Family Finances - We are Broke!

Scary, isn't it? And just think, unlike the Feds, we can't break out the currency copy machine.

I wonder what they'll do, when that little contraption gets taken away.

Then imagine that your average citizen is behind on his own home payment, car payment and credit card payments. He is going to the bank and withdrawing what savings he has to buy fuel and food. His house is worth less than his mortgage. He no longer works any overtime. His wife lost her job and his employer is laying off people. This citizen is not going to buy a car or anything he does not absolutely need, but as stated in another thread here, they are stocking up on food.

Your comments apply to just about everyone except government employees, particularly members of the SEIU and the Teacher's Union.

These factors are placing huge restrictions on financial institutions' abilities to lend. We have reached the point that the private federal reserve has told their favorite banks to lend to home buyers anyway. That means that local banks are printing money. When they create the check presented to the home seller they are creating money out of nothing. The home seller can cash that check at his own bank. His bank returns the demand to the issuing bank. The issuing bank only has the buyer's signature on the mortgage to justify the funds.

The issuing bank bundles 100 mortgages into a package and sells them on the "secondary market". People called underwriters claim that these loans are "Class A". Large international banks buy these bundles. They sell part of the proceeds expected to be derived from these mortgages to other banks and investors. These "derivatives" then become swapped around in the financial industry as collateral.

Surprise, surprise! Some homeowners fail to make their payments. A rather famous holder of one of these derivatives put in a foreclosure claim for a home in Maine. The Maine judge said, "You show me where you hold a mortgage on that property and we'll talk." The European bank had no mortgage, just a speculative contract on part of the potential payment. That courageous judge saved the Maine homeowner and triggered the worldwide derivative crisis. The system is broken and the world is coming to realize it.

The issuing bank only has the buyer's signature on the mortgage to justify the funds.

Not quite true, Roger. The bank (or eventual noteholder) has the value of the collateral, in this case, real estate. And that, too is part of the problem. When a bank forecloses, it costs that bank money to go through the foreclosure process, then still more money to maintain the property until it is sold, and finally more money to sell it. All of this further weakens the bank's financial position, which in most cases for small banks, is fairly precarious to begin with.

A friend has the heartbreak of psoriasis's is that the fault of public employees also ???

It could be Bruce, especially if your friend is falling behind but still has to scrape enough to pay for the union bennies via taxes. Stress is a funny thing when it comes to illness. BUt hopefully with the State now in good hands his stress may lessen as will future union benefits, it was some sweet while it lasted.

I know several people who are out of a job directly because the state didn't pay the medical providers and instead paid the public employees to stay home whenever it snowed. Not sure if any of them have psoriasis or not.

I wonder if the state will waste another million by paying the drones to stay home tomorrow so they can all head to the mall instead of working. I guess we'll see if there's really a new sheriff in town or if the new boss is the same as the old boss.

Well we wouldn't want them to have to drive their Porsches in the snow, plus it will give them time to plan their vacation to Bermuda or phone up their contractor who is putting in a guest house at their compound on Marthas Vineyard.

"When people lose everything and have nothing else to lose, they lose it"

Gerald Celente

"When people lose everything and have nothing else to lose, they lose it"

So when will they "lose it"? I've seen no unrest over the seizure of millions of homes. Mobs impeding foreclosure happened during the Depression - have modern Americans become totally emasculated sheep?

Improvement cannot begin until there is real unrest. So far all we've seen in the form of disruptive behavior are the government employee "haves" protesting in order to secure a larger share of the sheep's fodder.