May 5th, 2012
By Johnny Tremaine -- The reason you hear right wing politicians and bankers in Europe and Republicans in the United States
declaring over and over that the national debt is the most dangerous thing in the world -- is that it is -- for bankers. What bankers and financiers have done since neo-liberalism and the so-called Chicago School of economics and business has spread all over the world is they drive wages down until working people are desperate, then they make them loans at very cheap interest rates to make up for the lack of income. Then, after a period of time, they inform the borrowers that the only way that they can renew the loans when they come due (see adjustable rate loans) is if they raise the interest rates --- because, they say, now the loans have become slightly more risky. .
The absurdity of this "reasoning" is that by raising the interest rates on the loans when they are renewed,
they make it even more unlikely that the borrower will be able to repay the loan -- thus raising the risk when it comes time to renew the loans. Sometimes, also, when lenders renew the loans, they shorten the term. For example, if you are a business, you may have a five year loan. When you renew it, the lender will only renew it for three years. A shorter amortization term increases the monthly payment even if the interest rate stays the same. If the interest rate goes up -- and the term is shortened -- the loan in most cases becomes almost impossible to pay off. And if it isn't the first couple of times, by the third or forth term shortening and interest rate increase -- the lenders are essentially putting you out of business little by little -- until the borrower's business becomes insolvent. Sub-prime loans did the same thing to individual home-owners. And they were not alone -- financiers like Goldman Sachs did the same thing to city, county and state governments -- and even to the country of Greece. Except in the case of Greece, Goldman Sachs put them in a financial untenable position --- bound to go bad -- and then bought "credit default swaps" betting that if Greece followed its own advice -- they would become unable to pay the loans back -- and if that happened -- Goldman Sachs would make money on because of it. .
So when you hear that the Greece people, or the Irish, the Portuguese, or Spanish people must go through a period of "austerity" in order to get their extravagant,
spend-thrift ways under control, and even though it is tough and may take a long time -- it is just, unfortunately, what is necessary to "right the ship". But what they are actually saying is, "Goldman Sachs and other bankers are unwilling to lose any of their money -- so they force the governments of the countries that owe them money to take the money, and social benefits, -- all those "entitlements" -- from the working people and poor European citizens and use it to pay off Golden Sachs and their banker buddies -- because they simply refuse to take any loses -- and they have the power to make the debtor governments submit to their wishes -- for a period of time. . .
That's why in the United States the Republicans keep chanting and yammering about all the debt and the deficit,
but what they actually propose is reducing "entitlements" paid to the unworthy working people and the poor -- and giving it to the more deserving rich -- so they can go out there and, you know, do business and create all those jobs we all want and need. That's why when the Ryan Budget Plan is examined for what it really is, that budget to "right the ship" of government, as Paul Ryan says, and which Mitt Romney calls "marvelous", is really just a plan to play Chicken Little and "the sky is falling" to scare ordinary people and in actuality give rich people tax cuts and pay for it by taking money from social security, medicare, medicaid, food stamps, pell-grants, unemployment benefits, education, the EPA, alternate energy incentives, and anything else they can slander as an "entitlement" to the American people - and make them feel bad about themselves and their friends and neighbors. The only thing that happens right away is that the budget deficit gets larger -- and there is no sign of a balanced budget on horizon until you get out there about 75 years. . .
It's just dishonest. It's greedy. It's predatory. And it's plutocratic -- not democratic. Remember -- rich people do not need democracy to get their fair share of "life, liberty, and the pursuit of happiness." They already have it in abundance. That is what it means to be rich.
The people that need -- and depend on -- democracy -- for their "life, liberty, and the pursuit of happiness" are all the rest of us. The "un-rich". The 99%.