M. Collins: The Money Party (4)
Money Party to Citizens: Drop Dead!
Tens of millions are just a lost job away from homelessness.
Mission accomplished for The Money Party. (Nathan Rein CC
"The FBI is investigating every level of the conspiracy that it believes perpetuated the housing boom…" TimesOnline Jan. 31, 2007
"Scoop" Independent News
Now they've done it. The Money Party road show just hit a speed bump at 90 mph and that speed bump was us. There are no
more "booms" to hype. No more schemes to hook investors into the stock market. The high tech boom is dead and biotech
turned into road kill thanks to a president who talks to God and believes that evolution is just "a theory."
All they had left was the housing bubble. Ram home prices up by flooding the market with buyers. Get them in that home
anyway you can. The finance guys will figure it out. We saw "interest only" mortgages to sell people more home than they
could afford. And the highly "recommended" adjustable rate mortgages that mature in record time plus other schemes were
there to qualify those who should have bought less for more than they'd ever hoped.
What a great deal that was. The economy is now tanking. Only 18% of middle class families
have three months worth of accumulated income, the amount needed to have a chance of surviving a financial crisis.
go through the roof, the know-it-alls in The Money Party public relations shop (the mainstream media) trot out their
paid liars to blame the people.
This housing "boom" turned bubble had a crushing impact on the economy. One analyst
noted, that "By 2005, this bubble had been creating fifty percent of all economic growth in the U.S." That growth is
gone and now we're looking at people losing their homes just as massive layoffs
are planned and implemented.
This is an important point to remember about the party. It's never their fault, never. Not once has any economic failure
been their fault. It's our fault. We're supposed to be smart enough to see that these great "opportunities" are nothing
more than the bad ponies you'd never bet. The Money Party can't help itself and we were supposed to know better.
This is a very big lie that we must believe. If we didn't, who knows what would happen?
But wait! Apparently the paid flacks forgot that the financial deity, former Federal Reserve Chairman Arthur Greenspan,
endorsed the housing bubble in no uncertain terms. In 2004, Greenspan
told a credit union association crowd that "the refinancing phenomenon" had been supportive for the economy and that
the use of home equity "helped cushion" declining stock prices. Then Greenspan showed his supposed genius with this
advice to home buyers and owners:
"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional
fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their
own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home." Understanding household debt obligations, Federal Reserve Board, Feb. 23, 2004
The message was clear. Get an ARM!
Here's the back story. Greenspan got first rate analysis in 2001
from Ned Gramlich, a widely respected economist and Federal Reserve Governor. Gramlich warned
, "that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford."
Greenspan dismissed this advice and other warnings that followed. Predatory loan offerings; not to worry. It's all good.
The New York Times reported this epitaph of the Greenspan housing boom from a 2006 Gramlich speech to the Federal
“Why are the most risky loan products sold to the least sophisticated borrowers? The question answers itself - the least
sophisticated borrowers are probably duped into taking these products.” New York Times
, Dec, 18, 2007
Why? Because that's what they do. It's their nature. The Money party just can't get enough and it will get it anywhere
it can in any way it can.
So we're in a situation where a false housing boom was created by sticking the least qualified home buyers with very
risky loans. The big banks and Wall Street got together and created securities and bonds based on "subprime" mortgages
along with hedge funds and other schemes based on commercial real estate in order to profit from this madness.
These were highly rated and widely sold. When the housing market collapsed, the securities and bonds lost most or all of
their value, and the screwing of the citizens expanded. The financial collapse is now devouring the middle class and
pummeling the financial intuitions that started the scheme in the first place.
The Times of London indicated just how low The Money Party had sunk:
"The FBI is investigating every level of the conspiracy that it believes perpetuated the housing boom and ultimately
resulted in millions of Americans losing their houses, investment banks losing billions of dollars and the chief
executives of Citigroup, Merrill Lynch, Bear Stearns and UBS resigning." TimesOnline
Jan. 31, 2007
Will anything come of this investigation? Who knows? But we're in a serious crisis that requires skill, insight and
honesty to find solutions.
We should all be encouraged that the team in charge of fixing this mess is making progress. Who better to trust than
Bush and Congress?
Permission granted to reproduce this article in part or whole with attribution of authorship and a link to this article
in "Scoop" Independent News. Reproduction of images requires recognition of the Creative Commons or other copyright.