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The Reality of the Economic Crisis

Here’s where we’re at folks.  The end of the line.

“The end of free-market capitalism”

I’ve heard it called.

“The sub-prime mortgage crisis”

Some blame it on.

“A global economic meltdown”

Time for some major change.

So, our entire way of life is exposed as a rickety, weak, hollow, card house that collapses in a heartbeat, so what do we do?  We throw money at it!  We actually try and prop this mangled, pathetic card house back up with the exact cause of the collapse!

Kind of like tossing a bucket of water on a tsunami.

Kind of like throwing a candle at a forest fire.

Sort of the equivalent of hurling a snow ball at an avalanche.

Bail outs?  Our solution is bail-outs?!?!  And regulation?  But please, don’t get me wrong, the other side of the coin is just as, if not more retarded. Tax breaks and the same freewheeling market that got us here?  Those are the only two “solutions” on the table? Really?

Let me give you a hint.  They are both wrong.

It’s time for a new political ideology.  It’s time for a complete and total re-assessment of the problems we’re facing, and a whole truck load of new ideas on how to solve them.  It’s time for all those really smart people who are currently calculating derivatives, investments and algorithms dedicated to stripping you of your money, to start working on how to get us out of this mess.  To start working on new, relevant, current philosophies and systems of governance.  It’s time to re-think where we’re at and where we need to be going and what we need to do to get there.  It’s time to realize that money got us to where we are, and it was helpful in doing so.  The market, and current currency based political ideologies pushed us to produce and to innovate, and it kept us waking up on time in the morning. It replaced an outdated and oppressive feudalist society and that was a good thing.  It served a purpose at a time, but that time has long passed.  And no government or bank or wall street finance expert or CEO will ever realize that.  They will fight with every fiber in their being to defend the only thing they know.  They will scratch and claw to keep themselves important.

They are all irrelevant.

Just as has been the case countless times in history it is up to regular people to figure that out and to do something about it.  Don’t hold your breath for your senator and your congressman and your boss and your bank to get it.  They won’t. Get it yourself, and then, here’s the tough part… do something about it.  This will not likely happen until the situation is beyond bearable.  Or, as has also happened countless times in history, we can sit back and do nothing.  We can, if we chose, sit back and say nothing as we are cast backwards into complete and total oppression and subservience.  If the current general attitude, apathy, complacency and inertia continues, that’s where we’re headed folks, real soon… buckle up.

I can hear you shouting already in your trained, knee jerk reaction ” He’s denouncing capitalism. He’s a Communist!  A Socialist!”  No dumbass, those are all outdated and irrelevant ideologies.  We need to start looking at ideas and solutions for this world, for now, for our current state of affairs… not for/from the 1800’s.

“It’s time to evolve ideas, you know evolution didn’t end with us growing thumbs, right? It didn’t end there. We’re at the point now that we’re going to have to evolve ideas. The reason the world’s so fucked up is we’re undergoing evolution, and the reason our institutions, our traditional religions are all crumbling is because… they’re no longer relevant. So it’s time for us to create a new philosophy.” – The Late Great Bill Hicks

The reality is this.  The housing market crashed because a house is built so that people can live in it.  Not so that real estate tycoons can buy and sell them like stocks and bonds pushing their ‘value’ into the stratosphere.  A home is a tangible structure which at one time was priced according to what working people could afford.  It was.  Until, like everything else in our society, they became merely another pawn in the profit game, and all the humanity was squeezed mercilessly out of the house.

They stopped being homes, and started being ‘the housing market.’

I work full-time and couldn’t dream of ever owning a home.  It cost me more to attend one year of school than my parents paid for a 5 acre property with a house on it merely one generation ago.  That’s not inflation, that’s sucking the right to live in a real house out of an entire generation.  My boss, a professional of ten years, can’t dream of ever owning a home.  He lives with room-mates.  Your boss shouldn’t live with room-mates.  I don’t know a single person within ten years of me who can aspire to do anything other than inherit their parents or grandparents property.  It’s like we’re all just sitting around waiting for them to die and hoping we were the good child.  The beneficiary lottery.  It’s a sad, demoralizing and completely ridiculous way to live. Why?  Because houses aren’t built for people to live in any more.  There is no correlation between real, human wages, and the price of a home.  And you’ll never see a piece of legislation introduced that keeps those two interdependent things in line with each other.  Ever.

Every year my rent increases, no questions asked.  That’s just what happens.  Well that’s just what’s been happening for too long.  Now I’m paying $1000 a month for a one bedroom apartment.  And not a very nice one either.  I know people paying close to $2000.  Two people working full-time jobs in a one bedroom apartment should not be living in poverty and barely making rent every month.  How is a single mother supposed to survive in this world?  We are all systematically being driven mercilessly into poverty where our only choice is to sign up for the credit being dangled at us.  This is not frivolous spending.  This is survival spending.  This is rent and food and getting to work every day. That’s all I do.  I don’t drink, I don’t party, I rarely leave my house.  I don’t do anything.  Not because I don’t want to.  Because I can’t.  Every single action costs money, and lots of it.  Every year the price goes up.  On everything.  And every pay-cheque we’re going backwards.  The credit card interest piles up, adding on to the already extortionist cost of simply having a place to sleep.  This is the life that almost everyone I know in all walks of life is living right now.  Engineers, doctors, barely scraping by. People who have done what they’re ‘supposed to do’ – gone to good schools, gotten good jobs.  These aren’t deadbeats, so why are they forced to live like one and feel like one?  You cannot sustain a society where every single person in it is perpetually plummeting further and further into debt.  You cannot fix that issue by propping up those same credit companies with taxes on those same people who are already drowning in debt.

We cannot tax, subsidize, credit and bail-out our way out of this. We also can’t cut taxes, wage wars and let the free market run free to get out of this.  BOTH ARE EQUALLY STUPID AND OUTDATED SOLUTIONS.  They are not solutions, they are the cause of the problems.

“We can’t solve problems by using the same kind of thinking we used when we created them.”  – Albert Einstein

I see this quote thrown around a lot.  But I don’t see it applied very often.

The economy collapsed because the same lack of forward thinking swallowed up our jobs too.  A job is not just something you do every day to keep the stock afloat so that a handful of gamblers can buy and trade shares in your company.  A job is a contribution to your society in which you are given a fair compensation, so that you can live in a home, eat food and purchase the goods produced by others in your society.  At least it was.  The extreme of this we are now witnessing. We have highly trained, well-educated, useful people being forced to work menial, pointless positions at the fifteen mega chain stores that dominate every town and every city to pay off their ridiculously expensive education.  For what?  For who?  For Wall Street?  For a couple of CEO’s?

Humanity has become a machine.  There is no humanity left.  And there won’t be until human beings realize it, and demand more of themselves, for themselves and by themselves.

Stop defending a system that ritualistically fucks you in the ass on a daily basis, suppresses your potential and denies your ability to live a respectable and decent life.

Stop pretending all is well and all will be made well through legislation and banking.

Start taking some pride in your existence and your self worth.  Start caring.  Stop shrugging your shoulder and saying “That’s just the way it is.”

It doesn’t have to be.  And the only reason it is that way, is because you and me let it get that way, and continue to let it get worse.

Every day.

or you can leave it up to this guy to fix.

Because that’s working so well for us isn’t it?

December 22, 2009 - Posted by | The Great Collapse

67 Comments »

  1. Social comments and analytics for this post…

    This post was mentioned on Reddit by blargnoodle: I’m pretty sure the point is that neither bail-outs or a free market are the solution to our current situation….

    Trackback by uberVU - social comments | December 22, 2009 | Reply

  2. You know, Danny, I was ready to just click the back button after being linked here from Reddit; I just didn’t want to read another so-and-so’s blog. I think blogs are mostly a waste of time.

    But you really sold me with your “Who the fuck is Danny Mendlow…?” section. Really, what I’m trying to say is, I agree with your views on humanity.

    Comment by charles | December 22, 2009 | Reply

    • Hey I couldn’t agree more with your reservedness towards reading another so-and-so’s blog. I hate most blogs. As you probably read, I even hate the word ‘blog’. I have resisted having one for a long time. But I just have a lot of things boiling up inside me that I need an outlet for. I try and sneak some of my politics into my comedy, but there’s only so much you can say when you also have to be funny. Quite pleasantly surprised by the response so far though. Guess I’ll keep it up for now.

      Comment by dannymendlow | December 23, 2009 | Reply

  3. Beautiful, angry, and salient.

    Very nice.

    Comment by Sam | December 22, 2009 | Reply

  4. From what i read i got the impression that you want a complete overhaul, an whole new system, basically revolution. I agree with that, we definitely need it, but for the sake of argument i will ask the obvious question. What can we do?

    Comment by Kevin | December 22, 2009 | Reply

    • Well, that will the subject of many future posts, but that’s what I’d ultimately like to do here is start a dialogue on what the real issues are and what real solutions can come out of that. But it starts with knowing what the actual problems are. Unless people can see the actual issues at hand, they will continue to attempt doomed solutions.

      Comment by dannymendlow | December 22, 2009 | Reply

      • Agreed. Im looking forward to reading your future posts, and ur blog. lol

        Comment by Kevin | December 22, 2009

      • Get rid of lobbyists, corrupt politicians, and add term limits for a start

        Comment by Alex | December 22, 2009

      • The real issues are too hard for people to grasp these days. Our whole Society is a system based on a system based on a system… It used to be that the biggest News stories people cared about was which celebrity dated who, well that care free life style is dead. The system broke down, now we have to go back and build our society to be stronger instead of trying to fix it with the system that is already broken.

        It’s analogous to Maslow’s Hierarchy of Needs. Our society has dropped a level on the pyramid, and we need to accept it.

        Comment by Chris | December 22, 2009

      • Danny: Have you read Elizabeth Warren’s “The Two Parent Income Trap?”

        It provides a very succinct viewpoint into why the housing market failed–and it was written several years before it actually did fail.

        In brief: housing costs skyrocketed in part because of risky lending practices, but also in part because in buying a house, many Americans were also buying into perceived better public school systems and safer neighborhoods. Because both parents were working, they could afford more costly houses. Unfortunately, because both parents were working, when one got laid off, they could not cut enough expenses to cover the enormous fixed expenses (house, healthcare, cars).

        Cheers!

        Comment by Guestlove | July 12, 2011

    • The only real way to go ahead, is to let the current system burn itself to the ground and rebuild on its ashes.. If all they manage to do is keep it afloat until it recovers, then it’ll be business as usual until the next crisis.

      Comment by Mandamus | August 28, 2010 | Reply

  5. Glad to read something that makes sense. Too much BS going around right now and people swallowing it whole.Just like in your article,honesty and truth can’t be sold as a commodity and so have no “value” these days.

    Comment by R. Booth | December 23, 2009 | Reply

  6. Came from reddit as well. Never really commented on ANY blog but felt the need to do it. I have been having this idea on how to maybe fix the whole housing (mortgage) thing. Instead of borrowing from banks, why not borrow from each other! The main issue is creating the authority/rules for it to be “trusted”, as ideally the main issue would be trust. As in, how do i know the person i just lent say $100 going to pay me back and when etc.

    I would say i am semi socialist but then again, if you look around, almost everything in a working society is.

    Comment by Aj | December 23, 2009 | Reply

  7. well put.

    you might want to change “It costed me more to attend one year of school” to ” It cost me more to attend one year of school” :-)

    Comment by Paula | December 23, 2009 | Reply

    • I thought that was the correct way! I had it like that and then changed it back, then back again… about five times. For some reason neither felt grammatically correct.

      Comment by dannymendlow | December 23, 2009 | Reply

  8. seems like Marxist ideas are coming back. Marx wasn’t the devil he was made out to be, it was the wealthy who painted him that way.

    Comment by walter benjamin | December 23, 2009 | Reply

  9. [...] This post was mentioned on Twitter by Marc Parent, Peter Bukowinski. Peter Bukowinski said: "Stop defending a system that … fucks you in the ass on a daily basis." Excellent rant on the economic crisis: http://bit.ly/4V4cKo [...]

    Pingback by Tweets that mention The Reality of the Economic Crisis « Danny Mendlow's Blog -- Topsy.com | December 23, 2009 | Reply

  10. Great article. I am a mechanical engineer and my husband is a doctor. We both work full time. His malpractice insurance and office expenses take up almost all of the money his practice brings in. He accepts Medicare patients and loses money on every single one, their care is subsidized by him.

    We live in an old small house that was all we could find in the area with payments less than 3/4 of our combined salary. I can not get health insurance myself due to a preexisting condition. Our children go to public school. Some months I get food from the food bank run by a local church. We don’t eat out or own new vehicles.

    Comment by Joan Bennett | December 23, 2009 | Reply

  11. Nice to see you working in the blog medium.

    Comment by GC | December 23, 2009 | Reply

  12. Well said! Thanks for venting in public, where so many others can follow along, and get inspired that we’re not alone in thinking everything is completely nuts.

    That things caught up to “housing” or “banking” or “automotive industry” certainly isn’t the first ripple either, just the first big enough to hit enough middle class families for the issue to have news visibility. It rendered the poor poorer first, but no one seemed to notice.

    An entire generation of people expecting to make decent money as manufacturing labor (as their fathers did) were displaced into service work by hardware innovations.

    We’ve seen increasingly more service positions removed by software automation (roboceptionists) and increased efficiency of existing workforce (self-checkout).

    Increasing the efficiency of white collar work through improved strategy, communications, and IT has enabled one person to do the work of many.

    Increasing the number of content producers is increasingly saturating creative markets with medium-quality content splitting what money was in entertainment a million ways (see: the iPhone App Store, or for a better example, the porn industry). The going price for online content is free, and attempts to put a price on anything that can be digitized will likely get it pirated.

    We also have more college graduates than ever, but that has not necessarily translated to an increase in the number of ways we can find to employ them at a level utilizing their specialized strengths or areas of interest.

    And yet, I am not complaining about those things.

    Every single one of those changes is good.

    We have drastically lowered the total amount of effort needed to produce and distribute all the food, water, shelter, and even entertainment that might be needed and desired. Efficiencies are through the roof.

    But, somehow in the process, we’ve been participating in a structure that, while it rewards the occasional innovator (the person who makes software/hardware that can replace human workers), punishes civilization as a whole with increased poverty and homelessness for each major breakthrough, as it pushes still more people into not having a way to earn their share, even if they’re willing.

    Right now – and although Christmas season is the epitome of this I really mean modern America in general – our economy is floating on wasteful entertainment expense.

    Not just “entertainment” as film and videogames, but entertainment in the form of overpriced watches, overpriced shirts, overpriced meals, overpriced cars, overpriced furniture, and so on. “Fancier” foods, and $4 bottled water. We eat too much in the interest of pleasure, then pay to exercise so we can still feel great.

    Many of the prices are currently justified by worth as a status symbol. But as soon as people wise up to the fact that a girl with Prada or Gucci is no better (and sometimes much worse) than a girl with her things in a bag from the Salvation Army, that a man really isn’t the watch that he wears, or even that a Nike logo isn’t worth paying 6x as much for a shoe, we’re set up to see even more jobs vanish.

    Sorry to go off on a soliloquy.

    The issues surrounding how we connect right living to a right to live, in a civilization where no talent ass clowns who have never given a thing to society make millions by finding ways to screw other people over and profit from the work of others, has captured my attention for some time now. I’ve been steering my professional life from videogame development to focusing my attention on researching this challenge, in the hopes of coming up with something realistic and actionable as an alternative.

    You’ve hit the nail on the head in stating the problem quite eloquently though – people doing right are getting wronged, more so every year, from an arrangement that we all play along with out of assuming there’s no alternative.

    There’s much work to be done.

    Comment by Chris DeLeon | December 23, 2009 | Reply

    • Hey! Get your own blog! :)

      I agree with you on many points, but I don’t have time to type fellatio at the moment… maybe some other time.

      Comment by dannymendlow | December 23, 2009 | Reply

  13. Interesting post, sir. I consider this to be the most salient quote from the article:

    “The housing market crashed because a house is built so that people can live in it, not so that real estate tycoons can buy and sell them like stocks and bonds.”

    It definitely strikes a resonance. I’d recommend changing the title to something a little less generic and more focused, however.

    Comment by laja2 | December 23, 2009 | Reply

  14. This piece is beyond awesome. You, sir, have managed to recognize a problem so fundamental that solving it requires a complete paradigm shift. I sincerely hope that this problem can be solved though (rent is getting on my nerves!).

    What we all need right now is sound, sane, and rational policy making.

    Comment by Spiggi | December 23, 2009 | Reply

  15. Very well said Danny. I keep wondering how come houses increase in value over time even if all you do is regular maintenance? NO additions or major renovations, but as long as a house is maintained at a decent level, the value is expected to go up (providing the whole neighbourhood doesn’t decrease in value.) I don’t understand this, because everything else I buy (example:my car) will go down in value because it is used and outdated.

    Comment by spyxero | December 23, 2009 | Reply

    • great point.

      Comment by dannymendlow | December 23, 2009 | Reply

    • I can buy a new Car anytime, they make new ones every year. But how often do they make new land?

      Comment by Venturo | December 23, 2009 | Reply

  16. Sheep that we are, we truly do this to ourselves. Shame on us all.
    There are a select few people in this world who have realized early on that all they have to do is not play by the rules, to take rather than ask for, to not give a damn about anyone else and to work very hard at it.
    And, firmly entrenched in their giant egos and ‘power’, they quietly but adeptly run the show from behind the curtain whilst, collectively, we opt to concern ourselves instead with who is the best on Dancing With The Stars or firing off yet another verbose blog post ;)
    I often wonder what a strongly united ‘consumer advocacy group’ would do to our one-sided economy (and don’t kid yourselves folks, the game is rigged from the start).

    Example: Gather about a million or so consumers (do-able via the internet and a good website nowadays) and take a poll amongst the all of them regarding one particular consumable product…it can be anything, but for example we’ll say that the group decides to go after Crest toothpaste. The leader of said advocacy group writes a formal and polite letter to the CEO of the toothpaste company informing him that the consumers he represents will no longer be purchasing crest toothpaste until ‘x’ amount of conditions are met. These demands could be anything from a lower product price to guaranteed North American employment to lower executive salaries etc.

    The problem is (obviously) organizing, and more importantly motivating people into believing that such a course of action would be worthwhile. Yet I think if you can convince enough of the flock to stick together and turn on the wolf, then the reality is that the wolf is fucked.

    Comment by Ghost | December 23, 2009 | Reply

  17. I read recently that the poor beleaguered UK govt was trying to claim that things were bouncing back because in some areas, house prices had climbed by 11%

    Well excuse me… if you happen not to own a house, then things just got 11 fucking percent worse.

    I don’t see any way out of this without some sort of land-reform.

    I also think we seriously need to… what’s the word? Kill… the banks. We need to recognise them for what they are, which is a baronial class that is now too strong for the king to control. They need to be brought down. They need to be reduced to entities owned by the communities that borrow from them, with either no profits made, or all profits going back into the communities that support them.

    I live in a small town… off the beaten track, whenever anyone in my town buys a house from someone else, hundreds of thousands of dollars are sucked out, and winds up in an offshore bank. I don’t get how that’s even legal.

    Comment by Nick Taylor | December 23, 2009 | Reply

    • sound like you need to switch to a local credit union for all your banking needs.

      Comment by spyxero | December 23, 2009 | Reply

  18. Danny, this is the first time I’ve been to your blog [came through reddit] and honestly I couldn’t agree more with what you’ve said up there. These past few months I’ve been asking myself why we pay these corporate suits thousands of dollars a month when a lot of them don’t produce anything of real value. My point being that you know, even in software projects and stuff like that, the real dudes doing the work are the engineers in the project, however, the manager [who really often does not have that much technical training..] gets to call the shots and make the big $$$. I live in Dubai and the story here is of uncontrolled rampant capitalism. Infact, there are folks are making obscene amounts of money doing nothing while the people out there actually creating stuff of value get the short end of the stick. The game has got to change, that’s all I can say. This is not sustainable.

    Comment by Ash | December 23, 2009 | Reply

    • I don’t think we should demonize all management this way. Workers need a manager to help and effectively organize them so that all of their abilities are used to their greatest potential.

      I work in a creative field and while I do from time to time do a bit of the work myself, I know I could manage one person with 50% my skill/experience level into producing a superior product more effectively then I could on my own.

      That’s not to say that we shouldn’t adjust the pay scale in some cases though. But remember that skill level is not the only determining wage factor, another huge one being replacement cost. A single engineer on a project (or in my personal case a video editor) may be much easier to replace than a project manager who is engrossed in all areas of a project.

      Comment by Chris | December 24, 2009 | Reply

  19. Wow. You have a heart, man. I agree completely, but it doesn’t stop there. The same disconnection between reality and our social game that allows us to disenfranchise ourselves also allows us to complain about living in a country where even the laziest, poorest sonofabitch alive can generally scrape by while so many humans on this earth are literally fighting to simply sustain their existence.

    We do need to focus on real value, but value to whom? The shit apartment you live in is now priced on aggregate demand of more people than ever before, thanks to both population growth and globalization on top of simple inflated value. What is the solution?

    My only real answer is that we can do our best to not play the game of inflating values, and to truly keep humanity in mind when we make decisions. Best wishes man, and thanks for the reminder of what’s important.

    Comment by Dirt McGurk | December 23, 2009 | Reply

  20. [...] [...]

    Pingback by The reality of economic crisis - Grasscity.com Forums | December 23, 2009 | Reply

  21. I can’t say i agree with most of this piece. Mostly this:

    “The housing market crashed because a house is built so that people can live in it, not so that real estate tycoons can buy and sell them like stocks and bonds.”

    True that you buy a home to live in, but most ‘real estate tycoons’ are investing by buying/selling the mortgages from banks. They are not really the ones affecting the rise or fall in housing market. Its just like buying or selling anything else, more people want to live a certain place, then the more its going to cost to live there. It’s a pretty easy concept. Property value usually increases at a steady rate, and that combined with inflation is going to drive up the price of rent.

    As far as aspiring to own a home, i think it is related to your own personal spending (your meaning anyones). I mean, I’m a 23 year old Sgt in the USMC, I bought my first home when I was 22. I don’t make a ton of money as we all know, but I’m more than able to pay my mortgage and live comfortable. My wife is now a teacher (another high paying job ;)) and we just purchase our second home earlier this year. Our first place is now a rental that we make a bit of money off. I call that an investment. We are able to manage the money we make, live in what I consider a nice home, and we can splurge for special occasions when we like to.

    Owning a home is not as hard as some like to make it out to be, and sometimes you need to stop blaming everyone else for the situation you are in. I do agree that ‘bail outs and regulations are no the answer’. The answer is for each of us to make best out of ourselves, and take some responsibility.

    I didn’t come up with this ideal but it’s one I’ve come to appreciate.
    The population increases every year. Everyone needs a place to live. Buying property and land is a good investment, because God isn’t making anymore of it. Probably the best examples of supply and demand.

    Comment by Venturo | December 23, 2009 | Reply

    • True indeed, I bought my home when i was 19 but I obviously did not do it on my own (especially in NYC). I gathered my family (nuclear) and told it as it is, it would be much easier if we do this together then separate. Of course we/I’m making many sacrifices to live better but ideally it shouldn’t have to be this way. Also by the time we finish paying our mortgages, we will be paying 2.3 times what it was originally worth for essentially money that the banks made out of air.

      Of course one could say, why not save the money and then get a house? Well in our case (being that it’s NYC) or anywhere else, it would take a considerable amount of time to gather all the money to buy a house with just cash. By the time we save all the money, my mom would probably have passed away and i’ll be too old to enjoy it.

      Comment by Aj | December 23, 2009 | Reply

  22. @ Venturo… god isn’t making anymore is an old Mark twain quote that is overused and irrelevant. God is always making more. Hawaii has rose from the sea and continues to grow, as many volcanic islands out there (Japan, Iceland, etc.).. People die and free up properties. Global warming melting the arctic & antarctic + greenland? How about hurricane Katrina – -that opened up many a lot for sale. Land is freed up all the time.

    Comment by guy | December 23, 2009 | Reply

  23. I agree that it isn’t the easiest thing to do in life, buy a home, but who expects it to be easy? Isn’t owning a home a big part of the American Dream? They Wouldn’t call it a ‘Dream’ if it was easy :). I also agree that it’s no longer as easy as going out and planting a flag, building a house and calling it your own, but come on!

    As for your experience, first off, congrats. You realized what you needed to do to achieve the Dream, and you did it. NYC is quite expensive and it would take me a while I think to afford it, but not unobtainable (but I think it’s too big for me regardless).

    For the banks making the money out of no where, I think you miss a little of the point of a bank. It’s a business like any other. They didn’t ‘make the money out of air’ my friend, they borrowed it from you, me and everyone else who has a savings account. You end up paying 2.3 times the cost of your house(initial purchase price)yes, but look at it this way.

    The bank gets the money to lend out to people who want mortgages and any loan for than matter, from the others who keep their money there. The bank pays you x% to keep your money in the bank, because they’re going to use it to make money themselves. Now, we’ll say the bank charges 5% interest on a loan. First off, that money they lend you, is really on loan to them, just at a lower rate (the 1-2% they pay their savings account holders). So now their profits are 3-4% of the loan. They also have to account for inflation, because the money they give you today is going to be worth less tomorrow, I think we are somewhere around 2% inflation rate. So they are at 1-2% profit from their investment in the potential homeowner. Doesn’t seem that unreasonable. Yes you will have paid 2x the value of your house, but that is at the end of 30 years! You can make extra payments to cut that down as well. Paying 1 extra mortgage payment a year can shave off thousands. My personal situation, 1 lump sum payment at the beginning of each year saves me over 50K throughout the time of my loan.

    Now, over 30 years, your property is also going to increase in value. I’m talking about long term here, not the ridiculous bubble the last few years. On average, property value doubles every 7-10 years. So even at every 10 years, your property is worth 8x what you paid to begin with, even if you have paid 2.3x your original loan amount you are coming out on top at the end (that’s without making an extra payment a year!).

    Now, did the bank really do you wrong?

    Comment by Venturo | December 23, 2009 | Reply

    • Thank you, but they do make money out of thin air, they use fractional reserves and if you and I were to do that, we would go to jail for fraud. There are plenty of videos online how all this works (don’t have all the links available etc) but did a quick search and this one should be good; http://www.yesmagazine.org/issues/the-new-economy/how-banks-make-money

      All Google Video, search for “Money Masters”, there are also others.

      If everyone would go to a bank and demand there money, the bank wouldn’t have all the money available to hand back (this doesn’t include the money for Mortgages which they certainly don’t have in full).

      Comment by Aj | December 23, 2009 | Reply

  24. Chucks, can’t edit previous post, typo, should be “their money” :-P.

    Comment by Aj | December 23, 2009 | Reply

  25. [...] “The reality is this. The housing market crashed because a house is built so that people can l…dannymendlow.wordpress.com [...]

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  26. [...] Danny Mendlow writes: [...]

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  27. [...] The Reality of the Economic Crisis Here’s where we’re at folks.  The end of the line. “The end of free-market [...] [...]

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  28. [...] The above article was reposted from dannymendlow.wordpress.com [...]

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  29. I had the same really good job for 30 years, then a French company bought where I worked, laid off thousands of people, and made new jobs in CHINA.
    WHY?

    Now, a year and a half later I still don’t have a job because companies are refusing to hire people over 40! (I’m 49). 40! Like 40 is 90! Both federal and state agencies have told me that companies are deliberately not hiring people over 40 and that is the number one reason that that we have a jobless recovery. And, also one of the main reasons that local business are going bust (no customers that have jobs) and foreclosures are still increasing and will continue to do so.
    They told me that I can expect to stay unemployed for another year OR TWO!

    What does the “System” want me to do, kill myself because I am over 40? If many people start doing that (and it is already happening), its a Nice way to start lowering the amount of people going to social security in the next 5-10 years.

    History repeats itself, things were just like this when Carter won the election. Companies stopped hired, unemployment climbed to over 10% and he lost his chance of getting a second term. Then we had the Reagan and Bush I years, which really dampened our country.
    I think that people are trying to do the same thing again to Obama.
    Remember, a criminal always returns to the scene of a crime, so the crooks are book doing what worked for them before.

    Comment by salckf | December 25, 2009 | Reply

    • It’s not that they are not hiring people over 40, but coincidentally, if you are over 40 you may have trouble getting hired for the following reasons:

      1. you want too much money for your skills and have a family so you cannot be as flexible as the 25 year old.

      2. you have too much of the wrong experience and they’re concerned you cannot learn new tricks.

      3. you project an air of “i’m too old for you young punks” during the interview and they don’t want to deal with it.

      4. your skills are not as good as you think they are and your future employer knows it.

      Regardless, it is up to you to convince them otherwise. Shorten your resume keeping only the last 10-15 years experience. Obscure your graduation dates. Dye your hair if you think that would help. Get someone younger to help pick out your interview outfits. Loosen up your voice for the phone interview, don’t forget to smile when you talk.

      Interviews are won for one of two reasons: a. they like you or, b. they think you can help them. Make sure you can achieve both perspectives.

      Comment by tom | December 25, 2009 | Reply

      • What a dismissive and naive response tom. Maybe when this crisis actually affects you and yours and you go through something like this, you’ll understand that this isn’t an issue some how-to, for dummies guide for “nailing that interview” can solve. Peoples lives are being pulverized here across the globe, wake up.

        And he shouldn’t have to dye his hair, erase 10-15 years of his life and try to lie about his age… what’s that going to do? How long will he be able to keep that charade up? And why should he have to?

        There is no way any person CAN survive for two years with no income, and there’s a good chance within a few months he will have lost everything he’s worked his whole life for just trying to stay alive. (I’m just guessing you’re a man, I don’t know that).

        This is just one example, there are thousands, millions, probably soon to be tens of millions of stories just like this all around the globe, many too afraid to speak up for fear of being dismissed and talked down to just as you have done here.

        Show some fucking respect and compassion.

        Comment by dannymendlow | December 25, 2009

  30. I appreciate these thoughts and opinions, and agree with them.

    In addition to the problems you cite, however, is another REALLY, REALLY, BIG PROBLEM:

    People Tweet and blog and post comments and do every other kind of passive bullshit instead of GETTING TOGETHER to take some kind of POSITIVE ACTION—hitting the streets en masse (non-violently, I mean), organizing some kind of alternative sub-system, or whatever.

    Think back to 1968, if these problems were in the forefront of the consciousness then. You think the kids back then would be blogging and Tweeting and otherwise passively bitching, or taking some kind of action?

    Not blaming you, or anyone else, just saying: talk without action means nothing. What kind of action? Well—now that we know the problem, can we put our heads together and try to figure out something TO DO about it?

    Love—
    John X

    Comment by John X | December 25, 2009 | Reply

    • Couldn’t agree more John. The trouble is that there is such violent resistance to even acknowledging the real problems, and so many people defending this system and fighting for the people who are fucking them. I have just started this blog in order to open up some dialogue and start working towards some solutions. But without realizing and understanding the core of the problem, then any attempt at finding solutions will be futile and misguided.

      I don’t pretend this blog will change the world. It’s just a place to express my thoughts. I’m writing a political manifesto… but I don’t believe that will change anything either. The real reason I write is simply for my own sanity. I need an outlet for these thoughts or they will literally consume me. It’s a release valve to unload some inward pressure, that will otherwise surely cause me to lash out in some irrational manner.

      Honestly, I have no desire to lead a revolution other than my own intellectual revolution, and the way I behave. I don’t tolerate bullshit from beaurocrats, employers, banks or my fellow man. I stand-up for what I believe in but that, more often than not, merely makes me isolated and talked down to by people saying “That’s not the way it is, deal with it.”

      That frustration and lack of desire to acknowledge there’s anything wrong or anything that can be done that you express I suppose is why I choose to write and comment on the world objectively, rather than hoping to effect any monumental shifts in human behavior. I’ll be talking a lot more about that in future pieces of writing, documentaries and other films. I just think we’re biologically hardwired a certain way, and you’ll never knock more than probably 10% of the population off of that path. I yearn for the change of the 60’s you speak of, and the substance and real action en mass. I wish more people saw how much that period shaped things we now take for granted in modern society… things like racial, gender and other forms of discrimination going from the accepted to the taboo. But it’s also created this massive politically correct movement who are simply hiding from reality
      and pretending all is well when it’s not. Now you can’t talk about real issues for fear of ‘offending’ someone. Well fuck that, if there’s a real issue, let’s talk about it and do it realistically, hiding behind jargon helps no one.

      I’m a writer first, and a social commentator, and if my work inspires others to change their behavior or to act that is for them to decide. But I can’t say I hold much hope for anything positive until a massive catastrophe forces people to act or perish.

      You can’t have a renaissance without the dark ages.

      Peace and Respect,

      Danny

      Comment by dannymendlow | December 26, 2009 | Reply

  31. I really like how you did the subtle snow effect. I hope you don’t mind I posted this article on my FB wall. Thank you Danny.

    Comment by M C | December 25, 2009 | Reply

    • Of course not, the more who share the better. I write so others hopefully find it worthwhile to read.

      Comment by dannymendlow | December 26, 2009 | Reply

  32. [...] ‘They are all irrelevant.’ (Danny Mendlow article). [...]

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  33. Thanks for your anger, Danny. Not out of control, just heated. Apathy clearly isn’t going to help us (the “people”).

    In my “travels” I’ve seen a graph showing workers wages and company earnings over a century or so. Up until about the 1970s, (real?) wages rose fairly linearly, as did company earnings. After some point, wages fell off to constant (or slightly worse), whilst company incomes increased, even more rapidly than before. The gulf between company earnings increased further and further – the implication here is that the owners/shareholders/etc are getting richer and the workers having less money to pay for the basics, like food, clothing and shelter.

    So, it would seem to me that, even without any particular “crisis”, people have been increasingly screwed down for the past 40 years. Of course the current events have been wholesale rape and pillage by the ultra wealthy, and the decline of the typical person’s life is now more sudden and obvious to all.

    A really big question/problem is what do we replace our “system” with? I certainly don’t have all the answers, but it makes sense to me to have some sort of resource-based economy – one where the actual physical resources dictate what we do, not one where some unscrupulous character with lots of “money” dictates what we do.

    Comment by subpixel | December 26, 2009 | Reply

  34. [...] ‘They are all irrelevant.’ (Danny Mendlow article). [...]

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  35. transition towns it’s a start.look them up.we’ve been living this lie to long.start giving to your local merchants.be the change you want to see.stop supporting a system that doesn’t support you and create one that does.these people are leading the way.
    The Transition concept emerged from work permaculture designer Rob Hopkins had done with the students of Kinsale Further Education College in writing an “Energy Descent Action Plan”. This looked at across-the-board creative adaptations in the realms of energy production, health, education, economy and agriculture as a “road map” to a sustainable future for the town. One of his students, Louise Rooney, set about developing the Transition Towns concept and presented it to Kinsale Town Council resulting in the historic decision by Councillors to adopt the plan and work towards energy independence.

    The idea was adapted and expanded in September 2006 to Hopkins’ hometown of Totnes where he is now based. The initiative spread quickly, and as of September 2008, there were one hundred communities recognized as official Transition Towns[3] in the United Kingdom, Ireland, Canada, Australia, New Zealand, the United States

    Comment by geln | December 28, 2009 | Reply

  36. Well said.

    I believe that this issue is a result of people depending on the market for their basic needs, and the market getting out of control.

    Take back your basic needs – find a cheap-ass block of land, build a house, grow as much of your own food as you can. Get some friends together and pool resources. Knowledge is free on the Internet to do all of these things – check out http://www.verdant.net about communal living and dodging the market. Find a LETS group and start working in a currency that is backed by your community. Build your own community of people that you know and trust.

    Banks, mutual societies, insurance companies: all of these things were originally pooled resources of people in a single community. They have since metastasized, and transformed from useful organs to devouring cancers. Time to cut them off from their blood supply (you) and grow new ones.

    Comment by Fish | January 24, 2010 | Reply

  37. I just want to thank you for you eloquent expression of the truth. Something needs to change. I am unsure how we as citizens can affect this change. Perhaps we can turn their media engine against them and make those that exploit pariahs worthy of constant public shaming. We need to raise our voices above these digital whispers before we get permanently silenced by the machine.

    This world belongs to all of us together, not to the privileged few.

    Comment by Rick (slofut) | July 1, 2010 | Reply

  38. Huh? Lots of complaining here about how it’s not fair…well the increasing globalization of our economy means that our standard of living is eroding to eventually equalize with the chinese…or indian…or south american. we still live vastly superior lives to 99% of the world’s population.

    You say you want a revolution to reclaim your standard of living? Because you are owed it? Says who?

    Comment by dan | July 1, 2010 | Reply

    • Ladies and gentlemen, the definition of apathy and complacency!

      Keep pretending all is well Dan. Hope it makes you feel good.

      Also, I said neither of those things, that’s how YOU interpreted my words… not what they actually said.

      Comment by dannymendlow | July 2, 2010 | Reply

  39. Here’s how to regulate the housing market:
    Like sodas, houses should come in 3 sizes–small, medium, and large. Small costs 100K, medium 150K, large 250K. Any house could be any physical size, but it would have to be designated as one of these 3 and be priced accordingly.
    This would allow more people to afford a house, and also allow for some showing of status, since this is what most people are after in life. I’m sure it would also have countless other effects that I am in no way capable of thinking through, so I haven’t really tried. I am not an economist and I’ve only had 2 beers, but I think this is a winner.

    Comment by Jeff | July 2, 2010 | Reply

  40. Stop crying and feeling sorry for yourself, and try a move to somewhere besides New York or some other crappy city that controls rent prices.

    Comment by John Yaeger | July 17, 2010 | Reply

  41. Danny … uh.

    Rising living costs are a result of inflation, not greed.

    The housing market exploded due to easy money policy from 2000 to 2007, and collapsed as a result of the same.

    “Tycoons” and landlords do not set your housing price. Supply and demand do. To help illustrate this concept, I am providing you with this free economics graphic:

    The “Tycoons” you lambast play an important role in mediating the mortgage market so that there is swift and accurate arbitrage in that market. The only thing that went “wrong” was when the Fed kept interest rates too low following the dot-com bust.

    “Good” jobs are shipped overseas due to US dollar hegemony. No country has ever had inflation-free monetary policy like the US for the last 30 years. The Russians call it “inflation without tears”, but the net result has been a significant decline in domestic manufacturing and production (and as a result, the standard of living).

    Comment by Noah | August 17, 2010 | Reply

  42. [...] Source Article [...]

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  43. mmmh, how do I start? Well, to begin with I knew with NAFTA that the US couldn’t compete. Now we have this, and it has led me into a very long journey. Firstly, lets look at human equality. The world belongs to all of us equally, I think, so when companies, artificial arrangements that they are, come in and chew, swallow the environment, we are all robbed of our inheritance. None of us have the right to claim that water, oil, air, or any of the myriad current capital commodities belong solely to us or the company we work for. All individuals own only own their labor, blood or physical self. All other material works of nature are owned equally by the rest of us, or are they? Science shows that other species are very intelligent. Look up Elephants painting and maybe you will understand that other species are equally important. Our home is the earth, a marvelous creation, that we are killing with greedy inattention and selfishness. I say there are COMMONS, equally owned by all life on earth and I feel there has to be some system (not capitalism) that gives us all equal accord. We should all be thinking about what that is, as millions starve and suffer while the current system collapses….

    Comment by Donna | August 20, 2010 | Reply

  44. So many comments, but I just had to say, I agree. There are no solutions offered by any Politicians. We have to start all over again, but not with Socialistic schemes to redistribute the wealth. We can forgive ourselves the National Debt, which is how much the Government owes the People(Public Debt). We can start with a clean slate because we borrowed it from ourselves and are asking our children and grandchildren to pay us back. We can at least stop creating more debt by appropriations. We have to understand that congress is not spending money ever. We are spending Public Debt Securities which in legal terms is “a promise to pay all or part of the principal or interest on a debt”. We can start all over with Greenbacks and not charge ourselves interest and entirely skip the banks. But that would require us to have a base for our currency. How about all the mortgages on all the homes and businesses and buildings in the US? We already own them, why not use the money and the interest on the money and the principal to issue currency. The banks do anyway, why can’t we?

    Comment by Ann Raabe | September 1, 2010 | Reply

  45. helpful post.

    Comment by internet fax | September 17, 2010 | Reply

  46. health insurance should only be taken from reputable companies, you really don’t want to get it from fly-by-night companies -:,

    Comment by Thermal Imaging | November 17, 2010 | Reply


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