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A New Precedent For America: Financial Irresponsibility Pays
Tuesday, November 11, 2008, by Stathis
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As a desperate attempt to stop the bleeding, banks are stepping up with further efforts to protect delinquent homeowners. To date, this represents the most radical effort to stop the avalanche of foreclosures. It’s thought these ridiculous bailouts will help restore the housing market which will provide more stability to the economy.

The problem is that these plans are still insufficient to make any impact. And there is nothing to absorb the massive inventory of housing. If Washington wants to help homeowners make mortgage payments, they need to stop letting corporations send jobs overseas. Similar to the banking bailout, the latest “solution” from Washington will continue to waste taxpayer money. More important, it will reward the wrong people and punish responsible homeowners.

It’s been estimated that the banks, FHA and Hope Alliance have already halted over 2 million foreclosures. But you cannot cheat the system. Robbing Peter to pay Paul will eventually lead to more adverse consequences.

Unlike the previous programs to bail out homeowners, these newer more aggressive plans establish a new precedent that effectively dissolves what was once a free market economy; an economic system once built on rewarding the winners and punishing the losers. As you know, today we are seeing the exact opposite.

Those who will be provided with 0 and 1% mortgages or a write down off of their original mortgage will be enriched unduly. This is not only unfair but it will create more inflation since the recipients will be handed monetary rewards without working for them.

We must demand equal treatment. If there isn’t enough money to reset everyone’s mortgage, Washington needs to start its fund-raising efforts by demanding the $75 billion in bonuses Wall Street bank executives received between 2006 and 2007. In fact, this needs to be done regardless.

In the New America, you will be rewarded if you make poor financial decisions; not because Washington or the banks care for you, but because they are looking out for their own interests. It’s all about helping the wealthy elite become richer and more powerful.

This selective socialism must stop. Homeowners who cannot pay their mortgage must suffer the consequences. And those industries “too big to fail” should be nationalized. Otherwise, they will continue to take excessive risks and act irresponsibly, knowing they’ll receive bailouts whenever they screw up.

Treasury Secretary Paulson has ensured America’s bailout buffet to be alive and well. Despite the $5 trillion passed out to the banking cartel (either in loans or guarantees), you can bet there will be much more to come. I will absolutely guarantee it. AIG has already received $150 billion and now the Big 3 is lining up for more bailout money.

Most likely the airlines will be next. You should expect another few hundred billion to be handed to Fannie and Freddie alone. And we cannot forget about the bond insurers. They are waiting patiently for their piece of the pie.

As the meltdown continues, it is likely the entire insurance industry will get rescued by taxpayers since they are “too big to fail.” You might recall I warned of numerous industry bailouts a few months ago. I also warned that the original $700 bailout proposal would only serve as a blank check with much more down the road. Finally, I insisted the Fannie/Freddie bailout would cost much more than the initial amount. In fact, I stated that $700 billion might only be sufficient to cover AIG, Fannie and Freddie.

“Anyone who thinks this bailout will be limited to $700 billion or any figure Washington decides on is naïve. In my view it will cost taxpayers at minimum $3 trillion to $5 trillion and possibly much more depending on many variables.”

The banks are now using bailout funds for executive compensation. That’s your hard-earned dollars going to the same crooks that destroyed the economy. These are the same bums who belong in prison.

But still, that is not all. Treasury Secretary Paulson recently changed Section 382 of the tax code. This will basically hand banks involved in acquisitions up to $150 billion. According to an interview with Treasury spokesperson Andrew Souza by the Washington Post, “This is part of our overall effort to provide relief.”

One of the tax experts interviewed by the Post, Candace Ridgway, replied “It was a shock to most of the tax law community. It was one of those things where it pops up on your screen and your jaw drops. I've been in tax law for 20 years, and I've never seen anything like this,” Ridgway told the Washington Post.

The new change allows banks to use this mark-to-market accounting to write-off losses during M&A activities. It is a complete joke, was passed without proper approval and represents another pay day via taxpayers to banks who acted irresponsibly. Once again, Paulson has acted without congressional approval.

“None of us wants to be blamed for ruining these mergers and creating a new Great Depression,” replied a congressional aide. Here’s a newsflash for you Washington knuckleheads…a “new Great Depression” has already commenced. And it is here to stay for a long time. All you clowns are doing is making things worse. Americans need real solutions from intelligent ethical leaders, not a continued gravy train for crooked bankers and irresponsible homeowners off the backs of hard-working taxpayers.

I’m fed up with the lies and irresponsible use of taxpayer funds. I’d say we all are. Those who fail must pay the price. Anything less is un-American. This goes for banks as well as homeowners. As we know, this bailout money will add to current inflationary problems. The full effects of this bailout bonanza probably won’t surface for a while but they WILL surface and the devastation WILL be unprecedented. I will GUARANTEE IT.

The problem is that the most financially responsible segment of America – those who bought homes within their means and others who borrowed money from friends, relatives and even their 401(k) plans to get through this mess – will be punished for honoring their financial commitments. Let me be crystal clear. It is complete bull to deny responsible homeowners the same refinancing opportunities provided to irresponsible homeowners. I certainly don’t plan on taking this lying down, nor should you.

I would like to appeal to those who acted in a financially responsible manner to stand up and wreck this flawed plan. If homeowners are bailed out it will ultimately hurt you because it will enrich those who do not deserve it. And this will lower the relative value of your home per dollar paid when compared to homeowners who receive a bailout. Furthermore, it will not end the downward spiral in the economy.

It’s time for Washington to realize it can’t continue to cheat the system. They need to let things play out with natural supply-demand, risk-reward dynamics present in a real free market economy. If this is done, everyone will learn a very valuable lesson. Otherwise, these bailouts will create a moral hazard, ensuring the same thing will happen again. 

There are no solutions that can prevent further devastation. It’s impossible to stop the massive de-leveraging process and it’s impossible to prop up the real estate market. The more money pumped into these ridiculous bailouts, the worse things will get. They might be delayed for a period, but the effects will be much worse. The real solution is to clear out all the trash from this economic illusion and create real jobs that stay on American soil. 

Let Washington and the banking cartel know you will not take this inequity lying down. Until everyone is offered the same terms that irresponsible homeowners have been afforded, I would advise you not to spend your money. Let the economy stall. Leverage your financial responsibility and vote against this scam by withholding you dollars from the marketplace. This will remind Washington that everyone must be treated fairly.

If anything, it is YOU who should be rewarded for being a good credit risk instead of the opposite. Let them know their circus show antics won’t work. Do not allow yourself to be the sacrificial lamb for the sake of the economy while others get bailed out.  Keep your money in your pocket and don’t spend.

After all, homeowners receiving a bailout have very little disposable income. If in fact, those of us who acted responsibly – those of us with large disposable incomes decided to stop spending, we would neutralize these ridiculous efforts to buoy the economy. Let’s do it. I certainly will. I’m mad as H***, and you should be too.

Until every home owner is provided with the same refinancing opportunities, I refuse to spend money on anything I absolutely do not need to survive. Do your nation a favor and pass this message along. 

Together, we can demand equity. Whatever you decide, those of us who played by the rules, those of us who are being abused – we have to do something. Do whatever you can. Organize and protest. If you are truly a proud American you won’t take this abuse lying down. Some of you will sit there and do nothing while these vultures steal every dime you have.  I wish you the best.  But don’t come crying to the rest of us later on.

It’s time for a revolution in this nation. America’s pseudo-free market economy must be made whole again. Oligopolies must be destroyed and accountability must be emphasized.

But if you really think President-elect Obama will create any real “change,” you are sadly mistaken. There’s a very good reason why he’s a member of the Council on Foreign Relations. After all, you don’t get elected president without membership in America’s real governing body.

The two-party political system is really one party with two factions. And they’re controlled by mega-corporations via lobbyists. But ultimately, the CRF is the puppet master of this grand show. And Obama is just the next puppet in line.

 

 

 

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