Let us start with the downfall of our economy in 2008

Let us start with the downfall of our economy in 2008.  Everyone pretty much agrees that the buying and selling of mortgages and the derivatives, side bets, and insurance on those Wall Street bets brought our economy to its’ knees.  And yet neither the new Obama Administration, Congress, or Paul Guetner never once put onto the table that maybe the buying nor selling of mortgages should be made illegal. 

Honestly, the selling of mortgages (debt) should not be packages into “securities” and sold on the open market.  This is not just an economic issue it is a consumer protection issue.  I want the same mortgage my parents had!  Whoever gave me the mortgage loan is the person and company that I am beholden to for the next 30 years.  My folks became best friends with their real estate agent.  Why?  Because it was an honest transaction and she was a genuinely good person.  In the early 2000’s mortgage companies started a policy called “point and sell”.  What this meant was that your mortgage was sold to another company before the ink on your signature dried.  They didn’t care who you were or your income or your ability to repay the loan because they got their commission and immediately sold it.  The mortgage company took no risk whatsoever.  Where was the consumer protection agency?  Do they even still exist?

Our real estate system is corrupt.  It is not good for the consumer, it is not good for investors who think they are buying a secure investment, mutual fund or IRA when they are really buying other peoples depts.  These “investments” rely on the hope that millions of strangers  will pay off their depts.  The cure is simple.  The buying and selling of mortgages should be illegal.  This would create a stable real estate market and consumer protection for those who want to buy homes and can actually afford them.

It would also prevent the wholesale selling of our real estate problems to foreign countries obsolete.  The reason why my mutual funds and college savings accounts tanked in 2008 was because some of those investments were involved in buying these “debt securities” (an oxymoron) when I thought I was making an investment in companies that actually produced things.  When the economy fell I was taken by surprised because I thought I was not invested in real estate when in fact I was.  So was most of Europe.  That is why the world economy is so bad because we exported our problem by selling securities that were really dept.  The thing that sickens me most is that WE ARE STILL DOING IT!  Wall Street hit a record high in trading today (3/6/13).  The news touts it as a good thing, but most of the trading is actually trading of “debt securities”. 

The answer to a stable economy is the buying and selling of mortgages and all debt for that matter (credit cards, auto loans, etc.) should be illegal.  Whoever gives you the loan should be responsible for your loan.  They take the risk and they alone should reap the rewards.

If I were President of the United States I would make the buying and selling of loans and all “debt securities” illegal.