Tuesday, February 2, 2010
The new credit card laws go into effect on February 22, 2010. That link gives a readable description of what you can expect.
I see some benefits to the new rules, but how they will affect the overall economy disturbs me: "Issuers can still raise interest rates on future card purchases and there is no cap on how high interest rates can go. Business and corporate credit cards also are not covered by the protections in the CARD Act."
I'm hardly an expert, but I know that a great many small and medium sized businesses have been hurt or destroyed from the credit crunch. This includes people in my former office building and in others, where the occupancy rate has dropped from 10% to 75% in the past year. People laid off cannot afford services or to buy products from businesses, who in turn go out of business and resulting in more unemployment.
Thirty years ago, my undergrad Sociology professor said something I never forgot: "One day we will see a reverse of the size of our poor and middle classes. My best guess is that mega-businesses like McDonalds will outlast the USA."
We snickered and wondered which country could ever have the clout to usurp our nation.
"Not a country," he speculated, "but a group, and perhaps we'll evolve as the United Corporations of America, perhaps not in name, but in essence."
In principle, perhaps we are moving from a We The People nation to a We The Corporations nation. The new Supreme Court ruling that gives "personhood" status to corporations for election influencing powers that I spoke of in the last post has done much to set the stage for this.
This is the earthquake we need to notice. It is one that will last longer and impact us in ways far more than the tragedy in that far away hell known as Haiti.
Just as we have a long history of colonizing smaller nations, the multinational monied interests have been insidiously colonizing us for 40+ years with small, plastic cards in our wallets, transforming us into neo-slaves, aka Debt Slaves.
Without good credit, it is impossible to take out a loan for yourself or small business, to buy a house, property, or car using a payment plan, or in many instances, even rent an apartment when you have a good job but only a debit check card. Were so many of us not already deep in debt and two paychecks away from poverty, we might be okay, but most of us aren't.
The banks cut the credit umbilical cord for too many businesses, leaving too many at the whim of an in-progress job market overhaul, with the endgame being busting unions and reducing much of the middle class workforce to becoming the new working poor.
This has caused a strong ripple effect in race relations; as a black person, I've felt more racism in job interviews and elsewhere than I have in decades. Unemployment for African Americans has skyrocketed, and is as much as three times the national rate in many cities.
Racism has hit Latinos businesses hard too. A black accountant I talked to last week said his office is moving to a smaller space because many of their clients are Latinos, who are being pushed out of business. More than ever, they've been under a microscope in the past year for hiring illegals to work in their restaurants or businesses that do painting, dry walling, lawn service, etc.
I was shocked when he said, "Some of them are choosing to return to Mexico before things get any worse. They tell me they are sure they can do better there than here."
We laughed at this sad irony; who'd have ever imagined that?
I have been stunned to learn how unprotected some of my closest friends are from being "colonized". I hate to use that word, but it seems so fitting. Few have a clue what peril they are in. One guy has worked 25 years in a fat job with the government. He has a small house that could have been paid for ten years ago. Instead he has not one but two mortgages on it, and can hardly wait until he gets his tax refund.
I didn't ask what in the hell he's been doing with all his money all these years. I guess my jaw was hanging open when he boasted that he always keeps two months in reserve to pay his house note in case he loses his job. He doesn't even have a wife or kids. Heck, one surgical procedure with a long recovery period from an unexpected illness, and the bank will own his house.
He's much like many of my friends and a dear relative - and not that different from me. Although I've given great financial advice over the past nearly two years and in this blog, I haven't been so great in applying it to myself.
What folly, to see a train coming and not getting off the track. I can only speculate that it's part of that miserable tendency in human nature to think the worse will never happen to me.
The big bankers, like neo-colonialists, have become like the rain to the American public. They rain on everyone too vain or short-sighted to think the storm won't wash away their lives, as well as the uninformed or those too poor to have an umbrella.
No, forget umbrella. It's a flood. Many of us will need a boat and a life jacket to get through this Great Depression.
A small cash reserve ain't jack; for that matter, neither is a six month reserve. I thought it was, but it's not. The competition in the job market is fierce. Even when you're told you'll be hired, at the last minute they've gotten the budget axe or put on a hiring freeze, and are suddenly scrambling to hang on to their own jobs. Had it happen to me, twice.
There will be an art to surviving this Great Depression. Part of that will be surviving without plastic cards. The thing is, if everyone cut up their credit cards and can't or won't pay their bills, the banks will probably die.
What the big banks' art to survival will be under those circumstances is an answer I don't have; I only know that fear of diminishing oil and other resources, effects of global warming, combined with greed and tribalism, will make life very different, and bring utter chaos to our country.
Perhaps this really has been the game plan all along, with the anticipated result to be the birth of not the United Corporations of America, but what I wrote about in mid-2008: the North American Union.
Perhaps they will be one and the same.
Posted by Kit (Keep It Trill) at 10:50 AM