Sub-Prime Mortgage Woes Are No Accident! by Catherine Austin Fitts

[Joanne98]

August 7, 2007


In 1995, a senior Clinton Administration official shared with me the Administration's targets for Fannie Mae and Freddie Mac mortgage volumes in low- and moderate-income communities. We had recently reviewed the Administration’s plans to increase government mortgage guarantees — most of these mortgages would also be pooled and sold as securities to investors. Even in 1995, I could see that these plans would create unserviceable debt loads in communities struggling with the falling incomes expected from globalization. Homeowners would default on mortgages while losses on mortgage-backed securities would drain retirement savings from 401(k)s and pension plans. Taxpayers would ultimately be hit with a large bill . . . but insiders would make a bundle.

I looked at the official and said that the Administration was planning on issuing more mortgages than there were houses or residents. “Shut up, this is none of your business,” the official snapped back.

Recently, we have seen numerous press accounts of bank and hedge fund losses from sub-prime mortgages. Remarkably, these reports imply that the losses are the result of a market downturn or contracting credit cycle. But there has been no mention of the extraordinary profits that were generated or who reaped them. There is no mention of who is poised to make a fortune on the bubble collapse. Even the most sophisticated commentators of our day are describing this financial coup d'etat as the unintentional consequence of "market forces."

To help the Solari network survive and thrive, I have written and spoken about the intentional engineering of the U.S. housing bubble and its ramifications for Americans and global investors. "Do not attempt to cure what you do not understand" is our motto for navigating the gathering storm. As we work to mitigate investment losses in the mortgage market and the harm done to communities through the fraudulent inducement of debt, we are well served to understand what has happened, who is benefiting, and why. The following resources will help.



— Catherine Austin Fitts



As Assistant Secretary of Housing under Bush I, I helped work out the '80s housing bubble collapse. Then as lead FHA financial advisor under Clinton, I watched the engineering of today's housing bubble. In this Solari Audio Seminar, you will share an insider's view of the deeper history of the bipartisan manipulation of the housing and mortgage markets.
"Navigate the Housing Bubble" at the Solari Store


Part of understanding today's housing bubble is understanding the stock profits generated from the gentrification of communities. My case study Dillon, Read & Co. Inc. and the Aristocracy of Stock Profits shows how Wall Street and Washington insiders engineer War on Drug and prison policies and contracts as they engineer the explosion in subprime mortgage credit. When you look through the "pump and dump" of the mortgage and stock markets what you see is the "pumping and dumping" of real communities.


One way to understand the housing bubble is to understand the alternatives that were rejected. Rather than load Americans up with debt, we could have promoted new skills and financed small business and communities with equity. In The Story of Edgewood Technology Services, I take you "inside the Beltway" to see a surprising array of groups who preferred a bubble to building real wealth.


http://solari.com/news/announcements/08-07-07/

[Joanne98]

1. Who’s Who in the Housing & Mortgage Bubble

Given the interest in the housing and mortgage bubble, here are links to introduce leading institutional players in the governance, regulation and credit guarantee/enhancement of the US mortgage market.

As the housing and mortgage bubble was a component of the “strong dollar policy,” the same players are also present in the other components, including the suppression of the gold price (a necessary step that preceded this bubble as the suppression of the gold price turns off the financial “smoke alarm”) and the refusal to produce audited financial statements for the US government from fiscal 1995 to date (as required by law) thus allowiing trillions to go missing from the US government.

http://www.solari.com/blog/?p=256

[Phoebe Loosinhouse]

2. Excellent! Because we DID already go through a bubble in the 80's

The current bubble should not have come as a shock to anyone.

The bubble of the eighties took down the S&L's and was primarily blamed on inflated appraisals causing a rise in values that was ultimately unsustainable, based on the same "invest-get fast equity-sell it or refinance - reap the reward" game that has just played out again. At some point, real estate values have to be backed up by comparable salaries that can afford the inflated prices. If that doesn't occur,which it never does, then everyone is just plain gambling and hoping they will always find "the greater fool" to sell to.

Musical chairs, no more, no less. To be successful, there have to be enough willing players to fill the seats. When the players start dropping out, more and more seats become added until you get what we have right now - essentially a stadium of seats with just a few people walking around them.

[flashl]

3. Pefect, "Do not attempt to cure what you do not understand". nt

[trusty elf]

4. More ruthless disaster capitalism at work, it seems.

Interesting,...and appalling! k&r

[Karenina]

5. Wonder what Carlyle's RE holdings in the mid-Atlantic states

look like now...