It seems to be a characteristic of our capitalist system that the people least able to pay the tariff of daily living are the ones saddled with additional bank charges, high interest rates, late fees, penalties, etc. The institutions levying these charges say that poor people are a greater risk than those who can more easily pay their bills, but my own feeling that banks and others charge these fees simply because they know they’ve got the poor over a barrel and charge confiscatory fees because they can get away with the practice.

It is ironic that institutions that assume no risks whatsoever in acquiring deposits that are in turn loaned out charge extra for “risk.” It is doubly ironic that a big portion for the 2008 financial crisis is attributable to the financial industry purposely extending such risky loans as so-called “liar’s loans” to people without the capacity to repay them, supported by inflated and fraudulent appraisals of property values, etc.

The banking crisis cost the economy eleven trillion dollars and ten million lost jobs; the only people who benefited from it were banking CEOs who were responsible for the greatest theft in history. According to former bank regulator William Black, these CEOs followed a recipe for what he terms “control fraud”:

1. Grow like crazy

2. By making and buying crappy loans at a premium yield

3. While employing extreme leverage, and

4. Providing only trivial reserves

Bank executives who follow this recipe, says Black, are mathematically guaranteed to have three things occur. First, their banks will post record profits. Second, the CEO will immediately be made incredibly wealthy by modern executive compensation practices. Third, farther down the road the bank will suffer catastrophic losses and will have to be bailed out by government or fail.

Despite unambiguous warnings years before the crisis, government did nothing to prevent the fraud. Despite clear evidence of financial crimes on a grand scale, the government has not held even one banking executive responsible. Instead, it stands by while the banks continue making their ill-gotten profits off on the little guy.

The same thing is being done by Big Oil, which is also an extractive industry. Gas prices in Terlingua have topped $4.05 per gallon, and the cost of gas in Alpine (65 miles away) is $3.60. I no longer drive, but this summer I have been buying a lot of fuel to run internal combustion generators while my solar electrical system is inoperable and awaiting repair.

Last December when I saw that my electrical plant was on the way out, I got a quote for a new system. However, it was $3,300 and I could not raise this level of funding for this purpose. Instead, another supplier quoted me $700 to repair my existing system, but it involved much more time. The old system finally gave out two months ago, and I was forced to turn to gas-powered generation in order to stay on the air. We have purchased new batteries and the system repair is only awaiting delivery of a new charge controller. But I am reaching the limits of my ability to purchase gasoline.

When I came out to West Texas, I destroyed my credit cards and swore to live within my means and without debt. I resolved to live more as a little guy. But being little means being taken advantage of by somebody big, if not a bank then an oil company or some other entity.

Choose your poison. The only hope is to minimize the damage. It’s capitalism.


Groove of the Day

Listen to Deep Purple performing “Bloodsucker”


3 Responses to “extractive”

  1. June 28, 2014 at 3:57 am

    Actually, it’s not up to the type of economy. Socialism and capitalism are not bad by themselves. It’s their implementations. America used to have a good implementation, some 40-50 years ago, when there were no corporations and no company was “too big to fail”. And the rich used to pay up to 90 (or was it 95?) percent of their income as tax. Today, they pay less than the poor. The capitalism says that all those banks should’ve been left to fail, but the (corrupt) politicians thought it would be bad for them. And, in short terms, it would be bad for people. Jobs, loans, houses, investments, etc. Was it Eisenhower who warned of the creation of corporations? But, over the years, the rich were growing stronger and manipulated the laws. So, now the American implementation of capitalism is very wrong. Just take a look at how the employees in corporations (say, Monsanto) and the employees in the government exchange places and it’s all perfectly clear. Also, the rich do not spend enough of their wealth anymore (they just have too much) so the money is not finding its way to the “little people”.

    It’s not capitalism anymore. And it’s not pure socialism, either. It’s the worst of both. Socially protected coprporation capitalism?

  2. 2 john
    June 28, 2014 at 7:28 am

    The June 27 New York Times has an article on the usurious rates charged for telephone calls, money transfers and emails to prisoners.

  3. June 28, 2014 at 7:41 am

    America is not the only country in which the poor are confronted with excessive bank charges, under the claim that they are more “at risk”. It is a truth in many developed countries, including mine, in which the State, under the pretext of fighting against organized crime and fraud, adopted laws that ordered that all transactions above a certain financial level should be made from bank account to bank account. So, anybody has to have a bank account, in order to perceive wages or social helps/revenues they have earned and nobody escapes to the hooks of the bankers. And it’s by perceiving abusive fees paid by the “at risk” people that banks make a great part of their revenues.
    Add to this that these people are the less susceptible to change their bank domiciliation, due to fees and difficulties that such a change can occur, due to the fact that they wouldn’t be better served despite what their advertisements claim and you will find a captive population, easy to exploit. An easy parallel could be made by comparison with a jail system. They are exactly like in a jail, in which inmates or their families have no other choice than pay abusive fees for services provided by private operators.
    Oil companies works in the same way. Cars are a need for many of us, today. We use them to go to work, to go to supermarket when the refrigerator is empty, etc… they are unavoidable in our way of life. But it is easier to change to another gas station, if the prices are lesser, than change for another bank if we find that fees are excessive.

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