Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Payday Loans, Tongue out of CheekIn response to my post about the satirical Predatory Lending Association website, yesterday an anonymous commenter wrote the following:This site you are trying to get people to take notice of is a fake! The fact that you are promoting a fake site that is complete satire makes you as bad as the scum that created the site to fight dirty against this industry! I have had my ass saved by the occasional payday loan and it is a respectable service for those that use it wisely. The idiots that missuse it and then cry about it do so on their own. There will always be the borrower who is just trying to score their next bag of weed or get money to drink on, but what about the person that is about to have a couple of small checks hit the bank and because of an accounting error they made by accident, their bank is going to charge them $34 for each check and then demand that they cover this fee by the next day? (What’s the APR on that 1 day loan?) What about the senior on welfare that needs a prescription not covered by their Medicare? What about the working single mother that is about to have her electric shut off in the middle of December? There are reasons that the service serves people for the good. There are also people that will abuse the system and get themselves in debt. People that don’t think. But that doesn’t mean that we need our government to think for everybody! Don't take away what for some is the only option available to them! In a free country, people are free to do good and bad. Free to do smart things and stupid things. That is the price of freedom. The government needs to keep their noses out of the business of American people!Since I didn't have time to reply yesterday, I'm going to post here rather than back in the comments. If we have an economy in which people are on the edge in the way anonymous describes, (a) why is that, and what can we do to change that? (b) in the meantime, can we have places people can turn for short-term financial help that don't charge such exorbitant interest and risk putting people in debt? Dollars & Sense recently ran an article by Howard Karger, who has written a book about pay day loans and other businesses that have predatory relationships with low-income or heavily indebted consumers, e.g., pawnshops, check-cashers, tax refund lenders, rent-to-own stores, and "buy-here/pay-here" used car lots. In his article, Karger discussed some of the current research about these businesses in what he calls the "fringe economy." Southwest Center for Economic Integrity found that 67% of borrowers used their loans for general non-emergency bills. The Center for Responsible Lending found that 66% of borrowers initiate five or more loans a year, and 31% take out twelve or more loans yearly. Over 90% of payday loans go to borrowers with five or more loans a year. Customers who take out 13 or more loans a year account for over half of payday lenders' total revenues.The Center for Responsible Lending has found that "ninety-nine percent of payday loans are flipped" rather than paid back* and "ninety percent of payday lending revenues are based on fees stripped from trapped borrowers." In other words, the industry is based on people getting caught in widening spirals of debt and not on people like anonymous who only need an "occasional payday loan" and can catch up at the next check. (And who do you think payday loan companies are targeting especially? African Americans and military families.) But anonymous brings up an important point: the need for some alternative to payday loans. In the long term: an economy in which so many people aren't on the edge; in the short term: some kind of micro-lending system that isn't so usurious (through community-supported credit unions, maybe?). Karger is very good, by the way, about not wanting to simply shut down payday loan businesses without offering an alternative; to do so would be to make people vulnerable to real loan sharks. ~ *Flipping the loan means renewing it for a large fee without being able to pay down the principal. Labels: african american, center for responsible lending, consumer debt, fringe economy, howard karger, low income, military families, payday loans Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Naomi Klein at Firedoglake The discussion appears to be over, but earlier today Naomi Klein was fielding questions about her new book at the weekly Firedoglake book salon.What is the shock doctrine? Klein explains: I started researching the free market's dependence on the power of shock four years ago, during the early days of the occupation of Iraq. I reported from Baghdad on Washington's failed attempts to follow "shock and awe" with shock therapy - mass privatisation, complete free trade, a 15% flat tax, a dramatically downsized government. Afterwards I travelled to Sri Lanka, several months after the devastating 2004 tsunami, and witnessed another version of the same manoeuvre: foreign investors and international lenders had teamed up to use the atmosphere of panic to hand the entire beautiful coastline over to entrepreneurs who quickly built large resorts, blocking hundreds of thousands of fishing people from rebuilding their villages. By the time Hurricane Katrina hit New Orleans, it was clear that this was now the preferred method of advancing corporate goals: using moments of collective trauma to engage in radical social and economic engineering.We haven't been using Klein's terminology, but disaster capitalism should be a familiar concept to readers of Dollars & Sense. In "Fisherfolk Out, Tourists In" (July/August 2005), for example, Vasuki Nesiah wrote: From Thailand to Sri Lanka, the tourist industry saw the tsunami through dollar signs. The governments concerned were on board from the outset, quickly planning massive subsidies for the tourism industry in ways that suggest the most adverse distributive impact. Infrastructure development will be even further skewed to cater to the industry rather than to the needs of local communities. Within weeks of the tsunami, the Alliance for the Protection of National Resources and Human Rights, a Sri Lankan advocacy group, expressed concern that "the developing situation is disastrous, more disastrous than the tsunami itself, if it is possible for anything to be worse than that." ...And I heard similar analysis from local African American activists along the Gulf Coast of Mississippi, following Hurricane Katrina. When I interviewed Derrick Evans of Turkey Creek Community Initiatives (March/April 2006), he said: [W]hat you'll find is that the unresolved problems pertaining to any one of those issues can be overlain on a map: that the lowest-lying land is typically where black folks, generations ago, would have acquired their land; where they would have settled and developed their communities, which would have been the least disturbed by 20th-century infrastructure; and that now, in the wake of a "Mississippi miracle"--the economic revitalization of the coast, for example, the advent of dockside casinos--would be the most ripe or prime for redevelopment.David Bacon, writing in this year's Annual Labor Issue, sees similar forces at play in Iraq. President Bush says he wants democracy, yet he will not accept the one political demand that unites Iraqis above all others. They want the country's oil (and its electrical power stations, ports, and other key facilities) to remain in public hands.Perhaps the quickest way to understand how shock plays into all of this is to watch the short film based on Klein's book. One Firedoglake commenter asked Klein, Isn’t shock a funciton of any visionary change, regardless of whether it is left or right? Mao & Pol Pot come to mind. Why, then, is it disaster capitalism rather than disaster transformationalism?Klein replied: I wrote this book because the far left has been held accountable for the crimes and abuses required to impose its utopian, year-zero fantasies. The far right has not. And when criminals are not held accountable for their crimes, they re-offend. It’s worth remembering that Paul Bremer was Kissinger’s right hand man during the coup in Chile in 1973.In today's discussion, Klein emphasized nonetheless that market forces are not all powerful and that, in fact, we are at an important turning point. The so-called “free market” is in crisis today - we see it with sub-prime, a s well as with the massive disillusionment with the Bush Administration. Even Greenspan warns in his book that people are losing faith in market fundamentalism. Labels: Books, Disaster Capitalism, firedoglake, Gulf Coast, Iraq, katrina, mississippi, Naomi Klein, oil, sri lanka, tsunami, unions Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). In Mississippi, Poor Lag in Hurricane AidThis is in today's New York Times:By LESLIE EATONFor Dollars & Sense's coverage of Katrina and its aftermath, see our special March/April 2006 issue on Katrina, and also The KatrinaRitaVille Express, in our September/October 2007 issue. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Support Gulf Coast Housing Recovery Act of 2007 S. 1668We received this from Amelie Ratliff of Mass Action for the Gulf Coast:Finally, there's a bill in Congress that would help some of the hardest hit Katrina survivors come back home. Unfortunately, it is about to die because some members of the Senate think it's fine for certain New Orleanians— specifically those who are Black and poor—to be shut out of the city. I just called on my senators to support the Gulf Coast Housing Recovery Act of 2007 (S. 1668). It would re-open desperately needed housing and make sure there is no loss of affordable public housing in New Orleans. Please join me by contacting your senators and check out powerful videos about the housing situation in New Orleans created by Brave New Foundation and as part of the Voices from the Gulf Project. It takes just a moment: http://www.colorofchange.org/s1668/?id=1834-142331 Saving Affordable Housing in New Orleans New Orleans public housing residents have been fighting for over two years to return to apartments that were minimally damaged by the storm. But the Department of Housing and Urban Development (HUD) has shut them out, because it wants to demolish most of the available public housing units—and replace them with far fewer mixed-income housing.[1] The vast majority of the most affordable public housing units, pushing thousands of mostly Black low-income residents out of the city. S.1668 honors the right to return of all New Orleans public housing residents. It requires the re-opening of at least 3,000 public housing units and ensures that there is no net loss of units available and affordable to public housing residents. It also designates $1.7 billion for rental housing assistance and earmarks millions for community development programs, which will benefit an even larger segment of the lower income population. But the bill is in danger of dying -- because some senators are opposed to preserving affordable public housing. It's hard to know what motivates each senator, but it's an open secret that many folks have a desire to see a richer and Whiter post-Katrina New Orleans, and many of them have a great deal of political influence. Senators like David Vitter (La.) and Richard Shelby (Al.) appear to be playing to those interests by standing in the way of this legislation, and others are following their lead. If they win, it will be yet another instance of the federal government abandoning those most vulnerable during and after Katrina. The Gulf Coast needs a housing policy that welcomes all citizens home, especially those who need the most help coming home. Senate bill 1668 is an opportunity to do that. Please join us in demanding that your senator support the bill. http://www.colorofchange.org/s1668/?id=1834-142331 Thanks. Labels: affordable housing, Gulf Coast, housing bubble, hud, katrina, New Orleans, public housing, S. 1668 Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Online Resource of the DayDollars & Sense readers and supporters will find the PLA website most informative.
The PLA website is chock full of resources, including its Military Loan Finder , Working Poor Finder, and Racial Profiling Tools. (via P6) Labels: Class, poverty, predatory lending, racism Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Sub-Prime PrimerVia Darkstar. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
Maximum profit: In 2006, American families spent one in seven of their take home dollars on debt payments