"Easy credit was substitute for higher wages...."

[kentuck]

Barbara Ehrenreich just made that statement on the C-SPAN II panel of The Nation magazine. Think about it. She is absolutely right!

If consumers, you and I, don't have the money to buy the products on the market, then the producers of those products do not make any profits. And the sad fact is that, for years, the minimum wage was stuck at about $5.15 per hour and millions of American "consumers" were stuck in the $8-$12 dollar range. So how could people buy anything with those types of wages?

Simple. The big banks would give them credit cards. They would pay off one credit card with another credit card and this cycle could go on for years. So long as the people were "buying". They were even offered new homes with no money down. Then they could re-finance those homes and get $20-$30,000 dollars and continue buying the products our economy was selling. But then, the housing market stopped dead in its tracks. People could no longer re-finance. They could no longer pay off their credit cards. But they were still stuck with their low wages. And no matter what the banks do or what this Administration does, people will still be stuck with their low wages and no money to buy the products to keep our economy going.

Barbara Ehrereich is right on target!

[Monk06]

1. Kick that shit up. That is it in a nutshell Kentuck. False growth disquising inflationary debt.

[ColbertWatcher]

5. Agreed, k+r, n/t

[Hello_Kitty]

2. It's so obvious and no amount of telling us not to believe our lying eyes will change it. eom

[Deja Q]

3. Seems pretty obvious. Especially with graphs showing decades' worth of information,

between cost of living, wages doled out, productivity, increase in CEO pay, et cetera.

Real wages have been by and large stagnant.

1993-2000 not excepted either, or at least according to the graphs a union friend once gave me...

[aquart]

4. k&r

[malaise]

6. Perfect

100% correct. Debt from the cradle to the grave.

[chimpymustgo]

7. Marmar started a thread on this (C-SPAN2). I posted that remark. This is an incredible conversation.

http://www.democraticunderground.com/discuss/duboard.ph...

[No.23]

8. Spending other people's money instead of your own...

AKA credit... has been a preferred MO for most consumers for years.

It's also the preferred MO for the Federal Government as well.

What other people's money does it like to spend?

Our children's, of course.

Deficit spending and credit are siamese twins.

[hedgehog]

13. I wouldn't say preferred MO so much as desperation MO.

Most Americans are pretty optomistic and figure that if they can just get past this crunch, things will be better later on.

[fasttense]

124. Debt is NOT the preferred MO for most consumers.

Paying upfront with cash is the preferred MO for Americans but we can't earn enough money to do that. If your salary is so low, that $1,000 emergency bill will wipe you out, you have no choice but to borrow.

If the roof in your house is about to come crashing down, you have to borrow to repair it cause you can't let it deteriorate and leave you homeless. If the car has to be repaired or you can't get to work, you have no choice but to borrow. Americans are paid so little that they can't save any money.

Look at France, they get FREE college education, 30 hour work weeks with 6 weeks paid vacation. They get FREE medical and prescriptions.

What do Americans get for their tax dollars? Thousands of dollars in debt to go to college. Thousands of dollars in debt if they get seriously ill. Excessive work hours without even sick leave. Now tell me, who got the better deal from their government?

[raccoon]

137. "What do Americans get for their tax dollars? "

You left out imperial wars.

[Sherman A1]

191. Precisely

And it was Ike that warned us about this.

[sojourner]

134. preferred.......vs more easily available/affordable? the financial giants ENCOURAGED this behavior.

In fact, do you remember how hard it was to even rent a car WITHOUT a credit card?

That said --- yes indeed, the Gov't likes us to sign on to its preferred MO and it IS our children who are going to pay.

[Mojambo]

9. Thom Hartmann has been making this argument for like 5 years.

Demand drives the economy.

[Postman]

130. Exactly. Along with Ravi Batra....

The main source of SUPPLY is PRODUCTIVITY

The main source of DEMAND is WAGES

When wages don't keep pace with productivity the economy is out of balance. To restore that balance or in other words, to fill the wage gap that enables the economy to grow or keep pace, credit cards were used as a substitute for wages. When that ran dry, people relied on their houses as ATM's to fill the gap.

Now it has come to a screeching halt and no amount of propping up banks so they can lend more money to consumers to keep the economy from crashing is going to work.

People are tapped out to the max already with credit. Even if Obama were to restore liquidity to the banks again, it won't matter. I'm certainly not going to go out and borrow money to keep this PONZI SCHEME ECONOMY afloat.

[Peregrine Took]

150. Yes, I just thought of the same thing. He should be on Obama's committee.

[scarletwoman]

171. I hope you don't seriously think that's even remotely possible. Not even Paul Volcker

or Joseph Stiglitz are getting the time of day from the Wall Street controlled Obama economic team.

Read this post from a different thread:

Volcker Kept Out Even Paul Volcker, who espouses a tougher posture on regulation than Wall Street chieftains like, is kept out of major policy decisions, associates say. Volcker was named to head a White House economic advisory board, and then several of his choices for that board were vetoed by the White House.

(from another source) Paul Volcker has grown increasingly frustrated over delays in setting up the economic advisory group President Barack Obama picked the former Federal Reserve chairman to lead, people familiar with the matter said.

Volcker, 81, blames Obama’s National Economic Council Director Lawrence Summers for slowing down the effort to organize the panel of outside advisers, the people said. Summers isn’t regularly inviting Volcker to White House meetings and hasn’t shown interest in collaborating on policy or sharing potential solutions to the economic crisis, they said.

I wouldn't hold my breath waiting for any progressive voices showing up on Obama's economic team. It's neolibs and Wall Streeters and corporatists all the way.

sw

[grahamhgreen]

182. What if Hartmann was on CNN?

[scarletwoman]

184. Sorry, I don't understand your point.

[sabrina 1]

187. Thanks for this link. I wasn't aware of that

Sooner or later, Obama is going to either have to explain all of this, or lose significant support, at least for his economic policies within his own party. Not the politicians so much, but those who put him in the WH.

[scarletwoman]

190. Obama works for the Owner Class, as does pretty much the entire Washington political class.

He doesn't have to explain anything as long as the people who actually run things are happy.

Elections are just shows put on for the populace, to keep them fooled into thinking that this is a democracy. As Emma Goldman said, "If voting actually changed things, it would be illegal."

sw

[Skittles]

196. gee, we never saw that coming did we sw?

[scarletwoman]

201. Well, to be honest, you sussed out the con before I did.

I knew we'd be fucked in a general sort of way -- because that's just the nature of our political system -- but at the time of the election I wasn't cynical enough by a long shot when it came to Obama.

I wonder how long it will take before the majority understand the full dimensions of the betrayal. We've been sold down the river into permanent corporate serfdom by the slickest marketing campaign ever devised by the Ruling Class.

And even now it serves a continuing purpose of divide-and-conquer by setting the faithful true believers against those us trying to break them free of their hypnosis.

sw

[LooseWilly]

194. Hmm? Hartman's been making the point for years?

I really wish I'd heard of this before... I've been saying for years as well that, if corporations keep laying people off and outsourcing and so on in order to keep labor costs low... and continue to be successful at it... then they're going to find that they've just eliminated their customers in the effort to maximize profits.
Most people looked at me like I was crazy when I said this. (To be fair, I do give plenty of reason for people to look at me like I'm crazy.)

It would've been nice to have heard that there were others predicting this sort of thing.

Looks like the MSM wasn't looking only at me like a crazyperson...

[SammyWinstonJack]

199. Kill the goose that laid the golden egg. It certainly isn't rocket science, is it?

U.S. Corporations=short-sighted greed pigs.

[The Traveler]

10. Exactly right ...

And in my view, another mechanism by which society, as we have structured it, have socialized the costs of making corporate profits.

Corporations want lower wages. But that cuts into the size of their markets. So to stimulate those markets, make credit easy. But there is a cost of money borrowed ... and who pays that cost? The consumer, whose wages have been held stagnant.

Corporate socialism ... the socialization of costs, risks, and losses ... must end.

Trav

[kentuck]

11. Right on target!

Thanks!

[malaise]

16. It's a vicious cycle because once you get into debt

you are forced to take more and more low paying jobs. Further as the pay decreases and benefits decline, the interest on credit card debt rises at the whim or fancy of a corporate CEO.

[Merlot]

12. So true, which is why every time I hear of the "wide screen TV" credit card

person, I think "welfare queen." It's just another way to blame the victim. A lot of people used their credit cards for household goods, groceries, gas, medical, etc. Yes, it should have been a warning to these people they were in over their heads, but most people are to busy living life.

It hasn't been vacations and TV's for everyone.

[kentuck]

14. So, basically....

The solution to getting our economy back on track lies more with rising wages rather than "unfreezing" the credit markets. Once people have more wages, the markets will unfreeze themselves.

[chimpymustgo]

18. Novel idea!

Stiglitz (or was it Madrick) pointed out on C-SPAN forum that except for a couple of years in the late 90's, wages have been stagnant for 30 years.

[Fire1]

74. But that won't happen without unions.

[scarletwoman]

82. Thank you for pointing that out. (nt)

[Sherman A1]

192. Agreed

[midnight]

123. Who will tell the Monster on Wall Street?

[blindpig]

152. I will...

[hedgehog]

15. So, the people facing high medical bills should have realized that

"they were in over their heads" and forgone Dad's heart by-pass and Mom's insulin? I think you're mistaking the symptoms for the cause.

[Merlot]

38. I think you and I are in agreement

By saying people were in over their heads, I mean that they didn't realize that their wages were stagnating and the economy was not growing. I'm not saying that people were to blame for doing what ever was possible to survive. I think to many people blame themselves without realizing the state of our economy.

[hedgehog]

40. Sorry , I shouldn't have been so irritable!

[Merlot]

49. No worries - I think we're all a little edgy right now!

[blindpig]

159. It's all this responsibility/self-help bulshit.

It's always YOUR FAULT, you must improve yourself else it is your fault. We are admonished that politics will never be right unless we make ourselves 'better' persons. What complete bullshit, we have a system which encourages, nay, rewards every sort of stupidity and bad behavior, yet it is the individual that must be changed. Something wrong with that, doncha think?

Change the system, radically.

[xiamiam]

163. its not just the medical bills..its the time off from work to recuperate..

provided you survive the medical system...its the time away from your clients because of the lack of interest in their problems while you deal with pain and the foggy brain from pain medication...its also trying to rebuild a business after recovering in an economy that is unforgiving that you took time off to be sick...

[CoffeeCat]

20. That's true...

...but there are plenty of middle and upper-middle class folks who wanted the luxuries, but they
couldn't afford them.

They wanted it all, but didn't have the money--so they put it all on credit cards.

Yes, there are people who used credit cards in emergencies and to pay for medical expenses. There
are also people who relied on the cards for necessities, such as food and gas.

The credit-card companies screwed us all. At every income level.

They knew that if they handed out these magical cards, people would use them. The problem is---nearly
everyone is enslaved. It doesn't matter if you make $10,000 per year or $200,000--if you used these
cards and have heavy debt, you are owned. To some extent, your freedom is limited.

Wall Street and people who invested in the market made a killing--because credit cards caused our aggregate
demand curve to move outward. We demanded more of everything. This caused the boom.

Now that boom is over, and we're looking at the fall out. Aggregate demand is returning to rational levels.

Our politicians who relaxed the credit-card and banking regulations---working in tandem with these companies--made
a killing off of us. It's a very, very sad situation.

[kentuck]

21. I wish our President was listening to these folks also...

Rather than just the Wall Street and big banker guys... Other than that, he is doing great.

[juno jones]

118. Lots of people used 'em on their businesses

Thinking they could get out from under servitude from others.

I did. Spent 5 years building a buisness only to have the sucker swept away at the beginning of this debacle. More fool me.

I see red when I see this laid at the door of people who 'frivolously' bought TV's and houses. Many did, many didn't, it is not for anyone to fucking judge, because it is not their fault that we are here. What's a flat-screen compared to a few million dollars CEO bonus?

[xiamiam]

162. even here, people judge..and buy into the talking points handed down by the wall street pr firms

THEY MADE BILLIONS betting against the loans that they gave us..yet it is our fault...and the first talking point was that the subprimes did it..thats a bunch of nonsense...a little like the wmds...once the talking point gets out there..its hard to undo it...the economy started to tank..some of us were sick..layed off...trying to keep our businesses afloat...a million reasons..mostly not about irresponsibility..rather survival...when you get dozens of offers every day from the credit companies to borrow rather than go under...its a friggin no brainer..what are you gonna do?..not eat?..let the lights get turned off?..people still think it cant happen to them because they did everything right..and until all of us GET IT...the problem persists...hideous to see the amount of money the ceos make...one persons salary could probably take care of all the foreclosures in detroit...ridiculous...as long as the victims of this huge crime are faulted, the pr firms of the bankers are winning..I would like to see a class action suit by all of those who have lost their houses against the bankers who were betting they would....because they made BILLIONS betting against the middle class...and even some here dont get it...they think its our fault...i call bullcrap...

[SammyWinstonJack]

200. Five months unemployed, husband who can no longer work, savings dwindling fast. What to do?

I will use my cc and try to maintain a little longer. Anyone wanting to blame me for getting into debt because of circumstances beyond my control, go right ahead. For the record, we had no cc debt until this happened.

[Spazito]

17. Bingo!

She is absolutely right. It was a two-fer for the Corporations. They could keep wages at subsistence levels and therefore increase the profit margin and gouge the recipients of the subsistence level wages with easy credit/grossly high interest rates.

[kentuck]

19. It's really not that complicated...

For each 1000 employees in a company with a high paid CEO, each employee could get $20 per week, which would total approximately $1000 per year, and 1000 x 1000 would equal $1,000,000 dollars. Take $1 million from the CEO and give it to the employees and they have more money to buy more products and the economy recovers...That is our way out of this mess.

[destes]

120. You have hit right on the rest of the equation

The problem before us is an economy upside down.

People must graduate from this "capitalism". Too many important aspects of civilization teeter totter between recession, the personal pocket-book crunch felt by all, and bubble, the profit scheme of the moment created by the powers that be.

I figure that wages for labor are about the correct percentage of the value of those products and services created by labor. The problem is that those wages are inadequate to provide labor with means to equitably consume.

Labor needs more discretionary income to provide balance to the economy.

It's obvious that health care expenses are onerous. Were health care readily available at no extra cost, no deductible, no insurance cancellation, no crazy pharmaceuticals costs and no fear of losing ground in the rat race because of illness, people would be able to afford to be healthier. Socialize medicine. No need to tiptoe around the term. Okay, Single payer, if it makes people more comfortable.

Plow health care profits back into health care service and everyone gets a $100 per week raise, security from catastrophic loss. REAL small businesses, those the politicians are always "real serious" about, will get out of the health insurance business and focus on their core values and profitability. The local hospital will exist to provide medical care to their communities as opposed to providing attractive investment opportunities to local physician's groups. The medical profession has it's own fair share of overpaid corporate executives too.

In any case, I think that alone will bring our economy about two thirds of the way around to balance. Kentuck here has provided the remainder with the elegance of simplicity.

It's just that easy.

The challenge is the same as it was at the founding of the nation. To get our collective will and wisdom to become the law of the land.

Apparently the two party system doesn't perform that in anything like a timely manner. Our government is obviously bloated with corruption. Our leaders are pre-screened and pre-packaged. Sold to us like the latest model automobile, or like Sham-Wow, except Sham-Wow seems to actually perform as advertised.

Our nation is perfectly poised to fulfill the dreams of Hitler's National Socialism. That's a hell of an epithet for the "greatest generation".

The only way to stem this is to remove the crazy amounts of money-power wielded by the very few. I'm pretty convinced everything I've said is reasonable. None of the intelligent people I know seem to have any better ideas. They all seem to be thinking that they're in line to be the next generation of overpaid elite. That's probably why it goes like it does. Even a dung hill can look good from the top.

[scarletwoman]

145. Excellent post!

Welcome to DU!

sw

[TheBigotBasher]

22. It was not just easy credit.

The US and the UK both took property prices out of the inflation index, which meant that property price inflation was left unchecked. People saw their home as equity and they used their house values to buy bigger and bigger cars on. Wage rates did not go up because "inflation" was low. However the rising value of their "equity" made them feel "richer".

The Governments in the UK and US deliberately allowed an element of hyper inflation in order to break wage rate inflation. Now that bubble has burst there is nothing to use to buy the big cars.

How do you get out of that?

Who knows. Krugman can not say he does either, because there has been nothing like this in history.

[OwnedByFerrets]

79. And it certainly wasnt an accident.

[Mari333]

23. makes sense. nt

[daleo]

24. 1) Begin to off shore lower skilled jobs to low wage countries

2)Run down national savings buying cheap junk from low wage countries.
2a)Continue to offshore lower skilled jobs to low wage countries, but begin off shoring more highly skilled jobs as well.

3)Run up huge debts buying cheap junk from low wage countries.
3a)Continue to offshore lower skilled jobs to low wage countries, and accelerate off shoring more highly skilled jobs.

4)Loot all the money in pension plans to continue buying cheap junk from low wage countries.
4a)Complete off shoring of lower skilled and higher skilled jobs to low wage countries,

5)Become a low wage country. Congratulate yourself for accepting the principles of capitalist globalization.

The complete process appears to take about two generations, say 40 to 50 years. If we assume it began with the "Reagan Revolution", that means we are a bit over half way there, with step 4 as the flavor of the month.

[patriotvoice]

132. The good news is that once the algorithm completes, it reverses and you're on the up side.

Won't that be fun! "Made in the USA" is to tomorrow's China what "Made in China" is to today's USA.

[daleo]

161. Possibly

Of course the whole world might settle into an equilibrium of low wage countries. It would be something like medieval Europe, where a small international aristocracy lorded it over a large peasant/working class.

[scarletwoman]

169. I'm pretty sure that's what the Owner Class has in mind. It's largely in place already.

The real question is, are we going to put up with it? Or are we going to fight back?

sw

[daleo]

178. Yes, that's the question

A lot of history has revolved around that question. It's a never ending struggle.

[scarletwoman]

179. Indeed. And here we are, it's our turn now. The pivot of history is upon us. (nt)

[LooseWilly]

195. Wow, algorithm cyclicism...

... that's my kind of optimism!!

[destes]

197. cyclicism or profit taking, by any other name......................

As economies go, have we really progressed any farther than we were at the fall of Napoleon I's empire?

People ponder the issues, seeking understanding and clarity. Perhaps a solution. They come up against the fact that there are powerful, entrenched interests working diligently to block solutions to glaring problems at the heart of those issues.

Solutions are not favorable to these people. They feed on the cyclic nature of "economies". They are debt farmers, sowing the seeds of credit, weeding out the competition, fertilizing to maintain low or no taxes, cultivating poverty and lastly, harvesting their exorbitant profits in the melee of fear and irrationality that is war.

An investors dream. Enough capital to be immune to the vagaries of the marketplace. These folks live that dream. They had the masses screaming to heaven about the immorality of Social Security and the New Deal. Today it's the "horror of socialized medicine". They showed their power when the highest tax rates were turned back from 90% to 35%.

How do we fight back? Squeeze their umbilical. Promote high rates of taxation on investment income. Do it now.

Get over the Kool-Aid fed mantra that investment is sacred and that the economy cannot function without it and that everything possible must be done to promote investment. "Plow your "lunch-money" savings into the market. It's good for you and America."

The battle cry of the contemporary progressive should be, "Remember Your 401-K". Just as the Rothschilds consolidated their empire at Waterloo, the present day lenders have harvested your life's savings.

[alcibiades_mystery]

25. You can't have growth with stagnant wages

Of course she's correct. Only the greed of the capitalists could construct "growth" on the profit side while fighting anything like "growth" on the income side. The credit solution to a declining rate of profit is not sustainable, as we're finding out now. It's only surprising that it took so long to fall apart.

[kentuck]

26. Yep.

All we need to do is "unfreeze" those credit markets and everybody will start spending again. We just need to give the banks more money for their bad assets and everything will be OK. Only if it were that simple...

[jwirr]

61. I do not know about you but they are going to get rude awakening

from me. No matter how much credit they give me - I am broke. They will have to pay off the credit I used first and then hopefully I will be smart enough to just say NO.

[DBoon]

27. Easy credit is also a substitute for social benefits

Credit pays for college, medical expenses, and if you are unemployed, you use your credit card to meet monthly bills (and hope you find a job soon)

You go into hock to buy a home, in the hopes that the equity will allow you to retire in some comfort.

[TahitiNut]

28. "Mortgaging Tomorrow" is far more than a mere euphemism.

Now, as the market value of "tomorrow" has collapsed, we're in a world of hurt.

[Trajan]

29. ABSO-FUCKING-LUTELY ....

Trajan has been saying the same thing here since, well, for quite a while ....

http://www.democraticunderground.com/searchresults.html...

Hardly anyone seems to be listening .....

[scarletwoman]

30. Well, of course. But I honestly thought most of us had figured this out years ago.

I know many DUers have pointed it out going back years, even before the housing bubble burst.

"...people will still be stuck with their low wages and no money to buy the products to keep our economy going." Which is precisely why so many of us are outraged by the Obama/Geithner/Summers Bankster bailouts.

Wall Street isn't the real ecomony, the real economy is people earning money by producing things, and earning enough to buy what their fellow workers have produced. Thus our money circulates around amongst us and benefits everyone.

But our commonwealth has been taken over by a group of limitlessly rapacious vampires, empowered and enabled by our political class, that suck all the money out of our economic circulatory system to enrich themselves while producing absolutely nothing.

If we are to survive, a stake must be driven through the hearts of these vampires and their heads cut off. It isn't capitalism if capital isn't investing in production, it's just an elaborate pyramid scheme.

sw

[chimpymustgo]

121. Outstanding post, scarletwoman. The question is HOW. We are continuing on this bad path.

Where will it lead, and how do we get turned around?

[scarletwoman]

165. Thank you. As for "how?" - I think we have to become guerrilla entrepeneurs.

Like in South America, where workers have taken over shuttered factories and re-started them as worker-owned collectives, making things that are needed by their communities while putting people to work.

I think the answer lies in quietly building a parallel economic system that serves the People, and that gradually draws away the supports that prop up predatory capitalism. We need to look toward creating networks of decentralized, self-sufficient, sustainable community enterprise modules -- guerrilla "cells" as it were.

It's already happening here and there in the "eat local" food movement -- people are supporting local organic farms which provide them with wholesome food. Such a model could be extended to include light manufacturing, the making of clothing, household goods, car sharing (as is being done in several cities), and who knows what else.

The operative idea is to remove oneself as far as possible, in as many ways as possible, from the corporate system, and bring as many others along with you as possible. Foster a quiet revolution that doesn't have to storm the Bastille, just make the Bastille irrelevent.

I'm just throwing out ideas off the top of my head -- all I know is that we don't HAVE accept being enslaved. We DO have the power to throw off our chains, and it starts with NOT accepting that these chains are our inevitable and immutable fate.

sw

[hfojvt]

31. "what's the matter with credit?"

"It's old fashioned! Charlie, you're an anvil salesman. Your firm give credit?"
"No, sir."
"Nor anybody else. Cash for the merchandise ..." The Music Man

Stores and gas stations gave credit before credit cards became so big. I remember my dad used to have to search in the 1970s to make sure the gas station took a credit card. Now you can figure that they all do. Although I sorta got into a jam in Burbach, Deutschland with a bahnhof that would not take a credit card or American dollars. So there I was in a city of 12,000 people, unable to buy a train ticket to Amsterdam to catch my flight to Twintown.

I still wonder if people used credit because they don't make enough money, or because their eyes are bigger than their paychecks. I have always been in the bottom quintile and never got into trouble with credit. I am like the kid from the Sixth Sense "I see wasteful, greedy people." "All the time."

Like the other day, the news did a story on somebody facing hard times and having to cut back. One woman made a comment "we cannot afford to take the dog to the groomers". I had to laugh at that "oh no, take me down to hardship city!"

Maybe that's just my asceticism. My Indian roommate did compare me to "the man who lived on air".

[No.23]

33. The Grand Eraser

"I still wonder if people used credit because they don't make enough money, or because their eyes are bigger than their paychecks."

The latter, I believe.

Credit is the Grand Eraser of the line that distinguishes a need from a want.

Thanks to credit, it's a lot easier to confuse our wants for our needs.

[hfojvt]

43. I got in trouble teaching business class

because I disagreed with the textbook which defined a need as a want. I saw that textbook definition to be pernicious. An attempt to both a) convince wealthier people that "you need a thneed" and also b) convince wealthier people that those poor people just "want" food, clothing, shelter, and medical care. Kinda disarms the whole "to each according to their needs" if there is no such thing as a need, just a bunch of wants. And the advertisers have long encouraged all of us to "want it all".

But I am gonna get in trouble on DU for thinking that people can live on $11 an hour.

[scarletwoman]

71. "defined a need as a want" -- that's just incredible! Who wrote the textbook, BOA?

Truly pernicious.

sw

[Skittles]

112. I hear you on that one

when I was a kid and I told my dad I wanted something, he'd reply, " You WANT it or you NEED it?" It really taught me a lesson that not too many other people seem to have learned.

[tammywammy]

114. My dad calls it

The champagne life on a beer budget.

[havocmom]

32. Hmmm, I seem to recall all the commercials for that new fangled Bank Americard

in the 60s, about the time JUST before the working class started slipping in real income to cost of living...

Yep, it all makes sense.

[jesus_of_suburbia]

34. I saw Barbara Ehrenreich on C-Span a few months ago talking about her new book ---

"This Land Is Their Land"


She is a great speaker, and she is correct about the credit cards being a way to screw workers from higher wages.

[MadHound]

35. She's right, but only up to a point

Credit cards were also the mechanism for those with poor impulse control to go out and acquire the latest shiny object on the market. Far too many people decided that they had to have it all, the big house, the new car, all the latest cool toys, and since they couldn't afford to buy them, and they didn't have the personal control to restrain themselves, they went out and put them on plastic.

[Liberal_in_LA]

48. good point

[LuckyLib]

104. Don't forget that at the same time, the advertising/consumer culture was doing a masterful job of

convincing folks that "they owed it to themselves" to get whatever they wanted, that it was their right to have bigger and better. Add to that isolation and loneliness in a culture that encourages people to shop for entertainment, pleasure, and gratification, and you have a recipe for disaster.

This is our disaster.

[Hissyspit]

36. company store

[earth mom]

72. I was thinking the same exact thing. nt

[csziggy]

76. Company Store is right - that is how it got started

And then the system was rigged. The goods at the company store cost just high enough that the low wage workers could never get ahead. They could just make it from month to month. Company towns were too far from other sources of supplies to make it practical to go elsewhere to buy goods at lower prices. Usually it would have been a good part of a day to get to another town - even if they had transposration.

My Dad grew up in a company town during the late 20s and through the 30s. Even though his father was a manager, the family still had to scrimp to make life comfortable. I cannot imagine how bad it must have been for the workers my grandfather had to watch out for. After the war, Dad worked in the same company town for a short while, but by the time I was born he started his own consulting business - he was a mining engineer - and worked for himself after that. It was a boom-bust life and took a lot of careful managing for my parents to keep us in a house and clothed & fed.

[NashVegas]

37. In Some Cities, It May Have Even Helped People Get Access to Higher Paying Jobs

But they stayed on the Habitrail wheel and lost, anyway.

Example: in my city, people will make a ton of assumptions about a person's level of success dependent on what neighborhood they live in, what car they drive, how they dress, etc., etc., and because "nothing attracts success like success," if you have the right zip code, you have a better chance of getting taken seriously by whomever your target on the success ladder is.

I doubt very much Nashville is the only place like that.

[Merlot]

39. Yup. In LA, the car you drive is a big deal for a lot of people.

When I was in college, someone once told me to always drive a nice looking car to appear successful. He was doing work as a designer and needed to impress clients. Clients are insecure and if they think everyone else likes the designer, they would be more inclined to hire him. That was his philosophy, and I don't think its untrue to some extent.

[Cassandra]

129. Some years ago, a Forum Leader who had been all over...

the country said she could characterize several cities by questions:
Boston - What do you know?
New York - What do you do?
Washington, D.C. - Who do you know?
Los Angeles - What do you drive?
Still true.

[Sen. Walter Sobchak]

154. No Kidding!

Until it recently met an end worthy of America's Funniest Home Videos that involved a runaway dumpster - I drove an old Toyota - and by the reaction that got you would think I have stumbled off the bus soaked in my own piss and vomit begging for change.

Meanwhile people who made little more than half what I earn were showing up in Hummer's and BMW's (leased of-course) claiming it was an investment in their career.

[pengillian101]

113. Good point. n/t

[kentuck]

41. So, what's the solution??

I think the problem has been accurately defined.

[babydollhead]

42. For my family, the solution

would be to have our credit debt nullified. Then we could relearn how to live on what we earn instead of charging groceries and gas and kids clothes.

[TwixVoy]

45. And are you naive enough to believe

that everyone else in the country would be as mature enough as you and do the same thing?

[Fire1]

93. Right now, more than you know are finding out they don't have a

choice. This crisis is going to be a very expensive lesson to lots of folks.

[Raineyb]

53. Higher wages to start with

The American worker has been increasingly productive but their checks haven't been reflecting that.

People won't buy if they don't make enough to cover their living expenses plus have extra to save.

[TwixVoy]

44. I said the same thing a year ago

it is painfully obvious that MANY people substitute low wages with credit. That is half the reason we are in this mess.

[kohodog]

46. We're all serf's now

(unless you're off the grid).

"Serfdom is the socio-economic status of unfree peasants
under feudalism, and specifically relates to Manorialism. It
was a condition of bondage or modified slavery which
developed primarily during the High Middle Ages in Europe.
Serfdom was the enforced labour of serfs on the fields of
landowners, in return for protection and the right to work on
their leased fields." This from wikipedia, sorry I wanted
a quick definition.

Beginning to sound like homeownership to me.

[JDPriestly]

47. Good way to make us all into serfs.

It's back to the Middle Ages for Americans. Just stop buying.

[Uncle Joe]

50. I believe she nailed it.

I also believed this camouflaged the social/economic effect of CEO pay going from an average of approximately 26 xs that of their average employee in 1989 to over 400 xs that of their workers today.

Nobody is worth that kind of money and I believe it creates dysfunctional disparities in the economy with the ultimate result of we're seeing today.

Thanks for the thread, kentuck.

[TheBigotBasher]

54. I am actually not so concerned about that.

Some people are worth that. Some CEOs have created and developed companies tha even during the recession are still strong; Steve Jobs and Bill Gates for example.

My concern is that pay rates were kept low because of a massive redistribution of wealth from those in their 20s and 30s to those in their 60s through hyper inflation in the property market; deliberately left unmeasured so that homes were not sold on how much they cost but what the mortgage repayment was each month.

Now that has gone, especially as the banks now label such mortgages as "sub prime" which is a deliberate attempt to blame the poor for their creation, how do you regenerate demand? It can not be done. People now understand their home is their home, not their retirement pension.

[Uncle Joe]

176. I believe, if it hadn't been Jobs and Gates, it would've been someone else.

That was not intended as a slam against Jobs and Gates, I respect what they have accomplished but I also believe the American People as a whole are remarkably resilient in their creative pool.

If CEO and upper management pay scales had been kept to more realistic levels, in stead of them abandoning the middle and lower income class, by leaving in their stock option life boats, they would've been focused more on doing what was good for their companies, instead of just what was in it for them. Wall Street would've had more incentive to focus on mid-long term vision goals instead of manipulations to drive up short term quarterly profits which in turn fueled much of this disparity.

It was this short term greed based thinking which motivated many of these banks and financial institutions to make unsound mortgages to the American Workers; whose pay had remained largely stagnant, this in turn created the real estate bubble.

Instead of using leadership, making hard choices and personal sacrifice in the late 80s, the upper crust decided to create an camouflaged artifice to enrich themselves at the American People's expense.

[bluesmail]

51. That's something I can agree with. It's getting more difficult to agree

with anything anymore.

[leftstreet]

52. K&R

[glitch]

55. I can't remember her ever being wrong! Thanks for posting, K & R nt

[dixiegrrrrl]

56. I have had a constant heartache about my grown son's future.

They both are close to 40 now.
They are very smart, very good with money, and until recently they still believed all they had to do was find the "right job" in order to "get ahead".
They worked hard, stayed out of debt, got and lost jobs as the economy tanked in 1991 and 2001 and 2008, and have no hope of ever getting out of the rut, the system no longer works that way.
They are surviving ok, "getting along" ok, they have Top Ramen weeks and then things improve to hamburger and potatoes weeks, they drive 12 year old cars, one is working as a CAD operator for the one remaining company in his medium size town and he is making a whopping 12.00 an hour.
Fortunately, they are both single and have no intentions of marriage.

I bought one son a sweater for X-mas...his voice was cracking when he told me it was the first new clothes he had gotten in 5 years. He says now even the thrift stores have lousy pickings.

My heart is breaking for them.

I am furious down to the bottom of my feet towards the government and the "system" and the same o same o games being played in DC.

[Fire1]

94. That is so sickening. Just sad. Sad.

[pengillian101]

116. They both are close to 40 now. They are very smart, very good with money...

What jobs do they have that have screwed them so badly? That's a sad story they are nearing 40 and in that shape.

As far as eating on the cheap - here's Clara with Great Depression era recipes -

http://www.youtube.com/watch?v=9zXqkHvs0po
http://www.youtube.com/watch?v=P4IjNV3lZkQ&feature=chan...

[underpants]

57. and when the powers that be decide to all be "broke" at the same time

all the little peons are still on the hook for credit

but I am sure that that isn't like that.

As Lennie on the Simpsons once famously said of Monty Burns "He's rich! He MUST have all our best interests in mind!"

[jwirr]

58. And it worked fairly well until the manufacturers and bankers got

greedy. When they pushed interest and the price of purchase too high the bubble burst. Whole generations of our parents bought their homes and cars under this system but we cannot for a couple of reasons. First interests and prices rose and then we the buyer wanted McMansions and bigger everything. Between us we have created a financial system that is providing few of the needs of the people and enslaving us to the credit card. Not a healthy situation for any of us.

[slipslidingaway]

59. K&R n/t

[Citizen Worker]

60. Real income

In late 2007 the Brookings Institute published a study and
found that between the years 1974-2004 median income had
fallen by $1,836.

I think that in part this is what lead to the housing crisis.
 Banks and mortgage companies employ legions of economists and
no doubt they became aware of the decline and it threatened
their profits so they came up with these "exotic"
mortgage instruments.  Further, there were probably some in
government who also recognized the potential for political
discontent should the myth of the "american dream"
become visible.  So, lenders got a by from the congress and
regulators to carry forth the myth.  But the myth couldn't
survive NAFTA, GATT and WTO and outsourcing.  Now reality has
caught up to the myth.

If prductivity creates supply and wages create demand it's
abundantly clear that AMERICA NEEDS A RAISE and a big one at
that.  There's 35 years of decline to catch up with.

How many members of congress, democrat or republican, do you
think will stand up and give american workers a much deserved
raise?  Hell, the democrats can't bring themselves to index
the minimum wage to the CPI lest their campaign contributions
face a huge decline.

In an economy that's based on consumption without a raise in
wages consumption has ground to a halt.

Instead of putting the bailout money where it would have done
the greatest good, in consumer's hands, Geithner et al has
given the money to the banksters, a sector of the economy
that is but 15% of the GDP while the 70% are left wanting.

Many are still complaining that the banks are sitting on the
money rather than lending it out.  Think about this for a
moment.  It's our money that went to the banks and we're
begging the banks to lend to us at usurious interest rates so
we can pay yet again!!!  Doesn't make much sense to me, does
it to you?

[kentuck]

63. Well said !

"In an economy that's based on consumption without a raise in
wages consumption has ground to a halt."

==============

And banks unfreezing the credit markets won't do a damn thing to help these folks. If they can get some jobs out of the stimulation bill, that might help some? However, it is a systemic problem. The massive transfer of wealth in the last 25 years or so has finally done the trick.

And you are right. Our economy is based on consumption. Consumption is based on how much money you can get your hands on or how much you have left on your credit cards. If your wages are too low and your credit cards are maxed out and you can't sell or re-finance your home, then you up shit creek with a whole lot of other Americans.

[scarletwoman]

81. Great post.

One thing that has been bothering me for a very long time -- way before things fell apart -- is this: How can a consumer-based economy be sustainable when we aren't making the stuff we're consuming? How can there possibly be a sustainable ecomony with no manufacturing base and nothing but service jobs?

I'm no ecomonist, but to me that just defies common sense.

sw

[raccoon]

139. Great post.

"Banks and mortgage companies employ legions of economists and
no doubt they became aware of the decline and it threatened
their profits so they came up with these "exotic"
mortgage instruments. "

I have been saying for years, who's going to buy the products when all the "good" jobs are gone?

[femrap]

62. Debt....the new Slavery!

Go to college so you can get a decent job, but first go into Debt (no State grants nor low interest Fed loans plus college costs have gone up astronomically). Graduate a Slave! You are now enslaved to Corporate American...your boss can treat you like shit and you gotta take it, cuz you're in DEBT! And Student Loan Debt can't be written off EVEN IF YOU FILE BANKRUPTCY! (Thank you Dems for that great 2005 new Bankruptcy Law).

So you can never get ahead and set a few bucks aside so you can have some 'fuck you' money so when things get so bad at work, you could leave and give them the finger when you walk out the door.

DEBT IS BAD. DEBT IS SLAVERY. THE BANKS OWN THE PEOPLE....AND THE GOVERNMENT LIKES IT THAT WAY.

[scarletwoman]

69. The banks own the people AND the government. Let's be clear on that. (nt)

[Fire1]

97. Becoming more obvious everyday!

[femrap]

204. I look at the gov't as

the middleman....it does as the Corporations say. I guess I should say Banksters instead of Corporations.

I tell others...why bother calling your congresswoman or Senator. They're just taking orders. If you want to make a difference, call your local CEO and holler, protest and boycott.

[sabrina 1]

153. In 'Confessions of an Economic Hitman'

John Perkins describes this exact system, only it applied to under-developed countries.

Who would have thought that globalists were applying the same system to their own countries?

They forced these countries into so much debt and in return for the loans they received, they provided cheaper natural resources than their value to foreign corporations who ended up controlling them.

In our case, the commodity they received appears to have been cheaper labor. Which resulted in debt and ever higher interest rates on that debt.

That is why Chavez is so hated by the globalists, he repaid Venezuela's loan to the World Bank and got out from under their influence, while taking control of Venezuela's most valuable resource and returning the profits to his own people. And it looks like other South American countries are following his example. Imagine a country wanting to control the profits from its own resources? How dare they! Before Chavez, Venezuela had a poverty rate of approx. 80%. Not to mention the illiteracy rate. Easy to see how necessary it is to keep people ignorant in order to make this system work.

This form of 'Capitalism' is nothing more than usury.

There is no security in the system we now have, booms only move money to the top while the inevitable busts plunge small businesses into bankruptcy, and the cycles seem to be getting shorter and shorter.

[scarletwoman]

173. Thank you for bringing up John Perkins. Very good post! (nt)

[sabrina 1]

188. You're welcome!

The more I'm learning about all of this, the more I think of Perkins' description of our treatment of third world countries. And I can't help thinking that these 'masters of the universe' viewed the US in the same way, just with different 'resources' to be harvested. I hope I'm wrong.

[scarletwoman]

189. "I can't help thinking that these 'masters of the universe' viewed the US in the same way..."

Of course they do. They have no loyalty to anything but power and wealth, they will accumulate it by any method at hand.

The only difference between fleecing the common citizen in the U.S. and fleecing the common citizen in the Third World is they have to use somewhat more sophisticated propaganda here -- in the Third World they can just barrel on in.

Here, there is still the illusion of "democracy" to be kept up while the people get ripped off. But they've proven themselves well up to the task.

sw

[femrap]

203. I remember when I saw the author of 'The

Economic Hitman' on Amy's 'Democracy Now.' I literally got chills. The Truth is scary. I read the book immediately.

Capitalism has become feudalism....'Serfing, USA.' I'm sorry to joke....but if I don't, I'll cry.

S. America seems to be the place in the world to live. Women are making advances, the indigenous are actually ruling. Too bad I took French instead of Spanish...but they're similar. And I love the Tango!

Chavez just nationalized another company the other day....damn, I can't remember what it was. Good for him.

I am going to do my best to get off the grid as much as possible so the Corporations can't screw me anymore than they have. I worked for them for years and the stress killed my adrenal system...never again.

I'm so grateful that I was born to hate debt...it never made sense to me. So I do have some 'fuck you' money

BTW....welcome to DU!

[sabrina 1]

205. Thank you femrap ~

I couldn't agree more regarding S. America. After decades of being victimized, while Bush was busy in the ME, country after country in SA threw out the dictators. If there's any hope for changing things, I think it can be found in those countries.

'Serfing USA'! What a great slogan, funny yet sadly, true.

I was shocked too when I first came across John Perkins' work. And yes, SA may be the place to go, I thought about it after the election in Venezuela when Chavez' first act was to provide the opportunity for all Venezuelans to get an education, regardless of age.

While we were watching the results coming in (on another blog) we had a blog friend from Venezuela who was standing in line to vote with his girlfriend. He told us that there was a woma in her sixties ahead of them, who was going to vote for Chavez because for the first time in her life, she had been given the opportunity to learn how to read.

There was such an atmosphere of hope, which he conveyed to us, even though everyone understood it would not be easy, after so many years of oppression and a population that was basically denied basic rights such as learning how to read.

He was originally opposed to Chavez, he said, but changed his mind after he saw that he seemed to be trying to keep his promise of putting the Venezuelan people first in their own country.

And then it was exciting to watch other SA countries vote for democratic leaders also. I doubt this would have happened had the war in Iraq not turned out to be such a failure. So, I suppose something good came of that terrible war. I think the global capitalists have lost SA, at least I hope so.

[Mithreal]

64. This was the Greenspan plan. nt

[gorfle]

65. This is also why "freeing up credit markets" is a bunch of crap.

Too often we hear that the solution to this financial crisis is "freeing up credit markets". I think this is bunk. The problem here is not that people need more debt, the problem here is that people have too much debt. People need more wealth, not more loans.

[scarletwoman]

84. "People need more wealth, not more loans." Exactly! I'm with you, "freeing up credit markets" is BS

[pnwmom]

91. But businesses and governments need credit in order to manage inflow and outflow.

A state government, for example, needs to pay employees, primarily teachers, every month. But its revenues don't come in on a regular basis every month, so they use credit to manage the bumps. Businesses do this as well. Their receipts come in on a more irregular basis than their expenses go out. They need credit to manage this. Boeing, for example, needs credit to build the airplanes that it has orders for.

When they talk about "freeing up credit markets" the key credit that must be freed up -- if people are to remain employed -- is credit to employers.

[pnwmom]

92. delete (dupe)

[KT2000]

66. The thing about B. Ehrenreich

is that she knows what she is talking about. She has shown great insight into so many issues.
The reason she is so spot on is that she understands how it works from the ground up. When she revealed the pink ribbon martyr crusade funded by a chemical company, she had been there. When she talks about minimum wage, she has been there too.
She belongs in the Obama administration.

[dcsmart]

122. she should, but

she is a card-carrying Democratic Socialist and we know how bad that is.....lol

http://www.dsausa.org/about/structure.html

http://www.thenation.com/doc/20090323/ehrenreich_fletch...

DSA is terrific organization, which i am a member.....

[KT2000]

156. Thanks for that

link. I had not heard of this before. Will look into it because the standard Dems are falling short IMHO.

[KoKo]

67. Thanks, Kentuck.....and "they" will tell us we coulda' said "NO!"

We all know this is true...but Ehrenreich is giving it credibility.

Suckered us into cheaper and chepear goods from China...and told us to charge it all. Couldn't walk into a store with out the "Check Out" person saying: "You can save 10% on your purchase to day if you apply for our card." So many folks got suckered into those "Store Cards" where you saved 10% on "today's purchase" but live the rest of your life paying 20 or 30% to pay off that one day whim.

What a casino we've lived through. Sending our jobs overseas...sending cheap goods back and giving "home equity" and 10% off a purchase for a store credit card that kept you going with 20 or 30% for years. And all the time our "Gross Domestic Product" was rising based on us "Consumers," that "they" like to call us. Propping the "scam up" higher and higher...and it implodes and we are the ones to blame for not keeping spending...spending..spending!

Yeah...was it our fault? We could have said "NO!"...all along the way we coulda' said "NO!"

Yeah..sure...sure.

[cliffordu]

68. best fucking post of the week, if not the month. K&R

[earth mom]

70. Obama is propping this b.s. up and in doing so, proving he doesn't give a damn about wages

or the majority of people who have been living on the edge for decades.

Elizabeth Warren of Harvard said about the same thing about wages a year or so ago and no one in Washington DC gave a damn.

Obama is not going to listen Ehrenreich or Warren or any of the economic experts out there telling him the truth about Wall Street and the banking system.

Obama's too busy doing what the Wall Street and the banks tell him to do.

[kentuck]

75. I don't know that I would be that harsh with Barack...

Although I am disappointed in his Treasury Dept, I do believe that he's a realist. He is much like FDR in that respect, in my opinion. He knows that he cannot take on the big banks and the internationalists unless the people are behind him. It would be suicidal, much like it was with Gov. Elliot Spitzer. Bad things happen when you try to take them on all by yourself. A wise man has all his soldiers in place when he is ready to do battle with such a strong enemy. At least, I hope that is the case...

[scarletwoman]

88. Wall Street and the banks OWN our government, our political class serves THEIR needs.

We are just herd animals.

sw

[closeupready]

126. Yes, and anyone who doesn't get that has been sleeping for the last 30 years.

n/t

[TomClash]

73. Easy credit and cheap mports

were a substitute for higher wages.

No doubt.

[Mari333]

77. her online blog

she is right on


http://ehrenreich.blogs.com/barbaras_blog/2009/01/rich-...

[elizfeelinggreat]

85. Thanks for that link

I am enjoying it.

[OwnedByFerrets]

78. No truer statement has ever been uttered.

[kentuck]

80. That is why it is so important that the Obama Administration not...

loosen the caps on executive pay for these bank CEOs. Because if there are limits on how much this big shot banksters can make, it will affect how much other CEOs can make in the rest of our economy. Few would dare to suggest they deserve more than the big bankers. This could return to the employees in better pay and would be a good start in getting our economy back on the right track...Just my opinion.

[paparush]

83. I remember telling my wife, years ago, that when this period of easy credit goes away

some serious shit would hit the fan.

[trickyguy]

86. What a beautiful and simple explanation of why we are in our current mess. Consumer greed.

[kentuck]

87. But consumer greed is harmless...

unless it is fulfilled by the creditor's deception.

[Carni]

89. It was also THE only way to finance a small business for some

Seriously...banks started pulling in their purse strings in the early 2000s if you wanted to get a business loan, but the credit card companies would issue you dozens of cards (guaranteed by you personally of course.) Consequently many small biz owners were forced to use their own personal credit (via cards) after 911 to meet payroll, finance their businesses etc.

It sucked and was not wise...but it was that or close the door for many.

This mess wasn't just a result of people having eyes bigger than their wallets for bullshit purchases (IMO anyway)

[scarletwoman]

96. Thank you, that's a very important point. I remember when that started happening.

Any thoughts on why banks were "pulling in the purse strings" then?

[kentuck]

101. I have heard of a few businesses having problems getting loans...

but it doesn't appear to be the widespread problem we are led to believe. The problem lies with the banks. They made loans in which they did not have the money to back it up. Then they sold them as securities on the open market - good loans mixed with bad loans. They really had no idea how many bad were with the good. They didn't have time to think about such trivial matters...

[NashVegas]

125. Independent Movies Were Built on Mastercard

and Visa, until 10-15 years ago.

[Chovexani]

147. Very true

Robert Townsend did that to get Hollywood Shuffle made. Same with Kevin Smith and Clerks.

[NashVegas]

157. Lot of People

Of course, there's a very obvious difference between using credit to finance a film you believe will find a paying audience, and using it for a vacation you could never afford otherwise.

[scarletwoman]

160. Serious question: Why was that? Why weren't there any actual investors?

I may have this totally wrong -- I never really tried to learn anything about economics until recently -- but isn't part of the deal with capitalism supposed to be that the people who have accumulated money (capital) look for projects/products to invest in?

So, the capitalist lends (invests) money to people who want to make something (like a widget factory or a movie) in return for a specified share of the resulting profits over and above the original amount of the money loaned (invested) -- do I sort of have that right?

I read your post about funding Indie films with credit cards, and several other posts on this thread about people trying to start small businesses having to use credit cards to fund their start-ups, and it got me wondering -- where was the investment money that a capitalist system is supposed provide?

In the case of small businesses, I could also ask -- where was the SBA? -- but that answer is probably pretty straightforward: grossly underfunded thanks to the same governmental philosophy that underfunds all programs that actually help people.

What I'm getting at here, is that it appears that capital has been increasingly withheld from circulating in our own economy in several different ways.

For one thing, the parasitic class has increasingly chosen to hoard wealth for themselves -- to buy ever bigger mansions and yachts, etc. Added to that is all the capital funnelled into exotic financial instruments -- as opposed to actually investing in real life enterprises producing tangible things, and all the capital that goes into the process of sending our jobs to low-wage countries.

The "prosperity" that capitalism supposedly fosters has been calculatingly withheld from reaching the ordinary citizens of our country. Instead, capitalism has declared, "Let them eat Visa."

Is it time we sent capitalism to the guillotine?

sw

[NashVegas]

168. I Can Only Guess

Corporations jumping into it had to have some impact. In the 1980s, in the post-Jaws world, most movies were either mindless blockbusters or "art house," films. With the arty films, the distributors at least knew where and how to reach the audience to tell them about something that was coming out.

If you look at a lot of start-up businesses right now, the name of the game is to come up with a business idea, take it to venture capitalists, get funded, create a market splash and sell the company to a corporation ASAP.

I don't have *very* much against capitalism. I like the things money can buy, and I like being the one who makes decisions about what I'm going to buy. Corporatism, I can do w/out.

[scarletwoman]

172. Thanks for your reply.

I don't have *very* much against capitalism. I like the things money can buy, and I like being the one who makes decisions about what I'm going to buy.

So what's to be done when capitalism is behaving badly? And isn't it possible for simple market-based economies to provide the same buying freedom?

edited to add: on corporatism we totally agree.

sw

[xiamiam]

164. what were the options really?...in business you have to push forward..hoping

none of us looked to the model of the great depression as a possibility...wasnt it our sights..we just thought that a few bumps along the way would work themselves out..as they always had before in the last 60 or 70 years...that is not our fault..

[quaker bill]

90. Yes,

she is right. Let's go back to Keynes. If what you want is jobs with higher wages, you simply collect taxes and hire people. Propping up private sector middlemen is inefficient and often enough unproductive. Just create high wage government jobs, lots of them. There is enough work to be done in neglected infrastructure and innovative research to gainfully employ millions for a generation. Tighten the labor market and increase wages by hiring people at good wages. It is really just that simple, no need for "enterprise zones" and fancy tax loopholes. Just hire people, if for nothing else, just to get salmonella out of the food supply. It is really not all that tough.

[JI7]

95. i just finished reading her book "Nickel and Dimed"

should have read it much earlier. and i already knew much of what she wrote.

but this book that was written around the year 2000 kind of points out what led to current problem.

[hay rick]

98. Ehrenreich supported Nader in 2000...

I still remember her op-ed in the NYT. Link to a Nation article in 2000: http://www.organicconsumers.org/corp/votenader.cfm

And, of course, she lives in Florida.

She's right about the current subject- debt was substituted for income and this was an important factor in creating both the housing bubble and the credit crunch and recession which followed. But I just have to say- this trend accelerated after GEORGE BUSH WAS ELECTED OVER AL GORE WITH THE HELP OF NADER VOTERS, the Supreme Court, voter suppression, etc.

Ehrenreich means well but she needs to be reminded about the 2000 election every week or two...

[Raineyb]

185. Why?

It's not like the Democrats have been much different on the economic front.

Regards

[C......N......C]

99. Earth shaking, I don't think so. People without have always borrowed to be buy what they

were without.

[kentuck]

100. But not at this level...

Right?

[C......N......C]

102. Right, so many borrowers have not been out of jobs before. Except

1929 and that era. And that is where we are heading.

[kentuck]

106. But people are not laying off employees because they could not borrow money....

It's just that the banks scared the hell out of everyone. Especially right after Bush and Paulson came out to tell everyone that the entire system could collapse in a week if they did not get $700 billion dollars immediately. W-H-A-T !!!

The economy was already slumping and that sent it over the edge. The last six months have gotten worse each month. The banks are protecting themselves. As the old song goes, Not too proud to beg?

[C......N......C]

105. Borrow to buy stock.

They were encouraging people to borrow on anything to buy stock. That was what I understood the case to be. FDR put a stop to speculative speculation. http://www.echeat.com/essay.php?t=27546

[pnorman]

103. Thnks for that find! Here's what I was able to Google:

“Easy credit is our economy’s substitute for decent wages,”
http://thedartmouth.com/2008/02/26/news/ehrenreich /

She apparently employed minor variants of that idea in many of her works.

pnorman

[Duer 157099]

107. I've been saying this forever!

It's been patently obvious to me for the past decade that this was happening.

[kentuck]

108. It's the obvious that folks tend to overlook...

in my opinion.

[omega minimo]

149. the past three decades since "greed is good" and "conspicuous consumption" brainwashing

before that people didn't overextend in these ways.........

[Political Heretic]

109. Bam. There it is. Kick and Rec!!

[Median Democrat]

110. Barbara Is Right - But Elizabeth Warren Should Get Some Credit (pun) for this point

Read the "Two Income Trap." Warren was making the point Barbara is pushing long before the current economic crisis hit.

[livefreest]

111. right on

but EFCA could resolve a big part of the problem when American workers can collectively bargain for their pay.
or every one can have many children who will become low income workers and get more credit to buy those houses that have been foreclosed. it will take sometime but it's feasible.

[kentuck]

115. That would be a great start.

The EFCA.

[juno jones]

117. Barbara Ehrenreich is a muckraker first class

I love the way she has 'gone undercover' for her books. She gets it.

Thank you for posting this.

[MyThoughts4]

119. that's an economy built like a sand castle....just swept away by the tide

[pleah]

127. K&R

[The Wizard]

128. A consequence of

cheap labor conservative governance.
With government policy directing money to the wealthy, there's less money in circulation. The only way to get the working class spending in a consumer generated economy is to issue credit.
The fact that we have ditched our manufacturing base, with its good paying jobs, in favor of service jobs that pay far less, is the reason for the current mess.
When the vast majority has more money to spend the economy booms because of the demand.
Cheap labor conservatives, with the Bush cartel leading the way, used supply side economics under the premise that when rich people have more money they create jobs. The problem is they created jobs where the labor is cheapest to increase their immediate bottom lines. The effects of this greed driven principle are coming home to roost. Eat the rich; they're not bad with mustard.

[kentuck]

131. It's an inconvenient truth...

to borrow a phrase from Al Gore.

But Big Business and Government do not want to address it. They would prefer to ignore it. But they all know as we all know, that labor has been kicked to the curb. Wages were frozen during the Carter years, in an effort to combat inflation, and they have never gone back up to the point where workers have disposable income. Although there was some progress during the Clinton years, it was of minimal impact. George W Bush finally threw the last shovel of dirt on the working people of America. And as the patient lies there bleeding to death, they diagnose him as having a high temperature. Until labor is fairly paid for their productivity, this problem will never be fixed.

The government could make a deal with corporations and large employers. If you give your employees a substantial raise, then we will not raise your taxes? It could be a swap-off. Rather than a tax increase, the employees get 3% more of the profits of the company in the form of pay raises. Which do you choose?

Putting more money in the pockets of workers is the only way to increase demand for products and to get this economy back on the right track. Giving more money to a few banks is not only a waste of money, it is a waste of effort.

[JHB]

133. Check out the April Harper's article "Infinite Debt"...

by Thomas Geoghegan:

http://www.harpers.org/archive/2009/04/0082450
(you have to subscribe to read the article online, but the issue should still be on the stands).

He traces this and many other banking problems to the elimination of interest limits back in the late '70's.

(some "course corrections" were needed to regulations written in ways that didn't account for the "stagflation" back then, but as with many things, the people who were most familiar with the problem and pressuring the politicians for change saw it as an opportunity to remove regulations, not just adjust them).

[lumberjack_jeff]

135. It was an alignment of interests.

The evil brilliance of conservatism was the realization that wages really didn't matter to people. What mattered to them was the ability to buy shit. So long as people can defer paying for the stuff they buy, they will continue to fuel the economy through purchases, enrich the banks and not do anything rash... like unionize or call for general strikes.

[no name no slogan]

136. Right on. I've been saying the same thing for years.

Wages haven't gone anywhere since the early 70s, but credit has gotten much easier to get.

Our access to easy credit provided the illusion of increasing prosperity. That is, until they couldn't borrow anymore, and the bill came due. With a vengeance.

[guitar man]

138. "Easy Credit Ripoffs"

"Good Times....ain't we lucky we got 'em...Good Times!!"

[tjwash]

140. Hee...I'm glad I wasn't the only one who had that song pop in his head.

nt

[guitar man]

141. yep, popped right up

When I saw the OP title. And you know, it kinda rings true. The "easy credit" sharks preyed on the poorest for years and it wouldn't surprise me a bit to find that somewhere along the line the "mainstream" credit companies got jealous of the ridiculous margins that the "ghetto rental and credit" outfits were pulling in and decided to follow suit with the middle class. Stagnant wages sure made the middle class an easy target for them.

[Rosa Luxemburg]

142. a country of the rich, by the rich, for the rich,

and they send out jobs overseas

[paparush]

143. K & R! nt

[Tierra_y_Libertad]

144. Hook, line, sinker meet hungry fish.

[Xenotime]

146. Very true. * is to blame for the crisis he has put us into.

When will these people stand trial for their crimes?

[scarletwoman]

174. This has been in the making for over 30 years, and has been aided & abetted by both parties. (nt)

[mikehiggins]

148. The first time I saw someone buy groceries with a credit card

I knew we were in trouble. That was over thirty years ago, in Long Beach in Nassau County, NYS. It was in a C-town supermarket and it was the "newest" thing. I remember thinking that if someone needed credit to buy food, how would they ever get out of debt. Well, three decades and two bankruptcies later, the answer is you don't.

[Stargazer09]

151. K&R! Exactly right!

If you think about it, an hour's work at minimum wage will buy a loaf of bread and a gallon of milk (if you're lucky to have that much left over after deductions). That certainly not enough money to live on, not even a young, single person sharing an apartment.

[antimatter98]

155. It's true: we had 'virtual income' via second mortgages and credit cards. n/t

[prolesunited]

158. I never got caught in that trap

I've lived within my means, spent cautiously, and bought a small, affordable home. Yet, here I sit without a job and on the verge of losing everything.

I would venture that there are many out there like me -- never played the game (or had the fun) and are still getting screwed all the same.

[LuckyLib]

166. And those folks still OK have been very, very lucky. That luck could change. Any minute.

One health crisis, one catastrophe, one flood.

We're all in this together.

[xiamiam]

170. sorry...there are a lot of us in this same situation...for whatever reason..

my guess is there will be a lot more...

[wisteria]

167. Absolutely, spot on.

I would hope that our leaders recognize this this hole we have dug for ourselves and do something about income levels.

[Sherman A1]

175. She is absolutely right

Thanks for posting.

[RedCloud]

177. Organize consumers and workers. Tear this MoFu down!

It already stinks from one end of infinity to the other. We are being asked to bail out the super rich and all we get are golden showers from them when it comes to helping us out?

[scarletwoman]

183. Exactly. The problem is, there are still too many people willing to believe that their "leaders" are

going to save them, if they just "hope" hard enough.

sw

[Divine Discontent]

180. my goodness, if that doesn't say it all - easy credit in EXCHANGE for giving better wages - it's

SPOT ON!

[grahamhgreen]

181. 100% true - MORE PAY NOT MORE CREDIT!

[Kansas Wyatt]

186. Well duh...

I knew that before the 2004 election.

All the outsourced jobs also kept the price from going up on goods too. When are people going to figure that one out? Yes, Working People have been getting screwed over hard, in more ways than one, the last eight years. For Christ's sake, it didn't take a whole lot of intelligence to figure out it was nothing but a shell game.

[Hekate]

193. Ehrenreich also knows that wives bringing in a second income kept the middle class going as well...

While the traditional breadwinners' wages stagnated and fell behind inflation their wives went to work. Yay feminism? Not so much when all it meant was that the family simply maintained the same level as before and never pulled ahead.

Now we add easy credit to the tally.

Hekate

[sendero]

198. I'm lucky...

... in 1981 I wanted to buy a modest used car. I saw an ad for a "signature" loan in the paper and for whatever reason I decided to go that route.

I needed $2200 to buy that Scirocco. I went to the Aetna Finance office. The "signature" they were talking about was on what is called a "chattel appraisal". This is basically a list of everything you own.

So, for my $2200 loan (at 24% to boot) I was putting everything in my house at risk. I went through with it, with a really bad taste.

I decided right there I would never borrow money, except for a house, again. FUCK the moneychangers.

And while I'm at it, I will never invest any substantial monies in the stock markets again, the whole thing is a rigged game and the little guy will lose every time.

[anonymous171]

202. Typical corporate management. Keep the little people in debt,

so they are forced to continue working for you in order to pay off that debt.