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James Howard Kunstler: Now What?

Where we stand now is on the cusp of another giant step into the abyss, since the latest storm of Foreclosure-Gate suggests pretty strongly that mega-tons of mortgage-backed securities are assured of blowing up, as well as the sundry derivatives of these things (CDOs, CDOs-squared, plus the massive fetid matter infesting the alternative cosmos of credit default swaps). If you follow the media-of-record like The New York Times and the Wall Street Journal, you would have to conclude that there is no extant plausible notion among financial leaders as to how the fiasco of botched mortgage-and-title documentation can be resolved. After three weeks of emerging events around this debacle, the consensus among the power brokers is to pretend that there's no problem, that the issue of missing, forged, post-dated, trashed, or non-existent paper related to claims on property can just be put aside, brushed under the rug, glossed over, ignored. Let me tell you something: this problem is not going away. At the very least it is going to paralyze the real estate industry for as far ahead as anyone can see. For another thing, it could force the disclosure of what the banks are holding in their vaults in the way of worthless paper and expose their insolvency. For still another thing, it could lead to rafts of lawsuits that would additionally shove the banks toward collapse, demolish the claims that underlie our currency, call into question the meaning of property ownership per se that is the basis of Anglo-American law, and tie up the court system until kingdom come.

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