NOTE: Some Americans are discovering that they are able to keep their homes and save themselves from becoming refugees by challenging the banks. All they are doing is asking the courts for proof that the banks own the mortgage notes that they claim to own. “Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven't been able to prove they own the mortgages.” More on this at “Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish (external - login to view).” I personally know what I would be doing if I owned a mortgage in the United States. Good luck, and remember, according to the ex-Comptroller General of the United States (external - login to view), the top accountant for the United States of America, “deficit spending and promised benefits for federal entitlement programs have put every man, woman, and child in the United States on the hook for $175,000”. In essence, the United States is bankrupt (external - login to view).
www.chycho.com/?q=node/1631 (external - login to view)
US economist calls financial crisis worst since 1930s
19 Mar, 2008, 1659 hrs IST, IANS
WELLINGTON: The current financial crisis is the worst the world has seen since the Great Depression of the 1930s and the US Federal Reserve move to cut interest rates will not make much difference, the Nobel Prize winning economist Joseph Stiglitz said on Wednesday.
"It will have some impact - it will do a little bit to stem the blood - but it's not addressing the fundamental problems underlying the collapse of the financial sector," Joseph said.
Stiglitz, who won the Nobel Prize in economics in 2001, is a former chief of the World Bank and chaired former US president Bill Clinton's council of economic advisers. He is in New Zealand on a lecture tour.
He said the Federal Reserve's move to cut its funds rate by three-quarters of a percentage point was "just trying to ease the economy down rather than try to address the underlying problems."
Stiglitz said the main problem was the fact that an estimated 2 million Americans were going to lose their homes because they could not repay mortgages which exceed the value of their property as house prices fell dramatically.
"As people walk away from their mortgages there will be more and more defaults - that undermines the whole financial system," he said.
Stiglitz said the Bush administration was bailing out banks, but accused it of refusing to do anything to help poor people stay in their homes which would stabilise the housing market.
"It's very easy to do something about it," he said, suggesting the administration could give assistance to write down mortgages to about 90 per cent of the value of a house which would enable people to stay in their properties.
However, the Bush administration has unveiled plans designed to help homeowners in danger of losing their homes by allowing holders of sub-prime mortgages to borrowers with poor credit to more easily apply for refinancing. The government will also send out tax rebate cheques in May.
Stiglitz said it was ironic that former Federal Reserve head Alan Greenspan had said it was the world's worst economic problem in the last 50 years, adding, "He is the source of much of the problem."
He said mismanagement by the Federal Reserve over the last seven years was one of the major factors underlying the current problem.
"They had the regulatory authority to prevent some of these bad practices that we are now paying for and he chose not to do it."
Stiglitz said the reason related in part to the war in Iraq and the very negative effect on the economy.
"They didn't want Americans to know exactly how bad the war was for the economy so they flooded it with liquidity, they looked the other way with regulations and they deliberately, I think, postponed the problem into the future and now we're paying the price."