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On Pyramid Schemes (Chuck D., March 2008)
1. In this age of "victimhood", being a victim the mortgage debacle is probably a pretty good way to scramble to the top of the heap right now to be first in line for a helping hand. Since I'm a victim, I had no part whatsoever in bringing this predicament upon myself, it was all someone else's fault, so "save me, save me, please!!" In other words, it's about something you have talked about before - self-responsibility. We no longer believe in it or think it's necessary. It's so inconvenient to believe this, when we all know that our lives are supposed to be fun. There is not supposed to be tragedy or suffering in them. We are entitled to be happy and get what we want in life. Its our birthright, you know.
But you can say all of the "help" so far has been not been directed to the "victims." It has been directed to bailing out the financial institutions. The little guys who were saps and got suckered into this scam are still out there twisting in the wind. And you would be right. And I suspect that is where they will be left for the reason explained below. For this same reason, I suspect both their lives and ours will not be fun. There will be tragedy and suffering in them. We will not be happy. Our birthright is about to disappear.
2. Your idea is heresy. It files in the face of the new social convention - internalize the benefits, but socialize the risks. I suspect that this convention is the "writ large" version of that personal birthright I mentioned above expanded to the whole of society. We already see it at work in the institutional bailouts that have been arranged so far in this burgeoning financial disaster. Already there is talk about some form of a Resolution Trust like in the 1980s S&L debacle to clean up this mess. And who gets to foot the bill - the taxpayer of course in the form of us and our children and grandchildren. Meanwhile, how much do you want to bet that all those people who made billions in fees and got to buy their houses in the Hamptons will get to keep them while their employers are made whole?
It isn't just in this financial disaster where we can see this convention at work. It permeates our current social life and structures. How about all the programs to deal with social problems known as "the poor", "the elderly", "the war on drugs", "AIDS"? Or how about the breakdown in the family unit (I need to go find myself, so I'm leaving you and our two kids to fend for yourselves while I go do it). No, I am not saying that these "solutions" that socialize risk in response to these problems are necessarily bad. I am saying that it's just the way things are right now; it's the way we currently think.
I am also saying that when you scratch beneath the surface of many of these issues at some point and in some way you seem to find the idea that we want to keep all the good consequences and benefits of our actions for ourselves, but we want to shift all the negative ones to someone else. Adults aren't supposed to act and think this way. Kids and adolescents are. Perhaps you are right - we really have become a nation of adolescents.
3. There is one other reason why those who didn't particpate are going to pay for those who did. It is something I have reluctanly come to believe because frankly it scares the hell out of me. I really don't want to believe this, but I can't find a better explanation for what I think I see. It is what Jim Willie in his financial commentaries often mentions as the Fascist Business Model. Simply stated, the Federal government especially operates to benefit certain large busnesses and business sectors. This seems to explain why the Feds are directing all their efforts at bailing out the banks and not helping Joe Sixpack who got into a sub-prime predatory loan, and why Joe is probably going to get left there. It seems to explain why corn-based ethanol is promoted even though it is at best a marginal fuel. And it seems to explain why we just can't apparently do anything to stop the border with Mexico from being an open sieve. Etc, etc.
The scary part in this is that fascism destroys the middle class.The middle class is the one who gets exploited and made to assume the risk of loss and expense while the privileged entities and individuals get to keep the benefits. Eventually the middle class withers away under the burdens put upon it. Already we seem to see this happening. Wages and salaries remain where there were 20 years after adjustment for inflation but the purchasing power of the money we have keeps dropping. It becomes harder and harder to buy a house, own a car, pay for food, gasoline, utilities, insurance, let alone save anything for retirement. When we can no longer afford something, we drop it from our lives and our standard of living goes down.
Here is a simple example of what I mean. The fools who got themselves into a mortgage and are now walking away from it have a very unpleasant surpise coming to them. Not only are they going to lose their house, but they are going to saddled with a huge tax bill from the IRS for doing so. In the perverse logic of the tax code, because they no longer have to pay the mortgage, they no longer have to come up with the money to pay it. What money they have can now be spent for other things. It is as though the forgiveness of the debt boosted their income for something else. So the forgiveness of the debt is imputed to them as though it were income even though they never actually got a penny more of tangible income in their hand. Since they received this "income" they now owe tax on it. How they are going to pay it is a good question since they don't have any means to do so otherwise they wouldn't be in default on their mortgage. But I'm sure the IRS will be happy to work out some agreement where they can be its indentured debt slave for the rest of their lives while they pay them $100.00 a month. Or they can always wait for the IRS to levy on anything they might own at anytime in the future. Or perhaps they can simply figure how to never own anything in their own name for the rest of their lives. Rep. Ron Paul has a bill sitting in Congress to elimiate this perversity. It seems to be going nowhere. Meanwhile the Congress is doing what it can to help bail out the privileged elite. Find me a better explanation than the Fascist business Model at work, if you can. Please.
How the social turmoil this middle class destruction will probably generate and how the politics of it will play out, I don't know. But I am not hopeful about it. But whatever results and however we get to it, this is why I said earlier that I suspect our lives will not be fun, that there will be tragedy and suffering in them, that we will not be happy, and that our birthright is about to disappear.
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