You are browsing the archive for Debt.

Occupy History: The American Revolution Was About Debt Relief

10:07 am in Uncategorized by DSWright

Happy Independence Day! It seems appropriate given Occupiers are in Philadelphia right now to mention an interesting aspect of the American Revolution: debt relief.

From the New Yorker:

The American Revolution, some historians have argued, was itself a form of debt relief. In 1787, just before the Constitution was drafted, New Yorkers formed the Society for the Relief of Distressed Debtors. They launched an investigation and found that, of 1,162 debtors committed to debtors’ prison in New York City in 1787 and 1788, 716 of them owed under twenty shillings. In 1758, New York’s debtors were moved to New Gaol, near what’s now City Hall Park. Describes the horrible conditions in New York’s debtors’ prison. In 1791, John Pintard, a state legislator and stockbroker, fell for William Duer’s financial scheme, which helped trigger the Panic of 1792, the nation’s first stock-market crash. Pintard eventually landed in debtors’ prison in Newark.

The idea that debt is necessary for trade, and has to be forgiven, is consequent to the rise of a market economy. Americans fought to provide the same debt relief to everyone because we believe in equality and because bankruptcy protection makes taking risks less risky. Our willingness to forgive debt lies behind a good part of our prosperity. Pintard got out of jail in 1798, and he filed for bankruptcy in 1800. He went on to found the New-York Historical Society in 1804, and to help open the New York Bank for Savings in 1819. Mentions Joseph Dewey Fay. In 1841, Congress passed a sweeping federal bankruptcy law that offered bankruptcy to everyone. Meanwhile, in 1831, the New York State Legislature abolished imprisonment for debt. Other states soon followed. Debtors’ prison was abolished, and bankruptcy law was liberalized, because Americans came to see that most people who fall into debt are victims of the business cycle, and not of fate or divine retribution.

Oh how far we’ve fallen.

Today not only do homeowners not get debt relief they get fraudulently foreclosed on. And students are saddled with debt their entire lives that can not be discharged even during personal bankruptcy.

Debt slavery is back in style, will Revolution follow?

RIP Middle Class: Americans’ Wealth Plummeted 40% from 2007 to 2010

4:09 pm in Uncategorized by DSWright

Wall Street’s fraud based crash has really taken its toll. From Washington Post:

The recent recession wiped out nearly two decades of Americans’ wealth, according to government data released Monday, with ­middle-class families bearing the brunt of the decline.

The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992.

But don’t call it class warfare.

The recession caused the greatest upheaval among the middle class. Only roughly half of middle­-class Americans remained on the same economic rung during the downturn, the Fed found. Their median net worth — the value of assets such as homes, automobiles and stocks minus any debt — suffered the biggest drops. By contrast, the wealthiest families’ median net worth rose slightly.

The drops are truly staggering both for income and net worth:

Read the rest of this entry →

Krugman: 1% Have “Warped Our Political System” and What It Means

7:22 pm in Uncategorized by DSWright

Photobucket

 

I do not typically find modern liberals particularly useful or engaging but I have to admit, Professor Paul Krugman may be an exception. His social and political analysis is always lucid (rare among academics) and his credentials – a feature oh so important to the establishment – are beyond reproach. So having Nobel-Laurette Princeton Economics Professor Paul Krugman PhD make similar critiques, or really just reveal the same set of facts, as the 99% Movement and Occupy Wall Street is both poignant and empowering. You don’t even have to be a Keynesian to enjoy it (though I imagine it helps).

 

Photobucket

 

From Plutocracy, Paralysis, Perplexity:

Did the rise of the 1 percent (or, better yet, the 0.01 percent) cause the Lesser Depression we’re now living through? It probably contributed. But the more important point is that inequality is a major reason the economy is still so depressed and unemployment so high. For we have responded to crisis with a mix of paralysis and confusion — both of which have a lot to do with the distorting effects of great wealth on our society…

Today, Washington is marked by a combination of bitter partisanship and intellectual confusion — and both are, I would argue, largely the result of extreme income inequality…

Specifically, money buys power, and the increasing wealth of a tiny minority has effectively bought the allegiance of one of our two major political parties, in the process destroying any prospect for cooperation…

No, the real structural problem is in our political system, which has been warped and paralyzed by the power of a small, wealthy minority. And the key to economic recovery lies in finding a way to get past that minority’s malign influence.

Of course, there is one obvious critique to Krugman’s essay, not of the analysis but of an omission. While it is rather clear the heart and soul of the Republican Party are moneyed interests who use the organization to promote plutocratic interests, finding coalitions with any group that will drive turnout and not challenge Neo-feudalism (Gods, Guns, Gay-haters) – there is something Krugman is omitting.

The Democratic Party has been captured as well. There are many reasons for this, not the least of which is the decline of unions. Politics is an ugly game, so say what you will about the pathologies of Big Labor but they weren’t afraid to take on Big Business and had the strength, tenacity, and viciousness necessary to do it and win. To be fair, unions helped destroy themselves with AFL-CIO President George Meaney and Teamster President Frank Fitzsimmons endorsing Nixon in 1972. How sorry can you feel for people who slit their own throat?

In the Teamsters instance the endorsement was part of a corrupt deal hatched by Nixon apparatchik Charles Colson and Fitzsimmons, namely that in exchange for Jimmy Hoffa getting out of prison the Teamsters would endorse Nixon. Oh, and Hoffa would be banned from labor activity until 1980. That last amendment was apparently requested by Fitzsimmons, securing his presidency of the Teamsters Union. When Hoffa found out he threatened to retaliate by exposing Fitzsimmons and others’ illegal activities and then Hoffa… disappeared. In the AFL-CIO instance President Meany stated he believed the Democratic candidate George McGovern was “an apologist for the Communist world.” The wrecking of the New Deal Coalition and a more malignant Chamber of Commerce diluted labor even further. Needless to say, Reagan’s Neoliberalism found a more receptive environment than it should have in 1980 (Reagan also received Teamster endorsements in both 1980 and 1984).

So with labor on the ropes who would pick up the slack and fight for the working class and poor within the Democratic Party? Nobody.

 

Photobucket

 

The plutocrats got free reign while progressives made progress on other issues like civil rights, women’s rights, and gay equality. And the Democratic Party became a second front for corporate interests culminating in the creation of the Democratic Leadership Council (DLC) which promotes Big Business within the party itself. They even helped promote a corporatist party leader, President Clinton; who deregulated Wall Street, shredded welfare benefits, and helped jam through NAFTA and other trade agreements aiding Corporate America in its endless quest to ship jobs abroad and dodge taxes for greater profits. Big Business would have two political parties, one pro-life, one pro-choice.

This system, with all the electoral kabuki theater of two candidates pretending to actually disagree with each other vis a vis plutocracy (I’m a pragmatic liberal! I’m a compassionate conservative!), would have continued except allowing the 1% to do whatever they want with no check on their power and influence lead to the outcome it always does – a crash.

And not surprisingly the minute rich people got into trouble both parties scrambled to find ways to help them. By the end, the establishment ran out of ideas and simply handed Wall Street everything they wanted – endless loans from the Fed and hundreds of billions in bailout money to make private debts become public debts. Because both parties were constructed or should I say reconstructed to serve the interests of the 1%.

But here is the problem, most people in America (and the world if anyone cares) are not in the 1%. In fact, they will never be in the 1%. So they are getting royally screwed under this system, as Krugman notes rather clearly. The 99% have no reason to believe in this system and they don’t. Confidence in institutions and belief in a better future has been shattered. The noose of debt slavery and poverty is tightening around the middle class, what’s left of it.

Are we on the verge of a revolution? Probably not. At least not yet. Right now people are just fed up but it seems most are still hoping for some kind of miracle that will shift the country in the right direction, as many were in 2008. They aren’t going to get one. So what happens the next time Wall Street shits the bed?

Nothing good and nothing peaceful. Then you might see that revolution.

That’s why this is the time for the Democratic Party to reform itself, cast out the 1% apologists, and provide voters a real alternative to 1% based politics. That’s not Obama, not even close. So vote him back in, but realize that’s not going to solve the problem. Because Presidents like Clinton and Obama come from a party that, since the wrecking of unions, is not dedicated to advancing the interests of the 99%. It is at best, plutocrat light. As Krugman notes the plutocracy has lead to paralysis – and paralysis in the face of a crisis is disastrous.

Reform now, before it is too late.