More From the Credit Card Front (Brian) by Winston

I know - it seems like I'm obsessed with their chicanery, tomfoolery, and shenanigans...well, at least the tomfoolery - so I'll make this a quickie (I'm doing lesson planning on the Lowell mills anyway)

This piece describes what represents a new low...figuratively and perhaps literally...

Basically, you could wake up tomorrow with your credit limit very close to or below your actual current balance... yikes!

Banks to Card Debtors: Pay up now!!...Please??? (Brian) by Winston

The credit card biz used to love people with "a taste for credit" -- folks who kept high balances and more often than not paid barely above the minimum. But alas, the party is over. As the economy circles the toilet, credit card banks are reversing course -- offering incentives to pay off balances quickly so your debt balance is off their books like so many other "toxic assets." It's an interesting reversal of a long-standing policy that your balance was a good thing (I wrote about that policy a bit more indirectly here on this blog).

So why do we care? Well, they're in a panic. The banks don't know which way is up. A few weeks ago, the message was, "Buy stuff!!" Now it's, "OK - How can we make you go away?" It is times like these that a re-orientation of our relationship to debt and banks, like a debtors' union or a "bank strike," becomes more viable. The "cultural space" for (the popularization of) resistance is growing, if you will.

PS - By the way, as you might have figured out, "You are not your credit score!" rings truer because you can't even trust the accuracy of that score to begin with.

Thanks, capitalism - enjoy retirement.

This goes out to all the Individual Responsibility trolls (Sam) by Dick Strongball

Here's a decent article from a HuffPo blogger and ex-financial regulator breaking down in general terms who bears the brunt of the ahem "responsibility" for defrauding the entire lending system. And...SURPRISE, any financial analyst with half-a-brain knew all this mortgage fraud and wholesale robbery of the banks by their owners was taking place, but were either knocked on the head by their greedy superiors or had their red flags ignored by, double-surprise, people in the Bush administration whose job was to police the industry.

In place of any common-sense regulation and denial of credit to people with bad credit histories, the banks were essentially given free-license to gouge non-prime lendees with higher fees and interest rates and package those nuggets of toxic fantasy wealth into resellable debt. Turnover was apparently so quick that even the loan files for these transactions seem to have been lost in the shuffle.

http://www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html

The time is past due. These banks and institutions require a stake through the heart. Our incremental overdependence on indebtedness to these vampires just for the right to live has to come to an end. I don't give a fuck if the gov grows; our new administration has to stop handing out welfare to the demon-gods of banking and start using that money to hire people to advance our infrastructure, science, health, education, and culture. It's time to start building REAL wealth in this country again, and for the first time in our history, give everyone a real shot at living quality lives.

BankStrike (Keith) by Keith

Some comrades in Vermont have started a site called "BankStrike." Their idea seems close to what we are talking about. The site is well put togther. I sent them an e-mail hopefuly we can connect. Check it out.

They're Here to Help (Brian) by Winston

Really. Just ask. They're here for you.

Reply to the David Graeber article Brian posted (Jim) by der Augenblick

I thought Graeber made an interesting point in the article Brian posted yesterday:

For at least 5,000 years, before capitalism even existed, popular movements have tended to center on struggles over debt. There is a reason for this. Debt is the most efficient means ever created to make relations fundamentally based on violence and inequality seem morally upright. When this trick no longer works everything explodes, as it is now. Debt has revealed itself as the greatest weakness of the system, the point where it spirals out of control. But debt also allows endless opportunities for organizing.

This is absolutely right. The trick with debt is that it’s made to appear as a function of personal responsibility. Those who are responsible don’t get into debt they can’t pay back. If you’re in debt now and can’t pay it back, that’s your problem. You shouldn’t have borrowed the money in the first place.

The problem with this appeal to personal responsibility is twofold. First, if it’s an individual problem, they how can the problem be so general? According to this article “There were 145,000 home foreclosures last year -- a 21 percent increase from 2007 and a 108 percent increase from 2006. Another 11,000 families lost their homes in January alone.” The problem isn’t one of personal responsibility. It’s a systemic problem. Something went wrong beyond people’s personal choices. Choices don't exist in a vacuum. Holes are dug, and people are pushed toward them.

That brings us to the second problem: even if this couldn’t have happened without individuals making bad personal choices about their own money, it’s definitely a general, societal problem now when you consider how things have spiraled out of control as a result of it. The point has already long past where we can sanctify debt. What we need now is for companies like Countrywide to be forced by the government to get off of people’s backs and let them keep their homes. And if the government won’t force them to do it, we need to form a debtors’ union and collectively negate our debts.

Graeber sounds lukewarm on this proposal though. See what he says next:

Some speak of a debtors’ strike or debtors’ cartel. Perhaps so, but at the very least we can start with a pledge against evictions. Neighborhood by neighborhood we can pledge to support each other if we are driven from our homes. This power does not solely challenge regimes of debt, it challenges the moral foundation of capitalism.This power creates a new regime.

I mean, I guess. To respond to the idea of government intervention in the debt crisis or worse, to respond to the idea of a debtors’ union with a “perhaps”, in favor of a “moral” challenge to capital seems hopelessly perfectionistic and idealistic to me. While I'm not intimately familiar with Graeber's line, I suspect it comes from this general view that the only institutions that have the moral right to challenge capital are those that reflect the will of the people in a direct, almost mystically immediate way. A lot of leftists are skeptical of a debtors' union because they're skeptical of unions in general. They’re skeptical of the “traditional” organs of working class struggle, the ones that don’t really end up representing the people, after all.

Surely we need both. We need to turn around the moral logic of personal responsibility and constantly point out the ways in which capitalism is a system of slavery and theft, even in the relatively affluent United States. We need to mediate so-called personal problems with general categories and concepts, showing how what appears to be personal in fact exemplifies class antagonisms fundamental to the capitalist mode of production. But we also need to take a practical point of view with regard to these criticisms, and that means utilizing to the greatest degree possible all the institutions and organizing technologies at our disposal, not just the sexy, radically decentered ones. Our orientation should not just be moral or practical. It should be political. That means creating new institutions that adequately express working class power, but it also means seizing power from the hands of our masters, taking over their institutions, and wielding that power against them with impunity.

the banks are made of marble/with a guard at every door...(Brian) by Winston

...and their vaults are stuffed with silver/that the [teachers] sweated for...

upon Keith's suggestion, and in the spirit of collecting these stories as we build toward more analysis and the debtors' union, below is the text of an email I sent some fellow-travelling victims of profit motive:

So I needed to open up a "summer savings" account. Watchung did it for me at a bank that had no minimum balance (I guess they had a deal w/the bank). Montclair is so big, ya gotta do it yourself - they can't run accounts for all the employees who'd want one. Problem is, I need an account w/a low mandatory minimum balance - I clear the sucker out pretty much by late August and can't do penalties. So me and Jones go to Chase today - they were open on Presidents' Day and are in walking distance, so they got our buisness. Basically, all we wanted was a "tuck my money away so I don't spend it" account for when the summer comes. As we discussed not being able to handle the $300 minimum balance - honestly, I can't see that happening by late August - and having no need for another checking account (they like to "package" accounts), you could smell the poverty, and the conversation had this awkward, talk-in-circles, stunted kind of vibe....I thought we'd leave in search of a better po' folks' bank...

So the guy says in passing that if I had an existing relationship with Chase, he might have other things I could do. I have a credit card with Chase - I could go on for hours about cards and debt, but suffice it to say I did some dumb things in my desperate youth and I rarely use the thing now and make payments barely above the minimum - just what they love - the business calls it "a taste for credit" - they call people who pay balances "deadbeats"... Well, this guy takes one look at my roughly $17,000 card balance and says, in unison with his partner , "That changes everything." Yeah, you're telling me - it's been changing things for me for a long time....So basically, I can bundle accounts together that have an average total daily balance of $5000 (we held off on the $15,000 in case I get some windfall and pay off two grand of debt)...that's right - for those of us with little cash flow, we can keep basically nothing in both the checking and savings account, as long as we keep the card balance above $5000 - it's a disincentive to get out of debt. I wasn't shocked, but I have to admit there are few days that debt can ever be spun into something positive. Incidentally, the checking-savings connection is good to have because the feds have electronic transaction limits on savings accounts - a deterrant to using savings like a checking account - i.e. an incentive to keep your damn money in the banks and open up more accounts.

And one more - picture this: Chase Bank, the only bank in town open on a holiday, with a sign out front giving away $100 if you open a checking account w/$100 (that goes untouched for 30 days) today only...how long until these guys are working Sundays with carnival barkers outside???

I feel good - I did my part to help save capitalism today... B

PS - not to seem overly simplistic in one's analysis, but it seems to me the ____s that caused this mess need to be giving us the keys to the place, not some $100 bait...

PPS - from a race/gender/class perspective: as I watched the execs get ummm... "grilled" (ha!) by Congress, I thought to myself I'm lucky (i.e. I have the privilege) no one judges the conduct of all white males based on these guys' actions...could you imagine if a small group of say, black women, were responsible for this crisis??

PPPS - I have a relative in financial - he says these guys are DESPERATE and at least partial nationalization is pretty much a done deal before the end of 2009 (he also says he'd get his own branch from Chase if they used HIS card balance as the guide, but that's another story...)

Settling the Debt: Business Week Starts to Point Out the Obvious (X.) by X.

Check out the Business Week article below that lays the blame and responsibility for the massive debt crisis at the feet of the banks and real estate speculators. That the corporate interests that run Business Week decided to run an article that advocates massive debt write-offs at the banks' expense is a significant development. There is dissension in the ranks of capital. Big business wants this crisis to come to a resolution because it is losing untold billions. Some of the big capitalists are losing their patience with the banking industry's stalling tactics and spelling it out: Take your medicine. What is lacking here is bold mass revolutionary democratic organization of the debtors to force the banks to eat ALL of their debt (rather than passing most of it off to the taxpayers) and to use all available means to force a resolution of the looming consumer debt crisis in favor of the producers of wealth (you know, the workers).

This is the kind of information needed on a website hub in a campaign to build Keith's proposed debtors' union, along with articles on available means of resistance to the banks and credit card companies, stories of successful dual power organizing to stop evictions, company closures, etc. and exposures of the sickening decadence of the rich in the midst of this crisis (using government bailout funds to pay for exotic holidays and to give million dollar bonuses to execs).

Here are the first graphs of the Business Week article:

"The bad mortgages that got the current financial crisis started have produced a terrifying wave of home foreclosures. Unless the foreclosure surge eases, even the most extravagant federal stimulus spending won't spur an economic recovery."

"The Obama Administration is expected within the next few weeks to announce an initiative of $50 billion or more to help strapped homeowners. But with 1 million residences having fallen into foreclosure since 2006, and an additional 5.9 million expected over the next four years, the Obama plan -- whatever its details -- can't possibly do the job by itself. Lenders and investors will have to acknowledge huge losses and figure out how to keep recession-wracked borrowers making at least some monthly payments."

"So far the industry hasn't shown that kind of foresight. One reason foreclosures are so rampant is that banks and their advocates in Washington have delayed, diluted, and obstructed attempts to address the problem. Industry lobbyists are still at it today, working overtime to whittle down legislation backed by President Obama that would give bankruptcy courts the authority to shrink mortgage debt. Lobbyists say they will fight to restrict the types of loans the bankruptcy proposal covers and new powers granted to judges."

"The industry strategy all along has been to buy time and thwart regulation, financial-services lobbyists tell BusinessWeek . "We were like the Dutch boy with his finger in the dike," says one business advocate who, like several colleagues, insists on anonymity, fearing career damage. Some admit that, in retrospect, their clients, which include Bank of America (NYSE:BAC - News), Citigroup (NYSE:C - News), and JPMorgan Chase (NYSE:JPM - News), would have been better off had they agreed two years ago to address foreclosures systematically rather than pin their hopes on an unlikely housing rebound".

Read the whole article here.

PS: Where is the traditional US Left on this question? In the wilderness of irrelevant protest or pathetic lobbying as always...

Settling the Debt: Who's fighting Over What and What We Can Do About It (X.) by X.

Picture yourself sitting at a huge table of diners in a restaurant. A small group of bankers, big stockholders and corporate execs feasted on champaign and caviar all night. The rest of us got anything from half a sandwich to a couple of peas. Now here comes the check and it's a huge one. The bankers and their stock-holding buddies owe most of the bill. But they don't want to pay up. And since they know the owner, they're trying to work out a deal under which they go home while the rest of us go wash dishes in the kitchen... for the next 10 years.

As Keith points out in his bold proposal to build a debtors' union, the resolution of the current global economic crisis requires that someone take a big loss. And since no one wants to take a big loss, all the economic players in the game (classes) are doing all they can to avoid paying up. The frenzied speculation that set off the financial collapse created fictitious value for years (e.g. houses that were worth $300,000 were valued and sold at $500,000 because speculators counted on house prices to keep going up forever). Now banks, hedge funds, mutual funds, etc. are sitting on a lot of IOUs that will never be paid back (e.g. impossibly high mortgages that broke homeowners cannot repay).

The rest of big business can't get loans from the collapsing banking system to finance their upcoming projects (big business always finances future projects with borrowed money since sitting on huge sums of money is not profitable). As the crisis deepens these businesses can't get new orders for whatever they're producing (whether goods like machinery, cars, etc. or services like entertainment, health care, etc.) and start to cut down production to remain profitable, which means laying off masses of workers. The workers -the rest of us- are on average buried in personal debt that we accumulated when we borrowed from the banks (credit cards, loans) to make up for our declining real wages which the big stockholders slashed over the past decades in their desperate attempt to maintain huge profit margins (see the instructive posts by Keith and Jim for their take on Marx's explanation of the declining rate of profit).

As the economic crisis continues to deepen, the following questions become more urgent every day:

-Who will get stuck with how much of the bill?
-How much worse will the ongoing depression get before the debt question is settled?

What the traditional media pundits won't discuss is that the answers to these two questions depend on two other questions:

-Who are the economic players (classes) in the 21st century economy and how are they being impacted by the current crisis?
-Which of these economic players (classes) will successfully unite to safeguard their interests at the expense of the others?

For Revolutionary Democracy, the key is to figure out how to unite as many of the progressive economic players (classes) around a concrete plan of action to force the banking and corporate players to assume responsibility for the debt caused by the capitalist system (of which they are the greatest beneficiaries and defenders).

Keith's proposal to build a debtors' union provides us with much-needed dual power strategic direction. A united front of the working classes (from the factory to the office) and small business allies capable of launching a general debt strike could force the financial and corporate powers-that-be to renegotiate consumer debt on a mass scale (a modern Jubilee as Keith points out, which we need to evangelize among progressive Christians!). A massive consumer debt settlement in turn would jump-start the economy by returning to the workers the buying power they are due (e.g. when you get your check, you can actually spend some of it and save some of it, rather than giving a huge chunk of it to the banks for your credit card bills, mortgage, etc.)

The task at hand is to flesh out the debtors' union strategic proposal (which classes would unite most readily and why) and to develop a tactical project plan (how do we go about uniting these classes in a debtors' union). Specifically, we need to:

-Analyze the current economic situation more thoroughly with the express purpose of identifying each economic player, its relationship to the 21st century economy production process and how it is currently being impacted by the crisis. For example, what is the difference between struggling old economy capitalists (auto, steel, textiles, etc.) and new economy capitalists (internet, green energy, etc.). Which ones will come out of the current crisis stronger, which ones weaker? Also, who owes how much? What is the debt burden of the average student? blue-collar family? white-collar family? Etc.

-Develop concrete action proposals with achievable short-term goals that can help people grasp the revolutionary potential of a debtors' union. While we must broadcast the debtors' union and general debt strike idea in its full boldness, we must recognize it as a long-term goal (which could become relevant sooner than later should the economic situation deteriorate quickly). In the meantime, we could start researching and broadcasting all tactics available to people to resist the banks when facing foreclosure, rising interest rates, etc. We could also document and promote all instances of collective, organized resistance such as the recent Chicago sit-down strike, reviving the old Unemployment Committees of the 30's that prevented evictions in their neighborhoods, etc. A website fully dedicated to this task -updated frequently and radically open to mass participation- could serve as an early organizing hub that progressively demonstrates what a debtors' union could do in the real world.

Sounds like a good project for an ambitious Rev Dem study circle to take up at this point in time...

Debtors Union (Keith) by Keith

A Debtors Union: Main Street’s Solution to the Financial Crisis

The economic crisis is in essence a debt crisis. For all the economic complexity involved in the details it basically easy to understand. There are way too many pieces of paper that supposedly entitle their holders to social wealth and there is not enough of that wealth to meet all those claims. Debt is just a promise to pay in the future what one does not have today. There are simply way too many of these promises and no way that they can all be paid.

In order for our society to get out of this crisis much of this debt has to be “forgiven.” In other words the creditors who lent the money have to accept that they are not going to be paid back and they will have to take the loss. This is no sin nor is it a crime. It is a part of the risk which lenders take and which, according to their economic theories, entitles them to profit. It also entitles them to lose. That is what “risk” means. The crisis continues because they won’t accept that they lost.

Once they take the loss the economy will start to move forward again. The crisis is continuing because the banks who loaned the money don’t want to accept the loss.

The bailouts are designed so that the banks do not have to accept the loss. Instead of the banks taking the hit, the government will borrow money to be paid back by our future tax dollars and they will give this money to the banks to make up for the losses they should have taken. That is a solution to the crisis but not the only one.

Instead of asking Washington to bailout people instead of banks, or asking the government to help Main St, instead of Wall St. we should just help ourselves, and solve this crisis by forming a union of debtors.

A debtors union is open to all who are indebted—credit cards, car loans, mortgages, student loans, medical bills etc. and once we organize ourselves we can refuse to pay and organize a mass default and force the debt to be written off, or we could decide to renegotiate the debt at a steep discount maybe twenty cents on the dollar. That will be for the union members to decide for themselves. In any event, we can take our destiny into our hands --Let’s “bailout” ourselves, lets “recapitalize” ourselves, lets get out of debt!