The Cash Cows of Personal Debt

The Credit Card Industry and Predatory Capitalism

By Charles Sullivan

12/15/06 "Information Clearing House" -- -- The booming credit card business is one of the most profitable and destructive industries to ever emerge from the inventive capitalist mind. Citibank is raking in more money than Microsoft and Wal-Mart. Obscene profits are realized without lifting a finger to perform any physical work. In 2004 a single credit card company—the MBNA—realized 1.5 times the profits of fast food industry giant McDonald’s. Collecting on credit card debt is a very lucrative business.

With origins in South Dakota, the modern credit card industry began realizing obscene profits as a result of deregulation. The Supreme Court also played a pivotal role in expanding banking industry profits by lifting limits to the amount of additional fees credit card companies could charge their customers. The sky is the limit now. Industry deregulation has resulted in the systemic fleecing of consumers by practices that can only be described as willful and predatory in nature.

It is variously estimated that debit cards will account for 26% of retail sales volumes between the Thanksgiving and Christmas holidays this year, up 3% from 2005. The busiest shopping period of the year does not occur on Black Friday, as is widely reported, but between the 11th and 17th of December. During this span Americans will likely spend $34 billion on credit and debit card purchases; and nearly $86 billion between Thanksgiving and Christmas. Billions more will be spent on store issued credit cards. In total, Americans will accrue $135 billion in additional credit card debt this holiday season.

To date, credit card volume is running 11% percent higher than last year. The National Retail Federation estimates that over $454 billion will be spent by American consumers during the holiday season this year, including cash purchases. That represents a 5% increase over the previous year, while VISA USA estimates overall retail sales for the
2006 holiday season to increase by 7.5%.These are truly staggering numbers that are not easily grasped.

By paying only the monthly minimum payments, as so many struggling families do, it may require more than thirty years to pay off a dress or a power tool that was purchased at the local mall on Black Friday. That makes for a pretty expensive gift and every year additional debt is accumulating upon the old, making extrication very difficult, if not impossible. But that is the whole idea behind predatory capitalism. Industry insiders refer to the small percentage of card holders who do not carry a monthly balance as ‘dead beats.’ Consumer traps are engineered into the system that all but guarantees that card uses will be late making their payments or exceed their credit limits.

When card users are late making payments, as the complex algorithms used by card issuers predict they will, interest rates rise dramatically and multiple user fees are added to the monthly bill. Millions of card users spend most of their income paying exorbitant user fees, without reducing the balance or reducing it only minimally. The bankers are raking in billions, while working class families are becoming debt slaves to the predatory capitalists of the credit card industry. This was made possible with the blessings of Congress operating under the influence of the corporate lobbyists that swarm on Capitol Hill like maggots on a corpse.

Bankruptcy laws that once provided working people a way out of debt are no longer available to them as an avenue of escape. It should be noted, however, that bankruptcy courts remain open to corporations and provide them with debt relief, a chance to start over with a clean slate.

Thus the banker thieves will continue to rob working families until death do them part; and then the debt burden is passed on to the next of kin. More than a cash cow designed to bilk the people of their hard earned income, credit card debt is also a way to control the debtors and keep them in line; and it is a major battle front in the class war that rages across the continent.

Like genetically modified poultry with abnormally large breasts, the American consumer is bred to consume and to be consumed by predatory capitalists. They are taken in by seductive advertising campaigns that nourish the urge to consume, no matter how destructive to the self or to the planet.

Credit card agreements are so complex and deliberately misleading that few consumers, or even lawyers can fully comprehend them; and they are mined with hidden traps and pitfalls guaranteed to produce lifetimes of debt.

From the previously cited statistics it should be clear that the people stand naked and vulnerable before the predatory capitalists and their cohorts in government. Massive personal debt is yet another example of a profit driven system that does not work for the working people of this nation. The trust that should prosper between people and government no longer exists, leaving the majority of citizens without representation. Predatory capitalism creates enormous wealth for a privileged few by exploiting workers who are trying to survive by working multiple jobs that yield non-living wages, and few or no benefits.

Virtually all of the financial institutions in this country, including the Federal Reserve, are arrayed against working families. Congress is working for big business rather than working families, as evidenced by their policy decisions and voting records. Let us be clear about whose side they are on.

Ever more creative methods of fleecing the people are being crafted in the corporate board rooms of America and dutifully written into law by Congress. Millions of working people thus find themselves buried under an avalanche of debt from which they will never escape. Debtors are a cash cow for the credit card and banking industries whose supply of milk is without end. Eventually we will be required to work until we die, as our creditors and Congress work in concert to bleed us to death and gorge themselves on our labor and our suffering.

The low esteem by which workers are held in America by the ruling Plutocracy underscores the reality that there is no one looking out for our interests. But we must remember that we comprise about 95% of the population. Our low placement on the economic rungs of the ladder assures that we will remain bottom feeders, either surviving or perishing on the crumbs that fall from the tables of the rich, thereby guaranteeing our continued serfdom to them. It also demonstrates the necessity of organizing as a class and rising together against the corporate predators that are bleeding us of life, liberty, and the pursuit of happiness.

Sources:

BCS Alliance - www.Cardweb.com - PBS Frontline, November 28, 2006

Charles Sullivan is a photographer, free-lance writer and social activist living in West Virginia. He welcomes your comments at csullivan@phreego.com.