The fundamentals of the world economy aren’t, in themselves, all that scary; it’s the almost universal abdication of responsibility that fills me, and many other economists, with a growing sense of dread.
Category: Economy
Matt Taibbi & Yves Smith Talk Bankster Corruption
“Simply Aren’t Interested”
The regulators simply aren’t interested in bringing real relief to homeowners and allocating the losses from the housing collapse in any kind of equitable fashion.
Yep.
Occupy Homes Is Winning
My dear friend and co-collaborator on Occupy Our Homes, Han Shan, has a great op-ed in Alternet, titled, “Occupy Homes Wins Crucial Victories for Struggling Homeowners Against Big Banks.” The whole thing is worth reading, as it’s a good reflection on how we are winning and forcing banks to negotiate with homeowners.
The PSA above is currently being funded on LoudSauce – if we get to $1000, it will be aired on TV nationally.
A Great Victory for Nick & Colleen Over Citibank
Nick Espinosa is an organizer with Occupy Homes MN, where he’s helped people facing foreclosure and eviction fight off the bank and keep their homes for the last eight-plus months. Nick is also well-known in activist circles for being the creator of the Glitter Bomb as a tactic in support of LGBT rights. In short, he’s a great activist who’s putting his full being into helping others. Unfortunately while Nick had been helping other families in his community, his mother, Colleen McKee Espinosa, received a foreclosure notice. After briefly falling behind on her payments, Colleen had repeatedly asked Citibank to let her become current on her mortgage, but they wouldn’t let her pay. Instead the bank moved to take the home, with a Sheriff’s Sale set for Wednesday, July 13th.
Thanks to organizing by Nick and other Occupy Homes MN activists, OccupyOurHomes.org (which I help run), and countless supporters around the country, Citibank has come to the table and found a solution for Colleen and Nick, stopping the sale.
An official with CitiMortgage’s Executive Response Unit contacted the Espinosa family with news that Citibank had approved a loan modification that would keep the family in their home and reduce their payments by one-third on a 7.5 year payment plan. The dramatic news came less than 24 hours before the house was to be sold at auction on Wednesday, June 13.
“I’m so relieved that my family’s home of 16 years will not be on the auction block tomorrow,” said Colleen McKee Espinosa, a nurse and single mother who received widespread support after she pledged not to leave her home without a good faith negotiation. “We are grateful that Citibank has decided to accept my payments, and we look forward to signing the final paperwork.”
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“I am deeply grateful to everyone from across the country who stood with our family as we fought our foreclosure,” said Nick Espinosa, Colleen’s son, and an organizer with Occupy Homes MN. “I’m inspired by the outpouring of community support, and it renews my commitment to stand with other families who are struggling to stay in their homes.”
This is a tremendous victory for Nick and Colleen and their community, as well as the entire Occupy Our Homes movement. But how did it happen and what should we take away from it?
Colleen’s choice to fight back was critical to victory. She decided to share her story and talk to her neighbors, Occupiers, and community organizers about how she could put pressure on Citibank to make a deal. Banks aren’t showing themselves willing to magically reduce homeowners’ principal out of the goodness of their hearts (let alone for the financial benefit of their investors). But homeowners who are standing up and saying that they are not ashamed to be fighting back are finding that they are can get solutions from the banks.
The banks want homeowners to be ashamed about being in foreclosure. They want us to keep our mouths shut, except to open wide while we take the bitter medicine of losing our homes. But Colleen’s story shows, as is so often the case, it’s not the homeowners fault for being in foreclosure. When the bank refuses to take your money, it’s obvious that it’s not your fault. When the bank defrauds you and sells you something other than what you were told you were getting, it’s not your fault. When the business you work for goes under and you lose your job in an economy that Wall Street broke, it’s not your fault for coming to foreclosure. When your government job is eliminated as part of austerity pushed by financial elites to, again, try to repair the economy that they broke, it’s not your fault when you get a foreclosure notice. Banks demand that homeowners feel shame for situations created entirely from bank behavior.
As McKee Espinosa says, “If anyone should be ashamed, it’s the banks for tearing apart our communities after we bailed them out with our tax dollars. When we stand together we can win, and I believe thousands more will.”
People like Colleen are showing us all that when homeowners fight back against the banks, they can win. While servicers aren’t rushing to make deals to keep families in their homes and keep chasing profits through foreclosures, when communities organize to help a family stay in their home, the banks are coming to the negotiating table.
The banks have destroyed so much of our economy. Over 7 millions homes have been foreclosed on and at least that many more are likely to happen over the next three to four years. A new study by the Federal Reserve (pdf link) says that median net worth fell 38.8% between 2007-2010, largely driven by a losses in housing. Policy makers, regulators, and politicians have failed to neither pursue legal accountability for bank crimes relating to the housing crisis, nor put in place programs to aid homeowners in crisis. In the absence of meaningful law enforcement and aid solutions, it is up to communities to rally together to fight off foreclosures, as Minneapolis rallied around Colleen and Nick.
Community pressure around brave homeowners like Colleen is producing solutions that are keeping families in their homes. It is forcing banks to behave with a shred of decency and humility. Indeed, it is the hope of the Occupy Our Homes movement that by forcing banks to change what their doing with foreclosures one case at a time, we can build up enough pressure to force banks to change their foreclosure mitigation policies nationally, so all homeowners can benefit.
This is going to be a long fight, but Colleen and Nick are proof that homeowners can beat big Wall Street banks, if they stand up and organize in their communities and wield their power for change. Find out more at OccupyOurHomes.org or OccupyHomesMN.org.
Netroots Nation Panel on Occupy Our Homes
I wanted to post this video of a panel I was on at Netroots Nation 2012 last week. It was called “Occupy Goes Home: The Occupy Movement and the Foreclosure Crisis.” On it with me were Sarah Jaffe of Alternet, Rachel Falcone of Organizing for Occupation & Housing Is A Human Right, and Nick Espinosa of Occupy Homes MN. It was a really great, powerful discussion and I was proud to be a part of it.
Watch live streaming video from fstvnewswire at livestream.com
Netroots Nation compiled a good run-down of peoples’ tweets during the panel – you can check it out here.
Forget the fiscal cliff, we need stimulus
Via David Dayen, Dean Baker has a very good article on the the problems with the US economy. Of note is his description of the Democratic Party’s lack of a coherent vision for how to fix the economy.
The basic story of this downturn remains incredibly simple. We lost close to $1.4tn in annual demand when the housing bubble collapsed. The construction boom that was fueled by the bubble went into reverse, with new construction falling to its lowest levels in more than 50 years. The consumption boom fueled by the bubble-generated equity collapsed when that equity disappeared.
We cannot return to full employment until we have something to replace the demand that had been generated by the housing bubble. This is simple arithmetic.
Unfortunately, both parties in the United States refuse to talk about filling the hole created by the collapse of the housing bubble in a serious way. The Republicans talk about giving everything to “job creators”, with the idea that if we are generous enough to the rich (with tax cuts), they will show their gratitude by creating jobs. There is zero evidence to support this view. Are we supposed to believe that investment will somehow increase by 50% as a share of GDP just because we are nice to rich people?
The world doesn’t work that way. Firms create jobs when they have more demand, not because we are nice to their rich owners.
President Obama and the Democratic leadership have refused to put forward a serious alternative path. While they have been willing to argue that rich people should have to pay some taxes, they have not come to grips with the nature of this downturn, as if hoping that, somehow, the economy will just jump back to its pre-recession level of output through some magical process. There is no magic that will allow the economy to override basic arithmetic. In the short term, only the government can provide the boost necessary to support the economy. Over the longer term, we will need to get the trade deficit down through a more competitive dollar.
I don’t think Dean gets anything wrong in his description of the Republican reaction to the economic crisis we continue to live in. But given that description is pretty much in line with what any leftish commentator is saying about the GOP, I’m more interested in his take on Democrats. What’s particularly relevant to me is that there is no vision for how to stimulate the economy, to fix the arithmetic problem of weakness still reverberating from the collapse of the housing bubble.
There has been and will continue to be a lot of talk about the fiscal cliff. Dayen, linked above, notes that it’s really more of a slope than a cliff and even Republicans are talking about deploying military Keynesianism to mitigate it. One of the key issues at play here is the expiration of the Bush tax cuts. In the context of deficit hawkery, many liberals have (for years) pointed out that if we simply let the Bush tax cuts expire, the long term deficit problems functionally disappear. There would be no long term crisis. That’s all well and good, but we’re dealing with a struggling economy now and we have a real need for stimulative spending now.
What is amazing to me is that basically no one is saying that we should take the massive amount of money the federal government would expect to take in after taxes reset to pre-Bush tax cut levels and put that towards stimulative spending. This money could go towards building roads, bridges, the electrical grid, constructing schools and fire departments and hospitals, giving people unemployment benefits and expanding SNAP. It could go towards green technology and education, too. A massive input in stimulative, job creating endeavors paid for by the federal government with new revenue from the expiration of the Bush tax cuts could conceivably do a lot to help fix the arithmetic problem Baker references above.
Additionally, it would be a proactive vision for how Democrats could actually fix the economy, beyond some piddling additional taxes targeting the super rich.
I don’t expect that Democrats will suddenly start talking about the coming cash cow that is the expiration of the Bush tax cuts as a vehicle for a massive stimulus. I think that the Democratic leadership is genuinely opposed to having taxes rise at all for the lower 98% of America and is likewise on board with deficit hawkery as a vehicle for cutting the Big Three social services. But as Baker points out, the Democrats are not offering a coherent pathway to right the economy now and this is a big problem.
Soros on the Eurozone
What Atrios Said
The economy isn’t the way it is because The Kids Today didn’t study enough, it’s because the people in charge fucked it up and are refusing to fix it.
Austerity Later!
The bad metaphor — which you’ve surely heard many times — equates the debt problems of a national economy with the debt problems of an individual family. A family that has run up too much debt, the story goes, must tighten its belt. So if Britain, as a whole, has run up too much debt — which it has, although it’s mostly private rather than public debt — shouldn’t it do the same? What’s wrong with this comparison?
The answer is that an economy is not like an indebted family. Our debt is mostly money we owe to each other; even more important, our income mostly comes from selling things to each other. Your spending is my income, and my spending is your income.
So what happens if everyone simultaneously slashes spending in an attempt to pay down debt? The answer is that everyone’s income falls — my income falls because you’re spending less, and your income falls because I’m spending less. And, as our incomes plunge, our debt problem gets worse, not better.
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So the austerity drive in Britain isn’t really about debt and deficits at all; it’s about using deficit panic as an excuse to dismantle social programs. And this is, of course, exactly the same thing that has been happening in America.
Alternatively, our elites can make a situation that has been defined by four years of suffering worse by ensuring that the 99% suffer some more to pay off elites’ gambling debts. This isn’t hard people. It’s only made hard because elites like making everyone else suffer.
Hold Fast 