Ramanisblog

Tag: Economic down turn

  • Holiday cheer: Citigroup suspends foreclosures for 30 days

    Very Nice gesture.People who defaulted payments must make arrangements to pay up.How do you expect the organisation to thrive if you do not pay up?At least from now on live within your means.
    Citigroup is holding off on foreclosures and evictions for 4,000 homeowners. Fannie Mae and Freddie Mac are expected to make a similar announcement, and other financial institutions are expected to follow suit.
    In a TV news segment about the event, the network anchor reminds viewers about the bonuses that the bankers are raking in.

    So what’s a bank to do?

    This holiday season, some are planning to hold off on the foreclosures and evictions. Yes, Virginia, there is such a thing as a kind bank … well, at least until January.

    Starting Friday, Citigroup is giving some 4,000 homeowners 30 days without the threat of being evicted or foreclosed on. Both Fannie Mae and Freddie Mac are planning to announce a moratoriums on evictions for the holidays. Many other financial institutions are expected to follow suit in the days ahead.

    The holiday goodwill comes at a time when mortgage delinquencies are at a record level and climbing. According to the Mortgage Bankers Association, the portion of loans in the foreclosure process was 4.47 percent at the end of the third quarter – up from 2.97 percent a year ago. Some 4 million homeowners are either 90 days behind on their loans or in foreclosure.

    Things will get worse next year, the group projects – mainly because of the high unemployment rate.

    Consumer groups applaud the eviction holiday. “It’s always a good thing to give consumers more time to get paperwork and other documentation together to present a complete and persuasive case to their lenders so they can get help,” says Douglas Robinson, a spokesman for NeighborWorks America, a Washington nonprofit that tries to encourage counseling for homeownership problems.

    However, the eviction and foreclosure suspensions won’t solve the problem, these groups point out.

    “It’s a nice gesture and more than that for the families facing foreclosure. But it won’t turn the economy around, and it won’t turn foreclosures around, which is what we need to do,” says John Taylor, president of the Washington-based National Community Reinvestment Coalition, which advocates fair lending and fair housing.

    Some public-relations executives think the suspensions are a smart move. “After President Obama called them fat cats on ’60 Minutes,’ they have such a black eye it’s the wise thing to do this,” says Jeff Crilley of Real News Public Relations in the Dallas area. “To do it when they are not asked to do it makes them look good.”

    However, Mr. Taylor says, bankers have a long way to go to resurrect their image. He recalls the classic movie “It’s a Wonderful Life” and the character of Mr. Potter, a heartless banker. “Some of these bankers are making Mr. Potter look good,” Taylor says.

    Citigroup generally slows down the eviction and foreclosure process during the holidays, says Mark Rodgers, a spokesman for the financial institution.

    “It’s the right thing to do,” Mr. Rodgers says. “This is the time when there is so much anxiety. You want to give people some time to spend with their families and not think about a foreclosure or eviction hanging over their heads.”

    The bank, he says, also hopes that the suspension encourages people who are behind on their payments to contact the bank or the mortgage servicer.

    “We hope some people view this as extra time to see if they can work anything out,” Rodgers says. “Maybe there is a solution such as a short sale [you sell the property for less than the principal on the mortgage], or a deed in lieu [basically handing the keys to the lender, who sells the property].”

    http://www.csmonitor.com/USA/2009/1217/Holiday-cheer-Citigroup-suspends-foreclosures-for-30-days

  • America’s decade of dread

    Financial decline of US in this decade is not a sudden one.It is the result of years of faulty planning and lopsided priorities.There used to be a time when middle class moved up the ladder and additional people from middle order still moved up because they had room and Govt. policies stimulated this phenomenon.Now middle class ,having moved up did not pull additional people from the same group nor does the Govt. of any help.;Govt. is busy pampering the already settled neo rich, with an eye only on the stock market, forgetting that stock market participants form only a minuscule of population.Stimulating other sectors more, if not equal to financial sector is called for.
    Conspicuous consumption is to be reduced.Use of plastic money is to be discouraged.
    Savings is to be promoted by offering incentives.Luxury items are to be taxed.Cap on individual income in Corporate sector is necessary.
    Import is to be reduced.Above all live within means and do not live to day as if there is no tomorrow.
    Infrastructure outlay must be increased.
    This decade began and ended in dread. It began with Wall Street — the World Trade Center — targeted for mass murder. It ends with Main Street fearful and reeling from economic reverses that Wall Street helped create.

    It was the decade of distraction. While the U.S. economy bubbled and then crumbled, the president for eight of the decade’s 10 years embroiled us in a grudge match with Saddam Hussein and then persisted in throwing lives and money into the chaotic conflict that (as many predicted would happen) ensued. The decline of the American middle class was nowhere on his radar screen.

    The stocks bubble of the late 1990s was succeeded by a bubble in housing; these were the engines of our economic growth. America’s production of goods no longer received the level of investment that had made it the engine of our economic growth from the mid-19th century through the 1970s. The change began at the outset of the Reagan years, when the percentage of corporate profits retained for new investment dropped sharply. A report from the International Labor Organization published last week shows where the money went: to shareholder dividends, disproportionately benefiting the wealthy. In the prosperity years of 1946 to 1979, dividends constituted 23 percent of profits. From 1980 to 2008, they constituted 46 percent.

    Finance boomed. The gap in annual wages between workers at financial companies and workers at non-financial companies, the ILO reports, grew from $11,000 in 1989 to $40,000 in 2007. The financial sector defended this shift by arguing that it had created many innovative financial products — the very financial products that managed to turn downturn into Great Recession. In an interview in Monday’s Wall Street Journal, former Fed chief Paul Volcker said that he has “found very little evidence that vast amounts of innovation in financial markets in recent years have had a visible effect on the productivity of the economy.” He went on to say: “All I know is that the economy was rising very nicely in the 1950s and 1960s without all of these innovations.”

    The dread in the land today isn’t just a fear of losing your job — or of your spouse, sister, father or child losing his or hers. It’s a fear that America has been hollowed out, that we don’t have a sustainable path back to mass prosperity, let alone to economic preeminence. A poll taken last month for the Council on Foreign Relations (CFR) shows that 44 percent of Americans considered China to be the world’s leading economic power, while just 27 percent thought the United States still held that throne. Such fears can only be intensified by public policies that fail to champion America’s national interests by fostering the flight of investment abroad.

    Overcoming some of our national phobia about having an industrial policy, the Obama administration has rightly targeted the renewable energy sector for investment — a long overdue shift back to real, rather than financial, production. But we don’t yet have policies to ensure that the real production we’re fostering is done at home. As Joan Fitzgerald, director of the Law, Policy and Society program at Northeastern University, notes in a recent article, 84 percent of the $1.05 billion in federal clean-energy grants distributed since September has gone to foreign wind turbine manufacturers. Unionized, high-wage Germany and non-unionized, low-wage China both have thriving wind-power industries that profitably export their products to us. We have shunned policies that bolster domestic production, which is why more Americans are betting on China’s economy than on our own.

    The problem is that America’s economic elites have thrived on the financialization and globalization of the economy that have caused the incomes of the vast majority of their fellow Americans to stagnate or decline. The insecurity that haunts their compatriots is alien to them. Fully 85 percent of Americans in that CFR-sponsored poll said that protecting U.S. jobs should be a top foreign policy priority, but when the pollsters asked that question of the council’s own members, just 21 percent said that protecting American jobs should be a top concern.

    The moral world that we see in that poll is the moral world of Charles Dickens. Of the elite of his day, he wrote in “Bleak House,” “there is much good in it. . . .” But, he continued, “it is a world wrapped up in too much jeweller’s cotton and fine wool, and cannot hear the rushing of the larger worlds, and cannot see them as they circle round the sun. It is a deadened world, and its growth is sometimes unhealthy for want of air.”

    America, at the end of this dreadful decade.
    http://www.washingtonpost.com/wp-dyn/content/article/2009/12/15/AR2009121503382.html?wpisrc=newsletter&wpisrc=newsletter&wpisrc=newsletter