The only loser is the one who is forced to sell in today's depressed market. When the mortgage owed is higher than the assessed value of the house, one may be tempted to "bail out," particularly if indications are that the housing market will continue to be depressed for years.
Bankers who are faced with a lot of foreclosures are in a quandary. Do they want to own a lot of properties that can be sold only at a loss? If the owners have been diligent in making payments and can stay in the property at a reduced rate, this would seem to be the best solution for all.
The sub-prime lending crisis caused several banks and lending institutions to teeter on the brink of bankruptcy. The bailout by Congress of some of these institutions was supposed to help keep those diligent homeowners in their homes. Apparently, it hasn't happened as yet.
It has been reported than more than 2 million homes were foreclosed in 2008. The U.S. government seems to have adopted the "don't ask, don't tell" policy.
The congressional oversight committees aren't asking, and the banks aren't telling, what they did with the money. We know that a number of large banks - recipients of billions of taxpayer dollars - have purchased other large banks.
The AIG insurance giant has continued to pay large salaries and bonuses as well as "golden parachutes" to its corporate executives. Is it any wonder that taxpayers are incensed at the idea of a multi-billion dollar rescue of more companies like the Detroit automakers when they continue to pay exorbitant executive salaries, as well as worker salaries which are double those of foreign car makers? Not to mention that they insist on continuing to make expensive gas-guzzling vehicles that few can afford today.
To go from the ridiculous to the most ridiculous, Larry Flynt of "Hustler" magazine has begged Congress for a $5 billion bailout of the porn industry.
Bernie Madoff and the SEC
An honest-to-goodness Ponzi scheme was that devised by Bernie Madoff, Wall Street hedge fund manager and former chairman of the NASDAQ stock market.
Estimates are that he made off with some $50 billion of investors' money. So far, he has kept mum about what happened to the money. His scheme is called an "affinity fraud," since he dealt mostly with Jewish investors and board members of charitable foundations of his acquaintance in New York and Palm Beach, Fla.
Several foundations which invested billions with him have gone bust, and a couple suicides have also resulted. The Securities and Exchange Commission was totally remiss in its oversight responsibility, although it had supposedly investigated Madoff twice. His niece was serving his firm as compliance attorney and is married to an SEC official. It took Madoff's own sons to finally blow the whistle to authorities to initiate the current indictment.
You may not have had the misfortune to know Mr. Madoff, but many have described the current Social Security System as a U.S. government Ponzi scheme. Current recipients are being paid with money received from payroll deductions from a diminishing workforce, which also hopes to receive benefits in the future. Your retirement money invested in a shrinking 401(k) may also resemble some kind of pyramid scheme. The Chinese creditors of the U.S. government may be starting to believe that those Treasury bills backed by the full faith and credit of the United States may also prove to be devalued pieces of paper and just another Ponzi scheme.
Harvard professor and Scottish economist Niall Ferguson, author of "The Ascent of Money" and moderator of a new PBS documentary with the same title, talks of a precarious symbiotic financial relationship between China and the U.S., which he calls "Chin-America."
