There are lots of arrows to cast at both Republicans and Democrats.  You can trivially find things like the CRA, or what look suspiciously like bribes on mortgage rates (sub-market rates given to "Friends of Angelo" from Countrywide, etc) handed out to Congress people, and other abuses.

You can find hundreds of thousands of dollars given in campaign contributions.

All of these factors contributed to the bubble.

But if you want to know why it happened - why the market did not step in and stop it, which everyone involved wrings their hands and laments - you need to look to only two decisions, and both of those decisions were made not by Congress but by executive fiat in the Bush Administration.

These were:

1. The decision to file suit to overturn state regulation of mortgage issuers, specifically targeting New York among other states, where state regulations required that "ability to pay" (and other anti-abusive lending provisions) be part of the underwriting decision.  These suits barred states from clamping down on lenders who made loans to people who could not pay.
2. The decision by the SEC to lift broker/dealer leverage limits in 2004.

#2 is particularly outrageous because in 2000 Henry Paulson, then the head of Goldman Sachs, asked the SEC to lift those limits and was told "no" - The SEC at the time said that it believed that removing those limits was unsafe.

In 2004 Henry Paulson (two years before he came to Treasury) came back with the request a second time, and the request was granted in what was the culmination of a furious lobbying crusade by Wall Street firms.

Now look at this chart:

Note very carefully when the home price index went over 150.

Late 2003/2004.

Why is this important?

Because 150 is the maximum level that the home price index had obtained during all of the previous "housing booms" since WWII.

Here is the simple, raw, unadulterated and ugly fact:

It is not possible to pump home prices beyond about the 150 level on that index without intentionally increasing leverage and reducing supervision of lending beyond safe levels.

The actions of every one of the government participants since the housing bubble popped have been focused in one and only one place - obfuscating this simple fact and trying desperately to avoid being held responsible for both their actions and the outcome on the American economy.

Isn't the reason for this "need" obvious?

To admit the truth would mean that Henry Paulson would have to immediately resign in disgrace, and George W. Bush would have had to apologize to the American Public.  In addition, it would only be reasonable for Henry Paulson to disgorge his $500 million in personal wealth gained from the bubble, since it was, effectively, "ill-gotten gains."

Both are simply not going to happen.

Not now, not ever.

All of the other issues (the CRA, bribery of Congress, etc) are important - but none of them were the cause of the bubble, and none of them could have led to the bubble, for one simple reason:

You cannot have the price of a capital good expand beyond the earnings capacity of the underlying owner of that good without creating an environment where lending takes place without limits or standards.

That is, so long as sane leverage limits and a requirement that borrowers be reasonably able to pay exist, a bubble of this magnitude cannot occur.

This is math, not politics.

Tonight Cramer was talking about either letting unlimited immigration take place (to buy up all the homes) or literally bulldozing them (aka what FDR did during The Depression to pigs, cows and fields!), and he's threatening to send that to Obama as "his plan."  Back in the 1930s when this was done it cost thousands of farmers literally everything; their crops were destroyed and livestock shot, and they lost their homesteads as their income was cut off.

That idiocy, should it be attempted with houses, will guarantee that all middle class and lower Americans will go bankrupt, because your cost of living will double, home prices will remain unaffordable, and your wages will not increase by a nickel.

Think about that folks - take your "mandatory bills" and double them, then tell me what the odds are that you escape bankruptcy.

Leave it to a Wall Street thief to come up with something that would grossly increase the amount of damage that America's middle class sustains - never mind CNBC employing someone promoting a policy that would bankrupt half its viewers.

Cramer needs to be put in the stocks - alongside Paulson Bernanke and Bush.

I want to throw rotten tomatoes.

But back to the underlying theme of this entry.....

The mathematical reality of how we got here places in stark relief what must be done to get out of this mess:

1. Leverage limits of 12:1 must be placed on all financial institutions.  No exceptions and no games.  If we cap leverage we cap systemically-important bubbles and prevent them from forming.
2. Ability to pay at the fully indexed rate, inclusive of any potential penalty must be "the essence" of any loan agreement for both consumer and business loans.  This includes credit card "penalty" rates, mortgages and all other forms of debt.  Evidence of this computation being done and within safe and sound limits must be prepared and maintained with all loans.
3. It is already illegal to lie on a loan application.  Falsification of loan applications must be aggressively prosecuted.

Do these three things, prices immediately contract to affordable levels on all things bought with credit, leverage is reduced to affordable levels and debt taken on can be repaid.

This will not prevent the pain that is currently in our economy from being manifest, nor will it "magically fix things." 

But it will contract house prices to where you can afford to actually own your home, it will force credit card issuers to reign in either limits or penalty rates (and perhaps both) and it will arrest future bubbles of systemic significance before they can do critical damage to the financial system.

President Obama's First Legislative Initiative

 My recommendation: Repeal the "Bankruptcy Reform Act."

 Senator Obama voted "Nay".

 Send up a bill to repeal that act.  I bet Congress would pass it and both Nancy Pelosi and Harry Reid would be for it, as it goes directly to "helping the little guy."  Sign it.

 This instantaneously shoves all the bad debt written by the imprudent bankers back where it belongs, while at the same time not letting imprudent borrowers off the hook (going bankrupt isn't painless by any means!)

 Market discipline is a wonderful thing, and this would go a long way toward restoring it.

 I strongly recommend that President Obama do so 20 minutes after being sworn in as President, and tell the American People right here that he will do so as part of his "First 100 Days" initiatives.

 What 'ya say Mr. President?

 Douglas Middleton

That's right - our Federal Reserve is no longer backstopping just our stuff, nor even "arranging swaplines" - now we're buying foreign commercial paper issued by a foreign bank controlled by a sovereign!

Jesus.

Yeah, I know that the South Koreans are our friends. So what?

Exactly how far does our printing of Treasuries go?

Now we're printing up Treasuries (taking on debt as America) to be able to buy up foreign bank commercial paper?
I've seen stupid before. This is beyond stupid. Significantly so.

We're not only crowding out our own commercial and private lending (if you haven't noticed mortgage rates continue to rise for this very reason) now we're taking down foreign debt, issuing Treasuries to provide the cash with which to buy foreign commercial paper issued not by a US company, but by a foreign development bank controlled by a foreign government!

Folks, this is outrageous.
Your government's ability to fund its operating debt through taxing you has now been co-opted by The Federal Reserve without a vote and without affirmation of Congress to prop up foreign banking interests.
When we provide foreign aid to a nation Congress appropriates the money and approves of the uses to which it will be put.
This is a blatant open-handed purchase of foreign debt obligating the US taxpayer to pay through his or her taxes the interest on the treasuries issued to cover that buy - without a vote of Congress.

That's bad enough.

What's worse is that our "crowding out" is now extending to foreign banking interests.

Down this rabbit hole lies a dislocation in currency and bond markets.

Ben Bernanke is going to cause a Global Depression.

In fact, he may already have gone too far down the rabbit hole to prevent it from happening.

By the way, to those in Congress who might be reading this, you may wish to note that Ben has committed four of his five "how do I stop a deflation" ideas already - and has failed to stop the deflation. The four are, in short:

1. Buy assets (Bear Stearns debt, et.al.)
2. Low fixed-term loans (e.g. TAF, TSLF, etc)
3. Acquire real or financial assets (TARP anyone?)
4. Treasury issues debt which the Fed then purchases with newly-minted money (Fed Balance sheet doubling anyone?)
5. Announcing an explicit ceiling on long-maturity Treasury debt.

Why is this last one important? Because all of this coupon printing (Treasuries) along with 1-4 is extraordinarily inflationary. I know, Ben said its not in his Congressional testimony. He's lying. It is. You doubt that? Go look at the price of 30 year mortgage money and what has happened to it in recent weeks. Longer-term debt is very sensitive to potential future inflation and will turn upward long before the inflation actually appears, because the lender is stuck with the note for the entire period.

So how do you stop long maturity Treasuries from shooting the moon on yield?

You announce that you are capping the yield through unlimited purchases of same.

That is, you'll buy as many as you need (printing as many dollars as necessary) to hold the price high and yield low.

There is one problem with this - it is insanely inflationary, especially when the government is running a fiscal deficit.

In fact it virtually guarantees a "feedback" cycle that ultimately will destroy both the government and the monetary system.

Here's why.

We currently require about $2 billion a day in foreign flow of funds into our Treasuries to fund our government's operation. We have "gotten away with this" and "enjoyed" unreasonably low yields on long maturity government debt because we buy a lot of foreign things - most specifically Chinese toys and oil. As we do so these governments become awash in dollars - effectively, we are exporting our (monetary) inflation to them in return for their imported goods. To prevent this inflation from destroying their economy they "sterilize" these dollars by buying Treasury securities with them, thereby removing the dollars from circulation and dampening the inflationary impact.

But if Bernanke were to try to cap long yields foreign investors would immediately tender their bonds into The Fed, destroying this external funding source.

Why?

Because all those dollars would devalue the currency, and in doing so foreign interests would take an immediate and permanent capital loss on their bonds, as the dollar would be worth fewer of their native currency units than it was prior to the "capping" expedition. To avoid this risk they would both cut off their purchases of future bonds (since the capped coupon would not reasonably compensate them for the inflationary risk) and tender their present stock, choosing to buy something else (oil, raw materials such as cement, some other government's debt, etc) with their foreign capital flows - something that is not subject to being devalued at whim.

This would force The Fed into an untenable position - capping bond yields creates an instantaneous circle jerk, and the requirement for foreign funding makes the implosion both quicker and more violent than it would otherwise be.

Treasury issues bonds into the market (too many for demand) and this depresses the price and jacks yields. To prevent yields from rising Bernanke monetizes them by buying them off the market to hold up prices and suppress yields, issuing dollars into the market in the process. This causes the total number of dollars in the system to rise (he must print the dollars with which to buy the Treasuries, and give that dollar to someone - either a holder or Treasury which presumably will spend it into the economy), which depresses the foreign trade value of a dollar. Prices for goods (imports especially!) rise precipitously, and holders of these bonds who can't tender them to The Fed sell them, mandating yet more Fed purchases and money printing to keep up the charade.

The inflationary impact of the dollar issuance reduces discretionary spending which in turn reduces real GDP and tax receipts.

That, in turn, forces Treasury to issue more debt to fund operations which......

See the problem? This cycle immediately spirals out of control, leading to a Weimar Germany-type meltdown of the currency and Treasury funding path.

Down this road lies the destruction of America's political and monetary systems.

This is the problem with academics running their "theories" in the real world. In the real world Ben has discovered that his much-vaunted "liquidity pumping" leads to commodity price moon-shots, massive distortions in the corporate debt markets and rising (not falling!) mortgage rates.

Ben's thesis says that none of these "side effects" should have happened, but of course the historical record says that they all did, because in the real world your sphere of influence doesn't extend to people beyond your borders or those whom you cannot compel to do your bidding, all of whom are free to act as they see fit.

You've been warned Congress - Ben's "next trick", and the last of the five, is the one that can destroy this nation's political and monetary system.

PS: I've been right about the impact of Ben's previous machinations - all things he denied would happen but I said would in fact did. Who 'ya wanna place your next - and possibly final - bet with?

The value of all assets must be allowed, even encouraged, to normalize. This crazy attempt to prevent that from happening at all costs will not work and puts our nation's political and monetary systems at risk.

Rick Santelli this morning on CNBC laid it out in nice, clear succinct language - all we have been doing is for one purpose - to protect insolvent, that is bankrupt companies from having to come clean and face the music of the market.

The bad news is that in doing so we have destroyed our credit markets, replacing them with The Fed as the first, last and only lender, and we are threatening to destroy not only the entirety of our capital markets but our monetary and political system as well.

Douglas Middleton [READ MORE] [COMMENT]]]> Tue, 04 Nov 2008 21:17:17 -0500 http://quikonnex.com/channel/link.php?id=32920 http://quikonnex.com/channel/link.php?id=32919 "WASHINGTON - An impatient White House is serving notice on banks receiving billions of dollars in federal help to quit hoarding the money and start making more loans."

Oh really?

Let's see.

You and he then made a half-dozen appearances on national television for the express purpose of twisting the arms of Congress so as to force it to pass over the strong objections of the American people.

Congress was told that if they attempted to restrict the use of the funds you would veto the bill.

We the people, in our phone calls, letters and faxes both to you and to Congress, said that we disapproved - that Hank Paulson would abuse this power and the banks would abuse our (not your) money.

Paulson in fact did exactly that.

He gave out $125 billion of that money in the form of "equity injections" to these banks without requiring in the form of contact that:
* They not pay out any of it in bonuses, dividends, or executive compensation.
* That they not use it to acquire other companies.
* That they agree to verifiable means of showing that they have used it to make loans into the economy.

The banks in fact are using the money for bonuses and acquisitions, and aren't making loans - exactly as we the people said would happen, and which your political appointee enabled through his explicit actions.

Oh, and speaking of those contracts, where are they? Government in the sunshine? Yeah, right - this is why the two contracts we have seen for services contracted had the pay sections blacked out.

What's even better is this tidbit:

"Indeed, the government approved PNC Financial Services Group Inc. to receive $7.7 billion in return for company stock and, at the same time, PNC said it was acquiring National City Corp. for $5.58 billion."

Got that? Treasury approved $7.7 billion for PNC knowing full well they were going to use nearly all of it to acquire National City, another bank (that is, a competitor.)

In other words we now have proof that Treasury is doling out money knowing full well it won't be used for lending.

And who does Hank Paulson work for Mr. President?

That would be you. He is a direct report.

President Bush, you're embarrassing yourself, The Republican Party, The White House and The United States of America.

The way you express disapproval with what has happened is to summarily fire your stooge Hank Paulson who has intentionally violated what you claim is the purpose for that $700 billion dollars in taxpayer funds - on national television.

This is what you do if your pique is real and not some sort of gaudy show for the American Public and press, praying that the public won't take out the fact that $70 billion of the bailout money was siphoned off into bonuses on Republicans in another week at the voting booth (good luck with that, by the way, given the market's reaction to your idiocy. Speaking of which, that's a very nice stock market crash Paulson and Bernanke caused with the passage of the EESA, no?)

But instead of doing what any executive does when his or her subordinate screws up to such a colossal degree, blowing $700 billion of the firm's (in this case, the taxpayers) money on what amount to beer and hookers, you instead show up in the press to "chastise" the banks and urge that they do that which your stooge did not require (but could have) and in fact which Treasury has said they did not include in their demands because it would limit participation in the program.

In other words, that these banks are not lending the money was no accident.

Henry Paulson omitted these terms knowing full well the banks would not lend and you have full knowledge of this fact - and that's just from what Treasury has said in public!

Your Treasury Secretary shoveled taxpayer money at banks so they could pay out $70 billion in bonuses and make acquisitions, he did so with full knowledge that this was going to happen, and he still has his job that he holds at your pleasure.

Douglas Middleton [READ MORE] [COMMENT]]]> Tue, 04 Nov 2008 20:54:18 -0500 http://quikonnex.com/channel/link.php?id=32919 http://quikonnex.com/channel/link.php?id=32737 First - Lehman's CDS and bond auction process told us two things:
* Even though they were dirtier than a hobo who hadn't had a bath in a month, they had enough value left in their bonds to wind up positive. Yes, it was less than a dime on the dollar. But it was a positive number. That's all that matters.
* There were no fails on the posting of collateral against settlement.

Now for the last year we have been told that:
* You can't trigger the CDS, it will cause a systemic, chain-reaction style nuclear meltdown.
* These firms are so broke that there is no value left in them.

Both are now known to be false.

This gives us hope - and a path out of the darkness.

It’s called "The Genesis Plan" (See attached PDF file)

The question raised about this plan is whether the "cramdown" provisions could possibly work - that is, if put through them, would the firm come out the other end, or be squashed like a bug as there was insufficient equity left in the bonds.

We now know the answer for one of the worst of the ugly - the equity is there, even if only by a scrape, to clear the firm's balance sheet and spit it out on the other side.

Folks, if there was a time to absolutely flood your Congressmen, the media, and every pundit and wonk you can find, this is it.

The short version of The Genesis Plan is:
1. Everyone must expose their balance sheet; all Level 2 and 3 assets must be declared and all models disclosed in full immediately and every quarter hereafter.
2. The CDS monster must be caged by forcing it onto an exchange where O/I and margin supervision can be maintained. This is already in process and must be completed.
3. Leverage must be returned to no more than 12:1 across the system - no exceptions.

The last point is obvious - every firm that has detonated has had leverage well beyond 12:1. None that have had less leverage have blown up. Game, set, match.
#2 is obvious and in process.

This leaves #1.
Now doing #1 will cause some insolvencies to be uncovered. Maybe a lot of them.

For each of those firms perform a "cramdown" of the debt to equity, using the retained value in the bonds to cover the liabilities that rendered the firm insolvent.

If there is recovery value (in most cases there will be, as we saw with Lehman) then the bondholders get newly-issued equity in ratable proportion to their (former) ownership of the bonds. The existing equity is wiped out. The firm, having no balance sheet debt whatsoever, can then immediately raise capital in the market to recapitalize itself (having a clean balance sheet this is a trivial task)

For those firms that have zero equity remaining, the government can step in and inject capital via a super-senior tranche as necessary to establish a working capital base. Remember, with a 6% Tier 1 capital requirement a little goes a long way - $10 billion injected results in over $160 billion of available gearing! Bingo - the firm is back on its feet. Protect the taxpayer in these transactions by attaching an onerous coupon to the issue so that it will be rapidly repaid (e.g. 3mo LIBOR + 600 bips) and cleared.

The objection to this plan will be that existing equity holders will be wiped out and bondholders will take a haircut.

Well, bond holders are no worse off than if the firm went under. They would get their recovery value anyway, and they still do - its just in the form of equity instead of cash.

As for equity holders, they're wiped out in a bankruptcy too.

The real objection to this is going to come from the executives, who will see their stock options rendered worthless along with their restricted shares. However, they remain in place (if the shareholders will have 'em) and as a consequence can rebuild their equity over time.

I have a solution for that problem too - make clear that any firm that turns down this demand is free to do so, but they will receive exactly zero access to the discount window or any other Fed or government borrowing facility, and if they go down, that's too bad - no help. We let Mr. Market take care of 'ya. Either take this deal now, or take your chances.

The Genesis Plan is demonstrably superior to the TARP/EESA for the following reasons:
1. The Genesis Plan immediately restores trust to the credit markets as balance sheets are instantaneously exposed and remain able to be evaluated by the marketplace. EESA does nothing to guarantee the return of trust to the credit markets as it does not deal with the underlying issue at all - the lies told by executives and firms in terms of their exposure to credit risk of all types.
2. The Genesis Plan addresses the root cause of all of the large-firm failures since the first of 2008 - excessive leverage. TARP/EESA is silent on the root cause of these business failures.
3. The Genesis Plan can be represented in a half-dozen pages of legislation. The EESA required over 100 to put in proper oversight. Since there is nothing other than ministerial activity required under The Genesis Plan and no discretion to abuse, such oversight is not necessary as with the EESA.
4. The Genesis Plan uses no taxpayer money at all for most institutions, and where taxpayer money is required it is intrinsically protected since it will sit at the top of a (new and clean) capital structure. The TARP/EESA uses all taxpayer and no private funds.
5. The Genesis Plan, when taxpayer money is used, goes directly to Tier 1 capital and thus is "high power" money; that is, it supports lending of $10-12 for every dollar put in. TARP/EESA is twelve times less efficient in the use of funds in that by purchasing assets zero leverage is obtained for each taxpayer dollar deployed.
6. The Genesis Plan promotes restoration of normal lending activity as it clears the impaired firm's balance sheet debt and immediately eliminates the issue of counterparty trust. TARP/EESA does not clear (although it does help remove items from) the firm's balance sheets and does nothing to address counterparty trust.
7. The Genesis Plan requires no lengthy administrative or "start up" time. It can literally be "up and running" immediately, with the exception of the CDS exchange, which is already under way. TARP/EESA was claimed to be required "immediately" but now is said to not be likely to actually go into effect until November at the earliest.
8. The Genesis Plan uses existing agencies who are already tasked with the required functions - auditing and reporting (OTS, OCC and the FDIC) and thus has very low "parasitic" costs. TARP/EESA establishes a new government agency and thus has a high parasitic cost requirement.
9. The Genesis Plan exposes the taxpayer to no credit risk. EESA/TARP exposes the taxpayer to $700 billion in taxpayer risk - or more.

While there were a few signs of credit market stress easing (a bit) today, there were also more anecdotes of things getting much worse. I see nothing to suggest that short-term lending has returned to normal, and until I do, I remain on high alert for the sort of disruptive events that can impact your life in very undesirable ways.

Yes, the market bounced hard today. Twice. Artificial? Maybe. Inside knowledge? More probably. Will whatever the "crackberry network" was buzzing about work? Likely not for more than a few days, but with the market this jittery, it doesn't matter - when the VIX is this high anything that makes people jump causes this sort of reaction - in either direction.

Get on it folks - plaster the media and your elected officials with the fact that we now have hard evidence that this path forward will not only work on a technical basis, but if it is adopted it will clear the credit markets almost immediately, which is the key element of this mess that must be resolved.

Any public official or media that wants to get ahold of me - the contact link works, and you're invited to use it.

We must fix this mess and we must do it now!

Douglas Middleton [READ MORE] [COMMENT]]]> Fri, 17 Oct 2008 19:09:33 -0400 http://quikonnex.com/channel/link.php?id=32737 http://quikonnex.com/channel/link.php?id=32736 Update 7:30 AM CT 10/10 - Overnight LIBOR has come in dramatically, but 3 month dollar LIBOR has not - in fact, it went higher. This tells you that while people do not believe the market is due to implode tomorrow - an improvement over yesterday - they also don't believe that anything will be fixed in the next few months. Thus, as of this time, the nightmare scenario remains on the table.

8:00 AM - Trading desks are reporting agencies being dumped by Chinese holders. Don't be too quick to call this "screw those evil Americans" - this smells like have to sell as opposed to want to sell. LOC seizures mean goods aren't moving which means you have to sell what you can, irrespective of price. Ditto for the price dislocation in the Treasury market. Say goodnight to what's left of the housing market - as I expected would happen – it’s done.

9:53 - Again, for the second day, no OMO (Open Market Operations) at The Fed. Read this report carefully. Note that there are no Agencies and no Treasuries left on The Fed's balance sheet. All gone. All that is left is $80 billion of crappy MBS. Bluntly, without printing raw money, The Fed is out of Treasuries with which to lend into the market, and thus cannot perform OMO anymore; they must do "other things" (like print money.) We are now officially into the twilight zone and Fed Solvency is an issue on the table. President Bush spoke again but none one word about forcing transparency among financial institutions. Raise cash now and be prepared for potential essential good and service disruptions as the supply pipelines could begin to go dry on these as soon as early next week.

Douglas Middleton[READ MORE] [COMMENT]]]> Fri, 17 Oct 2008 18:57:54 -0400 http://quikonnex.com/channel/link.php?id=32736 http://quikonnex.com/channel/link.php?id=32733 Ok folks, this is serious stuff.

This is now a national emergency.

Seven trillion dollars of wealth has been vaporized in US Stocks in the last seven days alone, with five of it since the passage of that ill-designed and foolhardy "bailout" bill.

The selloff this afternoon is the "real deal." It was not caused by the stock market getting "mad", it was caused by the short-term credit market along with the Treasury market suddenly dislocating at a few minutes before the bond pit closed at 2:00 PM.

Worse is also the fact that institutional lending has essentially disappeared - both between banks and now it is choking off commercial short-term credit across the board.

It doesn't get any more serious than this. To repeat: short-term commercial credit is threatening to completely disappear from the American scene.

Every action our government has taken thus far, including repealing mark-to-market requirements have made the situation worse by further destroying confidence.

In the overnight market the futures are imploding once again; the Osaka exchange was closed in Japan after hitting its "lock limit" within minutes prior to the Nikkei opening; the Nikkei is now down ANOTHER 10%, for a total loss of nearly 20% in just two days, with Japanese banks trading "offer only" - that is, NO BID. There are rumors of government bond market fails in parts of Europe, and Iceland has essentially been cut off from the rest of the world Interbank marketplace.

Japanese banks are now firewalling themselves from European and US claims; the interbank market is about to explode. Iceland has effectively defaulted on sovereign debt and today there was a rumor that Hungary had a failed bond auction, effectively defaulting as well.

Key: Sovereign debt (that is, Treasuries from various nations) has become infected with trash - unfortunately including ours now that Fannie and Freddie were nationalized and TARP has been passed - and may fail in a cascade-style fashion across the world. If this occurs our ability to fund our government will be cut off as well, leading to a need to reduce government spending by $800 billion a year immediately. This means huge and immediate cuts to Social Security, Medicare and Military budgets - by as much as half.

Over a year ago I warned in my writings that this could happen if we did not take action. If we did not force accountability through Congress and onto our financial system. If we did not force the thieves, liars and thugs on Wall Street to take their medicine.

Instead of taking action we have sat on our collective asses and allowed Congress to pass bailout after bailout - now our stock market is down close to 40% from the top with 20% of that loss coming in just over one week!

We are facing a global DEPRESSION and the cut-off of essential goods and services in this nation if we do not stop this lunacy immediately.

Please understand - the TRUCKER who has a full load of food headed for your grocer REQUIRES commercial credit in order to fill his truck with diesel.

The local GAS STATION owner REQUIRES commercial credit to fill his underground storage tank.

The local CAR DEALER REQUIRES commercial credit to have cars - and parts - in his dealership. No credit, no car - and no car repairs.

IF THESE MARKETS DO NOT IMMEDIATELY UNFREEZE THE CONSEQUENCE WILL BE THAT FOOD AND FUEL MAY NOT FLOW TO YOUR GROCERY STORE AND GAS STATION.

Think about that very carefully and then consider whether YOU can afford to sit on your ass for one more second, or whether you have an absolute NEED to get on the phone, fax, and whatever else RIGHT NOW to your elected and appointed representatives and, if you do not get in response that they will IMMEDIATELY resolve this matter whether you will vow to band together with every one of your associates and friends, form a group consisting of everyone in your local city or town, and call a GENERAL STRIKE, refusing to both work and permit commerce to be conducted UNTIL THE LIARS ARE FORCED INTO THE OPEN, DEALT WITH, AND THE SYSTEM IS ABLE TO CLEAR.

We are quite literally out of time. This freeze in the markets WILL continue around the globe unless something is done NOW.

Every "intervention" and "promise" made by our government thus far - all of them - have been LIES.

Our government has done NOTHING to alleviate the problem and in fact every one of their "solutions" have made the situation worse - going back for more than a year.

We have "pumped liquidity" and even bailed out firms with taxpayer money, and yet the markets have not unfrozen.

They remain frozen because the root cause of the problem is that banks and other financial firms have been lying for more than a year, each quarter claiming to have "kitchen sinked" their losses only to report more the next quarter, and in some cases have gone on national TV to proclaim they're "well-capitalized" only days or weeks before they collapse!

The first question anyone asks when someone wishes to borrow money is whether or not they will get paid back. If the lender does not believe they will be able to be paid back then that loan will not be made, no matter how much money someone has available to them.

It really is that simple folks and yet this fundamental principle has been willfully and intentionally ignored for more than a year.

YOU MUST CHOOSE RIGHT NOW, TONIGHT, AS AN AMERICAN WHETHER YOU ARE GOING TO GO TO WORK TOMORROW AND PRETEND THAT NOTHING IS WRONG, OR WHETHER YOU ARE GOING TO ENGAGE IN PEACEFUL BUT FORCEFUL PROTEST IN DEMANDING THAT THIS CRISIS BE ADDRESSED NOT WITH "MORE OF THE SAME" BUT BY ARRESTING EACH AND EVERY ONE OF THE CROOKS, BY FORCING BALANCE SHEET TRANSPARENCY FOR EACH AND EVERY FIRM IN THE UNITED STATES, AND BY THEN FORCIBLY RECAPITALIZING VIA DEBT-TO-EQUITY "CRAMDOWNS" EACH AND EVERY INSOLVENT BANK AND OTHER FINANCIAL INSTITUTION, WITH TREASURY STEPPING IN WITH TAXPAYER MONEY ONLY AFTER THE TRUTH (OR FALSEHOOD) OF SOLVENCY IS ESTABLISHED IN PUBLIC WHERE WE CAN ALL SEE IT.

YOU LITERALLY MUST CHOOSE NOW, AS THE TIME TO DAWDLE AND THINK ABOUT IT HAS EXPIRED.

Douglas Middleton [READ MORE] [COMMENT]]]> Fri, 17 Oct 2008 18:52:57 -0400 http://quikonnex.com/channel/link.php?id=32733 http://quikonnex.com/channel/link.php?id=31587 Homeowners being foreclosed upon may not be the only homeowners affected, according to data cited in the report. An additional 40 million neighboring homeowners may see their property values and their municipalities’ tax bases drop by as much as $356 billion, largely over the next two years.

Defaulting on the Dream: States Respond to America’s Foreclosure Crisis is the first-ever, comprehensive look at what all 50 states and the District of Columbia are doing to try to address the subprime mortgage fallout. The report finds that more often than not, states are at the forefront of developing policies and programs aimed at preventing more irresponsible loans from being made and improving residents’ ability to stay in their homes. The report highlights states that are making headway to strengthen loan underwriting standards and help borrowers avoid foreclosure—and underscores that any federal legislation must complement the work being done in the states, not compromise it.

The report is a joint effort between the Pew Center on the States and Pew’s Health and Human Services Program.

“Stronger standards from federal policy makers could have helped avert this crisis,” said Shelley A. Hearne, Managing Director of Pew’s Health and Human Services Program. “Future legislation must consider ways to strengthen standards to prevent more troubling loans from being made. Let's make certain federal laws build upon, rather than preempt, the strong and smart state efforts already underway and ensure that states retain flexibility to respond to local circumstances.”

States are using a wide range of measures to try to prevent problematic loans from being made in the first place. In North Carolina, lawmakers have passed some of the nation’s most aggressive consumer protection laws that help assure that borrowers receive loans that meet their circumstances through strong underwriting standards, such as requiring lenders to assess a borrower’s ability to repay, not just at a loan’s teaser rate, but also when that introductory rate adjusts. Colorado, Maine, Massachusetts, Minnesota and Ohio have followed North Carolina’s lead. Ten states, including Maine, Minnesota and North Carolina, ban most prepayment penalties, which are included in about 70 percent of all subprime loans. At least a dozen states have anti-predatory lending laws that regulate high-cost loans. And nine states, including Arkansas and South Carolina, require mortgage brokers to consider or represent the interests of the borrower when recommending mortgages.

Some states, including several that have been hit hardest by the crisis, also are taking steps to try to help current homeowners avoid foreclosure. Ohio, Michigan and Pennsylvania are among at least nine states with publicly funded refinance programs. Ohio, which accounts for 6 percent of the nation’s estimated foreclosures—loans in the foreclosure process or 90 days past due—launched a statewide campaign, including a 24-hour hotline, which encourages at-risk borrowers to seek counseling. Earlier this month, the state reached agreement with nine mortgage servicers on a significant effort to modify the terms of adjustable-rate, subprime mortgages.

Although they have not been as severely affected to date, states such as Maryland and Massachusetts are taking similar steps. Maryland recently passed sweeping reforms that extend the foreclosure process from 15 to 150 days and seek to prevent deceptive foreclosure rescue scams. Massachusetts soon will provide borrowers in default on their mortgage payments 90 days to work with their servicers to try to avoid foreclosure. It also recently made $2 million in grants available for foreclosure education, prevention and counseling initiatives.

Finally, 14 states have created statewide foreclosure task forces to bring government, lenders, consumer advocates and experts together to address the crisis.

“State lawmakers who have shown they understand the high stakes involved in the nation’s foreclosure crisis—including the impact on state and local economies—deserve a lot of credit,” said Susan K. Urahn, Managing Director of the Pew Center on the States. “We hope some of the promising practices highlighted in this report can inform federal efforts and inspire others to take action.”

Some states with severe problems have lagged behind. California, where one in 20 homeowners is projected to experience foreclosure, primarily over the next two years, issued a notice to loan servicers encouraging them to agree to wholesale loan adjustments, but as of the end of 2007, had provided little additional help to financially distressed homeowners. California has a task force and is exploring other relief, however, and has proposed expanding the types of loans regulated and strengthening the state’s underwriting standards for high-cost mortgages to prevent future challenges. Arizona, Florida and Utah, three of six states with the highest projected foreclosures per homeowner in the country, have also not been quick to respond to their states’ growing crises.

Pew’s research analyzes two principal data sets: the Mortgage Bankers Association (MBA) 4th Quarter National Delinquency Survey and the Center for Responsible Lending’s (CRL) foreclosure projections and Subprime Spillover data. (CRL is a partner in Pew’s Family Financial Security portfolio, which seeks to advance common-sense solutions to help Americans save for tomorrow and manage debt today.) Both data sets are widely cited and used to understand the nature and magnitude of the nation’s foreclosure challenges. Researchers also conducted extensive interviews and used other data sources to identify state action to address the mounting foreclosure challenges facing the country.

Below you can download a copy of the complete report. You will also find links to a national fact sheet and 50 state-specific fact sheets (including District of Columbia) assessing how each state is being affected by and responding to the foreclosure crisis. [READ MORE] [COMMENT]]]> Fri, 27 Jun 2008 19:39:16 -0400 http://quikonnex.com/channel/link.php?id=31587 http://quikonnex.com/channel/link.php?id=31317 The following Podcast is a more rational conversation about the financial welfare of consumers both in America and worldwide. In fact the new paradigm to financial freedom started outside of America. Educated-Wealth Network, Tri-Star Consulting Group LLC, Financial Freedom International Inc, are your sources for Mortgage Acceleration, Mortgage Elimination And Debt Elimination.

Keywords:Mortgage Acceleration, Mortgage Elimination, Tri-Star Consulting Group LLC, Financial Freedom International Inc, PayAccel HELOC, Debt Elimination [READ MORE] [COMMENT]]]> Thu, 29 May 2008 23:14:36 -0400 http://quikonnex.com/channel/link.php?id=31317 http://quikonnex.com/channel/link.php?id=31018 USA TODAY Article

By Stephanie Armour,
The most severe real estate recession in decades appears far from over, with the pace of foreclosures rising, the fall in home prices accelerating and the pain spreading to nearly every major U.S. city, according to two reports issued Tuesday. The number of homes entering foreclosure jumped more than 100% in the first three months of the year compared with the same quarter in 2007, with one in every 194 homes receiving a foreclosure filing, RealtyTrac reported. Foreclosure activity rose in 46 of the 50 states and in 90 of the 100 largest metro areas. [READ MORE] [COMMENT]]]> Fri, 09 May 2008 01:23:02 -0400 http://quikonnex.com/channel/link.php?id=31018 http://quikonnex.com/channel/link.php?id=30877 Click to hear the real rest of the story...

This is YOUR nation America. Either speak up NOW or we are looking at a potential bond market crash and a rerun of the 1930s. Yes, I mean it, and here's the presentation you MUST WATCH if you care about this country. Then you must act - NOW - by calling your Rep and Senators. Time is running out! [READ MORE] [COMMENT]]]> Sun, 20 Apr 2008 21:58:40 -0400 http://quikonnex.com/channel/link.php?id=30877