The Bickerstaffe Record
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Being Labour, The world beyond West Lancashire

‘Lets blame the poor, we might get away with it.’

09.28.08 | 3 Comments

I’d thought it might turn up soon, and it has.  Far right wing blog trash like thishas turned up in the supposedly balanced MSM, courtesy of an article by Carl Mortished in The Times, which I had to read twice before I could quite believe he was really saying what he saying.  Here’s an excerpt (and hat tip to Rick at Flip Chart Fairy Tales, whom I see has also covered this article very well, and quoted liberally from it): 

‘Someone has forgotten who borrowed all the money. This is not a tale of City greed v the downtrodden working man. It is the triumph of mass consumption over class privilege; it is about the homes, but it is also about the cars, the flatscreen TVs, the racks of Primark frocks, the consumer detritus that litters a million British working-class homes. It is the lifestyle of people who a quarter of a century ago were struggling to fill the gas meter but who last year took a foreign holiday.

It was those blood-sucking vampires at Canary Wharf who made possible the Great Spend of the Millennium, when a cheap loan became available to all. Are these Labour preachers oblivious of the great capital transfer to the poor that took place over the past 15 years?

Who stood behind the toxic mortgages underwritten by Fannie Mae and Freddie Mac? Blue-collar America. Who borrowed from Halifax, the former building society that clings to the apron of Lloyds TSB? British working men and women.

It was social engineering on a vast scale. Since the War, Labour governments tinkered, trying to create a ‘fair’ economy. They mostly failed and, half a century later, rampant capitalism did the job, transferring hundreds of billions of pounds into the pockets of the less-well-off. Much of it will never be paid back, except by taxes, and perhaps the burden will be eased by a dose of inflation if the US Federal Reserve Bank finally loses its bottle. There was an unwritten rule among bankers that you did not lend to poor people. It was assumed they would fritter it away, but a different view prevailed over the past decade, that a mortgage was just a statistical risk.’

Oh, my word!  You can almost smell the well-healed bile rising as the article degenerates into a torrent of abuse for the feckless poor, who are the true cause of the collapse of capitalism!  How dare they want to own things like the rest of us! 

Yes aspiration is fine for the likes of you, eh Carl, but the poor really should know their place, is that it?  No matter that millions of Council homes in the UK were sold off leaving a mortgage the only realistic option for sustainable accommodation for millions – surely there are enough cheap B&Bs and cardboard boxes to go round! 

And ’rampant capitalism transferred hundreds of billions of pounds into the pockets of the well off’?’  What planet are you on, mate?  Not only are you clearly a bit of a git, you also don’t understand loans and interest rates very well. Or the massive increases in social inequality of the last 30 years. 

But let’s just get one thing straight while we’re here.  Auberon, sorry Carl Mortished assumes that lending to the poor is automatically more of a risk than lending to the rich.  Well, I hate to bore him with more facts than he can digest before his sherry, but that’s not actually true.

Let’s take the very poorest for starters.  There is very reliable evidence from thirty years of Grameen Bank that, across the countries they work in, repayment rates on micro-finance loans are much higher than in commercial banks lending to the non-poor in the respective country.  Repayment rates have regularly come out around 99%, and the slight tail off in recent years is as much associated with more unscrupulous lending practices from commercial banks now trying to get a piece of the action with the people they used to ignore, and the impact on the overall ‘loan package’, than it is with the poor’s capacity and willingness to repay.

Why are the repayment rates so high?  Well, I won’t bore you with the exact mechanics that Grameen use (and they vary a bit), but basically it’s down to establishing trust between lender and borrower, and creating solidarity between borrowers through ‘lending circles’, as well as preferring to loan to women who are often excluded from formal banking processes (institutional sexism, differential literacy rates etc. etc.). 

Trust and solidarity – not terms our friend Mortished would be familiar with, I imagine. 

 And it’s not just Grameen Bank.   Other examples of what can happen when loan finance is constructed on decent principles abound, like the Kiva scheme that Steve Hanlon kindly introduced me to recently.

And if we turn to America, where those pesky ‘blue collar’ workers have, according to Mortishead, been wantonly bringing down the edifices of his beloved capitalism with their irresponsible desires to live in houses, what do we find?

Lets look particularly at that much-hated-by-the-right Community Reinvestment Act brought in by the Democrats in 1977, under which lower income people do get borrowing opportunities denied to them elsewhere.   Here again, there very clear statistical evidence from an independent reportwritten well before the current crisis point and no political axe to grind, that responsible lending from banks operating according to the principles of the Act, is associated with lower foreclosure rates.  In particular the study found ‘a very high negative statistical correlation (-0.764) between the number of bank branches and the number of properties with foreclosure filings per owner occupied housing unit.’

In other words, where banks lend responsibly and with sensitivity to the way poor people actually live, the poor are a good bet.  It’s that local solidarity thing again, Carl.  You wouldn’t understand.

So let us be clear.  The crisis IS the fault of the banking elite and the elite institutions that let them get away with it, and they WILL continue to do so if this myth – that it’s all the fault of the poor -, and the solution – that they really do need to atone for their sins – gain further ground. 

It’s made it this far – from right wing loonies on blogs, to crap right wing journalists at the Times.  There’s still time for it to be Conservative party policy by the end of this week.  Oh no, sorry, I think it already is.  According to George Osborne:

No one takes pleasure from people making money out of the misery of others but that is a function of capitalist markets.’

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