A Crack in the Debt Wall?

In this morning’s New York Times, there was an odd story about Irish mortgages. It suggested that substantial debt abolition was set to happen but gave very little detail. So I went online to try and find out more and, as far as I can tell, it’s not true. Or, given that there were no details, it’s true that some people in Ireland want this to happen but it’s not clear whether it will. So why was it on page one of the “paper of record”? We can only presume that some people of influence are trying to sow the seeds for debt “forgiveness” as the paper calls it.

In the piece, now not visible on the top pages of the website, Peter Eavis asserts:

The Irish government expects to pass a law this year that could encourage banks to substantially cut the amount that borrowers owe on their mortgages, a step that no major country has been willing to take on a broad scale.

With more than 50% of Irish mortgage holders now underwater and the Allied Irish Bank raising interest rates on mortgages recently, such a decision makes sense. Only there’s no clear indication that it’s actually happening.

What Eavis is referring to is the Irish Insolvency Bill, proposed last June in the aftermath of the Keane report into the financial meltdown in Ireland. Media reports at the time noted that Keane placed

huge store in the implementation of a personal insolvency bill in early 2012.


This legislation is curiously lost in the parliamentary process with no clear account of what’s going to happen being available.

In fact, Irish media reported today the creation of a new joint Irish and UK personal insolvency company, Debt Options, which will be based in Dublin. The Leicester-based firm IrishBankruptcyUK.ie, has been involved in the write-off of more than €1 billion worth of Irish debt in the UK over the last year. Expectations are that more business is to be had because Irish procedure requires expensive legal counsel and a

six-month personal insolvency arrangement process with the bank

Clearly this investment would not have been made if people involved in Irish bankruptcy proceedings thought the government was about to act.

Certainly, debt forgiveness or abolition is in the air in Ireland. Here’s the Irish Independent from September after Blackrock showed that negative equity was at 50% and Moody’s reported that 20% or more of such mortgages would default:

“Principle modification” — which is a nicer way of saying “debt forgiveness” — is, according to Moody’s, the only solution. This has been empirically proven by Blackrock. Thus, we have a known cure that we won’t countenance and can’t afford.

That forgiveness is the answer has also been argued by Harvard economist Carmen Reinhart and backed up by several economists in Ireland, including Oxford’s Ronan Lyons, Trinity’s Brian Lucey and UCD’s Ray Kinsella.

Banks know that even mentioning this possibility is financial kryptonite to their sector. But just look at the figures. Short of mass repossessions, there really is no alternative. The message from the banks is: “Stay calm, don’t worry, this is under control.”

Quite frankly, our banks have been lying to us. This is about as controlled as herding butterflies.

Well put. So we have to conclude that the Times put this story on A1 because it too wants to put pressure on the banks. Who pushed them to do that? The only conceivable “source” that might have such clout would be the Federal Reserve or similar high placed financial regulators. Debt activists have been hearing rumors for a while now that debt abolition is on the Fed’s agenda.

Mortgages are $14 trillion. The earth may be moving under our feet.



Austerity Intensifies

How’s it going for austerity? Mass unemployment, rising interest rates, higher taxes and strikes, since you ask. Today brought grim news for the 99% in Greece, Ireland and Portugal. And the Eurozone as a whole returned to recession in the third quarter. While US media seem to want to keep this crisis off the front pages till November 7, make no mistake. This crisis is our crisis–we, the 99%, not the US.

So let’s do the rounds. In Greece, the Troika are getting cute about when they will release the next tranche of aid to the strapped government. We’re talking €31.5 billion, which in terms of global finance is really chump change. If Goldman Sachs needed this amount, the Fed would have it to them by close of business but as it’s just people not getting paid or having access to services, who cares? A delay has the additional benefit of postponing any crisis till after the US elections. It seems that global austerity apparatchiks are rooting for Obama.

In Ireland the de facto state-owned Allied Irish Bank raised mortgage rates for its customers by 0.5% despite the global recession, in order to raise more money to balance its books. One in five Irish homeowners have their mortgages there and now have to continue to bail out the bank, even after its €21 billion bail out. This is the second increase in six months, even as European Central Bank rates remain very low. The Irish Central Bank reported today that the property market would not even begin to recover till 2018 and it might take till 2029 for a full recovery. Unemployment, as everywhere, remains high for the foreseeable future. Occupy Dame Street (the Irish Occupy) held a sit-in at AIB to protest (above).

In Portugal, official unemployment is about 14% and set to rise to over 16% over the next year. But in order to bail out the banks, the government raised taxes today. While there were some higher taxes for the wealthy, there were numerous redistributive measures, such as moving more people into higher tax brackets; a new income tax surcharge of 4% on individual income; and a rise in the “average income tax rate” will rise from 9.8% to 11.8%,

In response Portugal’s CGTP union, which extends across many trades and professions, has called a general strike for November 14:

This is an authentic programme of aggression against the workers and the people …The consequences for the workers and their families are brutal — general impoverishment, drastic worsening of living conditions and life expectancy.

The graffiti above calls for the fall of Prime Minister Passos but the Troika will come with their demands no matter who is in office.

Debt refusal, debt strike, debt abolition: call it what you will, it’s the only way forward that doesn’t further impoverish the 99% to bail out the banks.

On October 13, make some noise, end the racket!

Turning the World Upside Down

Occupy Sydney

How does Occupy look from the other side of the world? A few days ago, I walked into Gleebooks, the excellent alternative bookstore in Glebe, Sydney, and asked for books on Occupy. The well-informed staff person, who had tracked down my literary interests without difficulty, was thrown. There were some things on the American Occupy, she said, but nothing on Australia. Throughout my visit I encountered this polite bafflement.

Commonwealth Bank, Sydney, opposite Occupy Sydney

Although everyone used the past tense about Occupy, Occupy Sydney still has a street presence in Martin Place. This is a canyon of colonial era banks, like Commonwealth Bank. The Bank epitomizes the transformation of imperial capital into financial globalization. Created as a colonial government enterprise in 1911, it was privatized beginning in 1991. Commonwealth introduced credit cards to Australia and has holdings in banks all over Australasia and now China. It generated some $6 billion in profits in 2011. Despite its Harry Potter-like teller windows with brass bars, Commonwealth is an aggressive globalizing institution. Surrounding it are extensive holdings of Fairfax Media, owned by mining magnate Gina Reinhardt, Australia’s richest individual. Need I go on?

In the midst of all this was what’s left of Occupy Sydney. It’s a table with literature, sign-up sheets, and a handy on-going collection of global Occupy actions. The people staffing the Occupation appear to be homeless and with other unmet needs, which suggested why people discreetly asked me about “improving the aesthetics” of Occupy.

In a new collection of essays called Left Turn, Australian activist Jeff Sparrow summarizes what he considers to be the strengths of Occupy

In Australia, the protests expressed, more than anything, a general alienation from the political process–but they extended as far as embracing the issues of Indigenous people, for whom discussions about occupation had a particular resonance.

Note the past tense.

Perhaps the difference stems from the relative sense of prosperity (or lack of it) in Australia and the US. Australia’s mining-driven boom has sustained high property prices, a very strong exchange rate and a palpable sense of big money for the usual suspects.

On the eve of Occupy Wall Street, the Wall Street Journal reported

The income of a household considered to be at the statistical middle fell 2.3% to an inflation-adjusted $49,445 in 2010, which is 7.1% below its 1999 peak.

In Australia, by contrast, according to a similarly one percent-oriented source:

The median or middle gross household income is about $68,600 p.a. There are only an estimated 473,200 households (or 5.6% of the population) with gross incomes in excess of $208,000 p.a.

Australia’s dollar is worth a little over one US dollar so the numerical difference is smaller than the actual one. Income disparities are less glaring than in the US (the top 10% makes four times as much as the lower 90, compared to 11 times as much in the US) but, according to government statistics, the gap is growing:

the net worth of low economic resource households had not increased significantly since 2003-04, while the average net worth across all other households had increased by 29%.

That’s 23% of the population falling behind the others. Without scoring points, it’s easy to see why the Occupy message might have resonated with those on the underside of the boom. What happens now that the mining boom is over and Chinese economy, engine of global growth, is slowing?

If you look back to last September, the suggestions being made would have been relatively easy for the neo-liberals to accept, I’ve often thought. A Presidential commission, Ad Busters wanted. Or the Glass-Steagall Act restored. So Paul Krugman, so little difference it would have made. Of course, they were too greedy, too self-satisfied. Next time, it won’t be so simple.


Simple Lessons for S17

In academia, we are discouraged from taking a straightforward view. Perhaps the most popular academic words are “complex,” “complicated” and “more” when attached to one of the first two. The financial crisis does, however, strike me as straightforward: the blatant crimes of the banks culminated three decades of wealth transfer from poorer to richer. As the anniversary of Occupy Wall Street approaches, this should not be forgotten or set aside.

This point was brought home by seeing some charts produced by the Federal Reserve and published on the Business Insider blog. Here to begin with is a chart showing the value of wages in relation to gross domestic product.

Wages expressed as gross domestic product

It’s easy to see that since the 1973 oil crisis in general, and the beginning of  Reaganomics in 1980 in particular, wages have steadily declined until falling off the cliff in 2008, from which there has been no recovery. Unsurprisingly, therefore personal debt has risen in accordance.

Household debt

In 1973, household debt was negligible. It is now over $14 billion. The apparent slight improvement since 2008 is the effect of record numbers of bankruptcies, foreclosures and credit card write-offs. Corporate and government debt rose in parallel. The consequence can be seen below, where debt is the red line and gross domestic product is the blue line.

Clearly, this is not sustainable: or so you would think. Government has concentrated primarily on reducing its own debt, a largely meaningless affair except insofar as it further impoverishes those dependent on state support or using state-financed health care. Isn’t there a problem with financing all this state debt? Actually, as far as the U. S. goes, no, not at all. Liberal Paul Krugman points out the obvious in today’s Times, namely that markets are

buying government debt, even at very low returns, for lack of alternatives. Moreover, by making money available so cheaply, they are in effect begging governments to issue more debt.

Some U. S. government debt is so cheap, it actually costs investors money to get it.

So it’s clear that you could, if you wanted, do many creative and interesting things with what is in effect free money, like abolish personal debt. If you want to see why this isn’t happening, then look at this chart showing corporate profits:

Corporate profits

After a nasty hiccup in 2008, profits are roaring above all post-war levels, with only the Cold War boom even coming close and then only very briefly. This level of return is very desirable for those we have called the one percent and they are willing to do anything to defend it.

And yet, even this wasn’t enough for them. At Barclay’s Bank, center of the LIBOR scandal, yet more criminal activity has been uncovered. Jerry del Missier, the former Chief Operating Officer of the bank during all this crime has even been handed a $13.6 million  farewell package.

The activism is about changing the way that we imagine ourselves in relation to debt. It means embracing government borrowing at historically low levels to relaunch the economic lives of the 99%–and then making sure neo-liberalism can’t happen again. The outrage, the anger and the sadness comes from the astonishingly brazen theft by corporations and banks for which no-one has yet even shown remorse, let alone be punished.

On September 17, and for the years after it, let’s show that we haven’t forgotten these simple lessons.


Mediating truAmerica

Like many New Yorkers, I’m in the middle of my summer exodus, a retreat to leafier and quiet parts of the state that many people still seem to manage for a while. It’s an unconscious homage to the former Jewish exodus to the Catskills, a legacy so apparently unappealing that the Catskills are trying to rebrand as the South Adirondacks. One of the things I do is see more broadcast media than usual. It’s not pretty. But you do get to see truAmerica, the country that brought you truTV.

Max von Sydow in Hannah and Her Sisters

In Woody Allen’s 1986 classic Hannah and Her Sisters, Max von Sydow plays Frederick a misanthropic artist. He too spends an evening watching television and describes it to Lee (Barbara Hershey): “Can you imagine the level of the mind that watches wrestling?” While funny, any good cultural studies undergrad can take this apart: wrestling is known to be “fixed,” so the pleasure for the viewer comes in a knowing engagement with the parodic violence that is not violent and so on, and so on, as Zizek would say.

There’s another form of inauthentic television now, which is what I call truAmerica. Let’s try and imagine the kind of mind that would watch golf. Yesterday at a spacious Long Island gym, I was confronted by a large flat-screen showing the British Open golf. It’s amazingly well-executed TV, with cameras tracking the tiny white balls through the air and an editor cutting live from one scene to the next so you’re always watching action. In between come repeated ads, clearly targeting middle-aged white men. There’s hair color, pills for erections and cars of course. Notably, there were also a lot of financial ads.

This one from Merrill Lynch, which you can watch in entirety on their YouTube channel, seems designed to provoke a snort of ironic scorn. Of course, it’s called “Belief,” knowing that the very last thing that anyone with actual knowledge of financial markets would have in Merrill Lynch is belief. It’s like a restaurant that indicates on its signs that it serves “Authentic Cuisine,” telling anyone with any sense that the food is utterly inauthentic and homogenized for truAmerican taste. Indeed, Merrill Lynch are forced to note at the end in a subtitle that they are now part of “Bank of America Corporation.” Perhaps the point of the ad is just to remind people that, despite all their corporate crime, Merrill Lynch did not go under.

Next up was an ad for AIG. Yes, that AIG. It was trying to sell the idea that an AIG policy was a good way to provide security for “your” family, using a graphic of a white roof over four little figures representing the traditional heteronormative family with one boy child and one girl.  Again, no-one aware of the events of the past five years would think that AIG would be a good place to get life insurance. This advertising targets people who think that they are, or hope to be, in the one percent but are not even close. The sales manager who thinks he’s getting ahead (no ads I saw were directed at women) and wants to make investments to show it but doesn’t know how. It’s malicious and deceptive advertising.

If this form tries to define the upper levels of what used to be called the middle-class, there’s far more to define the exclusion at the lower levels. Later, while scanning channels I found one called truTV. On the basis of the “authenticity” paradigm, we can say that nothing on truTV is true, as conventionally understood. Perhaps truTV is a mediated version of Colbert’s “truthiness,” showing the world the “America” that the politicians claim to believe in and speak for. The place where gun massacres are not the time for discussion of gun control is truAmerica.

I discovered here an episode of the hit reality show Hardcore Pawn, which I refer to in my debt talks but have never seen. Apparently, it just started a new series. It’s set in a big box pawn store called American Jewelry and Loan in Detroit. There are three plot scenarios used. First, staff fight among themselves or against the customers. Second, a customer tries to pawn something that is worthless. Third, someone brings in something interesting or valuable that the store wants to get. That’s about it.

The viewer is encouraged to identify with the store staff and to despise the clients, whether African American or (from the show’s truPoint-of-View) poor white “trash.” A typical segment shows a gay man trying to pawn a TV for $400 so he can move out from his violent partner’s apartment back to his mother. The store will only offer him $50. The character then acts out a parody of African American queer camp. Or a heavy-set white guy tries to pawn a much-worn computer with missing keys for $1000 and uses a tirade of obscenities at the long-suffering staff. “We” are supposed to laugh at “them” because were are in truAmerica, while they are not. The acting is transparent, the performances are wooden and the laziness ubiquituous: as is typical of the format, any quote with “bite” is seen over and over again.

Hardcore Pawn is a “breakout hit” for truTV, with 2.5 million viewers, close to the best numbers for Mad Men and many times higher than shows like Treme. The pleasure of measuring yourself against the desperate and seeing your higher status is clearly on the rise.

If this is the context, a self deceptive and highly mediated “middle class” that nonetheless knows that truAmerica is not real, why are we surprised when a sad, lonely man identifies himself as a superhero and acts out the Dark Knight message of one man against the world, dressed in a fantasy costume of black armor and a gas mask? Does he even understand that he’s not in truAmerica when he does this? Increasingly I think that the social movements’ mantra shouldn’t be “Another World Is Possible” so much as “You Need to Come and Live in this World, Not the One in Your Head.”

In short, the fantasy is not that there is an alternative. The fantasy is the world in which financial markets operate for the customer’s benefit, there’s a bold line between the middle class and the underclass, and it’s perfectly sensible to allow people to buy as many guns and ammunition as they want.


Against Heroes and Hero-Worship

From cinema to university sport, not to mention the bankster disasters, it is time once again to be against heroes, whether they have the most wins in college football history, a fancy O logo, or strut around pretending to be Gordon Gekko.

In 1840, the arch-conservative historian Thomas Carlyle gave an incredibly influential set of lectures called On Heroes and Hero Worship. You’ve probably never read them but you know his tag line: “Great men make history.” This phallocracy is alive and well, from the 600 page biography that no-one reads but get published anyway, to Aaron Sorkin’s fantasies of liberal heroes, the cult of sport and the worship of the Big Men of Finance.

Thomas Carlyle

Carlyle exalted the capacity of the Hero to “visualize” history, something ordinary people were utterly incapable of doing. It was the hero or anarchy. Interesting choice, you might say. Carlyle was disgusted by the French Revolution, appalled by the ending of slavery in Haiti’s revolution and afraid it would spread. His work was read by Hitler and used to justify Mussolini.

As a result no one quotes him any more, but the desire for Big Men, for heroes, who have what it takes is still everywhere. It is literally the patriarchy. And it’s just as much evident in the call for OWS to have leadership and hierarchy as it is in less savory locales, so let’s not assume that somehow we are past all this.

It took the FBI to finally prise Penn State’s fingers off their football heroes. A “sport” that should be banned for all the brain damage it causes to its players has now been thoroughly discredited–or at least it should be. As is the modern university system that lavishes money and facilities on sport, while classrooms are shabby and fees high. Penn State has one of the highest tuition rates of any state university at $15,500 for in-state students and an eye-popping $27,000 for out-of-state. So for all the alumni money that football supposedly generates, students are not seeing much benefit. Except that their Paterno Library is now revealed to be named after a child abuse enabler.

Banker worship was and is rampant in the Anglophone world. In Congress, senators and representatives fawn over Jamie Dimon, head of JP Morgan Chase, who revealed that their credit default swap losses in London were now $5.8 billion and, by his own estimate, criminal. The trader who dug this hole was known as The Whale or Voldemort, a hero to his fellow type-A macho men.

They believe they are unique human beings, capable of alchemy, as one banker characterizes his job:

an investment banker resembles a magician – his greatest trick is the disappearance and reappearance of money, an illusion he aptly executes with nicely designed and immaculate literature and an arsenal of free-flowing industry jargon intelligible mainly to his own circle

How thrilling it apparently is, all the champagne and bonuses awarded to those considered to be “Big Swinging Dicks” (to quote Michael Lewis’s characterization of Goldman Sachs).

How are the mighty falling. After all that “Dude, I’m opening the Bollinger“–the most expensive sort of Champagne–the LIBOR investigation is bringing things down to earth. Here’s a quick calculation by Sandy Chen reported in the Financial Times of the kind of damages a 5 basis points manipulation of LIBOR might entail over four years for one bank:

5bp x £1 trillion of notional contracts x 4 years = £2bn in potential damages. If these were covered by the US Sherman or RICO Acts, the damages/relief could be trebled.

Sherman and RICO are the statutes under which you prosecute organized crime, so the “mafia capitalism” meme has spread to the business papers! Total LIBOR related fines and costs are guess-timated at $22 billion without calculating for multiples under the organized crime legislation. Of course, there’s no calculation yet for what credit card holders, student loan or mortgage borrowers might expect back–but here’s my estimate: $0.00.

This all reinforces how important the anti-patriarchy aspects of Occupy’s strategy are and were to the movement. Whether it makes certain people impatient or not, such measures as circles, progressive stack and mutual respect are a pre-condition to creating an alternative to the phallocracy whose crimes and misdemeanors are becoming more evident on a daily basis.


Red-Line the Banks

Perhaps calling what the banks have been up to in the past decade “mafia capitalism” is starting to become a slur on organized crime. Today we learned that major banks served as money laundering operations, openly discriminated against people of color, and that JP Morgan lost far more gambling than they had admitted. To try and cover this up, the NYPD launched a sad smear campaign against OWS that totally backfired.

In London, where regulations are so laughably weak that banks can do just what they want, HSBC was busted as a money-laundering front. Within the bank, this has been known for a long time and people in compliance who wanted to do something about it have been assaulted. Speculation is rampant that fines here may reach $1 billion for

the money laundering and terrorist finance vulnerabilities created when a global bank uses its US affiliate to provide US dollars, US dollar services and access to the US financing system to high-risk affiliates, high-risk correspondent banks and high-risk clients.

This is policy-speak from Congress about Iran. It shows that when the government actually cares about the outcome of an investigation, it is willing to use its powers to the full. By inference, then, it does not care very much about what happened in loans to its own citizens.

Elsewhere today, banks continued to display contempt for those citizens. Wells Fargo was merely the latest bank to admit that the long-standing practice of “red-lining” continues. That is to say, banks used to openly designate certain areas of cities where minorities lived as “red-lined,” meaning no loans were to be approved.

Here’s the official definition of red-lining:

Red areas represent those neighborhoods in which the things that are now taking place in the Yellow neighborhoods, have already happened. They are characterized by detrimental influences in a pronounced degree, undesirable population or infiltration of it. Low percentage of home ownership, very poor maintenance and often vandalism prevail.


This, then, was official policy in the 1920s and 30s. The impressive T-RACES digital project that has mapped these red-lined districts has shown that such neighborhoods continue to be financially disadvantaged and have a higher percentage of minority residents than favored areas for lending today.

Today, the hustle extends to selling more dubious products to people of color. Wells Fargo

steered more than 4,000 minority borrowers into costlier subprime mortgages when white borrowers with similar credit risk profiles had received regular loans.

African Americans paid an extra thousand dollars in fees per hundred thousand borrowed and were 2.9 times more likely to be made to take a sub-prime loan.

Now we’ve crossed $500 million in fines to major banks for racist loans of this kind but the reparations should just be beginning. Remember this clown?

Chicago trader Rick Santelli “spontaneously” rants against mortgage support for certain “people,” who will “drink the loan.” The flimsily-concealed racism has been a subtext to the entire Tea Party movement and the hostility to debt abolition. Now we can see that many of these loans were pushed on people who did not deserve (if anyone does but that’s another question) the high terms of a sub-prime mortgage. And then became targets of white resentment when the set-up-for-failure arrangement failed.

Tomorrow JP Morgan Chase will announce huge losses, somewhere between $2 and 9 billion for the quarter due to their terrible investments. These were pre-leaked today to try and minimize the impact. Do we think that there will be people on CNN and Fox ranting against Jamie Dimon? Of course not.

Instead yesterday the NYPD launched a bizarre allegation that someone in OWS must have been involved in a high-profile murder case because DNA found at a scene where some presumed OWS people had opened a subway gate matched that found at the murder. Except, oops, it turned out to be that of the Chief Medical Examiner. Somehow this cock-up found its way into all the newspapers. Retraction on p. 100 in the 4 point font. And last night irritated cops launched a totally unprovoked attack on people in Liberty Plaza, whose main offense appears to be “refusal to go away.”

No wonder the Democratic party wants the movement to concentrate on the generic “money out of politics” meme. Now the reality of what the finance capitalists actually did in this administration as well as the last is starting to emerge. Maybe we’re ready for a discussion on how to replace this morally and financially bankrupt system? Maybe it’s time to red-line the banks.

Strike Debt: an emerging consensus

For a long time, Occupy was a combination of radical affect, method and principle. It did not have a central subject. Readers will have noticed that debt has increasingly become a key theme in this project. And now it’s perhaps becoming the theme in OWS as well. A growing consensus is emerging that the next major day of action will be orchestrated around debt. This will be Black Monday, or September 17, Occupy Wall Street Year One.

In a sense, this is overdue. After all, OWS’s own David Graeber is the author the global best-seller Debt. But just as the 2011 protest lagged behind the worst of the bailouts, it’s only now that the full extent of the debt crisis is becoming apparent.

There are three main factors at work here. One is the exemplary resistance in Montreal to the privatization of higher education and the refusal of endebted futures. Here is a direct challenge to the idea that morality means debt. Quebecois consider that they have already paid for education via direct and indirect taxation, one. And, two, they see a moral society as one that educates its citizens as a public good.

“I fought nazism. I fought fascism. I detested Duplessis. I didn’t make it to 94 for this. NO to law 78.”

Next, and perhaps resulting from this rigor, is the new refusal of student debt that I’m seeing. I’ve met several graduates who are talking about going directly into default from graduation, confronted with apparently long-term unemployment. Many others have moved home with family to a very different future than the one they envisaged when matriculating.

Finally, the macro-economic picture continues to worsen. Spanish banks can’t even calculate how much bailout they need. And this, incidentally, is one of the many reasons why the parallel between family budgets and financial institutions doesn’t work. If the EU came to me with an offer to bailout my debt, I could work it out in about half an hour. Yet giant Spanish institutions with highly qualified staff offered a spread of between 20 and 62 billion euros. So the real amount needed is probably 120 billion.

Major US banks had their credit ratings cut on Thursday so that Citigroup and Bank of America are now two notches above junk bond status. The only upside for their customers is that these banks have so maximized their fees and penalties already that they have run out of room for more.

In his European travels, David Graeber has been saying that the question now is, not if there will be some form of debt abolition, but how it will happen. In Iceland, the state has decided:

to forgive [mortgage] debt exceeding 110 percent of home values.

This forgiveness has affected between 15 and 20% of mortgages to a cost of at least $1.6 billion (in a country where the population is only about 300,000) and has had a dramatic turnaround effect on the economy.

Here banks have moved to a new tactic to their own benefit alone: short-selling, in which a house is not formally foreclosed but the bank accepts a sale at a loss. A striking 233,000 homes were sold this way in the first quarter of this year, a quarter of all such sales. That’s a million people who have had the banks sell their homes for them. Thus the headline-making foreclosure sales are technically down, at just over 20% of the market. Banks still own nearly 700,000 homes and the same number are in some stage of foreclosure: over 5 million more people are confronting homelessness.

The housing crisis is an invisible reason the student debt situation has worsened, I suspect. Parents and other financial supporters no longer have home equity to draw on to sustain ever-rising tuition costs, as universities assumed they did until 2008. That’s me right there.

And next week the Supreme Court is going to overturn health care, which, as flawed as it is, represented at least a chance that medical debt might be contained. In today’s New York Times, a couple with two health insurance policies are reported to have found themselves with a $90,000 bill after a fall led to an unexpected set of surgery and nursing home stays. A consultant reduced the costs by $22,000–but charged 25% of that as a fee.

So when the Montreal solidarity march last night took the theme “Night of the Living Debt,” it really made sense to people. It might as well be zombies spreading the debt crisis because it would be no more out of control than it is now.

Night of the Living Debt

Today, a group called “Free Bed-Stuy” had a great Free University-style event in a lovely park in deepest Brooklyn (I forgot to take pictures because I was doing a teach-in). An urban farm next door housed chickens, pigs and vegetable plots: and also a serious sound system that was luckily far enough away from the event that we could hear ourselves talk. No cops. And a comfortable curious crowd, who were eager to hear our ideas about linking debt to prison, slavery and stop-and-frisk. Tomorrow, the fourth Strike Debt assembly in Washington Square Park, 12pm. I’ll report back.


Never Mind the B@#$%^&*, Here’s the Real Jubilee

My country of origin, the UK, is about to make a global fool of itself over the monarch’s so-called diamond jubilee, commemorating the apparently endless “reign” of Elizabeth Windsor. Altogether forgotten in all this noise has been the devastating report of the Jubilee Debt Campaign, which shows the much better side of the country. Established in 2000, the campaign has had some success in debt cancellation. Now it reports that things are getting worse.

Once again, then: No to a royal jubilee and yes to a global debt jubilee.

The key facts from the report make the case for debt abolition in themselves:

In the 1950s and 1960s the number of governments defaulting on their debts averaged four every twenty years. Since the 1970s this has risen to four every year….


The current First World Debt Crisis has led to debts in impoverished countries increasing. Their government foreign debt payments will increase by one-third over the next few years.


The Mozambique, Ethiopia and Niger governments could be spending as much on foreign debt payments in a few years as they were before debt relief.

These are countries where the Gross National Income–which is not what the average person earns but an estimate based on all final goods and services–is less than $1005 per person per annum. Even a High Income country averages only $12,276 or more. Compare that to the high-rollers on Wall Street.

A 2011 research paper for that well-known left organization the Bank of England demonstrated that, compared to the Bretton Woods system:

The current system has coexisted, on average, with: slower, more volatile, global growth; more frequent economic downturns; higher inflation and inflation volatility, larger current account imbalances; and more frequent banking crises, currency crises and external defaults.

In short: neo-liberalism is a disaster for everyone except creditors. The rhetoric of the one percent used by Occupy is more or less accurate in fact as well as emotional force.

Debts need to be cancelled. The Jubilee campaign has some practical suggestions to this end. They call for a system of debt audit and an international debt court with powers to arbitrate between creditors and debtors and/or cancel debt as they see fit.

However, in 2011 the IMF and the World Bank brought to an end the Heavily Indebted Poor Countries initiative, the sole international system for dealing with debt crisis, having given “aid” to only 32 countries in 17 years. Some countries ended up spending more on debt repayment after involvement in the process than they were before. On the other hand, Jamaica is considered too “rich” for debt relief due to its GNI of about $6500, which, if you’ve ever seen anything of the country outside the resorts, beggars belief. In 2011-12, one-quarter of government revenues were spent on foreign debt payments. There has been a 20% drop in the number of children completing elementary school in Jamaica since 1990 down to 73% from a former 95%.

This is the pattern for the global majority: increased debt, increased poverty, declining services. The IMF and World Bank themselves reported in March that of 68 low and middle income countries (GNI of $12,275 or less):

  • 5 are in default on at least some of their debt payments
  • 15 are at high risk of not being able to pay their debts
  • 23 are at moderate risk of not being able to pay their debt
  • 25 are at low risk of not being able to pay their debts

So there are no countries not at risk of default in the world’s poorest nations. Loans are increasing, often to repay earlier loans. Speculative loans are widespread.

The Jubilee campaign does not report on high income nations so here’s some data from a random search of today’s financial media:

  • Germany sold bonds for 0.07% annual interest last week. Spain, however, has to pay 6% and is insisting that this is intolerable. Italy sold bonds at 6.504% today. The bonds in my retirement account are making 1.76%.
  • Christine Lagarde, head of the IMF, pays no tax on her salary of $467,940 and has a built-in pay rise every year of her contract. Sporting a deep tan, Lagarde last week told Greece “it’s payback time,” arguing that all Greeks had to pay their taxes.
  • Facebook founder Eduardo Saverin took citizenship in Singapore to avoid $67 million in capital gains tax, because paying 15% tax is too much for the one per cent.
  • Meanwhile law professor Alex Tsesis is quoted in the Times as being “skeptical about the ability of a retail purchaser to be able to play on a level field in the market.” The poor chap lost $2200 on Facebook shares rather than making the instant cash-in “investors” feel entitled to get.
  • Told that New Jersey faces a $1.3bn budget deficit thanks to his tax cuts for the rich, Gov. Chris Christie called the auditor the “Dr Kevorkian of the numbers.”
  • Russian oil magnate Mikhail Fridman has taken his TNK corporation out of  BP: it generated $19bn in dividends to its UK parent since it was created in 2003. Steal oil in Russia, spill it in the Gulf: BP.
  • When shareholders vote on executive pay, companies used their block votes so that “less than 3 per ended up losing the votes.”
  • Retail sales in Spain are down 11% on the year and a staggering 25% over a five-year period–since the end of the housing boom in other words.

In short, we all need a Jubilee: not a grey-haired German lady taking a ride in a horse-drawn carriage with an irascible Greek aristocrat, but a debt jubilee that returns the financial system to a level of decency. That would be the sensible, NGO-style demand that could be made. But the Jubilee Debt Campaign has been making this case brilliantly for years and the situation just gets worse. No demands. No royals. But I think a quick listen to the Sex Pistols might be in order.

F29: Against Trapezocracy

Yesterday the Dow crossed 13,000 for the first time since the crash of 2008. Things have not gone so well for the 99%. Today was a global day of action against the rule by banks. Rendered into Greek, this becomes “trapezocracy” from “trapeza,” ancient and modern Greek for bank. Rule by and for the “banks,” meaning the transnational neo-liberal financial order is what Occupy makes visible and challenges.

Today’s OWS protest in New York made visible several pillars of trapezocracy. The first stop was Pfizer, key player in Big Pharma, followed by a teach-in and rally outside the Bank of America Tower. The NYPD chimed in helpfully by barricading off the otherwise anonymous glass towers and saturating 42nd St with an overkill presence, including lots of men on motorized scooters. This isolating strategy made the corporate invisibility visible in a way that simple protest would not. The trapezocrats came out of their little cubicles to photograph us, although they might want to consider that cell-phone photos from long range behind glass don’t come out all that well.

The “trapeze” in trapezocracy indicates nicely the wild market swings that neo-liberalism has made its trademark, in which they sell overpriced products like derivatives on the upswing, even as they bet against them with by “shorting” the market (a bet that prices will fall). The new OWS  Plus Brigades, dressed as clowns, superheroes and other circus performers, visualized the comedy of errors very nicely.

Standing across from BoA in the cold rain this morning, Matt Taibbi of Rolling Stone reminded us that it is a profoundly corrupt institution, surviving only because of enormous tax payer support. Its miserable stock price would have brought any other company into bankruptcy but it survives because markets believe the government will always support it.

Matt Taibbi addresses the crowd at Bryant Park

Some of the details he was impressively able to recall were remarkable: the sub-prime bonds that banks issued against mortgages were ranked as AAA: only four corporations in America have AAA rating. Warren Buffet’s Berkshire Hathaway with over $20 billion in capital is AAB. But a set of bonds drawn against random people’s mortgages, many of whom were shuffled through the process in the most negligent way, were AAA. One Bank of America employee alone recalled forging 8000 documents a month to facilitate creating more mortgages.

Meanwhile the administration has encouraged BoA to move its corrupted $73 trillion in derivatives from the speculative end of the bank to the federally-insured depository side. Now every taxpayer in America owes for BoA’s speculative bets. But should a student or homeowner ask for rescheduled debt, lower interest or reduced principal, the cry of moral turpitude goes up all around.

Elsewhere in his magazine today, you can read the Wikileaked document from the Department of Homeland Security on OWS:

The continued expansion of these protests also places an increasingly heavy burden on law enforcement and movement organizers to control protesters. As the primary target of the demonstrations, financial services stands the sector most impacted by the OWS protests.

As RS point out, why is the onus on “controlling protestors” as opposed to the criminals in the banks? Good for them–but is anyone else a tad troubled that a music magazine is doing the most incisive reporting on the crisis?
Let’s do a quick review of some other actions against the Trapezocracy:
In Arizona, a small group of protestors shut down a G4S privately-owned detention and deportation “facility” by direct action. As Angela Davis has long reminded us, the prison-industrial complex is the negation of abolition democracy, as well as a highly profitable privatized “enterprise.” By the way, if you are a university employee with a TIAA-CREF pension, you are a shareholder in G4S. The company resorted to cutting down their own fence to get out!

Picket at Acelor Mittal, France

Across the Atlantic, at the occupied Acelor Mittal steel furnace in France, a joint union picket closed all operations down for 24 hours beginning yesterday morning French time, in defense of their jobs. Perhaps it was not a coincidence that turnout for the anti-austerity F29 protest in Paris was higher than expected, about 15,000:

Rally at the Place de la Bastille, Paris F29

And the indignados, who never went away, turned out all over Spain where unemployment is 23% and over 50% among 16-24 year-olds.

Barcelona Student March F29

This student march in Barcelona in defense of the public universities was matched by similar rallies in Madrid, Valencia and across the country.

Finally, the Greek “parliament” today rubber-stamped the demands of the Troika, the very embodiment of Trapezocracy, cutting pensions and the minimum wage for a country deep in Depression. There were only symbolic protests, as people know the sell-out was done. The market responded by putting Greece into default anyway but the European Central Bank saved the Trapezocracy by opening yet another slush fund. This story is not even beginning to be over.

Tomorrow: M1 Occupy Education!