(Update: to be fair, Bank of America did take a hit this past quarter)
In order to create incentive and get consumers’ as well as investors’ confidence back up to levels before the financial crisis started, it seems the media and their overlords, whoever they may be (I personally think Goldman, JPMorgan, BofA, et al. :] ), are intent on continuing to mask the reality of the actual crisis in the housing market and the broader market that is getting worse and apparently far from over, where there is an increasing amount of pain and hurt; something those very banks helped create and are profiting from now.
Case in point: foreclosures for the third quarter versus foreclosure filings year over year.
“The number of households caught up in the foreclosure crisis rose more than 5 percent from summer to fall as a federal effort to assist struggling borrowers was overwhelmed by a flood of defaults among people who lost their jobs.”
Now while the above is certainly a true number and an accurate reading of the number of actual foreclosures for the third quarter, the reality going on behind the scenes can be seen in this article, which has come out on the same day as the last article:
“U.S. foreclosure filings climbed to a record in the third quarter as lenders seized more properties from delinquent borrowers, according to RealtyTrac Inc.
A total of 937,840 homes received a default or auction notice or were repossessed by banks, a 23 percent increase from a year earlier, the Irvine, California-based seller of default data said today in a report. One out of every 136 U.S. households received a filing, the highest quarterly rate in records dating to January 2005.”
The reality is the housing market is getting worse (not to mention the coming wave of record commercial loan defaults). And as several economists have been pointing out as of late, there can be no recovery without the housing market getting fixed. And it’s getting worse, not better. The prime market is now getting hit, whereas the subprime a couple of years ago is what got the popping of the bubble underway. In fact, according to that above, there are record numbers of foreclosure filings dating to Jan 2005 now.
To give the perception that we’re now on the up and up and a recovery is most certainly under way, the media celebrate that the Dow passed the 10,000 mark for the first time in a year yesterday (which really is only a small indicator of where things currently stand in the broader economy). And in particular they are celebrating that the major banks have blown earnings estimates out of the water. Let’s all celebrate!
The big banks, who used to be about 12 in number before the crisis and are now an oligarchy of four, are making record profits at the tax-payers’ expense, living exuberantly on trillions of dollars we had “no choice” but to give them a year ago. Remember? One Congressman saying that in private meetings they were told Meanwhile, regional banks are suffering from higher fees from an FDIC who is now underwater as a result of bad loans and record foreclosures.
But the guys on Wall Street are sitting pretty, the Dow is rising (which unless you have investments this means nothing to you if you are out of work and have lost your home), so we’re all supposed to be happy and confident that things are turning around (for Wall Street that is). Absurd.
This interview, which I posted yesterday, sums up what is going on with the mortgage market as well as the oligarchy of bankers that are greatly profiting at the expense of the middle class in particular and all tax payers in general: http://www.pbs.org/moyers/journal/10092009/watch.html.
It is astonishing that in the wake of this crisis, a greater moral hazard is being created even greater than the one which came before. The special interest groups and the massive corporate interlocking with the government has not subsided with this administration; it has exponentially gotten worse and more ingrained. Change did not necessarily mean things would get better; it has proven all too often now to mean things are just getting worse because the same allegedly “inherited” problems are being made bigger and bigger.