For those in the Pueblo/Colorado Springs area, I’ll be playing at the Downtown Bar (corner of 1st and Main streets) this coming Tuesday, September 30th from 8:30 until about 11 or 11:30. I’ll be doing all of my solo acoustic stuff and maybe some spoken word, and there’s no cover charge.
Come on by, bring a few friends, and catch a mid-week show. I’ll look forward to seeing you there.
Congress and the Executive branch reached an agreement this morning for a financial bailout of the banking sector, totaling three-quarters of a trillion dollars. This is the biggest government response to financial crisis in this country – and perhaps in the world – since the Great Depression. The question that seems to be on everyone’s minds is about whether or not the bailout is a good idea for America as a whole or not.
I think back to a recent quote from a European economist who defined the difference between the European and American economies. He said that, while theirs was based on exports, ours has been built for decades on consumption and credit.
Seventy years ago, only one in fifty homes in America had a mortgage. There was no economy built on the idea of borrowing for things like homes, cars, college, let alone credit cards for everything else, which has literally exploded exponentially in the last 25 years. Thus, a whole new economy was born, based on debt, which in turn, was based on the American sense of entitlement that we deserve what we want right now, whether we can afford it or not.
The thing is that selling credit is actually much more profitable than producing goods. As an example, Ford Motor Company makes more money off the loans they give to people to buy their cars through Ford Motor Credit than they do on the actual cars themselves. Granted, you cant sell the credit if you dont have the car, but with so many imports available at lower prices, weve largely phased out production and focused on debt.
This is a profitable industry for investment on Wall Street too. Think about what a great position a bank is in that lends out credit at a 10% to 18%. They can pay dividends that rival any old-school blue chip stock, and they have a resource for the promise of future business much more valuable than any natural resource: human greed.
Therefore, investors decide that, not only should we invest in a company based on immediate revenue projections, but based on what we think the stock itself will do in the future, based on public demand/perception. So instead of basing our valuation of stock on the realistic formulae of what kind of wealth they can actually produce, we leverage the P/E Ratios (Price-to-Earnings Ratios) until they are inflated to an incredibly unrealistic degree. We have these companies whose stock suggests a value that would take them thirty years to justify in projected profits, but because momentum begets momentum, the stock keeps going up.
Then, because these companies have all of this value in their stock, they use this to leverage borrowing of their own to expand. The lending institutions are the worst about this, leveraging up to thirty-to-one in debt versus real value based on revenue.
On top of all this, about 25 years ago, institutions started bundling mortgage loans as commodities and selling them in bulk on the market. This fueled more interest in trading these bundled mortgages, which succumbed to the same sort of speculation that other stocks have, pushing their prices up way beyond what is reasonable. Of course, theres more wealth to be had in this sort of market only when there are more mortgages to sell, so we had to start scraping the bottom of the barrel with respect to who would qualify for a home loan and how we would possibly structure it so they could afford it.
So we see things like 40 and 50-year mortgages come along, as well as things like variable interest loans which allow people to afford a home they have no business buying, at least for a while. The individual buyers justify this because either they do not understand what they are signing on for (their own fault, in my opinion), or because theyre banking on being able to refinance or sell the home before the balloon on their mortgage pops. Lenders dont mind doing this because it gives them short-term liquidity, and then they can bundle all these loans and sell them off to investors, who then try to sell them off.
All of this only works as long as home prices keep going up and people keep taking out new loans. When that didnt happen, the whole thing fell apart.So to me, heres who is responsible:
ØInvestors (including the average Joe in stocks for savings and retirement) are liable because they put their money into something that had no sound financial basis for its value.
ØInvestment banks are liable for making profits as fast and as much as they can, while ignoring the reality that, at some point, an over-leveraged system cannot sustain itself.
ØThe original mortgage lenders are responsible for giving out bad loans in the first place, just to make a few bucks in the short term
ØThe government is responsible for turning a blind eye while things were going well, unwilling to impart regulation on an industry turning out billions in wealth and thus, billions in tax revenue and tons of lobbying power regardless of the fact that it was a house of cards. It was too politically risky to do so.
So we have homeowners overextended on credit, consumer banks overextended on high-risk loans, investment banks overextended on loan packages that are not only already overvalued, but which they borrow on to go into even more debt themselves. Then the stockholders all of us are overextended by expecting high returns, regardless of what makes logical sense.
ØCEOs dont want to be fired for flat stock values.
ØPoliticians dont want to be pushed out of office by big corporations for cutting of a source of income for them while the getting is still good.
ØStockholders dont want to be told that a stocks value will retract by 40 to 50% because its been overvalued for years, and that it will now be worth less, but actually will be based on profitability and dividends.
ØHomeowners dont want to be told no when they want something, period. And they are willing to pay with the wealth and futures of their children and grandchildren to keep from being told no.
Here we are. The house of cards has fallen, and everyone wants someone else to blame. The problem is, we all have blood on our hands.
Is the bailout the answer to fixing the problem? I dont know. Yes, there are some limits and safeguards that can be added to the proposal to limit executive benefits and to help stem foreclosures at least for now. But ultimately, are we investing close to a trillion dollars in a system that has been broken for a generation at least, and in doing so, are we only forestalling the inevitable collapse which eventually has to come?
In my opinion, America is getting precisely what we all deserve with this crisis.
It’s not often that I re-post articles, but I think this one is worth consideration. Time wise is an author, scholar, and preeminent anti-racism activist in the United States. You may not agree entirely with all he says, but consider the truth behind the disparities he points out.
This is Your Nation on White Privilege
By Tim Wise
For those who still can’t grasp the concept of white privilege, or who are
constantly looking for some easy-to-understand examples of it, perhaps this
list will help.
. White privilege is when you can get pregnant at seventeen like
Bristol Palin and everyone is quick to insist that your life and that of
your family is a personal matter, and that no one has a right to judge you
or your parents, because “every family has challenges,” even as black and
Latino families with similar “challenges” are regularly typified as
irresponsible, pathological and arbiters of social decay.
. White privilege is when you can call yourself a “fuckin” redneck,”
like Bristol Palin”s boyfriend does, and talk about how if anyone messes
with you, you’ll “kick their fuckin’ ass,” and talk about how you like to
“shoot shit” for fun, and still be viewed as a responsible, all-American boy
(and a great son-in-law to be) rather than a thug.
. White privilege is when you can attend four different colleges in six
years like Sarah Palin did (one of which you basically failed out of, then
returned to after making up some coursework at a community college), and no
one questions your intelligence or commitment to achievement, whereas a
person of color who did this would be viewed as unfit for college, and
probably someone who only got in in the first place because of affirmative
. White privilege is when you can claim that being mayor of a town
smaller than most medium-sized colleges, and then Governor of a state with
about the same number of people as the lower fifth of the island of Manhattan, makes you ready to potentially be president, and people don’t all
piss on themselves with laughter, while being a black U.S. Senator, two-term
state Senator, and constitutional law scholar, means you’re “untested.”
. White privilege is being able to say that you support the words
“under God” in the pledge of allegiance because “if it was good enough for
the founding fathers, it’s good enough for me,” and not be immediately
disqualified from holding office–since, after all, the pledge was written
in the late 1800s and the “under God” part wasn”t added until the
1950s–while believing that reading accused criminals and terrorists their
rights (because, ya know, the Constitution, which you used to teach at a
prestigious law school requires it), is a dangerous and silly idea only
supported by mushy liberals.
. White privilege is being able to be a gun enthusiast and not make
people immediately scared of you. White privilege is being able to have a
husband who was a member of an extremist political party that wants your
state to secede from the Union, and whose motto was “Alaska first,” and no
one questions your patriotism or that of your family, while if you’re black
and your spouse merely fails to come to a 9/11 memorial so she can be home
with her kids on the first day of school, people immediately think she”s
. White privilege is being able to make fun of community organizers and
the work they do–like, among other things, fight for the right of women to
vote, or for civil rights, or the 8-hour workday, or an end to child
labor–and people think you’re being pithy and tough, but if you merely
question the experience of a small town mayor and 18-month governor with no
foreign policy expertise beyond a class she took in college–you’re somehow
being mean, or even sexist.
. White privilege is being able to convince white women who don’t even
agree with you on any substantive issue to vote for you and your running
mate anyway, because all of a sudden your presence on the ticket has
inspired confidence in these same white women, and made them give your party
a “second look.”
. White privilege is being able to fire people who didn’t support your
political campaigns and not be accused of abusing your power or being a
typical politician who engages in favoritism, while being black and merely
knowing some folks from the old-line political machines in Chicago means you
must be corrupt.
. White privilege is being able to attend churches over the years whose
pastors say that people who voted for John Kerry or merely criticize George
W. Bush are going to hell, and that the U.S. is an explicitly Christian
nation and the job of Christians is to bring Christian theological
principles into government, and who bring in speakers who say the conflict
in the Middle East is God”s punishment on Jews for rejecting Jesus, and
everyone can still think you’re just a good church-going Christian, but if
you’re black and friends with a black pastor who has noted (as have Colin
Powell and the U.S. Department of Defense) that terrorist attacks are often
the result of U.S. foreign policy and who talks about the history of racism
and its effect on black people, you’re an extremist who probably hates America.
. White privilege is not knowing what the Bush Doctrine is when asked
by a reporter, and then people get angry at the reporter for asking you such
a “trick question,” while being black and merely refusing to give one-word
answers to the queries of Bill O”Reilly means you’re dodging the question,
or trying to seem overly intellectual and nuanced.
. White privilege is being able to claim your experience as a POW has
anything at all to do with your fitness for president, while being black and
experiencing racism is, as Sarah Palin has referred to it a “light” burden.
. And finally, white privilege is the only thing that could possibly
allow someone to become president when he has voted with George W. Bush 90
percent of the time, even as unemployment is skyrocketing, people are losing
their homes, inflation is rising, and the U.S. is increasingly isolated from
world opinion, just because white voters aren”t sure about that whole
“change” thing. Ya know, it’s just too vague and ill-defined, unlike, say,
four more years of the same, which is very concrete and certain.
Some may have noticed I didn’t post a faith column this weekend. For those who haven’t had a chance to read the last one I did post, it’s because I’ve left my column at the Pueblo Chieftain.
For some time, I’ve been a strong advocate for the need for an alternative press voice in our area, and three months ago, PULP was born. It’s an alt-monthly for now, but once the funds are in place, there are plans to take it weekly. If you’re not familiar, the alt-publications are the tabloid-format free papers you pick up in restaurants, coffee shops and the like, such as Westword in Denver and Dallas Observer in Dallas.
Anyway, I met with the publisher and she offered not only to let me have a political satire column, which I’ve wanted to do for some time, but she also invited me to become an associate editor, in charge of all Arts & Culture content. Since then, we’ve decided to add a Spirituality section, which I’m developing and which will debut in October’s issue, and eventually, I’ll oversee Singles and GLBT sections as eminently more prestigious but equally vague “Lifestyle Editor.”
When I told the Chieftain folks about this, they told me I had to pick one or the other, as they perceived PULP as competition. Though I’m not sure I agree that a free alt-monthly with a circulation of 4,000 is competition for a subscriber-dependent daily with a circulation of 56,000, I have to bow to their wishes.
So that’s why I’m done at the Chieftain.
I think the person who was most distressed by my decision to leave was my wife, Amy, because the column was great exposure for our church. But after two-and-a-half years and 127 columns at $25 a week, I was ready for a new angle on my column work. Since I’ve been a vocal proponent of the need for such a local media outlet, I couldn’t very well balk at such an offer.
As far as how this affects my blogs, I’ll still be posting pieces I put together on theological issues, and with the broader scope of my new position, I may wax more political and even throw in some other things now and then. I am also still doing columns for Disciples World magazine and occasionally for Worship Connection. I’ll add pieces as I have them from the various publications I’m working with, so hopefully there will be some things of interest to those who do follow my work.
For now, check out PULP by clicking on any of the words linked to the site above, or by going directly to www.pueblopulp.com. For those who would like, you can subscribe to PULP by mail for about $12 a year, or you can just bookmark the site and check it there.
Take a look at it and please let me know what you think.