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Guest Post: Debt-Serfdom Is Now The New American Norm
Submitted by Charles Hugh Smith from Of Two Minds
Debt-Serfdom Is Now the New American Norm
Trapped assets that generate no income streams in the present are not capital; the value of such non-productive assets is illusory. Strip away these trapped assets and the reality is revealed: most American households toil to service their debts.
The typical American household is insolvent: its debts exceed its assets. There is nothing fancy about calculating insolvency: if debts exceed assets, the enterprise is insolvent. By this measure, most American households are insolvent, if their real assets are marked to actual market.
For example:
Auto loan balance: $9,000
Actual market value of auto: $6,000
Credit card balance: $6,000
Street value of stuff purchased with credit card: $300
home mortgage: $250,000
Auction value of house: $200,000
Student loans: $60,000
Market value of education: Not applicable, as it cannot auctioned off or securitized
And so on.
The typical American household is thus in service to its debt, not to its assets, and to the holders of that debt. This is debt-serfdom: serfdom in service to the owners of debt, debt that may well always exceed the value of the household's assets. This is debt-serfdom for life.
If we look at the American household as an enterprise, then we have to differentiate between unproductive, trapped capital, assets held in a house or retirement account, and productive, free capital which can be moved in and out of productive assets to earn a return which increases free cashflow income in the present.
By this standard, most of the typical American household's assets are trapped and therefore unproductive. In this sense they do not even qualify as capital. Let's say a household owns a house with a real-world market value in today's depressed market of $250,000, and the house carries a mortgage of $150,000. On paper, the household holds a net asset value of $100,000.
But this asset is not actually productive; it produces no income and exposes the household to the risks of declining real estate valuations. The asset provides the value of shelter, but if similar shelter could be rented for less than the costs of servicing the mortgage debt and the many costs of ownership, then sinking the entire household's net worth/assets in a house does not "pencil out" as a productive investment of assets.
In a practical sense, this $100,000 is inaccessible and thus trapped; housing is highly illiquid and has transfer costs of up to 10% in realtor and escrow fees. In most cases, the sale proceeds are simply reburied into another mortgaged home. The asset is trapped and thus not deployable capital.
The same can be said of many retirement accounts that are routinely counted as assets on household balance sheets. the assets are trapped in the account until retirement, and their deployment is often restricted to a handful of risky options (investing in Wall Street, for example). The purchasing-power value of the assets might decline considerably by the time the funds can actually be withdrawn, and in this sense their present value is chimerical.
Since these funds are trapped, they also don't qualify as capital: they cannot be used to start or buy a business or other assets which return free cashflow in the present.
Trapped assets are not capital. They cannot be moved into more productive uses that yield income streams that add to current income, which is the definition of capital. Borrowed money that is sunk into trapped assets is not borrowed capital; it is simply debt that must be serviced.
If we set aside assets trapped in real estate and retirement accounts, a truer picture of the American household's actual productive capital emerges: most households have essentially no productive capital, and their debts far exceed whatever meager free capital they do own.
In a very real sense, the non-cash, non-small-business assets of the typical American household are invisible, unuseable, inaccessible and thus illusory; they exist as entries on the balance sheet but not as real-world productive capital.
Wealth and income do not flow from servicing debt incurred by trapped assets, it flows from productive free capital.
Thus the typical household toils not to increase productive capital that can be deployed to increase household income but to service their crushing debts. How else can we describe this situation other than debt-serfdom?
Tomorrow I will discuss the slow and largely misunderstood transmogrification from a free people with limited access to borrowed capital/debt to a nation of debt-serfs.
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How appropriate :)
Ahhh, America. Are we not fortunate.
debt surfdumb
ride the wave
I walked away from my debt. Best thing I ever did. They knew the risks when they loaned me the money. I paid as long as I could then stopped when it stopped making sense. Never again will I be in debt like that. Ever.
I fully support this decision for everyone who can. Get free, be free. The system is run by criminals, get what you can while you can. If everyone did this the rotten debt cabal would go away.
Have you ever sold a house on a land contract?
Well technically they didn't loan you their money, so that shoudn't bother them too much. So you messed up your credit, BFD, it is yours in reality.
Kudos for swearing off the debt. Starves the beast too.
pods
The vote on the final Position Limit rule is happening right now at CFTC
http://www.cftc.gov/PressRoom/Events/opaevent_cftcdoddfrank101811
The typical American household is insolvent: its debts exceed its assets. There is nothing fancy about calculating insolvency: if debts exceed assets, the enterprise is insolvent.
Well, balance sheet insolvent anyway.
Even in the good 'ol days one's mortgage would often exceed one's net worth, at least in the beginning. As long as you make your payments on time you're solvent on a cash flow basis. Lots of debt on lots of deprieciating assets though...not so good.
Frankly I'm more worried about the Americans who aren't insolvent but are going to be muscled by the government into bailing out those who are
Yes, and that would be folks like ME! I cringe everytime Obama talks up another way to aid underwater homeowners. Christ! I built a home I could afford with 2/3 cash down and a 15 year fixed for the other 1/3 at 4.86%.
Now people like me are going to get screwed by government to bailout the McMansion crowd!
Makes it kind of hard to decide whether to prepare for total collapse or get into debt up to your eyeballs before they try and “level the playing field”.
Both point to physical PM however.
Government bailouts of the McMansion crowd is not what is screwing you, it is a rigged kleptocracy of banksters who have successfully toppled our government in a silent coup of bribery. And since you bring up the concept of people making horrible decisions in the BushCo era re residential real estate may I ask what was your excuse? I mean who put a gun to your head and made you do what you did the way you did it? You seem to want to bitch about everyone else blaming others for their miserable misfortune even as you point your own fingers. Tad hypocritical don't you think? People did what they were told, convinced by fraudsters was not only OK but highly profitable as they blew the bubble ever larger, and for a lot of people it was, they were making $$$ house price appreciation to the tune of 20,000 per month in many places. Now many are forced to leave their homes and walk away from debt as a matter of survival. That is life, but you sound like someone that is pissed because you used to be smug about your superior ethics and savvy about housing and financial accumen, and now are getting reamed like everyone else.
How many Chinese made pitchforks does it take to..…
Under legal tender laws, using credit/debt money turns all of us a debt serf!
Even worse, the value of YOUR labor is decided by a small group of private bankers.
pods
How many Chinese made pitchforks does it take to..…
You want to hear something really strange? Friday my water heater started leaking and was all rusted out and I had the landlord intall a new one. They got it at Lowes and the box said MADE IN THE USA
Did you know they made something like that here? I wonder where they made the parts though.
The U.S.A. is bankrupt. They are unable to file for it, so they just will not pay. Someone needs to go to jail.
You must use the approved terminology or the serfs might awake. The serfs must be convinced to pursue the 'American Dream' of 'home ownership'. Don't refer to them as 'debt-serfs', refer to them as a 'homeowners'. Don't refer to their untapped potential to yield a duty to the overlords, rather, call it their 'credit score'. Instead of calling the initiation rites into a life of debt-serfdom 'predatory student loans', call it 'higher education'.
Wazzamattayou? Truth is dangerous!
Why I laugh at the idea of the US as a wealthy nation. Wait for the big blowout and that illusion will be stripped away. Expect to see a flattening out of global standards of livings, and in the lower way.
Just like what Obama was talkin about this morning
'Hey...you got it rough? Yea I know...we're all americans, well I'm not actually but I play 1 on TV so now we ALL got to suffer and struggle trying to make ends meet....well, let me qualify that... not ME personally or any of my multi-billionaire Wall St bank friends LOL hell we're livin REAL GOOD better than ever before actually! Hell I've got FIVE PLANES BITCHEZ!! I eat Kobe steaks EVERY NITE, with LOBSTERS! But keep being sheeple, and keep hoping I'll actually ever do something to help you out and keep on voting for me! Thanks, idiots'.
"Hey Michele you got the bags packed? Where we luxureiating this week? Don't forget the golf clubs?
short term... okay. But long term we have an advantage still, it's what put us over the top the first time around. Natural resources, abundant arable land, water and two great big fucking moats to keep the majority of ill wishers away.
The farms will get small again, but increase in number. The tracks will be renovated and the trains run again. The mills will be re-built or refurbished.
When the leeches get salted, then it will begin.
Good luck with that. Look at the demographics and the culture aside from the nightmare debt storm. The death blow has already been struck, most people simply fail to realize it. Hopefully I'm wrong, but the trend is quite poor. Mexico has a bunch of natural resources and abundant arable land, why aren't they wealthy?
Shortage of water and a Spanish/Catholic bend in their history. Mercantilism fucked up just about everything south of the Rio Grande. Restrictive property rights did the rest. It rewarded and promulgated the Hefe Maximo and his peones. The nails that stuck up got hammered.
In Colonial and pre WW1 USA, you could work had and still move upward, especially in the agricultural or transport spheres. Talent, moxie and sometimes just plain dumb luck were rewarded. Didn't like your situation? Move your ass west and start over... there was room to escape and expand. If you weren't hard enough already, then plowing, cutting wood, fighting the Kiowa and the Crow toughened your ass up right quick. It wasn't exactly Arrakis, but it did work to that effect.
You do realize the demographics say the US will be a Hispanic country this century, heck in what 30ish years. That mess with your optimism? Speaking as a guy who grew up in the SW and lives in a rougher neighborhood, lets just say I hear a lot of Spanish. So will they be holding onto that Catholic bend?
And I daresay the world of today and in deed the future is a lot different than pre WW1 USA. Where is the cheap and open land, along with cheap energy going to come from? I'm not happy about what I see, but I fail to see how blind optimism and living in the past accomplishes anything.
if this house of cards built on fiat collapses (and I'm thinking it will), my thought is that we'll be seeing something more akin to those "good olde days" than any of us would care for. Lack of food, medicine and shelter will create the great culling... lot's of un-adaptables are going to go tits up in the water.
This will fix your land problem.
As for the south west, Well, we had just barely gotten started playing cowboys and mexicans, less than 2 years worth, before Wilson shut it down. If the continuation goes anything like the original, it's not exactly boding well for the Mexicans, is it? The example I'm citing is the Villa raid on Columbus, NM. 8:1 losses for? Munitions. Why? Because they don't make shit there, and what they do make is shit. When your shitty little country cannot feed it's own, or has to import all but the most basic of hand tools, you're fucked. We could roll it back a bit further, and ponder how some outnumbered Texas militiamen routed a larger Mexican force at San Jacinto in 18 minutes and I've even read ended up tarring and feathering El President himself, after he was caught trying to escape, hiding in the uniform of a private.
Your neighborhood is your own problem man, I've got problems of my own that my blind optimism will have to deal with, but throwing up my hands in dejection isn't one of my solutions, I'll get by until I can't get by any longer by what means I deem necessary.
So your thought is it will be The Road and then things will be hunky dorry? Like I said good luck with that, but I reckon most people just won't lie down and die. I would expect at least a little violence, especially considering the level of violence already there. I'm getting out because I see the writing on the walls, and maybe this white boy isn't man enough to claim he can take on 8 to 1. Look around, you really think the youth of today are a match for their great grandfathers? Time spent playing their X-Box is a hell of a lot different then time spent with a real rifle.
You seem to have forgotten, or don't understand, an awful lot of young men have been at war for the last ten years, not playing xbox. An out of shape fat ass kid can't climb mountains in the hindu kush strapped with a combat load.
You don't have a clue how tough our boys are. Give 'em an M4 and let's see how many gang bangers they can take out.
Yeah i have seen how gangs shoot and fight. I daresay a single well armed platoon can take on a few hundred gangs.
Defeat in detail. How a small force ends up beating a large force. And why the marine armored scout units got all the action and there was nothing left by the time the main body caught up.
Demographics a hundred years ago said we would be an Irish/Southern European nation. Yet here we are.
Never try to extrapolate a trend when dealing with real things or people. You will be embarassed.
because of much depressed ag commodity prices.
'Mortgage $250,000....auction value of house $200,000'
Highly overoptimistic.
if you add government debt to the figure (ater all as taxpayers it's our debt) the figures are much worse
I had a woman who said that borrowing money was a "privilege" and at every chance she sought to exercise this "privilige".
We are no longer together. I am solvent and have some degree of productive capital. She on the other hand will never be able to retire because she is 51 and holding long term debt obiligations extending 20 years. Apparently we had good reason to split as she was a typical American and I was a tight wad cheap skate [according to her!]
I on the other hand retired young and consider new work only when I feel the need for more to occupy myself now and then.
you're missing out man... you know this is domestic violence awareness month, right?
Oh snap LF!
Jumped right out, Jack...occupy myself. Start a movement.
Bet she knows my ex.... bitches of a feather....
Technically, one can tap their 401k to start a business. To do so one must form a corporation (however, not LLC or S-Corp) and through a specialty brokerage ($$$) create a 401k for the new corp, transfer previously existing 401k balance to new 401k, then from 401k purchase company stock up to lesser of $50k or 50% of balance. However, the stock purchase is a loan you must pay back to the 401k over 5 years in quarterly installments with interest.
You can take a loan for 50K not to exceed 50% of balance without starting a corporation, at least it was possible at one point in time. I did it back in the 90's, not sure if the law has changed or not.
Wow, that sounds like fun!
/sarc
pods
This pisses me off. I always make my money on the entry, so even if I finance and have to dump there is some cushin and 98% of the time no loss. But I have heard how these loans are pushed, the schools to do not teach the real history, law, politics, medicine, crooking (I mean banking). In fact as most of you in the USA know you are ostracized for going against the idiocy.
two forms of obligation follow one to his grave, student loans and back child support. For all the rest there is BK.
But only one of those will put you in jail.
I wonder how "deadbeat dads" are doing in this economy?
If it were me (which it isn't) I would pay child support and student loan payments with CC & heloc money. A person can default on the latter free and clear in a BK. [/not advice]
You need to become a debt consultant.
Debt isn't real. The money lent never existed. So Americans just took fake money from people called financiers and other people took that money in exchange for lots of chinese made products. It's like buying a stock for 10 and selling it for 1000. Easy money.
Every Zero Hedger who believes the above statement should take out as many loans as humanly possible and buy physical things with it. It's that simple. Borrowers have already proven the theory that it doesn't matter if you don't pay back the debt, they'll just fudge the numbers and keep on printing.
So it's short debt, long things you can touch and lick.
If I was getting the rate that the Primary Dealers do, you bet I would.
But because we don't, you are just playing their game by using US dollars, and increasing your US dollar-denominated debt obligations/liabilities.
Its better to help end the system than to game it. People have been subjected to this propaganda their whole life without realizing it: Bugs Bunny indoctrinated us as children "If you CAN'T BEAT 'EM, JOIN 'em."
Sorry, but I will stick to trying to beat them, personally.
How about thoes elite Judges in New Jersey ..A state Superior Court judge ruled Monday that the state can’t make judges pay more toward their pensions and health benefits under a law enacted in June because the New Jersey Constitution does not allow for judges’ salaries to be reduced during their term.....http://www.app.com/article/20111017/NJNEWS/310170099/Judge-NJ-can-t-forc...|topnews|text|Frontpage
Looks like they're pretty damn good with The Law after all . . . when they wanna be.
And to think that skeptical attorneys claim the appellate judiciary is "result oriented."
Land of the free...becomes land of thrall not enthrall, yoke not lazy hazy poke, villenage not singin in the rain, serfdom not surfing the waves. We'll dream about 'pursuit of' while we strive like Sisyphus in helotry.
Sources for your data, please. And since this is a piece about how "the typical American household is insolvent" then some numbers you didn't just pull out of your ass would be nice too.
Here's my attempt at finding some numbers to back up your claim. Sadly for you, they do the opposite. From the Fed Flow of Funds (Z.1) report of Sept 2011:
Assets of households and nonprofits, end of 2011Q2 = $73T
Liabilities = $14T
Net worth = 73 - 14 = $59T
Net worth per capita = 59T / 300M = $197K
http://www.federalreserve.gov/releases/z1/Current/z1r-5.pdf
So, "the typical American household is insolvent", is it...?
'$59 Trillion net worth' yea right try to cash it in!
If the Federal Reserve is wrong then what's the correct figure, in your opinion? You should let them know.
'If the Federal Reserve is wrong'....
OH NO certainly THAT cant be!
Perhaps you need to address the issue of "typical" household for a meeting of the minds.
See this :
http://www.usdebtclock.org/#
US unfunded liabilities : 116 T. Liabilities/ taxpayer = 1032 K USD. Compare this with net worth per capita above...
You're comparing the US government's total estimated contingent liabilities (per capita) over the next several decades to how much money Americans have at this moment, ignoring future income. Are you sure you want to do that, mathematically speaking?
Suppose the $116T is payable over the course of 30 years, and suppose national income remains constant. In that time Americans will earn 15T * 30 = $450T. $116T is about 25% of $450T. So assuming no reductions in those contingent liabilities, they will require about a quarter of the country's income over that period.
We're doomed...?
This is just an instant photograph. If you add to that, the US debt, deficits (all of them) trend, which indicates it will increase for at least five years if not more, unless we take drastic measures to unload existing debt and turn back the deficit machine, if there is no global collapse in the meantime. Which means that we are in a situation where the existing cumulative debt will increase geometrically. Also debt generates interest. So on a time value of money basis, in NPV terms, the situation is very bad. We are talking of 350% debt/Gdp in thirty years. So if you follow the projected moving target of debts and deficits the situation gets worse. That's my point. If the US loses its reserve currency status the US economy is toast like Greece AS SOON AS THAT HAPPENS. As the markets are relentless.
Is that doom?
"This is just an instant photograph."
Well, it's a very misleading one. Sorry.
As for the debt:
What matters is not the absolute amount of debt outstanding, but the ability to service it. Interest payments on the US government's debt amounted to 1.3% of GDP in 2010 and (according to Geithner, anyway) will rise to 3.1% of GDP by 2016. Do you really think America can't handle carrying a loan requiring <5% of its income for a while?
(Aside from the fact that the government, as the sole currency issuer, does not need to borrow in the first place. See http://pragcap.com/resources/media-section for details.)
the debt clock is NOT misleading, projected intrepretations are. Your scenario over thirty years is not realistic. Period.
Your metric for interest payment is wrong. It is as % of Fed Budget that interest payment is measured. And its very high. NOT GDP which means F-all about a government's ability to service the debt IT has accumulated. Government does not handle GDP amounts but revenues from budgeted amounts that is uses for a) its operating costs of which debt interest and Defense are HUGE segments b) its investments and non operative expenses.
This is now moot issue as expenditures like debt service and defense explode and revenues from taxes are grid-locked, all the while the private sector, in bubble economy, generates HUGE, unsustainable, current account deficits...Bad trend...very bad trend. Enuff said.
I got the "interest payment as proportion of GDP" figure from here:
http://www.bloomberg.com/news/2011-02-14/geithner-quietly-tells-obama-de...
"Interest expense will rise to 3.1 percent of gross domestic product by 2016, from 1.3 percent in 2010"
Interest on the national debt is paid out of the national income, thus as a percentage of GDP is the most appropriate unit.
You mean... like having to work for the rest of your life to pay it off? ... Like a debt slave?
Anyway. Total debt absolutely does matter. The US government (public) debt is only a third of total debt and it gets highly preferential rates. Treasuries yields are lower than they have been for decades. The rest of the debt (commercial and personal) pays a significantly higher interest rate. Even at 3%, assuming treasuries like rates[1], total interest payments would amount to 1.5 trillion... on a GDP of ~14 trillion... that is very significant.
You're working for a month a year just to pay the interest on the principal.
[1] Commercial/personal looks on average about 6% at the moment. It would put total interest payments at around 2.6 trillion, about 20% of GDP. i.e. working for ~2 months per year just to pay the interest.
Yeah but you are going to trade it Falak aren't you? I thought so. So am I, prudence has to pay off at least smidge. Need dough to fix some air pockets in the foundation and all that..
So what part of the Assets are tied up in "nonprofits" and say, the top 0.1% of households?
Versus the debt tied TO the typical household.
pods
Unfortunately that report doesn't give any summary stats -- the median household net worth would be nice to know, yes. But I'm not doing all the OP's research for him, just demonstrating that his approach is not exactly rigorous.
His research might not have been rigorous, but it certainly holds up anecdotally. His examples are far more indicative of the present reality for the vast majority of americans. Sure the aggregate looks good, but that does not divide up equally. I am NOT saying that it should, as I abhor any collection of power that is powerful enough to do that, just that wealth side of the equation is kind of aggregated near those who print the $$, while the debt side are the ones accepting the printed up $$.
Kind of like someone designed the system that way.
pods
You base your investment decisions on anecdotes? I prefer data. According to the Census Bureau, in 2007 the median US household net worth was $120K. Thus I'm pretty sure insolvency is not the "present reality" of "the vast majority of Americans".
http://www.census.gov/compendia/statab/2012/tables/12s0721.pdf
You really could not have picked a worse example for your argument, save maybe people's net worth in stocks in the late 90s.
From your link, the skewing in seen between the difference between the median net worth, which you noted at 120k, and the mean, at $556.3
And why the hell would you base your investments on a paper issued during the 3rd largest bubble in history, just behind student loan debt and US government debt, two yet to be popped bubbles?
I base my investments in vehicles which may stay outside of the clutches of the imperial US government.
pods
That was the most recent data I could find for the median value. So let's estimate its current value this way:
According to the Fed, US net worth was $59T in 2011Q2. There are about 115M households in the US, so the mean is currently $513K. That is 92% of the 2007 figure ($556K). Since the median in 2007 was $120K we can roughly estimate it to be about $110K now. While that is a large drop, it did not plunge "the vast majority" of Americans into insolvency.
Looking at it another way, there were 11M residential properties with mortgages in negative equity in the US in 2011Q2. That's about 10% of households, assuming one property per household. There are numerous other factors that should be considered, of course, but I maintain the OP wildly overstated the problem because he didn't bother doing any actual research before firing up Word.
Also, I never said the distribution of net worth is not skewed.
All you have to do is look at any of the FRED charts about credit and you will see that the last 30 years growth was only financed through debt issuance.
And the reason why the data you cite looks as good as it does is that the losses have been papered over and the leverage has been transferred to the FED and treasury.
Our system requires constant expansion. If they did not step in when we rolled over in 2008, the entire system would have imploded, as illustrated by this chart:
http://research.stlouisfed.org/fred2/series/BORROW?cid=122
The damn thing looks like an HPLC chromatogram. We really cannot have a conversation about the state of things, as we are living in lala land. Almost like commenting about the weather in the eye of a hurricane.
I did not mean to imply that you said the distribution was not skewed, only that looking at aggregates cannot really explain the situation for the majority.
pods
Take the nonprofits out, that is where the banksters hide their money, then report back.
I think the numbers might change.
This 73 trillion... Book value? i.e. Mark to Myth? Presumably they got that figure from their member banks... So that'd be a yes.
Anyway. All quite irrelevant.
Total US debt[1]: 50 Trillion. This includes public, private and personal debt.
Total US money (M2): 9.5 Trillion.
95% of the M2 supply of money is credit, which means that when you pay off the principal of a bank debt, the credit is destroyed. It vanishes. As the 50 trillion reduces, the M2 figure also reduces. When money is destroyed the value of the remaining money in circulation changes. It increases. And as you see, there isn't by a long way, enough money in existence to pay all the debts.
When the value of money changes, the value of all of the assets which are priced in that money also change, when money decreases, prices decrease.
So, the entire concept of net worth is bullshit and the only thing keeping the existing system going is that more money is created every year making the numbers get bigger instead of smaller. i.e. inflation. When you enter a deflationary period, your net worth isn't worth shit, what matters is what you can sell the assets at in the market and that will be less than the mark to myth valuation, as a half Canadian you're about to experience exactly that right... about... now...
[1] http://en.wikipedia.org/wiki/Financial_position_of_the_United_States
Housholds+nonprofits!=households unless nonprofits=0
Further, where are they getting their numbers for hom values? They are likely to be wildly high.
Its funny you post this now. I was litterally just thinking to myself yesterday how so many of us are really just serfs now. Sure its not manorial as in not tied to a specific piece of land where you owe services, rents etc to a local lord.
Now the lords are the student loan and mortgage servicers and the TBTF banks.
I think the reason the word isn't tossed around more is that people have this monty python esque notion of serfs toiling in muddy slop and now days we have a supposedly higher standard of living. I mean as has been pointed out on fox the average poor family today now has a big flat screen and decent disposable furniture etc.
But agreed that many of us are now essentially slaves to our debt. I believe that you have hit on something huge in that if 99% of Americans are too busy scraping together money to make their monthly payments they have virtually no capital to employ in seeking income and wealth.
At least those people that do not have student loans can still get a fresh start via Chapter 7 of the bankruptcy code. As I am sure all of Zero Hedge's readers are aware student loans are non dischargeable and almost impossible to escape except through death or massive life impairing disability.
As most people my age or younger are trapped under crushing student loans that haven't all guaranteed excessive salaries there will be real animosity towards the older crowd once the generation wakes up to the fact that by and large we have been set up to fail.
Retirement set take note, in a few years there will be no one left with any money to buy your rapidliy depreciating so called asset of a home. I would expect it to be worth less to your heirs (unless they want to live in it) than you think. This also does not bode well for the stock market because if you're too busy paying off your creditors you don't have much extra to invest on the side. You also are less likely to contribute the maximum to ones retirement accounts.
We're pretty fucked and the longer we put off making serious structural changes to the economy and political structure (taking political contributions away from corporations ) the worse its going to be before we can start over and recover.
America needs a reboot
'OH look, it must be the King!'
'How can you tell'?
'Well he hasnt got shit all over him'...
Americans need a robot.
What's up with FAZ? Gloom and doom in financials and it drops?
I gave up on that bullshit FAZ 2 years ago.
thanks
I guess I need to keep harping on this, but everyone appears to be terrified of mentioning that CHILD SUPPORT is also debt slavery. In fact, CHILD SUPPORT was the first pillar that was enacted of the debt slavery system back in the 1980's when the Bradley Amendment was snuck through Congress w/o a serious debate. In the early 1990s, all the states passed "guidelines" which hugely increased the amount of support a parent (usually the father but always the breadwinner) was supposed to pay. Refuse to pay and you go to Jail - that was new too. By the mid 1990's coupled with the Domestic Violence laws, the entire "man is now dogmeat and serf to woman" was in place. And the courts? If anyone thinks they are actually honest and just - "Family Law" will change your mind. Courts are closed to the public so you can't see what they do behind closed doors. But the system exists to separate you from your money and feed the parasitic legions of lawyers, and "social workers". Judges maximize awards and payment length because the Federal Government gives the states 50 cents on every dollar of CS processed. Raising children has become a multi-billion dollar industry for your state.
When you head to Divorce Court the big issue is usually the children. But the courts have already decided who IS NOT going to get them - the breadwinner. You just don't know that yet. Look at Britney Spears. Kevin Federline won before he even walked in the door - because SHE had the money and was going to be the "payer" so everything the court did was make Britany look like an idiot and a nut case. Alex Baldwin, same thing. He made the money, so his wife got the kid and he got slapped around by the system. Every mistake multipled 100x, but NEVER a bad word about the wife. This is what happens when you allow the courts to decide. The loser is always the breadwinner.
People here have figured out that their Mortgages are full of fraud, and so are Student Loans - both designed to trap you into high payments. Child Support is the same thing but multipled. Entire families have been devestated by decades over this. All these laws are immoral and unjust to every American and their family.
The ultimate solution for CS is your children can live with you, and you not be subject to the whims of the government, who is determined to enslave you forever in endless support payments. Failing that, people need to be educated on this and the laws need to be changed.
Word. Good luck, brother.
You must be bitter about your divorce.
However u might should have expected that if you got all biblical on them about you being annointed by jebus to be the family dictator.
They might not have liked all that heavy handed dictating.
In a meeting with a divorce lawyer, he told me, 'sure, gimme 10 grand and we can go to court and try to get custody of your kids. But we'll lose.' In other words, I had No Fucking Chance. Had nothing to do with anything material, ie, income, personal issues, etc. It was simply the policy of the State. His honesty surprised me, but at least he saved me 10 grand I didn't have.
At least he was honest.
Divorce lawyers capitalize on the anger and sadness of the opposing parties; seriously, how many two minute phone conferences that are bill at the minimum of 10 minutes each does one have to make before submitting the fucking motion to the judge? Both lawyers profit from it and seldom do most soon-to-be ex's realize it's a scheme.
My ex-husband and I kept our agreement between us BUT because we couldn't get divorced with out an order for our daughter, we had one drawn up but maintained our verbal agreement that was much more forgiving. I did that for two years with him until he decided to stop paying and hassled me about it. He didn't pay for two years and we ended up in court and he was made to pay more and ended up being garnished.
Maybe if more men acted like men instead of babies, it wouldn't need to forced.
That said, I know 4 men who raised their children on their own and some NEVER received a cent from the mother. This is outrageous because for me, it's a two way street and the mother is just as responsible as the man would be in the same situation.
There are father's rights groups and I fully support them.
I didn't junk you tho' I was tempted to.
What's ridiculous are distribution of asset laws in divorce; they're totally in favor of the wife.
I don't believe in alimony. Adults can get a job to support themselves. Children cannot and custodial parent is limited because they have to be available for child if child is sick, has appt's, loss of freedom ...esp. if non-custodial parent doesn't want/have visitation by choice or some other freaky reason.
Man up.
I gave you a thumbs up. My ex was a nurse in NH and I had custody. The verbal was $75. No pay. Then filed through State. Still no pay. Then I am taken to court on trumped up abuse charges, ex parte (sound familiar guys?) . Ex received immediate child support and as my income was greater, the entire $3k she never paid or even bothered to try and be collected by State was wiped clean. Plus a bonus for her!
At the end of the case which I did have an attorney, I won son back. Set child support for $25 per week as ex quit job (or claimed was unemployed) and I figured it was so low she would just pay it.
I was wrong. Rinse and repeat this process literally three more times! Oh yeah, as each time she was unemployed I had to pay for Guardian Ad Litem to investigate myself!
After the first case I realized how dark and rigged this game was, so I represented myself in all the cases thereafter. Caught ex cold with perjury in Superior Court. Marital Master let it slide instead of dismissing the case.
By the last two cases, I had people ask my wife when I was presenting if they could get a card for them. They thought I was an attorney. But I guess after thousands of hours of legal work, it tends to edumacate you a little.
I won EVERY single case. My son is 18 and lives with me. Don't fight the payments, fight in court for how important it is that your son or daughters well being is worth it to you. Social justice sucks but acting this way in court ups your odds of winning way up.
I fought NH legal system on lots of other things too. I paid a very steep price but someone has always gotta be first in slowing down the gears of the machine. No worries, I am going to now help rebalance my State as it has collapsed and now opportunity to both be repaid and to serve my local citizens. The social side effect of such damaging indirect tax vehicles does have a silver lining for you fellow gents. A ton of single horny women milling about that have now learned their utopia of endless free goodies was just another class of people being used for a political agenda. But definately MAN up on birth control as you come roaring into horny lady land in NH :)
The trumped up abuse charges happened to my BFF during his divorce; the charges were dropped as her story didn't make sense BUT nonetheless, his rep was ruined. his pistols were taken away and Judge- without conviction or charge against my BFF- won't give him his pistols back AND has him pegged as a 'woman beater.'
I have a crazy woman stalking me trying to set me up as her stalker. I can't share details as it would give away my identity to her but my situation is fucking impossible...she has tried this before numerous times and set up a couple guys -one was fucked over BIG TIME professionally and because of his profession, lost certain privileges as it lead to a felony charge... FUCK.
Most of my friends are male because it's my experience that a majority of women are bat shit insane.
Just my humblest opinion.
Ah, those damned lifestyle choices get you every time.
This guy suddenly lost all credibility with me. When you invest you put off spending your capital now to spend it later. It's the whole point. To say you can't call it capital because it's "trapped" is nonsensical. Investing capital is 'trapped" regardless if it's locked up in an IRA or if you have the discipline to plant your seeds and hold off "eating the corn".
Douche.
Yeah. I agree. Seems like he's writing off what is investment capital because it's not working capital. The point is still kind of valid. People are mentally playing a game with themselves that they're worth more than they really are. Also a lot of young people envy older folks who have this stuff because it has the appearance of wealth and stability.
I can't get over how a house can be a tax liability through property taxes.
If a fish stinks, it stinks from the head. A country is simply the sum of its individuals .:. insolvent individuals = insolvent country.
That saying means, if there's something wrong with a group, a team, a company, a nation, then it's the leader's fault. That's why fish stinks from its head and not the body. Per the saying.
Interesting, but I'm not convinced this is the correct framing.
Most households are not interested in capital investment; they are just getting through each day. Kids to school, dad/mom to work, mom/dad to manage the home. Education of children and child-rearing are tasks, not investments; we do them regadless of future returns because we are good parents. Wages are sunk from the start, we work to survive and that's it. When survival is sorted out, we play. Notice that play is also a sunk cost. Big deal.
Where the analysis is spot on is the insertion of debt. It is debt that drags the household into the investment world, makes mom and dad into "human resources" and turns childhood into a desperate race against the clock and peers.
Which is exactly what the system wanted.
Notice that debt is not an emergent property of survival -- we survive perfectly fine without future-dated obligations -- rather it emerges from abstraction in particular it emerges from theft. Interest paid is a kind of parasitism of the productive by the unproductive. The household that listened to the parasite learned how to be parasitized, and does not know any other way but to bleed. It would have been better never to have listened. Once the parasite is attached, the host cannot escape.
A lot of people are going to die in the coming battle to shed these parasites. But that's what it takes.
This is why I as a young adult refuse to buy a car/house or anything else I can't pack into a bag and carry to the nearest airport
I am NEVER buying a house with a mortgage. NEVER! I will never take out another auto loan. NEVER! Even a rabbit will bite when cornered. "Joe Middle Class" is waking up to reality, good luck floating the Konsumer Kredit Ekonomy when you've starved out the Konsumerz! No jobs-- no prospects-- well, NO SPENDING!
Oh BTW, not having any Kidz either! That's how they really get ya! There will be plenty of people to go around in 40 years anyway, supposedly Nigeria will have 725,000,000 people soon enough (they have 125,000,000 now).... hey, not running out of people.....
stop feeding them. These things tend to work themselves out.
I figure they'll just cross the Med. EuroDisney is in its last century (half-century?)
I don't know man, Hannibal had troubles with the Alps, but I'll grant he was headed the other direction.
Not if "Mr. Vaccine" Bill Gates has his way!
New reality, “live for your American nightmare”.
Chairman Gensler is FINALLY IN THE ROOM! CFTC meeting on position limits in commodities (SILVER!) is now in process.
LIVE COMMENTARY AND VIDEO of the CFTC Meeting
Is this why the Constitution stated all money shall be gold and silver? Seriously how would the bankers be able to loan us money to go on vacations, buy new SUV's, or get a degree in the Liberal Arts with gold? How could they wage war on the world in perpetuity for that matter? It's a good thing we don't have a Constitution anymore because many of our dreams would not come true if the banks could not create money from nothing to loan to us so we can pay them back from our 2 full time minium wage jobs with interest until we die. And how can you feel good or patriotic about your country if you don't have at least 8 wars going on distant lands that none of it's citizens has ever been to or will ever go to?
the world is run by some really ugly and wicked people
where does this guy live? did he ever hear of a ReFi? does the name Greeenspan ring a bell, economists were tap dancing about unlocking hidden assets? and in theory it made lots and lots of sense, for homeowners to tap their sleeping equity, and YES invest it in the stock market where 8% YOY returns as far as the eye could see would make that equity grow!
it was an economists dream. (it was a raid on equity), just don't spend it on nonrecoursing things, or you will end up buying that fancy dinner on the cuff, and paying twenty years for it!
no no don't do that, (even through GDP is 75% consumer spending - well please spend a little, just to help defeat the terrorists)
now equity lines are tapped (because market values are wrong - we must NOT mark to market, we must mark to perfection - twenty years from now your house will be worth x, so we'll let you borrow on x)
have you ever looked at those life insurance policies the banks sell their customers, they're lines of credit. you pay $20 a month, and you can borrow on the cash value of the policy.
future wealth becomes instant credit. the correct thing to do in that case is to leverage out your future earnings. that's the system protocol. this is why you need an expensive student loan.
celebrities sell bonds against their future earnings, shouldn't joe sixpack do the same? problem is joes future earnings are being marked to market, (his college education is worthless before he even throws his flat hat into the air) while the banks mark to perfection, and future earnings, based on servicing that debt. (but not really, but they conspire to pretend they are)
in practise you should buy all the debt they will give you, because there is a bear market in debt, and you can consolidate debts at a lower rate. State of CA did it, why not you?.
and a point will come where some lenders will go out of business and they will not be there to collect your debt. think about that.
you own GMAC $10 grand and they close up, and no one buys their paper. it just sits, you stop making payments. nobody cares.
buy debt as long as it keeps getting cheaper, (one financial publication predicted some time back that investors would be borrowing money to buy Treasury bonds. think about it, it could very well come true)
Look for organized campaigns instructing us to abandon our debts and cast off the serfdom or slavery or peonage.
Whatever you want to call the bad thing is immaterial.
We know what the good thing is: Liberty.
We know how to get it: Jubilee.
We know there are no hands steady or just enough to move forward with this. But, the option belongs to TPTB:
Will their hands be forced? Or will they be cut off and made as irrelevant as the bodies they are attached to?
Shorter:
Egypt 2011 or France 1789?
Choose quickly. Because one is more orderly.
The other is more fun.
the headline should read:
thanks to rightwingers/libertarians and their corporatist OVERLORDS, Debt-Serfdom Is Now The New American Norm
idiot
Is dat sum RNR clone?
Also, yeah, blame the libertarians, you know, the people who haven't been in power in over a century. It's clearly THEIR fault.
Moron.
"Rasta..." we know he is definitely not PLA. A puppet none the less, the idiot domestic type, the red pill blue pill type. I figure bought and paid for by the SEIU or maybe a freshly minted graduate interning for Nancy Pelosi’s campaign staff.
Libertarians right-wingers? Thanks for exposing your lack of intellectual examination.
Social libertarianism is 'left-wing' and even libertarian fiscal policies align more with 'left-wing.' This is the problem of the false paradigm: It hides the truth that we have more in common as individuals than we do with our 'team mates' on either side of this imaginary political fence.
You're a twat.
Correct. Bipolarity and reverse pyschology. It always does require looking over one shoulder to understand which group is empowered to steal your property. The nutty correlation is that it seems bi-polar people are the ones most attracted to political larcenies.
All you suckers who voted Obama and not Ron Paul in 2008. I told you so.
I voted for Cynthia McKinney.
New SEC Chairman - Mr. Honey Badger...
Don't forget to check teeth and muscles before paying for serfs.
..and yet those of us aware we are being lied to by the government and mainstream media are in the minority.
Case in point: http://www.youtube.com/watch?v=KyvQWmK-DGY
If thou givest me $1, I'll spend two...of thou givest me $2, I'll spend five...
Americans are in serious need of behavior modification.
yes.... and let'd hope it starts with Demi dumping that little shit Ashton Kutcher
and comming up next Running Man...
There won't be any jubilee. What there'll be is more crap jobs that'll get people to work their hours and shut the hell up. Don't wanna lose your job after being unemployed for so long, afterall.
You think they're going to withdraw their tentacles from this lucrative debt-serfdom? They will not: only when heads start rolling will they get the message--and Americans have been pussified through decades of conditioning. Maybe in other parts of the world it may happen, but in America it will not.
They know how to keep people just on the edge. Just at the precipice is where they want you. You're afraid of going over, so you're going to do whatever it takes from falling off. As I've said, they don't care about the total sum being repaid. What matters to them is that they've got you by the balls for a lifetime.
Expect to see "debt forgiveness" deals when WWIII ramps up. Put your ass up and get shot by red Chinese and we'll forget about the imaginary sum we loaned you that we never had in the first place.
Too bad our own instincts work against us. The best thing we could do is leap off that edge and say fuck their concept of an edge. The "edge" is ours to make.
Agree.
The only truely free are those that didn't get invovled (and / or in debt) in the first place.
We will be the first in the Fema camps, probably labled terrorists or such like.
The next bit will be the great war against Iran, at which point it will force either China's or Russia's hand...you always need someone else to blame when you screw up.
I just feel sorry for the kids who will be sent over to die, because their cowardly parents didn't have the guts to stand up and fight the real enemy; but instead rolled their fat asses over to keep their own safe.
Lets hope people are just tired of war and Rossi's LNR reactor changes things on Oct 28th....http://www.forbes.com/sites/markgibbs/2011/10/17/hello-cheap-energy-hello-brave-new-world/
http://ecatnews.com/
but given how things are progressing and the blatant way the media is blocking Ron Paul, things don't look good....
all over the webs I hear talk of these FEMA camps. Think it will be easy getting all these people packed in there? All means of communication best be shut down before they begin. The first round might be easy, with all the conditioning that's gone on. Round two is when the fucking music starts and the sock hop is on. Breakin' 2, CETME boogaloo.
I hope they get greedy and try it too soon, because that will the event that makes sheep grow teeth and fight rabid. Some will still walk along, looking at their shoes when they separate the kids, and the women and then start sorting them based upon professed, select skills. Some won't.
The year is 2018. Mugabe the 4th declares the new Food for Guns program citing a shortfall of light arms to supply the National Guard against invasion....
I present:
Tyrannosaurus Debthttp://www.youtube.com/watch?feature=player_embedded&v=_mfMG66LtVU
Good vid! When I defend America I will shout out the Battle Hymn of SchoolHouse Rock!
Revelatory. Except someone noticed this, oh, about 3000 years ago: Proverbs 22:7
"Just as the rich rule the poor, the borrower is slave to the lender."