Marx Was Right

Communism, the system that grew out of the thought of Karl Marx failed. But that does not mean that Marx may not be right regarding the predictions he made about "capitalism". I am not yet 100 percent positive that Marx was right. But if the middle class doesn't get some help and we fall into the mother of depressions, he will have been proven right. Karl Marx was a smart economist. Yes, the resulting communistic form of government that resulted from his views failed, and was a failure. But Marx predicted exactly what happened in this credit crisis and economic meltdown. He was correct regarding the global economy and the wealthy class's need for new markets, free trade, a new world order, ie international wealth dictating governmental action.

But most had believed that downward pressure on wages that Marx predicted would not come to pass. Most believed that the middle class, which Marx never really saw in his time, would keep us from falling into capitalist failure. But many have argued that the middle class, which has been knocked to its knees, is tapped out.

Capitalists certainly need to realize that they will not have much of an economy without a strong middle class. I do not hear that concern for the middle class on CNBC. All I hear on CNBC is a sob story for the rich. Wake up CNBC morons! Most commentators on CNBC believe that all people need is for credit to flow again and everything will be hunky dory. WRONG! People in the middle class are tapped out. They just don't get it.

We have supply problems with credit not being furnished, to be sure. But we also have demand destruction, I repeat, demand destruction because people no longer want loans they cannot afford.

The European and Asian nations engineered a strong middle class. Of course that brings about economic imbalances. But the free market in the United States has spiraled into a lender's market. People in China make things, and people in the United States lend, borrow and sell each other insurance. While it is true that people in the early 1990's had equity in their houses, in the face of price declines they still had the power economically to ride out the storm in a slave like manner, being slaves to their mortgages.

As Americans got poorer and house prices continued to rise in the late 1990's and in the early turn of the century, there was only one way the Bush administration thought of to get us out of the dot com crash. That was to create a war in Iraq and a borrowing binge to pay for it. This was planned before 9/11. And it culminated in the government sponsored ponzi scheme that was caused by the introduction of mortgaged backed securities, pools of bad mortgages dressed up to look like good mortgages, and sold throughout the world. Instead of a garden variety recession, we have a credit crisis and the financial system is threatened. All of this occurred because Greenspan wanted to pump the economy to pay for the oil war in Iraq.

But the problem now is, we still don't make anything, and the few industries that produce anything aren't selling them because they are inflated in price in this time of deflation. Americans are poorer without down payments for cars or houses. And on top of all that we have a massive debt crash as well, caused by the Bush administration's reliance on debt to fuel a bogus lying murdering administration. The neocons and their wall street buddies have committed a giant fraud upon the American people and war crimes abroad.

But I digress, the government wants to get out of the credit mess on the backs of the middle class again! The government wants to lower mortgage interest rates to and that will guarantee future downward pressures on house prices (because the government will have to raise rates later). So if you buy you will probably sell later for less money because the buyer will have to buy at higher rates! And guess what, he will demand a lower house price to make up for it! They don't care, since so many of the American people are so boneheadedly stupid. It is possible that the government will have recourse to go after the money if you default, and that is another attack on the middle class.

Even if interest rates stay low because of Federal Reserve manipulation, this will likely establish even less demand for housing. So either way, housing may have a leg or two down to go. If you need to buy a house, do so for shelter, and not for an investment. If your house appreciates then count it as gravy. Don't bank on it because there are forces working against this appreciation.

The government, then, is still trying to screw the middle class. Instead of putting more money into the hands of the middle class, responsible for buying most of the products that the world makes, the rich bankers and their government lackeys want to rip a pound of flesh out of the middle class again and again.

I am so disgusted with this cabal of bankers and their closest friends, the oil and military industrial complexes. My warning is this, don't buy a house with credit under these terms, rent until either the crisis brings Wall Street to its knees, or the government helps the middle class instead of screwing them. Rent and invest the rest, and that very carefully!

If Marx was right it will be because the greed of the bankers and the central banking system that knows no bounds. And the ignorance of the American middle class seems to have no boundaries either. We will fall for the banker scams against us over and over again. Lets hope this time I am wrong.

While I have been formulating my views about the interest rate trap that awaits those who buy at low rates artificially crammed down by the federal government, others have come to the same view. The link below will direct you to the Irvine Housing Blog where there are nifty charts about how this downward pressure on house prices will continue. My concern is that as this attack on the middle class economic well being intensifies, the greater chance we have of severe recession or even a deflationary depression.

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