So, Here’s the Deal

If I’m an automobile company, I’m going to build plants, struggle with shortages in parts and supplies, fight with the unions (if any are left), create a dealership network that sells and services my product and hope I’m sufficiently rewarding both my investors and buyers so I stay alive in the market. There’s fierce competition and a sea-change in the move toward electric vehicles as well. 

The average worldwide profit-margin in my industry is 7.5%

Or, I can be a bank that issues credit cards. In that case I have no messy infrastructure, unions or dealerships to get in the way of extracting huge profits from my product. I don’t even properly have a product. My ‘product’ is money and—because I am a bank and only because I am a bank—the government allows me to count loans to customers as assets. Elsewhere, if you or I loan uncle Willy a thousand bucks, it’s a debt against our personal wealth until repaid. Further, (and think on this special deal for a moment) for every ten dollars a bank loans out, it is allowed to print another eight dollars to loan out of thin air.

The average profit in this ‘financial services’ industry is 14.71%

I know, I know, the government actually does the printing, but they shove this dough at the banks through a cute little entity they call the ‘overnight window’ at an interest rate determined by the Federal Reserve. Currently, that’s 5.5%. It used to be 0% but the financial wizards that run such things still couldn’t keep us out of recession and it’s a shell game at best. You and I are not allowed an overnight window because we are not ‘too big to fail.’ We fail quite regularly, entirely on our own, and no one is the wiser. So I ask you, would you rather be a producer of actual stuff or a bank?

Which is pretty much why America got out of the business of producing actual stuff and turned itself into a consumer nation.

And if you’re not a bank and have no chance of ever being a bank, here’s another gig you might consider: Payday Loans

Payday loans are short-term cash loans for the poor. Most of us may be temporarily broke from time to time, but we’re not actually poor. So, few of us understand how incredibly expensive it is to be poor in America. They’re always behind. Being behind means you never ever get a discount, live in the crappiest housing at the highest rents, put off health issues, have a hard time keeping your kids in school, are likely to be an alcohol or drug abuser and work for the lowest wage.

Payday loans are based on the borrower’s personal check, held for future deposit, or on electronic access to the borrower’s bank account. That personal check is written for the amount borrowed plus the sky-high finance charge and they receive cash-in-hand.

And these ‘last resort’ loans to the poor have mind-blowing interest rates

Payday loans range in size from $100 to $1,000, depending on state legal maximums. The loan term is usually two weeks, but get this. Loans typically cost 400% annual interest or more. The finance charge ranges from $15 to $30 to borrow a hundred bucks. For a two-week loans, these finance charges result in interest rates from 390 to 780%. Shorter term loans have even higher rates, so if you’re short of the rent due on the 15th and don’t get a paycheck until the 20th, you’re really screwed. 

Now you might wonder how all this is legal

I blush to inform you that it is legal because your state legislature decided to make it legal. And I blush further to advise you that those well-meaning jerks you either did (or did not) vote for were paid to enact such laws. Well paid, I might add. You don’t think they can afford to get re-elected without ‘going along to get along?’

Which is also legal, something I won’t go into here, but it’s embarrassingly underhanded in what is supposed to be a representative democracy.

You see, it is a fact of being American that the poorer you happen to be, the less you are visible on the radar of the wealthy. And the wealthy run things. Flying through the flotsam and jetsam of your difficult and often discouraging life, you are truly a stealth bomber. Those various elected officials who intersect with your life have never known anyone poor. The fact that you bleed when cut, cry when hurt and have families you love is not apparent to them. They blame you for not pulling yourself up by your bootstraps—unaware that you have no boots and have never had boots.

“Workers are being punished for inflation. The real culprit is corporate greed”

So says Robert Reich, former US secretary of labor, who just wrote an enlightening article in today’s Guardian UK that casts further light on punishing the wrong culprit. I highly suggest you read it. His street-creds beat mine, hands down.

But guess who the wrong culprit is.

He says workers, but I say the poor. In today’s economy, in both America and the United Kingdom, they are often impossible to tell from one another.