Archive for September, 2008

Perhaps a Better Bailout?

Thursday, September 25th, 2008
Dear Reader,

It seems to me that there is a better way to spend $700 billion dollars on fixing the economic mess than the one chosen by the US government.

The problem actually is that the trouble on wall street is drying up business, and personal loan access. The local bank or credit union would love to lend us money but there is none to lend because of the present mess. Without access to credit people can not do business or buy property, (chattel and real). Businesses can’t upgrade, expand, or sometimes even get through a lag in the business year. The banking system must function in the aspect of keeping the machine of the worlds economy supplied with fuel (money).

Taking this as the premise the government has chosen to free up the money supply by paying off the bad debts of large banks to shock the system back into working. This time it’s supposed to work better than the last few tries. This time it’s much bigger… So the logic goes.

Perhaps a better way would be to use the money to back new loans only. Set up a trust or some such instrument, fund it, and make the money available to the Fed at the going interest rate. Using the existing mechanism but bypassing the troubled spot. Troubled because of it’s own foolishness.

Let the problems work themselves out in the free market. As the system behind the government’s loan program comes back online, the government can reduce and stop altogether, it’s intercession into the market. This way those that were conniving will be ferreted out by the free market and the companies that were weak will be devoured by the strong. The system would emerge stronger. Capitalism will take care of the problems.

The government’s way will only let the miscreants escape the light of day. Their misdeeds will largely go unpunished. Escaping justice to connive again. Oh there will be some ginning up of public outrage at the pay of some of these people, but the worst offenders will undoubtedly slip under the radar, with the cloak of crooked politicians guarding them.

Bailout Mania

Wednesday, September 24th, 2008

Dear Reader,

It seems to me that the best thing that could come of the proposed “bailout” would be the vast devaluing of the dollar’s effect on the US balance of trade. To expect the “bailout” to be any more effective than the “bailout” of Morgan Sterns is folly. It will enrich a few people. Empower the Elite to a new level. And insure that the problem will grow.

NPR reported on Morning Edition that as much as 2% of the riskiest loans are in default. Those loans are spread over the entire collateralized loan instruments all over Wall Street. That doesn’t seem on the face of it to be such a problem only 2% of a small percent of the total loans. Especially since they are spread out. We must keep in mind that price is only a factor of opinion.

The value we place on anything is due entirely to opinion. If we see something as rare we value it highly. Gold for example. Yet gold has little intrinsic value, (industrial not withstanding for purposes of our discussion), yet it has great value. Water on the other hand has great intrinsic value. We must imbibe it several times a day else we die. Our very life depends on it. Yet it is cheap. The answer is in it’s perceived rarity. Were potable water rare it would be more valued than gold. Both examples rest on our opinion. We all know that opinion is as much based on emotion as on reason.

Market opinion has turned violently against any financial instrument that even may have the tinyest exposure to the sub prime market. Emotion has run wild. Cold cash will not quench emotional reactions. Cash only serves to prove the emotional, group think. As such, it will only add fuel to the fire. A fire that was intentionally set.

This is a political year. It is undeniable that an economic downturn would benefit one party over the other.
There are many powerful actors on both sides. These actors try to serve the interests of their respective parties. With no real consequences for their actions they move with virtual impunity. Only when the searchlight of public opinion is on them are they held to any standard at all. So it is with this arrogance these people have engineered this fiasco.

As I have stated long before now in my blogs and in the International Capitalist Party BBS the “unbiased” media has been talking down the economy for years. An economy that until this year has been growing at an unprecedented rate in recent US history. With the growth of the Chinese economy and subsequent rise in demand for commodities, linked with the real estate bubble bursting, actors had the chance to push the economy into what they thought would be a minor recession. Affect the election, make some money on the upturn, and get away with it again. The spark has turned into a conflagration however…

How do we find out if this is true or simply the raving of a lunatic. Well I am probably a lunatic… but, lets open our minds to the possibility.

We cannot rely on the consequent, the financial meltdown, it may have come about by some other means and begs the question. We must look at the antecedent, the conspiracy theory. It is undeniable that there are people of great wealth and power, power even to do just as I have iterated. It is also undeniable that some of these people have political positions that put them into one camp or another. Further they have historically never been held to task for anything. The question comes down to, are those people who have the power and the political motivation so utterly bereft of any concius that they would in fact put into action such a plan? We can then reason that if the motivation was sufficient, and the moral character deficient, such a plan would almost certainly be put into action.

So… what do you think? Are they morally deficient enough?

Lets Bail Out the Elite!

Wednesday, September 17th, 2008

Dear Friends,

It seems to me that the money spent on bailing out the wealthy corporations would have been much better spent keeping people in their homes last year.

It’s economics 101. The problems started with people’s mortgages turning upside down and for a great many a balloon payment that they hadn’t counted on. (They planned to sell the house before the balloon kicked in). Were the money spent on a temporary program to keep people in their homes the vacancy rate in some neighborhoods would have been greatly reduced. Had that happened, the price free fall wouldn’t have been as large. Had that happened fewer people would have been caught in the pinch. Less mortgages in delinquency and fewer institutional repercussions.

Another positive side effect of this means to action is reigning in of the criminal or simply unscrupulous element. The price of housing would have stabilized at a higher level. The people who simply turned in the keys because they were too far upside down in their mortgage would have been dissuaded by the higher price level. This was undoubtedly a cause of further financial distress.

The worst thing the US government could have done is to protect the capital of the elite at the cost of society in general. Protecting the elite helps them but does nothing to address the underlying problem. I believe that the goal of right government is to protect the capital of society in the amalgam. In doing so right government encourages growth in GDP. Helping the elite escape the consequent of their folly only perpetuates the folly. Leading us into more and greater downturns in the economy.

Like Ricardo meant when he said that unless the corn laws be overturned the productive good of the Capitalists and the workers will go to the landlords. (Because the landlords controlled the apparatus of government)! It is my contention that when government serves the interests of one segment of society, instead of the good of all, it serves the interests of no one. The lot of all is reduced. It is only pragmatic to be an International Capitalist.

I think 45 billion dollars would keep a lot of people in their homes. The benefit would trickle up through society. Buoyed by the release of vacant homes, the housing market could adjust with less friction. In keeping people in their homes the crisis on the banking industry would have been reduced. The weakest of the pack would be hunted and killed by the strongest. Thus the banking industry would have been strengthened. Now it has been weakened with a cancer. The weak but politically connected have been protected.

The market will see the best course of action to maximize profits for themselves. They will take the course of action that has now been shown to be best at personal enrichment. Screw the stockholders, screw the customers, screw the whole planets economy, but, give enough money to the right politicians and your sins will be forgiven and you will be bailed out… Economists claim to believe that there are always tradeoffs…

Financial Meltdown

Monday, September 15th, 2008

Dear Friends,

It seems to me that I heard on NPR’s Morning Edition last spring that some woman, I don’t know where, had bought a house at some high price and now that the market for her house has decreased she had stopped payments and is putting the money away for a new house after she is finally ejected from hers.

That is out and out fraud! She can make the payments but chooses not to because it will benefit her financially. By taking this course of action she is screwing over, all her neighbors, the stockholders in the bank she got her loan from, and society in general. Not only that but she was totally unabashed about it.

But, what can we expect? She was only taking her cue, or marching orders from her betters in Washington. Charlie Rangel apparently owes the IRS for $70,000 (seventy thousand dollars)? We’ll see what sort of punishment will be meted out to him for it. I remember a man and a woman in New Hampshire last year that didn’t pay the IRS, (probably for less than $70,000). They were surrounded in their house at gunpoint. Federal agents with sniping rifles aimed at them day and night. In the end they went to jail. Them and everyone they knew who admitted to being their friend. Well we’ll see how Charlie…

So with Washington being so totally corrupt why should we expect better behavior from the people? We are only a reflection of the elite. When we see the elite so totally unabashedly corrupt, saying things like “There is no overriding legal authority.” Calling place in a legal matter. What are we to assume is the norm for behavior?

Where will this eventually lead?

Perhaps to a financial meltdown?

Oh wait…it has.

News is News?

Saturday, September 13th, 2008

Dear Friends,

It seems to me that what passes for news now days is opinion and drama. It may be that people who consume the news want opinion instead of news. I personally like some information to go with opinion.

Jim Lehrer News Hour is about ten minuets news thirty minuets opinion. Outrage at what this or that person has said. But we don’t get to hear, in context, what the offender in fact did say. There was no coverage at all about the MILF gorillas in the Philippines, the unrest in Bolivia or the Canadian elections.

Instead coverage focused on whether or not one politician lies more than the other. I can tell you a fool proof way to tell when a politician is lying, look to see if his or her lips are moving. We all know that politicians lie. I would expect that a news organization worth it’s salt would at least give passing coverage to world events.

That is the reason that the American public is so often caught off guard when a major news event happens. John Q Public has only been watching weather people stand in the rain and wind of a hurricane telling us not to stand in the wind and rain of a hurricane. Hours of this mindless tripe. Then an allied government is attacked. The American people are aghast and exclaim “ why does this keep happening to us?” meaning why didn’t we know about this before it erupted into a full blown crisis. The Georgian crisis was brewing as far back as April, as I talked about in one of my BBS posts, but the American people were caught off guard when Russia invaded Georgia.

Our “high quality” and “unbiased” main stream news organizations leave a lot to be desired. Perhaps they could try reading the Taipei Times. America’s news organizations could learn a thing or two about what is news and what is opinion. Then perhaps label them as such.

Of course the media provides what the market demands. Otherwise the firm providing the service will loose market share and eventually fold… Aren’t the major news media outlets in decline though?

Theres Money to be Made in Them Thar…

Monday, September 8th, 2008

Dear Friends,

Why go into space? Money, that’s why. There is money to be made there. Not a pittance for lugging some gawking tourists there. I’m talking pay off national debt money. The scenarios are as varied as human imagination.

Mining a Near Earth Asteroid (NEAR) for example. The person or firm who figures out to build and get an automated mining and smelting operation on a NEAR as it passes close to Earth. Then in the two or so years when it returns to Earth’s vicinity, perhaps using a spring loaded catapult, it sends the refined ore to Earth’s orbit to be picked up there. Returning every few years sending another few tons of rare metal to Earth. NEARs that are Nichol/Iron and have sufficient mass have tons of platinum and other valuable metals. Metals that are rare on Earth but common in asteroids. (As have been found in meteorites). I dunno, what’s a few tons of Monozite or Dysprosium worth these days?

Companies that build infrastructure can be well placed when a technology fruits. Provided they are innovative and have an ear for the demands of the markets. Some ideas are probably useful in sheltering people on the moon as are for polar habitats. There are as many possibilities as are companies. No one knows what could possibly be needed.

Rather than get tedious I’ll cut to the chase. This example of mining a NEAR for say a few tons of rare metals every few years placed in Earth’s orbit would not only make the owners of such a device Rothschild wealthy but would have ripple effects throughout the world economy.

Some of the metal would probably be used in Earth orbit to manufacture goods that are impossible to make and cast in gravity. Glassy metals for example. These new products would improve the standard of living for the worlds people in ways that we cannot fathom. Some of the metal would be sent to Earth. Tons of some rare metal dumped on the worlds commodity market would spike the price down for a short time. That would in turn drive up demand to make use of the new resource on the worlds markets. Lowering the price of goods and improving the standard of living for the people of the world.

Of course the people or person who thinks of a feasible way to mine NEARs will be wealthier than Bill Gates. Wars are fought over less money. That won’t make then bad people. Improving the lot of man makes them heroes. Winners that make winners of all the rest of us… Who would begrudge them money?

Rationalism VS Fear

Thursday, September 4th, 2008

Dear Friends,

One last thing about the Russia Georgian conflict, then I’ll shut up about it… Maybe.

Russia has, since it’s breakup, Made a hard distinction about the territorial sovereignty of nations. Russia used this as justification to bypass UN sponsored arms embargos against the former Yugoslavia. Russia armed the Serbian Republic against Bosnia. It also used it’s own territorial integrity as justification for the war in Chechnya. Russia has been unwilling to sanction nations that violently put down rebellions, because of this reasoned stance.

Now Russia goes against this argument in it’s treatment of Georgia. Russia says that Georgia does not have the same rights to maintain Georgia’s territorial integrity as did Yugoslavia, Russia, or any of the other nations Russia refused to sanction from the UN security council. Why?

There is a French maxim that it is better to blunder than to make an error. Where a politician blunders in a campaign, he is only accountable to himself. But when he errs in his job he has the whole Nation to account to. In other words, A politician works for the benefit of his nation and thus the nations interests hinge on his judgment. But when he is seeking office his judgment affects only himself, (and possibly some close allies). Russia sees the encroachment of NATO into it’s former sphere of influence as a very real threat. They, (as I have discussed formerly) have every right to be paranoid. The US and it’s allies may or may not be a threat to Russia, and is almost certainly not. But a miscalculation that puts Russia at war on it’s own territory is completely unacceptable. The deeply bruised Russian psyche requires a buffer.

So here we are, Russia is still going against it’s past stance. I have alluded to the answer, it is politics. Russia‘s, and every other country in the world, own interests must be paramount. In doing so it puts the interests of it’s people as paramount. Whether this is actually true or not in practice all national governments hold this to be true, whether consciously or unconsciously.

Russia must do something to stem the advance of NATO. It’s people see this as a threat. National governments are primarily there to protect the people from invasion. Being pragmatic Russia has decided that this profound tension between it’s present and former stance on the territorial integrity of nations is necessary. Machiavelli said that in the affairs of nations where there is recourse from the sovereign, the end justifies the means. In this case the end is to stop the advance of NATO and the means is to take the side of the rebellion over the nation. Thus terrifying the other potential joiners of NATO, (who have the same imperative).

This is a case of power politics trumping international legalism, as well as trumping rationalism. When a nation is ruled by fear, rationalism takes a back seat to emotion and international legal norms are irrelevant.

The politician must keep in mind, however, that in this chaotic world in which we live, there is a thing called the ‘Butter Fly Affect’. If a small action such as the fluttering of a butterflies wings can cause a hurricane on the other side of the world, how much more unknown, and profound, are the implications of actions of power politics ?

Elitist Theory at Work

Wednesday, September 3rd, 2008

Dear Friends,

It seems to me that the nomination of Sarah Palin as John McCain’s vice presidential pick is seen as a threat to the Elite. As such it is an example of elitist theory at work.

Apparently she is a ’boat rocker’. Someone who is not afraid to rock the boat and call attention to the foibles and decadence of the elite. She has done just that in her native state of Alaska. She has not only been a partisan in pointing out the corruption of the other but she has actively attacked corruption in her own party. That is totally unacceptable to the elite.

The elite are a small clique that values above all, compliance. With the status quo, and with their power. Anything that threatens their power is to be destroyed or engulfed. If a person is shown to be too loved by the people to be destroyed they will be incorporated into the cast of the elite. In that way the egoist that threatens the status quo of the power of the elite can be muted and controlled. In being incorporated into the elite they gain a stake in the status quo. Those that can not be controlled are eliminated. History is rife with examples.

Sarah Palin must be seen as a real treat. She is being attacked mercilessly by the “unbiased” media. Even Republican elites are undermining her, (they see her as a threat as I have already pointed out). Any candidate that is put up gets a full examination. That is normal and right. A person running for office in a Democratic Republic should be known to the people. What is amazing to me, in this case, is that her daughters pregnancy is the number one news story in all the media in the USA for four days. The world is full of important news that is ignored because a seventeen year old girl is pregnant. Is that really more important than the ongoing occupation of Georgia by Russia? Or the troubles in Xingjian province in China, or the blood letting in India between Christians and Hindus, or the ongoing insurgency in the Philippines, or the Tamil tigers in Indonesia, or the protests in Thailand, the coup attempt in Ukraine, or the Bolivian constitutional referendum, not to mention the ongoing troubles in the Middle East? The “unbiased” media have given up all pretense of “fairness” (as if there ever was such a thing) and overtly taken sides. They see themselves as the Fifth Estate of government, and as such, are members of the elite and have a stake in the status quo.

The power arrayed against her is daunting. Anyone who stands up to the elite must be made of steel. They could be tempered by the fire of the “unbiased” media. Lesser alloys are made brittle and shatter, or, more often they are annealed and bend at the behest of the elite, but some few are actually tempered and can change the dominant paradigm. Time will tell if she is made of the right stuff.