We Need Pitchforks and Torches
Political factors, not legal or economic, probably will control the evolution of this crisis. Hence the likelihood of modest impact to the national economy. More than the small impact expected by Wall Street; less than expected by the increasingly rabid doomsters. Over a longer horizon, a year or more, the economy will affect the political dynamics. For a good analysis of the current political situation see “Congress Taking Cautious Approach with Foreclosure Mess“, American Banker, 14 October 2010. The Republicans, as usual, eagerly support the banks – despite any violations of the law, despite the interests of the American people.
The economic impact looks to be minimal and probably less than the political effects. New home sales are unaffected by this crisis. The title problems are solvable. New home finance is unaffected, and in any case are now 90% government financed or guaranteed. Interruptions in sales of existing homes will have severe effects for those affected, but little for the overall economy (despite the massive attention to the volume of existing home sales, they have minimal economic effect).
What could change this forecast? A second dip would radically change the situation, as more links in US and global economy “unexpectedly” break. As would a long foreclosure moratorium, although this is unlikely under the current political regime. It could happen as part of system change, of such magnitude that the moratorium would be one of the lesser results.
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historyguy99:
October 18th, 2010 at 4:17 am
At first, glance I thought your post was a bit of a parady like the video. But upon reading the link, it appears that art ( the video) is too close an immitation of life as it is, to really chuckle about.
Pitch forks and torches, more of this; and it’s edging the population closer to 1789 France.
Joseph Fouche:
October 18th, 2010 at 4:45 am
The United States is a casino with nuclear weapons.
joey:
October 18th, 2010 at 11:24 am
As Frank Zappa said…It can’t happen hereIt can’t happen hereI’m telling you, my dearThat it can’t happen hereBecause I been checkin’ it out, babyI checked it out a couple a timesBut I’m telling youIt can’t happen hereOh darling, it’s important that you believe me(Bop bop bop bop)That it can’t happen hereWe need the security establishment to step in and restore order during this period of chaos. Since the Army and the Police are the only powers that command society wide respect, it is only right that they should step in to protect the American people in this hour of need.
joey:
October 18th, 2010 at 11:38 am
gah, damn this text formating!
Fabius Maximus:
October 18th, 2010 at 2:23 pm
Is this a parody or actual hysteria? In a nation of 300 million people one can easily find small numbers of awesome outrages. That’s a Reader’s Digest staple. Fantastic miscarrages of justice in the civil and criminal courts, horrific mistakes by our health care systems, terrifying actions by our civil and military machinery. Get a grip, people.
The forclosure crisis is serious, although of unknown dimensions at this time. This does not accurately represent the actual problem (people defaulting on their loans, illegal bank screw-ups on the docs). And it is part of a larger financial crisis, still evolving in unknown ways. Hysteria does not help.
It is similar to the post about Goldman getting the swine flue vaccines, part of the CDC’s plan to distribute it though employers, leaving THE REST OF US TO DIE IN THE STREETS. OMG!
zen:
October 18th, 2010 at 3:30 pm
"Fantastic miscarrages of justice in the civil and criminal courts, horrific mistakes by our health care systems, terrifying actions by our civil and military machinery. Get a grip, people."
Fabius Maximus:
October 18th, 2010 at 3:48 pm
Perhaps, but the headline story you provide is totally unrepresentative of the actual problem, which constsist almost exclusively of people defaulting on their mortgages. Many banks committed offenses when processing the foreclosure, but it’s not the same as implied by the opening story above.
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For some very sad stories, more deserving of outrage and action, go to The Innocence Project. For example, see the many examples of people suffering from being arrested while Black.
http://www.innocenceproject.org/
slapout9:
October 18th, 2010 at 4:49 pm
To this day I find it amzing that most people who damn Karl Marx (who was an economist before he was a revolutionary) have never even read Das Kapital (On Capital) which describes perfectly what is happening to our Economy. He called The Bourgeois, today we call them the Oligarchy…I call them exactly what they are CRIMINALS. Zen is right to call them that.
Larry Dunbar:
October 18th, 2010 at 5:01 pm
The forclosure crisis is serious, although of unknown dimensions at this time. This does not accurately represent the actual problem (people defaulting on their loans, illegal bank screw-ups on the docs). *I don’t know Fabius, first move manufacturing to a country with a lower standard of living, then, "…hollow this country out and move…offshore just like in Russia [the oligarchy left) during the 1990’s" and moved to a country of greater growth, kind of makes sense. It would be kind of like the brothers selling Joesph into Egypt, they (Jewish or not) could become very comfortable there, until perhaps an Exodus when they built-up enough resources that they could get their own country. I mean we are talking real money here and why would you guys want to stay anyway, ha!
TDL:
October 18th, 2010 at 6:26 pm
I think there is a certain amount of hyperbole of this issue. The story that Zen referred to in the post is an extreme example of where the law firm that has contracted with Deutsche to manage the paperwork cut coroners where ever they could. This is not a systematic effort to loot. This is being caused because the banks began to increase the volume of transactions while at the same time demanding a decrease in the administrative costs associated with transferring titles to property (i.e. the creation of M.E.R.S. ) These are two competing business agendas; it is generally in-advisable to began a cost cutting initiative while attempting to expand your top line growth.
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This is fallout from the bankers greed from the earlier part of the decade, however, it is not an attempt to steal property from those who own it. The looting meme on this specific issue does not even make sense. It is far easier to lobby for billions more in bailouts & receive cash (a liquid & easily transferable asset) then to steal a piece of property, put it on the market for sale, market the property, & conclude the deal in a timely fashion in order to avoid a lawsuit preventing the bank from selling the property.
Regards,
TDL
Curtis Gale Weeks:
October 18th, 2010 at 7:12 pm
Isn’t the real problem Capitalism + Usury? Ha just kidding. Sorta.
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All these calls for pitchforks, torches, mobs, etc., even to the degree that they are only metaphors (and especially to the degree that they aren’t) create a visceral reaction in me, a kind of powerful dread. What happened to just voting yea or nay? If voting is to be seen as once and for all passe, we are in real trouble. (I grant the reality of The Campaign™ as a valid part of our democratic/republic system of government, and so I understand the 4GWish trend toward motivating sufficient numbers of voters by the blandishment of metaphorical torches, pitchforks, nooses, and all the other lovelies….but still.)
zen:
October 18th, 2010 at 7:25 pm
"What happened to just voting yea or nay? "
slapout9:
October 18th, 2010 at 8:27 pm
Criminologist Bill Black explains foreclosure gate (white Collar crime).
http://www.youtube.com/watch?v=O3JTPzW3xmg&feature=player_embedded
TDL:
October 18th, 2010 at 9:33 pm
Zen,
You are absolutely right, "Due diligence is not a frill." The problem is, the banks treated it as a frill over the past decade. The action (or the inaction) of having a blase attitude towards due diligence (whether it was transferring title, underwriting, ratings, etc.) in deference to increasing transactions is still playing itself out. It is necessary to differentiate the actual looting with negligence (both punishable.) Punishing the bankers, regulators, politicians, & other enablers for the actual crimes commensurate to the degree they committed it is the best approach to take.
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Coming down hard on one group or individual to symbolically punish the crimes of a wider group is counter productive. It will turn corrupt governors (think Blago) into heroes & rogue traders (Jerome Kerviel of Society Generale) into victims.
Regards,
TDL
Curtis Gale Weeks:
October 18th, 2010 at 10:59 pm
Mark, it just occurred to me that, what with the call for pitchforks and torches and mobs and so forth…Are you trying to turn America into France?!@#$!!?
J. Scott:
October 19th, 2010 at 1:10 am
At the Boyd Conference over the weekend, Ray Leopold contrasted the difference between the government’s view of contracts with the private sector. He distinguished the two as follows: the government’s contract is based on distrust, and private sector contracts are based on trust….that assessment was based on an old model…perhaps trust is devolving in our culture to the point of crisis…I don’t think so, but it is worth due diligence.
Lexington Green:
October 19th, 2010 at 1:55 am
"Are you trying to turn America into France?!@#$!!?"
Are the banks trying to turn America into Yeltsin-era Russia?
Curtis Gale Weeks:
October 19th, 2010 at 1:46 pm
Lex, I doubt the banks could do such a thing. There is the tendency to find one similarity, however accurate or tenuous, and extrapolate from that an exact similarity across all domains; but this isn’t Yeltsin-era Russia. Maybe I should relate this to GCS: Gated Community Syndrome; or, it could be thought of as "thinking inside a box." History may repeat itself; the Wheel of Time may turn; but I’m naturally hesitant to equate our contemporary America to Yeltsin-era Russia, because they are so different and the differences with have as much influence or more influence over the future of America than the similarities, I suppose.
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And unlike France, the students in America just don’t give a damn–yet.
T. Greer:
October 19th, 2010 at 3:10 pm
It may be time for pitch-forks, but this is not the issue to raise them over.
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This story is just beginning to break. We do not know if it is a few set of isolated incidents or if this type of fraud pervades the entire system. Better to see the monster in its full extant before we decide how to kill it.
tdaxp, Ph.D. » Blog Archive » MyDD: Geithner et al part an organized criminal conspiracy:
October 30th, 2010 at 2:04 pm
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