Usury: the greed that dares not speak its name

Last night, Paul Barry on Four Corners did a program on the Mortgage Meltdown in the USA. Scary, dreadful stuff in the Land of the Free and the Home of the Brave. Miss Eagle was very struck by the comment by a black female interlocutor who pointed out that urban decay had been evident in black communities for a very long time but now there is some attention being received because, with the collapse of sub-prime mortgages, urban and sub-urban collapse now invades white communities.

To date, Australia has seen only small tidal effects from the tsunami swamping the USA. However, the Land of Oz has problems of its own with low-doc and no-doc home loans. Home loan defaults are on the rise.

A few years ago, Australia had a Productivity Commission inquiry into gambling. This probably came about because of representations by Tim Costello, CEO of World Vision, to his brother, Peter Costello, Australia's Treasurer.

Miss Eagle asks if we could see a Productivity Commission Inquiry into usury and its impediment in the market place and its role in the dysfunctionality of human relationships, individual lives, and dysfunctional communities. Such an inquiry should take into account:

1. The level of interest rates on housing, credit, credit cards, and all forms of lending of money.
2. Fees charged in relation to accounts held in and by financial institutions and in relation to the lending of money.
3. Pay day lending
4. Predatory Lending
5. Pricing in all financial institutions
6. The true cost of Private/Public Partnerships in the provision of public infrastructure
7. Commissions, fees, and other forms of remuneration in and by financial institutions
8. Trading in and financing of debt
9. The social implications and adversities related to money and credit lending
10. Innovative financial practices of social utility and benefit

Usury is an ancient human and communal problem. The Abrahamic religions - namely Judaism, Christianity, and Islam - have always found usury problematic. Perhaps, Islam has held out longest against usury and has institutionally made provision in response to Qur'anic prohibitions. However, life moves on and people, times, and situations change. Now, in Australia, we are seeing changes within the Islamic community. See here and here.

Of course, it takes a great naivete to imagine that the upper echelons of oil-rich Islamic societies have had nothing to do with usury in some form or another. Instance the connection of the House of Saud with the Carlyle Group. The Papacy no longer rails against usury and has its own bank. And did Frank Lowy look to Old Testament injunctions against usury on his way to taking the Westfield Group to its premier position as the world's largest retail property group by equity market capitalization?

So our ancient wisdom stories have warned against usury, warned against the actions of the rich against the poor. 21st century people, communities, and nation states have not become any smarter, any more moral than their 8th century BCE, 30CE, or 500CE counterparts.

We need to call usury for what it is. We need to name greed for what it is. We need to put people before money, and the community ahead of the corporation. If the predatory lending tsunami continues as the forecasts tell us it will, it can be as devastating as - and possibly more devastating than - World War II. The social fall-out over time will be horrific. As individuals were are not prepared for this. As communities we are not prepared for this. And the world is certainly not prepared for a diminution in the power and strength of the USA and its economy.

A long way from nowhere...

House at Gapuwiyak, NT

Meanwhile, still in the Northern Territory, reports are in The Australian to-day of the whitefella knows best policies of Mal Brough. Isn't this great news for Aboriginal people? Isn't it just what ignorant whitefellas in urban Australia want to hear as they sip their caffe lattes in Degraves Street, Park Road and Darlinghurst Road?

As he surveyed the house he helped to build, the house he will one day own, Barney Narjic was only too aware that he was the first to walk this path. "But when I pass away," the 51-year-old said, "my kids will take this over."
The Federal Govt estimates its value at $270,000. In the better suburbs of Brisbane, Sydney and Melbourne, where the real estate in the better 'burbs is running full steam ahead, they wouldn't have a clue about relativities in Wadeye and environs.

Just to give you some point of comparison. Tennant Creek, in the middle of the NT, at the cross-roads of the nation has a population of 4,000 - 50% of whom are Aboriginal. Tennant Creek has an economy. It is in the centre of pastoral and mining activity and is a community service centre for the 250,000 square kilometres that is the Barkly Tableland. It is serviced by air, buses, and The Ghan on a very well-maintained Stuart Highway just south of a very well-maintained Barkly Highway. Miss Eagle knows of no one who would spend/invest $270,000 on a home in Tennant Creek. In fact, the biggest driver to home purchasing in TC has always been the scarcity and cost of housing in the rental market - but not to the tune of $270,000. Miss Eagle will admit though that the cost of housing in the NT is expensive because of the cost of bringing in the materials. Its just that outside the high prices of Darwin and Alice you have to have a big hard think about it - and most people do not build but purchase existing housing.


Now let's switch back to Barney and his new home. The idea is supposed to be - as it has been publicised to the Australian polity - that Aboriginal people would be able to own their own homes on freehold land just like other Australians. The idea would be that they would become property owners like most Australians.

Well, it's not happening at either Wudapuli or Wadeye. Barney gets to rent his $270,000 home and we are not told precisely what the rental is. Now, there is a rule of thumb in Sydney and Melbourne which means that, on average, you drop the three noughts off the end and that's your weekly rental. So, as a generality, a $270,000 property would rent for $270. Barney is reported to earn $300 a week on the work for the dole scheme.

Now does Miss Eagle have your attention, dear Reader, for this little lesson in home economics?

Barney is not permanently employed. Don't think the banks would want to lend, do you? Servicing a $270,000 mortgage? How do you manage that in one lifetime, particularly the lifetime of a 51 year old, and particularly the shorter lifespan of an Aboriginal man who, statistically is already on borrowed time? Will Barney still be around in 22 years when he will be 73 - after two years of rental and twenty years of mortgage repayments.

And this mortgage - unlike yours and mine, dear Reader - has strings attached. Barney will only be eligible to purchase his home if .....
.....after two years if his rental record is unblemished and the children are sent regularly to school.

When did your bank manager last check on the attendance record of the kids, Miss Eagle asks?

The federal Government says the four families will take up to 20 years to pay off their homes, with an average weekly rent of $150 for one four-bedroom house to be paid through indigenous home-ownership schemes.
Mr Brough said mortgage payments would be the same cost as rent. "I have no doubt that these families have gone through a very vigorous process of financial assessment to ensure that they have the will, they have the financial capacity (to make the payments)," he said.
"No one is being left out here high and dry."

More home economics:
If Barney earns $300 per week on the work-for-the-dole-scheme and he pays $150 in rent, how does he manage basic food and clothing for six people (himself, his wife and his five children). Now, there may be additional family benefits, but remember that, just as housing is expensive because of the costs of materials, so is food very expensive. The food that is available is basic - not organic niceties, nor health food shop niceties as in urban Australia. Why? Because there is no economy. Not even an economy which might discriminate against Aboriginal people. This means virtually no choice; little, if any, competition; virtually no employment; no diversity.

The Oz reports:

The handover came as The Australian revealed the Howard Government was set to unveil a $1billion-plus plan to encourage private home ownership and lift education and health standards among indigenous people. Tuesday is expected to provide significant backing for private home ownership and economic development in Aboriginal communities.

So, dear Reader, you will have your ear glued to the budgetary details, won't you? And if the comments above have any truth or any semblance of hope in them, Miss Eagle can provide a measure to gauge them by. If the Howard Government is deadly serious, he will fund - for soon completion - a first-class, all-weather road to Wadeye.

You see, without this there will never be an economy at Wadeye. The $270,000 home of Barney's dreams will never be worth two-bob - because there will not be an economy. No local economy means that there will be no housing market in which to create value.

And all Mal Brough and John Howard will have done - out of their utter and complete ignorance - will be to re-arrange funding for Aboriginal communities once more - this time with invective as a lead up.