Living Lessons Blog

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Preventing a Deeper Economic Depression

The stimulus package has been passed. Speculation, political analysis, and partisan response are already splashing all over every available form of media. The stock market took a tumble on the day the legislation was signed. President Obama is working hard to sell the idea that we are all in this sinking boat together, while Wall Street’s response is more geared to “What About My Yacht?”

Pundits and policy pushers alike are focusing on consumer confidence, when in fact we need to be shaping policy that takes the burden of carrying the American economy off the consumer and puts it back on to manufacturing desirable hard goods here in the USA, unions and all.

This is a much tougher sell. Our national economy can’t function let alone thrive based on the notion of consumer spending. At least President Obama’s key word is jobs.  We have ample evidence that a credit-based economy, where most of us have to be in deep debt to keep up with the things in life unfortunately considered necessities and the things which really are (health care, transportation, higher education, a roof over one’s head, and good nutrition everyday) is FAILING. We’re going to pitch and help our neighbors. We understand foreclosed homes are a downward spiraling threat to our neighborhoods and communities. We going to set aside any natural sense of resentment toward the few rotten apples who were living well beyond their means, recognizing they are in the minority. We are going to take responsbility for buying a version of the American Dream that is ravaging our well-being at every level, and buying it on credit. And we are asking: Where’s our bail-out?

The obvious glitch is that banks are in the business of making money and profit. Banks make money by taking in money, holding money, and loaning money at interest. They are not in the business of loaning money at little to no interest. They are intent that holding on to money works for them, whether or not it works for their customers. How often do we find we have to wait while a deposit clears and our banks hold our funds? We are not able to charge fees to the bank for holding our money for a day or two, but we will be charged a fee if a check comes in and doesn’t clear because our funds have been held. How much profit is made anually from ATM fees?

There is no regulatory activity on the credit card financy industry (that I’m aware of ) which has a chance of becoming legislation– now.  Or any regulatory changes protecting  consumers from damaging credit transactions while credit card companies continue to make BILLIONS OF DOLLARS in profit. Not to mention the consumer credit evaluation and reporting system  which determines who obtains credit and who is eligible for obtaining credit at reasonable rates and  conditions.

We keep forgetting — through some form of very effective hypnosis and propoganda — that is is our money that makes the system run! Bank customers bring their money into a bank, and that bank gets to play with our money!  Credit card companies make daily fortunes on the promised money we spend. The implicit agreement up to this past September was there is a reasonable promise of work if you are healthy and educated, you will be paid to work, even though you have to wait two weeks to be paid for the labor you provide today.

Whose idea was that? Did anyone ever come and ask you whether being paid every week worked for your personal economy? How did that one change alone, being paid every two weeks,  push people into using credit cards? Thirty years ago, it was still common to be paid every Friday.  We gave our labor everyday, but now loaned two weeks worth of labor to our employers instead of one. How did that happen? Why did workers just roll over and accept this change?

At this moment, President Obama is outlining the impact the home mortgage crisis and sinking home values is having  on local communities — the ripple out effect rather than the trickle down theory of economics. He is hoping that a government intervention on the banking system’s “holding our money” for profit while we lose our homes, jobs and cars is a good place to begin.

But President Obama’s housing plan is aimed at shoring up the consumer debt foundation of our economy. He’s talking about restructuring loans and better interests rates. He’s effectively saying, we’re going to make it possible to stay in debt, just smaller debt. Then if you’re fortunate enough to still have a job…

You lend the business you work for money in the form of your daily work. The business you work for doesn’t pay interest on the money you lend them for two weeks! The best they do is to offer health benefits as a form of “interest” in you as a worker. Most companies now take a portion of your pay to cover the costs of your health benefits if you have them, so there goes that “interest.”

700+ billion dollars has been offered up to the country by the people who make this country run, our work force. The bail-out package we need to demand now is a bail-out package that looks like relief from consumer debt. We need regulations on bank ATM fees, credit card fees, and having consumer reporting agencies destroy our ability to participate in the system that is breaking down and has no compunction at all about taking all of us with it.

What about the rest of us?

My sister and her husband are model citizens. They both work, they are great employees, they managed their money well, they bought a home, they bought modestly priced cars, they met all of their obligations on time, and they saved. They invested their savings in 401(k) plans and into the stock market. My sister chose to retire last year. My brother-in-law planned to retire in 2010, begin to collect social security, and to find a part time job to supplement the family’s income to the allowable limit. He’d like to be a basketball referee for amateur basketball games. This was the plan before the economy tanked.  These two model citizens  lost one third of their retirement savings in the last year. My brother-in-law just received notice that he’s going to have make a contribution to his health care plan, the option to work overtime is gone, and two employees in his branch of the business he works for lost their jobs yesterday. These workers are both young and they don’t have families to support.

My brother-in-law is already quietly dealing with the disappointment of having to work two more years. He and my sister sat down, looked at their budget, and adjusted it. They are scaling back, saving everywhere they can. They joke about calling Obama and asking for help if my brother-in-law is laid off. They are afraid of losing their lovely home. My sister was going to buy her leased Saturn, but with GM discussing eliminating their Saturn line of cars, she probably won’t. There are four Saturn cars in this family. We can’t understand why such a good, reliable car isn’t more popular. I figure it’s because Americans have become accustomed to abuse, and are indoctrinated into the idea that you just have to buy a new car every three years because after three years your car disintegrates and becomes a money pit — as a way of fueling the automotive industry through sales of parts and the automotive repairs business.

I lost my job over a year ago. I bought my Saturn on a Monday morning — the 1993 Volvo finally died — necessary repairs would cost more than the car’s book value — and I went into work that afternoon and got laid off.

As things were with my job, my salary didn’t meet my expenses anyway. My job required regular travel, and the company policy was to reimburse those expenses — borrowing money from me to do their business — when the reimbursement process might take three to six weeks. The salary they paid me wasn’t enough to meet those additional expenses and my monthly obligations — and that was before I had no choice but to buy a good newer used car.

So, while I was employed, I took out a small line of credit. My plan was to use it as the fupfront source for work related expenses and pay the credit line back from the company’s reimbursements. That worked well until the cost of everything suddenly  jumped, due to the increase in the price of gas. Suddenly food cost 10-20% more as gas climbed to over $3.00/gallon. The rent on my apartment initially included all utilities, cable, internet, garbage pick up and snow removal and lawn maintenance. My landlord couldn’t keep up with the increased costs of all those perks, and the increase in her costs of doing business and her own personal expenses.  I couldn’t keep up with the additional cost of the perks, or the rising cost of food and gas. I went from being able to fully refund the line of credit every few weeks, to only being able refund have of what I had to put out, to only being able to meet the interest payment, to not having any money at all when unemployment ran out.

 $41,000 a year for a single person was no longer enough to live on without being in debt either through the use of a credit card or a line of credit. I refused to buy into the revolving credit card game. I’m glad I did. My credit is now damaged because I’ve been late on two car payments and I’m unable to make payments on two small loans. I’m not receiving unemployment because when I got a real estate license the Department of Labor decided that made me an independent contractor, even though all I ever got to do was pay out money for the course, the test fees, and the local real estate board fees.

I watch companies like GM and Chrysler receiving millions of dollars in tax payer capital investments. I see some form of assistance on the way to homeowners who got caught in predatory lending schemes and/or who lost their jobs. But where is the help for someone like me? Single, almost retirement age but not quite, over-qualifed for the average down-sized job that comes with no health benefits, too young to collect social security and not having much in the system because I’ve been self-employed or a supported home-maker — now facing damage to my credit score because I have no money. No money. I’ve applied on average to no less than 10 jobs a week. I’ve applied for jobs where I might make enough to live independently and save for my retirement — that’s a $60,000 a year now. $60,000 is the new $40,000. $40,000 is the new $20,000.

To quote Lilly Bart from Edith Wharton’s novel, House of Mirth: “I’m on the rubbish heap.”

I’m too old to leap frog off the rubbish heap, and at the moment, where would I leap frog to? I suppose I will have to entertain teaching English as a second language in Korea.  Leaving my family and grandchildren, and any hope of comfort and support if I encounter a serious medical set back? I’m at the age of gradual disintegration, and although I’ve taken excellent care of myself and come from healthy stock, I know it’s a crap shoot from here on out despite my intake of garlic and fish oil capsules.

I have no money. I have no job. I need a car to get to a job but I can’t make the modest payments because I have no job. Soon it will be I won’t be hired because my credit report shows me in extremis and saddled with debt I can’t pay because I don’t have a car since I couldn’t keep up with the payments because I don’t have a job. The notion of consumer confidence is presently lost on me. 

I do nothing outside the home that contributes to the local economy. I have to ask relatives for gas money. I still have my car because my family has been willing to help with car payments. I don’t buy anything but gas. I don’t go out for coffee, or lunch or dinner. My grand-daughter just had her fifth birthday — right after Christmas — and I couldn’t give her any presents. Or anyone else in my family. I’m living with my sister and her husband, an enormous act of generosity. I do my part in the house in exchange for being kept afloat to the point of not having any place to live and starving.  My brother is living with our mother. Another enormous act of generosity. My mother performs the same domestic functions to make life a little easier for him.

At some point (and we’re close) my mother and I will become unsustainable liablilities. Both of us are willing to work, but we no longer have the responsibility of carrying a family or of biologically producing anymore worker bees, so we are both on the rubbish heap. We are both in very good health, strong, and able to make a contribution to the “work force.” With so many people out of work who do have families to support, we are last in line for the opportunity to brng home a paycheck. At our age, we also are potential liabilities to any employer. How long will she be a healthy, reliable worker? What if I train her, and she leaves for a better job because she’s overqualified for this one?

In times past, maiden, widowed or spinster females could count on being supported by a male family member — father, brother, son, uncle — men had an sentimental inclination to be strong supports, and in exchange home functions were attended to by women who traditionally were not part of the work force. Women’s liberation ravaged that idea, and women who are not financially independent, for whatever legitimate reason, are now viewed as undesirable liabilities.

Older, single women who are imid-life  “relationships’  know they can’t count on emotional, financial or practical support from their boyfriends if hey become ill and require care-taking but they may not be able to count on their families for support, either. Or when the support is there, it maycome with subtle forms of emotional and psychological abuse, or assumptive expectations.

I’m living with my sister and her family. They are feeding me, although the food they would normally throw away as space-consuming left-overs is enough to feed me. They are putting a roof over my head. I’m not sleeping in my car. There is a television, cable and a computer with broadband Internet in my bedroom. I’m comfortable. But each day, I worry about how will I retrieve my belongings which are in another state.  Where will I put them when I retrieve them? Spend money on storage fees?  I can’t afford to live in my own place. Even with a good job at or near the $40,000 mark, I wouldn’t be able to afford to pay rent, all other expenses, and dig out of the whole created by being unmployed for over a year. The chances of making that kind of money as an employee in this economy at my age are exceedingly slim, yet I can’t afford to go back to college, and I refuse to take on any more DEBT.  I’m not a good citizen.

What is happening in this country is a great leveling, an unsettling reckoning.

My sister who has worked hard at the same jobs, who has been married to the same man for twenty years, and who has done everything by the book is looking at as uncertain a future I as am.  She is appalled by this leveling. She should not be in a situtation of this much uncertainty, on par with me, her free-wheeling gad-about sibling. My sister is having to choose whether her future looks fearful. In her growing fear, she wonders how far she can stretch in my direction? She is thinking about what will happen if she loses her home. She can’t even begin to think about what life would be like if she were to lose her husband, who is the primary breadwinner and on whom she relies for the major expenses of their life.

We are in a moment of great opportunity. Lots of healing to do with my sister as we negotiate the tension of my being here, her family’s generosity and its limits, the as yet undiscovered set of skills and resources that are going to jump-start the rest of my life, and remembering that I was laid off from a good job although inadequately compensated. My nephew lives here, too. He couldn’t afford his own apartment, car payments and living expenses even though he has a steady job and is an excellent, reliable employee. My sister and her husband expected he would be able to launch an independent life. He is not.

I am looking at being perceived as a dead leg in my family system square in the eye. I’m also facing being the chosen one to care for our elderly mother, when and if  that day comes. After all, I am on my own. No husband and my children are grown, so I’m the ideal candidate. No one says this. It is simply assumed.

I watched my grandmother go through this process. She was a force majeur, a dynamic businesswoman, and a solid asset in the business partnership she had with my grandfather. Consequently, they crafted a good life together. My grandparents were financially secure. During the Depression of the 1930s, they toured Europe. In addition to owning a home and business in Philadelphia, they had a weekend, holiday and summer getaway in Bucks County, in the 1950s. My grandmother played bridge, hosted hundreds of bridge parties which was also part of networking her business, she was involved in civic affairs, and was possessed of the ceaseless flow of energy available to people who live life fully.

At the end of her life, after the death of my grandfather, she down-sized, selling their home and business, moving into a modest apartment with a maiden aunt who never married, living off of their planned  retirement income until her health required her to finish her days in a nursing home. Even these changes didn’t entirely deplete her income. She died leaving two properties free and clear and $250,000 in cash assests. She got smaller, and smaller, and smaller while her income went to feed the service systems in which she was embedded by cultural default. Although she was deeply loved and respected by all of us, and we visited her in the nursing often, my grandmother graciously surrendered to shrinking down to no longer being ‘useful’ within the context of the American Dream  — which in case anyone hasn’t noticed, doesn’t seem to include our elders who also contributed to making America great.  Grandmother died peacefully in her sleep, and was laid to rest next to my grandfather.

My grandparents worked hard, they raised four wonderful children, they played hard, they planned well, and they left assets behind for their children. My aunts and uncles have not been able to do as much, and my generation of the family is struggling to keep our ships afloat with the painful realization we will not be leaving much behind to help our grandchildren. This is very painful for a family who believed they were plugged into the version of the American dream available to blacks. My grandparents have probably rolled over in their graves a couple of times. They worked as hard as they did to leave something behind for all of us. My grandmother promised a summer-long trip to Europe to any of her grandchildren who graduated from college. My grandparents understood the importance of the passing on of generational assests. They would both be appalled that in only two generations, their great-grandchilden have been robbed of the kind of loving assistance my grandparents shared with all of their children’s  families as times and circumstances required.

How are we going to use the energy of this  great leveler of financial distress of to create a shift in awareness and something new in this country?  When are we going to wake up about our value in the building of the America of our  past, where great fortunes where made and philanthropy substituted for public policy, and a future where public policy guides and regulates philanthropy and how fortunes are made and managed, when it is OUR MONEY — OUR LABOR AND CASH VALUE — that made this country’s wealth possible at all?

While it is UNNATURAL to be forever in a cycle of un-ending expansion, which is what our country seems to demand from life — an unending cycle of economic prosperity and opportunities to accumulate ever greater platforms of wealth, and endless possibilities of capitalist based commerce, we all need to be clear that life will not support this desire. I repeat, it is unnatural, especially when American power and wealth have been framed through the structure of  global competition rather than global cooperation. Since we were unable to correct ourselves in time, life is correcting us — and this is always a much more arduous and painful past, which includes breaking down whatever is out of balance. Since 2000, the election of George W. Bush, and the implementation of his tragically skewed policies, America has been horribly out of balance.

I encourage us all to push our government even harder by demanding that not only home loans be restructured, but that credit card and other consumer debt be restructured without damaging a consumer’s credit standing. Unemployment compensation, while helpful,  isn’t enough to cover the average person’s modest and well-controlled expenses.

We need to ask our elected officials to adapt domestic economic policy effectively weaning this country off consumer debt as the key gross domestic product, a product we export by financing out debt to countries like China. We need to require new regulations on banks, eliminating ATM fees and other compounding credit card fees. Support your local, small community bank or credit union.

Remember, when all is said and done, if you’re working — IT’S YOUR MONEY. You lend money to banks by depositing your money with them. You lend money to your employer by loaning him your labor in exchange for a promise to pay you — in two weeks. If you demanded cash payment for you labor, if we all did — things would change really quickly. If you demanded cash payment and stopped putting your money into a bank, things would change radically. I don’t support a fear-based run on major banks. I do support scrutiny off Swiss bank accounts and off-shore tax shelters. End the war in Iraq, tax the folks who can afford to hire the advisors who assist them in not paying the taxes they should while taking every advantage being an American citizen offers them. Taxing these rich? Absolutely. Defund the Pentagon? Absolutely. Our military industrial complex and contractors like Haliburton have had they hay-day. Enough. I do support understanding being smarter about where we put the money we have left. Nationalize the banks if necessary. Put a temporary cap on capitalism until economic equilibrium is restored. Socialism. No. Communism? Common social sensism? Yes. We now own AIG. Let’s hope the rdinary American AIG insures continues to have salary and/or wages to pay those insurance premiums! Many of us are now “self-insured” since we  have invested so much taxpayer money into AIG. Don’t you wish we’d had just contributed this much to universal health care? That’s an idea that is “too big to fail.”

This is what is known as leverage, or a bargaining chip.

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