Bubbles and the Bloody Aftermath

In the end, we will remember not the words of our enemies, but the silence of our friends.
                        —Martin Luther King Jr.

Since 2007 the real estate market has been deteriorating.  The scenario unfolding encompasses the facts that one million foreclosures were completed last year, a 10 percent increase over the year before.  And, roughly two and a half million more properties are currently in default, with about five million expected to foreclose before the waves are completed. Currently, only 25 to 30 percent of the houses actually in foreclosure are actively being pursued due to the suspension of activity by several major banks.  Once that resumes, there will be a wave of auctions and evictions and a further drop in values.

However, a bottom should start to form by the end of this year or the middle of 2012. In the meantime, there is significant more pain to come in the form of unemployment, evictions and bankruptcy for Main Street.  In case you are not familiar with the term “Main Street” that means you, me, and everyone not working for Goldman Sachs, et al, and not qualified to receive government bailouts.

The aftermath of the fraudulent activities on Wall Street, including the CDO, CDS and robo-signer controversies exposed the average American to tremendous pain. It is clearly due to the greed and moral indifference by bankers and their front-line shills— the mortgage brokers, who foisted poison on millions of unsuspecting borrowers. This created the economic collapse which is still ongoing. Films like “Inside Job” and books like “The Big Short” and “Busted” as well as Charles Gasparino’s “The Sellout”  have widely disseminated the cause of the systemic risk perpetrated by these banks. The issue of how government and corporate America forced the culture of debt upon us all is also dealt with in Richard Wolffe’s "Capitalism Hits the Fan." Of course banks and corporate America were all rewarded for this Corruption Enterprise, otherwise known as RICO, by taxpayer bailouts. Paulson, Geithner, Bernanke and Bush saw to that.

While there are some Federal inquiries into the behavior of Countrywide and Mozillo’s sale of his worthless institution to Bank of America for $4 Billion dollars, the witch hunts and prosecutions have given the “Justice” business a real boost in appropriations. With villages, counties, states and countries in dire straights due to bond defaults as well as the drying up of tax receipts due to the housing morass, what better way to keep funds allocated to prosecutions? The Federal government can print money with no downside since the dollar is the Reserve currency for the world, but States cannot. And, neither can you, unless you're in the counterfeiting business.

Civil Service employees, bureaucrats, police, clerical employees are all targets (along with the pork barrel method of inflating retirement benefits), in the crosshairs of efficiency experts looking to balance budgets. They are, unfortunately, doomed to fail because the problem is now beyond repair. With a $14 Trillion dollar deficit and a $14.3 Trillion dollar debt limit that urgently needs to be raised, we’ve all stayed at the dance too long.

While the public has obviously become indifferent to what they should realize was avoidance on the part of government to prosecute the real perpetrators— banks, bond-grading companies and mortgage brokers— local law enforcement has had a field day in persecuting those who accepted any financing from those virtually unlimited deep pockets created from the phony mortgages bonds. The damage done was in the Trillions of dollars. But, prosecutors have chosen to pick on a “sure thing” by indicting people who cannot afford to fight while they leave the Wall Street/Banking crowd alone.  This is partly because they run the government (Goldman Sachs CEO’s were Treasury Secretary, Jon Corzine was Governor of New Jersey and Senator) and partly because they have unlimited deep pockets.  Imagine the fallout of Suffolk County D.A. Thomas Spota, for example, deciding to indict and prosecute Angelo Mozillo of Countrywide where thousands of loans were extended?

There have been recent exposes, like the recently rumored FBI search warrant executed on the offices of Threshold Land, a title company affiliated to the principals of the Rosicki and Rosicki foreclosure mill operated in Suffolk County.  There are also rumors that the FBI is continuing to look at Countrywide and the many mortgages written with zero underwriting in order to satiate the needs of Goldman, Merrill, Morgan Stanley, Bear Sterns, Lehman and JPMorgan. These investment banks needed millions of mortgages to package CDO’s (collateralized debt obligations) then pack into bonds in order to sell them off. Bank of America is now teetering due to that problem as they hold $360 billion of toxic paper.  If Assange, of Wikileaks.org, does expose B of A there may be a much bigger, systemic problem. Ethan Ellner, of Suburban Abstract, implicated in the Levy/Spota “pay to play” allegations has also reportedly been visited by the Feds.

Few areas have remained untouched by this zeal to find wrongdoers.  In the Hamptons, where celebrities summer, numerous questions have been raised about how a Southampton Detective, for example, came to own 20 houses (several in foreclosure) on civil servant’s pay. Lack of investigating this connotes “connections.”  It helps to have friends in Suffolk County where such problems may never be investigated.  Unless, of course, the Feds become interested in Suffolk countywide wrongdoing— as has been suggested in the Ethan Ellner/Steve Levy connection.

Then there is the trial of George Guldi, former Suffolk County Legislator who went head to head with current D.A. Thomas Spota, citing corruption and black bag operations among high officials. That trial begins next week having completed the process of jury selection in James F.X. Doyle’s (a Frank McKay/Independence Party appointee) courtroom and directed by Thalia Stavrides, an A.D.A employed by Spota. This promises to be an education in Suffolk politics and Justice... in the Hamptons. The Town of Southampton and its own political structure may be dragged into this as well. Although, the Town and Villages of Quogue and Westhampton Beach have recently been sued for anti-Semitic behavior (the Eruv controversy), none of the political corruption there has yet surfaced due to a near-total lack of media coverage.

It’s good to be King. Or, at least be a publisher owned by the politicians.

If you are interested in following the trial go to
http://bit.ly/fAI7nD , which takes you directly to the trial coverage and local commentary. The long route is www.631Politics.com  —click on 631 Politics and then click on Guldi).  Start from page one to bring you up to speed.