When it all comes down to basics, we survive if we can grow food and build shelters.
On 15 Feb, 18:55, gruff <[email protected]> wrote: > "... On Feb 5, 4:04 pm, archytas <[email protected]> wrote: ..." > > > I wish we could look deeper into the structures that have brought > > about this mess. I like the idea of small and local-global for most > > things as I don't cotton to the idea that whizz-kids know much other > > than how to use and hide insider information. Obama was sliming up to > > the ghastly Blair yesterday and this makes me wonder whether he just > > has a sharp eye to what sounds good rather than policies. Capitalism > > readjusts itself as a rule and I think this will be the problem - the > > same old stuff will emerge again when we really need deeper change > > towards more justice in law and reward. > > I think we can and have looked deeper into the current economic crisis > and I think it scares the hell out of us but that's no reason for any > of us to go into mental and spiritual rigor mortis over it. > > From the bottom up, fear and greed are the altogether underlying > causes of the current situation. It helps to remember that greed is > but one of the bastard children of fear. > > It started with the housing market, as it generally seems to -- we > have more bubble/bust cycles in real estate than in all the rest of > business and industry combined. Perhaps that is because land is the > primary and underlying foundation of what we consider to be wealth, > leading us to value and over-value it more than is meet and proper. > > Of course it doesn't help that real estate salespeople are held in > little more esteem than used car salespeople which fosters the > attitude that since they have the name they might as well play the > game. In any case, real estate blossomed into another bubble that led > to the greatest over-valuation of property that this nation has ever > seen. > > This mess was made worse by an out of touch administration that set > loose the dogs of greed and the dogs of war by reducing or eliminating > virtually all controls over the market. Then the banks and mortgage > houses got in on the bubble by giving overvalued mortgages under > obscene terms to people who could not be expected to pay them off. > The people who are now in foreclosure or close too it are screaming > but most of them knew or should have known they were in over their > heads and should have stopped. But a large number of them figured, > what the hell, I'll flip this property in two years at a handsome > profit given the current rate of appreciation, so I don't care if the > mortgage balloons to an outragous rate. The problem began to come to > the surface about two years ago when the appreciation rate began to > fall, then the bottom fell out of it last September. > > A lot of people got into the market early on in the boom and wound up > taking their profits early and walking while the walking was good. > It's sort of like the initial investors in a ponzi scheme -- they are > the only ones who will realize any profit or return on their > investment and that profit will be paid for by those who are the > losers on the end run. The ones who got into the market in the last > two years have virtually lost everything. The bigger problem is that > as the real estate market went bust it fell so low that it took a lot > of very solid homeowners with it -- people who did not really deserve > to lose. > > But also early on the banks and mortgage companies, seeing this huge > influx of money and growth, packaged these overvalued mortgages into > more and more complex investment packages which were then sold > repackaged and resold over and over to other banks and investment > houses on thinner and thinner margins until those investments were so > complex and so leveraged that no one could figure out who owned what > and how much any of it was really worth. These comprise what are > currently referred to as toxic assets > > And these toxic assets are the problem the banks have to deal with > today. There are so many of these overvalued assets on their books > that they have no idea whether they are insolvent (bankrupt) or not > and are holding on to every dime they get from any source including > the bailout funds. This is also why everyone is talking about needing > to fund the banks with additional trillions more dollars. > > Without banks the country has no liquidity and that more than anything > else can bring about ruin. No one likes bankers -- probably not even > other bankers -- but they are necessary to a functioning economy > whether we like it or not. > > Capitalism is the process whereby capital is invested to create > profits. Every one who owns a share of anything in this country is a > capitalist. It is also true that a capitalist free market does get > out of balance from time to time -- either via over-valuing or under- > valuing assets by different means but mostly by debt exceeding the > necessary growth to pay the interest and reduce the principle on that > debt. > > Debt is a fine tool to be used with a steady hand to make the economy > grow, but again, where it gets out of balance with an economy's > ability to grow fast enough to service the debt and principle the > waters get troubled. > > And unfortunately when the waters get troubled people's fears are > magnified and greed becomes even more prevalent. This is where we are > right now. > > But there is a bigger problem to deal with, though not an > insurmountable one. Basically no one ever envisioned a global economy > such as we have today. Many call it Pandora's box but maybe Pandora's > not such a nasty bitch after all. Time will tell but what we have is > not only a new ballgame, but a whole new game entirely and we are > unsure of the degree and sort of rules necessary to ensure against > greed and corruption without choking the economy to death. > > We know people become afraid and react greedily but how do we protect > ourselves, our society, and our economy from that greed and corruption > without creating a stringently and tightly controlled environment that > does not permit any growth at all. It is true, as Geithner said the > other day -- the same day Wall Street and other markets took a > nosedive on the news -- that we are in uncharted waters and need to > proceed with both care and daring -- a difficult trick at best. > > But the numbers can help give the confidence needed. Global wealth -- > assets if you will -- is estimated to be around $140 trillion with > the U.S. owning the largest share at approximately $48 trillion. > Notwithstanding the current situation, the global annual GDP (the > value of all goods and services) is around $48 trillion, which > accounts for a certain amount of growth in global assets each year. > The U.S. adds approximately $12 trillion a year to that. In both > assets and GDP we still lead the world by a wide margin. Check > outhttp://bigpicture.typepad.com/comments/2007/01/worlds_assets_h.html > for a more detailed graphic on these numbers. > > But the essence of this situation is that it is entirely of human > creation. Nature did not force an economy on us. Were we satisfied > to live as the rest of the animal kingdom lives, we'd never have to > face anything worse than a natural disaster. But we have created this > world in which we function. It is all our own doing. We write the > rules and arbitrate the outcomes. Basically we got ourselves into > this mess and given our history, I've little doubt we'll get ourselves > out of it and be the better for it. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""Minds Eye"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/Minds-Eye?hl=en -~----------~----~----~----~------~----~------~--~---
