U.S. Home Seizures On The Rise Again
The madness of foreclosures and bankruptcies continues to spin out of control in America, long after economic “experts” and government officials assured the country that housing and debt problems were on the mend. Some of these foreclosures are indeed cases of overoptimistic purchases on the part of consumers who should have been living within their means. But, many others are a product of the corrupt banking culture and the greed driven local bureaucracies that gladly feed the machine by victimizing homeowners in desperate need of aid, as we have seen in the case of Warren Bodecker, Montana WWII Veteran railroaded by the system and robbed of everything he had.
Ultimately, this process of wealth destruction is going to strike the doorsteps of EVERY American. Though many in our culture have a dangerous tendency to conveniently overlook such trials and crises as long as they are not personally affected, it behooves all people to take note of this situation. No one is immune from an economic implosion, except, of course, the “Too-Big-To-Fails”, who steal our savings, our security, and our homes, and get paid by the government to do so with our tax dollars.
Brandon Smith, Associate Editor
Foreclosure starts rose year-over-year in May for the first time in more than two years as banks resumed dealing with distressed properties after a mortgage abuse settlement earlier this year, data firm RealtyTrac said on Thursday.
The $25 billion settlement between major banks and states, formally approved in April, had been expected to jump-start foreclosure proceedings that were previously stalled by uncertainty about the liability of banks.
Overall foreclosure activity, which includes default notices, scheduled auctions and bank repossessions, affected 205,990 properties in May, a 9.1 percent increase from April.
The figure was 4.2 percent lower, however, than in May 2011, RealtyTrac said in a monthly report.
Foreclosure starts grew 12 percent from April and 16 percent on an annual basis after 27 straight months of year-over-year declines. Foreclosure starts were filed on 109,051 homes in May, the first month-to-month rise since March.
Bank repossessions increased 7 percent after sinking to a 49-month low in April, with 54,844 homes repossessed in May.
“That the May numbers were up the month after that settlement was completed is an indication that lenders are more confident that there are clear ground rules to foreclose now, so they can play by the rules,” said Daren Blomquist, RealtyTrac’s vice-president.
“The banks are getting to a place where they consider their foreclosure processing issues resolved, so they’re confident enough to go ahead and push through more foreclosures,” Blomquist said.
READ MORE HERE:
http://www.reuters.com/article/2012/06/14/us-usa-housing-realtytrac-idUSBRE85D05P20120614
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June 18th, 2012 at 7:17 am
The housing market has to be cleared of the malinvestments before there can be a recovery.
Remember that the “too big to fails” wouldn’t have engaged in risky lending, in the first place, if it wasn’t for government ultimately protecting them from failure through the “lender of last resort”, the Federal Reserve.
Centra banks create moral hazard, while a free market would not result in system wide destruction.
Please don’t blame the “too big to fails” for the evils of the central planning of the money supply. The banks are simply trying to make a profit like everyone else, and there’s nothing wrong with that.
Banks are very good and necessary for economic growth, because they facilitate sustainable expansions of the capital structure when they operate under sound money; Central planning of the money supply, as well as central planning in general, is the source of economic destruction.
June 18th, 2012 at 11:19 am
@Austrian
I would have to disagree with you there, especially since it’s highly likely that the bankers behind the too-big-to-fails are the same men who sharehold in the Federal Reserve. Also, lets not forget the fraud that companies like Goldman Sachs knowingly perpetrated by creating toxic derivatives, selling them around the world, and then placing bets against THEIR OWN FINANCIAL INSTRUMENTS so that they could not only profit from the inevitable debt implosion they helped to trigger, but also so the IMF could move into various nations to offer loans in exchange for vital infrastructure.
These companies are by no means innocent. They are a primary source of our economic ills. The fact that their actions are now supported by our tax dollars and by Central Bank fiat creation is just the icing on the cake.
June 18th, 2012 at 6:55 pm
With all respect to Austrian,exercising his rights of free speech under the 1st amendment,I agree with Brandon.The “icing on the cake” conclusion in his statement is horribly true.This is an extremely complex,socially interwoven corruption that must be dealt with.And,like an onion,the more layers that come off (revealing the true nature of it),the more it’s going to stink.We,as a nation..as citizens of it,need to go back to the basics–back to the Constitution and what our forefathers originally wanted,and intended for this nation.
June 18th, 2012 at 8:09 pm
Hi Brandon,
The malinvestments couldn’t have happened without the artificial credit expansions. Businesses can be as greedy as they like, but without fiat money (whether created by central banks or by private banks), or at least the assumption of receiving future fiat money, they will not engage in such risky investments in the first place, because they would be losing THEIR OWN money, as opposed to being able to socialize the losses.
Ron Paul was warning about the housing bubble in 1999 and 2001.
Speaking in the context of the Dot Com Bubble, he said:
Conference Report On S. 900 Gramm-Leach-Bliley Act
Speech Of Hon. Ron Paul Of Texas
In The House Of Representatives
Thursday, November 4, 1999
- Begin excerpt -
Government policy and the increase in securitization are largely responsible for this bubble. In addition to loose monetary policies by the Federal Reserve, government-sponsored enterprises Fannie Mae and Freddie Mac have contributed to the problem. The fourfold increases in their balance sheets from 1997 to 1998 boosted new home borrowings to more than $1.5 trillion in 1998, two-thirds of which were refinances which put an extra $15,000 in the pockets of consumers on average— and reduce risk for individual institutions while increasing risk for the system as a whole.
- End excerpt -
_
After the crash of the Dot Com Bubble, Ron Paul was warning about newly created money entering the real estate market, and creating a bubble there:
Ron Paul: “This real-estate bubble will burst, as all bubbles do” (part 1)
http://www.youtube.com/watch?v=XDKWm92EvhU
Ron Paul: “This real-estate bubble will burst, as all bubbles do” (part 2)
http://www.youtube.com/watch?v=rfaM2tEayik
Ron Paul: “This real-estate bubble will burst, as all bubbles do” (part 3)
http://www.youtube.com/watch?v=KONpt9a6HrI
_
In fact, Paul Krugman, himself – Keynesian defender of the Fed and of government spending as a means to grow the economy and stop crashes – suggested that Alan Greenspan CAUSE a housing bubble, which means that Krugman is aware that the Fed CAN create bubbles:
Krugman In ‘02: ‘Greenspan Needs To Create A Housing Bubble’
http://articles.businessinsider.com/2009-06-17/wall_street/30100530_1_housing-bubble-slump-fed
- Begin excerpt -
To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
- End excerpt -
_
In Tom Woods’ book, Rollback, in the chapter “Government and Economic Crisis: Savior or Perpetrator?”, Woods writes:
- Begin excerpt, page 38 -
Fannie Mae and Freddie Mac were “government-sponsored enterprises” (GSEs) whose mission was to make housing affordable. Although ostensibly “private.” Fannie and Freddie enjoyed special tax and regulatory privileges that other institutions did not, and it was generally assumed that if it ever came to that, the GSEs’ special line of credit at the Treasury would be transformed into a bailout in whatever amounts were required.
- Skip to page 40 -
But if Fannie and Freddie had nothing to do with undermining lending standards, and federal programs designed to do the same thing had in fact not had any such effect, where was Krugman when the government was boasting of everything Fannie and Freddie had done to expand homeownership by watering down lending standards? They took credit for the very things their defenders today try to pretend they didn’t d. In 200, the Department of Housing and Urban Development (HUD) declared:
[Quote block from the book]
Lower-income and minority families have made major gains in access to the mortgage market in the 1990s. A variety of reasons accounted for these goals, including improved housing affordability enhanced enforcement of the Community Reinvestment Act, more flexible mortgage underwriting and stepped-up enforcement of the Fair Housing Act. But most industry observers believe that one factor behind these gains has been the improved performance of Fannie Mae and Freddie Mac under HUD’s affordable lending goals. HUD’s recent increases in the goals for 2001-03 will encourage the GSEs to further step up their support for affordable lending.
[End quote block]
Four years later, HUD added:
[Quote block from the book]
Over the past ten years, there has been a “revolution in affordable lending” that has extended homeownership opportunities to historically underserved households. Fannie Mae and Freddie Mac have been a substantial part of this “revolution in affordable lending.” During the mid-to-late 1990s, they added flexibility to their underwriting guidelines, introduced new low-downpayment products, and worked to expand the use of automated underwriting in evaluating the creditworthiness of loan applicants. HMDA data suggest that the industry and GSE initiatives are increasing the flow of credit to underserved borrowers.15
[End quote block]
- End excerpt -
_
And if Fannie and Freddie DIDN’T extend opportunities to risky, “historically underserved households”, they were accused, by ACORN, of being racist:
Recent Efforts to Overload the American System:
By DiscoverTheNetworks
January 2010
http://www.discoverthenetworks.org/Articles/recenteffortstooverloadtheamericansystem.html
- Begin excerpt -
Any bank wishing to expand or to merge with another was required to first demonstrate that it had complied with all CRA requirements. Final approval for bank expansions or mergers could be held up or derailed entirely by complaints — however frivolous or unfounded — where community groups like ACORN or the Greenlining Institute accused a bank of having violated the CRA.
In response, terrified bank executives routinely agreed to appoint ACORN or the Greenlining Institute as their official “advisors” on CRA compliance, thereby giving the groups carte blanche to channel loans to their own hand-picked recipients.
The New York Post explains what happened next:
[Quote block from the web page]
“As ACORN ran its campaigns against local banks, it quickly hit a roadblock. Banks would tell ACORN they could afford to reduce their credit standards by only a little — since Fannie Mae and Freddie Mac, the federal mortgage giants, refused to buy up those risky loans for sale on the ’secondary market.’
“That is, the CRA wasn’t enough. Unless Fannie and Freddie were willing to relax their credit standards as well, local banks would never make home loans to customers with bad credit histories or with too little money for a down-payment.
“So ACORN’s Democratic friends in Congress moved to force Fannie Mae and Freddie Mac to dispense with normal credit standards. Throughout the early ’90s, they imposed ever-increasing subprime-lending quotas on Fannie and Freddie….
[End quote block]
- Skip -
This strengthening of the CRA’s loan mandates, coupled with the authority that ACORN and other community organizations were given to intervene at yearly bank reviews, placed the activist groups in a position of great influence. Banks, eager to receive good reports from these groups (in order to avoid having their merger plans blocked or their lending practices challenged by the Justice Department), funneled immense sums of money to them. But the proliferation of risky loans to underqualified borrowers eventually caused Fannie Mae and Freddie Mac to suffer financial collapse in 2008. Many U.S. banks likewise folded.
- End excerpt -
_
In conclusion, government and the Fed were responsible for the housing bubble. And whatever it was that triggered the bust, it cannot be overstated that the bust was inevitable – that is the nature of artificial credit expansion-induced malinvestments.
Yes, the IMF is taking advantage of us through our central bank; But the only reason that’s possible is, again, because of fiat money (This is why I make such a stink about the difference between “gold-BACKED currency” and “gold AS currency”).
As the song “Fear the Boom and Bust” notes: “The place you should study isn’t the Bust; It’s the Boom that should make you feel leery.”
June 19th, 2012 at 6:35 am
I will give an excerpt from this article – http://www.bobfanning.com/?p=2081 – but would suggest reading the entire article at that link.
Excerpt:
On Saturday, March 24, 2012, in Livingston, Montana, I had a conversation with former Congressman Rick Hill, subsequent to a February 27th Gubernatorial debate where I had introduced the “four satchel charges” which destroyed America’s financial system.
Mr. Hill confided to me in Livingston that he was approached by then-Federal Reserve Board Chairman Alan Greenspan, who disclosed motive and intent for the premeditated murder of America’s financial system. Mr. Greenspan stated, according to Rick Hill, that those who had been “caught” in the dot-com stock market bubble needed to be bailed out and that he, Greenspan, intended to “re-liquefy the system”. That was the motive.
The stock market is not an asset class in the Federal Reserve jurisdiction.
The Chairman of the Fed stated his criminal intent to “turn everybody’s home into a cash station” in order to re-liquefy the system.
But real estate is not an asset class that is within the scope and power of the Federal Reserve. It is not defined in “The Federal Reserve System: Purposes And Functions”. This declaration of control fraud by Greenspan was a declaration of criminal intent, made to a prominent member of Congress (Rick Hill). How many other prominent members of Congress, under deposition, would corroborate Mr. Greenspan’s declaration of the premeditated breaking of the rules and regulations of the Federal Reserve System?
We all know what happened Sept. 17, 2008; but does America know that Mr. Greenspan joined John Paulson and Company the 15th of January 2008, and that Paulson and Co. and their new employee Greenspan reaped billions of dollars profiteering from the collapse of toxic securities and highly-leveraged OTC Derivatives known as “credit default swaps”?
This prearranged trade, this rigged transaction, is known by finance professionals as the “Greenspan Put”. Greenspan and his buddies knew that they were going to collapse the financial system nine years before they did it. They not only profiteered upon the pain and suffering of millions of Americans but they also destroyed the collateral of America’s primary employer, the small businessman, who accounted for an estimated 65% of all jobs in America.
-end excerpt from above link-
Also note that the “Four Satchel Charges” mentioned in that above link can be found here -
http://www.bobfanning.com/?p=1704
In a word, the foregoing explains what happened, how the Federal Reserve was involved with Wall Street to make it happen, and how Congress was complicit.
Austrian, I’d appreciate your analysis of my post here. Thanks!
Salute!
Elias Alias
June 20th, 2012 at 12:04 am
Elias Alias @ comment #5,
Assuming that what former Congressman Rick Hill recounted is true, for the sake of argument, it still wouldn’t have been possible for their plan to succeed without artificial credit expansion.
Remember, Fannie and Freddie only made the risky loans because they were coerced by race baiters in government and in the community organizing groups, and because it was assumed that the government would cover potential losses.
The Dot Com Bubble was also the result of artificial credit expansion.
In the first of the three part Ron Paul video series in my previous post, Ron talks about the monetary inflation of the 1990s.
You can see that, here [Thank you, GaryNorth.com]:
Graph: M1 Money Stock (M1)
http://research.stlouisfed.org/fred2/graph/?s1id=M1
It was new money that was fueling the bubble, so it was inherently unsustainable.
Whether or not Greenspan was aware of this phenomenon, and chose to exploit it, doesn’t change the fact that it would have crashed anyway.
Normally, what would happened after monetary inflation is that, because new money creates a kind of bidding war for the factors of production between long and short term investors (consumers, etc.), the price inflation that follows will make the long term investments unsustainable, real market forces will eventually prevail over the inflated markets and those prices will fall.
Now, if you’re in a position to control credit and the money supply, and you see a bubble forming, you can make the crash happen before the market would; so there is a way the Fed can knowingly rip off the people.
I want to quickly add, though, that this can happen without the Fed targeting a specific industry, by simply observing where the new money goes to see where the bubble is forming – though you can imagine how much easier it would be if you had people in government, and in community organizing groups, helping to make certain industries look like better investments than are they really.
The reason I mention that is because there was mention, in the article, that the stock and real estate markets aren’t asset classes within the Fed’s jurisdiction; They don’t have to be. All one would need to do in order to make money off the crash is to know that the new money went into certain industries, and then short those industries before causing a general contraction of credit – which would affect the bubble industries the most.
My point is that fiat money is the means by which America is being ripped off, and that it cannot happen under a sound money economy (short of intimidation – which also happens). The money simply wouldn’t exist to fund big government, imperialism, artificial booms, etc.
Which is why things like big business, the corporate structure, buying from China, outsourcing jobs, etc., are NOT the problem. At all.
(I [claim to] have a problem with multinational companies for national sovereignty purposes, but I digress.)
If you have some time, may I recommend these videos which explain these concepts?:
Smashing Myths and Restoring Sound Money | Thomas E. Woods, Jr.
http://www.youtube.com/watch?v=HAzExlEsIKk
Anti-Trust and Monopoly (with Ron Paul)
http://www.youtube.com/watch?v=8C4gRRk2i-M
Defending the Undefendable (Chapter 23: The Importer) by Walter Block
http://www.youtube.com/watch?v=PTT_WHyzZ54
June 20th, 2012 at 2:11 am
@Austrian
You still seem to be overlooking the collusion between international banks and the Fed, as if they are separate entities. I assure you, they are not. The derivatives bubble is treated in the mainstream as some kind of perfect storm, which is pure nonsense. The amount of deliberate and choreographed corruption needed to produce such an implosion goes far beyond “coincidence”.
While agree wholeheartedly that the Fed is the ultimate source of the crisis through its artificial reduction of interest rates and the flow of easy fiat money, the major banks had to also participate in the game by concocting derivatives mechanisms in the first place, then also sell them knowing that they were toxic, and then BET AGAINST their own securities. Again, this is NOT the behavior of an innocent bystander or even a company operating on pure greed; it is the action of an accomplice in the crime.
On top of this, the SEC had to look WAY the other way while banks pawned off the obviously destructive derivatives instruments among numerous other frauds, AND, the Ratings Agencies had to look at those same toxic trade items, and rate them all AAA. You see, this has been an organized effort to CREATE a debt crisis. It cannot be explained in any other manner without a ridiculous level of mental gymnastics.
June 20th, 2012 at 10:01 am
Did my response to Elias Alias @ comment #5 go through?
June 20th, 2012 at 1:26 pm
Brandon @ comment #7,
I’m not saying that the collusion between the so-called “international banks” and the Fed isn’t a factor in our crisis.
What I’m saying is that such collusions are impossible without an easily debaseable currency.
There wouldn’t be national banks or “international banks” without some kind of fiat money, because central planning of the money supply leads to artificial booms, and the subsequent crash would result in bank runs that would shut such attempts down long before they could cause an entire nation’s economy to crash, let alone the entire international division of labor.
(Not that I think in terms of “national economy”, mind you; I hold to national sovereignty (of all nations) and citizenship as an expression of the freedom of association, but “the economy” is simply the result of a series of trades made by individuals for their own purposes; And there is nothing economically deleterious about trading with individuals in other countries.)
June 22nd, 2012 at 11:03 am
I would like to offer a resource in response to a quote from the bobfanning.com article that I didn’t address specifically, before.
The quote is:
- Begin excerpt -
Finance Is Rules. Finance sets the rules of money and it therefore sets the rules of commerce. Money is based on rules, and finance works to cause government to set those rules.
- End excerpt -
This is actually a Keynesian/Marxist view of money. The underlying supposition is that money is otherwise worthless, and as such the free market is incapable of adhering to the rules of money; Therefore we need government to enforce those rules.
A lot of well-meaning people assume this, and I used to be one of them.
Tragically, this view of money has been the source of much tyranny: Roman and British imperialism, the bubbles which result in economic crashes, Communist tyrannies time and again, and American imperialism, too.
None of these tragedies would have been possible were it not for this underlying mistake in economic thought.
As Ron Paul has noted (and I’m paraphrasing): Why is it that liberty-minded folk don’t agree with the central planning of goods production, but they accept the central planning of something that is half of most transactions?
See, it’s precisely BECAUSE the central planning of goods production is a tyranny, that the central planning of the money supply is, as well:
When we intend to trade the goods we produce, we are doing so based on our own perceptions of what our goods are worth relative to the things we hope to ultimately receive in return.
(It’s not the money we want, but that which we think the money will buy.)
So if we are to know whether or not the goods we produce DO IN FACT permit us to acquire that which we want in return, given our costs and given the price of the goods we want, then the FREE MARKET must also set the rules of money.
You can’t eat gold and silver, sure. But the reason people like to use them as money is because, as their supply cannot easily be inflated, they are very good at valuing goods against each other.
Not that there couldn’t be anything else used as money, but the point is that the free market chose gold and silver for its own purposes. No central planning agency is required to control the money supply, because there’s no such thing as “the correct amount of money”; Only the free market can manage the type and supply of money in such a way that ensures economic mobility and liberty.
Our own Constitution doesn’t give government the authority to control the money supply. What it does do is provide for a minting service as a way to prove that there is X amound of gold or silver in the minted coins; The free market is what pours meaning into that amount.
The following article has a title that is no lie. It really is a killer summary, and addresses a lot of the underlying Marxist fallacies we commit in our view of money:
Killer Summary of Austrian Views of Money, Banking and the Fed — Delivered in Congressional Testimony!
http://www.libertyclassroom.com/killer-summary-of-austrian-views-of-money-banking-and-the-fed-delivered-in-congressional-testimony/