Political Cortex: Brain Food for the Body Politic

Who has gone to jail for making loans to people with poor credit and no proof they could every pay for this loan?  The thieving mentality devised "interest only" loans.  In California, where real estate prices skyrocketed over 30% of the loans were interest only.  Now when the home owners with interest only loans had to begin paying on the principal they fled, leaving their homes in foreclosure.

But these phony loans which had been made were called "mortgage securities."  This constituted the beginning of the "fraud scheme."  The word "securities" was misleading.  They were in reality mortgage insecurities.

Having the first step of the popular U.S. fraud scheme been loaning money to a person who they knew was not just a credit risk but most likely someone who could never pay for the mortgage, the next step of the fraud artists was to label these high risk loans "securities."  This would fool the investment buyers into thinking they were buying a fair and secure investment.

The third step in this housing/mortgage investment scheme was to bundle them all up, after the original fraud/loans had been made and bonuses given to the individuals who sold the mortgages.  Now with these neatly packaged sub-prime mortgages labeled investment securities it was time to involve the banks and investment companies worldwide.  

The investors worldwide bought these phony mortgages and when it was time for the high risk credit borrowers to begin paying on the principal they did not have the cash to follow through.  The loss to European banks was $300 to $400 billion.

Of course, many of these individuals who were high risk calculated they would never have to pay a penny on the principal as one of two things would happen - if their house soared in value they would sell as quickly as they could see any profit and if the house did not go up in value and the time to pay on the principal arrived, the logical alternative was simply to flee into foreclosure.

The fact that they could simply consider paying interest only was just like renting and now over 2 million U.S. homes are in foreclosure - the worst foreclosure statistic since the Great Depression.  Who is going to pay for the $300 to $400 billion losses worldwide?  The U.S. taxpayer?

Oil prices, which were $35 a barrel when Bush became the White House resident, are $110 per barrel and going up.

Airlines must charge much more to the 700 million people who fly in the U.S.A. every year.  Delta Airlines is grounding many planes and firing workers by the thousands.  Food costs will skyrocket as it costs to transport food and the fuel to do so goes up, up and away.

It all began when Alan Greenspan lowered interest rates to the lowest in 40 years to make housing prices/building become the U.S. stock market in effect.  When the stock market collapsed, people fled the stock market.  So a new money trap (realty) was hastily created.

Foreign investors like the Saudis simply raise gas prices to compensate for dollar destruction.  Senior citizens who trusted their government to protect their life savings have seen income cuts of 50% or more.

Meanwhile the Fed bailed out the thieves!