I’m at a union communicators conference in Spain and in the current session, organizers from the US, Ireland, and Spain have talked about the impacts of financial collapse on workers and how systemic failure happened. This video has well over 3.5 million views across various languages. It’s an incredibly good explanation of how the Spanish economy was built on a house of cards and what caused the collapse that is still ongoing here in Spain. Just this Sunday, I got to see a protest by the 15M movement and Pirate Party of hundreds of thousands of workers, young people, and the unemployed. It reminded me of Wisconsin, but on a larger scale. Truly impressive responses are happening in Europe (particularly Greece, Spain, Portugal and France) to the lack of accountability by elites for destroying economies, destroying public services, and stealing wealth from working people.

Writing on a ruling in Michigan that came out this week (Hendricks v US Bank), Yves Smith gets to the bottom of where things are with judges throwing out foreclosure cases because mortgage originators failures to comply with the PSA when the created mortgage backed securities. The court ruled that New York trust law applied to the securitization of the trust. Basically if the rules creating a mortgage backed security are followed, the trust exists. But if they’re not, then it’s basically non-existent. In this case the note was not properly delivered to the trust. And since the entity trying to foreclose was the owner of the MBS, they actually are not able to do it. Smith writes:

Note that the judge rules that someone can foreclose, but it’s not the trust, it’s the original lender. But that is unacceptable to the mortgage industrial complex. They cannot afford to admit they defrauded investors, which is what a foreclosure in the name of the original lender amounts to.

So when people complain about borrowers getting free houses, they act as if it’s the borrower’s fault. That’s the wrong place to assign blame. No one is saying the borrower does not owe somebody money. And the borrowers aren’t seeking a free house; they usually came to this juncture because they thought their records had overcharges in them or they thought they were a good candidate for a mod but could not get the servicer to consider their case. It’s the originators and packagers who put themselves in the situation of not being able to enforce the debt, not the borrower.

The apparent widespread abandonment of the practice of crossing the ts and dotting the is potentially devastating. If the failure to convey notes properly is as widespread as we have been told by various observers (and Abigail Field’s sample confirms), the mortgage industry has a monstrous problem on its hands. As the Michigan ruling suggests, at a minimum, notes not transferred properly are actually owned by someone earlier in the securitization chain. But no one wants to admit that; it means the investors were lied to and hold paper that does not have clear legal rights to foreclose and that originators, servicers and trustees have committed massive securities fraud. And in a worse case scenario, if no notes were transferred to the trust by closing, there is a contract formation failure.

Effectively what judges are finding is that we have a lot of MBSs that are in fact non-mortgage backed securities. This is a huge problem and something that investors should be up in arms about. It also should mean that only people who actually own the note to a mortgage can foreclose. But since there’s no clarity about that, that means that there should effectively be no foreclosures until this gets sorted out. And anything that aims to sort this out without addressing these questions should be rejected on its face.

Matt Stoller had a piece in Politico yesterday, “Public pays price for privatization.” It’s a good read about how America has historically completed great national infrastructure projects like the Hoover Dam and interstate highway system though a combination of public and private resources. But at this point we are not only not building things, but privatizing the public infrastructure we have left. Stoller writes:

After all, building infrastructure implies the ability to build things here and being able to use the power of taxation to finance them. Privatizing infrastructure requires the ability to securitize revenue flows. Which one do you think modern America does better?

Privatization takes inherently governmental functions — everything from national defense to mass transit and roads — and turns them over to the control of private actors, whose goal is to extract maximum revenue while costing as little as possible.

Not shockingly, quality suffers when business risk is backstopped by public funds.

Stoller also makes an important point about the dangers of putting state powers in private hands:

Even more perniciously, selling infrastructure such as toll roads puts the coercive power of the state in the hands of private actors. We have great public assets built by prior generations. We should and could be building a better country for our children, rather than liquidating what we have.

The last great era of public works — the New Deal’s roads, bridges, arts programs and schools — did not come from great planning and bipartisan concern over U.S. infrastructure. It came from the desperation of then-new-economy industrialists, who sought an economic structure in which they could profit and a populace seeking to govern its own country.

It was initiated by an unemployed and hungry citizenry and supported by builders clamoring for a government-backed housing-finance system, auto companies demanding roads and airlines seeking airports. The scorching class conflict of the Great Depression led to a national consensus in favor of avoiding unemployment that lasted until the 1970s.

Naturally one wonders whether the continue refusal by DC elites to address unemployment will provoke the a Depression-era style backlash as more and more people lose their jobs, lose their homes and go hungry. Stoller concludes:

Ultimately, of course, we will have no choice but to rebuild our infrastructure or risk social collapse. It’s not just the disintegrating bridges and extreme weather. Recent global supply chain disruptions suggest that certain parts of corporate America may turn toward a pro-infrastructure posture out of self-interest.

But Matt notes that this isn’t where Congress and the White House and state governments are at. Instead the focus is on reducing spending and privatizing infrastructure. This is a dangerous disconnect and one that only makes the further sale of infrastructure more likely, while simultaneously collapses and we’re left with less quality power, fewer good roads, less drinkable water, and unsafe bridges.

We need job creation in America. One of the simplest ways to do it would be to build infrastructure – repair roads, build new sewer systems, rebuild the entire electric grid, build new bridges, and build clean energy facilities like wind farms, solar farms, geothermal and hydroelectric. We could put millions of people to work building big things and ensuring that we have the infrastructure our country needs to survive in the 21st century. Or we could just sell what we have and hope we’re not on a big bridge when it collapses.

Der Spiegel has a great piece on the movement of young people protesting against unemployment and policies that hurt the working class and the ability for young people to move up the economic ladder. As with Egypt, Tunisia and elsewhere, there is a surge happening as people who are unemployed for too long reach a breaking point and find political awareness. The Der Spiegel article looks at rising youth protests in Portugal, Spain and France. In each case, the size and growth of these protest movements is historic.

I hope these protests continue until young people in these countries are treated like a serious constituency whose demands are critical to the future strength of these European economies. I’ll be in Madrid in ten days and I want to see the protests in Puerta del Sol first hand. I hope these brave, passionate young people keep up their fight for jobs and job creation.