This post is in response to a question I received from Sarah in a comment. She asked:
I dont understand why you let yourself slide into this position. Why? bankruptcy.losing your house,credit,credibility,and business and reduced to the kindness of strangers and all that. kinda like all those harvard grads in the banking industry whom have just pushed the US into a depression. they have taxpayers to bail them out, but you don’t.
I’ve blogged a lot about how I got into my current financial situation. You can read about it if you click on the topic of Business and Finance > Finance. It was a combination of business mistakes I made and a failing economy. Books aren’t in high demand when people can’t afford fuel or food.
The economy has been tanking for over two years. Our government is bankrupt. Financial institutions are failing. People all over are losing their jobs and homes. But I didn’t lose my house. I gave it back to the bank. Just like I’m giving back my car. I’m giving it all back and starting over, which is my legal right.
A bank is a place where they lend you an umbrella in fair weather and ask for it back when it rains.—Robert Frost
Don’t think it was the Harvard grads that pushed us into a depression. They were just doing what they were taught to do and what people wanted them to do. Everything they did was perfectly legal. Just like my bankruptcy is legal.
Our problems started when we allowed fractional reserve banking and were compounded by the creation of the IRS and the Federal Reserve.
This cycle repeats. People get into debt, can’t pay it, and the banks take possession of houses and property, property on which they have often already received huge sums of money through finance charges. If they risk too much and lose, the government bails them out by printing money, and our currency is further devalued. Businesses are bought for a fraction of their value. Stocks are devalued and snatched up by the wealthy who sell them when they recover.
If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.—J. Paul Getty
It’s like this: I am a banker. I have the ability to create fake money but my customer base is tapped out. So I dream up a new scheme that allows a new customer base–poor people with no credit–to own homes. So I teach Harvard grads how they can get rich with this new system, and they go out and sell it to the public. I’m so very clever.
I know I can get the poor people to pay me 30% interest for a while before they default, if they default. But when they default, my government covers my loss. Meanwhile, I’ve pocketed the interest and lived high on the hog. I risked nothing.
You see, I paid to put the politicians in place who would establish laws that allowed me to get away with usury and that cover me in case of default. I own all the media, which is constantly drumming into your head that you need silly things that cost a lot of money. I own stock in all the major corporations that produce garbage for you to buy. And I own stock in the pharmaceutical companies that make the antidepressants and drugs that treat the diseases that your stress produces, stress further compounded by the nightly terror known as “TV news.” And when I really want to speed things up, I start a war, finance both sides and then buy up the countries when they are bankrupt.
The rich become richer and the poor become poorer.
Then the cycle turns and our economy booms, we all bet on a happy future by buying houses and cars and TVs and boats (all financed, of course), we’re happy for a season and it starts all over again.
OUR MONEY IS BEING HARVESTED.
And we’re offered a million entertainments, drugs, and pharmaceuticals to dumb us down and keep us from revolting. Well, I’m not on drugs, pharmaceuticals or benumbed by entertainments. On the contrary. This situation has compelled me to learn about how I got here, how the banking system works, how money was created. I have educated myself into clarity. And I’m checking out of the system.
I haven’t been reduced to the kindness of strangers (not sure where you got that from), nor have I lost credibility. I have lost my high credit score, which simply means that I will no longer be able to borrow imaginary money from banks (strangers) and pay exhorbitant finance charges that not long ago were illegal in this country.
I made a choice that was in my best interest. I decided I was not going to work for the banks for the next twenty years. I choose freedom.
If you really want to help the economy, get out of the credit game, no matter the cost. Pay off the debt or get out via bankruptcy. It’s only when we stop relying on the banks and begin working together as a community that we’ll be able to avoid the ups and downs manipulated by bankers.
The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight-of-hand that was ever invented. Banking was conceived in inequity and born in sin… But if you want to continue to be slaves of the bankers and pay the cost of your own slavery, then let the bankers continue to create money and control credit. –Josiah Charles Stamp
I leave you with this humorous tale.
An American INVESTMENT BANKER was at the pier of a small coastal Greek village when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna.
The American complimented the Greek on the quality of his fish and asked, “How long does it take to catch them?” The Greek replied: “Only a little while”.
The American then asked why didn’t he stay out longer and catch more fish? The Greek said he had enough to support his family’s immediate needs. The American then asked, “But what do you do with the rest of your time?”
The Greek fisherman said, “I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play cards with my friends, I have a full and busy life.”
The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat with the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Athens, then London and eventually New York where you will run your expanding enterprise.”
The Greek fisherman asked, “But, how long will this all take?” To which the American replied, “15-25 years.” “But what then?” The American laughed and said that’s the best part. “When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions.”
“Millions … Then what?” The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play cards with your friends.”
{ 3 comments… read them below or add one }
LOL. Had your post forwarded by a friend. I love it! One of the best takes on the matters economic I’ve come across.
One note to the contrary – Legal does not necessarily equal Ethical, Moral or Right. I believe that’s how we got into this mess. Enron didn’t necessarily violate it’s business plan so did it do anything wrong? Rite Aid allowed multiple creditors to make them loans backed the same collateral creating quite a mess sometime back. GM is trying to blackmail the government for a bail out so it can continue paying 60 year olds $60,000 a year not to come to work to put hubcaps on cars inside out.
I do believe the days of going bankrupt and simply getting new loans at higher interest in and endless cycle are about over. No credit at any price for anyone may be the ultimate result.
No boo hoo’s for the Wall Street lemmings mind you. As a banker type recently opined, “…everyone knew derivatives were non-sense and loan practices were out of control but no one wanted to speak up for fear of being found out as the only one in the room who didn’t understand them. Turns out no one really did.
I agree regarding legal not equating to moral. Legal just means what the corporations managed to finesse through the courts.
It’s also not moral for me to walk away from my debts, but I’m just playing by the rules of the game to which I was invited.
The whole system is corrupt and designed to keep the peasants in eternal servitude to the blue bloods. The only way out is to decline their offers. But I don’t think their offers will stop entirely.
Thanks a lot for posting.
Great post. I already knew a bit about the evils of the banking system, but this was a nice take on it. I don’t know a lot about your decisions for declaring bankruptcy, but I think you did the right thing. People get so weighed down by their possessions and debt. Living simply with few possessions is cheap and allows us to not be owned by the corporations.