Monday, October 19, 2009

What happens when the banks don't even want to exploit your misery?

This headline caught me off gaurd:

Drop in foreclosures called ‘very scary’

Then I read the story and was somewhat horrified. When real estate is so worthless that the banks don't even follow through on foreclosures....where does that leave us? City governments lose their tax base, city employees get laid off, city services disappear....jeez, I'm depressing myself.

But hey, Wall Street loves Bernanke, and our government is now an extension of Goldman Sachs...so just ignore the walls crumbling down around you, the recession is over, man. In Goldman we bust...I mean trust.

14 comments:

Anonymous said...

The news-news these days is better than horror movies if you want a good scare.

Does Zombie-kind fear that their traditional niche in the pop cultural landscape is being taken over by immortal psychopathic corporate entities?

Dambala said...

nope...zombies know no fear. They just eat brains....corporate brains are even yummier.

Anonymous said...

Glad to hear that.

This may not be the point of this blog at all, but if you've a mind to, I'd love to read posts which explain your faith a little.

You may prefer to write mostly about political things, but at least telling us about Dambala, Yemaya, et al won't likely get you sued, (and unless the fundies are really feeling scared and weaak, it probably won't lead to death threats, either.)

Anonymous said...

Sorry to micro-blog, but this is appropriate:

Marching Toward Zombieland:

http://kunstler.com/blog/2009/10/marching-toward-zombieland.html

"The sense that Wall Street has pulled off a coup d'etat and taken over the machinery of the United States is the most powerful meme out there now, and its power is growing in magnitude every day among all classes of Americans."

Anonymous said...

AZ, I think the comments here are telling. Almost everyone I know either:

A) Does not know that the federal government just gave GS something north of $20B - not loaned, GAVE - by laundering it via AIG, or

B) Does not think this is a big deal, or

C) thinks anyone who thinks it's important is some kind of conspiracy-theory crank.

I have for the most part given up complaining about it, because no one seems to care. All I can say is that I encourage anyone who wishes to use their brain for 30 seconds to think about how it is that we can conduct these never-ending giveaways when we are already mired with incredible debt. It shouldn't take any longer than that to see that this obviously can't work, in which case one may begin to wonder about what format "doesn't work" will take.

We can still do something about this, but if only a handful of us care then why should the Congress?

Dambala said...

yeah and you know what really cracks me up is the people who are oblivious to this are some of the same people crying socialism, socialism, socialism!!!!

Dudes....if we were a socialist nation those empty houses in this story would have been subsidized by the government immediately and we've have people living in them.

Instead they are empty and people are hungry and homeless because there is no economic incentive to occupy the house for the banks. It's not even in their interest to take over the property....Jesus fucking Christ guys...that doesn't worry you?

If I hear one more person rattle socialism out, I'm gonna frikkin' scream. The word they're looking for is Fascism, as defined by Mussolini: the perfect union of corporation and state. GS + D.C. = love. GS should change their name to AmeriCorp...rework the flag...and just get it over with.

Dambala said...

Speaking of getting sued...that Kunstler blog post is ripe....

"..a few pounds of Semtex in the lobby of Goldman Sachs's New York headquarters... a few men with market-grade small arms converted to full-automatic outside on the Wall Street sidewalk one evening at holiday time when the suits are leaving work for the day.... It won't take much."

shit...draw a map why don't you? I don't even know what Semtex is but it looks like he's really thought this scenario out.

Zombies are the zeitgeist these days huh?

Anonymous said...

Dambala, let's not get too caught up in definitions - the people crying "socialism!" are technically incorrect (it is in fact facism as you point out). But their cries do indicate they know/feel they're getting the shaft and gov is using their children's future to bailout the corporatist.

And lastly, the reason those banks won't foreclose is that they would then have to recognize the loss on the their balance sheets. Why do that when you can sell the MBS to the Fed at full 100% of value through one of the many TARP,TAFT, alphabet plans of the bailouts that have come out in the last year.

So you see, the .gov (through the fed) IS buying those houses... Why do you think the Fed doesn't want to get audited and congress won't force the issue?

Dambala said...

- And lastly, the reason those banks won't foreclose is that they would then have to recognize the loss on the their balance sheets. Why do that when you can sell the MBS to the Fed at full 100% of value through one of the many TARP,TAFT, alphabet plans of the bailouts that have come out in the last year.

So you see, the .gov (through the fed) IS buying those houses... Why do you think the Fed doesn't want to get audited and congress won't force the issue?

That's a damn good theory but is it fact? I hear what you're saying but is that really what's happening? What I gleaned is that the property is just going ghost town.

Anonymous said...

Great comments.

So where is the peacefully intended squatter's movement?

Dambala said...

You know what occured to me after I read this point:

- And lastly, the reason those banks won't foreclose is that they would then have to recognize the loss on the their balance sheets. Why do that when you can sell the MBS to the Fed at full 100% of value through one of the many TARP,TAFT, alphabet plans of the bailouts that have come out in the last year.

So you see, the .gov (through the fed) IS buying those houses... Why do you think the Fed doesn't want to get audited and congress won't force the issue?

What if the government passed a law which required the property to be turned back over to the homeowner...mortgage free...if the bank fails to foreclose within 45 days?

Anonymous said...

AZ, you asked "That's a damn good theory but is it fact?"

Good question. Right now it appears that the answer to your question is no. Remember when Congress strong-armed FASB into repealing mark-to-market?

A simplified explanation goes like this: because the MBS are fixed-income instruments, they should in principle lose value whenever the cash stops coming in, i.e., the value of the mortgage loan starts to go down as soon as the homeowner starts missing payments, long before foreclosure.

When the current recession brought massive layoffs, a lot of people started missing payments. The resulting loss in value to the MBS created such a huge black hole on the balance sheets of the investment banks and mega-banks that it sucked some of them completely under (Lehmann, Bear Stearns) and threatened to take the rest of them down. Congress "solved" that problem by telling banks that they no longer needed to reflect the actual market value of those MBS...for balance-sheet purposes, it appears that rule is now that the MBS are now "worth" whatever the banks say they are worth. Poof! Problem solved!

Unless / until these rules are challenged legally, this "mark-to-myth" approach is the accepted standard. So whether or not the mortgage servicer forecloses on the house doesn't really have an impact on when the loss is recognized. That is the reason those houses aren't getting foreclosed - because it costs money to foreclose and since there's no benefit to the servicer OR the MBS holders to do so...why spend the money?

Now, you may be saying to yourself: but...wait...someone still paid $500K for a house that is now worth $250K...isn't that a real loss? Where did that loss go? Currently the answer to that question is: "let's talk about health care!"

I realize that even in simplified form, this stuff makes most peoples' head hurt. That would be because it's DESIGNED to make your head hurt. So long as no one can understand it enough to ask the right questions then it stays Party Time on Wall Street. When you ask yourself how it can be that historic bonuses are being paid to the exact same people that brought the economy to it's knees, the answer is: not enough people care enough to complain; they'd rather just not think about it. By the time we are staring at years of crippling 70's-style inflation, it will be too late.

For anyone who does want to understand this better, I highly recommend the blog "The Baseline Scenario" by former MIT professor and former IMF Chief Economist Simon Johnson

Anonymous said...

It is amazing that all these people cry "from my cold dead hands!" about their guns, and yet they are not similarly protective of American's homes.

You're right about the motives of the banks, I think, Dambala.

I like your idea of a solution, too.

Who ends up with the land and the houses is also important.

Speaking of homes, would you please weigh in on the Charity Hospital situation?

Anonymous said...

Thanks for the blog recommendation, anon.

I only noticed it because I re check older posts with threads that interests me.

Dambala, many who might like this blog probably won't get this referal.