BRUCE E. W.

Coming Soon: Banking Crisis of Historic Proportions

FINALLY SOME INSIDE WORKING GROUND PEOPLE FROM THE MIDDLE CLASS RANK AND FILE! WE NEED A LOT MORE OF THIS AND WE NEED TO MAKE PEOPLE LIKE ALLSTREETS FEEL COMFORTABLE SPEAKING OUT WITH SOME CONSTRUCTIVE PEOPLE POWER. CHECK OUT THIS THREADED STREAM FOR MORE GROUNDSWELL ORGANIZTION: baselinescenario.com/2...

This is a good discussion from BaselineScenario.com

baselinescenario.com/2...

We don't know who might be right on the cure; but we sure know who has been wrong. We need to rebuild the foundation of America not the Penthouses for this "LANDLORD" ECONOMY. "WHAT WE HAVE HERE...IS A FAILURE...TO COMMUNICATE" (Cool Hand Luke).

On Aug 16 01:41 PM AllStreets wrote:

> Great article, John. You and others have convinced me that there
> will be massive bank failures due to additional consumer and business
> bankruptcies and residential foreclosures unless something effective
> is done to quickly relieve the underlying problems, the excess consumer
> debt burden and defaulting loans. The ongoing recession is causing
> irreversible damage to consumers and letting that play out with massive
> bankruptcies and foreclosures and bank failures will both postpone
> and limit any general economic recovery. The prime focus of government
> efforts to date, and the entire focus of Fed action, has been saving
> a few privileged lenders, investment banks and corporations. But,
> as you pointed out in your comments above, bank failures, as well
> as damage to corporations and investors, are the symptoms, not the
> causes of credit system problems, and saving lenders directly or
> having the FDIC sell them does nothing to fix the underlying problems.
> If the consumers can be rescued, then the banks and Wall Street will
> automatically be rescued too.
>
> The problem is so large and urgent now that only the federal government
> as the lender of last resort has the means to detoxify the private
> loans at risk. Just letting everybody go broke while hoping for a
> quick enough recovery is a highly uncertain and severely risky approach
> for both creditors and debtors in the intermediate and long terms.
> But it matters a lot who gets the loans. The right solutions aren't
> having taxpayers buy toxic debt securities while letting debtors
> fail, or federal lending to a select few banks as with TARP, which
> is a grossly unfair approach, or special Fed lending facilities,
> since none of those programs do anything to cure the underlying bad
> debts. I am really exhausted and frustrated by witnessing the widespread
> monomaniacal focus on saving corporations, investors and lenders
> with taxpayer funds while there is no discussion of doing annoying
> for the consumer taxpayers who ultimately pay the bill for all the
> business rescues.
>
> One very effective approach would be direct government lending to
> consumers to transform a portion of excess mortgage debt into long
> term low interest loans not secured by the properties, and to transform
> other consumer debt, especially credit card debt, into debt more
> easily serviced. A properly designed program of long-term, low-interest
> federal loans fairly available to all adult citizens without qualifications
> will simultaneously save consumers and their lenders without discrimination.
> It will also restore much value to existing debt securities.
>
> I've designed a comprehensive plan to do that in a manner fair to
> all adult American citizens that won't increase the federal debt
> at all, The AllStreets Bailout Plan detailed at themortgagenews.info.
> The program uses about $5 trillion in loans to transform $1.9 trillion
> (about 15% of the total $12.8 trillion) of all residential mortgage
> debt into 3% 30-year federal loans not secured by the properties.
> Those loans are fairly allocated to all residential property owners,
> and the loan associated with each property is equally shared by the
> borrower and her lender. Payments on remaining balances are recast.
> The loan pay down is immediate liquidity to the lender at 3% for
> 30-years, and the mortgage is then less, or not at all, upside down.
> The borrower has significantly less total debt, and reduced interest
> cost and payments. The balance of the $5 trillion is available in
> a fairly allocated manner to all adult American citizens who don't
> own residential properties to use to pay down credit card debt, purchase
> a property, invest in a business or as a personal loan. Funds from
> all of the loans will immediately flow to lenders, but only through
> their debtors, which is the only way to solve the systemic problems.
> The loans will either displace, or make unnecessary most, if not
> all, of the $11 trillion in TARP and other loans and guarantees.
>
>
> The program greatly alleviates the single most threatening problem
> for lenders, the upside down mortgages. It greatly reduces the odds
> of borrowers walking away from mortgages, and frees up many borrowers
> to refinance or sell without a loss. It relieves the consumer debt
> burdens by reducing debt service payments. The key to fairness in
> the program is the use of the drop in value of each residence, and
> the use of area median home values for those who don't own a property.
>
>
> No doubt the "free marketers" would be apoplectic over such a "socialist"
> program. But we now have the federal government , which has been
> socialist in many respect for decades anyway, owning via debt or
> risk insurance all or a big piece of the auto makers, AIG, money
> center banks, Fannie Mae, Freddie Mac, insurance on VA and FHA loans,
> FDIC deposits, pensions, and on and on. All of those programs are
> actual or prospective damage control, but don't alleviate the main
> underlying problem. It's high time that federal loan programs were
> used to actually solve the economic problem, not just to save wounded
> elite, and that's with loans to taxpayers who ultimately bear the
> risk or pay for any and all of the federal programs.

Coming Soon: Banking Crisis of Historic Proportions

Why is the reference growing daily to the Great Depression? This is 2009 not 1920. The banks are going down because the monetary policies that created helium baloons in a false economy continue to throw more fuel onto a raging fire. This is a result of strategies that started in 1970 with computational debt instruments that bundled junk into massive profiteering schemes which proliferated into a spoke wheel of market baloons and bubble inflated rafts for a Titanic driven economy. iT STARTED Stop looking to 1920 and start looking over your shoulder to the more recent histories of corporate raiding and hostile sequences of acquisitions by default. The incindiary prctices at the oligarchic level of finance are serving a direct interest. Your entire banking system has now , along with your economic foundation, been TURNED INTO A DERIVATIVE. Once you see that model you realize it is a massive hostile takeover strategy and private equity is into the Trenches while Big Entrenched money is simply stalking new prey. Good luck with your neoclassic analysis. You've all been duped by the people who believe their the smartest people on the planet and are looking to rule the world. For them, the end justifies the means and they will certainly weather out the ongoing and upcoming storm in luxury and vain contempt for the rest of us. Because "Something is Happening Here, but you don't know what it is...DO YOU...MR. JONES?"