What follows is a copy of a letter sent to NAB’s president-CEO in response to a published quote of his.

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Date:	04-26-10
To:	NAB President-CEO Gordon Smith
From:	Brian Ascenzo, Pegwood Arts
Re:	Performance ‘tax’

Mr. Smith,

Speaking as both a BMI composer/musician and NAB member, I must voice my mixed reactions and thoughts with regards to your latest media quote:

(per NAB Smartbrief, 04-26-10)

Radio already provides a free platform for artists to promote their music and shouldn’t be the fall guy for the music industry’s failure to adjust its business model to the Internet,’

I must first point out that I don’t believe the Performance Rights Act is necessary, or that these lower echelon stations and venues need to pay additional royalties, especially at rates that would cripple their bottom line.

However -
The major users should continue to pay as they do. The opposing ‘Local Radio Freedom Act’ sponsored by NAB seeks to set a precedent that would set the stage for every major music user to sue for exclusion from royalties, as allowed for some but not all broadcasters after the passing of the LRFA.

Basically, this combination leads to the elimination of royalties for music usage everywhere, from malls to theaters to TV and radio.

As a BMI composer, I have made my career and living scoring corporate videos, short films and infomercials. I am no rock star getting heavy radio play, but my livelihood is in jeopardy because these political actions seek to eliminate my target revenue stream.

Even worse than that, though, for both sides, is that the arguments the NAB is using against these royalties are dichotomous to say the least, and outright untrue at many levels.

In addition to the quoted claim to a ‘free platform to promote their music’, there is also the ‘only millionaire stars and big companies get the money’ complaint.

In reality, the single hardest thing for an artist to do is to get on the radio. Even in the old days, you had to have a DJ or PM that liked you or sell thousands of copies (or bow to payola) to get even local or regional play.

But, it could be done. You could invite DJs to gigs and maybe get a late night play or 2 to get the ball rolling.

Music radio has long done away with all that.

Even small stations are using out of town programming services. College radio is as quirky and picky as ever, but all broadcast commercial radio is now a closed door. The vast majority of PMs and MDs no longer have the authority to program local or new artists on the air. DJs have rarely picked their own songs for the last 20 years.

The music radio industry decided decades ago that only ’stars’ and ‘hits’, songs and artists shipped and selling at 100,000 copies or more, would merit airplay.

This effectively limits radio access to millionaire and major label artists.

Quite simply, you can’t say we get free promotion for our music when only already famous artists are allowed to be featured. And you can’t limit the airwaves to hit artists and then complain that rich people get the money.

Radio broadcasters decided that only stars can play this game.

Most every other business in the world pays up front somehow for the commodity they offer the public. Even TV.

Not music radio, though. They get the product free, restrict access from songs and artists that they don’t believe will increase their audience, and set advertising rates using it as a draw. And now, they do it through a faceless remote service that artists can’t even approach. Our careers are uphill lotto-odds battles to get to that level somehow.

‘Free promotion’ exclusive to hit records is an oxymoron in practice.

Your language, from calling it a ‘tax’ for vilification purposes to citing the ‘free benefits to musicians’ to assert our selfishness, has most likely been wildly successful in assuring both the defeat of the PRA and the passing of the LRFA.

I know you’ll be pleased.

Here’s what happens next- since there will be a precedent for who’s exempt from royalties, and the LRF act says ‘any business using sound recordings’, every major music user of every kind will have an excuse to sue for exemption, and will. Of course, BMI and ASCAP will collapse.

Good, you say?

Video producers already want to pay little or nothing for music production. Their promise is the royalties.

They will be gone.

Every user will be allowed to use any recording anywhere with impunity from any source, and my craft will no longer have any value.

As an artist in my own right, I will still have to sell 10,000 copies on my own to find a national distributor or attract a major label.

Oh, but with this major revenue stream gone, they’re going to disappear, too.

Within 3 years of these laws passing, the programming services will control the entire music industry, and all artists will have to become independent labels.

Not that it isn’t evolving that way now, but the major labels are still an important cog in the works, and the royalty structure is a critical part of our legal rights to our product – our patent, license, trademark, etc. Not to mention being our gold ring, like a graphic artist licensing an artwork to Ford or McDonald’s for an ad or Sears to sell t-shirts – part of the reward for reaching that level.

You have no concept of how deeply and widely these actions will damage musicians and the future of recorded original music.

We already have to give our music away online and play for the same $50 that Ray Charles made in the bars in 1949, if that. We have to own a studio or pay for recording. We pay for pressing or burning CDs. Posters. SWAG. We are far from getting a free ride at radio’s expense.

Film makers have always wanted us to do scores ‘on spec’. With no royalty, we are down to the credit alone for hours and hours of work.

Oh, but they won’t need me anyway, because the LRFA will end up letting them use any music in the world to score the entire film, free.

We artists are under financial attack because we do actually generate billions of dollars.

We are worth our share of it, as surely as any other intellectual property originator.

The PRA is unnecessary, and does need to be defeated. The stations it seeks to add to the royalty structure are unlikely to pay a substantial amount and would be hamstrung with unwarranted additional overhead. They should instead be encouraged to include more new and local artists, and provide playlists to licensers voluntarily to help track and advance up and coming artists. At no cost to them, of course.

The LRFA, though is dangerous and completely uncalled for, especially in it’s vaguely worded form, and calls for the end of a livelihood for a large part of the musical community, unseen by the public.

NAB, however, knows us well. We were in the South Hall this year.

Please, don’t let us down.

Thank you for your time,

Brian Ascenzo
Pegwood Arts

 
 

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For more information:
 
The Performance Rights Act (PRA)
The Local Radio Freedom Act (LRFA)

 

The Lunatic Fringe in the Middle

§ 4:   I’m Only Biased Towards Prejudice

How many times a day do you hear them? More importantly, just what do “bias” and “prejudice” really mean to you? Do they mean the same things they meant 50 years ago? 100 years? 200??

Back out on my familiar limb, I’m going to throw caution to the wind and say “no”. I can’t say that the usage of these words was even the same when I was a schoolkid. I’m not concerned with using a dictionary for reference here, because, well, a dictionary just lists all the definitions. It doesn’t bother to tell you which one came first. The different meanings are cataloged in order of common usage, not age. I believe this means the most general definition is most likely the first. Therefore, a major individual situation is necessary to add a particular definition to a word.

Now, because of the idiocy of slavery and racism towards blacks, the definition of the word of “prejudice” actually includes skin color as a factor, like the word “politics” includes government as the major factor. (And we all know how well that turned out!)

Regardless of what we may do to the recorded meanings of words, we are still acting out the basic usage in most cases. Nowhere in our vocabulary do we make this more obvious than with the evil twin cousins of the English language -‘bias’ and “prejudice”.

“Bias”, I feel, is a general term to indicate a preference for a person or a thing based on the belief that the preferred one is better. Like the old mom’s line “he’s a good boy, but then again, I’m biased”. You can have a bias for a sports team, a brand name – anything or anybody. Nowadays though, you can also have a bias against something. This is, I feel, an overly generous addition to the usage of the word.

Why would a word be forced to work overtime? Who tells a noun that it’s gotta put in double shifts all week? (for that matter, who pays unemployment for out of work adverbs??) Just like in real life, it’s because someone got a transfer.

“Prejudice” was the word that really stood for the negative preference. Prejudice is about not liking something. It’s about wanting that thing to lose or go away. We are prejudiced towards the visiting team because we want our team to win. Well, we used to be.

All that has changed. Now, if you are biased, you are against the other team (not for your own), and if you are prejudiced, you are a racist. Forget about the sports analogy, buddy, this word’s out of the game. Our nation’s own past misdeeds have reassigned this word to new duties for the forseeable future. The civil strife that never should have been had no choice but to leave it’s marks on society, and this is one of them.

The reflection of a great mistake, chiseled into the meaning of 9 letters.

In spite of all this, we still act by the old definitions every day. Some of us trumpet our biases and wail our prejudices. Some of us just quietly steer around our prejudices, mapping the course to our biases, where we find peace, or at least, a good lunch deal. We are biased towards everything from our kid’s ball team to the gang that works at our regular hangouts. We are biased for the sports that we had fun playing when we were kids, and we are prejudiced against the ones we sucked at. We carry this love/hate relationship with us throughout our lives, in our food, our music, theatre, movies, our clothes, and, most unfortunately, our associations with people.

We clean each others clocks everyday in our brains, sizing each other up and filling out our tedious little sub-conscious lists of who to like and who to dislike – and why! We come up with all kinds of reasons to include or exclude people from our lives. As with all things, we’re just organizing our individual worlds to suit each unique perspective and identity. (Gosh, that’s so, like, you know?)

We call it freedom of choice.

For the most part, it works darn well. But, the thing about it is, freedom of choice only applies to the biases in our lives. It’s like candy, rewarding us with a sweet, head-spinning rush of joy. We choose our biases the way we choose our candy. We grab what we like best, and we grin about having it. When we’re choosing our freedoms, life is our candystore.

We don’t, however, choose our prejudices. They are the result of our exposure to the biases of others that conflict with ours. They represent the things that make us uncomfortable beyond our control. Everybody has them, whether they admit it or not. The thing is, prejudices run the gamut from petty idiocy to global endangerment.

In addition to the current “skin color” definition, we harbour many other wonderful, “enriching” prejudices. We have them towards the people who dress differently, and those people have them towards us because we’re looking at them. We’re prejudiced against the store that treated us badly, the TV show that we thought wasn’t funny, that band so-and-so likes that sounds like trash, or the cranky old fart who says the music we’re listening to sounds like trash. Our prejudices bely both the petty annoyances and the major upheavals in our lives. It’s not uncommon for all the close relatives of, say, an alcoholic, to develop a prejudice towards drinking – sometimes against anyone who drinks at all. You could substitute ANY problem a person can have, and the equation will hold true – some kind of prejudice will be produced. It is part of the way our minds cope with unwanted influences.

The really big problem is the tendency to ignore or dismiss the subjects of our prejudices out of hand because of our particular discomfort. We do it all the time. We assume that, because “they” engage in behavior that we don’t like, that everything else “they” do is invalid as well. We stop listening to the words and start judging the content by our loathing for the individual. Had a drug problem? Can’t know what you’re talking about. Must be totally zoned, man. Were you a gambler? Better watch my wallet! You get the idea. Everyone from immigrants to senor citizens feels it everyday. Face it, if no one is prejudiced against you, you are probably dead, or living on the new side of Antarctica.

So what can we do? We could be more patient. We can try to be more educated so that we will recognize smart things when we hear them, instead of dismissing them because of the body-piercings on the speaker (or the lack of same).

Mostly, if we learn, we win. If we don’t, we all lose.

 
©2000 Pegwood Arts. All Rights Reserved.
 

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The Lunatic Fringe in the Middle

§ 3:   The Counselor’s Dilemma

The pressures of everyday life are mounting higher with each passing year. The toll on humanity is incalculable, manifesting itself in some of the ugliest ways imaginable. And the victims of this outrageous terror?

Our spirits.

Yes, our very souls are under attack from within and without, plagued by the stresses of life that we create, and just as often, the stresses we don’t. Though we tend to set up many of our own disasters through greed, haste, ignorance, or pride, we don’t plan well for the disasters initiated by others.

The feeling of remorse or regret for something you’ve actually done wrong is relatively easy to get over (in less serious situations). Admitting your fault and seeing to its resolution usually takes care of the disaster and any accompanying emotions for all concerned.

When the stress comes from outside, the story is different. No matter what anyone says, there is a feeling of helplessness that can’t be avoided or denied. There is no true ability to confess or atone for the wrong. There is only the choice between blaming the other party for doing wrong, or blaming yourself for letting them!!!

Now the tricky part.

Left to ourselves, we will usually make a choice, good or bad. When we choose how to react to a problem, we are almost always governed by emotions. The strongest of those emotions are, unfortunately, depression and anger.

Yes, our old buddies depression and anger are just about the only reason we even know someone has a problem. Left on our own, our most immediate response to being screwed over is quite often anger. A great deal of the time, we make the “good anger” choice by focusing it as discipline at the source of the problem. We do this every time we send a meal back to the kitchen in a restaurant. When we return a defective toy to the store. When the credit card company messes up our bill.

(And of course, some of us go off the deep end, bringing up the basic reason for the concept of “state prisons”.)

In the lesser scenario, though, we almost unanimously support the anger of the aggrieved individual, as it relates to a tangible, material problem. By doing this, we diffuse the anger, and it subsides fairly soon afterwards.

Ah, but there’s the rub. Most of today’s real stresses come from the intangibles – from our dreams, our fears, our hopes and self-confidence, our aspirations, skills and talents. When these are the battlefields, anger is usually ineffective or even more damaging. Now, depression is the obvious choice. Left alone, we will all banish ourselves to the depths of despair.

We don’t want to do this, so we look to our peers and loved ones for help. All too often, though, we do not find the support we seek. We find instead, admonition and criticism. “Well, you shouldn’t have”…”I would never have done that….” “Oh, you’re exaggerating!!!” “Well, that’s your side of it.” And, of course, the king of them all – “There are people ‘homeless, dying, starving, oppressed, etc. [insert your favorite global disaster]‘ so you really have no problem at all!”

As true as any of these may be, when it comes to consoling someone, they simply do more – well, no, only – damage. Belittling the pain does not bring relief, only the desperate feeling of helplessness, and the need to justify. As this dire need is further criticized and dismissed, it grows into anger. Keep in mind, this is not anger at the situation that caused the depression. This is anger at the person sought out for help. In addition to whatever the job, career, relationship, or personal stress that started it all, the poor unfortunate’s heart is now broken by the hopeful healer! This is where, I fear, many suicides come from.

You see, in every case, no matter what, there is a real problem to be solved. An actual transgression, a real frustration, or an obstacle. Something to be overcome. Sometimes you have to dig a little to find it. Many people just blurt it out right from the start. Sometimes it’s too obvious to see. It depends on the original source of the pain.

Relationships are sometimes difficult to help people with, but they are still basically a no-brainer. We accept romantic problems as tangible, and we are rarely anything but supportive.

Likewise, when kids are involved, our tendencies are towards support and resolution. We have an unwritten rule that you can’t go kick a kid in the dream.

You are however, allowed to bash, belittle, vilify, and crush any adult’s dream anytime you wish. Once you grow up, all your dreams, aspirations, skills, talents and plans are targets on the range.

Want to own a chain of restaurants? Support, support, support. Got a problem with the franchise manager screwing you up? Problem to solve, let’s help.

Want to be something a little more intangible, like a musician, actor, writer, or artist? Why? Why? Why? Got a problem with a publication, a club, or a gallery? “Oh, you’re exaggerating!!!” “Well, that’s your side of it.” Made any money at all doing it? Well it’s just play to everyone else, and they think you’d do it for free, so they don’t hesitate to tell you how lucky you are because you do something you love. If you protest any more, they inevitably hit you with the aforementioned “king”.

So meanwhile, “whoever” is still getting away with “whatever”, and our alleged good friend is spiraling ever downward. Especially now, since we don’t hangout too much. After all he/she’s always bummed out or pissed – and that’s no fun.

Their funeral will be a riot, though, won’t it?

OK, that’s harsh. Or is it? We are constantly finding ways to diminish the power of death. We live longer. We die of less diseases. We even die of less injuries than ever before.

But we take our own lives at an alarming and growing rate.

Yeah, it scares me too. It’s probably my greatest fear for humanity. We are evolving at a quickening pace, hitting the gas a little with every new technology. With every mile down the cosmic road, we come closer and closer to being independent of physical labor. Once that threshold is crossed, our dreams, fears, hopes, self-confidence, aspirations, skills and talents will be all we really are.

All the reasons that a soul has to live.

In that future day, with only our spirits or our souls to define us, we will only be able to measure society by the integrity and quality of the intangibles that we as individuals contribute. Our very spirits will be the population. With our bodies efficiently repaired and life extended through modern and future medicine, there will be only one true loss, one crack to slip into.

The death of a soul.

I know, we’re getting religious here. Or are we? Yes, most faiths have some kind of basis in the existence of the soul, some believing it eternal. There is a point where they all agree, though, and that is how the soul manifests itself.

Most would agree that our soul’s face is our personality. But is that all? You know by now that I don’t think so! How we behave, how we carry ourselves, how we treat others, how we react to the way others treat us – this is our soul – who we are.
Right?

Our personality is just the outer shell of our soul.
The inside?

Dreams, fears, hopes, self-confidence, aspirations, skills, and talents.

And now, I suppose you want me to explain all this metaphysical mumbo-jumbo so that it makes actual sense, or you’re going back to the den to watch the ballgame?

Who’s playing?

But, seriously folks (thanks, we’ll be here all week!) It’s really not about any supernatural or cosmically spiritual manifestation of the universal or divine energy or any other highfalutin’ crap I could invent to blame it on. It’s just the one, basic rule, often called the “Golden Rule”.

“He with the gold has the higher tax bracket.”

Oops. Sorry. Scratch that. I really mean the other “Golden Rule”. That one that went on and on about treating others as you would treat – what was it? A dog? A pest? A stone in your path? A fruit tree to harvest? An animal to be slaughtered?

We humans invent a new way to break that law about every 20 seconds, yet still manage to invoke it whenever we’re on the receiving end. Many times, there’s little we can do. One way we can make a difference is in how we console our peers when these emotional disasters strike them.

Simply finish the proverb. Put ‘YOURSELF’ into the equation. Console the way you would want to be consoled if you had exactly their problem as they describe it. Toward that end, I would like to offer a few guidelines that I have learned from dealing with the stress and problems with various folks in my years of teaching, producing and performing.

I call them “Three Bad Things To Bring Up When Someone’s Down”:

1. Don’t say there is no pain.
If you don’t acknowledge the pain or the situation, you will never find out what’s really going on, and you will fix nothing. The more you deny the problem’s existence, the deeper the depression will go, and now you will be negatively attached to it as well. Open the gate. Admit the pain.

2. Never one-up someone when they’re down.
By far, the poorest way to convince someone that you understand their pain is to say you’ve been through it, only worse! This makes only you feel good. The object of your efforts, however, is more depressed, and now empathetic and guilty about your experience. The general feeling created is “I’m unimportant, and my problems aren’t worth solving.” You should withhold such an anecdote, unless it is less severe. Better yet, use those stories as a way to investigate or suggest a solution.

3. Don’t kick anyone in the dream.
This is the big one. Where most damage is done. If a person is depressed about something that you don’t understand, aren’t good at, or don’t like, BIG DEAL!!! It’s not your soul, for crying out loud; so try and help from their point of view! For example, what if you were a musician. What would you want? What would define that dream? Could it be, maybe one of the things you already know about, like, oh, a Platinum Record or a Grammy? Most importantly, you shift your criticism to the support side. Now you’re trying to help figure out how to get one. There’s only a few bars of blues when you do this!

Obviously, I’m talking about some pretty general things here. As a member of the entertainment community, I use a very close example, yet, one which is widely publicized. The “Artist’s Angst” is not new to culture in anyway. No artist, from scribe to sculptor to singer, is validated by their peers until they have achieved the tangible – the Grammy, the Oscar, the Pulitzer – or in many cases, the money!

This holds as true for a man with a better donut recipe as for an aspiring film director. The pain of climbing the mountain comes with the path, but the dream is up that steep, winding road. “Get off the road” is not an answer. Getting up the road is the quest.

So the true test of the Golden Rule comes not of our actions, but our reactions to others. This brings up that other old cliché. And our misuse of it.

“Walk a mile in my shoes” doesn’t mean put them on and walk around your backyard. Maybe we should say, instead, “walk a mile in my footsteps”. In other words, try to imagine going where I have gone, and trying to go where I want to be.

By using these age old rules, we effectively battle depression and all the baggage that comes with it – crime, addiction, abuse, neglect, and yes, thank you, suicide.

We will know we’ve truly grown when we matter-of-fact-ly regard each other as the spirited souls we are, defined by the most important standards in the cosmos.

Dreams, fears, hopes, self-confidence, aspirations, skills, and talents.

 
©2000 Pegwood Arts. All Rights Reserved.
 

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Many of you have gotten this email.

B-note: This is a partial quote from the email. He cites several dozen more, but these are the “horrifying, shocker” lines referred to and originally printed by the author in red.

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I URGE YOU TO READ THIS ALL THE WAY THROUGH AND IF YOU DON’T LIKE WHAT IS THERE TO PLEASE CALL YOUR CONGRESSMAN AND SENATORS TO OBJECT BECAUSE IF WE DON’T OBJECT THIS WILL BECOME THE LAW.

Subject: If you don’t want to even think about this, but surely you must oppose i…

If you have been in favor of any of the healthcare plan, you better think again. It will be tyranny for us. Let your congressman and senator know how you feel.

All of this is more than HORRIFYING, but for the biggest shocker look at page 425.

Peter Fleckstein has looked at Obama’s Healthcare Bill and if his comments are accurate this bill would be the most encompassing act of tyranny ever in the history of these United States. Here is what he says the bill says:

At the end of his comments there is a link to the actual bill itself so that you may check the accuracy of his comments.

PG 425 Lines 4-12 Govt mandates Advance Care Planning Consultation. Euthanasia and Doctor-Assisted Suicide.

Pg 425 Lines 17-19 Govt will instruct consult regarding living wills, and assume power of attorney of all enrollees. Mandatory!

PG 425 Lines 22-25, 426 Lines 1-3 Govt provides approved list of end of life resources, guiding you in death decisions to end your life.

PG 427 Lines 15-24 Govt mandates program to mandatory end of life programs. The Govt will mandate how your life ends.

Pg 429 Lines 1-9 An “advance care planning consultant” will be used frequently as a patient’s health deteriorates

PG 429 Lines 10-12 “advance care consultation” may include an ORDER to initiate end of life plans. AN ORDER from GOV to terminate a life.

Pg 429 Lines 13-25 – The govt will specify which Doctors can write an end of life order.

PG 430 Lines 11-15 The Govt will decide what level of treatment you will have at end of life

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Oh my God!!!!!
Government mandated suicide!!!
Just like that Star Trek episode with the guy from MASH committing suicide at age 60 by law. How horrific!!!!!!

I don’t want anyone to think I’m for bill HR 3200 in any way. It’s garbage for 32,000 reasons including the euthanasia scare.

But not the way you think.

We’ve all gotten the horror email about killing old people. It says the bill mandates this outright in black and white.

The concern is real, though the bill doesn’t say that.

HR 3200 doesn’t give the government the powers of euthanasia that the emails describe.

It does guarantee the medical community, especially insurers like Blue Cross, that they can charge Uncle Sam once every 5 years for a “consultation” for every patient that qualifies for Medicare. More often than that if there’s a change in the person’s health.

These provisions are supposed to be about making sure people plan ahead for future care and have their wishes honored. The section lays out all the reasons you might need it: long-term care, life-sustaining care, decisions to be made if you can’t, and, yes, hospice.

No government agent is supposed to sit in on this consultation. You and your doctor, nurse, or – here’s the dangerous part – your proxy. Which can be your provider’s medical administrator.

According to the bill, this is a choice for the patient that the government must pay for. To insurers, doctors and health care providers, it’s a goldmine of guaranteed fees from the US coffers with no treatment or service expense. All providers will make this consultation mandatory by policy so they won’t miss out on any cash. Then, doctors will start telling all their patients of age, but not covered, that it’s mandatory but free, and everybody will get in on it.

Then, the providers and certain doctors will use the consultations as an excuse to suggest or deny treatments, minimize expenses, or, yes, convince folks to give up and let their illness win to maximize profit.

Facilities and providers under the current system can’t wait to bury patients who are terminal and no longer generating income through treatments and procedures.

They practically killed my dad with horrendous care and practices after botching his surgery. He couldn’t die soon enough. The nursing home doped him up and gave him pneumonia. Then the ER was going to deny him the antibiotics because he was going to die anyway. I almost hit the doctor. I demanded my dad get them, and he was eating a steak the next day. We set him up to do home hospice with me and my brothers. He left this world at his time, in his own home, watching his TV.

This bill will empower providers to lie about the law at will, applying it as they see fit to maximize their cash flow from the government. Every healthy person over 65 would be encouraged to test for some possible ailment at every consultation. Anyone with a problem would find themselves taking numerous tests, procedures, and drugs unrelated to the illness. God forbid you be terminally ill. They’ll send you down the hospice chute faster than you can wink. On life support? Not anymore. Cutting costs mean cutting your life.

So, yes, these fears are justified, but not because the government is going to suddenly become fascist, commie Nazis.

It’s because our medical providers will instantly abuse it completely and leave us worse off no matter what it says.

My brother pointed out to me that Nazi Germany had similar legislation, that had a distinction, read between the lines, that allowed for the elimination of “useless eaters” – euthanasia of those too old or infirm to contribute to society. Although the law didn’t say that, it could be interpreted by the Nazis intentionally to use it this way without the public’s awareness, most believing the law was fair.

This is exactly like that. The pages just say a Medicare patient can have this every 5 years or more often if their health changes.

Providers will say it’s mandatory. Even though they don’t provide that consultation at all now unless it’s demanded by the patient’s advocates and approved by the provider, however useful it might be.

A counseling session like this may have allowed me to get my dad into home hospice much earlier. Even to have planned for it when his cancer metastasized. We only got him home after 3 near-death experiences exposing horrendous negligence. And begrudgingly. They fought us over it until we exhausted them. This is with full BlueCross/BlueShield and supplemental up the wazoo. They couldn’t wait to put him in a black gurney.

Imagine what they’ll do when they can charge the government full rate, say it’s mandatory, and dictate patient care from then on.

The bill doesn’t say that, but we’re already being told it does just to hide the fact that it’s already status quo.

They want more. This is a license to print money from Medicare patients and discard them when they don’t bring a profit.

The whole thing is written like this – vague, technical, and ripe for abuse by the current system.

I hate this bill, but I also hate to see all this larceny continue unabated because of some semantic sleight of hand.

The providers need to change to accommodate the market. No government-anything past fixing Medicare for now.

This bill will make everything worse.

Even worse yet, no bill will be any good until we start using the actual language against them instead of taking interpretations as fact.

This is the info I wish was going around the internet. The bill can’t be trusted because it gives free reign to all the morons and profiteers already ruining our system for most folks.

Obama is not out to kill our elderly, he just doesn’t know the medical insurance industry already is.

I hope you’ll pass this on. I hate to see this bill go through because this “euthanasia” point is too easy to dismiss.

It’s already happening now, and it will grow unchecked if this bill is passed.

Please send the real page 425 to everyone and your congress-morons.

Now, those actual pages from the house bill, accessed via the link in the email (you actually have to start at page 424 to get the entire section):

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I simply did as the email suggested: I followed the link to verify his comments.

To make it even simpler, I chose to first investigate his “horrifying” mandates on pages 425-430.

As you’ve read, there is no way to confuse this section as “mandatory euthanasia at the government’s discretion”. It merely demands counseling and knowledge of all aspects of care and assistance available, spelling them out by application – critical care, long term care, life-sustaining, and hospice.

This kind of misquote is rampant on both sides. Read the bill yourself. Don’t take someone’s word for what’s in it. There’s surely plenty wrong and right in the same pages, and much to be discussed. This is, however, a blatant attempt to frighten people into
fearing any health care bill, outright. We aren’t living in Logan’s Run unless we allow this to continue.

But, as my brother wryly observed, “objects in mirror are closer than they appear”.

All this nonsense has to stop.

And we’re just the hairpins to do it.
 
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References:
 
Full text of HR 3200 IH on gpo.gov
Government Printing Office (GPO)
 
Related Media:
 
Star Trek: TNG episode “Half a Life” – Wikipedia entry
Star Trek store

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From Oxford University Press:

refers to any one of various theories of economic organization advocating public or collective ownership and administration of the means of production and distribution of goods, and a society characterized by equal access to resources for all individuals with a more egalitarian method of compensation.

a political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs.

the ideology and practice of the Nazis, especially the policy of racist nationalism, national expansion, and state control of the economy.

 

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This definition of socialism is valid.

The common distinction of Nazis obfuscating racism and nationalism as socialism is also accurate.

All the myriad modern political criticisms voiced as Nazi, socialist, and communist comparisons are accurate as well.

Historically, politically, and situationally. Accurate.

But, not from your real “Funk and Wagnalls’” point of view. Not according to the words themselves.

These are basically dirty words in America. They bring scorn and derision from many. Torrents of online comments and forums are rife with eager right wingers slamming liberals as “socialist”. Eventually, as “commies”, and of course, soon after, as “Nazis”.

Theses comments represent the individuals understanding of these terms from knowledge of their application through history. All 3 terms are instantly associated with cruel, brutal, evil regimes and widespread abuse, corruption, murder, and imperial plans for military global domination.

Of course, from the current Communist view, we Americans are “greedy imperialists’”out to take monetary and military control of the world. While we suspect as a society that our financial sector has maybe too big of an appetite, I think few of us believe that our leaders or citizens have ever wanted to militarily control the world or, in fact, even to be an empire of colonies around the globe. I think we genuinely want everyone to have their choice and the knowledge to make it wisely. We don’t see ourselves as the ruthless conquerors we observed the Soviet Union to be.

So here we are. Completely divergent socio-political systems at odds with each other and the global economy batted about between them like a shuttlecock. The other is so evil, mine has to be right. So both will tell you, with plenty of horrifying indisputable examples of why the enemy is so bad.

What’s missing – that hidden truth in the middle.

The clarity of the words themselves. What do they really mean?

Well, we can dump “Nazi” because it was created by a murderous lunatic and is only an acronym for his intolerant evil movement. Please use it sparingly. And alone. Or not at all, maybe.

No such luck with the other two. They’re real words twisted past recognition.

“Communism” and “socialism” are words that have been re-defined by history and politics.

Even Karl Marx himself was so inane as to call them a “political struggle”.

Communism – from “commune” or “community”. “Socialism”- from “social” or “society”.

These words mean, basically, “for the community” or “for society”. It’s not politics.

In fact, it’s an economic/administration system that could only work as a classless democracy with voluntary and agreed levels of community ownership and responsibility.

No government on Earth’s ever tried this without military ruling-class domination and the virtual elimination of the middle class. Not Russia, not Cuba, and certainly not China. And the Nazis? Socialists? Hardly! As soon as Marx made it a political issue, he gave it to uncounted current and future despots as a new strategy.

The only example of socialism or communism ever attempted in the modern age was by – you guessed it – hippies in the late 60’s.

A “commune” was a community of people acting as one entity, sharing all assets and duties equally.

They ran into immediate difficulty because all needs and skills are not equally applicable. A variable scale has to come into play to account for demand, supply, skills, priority and value.

This goes against the philosophy itself unless you add individual ownership and capitalism to generate growth and stability.

In other words, free-market capitalism.

Socialism demands a common base for all and a common right to improvement and enrichment for all, balanced by the desire to contribute to the base by those who grow.

China is learning as we watch. You can’t sustain a true communist society of billions without growing economically. They are starting to evolve, albeit at a snail’s pace, to a free market-socialist hybrid. They’re seeing a dramatic increase in middle class as they take on a more active role in the world marketplace.

They have a long way to go, but you can see that they’re adding bits of capitalism here and there to keep the system running. While democracy may be light years away there, China is in a prime position to set the world example for nationalized health care and meeting public welfare/retirement needs.

Serious human rights issues remain from the military origins of Chinese communism, and these will need to be overcome as well before they can achieve this prosperous blend of east/west philosophy.

Simply put – they must find the necessary blend of socialist and capitalist practices to ensure maximum stability or they will die financially like the Soviet Union.

In any case, the stage will be set for a new attempt at democratic, free-market, socially-oriented government.

Think of it. The American dream – you’re right try to achieve anything you want and reap the fortunes you earn, anchored by the safety of knowing you have shelter, food, education, and communication at your disposal – you can try, really try, without risking your home, your livelihood, your family’s health. You can grow, earn, profit, and participate in your government. You can truly choose.

I have only ever seen one example of this kind of government.

Star Trek.

In this fictional Utopia of the future, it seems the lowest one falls is a place to stay with a replicator, communications port, and medical help if they need it. Above and beyond that – the universe is the limit.

You live a life of freedom of choice, of speech, of endeavor. You vote. You participate in your government’s affairs. Your politicians know this and act responsibly. (Ok, even I couldn’t keep a straight face on that one.)

In the Federation’s day, things are still made. People are still employed privately and civilly. There are still successful folks, and folks who just get by on the basics.

If we had to nitpick about how a fictional society works;

All housing isn’t arbitrarily free. You live in a small, clean, pleasant, healthy, and accessible studio apartment with a bath, sleeping area, a dining area, replicator, and communications hub. The furniture is built in and it retracts if you want to buy your own custom furniture. You can still buy or lease any size or style of home, but this one is free as long as you need it.

A basic communications system probably would give you all the same kind of things that are free or normal for general consumption now. A computer keyboard/lcd port for internet/Library access, news, TV, some entertainment, communication, correspondence, and education. Special programming and features would cost extra.

The replicator might come with about 500 normal everyday household patterns, from chicken soup, salads, and hot dogs to pajamas and screwdrivers. A small selection of toys and games. Specialty items, like designers clothes, sports equipment, musical instruments, and recreational items would cost. You’d buy the pattern for that brand-name tennis racket, and if it broke you could make another.

You see, you still can have a job and get paid. And you don’t have to spend 90% of your pay struggling just to exist. If this isn’t enough for you – if you want more, you can go after it all you want without fear of dying alone in the street.

And when you make it, you can have a mansion somewhere and your own shuttle-pod. Maybe even your own transporter. You can replicate Gucci underwear and famous gourmet recipes.

Gene Roddenberry’s world of our future implies a true fusion of democratic, capitalist, and socialist philosophies.

Does that make Star Trek a bunch of pinko-commie Nazis?

We can’t even use the word socialist without attaching the idiocy of Marx, Lenin, Stalin, Hitler, and Mao. The term itself is now vilified beyond repair.

So, my point stands. No one has ever tried to implement a proper working blend of democratic, capitalist, and socialist practices.

Well, a couple wanted to, but they immediately thought, “Ok, we can free everybody from this tyranny if we just get control of the military, banks, and broadcasters.” You know the rest.

It will be hundreds of years before mention of socializing or nationalizing anything is not tainted by these horrific examples.

And so it goes.

The subject of “socialism”, of welfare itself, in any form, is now immutably wed to the despicable crimes of fascist, insane, despotic megalomaniacs bending Marx’s already misguided words.

I’m just saying. Nothing but the shams of military dictators has ever seen the light of day.

Some of the most stoned people on the planet figured out by 1969 that socialism alone doesn’t work because it kills the economy. “Man, like, I need bread to make bread, you know, but i gotta sell some bread to get some.”

But, because of the historical morons I’ve named, it will take until Star Trek is real before the concepts themselves will be mentioned without generating revulsion.

I suppose we can wait. We’ve waited all this time already.

What’s another 300 years?

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Part Four: Epilogue

Unfortunately, rate gouging to maintain margins is common practice for finance-based companies. They hold everyone hostage by controlling the money, charging for doing it, and penalizing you past your means if you get behind.

I don’t know, that sounds like extortion without the broken limbs, to me.

And that “new deal at the table” thing sounds like fraud.

Holding my deposit and bouncing a check against it, then charging $35?

Sounds like embezzlement, at least.

Raising interest rates and charging fees at will, pushing a debt to unpayable limits? Isn’t that loansharking?

And yet, Detroit automakers, their sales killed by these factors ruining their client base financially, are assailed for their gall in asking the government for 1/7th of what AIG has already received and blown.

GM and Chrysler make something we use. Many of us like their cars. AIG just charges premiums and bets it all on Wall Street. Which one is useful and which is self-serving? And which is being criticized for needing help while the other gets Pentagon-level funding with no strings attached?

Why not give all of AIG’s dough to Detroit? Tell them to have 50 miles per gallon alternative fuel cars and an average new car price of $10,000 in 7 years. They would do it, I’m sure. Ford would even pony up to the trough to stay up with the rest.

$180 billion is an obscenely huge amount of money. Almost any manufacturing industry on earth, short of military suppliers, could advance exponentially with that kind of funding from the government. Give it to World Health Organization and the whole planet is up to it’s knees in food. Give it to aids or cancer research and we see cures in our lifetimes. Give it to NASA and we’re practically on Mars.

Or, offer it as a refund incentive to mortgage companies that willingly reduce principle and interest to insure that homeowners can make their payments.

If “Mary’s” mortgagor was getting $50-100,000 of that $180 billion in return for adjusting her loan down to $180,000 at 4%/40 years, that would be just fine with people and “Mary” would be just fine, too.

The Fed could have said “Ok, folks – everyone who drops to 4% fixed APR and absorbs principle on upside-down loans and interest from payment arrears can claim those losses from this fund”.

There would be no foreclosure crisis and little complaint from most folks if the ‘bailout’ was based on saving people’s homes and livelihoods by capping interest rates and re-imbursing lenders for the lost principle.

That’s not what the bailout accomplished.

It’s company’s margins and share prices that were restored. Their value at – where? The Wall Street Casino.

It would not be unfair, un-American or communist to suggest a temporary federal hold on interest rates. All lenders and credit companies could be limited to 4 or 5% interest for a specific period of time. That would allow people to catch up and stabilize themselves financially. Then interest rates could start with a clean slate and rise or fall more naturally with the economy as it recovers.

Thus, helping the companies that we live on further reduce the cost of living for everyone by increasing quality and lowering prices. If everyone can afford to live, it’s likelier they can spend, too. If people can work things out to stay on track with their debts and expenses when times get rough, they’ll make it through to the next good time, and be all caught up.

And, when times get bad for the market, it’s those top-level execs and shareholders who own the business, like any small business owner, who owe it to the company to eat the margin if they have to in order to maintain stability.

But this isn’t about stability. This profit margining behemoth is motivated only by immediate gain and has little or no concern about longevity.

What about this current recession/depression does not stem from these financial practices?

We’re talking about a free market economy, right? Capitalism? Supply and demand? Fair market value? Free and fair trade? Is this really the way that’s supposed to work?

Strong-arming us with price hikes, penalties and fees, paying huge salaries and bonuses, and claiming billions in losses as they do it.

Getting their hooks into us with a small legitimate debt, and turning the screw as soon as we mess up.

No, not a scene from the “Sopranos”.

The epitome of organized crime – crime for sheer profit above all else, with no regard for human life or welfare, is not a bunch of mobsters.

It’s the money guys in the black silk ties.

You can see them. There’s a tour.

It’s called the Wall Street Casino.

Open 9:30am-4:00pm ET Monday through Friday.

 
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Return to the beginning – Part One: Genesis
 

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Part Three: They Get Us Where We Live

In the housing industry, it all comes together – every form of margining, gouging, and fee wrangling takes place in the cavalcade of paperwork and fine print the unwary homebuyer faces.

Here’s how it works.

“Ed” watches some house-flipping show on TV.

He’s fascinated and thinks he can easily pull it off. The housing market is hot, and he’s sure he can fix up and sell a house in a couple months or less. Big dollars!!!

Ed has $50,000 in the bank. He finds a fixer-upper for $150,000. He has to put down 20% to get his loan at 6% and 3 points ($4500), and puts $10,000 into making it sellable. That climbs to $25,000 as the infirmities in the house are discovered.

Now Ed is $9500 in debt and has a mortgage payment on the spec house. He puts it on the market at $275,000, the same price range as other houses in the area. He wants his margin. But, a glut of houses for sale in his neighborhood drive the price down near $200,000 and his is not selling. So he decides to drop the price to $250,000 and rent it in the meantime for market value, almost double his mortgage payment. Tenant after tenant gets behind on the $1400 rent and has to be evicted, often leaving damage in their wake.

It goes on for like this for 6 months.

“Mary” wants to buy a house in Ed’s neighborhood. His is “just right” for her, but she can’t afford it. He was looking for something around $150,000. But she really loves it. Her bank won’t come up, and she only has $20,000 to put down. She can’t afford more than $1000 a month payment, tax and insurance included.

She’s talked to several real estate agents. Many told her there won’t be anything she wants in her price range – that she should lower her sights. One, though, insists that she can afford Ed’s house, even though her bank won’t touch it. He tells her he can recommend someone.

He insists – “we will get you into the house”.

Mary goes to the agent’s chosen mortgage broker, who also assures her that she will get her dream house. The sale price is the full $250,000. She is offered a typical 30 year mortgage at 5% fixed with 1/2 point loan fee. He quotes her $1200 without T/I. She says it’s too much. He says he’ll “come up with something”.

Weeks later, he calls Mary with a solution. He can get the principle down to under $1000 if she puts $70,000 down. She reminds him she only has $20,000 to put down. He says she can borrow the rest of the down payment for an extra $75 dollars a month.

And, he chimes, “you’ll be in your dream house.”

Mary agrees and he puts the loan in to the bank. He sets a closing day for July 1st. Her lease is up at the end of June, and the landlord won’t budge, so she has to move into storage anyway.

The paperwork takes longer than expected, so with her things in storage, Mary has to live in a motel for a 8 days waiting to close on her dreamhouse. When she gets to the pre-closing meeting, she suddenly finds herself in the Twilight Zone, beset with a mountain of new, horrifying contracts and numbers.

She is now looking at 8% interest variable up to 17%, $1320 PI per month, with 3 points down – $7,500, and a second mortgage for the downpayment – 20 years at 9% for $400 a month. Her combined payments with tax and insurance top $2000 a month, and she has to pay almost $29,000 at closing.

So, she has to take it because she works out of her home and can’t do business from a motel room. She rationalizes that she can rent a room, make some cutbacks – she still has $10,000 in the bank. She’ll just have to make it work. She will surely go broke being unable to work and paying for hotels and storage while looking for another house.

You see, Mary had only a $40,000 inheritance in the bank. She was counting on getting a mortgage lower than her current rent, and still having $20,000 security in the bank.

But, the mortgage company required Mary to show them that bank balance, as well as her credit and income. They decided after seeing the $40,000, her income of $30,000 a year, and a good credit score that Mary would be an ideal target for the maximum margin – she could be expected to somehow make the payments at that rate – at least until the $40,000 ran out.

All this time, Ed has seen his debt escalate as his maintenance of the house and tenants continues to worsen. Finally, he’s so far in debt and tied up maintaining the renters that he gets behind on the mortgage.

In the 7 months it’s taken Mary to figure her finances, decide to buy, find a neighborhood, find Ed’s house, apply for the loans and close, Ed has lost it to the bank. They foreclosed on the $120,000 loan and that’s who Mary is buying it from now.

For $250,000.

The agent makes 7%, $17,500, and the bank that foreclosed on Ed nets over $150,000.

Neither the agent nor the mortgage broker suggested offering less money for the house. They both wanted their maximum return.

So, in a years time -

Ed lost his entire $30,000 down payment, spent the other $20,000 and rang up an additional $12,000 in credit debt over the course of the project. Eventually it put him behind in his own home mortgage, and when he was laid-off from his job, he ended up losing his home.

Mary held on until the savings ran out and business slumped. A roommate could only be expected to pay about $500 a month including utilities. Making matters worse, house prices in her neighborhood plummeted farther, below $200,000, leaving her seriously “upside down” at $230,000 in total loans. Losing the house was inevitable.

Well, it shouldn’t have been. This is the kind of mess you end up with when margining rules every step of the way. Had Ed been offered and willing to take $200,000 and the bank willing to give Mary 5% @40 years with a 1 point loan fee, she could easily have made it and Ed would’ve collected $65,000, even after paying the agent. And he wouldn’t be in severe debt causing him to lose his own home.

But, everyone had to have the biggest piece they could along every step. From the mortgage companies to the title brokers to Ed’s credit cards, everyone wanted their maximum profit margin, right now.

Ed was trying to play the casino games, like the big guys on TV. He willingly took the risk, knowing he might lose, but not really believing it. Like many people, he was attracted to the golden apple of big money, portrayed all too often on TV as easy pickings. He got in over his head by rushing in as soon as his bank said “yes”. So many doing it – it must be a sure thing. Turns out, it’s not always so.

Only one person was margining for the right reason. Mary. The consumer. She was budgeting. She tried to increase her chance of maintaining cashflow by reducing her cost without having to charge more for her services. She was trying to obey the marketing rules. This is normal, healthy margining.

But the money monsters had both of their numbers all along. If you want it, you gotta pay for it.

Everyone involved marginalized Ed and Mary to the limit for the sake of immediately collecting cash that “we know you have”.

Gotta keep that margin up.

Ooh! Gotta run. The Casino’s open!

 
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Read Part 4: Epilogue
 

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Part Two: The Monster Grows

So, all of our financial companies hit the Wall Street Casino with our collective cash from all our monthly payments, and it’s not going well. There’re way too many people betting on the same things and driving up the bets. Everyone has to raise their rates to make sure they keep their value and salaries and still have enough to play with. Their increased values force big companies that make the stuff we all use to raise their prices to keep their stock values competitive.

Higher financial prices propel rents higher and higher, pushing the limits for the majority of the population. The government makes more money to alleviate the pressure, but it backfires. Financiers just raise their rates to take up the slack. So, the Fed lowers the interest banks pay. That should help.

It does. The banks use the increased profit margin to bolster their stock value. More chips for the Casino.

Oh, and rates go up again.

This idiocy has grown into an unfathomable money monster, killing Americans dollar by dollar, day by day.

The sheer fact that an insurance company asked for and got $180 billion dollars from the government says something is horribly awry.

This company’s been paid billions of dollars by customers of their various insurance programs. How do you lose that much money when your only administrative costs are claims, staff, facility, and communications? Surely the nation’s largest insurer would have to see 50% of its customers drop or default to be in this kind of jam.

Um, no.

Remember, they figured out the minimum cash needed to sustain normal claims, expenses, salaries, and bonuses. The rest went – you guessed!

You see, if you have $100, the Wall Street Casino will lend you $500 and you can bet it all. If you win, cool. If not, you deduct your loss from your taxes and add the payments to your rates.

Free money to gamble with!!!

It’s very simple math, folks – if people can’t pay what you charge, you need to lower your rates. You don’t restore cashflow by charging more! You accommodate the market by lowering your rate and expanding your terms if that’s what it takes.

You certainly don’t pay anyone millions of dollars when the company is losing money, do you? And you surely don’t take risks like the stock market when your bottom line is in trouble — But, they did. And they are still. And it all goes on like before except they have $180 billion in free chips for the Casino.

You see, in all these cases, from apples to insurance, the one governing rule of capitalism is that you can’t charge more than the market will bear.

The current foreclosure rate in the US is graphic proof that this rule has been left in the dust.

Lots of people blame consumers for buying past their means, causing prices to go up.

No. Not even close.

There is a real evil at work. The one that wrought its way through the money belt and out into every form of commerce.

Margining.

Maintaining and increasing profit margin is the driving force in modern business. Lowering cost and increasing sales lead to bigger profit. That’s the theory, anyway.

That’s just not good enough for today’s financial honchos. They want more. Not just being profitable. Not just growing as a business, but by growing limitlessly through lower costs, more sales, and higher prices.

Everything is margined to the hilt. You’re supposed to charge double or more what it cost you. Period. You’re supposed to get that margin from everyone, everywhere, all the time.

Why would so many buy into this idea of raising prices and pushing margins to the edge?

It gets the company more chip credits in the Wall Street Casino.

To them, this is how it works. What it’s all about. Being up on the big board, in the game. The rise and fall of the stock prices, the thrill of the deal. The sweet smell of victory.

Sounds more like Vegas than Wall Street, doesn’t it?

This is where the controlling eschelons of finance live. This is how they see the world. Not in terms of how strong the foundation, but how tall the castle. The price per share is what it’s all about. That’s the bottom line to them.

But, the realities of capitalism say “no”.

It’s given public opinion that finance is thought to be in the hands of the richest 5% of the population. While this may or may not be accurate, it’s sure that the rich are a minority and that many wealthy people have gotten there through control of or profit from the Wall Street Casino.

Any market will bear what the bottom 50% can afford, or the controlling top 5% have to eat the balance to maintain stability, or risk assets and equity by losing customers. It’s supposed to be in their best interest to suffer the margin in favor of continued positive cashflow.

Current practices have no patience for bumps in the road. They want the maximum price, the widest margin, right now. They want all the money you have.

And, they get it. Your mortgage straps you and you have to put the refrigerator on a card. So you get one with a 5% introductory interest rate (going up to 17% in 30 days). You buy the fridge and make the minimum payments for 2 months, and suddenly the interest is 23%, and the finance charge has put you over your limit, earning you a $35 fee as well.

While there are people who just spend too much on credit cards when they shouldn’t, or get too many and max them all out frivolously, there are now far more people using credit just to get by. Emergencies like a new fridge or an unexpected dentist bill can be crippling. There are hundreds of new, rising costs facing consumers everyday. It’s common for people to be buying even groceries and gas on credit cards.

And the card companies eat it up. They don’t care if you’re strapped to the limit. They just keep piling it on, increasing your burden in fees and interest far, far past the amount of your purchases, all the while raising those rates and fees.

They want people to spend the max, pay the max interest, go over limit, pay fees, and catch up again – over and over and over.

Their margin-model is based on it.

And what do they do with that huge margin?

Yup.

They hit the Wall Street Casino again.

 
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Read Part 3: They Get Us Where We Live
 

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Part One: Genesis

One of the themes of President Obama’s administration that draws controversy is the idea of “redistributing” wealth. Depending on your point of view, this is either nobly responsible or outright larceny. Or if you don’t fancy yourself to be a “liberal” or “conservative” (I don’t like to use the terms – they don’t mean anything anymore), then you know this is all malarkey.

Robin Hood politics is not the answer here. Never going to happen.

The current economic crisis is not the result of too many people being rich, even obscenely so. The problem is in how some of them got that way.

The general, parental culprit is the financial industry itself – its parents, banking and lending, and it’s havoc-reeking progeny, the credit card, insurance, mortgage, and investment businesses.

Now, I, for one, have no problem with the idea of being rich. Not for me or anyone else, for that matter. I do have huge problems with some of the ways to become rich.

For instance, stealing, cheating, lying, committing fraud, selling ripoff deals, extortion, and loansharking are all ways of making money that I believe are just wrong. I’m not big on gambling, but I don’t think it’s criminal unless it’s fixed, and it’s your own business making the bet as long as you’re prepared to suck it up if you lose and stop when you can’t afford it.

So, I have no trouble with Paul McCartney being a billionaire. Or Steve Wynn or Mike Ilitch.
Really. If you make, create, or build something; provide a skill; build a business; improve or fix or refurbish or sell something – any way to earn money by providing a service or skill or taking the bet and facing the risk fairly. In other words, tangibly honest.

Banking starts out that way. It provides the service of safeguarding your money. Likely, it began as simply as holding accounts and charging a fee for it. I’m sure one of the very first bankers immediately saw the possibilities from having a whole village worth of money at once. So, lending money and charging interest on the payments quickly became a principle function of banks in general. Along with public knowledge of the bank’s profit came the payment of interest to the account holders – essentially their share of the profits from loans on their money.

But, this is just the tip of the financial iceberg that we have crashed into. It didn’t take very long at all for bankers to realize that the more ways you could raise large capital, the more you could invest in loans, the more profit you make in interest.

So simple.

Soon everyone is borrowing something somewhere – governments, businesses, individuals, other banks – all generating huge cashflow in monthly payments.

Then the brilliant idea that changed everything.

Let’s sell shares of it!

Let’s let people buy a piece of the cashflow by putting up cash in return for a dividend from the profits. Just a small extension of the original interest bearing account technique, right?

Oh. no. Much more than that.
We’re looking at every kind of mutual fund, investment accounts, insurance, and the mother of all financial goldmines – The Stock Exchange.

Now, selling shares of your business to generate capital is a pretty normal way to make a business work. The basic idea is for investors is to reap the rewards through dividends. If the company increases its earnings, the dividends go up, and this is, after all, why you put up the money in the first place.

Financial tools don’t work that way. They aren’t based on real cashflow. They’re based on a company’s total value of assets, capital investments, estimated cashflow, and the resulting stock market value.

With stock trading came the reality of values going up or down and shares being bought or sold on that alone. Along comes the caginess of the stock broker, gauging the profitability of the different companies and their potential.

From a capitalist view, there is still nothing wrong here yet. As long as people know what they’re getting – guaranteed interest or potential dividend, this works fine.

But, along comes the insurance industry, again, with humble, sensible beginnings. The idea of paying premiums to a company who agrees to pay on your behalf for damage, loss, or injury beyond normal means is practical and in many cases, prudent. At the front end, handling accounts, the agent’s office is no different from the local banker, honestly just looking at parameters and figuring out what coverages you’ll buy and premiums you’ll pay. The fact that the salesperson makes a commission from the premiums isn’t out of line, either – it’s a standard retail sales practice.

If all the money from premiums just went into the bank and the insurance company just collected interest, deducted payroll and expenses, and paid out for claims, it would all be fine. Thinking like a normal retailer might, as your bank balance goes up, your
interest earnings increase. As your margin rises, you lower rates to attract more customers, growing by volume rather than individual customer profit.

But, that’s not how it works at the top.

It’s soon realized that the claim payouts are a small percentage of premium revenues collected. Nothing compared to the potential profit from investing this huge sum.

They figured out that they can collect all that cash upfront from the customer, and invest it themselves just like the bank would and keep all the profit. Most of the money just sits there, so let’s make it work for us by investing it in the stock market.

So, they stop keeping much more than enough cash to cover the statistical number of claims per fiscal quarter and expenses, salaries, and of course, bonuses.

The real risk here is that if they have too many claims at once, say, from a natural disaster like “Katrina”, they may not have enough cash on hand to cover everything. They may be forced to sell stocks or shares to raise the cash to satisfy claims. Being margined for investment will leave them short, and they may even have to borrow the money to make good.

It’s no accident that an insurance company is one of the most publicized bailout recipients. By refusing to bend on margins, acquisitions and executive salaries, they pushed their customers to the edge while maintaining excessively large investments and compensations.

But, I’m getting ahead of myself. All of this leads to some pretty large corporate fortunes. Money to burn, so to speak. Insurance, investment, and mortgage companies with lots to lend and running out of new ways to generate that payment-fed cashflow, strike on an idea that solves it all.

Credit cards.

The idea of letting people just buy things on your capital and pay back with interest goes right back to the heart of banking at the local level. A truly useful, even noble idea, taking the burden of running accounts off of the merchants, and letting those with capital to risk make a profit from the interest.

A marvelously capitalist, yet democratic, fair, and humane thing to do.

For approximately 30 seconds.

It couldn’t have taken longer than that for someone to say, “Hey, we don’t have to use our money to cover this – they’ll owe us the money, so we can charge anything we want for everything we do and they have to agree to pay it if they want the card. We can charge a fee just for having it. We can charge a fee if they’re late. We can charge a fee if they go over their limit. We can charge them all at once on top of interest and raise them anytime we want. We don’t have to touch wages, bonuses, and investment funds at all.”

They merely fold all those projected fees and charges into the portfolio. Part of the estimated cashflow.

So, an industry that now COUNTS ON $15 billion just in late fees has a stranglehold on our society.

And worse, this venom has spread backwards through the entire financial family tree. Safeguarding the margin by raising rates and penalties.

Insurance rates, of course, are outrageous – unaffordable for many. Auto insurance is mandatory by law everywhere, so no surprise that rates are through the roof and go up for any reason you provide, from buying a newer car to getting a ticket.

Banks used to pay an average of 5% on savings accounts, which was considered small but not embarrassing. Return fees were reasonable. Overdraft fees as well. Before the credit card era, most people could survive a cashflow crisis without the bank looking to destroy them.

But, along with the newfound “We’ve got you hostage because you owe us” greed came the inevitable banker’s gouging, now common today.

Now, 1% interest tops without buying an investment bond of some sort to get that 5% – sometimes requiring minimums of $5000 or more tied up for 10 years to get that rate.

They all, creditors and banks alike, ply what they believe are “fair charges that encourage timely payments” at $25-$50 a pop. What’s more, even the banks are saying, “if you owe us money, we’ll charge you more”.

So, now, running out of money becomes a very costly thing. Being broke is expensive!!

Let me get this straight. You don’t have any money, so we’re going to charge you more.
You have nothing, so you owe us more. The more you owe us, the more you, um, owe us.

 
Read Part Two: The Monster Grows
 

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