10-07-2007, 07:00 AM
MORTGAGE RESTRUCTURING WON'T WORK WITH THE WHOLE BANKING SYSTEM
http://www.larouchepac.com/news/2007/10/...irman.html
Lyndon LaRouche issued a strong warning this morning to Senators Richard Durbin (D-IL), Arlen Specter (R-PA) and others, not to pursue legislation that would allow for case-by-case home mortgage "work-outs" under revised bankruptcy protection laws. He addressed exactly the same warning to FDIC Chairman Sheila Blair on her proposal today that Congress freeze the rates of adjustable-rate mortgages.
LaRouche's warnings were focused on the fact that the crisis is not merely one of sub-prime mortgage foreclosures, but a general breakdown crisis of the entire banking system and the global dollar-based world monetary architecture. "Don't commit to pricing on mortgages," LaRouche warned. "The whole banking system is undergoing a collapse, and a new system is going to have to be established. To tie mortgage values to the old, bankrupt system, would be a grave mistake." LaRouche added, "What is wrong with just implementing a blanket freeze on mortgage foreclosures, until the whole mess is sorted out? Just set some appropriate interim payments so that there is some flow of funds into the banking system, as homeowners remain in their homes, paying, in effect, rental payments. But don't attempt at this moment to deal with the issues of appropriate property valuations, mortgage rates, etc. It would only make matters worse."
"You have to understand that the system is coming down," he continued. "And trying to tinker within the system is not going to work. You have to put the SYSTEM into suspension. It's like declaring a bankruptcy of the system. And the only honest thing you can do is declare the system bankrupt. Now, then, the system continues to function in the general welfare interest, according to appropriate rules for reorganization of the system. Don't try to negotiate a solution to the conflicting demands within the system! Suspend what you cannot deal with. You must keep the economy functioning; you must keep people employed; you must keep the economy working. We'll sort it out over the next two years. Don't try to find an instant solution,-- there is no instant solution! You're going to go through bankruptcy reorganization of the entire system. The system is bankrupt! And to try to pretend that you've got a solution for a bankrupt system, by tinkering with the values,-- YOU ARE COMMITTING FRAUD!
"The point is," LaRouche concluded, "there is no solution. We're talking about a transition from a present system, which is hopelessly bankrupt, and the main thing we're talking about, is keeping the economy functioning, despite the fact that the system which we're administering, is bankrupt. And we're acting on the basis of the Constitutional obligation to defend the General Welfare. And that, essentially, is what the story is. Nothing more complicated than that. But, people don't want to do that; they want to get the agony over, and hope that they can now renegotiate and lower the price of the mortgage, and somehow, everything will be back to business as usual. The problem is,-- the business-as-usual question, is what the issue is. They want to get back to business as usual. And that's where the failure comes in. There is no business as usual. There can't be. This business is ENDED. What we have to do is keep the economy functioning, while we have a couple of years to reorganize it."
http://www.larouchepac.com/news/2007/10/...irman.html
Lyndon LaRouche issued a strong warning this morning to Senators Richard Durbin (D-IL), Arlen Specter (R-PA) and others, not to pursue legislation that would allow for case-by-case home mortgage "work-outs" under revised bankruptcy protection laws. He addressed exactly the same warning to FDIC Chairman Sheila Blair on her proposal today that Congress freeze the rates of adjustable-rate mortgages.
LaRouche's warnings were focused on the fact that the crisis is not merely one of sub-prime mortgage foreclosures, but a general breakdown crisis of the entire banking system and the global dollar-based world monetary architecture. "Don't commit to pricing on mortgages," LaRouche warned. "The whole banking system is undergoing a collapse, and a new system is going to have to be established. To tie mortgage values to the old, bankrupt system, would be a grave mistake." LaRouche added, "What is wrong with just implementing a blanket freeze on mortgage foreclosures, until the whole mess is sorted out? Just set some appropriate interim payments so that there is some flow of funds into the banking system, as homeowners remain in their homes, paying, in effect, rental payments. But don't attempt at this moment to deal with the issues of appropriate property valuations, mortgage rates, etc. It would only make matters worse."
"You have to understand that the system is coming down," he continued. "And trying to tinker within the system is not going to work. You have to put the SYSTEM into suspension. It's like declaring a bankruptcy of the system. And the only honest thing you can do is declare the system bankrupt. Now, then, the system continues to function in the general welfare interest, according to appropriate rules for reorganization of the system. Don't try to negotiate a solution to the conflicting demands within the system! Suspend what you cannot deal with. You must keep the economy functioning; you must keep people employed; you must keep the economy working. We'll sort it out over the next two years. Don't try to find an instant solution,-- there is no instant solution! You're going to go through bankruptcy reorganization of the entire system. The system is bankrupt! And to try to pretend that you've got a solution for a bankrupt system, by tinkering with the values,-- YOU ARE COMMITTING FRAUD!
"The point is," LaRouche concluded, "there is no solution. We're talking about a transition from a present system, which is hopelessly bankrupt, and the main thing we're talking about, is keeping the economy functioning, despite the fact that the system which we're administering, is bankrupt. And we're acting on the basis of the Constitutional obligation to defend the General Welfare. And that, essentially, is what the story is. Nothing more complicated than that. But, people don't want to do that; they want to get the agony over, and hope that they can now renegotiate and lower the price of the mortgage, and somehow, everything will be back to business as usual. The problem is,-- the business-as-usual question, is what the issue is. They want to get back to business as usual. And that's where the failure comes in. There is no business as usual. There can't be. This business is ENDED. What we have to do is keep the economy functioning, while we have a couple of years to reorganize it."