Sunday, March 08, 2009

Can someone please explain Capitalism to me?

I don't understand. We have to give trillions of dollars to keep a system afloat that benefits the few over the many. But the only way the system stays alive is if the many give....

We are faced with a real chance to change the world. We are living in a world historic moment. But all we will do is prop up the system again. Until the next crisis.

Trillions of dollars.

We should be focused on making energy free...
We should make every home an energy producer through solar power and recycling. But we won't.

We will just give till it hurts so the rich people who run the world can keep running the world because we are so certain there are no alternatives to the mixed economy we have now....

We deserve what we get....

17 comments:

Lisa said...

I think the whole purpose of capitalism is to keep the rich - rich. Money gives you options. Now if you don't have money, you might make money, but lately it seems that when THEY talk about capitalism, they mean profit at any and all costs.

You want justice? Humanity? Equality and fairness? Well, the way they define capitalism, you should only have those things to the extent that you can afford them.

Pretty depressing, aren't I?

Dr. Monkey Von Monkerstein said...

And they tell us every day that capitalism is the best system ever, I know they're just fucking with us.

Romius T. said...

Very true guys!

Steph said...

"There's another reason for working inside the system. Dostoevski said that taking a new step is what people fear most. Any revolutionary change must be preceded by a passive, affirmative, non-challenging attitude toward change among the mass of our people. They must feel so frustrated, so defeated, so lost, so futureless in the prevailing system that they are willing to let go of the past and change the future. This acceptance is the reformation essential to any revolution. To bring on this reformation requires that the organizer work inside the system, among not only the middle class but the 40 per cent of American families - more than seventy million people - whose income range from $5,000 to $10,000 a year [in 1971]. They cannot be dismissed by labeling them blue collar or hard hat. They will not continue to be relatively passive and slightly challenging. If we fail to communicate with them, if we don't encourage them to form alliances with us, they will move to the right. Maybe they will anyway, but let's not let it happen by default"-Rules for Radicals

Girl Friday said...

apparently the rest of the world think we are money hungry scavengers who would sell our own kids to get to the top.

hmmm...

no_slappz said...

romius, how do you interpret the borrowing binge of the last several years?

Virtually anyone was given a mortgage after merely promising to repay the money. Nothing more. Just signing a note promising repayment.

Are lenders like drug dealers, seeking dependent people with habits they cannot control?

Do you believe in personal responsibility? Should borrowers look at their finances and determine their capacity to send monthly payments to a creditor? Or is it okay for borrowers to ignore good sense and grab every dollar a lender will give simply because it's there?

Can individuals be trusted to act sensibly on their own behalf? Or are individuals inherently out of control? Do people need limits in their everyday lives set by the government?

Should businesses, at times, refuse to give customers what they seek?

Are No-Documentation Loans illegal?

Is it legal to lie on loan applications? Such as when a borrower asserts he has the assets and income to repay his debt?

Smoking cigarettes kills millions of people. Should manufacturing, selling or smoking cigarettes be made illegal? Or do people have the right to develop lung cancer and/or cardio-pulmonary disease?

Is abortion murder? The Supreme Court says a fetus is not a human. The Court also says it does not know exactly when a fetus becomes a human. The court concludes that as long as a fetus is not a human, the fetus is not protected by the Constitution. Therefore it is legal to end the existence of the unprotected fetus.

Does the refusal of the Supreme Court to acknowledge WHEN the developing human organism becomes "legally" human mean abortion is not murder?

Free Energy? You obviously know nothing about science and engineering. And nothing about human inventiveness either.

Like oil itself, sunlight, wind and moving water are free. But engineers, scientists, and all the people who build the equipment that turns sunlight, wind and moving water into electricity expect paychecks for their labor.

Generators that convert wind and water motion into electricity cost real money. The panels that convert sunlight into electricity cost a lot of money. And they use hazardous materials in the energy conversion process.

However, wind generators and solar panels are avaiable today. Their prices are already heavily subsidized by governments around the world. Nevetheless, electricity from solar and wind sources is still more expensive and less reliable than electricity produced by conventional methods.

People who believe there is an abundant and cheap energy source that powerful leaders keep out of reach of most of the global population are people who believe in flying carpets and perpetual-motion machines.

As of today, oil is the least expensive, most dependable and most flexible energy source -- ever. It is the vitamin that has given the world's leading economies much of their strength.

Meanwhile, we know a lot about energy. We know there are NO elements on the planet that can be used to make batteries that are significantly superior to the best batteries available today.

There's no Moore's Law, semi-conductor experience ahead for batteries or solar panels. The gains will be incremental -- inches gained here and there. No Philosopher's Stone turning a pound of lead into a power station.

You need to understand what science and engineering can do, and you need to understand the timetable.

Leonardo da Vinci was a pioneer in flight. He was trying to fly in 1500. It took 400 more years before the Wright Brothers got a plane into the air. Flight has advanced rapidly in the last century.

The first battery was made in 1800. After two hundred years, battery technology has advanced like a speeding glacier.

Scientists and engineers have learned that it is far easier to design portable devices that use less electricity than it is to develop batteries that hold more.

Romius T. said...

romius, how do you interpret the borrowing binge of the last several years?

A. As the only way to extend the life of late-capitalism

Virtually anyone was given a mortgage after merely promising to repay the money. Nothing more. Just signing a note promising repayment.

A. True, but who can you blame for that? the borrower? they always need money.

Are lenders like drug dealers, seeking dependent people with habits they cannot control?
yes, but they assumed (wrongly) that they could control borrowers habits.

Do you believe in personal responsibility? Should borrowers look at their finances and determine their capacity to send monthly payments to a creditor? Or is it okay for borrowers to ignore good sense and grab every dollar a lender will give simply because it's there?

A. no. Of course (if they are interested in self survival. I would.

Can individuals be trusted to act sensibly on their own behalf? Or are individuals inherently out of control? Do people need limits in their everyday lives set by the government?

NO. YES. That all ready exists.

Should businesses, at times, refuse to give customers what they seek?

They do. in the future it will be much worse. I predict the future will hold the only way to exploit "value" (in the Marxist sense) will be to find ways to LIMIT your customer base to GOOD customers...so long to buying what ever you want whenever you want to.

Are No-Documentation Loans illegal?
of course not.

Is it legal to lie on loan applications? Such as when a borrower asserts he has the assets and income to repay his debt?
ummm maybe,maybe not....

Smoking cigarettes kills millions of people. Should manufacturing, selling or smoking cigarettes be made illegal? Or do people have the right to develop lung cancer and/or cardio-pulmonary disease?

If you assume (and you must) a RIGHT to sell what ever you want --then you would (in theory) at least be held accountable (financially and morally and legally, so if your product kills then you go to jail...you go bankrupt..so yeah sell whatever you want ..when you kill someone you get to go to jail and lose all your money...I say end the protection that multinational incorporated firms have,,,,

Is abortion murder? The Supreme Court says a fetus is not a human. The Court also says it does not know exactly when a fetus becomes a human. The court concludes that as long as a fetus is not a human, the fetus is not protected by the Constitution. Therefore it is legal to end the existence of the unprotected fetus.

Abortion is not murder like war and the death penalty...a fetus lives if AND ONLY if the MOTHER wills it

Does the refusal of the Supreme Court to acknowledge WHEN the developing human organism becomes "legally" human mean abortion is not murder?

yep

Free Energy? You obviously know nothing about science and engineering. And nothing about human inventiveness either.

nothing is free...but you can substantially reduce the impact that energy consumption has on the environment...this will initially be VERY expensive....but the costs outway the benefits....A number of plans already on the books make homes energy producers rather than consumers..of course this will cost money...money that is better spent here than abroad on multinational oil companies and states that hate Americans

Like oil itself, sunlight, wind and moving water are free. But engineers, scientists, and all the people who build the equipment that turns sunlight, wind and moving water into electricity expect paychecks for their labor.

Certainly. But they are relatively cheap compared to for profit CEO's who want 500 million dollars a year...we can offer free education and other entitlements to get them on board.

You will never stop paying for energy but we can get the exchanges to be better...if the world got on wind and solar all we need to do is maintain the current grid (and look for scientific improvements..which by the way are almost always s government funded...all you have to do is look at medical research to understand this...any understanding of medical research quickly comes to the point that private research is unimportant and useless if not dangerous (ask Nigeria)

Generators that convert wind and water motion into electricity cost real money. The panels that convert sunlight into electricity cost a lot of money. And they use hazardous materials in the energy conversion process.

Of course....the real point is that they would be harnessed for longer periods of time and the other point is that if we spent trillions of dollars like we do now on fossil fuel extraction that we would all benefit (in the long term) maybe a few hundred years from now....WE WILL run out of oil eventually...we might as well get started....look gas and oil is cheaper than anything we have now...of course...we subsidize the shit out it...all I am asking is that we get renewable energy a few trillion dollars too..our childrens children will thank us

However, wind generators and solar panels are available today. Their prices are already heavily subsidized by governments around the world. Nevertheless, electricity from solar and wind sources is still more expensive and less reliable than electricity produced by conventional methods.

Thats refusing to understand how much subsidy we put in gas/oil etc...further more and is a basic misunderstanding of capitalism on your end..capitalism is all about Externalizing costs to others...so of course oil is cheaper..second there is no market for alternative fuels...the science to get us cheaper is there ,,,,all we need is markets,,, the government must become that market...all you have do is look at light bulbs...those energy savers are everywhere now..all due to gov. buying power ....the price has come down by 20 times the original....nothing of that magnitude needs to happen for alternative fuel...eventually we WILL be running on alt fuel because we WILL have to....might as well get started...if you are thinking really long term how will civilization exist in 20,000 years without oil? it won't/ we need to get started soon we only have a few hundred years of cheap fossil fuels left...

People who believe there is an abundant and cheap energy source that powerful leaders keep out of reach of most of the global population are people who believe in flying carpets and perpetual-motion machines.

those people are fools.

As of today, oil is the least expensive, most dependable and most flexible energy source -- ever. It is the vitamin that has given the world's leading economies much of their strength.

Meanwhile, we know a lot about energy. We know there are NO elements on the planet that can be used to make batteries that are significantly superior to the best batteries available today.

There's no Moore's Law, semi-conductor experience ahead for batteries or solar panels. The gains will be incremental -- inches gained here and there. No Philosopher's Stone turning a pound of lead into a power station.

You need to understand what science and engineering can do, and you need to understand the timetable.

Leonardo da Vinci was a pioneer in flight. He was trying to fly in 1500. It took 400 more years before the Wright Brothers got a plane into the air. Flight has advanced rapidly in the last century.

The first battery was made in 1800. After two hundred years, battery technology has advanced like a speeding glacier.

Scientists and engineers have learned that it is far easier to design portable devices that use less electricity than it is to develop batteries that hold more.

A.) Batteries have come a long way...without much support or any help...just using private (always the worst way to do basic research in science) while what you say is true in some cases...I don't agree that your conclusions about what the case CAN be are...

We spent 11 trillion dollars developing nuclear weapons...if we spend a fraction of that on basic science and retooling ourselves the dividends will pay...

We aren't going to get rid of oil overnight....where will all the cars go?

The real question is WHERE should we invest our resources?

In alternative energy sources that offer fewer (despite your claims) environmental problems? Or continue with what we know will not work in the future....should we abandon the the third world to unclean fuel sources?

no_slappz said...

Romius, here are a few facts about me. My undergraduate degree is in engineering and I have spent a number of years on Wall Street. My Wall Street jobs include selling stocks and bonds, portfolio manager running a $200-million mutual fund, securities analyst and contributor to the financial press.

I believe scientists and engineers can develop alternative energy supplies and I know the world will run out of oil in less than 200 years if we continue to consume it at current rates.

I also know science, engineering and government go down blind alleys and make grave mistakes.

Regarding the repayment of borrowed money, you said:

A. True, but who can you blame for that? the borrower? they always need money.

I see. Your response implies that you believe people living in your Marxist utopia will have no need for money. It also says you believe humans are undependable; they will not honor commitments they have made. And yes, I blame the borrower. The borrower willingly accepts the responsibility of repaying his debt when he signs his loan documents – a 100% voluntary choice.

You responded to another series of questions with answers expressing your belief that humans are idiots who need the control imposed by a repressive government. Obviously your marxist regime will provide the repression.


In another response you said that people shall no longer get to buy what they want in the future. This is your way of saying that our current abundance of goods and services is bad because some people lack the money to buy everything they see. I think you can find your ideal form of marxism in North Korea, where everyone has nothing and there’s nothinganyone can do about it.


I asked you about the legality of lying on loan documents and you said you were not sure. Let me set you straight. It is illegal to lie on loan documents. Lying on a loan form is an act of financial fraud. If the government applies the criminal code to our current mortgage problems, it will file a huge number of cases against buyers who lied. If the government ignores the criminal issue of lying borrowers, then it is declaring that fraud is permissible. If the government willfully ignores fraud among borrowers, lenders will lend only to people who provide overwhelming proof they can and will repay their loans.


I asked you about the legality of smoking. You said if a product is deadly then its maker should go to jail. But we know cigarettes are deadly. The warning has been on the label of every pack for 45 years. We all know people who died from smoking. We’ve all been told cigarette smoking will kill you. Despite the warnings, the death toll and personal connections to the dangers, people still smoke. This seems to confirm your view that people are idiots who must subject themselves to government control.

But our federal, state and city governments depend on tax revenue from cigarettes. Does this mean that government is as irresponsible and brainless as the people it controls?

I asked you about abortion. You responded that a woman controsl the life and death of a fetus within her. It is legal for a woman to have a “late-term” abortion, which means an abortion performed almost any time before actual delivery – up to the nine-month mark.

At what point in the nine-month gestation period does a fetus switch from its non-human status to human status, when it gains the rights and protections of the Constitution?

The argument used by the Supreme Court that permits abortion is the same argument used by the Supreme Court to permit slavery. Both depend on the same device of sidestepping the real question and substituting something else. The Court declared that every human in the US is protected by the Constitution. But, the Court also said a fetus is not a human and is therefore not granted the right to life, liberty and the pursuit of happiness given by the Constitution.

More than a century earlier, the Court ruled that blacks were not human, therefore they were not protected by the Constitution. The Court affirmed its position on the non-human status of blacks in the 1857 Dred Scott case, which upheld the rights of slave-owners. What is the difference between the Supreme Court’s position on abortion versus its position on slavery? It seems to me you should believe in the legality of slavery.

On the energy question you say that switching from oil to something else will incur VERY high costs. Your estimate is vague. In fact, the reason only a few people drive Rolls-Royces is their VERY high cost. A better example is the cure for AIDS. A massive scientific assault on AIDS has been underway for 25 years. But NOT ONE person has been cured. No vaccine has been developed and no cure has been found. We have learned how to improve the lives of AIDS patients and we are moving in a promising direction. But no one knows if we are truly on the right track to discover a cure or a vaccine. Twenty-five years of work and we are still looking.

Thus, a Trillion Dollars cannot buy a cure today. Do you think the solution to energy problems is easier? Money helps, but it takes Genius. As it happens, Einstein’s father was a manufacturer of batteries. Maybe the family gene pool and Albert’s early exposure to chemistry combined to give the world one of its greatest minds. However, no government has had any luck at creating genius. It arrives on its own, if the setting is right. Never happens in marxist settings. In fact, genius is always the most dangerous enemy of marxist states.

Meanwhile, is it even necessary to cure AIDS? Even if the cost is Trillions? Contracting AIDS is like contracting lung cancer. If people avoid certain behaviors they will not develop AIDS or lung cancer. Or putting things another way, we are spending mind-boggling amounts of money to cure people of their reckless willingness to jump off a cliff.

Tell me why you think the benefits of developing alternative energy sources outweigh the huge costs? Tell me why it matters today? When we have vast quantities of low-cost oil, natural gas and coal to burn, why are some people determined to spend immeasurable amounts of money to replace them? When we have a nuclear industry that supply electricity needs forever, why do people want to spend trillions on alternatives?

You mentioned the pay of CEOs as though it matters in the overall calculation of costs. This shows your absence of financial knowledge. CEO paychecks are insignificant. Some CEOs receive big paychecks. Enough to make them individually wealthy. But the population of the US is 305 million. Meanwhile, the biggest companies are part of the Standard & Poors 500. That’s 500 big companies. That’s 500 well paid CEOs. Five hundred people out of 305 million. If all 500 donated their annual paychecks to the US Treasury, the money would run the country for about one minute. Maybe less.

Meanwhile, there are more well-paid entertainers and athletes than CEOs. Should the government impose income and pay restrictions on them?

Wind and solar energy are limited by Nature. The winds circulating around the globe cannot and will not increase because we want more. The Sun transmits almost exactly the same amount of energy to Earth every day. For any practical discussion, the amount of solar energy striking Earth will never change.

But the population of Earth will increase. In 1950 it was 2.5 billion. Today we are at 6.8 billion, and rational estimates predict a population of 9 billion by 2040. A growing percentage of Earth’s population is enjoying the benefits of increasing prosperity.

That means per-capita energy consumption is rising. Per-capita energy consumption for transportation, for heating and cooling, for electronics of all forms; they are all rising. Thus, in the aggregate, energy consumption is growing fast. That’s a condition that will not change. Unless people are foolish enough to subject themselves to dictators.

Despite your claims to the contrary, you really do believe in flying carpets and perpetual motion machines. Meanwhile, you claim we “might as well get started” on alternative energy sources. You are woefully behind the times. These efforts have been underway for decades. But the results of research stink.

The alternatives are only viable if they cost the same or less than existing energy sources. They are only good if they offer an advantage.

As I mentioned, solar panels are made with a hazardous form of cadmium. First, this stuff is tough to get. Second, you and the others who believe in solar power ignore the costs – both financial and environmental – that are part of this alternative.

Thus, when people suffer health impairment from exposure to the hazardous chemicals in solar panels, the lawsuits will fly. Solar panels will become the new lead paint. If you think people will become less litigious over solar energy risks, you are amusingly naïve.

You also claimed that oil and gas already receive a generous subsidy. Explain your statement and include some numbers. You also claimed there is “no market for alternative fuels.”

Nonsense. But real markets exist only for competitive products. Thus, even though wind and solar energy production is subsidized, it costs more than conventional alternatives. Therefore, only a narrow group of consumers will choose them, and they will choose them for non-financial reasons.

That raises the issue of fiduciary responsibility – spending money wisely.

You went on to imagine life on Earth 20,000 years in the future. Get serious. Who cares? We cannot predict the weather more than a week in advance. We cannot reliably predict stock prices. We have no idea if a plague will wipe out human life.

An honest person would admit that the world’s greatest visionaries are right slightly more than half the time. Thus, prognosticators are wrong almost half the time. Betting the future on an uncertain outcome is about as dumb as one can get. The smart bet is not betting.

As for your example of light bulbs – you’re making me laugh. Again, your ignorance is showing. It is unfortunate that so many people are so completely illiterate when it comes to science and technology. There are some definite and inflexible laws of physics and chemistry that determine the results of energy conversion. Even if we develop near perfect conversion devices, the number of devices will soar due to the mix of population and prosperity, thereby increasing the demand for energy by huge percentages.

You and most others seem unwilling to accept the realities of AGGREGATE Energy Consumption.

Meanwhile, you are wrong. Batteries have NOT come a long way. There have been advances since 1800. But the best batteries on the planet hold very little energy and weigh a lot relative to the energy in them.

With respect to electric cars, two gallons of gasoline contains a lot more energy than the best batteries available to power electric cars. You can be certain that almost no one except a person with money to burn will buy the Chevy Volt when it hits the market. The car is expected to appear in showrooms in 2010. I doubt it. GM has already said it will cost $40,000. How many people will spend $40,000 to buy a car that goes 40 miles on one battery charge?

Bottom line, you are wishing for the arrival of a dreamland of science and economics. Humans will disappoint you. If you want to know what can be done, then you have to study real science and real economics, not the lunacy of uninformed dreamers.

Romius T. said...

I think this post have denigrated into becoming a flame war...

I will leave you with one figure that you requested..

"Meanwhile, there are more well-paid entertainers and athletes than CEOs."

18.4 billion in Wall street Bonuses is greater than the domestic hall of all films in the USA.

Doubtless you will suggest they are not all CEO;s....

Either way I am not sure we are going to settle anything, much less even take part in a real debate...a real debate does not take one side;s viewpoint and extend it to the point of silliness.

We were both at fault.

I just bore easily of that stuff.

Though by all means continue if you wish...lol.

Did I use the term Flame wAR?

How 1990;s of me...

no_slappz said...

romius, I wrote:

"Meanwhile, there are more well-paid entertainers and athletes than CEOs."

In other words the NUMBER of well paid athletes and entertainers is larger than the NUMBER of well paid CEOs.

You responded:

"18.4 billion in Wall street Bonuses is greater than the domestic hall of all films in the USA."

I referenced the number of people and you responded with a dollar-figure.

However, to extend your line of thinking, you ignored the revenue flowing to professional sports as well as all the money earned by non-movie/TV entertainers. Musicians/bands, for example.

You said:

"Doubtless you will suggest they are not all CEO;s...."

True. The vast majority of well-paid people on Wall Street are NOT CEOs. There are only a handful of CEOs. Fewer after the failure of Lehman and acquisitions of Bear Stearns and Merrill.

Furthermore, roughly 40,000 people in NY City pay a huge percentage of NY income taxes.

Anyway, there is a huge comprehension gap in the mix. People with no understanding of economics and finance want to set the new rules -- a truly frightening development.

Romius T. said...

Dear No SLappz,

Let me try responding again.

Let me tell you something about me.

I never graduated from high school. I never graduated from college. But I do know that accepting forms of argument from authority can be a fallacy.

I am sure that was not your intention when you dropped your transcripts in one of the last posts.

One good thing is that you won't have that worry with me. I have no such credentials.

In my initial response to you I see that you may not have caught on to some of the sarcasm I was using.

For instance: I answered "I did not know" if lying on loan documents was illegal or not.

If the lying was "fraudulent" it might have been illegal. In many cases no LYING was needed as many loans simply required no assurances of income as you have rightly pointed out. However; if the "lying"was there only because there was a "technicality" for using that kind of language but there was a gentleman's agreement between the two parties to do things like: renegotiate the interest, or sell the property at a higher price if the borrower got in trouble. Then the lenders only recompense may be to sue in civil court.

Lying on forms MAY have been illegal but "the intent of the lying" would be germane here.

The legality of many "loan pitches" has come into question as well. So in many cases the fraudulent nature of the transaction (you seem so disgusted by) was not in fact the case of your maligned and scapegoated borrower. (Who you seem to assume never had the intention of repaying his loans.)

I think the situation is murkier than you initially suggested in your premise (the question).

For one, I don't believe the breakdown of the financial system can be accounted for by simple moralizing like bad borrower or(even evil lender). I think there were systematic

If we wish to discuss the moral ramifications of the last few years I think it would be safe to say that there was a lot of greed on both ends. (Making bonuses & interest for lenders and getting access to more money than many borrowers should have had a right to think was possible in a market based economy.)

I DO think there was a lot of fraud by borrowers who took advantage of lenders.

(Who by the way don't have to lend...)

You never mentioned the evil lenders so I have to.

I think fraud of a massive scale happened from the lenders themselves...I think reckless gambling occurred...

I think distilling everything in this crisis down to lying borrowers is simplistic and a lazy form of moralizing.

Here is a PBS (this Amercian Life) special that attempts
to analyze the systemic causes of the financial crises:

http://www.thislife.org/Radio_Episode.aspx?sched=1242

It is worthy of your time.


Your ideological need to reduce social phenomenon to individual responsibility stopped before it ever got to the banks and the lenders themselves.

Don't they have a responsibility to vet loans, not to engage in fraud too?

The lenders have the ultimate responsibility for okaying loans...but it's funny that just the borrowers incurred your wrath.

I would ask why that is.

I think the answer is pretty obvious.

Is it because you can identify with the lenders and the bankers?

I bet you have a hard time understanding why someone might make a promise they can't keep.

Might some of those promises have been made in order to secure "the dream?"

Could there have been promises made to the "promisers" that things would work out ok even if things were tricky now?

You are right to point out the naivety of many people when it comes to financial decisions.

People are less schooled in financial matters than the so called experts (you yourself say so..why else bring up your expertise?) and the so called experts helped make the mess we are in.

I think the reason you are so upset at borrowers and wish to scapegoat them is simple.

In your ideology consumers (people who engage in market transactions) are credited with having near perfect knowledge. If in fact that is not the case. The case for Libertarianism is a harder sell.

So when in doubt "demonize" the less fortunate and the poor for their decisions. Ignore the similar decisions by powerful and wealthy.

And if any person stands against that thinking call them out from their ivory towers. Tell those thinkers they have no respect for the common man. Tell them he thinks they need the love of BIG Brother and Communism.

I hope you won't go down that path by insisting that I think consumers are stupid or that we need a nanny state. I don't for a second want those things either.

What we need is good oversight and clear regulations that punish those who would take advantage of others.

That is the historical situation we live in. I would love to call for the radical destruction of money when we live in an era of prosperity that approaches no scarcity, but that STarDate has yet to come.

What you won't hear from me is adding my voice to the chorus of moralizers that seek to demonize the weak.

THAT is what Marx did as an anti-moralist. It is not the abandonment of a moral view.

On the contrary it is easy to identify my moral views (and it should always be so) rather abandoning the moral stance as an objective category of social inquiry is what is needed.

Social theoretical musings such as ours need to confine themselves to understanding the root causes of behavior and cease with labeling the non-conformist behavior as evil.

I have no formal training in this matter. All I have is what I have taught myself from my own interpretation of Marx's method.

no_slappz said...

romius, I mentioned a few relevant facts about my background in scinece, engineering and Wall Street to clarify that my views on the matters under discussion are based on more than my idle opinions. My point was to establish some credibility.

Meanwhile, with respect to false logic, you wrote:

"...I do know that accepting forms of argument from authority can be a fallacy."

This claim breaks into two parts. First, there is the problem of accepting the word of Barack Obama simply because he is the president. He claims the nation must take steps to combat current problems. Like "global warming." But he has zero knowledge of science. Therefore, even though he is the most influential figure of authority in the country and probably the world, he's still wrong.

Then there is the problem of accepting conclusions about scientfific problems from someone who is a science expert. The expert may well be biased. Obviously scientists who believe the Earth is headed for Doomsday because humans use a lot of energy are biased.

As for your background, the lack of training in science and finance, and a lack of experience with the government involvement with both impairs the possibilities for useful discussions.

Billions of people believe religious nonsense despite its obvious falsity. Similar numbers have equally nonsensical beliefs about science. However, until all influential people are dealing in established facts, there's little hope of government getting on the right track.

Despite 50 years of health warnings, 50 million Americans smoke cigarettes. About 99% of all cases of lung cancer occur in smokers. A long list of other diseases and health problems are tied directly to smoking.

Are smokers stupid? Are they psychologically impaired? Are they in denial? Are cigarette companies violating any laws? Is the government wrong to permit smoking when smoking causes widespread health problems?

Why does the government permit smoking cigarettes but not pot?

The point for asking the questions is this: Since growing tobacco and manufacturing, selling and smoking cigarettes is legal, what basis can exist for placing strict controls on lending?

Credit cards were mailed to a hundred million Americans. Probably more. Maybe almost 200 million out of our population of 305 million. Credit cards are an example of Unsecured Lending. No collateral at all. The card-holder simply promises to pay when he signs his sales receipt.

Credit Card purchases are No-Documentation Loans.

Those who took No-Documentatino loans promised -- legally bound themselves -- to repay the borrowed amounts when they signed their promissory notes. The loan documents include a statement in which the borrower declares the information he has supplied is true and accurate. Even No-Doc loans demand that the borrower declare his income and assets are sufficient to repay the loan according to the terms.

The fact that the lender does not require "proof" the borrower can repay the loan changes nothing. The borrower signs an enforceable statement claiming he can repay, but if not, the lender can seize the property.

You wrote:

"I DO think there was a lot of fraud by borrowers who took advantage of lenders."

There was Some Fraud. By fraud I mean that borrowers were intentionally deceived about the terms and costs of their loans. The facts were kept from them.

Taking a hayseed to the cleaners may be morally wrong, but doing it is not fraud. But withholding pertinent information crosses the line.

Meanwhile, most of the mortgage problems occurred in states that allow real estate transactions to occur without lawyers representing buyers and sellers.

In NY, both parties must have a lawyer. As a result, there have been fewer problems here. However, things get murkier with Home Equity Loans. Homeowners can obtain Home Equith Loans without legal representation.

Meanwhile, there are no "Gentlemen's Agreements" in real estate lending. Every detail is spelled out.

Furthermore, you seem to misunderstand something about borrowers. When an offer appears to be riskless, people will grab it.

When borrowers understand that it's possible to finance the purchase of a house with 100% borrowed money, they simultaneously realize that those loans offer a Heads-I-Win, Tails-the-Lender-Loses opportunity.

The borrower may believe he is sincere about repaying the borrowed funds, and the borrower believes that even if he is unable to pay the monthly bill, the house itself can be sold to satisfy the debt.

thus, the borrower believes he is hedged against all risks. He owes a great deal of money, but he holds an asset with a market value sufficient to settle the debt.

Thus, in the mind of the borrower, he is doing a sane thing. The worst-case scenario in every buyers mind is the scenario in which the house gains no value. It market price remains rougly equal to the amount of the loan. The borrower feels reasonably secure.

Perhaps he chuckles to himself and says, well, if the whole real estat market collapses and the value of the house drops in half, then, what the heck, I have NO money in the house. No downpayment, only a series of monthly payments. Like rent. So if the market falls apart, I've got no risk.

Recent buyers are learning they were right. They've lost nothing.

Also, the Sub Prime mortgage market is an old market. The Low-Doc and No-Doc mortgage business is old too. The only major change between the old model and the new model is the downpayment.

In the past downpayments were large. Now they are small. Zero, in too many cases. That's the chief problem.

Romius T. said...

no_Slappz:

Have you investigated why there was a change in loan format from money down payments to "no money down" payments?

That seems to me the appropriate question for your analysis. The source I used (the NPR story) went over that. And that's why I tended to place blame on institutions and not concern myself with individual choices.

We should bear in mind
(as your analysis suggests) what the role of social and institutional decisions have on the the behavior of individuals.

You said I misunderstood the mind of the borrower.

I did not account for the role of the mind of the borrower in the shaping of economic events.

I did have an inking of what went through the minds of and while
you explained it the mind of the borrower much more clearly and eloquently than I could I stated as much by saying "you can't blame the borrower." Why would he not take free money? etc.

It certainly could have been interpreted by you that I was just saying "it was a no lose thing for the borrower...so of course the borrower took the deal."

Did the borrower think of anything other that his selfish need?

Probably not. I assumed that was what you hoped motivated people. Selfish concern. Of course self interest and selfishness can be two different things...but I am unaware of much distinction made between the two by most libertarians.

From what I think can understand about your position you think that it is probably bad to accept these loans. Bad from the point of view of personal responsibility on the borrower and (presumably) for its effect on capitalism.

I would only counter if it is bad for the consumer to take the money, it might be "bad" to offer them money.

I do worry that one day corporations will get much better at figuring out these kinds of things and cutoff the underclass completely. Instead of finding ways to work with the underclass.

That's why I call for a radical approach to ending capitalism like we know it...I think as corporations learn more about behavior and have more access to data we could see a true underclass of formerly blue collar workers...I just see that as the more likely outcome..but that is sheer prognosticating

I am not talking about the lumpenproletariat mind you...just regular folk that won't be able catch a break.. because of some computer profile.

I don't think "the breaks" the underclass is looking for is a system that rewards them apart from their ability or desire to be a part of society...I would not advocating things like take advantage of the system (take the loans)just to break the system.


I don't think allowing dumb loans to stressed out citizens is the answer. I also don't think capitalism has an answer for what to do with the underclass.

I would just point out that the lenders created these programs and then gambled on top of offering risky loans by setting up complicated derivatives trades based on these risky holdings.

If it is so obvious that borrowers would take a no down payment and think of it as a "free ride" (and I tend to agree with you) why offer these type of loans?

Wasn't that your original question?

What is the solution? Some poor people don't get homes. That is the defacto position. I suppose we can also blame the poor and tell them it is up to them. I don't care for that answer much.

A note of Clarification:

Regarding what I called "gentleman's agreements" what I should have stated was the fluffery and salesmanship that go on behind the closed doors of loan offices.

Of course all the details of a loan are in place on contracts (that's the case for auto loans and just about anything else.)

That does not stop loan officers from pursing the signature by saying and promising all kinds of things (and even giving advice they think is right which just turns out to be wrong.)

I guess what you are saying is that we need to end these kinds of loans. (Actually, is it? Was that the point of asking me the original question? I don't remember how we got here.)

I tend to agree with you. Those loans were bad ideas and I never understood them. Bad idea to offer and bad idea to accept.

I would say if you want to get behind something it should be something more radical, but then again we would disagree about what needs to be done.

Like I think about ending Capitalism and you are thinking of way to make it "pure."

FACT CHECKING

p.s. I can't find anything that corroborates the 99% thing on lung cancer. What I found on the web was closer to 85%.

oh, and I think one person was cured of AIDS- from stem cells. (just saying)

not that you should trust the internet....

p.s.s. (the following was written drunk)

p.s.s.s

regarding the credentials...

remember there is no way for me to verify that you have a B.A. in engineering or that you worked where you said you worked. So all you were offering me was the Obama option.

I choose to take you at your word...but I have no real proof...

p.s.s.s.s.

The lack of constraint knowledge when debating is often a serious problem in debate. Take care to remember you asked my opinion, so I gave it. I do not have any expertise (or even lay knowledge) in most of these matters...I only furnished what you asked for...my opinions...

However, I would make a plea to "the experts" to formulate questions and debate formats that allow for lay people to respond.

I did find the tone of the ideas you stated in your last response to be more tempered. I thank you for that.

A personal NOTE:

On a personal note: you seem like a pretty smart guy (for a guy who believes in the genius theory of invention) and you seem like an OK person (for a guy who thinks we should let aids patients die.)

Believe it or not I am not being sarcastic...lol

REALLY I wasn't.

soulipsistic said...

The banking crisis will get better faster than any other way I have heard if Obama complies with the Prompt Corrective Action Law (12 USC 1831o) ("PCA"), which was passed after the '80s S&L crisis, and prescribes precise actions for the president, including identifying insolvent banks, putting them into receivership (i.e., scraping the executive lice off its hide), selling its assets, wiping out the shareholders, and getting on with life. Don't be fooled by smoky rhetoric like "toxic assets": there are offers out there and the banks could sell those assets right now, but they want to make us believe we need them so they can keep up the corrupt American political economy status quo.

If we had gone with PCA in the beginning, we would have already saved $140 bn that have been disbursed through TARP by Obama.

Obama is not in compliance with PCA, but we can get him to do it. Everyone please refuse to self-disempower, believe you can make a diff by contact with Congress.

Real impact is not that hard to achieve; it happened in Aug. 2007 with "Protect America Act", the first leg in the coverup and immunity for telecommunication spy enabling corps.; Pelosi allowed sunset provision to fire whereas she would not have w/o 200,000 angry emails (only 1/14 of 1% of American pop.!), thus causing the entire issue to be reviewed and reconsidered in the media a second time during the general election last year.

In another successful exercise of exelectoral democratic action, a group of citizens spontaneously and nonmilitantly refused to end a visit to their Congressperson's office w/o said rep's withdrawal from sponsorship of H.Con.Res. 362, a "sense of the Congress" motion which would have recommended Bush to put a naval blockade on Iran (an act of war). Think he would have? But those citizens and many many others contacting reps actually made that very dangerous thing GO AWAY; Congress dropped it completely! What a sense of relief and victory I had on that one.

So I recommend everyone use Congress.org to contact your reps. You can email rep and 2 sentors simultaneously off your zip code, or get their fax #s, etc.

If we can get Obama to FULLY comply with PCA and then get special prosecutors appointed to investigate and bring to trial the former Bush admin. members, democracy in America may survive the spate of natural disasters leading up to and through 2012. Everyone should be aware there is already tremendous pressure for accountability on Bush, if we keep it up there's no way they can avoid it, and that the more messages you get from the mainstream media that we are NOT being effective, the more you can be sure we ARE being effective and that they are getting close to breaking. Look at the gay marriage issue! Who was it this week, Newt Gingrich, who as much as said there's no point in resisting it anymore? Who knew we could do that? BUT WE DID!

BTW, I myself believe faxes are an especially influential form of communication with Congress. I use a PDF writer to download articles from the web to buttress my positions and to reupload to a webfax (I use TrustFax.com) to send to the rep fax numbers I get from Congress.org. Also useful is www.govtrack.us, where you can look up legislation and other Congressional info.

Peace and Power!

Wat

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