Bankclosure: What goes around…

Ed Stein

For USA GOLD

 The pace of residential foreclosures slowed in November, but it wasn't because the housing market had fundamentally improved. Instead many banks put a hold on foreclosures amid swirling concerns over faulty paperwork and procedures. In fact, new home sales plunged by 8.1% in October to just 283K, down 80% from the peak of the housing boom. Zillow, an online real estate database, projects that home values will be off $1.7 trillion in 2010, worse than the $1.05 trillion loss recorded in 2009. Zillow estimates that $9 trillion in residential home equity will have been wiped out since the housing market peaked in 2006.

Recently, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Fed was obligated to reveal the details of the $3.3 trillion in emergency aid it doled out in 2008 and 2009. Along with bailouts of the usual suspects, it was revealed that the Fed also bought hundreds of billions of dollars worth of mortgage backed secutities (MBS) to bail out foreign banks while in the active course of bailing out other corporations and even other central banks. It is now abundantly clear that the Fed is the lender of last resort to the world... which begs the question: Who bails out the lender of last resort to the world?

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