Tuesday, February 2, 2010

When Debt Slaves Learn
The Art Of Pay As You Go

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.


  1. You know what's been interesting to me...

    Even in the midst of this, "experts" are still saying, don't cut up your cards; you need it for credit.

    Honestly, what good is credit when banks won't extend it? Why do I give a sh*t about it if I can't use it?

    As true as it may be, that our credit scores -- essential to buying homes and cars -- are impacted by our use of credit cards, Americans have proven we have no idea how to use credit cards correctly and credit companies have benefited from that.

    The GOP says we need to start over on healthcare -- we need to start over with credit cards. At every chance to take advantage, they have, and now no one can get or use credit... except, oddly enough, folks who barely used credit cards in the first place.

    We blame the most recent administration for our troubles now, and Lord knows they more than did their fair share of contributions, but much of what has us in this mess is based on policies of yesteryear -- times that many people who are feeling it's bite barely remember if at all. Policies that helped the 80s become the decade of excess and fed hungry and growing corporations more than they needed.

    We've been deregulating and regulating all the wrong industries; the areas that needed some government oversight have gone 20 and 30 years without it while the meaningless ones have been scruitnized and buried in tape for decades.

    We're just ass backwards no matter which way you turn us.

  2. Well said, A. Smith. I just finished reading Kunstler's weekly piece, this one titled, The Jive Economy. While his way with words is funnier than usual in that post, the end result if/when it plays out, won't be funny at all.

    Well, I've had a bit too much freedom to read and write the past few hours; got to get back to the grind. Damn.

  3. As soon as working folk get it out of their mind that the next big job is around the corner,then and only then can a new game plan for this new economy can be formented by each and every person.The rich and powerful have no intentions of allowing the middle class to be middle again.People need to stop listening to the evening news and pickup a book and read some history and economics and be creative in their persuit of life and money.

  4. Banks will adopt the same suvivial tactics of loan sharks. They will make it very painful for you if you don't pay. Very, very painful. They have the resources to do that.
    That's what poeple don't grasp. Laws are only words on paper. We only have laws at the whim of people who have guns. When their whims change, so do the laws.

  5. Excellent post! I am with the commenter BigMac, way too many folks are running around thinking the bad shit won't happen to them. I have a dear friend who does not realize how lucky she was when she lost her job that she was only unemployed for 6 months. Instead now that she is working just living life like its all good.

    These are rough times, I knew it in 2007 when I lost my job abd it took 14 months to find a new one where my salary is 30% less than at my previous position.

    I don't know what the answer is since too many folks got their heads buried in the sand. Long as they driving a nice whip, and still making it they are beleiving the reports that the economy is turning around. Yeah right. My Pops was a bill collector and lost his job after almost 6 years with the same outfit (a lifetime in that industry)...when bill collectors get laid off that should tell you something.

  6. BigMac, Oh, you're so right. I've had to reduce my own expectations, and it's been hard.

    Big Man, So right too. Back in Great Britain a hundred or so years ago, they forced poor people into work houses for their meals only and maybe a roof over their heads, aka the phrase, "The Poor House". Prisons are already like this. I can picture the corporate sharks trying to do this again, can't you too?

    BGIM, Thanks. I'm surprised at your dad, a bill collector, getting laid off! I would think they are one of the most employed folks in the country. Hmmm. Hope you interview him and blog about what he thinks.

  7. Well, if Obama rides with Paul Volkner things could get better eventually as far as regulation.

  8. I've never had a credit card until I came to Canada, because we don't have the credit rating thing in my country, and our debit cards can be used for Internet purchases, unlike here (my debit card back home was a Mastercard, for example). Boy, it sure is easy to get carried away with credit cards, it happened to me in the first month and I've learned my lesson! I'm still widely ignorant about these things in N America, but it seems abusive to me that some things you can only purchase conveniently with credit cards (like plane tickets), and the credit rating thing makes me feel like I'm between a rock and a hard place. I still can't understand why people have to be punished for managing to stay out of debt and not stretching beyond their means. All I could come up with is to write all my credit card purchases (vs. the money I actually have) on a piece of paper that I keep in sight, so that I don't get carried away. And to try to gather as many days in a month when I spend zero, because I noticed that it's the smaller, frequent purchases that pile up before you realize.
    Sometimes I like (in a very masochistic way :)) to sit and think how much more money I could have now, had I not spent it on magazines, clothes I never wore, sweets that only made me fat, cosmetics I never used, etc, etc, etc. And then I want to slap myself :).

    I have a Black friend who lives in your area (in Oxon Hill), and he was out of a job for two years, despite being very experienced and qualified in his field. He had some savings that lasted him for a while, but he told me that he could have had much more, had he avoided many unnecessary spending sprees on credit. He said it wasn't stuff that he needed, or that made him happy, just impulse buying of junk - and we all do that, to different extents. Still, I think he should have found another job sooner, because he was always searching and sending out resumes, and often he thought it was a sure thing, like you said, just to be turned down at the last second. Probably racism had to do with it, but he didn't want to think of that, to not get even more depressed and lose his drive.

  9. Marianne, I had no idea that you can't buy a airfare w/o a credit card... hmmm, that's so crazy that I checked to see if true. Apparently there are limitations, but I was also surprised that you can't rent a car or get a hotel with a debit card.

    As for your friend out of work completely for two years and not by choice, you didn't say his profession, but although racism is a barrier, it shouldn't take this long to get some kind of decent job... maybe not at the pay of his last job, but something half-way decent. The DC-Maryland area is one of the best places in the country for blacks to find good employment, at least compared to other states.

  10. Yes, the hotel thing too, they don't take cash (at least not here) or debit.
    My friend found a job in November, and it seems to be a stable thing. But the times before that were awful, he had several interviews each month, and it was one rejection after another, and he was willing to take any job, but nothing. Don't mean to bring down any readers of this blog who might be in the same situation at the moment - truth is he did neglect the huge potential of networking when job hunting, because he didn't know how important it was, so he mostly used the Internet. Anyway, he says the whole experience taught him how to be frugal and find joys in things that don't cost money, so I guess something good came out of it after all.

  11. I have a credit-card exactly because of the problem with internet-purchases with the regular debit-card.
    Internet-purchases of Airplane- or Train-Tickets is at least more difficould without a credit-card, and international orders are a problem, too. (Talking about Germany, by the way ;)).
    But the credit-rating think I keep hearing about... it keeps confusing the hell out of me: how do you get a BETTER rating by SPENDING money? ;)


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