Category Archives: debt

Privatized Austerity: Why Silence=Debt

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The new report on debt from the Federal Reserve Bank of New York presents the case for a decline in household debt. Which is true, if you exclude bankruptcy, foreclosure, and student debt all of which are up. And forget trying to get a new mortgage at those nice low rates you hear about: the banks aren’t lending at all. What we’ve got here is a privatized austerity that’s affecting individual lives every bit as much as its nation-state implemented partner in Europe. In this privatized form, debt-driven austerity presents less of a political target. Silence=Debt. Which is why we strike debt.

Let’s look at the Fed’s own numbers. With student loans, the news is all bad, explaining in part why, of all debt topics, attention continues to be centered on student loans:

• Outstanding educational debt stood at $914 billion as of June 30, 2012 [previous Fed figures had it at $870 bn]

• Since the peak in household debt in 2008Q3, student loan debt has increased by $303 billion, while other forms of debt fell a combined $1.6 trillion.

• Student loan delinquency rates increased for the second consecutive quarter; The percent of student loan balances 90 or more days delinquent increased to 8.9% from 8.7% during the second quarter of 2012.

Note that the delinquency rate here is across all student loans, including those currently in deferral. The Fed itself has reported that 27% of loans not in deferral are in some stage of default. The increase in student debt is a direct consequence of the impossibility of declaring bankruptcy or defaulting on these loans.

So we need to be careful about the assumption that the numerical decline in bank reported debt means that people’s situations are improving. To the contrary, as bankruptcy and default increase, banks move debt off their balance sheets, making their situation appear better. For the debtor, the situation is in fact worse.

Here we can see that more people are being pursued by debt collectors for larger sums than ever:

This chart suggests that about 14% of consumers are in collection and the amounts are climbing steeply to an average of $1550.

As we might expect from this, bankruptcies are up, while foreclosures are running back at 2011 rates, despite the 5 million people who have already lost their homes

So how can total household debt be lower? Here’s the giveaway detail. Foreclosures and bankruptcies allow banks to remove that debt from their balance sheets. The people concerned are now invisible, statistically unaccountable and therefore (it is hoped), politically neutralized. Here’s the Fed’s visualization of that for mortages:

The red section of the bars refers to “charge-offs” meaning defaulted or foreclosed loans. The more these increase, the lower total mortgage debt becomes as you can see here, as represented by the black line.

Notice also that the blue bars depict new loans and mortgages that are actually paid off by the homeowners. This number has now declined to irrelevance. If we assume that some folks are in the course of time managing to pay off their 30-year loans, then the amount of new mortgage lending is very low indeed. That would accord with the anecdotal sense that, despite notionally low interest rates, mortgages are now impossible to get. The federal funds set aside to help underwater mortgage-holders have been little used, not because people don’t want them, but because banks put so many obstacles in the way of refinancing.

Unlike European austerity that is visibly punishing the 99% to recoup the excesses of the one per cent, this silent austerity has come with relatively little political consequence. A Wall Streeter whose entire enterprise rests on forcing companies into debt and then cashing out, leaving them to pay off the debt, is at 50% for the presidency. He’s only doing to companies what the banks are doing to all of us.

Strike back. Strike Debt Assembly at 1.30, followed by Life After Debt: A Gathering of Debt Refusal at 4pm, this Sunday in East River State Park in Williamsburg.

Five Theses on Debt

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From Tidal for S17 by Strike Debt:

STRIKE DEBT/DEBT STRIKE/DEBT
WHEN WE STRIKE DEBT. WHY WE DEBT STRIKE. HOW TO MAKE DEBT:

We must remake our failed economic system that impoverishes millions while destroying the ecosystem. Using a diversity of tactics that includes a Rolling Jubilee, a People’s Bailout, and vigorous organizing towards a debt strike, Strike Debt seeks to abolish debt and reconstruct a just society where our debts and bonds are to one another and not the 1%.

When you strike debt, know that:

1. You are not a loan.


Debt is not personal, it is political. The debt system molds us as isolated, scared and subjugated, unwilling to consider going public for fear of the all-powerful credit ratings. There is a reason so many people speak of debt as slavery. Slavery was social death. So is debt. It makes us ashamed. We have to sell our time, our souls, working jobs we don’t care about simply so we can pay interest to the bank. Now that debt is so rampant, many of us are ashamed for putting others in debt. Our professions from teacher to lawyer and physician have become means to direct more victims to the loan sharks. So perhaps above all, we strike the fear, refuse the shame, end the isolation. When we strike debt, we are giving ourselves permission to be more than a set of numbers. In a sense, we create the possibility of an imagination. We are not abdicating our responsibility, we are exercising our innate right to refuse the unjust.

2. We live in a debt society, buttressed and secured by the debt-prison system.


$1 trillion of student debt. 64% of all bankruptcies caused by medical debt. 5 million homes foreclosed already, another 5 million in default or foreclosure. Credit card debt is $800 billion, generating an average 16.24% interest on money banks borrow at 3.25%. Permanent indebtedness is the pre-eminent characteristic of modern American life. Keeping all this in check is the peculiarly U.S.- specific apparatus, in which mass incarceration, racialized segregation and debt servitude are mutually reinforcing. The choice is stark: debt or jail. With 2 million in prison, seven million involved in the “correctional” system in various ways and sub-prime loans and other predatory credit schemes targeted at people of color, this is a system designed to disenfranchise and exclude.

3. There’s A Debt Strike Going On


There is something happening in our debt society right now. 27% of student loans are in default. 10% of credit card debt has been written off as irrecoverable. Foreclosures and mortgage default are rampant. People are walking away from debt. These actions take place driven by necessity, by desperation but also by something else. What do we call this? We could call it refusal. We could also call it a debt strike. In this time of high unemployment, battered trade unions, and job insecurity, we may not be able to signal our discontent by not going to work, but we can refuse to pay. Alongside the labor movement, a debtors movement. For those who can’t strike, we propose a Rolling Jubilee in which we buy debt in default, widely resold online for pennies on the dollar: and then abolish it. It will be funded by the People’s Bailout, and other forms of mutual aid that will prefigure alternatives to the debt society.

4. When we strike debt, we live a life rather than repay a loan.

We refuse to mortgage our lives. We reject the math that debt forces on us; math that says we cannot “afford” to care for our communities because we must “pay back” the banks forever, above and beyond what was borrowed. We question the dominance of the market in every aspect of social and cultural life. We abolish the trajectory of a life that begins with the assumption of debt before birth, and ends with a post-mortem settlement of accounts. This is financial terrorism. We intend to reconstruct a social world in which we see each other as people, recognize our differences, and acknowledge that the chimera of permanent economic growth cannot outstrip actual ecological resources.

5. We claim the necessity of debt abolition and reconstruction.


Abolishing debt is held to be an impossible demand. “Debt must be repaid!” Unless you are a corporation, bank, financial services company, or sovereign nation. We understand that debt is at the heart of financial capitalism and that the system is rigged to benefit those at the top. The question is not whether debt will be abolished but what debt will be abolished. The banks, the nation-states and the multinationals have seen their debts “restructured,” meaning paid off by the people, who now have to keep paying more. The debts of the people in whose name these actions were undertaken should also be abolished. Then we can begin reconstruction, transforming the circumstances that create the destructive spiral of permanent personal debt. Right now we must borrow to secure basic goods that should be provided for all: housing, education, health care, and security in old age. Meanwhile, around the world, debt is used to justify the cutting of these very services. We understand that government debt is nothing like personal debt. The problem is not that our cities and countries are broke but that public wealth is being hoarded. We need a new social contract that puts of public wealth to equitable use and enshrines the right to live based around mutual aid, not structured around lifelong personal debt.

 

 

Dis/Occupy the Olympics

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Oscar Pistorius runs in his Olympic 400 metres heat

The orgy of nationalism and sentimentality known as the Olympics has been very much not in my mind. The notoriously awful NBC coverage reduces excitement to boredom–they even showed ads during the middle distance races. There was a moment today, though, for those of us dis/abled or otherwise differently embodied folks, when Oscar Pistorius of South Africa ran in a 400 metres heat. As most people surely know, Pistorius is a double amputee and runs on J-blades. He not only participated but finished second, putting him in the semi-finals.

His charming pleasure in this accomplishment contrasted with the usual Gold! obsession of the Anglophone media. It reminds me that different modes of embodiment  and body presentation continue to have to struggle for acceptance. One of the aspects of the Occupy movement that I love is its attachment and embrace of all forms of self-actualization. Pistorius’s lesson for us is that it’s not just an end to medical debt that we call for: we want everyone to be able to get what they need, whether that’s a signing school for the Deaf, gender reassignment surgery, prosthetics, insulin, whatever: regardless of income.

Pistorius has had to compete not only against his fellow athletes but the extraordinary assumption that running on prostheses might somehow be an advantage. The myth of the Terminator cyborg is perhaps to blame here. Vivian Sobchack long ago dismissed the enhancement fantasy from her own experience with a prosthetic limb. Pistorius himself put it like this:

I think often there’s a lot of debate about the advantages, but there’s not much said about the disadvantages. If this was such an amazing piece of equipment that’s been around for 14 years, then how come thousands of other Paralympic athletes aren’t breaking world records and challenging even a 45- or a 48- or a 49-second 400m?

Here then is the crux: in common with people of color, women and people of non-normative sexualities, the dis/abled are both assumed to be inferior but suspect for any effort that is made to make them/us equal. Pistorius cannot simply be a good runner who lacks lower limbs. He must be a “crippled” runner made into a superhero by his device.

I’m deaf, or technically hard-of-hearing because I can decipher sound using lip-reading and an electronic device. Being deaf is still assumed to be a personal failing by mainstream normative culture, who celebrate the occasional exception like the fabulous Marlee Matlin, but presume deafness to indicate stupidity as a rule.

Marlee Matlin in The L-Word

Consequently, the 50 million people with hearing loss in this country are a totally ineffective lobby because we are unwilling to identify ourselves. Signing Deaf people, who defend Deaf culture vigorously, are the exception we should learn from.

For example, an odd editorial in the New York Times presented hard-of-hearing people yesterday as being at a disadvantage in noisy spaces because their devices amplify all noise, making it unbearably loud. This was true for analog hearing aids, but digital devices all use a compression curve and most that cost as much those the article cited (about $3000) will have a setting for noisy spaces that eliminates background noise. So I find myself at an advantage compared to my “hearing” middle-aged friends in such spaces.

The issue here is in fact one of insurance. If you have good insurance, as I do through New York State (thanks to my partner Kathleen), devices are covered. If not, you have to pay for them, and for hearing tests, and they are very expensive. So although hearing is considered the indispensable attribute of the human, because of music and spoken language, hearing aids are part only of what is known sneeringly as “Cadillac” plans. All politicians now agree such luxuries must be dispensed with. Prosthetic devices like those used by Pistorius and myself will be for those who can afford them. Some have disparaged Occupy as being “medieval” but what could be more medieval than that? Free universal health care is not a demand. It’s a right.

 

Disappearing Like Ice: The Middle Class

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The artists Ligorano and Reese have made a new ice sculpture project to confront delegates at the Democratic and Republican conventions. About 2000 pounds of ice will be carved to read: MIDDLE CLASS. Over the course of the next twenty-four hours, it will melt away, leaving only memories. It’s a combination of earth, language and performance art, creating a striking hybrid. For whereas land and environmental art has tended to create permanent forms out of rock, earth and water, this piece is time-based, like performance. In the tradition of language work, it relies for its impact on the material form of language but here the words are transitory and ephemeral, like conversation rather than print.

One of the oddities of the United States to an outsider is the insistence that there is no such thing as class here, only a “middle class” that covers almost everyone. Any attempt to point out that government policy over the past three decades has enormously benefited the wealthiest, those now known as the one percent, is nonetheless immediately described as class war.

There is a way to make sense of the “middle class.” We might describe it as the assemblage of all those people able to improve their lives by debt financing. That would extend from the lowly store credit card via student loans to the mortgages that made the “American dream” of home ownership possible. Excluded from the debt middle class would be those at the bottom unable to qualify for credit, except at places like Pay Day loan sharks or pawn shops. At the top, there are those who use debt to make more money, whose personal well-being is not at risk.

As we all know, this middle class is indeed in dire danger. Student loans now total an absurd $1 trillion, while outstanding credit card debt is not far behind at $800 billion. As secured loans, mortgages were supposed to be the smartest investment a person could make. Today, some ten million homes have been foreclosed or are in the process of foreclosure. So what would be left of “America” if the middle class disappeared, as Ligorano and Reese suggest? The melting will leave us drowning in debt.

The disappearing ice sheet in Greenland NB this is surface melt, not total melting

Melting ice is of course also suggestive of the palpably accelerated pace of human-caused climate change. This Northern summer has seen unprecedented ice melt across the Arctic and Greenland, prompting only an unsightly squabble among nation states as to who gets the mineral rights to the newly exposed land and sea bed. Neither political party has anything of substance to say about the planetary disaster, for fear of alienating Big Oil. Perhaps the very melting of the art work recognizes that its message will not be seen, let alone heard.

Let’s propose an alternative ending: the melted water should be collected, refrozen and carved to read: “We Are The 99%. S17. Join us.”

 

What’s (Higher) Education For, Anyway?

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Another day, another rash of student debt horror stories. At the end of this op-ed, another suicide in which student debt was a key factor. NYU, where I teach, recently received permission from New York City Council to begin a massive expansion that will cost over $4 billion by most estimates. Although no budget has been published, 60% of this cost is estimated to be coming from student tuition, which is to say, debt. It’s time to start countervisualizing against the debt factory.

US universities were built up as bulwarks of knowledge and propaganda during the Cold War. After the Soviet Union launched Sputnik, the first satellite, in 1957, this effort moved into high gear. It was widely held that “It is upon education that the fate of our way of life depends,” to quote one widely discussed essay of that time.

The G.I. Bill brought huge numbers of veterans into the university system. Some 50% of University of California students in the 1950s were veterans. Think tanks produced endless papers like Higher Education for American Democracy (meaning as opposed to Soviet Communism). All this culminated in the National Defense Education Act of 1958, which stated:

an educational emergency exists and requires action by the federal government. Assistance will come from Washington to help develop as rapidly as possible those skills essential to the national security.

All this is simply to say that we should not be attempting to restore this lost university of the military-industrial complex but instead seeking to abolish the debt-financed university and reconstruct another form of higher education.

This university will not be skills-based in the sense of vocational training. Even by the logic of capitalism, this doesn’t work. For example, when I was undergrad director in the Art department, I had a stream of students wanting to know how to become animators. The answer was simple: acquire good traditional art practice in a four-year degree. The studios want people who know what they’re doing visually but they train them in software, which changes too fast for universities to keep up.

Looking towards a possible future in which we don’t live to work, and we don’t work to repay loans, we would do well to think about how to inculcate a breadth of historical, cultural, critical and scientific vision as part of learning. Current university practice encourages and rewards intense specification, producing humanities scholarship that is so tightly focused that even other humanities faculty don’t read it, let alone assign it to students. Scientific journals come “bundled” so that the majority no-one wants to read have to be subscribed to as well as the few popular ones.

If the global social movements should have taught us anything, it is the need for a shared and extended understanding. Learning takes place best in non-hierarchical small groups and having so-called “smart” classrooms full of technology may be as much an impediment to that learning as a help. At the same time, there’s a place for the large audience teach-in (lecture) because, of course, some people know more than others. The question is always how to enable the learner to make use of that knowledge for themselves.

All this is the fine print. The real question is still the one that panicked people in 1957: what future do we want to make? David Graeber has recently lamented the collapse of the Jetsons/Star Trek vision of the future. Bifo has published a book called After the Future that takes the Sex Pistols’s mantra “No Future” as a diagnosis.

Perhaps we need to go back to the future. In the Central and Western Pacific, there has been a resurgence of traditional navigation, using the stars and waves to set a course, in handmade boats. Voyages of 1500 miles are routine.

The Canoe House, Guam

The people who sail and steer these boats take a considerable personal pride in the accomplishment, as well they should. It also offers a sustainable and zero-emission means of transport. In islands where climate-changed sea-level rise is already a daily reality, this is not just anachronism, it offers ways to resolve how to continue island life. It’s the direct opposite of the jet-pack vision and it’s not practical for everyone of course. Nor did the Sputnik lead to a viable space-flight system, it now turns out.

I don’t mean that we should all start teaching canoes or canoeing, although there is a great course at Michigan like that. I think we need to start deciding what kind of future we can imagine, what kind of future we want and how we might get there from here. A learning practice that embraced that kind of countervisuality to the military-industrial complex might even be worth working for.

The Debt Vultures

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From three corners of the debt square–education, housing and health–come stories to answer two repeated questions about Strike Debt: is this the right theme for OWS? And is this in any way different to standard issue capitalism? In short, yes and yes. And I think they might serve as an answer as to what to call predatory debt: I’m going for vulture debt. Because a group of vultures is known as a committee (true).

First, education. Student debt has been questioned by some as an elitist preoccupation or as too easily eliding with right-wing attacks on higher education. Today, a US Senate report of all things exposes for-profit higher education institutions, so beloved by the right-wing, as predatory loan garnishing machines. They exist solely to generate money with instruction as an afterthought:

Among the 30 companies, an average of 22.4 percent of revenue went to marketing and recruiting, 19.4 percent to profits and 17.7 percent to instruction. Their chief executive officers were paid an average of $7.3 million

80% of their revenues come from Federal grants on average. Here’s one specific example of why this is vulture debt:

The Apollo Group, which operates the University of Phoenix, the largest for-profit college, got $1.2 billion in Pell grants in 2010-11, up from $24 million a decade earlier. Apollo got $210 million more in benefits under the Post-9/11 G.I. Bill. And yet two-thirds of Apollo’s associate-degree students leave before earning their degree.

The more you read, the worse it gets. These “colleges” are more expensive than not-for-profit institutions, yet graduate far fewer of their students. In terms of debt:

Students at for-profit colleges make up 13 percent of the nation’s college enrollment, but account for about 47 percent of the defaults on loans. About 96 percent of students at for-profit schools take out loans, compared with about 13 percent at community colleges and 48 percent at four-year public universities.

These institutions are the right-wing solution to higher education: supposedly vocationally-oriented market-driven education, rather than the supposedly wasteful liberal arts schools. They are nothing but debt vultures.

Housing. I noted recently that student debt is getting noticeably worse for older people. Now it seems that foreclosures are biting the over-50s hard:

one and a half million Americans over the age of 50… lost their houses to foreclosure between 2007 and 2011. Of those, the highest foreclosure rate was for homeowners over 75.

In this report from the AARP it emerges that these are prime loans, not the marginal sub-primes so often discussed. Seniors are being affected by declining pensions, collapsed property values, rising medical costs, shrinking investment values and (although not mentioned in the report) the need to support children and grand-children. People who have been making payments since the 1960s are now being evicted. Whose interest does this really serve? How much is enough? For a vulture, that question makes no sense.

Finally, and most repellent, medical debt. Please don’t be eating while you read this. The major medical debt collector Accretive has been banned from Minnesota and fined $2.5 million. Why? Well, it did things like this:

Carol Wall, a 53-year-old Minnesota resident, said “a woman with a computer cart” told her she owed $300 as she was “vaginally hemorrhaging large amounts of blood” at an Accretive-affiliated emergency room.

The repellent company has issued the usual generic statement claiming such cases were  exceptions, and so on, and so on. Even the New York Times didn’t buy that:

Accretive Health contracts with some of the largest hospital systems in the country to help them recoup money on unpaid bills that have piled up during the financial crisis and the economic downturn.

In other words, this is how medical debt works: the system knows people can’t pay and has a mechanism to deal with it. Here the debt vultures are literally preying on the weak, requiring patients to pay before they can even see doctors, against all rules and regulations.

So: is debt a proper subject for OWS? I’d say that predatory, criminal enterprises that place profit before people and are fundamentally incapable of saying “enough is enough” are the prime target of Occupy. Further, the unique quality of the movement is to bring together issues that are deliberately kept apart so that we can see how things really are. The minor “fixes” that pass for policy from the political parties are helping almost nobody–this is statistically as well as morally true. From student debt to housing and medical debt, the debt vultures have shown that this is a fight to the death. Only social movements like Occupy can help.

Is this a different form of capitalism? Technically, the switch to debt as the dominant aspect of the money form is different. Certainly, rapacious capitalism is far from new, as a quick glance at Engels’s 1845 classic The Condition of the Working Class in England will show. However, the present delusions about the virtues of the rich have become so attenuated that it is considered daring  to suggest that government or society have any role in wealth creation whatsoever. The idea that government should mitigate the impoverishing effects of capitalism for any except the capitalists themselves is now “socialism.” When neo-liberalism emerged, Stuart Hall and others called it “Thatcherism” and were widely castigated for saying that capitalism had changed. But it had. And it continues to do so.

Debt servitude is predatory and relentless. It has shifted the target of neo-liberal expropriation from Heavily Indebted Poor Countries to Heavily Indebted Poor People. Fanon suggested that fascism was the application of colonial techniques to colonizing nations. We can say today that neo-liberalism is the application of neo-colonial techniques to all populations. No longer is there a “wages of colonization” (to adapt Du Bois’s concept of the “wages of whiteness”) in which being a citizen of the neo-colonial powers protects you. We are all targets now.

Certain scavenger species can eat themselves to death, unable to stop. The debt vultures are one such species. We have to stop them before it’s too late.

 

Simple Lessons for S17

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In academia, we are discouraged from taking a straightforward view. Perhaps the most popular academic words are “complex,” “complicated” and “more” when attached to one of the first two. The financial crisis does, however, strike me as straightforward: the blatant crimes of the banks culminated three decades of wealth transfer from poorer to richer. As the anniversary of Occupy Wall Street approaches, this should not be forgotten or set aside.

This point was brought home by seeing some charts produced by the Federal Reserve and published on the Business Insider blog. Here to begin with is a chart showing the value of wages in relation to gross domestic product.

Wages expressed as gross domestic product

It’s easy to see that since the 1973 oil crisis in general, and the beginning of  Reaganomics in 1980 in particular, wages have steadily declined until falling off the cliff in 2008, from which there has been no recovery. Unsurprisingly, therefore personal debt has risen in accordance.

Household debt

In 1973, household debt was negligible. It is now over $14 billion. The apparent slight improvement since 2008 is the effect of record numbers of bankruptcies, foreclosures and credit card write-offs. Corporate and government debt rose in parallel. The consequence can be seen below, where debt is the red line and gross domestic product is the blue line.

Clearly, this is not sustainable: or so you would think. Government has concentrated primarily on reducing its own debt, a largely meaningless affair except insofar as it further impoverishes those dependent on state support or using state-financed health care. Isn’t there a problem with financing all this state debt? Actually, as far as the U. S. goes, no, not at all. Liberal Paul Krugman points out the obvious in today’s Times, namely that markets are

buying government debt, even at very low returns, for lack of alternatives. Moreover, by making money available so cheaply, they are in effect begging governments to issue more debt.

Some U. S. government debt is so cheap, it actually costs investors money to get it.

So it’s clear that you could, if you wanted, do many creative and interesting things with what is in effect free money, like abolish personal debt. If you want to see why this isn’t happening, then look at this chart showing corporate profits:

Corporate profits

After a nasty hiccup in 2008, profits are roaring above all post-war levels, with only the Cold War boom even coming close and then only very briefly. This level of return is very desirable for those we have called the one percent and they are willing to do anything to defend it.

And yet, even this wasn’t enough for them. At Barclay’s Bank, center of the LIBOR scandal, yet more criminal activity has been uncovered. Jerry del Missier, the former Chief Operating Officer of the bank during all this crime has even been handed a $13.6 million  farewell package.

The activism is about changing the way that we imagine ourselves in relation to debt. It means embracing government borrowing at historically low levels to relaunch the economic lives of the 99%–and then making sure neo-liberalism can’t happen again. The outrage, the anger and the sadness comes from the astonishingly brazen theft by corporations and banks for which no-one has yet even shown remorse, let alone be punished.

On September 17, and for the years after it, let’s show that we haven’t forgotten these simple lessons.

 

Land, Debt, Food

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Reading the “Land Grab” and “Combatting Monsanto” reports by La Via Campesina shows that the issues of land, debt and food are intimately interwoven. Speculative capital has moved into land, food and climate change offsets as a new market since the collapse of debt-based securities in 2008. The global land-grab now underway is enabled in part by getting peasant farmers so into debt that their only option is to sell or self-kill.

I’ve discussed how the dramatic expansion of the Commodities Futures Index after the 2008 crash led to an inflation of food prices. In turn, many believe that the Arab Spring received a decisive impetus from this deterioration of living standards among the poorest. The land, debt and food crisis may–indeed, should–provide another turn of that screw.

Land grabbing resembles both colonization and the formation of plantations. What’s new is both the scale of the preset movement and the multinational origin of the speculators. A 2012 report by The Land Matrix shows that since 2008, some 82 million hectares of land–1.7% of the world’s agricultural space– have been “granted” or otherwise obtained in developing countries by such enterprises. Data and ownership trails are difficult to establish, it should be noted, so some estimates are much higher.

La Via Campesina rejects all these legal niceties and calls them all land grabs. Governments and multinational corporations are involved, including nations from the global South like the West African Economic and Monetary Union. There are cases like Mauritius, trying to secure land in the event that sea-level rise renders their nation uninhabitable:

Therefore it is not always a question of countries of the North buying land from countries of the South. However, it is always a question of industrial agriculture replacing sustainable family farming.

 

Palm oil plantations in Bajo Aguan

For example, in the Honduran region of Bajo Aguán, peasants were compelled to grow palm oil for biofuels and then found their land subject to enclosure by the leading landowners in what is called “land counter-reform.” There are widespread reports of human rights abuses, including fifty deaths.

In Asia, debt is the primary weapon against landowners. As public services are privatized, peasants and family farmers are compeled to borrow to pay water and electricity bills, or even health care. Micro-credit provided by institutions such as the Banque de promotion agricole in Laos have no provision for crop failure or other accident. Money lenders move in, and soon the land is lost. In India, the epidemic of farmer suicide is so intense, it’s almost hard to believe: over a quarter of a million farmers have self-killed, often by consuming the pesticides given to them for use with the Bt cotton (designed to be resistant to pesticide for bollworm). Official figures underreport, not least because women are not considered to be farmers.

Ironically, land is being taken from peasant and indigenous farmers in the name of climate change mitigation. In Indonesia, Thailand, Cambodia and India, forest is being assigned as REDD (Reducing Emission from Deforestation and Forest Degradation).

In Africa, subject to the worst of all these practices, there are 80 million small-scale farmers most of whom are women. Land grabs are also seen in Europe, particularly in Eastern Europe and the former Soviet Union.

Programs to defend small-scale farming have been defeated by “developed” nation resistance, such as the 2006 Declaration of the International Conference on Agrarian Reform. The World Bank’s “Responsible Agricultural Investment” program is a charade in which legal titles are invented for land that was never held in that fashion and then “sold” or transferred to multinationals.

Several important considerations arise from the report, as Jun Borras notes in his conclusion:

  • climate-change mitigation, biofuels and food needs are being used to justify the land grab
  • Traditional imperial centres are involved but so are the BRIC nations and even middle income countries creating a “polycentric agro-feed-fuel regime.”
  • Given this polycentrism, four movements need to work together: agrarian justice, environmental justice, labor and food movements.

We certainly need a new geo-imaginary adequate to this. More than that, even, we need a new democracy. I think that only direct democracy can (or might be able to) solve this kind of intense nexus of activist interest, political power and financial speculation. NGOs, the UN and the nation states have all tried and failed. Ironically, it may only be the prospect of major financial collapse, such as that now emerging from Europe, that gives us the opportunity. We need to be ready.

 

Student Debt: Confused? You won’t be, after this episode.

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No wonder people get confused about student debt: a new Federal Reserve report shows student debt worsening. A group of universities jump into spending small fortunes creating Massively Open Online Courses (MOOC), which are free. The New York City Council clears the way for NYU to build a $4-6 billion expansion, financed entirely by debt. Confused? You won’t be after this episode.

Soap!

First, the Fed, who are doing a good job of trying to alert lawmakers to the personal debt crisis, not that anyone is paying attention. They use a somewhat different and conservative methodology to arrive at a total amount of student debt but nonetheless their figures show a rise of $30 billion in the last quarter to $902 billion. So student debt is rising at nearly $100 billion a year. Average student debt is now over $24,000. There are over 37 million people with student debt.

What’s freaking out folks at places like the Wall Street Journal is that it turns out that this debt doesn’t go away. 5 million of the endebted are in their 50s and their average debt is $23,000, only $1000 off the overall average. Student debtors know why: compound interest, penalties and other fees make it almost impossible to reduce the principal. For people with children of their own, a second wave of student debt is now breaking. With home equity radically diminished (the presumed source for many to pay college bills), the fastest rising category of Federal education loans is to parents.

Delinquencies in borrowers over 40 are notably up in the past quarter, running as high as 11.9% for forty-somethings but not falling below 9% for any age group over 30. For many middle-aged people–and I know whereof I speak here–debt management is all about redistribution, moving credit card balances, taking loans on home equity or retirement accounts, refinancing mortgages and so on. Only the merry-go-round stopped in or around 2008 and it’s not going to be moving again any time soon.

The reason student debt continues to get worse while other categories of debt “improve” is very simple. You can declare bankruptcy, get foreclosed or default on other debt. Student debt never goes away. There is no bankruptcy or other means of legal adjustment. So while credit card companies have written off 10% of 2008-level debt as irrecoverable, and 5 million homes have been foreclosed, student debt remains. The Fed did not update its December estimate of defaulters excluding those currently in deferral: but it’s safe to assume from the overall increase in default that the 2011 rate of 27% is closer to 30% now.

Meanwhile, universities are responding in two ways: fantasy and insanity. The fantasy is that if you are not a university with a huge endowment, creating free MOOCs will somehow make you more competitive. Everyone knows that Stanford’s Artificial Intelligence MOOC attracted 160,000 people. No word on how many completed the course, still less of anyone inventing a robot or any of the other fantasy outcomes that people associate with A. I. All this has been great publicity for Stanford, which gets to appear civic-minded at relatively low-cost.  With a $16.5 billion endowment for their 18,000 students,  it’s not as if Stanford is broke or looking for new people to apply. For places like that, keeping the rabble out is a price worth paying.

Now a new consortium called Coursera has set up shop using faculty from a range of institutions. There is already a Great Lectures market for CDs and the like that might be in trouble but for state funded or less affluent private institutions, the upside to the “brand” and other publicity generated by the expensive creation of online content is less clear. A MOOC can be fun, you might learn some skills, but it’s really not equivalent to college.

Given that employers are not impressed at the moment by a B.A., what use would a set of MOOC “credits” be? The answer might be this: if MOOCs can supply a skill-set that allows a person to do what they want. For many young people, though, the purpose of college is to find out what it is that they truly want, rather than the limited range of options presented in grade school or locally.

Yesterday NYU persuaded New York City Council’s Land Use Committee that the place more young people want to do that discovery is New York. Its massive expansion scheme was approved 19-1, making it a foregone conclusion that the Council will approve it. Legal challenges may succeed in turning this back but it’s still not clear what NYU is thinking. Why undertake this massive new building when only 18% of it is for academic purposes and it will be paid for by debt? Meaning student tuition fees for the most part presumably, although no budget has been supplied. The answer is the same as the thinking behind the MOOC: college is a mercantilist system in which there are limited resources and schools must aggressively compete for them.

This is a Business School role-playing game and has no educational content at all. And that business-think is so manifestly not working–see above, see the economy, see unemployment– that to begin vast new projects without proper funding based just on that is a threat to the entire enterprise. So are you still confused? I am.

The Slow Motion Mortgage Disaster

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From time to time the media make efforts to convince us that the mortgage debt crisis in the US is improving. Or at least not getting worse. Or something. A rush of recent reports shows that, while wealthy people and banks are doing better, things continue to get worse for the majority. According to the Office of the Comptroller of the Currency, 5% of all mortgages are in default, with a further 4.1% in foreclosure. Which is to say one in ten of all homes is in default or foreclosure. And worse is to come, unless new and radical ideas being proposed by county government are enacted.

One indicator is that people keep trying to refinance. According to Bloomberg News:

Refinancings probably rose 4.2 percent to $275 billion in the quarter ended last week, the bankers group forecast, three months after saying the boom was over. About 5.6 million loans will be refinanced this year.

Banks then resell the loans to Fannie Mae or Freddie Mac–in effect to the Federal government–for a tidy profit and no risk:

The gain on sale that accrues when a loan is sold to a third party for more than its previous value was 2.36 percent for Wells Fargo in the first quarter, compared with 1.9 percent in the fourth quarter.

Meanwhile it remains very difficult for average consumers to get refinanced. Very high credit scores and enormous amounts of paperwork are now required. And that’s for people in relatively good situations, who are simply asking to pay less on their current loans. In a state like New York, this will in itself cost you thousands of dollars.

The government has been trying to get refinancing for people whose houses are severely “underwater” (meaning that the loans are worth more than the homes). Headlines tell you that they have succeeded. In fact, there were  only 4,400 refinances for those whose loans were more than 125% of the current home value in the entire first quarter.

To realize how little that is, look at the new Corelogic report. Here we discover that 11.4 million loans, 23.4% of the total, have negative equity. However, this problem is very unevenly distributed. While a state like New York has relatively low numbers, 61% of all mortgages in Nevada are underwater, followed by Florida (45%), Arizona (43 %), Georgia (37 %) and Michigan (35 %). So California, with 30%, doesn’t even make the top five. But there are 2 million underwater mortgages in California, compared to only 339,000 in Nevada.

Here come the kickers. First, it’s at the low end of the market where the bulk of the negative equity is concentrated. For example, for low-to-mid value homes valued at less than $200,000, the negative equity share is 31% for borrowers, almost twice the 15.9 % for borrowers with home values greater than $200,000. So while it’s good nowhere, it’s twice as bad at the lower end, meaning for people on low income.

Next, 4.5 million households whose loans are underwater also have home equity loans. There’s almost $300 billion nationwide in such loans and 60% of them are about to start asking for repayment of principal as well as interest. In 2014, according to the Office of the Comptroller’s report, $29 billion in home equity loans start full repayment, followed by $53 billion in 2015 and $66 billion in 2016. Homeowners will be unable to refinance in many cases because their total loan amounts will put them underwater. And interest rates, which are usually variable on these loans, can really only go up from current levels.

So what is to be done? A new idea has begun to circulate in county government. The county could use its power of eminent domain to acquire underwater properties and then resell them to the homeowners at the current property value. This plan is circulating in San Bernadino County in California, epicenter of the home equity disaster, and has attracted interest from places like Suffolk County on Long Island, NY, where 10% of properties are underwater. Counties are not making these moves because they are radicals but because their localities, dependent above all on real estate markets, are dying. The city of San Bernadino is bankrupt. National retail sales fell for three months in a row, largely because people are no longer doing up their houses.

Needless to say, the banks are in uproar, making solemn references to the sanctity of contract law and so on and so on. But as we’ve seen here, the states and the Federal government were more than willing to overturn contract law to forgive debt mortgaged against slaves after the defeat of the Confederacy. The argument was that human property was immoral so the debt did not apply. With all the evidence that we now have about the corruption of the housing market, from robo-signing of mortgages, to the fixing of interest rates, and the forcing of sub-prime loans to people of color, can we not say that extreme housing debt is also immoral?

Of course, if such a program were offered, homeowners who have been making payments are not underwater might feel cheated. So we might have to advocate that all mortgages be open to nationalization and reset at LIBOR without fees. It would be the most gigantic stimulus to the economy imaginable and might ironically be US capitalism’s best shot at long-term survival. However, because neo-liberalism is dedicated to the short-term, no national program of this kind has the slightest chance of approval in the current political climate. So we’d better get on it and change the political climate, no?