cutting the head off the snake

It is easy to understand why the democrats haven been unable to affect change, they are the reserve army of the upper class. what is less easy to understand, however, is the inability of the people and their champions to affect any change. To understand this one must first understand the nature of people and change. To get someone to do something requires leverage. This can be societal pressure, threat of force, money, position, or any number of things. The important part is that the party you wish to persuade either has something to gain by obeying you, or lose in not. The Inability of the people to affect change, stems from the loss of their leverage. They have lost their first form of leverage in the vote, due in part to the wealthy using their monetary leverage to influence the process. The proletariat simply cannot keep up with the bourgeoisie in disposable income per capita and therefore the bourgeoisie win. Now, I know you know this and it's been said a hundred times before. The real question is why do we continue to play these games, to fight on an uneven playing field against a team that uses dirty tricks on their homefield? Remember gaining votes with money is the bread and butter of CEO's and boardmembers, it's what they do everyday. We aren't just fighting an opponent that has more resources but more experience using those resources. So why play their game? Why do we submit to playing the game on their terms? Well, we don't have to. There are other ways. First, we can play the game, but we play it on our terms. We stop this nonsense of trying to beat the money masters with money and votes, because we know they win that round. We fight using alternative forms of leverage. Now, contrary to popular belief, protests are not a form of leverage and accomplish nothing more than giving the bourgeoisie large groups of people to laugh at. We have to have real leverage. This can be anything from large scale boycotts to outright revolt. The important thing is that there is something for those you wish to persuade to either loose by ignoring you or gain by complying with your orders. Take care when giving them something to loose however, because if they get sympathy your efforts will be counter productive. Second, We stop playing the game all together. Forget the politicians, forget the bankers, just let them drop off the edge of your radar. Sounds impossible right? well, it's not. It is possible to start a bank. IF one were to start a non profit bank one would have the ability to create with it, a side economy, one that can just simply ignore the world of big business. How do you do that? Easy. First the bank must be democratically controlled. Easy enough. But then you have said bank start offering a deal. Instead of loaning out money for businesses loans, the bank will hear business plans and authorize individuals to persue those plans under the banks name. The profits of the companies started this way go to the bank. The benefit for the entrepenur is zero risk to themselves, and no need for credit. So how do you start something like this? First you have to capitalize on modern times, both technology and society. With things like kickstarter, you can raise money for the initial project. If you further capitalize on the anger against wallstreet by say, putting a limit cap on CEO's and no golden parachutes, you can get there. You might need a few appearances on major TV to get noticed, but it can be done. And notice none of this requires the fatcats or politicians do anything. Just the people. So there you have it, the two methods of regaining the peoples freedom. Choose wisely.

CCP: Chavez, Cronyism, and the Corporate Plutocracy

Hugo Chavez has been a thorn in the side of the plutocrats for a long time.  But to understand why we must look first at the history of Venezuela and the oil subsidies . In 1949 the government of Venezuela was considering nationalizing their oil. Well the plutocrats will have nothing of the sort and Royal Dutch Shell and Jersey Standard Oil strike a deal, they will give the government of Venezuela 50% for the profits that they make. Well within a year the detail of this come out and Saudi Arabia starts looking to do the same. The companies dealing with Saudi Arabia at the time went by the name ARAMCO (Arab American Company).  So Saudi Arabia is looking to strike a deal or nationalize their oil company, and they’re kind of leaning towards the soviets because of our support for Israel, and arabs don’t like Israel. So a deal is struck, Aramco will make all the money they can, and give half to the saudi’s, They can then turn around and deduct half the money they make from their taxes, not from their income for calculation of their taxes, but simply cut off the tax bill.  So who makes up for the sortfall… BINGO! The American taxpayer.

                So fast forward to around the mid 1970’s.  Where the whole scheme has been known for a while, and surprise surprise, the corporate elite have figured out that  they can get money from the government just like Aramco. Well this opens the door, the only thing left is to figure out how to do it. Enter: the powell memo. What this was, was basically a call to corporate America to become more aggressive in it’s takeover of the government, because it was, at it’s core, extraordinarily profitable. Well Nixon sees this, and powell is subsequently put on the supreme court, and the finalization of corporate person hood comes to be through a series of decision by powell and company. So we basically come to where we are today, corporate rule due to buying the government being a very lucrative and effective strategy.

Well Chavez had a different approach, he comes in and basically says “fuck your money, the oil industry now belongs to the state” and with that Venezuela starts to improve not only their own lot, but that of several surrounding countries, including Cuba. So while America is giving money away to rich oil baron, Venezuela is profiting off of it’s own resources and those resources are being used for the betterment of the country, essentially giving the middle finger to big business.  Say what you want about the man, that is a great achievement.

2008 Crisis and Beyond

Disclaimer: I am not an economist. An accountant. Or Business man. So take this with many huge grains of salt

So I got a wild hair up my ass and thought I’d share what I know of the cyclical Boom/”OMG THE SKY IS FALLING” cycle we seem to be set in. Specifically focusing on 2008 and the next one that is looming overhead.

Culprits:
2008: Bad debt being sold fraudulently

TBA: Derivatives, derivatives are like insurance on inflation. Kind of like a future you aren’t obligated to buy if the price is under the agreed upon terms. Essentially say you make sundaes, and you need banana.  Now you know the price right now is $60 a unit. If however the price doubles to $120 per unit, you are up shit creek without a paddle, you can’t do business and you will have to fold (bit of an exaggeration but you get the point.) what a derivative is, is a financial product that says you pay $2,  and if the price of banana’s goes about $80, you only pay $80, but if the price remains under $80 you pay the market value plus the fee. Simple, and actually helpful, especially helpful at combating inflation, so the market is actually fairly self-stabilizing to some degree. Oh and 30 day lending might play a role, maybe.

How:
2008: In 2008, the problem was that people were basically selling spoiled goods. In laymans terms what happened was Bob bought a $200,000 house from Jack on credit, promising to pay $250,000 by the end. (often times  Bob couldn’t really afford the house but was persuaded to by jacks silver tounge, I.E. Predatory lending). Now, Jack, looking to make a quick buck want to sell something, what does he sell? He sell’s the debt that bob owes jack to Rufus for  $220,000. However, Jack knows Bob isn’t doing well, and has a high likelihood of going into default, paying only $10,000 leaving Rufus with $10,000 and a house that is really only worth $150,000. Now, rufus would have been fine had he known the risks, and the price was under $160,000 for the $220,000 Debt but Jack had promised Rufus that Bob would be able to pay at least $30,000 and that the house was worth $200,000.

Now, you have to understand that a house and debt are assets and that assets don’t obey the law of supply and demand, in fact, as price increases, demand increases, and as demand increases price increases. Now obviously what drives this is speculation as to increasing value and how much you can get out of it, however, once it goes too far it won’t go up any more because since it’s an actual product the price can’t rise forever. So the “market” was telling people the house was worth vastly more than what it really was, or at least what you could build one for.  As you can expect, this was a perfect storm of stupid. You had bad, or outright fraudulent claims made about assets in the form of debt. And the two components of the income on those assets were, well shall we say, shaky at best due to predatory lending and the inflated prices. Now, the inflated prices were market value so those were “fine” it was when you had the fraudulent claims about the risk of the debt that made things bad. Basically once the cat was out of the bag, the shadow banking system collapsed and with it the demand in housing assets and thus their price, which compounded the problem.  By the end the largest banks had been assisted with over 7.7 trillion dollars, yes 7.7 trillion, mostly by the FED. That’s half the GDP. So 2008 was a crisis that lost us one half GDP

TBA:  Now the derivatives markets are fairly stable, as far as I know there is no fraudulent claims. They aren’t based on something that can just up and poof out of existence, the risks are calculated by very smart people, and important to note is that the seller of these is the one that loses if the math is done incorrectly and risk is not assessed correctly. However, the size of the markets is over 630 trillion dollars.  To my knowledge that is the total of what the derivatives are worth (the $80 in my previous example, someone correct me if I’m wrong. Which is good because that’s the biggest number you have, if that 630 trillion is the summation of all those $2, start prepping, and I ain’t kidding, full out bomb shelter)What does this mean? If for some unpredictable reason, prices on average rise above the value of the derivatives terms the issuers are going to be taking a loss.  Now what does this mean… well the largest banks are on average worth about 1-2.5 trillion dollars. Notice the differences there 630 trillion…2.5 trillion. Luckily that’s shared by a fair number of banks. However for example, JP Morgan Chase, total assets worth around 2.3 Trillion http://en.wikipedia.org/wiki/JP_Morgan_Chase,  how much do they have in derivatives? 72 trillion http://www.youtube.com/watch?v=PDprXKn8oTU. These are the same people that just lost a few billion a few months back. That means if prices rise unexpectedly 3.5% past the agreed upon terms in their derivatives for some reason (or they were just fucking wrong about the risks) they get wiped out. 10% and you’re talking about them alone creating a financial disaster like 2008, 20% and that would equal a loss of the entire American GDP. These price increases, they’d affect all of the banks and anyone holding a derivative, and the derivatives markets total 630 trillion, meaning an increase over expected of just 2% would wipe the equivalent of the US economy. 11%, would wipe out the Gross World product. Oh and remember that 30 day lending, without the banks these companies go broke temporarily. Meaning when the house comes crashing down, not only is the erasure of every private bank account possible without some miracle of intervention, something the Government would not be able to accomplish without immediately being downgraded to a null credit rating, but businesses would halt, workers wouldn’t be paid.

On the flipside: derivatives ARE fairly straightforward and I know of no fraud or incentive for fraud, and they are looked over by some very smart people. So getting to that 3% increase would be monumentally hard (remember that’s over the agreed upon price which is usually somewhat higher and standard inflation is taken into account). So panic time? No. but you’d have to be a fool not to keep an eye on it.

Long story short, pray that smart people looking after the derivatives markets are as smart as they say they are, and a metor or some shit doesn't hit us.