Greed

Ground Rules

Since the financial meltdown plunged the world economy into crisis last fall, every sane person (a category that does not seem to include financial-industry lobbyists) agrees we need better regulation. Pension funds and others are hopping mad that the complex Wall Street products they bought, many rated AAA by private companies such as Moody’s, are actually “toxic” and near-worthless. The whole planet is angry to find that, by letting Wall Street make up new financial architecture as it went along, we brought on the burst-bubble collapse now raining chunks of debris on our heads. President Obama has sent Congress a proposal for better regulation.

But if Wall Street needs some rules to keep elite, well-educated financial players from getting themselves and us in trouble—and boy, do we ever—then this argument applies even more to Main Street, where the working poor and middle class are increasingly faced with financial predators.

Exhibit A: payday loans and their just-as-evil twin, car title loans. Designed to be hard to pay off so that borrowers must repeatedly renew, these are heavily marketed to the poor, particularly communities of color; a typical borrower will pay $500 in interest on a $300 loan.

Obama’s proposed Consumer Financial Protection Agency might be empowered to reign in those financial predators, but it won’t help with another problem that’s just as bad: the 2005 bankruptcy law changes, which tilted the scales in favor of credit card companies by requiring many families in trouble to stay stuck in debt, making payments for years.

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Sojourners Magazine August 2009
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Wal-Mart's Big Green Claim

Well color me happy (as the saying goes): Wal-Mart just released a big claim to be greening up its act. But what does their claim really mean and how do we define what corporate green looks like anyway? Especially since lately, corporate green seems to grow everywhere, at times fertilized by a healthy dose of corporate greed.

A Paper God

Commentators have frequently compared the credit crisis of today with the economic crisis of 1929, just before the Great Depression. Yet almost no one speaks about the deeper causes of the economic crisis: the eagerness of banks to give, year after year, huge amounts of credit to speculators and all kinds of speculative funds, with an enormous worldwide growth of financial markets and new financial products as an unavoidable consequence.

 


In recent years there has been a staggering increase in the amount of money being invested by investors worldwide—and most of it has been put in highly speculative markets in the financial, rather than the “real,” economy. What does this distinction mean? To oversimplify, the “real economy” is the part of the economy that involves making, selling, and buying goods and services, from groceries to shoes to doctors’ visits to garbage collection. The financial sector, in contrast, involves the buying and selling of money as a product in its own right.

 

 


On its simplest level, this involves the trade in loans or bonds (someone borrows money and pays back more money in the future), the buying and selling of foreign currencies, and the buying and selling of shares in the stock market.

 

 

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Sojourners Magazine June 2009
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