In Debt We Trust

In Debt We Trust

Directed by Danny Schechter (2006)

Film Review

The main selling point of this 10-year old documentary is that it foretells the 2008 global economic crash. It quite accurately paints the enormous debt bubble that had developed by 2005 and which triggered a massive global recession when it burst in 2007.

Schechter mainly focuses on aggressive marketing efforts by banks to addict young people to debt and living beyond their means. College students can easily rack up $10,000 in credit card debt by the time they finish graduate, on top of $50,000+ of student loan debt.

The film also addresses predatory check cashing and pay day loan stores in minority communities, tax preparation services like H & R block that offer high interest tax return loans as part of their service, and predatory mortgage schemes that played a role in the 2007 housing bubble that crashed the global economy.

The only glaring inaccuracy is a claim that attributes the American Revolution to the colonists’ desire to end their “enslavement” to European banks. Unfortunately the War of Independence didn’t end US enslavement to European banks. The first Bank of the United States, founded by the first Secretary of the Treasury Alexander Hamilton, was a private central bank largely funded by European banks which imposed crippling interest charges on the fledgling US government.

Contemporary historians are more inclined to identify the British ban on seizure of unceded Native lands as the main trigger for the US War of Independence (see Voice of Sanity in the Gun Control Debate).

Overall the major weakness of the film is its failure to highlight the root cause of the present debt crisis – namely that we continue to allow private banks to issue (out of thin air) 97-98% of the money used to run the global economy (see The Battle for Public Control of Money )

Student Loans Are Forever

student loans

Recently a mind boggling General Account Office (GAO) study revealed that 105,000 Americans had their Social Security benefits garnisheed due to unpaid student loan debt. The New York Federal Reserve reveals that two million US Americans over sixty are still paying off $36.5 billion in student loan debt. Over eleven percent of this debt is in default.

According to banking reform advocate Ellen Brown, some seniors incurred this debt by co-signing student loans for children or grandchildren. However a lot was incurred by middle-aged workers going back to school in the hope of finding employment in a bad job market. What they have wound up with is something much worse: no job, an exponentially mounting debt that cannot be discharged in bankruptcy, and the prospect of old age without a social security check adequate to survive on.

John F Kennedy’s Vision

It took me twenty years to repay the student loans that enabled me to attend medical school (1969-73). This was before the financialization of the American economy, when student loans became a profit center for Wall Street banks. President John F Kennedy, who started the Health Professions Loan scheme, believed that bright students who worked had as much right to attend medical school as the sons (only seven in my class were women) of wealthy families. He also wisely envisioned that patients would benefit from a more diverse medical profession.

Although student loans are issued by banks, they are guaranteed by the federal government. Theoretically this means the taxpayer is on the hook if the student can’t pay the loan. In practice, this rarely happens. Student loans can’t be wiped clean by bankruptcy, except in rare cases of permanent and total disability. Or even by death. Last week Senator Chuck Schumer (D-NY) introduced “Andrew’s Law,” new legislation requiring private student loan companies to forgive outstanding debt if a borrower dies. The bill has little hope of success in a Republican congress.

At a time when mortgage interest rates were over 8.5%, I only paid 3% interest on my student loan. In addition my medical school was scrupulous about limiting my outstanding debt to $26,000 – finding me work study jobs and private grants to reduce the amount I had to borrow.

With the advent of neoliberalism, education is no longer regarded as a basic right, but as an enormously lucrative commodity. Banks borrow money from the Federal Reserve for close to 0% interest. They charge homeowners 3-6% interest on mortgages, while students, who are more desperate, are forced to pay 4-10% interst. Moreover, unlike mortgage loans, student loan interest rates are fixed and can’t be renegotiated when interest rates drop.

The Student Loan Bubble

The New York Federal Reserve recently called a daylong conference to address the student debt crisis. In his opening address , New York Fed president William Dudley indicated that student loan exceeds $1 trillion dollars and has the highest rate of delinquency of any form of consumer debt. In the 2009 cohort of college graduates, only 17% of the original debt has been paid down. In fact, more than 20 percent of high balance student borrowers owe more than when they graduated.

In mid-March, Obama signed an executive order instituting a Student Aid Bill of Rights that will

1. provide a new website where all federal loans will be visible by July 2016.
2. require loan servicers to notify debtors when their loans or transferred or payments are late.
3. instruct loan services to apply prepayments to loans with the highest interest rate
4. offer a “state-of-the art” complaint system.

Beats me how any of this helps struggling seniors whose Social Security checks are being docked.

People can learn more about the student loan crisis at Student Debt Crisis, a non-profit organization dedicated to fundamentally reforming the student loan program. The weekly radio program Counterspin recently interviewed their executive director Natalie Abrams. Listen here (starts at 18:45).

photo credit: IMG_2589 via photopin (license)

Unemployed Youth: the Lost Generation

youthRecovery? What Recovery?

High youth unemployment is a defining characteristic of the current recession. Despite the so-called recovery, a fifth or more of young people under thirty remain unemployed. In most countries, youth joblessness is triple the general unemployment rate. In some regions with harsh austerity regimes, youth unemployment is increasing.

In the US the preferred approach to youth unemployment, both by government and the media, is to ignore it. Elsewhere the attitude towards youth unemployment is mixed. In Europe, the European Commission has appropriated $1 billion euros to address youth joblessness. Yet only Germany and Switzerland have come up with real solutions.

Pundits offer a variety of explanations for the stubborn problem of youth unemployment: globalization (i.e. jobs moving to the third world), automation (i.e. replacement of jobs with robots), the greed of baby boomers who refuse to retire (greasing the wheels for social security and pension cuts) and government policies that allow billionaires to suck all the money out of the economy for their personal pleasure.

An increasing number of economists see youth unemployment as symptomatic of structural economic changes related to the end of global growth. Despite all the corporate media babble about perpetual economic growth, the phenomenon is actually quite new. Prior to the harnessing of fossil fuels by the industrial revolution, all human civilizations were based on steady state economies.

Of the three documentaries below, the first, from Canada, is the best. Portraying youth unemployment as a permanent structural problem, it’s highly critical of the Canadian government for refusing to address it.

The four important points Generation Jobless (Canadian Broadcasting Corporation 2014) makes are

1) by 2030 half of all the current jobs will be gone
2) the “lost generation” (the 20% of Canadians under thirty who remain unemployed) is highly unlikely to ever land permanent good-paying jobs
3) Canadian universities are training young people for obsolete jobs instead of offering them new skills needed in the present economy.
4) Canada’s student loan program is a fraud – students are pressured to take on vast amounts of debt on the promise of good paying jobs that don’t exist.

The film disputes the frequent claim that a large aging population is a drag on the Canadian economy – the real drag on the economy is the underutilization of Canadian youth. This has drastic implications for the future health of the Canadian economy. Most of a society’s wealth comes from the skills of its workforce.

This first documentary also highlights two examples of programs that are successfully cutting youth unemployment, one at the University of Regina (UR) in Saskatchewan and the other in Switzerland.

The UR Guarantee program, which promising all entering students will be placed in a job on graduation, has a 97% success rate. From day one, the curriculum for all students includes career counseling and career education, consisting resume writing, interview skills and networking. Students also participate in an apprenticeship program in their chosen field, thanks to a cooperative agreement UR has with local businesses. Finally, they get a guarantee: any graduate who fails to find work in six months returns for an extra year (free of charge) to further hone their skills.

In Switzerland, youth unemployment is 2.8% (roughly a tenth of other industrialized countries), thanks to a high school program that allows them to start an apprenticeship at fifteen. The Swiss Employers’ Association helps local high schools set up their apprenticeships, which include white collar fields, such as health care, banking and IT, as well as the traditional trades.

The 2013 BBC documentary Young and Jobless is less hard hitting. Unlike the CBC documentary, it fails to emphasize the failure of the British government to acknowledge or address the problem of youth unemployment. In fact, it tends to trivialize the problem by comparing superficial snapshots of youth unemployment in different countries.

That being said, there’s an excellent segment about lawsuits American young people have filed (and won) against corporations that have exploited them via unpaid internships.

I was also intrigued by the number of countries that deal with youth employment by encouraging young people to emigrate (as we do in New Zealand). In Spain, for example, there are specific programs to assist Spanish youth in locating jobs in the UK. In contrast, Irish youth are encouraged to emigrate to Australia.

Video 3 Young, Jobless and Living at Home is a 2014 BBC documentary about the “boomerang generation,” the growing tendency of young people under thirty to move in with their parents, either because they can’t find jobs or because they can only find low paid, part time and/or temporary work that doesn’t cover their living expenses. Radio DJ Grey James follows six unemployed youth for six months.

The statistics say it all: in 2014 20% of young Brits under thirty were unemployed but twice as many (40%) were living with their parents.

photo credit: Caelie_Frampton via photopin cc

Also published in Veterans Today

Working Class Culture


Limbo: Blue-Collar Roots, White Collar Dreams

by Alfred Lubrano

Wiley (2004)

Book Review

Limbo is based on the premise that working class Americans (regardless of ethnic background) have their own distinct culture, values, language and world view. This cultural conditioning, based on early childhood experiences, provides an instinctive approach to the world that persists throughout adulthood – regardless of advanced education or changes in social status.

Lubrano coins a new word in Limbo: “straddler.” It describes a professional of working class origin, who owing to profound cultural differences, never totally fits in with middle class colleagues. As this perfectly describes me in relation to the medical profession, it’s a subject very dear to my heart.

For the most part, middle class Americans are totally unaware that working class people have their own distinct culture. Although many liberal academics and professionals happily weigh in on America’s scandalous wealth inequality, the concept of social class is much more difficult for them. They unconsciously cling to the myth that class differences have vanished in the US – that all Americans have an equal opportunity to become billionaires if they work hard enough.

America’s Loss of Class Identity

Meanwhile, thanks to a steady diet of pro-corporate propaganda, low income Americans have lost any sense of working class identity or solidarity. They, too, cling to the myth that all Americans are “middle class.” This is unsurprising, given that TV is often their sole source of information and entertainment. The average American watches an average of 5 hours of TV a day, with the heaviest viewers coming from low income households

Based on income,* more than 70% of Americans qualify as working class. Yet nearly all the characters we see in TV dramas and sitcom are unquestionably “middle class.”**  Recession-themed programming (where people are thrown out of their homes, work three jobs, wait in line at the food bank or struggle to see a doctor) are virtually unheard of. Instead we get reality TV, cooking and renovation shows, dystopian fiction with or without vampires.

The issue of working class culture received little attention until World War II, Korean and Vietnam veterans began attending university on the GI bill and Kennedy and Johnson established federal student loan programs to allow other working class Americans access to tertiary education. Kennedy’s Health Professions Student Loans program made it possible for me to attend medical school.

Despite being immensely grateful for the opportunity to attend university, the realization that we have nothing in common with our mainly middle class peers can be extremely alienating. In my own case, post graduate psychiatric training was particularly difficult. My middle class peers often complained I made them uncomfortable. They had absolutely no awareness that we dressed, thought and talked differently due to differing backgrounds. Instead they insisted I had “personality problems” and in one instanced suggested I take medication. change.

World’s of Pain

Sociologist Lillian Breslow Rubin published one of the first definitive studies of working class culture in her 1976 classic: Worlds of Pain: Life in the Working-Class Family.

Limbo differs from Worlds of Pain in being more descriptive and less scientifically oriented. Personally I prefer Limbo, which Lubrano bases on personal experience and 50 interviews with self-identified “straddlers.” I especially appreciate his effort to describe the value system that characterizes working class culture.

He starts his book with an analysis of fundamental working class values that distinguish them from the middle class:

1. A powerful work ethic (unlike the middle class, which places higher value on getting something for nothing).
2. A strong, unambivalent respect for parents that persists into adulthood.
3. Strong ties to extended family..
4. A forthright approach to interpersonal communication devoid of hidden agendas.
5. Intense personal loyalty.
6. Firm limit setting for children.
7. A preference for common sense problem solving as opposed to book learning.
8. Comfort in openly displaying affection and anger.

*Based on 60% working poor and 10-15% unemployed.

**I can count working class TV series on one hand and most are pre-1980: Jackie Gleason’s The Honeymooners, Amos and Andy, Roseanne, Cheers  All in the Family and possibly Two Broke Girls. I don’t really watch TV that much, and I’m sure people can think of others.

Is a College Degree Worth the Cost?


The Best Educated Janitors in the World

Given the $962 billion Americans owe in student loan debt, it seems reasonable to ask what a college degree buys them in employability and future income.

Not much according to a recent Online Degree feature revealing that 33,655 PhDs and 239,029 master’s degree recipients are on food stamps. American janitors are the most educated in the world, with 5,000 of them holding doctorates. According to the Bureau of Labor Statistics, approximately 1/3 of US college graduates work in jobs not requiring a bachelor’s degree.

Peter Schiff’s recent encounter with college grads in New Orleans is also extremely revealing:

photo credit: an untrained eye via photopin cc

Crossposted at Daily Censored and Veterans Today