There are many foundational subjects, issues and systems under which we operate, in our society. Many are a big part of our lives like religion but the debate as to whether capitalism or socialism work best, trumps all these debates. Why? Because money and livelihoods are involved and that determines our lifestyle, friends and well, pretty much everything we seem to enjoy and relish.
Over the centuries Socialism seems to have lost the debate and many socialists are converts today, to the great notion that capitalism works best for all, with a little socialism thrown in to keep the poor from rioting and causing a stir...About capitalism's faults.If anyone is going to have a go at telling some truths, you better be a charismatic, very smart and a great speaker.And you might get to first base.
As I wrote in a previous blog, my Irish friend Pat Quinn believes the Irish Good Friday Peace Accord was signed by the Catholics and Protestants because the EU Celtic Tiger was washing gobs and gobs of money across Ireland and the powers that be, even the bitterest of enemies said to themselves and each other; We can't fuck this up. Everyone has a good job and toys and homes, so let's all chill out and sign this God Damn Accord and get on over to the pub.
So, trying to get up the gumption to try and improve our capitalism with some new ideas, criticism, even honest criticism and the evolution of capitalism is a road few are brave enough to journey. The powers that be, are really powerful and much money is at stake. Also a lot of bumps in the rug are nasty realities swept there for a reason. This week Janet Yellen, the USA Fed Chief gave a speech which blew the doors off hinges.
She bravely told the crowd that the top 5 per cent of homes in USA have seen their wealth increase by 63 per cent of national total, while the bottom half are down to 1 per cent and fully 25 per cent of them have no wealth at all. She said that she wanted to provide a factual basis for future discussion. Further she noted that the sub prime mortgage meltdown and great recession had been disproportionally borne by the financially disadvantaged, who were and had been prey for banks and lenders who sold them homes they could not afford and promised they would always go up in value, either way.
She finished by saying the low interest rates in place spurred huge gains for the wealthy in the stock market, since the recession. Banks got bailed out but not the gullible, financially challenged middle class.
Everyone, it seems was at a loss, as to why she would go there. Maybe she is tired of the unfairness of our capitalism and knows it gonna take an FDR spirit to return the system to some semblance of fairness. The truly cynical suggested she wants to run for president. But do not the bankers and rich control that too. Taking big money out of the election system, now that's a blog of a different color.
Martin Wolf a British financial writer has a new book out this week and he says we need to evolve banks and way of doing business especially on loans and mortgages. Since the Banks would not let new checks and balances go in place to curb their predatory nature, then banks should be also responsible for some of the losses and work with homeowner when they fall behind.
Risk Management, that smarty Alec new mantra, needs to factor that loss into some of the mortgages they place. Why should they get all the benefit and hang their share of the fault they do bear, when economies falter, on the homeowner. What's good for the goose is good for the Banks too.
The only way to get big money to care, is to show them how being fair and financially fair, is to show them how it can make them money and enjoy a better image. Thanks to the rebirth of philanthropy by the Bill Gates family, Bill Clinton and Warren Buffett, it seems a lot of rich are jumping on board the giving wagon. And... They get a tax break. LOL
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