[GJM] From the Mirage of a Middle-Class Life

[marguerite hampton]

 This is a close-up look at what lays ahead for millions of 
Americans.  See below article.  

 I do urge all of you health care providers to consider the 
need for post-traumatic stress or critical stress counseling
for those who willl be out on the streets in a state of shock. 
Without counseling many will turn to drugs or alcohol to alleviate 
the mental anguish associated with this event -- and the crime 
rate will increase dramatically as hungry and out of work 
people search for food and shelter. 

In a "pay-it-forward" type of action, I have given shelter for 
nearly two months now to an out-of-work person transitioning 
from the conventional economy to the alternative economy 
after the loss of a job. This person,  I am happy to say, has 
been able obtain work and pay half the room rent charged 
in cash and the other half in a yardwork exchange.  I hope 
you will do the same in your community.  

Consider this:  Homeless and on the streets without access 
to phone or computer, and no place to shower, hang one's 
clothes, or relax in privacy, there is little chance of obtaining 
work.  The more you aid in keeping these people "off the 
streets" the safer your community will be. 

If you have a spare bedroom, or an enclosed garage area,
please consider turning it into a space for a homeless person.  
Help them maintain their dignity and give them a leg up --
not a "hand-out".  Set up a work program for those unable to pay 
for the space. Share some meals and be available as a "friend" 
during the stay, but assure your guest privacy.  Do not try to coerce
anyone into "your religious belief system".  I recommend that you  
accomodate each person you provide with assistance a 2-month
stay.  Then leave the space open for a month before you take in
another person.  Having a stranger in your home for a couple 
months may be stressful as it requires you to give up some of 
your privacy.  So, be good to yourself and allow yourself time to 
enjoy the space you have created if you find sharing stressful.  

Write up a contract with each person you bring into your home.  
Expect that they are going to obtain enough work to pay for their 
food.  Since sharing your kitchen may be difficult, you may want 
to do the cooking and ask your guest to do someime and  prep work and
clean-up afterwards.  

I am not suggesting that you take in a chronically homeless 
person -- there are agencies which are prepared to care for 
this type of person.  The people you can be most effective in
helping are those who have formerly held good-paying jobs,
but are now facing a huge life crisis through which they must 
transition.  Having been severely "bitten" by the conventional 
economy, most will prefer to enter into the alternative economy,
working part-time,  perhaps accompanied with further education
directed toward acquiring new skills.   
 
Be able to point your guest to the nearest library and 
community college. I was able to purchase 99 -cent
phone cards from the 99-cent store at 1-cent per minute
which alleviated the stress over phone useage until such
time as my guest was able to reimburse me. I now use these 
phone cards for all my long distance calls finding it much 
cheaper than any other service.   .  

A book that I recommend having available is "Job Shift - How to
Prosper In A Workplace Without Jobs" by William Bridges.  
Reading it youself will aid you in understanding the dilemna your 
guest is facing, and it will aid those searching for work in an 
alternative economy to "think out of the box" -- Bridges suggests
"looking for work to be done" and "doing it".  This requires a
"mind shift" for most people as our eductional system is geared 
toward dumbing down people to fit into the corporate system as 
an "employee/wage slave".  What is required at this time are 
"entrepreneurial skills" with which few people are familiar as  
our system does not provide this type of education -- it is usually
obtained later. 
 
May all be well, fed, and housed and able to obtain medical care.  
I am holding the field for the fullest potential to unfold in this event 
now in the best interests of all concerned.  

in peace and with love, 
marguerite  

http://www.alternet.org/story/49678/ 
  From the Mirage of a Middle-Class Life to the Slavery of Debt 
By Joshua Holland, AlterNet 
Posted on March 24, 2007 
  
America is very wealthy country, but one has to wonder how much of  
our wealth is in fact a chimera, spun of a consumerist ideal and  
given the appearance of solidity by a flood of easy credit? How much  
poverty and real economic pain is covered up by an endless succession  
of pay-day loans and EZ-finance rip-offs that eventually just bury  
people under mountains of debt from which they have little chance of  
digging themselves out. 
  
Today's bankruptcy rate is ten times what it was during the Great  
Depression, foreclosures are at a 37-year high and the United States  
has a negative savings rate, yet we're told every day that the  
economy is going gangbusters. 
  
George W. Bush often points out that more Americans own their own  
homes today than ever before. He doesn't mention that they also have  
less equity in those homes than ever before. Every day brings news of  
the potential scope of the emerging "sub-prime" loan scandal -- what  
Robert Kuttner called "deregulation's latest gift" -- and new  
indicators that the housing market that's driven so much of the  
economy for the past five years is a bubble that's begun to burst  
right before our eyes. 
  
Compounding our personal debt problems are our representatives,  
equally profligate spenders who are just as happy to run up enormous  
budget deficits and who reflexively guarantee and subsidize trillions  
of dollars of new loans to already strapped American businesses and  
consumers. 
  
It's a pretty good time to ask ourselves just how we got here. 
  
Writer and film director James Scurlock does just that in the  
documentary, and now book, Maxed Out: Hard Times, Easy Credit and the  
Era of Predatory Lenders. The film is a sprawling look at the seamy  
underside of the American credit industry -- an industry whose  
practices have changed dramatically since deregulation, and not for  
the better -- and at those who end up caught in a trap of their own  
creation. 
  
The film is not perfect. Its view is broad but lacks depth; while it  
makes its point with some really effective storytelling, the  
documentary acts on an emotional level but lacks the kind of  
narrative power that makes Michael Moore's films, for example, such  
controversial cultural touchstones. 
  
What Scurlock's camera does brilliantly is lay bare an issue that  
affects millions of working Americans but is usually buried under  
layers of shame and taboo. The film tells the individual human  
stories that lie behind the bankruptcy statistics, behind the  
foreclosure numbers. The book, released this week, follows up with  
much of the narrative power and depth that the film missed. 
  
AlterNet caught up with Scurlock by phone this week to talk about his  
project and the country's emerging debt crisis more generally. 
  
Joshua Holland: You really tapped into something at the right moment  
-- people have become aware of the issue of debt, and we're now  
hearing about it described as an emerging crisis. 
  
James Spurlock: When I started the project a lot of people didn't  
even know what bankruptcy reform was, but most do now. A few weeks  
ago, nobody knew what "subprime" meant and now because of this whole  
mortgage fiasco I think everyone knows what that means. So here we  
are, two years after the start of the project and everything  
discussed in the film and the book has gotten worse. As we talked to  
people for the film, it became pretty obvious that things were just  
totally out of control and there was this sense that at some point  
the chickens are coming home to roost and that's largely what's been  
happening. I'm not gloating about that -- it's really tragic. 
  
But my sense -- and I've talked to a lot of people since the  
project's been done -- is that the really big system hits are yet to  
come. There are a lot of bad mortgages out there; there are a lot of  
these "liar loan" mortgages out there; there are a lot of credit  
cards and people used to paying off their bills by refinancing their  
houses every year. 
  
Holland: Debt -- or credit -- has always been an important part of  
the economy; it allows people to invest and it encourages  
entrepreneurship -- all the standard things we learn about in Econ  
101. But one thing I came away with is that we're looking at a very  
different credit industry in the last couple of decades than what we  
experienced earlier. What's different between the credit industry  
today compared to, for example, the industry during my parents'  
generation? 
  
Spurlock: The biggest change, by far, is how the financial industry  
sells debt -- how it sells credit cards and mortgages and all these  
different products. A generation ago, you'd go to the bank for a  
personal loan and that was a very rigorous process. You had to  
provide them with proof of earnings -- your tax returns -- and you  
gave them references and really had to work for it. The flip side of  
that was that if they gave you a loan, you got it at a reasonable  
interest rate. Now we're in a situation where we're getting 17  
billion hits of direct mail encouraging us to borrow at often very  
high interest rates; we're getting e-mails every day encouraging us  
to refinance our homes; we get offers of credit for every conceivable  
thing from plastic surgery to automobiles -- there's a credit card  
now for gambling and one to pay off your taxes. Everything. Small  
businesses never used to use credit cards at all. They'd go to the  
bank and get a small business loan with a fixed payment. Now they're  
primarily using credit cards. 
  
At the same time, the way the credit industry behaves has just  
completely transformed itself. Its underwriting standards have gone  
way down and that's a big part of the reason we're seeing so many  
problems now. 
  
Holland: That's a good transition point. I read somewhere that you  
were voted the most conservative person in your class at Wharton  
Business School 
 
  
Spurlock: Actually, in my high school 
 
  
Holland: OK, in high school. The reason I found that interesting is  
that you give very short shrift to the traditional conservative  
narrative around these issues. You don't focus a lot on "personal  
responsibility" -- on the often really bad choices people make on the  
way to getting into problems with debt. You focus on these  
unbelievably predatory situations -- scenes like the mentally  
handicapped guy with the low-interest government loan who you show  
getting hoodwinked into this high-interest loan. Respond to that. 
  
Spurlock: You know, everybody in the film and everyone in the book  
will readily admit that they screwed up. They made a mistake: they  
bought to many commemorative plates from Franklin Mint or they took  
out cash advances to pay their mortgage or they bought one of those  
Ab-tronic belts that are supposed to give you perfect abs in five  
minutes or they built a 10,000 square-foot McMansion which they knew  
they wouldn't be able to afford if interest rates were to go up --  
which they did -- and on and on. 
  
So that's all there, but what surprised me -- and what got a lot of  
these people into such deep trouble -- is that lenders weren't asking  
for their money back along with a reasonable return and maybe a fee  
or two. They were asking for multiples of what these people had  
originally borrowed. The line between a loan-shark and a reputable  
bank has now become so blurred with these banks all writing high-  
risk, high-interest loans and slapping on all these fees and coming  
up with all these schemes like double-cycle billing and universal  
default and on and on. 
  
It's getting to the point now where people actually have a hard time  
figuring out just exactly what they owe. There was one woman in the  
film who had a gambling problem -- someone who was very  
irresponsible, and no one would argue otherwise. But in one year her  
$12,000 debt went to $50,000 and she didn't make any new charges.  
There was a guy who testified before Congress recently and he had  
borrowed $3,200 and had paid Chase back $5,000 or $6,000 and they  
were still demanding another $5,000 from him. 
  
And if you look at every study done or if you look at what New Year's  
resolutions people make it becomes clear: people want to pay their  
debts off. But they're increasingly getting into situations where  
their $1,000 debts are becoming $4,000, or their mortgage payments  
are doubling and they don't understand how that happened and in many  
cases it's just devastating. 
  
Now, there are two parties to these contracts -- that's absolutely  
true. But the banks have the ability to change the terms and  
conditions, at will, and these contracts have become so complex that  
even the Harvard Law professor in the film has a hard time making  
sense of them. Sometimes bankers can't make sense of the mortgages  
they're selling. So, caveat emptor, yes, but you should be able to  
walk into a major banking institution without worrying that you're  
going to get loan-sharked. 
  
Holland: Maybe you can explain something that I think would be fairly  
counterintuitive for most people. You say in the book that the common  
view many people have about bankers is that they're this conservative  
breed who make their money by being cautious, by writing smart loans,  
but in fact the real money is made by lending on the margins -- by  
giving loans to people who are most likely to have problems paying  
them back. 
  
Spurlock: That's right, it is counter-intuitive. It's because it's  
gone from a business based on a conservative business model where you  
were loaning to people who could safely pay you back and you weren't  
making a ton of money -- just a bit on the spread -- so you had to  
look at all your risks very, very carefully in order to make money.  
That model is now history, and the new one is that you charge a huge  
amount of fees, and a very high rate of interest. So the trick is  
actually getting people who will pay the most interest and the  
highest fees. 
  
Credit card fees went from $1.7 billion dollars per year in 1996 to  
almost $18 billion last year -- an increase of more than a 1000%, and  
that's where the money is. Now you take someone who pays their bills  
on time, who has savings and pays their credit cards down each month,  
well they're not going to pay those fees. They don't have to. And you  
want someone who really needs the credit, who will be willing to pay  
a very high price for it. 
  
One thing you've got to understand is that we have a negative savings  
rate in this country. Two out of three people can't pay their credit  
cards off each month. At the same time, last year we cashed $800  
billion dollars out of home equity. Trillions of dollars in the last  
few years have been cashed out of people's homes and much of that  
went to paying off credit card bills. And the cycle continues. So  
it's a bit like Enron -- you've got some wishful thinkers, and then  
there are these bankers making enormous fees and at the end nobody's  
stepping in to stop the party. 
  
Holland: To what degree do you see this as a kind of cultural  
manifestation -- a reflection of how much value we as Americans tend  
to put on material wealth, or how much we see material wealth as a  
proxy for self-worth? 
  
Spurlock: I think that has a lot to do with the taboo nature of the  
problem -- a lot of people just don't want to about it. Until  
Katrina, I don't think many people had really seen images of poor  
Americans. There's this scene in the film where Robin leach of  
Lifestyles of the Rich and Famous says nobody would watch a show  
called "lifestyles of the poor and unknown." We just make poor people  
invisible in this country and there's a sense that if you can't  
afford something, you've failed. 
  
And the truth is, there are a lot of people in this country who look  
like they're middle class but in fact if you took away their credit  
cards you'd see that they're actually quite poor. 
  
  
  


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