ADRIFT AT SEA

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Posted on 18th February 2013 by Administrator in Economy |Politics |Social Issues

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 “In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.”
Friedrich Nietzsche

 

The big story this past week, besides the annual State of the Delusion speech by Barack “It won’t add a cent to the deficit” Obama, was the fate of the passengers on the Carnival Triumph as their skyscraper sized ship was left adrift at sea for days without power. This 900 foot long, 100,000 ton goliath is one of the largest passenger cruise liners in the world, carrying 3,400 passengers and 1,100 crew members in luxurious splendor through warm Gulf of Mexico seas to sun drenched exotic isles. These ships are practically floating countries, with passengers treated to an endless American buffet of never ending quantities of bacon, sausage, biscuits, gravy, fried chicken, mashed potatoes, waffles, pizza, cheesecake, soda, beer and the rum drink of the day. It’s as if all 3,400 passengers have a SNAP card with no limit. There are retail stores, restaurants, bars, ice skating rinks, movie theaters, showplaces, and staff waiting on you hand and foot. No cash changes hands. You charge everything to your room number and then just pay with one of your 13 credit cards at the conclusion of your voyage into debt. Then you pay 18% interest on the 25 Funky Monkeys you consumed for the next 14 years. Cruising captures the essence of America as we traverse our voyage to hell.

The ordeal at sea of the Carnival Triumph and the leadership displayed by the Carnival management and executive officers is a microcosm of our declining empire. The $420 million Carnival Triumph was put into service in 1999 and has run continuously for the last fourteen years, with only periodic dry dock maintenance. These massive ships are replenished within hours of docking and depart within twelve hours of dumping their 3,400 passengers back onshore. The CEO and top management of Carnival care only about ROI and whether their stock options are vested. Their goal is to bilk the passengers out of as much cash as possible, while paying their foreign slave labor crew members as little as possible. The ships are registered in foreign countries for tax purposes and the crew members are mostly from third world countries. Carnival executives and shipboard officers have a history of recklessness, mismanagement, and willingness to endanger its passengers in its greedy thirst for short term profits. Ask the families of the 32 passengers killed in the sinking of the Costa Concordia.

   

The engine room fire that disabled the Triumph was not an isolated instance. This was the fourth engine room fire on a Carnival owned ship resulting in a loss of power, the others being the Tropicale in 1999, the Carnival Splendor in 2010, and the Costa Allegra in 2012. The Carnival Triumph should not have been at sea. It had been plagued with mechanical problems for weeks prior to the engine fire. Voluntarily taking the ship out of service would have hurt the 1st quarter earnings per share of this public company, therefore the leadership of Carnival told the engineers to patch it up and get it back out on the seas. Two weeks prior to the engine room fire the Carnival Triumph experienced propulsion issues that caused it to be five hours late returning to its Galveston home port on January 28, 2013 and delaying the ship’s departure for its next cruise until 8:00 pm that night. The ship departed, but the problems had not been fixed. The Associate Press reported a story about that cruise that provides a different assessment than the public relations drivel released the corporate office:

An email informed Debbi Smedley and other passengers that the propulsion problem would prevent them from docking at two ports. “Due to the limited cruising speed, our itinerary will be impacted. Depending on the progress of the repairs, we will either visit Progreso or Cozumel,” stated the email, signed by Vicky Rey, vice president of guest services. Smedley said the ship was in poor condition overall. During her five-day cruise, a water line broke in the hallway ceiling near her cabin, and a separate sewer line broke outside the main dining hall, she said. Metal was protruding from handrails on the staircases, and the elevators often did not work. Rather than docking in Progreso for only a few hours as planned, the ship stayed in the port for two days, and cruise workers repeatedly told passengers they were waiting for parts to fix a mechanical problem, according to Smedley.

Carnival’s public relations machine then admitted to an electrical problem with the ship’s alternator in the last voyage before the fire, but claimed it was repaired. What they didn’t reveal is that it was a Coast Guard inspection that revealed there was a short in the high voltage connection box of one of the ships generators causing damage to cables within the connection box. A directive with a compliance due date of February 27, 2013 was issued following the inspection requiring that “the condition of the ship and its equipment shall be maintained to conform with the regulations to ensure that the ship in all respects will remain fit to proceed to sea without danger to the ship or persons on board.” The Coast Guard Marine Information Safety and Law Enforcement System showed that this deficiency remained unresolved at the time of the subsequent fire and loss of power while at sea on February 10. So you have a company PR maggot lying and you have another useless Department of Homeland Security branch not enforcing regulations that are supposed to protect passengers. This is par for the course in our corporate fascist states of America today.

Shit Happens

George: Aha. Aha. Could it be because you don’t want him to know that you have a friend who pees in the shower, is that it?!

Elaine: No, that’s not it!

George: Oh, I think it is! I think that’s exactly what it is!

Elaine: Why couldn’t you just wait?

George: I was there! I saw a drain!

Elaine: Since when is a drain a toilet?!

George: It’s all pipes! What’s the difference?!

 

George Costanza would have enjoyed sailing on the Carnival Triumph as passengers were left to piss in showers and shit in red plastic bags for days. It finally became socially acceptable to pee in the shower. Most of the ship’s electrical power went down after the engine room fire, causing extensive breakdowns of vital shipboard mechanical systems, including taking out sanitary systems. Passengers reported sewage sloshing around in hallways, flooded rooms and trouble getting enough to eat. Passengers waited in line for three hours to get a lousy hot dog. On the lower decks sewage came up through the shower drain, pooling in the sinks and flowing into the hallways. The allegory of the poor people on the lower decks being inundated with feces and living in wretched conditions, while the rich people living in luxury on the upper decks are blissfully ignorant of the fate of their fellow passengers is so easy to apply to our society in this day and age. The 1% glory in their stock market gains, while 20% of U.S. households are on food stamps.

These direct quotes from passengers and pictures taken onboard this voyage from hell provide a taste of what our future portends:  

“We have to urinate in the shower. They’ve been passed out plastic bags to go to the bathroom. There was fecal matter all over the floor.”

“They’re walking around in a lot of urine and fecal matter, and the sewers are backing up.”

“The sanitation situation was gross and the stench was awful.”

“Just imagine the filth. People were doing crazy things and going to the bathroom in sinks and showers.”

“A lot of people were crying and freaking out.”

“We are trapped aboard a floating petri dish without power, air conditioning, or fresh water.”

“It’s degrading. Demoralizing, and then they want to insult us by giving us $500″

 Disgust: Guests were being forced to defecate into plastic bags and place it outside their rooms as toilets on board the Triumph backed up following the electrical failure Foul: Passengers on board the Carnival Triumph reported that floors were being flooded with raw sewage from overflowing bathrooms

 Where's my charger: After days without power a generator was airlifted unto the ship today and many people took the opportunity to charge their phones

After reading a number of articles describing what happened before, during and after the engine fire aboard the Carnival Triumph, the parallels between this Ship of Horrors and our Ship of State become self-evident. You have the CEO and top executives of Carnival only concerned about their wealth, power and control of the company. Rather than thinking long term and making decisions that might be detrimental to their short term quarterly earnings, but insure the long –term financial health and reputation of the company, their decision was driven by their true masters on Wall Street. Instead of taking the ship off-line to make vital repairs and  necessary investments, they just papered over signs of an imminent disaster and turned to public relations spin and propaganda as there preferred course of action. When disaster “suddenly” struck, the management and executive officers were unprepared, slow to react, and more concerned with their reputations than about the health, safety and welfare of the passengers. Much more could have been done to alleviate the misery of the 3,400 passengers. Carnival could have had a large generator helicoptered onto the deck and used to produce enough electricity to run some lights, ventilation, refrigeration and toilets. It appears that this ship had two engine rooms and only one was damaged by fire. They could have restarted the undamaged engine room and would have had enough power for most normal functions in the cabins of the ship, and probably some capability to propel the ship towards port. The disgraceful lack of urgency and refusal of top management to attempt every possible solution to this crisis is a lesson to be learned by passengers and citizens alike. They don’t care about you.

 

Rev. Wendell Gill’s experience onboard the Triumph provides a glimpse into our future. He immediately recognized the leadership of the ship was non-existent and it would be up to people helping people if they were to make it through the ordeal:

“What you had was a tale of two ships. You seldom saw a deck officer. I never saw the captain. Some of the people in the upper areas had plenty of air, but down below, it was unlivable. It was like a sauna of sewage. It was the people on the boat that saved Carnival. In an adverse situation, most people will rise to help — that’s just the human spirit.”  

Reverend Gill and his wife noticed that no one from Carnival was stepping up to help the elderly and sick get around. The Gills, along with other concerned passengers, decided to take matters into their own hands, carting mattresses and bedding up from the lower decks. They witnessed the worst side of human nature in the inaction of Carnival leadership, along with some people becoming drunk, disorderly and fighting over food. But they also witnessed people coming together under difficult circumstances, with many in the upper cabins sharing their space with those from the lower uninhabitable decks. The passengers created their own shanty town of tents on deck and in the cooler hallways. The vast majority of people acted like decent human beings. Kindness, sharing, and helping one another won the day. This voyage through hell is a precursor of what lies ahead for everyone in this country. When vital systems fail, the lights go out, and your beloved government leaders are nowhere to be found, how will you fare? Don’t count on someone from the government to lead when we are set adrift in a sea of chaos created by them. The politicians, bankers and bureaucrats will be scrambling to save themselves. Your family, friends, and neighbors will be the only people you can rely on. Your caring government doesn’t really care about you.

Cruisin for a Bruisin      

“Sometimes people don’t want to hear the truth because they don’t want their illusions destroyed.” Friedrich Nietzsche

 

The similarities between the horrific voyage of the Carnival Triumph and the tragic voyage of the dysfunctional ship of state we call America are many. We have a ruling class consisting of the President, Congress, Judiciary, Central bankers, Media titans, and goliath corporation CEOs who care not for the citizens of this country. You are ignorant peasants in their eyes. They only care about maintaining and expanding their wealth, control and power through the complete capture of our financial markets, political system and media propaganda to the masses. The health and welfare of the peasants isn’t even on their radar screen. The ruling class steering this ship of fools have no interest in the truth or the best long –term interests of the country. The vast majority of the passengers on this impaired listing ship prefers to believe the propaganda and lies spewed by the captain and his minions. They prefer the illusion of safety and security to the truth about the real condition of this ship. When the engines of this ship come to a grinding halt, their illusions will be shattered. Big government will come up small when it counts. The government propaganda and public relations will be revealed as nothing but hot putrid air and fecal matter.

Michael Ramirez Cartoon 

Speaking of fecal matter, President Obama’s State of the Union address, which was watched by 33 million (down from 52 million in 2009) believers, was a perfect reflection of the thinking that led to the Carnival Triumph disaster. The reality facing the country is: $220 trillion of unfunded entitlement liabilities; a $16.5 trillion national debt; annual deficits exceeding $1 trillion; 48 million citizens on food stamps; 11 million people on SSDI; a true unemployment rate of 23%; true inflation exceeding 5%; record high gasoline prices; 0% interest rates for senior citizen savers; free money for criminal bankers provided by their sugar daddy Bernanke; not one criminal prosecution of a Wall Street executive for the greatest financial fraud in history; a war department that spends $1 trillion per year and fights undeclared wars around the world; a chief executive that invokes dictatorial executive orders to murder Americans with his fleet of predator drones and imprison citizens indefinitely without charges; and a bureaucratic nightmare called Obamacare that will drive up deficits, drive up healthcare costs for every family, enrich the healthcare industrial complex, drive doctors into retirement, and drive small businesses into bankruptcy.

Rather than deal with this reality, Obama chose the Carnival Cruise Line method of public relations, misinformation, denial and delusion. He has embraced the Big Lie concept as if he had created it. With a straight face he proposes “investments” in infrastructure, new jobs programs, new education initiatives, more green energy projects, pollution control schemes, bailing out more underwater mortgages, and raising the minimum wage, all done for the children – and it won’t add one cent to the deficit. Instead of leveling with the American people and explaining the dire economic issues confronting our nation that require sacrifice, reality based thinking, and tough choices, we got more platitudes, class warfare, divide and conquer, phantom spending cuts, disingenuous twisting of the truth, intellectual dishonesty and fuzzy math. Public relations spin created by Madison Avenue maggots and pronounced grandly by corrupt puppet politician hacks will not prevent the catastrophic engine failure that will leave this country adrift in a sea of its own feces.

Our cruise of illusions and delusions is headed for troubled water. The math challenged citizens on this ship have been enjoying the 24 hour pizza buffet without the labor required to pay for the bounty. When your leaders boldly lie and tell you we don’t have a spending problem, refer to proposed spending increases as “investments”, and hail $1.6 trillion of spending cuts that did not happen, you’ve got a ship that will be signaling SOS in the imminent future. Both political parties are laughable in their blathering about spending cuts as Bush and his Republican cronies drove spending from $1.9 trillion in 2001 to $3.0 trillion in 2008 with their unfunded wars, unfunded new entitlements (Medicare Part D), Wall Street bailouts, and creation of police state agencies (DHS); while Obama and his Democrat co-conspirators have driven spending up to $3.8 trillion in four years with new unfunded entitlements (Obamacare), expansion of warfare in the Middle East (they sit on top of “our” oil), $800 billion stimulus handouts, $60 billion hurricane relief pork handed out for $25 billion of uninsured losses, and bailing out banks, auto companies, homeowners, and other gamblers who took undo risks and lost to the tune of hundreds of billions. Politicians and the inhabitants of this country have forgotten there are consequences to their actions and inactions.

Carnival Cruise Line is trying to buy off the passengers with refunds and $500 bribes to keep them quiet and sedated, while protecting their continued hundreds of millions in profits and million dollar bonuses for their executives. The ruling class in the United States has bought off the American people with entitlement promises that can’t possibly be honored, food stamps, SSDI, tax rebates, homebuyer tax credits, loan modification programs, Cash for Clunkers, payroll tax cuts, $1 trillion of taxpayer financed student loans, taxpayer financed subprime auto loans, and a myriad of other handouts designed to keep the masses sedated, while the ruling class continues to pillage the national wealth. It’s as if the entire country has been charging their food, drinks, excursions, and purchases to their room number and the bill has reached $16.5 trillion, rising by $3 billion per day. This voyage is reaching an end and the bill is coming due. The engine is on fire but the captain is telling us all is well. Eventually, everyone will know the captain lied.         

Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died

Leonard Cohen – Everybody Knows

 

survival seed vault

FAKE HOUSING RECOVERY SUBSIDIZED BY YOU

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Posted on 23rd August 2012 by Administrator in Economy |Politics |Social Issues

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Did you know that 97% of all the new mortgages in the country are guaranteed by you? In 2007 that number was 7%. Back in 2007 Fannie & Freddie were not considered Federal government entities. Today they are. The Federal government is putting you on the hook for mortgage loans to deadbeats with only 3.5% down. When has this type of lending ever caused a problem? Shockingly, 1 out of 6 of FHA insured loans are delinquent. If we are having such a robust fucking housing recovery like I keep reading about in the MSM, why are delinquencies rising. Make no mistake about it – YOU THE TAXPAYER are going to be hit with hundreds of billions in loan losses from Fannie, Freddie and FHA. So it goes. Dr. Housing Bubble provides the sordid details.

All praise to the new subprime – 1 out of 6 FHA insured loans is now delinquent.  Offering 30x leverage with FHA loans.

Perfectly timed, the Federal Housing Administration (FHA) is starting to see significant delinquencies at a time when the housing market nationwide is appearing to recover.  If you define “subprime” as the lowest quality mortgages on a totem pole, FHA insured loans now take that place.  It should not come as a surprise given the FHA is insuring an insane 30x leverage market with many that are diving in with only 3.5 percent down.  This is no surprise and even this summer, the FHA to assist in shoring up their dwindling capital base jacked up their mortgage insurance premiums.  The FHA has completely deviated from their mission and is simply another method of over extending debt strapped and income restricted Americans into homes that they clearly cannot afford.  What was once a tiny echo is now becoming a larger siren of impending financial issues.  The FHA is heading directly into a bailout scenario.

 

FHA is the new subprime

Some astounding information is coming out regarding the deterioration of FHA insured loans:

“(Reuters)- Fitch Ratings sees a growing divergence between 90-day past due delinquency patterns for guaranteed and nonguaranteed loans as a potentially troubling signal of future losses. This may eventually force the FHA to look for opportunities to put back some defaulted loans to the banks, particularly if the agency’s funding status worsens and U.S. home prices fail to rebound quickly.”

What stood out in the report is that eight of the largest US banks now have $79.4 billion in delinquent FHA insured loans.  Of this, 83 percent represent government-guaranteed mortgages.  If you need additional proof of this maximum leverage nonsense and that banks are willing to give loans out to a homeless person if they could offload the risk to the American taxpayer, read this:

“While delinquency rates for nonguaranteed loans have been improving steadily at these institutions, the trend for FHA-guaranteed loans is starkly different.”

In other words, banks are cautious when their money is at stake but when it comes to government backed loans they are willing to make any kind of loan product so long as they get their cut.  This is very similar to the entire Alt-A MBS process where banks bundled crap loans together and distributed their toxic waste around the globe deceiving investors.  Now why is this a problem?  Because FHA has essentially stepped in as the low-rung mortgage option:

PSOriginationbyProduct

Since 2008, FHA insured loans have taken up a sizeable role in the loan origination market.  In 2005 and 2006 FHA loans were only 5 percent of the entire pool.  Today, they make up roughly 1 out of 4 originations and reached a high of 30 percent in 2009.  In other words, these loans were made after the bust so home prices were already correcting lower yet they have entered the default pipeline rather quickly.  Why?  Because 30x leverage is freaking insane!  Heck, we’re talking about leverage ratios that brought down Lehman Brothers.  Some are so delusional to think that this is for the common good.  How about we implement some sensible restrictions like the following:

fha loan action

Source:  AEI, Edward Pinto

Of course these sensible items have been completely ignored for the sake of creating another monster that needs to be bailed out.  Ironically, FHA loans have a mission for affordable housing yet we have upped the limit to $729,000+ in some areas of California!  In a country where the median household income is $50,000 how is this even remotely close to sensible?  It isn’t and we are quickly approaching another bailout.

FHA loans continue to be a big part of loan market

FHA insured loan originations continue to be a big part of the market:

loan origination by type

There is little appetite for more bailouts.  Fitch Ratings actually feels that with worsening conditions that the FHA may need to renegotiate loans with banks that hold these loans.  FHA might actually, to a certain degree default by paying less than the actual original principal protection.  In other words this will transfer some of the loss to banks.  If this plays out, banks are simply not likely to participate and this actually throws the entire purpose of FHA’s insurance into question.  This isn’t necessarily a bad thing since collectively this is a boondoggle and such a poorly crafted program that it is now leaking money left and right.  For anyone thinking that 30x leverage on a $400,000 mortgage at twice the national median home price is ludicrous they need only look at the very high delinquencies.  They are simply yearning for the days of the toxic loan fiesta to come back.  Just because you are checking W2s doesn’t mean you are practicing wise due diligence.  That should be obvious given the massive delinquencies.  1 in 6 FHA insured loans is delinquent.

The young need leverage   

Banks are essentially in a symbiotic relationship with the government.  The entire mortgage market is government controlled.  I was talking with someone that jokingly mentioned that the slow progression of lower interest rates is a method for banks to collect closing cost fees and generate additional revenue on the back of the government forcing rates lower by encouraging mountains of refinances.  Given refinancing volume, there might be a point to that.

The government and banks are intertwined.  I mean come on, the entire mortgage market is now government backed and the loans are dished out by the too big to fail banks.  You have similar mispricing of risk with the massive student debt bubble.  And this brings us to the next point of the younger generation.  It is very clear that as a group, younger Americans will be less affluent than say the baby boomer generation and this will impact housing moving forward.

Gen Y most likely to hold low-paying jobs in retail

“(USA Today) Chances are if you’re a working Millennial, you’re working in retail, says a study released Tuesday by Generation Y research firm Millennial Branding in conjunction with PayScale, a company that collects compensation data.

Retail sales associate is listed as the fifth-worst-paid job, at an average of $19,300 a year, only better than cashier, barista, hotel clerk and dietary aide, the findings show.”

This is where you find arguments for steady rising home values to fall flat.  The leverage to boost the housing market without a doubt has come from the following areas:

-Banks simply ignoring mark-to-market

-Banks artificially keeping inventory off the market

-Fed forcing mortgage rates lower

-Government ramping up low-down payment mortgages like FHA insured loans

None of the above reasons has occurred because incomes were going up.  We’ve added jobs but many of the jobs added have come in lower paying fields.  Many of the future home buyers are already saddled with massive debt:

“For an age group struggling with a poor job outlook and hefty student loans, many settle for retail while they look for jobs in their preferred field, says Dan Schawbel, managing partner at Millennial Branding. “A lot of them will end up in these retail jobs while applying for professional jobs and hoping there’ll be openings,” he says.

Many Millennials in retail have college degrees. Almost half of merchandise displayers — better known as floor clerks — and 83% of clothing sales associates indicated having a bachelor’s degree, the PayScale data show.”

The figures are not all that reassuring and certainly do not provide evidence to increasing home values.  It also may point to the flailing of FHA insured loans.  Many younger buyers may opt to go with FHA products because of the low-down payment option but with more transient jobs and lower paying jobs, one little hiccup and you quickly fall behind.  We already see the rise of the temporary employment market.  The student debt market is now up to $1 trillion and many have degrees from for-profit paper mills that provided little chance for higher earnings.  Yet they are now saddled with incredible debts.  The irony of all of this is that products like FHA insured loans have actually kept home prices more expensive when the market is demanding more affordable options.  Those that usually champion these products are massively self-interested and fail to appreciate the massive costs hidden here.  Even if you want to keep these products available, why not cap it out at the nationwide median home price and require 10 percent down?  Some don’t want this because they want to swear allegiance to the new subprime flavor of the day so long as they don’t have to pay for it.  Moral hazard galore.

13,000 – 46,500,000 – 22,500,000 – 8,750,000

123 comments

Posted on 29th July 2012 by Administrator in Economy |Politics |Social Issues

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Four charts that tell you everything you need to know about the American Empire of Dirt are below. While the 1% who run the rigged financial system of this country utilize their high frquency trading super computers to ramp the Dow Jones back up to 13,000 (still 8% below the level of 2007) in an effort to gorge themselves on the carcasses of the middle class, the true picture of our collapsing empire is there to see for anyone with two eyes and a functioning brain. There are 117 million households in this country and 22.3 million of them are on foodstamps. There are only 75 million owner occupied houses in the country and 30% of them have a mortgage loan greater than the home value. That’s 22.5 million households underwater. There are 243 million working age Americans and only 142 million of them working, with 35 million of those only working part-time. At the same time we have 48 million people collecting Social Security retirement and another 8.7 million people collecting Social Security Disability.

We have re-entered recession. Gas and food prices are rising. Europe is about to collapse. China’s fraud of an economy is coming to a halt. Retail sales have imploded. Consumer confidence is in the toilet. New and existing home sales are falling. But CNBC and the Wall Street shills are telling you its the best time to buy.

Are we living in bizarro world?  

HOW COME ROBERT RUBIN, CHARLIE PRINCE & VIKRIM PANDIT AREN’T IN JAIL?

11 comments

Posted on 5th December 2011 by Administrator in Economy |Politics |Social Issues

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The enemy is evident to anyone capable of using their brain. Not one of these criminal bankers has been arrested. The laws are just for the little people like you and me. They don’t apply to the ruling elite. Is anybody in there? Knock if you can hear me. Is anybody home?

OBAMA IS TRYING TO SCREW YOU AGAIN

39 comments

Posted on 31st August 2011 by Administrator in Economy |Politics |Social Issues

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You know those deadbeats who haven’t made a mortgage payment in over a year? Obama wants to take your tax dollars and let these scumbags refinance their underwater mortgage at 4%. He’d like to do it through your backdoor by having Fannie Mae and Freddie Mac take on another $70 billion of losses. These two wonderfully run organizations have already lost $130 billion of your tax dollars, so what’s another $70 billion.

This is how a socialist views the world. I have been making my monthly mortgage payments faithfully for 16 years. It doesn’t matter whether the value of the house is lower or higher than the mortgage. I have a financial obligation and I honor it. There are millions of deadbeats who have lived far above their means, took on too much debt, and never saved for a rainy day. Now they are living in homes for one or two years without making the legally required mortgage payment. Obama feels their pain. His solution is to take my tax dollars and help the deadbeat out.

People make bad decisions every day. There are consequences to bad decisions, just as there are benefits to good decisions. Obama wants to reward the people who made bad decisions at the expense of the people who made good decisions. This is just another form of warped Keynesian thinking. These blithering idiots believe that the reduction in mortgage payments will boost the economy. Absolutely ridiculous!!! These morons haven’t been making any mortgage payments. They were already spending that freed up cash on iPhones and HDTVs.

What kind of country have we become? People who can’t or won’t make their mortgage payments need to be booted out on their fat asses. It’s time for them to rent or live in their mother’s basement. The housing market needs to be cleared of the massive oversupply through price discovery. At a low enough price, someone who had been renting and saving their money will be able to afford one of the houses. At the right price, every house will sell. The banks need to write-off their bad mortgages. If that pushes them into bankruptcy, so be it. An orderly liquidation of their assets has been precedent for a couple hundred years.

Don’t let Obama screw you again.

The regulator who could block mortgage refi plan

FHFA chief could derail effort, experts say

By Ronald D. Orol and Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — A possible White House effort to kick-start the moribund housing market, and create a major backdoor stimulus to boost consumer spending, may be undercut by the regulator for government-seized housing giants Fannie Mae and Freddie Mac.

An idea that outsiders have said the White House is considering would allow for the refinancing of millions of underwater mortgages backed by the U.S. government. President Barack Obama is due to give a major speech after Labor Day outlining ideas to boost employment and help the economy.

Mortgage refinancing could jump-start economy

Glenn Hubbard, dean of the School of Business at Columbia University, tells MarketWatch’s Greg Robb that if mortgage owners could refinance their loans it would be the equivalent of a $70 billion tax break.

Millions of homeowners who owe significantly more than their homes are worth currently can’t refinance, but could be permitted to use such a program to refinance to current low mortgage interest rates, which are currently just north of 4%. See story on mortgage rates.

Glenn Hubbard, a former top economic advisor to President George W. Bush, said he presented such a refi plan to the White House. According to Hubbard, an estimated 37 million borrowers could save $84 billion a year, a large chunk of which would be injected into the economy.

However, for the White House to propose such an approach it would need the Federal Housing Finance Agency, an independent regulator which oversees Fannie Mae and Freddie Mac, to implement it.

That may be difficult, regulatory onlookers say, because FHFA’s acting chief Edward DeMarco has sought to limit costs of the two firms to taxpayers and that such a program would likely hike taxpayer expenditures. DeMarco became acting head of the agency in 2009 and has had worked at the agency and its predecessor since 2006 during the Bush administration. Fannie and Freddie own roughly $1.4 trillion in mortgages and mortgage-backed securities, as of June, according to the agency.

“DeMarco might not want to do it so, the question is, can the White House require him and FHFA to do it?” asked Michael Stegman, director of policy and housing at the The John D. and Catherine T. MacArthur Foundation.

“If [DeMarco] sees that the program would result in losing money and reducing revenues, he may say we’re better off where we are and not go through this.”

Analysts contend that the plan would result in a significant reduction in revenue for Fannie and Freddie, though backers say the lower interest rate will also result in some savings for Fannie and Freddie, from lower default rates and fewer foreclosures. Already the two firms have cost taxpayers some $130 billion. Read about how a plan to kick-start housing wins Jackson Hole nod

FHFA and the White House declined to comment for this article. However, DeMarco has said repeatedly that his focus is to ensure the regulator can preserve Fannie and Freddie’s assets and limit costs to taxpayers.

“We are preserving and conserving the assets principally for taxpayers so that they may realize the greatest possible return from these assets,” DeMarco said in a speech in May.

Donald Lamson, a former Office of the Comptroller of the Currency official and an attorney with Shearman & Sterling LLP, said it is possible that a White House call for such a program could create tension between the administration and the FHFA.

“There are plenty of times when an administration tells an administrative agency to do something and it doesn’t happen because the agency doesn’t want to,” Lamson said.

He added that any complications the White House has in having FHFA implement such an approach puts a spotlight on the administration’s failure to have an Obama-nominated and Senate-confirmed director of the agency.

The White House’s nominee to head the FHFA, North Carolina’s banking commissioner Joseph Smith, withdrew his candidacy after Senate Republicans expressed opposition.

Bob Davis, vice president at the American Bankers Association, also said DeMarco will have trouble with such a proposal.

“His job under the law is to be a conservator. I think he’s got to stay true to that. He runs an independent agency,” Davis said.

Capitol Hill complications

Without FHFA support, the only other route for Obama would be with legislation on Capitol Hill, something that most observers see as unlikely.

Lamson said Republican lawmakers on Capitol Hill would likely call hearings, which would focus on the question of authority.

The program would likely also extend to mortgage backed securities, which Fannie and Freddie guarantee. The private holders of these securities would experience meaningful losses of billions of dollars and Republicans may raise concerns that investors would be discouraged from investing in the sector as a result.

“I would be scheduling hearings asking, ‘what is going on here ?’” said Lamson. “Depending on the outlines of the proposal, they could ask what authority does the Obama administration have to employ the program and possibly break mortgage bondholder contracts?”

He added that it is unclear whether such a program would be beneficial politically for Obama.

“When you are parsing through all of this, there are winners and losers. Whenever you get into a reallocation of financial assets people will howl one way or another,” Lamson said. “From a political perspective lets say 10% of the population ‘wins’ but there are other people who live down the street who will be furious.”

Lamson added that there could be unintended consequences with some borrowers seeking to have their properties re-appraised in hopes of qualifying for the program and receiving the benefit.