Home foreclosure scandal in the USA

I have been forwarded some startling information on the USA housing scandal, which underlay the great credit crunch, from Australia. Read some details from this link. A quote with links to other background material is here:

Citizens Electoral Council of Australia

Media Release 12^th of October 2010

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 03 9354 0544 Fax: 03 9354 0166
Email: cec@cecaust.com.au
Website: http://www.cecaust.com.au

Bank of America ‘pulls the pin’ to explode financial grenade

The decision last week by Bank of America to freeze all foreclosures on its mortgages in all 50 U.S. states amounts to “pulling the pin” on the grenade that will explode the global financial system, according to U.S. physical economist Lyndon LaRouche.

Literally trillions of dollars worth of derivatives contracts based on mortgages could be found to have no asset backing at all, which will implode the inflated financial system.

In recent weeks millions of American families who were evicted from their homes as a result of the subprime crisis have discovered that their foreclosures were probably illegal—three years after leading Democrats in the U.S. Congress allied to Barack Obama, such as Barney Frank, blocked LaRouche’s proposed Homeowners and Bank Protection Act which would have protected all those homeowners from foreclosure while the financial system was sorted out.

The present scandal relates to the fact that in all of the slicing and dicing and bundling of mortgages that underpinned the derivatives speculation in mortgage backed securities (MBSs) and collateralised debt obligations (CDOs)—on which dozens of local councils in Australia lost hundreds of millions of dollars—the legal paperwork to prove title and mortgage contracts was often skipped.

[Click here to read a detailed analysis of the crisis]

Consequently, banks have been foreclosing on homes to which they held no title! This conveniently sped-up the waves of foreclosures that made many American families homeless in the past few years. In one case, a bank officer admitted to mass-processing 10,000 foreclosure notices per month, without once checking the paperwork. Among the horror stories, a man who owned his home outright, having paid for it in cash, was foreclosed on by the bank holding incorrect paperwork.

The potential for this scandal was foreshadowed in late 2007, when a Federal Judge in Cleveland, Ohio dismissed 14 home foreclosure cases, due to the doubt that the foreclosing bank, Deutsche Bank National Trust Co., actually held title to the houses on which it was foreclosing. The judge ruled that there was no proper recording with local government officers, of the property titles, mortgage contracts, and assignment of ownership. At the time, LaRouche commented it smelled of a major problem, that there is legitimate suspicion that loans, which have not been recorded in local registries, have been sold as part of a securitised package over and over again, leading to liabilities that exceed assets by enormous amounts. Even the smell of such a situation could blow the system out, he noted at the time.

The smell is now a sickening stench, in the face of which four major banks have had no choice but to suspend foreclosures, three of them in 23 states, and in the case of the Bank of America in all 50 states.

However, due to the nature of the financial system, this foreclosure freeze will be the catalyst to bring down what is left of it—worldwide.

The trillions of dollars in bailout funds pumped into the banks by the U.S. Federal Reserve and other central banks have shored up securities that were assumed to be backed by assets, i.e. physical houses. The banks foreclosed on millions of those houses to recoup the value of those assets. The freeze will start to reveal that many of the assets claimed by the banks either aren’t real, or aren’t theirs.

In turn, the bailout funds exchanged for those assets will be proved to be worthless, which will set off a global chain-reaction meltdown.

There is only one way to fix this crisis: Lyndon LaRouche’s call for a Glass-Steagall reorganisation to support only what is real and write off what is fraudulent, combined with the Homeowners and Bank Protection Act to keep people in their homes.

Underscoring why LaRouche has called for Obama to be ousted from office under Section 4 of the 25^th Amendment to the U.S. Constitution, White House adviser David Axelrod yesterday announced Obama was pushing for foreclosures to resume as quickly as possible.

To find out how LaRouche’s plan would have prevented the current foreclosure crisis, click here for a free copy of the CEC’s feature DVD, the Homeowners & Bank Protection Bill—the only solution.

To buy a copy of What Australia Must Do to Survive the Depression, click here.

Prepare for the next banking bail-out NOW!

The IMF warns in its Global Financial Stability Report, linked here, that the banks will soon come knocking for another four trillion dollars (four followed by twelve noughts). In a Telegraph article the following is noted:

Although the IMF does not mention individual countries, it is clear it has concerns about the UK. According to the Bank of England, British banks need to refinance £750bn-£800bn of funding by the end of 2012, £285bn of which is emergency support that expires in the same period.

The IMF adds: “Without further bolstering of balance sheets, banking systems remain susceptible to funding shocks that could intensify deleveraging pressures and place a further drag on public finances and the recovery.”

As the UK has now bankrupted itself in a failed attempt to rescue the spivs and charlatans who created this mess it seems sensible to adopt a more rational solution for the next round of banking bail-outs of which the IMF has so kindly now provided timely notice.

Money held by private individuals and small private companies with commercial banks allowed to proceed to liquidation should be honoured by a state owned bank duplicating the current account balance on production of 12 months statements from the failed bank. If crossover of accounts to the Government backed venture were accomplished in advance, individuals and companies would be saved much anguish and all taxpayer funds dispersed could be certain to be going to where they are most needed.

Can Prime Ministers Constitutionally Deliberately Bankrupt their Countries?

In Ireland it is now clear that a decision by that country's Prime Minister to give an open ended pledge to back its banks will inevitably lead to the bankruptcy of the nation. In the UK the Prime Ministerial decisions over RBS, Northern Rock and the Prime Ministerial machinations regarding the takeover of HBOS by Lloyds will eventually be seen to have the same result.

In the case of Gordon Brown, the sell off of national assets in the form of the Inland Revenue offices started way back in the last century. Illegal expenditure beyond Parliament's approval was identified by the National Audit Office as Parliament prorogued in July 2009 as I blogged here and here.

What kind of democracies allow the PM and his Finance Minister to commit endless amounts of expenditure to crooks , spivs and cheats without any parliamentary review nor constitutional restraints. Such behaviour has to be illegal!

Mr Beane, Deputy BoE Governor, OutBeans Atkinson!

An item in the Daily Telegraph this morning, linked here, with a photograph of the extremely shifty looking character bearing the name Charles Beane and holding the title Deputy Governor of the Bank of England, reports that this man has yesterday truly shown the complete lack of probity, let alone plain commonsense, that drives the thoroughly reckless and increasingly desperate individuals who still govern us.

The totally misguided advice the newspaper reports this clown Beane to be offering "Older Households" and those with savings is to stop complaining about low interest rates and to start spending to help the economy.

Since when does spending help the economy? It tweaks the indices that the BoE and others have devised to give the impression of prosperity in a morally (and soon economically) bankrupt nation, perhaps, but senior citizens buying a second flat screen TV or new French or Japanese car will merely destroy their chances of survival in the coming years of depression those, such as this particular clown Beane, have helped to create.

This blog has known that this nonsense has been Government policy for years and regularly warned of the consequences, well they have arrived and Beane's words proved this end has been deliberately contrived by either very devious men or complete and utter fools. Look again at the photograph of Beane and his boss in the paper and form your own view as to which of the two they be.

Hang on to what savings you have and prepare for the rainy day, which the likes of the sallow Beane is now realising, men such as he can no longer ignore. I bet those of you who voted Conservative at the last election are truly surprised to be today receiving such amazing and suicidal advice, am I right?

The Irish Property & Banking Crisis

First watch the video!

Now read this link to FT Alphaville.

Then off you go and have a pleasant weekend if you can, recalling perhaps, that Ireland was encouraged to join the Euro currency to weaken the historic link between the pound sterling and the Irish punt in the now successful endeavour of undermining the UK, stripping it of its assets and democracy and corrupting the structures of its society. All these EU successes are apparently being celebrated during the Papal State Visit presently under way!

Who bails out a bankrupt European Central Bank?

The ECB is not a lender of last resort. Yet according to yesterdays Open Europe press briefing quoted here:

... the FT notes that the ECB has stepped in to shore up the eurozone government bond markets in its biggest such intervention since early July. The ECB has bought between €100 million and €300 million of Greek, Irish and Portuguese bonds so far this week, traders said yesterday.

So who steps up to pay for all this useless paper at the end of the day?

First the commercial banks were effectively belly up and their Governments shrilling they were too big to fail met the consequences of their disastrous investments with tax payer commitments the taxpayers (themselves mostly up to their necks in debts with mortgages on homes about to plunge in value) will never be able to pay. So now the Central Banks step in with yet more commitments, which in the case of the ECB nobody seems obligated to cover. Slovakia who have refused to join the Greek bail out and the Czech Rebublic who sidestepped the EU commitment for a financial levy on banks, must both appear comparatively well positioned compared to the rest of the eurozone let alone the EU as a whole who undoubtedly will be the final soft touch at the end of the day!

On Sunday we are today informed Basel III for the international banks will be finalised, an event that has seen Deutsche Bank this morning scrambling to raise billions more in capital, read here, before the rest of the pack leap in.

Yet what use a well capitalised commercial banking sector in a world of bankrupt sovereign governments and floundering central banks? Let alone hundreds of millions of consumers saddled with debts on their over-valued houses, which, as this blog repeatedly points out, NOTHING absolutely ZERO has been done about. The house price bubble that first sparked this crisis remains ignored while money is everywhere printed out of nothing but thin air to presumably eventually price other worthwhile and essential commodities, such as wheat, to appear reasonable when compared with terraced houses considered near slums in more sensible times, now valued in several hundreds of thousands if not millions of now worthless local currencies.

Treasures from the threads - Number forty-six

On Japan's resumption of Quantatitive Easing reported here, comes this common sense:

Yesterday 09:52 PM

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QE simply will not work unless it is for the express purpose of massive buying of government bonds for massive income and consumption tax cuts and / or issue of spending vouchers. And politically that now looks virtually impossible until our leaders are not just staring down the abyss but falling through it. I don't think they have sufficient feel, if any, for the downward compounding that multiple negative factors triggering and accelerating each other are about to unleash, not least of which is the fact that they look like rabbits trapped in the headlights.

(Edited by author 9 hours ago)

This may prove of particular historical interest as it is the first mention I have seen in the press of the possible issue of 'spending vouchers', which of course means nothing other than "new money".

In the main body of the article is mention of the earlier ending of the "Great Recession" which is a seriously sick statement given the world economic situation in general and the UK housing market in particular upon which many Britons calculate their well-being.

More on the world economic turmoil from Reuters here, as the markets belatedly realised that everything said at Jackson Hole was gobbledegook, particularly that from Bernanke.

Obscene pensions, EU waste and Lost Democracy

Click here for update on the "Jail the Whitehall 600,000".

There is a Daily Telegraph report from November 2006 on the 1.7 million pensions available even then and against which this blog has long campaigned, read it here.

We wish The Slog much success in its campaign and hope the reference to interest from The Sun in today's post bears fruit, for the blogosphere has so far proved ineffective in arousing the public in the huge criminality at play in the governance of the country over recent years;

The conomic crisis might also do the trick, as hinted at in this from today's Telegraph web pages.

A quote:

Yields on 10-year Swiss bonds fell to 1.02pc as investors flocked into the ultimate safe-haven asset, now outperforming gold.

No country in the developed world apart form Japan has ever seen 10-year yields drop below 1pc. Rates remained significantly higher during the two great depressions of the 1870s and the 1930s.......(blog editor's highlight)

While it concludes....

The next phase of the crisis will see revenge by all those who have already taken a big hit, or expect to do so: whether under water on their mortgages, unemployed, dependent on health support, or state employees. Democracy will have its way.

Well we can indeed hope that will be the case, but how it will play out given the apparent powerlessness of the nations states to prevent runaway EU expenditure, reported elsewhere in the same newspaper's pages, remains to be seen!

EU self-delusion or lies continue over Greece!

The EU Commission states that the next tranche of funds for Greece can go ahead as it meets all the conditions, read here.

Yet according to the latest midday news update from Open Europe, straight out of the box, we are informed as follows:

The frontpage of Handelsblatt reports that fear has returned in Athens, Brussels, Berlin and Washington as tax receipts for the Greek government have failed to match the expectations. In the first seven months of 2010, only 4.1 percent extra tax income for the government was created, while the EU and the IMF had been promised 13.7 percent for the whole year - a goal which will be hard to achieve as the tax burden has already been increased.

Don't you just love being part of the huge, corrupt, non-democratic organisation of the EU which even lies to itself as it dispenses your money in a manner that can only bring individual national disaster? Read the article from Der Spigel, which I linked yesterday if you have not yet done so, it is titled "Entering a death spiral" if only that could refer to the EU itself!

Smashing Sovereignty by Hollowing out the Euro?

The following quote is an interesting extract from an article from Voltairenet.org, linked here, which makes some fascinating assertions behind the extraordinary and wrongheaded means chosen to counter the credit crunch and sovereign debt crisis up to this point. While the overall article carries an unecessarily anti-US slant in my view, the questions and links provided confirm my view that the crisis as presently handled by the EU will result in nothing less than the final loss of national independence, thereby cancelling any democratic accountability, for the entire EU:

In case of depression or even economic stagnation, the ‘policy of consolidation of public expenditure’ is doomed to fail. The foreshadowed €750 billion of aid will be used to pay back the banks to the detriment of taxpayer’s purchasing power, and this payment to financial institutions will further enhance the recession. Thus, IMF control and creation of funds to help the banks are two complementary dimensions of the same policies. The point is to effect a significant redistribution of income in favour of financial institutions.

What future for the EU?

Such an operation against people’s incomes necessitates the neutralisation of all decision-making processes at the level of national states - a structure in which citizens still maintain some means of defense - for the benefit of market mechanisms, placed completely out of range of all political pressure. The question is to know what role the European institutions are to play in this process of submission to the financial markets?

Ever downwards towards Depression

A good analysis of the ever deepening economic crisis appears in the Asian Times this morning, titled "Unholy trinity sets up bank failures" written by Chan Akya which may be read from this link.

Another worthwhile weekend or summer holiday article of note is in the American Spectator, linked here and titled "America's Ruling Class -- And the Perils of Revolution". I found one particular comment to this article very apt as follows:

Cincinnatius| 7.16.10 @ 3:34PM

Here, here! The apathy/ignorance of the America electorate over decades has allowed the formation of a "political caste" in America. Another way to describe it might be a "political peerage", which I find interesting considering the repugnance that most Americans have for the concept of "better by birth", though many Europeans readily accept the premise. Somehow, Americans forgot the principle espoused and endorsed by Washington, "power comes from the consent of the governed." Now, those in power are more inclined to tell us to sit down and shut up, we know what is best for you, like a parent often tells an unruly child who is throwing a fit for something he doesn't need. Perhaps it is time the American people started acting like rebellious teens, who are often ready to throw the baby with the bath water in order to assert independence. I know one thing, we can't continue to allow our "betters" to act with impunity. Plato said it best, "Either be interested in politics or be ruled by your inferiors."

Treasures from the threads - Number forty-three

'Welfare for the rich', is the topic for this Telegraph blog posting by AEP from Owainglynwr, (I thought he had been assassinated for twenty pounds at Mortagne-sur-Gironde, but on checking that was Owain Lawgoch a perhaps more legitimate claimant to the title as last truly Welsh Prince of that name?) I digress for what was posted is fascinating and may be read herewith:

owainglynwr

Today 01:32 AM

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Amrose you wrote:

'I do think think that the American political class will have to face up to the new reality of a semi-permanent slump for a decade or more that will blight a great number of lives. The cyclical recovery that normally makes it possible for most Americans to find a job if they want one is not going to happen this time because the overhang of debt, fiscal tightening, and a liquidity trap have combined to jam the mechanism.'

Agreed. Further on you wrote:

'But once welfare has been deployed so generously for the rich, it cannot be so easily be denied for the poor. This was the Faustian Pact.'

By describing stimulus as generous, this implies the welfare deployed for the rich has been enough. Not so I fear. Few politicans could dare to articulate this. What has been deployed so far has been emergency surgery, some I admit, weirdly prescribed by politicans to gain votes and therefore wasted. If banks ATM's for example, ceased delivering savings for any longer than a couple of days, it moves from a simple financial crisis to a law and order issue. Most depositors are unaware when 'their money' is deposited into a bank, it ceases to be 'their money'. It becomes the bank's to do as they see fit. Depositor's have a claim for that amount in return for an agreed interest rate, thats all. So the bond holders had to be appeased, as the banking system was so interdependent with modern life.

Mark to market accounting should rightly be suspended in a non functioning market. Yet when times improve and investors appetite returns, for stability and funding its important assets are valued at a fair price for both banks and investors. Easier said than done. Under the new corporate accounting standards rules proposed in the US, banks and other lenders would be required to book their loans at their current market value, a method called mark-to-market accounting.

Previously, they had more leeway in valuing assets, so long as they expected to hold them for a long period of time. Critics call that approach “mark to make believe.” The question is are there banks and other lenders engaged in denying crystalizing losses? European banks and governments for example are experincing what happens when investors question the validity of their accounting systems. Pushing on a string for funding at any reasonable price.

US Banks already use mark-to-market accounting for stocks and complex mortgage bonds whose value fluctuates through daily trading. The change in the way they treat the value of loans, however, will be greeted with fierce opposition from banks. Banks claim that the change in the way they treat the value of loans would force them to take big losses on loans during periods of economic distress. Doing so would mislead investors, they say, because the loans would probably still pay off over time even if they were trading at lower market prices. 'Risk Off' investors however, might call mark to market accounting for loans prudent.

Big US investment banks, have traditionally used mark-to-market accounting. So stress testing for these large US banks has been well regarded by investors. For regional and community banks that make commercial loans — the vast majority of the USA's 8,000 lenders — the impact could be well, drastic.

This is the catch- 22. Fail to recognise poorly performing loans adequately not just the outright delinquent, investors will avoid funding to those regional and community banks. Currently I believe Spain's cajas are experiencing this. Tighten and credit for the poor and the private sector which help generate the growth needed to get the unemployed back to work will be dramatically reduced.

Welfare for the rich Ambrose before the poor can benefit, still has some way to go. Unless carefully handled politically, the next stage in this ongoing crisis (it never really went away, despite the media hype) could be generated by accounting standards not applied consistently internationally. The vast majority of the public remain blissfully unaware. Politicans are still blaming the 'greedy bankers' for the 'past' crisis. Labour politicans are a prime example. They are deluded if they do not see Depression 2 could still quite easily beckon. The 'rich' in America and Europe might still need welfare as a matter of urgency before the poor.

BNP Paribas Rights Issue

The Wall Street Journal, link, reports this evening:

What a difference six weeks makes.

Back in August, BNP Paribas said it wouldn't repay the French government's €5.1 billion ($8.1 billion) stake in the bank until at least early 2010. Now it is launching a €4.3 billion rights issue to do just that -- in the process leapfrogging a clutch of other European banks, including Lloyds Banking Group, Royal Bank of Scotland, mulling similar efforts to repay government aid, and Unicredit, which announced a rights issue later Tuesday.

Watch for developments in the Lloyds HBOS and RBS Asset Protection Scheme saga as the next stage of the credit crunch looks set to hit removing the world from the relative calm of the phony recession.

Read John Redwood on Quantitative Easing from here.

Returning value to money is the only cure, everything attempted over the past 25 months has been working in exactly the wrong direction.

Why are MPs on Holiday? Why are the media silent?

Parliament has this major task remaining in spite of the EU, namely to authorise Government expenditure.

Why have the elected MPs gone on a thirteen week holiday in the week it was announced by the National Audit Office that Government Ministers have this year spent 24 Billion Pounds (likely to rise) more than the amounts authorized. I quote from this link:

HM Treasury Resource Accounts 2008-09: Report by the Comptroller and Auditor General to the House of Commons

• Publication date: 20 July 2009

Resources

• Full report (PDF - 58KB)
• Press notice (HTML)

---

Amyas Morse, the head of the National Audit Office, said today:

“This financial year has been an extraordinary one and has presented extraordinary challenges for HM Treasury. The department’s huge in-year growth in its assets and liabilities illustrates the extreme nature of the problems faced and action taken. It should be recognized that the pressure for the department to intervene by offering the Asset Protection Scheme gave it no time to seek from Parliament the additional resources needed. The breach of the Treasury’s expenditure limits has necessitated my qualifying my opinion on its resource accounts. This arose from the need to take action at a point when it was too late to obtain spending authority through the Parliamentary estimates process.”

The Comptroller and Auditor General, the head of the National Audit Office, today reported to Parliament that he has qualified his audit opinion on HM Treasury’s Resource Accounts for 2008-09. This was because, in that year, HM Treasury incurred expenditure of some £24 billion more than Parliament had authorized.

(Blog editors emphasis has been added to the paragraph above).

This arose because of the need to provide for expected net losses arising from the operation of the Asset Protection Scheme – under which HM Treasury provides banks with protection against future credit losses on certain assets in exchange for a fee. HM Treasury knew from the outset that the Scheme would result in a significant loss but at that stage there was not enough certainty about which banks would participate and on what terms to include a provision in the Spring Estimates.

Subsequently the participation of the Royal Bank of Scotland Group and the Lloyds Banking Group was announced and they are currently in negotiations with HM Treasury.

HM Treasury’s Balance Sheet also shows the level of assets and liabilities recorded have increased significantly compared to last year. Total assets less total liabilities now stand at £44 billion, up from £2 billion in 2007-08.

The People delivers the facts

The popular Sunday tabloid splashes this bad news for the less well-informed British citizens:

22 March 2009

BLACK HOLE COSTS YOU £25,000

EXCLUSIVE Here's how they might claw it back

By Nigel Nelson Political Editor

Every British taxpayer faces a debt of £25,000 to pay for Alistair Darling's borrowing binge.

At least the Maggot MP and Employment Minister, Tony Mcnulty, has put aside enough to pay his share of the debt having claimed sixty thousand pounds worth of parliamentary expenses on his parents home for the past several years in spite of he and his wife pulling in some three hundred thousand pounds a year, she being the Chief Schools Inspector according to The Times, linked here it begins:

A LABOUR minister was at the centre of a new controversy over Commons expenses after he in effect admitted that he had been wrong to claim £60,000 of taxpayers’ money for a property that is his parents’ main home.

Tony McNulty, the employment minister, confronted over his expenses claims, said he would stop claiming the MPs’ second-home allowance, it was reported last night. McNulty and his wife, Christine Gilbert, the chief schools inspector, have a combined annual income of more than £300,000 and between them own two London homes worth £1.2m.

They live together in a house she owns just three miles from Westminster. However, McNulty has been claiming up to £14,000 a year in parliamentary expenses to help to pay for the second house, in his Harrow constituency, where his parents live. The property is just 12 miles from the Commons.

EU to monitor Skype calls

The report that EuroJust wishes to monitor inter-computer communications comes as no surprise and may be read from here.

There is no need for the grotesque organisation of the EU to monitor my Skype calls as I will tell them here and now what I think of their thoroughly corrupt anfd totally self-serving organisation -

THE EU IS ROTTEN TO THE CORE AND SHOULD BE THE FIRST VICTIM OF THE GLOBAL ECONOMIC CRISIS! IT IS DESTROYING THE DEMOCRACIES OF 27 NATION STATES FOR THE PERSONAL ENRICHMENT OF ITS COMMISSIONERS, OFFICIALS AND MEMBERS OF ITS NON-LEGISLATION PROPOSING PARLIAMENT! IT IS A TOTALITARIAN PAN-EUROPEAN POLICE STATE UNDER CONSTRUCTION.

As I blogged last week, the credit crash is nevertheless providing the EU a golden opportunity to heal itself. The EU has reached this point by conning the people of Europe into believing that it is all about mutuality of interests, a sense of community and coming to the aid of one another in a crisis.

So here is the crisis, are Germany and France, the wealthiest countries helping the ones worst off in the credit crunch, sometimes unflatteringly known as the PIGS (Portugal, Ireland, Greece and Spain)? Are they heck!

Is cash rich Germany rushing to the aid of the Austrian Banks now reeling from over-lending to their old Hapsburg buddies in the East? - Are they heck!

Is aid to the various car industries (among the worst hit sectors after the banks) being handled on a communal basis? -You must be joking!

So what IS the EU for other than to rob electors of the power to remove those who govern them on a periodic basis without bloodshed and thereby oppress them at their rulers whim, such as for example by monitoring their harmless Skype conversations. IF it does something to jointly solve the crisis and we emerge as a Community relatively unscathed from the turmoil, then perhaps AND only then should we consider whether Lisbon is the correct way forward - the answer to that of course will certainly be NO.

A final point for consideration in this growing mess, if globalisation was a feasible option for world economic growth, why does the EU need all that mass of legislation to create a single market? We all, to our cost have huge trade with China, but no community of interest or single market legislation whatsoever!