Crocodile Tears for Homeowners - Pearls for Money Lenders

Congress continues to be firmly in the hand of money lender lobbyists. The Twenty Million dollars or more that the money lenders spent for passage of the bankruptcy bill through Congress in 2005 continues to pay dividends. A $700 billion dollar proposed payout on a $ 20Million investment, not bad for bankers who are mocked for their “stupid” investments. In 2005, Congress subjected hard working Americans, suffering the destitutes of fortune, to the rigorous requirements of Credit Counseling, Financial Management and Budgetary analysis, before they could obtain the “fresh start” of bankruptcy relief provided for by the US Constitution. Failure to meet these requirements barred them from discharging obligations owed to unscrupulous credit card lenders charging usurious interest rates and from getting out from medical bills not covered by insurance. The Bankruptcy Bill was the worst piece of legislation that the US Congress enacted and it is the bite of that bill that is now also hurting financial institutions.
The bankruptcy bill gave these financial institutions a false sense of security. They engaged in unscrupulous lending practices, charged usurious interest rates (sometimes reaching 30% per year) and reaped windfall profits from the enormous debt burdened placed on the American worker and homeowner.
The enacted bankruptcy law provides no protection for homeowners from the greed of these money lenders. It obligates them to pay back all home loans (and burdensome loan costs) in full or lose the house to the lender in a foreclosure regardless of the market value of the home. In an escalating market the money lender recovered its loan, with interest, penalties and fees or acquired the property for less than market value and was then able to sell the home for additional profit.
Pigs get fat and hogs get slaughtered. These money lenders jumped over each other in making nonsensical loans. Loan documents were forged, a borrower’s ability to pay was ignored, and teaser interest rates, for borrowers who obviously could not afford the loan, and negative amortization became the vogue. Loan brokers became creative; banks devoured these loans and regurgitated them onto investment houses. Investment houses split them up in tranches and parceled them off to exotic lands and places and wished them bon voyage on their journey around the world.
While the money lenders believed that the loans had sailed off and they could live happily ever after, basic economic principles proved them wrong. These loan ships have returned burdened with algae and fish meat and now cast a poisonous odor on the American financial (fish) market.
Everyone recognizes that the problem started with subprime mortgages and that those who are really hurting are the homeowners who are losing their house.
Perhaps the mistake is that what should be called a home is referred to as a house. People are losing their homes not a "house". While a house may be something put together with bricks and intended as a shelter from the rain, a home is something real, something personal, and something near and dear. This is where the young couple decides to spend their lives. This is where the husband and the wife spend countless hours landscaping, painting, decking and shooting hoops with their children. This is where they entertain and dream of better days to come while nostalgically looking back at the time that the family spent together.

It is this loss and foreclosure of homes that must be stopped. Every home that is saved results not just in a family being prevented from being on city streets, that could turn into slum streets, it keeps hope alive and burning in the family. While a family as its home, they can still believe that by working hard they can achieve whatever they dream off. A family thrown out of their home is exactly in the same position as a refugee family of a war torn nation, thrown out and forced to live in make shift tents in the middle of unknown places. There may be but little difference between economic refugees and war refugees as both lose confidence in themselves, their country and their future. A nation’s economy cannot be built on the shoulder of refugees.
“Homes” are what are being lost by Americans in America. The Bankruptcy law can easily be amended to prevent the egregious confiscation of American homes by lenders. A foreclosure sale of a home by a lender brings less than the market value of the home and the lender will not be repaid the debt that is owed it. The bankruptcy law must be changed to allow a homeowner to keep the house if he is able to pay the same price that the lender would receive at the foreclosure (or perhaps even pay the market price). This allows the lender to receive more than it would have in a foreclosure, keeps the homeowner in the house and stops the slide in market value of other properties as one home is taken off the market.
This is a simple solution and it will work. The Bankruptcy courts are already set up and well equipped to deal with such issues. Even under current law they can help investors who own multiple properties (ah the rich - they even fair better in bankruptcy courts) and modify investor loans. It is simply not equitable to deny this relief to the homeowner who only has one home. The US Economy does not need the sacrifice of this struggling homeowner and his/her family. This simple change in the Bankruptcy law is a win-win for the homeowner, the lender and the US Economy.
Congress delivered the horrible Bankruptcy Law to the lobbyist in 2005. It is time for them to say "thanks, but no thanks" to further lobbying effort to prevent amendments to the Bankruptcy laws. It is also time for Obama and McCain to stop shedding crocodile tears for homeowners . Goldman Sachs Paulson may be a wizard but even this magician cannot be allowed to turn these tears into Mikimoto pearls for the money lenders.

A solution to the US Economic problem - Chinese just have to have more kids

With Lehman sinking, AIG failing and now Reserve Money fund faltering, someone had to ask:


"Just wanted to ask you that how come lehman brothers could lend US4 600B to real estate with US$ 30 bln capital footing ? there must be some prudential regulation set by central bank or sec of USA regarding mantaining certain financial ratios or percentage of lending against capital base or backed by deposit? or even cap on lending x amount of money t a specific sector...

would appreciate if you shed some light on this being the expert..."

Such a complex financial question deserves a serious response so here goes:

"Good questions all.
Lehman is another example of the US being run by idiots.
The Regulators who regulate the banks ignored them because they didn't think that the banks were behaving badly by taking on bad loans and then parceling them out to investment houses like Lehman. Lehman also thought that stupid investors would keep buying their packages because they "very smartly" split up loans into smaller pieces, then bundled the good, the bad and the ugly loans together and convinced themselves and the investors that this reduced the risk without really understanding what the risk was. Result. The ugly loans crapped on the bad loans which blew out the good loans leaving Lehman and the rest of the US with blown out crap.
Now the US govt has a blank check to bail out these brokerage houses but the checks they are writing is from the money borrowed from the Chinese and the Japanese.

So the math is something like this. Every Chinese has now lent a $1,000 to his Uncle Sam ($1,000 x 1,000,000,000) or a total of about a trillion dollars. The American appetite however needs more money and this economy is incapable of supporting itself at this level.

So the solution, with the increasing appeal of the even more stupid leaders (McCain and Palin) to the populace (they are looking for a down to earth person who speaks in a folksy tongue), I believe the day is not that far away when the US will demand that the Chinese have more children so that they are able to lend more to the US.

Confused?

Well here is the Math, if each Chinese lends a $1,000 to the US, and you just get the Chinese to double their population, China will be able to lend twice as much. In other words the US can then borrow 2 Trillion fom the Chinese and continue to spend happily for another couple of years. After that I guess the pressure will be on the Japanese (who have lent almost as much) and when the Chinese and the Japanese are worn out, and the Viagra has stopped working, by then the US hopes that the Indians are on line and ready to produce more kids so that the US can borrow from them.

Make Sense! So did WMD in Iraq."

The Conception Pains of Democracy

Condy Rice considered Iraq to be undergoing the "birth pangs" of democracy when referring to the impregnation of Iraq by more than one hundred thousand soldiers. Soldiers who were asked not just to impregnate but also to play midwife to the birth. When their midwifery skills couldn't deliver a healthy baby a surge[on] was called in. Before Bush/McCain get carried away with prematurely celebrating the blossoming of a democratic baby on the banks of the Euphrates they should stop and ponder that the nutrients that this flower feeds on is composed of the remains of the hundreds of thousands killed by a criminal invasion.

So much for the birth pangs of democracy but democracy is not a word that should be used lightly. Civilization has paid a heavy price for achieving it, what is being forced upon Iraq is better described as "Democramy" - Cramming democracy down the throats of people you don't know and don't understand, with a toilet plunger.

Examining the "democratic" process in Pakistan, Rice's phrase "birth pangs" of democracy turns into "conception pains" of democracy. Musharraf, in all likelihood, would still be at the head of an autocratic government but for his rape of the Constitution of Pakistan as he, fearing the end of his rule, "fired" the judiciary of Pakistan.

While the lawyers movement in Pakistan was on course to bring a civilized democracy to Pakistan, what has now emerged is the unforseen metoric rise of Asif Zardari. Zardari’s election by a landslide through the legislative electoral college should not be construed as a nationwide referundum of his popularity. The widely held believe is that Nawaz would easily win in a one to one contest with Zardari and some dare to say that six months from now even Musharraf would outpoll Zardari.


With Zardari at the helm, with Gilani as Prime Minister, Dogar as Chief Justice and the People's party in control of the legislature it does seem as if Pakistan is now in the grips of Benazir's widower. Of course the military and the Intelligence services of Pakistan cannot be ruled out but with the US continuing to play a gorilla role and with Zardari firmly in the hands of the US, Pakistanis will, at least in the short run, see more democramy than democracy.

Musharraf's graph

While the PPP and the PML(N) continue their dance routine, looks like Musharraf is still an honored invitee of sort at some wedding functions. I understand that now that he has turned the country upside down he is anxious, available and free to attend any and all functions (aren't there any Colonel's left whose kids are getting married - someone please invite him).

Even Bush retains 30% or so support amongst those who believe that he believes, and thus he can do no wrong, and so it is not surprising that Musharraf still has a cadre of sorts that welcomes him to Weddings.

While he is a guest of honor at these weddings it appears that the other guests are no longer motivated to rise from their chair when the former Commander of the World's 5th largest Army, and now just a sorry figure of a President, walks in with his escorts. Either these guests are upset at the additional security that they have had to go through (traffic jams, barred from parking in the hotel parking lots, metal detectors, frisking, empty your pockets, give up your cell phones, cameras, might as well be bend down and touch your toes) or they are just plain tired of this gentle soul and this tiredness prevents them from standing up and greeting this President. It is also possible that after all this is Pakistan, a country where one is loath to give up one's chair in the fear that someone else grab it. Isn't that what brought Mush to this?

While Mush may be contriving an honorable exit, his continued occupation of his throne may prove more tortious than its giving uppance.

Musharraf's party was routed at the polls. An apparent manifestation of a sea of change sweeping the world and a confirmation of a reversal of the trend that swept the world when religious parties dominated: Christian Fundamentalist helping Bush, Islamist gaining power in Pakistan, BJP dominating India and Jewish right wingers controlling Israel.

The lawyers and the civil movement sought a resignation of Musharraf. Zardari and Nawaz, propelled into the heights of powers, on the backs of the sacrifice of the civil movement and the murder of Benazir, boldly proclaimed that the dawn of freedom had arrived in Pakistan, and while Musharraf's ouster may not be imminent, restoration of the Judiciary was certainly in the cards.

For the people of Pakistan the concern was not so much as to whether the opposition could work with each other. The concern was, that given their history of corruption, whether they will sell out to Musharraf and seek to form a government with Musharraf's support. While the ruling coalition proclaimed that this would not happen, their coalition has split on the very subject that led to Musharraf's defeat. If Zardari believes he can now ignore, a la Musharraf, the anguish of the civil movement, he does so at his peril. If he believes he can rule with the blessings of Mush and Bush, this would not just be naive it would also be a betrayal of the movement that brought him into power and will undoubtedly lead to another round of chaos and pandemonium.

Is America Broke?

From the consumer, to the city, to the county, to the State to the Federal Government every one is in debt and tinkering with bankruptcy.

Some believe sending tax rebates or suspending gas taxes will provide relief. I guess they spell Relief "R-o-l-a-i-d-s".

Even though the stock market is down, US Corporations are loaded with money (some 1/2 trillion dollars in the bank).

What is needed is a way to getting this money to fix some other things that are broke - our infrastructure and our educational institutions.This could get us a double bang for the buck as people get jobs, pay taxes and prevent the erosion in the quality of life in these United States.

The Arrogance of Intellect - "Roasting" an Iranian President

I can understand the pressure that Columbia was under when it invited Iranian President, Mahmoud Ahmadinejad, as a guest to speak before its student body in New York.
Perhaps it was this pressure that required Columbia's President, Lee Bollinger, to lunch a tirade against the invited guest and find that he exhibited "all the signs of a petty and cruel dictator" and that he was "brazenly provocative or astonishingly uneducated." If these comments were made under pressure that that doesn't say much for the independence of our academic institutions, on the other hand if they were made to cause resentment in Iran for the arrogant treatment of its invited President, then they appear to have wildly succeeded.
I am curious as to whether there is any precedence for this at Columbia or any other University in the world where an invited speaker is subjected to taunt and ridicule as part of their Introduction. Introductions, after all, are supposed to be flattering and intended to highlight the achievements of the speaker/guest. The only exception is when the event is a "Roasting". Did someone forget to tell the Iranian President that he had been invited to a Roast?
Usually a speaker is invited so that the audience can find out what he stands for. I am sure Columbia students, New Yorkers, especially the loud vocal New Yorkers know what Columbia's President stands for, and certainly AIPAC appreciated the brilliancy of those comments, but such self-righteous comments uttered from the pulpit of Columbia by the High Priest of Columbia had no place in an Introduction.
We seem to have become so proud of our "freedom of speech", that we have forgotten that we as Americans do not have all the right answers, (and in some cases we don't even have the wrong answers - in other words we are totally clueless). We are, after all the 800-pound Gorilla that pulverizes whatever it steps on. How can we totally neglect the hundreds of thousands of deaths caused by our invasion of Iraq, the killing, jailing, maiming of thousands of Palestinians, the destruction of our own civil rights, the neglect shown to Katrina victims, the waste of billions of dollars in arms when hundreds (if not thousands) in the US sleep on the streets or in parks and go without insurance.
We sit here in our isolated halls of freedom and chastise individuals and countries that we have never visited and to which the only access we have is through the myopic, cynical view presented by the US Media. Our people sit in an ignorance well being spoon-fed miss-information and one-liners from the media and our politicians lead us guided by night goggles worn (during the day time) by our intelligence agencies. Is it a surprise then that we know so little about what is happening in the world?
How can the President of Columbia University neglect the sad state of education that exists, not just in the quality of education, at the primary and high school levels, but also the exorbitant cost required to attend college and instead taunt the Iranian President on his educational deficiencies?
We have become an arrogant nation that believes that what it does is right, that those who disagree with us are terrorist, and that those who seek to protect their independence are a threat to us. Our strength and our power have indeed gone to our heads as we hippopotamus like wreck wherever we set foot.
We are good at manufacturing reasons to create enemies; it may be more helpful to use our tremendous resources to make friends and to understand where the world is headed. Indeed our economic survival may depend on this as the rest of the world races ahead in educating its people and in developing their economy.
How much time do we have before China comes calling to collect its trillion dollar debt, before Japan comes calling and before all the Indian software engineers and entrepreneurs have departed back to India taking with them their education, their experience and the wealth that they created? Perhaps the sages who live in New York can answer the question but given the track record displayed so far, rather than finding a solution these sages will find another country to blow up. After all even after Iran has been destroyed, there are other countries already on the hit list and we haven’t even scratched the surface.
May I humbly suggest that the next time Columbia invites someone to speak, do let him or her know they will be roasted.

Pakistan Taliban - It is about Education

This morning Benazir Bhutto was brutally assassinated by another misguided individual who thinks the answers to all questions comes from bullets and bombs. I fear that this world is becoming a ruthless, cold place as we enter a century where the "shoot first and ask questions later" mentality has firmly taken hold.
We will spend more than a Trillion Dollars making bombs and weapons of mass destruction. Our ten million dollar cruise missiles will successfully destroy the hundred dollar mud houses in Afghanistan and as the manufacturers of armaments and plans rejoice in the orders that they fulfill, innocents around the world will pay the price for these armaments as the become collateral casualties, collateral refugees who will then spawn another generation of individuals who become the "suiciders" (another word coined by GW) of the future.
Building a school in a country like Pakistan costs barely ten thousand dollars and one can educate almost a hundred students a year there. The trillion we have spend, the gazillions we are getting ready to spend could educate the entire nations of Pakistan and Afghanistan. This is where we blunder. We are fighting this battle with weapons when it should be fought with education. The Taliban (the word means "students") are fighting this war with the weapon of "education" (their brand, of course) and by doing so they seem to mock us with not just "the pen is mightier than the sword" but that "the pen is mightier than missiles, bombs and all your armaments put together".
The Al-Qaeda/Taliban have now had a generation schooled in their mold, this generation is now teaching a second generation. Their offer of "education", food and shelter to the poor children of these countries provides them with grateful graduates/talibs who are willing to return the favor by sacrificing themselves for the taliban cause. One would think that with all the suicide bombings that have taken place, the Talibans would run out of "human resources". but by creating a mass educational system, this resource is multiplying and quadrupling, and will continue to do so until such time that we expend our resources in building schools, education, food and a safe place to nurture the young generation of tomorrow. Unfortunately it is much easier for politicians to fear monger than to provide solutions so we are indeed set for a rough ride. Deporting tens of thousands of "illegal" Muslims from the US didn’t help either.
The US should learn from that noble American, Greg Mortensen, who has done more to battle the Taliban influence, by creating schools in the unforsaken parts of Pakistan and Afghanistan, then the entire machinery of the US and NATO. In short, we are in a long struggle that has not yet begun. It will begin when we step back from fighting bullets with missiles, and start fighting fanaticism with education.
Bhutto's assassination is not a reflection on Pakistan, it is a response to the stimuli generated by the megatons of bombs that litter the entire world. The more we bomb the greater crescendo this response will reach.
Best wishes for the New Year. In the hope that these musings will be posted to a year gone by, not to return.

Words, Inspirations and Politicians

My very first political memory was of Robert F. Kennedy when he visited the Monterey Airport on March 25, 1968. Having enrolled at a junior College in Salinas, and having just arrived in the US (legally), here was an opportunity to meet a man who had taken on a sitting President (Lyndon Johnson) and challenged America to bring an end to the Vietnam War. We drove to the Airport in a beat up 1952 Rambler and on the tarmac of the airport eagerly awaited the arrival of Bobbie.
Bobbie's plane landed at this small airport and he was carried off on his shoulders into the crowd. He made his speech and then jumped into the crowd. I remember his words, (Fear not the path of truth for the lack of people walking on it) but most of all I remember shaking his hand.
It is indeed fitting that the Kennedy clan has endorsed Barrack Obama for Robert Kennedy inspired Obama. At a Human Rights Award Ceremony presentation in 2005, Barack talked about Bobbie:
"Obviously, much has to do with charisma and eloquence – that unique ability, rare for most but common among Kennedys, to sum up the hopes and dreams of the most diverse nation on Earth with a simple phrase or sentence; to inspire even the most apathetic observers of American life."
It is said that history repeats itself. A lying President (Johnson) who lied about the reason for the Vietnam war, that resulted in 5.1 Million Dead (the US Casualties alone were 350,000) was challenged by a man of charisma and vision. Today Obama rises to challenge in unequivocal terms the deceit of another lying President whose war has so far killed over 1,200,000. Johnson had the decency not to run for another term. Bush has termed out.
We do need change. We do need a leader who looks out for America first and stands up to the interest of the lobbyist. This will not be an easy task for any elected leader, given the millions of dollars that are required to campaign, and the millions more that fill the coffers of the US Congress, but to the extent that a leader is elected by the grass roots he stands a better chance of fulfilling the promise of America.
It will ultimately not be the words that the great orator speaks that will define the actions, but the expectations that the citizenry places upon him or her and whether those expectations can check the might (and the beauty) of the lobbyist bearing fruit.

Pakistan election - Winner Beware

Musharraf's party has been routed at the polls. This is another manifestation of a sea of change sweeping the world. This is the reverse of the trend that swept the world when religious parties dominated: Christian Fundamentalist helping Bush, Islamist gaining power in Pakistan, BJP dominating India and Jewish right wingers controlling Israel.
The religious parties, while still a factor, no longer dominate.
In Pakistan, the election in spite of, and not because of Musharraf (lest we forget the pre-election maneuvering by which BB was in and Sharifs were out), were mostly fair. There are several reports of voters not being on the list and there appear to be several "landslide" type victories which may not be the result of free polls, but all in all this was a good election.
The polls reflect the soft voices of the people of Pakistan. While the loud screaming, demonstrations and protests of these people were loudly ignored, these "soft-speak" cannot be ignored.
It is now time for Musharraf to avoid confrontation and resign, the people of Pakistan do not care for him and he is a liability. He has had his time in the sun, he now needs to move on and he should do so expeditiously while the people of Pakistan are in a forgiving mood. They can celebrate his "fairness" and let him depart with dignity.
As for the opposition parties, the concern is not so much as to whether they can work with each other. The concern is that given their history of corruption whether they will sell out to Musharraf and seek to form a government with Musharraf's support.
To do so will be a betrayal of what the people of Pakistan and will undoubtedly lead to another round of chaos and pandemonium.