April
29, 2008
"JUDY GARLAND AND THE SUBPRIME CRISIS"
The irony is that however much money Judy
Garland earned in her lifetime, she was always in debt.
The celebrated singer and actress, however, put in motion
events which contributed to the subprime crisis of the
year 2008.
Very few people bring the two together but being a research
analyst all my life, I began to look for the correlation.
Judy Garland had one of her husbands, Mr. Luft, and they
had two children. They lived in the Stanhope Hotel and
Judy Garland wanted a divorce. She found that imaginative
and rather forceful lawyer, Irving Erdheim, Esq., who
became at some stage more popular in New York City, namely
in the 1970s, than the mayor of New York, wanted by every
woman not for divorce but a settlement.
Mr. Erdheim discovered the life-long alimony and in each
particular case he didn't hesitate to use visitation rights
to the children, contact with the children, to attain
what he wanted. As a result, Mr. Erdheim became rich.
However, many people became poor.
Judy Garland's two children, living with the father in
the Stanhope Hotel, were actually kidnaped and shifted
to London to the Savoy Hotel. The Savoy Hotel is where
Winston Churchill in his earlier years liked to have dinner.
Mr. Erdheim made the children the wards of the British
Crown, so as a result he obtained for a settlement not
only a downpayment but a string of payments for a lifetime,
which in aggregate amounted to, if I'm correct, $2 million.
After six months the children returned to their father
and Mr. Luft was obligated in regular yearly payments
to put Judy Garland's bank account into the black. Slowly,
Mr. Luft joins the debtors class. Now, Judy Garland's
settlement took place in the 1940's and the $2 million
long-term commitment was technically making Mr. Luft a
relatively poor man. His life was mortgaged, and that
is why Judy Garland created the subprime crisis in Mr.
Luft's life.
Mr. Erdheim, having learned from that experience, became
an expert in such settlements, always using the children
and the relationship with the father to bombard the poor
husband and having a string of payments for five, ten,
twenty years or a lifetime, committed for the mother and
against the father. In the 1970s, Mr. Erdheim even got
to the front page of New York Magazine. He was named The
Bomber of the Year, who hardly goes to court but gets
very good settlements, namely the subprime settlements
of the divorce industry.
In my case, and I was a father who spent every weekend
with my two sons, Gregory and Justin, suddenly found myself
right at the beginning strictly restricted from visitation
rights, even though I lived only a block away on purpose.
The settlement left me with a lifelong alimony of at least
$20,000 a year. So from 1980 until the present day of
almost 40 years, I was committed to pay to ELLEN RACZ,
305 East 86th Street, Apt. 5CEast, New York NY 10028,
212-427-7480, approximately, assuming I live to the age
of 80, a million dollars just for alimony alone. A million
dollars cash for a middle class person like myself, even
if I was a penniless Hungarian immigrant who came to this
country, an orphan at the age of six, I had my Cambridge
education, I had my education in Munich, Germany and in
Johannesburg, it was a million dollars committed to be
paid by an immigrant 15 years after landed in Ellis Island.?
WHERE IS THE CONSTITUTION?
My settlement also had some caveats. For instance, a house
I bought on the lake in South Salem in 1975, three levels,
at the height of my income growth, went over to ELLEN.
So not only did she get the real estate, she got the million
dollar payment scheduled at $20,000 a year until eternity.
The vulgarity of the transaction, which is tied to my
relationship with my two boys, made me angry and I reverted
to my ability to write. I put together what I consider
perhaps the best piece of literature I have ever provided,
The Multi-billion Dollar Divorce Industry. That shows
all the extras. That shows that it's not only the million
dollars but the other half a million which is taken away
from you at the time of the divorce would actually bankrupt
anybody but the very rich.
Nobody wanted to read it. I even expanded to contingency
lawyers. Tobacco lawyers, for instance, got two billion
dollars. Now, this was a liability carried by the tobacco
companies. Then came Senator Edwards, who had a net worth
of $50 million. He attacked the insurance company so his
settlement for everybody including himself became a liability
for the insurance companies. Mr. Edwards, being a politician
and a good speaker, in his various campaigns which fortunately
all became failures, claimed credit for attacking the
insurance industry. One night he would say, yes, I did
earn $50 million, but I wanted and I should have earned
$500 million, so the insurance companies could be hanged
with a $200 or $500 billion liability.
Senator Edwards is not a presidential candidate this year,
but whenever he opens his mouth I will campaign against
him as the man who didn't create liabilities big enough
to be carried by American corporate institutions. Let
me make a point very clear. The one and only reason Senator
Edwards could carry his trade is because this country
created powerful insurance industries. Mr. Erdheim and
Judy Garland could get money from men like Mr. Luft and
Andrew Racz because two of them have made some money.
The limit of how much liabilities they were forced to
carry was executed by Irving Erdheim, Esq., of Madison
Avenue and Judy Garland, the reckless singer who was willing
to prostitute her own children for money. Actually, Mr.
Erdheim's son Michael, following in his father's footsteps
in the divorce industry, if I'm correct, went to jail.
Now, the American government did know the members of the
Senate, members of the House of Representatives, did know
the tragedy divorce and contingency lawyers create in
this country. No sane person who reads the newspapers,
who watches television, doesn't know the tremendous tragedies
created by these two classes of lawyers.
Now, let us look at the dividends. I learned that if Marx
wrote "Das Capital", Stalin was the dividend.
If the multi-billion-dollar divorce industry failed to
bankrupt anything but part of the 50 percent of the couples
who divorce, there came a very modest group of people,
the mortgage bankers, who decided to take a share of the
greatest enterprise in the world, the United States of
America.
How does this now read? Mr. Smith and his family of two
children have a house worth let's say $500,000, with a
mortgage of $400,000, and they are receiving total income
from Mr. Smith of $150,000 a year. They are probably struggling
to educate two children and put one of them through college.
Every penny counts. The interest on a 6% straight mortgage
of $400,000 is $24,000, which they manage to pay. If college
expenses are too high, they borrow some money for the
difficult few years and somehow or another, they manage.
Now comes the mortgage broker. Very simple guy, couldn't
get a job as a broker in Merrill Lynch, couldn't work
at Chase Manhattan, couldn't be an accountant, first of
all couldn't be a lawyer. So the mortgage broker says,
Mr. Smith, your house is worth $600,000 and we can provide
you with the full $600,000 at a 2% rate for two years
and then 8% in the following years. Calculate the interest
and calculate the payments for five years and ten years.
This model is the subprime crisis! Mr. Smith and
his family, after the third or fourth year, cannot cope
with the payments. They borrow personally. They may manage
to pull through at the expense of lowering their standard
of living to the minimum, but the possibility exists that
they collapse. If, as it happens, real estate values knock
the price not from $600,000 back to $500,000 but to $400,000,
it would actually pay them to leave the house, keep what
little money they saved and move to California.
The little mortgage broker gets a nice commission. The
$600,000 which he brings into a bank may give him $10,000-15,000
for a transaction. There are more houses in America than
upper middle class divorce couples, so they go for half
a million dollar house, a million, two million, and suddenly
we are in what Charlie Chaplin called in his movie "Modern
Times", the modern times of the subprime crisis.
The definition of the subprime crisis is not applied to
real estate alone. The definition is that we have laws
in the United States that permit unlicensed mortgage brokers,
divorce lawyers, continency lawyers, to create liabilities
for corporations, but particularly to people, with which
they cannot cope. It is now April, 2008. For one year
we have been living off the well-documented subprime crisis.
Let me assure my audience that for a year, every executive
of Merrill Lynch, Citicorp, have been living with the
well-documented subprime crisis.
Not only the executives, but members of Congress, Senators,
presidential candidates, the President of the United States,
the Secretary of the Treasury, all are spending a large
percentage of their time either criticizing or trying
to solve the subprime crisis, which is dangerous to a
level that could bring down the financial structure of
the United States. The fifth largest investment bank,
Bear Stearns, actually collapsed.
Specialized real estate brokers like Countrywide and Washington
Mutual were almost brought to their knees and created
bankruptcies, except for the exceptional skills of our
leaders at the Treasury, at the Federal Reserve, and so
on. We have to regiment our contacts overseas, our skills,
everything almost like a war, to save the country.
[I don't want to be here an expert in subprime crisis.
I would, however, like to point out where my expertise
may lie, that pushing people to a level of near desperation,
saddled with debt, should be declared a crime the same
way insider trading is a crime, the same way money laundering
is a crime, the same way hidden overseas bank accounts
is a crime. Any of these crimes hurt the United States
but do not threaten individuals with bankruptcy, families
with dissolution, and individuals to a level where their
created capacity is killed fighting the enemy. The enemy
as I mentioned, saddling unsolvable, unfair and prohibitive
liabilities through unpunishable crimes.]
This is the problem. This is the problem that Congressman
Barney Frank should have a hearing. Unlicensed bankruptcies,
liabilities against an individual life, this must be declared
unconstitutional by constitutional means.
Well, I am not a lawyer. I'm a combination of an investment
banker and a writer, and I applied my sense of humor in
writing to get through may of the difficulties of life.
Mr. Erdheim was a jovial person. He didn't like to fly.
He had friends in Las Vegas and Florida. He used to arrive
at his office at 5 o'clock to do his paperwork. He held
well over a year and a half contact with my children in
his hand to soften me up, to sign over anything he tried
to get me to sign. I tried to fight him, appealing to
influential people until I realized that when it comes
to the multi-billion dollar divorce industry, there is
no law. There is only force and power. The late Dean Atcheson
lectured Kennedy in 1962, "The Russians only understand
force."
So when I wrote my article on the Multi-billion Dollar
Industry, I described exactly what happened with Mr. Erdheim
and Gregory and Justin and my former wife. And what I
did was I distributed my article to all the divorce lawyers
in New York, all the major law firms in New York -- after
all, Erdheim used to get a lot of business from major
law firms -- and actually tried to publish it. I failed
with the publisher but I created quite a bit of upheaval.
This was a time when the movie "Kramer v. Kramer"
was made.
Mr. Erdheim wasn't particularly happy with me and called
the head of my brokerage company and objected left and
right. Then I got an idea which appealed to me. Why not
get a permit to demonstrate in front of his Madison Avenue
office and distribute my Multi-billion Dollar Divorce
Industry to anybody in the street who wanted to read it?
The following morning he was actually visiting James Walden,
the chairman of Philips, Appel and Wanden, where I spent
most of my working life. He screamed.
I began to understand what hurt him. At 4 o'clock he sees
one copy of my article coming up to his office. At 5 o'clock
people in the waiting room are reading it. At 6 o'clock,
he has nightmares that everybody on Madison Avenue reads
it, and at 7 o'clock he thinks it will be on the Walter
Cronkite show. Actually, this worked. He screamed, objected,
threatened, and frankly he was close to seventy so I was
afraid that I would have a bigger problem. But I kept
on.
I repeated to myself what General Douglas MacArthur said:
"In war there is no substitute for victory".
So the following weekend I hired ten students, and we
had a permit from the City and demonstrated on Madison
Avenue.
My fellow Americans, this is not a joke. My relationship
with Justin and Gregory changed and was disturbed by Mr.
Erdheim. Think about all the families who have to leave
their homes or make basic cuts in their standard of living.
There are two children in each home. They will never forget
it.
The Multi-billion Dollar Subprime Crisis has brought back
to me the memories of 1945 when the war ended, when families
lived on very little, when there was a lot of friction.
After the war there were two and a half billion people
in this world. Today there are nine billion, 300 million
in America. I only hope that the trend that Judy Garland
started will end. It would be much better if the world
remembered Judy Garland in "The Wizard of Oz".
As it stands, she started a trend which hurt millions
of American children, American families, changed the whole
real estate industry, but in the final analysis all Judy
Garland created is suffering and tragedy.
This is an American tragedy.
President Nixon said once on television, "The North
Vietnamese cannot hurt America. Only Americans can hurt
America."
For goodness sake, let's come to our senses. We demand
a congressional hearing right away, not only on the real
estate crisis but on all the crises where American people
can inflict suffering of an enormous and intolerable nature
on one another. That is wrong. That is very wrong. But
only Americans can solve it.
