Personal bankruptcies up in 2007

Add bankruptcy to the list of ways Americans are dealing with the economy:

Despite the 2005 passage of a law that made it more difficult and expensive to file for personal bankruptcy, more Americans are choosing bankruptcy over destitution. Filings -- including Chapter 7, which wipes out debt, and Chapter 13, which reorganizes it -- totaled 822,590 last year, up 38 percent from 2006.

Sadly, unless we start to do something about economic inequality in this country, it doesn't look good moving forward [emphasis mine]:

"The rise in bankruptcies is not about something that happened last week or last month," said Elizabeth Warren, a Harvard Law School professor and a bankruptcy expert. "It's about the fundamentals. It's about declining wages, rising costs, inadequate health insurance, job instability. More hardworking middle-class families simply can't make it in this economy, and it's only getting worse."

However, inequality doesn't explain it all.

Bankruptcy attorneys and economists said the trend cuts across all segments of society -- the young and the old, homeowners with bad mortgages and renters, the poor and the middle class. In the past, bankruptcies were more common among people who had sudden life changes, such as a divorce, illness or job loss. Now, the bankrupt are people who have simply racked up too much debt.

"It is pretty widespread because there are widespread problems in the economy," said Peter Morici, an economist at the University of Maryland at College Park. "Americans have been spending 105 percent of their income for the last three or four years. That's not sustainable."

I have sympathy for those who find themselves in over their heads due to illness or other life changing events, but I have little compassion for those of you who lived beyond your means or scammed the system.

Take the housing mess we currently find ourselves in as an example. I was talking to a friend in the mortgage industry recently and I asked him why so many companies gave loans to people with poor credit. His response shocked me because it boiled down to "everyone else was doing it, so why shouldn't I?" He said if his company turned down an applicant that person would just move on to another company where they'd be approved for a mortgage and that broker would earn the commission. He said he just couldn't see giving the business away even if the person's credit was shaky.

He was quick to point out that credit worthy homeowners aren't perfect angels either. The latest trend he's seeing is homeowners with lots of equity in their homes taking out home equity loans, paying cash for an equally sized or larger home at below market value, and then walking away from their current home. They end up living in a home that's paid off and the bank gets stuck with their old house and the outstanding mortgage. I call that stealing.

Nice world we live in, eh? Everyone is scamming everyone and no one is being held accountable, and those of us who play by the rules and honor our obligations have to live with the results of this mess. Maybe we need to bring back debtor's prisons to restore some common sense to this country.

The Party of Nyet

That title was inspired by Kevin Drum to describe the Republicans. I like it, and it certainly fits considering the obstructionists have set a record. These are the details from Campaign for America's Future [emphasis added]:

The Republican Senate minority today filibustered an omnibus budget bill, setting a modern-day record for blocking the most legislation during a congressional session. A new report released today by the Campaign for America's Future details the 62 times conservatives have used the filibuster to block legislation (or force modification of bills) in the first session of the 110th Congress. In just the first year of this two-year Congress, their use of the filibuster in the Senate topped the previous record, reached during the entire 107th Congress.

The new report outlines every bill filibustered, vetoed or threatened to be vetoed by President Bush. Conservatives filibustered bills to end the occupation of Iraq, provide soldiers in Iraq rest time equal to their deployments, support renewable energy and grant residents of the District of Columbia representation in Congress. Today's record-breaker involved a $516 billion budget package passed by the House to fund the federal government in 2008. The conservative minority demanded $20 billion additional funding for the war and opposed House language to bring troops home, and threatened a filibuster to prevent the bill from getting an up or down vote.

"In just one session, a minority in Congress has prevented a mind-blowing 62 pieces of legislation from going to the floor for an up or down vote," said Campaign for America's Future co-director Roger Hickey. "Our report shows how over and over again, the uncompromising minority has thwarted the will of majorities in Congress and of the American people, holding the Senate floor hostage to a radical right-wing agenda."

And to think this is the same party that's been running around for decades crowing about their values. They're nothing but a bunch of immature bullies:

Eric Lotke, Campaign for America's Future research director and lead author of the new report, calls the obstruction a "deliberate strategy." He observes that the congressional Republicans block legislation, then blame the Democrats for getting nothing done. "It's like mugging the postman and then complaining that the mail isn't delivered on time."

Deliberate obstruction. They must be so proud. Yet, for all their efforts, they've actually failed. It turns out that 2007 Democrats have been more successful than Newt Gingrich's 1995 Republicans, although I'd really call it a Pyrrhic victory since our biggest problems are still hanging over our heads.

America, Inc.

You can't pick up a paper anymore without reading bad news about our economy, but this headline really got my attention.

Weak Dollar: Airbus, VW Plants in U.S.?

A rising euro and high labor costs are leading at least two European manufacturers to consider building new plants in the U.S. [...]

A recent study by the Center for Automotive Research, completed prior to the recent fall of the dollar, found that autoworkers in Western Europe make almost $10 more per hour than their colleagues in the United States make.

Wonderful. Jobs are being created in this country because we have cheap labor and our dollar isn't worth much. Neither are our homes:

Home prices see biggest drop in 25 years.

Add into that mix the financial crisis and the costs associated with the Iraq war and the picture looks pretty gloomy. It doesn't look like conditions will improve anytime soon. So, who's to blame? Danny Schechter @ AlterNet nails it:

Its probably truthful but not helpful to say that the mismanagement of our economy is an outgrowth of the very corporatist policies that will haunt this country for decades to come, including costly wars, and obscenely high levels of corruption and the list goes on.

This crisis, however is a bit different because it has built in intensity for years without much visibility or attention. It speaks to structural problems in an economy built on the quick sand of debt and delusion.

In order for the economy to function, in order for consumption to continue and profits to keep flowing, people have to believe that everything's all right. They want remedies modeled after Alka Seltzer. Put one tablet in water. It fizzes. You drink and feel better in minutes.

The truth is that confidence is eroding not because "the masses" hate capitalism but because our brand of unregulated capitalism is increasingly not working for them. They know that because prices keep rising and good paying jobs are harder to find. They know that because crime is going up in many cities, and it's harder to make ends meet.

And some even know that the very concept of the masses has been replaced by highly stratifies classes built on growing income inequality.

Greed, Republican corporatism, free market ideology...there's plenty of blame to go around. The American consumer shares part of that blame too. We drank the Kool-Aid. We kept spending. We closed our eyes and ears when good paying jobs were sent out of the country. We voted for politicians who tricked us into believing abortion was the most important issue we faced. Then we voted for them again when they told us terrorism was the most important threat. We were enablers and now we're feeling the pain.

So, what's the prognosis? We shouldn't expect a full recovery:

The pessimism, moreover, isn't momentary but reflects voters' worries beyond the current business cycle. Early last month, a sobering consensus emerged from a focus group of a dozen Republican-leaning voters in the Richmond, Va., area, sponsored by the nonpartisan Annenberg Public Policy Center at the University of Pennsylvania. The participants unanimously agreed that they didn't think their children's generation would be better off than their own -- breaking with traditional American optimism -- largely due to the debt future taxpayers will inherit.

"Who's buying our loans?" said former secretary June Beninghove, 67. "Who's going to own us? We are going to give ourselves to another country because of debt."

And we have reason to believe things will get worse before they get better:

There is a conflict coming, as this problem turns into an issue. It could lead to an economic civil war. Its won't be just a working class led class war either. Says credit expert Robert Manning:

"What we've seen with this kind of financialization of the American economy, where the democratic system and so many democratic institutions have been co-opted and literally bought by the financial service industry, is that we're seeing a big backlash from the American people.

This is what happens when politicians run our country like America, Inc. instead of a Republic. I hope our country can survive the mess they've made.

British government seeks to close Amway

When DeVos was running for governor last year, supporters threw their weight behind him because they believed he could bring good paying jobs to Michigan like those at Amway, the company his father helped found and DeVos ran for a period of time. I wonder what his supporters think of this news from the London Times:

John Hutton, the Secretary of State for Business, Enterprise and Regulatory Reform, seeks to close the company in the “public interest”. [...]

The Government has claimed that the sales people were persuaded to join Amway on the basis that it provides “easy money” or requires “minimal effort”. It also alleged that the business’s primary aim was to recruit staff rather than sell products.

Those terms "easy money" and "minimal effort" are actually pretty flattering compared to what was recently said in court by Mark Cunningham, Queen's Counsel. I highlighted the pertinent descriptive terms.

The British subsidiary of one of the world’s biggest marketing groups was accused yesterday of breaking company law by “selling a dream” of unachievable wealth.

Amway, which had 39,000 selling agents in Britain during 2005-06, is “inherently objectionable”, operates as a lottery and is trading unlawfully, the Companies Court was told. [...]

The Government investigation claims to have revealed that just 10 per cent of Amway’s agents in Britain make any profit, with less than one in ten selling a single item of the group’s products. It claims that Amway’s main activity is encouraging other people to join its salesforce so that they pay the registration fee and buy marketing materials.

Mr Cunningham said that Amway attracted new agents, known as Independent Business Owners (IBOs), by offering “substantial financial rewards or easy money”. He said that promise of wealth was “illusionary” and amounted to “dream selling”.

The group, which has been operating in Britain since 1973, claims that agents can earn a substantial income from selling its range of dietary supplements, cosmetics, jewellery and water purifiers. They are also offered bonuses for recruiting other agents. However, an investigation by the Department for Business, Enterprise and Regulatory Reform showed that only 6 per cent of agents bought Amway products to sell on, the court was told.

Mr Cunningham said that the vast majority of products offered by Amway to its agents were overpriced even before they were expected to add a further 20 to 25 per cent for retail. “The unattractive pricing explains some the graver vices that are at the centre of the winding-up application,” Mr Cunningham said.

Agents were encouraged to buy instructions on how to grow their businesses by attracting new agents. The material contained images of success such as luxury cars, boats and foreign holidays.

Mr Cunningham told the court: “The prospect of substantial rewards and easy money has been at all times, and remains, illusionary.”

The investigation discovered that 71 per cent of agents made no income from Amway in the year 2005-06 and that 90 per cent had made a loss after paying the £18 fee to renew their registration. In fact, just 101 of the agents shared 75 per cent of the bonuses.

“The reality of being an IBO is that a substantial majority make minimal financial returns,” Mr Cunningham said. “Our case is founded on the selling of the dream on one hand and the loss or minimal financial return on the other.”

Mr Cunningham told the court that Amway operates a “pernicious” scheme, which encourages agents to recruit family, friends and colleagues to the group so that they themselves could move up to “that very narrow group that makes any money”.

He said that the Amway scheme involved targeting the “gullible”, “deluded” and “vulnerable” to join the scheme and accused the group of “dream selling.”

Those are pretty serious claims, but the Times provided numbers to support the reality behind those "good paying" Amway jobs:

39,000 - agents working for Amway [in Britain]

27,000 - (71%) had no income

11,410 - (30%) earned something

7,492 - (of the 11,410) received average of £13.53 [about $27] per year

101 - agents received 75 per cent of bonuses

£116K - paid to top earner Trevor Lowe

26 - number of years Mr Lowe was an agent

Of course, the DeVos family made out pretty well - they're worth billions of dollars.

The case is still ongoing, but if the court rules against Amway, the company will be no longer be allowed to operate in Great Britain. Either way, this case just collaborates what citizens have been saying for sometime now - Amway jobs don't help people achieve the American Dream.

(Cross posted at BFM.)

Our children should be non-negotiable

I thought Michigan's anti-government, anti-tax Republicans were hard-hearted and ruthless until I read this article about the GOP-controlled Montana House where the legislature ended without a budget, and Montana is now on the brink of its own version of the 1996 Gingrich-Clinton government shutdown.

Our Republican lawmakers haven't stooped that low yet, but Michigan is on the verge of a government shutdown because they're unwilling to consider a budget that includes any tax increase whatsoever. It should be pointed out that polls show a majority of Michigan voters support a tax increase combined with spending cuts. (It appears the MIGOP is taking a lesson from George Bush who also doesn't care what polls say.) If a compromise isn't worked out soon, libraries are facing a 50% reduction in money, Medicaid payments to doctors and hospitals will be cut 6%, and local districts will face a $125 per pupil cut.

Speaking of that $125 cut, here's an example from MiLib of a state Republican - Michelle McManus - who would make Montana's GOP proud:

Last Thursday, a group of 4th graders from Crystal Lake Elementary School in Benzonia took a trip down to Lansing to meet with their legislators at the Capitol, including State Senator Michelle McManus (R-McManus Family).

On the bus ride down, the parents on the trip - some Republicans, some Democrats and some independants - talked with the kids about Michigan's budget crisis, including the $125 per pupil cut that will be made if the Republicans don't cover their expenses in the next 24 days. These cuts would cost the students of the Benzie County Central School District, which includes Crystal Lake Elementary, $246,285.

In response, the kids took part in a silent protest:


This was way, way too much for Michelle McManus. In response, she allegedly called the Capitol Tour service and tried to have these 4th graders banned from the Capitol building. That's right: a second term state senator responded to a silent protest not aimed at her but at the budget situation in general by trying to ban a group of 4th graders from ever visiting the site of their state government again!

That was a pretty petulant response on McManus' part, and it also sent those children the message that government doesn't care about them. How ironic that Republicans believe in building democracies, but they don't care about building the foundations that benefit our children.

If you care about our children, read this letter a parent from Crystal Lake Elementary is sending around the state and then urge our legislators to do the right thing:

email Sen. Mcmanus @ senmmcmanus@senate.michigan.gov with -125 in the subject line----- Please let her know that she is elected by us, and her Job is to LISTEN to US--and let her know that we are very disappointed in her unprofessional behavior , then let her know that ANY cut to schools will impact us and hurt our children---Another cut this year will be the third pro-ration cut in the last five years......As an elected official she has an obligation to provide Michigan with more than bargain basement services--- and that Education is the KEY economic developmental tool for Michigan

Are you listening, Republicans? Building a future for our children should be non-negotiable.

Update: MiLib posted a reply from Sen. McManus. She denies having the children banned from the Capitol and accuses the parents of using the children as props in a political demonstration, but her words ring pretty hollow since MiLib includes extensive pictorial examples of the times McManus used children as props.

Update 2: MiLib reports that the media is now onto this story.

Republican speakers not wanted

Republicans haven't felt too welcomed on the speaking circuit lately. Last week, V.P. Cheney faced protests when he delivered the commencement speech at BYU, and locally many of us have been voicing our complaints about Cleary University's decision to pay controversial Anne Coulter $30,000 to speak at the school's Economic Speakers Luncheon Series this fall.

(I side with those who oppose her appearance, but after a multitude of letters, calls and posts to blogs asking the school's president to reconsider, Cleary President Tom Sullivan decided to stick with Coulter. He claims the goal of the series is to: "enrich the community by hosting speakers who can share a broad spectrum of business, social, political, intellectual, and cultural experiences." I'll leave it up to you to decide if Coulter "enriches" anyone but herself.)

Moving along, President Bush is scheduled to give the commencement address at St. Vincent College in Latrobe, PA next week and the decision is drawing disapproval from a most unlikely source - the college's former president, Maynard Brennan - who gives very principled reasons why the president is unsuitable:

Mr. President: This place is not your place
St. Vincent College should not host a leader who has exhibited values antithetical to its mission

Wednesday, May 02, 2007
By Maynard Brennan

On Friday, May 11, President Bush is scheduled to give the commencement address at St. Vincent College in Latrobe. To honor the leader of this country would seem a unique opportunity. However, President Bush and his administration have so often violated Christian, Catholic and Benedictine teaching and tradition that I firmly oppose this distinction. Let me explain.

For 35 years I was educated and lived the venerable Benedictine life. I maintain the Benedictine spirit as essential and defining for my life journey.

Four years ago, I was heartsick when President Bush ordered the invasion of Iraq. At that time I endorsed the words of Pope John Paul II as he opposed this ill-fated, immoral adventure. I was pleased that in 2005 the leadership of Benedictine men and women, 2,357 strong, issued the Benedictine Peace Statement: "We believe that violence does not yield peace. We are concerned about the military and political ethos of our own country where justice is defined on the basis of our self-interest rather than on a consciousness that we are part of a common humanity."

I am disturbed that my alma mater will place before graduating seniors one whose leadership and administration have violated and ignored this exhortation. Recently, during his Easter greetings, Pope Benedict XVI continued the criticism: "Nothing positive comes from Iraq, torn apart by continual slaughter as the civil population flees."

In addition, while Mr. Bush served as governor of Texas, 152 people were executed. On at least five occasions Pope John Paul II wrote to Gov. Bush requesting clemency for individuals on death row. Mr. Bush rejected these requests, as well as one made to him during his presidency. This shows Mr. Bush's outright disregard for contemporary Catholic moral teaching.

Mr. Bush calls himself a born-again Christian; he quotes the Bible; conservative Christians form his political base. Yet, in Matthew 25 we read that Jesus identifies with the hungry, the thirsty, the naked and the imprisoned. This gospel further challenges us: If we do not care for the least and the lowest, we cannot enter the kingdom of Heaven.

Has Mr. Bush led us to care for the powerless and the marginalized? The numbers of poor, homeless and imprisoned people in this country continue to rise. The gap between the rich and poor grows exponentially: According to the most recent figures, the top 1 percent of Americans -- whose average income was $1.1 million a year -- received 21.8 percent of the nation's income. According to the U.S. Census Bureau, nearly 37 million Americans, or 12.6 percent of our population, were living in poverty in 2005. I cannot forget the many pictures of American poor struggling for survival after Katrina. Many continue to suffer so many years later.

Certainly our country needed to respond to the horror of Sept. 11, 2001. Subsequently, we broke the back of al-Qaida and took military action to eliminate the Taliban in Afghanistan. Imagine what would have happened if the United States had then focused on building hospitals and training Afghans to heal their own people. Imagine what humane gospel values would have been seen if we had improved the irrigation system, thus bringing clean water to isolated villages. Those pictures would have been broadcast throughout the Arab and Muslim world.

Instead we invaded Iraq, a country with many revered Muslim holy sites, making us seem to many as the latest incarnation of Western domination or even crusade. Extreme fundamentalists in Afghanistan are making a fearsome return. Our actions have become the best recruiting tool for terrorists.

When I was president of St. Vincent College, I was proud to stand before the graduates and encourage them to engage the world with wholesome gospel values. A commencement speaker is a living example of such virtue, sending graduates forth with vision and hope. I have serious misgivings that President Bush can fulfill this exalted role. How can a man whose administration has been so tainted by incompetence and corruption be a worthwhile role model for young people?

Note to Cleary University: Book Maynard Brennan in the future and I'll buy a ticket to hear him speak.

You can't veto the truth

I don't care what explanation the president gives for his veto. I don't want to hear it. Enough is enough already.

Americans United for Change have an ad ready to run in response to President Bush's veto and it says everything anyone needs to know:

Mr. President. You can veto a bill, but you can’t veto the truth.

Republicans neglect our elderly population

My mother was hospitalized last week after a health emergency and she's being moved to a nursing home today. I wish to protect her identity so I won't go into details, but I will tell you she has Alzheimer's, and because of the added health issues she now requires round the clock care for all activities of daily living. As you might imagine,the past several days have been very difficult for us. There's a chance she'll recover enough to come home (she lives with my sister and brother-in-law), but that's a big "if" at this point in time.

Nursing homes can be scary places for patients, and also for families. We've all heard the horror stories of inadequate care or neglect and none of us want to see our loved ones end up in those kinds of places. We only want the best for them. That's what I woke up thinking about this morning. The facility they're transferring my mother to is nice, but my concern is what happens if this becomes a long-term proposition and her Medicare runs out. My mother is almost 90-years-old and outlived her money years ago. She was fortunate to have children she could live with, but none of us is in the position to help her with nursing home expenses. Mom will end up in a Medicaid facility once her Medicare runs out, and we'll just have to keep our fingers crossed that she ends up in a good place. The better nursing homes only take so many Medicaid patients and openings are hard to come by. It's shameful that the level of care an elderly person receives ends up depending on money.

It's also shameful that some insurers have taken advantage of those people who had the means to buy LTC insurance:

Interviews by The New York Times and confidential depositions indicate that some long-term-care insurers have developed procedures that make it difficult — if not impossible — for policyholders to get paid. A review of more than 400 of the thousands of grievances and lawsuits filed in recent years shows elderly policyholders confronting unnecessary delays and overwhelming bureaucracies. In California alone, nearly one in every four long-term-care claims was denied in 2005, according to the state.

“The bottom line is that insurance companies make money when they don’t pay claims,” said Mary Beth Senkewicz, who resigned last year as a senior executive at the National Association of Insurance Commissioners. “They’ll do anything to avoid paying, because if they wait long enough, they know the policyholders will die.” [...]

“These companies have essentially turned their bureaucracies into profit centers,” said Glenn R. Kantor, a California lawyer who has represented policyholders.

Yet these concerns have been ignored by state regulators, advocates say, and have gone unnoticed by federal lawmakers who recently passed incentives intended to promote purchases of long-term-care policies, in the hopes of forestalling a Medicare funding crisis. [emphasis mine]

This is just one more example of privatized services failing to deliver. Washington may be helping the insurance industry by pushing these programs, but they're not helping the people victimized by the system, and they're not helping people like my mother who can't afford the luxury of private long-term care insurance, yet she worked and paid taxes her entire life. In fact, my mother was a "Rosie the Riveter" and worked in a factory during the war. She deserves the same level of care as the next person.

Locally, our state Republicans have shown the same disrespect and disregard for our elderly. Last week, they pushed through a late evening budget plan that would save the state more than $15 million by reducing the wages and hours for people who care for 40,000-plus low-income seniors and the disabled. Pay for home health care aides will be reduced to $7 an hour under their plan, and seniors must find the helpers on their own. They also cut funding to home-delivered meals by $97,000, which as one person said is a small cut, but it's somebody's grandmother who's going to get the phone call saying they can't get meals anymore.

I don't think there's any justification for cutting back services to our elderly or disabled, but that's not how state Republicans see it:

Senate Majority Leader Mike Bishop, R-Rochester, said the cuts are "painful" but argued that the GOP plan would adequately fund public safety, education and health care and help turn around Michigan.

"Once you get used to a certain level of government, it's hard to trim it back," Bishop said. "But we also know that we have an obligation to the state, to the citizens that we represent, to downsize government."

Excuse me, Sen. Bishop, but you also have an obligation to our elderly. They're citizens too. They paid taxes and contributed to society their entire lives, and now, when we should be doing for them, you want to kick them to the curb? That's disgraceful.

Put yourself in a poor person's shoes just once. How would you feel if your mother needed her adult diapers changed and you couldn't find someone willing to do it for $7 an hour? In fact, would you change diapers, give sponge baths, and strip dirty sheets for $7 an hour? Add into the equation that old people can be difficult and cantankerous to deal with, especially those with dementia, and the pool of caring people willing to work for poverty wages goes down considerably.

Sen. Bishop, you and your Republican cohorts in Michigan and Washington should be ashamed, most people treat they pets better than you treat our elderly.

Bush Administration Channels Rose Mary Woods

Talk about deja vu. From Firedoglake:

President "What, Me Lie?" just took a credibility hit this morning. Via Josh (with a huge H/T to Muck commenter Donp who spotted the gap at 2:19 am!):

I think a commenter in our document dump research thread may have been the first to notice that the emails released by the Justice Department seem to have a gap between November 15th and December 4th of last year….

The firing calls went out on December 7th. But the original plan was to start placing the calls on November 15th. So those eighteen days are pretty key ones. (emphasis mine)

What are you trying to hide, President Bush?

The House panel showed some smarts today and approved subpoenas for Rove and other top White House officials that Bush plans to fight. I say "bring him on." It's time for some public accountability.

Update: Editor & Publisher has a story about this too: Paging Rose Mary Woods: '18-Day Gap' in Release of Latest Emails in 'AttorneyGate'

Asked about the gap today, Tony Snow, White House spokesman said, "I've been led to believe that there's a good response for it, and I'm going to let you ask them (DOJ) because they're going to have an answer."

Yep, but first they have to invent something that sounds plausible.

No Testimony Under Oath from the Values Party

White House Won’t Allow Rove, Miers To Testify

MSNBC’s Mike Viquiera: “Fred Fielding, he’s the White House counsel, he was just here meeting with the House Judiciary Committee. He made the following to the Congress, both House and Senate. He said Rove and Harriet Miers would be offered to the committees for their testimony in the Alberto Gonzales prosecutors scandal. However, it would be unsworn testimony, not under oath, behind closed doors, and no transcript would be permitted." [emphasis added]

Why not let them testify under oath? If they're telling the truth - which they should be since lying is not acceptable to people of values, right? - then they should have nothing to worry about.