housing (6)
As recently as his State of the Union address this past January, President Obama wasreaffirming the support he announced last August for bipartisan plans making their way through both chambers of Congress to drastically reduce and/or eliminate the two lending giants’ outsized footprint in the housing market, pressuring lawmakers to “send me legislation that protects taxpayers from footing the bill for a housing crisis ever again, and keeps the dream of homeownership alive” by shifting the market more toward private lending. Opposition to the plan’s practical implications from some highly interested parties in the housing sector, as well as the upcoming midterm elections, have put Congress’s legislative role in the Fannie/Freddie drawdown in fuzzy and protracted territory — so in what will doubtless be the long interim before we see any major Congressional action on that front, the Obama administration is now planning to use their regulatory authority to… ramp up their role in the mortgage market and basically promote more risky lending? What? Via the NYT:
The federal overseer of Fannie Mae and Freddie Mac on Tuesdayannounced a shift in policies intended to maintain the mortgage finance giants’ role in parts of the housing market, spur more home lending and aid distressed homeowners.
“Our overriding objective is to ensure that there is broad liquidity in the housing finance market and to do so in a way that is safe and sound,” Melvin L. Watt, the new head of the Federal Housing Finance Agency, said in a speech at the Brookings Institution in Washington. …
Mr. Watt’s changes would perpetuate the presence of the two government-sponsored enterprises in mortgage finance, rather than shrinking it. …
Mr. Watt laid out several specific measures. For example, rather than reducing current limits on the size of the loans they guarantee, as previously proposed by the former overseer, Fannie and Freddie would keep the current, relatively loose, limits in place. The two enterprises back about two-thirds of all new mortgages.
The White House, via Jay Carney, applauded “the Federal Housing Finance Agency for issuing certainty and clarity on the rules of the road for loans backed by Fannie Mae and Freddie Mac” on Tuesday, and as Bloomberg notes:
Watt’s policy decisions will play an increasingly pivotal role in the nation’s housing finance system as bipartisan efforts to wind down Fannie Mae and Freddie Mac appear to be stalling in the Senate.
The Senate Banking Committee is expected to vote Thursday on a measure that would replace the two companies with a reinsurer of mortgage bonds that would suffer losses only after private capital was wiped out. The bill doesn’t have enough Democratic support to advance beyond the committee and legislative efforts to remake Fannie Mae and Freddie Mac are unlikely to continue before next year.
Well. So much for that, and in the meantime, it looks like the Obama administration just couldn’t resist the urge to keep getting the federal government increasingly involved in the economy.
Statistical Picture Much Grimmer
Than Average American Appreciates
Every body knows the economy is bad, but a look at today's statistics paints a far more sobering picture than you probably realize . . . .
The Definitely BAD NEWS:
1. U.S. national debt increase averaged $4+ Billion daily during President Obama’s first three years. IF the government stopped spending and began repaying immediately @ $1-per-second; it would need 479,000+ years** eliminating current debt . . . 2011’s budget deficit of $1.29 TRillion was the third consecutive year spending deficits exceeded $1 TRillion.
2. 19% of all American men 25-34 years old now live with their parents. 14% of Americans receive food stamps including 25% of American children. 37% of all U.S. households led by someone 35 or under have a net worth of $0.00, or less; 46% of all American workers have less than $10,000 saved for retirement; 29% of all American workers have less than $1,000 saved.
3. For every dollar China spends on American goods, we spend $4 on Chinese products; China just slapped a new 22% tax on all U.S. products (in a phrase: China “owns our Treasury Department”).
4. Without recent changes defining “Americans wanting jobs” today’s unemployment would be 11%. All Americans out of work, or under-employed (Bureau of Labor’s “SGS Alternate employment” while U-6 unemployment is 15.3%) is now 22+%. 74% of all U.S. small businesses do not plan to hire new workers in 2012, citing bad economic times; increased government regulations and health care uncertainties.
MIXED News:
1. New home construction is at an all-time low in 2011, but older home prices now aren't dropping nearly so fast.
2. Because of foreclosure sales: the median price of a home in Detroit is now just $6,000. Great for buyers.
3. More Americans will now be able to afford homes, but the home price slide will NOT stop. The government’s foreclosure regulations retard average home sale rates by 21 months or more. No real estate bottom in sight for three years.
Ya'all live long, strong and ornery,
Rajjpuut
** Note: math required is . . . 3,600 seconds per hour@ 24 hours per day = 86,400 seconds per day @ 365.25 days per year = 31,557,600 seconds per year over 479,000+ years = $15.125 TRillion national debt (as of today, 12/17/2011) paid off @$1 per second.
“There are lies, damn lies, statistics . . . and then there are damnable statistical lies from politicians.”
Rajjpuut
Rajjpuut
“When you combine ignorance and borrowed money, the results can get interesting.”
Warren Buffet
Warren Buffet
Wide-spread Housing Collapse Underway
Main Obama Program Fails, ‘Cash for Keys’ Proposed
NOTE: CBS Moneywatch today, ran an article entitled “Why the Housing Market is three times worse than you think.” Since Rajjpuut has several times mentioned that when it comes to housing, the situation is probably seven or eight times worse than the administration wants people to believe, it’s time to clear the air. This blog concerns HAMP and other failed big government housing initiatives and how they’ve destroyed the U.S. housing market now and possibly well into the future. Many American readers know very little about the background of the situation which is provided in the next few paragraphs. If you’re well-informed, skip the introduction and head right down to the “red” paragraph below and start reading there . . . if you’ve foolishly been thinking over the years that politics and the economy don’t matter – don’t affect you, read and understand every word and continue to the footnotes and read and understand that as well. As the Kingston Trio once sang, “Citizens, hear me out, this could happen to you!”
As every would-be bride knows, it’s “something old, something new, something borrowed, something blue" . . . and yes, a similar pattern is starting to develop. The “old” is the outdated Keynesian idea that government can create real and meaningful jobs in free markets and that government interference could actually save free markets in times of duress; can improve the free market system.
The “new” under Obama was a series of handouts and bailouts bearing his signature ‘zero oversight, zero results’ label . . . first came the Obama $787 billion second-stimulus. Then “Cash for Clunkers” in mid-2009 proved itself an expensive program that accomplished little or nothing and absolutely destroyed the used car market so badly that’s its effects are still in place today: the average used car today costs $1,778 more than an average used car cost in 2009, hurting poorer Americans more than all others. Then came HomeStar, unofficially known as “Cash for Caulkers,” launched later that same year to encourage economic growth by offering incentives to homeowner and retailers and small business owners for improving their homes’ etc.’s energy efficiency. The program got all tied up in bureaucratic red tape when Republican oversight indicated that the beneficiaries would mostly tend to come from a narrow-range of construction firms that had contributed to the Obama presidential run in 2008. “Cash for Keys” (more below) is a similar program which has an importantly distinct “wrinkle.”
“Something borrowed” includes all the same lies that made Franklin Roosevelt (FDR) such a left-wing hero even though he took an ordinary recession and extended it out to 12.5 years until Pearl Harbor finally jump-started the economy and ended the country’s horrific malaise. In this age of real information available in real-time, however, the slick lies that allowed FDR to confiscate the nation’s gold coinage from citizens and then to re-peg the price of an ounce of gold from $20.76 up to $35 an ounce (a theft of the wealth of the citizens and an overnight inflation of roughly 69% which mugged 92% of all Americans <gold coin holders> on the one hand; and then impoverished 100% of the nation on the other) aren’t able to fester so long as there are now in the information age watchdogs like The Wall Street Journal and Fox News (and to a lesser extent USA Today) defying the liberal media’s cheerleading for the Obama administration and holding their feet to the fire every single day; 24 hours a day. Even though most citizens don't bother to educate themselves as to political reality; the 24-7 news cycle makes it impossible eventually for the majority to stay ignorant forever. When they "wise up" often their bitterness toward the liars in government can be dramatic: as we saw on the last Election Day.
Under real media scrutiny, Joe Biden’s remarkable rhetorical statement (“Are we going to have to borrow trillions, to keep from going bankrupt? Yes!”) was quickly revealed for the preposterous notion it was and not repeated. When a poll earlier this week showed that 60% of Americans do NOT approve of Obama’s economic programs and then virtually identical results came from the always trustworthy Rasmussen Reports, it shows that Americans sooner or later get the picture. Only 36% of Americans think the Obama economic programs are sound. 57% are so convinced that they're in favor of a government shutdown so long as substantial budget cuts result.
Something “blue” is the result of all the government interference in the once great American housing market. We’ll only touch briefly here on the well-documented fact that it was government interference** which created the crisis in the first place (see the footnote if you’ve been too busy watching sitcoms and IRreality shows to notice how the government stuck it to us . . . and pay attention from now on). We will mention that the job-killing government interference that supposedly was designed to expand job opportunities in the free market has had the exact opposite effect. The money that normally would sit on the sidelines during the initial stages of a recession and then come into play has stayed there on the sidelines for two and a half years now. The bottom of the recession, as shown by the American stock markets which usually get it close to right, was in mid-March, 2009 six months after the height of the financial crisis. Typically in normal times within another nine or ten months (that would mean at the end of 2009 or January of 2010) an all-out recovery is well underway.
However, thanks to all the new government regulation and interference and all the confusion and uncertainty that’s been created . . . even larger amounts of capital has stayed uninvested by small business, the engine of economic recovery. This is money that would have been working in the free markets for fourteen or fifteen months already which is too frightened by the economic assault Barack has lain upon them. Obamacare, is one of the administration’s worst moves ever. The new law all by itself created 384 new government agencies (in 12+ years FDR only created 39 new agencies) – no, that is NOT a typo, 384 new agencies and all their red tape anti-business bureaucracy Americans now have to deal with. Now let us move on to something’s “double-blue.”
On Tuesday, March 29th, the House of Representatives voted overwhelmingly to end HAMP one of president Obama’s most ambitious housing programs. HAMP (the Home Affordable Modification Program) was designed to keep homeowners in their homes despite being on the road to foreclosure for not paying their mortgages. Republicans and virtually all so-called “Blue-dog” Democrats agree nearly 100% that HAMP was a fiasco, a monumental failure. There are lies, damn lies, statistics . . . and then there are damnable statistical lies from politicians . . . such as when Janet Napolitano tells us with contrived data that the borders are safer than ever; or President Obama assures us that his approach to the housing approach is actually working quite well; and justifying his request to modify and expand the program . . . .
“Real” (meaningful numerical information designed to highlight a problem and point at a solution) statistics tell a different story than the Obama folk would have you believe. As soon as the repeal HAMP bill was passed in the House, fifty Democratic reps sent a message to Treasury Secretary Tim Geithner urging that he reform HAMP: “HAMP must change to meet its potential.” The real stats show a deeply flawed program. Besides the few Blue-dog Dems voting for the bill, most Democrats know that HAMP is the poster boy for failed government interference and government spending boondoggles, but they feel they must vote with their caucus and their president . . . so the HAMP repeal vote faces a highly uncertain future in the senate . . . not to mention that Barack Obama has said he will definitely veto the HAMP repeal bill should it reach the Oval Office. What is it about HAMP that Democrats find to love? First, the facts . . . .
The outgoing special investigator general for TARP (the Troubled Asset Relief Program), Neil Barofsky, called HAMP a "failure," in an interview with CNN on March 24th. He said HAMP was supposed to help 3 to 4 million underwater homeowners stay in their homes. But so far, it has only managed to help less than half a million do so despite immense expenditures of time and money. "It's really one of the deep failures of TARP," Barofsky said. "TARP wasn't supposed to just help the banks return to profitability, it was also supposed to help people stay in their homes." Mr. Geithner at the Treasury has pointed out, on several occasions, that while the HAMP program could be better, it's the only federal program spurring mortgage servicers to help homeowners.
What goes unmentioned among all the administration spin is that because of the huge amount of time and red-tape involved with HAMP and the refusal of many aggrieved foreclosed owners to leave their properties the possibility of a genuine recovery in the American housing market is years away. Until these depressed properties are handled, their shadow hangs over all potential dealings as the vast majority of Americans paying their mortgages every month find that their once “most valuable asset” (their home) has now become a monstrous drag on their personal finances. Should they want to sell, they face depressed prices and/or long periods of uncertainty before a buyer can be found. If they hold onto their homes they face 3%-10% drops in value that threaten in many cases to put them “underwater” on their mortgage despite their homes’ built-up equities.
Barack Obama’s refusal to insist that reasonable foreclosures be allowed to proceed is a huge black cloud hanging over the nation’s real estate marketing. Of course, Barack as an ACORN lawyer in the mid-90’s was helping shake down lenders and setting up a lot of these very same loans to ignorant and unworthy clients by extorting banks to abide with the federal government’s CRA ’77 legislation forcing them to make horrifically bad home loans so perhaps his judgment in the matter is clouded. Besides clearing this nebulous situation up, the Republican HAMP repeal bill will knock $1.3 billion off the federal deficits. So why does Obama and why do the progressives Democrats love HAMP? Despite all their claims about Bush and “the car in the ditch,” most Democrats know who really caused the financial meltdown we saw beginning in late 2007. They’d prefer, however, to continue to lie to themselves and to the American voter.
HAMP is their last ditch effort to prove to themselves that despite the obvious facts on display . . . government interference works; that they really did NOT undermine and cut the legs off the U.S. economy with all their constant mortgage industry interference beginning with CRA ’77 (see the earlier mentioned footnote** below). Of course the fact that the original CRA President was Jimmy Carter; and our first ACORN president Bill Clinton, expanded Community Reinvestment ACT ‘77 legislation once by regulatory fiat in 1993; twice by separate legislations in 1995; and by a steroid-version expansion of the law in 1998; and the fact that Barack Obama was an ACORN lawyer for parts of three years shaking down banks and mortgage companies to extort their involvement in CRA 77 and grant knowingly unsound loans to knowingly terribly fiscally-unworthy clients . . . these facts should not color your evaluation of progressive politicians and their competence now, should it?
So what is the big picture here? What’s going on in the housing markets? When can we expect a full recovery? Recent reports show that new home sales hit a record low in February, 2011. Last week we found out that 19 of the 20 largest metros areas according to Standard and Poors, experienced a pricing slump in January. This is horrible news three years into the financial meltdown and almost by itself guarantees a “double-dip” recession. Ah, but the situation degenerates even more . . . .
The good news is that besides some job growth and a tiny wage growth . . . American banks are finally looking at the economy with a rosier perspective and are now far more likely to grant home loans. However, the fly-in-the-ointment is the nasty situation with depressed and foreclosed homes mentioned above. It’s what the mortgage industry calls “shadow inventory.” Besides the alarming backlog of older homes on the market and the relative DEPRESSION in new home turnover, there is this nagging shadow inventory that can’t be dealt with properly because of the government red tape; Obama’s intransigent belief that his programs are infallible; and Eric Holder’s “INJUSTICE DEPARTMENT” standing in the way, protecting the unworthy ACORN-inspired borrowers over the forced-to-loan-‘em-money-by-your-stupid-CRA ’77-law banks and handcuffing the entire U.S. economy as a result.
Here’s what the statistics tell us: A) 3.5 million existing homes are being tracked by the National Association of Realtors (NAR) which, at their current prices, are homes that would sell on average only after 8.5 – 9 full months’ exposure on the market. B) The “shadow inventory” that the government and the banking industry would like to pretend isn’t fouling their nets is, if you press them, another 1.8 million homes definitely likely to hit the market sometime soon in our futures. Why? Some people will eventually “just walk away” from their underwater mortgages; or from their job losses which have made them unable to continue paying on older homes in which they’ve some real equity; most of these people are now anywhere from three months to nine months behind in paying their mortgages and foreclosure is now a definite prospect. And what is the likely result of all this shadow inventory eventually? A large chunk of these homes will appear on the market and the NAR’s projected nine month turnaround will then jump to an average of two years . . . a literal disaster for home-sellers and C) in reality the biggest lie of our time concerning the mortgage industry is now coming to light: it appears that a hither-to unreported severely underwater shadow inventory has been glossed over until now.
These are two million homeowners who now find themselves at least 50 percent underwater on their mortgages. A huge percentage of these folk were the “beneficiaries” of the CRA ’77 legislation and ACORN’s efforts to put the jobless and poor credit risks and even illegal aliens into expensive homes (that statement is zero exaggeration, but LITERALLY 100% true). A leftist rebellion has charged many of these folks with a zeal for ignoring the facts of life and staying in their homes (despite years of not paying their mortgages in many cases) despite the official proceedings. To say that this element is a severe drag on the housing market is to underestimate reality by 600% in Rajjpuut’s opinion. IF they are allowed to get away with this the banks are really in trouble. IF they get away with this, what’s also to stop normal, honest debtors who can afford their mortgages but who find themselves underwater from saying “Screw it? I like their idea!” What would prevent that? This sort of widespread collapse of private property would mean the end of America as we know it.
Rather than facing reality, the Obama administration is looking at creating another government-spending and government-interference boondoggle called “Cash for Keys.” Their idea is to give $21,000 to all the bad loan recipients from CRA ’77 so they’ll vacate their homes and the housing market can finally start to return to normalcy. So the progressives in the federal government almost bankrupted the banks and mortgage companies by forcing them to make horrifically bad loans to those people (many of whom could not honestly afford an $800 used car) and after bailing out the banks, they’re going to bailout these fools who couldn’t figure that there was no way in hell they could ever pay off their home loans . . . . Now do you still believe in making government bigger? What do you think of government-forced redistribution of wealth schemes now?
For the home-sellers in the worst-hit states: (New Jersey, Illinois, Maryland, Florida, Delaware, Georgia, Connecticut, Alabama, California and Washington) those turnover numbers are beginning to drag out already. Only four states seem to have a semi-healthy housing industry outlook for 2011-2012: the aforementioned North Dakota, Alaska, Wyoming and Montana. Sugar-coating all this information is the Obama strategy to get him through the next nineteen months and re-elected . . . excess sugar is terrible for your health.
As a quick side note: if you’re in the market for a home, present mortgage rates are very much on your side, so take your time, look over the available housing carefully; don’t be afraid to offer 50%-60% of asking price. After initial refusal you might find a bargain home in five or six weeks. If you’re selling a home, make sure you live in North Dakota, Alaska, Wyoming or Montana; or look to hold onto it for 8-10 years when the markets might hopefully rebound and stabilize at a higher level. Of course, if we wind up with hyper-inflation in the next decade, your home and its present ridiculously high mortgage might just prove to be your saving grace if you can survive the ravages of 80% or higher inflation. Good luck, America!
Ya’all live long, strong and ornery,
Rajjpuut
** “When you combine ignorance and borrowed money, the results can get interesting.” Warren Buffet Buffet’s comment not only applies to the unworthy and ignorant borrowers (perhaps worthy of a 55% down payment loan for an inexpensive home if they won a lesser part of the lottery some day, but definitely NOT worthy of a 0.0% loan on a $400,000 home) blogged about here . . . but also to the ignorant and heavily mortgaged Federal Government. Are you far better off now, than you were $5 TRillion ago? I’m not and neither is the country. How did we get into this mess? It’s a long but very interesting story . . . . ITEM: In 1975, 64% of American private citizens owned their own homes, then the highest in the world. Only one loan in 404 was considered “suspect.” 90% of home loans were granted with 20% to 33% down payment. Even the “suspect” loans were special cases, typically military officers attending college on the GI bill who received mortgages in some cases with 3% down payment. In short our private home ownership mortgage system was NOT broken. But progressive politicians of both parties would soon fix that, and us.
A decade earlier, a progressive president, Lyndon Baines Johnson, not only got us deeply involved in war in South East Asia, but also launched an expensive “War on Poverty” which included Medicare and the Federal side of Medicaid that today face a combined $68 TRillion in unfunded liabilities; a broad expansion of Social Security benefits (now with $36 TRillion in unfunded liabilities); and a sweeping and, of course, overly generous and anti-work-incentivized welfare set of expansions. About the time this was happening, a husband and wife neo-Marxist team, Richard Andrew Cloward and Frances Fox Piven, published an article in The Nation magazine in 1966 entitled The Weight of the Poor: a Strategy to End Poverty which has come to be popularly known as the “Cloward-Piven Strategy;” the two were Columbia University professors not opposed to crapping in their own nest (New York City) as you’ll soon see. In C-P Strategy the poor are unwittingly used as leftist storm troopers in their attempt to bankrupt the federal government of the United States.
Their stated goal -- when they established the National Welfare Rights Organization (NWRO) in 1967 with Black militant activist George Wiley – was to bankrupt the welfare system by creating a huge welfare state and thus to cause such financial chaos they’d get the Democratic Party to institute a Guaranteed National Income (GNI). This approach they said would SNAP! eliminate poverty; totally destabilize American capitalism; and set the country on the fast lane to “the Revolution.” Frances Piven, by the way, is still alive and still calling for “The Revolution” and violence and blood in the streets today. Rajjpuut bets “Nana Frannie” makes a wonderful peachy-keen grandmother – wanna bet she knits some wonderful Afghans?
Their Alinsky street-battling worked wonders in the welfare offices (self-proclaimed “neo-Marxist Saul Alinsky is famous for Reveille for Radicals in 1946; and Rules for Radical in 1971 he also was a mentor to Hillary Clinton and his “Rules for Radicals” course was taught in Chicago by Professor Barack Obama) and C-P strategy worked “wonderfully,” welfare rolls were doubled within three and a half years and by 1975, New York City was bankrupt; New York State itself was on the verge of bankruptcy and numerous large metropolitan areas and big-city states around the country were also in dire fiscal straits. NYC was bailed out by the federal government in November that year.
Wiley and Cloward and Piven took to publically boasting of the “great things they’d accomplished” even though their stated goal (GNI) was never an idea discussed seriously in Congress;” then they called upon their followers (using the “Saul Alinsky street tactics” Wiley had perfected for future endeavors) to now get involved in federal housing and in voter registration. Therein hangs the meat of our tale . . . .
ITEM: As new president Jimmy Carter took office in January, 1977, a Wiley-NWRO lieutenant sent to Arkansas about 1970, Wade Rathke, was assigned the task of coming up with a Cloward and Piven type organization along the lines of the NWRO to test out in Arkansas. Arkansas was chosen because it was far from the “media glare” and because they had an up-and-coming young politician whose thinking ran to progressive aims that C and P and Wiley strongly believed in: Bill Clinton, at 30 years old one of the youngest Lieutenant Governors in the country and one of the nation’s most promising Democrats.
The stimulus for the Rathke assignment was that Carter and the Democrats had promised CRA ’77- (Community Reinvestment Act of 1977) type legislation designed to spread the wealth by forcing mortgage companies to make home loans to bad risk clients (at that time just in the inner cities) who, as they saw it, might otherwise not be in the housing market for ten or twelve years. Perhaps 4% of Americans understand the whole big picture of Cloward and Piven and of Carter’s CRA ’77 legislation and how it led inexorably to the financial meltdown of 2007. It’s a fascinating story. But first consider this: it took Cloward and Piven’s NWRO parts of eight years to bankrupt NYC and nearly bankrupt New York State and with Bill Clinton’s unending support, it took ACORN roughly 30 years to bring down the USA and almost ruin it irreparably.
ACORN (originally the Arkansas Community Organizations for Reform Now) was created at virtually the same moment as Carter’s CRA ’77 law was signed. At first ACORN was largely ineffective in getting housing action but they went out almost immediately and began registering voters for the 1978 Arkansas election. They signed an enormous bunch of people up; many of them were even real people really eligible to vote in Arkansas. They also threw all the Republican registrants paperwork in the trash which threw the 1978 election dramatically to William Jefferson Clinton, the state’s new governor. At that time Arkansas governors were only elected to two-year terms, later that changed. Nevertheless with ACORN’s backing Bill Clinton remained Arkansas governor for 12 of the next 14 years and became president of the United States in 1992. Meanwhile ACORN had figured out how to get lots of bad home loans for risky clients. In a little while, ACORN was found in all 50 states and now stood for: Association of Community Organizations for Reform Now. By 1985, the action of ACORN limited only to Arkansas had made a big difference in overall mortgages in the entire United States. The number of suspect loans was roughly doubled: from 1 in every 404 in 1975, to 1 in 196 by 1985.
ITEM: The election of Bill Clinton in 1992 was a welcome relief for progressives after the fiasco that was Jimmy Carter in 1980; and the non-electables Walter Mondale in 1984 and Michael Dukakis in 1988. Even though Clinton made the CRA ’77 situation much worse, it would be unfair to give Democrats all the blame. About 80% of Democrats were progressives in the early 1990’s but progressive Republicans played a role every step of the way and, even a non-vigilant conservative president caused us a lot of problems. George H. W. Bush who succeeded in upholding 45 out of 46 presidential vetoes against a big-spending congress saw a bill pass his desk that he approved of except for two or three small details. Instead of standing his ground, Bush #1 signed the bill into law instead of vetoing it and sending it back to Congress for removal of the offending parts. Too bad, part of that bill was an expansion of CRA mortgage legislation into the big federal mortgage programs Fanny Mae and Freddy Mac -- a huge mistake. The good thing was that the original CRA ’77 was a poorly constructed law that mostly any conscientious mortgage company could largely ignore.
Bill Clinton came into office in January, 1993 aiming to put across a very ambitious conservative agenda including government health care. He was beholden to ACORN and to all the Cloward-Piven people and more importantly he largely believed as they did. His first two major actions were aimed at re-paying them. You’ll recall that ACORN was created in response to the C-P call for their supporters to get involved in voter registration and in federal housing after their success in bankrupting NYC . . . Clinton passed the “Motor Voter Act” called by opponents “a twelve-lane highway to voter fraud.” No doubt the ACORN people considered Motor Voter to be a great help to their registrations scams. If you’ll visit this picture of the Motor Voter signing ceremony you’ll see something very important in the picture:
Yes, if you visited the Wikipedia link given earlier you’re right, that is Frances Fox Piven in the green sweater standing almost directly behind President Clinton with her husband Richard Cloward the tall man with glasses to her immediate left watching the Motor Voter Act get signed into law.
Clinton also used the regulatory fiat of his office to turn the rather cumbersome CRA ’77 legislation into a powerful and more easily enforceable law. Now it would not be so easy for mortgage lenders to laugh off the notion of making bad loans to unqualified would-be home buyers . . . now it would become part of their everyday life. Twice in the year 1995, Clinton was able to sneak bills further expanding CRA ’77 through Congress even though it was dominated by Republican majorities in the House and Senate. Newt Gingrich the Speaker of the House did a horrible job and allowed almost anything the Democrats could dream of into numerous “compromise bills.” During this time a Chicago attorney named Barack Obama was working for ACORN and shaking down home loan companies. Obama was reputed to be so good at his job that court appearances never happened. The Banks just caved in, agreed to a certain pattern of loans and usually even offered up a donation to ACORN thanks to Barack’s persuasiveness. By 1995, one in every seven home loans was suspect and also offered at less than 3% down payment.
Finally, in 1998 Clinton passed the steroid version of CRA ’77 in 1998. Obama was long gone but the ’98 Clinton expansion of CRA put ACORN in the driver seat. From now on they’d have less trouble getting unqualified loan recipients into $440,000 homes than they had getting them into $110,000 homes a decade earlier. ACORN had elevated its shake-down processes into a science. Where before loans for moderately bad risks had been common, the new law made it easy for ACORN to get home loans for people without jobs; people with bad credit ratings; people without even rental histories; people whose only “income” was food stamps; or other welfare roll recipients; and even illegal aliens. By 2005, 1 in every 3 home loans (34% to be precise) was granted to unqualified loan recipients at 3% down payment or less . . . many of them at 0% down. The housing bubble was accelerating and America was in trouble.
Perhaps the first person to write about the seriousness of the bubble was investech.com guru James Stack out of Whitefish, Montana. As early as late November, 2003, Stack was upon the problem like ugly on an ape. He soon began including a graph of the Housing Industry bubble which he said had been created by senseless sub-prime loans that could never be expected to be repaid. That graph slowly changing month after month was a regular part of the investech weekly reports for roughly the next 5 ½ years. The Republicans of the Bush #2 administration figured things out by late December, 2004 and presented Congress with a bill undoing the 1998 Clinton expansion and many of the most harmful features of all the CRA ’77 legislation. President Bush gave nineteen separate speeches about the unraveling of the American economy that CRA ’77 was bringing about. The bill was defeated every time and the liberal press virtually totally ignored the story. Rajjpuut, who had been warning people since December, 2003 was aghast. Here was the most serious financial debacle of our time and no one cared.
Finally, 30 months after their first try, the Republicans passed a seriously watered-down version of the anti-CRA ’77 bill in July, 2007 just about the time the problem became Unignorable. It was, of course too little, too late. Nevertheless, according to a speech Treasury Secretary Timothy Geithner made in August, 2010, Bush’s efforts probably saved the nation from absolute financial Armageddon and he credits Bush in particular for preventing a total meltdown in housing prices. So as far as that little fable Mr. Obama delights in about the Republicans, conservatives and Wall Street driving the economy in the ditch . . . the truth is quite different. Here it is:
George W. Bush seeing the progressives, Bill Clinton, Barack Obama and most Democrats deliberately pushing the car (the economy) toward a 500 foot-cliff, jumped into the front seat grabbed the steering wheel and hit the brakes and guided it into the nearest friendly-looking ditch. Amen.
It's that key word "deliberately" that is most disturbing on two levels: first, that one of our major parties has been hijacked by people (progressives) who put their own agenda totally and utterly ahead of the nation's because they know best for all of us; and secondly, the fact that only two main news sources in the country have considered this story important enough to cover. Just in case you don't know what progressivism is: it's the conviction that we must "progress" beyond the 'outdated and ill-conceived U.S. Constitution' if we are to make necessary "progress" toward an earthly Utopia.
We now have FEWER people working in AMERICA than we've at any time had SINCE 1981 during the early days of the Reagan administration. We also have more people working for the government than at any time in history outside of war.
Bernanke Sobers Up, Comes Clean, Sort of
Ben Bernanke had a National Press Club audience laughing while doling out some super-serious information yesterday. For example, he reminded them that the country’s projected deficit and debt level are actually not only unsustainable but impossible . . . because the nation’s creditors at some point in the future would wise up and refuse to continue financing our country’s spending.
ALERT: Before going further with the blog itself . . . the nation’s latest jobless numbers came out earlier today: 9.0% unemployment sounds like an improvement over the recent 9.4% . . . unfortunately, the fact is that virtually all of the “drop” in unemployment can be traced to unemployed persons who have stopped reporting in to the nation’s Workforce Centers and therefore “fell off” the statistical data base. True unemployment now stands at just a tad below 20% if all the unemployed; and forcible part-time workers are included . . . not to mention all the grossly under-employed who lost better jobs and are working at stop-gap situations. Only 36,000 jobs were created last month, almost 110,000 short of the projected 145,000. 1.4 million people gave up looking for jobs through official channels last month: 1.4 million! We now have FEWER JOBS in AMERICA than we've seen at any time SINCE 1981 during the early days of the Reagan administration. The situation is getting so hopeless that more than half of the unemployed are no longer using the official Workforce procedures . . . these fictitious unemployment numbers just prove that when it comes to statistics, garbage in = garbage out. Now let’s get back to Ben Bernanke . . . .
“By definition, the unsustainable trajectories of deficits and debt (outlined by the Congressional Budget Office, CBO) cannot actually happen because creditors would never be willing to lend to a government whose debt . . . is rising without limit.” Currently the National Debt is stated at about 60% of the economy or Gross Domestic Product (GDP) officially; but in reality the figure is much closer to 95% than 60%. More on this soon . . . Bernanke said that the 90% threshold is projected by 2020 and debt would be 150% of GDP by 2030. But Bernanke’s citing of $9.5 trillion in national debt was sinfully inaccurate because it omitted the $4.6 trillion owed by the government to trust funds for things such as Social Security and Medicare, which have paid out cash to the Treasury in exchange for promissory notes. The full national debt – when both forms of debt are included is roughly $14.6 trillion.
Mr. Bernanke also failed to acknowledge the 180-ton blue whale splashing about in the Lincoln Memorial Reflecting Pool, the fact that not including all our welfare programs and barring deliberately infecting all our nation’s elders simultaneous with ebola . . . the federal government is already obligated for roughly $113 TRillion in services via Social Security, Medicare and the federal side of Medicaid. He also was less than forthcoming about the fact that Obamacare is now shifting a huge burden in Medicaid from the Feds onto the unwilling states which will presumably bankrupt every single state by 2026 (2023 in some less optimistic projections). To emphasize the point he was semi-obscuring, Bernanke quoted economist Herbert Stein, “If something can’t go on forever, it will stop” to exceedingly nervous Press Club laughter.
The Fed chairman strongly admonished Congress to act soon to cut spending or increase revenues (taxes), or some mix of the two, because otherwise the U.S. economy will suffer a severe correction. “One way or the other, fiscal adjustments sufficient to stabilize the federal budget must occur at some point,” he said. Bernanke avoided predicting when the U.S. might experience a debt crisis similar to what Greece and other European countries have experienced. Bernanke suggested lawmakers should forget politics and not use the debt and debt ceiling as “bargaining chips” or resort to playing political “chicken.” He also seemingly assured Republicans that their understanding was correct, “Under current law, if the debt limit is not extended, for a time, the Treasury has various resources that it can use to make payments on our national debt,” he said, “but beyond a certain point, (our federal government) would not have those resources and the United States could conceivably — I think this is very remote, but it’s not something you want to play around with — the United States would be forced into a position of defaulting on its debt,” he said. “And the implications of that for our financial system, for our fiscal policy, for our economy would be catastrophic.”
The twin drivers of this unsustainable national path toward debt (and he did not mention, but also toward UNfunded liabilities), according to Bernanke is the double barrel impact of rising health care costs and exploding baby boomer retirements on entitlement programs such as Medicare, Medicaid and Social Security. “Our ability to control health care costs, while still providing high-quality care to those who need it, will be critical for bringing the federal budget onto a more sustainable path.” He tempered pessimism with a slightly optimistic look at the overall economy citing “increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold,” but immediately slipped back into pessimism saying the economy “does look to be growing more quickly, but is still in a deep hole, is still very far from where we’d like it to be.”
Coupled with Bernanke’s speech the Senate Budget Committee heard from numerous “experts” about the most serious threats facing the hoped for economic recovery: the housing crisis; state, local and federal budget shortfalls; unrest in Egypt and its possible effects on shipping via the Suez Canal and on the price of oil; and the continuing European debt crisis. Home prices are expected to fall another 5% this year and 14-17 million Americans are currently “underwater” on their homes (owing more than their homes are worth now, not to mention after a further 5% drop in prices). Overall this amounts to an expected total average home price drop of 35% between 2007 and the end of this year possibly igniting another round of the vicious cycle of default, foreclosure and greater downward pressure on home prices.
The pressure is not all at the federal level either. Ray Scheppach, executive director of the National Governor’s Association said that the Obamacare mandated explosion in Medicaid enrollment (coupled with other demands on the states shifted from the federal government) was the “700 pound gorilla” in the room as it increased costs to the states by 190 million by 2019. If the recession (which has been officially “ended” for over nineteen months now . . . you and I know better, any time home prices are down over 1/3 of their value in four years: that’s a recession!) continues, Rajjpuut concludes that the Obamacare-created meltdown of the states will happen sooner (2023) rather than later (2026). As far as bailouts, several of the witnesses at the senate hearing implied that there was no appetite for state bailouts. Going back to Bernanke, he failed to mention that the Federal Reserve Banks under his command had been busy printing paper money and creating electronic money for the better part of twenty-seven months and there was, believe it or not, some obscure chance that the nation’s major creditors (such as China, Russia, India, Brazil, Japan and others) might not only notice but also object to his willful policy of inflation. Since technically the math says that the current dollar is worth 3.4 pennies worth of the late 2008 dollar . . . this could also be a problem, eh?
In short, Mr. Bernanke seems to be sobering up, but he’s still not admitting his drunken money-creation, so overall the prognosis for the patient is very, very, bad.
Ya’all live long, strong and ornery,
Rajjpuut 
PS remember this: We now have FEWER people working in AMERICA than we've known at any time SINCE 1981 during the early days of the Reagan administration. We also have more people working for the government than at any time in history outside of war. At a projected cost of 2 - 3.5 real jobs lost in the real economy for every government job created, is it any wonder?
Here's a chart of the eleven recessions the country's suffered through since World War II. Notice the "V" shape typical of recession recovery is not present now thanks to government interference . . . .
Obama's Radical Reliance upon R-Word #1's
REQUIRED Because R-Word #2 is Barack's Goal
REQUIRED Because R-Word #2 is Barack's Goal
Readers of the tales of Arthur Conan Doyle’s masterfully-drawn detective Sherlock Holmes realize that “after all the impossibilities have been eliminated, what’s left, however, improbable must be the right answer.” The burning question left us since roughly 1965 is this: why has the radical left-wing of the Democratic Party, now in TOTAL charge of that party, relied so thoroughly upon the single word: RACISM?” The easy answer is “because it works for them.” The question begged is “Why?”
Racism or “R-word #1,” is a fact, a piece of evidence, which is crystallizing before us and the more we examine the history of this crime, (and it is a crime that the largest and most influential of our nation’s political parties has become the handmaiden of the least principled of persons and their perverted interests) and its ubiquitous presence definitely implies the existence of “R-Word #2, nay, REQUIRES R-wod #2 to be revealed later in the blog.
Rajjpuut suggests that as facts and history pile up ever higher one atop the other . . . and as all of the far more “preferable” and at first more likely answers are eliminated . . . only one highly improbable answer remains: “R-word #2. It is indeed a puzzler . . . .
If in solving the puzzle, we are repeatedly and ceaselessly confronted by the single inglorius word “RACISM” at every turn . . . “IF RACISM IS KEY TO THE ANSWER, (in other words, if use of the word “racism” willy-nilly at every key juncture is the METHOD) WHAT MUST BE THE QUESTION (in other words what is R-word #2, a.k.a. the GOAL)??
As always those who deny or refuse to learn their history are compelled to suffer its consequences. 1965 should have seen the halcyon days for the United States of America. The Civil Rights Act had just been passed. At last, the Civil War, also known as the “War of Nothern Agression” in some parts of the South, was successfully concluded. But the enemy within saw their opportunity and they hijacked the word “RACISM,” R-word #1 from the Civil Rights movement and therein lies our tale.
The country as a whole refused to acknowledge their presence and that made it easy for the enemy soon to come to nearly dominate the leftwing politics of the day. They have been able to disguise themselves, their nature and their goals right up till today. Yesterday so to speak, however, they began to be noticed finally. In a recent poll, 55% of Americans said that the word “Socialist” was a fitting description of Barack Obama, thank God! But at first and until very recently only they were able to make things appear to be quite different on the surface than the reality beneath where they were operating.
They – you are now aware enough to call them “Socialists,” but Rajjpuut has long known them as “Communists” since the first time he read Saul Alinksy’s “Rules for Radicals” or studied the “Cloward-Piven Strategy’s role in the bankruptcy of New York State in 1975-- were helped by the fact that when the first true battles in the Civil Right Movement were engaged after World War II, the Democratic Party was split asunder by the conflict and the smaller splinter group was a tempestuous group of Southern Whites known as the Dixiecrats who ran on a platform of thinly-disguised Confederacy (circa 1860). In fact, it was that single fact, that a highly concentrated group of racists that the rest of the United States came to hate actually existed and actually held the Confederate States of 1860 as an ideal that made the Communist’s takeover a plottable and possible outcome . . . and today that outcome is nearly a fait accompli. And that takeover is our R-word #2: Revolution or “Fundamental Transformation.” Here’s how it all came to be . . . .
It all began to come to a head in late 1945. Among the heroes returning from the South Pacific and Europe at the end of World War II were a large contingent of Black soldiers, 85-90% of them from the south. They were not always regarded as heroes when they got home. The president at that time was Harry S (no period, no middle name, just the initial) Truman, the greatest president of the 20th
In those days all Blacks, 100%, voted Republican, the Party of Lincoln. And the "Solid South" was the Democratic stronghold just as it had been before the Civil War. And the country was much more uniform and far less urban than it is today.
Century though he served less than two full terms. Truman was raised as a Missouri segregationist, so it must have been a tough battle for him. Rajjpuut thinks of Harry S. Truman as the inspiration for the founders of today's TEA Party movement.Whatever else Truman might have felt about Blacks, Truman was himself a war hero from World War I and when hundreds of the returning Black soldiers were lynched across the south (one poor fellow with his battle ribbons still on display trampled into the ground beneath his corpse) in 1945 and 1946 he would not stand for it. He and the Republican Party and moderates of his own Democratic party quickly passed federal anti-lynching laws and Truman sent U.S. Marshalls into the south to enforce them. He also, by presidential edict, integrated the armed forces. Blacks in the navy, for example, had only been allowed to be cooks and stewards, and in the army had fought in entirely Black units. All the key segregationists of the day such as Harry Byrd, Strom Thurmond, Henry Wallace, Jesse Helms and George Wallace were outraged . . . to their mind another hated Reconstruction period was in the offing brought about by another War of Northern Aggression. They were actually right. This time the civil war took about eighteen years to fight, it was far less bloody but no less intense.
In effect the segregationists of the south, had once again fired upon Fort Sumter (lynchings) and once again the Union had regarded the act as an act of war and responded righteously (the anti-lynching laws and the presence of the U.S. Marshalls and integrating the armed services).
One fringe group needs to be mentioned: the Ku Klux Klan had been a huge power in the country since the earlier groups of Blacks had returned from World War I, and they’d been very popular in the early 20’s, not only in the south, but also dominating politics in some urban east and mideast states and around Rajjpuut’s home, Colorado. But the KKK’s power had been waning since several incidents in 1925 and 1926 had brought their patriotic-sounding rhetoric into obvious conflict with their goonish and sub-human true nature. There would be a resurgence of KKK activity during the next eighteen years but a large percentage of the southern populace and virtually all the rest of the country had moved well-beyond these thugs. Later as the undeniable courage of the Freedom Marchers of the ‘60’s led by Martin Luther King, Jr’s Gandhiesque non-violence surfaced into crystal-clear focus, more and more southern Whites came to appreciate the Black situation and the basic unfairness and injustice of segregation.
When Hubert Humphrey of the Democratic Party at their presidential nominating convention of 1948 introduced an “integration plank” to the delegates, Thurmond, Helms, Byrd and both Wallaces and their ilk walked out of the convention. Soon, calling themselves the States’ Rights Democrats or Dixiecrats they immediately created a third party and nominated Thurmond as their presidential candidate. It was considered only a small gamble. The split of the Democratic Party in ’48 was seen as virtually guaranteeing Truman’s defeat and the election of Republican Thomas Dewey, if Truman didn’t “come to his senses.” Despite all this, Truman continued to campaign vigorously along populist lines while Dewey, with supposedly 55% of the popular vote and 60% of the electoral vote coming his way according to the polls, gloried in the disintegration of the Democratic Party and espoused positions that appealed only to the plutocrats in both parties.
The Dixiecrats were almost as equally smug and reasoned that 1) after they defeated Truman, unless, of course, he invited them back in ’48, their power would be obvious and things would go back to normal or 2) after they won enough southern states to send the election to the House of Representatives, the south would basically control the selection of the President (certainly NOT Truman) and again their power woud be obvious.
What they didn’t foresee was that about 60% of the few Black voters; and the vast majority of other minority voters; and many of the urban white Republican voters and other White voters all across the nation changed their allegiance almost immediately, voters admired Truman and didn’t connect with Dewey and now that the segregationists were out of the Democratic Party many of the most independent felt comfortable voting that way. This was the natural birth of the TEA Party movement, which acted like one huge Independent voter hopping from party to party over the next few years until the communist undercover movement clearly took over the leftwing of the Democratic Party by say 1992.
Unhampered by this decidedly foreign presence in the Democratic party this respect for integrity and progress within tradition represented by the TEA Party would have likely changed the history of the country dramatically. They were the naturally center-right Independents of the country and controlled things from 1948-1960.
Meanwhile, in ‘48 Truman despite being consistently defeated by the Gallup polls defeated Dewey soundly and suddenly those Dixiecrats were a cause without a viable party. The Republicans, Party of Lincoln and far more interested in northern and eastern and urban concerns than in the south, had less room for them then the Democrats did. In presidential politics they were party-less until 1964.
The success of the Civil Rights Movement largely on the back of and inspired by the non-violence of King and the 1964 Civil Rights Act, was the ultimate straw as far as the Dixiecrats were concerned, not only that, but the Republican presidential candidate that year was a conservative named Barry Goldwater and one of the few good things about the Dixiecrats was their respect for traditional values. Unfortunately, “racism” was a traditional value for them too. So now the Old Racists were aligned with the Republican Party in November, 1964, a fact the Democrats haven’t stopped shouting about even since racism went out of style under Ronald Reagan and beyond. It’s ever necessary to keep the Black’s in their place (under the Democrat’s flag) and to remind Independents of what is no longer true. Anytime, in short, that a Democrat candidate is in trouble, the “Racism-Ploy” is appropriate. R-word #1 will never go out of style.
Remember that R-word #2? Revolution! Meanwhile, our enemies had flourished. Lyndon Johnson’s ill-conceived “Great Society” dove-tailed with their plans nicely. Saul Alinksy’s book was their Old Testament and in ’64 two communist Columbia University (NYC) sociology professors Richard Cloward and Frances Piven suggested that implementing Alinsky’s ideas on a large scale could quickly bring about the “fundamental transformation” they were seeking. They suggested the natural “vehicle” for their ascendancy was the Democratic Party of the United States and its weakness for complicated social programs outside the traditional American value structure. With Alinsky as True North they published their ideas now known as Cloward-Piven Strategy, which some have called “forced change through crisis” or “overloading the system.” Then they set about making their goal of a guaranteed national income come true. They aligned with George Wiley, a militant Black chemist and Civil Rights Activist to create an Alinsky-type battle plan.http://www.discoverthenetworks.org/individualProfile.asp?indid=1769
Together they created Wiley’s NWRO (National Welfare “Rights” Organization) and set about first putting many more people on the state of New York’s welfare rolls, large quantities in NYC. While doing that they set about using these urban poor as their shock troops disrupting the welfare landscape with angry but well-coordinated street uprisings (really orchestrated demonstrations) until by 1968 they’d grown the welfare rolls of the state by 8 million. By 1975, NYC was bankrupt and NY state almost bankrupt . . . the broader welfare crisis they sought to provoke across the nation never materialized and the guaranteed national income was never seriously contemplated except by the extreme left of the Democratic Party. Nevertheless a huge success was, they believed, achieved, and while bragging about their efforts in print, they suggested the next two areas to advance the Popular Front (Communist Movement) should probably be voter registration and housing. Wiley set about creating ACORN.
You know most of the rest, probably, but Rajjpuut will summarize it here:
C-P defiles the housing market and ballot box
The U.S. had the highest home ownership in the world 62-64% depending upon the economic conditions, but Jimmy Carter and the Democrats passed the Community Reinvestment Act in ’77 forcing lenders to make bad loans (it was a mortgage-guarantee program) to people who could not afford to repay them. This program was expanded in ’92 to include Fannie Mae and Freddie Mac and George Bush I did NOT veto it. Under Bill Clinton it was expanded three more times (twice in 1995 and the steroid version in ’98).
By ’93, ACORN had begun perfecting its Alinsky techniques. From ‘95-’97 they found out that using lawyers like Barack Obama to shake-down the mortgage lenders and getting free publicity from PBS and network television was their ticket. Between ’99 and 2007, ACORN had it down to a science so that people without IDs, without jobs, without rental history, with horrendous credit ratings and even illegal immigrants could expect to receive forced loans from cowed mortgage companies and bankers . . . often far larger and more expensive homes than typical middle-class Americans owned.
If anything, ACORN’s involvement with the voting process has even been more corrupt. As far as the general election 32 ACORN operatives were convicted of fraudulent activities (the tip of the iceberg). But earlier was when the real problems arose:
ACORN and the Black Panthers helped Barack Obama steal the nomination of the Democratic Party from Hillary Clinton by allowing him to shakedown the system and win thirteen of the fourteen caucus states although being well-beaten overall in other states. Bussing, intimidation, dirty tricks and fraud were the featured activities.
More recently Obama’s Department of Justice in the person of a Deputy Attorney General assigned to head the DOJ, Julie Fernandez, has played politics by dropping a Philadelphia voter-intimidation case for the general election in 2008 against the New Black Panthers which the Bush administration had won with strong video evidence. Only one handslap was given out to a man seen in other videos calling for the killing “of crackers and their cracker babies.” And the aformentioned Ms. Fernandez let a roomful of DOJ employees know there was “no interest in prosecuting or investigating cases with White victims and Black perpetrators; or in investigations along Motor Voter Act.” Richard Cloward and Frances Piven are standing directly behind Bill Clinton in the phots as he signs the Motor Voter Act which has been called “a license for voter fraud.” Now Ms. Fernandez says that even the ultra-weak Motor Voter Act will not be enforced “because it might hurt turnout.” What??? Turnout of dead voters and moved voters will be down; duplicate votes will not occur, other voter irregularities will be culled . . . and Ms. Fernandez doesn't want that happening?
Today, by hook and by crook and by underhanded, under the table activitites, the Constitution of the United States is being shredded before our eyes. Our free-market system is being enslaved to bureaucracy on a dozen fronts, our present economy is being castrated and our children and grand children are being enslaved by Barack Obama’s fundamental transformation. His next target: the ballot box in November, 2010.
Ya’ll live long, strong and ornery,
Rajjpuut
