I find this article interesting. Please take a look at mine….

We’re supposed to have a system of checks and balances here in America, but so much is thrown in as you say to distract from that and thwart it, it hardly ever works.

I do believe there is a movement to create a World Central Bank, and that this what is fueling the undecipherable logic behind the latest crisis in the mortgage industry — but don’t get me started with conspiracy theories. Thanks for the comment — it was refreshingly different.

“Write Off Speculative Debt Obligations”

“The Act states that it would explicitly write off speculative debt obligations. The legislation incorporates the idea that there will be time provided for a “shakeout [that] may take several years,” during which time the valuation of U.S. homes and of mortgages will come down. The understanding is that during this interim, no branch or agency of the U.S. government should be permitted to purchase any of this mortgage paper at currently inflated values.

Rather, worthless pyramided speculative paper should be written off the banks’ books, and these banks should “resume their traditional functions, serving local communities, and facilitating credit for investment in productive industries, agriculture, infrastructure, etc.” Thereby, the banks would have real loan assets on their books, which are of far more real value than a large volume of speculative assets which are disintegrating before one’s very eyes.

Between 1930 and the end of 1932, throughout the USA, 5,100 banks, or one fifth of those that existed at the outset of 1930, failed. On March 4, 1933, President Roosevelt was inaugurated as President. On March 6, Roosevelt closed all of the banks through his executive order of a National Bank Holiday. The Emergency Banking Act legislation was introduced to Congress on March 9, at noon, and was signed by President Roosevelt at 8:37 pm. The whole affair, from start to finish, had taken less than 9 hours, showing that Congress can be spurred to act swiftly, when a good kick is administered. Banks reopened on March 13, and one month later, 76% of U.S. federally-chartered banks were up and operating.

Lyndon LaRouche has called for a bankruptcy reorganization of the thoroughly bankrupt and collapsed banking system. ”

In my mind, this proposal sounds a lot better than a punitive bankruptcy solution that actually punishes homeowners for being unfortunate enough to be preyed upon and swindled.

Bankruptcy process is a existing legal instrument that allows debt amounts reduced, it’s been there from the start when lender/investor gave the loan and so risks should have been priced in. Lender/investor will also be able to dispute anything before the judge and they will know they got the best they could.

If Congress comes out with uniform legislation that would stipulate the way cram downs must be calculated (to remove subjectivity of judjes) it’s way better approach than anything like mandatory modifications. After cram down the comps in neighborhood will be lower (cram down amount will be another price point record) and so incoming new buyers won’t have to pay overinflated price. Those who overpaid and went through bankruptcy won’t be able to refi/cash out for a long time. Lets see if they can be weaned from credit needle.