What would you think if public funds were used to help those who are not far off being able to do so to continue paying their mortgages? What if, whilst that public aid is being provided, foreclosure proceedings were put on hold? Well, that is exactly what is happening in the US. And these are the measures that three banking giants have already taken: Citigroup, Morgan Stanley and JPMorgan Chase. Let us also remember that the quasi-public Freddie Mac and Fannie Mae They have also suspended their repossession proceedings until 6 March for all occupied 2-, 3- and 4-bedroom flats and detached houses (in line with what we predicted last October).
These are exceptional measures designed for extreme situations. The situation facing these banks is so precarious that they can no longer exchange any more property for cash. Furthermore The Ninjas will be grateful and they will, at least for the time being, go from being Ninjas to be Squatters. But with a «c» rather than a «k», as their radicalism and alternative approach have gone hand in hand with the state’s financial authorities themselves, and it is the banks that have decided to halt the enforcement proceedings. It is these financial institutions that ought to be called Bankos, and we’re not talking about Triodos Bank. Seeing is believing…
If these practices are not rolled out, even on a temporary basis, the social problem posed by millions of people facing eviction would become unsustainable. This applies both to society and to financial institutions, which are physically unable to convert any more loans into property. Both need the state’s help to keep these mortgages afloat. Whether this involves retaining ownership of the properties or, in some cases, transferring ownership to semi-public bodies (Mac & Mae) or other entities created ad hoc, whatever they may be called bad banks or bad owners (such as alternatives to SOCIMIs or REITs, for example). In other words, property owners de facto, whether or not they are owner-occupied, and whether they are run on a for-profit or quasi-public basis, which maintain permanent purchase options for their occupants in exchange for «the will«. In a sense, that – and no other – will be the best market price for these properties, since in most cases, if the foreclosures were to go ahead and the banks were to flood the market with millions of properties, supply would overwhelm the limited demand, causing prices to plummet to levels that are difficult to assess.
No one will fail to notice the source of the funds needed to keep financial institutions afloat and the creation of these funds bad owners. Just as we have argued in various articles that the socialisation of bank losses was a necessary injustice, we also believe that the mass socialisation of these mortgages is an inevitable injustice. We say ‘harm’ because the taxes paid by solvent citizens will be used to partially pay for the homes of those who recklessly sought to become homeowners on precarious terms. And also because the complicit financial institutions will not pay for their recklessness through their just and Darwinian extinction. Why are both these arbitrary measures in our interests? Because there are so many of them, and the sums involved are so vast, that bringing them to justice would undermine the very foundations of society and the financial system. If we add to this a looming economic depression, the result is that the socialisation of the losses (of financial institutions) and of the mortgages of those involved becomes a vital necessity for everyone.
Meanwhile, the number of non-payments in Spain is rising in tandem with unemployment, and is inversely proportional to the consumer price index. Some Spanish banks (only those at the top of the rankings) boast that they have the financial strength to withstand defaults and mortgage repossessions until the end of 2010. It is true that Spanish mortgage holders, unlike American squatters, use all their personal assets as collateral for these mortgages, but despite this, the economic downturn is set to cause defaults to soar far beyond what the Spanish banking sector can withstand. From that point onwards, we are also likely to see the socialisation of mortgages in Spain.
«There cannot be a thriving and happy society when the majority of its members are poor and unhappy.«
Adam Smith (1723-1790)
«The dispossessed have a world to win.»
Karl Marx (1818-1883)
If Marx and Smith were to look up…