U.S. Economic/Financial News
Rep. Obey: Bush Is Like Hoover
Dec. 22 (EIRNS)Panic spread last week with Bush's announcement of an auto industry loan package of $13.5 billion, that is dead on arrival. Soon after, Treasury Secretary Henry Paulson demanded that Congress turn over the next $350 billion of the Oct. 1 bailout swindle. Then, under the threat that Congress was going to block the bailout, as the House of Representatives did on Sept. 29, Rep. Barney "Bailout" Frank came up with new "CYA" legislation that would give Paulson his $350 billion, with a few "conditions" on how Treasury must use the money to bail out mortgagesanother useless band-aid, like the Frank-Dodd bill in early 2008 that promised to end the mortgage crisis with some $400 billion to Fannie Mae and Freddie Mac.
Countermoves are also underway: On Nov. 19, Sen. James Imhofe (R-Okla.) introduced S.B. 3697 to freeze the bailout. A parallel bill, H.R. 7276, was introduced by Rep. Randy Neugebauer (R-Tex.).
Lyndon LaRouche hit the hoax head-on with his press release statement Dec. 19, accusing the Bush Administration of deliberate economic sabotage to set up the incoming Obama Administration for a disaster-in-progress.
Panic over the economy was also reflected by House Appropriations Committee chairman Rep. David Obey (D-Wisc.), who will have to shepherd the job-creating "stimulus" plan that the new Administration says it is working on.
Apparently recognizing that the U.S. economy can't hold until Jan. 20, Obey said, in a Dec. 19 interview with Politico, that the transition has proven to be "a disaster for the country because Bush is sitting around like Hoover did."
"The target keeps changing, it keeps getting worse," he added. "These are calamitous events. While I think people know the economy is in trouble, I still don't think they have a full appreciation of just how close we are to falling in the pit.
"The tragedy is [that] immense damage is going to be done to the country over the next 30 to 40 days before Obama takes office, and government is sitting here in neutral trying to decide if it is going to go forward or backward....
"We should have been able to get together with Bush and pass a major package right now. Every day we don't makes this problem deeper and deeper. And the deeper it goes, the longer it is likely to last.... It is a massive, massive hole that we are about to fall into unless we do something dramatic. And the question is whether it will be met by a massive and effective package."
As Unemployment Soars, So Do Foreclosures
Dec. 15 (EIRNS)During the first half of 2008, 46% of 90-day delinquencies on conventional, conforming loans were the result of homeowners' loss of income, according to Freddie Mac. This compares with 36% in 2006. And this is only the beginning.
Should any of the big three automakers go under, with the resulting job losses ranging from 2.5 to 3.5 million, foreclosures will go off the charts. USA Today reports that unemployment is the cause of almost half of all U.S. foreclosures. Lawfully, the National Coalition for the Homeless reports that homelessness is also rising quickly.
Rick Sharga of RealtyTrac warns, "It's not going to be pretty. You're going to see whole different regions of the country suffer."
Add to this the report issued by Zillow.com today, showing that U.S. home values plunged by 9.7% in the third quarter compared to a year ago, and by 12.8% compared to the 2006 market peak. One in seven homeowners, or 14.3%, has negative equity. Zillow calculates that by the end of this year, American homeowners will collectively lose more than $2 trillion in home value.
While most of the subprime loans that will fail have already done so, according to Zillow, they say there are many more "toxic" mortgages, such as option ARMs, whose default rates haven't yet peaked. Not to mention the unemployment issue.
You'd almost think we're in a depression.
'No-Hope for Homeowners' Bill Dead on Arrival
Dec. 17 (EIRNS)The Washington Post reported on its front page today that the last Congressional dodge, the so-called Dodd-Frank bill or Hope for Homeowners legislation, passed in July, is a failure, so acknowledged by sponsor Rep. Barney "Bailout" Frank (D-Mass.) and by the Administration. Supposed to prevent 400,000 foreclosures, the program has failed to make any impression on foreclosures/repossessions. With only 100 mortgages a month having even been submitted for FHA-backed replacement loans, it is just as hopeless as the preceding state programs, bankruptcy programs, HOPE NOW Alliance programs, etc.
Housing and Urban Development (HUD) Secretary Steven Preston, whose agency officially implements Dodd-Frank, yesterday blamed Congress. Frank blames the Bush White House, rather than Credit Suisse and other banks that drafted it for him. Getting bought out of their defaulted mortgage loans by FHA guarantees at 90 cents on the dollar, wasn't enough for the banks; they forced HUD to raise it to 96.5 cents, and still wouldn't participate. Homeowners can't afford the stiff fees and high interest rates to get the new FHA mortgages. Home repossessions are projected now at 1.2-1.5 million in 2009, 2 million-plus in 2010.
At a full House leadership meeting with Treasury Secretary Hank Paulson in the first week of December, at least one Congressman broke down crying over inability to stop foreclosures; others were in highly emotional states while Frank had a "confrontation" with Paulson over Treasury's failure to use the TARP bank bailout funds to stop foreclosures. Frank reportedly told Paulsonwho remained unmovedthat Congress was discredited by this and could not authorize any further TARP money.
The only thing that held repossessions below 1 million in 2008, was a series of timid state moratoria, 90 days at a timenot the necessary total freeze ordered by LaRouche's Homeowners and Bank Protection Act.