IN DEBT WE TRUST

My film In Debt we Trust was largely ignored or put down by the mainstream media as alarmist and worse. Now, segments in the film are turning up as stories in leading newspapers. Sunday’s Washington Post featured a Minister who urges his parishioners to tear up their credit cards. I featured another Minister with the same message in my film two years earlier:

Calling on Gospel to Call Off Debt

As Financial Crisis Grows, Many Turn to Church for Help

Following the advice of their pastor, the men and women shuffled to the altar, cut up their credit cards and placed them near his feet.

“If we want to have victory, we have to come out of financial bondage,” the Rev. John K. Jenkins of First Baptist Church of Glenarden shouted during a recent sermon.

Ordinarily Jenkins’s sermons are about spiritual freedom and ridding one’s self of sin. But his message has taken a different turn lately — one that preaches the dangers of overspending and debt.

Speaking of the Post, it is published across the street from where I am staying in Washington and helping the Neighborhood Assistance Corporation’s anti-foreclosure event that has drawn thousands of homeowners seeking justice. (See My Commentary on the subject.)

The Post has not send a reporter across the street to check it out. Yesterday I went over there to try encourage coverage but could not penetrate their security cordon to speak to an editor. I did find a copy of another paper Epoch Times in a news box in front of the Post’s main entrance featuring an article I wrote on Fannie Mae. That’s the closest to the Post I got.

Meanwhile, closer to home, Gary Scott uses the phrase “In DEBT WE TRUST” to describe a New York Times Series:

‘In debt we trust

The New York Times launches a series on debt in America. Gretchen Morgenson, one of the nation’s smartest business reporters, is the lead author. If you think the credit crisis/mortgage crisis/mental recession is about Wall Street and deadbeats, you’re missing an enormous cultural and social shift taking place in this country.

Here are a few stats from the first story:

Today, Americans carry $2.56 trillion in consumer debt, up 22 percent since 2000 alone, according to the Federal Reserve Board. The average household’s credit card debt is $8,565, up almost 15 percent from 2000.

College debt has more than doubled since 1995. The average student emerges from college carrying $20,000 in educational debt.

Household debt, including mortgages and credit cards, represents 19 percent of household assets, according to the Fed, compared with 13 percent in 1980.

Even as this debt was mounting, incomes stagnated for many Americans. As a result, the percentage of disposable income that consumers must set aside to service their debt — a figure that includes monthly credit card payments, car loans, mortgage interest and principal — has risen to 14.5 percent from 11 percent just 15 years ago.

By contrast, the nation’s savings rate, which exceeded 8 percent of disposable income in 1968, stood at 0.4 percent at the end of the first quarter of this year, according to the Bureau of Economic Analysis.

HOW BANKING PRACTICES LEADS TO MOUNTING CONSUMER DEBT

Must read: Gretchen Morgenson in the NY Times

HARVARD’S ELIZABETH WARREN ON THE RELATIONSHIP BETWEEN THE MORTGAGE MELTDOWN, BANKRUPTCIES AND DEBT

HOUSING CRISIS

Richmond Times Dispatch: Saving Your House: New Law Gives Owners a Little More Time But Cutting Through the Red Tape Can Be Tough, Borrowers Say

Jul. 20–A new state law gives some Virginia homeowners struggling to make their mortgage payments longer to work out a deal with their lenders. A Virginia Foreclosure Prevention Task Force is supposed to help deal with the rising number of foreclosures here. Virginia was ranked by a national real estate research firm as having the 11th-fastest foreclosure rate in June in the country.

Boston Herald: Feds Too Much in the House: Critics Say U.S. Too Involved in Home Programs

Jul. 20–The bailout of mortgage giants Fannie Mae and Freddie Mac is raising questions about whether the U.S. government is too involved in promoting and ultimately paying for the American Dream. From mortgage-interest tax deductions to rescuing Wall Street firms caught up in the subprime-mortgage debacle, the federal government now spends and forgoes in taxes far more than it currently earmarks for highly controversial farm-subsidy programs, economists say. Few expect Fannie Mae and Freddie Mac, which are quasi-independent mortgage companies, to collapse because of recent turmoil within financial markets.

THE COLLEGE CREDIT CARD HUSTLE

WHERE IS THE OUTRAGE

James Grant in the Wall Street Journal

Why No Outrage?

Through history, outrageous financial behavior has been met with outrage. But today Wall Street’s damaging recklessness has been met with near-silence, from a too-tolerant populace, argues James Grant

“Raise less corn and more hell,” Mary Elizabeth Lease harangued Kansas farmers during America’s Populist era, but no such voice cries out today. America’s 21st-century financial victims make no protest against the Federal Reserve’s policy of showering dollars on the people who would seem to need them least.

SHOULD THERE BE A BAIL OUT OF FREDDY AND FANNIE?

The editor of Ml-Implode says No:

At this late point in what passes for the discourse on the matter, it seems basically a foregone conclusion that some sort of bail-out is needed. The main questions are whether the support should come from the Federal government or whether shareholders should be required to raise capital in the private markets (to their own detriment). To those that think the Federal government should be a part of the bailout, the questions are merely whether the backing should be limited or unlimited, and whether the shareholders should be forced to take the brunt or be made whole (because after all, lots of “public welfare” institutions like pension funds own these shares).

All of these perspectives make one gigantic presumption: that Fannie and Freddie are good for the country, or at least critical for the survival of our housing market…..My point: the GSEs are not worth saving because they do not serve a purpose that can even theoretically lead to any good for society. All they can do is distort the market, transfer wealth through price fixing from “late receivers” to “early receivers,” put our country deeper in debt, and provide more bureaus for politicians to use as plum patronage vehicles….

Mike Whitney agrees on Counterpunch:

“The Fed’s emergency rescue plan for the financial markets is hopelessly flawed. It’s a scattershot approach that doesn’t address the real source of the problem; an unregulated, unsustainable structured finance system that emerged in full-force after 2000 and spawned a shadow banking system that creates trillions of dollars of credit without sufficient capital reserves. This is the heart of the problem and it needs to be debated openly. The present system doesn’t work; it’s as simple as that. It makes no sense to provide trillions of dollars of taxpayer money to shore up a system that is essentially dysfunctional. It’s just throwing money down a rat-hole.”

Reuters.com - House prices could fall for two years: Citigroup

Citigroup Posts $2.5 Billion Loss on Write-Downs