We’re still sinking with the Titanic

[Arraya]

http://theautomaticearth.org/Finance/were-still-sinking-with-the-titanic.html
The real story of the RMS Titanic that goes unmentioned in Western public schools is, of course, one of extreme wealth inequality, class warfare and, ultimately, the complete and utter disdain that the richest people had for the lives of the poorest people in a time of crisis. Just shy of one hundred years from the day the Titanic sunk (April 15, 1912), and we are all still stuck on that same dreadful voyage. The global economy has side-swiped an iceberg at full speed and is mathematically destined to go under, no matter what the Captain and crew decide to do.

Except, now, it’s not only the poorest two-thirds of the ship’s passengers that are being left to die, and there is no priority for “women and children”. It is true that the entire corporate establishment has benefited from systemic fraud, propaganda/manipulation and taxpayer-funded bailouts, but it is a very small percentage of people who are truly being guaranteed a lifeboat. These institutions and the people who run them are gifted vast sums of money over and over again, while the rest of us patiently, helplessly and hopelessly wait to be “rescued”.

Among the 1% of people who have been given every possible advantage to survive the systemic meltdown, we must include those in charge of defense industrial conglomerates. We are now in a state of perpetual, taxpayer-funded war that surpasses any notion of political ideology or appropriate response to “external” threats. However, that is an issue for another time and place. Right now, we will focus on the criminal banking class, which has been feasting on the public coffers for years while hundreds of millions of people struggle to keep their jobs, stay warm, find their next meal and/or avoid being victimized by an ever-growing police state.

Never before in history have such vast amounts of wealth been transferred so quickly from so many people to so few. The worldwide property bubbles of the last few decades, and specifically the last one, were made possible first and foremost by extensive fraud in the banking and real estate sectors of the global economy. Although government regulations and loose monetary policy certainly had their roles to play in the Western housing bubble, it was the private banks originating “liar’s loans”, slicing them up, securitizing different loan tranches and marketing them as top-grade investments that really fueled the credit explosion.

A whole plethora of debt-based “assets”, securities and derivative instruments were generated through the collateralization of residential and commercial property, which, in turn, created an entire industry of speculation, financial engineering, commissions and returns. The benefits of this industry accrued to fewer and fewer institutions as they pawned off the “assets” and derivative instruments to other institutional investors such as pension and hedge funds, and then dumped what remained directly onto taxpayers after the great bust of 2008.

This class warfare by the 1% no longer takes the form of some stealthy wealth extraction operation hidden behind cultural optics, clever marketing and flimsy regulations, but is happening out in the open for every neglected, second-rate passenger to see. It has gotten to the point that the U.S. federal government AND the major banks openly admit that extensive fraud occurred with the transfer of mortgage titles and subsequent foreclosure of property. Why else would there be an “investigation” and a settlement of $40 billion by the five largest banks?

Even a symbolic settlement such as this one can no longer be made without turning it into a complete travesty of the justice system. They got caught red-handed stealing our money and our homes, and now they have to pay us back a very tiny portion of the stolen wealth… with our money. The Financial Times reports that the settlement agreement contains a clause allowing the banks to count future loan modifications made under the $30 billion [taxpayer-funded] Home Affordable Modification Program (HAMP) as credits for the money owed under the agreement.

[moneymaker]

It’s a fact that banks make “a lot of money” initially on mortgage loans, by either selling them or raking in the interest payments. It’s also a fact that they have lost a lot of money in the last 7 tyears via foreclosure and property devaluation. Without being too far out there I am actually amazed that the banks are offering 20 year loans @ 3.75% with no points and such. If you think about it that is less than a point above the 10 year rate. Wow, think about it, do you really think they want to hold that loan over the next 20 years when interest rates are “guaranteed” to go up.

[CA renter]

Most of those low-rate loans are being sold to Fannie Mae and Freddie Mac — the taxpayers’ mortgage arm. The “private” market simply skims a portion of every transaction while working as the middle-men.

Personally, if taxpayers are the ones shouldering the burden, there should be no middle-men; the govt should make direct loans and charge whatever fees necessary to cover origination costs (and pay their employees an hourly wage, no commissions).

Again, this is another example of the corporate welfare given to the financial industry. How much extra money are consumers forced to pay just to get a conforming loan? Why do we have to pay the higher price (points/fees and/or higher rates) when the originators (and everyone in between) are totally unnessary? The financial industry buys the politicians so that we are forced to use their services.

Thanks for this post and link, Arraya.

[paramount]

Slightly off-topic, but would a Greek default trigger a tsunami of credit default swaps?

[Arraya]

[quote=paramount]Slightly off-topic, but would a Greek default trigger a tsunami of credit default swaps?[/quote]

Eh, greece is not that big, so, nothing another round of bailouts can’t fix!

[SD Realtor]

Agreed about Greece. I presume you have heard about the 2T fund that is being created for the future…

[paramount]

[quote=SD Realtor]Agreed about Greece. I presume you have heard about the 2T fund that is being created for the future…[/quote]

So by 2T fund is that code that just means more debt for Greece?

[SD Realtor]

It is 2T that is being backstopped for Europe in general.

[briansd1]

[quote=CA renter]Most of those low-rate loans are being sold to Fannie Mae and Freddie Mac — the taxpayers’ mortgage arm. The “private” market simply skims a portion of every transaction while working as the middle-men.

Personally, if taxpayers are the ones shouldering the burden, there should be no middle-men; the govt should make direct loans and charge whatever fees necessary to cover origination costs (and pay their employees an hourly wage, no commissions).

Again, this is another example of the corporate welfare given to the financial industry. How much extra money are consumers forced to pay just to get a conforming loan? Why do we have to pay the higher price (points/fees and/or higher rates) when the originators (and everyone in between) are totally unnessary? The financial industry buys the politicians so that we are forced to use their services.

Thanks for this post and link, Arraya.[/quote]

I agree on this one CA renter.

The evidence is the student loan program. Direct lending saves students and the government money.

[Author]

Posts