Why Retailers Have a Stake in Maintaining the “Securitization” System


Retailers are NEVER going to challenge what Wall Street is doing to consumers because virtually everything is sold with an offer to make installment payments — which in turn results in the sale of securities far in excess of any purchase. Retailers have increased sales dollars then because (1) more products and services are sold and (2) they can raise prices by selling payments instead of the actual price of the product or service.

We saw this in stark relief when developers in the 2001-2007 ramp-up were increasing prices by as much as 20% per month, corroborated by appraisers who were being paid to state a value that was $20,000 more than whatever the contract price was stated. That is how prices deviate from value. And when that happens a crash always follows.
And real estate developers became addicted to the scheme because they were getting more and more for the sale of new homes, they were getting more sales of homes based on nonviable “loans,” and because they were starting mortgage brokering operations on site while they were selling homes — which enabled them to get kickbacks (bonuses) from Wall Street.

In short, EVERYONE IS GETTING A PIECE OF THE SECURITIZATION PIE EXCEPT CONSUMERS WITHOUT WHOM IT WOULD NOT EXIST. In that context, the critique of my opinion and conviction that consumers should be participating in the revenue and profit cash flows—-  along with everyone else — falls flat. Exactly why should consumers be excluded from the largest financial innovation in history when it is the consumer who launches the innovative scheme? Should it really be a legal doctrine that successful concealment of the scheme from consumers is sufficient to institutionalize the practices as though they are legal? 

This facts demonstrate what I have been saying since 2007. The ingredients for such illegal schemes — whether you are looking at Wall Street or the pharma industry — is a false national narrative “corroborated” by fake labels that are generally accepted over time PLUS addiction to the flow of money that represents “extra” revenue. Even consumers who pay the ultimate price are addicted to the flow of goods and services into their lives because of the blind addiction to debt.
And the addiction to debt and acceptance of debt as a substitute for wages is an underlying reason for social unrest — although people say it is something else. Deep down inside nearly everyone knows that things are screwed up with our economy and our politics but they’re unable to articulate it because they don’t know enough about it.

So you end up with all ends of the political spectrum articulating idiotic ideas about what is wrong with society because they really don’t know. And people from opposing ideologies get to believing and saying that the other side is stupid. They’re not stupid. They’re simply struggling to express their angst in a chaotic world that is mainly controlled by big money.

3 Responses

  1. I recall that too Ian. And, Java – yes. But the prize is the increase in a fake “mortgage” when there is difficulty in paying the VERY high interest rates credit cards, and need a fake mortgage refi to pay (and also inflated home prices from crisis – which is happening again). All recycled “debt” collection. No funding. Scheme just prior to crisis was bank collusion in NYC to insert arbitration agreements into credit cards. If one had equity, and had a hardship, arbitration kicked in – which awarded, without question, full credit card debt with interest and attorney fees to banks – who had charged off the debt, and sold collection rights by claimed creditors – and arbitrated by affiliation with the debt buyers and hedge funds. Creditors were NOT the creditors stated. Only debt buyers could be paid, but they rarely showed their face. Biggest business in the world. Arbitration by the NYC collusion case was shut down for only 3 years. DId not see for awhile. Think it is back.
    Interest rates have been so low – but why not on credit cards? Interest rates there sky high!!!! System is a mess. Don’t like to be political, but we can’t take in the world when we can’t take care of Americans. And, remember – SPENDING (Consumption) is 70% of GDP (measure of economy). They want spending – they want credit card spending – or economy is done. So — link to spending – link to fake debt – link to house – link to equity – link to fake mortgage – link to GDP– America is in the pits. Except for the very top who can never carry recovery of GDP when it hits. And their wealth will fall. Genius scheme? Absolutely — and America suffers. Stock market? Wait until there is run-away inflation. Cost-push, and demand pull at same time. Can’t easily fix that. WW 1 old story — a wheelbarrow was full of money. The money was dumped because only the wheelbarrow had any value. Everything goes in cycles. Roaring 20’s, depression, World War. Cyclical. Scary. Happy holidays! Spending for a bit!!! And then – What???

  2. They are Selling Debt. NOT products !!!!!

  3. Neil, I remember a long time ago, probably 30 years or more, when I was informed that Sears earned more money on their Discover card from interest and fees, than they earned from all their store sales combined. Only a small percentage of the Discover card useage was from Sears purchases.
    I thought that was sad, but didn’t realize how prescient it would turn out to be.

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