Occupy Wallstreet: Where Do We Stand?

This post has been severely delayed, mainly because I am not quite sure of my feelings on it. When it comes to Occupy Wall Street, I admit to talking out of both sides of my mouth.

On one hand, I think its great. For far too long, large corporations and big banks have thrown money at politicians to have laws worked out in their favor. It appears that favor can be bought and sold, to the highest bidder of course. This leave those who don't have a couple extra million to spend out in the cold. The Occupy movement calls on government to be responsible to its citizens, not corporations.

But then again I have to wonder why these protests were nonexistent when it was mainly minorities that were suffering. After all, poverty and high unemployment (and underemployment) is nothing new to the Black community. African-Americans have been the victims of predatory lending for years. Many of us have been unable or barely able to pay for medical treatment, student loans, etc. In the all too common "laugh to keep from crying" way, dodging bill collectors has become a running joke. Yet the majority of Americans turned a blind eye to what was going on, or they felt (like many of the bankers and big businessmen feel today about Occupiers) that we were just too lazy and needed to simply get a job.

And then I have to wonder where someone like me fits in. I'm nowhere near the 1% but my story doesn't compare to many of those who proclaim to be the 99% (and there are some tearjerkers there). True, I am basically living from check to check, can't quite afford to move out of my parents' house (at least, not into the kind of place I want). I don't make as much money that it seems a Master's degree would afford me. But this doesn't surprise me. I was prepared as a child to face this because I am black and I am a woman. So even though I am frustrated with the situation, it's not as if it's something new to me due to a down-turned economy. It's just life...

So are the Occupy movements just a momentary outcry from those who were once spoiled by privilege? Will there be any benefit to those who have been the victim of corporate greed for years and not just in the past year or two? Or will they be forgotten when/if there is an upswing and the protesters are pacified with jobs? Time will tell.

What Does the Credit Downgrade Mean for You and Me?

By now you (should) know that on August 5 Standard & Poor's, the world's leading independent provider of credit ratings, has downgraded the US credit ranking from AAA (the highest ranking it gives) to AA+.  Their rationale is as follows:

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related  fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade. (source)

Of course there is a lot of debate and finger-pointing over who is at fault for this. The usual back and forth between Democrats & Republicans has taken place in regards to who should have done what with the debt ceiling debacle. The White House staff is saying that it should be restored to the previous AAA rating because of an accounting error on S&P's part. Still others say that S&P's opinion isn't reliable anyway, since they deemed the screwed up mortgage practices that got us in this economic mess as "sound."

Regardless of who is at fault, the head's of S&P are remaining firm in that decision. So why does it matter? Well the US credit rating is just like an individual's credit rating. Lenders (other countries in the US' case) look at our score to see whether we are worthy of loans, our ability to pay loans back, and what interest rates will be assigned. In this borrow-happy country, that will have major impacts. And although the trickle-down theory hasn't worked with those tax cuts, you better believe there will be a trickle-down for you and me. Here are a few of the things we can expect to see:

Higher taxes. The interest on Treasuries will go up to reflect their higher risk, which means the cost of the nation's debt will increase accordingly. And the U.S. can't continue to maintain this course of no tax hikes indefinitely. The resistance to higher taxes by some politicians in the debt ceiling deal suggests the country isn't serious about paying its bills and is considered one of the reasons for the lower rating.

Higher home buying costs. Interest rates on mortgages track Treasury yields. "A 1.15% higher rate on a $200,000 loan would raise your interest payments by $36,573 over the course of the mortgage," Gandel said.

Guy Cecala, the publisher of trade magazine Inside Mortgage Finance, told Bankrate that homebuyers could face higher fees as Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs absorbed higher borrowing costs.

Higher inflation. If that's a result, you'll need to stash away even more money for retirement.  (source)

Of all these consequences, higher home buying costs is the biggie for me because it hits me twofold. On one hand, it makes it harder for people to buy houses (it's already pretty hard to get mortgages as it is) which means my real estate business would be put in an even bigger strain. But on a more personal level, I may not be able to buy the home that I want. Even though the one I have my eye on isn't that much, a higher interest rate could potentially knock me out of the running altogether. It's a scary prospect.

Now more than ever, we need to be conscious of our personal spending and saving habits. We may also want to look into more income-generating activities as well as learning how to sustain ourselves (yes, I'm talking farming/gardening here, people). Although I believe we can and will bounce back from this current economic meltdown, it may be a long time coming. We have to be able to survive until then.

Sidenote: It is really disturbing when life imitates art. I'm reading a book, Super Sad True Love Story by Gary Shteyngart, and just finished a chapter in which a Chinese official, Central Banker Li, calls America "An unstable, barely governable country presenting grave risk to the international system of corporate governance and exchange mechanisms." On Saturday, China lambasted the US over the downgrade. "The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," Xinhua said. It said the rating cut would be followed by more "devastating credit rating cuts" and global financial turbulence if the U.S. fails to learn to "live within its means." (source)

Desperate Times...

What would you do if you were broke and in need of medical attention? James Richard Verone decided to rob a bank... for $1.00.

Earlier this month, Verone (pictured), a 59-year-old convenience store clerk, walked into a Gastonia, N.C., bank and handed the cashier a note demanding $1 and medical attention. Then he waited calmly for police to show up.

He's now in jail and has an appointment with a doctor this week.

Verone's problems started when he lost the job he'd held for 17 years as a Coca Cola deliveryman, amid the economic downturn. He found new work driving a truck, but it didn't last. Eventually, he took a part-time position at the convenience store.

But Verone's body wasn't up to it. The bending and lifting made his back ache. He had problems with his left foot, making him limp. He also suffered from carpal tunnel syndrome and arthritis.

Then he noticed a protrusion on his chest. "The pain was beyond the tolerance that I could accept," Verone told the Gaston Gazette. "I kind of hit a brick wall with everything."

Verone knew he needed help--and he didn't want to be a burden on his sister and brothers. He applied for food stamps, but they weren't enough either.

...

Because he only asked for $1, Verone was charged with larceny, not bank robbery. But he said that if his punishment isn't severe enough, he plans to tell the judge that he'll do it again. His $100,000 bond has been reduced to $2,000, but he says he doesn't plan to pay it.

In jail, Verone said he skips dinner to avoid too much contact with the other inmates. He's already seen some nurses and is scheduled to see a doctor on Friday. He said he's hoping to receive back and foot surgery, and get the protrusion on his chest treated. Then he plans to spend a few years in jail, before getting out in time to collect Social Security and move to the beach.

Verone also presented the view that if the United States had a health-care system which offered people more government support, he wouldn't have had to make the choice he did.

"If you don't have your health you don't have anything," Verone said.

As it is, Verone said he thinks he chose the best of a bunch of bad options. "I picked jail." (source)

 

You know, I'm not even mad at him. Desperate times call for desperate measures. We should, however, be mad at the lawmakers who believe national healthcare is a frivolous waste of tax dollars.  (By the way, these lawmakers have great government-funded healthcare. Even stuff us normal folks can't get covered under insurance--like liposuction--is all taken care of.) We should be mad at the corrupt businesses and banking institutions that are majorly responsible for the state of our economy. Be mad at your fellow citizens who don't vote, neglecting their responsibility to elect leaders with our best interests in mind. But this guy? In my mind he deserves, at the very least, the medical treatment he needs.