[Dialogue] When did the Counter-Revolution began in the USofA?

Tue Jun 12 06:58:09 PDT 2012

It was a top-down structural counter revolution.
Maybe it began with

Conservative reactionaries who hated FDR's New Deal
Ayn Rand's philosophy
Barry Goldwater's reactionaries
In Nixon Administration with Agnew's Nattering Nabobs of Negativism
and the Southern Strategy
And became public policy in the late 1970s when Adolph Coors the
conservative financed Ronald Reagan's early speeches and his later
election campaigns.

See the article below

http://www.theglobalist.com/storyid.aspx?storyid=9634
The American Way of Debt
Ronald Reagan's Raw Deal for America

By Louis Hyman | Tuesday, June 12, 2012

People have borrowed and lent to one another since the invention of
money, but how Americans borrowed in the 20th century was entirely
novel. Mass access to credit became an American way of life, and tax
cuts for the rich has been the political mantra since the Reagan
presidency. The trouble is, Louis Hyman explains, the rich haven't
keep their side of the bargain.

or most of history, personal debt was personal. It existed between two
people that knew each other. With the beginnings of the resale of
debt, from installment credit and mortgages in the 1920s, a new
impersonal relationship developed.

The return of economic inequality, all-too-familiar before World War
II, collided brutally with easy borrowing made possible through
resellable debt.
Debt could now be traded like any other commodity. Buying and selling
debt remained a specialist's task. The debt itself remained tied to
the original purchase of cars, televisions or houses.

In the 1970s, this specialized network of resold debt transformed
again with securitization, which made debt look like any other form of
security. A bond backed by credit card debt or mortgage debt could not
be differentiated from any other corporate bond.

Consumer debt had become interchangeable. Easy to invest in, the
supply of money for consumer credit reached unprecedented levels. The
technical, proximate causes of the credit crisis are perhaps less
important than the long-term shifts in the debt economy that made them
possible.

Easy access to credit is neither a good thing nor a bad thing. It
depends on context. Credit is just one part of American capitalism. On
the one hand, in the context of rising incomes and stable jobs,
borrowing enabled postwar Americans to realize their material dreams —
years before they could have saved up enough money.

One the other hand, encumbering consumers with debt when incomes are
uncertain or stagnant can make borrowing less an opportunity than a
shackle. As the volatility of American capitalism returned in the
1970s, consumers relied more on themselves than ever before.

The return of economic inequality, all-too-familiar before World War
II, collided brutally with easy borrowing made possible through
resellable debt. Hemmed in by low wages and easy opportunities,
Americans looked to leverage in the only way that they could — through
home mortgages. Even those who did not speculate enjoyed the rising
home prices, cashing out all that excess home value through home
equity loans, and using the money to pay off the credit cards.

Five years after the onset of the financial crisis, the underlying
practices that enabed the crisis remained unfixed. Financial
institutions and instruments are largely unchanged.
Yet today, five years after the onset of the financial crisis, the
underlying financial practices that enabled the crisis remained
unfixed. Financial institutions and instruments are largely unchanged.
Credit rating agencies continue to operate unregulated, their AAA
ratings as uncertain as they were before the crash. Mortgage lenders,
though currently under scrutiny, only have to wait for the next
opportunity to enable speculation.

Adjustable-rate mortgages and teaser rates still lure people to budget
themselves into bankruptcy. Securitization allows loans to happen
without lenders putting any of their own capital at risk. But these
financial practices are still just an echo of the real problem in
America.

Ask why our financial institutions lent

The structural connection between economic inequality and the crisis
remains ignored. The dangerous investment choices that precipitated
the crisis are but a symptom of this underlying cause. Income
stagnation continues, pushing Americans towards greater borrowing and
less real saving.

Many of those who lost their jobs in the crisis remain unemployed, but
went uncounted since they had run out of benefits and hadn't looked
for work in the last two weeks (which is how the government measures
unemployment).

Meanwhile, as those at the bottom hang on, profits continue to
concentrate at the top. Without a good alternative, surplus capital
continues to be invested in consumer debt. It is more important to ask
why there was so much money to invest in mortgage-backed securities
than to ask about the particulars of how those investments went awry.

Don't ask why Americans borrowed. Ask why our financial institutions
lent! To avoid this calamity, we cannot pretend that by sending some
traders to prison we have rectified the economy.

The justification for low tax rates is that the wealthy will invest
their savings and grow the economy. Instead, that wealth has been
invested in speculation.
The crisis was not caused by a few individuals, but by the structures
in which those individuals acted. We must ask why these individuals
made the choices they made and why those choices had such power over
our lives.

There is no question that consumer credit is necessary for modern
capitalism to function. But the excess of capital allowed to form at
the very top is starting to inhibit the continued necessary growth of
the economy. High tax rates, like we had during the postwar
prosperity, put money in the hand of the consumer and the government
to spend.

Since the Reagan era, those tax rates have been falling. The
justification for low tax rates was that the wealthy would invest
their savings and grow the economy. Instead, that wealth has been
invested in speculation, destroying capital and hampering growth.

If that capital were invested in businesses and not in consumer debt,
then those low tax rates could be justified. The fact of the matter is
that it wasn't — and they, the low tax rates, cannot be justified.

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