Blue Space » 2008

11.19.08

The Socialism Debate

A funny thing happened on our way to electing our next president. The awareness of government sponsored socialism was raised several notches. Many in the socialist camp view this as a rare opportunity to further their ideology while much discontent exists with the American status quo. Many in the capitalist camp ridiculously defend their ideology by stating flatly that socialism is un-American. So let me enter the debate and thereby ruin any hopes that I may run for public office. (This will undoubtedly save me a lot of trouble in the long run.)

Let me first state explicitly that ideology is not a bad word. Ideologues have taken a pretty bad wrap because so many of them lacked common sense and/or morals while pursuing their ideology. However, I do believe an ideological discussion is warranted and highly needed from time to time. The present time in our American experiment is just such a time.

I believe that our country is in dire need of a newly framed ideological message proceeding from Christianity and those that support it. It is my belief that this newly framed message must make a clear delineation of how socialism can actually work. My belief is that socialism can only work among Christ followers that have sold out and made Jesus the Lord of their lives. These Christ followers must have rid themselves of all selfishness and coveteousness. This is no small task. In fact, it is monumental. This approach is fraught with peril as almost all historical examples (the earliest church in Jerusalem being one) proved to be unsustainable. Anyone who has served in a church or para-church setting knows that it is a very tall order to maintain an environment where shared burdens can truly be shared happily without sin and division creeping into the group.

The counterpoint to my belief that the church is the only place where socialism has a chance of working is my belief that government sponsored socialism is absolutely, positively destined to fail. It will fail in a morass of overexpenditure resulting from a beauracracy which inevitably will end up having no personal, emotional connection with those for which they should serve. I do believe that capitalism is the best economic solution in a fallen, sin-cursed world. It is NOT the best solution, but we are not in an environment that is the best. Even with this being said, capitalism is extremely fragile and does require a moral foundation among its constituents that does not devolve into making every dollar its god. (Doesn’t that hit close to home?!) I believe that the questioning and unease that has begun to manifest itself in greater and greater abundance among the American populace flows from the fact that more and more Christ followers and non-Christ followers realize that the United States has lost its way with regard to a moral foundation. The outcry is great against the cheaters among us! (CEOs, governmental officials, tax evaders, sinecure holders, lobbyists, medicare manipulators, welfare manipulators, disability manipulators, etc.) Be careful to fully examine your own life before you lay blame to a cheater as you may also be one. The same crying out people have widely differing views as to what our moral foundation should be, and I believe that all Christ followers must be working hard to guide that foundation back to a foundation built upon Biblical principles.

Author: joe | Permalink | 1 Comment | Daily Entries

11.06.08

Another Crazy Debt Addiction

After my last post, I will delve into something a lot more temporal and straight forward. The US Federal Reserve recently released information that it has now purchased $243 billion worth of commercial paper from various companies. This number has increased almost $100 billion in one week. Although I understand some of the reasoning behind cushioning the harshness of the sudden aversion to commercial paper, it substantially grates against my senses at how commercial paper has been utilized by banks and large corportions. First a primer on commercial paper, the description below is pulled directly from wikipedia.

In the global money market, commercial paper is an unsecured promissory note with a fixed maturity of one to 270 days. Commercial Paper is a money-market security issued (sold) by large banks and corporations to get money to meet short term debt obligations (for example, payroll), and is only backed by an issuing bank or corporation’s promise to pay the face amount on the maturity date specified on the note. Since it is not backed by collateral, only firms with excellent credit ratings from a recognized rating agency will be able to sell their commercial paper at a reasonable price. Commercial paper is usually sold at a discount from face value, and carries shorter repayment dates than bonds. The longer the maturity on a note, the higher the interest rate the issuing institution must pay. Interest rates fluctuate with market conditions, but are typically lower than banks’ rates.

As defined by American law, commercial paper is a financial instrument that matures before nine months (270 days), and is only used to fund operating expenses or current assets (e.g., inventories and receivables) and not used for financing fixed assets, such as land, buildings, or machinery. By meeting these qualifications it may be issued without U.S. federal government regulation, that is, it need not be registered with the U.S. Securities and Exchange Commission. Commercial paper is a type of negotiable instrument, where the legal rights and obligations of involved parties are governed by Articles Three and Four of the Uniform Commercial Code, a set of non-federal business laws adopted by each of the 50 U.S. States.

At the end of 2007, more than 1,700 companies in the United States issue commercial paper. As of 2008 October 31, the U.S. Federal Reserve reported seasonally adjusted figures for the end of 2007: there was $1.7807 trillion (short-scale, or 1,780,700,000,000) in total outstanding commercial paper; $801.3 billion was “asset backed” and $979.4 billion was not; $162.7 billion of the total was issued by non-financial corporations, and $816.7 billion was issued by financial corporations.

Here’s the skinny. Corporations and financial institutions perceived to be stable and highly solvent are able to receive substantial loans at extremely discounted rates via issuing commercial paper and rolling it over continually. Recently, many institutions which heavily utilize commercial paper have suddenly been revealed as something less than highly solvent. (e.g. AAA rated GE needed cash bad enough to borrow from Warren Buffett at a 10% rate plus incentives.) This has naturally led to a substantial reduction in the amount of cash available to them via commercial paper. Suddenly they are forced to play the game like the rest of us and either finance their activities from their own pockets or post collateral for a loan from a financial institution. (FYI - Financial institutions aren’t looking so stable either and don’t really want to lend to less than highly solvent corporations no matter how big.) It seems to me that receiving cash to fund your operations at interest of 3% or less falls under the category of “too good to be true.” The more prudent among us understand that if something sounds too good to be true it probably is. Alas, this maxim has been forgotten along with much of our senses during the period of our “goldilocks” economy. So for the good of the economy, the US Federal Reserve feels it must step in and help these major, highly solvent (supposedly) institutions come down from their commercial paper high gradually. This is nothing more than a not so cleverly disguised, massive, additional bailout of financial institutions and major corporations. These actions must ultimately be funded by newly issued T bills from the US Treasury. (But what’s another $100 billion a week. That’s just $5.2 trillion added to the national debt per year!) I’m still waiting for my 3% loan from the US Federal Reserve. Perhaps it will come with the next stimulus package.

Author: joe | Permalink | No Comments | Daily Entries

11.06.08

And in the end…

One of the curious traits of human nature is our additional attentiveness to the ends of things. If you have ever watched a small child when they first discover a light switch, you will note this human idiosyncrasy in a nearly pure form. Often the child will sit for an inordinate amount of time (a preciously inordinate amount for the tired mother or father) looking at the switch, making it move, and then watching the light illuminate or darken. It is worth noting that never have I seen a child after the first illumination, stop, look at the distance between the light and the switch, and thoroughly investigate what has transpired between the two. No, a normal child seems to focus exclusively on the ends of the cause and effect and take much pleasure in making change over and over and over again.

Likewise, I find it fascinating the gravitation that our minds have toward the ends of time. The chronological ends which I speak of are twofold, the beginning and the end. We dedicate a significant amount of consideration and brain power toward better understanding one event (the beginning) which seemingly has no direct bearing on us and another event (the end) which has a seemingly low likelihood of having an impact upon our lives. A strictly logical analysis would point us clearly toward the fact that only the present (middle of time) has any impact upon our lives and therefore we should focus our attention and minds only upon the present. But oh how our minds wander from the subject at hand! One of the BIG questions of life is why does our mind wander in such a manner? Does our mind wander due to persistent social conditioning to consider such matters? Does our mind wander because it is simply too bored with the present and needs something to do with its spare analytical power? Does our mind wander because we secretly enjoy sabotaging our present existence and therefore prefer not to pay attention to it? Does our mind wander because there is some external force that is actually controlling it? On a strictly logical basis, I have no answer for you. I could create a logical answer, but it would most certainly be flawed with either circular reasoning and / or subjective assumptions.

At this point I could stop my essay and retreat safely to my “middle of time” existence. I am either too much of a fool, too full of myself, or too concerned with the question to let it drop. So for sake of simplification, please allow me to reframe the question. Because our minds do not allow us to easily forget the ends of time, how are we affected?

I would argue that due to this idiosyncrasy/foible/spirituality we are affected in almost every way. This is based upon a belief that how your mind processes the ends of time has a significant impact upon your worldview. By the way, I would argue that your worldview determines which word you chose for the first sentence of this paragraph. Worldview is “the overall perspective from which one sees and interprets the world” or “a collection of beliefs about life and the universe held by an individual or group.” Amazingly those utilitarian, stoic Germans coined the word as Weltanschauung.

At this point you would be justified to ask, where in the world are you going with this? Well, there are many different ways to go, and perhaps in the future I will deal with more of them, but for now I would specifically like to tackle the end of the world as we know it. Our chronological mindset often brings up the question of how will it all end? I hate to take possible answers to such an important question from science fiction, but science fiction movies do seem to delineate the spectrum of answers rather well. They typically envision a future cataclysmic, horrible existence or a future utopian, enlightened existence. (I suppose a future normal, similar existence probably wouldn’t do well at the box office.) It seems to me that given only personal reasoning your take on the end is likely to be heavily influenced by your own inherent optimism or pessimism. The educated optimist has hope for the human race despite its flaws and often trusts in natural selection to enable us to eventually attain our utopian, enlightened existence. The educated pessimist has fear of the many uncertainties of sustaining life and between the human race’s relative ignorance of the universe we inhabit and the many slight chances of cataclysm on an ongoing basis believes that our ignorance and / or those slight chances will eventually catch up with us and seal our demise. They might even label it an inconvenient truth.

I don’t have confidence in my personal reasoning, and I am aware that I would definitely end up in the pessimist camp. The truth I choose to believe is the Bible. Therefore, I hope that it would be said that my worldview is Biblical. I believe that the Bible teaches that we are heading toward a climactic ending which will begin with an unusual peace and quickly turn into a living hell with many cataclysmic, horrible features. The good news is that after that Jesus Christ returns and exercises his omnipotent power to usher in a completely perfect, enlightened existence for those who remain. At this point let me state clearly that I believe it is a considerable waste of time to focus too much on Biblical prophetic writings and to spend ones life distracted from what Jesus has called you to do. (i.e. You won’t find me wandering around Times Square with a sign that reads THE END IS NEAR.) However, my worldview causes me to envision a falsely perceived upward progression of mankind followed by disastrous consequences. This worldview leaves me skeptical of an inordinate reliance upon man’s progress. Let me also state emphatically that I believe no one knows when the end will happen. I believe this allows for a considerable ebb and flow with regard to mankind’s progression, enlightenment, regression, and ignorance. If you would like to hear the Biblical end of the worldview please read Jesus’ words in Matthew 24.

The main difference between the secular and Biblical end of the worldview is who is in control. The secular optimist worldview believes that the human race is in control of its own destiny. The secular pessimist worldview believes that either the human race will cause its own demise or random chance will lead to our demise or a combination of the two. The Biblical worldview believes that ultimately God is in control of events that will lead to the end of our world.

Author: joe | Permalink Comments Off | Daily Entries

John 14:6

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The Socialism Debate

Another Crazy Debt Addiction

And in the end…

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