StopTheSqueeze.org Newsletter - Americans For Debt Relief Now!

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-- 01 August 2007 --

IT’S YOUR TURN TO ACT.

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Stop The Squeeze
Weekly Tip

Watch what you throw away: Inventive scammers require constant suspicion
By GREG JORDAN
Bluefield Daily Telegraph

“It’s a fact that there are people who truly don’t have any shame. They see nothing wrong with calling complete strangers and stealing their money, particularly if the person on the other end of the line is elderly. A couple of months ago I had a call from a local woman who said a stranger had called her over the phone and tried to talk her out of her Social Security number and bank account numbers. Well, she didn’t fall for it and alerted the media. Unfortunately, a whole new set of scammers called her this week and tried a new trick. This time they said that her “medical cards” needed to be updated, so could she please go get her bank statement. They knew her full name, address, and other particulars — details available in the trash and in phone books. She didn’t fall for the trick again, and called her bank about the ploy. Upset by yet another attempt to deceive her, she said that if the scammers put as much energy into working in a regular job as they did trying to cheat people, they would do just fine. The confidence tricksters come up with new scams all the time. in the mail.”

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STOP THE SQUEEZE NEWSLETTER
In Debt We Trust director Danny Schechter reports on the film and campaign.

Last week, when I wrote the stop the squeeze newsletter, the stock market was up, up and away, hitting 14000. The American economy was riding high and my fears about the debt bubble seemed to many to be exaggerated if not misplaced. But remember what the very first person I interview in my film say: what goes up, must comes down.

And sure enough:

AP reported Thursday:

“NEW YORK (AP) -- Wall Street suffered one of its worst losses of 2007 Thursday, leading a global stock market plunge as investors succumbed to months of worry about the mortgage and corporate lending markets. The Dow Jones industrials closed down more than 310 points after earlier skidding nearly 450.

Investors who had been able for months to largely shrug off discomfort about subprime mortgage problems and a more difficult environment for corporate borrowing finally decided it was time to sell after the Commerce Department issued another disappointing home sales report.”

If the big money boys had been reading this newsletter, they wouldn’t have been so sanguine, and so able to “shrug” off all the bad news bears who have been -- and still are -- warning about what is now happening.

When I started making the film IN DEBT WE TRUST, I thought I was just making a film about consumer credit issues. I didn’t really understand and am still learning about how those issues are related to much larger forces, if not the whole economy. I didn’t appreciate how abuses that impacted one group, and of course benefited others, could mushroom into a crisis that would rock the whole system.

I wanted to focus on the pain of Americans because so many activists had defined the debt problem as something that only impacted Africans and the third world. For years, the World Bank and IMF have been targeted (correctly in my view) for taking advantage of poor people. But then I saw our own financial institutions, some regulated, many not, were targeting poor and working people who wanted to better their lives and buy new homes. They wanted to be part of what President Bush was touting as the “ownership society.”

And along came the subprime loans, which appeared at first as a reform, a way for people without credit to pay a little more and get a mortgage. Appearances, however, are deceptive. Soon, small companies and then humongous banks saw an opportunity to get even richer and started shoving out money and then selling paper into so-called securitization trusts or CDOs. These instruments were then used to finance all kinds of business transactions. The middle men were making a fortune but it was all based on what was once called JUNK... and the bad credit funded bad deals and bang -- the quicksand became more visible.

END OF AN ERA?

And now, unheard warnings have turned into a full fledged crisis. As the housing bubble burst, others soon followed. The Washington Post noted:

“NEW YORK, July 25 -- In just a few days, shares of Internet travel company Expedia lost 12 percent of their value, one of the highest-flying executives on Wall Street watched his fortune shrink and the nation's largest mortgage lender said many Americans with good credit were in danger of losing their homes. At the root of those seemingly unrelated events is a single new reality, one that could portend trouble for the broader U.S. economy: The era of cheap money appears to be ending.”

Now we have gone from a “minor set-back” to the “end of an era.” Read on:

“Easy credit has been the economy's lifeblood in recent years. It gave people who previously couldn't afford homes a crack at the American dream. It fueled multibillion-dollar takeovers of some of corporate America's biggest names. It buoyed the stock market and propped up the prices of many other assets.
But now, the investors who a few months ago were willing to lend money to Wall Street at low interest rates, on loose terms, are balking as they worry about having to pay the price for lax lending standards.”

Has this happened before? Hasn’t anyone heard of Business Cycles? Does anyone read history? Scott Thill wrote about this on Alternet:

“The recent implosion of the subprime housing market -- in which people with little or no significant savings of their own are offered huge loans for little or no money down for houses often but not always located in fast-track developments -- shares similarities with the junk bond burnout of the 1980s.”

For years, magazines like Monthly Review have been writing about debt and the business cycle. Is anyone paying attention? But worse than that, there is debt and the BUSINESS CRIME CYCLE.

In reponse to an essay, I published on Mediachannel about all the financial lenders that are IMPLODING I received many responses including some from readers of Huffington Post:

"Has it occurred to no one that interest-rates upward of thirty percent [might be] part of the problem? Interest-rates that banks can, and do, change at their pleasure?

And how healthy ARE those banks, anyway? Pick the annual-report of any national bank, flip straight to the last page, and start reading backwards.

... Does it not strike you as "odd" that (pick a national bank, any bank...) we see figures like "$8 billion in fees-and-penalties income?" Do THAT many customers bounce that many checks ... or are you playing computer-games like your "accountholder 'agreement'" says that you can?

... Does it not strike you as equally "odd" that said bank might be forced to set-aside that amount or more as an "allowance for bad credit-card debt?"

Talk about 'SiCKO!' ”

AND MORE:

“Here, at last, is the eternal spring from which those securities have come. It is a cholera-infested sewer.”
I agree. Congress could pass some simple laws that would transfer money back to the working people and away from the financial institutions. But they don't, because the Congress and its members receive enormous amounts of money from those same institutions.

For example: many credit card companies collect more in late fee than in interest. Check your bill. The credit card bills are always set up to be "due" and "past-due" at a time when it is least likely the borrower will get the payment in on time. Most people pay bills after their paychecks on the 15th and 30th clear the bank. If you make the credit card payment due on the 28th, for example, many people will wait to pay it out of their check at the end of the month, which will be five-days late by the time it's received, which will create a $50 late fee.

AND ANOTHER:
“it's a lot worse than contagion or tsunami" - See "Multi-Trillion-Dollar Debacle: Failing Hedge Funds" by AL MARTIN.

The CONSEQUENCES ARE JUST BEING FELT

From Newhouse News Service

“Older Americans increasingly are being overwhelmed by debt. By one expert estimate, people 55 and older now account for more than 22 percent of those filing for bankruptcy, up from less than 10 percent in 1994…

Seniors are in financial distress for many reasons: the exploding cost of health care -- including prescription drugs -- that either drains savings or is diverted to credit cards, necessities like food bought on credit, unrealistic expectations about how much retirement income Social Security would provide…”

NOT JUST AN AMERICAN PROBLEM

I am writing from Australia. Already, a major hedge fund is in trouble because of what’s being a called a “tidal wave” caused by the American subprime loans. They fear more to come. In Eastern Europe, Reuters reports that one Asset Management Fund is facing a "Greed-Fear" dilemma: “The dilemma is whether to hang on to get more returns or step back so as not to lose out in a correction.”

RIPPLE EFFECT

Joe Dunphy notes: “ Note how the housing crisis has a big ripple effect on Japan, where if the dollar gets weaker, the yen gets stronger, and it can weaken demand for the export volume that Japan must maintain.

Japanese stocks tumble in Tokyo trading - Yahoo! News

REVIEW OF IN DEBT WE TRUST:

“Part of the reason In Debt We Trust works as well as it does is the ability of the audience to understand the problem of credit card debt in their own terms. Whereas a nearly mythical organization called Al-Qaeda and people the general movie-goer has never met were the focus of Farenheit 9/11, this is a much more accessible problem: interest rates, credit scores, foreclosure, bankruptcy. This isn't something "someone else" deals with; we all struggle with the ads, the desire to spend and everything in between.”

Read the full review

SCREENINGS

There are more screenings of In Debt We Trust underway with one just taking place on Capitol Hill and another outside Ithaca New York. NEDAP is hosting a screening at DCTV on August 7, which is 87 Lafayette St., 2 blocks below Canal St. Doors open at 6. I will be there.

You can organize a screening in your neighborhood.

Help us get the word out.

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Your comments and experiences are welcome. Write: Dissector@mediachannel.org. You can read more of my daily blogs and articles on Mediachannel.org

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