Internet Babel

This time Max Keiser and co-host Stacy Herbert talk about the walking zombies of the world’s largest economies.

A report on Bloomberg indicates that the housing and debt crisis in the U.S. is far from over, as instances of so-called ‘Buy and Bail’ are on the increase.

Buy and Bail consists of  acquiring a new house before the buyer’s credit rating is ruined by walking away an existing mortgage loan because it is “underwater” – i.e. worth less than the mortgage. It’s an attempt to escape payments on a home whose value may never recover while securing a new property, often at a lower price with a more affordable loan (and almost always with a different lender).

After falls in house values since 2006, something like 20% of home loans in the U.S. are “underwater”, meaning the house is worth less than the loan. As a result, more people are looking at ways to walk away from loans and approx. 12% of mortgage defaults are ‘strategic’ (deliberate), according to the report.

There is still a long way down yet, it would seem.

Read the full article here: http://www.bloomberg.com/news/2010-08-10/-buy-and-bail-homeowners-get-past-mortgage-hurdles-from-fannie-freddie.html

Adrian Salbuchi is an Argentinian economist who has plenty to say about the banking system and the Global Financial Crisis. This video is a year or so old but it acts as a good introduction to his thoughts, and we’ll be covering more of his material in future.

Using his experience of the financial difficulties experienced in Argentina, Adrian explains the lead up to the Global Financial Crisis, describing the whole Global Financial System as one vast Ponzi Scheme, based on:

(1) Artificially controlling the supply of public State-issued Currency
(2) Artificially imposing Banking Money as the primary source of funding in the economy
(3) Promoting “doing everything by Debt” and
(4) Erecting complex channels that allow privatisation of profits when the model is in expansion mode and socialisation of losses when the model goes into contraction mode.