Our Economic Crisis Must Become the Top Political Issue in 2008
Barack Obama's Iowa win has forcefully put the words "hope" and "change" on the national media agenda. His dynamic personality and uber-organized charismatic campaign galvanized attention and support even as his positions on issues seemed less clear.
The primary marathon continues with a retinue of pollsters and pundits trailing behind a diminishing number of candidates. They never lack in inane commentary or a barrel full of predictions that are rarely as accurate despite sounding so authoritative.
But there's another barrel to consider that's a lot less fun. It won't take us over the falls but, in fact, may lead us to a fall. That's the rise in the price for a barrel of oil and a set of deep economic pressures that will affect the country, the world, and every political race as unemployment goes up along with rising prices.
So far, none of the debates are focusing on solutions for the growing squeeze. It's easier to denounce immigrants or even corporations in the abstract. The business press is now debating when the recession will hit, or whether or not we are already in one. The optimism one sensed on the night Barack's last name was spelled BAM in the headlines is slowing giving way to trepidation that any new Administration will have to revive an economy that may, before November, be on the ropes.
There is a reason that American Dialect magazine chose "subprime'' as 2007's Word of the Year." Bear in mind that for the first seven months last year, the problem was downplayed, ignored, and minimized. It was only when the markets melted down in late July that the press and the pols took note. Even then, there was denial -- and in our media and political discourse, there still is among those who have yet to feel the sting.
There may be a reason for that, too, because most of the progressive world has been more engaged with the war than with issues of economic justice, so there has been little activist pressure on most politicians. Except for a speech here or a policy paper there, economic issues are not on the top of their lists. Bear in mind also that main industries still funding our political races are -- surprise, surprise -- real estate, finance and insurance.
So even as the media reports on inflation and foreclosures, they often do so as, the International Herald Tribute put it," with a "bad news is good news scenario." The paper quotes a Bear Stearns executive with comparing the current U.S. housing crisis to a recent natural disaster.
"Areas like Florida and Las Vegas are devastated," he said. "It is like Hurricane Katrina."
And, like refugees of that whirlwind of destruction, the subprime victims will simply pick up stakes and make new lives elsewhere: "People will move out to areas like Alabama and Idaho, where there are jobs and there is growth and there is not enough housing. So they will build more and that will add to economic growth."
This naive silver-lining thinking is riddled with illusions. Avinash Persaud, chairman of Capital Intelligence, an investment advisory firm in London, calls the housing bust a catastrophe. "American consumer boom was financed with real-estate debt: Americans have spent 130 percent of their income over the past five years. "They borrowed money against their property," he said.
And now as a many as 2.6 million families face foreclosure, that's going, going, gone.
Many advocates are up in arms. Jesse Jackson, now holding a Wall Street Summit in New York, is leading a national movement calling for the jailing of "subcrime" white-collar criminals. He is planning a march on the Federal Housing Administration at HUD in Washington on January 22, the day of the State of the Union address and the day after the Martin Luther King holiday. He told the Summit that Dr. King, on his birthday in 1968 -- the year he died -- was planning a new March on Washington for Economic Justice. He is demanding government action to "restructure loans, not repossess homes."
Others present, like Congressman John Conyers, plan to pressure the Justice Department for action, while Congresswoman Sheila Jackson-Lee (who appears in my film In Debt We Trust) is organizing town hall meetings. Lisa Madigan, the Attorney General of Illinois described her investigation into discriminatory and predatory lending practices by Countrywide. David Patterson, the Lieutenant Governor of New York called for an investigation into the failure of regulators and the Federal Reserve Bank.
John Taylor, CEO of the National Community Reinvestment Coalition denounced rapacious "greed" and revealed that former Fed Chairman Alan Greenspan is now saying that the federal government has to act with a major financial intervention.
Jackson quipped, "Why wasn't he saying that when he helped cause these problems?"
Housing is not the only crisis. Credit card balances are at a record high, along with interest rates and fees. There are growing defaults on car and student loans. This will get worse with more job losses and less access to credit.
When you read the press outside the United States, there is even more alarm. The Telegraph, a conservative newspaper in London reports:
"As the credit paralysis stretches through its fifth month, a chorus of economists has begun to warn that the world's central banks are fighting the wrong war, and perhaps risk a policy error of epochal proportions."
"The central banks are trying to dissociate financial problems from the real economy. They are pushing the world nearer and nearer to the edge of depression. We hope they will eventually be dragged kicking and screaming to do enough, but time is running out." -Bernard Connolly, global strategist at Banque AIG.
"The kind of upheaval observed in the international money markets over the past few months has never been witnessed in history," says Thomas Jordan, a Swiss central bank governor.
"Where will it end? A fresh study by Morgan Stanley warns that the big banks face a further $200 billion of defaults in commercial property. On it goes."
On it goes, true, but, its not an issue that's going on TV much here or being raised in political debates. That's why activism is needed. We need a national organizing and education effort. We need to be reminded of Dr King's phrase: "The urgency of now."