Sam Hill
2008-07-29 23:37:01 UTC
Are We Facing Just Another Market Problem or a System Collapse?
By Danny Schechter, AlterNet. Posted July 28, 2008.
Even as foreclosures double, and the price of gas and food rises
sharply, it's been business as usual in newspapers and in Washington.
The question we face in late July, as regulators seize two more banks,
is: will we be engulfed by a further collapse in our economy or can
the damage be contained, or, even turned around?
We know what goes up must come down but when will what's down go back
up?
It isn't looking good -- and, even now, the two presumptive major
party presidential candidates are talking about everything but this
deepening crisis. They are debating terrorists and Afghanistan and how
to meander out of Iraq but not the reality that so many Americans are
living with: a squeeze that is leaving so many of us broke, in deeper
and deeper debt and disgusted.
Until now, the doom and gloomsters were mostly to be found in the
margins, in financial blogs or in the campaigns of Ron Paul, Ralph
Nader or the Greens. The mainstream media has been looking the other
way and mostly downplaying the unfolding disaster. Even as
foreclosures double, and the price of gas and food rises sharply, it's
been business as usual on the business pages, and among the liberal
political pundits who would rather debate the cover of the New Yorker
than the growing desperation of so many Americans.
The Congress finally passed a housing bill a year into the crisis with
most of the money allocated to try to shore up two housing agencies
with more than a half a trillion in housing assets. The markets are
melting down with more major stocks tanking, banks writing off still
more billions. and unemployment rising.
People in the know like George Soros are saying this is the worst
financial crisis since the depression. Others fear another depression.
This pessimism has reached Newsweek, a guardian of conventional
wisdom, which now says "It's Worse Than You Think, writing "this
downturn is likely to last longer than the eight-month-long recession
of 2001. While the U.S. financial system processes popped stock
bubbles quickly, it has always taken longer to hack through the
overhang of bad debt. The head winds that drove the economy into this
dead calm -- a housing and credit crisis, and rising energy and food
prices -- have strengthened rather than let up in recent months. To
aggravate matters, the twin crises that dominate the financial news --
a credit crunch and the global commodity boom -- are blunting the
stimulus efforts."
We have two challenges: understanding the gravity of what is
threatening us, and then discussing what could or should be done. We
might also want to think about what the press should be reporting and
what policy makers should be proposing.
On the foreclosure crisis, for example, I was just in Washington for
five days with NACA, the Neighborhood Assistance Corporation of
America which took over a major hotel and set up a shop to counsel at
risk home owners and advocate for affordable loans.
The Washington Post, based just across the street from the lines of
some 20,000 people seeking help, did not cover it until it was over.
But, to their credit, when they did they recognized that this effort
by a not for profit citizens group was more effective in responding to
the crisis than all the government agencies put together.
Writes Post Business columnist Steven Pearlstein:
"They came by plane and train, car and subway, starting before dawn
and continuing late into the night, all of them clutching tattered
folders and envelopes stuffed with the documentary evidence of their
financial hardship and miscalculation.
"It was striking how well-organized and executed it all was. Outside,
there were plenty of volunteers and staff -- 350 were flown in from
around the country -- doling out information, advice and sympathy to
those waiting in line.
"In the space of 30 to 60 minutes, the well-trained, upbeat counselors
managed to win the trust of their new clients, wring promises of a
more frugal lifestyle and enter into their computers the relevant
financial details. At a push of a button, NACA's underwriting system
declared how much the client could afford in monthly mortgage
payments, and automatically requested the mortgage servicing company
to modify the loan accordingly. Depending on the service and the loan,
the answer might be available in a matter of days or even hours. In
about half the cases, the result is likely to be a below-market,
fixed-rate loan with hundreds of dollars cut from their monthly
payments."
So here's one example of what can be done by an economic justice
organization fusing services and advocacy. This all happened three
blocks from the White House. While federal regulators visited, none of
the progressive DC think tanks or even unions showed up in solidarity
even though AFL-CIO headquarters is a block away.
Individuals need help but we all need change. Are we dealing with just
another market mistake, the latest bubble gone bust in a volatile
business cycle or a straining system on the verge of breakdown? Can we
solve all this with an Alka-Seltzer-like infusion of new taxes or
regulations?
Or, is Gerry Gold, economics editor of the UK's A World to Win, right
when he argues, "The urgency of building a movement to replace
capital, not to rescue it, cannot be overstated. This will mean a
major program extending social ownership to all sectors of the
economy, ending the distribution of profits to shareholders, and
replacing the system of selling labor for wages with collective
decision-making about the distribution of an organization's income."
Pie in the sky? Or is the sky really falling, made worse by global
warming, wars without end, and resource depletion? If Obama or McCain
are to "fix" what's broken, they better start talking about it. And
once they inevitably do, will either one of them, once elected, be
able to overcome Congressional inertia and the power of
corporate/finance industry lobbies?
If the rest of us see what's coming, we better speak up too. Remember,
when you see something say something? It's also time to do more than
talk.
Danny Schechter writes a blog for MediaChannel.org. He is the author
of "Embedded: Weapons of Mass Deception: How the Media Failed to Cover
the War on Iraq" (Prometheus).
By Danny Schechter, AlterNet. Posted July 28, 2008.
Even as foreclosures double, and the price of gas and food rises
sharply, it's been business as usual in newspapers and in Washington.
The question we face in late July, as regulators seize two more banks,
is: will we be engulfed by a further collapse in our economy or can
the damage be contained, or, even turned around?
We know what goes up must come down but when will what's down go back
up?
It isn't looking good -- and, even now, the two presumptive major
party presidential candidates are talking about everything but this
deepening crisis. They are debating terrorists and Afghanistan and how
to meander out of Iraq but not the reality that so many Americans are
living with: a squeeze that is leaving so many of us broke, in deeper
and deeper debt and disgusted.
Until now, the doom and gloomsters were mostly to be found in the
margins, in financial blogs or in the campaigns of Ron Paul, Ralph
Nader or the Greens. The mainstream media has been looking the other
way and mostly downplaying the unfolding disaster. Even as
foreclosures double, and the price of gas and food rises sharply, it's
been business as usual on the business pages, and among the liberal
political pundits who would rather debate the cover of the New Yorker
than the growing desperation of so many Americans.
The Congress finally passed a housing bill a year into the crisis with
most of the money allocated to try to shore up two housing agencies
with more than a half a trillion in housing assets. The markets are
melting down with more major stocks tanking, banks writing off still
more billions. and unemployment rising.
People in the know like George Soros are saying this is the worst
financial crisis since the depression. Others fear another depression.
This pessimism has reached Newsweek, a guardian of conventional
wisdom, which now says "It's Worse Than You Think, writing "this
downturn is likely to last longer than the eight-month-long recession
of 2001. While the U.S. financial system processes popped stock
bubbles quickly, it has always taken longer to hack through the
overhang of bad debt. The head winds that drove the economy into this
dead calm -- a housing and credit crisis, and rising energy and food
prices -- have strengthened rather than let up in recent months. To
aggravate matters, the twin crises that dominate the financial news --
a credit crunch and the global commodity boom -- are blunting the
stimulus efforts."
We have two challenges: understanding the gravity of what is
threatening us, and then discussing what could or should be done. We
might also want to think about what the press should be reporting and
what policy makers should be proposing.
On the foreclosure crisis, for example, I was just in Washington for
five days with NACA, the Neighborhood Assistance Corporation of
America which took over a major hotel and set up a shop to counsel at
risk home owners and advocate for affordable loans.
The Washington Post, based just across the street from the lines of
some 20,000 people seeking help, did not cover it until it was over.
But, to their credit, when they did they recognized that this effort
by a not for profit citizens group was more effective in responding to
the crisis than all the government agencies put together.
Writes Post Business columnist Steven Pearlstein:
"They came by plane and train, car and subway, starting before dawn
and continuing late into the night, all of them clutching tattered
folders and envelopes stuffed with the documentary evidence of their
financial hardship and miscalculation.
"It was striking how well-organized and executed it all was. Outside,
there were plenty of volunteers and staff -- 350 were flown in from
around the country -- doling out information, advice and sympathy to
those waiting in line.
"In the space of 30 to 60 minutes, the well-trained, upbeat counselors
managed to win the trust of their new clients, wring promises of a
more frugal lifestyle and enter into their computers the relevant
financial details. At a push of a button, NACA's underwriting system
declared how much the client could afford in monthly mortgage
payments, and automatically requested the mortgage servicing company
to modify the loan accordingly. Depending on the service and the loan,
the answer might be available in a matter of days or even hours. In
about half the cases, the result is likely to be a below-market,
fixed-rate loan with hundreds of dollars cut from their monthly
payments."
So here's one example of what can be done by an economic justice
organization fusing services and advocacy. This all happened three
blocks from the White House. While federal regulators visited, none of
the progressive DC think tanks or even unions showed up in solidarity
even though AFL-CIO headquarters is a block away.
Individuals need help but we all need change. Are we dealing with just
another market mistake, the latest bubble gone bust in a volatile
business cycle or a straining system on the verge of breakdown? Can we
solve all this with an Alka-Seltzer-like infusion of new taxes or
regulations?
Or, is Gerry Gold, economics editor of the UK's A World to Win, right
when he argues, "The urgency of building a movement to replace
capital, not to rescue it, cannot be overstated. This will mean a
major program extending social ownership to all sectors of the
economy, ending the distribution of profits to shareholders, and
replacing the system of selling labor for wages with collective
decision-making about the distribution of an organization's income."
Pie in the sky? Or is the sky really falling, made worse by global
warming, wars without end, and resource depletion? If Obama or McCain
are to "fix" what's broken, they better start talking about it. And
once they inevitably do, will either one of them, once elected, be
able to overcome Congressional inertia and the power of
corporate/finance industry lobbies?
If the rest of us see what's coming, we better speak up too. Remember,
when you see something say something? It's also time to do more than
talk.
Danny Schechter writes a blog for MediaChannel.org. He is the author
of "Embedded: Weapons of Mass Deception: How the Media Failed to Cover
the War on Iraq" (Prometheus).