Food for Thought: What's in Your Wallet?

"Baking the news cake" for palatable reception and consumption is an art form perfected for specific markets, based on the cultural and educational profile of the local, national or even international consumer. CNN, CNBC , NBC and Fox News are little more than propaganda organisations serving up a daily "McNews" for the generally poorly read and travelled, culturally naïve, and generally poorly educated US consumer, on the basis that those who eat junk, drink junk, read junk, watch junk and listen to junk deserve, well... just more junk? Mr. Hitler and Dr Goebbels would have been heartily jealous of such a malleable and docile, if not to say almost bovine populace, who could readily absorb such shallow rubbish and believe it all! Unfortunately, the insidious US style media is polluting the planet in the global attempt to produce a "dumbed down", ignorant, poorly educated and malleable global serfdom, hooked on trashy TV and video entertainments and other such puerile nonsense, and moreover, up to their necks in debt and easy credit. Again, one is led to ask why? Aren't we living in the enlightened 21st Century?..... or, are we regressing to type, as demonstrated over thousands of years of human suffering at the hands of our own dubious species?

For the average person in the US, Canada, Britain, Japan, Australia and New Zealand, not to mention much of the European Community, the quality of life is steadily declining amidst the illusion of paper wealth represented by assets such as houses, bonds and stocks. Since 1982, the money supply has been progressively pumped up at an ever expanding rate, whilst real earnings have been in steady decline, under steady erosion through real inflation as opposed to the statistically incorrect CPI as corrupted by manipulative "jiggery pokery" by successive governments.

The prime instrument in this global economic game has been one fundamental to the lives of everyone; i.e., the house you live in. Unless the householder is rich enough to afford to own two or more houses, which most are not, then the paper gain in the steadily, but rapidly rising, price of his home can only be realized if he sells his home and move into a lesser house in the same area, or, one of similar quality and size in a less attractive or sought after location. Most people do not like moving home for obvious reasons. Therefore, the only benefit one gains from ever rising house prices, and property prices in general, is if one can use some of the increased equity in ones home to finance other consumption needs, such as: education; cars; consumer durables; holidays; home improvements and non-essential luxuries such as speed boats and jet skis. As many writers have pointed out, a home is a source of finance amidst falling real earnings, a veritable private bank ATM to be tapped into as deemed necessary. This happy little arrangement has been facilitated and expanded by an increasingly lax and accommodative banking environment, which seems almost disinterested in whether one can ever repay ones debts in the face of unemployment or illness. Again, it is necessary to ask why this is being allowed to happen? And, furthermore, why does it fly in the face of prudent money lending, as deemed sensible practice, since the creation of the banking system. Why have supposedly responsible governments allowed it to happen without imposing regulations to protect the consumer from himself and for himself?

In the event of a collapse in the heretofore ever rising housing market, often at a factor of 3 to 5 times the increase in average earnings over a sustained period of nearly 20 years, one's house becomes a "financial lobster pot". Given the low equity in most new home purchases, in a collapsing market the mortgagee is little more than a tenant, albeit with a thumping great paper debt to pay off over the rest of his or her miserable life. In other words, modern society has reverted to one of Baronial serfdom reminiscent of 11th Century Europe at its impersonal worst. Genuine democracy and freedom has vanished in that other great illusion - so called Democracy. The biggest fear a family man will hold is losing his job. What a pernicious instrument of societal control the home has become. It's a corporate shareholders dream come true. Like a dead albatross slung around the neck of "the ancient mariner", as he thinks: "how I wish I had never bought this house!", and, how I wished that I had saved for what I have purchased and that it really did belong to me. The deep evil of credit, whose use appeals to man's darkest and bleakest being, as an instrument of acquisition, exploitation and control, will be brought home to the unthinking US, UK, Australian, and Canadian consumer like his very worst nightmares. As Yoda says to Luke Skywalker in the "Empire Strikes Back", "you're not scared? .....You soon will be! Oh yes! You soon will be!"

The downside of the exploding property market is immense and highly insidious. The vast inflation of property prices has served to bring about the following:

Distort the cost structure of the entire economy through increased "on costs" of mortgages, rentals and leases, which are recovered through higher charges on all goods and services;

Inflated house prices push homes into higher tax thresholds including: sales tax, stamp duties, council or local authority taxes and capital gains tax resulting in increased costs of living;

The increased purchase price, and lower equity downpayment in homes for most buyers, requires them to take out ARM's (adjustable rate mortgages) rather than fixed rate mortgages. This increases the lender's exposure to financial risks in an environment of rising interest rates, when unemployment and job loss risks increase. Furthermore, most mortgages issued in ARM contracts are junk status loans, backed by derivatives, with little or no financial due diligence performed by the lender on the debtor;

Further distortions due to high and rising house prices mean that vital labour mobility is restricted throughout the economy as lower wage earners, in important sectors of the economy, cannot afford to take out a loan or move from a location of low house prices to one of high prices. Such key labour includes: teachers, medical staff, police, firemen, and drivers of public transport vehicles;

Large mortgages, or home loans, come with a deep psychological load on the mind of the mortgagee or borrower. The thought that you have a mountainous debt overhanging your daily life effectively dominates your life whether you like to admit it or not. The fear of losing ones job, becoming ill, or having an accident, where you cannot pay your monthly bill, resulting in your family being made homeless is a socially destructive and degenerative influence, colouring a person's outlook on life and their entire social behaviour. The net result is greater mental stress and physical illness, increased crime, drug and drinking offences. In some, and by no means rare, cases, suicide results.

full