Menendez and Booker Take on Zombie Foreclosures

For more information please call 954-495-9867 or 520-405-1688

This is for general information only. Get a lawyer.

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see http://dsnews.com/news/10-30-2015/senators-call-federal-regulators-to-action-on-zombie-foreclosures

It seems ridiculous. Why would a lender reject a workout, reject modification, reject a short sale and insist on a foreclosure — and then walk away from the property? Why has this not been a center of attention as hundreds of communities, cities and states have been decimated by this phenomenon?

The answer turns on the themes of this blog and several other media outlets but nobody in a position to change the conversation wants to face up to the single true statement about this: somehow the banks are making more money going to foreclosure (and walking away from the property) than doing a workout to save the loan as a valuable asset. The foreclosure sale is worth more to them than the property.

The banks are not stupid. They know that destroying neighborhoods and cities results in a precipitous drop in home values (going to zero in many places). They know that this results in a disastrous deterioration of the value of the security for the alleged loans.

So we are faced with a second undeniable truth: the banks are not losing money on foreclosures, they are making money.

So when Senators like Menendez and Booker from New Jersey write a letter to federal regulators asking them to look into the wild phenomenon of Zombie foreclosures, we can only hope that such Senators and the federal regulators will ask themselves some very simple questions. That is the only way this crisis will be averted and it is a vehicle for bringing down the largest banks who are performing illegal acts every day in foreclosures across the country.

If we go beyond the basic questions, then we start to drill down to the real facts — not the ones that practically everyone assumes to be true.

How could the banks not be losing money on Zombie foreclosures? The loss of the loan and the loss of the property securing the loan obviously reduces the value of the alleged loan to zero. In fact, it creates a liability to the bank for walking away after they kicked out the people who own the house. The City can go after them for taxes and the prospect of liability for attractive nuisance and other torts requires them to pay for insurance or brace for impact when the lawsuit happens. Any normal banker will tell you that this is not an acceptable scenario nor is it industry practice amongst banks who make loans.

Hence the conclusion that the parties who invoking the foreclosure procedures did not make loans — nor did anyone else in their alleged chain. The part of the deal where the lender hands over the cash to the closing agent never happened in those loans. If it had happened then the loan and the property would have value to these banks and other entities. Since it was “other people’s money” involved in that “loan” transaction, the banks simply don’t care what happens to the loan or the property except that THEY want the foreclosures to the detriment of the owners of the property, the detriment to the Pension funds whose money was somehow used to make the alleged loans, the detriment of our communities, and the detriment of government which ramped up to handle all the new housing only to find that their tax base vanished.

So if the banks are not losing money on the alleged default of the borrower, it opens the door to understanding that practically anything else they do would result in profits to the banks who are illegally and fraudulently controlling the foreclosure process. When they bring a foreclosure action they use self proclaimed authority that is presumed to be true even though truth is not involved. They have credibility even though they lack the truth.

It’s a perfect world to Wall Street. They use nonexistent entities as claimants in the foreclosure process thus insulating themselves from liability for wrongful foreclosure when those few cases actually get decided on the merits. The money from the pension funds goes into the pocket of the Wall Street banks instead of those empty Trusts.

The pension funds gets a certificate of ownership and debt from the empty trust and they are contractually bound not to ask questions about any specific loan. Ever wonder why that provision is in every Pooling and Service Agreement. So while intermediary parties have a party with pension money, the pension money was used to fund loans that were underwritten for the purpose of loss instead of the usual profit motive. And by knowing that the loans would fail the banks were able to get even more money by betting on loans that they knew would fail. And then they got even more money by betting on the loss of value of the certificates. And they got even more money when they engaged in the Re-REMIC practice of closing out the old trust and starting a new one. And to add insult to injury, the pension fund keeps getting paid by the wrongdoers from a “reserve fund” consisting entirely of pension money. Pouring salt on that wound is the bank’s hubris in claiming the right to recover “servicer advances” made from the reserve pool — only upon foreclosure sale. And the cherry on top is that the “servicers” who are not servicers sell the right to recover servicer advances in additional securitization schemes.

Homeowners take it personally when the servicer tells them  they were rejected by the investor for a modification (false claim). They think it must be personal because no other explanation makes sense to them. But that is because they don’t have the information on “securitization fail.”

The BIG LIE is that lenders are foreclosing. They are not. In fact, there are no lenders in the legal and conventional use of the word. There are only victims of fraud.

Modification Minefields as Foreclosures Resume Upward Volume

For further information please call 954-495-9867 or 520-405-1688

Listen to Neil Garfield Show on Thursday February 26, 2015 at 6pm EDT., and each Thursday

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see http://www.njspotlight.com/stories/15/02/02/new-foreclosure-procedures-put-to-test-as-number-of-cases-climbs-in-nj/

New Jersey now has an upsurge of Foreclosure activity. It is on track to become first in the nation in the number of foreclosures. What is clear is that the level of foreclosure activity is being carefully managed to avoid attention in the media. Right now, foreclosure articles and the infamous acts of the banks in pursuing foreclosures is staying off Page 1 and usually not  anywhere in newspapers and other media outlets online and and in distributed media. The pattern is obvious. After one area becomes saturated with foreclosures, the banks switch off the flow and then move to another geographical area. This effectively manages the news. And it keeps foreclosures from becoming a hot political issue despite the fact that millions of Americans are being displaced by illegal foreclosures based upon invalid mortgage documents and the complete absence of any real creditor in the mix.

As foreclosures rise, the number of attempts at modification also rise. This is a game used by “servicers” to assure what appears to be an inescapable default because their marching orders are to get the foreclosure sales, not to resolve the issue. The investment banks need foreclosures; they don’t need the money and they don’t need the house —- as the hundreds of thousands of zombie foreclosures attest where the bank forecloses and abandons property where the borrower could and would have continued paying.

The problem with modifications is the same as the problem with foreclosures. It constitutes another layer of mortgage fraud perpetrated by the Wall Street banks, who are now facing increasingly successful challenges to their attempts to complete the cycle of fraud with a foreclosure.

The “servicer” whom nearly everyone takes for granted as having some authority to move forward is in actuality just as much a stranger to the transaction as the alleged Trust or “Holder”. The so-called servicer alleged authority depends upon powers conferred on it by the Pooling and Servicing Agreement of an unfunded Trust that never completed its mission to originate or acquire loans. If the REMIC trust doesn’t own the loans, the servicer claiming authority from the PSA is claiming vapor. If the Trust doesn’t own the loan then the PSA is irrelevant and the powers conferred in the PSA are pure vapor.

This brings us full circle to where we were in 2007-2008 when it was the banks themselves that claimed that there were no trusts and that there was no securitization. They were, as it turns out, telling the truth. The Trusts were drafted but never funded, never used as conduits and never engaged in ANY transaction in which the Trust had funded the origination or acquisition of loans. So anyone claiming authority from the trust was claiming authority from a fictional character — like Donald Duck.

Complicating matters further is the issue of who owns the loan when there is a claim by Freddie or Fannie. Both of them say they “have” the mortgage online when they neither “have it” nor “own it.” Fannie and Freddie were one of two things in this mess: (1) guarantors, which means they have no interest until after a creditor liquidates the property and claims an actual money loss and Fannie and Freddie actually pays off the loss or (2) Master trustee (and probably guarantor as well) for a REMIC Trust that probably has no greater value than the unfunded REMIC Trusts that are unused conduits.

Further complicating the issue with the former Government Sponsored Entities (Fannie and Freddie) is the fact that many banks have been forced to buy back or pay damages for violating underwriting standards and other types of fraud.

So how do you get or sign a modification with a servicer that has no authority and represents a Trust that has no interest in the loan? The answer is that there is no legal way to do it — BUT there is a way that would allow a legal fiction to be created if a Court issued an order approving the modification and declaring the rights of the parties. The order would say that XYZ is the servicer and ABC is the creditor or owner of the loan and that the homeowner is the borrower and that the modification agreement is approved. If proper notice (including publication) is given it would have the same effect as a foreclosure and would eliminate all questions of title. Without that, you will have continuing title problems. You should also request that the “Servicer” or “Trustee” arrange for a “Guarantee of Title” from a title company.

For the tricks and craziness of what is happening in modifications and the issues presented in New Jersey and other states click the link above.

“FREE HOUSE” in NJ Bankruptcy Court

For further information and assistance please call 954-495-9867 and 520-405-1688. We will be covering this decision on the Neil Garfield show tonight.

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Click in to tune in at The Neil Garfield Show

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see http://stopforeclosurefraud.com/2014/11/18/in-re-washington-bankr-court-d-new-jersey-morris-county-homeowner-gets-a-free-house/

also see Senator Elizabeth Warren Ramping Up Attack: When Will “Principal reduction” become a reality?

This case is notable for several reasons:

  1. The Judge expresses outright that it is general judicial bias that homeowner should not prevail in foreclosure litigation.
  2. Nevertheless this Judge trashes the the claim of SPS (Specialized Loan Services) and BONY (Bank of New York) Mellon leaving the homeowner with what the Judge calls a free house.
  3. The Judge concludes that the mortgage was unenforceable and that the note was unenforceable after a careful examination of the statute of limitations under New Jersey law.
  4. The Judge concludes that the mortgage is void, not just unenforceable, thus clearing title.

While we can be pleased with the result, some of the reasoning might not withstand an appeal, if the foreclosers take the risk of filing one.

Here are some interesting excerpts:

“No one gets a free house.” This Court and others have uttered that admonition since the early days of the mortgage crisis, where homeowners have sought relief under a myriad of state and federal consumer protection statutes and the Bankruptcy Code. Yet, with a proper measure of disquiet and chagrin, the Court now must retreat from this position, as Gordon A. Washington (“the Debtor”) has presented a convincing argument for entitlement to such relief. So, with figurative hand holding the nose, the Court, for the reasons set forth below, will grant Debtor’s motion for summary judgment.
The Defendants accelerated the maturity date of the loan to the June 1, 2007 default date, as acknowledged in the Assignment (dkt. 7, Exhibit L).[10] Moreover, neither the Debtor nor the Defendants have taken any measures under the note or mortgage, or under the Fair Foreclosure Act, to de-accelerate the debt, and the Defendants have further failed to file a foreclosure complaint within 6 years of the accelerated maturity date as required by N.J.S.A. § 2A:50-56.1(a). Accordingly, the Defendants are now time-barred from filing a foreclosure complaint and from obtaining a final judgment of foreclosure.

11 U.S.C. § 502(b)(1) (emphasis added). 11 U.S.C. § 506 controls the allowance of secured claims and provides that, if the claim underlying the lien is disallowed, then the lien is void:

(a)(1) An allowed claim of a creditor secured by a lien on property in which the estate has an interest, or that is subject to setoff under section 553 of this title, is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property, or to the extent of the amount subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of such creditor’s interest or the amount so subject to setoff is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor’s interest.

(d) To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void, unless [conditions not relevant here exist].
As explained above, by application of N.J.S.A. § 2A:50-56.1(a) and (c), the Defendants are time-barred under New Jersey state law from enforcing either the note or the accelerated mortgage. As a result, Defendants’ proof of claim 7 must be disallowed under 11 U.S.C. § 502(b)(1) as unenforceable against the Debtor or against Debtor’s property under applicable state law. Having determined that Defendants do not have an allowed secured claim, the underlying lien is deemed void pursuant to 11 U.S.C. §§ 506(a)(1) and (d).[11]
In light of Defendants’ acceleration of the maturity date of the underlying debt as of June 1, 2007, and because neither Debtor nor Defendants took any action under either the mortgage instruments, or the Fair Foreclosure Act, to de-accelerate the maturity date, Defendants’ right to file a foreclosure complaint expired 6 years after the June 1, 2007 acceleration date under N.J.S.A. § 2A:50-56.1(a). Given that Defendants’ putative secured claim is unenforceable under 11 U.S.C. § 502(b)(1), by applicable New Jersey statute, their mortgage lien is void under 11 U.S.C. § 506(d), and the Debtor retains the property, free of any claim of the Defendants. Debtor is to submit a form of judgment. The Court will proceed to gargle in an effort to remove the lingering bad taste.
11] In as much as the Court finds that the Defendants are time-barred from enforcing the note or the mortgage, it is not necessary to address Debtor’s arguments that Defendants lack standing to enforce the note and mortgage based on alleged defects in the Assignment or the alleged impact of a Settlement Agreement.

New Jersey Clears Docket: Dismisses 80,000+ cases

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GUEST TONIGHT: KENNETH HANKS, ESQ. TITLE EXPERT

One might ask why a lender would delay the prosecution of their claim. The answer is that they wouldn’t delay if they thought they had a solid claim. I know. I have represented banks on loans, foreclosures, associations in foreclosures etc. And I have proposed that if the Courts were to order the alleged ‘holders” to show the actual money trail so we would all know what transactions actually took place, their dockets would be clear, because most of the transactions described on assignments and indorsements never took place.

We have seen cases dating back to the 1990’s that have not been prosecuted and judges in all states are dismissing for failure to prosecute, which in turn brings up the statute of limitations, which I warn you is applied very differently from state to state. But in many cases they cannot refile because the statute of limitations has run and they are out of luck. So why would a bank (who is representing to the court that it the loser in a transaction with the borrower ) allow so many cases to be dismissed? Is there reason for this madness?

I believe there is. But the reason probably varies from case to case. Suffice it to say that we will see what plays out in New Jersey. My guess is that many of the documents used by foreclosers represent transactions that were fictitious or duplications of other transactions and now they are picking which story to go with in court but he courts are getting annoyed with the actual complexity of what seems to be a “simple” claim. The borrower didn’t pay, isn’t that enough? Actually no.

The essential problem that is now bubbling to the surface after years of suppression is this: the lender is receiving payments based upon a different deal and computation than the deal and computation the borrower is required to pay. The lender’s right to repayment comes from the bond indenture on the mortgage bond issued by a REMIC trust that never had any money, assets, income or expenses.

That indenture doesn’t say the investor will be paid according to the homeowner notes on loans originated or acquired by the trust or with the money from the trust beneficiaries. It provides for a specific yield of interest and principal regardless of what the notes say and even regardless (many times) of whether the borrower pays or not. Those terms are different than the terms signed by the homeowner. And the note and mortgage, were mostly executed in favor of parties who did not make any loan, never received the delivery of the note and never had any interest in the transaction. So what good are assignments from parties with zero ownership interest to convey?

We have reached a turning point where courts and others are saying to the banks, “if your claims are real, why didn’t you prosecute them for years?”

http://www.wnyc.org/story/new-jersey-breaks-foreclosure-logjam-yields-flood-dismissals/

New Jersey Now Moves Into the Lead in the Race to Didsaster

New Jersey moves into the lead. We have been comparing this to a ball game to make the point that we are only in the 5th inning of a very long game. We have many years to go before this spreading contagion of fake foreclosures is over. It might better be analogized to a horse race where one state leads in Foreclosures and then another takes the lead with the “leader” is a mess of cracking bones and split hoofs while the states “behind” it are in even worse shape.
Economic recovery cannot be real until we cure the housing crisis. Housing drives our economy. The real solution to housing is to simply apply the law and concede that in most, if not all states the mortgage lien was never valid and neither was the note. For that to happen, the banks must be thrown from government power. Yes, there will be some collateral damage — but nothing close to the continuing damage caused by this race to the edge.
Applying basic legal and long-standing principles of equity and law, the documents upon which the foreclosers are relying are invalid, void, and not even competent evidence of the monetary transaction that took place with the borrower, whose obligation is largely undocumented and certainly not secured nor securitized. Improper closing documents can not be laid at the doorsteps or the courts. This was the fault of the banks who transformed their role as intermediaries into being the principal on both sides of the transaction through identity theft and deceit.
The solution lies not in the forgiveness of debt but the elimination of the debt as being secured by perfected mortgage liens. This is all too complex for John Q Public but not for the government that is still getting it’s guidance from Wall Street. The intentional failure of revealing the real lender and the real terms of repayment enabled the banks to intervene, grab the gains and pitch the losses back at the real lenders and borrowers and eventually the government. If we elect a government where fewer people are beholden to the banks, we will have the opportunity to solve this crisis over much fewer years than otherwise.
Homeowners would be left in their homes not because the debt was forgiven, but because the noose around their neck had been given some slack. The obligation would still be owed as a demand loan giving the investors at least some clout and the homeowners would be more than happy to grant a real mortgage lien on a real note for a real obligation based upon fair market values and reasonable rates of return.
Some would be discharged in bankruptcy but the homestead exemption only goes so far in bankruptcy so the homeowner would still be left with an existing unsecured debt.
Not everyone can declare bankruptcy just because their house is in trouble. Most obligations could and should be resolved with the removal of the banks as intermediaries and a platform or marketplace where investor-lenders and homeowners can meet for the first time since the money hit the closing table.
If the false securitization structure is made real by pooling loans into those structures and doing it in a fair and equitable manner, the investors would minimize their losses, while retaining litigation rights against the banks for fraud and breach of contract. Who knows? Maybe the investors could be made whole!
The benefit to the investors would be the best possible recovery of money for the pension funds that we often forget ARE the investors.
The benefit to the homeowners would be that they would stay in their homes with a large income tax bill that could be laid over years in monthly installments but amounting to far less than the payments on the old fake mortgage, note and obligation.
The government and the economy would be infused with operating capital and wealth respectively, as the middle class suddenly reappears. The banks are removed from power simply by forcing them to recognize the losses on their books that are now reported as assets. Their collapse would mean the end of the banking oligopoly.

Thus I say again, dig deeper and you will often find your representatives I state and federal government in bed with the bankers blocking common sense solutions. Vote them out and start a new day!

New Jersey Housing Suffers as Defaults Exceed Nevada: Mortgages
http://www.bloomberg.com/news/2012-09-18/new-jersey-housing-suffers-as-defaults-exceed-nevada-mortgages.html

NEW JERSEY REPORT DETAILS LPS CREATION OF FALSE DOCUMENTS

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

GET COMBO TITLE AND SECURITIZATION SEARCH, REPORT, ANALYSIS ON LUMINAQ

SEE COMPLETE REPORT: LSNJReport

WERE ORIGINAL MORTGAGE DOCUMENTS FALSE OR FRAUDULENT?

YES — at least that’s my opinion and the the opinion of a growing body of legal experts. Any property lawyer will tell you that you can fix any chain of title using the proper methods — getting a signature to correct something that was wrong, getting a court order or affidavit from a competent witness, etc. The idea is to make it as easy as possible to correct improperly written or improperly executed documents to reflect the real deal that constituted the transaction.

So why would the mega banks start their own document fabrication and forgery operations when there is a perfectly legal way to correct “paperwork” problems? If there was a real transaction in which money changed hands, it is easy, especially in today;s digital world, to establish the trail of money, put the transaction in context and then either solicit the appropriate parties to sign corrective instruments or force them to do so by court order.

And sure enough there was a real transaction in which money changed hands. No borrower denies it. So why the fabricated and forged documents? ANSWER: BECAUSE NO THE INVESTOR-LENDER WHO ADVANCED THE FUNDS NOR THE BORROWER WILL SIGN ANY CORRECTIVE INSTRUMENTS. WHY YOU ASK? BECAUSE THE CORRECTIVE INSTRUMENTS DO NOT DESCRIBE THE TRANSACTION BETWEEN THE HOMEOWNER AND THE INVESTOR. In order to force the homeowner and the investor to take the deal and lose money on it, the securitizer pretenders would need to show that the transaction they are seeking to “correct” actually existed. But it didn’t.

The investors and borrowers are not suing because the deal didn’t turn out the way  they wanted. They are suing because the real deal was not disclosed to them and they never would have signed papers on either end of the deal.

Start with the “mortgage originator” who in the world of the illusory infrastructure of securitization is distinguished from lender, beneficiary or mortgagee. Here is an entity that has no money, lends no money, and in substance never even handled the money for the funding of the transaction except possibly through their wire transfer department if they were an actual bank. The so-called trusts, were not formed under New York law and the Trustees took great pains NOT to include these trusts within their “Trust Department” that they use ordinarily for the administration of trusts.

Move on to the inflation of the appraisal, the borrower’s income — often without knowledge or consent of the borrower, and you have a deal that nobody would do if they knew what was going on — which is why the securitizer pretenders CAN’T go to the investors and CAN’T go the homeowner and ask or demand that they sign corrective instruments.

AND THAT LEADS TO DEFECTIVE TITLE WHICH WILL HAUNT US FOR DECADES. Wall Street’s efforts to buy or start title companies is only another part of the cover-up. The inescapable conclusion when you look at the money trail and compare it to the documents, is that they don’t match. The unavoidable conclusion is that they were not intended to match — meaning there was fraud in the inducement and fraud in the execution of documents.

LOGIC and common sense bring us to this: the money trail is NOT reflected by any existing document. It never was and it can’t be now. The document trail, pretends to follow an illusory transaction trail in which no money changed hands — hence it is a bunch of documents in support of non-existent monetary transactions. The mega banks can’t correct it without admitting they lied to the investors and lied to the borrowers — because out of necessity, any corrective documents would change the deal completely. So ordinary forms of correcting legal instruments and recorded instruments are simply not available. They have no choice but to keep lying and fabricating and forging.

It won’t be long now before Judges and lawyers and homeowners realize the truth about their so-called mortgage loans. They are a fiction. The money trail leads to a single transaction between the investor-lender and the homeowner without any documents. The government’s attempt to use servicers to modify the mortgages failed because they were asking the fox to negotiate over who would get the eggs — and the chickens for that matter. WRONG WAY AND WRONG PARTIES.

It may therefore be fairly stated that ALL of the more than 80 million “mortgage” transactions that were documented at “closings” were fatally defective, unsecured and involved parties who were not involved in the actual transaction. $13 trillion in transactions went south because the investors were tricked by deception and because the homeowners were tricked by deception. Following the money trial will reveal that much of the money advanced never went to fund mortgages but was shunted off-shore as fees in “off-balance sheet” transactions amounting a yield spread premium that could only be described as fraudulent, inasmuch as the word “excessive” is inadequate to describe it.

FIRING SERVICERS AND TRUSTEES IS THE ONLY SMART STEP FOR INVESTORS

It may therefore fairly accurately be described as an economy that appears to be flipped but actually is not. Since none of the actual transactions were liens or encumbrances upon the real property, the original owners still own them. If the investors want to “settle” their claims with the investment bankers, that is fine. But if they want to recover more of the money that was stolen from them, they should probably work out a deal wherein homeowners are allowed to keep or re-take their homes under normal and reasonable terms. If investors want to maximize their recovery and minimize their damages, they need to exercise their right to fire the servicers, trustees, and others who are feeding off of their money.

NEW JERSEY BOND RATINGS FALL

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

THE NEXT WAVE: MUNICIPAL BOND RATINGS AND DEFAULTS

EDITOR’S NOTE: With heads stuck in the sand, avoiding the “third rail” of acknowledgment that tens of trillions of dollars of mortgage transactions are fatally defective, which would save or partially save the budgets of most states, counties and cities, New Jersey took it on the chin with a downgrade in the announced quality of their bonds. This from the rating agencies that told the states,, counties, cities and investors that CDOs were AAA rated (virtually risk free).

Meanwhile the spin machine is running full time reminding readers and listeners that bankruptcy is not an option under current law for government entities. Of course they avoid the obvious — the legal remedy of bankruptcy has nothing to do with the factual reality of BEING bankrupt.

As the stimulus money runs out, the downgrading will reach a roar, and while the SEC searches around for alternatives to the current rating agencies, we will still be marching to the tune of S&P, Moody’s, and Fitch. Defaults seem inevitable but anyone who says so is verbally beaten to death. We like to wait for our disasters to strike before we do anything about them.

The facts are simple: government is running out of money and prospects. People don’t have enough money as it is, so raising taxes is not going to produce more revenue. We’re not training our workers to function in the modern economy, so the prospect of greater commerce or revenues to tax are also pretty dim. Past commitments for pensions and other forms of safety nets are getting expensive because the governments are not producing the tax revenue that was projected when those commitments were made.

The ONE place where the money can be located, the one source of tax revenue that is owed but both unpaid and unreported (Wall Street) is off limits. The simple admission of the scheme — that the mortgages, notes, loans, obligations and receivables generated by the holographic image of a financial structure that was never intended to be real — would produce substantial revenue, and allow for substantial recovery of losses taken by governments when they too bought mortgage backed securities that did not exist in form or substance.

It isn’t a magic bullet. But it would make the crisis aspect of our situation go away and return wealth to where it was stolen from — the middle class and poor. It isn’t the whole solution. But reality has a way of coming around to bite you. China is now positioning itself to have its own currency creep into the world markets as the world’s reserve currency. I don’t know if they will be successful (the idea that China is infallible has been bandied about without merit), but I DO know that central bankers, and commercial bankers around the world do not trust Wall Street, do not trust the the American government to do anything except protect Wall Street and do not trust the U.S. dollar.

If we lose our position in the world currency market, people should take notice. we will have a shellacking that will dwarf the 2010 elections. Financially, we are on the precipice of a looming crisis that far exceeds the scope of the Great Recession and thus threatens to compete with the Great Depression. While the White House and Congress continue to take their regulatory advice from the people who created this mess, the Court systems are getting the hang of it, and the remedy is coming faster and faster for most people, if they can hang on. The fraud might be addressed in large scope, but through the Court system, it may come too late to help us retain our market position in the world.

Costs Soaring, New Jersey Bond Rating Is Lowered

By RICHARD PÉREZ-PEÑA

NY Times

A top credit-rating firm lowered New Jersey’s bond rating on Wednesday, citing ballooning pension and other costs, and Gov. Chris Christie and Democrats in the Legislature wasted no time in blaming each other.

The firm, Standard & Poor’s, downgraded New Jersey’s general-obligation rating to AA-, from AA, and dropped the ratings on some other state debts even lower. The changes will increase the interest rates that the state must pay when it borrows money.

Standard & Poor’s has given lower ratings to just two states, California and Illinois; four others stand with New Jersey at AA-, which is the fourth-highest rating. The firm rates New York and Connecticut a notch higher, at AA.

A Standard & Poor’s credit analyst, Jeffrey Panger, cited New Jersey’s underfinanced pension and employee benefit funds, and his firm’s shift to putting more emphasis on such obligations.

The state reported last year that its pension system had $54 billion less than it needed to meet future obligations, one of the biggest such deficits in the country, and experts have said the state could run out of money within a decade. The fund for retiree health care is even further behind.

Year after year, lawmakers have failed to contribute what actuarial rules said was required to make the systems whole, increasing the size of the payment that the rules required the following year. In 2010, Mr. Christie’s first year as governor, the state was supposed to put $3 billion into the pension system, but in grappling with a large budget deficit, it contributed nothing.

The governor, a Republican, has said the state needs to curb government employee pensions and benefits to remain solvent, and at a public forum in Union City on Wednesday, he said the Democrats, who control the Legislature, had compared him to Chicken Little. “The sky started to fall in today,” he said, referring to the Standard & Poor’s action.

Such talk brought the governor criticism last month, when he mused publicly about the prospect, however distant, of a state bankruptcy — at a time when the state was marketing a new bond issue. Some bankers said he had spooked the market and possibly raised the state’s cost of borrowing by saying what chief executives usually refused to acknowledge.

Democrats said Wednesday that the governor was responsible for the downgrade, for failing to put money into pensions last year. They noted that last year they agreed to pension and benefit reductions for newly hired employees.

“It’s time the governor took responsibility for his own actions and stopped trying to blame others,” said Assemblyman Louis D. Greenwald, chairman of the budget committee.

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