The International Forecast
The Crony Capitalist Bailout Nation
written by Bob Chapman
Saturday August 8, 2009
Yes, the underlings were simply doing as they were told to get their million dollar bonuses even though they knew that what they were doing seemed very imprudent, but the people at the top, from the upper tier of the Illuminist cabal, knew exactly what they were doing. The top dogs created the framework for the underlings to work in. That framework was intentionally and fatally flawed by maniacal leverage, rampant fraud and total lack of any meaningful regulation. Even a minor problem could be magnified into a major issue via excessive leverage.
The Crony Capitalist Bailout Nation
written by Bob Chapman
Saturday August 8, 2009
Yes, the underlings were simply doing as they were told to get their million dollar bonuses even though they knew that what they were doing seemed very imprudent, but the people at the top, from the upper tier of the Illuminist cabal, knew exactly what they were doing. The top dogs created the framework for the underlings to work in. That framework was intentionally and fatally flawed by maniacal leverage, rampant fraud and total lack of any meaningful regulation. Even a minor problem could be magnified into a major issue via excessive leverage.
And any major problem could, by that same excessive leverage, be magnified into a catastrophic financial meltdown that would destroy the US economy, and even the world economy. You have to kill off the old system utterly, so you can install your fascistic police state and one world government in the ensuing chaos, and that is exactly what is happening right under your nose, right before your very eyes. Does God have to club you over the head from His throne in Heaven to get you to take notice? Get a freaking clue, America!!!
Now, let's look at some numbers. According to mortgage loan servicers handling 64% of all first liens, they were managing $34 million loans totaling $6 trillion dollars of which two thirds were prime loans. That would make the average mortgage somewhere in the area of $175,000. If we add in the other 36% of first liens, and assuming the same overall average principal for these loans, we would have a total of about 53 million first liens with an average of $175,000 per mortgage.
Now, let's look at some numbers. According to mortgage loan servicers handling 64% of all first liens, they were managing $34 million loans totaling $6 trillion dollars of which two thirds were prime loans. That would make the average mortgage somewhere in the area of $175,000. If we add in the other 36% of first liens, and assuming the same overall average principal for these loans, we would have a total of about 53 million first liens with an average of $175,000 per mortgage.
The TARP money was 700 billion dollars. That means we could have completely paid off 4 million mortgages, or cut 8 million mortgages in half whose borrowers would then be able to easily refinance with their high newfound equity. And Realty Trac tells us that from 2005 to 2008, inclusive, about 7.5 million properties had foreclosure notices of default, orders of foreclosure and/or notices of sale served/filed against them. There is a lot of double counting there because multiple filings could affect the same properties in different years and not all properties go to foreclosure, but it does give us an outside/maximum figure for loans in serious default. All those mortgages could have been cut in half with the TARP money and saved from foreclosure, and refinanced down to affordable payments.
What would such a bailout have meant for America? Bear Stearns would still be here, Lehman Brothers would still be with us, AIG and the insurers would have manageable claims and still have decent ratings, all the subprime lenders would be solvent, all the Wall Street legacy investment banks and commercial banks would still be functioning and would not have become penny stocks, municipal bonds would be selling like hot cakes, the Dow might be past 14,000, most people would still have their jobs, pensions would be flush, the real estate market would still be sledging along, and the world economy would still be humping.
What would such a bailout have meant for America? Bear Stearns would still be here, Lehman Brothers would still be with us, AIG and the insurers would have manageable claims and still have decent ratings, all the subprime lenders would be solvent, all the Wall Street legacy investment banks and commercial banks would still be functioning and would not have become penny stocks, municipal bonds would be selling like hot cakes, the Dow might be past 14,000, most people would still have their jobs, pensions would be flush, the real estate market would still be sledging along, and the world economy would still be humping.
And we haven't even touched the $787 billion of pork from the stimulus plan, or the two trillion dollars that the Fed doled out to both foreign and domestic banks and that is still unaccounted for! With those funds we could have paid off everyone's general purpose credit cards (one trillion), cut another 8 million mortgages in half (700 billion), and still had over a trillion left over to take care of the defaulted car loans, student loans, commercial mortgages and future residential mortgage defaults! Even the foreign banks could have been saved!
Why would this be so? Because if the defaults were cured, the de-leveraging of the big commercial and investment banks, which were, and still are, leveraged at a rate of about 50 to 1, would not have become necessary, at least not right away. This need to de-leverage to absorb losses when they occur by banks that are leveraged at 50 to 1 is what makes a trillion dollar problem into a 50 trillion dollar problem, and this is where we are headed when the Derivative Death-Star ignites and/or banks are forced to mark-to-market again. All this pain could have been avoided by the curing of loan defaults.
Would it have been fair to bail out the liar loans? Of course not. This drips of moral hazard. But would you rather bail out the bankster-gangsters instead? Is it more fair to do what our government has done for the criminals on Wall Street? Heaven forbid! And besides, the bailout of the liar loans would have automatically bailed out the bankster-gansters in any case!!! Do you mean to tell us that the geniuses of corporate America, Wall Street and Goldman Sachs South could not figure this out? Again we say: COME ON!!!
Why would this be so? Because if the defaults were cured, the de-leveraging of the big commercial and investment banks, which were, and still are, leveraged at a rate of about 50 to 1, would not have become necessary, at least not right away. This need to de-leverage to absorb losses when they occur by banks that are leveraged at 50 to 1 is what makes a trillion dollar problem into a 50 trillion dollar problem, and this is where we are headed when the Derivative Death-Star ignites and/or banks are forced to mark-to-market again. All this pain could have been avoided by the curing of loan defaults.
Would it have been fair to bail out the liar loans? Of course not. This drips of moral hazard. But would you rather bail out the bankster-gangsters instead? Is it more fair to do what our government has done for the criminals on Wall Street? Heaven forbid! And besides, the bailout of the liar loans would have automatically bailed out the bankster-gansters in any case!!! Do you mean to tell us that the geniuses of corporate America, Wall Street and Goldman Sachs South could not figure this out? Again we say: COME ON!!!
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