The blog of a North Country Swede!

Tuesday, January 22, 2008

The day the debt came due

Joseph Racioppi posted this in a column of his titled Subprime mortgage mess just a symptom of what ails us on NJ Voices yesterday, Monday, January 21 — Martin Luther King Jr. Day — when Wall Street was closed:

Our entire economy is debt based. The Federal Government is in debt $10 trillion. New Jersey is in debt billions and billions and many Americans are "maxed out" on credit cards. Rather than addressing the problem of a debt based economy, our leaders try to find more ways of continuing the spending that runs the economy. When our leaders, after September 11th, tell us to "go shopping", that says a lot.
This was my response for today, Tuesday, January 22:

How prescient of you, Joe. This may be the day the debt comes due.

The above the fold main story on the front page of the NY Times this morning was headlined: Awaiting Wall Street's Open, Asia Market Plunge.

The lead paragraph read:

"Stock markets across Asia plummeted again on Tuesday, and European markets saw volatile trading, as anxious sellers worried about the global ramifications of a slowdown in the United States."

Here's the link: http://www.nytimes.com/2008/01/22/business/worldbusiness/23cnd-asiastox.html

It's going to be an "interesting" day: "The Day the Debt Came Due"?

Do you think we the people will finally get it ... as Pogo told us: "We have met the enemy and he is us" ... or will we in more typical fashion start looking for scapegoats?

Personally? I'm rereading Thomas Paine's Common Sense ... and it is making a lot of sense.

Sunday, January 20, 2008

Need I add, "Duh!"?

Hoo boy!

The New Jersey Star-Ledger poses this Q&A in its editorial, Foreign money to the rescue, January 19:

"Is foreign investment a bad thing? It is not."

This was my comment in response:

That's like asking if drinking water is a bad thing. Depends on how much you drink. Too much water and you upset your electrolytic balance, the brain swells, and you die ... or something like that.

Let's start with some economic basics that the common person can understand. (I have to do that because I am not an economist and I have never read one who has ever gotten economics right over time outside of tightly controlled models ... which is kind of like pouring sand through a funnel into neat little cone-shaped mounds on a beach on a windless, sunny day below the high-tide mark and thinking they are going to last ... but I digress.)

First, if you don't produce something of real value, you are not creating wealth. Money has no "real" value, it has "virtual" value relative to its ability to help exchange things of real value between strangers ... close and far. Money has value if the two parties to a transaction using money BELIEVE the pieces of paper they are using has the exchange value (translatable into real things of real use value -- like food that actually keeps us from starving to death) printed on it ... or something like that.

Now if you take something of real value and you auction it off to people who want it (think it desirable and worthwhile to own, like a house -- hint, hint) with an excess of money to spend (either their own or what they can borrow ... 'cuz that's the job of the Fed to insure we have enough liquidity to get the things we want 'cuz we're a nation of consumers), they will in all likelihood pay more for it than they would have otherwise. If they then turn around and get even MORE money for it than what they paid because others in turn bid higher with the extra money they have or can get ... well, the PRICE of that something will go up. Do I have to say, "DUH!"?

Let's not get too complicated here ... if a nation reduces the amount of real things of value that it produces ... and starts a bidding war on the things of value it does produce ... while the Fed keeps printing money so we can all bid as high as we want for something ('cuz -- you guessed it -- we're consumers now!) what do you think the outcome will be?

And you have economists with mathematical models who tell us this imbalance of real production to virtual wealth is what is real? and can continue indefinitely? and folks fall all over themselves BELIEVING it when they see with their own eyes that the real wealth of our nation has been deteriorating ... while the dollar amount (virtual wealth) of the money supply has been growing?

And now that our money has been siphoned off to the oil producing nations and the goods producing nations because our vaunted economic leaders thought it better to pass along windfall profits in a "free" market rather than "tax" ourselves for our own rational benefit ... you say there is nothing wrong here because this is the way the "free" market is supposed to work?

And I'm not supposed be laughing until I start crying?

From my notes about Milton Friedman and the so-called "free" market:

Milton Friedman, the guru of profoundly influential monetarist and laissez-faire ideas of the past few decades has pulled the plug on free markets ... maybe without realizing it.

From NPQ, the New Perspectives Quarterly:

Free Markets and the End of History
Friedman | ... "Free markets" is a very general term. There are all sorts of problems that will emerge. Free markets work best when the transaction between two individuals affects only those individuals. But that isn't the fact. The fact is that, most often, a transaction between you and me affects a third party. That is the source of all problems for government. That is the source of all pollution problems, of the inequality problem. There are some good economists like Gary Becker and Bob Lucas who are working on these issues. This reality ensures that the end of history will never come.
Intrepretation: Because transactions using the medium of money ALWAYS affect a third party, there is no such thing as a "free" or "unfettered" market in terms of the customary definition of the economic term. The reason for this is the clear fact that all costs incurred in the production and distribution of goods and services are not paid for out of the monetary selling price of the goods and services ... only the reimbursement of "ownership" costs ... so what is "free" about free markets is their being free of the costs they incur to others than the legally defined owners of the goods and services for sale--sellers and buyers.

Read that again: Because transactions using the medium of money ALWAYS affect a third party, there is no such thing as a "free" or "unfettered" market in terms of the customary definition of the economic term.

Need I add, "Duh!"?

Y'know, if something is too complicated for us common folks to understand ... when it affects our daily lives ... then we probably should figure something else out ... because the brilliant idiots are gonna screw things up trying to get more than their fair share of the real wealth ... which as the Good Book laid out: greed ... aka the love of money ... is the root of all evil.

All us working folks are asking is to give us the opportunity to go to work and create real wealth, and then be paid our fair share of what we have helped create. That's pretty darn simple. You'd think these geniuses could figure that out. Or ... could have figured out how not to screw it up.

Got a lot of "Duhs!" in this piece.*wink*

Tuesday, January 08, 2008

Too late for Hillary to go authentic on us

Apparently Hillary Clinton teared up yesterday in her bid to seek the nomination of the Democratic Party for president.
Hillary Rodham Clinton's eyes welled up and her voice broke repeatedly Monday as she talked with voters in a restaurant about her campaign for the presidency.

The former first lady was making a last-minute pitch for support as she spoke on the eve of the state's primary, with polls showing her trailing Democratic rival Barack Obama.

Asked by a sympathetic voter how she keeps going in the grueling campaign, she replied, "It's not easy. It's not easy."

"And I couldn't do it if I just didn't, you know, passionately believe it was the right thing to do," she said, her voice catching.

-http://www.huffingtonpost.com/2008/01/07/hillary-tears-up-on-the-c_n_80254.html

I can try to understand her feelings. I have witnessed them in others all too frequently now that I am in my 70th year. Here she is having lived her whole life in pursuit of a goal ... clawed, scratched her way to the top of the heap, done everything she thought she had to do to earn the prize ... remnants of opponents strewn left and right ... and it begins to dawn on her that it's been in vain. In fact, the very life she lived is now her biggest obstacle.

It's not fair!

I think she is really saying, "It's not fair, Bill!"

Friday, January 04, 2008

A Political Tsunami: Obama's win in Iowa

For those of us who remember Bobby Kennedy's win in California before he was assassinated, Barack Obama's win yesterday in Iowa is a similar earthquake. The energy generated by the audacity of hope in our youth will again transform an epoch.

The youth turnout in support of Obama was huge. It represents an opportunity for we the people to alter the course of our nation in a historic manner. This is a politcal tsunami.

It will be interesting to watch the old guard politicians try to plug the breached dikes.

Note 1: Originally posted as a comment on the Star-Ledger's NJ Voices website in response to the John Farmer's column, For two also-rans, it's crunch time.

Note 2: According to the results of the entrance polls for the Iowa caucuses posted on CNN's website, Obama was supported by 57% of the 17-29 age group, and 42% of the 30-44 year olds.
(See http://www.cnn.com/ELECTION/2008/primaries/results/state/#IA )

Thursday, January 03, 2008

New Jersey MUST apologize for slavery

Out of our reflections on our past, our history ... we create a narrative of existence that we then teach ourselves ... to guide us into the future.

We as a people write our bibles, our stories ...

It takes time and distance to put things in perspective ... and correct the lies we previously told ourselves out of false understanding, a false narrative ...

False in the sense that our beliefs were wrong because we had been taught a false narrative of our past ... and these beliefs were proven wrong when we finally had the courage to examine them in the light of new evidence, new revelation.

An apology for slavery is not just important, it is necessary. We need to plant that marker in our collective consciousness, our narrative of our existence ... reminding ourselves how wrong we can be at times.

Note: Originally posted as a comment on the Star-Ledger's NJ Voices website in response to the editorial, Apologize for slavery: