Foreclosure Theater

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An essay about foreclosure and liquidation auctions and their role in a functioning free market.
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  Everybody should make a point to determine the location and time of the monthlyforeclosure auctions held in his or her county. Having done so, everyone should make a point to attend at least one such auction. These auctions are the essential point where politics, government and economics intersect.More so, even, than legislative bodies that, granted, are pretty much open markets of moneyed political influence, auctions are where government and economics merge.Legislative bodies always have been and always will be subject to influence from thewealthy and the powerful. Never the less, in a legislature the decision does not always goto the highest bidder, sometimes it does, but not always. Usually, the legislative winner isthe side with the more skillful and politically connected lobbyists and legislative allies.While money can buy both skillful lobbyists and legislative allies, securing theseallegiances does not generally involve open bidding.At a foreclosure auction, and other similar liquidation asset auctions, society resetsmarket prices, establishes a floor on falling values, at least a temporary floor until thenext stage down, should one come, comes and does so. The role is absolutely vital to acontinuing, functional free market system. Such auctions are also the epicenter of emotional pain as bad as any outside the funeral home.I have heard the free enterprise system of markets described as an ongoing revolution thatallows a society to continuously overthrow old elites and replace them with new eliteswithout the use of a guillotine or cannon. If that is so, it goes a long way toward justifying all the system's abuses. Foreclosure and liquidation auctions are one suchmechanism that provides untold emotional, spiritual and economic abuse to those wholose their property. Yet, such auctions are essential to any chance the continuous,nonviolent revolution that is the free market has to function and muddle througheconomic downturns and contractions.The hardest and most painful action an economy has to take is resetting prices to reflectnew, relative values in money terms. Whether an economy's asset values are inflating or deflating, some mechanism for resetting the floor and the ceiling must be established in ademand economy foreclosure and liquidation auctions serve this function, as opposed to acommand economy where some central authority attempts to play this role.Like any market, foreclosure auctions have their regular players. Some of these are thelawyers who represent the creditors, sometimes the debtor, paralegals who playadministrative and functionary roles bidding for creditor, bottom feeders, people whowork the foreclosure lists looking for bargains to buy by bidding slightly more than thecreditor and others. These auctions also have people who come hoping to buy out thecreditor's interest so the srcinal property owner may stay in place by having a friend or family member bid and win.This last category of auction participant doesn't always show up. In fact, they are rarely inattendance. However, when one such does show the emotional tension is somethingtangible.  The professionals deal with these nonprofessional bidders hoping to retain the propertyfor a family member in a variety of different ways. Most bidders for the creditors submitone bid, usually the amount owed plus certain fees associated with the foreclosure procedure. If someone else bids slightly higher such creditor representatives let it go.Sometimes though, you will witness a truly sadistic creditor representative who will startlow, eliciting slightly higher bids, in one iteration of bids after the other, from thosetrying to retain the propertyIn such cases, the family trying to retain the property will go through several stages of emotion. At first, the family will believe there is a chance they will get the property back at a cost much les than they owned. Later, once it is obvious the creditor representative ismerely playing, the family will get angry. Later still, as the bidding drags on, ever higher,the anger will turn to fear and remorse.Based solely upon the facial expressions of creditor representatives using this technique,this part, the part where remorse and despair among the family trying to retain the property becomes obvious on their faces and in their private conversation, is the time thesadistic creditor representative lives for. It is clear they enjoy this. I suppose it relievesthe boredom of an otherwise routine procedure.It is, for the otherwise disinterested observer, a remarkably painful thing to watch. I doubtthere is anything to be done about it without doing harm to an essential economicmechanism. Perhaps citizens could be dispatched to observe and when this kind of  behavior is noted it could then be exposed to the public with the creditor representativeidentified and the bank he or she works for (the most egregious example I have ever observed is a woman) held up to public scorn for inflicting unnecessary pain to theeconomy's victims. Perhaps after some public exposure banks would decline to employsadists, perhaps the sadists themselves would decide to stop the practice.
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