Saturday, October 16, 2010

SAR #10289

There is no Plan B. - Chris Martenson

First Principals: In the US, housing is central to the economy, to the financial system, and to the society. It has failed. And with it the consumer economy has lost its main support, so, too, have employment, taxation, the social contract and governance. The replacement, in each case, is fear. And not far behind the fear is the gathering recognition that doom, that collapse is just off stage, waiting.

There is no rational way to discuss one aspect or another of the hydra facing us. Yes, fraudulent affidavits were used to keep foreclosure mills running. Why not? The mortgages were frauds at inception – deceitful loans made to deceitful buyers. The fraudulent mortgages were quickly passed on to the slice and dice middle-men who knew what they were cutting up was fraudulent but didn't care as long as they could pass it on – nudge, nudge, wink, wink – as MBS given fraudulently high ratings by firms that were no better than houses of prostitution. A “service” industry grew up that was designed to keep all the players fat, dumb and happy until they were starved, very unhappy, but still greedy, still dumb.

The housing market has disappeared into the hated federal government – no one else would lend money into such a market, nor offer MBS stuffed with fraudulent documents and backed by no-loss covenants. All the banks do is collect fees and distribute bonuses.

The rule of law disappeared along with the magic of deregulation – what are laws except inconvenient constraints on profits? Common sense left town years ago. Readers ask why I've not written about the 'foreclosure fraud', this is why: It is too big to grasp. We are living in a world made by fraud and it cannot but all fall down. Anyone who thinks this is all trivial technicalities is wrong.

I truly thought our doom would flow from the increasing decline in petroleum production, years from now. I was wrong.

11 comments:

Anonymous said...

I think you are absolutely right.

This is beyond anything I've ever seen in my life. 2008 was just the prologue.

This country is basically finished, whatever exists now is just zombies being fed by the Fed.

rjs said...

it certainly does have real systemic trouble written all over it...

yves has been on top of it since before it was news, and this week she admitted it had gotten ahead of her too...

Gegner said...

Well said! While there are many contributing factors to the pending collapse of our civilization, I believe the principle cause is criminal. (Despite the fact the criminals have 'legalized' their crimes.)

Which begs the question, is it still a crime if the judge says it's okay (or is the judge a criminal too?)

Anonymous said...

"The rule of law disappeared along with the magic of deregulation – what are laws except inconvenient constraints on profits? Common sense left town years ago."

The Rule Of Law has not disappeared but has been diminished. Think of a ROL Index where the Index continues down, down. That is where we are going and what Rules all. Why economists do not have such an Index is inexplicable.

I have yet to hear or see any comment by Criminologists about the Massive Crime Wave in the US today. In RE alone, at $2 TRILLION in crimes, at $1 MILLION per Crime, you're looking at 2 MILLION Criminals. Yet, these criminologists can tell us how many car thefts, muggings, pot deals, etc. occur in the neighborhood. Just another indication of a system becoming more and more corrupt and rotten.

OkieLawyer said...

I wrote several articles about mortgage fraud. Here is but one example.

OkieLawyer said...

Oh, here is another one for good measure.

Doly said...

"I truly thought our doom would flow from the increasing decline in petroleum production, years from now. I was wrong."

Actually, the housing bubble and oil are connected, it's just that most people don't realise how. The reason for a housing bubble was that interest rates were kept abnormally low, and all that money had to go somewhere. It went into real estate. And the reason that interest rates were kept abnormally low and it didn't lead to rampant inflation? When currencies are following the same standard (such as gold), running a huge deficit is deflationary. No, there wasn't a gold standard at the time. There was a petrodollar standard, followed faithfully by almost all oil exporters and the biggest manufacturer: China. You see the big picture now?

Demetrius said...

Doly's comment is interesting. You are very right when you say that basing a finance driven economy on on shaky assets that can deteriorate fast, both in real terms and financial is asking for disaster. The trouble is that it was popular and politicians bought it as well. Over here in the UK we could be facing more trouble soon. What is it about building on sand?

Rob said...

"I truly thought our doom would flow from the increasing decline in petroleum production, years from now. I was wrong."

As did and was I. To quote Gonzalo Lira, "Fuckit."

http://www.zerohedge.com/article/gonzalo-lira-coming-middle-class-anarchy

fajensen said...

I just read this book* about one of Jimmy Hoffa's henchmen and it made me realise that:

1) The US economy has probably *always* been run by and for the benefit of some constellation of gangsters - inside and outside of government.

2) Lawyers are the key enablers of organised crime.

Maybe they just went and overdid it on the securitisation scams - *all* the crooks piling into FIRE because the regular scams got too scarce with outsourcing and all?

Of Course *nothing* is in the news here. Wouldn't want to rock the "recovery" now, would we?

*) http://www.amazon.com/Heard-You-Paint-Houses-Teamsters/dp/1586420771

ibilln said...

CKM - well said. I sent to a friend, a Harvard type, who has been beating the "currency is becoming worthless" drum. The point was, in my mind, that the issues are more overarching that the currency markets, and your piece said pretty much what I wanted to say. He was a bit stunned. He has yet to argue with it.