There is Only One Way Out of the Foreclosure Crisis

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Sat, 10/09/2010 - 13:52 | 638053 kevinearick
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it's a slow motion train wreck because the public is just learning to increase taps in the filter and improve its contextual "sight" in a self-reinfocing feedback cycle.

The relativity circuit is slow, with lots of small disordly events building, but they have not reached the threshold required to catalyze the big picture in linear time.

What would happen to all the people clinging to that bridge, which has aleady been separated from its abutments if 40+ million fully functional taps were activated instantaneously?

Sat, 10/09/2010 - 14:44 | 638135 Matto
Matto's picture

it'd be a flood!

Sat, 10/09/2010 - 09:06 | 637524 MarketFox
MarketFox's picture


This truly good bottom line....point A to point B thinking....I like it a lot....


So let's succinctly review where we really were....are...and where we are really going....

2006/7 100 = total credit and assets

2010 = 60

2012 = 40


Proposed and utilized govt. solutions:

Money counterfeiting

Accounting Fraud

Tax increases on capital


100 - not going to go away until there is debt destruction....and lots of label changing on assets.....which is what you have mentioned...


Recovery can occur once 40 is acknowleged...and then the 40 can move higher....


And this time around....coming from better overall structure....

regarding both the banking and securities markets....


The current administration to date....are doing just the opposite of what they really need to be doing....


Add to the structure change

Eliminate individual/corporate income taxes....

Recreate the securities exchange for RETAIL....for the new internet age of efficiency and information...thus allowing banks to service RETAIL...and not game them....


Entrepreneurship has to get big....and govt. has to get small....

In order to compete with BRIC.....

This means a lower dollar....

This means dramatically reducing the size of government...

This means permanent tax structure be replaced by the broadest smallest tax a small monthly basis point charge on all cash balances...

And govt. cannot exceed 10% of the economy by law....


And another item of significant THIS....

To end FASCISM in the US....the big banks HAVE to be broken up and placed in history as one of the biggest US mistakes never to be repeated again.....

Sat, 10/09/2010 - 09:15 | 637546 blindman
blindman's picture

you lost me with the tax on savings.

i don't think my mind will ever be big enough

to wrap itself around that one?

Sat, 10/09/2010 - 09:31 | 637555 MarketFox
MarketFox's picture

Money is money....and the broadest possible making tax as small as possible....would be a small basis point charge on cash 10 basis points per month....

When you pay convert something to money....

This has to be coupled with a small government mandate....


And this is not just savings....this is any cash balance....

ie loaned money....



Another possibility would be some form of a consumption tax....however this would be less well distributed....


Sun, 10/10/2010 - 11:56 | 639317 MurderNeverWasLove
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You know I like your thinking about taxes.

First repeal them all, then come back with a tiny fee, but I wouldn't put it on savings, I'd put it on use.  Every time you want to play with money, the casino gets its rake.

The biggest players shovel quadrillions around every year amongst themselves, yet only register a tiny fraction of that commerce as anything taxable.

If casinos only collected a rake on cashed-out winnings, they'd be out of business.

Pay to play.  Anonymous.  Capital gains tax cut of 95+%.  Same with property taxes if the states go along.

Good excuse to repeal the 16th amendment, and go with something like you suggest, limiting government to a small percentage of GDP.

Why not even take the money creation power away from the banks?  Pretty sure they've had their chance to prove how badly they can F things up.

They aren't really lending anymore, anyway, so now is as good a time as any for 100% reserve requirements.  And if corporations really are like regular people with regards to speech, etc., then just as well go all the way, 100% reserve requirements, 20% down, taxed like everyone else, and a freaking life span, eh?

Sat, 10/09/2010 - 10:11 | 637668 blindman
blindman's picture

the "government" / people could operate, flush, with no tax at all.

i know, it sounds crazy,  but it is just sanity in an insane world.


Guest Post: Money, Myth, and Machiavelli October 9th, 2010 by Damon Vrabel

 and it is not "socialism" it is republicanism as was conceived in

1787 or so.  not federalism.  not communism etc... and has nothing

to do with the republican party or democratic party as empowered, by

the banksters, today. 

why do the banks have power, the power of the people, in their hands?

simply because they stole it.  and tax you through the "government",

not the people, to rub it in and prove it.!

watch the vid?

Sat, 10/09/2010 - 00:50 | 637326 stuartbramhall
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After a close encounter with the first Resolution Trust Corporation (which ripped me off for about $300,000), I would be very opposed to creating another one. At the time, people were extremely about the head of the RTC – a once and future Goldman Sachs executive – selling Goldman Sachs a lot of deeply discounted real estate (non-competitively) – at the cost of billions of dollars to the taxpayer. And they simply ran over little people like me like a herd of elephants. In 1992 I bought a commercial building in a foreclosure sale (the bank I bought it from held the note). Then a month later they went bankrupt, and the RTC took them over and refused to honor the sales contract which required them to evict the hostile tenants. I got both my senators and my congressman involved – and filed a complaint. The RTC agreed to a settlement, then renigged on it, and told me if I wasn’t happy I should get a lawyer and sue them (and pay legal costs equal to my original investment). I write about this, as well as close encounter with other federal crooks who worked for US intelligence, in my recent memoir THE MOST REVOLUTIONARY ACT: MEMOIR OF AN AMERICAN REFUGEE ( I currently live “in exile” in New Zealand.

Fri, 10/08/2010 - 22:50 | 637180 anolmec
anolmec's picture

"Shoot the bird and remove its Talons from our hide", but then you suggest its the bankers Talons. I am not so sure. Lets see who passed laws that allowd these banks to get TBTF??ummm that would be politicians........and who passed laws that allowed mortgages to be securitized.....again politicians.....and who pray tell has sat on their asses wile there constituents are being foreclosed on by the holders of nothing....politicians......I agree with the shooting part, but disagree with which way the lead should fly.







Fri, 10/08/2010 - 22:42 | 637166 Troy Ounce
Troy Ounce's picture

What about:

  1. abolish the fed
  2. introduce a gold and/or silver based monetary standard
  3. go after the corrupted

Chances: 0.000001%

Fri, 10/08/2010 - 22:13 | 637124 Jim in MN
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Mr. Washington, there are other ways out.  Even if the TBTF brethren are broken up, the loans are still bad, the assets impaired. 

What if we let markets work and just required mark to market and took the bond haircuts?  Any attempt to shift these bad debts away from the private holders is a certain Japanification policy; indeed, that is our contemporary policy.  However many lost decades it takes.

Here is a new, fresh, glowing idea for you: Progressive (income-graduated) Haircuts.  I made this up a couple years back when the crisis hit, and have stuck it up on Krugman's blog, Naked Capitalism, and here several times.  It is quite elegant.  You do the mainline cure, mark all the shit to market, take the hit.  But, you allow lower and middle income Americans a tax credit to partially, or what the hell, totally compensate. 

Is simple, no?  The system gets purged, we get on with things without the horrific damage to our economy, polity and lives that is the inevitable outcome of the current imbicility and corruption we are facing.

Progressive Haircuts.  Please, somebody at least try to get the Big Policy Call ("no bond haircuts please, we'd rather end it all") back on the table.  It will be the death of our nation. 

Fri, 10/08/2010 - 22:25 | 637143 Bringin It
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What, not multiple posts?  Easy on the save button there tiger.

Fri, 10/08/2010 - 22:35 | 637156 Jim in MN
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My fuckups in no way dim my patriotism. 


Sat, 10/09/2010 - 03:09 | 637274 Bringin It
Bringin It's picture

++ for patriotism Jim.  I appreciate your posts.

Fri, 10/08/2010 - 23:22 | 637221 Bob
Bob's picture

Oh, no, it's YOU! 

Jim, I have never laughed so hard or so long "in" a web forum before.  You really inspired people with that postpostpostpostpost . . . 

Can't exactly explain it, but that was funny!  Like one of those dreams where you're naked in class . . . but, thank god it ain't you!

Oh, yeah, this post.  Interesting concept.  Deflation seems to be the problem.  I would be fine with that.  But, unfortunately, the financiers have a real problem with it. 

Systemically, it makes sense, provided we outlawed the derivatives that would be triggered.  Of course, there are all the state and muni bk's coming.  And the apparently unpayable federal debt. 

Seems to me we are royally screwed, no matter what. At least in this country.  My realistic hope is that we don't trigger another Dark Age or suffer culling by TPTB. 

Fri, 10/08/2010 - 22:05 | 637112 Bringin It
Bringin It's picture

Look George - just End the Fed, go back to MTM and we're done.  Yes banks will fold ... and they should.

Fri, 10/08/2010 - 21:06 | 637027 surfsup
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I think quite the opposite is true in regard to the pic above.  Eventually criminal acts beget the talons of quantitative Law.  Time is the only distilling agent.   All wrong action falls on its own sword -- every time -- in time.  Manipulation is not power and it can't stand the Light of Truth being thrown on it.  Nothing fails like success...  The fish is the fraud, the Bird is the Law.   She's always hungry...

Fri, 10/08/2010 - 20:21 | 636955 enobittep
enobittep's picture

Banks broken up - yes.

Outlaw fractional reserve banking (no more Mandrake magic) - yes

Repeal of the Federal Reserve Act - yes

Gold backed currency - yes

Ability to run a trade surplus or deficit outlawed - yes

Torture and kill fuckers that did this shit - yes

Sat, 10/09/2010 - 02:57 | 637408 The Navigator
The Navigator's picture

+2 Quadrillion (due to inflation and exponential numbers)

And wear the mask of your choice

Fri, 10/08/2010 - 20:12 | 636946 Kina
Kina's picture

The only way out for us - the fish - is if someone "shoots" the bird ..

I think it is becoming clearer where all this is going to end up. The US ending up as a steaming pile of crap circled by flies (banksters).

When this economy falls apart entirely as it inevitably will the issues will no longer be economic, they will be about justice and vengence. People will demand blood sacrifices for systemic collapse of the country, they will want a focus for all their rage.

And one thing we know about the modern American politician is if it is their skin on the line thye will sell their mothers into a brothel. So when the public turn their rage on them they will deflect it onto their current paymasters. The employee will sell out their current bosses and deflect all community rage and desire for vengence on the banks.

The scum in the Senate and so forth who currently do all they can to help banks fuck over America, will turn on them and make them the source of all evil, and the resting place of all anger and revenge.

People will want blood and will get it, given to them by the same craven politicians who are currently working against them.


So those banksters and corrupt regulators out their ought to be feeling a bit of a shiver, people are dancing on their graves, there will be no safe place for them in the US or Europe.




Fri, 10/08/2010 - 20:06 | 636939 non-anon
non-anon's picture

these final days are like the dying gasps of a dying beast, already dead

Fri, 10/08/2010 - 19:58 | 636933 ptolemy_newit
ptolemy_newit's picture

American pussy's are fucking talking heads with 300 million hand guns and not a single patriot left.


Its not clear enough, you know who the terrorist threats are from within!

Fri, 10/08/2010 - 19:17 | 636853 gwar5
gwar5's picture

The banks own us, and the health care system is how they will repossess what is left when they make us take the blue pill. 

Serious. You will not be allowed to spend down your own money to try to live, or the doctor will face criminal charges, and the FED can now directly track every digital transaction you do and can debit your accounts (before they even debit you!).




Fri, 10/08/2010 - 19:11 | 636845 Milestones
Milestones's picture

On 6-15-10 I posted a rather lenghty document contending that because neither Congress nor the President had the authority to delegate the authority to the Federal Reserve that was given; under Marbury v Madison (1803) any law contrary to the Constitution is not only illegal; the act is VOID. If anyone is interested in reading it I guess it is posted under my handle and was #415414.    Milestones

Fri, 10/08/2010 - 21:33 | 637066 w a l k - a w a y
w a l k - a w a y's picture

here is the link

Fri, 10/08/2010 - 19:05 | 636829 gwar5
gwar5's picture

Better idea: burn them down for the insurance money.

Sun, 10/10/2010 - 12:01 | 639325 MurderNeverWasLove
MurderNeverWasLove's picture

Hey, you might get a lot of birds with that stone!

Fri, 10/08/2010 - 18:50 | 636804 nicholforest
nicholforest's picture

There might be a moment there when the fish thinks - WOW this flying is cool!

But just a moment.

The big banks are the psycopathic servants of the Predators who now target the middle class in a move towards economic feudalism.

See my earlier post here:

Sun, 10/10/2010 - 12:14 | 639347 MurderNeverWasLove
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Lost me here:

Accelerating technologies and an unsustainable increase in population growth are matched by an alarming decrease in natural resources, rising pollution and dramatic climate change. This is the backdrop as we stand on the edge of an abyss, a massive power struggle sweeping across our world.

This is all Predator BS.  Don't believe the hype, and especially, don't help them pimp their Malthusian pap.

Fri, 10/08/2010 - 18:48 | 636799 Shell Game
Shell Game's picture

'Since this won't be solved on the soap box, nor the jury box, nor at the ballot box, it is time to solve this with the ammo box.'

Buying PMs is not only wealth preservation, it's an act of civil disobedience against the TBTFs.  Hide that gold, bitchez!

Fri, 10/08/2010 - 19:11 | 636844 gwar5
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I think every American that is able ought to buy at least one ounce of gold per month until they cry, which will just make gold go up even more.

Fri, 10/08/2010 - 20:06 | 636940 Shell Game
Shell Game's picture

Absolutely. Real money is the only way to fight this paper hell.

Fri, 10/08/2010 - 18:44 | 636794 Buck Johnson
Buck Johnson's picture

Chris Whalen wouldn't have said what he said if he didn't have inside information about many of these banks.  I think he is correct and this push for legislation is being done to give the president more power to unwind these banks via other methods. 

Fri, 10/08/2010 - 18:43 | 636777 Mercury
Mercury's picture

Man, that is an osprey (aka a fish hawk) and it looks like he just got dinner out of some McMansion backyard koi pond.

But, yeah, I'm generally in favor of more, smaller banks as opposed to fewer, larger banks.

What the hell ever happened to regional deposit share limits anyway.  That outlasted Glass-Steagall didn't it?

Fri, 10/08/2010 - 18:09 | 636713 swamp
swamp's picture

End the Fed, the private unlawful unFederal unReserve.

Fri, 10/08/2010 - 22:21 | 637140 Bringin It
Bringin It's picture

Until the Fed goes, there is no solution.

Fri, 10/08/2010 - 17:49 | 636657 Mitchman
Mitchman's picture

Thank you, GW.  While many on ZH are focused on the delinquent homeowners who are apparently getting off "scott free" in the mortgage foreclosure mess, the real crux of the matter is that it appears that the banks that sponsored the mortgage securitizations engaged in outright fraud, often "selling" into securitization vehicles loans that they did not own.

You can bet that investors that have been burned in this particular scheme are going to be suing these banks so regardless of whether a foreclosure becomes enforceable, the basic securitizations themselves will come into question.  This is the real risk to the banks.

I hope this bankrupts each and every one of them as to hope for legislative action to break them up is way too much to hope for.

thanks again for a great post.

Fri, 10/08/2010 - 19:31 | 636885 gillimus
gillimus's picture

You can bet that investors that have been burned in this particular scheme are going to be suing these banks so regardless of whether a foreclosure becomes enforceable, the basic securitizations themselves will come into question. 


That's the key, Mitchman.  If you or I are injured by fraud or deceit it doesn't matter much, but when Jaime Dimon is buttfucked by his Golbal Superpals there will be hell to pay.

Fri, 10/08/2010 - 17:47 | 636651 metastar
metastar's picture


Fri, 10/08/2010 - 17:42 | 636636 Azannoth
Azannoth's picture

If you repealed the FED would you at the same time be repealing all the debt the FED has ? hmmmm sounds lika a plan

Fri, 10/08/2010 - 17:56 | 636621 Ieetseelmeet
Ieetseelmeet's picture

The quick and expedient answer is


Eminent Domain


America is a land of communities and they must find that strength again.

Let the local community government take this action.

The compensation to the homeowner is forgiveness of the value of the back taxes.

The previous owner has a clear credit rating. Not his fault the town took the property.

Having done this, the house is taken off the foreclosure playing field and out of the CDO tranche.

The house is then sold at the current fair market value by the municipality with no problems with title insurance.

The mortgage is taken by the local small town bank.

All this is done at the community level.


Eminent Domain

The fish is snatched by a flock of local starlings.


Fri, 10/08/2010 - 18:41 | 636789 RockyRacoon
RockyRacoon's picture

Wonderful thought, but let the federal crooks cede authority?  Let local financial institutions show the big banks how the job is done?  Not likely.  I do like your panoramic view, however.

Fri, 10/08/2010 - 17:26 | 636597 Djirk
Djirk's picture

Who is the biggest bank? The FED and their charter seems to be "make" money.

The only way out is to start a liquidation process like they had in the S&L crisis.

But it will be politically easier to inflate away the debts, the social security and medicaid liabilities.

How about creating a supply shock if you want to keep your hands clean?


Fri, 10/08/2010 - 18:28 | 636761 Bob
Bob's picture

I always wonder just how much keeping the Fed has actually cost us--over its lifetime.  Hell, even over just the past year.  Something tells me that all of the "entitlement" programs that taxpayers have paid for over the last 75 years--and are now being told cannot be afforded--would be a drop in the bucket compared to what the leeches at the Fed have cost the nation. 

Fri, 10/08/2010 - 22:19 | 637137 Bringin It
Bringin It's picture

Re. Leeches at the Fed - You're 100% right Bob.  Funny you got junked.  Fed trolls are everywhere.

Fri, 10/08/2010 - 23:02 | 637205 Bob
Bob's picture

Hard to say--there are a whole lotta folks who just deeply despise so-called "entitlements."  And then there's the "who have you offended" factor to consider. 

Fortunately, I don't do ZH for love or money. 

Fri, 10/08/2010 - 16:56 | 636592 tony bonn
tony bonn's picture

"In other words: Unless the mega-banks are broken up and reined in, we're in quite a pickle."

absolutely correct....they must be destroyed and the evil squids running them thrown into jail and shot.

Fri, 10/08/2010 - 20:46 | 636996 Mad Mad Woman
Mad Mad Woman's picture

Don't throw them into jail, just shoot them. That will save US a lot of money.

Fri, 10/08/2010 - 16:54 | 636580 RecoveringDebtJunkie
RecoveringDebtJunkie's picture

I like the drug dealer (banks) - addict (us) analogy better. We're not helpless little fish, no matter how much easier that is to believe. We need to voluntarily withdraw support from these destructive institutions, because our government is not going to do it for us... in fact they have become one of the most destructive.

Our local and state governments, on the other hand, may still be at operating at a level at which they could do something useful for their people. Unlikely, but possible.

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