Corporatism and Individual Morals and Ethics

[Spiritwind]

When I attended North Idaho College back in the late 80's I ended up taking an ethics class, since the philosophy class I would have preferred for the required elective was always full. I don't remember much about the class, except a few things. We had to read the books Brave New World by Aldous Huxley and 1984 by George Orwell. And we had to break up in groups and choose a particular topic to explore to learn about ethics. The topic my group ended up exploring was the nature of corporate ethics. What I do remember is that somehow, and my instructor was clearly not happy about this, corporations had the same so-called rights as the individual citizen, yet absolutely none of the responsibility or ethics inherent with the use of those rights. It's sole purpose to exist was to increase profits. No matter where you look you can identify the devastating results of this total lack of ethical oversight.

Even though the governing bodies have tried to appear as though there is some oversight, when you have back door deals, lobbyists, and kickbacks, the public absolutely cannot rely on or trust greedy corporatists to just "do the right thing". And this applies to almost every aspect of our lives these days. The takeover is almost complete.

So, I'm going to provide a few definitions up front here, to make sure the terms are understood. First one up is what is a lobbyist?

From Wikipedia:
Dictionary definitions: 'Lobbying' (also 'lobby') is a form of advocacy with the intention of influencing decisions made by the government by individuals or more usually by lobby groups; it includes all attempts to influence legislators and officials, whether by other legislators, constituents, or organized groups.

The best definition for ethics I found without making someone read probably more than they want to is from here: http://www.definitions.net/definition/ETHICS" onclick="window.open(this.href);return false;

Ethics

Ethics, also known as moral philosophy, is a branch of philosophy that involves systematizing, defending and recommending concepts of right and wrong conduct. The term comes from the Greek word ethos, which means "character". Ethics is a complement to Aesthetics in the philosophy field of Axiology (For those of you who, like me, hadn't a clue to what this words means: Axiology - the study of the nature of value and valuation, and of the kinds of things that are valuable). In philosophy, ethics studies the moral behavior in humans and how one should act. Ethics may be divided into four major areas of study:

⁕Meta-ethics, about the theoretical meaning and reference of moral propositions and how their truth values may be determined;
⁕Normative ethics, about the practical means of determining a moral course of action; ⁕Applied ethics, about how moral outcomes can be achieved in specific situations; ⁕Descriptive ethics, also known as comparative ethics, is the study of people's beliefs about morality; Ethics seeks to resolve questions dealing with human morality—concepts such as good and evil, right and wrong, virtue and vice, justice and crime.

Wikipedia was more informative and gets more in depth into the various branches, so I'll throw the link in here: https://en.m.wikipedia.org/wiki/Ethics" onclick="window.open(this.href);return false;


And next up is the word morals. Both the words ethics and morals have filled volumes of debate about the whole concept of right and wrong, good and evil, and all the many exceptions and gray areas in between. It would be hard to find even two people who completely agree about what these mean to them, but you have to start somewhere. I used to have my grandfather's old book, Morals and Dogma, by Albert Pike, and I can tell you there is a whole segment of the population that has a completely different take on what just these two words mean. Anyway, I digress. The following is the first definition that showed up at the top of my google search. I don't have a link though.

mor·al
noun
plural noun: morals
1.
a lesson, especially one concerning what is right or prudent, that can be derived from a story, a piece of information, or an experience.
"the moral of this story was that one must see the beauty in what one has"
synonyms: lesson, message, meaning, significance, signification, import, point, teaching
"the moral of the story"
2.
a person's standards of behavior or beliefs concerning what is and is not acceptable for them to do.
"the corruption of public morals"
synonyms: moral code, code of ethics, (moral) values, principles, standards, (sense of) morality, scruples
"he has no morals"

And here is the link for wikipedias entry on this word: https://en.m.wikipedia.org/wiki/Morality" onclick="window.open(this.href);return false;

And now let's move onto the word corporatism. Once again, Wikipedia had a very long but informative entry: https://en.m.wikipedia.org/wiki/Corporatism" onclick="window.open(this.href);return false;

Here is another one I will copy and paste, for, as I suspected, it is similar to religious ideologies and needs to be more clearly understood. I say this because it is part of what ails us as a society. I don't have a solution other than on a person to person individual level that comes down to what you choose to focus on and how you live your life day to day. This is because those who inherently feel a need for power and control will use a variety of methods that get perpetuated throughout time and specific families to maintain that control. Most of the individuals that comprise these corporations at the top levels do believe in, and want to sustain, class distinctions and hierarchies of privilege. I can remember talking to my grandfather when he was still alive (he was a fairly high up the ladder Freemason) and being dumbfounded when he went into a defense of how menial and low paying jobs were needed in society, like there was a certain class of humanity who was meant to fulfill those needs of the upper classes.

https://www.britannica.com/topic/corporatism" onclick="window.open(this.href);return false;
Corporatism, Italian corporativismo, also called corporativism, the theory and practice of organizing society into “corporations” subordinate to the state. According to corporatist theory, workers and employers would be organized into industrial and professional corporations serving as organs of political representation and controlling to a large extent the persons and activities within their jurisdiction. However, as the “corporate state” was put into effect in fascist Italy between World Wars I and II, it reflected the will of the country’s dictator, Benito Mussolini, rather than the adjusted interests of economic groups.

Although the corporate idea was intimated in the congregationalism of colonial Puritan New England and in mercantilism, its earliest theoretical expression did not appear until after the French Revolution (1789) and was strongest in eastern Germany and Austria. The chief spokesman for this corporatism—or “distributism,” as it was later called in Germany—was Adam Müller, the court philosopher for Prince Klemens Metternich. Müller’s attacks on French egalitarianism and on the laissez-faire economics of the Scottish political economist Adam Smith were vigorous attempts to find a modern justification for traditional institutions and led him to conceive of a modernized Ständestaat (“class state”), which might claim sovereignty and divine right because it would be organized to regulate production and coordinate class interests. Although roughly equivalent to the feudal classes, its Stände(“estates”) were to operate as guilds, or corporations, each controlling a specific function of social life. Müller’s theories were buried with Metternich, but after the end of the 19th century they gained in popularity. In Europe his ideas served movements analogous to guild socialism, which flourished in England and had many features in common with corporatism, though its sources and aims were largely secular. In France, Germany, Austria, and Italy, supporters of Christian syndicalism revived the theory of corporations in order to combat the revolutionary syndicalists on the one hand and the socialist political parties on the other. The most systematic expositions of the theory were by the Austrian economist Othmar Spann and the Italian leader of Christian democracy Giuseppe Toniolo.

The advent of Italian fascism provided an opportunity to implement the theories of the corporate state. In 1919 Mussolini and his associates in Milan needed the support of the syndicalist wing of the Nationalist Party in order to gain power. Their aim in adopting corporatism—which they viewed as a useful form of social organization that could provide the vehicle for a broad-based and socially harmonious class participation in economic production—was to strengthen Mussolini’s claim to nationalismat the expense of the left wing of the centrist parties and the right wing of the syndicalists.

The practical work of creating Italian fascist syndicates and corporations began immediately after Mussolini’s March on Rome in 1922. Italian industrial employers initially refused to cooperate in mixed syndicates or in a single confederation of corporations. A compromise was arranged that called for pairs of syndical confederations in each major field of production, one for employers and one for employees; each pair was to determine the collective labour contracts for all workers and employers in its field. The confederations were to be unified under a ministry of corporations that would have final authority. This so-called constitution for the corporate state was promulgated on April 3, 1926.

The formation of mixed syndical organs or corporations, which was the central aim of the corporative reform, had to wait until 1934, when a decree created 22 corporations—each for a particular field of economic activity (categoria) and each responsible not only for the administration of labour contracts but also for the promotion of the interests of its field in general. At the head of each corporation was a council, on which employers and employees had equal representation. To coordinate the work of the corporations, Mussolini’s government created a central corporative committee, which turned out in practice to be indistinguishable from the ministry of corporations. In 1936 the national Council of Corporations met as the successor to the Chamber of Deputies and as Italy’s supreme legislative body. The council was composed of 823 members, 66 of whom represented the Fascist Party; the remainder comprised representatives of the employer and employee confederations, distributed among the 22 corporations. The creation of this body was heralded as the completion of the legal structure of the corporate state. However, the system was broken by the onset of World War II.

After the war many of the governments of many democratic Western European countries-eg., Austria, Norway, and Sweden- developed strong corporatist elements in an attempt to mediate and reduce conflict between businesses and to enhance economic growth.



You probably noticed the terms sovereignty and Divine Right, which greatly interests me. For, once again, it comes back to some ruling segment who feels they have been placed there by divine right. And it's clear that the concept of corporatism has an interesting and telling history. I'm not going to go off tract here too much and get into the definition or discussion about what it means, divine right, because that is a whole can of worms to be opened perhaps on a later occasion. It certainly factors in there, though. But it appears we do have a many tentacled octopus these days that is connected through many seemingly different unrelated areas that directly affect our lives, from birth until death.

I remember a time before corporate farming tactics and techniques took over. I remember a time before corporate "for profit" tactics took over the medical industry. And now we even have corporate for profit prison systems. I could go on and on. The military industrial complex, banking, education. Basically everything that this upper class has determined they have some kind of divine right to, which unfortunately includes us and all the resources of this planet.

I realize there are many right here on this forum, and "out there" who already understand all of this, and have figured out the solution is to focus your attention and energy elsewhere. And they would be quite right in that. We, ourselves, have that divine right to live our blankety blank lives anyway we damn well choose and I applaud those who have figured it out. But I still know, and have a few close and dear to me, who have not figured it out. And I also know many who are not in much of a position to get out from under the weight of having lived their whole lives believing in something that wasn't true. My whole purpose in writing and highlighting certain things is to not create even more of a sense of despair, but to encourage and empower each of us as individuals who absolutely do have that right to say "no" to oh so many things. We do not have to comply, and there is something more that just a comfy life of leisure at stake here. More maybe later.

[Spiritwind]

There is a deeper reason I have started this thread. Several, actually. But for starters I have been a business owner, and I have gotten to know, and worked for many other business owners. My experiences with a lack of ethics at this level started when I worked for a company called xxx (decided I better not actually name them) who processed many of America's favorite frozen vegetables such as peas and corn. I drove a really big piece of equipment called a pea viner. Anyway, I can clearly remember the day I stood out there and watched as the foreman and several other employees kind of looked at one another, gave me a sideways glance, and then proceeded to pour the oil they had to drain out in order to fix the problem directly onto the ground in the field. I knew even then this was a no no, but had not reached the stage of participating in activism so it didn't even occur to me to report them at the time.

Then I worked in a locally owned grocery store as a cashier for several years. I came to find out the the owner's son, who was in charge of running the store, was embezzling (big time!). Then come to find out their long time bookkeeper was also embezzling (also big time!). I even remember a cashier being fired for letting her friends go through the line without paying, and another one fired for out and out stealing out of the register.

About ten years later I met my husband and got into mobile home park management. Not something I ever wanted to do, it just kind of fell in my lap. All three parks I co-managed were owned by people who may have appeared like upstanding citizens, but all of them also engaged in unethical business practices. And there is so much more. This is just what jumps to mind right off. It seems that unfortunately far too many have taken the concept of business, which isn't just about making a living, but increasing profit whether you need it or not, to mean that anything goes. You know, it's just business. I know there must be honest business owners out there, but so far my experience has shown me that they are few and far between. Could this just be one of the social problems that needs another look? Like, where did honesty go? We are taught that it is important to tell the truth when we are children, most of us anyway, so what happened?

[Sandy Clark]

Good Question and one I don't have an answer to either. I do know that being honest with self is the only real pay off but for many that would mean being different and standing out more often than not. One is more apt to be penalized versus rewarded, honoured or respected thus the incentive has to be inborn and there may lie the concern. Just some quick thoughts.......

[Christine]

Great subject for discussion and one that only each individual can answer. During the over thirty years I had my own business I had to deal with honesty and trust on a daily basis and it taught me a lot about myself. For yes, any business to survive depends on "profits" but how those profits are made depends on the overall tenor of both employee and employer, terms I diligently tried to blur the edges on.

In the beginning it took courage to open my shop because I had no idea if what I was producing (woman's clothing) would be accepted or rejected. To overcome this fear I made an inner resolve to be partners with the Great Spirit which I still called god at the time, this was the best decision I made and it guided me through lots of challenges and gave me a place to fall back too when the times were rough. Through perseverance I created a beautiful boutique which still exists today. While I am no longer owner the boutique thrives today in the capable hands of the lovely woman who was my right hand and kept an ethical compass during our many years working together.

The issues that arise in me today building a new enterprise are not wanting to recreate from the old formulas of worker versus owner but how to do that is a big question. In the clothing business I had initiated a profit sharing model but it was difficult to maintain for a variety of reasons so we ended up with an employee savings account that was distributed at the end of the year ... all of that is no longer possible due to the overreaching system and regulations the government has installed. The last thing we want to do is get tangled up in the taxation/ regulation web ... so how do we become viable financially without doing so?

I had bookmarked this from C. Jung's Red Book to post elsewhere but it seems to sum up where I feel we are "going" once we resolve the worn out paradigm we still have to deal with daily. For myself Jung heralded a time that our collective darkness would come to pass yet the only way through is via each one of us making the choices everyday to follow the unknown path or return to the well worn surface one.

https://carljungdepthpsychologysite.blo ... ourselves/
In the renewed world you can have no outer possessions, unless you create them out of yourselves.



“In the renewed world you can have no outer possessions, unless you create them out of yourselves. You can enter only into your own mysteries. The spirit of the depths has other things to teach you than me. I only have to bring you tidings of the new God and of the ceremonies and mysteries of his service. But this is the way. It is the gate to darkness” ~The Red Book (Draft), Footnote 163,

This play that I witnessed is my play, not your play.

It is my secret, not yours.

You cannot imitate me.

My secret remains virginal and my mysteries are inviolable, they belong to me and cannot belong to you.

You have your own. [See Footnote 163]

He who enters into his own must grope through what lies at hand, he must sense his way from stone to stone. He must embrace the worthless and the worthy with the same love.

A mountain is nothing, and a grain of sand holds kingdoms, or also nothing.

Judgment must fall from you, even taste, but above all pride, even when it is based on merit. Utterly poor, miserable, unknowingly humiliated, go on through the gate.

Turn your anger against yourself, since only you stop yourself from looking and from living.

The mystery play is soft like air and thin smoke, and you are raw matter that is disturbingly heavy.

But let your hope, which is your highest good and highest ability, lead the way and serve you as a guide in the world of darkness) since it is of like substance with the forms of that world. ~Carl Jung, The Red Book, Page 178.

[Spiritwind]

I'm not sure I'll be able to post this today, due to a bad connector on our cable for the satellite internet we use. It won't get fixed until much later today, unfortunately. But your response Christine stimulated all kinds of reflections on this topic. You see, most of us if we are honest with ourselves have had moments, times in our lives, that we did not live up to our current standard of ethics. I had a very adventurous, weird, and fairly dysfunctional life. It's still adventurous and weird (I wouldn't have it any other way), but I actively work on self honesty and being true to my inner values. It's actually kind of embarrassing to look back on some of the choices and responses to situations at other times in my life that I know I would do differently now.

And I don't mean the more obvious intentional lack of ethics. What I mean is that circumstances can put you in situations where you find a way to justify certain actions that don't even feel right at the time, if you are a person with conscience. I have never been one to steal out of the cash register, but how about when one of my manager's at the grocery store I worked at all those years ago took sweatshirts off the rack at Christmas time and told several others of us to take one too? I didn't give it much of a thought at the time. And the same woman bookkeeper that I mentioned in my post above is the same one who quietly gave me a raise after a serious auto accident I was recovering from, and knew that I had two small boys I was raising alone. She wasn't authorized to do that. And I would even guess that she justified her theft all those years due to watching the owner's son do it and get away with it.

And here's another one for you. We had a family in the last park we managed who had bought a double wide manufactured home from the owner of the park. We came to find out, my husband and I, that his whole family was sick from black mold growing in the walls. They didn't have the money to fix it or go somewhere else. Their teenage daughter was sleeping in the shed because of the problems this was causing. He was too sick to work, and so on. We had a lot of leeway in our jobs as managers there, with my husband remodeling homes in the park on the side and getting paid extra to do it for the owner. I also sold homes and managed mortgages. We knew the owner would not approve our helping this family (even though in my mind they probably had a case for a lawsuit because it was most likely there when they purchased it) and we did knowingly and without regret give them materials to replace the area in question, and were quite gratified even when they all finally got well.

What if you find money and you are broke? Do you try to find out who it belongs to, or do you just keep it and feel slightly guilty but find a way to rationalize? I know this kind of questioning just scratches the surface, as there are so many areas of our lives where ethics and morals come into play, and it is indeed a very individual thing in every case. But then, what about when a whole group of what even the majority would agree is immoral in nature come together, and engage in activities that affect a large swathe of humanity?

You see, I tend to think part of the problem lies at this level of ethics and morals, due to a general lack of personal questioning, and having effectively learned to push those pesky little thoughts and feelings of guilt away. And this is all largely because, though many are taught verbally from childhood on about being honest and truthful and to practice right action towards others, we grow up in a culture that is at the business level, which even religion and government is, to climb over your neighbor's, friends and family sometimes even, back to get ahead. At the highest levels we have people who have justified their actions for so long they don't even feel what most of us would feel. Perhaps they just can't. But then, where do you go from there. We mostly recognize what the situation is.

Many of us here are well into our self discovery and personal reflection process, but this is still no where near the norm. In fact, it seems to be getting worse due to the even heavier programming of our youth that is going on today that makes our childhoods seem like some kind of dreamland far far away, and that is even with myself and many other's not having that idyllic childhood they dallied in front of us on the TV sets growing up, like Leave it to Beaver and so on. At least we weren't vaccinated into a medication induced hell. I have more to say on this, but got stuff to do now. In some ways, though, this seems like the topic of topics. Because ultimately it isn't something you will ever be able to enforce, behavior with a conscience, from the outside. It is an inside job. So giving corporations rights of this nature in the first place just seems like an open invitation for abuse. There is a whole topic about corporate welfare benefits that would make your eyes bug out, when these same corporations lobby against providing these same types of assistance to the individual (as if they are the reason this country is going broke).

It makes me think of the bailout after the housing market disaster in 2008. I don't know of even one individual that benefitted from this bailout (although it was sure sold to the American public that way). A whole lot of corporations and banking institutions did though. I have an article I'll have to find about exactly what really happened there, if I can find it I'll post it.

[Spiritwind]

I couldn't find that article I was looking for unfortunately. But, I'll drop this one link in here: http://billmoyers.com/2015/02/14/needless-default/" onclick="window.open(this.href);return false;

Plus, even though it's very long, I'm going to copy and paste this other one in total. It really shows how this idea of corporations (and I'm not talking about the locally owned Ma and Pa business that are fast growing extinct) having the same rights as an individual supposedly has does leave the door wide open for unscrupulous business people who have banded together to scoop up and get rich at the expense of the working class people who actually do something useful to make a living. Making the people who actually go out and work on those roads, stock those groceries, sit at the sewing machine and make the clothes most of us wear, build those homes, clean those toilets etc. end up having to go back to renting after losing their life savings on the home they thought they might grow old in is disgusting to me on every level. And this is the kind of business practices that go on every damn day.

How Wall Street Has Turned Housing Into A Dangerous Get-Rich-Quick Scheme

By Laura Gottesdiener November 29, 2013

http://www.motherjones.com/politics/201 ... sed-homes/" onclick="window.open(this.href);return false;
This story first appeared on the TomDispatch website.

You can hardly turn on the television or open a newspaper without hearing about the nation’s impressive, much celebrated housing recovery. Home prices are rising! New construction has started! The crisis is over! Yet beneath the fanfare, a whole new get-rich-quick scheme is brewing.

Over the last year and a half, Wall Street hedge funds and private equity firms have quietly amassed an unprecedented rental empire, snapping up Queen Anne Victorians in Atlanta, brick-faced bungalows in Chicago, Spanish revivals in Phoenix. In total, these deep-pocketed investors have bought more than 200,000 cheap, mostly foreclosed houses in cities hardest hit by the economic meltdown.

Wall Street’s foreclosure crisis, which began in late 2007 and forced more than 10 million people from their homes, has created a paradoxical problem. Millions of evicted Americans need a safe place to live, even as millions of vacant, bank-owned houses are blighting neighborhoods and spurring a rise in crime. Lucky for us, Wall Street has devised a solution: It’s going to rent these foreclosed houses back to us. In the process, it’s devised a new form of securitization that could cause this whole plan to blow up—again.

Since the buying frenzy began, no company has picked up more houses than the Blackstone Group, the largest private equity firm in the world. Using a subsidiary company, Invitation Homes, Blackstone has grabbed houses at foreclosure auctions, through local brokers, and in bulk purchases directly from banks the same way a regular person might stock up on toilet paper from Costco.

In one move, it bought 1,400 houses in Atlanta in a single day. As of November, Blackstone had spent $7.5 billion to buy 40,000 mostly foreclosed houses across the country. That’s a spending rate of $100 million a week since October 2012. It recently announced plans to take the business international, beginning in foreclosure-ravaged Spain.

Few outside the finance industry have heard of Blackstone. Yet today, it’s the largest owner of single-family rental homes in the nation—and of a whole lot of other things, too. It owns part or all of the Hilton Hotel chain, Southern Cross Healthcare, Houghton Mifflin publishing house, the Weather Channel, Sea World, the arts and crafts chain Michael’s, Orangina, and dozens of other companies.

Blackstone manages more than $210 billion in assets, according to its 2012 Securities and Exchange Commission annual filing. It’s also a public company with a list of institutional owners that reads like a who’s who of companies recently implicated in lawsuits over the mortgage crisis, including Morgan Stanley, Citigroup, Deutsche Bank, UBS, Bank of America, Goldman Sachs, and of course JP Morgan Chase, which just settled a lawsuit with the Department of Justice over its risky and often illegal mortgage practices, agreeing to pay an unprecedented $13 billion fine.

In other words, if Blackstone makes money by capitalizing on the housing crisis, all these other Wall Street banks—generally regarded as the main culprits in creating the conditions that led to the foreclosure crisis in the first place—make money too.

An All-Cash Goliath

In neighborhoods across the country, many residents didn’t have to know what Blackstone was to realize that things were going seriously wrong.

Last year, Mark Alston, a real estate broker in Los Angeles, began noticing something strange happening. Home prices were rising. And they were rising fast—up 20% between October 2012 and the same month this year. In a normal market, rising home prices would mean increased demand from homebuyers. But here was the unnerving thing: the homeownership rate was dropping, the first sign for Alston that the market was somehow out of whack.

The second sign was the buyers themselves.

Click here to see a larger version

About 5% of Blackstone’s properties, approximately 2,000 houses, are located in the Charlotte metro area. Of those, just under 1,000 (pictured above) are in Mecklenberg County, the city’s center. (Map by Anthony Giancatarino, research by Symone New.)

“I went two years without selling to a black family, and that wasn’t for lack of trying,” says Alston, whose business is concentrated in inner-city neighborhoods where the majority of residents are African American and Hispanic. Instead, all his buyers—every last one of them—were besuited businessmen. And weirder yet, they were all paying in cash.

Between 2005 and 2009, the mortgage crisis, fueled by racially discriminatorylending practices, destroyed 53% of African American wealth and 66% of Hispanic wealth, figures that stagger the imagination. As a result, it’s safe to say that few blacks or Hispanics today are buying homes outright, in cash. Blackstone, on the other hand, doesn’t have a problem fronting the money, given its $3.6 billion credit linearranged by Deutsche Bank. This money has allowed it to outbid families who have to secure traditional financing. It’s also paved the way for the company to purchase a lot of homes very quickly, shocking local markets and driving prices up in a way that pushes even more families out of the game.

“You can’t compete with a company that’s betting on speculative future value when they’re playing with cash,” says Alston. “It’s almost like they planned this.”

In hindsight, it’s clear that the Great Recession fueled a terrific wealth and asset transfer away from ordinary Americans and to financial institutions. During that crisis, Americans lost trillions of dollars of household wealth when housing prices crashed, while banks seized about five million homes. But what’s just beginning to emerge is how, as in the recession years, the recovery itself continues to drive the process of transferring wealth and power from the bottom to the top.

From 2009-2012, the top 1% of Americans captured 95% of income gains. Now, as the housing market rebounds, billions of dollars in recovered housing wealth are flowing straight to Wall Street instead of to families and communities. Since spring 2012, just at the time when Blackstone began buying foreclosed homes in bulk, an estimated $88 billion of housing wealth accumulation has gone straight to banks or institutional investors as a result of their residential property holdings, according to an analysis by TomDispatch. And it’s a number that’s likely to just keep growing.

“Institutional investors are siphoning the wealth and the ability for wealth accumulation out of underserved communities,” says Henry Wade, founder of the Arizona Association of Real Estate Brokers.

But buying homes cheap and then waiting for them to appreciate in value isn’t the only way Blackstone is making money on this deal. It wants your rental payment, too.

Securitizing Rentals

Wall Street’s rental empire is entirely new. The single-family rental industry used to be the bailiwick of small-time mom-and-pop operations. But what makes this moment unprecedented is the financial alchemy that Blackstone added. In November, after many months of hype, Blackstone released history’s first rated bond backed by securitized rental payments. And once investors tripped over themselves in a rush to get it, Blackstone’s competitors announced that they, too, would develop similar securities as soon as possible.

Depending on whom you ask, the idea of bundling rental payments and selling them off to investors is either a natural evolution of the finance industry or a fire-breathing chimera.

“This is a new frontier,” comments Ted Weinstein, a consultant in the real-estate-owned homes industry for 30 years. “It’s something I never really would have dreamt of.”

However, to anyone who went through the 2008 mortgage-backed-security crisis, this new territory will sound strangely familiar.

“It’s just like a residential mortgage-backed security,” said one hedge-fund investor whose company does business with Blackstone. When asked why the public should expect these securities to be safe, given the fact that risky mortgage-backed securities caused the 2008 collapse, he responded, “Trust me.”

For Blackstone, at least, the logic is simple. The company wants money upfront to purchase more cheap, foreclosed homes before prices rise. So it’s joined forces with JP Morgan, Credit Suisse, and Deutsche Bank to bundle the rental payments of 3,207 single-family houses and sell this bond to investors with mortgages on the underlying houses offered as collateral. This is, of course, just a test case for what could become a whole new industry of rental-backed securities.

Many major Wall Street banks are involved in the deal, according to a copy of the private pitch documents Blackstone sent to potential investors on October 31st, which was reviewed by TomDispatch. Deutsche Bank, JP Morgan, and Credit Suisse are helping market the bond. Wells Fargo is the certificate administrator. Midland Loan Services, a subsidiary of PNC Bank, is the loan servicer. (By the way, Deutsche Bank, JP Morgan Chase, Wells Fargo, and PNC Bank are all members of another clique: the list of banks foreclosing on the most families in 2013.)

According to interviews with economists, industry insiders, and housing activists, people are more or less holding their collective breath, hoping that what looks like a duck, swims like a duck, and quacks like a duck won’t crash the economy the same way the last flock of ducks did.

“You kind of just hope they know what they’re doing,” says Dean Baker, an economist with the Center for Economic and Policy Research. “That they have provisions for turnover and vacancies. But have they done that? Have they taken the appropriate care? I certainly wouldn’t count on it.” The cash flow analysis in the documents sent to investors assumes that 95% of these homes will be rented at all times, at an average monthly rent of $1,312. It’s an occupancy rate that real estate professionals describe as ambitious.

There’s one significant way, however, in which this kind of security differs from its mortgage-backed counterpart. When banks repossess mortgaged homes as collateral, there is at least the assumption (often incorrect due to botched or falsified paperwork from the banks) that the homeowner has, indeed, defaulted on her mortgage. In this case, however, if a single home-rental bond blows up, thousands of families could be evicted, whether or not they ever missed a single rental payment.

“We could well end up in that situation where you get a lot of people getting evicted… not because the tenants have fallen behind but because the landlords have fallen behind,” says Baker.

Bugs in Blackstone’s Housing Dreams

Whether these new securities are safe may boil down to the simple question of whether Blackstone proves to be a good property manager. Decent management practices will ensure high occupancy rates, predictable turnover, and increased investor confidence. Bad management will create complaints, investigations, and vacancies, all of which will increase the likelihood that Blackstone won’t have the cash flow to pay investors back.

If you ask CaDonna Porter, a tenant in one of Blackstone’s Invitation Homes properties in a suburb outside Atlanta, property management is exactly the skill that Blackstone lacks. “If I could shorten my lease—I signed a two-year lease—I definitely would,” says Porter.

The cockroaches and fat water bugs were the first problem in the Invitation Homes rental that she and her children moved into in September. Porter repeatedly filed online maintenance requests that were canceled without anyone coming to investigate the infestation. She called the company’s repairs hotline. No one answered.

The second problem arrived in an email with the subject line marked “URGENT.” Invitation Homes had failed to withdraw part of Porter’s November payment from her bank account, prompting the company to demand that she deliver the remaining payment in person, via certified funds, by five p.m. the following day or incur “the additional legal fee of $200 and dispossessory,” according to email correspondences reviewed by TomDispatch.

Porter took off from work to deliver the money order in person, only to receive an email saying that the payment had been rejected because it didn’t include the $200 late fee and an additional $75 insufficient funds fee. What followed were a maddening string of emails that recall the fraught and often fraudulent interactions between homeowners and mortgage-servicing companies. Invitation Homes repeatedly threatened to file for eviction unless Porter paid various penalty fees. She repeatedly asked the company to simply accept her month’s payment and leave her alone.

“I felt really harassed. I felt it was very unjust,” says Porter. She ultimately wrote that she would seek legal counsel, which caused Invitation Homes to immediately agree to accept the payment as “a one-time courtesy.”

Porter is still frustrated by the experience—and by the continued presence of the cockroaches. (“I put in another request today about the bugs, which will probably be canceled again.”)

A recent Huffington Post investigation and dozens of online reviews written by Invitation Homes tenants echo Porter’s frustrations. Many said maintenance requests went unanswered, while others complained that their spiffed-up houses actually had underlying structural issues.

There’s also at least one documented case of Blackstone moving into murkier legal territory. This fall, the Orlando, Florida, branch of Invitation Homes appeared to mail forged eviction notices to a homeowner named Francisco Molina, according tothe Orlando Sentinel. Delivered in letter-sized manila envelopes, the fake notices claimed that an eviction had been filed against Molina in court, although the city confirmed otherwise. The kicker is that Invitation Homes didn’t even have the right to evict Molina, legally or otherwise. Blackstone’s purchase of the house had been reversed months earlier, but the company had lost track of that information.

The Great Recession of 2016?

These anecdotal stories about Invitation Homes being quick to evict tenants may prove to be the trend rather than the exception, given Blackstone’s underlying business model. Securitizing rental payments creates an intense pressure on the company to ensure that the monthly checks keep flowing. For renters, that may mean you either pay on the first of the month every month, or you’re out.

Although Blackstone has issued only one rental-payment security so far, it already seems to be putting this strict protocol into place. In Charlotte, North Carolina, for example, the company has filed eviction proceedings against a full 10% of its renters, according to a report by the Charlotte Observer.

Click here to see a larger version

About 9% of Blackstone’s properties, approximately 3,600 houses, are located in the Phoenix metro area. Most are in low- to middle-income neighborhoods. (Map by Anthony Giancatarino, research by Jose Taveras.)

Forty thousand homes add up to only a small percentage of the total national housing stock. Yet in the cities Blackstone has targeted most aggressively, the concentration of its properties is staggering. In Phoenix, Arizona, some neighborhoods have at least one, if not two or three, Blackstone-owned homes on just about every block.

This inundation has some concerned that the private equity giant, perhaps in conjunction with other institutional investors, will exercise undue influence over regional markets, pushing up rental prices because of a lack of competition. The biggest concern among many ordinary Americans, however, should be that, not too many years from now, this whole rental empire and its hot new class of securities might fail, sending the economy into an all-too-familiar tailspin.

“You’re allowing Wall Street to control a significant sector of single-family housing,” said Michael Donley, a resident of Chicago who has been investigating Blackstone’s rapidly expanding presence in his neighborhood. “But is it sustainable?” he wondered. “It could all collapse in 2016, and you’ll be worse off than in 2008.”

Laura Gottesdiener is a journalist and the author of A Dream Foreclosed: Black America and the Fight for a Place to Call Home, published in August by Zuccotti Park Press. She is an editor for Waging Nonviolence and has written for Rolling Stone, Ms., Playboy, theHuffington Post, and other publications. She lived and worked in the People’s Kitchen during the occupation of Zuccotti Park. This is her second TomDispatch piece.

[Note: Special thanks to Symone New and Jose Taveras for conducting the difficult research to locate Blackstone-owned properties. Special thanks also to Anthony Giancatarino for turning this data into beautiful maps.]

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[Spiritwind]

I am going to completely change the tone of this here, with my latest rambling upon reflection this morning. I am going on and on about this, as I suggested earlier, for a whole number of reasons. As Christine talks about in her post above, I also do not want to keep using the same old formulas and concepts that have already been shown not to work. Many of us are faced with having to contemplate just how to do that. This is going to sound horrible, but it's like in a way we have become quite domesticated. All of my animals have an area where they are contained, and they expect to be fed by me everyday. Even though I do let them out, they have definitely learned not to feel entirely comfortable outside of their containment area. I am basically in charge of their life.

Christine also talked about the fears she encountered when she opened her business all those years ago. We all have to face those in one way or another. At one time I wanted to make a career doing the things I loved and felt would benefit others. But even the "New Age" has become very commercialized. I walked away from trying to develop something along the lines of using variety of healing modalities, and doing various kinds of readings and so on. I am good at it, but somewhere in there I saw that the people who were most successful had vigorously promoted themselves, and their very personality became part of the commodity that was being sold. Many of them suffered from big egos and this feeling of how noble they were for "helping others". I am now at a place where I am actually being asked to come forward and do some of those things I walked away from. I am wondering if it can be done in total integrity. I feel and sense so many things I just didn't know anything about even just a few years ago. But I have no magic formula that guarantees success and that one size fits all thing just doesn't work for me anymore.

I now see that each and every one of us has to be willing to do the work ourselves. So many people want a quick fix, or a "one time" deal that heals all of what amounts to many lifetimes of traumas, hurts, and undealt with emotions that have been shoved into that murky dark sub-conscious realm. I realize I don't want to work with people who look at me as any more than a facilitator of what must ultimately be their own inner journey of healing, one that no one can take but them. If the whole structure of our world's economic system is as fundamentally flawed as we know it is, then the question of how to live in this world in a way that still provides for our needs and a certain degree of freedom to go and do as we please comes up. We must have, find, or develop a way to make that happen. So many I know are just hanging on by a thread, financially speaking, just a paycheck away from having nothing to rely on and fall back on.

I guess this is why my husband and I have basically sacrificed a need for security and stability to choose the path most uncertain and generally risky every time. To pave a new way all of must must learn to throw caution to the wind, and face a very uncertain future, which it is already! And we must each and every one of us turn and face that mountain of fear that keeps us frozen in place, reacting the same way to the same old problems day after day. That stupid line from a Talking Heads song comes to mind "same as it ever was, same as it ever was". We will have to challenge ourselves to try harder, to find ways that go against this current that feels like it has a bottleneck up ahead. But many of us, perhaps all of us, come from a long line of descendants who at some point back there lived without all of these seeming benefits that our current way of life offers. I feel we give something vital of ourselves when we become so compliant and leave it to others to provide for us. Imagine the shock and awe many would feel if they woke up one morning and their expected social security benefits, or monthly pension wasn't in the bank as expected. Nothing is guaranteed, but we have been programmed to think this way.

I certainly don't have the answers to this conundrum we all have to contend with, but since we have true nut-cases operating the game board for the most part, it's a good idea to at least think about these things. I'm not a doom and gloomer by any means. I intend to just keep on plugging along doing whatever I feel guided to do pretty much moment by moment, day by day. I totally intend to not just survive, but thrive even. But I also don't rely on the system to do much of anything for me, and always keep in the back of my mind that even what we do get from there may not always be there. All of my never ending ramblings are just food for thought. I, also like Christine, simply ask each and every day for the Great Spirit from which I feel such benevolence radiating from to guide my life, my thoughts, and assist me in knowingly where to step next. I have actually learned not to always know what is up ahead, and be more comfortable with that. I notice we humans are also creatures of habit. It's easy to get stuck in patterns and ways that aren't really beneficial over all. And it does often take some effort to change old patterns to more positive ones. But there is a field of love that emanates from deep within this earth that rejoices when we listen and follow the path of the heart.

For the path of the heart when followed, cannot be trapped and put in a box or contained. It is in constant flow and must be tuned into. Even the deafening noise of the energies being released from electronic means these days can be pushed aside with some effort. We must hold onto what is real, and only love is real.