The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

Good for Barack Obama for resisting this shameful pandering.

Dumb as We Wanna Be

CLINTON — MCCAIN FORECLOSURE FREEZE GETS COLD SHOULDER BUT SOUNDS GOOD

Well here is a version (SEE ARTICLE BELOW) of what we have been pushing for months —- changing the terms of the mortgages so that the homeowner can stay in the house and the mortgage can be modified, sold or recast for capital accounting. This is a lot more sophisticated than the “mortgage freeze” proposed by Clinton and McCain and it is working already so we can’t dispute the success.

• The problem with a “mortgage foreclosure freeze” is that it is a sound bite that doesn’t really mean anything — like the gas tax holiday. It doesn’t address any of the problems but it gives rise to the illusion that the homeonwer is getting some relief.
• The problem for Obama is that he sounds like he is against providing relief because he understands the nuances of how to get that relief — without pandering for votes. People don’t like nuance and don’t have the time for complex answers. So they vote against themselves based on sound bites, hoping gas prices will go down (they won’t) and that their house will be saved by just doing one thing like a freeze on foreclosures that lasts ninety days (that won’t work either).

There is no Clinton-McCain plan for relief because no order, legislation or rule is pending that will freeze anything and nothing is pending. Hillary and John are just blathering. They haven’t ACTUALLY proposed the plan by introducing a bill on the Senate floor. The plan of these pandering politicians is get elected (the people be damned): the method is to make use of time-honored sound bites that consist of misleading statements and outright lies. The truth is that neither McCain nor Clinton has a clue about gas prices or mortgages.

Although this trading of mortgage obligations is obviously providing some relief, it doesn’t address the root cause of the mortgage meltdown. And much as I don’t care for the people or their methods who perpetrated this fraud on the world, there is no REAL solution unless some value is restored to the balance sheet of financial institutions and investors who purchased the collateralized mortgage obligations. Thus combining attributes of this plan with a more comprehensive plan to restore the capital reserves of financial institutions and investors would be preferable.

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HOUSING

Investors move in to save broken mortgages

By E. Scott Reckard
Los Angeles Times Staff Writer

May 1, 2008

Jared Lanning, struggling to pay a home loan on which he owed more than his house was worth, was thinking he might just let the lender take back the property. Then he got a call one evening from an Orange County investor who had bought his mortgage.

“I want out of your loan,” said the investor, Evan Gentry, chief executive of G8 Capital of Ladera Ranch, who offered to lower the balance and the interest rate.

Lanning, a crane operator in Englewood, Colo., was skeptical. A phone pitch, after all, had led to his getting the unaffordable loan in the first place. But Gentry was legit: He helped Lanning get a new Federal Housing Administration-insured mortgage — with a $12,000 lower balance. Gentry also paid $5,000 in closing costs for the new loan. Lanning’s new monthly payment is $200 less than before.

Investors — including big fish like former Countrywide Financial Corp. President Stanford Kurland as well as smaller fry like Gentry — are buying loans on the cheap from lenders who want them off their books. By paying less than face value for the mortgages, the new holders can modify loan terms, including shrinking the amount owed, and still make money.

With some economists projecting 2 million foreclosures this year, legislators and regulators are hoping to encourage wide use of this model. They want lenders and investors in mortgage bonds to mark down what borrowers owe and then provide them with lower-cost loans. It’s a tricky business: No one wants to be seen as bailing out speculative buyers or imprudent lenders, but they also don’t want mass foreclosures to devastate neighborhoods and the economy.

The Federal Deposit Insurance Corp. described the problem Wednesday as “a self-reinforcing cycle of default, foreclosure, home price declines and mortgage credit contraction, the likes of which we have not experienced since the 1930s.” The agency is proposing that the government lend $50 billion to 1 million borrowers to help them replace unaffordable loans.

Sub-prime mortgages with interest rates ratcheting higher have proved less of a problem than once feared, because interest rates overall have dropped. But a “toxic combination” of falling home prices and borrowers who can’t afford even the initial low rates on adjustable loans is now the issue, FDIC Chairwoman Sheila C. Bair said in an interview this week.

“Many more borrowers are under water,” she said. “And many more are just walking away.”

Many people bought homes with nothing-down loans at the peak of the housing boom — 29% of all buyers in 2007 made no down payments, Treasury Secretary Henry S. Paulson Jr. said recently. Others have sucked all their equity out of their properties with refinancings.

According to Moody’s Economy.com, some 8.8 million Americans — more than 10% of all homeowners — owe more than their houses are worth, although a Mortgage Bankers Assn. economist contended the figure was lower, perhaps 8%. In any case, there is wide agreement that many of those troubled borrowers have proved surprisingly ready to abandon their properties, even when lenders offer to modify their loan terms as they were encouraged to do by the Bush administration.

“We are working with borrowers to keep them in their homes, but a lot of them really don’t want to stay,” said Babette Heimbuch, chairwoman of FirstFed Financial Corp. of Los Angeles, a savings and loan operator that specialized in adjustable-rate mortgages, including many that were made without full documentation of borrowers’ incomes.

FirstFed has about $6.3 billion in loans on its books. It said that $667 million of that balance, more than 10%, was delinquent or in foreclosure as of March 31, up from just $46 million a year earlier. FirstFed said Wednesday that it lost $69.8 million, or $5.11 a share, during the first quarter this year compared with a profit of $8.4 million, or 61 cents, a year earlier. It set aside $150.3 million for loan losses during the quarter, up from $3.8 million during the first quarter of 2007.

Because FirstFed kept most of its loans on its books rather than selling them, it should have been easier for the company to work with borrowers to modify the loans. Heimbuch said FirstFed forecloses only after analyzing 10 other options to offer the borrower, including lowering the interest rate; changing to a five-year, fixed-rate loan requiring payment of interest only; and writing down the loan balance.

Still, she said, up to 50% of borrowers who miss payments don’t respond to letters and repeated telephone calls to see if something can be worked out.

Some customers had acquired second mortgages and couldn’t make new arrangements with the other lender, she said. “I think some know they told us the wrong income and are afraid to come clean, though we would still work with them . . . to keep them in their homes if possible.”

For struggling borrowers, it’s a big mistake not to return such calls these days, said Gus A. Altazurra, a veteran mortgage executive who recently raised $10 million from private investors to buy and modify loans for which homeowners are still making payments.

“They’re probably going to help you, given the current situation,” said Altazurra, whose Irvine-based Vertical Fund Group has been negotiating with lenders of all sizes to buy loans. He said “a flood” of mortgages went up for sale in April after lenders closed their books on a horrendous first quarter.

Altazurra, who has paid as little as 31 cents on the dollar for some loans, said the terms of some mortgages made at the peak of the boom were hard to believe. One loan he bought from a Texas bank was to a borrower with a very low credit score — 484 — who refinanced and cashed out 100% of the equity in the property, he said.

Gentry, the other Orange County loan buyer, said he had obtained commitments from investors to provide $100 million in capital for workouts on loans that have stopped paying, current loans that can no longer be sold and foreclosed properties. He has bought nearly $50 million in mortgages and property so far.

Gentry purchased Lanning’s loan in a pool of mortgages from a San Diego lender that was going out of business. He said that on average his private venture was paying 70 cents to 80 cents on the dollar for loans like Lanning’s that were still current, and “less if the loans are nonperforming.”

Lanning had no home equity left — and thus had little incentive to keep sacrificing to make payments — before he got the smaller, cheaper FHA loan. Now his outlook has changed.

“We can’t do anything frivolous now,” he said. “But if we do it right, we have enough. That other loan was just pushing us over the top.”

May 3, 2008: Two interesting things about this posting.

The first is that while I posted it many days ago it has been the number one posting on this site every day.

The second is that it obviously attracted the attention of the Clinton attack machine who have tried to get me to allow comments that suggest that this entire story, which has done so much obvious damage to Obama, was actually a plot by Obama.

I almost let it go up as a comment until I heard the exact same words spoken by Clinton surrogates on TV. I concluded it was a plant and I rejected it. I also concluded that Errol Louis might have stumbled onto something important and that the thought of having the Clintons back in the White House is not nearly as appealing to me as it was a few months ago.

ALSO SEE 

http://www.nydailynews.com/opinions/columnists/louis/index.html

New York Daily News columnist Errol Louiswrites:

The Rev. Jeremiah Wright couldn’t have done more damage to Barack Obama’s campaign if he had tried. And you have to wonder if that’s just what one friend of Wright wanted.
Shortly before he rose to deliver his rambling, angry, sarcastic remarks at the National Press Club Monday, Wright sat next to, and chatted with, Barbara Reynolds.

A former editorial board member at USA Today, she runs something called Reynolds News Services and teaches ministry at the Howard University School of Divinity. (She is an ordained minister).

It also turns out that Reynolds - introduced Monday as a member of the National Press Club “who organized” the event - is an enthusiastic Hillary Clinton supporter. …

I don’t know if Reynolds’ eagerness to help Wright stage a disastrous news conference with the national media was a way of trying to help Clinton - my queries to Reynolds by phone and e-mail weren’t returned yesterday - but it’s safe to say she didn’t see any conflict between promoting Wright and supporting Clinton.

The bottom line is that regardless of who steps into the oval office next January, nothing will actually change unless the dynamics of political participation by U.S. Citizens changes. It isn’t enough to vote. It isn’t wise to trust any leader to do the right thing. And it isn’t wise to trust that once a policy or program has been approved it will be ever be executed. It is up to us to hold their feet to the fire and to remain interested despite the constraints and demands of our lives. That fire will burn us and not them if we don’t wake up to this essential obligation of citizenship.

Both the Conservative and Liberal seek “assistance” from government, which explains that despite the slogans and speeches, government has grown to mammoth proportions regardless of whether it was dominated by democrats (generically liberal) or republicans  (generically conservative). Both seek access to the Public Treasury for their agendas, which explains why spending increases regardless of who is in power. The conservatives seek to direct the money to the top while the liberals seek to direct the money to the bottom.

Our citizens end each month further in debt, with less value in assets, and declining income that even a second or third job won’t cure. This is explains why no fiscal stimulus package, and no bailout will “assist” anyone. The ONLY thing that will save our economy, our sovereignty and our economic and political power here and abroad is a fundamental shift in perception and action directed toward revitalizing our population. 

This starts with taking the stress out of where they are going to live (STOP THE FORECLOSURES AND EVICTIONS) and whether they will have something to eat (10% of our population is already on food stamps). It includes medical care (we pay more for medical care than any other country on the planet, yet we deliver less, die earlier and have a higher infant mortality rate) and education (having slid to third world status) that is meaningful for their participation in society and the world. And it means telling the truth to them without using nice-sounding names of programs that are based in self-interest and potentially evil intent. 

Perhaps more than anyone else the one person the current “Conservative” economic policy can be traced to is Andrew Mellon, who served under the three Republican Presidential administrations as Secretary of the Treasury. The roaring 20’s, having antecedents dating back to the Civil War, and fueled by unbridled greed inspired by Mellon and his group of “leaders” created the events leading up to the Great Depression . Mellon of course made a ton of money in various endeavors, just like the other “robber barons” of his age. He was ardently “conservative” in his economic and political philosophy, or so he thought. 

If you asked for a definition of a conservative from Mellon or anyone else who is of like mind it would all boil down to one central idea: that the purpose of government is to “assist” private enterprise in creating jobs and wealth for the country. In fact, conservatives conserve nothing and have no desire to conserve anything, except their own rising wealth and power. Looking after one’s own interests is hardly sufficient for condemnation. Catering to one group (corporate interests, and specifically the largest of them) does nothing to conserve the most precious resource any country posses: the people who are citizens and residents of that country. 

The inevitable consequence of the so-called conservative philosophy is to concentrate wealth and power into the hands of an ever smaller number of people who eventually will be so taken with themselves that they will commit acts of outright theft and fraud with the assistance of a government that either passes laws to make such acts legal or which does not enforce the laws that clearly describe those acts as illegal. This is clearly the outcome we have been dealing with repeatedly with the boom and bust cycles wherein the corporate titans wring every last piece of value from the treasury of the of the government, from the citizens of this country and from the governments and citizens of other countries. 

And yet “conservatism” masquerades as freedom from government interference when in truth without government, the greatest fouls committed in the economic marketplace could never have succeeded without the active assistance of government including direct subsidies for acts that were and are contrary to the interests of the country — like giving tax breaks to corporations that ship jobs overseas. Like most things in politics it is a lie masquerading as the truth through the mouths of “leaders” who speak with a stright face and a forked tongue. 

We have a habit in politics to name things in a way that will distract the public from the real intent of the perpetrators of any particular agenda. We’ll stick with conservatism and liberalism here since that is a current topic of political discourse in this presidential season. 

If you asked for a definition of a liberal a/k/a progressive from anyone on that side of the spectrum it would boil down to one central point: that everyone in the country, especially the poor and disenfranchised should receive the assistance of government in seeking a better life.

So both the Conservative and Liberal seek “assistance” from government, which explains that despite the slogans and speeches, government has grown to mammoth proportions regardless of whether it was dominated by democrats (generically liberal) or republicans  (generically conservative). Both seek access to the Public Treasury for their agendas, which explains why spending increases regardless of who is in power. 

Differences do emerge however. As to conservation of resources (especially our people) conservatives treat our resources as infinite and relatively unimportant, relying upon technology to make up the difference when we run out of something. They completely miss the point that when you run your people into the ground, you have the figurative equivalent of an army that is too exhausted to fight. The battle and the war will be lost if you press forward in that condition. 

This is at least an adequate description of the vast majority of the American public — they are exhausted, beleaguered, and demoralized. It is not hard to see how innovation, education, the dollar itself, and the financial markets are in a near state of collapse. Led by trickle down enthusiasts, we have depleted our human resources to the point where we have nowhere to go and the rest of the world knows it. 

Our citizens end each month further in debt, with less value in assets, less relevant knowledge that is valued in the marketplace, and declining income that even a second or third job won’t cure. This is explains why no fiscal stimulus package, and no bailout will “assist” anyone — except the usual culprits at the top. 

The ONLY thing that will save our economy, our sovereignty and our economic and political power here and abroad is a fundamental shift in perception and action directed toward revitalizing our population. 

The Liberal  also treats our resources (natural and human) as infinite but differs in that they identify such resources as important. A nice step, but useless without positively pursuing policies that (as an actual result) conserve and revitalize our people, our economy and our societal fabric. Like their conservative cousins they tend to rely on slogans and speeches rather than accountability and results.

The rather obvious conclusion is that we must seek a new political route. It appears as though the American public has been awakened to this need but has been so misinformed and denied access to the truth that they cannot identify by themselves which policies hold the most promise for relieving the ever-worsening conditions in this country and around the world. The voters have been bombarded by interesting but unimportant facts and theories and slogans and speeches. We are seduced into voting against our own interests by exchanging one “leader” for another without knowing that both subscribe to the same dogma and both are seeking to further their own self aggrandizement of power and wealth.

In that sense, while the words could have been different, Obama correctly identified the problem with certain voters. They have been abandoned, lied to, and defrauded by promises that were never intended to be kept. They are angry and bitter about their loss of jobs, wealth, and prospects. When voters get angry they seek change, but rarely get it. Obama’s “small town” remarks were extremely uncomfortable for a lot of people to hear, but they were true. 

Whether you are a supporter of Obama, Clinton or McCain, if you want change, you are going to have to work for it from the ground up. If you rely on the person onstage to cure your ills because they will “fight” for you, they are telling you they have no intent to win — but they would very much like to create the illusion that they are trying to do something for you. They are not and they won’t unless you insist on it. Obama at least, as been courageous enough to speak the truth and to pursue a nuance in politics that I don’t think we have seen since Kennedy or Lincoln. Most people, even the ones that support him, get it at a gut level but really do not understand the dynamics involved. There is no way to say that without sounding condescending. 

The bottom line is that regardless of who steps into the oval office next January, nothing will actually change unless the dynamics of political participation by U.S. Citizens changes. It isn’t enough to vote. It isn’t wise to trust any leader to do the right thing. And it isn’t wise to trust that once a policy or program has been approved it will be ever be executed. It is up to us to hold their feet to the fire and to remain interested despite the constraints and demands of our lives. That fire will burn us and not them if we don’t wake up to this essential obligation of citizenship.

The problem for homeowners is that however many ideas are put forward they won’t be effective in time to save most people, they won’t be in time to save the economy, and they won’t be in time to save our currency from further wrenching devaluation. It is the fierce urgency of now that cannot even wait to the election or January 20, 2009. There is only one place where immediate relief can be achieved — the Court System. There are constitutional impediments to interference with the mortgage foreclosure process. Yet there is authority in the judicial system to change the rules as long as it does not significantly impede or in this case, it should enhance access to the courts and the ability to mount a credible defense to foreclosures on predatory or fraudulent loans. 

These are the rules that could be enacted by each court in the land that would [a] slow down the process and [b] protect borrowers from the steamroller of lender foreclosures and [c] protect lenders, investment bankers and investors from themselves. These rules preserve and enhance due process so that the unsophisticated borrower is not wiped out again by his or her lack of knowledge. 

Emergency Provisional Rules

Mortgage Foreclosures

These emergency rules of civil procedure apply to all foreclosures on all property, real or personal, initiated on or before January 1, 2007. No Judgment shall be executed, or if already executed, enforced, and no order of removal or eviction or seizure related to foreclosure shall be executed, or if already executed, enforced unless a Court of competent jurisdiction shall have executed an order finding as a matter of law and fact that the foreclosing party(ies) have complied with each and every provision contained herein.

1. Every Petition for Foreclosure and/or every action undertaken by a foreclosing party prior to seeking recovery or seizure, or occupancy of property, shall require the foreclosing party(ies) to file a verified complaint or affidavit alleging the facts supporting the claim for relief, executed by a person with actual knowledge of all facts alleged. The executing party on said verified Petition or affidavit shall affirmatively allege and actually be available for the taking of testimony by deposition or at an evidentiary hearing in the jurisdiction in which the property is located.

2. Each such Petition or Affidavit shall state the names and addresses of all parties involved in the loan transaction and shall be served under the rules governing service of process upon each of said parties as third party non-party litigants, if such parties were not the lender or borrower.

3. Each such Petition or Affidavit shall account for all funds that were passed through or to each party named in the action, the disposition thereof, and the manner and time in which the passage of said funds were dispersed, together with a citation to the mortgage documentation, including a quote of the relevant passages in the body of the Petition or Affidavit wherein said funds are disclosed and wherein said funds are authorized. 

4. Each such Petition or Affidavit shall state with particularity whether any changes occurred after the closing of the subject loan transaction in which parties or persons were changed including the names and addresses of all parties and persons related to the transactions subject to the mortgage.

5. With respect to sale or assignment or any joint or sharing arrangements concerning ownership, distribution of risk, or securitization in which the subject loan was referenced as collateral or otherwise, each such Petition shall state with particularity the details of each such transaction, the distribution or re-distribution of funds, and the documents employed by said parties after said closing.

6. Each and every such Petition or Affidavit shall affirmatively state that the foreclosing party(ies) have standing and authority to bring the action, defend counterclaims and answer affirmative defenses. The signature of the attorney on said pleading shall be mandatory and shall constitute a representation to the COURT that the filing attorney has performed proper due diligence to ascertain the truth of the allegations of legal standing and all other allegations.

7. Each such Petitioner or Affidavit shall be accompanied by attachments of the referenced documents to be included with the first service of such Petition or Affidavit.

8. Each such Petition or Affidavit shall state with particularity and specificity each disclosure made to the borrower and any third parties involved in the transaction under the Truth in Lending Act and the corresponding provision of the mortgage documents executed by the borrower which supports said disclosure.

9. Each such Petition or Affidavit shall state with particularity and specificity each disclosure made to the borrower and any third parties involved in the transaction under the Truth in Lending Act and the corresponding provision of the mortgage documents executed by the borrower which does not support said disclosure. If any allegation other than “none” is made under this paragraph, the foreclosing party(ies) shall state with specificity the law or fact upon which they should be excused from compliance.

10. Each such Petition or Affidavit shall attach a full and complete accounting of all money, value or funds transmitted, paid or or promised between all parties involved in the loan transaction before or after the loan transaction. In the event the borrower has been overcharged, undercharged, or charged correctly, the Petition or Affidavit shall so state affirmatively, providing a full accounting of said funds. 

11. No answer or response from the borrower shall be due unless and until the foreclosing party(ies) are in complete and full compliance with the provisions of these rules. Any prior answer or response may be amended by the borrower after a determination is made that the foreclosing party(ies) are in full compliance. No prior Judgement, order or other document or rule shall prevent the borrower from filing a response or answer after the foreclosing party(ies) are found to be in compliance with these rules.

12. In the event that the foreclosing party(ies) fails or refuses to comply with these rules, the foreclosure shall be barred with prejudice and until the terms of the mortgage are determined with certainty by the Court by clear and convincing evidence, no payments to the mortgagee shall be due. This provision that not apply to payment to taxing authorities. In such event of delay caused by the the foreclosing party(ies) the court may fashion such equitable remedies as the Court deems fit in its discretion. for example, the Court could apply delinquent payments to the end of the mortgage, thus extending the terms. 

13. In the event of non-compliance with these rules wherein the foreclosing party(ies) demonstrate to the Court the probability that they could amend their filing to conform to the requirements herein, the foreclosing party(ies) shall file an amended Petition or Affidavit on or before thirty (30) days from the date of the order of the Court allowing the amendment. Failure to file within said thirty period shall be grounds for a mandatory immediate dismissal with prejudice. 

14. In the event of the filing of a verified amended Petition or Affidavit, Borrower shall have sixty (60) days in which to answer or respond. Failure to answer or respond shall not relieve the burden of proof of the foreclosing party(ies) in compliance with state, local and Federal law, and in compliance with these rules.

15. The Court may grant attorney fees and costs to the prevailing party in each case where a motion or other filing occurs, wherein a determination is made in an adversary proceeding that the filing is in or out of compliance. 

16. In the event a foreclosure has already been completed and all subsequent and customary actions have occurred and no bona fide third party has taken control or occupancy of the property, these rules may applied retroactively. 

17. Once compliance has been established and the issues are joined, the Court shall enter an order requiring the parties to enter into a process of mediation. The purpose of the mediation shall be to fashion a settlement which provides relief and incentives to all affected parties, including non-party litigants. Mediation shall take place no earlier than thirty (30) days after the entry of the mediation order, and not later than is reasonably possibly given the volume of cases and the availability of competent mediators.

These rules are subject to review by the Court but are effective immediately. Comments and applications to be heard shall be available in keeping with the usual and customary methods of proposed rule changes. Said rules shall be effective unless and until stated otherwise by the Court.

OBAMA MOVEMENT IS LAST CHANCE FOR ECONOMY AND HOMEOWNERS.

CHANGE THE RULES OF CIVIL PROCEDURE REGARDING FORECLOSURES OF ALL TYPES.

As we have have repeatedly pointed out, there is no time for stimulus packages, legislative bailouts, or executive orders. 

The evidence is mounting because [a] the situation is as bad as it looks and it is getting worse and [b] the administration ran out of places to hide the mounting losses to the economy. 

The dollar continues its slide which will create devastating inflation within 6 months. Consumer buying power is now the lowest it is had been since 1945. Job losses are at record levels and more people, especially men are starting to simply walk away from their jobs because the pay does nothing for them. People are also getting ready to walk away from their homes and just leave the keys with banks who will try to dump their real estate inventory, perhaps with some new derivative security plan.

The financial industry cannot bail us out, the U.S. Treasury can’t bail us out, China can’t bail us out, the congress cannot bail us out, the President won’t or can’t bail us out, and the candidates for President will inherit the second Great Depression (GDII) unless something is done right now. The plain truth is that if you do the arithmetic, there isn’t enough money in the world to buy our way out of this. Leadership, agreements, cooperation and sharing are the commodities that will settle the financial claims and avert a general collapse.

Start with the obvious — 900,000 foreclosures and mounting. At the center of this meltdown is the mean fact that prices were artificially inflated and, as in every Ponzi scheme, eventually collapsed. The debt was as fake as the prices. But we are still pretending it is real. The monthly payments were in many cases procured by fraud and numerous violations of the Truth in Lending Act. 

Change the procedure, not the substance of the law. 

The change needed is to enumerate the requirements for initiating foreclosures such that Ponzi operators are deterred from filing foreclosures, the entire foreclosure process is slowed down, and the loans are reinstated, re- negotiated, or modified on some basis that will result in continued occupancy of homes, restoring capital to balance sheets of financial institutions, restoring some degree of quality to CDO’s that were sold, and adding liquidity to the economy without pumping more funny money into it — thus adding value to the dollar, and adding purchasing power to consumers and industry. We encourage immunity from criminal prosecution those players who are still in the chain and assist in the process of recovery. Those actions and investigations by State attorney generals will at best provide an empty victory in an empty marketplace.

CHANGE THE RULES OF CIVIL PROCEDURE REGARDING FORECLOSURES OF ALL TYPES.

The only hope is the judiciary, which handles the foreclosures. Everyone agrees, including the parties initiating the foreclosures and evictions, that the goal is slowing down the process, giving everyone a little hope and incentive, and creating a process where these cases are settled equitably by agreement or by the equitable powers of every court in which an eviction or foreclosure matter is pending. Foreclosure is an equitable remedy which grants wide latitude to the Judge. Procedures should be in place that force the initiators of foreclosure proceedings to slow down, force everyone into mediation and give some breathing room so the marketplace, the financial sector, and government has time to catch up with events that have overtaken them.

In order to accomplish this, the authority is usually vested in the State Supreme Court of each state. The State Supreme Court is usually the authority that creates, amends or changes rules of civil procedure. This plan is not sexy but it is quick and it will work. Change the rules as we have suggested in our recent posting “Send this to Your State Supreme Court”. 

As for the PRESIDENTIAL candidates it is a dismal picture. The candidates for all other public offices don’t look any better in any of the State, local or Federal elections.

While we applaud McCain for his honesty in admitting he doesn’t know much about economics, that is hardly the person we want making executive decisions during a deep recession or depression. 

While Clinton is good at creating four point plans, ten point plans etc., she has not demonstrated any understanding of the economics at work here. Her husband didn’t have any experience in economics beyond a small state with niche industries. Her “experience” might sell but it isn’t true. She was a tea and cookies first lady in Arkansas and in the White House. This is no Eleanor Roosevelt. We can only hope that, like her Husband, if she is the candidate, she will be lucky enough to have people around like Alan Greenspan, Robert Rubin and others who not only understood the economy but knew how to grow it and that her personal political ambitions for a second term don’t get in the way of good judgment.

While Obama does have a close-up understanding of the economics of poverty, because he gave up Wall Street to work on Main Street, he also lacks experience in the macro-economic events that are in the process of burying our economy. He also is an academic, having taught constitutional law for 10 years, and brilliant analyst and fast learner. He also energizes people to out-perform which is exactly what we are going to need in the White House if we get through this in one piece. 

Obama is about leadership while Clinton is about tactical maneuvering. Both are valuable talents. But the truth is that Clinton would probably be one of the best Senate Majority leaders in history and at best a mediocre President for precisely those reasons. With Obama in the White House and Clinton and Pelosi in charge of Congress, it is hard to imagine a scenario where we can’t emerge from all this a little smarter and rebounding from the worst economic times in our lives.

There are no guarantees. Yet it seems like an Obama presidency will be a populist presidency directed by the people and for the people, while a Clinton presidency will be a Hillary presidency. McCain appears best suited to go to war and least suited to deal with any domestic issues. But none of them will like what is delivered to them on “Day One” unless something is done now. Obama too is at least as likely to attract energized geniuses in their respective fields to manage the difficult terrain ahead of us.

What Obama should do is what Obama does best — create a movement that moves the Supreme Courts of every state into action. All candidates for public office should sign on and all present office holders should introduce and pass remedial legislation in support of the movement. Obama is best suited to initiate this movement because his core constituency is the sector hardest hit by predatory lending practices, job losses, and NAFTA failures. 

The Obama Presidency should, as much as possible, start now. 

It is highly unlikely that Clinton’s last gasp pf political maneuvering and attack ads is going to change the math — Obama ends up with more popular vote, more states won, and more delegates one. Unless the convention turns to a compromise candidate like Gore, who probably won’t take the job, Obama is the only candidate that can be the nominee without tearing the Democratic party apart.

It’s 3a.m., the phone rings. A girl with an apron answers and says “Thanks for calling Crispy Creme.” Hillary places her order for Bill. The fact is that none of the three candidates — McCain, Obama, or Clinton have ever had that 3am call nor have they ever had to make an executive decision in a national crisis. On experience in public office, McCain is the clear winner, with Obama having about twice as much as Hillary. 

On voting critical issues, they all have pluses and minuses. The Iraq War resolution was clearly a mistake because it delegated to the President the authority to declare war — a clear violation of the U.S. Constitution. It doesn’t matter whether the war was right or wrong, the resolution was wrong. Obama did have that right.

The scare tactics, while interesting for the Press, tell us nothing about the executive decision-making abilities of any of the candidates. They pretend to say something negative about one candidate implying that the critique is not equally applicable to the author and the target.  

Meanwhile, the real issues confronting voters are getting totally confused. NAFTA, even if it was a good idea in the long run, was rushed to judgment, with Hillary’s concurrence. Like the Iraq war it was executed miserably because of lack of congressional oversight which is the real issue confronting the American voter. It is the failure of congress to do its job which allowed the two previous chief executives (Clinton and Bush) to run amok. We;ll get the same result regardless of who is President if we don’t change that.

The Mortgage Meltdown occurred also because of lack of congressional oversight and a green light from the executive to go ahead and invent money.  Want more of the same? Just keep focussing on only the Presidential race instead of the people who are supposed  to provide checks and balances — congress. 

What we know is that nothing constructive is happening now, the usual ideological gridlock is preventing progress, and that the curiosity about a brilliant new face might just get the right people to the right table at the right time.  

Bernanke is completely right that the ONLY way out of this mess is not throwing more money at it, further damaging the credibility and value of the dollar. The real answer, the one that that actually reverses the crisis is admitting the simple fact that a $250,000 house was sold for $400,000. 

And the solution lies not in legislation but in executive leadership. The key component of the solution is a reduction of the principal balance of the mortgage loans out there — and that includes virtually all loans that were initiated over the last 5 years. All homes were affected by the appearance of rising prices that turned out to be false.

The only way this is going to happen is with persuasive executive leadership. Teddy Roosevelt said speak softly and carry a big stick. That is pretty much what need to happen here but somehow you need to get all the players into the room and sitting at the same table. 

McCain won’t do it out of stubborn ideology. Clinton can’t do it because of resistance just to her name let alone credibility in her policies. That leaves Obama — an untested but brilliant strategist who not only survived but prospered in highly contentious environments consisting of diverse antagonists and rivals.  His credentials are necessarily sparse but still solid in this respect. If Obama can’t get everyone to the table, nobody will. And if they don’t come, the economy will sink like a stone. 

Bernanke could be the one but he isn’t. Paulson could be the one but he isn’t. And of course Bush is in the right position, but is so out of touch with the reality of the situation that he is worse than useless.  

Consensus that offers olive branches and incentives to everyone CAN solve these issues. Lower the mortgage balance but give the lenders a chance to participate in the comeback on a contingent basis. State the reduction as a contingency so the capital requirements of banks can be met without begging for money around the world. This will also minimize the write-downs of investment banking houses and restore investment value to balance sheets.

Avoid criminal and civil prosecutions and even offer immunity of there is cooperation. Strengthen regulation and abandon the new round of loosening regulations in Basel II in favor of tighter standards with oversight on risk assessment. Strengthen disclosure requirements and enforcement of violations by the SEC using the methods employed in the CDO fraud as the template.

These are the a few of the important things that need to be done. In order for Republicans, Democrats, Independents, businessmen, Wall Street executives, Bankers, borrowers and investors to play nice together though, it will take executive leadership of a type we haven’t seen since Jack Kennedy talked down steel prices. 

There is no guarantee that anyone including Obama will be successful at staunching the bleeding. What we know is that nothing constructive is happening now, the usual ideological gridlock is preventing progress, and that the curiosity about a brilliant new face might just get the right people to the right table at the right time. 

Obama, like any president, will need advice and counsel dealing with the complexities of currency, derivative securities, arcane, conflicting mortgage laws and provisions in notes that defy explanation. 

He has an advantage in perception, however, His campaign is clearly not owned by one large interest group over another. And there is no perception that runs to the contrary. Enmity between ankle biting bankers and investment bankers won’t be mixed with suspicion that they are being led into a trap. 

It will be 10 months before Obama can use his powers of the Presidency to start this process. But there IS something he can do now. Start acting like a President and fill the void. His backing includes people of enormous political power who can help invite the decision-makers to secret meetings now. Win or lose, he should do that now without regard to whether it is politically expedient.