WHATS MISSING IN THE COVERAGE?

How great to finally see the networks jumping on the mortgage fraud issue. NBC’s Lisa Meyers did a great story last night on a mortgage broker scamming homeowners in Washington DC, getting them to put up their deeds which were then promptly resold. The folks lost their their homes. I exposed a similar story in my In Deot We Trust film.

The story was then followed by a commercial for Fidelity with black customers having their money managed. Any relationship there? Of course not.

hen, the lovely Trish Reagon, one of CNBC’s so-called “money honeys” dropped in at 30 Rock to explain that the economy is not doing so well and that a jobs report this week is expected to show a decline. (A recent report on job gains last Spring has now being revised downwards so please take these numbers with a grain of salt.) But the thrust of the story was to reinforce the pleas of investors to the Fed to cut interest rates again,

AP reports: “Wall Street’s newfound confidence that interest rates are headed lower may not be enough to fuel a December rally if the economy looks like it’s weakening.

Not mentioned in NBC’s story is that any rate cut will also mean more inflation which is a way of stealing people’s money with rising prices even as investors cash in. NBC left that out. In their mortgage fraud expose, they mentioned that the fraudsters would finagle people out of their deeds and resell them Ok, Lester Holt, who bought them and how much money did they make. Isn’t a crime ti fence stolen property? That’s what the Wall Street firms were doing.

This is at the heart of the sub crime story because it was Wall Street firms that snatched up the mortgage paper and then turned it in part a pool of securities in a profitable process called securitization. (My new book SQUEEZED gets into this more..see coldtype.net/debt.html)

The problem is that the scammers in the ghettos are the small fry who exploited their own communities; the scammers on Wall Street were exploiting each other and the whole economy. Ben Stein, not my favorite eonomic columnist for reasons I will explain, at least put his finger on the deeper problem in the Sunday Times Business pages—typically at the end of his column. (I keep telling you, read the Times from the bottom up.)

“HERE is a query, as we used to say in law school: Should Henry M. Paulson Jr., who formerly ran a firm that engaged in this kind of conduct (ie. was deeply involved in the subprime ponzi scheme) , be serving as Treasury secretary? Should there not be some inquiry into what the invisible government of Goldman (and the rest of Wall Street) did to create this disaster, which has caught up with some Wall Street firms but not the nimble Goldman?”

Well thank you Ben for columnizing on this especially since this same Business section ran a big feature two weeks ago lauding GoldmanSachs to the sky and not asking tough questions or showing Goldman’s complicity in all this.

Ben’s piece only turns critical at the very end. His lengthy diatribe was mostly devoted to discrediting an analyzis from a top economist at Goldman, Dr. Jan Hazins. Hazins predicts that the damage to our economy is going to be much greater.

That is Stein’s central message: the economy is doing good and Goldman’s analyst is just wrong, wrong, wrong. At the same time, it should cop to its complicity in the scandal. Unmentioned in all of his flip cleverness is the fact that he scoffed months ago warnings of a subprime collapse. It was all too negative for this market worshipper/ Whatever happens, Stein will be remain a high profile pundit able to speaking confidently on every side of every issue.

Many of his projections have been off base and spoofed on the itulip.com website. Check that out.

Meanwhile we have yet to see a major investigaton or any prosecution of the people who profited off the misery of homeowners who may be out in the streets. Efforts by the Fed to cut rates or the Treasury Department to freeze mortgage interest may be too little and too late.

THINK I AM EXAGGERATING?

This is from the Times of London, a Murdoch paper:

Suddenly the mood has darkened. Just when bankers and investors were hoping the worst was over, a second devastating wave of writedowns from major banks has rocked confidence. In recent weeks, Citi announced it would write down a further $6.4 billion in losses related to the sub-prime mortgage crisis. Merrill has also revealed more losses, while HSBC last week said it would take $45 billion back onto its balance sheet by rescuing two structured-investment vehicles. Last month Barclays wrote off $1.3 billion.

More pain looks inevitable. Analysts expect Citi to be hit with a further $15 billion of writedowns. Investors will be nervously scrutinising a Royal Bank of Scotland trading statement this Thursday when the bank is expected to reveal sub-prime-related losses of more than £1 billion. Goldman Sachs analysts have estimated that the total sub-prime-linked losses could reach a whopping $500 billion – far higher than Federal Reserve chairman Ben Bernanke’s initial estimate of $50 billion, later revised to $150 billion.

To add to the gloom there are mounting fears that the problems could engulf other types of American debt – credit cards, car finance and unsecured loans.

FALLING HOME PRICES WILL BREAK THE BACK OF THE U.S. ECONOMY

NAACP CRITICISES HOUSE PREDATORY LENDING BILL