Got Hope?

Got Jobs?Got Jobs?

For me, watching Barack Obama win the White House has been like watching a train wreck. The worst thing about it was the feeling of helplessness. Nothing I could do or say could have changed this election, and McCain would have been as bad for the nation as Obama. Having been in sales for as long as I have, I instantly saw Obama’s public relations value. From a purely public relations POV, Obama was the perfect candidate. He had black skin but he was raised in white European culture. Obama has more in common with a Republican lawyer than he does with any average voter. Yet, I have watched the spin doctors turn Obama into liberal America’s darling.

In the last three months since the inauguration, Obama has done things that would have had the rest of us howling had Baby Doc Bush done them. So far, Obama voted in favor of sheltering the telecoms who turned personal information over to Homeland Security. Obama broke his promises to raise the capital gains tax and end the Bush tax cuts. There is also an undeclared war going on in Pakistan which Obama authorized. Then there is this idiotic bailout . If Bush had done any of this, everybody would be screaming in outrage. So why does Obama get a free pass?

Maybe we are not holding Obama accountable because we have a huge emotional stake in his presidency. Twenty eight years of constant neocon rule has taken its toll. We as a nation want change so badly that we can taste it. These are the sort of emotions that Freud’s favorite nephew, Edward Bernays, loved to exploit. Bernays exploited poor self image to sell cigarettes and fear of alien cultures to sell the Cold War. There is a lot of heavy emotion associated with the Bush administration. There is the anger at being lied to, there is grief at the lives being lost in the Middle East, and there is the fear at the deteriorating economy. All of these churning emotions are so easily channeled through the simple two word phrase, “Got Hope?”

The paradox of sales is that originality in advertising rarely sells. The successful advertisement follows the same patterns, and we the consumer have been conditioned to follow those patterns. Let’s look at the original “Got Milk?” TV ad.

See what can happen to you if you don’t have enough cow juice on hand? This commercial was the first in a series of commercials that increased milk sales by over seventy percent. It was the first increase in milk sales in decades! It seemed fresh and funny but followed the traditional patterns. There was a funny vignette where the hero faces a heartbreaking loss because he didn’t have enough milk on hand. To quote the article I linked to:

Goodby’s team fielded qualitative research and learned that many consumers indeed linked milk with sweet, sticky snacks. Pushing further, the researchers flipped around the question: how do people feel when they’re eating something that demanded milk to wash it down, but don’t have milk in the house? Focus group respondents placed in this situation were upset, they felt deprived. They were able to convey viscerally the feeling of having a brownie or cookie remnants stuck in their throat, calling out for a gulp of milk to cleanse the palette.

In the best Bernays manner, the commercial uses the fear of deprivation to sell milk. Fear of not having something important or otherwise is a powerful sales tool. Next time you speak to a financial planner notice how he uses fear of an impoverished retirement to sell you an annuity. That’s how Bernie Madoff did it. He frightened his victims as to what would happen if they failed to invest for their retirements and commenced to make their fears come true. The commercial does the same thing. Only it is fear of a different sort of loss that sells milk.

Then there is the slogan that caught on like wildfire. Once again, quoting the article I linked to:

Goodby and his team used this consumer insight as the spark for what came to be called the deprivation strategy: rather than selling milk as a complement to certain foods, instead the strategy became to remind milk drinkers of the anxiety and disappointment that came when milk wasn’t available at crucial moments. Working to distill this milk-deprived emotional state into a phrase that everyone might instantly understand, Goodby coined the campaign’s well-known grammatically-challenged tagline, ‘got milk?”

It is the ungrammatical use of the word “got” that made the tagline so effective. The ungrammatical use of “got” caught the attention and held it. It was both short and memorable. It was perfect. It got to the point all a person had to do was see the tagline and all the fear of deprivation would jump out of the subconscious. These “Got Milk” signs popped up all over the nation.

got-milk-scented-bus-shelte

Since originality rarely sells, other products jumped on the bandwagon and the country was inundated with slogans like “Got Game?”, “Got Retirement?”, or even “Got Jesus?”.

got_jesus_1400x1050

There were even jokes and parodies. You can still find this T-shirt sold on the Haight-Ashbury district in San Francisco.

got-pot-tee-shirt1

The “Got Jesus” campaign rode the success of the original commercials. The “Got Milk” campaign set it all up for the Christianoids. Just looking at the “Got Jesus” slogan got people thinking of all the horrible things that could have happened to them if they lacked Jesus in their lives. The “Got Pot” parody helped keep the slogan alive and in the public subconscious. The more “Got (fill in the blank)” is used the more effective it becomes. This leads us to the Obama Campaign.

got_hope_vote_obama_tshirt-p235792798030844249qm6x_400

This must be the most effective campaign slogan ever used. It’s an old and established work horse. It has been used to sell everything from milk to religion. It is one we have grown to know and love and we all respond to it if we admit it or not. The sad fact is that we all “Got Hope”. We all have hope that Obama will turn the economy around. We all have hope that he will end the unconstitutional detainments in Guantanamo. Some people have so much hope that they are stating that Obama has already released the prisoners in Guantanamo and ended the war in the Middle East, despite all the evidence to the contrary. Obama has announced a timeline to release the prisoners and so far that is it. Obama is stepping up the war in Afghanistan while making a token show of slowing down the Iraqi war. Three months into his administration and the nation is still in the same situation it would be in if McCain won the election.

Hope is a very powerful emotional condition. People with terminal diseases have been known to continue to hope for a miracle cure as they lay dying. People in hopeless situations tend to hang on to hope as a means to hang on to their sanity. Hope, like any other emotional situation can be exploited by the public relations trade. People are supporting Obama despite the evidence because they are afraid to be deprived of hope. Right now Obama can break into their homes and rob their liquor cabinets, and they would not prosecute because they are afraid of losing their hope. “Got Hope” has caused a psychological confusion between Obama and the changes we are hoping for. It is as if without Obama the changes are impossible.

The worst thing about it is that we are still being sold. Everyday after work I go to the Barnes and Nobles cafe for a cup of tea, and every day I see more and more Obama promotional merchandise. Mugs, books, biographies and commemorative picture books are being hawked long after Obama has won the election. Promotional merchandise is not cheap to promote. The ghost writers and the behavioral scientists that put them out have to be paid up-front. The money you pay at the cash register barely covers the cost of production and distribution. If they are paying on the front end and not regaining the cost on the back-end, all this promotional garbage must be an investment. So my question is what are they going to try to sell us next?

Now What Excuse Will We Use to Invade Iran?

Now What Excuse Will We Use to Invade Iran?




How to Sell A Subprime Mortgage Part One: Why Subprime?

It Should Be Called the SS GreenspanIt Should Be Called the SS Greenspan

From the end of 1999 until the spring of 2002, I worked for Aames Home Loans as a Loan Origination Officer.  I started my mortgage career during an interesting period for the mortgage industry.   Bill Clinton and his economic team poured millions of dollars into the tech industry, creating a situation reminiscent of the Dutch Tulip craze.   Worthless tech stocks and stock options were publicly traded on Wall St.  All financial regulations were relaxed, including the regulations for the buying and selling of subprime mortgages. Alan Greenspan kept interest rates high to keep domestic wages low. Money was invested because of the high returns in CD’s, annuities, and even money market accounts. Of course, there was a huge amount of money invested in the stock market. There was virtually no investment in domestic production, but hundred of millions of dollars were spent on outsourced industry.

Displaced workers found themselves either living in the black market or homeless. Homelessness grew as rents rose to match the interest rates, and as more and more people sought housing. As the demand rose so did rents. The demand for housing also began to raise property values. High rents caused salaries to pay for less. People began to miss bill payments to keep up with the rent. The less a dollar could buy, the more profit there was in Wall St. People began using their credit cards more. This tied even more dollars into high interest rates. The richer the few became, the poorer the rest of us became, and that created a new market for subprime mortgages.

Subprime Defined

A simple definition of a subprime mortgage is a mortgage for people with less than perfect credit. What less than perfect credit means in this case, is people whose credit scores dropped due to the economic conditions created by the White House. People who could afford their prime mortgages when they were working in an American factory were suddenly unemployed or underemployed due to outsourcing. Other homeowners had variable rate mortgages because they thought the moderate interest rates of the Papa Doc Bush years would last forever. They watched their 3.7% mortgage grow into a 17% mortgage or even a 27% mortgage. Credit cards were overused, so homeowners needed help with their monthly credit card payments as well as their mortgage payments. The demand for subprime mortgages, combined with the fact that mortgage companies don’t risk their own money, made the subprime industry look very good to Wall St.

Mortgage Banks

The money that is used to purchase homes and properties does not come out of the pockets of the banks and mortgage companies who sell the loans. They come out of what are known as “Mortgage Banks”. A mortgage bank can be anything from a group of individuals who pool their money into long term, high return investments to major international banks. Subprime was very attractive to many investors because subprime has a higher interest than prime. Subprime is considered riskier than prime because the customers have a history of missing bill payments. This is why subprime loans have even more restrictions on them than prime loans. Prime loans are sold to people with excellent credit. They have a lower interest rate and a higher commission for the salesman. It takes about two and a half subprime loans to equal the commission on a prime loan.

Underwriters

This brings us to the underwriter. Underwriters are the guardians of the mortgage banker’s money. The mortgage bankers pool their money and they divide it up into different amounts. These amounts are anywhere from 10K-100K for second mortgages to 10K-500K for firsts and refinances. They decide what interest rate they want for it, whether or not it is to be prime or subprime, and the conditions of the loan. The money belongs to the mortgage bankers. They can impose any darned condition they want as long as it does not conflict with State and Federal laws. That’s where the underwriter comes in. The underwriter’s job is to examine each mortgage to make sure it conforms to his principle’s conditions. The underwriter can demand any proof from the customer that he wants. He can ask for pay stubs, character references, profit and loss statements, or anything else he needs to make a decision. The only thing that he cannot factor into his decisions is race, creed, or national origin.

Subprime from the Inside

Unprecedented demand for subprime mortgages attracted Wall St. Wall St. corporations began buying up private mortgage companies and turned them into publicly traded companies. Aames Home Loans had been a family owned company until two years before I signed on. It had been a much respected institution by the minority home owners who made up most of its customers. The office manager was loved by the people she served. The processor, who also served as receptionist, knew everybody by sight. This changed after Wall St. took over.

Aames’s cash reserves were exhausted by the time I started in the Oakland office. Customers could no longer pay their mortgages at the office, because the loans were sold to other companies before they were even funded. New rules and regulations were instituted that made no sense and were ignored. It didn’t take long to realize that the only rule that mattered was the eleventh commandment: Thou Shalt Not Get Caught.

This was my introduction to the mortgage industry. My job, loan origination officer, was one of the innovations brought in by the new Wall St. management. We were replacing the old call center in Irvine, California. Wall St. thought the old call center was too expensive and the long term employees made too much money. Instead they put one or two L.O.O.s in each office. The people in the old call center knew their jobs. I knew nothing about selling mortgages and my new bosses were not going to teach me. They thought they could chase me out and return things to the way they used to be. More fool they. I survived Aames for two and a half years, outlasting five managers, four regional managers and more salesmen than I can remember. I had no experience in subprime mortgages at all, but within six months I was running that office between managers.

Aames was my introduction to the financial industry. I share it with you in hopes that you will truly begin to understand why things went wrong and the changes that we have to make to make them right again.

Wall St.  You're Fired!

Wall St. You're Fired!


Money Down a Bottomless Pit

timothy_f_geithner_31It’s Raining Soup!

Twenty eight years of steady neocon rule have placed this country right into the sewer. It wasn’t just Bush. It was Bush’s dad, the Reagan Administration and Bill Clinton. Now we have Barack Obama promising change and giving us the Son of the Clinton Administration. The same people who caused this economic disaster are back and making the same mistakes. We have no infrastructure left. Our manufacturing is overseas. Our GNP, which supports our currency, is entirely through oil production and refining.

While America has its collective attention riveted on Ponzi scams and other symptoms of a capitalist economy, the Obama administration is getting away with an even bigger scam. I am talking about the bailout. The most aggravating thing about it is that the criminals from the Clinton Administration who caused this mess are back with Barack Obama. We are only now coming into the full extent of the damage that Clinton and his Whitewater cohorts did to the economy. We have not even begun to feel the damage that Bush caused to the economy. Not to worry, Bush’s disasters are just around the corner.

The Clinton Years

Make no mistake about it, Bill Clinton was a neocon. His rise to superstardom was very much like Barack Obama’s. After eight years of Reagan and four of Papa Doc Bush, America needed a change. Twelve years of tax breaks and deregulation had already sucked the nation dry. In comes Clinton as the Democrat’s “great white broom” that was going to sweep away the evils of the
Republicans. Instead, Clinton followed the neocon agenda. He pushed NAFTA through Congress,and joined with Newt Gingrich to destroy the social safety net. Like Reagan and Bush, Clinton cut taxes for the rich and continued with the rash of deregulation which began in the Reagan years. This created an interesting challenge for Bill Clinton. He had to create the illusion that his policies were working without threatening corporate profits.

Along came Mrs. Geithner’s darling baby boy, Timothy, with the perfect plan. Take all of the money that should have been spent on health care, rent subsidy and education and pour it into the Internet. Pour enough money into the private sector and it would look as if the economy is healthy. While American jobs were being sent overseas and American citizens were forced into poverty and homelessness, Clinton was pouring billions of dollars into the computer industry. Like everything else that has happened in the financial industry these last twenty years, the money was poured without any regard to where it was splashing. For every piece of genuine research that was financed, there were four Internet start-ups which were not producing anything of value.

Eventually money accumulated to the point where it was spilling out of the computer industry and into other industries. All the shiny new Internet millionaires needed credit cards, right? Otherwise they would not be able to buy skateboards and groceries. Landlords had to raise the rents to account for the new prosperity and high interest mortgages had to be sold. New businesses had to be opened to support the new tech industries. Office equipment had to be sold to the new start up companies. This caused a temporary rise in the employment rate. Geithner’s house of cards was supported by the stock market, which was buying and selling junk Internet stocks as if they were actually worth something.

In the meantime, e-commerce companies like Amazon were selling their goods at a loss and making up the loss through the stock market. This forced traditional “bricks and mortar” businesses into bankruptcy. Bill Clinton signed the Financial Reform Act into law. In other words, Clinton legalized theft. Enron happened and the biggest corporate criminal of them all later became President. I think the most amazing thing that happened during the Internet bubble was AOL taking over Time Warner. AOL was an Internet company like any other, and they managed to buy one of the largest media giants with Internet money. That’s like buying a kingdom with faerie gold. Speaking of faerie gold, that was the Clinton surplus. All the extra money that was supposed to be in the treasury was actually Internet stock. It was faerie gold that vanished after the crash of 2000.

The crash happened when people woke up and realized that most of the Internet start-ups were not producing anything of value. The stock market crashed. The tech industry went belly up. The major corporations bought up everything worth buying and outsourced the work. Blend this in with the sub-prime mortgage boondoggle, financial deregulation and the death of the social safety net and you have the mess we are in today.

The Jig Was Up!

Fast forward to the summer of 2008. The mortgage industry finally melted down. The stock market crashed like it was 1929. European banks were ready to take over American institutions which had been badly run for decades. American financiers were looking at the end of their gravy train. The European banks are strict and conservative. There would be no more buying and selling of inflated stocks, no more selling of bad mortgages, and no more Ponzi scams. American financiers were panicking. The Europeans would impose law and order. What was Wall St. going to do?

Once again it was Timothy Geithner into the breach. He got in front of Baby Doc Bush and proposed a 75 billion dollar bail-out. The idea behind the bailout is exactly the same idea as the Internet bubble. If you pour enough money into the private sector it will look as if the economy is healthy. Baby Doc Bush and his tame Congress poured 75 billion dollars down the rat hole and the stock market is still in the toilet.

The Son of the Clinton Administration

Along comes President Barack Obama who promised us change and commences to give us a rerun of Clinton. Obama not only supported the first bailout but is now championing another bailout. Guess what? The second bailout is not going to work any better than the first one did. Still, Obama inherited Baby Doc Bush’s trained Congress, so this bailout is going through anyway.

Despite all the libertarian delusions that are bandied about the Web, America does not exist in its own private little capitalist bubble and never did. The United States has been a part of the world economy since Thomas Jefferson made paying the Revolutionary War debt a priority. Most of the mortgage banks that U.S banks borrowed from were European conglomerates. The Europeans pulled out their money when they discovered how many US mortgages were defaulting. That left a monster hole in American finances. That hole got bigger after Europe called in their debts and the U.S mortgage companies had to pay off all the mortgages sold. Thus billions of bailout dollars went to satisfy the European debt, which is still not paid off. Very little of this money is going to stay in the U.S

It’s not as if we really have that much money. Between Clinton and his junk stocks and Bush’s uncontrolled spending, there is not that much money left. Baby Doc cut so many taxes for the rich that more money is flying out of the Treasury than is coming in. The Bush Administration sold off federal investments and government-owned property to pay its debts. Baby Doc Bush invaded Iraq and Afghanistan with money borrowed from the Chinese and the Saudi Arabians. That’s right, folks, we owe the people who control our manufacturing and oil production big time and who’s idea was outsourcing all our factory production to China? I’ll give you a hint. He’s Barack Obama’s Secretary of the Treasury.

The last time the American public took such a fall, we had the labor movement there to make sure we got a new deal. Who do we have looking after our interests today? If we are going to have the changes we need to restore our economy, we need to organize. We cannot sit back and expect a corporately-chosen President to do it for us. We need to rebuild our infrastructure, reimpose reasonable limits on our financial institutions and bring our jobs back home where they belong. If Obama won’t do it, we’ll just have to do it despite him.

If You Use the Right Words the Right Way, People Will Convince Themselves that Grinding Poverty is the Change They Asked For

If You Use the Right Words the Right Way, People Will Convince Themselves that Grinding Poverty is the Change They Asked For