Signs of an economic recovery are starting to appear. After recapitalising the financial system, President Obama kept the US economy liquid. This is may have averted more depressing news but as the bankers start to return funds they were lent by the tax payer the question arises, where to now for the US economy?

An economy is a little like an elastic steam engine. As it gets hotter and more pressure the boiler can inflate – and that reduces the pressure. There are little feed pipes that take excess steam away and it is also possible that you may have too many coals firing the engine – if there is coal burning, and there is not enough water to accomodate the heat generated, then less coal is required. The coal that burns that is not required is in danger of becoming unemployed. What is the point of burning coal that is not generating heat? With the extra coal burning, there is more of a tendancy for the boiler to overheat, and expand without producing more energy as the water pressure is not sufficient to supply it.

There are two economic arguments:

1) prevent inflation at all costs (conventional economics)
2) avert as much unemployment as possible, despite a bit of inflation (putting wealth into the hands of the people).

The trouble with doing 1) is that it creates a wave of unemployment.
The trouble with doing 2) is that it creates future inflation.

The economic crisis however created a new condition. It is not just the burnoffs from the Madoffs

full article

See also:
NY Times

P – the drug – its use and manufacture is criminal in most democracies as it should be. The Western meme, “The War on Drugs” is a poor model of how to combat what is a contagion of deliberate disease that quickly spirals into addiction. Catching it early is not as good as prevention but if prevention fails, then catching it early is vital.

There are market forces and financial relationships a drug of extreme dependence enforces, which with P is pressured by the fact it kills most of its clients whom are increasingly isolated from help.

If law only incriminated those involved in the manufacture and distribution of P, then its enslaved victims would not clog the courts but seek medical help (before it destroys their brain).

Parental response to P is guided by horror. Compare this to parental reaction to STDs and how that has changed from 30 years ago as factual information was understood.

Incriminating P users is like jailing victims of child abuse.

President Obama has stated that it is time for American leadership to step up and he has picked the one time when the Right certainly have no right to complain about putting America to work solving its dependence on foreign oil economic imbalance in three years.

All it takes is the political will to spend on the economy while saving the banking system. The best and perhaps only way for a modern large economy to work is not so much trickle down as a sort of reverse trickle – or more correctly by “assimulative growth” – growth that absorbs and supports its own as well as taking on new ground. It is the point of winning a war, to be able to improve a worsening situation.

And this is an economic war of sorts, the banking system is poised like a blocked drain may cause part of a city to flood whilst leaving others dry battling against the forces. Only by expanding upward does it become obvious that our resources are limited by our number.

Only by rewarding the creativity and workmanship of his citizens to act as a force, to meet the demands of citizenship and help the wheel of wealth turn the right way again – for a time – can the Government is better not to simply dish out cash. But to use the oil to make productivity of Americans create their own wealth again by reducing the need to trade for oil. If Barack Obama has the community building skills to achieve this, then the Republicans should support it or lose any credibility they think they have.

It is the best news for the World at large, for years.

See also: Al Gore’s Blog

Have a read of NY Times writer, Brooks article about morale philosophy.

Likening proactive morale behaviour (for example, charity) to aesthetics seems an attractive proposition. The human is being defined increasingly loudly by “science” as “non-spiritual”. The Brain controls our new age emotions, in a logical, physical, provable manner. Predictability is often the first sign of a new thinking, and here it is.

The idea that spirituality exists regardless of form, function or practical explanations has to be undermined due to evidence of evolutionary psychology?

The physics of huge objects may be the same as that of small objects but it has become a very hard thing to align with facts. Defining a moral compass for everyone is also a distinctly impossible task.

You walk past a drunk lying in the street, seems asleep. Do you do anything. What if you did – would society’s inbuilt moral compass do anything to reward you or are you more likely to be judged as some kind of idiot.

If a person makes 64 billion and then declares that it is all given to charity, do we say he is an admiration seeking fool? Certainly not.

Can we celebrate the geninue humanity evident every day in every way by people who hug each other. Not as some kind of native survival urge leading us by the nose. But as an act of the human will. That is something that evolutionary psychology possibly sees as successful behaviour being rewarded in the soup of evolution – but plainly is something more immediately under our control and that is the will. It has overriden much that nature evolved over time. Without a moral compass, we leave our survival up to chance. Which it is anyway. But the will makes us feel responsibility. We can feel in control of our selves with a sense of morality to help us feel bad when we hurt other people.

If we did not feel bad when we hurt other people, we are indeed a different kind of human than those I encounter every day. The need to be suspicious of each other is an instinct and it takes an act of will over get past that – and learn trust.

The hypothesis that moral judgment is solely based on our instinctive responses sounds more like Right Wing propaganda than science. Moral judgment is not solely based on imperatives. Certainly they play a part, but we are not only shopping for what is pleasing or we would hurt others in the process. From being careless. That is our real value. We can feel pain, so care about things that we should not. This creates new reasons to make moral decisions. The experience of pain in our lives makes us want to try and help those we beget not to make the same mistakes.

Whether we are effective or not, this is moral judgment from the will. Evolution is the brutal side of nature. Sudden cessations in the constant changing morass of life and accidents aside, it drives life into more successful forms. But some see that as the sole imperative and that allows their moral compass to the yes box on genetic engineering of foods.

It is the very disrespect for the natural process of selection that they ignore to the peril of ecology. There is a morale philosophy. It does not even require a God. It just requires awareness that we do what we want.

Our will is the mutation that made humans so successful and intelligent. Altruism, patriotism and dependence are things that develop and run like the tides. The idea that once they have occurred to you they are in any way fixed, that idea is corrupt.

We are what we think we are. That is the moral fibre underlying civilisation.

“Sustainable Development” used to mean the kind of financial growth that Bernie Madoff practiced. In a childs game of impressing people with graphs of his snake oil financial empire he gloated in his now repossessed houses and yachts about his ability to make capitalism work for him personally in very special ways.

Sustainable development eventually became, in the 1970s a mantra for civilizing the world. A hundred years ago this civilizing allowed the demise of colonialism. The fruits of which resulted in an extended upper class that ruled things from the ‘ouse of Lords or perhaps it was the cricket umpires, after all.

The inanity of passing along with wealth political power into dynastic arrangements have historically proven to be one way of doing things. We took thousands of years to realize that instead of being ruled by an inbred clan of monarchs we could choose our finest and give them seats in a decision making body that matched our courts in finding the truth, fairly and for all. Celebrating the monarchy is one way of providing civilian purpose in a God-less world.

The Taleban have their inane rules to govern human desire but in doing this they make important the unimportant. The trails of hair that grow from a man’s chin are not going to feed families or erect great monuments that inspire. The Taleban will always appear stupid to the rest of the world for demolishing history. Their cultural rules and habits are not really our business, and in the same breath, they must allow for the presence of other cultural springs in their community, or be damned. Mainly by logic.

In the same way, the communique to rescue the world from financial crisis through the World Bank and IMF aims to prevent years of decline by watering down the entire system, but there is a danger the old traditions will start to occur in a new “environment”. With regulation, the worst atrocities can be avoided.

It will work. Sort of. George Monbiot writes in the Guardian that it ignores the environment. He does have a point as the ice caps inexorably melt. It is like we are more concerned about saving the silverware than preventing the boat from sinking. At least we are worried about the silverware, but do not seem to mind that we through our babies into the surging seas to do so.

The alternative, letting the bankruptcies change our world into a right wing desert of survival of the very fittest or a generational decline, just seems like torture. Why go through the massive degree of pain, when it can simply not occur. There is a left wing cabal at work – as China’s influence rises – the West has gone socialist. President Hu has asked what the OECD is, although China is about to become a member – it is China who is defending their tax havens while the Western governments are hell bent on shutting them down.

Liberty and Equality for all to be greedy – is what Monbiot is afraid will come of all this. He is partially right. But the long term is the only way to measure the effects of Globalisation. Incorporation of Green transformational goals into global change and development is the way forward.

Globalisation is seem as a terrible thing by the protesters at the G20. They see it as exploitation. Unfairness. Their tune can now be “environmental” but is it actually just anti-progress. Anti-wealth?

It does not really matter what extremes of political opinion are provided that humanity takes stock of itself and reduces our numbers in the long term (no, not by genocide or economic force), by modernization of our morale codes.

It is not acceptable to destroy the future. It is unacceptable to hide profits from common taxation. The war against tax havens and avoidance will prevent dynasties erupting from wealth hidden from this bubble – dynastic insanity such as that of Osama Bin Laden is the result of too much money in too few hands.

PHILOSOPHY & RELIGION

The role of God has the appearance of playing a very large part in the way we develop thought. That some will already find the bile of objection to definition of a deity rise, is in part the conditioning of faith upon the critical ability.

We divine wisdom we define as inherent knowhow that accumulates over time and exists as a diamond crown above the heads of those who have lived.

Faith appears to accumulate as indicated wisdom. It would be folly to say that such wisdom is not ‘worldly’ but indeed, it is focused on the non physical – a representation of love that only exists within that faith, that part of the person we call the “soul” that only seems receptive to or active in prayer and certain kinds of music.

A Llama is expected to accumulate wisdom through meditation – through nothingness. From nothing the only harvest is one that exists in the universe of thought. Modern media distractions shake the ability to accumulate wisdom by distracting and disconnecting the involvement.

Learning without experience provides no wisdom. “Oneness” is required for wisdom accumulation, that being a part of something requires that one submits to the will of another is an act of grace. Done with dignity, we call it “work” and devise instruments to transfer “value” so we can stay convinced that we are doing the right thing.

A financial crisis may be the result of too much faith – that type of “wisdom” that exists in the eyes of the desperate, the addicted gamblers who believe their future is tied to luck and that is a function usually of what they are saying to themselves as they cast the die. They even mutter little prayers to God, sometimes – even if they are agnostic or atheist.

Are the blindly relying upon a sense of faith to carry on risking their livelihood to make that point? Gambling, addiction and faith only belong together in the most cynical of sentences. But the wide eyed acceptance of the rules of the house and fickle chance dictate the relationship of this individual to any asset they may possess. In other words, it is their irrationality that is providing “wisdom” based on randomness, externally it can be seen as folly but inside the problem and the gambler is more than intent on their own self destruction. Active belief – a perverse sort of faith – lets them go on hoping.

FINANCIAL CRISIS

The financial crisis is a crisis of a too much faith for too long without recognising the distraction from action – that has resulted in the evaporation of wealth, seemingly from all. When wealth is calculated by bankers who put their hands out for economic relief we start asking ourselves what is the point of all this economics.

We have accumulated all this “wisdom” to no effect. Knowledge is thrown back and forth as economists and governments disagree on the solution to the problem.

We are driven by conflict and achievement. We are not driven by a race to relax. The enjoyment of reward is a major factor in motivating people in business. It (money) is seen as confidence – the strange sister of faith, they seem to be the same but in fact they are opposed. When money value is negotiated no wisdom is passed with that change of value. Confidence comes about when faith is not broken. Like a run of doubles. As the confidence rises, the faith actually declines. The winning streak is bound up in confidence, the losing streak is all about faith.

It is not so much an economic crisis but a crisis of confidence in the frightening mathematics. Financial instruments and currency are a form of instant contract – they assume faith – but the gambler, the criminal, the banker – they lose the concept of money as value as they are no longer participating in the “being a part of responsible humanity” model. They are instead being a part of the mechanisms of belief transfer between disparate entities. They broker distance and difference with a purely conceptual and fluid exchange of value – with no other manifestation resulting – except the accumulative assumed difference created by displaced value.

FAITH IN HOPE

The Obama philosophy is to restore the effect of economics to action away from the belief of the gambler and back to a confidence in a job well done.

It is to bring back to the concious mind (of the world) the ability to act without greed. To act from a better place – for the family – for the spirit of community and for each other. Interaction requires that the wealthy spend money and pay the not yet wealthy for their valuable contributions.

The actions of those who wish to prop up the world on faith without action, the gamblers and speculators who want to dissolve their relation with others by inflating cost without adding value are incrementally taking from everyone.

Real contributions to the world do not have to be tangible. They do have to be valuable. The world economic state gives us reason to act in ways we could not when constrained by greed.

It is not just a better world. It is a world where confidence can again have the effect of building experience.

Letters from school children to Mr Obama published in the NY Times included this:

Dear President Obama,

I am small, quiet, smart. I love to swim and play basketball. My mom and dad are from the Dominican Republic. I am going to the Dominican Republic next year. I think you should try to change the world by building shelters for the people who live in the streets. It’s the beginning of January, and it’s cold. Good luck being the president.

— Pamela Mejia, age 11, Boston

Something tells me President Obama will read this letter.  Something tells me it is a very good idea.  People keep saying “clean up the streets”.  This 11 year old smart girl is pointing out that the homeless are people.  It is not that they dirty the streets, but how would you like to live out of rubbish bins and sleep in cold hard places you can hide in?  It is that homeless people suffer that makes it worth while to give them shelter.  Slavery was abolished, but a homeless person has no shoestrings upon which to change their state.

It is one of the more extreme instances of enabling people to do more, rather than protecting the wealth of the very wealthy from risk.  The kind of reconstruction that Mr Obama is considering could be game changing for American society in the same way that any liberation is.  By shoring up the lives of the many and not enabling the very wealthy free reign to essentially gamble or the bankers to over-leverage our money at extreme and definite risk.

The world does not need mega oligarchs to run things.  It needs the productivity of its greatest nation.  Another letter suggested “free university for all”.  These 9 year olds understand the price of freedom is to support progress.

Bail out monies being injected into the economies of banks that have poisonous investments (i.e. derivatives) are showing little result as they are absorbed into the inflated capital these failed instruments represent. Each bailout of the banks only makes the problem last longer and worse.

Bailout the holders of negative equity mortgages, they will still have impossible repayments down the track. The economy will adjust hugely before it starts to recover. Our prediction is that about May/June there could be a massive deflation/adjustment that could see recovery start more quickly than people realize as false financial instruments fail rather than the bank behind them. If the bailout succeeds it is preventing mass bank failure at that stage.

So much more may be achievable by what Obama is about to do. Making the economic machine (people) work more rather than succumb to depression is a better answer. Banks are going to fail, and when they do, they perhaps will be nationalised, and the management replaced.

Links:

NZ Herald article

The Credit Crunch has been in the news for over a year and many have not noticed anything except the news being reported. But for some it has been horrible and life changing. Houses bought on zero or little equity have turned into negative equity and being forced to sell in those conditions is locking that loss into reality.

Credit card debt has been the silent bane of many lives removing any hope of wealth, usually when it could do the most good. There are about five stages of any life, and after young families with their expanding social needs are very likely to quickly create a mountain of debt without realizing just how difficult it will be to reduce it. Years later, the seething remains still extract a portion of their pay-cheque and a greater portion of their youthful promise has been absorbed into a life of debt. Stages 3 and 4 of many lives are spent undoing what they enjoyed in Stage 2.

“Generation Y” seems the most adept at accumulating debt. The student loan culture experiment that “funds education” is nothing but an extended form of slavery. It is an intergenerational con. We will teach you kids if you sign your life away here, here and here. Now you work and pay it back! Political pressure keeps the interest on such loans minimalised until the student decides to strike out on their own, and then it is pretty similar to a mortgage.

Mobile phones are in the same league. How many 18 – 25 year olds spend more than they earn? How many run up huge bills on their mobiles?

But now, we have a whole new problem. The wild enthusiasm getting into debt now has to find a way of going the other way. We have had a credit crunch. Next we have a huge consequence. Will the debt not get repaid?

Defaulting on a huge scale leaves lives undone. Not just the lives of the defaulters. Their families and the people they do business with. Not to mention their bankers.

2009 could be a very rocky ride. Economic extinctions are the real threat. When sections of the economy cease to exist. These bail outs mean that the extinction is now a shared thing. It will affect a larger number by letting the economic cancer spread.

Economic Responsibility

The elephant in the room was ignored way past its fat carcass rotting in the corner. The consumption of average American is unmatched in history. The output of the average Chinese is unmatched in history. To compete in the big world, the Chinese made their products less expensive and held their currency very low and the Americans had ridiculous wealth. Over generations this leveraged American citizens into debt, at first by the liquidity arising from short term debt (credit cards) which returns lots of value as payment demands mount, so does liability ramp up. In other words, debtors are given reasons to pay them back (to US banks). So the secondary mortgage market and being able to work the system. By arbitrage on property sales, investors were being given a free and rapid rise. This lead to an increase in property investment vehicles and these in turn would lend on their “assets”, thus becoming, in effect, banks. The additional capital availability was then leveraged into bonds and futures and then derivatives. As the money served more and more future up now based upon this internal explosion of capitalisation. The consumers vs producer equation went seriously out of whack. Why do we consume so much? Maybe it is just risks taken are more when there is an excess of capital. The US excells at bigger and better, but sheer quantity is another type of strength.

The trick is to leverage both together. To understand how our different economies have evolved to serve our society and live with a relativity to one another. Competition is for rats. We humans can enjoy our path of life without having to win. Losing is now also quite a lot of fun.

Does this mean American consumption has been making China economically successful? What happens next as Americans can no longer afford to buy buy buy.

It seems almost fashionable to be fatalistic, and there seems a slight gasp when economic conditions are mentioned. Nobody seems to have a definite plan, but having a definite plan is the key to success when things are good. Why should it be any different now?

Normal things are not that easy, either. You always have to try hard, to make a go of things. Orderly thinking is good. Planning is good. Dusting off a few of those management skills that they used to talk about. But the question is, what is the world going to want as everything else, including imported goods descend in value. There may be a time when a car costs five hundred dollars and nobody can buy one.

Unlike Zimbabwe. As the rest of the world edges with depreciation, this land is being throttled with extraordinary inflation. It is being ruined by a leader ten times more dumb than W. He knows what to do. And by George they had better do what he says or he will have them shot. There simply are not that many humans, historically, who could cause so much misery as Mugabe has. Zimbabwe would be better off if a pile of shit ran it than the power mad imbecile, Robert Mugabe. It is time he gave it up.

George Bush is trying to do something similar to the world economy.

After continued daily rocket attacks from Gaza into Israel, and after a warning by the Israeli PM Israel bombs Gaza killing 280 people.

The attack on Hamas targets are, according to reports from Israel, destroying rocket launching silos. That civilians are killed in this non surgical intervention is absolutely guaranteed. Gaza is the most populated place on the planet. People have to live somewhere.

Disproportionate responses like the Iraq war and this, seem aimed at the deconstruction of the enemies ability to retaliate, no matter the cost. It is the Bush doctrine post 9/11, to drop hand grenades into the nest of scorpions so they pose no danger. It has always been an American doctrine, to devastate enemies; a lesson learned from WWII.

Are these acts of war that effective in the “war on terrorism”? The problem is that the disease spreads in all directions. In an ancient sense, yes, Israel certainly had a right to the lands of the Levant. But so do the Palestinians. A dominant country dominates in order to prevent control slipping; the weaker force attempts to find a chink in the armour.

What strikes one as rather horrific is he confinement of a people. The echoes of the Holocaust can not be ignored; Israel can not stain itself in this way. The confinement of millions of people to a sub-state that can never have an economic sway is not civilized.

A treaty is required. Hamas may be deconstructed by Israel’s military actions. Huge force is a reflection of the fate the USA had for Iraq, but Hamas were reported to be firing rockets into Israel. There is some justification and a clear warning was given.

Any hope of Tony Blair’s passive diplomacy making progress or Bush’s active aggression bringing change are now irrelevant history. The world has progressed to the next move. What comes next?

If Israel can indeed remove Hamas from the political equation by an act of war will it improve matters? Seems highly unlikely. Israel claim to be forced into this situation. Israel at war, Hamas seem likely to now be a political martyr.

Links:
http://www.guardian.co.uk/world/2008/dec/27/israelandthepalestinians-terrorism