Barak's SUV
Two things struck me when I read this - and in this order:
- How dare someone look down on me because I don't bleed for every cause and understand every thing that is possibly wrong with society today?
- Then, I realized what my blog is all about and thought to myself, "You hypocrite!"
How do I reconcile the two? By realizing I have a right to my initial feelings, then by understanding that, as Red Green (of Opossum Lodge fame) would say, "I'm looking out for you, because we're all in this together." (Anyone know who I'm talking about? No Canadians answering, please!)
I can understand why Barak would make such a statement. It's not a "white America" thing: it's a "rich America" thing - and not in the way you might think I would attack the problem.
This is the fault of rich America, but not because the rich aren't cutting checks for mansions, to replace the shotgun-shacks of the disenfranchised homeless. This is the fault of rich America, for keeping everyone from middle-class on down, ignorant on how money really does work.
See that stupid little plastic thing in your wallet or purse? You know, the thing you reach for, everytime you want to buy something? That little thing is making you an economic slave-to-the-grind.
There are 2 sales meetings that rank up there in the all-time list of successful sales presentations, that I would've given my right nut to witness:
- The guy who sold the script for the 1960's sitcom, "Hogan's Heroes."
Could you imagine how the sales pitch went on that one? "Hey, I've got an idea for a sitcom, that'll leave the whole family in stitches! How about a group of American POWs in a German prisoner of war camp during WWII? Wouldn't that be a hoot?" Don't laugh: the guy (or gal) sold the script, and Hogan's Heroes even went into syndication, which is the only reason I know it ever existed.
- The person who originally thought of credit cards.
Could you imagine how the sales pitch went on that one? "Hey, I've got an idea that'll get people to keep paying for items they've already bought!"
Close your eyes, and imagine a skeptical Simon from American Idol: "Oh, come now! This has probably got to be the most bloody ridiculous idea I've heard from you yet! Do you honestly think people are that stupid?"
"Yes, I do."
Then imagine Simon, rubbing his chin, deep in thought. This was probably the birth of credit cards.
When you're paying 25% interest on the unpaid balance, you keep paying for things that you've already bought. Seriously.
So what does this have to do with Barak's "SUV" speech? Everything.
When you get a loan for a house, you've got the option of incorporating into the loan, one year's worth of disaster insurance, and one year's worth of property taxes.
The bank will total up the amount for the year's worth of taxes and insurance, add five percent (to allow for increases) divide that by 12 (the number of months in a year) which figures your monthly payment on your taxes and insurance (escrow) for a year. You pay the monthly payment for the house, plus your escrow payment. Your escrow payment goes into an escrow account, that always keeps you 12 months ahead. (Remember, you've already incorporated into your mortgage loan, one year's worth of taxes and insurance - which you'll pay at the "closing table" when you sign for your loan.)
Even if you get 3 months behind on your loan, you're still 9 months ahead on your taxes and insurance. This way, when disaster strikes, even if you're a little behind the eight-ball yourself, you'll always have insurance to cover your losses. This is called an "escrow account."
Again: what does this have to do with Barak's "SUV" speech? Everything. If the people of New Orleans had their insurance escrowed, chances are good that they wouldn't have to rely on FEMA to bail them out - their insurance company would.
Who teaches you this? Nobody! Why? Money is a finite resource. There's only so much to go around. Do you honestly think the rich want everyday school kids to learn this stuff? Of course not! Who would keep buying stuff with credit cards, who would keep renting apartments, and for those lucky enough to know how to build their credit enough to get a mortgage, who will fall behind when disaster strikes, so the bank can repo your house after you helped pay a significant portion of the amount borrowed, down?
Were you ever taught in school that the benchmark measurement for determining whether or not an investment is providing a good return, is comparing it to what you would have made, if you would have stuck that money in a CD?
Do you learn in school what a sector of the economy is, and how to balance your investments in stocks, so they're in off-setting sectors?
Do they teach you what commodities are, or the fundamentals of investing in commodity-based stocks? For example: Weyerhouser (sp?) is one of America's leading provider of lumber. When a hurricane is off the coast, what do you think happens to the price of Weyerhouser stock? It skyrockets!
We're too busy buying stuff with credit cards and going broke as a result, to ever notice.
If the middle class is to survive, this has got to stop.
posted by Boris Yeltsin @ 6:28 PM
7 Comments:
At 8:51 PM, February 14, 2006,
Intellectual Insurgent said…
Have you ever read "Rich Dad Poor Dad"? That is the point of the book - how to make money work for you.
That said, that assumes that the people in NO could afford to own homes. My bet is that most were renting.
At 12:47 AM, February 17, 2006,
Intellectual Insurgent said…
By the way, I think it's pretty cool that you can have a gut reaction to something, but stop and look at it from a distance and use the opportunity to analyze it intellectually and even learn something about yourself. That speaks volumes about your character.
At 12:48 AM, February 18, 2006,
Mahndisa S. Rigmaiden said…
02 17 06
Whoa Boris: You are all that with this post. One of the things that I have come to grips with is that Blacks and poor people are at a total disadvantage in this economy. If one's ancestry is only 140 years out of slavery, that isn't that much time to learn economics especially if you are competing with someone whose ancestors came over on the Mayflower. Those folks have been building wealth for hundreds of years!!!! The whole thing about the escrow account is important too. I was speaking with someone and they were warning me about property taxes etc. I had to stop them and tell them that I have an escrow account set up for me, and a coupla weeks ago, we even received an overage cheque from it. It is so sad that people don't know about money though. I traced six generations of my family tree and there was property ownership there. However, each generation owns property since but the wealth isn't increasing like Oprah either. I think it is because we need another hundred years or so to really figure out how money works-well on a collective basis. Good post; and like II said your honesty is totally refreshing! BTW thx for the email updates;)
At 1:59 PM, February 18, 2006,
Boris Yeltsin said…
I've heard the argument from the African-American community that they're behind the eight-ball financially, because they've just been out of slavery for 140 years, and whites have been accumulating wealth since the days of the Mayflower.
Do you ever watch that show with Cramer on MSNBC? It's where this crazy guy who knows everything about stocks throws pencils, chairs, raves like a lunatic, etc.
I'm not an avid watcher of BET, but in all my years of channel surfing, I've never seen an equivelent on BET, where they get passionate about talking about money - how it's made, sheltered and invested. It's too geeky for the hip-hop culture. Gospel isn't too geeky, because they've got some damn good singers on Sunday mornings, and girls with their boobs and asses hanging out in the videos isn't too geeky, but passionately talking about how money is made, sheltered and invested? Can't have that!
Now, I'm as white as white can be. So is my brother. Three out of our four grandparents were either first or second generation from England.
We're not benefitting from the wealth of our ancestors, and trust me, there was some serious wealth there. It all sprouted wings and flew away over the generations. (Just like the Bible says it does.)
So, if I'm not benefitting from the wealth of my ancestors, I don't understand how people can be held back by the poverty of their ancestors. I think it's more about attitude than anything. Example:
Like I said, my brother and I are as white as white can get. We're complete opposites though.
We're only 4 years apart, and I've owned a house now for over 15 years, and he just bought one. Why is that?
He was afraid of the interest. He said, "I heard that you pay almost as much in interest, as you borrow. Why would I want to put myself in a situation where the bank is screwing me like that?"
I said, "That's true: on a 30 year mortgage, you're only paying the interest during the first 15 years. That prevents someone from adding up all the house payments they've made in 15 years, and telling the bank, 'Hey! I don't owe you any more money, because I just paid everything back that I originally borrowed, so we're even; I'm done!' Since you're only paying the interest for the first 15 years, the bank can turn around and say, 'You didn't pay back what you borrowed! You only paid the interst. You now owe us the money you borrowed!' "
My brother was like, "Duh, that's exactly why I don't want to get a mortgage!"
I said, "Yeah, but you don't understand: the money you pay in interest, is completely tax deductable. That means, for the first 15 years you're paying on your mortgage, the government is giving you a 100% reimbursement for your housing expenses. Once that 15 years is up, I'm moving to start the whole thing over again, because I want that deduction. You're a fool if you're not going after it either."
What he said next flabberghasted me. He said, "Only you could put a positive spin on a scheme designed to screw people out of their money."
That's my mom and dad talking, all the way.
See? It's obvious that my mom and dad haven't benefitted from the wealth of their European ancestors, either. They're broke too.
In my opinion, it's all about how you look at money. Like that guy from Kentucky with the 8 rental houses has always told me: "If you take your money seriously, your money will take you seriously." I believe that, more than anything else.
At 3:14 PM, February 18, 2006,
Intellectual Insurgent said…
BY -
There is something to be said for race/culture and wealth. Although I am not a big fan of making excuses for people, there are certain facts of racism that cannot be denied. And if you have never experienced it, you cannot simply dismiss what others have to say regarding its effects. I highly recommend that you check out Tim Wise's writings and lectures sometime.
http://www.zmag.org/bios/homepage.cfm?authorID=96
Even if your ancestors weren't poor, they were allowed to have jobs from which blacks were excluded until as recently as the 1960's. They were allowed to buy homes in neighborhoods in which blacks were legally prohibited from buying homes. They were not allowed to build a foundation the way even poor whites were.
Indeed, it has been a consistent aspect of American history to play poor whites off against blacks so that they never unite in common cause (as they did during colonial times).
It's far more complex than the viewing options on BET, although I completely agree with you about BET's shallow programming.
At 2:34 AM, February 21, 2006,
Unknown said…
wow, I am overwhelmed and humbled by your knowledge and wisdom I hope it is okay if I link your page. I am sure I can learn alot from you you dont know me though, but I am an old friend of maya's and you if you would like check out my blog,but as a individual who is apart of the black community (if you can call it that) I am in total agreeance that BET's programming is to focused on entertainment and not focused enough on true values and real issues that plaque the black community, If they (BET) believe that entertainment is all that the black community is good for I dont believe that the station should be exisiting in the first place, yes music is something the black community holds as something that is significantly apart of there community but when it comes to the bigger picture it isnt something I would say is important.
At 11:55 AM, March 17, 2006,
SwallowedAlive said…
Thanks to this deployment, I've paid off all my debt to creditors (thank you my generation's war (silver lining?)). I've vowed never to use them again-although, I haven't rid myself of their plastic presence either. I come from a middle class family split up into barely-holding-on and a welfare-house. I was never taught about money. I'm just now starting to learn. The enormity of my financial ignorance makes my eyes cross. Thanks for some insight.
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