Note: The following is a policy speech delivered on January 6th at the Dobson Press Conference at the Hilton Garden Inn, Manchester NH as a policy proposal. This speech was subsequently delivered to three Presidential hopefuls: Clinton, Edwards and Kucinich and also given to the following media personalities:
Harry Smith, Chris Matthews, Andrea Mitchell, Anderson Cooper, Mike Barnacle, Joe Scarborough, Susan Sarandon, Tim Robbins and Viggo Mortenson; and contact information was given to Mike Barnacle, Tim Russert, Lauren Erickson and many other media contacts in the Obama, Clinton and McCain campaigns. The policy was discussed on two radio programs, including one talk radio show done by Laurie with Elizabeth Kucinich.
FOR A FEDERAL BAN ON FORECLOSURES
by Laurie Dobson
Maine’s Independent for US Senate
January 6, 2008
Thank you all for coming. I am Laurie Dobson, and I am running as an independent for the US Senate in Maine. I have called this press conference to report on our national campaign to enact, on an emergency basis, a uniform federal law to outlaw, ban and prohibit any and all foreclosures of productive and socially necessary activities, starting with homes. Since change seems to be the order of the day, let us give it some real content. Let change start now, with an end to the scourge of foreclosures, a problem that is hitting New England especially hard.
I am very glad to be here. We almost lost this room because three different presidential campaigns wanted to rent it at this hour. Somehow we prevailed. But let me extend an invitation to those three presidential candidates, whoever they may be, to come and join our press conference here this afternoon– on one condition: that they endorse this call for a freeze on all foreclosures for five years or the duration of the crisis, that they insert this issue in their standard stump speeches, and that they bring this question up in the next nationwide televised presidential candidates’ debate.
I am from Maine, you see, and our state motto is Dirìgo – I lead. As Maine goes, so goes the nation. And from Maine to the rest of New England to the whole United States, the idea of a ban on foreclosures is radiating out and gaining strength. I felt it was my duty to come here today to introduce this vital issue into the New Hampshire primary and the national debate. First let me sketch the critical situation in which we find ourselves today. Pay attention, because you won’t be hearing an analysis like this from the so-called mainstream candidates.
THE CRISIS: BACK TO THE WINTER OF 1932
It started last summer with the subprime mortgage crisis. That soon became a generalized mortgage crisis, with terrible implications for the banking system. At the same time, we had a contraction of productive activity related to the partial collapse of GM, Ford, and Chrysler during 2005 and 2006, with the destruction of tens of thousands of skilled jobs at union wages, replaced by low-paid dead end non-union hires. That meant that the collective ability of the American people to pay mortgage interest was in sharp decline, just as the mortgages were resetting upward.
Soon all asset-backed commercial paper became suspect, and the commercial paper market seized up – there was no bid, nobody wanted to buy. In mid-August the Fed, the European Central Bank, and the central banks of the world began injecting liquidity – not cheap loans for production and jobs, but cheap loans to bail out sociopathic speculators. Something like one to two trillion dollars of new money has been created in this way since. No wonder food and energy prices are rising.
Despite all that, the contagion of banking panic spread across the world, from California to Great Britain. First there were panic runs on Countrywide Bank of California last August. The Great Fear was abroad in the world. Then in October panic runs broke out at Northern Rock, the eight largest bank of Great Britain and Ireland. British taxpayers are now supposed to bail out Northern Rock to the tune of some $80 billion – more than $1,500 per person, and enough to modernize the whole economy over there. Surely we here do not want to go down that suicidal road of bailing out bankrupt banks. Again, no matter how much you pour into a black hole, it will still be a black hole, and it will still be insatiable.
The central bankers could not stop banks from blowing up, but they were able to generate hyperinflation. Oil is over $100 a barrel. Gasoline is well over $3 a gallon. Milk is over $4 per gallon in most parts of this country, and it is headed higher. Wheat has been going limit up on many trading days. Bread and meat are headed into the ionosphere. The Commodities Research Bureau index, the CRB, has just touched a new all-time high. The signs of hyperinflation are everywhere. Soon we may be like Germany in 1923, when inflation ran at one per cent per minute on many days, and eventually topped a faction of one trillion. The flip side of this is the dramatic collapse of the US dollar, with the dollar index reaching an all-time low in European trading on Thanksgiving Day. Better forget that trip to Paris.
In November, Secretary Paulson of Goldman Sachs – known as Hanky-Panky on the Street – was talking about a so-called Frankenfund -- $100 billion of supposedly private money to bail out bankrupt mortgage paper and credit default swaps, for the benefit of Citibank, JP Morgan Chase, Bank of America, and Wachovia – the usual suspects. But, just like similar things tried by Herbert Hoover in 1931 and 1932, this died stillborn. No Frankenfund.
Bush, Paulson, and Bernanke then announced at attempt to help mortgage borrowers facing foreclosure – but only if they were current on their payments! Then their adjustable rate mortgages might not be re-set. Those who were behind in their payments and who needed hope the most were excluded – another cruel joke.
Then, on December 12, the Fed joined with the European Central Bank, the Bank of England, and the central banks of Switzerland and Canada to offer the banks $40 billion of cheap credit – again, not for production and jobs, but for speculators. Wall Street just laughed, since $40 billion would not be enough to hold up even one big bank for a single day.
By mid-December the big banks were so scared of panic runs that they were selling assets, driving down stock prices and the like, and hoarding cash to make sure they could weather the storm. This was approaching the level of systemic crisis, with commercial paper and other markets seizing up again. On December 19, the European Central Bank dished out 350 billion euros – a cool half a trillion US dollars – in cheap liquidity for the banks. The main goal of this seems to have been to prop up the dollar by weakening and diluting the euro. And in fact, this was enough to strengthen the dollar by a few cents – but only for about two weeks. This past week, the European Central Bank, by now a virtual heroin addict, had to begin a new round of injections. This suggests that the euroland money supply has to expand by $50 billion per day in order to prevent the dollar from collapsing. How long can that be sustained?
When Wall Street opened for trading for the New Year last Wednesday, CNBC pointed out that this was in many ways the worst opening since 1932, or in other terms the worst opening ever. And that should give us some idea of how bad things are – it is indeed the worst situation since the descent into the world depression of the 1930s. And if you realize what that means, you should shudder. All week the stock market was chaotic, with heavy losses. The Fed had to step in once again with $60 billion of bail-out credit on Friday. Oil is over $100, gold is at $865 per ounce, the dollar in free fall once again, and so forth. Orders for durable goods have been down for the last two months, signaling that the contraction is becoming more severe. This situation is increasingly ugly, and the bottom could fall out at any moment. Where will banking panic strike next?
The Bush administration continues to flail at this problem with its usual combination of cynicism, malice, and ineptitude. Now there is word that Bush is planning to use the State of the Union in late January to launch what is called a stimulus package. This is billed as a series of tax cuts to promote business investment and consumer spending. Look for the usual Bush package of tax cuts for the rich, which will have no effect on the deepening crisis.