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/burningman’d
Just why is there so much debt in the Anglo-Saxon world? Bankers and regulators know well that it is in nobody’s long-term interests to have allowed borrowing to escalate to a position where the US now owes far more, as a multiple of the economy, than at the start of the Great Depression.
The answer is capitalism’s dirty little secret: excessive lending was the only way to maintain the living standards of the vast bulk of the population at a time when wealth was being concentrated in the hands of an elite.
The amount by which the elite has benefited is startling, and illustrates the problem with lightly regulated free markets: the rich get much richer while the rest do not get richer at all. According to Société Générale economists, the inflation-adjusted income of the highest-paid fifth of US earners has risen by 60 per cent since 1970, while it has fallen by more than 10 per cent for the rest. As was recently pointed out in the New York Review of Books, the Walton family, of Wal-Mart fame, is wealthier than the bottom third of the US population put together – about 100m people. These are staggering statistics, confirmed by measures such as the US and UK’s ever-rising Gini coefficients, which estimate income disparity. Another way of putting this is that the share of profits in gross domestic product is at a 100-year high, or was until very recently.
Put simply, the benefits of economic growth have gone into the pockets of plutocrats rather than the bulk of the population. So why has there been no revolution? Because there was a solution: debt. If you couldn’t earn it, you could borrow it. Cheap financing was made widely available. Financial innovations such as the asset-backed securities market aided this process, as did government-sponsored agencies such as Fannie Mae and Freddie Mac. Regulators welcomed it all while perhaps taking insufficient account of the moral hazard problem it posed: that ever-increasing leverage meant the authorities had to keep interest rates low, otherwise the debt burden would cripple consumption. This prompted more leverage, which exacerbated the problem.
Hey.
You a dreamer?
Yeah.
Haven’t seen too many around lately. Things have been tough lately for dreamers. They say dreaming’s dead, that no one does it anymore. It’s not dead, it’s just been forgotten. Removed from our language. No one teaches it so no one knows it exists. The dreamer is banished to obscurity. Well I’m trying to change all that, and I hope you are too. By dreaming every day. Dreaming with our hands and dreaming with our minds. Our planet is facing the greatest problems it’s ever faced. Ever. So whatever you do, don’t be bored. This is absolutely the most exciting time we could have possibly hoped to be alive. And things are just starting. - Waking Life
WASHINGTON — Banks and mortgage lenders are placing top priority on killing President Obama’s proposal to create a new consumer protection agency that would regulate home loans, credit card fees, payday loans and other forms of consumer finance.
The Obama administration fired an opening shot on Tuesday, sending Congress a detailed, 150-page proposal for an agency that would set new standards for ordinary mortgages, restrict or prohibit risky loans, investigate financial institutions and enforce new laws aimed at protecting credit card customers.
“This agency will have only one mission — to protect consumers,” said Timothy F. Geithner, the Treasury secretary, in a written statement on Tuesday.
But industry executives vowed on Tuesday to fight Mr. Obama’s plan with everything they have, even though banks are still heavily dependent on many taxpayer-supported loans and loan guarantees to get through the crisis.
Banks Balk at Agency Meant to Aid Consumers | NYTimes
This really sums up the current situation in our country nicely. Imagine a world where Banks just received trillions of dollars in Tax Payer money, the ability to move trash assets (in the 10’s of Trillions) off their balance sheets because there wasn’t any other accounting tricks they could pull in order to free up credit, allowing them to make record profits and still have the audacity to say “Over our dead bodies” to those same Tax Payers at the first sign they would get some better government protection.
You don’t have to imagine it - that is the current political and financial environment. People need to realize that although it might not seem like it - we the people consumers still have power. If we can’t count on our Local, State, and Federal representatives to make decisions in our favor, then we must vote with our dollars, and who and what we do business with. Corporations care about their bottom lines, so hit them where it hurts. Support businesses and products that still have respect for human life and rights, and not just in your backyard, but across the globe.
Zeitgeist: Addendum
