The So-Called Mortgage Crisis and Clinton's Plan

I really don't understand how one can turn something into something it is not. The media, the politicians, all are voicing that we have a mortgage crisis. But whose crisis is it, and what is the real aspect of such a so-called crisis? Well, for the person that is losing their home, it is a crisis of sorts, but the great majority of these individual losses can be coped with without an influx of funds. I lost my home and property a few years back and no one came to my aid, especially not the government who I asked to do so - not by money but in the legal sense. I had to buck myself out of it and keep going; literally starting over again at the age of 55. Is it tough? Sure it is. But in the individual's case who gets hurt besides the individual? Let's take a look at this first.

The banks and commercial lenders of mortgages and credit needed a manner in which to judge the creditworthiness of those applying for credit when credit cards were issued on a national scale - you mgiht recall when credit was issued at a local retailer based upon your good name. So several national credit reporting agencies evolved. Credit scores were strategically applied enabling credit givers to achieve their best interest rate; in other words, make credit from demand and you get higher interest rates.

You remember, I am sure, how the ads were for early credit cards, they made you feel like you were really important to hold one of those plastic give-it-to-me-now cards in your hand; it was something you were proud of, it made you feel special. But look at the difference now, the ads make you feel as if you can have anything at anytime and you don't have to pay for it, you just give them your card.

This is like a movie where the actors never work or go to the bathroom, or get sick; they only live this heroic life, have sex, eat well, don't pay bills, and everything ends wonderfully, usually in bed. You understand, what banks fail to reveal in their wonderful don't-worry-about-it ads is that you are going to pay the cost of the item plus 46 or so percent above that for "having it now." Some deal, huh! That's what the card issuers average take is according to my own investigations; I even had a major bank loan officer tell me this. But you are only paying, say 20% with fees and late charges.

Suppose, for example, you purchase a bag of 1000 nails on your credit card. As part of the bulding budget you figured out the each nail cost you 10 cents. You start building and then learn each nail costs you 12 cents. That means that instead of $10 worth of nails, you are using $12 worth. If you purchase all your building supplies on your credit card and your budget is $100,000, you are going to be paying $120,000 - that's 20 grnad more than your budget and that's why most unsophisticated borrowers are going broke.

Now imagine this: the credit reporting agencies have set creditworthiness standards; the card issuers and lendors go by these standards; and there are thousands of mortgages involved in this so-called crisis. Beyond that, look what the consumer has purchased with his credit card and mortgage refinance, or original loan: new cars, new furniture, new clothing, new utilitarian objects like lawn mowers and tools, hoses, plants, etc.; much of which is also not going to get paid for.

From this we can discern where one part of the crisis is going to hit hard, and that is at the credit reporting agencies who will have to say you are no longer credit worthy -and interest rates will go up. Now imagine, if a large percentage of individuals have, according to the agencies, lousy credit, the credit vendor is going to be hit hard in the pocket book, in addition to losses from the so-called crisis.

But let's take a look at what credit really is: it is you - by signing your credit agreement, which is a promissory note (a type of money) - it is you depositing this note (or money) into a bank. For this, the bank opens an account in your name and is liable to return to you the amount you have deposited, just as if it were cash. Instead, the bank places digits into your account as a form of paying you back. These digits can also be transferred within the banking system to pay off your debts. And, you may also be able to redeem them in cash, but the chances are you will not because cash is somewhat inconvenient and dangerous to carry around. Thus, most likely you will use a check, a check or debit card, or a credit card.

You will notice, when you take cash out on your credit card, there is a fee you pay for that. But if digits are put into a new account for you, where is the so-called cash that you are borrowing? Well here's where it goes: you sign a promissory note which is a form of money and deposit that into the bank. This is a promise to pay the bank the amount shown. The bank gives you credit and therefore is liable or owes you that amount back in exchange for the promissory note. But the bank only places digits into your new account, not cash. The bank then takes the promissory note and uses it to purchase cash from the FED. This cash is purchased at a discount - so if you borrow 10,000, the bank can purchase a significantly larger amount of cash in return. This cash is numbered, and each note, or dollar, is registered as it travels about the system. If a dollar, for example is used several times, it then makes more and more money, or profit for the FED in book digits. When large amounts of credit is issued, large amounts of cash is created - that is why we presently have the dollar crisis, or too much cash on the open market.

What Clinton's plan really does is to borrow from the people's future, or suffer the taxpayer to pay more in order to bail out the banks and avoid what the credit crunch will do to the bank's profitability. It is a form of welfare that ultimately falls on the backs of business and the people. It bails out the mortgagor, but does nothing to protect the mortgagee who will have to pay anyway in some form or another. It keeps the banks in the credit business where the great profitability of their business exists. And all for this, whoever is making this thrust, is really not to help the homeowner who got sucked into this affair, but to help the lenders keep doing what they have always done, exploit the ignorance of the customer and profit from the weakness of greed; greed which has been created by false advertising and creating the illusions that you don't have to pay your bills, just whip out your card. And they do this because they are only losing digits, creating money, and the digital profit indicates they can make a certain percentage no matter what failures in payment arise - that is, as long as the economy is controllable.

What has happened now is a compounding expansion into a global society and monetary exchange. Money, as you might not know, is used as a commodity - as are the peoples renewable needs commodities and precious metals. If money is cheap, the price of gold raises, and people buy gold knowing it will go up. Pull the money off the market, and the price of gold goes down because there's not enough money around to buy it. Money then becomes more valuable. If you bought your gold cheap, manipulated the market to make the price rise, sell it off at a high price, and then cause money to become more valuable and the price of gold to go down; well, then, you can buy gold cheap, sell it high, buy dollars cheap and sell them high - in fact, you can do this with about anything as long as you control the value of money.

So is Clinton's plan worthy? No, it plays to the emotions of the individual who believes by this happening things are going to be good again, that the card will do it, that want to bet in a few years things will change and all will be better. All one has to do is look at the history of such bailouts; in every case the problem has grown into a more complex matter; in every case the problem has just expanded; in every case the debt has remained. The simple fact is, this is not the job of government. It is a play to look at government as if it were God Himself. All I can say; if you want God's help you better be praying to the right God. Government has not revealed anything but corruption.