World Bank Prez: Stimulus A 'Sugar High' That Won't Stem Unemployment, Political Unrest
Forget all that talk about "green shoots," kids. We're been in the eye of the storm, but now we're about to run into another round of mortgage resets. It's going to get much, much worse:
World Bank President Robert Zoellick warned policy makers that fiscal-stimulus plans are insufficient to turn around the “real economy” and rising joblessness threatens to set off political unrest across the globe.
“While the stimulus has given an impulse, it’s like a sugar high unless you eventually get the credit system working,” Zoellick said in an interview with Bloomberg Television’s “Political Capital with Al Hunt” scheduled to air tonight and over the weekend. “When unemployment increases, that’s probably the most political, combustible issue.”
From Ryan Chittum at the Columbia Journalism Review:
The option-ARM resets mark the end of the salad days for their holders. The principal has to be paid off sometime, after all. So interest-only payments will reset to amortize in many cases will be an even bigger amount owed than when they first purchased the house. Low-interest teaser rates will reset to presumably higher rates.
Now, the question that raises for me is: How many of these option ARMs have been written down by the banks? If they haven’t been, then the capital holes are going to be blow out again.
On a broader level, it spells more trouble for the housing market, which is already down by a third nationwide (remember those jokers who said it could never decline even 1 percent?), and which, as the Times wrote the other day, is just now getting fully hit by the pain of prime-mortgage holders.
This will be, uh, bad for the economy. That’s not even mentioning the still-to-come crash of commercial real estate loans, credit cards, car loans, etc.
The press doesn’t need to be cynical about a potential recovery, but after all it’s been through in the past few years, it sure doesn’t need to give readers false hope.
of course its just gonna get worse
im ready to be homeless
Where is the analysis.
The 'Stimulus' is puny compared to the bailouts.
The banking system will not be functional because the Oligarchs are going to stay in place and hang on to every billion that Little Timmie and Big Ben shovel them.
Obama is bailing out the Bankers, not the Banks.
We will end up with the same crooks and the same broken system.
Meanwhile the crooks will have absconded with the cash.
Break the Banks up and send the crooks to jail.
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Andy Kroll in Tomdispatch.com here:
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Timothy Lavin here in the May Atlantic (along with Simon Johnson's must read Quiet Coup here.):
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Wall Street scions sought the Fed's bailout authority in '91, now ballooning to a trillion plus, here.
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Your Field Guide To The Mortgage Collapse - Henry Blodget (it takes a thief) here.
Guided tour here.
View them all but this is particularly informative:
Percentage of loans underwater by type, here
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Throw in Peak Oil to really get depressed at our prospects, links here.
The dollar is tanking and oil is on the rise, again and that is just the beginning. Just wait until the demand comes back.
statusquObama, change you can only pretend in
Thank you so much for the links. Yes, these people are who I've been reading, too, and the shear criminality, callousness, greed, corruption, self-serving interests are indeed responsibile for their own private looting of the US treasury, pillaging the whole $$$$$market.
These people (links above) tell how the criminals did it, and who they are!!! There is way too much anonimity about the people. Bernie Madoff is only the very tip of the iceberg, now melting into nothing.
More links on Blodget's great guided tour:
Of Course, Mortgages Weren't The Only Dumb Loans Lenders Made here
And Most Of Those Other Loans Are Exploding, Too here
Which Brings Us To The Bottom Line: $4 Trillion Of Losses here
All of which will be paid for by the taxpayer.
Here are all the graphs in a pdf.
statusquObama, change you can only pretend in
That'd be more accurate if he said high-fructose corn syrup high.
Diabolus est Deus Inversus
Green shoots sound like armed environmentalists.
Diabolus est Deus Inversus
How many of these option ARMs have been written down by the banks?
Is that a rhetorical question? The real question is how many more are out there?
Zoellick is echoing what the German government is recognizing by subsidizing its GM industry, that provides jobs and bolsters that Real economy. Without jobs, and living wages, the consumer economy doesn't have the impetus to get off the ground.
oh, robert zoellick, now there's someone you can trust...
/snark
what you should "realize" about zoellick:
- president of the world bank, nominated by george w bush
-lead negotiator for NAFTA trade talks
-member of PNAC (if you know what that is)
-a member of the advisory boards of enron
-member of CFR and trilateral commission
-OXFAM's Kevin Watkins writes, in "Trade Hypocrisy: The Problem with Robert Zoellick", that: "Another area of trade policy in which the Bush administration exercises global leadership, superbly captured by the Zoellick manifesto, can be summarized in a single word, `hypocrisy'. Like the British colonialists that attracted the ire of the Boston tea party fraternity, the United States is a good old-fashioned mercantilist power, combining protectionism at home with a commitment to free trade overseas."
-robert zoellick writes in WSJ: "It would be a grave mistake to permit any one country to veto America's drive for global free trade"
before you call someone a troll know what you are talking about or you look like an ignorant tool
"neoliberal" is nearly the opposite of "progressive", maybe you should change your name if you are so enamored by zoellick (proudly neoliberal)--or just admit you don't know wtf you are talking about?
The bank bail=-outs have been nothing more than subsidies for the nextr bubble.
FGoldman and Citi and others which took the federal largesse/bail-out money, invested it in oil futures, thereby driving up the prices againi, and setting the satage for the next collapse...
this summer, starting in July, but extending through the whole nect two quarters when all those option-ARMS, which haven't been written down because they were the only that the big banks got past the stress tests last month, get renegotiated up, and folks have to start repaying principal.
There'll be soup lines by Xmas...
I know this is naive as hell but how about a world wide debt cancellation jubilee. Fuck all of it, you wouldn't even owe your buddy that $5 football bet you lost. Clear the decks and start over. A man can dream damn it, especially on a beautiful Pacific Northwest day like today.
Generally speaking I don't trust anyone making over 150K a year.
I recall reading quite a bit about this subject. From what I was reading then, this next wave of foreclosures was expected to be about 50% worse. Not sure if anything has changed?
It boggles my mind why there haven't been more people going to jail over this titanic-sized SCAM?
............to see something that looks mostly truthful about the DEPRESSION. Folks we're getting sand-bagged AGAIN! 'It's much worse than we could ever know, 'cause us poor peóns would riot, kill the WALLSTREETBANKSTERS, tar, and feather them, brand them, not let them live their 'normal' priviledged life of ease on stolen $$$$$ They really thought that they could distance themselves from the suffering they've caused, and enjoy their ill-gotten gains.
What's happening is not a 'recession' or a 'depression' in the normal economic sense. What's going on is world-wide robbery. The Powers that Be (the international banking/financial cabal) and all of their buds in countries large and small around the globe, have engineered this little mess.
Our own banks and government did their part by privatizing lots of stuff, lowering the tax rates (especially for high earners), and dismantling the systems of regulation that keep the crooks marginally in line (SEC, Glass-Steagall et al). Then the banksters went out and scammed citizens who just wanted to live the American dream by owning a home - talking up sophisticated products that most folks didn't understand. Then the financial houses, rating cos., banks and insurance companies went on a gambling spree >> commonly know as Fraud.
What we're experiencing is not a naturally occurring 'correction' - it's an historic Crime.
We are soo-oo-o screwed.
"Egotism is the anesthetic that dulls the pain of Stupidity" - Frank Leahy
That - plus the fact that 330,000 families have 40% of the total wealth in this country (with even greater wealth disparity in most 3rd world countries.) And thanks to the GOP, they pay almost no taxes on it.
And people wonder why nobody has any money except the filthy stinking rich? Well duh!
Rush Limbaugh is what a smart person thinks a stupid bigot sounds like.
A question that hasn't been answered by anyone:
Why doesn't mortgage insurance stem the losses on some of these loans?
It is paid for by the borrower (at exorbitant rates) to protect the lender in case of default by the borrower or massive market correction (that leads the borrower into default).
So many loans require this, and even more force it on the borrower even when it isn't required. This should have made a huge difference on the costs of default to the financial institutions. if the "system" (mortgage insurance is a business) was overwhelmed, why are we still paying it and what does it actually cover?
I'm not the most financially knowledgeable person, but I have a hunch here that mortgage insurance is as broken as the rest of the "system." Like other forms of insurance, it is easily overwhelmed when really large claims need to be made (whereupon those claims are denied en masse--as in New Orleans after Katrina or in areas where homes are lost to other natural disasters of massive scale). It isn't stemming the losses because it can't.
I may be very wrong here, and if so, I'd welcome the input of others.
Still haven't seen any evidence of a credit crunch. Banks are lending. Both small and large. Certain sectors that are doomed are not getting money, but why should they?
How much information coming out of the mainstream media (regarding the financial crisis) is disinformation? Most of it, in my opinion.
Mostly crap, and sugar pills They are agents of the Oligarchy, what would one expect????
The Big Banks are making non-asset backed loans to their best customers.
Mortages are very far down.
Here is a chart on Jumbo loans to prime borrowers.
Intra Bank lending as indicated by the LIBOR, London Interbank Offered Rate is still way down.
statusquObama, change you can only pretend in
I love how they make people like(Krugman,Rubbini,Geitner,Soros,Summers,Volcker,Keynes etc)seem like the end all and be all. Like no one else with two bit of common sense that god gave them would not know that 2+2=4. This has been the largest theft of society in history and there's more to come. The bond markets and commercial real state is next to go. Get ready when the dollar crashes for the hyperinflation to set in. China, Brazil and Russia are dumping the dollar as we speak. If China can't or refuses to buy our debt anymore please someone tell me who will? And to make things worst they are about to introduce the VAT Tax to rob the remainder of the middle class and the working poor. This is change all right, the robber barons are our POTUS and BUSH are LOL all the way to the bank. The Bankers are like the godfathers and the government is Fredo they are afraid of ending at the bottom of the lake so they do as they are told. As I was always told the person/persons who hold the purse strings have all the power in this world. Bring back the gold standard and real money and the barter system. End the Fed and set our selves free from these scumbags. Usury is a sin because it's stealing,The IMF,World Bank,The Fed and their likes and cronies are cockroaches.
All nonsense. And probably an excuse to beg for more handouts from the scared-silly taxpayers.
The sky is not falling, and most of the current and future problems in the banking industry will be dealt with, if not in exactly the way we'd all like.
Six months from now this hysteria will look comical, just like the hysteria of five months ago.
According to all the chicken littles, we should all have been in bread lines already.
Jeebus, it reminds me of the eighties, when the hysterics were convinced the nukes were going to start flying any day now.
Calm the fuck down and be rational for chrissakes.
in your outlook in about 4-6 months. In the next few weeks, millions of people who worked in the automobile industry will be out of work.
They will have no paychecks, they will default on their mortgages and other loans; they will lose their homes and health care and who knows what else.
As you say, the bankers will be just fine, as they have now, with the help of the government, looted the rest of us.
"Egotism is the anesthetic that dulls the pain of Stupidity" - Frank Leahy
working again is to nationalize all banks. Also, the Fed needs to be dissolved and those functions returned to the government. These institutions serve only themselves, and the fed serves only the banks.
BTW, has anybody been following the recent idea being floated to close the SEC and grant the SEC's regulatory authorities to the Fed? That's absolutely the last thing that should happen. The whole plan appears to be a Shock Doctrine scam to put the fox in charge of the chicken house. I heard this discussed on NPR, and of course, they are pimping the plan as one of the best ideas since sliced bread. This is a topic that needs wide discussion on the web.
Uncle Sam and Obama are taking care of the fat cats ,bailing their asses out , the very ones who through their greed and criminal conduct caused this mess to begin with ! Imagine , not only is there no one being held accountable but they get a free pass and a friggin reward to top it off ! As for the rest of us worthless peasants and commoners who have lost or will soon lose our jobs and everything else , not one damn thing is being done other than extending unemployment a few months and giving us a 25 dollar a week raise . It is going to get worse for most of us and yes this is a false sugar high recovery ... the ones who caused this mess are making money in the market again , that's their measure of recovery and of how much better things are ,"hallelujah ! The crisis is over "! Meanwhile the rest of us are on our own , no light at the end of the tunnel . Just where are these millions of jobs that have been lost going to come from , hmmmmm ? Got news for you , they won't be coming back for years and years if at all . But don't worry , the rich investor class , they'll be well protected and taken care of . Trickle down = we get pissed on . It's the same old story , same as it's always been , only worse . Democracy ? Yeah right ,the reality is that we are for all practical purposes powerless .
He's a very intelligent, dedicated public servant but he did work for, and was brought to Treasury by, Richard Darman, the Deputy Secretary of the Treasury in the mid 80s during the Reagan presidency and then became an assistant to James Baker, the Secretary of the Treasury under Reagan. He followed Baker to the State Dept. during Bush 41's term when Baker became Secretary of State before he followed James Baker to the White House when Baker became Bush's chief of staff. When Baker became head of the ReElect Bush campaign in the last months before the `92 election, Zoellich was acting chief of staff to the President at the White House. While he started out as a grad student of Darman's at Harvard as a Democrat, he became a loyal Republican and has served 3 Republican presidents well. (He was Bush 43's Trade Representative.) So while he is a straight shooter in the eyes of many, including myself, he has been in a position to prevent some of the excesses that have been a major cause of the problem over the last 2 decades. So what he says now as the head of the World Bank needs to be taken into account, just consider who he succeeded as president of that institution. (Wolfie) It's a pretty low bar. He may be protecting his brand.
I know this is naive as hell but how about a world wide debt cancellation jubilee.
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It was called The Great Depression.
Every bubble deflates. There are no exceptions. Bubbles are unsustainable. House prices have to come down to a sustainable level.
House prices will come down to a sustainable level. The math demands it.
Debt creates an illusion of wealth. The 1990's boom was based on debt, just as the 1920's boom was. The housing boom was based on a massive financial fraud, which created the top of a massive debt bubble.
Some 1.2 quadrillion in derivatives were created world wide. An absolute fantasy number.
The repurcussions are far from over.
Ben Bernanke said, "A sufficiently-determined central bank can repeal the laws of mathematics!"
Have Ben show you how 1+1= anything other than 2. He can't. Thus Ben cannot repeal the laws of mathmatics.
Law of mathmatics: every bubble bursts and deflates.
Law of mathmatics: every parabolic collapses.
Law of mathmatics: every inflation ends in a deflation.
Ben Bernanke cannot defy this. Ben can hyper inflate, but that will end in hyper deflation, thus he will still not be repealing the laws of mathmatics.
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