Let’s start over, the large multi-national banks were rigging the laws across the globe to allow faster and more frequent consolidation. Nearly every country on earth has fewer banks than a decade ago. The growth of the internet which should have doubled their business actually has turned out to be a more democratic and competitive market place. Democracy and competition have their place; unless you are the one who has the most.
The flow of money as it had been known which would normally allow taxes to be collected and then passed directly to the banks for them to loan back to the public at a profit was crumbling. Why pay $500 per trade if you could trade for $10? Why pay a broker at all when you can trade for yourself and pocket the fees? While they were gaining in one sector by gobbling up smaller banks and dictating political policy, market share was becoming more competitive. Fees and commissions are like store warranties on electronics and are generally 100% profit. It never cost a brokerage $1000 to buy a few shares on your behalf. They could have taken the entire internet by storm by offering discount services to the masses but they believed that the poor spend all of their money; the middle class has a little left to save and only the rich had the means and intelligence to invest. If they offered discount services then they simply would be giving back billions each year in profits. They could no longer simply buy market share through mergers. Sure Toronto dominion could link up with ameritrade but there are tons of online competitors for investing and trading. Even the well-heeled customers began to consider the cost savings in discount fees and so the major banks and brokerages late and begrudgingly rolled out their own over priced online banking services. This was not the only industry to make this mistake, we all remember napster and amazon as entertainment and retail woke up behind the eight ball and determined to turn back the clock on their greedy business model. All the major retailers allow you to purchase online except the largest - wal-mart but this holiday season will surely change this outdated attitude. The auto industry and it’s let them eat cake attitude, the media acting only as a megaphone for industry now wants me to blog on their site or twitter and facebook them. It has all changed in a a world where CNN needs facebook more than the other way around. The free blogs and news submissions are a realization that news was no longer going to be determined by a few people with a common life experience. The thought now is that what started with the banks has spread to retail and media among others but the truth is the banks are only the most recent to have to deal with the new reality. They were able to determine who became middle class or rich, whether cars would stay old tech or if new tech could gain their favor and that the media conglomerates would be the captains of information. Why would the retailers, media and industry change, they were the ones with the most access to credit and credit has long replaced merit. Merit says that there were people who developed ideas for flying cars decades ago; Credit says that they never got the financing to get off the ground ( get it? Off the ground, flying cars!!!…never mind). Credit allowed white factory workers to get $200k to buy a home in the suburbs and only allowed his black foreman $110k to find a home in the city because that’s all the homes cost where they thought he SHOULD live. The banks were not interested in giving him access to homes in places they didn’t feel he belonged. Banks used credit to steer people into the communities DESPITE merit. This example is often cited and always shows up in government testing, Despite the persistent dogma to the contrary. In case you haven’t noticed what this normally causes to happen is in any “intergrated” middle or upper-class community the non-white is 1-3 classes above their white neighbors. Black doctors can get the credit to live next to white roofing contractors, when he parks his top of the line audi in the drive way all he can see is a sea of contractor vans and trucks and modest home vehicles. The real kicker is that all the whispers are about how he is the one bringing the value down and how could he get the money to afford one of the homes. This is not an attempt to elicit “white guilt” which seems to be an oxymoron at best but to set the premise for offering a solution for this horrific quagmire we find ourselves in.
The banks stunted innovation and used credit to skew merit and so the public much the same as industry began to believe their own press. That merit must be color coded, the car companies that had the most money, have the best cars. The brokerages with the most market share and locations offered the best service. What separated you from the poor people in the social underbelly was your willingness to work hard. Well it’s time to wake up!! Now no one can stand now that the king making banks are closing off the lines of credit and hoarding all the money. The best part is that they simply changed the standards arbitrarily, until now you didn’t know it was arbitrary and really didn’t care as long as you were chosen. Now hard work isn’t enough, size of the company isn’t enough as the spicket to all your advantages is turned off. All of a sudden companies that have been around forever off of “merit” don’t seem able to survive solely based on the quality of their business. So car companies are told to sell cars if they need money and they can’t imagine trying to survive like that and no one will “buy” the cars. The problem is most people never buy cars, the banks told them they had enough “merit” to deserve the credit to access the car they wanted in exchange for interest payments to allow the bank to profit. Most people did not save and write a check for their home, car, clothing and furnishings and most people who did; don’t really have anything that anyone would envy.
So to reverse engineer the problem will help in understanding the solution. When this most recent symptom arose the solutions were idiotic at best because they were based on this credit = merit myth. I ran out and immediately said if the underlining assets are mortgages then the efforts should be focused on keeping the home “owners” in place. What everyone else decided from the blog sites to governments was that the people who were suffering with these predatory loans were not victims. In the twisted warped reality stoked by the media was a version where the banks were the victims of bad underserving people trying to game the system. The banks were also the victim of governments requiring private organizations that receive public funds from everyone treat everyone the same. What a ridiculous idea that people who pay in their money be considered for having it LOANED back to them. The banks pumped that version through the central banks to the governments and media to the public and received trillions in infusions as everyone spurned the homeowners. A year later the western governments and public found that they had once again been successful in keeping homeownership out of the hands of hardworking deserving people but everything was worse. How could this be? Didn’t we just sacrifice all of these families on the alter of the banks to save ourselves? Yes, but the banks demand more sacrifice, the terms are now give the banks more and more money and power while they throw more families and business into the sacrificial pit. Finally everyone woke up and realized that no one or nothing was immune, things keep getting worse and worse while the banks continue to demand more and more. It’s your fault, the media, government and public told them that they were “too big to fail” no sacrifice was too big, saving corrupt titans was paramount to all things. The answer is still what it was a year ago; start at the BOTTOM and work your way UP. Create public jobs and finance homes of the workers. Double welfare and social assistance checks to stimulate consumption. Issue massive government grants to business and start-ups. Ignore the conservatives, there is not a single one alive who doesn’t owe his station in life to these solutions being put into place after the depression and world war. Americans conservatives who owe their class to the G.I. bill and the new deal or Europe which would be living in the stone age without the marshall plan. I have no respect for people who want to burn the ladder once they climb up. Massive government iniatives were the foundation of modern prosperity, all rigged faux merit systems bring is bursting bubbles. If you prefer faux merit and bursting wealth bubbles to real merit then you are going to find yourself isolated as a selfish throwback to a failed dogma. This ruin that we are all suffering in is the direct result and so the proponents of this failed state will now spend their time as the voiceless and disenfranchised but at least they earned stigma; finally merit at work.