Banking Reform

Welcome back to the White Buffalo Hour this is your host John Phillips, and we are doing another pre-recorded broadcast from the great state of Massachusetts.  We certainly all have our eyes on the coast of Florida as the first tropical storm of the year; Arthur begins to move up the East Coast of the United States as we prepare for our 4th of July celebration.  With the growing state of chaos all around us, it hard to imagine what people will be celebrating about since without Paradigm Change, a radical new vision for the United States that cuts across the right/left paradigmatic illusion brought to you by the 1%, our future as a nation, as a world leader still is like a bus with 2 wheels hanging over the cliff.

 The White Buffalo Hour is about paradigm change and as the winds of change begin to whirl around us, this show hopes to open your eyes to new paradigms, New paradigms about history, medicine and religion.  As I watch the social media chatter across a variety of platforms, I still believe that the warning that “Karen Hudes” gave us more than a month ago that there were a variety of media events designed to take the focus of the central issue for the entire world, Banking.  

And while we look across the Globe at the number of conflicts that seems to be growing both in intensity and frequency, I cannot help but reflect back on the words of Mahatma Gandhi who said in essence that he loved the Christian message, but hated what Christians were doing around the World.

 It was Anthony Sutton who talked about the use of the Hegelian Dialectic by the elite to control the message, or use the message to increase their power and influence over the 99%.  As Sutton dissects the Bolshevik Revolution, the Financing of Adolph Hitler and the 3rd Reich during World War II, the build up of the Soviet Bloc during the 1950’s, in his series of book while a scholar at the Hoover Institute, you can see the foot steps of history, and how the elite have used the Hegelian Dialectic against the 99% for more than a century.

 Sutton believed that the “elite” would set a goal to take control and power in a certain arena be it political, social, economic or governmental, and then they would use chaos, in essence, they would create a problem that would make their “reforms” or solutions appear to be the perfect answers to society’s problems.  But history has demonstrated over and over again that frequently the “Solution” to the problem was designed before the event that needed to be solved.

 Set a goal or agenda, create chaos with the intended purpose of introducing Legislation that would put one more link in the chain that binds the 99% to an agenda that increases the power and wealth of the 1%.  Few can deny that the weight of the chains are increasing with food and energy pricing putting increased pressure on the working poor and middle class, the necessary funds for a recovery are no where to be found.  While we are surrounded by a variety of commentators that predict our economic financial doom, I personally believe that the necessary funds to stimulate a healthy working poor and middle class recovery is possible, if we can finally take the necessary steps to follow the Leadership of Dr. Martin Luther King who stated that a nation that continues to spend more money on War, then upon problems of social uplift is approaching spiritual death.

 While we had a bail out for the banks and Wall Street as the market and the financial health of the 1% is as bright as a morning star, we never had a bail out for the poor and middle class who have been buried by a financial beast whose usury interests rates put a burden on those who can least likely afford it.  As the Federal Reserve prints more money on a daily basis to try and ease our pain, without real economic and political reform that flows across both sides of the aisle, the American people we fall slowly into the economic abyss.  Most economics agree that the amount of debt per person, man, women and child in the United States is near $60,000.

 Now you can see Karl Marx’s name flying across the internet airwaves as false prophets warn us about our past history, Marx got at least one thing correct, addiction to money is the greatest threat to mankind.  The United States has the highest ratio of executive pay to employee pay in the world, a 475 to 1 ratio, meaning that the average worker in a company receives $1 in earning for every $475 the executive earns.  In Europe there ratios are closer to a 15 to 1 ratio, so if an average worker makes $30,000/year, then an executive makes $450,000 per year.

 Far too often these executive salaries have been funded by designing employment systems that limit the number of hours of work by an employee so that they can get housing benefits, food stamps and medical assistance from State and Federal Governments:  This is Corporate Welfare at it worse, yet you see little or not effort in Congress to try and stop these types of abuses within the system.

 It was good to see the Massachusetts Legislature pass a new minimum wage law that was signed into law by Governor creating a wage of $11/ hour in the Commonwealth by 2017.  This is a step in the right direction but $11/hour is not enough to exist in Boston with the current escalation of housing costs especially for the poor.  A typical 2-bedroom apartment with utilities, even in Boston’s poorest neighborhoods is now cost $1600 per month.  For a family of 4, an $11/hour wage does not even cover a month’s rent.  In one particular Boston City Council district, 42% of the housing is subsidized but 78% of those people who need subsidies are working, the working poor.

 There is no better example of The Order out of chaos system than our current banking system that has turned into a system that robs the poor and middle class at every opportunity they get.  Charging the poor exurbanite interest rates, anything over 7% is a crime against humanity, and if we are going to fix a system that has preyed on the poor and middle class for more than 100 years, we need to take a serious look at how high interest rates have made the typical American consumer a wage slave.

 There is no better example of the effect the banks have had on the poor and middle class than the Mortgage Crisis that began in 2006 and continues to this day.  No one can deny that bankers and Wall Street executives were deliberately driving housing prices higher by lending money to individuals who could least afford it.  Consumers were led to believe that their home would continue to increase in value at unprecedented rates, allowing them to comfortably regain control of their finances.

 Millions of people ended up on the street, the executives involved in the scheme paid small fines that were a fraction of the profits that they generated, and in many Urban areas around the United States where the “Housing Myth” was manufactured consumer were stuck paying mortgages that were significantly higher than the actually value of their homes.

 The housing crisis is still a key to the American way of life, and a good place to start since the fraud to create the housing bubble originated in the Clinton Administration and continued into the Bush Administration. But it was the brilliant idea of the Clinton financial team to take the cost of housing out of the consumer price index that set the stage for allowing banking interests to commit a fraud that is still at the heart of our economic distress.  As long as consumer continue to spend such a high percentage of their wages on housing, the chance for a fair and equitable recovery are slim.

 Housing costs are driven by the amount of interest that investor and homeowners pay on a monthly basis.  As is historically the case with housing bubbles, while the over all cost for homeowners drop when the bubble burst, rents generally stay the same.  In an article in the Daily Beast in April John Surico wrote an article called The Rental Bubble is going to blow up  across the country. 

  According to the most recent Zillow report, Americans are spending the highest percentage of their income in 30 years on the rent check every month. Historically, the median household needed to spend a nationwide average of 24.5 percent (this includes utilities and additional costs) of their earnings to pay for rent at the median property level. Now, the share is 29.5 percent, a 19 percent jump from what it was between 1985 and 2000, before the housing market succumbed to bubble economics.

 If you look at the map, you’ll see a harrowing tale of statistics, where America’s increasingly unaffordable urban centers have skyrocketed in price over the past 10 years. Residents in Los Angeles, Miami, and San Francisco alone are spending more than 40 percent of their income to make ends meet in the rental market. But it’s not necessarily about what the price is now; to understand the true nature of these increases, it’s important to keep in mind what it once was. And McMillan’s turf is Ground Zero for this disparity.

  If we want to solve our current economic crisis especially in our inner cities, we need to address the issue of housing.  The first step in this process is admitting our history, and removing many of in inequities that have existed in the “housing and development game” for a long time.  Many of the inequities in that housing market have been brought on by bad government policies that looked at the problem of housing from a short-term perspective without looking out for the long-term health and prosperity of the average American citizen.

 The mortgage deduction for interest costs related to interest is perhaps the greatest burden for producing adequate housing for the poor.  The original idea of a mortgage deduction for homeowners has to create a incentive, an investment in American having their own piece of the rock.  It was not made to make sure the 1% could shelter as much income from taxes as possible by using valuable resources that are needed for the poor to build fortresses in the wilderness.

 We need a reasonable limit on the mortgage deduction to even the playing field.  You hear from housing experts frequently that the building of palace of elegance should be funded by taxpayers because it creates Jobs, but the net effect of this housing gluttony is that it ultimately drives up the prices of the natural resources necessary to build houses.  We could easily correct this problem by putting a limit on consumption or at least we could make sure the taxpayers were not financing housing for the 1%.

 As we look back over our governmental attempts to end the housing crisis through HUD, the Department of Housing and Urban Development, while this program has provided housing for the poor in our cities, when you look back on who really profited from the system, the Developers ultimately were the individuals who ended up with the greatest financial benefits from building housing for the poor.  And 50 years later, we serious need to begin to ask the hard questions about a government subsidized housing system that in many urban centers around the United States has become a de facto housing option for employees of multi-national Corporations who are paid substandard or non-living wages frequently as part time employees.

 In the poorest City Council district in Boston, 42% of the housing is subsidized and 78% of the occupants of those units are working.  We have created a system that essentially is a government subsidy for Corporation that refuses to pay a living wage.  $11/hour by 2017 is a start in the right direction, but what if we decide to do the math, the old fashion way.  Why can we not do the math like it used to be done before bankers and the financial hustlers of Wall Street got the American Public to drink from their poison system?

It was generally accepted back in the 1950’s that for a family to Thrive and to be a success part of the American dream that they should spent 25% of their income on housing.  Now back in the day many families survived on the income of only one of the spouses, but this formula was considered the foundation of a successful and prosperous nation.  So let us but that into perspective, and we will use Boston as an example.

If the typical housing cost for a family are $1600 per month, then that family would need an income of $6400/month in order to meet the standard set in the good old days when our manufacturing economy was the envy of the entire world. 

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