I was having breakfast the other morning in Long Grove Illinois of all places and exchanged a few words with the waiter, who, it turned out, was a recent immigrant from Latvia.

She liked the US very much, not surprising to hear from an immigrant from the former Stalinist world. But when we touched on the subject of education she had a different view. The education she received was not only better than here in the US but free at all levels.

Like the victims of the ongoing subprime mortgage crisis, students in the US are in the clutches of moneylenders and, in some cases, do not escape those clutches for many years after they have finished their education.

Except when it comes to their own interests, the capitalist class likes to leave all social issue to the market. Healthcare, education, housing, food production; let the market deal with it. When the S&L's went bust though, it was the taxpayer they turned to. To deal with climate change that will affect profits, it is the taxpayer they will turn to, the "big hand" of government.

The state, Marx argued, was merely the board of directors for the interests of the capitalist class as a whole and will not act in a way that oppose those interests. It will attempt to regulate its excesses though, when these excesses threaten the stability of the system.

New York Attorney General Andrew Cuomo is attempting to curb the moneylender's excess with regard to student loan "market". Why is there a student loan market one must ask oneself?

Cuomo is concerned that lenders are giving kickbacks to colleges that give them a "spot on their coveted list of preferred lenders."(1) Cuomo's probe in to the market for student loans is driven by concern that schools should be recommending "preferred" lenders because they offer better rates, not because they offer kickbacks in any form. Some schools are defending the practice claiming that the revenue is put back in to financial aid. But some lenders, according to Cuomo, pay for schools financial-aid officers trips to "Pebble Beach, the Caribbean and elsewhere."

Loaning money to students so they can get an education is an $85 billion market in the US. Much of this is done through government loans, grants and other measures. Like the subrime lending market that targeted the poor, seniors, and that section of society with weak credit history moneylenders have created new student loan startups along the same lines.

These companies are set up quickly, they're really just organizations set up for the sole purpose of loaning money to people so they can get an education, something that should be a right and a social service in any civilized society.

One of them, Education Finance Partners, was founded in 2003 offers loans that are not backed by the US government and these institutions made $17 billion in loans between 2005 and 2006. For some of the poorest among us or those with family obligations such as a sick parent or sibling, the military might be the best choice; it's called economic conscription.

Cuomo's efforts will result at best in eliminating the biggest sharks from the student loan pond but he will no propose the only real solution; education as a social service and free at all levels like they had in a dictatorship like Latvia. He is also motivated by the subrime fiasco that is being dealt with after the fact. This crisis can lead to social unrest.

Champion of the Subprime Borrower

Christopher Dodd is Mr. Cuomo's twin on the Senate banking Committee who is crying crocodile tears for the victims of what some economists are calling the subprime "correction."

Dodd expects us to believe that he is shocked by the developments in low-income mortgages. There has been a "chronology of regulatory neglect" he says. "The fact that they haven't acted really angers me." he tells a senate hearing yesterday, referring to the Federal Reserve. (2)

Dodd, interestingly enough, just happens to be running for president.

Dodd's fix, like Cuomo's, amounts to nothing more than re-packaging loans or most likely the responsibility will be shifted on to the backs of the working class through taxes or some other form of payment.

Like loans that hang like a ball and chain around the necks of students way in to their adult life, mortgages in some areas like much of Florida, account for as much as one third of income. And in California, mortgage payments consume more than 50% of income for one in five homeowners. (3) I would bet that this is not the percentage of one income but of two, or family income.

Few Americans believe these politicians of the corporations, Democrat or Republican, but there is no alternative with regards to the electoral arena so most just opt out. We don't believe they weren't aware; we don't believe they'll do anything; we don't believe they'll make much, if any difference in our lives.

There are others that chose to opt out of the subprime crash but it certainly wasn't the homeowner. "The biggest winners? Without a doubt they're top executives at subprime lenders who sold shares before he collapse." comments Business Week. The article explains that "over the past eight months five directors and officers at New Century sold shares worth $29 million, with most of them selling between August and November, when the stock was flying high." It is as clear as day that they knew it what was coming and got out of the way. The co-founder of the firm walked off with $19.3 million while at another firm, one big shot made a million dollars in two months selling shares, his last sale as late as the end of January 2007 when he made $172,000.

Housing and education should be a right. It can be a social service and it can be efficient and we can have it without being in debt and living in fear and stress for the rest of our lives. What is clear is that capitalism cannot provide it.

Most noticeable in the maelstrom of these ongoing crises, that the war in Iraq must surely be included, is the deafening silence of the Labor leaders in this country. No call for an independent workers political party. No call for education of housing for all that existed even in a dictatorship. They are completely absent from most workers lives.

But there is definitely a growing concern and increased activity on the ground as workers and youth, as well as older people, feel the pressures of US society. This is particularly so with regards to the Iraq fiasco and will increase as the situation continues to deteriorate. The events in Seattle in 1999 surprised everyone as thousands of youth joined by sections of the trade union movement put a halt to a gathering of global thugs from the WTO.

I think it is quite likely we will see a little more of that in the period ahead.

(1) Wall Street Journal 3-23-07
(2) Wall Street Journal 3-23-07
(3) Business Week 3-26-07