The Lyndon LaRouche Political Action Committee (LPAC) is mobilising to get the United States Congress, when they return from their current recess on Sept. 4th, to enact the Homeowners and Bank Protection Act of 2007. This is legislation that Lyndon LaRouche proposes as the only means, at this late date, for stopping millions of home foreclosures and evictions this year and next, and for launching a larger process of bankruptcy restructuring of the U.S. and global dollar-based financial system, which is now already doomed. Governors and state legislators all across the United States will enthusiastically join in this effort, which some leading bankers and Democratic Party figures, briefed on LaRouche's proposal, have already declared is "doable" and the "only salvation" for the American people.
Despite the extremely dubious claims of Peter Costello that Australia does not have a problem with sub-prime mortgages and that "low documentation" mortgages form only around 1% of Australia's trillion dollar mortgage sector, Australia also desperately needs this legislation. Australia's debt per capita is higher than that of the U.S. with our household debt to income ratio being 170% [ABS].
Increases in first home owners grants, stamp duty tax concessions for first home-owners, together with an increase in aggressive lending policies, have all contributed to many Australians taking out a four or five hundred thousand dollar mortgage that they could never really afford. Increased competition from non-bank lenders with zero deposit home loans, shared equity mortgages, and mortgages that require only limited documentation have especially inflamed the crisis.
Last year over 50% of new mortgages lent in Britain were sub-prime—the question is, is it comparable here? There are officially 200 foreclosures per week in Australia, but it is acknowledged that the true figures are hidden, so as not to trigger a market collapse like in America; Australia's largest private debt collector, Prushka, claims the true figure for foreclosures is four times as high. Last week's proposal by John Symond of Aussie Home Loans for the government to subsidise interest rate payments appears to be a desperate measure to bail out the property sector.
LaRouche's proposed legislation would freeze home mortgages, and foreclosures of home mortgages, until they are restructured to reflect real values and reorganised at an appropriate, low interest rate. An affordable monthly payment will become the basis of a new mortgage, reflecting the deflation of the housing bubble. It would also include a full reorganisation of the banks whose bankruptcy is driving this bubble, including a write-off of speculative debt obligations such as mortgage-backed securities. For a fuller summary of the legislation, click here.
