Housing Bubble Bloodbath

Excerpted from the January 14, 2007 page at informationliberation:

"I wonder if Alan Greenspan takes a copy of the business page along with him on the chair-lift at the Aspen, so he can read about the plummeting housing market before swooshing down the well-groomed bunny-slopes at his favorite ski resort. After all, no one played a larger role in inflating (what the “Economist” called) the “biggest equity bubble in history” than the retired Fed-master. His low interest-rate bonanza triggered a stampede of speculation in the real estate market sending prices through the stratosphere and setting the stage for the biggest economic bust in American history.

The whole catastrophe was cooked up by Sir Alan and his coterie of brandy-drooling elites at the Federal Reserve.

Thanks, guys.

Greenspan has undoubtedly taken note of the sudden spike in foreclosures which have set off alarm bells from Wall Street to the American heartland. The effects of his “cheap money” policies are finally sending tremors through America’s fragile economic landscape. In September, 2006 the US Foreclosure Market Report released a statement that over 112,000 homes had entered some stage of foreclosure “a 63% increase from September 2005!?! September was the second straight month in which more than 110,000 new foreclosure filings were reported nationwide, evidence that the spike in August was not just a one-month anomaly.”

No, it is not a “one-month anomaly” and it is bound to get considerably worse as $1 trillion of ARMs (Adjustable Rate Mortgages) reset in 2007. The rising foreclosure numbers are the result of rising monthly payments on the new-fangled loans which have low introductory interest rates, but can unexpectedly double after a two or three year period.

Imagine mortgage payments that suddenly jump from $1,300 per month to more than $2,000 on a $129,000 house. That’s what many people will be facing in 2007 when their loans reset and they are suddenly forced out of their homes and onto the streets.

The housing bubble is actually an extension of the stock market bubble; Greenspan’s earlier swindle which cost American investors $7 trillion in retirement and life-savings. Both equity balloons can be attributed to the shabby and exploitative monetary policies of the Federal Reserve. By expanding credit and money supply via low interest rates, the Fed has kept the economy whirring along creating the impression of prosperity when it’s all just smoke and mirrors. America’s opulence is built on a mountain of debt that’s piled a mile high. Regrettably, that mountain is about to cascade-down on the American people sometime in 2007-2008. There’ll be no escaping the fallout from the $4.5 trillion dollars of new mortgage debt that’s built up in the last 7 years. By the end of 2007 we should be able to identify many of the painful trends that accompany a deep recession; prices of homes will steeply decline, GDP will fall, and Greenspan’s mighty Temple of Debt will crash to earth.

The New York Times reported last week that “about 2.2 million borrowers that took out sub-prime loans from 1998 to 2006 are likely to lose their homes”. That translates into about 10 million people! But that, of course, is just the beginning of the bloodbath. The real fun begins when the whole, ugly ball-o-corruption starts to unwind and we get an insider’s-view of a system that is rotten to the marrow. The housing industry is saturated with fraud; the banks, the mortgage lenders, the Fed and the homeowners themselves have all played a major role in this sordid confidence game."

For full article:
Housing Bubble Bloodbath

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