When college student Trevor Hill stood up at a CNN town hall in 2017 and asked House Minority Leader Nancy Pelosi (D-Calif.) if her party might move further left to mark a starker break with right-wing economics, her answer was clear: “I thank you for your question but I have to say we’re capitalist. And that’s just the way it is.”
No major Republican has felt a similar need to affirm loyalty to capitalism; everyone quite rightly assumes it. Yet the two major U.S. political parties’ shared celebration of capitalism raises basic questions about U.S. society that deserve more attention than they get.
Capitalism’s fundamental political problem is its class division between a small number of people who are employers and the majority who are employees.
Capitalism’s cycles between good and bad times, as well as the inequality it produces through vast gaps in income and wealth, cause conflict and division. And these tensions threaten the whole system, as the recent “yellow jackets” mass movement in France demonstrates. There, a fuel tax rise sparked weeks of protest across the country as those who live beyond France’s wealthy urban centers rejected ― occasionally violently ― yet another rise in their cost of living and demanded growing concessions from French capitalism.
In response, employers have built political alliances with some parts of the employee class. For example, inside the Republican Party, they worked long-standing deals with evangelicals to, for example, oppose abortion and coalesce around Supreme Court nominees, while inside the Democratic Party, they made alliances with large groups of religious and ethnic minorities.
They have had to make these and many more such political alliances because they are simply too vulnerable to go it alone. Their alliances’ goals always included making sure that the capitalist system itself survived, partly by preventing the majority from voting for tax and regulation policies that would undo the inequalities and instabilities of capitalism.
Whichever party wins, it’s capitalism that prevails.
Despite its socially destabilizing business cycles and income inequality, U.S. capitalism has been able to reproduce itself. This was achieved through the employer alliances constructed within both major political parties.
The aim of the Republicans is to identify and appeal directly to segments of the majority that feel aggrieved or threatened by certain social trends. In the U.S., this has meant appealing to, for example, white people facing the decline of white supremacist and racist practices; men seeing their dominance lessen over women at work and at home; and religious people facing the rise of secularism or disinterest in religion.
It’s a gathering together of conservatives fearing the changes that are undermining old social positions and privileges. Its appeal is simple and clear. Vote for the GOP to have the government slow, stop or reverse those trends. The party always links that appeal to a rigid commitment to preserving and strengthening “the economy.” By this they mean private property, markets and businesses where a dominant class of employers rules over employees.
The Democrats’ mode of alliance is to appeal to the entire class of employees by endorsing state programs of mass economic, social and cultural support. For example through subsidized higher education, unemployment insurance, Social Security increases and so on. The Democrats’ plan is to pay such programs’ costs by means of taxes imposed partly on employers and partly on employees.
These state programs are pitched to employers as relatively inexpensive ways of preserving and strengthening a social solidarity that includes and so supports capitalism. The programs are pitched to employees as benefits flowing from the capitalist economy if and when they have voted to put the government in Democratic Party hands.
The Democrats have generally built alliances with those segments of the employee class who most need government support (those paid below median wage and salary levels) and with those who welcome those social trends such as secularism, urbanism, diverse sexuality and immigration that upset the people who the Republicans target for alliances. The so-called culture wars in the U.S. both reflect and reinforce the class alliances constructed inside the two parties.
Both parties push “partnership” between employers and employees as an essential goal, while accusing the other party of threatening or undermining that partnership. Both also get the bulk of their funding for pursuing these political goals from capitalist employers. Donations from employees make up a much smaller proportion of their funding.
Whichever party wins, it’s capitalism that prevails. The statements and activities of the party in opposition serve to funnel disaffection with the party in power into votes for regime change. Capitalism is kept out of the debates, gets a critical pass and remains secure.
It also blocks possibilities for more than two parties. The GOP and Democratic Party have together produced and sustained the rules that make third parties difficult to start or maintain.
In many other capitalist countries, it was not possible to limit political parties to two. In France, Germany and beyond, while there are center-left and center-right parties similar to the Democratic and Republican parties in the U.S., there are also politically significant parties further to the right and left. In France, for example, the National Front is a powerful rightist party led by Marine Le Pen, while the La France Insoumise (“France unsubdued”) is a powerful leftist formation led by Jean-Luc Mélenchon.
In several European countries, green parties are also important. In Portugal and Luxembourg, green and anti-capitalist socialist parties are components of government coalitions. Democracy in all such countries reflects people’s demands for freedom to choose among parties with divergent attitudes toward capitalism. In contrast, the U.S. ― the nation that most loudly and routinely proclaims its commitment to democracy ― rigidly restricts its political parties to two that both celebrate capitalism.
Modern party politics has its contradictions. By its growing dependence on major donations from corporations, it risks exposing its class nature. Failures of major parties to solve key social problems increasingly provoke people to turn against the party system. Contemporary movements for social change are increasingly skeptical of allying with any existing political parties.
France’s “yellow jackets” movement ― successful in defeating President Emmanuel Macron’s attempts to introduce taxes that disproportionately hit those least able to afford them ― illustrates that skepticism perfectly.
Similarly, the entry of Elizabeth Warren into the 2020 presidential primaries ― like Bernie Sanders’ effort in 2016 ― moves in the direction of politically mobilizing the increasingly broad social disaffection with capitalism. Time will tell whether U.S. conditions make that direction sustainable within a changed Democratic Party or only outside it.
There is an emerging sense that new and very different parties are needed, parties that gather many segments of the employee class for a confrontation with all those who explicitly or implicitly accept and support capitalism.
7 tips for mortgage renewal time
It is that time of the year for you to renew your mortgage and all you want to do is sign the papers and get done with it. However, you shouldn’t be in a haste to renew your mortgage without doing a little research.
A good fraction of Canadian homeowners—about 27 per cent of them—who carry a mortgage have automated their renewal process, according to a survey by Angus-Reid. While the aim is most likely to avoid any penalties or stress that comes with missing a renewal, this approach can prove costly. Automatically renewing your mortgage means you lose out on great opportunities to save money and take further advantage of any new products and features on your mortgage that may be advantageous to you.
Typically, mortgage renewals occur at the end of your existing mortgage term and the most popular period is usually 5 years—though it can range from 1 to 10 years. Depending on your mortgage type, with a fixed rate mortgage calculator, you can easily estimate your monthly mortgage payment and know how much you’re due on your next payment.
However, before you make your next mortgage payment, here are some important tips that would help you get the most out of your mortgage renewal.
1. Review your current goals
It is possible that your financial needs must’ve changed since you first applied for a mortgage. Therefore, before your sign that renewal slip, you may want to take another look at your financial goals.
For instance, if you’re currently on a five-year fixed mortgage, your renewal would likely come with another five-year fixed mortgage. If you’re certain you would be staying in your home for that amount of time, then renewing it would be great. However, if you have plans of relocating to a different city in a couple of years, then a shorter mortgage term would be best.
Other financial goals that you may want to consider is whether you want to refinance your mortgage or access some equity with Home Equity Line of Credit (HELOC).
2. Ask for better rates
Before your mortgage renewal is due, your current lender would most likely try to get you to renew early. Typically, you will receive a renewal letter from your lender 6 months and 4 months before your renewal date. While they may offer you a rate that is lower than what you currently pay, it is often not the best rate you can get.
The renewal offer given to you by your lender is often not the best deal and in an increasing rate environment, negotiating your renewal rate is even more important. Signing the renewal letter right away because of some discount offered by your lender might seem tempting but you are potentially losing out on a lot of savings by not considering other available options.
3. Shop early for better rates
Rather than just accepting your current lender’s renewal offer immediately, you can start searching early for other providers and comparing their rates to see which one is most favourable for you. If you begin at least four months before your renewal due date, you will be giving yourself enough time to make a switch, if necessary.
While there are no major penalties if you choose to switch providers, there are some charges incurred that are typically covered by your new mortgage provider. You may not be able to change your mortgage provider until the actual renewal date, but this would give you enough time to find the right product and sort out every required paperwork.
4. Take advantage of a renewal rate hold
A mortgage renewal rate hold allows you to lock in a particular mortgage rate before your renewal is due. Normally, rate hold can last for about 90 to up to 160 days, protecting you from increases in interest rates.
During this time, you can comfortably compare rates months before your renewal date just to find a better deal. If the interest rates increase during your rate hold period, you would have nothing to worry about. Also, should the interest rates decrease, you can still negotiate for a new lower rate with your lender.
5. Switch mortgage lenders
Cutting ties with your current lender can be difficult—at least that’s the impression most lenders give to home buyers. But don’t be afraid of switching lenders, especially when you’ve found a better rate elsewhere.
Remember, getting a better deal on your mortgage can save you few thousands of dollars. Switching providers might mean you have to go through requalification but that is not a problem as long as you begin the process early enough before your renewal date.
6. Add some extra on your principal
If you’re looking for the best time to make a bigger payment on your mortgage, then renewal time is the best since there are no limits on pre-payment.
Making a lump-sum payment can put a huge dent in your mortgage amortization and you would be saving a lot of money on your total interest cost.
7. Consider switching to a broker
If you’re not already using a mortgage broker, then renewal time might be the best time to consider making the switch. According to a study by the Bank of Canada, most homebuyers who used a broker got a much lower mortgage rate than those who used one of the big banks.
Mortgage brokers are a better alternative because they have access to several lenders who offer different competitive rates, unlike the bank. Therefore, if you’re looking to get the best deal on your mortgage, switching to a broker might be a great move.
3 Money and time-saving mortgage tips
The path to buying a house isn’t the cheapest nor the easiest. Since the COVID-19 pandemic began last year, there has been several opportunities and challenges for first-time home buyers in the Canadian real estate market.
For some, sudden changes to their lifestyle created better opportunities to improve their savings plan while for others, such plans were halted due to the economic impact of the pandemic and rising home prices in real estate markets across Canada. According to the Canadian Real Estate Association, over 550,000 properties were sold in Canada last year, a new record for the country’s real estate market and a huge boost for the Canadian economy.
If you are a prospective buyer, looking to purchase a home within the year or just planning for the future, having access to the right information, resources and support can be crucial during your home-buying process. Many people—especially first-time home buyers—easily fall into home debt due to a lack of proper research into the market.
There are some important factors to consider in ensuring that your mortgage works best for you by not only saving you time but money. However, before you start searching for a home to buy, you should have a good idea of just how much you’re able to afford for one.
Checking your credit score using a Canadian mortgage calculator before applying for a mortgage, would give you a realistic price range and equally inform you of your chances of getting your mortgage approved.
Here are some important mortgage tips to help you save time and money while house hunting:
1. Know the penalties on your mortgage
There are several reasons why anyone would want to sell their property. From changes in your financial or marital status to getting transferred to a new location due to either school or work. However, these circumstances could lead to you selling your home and breaking the terms of agreement on your mortgage.
If you’re on a variable-rate mortgage with one of the major banks in Canada, to successfully break your mortgage, you would need to pay about 3 months’ worth of interest. For a fixed-rate mortgage, the cost is much higher than 3 months of interest and there’s also the option of an interest rated differential (IRD). This is typically based on your remaining mortgage balance and current mortgage rates.
To avoid penalties on your mortgage, apply for a portable mortgage that allows you to transfer your existing mortgage to a new property and even combine it with another loan, if necessary. There’s also the option of an assumable mortgage, where you can transfer the mortgage to a qualified buyer instead of breaking it.
2. Inquire about pre-payment privileges
When buying a home, you need to understand how rising interest rates would affect your mortgage. Without having any pre-payment privileges, the larger portion of your monthly mortgage payment would go towards the interest against the principal—making it harder to complete your mortgage.
Once you have pre-payment privileges, you’re offered enough flexibility to repay a percentage of the principal on your mortgage before the amortization period is over—and without any penalty. In fact, some lenders may even offer you their best rate to avoid giving you the option of pre-payment over a fixed period of time. Therefore, it is important to ask your lender the specific kind of pre-payment privileges you enjoy on your mortgage.
The amount of money you save by taking advantage of pre-payment privileges is quite substantial. For example, if you took a $300,000 mortgage at a fixed rate of 3.29% over five years and is amortized over 25 years. By making a pre-payment of $2,000 annually, you would save about $21,787 in interest and finish paying off your mortgage almost 4 years faster—assuming the interest rate was fixed throughout the amortization period.
You can always use a mortgage calculator to check much you would be saving by making extra mortgage payments annually.
3. Know the benefits of making a less than 20% down payment
Typically, when house hunting, the recommended amount of down payment you need to make is 20% of the property cost. However, you mustn’t always pay that high to get the best deal.
Surprisingly, lenders offer the best interest rates to those who want high-ratio mortgage because they have less than the recommended 20% down payment. This because a high-ratio mortgage borrower has a low risk against losses.
Default insurance makes it a lot cheaper for lenders to easily fund the mortgage loan, allowing them to transfer some of the savings—in form of lower rates—back to the borrower.
It is important to always carry out thorough research before applying for a mortgage to know what the best rates are, if a broker is more advantageous than a bank, or simply how you can get the best credit scores.
Major housing markets to shine this year and next: Reuters poll
BENGALURU (Reuters) – The outlook for major global housing markets is brighter than previously thought due to expectations for a broad based economic recovery and easy monetary policy, with only a low risk that a COVID-19 resurgence will derail activity, Reuters polls showed.
Over 100 million people have been infected by the coronavirus, leading to a healthcare crisis and deep economic recessions, but fiscal and monetary stimulus, and the rollout of vaccines, mean the global economy is set to recover this year.[ECILT/WRAP]
While already high unemployment caused by the pandemic is expected to rise further, the Jan. 15-Feb. 1 poll of over 130 property market analysts showed average home prices would rise this year and next in most countries polled.
That compares to largely pessimistic predictions made in September.
An economic rebound, loose monetary policy, government stimulus, pent-up demand and tight inventories were expected to boost housing market activity to varying degrees in Australia, Britain, Canada, Dubai, India and the United States.
“A solid economic recovery bolstered by more fiscal stimulus, still-low mortgage rates, and unmet demand should continue to prop up home sales and construction in 2021,” said Gregory Daco, chief U.S. economist at Oxford Economics.
“We expect some gradual moderation in price growth over the course of 2021 as home sales cool, but sparse inventory will keep a solid floor under home prices.”
Reuters Poll: Major housing markets outlook https://fingfx.thomsonreuters.com/gfx/polling/bdwvkybkqvm/Reuters%20Poll%20-%20Global%20housing%20markets%20outlook%20-%20Feb%202021.PNG
Three-quarters, or 77 of 102 analysts, said in response to an additional question that the risk of a COVID-19 resurgence derailing housing markets this year was low.
Although the U.S. economy on average contracted last year at its sharpest pace since the Second World War due to the pandemic, it had little bearing on housing market activity, an immunity the sector was expected to carry this year.
Despite the recent surge in coronavirus infections and renewed restrictions imposed in the United States, house prices there were forecast to rise over the next two years and activity was expected to continue on a strong course. [US/HOMES]
“The recent COVID-19 surge has not had any noticeable impact, with transactions near record high levels despite record high case growth,” said Brett Ryan, senior U.S. economist at Deutsche Bank.
“Pent-up activity from COVID-19-shutdowns earlier in the year will soon start to wane and transactions will likely normalize. More housing supply will come online as vaccination picks up at the same time that base effects will start to roll off.”
Reuters Poll: Global house prices outlook – Feb 2021 https://fingfx.thomsonreuters.com/gfx/polling/xklpylyqbvg/Reuters%20Poll%20-%20Global%20house%20prices%20outlook%20-%20Feb%202021.PNG
When asked about the primary driver of housing market activity this year, over 55% of respondents, or 57 of 101, chose an economic recovery and easy monetary policy.
Of the remainder, 20 analysts named a desire for more living space and 18 said a successful vaccine rollout, while six chose fiscal stimulus.
Australian and Canadian house prices were expected to rise significantly this year and next, helped by low mortgage rates and massive fiscal spending. [AU/HOMES][CA/HOMES]
When asked what was more likely for housing market activity, 58 of 100 respondents said an acceleration. The others expected a slowdown.
Those views were swayed by a somewhat modest outlook for the British, Dubai and Indian housing markets compared to the rest.
Indian house prices were expected to barely rise this year despite an economic recovery and supportive policies, and Dubai house prices were predicted to fall at a slower pace this year and next compared to the previous poll. [IN/HOMES][AE/HOMES]
British house prices were forecast to flatline this year.[GB/HOMES]
“While we expect a strong start to the year, we expect momentum to wane following the end of the stamp duty (property sales tax) holiday in April. Towards the end of the year the housing market should settle,” said Aneisha Beveridge at estate agents Hamptons International.
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