Everyone Else Knows: Why Do We Continue To Ignore It?

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Editor’s Comment:

In a short article by Patrick Jenkins in the Financial Times (Doubts Over Lending Push), it seems that everyone in Europe understands the problem well, and that the the consequences are dire but are unsure about what to do about it. Here in the United States housing is the elephant in the living room that nobody really wants to talk about. European leaders don’t like talking about it either but they are doing it anyway. Maybe they actually care what happens next unlike American politicians who seem to enjoy creating catastrophes, then handing power over to the other party and blaming them for the results.

Mitt Romney and Barack Obama are battling it out over economic policies and whether lower taxes and fiscal stimulus will benefit the economy. Mitt wants to cut what is left of federal and state spending thus deepening the depression or recession or whatever it is. Barack wants to stimulate economic growth with more money. How about this: they are both wrong. And the Europeans, for all their chaotic political intrigues, are zooming in on the cure a lot faster than we are because we won’t even talk about it.

Both candidates seem to think that cheaper money and more of it delivered to the banks and large corporations will stimulate borrowing and commerce. But Graeme Leach, chief economist at the Institute of Directors boiled it down to one simple sentence: “Companies alarmed by the euro crisis will not be eager to borrow, regardless of the cost.” It is obviously obvious to anyone with a brain that companies are not going to borrow unless they think they need the money.

And they are not going to think they need the money unless demand is going up. With unemployment topping out near Great Depression levels, why would anyone think that commerce can be revived? Add in the fact that real wages have declined over the last 30 years and you can easily see why companies won’t borrow unless they think they can make money increasing their debt burden. Who does the buying — fairies? It’s consumers, stupid, and they are broke, tapped out on credit, and have very little confidence in their prospects.

The Europeans actually understand that there is a difference between the real economy and the one reported in the newspapers. The real one is where a strong middle class has savings and resources and they buy things. The one in the newspapers is all about paper and trades with companies buying and selling each other and “bets” being made on who is right about bonds, stocks and other crazy financial “innovations.”

Virtually half of the GDP published by Washington is made up of paper trades where the typical citizen is left out of the equation altogether. So here is a repeat of my prediction regarding the stock market: either it will “crash” in a correction that is congruent with actual commerce levels or the financial institutions and rating agencies will continue to rate and recommend securities of companies whose substance is gone —- called zombies in the FI article.

BOA is one such Zombie institution. It’s broke. Everyone knows it’s broke and yet they persist on pretending that it is just fine. Then they want consumers to express confidence in the economy or government. Why should they?

Everyone understands that the problem is housing and the fraudulent printing of “money” by private banks dwarfing any real money supply that is supplied by world governments. $700 TRILLION is traded as cash equivalents while world governments, even with quantitative easing have issued less than $70 TRILLION in real currency. Why would anyone think that taxes or stimulus or quantitative easing (printing money) could even nick the side of this barn. We are being forced to sustain a false tree of money on which thousands of branches are hanging onto a trunk that is not there and never was. Fear is now the dominant word that describes the behavior of world leaders and the leaders of central banks.

Here is the solution and it is the application of justice at the same time: since the mortgage papers contained lies and did not disclose the identity of the lender nor the actual terms of repayment, there is no law in existence that would allow such a transaction to become  an encumbrance on the land.

Add to that the fact that the transaction recited never took place because the borrower was actually doing business with a stranger where money DID exchange hands but was never documented, and you have the answer: the mortgages are invalid, the notes are invalid and the the banks having been already paid several times over for a loss they never incurred but instead foisted upon pension funds and sovereign wealth funds from other nations, let’s call it a day.

I don’t care if people get an unfair advantage or perk for being a victim in this scheme. I don’t care if this interferes with the ideology of personal responsibility (which is being ignorantly applied to this situation). I care about the country, our society and what will happen if our economy can’t come up off the ground. I care that too many people are underemployed or unemployed. I care that average savings are zero and that most Americans have suffered a grievous loss of wealth.

I care that there are not enough people to buy things because they don’t have any money. Rescind the so-called mortgage transactions, let the branches of derivatives and credit default swaps and other bets and enhancements fall to the ground. It’s not as bad as you think. Most of the bets settle out to zero exchanges because with certain exceptions the bets are balanced.

The world will not end if we give homeowners their homes free and clear of any encumbrance. The governments could even prosper if they took an interest in those mortgages they already purchased (or think they purchased) and imposed a fair mortgage with fair terms based upon realistic current market conditions in housing and finance. Then people would be returned to their former status in far less time, the rate of commerce would improve, the real economy would recover and the fake economy and the people who go with it can take a hike or go to jail, if we dare to put them there.

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Prosecute the Big Banks? Nothing’s Off the Table!

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Editor’s Comment:

Looks like Obama got the memo. Everyone dislikes the banks across all spectrums of ideology. The comment made that this is a man-made catastrophe shows that law enforcement is getting the point. And by announcing indictments in the fall and blaming the Banks and those who did the bidding of the banks as politicians, Obama scores major points from the far left to the far right. And of course there is the issue that criminal prosecutions will give borrowers far more credibility in court.

Prosecute The Big Banks? ‘Nothing’s Off The Table,’  

NY Attorney General Says

DAVID TAINTOR

PROVIDENCE, R.I. — Americans can expect to see tangible results this fall from the task force President Obama created to investigate the financial crisis, New York State Attorney General Eric Schneiderman told TPM Thursday.

Asked after his keynote speech to the progressive Netroots Nation conference here whether prosecutions from the task force are possible, Schneiderman said: “Nothing’s off the table now. Nothing’s off the table.”

The attorney general is one of five co-chairs of the “special unit” Obama announced at his January State of the Union address. More than 100 staffers and prosecutors have been deployed, Schneiderman said, mostly in Washington, but also in U.S. attorneys offices around the country. The group has been criticized by some for its lack of results thus far. In late May, Schneiderman told the Wall Street Journal he was seeking more prosecutorial firepower. The Journal reported that the group has issued more than two-dozen subpoenas and collected millions of pages of documents. Schneiderman wouldn’t specify how much man power will be necessary.

“I’m continuing to push for more, and faster, but I’m an impatient guy,” Schneiderman told TPM. “I think we’re going to get there.”

Schneiderman’s speech stopped short of specifics for the task force. He gave credit to progressive activists and the Occupy movement’s role in public discourse, saying “true change requires movement-building” and “officials don’t create movements, movements create leaders.” Schneiderman also said the public’s faith in the financial industry is at such a low that America needs a second New Deal.

“The markets didn’t crash because of an act of God,” he said later. “That was a man-made catastrophe. If we have any sense at all, we’re going to do what our predecessors did after the last big catastrophe in the 1930s and do some real re-regulations of the markets.”

While Schneiderman spoke to a mostly receptive crowd, a small group of demonstrators gathered in front of the stage holding “jail the bankers” signs. Schneiderman’s staffers said they thought group was friendly to the attorney general’s efforts to take on the financial industry. But Schneiderman said he appreciates activists who push public officials. “I understand the sentiment,” he said. “People have a sense that they’re not sure what happened, but they feel like somebody got away with something, and there hasn’t been accountability.”

Schneiderman remains an enthusiastic supporter of Obama’s reelection campaign. Introducing former President Bill Clinton at an Obama fundraiser this week, Schneiderman said, according to Capital New York, “Given how much is on the line for everyday Americans, why in the world would we hand over the White House to the same people that left our country in a much worse place than they found it? The same recipe for economic failure is what Mitt Romney’s serving. And I believe the American people will say, ‘Thanks, but no thanks,’ to a third term for George W. Bush.”

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WHO BENEFITS FROM AUSTERITY? WALL STREET!

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Editor’s Comment:

You might wonder why people, mostly republicans, are all about “spending cuts.” just for clarification here, spending cuts are what Europe calls “austerity measures.” every policy possibility has been played here and the worst one is clearly austerity or “spending cuts.” everyone calling for austerity is controlled by the banks. Everyone who is not controlled by the banks thinks it isn’t a bad idea to continue government safety nets and sponsor more commerce. Once upon a time Wall Street made its money riding the crest of successful economies, collecting brokerage fees for more and more deals. Not anymore. The Banks are intent on taking the capital — all of it. What then?

People think it makes sense to spend less money to have more. But when the government does that it has less, not more money, thus cutting off vital services. So you might want to think about who benefits as all the major industrialised nations go down the tubes. We know government loses, we know the people lose their services and pay more taxes, so who is it that benefits from the austerity spin?

WALL STREET is the answer. With the level of commerce declining, plummeting they can bet on a sure thing — that interest rates are going to go through the roof, which means that the prices of bonds already issued are going to fall like stones. Only on Wall street can you make bets on interest rates and bets on bonds or groups of bonds or banks or groups of banks. They are pushing the austerity engine and taking us all into a ditch while Wall Street rakes in whatever money is left in our limping economy.

Wall Street has not only turned the lending models on their heads they have succeeded at turning the policy models on their head. The results are unthinkable— Wall Street has created an incentive to kill commerce. And now they are so deep into those bets that the only game in town is putting every economy into crisis. Someone needs to pull the rug out from under these banksters and put them jail where they belong. As society gave them the license to create and grow liquidity for the engine of economic growth so too can society take it away when the banks bite the hands that fed them.

Paul Krugman Debunks Mitt Romney’s Economic Nonsense

By: Jason Easley

On CNN, Paul Krugman called out Mitt Romney today for spouting nonsense about the economy and explained why Romney’s plan to do what Greece did won’t bring prosperity to America.

Here are Krugman’s thoughts on Obama and Romney via CNN:

ZAKARIA: All this said and done, are you enthusiastic about President Obama? You were not for him in the Democratic primary four years ago.

KRUGMAN: Right. I mean, we’re a long way past where I think enthusiasm is the appropriate emotion for anything here.

But he’s learned a lot. And, you know, his heart’s always been in the right place, and I believe his head is now in the right place. And you certainly — of course, I can’t do endorsements, right? It’s a Times rule. So you have no idea who I prefer in this election.

(LAUGHTER)

But he certainly is talking sense about the economy, and Mitt Romney is talking utter nonsense. And you really do worry. In effect…

ZAKARIA: What is the single biggest piece of nonsense that Mitt Romney…

KRUGMAN: Mitt Romney is saying basically that spending cuts are how we’re going to get to prosperity. Mitt Romney is saying, see what’s happening in Greece and in Portugal and in Spain and in Ireland; let’s do that here.

Boy — you know, we’ve just had a massive test, human experimentation on a massive scale, in effect, alternative doctrines of economic management. We’ve just seen which doctrines are disastrous. And the Republican platform is, let’s put that doctrine that has just caused collapse in Europe — let’s put that doctrine into effect right here in America.

Krugman was right on the money. Republicans have been trying to play what they think is a clever game of pretending that what they have proposed isn’t austerity, while at the same time threatening to implement austerity if they don’t get what they want, which is austerity. History shows that economies suffocate under austerity, but Republicans like Mitt Romney and Paul Ryan keep pushing the insane idea is that we can do the same thing that Europe did, but expect a different result.

Republicans are using austerity as an economic justification for their policy of feeding the rich while starving everyone else. The Romney and Ryan plans by design don’t force any austerity measures on the wealthy. The austerity is designed for everyone else. The rich would benefit while America’s devolution into a society of haves and have nots would accelerate. The reality is that Spending cuts never bring prosperity, and many of the rank and file Republicans who are championing the cuts fail to understand that those cuts will be coming out of their hides. All of the Republicans over 65 years of age who support Romney haven’t put the pieces together that a vote for Mitt is a vote to slash their Medicare.

Mitt Romney is spewing contradictory economic nonsense, because the Republican platform is becoming little more than historically discredited feel good dreams of trickledown worship and gibberish.

Paul Krugman is right. A majority of his fellow economists know he is right. The American people know he is right, and history proves him correct, but the Republican Party is trapped in a suicidal fantasy economy of their own creation. It is this fantasy that Romney has to pander to in order to keep his base, and it is the same fantasy that Paul Krugman absolutely destroyed.

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