September 15, 2008
"Share Some G Man?” ©
Several months ago I was sitting at my desk working on crafting an outline for a project I’d been engaged to liquidate. It was late, the building and office was quiet, a good time to put my right brain to work sans interruptions of phone, appointments and so on.
Placing thought on paper, my concentration was severed by “…Curtis? Are you in there?” A voice from around the corner of my office, followed by the sound of a closing door. A familiar face appears in the door opening to my office. A fellow tenant in the building, an Attorney, and he has a real estate question. He knows of my experience and he asks for a few minutes of time to discuss an issue he’s dealing with on behalf of a Client. The central focus of his practice is Bankruptcies. Like so many Folks in these troubling economic times, he’s providing counsel to a couple who is suffering severe financial stress/distress. The Client runs a Plumbing and Electrical Contracting business with 12 employees, most of which are home owners. The seismic effects of the economic shakedown are making their way throughout the economic ladder and the Attorney simply asks “…what do I tell them…what options do they have?” He said his Client list is becoming nearly unmanageable as the requests from at risk Individuals mount! From the tenor of his voice and the expression on his face, it is clear that his altruistic approach is becoming quite familiar with the nature of fatigue and exiguous alternatives. “I’ve never seen it like this and I fear this is only the beginning…” he says with an expression in his voice that I equated with the emotion a scuba diver must feel when he/she finds themselves at depth knowing that their tank(s) are about to provide the last of their precious resource!
Sadly, I’ve no arcanum to offer, no magical elixir or wand to waive though I truly wish that I did or could. He and I both know that in the “BK” process the option of a “stay” is available however, in an environment such as the one we find ourselves in, we know that the inevitable is, ultimately, around the corner. I told him, the best option is to get the name of the Lender, contact the “loss mitigation” department and cut a deal. Get a restructuring of the Note and live to fight another day or two. The “Feds” are quietly yet with an urgency I’ve never seen, directing the System to do what they can to curtail the seemingly unending flow of Foreclosures!
We spent a few moments visiting and discussing various issues of the day. He inquired as to my economic prognostications and what I thought about the upcoming Presidential Election. I told him that I felt the financial markets were soon to implode citing, among others, various market indicators and the increasing number of signals coming form the various Investment Firms in New York. The collapse of Countrywide (absorbed by the goliath Band of America), Bear Sterns (absorbed by JP Morgan-Chase) and there’s further indicators that the fledgling Washington Mutual and Wachovia are is next in line! It’s inevitable I told him, sooner or later, a system that feeds on itself and the unsuspecting ultimately runs out of sustenance. As to the Election, I fear that Obama will win. I said, “I know your and Obama supporter and I respect that position. It’s not that I necessarily have an issue with Obama (I do) but more so that he will win because the options (alternatives) are far worse!” By the way, for the record, I don’t for one moment think that McCain is any better! I find myself increasing irritated with listening to Politicians chattering on/about issues to which they have no fundamental understanding nor background to suggest that they do! I’m equally disturbed by a Public that is so willing, despite the evidence to the contrary, to accept what the Politicians say as if it were so! He said, “...you know, I feel the same way, but I’ve got to HOPE that Obama will deliver on his promise even though I know he’s just another Political miscreant!” He paused for a second and before leaving the door to close behind him he asked if I’ve seen our resident vagrant prowling the building! You see, there’s a homeless person that takes cover from the elements (nightly) in an area at the rear of the building. It is a section of the complex that is covered and he’s adopted as his sanctuary from the elements. Occasionally, in cold weather, you might (even) find him asleep in one of the bathrooms and I’ve no idea how he manages to get in the building. Unless you are a night-owl, as is the case with me and a few others, no one would ever know he was there. A few of us simply refer to him as “Bill”. I’ve asked him his name several times, he simply responds “…when you’re a nobody, what’s a name….”
I never see Bill during the day so I’ve no idea where he goes or what he does. I’m not sure that he stays at our building each night either. However, from time to time, I’ll be at a stop light and I’ll look to the right and there he’ll be, standing at the corner looking right at me. He’ll begin to cross in front of my car all the while with his eyes on me. He traverses my position seamlessly reversing his bodies direction and walking backwards all the time with an unbroken focus on me! Then he’s gone! Every few weeks I’ll find him sitting on the curb next to my car. As I come around the rear toward the drivers door, there he is! He looks up at me and says “…share some ‘g’ man?” It was likely three/four encounters before I figured out what “g” was! I would ask him, “you want what?” During our early encounters he would look at me and utter something and then just turn and walk away. Finally at one point, he said, in response to what to him must have been an incredibly obtuse inquiry, “…you know man, green, cabbage, you know, dead presidents!!!” How stupid of me! Yes, I do “…share some ‘g’” with him.
At first glance this offering may appear to be a free-form expose. I don’t intend it to appear that way. It may only be my own inability to compile a cohesive sense about what lingers, to me, just below the surface of my comments represented afore. Consider the frustration and distress of a Couple, not unlike many others, struggling to hold on to what they’ve worked for in a system that they believed in and a man (“Bill”) who lives his life as he does likely because he feels he has neither! I think that, sadly, says it all!
It is not the System that has gone wrong, it is the increasing absence of principle and the medium that has accelerated its excise from the process that is at the core of the issue. Over the years I’ve found that when faced with a problem and in need of a solution I first have to reverse the momentum and retrace the progression back to the point where the anomaly first develops. Hence, the cause can then be identified and a resolution refined.
Without going into a detailed analysis let me just cut to the chase and say this: to much, to little and to late! To MUCH seemingly inconsequential indulgence which has lead to a Pelagian-like indifference, To LITTLE respect for the fundimentals of Natural Law which has lead to the accomadation of the former “indulgence” and the near extinction of what might be thought of as “shame” and To Late it may be as the degree of conviction and courage required to reverse the trend seems to be a sentiment that no longer stirs the Public who, it would appear, seems to have been exhausted by the seemingly endless assault of/by dissiduous ideals!
I’ll close this segment with a quote, as best I can recall, from the movie ‘American President”. The following line was delivered by Martin Sheen and it resonates far beyond what its author could have ever imagined. It goes something like this: “…we don’t just fight the fights that we can win, we fight the fights that need fought!”
At a recent speaking engagement, I left the evening with the following closing comment: “…I am far more grateful than I can express for the opportunity of spending these moments with you and though I may leave this evening and likely not see many of you again, remember this, my being apart from you and you from me is but an illusion. For though we appear to function in distinctly separate corpus we draw from the same well, our hearts find the source of its pulse from the same source and we are defined by that which has created us all! We must resign only to this truth and resolve to resign no further to the impulse that would serve only to lessen what is our best, what is most noble and what is most righteous at our core! It is, after all, our ultimate and most perfect destiny!”
I’m certain, absolutely so, that we’re worth fighting for! How about YOU?
Curtis C. Greco, Realtor/Broker
www.QuantumRealtyServices.com
“Share Some G Man?” Copyright © by Curtis C. Greco 2008 All Rights Reserved
August 29, 2008
"Looking Over Your Shoulder”
The mechanics of Life often seem such that decisions of the past never quite seem to remove them selves from ones consciousness. As if they linger simply as a reminder of things to come or, if your really Spartan, to avoid.
I enjoy anecdotal metaphors that mirror life! They seem to say what we can not read or, for the spoken words, we can not see. For instance, Shakespeare’s “What’s past is prologue.” Santayana’s “Those who cannot remember the past are doomed to repeat it.” And , for the record, my own “Lessons unlearned will resurface at the most inopportune moments and often when you’re least prepared to be reminded of your oversight!”
I find, in my own observations of life, that there is a great deal of predictability. We just simply don’t like predictability that runs contrary to our expectations. In other words, I’ve never heard anyone suggest that life is easy, simply, effortless etc. The obverse of this fairytale is thus, and then, what is true! An that, my dear friends, is why life is so predictable! God, or whatever you choose to identify as the source of All That Is, presents His Creation (you and me) with all it needs to accomplish the task of perfecting creation (that is to say, “perfecting” meaning, to take it to a specific intent or intention or outcome) and then sets us loose to do just that. What we end up with is a world that mirrors the vision (or our view/intention) that we hold in our mind/soul. In other words: “…what we sow, so shall we reap….” Again, a predictable outcome!
Years ago, during the Savings & Loan fiasco I had an extraordinary opportunity to witness the actions (legislative) that lead up to the crisis, the convergence of interests that produced the crisis and the actions the were employed to resolve the crisis.
I admit, in advance, that what follows is a complete and unadulterated over simplification of the events however, I illustrate key points which will serve to illustrate an interesting point that is keenly relevant to our current financial pendulum. One that is swinging straight for us. Consider the following points:
This should sound very familiar, we’ve seen it before, we see it now and sadly, we have the makings of seeing it again in another 10-15 years. However, in concert with our current state of affairs one could be Looking Over Your Shoulder for the source of the sounds of weeping, wailing and gnashing of teethe! Are you wondering why?
As a brief sidebar I note with much displeasure B. Obama’s comments about “deregulation” as he assails J. McCain for culpability! What a train wreck of an argument. He is deliberate in his use of the terms as most of his adoring audience is ignorant to the facts and McCain is simply to benign an individual to retrieve this rhetoric and toss it right back at him,…in flames! IDIOTS! AROGANT IDIOTS!
Not to wax crystal ball like however, looking at the foreclosure rates one doesn’t need to be particularly clairvoyant to know that we’re headed straight for chaos, big time chaos. The makings of the same style of implosion were set in motion in 1977 (Carter Administration) with the passage of the CRA (Community Reinvestment Act). By the way, made progressively more unmanageable and unwieldy by five/six subsequent legislative and/or regulatory actions. All, including the original act, authored/sponsored and heavily supported by Democratic power brokers. A summary of the CRA, its initial intent and subsequent misadventures follows:
In my opinion, the time is not to far off were the net affect of all of this is going to come crashing down. The weight of the dead or dying Loans, on the financial markets, is of such massive proportions that market liquidity will simply not be able to handle it. It is worth noting that the contemporary equivalent of a Ponzi Scheme, known as the Collateralized Debt Instrument(s) and/or the Derivative(s) markets, is the great unknown! Which is to say, there is really no easy way of knowing just how deep the debt-equivalent burden is contained within these unregulated segments of the financial markets.
Make no mistake, it IS going to collapse. Just how deeply the pendulum will cut, frankly, is anyone guess! If you are a “One Worlder” wanabee then you couldn’t ask for a better opportunity to open the pearly gates to Global Monetary Policy!
Another interesting thought too! This could be a fabulous opportunity to incinerate massive quantities of U.S. Dollars in circulation around the world! Hmmm,…very interesting! Strangely, it could shore up the Dollar vs. the Euro and cause Crude to drop in to the sub $100/bl territory!
In closing. I reference Democratic crafting of the legislations mentioned above not as a way of impaling the Party but more to illustrate the hypocrisy of the notion that deregulation is an effect and the cause is Republican. Clearly not the case, AT ALL!!!
Government, our Government, was given specific tasks, each enumerated by/in the Constitution. Why? Because the Founding Fathers understood human tendencies in positions of power and influence and went to great lengths to keep these tendencies from masquerading themselves in the from of Policy, Government Policy! Whether Government, as the “few”, or the “few” imposing themselves by/through the Government, we can safely say that this has and will forever be, the source of our individual hardship! So long as we engage in the permissive use of Government, either willfully or by oversight abstinence, of this type of meddling in the affairs of the People, we will never, NEVER, gain our full potential as a People, as a Nation, as a benchmark from which we can exceed!
Keep Looking Over Your Shoulder for signs of the future! In the mean time, remember, don’t hold your breath, just breathe and wear a smile! It will make people wonder about you!
“Looking Over Your Shoulder” Copyright © by Curtis C. Greco 2008 All Rights Reserved
July 30, 2008
“It’s a Do Over"
Several years ago I fulfilled a childhood dream of becoming a Pilot. While completing the various requirements I had the occasion to attend a seminar on “risk avoidance”. I’ve forgotten much of the details of that day although, one ascendant message of that course has become inveterate to my life compass.
The course spoke to risk avoidance by reviewing some of the more tragic aircraft accidents in U.S. Aviation history. Tracing each of the final outcomes to one single trigger event that, if preemptively/properly addressed, the nascent tragedy would/could have been avoided.
We’ve all heard the common anecdotal references to cause and effect and that every action has an equal and opposite reaction etc., but for some reason, this particular fundamental precept (from the “risk avoidance” seminar) struck me as profound! Perhaps it was due to the “loss of life” component that made it so, well, lasting.
Life rarely offers a chance at “do over” as the consequent effect of our choices is, all to often, permanent. Once the idea breaks the ethereal boundary of thought, the maturation processes of action takes hold and takes over! In effect, it becomes a bridge that once crossed, can never be traversed again for the first time!
A curious preamble to a dialogue that will ultimately carouse about a discussion of economics and the inevitable political commentary but as my growing “wing” of followers have learned, it always leads to a “wrap” that nicely ties it all together. However, before moving on, I must address a comment that came from the “field” recently whilst (I love that word) speaking at a gathering. “…it must be easy being a Monday morning quarterback…” of which I summarily dispensed with this deciduous intellectual by simply saying, “…I’m neither a quarterback nor a calendar and I find that commenting on the obvious is neither second guessing nor evidence of a thallic mind,…when mistakes are made particularly with the prescient advantage of history as a guide, should we not ask the obvious question, why?” Shouldn’t we collectively call a time out, if providence will allow, and say ‘it’s a do over’ ?” It may be that what I should have said was, shouldn’t we INSIST on a “do over”!
I’ve written economic/financial commentaries many times before. I’ve studied economic history with equal vigor. With this perspective as a ballast I can tell you that there are no economic unknowns. There are however, economic fundamentals that have a habit of rearing their “I told you so” banners at the most inopportune times. Then we witness the inevitable gaggle of Reporters with an “…oh so tempered brow and erudite way…” quizzing the various Officials with banal questions which yield equally weak responses.
Look at it this way. Present day economics is a case study in Marketing on many levels. Granted, I’ve greatly simplified the analysis however, I’m confident the essence of the message is not diluted by/through the absence of details. So, here goes:
Accept for the moment (I’m narrowing the discussion to refine the point) that demand is created by culturing a hunger for (largely) product that add no value nor function, still, successfully, we’re compelled to buy. These products are made in another Country with/at slave-wage levels. From the Social Engineering stand point, the Government enters in to the Marketing Plan by introducing its own Vote Mining process by creating it’s own form of implied demand and that is through the elixir of Entitlement. In other words, it creates the presumption of demand by mandating/legislating it. “Affordable Housing”, “Fuel Efficiency Mandates”, “Farm Subsidies”, “Taxes” and the list goes on and on. And, don’t think for a minute that these have no affect on the Financial Markets! (2.) The Government (abdicating its Constitutional Mandate) through its accomplice, the Federal Reserve (the “System”), creates money (literally out of thin air) which it funnels through the Banking System. This currency/banking system is known as a Fiat system as the Paper Currency has neither a fundamental or supported value (other than the Makers “good faith and credit”). (3.) With each stroke of a Pen that creates each subsequent and seemingly unending supply of Paper, those that have gone before it become worth less. This result forces the printing of even more Paper as the System attempts to maintain a sufficient supply of Currency to offset its diminishing purchasing power (also known as systemic Inflation forces). I’ll offer you a mental image. Picture a dog chasing a progressively smaller tail! (4.) Now, the unfortunate Consumer is placed in a uniquely precarious position. Due to the fact that combined with a decreasing wage base and purchasing power, the Individual, if they are going to play the Consumer Game, is forced to borrow money from the System for which they pay (interest).
This is classic “inflationary forces” at work!
OH,…it gets even better!
Let us examine the “what happens if” scenario should the Consumer want to Purchase a Home. (1.) Well we already know that inflation (due to the explosion in the amount of currency in circulation) is forcing prices upwards. (2.) The System has massive demands from the Government, Consumer Lending/Banking, Industry etc. to continue the supply of Paper Currency and it is clearly aware of the consequent effect of its practices. Accordingly, it attempts a measured response to these Demands. (3.) The Mortgage Lending Industry, in order to accommodate the limitations of the Systems ability to provide an unending supply of Paper for Mortgage purposes created its own sort of Fiat paper System with the willing accommodation of the Government and the silent acquiescence of the System. In effect, what it couldn’t get from the System it obtained from the markets by compiling a group of Mortgages into various “units”. The Units became known as Instruments and sold to Investors through the various Financial Markets. The proceeds of these sales went back in to the system to fund more Mortgages and the process repeats itself. (4.) However, the cycling of the Instruments doesn’t stop there. There’s a second tier and here’s were the multiplier effect comes in. Investors, in this first tier, are Fannie Mae & Freddie Mac (Government Sponsored Agencies) and various other Investment Firms, e.g. Shearson Lehman, Bear Sterns, created funds that held these Instruments. These Funds became known as “derivatives” shares of which were then sold to other Investors. These Investors are typically Foreign Owned Commercial Banks, Foreign Central Banks (similar in stature the Federal Reserve) and Private Equity Funds are just a few examples. These Private Equity Funds are particularly interesting as often they represent tremendous wealth as they are likely fronts for wealthy Middle Eastern Oil Interests (e.g., The Saudi’s) or Governments Directly ( The Chinese Communist Government/Party). Again, as before, this money flows back in to the pool of funds available to the Mortgage Industry and the process, yes in deed, starts all over again. What makes these examples so potentially volatile is that they are “derivatives” of the actual Mortgage Instruments and not the actual Security. They are only fractionally secured by the Mortgage Instrument which is already pledged to the original Investor who bought it in the first place. In other words, a house of cards a “ponzi scheme”!
As a side note, there is also another component of the Mortgage Markets that continues to fly under the radar. It is the single largest dirty little secret of all. It is the, de facto “off the book” lending of Fed Funds to Banks. These practices funded massive amounts of money in to the Mortgage Markets simply by the use of a slight of hand accounting method. Banks are required to maintain statutorily established reserves. The amount of money they are able to borrow is controlled by these limits which are based on liquidity as a function or ratio of the aggregate loan balances. Clearly, the Banks are suffering from very low reserve levels which, in turn, affect the amount of money the can borrow from the Fed. So, you ask, how do they get more money? They simply take large blocks of “debt”, typically those they’ve already borrowed from the Fed, and simply take these “off the Books”. Anyone wonder why Bank of America quietly stepped in and took over Countrywide? Better still, ask from were did Countrywide obtained much of their funding commitments. I’ll drop this particular subject for now, I trust you’ve got the point.
It’s not that I have a crystal ball. I don’t! I am certain however that the very same triggers that have occurred several times before are in play once again. We’ve already had one round of bailouts that I said would occur (11/07) and they are not over. The real problem that I see in our present situation is that the trail has migrated around the World. The interconnectivity of the Markets and their Investors have reach very influential parties. This time, it will be seen that the Government will have no choice but to intervene, albeit selectively, but it will have to none the less. Not doing so will likely send the Dollar to irretrievable depths and the U.S. Economy and Financial standing to the level of a third rate Nation.
Whatever the outcome. This Nation needs a Financial System “DO OVER”! Let’s have a frank and honest discussion about the Financial/Money System. Let us, at the least, be clear why the System is the way it is! One reason and One reason only. A fiat money system exists to enable the creation of dept unchecked by the need for fundamental and secure collateral. It, in effect, allows the Government to spend as it pleases to fund any/all programs it pleases and the consequent effect of which is to straddle the People with the eternal/life long burden of DEBT! And because you’ve been convinced that the Government is serving you by doing so, you are blinded by the very poison that is killing you and those that follow! The Federal Reserve was created in 1913 and has now survived nearly three generations. It’s ideologies have blended so effectively in to the financial culture of this Country that even those who should know better no longer see the damage it causes. Pay close attention to the Presidential Politics of the season,…not a word it mentioned! NOT A WORD!
DO OVER? Yes, LONG OVER DUE!
“It’s a Do Over” Copyright © by Curtis C. Greco 2008 All Rights Reserved
May 18, 2008
"100 Calorie Pack World”
Does anyone really enjoy flying Commercial anymore? Off handed question I know and ultimately I will get to the point of the “100 Calorie Pack World”, however I frequently find that peculiar queries appear and I simply have to engage the target! Consider a more colorful description: a few years ago I was sitting in the San Francisco Airport Terminal waiting for a flight to Los Angeles and next to me, a Individual who suddenly broke in to an uncontrolled laughter! Curiosity being the impetus for discovery I had to ask! What’s so funny? He looked at me with a smile and said “…sometimes I just think funny things!” That’s all I have to say about that!
Back to Commercial Flying. First, let me say, I am a Private Pilot so flying is, has always been and will likely forever be a complete and perfect joy! A single point, for me, where I am engaged in a process where I have complete control of the elements of cause and effect. The pure thrill of defying human physical limitations, being completely free and seemingly unencumbered! A truly splendid experience!
I’ll cut to the chase! After all, there’s always a connection (somewhere) to what may initially appear as miscellaneous ramblings! Airport Security! There’s got to be a better way to accomplish this function! I’m stuck on the idea (perverse humor) that to shoot your non-milk producing bovine just doesn’t quite make sense particularly when you discover that you can’t milk a Bull! A degree of misinformation, misdirection, or a Magoo-like blunder! You choose!
During a recent cross country flight (and return), I endured the blunder. I witnessed the horrific treatment of an 85 year old wheel chair bound Woman and the simultaneous Gestapo-like treatment of her 84 year old Husband who objected to the truculent efficiency of the Security Detail. For me, when I asked two of the complicit thugs if this was necessary, I was leveled with a threatening “…back off…”! I will conclude this particular narrative with the following; bureaucracy should never be let out of its cage and should only be assigned tasks that require no conscience or thought! To expect a thallic organism to craft a cogent and efficient response to any circumstance is reckless at best!
Have you noticed that we’ve seemingly devolved in to a peculiar state of mindlessness? Resolve has given way to convenience. Virtue has surrendered to the vacuum of nihilism. The acuity of discerning/discriminating thought has give way to tolerance. Public Service has ossified to a form of piracy. ( Trust me, I have more of these soliloquies!)
To be sure these are my personal observations and perhaps (just) if you greet these narratives with a bit of suspicion and/or contempt then you may very well have just confirmed my observation(s). If you are nodding in the affirmative, then you’re already in the choir!
I’ll draw, for you, a few examples (in no particular order) from the reclamation pond They may appear terse and somewhat myopic in scope however, I’m of the summary observation that you’ll recognize the intended metaphor and then, splice your own sentiments!
Low Flush Toilets (need I say more)
Mandatory Seat Belt Laws
No-Smoking Laws
Sensitivity Training
Government Oversight (a truly hopeless ambition)
Public/Civil Service Unions
Non-Performance Based Compensation.
Absent Public Oversight of Public/Civil Service Compensation/Benefits.
(go ahead, give yourself a raise and send the bill to your neighbor).
“Eco” anything.
Global Warming.
Pharmaceutical pandering in any media outlet.
Tenure in any profession/occupation.
Global anything (particularly economics).
Military intervention for Economic Interests.
Exempting Toyota Prius Drivers from carpool lane rules.
Failed (not failing) Education System on any levels.
Oh and there are so many more…..!
I’m going to excise one specifically entertaining piece! I’ve picked up on a particularly parasitic advertising trend. Perhaps you’ve seen the commercial/advertisement for the 100 Calorie (Diet!!!) Snack Pack? No need to name the Brand(s). Apparently, they’ve become quite a hit! But I’ve got to ask what should be an obvious question and it sounds like this! If you’re not going to keep the person from buying more than one package of their choice 100 Calorie Snack Pack, then, what’s that difference! Can you just picture the scene, you’re standing in line with a person (I’m being sensitive so I won’t use the word “overweight”) who’s just plunked down two boxes ( 25 count each) of 100 Calorie Snack Pack(s)! Perhaps it’s just me that “…sometimes just thinks funny things!”
If one takes a moment and really dissects the scenario (might I also suggest one review the soliloquies above as well) you’ll discover that this very type of vacuity occurs in so many areas/aspects of our daily lives and on an ever increasing frequency!
I’ll offer up just a few last comments. I’ve an acquaintance who works for the Fire Department. His annual salary, not including benefits, is $145,000 (yes, ONE HUNDRED FORTY-FIVE THOUSAND DOLLARS)!!! He can retire in three years at 100% of his pre-retirement income with, I might add, full benefits (both he and his spouse) for LIFE! We had an interesting exchange, my disbelief met head on with his sense of entitlement! The summary of the dialogue can best be summarized by the following when he replied “…well you know Curtis, it’s a very dangerous and stressful occupation…” to which I responded, “… you didn’t know this when you took the job?” I don’t know, maybe it’s me, but shouldn’t the term “fireman” have been an indicator of things to come?
Last one! Three days ago I was a guest speaker at a luncheon. At the conclusion of my presentation there was time for an “open” dialogue, a sort of free wheeling Q & A. I was asked “…as a Realtor, don’t you feel awful for the people loosing their homes and what do you think the Government should do to protect these unfortunate families?” Not to be flippant though I admit unfortunately sometimes my responses are quick and they appear sardonic. I truly don’t mean it that way though (well not always). I said “…your asking that the Government should protect it from itself then! After all, the Government is largely to blame for the mess! But to your point, yes, I feel terribly for anyone in an adverse situation particularly when the cause of such is beyond their direct control. However, in many cases, I see individuals loosing homes that were obtained with 100% financing. In other words, they had nothing out of their pocket. So what exactly are we going to rescue them from? Are you suggesting free housing?”
I’ve just concluded writing a commentary for a an online periodical. The subject is correspondent in nature and worth noting. I’ve inserted, following, a portion of the same.
“Earlier today I read a news release that appeared on a major media outlets website. Paraphrasing, it said something like this: "...FannaeMae/Freddie Mac looses Billions of dollars on REO Portfolios..." and goes on to site an example of a property in Flint, Michigan that 18 months ago sold for $110,000. This home is on the market for $6500 with no takers and the Real Estate Agent was entertaining the idea of reducing the price to $5,500 in order to entice a sale. The Agents explanation for the lack of activity was that there were “…just to many homes on the market.” My head hurts when I hear these kinds of explanations! It’s the equivalent of saying something as mindless as “gee there’s just to much competition”, the child that’s suffering through a desert of creativity says “…I just can’t find anything to do…” and my favorite “…the water is to wet!” What’s going on here, are these homes propagating on their own? NO! What we are witnessing is the fundamental flaw in an adopted Economic Policy that simply cannot and will not work! We will continue down this road of effect until we return to functional economic truths! No! We don’t have to many homes on the market, we have to few people truly capable of purchasing and sustain their ownership! It is worth looking in to this premise a bit further but first a few points to establish a foundation. Economic progress, like all life forms, has it’s cycles! Unavoidable! Expansion and contraction is a fact of this life cycle. It is simply not possible to have sustained economic growth, it is however possible to have predictable economic cycles that trend along a growth trajectory. The fundamentals of this principle is that economic vitality is not a “top down” model, it is, in fact, a “bottom up” reality. It’s not that our system of capitalism can accommodate this, it is, after all the foundation of it’s root principle. It is, I fear, that the arbiters of Government/Finance just simply don’t grasp the concept as they simply ride the momentum of the passing boats wake representing the fabulous track record of past successes. Sadly, this momentum has been exhausted and the current economic environment exhibits this fact with a painful clarity!”
“There is always hope! It lies in the torment of sleepless nights!”
Don’t just play through, play on and on and on!
“100 Calorie Pack World” Copyright © by Curtis C. Greco 2008 All Rights Reserved
April 30, 2008
"Peddling a Cycle”
The world we live in today is awash with a flood of information seemingly targeting ones senses at an intoxicating rate. I say this because I acknowledge that my brain is a sponge at the buffet table of data and I must say that all to often by the time the morsel of info surfaces from the recesses of my data storage unit I’ve not the slightest idea where it came from! Well it must have been worthy otherwise I would not have retained it…so it would appear!
I love words and the comical way they can be combined to create an image in ones mind. Take for instance, the current identifier “Peddling a Cycle”! Crafts a unique image in my mind. A combination of a cartoon character (Mr. Fudd) peddling about in a surreal environment in the more humorous portion of my minds eye. Quaint music playing the background, birds chirping, blue sky and colorful flowers, he’s happy, carefree, seemingly unaware of the reality of the three dimensional world. He’s not at all concerned about Carbon Footprints, Hybrid Vehicles, Trade Imbalances, Commodity Speculation ($4 / Gallon Fuel) or a Mortgage/Financial Crisis. In his world, couldn’t matter less! In the words of the creator of “Roger Rabbit”, “…I’m not bad, I’m just drawn that way….”
I don’t want to disappoint any particular group or ingratiate myself to another by identify who Mr. Fudd’s “3-D” counterpart is nor will I give up a clue to whom it might be. Let’s just say he represents an Ideal of the incongruent wanderlust in many!
I’m in the process of reading, for the third time, Mr. Greenspan’s writings and I’m trying to make sense of it. Oh I’m getting the clinical message of macro/microeconomics (been there done that) and world currency flows and destructive capitalism et cetera, et cetera, et cetera (for those of you who remember Yul Brenner in the “King and I”)! No, there’s much more to the message and it lies just below the surface of the printed word!
Several, to me, relevant points have surfaced from the material that sting with a most consonant dissonance! On the academic level they appear harmonious yet they sting with incongruence when attempting to find there true form in “3D”. A sort of sclerotic intelligence! I’m simultaneously stunned by his grasp of the details and his ability to recite them however I’m numbed by the seemingly odd resolve to the outcome. As if to say, we’ve got all the information there is to obtain and we can point to the trends that are compatible with the data however we don’t know why the trend is evolving and the patterns that they demonstrate! In other words a thallic form of economic prognostication!
I believe that Capitalism is a great medium with which to excite economic vitality and it, of all the “isms”, has demonstrated unilaterally its ability to do so. There is one consequent reality of Capitalism and that is that it requires constant expansion in order to sustain itself. Like all things in nature, you are either in motion or you are, likely, DEAD! There is nothing static in the universe and a component of the antithetic concept of static is consistent economic growth, though desirable, is simply not possible. There are Cycles and like the Seasons of the Year, they will continue to occur and it is quite possible to say that they are required. And, that is all there is to say about that!
I believe in the need for the many faces of prosperity and globalizing the concept has a great deal of merit. However, I see no logical foundation to suggest that exporting a Nations Economic Health in search of undeveloped markets without replacing the transplanted Economic Engine with a far more efficient one is nothing short of a recipe for disaster. Look at the plunge in U.S. per capita disposable income (adjusted for inflation) if you doubt my observations.
Mr. Greenspan, I imagine, would respond to my comments by saying that the “cross boarder flow of capital” as a percentage of GDP indicates sustainable growth! And then I would say, remove Government Spending, Military Spending, Farm Spending, Financial/Banking Income and Corporate Income Generated from Foreign Operations and/or their component effects on GDP and then tell me you’ve got sustainable growth! In other words Al, you can’t have the argument both ways. One can’t suggest that you have sustainable growth when your argument is based on the illusion of volume when all you’re doing is making ever smaller pieces from the same over-baked pie! Further, and lastly, there has never been a salient indication that consumer spending, sourced from debt creation, creates economic health. The model works only when the financed acquisition is in an area where the acquired is an integral component of an income producing function. Consumers don’t spend money on income producing systems, the spend, largely, on items of depreciating value that produce no income! In the Real Estate application, this illustration is even more appropriate and I’ll simply put it this way: your debt (Mortgage) doesn’t fluctuate with value, it is constant as most Folks don’t live in a home sufficiently long enough to vacate the debt and when values climb, they’re more inclined (than not) to increase the debt load and the statistic bear that out.
Economics like Politics, in there most vibrant and productive form are always measured (best) from the Bottom Up,…NOT,…the Top Down! An expansion in the disparity of incomes to the point where there is no longer a productive “middle” is a measurement more relevant! Nations with no “middle” litter history with their failures! If this Nation is not careful, it WILL be next!
Mr. Greenspan has my esteem and admiration if for no other reason than his knowledge base is rotund! It may be that his knowledge base is so severe that I’ve not the capacity to comprehend his insights. Acknowledged, humbly!
Yet even IF this were the case, I am still left with the same question. Is, even, Mr. Fudd not aware of the Cycle he’s Peddling? Or is the Peddling (the message) simply all that is required? Analogous to say: here’s one possible explanation for the pain you’re experiencing in your hand whilst ignoring the simple fact that that very hand is in a pot of boiling water! Perhaps we may just be ingnoring the obvious!
The Real Estate/Mortgage Markets, presently, clearly reflect what happens with the “every expanding” model and the hemispherical effect (grossly under reported) of Government meddling in the Real Estate/Financial segment of the Economy. The “Cycle” !!
Lastly and I’ve been storing this one and I’ve got to get it out there as an entre on the Buffet Table of data! With in the last two weeks a highly under reported tidbit of information was leaked and then quickly covered over. “North Dakota Oil Field Dwarfs Middle East Reserves”!! I doubt many picked up on it! Here’s all I’ve got to say: What the heck difference does it make whether you open up Anwar (Alaska) for drilling, the Coast of California or North Dakota for that matter if the oil is going to be shipped to markets other than the U.S.! Nearly 70% of the Oil presently coming through the Alaska Pipeline goes to the Pacific Rim (Japan, etc.)! Oil is just simply another commodity going to the highest bidder!
Just another day in paradise! Just be sure and keep peddling!
Until next time! Be well and good to one another!
“Peddling a Cycle” Copyright © by Curtis C. Greco 2008 All Rights Reserved
March 15, 2008
"A Fix v2" ©
“In the midst of a stellar field lies the anguish of nothingness!”
A most peculiar statement, in the absence of context, which I assure you will not go unnoticed. But for the moment, begging your indulgence, I’ve got to (first) go through a process, a sort of transfiguration in order to set my self right!
The other day I was standing in line to pay for soda. To the right of a checkout stand lay a selection of periodicals/daily newspapers. I noticed that on nearly each of the front pages was some sort of bold commentary about the “Financial Crisis Hits Wall Street”, “Your Portfolio at Risk”, “The Coming of an END?” and so on.
In front of me are two individuals who observed the headlines and were commenting to one an other and, it is to their comments, I find a type of clarity in their cunning ethos.
“…figures, I can barely make my house payment and these guy’s just get richer…” , “…Becky and Rick are loosing their house…” , “…this is why I think we need to make sure Obama wins…” , “…if McCain wins, you know it’s just going to be more of the same…” and, the peace de resistance! “…I just don’t understand how it is possible that in this Country, this can happen, someone’s got to do something about this!”
I found it somewhat comical as I hurriedly tried to write down these comments in a small notebook I carry, I felt like Henry Higgins recording Liza Doolittle’s comments outside the Opera House. The two Folks looked at me curiously and I just smiled at them generously, paid for my soda, and off I went.
I’m finding it more and more clear that the health (or mindset) of a Nation is best observed while waiting in line at a “mini-mart”! I’m also finding it clear that we as a people (Americans) really don’t talk to one another very much! We get our news from the Pundits via the various outlets but I’m caught in a curious discord of a sort. Where, when and how does this “news” get processed? How does it become sorted intellectually? What sort of fundamental thought process is engaged to vet the information and form it in to a thoughtful, relevant and sound precept. Or does it at all?
For example, how did our friends in line (from above) come to the conclusions based on the headlines from the newspapers? Or did they? I don’t know, frankly, that they did or didn’t! I do however suspect that the headlines were more of a trigger for an individual sentiment harbored in the deeper recesses of their consciousness. In short, I’m more convinced that it is at this base level, we all know SOMETHING IS NOT RIGHT! We just don’t feel as though we can talk about it and that, well, no one is going to listen!
I so very much enjoy people and I love to engage in conversation and here is a list of just some of the jewels I’ve learned (in no particular order) from “The People”:
1. They actually want people to get rich!
2. They know when they’re being lied to! For the most part.
3. They’re far more hearty than is considered.
4. They’re far more intelligent than they are give credit for.
5. They are very Spiritual/Faithful.
6. They are fearful of the Government.
7. They do not trust the Political Process.
8. They unilaterally do not trust Politicians.
9. They are fair minded and generally, egalitarian in nature.
10. They want a level playing field and observe the ever increasing appearances of entitlement and elitism. And, lastly, (for the time being)
11. They’ve no one to turn to who can/will employ a “Fix” for the broken System.
Let me repeat the opening line of this commentary!
Is the meaning coming in to focus now? If not, visit item(s) “1.” thru “11.” above paying particular attention to “7.” & “11.”!
We are a Nation at crisis with itself! I’m of the opinion that we insist only on the outcome that requires the least amount of effort and/or self-incrimination! If you doubt this, ask anyone why they’d vote for Obama, or Clinton or McCain. Truly, REALY ask them, go to the meat of the WHY? I’m horrified at the answers! Truly horrified! Much more amazing is the look on the individuals face when I say “…is that the best you can give me?” and they realize, yes, it is!!!
On a personal basis, I’ve got no issue with them as individuals. I’m sure they're all delightful, charming and at some points in their lives their Parents tucked them in to bed and smiled lovingly at them. The clever little darlings!
Again, we all know something is not right! We’re just not willing to accept the responsibility of insisting on the “Fix” and the discipline that will go along with it!!!
We’ve moved in to a caldron of mediocrity were truth can only be spoken in silence, were “impulse” is a sacred right and virtue and character are extremes!
There IS a Fix to the Fix we’re in! It appears however, that we’re not quite ready for it!
What does this have to do with Real Estate and why is a Real Estate Broker writing commentary on Social Issues? My answer,…who better understand the heart of a People than a person who spends his/her life tending to their desires to own a home, the challenges associated with it and the horror of watching a Family close the door (for the last time) on a home they’ve just lost!
More to come! Stay tuned!
In the mean time, be well! You’ve got lots to be grateful for, it’s about time you thank somebody for it! Might I suggest the One who’s responsible for all of IT!
“A Fix v2” Copyright © by Curtis C. Greco 2008 All Rights Reserved
February 15, 2008
"A FIX v.1" ©
There is a wonderful old saying that, as best I recall, goes something like this :
“There is unity in purpose even if it is with those of us who willing sing and march to the tune of our Leaders as they lead us merrily over the CLIFF!”
And then, here is another curious observation! It revolves around the clever double entendre as follows: If your in a “fix”, what you need is a “fix”!
In short, the Country is in a “fix” as it appears the momentum toward a march “…merrily over the CLIFF!” seems unavoidable and, as I see it, a “fix” is most definitely in order.
Historically, these cataclysmic threats have come and gone many times and it is fair to consider that the horizons looming threat is just another of what will no doubt be the preamble to more, still, I’m prone to wonder as to the big question. Why? Not why does “it” happen, but more importantly, why do we permit “it” to occur!
As it goes to Political perspectives I’m more of a Libertarian but I readily admit that’s only a half-truth! I’ve not found a great companion “ism” to ally myself with and I suppose I should, one day, craft an appropriate “ism” to colorfully adorn myself with. After all, everyone needs a Club to exclude others from and, lest I omit, one to be a victim of! Right? Yes, if you wonder, I’m not only poking fun at Politics, I’m chastising the process albeit with not a particularly powerful degree of scorn!
Look at the Political Process now waging its war (before us) against reason, character and identity. I observe John McCain, Barack Obama and Hillary Clinton – the current front runners for the Office! And I present the question to you AGAIN! WHY?
I’m concerned that we have reached a point in history where Benjamin Franklin’s great fear may be playing itself out before our very eyes! Which is to say not only have we lost the ideal of Democracy, but we may in fact no longer deserve it!
I’m tormented by the political process and media that has turned the function of oversight into a type of game show with the host barking, with the most sincere and learned furrowed brow they can muster, the virtues of their respective Candidate and their Party!
There’s no intellectually sound discourse regarding the “fix” the Country is in and the “fix” for getting the Nation out of it! There is however, a jubilant band of Media and Political Hustlers with their batons in conspicuous unity leading the charge and the Masses gather, the euphoria of “ode de ignoramus” is intoxicating and of course, there are others gathering and, well, they look like us, and well they did say we’ll get richer, safer, healthier, more equality, and judgment of any kind will no longer be permitted, and we’ll not have to do anything that we don’t want to and we’ll all be good friends and there will be tax credits for Prius Owners (notice I said Owners, you don’t have to drive it, just have to own one) and we’ll all live happily ever after! So long as you vote for “Ainbamnton” !
I’m SPENT! I ask the question again ! Why? Am I the only one who’s observing the wholesale melt-down of a Nation?
The “Plain of Providence” includes the possibility that will not prohibit access to the “Canyon of Oblivion”!
“Hey, YOU, get back in line! Signed: J.B.H. Ainbamnton” (J. mccAIN, B. oBAMa & H. cliNTON)
God help us!!!! That may be the only possibility!
There is more to come on “ A FIX” ! Do stay tuned!
“A FIX v.1” Copyright © by Curtis C. Greco 2008 All Rights Reserved
January 13, 2008
"They’re Missing The Mark”
Newton’s Law of Motion says that “every action has an equal and opposite reaction”. There is also the common understanding that with every decision there IS a consequence and most often an unexpected one at that.
The various News Outlets have been caught in the stir of predictions regarding the likelihood of the Big “R” word, yes, I mean Recession. The fact of the matter is, in what I call Demand Based Economy’s, the cycle of expansion and contraction are seemingly inevitable components. Demand, for any product or service, does not remain consistent over time, consistently stable, consistently expanding or consistently contracting. The only consistent component is that these attributes will demonstrate their persistence.
Curious to the equation/practice of Economic/Financial prognostication is the nature, frequently, that it occurs! Usually projections develop from current events that might indicate an evolving trend and of course another approach is the confirmation (type) of a trend once it has already developed. Sometime known as “hind sight” or “20/20 Vision”.
Understanding an Economic trend is a complex endeavor however it can be made easy with pertinent information gathered from a variety of relevant sources. In the case, for example, of Ford Motor Company circa 1950’s. Ford had “vertical” penetration in the market. The Company clearly made automobiles but they also made the steel for those vehicles as well the engines, wiring harnesses etc. It would be quite easy to identify the Economic Trend (i.e., the demand) for Iron Ore by simply looking at Dealer orders (demand) for automobiles. Convenient and predictable. Yes I know, a very simply (and deliberately so) example but I needed to create a clearly defined example so as to be able to create an equally clear contrasting issue. Additional components to the dialogue are required though!
Stick with me here! It would not be a fair conclusion to say that there is a certain demand for Steel (in the Ford example) because of an increase demand for paper plates? After all, Folks use paper plates on picnics and they do this by placing paper plates in picnic baskets and of course everyone knows picnic baskets are transported to picnics in the trunk of automobiles and, well, Ford makes automobiles with trunks, right? Using this approach, we’ve now established that there is a direct correlation to paper plate demand and automobile production! Fabulous. I think it’s fair to say that this type of prognostication, though quite creative, clearly is Missing The Mark!
What’s the point one might ask? Well, here’s my version of it! There’s been and will continue to be a fair amount of airtime expended on/to the relationship of the Credit Crunch (caused by the Mortgage , no “Sub Prime”, Crisis) and the corresponding consequence which is the coming Recession. Add to this another component that I see being thrown around and that is the Unemployment Rate that is, apparently thrown its hat into the ring as well! My opinion is simply this: They’re Missing the Mark! The possible threat of a Recession is not fueled by the Mortgage Crisis no more than paper plate production levels are consequent to the production of automobiles or vis versa! Employment Rates are a different, albeit slightly, issue to be addressed in short order.
As discussed in a previous article, let us all be very clear about something, with the exception of Farm Production and Military related manufacturing (and this area is becoming suspect with the sell off to Foreign Interests of high value tech/industries and that which is now gone Off Shore) this Nations Economy is largely Service Based. Anyone that has had to create their own income in this type of Economy, which pretty much excludes Folks on the “Legislated Dole” (Politicians, Taxpayer Funded Employees etc.), and by the way – one of the employment areas with the largest growth rate, I might add – then you know that your income potential is entirely related to DEMAND! And, that Demand is consequent to two fundamental components; (1.) Disposable Income. And (2.) Available Credit. End of Story!
Does anyone with any degree of intellect really believe that the flood of Containers in our Nations Ports are there because of our ability to PRODUCE? Well, I’m AFRAID NOT! Those containers are their because of this Nations ability to SPEND, SPEND, SPEND, MONEY THAT IF IT DOESN’T HAVE FROM INCOME, IT BORROWS!
Credit Crunch? Are you kidding me!! If there is such a massive concern over this illustrious Credit Crunch then why is Wall Street looking to the FED to lower rates? I’ll tell you why! It’s cheaper to USE FED RESERVE MONEY than to go to the credit markets (Foreign Banks/Investors) who are now suspicious of Wall Streets “Hoods”. Heck, even U.S. Politicians are secretly funneling Dollars off shore to protect their money against further devaluation!
I see no indication that the idea suggesting that Technological Innovation will produce and/or perpetuate Economic Re-Evolution. I simply can’t get my hands around the logic of this one. If the next wiz-bang “widget” is created here in this Country from the ether of intellect THEN shipped off-shore to produce it from labor and materials sourced from/in/at some FOREIGN shore, THEN shipped back here were the value (your money) is extracted to PAY for the Product....? Nope, still don’t get it. It’s a one way revenue transaction,...your money going out! Sorry, no matter how I spin it, it still goes round and round!
TOP DOWN money flow is a canard proffered by the erudite who has no fundamental (real world) foundation from which to support this flawed concept. Marxism, Fascism, Communism fail under the weight of this Top-Dow centralized planning concept. IT DOESN’T WORK!
Cut to the chase! The risk of Recession is related to lack of Wealth Creation Potential in this Country! Not the Phantom Mortgage Crisis and most certainly not the lack of Job Creation (which, by the way, simply creates more service based jobs – a.k.a., hamburger flippers!!) END OF STORY!
What Politicians, Bankers and Bureaucrats don’t (or do and are deliberate about it) understand (or grasp) is that Wealth and Related Economic Health is created by Productivity of appreciable value, not depreciable value! Economic History has proven this point time and time again! The consequence will be no different in this Nations recorded History! A Once Great Nation that Ignored the Proven Lessons of the Past and became nothing more than an overfead Lap-Dog!
Economic vitality is not something that is subsidized with Government Programs (handouts) or the much herald Stimulus Package(s). These are simply “redistribution” programs that create NOTHING! They're pablum for the masses!
Politicians of today are nothing more than 30 second sound-bites queued to feed the public what they want to here so as to keep them in the positions of power/influence. I only find two Presidential Candidates that have any grasp of the true nature of Economics and Capitalism, one is at risk of being marginalized by the process and the other is simply laughed at by the media and the political machinery! The others, both Democrat and/or Republican have made their careers at/by being on the public dole or raping the system with errant malpractice claims adjudicated by an increasingly exhausted Legal System! Tragic!
A President must be required to lead from in front and have the foundation from which to draw from. I believe to be a Presidential Candidate, to be considered, at the minimum one must not have had prior legislative experience (Governors excepted) and can not have been a practicing Attorney for 10 of the immediate preceding years. I believe all elected officials should be barred from Government Lobbying for a period of 10 years post there last Elected Office term. If they violate this requirement, they loose their Pension and all related benefits in addition to a visit to the "Pen".
More to come, but for now, a beginning, perhaps, at being closer to “hitting the mark”!
“They’re Missing the Mark” Copyright © by Curtis C. Greco 2008 All Rights Reserved
November 30, 2007
"Whose Mess Is This,…Really?: Part 3” Copyright © by Curtis C. Greco 2007 All Rights Reserved
“The Resolution”
I’ve struggled with how best to compose this, the last offering in this series, so much so that I’ve had to re-work the composition no less than eight times. Seems there’s so much more to say and, accounting for the desire to not publish a manuscript, I’ve had to severely edit the piece. My only worry of course is that it doesn’t quite deliver the “punch” I intended. In other words, an item looses its identity when it no longer resembles itself. Let’s just move on!
From my perspective I believe the resolution to the current mortgage crisis will ultimately rest with the Government doing the bidding of its Lords, stepping in with the customary “bail out”. It will be dressed and colored in a variety of soft and seeming digestible morsels but it will be, none the less, a bailout! It will be packaged with a variety of proposed legislation expanding Government oversight, modification (expansion) of various Government programs all funded by tax dollars. More on this later!
However, in understanding or creating a sound resolution of which, frankly, I find the Government uniquely incapable of accomplishing, one has to understand the problem. Clearly, from my review of various Government Officials and the myriad of News Outlets and their Editors, I’m still completely stunned by the following two points: either they are completely ignorant or they are complicit. In either case, the relevant issues are not being explored or they are, by design, being completely ignored.
Here are a couple of “bullets” I want to place on the table. You, we, need to be very clear about their relevance:
(1.) The U.S. power (Economic, Political, the Military only being an extension of the two) is based entirely on its control of financial Markets. Without this grip, the U.S. will only sink further in to third world economic status and take it citizenry along with it.
(2.) One of the primary ways the U.S. maintains its influence is by being the “maker” of the World Reserve Currency. Exercised, primarily but not to the exclusion of others, by having Oil traded in Dollars. You, China, India, etc. want oil, you pay for it in Dollars.
(3.) Oil producing nations, primarily those in the Middle East, have long historical ties to the West, first with (primarily) Britain and then of course, with the U.S. There is a great deal of Wealth and Influence that accompany this fundamental fact. This is what really angers the Fanatics!
(4.) There are several Countries that would love to see the U.S. buried by replacing the Dollar with another currency. But which one? No matter, the consequences of this, though some would say well deserved, would be an Economic apocalypse. Worldwide!
(5.) The U.S. will never, sadly, return to an Industrial Economy! Our uncontrolled nihilistic spending habits have pretty much perfected this reality. We’re no longer even loyal to our own Country! This being the case would one ever expect any other outcome!
(6.) We are no longer a Nation of like minded people bound by a common ideal which cherishes freedom and independence! We have become a People who are bound by the illusion of freedom and independence regulated by a National Government which cherishes more so its own Freedom and Independence!
(7.) The World Economy’s transition to “market force” capitalism has produced a very responsive engine that moves in direction and speed at an ever, seemingly, increasing rate. To attempt to use Government to regulate and/forecast economic trends or, for that matter, economic recovery seems to me, at best, to be an exercise in futility. I actually think this is a good thing!
(8.) The U.S. has transitioned to, largely, a serviced based economy. A serviced based economy prospers only in the presence of the following two items: Inflation and persistent consumer spending habits. Inflation, largely, being a part of a fiat money system and its component, debt spending. The typical American household spends money that is generated from debt creation largely because they’re household income is insufficient to fund these purchases. This is why we have among the lowest savings rates of any “industrialized country” and why our debt load is the highest in the world!
(9.) We are in Economic Uncharted Waters to be sure! On an individual (personal) basis I believe that unless we want to move further down the ladder of Economic Prosperity and with the understanding that there is indeed a New World Order (or Disorder), this Country will need to make some intensely difficult choices!
Now to “The Resolution” !
The Mortgage Crisis is only symptom of a much bigger problem. Attempting to fix it with Government sponsored “rate freeze” or “subsidies” reminds me of an old joke that gives an account of a man who’s going on holiday, to explore the Sahara Desert, takes a car door as part of his “gear”. Upon arriving to his destination the tour guide ask “…why the car door?” The Travelers response is “…oh yes the door, you see, when the day is at its hottest point, I can simply roll down the window to cool off!” Utter nonsense, won’t you agree?
WE are not experiencing a Mortgage Crisis, we are experiencing a Wealth Creating Crisis! And, to make it worse, there are clouds forming on the horizon that will make this one look like a quilting party! It is the product of were all great catastrophic economic and political boondoggles come from! Yes, your friends and mind, the U.S. Federal Government! Of course I’m speaking of Medicaid/Medicare and not to be forgotten, the Social Security system! This is what you get when Government is asked to manage money!!
The “FIX” for the Mortgage Crisis is not easy, it would not be popular as there will be no Political gain to be had from it. But it is SOUND, economically and morally! Know that I’m not a Socialist so don’t be surprised by me stating that Home Ownership, though your right, is not an entitlement. You work for it! Here are my recommendations:
A. The responsibility for “Loss” rests ultimately with the creator of the “supply of funds”. There exists sufficient guidelines for “lending qualification” to whit the argument that people “lied” on their applications is an idiotic notion at best. If I make a bad business decision, I pay the price!
B. A review of the “sub-prime” portfolio’s should be executed immediately to determine which of those loans are in fact “sub-prime” vs. those that have been “classified” as sub-prime though “originated” as “A Paper” loans (by the way estimated to account for nearly 61% of the so called “sub-prime” portfolio of loans). Those that have been fraudulently classified are sent back to the originating Lender and their penalty is that they loose “recourse” and or “collateral” status of the “secured” property.
C. The Borrowers should all be “re-qualified”, those that meet the qualifying requirements are able to be considered for “loan restructure”. Those that can not, well, let’s just say they shouldn’t have been there in the first place. They should have their credit “washed” and the Lender should refund all of their fees, but no more.
D. Any home that is “surrendered” by the Owner is assigned to be “warehoused” pending disposition (sale). No exceptions! The proceeds of/from sale of these properties should go to a “investment portfolio” that is used to make loans to “qualified” candidates according to their means, not their skin color! If a “means” test is not used, then you simply create a whole new generation of “slums”/ “projects”, we have no need to repeat the classic failures of the past! Proceeds from the sale of these property must never make it back in to the “financial markets”. Never! I was there in the S&L/RTC days, I saw the results and practice of greed and avarice in Government practices. We must not repeat this again!
E. We need to reestablish “value” in home ownership. You “must” meet minimum qualifying standards. Home Ownership will be encouraged but not subsidized by idiotic “housing” programs. Prices will be “market rate” only. Max Loan amounts will be passed on “Mean” home prices not “Medium” establish by region and will benefit from a fixed rate mortgage offered in either 15, 20, 30 and 40 year terms. Minimum down payment of 15% will be mandatory and their will be no “piggy back” origination on/at purchase. The Fixed rate will “index” with the rate of inflation but within established floor/ceiling adjusted every 5 years. Subordinate financing will not be permitted within the first 2 years of ownership. Thereafter it will be limited to a combined loan-to-value (CLTV) of 90%. To accumulate funds for these loans a “market” will be established collateralized by the acquiring “real property” and the securities issues without discount. The “yields” will be fixed with no more than a .5% margin/”loading” (at point of sale) permitted. To avoid/discourage “churning” and to increase market stability, it should be considered that there be a minimum “holding” period”. Investors will be enticed to acquire these securities as they will bear a “tax free” status on the Federal level. Determination of where “funding” will be available occurs by consent of the State to observe the “tax free” status as well.
The truth of the matter is the current Lending Guidelines are absurd. They were absurd when they were proposed, they were absurd when they were enacted and they’ve been absurdly applied ever since. Creative Thought by Committee produces,…well, thoughtlessness!
Also, there are far to many “do gooder” Lending programs out there that further dislodge any attachment to sound financial logic. FHA, Va, CalVet and the list goes on and on! Why do we need involved Government in these programs. If there sound and there exists a reasonable need, create an incentive for the market to provide it. Good Lord,…but never let the Government do it. When you do this, we end up with legislation that includes funds for a bridge in Alaska, a sewer line upgrade in Arkansas, a bridge in Nevada named for its Senator and the list, tragically, goes on and on! Somehow, some way, this graft has to be brought to an end!
NOW,…the only REAL FIX!
(F.) Education! Our education system is a disaster! It is the product of Socialist/Marxist ideology that history documents were the product of an obsessive-compulsive disordered freak that though these "isms" have largely been abandoned by most of the world, our ‘60’s era thallus /erudite’s who escaped detox are now in charge of the process and what a mess they’ve made of it!
If the U.S. is going to have any economic stability (and future) then we are going to have to become a perpetual producer of exceptionally educated Scientists, Engineers, Mathematicians etc. I promise you, we don’t need more Attorneys! 50% of the Law Schools should be shut down. The analogy sounds something like this: if the Bureaucrat and their maize that has become the albatross which is our most inefficient Government, then Attorneys are their commissary! Let’s just stop feeding them all!
We will also need to insist on the strict adherence, internationally on the issue of “intellectual property rights”. This nonsense of subjugating U.S. law to the Hague is ludicrous! What idiot expects a Country to lead that follows!
There’s no place for Union control in the education process. If the Unions are going to be able maintain this control then a “voucher system” is the only solution! We have got to get back to the ideal of “perfected outcome”!
We’ve got to reign in the cost of Education at the collegiate level and we do this by revambing the State School/University Systems. Dump Tenure, Dump the Unions the proven that they have no value and only produce and perpetuate mediocrity! Give the Educator a property salary the has matching contributions to a pension (non government) provide them with bonus for performance but for God sake, enough with the rewarding of the incompetent.
We’ve got to start producing results for a change. Everyone goes to school, Everyone learns. You miss school, you loose driving privileges, you have curfew restrictions, you have community service. You don’t go to college you go to the military for 4 years or you learn a trade. You go to college, great, you drink in stead and/or do drugs instead of study and your GPA is under 2.5, you go to the military for 4 years and learn a trade.
All Public Schools will have a dress code which will be strictly enforced. Parental supervision and involvement will be strongly encouraged through various parochial methods.
In short, the system is badly broken and desperately needs fixed! Children are so precious, the losing/wasting of one is, one to many! We need to be planting seeds of excellence that will produce towers of self esteem! Presently, for the most part, we produce illiterate gangsters who are more efficient at perfecting body language than they are carrying on a intelligible conversation! We can do better,…we must! Sadly, like so many areas of this Country, unless there’s Political mileage in it the hucksters won’t touch it. Unless the Unions are inebriated with more money, they’ll simply road block any meaningful redirection! There IS a solution to this! There IS a SOLUTION! Perhaps we’ll chat more on this some time in the future. Just know, Education is the Golden Key to this Country’s troubles, on so many levels! Why do we do nothing?
There’s so much more to discuss and details, I know, some of you will want to tackle me over. I’ll be waiting for you!
In the mean time, on your own, right there were you live, in your own space! Do me a favor, say a prayer for Guidance, Clarity of Thought and Purpose for all!
In closing, here’s a few repeats from “Part 2”:
“My great fear is also a fundamental truth! ‘When silence stills the conscience and thinking mind, the object of promise sees not its way!’ A powerful truth in deed!”
“In the final analysis, as Ayn Rand said ‘…if you perceive a conflict in my logic it is only the result of your not pursuing the concept to it’s obvious conclusion…’”
Stay tuned for “Part 3”! Until then,…stay well, prosperous and Blessed!
November 16, 2007
"Whose Mess Is This,…Really?: Part 2” ©
First, so that we’re all on the same page, an excerpt from “Part 1”:
“Over the past many months much has been “pressed” on the subject of the “Mortgage Crisis in America”. This conversation will continue for many more months if not years so don’t look for the dialogue to end any time soon. To aid in the process fueling this great confabulation I’ve decided to put pen to paper and start my own commentary so prepare yourself for a 3 Part series on the subject which I’ve blithely titled “Whose Mess is This Really?”
This series will be defined, from the layman’s vantage point, simply by a fundamental discussion of (1.) What is the Mortgage Market, (2.) The Mortgage Industry and Consumer Practice, and (3.) The Resolution . “
Now, let’s begin! The Mortgage Industry and Consumer Practice conversation is a topic that could consume volumes if we took a career making approach! I don’t intend to make that mistake so I am making the choice to be quite selective in the discussions depth and duration and focus on my on personal observations in the realm of cause and effect, primarily.
Though not unique to the American form of Capitalism/Finance, the U.S. is clearly the domain of the extreme practice of the art form, always hold to the understanding that the life blood of this concept is the flow of Capital and its control. Regardless of the medium, be it housing, heavy industry, technology, military expenditures or whatever course it may take, the fundamental underlying cause is the flow of capital and who controls it. Finance and its facilitator, politics/government have evolved to the point that the lines of demarcation are no longer distinguishable! If one doubts this observation, look at the money that goes in to the political election process and the true donor list!
In its most base and vulgar form, think of it as an opium farmer that understands he/she needs addicts to improve the profitability of his “farm”. The Farmer is not in the least concerned about the devastating consequence of addiction, it is simply a means to whit profitability is obtained. Very, shall we say, mathematical in its precision!
In the world of Finance, were the game is defined by the benefactor(s), the rules are then created and then enforced by the political system and the unwitting “addict” becomes entrapped!
The battle over currency control has been waged in the U.S. since its inception. Currency was to be ( Constitutionally) controlled by the Treasury and only in denominations identified as in either/or gold or silver. Debt was not to be a means with which to create economic vitality nor was the fractionalization of gold or silver (or market manipulation) to be effected to expand money supply. In short, the Constitution lost! Andrew Jackson (if I recall my history correctly) in the 1830’s attempted to return monetary policy/control to the government however influences made this an unsustainable ambition. In 1913, the Federal Reserve was created and we live and create the history of this result. The Government, abdicating fiscal responsibility, has become the “bag man” for the Financial Industry and that’s all there is to say about that!
The result of all of this is the continuous march in to financial expansions and contractions (economic) that are the pulse of a “fiat” money system. Debt is created to expand the economy to its breaking point, the economy “resets”, debt is “vacated” ( clinically referred to as “monetized” or “restructured”) and the process starts all over again. In this system, inflation creates wealth which is financed by debt, deflation “clears the decks” of the burden known as debt! The “system” wins on either trend! Great field of play don’t you think! Remember, the currency is created out of nothing, the borrower pays the creator for its use, when the debt can no longer be “serviced”, the borrower surrenders the “asset” to the Creator (particularly in the Real Estate arena) and the debt magically disappears! Or in the case of “derivatives”, they simply loose their investment and write it off as loss!
Here’s a real twist for you! When you hear the “blues” about the losses in the Financial System, remember this, the asset that secured the underlining debt (the Home), still exists! So what has really been lost? Particularly in a “fiat” money system that has no underlying value! The answer is, in effect, NOTHING but the income potential to the investor who was counting on a rate of return. As an aside to the astute individual: yes, this is an incomplete conversation and does not address the Markets creation and trading of Financial Derivatives ( a completely unregulated segment of the Market) which, by the way, is were, in my opinion, the major fault resides.
The System has long been directing itself to the consolidation of the Monetary System not only here in the U.S., but world wide as well. The last great “play” of the System (until now) was the calculated destruction of the Savings & Loan Industry which finally resolved itself in the mid-‘80’s. Short version: S & L industry was accounting for an intolerable share of the System’s business and it had to go. Legislation was introduced expanding the Lending Scope of the S & L’s, this was taken advantage of by an explosion in Lending practices by this Industry that was, at best, reckless (predictable). The net result was the S & L”s could no longer sustain the expansive lending policies as the financial market contraction of the period took its toll on their Loan Portfolio’s, Loans began to default and so did the S & L’s. The Government, on the advise of the Federal Reserve, stepped in and in effect sent the entire Industry into “receivership”. The Resolution Trust was created to liquidate the remaining Assets of the Industry and, as I said before, this “clears the decks”!
You might now ask, what does this have to do with Mortgage Industry and Consumer Practices? I’m sure you know the answer but let me just give it to you straight! The Mortgage Industry is the Farmer, the Consumer, is the Addict! To be sure, the Mortgage Industry, although not the System in its totality, it is, in effect, just another component that, like the S & L’s, is completely disposable (and most likely will be characterized as obsolete). Do not be surprised that the net effect of all the current chaos is a complete restructuring of Mortgage Lending Practices that places ultimate (complete) control in the Banking System. There’s already been a very subtle indicator of this likely scenario. Who is it that stepped in and “bailed out” Countrywide? Why yes, it was Bank of America! Surprised? You shouldn’t be!
The truth of the matter is that like it or not, there is, either by defined intention or stupidity, an even larger crisis that is looming which has been in play since the Nixon era and perhaps even into the later years of L.B.J.’s reign (truthfully, even furth
