The Hard Truth

The hard truth of the matter is that the regime of monopolyfinance
capital is designed to benefit a tiny group of oligopolists
who dominate both production and finance. A relatively small
number of individuals and corporations control huge pools of
capital and find no other way to continue to make money on the
required scale than through a heavy reliance on finance and
speculation. This is a deep-seated contradiction intrinsic to the
development of capitalism itself. If the goal is to advance the
needs of humanity as a whole, the world will sooner or later
have to embrace an alternative system. There is no other way.
—John Bellamy Foster
Monthly Review, April 2008
DEBT
WE LIVE IN AN ECONOMY that has become deeply dependent
on the American consumer for growth. U.S. consumer
spending accounts for nearly 70 percent of the US gross
domestic product. Consumer credit and mortgage debt is
a higher percentage of disposable income now than ever
been before. The US population is $5.3 trillion in debt. In
fact, the credit industry is monopolized by 10 credit companies,
who control almost 90 percent of the credit card
market, based on credit card receivables outstanding
(Source: FDIC).
• About 43% of American families spend more than
they earn each year.
• Average households carry some $8,000 in credit
card debt.
• Personal bankruptcies have doubled in the past
decade.
FORECLOSURES
Up to 4 percent of America’s mortgaged homeowners
might lose their homes to foreclosure in coming months, as
those homeowners find themselves trapped by heavy debt
and the housing slump. That’s four times worse than the
historical average of 1 in 100 mortgaged homeowners who
fail to keep up payments. The national foreclosure rate has
climbed 27% from a year ago with an estimated $110 billion
worth of homes expected to go into foreclosure.
National foreclosures are expected to hit 1.2 million to 1.3
million by the end of the year. $1 trillion in mortgage debt
will come due next year as the rates on millions of adjustable
loans reset, sending individual monthly mortgage payments
hundreds of dollars higher. In one case, a family started with
a “teaser rate,” paying just $1,700 a month. They thought it
was fixed, but it wasn’t. With rising interest rates and deferred
interest, the monthly payment has now ballooned to $3,700
a month. They can’t afford to pay it and, worse, they will
probably lose their home and all they have invested. Unfortunately,
this family is not alone.