Brutal Recession Destroyed Americans' Wealth, Net Worth Down 40% In 3 Years (Forbes)

[kenny blankenship]

15. By having the federal reserve buy their fecal mortgage backed securities at face value!

It's called "Cash for Trash", and QE and QE2, and it's why the bankers and Wall st. are rolling in dough right now. (no not that QE that just celebrated a Jubilee without any debt forgiveness. Quantitative Easing - a fancy pants term for the Fed taking on shit assets from banks onto its own balance sheets)

Meanwhile, Ma and Pa Kettle get no relief on their upside down mortgages.

Meanwhile, the official Fed policy for righting the capsized economy is to flood the same banks who deliberately inflated the housing bubble with zero interest rate liquidity so they can play HFT(high frequency trading) computer games in the stock market and replace the funny money of housing with funny money from stocks. Let's just replace one deliberately inflated asset bubble with another - that make sense right? Oh, but they'll be even handed and fair about it, surely? Well, do Ma & Pa Kettle get comped the zero interest Bernanke Bux that the banks get? No. Do they get to front run the stock market with HFT computerized trading (which ought to already be illegal under existing SEC regulations)? No. Do the downtrodden Kettles receive a Fed issued debit card charged up with $50,000 and a blessing from Ben to "Go, Thou, and spend it in the real economy and get our industry moving again!" No.

Now you wanted to know how the 1% could profit from falling real estate prices. As indicated above, they are protected from losses on their class specific vehicles for speculating on real estate. Poor people don't have Mortgage Backed Securities - neither sound ones nor crap stuffed ones. Banks, the premier 1% players participate in that. When their crap-stuffed MBOs start to stink, Smiling Ben takes them off their hands at face value instead of their market value (which is nil). They are protected as a matter of policy: Too Big To Fail. Real estate crashes, and the private sector assets, or trash-sets as they might be more properly called, are then moved onto the publicly backed balance sheet of Uncle Ben at or close to par (that's backed by the currency and future earnings of American taxpayers). During all this, ordinary people are losing purchasing power like shit going through a goose. They're unemployed and looking for work. They're getting permanently dropped from the rolls of the workforce. They're taking cutbacks in wages and hours. Their incomes are being way out-paced by inflation. As the report indicates they've lost the equivalent of about 20-25 years gains in accumulated net worth. But this is not happening to the rich, neither the rich individuals or the TBTF institutions they suck teat on. What does that disparity mean?

It means the 1% can buy up all the assets that are hitting the market because poorer people are repossessed on or otherwise forced to liquidate. The purchasing power of the rich is not just intact since early 2009, but has objectively improved. It's not just improved but because the purchasing power of the non-rich is actually in reverse, purchasing power is being multiplied for the rich. The Fed backstopped 1% thus are able snap up swathes of real estate and other assets at CYCLICAL LOWS. And that's what they're doing right now. If you want to buy a piece of property from them, and they want you to eventually - but for the moment they are in accumulation mode - you will have to pay a higher price.

The criminal class gets trillions thrown at it, as a reward for a career of crime and fucking things up, all in the wan hope that they will start lending again I suppose, someday. They also escape prosecution for control fraud. The real economy and the 99% who swim in it get fucked through the eyesockets - by the banksters and their boot boys in the government.