Friday’s announcement of more intervention in the housing mortgage market will result in a deeper, longer, and more painful delay in the inevitable decline in housing prices that are necessary to clear the market. According to the Obama administration, the “broad new initiatives” will help troubled homeowners to refinance their existing mortgages with more favorable affordable ones provided directly by the government. Part of the new program is “meant to temporarily reduce the payments of [those] borrowers who are unemployed [but are] seeking a job.” In addition, the enhancements include inducements to “encourage lenders to write down the value of loans [already] held by borrowers in modification programs.”
The Federal Reserve lost an appeal March 19 in a bid to keep hidden the details of its estimated $2 trillion in bailouts to bankers around the world, prompting celebration among anti-Fed campaigners and promises of a continued fight from the banking cartel.
The March 15 Associated Press story was blunt: "For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year. Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more."
The culprits blamed for the failure of Lehman Brothers in September of 2008 included the company’s top executives, their accountants, their highly-leveraged loans that had started going bad, their success at hiding those bad loans by cooking the books, and their lenders demanding more and better collateral, according to Anton Valukas in his 2,200 page report released Thursday.
On Wednesday, February 10, Federal Reserve Chairman Ben Bernanke expressed confidence that every cent of the Federal Reserve’s exposure to insurance giant AIG would be repaid. Regarding a combined $116 billion dollars that the Fed provided in emergency loans to shore up AIG and back the purchase of Bear Stearns — an amount that totals about one-fifth of the Fed’s entire balance sheet, Bernanke said that the Fed “expects these exposures to decline gradually over time. The [Federal Reserve] Board continues to anticipate that the Federal Reserve will ultimately incur no loss on these loans as well.”
There are further signs that Barrack Obama’s jobless “recovery” is, in fact, no recovery at all. The latest indication of the fundamental unsoundness of the American economy is found in statistics from the Commerce Department. According to that department, the sale of new homes plummeted in January to the lowest rate recorded in fifty years. As The Washington Post reports:
More than a year has elapsed since the U.S. economy went into a tailspin with the panic that shook the world’s financial markets in the fall of 2008. Two presidential administrations have attempted to solve the crisis by political means, using taxpayer dollars to bail out certain corporations deemed too large or too critical to be allowed to fail.
Sam Dillon of the New York Times reports that the depletion of federal stimulus money will result in schools approaching "a funding cliff." Dillon claims that the federal stimulus has managed to stave off drastic cuts at public schools in most parts of the nation thus far, but that the period of sustenance will soon end.
The Obama administration is considering asking Congress to impose higher taxes on banks as a way of cutting the deficit. Proposals that have been mentioned but rejected include a tax on financial trades and a special tax on bonuses paid to bank executives. Proposals now being actively considered by the administration include taxes based upon the size of a financial institution, a tax on the riskiness of the financial institution's loans, or a tax on the bank's profits.
Last summer, a federal judge ruled that the Federal Reserve must disclose the identities of firms that received any portions of the over-$2 trillion in bailout money back in 2008. This week, the Fed is preparing to go to court to protect its secrets.