John Kreese: “Prepare! What do we study here?”
Cobra Kai: ”The way of the fist, sir!”
John Kreese: ”And what is that way?”
Cobra Kai: ”Strike first, strike hard, no mercy, sir!”
John Kreese: ”I can’t hear you!”
Cobra Kai: ”Strike first, strike hard, no mercy, sir!”
Now that the pesky near “limited” engagement in Syria has passed and the NSA has promised (with fingers crossed) to become more “transparent“, Congress can get back to business. Namely, dragging the rest of America kicking and screaming into the Age of Austerity™. The San Francisco Chronicle has reported on retirees who are finding their Social Security benefits garnished due to student loan debts. These debts are accumulated for a number of reasons, some are for undergraduate or graduate loans and some are for older Americans returning to school. However, the majority of loans are for parents and grandparents who took out federal loans for their children or grandchildren’s college education. Hold up, wait a minute, are we saying that if Gramps and Grammy don’t pony up the cold hard cash, our Congress has authorized the “full weight and force“ of the federal government to be deployed to crack the whip on these grandparents gone wild? This, after Goldman gets to Sachs the U.S. Treasury with the help of his bff Ben Shalom Bernanke but for our elderly living on fixed incomes there is no mercy. How much of our working lives are spent so someone else can benefit? This has little to do with whether people should pay their debts and all of the moral baggage that accompanies such discussions and everything to do with keeping we the peons in line. In the world of high finance, debt is written off with the stroke of a pen, a handshake in an executive boardroom, a well placed tax break or corporate subsidy. For the rest of us, no such luck. This is about taking advantage of people by using an elaborate system of wheels and strings that keeps us in a continual state of indentured servitude.
When you owe someone you are in a cycle of working to repay what you owe. In some cases, this is a simple matter that is easily contained by good financial management. But like a hamster on a wheel you can only get off when the debt is repaid. In the case of a mortgage or car loan, you may be running on the wheel for years or even decades. Hypothetically, the lender has an interest (pun intended) in not loaning more money than the lendee can repay. In a sound economy, there are checks and balances, otherwise known as regulations, to keep the system running smoothly. However, when those safeguards are not in place, then the wheel begins to spin out of control. The entity being paid has no reason not to seek as much profit as it can so college tuitions continue to increase far beyond what most family incomes can keep pace with, healthcare costs skyrocket and affordable housing is anything but, well, affordable. The banks are given free rein to grant loans when their accountants and lawyers know full well the borrower does not have the means to incur such an obligation without making painful concessions, like going without a prescribed monthly medication or, you know, annoying necessities like food and clothing. But still the wheel continues to spin ever faster. Now we get to the element of the discourse that overshadows all else. Borrowing money alone is not the problem, it is the interest that kills. When a loan is made, the interest rate is the tell for whether you’re swimming with sharks. In biblical times, usury was forbidden. This is not about interest rates that are intended to help people finance a car or a home or an education. This is about interest rates that are intended to bury people or to sweep the leg.
When some of us borrow money we figure out in our head, or in my case with a calculator, spreadsheet and my Suze Orman audiobooks, how long it will take to repay the loan. If I borrow $144 it will take 12 months if I pay $12 a month. Simple right? What many of us do not fully consider is how much we will need to repay when interest is factored in, that is, if we even know what type of interest we are on the hook for. Is this a variable rate, fixed rate, simple, compound, subsidized, unsubsidized, short-term, long-term, or interest only loan? Interest rates are the strings which the lenders use to make the puppet dance. A 1.9% interest car loan for someone with a 90,000,000 credit score can make the puppet do a jig but a 19% interest rate on a car loan for a working single, mother will make the puppet convulse in spasms. Payday lenders, of course, are notorious for predatory lending where onerous fees can cause the annual percentage rates to reach the triple digits. While the puppet may start out doing a jig to the tune of an adjustable rate medley in a friendly game of musical chairs, when the music stops there will be only one chair left for you and the grim repo-er (hey, this is a blog not The Allegory of the Cave). Guess who gets to sit in the last chair standing? Our grandparent’s “golden years” should be the time in their lives when they are finally able to free themselves from the strings of the puppet masters and dance to their heart’s content. Instead, they get to hear the enlightened words of John Kreese ringing in their ears once more, “We do not train to be merciful here. Mercy is for the weak.” Welcome to life on the global plantation with your fellow serfs, I mean, grandparents.
Postscript: I hope you got a chance to check out the first recipients of the Jeffster awards which will be given on a weekly basis. There are more stellar contributions to the Mic check guest blogger series in the pipeline, as well. The continued support and solidarity of my fellow bloggers is much appreciated.