Clarion Content

The Clarion Content read this morning of yet another new way the system lurches against the poor and in favor of the big banks and speculators. Perhaps, dear readers, you have heard that the state of California in the middle of a massive budget crunch has decided to issue IOUs in lieu of tax refunds to its citizens and many small businesses. The state is expected to issue about $3 billion worth of IOUs this month alone. The IOUs bear a tax free interest rate of 3.75%. Craziness, that this is where America has come to, but all well and good so far.

Now here is the bad news for those living paycheck to paycheck or businesses with short term cash flow issues. Bank of America and many other large financial institutions (including Wells Fargo) have announced that they will stop accepting the IOUs as of today. This means the poorest recipients of these IOU, those most in need of immediate cash, may have to turn to speculators and secondary markets to redeem their IOUs, likely at less than face value. The SEC is trying to clamp down on speculators by treating the IOUs as securities and saying that only licensed traders can purchase them, but already a wellspring of such vultures has sprung up on the internet according to the Los Angeles Times.

Like so many other systems in America this one takes the poorest and weakest among us and grinds them down. Saying in so many words, here is your tax refund, poor citizen, but you cannot cash it at our states biggest banks, in fact, you may have to redeem it for only 75% or 80% of its value because you desperately need the money.

Labels: Economy, Politics