Column: The high price of patriotism
Patriotism and greed; strange bedfellows, indeed! President Bush is calling on all Americans to pitch in and do whatever they can to turn around our faltering economy. We are asked to be patriotic, get back to leading our normal lives, spend, buy, travel, fly and, perhaps, take an extended, expensive vacation, preferably in Texas or Florida. Apparently, his message has not gotten through to much of Corporate America. Let’s look at a few examples.
Enron, the huge corporation that was, only a short time ago, gleefully squeezing blood out of California power consumers recently declared bankruptcy (the largest bankruptcy in U. S. history). Shortly before filing, the company awarded bonuses totaling $55 million to 500 of its top employees (average bonus, $110,000) while at the same time awarding pink slips to the other 4,000.
Polaroid Corp., which also filed for bankruptcy protection in late 2001, laying off thousands of workers and leaving 6,000 of its retirees without health insurance, has petitioned the government to allow it to issue bonuses to its top executives (so they won’t “jump ship”). Such warm and fuzzy examples of corporate patriotism and welfare must have brought tears to the eyes of J. P. Morgan and the other “Robber Barons,” wherever they might be.
During the past year, the “Feds” have lowered interest rates a total of 11 times in an attempt to “stimulate the economy” . . . the result? Well, I put aside a stack of credit card “pre-approvals” received in the past eight weeks and guess what . . . they are almost identical to a similar stack I saved in January 2001: “0.0 percent interest” (the baited hook) for ___ months . . . then (get out the magnifying glass) 23.99 percent . . . unless you are delinquent, then it could be 27.99 percent or even more.
So much for the “Trickle-Down-Theory” favored by one of our two major political parties . . . 11 rate cuts and nary a trickle! It’s easy to understand why the wealthy embrace the idea . . . but the less-than-wealthy (?) . . . those who have yet to be trickled on, but mechanically go to the polls every election and support this dinosaurian concept? And then, there’s “my-very-own-bank,” which recently sent me another check for $1,018.47 . . . if I had cashed it, I would be paying an annual percentage rate (APR) of 36 percent (how patriotic can you get?)!
Finally, my nominations for “Scrooge of the Year” (fanfare, please): Anyone associated with a “Payday Loan Shark Establishment” (euphemistically, a “Deferred-deposit Business”) . . . those friendly, helpful, compassionate souls that let you borrow on next week’s paycheck . . . then sock you with an interest anywhere between rate 100 and 1,000 percent!
Nevada is one of a handful of states that has legalized these outrageous, morally indefensible “businesses” without imposing a limit on the cost of borrowing (could this possibly have anything to do with the 27 percent increase in Nevada bankruptcies in the past year?).
John Vergiels, a lobbyist for the “Payday Loan Shark Industry,” claims high interest rates are necessary because of the risks involved and has been quoted, in justifying these usurious activities, as saying: “If they (clients(?), victims(?)) could get a loan someplace else, they would . . . banks don’t want the customers we take . . .” Translation: “if the banks don’t want these folks . . . and their own government offers them no protection, then they are fair game.” During the last session of the Nevada Legislature, Assemblywomen Bonnie Parnell (Democrat) and Dawn Gibbons (Republican) introduced an obviously bi-partisan bill (AB 421) in an attempt to remedy the situation . . . I sent an e-mail to our representative, Lynn Hettrick (Republican), asking for his support on this measure and on April 18, 2001, received the following e-mail from him:
“AB 421 died in committee. There are many concerns regarding the way interest is calculated. There is a minimum cost to write a contract. As you know, that cost is added to the total finance charge to calculate the interest rate. That falsely inflates the rate. While you and I might not pay those rates, there are many folks who can’t finance anything without these short term loans. Capping rates negatively impacted them. The committee chose not to process in the form offered and there were no amendments offered that satisfied concern.”
Translation: by default, the Nevada Legislature has once again cowed to lobbyists, allowing, in this particular instance, the sharks to continue feeding on the most vulnerable among us, those living on the financial fringe.
Have a Happy New Year . . .
John O’Neill is co-director of the Carson Valley Violin School. He can be contacted by Email at firstname.lastname@example.org, or through his web site Music-FoodForTheBrain.com