Fannie and Freddie Scam

Fannie and Freddie were formed to assist in home ownership for citizens. Their mission was to increase homeownership through responsible lending. Note that I said responsible lending.


Since this mission was subverted, the mission of Fannie and Freddie became to create as many mortgage securities as possible and resell them rapidly. The mission of increasing homeownership became the excuse for the behavior that led to the subprime mortgage and bogus mortgage securities scheme.

It's like they said one thing to get approval, but the real motivation was different. Responsible homeownership includes making a payment if one exists. Getting people in homes for a few months or years and then foreclosure and then reselling the appreciated homes was the scheme, while the mortgage derivatives were worth more than the actual worth of the houses they were based on. Foreclosures only became a problem when houses stopped appreciating because the loan money dried up, because the problem with worthless mortgage derivatives had become apparent. It was quick money for a few, however.

It's interesting that anybody who did a short sale cannot get a loan for years, but the house they purchased after an appraisal was not worth what they paid, not then and not now. It was not like you could choose; all prices were sky high and if you wanted or needed to buy a house, you had to pay. The punishment of misled homebuyers is quite a phenomenon.

I would like to see a list of names and positions of those who originated the mortgage derivatives schemes and who are perpetuating them. Mr. Geithner, Mr. Paulson, Mr. Bernanke, and private sector people will probably be on the list. Is Federal Reserve money being used to purchase mortgage derivatives?

Since executives at Fannie and Freddie are rewarded with bonuses if they obtained a larger market share, that is apparently why the chief executives received some $12 million in bonuses, even though they are demanding billions in tax money to fund their deficit spending. I think Fannie and Freddie have 78% of the market share in housing loans now, which is a significant increase. What is wrong with this picture? This is deliberate direct competition with the private market in origination of more mortgage securities, which is the apparent prime goal of Fannie and Freddie. The people these government organizations are supposed to serve are forgotten or used as pawns in order to create more mortgage derivatives.

Obtaining a bigger market share? That was not the mission. Why are chief executives being rewarded for capturing a larger market share? How about paying the executives to do their job and no bonuses? Bonuses are being used by somebody making policy to direct the course of events, which has proven to be a bankrupt way to manage home loans. We need a comprehensive policy statement in Fannie and Freddie that states loans to institutions can be made if they loan it out to deserving homebuyers and that the mortgages originating from those loans will be serviced by those originating those loans. Responsible lending would immediately result, but of course the profits are modest.

I think mortgage derivatives should be relegated to casino bets and the institutions Fannie and Freddie and all their contacts should be disbanded. If a new government institution is created to 'help' homebuyers, no derivatives should be allowed.

It looks like foreclosures are up and I do appreciate the efforts of the law to recoup losses by forcing buybacks of delinquent mortgages packaged as wonderful investments by crooked rating agencies. The inflation in home prices was encouraged because the number of loans increased due to the dropping of lending standards. "If you could fog a mirror, you could get a mortgage", I was told. If they had stopped the scam with those who actually qualified for a mortgage, the foreclosures would have been within norms, but they had to have more mortgages to fuel their scam, so they just handed them out like popcorn to pigeons. Anything to keep the number of mortgages up so more mortgage derivatives could be sold. I knew people who would buy several houses at once and flip them 2-3 months later for tens of thousands more than they paid.

This inflation hit the consumer hard but the immediate effects were softened by various mortgage schemes that focused on the immediate payment the buyer would pay, rather than devious adjustable rate mortgages, interest only for a few years and other schemes designed to keep the payment low for a while, then escalating the payment to a level the buyer could not afford. Since by then there were no homes for sale the buyer could actually afford, these schemes became attractive since the buyers were assured their homes would continue to rise in value. Of course, that trajectory was unsustainable but what did the average schmo know?

It's amazing to me that the federal government is operating an agency that has as policy capturing a larger market share from the private enterprise market. The executives are awarded bonuses on the basis of market share statistics, rather than success in the mission to provide housing opportunities for the responsible buyer.

I suggest a review of the policies surrounding these 'bonuses', who wrote them and why and the consequences of encouraging particular courses of action without heed to future consequences.

Football Cult

This football scandal tops them all. Graphic details zoom around the world and it looks like the pagan worshipers of a sport have ignored feet of clay on their idol while the gold they worshipped filled their eager hands. The Golden Calf rules over the pagans who put more belief in their obsession than in moral certitude.


What disturbs about this scenario is the dubious value to the countless children who have been indoctrinated to believe that success at football is equitable with your value in the world. See a vision of a child's future that is defined by a sport that requires large size to succeed at the moneymaking trough narrows the field in that child's mind. What has happened to our moral fabric when a moneymaking game takes precedence over the students and the populace? They kept their insular trip going as long as they could.

The public schools and sports should be separated. Let the municipalities handle competitive sports while the schools teach academics and health for life. Profits from the competitive sports would help fund the schools and the municipalities. The competitive sports programs should be open to all on 8-12 grade level, with subsidized bus passes to the programs. Grade performance guidelines would apply to eligibility. Tutoring would be offered on site.

We are told that our local university funds other sports programs from football and basketball proceeds, yet contributions to the academic program lean towards getting instructors fired for giving bad grades to players or having special classes for the players, instead of them becoming a part of the university community and attending normal class. Our local athletic director has stated he will raise the graduation rate of the players, which has been abysmal under the recently retired long time coach. The hangers-on who suck a living out of the sports programs using the university name don't even bother to bolster up academics. It's all about money first and sports second .

Look at the Fiesta Bowl scandal. Free trips for state legislators, free tickets and free hotel rooms and meals, all to obtain influence and cooperation on key legislation that benefits their scheme. So the head of the Fiesta Bowl has access to all this money, which he spends on trips and freebies for himself, when the educational institutions represented get little cut out of all this lucrative action. I'm talking academics here: all that strange stuff like mathematics and the sciences and liberal arts, and the like. Most of that profit should be diverted into funding academics instead of puffing up the pay of the dealmakers and giving freebies to lawmakers .

The moral failure of the 'football leadership' did not live up to the hype fed children through the public schools and universities. Pressure applied by how many people resulted in a cover up that damages the students and the standing of the institution? Who participated in the cover-up? Who should go to jail for putting selfish interests ahead of right and wrong? Who would be better off today if they had stood fast and reported the truth until somebody actually heard it?

Debt as Tyranny

                                               The High-born Ladye



Debt as Tyranny


Thinking on the national debt and the local city debt is enough to create insomnia. City debt is more familiar to me and with that is a bit of contempt for the decision-making that mired the city in debt and more debt continues to be an attraction even though insolvency looms as borrowing has been the budget crutch in the city for the past few years. Why is borrowed money considered income in the accounting? Borrowed money is not income to be lumped in the general fund and spent on whatever. Borrowing money is a focused enterprise, hopefully with increased income or better conditions as a result of the cost of borrowing money. Around here, the real cost of borrowing money ranges about 30-50% of the principal, which is usurious but seems so desirable to the politicians who are courted by the lenders to borrow.

Politicians who borrow against revenue streams are indebting those streams for years after their term of office is over. They are often long gone and the taxpayers are still paying on those debts, ill conceived or not. The power these politicians have over our lives and environment is now reaching into the future lives of our descendents, as the politicians' insatiable urges to control cash seems to be more important than planning for the future.

Apparently in Greece, the deal seems to be that the Greeks are expected to borrow money at 85% interest and if the latest bailout plan works, the holders of the risky Greek debt will rake in the principal plus 85% interest, all paid for by whomever is paying for the bailout. Since our President did not agree to pay this bailout, then the taxpayers are off the hook to pay that usury and allow those investors to collect big. Nobody should pay that money. A cyberspace rumor is floating around that a banker is going to take over the reins of government in Greece. If the spring drifts north all bets are off so the foolishness of creating a climate perfect for new species will result in unwarranted competition, in ecological terms. Doesn't anybody remember the plight of the Germans after WWI when they were forced to pay war reparations to the point they had nothing left? That political economic mistake led to WWII.

I think the moneylenders need to take a haircut and either go broke or get on with it. They deserve that for all the easy credit they offered on all levels, without checking to determine if any of the borrowers could pay it back. Liberal tax codes allowed for massive tax deductions on defaults. Tax deductions for these losses should not be allowed, since the evidence shows a lack of responsibility on the part of the lender in vetting potential borrowers. So incompetence in the workplace is compensated for by the government in the form of tax breaks? Just think of all the money paid in commissions to lenders who set up these deals. "Fund managers" who invested pension funds and other critical money should be liable for these reckless losses and 'bailouts' should be aimed at the pension funds, not the clown who handled the crappy investments.

Back to the politicians who recklessly borrow and spend, whatever happened to bond elections, where voters had to give permission for borrowing? Around here, the euphemism for borrowing is 'certificate of participation', which bring in millions in debt. The RTA is issuing bonds after receiving .5 cent sales tax to do a job. The borrowing adds more than 30% to the cost, but was it in the voter proposal as an expense? So we were told that it was always understood there would be borrowing. They're wasting over a third of the money they get on debt, but they get to dole out the millions. Refinancing existing debt by rolling over the old debt and starting over with the principal after fees are paid and a few bucks doled out keeps the taxpayers in hock for a longer time, but what the hell, let's spend that cash now and leave nothing but a hole in the ground for posterity. Your kids can pay for it too; it's worth it to somebody. Let's have some legislation that calls a debt a debt and demands voter approval for incurrence.

Debt is tyranny. A forced payment brought on by government borrowing. The spending of tax money on moneylenders is outrageous and should not be allowed above a certain point. It is called the debt limit, which is now an object of ridicule. How about establishing a realistic debt limit and limits on what borrowed money can be spent on? Prosecute officials who spend borrowed money on anything else or who build up costoverruns resulting in partial completion. Somebody has to take responsibility.

Fannie and Freddie, the Fed lending houses that eagerly buy mortgage securities, are a losing proposition, where mismanagement has resulted in a request for billions more tax money subsidy every year, owes the taxpayers $141billion and is now paying top executives $12million in bonuses this year. Who else gets a reward for running a heavy deficit when the Federal government is running a deficit and making it all worse by billions? Close them down. We don't need any more mortgage securities or derivatives and who likes them is totally irrelevant to what needs to be done. Make the lenders responsible for what they lend locally. The power of the mortgage brokers needs to be broken. Real estate prices might fall, which would identify more potential buyers.

One way to avoid more public debt, particularly that foisted off on the voters without permitting a vote, is to adjust the size of the contracts to be awarded. Smaller contracts would favor local workers, while the huge contractors want huge lump sums borrowed and given to them on a large scale. These smaller contracts would be contingent upon receipt of the tax support, which would have some consistency. Smaller, shorter term contracts based on actual revenue would favor local, small contractors. The money paid them would stay in town circulating instead of flying out of state or even out of the country. It is time to set up the local bidding process in such a way as to favor local small contractors who employ local workers without forced union representation. This is a right to work state. Costs need to be lowered on all fronts, which would create more jobs. Smaller contracts contingent on revenue would avoid debt and would allow for incremental building of projects using all of the assigned money with none going to the moneylenders.

Another problem is the 'underwater mortgage' problem. Remember the last real estate boom, the Subprime Boom? During the boom in Vegas, houses were actually selling for more than the asking price, the bidding was so fierce. Inflated housing prices were the norm. If you could fog a mirror, you could get credit. If you wanted to buy a home, you had to pay, like $275,000+ for a cheap 1200 sq. ft. cookie cutter. Around here that overbuilt item is selling for around $40-50,000 and falling. How far can the prices drop? Maybe until the average Joe can actually afford the loan payment.

The debt pervasiveness also keeps rents jacked up so the principal and interest on the debt can be paid, with a profit for the leinholder after that. Renters are expected to pay the subprime boom mortgage price for the lienholder plus more for maintenance costs and profit. The stagnation of the real estate and rental market is due to a heavy debt load that absorbs cash and does not produce jobs. Debt jacks up the price of everything.

The tyranny of debt has brought economic exploitation and now protesters to the streets. We need legislation to prevent politicians from borrowing anything over a reasonable debt limit and any borrowing has to have the consent of the voters. The voters need control because the voters pay for it. It's easy to blow money when somebody else pays for it. No more Certificates of Participation or any other disguised borrowing. The Regional Transportation Authority (RTA) is claiming power to indebt based on the 1/2 cent sales tax they command and I question their legal right to indebt this fund without a vote of the people.

Our legislators can help the voters get control of public indebtedness and the time to act is nigh. No more moneylenders in the temple of government.

The Legacy of 2012

The Legacy of 2012

The Mayan Calendar ends with the winter solstice of 2012, heralding a new calendar cycle and a new era in world history. The new beginning is not defined in the prophesy but can be likened to the invention of domestic corn and this latest migration to the Americas, which produced the world in which we now live.

Monumental change will be the result of choices made today. The issue of what choices to make is the most important of the day.

Possible choices divide into three categories: Inevitable and Preventable and Attainable

PREVENTABLE

o Nuclear War

o Biological War

o Huge Income Disparities

o Population Growth

o Deforestation

o Pollution

o Growing Poverty

o Economic Collapse



INEVITABLE

 Petroleum Depletion

 Mineral hoarding as supplies decrease

 Higher prices for nonrenewable resources

 Climate change

 Competition for resources



ATTAINABLE

 Curbs on population growth

 Due to finite nature of Earth's mineral resources, extraterrestrial resources must be exploited.

 Research into energy sources and energy savings, due to ongoing petroleum depletion

 Protection and regeneration of fisheries

 Development of new agricultural products

 Plan for global climate change to prevent catastrophic food production losses**

 Localize food production as much as possible

If population growth not curbed: constraints will appear in freedom, food, water, living space, recreational space, wealth, and goods. Those kinds of social conditions will result in higher prices, war and depopulation. In the animal world, overpopulation results in a die-off of that population back to a sustainable level. One would hope that civilized minds could avoid such an outcome in the new era.

Social engineering as an action plan might take a back seat to survival economics in a new era. The various social structures found around the world hark back to pure environmental survival, like what did help us survive was perpetuated like immunity in the DNA. The modern world is changing so fast, this kind of adaptability must be supercharged as compared to the past.

Consider myself: Born mid twentieth century, as a child, I have known people who lived in Civil War times long before the telegraph and the automobile. I did not live in those times, but I heard stories of how it was and what you had to do to survive out there on your own in the wild world or in the world of man. I heard it! And just me can remember before TV and when a typewriter was a prized possession. TV came into Tucson around 1950. Ray Bradbury and A.E. Van Vogt were my ticket off the planet. And now just look at us with computers and space stations and wireless and cell phones! As a teacher, I rode the wave of change so I could teach the students the newest and latest in technology. I am so thankful for that opportunity.

What could a new era bring, considering the changes in the last hundred years? Could anyone have imagined satellites and cell phones in 1900? Jules Verne and H.G. Wells were sensations.

What could we invent?

 A mining network including moon, asteroids and Mars.

 Payload delivery from Earth orbit to the surface

 Solar smelting in a vacuum

 Solar Sail technology

 Nuclear energy research

 Wireless research

 New uses for light

 Genetics research

 Magnetics research

 Endless possibilities..

 *Increased lifespan

*Medical research has led to an increased lifespan, which in a sustainable world would result in a slowdown of replacement population. Longer lifespan = lower birthrate. Medical ethics and the prolongment of life are all issues here but cannot be ignored. I think requiring the lawyers and medics to bankrupt the families must be curbed. Balancing the birthrate with the deathrate leading the way is the only way to morally approach the problem. Discouraging excessive population production should be part of public policy and expressed in the tax code.

Worldwide, the problem of immigration caused by overpopulation in Mexico and the availability of jobs in the USA was mimicked in Europe, where Africans immigrate to where the food supplies are, in biological terms. Population stability needs to be achieved without mass migrations. In plain language, most of Mexico has a religion that discourages birth control, so the excess population migrates north to fill up spaces in the USA. Is this fair or responsible? For the political boundaries to mean anything, this problem must be addressed by the Mexican government and their religious leaders. The USA is not a population outlet for nations with high reproductive rates.

The national jurisdictions should be required to publish a research report on population dynamics and an action plan to achieve population sustainability to the United Nations. A recognition of the connection between population densities and wars must be made and the subsequent importance of population growth cannot be underestimated. High unemployment leads to civil unrest.

Capitalism as an economic success is dependent on renewable resources, discovery of new resources and the opening of new markets. The growth mantra has been uttered so often nobody thinks of the philosophy of an ever expanding population within a finite space. Since new resources are now few and far between, any growth must be at the expense of other economic interests. This kind of cutthroat competition and subsequent monopoly causes unemployment. We are now a nation of buyers of goods, rather than a primary producer of goods. The relentless erosion of regional self-sufficiency leaves too many at the mercy of importation of necessities and also leaves many unemployed. Unfair trade policies are not capitalism, but are rather exploitation. The USA has been exploited and now is broke and unemployed and in debt. Foreign interests now exploit our mineral resources while politicians assist and applaud.

Job creation should have a goal of perpetuating the system as well as employment of workers. Makework projects without a clear economic objective are too expensive for the economy to support, so job creation should occur in sustainable occupations like greenhouses, health care, energy production, research and development, where something of value is created ongoing. For example, instead of wasting money on a solar company proposing to use old technology to compete with the Chinese using their subsidized industry, why not consider a solar company that uses solar catchment units that have easily removable elements that can be retrofitted as the industry R&D continues? An adaptive solar unit! Or instead of building huge culverts where it rarely rains, build solar electricity producing units and export electricity, an ongoing profit making enterprise or provision of plenty electricity for that locale.

One example that comes to mind is the federal subsidy of the installation of a streetcar line made under the stimulus program that will leave the city of Tucson in deeper debt, has devastated the water company with borrowing, and has actually created very few temporary jobs in Tucson, but did export jobs to Oregon where seven streetcars are to be built with borrowed money, which raises the costs by at least one third. After the streetcar line is in operation, the maintenance costs will be paid by the city and are estimated to cost several million a year, all out of the general fund. The city of Tucson has borrowed money the last few years in order to avoid cutting programs and this streetcar will only add to the deficit, since no attempt will be made to make it into a paying operation. Thus, the stimulus just caused more debt, a few temporary jobs, and a lasting maintenance charge to add to the city deficit. Proponents of the scheme say that sales tax revenues along the route will be a money maker and more housing will be built, all this in an economy with a huge surplus of housing.

There are skeptics concerning the stimulus spending, long term debt obligations and the effect on jobs. More debt service = less money in circulation. How stimulated is Tucson right now? The streetcar operation and maintenance requires jobs, but these jobs must be subsidized by the city in a deficit situation. In tight economic times, this means cuts elsewhere in order to keep the streetcar running and the unions are demanding top money and benefits. Should the politicians borrow money to meet the added deficit? Already, the 'modern' streetcar has destroyed the efforts of a private outfit running an old streetcar here in town. So much for the stimulus, which also paid for 'Fast and Furious'.

Proposed spending for job creation must be analyzed carefully. Suppose a foreign mining company says they are creating jobs in Arizona by using local workers to extract copper using local water. This slurry will then be shipped overseas for refining and of course they will possess the metals, which raise in value every year. There's a big rush on this so they can quick get their hands on the new monetary standard, the metals. Why not build a state of the art smelter that can do slurry and recycle? There is plenty of room over in Mojave County along the railroad line: it is time for a smelter. Then the state metal resources will be exploited by local workers, the supply stays within the USA and more jobs are created here. And the huge wealth of the metals will remain here.

The old mining law dating from the nineteenth century must be revised. Perhaps the Feds should spend some time considering the critical long term resources of this country, get legislation passed that protects our national interest and revise that antiquated mining law. Jobs based on finite resources will be gone while somebody else makes off with the loot and leaves a big hole and poisonous waste in the groundwater. Being in a hurry to get jobs might hurt the economy in the long run, like selling Manhattan Island for a handful of bright beads didn't help the Indians long term. Selling all you have of valuables without economic replacement is not a way to get ahead.

The issue of excessive regulation must be addressed. The smallholders are tied up by local zoning laws that prohibit home based businesses, which is a violation of land rights. It appears that zoning laws have required someone to live in one place and have a business in another, which benefits those owning 'commercial' property. This expense defines what businesses can exist and the commercial land holders will charge as much as they can possibly get for any use of their properties, because of the liberal tax code that allows for heavy tax deductions for empty units, thus driving up the rents. Nobody cares if businesses cannot exist because of the high rents and the impossibility of using your own property to have a business, anything from a law office, hair salon, candy shop and so on. Of course, not allowing businesses in homes causes one to have to drive or ride the bus somewhere else to shop for everything every time. Excessive regulation and fees and licenses and super dooper inspections of larger businesses discourage investment, when the governments cuts itself in off the top even before any profits are made. Health and safety inspections are one thing that came out of excesses of the sweatshop age, but harassment and favoritism by petty local officials is expensive and nonproductive.

So the legacy of 2012 will be a new direction, either the choice of more and better technology and an outreach to the stars, or face the problems of population sustainability on Earth, with no more population outlets but death and takeover of resources. War and competition must give way to stability and regional sustainability.

Define sustainable regions, producer regions, needy regions.

Sustainable: self producing in energy, food and water @ 33.3% each for initial rating, then refine to exporters of energy, food, water and then consumers of energy, food, water.

For example, a predictable outcome would be heavily urbanized areas require energy and food to be brought in but are sometimes self-sufficient in water, depending on where they are located. Another predictable outcome would be that some cities in the southwest USA are self sufficient in nothing, due to the population buildup after World War II. Recent Central Arizona Project public policy changes undermine agriculture while increasing water allotments for more housing developments, which shows the foolishness of policymakers, who choose a quick buck over long term local benefit. Five days worth of food in the stores is not much of a cushion against a domestic emergency. Mexico is within these spheres of influence because of important food imports.

The old time methods of population control include mass executions, rolling heads down pyramid stairs, gas chambers and other cruelties all aimed at seizure of the properties, ethnic warfare and other extermination campaigns. The world cannot continue these methods in order to cope with overcrowding. In the absence of a migratory population outlet, populations within existing political or religious or ethnic jurisdictions must stabilize without encroaching. World population stability is a job to do and of course there are those who would try to obtain or maintain supremacy, but the vision of supremacy changes with time.




**http://www.forbes.com/sites/alexknapp/2011/10/24/independent-study-confirms-that-global-warming-exists/