How the Foreclosure mess would play out in an actual Republic Of Law and an actual Free Market
Here’s how this plays out in an actual free market society which follows the law (ie., not this one.)
You go through and figure out if you can prove title to the property. If you can’t, those who were insured go to the title insurance companies. A huge legal battle ensures, with the title insurance companies claiming that they were the victims of fraud from their clients, the banks. Eventually, the title insurance companies pay out whatever they have to pay out that they can pay out, and most of them probably go bankrupt.
The banks then go bankrupt, which, well, they already are anyway, so maybe we should stop pretending.
The title insurance companies did not do their due diligence. They deserve to be destroyed for not doing their jobs. The banks engaged in and colluded with systemic fraud, they deserve to go out of business and their executives should go to jail.
And no, the real economy does not take it too hard on the chin. You wipe out a ton of debts, those people are no longer underwater and can buy. The banks are taken over by the FDIC, the shareholders are wiped out and the bondholders take a bath. The Fed refloats the banks (after breaking them up) and they go back to lending the way they should have. It costs LESS in the long run to do this than it does to keep extending and pretending, and non-zombie banks can actually lend.
Yes, the investor class takes it on the chin and this includes some widows and orphans, and that’s bad (throw in some undoing of “welfare reform” if you feel bad for them. Not that “slash food stamps” Obama is likely to.) But it’s better than eternal zombie banks and illegal foreclosures up the wazoo. And the investor class is essentially worthless anyway, they have spent the last 30 years investing in asset bubbles and offshoring industries and jobs, not in the useful productive domestic economy. Letting them take their losses (and these are their losses) is a good thing, and is the free market thing to do.
It also wipes out a class of people who are driving the buying of politics, and who tend to prefer Republicans, if you want to do some crass political calculation. Which, frankly, would be nice, since apparently Dems crass political calculations are done with an abacus they don’t know how to work.
Addendum: a friend sends me this suggested course of action by Karl Dennniger, which I think is a good one. Odds of being pursued? Minimal. But we can hope. As Denninger points out, if private interests steal the homes of millions of citizens with the collusion of government, well, that doesn’t lead anywhere pretty.
I keep hearing people saying that Hispanics are angry with Democrats because comprehensive immigration reform hasn’t been pushed.
That’s part of it, but in suggesting that Democrats sins are passive, it is effectively a lie. Under Obama deportations have actually increased, and this is entirely an administrative matter, which he could change himself without Congress’s approval.
I would add that the same is true of womens ability to get an abortion. Objectively worse than under Bush. For two major Democratic constituencies, Obama has not just failed to make things better, he has made them worse.
Meanwhile police refuse to pursue criminal charges against banks breaking into housing to change locks when they don’t have clear title to the property. Many people have lost their houses based on fraudulent paperwork submitted by law firms and banks, where the banks committed perjury about their title to property.
Virtually all of this is interstate commerce and falls under RICO statutes if you want it to. The DOJ could go after it tomorrow if Obama wanted to. He doesn’t.
One can only assume, since he has the power to put the fear of God into banksters and refuses to do so, that Obama approves of what they’re doing.
Obama is not a liberal. He is objectively making things worse for many Americans, including the most vulnerable and core constituencies of the Democratic party.
A friend of mine notes the wave of fraudulent foreclosures, foreclosures where firms simply faked the paperwork needed to prove they have standing to foreclose (that they actually own the mortgage.) There have been some moves to stem the fraud, not the least of which is by Florida’s Attorney General Bill McCollum, but those who appear to be the worst offenders are firing back, going after him and other judges who have thrown out cases.
This is a logical consequence of refusing to go after banksters for fraud. The fraud was so systemic (the majority of CDOs based on housing) that virtually every major executive was involved. The DOJ and others chose not to prosecute criminally, and as a result the message was sent that the executive class, as a group, will not be prosecuted for fraud.
So, of course, they doubled down.
This is illness creep from the refusal to go after Bush era crimes. Political elites made themselves immune from prosecution for any crime that a lot of them are involved in, then corporate elites.
America isn’t a nation of laws, it is a nation of men. Has been since at least 2007, when Nancy made her choice not to go after wrongdoers. Obama confirmed this in 2009, when he refused to use the DOJ to go after either Bush era crimes or really go after mortgage and security fraud.
I hope it can be firebreaked here. Maybe it can. But when you exempt entire classes of important people from the law, every other group of important people sees no reason why they should be subject to it either.
If it is to be firebreaked here it must be done with criminal prosecution. Corporate elites won’t be deterred by fines, they consider them only a cost of doing business.
(Oh, and the next step if it isn’t firebreaked? Deficiency judgements: going after people for the amount that’s underwater.)
This, from Numerian, is the sort of thing I was talking about when I noted that:
If you can build a factory overseas which produces the same goods for less, meaning more profit for you, why would you build it in the US?
Until that question is adequately answered, by which I mean “until it’s worth investing in the US”, most of the discretionary money of the rich will either go into useless speculative activities like the housing and credit bubbles, which don’t create real growth in the US, or they will go overseas.
We rescued the automakers so they could move to China. GM is a shadow of itself before the 2007-2008 crisis. It has shed plants and workers in the US, along with their ongoing health and other benefit obligations. But in its newly-shrunken state, its emphasis is not on the US, which rescued it from bankruptcy. GM is putting investment money in China almost entirely. Like so many other manufacturers before it, the company has ceased to be American, in the sense that its manufacturing is no longer done here and its workers no longer live here. Instead, its corporate headquarters is here, and little else. Even its profits are kept overseas to avoid paying US taxes.
He goes on to do discuss the debt trap, and notes that the US has lost its technological advantage, meaning there is no way to fix the problem now except through brutal austerity.
I don’t think this is quite true, but it’s damn near true, and it seems to be the assumption the elite is operating on. And by the time we get rid of this bunch of loser Dems, suffer through the Republican government to come and then get another shot at someone competent, it may well be too late.
The future doesn’t happen in America any more, and that means America’s just a place with too high costs and a lot of guns. There’s no damn reason to invest in the US except in leveraged scams, and until the US figures out a way to change that, things aren’t going to get better. Right now the US’s elites seem to think the way to fix it is to reduce wage costs till they’re competitive with China’s.
I’ve said this before, I’ll say this again: if you can get out of the US, GO! If not hunker down and fight, and fight smart. More on that later.
If you value what they do and you can afford to help, you should give. Stuff that’s free, isn’t.
Peter Dauo has a pair of well received articles on how the left, and specifically bloggers, have brought down the Obama administration. This is in contrast to what many see as the attempt by the White House to portray left wingers as responsible for Democratic losses.
What?
Look, if the left is so powerful that is is responisble for Democratic fortunes, well, that’s not something we should shrink from. We should say “Yes, we can destroy Democratic prospects. If you don’t do what we want, we WILL do so.”
Powerful groups get what they want, weak groups don’t. If the White House wants to portray us as that powerful, we should embrace that description, because it is a blade which cuts both ways.
And there is an argument for it. While certainly the economy is factor one, the people whom left-wing bloggers reach are the sort of folks who traditionally don’t just vote, they volunteer, they give money and they are themselves influentials, who convince others to be enthusiastic, vote, volunteer and give. When, last year, I felt parts of the blogosphere lose their patience with Obama, I knew it would cost him, and it has.
Don’t run from this, embrace it, wrap yourself in it. You are part of the left, and the left is capable of destroying governments which don’t do what it wants. And this is good, because objectively Obama has not fixed the economy, has presided over further destruction of civil rights, has reduced access to abortion, and so on.
Powerful people and interests give away nothing they don’t want to unless they are forced to by others with power. The left is either powerful and willing to use that power or it is nothing.
Now that virtually everyone of any importance, up to and including the President has told you that they hate you, that you are a bunch of unrealistic ingrates who need to be drug tested, I trust no one still thinks the White House doesn’t hate the left’s guts, and that it comes from the very top, from the President?
I’m going to write on this at greater length, but the point folks need to get through their heads and burrowed down into their hearts and spleens is that Democratic politicians as a rule, despise you. This isn’t just about the White House, Democrats in the Senate and in the House have done everything short of spit in your face, over and over again, as when Nancy Pelosi snuck an up or down vote on the catfood comission’s findings into the lame duck sessions.
Not just that, but for whatever reason, these folks either don’t care about winning elections or are so incompetent they can’t see the obvious. Everyone with any track record of being, y’know, right, told them the stimulus was too small and every political consultant knows the economy is the most important thing to reelection chances, yet they passed an inadequate stimulus anyway. In a midterm election where they need the base to come out, they have spent the last six months insulting the base and engaging in policy after policy meant to enrage it. They could have, for example, put off filing a brief arguing that government secrecy allows the president to assassinate any American he wants anytime until after the election, but they chose not to.
It is, for whatever reason, more important to Democrats to “hippie punch” than it is for them to win elections. It is more important for them to serve Wall Street, even if Wall Street gives more money to Republicans, than it is to win elections. Further, they are very happy to do very non-liberal things, like restrict abortion rights, forbid drug reimportation, gut net neutrality or try and cut social security.
It is not clear how many of them somewhere deep in their shriveled hearts feel they are actually liberals, but what is clear is that it doesn’t matter, because they won’t act on it, even when they control the Presidency, the House and the Senate.
Incompetent. Ideologically right wing, only moderately less right wing than the Republicans.
This is your Democratic party. These people are the problem. As long as they are around, the problem can never be solved. If it could be, they would have done so. This means, sorry folks, that the only hope for liberalism and for America to avoid a complete economic meltdown, is for Democrats to be swept out of power and for as many Dems who aren’t reliable progressives to lose their seats as possible.
Yes, the Republicans will do worse things, but that’s going to happen anyway. And in some cases, as with Social Security, it is better to have Republicans in power, because it is easier to fight Republican efforts to gut SS than it is to fight Democratic efforts to do so.
I know a lot of people don’t like this calculus, but the math is clear. These Democrats cannot or will not deliver. They cannot or will not do what needs to be done. They have to go.
More on this in a future essay, for now just understand this: the people who control the Democratic party despise you. Loathe you. They think you’re the sort of frightened sheep who will keep voting for them, keep giving them money and help, as long as they promise to be just a little better than the Republicans.
Are they right?
The standard right wing talking point that tax cuts for the rich and for corporations create jobs is true: Tax cuts for the rich create jobs overseas.
The tax cuts’ two bills, in 2001 and 2003 – changed laws so that personal income tax rates were reduced, exemptions for the Alternative Minimum Tax increased, and dividend and capital gains taxes also cut.
Yet in the debate, it seems of no moment to either side whether the tax cuts were effective in achieving their goal of spurring business investment and making the US economy more competitive.
Our own examination of US non-residential investment indicates that the reduction in capital gains tax rates failed to spur US business investment and failed to improve US economic competitiveness.
The 2000s – that is, the period immediately following the Bush tax cuts – were the weakest decade in US postwar history for real non-residential capital investment.
Not only were the 2000s by far the weakest period, but the tax cuts did not even curtail the secular slowdown in the growth of business structures.
Rather, the slowdown accelerated into a full decline.
The logic of this is simple enough. If you have money to invest, you’re going to invest it where it’ll return the most. Right now and in the past couple decades that is either in leveraged financial games, or it is in economies which are growing fast and have low costs. The US does not have high growth compared to China or Brazil or many other developing countries. It has high costs compared to those countries as well.
If you can build a factory overseas which produces the same goods for less, meaning more profit for you, why would you build it in the US?
Until that question is adequately answered, by which I mean “until it’s worth investing in the US”, most of the discretionary money of the rich will either go into useless speculative activities like the housing and credit bubbles, which don’t create real growth in the US, or they will go overseas.
There are a number of ways this question can be answered.
- You could slap taxes on foreign capital flows;
- you could slap tariffs on foreign goods produced in low cost domiciles so that companies have to produce in the US to have access to the US market;
- you could push industries which are hard to outsource but don’t actually decrease American competitiveness. The housing bubble increased the cost of doing real business in the US by inflating real estate costs. A massive buildout making every building in the US energy neutral or an energy producer would increase US competitiveness.
- you could try and do what America once did: have a tech boom. If the future is being produced in a country then everyone has to invest there and when things are changing fast you can’t offshore production, because speed matters and offshoring is slow. This is why real wages increased during the tech boom of the 90s.
There are other answers as well, but the point is simpler: you must answer the question “why invest in the US instead of a low cost, high growth country?” Until you answer that question tax cuts will not only not do any good, but in a sense will do harm, by increasing the speed at which jobs are offshored out of America.
is that for the first time in 38 years the state prison population has dropped:
Professor Chris Uggen, at Public Criminology, summarizes the causes identified by the report:
Pew attributes the drop to greater diversion of low-level offenders and probation and parole violators from prison; stronger community supervision and re-entry programs; and, a quicker release of low-risk inmates who complete risk reduction programs. State budget problems have likely played an important role in accelerating each of these trends.
The decrease is certainly better than an increase, but Uggen notes that it is quite small. The prison population dropped by only 0.4%, or 5,739 inmates. Further, the decrease in the state prison population was outpaced by the increase in the federal prison population, which went up by 6, 838 inmates. Even so, Uggen argues, this is significant: “…any change in direction is meaningful after four
I’d go further and say it was definitely caused by the economic crisis. Suddenly locking up dark people and non-violent drug offenders doesn’t seem like such a good use of money. One can hope that this will continue.
Tea party crazies are winning, and it’s not even close. The deep rich, like the Koch’s, have funded this. The Republicans figure they’ll get in eventually, and with a strong crazy hard right wing, they’ll be able to pass the stuff they really want to pass.
I think it’s going to backfire on the rich, these folks believe in tax cuts, tax cuts, tax cuts—but they also don’t believe in bailouts, and the rich WILL need another bailout.
America’s heading for its fascist moment. Sorry, but that’s just the way it is.
