Your Savings Will Be Funding ForeclosureGate
by Daniel R Amerman CFA
Thu, 28 Oct 2010
As a result of apparent systemic incompetence coupled with fraud, it appears there is a chance that most real estate foreclosures may come to a screeching halt on a nationwide basis in the United States. What is missing from the headlines is the real impact on you and I, and how we will be the ones bearing the pain. To understand the implications of this extraordinary situation, we must first pierce a triple charade.
The first charade is the joke which the banking industry – and their regulators – in the United States has been making of contracts and the law. The second charade is the idea that the banks will bear the consequences for their gross negligence and lies, when in fact it is the US government and Federal Reserve that will be bearing the full costs (which is to say, you and I). The third charade is the idea that taxes will pay for these extraordinary expenses, when the only credible source of sufficient funds is ultimately the destruction of the value of the US dollar.
The economic bottom line (as is so often the case in the these troubling times) is that a massive redistribution of wealth is underway, and most of the US population has no idea what is going on. Which means that the older savers and investors who will be paying most of the real costs for this fiasco, will never understand what happened – they’ll just pay a devastating price as the purchasing power of their life savings plunges. Fully understand what is happening, on the other hand, and you can not only protect yourself, but position yourself so that wealth is redistributed to you rather than away from you.