Posted on 02/26/2007 9:53:40 AM PST by RobRoy
We the people once owned our democracy. We elected "representatives" to run it for US. Have you noticed? Somewhere along the way we lost our democracy.
It was foreclosed by wealthy and power elites that corrupted our "representatives" who literally sold us out. Our homeland was foreclosed right in plain sight. Sure, we citizens still reside in the USA, but we no longer own our democracy. We pay rent through our taxes. But we no longer have any equity. Our democracy is owned by the rich, and their partner foreign elites and governments, which is why in a strict sense it no longer is a democracy, but rather a plutocracy.
Modern day aristocrats – an apt terms considering the many political dynasties in our ruling class - maintain the charade that America is still a democracy by letting us vote. They also give us many freedoms to distract us from our dire political conditions. They're smart, so they limit our choices to the main parties that constitute the two-party duopoly. Even smarter, they convert consumer spending (that they spur) into economic inequality, making them, the rich, even richer and everyone else, all of us, poorer.
Donald Trump says we hardly have any middle class left. He ought to know. Lou Dobbs says there is a war on the middle class. He does not say what would only depress his audience, even more. We the people have already lost the war. We have a large Upper Class, for whom prosperity is real, and an expanding Lower Class, for whom economic slavery based on compulsive borrowing, debt and spending is all too real.
How We Lost Democracy Ownership
People born into American citizenship or sworn into it have inherited a democracy debt – a kind of political mortgage – that requires payment, not in dollars, but in engaged and responsible citizenship, ensuring that those elected to manage the government do so in the public interest. People like Thomas Jefferson told us about the burden placed on Americans. But paying our democracy mortgage has declined over the past fifty years.
I postulate that the decline started after World War II with the advent of urban sprawl, speeding up with accelerating suburban sprawl. Now, political divisiveness coexists with sprawl on steroids, with gated non-communities of McMansions for the Upper Class. As to the politics of sprawl, Americans traded democracy ownership for home ownership. They stopped paying for democracy through engaged citizenship and started paying for compulsive consumption. True citizenship was replaced by social isolation and loss of social capital as people cocooned themselves in their private space where they could gratify themselves with more and bigger possessions.
With sprawl and all the enabling automobile addiction, roads and chain stores, the power elites knew exactly what they were doing. They made Americans time poor and too tired to be politically active. Through distraction based on borrowing and spending they suckered Americans into defaulting on their democracy debt. Democracy was foreclosed, without any notice letter being sent to us. Ownership was transferred to the rich and powerful elites sitting atop the corporate state and, not coincidentally, making tons of money from land development and home building. Wal-Mart was elected corporate wage-killer-in-chief.
Delusional Ownership
Which brings us to our current new twist on Foreclosure USA. Millions of Americans have experienced, or will soon experience, foreclosure on what once was hyped as the cornerstone of the ownership society – they are losing their homes. The bursting of the housing bubble is often talked about in terms of slower home sales and lower prices. The latest data: In September, the number of existing single-family homes sold dropped 14.2 percent, compared to September 2005, and the median price dropped by $5,000.
But something much worse is happening and accelerating in virtually every community in all the states. In a delusional democracy with delusional prosperity we now are witnessing the proof that the ownership society is also delusional. Apparently no one has told George W. Bush.
Up to 4 percent of America's mortgaged homeowners might lose their homes to foreclosure in coming months, one of the nation's largest lenders predicted recently, as those homeowners find themselves trapped by heavy debt and the housing slump. That's four times worse than the historical average of 1 in 100 mortgaged homeowners who fail to keep up payments. First American Loan Performance, a mortgage-data company based in San Francisco, says overall the national foreclosure rate has climbed 27% from a year ago with an estimated $110 billion worth of homes expected to go into foreclosure. Rick Sharga, a vice-president at RealtyTrac, said recently "Over a trillion dollars is going to readjust in the next 15 months. We had almost 850,000 foreclosures last year and we are at 913,000 through September." He predicted that national foreclosures could hit 1.2 million to 1.3 million by the end of this year. Guess George W. Bush has not heard about this, only about great economic growth.
You probably have heard about the incredible amount of sprawl housing growth around Las Vegas. But not this: The number of foreclosures in Nevada has more than tripled in the past year and jumped 83 percent since May. Nevada recorded 2,016 foreclosures in August. That was 83 percent more than in May and 255 percent more than in August 2005. Foreclosures are rising at a faster rate in Nevada than the rest of the country, where they are up 24 percent since May. In California, foreclosures increased 43 percent since May.
And what about the ever-sprawling Sunshine State? Florida has one new foreclosure filing for every 254 households, more than four times the national average. Foreclosure activity in the third quarter of 2006 rose by 14 percent compared to the second quarter of the year. It was 39 percent higher than the same period last year.
How about the Northeast? In Massachusetts, 1,812 new foreclosures were initiated in August, which is 72 percent more foreclosures than August of last year, and 266 percent more than in August 2004. The July to August increase was 34 percent, making it the largest month-to-month increase in the past three years. When comparing foreclosures during the year ending Aug. 31 (15,309), to the previous year (10,517), foreclosures increased statewide by nearly 46 percent.
Nationally, in August, 115,292 new properties were listed on the database of online foreclosure tracker RealtyTrac, a 24 percent increase over the level in July. More significantly, RealtyTrac currently lists 650,000 properties nationwide in foreclosure or pre-foreclosure, up from 75,600 just one year earlier, when the Gulf Coast was devastated by Hurricane Katrina. The volume of bank seizures is immense. Foreclosure.com, another online tracker of distressed properties, currently lists more than 1.27 million properties in some stage of foreclosure, bankruptcy, or bank auction. Approximately 5,000 properties are added to the listings each day.
Getting behind in mortgage payments is one thing, called default. It's estimated that nearly 20 percent of homeowners in default earlier in the year lost their homes to foreclosure in the third quarter. That's a more than a three-fold increase over last year, when the default-to-foreclosure rate was only 6%. Meaning: People are having a harder time coming up with cash to cover mortgage debt. Guess Bush has not heard about this.
Are things going to get worse? You better believe it. Industry forecasters recently estimated that more than $200 billion worth of adjustable rate mortgages will "reset" at higher rates in 2006 and more than $1 trillion will reset in 2007. This situation, compounded by the expected slowing of the economy and the down housing market, which includes a growing inventory of unsold homes, will almost certainly push more homeowners into the foreclosure process.
Despite a lot of talk about the mortgage issue and warnings, Americans are still diving in. Are they falling for the economic hype coming out of the White House? Incredibly, 39 percent of new mortgages in the first half of this year were non-traditional, high risk mortgages compared to an average 2 percent over the last decade.
Consumer debt burden is ballooning. Statistics from the Bureau of Economic Analysis show that the personal savings rate has been running in the red for 16 months. Additionally, the Federal Reserve recently found that consumer debt has outpaced, by 18.7 percent, the amount of income left after the payment of bills each month, meaning that for millions of families the cost of living is substantially higher than their monthly incomes can accommodate. Guess Bush has not heard about this.
An enormous portion of the total personal debt is mortgage debt. Since 2000, mortgage debt in America has doubled, approaching $9 trillion. This year, $400 billion of this debt is coming due in the form of mortgage readjustments. Research firm LoanPerformance forecasts another $1 trillion in mortgage debt will come due next year as the rates on millions more loans reset, sending individual monthly mortgage payments hundreds of dollars higher, or even worse.
In one, not unusual, case in the Washington, D.C. area, a family started with a "teaser rate," just $1,700 a month. They thought it was fixed, but it wasn't. Rising interest rates and deferred interest have now ballooned that payment to $3,700 a month. They can't pay it, and they're not alone. They will lose their home. Credit counselors say they're getting 10 times the concerned calls they used to.
How has this come about? Clever elites running and ruing our country discovered all kinds of ingenious ways to sell mortgages to Americans still believing in the American dream. They had help from the Federal Reserve. So called unconventional or exotic mortgages were crafted to lure people in and make billions of dollars for the financial sector. The whole trick was to get home buyers to pay as little as possible initially. No cash down, no payments toward the principal and low adjustable interest rates were the main ways to pump up the housing market (the bubble) and, therefore, the whole economy. Yet another gambit was to give mortgages to people that really could not afford them, making them pay higher interest. These "sub-prime" mortgages create a debt to income ratio that is out of whack, which means mortgage payments that take too big a chunk of income. When interest rates rise and other costs of living creep up, people quickly sink and drown in debt.
The maximum percentage for household debt which would include a mortgage, credit cards and car payments is supposed to be around 36%. But now many homeowners find themselves paying most of their income – more than 50 percent – to their mortgage, especially after those monthly payments increase sharply. And they are going up because of rising interest rates, which is happening as wages are at best stagnant and other costs of living are rising. Once, homeowners in a hot housing market could refinance and take money out. In fact, from 2001 to 2005, they took out $500 billion in cash from their home ATMs. This propped up consumer spending as wage incomes stagnated, keeping the economy looking good. Now, with home values declining, they can find themselves forced to pay a lot more or lose their home.
Look at the larger picture. In 1980 household debt, including mortgages, car loans and other borrowing, was $1.4 trillion. Guess what it was in 2005? It had skyrocketed some 745 percent to $11.8 trillion. In 1980 credit card debt totaled $69 billion. Guess what it was in 2005? It had mushroomed to an amazing $1.8 trillion - a 2,500 percent increase! In 1980 credit card debt was just 5 percent of household debt; by 2005 it had jumped to 15 percent. This has happened when people also got suckered into risky mortgages.
Maintaining consumer spending has been the chief economic goal of the plutocracy. And to keep it growing it required Americans to be convinced that they should borrow more and go into greater debt. What kind of political leaders would want to do this to their citizens? The worst kind: Democraps and Republicrooks. Corrupt politicians care more about making corporations profitable and the rich richer. Economic inequality is like a cancer. They are willing to destroy the middle class on behalf of elites and the Upper Class.
Last Episode
What is the next installment in Foreclosure USA? Our enormous national debt owned in large measure by foreign interests can foreclose whenever they wish. Just as we the people lost our sovereign control of our nation, so too will our corrupt government lose sovereign control. With globalization, so heralded and hyped by New York Times elitist and plutocrat Tom Friedman, moving forward, American sovereignty will surely be foreclosed. Thus ending the Foreclosure USA saga.
What can we do to stop Foreclosure USA? Will electing Democraps do it? I doubt it. We the people must take back our ownership of our democracy. With too little political choice, our votes will not do the job. Our money is more powerful. We must politicize consumer spending. We must have some radical, dissent-driven leadership from true progressives to send signals to the tens of millions of disgruntled Americans to cut their discretionary spending to achieve specific' political reforms.
Money and greed have ruined our country. Money and citizen re-engagement can save it.
Stroke of the pen....and it will all be 'fixed'.
Like the Tom Clancy novel when foreign elements manipulated the stock market...the 'President' simply took a mulligan and pretended the sell off wasn't valid.
National emergency...postpone the due dates and/or terms of the risky loans.
>>Clearly, she is an idiot as far as investing goes. I never lost more than 8%.<<
Bully for you. Your story is not typical.
"REAL" investors also made money during the crash of '29, but their claims of everyone else being an idiot does not refute what happened.
Yep. And the "lower class" in the US today enjoys more material prosperity than any population anywhere in the history of civilization.
Impossible to take anything he writes seriously. Here, for example, is just a sample of where Joel Hirschhorn is coming from .
This whole silly screed is just warmed-over psuedo-populist rhetoric in the service of classic class warfare, straight out of the latest edition of the Marxist playbook: 'Leninism For Dummies'.
Using percentages from historical highs is a nice way to augment any argument; but the author knows that, or he/she/it being disingenuous?
Seriously, if her portfolio is that low now after the intervening years, she's been visiting her brokerage house to set fire to the remaining money. :(
Is losing 83% of your money typical for investors in the stock market? I hope not! Judging by the several freepmails I read, I did much more poorly than some, who never lost more than about 2-3%.
I money-back guarantee my story is MUCH closer to typical than your stupid friend who lost 83% of her principle. Holy crap, didn't she have ANY damage control measures in place? Someone with close to a mil ought be a little more intelligent than that. My kids do better on investments at ten years old than this dingbat!
As much as you try to doom-and-gloom, and piss on the economy, there are a lot of us out there making nice money, and are diversified enough to survive these minor bumps in the road.
"It is a stewardship thing. It also allows me to buy a nicer bass."
There's a man with priorities. Go Warwick. ;-)
>>They ain't making any more land.<<
That's not really true. It is kinda like "is it true you stopped beating your wife?"
When land becomes actually limited, the statement you made will be germain. It isn't.
There is LOTS of land, at least in the US, Canada and Mexico, and more is being made "available" all the time. For all intents and purposes it is by no means a limited resource.
At least, not for the forseable future...
Inflation and population increase combined should have led to a roughly 284% increase in the 1980 to 2006 timeframe.
I lost a small percentage for 2001-2002, but it was upsetting enough to think that might be a long trend! However, I hung in and invested more aggressively in the down market. That's hard for some people to do, and it's easier to imagine that she stopped buying, and even removed money from the market - and so did not have the right position to make money for the following years, as so many of us have.
Refresh my memory. When did the White House tell anyone to do something as stupid as borrowing more than he can repay.
>>Here's some shocking news..it's the same way it's always been and it's the worst system imaginable except for all the others.<<
I agree. But sometimes it is painful. It is about to be.
I took out a minimal 140K mortgage (paymets are about 15% of my income (before taxes, and benefits)..
Can you imagine losing $700,000 and not doing a damn thing about it but whine? How the heck does anyone lose over 80% of their principle and not do anything about it?
Hitting down markets is scary, but can be very lucrative and fun on the upside.
Diversification is the key.
What are you saying ? That owning rowhouses in the city promotes more of an understanding of private property than an acre in the suburbs ?
I'll bite - how do suburban homes differ from city homes in their private property aspects ?
Let's see - people in cities pay property taxes, wage taxes, city taxes, and usually extra sales taxes, while people in the suburbs pay property taxes, township taxes, and that's it.
I think you have your statement backwards.
>>This story has obvious flaws.
Regardless, Americans are loosing their freedom as a result of debt.
These aren't limited to those who took out risky, sub prime loans.
The average middle class professional has little time to consider the implications of local government let alone become involved. He accepts increased taxation as a means of preserving his neighborhood schools and property value. The result is expanded debt and less freedom.<<
Thank you. You pretty much summed up how I feel about this article. The warning isn't perfect (they never are), but to throw it out completely would be unwise. Very unwise.
That's not really true.
Wow, you are really a frickin wizard, aren't you?
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