Wednesday, March 19, 2008

Conscious Rasta Rant – In Consideration of the Economy

I am presently reading a fascinating book on finance and economics entitled Up To Our Eyeballs: How Shady Lenders and Failed Economic Policies are Drowning Americans in Debt, by authors Jose Garcia, James Lardner and Cindy Zeldin. I find it to be a compelling and most informative read.

The authors trace the evolution of the debt economy from the days of American prosperity emanating from the post-war industrial boom through the era of financial restructuring growing out of banking deregulation during the Reagan era, and then bring the conversation up to date with the current spectrum of economic woes resultant of shady lending practices and runaway debt from unmanageable interest obligations.

It is a complex tale and much of the change and subsequent decline can be traced to a chronology of deregulation measures beginning in the early 1980's, along with consolidation of the various lending markets into a relatively narrow lending cartel with deep tentacles into legislative bodies across the country and propped up by endless paper printing by the Federal Bank.

Much of the current sorry state of financial health within America owes its due to a string of banking deregulations that allowed the larger financial institutions to operate across state borders using the most favorable conditions that they have been able to convince certain states to tolerate. Thus, while a state like California may enact laws to make lending practices more transparent, a large transnational corporation can utilize friendlier laws in South Dakota or Delaware to bypass these regulations and get right at the citizens of California, right under the nose of state regulations.

Where then does this leave the little guy; the struggling middle class family; or the student just entering the workforce? In the nicest language that can be brought to the response: We're screwed! Despite constant dismissal of personal debt as failings of intelligent choice, self-discipline and the likes, the structure of the society is set up so that even in the most disciplined households, we still keep losing ground decade after decade to the rising cost of home loans, energy costs, utilities, food and transportation. All the while big, greedy, bloodsucking corporations have woven their excesses into the very fabric of the economy and we might expect little relief from the politicians, nearly all of whom are in on the trick with the wealthy class and subject to the same fiduciary bonanza as their fat cat sponsors.

Yet, whatever hope we can bring to secure the fate of our selves, family and community, will be grounded in the mechanisms that we can control and the actions we take today and every day. The wisest counselors who have made themselves available to me are currently alarmed that the worst economic conditions of the past half century or more are at hand: a perfect economic storm.

The following are a few recommendations that can bring some measure of positive effect on our financial status:

  • We spend too much money on housing. Our houses are too big for the number of people living in them. Young people should stay longer in their parents' home or take on roommates; elders should take on boarders after their children have moved out; extended families should share the same roof with Grandma taking on some of the childcare duties; and many who are saddled with outrageous mortgage notes should be renting instead.
  • We spend too much money on food. We should bring back the predominance of the backyard garden; stop eating out so often and filling up on empty calories at fast food restaurants; most people eat too much; shop at farmers' markets; and form a community co-op to purchase items in bulk.
  • We must curtail our lust for the latest and the newest luxuries. Americans spend too much on flashy cars (auto interest is seriously injuring many families' financial health), clothes, designer appliances, electronic gadgets and home entertainment. Too much of this stuff is being bought on high interest credit. A perfectly good automobile that has many more miles left to go is traded in because slick advertising has convinced many that their ego will only be served continuous upgrading.
  • We occupy our spare time in non-productive or indulgent activities. Watching television, listening to music, playing video games, going out clubbing or indulging in substance consumption are all activities that cost money, take up our time yet generally leave us empty handed after all our time has been invested. These activities could be replaced in handcrafts such as sewing, wood crafting, gardening, writing, photography, artwork, making music or spending time studying a course that could enhance our career potential.
  • Too few of us develop and maintain personal and household budgets. We are thus prone to impulse spending, unplanned expenses, we fail to save for future commitments and too often get penalized for late payments and punishing interest payments on overdue accounts. There is a large segment of the society that doesn't even balance their checkbooks each month and may not know how much cash they have on hand at any particular time.
  • Credit cards have replaced savings and emergency funds. In an ideal situation we would have the credit cards but never use them, or at worst pay off the debt at the end of every billing cycle. But many people are now using the credit card for consumable items that don't even last as long as the debt. Holidays, vacations and nights out on the town are being paid for with credit cards and the debt lingers on and adds to our increasing deficit.

There are numerous points that can be made that will contribute to a more stable economic outlook for the individual and the family. In the long run, there is some major restructuring necessary in a country that is saddled with some $80 trillion of personal and public debt. This has never existed in history and common sense would indicate that this cannot go on indefinitely without the promise that our children and their children will have security in employment and that prices would stabilize; there is no guarantee for these favorable conditions so we'd all better sober up as soon as possible and begin to back away from the abyss of mounting debt and unwise consumerism

Let's all get to work right now. Where's that household budget?

Keidi Obi Awadu is the founder of Black Star Media. He is the host of a talk radio show on and shares his video documentaries on Contact Keidi at

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