Frank Louis
Wealth redistribution? We already have it on a grand scale
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By Frank Louis
October 20, 2011

Recently, I wrote about the plot... oops, I mean, "plan," by the 50 State Attorneys General to make an "equitable" solution to mortgage modifications. About a week later, I happened to hear Maryland Attorney General Beau Biden on MSNBC's "Morning Joe" discussing this plot... sorry; I mean, "plan."

At the same time, we hear all of the Republican hopefuls talking about the economy, unemployment, "999 Plans," and whether or not Gov. Romney hired an "illegal gardener" or if Rick Perry provided jobs to tens of thousands of those same "illegals." Really!

After last night's debate, Michele Bachmann was asked something about the economy and housing in particular only to duck the question by telling us all about how important it is to create jobs. Duh Michele! While I sure like Senator Bachmann and Herman Cain as well, I must say that they all somehow overlook the plain and evident truth that the housing crisis was the first grand step in wealth redistribution in this nation. Who is paying them to not discuss this topic? Goldman Sachs or Fannie Mae, perhaps the "Fed?"

In a letter I recently wrote to all 50 state Attorneys General (email me for a copy of that letter) I pointed out just how "inequitable" even their research seems with regard to their solution. A solution, as I understand it, that will include pretty much letting the banks off the hook for the remaining fraud. Mr. Biden stated that he had met with homeowners for the past 12 months regarding this issue. He mentioned that some people deserved modifications and some did not. He did not unveil the plan to decide who qualified or did not however.

You know, I write regularly about this topic, I host a weekly radio program on the subject. I have intensely researched the topic of the housing crisis and mortgage related data since 2008 prior to when I began broadcasting. In the past year, I have never read a thing about these past 12-months and Biden's meetings. In fact, I have not read about any of the 50 Attorneys General on this topic, for that matter, seeking people for this study. How did they do it and whom did they interview? Surely they did not ask me. Did they ask you?

So, Wealth Redistribution, the subject of this article... Let's see. Just say, for instance, that you have two people. One (person "A") had saved $100,000 and the other (person "B") has not ever saved a thing. How best to equalize their standing with respect to their economic status? Simple, they can both buy real estate "valued" at $500,000. One person puts their $100,000 savings of $100,000 down as their 20% down payment on the mortgage, the other person does not invest a penny. In fact, in many instances, they get several thousand dollars in cash at closing.

Some months later, the bottom falls out of the housing market... some guy points at the "Black Swan Theory." Suddenly, both properties are now worth at least 50% less than they were just a few months prior. Both properties are "underwater" as they call it. The only difference is that person "A" is out $100,000 and person "B" has lost nothing. In fact, person "B" got to live in a big house for free while the AGs discuss what is "equitable" and what is not and the "shadow inventory" is amassed. Now both people are in debt for more than we need to discuss, but the bottom line is that they are both facing foreclosure, a forced sale of the property, and perhaps bankruptcy.

This bothers them both of course. Person "A" had worked, saved, invested, and probably had good credit and, I would go so far as say most likely had no credit card debt to speak of. Person "B" on the other hand was just "trying to have the American Dream" and was "tricked" by those nasty mortgage originations via "predatory lending." They had no savings, probably not as good of credit as person "A" and, I would speculate, had some credit card debt (that could have been paid off with the "cash back at closing" they received.

Both now loose their property and are forced into bankruptcy. Both have foreclosures looming over them. Person "A' not has a much worse credit score than before. Person "A" is out $100,000. Person "B" has a credit score not much different than they did before, they are not out any money, and their credit card debt has been paid off. They are now "equal." "

Of course, you will tell me "nobody held a gun to their head to buy the property." And that is correct. Some are buying property at "bargain basement prices." It is also not relative to the issue. Fact is, many people did "invest" believing the information they were provided by the professionals in the field. However, just also realize that even if you did not invest in any real estate during those years (for some reason you were just not at the place in your life where buying real estate made sense), your net worth has also plummeted right along with property values as well. The resulting inflation and economic crisis will most likely do its share to your economic standing as well. Can I get a Halleluiah?" This is wealth redistribution on a scale so large no one evidently sees it.

If you paid money for real estate that was fraudulently overvalued as a result of the mortgage games being played with us, tell your AG you want your money back. You bought a "faulty" loan. It was broken from the day you bought it. Ask the Republican candidates about this. They never bring it up. By some estimates, we have lost as much as $6 trillion on personal wealth through this housing crisis. Wake up America, wake up!

© Frank Louis

 

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Frank Louis

Frank Louis is a print and on-air commentator who offers opinions and solutions on and for the economy, social issues, and the future of this nation. In the Old Testament, Nehemiah 4: 14 instructs us to fight for our houses; something we need to be doing now. Our future generations depend on it!... (more)

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