Monday, October 10, 2011

Demand 12 - “Outlaw all Credit Reporting Agencies”

A tale of two cities in the gleaming land of Oz

New York – The demands are heavily skewed to the interests of the marginal – the very young just starting with fresh diplomas and mounds of student loans – and the very old whose lives are behind them, trying to live on fixed income.

In the midst of a global credit crunch, the upstart social media-driven #OccupyWallSt is homing in on the ramifications of that global crunch, especially as it affects these two market segments.

Though their demands are only proposed, the rhetoric seems to center around universal employment, a turn toward green energy generation and consumption, and an easing of credit conditions deemed as onerous, somehow perceived as vindictive.

After all, proposed Demand 11 calls for “Immediate across the board debt forgiveness for all. Debt forgiveness of sovereign debt, commercial loans, home mortgages, home equity loans, credit card debt, student loans and personal loans now! All debt must be stricken from the 'Books.' World Bank Loans to all Nations, Bank to Bank Debt and all Bonds and Margin Call Debt in the stock market including all Derivatives or Credit Default Swaps, all 65 trillion dollars of them must also be stricken from the 'Books.' And I don't mean debt that is in default, I mean all debt on the entire planet period.”

Demand 12 - “Outlaw all credit reporting agencies.”

The placement of demand 12 is only logical. After all, it's the scourge marketing programs use to ensure prompt payment for the kind of deals to which desperate people will often agree to in hard sell marketing campaigns when the mercury hovers below freezing or in excess of 100 degrees for record numbers of days.

Consider the cold snap of February 1 & 2 of this year, when temperatures fell to below-freezing throughout Texas. The trade group Electrical Reliability Council of Texas (ERCOT) instituted “rolling blackouts” from Midland-Odessa to Austin and the Metroplex to the Piney Woods of east Texas.

The discomfort of living in sub-freezing temperatures when the means of keeping homes and businesses at a comfortable temperature was immediate, profound - and frightening.

Social media went into high gear. The Facebookers and Tweeters shouted out that it was all about the EPA disapproval of 5 permit applications for coal-fired generating plants in the state, only 3 of which were approved due to emissions standards.

The anger rose as temperatures dropped. Clearly, something had to give. Lt. Governor David Dewhurst, a Republican candidate for U.S. Senator, made certain inquiries and discovered that the trade group was concerned about increased emissions caused by peak operation of their members' generating plants during the cold snap.

The capacity for electrical generation was there; it was the emissions meters that worried them.

That's when Republican Presidential hopeful Governor Rick Perry made his move. He assured the public that the emergency would be contained, but insisted that blackouts be limited to the minimum until temperatures would normalize over the weekend.

That's when the rolling blackouts ended, or at least slowed down - way, way down. In a short time, everyone's electrical furnace was running smoothly and their homes and places of business were back to a normal temperature.

Incidentally, the fears of the electrical companies came true when the EPA announced this month that they would have to clean up their emissions by 50 to 74%, the point where it's more economically feasible to quit using “clean” coal and go to natural gas.

The largest electrical generator in the state subsequently announced it will close two of its plants. The numbers just don't add up. Can't make a profit. Time to cut the losses at the expense of thousands of jobs.

What's all that have to do with credit reporting?

There is an answer to that question, too. Electrical deregulation brought about aggressive competition among providers for the business of buying and selling megawatts of power to consumers – regardless of who generates the juice.

People get an ad in the mail inviting them to get into a much lower rate, something that will save them large percentage on their current bill, and they go for it. When the power company decides to go back up on their rate, it's sudden.

Drop that company and sign up with another at your peril. You get a bill for the difference in what you would have spent at their highest rate and what you actually paid. If you don't pay, you get a credit blip of multiple delinquencies on the credit score, even though you didn't owe them a penny at the time and paid every bill faithfully, on time.

So senior citizens living on fixed incomes of only a few hundred bucks per month and young citizens living on a fixed income of zero bucks per month - or minimum wage when they can get it - are in pretty much the same boat.

Live on your retirement income and don't pay your bills – medical, energy, pharmacy – and the credit reporting agencies will drag your name through the mud.

Live on minimum wage and ignore payment of massive debts you ran up getting a sheepskin - and get the same treatment.

It's a cruel thing to look into the future and see the horizon has flatlined because those ubiquitous persons who can't die made some hard and fast decisions about how you would be spending your future.

Those persons, of course, are corporations who have logos instead of faces, stock symbols instead of names, and fluctuating numbers of profit and loss, stock growth, and dividends declared instead of souls.

So, what drives the very young and the very old to get in these corporate citizens' faces on their own turf and demand changes? The same thing that enabled peasants to challenge monarchies all over the face of Europe in 1948. New Technology.

Social media. Like the Industrial Revolution, the new technology of silicon and satellite is driving the deal just as new technology in communications and transportation did in the world revolutions of 1848.


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