ChickenBones: A Journal

for Literary & Artistic African-American Themes

   

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 It is hard on a sixty-six-year-old, who has not had a mortgage on his or her home

 since 1986, and invested in supposedly safe treasury bills.   Such a person is hemorrhaging

money and getting negative interest on her life's savings.

 

 

Books by Wilson Jeremiah Moses

Golden Age of Black Nationalism, 1850-1925 (1988)  / The Wings of Ethiopia  (1990)

 Alexander Crummell: A Study of Civilization and Discontent (1992)  / Destiny & Race: Selected Writings, 1840-1898  (1992) 

 Black Messiahs and Uncle Toms: Social and Literary Manipulations of a Religious Myth (1993)

Liberian Dreams: Back-to-Africa Narratives from the 1850s  / Afrotopia: The Roots of African American Popular History (2002)

Creative Conflict in African American Thought (2004)

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Responses to an American Speculator

By Wilson J.  Moses

September 27, 2008

 

As a Black American who can remember the 1940s, I find it amusing that I am in agreement with so many positions of the Republican conservative Senator from Alabama, Richard C. Shelby, ranking member of the Senate Banking Committee.   But from the opening of the hearings last week, I found myself agreeing with Shelby, and for that reason I have to question some of the points below:

1.  Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson are pushing Congress to quickly approve a $700 billion plan to remove illiquid assets from the banking system.

Senator Shelby was not convinced of the urgency, and indeed a week has gone by without any executives jumping out of windows.   Shelby asked how Bush's men had arrived at the figure of $700,000,000,000, and what other solutions they had considered. Both of the President's men meandered aimlessly and cravenly, refusing to answer the question. 

2.  This is not intended to be the sole solution.  Private capital will be necessary to further bolster the industry and system. 

Indeed private capital must be raised.   Everyone is talking about the "cost to the American taxpayer," and yet nobody has introduced any tax figures into this discussion, so I presume that a great deal of money is going to be borrowed from China, Saudi Arabia, and Russia. 

3.  Accounting conventions require financial firms to reflect the value of assets based on current market values (referred to as "mark to market" or MTM). 

Investment counselors prefer using the emotion laden term "value" instead of "price."  Prices have been inflated because wildcat bankers on Main street in mid-America were inducing middle Americans to speculate against the dollar on the housing market, gambling on the presumption that their $300,000 house would double its value within seven years, and encouraging people with incomes of $50,000 to purchase $300,000 homes with no money down.  

The party line is that the cause of the problem was passage of the Community Reinvestment Act in 1977.   That is digging pretty deep, but it is the official party line of the Republican Party, the Wall Street Journal, Larry Kudlow, and Fox Television—predictably so.  In other words, they blame some poor black or Chicano person who bought a house within their means in 1977, rather than the middle class white who speculated against the dollar in 2001.

Republicans also blame the creation of Fannie and Freddie, and the pressure that lenders were under to lend to impoverished minorities. This is not true.  The real villains were the American middle class and their local bankers and realtors, who due to excessively low interest rates, and rapid increase of the money supply were systematically inflating the price (not the value) of middle class housing.   This combined with the tendency of middle class Americans to take out second and third mortgages and to think of their houses as ATM machines was the cause of the constant inflation of housing prices in America, until price far exceeded value. 

1.  The root problem of excessive debt and troubled assets on financial institution balance sheets remains.

And How!   But Main street, is more to blame than Wall Street or Washington.  The average American is to blame for carrying excessive debt.  The root problem is irrational exuberance. 

4.  Inflation pressures are easing, providing the Federal Reserve with room to lower interest rates further.

This is a vicious lie.   Inflation is running wild.   Greenspan's and Bernanke's madness has been unfair to people who have lived simply and accumulated "life's savings."    It is hard on a sixty-six-year-old, who has not had a mortgage on his or her home since 1986, and invested in supposedly safe treasury bills.   Such a person is hemorrhaging money and getting negative interest on her life's savings.   And don't tell the person who is heavily dependent on social security that there is no inflation.   Inflation is literally killing such a person. 

5.  As such, we believe it is prudent to take a cautious investment posture for the time being.

Right you don't want to take any risk, but you expect the Chinese to buy up American debt, which they are forced to do, unless they are prepared to write off the debt they have already accumulated.   No, ironically, the Chinese will be forced to support the market, due to their already massive holdings of American debt. 

Older Americans on fixed incomes, especially those foolish enough to have accumulated life's savings will be the heaviest losers, no matter what happens. 

Franklin D. Roosevelt introduced massive tax increases during the last depression, and his policy helped.   Roosevelt dumped surplus industrial products on Europe by means of the Lend Lease Act.  Of course you cannot ship surplus housing (which Bush admitted last week we have) to Europe, and besides the Europeans aren't buying, and the Chinese are getting skittish.   But the price of housing nonetheless remains high, due to the inflationary activities of the Fed, which are directed at maintaining inflated prices. 

Sooner or later the American people will have to face a tax increase, because there is very little fat in a federal budget that pays Sunni militia $1,000,0000 a day not to shoot at our troops. 

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Breakthrough Reached in Negotiations on Bailout— Some lawmakers have made clear that they will not vote for the bailout plan under virtually any terms. “I didn’t want to be in the negotiations because I object to the basic principles of this,” said Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, who would normally be his party’s point man.

Pressed about his role, Mr. Shelby replied, “My position is ‘No’. ”

Officials, including Mr. Bush, stepped up efforts to sell the plan to the American public, which, according to opinion polls, is deeply skeptical.

“The rescue effort we’re negotiating is not aimed at Wall Street; it is aimed at your street,” Mr. Bush said in his weekly radio address. “There is now widespread agreement on the major principles. We must free up the flow of credit to consumers and businesses by reducing the risk posed by troubled assets.”

In a brief speech on the Senate floor, Senator Kent Conrad, Democrat of North Dakota, said: “It’s not just going to be Wall Street. The chairman of the Federal Reserve has told us if the credit lockup continues, three million to four million Americans will lose their jobs in the next six months.”

The ultimate cost of the rescue plan to taxpayers is virtually impossible to know. Because the government would be buying assets of value — potentially worth much more than the government will pay for them — there is even a chance the rescue effort would eventually return a profit.

Some Democrats had sought to direct 20 percent of any such profits to help create affordable housing, but Republicans opposed that and demanded that all profits be returned to the Treasury. NYTimes

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Letter to Senator Obama

Dear Senator Obama,

Conservatives are blaming the banking crisis on the Community Reinvestment Act of 1977, which was never honestly enforced, but very cynically exploited by recently collapsed Countrywide Financial and other usurers who lured poor black people into these mortgages.   Bank of America took over Countrywide in June 2008, promptly eliminating 7500 jobs.

Every African American will want to read The Wikipedia Article on the Community Reinvestment Act in its current version, most recently edited on September 28, 2008.   But read fast, because I don't know how long an objective version will remain available.   I am certain the current one will soon be revised by minions of The Wall Street Journal, Fox television, Larry Kudlow, or Neil Cavuto.

It was not a pathetically meager number of loans to poor black Americans that led to this crisis.  And is anyone so stupid as to believe that Attorney General Alberto Gonzales was enforcing the Community Reinvestment Act? 

Of course not!  The real target of this smear is Obama, who once worked with Acorn, a community organizing group, which supported the act, but attempted, in vain, to warn against the abuses of interest-only, sub-prime, flexible-rate, no-money-down mortgages, Such mortgages should never have been marketed to anyone, including white suburbanites.  

The typical target of this scheme was never the poor inner-city black person, but a middle-class white family, who took out a no money down, interest only, adjustable rate mortgage in a white neighborhood with the foolish expectation that it would inevitably double its value within seven years.

In 1950 my parents bought a dilapidated fixer-upper for $5000.   For seven years my dad did not own an automobile so he could come up with the down payment.  My parents had to sue before the previous occupants, poor whites, themselves the victims of class oppression, moved out.  It took a while, since the judge sided with the previous occupants, although my father was forced to pay their rent.  The house was then vandalized.  Plaster was falling off the walls, and the floors soaked with urine.  My dad practically rebuilt the house, and paid off the mortgage within ten years while working for a modest wage at the Detroit Water Works as a filter attender and chlorinator operator. 

By the time he paid off the entire mortgage in 1960 at $50 per month, which included both interest and principle, his roses and irises were the talk of the neighborhood.

When I was 10 years old, my mother explained to me the difference between principal and interest, and how a mortgage was amortized.  One of my chores was to occasionally hand carry the mortgage payment to the real-estate office which was about a mile away.—Wilson

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From what I could understand from the Wikipedia document realtors and some banks used the CRA as an undercover means to make risky mortgages to make quick money off of minorities and that other financial institutions without proper oversight bought into these kinds of mortgages making additional profits off these same risky mortgages. Now some are thus claiming that the government (the CRA) forced these institutions on the lower and upper end to make or buy into such risky loans.—Rudy

Yup.  That's pretty much the way I see it.   The CRA had all its teeth pulled by 2005, and it was nothing more than a cover for extending the same "benefits" to the urban poor, that were being "enjoyed" by the foolish geese of the white middle class.—Wilson

posted 27 September 2008

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Race Men

By Hazel V. Carby

Speak My Name

Black Men on Masculinity and the American Dream

Edited by Don Belton

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AALBC.com's 25 Best Selling Books


 

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Speak My Name

Black Men on Masculinity and the American Dream

Edited by Don Belton

It is rare in America for African-American men to have the opportunity to express who they are, what they think, or how they feel. As the nemesis in the American psyche, they have been silenced by an image that is at once celebrated and maligned. In this first anthology of contemporary African-American men's writing, black men share their experiences as the revered and reviled of America. Through the voices of some of today's most prominent African-American writers, including August Wilson, John Edgar Wideman, Derrick Bell, and Walter Mosley, Speak My Name explores the intimate territory behind the myths about black masculinity. These intensely personal essays and stories reveal contemporary black men from the vantage point of their own lives - as men with proper names, distinctive faces, and strong family ties.

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The White Masters of the World

From The World and Africa, 1965

By W. E. B. Du Bois

W. E. B. Du Bois’ Arraignment and Indictment of White Civilization (Fletcher)

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Ancient African Nations

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Negro Digest / Black World

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The Death of Emmett Till by Bob Dylan  The Lonesome Death of Hattie Carroll  Only a Pawn in Their Game

Rev. Jesse Lee Peterson Thanks America for Slavery / George Jackson  / Hurricane Carter

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The Journal of Negro History issues at Project Gutenberg

The Haitian Declaration of Independence 1804  / January 1, 1804 -- The Founding of Haiti 

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update 5 March 2012

 

 

 

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