The Compulsive Explainer

Debtor's Prisons are not the Answer

Until recently (1869 in the UK), Debtor's prisons were common. The logic was simple: bad people should pay for their sins by forfeiting their liberty. There was only one problem with this logic: it didn't work. It only made society at large feel self-righteous. It didn't keep people from going hopelessly into debt: there is no way stupidity can be cured - on the debtor or the lender side of the equation. 

Indeed, in our time indebtedness, at all levels, has become the basis of our economy. This may be utter stupidity, but if it is, it is widespread. The cure was supposed to be credit ratings: lenders would only give loans when they were likely to be paid back, and the credit agencies were supposed to give accurate reports about this. You know what happened: greed triumphed over all, because making bad loans was so profitable. Was this idiotic? Of course, but idiocy has become so common it was not noticed.

I have stated in another posting that Society has Become Evil. Perhaps I have exaggerated: society has only become stupid - but the end result is much the same. 

In this light, consider this part of of an article in Truthout: The Road Less Traveled: Saying No to the IMF. I quote:

Standing up to the IMF is not a well-worn path, but Argentina forged the trail. In the face of dire predictions that the economy would collapse without foreign credit, in 2001, it defied its creditors and simply walked away from its debts. By the fall of 2004, three years after a record default on a debt of more than $100 billion, the country was well on the road to recovery; and it achieved this feat without foreign help. The economy grew by 8 percent for two consecutive years. Exports increased, the currency was stable, investors were returning and unemployment had eased. "This is a remarkable historical event, one that challenges 25 years of failed policies," said economist Mark Weisbrot in a 2004 interview quoted in The New York Times. "While other countries are just limping along, Argentina is experiencing very healthy growth with no sign that it is unsustainable, and they've done it without having to make any concessions to get foreign capital inflows."

Weisbrot is co-director of a Washington-based think tank called the Center for Economic and Policy Research, which put out a study in October 2009 of 41 IMF debtor countries. The study found that the austere policies imposed by the IMF, including cutting spending and tightening monetary policy, were more likely to damage than help those economies.

The article goes on to say that Dubai has followed suit, and the sky has not fallen in. Greece, Iceland and Latvia may do the same - rather easily. Basically, you make your own currency, and carry on - much as China has done. Relying on the IMF, which is only interested in taking care of the rich countries, at the expensive of everybody else, has been a disaster. 

The solution is to work both ends against the middle: reestablish good credit ratings, and forgive debts that cannot be paid. There is no other way out.

Who Controls America?

This is a sensible question, and deserves a sensible question. The answer is simple: those in power. This is what power is: the ability to control other people - and the more people you control, the more powerful you are. It is also a matter of money, because money controls people - much more than they usually realize - because money controls jobs - for most, the most important thing in their lives.

In short, whoever controls the money controls everything - and that is the Business System, especially the Financial Industry. It is foolish to talk of The People controlling the economy, the government, or anything else. They have become mere consumers, content to vote once in a while, and used to taking orders from those above them.

The economy could be mapped as merely the flow of money: where it is, and how it moves around: an economic census. This doesn't seem like such a impossible job, but instead the economists concentrate on various indicators, as if these represented the economy itself. Perhaps a basic analysis hasn't been done because it would reveal too much about the Power Structure, which prefers to remain hidden. The people must continue to believe they are in control - when they clearly aren't.

Liberals are Useless

Chris Hedges in Truthdig

The photo is of a German woman buying a box of candy with Obama's picture on it.

Obama was and is a brand. He is a product of the Chicago political machine. He has been skillfully packaged as the new face of the corporate state. I don’t dislike Obama—I would much rather listen to him than his smug and venal predecessor—though I expected nothing but a continuation of the corporate rape of the country. And that is what he has delivered.

He goes on to say:

The qualities inherent in good soldiers or Marines, like the qualities I found among those boxers, are qualities I admire—self-sacrifice, courage, the ability to make decisions under stress, the capacity to endure physical discomfort, and a fierce loyalty to those around you, even if it puts you in greater danger. If liberals had even a bit of their fortitude we could have avoided this mess. But they don’t. So here we are again, begging Obama to be Obama. He is Obama. Obama is not the problem. We are.

He is referring to his fellow liberals here.

I have Chris Hedges latest book: Empire of Illusion, the end of literacy and the triumph of spectacle. Like many others, he describes the pickle we are in.  But he doesn't back off enough to get an historical perspective on how we got here.

Neil Postman, who followed in the footsteps of Marshall McLuhan, did a much better job of this. He masterpiece was Amusing Ourselves to Death (1985). It was translated into eight languages and sold 200,000 copies worldwide - but has since has been smashed by the landslide he warned us about: television culture.

The Power Structure of American Business

This book, which I am reading now, is by Beth Mintz and Michael Schwartz. I am finding it pleasant reading, even though it is not intended to grab everyone's attention, as the Communist Manifesto was. They acknowledge their indebtedness to Marx occasionally, as all academic theorists must, but let it go at that.

Their basic assertion is that:

Banks and other financial companies play a coordinating role in the corporate world.

They do not say, as the Marxists did, that Wall Street controls the economy. Their assertion is milder, and something they can substantiate and delineate. As you follow their reasoning, you cannot help but agree with them: the financial industry is a unique industry, and an uniquely powerful industry. This book was written in 1985, when this was just becoming apparent.

Today this is obvious - but still little appreciated or acknowledged - even as they suck our economy dry. We are distracted by our involvement in foreign wars, and this distraction is exactly what the power structure wants - and why they support them. The last thing it wants is economic democracy.

Control of the Job Market

This type of control affects more people than anything else. The days of the family farm where you could grow your own food, build your own house, raise your own horses, and sew your own clothing is gone forever, never to return - unless you want to be a Mennonite - and even they ride the airlines with everyone else when they want to move between their colonies - as I discovered during my last trip back to the States.

Everybody has to have a job, with very few exceptions. And this means fitting into some kind of organization - usually a fairly large one - and usually a corporation with little interest in its employees, its customers - or anything else. The corporations control the government that is supposed to control them - and get very huffy if anyone suggests the opposite. They are not interested in an economic recovery that will reduce unemployment, because this keeps them in control of the job market - and therefore everybody else.

Dubai in Photos

NY Times

This scene is all to familiar to Americans: high-priced real estate that nobody wants to buy. The owners are simply walking away from them and going back home. Photo #18 shows an abandoned new luxury car gathering dust.

Not long ago, Dubai was considered a miracle, and pictures of its luxury suburbs filled the Web. Now these have empty swimming pools and dead palm trees in from of them.

The bust in Dubai and exogenous shocks

I have been waiting to find out more about this; to find someone who could explain it to me. The New York Times pointed me to Credit Writedowns. Edward Harrison seems to know what he is talking about - and much better, able to explain what he knows to others.

Dubai is not an oil-rich country. It certainly has the greatest population amongst the United Arab Emirates, but oil and natural gas provide only 6% of income to the country. The country’s oil is expected to be depleted in as little as 20 years. Dubai is now much more dependent on its services like sporting events, trade and entrepôt services, and financial services and especially on property. So, when the Dubai property bubble went spectacularly bust in the credit crisis, Abu Dhabi, a UAE emirate with considerably more oil revenue, stepped into the breech in February.

Now, mind you Abu Dhabi’s sovereign wealth fund was rumoured to have lost a 12-figure sum in the financial meltdown in part because sovereign wealth funds from the Mideast recklessly poured capital into the American and European banking sector. Still, its support for Dubai calmed investors. 

He continues:

What does this tell me? First and foremost, it hints at the fragility of this recovery and the real risk exogenous shocks pose.  We are barely recovering now and a lot of debt and unemployment put us at stall speed, making the risk posed by events of this nature that much greater.

More importantly, however, the Dubai World events underline the unpredictability of exogenous shocks. All of these potential crisis situations — dollar carry trade unwind, debt crisis in the Baltics, oil price spike, an unexpected surge in interest rates, war in the Middle East — are still there lurking in the background. We don’t see coverage in the press on them everyday, but they are still there

I have been optimistic about the near-term prospects for the global economy in large part due to the myriad pro-cyclical effects of recovery. Longer-term, however, there are some serious obstacles to a sustainable recovery.  This is not a garden-variety recession and recovery. It is a recession within a longer-term depression.  And while we are in a technical recovery, I believe much of the fundamental problems which triggered this downturn are still there, lurking. The debt troubles at Dubai World bring this point home.

Did you get that? We are in a recession within a longer-term depression. Follow up on some of these links. I like this one about a crisis in 1931 in Austria.

I am a Successful Failure

I successfully evaded the collapse of America. I certainly did not plan this, I had no idea a collapse was going on. At one point, it looked like I would have to kill myself, because I was not employable, but that make me wake up and consider other possibilities.

This morning, it occurred to me that my history resembled that of a friend of mine in Silicon Valley. His family were German Jews. They did not take their Jewish identity or their German identity too seriously - and this enabled them to survive. When the Nazis came into power they simply moved to South America. When the war was over, and the German economy had recovered, they went back to Germany. As a result, my friend was tri-lingual: German, Spanish, and English. I knew a number of young people in Silicon Valley who were fluent in this combination. Their families had also gone with the flow: going where it was safest and where skilled people were needed. If their lives were weren't working in one country, they moved somewhere else.

I have urged some of my Silicon Valley friends to do something similar: to move to India and set up a software development business there - or in China. But they are horrified by the idea: they are too comfortable in America, and they are determined to stay on - as Obama says: stay the course, even if the course does not seem promising. That have not realized that America is collapsing - and they will not until it is too late. I have been fortunate: I was kicked unceremoniously out of the nest, and I had to fend for myself. They will struggle along, doing the best they can in a failing country, ignoring the obvious - and will end up nowhere.

How come I was so lucky? Because I have a strong sense of ethics. I couldn't put up with the unethical behavior in the high-tech world - and with its self-destructive behavior. And it couldn't put up with me either. If I could not conform, I could get out - which I did.

Fortunately, I had a safety net: my Social Security retirement benefits. These are not adequate for the States, but a handsome income down here - once you learn how to live as a local. This has also given me a new perspective on life in America: I can realize how lucky I am - and how unlucky America is. The Dollar is failing, but unless if fails completely, I will survive.

Running out of Uranium

Slashdot
The Energy Collective

Uranium mines provide us with 40,000 tons of uranium each year. Sounds like that ought to be enough for anyone, but it comes up about 25,000 tons short of what we consume yearly in our nuclear power plants. The difference is made up by stockpiles, reprocessed fuel and re-enriched uranium — which should be completely used up by 2013.

Breeder reactors, which in theory should produce more fuel than they consume, have in practice been disappointing.

Dr. Micheal Dittmar summarizes the nuclear waste disposal problem succinctly:

The well known use of nuclear fission energy in PWR's (Pressurized Water Reactor) is unsustainable. The problems related to long-lived transuranic elements, e.g. plutonium and heavier elements, as well as nuclear waste in general, are unsolved.

These facts are not what our conservatives would have us believe. They are controlled by the electrical power industry that wants a return to massive subsidies for nuclear power, which our incompetent American companies have never been able to deliver.

Dr. Dittmar thinks we should concentrate instead on the Liquid fluoride Thorium Reactor or a Thorium Molten Salt Reactor, and urges anther Manhattan Project to pay for their development. This would cost much less than the large solar or wind generation farms now being planned. And Thorium is abundant.

However, voices crying in the wilderness do not reach many ears.

Mexicans are Trash

If you have ever lived close to an Hispanic Ghetto, you know what I mean: the worst kind of people end up there. This is true of any ghetto, the worst places imaginable. It is hard to imagine anyone wanting to help them.

However, I had a girl-friend in Silicon Valley who was Mexican-American, her family had worked as migrant agricultural workers. But she was different: a nun trained as a nurse, who dropped out of that life and became a social worker. But she still defended her people vigorously. I didn't dare say anything critical about them. After a while, I got to see her point: these people deserve a chance for a better life - after all, they are people. It was hard to argue with that.

During the Contra War in Nicaragua, a Christian organization called Witness for Peace sent observers to Nicaragua to witness the atrocities perpetrated by our allies. I had to admire their guts. Who doesn't want to help the underdog? I am still on their mailing list and donate a little to them. Recently I got another appeal:
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In May, Roberto died in the Arizona desert while trying to make his way from his native farming community in southern Mexico back to a low-wage restaurant job in Los Angeles. The Witness for Peace staff in Mexico consoled his dismayed father, Pantaleon-an elderly man with tears streaming down his checks - after he was told the search and rescue operation for Roberto in the Arizona desert had been called off.

"A person should not have to risk their life to work," Pantaleon said as he wept. Roberto was a good son and a hard worker. He had a dream shared by the children of farmers the world over - to own a piece of land to farm alongside his parents. 

But by the time he turned sixteen, Roberto already understood that jobs paying a living wage in post-NAFTA Mexico were almost non-existent for farmhands like him. That year. he risked his life and followed another 500,000 Mexicans north, across the border and into the U.S.

After five years in El Norte, Roberto missed his family and native Mexico and so traveled home this April. His father, Pantaleon, was overjoyed to see him. But without enough money saved to buy a piece of land and with no jobs to be found, Roberto left again for the border.

He died just days later.
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A sob-story obviously, but a true one. I can see both sides: the desperate migrant workers who only want a job, and the Americans who want to keep foreigners from destroying their way of life. 

One cannot reason with the desperate migrant workers, but one should be able to reason with resentful Americans. Unfortunately, this is not usually the case. Human rights are not something they are interested in.