Wednesday, October 24, 2012

Collapsing Standards of Living in the Predatory Oligarchy

I concur with Michael Hudson that the financial crisis facilitated the greatest transfer of wealth to occur since the Great Depression

One way this transfer has occurred is through foreclosures on debt, particularly in housing wherein citizens may have stored some wealth. 

The foreclosure process centralizes equity. Banks and elite others can leverage their capital to purchase assets that distressed owners can no longer manage.

Banks and other elite interests have through government guarantees, loans, and bailouts, been able to purchase assets at rock bottom prices as a result of the avalanche of debt foreclosures that they (the banks) helped orchestrate in the first place.

The economy would have recovered much quicker if the US government had paid off mortgages rather than providing the too-big-to-fails with endless free money, increasing speculation and enabling predation.

Too bad government policy reflects elite interests, rather than what promotes overall economic and political security.

Since the entire game is about predation, I was hardly surprised to read about foreclosure fraud early this year. For example:  

Audit Uncovers Extensive Flaws in Foreclosures by Gretchen Morgenson Feb 15, 2012 New York Times
[excerpted] "An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday...."

So, given widespread evidence of foreclosure fraud, an independent foreclosure review was suggested. Now we read:
Doubts About Independent Foreclosure Review Spread by Paul Kiel ProPublica, Oct. 19, 2012,
[Excerpted] The idea behind the Independent Foreclosure Review seems simple. During the peak of the foreclosure crisis, the banks broke laws and made errors that hurt homeowners. In response, the government mandated they compensate the victims.

But there is growing evidence some banks are playing a major role in identifying the victims of their own abuses, raising the question of whether the review is compromised by conflicts of interest.
Last week we reported that Bank of America, according to bank employees and internal memos and emails, is performing much of the work itself.
...The OCC did confirm that some banks' mortgage servicing divisions are coming up with "self-identified findings of harm/no harm" and presenting them to the independent consultants. But the OCC would not specify which banks are doing this....

MAJIA HERE: This so-called independent foreclosure review program sounds a lot like the so-called independent British government review of high-frequency trading that was a big WHITE WASH, which I reported on yesterday.

The fact that these reviews are purely token seems to be escaping the notice of the population, which is essentially being pillaged.

Wake up people your future! Your future is indentured servitude!

Think I'm exaggerating.

Consider rent-backed securities, the latest financial innovation of financial markets.

See yesterday's Wall Street Journal on "Analyst is Walking the Talk: Former Housing Stategist at Morgan Stanley Forms Buy-to-Rent Business" by J. Neumann. Oct 22, 2012, p. C3

[Paraphrasing] The article explains how Oliver Chang, formerly of Morgan Stanley, crated Sylvan Road Capital LLC to buy, renovate and rent previously foreclosed homes. 

Private equity group Carlyle Group has invested 20 million up front with the potential for $300 million in debt financing to buy up and rent homes. Sylvan plans on spending more than $1 billion buying up  homes over the next 2 years.

The article states that institutional investors have already raised $8 billion in equity to buy and rent homes  just within the past year.

Mr Chang feels that the proportion of people who rent will be growing given the current economic conditions in the country.

Majia here: Assets are being shifted from the many to the few. Ownership of housing is but one example, there are others.   

Consider also the shift in  household wealth that has occurred in the wake of the great recession. A detailed analysis and example available below: 

Oct 18, 2012
Majia Here: The article describes in detail the shift toward low wages in manufacturing at about $9 or $10 dollars an hour, with some up to $14 or $15 an hour. It is notable that most of the jobs described in the article do offer .

What does it mean for a society to experience vastly growing inequality and declining standards of living for the majority?
Hudson, Michael. “Financial Bailout: America's Own Kleptocracy: The Largest Transformation of America's Financial System Since the Great Depression.” Global Research 20 September 2008. 20 September 2008


Sep 17, 2012
Example of the Evolving Neofeudal Order: Rent Backed Mortgage Securities. Charles Hugh Smith of Two Minds Writes "Financialization and Crony Capitalism Have Gutted the Middle Class" (July 13, 2012) ...
Oct 18, 2012
Wall Street already has a plan for their latest asset seizure - rent backed securities. Here are the articles from which I derive my analysis. "States Shift Foreclosure - Suit Funds" The Wall Street Journal Nick Timaros October 18, ...

1 comment:

  1. I agree, the only thing i would change is not to call them "elite" just call them criminals as they are.


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