Thu Feb 12th, 2009 at 07:33:53 AM EST
The Recovery Plan From Hell : Information Clearing House - ICH
While the Obama administration's financial planners wring their hands in public and say "We feel your pain" to debtors at large, they also recognize that the past ten years have been a golden age for the banking system and Wall Street. The wealthiest 1 per cent of the population has raised its share of the returns to wealth - dividends, interest, rent and capital gains - from 37 per cent of the total ten years ago to 57 per cent five years ago, and an estimated 70 per cent today. Over two-thirds of the returns to wealth now go to the wealthiest 1 per cent of the population. This is the highest on record. We are approaching Russian kleptocratic levels.
Yet the financial Hard Right of the political spectrum - the lobbyists now in control of the Treasury, the Federal Reserve and the Justice Departments for starters - repeats the new Big Lie: that it is the poor who have brought the system down, "exploiting" the rich by trying to ape their betters and live beyond their means. Subprime families have taken out subprime loans, the lying poor have signed documents to obtain "liars' loans," as Alt-A, no-documentation loans are called in the financial junk-paper trade.
I learned the reality a few years ago in London, talking to a commercial bank strategist there. "We've had an intellectual breakthrough," he said. "It's changed our credit philosophy."
"What is it?" I asked, imagining that he was about to come out with yet a new junk mathematics formula?
"The poor are honest," he said, accompanying his words with his jaw dropping open as if to say, "Who could have guessed?"
The meaning was clear enough. The poor pay their debts as a matter of honor, even at great personal expense. Unlike Donald Trump, the poor are less likely to walk away from their homes when market prices sink below the mortgage level. In today's neoliberal Chicago School language, the poor behave "uneconomically." That is, they make choices that do not make economic sense, but rather reflect a group morality. This sociological gullibility is what made them rich pickings for predatory lenders such as Countrywide, Wachovia and Citibank.
An excellent article from Michael Hudson, postulating that the grand plan of Wall Street is to take an "Equity Share" in the future property gains of distressed borrowers.
It's not really that the Poor are more or less honest than the rich - it's just that for them, property is always a home, and not just an investment.