Posted by: quiscus | September 29, 2010

September 29, 2010

1.  “Banks Suing Based on Counterfeit Court Summons in Foreclosure Lawsuits

Given that the IMF and others believe a large part of the “structural unemployment” in our country is related to the struggling housing market and underwater and barely-hanging on homeowners, what is to be done? One option is to allow for options like lien-stripping in bankruptcy courts, reseting mortgages by zip code, etc. Another option is for courts to accelerate foreclosures by ignoring due process, proper documentation and legal process in order to kick people out of their homes and preserve the value of senior tranches of RMBS while giving mortgage servicers a nice kickback.

What option do you think our country is taking?

We should all be very concerned about the foreclosure situation in Florida. If you are a homeowner or potential homeowner, you should find it offensive that people’s property rights are being violated in such a flagrant way. If you are an investor, either as “bond vigilante” or someone with a generic 401(k), you should be worried that servicers have gone rogue and the incentive structure to maximize value instead of fees associated with foreclosures has broken down.

And if you care about basic Western liberalism–the classical kind, with a Lockean understanding of freedom to own property along with freedoms of speech and religion– you should be pissed off. This is a clear-cut instance of the rich and powerful decimating other people’s property rights, rights that are supposed to protect the weak from the strong, in order to preserve their wealth and autonomy. Unless you think property rights are mere placeholders for whatever the financial sector demands are, this should be resisted. This should be viewed as a problem an order of magnitude larger than Kelo v. City of New London.

The short problem is that banks are foreclosing without showing clear ownership of the property. In addition, “foreclosure mills” are processing 100,000s of foreclosures a month without doing any of the actual due diligence or legal legwork required for the state to justify the taking of property and putting people on the street. Even worse, many are faking documentation and committing other fraud in the process. The government is allowing this to happen both by not having courts block it from going forward, but also through purchasing the services of these mills. As Barney Frank noted: “Why is Fannie Mae using lawyers that are accused of regularly engaging in fraud to kick people out of their homes?”

2.  “As Western Civilization Lies Dying

First, the system can’t be fixed by tinkering with the details. At best, tinkering with the details can merely slow down the depletion of consumer wealth. As long as the system is based on profit, more must be taken than is given. The rate of depletion can be changed, but the depletion cannot be stopped. This conclusion is as mathematically certain as subtraction. Why the geniuses in the American economics community, all who whom taut economics for its use of mathematical models, cannot understand this is a conundrum. They can tinker as much as they like. Some tinkering will produce apparent benefits, some won’t. But one thing is certain—the system, unless it is fundamentally and essentially changed—will break down over and over again just as it has at fairly regularly intervals in the past. As long as maintaining the system is more important that the welfare of people, the people have no escape. They are eventually impoverished—both when the system works and when it doesn’t! Two thousand years of history has produced not a single counterexample to this conclusion. Prosperity never results from exploitation.

Another implication that few seem to recognize concerns the national debt.

We are told that the burden of paying off the debt will be borne by our progeny, our children, and their children. But unless the Western commercial system undergoes fundamental changes, the children and grand children of most Americans will never have to bear this burden. Why? Not even governments can pick empty pockets. So if the debt is to be paid by raising taxes, the children and grandchildren of that 20 percent of Americans who hold 93 percent of the nation’s financial wealth will have to pay them. Most, if not all, of these people are also investors. Given the acrimonious debate about letting the Bush tax cuts for the wealthy expire, the chances of that ever happening are slim to none.

Will the debt then be paid by devaluing the dollar, by printing money? Many believe that the government will eventually take this alternative. Let’s say it does. Then all the dollars held by anyone anywhere will be devalued equally, including the dollars held by that same 20 percent of Americans. Again the wealthy 20 percent of Americans, having the most, lose the most. The devalued dollars they collect on their investments are merely added to their other devalued dollars, and the more the dollar must be devalued to repay the debt, the more the wealthy lose.

And finally, will the government default? Most seem to believe this to be unlikely. Perhaps, but isn’t it the best alternative? Investors will simply not be paid, but the rest of their money will retain its value unless other economic consequences reduce it. Even Morgan Stanley recognizes that “the sovereign debt crisis won’t end till deeply indebted rich country governments give holders of their bonds a good soaking.”

So relax, Americans, your children will never bear the burden of paying off the national debt. Just sit back and enjoy watching the wealthy squirm.

Finally, a hidden principle underlies this extractive system—It is okay for some to enrich themselves by making others poor. Even though this is exactly what thieves do, no one, to my knowledge, has ever pointed out that this principle is immoral. It appears to be accepted universally as economically acceptable. But consider these two similar principles: (1) It is okay for some to improve their health by making others unhealthy, and (2) It okay for some to avoid the consequences of their criminal acts by making others bear them. No one would consider the last of these right, yet all three are logically and materially identical.

Some may claim that without profit, no commercial system can function effectively. If true, the implications for humanity are horrific. It implies that mankind was made in Satin’s image, that the Commandments, especially the tenth, are fraudulent, that all the philosophy and literature that defines Western Civilization are nugatory, that no essential distinction exists between so-called civilized and barbaric nations, that all governments are illegitimate, that words like justice and fairness are meaningless, that the law is lawless, that society disintegrates into nociety, and that nothing really matters. The economy is Bedlam, the Earth is the Universe’s Insane Asylum, and the craziest are in charge. What kind of human mind would ever attempt to defend this abomination?

This Western commercial system exists merely to enrich vendors by exploiting consumers. When governments institutionalize this system, they place their nations on suicidal paths. Astute observers of history have long recognized what Thomas Jefferson made explicit—”Merchants have no country.” Oh, yes! These merchants will object vehemently. Pay no attention. Just watch what they do.

They expect favorable treatment and services from governments but do everything possible to keep from paying for them in taxes and exhibit no concern whenever their native lands face bankruptcy. When their native lands face stress, as in times of war, the people are called upon to sacrifice while the merchants are allowed to profiteer. When John F. Kennedy said, “Ask not what your country can do for you, but ask what you can do for your country,” he was not speaking to corporate America. Does any reader of this piece really believe that the makers of Humvees, drones, and F16s would ever consider supplying them to our military at cost? Yet how great is the cost of the sacrifice parents are asked to make by sending their children off to fight hideous wars?

People, a merchant unwilling to sacrifice for his country has no country, he will support no country, defend no country, and if such people are given control of a nation, they will suck its blood dry and sell off the body parts to the highest bidder. Not even a recognizable corpse will remain. It is not terrorism that threatens the security of the Western World, it is the Western World’s commercial system.”


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