Systemic Malarkey

by lizard

On the 11th of this month, president Obama said this about the housing market:

“Today, seven years after the real estate bubble burst, triggering the worst economic crisis since the Great Depression and costing millions of responsible Americans their jobs and their homes, our housing market is healing. Sales are up. Foreclosures are down. Construction is expanding. And thanks to rising home prices over the past year, 1.7 million more families have been able to come up for air because they’re no longer underwater on their mortgages.”

Mike Whitney has been tracking the housing disaster for years now, and when he calls this statement by our liar-in-chief “malarkey” he is being charitable. Here’s how Whitney counters the bullshit being spewed by Obama:

What a load of malarkey. The truth is housing is in a shambles. Starts are down, inventory is tight, demand is weak, mortgage originations are flat, household formation has fallen off a cliff, (The homeownership rate is now at levels last seen in the mid-1990s), and the entire industry is precariously propped atop artificially-low interest rates and the Fed’s bogus $40 billion per month QE giveaway.

Does that sound like a thriving market to you?

No, Mike, it doesn’t.

From the very beginning, it was clear Obama had no plans to hold the big banks accountable for massive fraud. Back when the hopium was still potent and being imbibed by Democrats, stacking the cabinet with Wall Street sycophants was something that had to be either ignored or downplayed.

Because the core problems with the housing market haven’t been addressed, the banks are looking to suck in more victims with government backed loans that require no down payment. Don’t believe me? Read the whole article. It’s beyond maddening this shell game is being allowed to continue. It’s criminal, and Obama is complicit.

This should be a scandal, but it’s not.

Speaking of scandals, because of the disaster in Oklahoma, Democrats get a reprieve from having to hear about their Nixonian president doing to the AP what he’s been doing to whistleblowers for years, among the other scandals plaguing the administration.

And speaking of the disaster in Oklahoma, I was incredibly disappointed to see Bob Brigham gleefully politicize the destruction yesterday evening with tweets like this:

Cost of @jiminhofe climate change denial. RT @AP State medical examiner’s office: 37 killed in Oklahoma tornado; death toll expected to rise

It doesn’t make much sense to give disaster aid after severe weather to people who elect climate change deniers. Unafforbable cycle of waste

Will the harsh realties of climate change dampen this activist’s support for his beloved coal cowboy, Brian Schweitzer? I doubt it.

Maybe we should finally acknowledge that we don’t have a political system capable of producing the kind of leaders we need to address big problems, like an economy manipulated by criminals and an environment heating up from the destructive inclinations of humans.

So let’s stop investing hope in political shucksters and pathological liars, and start doing the work ourselves. Plenty of folks are already doing it, both inside the system and outside.

If more people play a direct, active role in addressing the systemic inequities affecting billions of people across the globe, then there’s hope. There’s no hope in sending impotent little tweets to stupid politicians taking orders from their funders.


  1. Eric

    Mike Whitney is pretty much correct – when people say how busy it’s getting, they’re looking at it from the perspective of the ‘new normal’ that we’ve all gotten used to.

    When housing construction breaks 2007 levels I’ll say it’s getting busy.

    • lizard19

      Eric, I don’t think you’re getting it. housing construction was a part of the housing bubble, a phenomena that should never have been allowed to happen in the first place.

      if you read the whole article, then you would know that banks are capable of responsible lending. these banks peddled subprime loans, then chopped them up into complicated derivatives, because they know they own enough of our political process that when it blew up, they could squeeze everything they could from our tax money, via TARP, and now through the Fed’s perpetual “quantitative easing”.

      maybe you’re receptive to the article because it criticizes Obama, and that was enough for you. partisans seem to have difficulty understanding how things are accomplished by administrations with different letters by their name. Clinton deregulated the banks, then Bush used his ownership society to push for tax cuts and home ownership.

      now, Obama’s job is to stall so the banks have time to find the next fix to keep the party going. it’s disgusting.

  2. eric

    I get it real well Lizard – I make my living & feed my family from construction & maintenance – we have this discussion a lot at the lumberyard –

    • lizard19

      going back to the boom years, if you don’t understand how the massive parasites on wall street sucked wealth from that, makes no sense. breaking wall street’s grip starts with understanding why the grip holds both parties.

      that you agree with a writer featured on Counterpunch, though, is a very positive thing, IMHO. thanks for commenting Eric.

      • Dave Budge

        All I can say is that your singular blame on Wall Street is a bit narrow. You know I’m no fan of the big banks and their business practices but you’ve left out a lot of groups that are equally culpable including the credit rating agencies, the pensions funds and sovereign funds who bought that crap, the Federal Reserve for its monetary policy, the lack of Freddy/Fanny oversight by Congress, the administration of the Community Reinvestment Act by the regulators and the biggie – too big to fail (or the Greenspan put as we financial guys call it.) Oh, and let’s not forget irresponsible borrowers. There’s lots of blame to go around.

        • lizard19

          the difference being who has been made to pay the price and who continues to be protected.

          • Dave Budge

            So tell me what laws were broken by Wall Street banks.

        • JC

          Why don’t we just blame “the system?”

          • lizard19

            because it’s made of people.

  3. lizard19

    Dave, I’m sure if I spent more time than a minute I would find more than just this:

    WASHINGTON — When Citigroup agreed last month to pay $285 million to settle civil charges that it had defrauded customers during the housing bubble, the Securities and Exchange Commission wrested a typical pledge from the company: Citigroup would never violate one of the main antifraud provisions of the nation’s securities laws.

    To an outsider, the vow may seem unusual. Citigroup, after all, was merely promising not to do something that the law already forbids. But that is the way the commission usually does business. It also was not the first time the firm was making that promise.

    Citigroup’s main brokerage subsidiary, its predecessors or its parent company agreed not to violate the very same antifraud statute in July 2010. And in May 2006. Also as far as back as March 2005 and April 2000.

    Citigroup is far from the only such repeat offender — in the eyes of the S.E.C. — on Wall Street. Nearly all of the biggest financial companies, Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America among them, have settled fraud cases by promising the S.E.C. that they would never again violate an antifraud law, only to do it again in another case a few years later.

    don’t worry Dave, when the banks get to the backlog, more of those irresponsible borrowers will get the boot.

    and how many top-level prosecutions have their been?

  4. lizard19

    for gold bugs and believers in bitcoin, read this from Paul Craig Roberts.

  5. dbudge55

    This had to do with behavior after the crises. I’m not defending them but that is a seperate issue. And your right, the banks (bond holders) are being protected. But it’s your government who enables them. If they would be allowed to fail this would not have been a problem.

    • lizard19

      let’s work together to ensure the free market keeps your raw milk unregulated and kills parasitic banks deemed too big to fail/jail.

      • Dave Budge

        I’m all for it. Before the financial crises the largest 10 banks had about 50% market share. After Dodd-Frank that moved to 70% market share. This is an oligopoly that serves no one except the big banks. It’s bad law.

  6. Big Swede

    Those low lying scum sucking bankers.

    They sent guns into Mexico.
    They ignored our dying ambassador.
    They tapped reporters phones.
    They used the IRS as enforcers.

    And then smiled and took the fifth.

  7. Matthew Koehler

    I posted this comment and article over at this blog back in March….https://ncfp.wordpress.com/2013/03/21/lumber-finally-rises-from-the-forest-floor/#comments

    I don’t at all buy into the notion that the “US Housing market is thawing out.” The following article provides some good facts and figures, which the big banks and the big media outlets (largely owned by the same big banks) continue to ignore, as they cheer on more development, consumption and personal debt.

    For example, when you currently have 42% of the homes in Sacramento underwater with a “negative equity” averaging $100,000 below current market values, but then a veteran Sacramento realtor claiming “I’ve also never seen a market turn so quickly” you get a sense that the bubble is still bursting, and will continue to do so for some time.

    Of course, that veteran realtor has laughed all the way to the bank (driving his new Mercedes-Benz E63 AMG, no doubt)….first making money hand over fist during the 1990s to 2000s bubble, and now making money hand over fist due to interest rates in the 3% range, which has big-monied investors or the 1%-ers (not struggling families) buying homes like crazy.

    And don’t even get me started about the state of commercial real estate in this country. If you think we had a bubble burst with housing, let’s see what happens with all this commercial real estate, especially in an era of growing numbers of remote workers, on-line shopping and/or people just generally not having much money to spend any more.

    How all this impacts the US lumber industry, lumber prices and logging on national forests, I suppose, is anyone’s guess. But I’m not sure how anyone can honestly be too optimistic about the future.

    NY Times Ignores Banks’ Latest Role In Distorting The Housing Market
    March 22, 2013
    By Steven Rosenfeld
    Source URL: http://www.alternet.org/ny-times-ignores-banks-latest-role-distorting-housing-market

    The New York Times doesn’t get it. Thursday’s front page reported [3] that the U.S. housing market was again booming, with demand rising and builders racing to catch up. “After six years of waiting on the sidelines, newly eager home buyers across the country are discovering that there are not enough houses,” it breathlessly began.

    The article cited the housing market in Sacramento, California, where home values have tracked the national average—rising from 2000 to 2005, falling in 2006 and bottoming out in 2009, and climbing back up today. “In my 27 years, I’ve never seen inventories this low,” it quotes a local realtor. “I’ve also never seen a market turn so quickly.”

    The problem with Catherine Rampel’s report is that her analysis completely omits one of the biggest drags in the American economy that is creating an artificial shortage of homes for sale and inflating home prices. That trend is how banks are not willing to revise loans of people with ‘underwater’ mortgages, or who owe more than current home values.

    Amazingly, one of the sources [4] cited by the Times, Zillow Real Estate Research, notes that as of late February, 41.7 percent of the homes in Sacramento were underwater, or had “negative equity” averaging $100,000 below the current market values.

    The Times correctly noted that large scale investors have been buying up foreclosures and so-called starter homes, based on business models that envision renting the properties. But nowhere does its report mention that housing market “scarcity” is a direct result of banks refusing to modify mortgages for more than a third of Sacramento home owners.

    As Alternet has reported [5], this refusal by banks is a tremendous market distortion that is dragging down local economies across America. Indeed, Zillow research says that 19.4 percent of homeowners are underwater nationwide. “In total, underwater homeowners owe $1.01 trillion more than their homes are worth,” its February 2013 report said [4].

    Now, imagine, if lenders had to write off a portion of that debt and in so doing freed up hundreds of billions of dollars that could be spent on Main Streets across America. Or, if the federal government created an ultra-low interest program to help these borrowers pay the banks in full but then have much lower interest payments, which could mean saving several hundred dollars a month or more.

    “They’re not offering that. That’s the problem. It’s not there,” said Brent White, a law professor [6] at University of Arizona and author [7] of Underwater Home: What Should You Do If You Own More On Your Home Than It’s Worth.

    The Times report simply ignores the reality that 13.8 million homeowners nationally—Zilliow’s late February figure—are underwater. Instead, it talks about home builders trying to get new home permits from local authorities and then airs their gripes about the shortage of wanted construction workers. Once again, the lenders, many of whom tossed caution to the wind when making these loans, come out on top.

    You can bet that many lenders with underwater loans will be lending money to builders and new home buyers. That capital is underwritten by underwater loans with payments with interest rates that are often double what offered for today’s home loans. But the federal government isn’t stepping in to help these homeowners to boost the economy. And the national newspaper of record doesn’t consider this topic newsworthy.

    Links:
    [1] http://www.alternet.org
    [2] http://www.alternet.org/authors/steven-rosenfeld
    [3] http://www.nytimes.com/2013/03/21/business/economy/in-us-surprise-housing-demand-catches-industry-off-guard.html?ref=todayspaper&_r=0
    [4] http://www.zillowblog.com/research/2013/02/20/nearly-2-million-american-homeowners-freed-from-negative-equity-in-2012/
    [5] http://www.alternet.org/economy/economy-sucks-because-banks-are-still-sticking-it-overextended-home-loan-borrowers
    [6] http://www.law.arizona.edu/faculty/getprofile.cfm?facultyid=278
    [7] http://www.barnesandnoble.com/w/underwater-home-brent-white/1100563176?cm_mmc=googlepla-_-book-_-q000000633-_-9781456365707&cm_mmca2=pla&ean=9781456365707&isbn=9781456365707&r=1
    [8] http://www.alternet.org/tags/new-york-times
    [9] http://www.alternet.org/%2Bnew_src%2B

  8. “Our government?” Or the banks’ government? There’s only a few Ds or Rs on Cap. Hill that can say they don’t owe the top-4, big-time.
    http://www.rollingstone.com/politics/blogs/taibblog/deja-vu-on-the-hill-wall-street-lobbyists-roll-back-finance-reform-again-20130521




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