-- 12 December 2007 --

IT’S YOUR TURN TO ACT.

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STOP THE SQUEEZE WEEKLY NEWSLETTER
Compiled by In Debt We Trust Director Danny Schechter, author of SQEEEZED: America As The Bubble Bursts and director of In Debt We Trust
Comments to Dissector@mediachannel.org

A week back, the historian Carolyn Baker called my new e-book SQUEEZED, which synthesizes my ongoing reporting on the financial crisis, “a diary of the coming depression.” Let’s hope not, but unexpected events, and developments in this crisis are coming so fast and furiously that only a diary can offer a chronicle. Since I also write about these developments every day in my News Dissector blog on Mediachannel.org, I try to track its trajectory as if it were a hurricane building steam in the Caribbean with every indication that it could morph into a tsunami.

WEDENSDAY, The 5th -- The newsletter gets posted on Wednesdays so let me start a week ago. That was a day of optimism. The stock market seized on a private company’s report on new jobs as if it was a sign in the sky of a turnaround. Trading shot up once again. It spoke of an ESTIMATE of 189,000 new jobs. There were reports of the sun rising and the disaster abating... One analyst did call the numbers “funky” but no one wanted to hear that. The joy in moneyville was short-lived. On Friday the Labor Department’s official report came out only showing 89,000 news jobs in November with many in retail. (It is the Christmas season) Somehow in two days, l00,000 jobs had disappeared. Oh well. Meanwhile, there were front page reports of the White House/Treasury Department’s long awaited plan to deal with the emerging foreclosure crisis due to the subprime mess.

THURSDAY, December 6th -- The day started with a report by the Mortgage Broker’s Association confirming how bad the housing crunch was becoming:

Reuters reported:

Home foreclosures and the rate of homes entering the foreclosure process rose to record highs in the third quarter, the Mortgage Bankers Association said on Thursday. Problems with payments on all loan types drove up the pace of homes entering the foreclosure process, the trade group said in its delinquency and foreclosure survey. "The effect of seizure of nonconforming securitization, broad-based house price declines, continued regional economic weakness and broad-based payment adjustments on adjustable rate mortgages were all working together in the quarter for the first time," said the MBA's chief economist Doug Duncan

Enter Treasury Secretary Paulson to the rescue. The Bush Administration announced a five year freeze on home-loan rates. It’s big news. Many of the Bushevik’s free market supporters are horrified. They are against any government meddling and warn of dire consequences.

Critics pounce all over the plan, which we learn only a day later was not written just by the Treasury Department. Actually it was the Real Estate industry that put it together. Guess Why? To protect the Real State industry, of course, first and foremost.

When you look at the details, you find that it only covers homeowners who are current in their payment, which leaves out the people who need help the most. Once again, private interests are shaping a public program, One critic on the right calls it “inherently unfair –privatizing profits and socializing debt.” The Neanderthals of the Wall Street Journal soon to be brought under new management by Rupert Murdoch started whining:

The next time we suggest that the government give advice to the private sector, tie us down until the fever passes. A couple of months ago, we endorsed the idea of mortgage service companies voluntarily negotiating with subprime borrowers and investors to avoid a wave of defaults next year. Now come the politicians to wrap their arms around the idea, and maybe give the U.S. a reputation for forcibly rewriting financial contracts. Don't cry for us, Argentina?...

On the other hand, organizations representing and advocating for the people most affected went into attack mode pointing out that it MAY help only 12% of 6.5 million subprime borrowers and victims. They have vowed to fight it.

FRIDAY. December 7th, the anniversary of the attack on Pearl Harbor, once called a “day which will live in infamy.” Last week, it was a day for a debate over another kind of infamy. The NY Times exposed the Industry’s role in the plan.

In its critique of the plan, The Center for Responsible Lending, a group that works to curb predatory lending, estimates that only 145,000 families will qualify. To my surprise, Jesse Jackson has an op-ed in the Wall Street Journal proposing a new Marshall Plan and the formation of agencies like the ones that saved the economy in the depression and/or resolved the Savings and Loan Scandal in the l980’s, from which not much seems to have been learned. This is a time, he says in reference to the Christmas Season (even the NY Stock Exchange has put up a big Christmas Tree outside its heavily guarded headquarters, for Samaritans, not Scrooges.

HOUSING EXPERTS DERIDE PLAN

Realists in the housing industry are also not happy. Noting that bringing relief to. “1.2 million people from losing their homes by freezing interest rates on subprime adjustable-rate mortgages will bring no benefit to the depreciating housing market.

"At best, it may stop some of the hemorrhaging of the housing market, but it doesn't necessarily turn things around,'' said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies in Cambridge, Massachusetts. ``The fundamental problem with housing is oversupply.''

Existing home prices may fall as much as 15 percent by 2009 from their peak last year, even if interest rates are frozen on one fifth of 2006 subprime loans resetting next year, said Mark Zandi, chief economist at Moody's Economy.com, a unit of New York-based Moody's Corp.”

That number 1.2 Million to be helped was revised sharply downward after experts studied the plan but the impression that the Government was now helping in a meaningful way was reinforced by many media outlets who went with this bogus number, like USA Today. This is the problem with superficial coverage—it’s wrong and misleading.

BUSINESSMAN SPEAKS OUT

Wrote Peter Schiff of Euro Pacific Capital on GoldSeek.com:

“Without question, the Bush administration’s mortgage rescue plan will exacerbate, not alleviate, the problems in the housing market. As the plan will sharply reduce the ability of new buyers to make purchases, it really amounts to a stay of execution and not a pardon.”

WHITE COLLAR CRIME NOT COVERED

You had to go to specialized blogs to be reminded how this all happened in the first place through extensive fraud and widespread CRIMINALITY. That was real estate expert Ed Rybczynski ‘s explosive conclusion but it was not given mainstream media attention. click here

Only by examining its causes do we surmise that mortgage fraud is properly characterized as a national epidemic, not a series of isolated incidents.

• Only by scrutinizing the motives of mortgage fraudsters do we recognize the cultural corruption of an entire industry.
• Mortgage fraud statistics correlate directly to foreclosure statistics which in turn point to a breakdown of professional protocol, and standards, in residential real estate markets.
• The disparities between mortgage fraud and predatory lending are academic at best. Unethical, often criminal, behavior demonstrated by loan originators, appraisers, real estate agents, and title professionals is the real world nexus that definitively binds mortgage fraud to predatory lending.
• Legislation and judicial interpretation are not the answers. Heightened professional standards among real estate practitioners is the crux of the solution.
• Class action litigation will change the form and function of the real estate industry in the next decade.
  
  In light of the subsequently released Bush initiative, I would add that it’s apparent that the feds don’t see housing values rebounding anytime soon. If they did, the proposal would include a recapture provision if gains were realized when the select group of properties were sold.

Beyond the blogs and the media accounts, I read some much deeper economic analysis based in part on Chaos Theory, There was this observation that was worrying, indicating that deeper economic forces are at work here. “the longer that a critical state builds up in an economy, or in other words, the more "fingers of instability" that are allowed to develop a connection to other fingers of instability, the greater the potential for a serious "avalanche."

Mmm….” A serious avalanche.” That doesn’t sound too good.

SATURDAY, December 8. I am in Chicago to see how one community most affected by this crisis is responding. I am at the headquarters of Reverend Jesse Jackson’s Rainbow Push. He is preparing to put together a coalition of organizations for a fightback with calls to “Save Our Homes; Restructuring Loans, Not Repossessing Homes. That’s his central message. Reverend Jackson has become a big supporter of our film IN DEBT WE TRUST. He plugs it on his TV and radio shows and at the Saturday Service in the former Synagogue turned non-denominational Church on Chicago’s South Side. He urges his supporters to see the film and shows clips. He urges that they set up community screenings. (See stopthesqueeze.org for ways you can help get the word out.)



CAPTION: REVEREND JACKSON WITH DANNY SCHECHTER
Photo by Adrian Burrows for Rainbow Push.

Jackson is preparing a March on Wall Street for Monday to bring the concerns of people facing or in foreclosure. He’s been reading reports coming in from around the country. Here are two examples.

North Carolina: Mortgage Plan Found Wanting: Triangle Specialists Say More Needed THE NEWS & OBSERVER | DAVID RANII

Dec. 7--The mortgage relief plan unveiled by the Bush administration doesn't go far enough to help homeowners victimized by onerous subprime mortgages, local mortgage experts say. "I think it is a positive, but very limited, first step," said Deborah Goldstein, executive vice president of the Center for Responsible Lending, a consumer advocacy group based in Durham.

Bush Mortgage Plan Won't Help S. Florida Housing Market: Many of State's Hurting Borrowers Wouldn't Qualify

SOUTH FLORIDA SUN-SENTINEL | PAUL OWERS

Dec. 7--South Florida won't get a big boost from President Bush's plan to freeze interest rates for homeowners nationwide who are bracing for sharp increases in their adjustable-rate mortgages, analysts say. What's more, Bush's proposal is focused on preventing a national foreclosure crisis and not meant to aid individual states, such as Florida and California, that are leading the housing bust after the boom of 2000-2005.

Meanwhile, volatility continued inside the financial industry. There were reports of more bank write-downs to come and speculation about bank mergers to come.

SUNDAY DECEMBER 9: Residents of the Detroit area who opened their paper were greeted with 122 pages of the 2008 Tax Foreclosure list for Wayne County. The current figure for Wayne county reports that a staggering 1/4 of homeowners are in default on their mortgage. This is worse than Katrina, a disaster in the making. Motown may soon be Notown.

MONDAY DECEMBER 10 -- THE MARCH ON WALL STREET

A stage had been quickly erected and slowly a relatively small pen filled with about 200 members of the NAACP, ACORN, The Transit Workers, SEIU and other sign carrying activists to join the rally to “save our homes.” The speakers, led by Jackson, called on Wall Street to restructure loans and not to repossess homes. They called for federal action and vowed to fight foreclosures and build a national movement.

Yes it was small, but remember that the student sit in movement that sparked the civil rights movement started when FOUR—count them, 4—students sat down at a Woolworth store in Greensboro, North Carolina. Mighty trees come from acorns like these, and there is no doubt that this issue strikes a chord among homeowners facing resets and increases thanks to predatory lenders and subprime mortgage hustlers.

It did get coverage because Jackson is a magnet to the media. Here’s how Reuters framed it and at the same time narrowed the message.

Civil rights leaders urge aid for housing crisis
NEW YORK (Reuters) - Rev. Jesse Jackson and other U.S. civil rights leaders converged on Wall Street on Monday to demand the government and the financial community step up aid to stem a home-loan foreclosure crisis.

At a rally in lower Manhattan, activists said homeowners needed more help to restructure their loans and avoid losing their houses.
“We’re standing to stop an economic tsunami,” Jackson told a crowd of more than 200 people. “Our government has an obligation, not only to borrowers but to the economy itself.”

Here’s what it looked like: I was invited to speak too:

PHOTOS BY HUGH CHATFIELD

There was also a report that the much vaunted SUPERFUND put together by the banks bail out distressed mortgage investment schemes was being cut back even before it was launched. Oops, that didn’t work either.

TUESDAY DECEMBER 11: WILL THE FED CUT THE INTEREST RATE AGAIN? WHAT’S NEXT?

The Fed was the big news again on Tuesday. The big debate –would the Central Bank cut rates again and by how much? And can a cut solve the problem? The crisis has only intensified since the Fed first acted by injecting billions into the financial system and then cutting rates twice. Investors want another cut badly but in order to make more money. What will these mean for the victims of subprime loans?

Those deeper questions remain to be answered after the Fed did act. It cut the rate. And, interestingly the market was not happy. They didn’t cut enough. Here’s CNN’s report:

NEW YORK (CNNMoney.com) -- The Federal Reserve lowered an important short-term rate by a quarter of a percentage point Tuesday, the latest in a series of rate cuts that the central bank hopes will stimulate an economy some fear is on the brink of a recession.

But stocks plunged following the Fed's announcement as Wall Street was disappointed the Fed did not act more aggressively. The Dow dropped nearly 300 points, or 2.1 percent, while the S&P and Nasdaq each fell about 2.5 percent.

The Fed can’t seem to win. They are attacked for whatever they do" Says the Dr. Housing Bubble Blog.

“As a society we have not come to terms that without credit, we have a very hard time functioning. That is why even the mere hint of a rate cut makes the financial markets slap happy because it postpones the inevitable for one more day. But is this really a healthy long term approach?”

Ml-Implode now reports that 200 mortgage lenders have imploded and are out of business, and that CitiBank is dumping SIVs.

Aaron Krowne of Ml-implode.com told me before the Fed acted on a rate cut, that a cut will “make matters worse.” He says that like in Japan we are facing what may be a ten to fifteen year downturn. BBC: “Investors expected the global credit squeeze to continue well into 2008. The Australian: “An unwelcome second wave of the global liquidity crisis had started washing over financial markets in the second week of November, again blowing out credit spreads.”

So say hello to a recession. The question: Will it devolve into a D—I can’t even say it, but you know what I mean. Read this for example. It’s scary.

MORTGAGE MARKET FALLS OFF THE RAILS, ECONOMY TO FOLLOW

What a week! Tune in next week for more.

REMEMBER: IN DEBT WE TRUST MAKES A GREAT HOLIDAY GIFT. HERE'S HOW TO ORDER…..

NEW BOOK WORTH READING: A HOUSE OF CARDS: From Fantasy Finance to Global Crash by Gerry Gold and Paul Feldman. Published in England, this small book argues that the amount of debt now in the financial system threatens its survival. Available through the excellent website; www.aworldtowin.net.

OTHER READINGS ON GREED.

FINAL QUOTE: Catherine Austin Fitts (on Carolybaker.net)

“There is a fundamental difference between financial fraud and warfare implemented by financial means – a financial coup d’etat, if you will. For citizens and investors trying to navigate current events and markets, it is well worth pausing to gain perspective on current events and contemplate which type of event we are experiencing.”

* * *

ALSO NEW: THE IN DEBT WE TRUST FAMILY FINANCIAL SECURITY VIDEO FEATURING FINANCIAL ADVISOR GARY KORNEGAY.  YOU CAN ORDER IT HERE.

WE NEED YOU!

We can only continue this work of informing you about the crisis with the news we need to know with your support. Tax Deductible donations to the Financial Awareness Project at the Global Center are urgently needed. The Global Center is at 575 8th Avenue #2200, New York, N.Y. 10018

Comments to Dissector@mediachannel.org

Danny Schechter
Editor Mediachannel.org
Director IN DEBT WE TRUST
InDebtWeTrust.com
212 246-0202x3006

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Here’s something special for StopTheSqueeze.org subscribers: a copy of the timely new 180-page e-book by Danny Schechter, the News Dissector …

Squeezed: America As The Bubble Bursts

Free with a donation of $25 or more to Globalvision

Here’s how Danny Schechter describes his latest work:

‘This instant internet E-Book, published by ColdType.net in Canada in a first edition in the Adobe PDF format, was inspired by the tradition of American pamphleteering exemplified by the work of the American revolutionary Tom Paine (who, of course, has no responsibility for this effort) and the Soviet-era samizdat publishers forced to work underground.

‘In our culture, we do have many publishers of small and large presses but as someone who has had eight books published that way, I know how long it takes to go from pitch or proposal to book in hand. And then the real battle begins for attention and distribution in an environment dominated by big names and bigger budgets. I don’t want to get into how many books reflecting years of work languish because of poor marketing and promotion.

Often, issue-oriented books appear well after the fact, not when they can best stimulate or contribute to an ongoing debate. Publishing this way is more immediate, accessible and timely. Squeezed primarily chronicles events over six months in 2007 and the explosion/implosion of an economic crisis that had been building for many years. Happily, it can be available in this same year just in time for the Christmas shopping season which the prognosticators already fear will be a disaster.

‘It is the work of a journalist who often finds himself ‘ahead of the curve.’ My book Embedded: Weapons of Mass Deception on the media war in Iraq was published by ColdType.net this way in the early summer of 2003 in a stunning climate of patriotically correct denial. I can only hope that this one has more impact if only because of the way so many institutions we trusted are loosing that trust so quickly. And also, lest I remind you, how this affects our wallets and financial survival.

‘I am sure we will soon be deluged with barrels of more books on the issues I treat, written by authors far more expert than I. Journalism has been called the ‘first draft of history’ but this is a history we can, hopefully, still influence if we wake up and have the courage to proclaim a state of economic emergency to do what must be done. For starters, we need to arm ourselves with information (or harm ourselves) and then drive the money changers from our temples.’

SEND A TAX-DEDUCTIBLE CONTRIBUTION TO THE FINANCIAL AWARENESS PROJECT AT THE GLOBAL CENTER (575 8th Avenue #2200 NY NY 10018. We will tell you where to download the book)

* * *

LETTERS

Diana asks: I have a $10,000 debt to Sears Master Card (Citi Bank) that I closed in August, because I interest was so high. I thought that would at least stop the interest. The amount of the debt has increased to over $11,000. They have been calling, but I haven\'t responded because I don’t have the money. What do I do?

Taylor writes: I'm in the process of paying off credit card debt, but it's a slow process and those not being paid are going to arbitration, one already has. I've explained the situation and my credit report shows they're being satisfied, so I'm still paying as much as possible to get them paid down, but I wonder if bankruptcy would have been a better solution? It's very frustrating.

Ray writes: “I am a parent of three college students and am living the college student loan nightmare as we speak. Where can I write to express my concerns on this??? As you indicated in one of your articles on this topic, we are mortgaging our children’s futures for the profits of large financial institutions. When these loans start coming due and defaulting, this has the makings of another national crisis. It's hard to say who's most at risk here..the students or the co-signers...although at least we can get off the hook at some point...or so I am told.”

We are going to try to find an expert to respond.

* * *

SUGGESTIONS FROM STEVE WILLIAMS ON FINANCIAL HEALTH

Five Key Steps to Regain Your Financial Health:

1. Assess your situation Make an honest assessment of your current finances. Determine how much money you’re forking out each month. Don’t forget to include expenses such as medications, school lunches and dry cleaning.

2. Decide where you want to be financially Setting goals will help you focus. Decide what expenses you can realistically cut (daily mocha lattes, take out dinners, etc) to help create your action plan or roadmap for reaching your goal.

3. Pay yourself first If you have direct deposit, set aside a certain percentage from each check that will be funneled directly to a savings account. If you don’t have the money in your hands first, you won’t miss it so much. You must be diligent about allowing your savings to grow.

4. Explore your re-financing options If you’re house poor, re-financing a problematic loan could help ease your financial pain. Check out the government’s FHASecure loan program and other re-fi programs for homeowners who’ve been sucker-punched by ‘creative’ financing that’s taken an ugly turn. Make sure you truly understand the terms of ANY loan you sign.

5. Learn to manage the money you have now Money management is the most critical factor in building wealth; learn to manage the money you have now regardless of the amount

NEW CLAIM: A senior banker in the UK said last week his organization reckoned that of the $1 trillion sub-prime debt about $400bn would have to be written off, DS: THAT MAY BE LOW!