A topic much discussed.

Now I’ve talked about this before, and if you’re reading this, you’ve probably read that too. But the relevance of my classes recently compels me to clarify. You see, in contemporary political thought we’ve read a couple essays and parts of books which demonstrate the way in which society may become auto-totalitarian; how in Soviet style countries during the cold war the green-grocer put up signs saying “Worker’s of the World Unite!” Yet, he was not the only one to do so. His neighbor did so, the office-worker did so, everyone did so, because in truth they were compelled to do so. In some part it was the government, but mostly, it was because one did that the other must. And in doing so they did not genuinely tell workers to unite, rather they expressed their submission, while saving face behind the security of ideology and in doing so created a perception, and a practical reality that a united opinion existed. While this is considered, even in our class, to be a fairly recent occurrence I’m not sure. I am however sure it is occurring today, not here, but in the Middle East. This is exactly the auto-totalitarianism which we are facing. While they may not put signs in their window pronouncing “Death to America” they put scarves on their face and submit to the power of the ideology. However, it is not mere ideology, as in the case of communism, it is simply an opinion, a belief that we would be better off, a belief that the government at hand is actually communist, rather than a state capitalism. With Islam the forces are much greater, the belief stronger, the punishments not only harsher, but prescribed by god himself, the imposition that the more strict. Where a velvet revolution was possible in Czechoslovakia, taking the signs down are not enough. The majority is too large, the minority to uneducated of the alternative. It is a sense of oppression which drives revolution, but in order to feel oppressed there must not only be an alternative, but you must genuinely know of it; you must on some level be able to experience it, or see it. This is what the US invasion of Iraq aims to correct.

We can’t invade every country that has oppressed people, but in this case the ideology was not simply opposed to ours, but actively trying to destroy, not our way of life, but us as individuals.

I can’t say for certain that this was George Bush’s goal. I’m fairly sure it wasn’t Colin Powell’s. I’m fairly sure it wasn’t the majority of the congress’s. In truth, I can’t say that it was the goal of anyone in particular, but it is the effect, and even if it is the most improbable of co-incidences, it’s one I’ll take.

A summary of the flow chart…

Labour is labor, it is employment, and it produces both Income for the laborer and Capital for the employer. This income is either spent on goods, driving demand, or it is saved. Investment arrives from both the Savings of the company and the savings of the Individual as lent by banks. This leads to the relationship between demand and investment, or demand and production which requires investment and determines employment. This means that the unemployment rate measures the efficiency of the demand + investment equilibrium. On one hand demand for goods drives the demand for labor, if there’s no demand for goods there’s no reason to hire people to make them. But if there is demand for goods, and there’s no investment/capital, there’s no money to hire people with.

The final aspect, I’ll explicitly consider here is that the effeciency of labor plays a role. Specifically, what I mean by the effeciency of labor is that a worker makes $500 worth of products in a day and is paid $70, the employer makes $430 minus other costs. The labor’s transaction is ineffecint because he is not getting the full value of his work. The less the value of his work he gets, the more that money is centralized in the hands of the employers and locked into drive investment. This also means less money is available to drive demand. It thereby leads directly toward disrupting the equilibrium between demand and investment. Some may argue that this is exactly the check with Marx cited, and although I’m not entirely ready to disagree, I tend to think not, for as long as the worker is not making enough, the system slows to a halt, the employer stops profiting…. idk there’s more i can say but I’m hungry.

Economics

I’ve always thought that both supply side and demand side economics seemed to be oversimplified. They both almost seems to go out of the way to support their particular preferences, and it wasn’t until about a week ago or maybe less that I sat down and came up with the following flow chart of the economy.

Shot at 2008-10-20

This seems like the best blend of the two and makes sense. A supply of goods does no good if buyers have no money to buy with, yet buyer’s can’t buy anything if suppliers don’t have the capital to produce goods. Thus income from labor is split into savings and expenses, where expenses fuel demand and savings fuel production. It requires a balance between the two for the economy to work properly. Also the efficiency of the laborer is ‘profiting’ is important and I haven’t fully thought that out yet, butt.. I was reading on plastic.com a note on the argument of ‘conservatives’ that supply side creates wealth whereas giving money to the middle/lower class only spreads it around..

Not that’s not a wording I’ve heard before, and it’s one which makes a lot of sense. If money is invested then it allows for the production of more efficient means, and produces goods. If money is spent, it moves from person to person. I need to figure this out, because there’s good logic in it.  But I’m too tired. It’s a shame, there’s a real breakthrough in the relationship between labor’s production and this concept, and I’m tending to think it results in a need for consistent(though not necessarily predictable) revolutions. Probably crazy. /goodnight

Falling Gas Prices

Well, I’m watching NBC Nightly News, and as you know, gas prices have dropped quite dramatically. However, the certain cause, as the media sees it is dropping demand. This is simply not true, or at least not as they portray it. It is honest in that the demand for oil futures had plummeted, but in terms of actual consumption… think about your personal consumption. You may have cut usage by 5, 10 or even 20%, but you did this back when oil was nearing $3.50. You did this back when it was $4, but prices didn’t drop then. Prices dropped with the market for the simple reason that the prices we’ve been seeing were entirely unjustified. It’s true that China has been using more oil, but they did not double consumption in the past year or so then magically cut it coincidentally when the US market fell. The point is, investors who’ve been buying oil futures at exorbitant rates realized that like home prices, these were unrealistically high. My point is, the news is utterly failing to comprehend even the most basic elements of our economy. My all means, keep an ear to the ground, but do not believe the word on the street.

The more important point is, if you believe that consumption has dropped 30% in the past month(fueling the 30% price drop), then you’re the same person who believed the rise in prices was the result of an increase in consumption or the “closure of oil refineries” in the southeast during a hurricane…In all truth, that doesn’t make sense. We’ve got plenty of gas refined before and after the hurricane that it shouldn’t jump, and if it did, it should immediately drop back down to pre-hurricane prices within a week or so of passing.

What the president should have said:

Today, my fellow Americans, we are in a somber state of affairs. Several of the nation’s greatest banks have passed and several more are on that same path. They have been plagued by the disease of failed mortgages. They have lent unfounded money to borrowers who’ve had no ability to return it, and consequences if this are now readily apparent.

Indeed, these are of the most sudden passings which have shocked both citizens and shareholders across the nation.

Yet, while it is not unheard of for a man to fall dead mid-stride, such death of a great many does not occur; rather, it is the death of these few which has broken the ranks of the silently ill. Their fate, their failure, can no longer be concealed.

Too many have been mislead regarding the health of these institutions, and the savings of far too many are set to fail with then.

Let it be clear that those who have partaken in fraudulent or in anyway inappropriate and illegal actions will be pursued with the utmost severity.

I’ve instructed congress to proceed with negotiations regarding a reimbursement plan for those investors who such banks have defrauded.

This will be a slow procedure, and the markets will undoubtedly require time to regulate, but the foundations of our economy are strong and America will continue to prosper

Regarding the buyout.

So, if I understand this correctly, John Doe buys/gets a mortgage for 200,000 house he’d buying, and say he’s paying 6%, meaning over thirty years he’s gonna pay a total of 431,000 including 231,000 of interest. So the bank will make a profit of 231,000 over 30 years, or 7,700 a year for 30 years.

Now the bank packages 35 of these together. Now you see they lent out $7 million and over 30 years will get that plus $8 million profit back. However, it takes a long while to get that money back. So instead of waiting, they sell the package to Frank Richass for 9 million. They get their 7 million back, make 2 million profit, and are free to walk away. 2 Million profit today is better than 8 over 30 years.

Well the bank quickly realizes, shit, all we have to do it give out a bunch of mortgages sell them off. Now, people aren’t stupid. They say, hey, how do I know these people are gonna pay their mortgages? And banks say… Well I guarantee it. If they don’t then then we’ll pay the difference. But what about when people actually start defaulting on their mortgages?

Well, the people who own the MBS stop making money. If everyone’s paying it they get their 269,500 a month, if 5 of the 35 don’t then it’s 231k a month. However if 20 of the 35 don’t pay if off, then that only gets to 9 million, and they don’t make any profit. Plus! If people who do pay it off pay pay off the mortgage quicker than anticipated, then they don’t have to pay as much interest.

My math is clearly not perfect, and the numbers/rates/and percentages are off from the real world, but at the end of the day, if they make a bunch of bad loans, the back can’t pay off all they guaranteed. So the bank goes bankrupt, and the investor either doesn’t make a profit/as much of one/or even the money he put in.

Apparently the 700 billion would purchase the MBS, now I’m not certain if that’s the cost of the MBSs. If it is, we theoretically could get some of the 700billion back, if theoretically everyone kept paying their houses then we’d get it all back.

Of course, that’s not gonna happen. If the banks are going bankrupt paying to MBS holders what the homeowners didn’t, then it’s clear that those securities are not good ones. The big companies wouldn’t be pushing them on the government, and Congress/Bush wouldn’t be so eager to buy them if they were good investments.

Their theory is that if we buy them, and take the loss, then the banks won’t go bankrupt paying what they guaranteed the securities would. (I’m not sure if they want to buy both the MBS which “people” hold or even the bad loans which banks hold). As a result the banks and MBS holders could keep their money and keep lending to people(presumably with legislation to make sure they didn’t go too crazy again). But what if we don’t pay $700+ billion for them?

Then, the banks have to pay out what they guaranteed the MBSs would until they run out of money. Now shouldn’t they have a lot of money stockpiled? Probably not, as soon as they sell it for 9 million they go out and give 9 million in loans and sell it for 15, then again then again, and then the shit hits the fan. People start realizing the housing market’s crashing. They realize that people are defaulting on mortgages, and the bank has to start paying what they guaranteed the MBSs would. But all their free money is tied up in more bad(and even worse mortgages given at the height of the boom) which no one is willing to buy as MBS. So the bank is stuck with a ton of bad mortgages and so are the MBS holders. And the cards fall where they may, and people lose money.

But why do we need the banks need to give mortgages? Well the argument is Demand-Side. They say, if banks don’t have the money then businesses can’t get loans to start or expand, if they can’t start or expand, they can’t hire people, and no one will be able to get a job or buy a house since there won’t be anyone to give you a mortgage.

But does that make sense? Housing prices are lower and still falling. Other than money in the stock market… People still have income, they’re still working, they still need houses, they still need cars, they still need all the same things they needed before. And at the end of the day.. That money’s still out there.

As a matter of fact, remember who why it was lent in the first place? It was lent to people to purchase overpriced homes. Which means, all this money ended up going to the former owners of the homes. Some of it went to construction companies, some went to reality companies, some went to developers, and a whole lot went to private individuals who sold their home.

So where is it now? two places: those people who profited off selling a house, put it in the bank(or stock market), others spent it or are going to spend it on goods. Ultimately, it’s no big deal. Its a little hard for the people who put money in the stock market and it will be hard to get a loan for something you can’t afford…

Well you know what? You shouldn’t buy something you can’t afford…. Did you see what I saw at the top when writing this????? On a 200,000 loan at 6% you pay $231,000 in interest! How about you save and just wait to buy a damn house when you have the money? It takes 14 years at the most. Or maybe instead of saving for 14 years and spending 300k save for 7 years and get a 150k house and work for 7 more). Most importantly!! When you’ve bought the house you won’t have to keep paying a mortgage to the bank for 16 years. You’ll be able to actually save for your own  retirement.!

What gives you the right?

So far I’ve really only read Nietzsche’s  first essay and parts of he second in the Genealogy of Morals, but he seems to have very good point, in many ways similar to what I already believed, and influencing my though in general.

The point however is, “What gives you the right?” I saw this as a question a while ago. I’ve heard it as a question; as an attack. I’ve read the Habits of the Heart, and they’ve attacked individualists morality as lacking substance. Yet, who has authority? Does not each individual have complete authority over himself? Nay, does not an individual have authority over all things which he both claims authority over and which submits to his authority? The slave is a slave only so long as he is submits to his masters authority rather than his own; and his master’s claim to ownership, to authority over the slave is only valid in that the slave consents. Indeed it is the same with government. For so long as we submit to the laws of the land and authority of of the state, we are it’s subjects. Yet, it is important to note that this, subjection is not inherently bad. Indeed, as I recall previously stating, a subject of a “free” state is demonstrably more free that he who is not; for he who is not may my just in acting beyond the laws of such a state but is too in danger of being justly injured in such a way which law would have prohibited.

But when another asks of you, “What gives you the right..” do not answer god, or law, but rather I demand this right! I demand self determination. We have agreed in this nation upon a constitution, of methods of amendment and legislation, of limits upon powers and actors, and I will uphold my end of that bargain. I will vote. I will work for a just state, and as our independence declares, I will make sure “you” uphold your end too.

spending money that isn’t there

Ok, lets say the gov has $200billion but wants or needs to spend $500billion. The obvious solution is to borrow $300billion from someone. The government says by these “bonds” or IOUs and we’ll pay you back with interest later. But what everyone you talk to is only willing to let you borrow $100billion? Well then the government just “prints” $200billion more. However the government doesn’t print it and forget it. That, as well as the $100billion it borrowed gets listed as “debt”. So when it comes time to pay the bond-holders back we pay them and all is good.

But what if we still don’t have the extra $100billion to pay off that debt? Well, we “print” the money. At the end of the day, all the debt ends up being extra money we printed. This causes inflation. Since there’s more money in the system the money you have is worth less. Everyone’s money is worth equally less. Indeed, the government just borrowed that money, the value lost due to inflation, from you. So to pay it back, the government must tax a total of $300billion, then burn it all. This revalues the money in circulation, “paying back” the public.

At the end of the day, assuming this money isn’t “earned and burned”, deficit spending(thats the right term right?) is just another way of taxing the public. However it is one which allows for immediate spending and does not tax through regular means such as income, but by taxing accumulated wealth at a flat rate. Now progressive tax structures are another talk. But.. you see where it goes.

the condition of racial middling

caution, this obviously contains generalizations which ought not be considered without exception for even the majority of cases. indeed this is an unnecessary precaution I take here to warn against being offended, since it ought be well known that I intend no offense and support no racism.

Why does the “black man” want the white woman? Indeed why does the “black woman” want the white man in so increasing a fashion? The reason I’ve sensed is not that the “black man” does not want the “black woman”, but rather that the black woman does not want the black man. Over time the black man has gained for himself a poor reputation (not to delve into the sociological causes which may have precipitated this). However, it is indeed not an arbitrary reputation perpetuated merely by media, but by virtue of the circumstances, is one of fact. Sixty percent of black families are headed by a single parent, mostly women* . More than ninety percent of black children will be raised in such a female headed household**.

In the eyes of the black woman who has experienced this trouble, the black man all too often unfit for fatherhood. As a result, she does not want the black man. Of course, this does not even address the entire culture of drug related crime while has come to define “black culture”. And while the causes of this may be traced(I have to an extent in other blogs), the truth remains that it affects the perception of the black woman. So when such a woman dismisses the approach of those she senses are unable or unwilling to provide for her and any possible children, the black man is forced to look elsewhere. This is why the “black men want white women”. The inverse is also true, white men do not suffer from the same problems. They not only appear to be more capable(in providing), but more respectful since “white culture” places far more value in women.

Yet why does the the black man gain any ground if the white man is more desirable? For many, specifically the upper and middle class, the realities of life are not apparent. Unlike the lower classes, the “upper class” women do not see the troubles which black women have seen for so long. It is simply ignorance combined with a distaste for the racial prejudices which remain to some extent within “white society”. For those white women in the lower class who like black men, ignorance/ambivalence is similarly true. It seems naive to suggest that poor black/white women do not see the situation of black fathers. More likely they simply do not care. They may feel their relationship is different, as it may be. Or they may recognize the struggles related to black fatherhood, and decide to continue with relationships with hopes of fighting the causes which bear upon the black man.

Ultimately I find this logic far preferable to the alternative which suggests black men seek the company of white women out of some sort of malice. That said, even this belief has some weight considering that the resentment of black men toward the society which injustices them is often strong. To place this blame on the white man as a race is however clearly misguided. For as time progresses, assuming no “corrective” measures, this trend of black women and white men or black men and white women will continue to the point that races are effectively and entirely destroyed. And if still no measures have been taken to equal the poor then the difference with remain.

* Nathan Rutstein (1993) Healing Racism in America (pg. 4)
** Hill, R. (1999). The strengths of Black families. New York: Emerson-Hall.

on friendship

Everyone knows what friendship is. I’m in no peculiar position to lecture others on the nature of friendship. Indeed my perspective is just that, and is apt to miss much of that which other perspectives may clearly see. But in the nature friendship, of literally having one another’s back, I feel it is important to let others know what I see so that, as a community, a complete outlook may be had.

For me, friendship is talking to another guy; on the phone, on the verge of tears, for 2 hours, without anyone calling you gay. It is having one another’s back. It is meaningful; not just in that it carries the weight of others support, but that it carries the weight of other’s respect and reputation. Unlike family, friends may be chosen. You are not born into them and throughout life many may, as with family, come to let you down.

But it is for this reason that you are judged by the company you keep; for no wise man would knowingly keep company with scoundrels. Indeed, doing so would subject him to the danger of being their next victim; whether intended or not, and with this the case, it may be presumed that those who keep company with scoundrels either support their actions or are ignorant thereto.

Now of course, we are imperfect beings and are destine to commit wrong at some point. That said, humanity can only excuse so many actions, and the severity and frequency must be taken into account when judging whether an individual is good company. Yet, most importantly it is assumed that no malicious intentions were present. I mean, of course, if they were then it would be downright stupid to forgive the act. Of course, for those of whom such actions are unheard of, even fairly sever offenses may be forgiven in appropriate disapproval is displayed (and the inverse is also true).