Pride of Ownership

Pictured here is the grandiose and pretentious condominium development, built late in the boom, at 6212 N. Winthrop in Edgewater, which is additionally the most unkempt property on this block by far and a rather nasty contrast to the well-kept four-plus-ones and corridor buildings that line this block.

The asking prices for the units in this "luxury" building started at $600,000, though I doubt that the units sold thus far closed at that price (I haven't looked), but even so, I have to doubt they sold much under $500,000.

In the photos, you can see the trash lodged in the pikes of the fence and scattered about the parkway. It's not just a transient condition, either- I walk past this property on my way home and this trash has been here for many, many days. Yet, every other structure on the block, including low-rent corridor buildings, is well-groomed and often landscaped with great care.

Maybe the unit owners really have no idea that they are supposed to maintain the parkway and walk, or the little patch of lawn, in front of their place. Someone should tell them- this place is blighting the block. Home ownership is supposed to foster pride and commitment, but it's nowhere in evidence here.

Paulson's Lies

July 12th, 2007 "This is far and away the strongest global economy I've seen in my business lifetime."

My note: By July 12, 2007, we were well into the first stages of a steep retrenchment, and defaults were soaring. By this time, over 160 small mortgages lenders had already failed/

April 20th, 2007 "I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained."

My note: By February of 2007, the subprime market was going "down in flames", and then-failing Countrywide Financial's people stated publicly that "40 or 50 small lenders are failing daily".

April 20th, 2007 "We've clearly had a big correction in the housing market. Retail housing was growing for some time at a level that was not sustainable," Paulson said in a speech to The Committee of 100, a business group in New York promoting better Chinese relations.

My note: Well, no shit, Sherlock. I said the same thing in 2003, in 2005, and in 2006,and so did many pundits and economists who have a lot more credibility than this one disgruntled renter and taxpayer. Many other observers also said that $500,000 adjustable loans for fruitpickers and store clerks making $20,000 a year were not sustainable, and many economists were noting that the United States had the largest public and private debt loads of any economy ever to have existed, and that every other economy that had reached anything like this level of debt overhang, had collapsed.

August 1st, 2007 "The market has focused on this. There's a wake-up call, and there's an adjustment to this repricing of risk, but I see the underlying economy as being very healthy," he told reporters before leaving Beijing.

My note: Some understatement. By August of 2007, American Home and New Century had gone under, along with over 160 other lenders, and the credit markets were unspooling rapidly, as two hedge funds operated by Bear Stearns cruised toward collapse. Unemployment and inflation were soaring.

February 28th, 2008 "I'm seeing a series of ideas suggested involving major government intervention in the housing market, and these things are usually presented or sold as a way of helping homeowners stay in their homes. Then when you look at them more carefully what they really amount to is a bailout for financial institutions or Wall Street."

My note: The grand-daddy of boners. Do you remember saying this, Mr. Paulson?

March 16th, 2008 "We've got strong financial institutions . . . Our markets are the envy of the world. They're resilient, they're...innovative, they're flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong."

My note: Another whopper. The United States has the most over-leveraged economy along with the most rampant fraud and malfeasance and the most over-compensated financial industry executives, in the history of the world, as we have since seen. Our entire economy has been founded on the layering of debt since 1980.

May 7, 2008 'The worst is likely to be behind us,' Paulson told the paper, in one of the most optimistic comments by a top U.S. finance official since sub-prime mortgage losses set a domino effect in motion in mid 2007.

And....

May 16th, 2008 "In my judgment, we are closer to the end of the market turmoil than the beginning," he said. "Looking forward, I expect that financial markets will be driven less by the recent turmoil and more by broader economic conditions and, specifically, by the recovery of the housing sector."

My note: Well, we've seen what's transpired since. Mr. Paulson did not offer any supporting evidence to back these statements, which were made as the blight was spreading into Alt-A and prime debt, and as foreclosures continued to soar and as current defaults foretell even higher foreclosure rates as we leave the selling season behind.

But worse lies ahead, for commercial credit is even worse and is only beginning to unravel, and there remains unsecured consumer credit- the mountain of credit card debt that will almost certainly default more rapidly than housing or commercial. The reckless expansion of credit of the past 20 years promises to be matched by a proportionately ruthless contraction, and it's doubtful that people who have walked away from impossible mortgages and are losing jobs that there are no replacements for, are going to be able or willing to meet less-pressing obligations, such as the tens of thousands of dollars of credit card debt that many householders rung up when they had tapped out the last of their fake house equity.

The foregoing is only a sampling of Paulson's flamingly bad calls, flagrant mis-statements, and outright lies. We know that we have no reason to believe any of his statements, yet he and Bernanke have managed to terrorize the administration and Congress into rushing to foist a bailout of failing institutions that will cost each taxpayer in this country an average of $6,000 a year at least.

Worse, we can't help but wonder what else remains unsaid. Paulson insists that without a $700 Billion bailout, our economy will collapse. What he has not said is what another trillion dollars or so of debt will do to our currency and how we will continue to meet the interest payments on our government debt if we continue to add to it at the rate of a trillion dollars at a time. At this time, we have approximately $9.5 Trillion worth of soveriegn debt, and the interest per annum on this debt is $500 Trillion dollars.

At what point will the United States be forced to default on its government debt, and become the world's largest IMF client state? And what will that do to our currency, our economy, and our ability to keep the oil flowing into the country? There is no public discussion of these harrowing possibilities.

The risk of failing to take action is repeatedly belabored, yet neither Paulson or any of the other policy makers pushing for the nationalization of our banking system, which is what this bailout amounts to, wants to talk about the risks entailed in this massive socialization of the fallout from the greed and malfeasance of the only people who really stand to profit from the bailout.

$1.8 Trillion and Climbing- The Coming Insolvancy of the U.S. Treasury

I'll get to the point right now.

I don't see the attempt to bail out that which is too big to bail ending anywhere but in the complete insolvency of the U.S. Treasury, and it's deeply troubling that no one has broached this possibility, amidst the panic that ensued last week.

It's sad and sickening that our financial and government leaders are trying so hard to spin the total collapse of our financial system as merely a problem of "confidence", as if trillions of dollars worth of loans that can never be repaid and the derivatives based on them in insane ratios, can be made manageable merely by belief that the system can be kept going on its own terms....merely by belief.

And just as Paulson told us only a few short weeks ago that the economy is in good shape and that the financial system is fundamentally sound, he and the rest of our political leaders are pretending that if we just toss a few trillion more in taxpayers money into the system, that things will return to "normal", by which I imagine they mean that our financiers can go back to writing the Pay Option ARM and IO and NINJA loans and other worthless crap from which they were able to draw salaries and bonuses in the hundreds of millions of dollars.

Insolvency will mean our government is totally unable to meet its obligations, and that the United States will become the largest IMF client state. It will mean that we might no longer be able to adequately fund our military at the "stretch" level we currently are. It might mean that social security will be endangered for current recipeints, and possibly forever, at a time when millions of people are losing massive equity in their 401K plans and pensions, on the eve of their retirements, and that everything that is the legitimate responsibility of the government, such as our aging and badly deteriorated water and road infrastructure, as well as essential services and infrastructure at the local levels, as cash-starved local authorities are pressed to make further cuts as less money comes from Washington and more must be raised at the local level.

Government insolvancy will mean that the value of both government and non-government debt tanks completely, and that no one will be able to raise money in either the public or private sector for business formation or expansion, for the repair of failing bridges and collapsing roads, for public health programs such as immunizations for flue and other infectiuos diseases, or for disaster preparedness.

It would also most likely mean that oil will cease to be denominated in U.S. dollars, which would mean a disastrous runup in oil prices, as our currency totally craters in value. Note that oil today had the biggest one-day runup (to over $109 a barrel) in history. Winter lies just ahead, and the gas and fuel oil orders haven't come in yet, but we needn't expect any relief in prices when they do.

We have a choice between catastrophic- the failure of our financial system that looks to happen no matter what; or worse- the collapse of our financial system and of the U.S. Treasury, the very last backup.

Just as our leadership did not consider the current steamrolling disaster to be within the realm of possibility three months ago even though it was clear that almost every major institution was leveraged beyond sanity and confronting massive "liquidity" (i.e. solvency) problems; no one now is discussing the possibility of the ultimate failure.

This means we have no leadership that can possibly shepard us through the mother of all collapses, and we are on our own. I don't feel ready for it, and I'm sure no one else does, either, but we had all better be prepared to deal- with job loss, no unemployment, the loss of our homes, spotty or nonexistant services both public and private, and chronic shortages of basic goods essential to our day-to-day lives.

Shooting in Edgewater

There was a shooting in Edgewater, at 1109 W. Ardmore, in the early morning hours this morning, according to the major news sources.

Reports indicate that the shooting was not fatal, at least not at the time.

No information is available as to the identity of the victim, or other circumstances surrounding the crime.

The Largest Government Bailout In History: Socialism on an Unprecendented Scale

The Party That Wrecked America-our beloved Republithugs- has sponsored the most massive socialistic program-"the mother of all bailouts"- in the history of the world toprop up our wobbling financial system, and has put you and me, and all other taxpayers, on the hook for One Trillion Dollars at least, in addition to the other centi-billion dollar bailouts that have been engineered to prop up the plummeting housing market and our failing banking system.

Not that the Republicans stand alone- Obama has added his voice to that of McCain and his Trailer-Trash running mate, as well as to that of Bush- in supporting this massive misallocation of taxpayer funds at a juncture in our history where they could not be more wanted for other dire necessities.

Our leadership in both parties has totally failed us.

Make you no mistake- this is a bipartisan debacle that will not only elevate your cost of living steeply while robbing our cities and towns of badly needed revenues for dire infrastructure needs and critical civil services- as cities are deprived of "give-backs" of the federal income taxes their populations have paid in-but will drive the U.S. Treasury that much closer to insolvancy.

Those of you who remember my postings as "Paradise" on Craig's blog a few years ago will recall that I Told You So, but even I could not have predicted the cascading failure that is unfolding in front of us now.

If you believe that the bailouts that have been promulgated will in any manner benefit the American taxpayer, homeowner, or typical citizen, then you are delusional, and have clearly been drinking too much Kudlow and Cramer kool-aid on CNBC.

And if you believe that this country has, or ever had, anything resembling a Free Market, then you are so drunk on the kool-aid that all anyone can do for you is check you into rehab.

The trillion dollars or so that the series of bailouts promulgated thus far will be in addition to the $5 trillion of worthless mortgages belonging to FNMA and FNMA that we have been placed on the hook for. And it will not stop there, for remember that the FDIC, which insures your bank deposits up to $100,000 per customer, is also steeply underfunded, and will need more money just to cover the bank failures that are coming down the tube in the next few years. Some prognosticators predict that as many of half of the extant banks out there will fail, representing a couple hundred billion in deposits at least;yet the FDIC at this time has only $50 Billion to insure $1 trillion in deposits.

This disaster will continue to unfold at least for another two years, and the money allocated thus far will be soaked up like three drops of rain on a sidewalk in July.

What does this mean to the denizens of North Coast neighborhoods, as well as to the other citizens of Chicago?

It means that Chicago, one of the largest net taxpayers in the country second only to New York City and Los Angeles, as well as one of the last in line for federal "give-backs" of tax revenue, will suffer more deterioration of critical water, sewer, and transportation infrastructure, while local taxes will escalate to offset the dwindling funding from Washington. It means more income taxes for everyone- and if you believe that McCain can keep income taxes level, let alone lower them, while the federal deficit baloons to the point where the U.S. Treasury can no longer meet its debt service, then you deserve everything that will happen to you and the rest of us as this country continues to lurch toward complete bankruptcy.

It will mean even less money available for the failing war effort in Iraq, and still less available to the military in order to secure our oil supplies allover the world. For that is what our military really is- it is our oil security service, for every war we have fought in the past 80 years has really been about access to oil and safeguarding oil pipelines in the hot spots of the world. Those of you who think such a concern is frivolous and the money spent on it is wasted, be prepared to park your car and do without adequate heat and hot water for a looooooog time.

To those of you who made money flipping condos and houses during the credit-based housing boom of the past ten years- well, I hope you enjoyed yourselves, even though it was at my expense and that of not only every honest citizen who bought only what he/she could afford to pay for or not at all (and less than what they should have been able to buy for the same money), but at the expense of every taxpayer in the country. The party is over now and most likely forever, and you will have to earn your living by honest effort now. I hope you got bagged good and proper on your last attempted flip. May you spend the rest of your lives living in one-room apartments in four-plus-ones.

As for the efficacy of the bailout, it is money shot to hell that will only add to our national debt while the $400 Trillion or so worth of derivatives, based on worthless CDO paper that is worth perhaps a third its face amount, at a ratio of leverage of something like 10:1; will continue to unravel. Will we be able to bailout another ONE HUNDRED TRILLION DOLLARS worth of derivatives based on almost-worthless CDOs?

Such is the price of the spree of greed, fraud, and out-and-out larceny that was the Housing Bubble of the Early 21st Century. The poor are poorer, there are more homeless than ever, housing costs are 40% higher for almost everyone than 8 years ago, and millions of homeowners owe more on their places than they are worth. So much for the fabulous "wealth creation" of the fake boom.

Just one thing more- why have there been no Perp Walks for the financial industry honchos who built themselves $40MM mansions and bought 500' yachts with the proceeds of this rampage? Why, when about 300 million U.S. denizens are being made into unwilling homeowners, are these people permitted to keep the ill-gotten gains of the past 10 years, which include yearly compensation up into the hundreds of millions of dollars?

I mean, when I made a mistake that resulted in a $20,000-plus inventory loss a few years ago, I had to pay back almost every dime (the last $2,000 being "forgiven"). After all, I'm a licensed professional, so of course I had to pay back my losses, for, after all, I got to keep my gains.

So.. why have not the hedge fund managers, insurance and banking and lending executives, and derivatives traders who netted incomes in the hundreds of millions of dollars annually, based on their former profitability, not been compelled to give back their ill-gotten gains that have cost us our financial system?

So, in the future, let no one speak of what a wonderful thing "free markets", and unregulated larceny are and how they help "create wealth". There is no such a thing as a Free Market in a context where "freedom" means the license to steal and defraud while the responsibility for losses is passed on to parties- in this case the body of U.S. taxpayers- who did not get to attend the party but who will be stuck with the losses.

There can be no freedom without responsibility. If you are free, you must accept the responsibility for your actions. You must eat your losses. If you cannot accept the consequences of your mistakes, then you must bear with restrictions and regulations, and it's time to return our financial system to the regulatory framework that prevailed prior to 1980.