September 01, 2007

The Pwnership Society

To pwn: To take unauthorized control of someone else or something belonging to someone else by exploiting a vulnerability.

The Obscenely Wealthy vs. the Rest Of Us:

... Nationally, investment banking accounted for just 0.1 percent of all private sector jobs, but it accounts for 1.3 percent of all wages, the bureau said. Of the nationís 132.5 million private sector jobs, 173,340 were in investment banking in the first three months of 2006, the report stated.

... Data released last week by the Internal Revenue Service showed that in 2005 Americans reported more total income on their tax returns for the first time since 2000. Because the population grew, however, the average income was almost 1 percent lower per taxpayer and 2 percent lower per capita.

... The average 2005 income was 4.2 percent more, in real terms, than in 2004. But this increase was almost entirely at the top. One in 500 taxpayers makes more than $1 million, but those taxpayers reported 58 percent of the total income gain, the I.R.S. report, known as Table 1.4, showed.

Bush's Foreclosure Society:

... But while Bush's terrorism fetish filled the country with fear, his 'homeownership' mantra had the opposite effect: duping vast sections of the country into the thinking they owned homes, when in reality all they had done is sign themselves up for mortgages so rigged in the banks favor that they make credit card contracts look like birthday cards. Any honest financial planner would have looked at 99% of these 'sub-prime' and adjustable mortgages against the financial realities of the new home buyers and given vastly different advice about loan amounts. Somehow the simple questions never got asked--questions like, 'Are you sure you can handle this much debt over the next five years?' or 'Are you aware that these radical increases in your payments will likely happen in the next three years?' or 'Is it clear to you that housing prices at these levels cannot sustain themselves for more than 24 months, after which it is likely that prices will drop?' Nobody pushing the 'ownership society' on America's first-time home buyers seemed able to ask those questions at the time they needed to be asked--when the new buyer was poised to sign onto a loan that would inevitably set them on a course for total financial ruin in 3-5 years.

... What we will see in the wake of this new foreclosure society is what we always see when people struggling to get ahead lose the game because the rules are rigged against them. Prices will plummet, speculators with vast amounts of capital will swoop in, and vast amounts of property America's families once held will become the holdings of the 10,000 dynastic families in his country that benefit from George W. Bush's policies.

... 1 out of every 200 households in Neveda foreclosing? A 39% spike in foreclosure rates in just one month in Michigan?

This is the kind of stuff that destroys entire towns, not just families...

And our friendly, neighborhood bankers are laughing at us all the way to the ... watercooler, I guess:

According to BusinessWeek (registration required), some banks now make over 75% of their money from hidden fees on their customers -- account closing fees, customer service fees, and many more. All in all, these service fees raked in $32 billion for the banks in 2004.

That means each American family spends almost $300 on surprise fees every year, on average. Many pay nothing, of course, but that also means that millions pay even more. ...

They're going to keep laughing. Because even as a wave of foreclosures and credit walls hit the country, our bankruptcy laws were rewritten to turn more Americans' debt into something more like my college loans, which is to say, non-dischargeable:

... 58 [Senators] voted against giving just a little protection for military families set upon by predatory lenders. 74 voted against a 30% usury cap, saying the credit card companies are free to take whatever they can get. 58 voted against treating families beset by cancer and diabetes differently from those that run up bills on fancy vacations and over-priced nonsense. ...

I see the Senators' point, though. It's important for individuals who make bad financial decisions, like buying homes, joining the military, or getting cancer to learn their lessons, as Tula Connell reminds us over at the AFL-CIO's blog, in a post you should click over and read in its entirety:

... Democrats in Congress are proposing measures to enable lower-income families to renegotiate their loans so they can stay in their homes and avoid foreclosure. Many Republicans likely will argue that individuals got themselves into loans they canít pay, and it isnít up to the government to bail them out.

So why is it OK for the government to bail out Big Business?

... The latest twisted rationale for corporate welfare revolves around the buzz phrase ďmoral hazard.Ē Moral hazard is a bad thing, according to the corporatocracy, when it involves bailing out ordinary citizens who brought a financial crisis on themselves. If the government gets them off the hook, the argument goes, they will never learn their lesson and will only get into more financial difficulty.

Moral hazard somehow doesnít apply, though, when itís used to bail out rich investors. Although logically cutting interest rates to help hedge funds would encourage a resurgence of the same risky mortgage lending that led to the current turmoil ...

... Lesson: Bailouts for corporations and the wealthiest individuals are done out of pragmatism. Assistance to low- and middle-income families are handouts.

Remember that next time you go to the polls.

I will.

Posted by natasha at September 1, 2007 01:51 PM | Economy | TrackBack(1) | Technorati links |