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A post describing racism and its effects.

"Being anti-racist means more than refraining from using racist language. You can scrub every single racial epithet from your vocabulary and still be a racist. If you feel the overwhelming need to cross the street when you see a group of young black men in fear, that is racist behaviour. If you never think to question when you see blacks portrayed in the media as drug addicted criminals, that is racist. If you can mentally picture all of your friends and cannot point to a single one that belongs to a marginalized group, that is racist. If you think that by consuming food from a different culture you are displaying your global ideals, that is racist. If you believe that you can appropriate cultural symbols and wear them for the sake of fashion, that is racist. This list can go on and on because daily people participate in actions that are either directly racist, or have racist undertones, with little or no thought to the bodies that it effects."

*

This reminds me of a video I was linked to recently, a conversation between Whoopi Goldberg and Elisabeth Hasselbeck, the neo-conservative blonde on The View, about racism. Hasselbeck was talking about how terrible African-Americans were for using the N-word, how was she supposed to teach her children not to use it if they did, didn't they realize that they all lived in the same world? And Goldberg called her on that, saying that they didn't, her experiences were completely different, and in response Hasselbeck - started crying.

Point goes to Hasselbeck for such effective personification of the "WHY ARE YOU BEING SO MEAN TO ME ME ME" defense.

*

Make Believe Maverick, a Rolling Stone article that makes John McCain seem worse than George W. Bush.

*

I think the articles I agree with the most on the financial crisis are these from the UK. I'd never come across the website before, and I'm still not quite sure who they are, but what they say and how they describe the current problem makes sense.

Their view on the bailout.

"SchNEWS never thought that Neo Labour would do so much to boost the welfare state. Over the last six months the government has pumped an unprecedented (and gigantic) amount of cash into the welfare system. The only trouble is that this money is not heading for the needy, but the greedy as we’re talking about the welfare state...for big business.

The country’s wealth is being squandered supporting the very company shareholders that have been arguing for years that, in Maggie Thatcher’s words, “the business of government is not the government of business.” Interfering politicians hell-bent on regulating the market only serve to hamper the competitive spirit, say the profit-hungry capitalists. Unless, that is, the interference comes in the form of hard cash designed to prop up their ailing investments at a time of crisis.

Following ‘Meltdown Monday’ and the ensuing turmoil in the corridors of global capital earlier this week, rampant free-marketeers are now clambering for more government cash to bail out the banking and financial system. And we are talking intergalactic telephone numbers. After years of sucking out huge commissions, profits and bonuses (Krug all round!), recorded losses for the banking and insurance sectors are now running at £275,000,000,000 - and it is estimated that this figure will double over the next twelve months. So far the most ‘market friendly’ governments in the world have pumped enough money into the system to cover 80% of these losses. Some analysts are estimating that Western governments will spend $1 trillion of public money bailing out the financial corporate sector and it’s shareholders. Shareholders who have been only too happy to reap the benefits in recent years, without ever worrying about how their miraculous wealth was actually being created."

Their description of the credit crisis.

"Household debt has increased from 50% of GDP in 1980 to 100% in 2007. Financial sector borrowing has gone from 21% to 116% of assets in the same period. In fact, a chief cheerleader of the brave new financial world was the former boss of now bust Goldman Sachs – one Henry Paulson. He took them from $20 billion in debts in 1999 to $100 billion when he left. Having helped cause the crisis, and getting rich off it, he’s now the man putting forward the bail out plan as US Treasury Secretary. Despite self-imposed limits, Governments have also ramped up their debt levels – achieved by privatising everything in sight and putting all the deals ‘off balance sheet’ (thanks, Gordon!)

So lenders now routinely now lend out more than the total assets of the company. It was all made possible by massive deregulation, the completion of the project started in the Thatcher / Reagan free market era, as big business and their lobbies finally succeeding in getting politicians completely in their pocket, and indeed direct pay. Light touch regulation gave way to feather light.

The confidence of banks to throw ever more cash around was underpinned by the invention of the Credit Default Swap (CDS) market. This allows organisations exposing themselves by loaning out money to buy a kind of insurance against a default on that loan. In return for paying small regular premiums, priced depending on the perceived risk of default, that organisation could think of itself as no longer exposed to any risk, able to reduce any provisions put aside in case of default (so called ‘bad debt’) – and therefore free to lend out even more cash.

A culture of risky, unsound lending was thus created. To make things worse, all these debt contracts are traded, and indeed speculated on. They change hands multiple times as different people estimate their current value and risk differently. A tasty profit opportunity for canny get-rich-quick investors, but difficult for buyers removed from the original business to assess what they’d really bought.

In effect this all meant that many billions of debt could be considered assumed by people only having to put up in hard cash a tiny percentage of that figure. No problem as long as house prices, shares, bond prices etc all kept rising and more debt could be given out cheaply and easily to anyone who might otherwise be close to default. A debt mountain was gradually accumulated. In 2008, the amount of debt in the CDS market is estimated to be more than $50 trillion. That’s over twice the value of the entire US stock market.

Confidence started to collapse as the risks of sub-prime default got reassessed and foreclosure and bankruptcy rates started to climb. Banks panicked and realised they were caught in a kind of pyramid scheme. If people started defaulting in numbers nobody would have enough cash to pay out. The availability of cheap CDS contracts dried up and banks refused to lend to each other, wary that anyone of them could go under at any time. The cost of servicing the CDS exposures lept up, to the point where banks like Goldman Sachs and Bradford & Bingly couldn’t afford them and, unable to just borrow more to cover it, went swiftly bust. As credit availability goes down, the levels of debt exposure now threaten to bring down all types of companies, wrecking the economy from all sides at once."

.

Date: 2008-10-09 06:26 pm (UTC)
From: [identity profile] ibythetide.livejournal.com
on the subject of racism

i really like this clip.

i am mentally so far removed from understanding the credit crisis it's near ridiculous but i had read an article in the times (i think) about the CDS market. i had no idea the debt value of the market. how insane is that?!

Date: 2008-10-09 10:15 pm (UTC)
From: [identity profile] color-blue.livejournal.com
That's a really great clip!

Yeah, I didn't know anything about these instruments before I started working, and I was an econ major. They're really not as complicated as they make it seem, and I feel like the people who traded these wanted to keep them as obscure as possible - if no one understood what they were doing no one could stop them! Unfortunately, it's like politics - it doesn't matter if you pay attention to it or not, if you understand it or not; it's still going to affect you. And the whole thing makes me so angry. The other day I was reading a blog, and in one of the comments someone said - The days of the Fed believing that they can (or even should) just ignore asset price bubbles, and rather just clean up the mess afterwards are over. Likewise, leverage and maturity mismatch need to be managed systemically. We don't let people build nuclear reactors in their backyards, unregulated, under the banner of "free enterprise" nor should we allow the financial sector to expose the community to similar risk. - which pretty much sums it up (though what would make the analogy more perfect is to imagine that the people build the reactor using the government's money).

Date: 2008-10-10 12:32 pm (UTC)
From: [identity profile] marej.livejournal.com
*bookmarks to read when flu of doom is gone* (yup, don't i get sick on arrival)

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