some shit i never ended up posting on facebook because i realized after i had spent an hour on it that i sounded like a jackass posted:

Spoiler!

Aha, now we're getting somewhere. I wanna leave all moral arguments behind now - we could go on all day and it wouldn't go anywhere. I intend to show that the rate of return on the bank's capital itself is 1) the ultimate cause of inflation in real estate 2) regardless of whether it's morally okay or not, it's not sustainable.

The price of loaned capital is set by the market rate - basically what all the other banks are doing. If a bank undercuts it, the bank would lose out. But the rate of return on capital which banks require is predicated on the rate at which house prices rise in the first place. *This is the case even if banks try to keep their rate of return constant.*

As a simple example, imagine an island with only one house on it. It's being sold at auction. (From here on out let's say all our figures are corrected for inflation and real wages never rise, just to make the maths easier.) The final price is $100, and the winner Alice comes along and applies for a mortgage to pay it. The term of the mortgage is ten years, and Alice has an income of $20 a year. The bank sets the interest rate so its total rate of return R over the whole term is 10%. So in ten years time, Alice has earned $200, of which $110 has gone to the bank. The bank now has 10 extra dollars to lend.

Let's say Alice wants to move, so she sells at auction again. Imagine Bob wins at $100. This is the highest he's prepared to go, because he talked to the bank already and they said this is the most they're willing to lend based on his income, which is the same as Alice's. The bank gives him a mortgage under the same terms as Alice. Unfortunately they have a problem now. They've made another $10, but their total capital stock to begin with was $110 this time. Their rate of return on total capital has now shrunk to ~9.1%, because of the extra $10 they didn't lend out.

Their only recourse is to lend Bob more money. So they do, and he borrows $110, perhaps cos the agent suggests he'll need it for furniture or simply because they're offering the same new terms to everyone else at the auction, and Bob needs to beat them. At the end of the term, he's earned $200, and $121 in total has flowed to the bank. The bank's rate of return is identical, but the percentage of homeowner's income they're capturing has risen, and house prices have gone up. And in order to maintain the rate of return they're going to have to do the same to the next borrower.

Think about this for a sec. Even if you remove inflation, remove rising wages, remove any extra demand or shrinking supply, remove any CDOs or negative amortization or feckless flippers or any of the bogeymen folk like to complain about, without even inter-bank competition or any money being printed, the price of the house on the island will increase and an increasing share of the resident's income will go toward paying their mortgage, simply because the bank has to maintain the rate of return on the capital it holds. Eventually a time will come when so much income is being captured that the owner can't possibly make the payments, and we get a sudden collapse - hello 2008 - all simply because banks have to make a profit.

Let's get back to the real world, where wages practically are stagnant in relation to house prices, and we don't actually have the kind of population growth or shortfall in construction that can really explain the enormous rise on its own. In all respects we're close to the one-house island model. (House prices wd in principle be stable in the short term if the bank invests its returns in building new ones, but unless the population was growing at 10% too prices wd decline pretty quickly, and the bank wd be shooting itself in the foot.)

Now to go back to what you mentioned previously. You said it's absolutely fair to pay a % of your income over time in return for a place to live. Well, fine. Is it fair for everybody, over time, to pay an increasing share of their income? More importantly Is it sustainable? If not, should the rate of return on banking capital be strictly limited to the rise in average wages plus some correction for the rate of expansion of housing stock? But then the amount of money in their coffers is going to grow as the rest of the economy does and no quicker - why would anyone bother investing with them? The very fact that banks have to maintain a profit ABOVE the rate of general growth in the first place is the problem, and a bank that didn't do that wouldn't even have any particular incentive to bother with mortgages - it could accumulate capital by lending it to productive businesses (e.g. ones that build houses in the first place) just as well, since their rate of growth matches the rate of return on real estate. Moreover, it would end up being eaten by a less scrupulous bank.

Now the whole argument started off when I said it would be a good idea for everybody to stop paying their mortgages (and rents, and credit card bills). Now hopefully you can see why it's true that banks that make market rate profits on mortgages are the problem itself. The very fact that you don't have the resources or the recourse to borrow at a rate that matches your future increase in wages is what makes the transaction non-voluntary, in any meaningful sense.

Yet coordinated and direct pressure - cutting off their capital flows, in essence a "borrower's strike" for more generous terms, might actually work in terms of making things both sustainable and fairer for everyone. Is a regular strike morally problematic? Are the workers at fault because the employer doesn't "owe them work", because they could have technically chosen to start their own business, eat out of bins or join a self-sufficient commune? If not, why is it different for borrowers? A borrower sending repayments to a bank is working for a bank, and when your boss is screwing you, you down tools.

drwhat posted:

yeah it makes sense to do and I'm sure a lot of people would agree in theory but ithink people generally are going to be more timid and cautious than to act on it. everyone wants to tread water

in my experience people also don't in the main connect their personal debts with the anti banker/finance type stuff, i don't think they grasp the connection at least for now

drwhat posted:

Gibbonstrength posted:

people are trained to turn on anyone not suffering as badly as they are. if you start skipping out on debts as a movement the broader public will resent you the same way they resent people who refuse to do wage labour, imo

i think a sign of this is that arguments for it can be (are being?) made inside the capitalist framework. e.g. "real capitalism doesn't include this kind of loan-sharking bullshit, it's actually skewing the way it's supposed to work, a free market doesn't have billions of dollars of debts, banks are fucking you, let's fix the economy by blah blah blah". of course it's bullshit but it might work

this is exactly the direction Ideology is going on that topic, drwhat

stegosaurus posted:

I was talking to pink ninja

Its, uh, pink ninja now.......................................... >?!

NoFreeWill posted:

NoFreeWill posted:

CWAHF~Communism With A Human Face~CWAHF

crew wants a hardass fuckboy
crew without a human face
crew what alters humanity forever

img-vforvendettamaskontubbyneckbeard.jpg

littlegreenpills posted:

realtalk i think the debt strike idea is really good as long as theres already a strong mass organization with a decent line in place to sort out the inevitable mess

the Sino-Russian Empire *crosses pawpads*