August 17, 2007
Gilded Age Crime: Poor Go Homeless, Wealthy Get Bailouts (Brent Budowsky)
Driving to the Naval Academy at Annapolis, the route goes through poor neighborhoods where house after house have signs: For Sale.
What this really means is: foreclosed.
Listening to Jimmy Cramer yell and scream on CNBC about how "there is so much pain
out there," he was not referring to underpaid American troops, or homeless American poor, but the banks, hedge funds and private equity deal-makers whose hundreds of millions of dollars have been reduced to hundreds of millions of dollars.
In fact, the great pain suffered on Wall Street is this: At the market close this past Thursday, the Dow Jones average was up 3 percent, down from an all-time record high only several weeks ago.
These are tough times for the wealthy.
What has happened during the Bush years, with the Bush ethic of "grab all you can" greed, is the stench of a new Gilded Age that is morally disgraceful, economically unsustainable and politically deadly for Republicans if the Democrats speak clearly against this.
Hillary would probably argue that the wealthy, like special-interest lobbyists, are just plan old Americans who never influence government with their money. Some in Congress will have to interrupt their fundraisers and offend their campaign contributors. For most Democrats, this is the issue of a lifetime, the stuff of which landslides are made of.
Is it right that American troops are told we can't afford to give them body armor and protected vehicles, so they die preventable deaths, while the highest-income 1 percent receive huge tax cuts?
Is it right that the new racket on Wall Street is that banks make bad loans, sell them to hedge funds and private equity firms, many of whom are virtually unregulated and untaxed, who then complain about their pain after they foreclose on average Americans for falling a little behind their payments?
It is good that today the Fed cut the prime by 50 points, but it is bad, and terribly wrong
and unjust, that in the last week the Fed has essentially used Americans' money to bail out the wealthy who made the profits, while doing zero for the foreclosed and homeless.
When the banks, hedge funds and private equity firms make bad deals, they keep the
personal profits, while the corporate profits are protected by bailouts. Meanwhile, when the average Americans in the middle class, or the poor, fall a little behind, they get the boot, they lose their jobs, they are thrown into the street without homes and often without food.
Erin Burnett, the new glamor star at CNBC, says with a sneer that Americans are wrong to believe they have any right to a home.
In Ms. Burnett's world, the people have no right to a home, but the hedge funds have a right to the bailout. When things go bad, the average Americans get the boot, while the upper class gets the loot, paid for by the taxpayer, helping only the few.
With American troops getting killed because of a lack of armor we can't afford to give them, paying loan shark rates for desperation loans because of fair wages we don't pay them, with middle America feeling the squeeze because of the greed, and poor Americans going hungry and homeless, Jimmy Cramer cries out against the pain at the top. Erin Burnett sneers at the dream of a home, and the Gilded Age stars tell The New York Times they have more money, because they are superior.
Why are so many of these superior specimens of humankind the first in line for the bailout, paid for by those they believe inferior?
The Gilded Age ends on Jan. 20, 2009, but until then, the bailouts will flow for the few,
while the pain will be felt by the many.
This is another reason the world will rejoice when the age of Bush ends, and the age of reform begins, after the American people speak in November 2008.
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Brent: Get in line when the government guarantees you a right to a home. It will become like health care in Canada where you have to wait in line. After the Civil War African-Americans were promised 40 acres and a mule. Most of that land was lost along with the mule because anything given is often not appreciated and valued. You ridicule Erin Burnett for stating that you do not have a right to a home, which would prompt me to ask you, when did you buy your home? Did you get a loan? If so, would you give that home away to someone that doesn't have one? Or, would you be willing to pay a huge portion of your income to provide someone else with a home? By constantly ridiculing Erin Burnett you are simply attacking the messenger. The point is should the government hand out free housing? Look what happened when the government created public subsidized housing. In almost every instance it turned into a crime ridden ghetto. People who earn their way usually treat the property they pay for with more respect. As far as fair wages, your education determines that. While you're complaining about the plight of people you should be first in line to complain about public schools. They obviously fail to give students the skills they will need later in life and the worst schools of all are usually located in inner cities, controlled by democrats. Instead of blaming it on the financial system and Erin Burnett, put the blame where it belongs.
Comment by Robert Rosencrans — August 17, 2007 @ 12:51 pm
There is a solution
A CHANGE TO STOP THE SLIDE OF VOODOO ECONOMICS OUTPUT AND RESCUE THE GLOBAL ECONOMY
The headlines indicate that stocks are ready to continue their precipitous decline, and the Federal Reserve and other world economies are preparing to attempt to prop up the US housing market in order to prevent a world wide economic crises.
A more immediate and effective tact would be to have congress and the senate return to Washington and repeal the 18 month old draconian bankruptcy law. This would have three instant benefits that should stabilize world concerns more effectively than the psy-ops attempt to simply assure people that money is available (even if it’s not in their hands).
1) Immediate preserve homes of people about to loose them.
2) Reduce the supply of homes on the market creating a more stable supply/demand relationship.
3) Allow for a steady return to more balanced lending practices(reduction in sub-prime and easy credit card access) to prevent future “bubble” conditions.
PLEASE ASK YOUR SENATOR OR REP TO LEAVE THEIR VACATION TODAY JUST LONG ENOUGH TO SAVE THE ECONOMY.
Comment by katharine — August 17, 2007 @ 1:13 pm
Brent: I'm surprised you didn't mention Al Gore as our savior. To assume every for sale sign is a foreclosure is pretty presumptuous. As usual the rich get richer, the poor get poorer, the people have no stake in the game and the government must save us all, blah, blah, blah…
Comment by Rich — August 17, 2007 @ 1:28 pm
Rich, do your research, foreclosure are going
through the roof. This is no secret. And the
companies doing the foreclosing are the ones
that benefit from the bailout. The people who
were taken advantage of, the people who were
foreclosed when a smart bank would have given
them more time, are the losers in government
policy as well as private sector policy.
Robert, I do put blame where it belongs, on
the banks that made bad loans and profitted
from them when it was in their interest, and
on the government that bails out banks while
ignoring or screwing John Doe and Jane Doe.
I ridiculed Erin Burnett because she is the
mouthpiece for those who gamed the system,
the mouthpiece for hedge funds, private equity
and Wall Street insiders. That is who CNBC
caters to, the hedge funds and Street insiders.
They sucker in some day traders who think they
are smart, most of whom ultimately lose money.
How many shows does CNBC do that relate to
average Americans? None. Their business model
and advertising revenue come from having a
small audience of high income.
I found several things Erin said repulsive,
obnoxious and revolting. Candidly she is
not a journalist, she is pretty face they
are marketing, and it was Eric who has contempt
for average Americans, with her sneering and
leering comments about how dare people dream
of owning a house. Bartiromo is far smarter
and classier even though she appeals to the
same clientele.
I do think the government should help people
realize the dream of a home. Not guarantee
it, but be on their side, not on the side of
the foreclosures and not on the sides of the
bailouts for those who do the foreclosing.
These are competing visions of America as old
as Jefferon versus Hamilton and Roosevelt versus Hoover. I am with Jefferson and FDR. The country does best when the average Americans do best, and the country does worst, when a few benefit and everyone else suffers.
The economic history of America makes this
clear. And the political history of America
makes it clear that when we have these ages
of excess at the top, what follows are major
era of reform.
Comment by Brent Budowsky — August 17, 2007 @ 4:35 pm
Rosencrans, you're the pot calling the kettle 'black'. RR, it seems to come easy for you to recognize the poor and needy taking advantage of welfare and handouts. Why can't you (Rosencrans) see the corporations and the top 1% of earners getting exponentially more welfare than all the poor combined?
Rosencrans, you've had your pocket picked since Bush got in office and you don't even know it. If you are bothered by the poor receiving entitlements, you ought to be outraged at the rich and the powerful corporations getting thousands of times more.
What gives? It seems hypocritic. But then I know for sure you're a neocon, so I also know logic and reasoning don't mean anything to you.
Rosencrans, a mind is like a parachute, it works best when opened.
Comment by Chris in NM — August 17, 2007 @ 4:42 pm
Let's all pray for the Nanny State like Brent!
Comment by Bill Hicks — August 17, 2007 @ 5:27 pm
You harbor more optimism than I can muster, Brent. In my world, the Great American Style Democracy Experiment has concluded. It didn't last. It lacks only one signature.
Comment by wwz — August 17, 2007 @ 5:47 pm
The current mortgage/liquidity
debacle is a rerun of the
S&L scam of the 1980s: a
loan is not a liability but
an asset; perks and pay
are based on such assets;
and, if financial failure is
made large enough, financial
institutions don't lose, only
Federal taxpayers. This
is the "free" in "free market":
predators free of any consequence to their actions.
Obscene reward without risk.
Brother, can you spare a guillotine?
Comment by Roy — August 17, 2007 @ 10:51 pm
Most of these forclosures occur because buyers make dumb decisions. They take a mortgage that is above their income, they buy expensive cars or other big ticket items that cut into their mortgage payments. They generally have poor credit management habits.
Once again, liberals like Brent put the blame on everyone but where it belongs.
Next thing you'll hear is that it's Bush's fault.
As for the armor, perhaps if the Democratic Congress didn't try to stick ever funding project under the sun into a bill meant to provide funding for the troops, the troops would get their armor.
Comment by John Simmons — August 18, 2007 @ 10:16 am
It's called corporate welfare, the same firms and parent corps of those firms that were stupid enough to lend money to people with no incomes or jobs shouldn't be rewarded for their idiocy, but that's what happened when the Fed dumped billions into the markets this week and cut their interest rates
Nothing more than pure hypocrisy to decry helping out homeowners while bailing out their lenders
Comment by KingCranky — August 18, 2007 @ 11:17 am
Elizabeth Warren at TPM Cafe highlights another way the corporations are favored over citizens:
"Bankruptcy law is the final arbiter of debtor-creditor rights, but here's an interesting asymmetry in the law: If a corporation can no longer afford the mortgage on its factory, it has powerful tools to rewrite the mortgage in bankruptcy. But if a homeowner is in exactly the same trouble following an interest rate hike, those same tools are unavailable. . . A company that cannot pay its mortgage can declare Chapter 11 and do two things: 1) separate the mortgage into its secured and unsecured portions (called bifurcation), and 2) pay the secured portion at current market rates under a new mortgage and discharge the unsecured portion. . . If a homeowner can no longer afford her mortgage, the homeowner can declare bankruptcy and get rid of the credit card debt and doctor bills, but she cannot force the lender to write down the mortgage to the value of the home or to accept payments at the current market rate. All the homeowner gets is the right to make up past-due payments–in full, with interest."
Comment by Don Bacon — August 18, 2007 @ 6:19 pm
Rosencrans..
You are right..One does not have a right to a home..but the Financial Institutions do not have a right to a government bail-out either..what's good for the goose is good for the gander..The individuals are asked to pay the price for their mistakes..but the collectives (the Corporations) have their arses saved by the government (read " by the individual's taxes")
Katherine: you are "loosing" your mind .
Comment by GMcRae — August 18, 2007 @ 7:24 pm
Rich, Al Gore is the one who ushered the real Guilded Age of modern times: the legislation he championed unleashed the forces that created the Telecom Boom/Bust cycle of the nineties. Brent has just gone completely populist with his "save the people not the fatcats" rant. I don't like the way hedge funds are allowed to use leverage for their quant trading, but to think that the bailouts are aimed at specific individuals is ludicrous. All of this bailing out is to keep the liquidity from freezing up one way or another. Brent is just promoting class struggles under a different guise. Who benefits from the "us vs. them" class warfare? You guessed it, the Democratic Party in its current incarnation.
Comment by Igor R. — August 19, 2007 @ 1:31 am
Awesome article. I see by the usual Repub Troll comments in here that you really struck a nerve! Keep up the great work.
Comment by Reality Hurts — August 19, 2007 @ 1:01 pm
I spent 25 years as a bankruptcy attorney, and I learned that the human need for things not needed nor affordable cannot withstand the temptation of easy credit and an ignorance of the consequences of borrowing: the debt must be repaid. The high schools need to educate their students before they ruin their financial lives. The banking system and its affiliated fee-gatherers will not.
Comment by bannister — August 19, 2007 @ 2:29 pm
All right folks. This is the problem. If we bail out the lenders and the poor folk who were duped in some cases into buying homes they could not afford, IT WILL CAUSE THE HOUSING RECESSION TO LAST A LOT LONGER.
So, it is a question of pay me now, with a recession, or pay me later with inflation, maybe stagflation, and a continual slow grind down of house prices.
The Japan housing decline lasted FOURTEEN YEARS. And those people had savings!!! Do you realize what we are facing here?
Prices must reset to pre 2001 prices and maybe lower. If they do not there will be a stalemate between buyers and sellers that could go on for YEARS.
Comment by Gary Anderson — August 19, 2007 @ 10:28 pm
Both the Republicans AND the Democrats have been "bought" by wealthy financial types, corporate types, and the like; there won't be ANY solution, or change, no matter who is elected, as long as we live in this oligarchy - a failed system (featuring elections that rely on obscene amounts of money) that the Clintons, for example, are as comfortable with as are the Bushes.
Comment by laura — August 19, 2007 @ 11:04 pm
Robert Rosencrans say "As far as fair wages, your education determines that." What a joke! I have a B.S., in Physics, with Honor, from the California Institute of Technology, am listed in Who's Who American Men and Women of Science and Who's Who Emerging Leaders in America (ca. 1984), several other instances of national recognition, and an M.S. and Ph.D. in the physical sciences. And I cannot find a decent job. Rosencrans: get real and wake up (to the trash dump where this country is heading). And if you cannot, get out of this country and go live with the rich–try the Cayman Islands–the rest of us don't need you here to screw things up further.
Comment by scientist_whistleblower — August 20, 2007 @ 3:09 am
eratta: My previous comment above should begin with: "Robert Rosencrans says:", instead of "Robert Rosencrans say:"
Also "the rest of us don’t need you here" should read: "the rest of us don’t need you and your ilk here"
Comment by scientist_whistleblower — August 20, 2007 @ 3:19 am
Brent: Under you line of reasoning, if someone purchased a car without great driving skills, and wrecked it and killed themselves, somehow the auto dealership and the people who lent them the money are to blame. It's ridiculous. If you were not trained enough on finances who is to blame? Where is the personal responsibility? The only reason you don't like Erin Burnett is because she isn't sensitive , just factual. That's the hallmark of liberalism. Feeling sorry for people without dealing with the facts. Like you for instance.
Comment by Robert Rosencrans — August 20, 2007 @ 8:29 am
scientist_whistleblower: So you can't find a job? Whose fault is that? Typical liberal. You can't get it together so you want the Nanny State. It's nice of you to decide who can stay and go. You're not a retired Nazi are you?
Comment by Robert Rosencrans — August 20, 2007 @ 10:00 am
Brent: There is a proper discussion about borrowing and lending practices in the weeds here. The problem is your emotion and political utopian vision blur your vision. Corporations that lend to people with bad credit deserve to lose every penny they lent and borrowers that borrow beyond their means deserve to lose their house. The problem is if a lending institution goes under the domino impact is devastating to an economy. If individuals go under it is "only" individual devastation. Simple solution for the purpose of this post; stronger lending guidlines without drying up the credit market. This is not the place to detail the discussion but we really need to stop the rich poor crap…
Comment by Rich — August 20, 2007 @ 10:57 am
Well, I agree with what should not be done in bailouts. But Helicopter Ben is flooding the system with money, and may do so a lot more. I see the banks being protected when frankly some should fail. Countrywide is a failed mortgage company, IMO, and a bank. So the fed is bending over backwards to protect them. You can't have banks making crazy loans as Countrywide has done.
If Bernanke does allow to much liquidity, no one will have any confidence in the fed anymore.
Comment by Gary Anderson — August 20, 2007 @ 11:47 am
Brent, I am for helping people, but in this case the help for people is just to tell them to walk away from their loans. They need to rent, it is a better deal than buying now anyway. I am serious Brent, if you try to bail out these people and keep house prices up you will cause 10 times the amount of pain than would happen otherwise.
It is time, Brent, that house prices go down. The MUST go down, or their will be no housing market.
Comment by Gary Anderson — August 20, 2007 @ 11:42 pm
Sorry, they must go down, or there will be no housing market.
Comment by Gary Anderson — August 20, 2007 @ 11:42 pm
Robert Rosencrans: You give an excellent example of typical corrupt behavior–avoid dealing with the issue you raise since you have been shown to be wrong, switch the subject, resort to character assassination by unsupported accusations and insinuations. I repeat my advice and suggested action: get real and wake up (to the trash dump where this country is heading). And if you cannot, get out of this country and go live with the rich–try the Cayman Islands–the rest of us don’t need you here to screw things up further.
(You seem to be unable to make the common distinction between suggestion or opinion, and force. Thus, another suggestion–get educated or get honest, or both.) BTW, you may have the last word.
Comment by scientist_whistleblower — August 21, 2007 @ 4:40 am
scientist_whistleblower: You're the one who started with the character assassination and now you're complaining about it. Typical liberal. And now you want me out of the country. Of course you do. You can't stand to have your ideas reviewed, because they have no validity. Instead you want to marginalize people who don't share you opinion and have them leave the country. Seig Hiel. You're a Nazi.
Comment by Robert Rosencrans — August 21, 2007 @ 9:51 am
Rosencrans stated:"After the Civil War African-Americans were promised 40 acres and a mule. Most of that land was lost along with the mule because anything given is often not appreciated and valued." What college did you go to? Klan Tech? CCC Community College? Have you ever read of the horrors of the reconstrution era for blacks in America? Did you not read of the state sanctioned terrorism and murder of blacks by whites? Of course not, that history would not fit within your tidy narrative of white superiority and black/poor irresponsibility. Like a typical neocon you spew lies as fact after suckling at the teat of your favorite right wing radio hate minister. Whose your's, Rush? Turn off the radio and pick up a few books. And perhaps you'll learn among other things the 40 acres and a mule were NEVER delivered. Oh, and by the way little guy, you are not in the club. These neo-gilded age thieves laugh at your measly income while propagandizing you. They view your monthly income as weekend tip money. So until you abhor bailouts, tax breaks, and subsidies to the wealthy as much as you do for the poor and middle class you are just another willing racist gullible ignorant pliable victim of the right wing hate spin machine who you support despite having no skin in their game. I despise hypocrites like you.
Comment by Dennis A. Burnside — August 24, 2007 @ 11:16 am
[…] Some time ago I wrote an entry: ♦ The war against the middle-class. Where I featured two articles: Gilded Age Crime: Poor Go Homeless, Wealthy Get Bailouts and Grapes of Wrath Return discussing how the global market capitalism and so-called "free trade" is creating a new gilded age. Well, some recently released data from the IRS has been making the rounds and can be well analyzed here: […]
Pingback by CelticBear’s Musings » Blog Archive » The new gilded age. — October 15, 2007 @ 4:41 pm