Monday, January 25, 2010

Predator Problems

Greetings good citizen,

It’s that day of the week again, that time when those who have someplace to call ‘home’ report there to do what they are paid to do.

How ‘blessed’ is Wall Street? On a day when every other market around the world is bleeding from the eye-sockets, Wall Street snapped a 3-day losing streak, narrowly, but they managed it. Although there isn’t a good reason why…but when you’re ‘plugged in’ to the nation’s treasury, you can pretty much engineer any outcome you want.

Which brings me to another topic I have yet to mention as I waited to see there would be any, er, ‘reaction’ to the recent Supreme Court decision to uphold ‘personhood’ for a legal construct... If ‘real people’ are pissed, they are keeping it to themselves…or the media isn’t reporting it, which is the same difference…

In essence good citizen, the lapdogs of our corporate overlords have just cleared the way for ‘one dollar = one vote’, the political contests of the future will be restricted to those who can raise the enormous sums it will take to get on the ballot.

Um, I think we have all seen how well that worked out in the last election, where Wall Street was able to put their guy in the White House without any serious opposition.

In fact, the last election ushered in a new ‘twist’ in electoral politics, the two-year campaign. In a few short months we will see whom the Republican’s are going to run to ‘block’ a second Obama term.

Don’t get me wrong, Palin hasn’t disappeared…she just hasn’t managed to ‘energize’ the base enough to make herself a viable candidate.

There are other issues standing in the way of a Palin candidacy but that’s not for me to say.

Um, considering this ‘new’ hurdle in campaign finance, which effectively closes the door to all but the best-capitalized ‘third parties’. There won’t be what this nation is now begging for and that is a viable alternative to the repulsive Republicans or the traitorous Democrats, two sides of the same ‘corporate coin’.

The ‘little guy’ doesn’t have the kind of money it will take to successfully challenge either of the ‘mainstream’ political parties, ensuring any viable third party candidacy will be, er, ‘in the pocket’ of the status quo.

It is my opinion that the ‘ballot box’ (has been and) is now officially ‘broken’. In this respect, I view the recent Supreme Court decision as a boon because it ‘forces the issue’. It is one thing to suspect the deck is rigged and quite another to know it for sure.

It is no longer one individual = one vote, that whole game has changed.

You may have thought earlier campaigns were ‘tough’ on candidates, the new rules will eliminate anyone with a shred of decency who doesn’t enjoy a past that has been locked in the kind of ‘airtight’ container that only the very rich can afford.

You’re average schmuck doesn’t stand a chance, the (bought & paid for corporate) media will skin any normal person alive…not that any recent presidential candidate is anywhere in the ballpark of ‘normal’…a worrisome development all by itself.

And naturally, we are miles away from the topic of tonight’s offering an ‘excerpt’ of a piece by Henry C.K. Liu posted in today’s Asia Times.

Stiglitz pinpoints ‘moral core’ of crisis
By Henry CK Liu
[Basically the top of page 2]
"The foreign private fund flows that preceded the 1997 financial crises went to private entities in Asia and not just to sovereign borrowers as in the 1980s. Commercial bank loans in the 1990s, measured as a percentage of total foreign fund flows, were substantially less important than they were in the 1980s. Instead, fund flows to Asia ranged from foreign direct investment (FDI) to portfolio equity investment (meaning less than 10% ownership), corporate and sovereign bonds as well as structured notes, repurchase agreements, on top of traditional bank loans to public and private borrowers. This more-diversified flow of funds generated a different distribution of risks towards global institutional investors, mainly pension funds in the advanced capital and debt markets. Stocks and bonds investments in Asia shifted market risk and credit risk to foreign institution investors who bore the risk of changes in interest rates, securities prices and exchange rates.

"FDI in physical capital and real estate similarly shifted market risk and credit risk to foreign institutional investors. Even dollar denominated bonds issued by Asian governments shifted interest rate risk, as well as credit risk, to foreign institution investors. Socialized finance in the rich economies, what the Wall Street Journal fondly referred to as mass capitalism, was called on to finance old-fashioned compradore capitalism in the NIEs. The effect was to expose the NIEs to the risk of changes in US interest rates or the exchange value of the dollar, not as economic fundamentals, but as technical trends perceived by the herd instincts of fund managers in the advanced markets. Thus the neo-liberal focus on the need to resolve the national banks' domestic non-performing loans (NPL) as a prerequisite for generating growth is, to say the least, misplaced. The NPL problem in Asia is a fiction invented by the Bank of International Settlement to prepare national private banks as ripe targets for predatory acquisition by Western large, complex banking organizations."

Today, in 2010, as predatory capitalism hits its own home base, it is possible that a new world economic order will soon emerge from people power. [It’s possible but it’s not likely.] Unfortunately, all governments are still fixated on "recovery" schemes concocted to turn the crisis back to the very same flawed system of moral depravity that had led the world to its present disastrous state. [Strangely, it is indeed happening but there is no mention of this in the MSM, which proves little. There are many things the MSM would keep us ignorant of.]

Much of the talk now among establishment economists has been focused on technical debate on the government stimulus packages being too small to kick-start the seriously impaired economies around the world. When the problem has been that good public money has been targeted for bailing out undeserving private institutions to enable them to again play the same immoral game of recklessly speculation through "carry trade". Risking the people's money for unproductive, obscene private profit, while leaving a dispirited population unemployed and underemployed, with families with young children facing homelessness. [Um, yeah…and you don’t need me to tell you that these people suck, do you?]

If only a fraction of the people's money is spend directly on the people themselves, the world will emerge with a new economic order of moral justice instead of deprivation. [Again, the ‘root’ of the problem is corruption and we need justice to fix that. There is very little possibility of a just economy springing forth from a corrupt banking system. Ain’t gonna happen.]

Ron Paul, the Republican congressman from Texas, told Federal Reserve chairman Ben Bernanke in a hearing that the Federal Reserve is a "predatory lender". But he did not mention that by law, predatory lenders forfeit any right of collection. [Which once again proves we already have all of the ‘tools’ we need to straighten out the economy, the problem lies with the criminals who fail to prosecute their ‘brethren’ for fear of being prosecuted themselves.]

In the United States, although predatory lending is not defined by federal law [And who thinks this is an ‘accident’?], and various states define abusive lending differently, it usually involves practices that strip equity away from a homeowner, or equity from a company, or condemn the debtor into perpetual indenture. [Most of us are so deep in the hole that we don’t remember seeing the top…]

Predatory or abusive lending practices can include making a loan to a borrower without regard to the borrower's ability to repay, repeatedly refinancing a loan within a short period of time and charging high points and fees with each refinance, charging excessive rates and fees to a borrower who qualifies for lower rates and/or fees offered by the lender, or imposing new unjustifiably harsh terms for rolling over existing debt.

Predation breaks the links between an economy's aggregate resource endowment and aggregate consumption and between the interpersonal distribution of endowments and the interpersonal distribution of consumption.

The choice by some to be predators decreases aggregate consumption, both because the predators' resources are wasted and because producers sacrifice production by allocating resources to guarding against predators. Much of welfare economics is based on the concept of pareto optimum, which asserts that resources are optimally distributed when an individual cannot move into a better position without putting someone else into a worse position. In an unjust global society, the pareto optimum will perpetuate injustice.

Why isn't the legal concept of lender liability applied to stop foreclosure of homes with young children? In the US, lender liability is embodied in common and statutory law covering a broad spectrum of claims surrounding predatory lending. If a lender knowingly lends to a borrower who is obviously unable to make reasonable beneficial gain from the use of the funds, or causes the borrower to assume responsibilities that are obviously beyond the borrower's capacity, the lender not only risks losing the loan without recourse but is also liable for the financial damage to the borrower caused by such loans. [Naturally, it’s not ‘predatory’ if you’re a Republican, the borrower should have known better.]

For example, if a bank lends to a trust client who is a minor, or someone who had no business experience, to start a risky business that resulted in the loss not only of the loan but also the client trust account, the bank may well be required by the court to make whole the client.

The argument for home mortgage debt forgiveness contains large measures of concepts of lender liability and predatory lending. Debt securitization allows predatory bankers to pass the risk to global credit markets, socializing the potential damage after skimming off the privatized profits.

The housing bubble has been created largely by predatory lending without any lender liability. The argument for forgiving defaulted home mortgage debt is applicable to low- and moderate-income home mortgage borrowers in the US as well. Progressives should push for proactive commitments from both political parties instead of empty populist moralizing.

The fact that they’ve already tossed millions out of their homes will create a huge barrier to ‘forgiving’ the loans of people who were fortunate enough to hold out longer.

In this respect, ‘forgiveness’ should be ‘universal’. Make it so nobody owns the ‘stack of lumber.’ We need to solve the ‘homeless’ problem in tandem with the unemployment crisis.

Time to shift mental gears once again good citizen as I attempt to wrap things up here.

This Supreme Court decision robs you of your vote, not that the corporate controlled hasn’t already stolen it…you’ll never have another candidate worth voting for, it simply isn’t going to happen.

Look at what they did to Dennis Kucinich in the last election…the media wouldn’t let him debate! It is the same fate anyone else will encounter if you don’t put your political future in the hands of the elite few who control this process.

We don’t need to wiggle too far to see that justice won’t be served as long as there are no consequences for ignoring/breaking the law if you’re rich and powerful enough.

Which is to say there are a bunch of people we need to see swinging in front of their corporate headquarters from their flagpole…

Thanks for letting me inside your head,


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