I am including 2 links in this blog. The MSNBC video is 12 minutes long and gives a portrayal of Greenspan and the Federal Reserve doing the Big Bank Bidding to set up we Americans as lambs for the slaughterhouse while top executives pocketed Billions of dollars.
The second video is one and a half hours of history lesson on our monetary system, how it was put together, how it is run on debt and once you see it, you'll have a better understanding of how the deck is stacked against the regular people and for the big banks. It is absolutely worth the watch. Make sure you watch the addendum. It is the video about the monetary system.
So how does this all tie in with the mortgage industry's failure in the recent past?
DEBT!
A mortgage is a creation of debt. You want to buy a home and you can't pay cash, so you incur debt. The old fashioned way would be that you go down to your local bank and talk to them about helping you purchase your home and you'd get a loan from the bank. The bank was happy to lend and receive your interest payment along with principal. These were long term arrangements. As the mortgage industry evolved and more and more people were buying homes, the banks had to replenish their funds in order to fulfill the mortgage needs of their clients.
Along came Fannie Mae, who would sell paper (more debt) to raise cash and they would buy the notes from the banks. The bank's money was replenished and they could lend more. Then Fannie Mae's bonds turned into other forms of debt, like derivatives and debt swaps, which really all boils down to legalized Wall Street gambling. There were winners and there were losers. The biggest losers are the taxpayers. These giants were learning the game as they went along.
I am simplifying this of course, but truly the theme leads to excess and greed and "the rich get richer." The fundamental problem with this system is that essentially what Fannie Mae does is place further debt behind the debt, which really sounds like we're all just living in a glass house of DEBT. How do we ever get out of debt if we just keep printing money which is debt?
The value is not in what we owe but in what we own.
I'm not sure yet how the story ends, but I know how it should re-start. We need to put value back into the mortgage system and industry that will finally allow people to stop chasing debt to own their home. I want to buy a house in order to live in a home and one day own it outright. I don't want the pressure of refinancing every 2 years and starting the clock over for thirty years. That causes perpetual debt which continues to line the bank's pockets. There will always be opportunities for banks to make new loans because people continue to move around and buy new homes.
But in order to stabilize the mortgage market, we need new architecture:
- Fannie Mae is too DEBT ridden. Dismantling is a good answer
- Rate volatility is caused by the secondary mortgage market. The primary mortgage market can easily be stabilized. I have the answer. I won't share it here.
- Chasing refinances perpetuates debt that we'll never get out of and devalues our home with debt.
- Fees and points are out of control because of the hole we're in
- There is some risk to making mortgages, but the focus is in the wrong place due to over- reaction from politicians that have now over-regulated rather then enforced existing regulations
- Not everyone can afford to own a home, so lose the Democratic ideals and be real
- Quality appraisals cannot be achieved with the existing system put in place by out of touch politicians
- We should own the government not the other way around.
- For you Institutional readers, Low incidents of Prepayment. I can deliver the lowest incidence of Prepayment in the market today!
- Common sense
- An Architect
http://www.msnbc.msn.com/id/21134540/vp/36233217#36233217
http://www.zeitgeistmovie.com/
