What if I told you more than half of all U.S. housing loans are now made by just three giant banks. Would you say such a monopoly couldn't happen in America? That it flies in the face of the free market competition we've always known.
What if I told you that you and I and the other U.S. taxpayers are guaranteeing about 85% of all new mortgages, trillions of dollars in liability.
What if I told you many of these loans require as little as 3.5% down and are easy to qualify for. So if anything goes wrong, it's tempting for the homeowner to give the home back to the lender, which is ultimately you and me as taxpayers.
Finally, what if I told you no Congressional hearings have been held and it is being done with little media coverage, and not the headlines it should make. Unbelievable?
It's all true. Bank of America, J.P. Morgan Chase and Wells Fargo are the three banks that won this secret lottery. They make huge fees underwriting these loans and then dump nearly all of them off to Fannie Mae and Freddie Mac, government institutions whose liabilities you and I guarantee.
It's no wonder these banks are now making so much money and are being hailed by the U.S. government as great examples of the success of corporate bailouts. When in fact they are on welfare, on a magnitude no welfare family could attain in a million lifetimes.
Now ask yourself, what happens if people continue to lose their jobs and can't make their mortgage payments? What happens if real estate prices begin to fall again? What if the number of foreclosures continues its rapid rise?
Despite what you've heard about rebounding home prices, the U.S. housing market is on life support. If the artificially low interest rates created by the Fed and the recent special tax benefits are removed, it will collapse. And if it collapses here, it will collapse across the globe.
The U.S. government is so desperate to rescue its economic system and rescue the corporate giants that caused these massive problems, it doesn't even have an exit strategy from these unprecedented bailouts.
Nor has there been a regulatory revolution to ensure what caused the global economic meltdown won't happen again. In fact for Wall Street it is business as usual, right down to the big risk transactions and Mt. Everest size bonuses.
There is no market discipline. As one pundit said about Wall Street, "It's heads I win, tails you bail me out." That thinking has now permeated these institutions as they gladly make their campaign contributions to protect their access to your money.
How risky and under priced are these mortgages? When the Wells Fargo CEO was recently asked if the bank would keep any for its own portfolio he said, "We're not putting on 30-year [fixed rate] mortgages at this rate." In other words he wouldn't put the bank's money in these cheap mortgages.
What can you do to protect yourself from this madness? Take the following steps:
1) Keep your job. Become expert in a vital part of your firm. For example, in the radio industry, if you can deliver ratings or ad sales, your job is secure. Wherever you work, get into a revenue producing position.
2) Buy some one ounce gold coins. The corporate bailouts, the wars and the housing guarantees will ultimately jeopardize the value of the U.S. dollar. If inflation kicks in as I believe it will, you'll be glad you owned something more than paper money.
3) If you can afford to, invest in residential real estate. Track the prices and at the time you feel is right, buy a rental property, using an artificially low 30 year fixed rate mortgage set by the Fed. Even in bad times, everyone needs to live somewhere and someone will rent from you.
This not only will give you income, but if inflation does kick in, you've locked in most of your costs, while being paid rent in ever higher inflating dollars.
4) Protect your health. You can have all the financial security in the world and it will mean nothing if you're not around to enjoy it.
In summary: The U.S. was the greatest manufacturing powerhouse the world had ever seen. Now most manufacturing is done overseas and 70% of the U.S. economy is based on people buying consumer goods, often made elsewhere. Of the remaining 30%, a sizeable portion is military production and other government employment, all paid for by the taxpayer.
As is apparent, this is an unhealthy and unsustainable economic system and to right itself, it's going to have to go through a painful process, politicians' promises aside.
But the U.S. is still a vibrant, creative nation. Its Silicon Valley is the envy of the world as it creates new industries from Google to eBay to Facebook, from Laptop Computers to Ipods and it has the potential of developing technologies that can solve many global problems.
In the meantime, we will do as was done during the Great Depression and help each other as we get through this horrific financial period and build a far better future economy for ourselves and for mankind the world over.
Dick
Note: A key source for this piece is "U.S. Bets the House," The Wall Street Journal, 9/18/09 http://online.wsj.com/article/SB125322329116020929.html#mod=WSJ_hps_sections_realestate
Friday, September 18, 2009
Tuesday, September 15, 2009
The Invisible Wars
In America, war is invisible. We see no men, women and children blown to bits. We hear no cries from their families, we see no burials, nor feel any of their pain or loss.
We see no one rushed to the hospital, bleeding profusely from the latest bombing or shooting. We see no hospitals short of staff because most medical professionals have fled their nation.
We don't even see the dead or wounded U.S. soldiers nor see their devastated families. It's censored by the U.S. military and all of these people are invisible, never to be seen or heard from by the rest of us, as we go on with our lives as if these war weren't happening.
Recently, Defense Secretary Gates said in trying to censor a picture of a dying U.S. soldier that as a matter of "decency," it should not be shown. Well Mr. Gates, wars are major news and they deserve unsanitized coverage.
World War ll, and the Korean and Vietnam Wars were fully covered and widely shown to the American people so they could understand what was happening. "Decency" is not putting these soldiers in harm's way in the first place!
But we see no pictures of Iraq's or Afghanistan's war torn cities. In Baghdad, for example, we don't see a city filled with two story cement fire walls, a city filled with military checkpoints where the people live in lock down, imprisoned in their own nation.
Instead, we're told "things are getting better in Iraq" if we're told anything, as that war has disappeared from the news. In Afghanistan, the war is being ramped up for numerous fierce battles to come but we don't see it.
As with Iraq, it goes unquestioned by most major U.S. news media. We don't even know how many mercenary soldiers the U.S. now employs but it is a massive number.
As in Iraq, we don't even know why that war is being fought. Perhaps this eight year old war is just revenge for 9/11 in which all Afghans must pay. There are no stated objectives, time frames, means of measuring "progress" or any plans to leave. It's no wonder U.S. allies want no part of this war.
As for the monetary costs of these wars, there are no limitations. The U.S. has endless funds to throw into weapons and wars but apparently is cost constrained when it comes to providing medical care for all of its people, cost constrained when it comes to its schools and its hospitals and its bridges and roads.
After World War ll, many Germans claimed they didn't know about the concentration camps nor many of the other horrific actions taken by the Nazis. Their claims had no credibility.
Today, with the Internet we can overcome U.S. military censorship. No one can claim they don't know what's going on other than by willful ignorance. And to be apathetic is to abandon your brothers and sisters at a time when they need you most.
Many people say there is nothing they can do. But they say that without even trying to do something! Your voice matters, so raise it. Get involved with others who are trying to stop these wars. Take to the streets. Do a candlelight vigil, pressure the media but do something!
The world will later condemn the U.S. for the Hell it caused as it bankrupted itself morally and financially. But you will know and your family and friends will know that during this dark period of insanity, a time when so many others were silent, you had the courage and the compassion to try to stop it!
Dick
We see no one rushed to the hospital, bleeding profusely from the latest bombing or shooting. We see no hospitals short of staff because most medical professionals have fled their nation.
We don't even see the dead or wounded U.S. soldiers nor see their devastated families. It's censored by the U.S. military and all of these people are invisible, never to be seen or heard from by the rest of us, as we go on with our lives as if these war weren't happening.
Recently, Defense Secretary Gates said in trying to censor a picture of a dying U.S. soldier that as a matter of "decency," it should not be shown. Well Mr. Gates, wars are major news and they deserve unsanitized coverage.
World War ll, and the Korean and Vietnam Wars were fully covered and widely shown to the American people so they could understand what was happening. "Decency" is not putting these soldiers in harm's way in the first place!
But we see no pictures of Iraq's or Afghanistan's war torn cities. In Baghdad, for example, we don't see a city filled with two story cement fire walls, a city filled with military checkpoints where the people live in lock down, imprisoned in their own nation.
Instead, we're told "things are getting better in Iraq" if we're told anything, as that war has disappeared from the news. In Afghanistan, the war is being ramped up for numerous fierce battles to come but we don't see it.
As with Iraq, it goes unquestioned by most major U.S. news media. We don't even know how many mercenary soldiers the U.S. now employs but it is a massive number.
As in Iraq, we don't even know why that war is being fought. Perhaps this eight year old war is just revenge for 9/11 in which all Afghans must pay. There are no stated objectives, time frames, means of measuring "progress" or any plans to leave. It's no wonder U.S. allies want no part of this war.
As for the monetary costs of these wars, there are no limitations. The U.S. has endless funds to throw into weapons and wars but apparently is cost constrained when it comes to providing medical care for all of its people, cost constrained when it comes to its schools and its hospitals and its bridges and roads.
After World War ll, many Germans claimed they didn't know about the concentration camps nor many of the other horrific actions taken by the Nazis. Their claims had no credibility.
Today, with the Internet we can overcome U.S. military censorship. No one can claim they don't know what's going on other than by willful ignorance. And to be apathetic is to abandon your brothers and sisters at a time when they need you most.
Many people say there is nothing they can do. But they say that without even trying to do something! Your voice matters, so raise it. Get involved with others who are trying to stop these wars. Take to the streets. Do a candlelight vigil, pressure the media but do something!
The world will later condemn the U.S. for the Hell it caused as it bankrupted itself morally and financially. But you will know and your family and friends will know that during this dark period of insanity, a time when so many others were silent, you had the courage and the compassion to try to stop it!
Dick
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