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

[George Holcombe]

One of the better explanations I've seen.  Thanks, Steve.

George Holcombe
14900 Yellowleaf Tr.
Austin, TX 78728
Mobile 512/252-2756
geowanda at earthlink.net

Hope appeareth, but it is not your Hope—you do not have anything to do with it. It just appeareth. It comes as a stranger, as an alien—it just appeareth! You do not even know why you hope. How in the world could you hope when there is absolutely nothing to justify any hope?    ~Joseph W. Mathews




On Jun 12, 2012, at 8:58 AM, steve har wrote:

> 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.
> 
> 
> Editor's note: This article is adapted from Borrow: The American Way
> of Debt (Vintage Books/Random House) by Louis Hyman. Published by
> arrangement with the publisher. Copyright © 2012 by Louis Hyman.
> 
> 
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