Smashing Capitalism
Somewhere in the Hamptons a high-roller is cursing his cleaning lady and shaking his fists at the lawn guys. The American poor, who are usually tactful enough to remain invisible to the multi-millionaire class, suddenly leaped onto the scene and started smashing the global financial system. Incredibly enough, this may be the first case in history in which the downtrodden manage to bring down an unfair economic system without going to the trouble of a revolution.
First they stopped paying their mortgages, a move in which they were joined by many financially stretched middle class folks, though the poor definitely led the way. All right, these were trick mortgages, many of them designed to be unaffordable within two years of signing the contract. There were "NINJA" loans, for example, awarded to people with "no income, no job or assets." Conservative columnist Niall Fergusen laments the low levels of "economic literacy" that allowed people to be exploited by sub-prime loans. Why didn't these low-income folks get lawyers to go over the fine print? And don't they have personal financial advisors anyway?
Then, in a diabolically clever move, the poor - a category which now roughly coincides with the working class -- stopped shopping. Both Wal-Mart and Home Depot announced disappointing second quarter performances, plunging the market into another Arctic-style meltdown. H. Lee Scott, CEO of the low-wage Wal-Mart empire, admitted with admirable sensitivity, that "it's no secret that many customers are running out of money at the end of the month."
I wish I could report that the current attack on capitalism represents a deliberate strategy on the part of the poor, that there have been secret meetings in break rooms and parking lots around the country, where cell leaders issued instructions like, "You, Vinny -- don't make any mortgage payment this month. And Caroline, forget that back-to-school shopping, OK?" But all the evidence suggests that the current crisis is something the high-rollers brought down on themselves.
When, for example, the largest private employer in America, which is Wal-Mart, starts experiencing a shortage of customers, it needs to take a long, hard look in the mirror. About a century ago, Henry Ford realized that his company would only prosper if his own workers earned enough to buy Fords. Wal-Mart, on the other hand, never seemed to figure out that its cruelly low wages would eventually curtail its own growth, even at the company's famously discounted prices.
The sad truth is that people earning Wal-Mart-level wages tend to favor the fashions available at the Salvation Army. Nor do they have much use for Wal-Mart's other departments, such as Electronics, Lawn and Garden, and Pharmacy.
It gets worse though. While with one hand the high-rollers, H. Lee Scott among them, squeezed the American worker's wages, the other hand was reaching out with the tempting offer of credit. In fact, easy credit became the American substitute for decent wages. Once you worked for your money, but now you were supposed to pay for it. Once you could count on earning enough to save for a home. Now you'll never earn that much, but, as the lenders were saying -- heh, heh -- do we have a mortgage for you!
Pay day loans, rent-to-buy furniture and exorbitant credit card interest rates for the poor were just the beginning. In its May 21st cover story on "The Poverty Business," BusinessWeek documented the stampede, in the just the last few years, to lend money to the people who could least afford to pay the interest: Buy your dream home! Refinance your house! Take on a car loan even if your credit rating sucks! Financiamos a Todos! Somehow, no one bothered to figure out where the poor were going to get the money to pay for all the money they were being offered.
Personally, I prefer my revolutions to be a little more pro-active. There should be marches and rallies, banners and sit-ins, possibly a nice color theme like red or orange. Certainly, there should be a vision of what you intend to replace the bad old system with -- European-style social democracy, Latin American-style socialism, or how about just American capitalism with some regulation thrown in?
Global capitalism will survive the current credit crisis; already, the government has rushed in to soothe the feverish markets. But in the long term, a system that depends on extracting every last cent from the poor cannot hope for a healthy prognosis. Who would have thought that foreclosures in Stockton and Cleveland would roil the markets of London and Shanghai? The poor have risen up and spoken; only it sounds less like a shout of protest than a low, strangled, cry of pain.
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These same people who couldn't afford to pay their mortgages certainly had enough money to cover their new Playstations and Lexus's. Anyone who takes home $40,000 a year and buys a house for $400,000 should be sued by the Average taxpayer because we are now going to pay for that scumbag's stupidity. Sure, the lenders are to blame as well and deserve some of the blame (and penalty), however, they didn't force these people to sign the mortgages.
Sources please.
We're SLIGHTLY interested in your OPINIONS.
We're VERY interested in your FACTS.
Thank you.
Some years ago I had my first encounter with an American socialist. Something we in Europe didn't know existed. He told me he came from a devout family who would need an extension built on the Right Wing of the White House to harbour their opinions.
He wrote something which changed a few minds about capitalism:
http://p-ced.com/History/tabid/57/Default.aspx
Be advised, folks, that in a Democeracy, the
people, by their votes, have the power to
ordain, by force of law, that they shall have
the privilege to consume more than they are
willing to produce.
Guess what happens next.
as if "votes" matters...
Actually, itis government regulation that limits the success of the "little guy>" Governmetn regulations make development and innovation more costly than it needs to be and waste the time of the innovative that could be put into development and economic advancement. The problem with our current system is too many taxes and too many regulations.
Fair does not mean that everyone has a business, an IQ OF 140 OR A 3,000 SQ. FT HOME.
The victim mentality wholesalely bought into by libs is the most oppressive thing on earth. Seeing yourself or someone else a a downtrodden victim only further depresses them.
To succeed,one must have a positive vision of success, and the moral courage and clairty to persist UNTIL you succeed. THe victim mentality rapes the individual of the courage and persistence to succeed and the greatest oppression is to keep laying that on people.
No country where governmetn controlled the means of production has prospered. Well, the people haven't, a few elites may but government control keeps teh means of prouction in the hands of the elite and away from the majority. In the USSR, people had to stand in line to buy such basics as bread, but the elite could go to the GUM dept store with hard currency and buy whatever they wanted.
Capitalism means that PEOPLE own the means of production which includes land, capital to develop and their own labor. The more government interferes, the less opportunity you have for prosperity and government owns you and your labor which is one of the other factors of production.
SOme people will live with little because they willnever bother to exert themselves. They won't make use of the educdtional opportunities available to them, they won't use libraries, they won't bother to learn English, because they know lib fools will simply stel what others more discipined, hardworking and persistent have earned and use the force of governmnent to give it to them, thus perpetuating their evil.
hmm, I guess non exploding gas tanks, safety belts, medicine that doesn't kill you, paint that contains no lead, toys that won't choke your kids and the endless list of safety is a bad idea?
Gangbuster
You forgot to note that when you write PEOPLE, you're talking about a handful of superrich. Indeed they own everything.
.
OK -- let me get this straight-- the mortgage industry lured people into buying houses they knew they would default on--- uhhhh yeah-- and defaults can put the mortgage company out of business, and certainly selling even a appreciated house is seldom more than "break even." So obviously Big Banking just wanted to screw the little guy-- ok-- I have it now!
Hc,
You almost have it.
No, that was just a bonus.
The MONEY was the goal.
For every dollar leaving a foreclosee's pocket, there's another pocket receiving said dollar.
Get it now?
Thanks.
Carnivorous Capitalism eats it's own.
In two or three years they'll be talking about the unregulated credit/mortgage industry Just like they talked about the Savings and Loan industry. Who pays for the financial devastation left in the wake of this white-collar looting? Who paid for the criminal avarice of the S&L crisis? What is going to keep it from happening again and again?
Don't we have to insist that the representation we count on to regulate in the public's best interest be truly separate from the entities that, by their charters, find this type of activity irresistable?
I really think that's where we've got to start if we hope to put an end to this type of behaviour.
Barbara:
I lived on minimum wage as a young man, and it convinced me that I should do something about my station in life. I worked two part-time jobs and added a fulltime job in the summer while I went to college and am now pretty much set for life. I also took full advantage of the government programs that were available at the time.
This experience made me a life-long liberal. Those programs made the difference. And, while I was in the room, most people used them as they were intended. This taught me that the right wing mantra about loafers and cheaters was just straight up bullshit.
I was also lucky enough to have a high IQ and a network of supporters that helped when things (like not being able to cover my rent due to car repair costs or some other disaster) got rough. I'm told that IQ is the single most reliable indicator of financial success in this society. So the luck of the draw played a part.
Your conclusion, IMHO, is spot on. The free market without regualtion is viscious, crushing the less abled underfoot as the few make off with the lions share of the wealth. Socialism/Commiunism do not elevate the masses, they merely bring the elite down to the mass's (sp?) level.
The free market, with regulation and elements of Socialism, seems to provide the best deal for everyone. The problem we have right now is that those in power shreik "socialism" and "regulation" the way those in 16th century Salem yelled "witch". Both are eqully rooted in fact.
What's the right mix? Damned if I know. But it certainly isn't what we have now.
That's a great bit of writing!
We can't just look at predatory interest rates, though. Banks have been defrauding customers in many other ways, too.
For example, you certainly didn't know that at some point "you agreed to" a provision of your bank's "terms" which says that the bank "is allowed" to process transactions in the manner that is "most advantageous to itself." Here is what that means:
We sort the largest checks and withdrawals first, and the largest deposits last. We watch the balances to see when they dip, perhaps delaying a transaction for a day or two ("we have up to 11 days").
We wait until your account balance dips low, e.g. at the end of the pay period, and then we pounce. Biggest withdrawal (from the past 11 days) goes in.. bam! FEES! Subtracting this from the balance causes the next-largest withdrawal to .. bam! FEES! By the time your paycheck-deposit arrives (dead-last in the batch) the bank might have pocketed $500 or more in FEES! From a middle-class dual-income-no-kids. From anybody.
"The owner of the casino has rigged the game."
Look for yourself at the annual report of any major national bank. Without mentioning any names, one bank in 2006 pocketed $17 BILLION in "fees and penalties." That, quite obviously, is preposterous. I smell not only a rat but a roomful of dead corpses.
I'm bookmarking this column, and sending it around...
Rob from the Rich and Give to the Poor???
The 'Rich' have been robbing the poor for centuries. They control the police, the gov't and the banks. What I find 'odd' is the fact that the rich are arguing against paying their fair share by claiming the right to keep their 'hard-earned' money. Yet, they are the ones that GIVE themselves more money and set the wages of the working-class at poverty levels. No one is robbing the rich when they speak of changing the beneficiaries of the work done by the working=class.
If capitalism is so perfect, why does it always need an injection of government funds from the Fed in order to keep it from failing or at least soften its fall! Proponents of capitalism keep talking about letting the Law of the Marketplace govern everything. But what happens when that Law turns against large corporations? In steps the government to buoy them up! Large corporations are never allowed to crash on the rocks of the Law of the Marketplace. Only individuals like you and me are allowed to do that!
Neither Capitalism nor Socialism are single things. Both are on a continuum. Far right Capitalism means little or no governmental control, all power rests in the hands of the corporations. Far right Socialism means total governmental control with little or no control in the hands of the corporations. There are many possibilities between the two. Neither is inherently bad. Thus, most socialistic countries are also capitalistic and vica-versa. the problem in the US right now is that deregulation has shifted the balance too far to the right leaving the average person at the mercy of the corporations. Americans need to know more about the rest of the world.
I hope this has been a wake up call for everyone that a revolution needs to happen!
You can keep waiting for your share of the cake, but the reality is you aren't going to get it! Some of you may have more crumbs than others, but as long as banks continue making money out of nothing...then we (including our government) will always be their beotch !
How many of these so-called sub-prime mortgages were home refinance loans or second mortgage equity withdrawal loans? It would be even more criminal if the predatory lenders were preying on existing home owners who were trying to relieve their debt burdens and ended up losing their homes to foreclosure.
Quite a few.
Go here http://www.nytimes.com/2007/08/19/business/yourmoney/19bankrupt.html?ref=business
to read about the couple with an $85,000 income who refied out of a fixed mortgage with an $850 payment into successive ARMs so they could
(1) add a $40,000 kitchen to a $140,000 house
(2) refied again to pay off $40,000 in credit cards
(3) refied again to apy off antoher $40,000 in credit cards
(4) are in bankruptcy with the house now mortgageed to $260,000 but worth $200,000 and ANOTHER $20,000 on the credit cards
(and the credit cards where not medical bills.)
Or
The refie from a fixed to an ARM to buy a motorcycle
OR here to read about the idiot journalist and his physician wife who took out a $459,000 interest-only that resets to around 10%+ because they "deserved" a house they couldn't afford and they didn't want to live where they could afford a fixed rate
http://www.washingtonpost.com/wp-dyn/content/article/2007/08/18/AR2007081800089.html
Finally, the much needed but always averted healing-crisis getting to happen?
I'm dubious, but I'll remain open to the possibility.
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