The media have been informing us that the troubled bank Citigroup (whose credit card I use) has $306 billion worth of bad loans. For instance, I heard Kai Ryssdal say this on NPR’s Marketplace on Nov. 24, I read it in the Sacramento Bee on Nov. 25, etc.
So far, the federal government is in hock for $45 billion to bail out Citigroup, which is just one of many, many financial institutions and corporations which the government is being asked to bail out - not just under the $700 billion Paulsen plan, but also under other programs, such as those for the rescue of Fannie May and Freddie Mac, AGI, the Big Three auto companies, American Express and other credit card companies, etc, etc.In other words, Paulsen’s $700 billion aren’t going to be nearly enough, we are told. The $45 billion allocated to Citigroup aren’t even going to scratch the surface, since that bank has $306 billion in toxic assets, i.e. non-performing loans, - presumably mostly subprime loans that were made during the housing bubble of 2004-2007. We are also told that this is about 1/6 of Citigroup’s total assets of nearly $2 trillion.
Now I don’t know what part of the total financial sector Citigroup represents, but if they alone are saddled with $306 billion worth of toxic assets, then the total amount of such assets must be at least 10 to 15 times more, no? I.e. anywhere between $3 trillion and $4 trillion. Other banks, lenders, financial institutions, and those who insure them, ( E.g. AIG), are all in the same fix, aren’t they?
* * * * *
But it is difficult to comprehend these figures. I am not sure Kai Ryssdal, or NPR, or any of the media understand what they are talking about when they throw such figures at us. I believe that they are sometimes at least as ignorant as me.
I am not talking here about the various instances when I caught anchormen and newscasters on CNN or on CNBC’s business channel confusing a million and a billion. That also happens. No, I am now only talking about my hunch that the media (1) don’t understand the nature of the current economic crisis any better than I do, and that they (2) are in some ways even more innumerate than me, unable to grasp the magnitude of some of the figures they spout in their news reports. As a result, they spread confusion and misinformation.
* * * * *
Case in point: let me interpret the number $306 billion, the alleged amount in toxic assets owned by Citigroup. How does this number compute? In order to do this, I use some simple facts and some reasonable assumptions:
Fact/Assumption Number One: There are in America about 120 million households (See Census Data and Statistical Abstract of the United States).
Assumption #2: 65% of households own their private house/home/apartment. That’s 78 million mortgages. But many people own more than one piece of property, there is of course business property, etc. So let’s say there are 110 million deeds to real property in America.
Assumption #3: 80% of these mortgages are still being paid off. That’s 88 million mortgages on which banks should collect monthly payments, or some other sort of regular periodic payments.
Assumption #4. 85% of these are okay performing loans. After all, the vast majority of mortgages were taken out before the subprime frenzy, and even after 2004, millions of people still took out mortgages the responsible, old-fashioned way.
So let’ say that 15% of all real estate loans in America are “bad,” i.e. toxic, sub-prime, junk, non-performing, call it what you will. These are the loans that were made during the housing bubble, that should not have been made, that are now leading to foreclosures, and triggered the current world financial crisis. That’s about 13 million bad mortgages/loans.
Assumption #5. The average American home is now worth $200K, down from $380K at the peak 4 years ago. Remember, real estate is very expensive in places like San Francisco and much of California, but not so in Mississippi and in rural Kansas.
Assumption #6: The average sub-prime junk loan was for the full amount, with no down payment.
Assumption #7. If ALL sub-prime, junk, non-performing mortgages were a total loss to the banks, the magnitude of the entire problem of the exploded housing bubble would be:
13 million x 200 K = 2,600 billion, or 2.6 trillion.
If you want to be a bit more pessimistic, say that the problem is 3.5 trillion.
This sum is between one fifth and one fourth of US GDP.
If Citigroup owns 306 billion of the roughly $3 trillion in bad loans, that’s 10% of the total. Can that be correct?
Also, can Citigroup’s total assets (2 trillion) be one 7th of US GDP? Or about the same as the total economy of China or Germany?
And can the total combined assets of all US banks dwarf US GNP?
Can the combined assets of US banks equal three quarters of the world’s GNP? (54 trillion)
Can the total assets of all of the world’s banks be three times the size of world GNP?
The answer to all these questions is YES. Banks’ “magnitude” is measured in assets, whereas GNPs and GDPs are measures of wealth produced in a given year. The world’s GNP is 54 trillion but the total value of the world’s assets is seven times larger. Before the current financial collapse, I estimate the world’s total financial assets at 170 trillion.
And according to The Economist, financial assets only make up 46% of all assets, the rest consisting of real estate. Therefore, total world assets would be 370 trillion. This is $370,000,000,000,000, or 37 x 10 to the 13th power.
* * * * *
Well, these are just numbers. They are what they are. No meaning, really. Except perhaps this:
A) Banks are way too big and too powerful. Accumulating assets whereby a single institution is worth more than the GDP of Germany or California is bad. The power of corporations begins to dwarf that of entire societies. But corporations don’t represent the public, as societies do. Corporations represent shareholders only.
B) 13 million bad mortgages are a bummer, especially to institutions such as Citigroup, which are holding the bag. However, it’s only a small fraction of (1) Citigroup’s total assets, (2) a small portion of all mortgages, (3) an even smaller fraction of the total financial sector’s assets, and (4) an even smaller part of the world’s total wealth. It is unconscionable that the bursting of the housing bubble is permitted to create havoc with the entire world economy. 13 million bad mortgages in the United States do not represent the totality of the world economy. The crisis is far more psychological than economic.
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Tuesday, November 25, 2008
Friday, November 21, 2008
Sublimative Repression: Back to Freud, away from Marcuse
By Tom Kando
Herbert Marcuse was one of the gurus of the Counterculture, one of the founders of the neo-Marxist, critical Frankfurter school of Sociology. Theodore Roszak has characterized Marcuse’s work as the integration of Marx and Freud. Indeed, one of Marcuse’s provocative - and in my view true - ideas, was his concept of repressive desublimation. Here is what Marcuse meant by this:
He observed the obvious fact that, by the 1960s, Modern capitalist society had become a highly hedonistic, sexualized, consumer society. The idea of Capitalism remained, as always, to produce and to sell a maximum amount of goods at maximum profit. While Capitalism’s objective thus remained unchanged, the duty of the populace did change: In the increasingly affluent West, the “proletariat’s” duty became more and more consumption rather than production. This was the Marxian element in the Marcusian synthesis.The second element was Freudian: Freud has shown that libido was the wellspring of human energy, manifesting itself either in the form of sex, or - if sublimated - in the form of “higher” social achievements. The interest of Capitalist society, so Marcuse showed, was in controlling and defusing this explosive energy through a process of repressive desublimation. That is, by promoting maximum sexual permissiveness, modern hedonistic society ceases to repress libido, and thus robs it of its explosive potential. As sex becomes more frequent, more random, more trivial, more banal, it is de-mystified and it becomes less dangerous. This is also the theme of Huxley’s Brave New World, where the regime demands that the masses engage in periodic orgies, so as to better control them.
This is what is meant by repressive desublimation - a concept which most definitely rings true.
* * * * *
However, it is now 2008, and Americans are having less and less sex, or at least they are frowning more and more on various forms of sex, and panicking more and more about some of its manifestations.
For example, back in the sixties, being “progressive” meant favoring the legalization of prostitution and pornography. Today, many progressives/feminists have turned 180 degrees, arguing that these things exploit women and that they should therefore be punished more harshly, let alone be legalized. There is also a growing panic about Internet sex crimes, sex between teachers and students, etc.
* * * * *
So what is happening?
First, the facts: Many surveys confirm the fact that Americans have become sexually much more conservative than they were one and two generations ago. By any operational measure: rate of virginity among high school graduates, number of sex partners in a given time period, etc.
Of course, there are plenty of reasonable-sounding explanations for this turn to the right. Foremost among them is the emergence of AIDS in the early 1980s, and the realization that Sexually Transmitted Diseases (STDs) are more dangerous than was believed earlier. The realization that free-for-all sex à la sixties is not without serious consequences.
Part of the new sexual conservatism is positive: Feminism has taught us respect for women’s wishes - What part of No don’t you understand? The sixties free-for-all was certainly more to the liking of men than women. Hippies were among the worst sexists.
Also a great step forward has been the unmasking of rampant pedophilia in some quarters, e.g. the Catholic clergy.
Thank God, too, that the world is becoming aware of and beginning to fight against the abominations of sex slavery and sex tourism in South east Asia and elsewhere.
However, the new sexual conservatism cannot be fully explained on rational grounds. The new Puritanism is deeper than a merely practical response to new medical realities and the new awareness of various forms of sexual exploitation. There is definitely a new wave of moral panic under way. For example, just a few months ago, a Republican congressman introduced legislation to make adultery a felony. Over in England, the government is proposing to increase the penalty for prostitution - both for the prostitute and for the John. In many jurisdictions, consensual sex between, say, an 18-yr old boy and his 17-yr old girlfriend is considered statutory rape, i.e. a felony. Censorship of pornography is on the rise, on the Internet, in waiting rooms and elsewhere. Long gone are the days when Playboy Magazine was available in dental, medical, legal and barbershop waiting rooms, and when prison cell walls were covered with Playboy centerfolds.
While much of this is being justified under “women’s rights” and “children’s rights,” does it make sense to classify prostitution in the same category as sex slavery, and to censor all pornography?
The question remains: why the current moral panic?
To answer this question, I have coined a new term: Sublimative Repression. What does this mean?
Well, it’s Marcuse in reverse. I go back to Freud - again in conjunction with Marx. I re-introduce Capitalism as the explanatory principle.
What has happened since the 1960s? Simply this: Americans have begun to suffer greater and greater economic hardship. There is globalization, there is the internal polarization of wealth due to a quarter century of Republican policies. Most Americans are no longer rich. They have to buckle up once again. Each year they have to work more, just to stay even. Dual and triple income households become the norm. The length of the work week grows. People retire later. Even the average amount of sleep people get has declined - from 8 to 7 ½ hours. Our standard of living declines. What is one to do? Work more. Increase productivity. Sublimate. Who has time or energy for sex?
We are back to Freud, back to square one. With one difference: The rhetoric: The new Puritanism masquerades under the guise of “progress.” Sure, there is the Christian Right. Its message never changes. But on the same side are now also all the oh-so-progressive feminists and humanists who argue that the Megan’s laws, the Jessica’s laws , the anti-pornography laws and the anti-prostitution laws are all part of a crusade against such evils as pedophilia, sex slavery and the exploitation of women.
The piling on of laws against various categories of sex offenders (and here I must be careful, lest I get accused of being an advocate for pedophiles) is more demagoguery by politicians than sound policy. Almost anyone can run the risk nowadays of being labeled a sex offender, and after that, being subjected to Megan’s Laws, Jessica’s Laws, etc. You must be registered on the Internet, before the entire world. You are forbidden from living within a certain radius of schools, playgrounds, etc, i.e. de facto you have no choice but to live in some remote rural area, you become unemployable, etc.
This has happened to a couple of my students at the University in recent years. One of them was a thirty-something father. One night, he drove his teen-age babysitter home, and he committed some verbal indiscretion. The girl reported this to her parents, criminal charges followed. Although the man avoided prison, he is now registered as a sex offender for the rest of his life and his job prospects and his entire future are in jeopardy.
In many jurisdictions, it is now common practice not just to arrest prostitutes and Johns, but to also confiscating their cars.
What seems to be happening here, is a moral panic in the service of an economy which has a stake in desexualizing society, so as to maximize productivity, as America finds itself in increasing competition with other countries, and can no longer afford a leisurely lifestyle.
In the past, the rhetoric justifying the de-sexualization of society was that of the Christian Right. Now that this rhetoric has lost traction with a majority of the people, the justification takes a different form, namely “progressive” notions like “the protection of victims” such as women and children. The function of this desexualization is to increase work and production - Marcuse in reverse.
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Herbert Marcuse was one of the gurus of the Counterculture, one of the founders of the neo-Marxist, critical Frankfurter school of Sociology. Theodore Roszak has characterized Marcuse’s work as the integration of Marx and Freud. Indeed, one of Marcuse’s provocative - and in my view true - ideas, was his concept of repressive desublimation. Here is what Marcuse meant by this:
He observed the obvious fact that, by the 1960s, Modern capitalist society had become a highly hedonistic, sexualized, consumer society. The idea of Capitalism remained, as always, to produce and to sell a maximum amount of goods at maximum profit. While Capitalism’s objective thus remained unchanged, the duty of the populace did change: In the increasingly affluent West, the “proletariat’s” duty became more and more consumption rather than production. This was the Marxian element in the Marcusian synthesis.The second element was Freudian: Freud has shown that libido was the wellspring of human energy, manifesting itself either in the form of sex, or - if sublimated - in the form of “higher” social achievements. The interest of Capitalist society, so Marcuse showed, was in controlling and defusing this explosive energy through a process of repressive desublimation. That is, by promoting maximum sexual permissiveness, modern hedonistic society ceases to repress libido, and thus robs it of its explosive potential. As sex becomes more frequent, more random, more trivial, more banal, it is de-mystified and it becomes less dangerous. This is also the theme of Huxley’s Brave New World, where the regime demands that the masses engage in periodic orgies, so as to better control them.
This is what is meant by repressive desublimation - a concept which most definitely rings true.
* * * * *
However, it is now 2008, and Americans are having less and less sex, or at least they are frowning more and more on various forms of sex, and panicking more and more about some of its manifestations.
For example, back in the sixties, being “progressive” meant favoring the legalization of prostitution and pornography. Today, many progressives/feminists have turned 180 degrees, arguing that these things exploit women and that they should therefore be punished more harshly, let alone be legalized. There is also a growing panic about Internet sex crimes, sex between teachers and students, etc.
* * * * *
So what is happening?
First, the facts: Many surveys confirm the fact that Americans have become sexually much more conservative than they were one and two generations ago. By any operational measure: rate of virginity among high school graduates, number of sex partners in a given time period, etc.
Of course, there are plenty of reasonable-sounding explanations for this turn to the right. Foremost among them is the emergence of AIDS in the early 1980s, and the realization that Sexually Transmitted Diseases (STDs) are more dangerous than was believed earlier. The realization that free-for-all sex à la sixties is not without serious consequences.
Part of the new sexual conservatism is positive: Feminism has taught us respect for women’s wishes - What part of No don’t you understand? The sixties free-for-all was certainly more to the liking of men than women. Hippies were among the worst sexists.
Also a great step forward has been the unmasking of rampant pedophilia in some quarters, e.g. the Catholic clergy.
Thank God, too, that the world is becoming aware of and beginning to fight against the abominations of sex slavery and sex tourism in South east Asia and elsewhere.
However, the new sexual conservatism cannot be fully explained on rational grounds. The new Puritanism is deeper than a merely practical response to new medical realities and the new awareness of various forms of sexual exploitation. There is definitely a new wave of moral panic under way. For example, just a few months ago, a Republican congressman introduced legislation to make adultery a felony. Over in England, the government is proposing to increase the penalty for prostitution - both for the prostitute and for the John. In many jurisdictions, consensual sex between, say, an 18-yr old boy and his 17-yr old girlfriend is considered statutory rape, i.e. a felony. Censorship of pornography is on the rise, on the Internet, in waiting rooms and elsewhere. Long gone are the days when Playboy Magazine was available in dental, medical, legal and barbershop waiting rooms, and when prison cell walls were covered with Playboy centerfolds.
While much of this is being justified under “women’s rights” and “children’s rights,” does it make sense to classify prostitution in the same category as sex slavery, and to censor all pornography?
The question remains: why the current moral panic?
To answer this question, I have coined a new term: Sublimative Repression. What does this mean?
Well, it’s Marcuse in reverse. I go back to Freud - again in conjunction with Marx. I re-introduce Capitalism as the explanatory principle.
What has happened since the 1960s? Simply this: Americans have begun to suffer greater and greater economic hardship. There is globalization, there is the internal polarization of wealth due to a quarter century of Republican policies. Most Americans are no longer rich. They have to buckle up once again. Each year they have to work more, just to stay even. Dual and triple income households become the norm. The length of the work week grows. People retire later. Even the average amount of sleep people get has declined - from 8 to 7 ½ hours. Our standard of living declines. What is one to do? Work more. Increase productivity. Sublimate. Who has time or energy for sex?
We are back to Freud, back to square one. With one difference: The rhetoric: The new Puritanism masquerades under the guise of “progress.” Sure, there is the Christian Right. Its message never changes. But on the same side are now also all the oh-so-progressive feminists and humanists who argue that the Megan’s laws, the Jessica’s laws , the anti-pornography laws and the anti-prostitution laws are all part of a crusade against such evils as pedophilia, sex slavery and the exploitation of women.
The piling on of laws against various categories of sex offenders (and here I must be careful, lest I get accused of being an advocate for pedophiles) is more demagoguery by politicians than sound policy. Almost anyone can run the risk nowadays of being labeled a sex offender, and after that, being subjected to Megan’s Laws, Jessica’s Laws, etc. You must be registered on the Internet, before the entire world. You are forbidden from living within a certain radius of schools, playgrounds, etc, i.e. de facto you have no choice but to live in some remote rural area, you become unemployable, etc.
This has happened to a couple of my students at the University in recent years. One of them was a thirty-something father. One night, he drove his teen-age babysitter home, and he committed some verbal indiscretion. The girl reported this to her parents, criminal charges followed. Although the man avoided prison, he is now registered as a sex offender for the rest of his life and his job prospects and his entire future are in jeopardy.
In many jurisdictions, it is now common practice not just to arrest prostitutes and Johns, but to also confiscating their cars.
What seems to be happening here, is a moral panic in the service of an economy which has a stake in desexualizing society, so as to maximize productivity, as America finds itself in increasing competition with other countries, and can no longer afford a leisurely lifestyle.
In the past, the rhetoric justifying the de-sexualization of society was that of the Christian Right. Now that this rhetoric has lost traction with a majority of the people, the justification takes a different form, namely “progressive” notions like “the protection of victims” such as women and children. The function of this desexualization is to increase work and production - Marcuse in reverse.
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Thursday, November 20, 2008
The Seven Wonders of the World
by Thomas KandoLast year, the final list of the world’s seven wonders came out. It consists of the Great Wall of China, the Egyptian Pyramids, the Taj Mahal in India, the Roman Colosseum, the statue of Christ the Redeemer in Rio de Janeiro, the Mayan city of Chichen Itza and the hidden Inca city of Machu Picchu in Peru.
This list is the product of an effort started in 2001 by a Swiss organization. It began with a list of several hundred famous historical monuments in all six continents, and this list was gradually culled down through repeated voting by some world-wide public. Same method as American Idol.
This experiment is a failure. The final selections make no sense.
I will not quibble about which specific monuments should or should not have been included, but to suggest a few examples:
(1) The Brazilian statue of Christ the Redeemer clearly does not belong on the list - it is an early 20th century statue which measures about 100 feet and reminds one of the neo-realist monstrosities produced in Russia under Stalin. While I would not have include our Statue of Liberty either, that monument is certainly more deserving than the Rio statue.
(2) While Chichen Itza is nice, the Mayan site at Tikal is more beautiful.
(3) There are many other sites around the world which were more or equally deserving, for example Angkor Wat in Cambodia and several sites in Japan.
(4) Since my expertise is Europe, let me just suggest a few of the hundreds of magnificent historical sites on that Continent which deserved at least as much consideration as the final seven:
(a)The entire city of Venice, (b) the Parthenon in Athens, (c) prehistoric Stonehenge in England, (d) the prehistoric cave paintings of Lascaux, France, (e) the city of Pompeii in Southern Italy, (f) the Alhambra in Grenada, (g)the Mont Saint Michel in Normandy, (h) the palace of Versailles, (I) the Vatican, (j) Notre Dame Cathedral in Paris, etc, etc.
Here is what happened: The vote was a compendium of nationalisms, combined with an anti-European bias. It reflects demography and politics. What happened to the European entries is revealing: Europe’s representation on the original list was large, because Europe has the richest history of any continent. However, due to the world’s hostility to Western civilization and to the sin of “Eurocentrism,” most of the European entries were gradually eliminated. In the end, Europe squeezed by with ONE of its monuments left on the final list - not even Europe’s most impressive historical site. Meanwhile, Latin America has three.
It was a close call for Europe, which could have ended up with ZERO entries. Had this happened, the absurd outcome of this experiment would have been even clearer since - to repeat myself - no other continent’s history is as rich as Europe’s, no other continent is as rich in historical treasures. Then, even more obviously than now, the entire experiment should deserve to be junked as an utter failure.
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Thursday, November 13, 2008
Take it With a Grain of Salt …
By Madeleine KandoIt is hard these days to do the right thing to stay healthy. Every time you think you know what’s good for you, some study comes along and says that what you thought was good for you is either bad, not enough or will downright kill you.
Amongst many other things, we are told to eat more fish to get enough vitamin D, take up dancing to avoid Alzheimer’s disease and drink at least 8 glasses of water a day to flush out toxins.I happen to like fish, so for me that’s not a problem, and I run a dance studio, so if they are right I will probably die of something other than Alzheimer. But the water.. well, it makes me pee too much and I confess that I have not kept up with the ‘8 glasses of water a day’ advise. So, if they are right, I will start shriveling up like an old apple soon. I just cannot afford to leave my pre-school ballet classes every 5 minutes to go to the loo. It would be like letting the lions loose in a zoo. So I was relieved to hear that some doctors are now saying that drinking too much poses a far greater health risk than not enough.
But what makes us so gullible to all this so-called ‘expert’ advice? Are we all so insecure that we don’t trust our own judgement?
Could it have to do with fear? Fear of the big IF word? “IF I do this I will be safe from that.” “IF I drink 8 glasses of water a day I will be healthy and able to run a marathon.” This kind of reasoning reminds me of Sarah, one of my 3 year old ballet students. She barged into the studio one day beaming: “I am going to dance real good today, Miss Madeleine. I am wearing my tutu.”
There is a saying in the French language: ‘Avec des si on mettrait Paris en bouteille. (“With ifs you could put Paris in a bottle”. Also known as "If wishes were horses, beggars would ride.") In fact, every country has one of those expressions to denote the IF word. Here is one from Canada: “Si ma tante en avait, on l’appellerait mon oncle” (If my aunt had any we would call her my uncle).
Think about it. If the word ‘IF’ didn’t exist, there wouldn’t be any way to experience fear. Anything you can describe with an ‘IF’ expression is not real. If something is already happening you have other things on your mind then thinking: ‘what IF this car wasn’t about to hit me?’ The car IS about to hit you and you can bet your sweet bippy that you would sprint out of the car’s way, unless you are suicidal of course.
So whenever you hear of another study that is proving your ‘staying healthy strategy’ wrong, take my advice: just wait a little while. Hold off on the fish, the water, the dancing. Soon another study will come along and prove the exact opposite of what the ‘experts’ are telling you today.
The best advise regarding your health is this: take everything coming from ‘experts’ with a grain of salt.
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