Tag Archives: debt

‘Two American Families’ – Frontline

indexTwo American Families follows the story of two ordinary, hard-working families in Milwaukee — one black, one white — over two decades as they battle to keep from sliding into poverty.  The FRONTLINE documentary (83:46) raises questions about the changing nature of the US economy and the fate of a declining middle class.  XXXXXXXXXXXXXX

Over the last several decades, the middle class has struggled with stagnant income, mounting debt and dwindling opportunities for steady work.  Here’s a snapshot: The State of America’s Middle Class in Eight Charts.
The existence of a strong “middle class”  seems to contradict Marx’s theory of capitalism, which imagines only two classes with opposed interests: the bourgeoisie (owners) and the proletariat (workers).   Indeed, the postwar rise of a strong middle class in the United States caused many to question the utility of Marxist theory.  Today, fewer Americans are able to achieve the upward  social mobility once considered a birthright.  Median wages have been stagnant since the 1970s and we’ve seen growing polarization in the distribution of wealth.  These trends have sparked renewed interest in Marx’s critique of capitalism.  From this critical perspective, some contend that the glory days of the American middle class are over, and that its heyday was actually a historical anomaly, the product of very particular historical and political circumstances that could never be sustained and will never be repeated.

Financialization & Austerity in Higher Education

Michael Hudson (Research Professor, UKCM) discusses the financialization of education and its consequences on the RealNews Network:

“People had thought that getting a higher education was going to be the way into the middle class. But now it’s become a larger burden on them than the mortgage debt, and especially now that the lower fifth of Americans can’t get mortgage debts. Student loans can absorb 25 or 30 percent of their income, as much as housing used to do. So the problem is that education has been financialized. Just like roads are being turned into toll roads and sold off to Wall Street firms, you’ve had the school system basically become an appendage of the commercial banking system.”  Transcript at the RealNews.

Also, see: Hidden Victim of Austerity: State Universities That Educate Our Children (Alternet)

#13O “Global Noise” Protests Against Austerity and Debt

Here’s a report on the October 13th international day of action, which began a week of protest against austerity and “odious” debt. Tomorrow, 10/17, the action comes to the Queens College Quad (12:15pm) .  From the Facebook invite, ” Tear Up Your Student Debt- Day of Action – Queens College”:

We’re calling on everyone who wants to protest outrageously high education costs and mounting student debt to organize actions in their area on October 17, where we collectively rip up (or burn up) our student debt statements or tuition bills. We want to send a message that enough is enough! CANCEL STUDENT DEBT! FIGHT FOR FREE EDUCATION FOR THE 99%!

EDUCATION IS A HUMAN RIGHT! 1 in 5 students are defaulting on their loans. 50% of the 2011 class is either unemployed or underemployed. Student debt has reached over a trillion dollars. Over the last 10 years, tuition and fees at state schools have increased 72%. The times are ripe for action! Let’s show the 1% how serious and inflamed we are about the need for an overhaul of the education system by shining a light from the ashes of our student debt statements across the country.

Blog #4: Inside Job

During my spare time yesterday, I re-watched the documentary by Charles Ferguson that highlighted and analyzed the financial crisis that America suffered in the late part of this past decade. My personal knowledge of the crisis only stretched as far as the news covered it. Such films as,”Capitalism: A Love Story,” by Michael Moore, shocked me back then and every time I watch these types of documentaries. Inside Job, went more into detail of the governments cooperation with the private financial sector, from President Regan’s deregulation in the financial sector, to the laissez faire approach the government took during the George W. Bush presidential era.

There was a huge amount of risk that was involved with the housing market. (Starting from the bottom up) Subprime loans were handed out from banks to individuals who couldn’t pay back. The banks would approve loans to individuals who wouldn’t fit the criteria of “bankable” meaning they couldn’t provide information that would assure the bank that their annual income or assets would cover the monthly payments.  Banks sold these loans and mortgages over to investment banks who packaged them into CDOs. Then insurance companies joined into the mess with credit default swaps (CDS) which insured CDOs. Both CDOs and CDS were all rated AAA by many rating agencies. Then in 2007, when the market for CDOs collapsed, investment banks were left with loans and real estate that they couldn’t unload and since they took on more assets than they could handle, many failed and required government intervention.

The blame should have fallen on the CEOs and other big players in the SEC and federal government that allowed for this risky behavior to continue. At the same time there has to be some blame to be put on the individuals. Those who were trading CDOs, those in charge of giving insurance coverages to those CDOs (CDS), to those who foolishly took out subprime loans or mortgages. Even though the movie generated outcry and a positive response to the atrocities, my feeling is that, just like every powerful documentary, the feelings are temporary. Out of every 100 people who watch the movie, possibly only 2-5 people actually go out of their own time and are proactive in the solution.

Post #3: Economy Based on Credit

Nixon said, “We must protect the position of the American dollar as a pillar of monetary stability around the world.” Which later came to be seen as there were no longer limits to the amount of money that could be printed, which in turn led to America being an economy being based almost solely on ‘plastic money’ or credit and debit.  The reliance on debit and credit leads to America becoming more and more in debt.

Debt quickly became a negative almost as soon as it was introduced into society.  It almost isn’t solely the borrowers fault, but instead it is both the lender and the borrow who can be seen as evil. Credit in its own sense is a debt because you are borrowing money from money that you don’t actually own.  Money in this sense then also becomes an evil because it is creating tension between people

David Graeber relates debt to morality.  He tells us that being consumed by debt is nothing new.  He calls debt simply a promise, a sense of obligation, which turns into something that can be quantified and transferred.  This is how he relates it to morality, putting bonds between people that wouldn’t exist if it weren’t for the debt.  It creates a moral drama, from balancing money spend in a house hold all the way to America balancing money as high up as the government.

The economy we have now is based on virtual money, which makes it a promise that we make to each other.  We see that people are falling further and further into debt because of their credit.  People don’t realize the amount of money they are actually spending because they are putting it on credit.  Money becomes almost of no use to some people because they figure they are better off just using their credit card, turning America into an economy based more on debt instead of credit.

Blog 2-The experience of moral confusion

The relationship between a creditor and a debtor has existed for centuries. The idea in which someone should borrow money to make more money is one that has fueled this relationship, and was a principle that can be linked to the economic collapse in the late 2000s.  Moral confusion however is created during times of economic disaster, as to who to protect, the creditors or the debtors. A quote used throughout the article is that “debts have to be paid”, but under what circumstances? Should austerity be imposed on a country just because their dictator made a selfish economic decision and now the rest of the country has to suffer?

These types of questions are created when rough economic times arise. Should it be an obligation for debt to be paid? In my opinion after reading this article it depends on the situation. There should be laws that protect both the lender and the borrower. A lender should be able to receive his original sum, however the borrower should not be exploited to a point in which their lives can be ruined just because a debt is not paid. Dictators in the early 1980s, and 90s, borrowed money from the imf and were forced to pay it back. However after pocketing the money and investing it in banks, these dictators forced their citizens to have to work and receive less benefits from their country just to pay back these corrupt loans.

This led to many people dying in countries in Africa just because medical funding was cut due to these corrupt loans that dictators make. In ancient texts, lenders were always looked upon as evil individuals and if you think about it things really have not changed. These current lenders were the ones that created the whole economic crisis, and should be looked at the same way in my opinion.

Blog #1- “Surely one has to pay one’s debt”

The “financial crisis” continues to raise questions and concerns for many. Specifically, debt is the biggest issue many Americans are facing today. David Graeber, an anthropologist explains his argument about debt in his book. He makes the argument that debt is a “moral confusion”. Many see debt, or better yet paying off debt as a value of morality.

Graeber explains that paying off your debt is a notion of morality. It is the greatest obligation one has and it would be almost unreasonable not to pay your debts. This idea of morality that is attached to debt is what Graeber argues. It like the morality of paying off your debt is the greatest value that is above anything, in that as individuals we use it justify everything. Is it correct? Should we uphold “debt” to a higher standard than any other value?