Monday, October 01, 2007

We Always Pay For Their “Errors”

“The Federal Reserve's new approach to rescuing failed banks is evidently to avoid political objection by doing it behind the scenes, using fiat money created for the purpose. Rather than taxing other banks or the taxpayers at large, the Federal Reserve imposes an indirect tax in the form of inflation. Like other central banks, the Federal Reserve is a "lender of last resort," which means it can create money out of nothing with accounting entries.7 Adding new money to the economy without adding new goods or services, however, is not without cost. It shifts the cost to the public, driving prices up, taxing us at the grocery store and the pump. Meanwhile, errant bank managers are rewarded by being allowed to keep their winnings and continue in their risky ventures.” Bank Run or Stealth Bailout: Global Credit Crisis hits Main Street by Dr. Ellen Brown Global Research, September 21, 2007

As the popular corporate media distracts the masses with mental pablum and mind numbing programming designed to dummy us down, the ruling elites continue to wage economic war on the rest of the world, especially here in the United States. Few people I’ve spoken with are aware just how precarious the financial situation actually is in the US. You may hear a few folks talking about the rising cost of food and gas but for the most part our people are going along happy because the young people mobilized a march and protest in Jena Louisiana and their favorite team, model or superstar is in the news. The skyrocketing cost of living does not exist by accident; they are the direct result of the policies of the US Central bank and it member banks. Didn’t know the US had a central bank? It does. It is called the Federal Reserve Bank although there is nothing federal as in US government about it. It is a private entity created by Congress in 1913 at the behest of the very people who own and run it, the private bankers who form its directorship and major shareholders. This corporate entity, not the US government sets monetary policy for the nation. The Fed determines how much money is printed and put into circulation at any given time, sets interest rates, decides how much the Fed charges member banks for “overnight” loans as well as the “discount rate” which indirectly impact what is called the “prime interest rate”, the rate we suckers pay to borrow money from our bankers.
During the last few month we’ve heard a lot about “Sub Prime interest loans”, these are loans which are given to persons with risky credit, folks who are over-extended credit wise or people who have had credit problems and the folks regardless of their credit histories who were deliberately steered to these high fee, high interest loans by bankers and mortgage brokers with encouragement of the big boys in the banking and financial circles. “Several studies have shown that subprime loans have been pushed very hard in poorer communities, often to borrowers who could qualify for prime loans with better terms. (My emphasis) The subprime lending industry was doing fine until the Federal Reserve started its string of 17 hikes in the short-term interest rate in the summer of 2005, taking the rate from 1% to 5.25%. Four out of five subprime loans carry floating interest rates that, after the first year or two, change every 12 months as short-term interest rates fluctuate. Because of the Fed hikes, homeowners who received these loans in 2005 are now finding their monthly payments rising by 30% to 50%, leading many to fall behind in payments. ‘None of this would be an issue now if we did not have 17 straight increases in rates,’ Thomas says. About 70% of subprime loans have prepayment penalties that can make it too expensive ve for homeowners to refinance to conventional fixed-rate loans with lower interest rates. Because home prices are flat or falling in many of the poorer neighborhoods where subprime loans are most common, even those owners who can handle the prepayment penalties may find it impossible to get new loans large enough to cover their balances on the old ones.” Could Tremors in the Subprime Mortgage Market Be the First Signs of an Earthquake? By: Knowledge@Wharton
Many feel (I am one of them) the Fed and the private bankers, the hedge fund and derivative administrators collaborated to bring the current financial situation into being; knowing full well what the consequences would be: the massive defaults, foreclosures and economic implosion. “The classic U.S. mortgage charged a ‘fixed’ interest rate that stayed the same for the loan's 30-year life. Once the mortgage papers were signed, the homeowners monthly payments never changed, making payments easier and easier to shoulder as the borrower's income rose with inflation. Generally, home values went up as well, so the borrower could expect to sell at virtually any time for more than he owed. But the picture has dramatically changed in recent years. Wachter estimates that nearly two-thirds of all home loans issued since 2003 were types she terms ‘aggressive.’ These entail risks for the lenders, borrowers and investors in mortgage-backed securities that are not found in conventional loans. In addition to subprime loans, this includes interest-only loans where the borrower makes no principal payments. It includes negative-amortization loans in which the borrower pays less than the full interest payment, with the shortfall added to the outstanding debt. And it includes loans that require little or no down payment, or no proof of income. Subprime lending, the riskiest category of aggressive loans, soared from $150 billion in 2000 to $650 billion in 2005, according to testimony at a recent Senate hearing on predatory lending.” (Emphasis mine)
Why you ask would bankers and financial “experts” do this? Simple, in the ensuing chaos they can then gobble up your house and any other “assets” you have as collateral at pennies on the dollar. “Since 2000, outstanding mortgage loans have more than doubled: up over $5 trillion. Unpaid mortgages soared and lenders were falling all over themselves handing out sub-prime loans 2 for up to 125% of the value of the property. Now the real estate bubble has burst: property owners can't sell their homes or refinance them. They can't pay their mortgages so the banks foreclose and the house is sold on the courthouse steps. Within days they receive an eviction notice and they're out on the street. Since 2006, vacant dwellings have increased by more than 40% for existing homes and more than 20% for new homes. The personal tragedy these people face is overwhelming and heartbreaking.” Economic Cannibalism
Once you get into debt you are at the mercy of the person, bank or corporation who holds the note on your loan(s). If you are unable for any reason to pay your debt, the lender has the right to foreclose or call your note. “The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Notice of Default or Lis Pendens. The foreclosure process can end one of four ways: The borrower/owner reinstates the loan by paying off the default amount to during a grace period determined by state law. This grace period is also known as pre-foreclosure. The borrower/owner sells the property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history. A third party buys the property at a public auction at the end of the pre-foreclosure period. The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction. These are also known as bank-owned or REO properties (Real Estate Owned by the lender).” What is Foreclosure?
Ironically, the elite bankers and Wall Street financial wheelers and dealers don’t have to face the consequences of their actions because they get leniency and “corporate welfare” reserved only for the rich and well connected. The burst of the housing bubble and the resulting implosion of the credit and banking system is rippling around the world, Asian banks shuddered and suffered as did several banks in Germany and France, but they were bailed out by their Central Banks and the global network of central banks. A few weeks ago there was a run on two banks in the UK but the US corporate mind control apparatus repressed the story. The crisis is rippling across the Atlantic Ocean. Now the Fed is bailing out US banks and little people are the ones who will foot the bills. This scam is a repeat of the Savings and Loan scandal, with the elites getting off Scott free despite deliberately engineering this mess and tricking the taxpayers into bailing out the private bankers and their cohorts. “As the U.S. home foreclosures crisis deepens, and mortgage banks and lenders sit on the edge of bankruptcy in the United States and in Europe, Congressional sources say that efforts to act on the crisis are being distorted by tremendous pressure on Congress from the hedge funds, investment banks, and their lobbies—pressure for a huge bailout of the funds by government housing agencies. Such a bailout, under the guise of 'helping homeowners avoid foreclosure,' would do no such thing—the admitted failure of a $100 million Ohio state mortgage refinancing plan, since May, has shown that. But it would turn Fannie Mae, Freddie Mac, the Federal Housing Administration, into so many additional Federal Reserve Banks, injecting hundreds of billions—as the Fed has already been doing—into a bailout of the hedge funds and their partners, the Wall Street investment banks, which created the monstrous speculative bubbles based on housing mortgages.
This bailout policy is worse than doing nothing at all about the banking crisis, economist Lyndon LaRouche said on Sept. 14: ‘It is the precise equivalent of spraying cold gasoline on a burning building,’ spreading the fire into an international explosion of inflation and a dollar collapse. Should Congress or the Federal Reserve have bailed out Enron, with its scores of ‘off-the-balance-sheet’ loan scams, debt investment vehicles, derivatives-trading operations, and billions in hidden losses? Such an insanity is the repeated bailout of Countrywide Mortgage, which has now reached $23.5 billion in banks' new credit lines to Countrywide using Federal Reserve money-printing injections into those banks, plus a $2 billion stock purchase by Bank of America. What's Countrywide done with all that bailout credit? Shrunk its mortgage lending by 20%, laid off 13,000 employees, further restricted refinancing for distressed mortgage-holders—and bought back devalued mortgage-backed securities (MBS) from hedge funds, investment banks, etc. at full price! Such an insanity, multiplied many times over, is what Wall Street's Financial Services Forum and the hedge funds' Managed Funds Association lobbies are demanding from Congress.” Bankrupt Funds' Bailout Push Bars Mortgage Crisis Solution by Paul Gallagher
The private bankers and hedge Fund administrators want the US Congress to come to their rescue! Imagine this, the same people who created this mess via economic policies and products that have put families and the nation on the brink of economic collapse now want the US government to bail them out. These are the same people who are working assiduously to undermine or dismantle the social networks like Social Security and other “New Deal” policies but they want us to foot the bill for their bailout. We are being duped and played big time. FYI, the ruling elites’ real goal is to rob and plunder the US treasury and reduce us all to wage peonage, bound to an overwhelmingly disproportionate tax burden (remember Bu$h’s tax cuts for the rich?) in conjunction with pervasive debt slavery.



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