Wednesday, March 25, 2009

Tell me again: Why don't we want the banks to fail?

Okay, yeah, I know there are "a lot of good people out there who are unfortunately depending upon banks loaning them the money to run their businesses, businesses that provide much needed jobs in our community," (voice of my inner "Devil's advocate")but let's just think about that a minute. Is it actually a good thing that the vast majority of the economy of the United States and indeed much of the world depends upon loans from banks who are essentially answerable to nobody? I mean, I just recently got a letter from Capital One telling me that my credit card interest rate is going up to like 24%, after I have only had two late payments in well over two years. Who the fuck are they actually in business for? [Wait, I want to stay somewhat restrained in this post, so that I don't look like a completely bloody revolutionist on the rampage.]

So, I ask the question: Why exactly are we so - and when I say "we" I mean our current and recent governmental leadership - sure that if we let the banks that are "insolvent" fail our society will not rebuild itself in a much more logical, evidence-based manner? I mean, if you own a coffee shop and you are not selling enough coffee and danishes to stay open without taking out a bunch of business loans from the bank, logic ought to tell you to close down the damn business, or somehow change how you operate the business so that there is less overhead, right? Under the economic paradigm of the past 30 years or so, the previous statement would be shouted down as blasphemy. So much so, that most business owners are remiss to envision any possible business that does not take out more and more loans the more successful the business becomes. That is how out of touch the business world has become; they can't envision operating without massive funding from banks. In short, we went from a basic operating assumption that a successful business is one that is solvent and can provide the amount of goods and services demanded by the customers of said business, to an assumption that says a good business is a big business - the goal being to get bigger, even if you operate on a huge loss every year. Needless to say, I tend to think the former is a much healthier, albeit tougher, paradigm to operate under. Being a musician, problems like running out of CD's to sell at our shows, are good problems. We don't run out and try to get a loan from a big bank to pay for the printing of more CD's. Instead, we partner up with colleagues and actual investors to print more CD's than we did the last time, so that we can service everyone that wants one. More on that later.

Look, my point here is simple: There is a big difference between going to the proverbial "bank" and taking out a giant loan with a high interest rate in order to create more product, knowing full well that you are going to have to pay back a ton of money, regardless of whether or not your customer base actually expands, and talking to partners in similar businesses about pooling monies together to put out more product, offering those partners "points" (as we do in the independent music world) or a piece of the profits for a certain period of time or until they are paid off, whichever happens first. Damn, that was a long sentence, but hopefully clear. Am I making sense here?

If all the big giant, community crushing, banks in the country failed, what would happen? Well, the same damn thing that has happened time and time again throughout history, we would "socialize" them, "nationalize" them, "rescue" them, or whatever term you want to use so as not to rile up your frightened capitalist friends. And when that happens, the taxpayer owns the bank, and if the taxpayer is involved enough in the goings on of government, the taxpayer can have a profound effect upon who gets the money and what the terms are. In our current situation, banks are no different than the mafia, in that they give you an offer you simply can't refuse, and then when you fuck up and miss a payment, they don't just come and break your legs, they take your home, sue you, and take all your possessions until they feel like they got enough out of you to "settle" your loan terms. In the case of homes, the government pays off many of the banks the minute you sign your promissory note, and every penny you are supposedly "paying off" to the bank is pretty much just them collecting twice. It's a complex issue, and I do plan on writing more about this in the future. But for the sake of argument, everyone knows that nobody who buys a house, myself included, really envisions paying the thing totally off - unless they are really damn wealthy. Instead, we plan to hold onto it until the market tells us it's smart to sell, pay off the loan, and then - you know it - go out and get another, bigger, better loan.

It's all bullshit people, a clever game that we all play, because our system is set up in a way that offers very few alternatives. If the biggest, baddest banks fail, and taxpayers either take ownership of them or simply refuse pay them off, the government will have little choice but to take control of the financial markets and rebuild them, hopefully in a way that is centered upon uplifting the human condition, not simply uplifting profit and capital.

Personally, I have already canceled all of my credit cards and I am paying off the remaining balances in payments I can afford. Within a few months, I will have no cards to speak of, and I am more than willing to live my life here without the "convenience". I am still paying off my car, which sucks, and I have a house to pay off. However, my home loan is guaranteed by the government, and sits at a fixed interest rate of 6%. Put that in your pipe and smoke it Wall Street! I, for one, am more than willing to deal with the pain of the end of the American banking system as we know it, compared with the pain of only being able to subsist in this culture via outlandish bank loans that I know I will never be able to pay back.

And finally, the failing of the banks will inevitably lead to the coming together of people from every walk of life, either on the streets fighting a long overdue revolution in this misguided country, or because we are forced to work together with our neighbors to take back our country, its economic system, and control of the engine of capital again. Only this time, we can't fuck up and let the so-called "conservatives" lure us in with the promises of exorbitant capital and profit for goods and services that do nothing but rape the environment, the arts, and the rest of the commons.

Bring on the angry mob.

-Chris Robin Cox

1 comment:

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