It’s a good thing dueling is illegal, because that’s the only thing stopping this pugnacious working-class hero from tapping my front foot, shouting “ha ha” and lunging forward to plant a six-inch span of steel in the vitals of fellow scribe Charles Morris for scapegoating the middle class.
Instead, I’m just going to journalistically call out this former banker and lawyer and take his latest article to task. The Daily Beast story, which is entitled “We’re Doomed,” makes three ridiculous claims that are revisionist enough to qualify as class warfare.
First, it erroneously implies that The Great Recession and the continuing global economic distress resulted from working people here in the U.S. using the equity in their homes to live beyond their means. Bankers, lawyers, and predatory home loans had nothing to do with it, according to Charlie Boy, who must have been racing “last call” when he wrote this piece of dreck.
Second, the story claims the current American and European economic problems are quite different.
Third, the story claims European nations routinely have higher jobless rates than the U.S.
All three claims are ridiculous misrepresentations. Here’s why:
First, borrowing against your own money – in this case your home equity – is not living beyond your means. It is by its very definition living within your means. Because it’s your money.
Equity represents the portion of a mortgage that has been paid off. If you owe $200,000 on a home with a current market value of $300,000, you have $100,000 of equity. It’s borrowed money only in the sense that you don’t want to sell the house to tap into it.
The correct parallel in the government world would be bonding (or borrowing) against a surplus, like the one former President Bill Clinton left behind, rather than a source of future recurring revenue like bridge tolls. Those are two very different things.
Second, the causes of the European and U.S. economic problems are identical in many ways: risky stock market bets by financial institutions, weak regulation of questionable banking and investing practices, and the use of government bonds to allow the nations now having problems to live beyond their means via borrowed money.
They weren’t issuing bonds against a surplus.
You got that Charlie Boy (right)?
In the U.S, we used the money borrowed during the boom to finance welfare-like subsidies for the rich and for big corporations, and bankroll costly wars in the Middle East marked by irresponsible and excessive payments to defense contractors. Many of the biggest contractors, like Halliburton, were connected politically.
We used the borrowed money to offset revenue lost to the tax breaks for the wealthy that were championed by former president and lifelong rich kid George Bush; to allow multinationals to avoid paying their fair share of the tax burden through an array of loopholes; and to provide the billions of dollars allegedly skimmed by foreign power groups like the Karzai family.
In Greece, politicians used the largesse to go hog wild on social welfare programs to win the support of government employees.
The over-arching trend is that the federal governments in both Washington, D.C., and Athens, used borrowed money to live beyond their means. That’s a similarity, not a difference.
Now, let’s get into the inference that the implosion of the housing market was responsible for The Great Recession and continuing economic distress. That’s like saying a murder victim, who had been stabbed in the back 32 times with a butcher knife, died because their heart stopped beating.
The painful truth is that the middle class was tapping into home equity for daily expenses because it was broke. The collapse of the middle class we’re now seeing was underway long before the housing market imploded. Workers were getting killed for more than 25 years before The Great Recession by the health care industry, the demise of organized labor, and the offshoring of U.S. manufacturing jobs to China and services jobs to India.
Federal wage gain data is a useful fiction that obscures the fact that take-home pay has fallen dramatically the past 30 years, because this data treats both salaries and the money that employers pay out for employee benefits as wages. A practice which has allowed the huge and sustained increase in the cost of health care benefits to obscure the fact that take-home pay has not kept pace with inflation since 1980.
That’s one of the stab wounds in the back of the middle class.
The wholesale relocation of employment engines like factories and call centers to other nations by the Fortune 500 represents another stab wound. The rise of political lobbyists and political marketing, which has all but disenfrachised working voters and ended representative government, also is a stab wound.
Same for our neutered term limit regulations, which have allowed professional machine politicians like U.S. Rep. Chartlie Rangel (D-N.Y.) to remain in office for 40 consecutive years.
Finally, the claim that European unemployment rates are routinely higher is ridiculous because they don’t measure joblessness the same way as we do. Employment-to-population ratios are more accurate and the U.S. lags most European nations by that measure.
The U.S. ranks 16th in the world on this list of national employment-to-population ratios, which reflects the percentage of employed workers in each country, ages 15 to 64, in the overall population of that age using 2003 data. Ten European nations are ahead of us. There’s no indication it was an abberation.
The real question raised by this article is how Charlie Morris ever won a Gerald Loeb Award for Distinguished Business and Financial Journalism in 2009, and what the hell happened to him between then and now?
Try this class warfare garbage again Charlie and see what happens. To paraphrase the character of Clubber Lang in the film Rocky III: “I got lots a more for ya.”
You can go ahead and tell all your buddies at The Daily Beast and Fox that it’s going to be personal like this from now on.
You all have been running roughshod over the truth and looking for trouble for too long without consequences. Those days are over.
This kind of critical response is going to be the new journalism norm whenever you attack decent working people with your economic sins of omission and half truths.
There’s an old saying in the working-class neighborhoods of New York City where I was raised: “Ain’t no freebies.”
You feel me?