Government Violates The Citizens (Again) - kdenninger

Government Violates The Citizens (Again)

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This is going to be an ongoing series, I suspect - tracking government abuse of the citizenry via debt-shifting.
What am I referring to?  Simple: Back-door bailouts of banks and industry (notably the auto industry) through farcical programs that con the citizens of the nation to take on unsustainable debt, thereby transferring what should be a corporate or bank failure to into a whole bunch of personal bankruptcies.
There are two programs in particular that exemplify this attempt; "cash for clunkers" and the various machinations in the housing space, including the insanely loose FHA credit procedures.
Cash for Clunkers violated two basic premises: It destroyed perfectly good capital assets (older cars that were in good running condition; indeed, it required 12 months of continual insurance coverage and registration - that is, proof of being in good running order for the past year - to qualify!) and replaced them with a vehicle that had a presumed debt load on it.
Now we find out that indeed (as I have long suspected) the government's insane FHA approvals of patently unsustainable loans was an intentional act:

Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, said in an interview that the defaults were, in essence, worth it.
“I don’t think it’s a bad thing that the bad loans occurred,” he said. “It was an effort to keep prices from falling too fast. That’s a policy.”

Got that?  It's a policy to intentionally bankrupt people so as to allow banks who have made bad mortgages a chance to avoid their own bankruptcy.

That is, those who made bad decisions as lenders, you get a pass.  Your pain is passed to consumers by intentionally lowering standards for lending beyond the point of safety, on purpose, knowing full well that this will generate a significant number defaults.

This in turn prevents prices from contracting to where you could afford the house, that is, it causes you to overpay.  This in turn causes you to go bankrupt instead of the bank that made the bad loan to the previous owner.  In addition by preventing the house from contracting in price to it's actual sound value it stops other banks who made bad loans from going bust as well.

You, on the other hand, will get foreclosed upon and possibly forced into bankruptcy, all so that the banks who did evil and unsupportable things don't have to take their medicine.

This is "a policy" according to Barney Frank.  It is, in fact, THE OFFICIAL POLICY OF THE US FEDERAL GOVERNMENT.

Feeling sore yet?

Believe me, they're just getting started.

The Dollar's depreciation is intentional.  If economic activity picks up (it hasn't yet, despite what you're told) this will instantaneously echo into oil prices.  How badly?  The last time the dollar was here oil was at $150 and gas was aiming for $5/gallon.  We're going back there - or higher.  There are people who claim the federal government's official desire is to see the dollar index (/DX) at forty or lower, a devaluation of another fifty percent, and a 2/3rds devaluation from just a few years ago.

This of course will triple the cost of imports from that point of a few years ago.  It will boost the relative wages of those in other nations by 300%, while cutting your relative wages by 2/3rds, again, all referenced to just a few years back.

Can you survive this without becoming destitute?

One in six American households currently receive food stamps and according to a report by Deutche Bank 40% of homes will be under water on their mortgage by 2011.  The government added $1.7 trillion to the public debt last fiscal year (ending September 30th), taking in $2.1 trillion in taxes and fees.  The claim is made that the "budget" was $3.1 trillion; in reality, $3.8 trillion was spent, an "overage" of $700 billion or 22%.  (As an aside the CBO claims the "deficit" was significantly smaller but they ignore the off-balance-sheet games; tax receipts and the addition of debt are hard numbers, both published, and expose the chicanery.  Performed by a private business this would be a felony violation of securities laws and result in jail time; our government lies like this daily.)

People claim that "inflation" of the money supply allows debt to be paid off easier but this is only true if your wages remain constant in inflation-adjusted terms while prices are stable, or wages keep up with prices.  The problem is that they haven't since the turn of the century.  Per-capita income has risen only 3.2% (in total, not annually!) since 2000 in inflation-adjusted terms, and this presumes you believe government inflation numbers averaging about 2.5% annually.  How does that square with your grocery bill?  Your electric bill?  The cost of medical insurance and care, college tuition, homeowners insurance or a trip to the dentist?

Remember too that these "per capita income numbers" include those who made billions bilking Americans out of their homes during the bubble years.  Subtract those "outliers" back out and middle class America really got rooked at paycheck time.

If you think this is all the punishment you're due, you're deluded.  Taxes are going to go up.  Way up.  They have to, in order to close the gap between income and outgo for the government.  Guess who will get that bill?  The mirror is right over on the bathroom wall if you're having trouble identifying the sucker.....  This of course will further squeeze that so-called "income" you once had - if you keep your job.

Just remember folks, as you are saying "please sir, would you do that to me again" that you've asked for this.  You bought into the "ownership society" and demanded that everyone be able to have a house - whether they could afford one or not.  This in turn drove up the price (supply and demand 'yanno) until people couldn't afford to pay, at which point the banks simply stopped caring about anything resembling sustainable lending.

When that blew up instead of forcing the people who made bad bets (especially those fat cat bankers) to take their medicine the government decided instead to screw you again, this time with a formal policy of allowing bad loans to be intentionally made by the FHA.  So says Barney Frank.

The surprise here is that given the rank admissions coming from both Fraud Street and our Congressfolk we have yet to see any sort of real protest.

Why not?

With over 20 million lost jobs in the last decade and 8.2 million since 2007 you'd think those folks would band together and descend on Washington DC to demand that the idiocy stop, refusing to leave until Congress resigns en-masse.  Have they?  Nope.  Why not?  Good question - are we really that dumb?  Does America truthfully not realize what is being done to them? 

I guess not.

You're being shorn and then violated America - repeatedly.

Yet America's slumber continues, as does my amazement.