, the creditor is merely OFFERING their counterfeit money. If you deny it, you can still survive (and even thrive) in this world, just so long as you adhere to the basic premise of producing more than you consume, and saving the surplus in non-debaseable forms of money.

    • F. Beard October 15, 2011, 1:33 am

      This is only true if you accept that said government credit is the only true and viable form of money. Robert

      No, I do not accept that. However, one way and another the bankers have achieved a money monopoly for private debts. IF we were allowed to use other money forms for private debts on an equal basis with FRNs then yes, we could escape price inflation in FRNs and bank credit. But as it is, we can’t. Thus we are FORCED to borrow from the counterfeiting cartel or be left behind by those who do borrow.

      Does the US dollar qualify as “God’s money” pray tell? Robert

      It is Caesar’s money and should only be legal tender for debts to Caesar, not private ones.

      If you deny it, you can still survive (and even thrive) in this world, just so long as you adhere to the basic premise of producing more than you consume, and saving the surplus in non-debaseable forms of money. Robert [bold added]

      And what, pray tell, are “non-debaseable forms of money”? That’s my point. We are not allowed to use “non-debaseable forms of money”. Do you think gold is money? Think again. For one thing there is a capital gains tax levied on it measured in FRNs.

    • Robert October 15, 2011, 8:18 pm

      “IF we were allowed to use other money forms for private debts on an equal basis with FRNs then yes, we could escape price inflation in FRNs and bank credit. But as it is, we can’t. Thus we are FORCED to borrow from the counterfeiting cartel or be left behind by those who do borrow. Gold is Caesar’s money and should only be legal tender for debts to Caesar, not private ones.”

      The BS flag rises ever faster up the pole. Look man, we are all hampered by the linguistic barrier that separates expression from comprehension, but I have to assume that you are capable of understanding the very simple reason that your arguments are all false.

      Read, this , and THINK about it before you rush to come back and declare me naive, or stupid:

      ALL DEBTS ARE PRIVATE. THERE IS NO SUCH THING AS PUBLIC DEBT.

      I’ve given this example a million times, but here goes again.

      I have 5 chickens, and you have one goat, and I offer you 3 of my chickens for your goat, and you say you want all 5 of my chickens for your goat. I reluctantly agree, and we trade. Please define the money used in the transaction, and kindly identify the creditor and the debtor.

      Example 2 (just as easy to comprehend I think:

      I have 5 chickens, and you have one goat, and I offer you 3 of my chickens for your goat, and you say you want all 5 of my chickens for your goat. I tell you that I can give you 3 chickens today, but I need the other two chikens for 60 days so they can lay more eggs for me and as soon as I have the 60 days worth of eggs, I will give you your last two chickens. You reluctantly agree, but you declare that before you will relinquish your goat to me, I must sign a promisory note that I will indeed provide you with 3 chickens today, and 2 more chickens in 60 days, thus finalizing the agreed upon exchange of 5 chickens for one goat. I sign, give you 3 ckickens, and take home your goat and 2 chickens.

      I am now indebted to you for 2 chickens, and you have a contract signed by me that would confirm this fact to a judge.

      Now- does this second scenario obviate the fact that chickens are money? THINK about this question throughly.

      The existence of debt does NOT mandate the existence of money. I could have easily traded you 2 ounces of gold for your goat, or we could have agreed (in writing) that I would “pay” 1 ounce of gold today, and another ounce next week, for one goat.

      Nowhere in this perfectly viable, reasonable economic commerce transaction does ANY form of taxation, or “money denominating” have to occur.

      People who are thieves in their hearts want you to believe that the existence of debt necessitates the existence of money. They do this so that you will falsely believe that if you posses something that “they” dclare to be “taxable” that they have a right to levy a debt against you- FALSE FALSE FALSE FALSE.

      YOU are the only one that can initiate a debt, and you do it by agreeing to borrow. “They” do not create debt simply by agreeing to lend…

      If you do NOT agree to borrow from them, then you can never be indebted to them, and I am telling you via FIRST HAND account, that you can live a very favorable lifestyle (and I am not even a perfect example- I do operate basically as a 14th amendment “person” and because I do accept payment from a corporation, I do render unto Caesar-
      But my “wealth” is not subject to Caesar’s oversight. If I should be so lucky one day to actually receive a SS check, I will take it, only becasue I have paid in FAR more than I will ever take back- therefore, I will consider it a refund, or a gesture of good faith that the thief does have SOME semblance of concience.

      But I ensure myself that I will have enough “money” to retire without that SS check- I will not rely on it being there.

      Money is simple- Aristotle had it right. (google it)

      Gold is money just as chickens are (as per the example above, although chickens violate the premise of permanence and durability, so Aristotle might not define chickens as “ideal” money ).

      I never said Gold was perfect money that does not fluctuate in relativistic value- some times an ounce of gold might be “worth” one chicken, and other times a chicken might be “worth” 5 ounces of Gold- All this proves is that there is no permanent fixed rate of echange in a healthy economy. For the last 6000 years, however, Gold has proven to be the most stable option there is.

      I don’t have a logical argument to the validity of your proposed”two money system”. In fact, such a system falls perfectly within my own premise that Gold, chickens and goats ALL exist as legitimate valuators in economic exchanges. we might agree more than we disagree- the only difference being that you submit to a false authority, while I only render to one.

      I would not rather have 5 pounds of gold and no chickens, nor would I rather have 5 chickens and no Gold, but 10 ounces of Gold and 3 chickens would probably make me feel pretty wealthy… and wealth is truly nothing but a personal evaluation of our own perceived self worth. Wealth can NOT be denominated (especially by governments)

      So, you go ahead and continue believing that “they” compel you to live your life in “their” credit based world where “they” get to declare you as wealthy or not based on their denomination. (as a side- ever notice how the term “denomination” most frequently applies to money, and church? Moral relativism is fascinating to me)

      “Do you think gold is money? Think again. For one thing there is a capital gains tax levied on it measured in FRNs.”

      I’ve addressed the first part of statement (ad nauseum)… as to the second part:

      Said tax can ONLY be levied if you CHOOSE to exchange Gold for FRN’s… Again, THINK about that. what manner of intelligent Gold holder would choose such an obviously unfavorable transaction?

      20 years ago I could trade 2 ounces of gold for a used, 3 year old Jet Ski waterbike. Ditto today; and the advantage is MINE, because today’s Jet Ski’s are techologically far more advanced than they were 20 years ago- they are faster, use less gas, and pollute the air less. But their price, relative to Gold, has not really moved very far.

      Compare this to the fact that 20 years ago a 3 year old jet ski ran for about $500, while today they are about $3500… (source: memory, versus craigslist)

      I think this example should lay to rest my “non-debaseable form of money” statement.

      I have no argument that in real terms Gold is fundamentally debaseable, unless mining becomes completely illegal and the supply of available gold should become fixed for eternity, which would be bad because when money is PERCEIVED to be increasing in scarcity, people hoard, and economies contract.

      I will only panic and accept the end of the world if I wake up some morning and realize that I do not have enough assets to secure myself enough chickens to facilitate a self-maintaining source of daily protein. Until that day, I will consider myself wealthy.

  • F. Beard October 13, 2011, 8:44 pm

    “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”– Lord Acton

    • David Tanner October 13, 2011, 9:08 pm

      “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” Napoleon Bonaparte

      “It was not accidental. It was a carefully contrived occurrence… The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all.” Rep. Louis T. McFadden [D-PA]

      “If that mischievous financial policy which had its origin in the North American Republic [i.e. honest Constitutionally authorized no debt money] should become indurated down to a fixture, then that government will furnish its own money without cost. It will pay off its debts and be without a debt [to the international bankers]. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe.” London Times

      The ONLY issue that ever was, is and will be is THE PEOPLE VS. THE BANKERS. Everything else is either a symptom of, or a diversion from, the true issue.

  • Dave Francis October 13, 2011, 8:09 pm

    MAKE YOUR VOICE KNOWN TODAY ON E-VERIFY

    JOBS–the economy has everything to do with illegal immigration, and as more and more of these unfortunate people pour in from the borders or from across the world. The expenditure will keep rising for every US taxpayer, until Congress does something about it; it does no-way mean amnesty. We have the resources to stop this massive invasion, but neither party has relentlessly pursued it. President Obama had great intentions for a while, than fell off in the wrong direction. Only the TEA PARTY lawmakers in straw polls have openly spoke about the financial ramifications, while main GOP members remain silent, as do the Democrats. With 20 million citizens out of work, we as citizens and legal residents must insure that our borders are sealed and that internal enforcement is substantial. There are numerous laws moving through Congress, but the “Legal Workforce Act” has the power to slowly but surely drive the foreign workers out of the jobs, meant for our own people.

    The Immigration Control and Reform Act (IRCA) mandates procedures for business owners to verify the employment eligibility of their workforce, but since the 1986 law it has loosely applied until our prior president George H.W. Bush implemented Pilot program called E-Verify in October 1991. The Congressional authorization for the E-Verify electronic employment eligibility confirmation for employees was to expire on November 1, 2008. Republican Senator Jeff Sessions introduced an amendment in 2009 that would have made E-Verify permanent and mandatory for all construction companies, although Senator Harry Reid did would not allow the bill to come up for a vote. Reid’s contention was, “We need to do comprehensive immigration reform. We cannot do it piecemeal,” In July 2010 a reporter In Las Vegas said, “When you go to the unemployment office there’s many U.S. citizens who are unemployed–construction workers and they don’t have jobs because right now, some of those construction companies find it easier to hire undocumented workers.”

    If President Obama’s “Job Stimulus” had passed in the Senate yesterday, one of its sections was the “Construction” projects. So who are the jobs going to, without the guarantee that Contractors and sub-contractors are going to hire labor—Americans and Green Card Recipients? Without federal programs as the policing LEGAL WORKFORCE ACT” Secure Communities, the 287 (G) unethical employers can still bypass immigration laws and they will for more profit. This is the equivalent circumstances of any company, which includes Farmers and the agrarian industries who are cheating US workers of jobs.

    Reid then responded, “I think that any information you have in that regard is absolutely without foundation.” But a Pew Hispanic Center study shows 17-percent of all construction workers are in the United States illegally. Reid says not in Nevada. “That may be some place, but it’s not here in Nevada?” Like California, the well-known Sanctuary state–Nevada too has a large percentage of illegal workers in the U.S. When asked about E-verify, Reid’s office downplayed E-Verify as accurate, citing recent Social Security Administration numbers. But even then the federal governments (GOA) General Accounting Office that their own contracted accountant, found E-Verify worked 99-percent of the time.

    It’s flawed or so they said. Maybe E-Verify since the program’s inception had issues, but not anymore. They said it was too easy for illegal immigrants to pass through the verification process, using identity fraud and cheat the system. The open border and the special interest entities are forever putting a political dam against any commonsense law, especially as E-Verify have surfaced again for a current session of the House. New innovation are getting considerable better in making it more difficult to slip through the enforcement net. The utilization of Dept of Vehicle records, referencing picture ID is yet another sure measurement that the program is strengthening the ability to extract unauthorized labor. In a surprise move driven by Sen. Harry Reid, he and his elitist Senators egoistically voted to destroy job opportunities for U.S. citizens and lawful immigrants. Sen. Patrick Leahy motioned to table, Sen. Sessions’ E-Verify Amendment, and the motion passed by a narrow margin, 50-47, killing any previous chance of the passage of mandatory E-Verify.

    Senator Reid’s office gave a Statement Monday July 2010: “One single amendment is not the silver bullet to fixing our broken immigration system. We need comprehensive reform that secures the borders, requires 12 million illegal immigrants to get right with the law, and stops employers from lowering wages by exploiting illegal labor.” Senator Reid unable to stop the E-Verify had enough votes to stop the program as a mandated law, but could not stop it being re-authorized. As it stands now, it is not permanent and is only used on a voluntary basis, except for government contracting agencies. UNTIL NOW!

    Rep. Lamar Smiths “LEGAL WORKFORCE ACT” (H.R. 2885) HELP THE WORKING AMERICANS AND STOP THESE TRAVESTIES OF OUR LAWS. E-Verify will be a very successful supplement to stopping the illegality of people with foreign status from taking jobs.

    The website NumbersUSA is the only outspoken, pro-sovereignty group, which identifies the grading records on a chart that is open to anybodies scrutiny. Below you can see next to every personage in the presidential election, their relative grade and the informational pressing issue of E-Verify.

    There are two things that the average American can do, is by adding pressure to mostly the adversity of certain politicians. These reluctant politicians must be bombarded with your calls and free faxes, compliments of NumbersUSA. Contact Speaker of the House John Boehner (R-OH); House Majority Leader Eric Cantor (R-VA); House Majority Whip Kevin McCarthy (R-CA) ; House Chairman of Ways & Means Committee Dave Camp (R-MI); & Members of the Ways & Means Committee. You can additionally contact your own local Senator or Representative or federal politician at 202-224-3121 and insist on E-Verify.

    At this present Rick Perry (D-) endorsed E-Verify, but having his reservations, he also called building a 1,200-mile fence the length of the border “idiocy” Mitt Romney (C-) at the Conservative Political Action Conference that he supports an E-Verify system, along with Herman Cain (C-) who has qualified himself as a true TEA PARTY member. Michele Bachman (B-), Tea Party chairman believes employers should be required to check the legal status of people they hire with E-Verify. Rep. Newt Gingrich (D-) has not spoken explicitly about E-Verify; he has suggested that credit card companies should run a worker-verification program. Jon Huntsman (D-) said he would consider a requirement that employers use the e-Verify system to check the documentation of workers to ensure they’re legally employable. Rick Santorum (F), called Mr. Perry “soft on illegal immigration” during the debate, in Orlando, Fla., and framed the issue as a burden to taxpayers. Gary Johnson (F) has also stated, “Enact an application and tracking procedure for guest workers, such as an e-verify system.” Finally Ron Paul (F), who has never answered how he stands on the Illegal alien alerter E-Verify, as he is more interested as it stands on Privacy rights relating to the program.

    • F. Beard October 13, 2011, 8:22 pm

      Yea, the bankers wreck the economy and let’s blame the poor immigrants instead,eh? Congratulations on falling for a diversion.

    • David Tanner October 13, 2011, 9:02 pm

      Thank you Dave “Big Brother” Francis. Just what we need… more gov’t controls and interference in our personal lives just because those evil Mexicans are coming in here and stealing $10/hour jobs from us. Are you kidding me? Voters like you are a politician’s dream!

  • david October 13, 2011, 6:48 pm

    It would have been more fair (though not really fair at all, just relatively more fair) if the Gov had used the money they threw at the banks to pay off all the outstanding principal balances on mortgages in the US. I understand the two amounts are very closely equal. (Around $9T or so?) So let’s see…we (that is, the Gov on our behalf) gave the banks the equivalent of the cash they would have received if every mortgagee had received an inheritance at once and they all decided to use the money to pay off their houses…leaving all these “little people” high and dry, cut out of the deal, and still owing the banks that very same, or very closely the same, amount. So the banks got their balance sheets repaired AS IF the housing bubble had never popped and AS IF everyone had decided to pay off his principal balance all at once, and AS IF they hadn’t made such blunders in judgment, and still have all the schmucks on the hook! Nice work if you can get it. So now that they’ve been the beneficiaries of such largesse, the banks have decided to show their appreciation by luring in the sheep to refi so they’ll be holding recourse loans instead of the original non-recourse? Wowser.

  • John Jay October 13, 2011, 6:36 pm

    Farmer Tom,
    Thanks for the compliment. Let me rant some more.
    When my grandparents came here from what was then Czechoslovakia over one hundred years ago, they went through Ellis Island and received at least a simple medical exam to be sure they would not be a burden on the country. They went to work and saved their money.
    They learned English as fast as they could. I have seen photos from turn of the century Chicago of an immigrant run English language night school. Above the door was a large sign, in English: “Speak English, this is not the old country.” Back to my grandparents.
    All the various ethnic groups had their own neighborhoods they settled in, Poles, Czechs, Italians, Jews, you name it. No one called them “racist”, they prefered to live with their own countrymen. The Eastern Europeans and Italians formed Catholic parishes, built churches and parish Catholic schools on their own. The Jews did the same thing. No one asked for government help. They built their own houses, I still have the plans for the house my grandfather built. It all worked out because the nation had a huge need for immigrant labor in an expanding economy, and the people back then tried hard to assimilate the American language and culture.
    It is now a changed world, we don’t need millions of unskilled workers that take advantage of us and wave foreign flags at the drop of a hat, while speaking a foreign language as a sign of contempt for our country.
    But nothing will change because as George Carlin said,
    “We continue to elect these rich ******* that don’t give a **** about you, they don’t give a **** about you!”
    It all serves the purpose of the richest 400 families that control it all here in the USA.

  • nonplused October 13, 2011, 6:17 pm

    Nice rant John, agree with most of it.

    I don’t think free trade between Canada and the US has hurt either economy, but those economies were very integrated and similar prior to the agreement. Mexico, on the other hand….

    I don’t think industry left the US (and Canada) to avoid high wages. Wages aren’t a large part of the overall cost in a high tech automated plant. Instead, they left to avoid taxes, excessive regulation, extremely punitive legal settlements, and because the cost of capital was artificially lowered to the point where they could abandon existing N.A. investments and build overseas.

    In short, the environment in N.A. is extremely hostile to business, and capital was cheap.

    • Farmer Tom October 14, 2011, 3:25 am

      On the surface the argument sounds convincing David but don’t forget that when the Fed was handing out all that money that they were in fact exchanging it for the liabilities of the banks. So bad debt sits on the Fed balance sheet now. In other words, if you got “free money” to pay off your home under the same circumstances then the Fed would be your landlord. Is that better?

  • Jacques Redou October 13, 2011, 6:11 pm

    This discussion is about rearranging deck chairs on the Titanic.

    The real problem is not economic.

    Economic problems are a symptom of the underlying problem.

    America’s Vision of several Centuries was
    Wealth and Power.

    This is a flawed vision and we are living the
    results of this vision. You see the MacMansions. Trying to look like little Rockefellers.

    Where I live the poor live in shacks but the New Car is parked out front. Inside there are not books to read.

    So, all this discussion is about More McMansions and more New Cars?

    Most people in the world who have seen an
    American have seen an American Soldier.

    Wealth and Power does not make people happy. Health and Wisdom makes people happy.

    Where is the Federal Department of Wisdom located?

    America needs a new Vision for the future.
    The old vision will not suffice.

    • Robert October 15, 2011, 9:20 pm

      “The old vision will not suffice.”

      Well,that really depends on how far back we are willing to look.

      I still consider Jefferson, Hamilton, and Franklin to be among the greatest thinkers humanity has ever produced… The only thing I can concede that they goofed on was this little oversight in the Declaration of Independence:

      “… all men are created equal…” should read “…all people (or all better yet “…all biological human beings”, since the term “people” was so thoroughly corrupted by the 14th amendment) are created equal…”

  • tompaine October 13, 2011, 6:02 pm

    I whole-heartedly agree, and I’ve been a liberal all my life, though I lean sort of to the libertarian end of the liberal spectrum, if there is such a thing, and at this point I wouldn’t put any label on myself. I hope I’m a free thinker.

    One thing I agree with though is that prices of things, including money, should be set by markets. The governments role should only be to make sure that markets remain free and fair by enforcing regulations against fraud and collusion and perhaps occasionally breaking up large entities when they become TBTF.

    I’d say our current government would get close an F on all counts. My solution is to boycott both major parties. I say, if you are conservative, vote Libertarian. If liberal, vote for the Greens, or vote for independents, just DO NOT VOTE FOR ANY Ds or Rs, because both parties are up to their eyeballs in corruption and captured by big money interests on Wall Street and in the MIC.

    A voter revolt is the ONLY possible answer, IMO.

    • Rich October 13, 2011, 8:43 pm

      Ron Paul

  • ExNav October 13, 2011, 5:47 pm

    I agree with John Jay 100% on the trade issue. We don’t have free trade, or even fair trade. We have managed trade, and its not managed to our advantage.

    • VegasBob October 13, 2011, 6:55 pm

      All countries except the US manage their trade.

      Only in the US are people stupid enough to drop their pants and bend over for the sake of ‘free trade’. And they don’t even get a kiss while they are being raped.

  • John Jay October 13, 2011, 5:08 pm

    Mark,
    The corporations did not flee the USA to avoid regulations and taxes. GE pays no taxes. They left to avoid paying higher wages here, while at the same time exporting their foreign made products right back here to suck the slowly diminishing wealth out of US consumers.
    “Where would we be without these entrepreneurs and the hard working immigrants, that you disparage, that support, financially, the welfare-warfare-bureaucracy state? They are what’s left of America on this continent and it would serve us right if they packed up and left for good.”
    Really Mark, when the flood of immigrants at the turn of the century arrived here we had an expanding industrial economy thanks to protective tariffs. We had millions of unskilled labor jobs in coal mines, steel mills, horse farms etc. to be filled. Today we have no such needs. Millions of illegals working for cash pay no taxes and are a large cause of the welfare problem, they don’t support it with taxes they don’t pay. The jails of California are filled with illegal aliens, the hospitals are shutting down, the public schools are a tower of Babel, the state is bankrupt. We would be much better off “if they packed up and left for good.” But they won’t, that’s the problem.
    Our unemployment rate would probably be cut in half if they did and California would have a balanced budget and a lower crime rate.
    You can’t be living in Southern California or Fresno etc. and go on about the benefits of illegal immigration.
    Do you think that somehow exactly the right amount of , honest, intelligent illegals will arrive here without our controlling the process? Where are the modern Nikola Teslas that prove your point about the contributions of the illegal immigrants? Where are the new steel mills that Carnegie from Scotland created back in his time? Do we need even the 100k a month legal immigrants that come in on work visas with our unemployment as high as it is. It’s a free country so think as you like, and vote your vote. But you sound like Obama spouting about “this a nation of immigrants” as if that that is a good reason to commit financial suicide now that we no longer need millions of unskilled workers in an expanding economy that no longer exists.

  • theguyd October 13, 2011, 4:30 pm

    The problem has more to do with changing interest rates than the actual interest rate. Since the home owner pays on average, 28% of his income to his abode, and the interest charged on a loan is the biggest expense of ownership, and the value of the home fluctuates with the gross wages of the area, the value of the property cannot be ascertained as long as the interest rates continue to change and the gross wages continue to fall.
    Interest rates again last week fell below 4% for 30 year loans and 3.5% for 15 year loans. If you have some equity, refinance. I expect them to continue falling. The way to spark the housing market is to change the internals of the costs to wages which has been about 28% of gross for decades. Why limit the rate to 4%? Why not 2% as it was 100 years ago? We are heading there eventually anyway. Just socialize home ownership and get it done with. Take the private banking system out of it. Anyone is allowed an owner occupied loan at 2%, 10% down with payments not to exceed 20% of a gross income. Only 1 loan allowed at a time to any one family unit. Let’s face it, the construction industry is dead for all practical purposes. Nothing moves the economy faster than the construction industry. We have shipped our industrial base over seas, and are sending our clerical work away also. Killing off the construction industry was a last straw event.

    Another item that is never discussed is that no industry had as many self employed people in it as construction. These owners of small business have taken the jobs of others in the few remaining factories and businesses still operating. Some have been unemployed, without work contracts, for 3 years and none get unemployment insurance. None are counted in the official numbers yet there are many millions of them. Because they are entrepreneurs they are easily taking away the jobs of others, even if for 1/3 the pay. I cannot even tell you who to call anymore if you need a deck built, a new roof, or a sidewalk. The businesses are few and far between, at least here in Western CO.

    Just 1 of my 2 cents.

  • F. Beard October 13, 2011, 4:23 pm

    A fair solution (one more time):

    1) Put the banks out of the counterfeiting business by forbidding any further “credit creation”. This would be massively deflationary as existing credit was paid off with no new credit to replace it. Genuine loans of existing money could still be made .

    2) Send monthly and equal bailout checks to the entire adult population, INCLUDING SAVERS, equal in total to the amount of credit paid off the previous month. Continue till all credit debt is paid off.

    Since the total money supply (base money + credit) would not change then no serious price inflation should be expected.

    3) Implement genuine monetary reform including separate government and private money supplies per Matthew 22:16-22.

    • Larry D October 13, 2011, 4:56 pm

      F,
      are you a descendant of Sisyphus?

    • Carol October 13, 2011, 4:59 pm

      F. Beard your solution is socialism to the extreme!

      1) if you forbid any further credit expansion the economy collapses that it is a ponzi scheme with only the principle (from loans) is ever created so the interest has to be stolen out of someone elses principle payments. Reduce credit is not only deflationary but would kill the whole economy and put almost every debtor in bankruptcy.

      2) you then reward debtors at the expense of savers. I mean savers who have NO debt like me. Where is Where is the bailout for non debtors? BTW I don’t want any handouts from uncle sugar but I also don’t want every tom, dick, and harry getting rewarded for their irresponsible acts either.

      Also your assumption that base money + credit would not change inflation is incorrect. When credit is paid off the money supply is decrease (credit disappears) so your “solution” would most definitely create a huge amount of inflation.

      3) No the problem with our monetary system NOW is that the money is created by a NON government private entity not beholden to the people. So it is not government money. Further if the money was stable and kept its purchasing power there would be no need for any “private money supplies”.

    • F. Beard October 13, 2011, 5:30 pm

      1) if you forbid any further credit expansion the economy collapses that it is a ponzi scheme with only the principle (from loans) is ever created so the interest has to be stolen out of someone elses principle payments. Reduce credit is not only deflationary but would kill the whole economy and put almost every debtor in bankruptcy. Carol

      New “vertical money” (MMT terminology) would replace existing credit as it was paid off. The money supply would thus remain constant so neither price inflation nor price deflation should be expected. If additional vertical money is needed (to pay interest for genuine loans, for example) then the size of the bailout checks could be increased by that amount.

      2) you then reward debtors at the expense of savers. Carol

      You savers INVARIABLY miss the words “INCLUDING SAVERS”.

      I mean savers who have NO debt like me. Where is the bailout for non debtors? Carol

      Every adult INCLUDING SAVERS would receive equal bailout checks. Borrowers would pay off their debts and savers would receive an equal amount in constant value dollars to save or spend as they wish.

      BTW I don’t want any handouts from uncle sugar but I also don’t want every tom, dick, and harry getting rewarded for their irresponsible acts either. Carol

      The handouts have gone to the banks which are essentially a government backed/enforced counterfeiting cartel that has cheated both savers AND borrowers.

    • F. Beard October 13, 2011, 5:31 pm

      are you a descendant of Sisyphus? Larry D

      Practice makes perfect.

    • Carol October 13, 2011, 5:48 pm

      F Beard >>”Every adult INCLUDING SAVERS would receive equal bailout checks. ”

      well your first post said debtors would receive checks = the debt that had paid down that month. Even though you said savers would also get checks you never said what THOSE checks would be based upon. So if debtors are staying equal in purchasing power (their checks pay off their debts) and savers get some amount of check not equivalent to their debts (since they have none) then your supposition that inflation would not happen is erroneous as the checks received by savers without debts would necessarily increase the money supply!

      Why not go one step further in your socialistic scheme and just discharge all debts owed by everyone since that is essentially what you are proposing.

    • F. Beard October 13, 2011, 6:01 pm

      well your first post said debtors would receive checks = the debt that had paid down that month. Carol

      No. I said: “Send monthly and equal bailout checks to the entire adult population, INCLUDING SAVERS, equal in total to the amount of credit paid off the previous month. ” Let’s assume for the sake of argument that the US is 1/2 savers and 1/2 borrowers and that the average credit repayment by the borrowers is $1000/mo. Then everyone, INCLUDING SAVERS (sorry, couldn’t resist 🙂 ) would receive $500/mo till all credit debt was paid off.

      Even though you said savers would also get checks you never said what THOSE checks would be based upon.

    • F. Beard October 13, 2011, 6:04 pm

      Please ignore “Even though you said savers would also get checks you never said what THOSE checks would be based upon.” at the end of my last comment.

    • F. Beard October 13, 2011, 7:18 pm

      Then everyone, INCLUDING SAVERS (sorry, couldn’t resist 🙂 ) would receive $500/mo till all credit debt was paid off. FB

      Well actually, only for the first month would the checks be for $500. They would then taper off over time to $0. Or perhaps pre-payment would occur in which case the checks might be over $500 for some months. In any event, savers would receive equal checks and the total money supply would remain constant.

    • Farmer Tom October 14, 2011, 3:14 am

      I think by the time all those cheques have been cut and all mortgages paid off that you will be living a Soviet Era lifestyle. Nobody will work anymore. Most people will be wards of the state. In effect, the state will own your house (having paid for it from tax revenues) and the monetary system will have been completely destroyed rendering most property worthless anyway……

      But you will be out of debt. What a nightmare.

    • F. Beard October 14, 2011, 7:33 am

      I think by the time all those cheques have been cut and all mortgages paid off that you will be living a Soviet Era lifestyle. Nobody will work anymore. Farmer Tom

      I am retired yet I work, doing what I want to do within my financial and physical limits. Other retired people I know do the same thing. And there is considerable evidence that free men work smarter and more effectively than slaves. Besides, we are taking justice here; it is none of mine or your business what lifestyle changes people make if they receive restitution for theft.

      Most people will be wards of the state. Farmer Tom

      The banks are already wards of the State. They could not exist otherwise to any large degree.

      In effect, the state will own your house Farmer Tom

      Not so. The checks would be without strings. Borrowers would typically pay off their debts and savers would typically make their new cash available for genuine loans.

      (having paid for it from tax revenues) Farmer Tom

      No. The money for the bailout checks would be new legal tender created from nothing.

      and the monetary system will have been completely destroyed rendering most property worthless anyway…… Farmer Tom

      Nor would there be a stealth inflation tax since the size of the total money supply (base money + credit) would not change.

      But you will be out of debt. Farmer Tom

      And savers would have an equal amount in savings. BTW, I am not in debt.

      What a nightmare. Farmer Tom

      The last Great Depression was a nightmare and led to WW II Think this one will be any better? And it is not justice that leads to nightmares but lack of it.

    • Robert October 15, 2011, 9:15 pm

      “it is not justice that leads to nightmares but lack of it.”

      Stop the presses… F. Beard and I agree on something.

  • John Jay October 13, 2011, 4:04 pm

    I think everyones view of what we have become as a nation is influenced by their age and the way things were when they grew up. I grew up in the fifties and sixties. The dollar was king, wages and prices were stable, one income supported a family. The country wash awash in factories churning out autos, locomotives, machine tools, you name it. Moms stayed home and raised the kids. No one locked their doors, and a lot of my neighbors left the keys in their cars.
    Mass murders and rampant drug use did not exist. Then slowly, starting with the Vietnam war that LBJ had to finance, things changed. Endless “Enemies” and endless wars. Silver and gold went out the window as backing for the dollar. Inflation started up, everyones mom had to get a job. Oil shocks and gasoline prices that tripled overnight. State lotteries and casino gambling to cover an eroding tax base tax . Over time, prices went up by a factor of ten. Jobs and factories went offshore, after 1965 a tidal wave of immigrants started up. Wages have gone no where since the 1970s. The inflation created the monster that banks have become. Instead of financing a 2k car, 20k house and 1k college tuition, it all wound up 10 times higher. The banks made a killing off of decades of inflation. When they screwed up they were bailed out. The working man has had to deal with a rigged game with predictable results. The younger you are, the more you are likely to see this mess as the norm. The older you are the more you feel it has all been aranged to benefit the top 1%.

    • Farmer Tom October 13, 2011, 4:46 pm

      Go John. Man, you are on fire today. I agree with almost all of it. That was not a bad synopsis of the past 40 years. I lived through it too.

      You are right that younger people cannot see past the veil of history as they never experienced the past first-hand. What is happening today is “normal” for them and without the markers of the past to guide their thinking for the future there is little hope they can turn things around.

      Our standard of living has dropped considerably over the past 4 or 5 decades and by all accounts it will drop further in the coming years.

      You and I and those who know the past may lament the changes but it seems there is precious little we an do individually to change the course of history as it is now on a defined trajectory.

      Our best bet is to make personal investments or take decisions today that will shelter our families against the storm we surely know is coming. For those like you and many of the readers here who have been paying close attention do indeed have a very big advantage over the rest of the herd.

    • Rich October 13, 2011, 8:40 pm

      All reasons for debt default deflation.
      Did not find Hulbert bullish on October gold.
      http://www.marketwatch.com/story/the-cruelest-month-for-gold-2011-09-28?siteid=rss&utm_source=tf

    • Robert October 13, 2011, 9:42 pm

      “Our standard of living has dropped considerably over the past 4 or 5 decades and by all accounts it will drop further in the coming years.”

      Please define “our”.

      “our” standard of living in China over the past 4 decades has not declined.

      “our” standard of living in Canada has not declined over the past 4 decades.

      “our” standard of living in Mexico has not declined over the past 4 decades.

      You see- you both have on your “things were better back then” glasses on. I was not raised in the 50’s, but I see the pictures of 50’s era “middle class” neighborhoods were the houses were all 2500sqft plus on a 1/4 acre lot, and yes, I do recognize that today’s American median single family home is half that size, on a lot that is 1/4 that size, and lists for a price twice as high, even in inflation adjusted dollars.

      But- things were not REALLY better back then. The US was merely enjoying an EXTREMELY unethical privilege fostered by the Bretton Woods economic agreement, and the nation’s pre-eminence as the only nation on Earth capable of vaporizing all human society within a matter of hours if provocated to do so…

      Yeah, I’m sure those were real cheery times. Duck and cover, air raid drills, and all that other fun.

      Think bigger- think like a human being. Somewhere above, Rich brought up the fable of robbing Peter to pay Paul. Well, what the US has done for decades is to rob Ali Mohammed (or any other stereotypical arab name) to pay Chen Ching (or any other stereotypical asian name)

      To think of standard of living as an entitlement guaranteed by borders is biased.

    • Farmer Tom October 14, 2011, 3:01 am

      I think you got blinded by all the bells and whistles Robert. What looks like wealth is not exactly the same as wealth. Because we did not have marble counter tops and stainless appliances in the 50’s does not mean we were poor. Nor does having access to a mountain of cheap imports make me feel better because I know that really represents a loss of domestic productivity.

      Think in terms of family savings as one example and you will gain a little more perspective. To be more blunt, one family income used to support a whole family in this country. Just one. And that was at a time when 3 or 4 children were still common in many families.

      These days few people can afford to support one child and this is at a time when both parents work. How is that an improvement? Is a dual income family emancipation or slavery when it deprives you the opportunity of children?

      Now do you see how our buying power was eroded away over the years and how we lost our freedoms at exactly the same time? Makes the food in our superior modern diets a little more bitter doesn’t it?

      &&&&&&

      This observation goes as deep as anything that could be said about the true nature of the economy. Although, these days, Joe Sixpack can own a 52-inch TV, an $8000 graphite-frame mountain bike, travel to exotic vacation spots and drive a car that costs more than the home he grew up in, if you look at the important things rather than the consumer crap, the standard of living has crashed since the 1950s. As you’ve pointed out, dual-income households can barely afford to raise one child without going deeply into hock. Things like health care and a good ecucation have bcome unaffordable to the middle class, even though a single earner in the 1950s had no trouble providing such things for his family — and to put enough money away on the side to retire comfortably at 65. In contrast, Baby Boomers will work until they are 85 without accumulating a nest egg as fat as the one their parents retired on. RA

    • Robert October 14, 2011, 11:55 pm

      “These days few people can afford to support one child and this is at a time when both parents work. How is that an improvement?”

      It’s not- and it exposes a crucial underlying point.

      Real incomes have fallen as nominal incomes have risen over the past 50 years +

      The problem is that people are conditioned to see the nominal world as their reality.

      I live in the real world. Always have. Always will. My wife and I maintain the only example of the “traditional American family” (one income earner, one homemaker, 2 children) on our suburban block, and we simultanously enjoy one of the highest standards of living (if measured by the number of toys in the garage, the number of dollars in the checking account, or the number of ounces of Gold buried somewhere in the woods out back.

      I attribute all of this to the aggregate benefit of the choices my wife and I have made over decades, and the basic premise that informed, researched, and intellectually based choices are rewarded, while rash, impulsive choices are penalized.

      Today, everyone wants to act impulsively, and to be rewarded for it, and the fact that people clamour for dollars as their nominal drug of choice means that all they have to do is stay indentured to the system and the puppet masters who issue the dollars will keep their nominal incomes rising…

      Meanwhile, out in the real world… well, Rick covered the rest above.

      “Is a dual income family emancipation or slavery when it deprives you the opportunity of children?”

      I guess that depends on whether you personally WANT children, or are choosing to have children based on some societal norm that suggests that since everyone around you has children, that you are expected to as well… sadly, I see many people who fall into the latter category, but they don’t even realize it.

      Plus, I’d also throw out the tongue in cheek jab that having children is in no way an emancipating act. Having children is its own unique form of servitude and slavery.

  • mava October 13, 2011, 3:59 pm

    I agree with David.

    What I want is to collapse the housing as soon as possible, or, rather stop propping it up and allow it to collapse as it supposed to. Everyone who made bad investment must lose their shirts, so that they can be thoughtful about that the next time they wanna play Trump.

    The best way about it would be to lower the mortgage rates across the board, through refinance, but not on fixed terms. Then, when all the homeowners are caught in new terms, just watch and see.

    First thing that is going to happen is that the housing prices will go up a little. They will not go up as in Hong Kong, because America doesn’t do anything, but they will trickle up a bit.

    At that point, some home”owners” (LOL), will sell and escape while being thankful that the opportunity availed itself. Others, those who are still did not get the message, will attempt to live it out in real estate they can not afford.

    Eventually, the rates will be going way up. These same people will find themselves with much higher rates, again, against renewed 30-28 years. This is where they will be failing in honest. Except, they would not have their original non-recourse rights, so they really will be getting exactly what they deserved for signing up to something they could not afford in the first place.

  • David October 13, 2011, 1:40 pm

    You’re all missing the point. Helping people refinance homes they are still living in and are making payments on time will help stimulate the economy because the $100-$300 per month that is saved in lower interest payments will likely go back into the economy (rather than into the pockets of investors). It won’t do anything to keep people in homes they can’t afford long-term, and it won’t influence market prices one way or the other. All that would be happening is homeowners would be allowed to restructure their debt, something businesses do day in and day out with no influence on the market itself. And you’re fooling yourself if you think this is a broken contract with bondholders and/or that they’ll lose money as a result. All that would be happening is that the basis for refinancing would be changed. e.g., If I have 20% equity in my house and can therefore qualify to refinance at current market rates, are you telling me the banks are breaking their contract with bondholders? Are the bondholders losing money? Of course not. First, all the loans are resetting to a new 30 years, so the new bondholders get the majority of the new mortgage payment anyway, and the old bondholders get paid off, albeit early. But that’s allowed anyway. Folks, don’t confuse principle write-downs with renegotiating debt at current market rates. COMPLETELY different scenarios, and a win-win for all.

    • Rich October 13, 2011, 8:38 pm

      No David, you are missing the point.
      Robbing Peter Lender to pay Paul borrower does not work…

  • Mike October 13, 2011, 1:14 pm

    Lowering mortgages to 4 % cannot save the housing market in the US.
    In Hong Kong after 2008 , they lowered the mortgage rate to less than 1 % ( Hibor plus 0.5 to 0.8 %). Result is house price doubled in 2 years !!!

  • Mark Uzick October 13, 2011, 10:13 am

    John Jay:

    You criticize one type of economic quackery while promulgating another:

    Some “experts” want to want to “save” the American economy by creating artificial asset bubbles in real estate, stocks and bonds; artificial technology/manufacturing bubbles in solar power, wind power, infrastructure, carbon emissions reduction, high speed rail and electric cars; but most frightening of all are the “experts” that will save us from “unfair”(meaning free) trade by scapegoating our trading partners for the results of our own failure to create an environment conducive to any economic activity other than consumption.

    I say “most frightening” because protectionism not only removes the competition that would give incentive for our society to make reforms to the first two types of distortions created by our “saviors” as well as other economically harmful depredations to our liberty, but it leads to trade war; leading to personal hardship and desperation of the people; leading to an environment conducive to further authoritarian power grabs and the internal and international warfare upon which this power feeds.

    Clearly: While you’re cheer-leading it, this process that leads to world war is well under way.

    • Martin C October 13, 2011, 2:01 pm

      Correct, there’s some real mixed up thinking on here. Either you believe in free trade or you don’t

    • John Jay October 13, 2011, 2:08 pm

      Mark,
      Free trade has been a complete and unmitigated disaster for this country. It has stripped us of our industrial base, our tax base, and our jobs base. In fact, it has been so distructive that the Federal government has had to promote a series of Ponzi schemes to prevent the collapse of our economy.
      The flood of cheap imports was also used to export the inflation caused by the destruction of the dollar
      Year 2000 money printing by Greenspan, Dot com bubble, real estate bubble, endless money printing by the Fed and an economy so weak ZIRP has become a way of life. It is not Free Trade if, as in the latest agreement with Korea they negotiate away our right to sell beef and rice in their market. All these agreements are one sided against us. Look around you, we are now at the mercy of China etc. for shoes, socks, rare earth metals, screws, nails, computer chips, on and on. A temporary sugar high from cheap imports has come at the cost of huge run up in our National and individual debt. Here is a link to the history of our trade deficits: http://www.mint.com/blog/trends/spending-beyond-our-means-us-trade-balance-by-decade/
      This country was never more powerful and productive then when we had strong protective tariffs which allowed us to become an industrial super power. Exactly what Japan and China did to keep us out of their markets to grow their industrial base.
      We are now bankrupt and dependent on the kindness of strangers to finance our debt and supply us with shoes, socks and underwear.

    • Carol October 13, 2011, 3:17 pm

      I agree 100% John Jay. Free trade is often bandied about as the panacea for the ills of the world but I think it is a huge factor in the death spiral we in the USA are in now. Even if China revalued their currency that could not possibly make it a level playing field because of the tax structures there are much more conducive to doing business (corporate income, SS, health care costs, etc). Then add in the advantage they have in wages, debt levels, property costs, regulations, culture, etc. and you clearly see that they do and will continue to have a huge cost advantage over doing business in the ol’ USA.

    • Mark Uzick October 13, 2011, 3:43 pm

      John Jay:

      >>>”Free trade has been a complete and unmitigated disaster for this country. It has stripped us of our industrial base, our tax base, and our jobs base. In fact, it has been so distructive that the Federal government has had to promote a series of Ponzi schemes to prevent the collapse of our economy.”<<<

      In order to do business here, a business must first be productive enough to be able to afford workers who must live with such a high, often state-caused, cost of living, but if taxes and regulations reduce net productivity enough, then businesses must either die or find, or create their own, less expensive, subcontractors.

      To whatever extent that the American economy has continued to create wealth, in spite of business strangulating regulations, taxes and wealth mis-allocating Ponzi schemes, it's the ability of businesses to escape the destruction of their productive capacity at the hands of a corrupt American society by finding refuge in societies that have recently embraced free enterprise while bringing back much of the wealth that they create to unappreciative Americans; providing jobs and opportunities for designers, inventors, marketers and distributors, while also: enabling the success of manufacturers of products made possible only by access to inexpensive foreign-made components.

      Where would we be without these entrepreneurs and the hard working immigrants, that you disparage, that support, financially, the welfare-warfare-bureaucracy state? They are what's left of America on this continent and it would serve us right if they packed up and left for good.

      The idea of "America" is barely alive here at its birth-nest anymore, having moved on to prosper where the disasters of statism have taught people the value of liberty, leaving the US (not) of A an abandoned shell in its empty nest. It seems we are destined, like the rest of the world, to embrace the idea of America only after the full devastating experience of its opposite.

      Only reform, not the scapegoating of foreigners, immigrants and trading partners, will bring back prosperity.

      Protectionism is a classic economic fallacy, promoted as an easy fix, promulgated by statists as a vehicle for their self-aggrandizing power grabs and endless war campaigns. Don't fall for it.

    • Mark Uzick October 13, 2011, 4:03 pm

      >>>Carol October 13, 2011 at 3:17 pm

      I agree 100% John Jay. Free trade is often bandied about as the panacea for the ills of the world but I think it is a huge factor in the death spiral we in the USA are in now. Even if China revalued their currency that could not possibly make it a level playing field because of the tax structures there are much more conducive to doing business (corporate income, SS, health care costs, etc). Then add in the advantage they have in wages, debt levels, property costs, regulations, culture, etc. and you clearly see that they do and will continue to have a huge cost advantage over doing business in the ol’ USA.<<<

      There is still much corruption and despotism in need of reform in China, but you don't damn China for its evils, you damn it as a threat to our welfare for all its virtues, reforms and advances.

      This is illustrative of how low we've gone; we used to hate communism, fascism and monarchy; now we hate free-enterprise. Are we the new evil empire?

    • Carol October 13, 2011, 4:43 pm

      Mark, I don’t damn China at all, they are opportunist that are taking advantage of the “free trade” that USA has promulgated at its own expense. I don’t hate the Chinese at all nor was I disparaging them in any way I was just pointing out the fallacy of the whole movement to “let the yuan rise” as if that would “level the playing field”.

    • Rich October 13, 2011, 8:37 pm

      Fair trade better than unfair free trade…

    • Robert October 13, 2011, 9:20 pm

      ok- I see a ton of verbiage above about “free trade”.

      I didn’t read them all , but in scanning them I picked up two vibes:

      1) Free trade is killing America

      2) Free trade is making the 2nd and third world richer at the expense of the first world economies.

      To all of this, I am going to mount the pulpit and declare all of you to be fundamnetally short sighted in your perspective viewpoints.

      Free trade (the concept, not the tag-line) does not occur when competition is stifled. However, competition is anathema to all liberally minded social thinkers, because competition sometimes generates conflict, and conflict is the enemy of Utopia.

      Hence, we live on a planet where free trade simply does not exist. Not at all, not even a little bit. Competition is decreed to be healthy in concept, but loathed in practice, so the daily operations of the many serve to impede the competitive advantages of the few.

      If there were free trade, then there would be no reason for government, aside from adjuticating trade disputes in a court of law.

      If there were free trade, there would be no need for government issued currency units to serve as units of account.

      If there were free trade, prices would not fluctuate regionally based on local tax policies or other such forms of political favoritism: prices would only fluctuate regionally based on logistical concerns (like keeping pizzas warm in Greenland, and keeping ice cubes frozen in Malawi)

      There is no free trade today- anywhere. There is only government policy induced barriers to free trade.

      I hope this opens your minds a little bit to the fact that free markets have not, are not, and will not destroy America. The political bastardization of free trade (which completely evicerates the essence of the concept) probably will.

      Government policy jerrymandering and judicial/polical favortism based lobbying are what have subjugated free trade. Period, end of story.

  • John Jay October 13, 2011, 5:29 am

    Let me add a post script to my little rant.
    First, what about the people already foreclosed upon?
    Do they get the house back retro active?
    Where does it end?
    Secondly, any forced lowering of mortgage interest rates by the Federal government will very likely mean the end of any private sector financing of home mortgages. Who is going to invest in a home mortgage when the government can come in whenever they like and cut the interest rate you originally agreed upon with the home buyer? An interest rate that reflects your perception of the risk involved in your investment. That GM bailout really set a dangerous precedent for government interference in contract law. We don’t need to have them get in the habit of doing it.

    • Farmer Tom October 13, 2011, 8:22 am

      Good points John,

      This crackpot idea would just introduce another distortion into the system and frustrate those investors waiting in the wings who actually are appreciative of a correction. Indeed there are people willing to buy again when prices finally hit bottom and the process can begin anew.

      Unfortunately, some are suggesting backstopping bad loans with new low fixed rates. In other words they are saying they might ameliorate the ongoing correction by throwing someone else’s money at the problem.

      We have to wonder how the 40% of families who rent would really feel about subsidizing the rest who took on foolish risks and excessive debt loads though. Maybe they should get an equal rental subsidy to make it all fair or a tax holiday so though do not have to contribute to this new kind of socialism.


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