by Danny Schechtor
Welcome To The Panic Dome
Readers Respond to Subcrime Article
AOL Offers In Debt We Trust and WMD
Welcome to the panic dome. It’s as if those powerful images of icebergs melting in the Al Gore vehicle, An Inconvenient Truth, have come on land with financial markets groaning in a new and very dangerous financial climate. We are now hearing global moaning.
What will the market do when it opens later today? I’ve been flooded with questions from readers about whether or not to sell their stocks as if I have crystal ball. That’s a question I am totally unqualified to answer, not that the geniuses who claim to be financially savvy necessarily know what they are doing.
With all the finds injected into the markets in our country and overseas, my hunch is that they will keep the ship from sinking, The so-called “plunge protection” unit is working overtime, but we may just see a temporary fix.
The “Debt Bomb,” as the Wall Street Journal called it, has yet to fully explode.
I was glad to see this issue, a problem I have been working on for two years, finally bust into the news, triggering related discussions of who is making all the money and the spread in economic inequality. (PBS’s NOW had a good show on that) Unfortunately too much of the coverage has been focused more on the problems of the avaricious marketers and not the people who are being victimized, many people of color adding a dimension of discrimination to the crisis.
And Now the Hedge Funds Are Quivering according to today’s NY Times: ‘Pack Mentality Among Hedge Funds Fuels Market Volatility”
The article I posted last week calling sub-prime a subcrime (“sub” because, unfortunately many of these practices were actually legal in our climate of no regulation and pervasive predatory practices.) is having some response.
I was glad it got a lot of pick up although the Sunday news shows that I saw basically moved on to other issues and focused on the horserace in Iowa, Meet the Press For Example was speculating on political races the way banks speculated with these mortgages, The market meltdown could not be ignored but its causes are still being treated very superficially. John McLaughlin led a heated debate about the issue and I am pleased that Democracy Now is having me on again and that the Chicago Sun Times will run the commentary that you may have read on many fine sites.
The response was very strong.I heard from a former Reagan Administration official and a long time progressive activist. This shows that this issue has the potential to bring us together across partisan lines, a point I make in my film IN DEBT WE TRUST. (Now being streamed on AOL’s True Stories—see below)
There are still many many unanswered questions about where all this is going, The Housing bubble blog asked:
“Central Banks are ‘injecting liquidity’ all over the place. What does that mean exactly? Handing out money? Who’s money are they handing out? Can I have some? I promise I’ll go out and stimulate the economy.”Writing on The Geeze, Carl Worden worries:
“Who are the recipients and what do they do with it? How does that work? Does it work? What are it’s limitations? How unusual is this?”
One suggests calm. “Ya know, if we just all think positive thoughts, this could all turn out ok.”
The Stock Market is reeling right now. Yesterday, 8/9/07, the Dow dropped 387 points, preceded by days that saw an increase of 280+ points preceded by a day that saw a 280+ point drop. At this writing the Market is about two hours from closing and the Dow is up and down all over the place. Mortgage companies are failing right and left due to the fact they can’t resell their mortgages to investors.Cynthia Fisk asks:
The circumstances of this debacle are eerily reminiscent of the Stock Market crash of 1929, when people who thought the Stock Market would just keep going up and up, borrowed against the value of their homes to purchase stocks on the margin.
As we all know, the real impact on the population didn’t sink in until about 1933, when people en masse lost their homes and were living in their cars. Those who lived through those dire times were noted to never again, under almost any circumstances, hang paper on the homes they lived in. But that was many years ago, and as the generations of Americans emerged into years of prosperity, those hard lessons have been largely forgotten.
Does Alan Greenspan share part of the blame? He pushed interest rates lower and lower in order to persuade people to buy real estate and to show just how “healthy the economy was” as they did so.
No one has summed up the disaster in the mortgage lending business better than Paul Muolo of “Broker Universe”: “I’ll put it bluntly: if you operate a non-depository mortgage firm and don’t have a deep-pocketed parent or hedge fund as a sugar daddy you’re likely to be out of business by year-end, probably sooner. In the 20-plus years that I’ve been covering residential finance I haven’t seen a financial meltdown this swift since the S&L crisis of the mid-to-late 1980s. One subprime executive who closed his shop a few months ago told me, ‘This is a liquidity crunch the likes I have never seen.’ Meanwhile, the mudslide is rolling downhill from Wall Street to mortgage bankers, to loan brokers, and then the consumer.” “The mudslide from Wall Street”. That says it all
Known and very popular cialis coupon which gives all the chance to receive a discount for a preparation which has to be available and exactly cialis coupons has been found in the distant room of this big house about which wood-grouses in the houses tell.
Carolyn Austin Fitts, former Republican Administration eco manager:
Good work! Thanks!Long time author and no nukes activist Harvey Wasserman who has been exposing the election fraud in Ohio:
Hey danny….you’re the only one writing about this shit from the list….keep up, bro.stbycrk writes:
An excellent article, Danny. Unfortunately, not enough people will read it & understand the implications for the future. Greed is the common factor in all of the financial problems currently besetting U.S. consumers. Lenders are not happy with a reasonable profit, they have to gouge each & every borrower; & Congress is complicit as well. The current usurious situation with regard to credit card lending is a case in point, with credit card companies having everything their own way, with no regulation whatsoever from the Federal Government.Joel Swadesh writes:
Actually our defenders in the House & Senate are totally responsible for this consumer ripoff, having passed the act several years back that enabled credit card companies to charge borrowers whatever they wanted to, & to enact penalties that gouged them even more.
Thanks for the article.
I agree that there’s a real problem with awareness of financial issues on the left. Democrats even at very senior levels are amazingly clueless on basic issues like self-employment taxes, H1B visas, and the relative regulatory burden on small businesses, much less what people go through to get a mortgage. This often-incandescent ignorance makes almost impossible any attempt to form alliances between progressives and the large part of the middle class involved in self-employment or small business.Gus Hagelberg writes From Germany:
There are, however, a number of centrists or left sites that discuss economic issues. Some of the best: Brad DeLong’s Semi-Daily Journal, Hale’s Bonddad Blog, Angry Bear, Calculated Risk, The Oil Drum, Barry Ritholtz’s Big Picture, Max Sawisky’s Max speak, Econbrowser (and more).
I hope you will publicize them, as I do.
I just heard a recording of yours on media matters from March 07. You talked of your new movie, the personal dept problem and activism in general. It was really a coincidence that I listened to that show this week of the sub-prime crises.David Brugger writes:
I’ve been living here in Germany for about twenty years, moved here from California when I was about twenty. The attitude here in Germany about personal debt is quite different, luckily, than in the States.
Credit cards are quite uncommon, in fact I still get annoyed that the only place I can use mine is at a gas station. When I first came here back in the late 80’s I was amazed to here most people buy their cars with cash (or similar with a bank check). I myself once paid for plane ticket in cash which was very weird.
Over the years buying with credit here has increased but I’d say Germans are still at least 20 years “behind” the US. Well, what I wanted to say is that the personal debt tragedy is not as bad here but there still are many issues that need to be addressed. I’m involved in a local action group and we’ve been getting more involved in economic issues. Next to the “Small-Mart Revolution” and parecon we’re involved in starting a local currency here in our city. I was wondering if you have heard of that and what your opinion is. Here in Germany there are around 40 regions that use a form of local currency.
Investigate prime and sub-prime? The current financial markets are simply one small moment in a timeline of greed sanctioned during the Reagan years as a good thing for America, if not the world since Thatcher had done likewise in England.Deborah Emin writes:
Yes, there has always been greed but not one that was openly encouraged, legalized, marketed, rewarded and aided by the federal government and the political and corporate powers that rolled Americans into believing it was a common good, based on corrupted moral and ethical values propagandized by the evangelical power-mongers and created by the neo-conservatives to bring back the glory days before social do-gooders like Roosevelt and his out-of-the-depression economics and Johnson and his Great Society.
America lacks knowledge of history, perspective and context. One should just read two papers authored by the neo-cons in the 1970’s (and oopenoy propagated in the ’90s and 2000) after the Olin-Bradley-Coors-Scafe vitalized the Heritage Foundation and other non-thinking tanks to take back their country from the socialists.
One paper is for domestic policy and entitled “Starve The Beast” whereby all of the social programs would be privatized and\or eliminated so the market (read “wealthy 1%) could be free and work to accumulate wealth.
The other paper is the “Project for a New American Century’s Rebuilding America’s Defenses” which would project USA military power to every country so they can have democracy, much like we have instituted in occupied Iraq.
If you want to know and understand what is happening and why, look no further. Your welcome.
Welcome back from down under and here is a guy you may not read (The DAILY RECKONING) who makes me nuts at times but is worth keeping up with mostly because he is a true believer in wealth and thus has much to say about where the people who like money are looking and what they are up to these days.Bob Babcock writes in part:
As to the subprime crimes, you are more than correct in your analysis and I think it is also about the same game that has been going on with everything that is not bolted down and cannot be sold. Where those goods are, I don’t know. The whole country, world, is up for sale and those with the cash are buying it up.
In the interests of investigative work, it would be good to find out where the president’s other brother, Neil, is because much of the family’s dirty work falls to him. The last I could find out, he was in South America buying up water rights. As we all know that is the next big issue after oil and is going to make loads of money for a few people, including the Bush family.
Another good investigative piece dealing with the Bush family is the article that appeared the other day in the Times about Bush 41 and his feelings about his son. It read a great deal like a piece out of
People and yet for some reason no one has yet commented on what a snow job that was. No one questioned, for example, what the old man was doing talking to insurance groups, just that he did and felt badly when someone questioned his son’s worth as a president. We all know that this family is one hell of a bad group of lying, cheating and immoral thugs who seem to always follow the money not some kind of code of ethics. So, why was the Times floating this god awful piece on the poor Bush senior’s feelings of all things?
Just a question. Perhaps someone can look into this for us.
thanks for all your hard work,
IT’S THE ECONOMY, SWEETHEART!!!!!!!!!!!!There were 24 responses on Huffington Post to the piece including these two:
Bush is saying “Pay no attention to the man behind the curtain!” in a Wizard-of-Ozish manner while we pay more for energy in ALL sectors and food/clothing/etc. costs rise for everyone. Meanwhile, the last Congress passed bankruptcy legislation that allows the credit card companies to raise rates (read “payment”) on the card when they check credit and find that other accounts held by the cardholder have a 30 day late or are above 50% credit utilization - raising monthly consumer expenses even higher.
This is the way the Bush administration and Republican friends do not take responsibility for raping the American people on energy costs and NOT doing anything on sustainable energy.
You can’t take $700 billion out of the economy and NOT have a negative impact on it. That’s part of the price of this illegal war on Iraq….
TXfemmom (See profile | I’m a fan of TXfemmom)AngryAmish
Let’s face it. This is just another example of the Savings and Loan fiasco, seen under another Republican President, Reagan, and the country didn’t learn anything.
Then, with the Congress controlled by the Republicans in the 90’s, and with they and Bush expanding it since then, IT HAS BEEN REGULATIONS AND ENFORCEMENT AND OVERSIGHT IS BAD.
Well, it is not bad. It needs to be there to prevent Greed and this type of thing from vanquishing the country.
We should not be surprised. The Bush family, and their cabal, were chin deep in the Savings and Loan thing, and got out without paying back a single dime, and now, GW, Cheney, Rove, and the FED, which hid its’ head up its’ arse, created this.
There should be a LOT OF THESE PEOPLE IN PRISON, FOR A GOOD, LONG TIME.
Look what they did to Martha Stewart, and then they aided and abetted, and encouraged this disaster.
In an otherwise excellent post, you miss one crucial point: These incredibly sophisticated mortgage documents are not prepared by your friendly neighborhood brick and mortar bank. Those days are long gone. Rather, the vast majority of exotic (and risky) subprime loan documents are prepared by Wall Street investment firms and peddled to unsophisticated borrowers by mortgage brokers, who have no longterm interest in the sustainability of these loans and reap obscenely large fees upfront for pushing the riskiest and most expensive products.HOW TO COMPOUND THE HOUSING CRISIS
Caveat emptor no longer applies to this crisis. As you point out, these documents are so abstruse as to be unintelligible. Moreover, mortgage brokers routinely misrepresent to borrowers the true terms of these loans. A recent FTC report found that an astonishingly high number of borrowers with ARMs actually believed they had fixed-rate mortgages. Hmmm. . .Wonder where they got THAT idea?
And before commenters start whining that the explosive growth in subprime mortgage products in the last decade is responsible for the record-high rates of homeownership, consider this: The vast majority of these failing products were for refinances; they are not used to enter the market place. When you add in the escalating failure rates, subprime mortgages soon will be responsible for a net loss in homeownership in America.
Every time I see Michael Chertoff, I want to wretch. The Reich Minister for Homeland (sic) Security (Sic) was on CSPAN relating the latest scheme to torture Illegal Immigrants with help from the Social Security Administration. My Dad and I were recalling his heroic moments heading FEMA in New Orleans.
Geat Job Mike. Perhaps you can fix this too:
.(AP) ”NEW ORLEANS - While Willie Ann Williams waited for federal aid to rebuild her home in the hurricane flooded 9th Ward, it was demolished — apparently by mistake.AND SPEAKING OF SECURITY
There was nothing left but bare dirt.
A city official told her family the wood-frame house should not have been torn down, but no one has told them why it happened or what happens next.
Williams had a building permit and wanted to fix up her house once she received money from the federally funded, state-run Road Home grant program. Now, with no house to repair, she’s living in Franklinton, 70 miles away, and doesn’t know whether she’ll be able to come back, said Williams’ daughter, Vonder McNeil.
Confusion reigns with the approach of an Aug. 29 deadline — the second anniversary of Hurricane Katrina — for the city to tell federal authorities which properties it wants demolished. Homes that were only damaged have wound up on a list of 1,700 condemned properties. Some houses on the list have been gutted for rebuilding or are in move-in condition.
9/11 Workers Outraged by New Rudy ClaimIn Debt We Trust and WMD Now On AOL SEE IN DEBT WE TRUST, WMD ON AOL TRUE STORIES PLATFORM
By Celest Katz
The New York Daily News Friday 10 August 2007
Rudy Giuliani drew outrage and indignation from Sept. 11 first-responders yesterday by saying he spent as much time - or more - exposed to the site’s dangers as workers who dug through the debris for the missing and the dead.
Speaking to reporters at a Cincinnati Reds ballgame he caught between fund-raisers, the GOP front-runner said he helped 9/11 families and defended himself against critics of how he managed the attack’s aftermath.
“This is not a mayor or a governor or a President who’s sitting in an ivory tower,” Giuliani said. “I was at Ground Zero as often, if not more, than most of the workers. I was there working with them. I was exposed to exactly the same things they were exposed to. So in that sense, I’m one of them.”
His statement rang false to Queens paramedic Marvin Bethea, who said he suffered a stroke, posttraumatic stress disorder and breathing problems after responding to the attacks.
“I personally find that very, very insulting,” he said.
“Standing there doing a photo-op and telling the men, ‘You’re doing a good job,’ I don’t consider that to be working,” said Bethea, 47.
Ironworker Jonathan Sferazo, 52, who said he spent a month at the site and is now disabled, runs a worker advocacy group with Bethea and called Giuliani’s comments “severely” out of line.
“He’s not one of us. He never has been and he never will be. He never served in a capacity where he was a responder,” Sferazo said.
Producer Dan Balis writes:
Hey Danny,The DVDs are also available through InDebtwetrust.com and wmdthefilm.com
Just wanted to let you know we’re up and running! We’re featuring “In Debt We Trust” as our principal feature on the True Stories homepage (truestories.aol.com) and “Weapons of Mass Deception” just below that as well!
I know you’re very active on-line via newsdissector.com and other venues, so please help us spread the word that your superb films can now being featured and can be viewed in their entirety on AOL True Stories!
The pages devoted to your films can be found at:
All the best,
Producer - AOL True Stories
I was in Boston this past week with my dad who is fighting against the Big C, We watched the endless Doo Wop fundraiser on one PBS Station and the great film “WINGED MIGRATION “ on WGBH which ran it as part of a funraising drive which was shameless and unstoppable. I loved the birds.
We couldn’t watch local news again after every station spent endless time on chronicling the efforts to two women in New England who saved a giant Lobster, now named Andre by dispatching him to the New England Aquarium.
Was pained to see the funerals of those young people in Newark. But who the story have received all the publicity if they weren’t college students. The Crime in that city has a long and troubled history. I was pleased to have been part of a discussion on the 40th anniversary of the Newark Rebellion that aired this weekend on CSPAN. Watch for it. They may rebroadcast the panel on the amazing book NO CAUSE FOR INDICTMENT by Ron Parambo (Melville House Publishing).
Rare moment of truth. Did you see it. GWB is asked if he would like to say a few words in French to the TV cameras covering Sarkosy’s visit to the Bush Palace in Maine.
He responds by saying no, adding he can barely speak English. Ha Ha.
Stay tuned for more on the news not in the news at firstname.lastname@example.org
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