Media Ignores Reason for Foreclosures

Discussion in 'Economy' started by Lookout, Feb 16, 2008.

  1. Lookout
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    Lookout Active Member

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    http://www.infowars.com/?p=278

    Media Ignores Reason for Foreclosures

    Mark Anderson
    American Free Press
    February 16, 2008

    With the mortgage crisis reaching critical mass, it’s time for Americans to see past the media reports that are keeping them in the dark. Take Shaker Heights, a suburb of Cleveland. Foreclosures have emptied most of the houses. This town was “ravaged by the subprime mortgage crisis roiling the United States,” stated a typical mainstream news report.

    Many former residents were “evicted for non-payment of their mortgages,” some left in search of new jobs “after the factories shut down.”

    This report represents the usual shallow, worn-out “explanation” of the crisis. If people were not given so much worthless information, they might understand what is happening. The media blathers about careless lenders that gave mortgages to risky recipients who didn’t keep up their payments. But the real story is that the destruction of middle-class jobs, especially in the manufacturing realm, is destroying the ability of Americans to earn, save, invest, pay taxes, reduce personal debts etc.

    Gainfully employed people earn money and can buy homes; people with money can make large down payments to obtain smaller mortgage payments; people with money can pay cash for their car so they don’t have vehicle payments; people with money can avoid too much or any borrowing in the first place.

    Unless one is born into wealth, one must work. And the types of jobs people need to be secure homeowners are disappearing. These jobs left the nation aboard the “free trade express.”

    The Clinton-Bush dynasties gave us these poisons in nearly lethal doses. NAFTA, approved by Bush the Elder, was signed by Bill Clinton and protected by Dubya, who pushed through CAFTA. Congress has aided and abetted the whole process, perhaps believing in the fool’s gold of free trade.

    Free traders may believe that just being able to buy stuff for cheap—with nothing else taken into consideration—is the source of prosperity, and that it does not matter where things are made. This is premised on the “consumer is king” nonsense that Americans have been taught. As former General Motors executive Gus Stelzer noted many times, production is the key. But notice how often the media invokes the word “consumer” when referring to Americans. Never do they seriously talk about the vital process of production. Why?

    Production consists of taking the Earth’s raw materials and forging them into useful products. This value-added process lays the groundwork for an economy to function. Back when Americans were producing most of the things they needed—from shoes and clothes to cars and electronics—they were paid well; their purchases would help the very companies for which they worked. Imports usually cost more back then because they were supposed to (any item shipped long distances ought to cost more, for travel expenses alone).

    There was a time when one could graduate from high school, skip college, go right to a company and work for decades, with a decent retirement. America was so productive that surpluses were exported. We were the world’s leading creditor nation, with no trade deficit.

    Look at us now. It is the height of absurdity to believe that a national economy can function without production. But, under the thrall of the free traders, we close factories, outsource what used to be American production jobs to overseas locales, and then we build retail outlets here for selling the merchandise. Working at retail outlets does not generally enable one to buy a home (unless you’re in management), and every item made somewhere else and shipped here further injures the U.S. economy.We’re sinking in quicksand.

    Nor can we just employ people in tax-eating government jobs. As people slip down the job ladder and face eviction from their homes, they are even less able to pay taxes to support the mushrooming number of government jobs. And the pressure to spend more tax dollars and enact new taxes to cover the increased government employment eats away at the ability of remaining businesses and private individuals to keep their stores and homes (and home-based businesses) afloat. When they lose their grip, they become unemployment and welfare statistics.

    It means nothing when the media reports the unemployment rate and talks about jobs in abstract quantities with no consideration of the quality of jobs lost. And those whose unemployment benefits have stopped are no longer included in the statistics.

    “Based on a very conservative 4-to-1 ripple effect, if the goods represented by America’s current yearly trade deficit were produced in the United States, they would generate $2 trillion in added national income, equal to about $16,600 per household,” said Stelzer.

    An immediate need is to put sizable tariffs on all imports, particularly those from China, to offset the advantage of having things made overseas for dirt cheap, and to create a strong incentive to make things in America. From there, all levels of government must be cut back so taxes can be lowered, regulations relaxed and a good business climate re-installed in the U.S.

    And as presidential candidate Ron Paul says—no more policing the world (and the trillions of dollars it requires).
     
  2. Toro
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    Toro Diamond Member

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    There aren't many accuracies in this article. The author is astonishingly ignorant of basic economics.
     
  3. nibor
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    nibor Senior Member

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    :rolleyes:
     
  4. indago
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    indago VIP Member

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    Toro wrote:
    Perhaps you could point out for us some of the inaccuracies that you have found...
     
  5. Diuretic
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    Diuretic Permanently confused

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    A primer would be good.

    I'm not being sarcastic or difficult because Toro knows of what he writes and he writes so that even I can understand it and I'm no economist. My own thinking is that (and this applies in my country as well which is why I'm posting) absolute free trade is too extreme while outright protectionism will lead to war between economies, sorry, I mean, countries. I don't think it's possible or desirable to erect trade barriers (in my country the cries are going up to protect our automotive manufacturing industry which is getting a hiding in some quarters) but I also think there has to be some restraint on absolute free trade because pretty soon all the manufacturing in the world will be in China and India and SE Asia and the rest of us are going to be scratching around to feed ourselves, clothe ourselves, shelter ourselves and generally have a life above subsistence level.

    Okay, that was a bit hyperbolic. I do think it's necessary to avoid a rush to populist protectionism though. Anyway, I'll be interested to read some dispassionate arguments.
     
  6. midcan5
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    midcan5 liberal / progressive

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    I think everyone ignores the reasons for the foreclosure mess. The real answer is quite simple: people are the cause of the bubble bursting. It happens frequently in history, John Kenneth Galbraith wrote a book about it. Remember Tulips? Nah? or Florida real estate? Nah? or many many more. It is why life requires parents, regulators, and governments, to keep the kids from sinking into speculative euphoria which only disappears in time.


    "On the day when Saddam was caught, the bond market went up in the morning, and it went down in the afternoon. So here we had two headlines — "Bond Market Up on Saddam News," and in the afternoon, "Bond Market Down on Saddam News" — and then they had in both cases very convincing explanations of the moves. Basically if you can explain one thing and its opposite using the same data you don't have an explanation. It takes a lot of courage to keep silent." Nassim Nicholas Taleb

    http://www.edge.org/3rd_culture/taleb04/taleb_index.html
     
  7. Toro
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    Toro Diamond Member

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    There are many.

    The first is that the middle class is disappearing. That is sheer nonsense. The number of those who are defined as middle class over the past 10 years has fallen by something like 1%, from somewhere around 58% to 57%. That's hardly "disappearing."

    Second, that manufacturing is disappearing. That is wrong. The number employed have fallen, but manufacturing output has risen.

    Third, that manufacturing is the dynamic of the economy. That is wrong. Manufactured products merely embodies technology in a physical form. There is nothing magical about it. Simply because a solid good is produced does not make it any better than one that is intangible. We could make a billion manufactured lathes, but that would bankrupt us. What matters is technology. Value-added and wealth creation comes from new technologies, and America develops that in spades. That fact that the new technology is produced offshore does not in any way diminish the advances made in this nation.

    Fourth is the mercantilist argument about a trade deficit being bad. The comment about how much of a trade deficit there is per household is astonishingly ignorant about basic economics. The opposite side of a trade deficit is an investment surplus. That means each household has $16,000 in an investment surplus from the outside world. This is bad because...?

    Fifth, increasing tariffs would destroy jobs and decrease wealth. If there is any lesson from the Great Depression and the experiences of the postwar global economy is that lower tariffs increase wealth.

    There are all sorts of things wrong with the economy but the author displays little understanding of basic economics.
     
  8. Lookout
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    Lookout Active Member

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    The thing find absolutly amazing about your quote is it has all the earmarks of comming directly from a Bush commission. It has double talk in triplicate. It has spin. It has double think. It has out right lies, and sounds just like something you would hear from Ted Kopple and it is absolute bullshit...Good going, you are a very well behaved programmed and brainwashed unit!
     
  9. Diuretic
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    Diuretic Permanently confused

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    Toro wrote:

    That's true, but what about the people who would normally make that solid good? What happens to them their jobs I mean, if the good is made somewhere else? Let me give an example which is burgeoning in my country,

    We have a domestic automotive manufacturing industry. We had (until recently) four manufacturers (General-Motors Holden; Ford; Toyota and Mitsubishi).

    Mitsubishi will close up completely in March this year.

    Ford has recently released a new domestic model which it hopes will put it in front of GM-H in domestic sales while Toyota is burbling along nicely thank you.

    Now, GM-H a while ago realised the market here in Australia is far too small for it so it expanded its operations and with its parent company in Detroit took on a "world car" approach.

    The GM-H factory here makes cars for overseas markets including the US (coals to Newcastle). As well as having a strong domestic sales performance it is exporting. GM-H is probably doing okay.

    Ford is counting on its new car to lift its market share in the domestic market. But there are whispers around that if it doesn't work then Ford may well revise its position in the market here. If Ford left that would be a huge blow to manufacturing in Australia.

    I don't know what will happen but I think I understand the decision-making process. If they're not making money they will leave. Perhaps if GM-H and Toyota are left here they'll both do well and stay. But in the meantime many thousands of jobs would have been lost by Mitsubishi leaving (and if Ford left).

    So while in the abstract - and if it's pure economics as opposed to social policy that's being discussed then it makes sense - it doesn't matter if a solid good is made here or somewhere else, there is a lost jobs effect which can cause major problems for the economy as well as socially.

    I know I'm injecting what is essentially not a pure economic idea in here but I do think economics has a social aspect as well. Having said that I've declared my relative ignorance on economics so I'll stand corrected.
     
  10. Toro
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    Toro Diamond Member

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    So what is your education and your experience which enables you to discern what is a valid argument in economics and make such a proclimation?
     

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