-- 18 July 2007 --

“No body knows where the risk now lies.”
THE ECONOMIST July 14, 2007
Since late 2006, 99 lenders have imploded. Click here for details.

Danny Schechter Interviews Adam Chapnick, DocWorkers' president - DocWorkers specializes in national social awareness campaigns built around documentary films, and is managing the Stop The Squeeze campaign for Globalvision.Watch the interview on YouTube

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I wasn’t surprised to see our film ripped off and the substance of Danny’s work and character squeezed out of the movie version. (This is also the view of Asra Nomani, one of Danny’s colleagues and friends portrayed in the film and interviewed in the doc.)

I am only writing about it in this newsletter because of what happened next. I was accosted in the theater lobby by a team promising free tickets if I participated in a “marketing survey.” They didn’t, of course, tell me who was behind it. The questions turned on what I thought of the commercials - especially the credit card commercials that were played before the movie started.

It soon became clear that VISA credit cards was paying for the survey and they were trying to get consumer input on how to make their pitch even slicker. I went along and got the “free” ticket, When I got home, I found out the ticket wasn’t free after all but that it cost a buck when used in Manhattan. Typical bait and switch!

I urged the young man who was registering my responses to VISA’s inane questions into a mobile device, to see my film IN DEBT WE TRUST if he wanted to know why I was so hostile.

More on Credit Cards: Elizabeth Warren’s Warning (Dallas Morning News) - "If it's good enough for toasters, it's good enough for mortgages: We need a Financial Product Safety Commission"

MORE BUBBLES SET TO BUST

The big debt story this past week has been the same one that is still building in intensity—the collapse of the subprime mortgage market that made a handful of companies very rich and now threatens to toss two million American families into the street.

But that’s not all. In a tightly interwoven economy, a problem in one sector quickly spills over into another. Remember the Asian Financial Crisis where a problem in Thailand quickly spread throughout the region rippling from one country to another like the tsunami that came several years later? It turns out that many Asian banks are part of this mess with Asia Times calling this crisis: “one of the greatest robberies of our time, and it will go unreported in essence.”

Brace yourself because now even Rupert Murdoch’s flagship newspaper, The New York Post, is warning of a TRILLION dollar drop, “domino effect” culminating in a possible global recession. They see the future as “GRIM.":

"July 11, 2007 -- Wall Street is bracing for a nearly $2 trillion washout over the collapse of hollow and shaky mortgage bonds, triggering fears of a recession worse than the dot-com bubble bursting.

A stunning first step in that grim outlook came yesterday when two credit rating agencies - Standard & Poor's and Moody's Investors Service - abruptly pulled the plug for the first time on a protective layer of respectable ratings that have cloaked the underlying, deep weaknesses of mortgage securities awash in the economy.

S&P slammed only a chunk of the half-trillion in mortgage bonds it monitors - about 2.1 percent or $12 billion - but said housing prices could crash by 8 percent this year to make matters worse. Moody's downgraded $5.2 billion of mortgage securities.

It sent shock waves through the market, triggering worry among investors that a domino effect could spread in the coming weeks throughout the nearly $2 trillion in mortgage securities.”

This story seems to be getting more pick up in Europe than in the USA. Check out these links:

Problems in America's housing market begin to undermine confidence in the global credit bubble

On borrowed time: markets stare into abyss

Mortgage vultures swoop on US housing crisis

AND WHAT IS A LIKELY OUTCOME? MORE BANKRUPTCIES

The NY Times ran a strong editorial on the subject that directly touches on bankruptcy—a subject covered in ININ DEBT WE TRUST:

"Rising mortgage delinquencies are likely to be followed by rising consumer bankruptcies and, with them, the first big test of the federal bankruptcy reform law of 2005. Early indications are that low- to middle-income borrowers will be unduly punished."

So we have companies scamming each other while individuals are being targeted too.

There are even scams within these scams as the Tuscon Citizen reported:

"No money? No problem! That's the outrageous claim many Web sites are making. It's just the latest wrinkle in the growing mortgage fraud world.

These sites help risky borrowers look more attractive to lenders by getting them better credit scores.

They do it by illegally attaching the risky borrower to a total stranger's credit card, thus raising the risky borrower's credit score.

Other sites even let risky borrowers "rent" a bank account so that when it comes time to provide financial documents to the bank, the borrower looks as if he or she has a lot of cash on hand."

The Miami Herald reports on skimming in restaurants:

"It's become routine for customers to swipe their credit or debit cards at consoles in fast-food joints, gas stations and grocery stores. So why do we still hand over the plastic at sit-down restaurants?

Pay-at-the-table systems are popular in other parts of the world, but they haven't yet caught on in the United States, largely because equipment makers haven't been able to point to a reason why restaurateurs should switch.
Manufacturers now see an opportunity. A rise in the number of ''skimming'' scams in which waiters use hand-held computers to quietly record customers' credit card information and sell it is creating a sense of urgency. So is an increased push by managers to speed the flow of diners during peak hours."

Sometimes, scammers claim to be credit card security officers:

A Canadian newspaper warns: “ please be vigilant when it comes to scams. One of the ‘classics’ is where someone calls identifying themselves as a security employee with a credit card company like MasterCard or VISA.

They state an unauthorized purchase has been made on your card and want to credit it back to your account. They won’t ask for your credit card number on the front, but will ask for the last three numbers on the back of your card. Do not give it out…if you do, they have access to your credit card and will make purchases….”

Bear un mind as we worry about millions of folks becoming homeless, the Nation’s poor already are. This is a related scandal that gets scant attention as Tony Pugh writes for McClatchy Newspapers:

"WASHINGTON -- Growing numbers of the nation's poorest households are using more than half their earnings for rent while waiting years for federal housing assistance that may never come.

The phenomenon is largely playing out in urban and suburban locales, but has exploded recently in rural areas as coveted rental assistance becomes harder to get due to high demand and scant funding from Congress.

The lack of affordable homes for poor families is the nation's No. 1 housing problem and undermines the stability and security of families and communities nationwide."

Your letters are welcome. Lets spread IN DEBT WE TRUST the way Michael Moore is spreading his “SICKO” and use it as a tool for arousing public concern on this issue.

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

We are also maintaining a DEBT BLOG on this site. Please visit it and tell us what you think

Please send this newsletter to your friends.

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The Global Center
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If you have comments or suggestions, share them with me at dissector@mediachannel.org.

Danny Schechter
Editor Mediachannel.org
Director IN DEBT WE TRUST
InDebtWeTrust.com
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LETTERS

Ahmed Murchie writes from South Africa:

Hi Danny

We spoke very briefly at your movie screening in Durban....I mentioned to you about the old Chinese businessman telling me that " banks charge you interest 24 hours a day 7 days a week and 365 days year and as long as you work any less than 24 hours a day, it will be very difficult to catch up on the bank".

Danny firstly the movie was great and but importantly that you have taken the task to give this issue exposure and hence bringing it to the attention of the people.

Just one criticism, I felt that in the movie you had not touched or dealt in depth with the issue of interest and more precisely the issue of compound interest. My thoughts are that it is not wrong to borrow money, as long as it is not related to compound interest. Adding an "opportunity profit" on the capital sum is quite acceptable, but for me the problem comes in when compound interest is factored in. I would not be surprised that if analysis were done, and revealed that a greater percentage of debt is actually compound interest. Hence a person who purchases an item in a compound interest arrangement, starts adding monetary value to the item the moment they purchase but the item immediately looses intrinsic/ market value...depreciation etc. So the purchaser looses both ways. The real problem come when the person misses a payment and compound interest kicks in. Now suddenly the persons starts loosing double time again for the same reasons again. The only exception to this is property/real estate, cause the factory that makes land closed long time and is not making any more, hence demand will always exceed availability, not supply.

Not to go to much down the evangelical trail, but being a Muslim we are warned about the danger of interest and to stay away. I feel that while the film is excellent you should maybe do another movie on just the principle and workings of interest particularly compound interest...cause this really is money for nothing. AND THEN MAYBE WE COULD START A WORLD WIDE CAMPAIGN TO ABOLISH COMPOUND INTEREST.... "THE YOKE OF MODERN SLAVERY". Compound Interest is the corner stone of capitalism. Rid the world of this and we will be very much closer to a better world for all.

Thank You for your movie.

Ken Baker writes from Oregon:

My name is Ken, I live in Medford Oregon; I have a not uncommon story to tell; damned credit cards, the one that burned me was G.E Moneybank/Care Credit. Had some dental work done to the tune of about 15 grand...payment was to be 249.00 a month. I was in the process of moving at that time and gave them my new address; they had the old one as well, but informed them of the date of the move well in advance. About three weeks went by and I went to my old address, a relative, and low and behold there is bill from them due that day; ok, not possible to pay; I called them and explained that they had incorrectly sent it to the old address and there was no way I could pay this on time. Bottom line, they told me "it sucks to be you"...

None the less, I made the payment ASAP; didn't matter, it was late. So, I went from the 6.7% to 22.5% the interest amount was $302.00 min payment was $275.00...I went to the place that hooked me up with these crooks, and lady that I dealt with there was totally nice and shocked that they would do this; we spent an hour on the phone with these people trying to get them to understand that they screwed up in sending it to the wrong address; nope, no go; again, "it sucks to be you".....

Next statement my interest jumped to 29.99% interest amount was now around $329.00 a month....min payment $285.00...you do the math...I had 4 other credit cards that had from $300.00 to $4500.00...guess what???...They wanted a piece of that pie as well, so they jumped their interest rate to 29.99%...and it is legal....so, here it is, $35,000.00 at 29.99% the interest alone is about $875.00 a month....that is more than my take home pay...

...I was in a bad spot; I checked out Consumer Credit Services, and they were very nice and all, but that still was not going to really help me; I had no choice but to file chapter 13.....I gave it a good try though, I kept those cards current, I have had that Sears card for more than twenty years, never missed a payment.....I am not the kind of person that just bails out on my debt; had those crooks at GE Moneybank had cut me some slack and owe up to their mistake, I would still be paying them; but nope, they wanted the max dollar; back fired on them; now they get nothing...did you know that some cards can charge up to 40%?.....legally.....I don't think the mob charges that kind of interest....anyway, that is my credit card nightmare; hopefully never to be experienced again....my shredder gets a lot of use these days....LOL...:>)

Richard Kilday-Hicks writes from San Francisco:

Hi Danny -- Just read your essay sent to me on the ZNet Commentaries list. I'm a labor and media activist (I've attended the last two national conferences in St. Louis and Memphis). I agree that unions should be showing your film. I'm currently a local chapter president at SF State (for the Calif. State University Employees Union, SEIU 2579) but next month I'm running for statewide vice president for organizing (the second-highest position statewide). If I'm elected I will be showing your film to my union and more.

When you talk about the reluctance of unions to show your film, possibly due to the income off of credit cards they also rake in, it reminds me where the larger unions have been on the issue of single-payer health care -- reluctant to join the fight because many of them run health care businesses themselves. I'm not sure you mean to say, however, that the consumer debt crisis superseedes class warfare. As long as we have capitalism we will have class war. It may take different shapes (as you are pointing out with your film) but the underlying imperative of capital to grow at any social expense remains. Unions need to change their operating model from "business" to social justice. That's the battle I'm fighting.

I'm working on a master's degree in philosophy (at SF State) and I'm involved in a "free university" project with The Institute For the Critical Study of Society (www.tifcss.org). I sponsor a film and discussion series (I've promoted your other film, "Weapons of Mass Distraction" and was at the SF screening where you spoke) and I have your latest film on my "to show" list as soon as I can get my hands on a copy.

Thanks for the good work you do.