What happens abroad Blows Back Home
Joseph Stiglitz writing in the Article "A Fair Hearing for Sovereign Debt" writes:
"Last July, when United States federal judge Thomas Griesa ruled that Argentina had to repay in full the so-called vulture funds that had bought its sovereign debt at rock-bottom prices, the country was forced into default, or “Griesafault." The decision reverberated far and wide, affecting bonds issued in a variety of jurisdictions, suggesting that US courts held sway over contracts executed in other countries." [Read more at http://www.project-syndicate.org/commentary/argentina-repay-vulture-fund-by-joseph-e--stiglitz-and-martin-guzman-2015-03#wCQgC55xkYvkIIyD.99]
This decision, made in obvious, and corrupt favor to the Vulture Funds, threatened the economic survival of Argentina. And it looked like the USA was imposing Imperial authority over the whole world. Indeed the modern "Imperial" model is neocolonialism where every country is a colony of the wealthy, connected and powerful. Fortunately:
"Now, a court in the United Kingdom has finally brought some clarity to the issue, ruling that Argentina's interest payments on bonds issued under UK law are covered by UK law, not US judicial rulings." [Stiglitz/Guzman]
They next write:
"the fact that the Argentine debt negotiations were preempted by an American court – which was then contradicted by a British court – is a stark reminder that market-based solutions to sovereign-debt crises have a high potential for chaos." [Stiglitz and Guzman]
"Market Based solutions" are non solutions. (Unless "market" is code for buying judges and elected officials) In the end, these matters are settled by Governments, by courts. And sadly our international corporations have learned to play off courts one against another. Even worse our legal system is so corrupt that it's hard to trace the corruption to a single cause. As Stiglitz notes:
"The Griesafault is only the latest of many decisions and legal changes that have revealed what one might call a symptom of “corruption, American-style," in which lobbying and campaign contributions compromise the entire system, even when no individual official is on the take." [Stiglitz/Guzman]
Not to mention revolving door corruption, where those who make decisions favorable to shadow powers get contracts, speaking fees or guarantees of future jobs and favorable treatment at a later date.
How it comes home -- Foreclosure Crisis
To explain more about this "Corruption American Style" Stiglitz references an article he wrote in 2010, where he noted how the banks had foreclosed on people's homes, even when they owed nothing to the banks! This is pure corruption (and I doubt that either with the Foreclosure crisis corruption or Griesa-gate, that there wasn't some quid pro quo going on). In on our country corruption doesn't even have to involve direct quid pro quo. Sometimes it's through a family member. Often it's just through common membership in a Country Club and exchanges done in the sauna or on the links; or simply a cultural bias. But in either case.
He notes that "part of rule of law" is security of common folks property. That vanished during the foreclosure crisis, driven by fraudulent documentation, partly to compensate for the fact that most banks securitized their loans and defrauded investors around the world, and partly because the banks ignored real estate law and created a database of titles which they could transfer wiley niley and only later realized they had never bothered to register their changes at the courthouse. The result was a raft of signing fraud allegations (some of which were prosecuted) and millions of people dispossessed of homes in flagrant disregard of rule of law. Stiglitz notes:
"millions of Americans – in addition to the estimated four million in 2008 and 2009 – still have to be thrown out of their homes. Indeed, the pace of foreclosures would be set to increase – were it not for government intervention. The procedural shortcuts, incomplete documentation, and rampant fraud that accompanied banks’ rush to generate millions of bad loans during the housing bubble has, however, complicated the process of cleaning up the ensuing mess." https://www.project-syndicate.org/commentary/justice-for-some
Foreclosing on the innocent to pay off the guilty.
Stiglitz is too gentle. The foreclosure pace reflected a compounding of the frauds that generated the real estate bubble and it's collapse in the first place. We didn't "clean up the mess." We used the impact of banker fraud to punish the victims by taking their homes. Millions of homes now stand abandoned and empty and millions of Americans are struggling or even homeless due to massive financial corruption. The epicenter of that corruption is the United States.
As Stiglitz noted, the bankers and their corrupt judge and sheriff clients, in their corrupt hurry to take people's homes from them:
"these are just details to be overlooked. Most people evicted from their homes have not been paying their mortgages, and, in most cases, those who are throwing them out have rightful claims. But Americans are not supposed to believe in justice on average. We don’t say that most people imprisoned for life committed a crime worthy of that sentence. The US justice system demands more, and we have imposed procedural safeguards to meet these demands."https://www.project-syndicate.org/commentary/justice-for-some
Which Judges around the country conveniently and corruptly ignored. Sometimes because legislators changed the law to make it easy to ignore them:
"In America, the venality is at a higher level. It is not particular judges that are bought, but the laws themselves, through campaign contributions and lobbying, in what has come to be called “corruption, American-style.”"https://www.project-syndicate.org/commentary/justice-for-some
Stiglitz notes as I alluded to:
"It was widely known that banks and mortgage companies were engaged in predatory lending practices, taking advantage of the least educated and most financially uninformed to make loans that maximized fees and imposed enormous risks on the borrowers. (To be fair, the banks tried to take advantage of the more financially sophisticated as well, as with securities created by Goldman Sachs that were designed to fail.) But banks used all their political muscle to stop states from enacting laws to curtail predatory lending." Justice For Some
And when the banks were caught, instead of us frog marching the Banksters, we Changed the rules of the Game!
"When it became clear that people could not pay back what was owed, the rules of the game changed. Bankruptcy laws were amended to introduce a system of “partial indentured servitude.” An individual with, say, debts equal to 100% of his income could be forced to hand over to the bank 25% of his gross, pre-tax income for the rest of his life, because, the bank could add on, say, 30% interest each year to what a person owed. In the end, a mortgage holder would owe far more than the bank ever received, even though the debtor had worked, in effect, one-quarter time for the bank." https://www.project-syndicate.org/commentary/justice-for-some
Ruthless Rent Seeking is in Investor State Dispute Settlement, The World Trade Authority & At Home
This massive injustice is at the heart of many of our current conflicts and is destroying America. And sadly, the world too!
In the article on the Griesa decision they warn that USA corruption is undermining international law as well as the well being of 99% of our citizens:
"There is an urgent need to renew the United Nations' efforts to create a multinational legal framework for sovereign-debt restructuring. Though the US is striving to undermine these efforts, the UK ruling reminds us that America's judges are not the world's judges." [Stiglitz & Guzman]
Although increasingly, the world Judges are serving the same masters as American Courts. We live in a country where "rule of law" is undermined by corrupt politicians, lobbyists, and movements like the Tea Party. In 2010 Stiglitz warned that our corruption in campaign finance and growing inequality was turning our Justice system into a "travesty of injustice." We are dealing with the fruit of that.
The Motto "And justice for all" should be replaced with the motto "And Justice for those who can pay."
The HAMP Swindle
And it turns out that the programs intended to help owners, weren't designed to actually help homeowners, but to draw out the foreclosure process so that the banks could complete their looting of the victims of their abusive loans. Writing last year Pam Martens wrote this article in which she notes how Mr. Geithner's tunnel vision focus on saving the banksters made him completely obtuse to the harm he was causing millions of Americans. She notes:
"According to Barofsky, the Home Affordable Modification Program (HAMP) did not have a goal of keeping struggling families and children in their homes. It’s real goal, according to U.S. Treasury Secretary Tim Geithner, was to “foam the runway” for the banks." [Martens]
She continues to note:
"“For a good chunk of our allotted meeting time, Elizabeth Warren grilled Geithner about HAMP, barraging him with questions about how the program was going to start helping home owners. In defense of the program, Geithner finally blurted out, ‘We estimate that they can handle ten million foreclosures, over time,’ referring to the banks. ‘This program will help foam the runway for them.’" [Martens]
Instead of defending HAMP as a program to help homeowners. Geithner ignored her questions about the program and conceded the real purpose of the program was to slow down defaults so the banks could process all the foreclosures!
"“A lightbulb went on for me. Elizabeth had been challenging Geithner on how the program was going to help home owners, and he had responded by citing how it would help the banks. Geithner apparently looked at HAMP as an aid to the banks, keeping the full flush of foreclosures from hitting the financial system all at the same time. Though they could handle up to ‘10 million foreclosures’ over time, any more than that, or if the foreclosures were too concentrated, and the losses that the banks might suffer on their first and second mortgages could push them into insolvency, requiring yet another round of TARP bailouts. So HAMP would ‘foam the runway’ by stretching out the foreclosures, giving the banks more time to absorb losses while the other parts of the bailouts juiced bank profits that could then fill the capital holes created by housing losses.” [Martens]
I remembered how HAMP was underfunded. I was talking to people who were victims of the swindles that were the way the banks foreclosed on people, some of whom never defaulted and lost their homes anyway due to corrupt courts, sheriffs and banks. And some of whom made good faith agreements with HAMP programs at their banks -- and were foreclosed on anyway. They called the 2008-present bank behavior "fraud closure" and to me it was simply the third stage of a Bubble swindle designed to transfer real assets and rent opportunities to the banks and rentiers who live on rents, speculation and flipping such properties.
- Further Reading:
- Neil Barofsky’s new book — Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street
- Corrupt Court - Montana Decision Throws out 100 years of case law June 2012
- Corrupt Judges on the Supreme Court
- A Corrupt Decision blind to Corrupt Influence October 8 2013
- The expected corrupt Decision by a Corrupt Court April 2014
- Corrupt Court and Undue Influence and access according to Founders April 2014
- Is Quid Pro Quo Bribery the only kind of Corruption the Government can Punish?
- Corrupt Court overturns a Bribery Conviction January 2016
*Note, the corrupt Supreme Court has determined that even quid pro quo bribery is now difficult to prosecute