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Let’s Talk About “The System”

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hi, i'm the system

hi, i'm the system

Back in the eighties there was an awful lot of talk about the nefarious “system”, a deep and dark conspiracy of the powerful to keep down the powerless. Before resentment became a tool of the right, it was a clarion call of the unreconstructed left, a youthful, incoherent, but somehow meaningful rallying cry that drove many a drunken, sophomoric conversation. You don’t hear too much about “The System” these days. Nobody seemed to care anymore, when “The System” was delivering them flat screen TVs and great opportunities to flip condos.

But it seems to me that it’s time to revive talk about “The System” because it’s become very clear what it is.

Undiluted socialism for the rich and influential, and the legal and enforcement system to protect it.

Let’s take a very real world scenario. A couple in Henderson, Nevada, struggling to make ends meet had built up a crushing credit card debt that they want to consolidate. They had tried to be responsible, but stagnant wages had forced them to finance their own personal deficit with credit. To pay that debt that they need collateral, i.e what’s left of their savings. With great effort and sacrifice they start to pay off their debts at the cost of their childrens’ college fund. Much of this couple’s debt is on credit cards owned by Citigroup, which pushed up fees and interest rates as the fortunes of the economy began to falter, further undermining the couple’s ability to pay.

Citigroup had made billions in the good times. It seemed like a detail that it had failed to inform its shareholders and government regulators that its out of control traders had created upwards of a third or a trillion dollars worth of hardly traceable, unpriced, and worthless collateralized debt obligations, tranched out all over the world in an orgy of profiteering. They had paid the ratings agencies for the all important AAA ratings to help them move these CDO’s. These shadow assets had now gone bad, leading to a potential writedown that would destroy the bank. That is the definition of irresponsibiilty.

During the good times, Citigroup had expanded dramatically, its counter-party tentacles creating a web of interdependence that was now a very useful insurance policy. “Too big to fail”, said the government, so they invested nearly $50 billion in the bank with minimal control in return, and offered to guarantee the hundreds of billions in CDO junk. Among the millions bailing out the crushingly irresponsible Citigroup is the responsible couple from Nevada, who continue to pay their taxes on time, or are forced to pay penalties, and face jail time.

That is “The System”

The vicious spiral for the family feeds a virtuous circle for the bank.

At the risk of sounding sophomoric, it occurs to me that “beating the system” really wouldn’t be that hard.

If everyone boycotted making their credit card and mortgage payments for say three months, the banks would fail, and there’s nothing the government could do about it, except for calling out the National Guard to arrest us all. A very American Revolution. Of course, that won’t happen. We’re all too afraid of the law enforcement system put in place to protect “The System”, so we continue to feed it as it sucks us all dry.

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