Quick Note on the Debates

Well it's a week later, but I didn't really have time to post in the immediate aftermath. But one of the things I took from the debate -- one of the things we've gotta keep in mind as we keep thinking "Oh Holy God I don't even believe in don't let John McCain win" -- is that this really is about the War Party against the Other War Party.

The War Party tells us that General Petraeus is the greatest general in American history for finally applying principles that others had been talking about for years. The War Party will continue to focus on Iraq and just maybe attack Iran as well. The War Party will achieve victory in Iraq.

But the War Party is wrong! says the Other War Party. The Other War Party will increase our forces in Afghanistan and expand the War into Pakistan. The Other War Party will finally defeat Osama bin Laden.

(And please Sshhh and don't mention the fact that the Other War Party's candidate's foreign policy adviser has been advocating an expanded US presence in Central Asia since the 1990s) (P.s. sorry I can't find a link about Brzezinski that isn't from a paranoid website) (But read his book, it's interesting/horrifying).

And of course, the War Party and the Other War Party have identical stances on whether or not Russia's retaliatory attack on Georgia was somehow "aggression."

So there you have it.

...Not that you didn't know it already.

The Big Hullaballoo Part 5: Getting Groped by Guys With Stupid Names

Then there's Fannie Mae and Freddie Mac.

A big news item from -- was it last week? -- was that they were being taken over by the government. But who the hell are they, and what did they do? All I knew as of two weeks ago was that their names sounded eerily similar to "Sallie Mae," the student loan racket that owns the rest of my life.

So here is what Freddie's website says:

Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities – guaranteed by Freddie Mac – to investors.

So, if the understanding of the Big Chain of Stupid that we learned about in part 2 of this series is correct, Freddie Mac played a massive enabling role: Paying lenders for their mortgages, thereby encouraging them to do more and more mortgages to more and more people.

What else is true about Freddie Mac? It was a private corporation, though chartered by the federal government. Its mission and its function were the same as Fannie Mae, though the latter was created much earlier, under the New Deal.

So what the hell happened? The Washington Post has a pretty good overview. The gist is that Freddie Mac and Fannie Mae -- private companies, remember -- had special rules created for them, just like those other giant companies that failed.

Where banks that held $100 could spend $90 buying mortgage loans, Fannie Mae and Freddie Mac could spend $97.50 buying loans.

Also, they were subject to very little in the way of regulation. And what was the justification?

Barney Frank, a Massachusetts Democrat who said the companies served a public purpose. They were in the business of lowering the price of mortgage loans.

And

The Clinton administration wanted to expand the share of Americans who owned homes, which had stagnated below 65 percent throughout the 1980s. Encouraging the growth of the two companies was a key part of that plan.

And

The next spring [of 2000], seeking to limit the companies' growth, Treasury official Gensler testified before Congress in favor of a bill that would have suspended the Treasury's right to buy $2.25 billion of each company's debt -- basically, a $4.5 billion lifeline for the companies.

A Fannie Mae spokesman announced that Gensler's remarks had just cost 206,000 Americans the chance to buy a home because the market now saw the companies as a riskier investment.

And of course, as I guessed before even reading about it, they were in the business of buying shady mortgages, just like the guys on Wall Street.

Fannie Mae and Freddie Mac had been losing market share to Wall Street banks, which were doing boomtown business packaging these riskier loans. The mortgage finance giants wanted a share of the profits.

So what the hell does this all mean, and how can we make sense of it?

"The Clinton administration wanted to expand homeownership." So it turned to Fannie Mae (a company founded during the Depression to expand homeownership) and Freddie Mac (founded in 1970 for the same reason) to do so.

What does homeownership mean, in this definition? It means people paying a mortgage to a lender (or rather, to whoever bought the mortgage from the guy that bought the mortgage from the guy that bought the mortgage from the guy the lender sold the mortgage t0) for--what?--30 years, give or take.

And what happens to the "homeowner" who doesn't make these payments? Why, his "home" is seized, of course.

So in what way can the "homeowner" be said to "own" his house to a greater degree than I "own" the apartment that I "rent"?

There are no functional differences. But there are differences: in semantics and in prestige.

Fannie Mae and Freddie Mac existed to facilitate the illusion of "ownership" in America. And to increase the number of people who "owned" homes.

"Owning" a home via mortgage isn't different from "renting" a home in any way except: In how the "owner" perceives himself and in how others perceive him. Fannie and Freddie increased the perception of bourgeois or rather of "middle class" status among Americans. That's all. Nothing else.

Meanwhile, the only actual increase in wealth was at the (again, privately owned) companies themselves. Fannie and Freddie made a shitheap of money making proletarians feel like bourgeoisie.

The Democratic Party loved Fannie and Freddie. They increased the illusion of inclusive capitalism that is the Democrats economic guiding principle. And Fannie and Freddie loved the Democrats in return.

And that's the other part of the new Right Wing Narrative: Fannie Mae and Freddie Mac paid off the Democrats and so the crisis is Obama's fault.

And to some extent that's true. 16 of the top 25 Congressional recipients of Fannie/Freddie PAC money were Democrats, and the top 4 are Chris Dodd, John Kerry, Barack Obama, and Hillary Clinton, in that order. But the new Right Wing Narrative ignores that the Republicans were bought by the Retardedly Named Duo as well:

In the 2006 election cycle, Fannie Mae was giving 53 percent of its total $1.3 million in contributions to Republicans, who controlled Congress at that time. This cycle, with Democrats in control, they've reversed course, giving the party 56 percent of their total $1.1 million in contributions. Similarly, Freddie Mac has given 53 percent of its $555,700 in contributions to Democrats this cycle, compared to the 44 percent it gave during 2006.

Nor is Obama's the only campaign compromised in this way.

But back to this nonsense about ownership. (I'm about to say my longest sentence ever, but I've read over it and I assure you it's grammatically correct).

Looking at all this it becomes clear that the desire to be the "owner" of the place in which one lives; the prestige that is attached to that title, "Homeowner;" the constant bombardment of messages telling Americans that to be a "Homeowner" is basically the purpose of being alive and the measure of success, achievement, adulthood, America, freedom, liberty; and the willingness on the part of politicians and businessmen to both instill -- through rhetoric, through entertainment, through advertising, through the manipulation of symbol and language -- and then exploit this desire for political ("Look how many new homeowners my Administration created!") or monetary ("Hello investor, how much will you give me for these high risk mortgages?") gain that form the ultimate cause of the problem.

And that's the end of that sentence.

The Big Hullaballoo Part 4: What's the Best Way to Grope the Poor?

One of the other stories about What the Hell Happened? says it's all the fault of bleeding heart heartbleeders trying to make the normally prudent banks who like to bleed their blood only in sound investments instead bleed their big, banky hearts all over the poor.

What the hell are you talking about?

Why, the Community Reinvestment Act, of course! Because I'm lazy today, let's ask Wikipedia about this. The Community Reinvestment Act

is a United States federal law that requires banks and thrifts to offer credit throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services.

According to one of the emerging Right Wing Narratives of What the Hell Just Happened, it's this law's fault that all the bank's made bad loans: Because they were forced to by lovey-fluffy-commie girlies in Congress who were dumb enough to think poor people could pay back their loans. Some jackass at the National Review explains:

One of the reasons so many bad mortgage loans were made in the first place is that Barack Obama’s celebrated community organizers make their careers out of forcing banks to do so. ACORN, for which Obama worked, is one of many left-wing organizations that spent decades pressuring banks and bank regulators to do more to make mortgages available to people without much in the way of income, assets, or credit. These campaigns often were couched in racially inflammatory terms. The result was the Community Reinvestment Act. The CRA empowers the FDIC and other banking regulators to punish those banks which do not lend to the poor and minorities at the level that Obama’s fellow community organizers would like. Among other things, mergers and acquisitions can be blocked if CRA inquisitors are not satisfied that their demands — which are political demands — have been met. There is a name for loans made to people who do not have the credit, assets, income, or down payment to qualify for a normal mortgage: subprime.

So, you see? It's Barack Obama's fault, and it's also ACORN'S fault. But, the National Review concedes,

The bankers cannot blame CRA entirely; they made a lot of bad bets on rising home prices. But CRA did influence lending standards across the banking industry, even in those institutions that are not strictly liable to its jurisdiction. The subprime debacle is in no trivial part the result of lending decisions in which political extortion trumped businesses’ normal bottom-line concerns.

Now, leaving aside the fact that people who are editors for the National Review are retards/assholes, all of this does make some sense. So we should ask some questions like, To what extent did the Community Reinvestment Act force banks to make loans to people who couldn't pay them back?

Because this is complicated, and because understanding whether it's true would require some research, let's turn this one over to someone smarter than me. Writing for The American Prospect, Robert Gordon says:

First, consider timing. CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. In the mid-1990s, new CRA regulations and a wave of mergers led to a flurry of CRA activity, but, as noted by the New America Foundation's Ellen Seidman (and by Harvard's Joint Center), that activity "largely came to an end by 2001." In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law's toughest standards. Yet sub-prime lending continued, and even intensified -- at the very time when activity under CRA had slowed and the law had weakened.

Second, it is hard to blame CRA for the mortgage meltdown when CRA doesn't even apply to most of the loans that are behind it. As the University of Michigan's Michael Barr points out, half of sub-prime loans came from those mortgage companies beyond the reach of CRA. A further 25 to 30 percent came from bank subsidiaries and affiliates, which come under CRA to varying degrees but not as fully as banks themselves. (With affiliates, banks can choose whether to count the loans.) Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.

Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the "tendency to conflate the current problems in the sub-prime market with CRA-motivated lending." CRA, Yellen says, "has increased the volume of responsible lending to low- and moderate-income households."

See, look what I did! I paired a leftwing editorial with a rightwing editorial and decided that because the leftwing editorial said stuff that I like, I agree with it! You know what that makes me? Everyone in America!

The only problem with the above paragraph is that the American Prospect article included specific datapoints. In particular:

• Independent mortgage companies, who aren't subject to the CRA made twice the number of high priced loans the banks and thrifts did.

• Half the subprime loans came from banks and thrifts not covered by the CRA.

• 25 to 30 percent of the rest (for a total of 75-80%) came from "bank subsidiaries and affiliates, which come under CRA to varying degrees but not as fully as banks themselves."

• After the slow-down of CRA activity (2001) and after the weakening of the law (2004), subprime lending continued and intensified.

In contrast, the National Review gives us the following datapoints to work with:

• ACORN is racist.

• Barack Obama loves the Community Reinvestment Act.

• The CRA contributed in some way to the crisis, even though it wasn't the only thing.

So what are we left to conclude? My judgment, subject to change:

The CRA didn't cause the problem.

In fact it is sort of a kind of good idea, except that the idea of forcing banks to lend money to poor people as a way of increasing home ownership in poor neighborhoods is really really troubling. It can't not encourage some degree of predatory lending -- or, if you're on the other side of the fence, encourage irresonsible poor people to screw over the honest bankers who were forced to lend them money. I like the Habitat for Humanity model better.

The Big Hullaballoo Part 3: Man I Love Gropin'!

Continuing our exceedingly popular coverage of What the Fuck Just Happened to America?, here are some more takes on the issue from across the political spectrum.

First up, it's Pat Buchanan. I met Buchanan once and he was real nice to me even though I was disagreeing with him about stuff and wearing a defaced American flag on my jacket, so let's quote him at length:

Up through World War II, we followed the Hamiltonian idea that America must remain economically independent of the world in order to remain politically independent.

But this generation decided that was yesterday's bromide and we must march bravely forward into a Global Economy, where we all depend on one another. American companies morphed into "global companies" and moved plants and factories to Mexico, Asia, China and India, and we began buying more cheaply from abroad what we used to make at home: shoes, clothes, bikes, cars, radios, TVs, planes, computers.

As the trade deficits began inexorably to rise to 6 percent of GDP, we began vast borrowing from abroad to continue buying from abroad.

At home, propelled by tax cuts, war in Iraq and an explosion in social spending, surpluses vanished and deficits reappeared and began to rise. The dollar began to sink, and gold began to soar.

Yet, still, the promises of the politicians come. Barack Obama will give us national health insurance and tax cuts for all but that 2 percent of the nation that already carries 50 percent of the federal income tax load.

John McCain is going to cut taxes, expand the military, move NATO into Georgia and Ukraine, confront Russia and force Iran to stop enriching uranium or "bomb, bomb, bomb," with Joe Lieberman as wartime consigliere.

Who are we kidding?

What we are witnessing today is how empires end.

The Last Superpower is unable to defend its borders, protect its currency, win its wars or balance its budget. Medicare and Social Security are headed for the cliff with unfunded liabilities in the tens of trillions of dollars.

What we are witnessing today is nothing less than a Katrina-like failure of government, of our political class, and of democracy itself, casting a cloud over the viability and longevity of the system.

Notice who is managing the crisis. Not our elected leaders. Nancy Pelosi says she had nothing to do with it. Congress is paralyzed and heading home. President Bush is nowhere to be seen.

Hank Paulson of Goldman Sachs and Ben Bernanke of the Fed chose to bail out Bear Sterns but let Lehman go under. They decided to nationalize Fannie and Freddie at a cost to taxpayers of hundreds of billions, putting the U.S. government behind $5 trillion in mortgages. They decided to buy AIG with $85 billion rather than see the insurance giant sink beneath the waves.

An unelected financial elite is now entrusted with the assignment of getting us out of a disaster into which an unelected financial elite plunged the nation. We are just spectators.

So, according to ol' Pat, the morals of the story are that Big Government and global economic interdependence are the problems; that Big Government includes social spending as well as war; and that we should take note that the people deciding the solution are not elected officials (and we've already seen just how compromised one of them is).

***

Okay Pat Buchanan, that was fun. Next up, former Securities and Exchange Commission official Lee Pickard puts in his two cents:

"The SEC modification in 2004 is the primary reason for all of the losses that have occurred," Mr. Pickard, who is now a senior partner at the Washington, D.C.-based law firm Pickard & Djinis, said.

What's the SEC modification in 2004, you ask? Well, let's see if we can get our heads around it:

The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.

Making matters worse, according to Mr. Pickard, who helped write the original rule in 1975 as director of the SEC's trading and markets division, is a move by the SEC this month to further erode the restraints on surviving broker-dealers by withdrawing requirements that they maintain a certain level of rating from the ratings agencies.

"They constructed a mechanism that simply didn't work," Mr. Pickard said. "The proof is in the pudding — three of the five broker-dealers have blown up."

So, the SEC changed the rule so that these 5 mega-giant firms didn't have to abide by the traditional debt-to-capital ratios. Unfortunately, I have basically no idea what this means, so I can't really comment. I only find it hilarious that 1. Special rules were made for companies worth more than $5 billion, 2. Those companies then collapsed and trashed the economy, and so then 3. Instead of going back to the rules, the SEC got rid of them for everyone else too. Hahahahaha.

***

Anybody else care to comment? Any more informed opinions? Oh hey, look, it's the Wall Street Journal! I appreciate them for their nonbiased commentary.

The Wall Street Journal article begins like a comic book for rich stupid people:

Huddled in his office Wednesday with top advisers, Treasury Secretary Henry Paulson watched his financial-data terminal with alarm as one market after another began go haywire. Investors were fleeing money-market mutual funds, long considered ultra-safe. The market froze for the short-term loans that banks rely on to fund their day-to-day business. Without such mechanisms, the economy would grind to a halt. Companies would be unable to fund their daily operations. Soon, consumers would panic.

See! Secretary Paulson is like a superhero, watching nervously as the city begins to collapse. What to do! he thinks. And then insight strikes him:

For at least a month, Mr. Paulson and Treasury officials had discussed the option of jump-starting markets by having the government absorb the rotten assets -- mainly financial instruments tied to subprime mortgages -- at the heart of the crisis. The concept, dubbed Balance Sheet Relief, was seen at Treasury as a blunt instrument, something to be used in only the direst of circumstances.

One day later, Mr. Paulson and Federal Reserve Chairman Ben Bernanke sped to Congress to seek approval for the biggest government intervention in financial markets since the 1930s.

Eureka! shrieked Paulson, and -- billionaire that he is -- dove happily into his giant swimming pool of money. It was so simple--so obvious--Why hadn't he thought of it before? "Have the American people pay for it!" he cried, surfacing and spitting forth a stream of dollar bills. "Bail out the ultra-wealthy with taxpayer dollars!"

Yes! Henry Paulson had done it. He'd saved the economy! There was just one problem. What if anybody in Congress had testicles? Though he dismissed the idea as unlikely, Paulson still had to address the matter.

In a private meeting with lawmakers, according to a person present, one asked what would happen if the bill failed.

"If it doesn't pass, then heaven help us all," responded Mr. Paulson.

So there you have it, according to the Wall Street Journal.

***

Here's something I haven't seen anybody mention. This business of buying and selling other people's debt, this business that lead to a whole lot of people getting really rich in the last decade: What the hell is its point?

In that NPR show we looked at last time, they interviewed a guy that was making up to $100,000 a month buying and selling securities. And he was the cool guy, living it up, hobnobbing with Christina Aguilera and Cuba Gooding Jr. and all these other fuckheads.

So here we have a guy that has done absolutely nothing to make anybody's life better and has contributed materially in no way at all to the rest of society. And he's rich. And he probably thought of himself as the epitome of the American Dream come true. Meanwhile other people do meaningful work or at the very least, make something useful, and can barely afford to feed themselves or go to the doctor.

What. The. Fuck.

What does that say about our society? About our "economy?" About ourselves, that we allow this sort of thing to happen, that we even cherish it and consecrate it and endow it with all these revered words like Freedom and Opportunity and American Dream?

The Big Hullaballoo Part 2: The Grope Goes On

I just read over the transcript of this NPR show on the Crisis. If I understood what it told me, and if it was right, then this happened:

First, there were mortgages. People sold mortgages to other people to buy houses. Those other people made payments on their mortgages. The people to whom they made those payments, the mortgage brokers, then sold those mortgages to banks, or to companies. I'm not sure which. So now the brokers made a lot of money, and the banks were getting payments, but then, the banks/companies sold the mortgages to bigger banks/companies. And onward to the big big guys on Wall Street.

And every step of the way everyone was making money. And another funny thing: The littler companies that bought the mortgages from the brokers had to take out loans to do so! Hahahahaha.

And then it gets funnier. Because everyone's buying these mortgages. So the brokers start giving them, selling them, whatever the term is, to shadier and shadier people, until we're at the point (2 or 3 years ago) where someone like ME could probably have gotten one. This thing "NINA loan" turns up; No Income No Assets. WTF! They'd lend to anybody, and then the loan would skip up along this chain until it got to the top.

Other new words I learned include "mortgage pool" and "tranche." A mortgage pool, I think, is a group of mortgages. "Tranche" means slice; it's when you slice up all these groups of mortgages and sell them off to whomever.

So then things got fucked, sayeth NPR, when this happened: People started defaulting on their very first payment!

So in the beginning, it was okay if somebody defaulted and the bank foreclosed. And that's because housing prices were always rising. But all of a sudden there is all this defaulting and foreclosing, and all these damned houses, so, What? The prices fall. And so now if someone defaults and you foreclose, you lose money (by the way "you" are a bank.)

And that's why the crisis happens. The banks are losing, losing, losing money.

And they have to be bailed out. Because they're the banks!

***

Here are other fun facts.

The NPR show describes a guy getting a half-million dollar loan he could probably never pay back. The people that got this loan for him represented his income at something like 3 times what it actually was:

Mortgage brokers were walking around East Flatbush, knocking on doors, telling just about anybody: Hey, we can get you a house. If you have a house, we can get you a big home equity line of credit. This happened in poor neighborhoods all over the country. And, while the FBI and other law enforcement folks, say they don't have the exact numbers, it's clear that fraud--like the fraud on Richard's application--was ubiquitous.

The phrase "Fraud was ubiquitous" comes without source or citation, though it seems likely enough. But assuming it's true, will there be any repurcussions for any of that? Well, probably not.

***

Speaking of fun facts. Back in February, this article from Eliot Spitzer appeared in the Washington Post. Let's quote it a bit:

The OCC [Office of the Comptroller of Currency] has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.

Let's restate that, huh? All 50 states tried to stop the banks from predatory lending practices that helped cause this problem, and the Bush Administration stopped them. Shocking.

I am also shocked in retrospect at how Spitzer was brought down as governor of New York. By "shocked," I mean "not surprised even a little."

And all of this would tend to make one a little leery about all this power given to Henry Paulson, a man who works for this Administration (that should be cause for damnation in and of itself) and as Secretary of the Treasury, presumably approves of its fiscal policies (see previous quotation); and who, in his previous job, was billionaire CEO of one of the companies that caused the whole fucking problem in this first place!

***

Now I'm starting to rant and speculate. I still don't probably understand the whole thing, even a little. But it doesn't add up, does it? The Big Bail Out doesn't, especially not in the way it's being done (total authority for Paulson with no oversight at all). Something's totally fucked.

This Big Hullaballoo: Groping Toward Understanding

Okay I've been looking into more and more explanations of this big Wall Street crisis-thing going on, and the more I read, the more I conclude:

Nobody understands it.

The system is too big and too complex and nobody knows why it does what it does.

The only important questions then: Who prospers? Who suffers? Who takes the blame?

***

I've seen a lot of explanations of this sort:

Banks made loans to people who couldn't repay them. And that was the bleeding heart lefty government's fault, for encouraging loans for houses for people who couldn't afford them. The poor people couldn't afford their payments, and so they broke the system. Result: They lose their homes; and it's their fault; and the government's job is to bail out the banks, otherwise...

Otherwise, what? Who knows.

But Ron Paul says that the result of all this stuff should be a drastic lowering in housing prices:

When interest rates are lowered to below what the market rate would normally be, as the Federal Reserve has done numerous times throughout this decade, it becomes much cheaper to borrow money. Longer-term and more capital-intensive projects, projects that would be unprofitable at a high interest rate, suddenly become profitable.

Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is malinvestment, a misallocation of resources into sectors in which there is insufficient demand.

In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically.

This lowering of prices brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however that there are some winners -- in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers -- builders and other sectors connected to real estate that suffer setbacks.

The government doesn't like this, however, and undertakes measures to keep prices artificially inflated.

So...

The problem is that low interest rates caused builders to build too much? Sayeth Paul. And that should mean a drop in prices. Which should mean more people able to buy houses, etc, but real estate sellers losing money. And -- What? The real estate people, or, the homeowners(?) Have to sell their property, now at a low price because supply exceeds demand(?) But-- What? They can't repay the banks? So the banks go broke? And that's what the Fed is trying to fix?

That seems, if I even understood it correctly, like the dead opposite of the previous explanation.

***

Then there is an explanation I heard the other day from the guy that does our finances:

Banks gave people 100% loans for houses. These people had payments that were lower than their interest rates. (How?) So the amount of money they owed the bank continually increased. Meanwhile the value of their home decreased. (How?) So they now owed the bank $105,000 on a home that was worth $100,000 but now is only worth $70,000. The house being the only collateral, and being now worth less, the hypothetical homeowners abandoned it.

Who are the culprits, according to this guy? The Rich.

***

Another explanation, from a different forum:

You need money to get money. People (banks) loaning other people money is the "heartbeat" of the economy: If they can't loan money, other people can't take their money and make even more money with it. So the government can't let them crash. I look at this statement and think of anything ol' Ron Paul said:

Additionally, the government's actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.

***

The only thing that I can understand fully right now is that the government is bailing out ultra-wealthy people who made bad decisions, and that this is a pretty common pattern.

***

Writing for Asia Times, Otto Spengler gives us this delightful metaphor:

Think of America as a town with one casino, in which the only economic activity is gambling. Most people lose, but the casino keeps lending them more money to play. Eventually, of course, the casino must go bankrupt. At this point, the townspeople people vote to tax themselves in order to bail out the casino. Collectively, the gamblers cannot help but lose; individually they nonetheless hope to win their way out of the hole

Spengler goes on to, seemingly, confirm what Ron Paul had to say:

Contrary to what the Bush administration says, it is not the case that banks' troubled mortgage assets cannot be sold in the private market. Those are the so-called "Level III" assets that banks say they cannot value. But that is only a dodge that the banks use to postpone taking losses. There is a ready bid for these assets from hedge funds, in multi-hundred-billion-dollar size. The trouble is that the market bid is 25% to 30% below the prices that banks carry these assets on their books.

***

It comes up occasionally that this fellow Treasury Secretary Paulson is being given an immense amount of power and no oversight. It also comes up occasionally that he used to be the CEO of Goldman-Sachs.

***

So what's going on? An afternoon of reading and I still don't quite understand. One thing: We're told the Big Bail Out is necessary for the economy. So, what's the economy? And why does it need to continue?

A Horror

It is the twenty first century, and the day was long as all days are long. Body sagging with weariness the man pulls himself up the steps to his apartment. Inside he goes directly into his bedroom, lays down in bed and plugs himself in to a series of devices. Wires extend from his ears to a machine; a glowing screen fills his vision. He is cut off entirely both from the outside world and from his own thoughts.

The man of course is me. I have just come home. I have not been home in some time. What do I do? Do I converse with anyone, or perhaps sit in quiet meditation? I go to my room, I attach earphones to my head which create a facsimile of music that is ultimately as false as it is bizarre. I type a message: "Hi, how are you?" to a friend 3,000 miles away. Communication without context, soundless, sightless; the real world, the world of the senses, entirely done away with; the human removed, nothing but the Symbol remaining.

The twenty-first century: all of it is insane and none of it is real.

Confessions, Lamentations

Something is going on in America.

Everyone is freaking out about it.

I don't understand the financial system. At all.

Something's going on -- and I don't understand what!

I have some guesses as to who is responsible (the super-rich).

I have some guesses as to the nature of the government's response (socialism for the super-rich).

I have some vague grasp of what is happening (Something about the mortgage companies. Something about a trillion dollar bail-out. Something about the super-rich not having to suffer the consequences of bad financial decisions, even though they're savvy enough to at least know what those decisions were...unlike me.)

(By the way Ms. Pelosi, Mr. Bush, could the federal government maybe help out with some of my credit card debt? No? Yeah, I didn't think so.)

But all of this said. I don't, still don't, really grasp what's going on.

So somebody...

What the hell is going on?

Letting the Days Go By

Hey everyone I know what to do -- Let's go read the News!

Here is an oldie, but I missed it at the time.

Study Tallies Corporations Not Paying Income Taxes

Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released Tuesday by the Government Accountability Office, the investigative arm of Congress.

Holy shit, that's fucked! But what else is going on in the News?

Scientists Watch As Listener's Brain Predicts Speaker's Words

Scientists at the University of Rochester have shown for the first time that our brains automatically consider many possible words and their meanings before we've even heard the final sound of the word.

I originally clicked on this article cause I thought it was going be about telepathy. It turns out it's not, so I don't care. But maybe you should read it anyway!

And finally, read this neat thing sent to me by my fried B.

The eco-community in the Preseli mountains of west Wales was set up in 1993 and lived contentedly away from the rat race round a 180-acre farm bought by Julian and Emma Orbach.

In 1998, it was spotted when sunlight was seen glinting off a solar panel on the main building, which was built from straw bales, timber and recycled glass.

When the pilot reported back, officials were unable to find any records, let alone planning permission, for the mystery hillside village surrounded by trees and bushes.

So, usually the next sentence would be "so the villagers were evicted from their homes and their children were taken into custody by the government" accompanied by snideness and innuendo to the effect that people who want to live in ecovillages are necessarily insane. That is, if the story hadn't begun with "All members of deranged ecovillage cult killed in FBI siege." But not this time! Somehow a government (tellingly, not in the US) decided it was okay for people to do something different. Hooray!

By Way of Explanation

It was yesterday morning, not yet 10:00, and 3 people had written demanding that I update my blog.

There was just one problem: I hadn't a thing on my mind! In fact, I haven't had a thing on my mind in days.

But I do have endless bits of old writings floating around my computer and also brain, & most of it unread by you, if you didn't live in Pittsburgh in the early part of the twenty-first century, & much of it beloved of me, all of its parent-creator. The preceding story -- which was originally in the sad sad undergrad literary journal of the University of Pittsburgh in 2004 -- is one such item, and here it is one more time, and I will meditate upon the implications of this in a later post.

For now, good day.

An Oldie But A Goodie

How to be Some Sort of Beetle

Your legs clackel over soft crumbles, and your feelers twitch, and tell you the future. The future has food in it, the food that falls apart in the ground and warms the body and hardens the shell. You see with your seers the way ahead, and smaller ones cross you, and larger ones. And food is still in the future.

Continue: The ground shifts and stranges, and you can feel the empty-moving pushing down the wrong way, and struggle but the world is rearranged, and your legs waggle and wiggle but can't find a grip, and your feelers tell you that up has turned into down.

And you panic! Up must not be down never never never never never, and your legs flail and fling and your feelers twitter and twatter and your upside opens and your upside-legs whap the upside-ground and down must never never never be up--

And then it's down again, and up is up. And there is still eating in the future. And so you clakcel on. And now your legs find a crumbling ground to land on, and now a jumbled ground, and now they must pull you over stringy things and tufted things, and over fluid ground that trickles away and away to far off elsewhere.

And you can taste the future in the empty-above. And in your shell hardness you're warming and glowing in the feast that's foreseen.

And then it happens.

And then IT happens!

There are powers and pressures that punish and pinch!

There is squeezing and crunching and crushing and pain!

And up will never be down again, and up is not even up, and your legs wraggle and your tearing-face hisses and your upward-legs flutter! And everything stops being anything and nothing is anything forever.

**

Your legs clutter on hardness forever in every way. Your feelers are telling you strangeness, and others, and nothing like food. Your up-legs are telling you nothing, and you don't wonder why you thought you had up-legs, and you remember that you don't.

And onward: The future is a circle that has walls you cannot walk on, and it is filled with others and hunger. And now your feelers tell you changes, and yous ee now grass in the future, now crumbles land on your shell and your head, and everything shudders and trembles.

And now there is an other. And you see it with your seers and feel it with your feelers. And then you know:

The other is food!

And you are hot now and hotter, and hazy and hazier, and the world is the smell of eating! And your legs twirl and trample and flail and fling and your eaters are clacking and clamping, the other one writhing and wriggling and now yours! your're inside and the other is gory and gooey, you taste it now warmer and redder, fluttering hot and frenzy, it slurms through your eating place into yourself that's inside of your shell, and now you are warmer and redder.

And the world is strange. And the future is strange. And your feelers feel the others surround you and see you and feel you and taste you on the empty-above. And they move on many legs, and they move with venom stabbers, and they move with the up-legs in many directions.

And now there is another other: and this one is another of you. You feel its feelers and smell what it is, and the smell is now hunger and anger and fighting. And it makes itself larger and gnashes above, and wails its legs and crashes and clacks! And you can feel that you're cracking and your legs scramble backward, and the other is taking the food! The food must always be yours, and never never never be taken! And forward you're scrambling thrashing your eating-parts clacking your clackers and hissing and screeing, and now you crack! And the other moves back on its legs and you crack! it again with your great hardy eaters, up on your legs and gnashing the air! And the other goes back, and back into faraway and the treasure is yours, the food that warms you the goo that sustains.

And the everywhere continues in strangeness. You drag off your prize to a lump of tufts and fiber, and scree at a smaller thing already there, a one that clamps with the end of iself and scrambles down low on many small legs. It backs itself clicking away, and you burrow your legs back into the sinews. But nothing is still the same! And the world seems shifted and you can't feel what's ahead, and the future is danger in every direction, danger from frightening panicked and frenzy, and fearsome trapped hatefulness pours into your mind.

And now: there are deaths approaching. The seers that see are seeing right through you and your feelers are threatened and frightened and feel of a future of cracking and pain, and venom-strike stabbers are gathering closer and eaters to clamp off the whole of your head, and inside you grow warmer with terror and cornered, and many-claws clack at your head, and jaws that bite are biting toward you and the pattering clatter of toomany legs are clattering at you, your feelers feel fighting and killing and a clack! on your head and a snack! on your shell, a thing grips your leg and a thing grips your eeler, you flail your face cracking another thing's head, and it falls off to be eaten by some other thing else.

And now the world is burst! You fall and shift and everything stranges! You're jostled and jounced and your leg breaks away and your feelers feel less but feel broken in half, and downside turns upside and jumbles and falls, the herenow is shuddered the future is shattered, and the feelers feel nothing and the seers see no more!

**

The grinding ground crumbles with the clack of your legs, the legs that feel forward the way into Time. Your feelers feel little, and you don't wonder why, and you remember they never are very much good. Nor do you wonder the count of your legs; you remember that always you feel to one side.

Prediction

John McCain will be the next president of the United States.

It will suck.

Projecting the image of the square-jawed military hero and the courageous Christian mother, McCain-Palin will usher in a golden age of horrific rightwing values. Americans will revere them even as their own lives get genuinely worse and will join them in blaming gays, abortions, pot, and blowjobs for the state of the nation.

It will suck.

Blogtheft!!!!

The summer of 2008 was a fine one by all accounts, and recently there have on the internet emerged some fine photos thereof. Here are my two favorites, stolen, as always, from Gabe:







To the confused or distant:

In the first picture, Thomas has just been simultaneously drinking from a bottle of Rolling Rock and a bottle of Sutter Home. Megan and I are horrified -- though, as illustrated in photos which follow, we will both partake.

The next picture is taken on my birthday. Kat, Gabe, Matt and I engage in a group high-five in a photo taken by Ms. M____ R____.

(Speaking of my birthday, this is probably a good time to clear up certain internet urban legends that have sprung up about it. It did not, in fact, last for "weeks." Its official run is listed as Friday, August 8th until Saturday, August 16th. Attentive readers will note this is barely more than one week, let alone "weeks" plural.)

Other active participants in the summer include Megan At Law, Lexie, Sarah, Sarah, and the aforementioned M____ R____.

Final review: 8/Summer. Good job everybody!

Of Politics

I watched the Republican National Convention at the bar last night.

It made me think the following things:

1.

Republicans have a completely different America from the one you and I have. They live in a completely different reality. It doesn't even make sense for us to talk to each other, really, because we can't understand each other, because we're living from completely different truths.

2.

But it doesn't matter.

3.

It doesn't matter because national politics doesn't really affect things all that much. We talk about the last eight years like they've been a nightmare, but the only bad parts of it were news. The news was all bad. But news is just television.

4.

It doesn't matter who wins because all that will change is the news. To someone like me, an American like me, the thing that sucks about living in this country: We can't afford health care. We can't afford our cars. We can't find jobs that will provide these things. We don't have access to public transportation. These things suck. They suck a lot. But Obama won't make it any better. He can't, he doesn't have the money or the will or the power. But you know what else? McCain probably won't make it any worse.

5.

The only things I can think of that McCain will do to make things worse is, with his Family Values (hahahahahahahahahahahaha) VP in tow, continue the attack on reproductive rights and sexuality. That directly affects you and me and is fucked and vicious and cruel. He might also call programs that mitigate policies like these "wasteful spending" or "big government" and cut funding for them, hahahahaha.

6.

News isn't just television to people who are on the news, like the nation of Iraq. Like that kid in Afghanistan that was crying after a US airstrike killed his whole family. But you can't do anything about those things and neither can I.

7.

What about gas prices? That's not news and that sucks. I can't figure out what is causing all of it though. Rising demand from China and India combined with war and instability in oil-rich regions combined with a declining supply? I don't know. McCain might make this worse by being so fucking belligerent on the international scene.

8.

Obama In Charge might increase funding for things that you and I like and things that actually help us. But he'll only increase it a little and it won't be permanent because the other side will always come back into power and reverse everything.

9.

By the way, if you cut the military budget in half, you would still spend more money on "defense" (hahaha) than any other country in the world, and you'd still have the most powerful military in the history of the world, and you could cut taxes while investing massively in social programs and infrastructure.

10.

That will never happen.

The Pleasures of: Episode 12

Goodness, it's been a long time since we've visited my Pleasures, hasn't it, dear ones?

And yet there they are floating in that dark synaptic sea, little islands of happiness (and I think that sea is three dimensional and they are twinkling multi-colored stars) waiting to be swum to. So let's go, and there just right of the zenith is a pinkish glowing island which is in fact the story of

Orpheus and Eurydice

Why do I love this story so much? Do you remember it?

Eurydice steps on a snake and dies, and heartbroken Orpheus journeys into Hell to save her. With his sad music he charms Hades and Persephone and they agree that Eurydice may return with him to the world of the living: But she will walk behind him, and he cannot turn and look at her until they are back on the earth.

And of course, a ghost, she makes no sound as she walks. And of course, just as he is about to reach the cave-mouth gateway out of the land of the dead, he loses faith, and he turns, and there she is, and then she is gone.

Ahh the beautiful terrible of it! And how tortured do we feel in the considering. When I used to know how to write fiction I think I wanted to do my own version of it -- that having been one of my tricks or delights, retelling a traditional story in contemporary or science fictionly guise -- and I wonder how that would have looked.

As it is all we can settle for is the ending... The Maenads tear Orpheus apart and throw his head in the river, and there it floats away, still singing. Ha!

To Autumn

by John Keats:


1.

SEASON of mists and mellow fruitfulness,
Close bosom-friend of the maturing sun;
Conspiring with him how to load and bless
With fruit the vines that round the thatch-eves run;
To bend with apples the moss’d cottage-trees,
And fill all fruit with ripeness to the core;
To swell the gourd, and plump the hazel shells
With a sweet kernel; to set budding more,
And still more, later flowers for the bees,
Until they think warm days will never cease,
For Summer has o’er-brimm’d their clammy cells.

2.

Who hath not seen thee oft amid thy store?
Sometimes whoever seeks abroad may find
Thee sitting careless on a granary floor,
Thy hair soft-lifted by the winnowing wind;
Or on a half-reap’d furrow sound asleep,
Drows’d with the fume of poppies, while thy hook
Spares the next swath and all its twined flowers:
And sometimes like a gleaner thou dost keep
Steady thy laden head across a brook;
Or by a cyder-press, with patient look,
Thou watchest the last oozings hours by hours.

3.

Where are the songs of Spring? Ay, where are they?
Think not of them, thou hast thy music too,—
While barred clouds bloom the soft-dying day,
And touch the stubble plains with rosy hue;
Then in a wailful choir the small gnats mourn
Among the river sallows, borne aloft
Or sinking as the light wind lives or dies;
And full-grown lambs loud bleat from hilly bourn;
Hedge-crickets sing; and now with treble soft
The red-breast whistles from a garden-croft;
And gathering swallows twitter in the skies.