Posts Tagged ‘mortgages’

Fundamentals and Economics by Magpie

Sunday, September 21st, 2008

Make, sell and buy products. Starring in the Economy are consumers, manufacturers, corporations (often the latter two are one in the same) and, in today’s world, a whole mess of middle-men. You must make products (companies who hire workers to produce products) to sell (requiring stores, businesses etc. and workers) and then people (consumers) to buy these products. There are many theories on how to best manage an economy. We keep hearing about the fundamentals of our economy being strong or weak, depending on who you listen to…sadly enough. Let me tell you my thoughts on the real economic fundamentals politicians should be focused on right now.

Before people will shop or spend their money, they need the following things:

1. A roof over their head
2. Food on their plates
3. Electricity (yes, most of us have grown accustomed to that in this country)
4. Good health (which requires sufficient healthcare)
5. Gas/energy to get to and from work
6. Employment to provide the money necessary for the above

And finally…

7. Extras (these come after the fundamentals are procured).

However, if people cannot pay their mortgages (because they are victims of predatory lending born of the current Regime’s deregulation polices or because they have less money from the price-gouging of corporations on groceries, gas, electricity etc. or because they cannot find a job or are laid off or because corporate responsibility has flown out the window) and if they can’t buy enough groceries to feed their children or to pay for gas to get to and from work, or they fall ill and cannot get the proper care necessary for themselves, their children or their aging parents…then they will not be able to buy other stuff. Get it? If they cannot buy the “other stuff” then businesses suffer. Then businesses must cut jobs and/or employee benefits. And thus we spin towards a depression. You need only to examine the current financial situation to see this vicious cycle in action.

The fundamentals of economy are housing, groceries, gas/energy, and healthcare. This is true for the average American. Perhaps because the rich do not have the same concerns and they may think the fundamentals are different. However, if you ask the everyday American what is important to them, when they say economy, this is to what they are referring. They want their family’s basic needs met and to have a little extra money at the end of the day to buy bright and shiny things; to save a little extra for retirement and college funds; and to leave their children a little better off than they were left themselves. These are the fundamentals with which politicians should be concerned.

McCain, at best, gives lip service to these areas of the economy. He believes the fundamentals are strong. Oh, he is changing his tune the past week but if you didn’t know last week, we were in trouble… and it took a 500 point drop in the market and a ten point drop in your campaign lead to get it, you probably are not the most economically-savvy person for the Presidency. He does not truly understand what is fundamental for most of us. Simple enough mistake but simply too costly for everyday people to support his very different economic fundamentals by voting for him.

His idea of helping to immediately reduce the price of oil and groceries is to “send a strong message1 to the oil producing countries, as well as the oil companies, that prices are too high. Um, I think they already know this. They know they have us by the energy-throat and they are taking advantage of that. We need their services and they know it. Hrmmm… isn’t that the deregulated-corporate way McCain is in favor of? Doesn’t anyone else find it ironic that US oil companies are making windfall profits2 while the rest of us head into a economic (and quite possibly an emotional) depression? And yet, there is nothing in McCain’s plan to stop this corporate tomfoolery. No regulations? No consumer-assistance? No way! He is all about Corporate-welfare and idle threats. Neither will bring the prices down for us. Businesses want to make money. If they know you need a product, they will demand your first born, if they are allowed (READ DEREGULATION). But I will not even get started on how deregulation brings about corporate monopolies, resulting in the necessity to bail corporations with federal funds, ahem…AIG, which negates those greedy mongrels every argument about “welfare”. The difference between Republican spending and Democrat spending is who gets helped and why. Republicans wish to ensure the good “welfare” of corporations. Democrats wish to ensure the good “welfare” of people. Which category do you fall under? Which is more important to you?

McCain also plans to increase the value of the dollar (no mention of HOW he will do this btw, simple a pretty promise with no intellectual support) and theoretically this is supposed to reduce the price of oil. The idea that the value of the dollar directly affects the cost of oil is not that straightforward nor is it accurate.3 I understand it is easier to just believe what they are saying because it is frightening to think they may not have our best interest at heart after all, but WAKE UP AND THINK FOR A CHANGE!

What about McCain’s HOME PLAN? He plans on helping 200,000 to 400,000 homeowners facing foreclosure. That is nice, isn’t it? What about the other 1.8 to 1.6 MILLION homeowners facing foreclosure? Oh and his HOME plan EXCLUDES those who were victims of the predatory lending he advocated through deregulation, in the first place. How will this help the housing crisis?

And how will John McCain pay for his proposed tax cuts? His plan is to halt all discretionary spending for an entire year. Let’s see what falls under discretionary funding. The following programs (and this is not the majority, just some I found)…

Office for Victims of Crime
National Institute of Child Health and Human Development
Mental Health Facilities/Services
Drug and Alcohol Facilities
K-12 Education Budgets
Health Research
Housing
AmeriCorps (Full-time Community Service program)
HeadStart/ECEAP (Pre-school)
Rural Housing Services and the Department of Housing and Urban Development (HUD)

So, as far as I can tell he plans on cutting programs, such as mental health, educational funding (K-12 people), crime victims assistance, etc. It seems this is not going to benefit the American people. No, no, he plans on cutting these programs rather than corporate taxes. Hrm, which will benefit you or harm you? Oops sorry Sally Victim, that guy who tortured you and your daughter… yea, he got out of prison today but you won’t know about it because that program was cut for a year. Oh, yea those pesky science labs in your 7th grade class… oops, those are gone too.

Perhaps the Obama campaign should start asking how McCain plans on funding his wars (Iraq, Afghanistan, Russia, Iran…etc.) Or his corporate welfare… including the 3trillion dollars of debt for bailing out AIG. It was the deregulation policies that he (and others like him–like Bush) emphatically endorse which got us into this mess in the first place.

In theory, it sounds like a perfect plan to deregulate corporations. Theoretically, they will begin to flourish without extra costs and this will have a trickle down effect. The wealth they are making hand-over-fist, theoretically, will spill down to the rest of us, leaving lots of wealth for us to pick up at their feet. Now, this is quite possibly accurate in some respects. For example, it is true the deregulation policies have helped a lot of big corporations make a lot of money. However, these same corporations will step on anyone and everyone ensuring no one does take any of the trickled-down wealth. They hire middlemen to collect and return as much of that as possible. The middlemen’s reward for doing so? He too can keep a little of the trickled-down wealth but rest assured he’s not getting rich, he’s in foreclosure so he reallyneeds that extra money. And he’ll do just about anything to ensure he gets, including voting against his own best interest. This is where the majority of McCain voters are… at the feet of corporate America, groveling, begging, complaining, screaming, hoping they will survive financially. But are they?

When the corporations start to shove the excess money into their pockets, the windfall, record profits (as are seen with the oil companies for example, even while we are amidst an energy and economic crisis), where are the majority of the rest of us in this wealth-blizzard they are experiencing? Are we reallyseeing a trickle down effect? Or are they simply kicking us to bankruptcy, while lining their offshore bank accounts to ensure they do not have to pay taxes on their wealth?

And while we hear so much about pork-barrel spending… does anyone even really know what the helinski that means? They assume it is liberal spending on personal welfare, a concept attached to some deceptive, lazy person milking the system while everyone else works so hard. This is a fallacy. Look, liberals don’t want to reward lazy people. They simply believe the government should help people, citizens, not corporations. What is it you want to see your tax dollars spent on? The Republicans try to make it sound like liberals or Democrats waste your money. What in tarnation are they doing themselves with the money? Did the government bail us out, did it spend our tax money ensuring our children had a good education or that our homes were saved? Or did it get us into 3trillion dollars worth of additional debt to save us or a corporation? The Republicans do not save us money, they simply twist the facts to make it look as if the spending of money on people is somehow ludicrous and wasteful. How is spending tax money on taxpayers wasteful? But they will use an isolated account of one system-moocher to invoke the irritation you feel each time you pay a significant amount of your check towards taxes to throw you into a blind flurry about the excessive use of government funds used by the Democrats. This is nonsense. Do a little research. I dare you. Go look up the annual amount of corporate fraud.

The results of deregulation are a battered economy, a mortgage crisis, disproportionate wealth distribution; and disgruntled, disenfranchised customers left with no recourse…forced to deal with companies who couldn’t care less about them as individual consumers or even as groups of consumers. These corporations have fewer and fewer laws to bind them to the consumer, to stop them from taking advantage of the American people when we can least afford it. Smaller companies run by everyday people are gobbled up by the bigger companies and consumers are forced to do business with those 1 or 2 corrupt, multi-national conglomerates. And the corporations know this, anticipate their level of service being less than par and raise their prices accordingly. They know we are in need of oil, energy, communications, health care services, medicines, etc.

So you tell me…who has been and continues to prosper financially while the rest of us suffer? Drug companies, military industrial complexes, communication services, oil companies, electric companies, health-care insurance providers…etc. Saving money, second only to making money, motivates companies to outsource customer service, not only to other countries but simply to other companies or departments of their own corporation who do not care at all about consumers. Consumers get aggravated, but with no where to turn, are stuck getting their needs met by these corporate vampires. Diversity in the marketplace should buffer this, in theory, but in reality, with the deregulation of the big guys, the diversity in the marketplace is dwindling or simply not a realistic, viable option anymore.

Deregulation is not the answer. McCain supports deregulation emphatically. McCain is NOT the answer. We’ve seen what these policies have done for the people. We’ve seen what it has done for the business market. NOTHING good. NOTHING GOOD HAS COME FROM THE PAST EIGHT YEARS, unless you own an oil, telecommunications, financial or pharamceutical company. Since most of us do not, the tangible realities of their theoretical trickle-down effect are staring us in the face in the form of a mortgage crisis or a 500 point drop in the stock market, in the disappearance of our life’s savings, in the bill sitting on the table of the woman who worked every day since she graduated college only to lose her health care insurance a month after being diagnosed with cancer.

Enough is enough. Stop asking how Obama will pay for his economic plan when his includes helping improve the every day lives of the people funding the Federal Budget. Start asking how and why John McCain would rather focus on corporate welfare and illegitimate, unnecessary wars to the detriment of the everyday people, with our tax dollars. If he and Bush and the other billionaires want to rescue corporations or wage wars all over the world…let them do it with their own money. Our tax dollars should help US have a better life. Where was the referendum on bailing out these corporations? Where is the trickle-down effect from the deregulation policies?

Think people, think.

  1. http://www.johnmccain.com/Images/Issues/JobsforAmerica/briefing.pdf []
  2. http://www.huffingtonpost.com/2008/02/01/exxon-posts-record-profit_n_84463.html []
  3. http://www.econbrowser.com/archives/2007/10/does_dollar_wea_1.html []