Friday, October 10, 2008

Good Time to Buy Property?

James Call: Expert. Smart! Sassy! Government employed!

Reader "Mandy" asks: Should poor people like myself start investing in property now that prices are down? Or is now the worst time to apply for a loan?

In a word, nope. Don't invest yet. Home prices have not hit bottom. They should be hitting total rock bottom most likely in 6 months. The question is, will you have a job in 6 months? Maybe if these central banks get their shit together this weekend and the TED spread narrows, businesses will stay afloat. But don't count on having a job 6 months from now if you're working in a non-essential business sector.

However, yeah, soon... 3-9 months from now... good time to invest in home prices if you got that sort of money. ESPECIALLY in places like the suburbs of LA or the Bay Area, parts of Boston, etc. Those property values eventually will rise again. Don't bother with Podunk nowhere exurbs in Missouri. We're not likely to see a return to full value for those properties until inflation causes literally every commodity and property to rise in value.

As for applying for a loan... I'm not sure you're going to get a loan. Banks are loathe to lend to each OTHER, let alone you. If your credit is top notch and your income is considerable, go for it, but like I said, wait a few months.

This is a fantastic time to invest in oil, though! That will go straight back up as soon as this credit crisis begins to resolve. Far quicker than real estate.

RECOMMENDED READING: I would stay away from most conventional investment magazines and websites for the time being. They helped get us into this mess. Stick with the economist, the NY Times, the WSJ, more clinical sources. Check out the "Naked Capitalism" blog and follow the links around.

Turkic is a language group

Reader "Alex" comments:

Turkic is basically a language group, not an ehthicity - thouhg mnay groups are ethnically close as well, of course.. an unreltaed but culturally intersting note: took Aidan to the nearby park to play baseball.. local Kurds ( large population in nashville, since we're so close to Kirkuk) were having their post-ramadan Eid feast/party/pinic.. a group of 30-40 year-oldish men set out a nice rug on the grass and sat, crossed-legged and played some sort of vicious gambling game , with much earnest and loud discussion... all we needed were a winged Bulls and some water-wheels, et voila! Kurdistan!

True true. That's because the "Turks" who come out of the Caucasus quickly interbreed with the assorted groups they subjugate. I'm sorry if I didn't make that point more clearly in my earlier post... and it's true! Those Kurds don't fall far from the Assyrian tree. Same region, after all. Very ancient bloodlines course through these conquered peoples. Unfortunately, they're all YHWH/God/Allah worshippers now and have turned away from the ancient Gods. Oh well, a boy can dream.

What those Kurds are doing in Nashville, I really don't know, however. And why are there so many Armenians in LA? Someone explain that to me.

RECOMMENDED READING: I know I already mentioned The Great Game series by Peter Hopkirk, but let me just endorse it again, along with The Cartoon History of the Universe vols. 1 and 3 specifically.

Fouding of Germany

James Call: Expert! He isn't getting laid, because he's writing this blog! But he is still smarter and better than you. And all his opinions and facts are 100% accurate.

Reader "Damian" asks: When and how did Germany become a country?

Oh man, what a great question! Germany's unification is one of the most ass-kicking unifications of all time, and features one of my favorite practitioners of realpolitik, ladies and gentlemen, let's get a big round of applause for... OTTO. VON. BISMAAAAAAAARK!

Ok, so, back in the day, Northern Germany was the big nastay Kingdom of Prussia. Berlin was the Prussian capital, I'm pretty sure, and Prussia also stretched all the way out to Bonn (future Western German capital). In the Seven Years War, in which Frederick the Great invaded neighboring Saxony, Prussia kicked the asses of Russia, France, Austria, and Sweden, all at the same time. This marked Prussia as the military badasses of Europe for the next century and a half. Oh, except when they totally got their clocks cleaned by Napoleon Bonaparte, but that's a story for another time.

Point is, post-Napoleon, the old Holy Roman Empire (don't even BOTHER trying to understand that nonsense) was dissolved and a "German Confederation" was in its place. Problem is, these assorted Krauts really didn't have too much in common. The Prussians and the Frissians and the Bavarians were like Californians, Nevadans and Coloradoans. I.e., similar, but they'd hardly say that about each other. The Bavarians in particular were known for their foul manners and low breeding. These people didn't like each other so much.

But what these little states all had in common was that they were tired of being pushed around by France, Austria, etc. They were also the "workshops of Europe," really the birthplace of modern industrial development (along with England the U. S. of A.). During the tumult of the mid-19th century, communism was born here! Karl Marx was a German through and through, the good kind, the intellectual who called for states to be abolished and the workers to run the world. Sigh. A girl can dream, can't she?

But little dinky worker's revolts don't build big countries like Germany. Nope, modern warfare builds countries! So when Wilhelm I of Prussia named Bismark Chancellor in 1862, what did Bismark do, other than rapidly modernize the military and start laying down rail (later VERY important)? He started invading his neighbors.

In three successive wars, Prussia kicked the ass of the Austrians, the Southern German states, and France. Definitely the coolest war was the Franco-Prussian war of 1871. This was the first war to really rely heavily on rail (discounting the US Civil War, of course). While the French relied on traditional infantry and cavalry, the Prussians used railways to quickly reach the front - and managed to conquer all of Northern France, including Paris.

Of course, Bismark wasn't a barbarian, and that's what makes him so great. He let Paris go free and most of France return to the French. In exchange, he got recognition of a whole new country: Germany.

And that's how Germany was born! Iron and blood! That, and Bismark's top-notch ability to build alliances and take down ONE enemy at a time: Austria, then France, etc.

Germany was KEPT ALIVE by Bismark's crazy mad diplomacy skillz. He was able to make the peace with both Russia and Austria, to keep Germany's traditional enemy, France, isolated (Bismark was only on good terms with newly-unified Italy, as well as Britain).

Of course, when Kaiser Wilhelm II got the helms of the state, he totally disregarded Bismark's advice and was all "We can take on France and Russia at the same time! Get out of here, Otto!" Which any Risk player can tell you is a totally asinine strategy to pursue, but that's what he did, and then we got WWI, and then we got the Nazis, and then we got WWII, and then we got Kraftwerk, and I guess it's all good, but Wilhelm II should have listened to Bismark... maybe France would be owened by Germany today.

p.s.: Don't get me wrong though, Bismark was virulently anti-worker and wanted to completely crush the socialists, something he was not able to do, as vigorous socialist and communist parties and movements continued in Germany well up into the 1930s, when they were finally snubbed out by the Nazis.

RECOMMENDED READING: Play some Castle Risk! Try basing yourself in Germany and keeping yourself alive against both Russia and France. It can't be done. Or read any military history of the 19th and/or 20th century. They're all say the same thing.

Nukes and the Prisoner's Dilemna

James Call: Expert! Smarter than you! Also handsome!

Reader "Amy" requests: "explain the prisoner's dilemma and comment on whether you think the USA is increasing the risk of nuclear war by having WMD. "

Oh, the prisoner's dilemma. A great dilemma, one of my faves.

Ok, the premise of the dilemma is this: two people are arrested, and throw in jail. They alleged committed or were planning a crime together. The police separate them, and offer each a deal: if you testify against the other prisoner, you go free and he/she stays in jail. If NEITHER of you testify, you both stay in jail for a little bit, but eventually go free. But if you BOTH testify, the jail term is longer.

Classic game theory shit, nice thing to teach schoolchildren. Sets you to to understand "nuclear deterrence" and "mutually assured destruction" (MAD). MAD basically states that if you're facing down a person with nukes, and vice versa, one of you is going to have to be batshit insane to launch a nuclear attack, because that will end all life on Earth forever, and no one wants that. The point of war is to win, not for everyone to lose.

Thankfully so far nukes haven't gotten into the hands of people who literally want to blow up the Earth. But they will, one day, if we don't get rid of them.

Look at Hitler. During his "downfall," he wanted Germany itself to burn. Kill 'em all, and let God sort 'em out. Imagine if he had had nukes! That would have been it for the Earth, potentially. He was genuinely crazy enough to use them. Most world leaders are NOT, but that's why I keep saying you should read Rise and Fall of the Third Reich. It CAN happen here, ladies and gentlemen.

But assuming no madmen are around, MAD works very well. Imagine if there had been no nuclear deterrence during the Cold War!!! Holy fuck, that would have been awesome!!! It would have been the bloodiest, and largest, land/sea/air war of all time. World War III! That would have ruled so hard.

But the pinko commie rats didn't want to blow up the Earth, nor did the yankee imperialist swine. That's why the Cold War wasn't really a "war" at all, it was a gentleman's agreement to divide up the Earth between two "opposing ideologies" (questionable at times).

However, since nukes are so freaking powerful, you really don't need too many to achieve MAD conditions. Let's look at today's nuclear powers. For good measure, let's include those who are unofficial or former nuclear powers. So that gives us: the US of A, China, Russia, India, Pakistan, France, England, Israel, Nouth Korea, and South Africa. Soon to include Iran (yay, go Persia!). Now, let's say each of those powers has 10 hydrogen bombs. That's a total of 110 hydrogen bombs, discounting Iran. That's MORE than enough to create pollution so severe that mankind is almost totally eliminated. Let's crank it up to, say, 30 bombs per world power, and you have enough destructive force + radiation to end life on Earth. Period.

So where the WMD issue becomes a problem is when you exceed the MAD threshold. I'm not sure how many thousands of nukes we have left in this country, but we do have thousands: more than enough to destroy the Earth many times over. Now let's say we get sloppy and let a few nukes slip - you can sell those fuckers for a pretty penny.

Now one of those nukes ends up in the hands of a suicide bomber.


And that's the problem with the prisoner's dilemma/MAD... that you can go too far with it. Most of our nukes, I maintain, were built with profit, rather than strategic, motives in mind. There's money to be made in selling missiles to the government. But eventually, when central governments melt down - like the USSR's, like Pakistan's often does - nukes get loose. And then you REALLY have to track them down. It's one thing for North Korea's petty dictators to have a bomb. But what about the Taliban? Can you imagine that shit?

But keep deterrence levels manageable, and they're excellent: look, so far, no WWIII. If we ever figure out how to "defeat" nuclear weapons, you can expect another serious land/sea/air war. Hopefully, this won't happen in our lifetimes. Nor will the madmen getting the bomb. But that's a more likely scenario: it's all just a matter of time.

RECOMMENDED READING: I would just watch Dr. Strangelove over and over. Also, anything on Henry Kissinger, a master of nuclear deterrence theory.

Is global warming manmade?

Welcome to James Call: Expert. I am smarter than you and I'm going to tell you how it is. Shut up and listen.

Reader "Amy" asks: "is global warming man made?"


Does the Earth have natural heating and cooling cycles? Yes, of course. However, they occur over HUNDREDS OF THOUSANDS OF YEARS.

Meanwhile, the increasing pace of icecap melting directly correlates to the amount of man-made carbon in the air. Carbon traps heat and melts shit and fucks us up. It's well documented.

The "scientists" who dispute this are crackpots and/or paid off by special interests. It's that simple.

EDIT: Ha ha, reader "Liz" informs me that I shouldn't refer to the scientists who dismiss the manmade nature of global climate change (not warming ... I just prefer to use "warming" 'cause I was raised with it) as "crackpots," or even paid off. And it's true, I'm being a little harsh. After all, the Earth does seem to heat up significantly and cool down about every 100,000 years, and the last time it was really hot was about 100,000 years ago. Nonetheless, the significance of the change within ONE CENTURY, which is a blip in terms of the Earth's timeline, would seem to indicate that the large amount of carbon in the air, belched out by indsutry, has heated our world significantly.

But that's not to say that everywhere is just going to get HOT, which is the problem with the term "global warming". Global Climate Change is the correct term, because what's really going to happen is the weather is going to get more intense.

RECOMMENDED READING: Any basic science textbook. Plus, watch "Nova".

On Energy

Reader "Adam" writes:

While your right that transportation, communications and basic utilities infrastructure in this country, much of which has been steadily decaying since the depression, are desperately in need of updates and repair, I don't see how you can endorse the use of atomic power. Even if you ignore the possibility of nuclear catastrophe (which is certainly plausible given the complete lack of government oversight, rampant corruption and incompetence in America) atomic power plants have never been efficient. They generally end up losing money and require government bailouts. Obtaining and refining uranium takes a lot of energy. So does transporting and storing the resulting toxic waste. Atomic power plants cost hella money to build and can only be used for a limited amount of time before they need to be replaced. Unlike power from solar, wind, tidal (etc) sources which are essentially limitless and cause little to no environmental destruction. These would not require the centralized corporate monopolies that currently control our public utilities. Of course these technologies aren't efficient enough yet to support our decadent American lifestyles, but if we spent a fraction of what we spend securing the last of the world's fossil fuels on "alternative" power sources, we'd be way closer to weaning ourselves off these power sources which are fast becoming completely obsolete. Yeah, Obama says he's all for atomic power, but he also supports offshore drilling, ethanol and the mythological "clean coal" all of which will be environmentally disastrous and wont do dick in the long run for our "fuel crisis".

Well, you're quite right. Nuclear waste disposal is a serious issue. I still stand by nuclear as a quality alternative to clean coal, which would indeed be a disaster, and especially ethanol, which is already a disaster in some ways.

And that's the real problem with Obama, in my view: he's already in the pocket of Midwestern agricultural interests who want us to rely on 2:1 (output to input) corn ethanol, when 6:1 Brazilian sugar ethanol is readily available... and besides, ethanol PERIOD shouldn't be used, it's a pollutant just like oil, and solar and wind are coming of age.

I disagree about the monopoly issue, though: it's never too late to start cornering the market on solar and wind. After all, both solar and wind will require a vast new upgrade of the national energy grid to be efficient. Such a massive undertaking will require the power and coordination of the federal government. And the federal government can be very easily swayed by a few wealthy individuals. After all, that's by and large how the oil industry came to power: wildcatting, followed by local monopolies, followed by larger monopolies with government influence.

I think this the most likely future of the solar and wind industries. However, I'd rather have clear energy monopolies than dirty energy monopolies. And monopolies -can- be regulated in a way that decentralized energy perhaps cannot.

What I'm trying to say is, in the course of setting up the energy grid, solar/wide/tidal monopolies will probably come to be, simply due to how the access to gov't game is played.

RECOMMENDED READING: The whole sleiugh of oil industry books I've mentioned, but especially The Prize by Daniel Yergin. The Economist is a great place to read about the new energy industry, but bear in mind they take a very free-market-booster approach, so read between the lines. And there's so much reading on how monopolies are born and come to influence gov't that I really don't know where to begin. Revisit your American Pageant or whatever and read the bit about the breakup of Standard Oil back in, what, 1911? I think it's 1911.

Thursday, October 2, 2008

Summing it Up: Late September

Ok! As we move into a whole new month for James Call: Expert, I'm going to quickly sum up what's come so far. Some of you have noted that my posts are a bit long and maybe difficult to follow. So just read THIS post... I'm about to break it all down into soundbytes for y'all.

What caused our financial meltdown?

Years of no oversight of finance, the growth of finance as a portion of our entire economy, all of us counting on our homes and credit cards instead of, say, earning a healthy wage, and this fucking sleight-of-hand chop-chop BS called "CDOs" in which really bad loans were bundled with good ones to look fantastic. And the heavy reliance on finance heavy hitters, even old, respectable ones, on said BS.

Is John McCain's little "suspending his campaign" gambit gonna work?

I (sort of) called it - it did not. It just made McCain look stupid. Like everything else these days.

Who won the debate?

I was more or less right about this too. After all, I am very, very smart, and better than you. The debate was not a game changer. Obama is now said to be the winner of the debate, based on the visuals. Only racism can stop Barack now... or maybe an attack on Iran?!? That would fucking ROCK.

What is the best starting class in 2nd Ed. Dungeons & Dragons?

The cleric. Good balance of fighting abilities and the "cure light wounds" spell. Also, a great angle around which to base a character.

Is the "Invisible Hand" a borderline theological concept?

Yeah. It's a handy thing to toss around at cocktail parties, but the mofos who take this shit without any grains of salt sound like Communist Party functionaries. Or, hardcore Catholics, I guess.

How has insta-polling affected our politics?

By making the candidates less "stern leader"-like and more "pandering buffoon"-like. But good pols still understand the importance of "staying the course". Notice the hit Obama took when caving on FISA, for instance.

Assorted ridiculous questions

The Dove is just a glorified Pigeon. It's an Angel Rat with Wings.

Are we headed towards super fun Nazi time?

Probably not. But who knows, we could get Obama '08 and if he turns out to be Jimmy Carter II, Palin in '12, and lord knows that would be terrifying, would it not? But we didn't go (all out) Nazi under Dubya, so I still sort of believe in America.

Do we really need this bailout?

Yep, to keep business running. But it sucks. At this point, it truly is a "crap sandwich". It's a terrible fucking bailout. Can we please just nationalize this shit like they do in civilized countries?

Jews in Georgia? And ... UZBEKS?!?

Jews are everywhere! Especially the former Soviet Union. And, yeah, Uzbeks. Weird. Gotta a wicked sweet name for their ethnicity: "Uzbek". It just rolls off the tongue.

...And with that all said on done, please, BRING ON THE QUESTIONS!

Still angry at having to work as a file clerk,
James Call

Wednesday, October 1, 2008

Central Asian Trivia Time

James Call: Expert here! Back with some very fun questions from reader "Erin". Standard Disclosure: Please bear in mind that there are way more "expert" folks out there than I! But they're not as good drinking buddies.

Georgian Jews?!?

That's right baby, Georgian Jews. Now I don't know the exact history of Georgia's Jews, although I'm pretty fucking certain that a healthy dose of them were frontline Bolsheviks back in the days, because Stalian and a lot of the other first-gen Bolshies were straight outta Georgia, and the Jews, with a long history of often radical intellectualism, tended to go for things like "the overthrow of a feudal autocracy by the vanguard party of Communist revolution" all the time. In fact, it's fascinating to look at the early Zionists and see how thematically close it was to various strains of communist thought.

But, while I don't know the internal migratory history of the USSR very well - and there was a fuckload of it, while Stalin and others were all "Hey, Siberia needs more starving Azeris," etc., I'm willing to bet a lot of those Georgia Jews go all the way back to the good old days of the Khazars.

(p.s.: Turns out I was totally wrong about my first guess. I thought it was the nearby Uighurs, who converted to Manichaeism back in the day. Let's not even go THERE, girlfriend.)

The Khazars were your basic horseback riding fun loving subertribe/kingdom back in the day, back around, oh, 900 AD, I want to say? Back when Russia was around but way before Peter the Great made it into that familiar shape we've all come to know and love - The Russians used to be centered around the Principality of Moscow and a few other towns, and didn't really become a force to be reckoned with until they starting fucking the Ottomans (today's "Turks") around the 14th and 15th centuries.

Anyways the Khazar down there were doing their Turkic thing, just trying to stay alive, and of course you always had your Christians, Jews, and Muslims trading with these assorted Turkic groups, located as they were between China (rich), Persia (pretty rich), Byzantium (also pretty rich), and Europe (piss poor but featuring some handy crap such as woolens, etc). And apparently some notable Khazar military figure named Bulan starting banging this Jewish broad, and next thing you know he's all, "Fellow Khazars! Let us embrace this fantastic faith centered around a Holy Land that is way the fuck far away from us and has nothing to do with our lifestyle up here!"

And the other Khazars were all, "Hold on, cowboy," so Bulan convened a sort of grand argument between Jewish, Christian, and Islamic notables. And they all made their points about how great their YHWH-centered religions were, but in the end of the day the conversion probably came down to money and geopolitics, such as they were: The Christians could offer trade with the shitty Christian world (well, Byanztium would have been handy), the Muslims could do Arabia and Persia (muuuuuuch better), and the Jews could do ... drum roll please ... BOTH!

Because ever since the Christians came to power in Rome, the Jews have occupied a weird position of being the Chosen People let also flawed, and all throughout Rome up through the period of Islamic ascension and the rise of the Middle Ages, Muslims and Christians have alternately persecuted Jews and used them as go-betweens. Besides, Jews have tended throughout their history to be great world travelers and traders... there were plenty of Jews in the T'ang Dynasty of China, for instance...

So the Khazars went Jewish, and presumably did alright for themselves, although, where the hell is Khazarstan today? They are still out there, somewhere, you can bet your tuckus.

So I don't know if those Jewish Khazars, close as they were to where Georgia is today, are related to Georgia's Jews, but I wouldn't be surprised.

Next question!

now, i am also curious about the uzbeks, since the very best meal i had all summer was at the uzbeki restaurant....

Uzbeks Uzbeks Uzbeks... I got Uzbeks on my mind. I don't know much of the history of Uzbeks specifically, except it's important to note all these types are basically Turks. Not Turks from Turkey... it's a weird distinction... the most famous Turkic groups of all time have to be 1. The Mongols, 2. The Ottomans, and probably 3. The Seljuks, although there's so many other bitchin' Turkic groups. Fuck, the Afghans used to be Turks; they're just Turks who settled down.

You may note that a Mongol looks nothing like an Ottoman. That's because the Turkic groups were small, horseback riding types. They were always great conquerers, and to a lesser extent, traders, but once they actually conquered something, they had to intermarry to really dominate a place. And that almost never worked out for 'em. You can't hold down China, Persia, or Asia Minor very long. Their ancient and far-out cultures will always reassert themselves above barbarism.

Anyways, Uzbeks, I assume they're pretty old at this point. I DO know a bit about modern Uzbek politics, though, and it's great fun.

First off: ever hear of the "Northern Alliance"? They were our proxy in the invasion of Afghanistan (our invasion, not one of the other invasions). They consistented to a large extent of Uzbeks and Tajiks, from Uzbekistan and Tajikstan, natch. They were not Pastun like the rest of the country and therefore couldn't really do squat without the help of NATO. They also do not rule the country today. Although they got the opium supply flowing again, after years of Taliban repression of the drug trade. PHEW! Those illegal opium dollars are very convenient for helping our intelligence agencies purchase small arms for paramilitary groups.

Also, Uzbekistan is totally filled with natural gas, and part of the Project for a New American Century clique's New American Century totally included this ridiculous 1,000+ mile pipline to go from Uzbekistan through Afghanistan and then through PAKISTAN to the Indian Ocean. Ha ha ha! That's like say, "Hey, I live next to three crackhouses, I wonder if I can run my laundry line through all three of 'em" and expecting nothing to go wrong. Here, check out this map:

Gotta admit I'm not too up on the last few years of coup-related activity in Uzbekistan. I know they have the standard "radical Islamic student" problem that pretty much all those countries have. Remember: the age of the horseback conquerer is over, so Central Asia's a pretty sad place now. It's where Russia meets Islam meets China, with some Americans (who are on course to get kicked the fuck back to the Western hemisphere where we belong) mixed in.

I also know that Islam Karimov was the dictator of Uzbekistan for many years, and now it's some other guy. It's your basic post-Soviet totalitarian dictatorship.

I finally, I know that "Trans-Caspian Pipeline," to bring natural gas to the Indian Ocean for Exxon or whatever, is toast. It's a "pipe dream" you might say. HA HA HA! Since we've so royally boffo'd everything in Afghani- and Paki-stan these last few years, the Uzbeks have thrown down with their old overlords the Russians, and will be supplying their natural gas to our pals in the Kremlin from here on out.

And that's all I know about the Uzbeks. I should go get some Uzbek food too, I bet there's hella good lamb involved.

RECOMMENDED READING: For easy and VERY entertaining reading, start with Larry Gonick's Cartoon History of the Universe vol. 3. All of you should read all three volumes of this anyways. It's your defacto primer for the history of man. I am dead serious. And it's funny as hell. Also strongly recommended: The New Great Game by Kleveman Lutz. Sooooooo wickedly good. A few years old at this point, but really explains the hell out of the struggle for power in Central Asia, which is a large part of the impetus for our invasion of Afghanistan in the first place. It's all about the pipelines, baby! Also, check out ever so often. They're great for this sort of coverage (it's short for "Asia Times Online"). Oh, and here's some online book which looks really good and from which I fact-checked my Khazar/Judaism info (glad I did that! I would have had Manichaen egg on my face! Would have been ashamed to show myself at Columbia U. parties, etc.),M1 ... Mom, Dad, I want this book for Christmas.

Tuesday, September 30, 2008

Do we really need this bailout?

Welcome back to James Call: Expert. Standard disclosures: I am not truly an expert, I just know more than you (maybe). And I do not proofread or fact check this thing unless called on it. Because I don't have the time.

Today reader "Mike" asks:

Do we really need this bailout?

It's a good question! The answer is "yes," because investment has frozen up. In essence, banks have all moved their resources into treasury bonds, and the yield is way down. I have to admit here I can't really keep my numbers straight in my head. I have been reading in the Times and online that the yield on these bonds, since everyone is going there, is about 0%. I.e., it's the modern day of equivalent of taking your money out of the bank and sticking it under your mattress. But then, the 30-year treasury is still at 4%ish. But... that's 30 years to hold on to that shit.

BTW, if my prior posts on this subject were too long winded for you to read: DO NOT WITHDRAW YOUR MONEY. The FDIC protects your deposit. For real.

Banks are so risk-averse that they're buying madd treasuries and that means there ain't no cash for nothing else. Your deposit is safe but the money from the banks to the businesses you work for is not. I saw the apocalyptic "3 million jobs lost in 6 months" figure from some economist, who I hope was just trying to scare us, 'cause, Jesus Christo. But payrolls are gonna be cut, big time.

We need to inject capital into the banks to get liquidity going again. This is what we did in the New Deal; it worked. It worked slowly, over time, but it did work. We also need to root out the toxic assets and get some oversight crankin' so we're not "throwing good money after bad".

Now - the big question is - what kind of bailout do we need. I'll just try to keep this short. I read a real eye-opening post on "naked capitalism" (google that shit) yesterday, basically calling for the nationalization of the banks. Not in the real rabble-rousing commie way, but, just as a business proposition for the government. That's, in essence, what Sweden did, I believe - took over the banks, sold off the crap, and eventually sold the bank back, earning a profit for the government. I think. They may have retained shareholder interest in the banks... I'm not sure.

The Dodd/Frank/Paulson plan, which has been replaced with the "Crap Sandwich" plan full of GOP horseshit, was along these lines. While the banks wouldn't be seized outright, the government would receive equity shares in the banks it bailed out. In essence, should these banks become healthy in the future, we (the people, as through our government, in theory) make cash on the deal. Again, probably 10 years down the line, but it could be worse.

Some of that money (20% of profits made) was gonna go to affordable housing - but, you know, "affordable housing" = "public housing" = "negroes" and also = "socialism", so the House GOP totally flipped out and axed that provision.

This "naked capitalism" post, and I don't want to overtly plagirize here, but it basically said, since the FDIC already insures deposits up to $100,000, why not just lift that cap and make the FDIC insure everything. Then get the FDIC, the FBI, and whomever in to investigate and inventory everything. I mean every fucking bank. And the ones that are solid get a little slap on the wrist for diddling around with CDOs but do get to retain their banks, while we sell off their toxic assets over time... and the banks that are up shit creek, the government completely takes over, sells crap off and restructures the bank, and then auctions it off, but not to the same people who had run the bank into the ground in the first place (the government can seize failed banks and run them on its own terms via the bank bridge facility of the FDIC, introduced back in the S&L days - a great provision!).

This plan also really doesn't require taxpayer funds. It just requires the Fed to put up a huge chunk of cash as a good-faith jesture. Again, this cash doesn't enter circulation unless it's really called for. Now, I suppose this is a terrible idea if the banks are just fucked fucked fucked beyond our wildest beliefs. But, I don't think they are... right? The real problem with this plan is it's political aspect - it's temporary bank nationalization, really really solid and good for our democracy, but "socialism" nonetheless. People hate that crap in this country, residual Cold War culture BS. Same with a single-payer system for health care: should be done, but is "socalistic" and therefore we're gonna get some watered-down compromise, maybe, someday.

No matter how it's done, the bailout is needed. And it's gonna suck, as taxpayers, to do this shit. But if we just buy up the bad assets and let these banks off the hook for bad behavior, restoring their credit in the process, then we really are "socializing risk and privatizing profit" like everyone is saying to sound all smart. HOWEVER, if we sell the bad assets and then retain at least partial government ownership of these institutions, then the whole financial sector - which has come to dominate, and on several ocassions royally fuck our economy up - will now be earning money for the people.

That's not to see the people can't spend their profit on dumb crap like tax cuts for the rich or bunker-busting nuclear missiles, but, hey, it's a start.

I would oppose total nationalization because that probably does discourage "innovation" and "risk taking" blah blah blah blah blah, but partial nationalization would be a great deal, because these banks will still want to make money, even if they have to share some of it with the government (direct via shareholder stakes, as well as taxes). A bunch of whiners will cry over the lost money, but it'll still be an assload of money. If someone buys me a car, for free, but says I have to share it with my cousin out on Long Island too, do I really whine about that shit? It's still a free car.

In short: yes, bailout needed, but needed for the future is a sizeable direct federal government stake in our financial institutions, no matter how commiefied that may seem. This will cost a lot right now, but if done right, can earn us profits sort of for good, until some rich fookers get rid of it in when Jenna Bush is elected President or whatever.

RECOMMENDED READING: Track down that "naked capitalism" post. Keep up with Krugman's blog at the NY Times website. Really consider giving Wall St by Doug Henwood a shot. I wish I knew more about Sweden's bailout history, and our own shoddy S&L past. It's on the list, for sure... P.S.: GREAT article in politico today about why the bill failed. Read it!

Sunday, September 28, 2008

The Debate & Our Weimar Republic

James Call: Expert here. Just wanted to update on a couple issues I mentioned earlier.

First off, the debate results are in from rasmussen, and it looks to confirm what the "insta-polls" night of said - basically no minds were changed by the debate. Further, rating were unexpected low. Lower even than Bush-Kerry! That, I personally did not see coming.

Next: I dismissed out of hand a reader's allegory about the road to National Socialism the other day, and while I still doubt we're headed down that path, let's just say that with the federal debt likely to top $11 trillion by 2010... well, debt repayments - to FOREIGNERS - was by and large what drove Germany to Nazism. There were many other factors, but that was an important one.

Now let's be fair about our federal debt situation - most of the debt is held by US Gov't agencies themselves - a little over half the total debt. Of the remaining approx. half of the debt, only 25% is actually held by foreigners. And just who are those foreigners? Are they the evil Chinese and oil-exporting terrorist Islamofascist nations we keep hearing about? While those players are involved, the largest foreign holder of our debt is Japan, then China, yes, then Britain, and then a variety of evil Mecca-facing freedom-hating terrorist regimes.

So really - foreigners control only about 12.5% of our debt - one eighth. Not that big a deal, and one might thank them for helping keep our debt-driven economy aloft!

oh - also - re: Pakistan... is Zardari with us, or with the Taleban? The War Nerd has a great article up today about the recent bombing of the Marriot in Islamabad which touches on these issues. Please read:

RECOMMENDED READING: I think everyone owes it to themselves, at some point in their lives, to read William Shirer's The Rise and Fall of the Third Reich. It's a mind-blowing story, and the ultimate lesson is, "Yes, it CAN happen here." We tend to segregate our view of nazi history, in our modern culture, into "the holocaust just sort of happened and it was terrible" and "you have to be strong and not appease dictators". Understanding HOW the Nazis came to power, how the holocaust really came to occur, the importance of debt forgiveness, and so many other lessons that can be derived from this stunning and appaling history is crucial, in my view, to understanding the course of human affairs. It's also just a mind-blowing story.

Saturday, September 27, 2008

More James Call: Dumbass

Readers "Damian" again, and "Kirstin," continue to ask me questions the answers to which I simply don't know. But I'll give it a shot for shits and giggles.

How are Pigeons and Doves related?

Look, a dove is basically a white pigeon, and it's total discriminatory bullshit that people call pigeons "rats with wings" and view the dove as symbolizing peace or whatever. Can we dream of a better world and leave this racism behind us? Also, "Dove" means "Where" in Italian.

Oh and I wanted you to explain why the hell they taught those Dolphins to sing the Batman theme.

Because people are retards! Come on, why not hook electrodes up the amazing brains of the dolphins and translate the electrical impulses into MIDI (Musical Instrument Digital Interface) information and quantize (push values to the closest absolute value, rhythmically) that shit and then release a slammin' post-modern album? People would rather hear the fucking stupid "Batman" theme, that's why. I want to kick Bruce Wayne in the nuts after hearing this.

RECOMMENDED READING: There was this awesome book about North American wildlife in my house when I was growing up, but I don't know what happened to it. Read that.

I promise to return to issues about which I actually know something very soon.

Some Ridiculous Questions

James Call: Dumbass here, to try to answer some questions I really don't know the answer to at all. I'll try my best!

Reader "Skinny D" asks:

1. Why do we call eggplants eggplants?

Dude, that is a good question. Is it because they were used as a substitute for eggs at one point? Is it because they're sort of chewy, like a hardboiled egg? Is it because of their shape? I don't even know where eggplants come from. Outer space, probably. Next question.

2. What is the meaning of the word psychotropic.

Oh man. I almost know the answer to this. Ok, I think it has to do with the experience of sensation, not eyesight (I think) but touch, and taste, and smell. Like if you take a "psychotropic hallucinogen," it's going to make your skin feel tingly and your sense of smell really intense. Right? I don't really know. Tropic, tropic... fuck, what is the word root of that bitch. It definitely doesn't have anything to do with "the tropics". If only you can asked me to define "Star Tropics!" A great NES game by, I believe, Capcom. "Psycho" does definitely imply that it interacts with your mind (your psyche).

3. What the hell is this? See attached picture.(I honestly have no idea, I found it while searching for MP3's of Walrus sounds)

Ok, that's NOT a meerkat, nor is it a bonobo money. It appears to be some creature native to Southern Africa, however... the red earth there is fairly unique. I suppose that could also be the American Southwest, but do we really have crazy shit like that down there? I know we have scorpions and walking sticks and praying mantises, but not this crazy thing. It looks like a member of the money family, which is my least favorite animal kingdom (or whatever) around. Sorry I don't have a better answer for you. Looks like it's having a good time, though!

What the Fuck is This?



Welcome back to James Call: Expert. Your source for on-the-go knowledge.

We have one last question from "Zac" today. By the way, be sure to check out his fantastic blog - link on the side!

How has (instant, continuous) polling changed American politics?

This is kind of a loaded question, to be honest. The obvious answer is that it has increased the level of pandering and triangulating exponentially. And this might be the truth; look at the issue of offshore drilling, over which Obama and the Dems totally caved when the poll numbers came in around 60% in favor. That's just one example of many.

But I do think that truly saavy politicians realize that pandering to polls only goes so far. The Presidency is a vestige of the Monarchy, and the essence of the Monarch is like a Father to his Children. People like to be spoken down to, to a certain extent, by their political leaders. We like to assume they are smarter than us, and they can tell us how things are going to be, if they do so in a loving way.

Look at Ronald Reagan and his political hero, FDR (strange, but true!). Both were products of their time, of course, but each also took firm if somewhat risky positions on certain issues. This was regarded as "boldness". Look at McCain's position on the surge. It was deeply unpopular. The thing has turned around, and now he polls well on this issue.

On the other hand, look at McCain's jumping around over the financial meltdown in the last two weeks. He's been trying to follow the polls on a daily basis. Consequently (and ironically, hipsters), pre-debate, he began to receive a real drubbing at the polls. People can still smell insincerity. At least, the punditry can. And we get our news, our worldview, from them. It's sickening and anti-democratic, but that's a post for another day.

For the record, I fucking love polls. I follow them like crack cocaine. In the end of the day, they carry some merit, but it's best not to lose one's mind over daily polling, or even weekly polling necessarily. And the politicians who take it slow and steady tend to do better than "flip floppers" who lose their shit over polls.

And that's my two cents.


The Invisible Hand of the Market

Hi everyone! James Call: Expert here, to continue answering reader "Zac"'s questions. See prior posts for my expertly answer!

Standard disclosure, before I continue: I am not really an expert. I am just a cranky guy who reads the paper too often. And I am looking for proofreaders and fact checkers! I do not have the time to provide this service for this blog myself. After all, I am employed! And I have parties to go to! So if you notice any really blatantly wrong shit in my blog, please, call me on it in the "comments" section. I -will- respond, and rectify my mistakes.

Now, onwards to Zac's second question:

Is the "invisible hand" (a metaphor often invoked in arguments favoring free-market capitalism) a theological concept?

In a word, yes. At least, the concept that the "invisible hand" will perfectly allocate resources to create the most equitable and just possible scenario is patently absurd.

There are a few reasons why this is so, but the most pertinent, and one which John Maynard Keynes pointed out quite eloquently, is that information about the market is imperfect. The laws of supply and demand that Adam Smith and whatshisname Ricardo (David?) pointed out ARE laws indeed, although no one has ever really written them in equation form, mostly because both supply and especially demand are somewhat ephemeral. What people are demanding at any given moment might be driven not by personal need but on by the perception of desirability, something we're seeing in the housing bubble (R.I.P.) of today, and as far back as the Tulip Bulb bubble (I'm fucking serious) in Holland of the early 17th century.

The "invisible hand" does work perfectly if you're willing to accept human misery. For instance, a resource rich nation may not want for food or housing supplies; instead, they may want, for instance, cheap tennis shoes. But the labor market of said country may be too well organized to provide cheap enough labor, meaning some market overseas will offer cheaper labor to produce the tennis shoes, driving the domestic labor price down in competition, and producing a global race to the bottom that is very familiar to all of today (or should be).

So the total pursuit of supply and demand does not produce optimal conditions for the worker. In theory, it produces optimal conditions for the consumer, but the big problem is that the consumer is the same person as the worker. In theory, as your wages sink, so will the prices you are paying: wage and price "deflation," a term we don't use that much, but should (and not somthing I'm making up right now, by the way. This is a real fucking term).

Of course, this "invisible hand" depends not only on perfect information - knowingly exactly what people want and exactly who can supply it - but also a totally uninterrupted global trade system, uninterrupted by weather, piracy, or most important of all, politics and resource distribution. If we could wipe clean mankind and start over with a truly classless, property-less global society, we'd STILL have the problem that certain areas of the world would possess more oil than others which possessed more corn, etc.

Of course, then, we'd be trading perfectly, right? Except monopolies are naturally erected to defend select resources, and should corn be in more demand than oil, the oil-owners are a bit over the barrel, aren't they?

Besides, have we ever had a classless, de-stratified society? It was better under the hunters and gatherers I suppose, but ever since mankind introduced agricultural society, which requires the division of labor, there's been inequities within society, inequities which cannot be addressed by the invisible hand, since it will tend to favor those with monopoly power - and these people can acquire and defend their monopoly with force.

Of course, the owners of resources must pay their enforcers and they can't starve their market out of existence, lest they lose all their clout. But they certainly emerge as the winners, which is why Marxism is such a natural response to the "invisible hand". Yes, the "invisible hand" can be said to exist, but it's not a benevolent hand, it's an erratic and shaky hand that occassionally smacks people down for no morally good reason, sort of like the "Master Hand" end boss in the Super Smash Bros games.

Implicit in advocates of "unfiltered" Adam Smith and David Ricardo thought (once again I mention our anti-pal Milton Friedman) must accept a lack of basic morality in their economic programme. It's very much "the strong shall survive, the weak shall die". It's Social Darwinism.

But it ISN'T really the state of nature, and the reason should be obvious. As a species, in addition to the wheel and currency, we humans have invented MORALITY. And the social contract. It's in our genes to, on a certain level, defend the pack from the excesses of the few. Don't get me wrong, it's also in our genes to say Greed is good, Greed works, You got to Live for Yourself, Yourself and Nobody else ♫, but then again, we do have these Golden Rules and Ten Commandments and what not...

And then tends to be because, in collective action, we achieve so much more than we do on our own. Now we all tend to accept this is the case in terms of government - even modern libertarians accept the need for a federal army, for instance. But when it comes to economics, there's this strange disconnect, we must let the "invisible hand" govern indiscriminately, and it will allocate resources perfectly somehow... but note it always takes concerted government action to put true free market policies into place, and note how it's always a disaster...

Really, look to our Articles of Confederation period for a relatively clear example of lack of centralized economic order. Also look to the Gilded Age, although there certainly was governmental interference in the form of land grants to speculators and union-crushing aplenty during this time... you could say that's not an example of an unfettered free market in place. But then, we'd need no government whatsoever to let the hand go free, and that leaves us at the mercy of those who would organize, just like the agricultural societies of yore eventually wiped out the hunters and gatherers.

This is a massive question you've asked and my rambling answer is pretty insufficient. But yes, I would answer decisively that "theological" is a great term for the "invisible hand" concept, because unless there is no central government, or even local government, the market is not truly free, and when is there never any government? Even armed bands of brigands impose a government of some sort. And of course, the invisible hand cannot see what is going on globally on a supply and demand level, so even without government, it's operating in a vacuum of knowledge that's going to lead to errors of resource allocation.

Really this is a pretty insufficient answer to your question. Let's just say that I cannot think of a single example in human history when a totally unfettered market led to anything other than chaos, human suffering, the enrichment of the few at the expense of the many.

RECOMMENDED READING: Well obviously both The Wealth of Nations and Das Kapital, neither of which I've read in their entirety. Beyond that, there is a wealth of literature on this vast subject. The aforementioned Wall St by Doug Henwood goes into the assorted free market "equations" which have been put into practice by free marketers, and the resulting failure thereof; the book explicity makes the point (to which I subscribe) that you cannot separate economics from politics and governance, and the economics is not a science in the sense of chemistry or physics, as it is largely governed by human psychology.

Obama the Centrist

James Call: Expert here! Back again to sock my mildly informed opinion to ya.

DAMN, yo, can I get paid to blog for a living? Good questions keep pouring in. I don't have time in the workday to answer all this shit!

Our next THREE questions come from reader "Zack". I'll break this up into in separate posts as per the popular demand:

Is Senator Obama's "center tack" a temporary election-season tactic--so he can win the presidency and then govern from the left--or has he already abandoned what Paul Wellstone called "the democratic wing of the Democratic Party"? (For me, his vote on the FISA bill was a key moment in the "center tack.")

In a word, Obama's centrism is genuine. Obama is widely, and wrongly, credited with being "the most liberal member of the Senate". He put it himself very well last night: "heh heh, for the most part that's just me voting against George Bush's wrongheaded policies".

Obama's record speaks to a centrism that makes Hillary Clinton look liberal. His record on regulating the nuclear industry, for instance, is a bit frightening. When it came time to pass legislation curtailing the activities of nuclear power in Illinois, Obama talked tough, but at the insistence of power company Exelon, Obama actually turned a draft of a bill he was working on over to Exelon to proofread. Does that sound like a liberal thing to do? Are we gonna let Exxon have a "looksie" at our energy bills in years to come? "Hey guys, just look this over, and if you got any problems with it, just kinda sharpie that shit up, it's cool, add some stuff if you want."

It's not liberalism - it's bullshit. It's Bill Clinton style bullshit, specifically.

Don't get me wrong - I'm still for Obama - there are a lot of good reasons to be so - but it's mostly because he doesn't seem totally off the rails in terms of deregulation, and budget discipline.

But yes, despite the animosity between the Obama and Clinton camps (which I can only image is very personal, at this point), philosophically, they are little different. Obama's "structured" market approach to health care will help the middle class, a -bit-. But in the end, we need a single payer system. FDR called for it; Truman kinda got punked on it as the private sector stepped in, social-contract-wise, to guarantee employment-based health care. McCain's plan might actually destroy this aspect of the social contract, and Obama's will alleviate it somewhat, but the real solution is a single-payer system. Yes, my libertarian friends, this is socialism, and it is precisely what we need.

The FISA bill vote was, I believe, political triangulation. But let's bear in mind that Obama literally comes from the University of Chicago. Sure, he taught law there, but he talked to the economics department quite consistently. There was a great NY Times Magazine about a month and a half ago, with the chief article titled "Obamanomics". I strongly encourage ALL of you to google and read this article - it'll take you an hour to read.

I'd be very concerned about the U of Chicago influence on Obama. Those Friedmanites have had their way with our country and world for over 4 decades now, and the results have not been pleasant. I'm very cheered, however, that Obama seems to have a solid and genuine focus on updating our infrastructure, not only our highway system, but more importantly our power grid. Everyone who reads about the issues knows that oil is on the way out, all rhetoric aside, that drilling isn't going to do shit, and that ethanol... that way lies madness (although the ethanol lobby should become, and remain, very powerful for decades, based on corn production in Iowa and elsewhere. And yes, Obama is in the domestic ethanol industry's pocket. Note his endorsement of corn-based ethanol, with a 2:1 energy yield, as opposed to Brazilian sugar-based ethanol, at a much cheaper 6:1 yield - that is, energy output units for every unit invested). But solar, nuclear, and wind are the way of the future, which poses challenges or our outdated energy grid - remember those rockin' blackouts, a few years ago? Expect way more of those - and Obama understands the importance of not only upgrading the grid, but also, I hope would, protecting the domestic wind/solar/nuclear industries, I would hope. He seems to... we'll see.

Obama also seems to understand that the financial regulatory system of the New Deal is necessary and called for. It certainly is. And I feel he will push for a reinstitution of these regulations.

But on the whole, I would expect Clinton administration II from Obama, not really the change we need but perhaps less overt barbarism than a Republican administration. Certainly we might well have been better off under Edwards, or, you know, the unelectable Dennis Kucinich, who fucking actually gets it, who understands that the "free market" isn't just just because it has the word "free" in it.

In short, I believe Obama genuinely is a centrist/rightist, not the liberal that his foes AND supporters make him out to be. Another nurse coming in to administer a bandage to the bleeding patient who have been hacked to death by Drs. Reagan, H. W. Bush and W. Bush. Not the solution we need to remain the world's economic engine and chief world power, but certainly better than additional hacking and slashing of our nation.

RECOMMENDED READING: The "Obamanomics" article in the NY Times Magazine. Also, a while array of literature on Milton Freidman's monetarist/U. of Chicago teachings vs. Keynesian thought. Just google that shit! A good (if emotional) place to start to is Naomi Klein's The Shock Doctrine. Everyone should read this book! There are problems with it, structurally, that make it open to attack by rightist critics, but it really is an eye opener and a fairly good documentation of why "totally free" markets are completely fucked. But hey, for a totally different point of view, go to and check out the well-educated (but, in my opinion, pretty off base) libertarian POV there.

The advantages of the cleric

Welcome back to James Call: Expert, in which I tell you how it is. Neither fair nor balanced nor even especially accurate.

Today, reader "Tore" asks:

In dungeons and dragons, what is the most advantageous character to start as (in your opinion) and why?

This is an excellent and thought-provoking question, and touches on one of the top issues of the day.

Let's briefly review the 5 basic D&D classes available to the beginner:

- The Warrior (normal fighter, Paladin, Berserker, and Ranger)
- The Mage (with its eight standard sub-schools)
- The Cleric (along with the Druid)
- The Rogue (the Thief and the Bard, as well as the Ninja)
- The Psionicist

Let's also mention the Attorney! This is a holdover from the 1st Edition; 2nd Edition onwards discontinues this class, although I think it was reintroduced for the 4th edition, which was just released 2 years ago, if I'm correct. Or maybe it's still on the 3rd edition, who knows. I'll be basing my assumptions on the 2nd edition, which we Gen X-ers grew up with.

First off, any character starting off starts off at experience level 1. The different classes have different levels of experience point accumulation; depending on the campaign and how the Dungeon Master distributes experience points, certain classes may rise to higher levels more quickly.

A level 1 fighter begins with one ten-sided die of hit points. That's up to 10 HP potentially; that's not too shabby. Of course, if combat is especially brutal, that could amount to two short sword blows, and you're toast; depends how you're equipped. But warriors get a decent amount of starting funds, and all kinds of weapon proficiencies. It's not too hard, if you're smart, to get up to the 2000 experience points (XP) needed to progress to level 2, and get another 1d10 of hit points.

However, the fighter is constrained by his lack of other skills. These can be overcome, but there will be no hiding in shadows or climbing walls for the fighter. Mostly just hackin' and slashin'. There are some non-weapon proficiencies you can (and should) use to overcome the fighter's "clunkiness". So the fighter is a pretty solid starting choice. Of course, as the game progresses, the fighter remains a fighter whereas the other characters go on to be truly spectacular.

The Paladin is a fighter/cleric, in essence, and I want to discuss the cleric before getting to the paladin, arguably the best starting character in the game. The ranger we can mention in passing - a fighter with some limited thief skills, and some assorted nature-based shit. Again, a decent choice, but the Hide in Shadows and Move Silently scores of the ranger are so limited initially that I find the ranger to be of little use. Again, perhaps this was fixed up for 3 ed.; I don't know.

The mage is a lot fun to play, but quite fucked at level 1. With only 1d4 (4-sided die) of initial hit points, the mage can be killed in one fell swoop, and must avoid combat at all costs. If you manage to keep yourself alive, as a mage, over the course of a truly massive campaign (I'm thinking 3 "story arcs" or about 18-20 sessions), you are going to end up with by far the most powerful character in the game, capable of reshaping reality itself to a certain extent. But try staying alive when your Dungeon Master is quite literal about the rules of combat - something I always try to avoid as a DM, as it sucks the fun out of the game. Plus, the initial funds of the mage are quite limited, and if you play with the "material component required for spellcasting" rule, forget about it.

Let's touch brief on the pscionicist, another character, like the mage, who can become insanely powerful, but is even MORE limited from the get go than the mage. The pscionicist is your worst possible 1st-level character. It "costs" so much, without getting into it, just to establish contact with another mind, you can barely do squat until level 3 or 4. A great high-level character, though.

Now, the Rogue. What a fun character class to play as. With 1d6 HP, a decent balance between weapon and non-weapon proficiencies, and the abilities to move silently, climb walls, pick locks, etc. etc., the rogue is very diverse, a ton of fun to play as, progresses decently and can stay alive through fight or flight. Especially if you sort of specialize when you allocate your skill points at the beginning. Who can overstate the importance of moving silently and hiding in shadows? Just pick out some kind of range weapon (crossbow is ideal, if allowed) and go into total sniper mode! How can you go wrong?

And let's mention the Bard, the funnest character of all in a lot of ways, a character who must survive with his wits, but has limited access to theif abilities AND to spell casting. Bards tends to be the most dynamic characters in a campaign, anyways. They are just a ton of fun, and while they should avoid fighting, they can survive in a scrap if they need to, and bust out some magic missiles from time to time. Plus, their charisma - by requirement - is through the roof. Very appealing for the liar and con man in us all.

But now let me close the argument by voting for the Cleric as the best initial starting character class. The cleric has an impressive 1d8 of hit points, decent funds, a great character motive to follow at all times (the religious impulse), and above all, all good clerics can CURE LIGHT WOUNDS from the get go, at least once a day. So if the cleric takes a near-mortal short sword or arrow blow, he or she can just cure his or herself. Only once a day, mind you, but as you rise, you increasingly gain more spells, and the cleric ends up being mighty indeed. Plus, the cleric is not a lousy fighter. This is by far the most "stable," well-balanced and less fatality-prone starting character. And that is so important, assuming the party is all starting out at level 1. Plus, the cleric can cure other party members.

Now let's return to the Paladin, a sort of "super-class" combining the best of both the fighter and the cleric. Though limited a bit in spell-casting, the Paladin has all kinds of other nutso abilities that really just push them through the roof. The problem, however, is rolling up the initial ability scores required to be a Paladin. If your DM oks you to just allocated points however you want, you may be in luck. But if you're playing by the book, it's very rare you'll have the ability to be a paladin. And let's be honest, a paladin can severely misbalance a party. While the mage is running around hiding and casting one spell a day, the paladin is off kicking ass.

Of course, it all depends on how much you bend the rules. I personally bend them a lot, because the point of D&D is to provide equal parts laughs, action, and drama, in my opinion. But for the by-the-books types, gotta roll with the paladin.

Friday, September 26, 2008

The First Obama-McCain debate and more housing woes

James Call: Expert! Not really an expert in anything, I am simply slightly better educated than your average American. Hey, let's face it: it's not hard. Just read for half a fucking hour. Onwards!

Our first question comes from "Kerrianne":

Who won last night's debate?

Well, that depends on who you ask. The polls won't really reflect this event until early next week.'s analysis is a narrow win for Obama based on certain key moments, but most of the mainstream media are saying it was a very narrow McCain victory, although certainly the "liberal" pundits are saying Obama while the "conservatives" are saying McCain. My personal analysis is that while Obama squandered an opportunity to deliver a knockout blow to McCain, the debate doesn't really change anything. I'll explain why below.

First off, full disclosure: I am for Obama. I hope this will not deter any of my right-wing friends who may happen to be reading this blog. I am for Obama, but politics is an art that I savor. Last night I watched the debate with people who kept flapping their liberal gums off and I couldn't hear half the fucking thing. I was so livid. Anyways...

It's important to realize that the punditry determined ahead of time that McCain would have "won" the foreign policy part of the debate no matter what. That John McCain is a foreign policy expert. As I've tried to explain before, this isn't true; Obama is very well versed in foreign affairs; John McCain doesn't know some basic facts. I'm sorry to harp on the leader of Spain issue, but I knew who Zapatero is, and I'm a fucking 29 year file clerk and musician.

If you don't want to read this whole bit, let's just say: McCain won vocal delivery, Obama won body language, McCain appeared angry and frustrated but also more passionate, while Obama came off as cool but also timid at times.

The narrative is that McCain is the foreign policy leader, and this is his campaign strength. He plays to the basic Reagan/Bush I & II "being a strong leader is attacking people with bombs" narrative. It's very effective for the average American who doesn't read. After all, "we'll fight them over there so we don't have to fight them here" sounds like a more secure policy than, well, we'll negotiate but not concede. Again, it isn't true, but what's true doesn't matter in politics. It's what's easy to understand. And Obama's foreign policy is not as soundbite friendly as McCain's (Soundbites are something Obama should be working on in general, and I honestly don't know why David Axelrod and whatshisname Plouffe aren't more insistent with him on this point. I also wonder the extent to which Obama has taken the time to watch the Reagan-Carter and Clinton-Dole debates).

Last night's debate was supposed to focus on foreign policy, officially, but in light of the economic meltdown, the economy had to mentioned. It was mentioned in the beginning, and right again at the end. Obama narrowly "won" these sections. Nonetheless, I feel Obama lost an opportunity to really go for the jugular, to call McCain on his campaign shenanigans of the past week, and to really ravage him on the issue of the economy. Instead, Obama demurred to Jim Lehrer and stuck to the script. I consider this a mistake because polling at rasmussen and elsewhere shows that the economy is the top concern of 44% of voters (around there), followed ny national security at only half that amount (22%). People are losing homes and jobs; do they give two shits about depressing-ass Iraq anymore? Not so much.

Obama in general missed a lot of opportunities to really rip into McCain, and in terms of language, McCain won the debate, for the most part. McCain constantly kept saying "Obama doesn't understand." He used that phrase at least 3 times. He also called Obama slightly naïve. This reinforces (perhaps) the "Obama isn't ready to lead narrative". Obama was very wordy, which perhaps deflected that message. He seemed prepared, but he should have spoken more slowly. That is what McCain did well: spoke slowly and delivered easily digested sound bites. Obama came off as more litigious. His language was also far too moderate. Most of the time he said McCain "misrepresented" his views. He would have scored far more points by saying, Olbermann-style, "Senator, you are LYING." That was my biggest wish for last night, that I did not get: for Obama to simply say LIAR, LIAR, STOP LYING over and over again. People respond to simple language!

Further, it would be a good opportunity to rile McCain himself up. In terms of body language, Obama clearly won last night, including the foreign policy bit. McCain came off as condescending and looked like he was getting pisssssssssssed whenever Obama nailed him. Obama came off as cool as a cucumber, and he finally stared directly in the camera for a bit, thank God. Plus, his smile is killer. He's gotta smile more often and speak slower. And check out McCain - it looked like his fucking head was going to explode at times. Seriously, watch clips of the debate where Obama is ripping McCain a new one, gently, and just watch McCain flare up. Honestly, this is why Obama should come on stronger at the next debate. I want to see McCain turn around and say "Listen you nigger, you don't know what you're talking about!" McCain's temper is legendary and off-putting in same way Nixon was off-putting. Obama's gotta taunt him a little bit more.

McCain did deliver the one kinda misty-eyed part of the night, about some mom of some soldier who died, but who cares. The debate was not a game changer. Obama won the crucial parts, while McCain won the foreign policy bits. The spin is not going to change.

And let's assume McCain gets, at best, a 5 point bounce come Monday, based on this debate, and the two are neck-and-neck again. Well, credit is frozen, and this coming Friday, a tremendous amount of people are getting laid off. I would guesstimate at least 100,000, although I could be wrong. There might also be a bailout bill by tomorrow, which will dominate the airwaves. It sounds like the Dems are caving to the House GOP and introducing some very piss-poor elements into this bill, meaning the bill will pass in a bipartisan manner but both parties will be in the doghouse with voters. Neither Obama nor McCain should endorse this bill.

I know the Congress genuinely wants to get the markets running again, but if I were Pelosi and Reid I would just say "fuck it" and let the bill collapse until we've got a new President and Congress - guaranteed to be far more Democratic. As an alternative to this, the initial funding of $350 billion being offered should be cut back perhaps to $50 bil, half the size of the past stimulus bill. Why risk political suicide over a terrible piece of legislation anyways? The markets are still fucked - credit is gonna be frozen or slow for at least 2 years.

Bottom line: the debate did not change the narrative. McCain still looks like an angry child and Obama looks like a weak adult. Obama needs to "seal the deal" by speaking more slowly, with far fewer pauses, and in more digestible soundbites. Just get the man stoned and make him watch the Clinton and Reagan debates, for fuck's sake. Oh well.

RECOMMENDED READING: has initially polling in that will cheer the Obama supporter; I hope they're right. But I'll be staying tuned to Republican-weighted in coming days for sure. Always prepare for the worst!

Our next question comes from "Tore":

Can you explain in james call layman terms (full of expletives and funny analogies) why the housing market is so fucked right now?

I'll give it a shot, you cunt.

Listen - I tried to explain this last time... all the liquidity (free cash) from the dot com bubble had to go somewhere, and the forces that be settled on housing - who knows why, market mob mentality probably - and decided that the value of housing would only ever go up.

So banks decided they could lend to even dumb fucks like me, people with lousy credit, because I mean hey, even MY house was going to keep raising in value, forever and ever, into the sky. Even if I lived 90 miles from my job in the middle of the country in a place nobody likes.

You could, until recently, constantly refinance your mortgage - take out a new loan and use it to pay off a large chunk of your old mortgage and go forward in life with a lower interest rate. Especially since the Fed Funds Rate, the kind of "master" interest rate for the whole country, was so low under Alan "Mother Brain" Greenspan, pretty much everyone could be all "Wheee this adjustable-rate mortgage means I can keep up with my house payments because my house value keeps rising, and totally supplements my shitty income from working in a sub-par job that I have because the union movement has been totally destroyed in this country" (a topic for later) and life was ok, although it was ALL based on debt - as well as personal credit card debt, a lot of the time.

And here's the thing - because mortgages were sliced and diced and repacked into CDOs (see last post), the rising tide lifted all boats, including the shitty ones, and the eventual rapidly falling tide sunk all boats, including the very sound ones. People with fine credit are rapidly losing value on their homes because the market has effectively decided that all homes are worthless.

There have been a few little bubbles where this is not true, and these are typically places people actually want to live. New York, San Francisco, Boston and a few others have been largely safe because people will always want to live in these areas, because shit actually happens there, and they are nice. Even then, we are now seeing falling real estate prices in SF, Boston, and finally even here in the Big Apple! (although losing 30,000 financial jobs in a couple of months doesn't hurt, either)

When will the market bottom out, so we can start buying homes (those of us with money or good credit, that is) and wait for the value to rise back up? No one knows. Part of the bailout plan is to use "reverse auctions" to determine the actual eventual value of toxic housing assets, which the govt will then acquire for slightly below that value, eventually making a profit, although this new house GOP throw-money-at-the-failing-banks-for-free strategy certainly fucks that up a bit.

But the bottom line is that no one really knows what these houses are worth anymore. Certainly there are some undervalued ones in the East Bay of SF and some still overvalued ones outside of Indianapolis. It will take years to sort out. Meanwhile, we're going to see the rise of a lot of multi-family homes in houses designed for the typical nuclear family, a few very clever real estate entrepreneurs make out like bandits eventually, and a severe tax burden for the rest of us. I do not expect the real estate market to pick up for at least 3 years, perhaps more like 5, and if we ever do get a "boom" again, not for another 10 years. And, hey, shouldn't we avoid more of these "booms"? Will we ever learn our lesson?

This is why history and economics lessons are so important - why Americans should get 30 minutes paid time off during each day of the workweek to read the newspaper. Of course, that's a Commie fag Old Europe idea, so instead I encourage all of you to read The Decline and Fall of the Roman Empire by Gibbons and just get ready for that shit.

RECOMMENDED READING: Just everything I posted yesterday. I don't know of any good books right now specifically on the credit woes affecting households on a micro rather than macro level. Hey, just talk to your family and friends! They're all losing their houses, pensions, and jobs, aren't they? No reading necessary, baby!

Expert out!

The coolest financial meltdown and Presidential Election EVER

Hi everyone! Welcome to Day 2 of "James Call: Expert". Please bear in mind, for those of you joining us for the first time, I'm not an "expert" in anything. I just drink a lot of coffee and check every 13 seconds. I've read a lot of financial books, too. But basically I'm just a cranky file clerk. Thankfully with a job! Those are gonna be even more scarce pretty soon.

Anyways, we got two great questions yesterday, which I'm going to roll into one "super-question" since they are quite related. But first, I'd like to touch on the "how to get Al Qaida in Pakistan and Afghanistan" question from yesterday.

I had suggested we should pay some informants off to locate Osama et al, but in light of something I read in The Shock Doctrine by Naomi Klein (amazing book - a bit emotional at times - a quick read and a real mind-opener - everyone should read it), I think I may rescind my comments. Since we've been paying people thousands of dollars for Al Qaida operatives for a few years now, and they just keep kidnapping peasants etc. and shipping them off to us, and since we don't have anyone who speaks the local languages over there or know what the fuck we're doing, we keep giving slimebags money to sell us innocent people, who end up in Guatanamo or Bagram - hundreds of them - people with no info whatsoever.

So I guess that leaves the only "solution" as "really occupy the country and Marshall Plan that shit". Which, for the record, would have justified the Iraq invasion in my opinion: If we had left it a richer, better, more secure country than we found it. Which we didn't - instead we totally ruined the joint. And since we're undergoing this financial crisis and the political willpower for years of war no longer exists, I don't think success in an option in Afghanistan. Instead, I think we're going to lose both wars and thank God oil is slowly losing it's importance, because we just need to get the fuck out of the whole region for at least 2 or 3 decades.

Anyways, on to today's questions:

"Greg" asks: "Please explain the recent sequence of events that caused the current
economic crisis that is veering towards National Socialism."

and "My Mom" asks: "what is your opinion about McCain's tactics re:
canceling the Presidential debate Friday night, with his "country first"
excuse? Is it brilliant (though terrifying) politics or is the death of
his campaign?"

Well! I'm writing this first bit at 7am, one hour before I get my NY Times for the day, and the information contained within that will be outdated within a number of hours, anyways. But... I can begin answering these two linked questions. GO TEAM!

Let's answer my mom's question first, as it is MUCH easier to answer:

The McCain gambit: will it be effective?

In a word, in my opinion, no. He "suspended his campaign," which is total bullshit (he interviewed with Katie Couric that night, and appeared alongside Bill "The Traitor" Clinton), and which Letterman called him on. McCain didn't suspend his campaign at all. And I'm not a ratings expert, but I assume a good chunk of the American swing voter populace still watch Letterman. And I mean, Letterman is a Republican, is he not? Here's a pretty fun Repubilican-oriented guy calling out the head of the GOP for his bullshit move.

What McCain really wants to do is weasel his way out of the debate tonight. It's sort of a damage control thing. The debate is supposed to be about foreign policy, but everyone knows it's not going to be about that, and Jim Lehrer, God bless his heart, confirmed so in an e-mail: "I am not restrained from asking questions about the financial crisis. Stay tuned!" Gotta love the guy.

This debate is/was widely expected to be the most watched political debate of all time, more so than Reagan/Carter, which would put viewership above 80 million Americans. Now, McCain doesn't -gain- anything by skipping out on the debate, but he perhaps -minimizes damage- by not being seen as a doddering old fool in front of the dashing young man. That was always going to be the threat, since, let's face it, Presidential elections come down to how voters "feel" about candidates, largely, and those feelings are informed by visual information, not anything written or logical.

But - had McCain debated, and of course, lost, the mainstream media narrative would have been "McCain, as expected, won the debate, but Obama did surprisingly well," since the media have long decided that McCain is an expert on foreign affairs, which is untrue - he can't delineate between Sunnis and Shias, for instance - whereas Obama really is quite well versed on foreign affairs. In fact, while he's often described as the most "liberal" member of the Dems who competed this year, that is a total lie; he is the most rightist of any of them on domestic issues. It is on foreign affairs where Obama truly shines. That is his selling point, although the media, both mainstream and "alt," do not really depict it this way. But it's the god honest truth.

So - by claiming "he has to be in Washington to help fix the financial crisis," McCain can dodge the bullet of appearing just like Bob Dole did opposite Bill Clinton in 1996 - old, doddering, not in command of the issues, tempermental. However, what about the alternative?

If McCain does bail, Obama gets to go stand before Jim Lehrer for an hour or more (90 minutes, right?) and just EXPOUND. He basically will get widespread recognition for acting like an adult. That will be the narrative. Obama is an adult, and McCain is a coward. And as details of McCain's alternative bailout plan are leaked, the narrative will be McCain is a coward AND a fool. It would be a bigger win for Obama to actually debate, and kick Johnny boy's ass, but it is still an unqualified win for Obama, giving him that "reasoned leadership" edge he is often accused of lacking.

Of course, there's the alternative that liberals are worried about: McCain will stay in Washington, a compromise will be passed, and McCain will say "I made this happen! I'm Presidential!" Except, the problem is, this shit is not going to happen. And by injecting himself into the bailout's crafting, McCain has actually potentially subjected our country to a true collapse, a true Great Depression II.

How? It's simple. The political temptation for the GOP is to get the Dems to pass the bailout bill, along with a few sacrifical (East Coast) Rebublicans, and let the majority of the house GOP vote against it, and come back in 2010 with Republican Revolution II, saying, "The Dems voted for the biggest bailout in history! That's not fair to the taxpayer!"

Except that Nancy Pelosi doesn't have a brain made of jello, so, she insists on a bailout package that passes the House and Senate with wide bipartisan support.

But the house GOP is rallying around McCain for election season purposes. They're saying no way, Jose on the pretty fucking reasonable Paulson/Dodd/Frank compromise. BTW, for the record, the original Paulson plan was pretty scary and unreasonable - we'll get to that below - but he did effectively cave on all the major issues, mostly because the Bush White House has zero, zip, zilch political clout left.

So - the house GOP is going to doom the bill - but the Dems are in no rush to incorporate the bullshit GOP "alternative" into the bailout, because they too have to face voters in November, and they're not anxious to lose their seats. So what is going to happen?

That's a big question. Some sort of executive action of a pseudo-dictatorial nature? Don't rule it out, folks, the Presidency's power has been inflated beyond all good measure over the last century. But equally likely - no bailout deal. No compromise. And the continued collapse of major financial institutions, the total freeze of credit, and of course, massive layoffs. Great Depression II. Just like it happened the first time, when Hoover limped trotted out a sort of soft New Deal that never got off the ground.

And with Wall St. and Big Business generally livid as hell at the GOP for wrecking the economy, they are more than even behind the Dems. Mainstream media narrative (with the exception of Fox, but, maybe even them... I wouldn't be too surprised...) shifts to "McCain is selfish, foolish, and puts his Politics above Country" and "Obama has his head screwed on straight." Obama's victory in November is very narrow, just overcoming the "Bradley Effect" (which is the unstated racism we can expect, probably cutting somewhere around 5% nationally against Obama's poll numbers, the white folks who will never vote for a black man. Sorry, fellow liberals, that shit is real).

And then we get started on a New New Deal? Wouldn't that be something?

In the meantime, we all lose our pensions and our jobs. Enjoy!

UPDATE: It seems McCain will go through with the debate! I guess he decided to try to look less like a childish asshole after all. Prepare for your ass-kicking, John, it's coming tonight!

READING RECOMMENDATIONS: Just keep reading the Times, plus,,,,, and maybe some others to brighten your day.

Please Explain the Recent Series of Events that is Driving us to National Socialism

Silly liberal! This isn't driving us to National Socialism. This is driving us to Great Depression II. Come on, cheer up! We might get a New New Deal out of this shit! After we all lose our jobs and maybe our homes too, of course.

There are a lot on the left and right saying "nazis" and "commies" right now, but I don't think those are the right allegories, mostly because the Congress is finally Not Gonna Take It from Bush & Co. I guess it's possible that we can have some armbanded types in the future, but I think we need a real geniune Weimar Period first. Honestly, I have to say, I think the analogy is overplayed and inaccurate, and should be avoided. It allows the "mainstream" types to say, of those of us who would like reform, that we are "fringe wackos".

Let's get real: this is a total financial collapse. It has happened many times in American history. It's a very American/British phenomenon. But I am MORE than happy to try to explain how we got here. It's a wild story!

Ok. In order to understand the current crisis, you must understand that after the shit hit in the fan in the first Great Depression, three very important reforms were instituted, among others: the introduction of the Federal Deposit Insurance Corporation (FDIC), the legal separation of Commercial and Investment banking (more below) by the Glass-Steagall Act, and the creation of "Fannie Mae" and "Freddie Mac" (Federal something something something, who cares, everyone calls them Fannie and Freddie) to help facilitate both affordable home ownership AND liquidity in markets. Phew! WHAT THE FUCK DOES THIS MEAN, THOUGH, EXPERT you ask. And rightfully so. Onwards!

First off, when one refers to a "Commercial Bank" one is referring to a bank such as Citibank, Chase, Washington Mutual (R.I.P.), etc. This is a bank where you, the average schmuck, deposit your paychecks. You might get a mortgage loan from these banks as well. Businesses - the infamous "Main St." everyone is talking about these days - also deposit and acquire loans with/from the commercial banks. Including not just the saintly "small business," but also the villified "big business".

Investment banks deal in capital market transactions. This gives me a headache just trying to describe what that means. Basically, investment banks deal with investors, both individual and including hedge funds, mutual funds, and pension funds - your 401(k), baby! They also trade and sell cash and securities. They're MUCH more liquid than commercial banks, and much less stable. But the rewards, the yield, is much higher. Commercial banks issue stable loans and earn a little bit of return, slowly, over time. Investment banks can gamble and either lose or win big.

Back before the two kinds of banks were separated, banks were not commercial/investment... they were just banks. And they could gamble YOUR savings away on some stupid investment and lose it all. Which is what they did, and we had a bank run, and, fuck. Everyone was broke. So the FDIC was created, which is a government guarantee that your savings are insured up to a certain amount. And Glass-Steagall was instituted to lower risk.

Now, people are sayin "This shit could be Great Depression II". And they're right, but it'll be very different, because FDIC is still with us. You're not going to lose your (most likely paltry) savings. But in the late 90s, Bill Clinton tragically helped repeal Glass-Steagall. The differentiation between Commercial and Investment came to an end. And that's why you're not gonna lose your savings, you're gonna lose your job. I will explain below.

We also need need to explain Fannie and Freddie. Whenever there's a financial crisis, people don't know what the good investments are, so people hoard their money and no one invests in anything - this is what's known as a "credit crunch" or a term now being tossed around "credit FREEZE" (oh shit, bitches!). It means banks are not loaning to businesses, or to each other. Or, voila, to you, of course.

But what Fannie and Freddie, originally gov't run, are set up to do is to buy mortgages from banks, giving these mortgages government backing and making them an EXCELLENT investment. This not only means that home ownership was incredibly stable, a good investment, and rose for many years, but that for every mortgage a Commercial Bank sold to Fannie or Freddie, it freed up cash to invest elsewhere, stimulating the economy. This is "liquidity".

Now, in 1968, LBJ sold off Fannie and Freddie, which became Government Sponsored Enterprises (GSEs). This raised cash for Vietnam and made some bearish investors very happy. These were now private companies with public backing.

Sounds scary, right? Except Fannie and Freddie had very high standards for their lending practices - and continue to do so. They would not buy mortgages from people with bad credit. Period. So the privatization wasn't really that bad. Fannie and Freddie continued to function as before, except now that had a CEO and shareholders, who were making money but nothing on the level that a big company's CEO would make.

What Fannie and Freddie began to do wrong in the late '90s was: insufficient capitalization. They did not sell enough stock to maintain their balance sheets; that's why a government bailout was needed. But Fannie and Freddie were largely a victim of the housing bubble.

Skip back to the late '90s. At this time, Bill Clinton and the Republican Congress repealed Glass-Steagall. That's right, Bill Clinton, the "New Democrat," by and large turned his back on the New Deal, including this crucial risk-preventer. Soon the Commercial Banks were investin' in capital markets left and right, and soon there were just... banks. Not commercial, not investment, just banks (although some retained their historic roles).

The tremendous power of the former Commercial Banks could now be used to really make the markets crank. The dot com bubble really took off. And voila - it turned out to be a bubble. Too much cash was floating around withou the bottom line in place. So we had the recession of the early '00s.

But - that cash did end up going somewhere. It went into the next bubble, housing. This was made possible when some shrewd mofos figured out a couple of things. First off, since everyone was deciding real estate was a 100% win investment, that the value of homes would only ever increase - mass psychology is, by and large, what guides a given market, especially a very "free" one - banks started to figure that could issue "subprime" loans, i.e., loans to people with bad credit, figuring even these people would be able to pay off their mortgages because house values were just gonna keep increasing, right?

That's stupid enough, but the real chicannery came down to a new financial "instrument" the commercinvesto banks were now engaging in - the mortgage-backed CDO (Collateralized Debt Oligation). What this was was a sort of bundled investment, almost like a derivative, which included well-rated mortgages (AAA) and shitty, subprime mortgages... and most frighteningly, many other assets, including municipal bonds and other pretty valid, stable investments.

These CDOs flew around from bank to bank and a lot of traditional investment banks made the most money off of 'em. Housing prices just kept rising and rising and kept our economy somewhat afloat for many years. Certainly, some of the biggest banks to fail recently made a killing off these bundled investments, at the time, but essentially no one actually knew WHAT they were trading. They didn't know the extent to which subprime mortgages underlay these fancy-sounding, impressive CDOs.

It's like - what if I sold you a "Certificate of James Call: Expert" that included some of my favorite CDs, a couch, a usable hard drive, a bag full of cockroaches. But you had no idea what my Certificate meant, just that you could keep trading it for other certificates for more money everytime.

Well, we need to segue for a second into another trend of the '90s and '00s - the growth of the exurbs. Huge growth of suburb-like communities detached from any urban center. The ultimate logical extension of white flight, made somewhat feasible by telecommuting, amongst other things.

Except - in the end analysis - with oil prices through the roof, competition from abroad in so many traditional fields, and the threats to credit card holding consumers - who the fuck really wants to live in, say, Victor, Idaho? Or in the middle of Kansas somewhere, not on farmland but in a little suburb-like town? The answer: no one. Any moron with a brain could see this was a bad investment from miles away, and that eventually, housing prices would come down.

But see, here's the fundamental problem, and a big part of the reason why we're ALL fucked, not just Wall St. Since the late '70s, and especially the non-stop Friedmanite Reagan/Bush/Clinton/Bush years, finance, which used to be outweighed by manufacturing 2:1 in terms of the size of our economy, has grown to encompass 40% of our economy. Essentially, the shifting around of assets, not the actual PRODUCTION of ANYTHING, accounts for nearly half of our economy. So when a bubble collapses, it's much harder to ride out. We're all living on credit, including the businesses who employ us. This style of living demands a constant bubble, and when bubbles keep getting bigger and more ridiculous, crashes come much harder.

What's a real shame is that, since this subprime loans were sliced and diced and packaged up and spread throughout the whole financial system (worldwide, I hate to say, just like the first Great Depression), no one can identify the "bad" mortgage holders and the "good" ones. So people are, in essence, panicking, driving housing prices through the floor, and the good borrowers are being taken down with the bad ones, just as good loaners are in danger of losing out along with Bear Sterns and everyone else.

THAT'S why Fannie and Freddie fell - that and their insufficient capitalization. It's mass psychology. People with good credit who bought houses during the bubble are getting slammed, and are no longer credit worthy, so they're falling behind in their payments, and Fannie and Freddie had to apply for a bailout. If they had just collapsed, that would be the end, potentially, of affordable housing in this country. It will also seize up liquidity (well, this has happened, though, to a huge extent).

Now let's quickly review the fallen in these last tumultuous few months. First, their was Bear Stearns, a classic investment house who played the housing bubble/CDO game hard. They gambled big and totally collapsed - sort of amazing. JP Morgan Chase (proving to be a big gambler, and potential winner, in this whole thing) snatched up Bear at firesale prices. Bear is gone... one of the most notable names in American finance... gone. Incidentally, this sale to JP Morgan was done largely at the behest of the Fed (ah, the Fed. We'll "go there" in a minute).

How did Bearl? A BANK RUN! We haven't had a real proper bank run in a while.

After Bear came Fannie & Freddie, taken back over by the government, a market-reassuring move... but not reassuring enough, because next to fall were Lehman Brothers & Merrill Motherfucking Lynch, the dudes who made the "bull" in "bull market" famous! Yep, looks like Lehman and Merrill had some more of that subprime collateralized crap floating around, and while the rest of their capitalization was stable, people decided to sell 'em short and BAM! Down they went, Lehman just into bankruptcy and Merrill into a very cheapo buyout by Bank of America (slick move, BoA).

Let's stop and look at that term I just used: selling short. "Short Sellers" are currently either benighted villains or woefully misunderstand Randian heroes, in the public eye. I don't want to get, or give you, a headache by fully explaining short selling. Let's just say that it involves selling something you don't fucking own. Defenders of short selling defend it on the grounds that short sellers point out flaws in companies that others might miss. And, to an extent, this is true. But there's little regulation of short selling (or, well, there was. Treasury has now exempted over 800 stocks from short selling, in a bold, overlooked, and hotly contested move).

Let me offer my own analogy for short selling, and why I come down against short selling as currently being practiced, to take down firms that SHOULD be solvent, such a Lehman Bros and Merrill Lynch. Let's say we're having a loft party, and it's a great fucking time, we're all getting high and listening to music, etc. And I'm there, and I just -happen- to be a building inspector. And I notice the supports of the roof are rotting.

The responsible thing to do would be to say to a few people, "You know, I think we should get out of here, maybe. The roof is not in a good condition." And if they start freaking out, calm them down and say, "Dude, the roof MIGHT not collapse, but let's not take a chance. Let's go to the bar down the street." And then the party might slowly mellow out and disperse.

Now let's assume, instead, I start screaming at the top of my lungs, "HOLY SHIT THE ROOF IS GOING TO COLLAPSE!" Then, everyone runs to the doors in a panic. People get tramped and the shit is just no good. When Merill Lynch can be taken down in a couple of days, that's what short selling is like. I don't care how they defend themselves, they are part of the problem.

Ok. Now let's touch on our central bank, the Fed, which can sort of control our money supply. Obviously the Federal Reserve Bank and it's chairman (currently Ben Bernanke) are closely watched by economists and market types. And should be watched as closely as the President by every American, but I digress. When the Fed lowers its interest rates, banks can borrow money - from the government - cheaply, and liquidity flows. Laissez le bon temps rouler. This is what happened under Alan Greenspan, and look, we got this housing bubble.

At the end, fearing inflation, Greenspan cranked the fed funds rate back up, and then bowed out of his job, revered as a God of Finance. Then poor Ben Bernanke got the job, and things went fine for a while, but to prevent the shit hitting the fan, Ben tried cutting the rate down from 5.25% to about 2%, hoping to spur liquidity. Perhaps this sent the wrong signal to the markets, who started freaking the fuck out instead, but I can't blame Ben for trying.

The Fed has been largely impotent over the unfolding crisis. It just can't inject liquidity into a market where no one knows what a good investment is anymore. That's the panic in a nutshell right there. People are making bank runs on really pretty solid institutions. The government had to step in and sort of bailout AIG, formerly highly respected, now history (I think Barclay's is getting a chunk - the rest are "toxic assets," i.e., subprime CDO junk). Morgan Stanley narrowly avoided a panic, and, who am I forgetting? Well, Washington Mutual, as of this morning, is toast, it's investors non-reassured by the politicking going on over the bailout bill currently - all McCain's attemps to skip out of a debate with Handsome Young Black Man - way to put country first, John!

Now, let's recap. We still have the FDIC, so none of us are going to lose our savings, if we have them. And a bailout is guaranteed, so the stock market is going to stay in place, most likely, though I could be very wrong about that. Nevermind that, accounting for inflation, the market is way down from the end of the '90s... let's just stick with the absolute, not the real, number... hovering around 11,000.

What's going to happen instead is that credit is going to dry up. The final two true Investment Banks - Goldman Sachs and Morgan Stanley - are asking the government to regulate them as per commercial banks. It's amazing, and not a happy result. They want to remove risk, and who can blame them, but they also won't be doing any serious investing sometime soon. Meanwhile, while JP Morgan is making out nicely, even collassal Citigroup, the 800 lb. gorilla, has a sizeball chunk of questionable assets and will not be agressive in its lending anytime soon.

They're moving all their investments over to treasury notes, which have about a 0% yield at this point. Basically, credit is frozen. So where are small and big businesses going to get their money for payroll in these coming months? The question is: from either in-house, or nowhere. Except major layoffs and downsizings coming soon, to an Election near you!

This is in addition to our own personal finances, which are fucked. Many of us are screwed by the adjustable rates on our credit cards, and our mortgages. We're about to lose our jobs and we have major debts to pay off. Our 401(k)s are other seemingly safe investments are also, perhaps, toast. What we need is a classic cry heard throughout America, Britain, and Australia throughout history - and it's why I reject the Nazi or Commie scares of both the left and right. We need debt relief! This was the cry of the populists in the Gilded Age! We need debt relief and we need it NOW.

But we are not going to get it.

Treasury Secretary Paulson walked into a real shitstorm in Congress this week with his $700 billion bailout plan, which many experts say could really end up being $1.3 trillion. He demanded, among other things, that no review or oversight by courts or other bodies be allowed. Legal immunity! I swear, only in the Bush administration.

His plan also proposed to buy up the CDOs, the toxic assets, and just have taxpayers pay for them, so that the banks could get their good credit back, but does nothing to address the credit of the consumer, who is, hey, also the taxpayer... oh, and, we haven't mentioned this in a couple of decades, but also the worker.

Chris Dodd and Barney Frank, God bless 'em, said, "Politely go fuck yourself Mr. Paulson," and he did, indeed, totally cave, amazingly, probably because President Bush is the lamest duck of all. The Paulson/Dodd/Frank plan did NOT include the ability of those with mortgage woes to get their rates adjusted by court - very sad - but it did, at least, revoke the legal immune, grant oversight, and ensure that the bailout agency was buying not only the bad assets, but also equity shares in the institutions they're buying them from. There's a word for this: nationalization. A lot of dumbasses flinch when they hear this word, but hey, it's been done before and it WORKS.

It's not total nationalization anyways... it's just the government acquiring a stake in these banks, ensuring that some day we can sell this stake off and maybe make a profit, on behalf of the taxpayer. Of course, part of these profits were pledged to DEBT RELIEF. Oh boy. Debt relief! Fuck, are we just going to keep electing Republicans who drive up debt and then Clinton-style Dems who act on debt relief and temporarily recapitalize our banks and get credit flowing again?

Still, while I object to much of the bailout, it's crucial to free up capital to get it to businesses who employ us. Because where else are they going to get the money for payroll, equipment, etc? They really don't have it. Main St. relies almost entirely on Wall St. for this kind of funding. So a bailout is ugly, but necessary.

Furthermore - the bailout package restores New Deal regulations to a large extent. And by God, that's what we need.

In terms of ushering the bailout package through Congress, it all looked good 2 days ago. One would think what would happen is the Bush admin would try to get the Dems to vote on the package and most of the GOP would sit it out, running in 2010 claiming the Dems presided over the biggest bailout of all time. But Pelosi and Reid will not be sacrifical lambs, and they demanded wide bipartisan approval.

And by God, they almost had it, until McCain flew into town saying "hold on a sec," and giving the house GOP an opportunity to scuttle the whole thing. It's not that McCain has a plan - he doesn't - and the House Minority Leader Boehner plan is to just give these banks a ton of cash with no new regulations - because, hey, that's working so well right now, right? I know that when someone robs my computer, I try to get his address so I can send him a laptop, myself.

Anyways... credit is dry. Financial institutions have died. We don't know what the bailout proposal is going to be exactly; we only know we need one. The Dodd plan was pretty good. The GOP House plan is pretty terrible. Worse than the S&L bailout plan. God only knows what comes next - hopefully real regulations, including a sensible approach on short-selling, more restrictions on CDOs and derivatives (a sad tale for another time). We're getting an exectuive salary cap, which a lot of people are calling bullshit, but, are restrictions on drunk drivers bullshit, even if most drunk drivers don't get into accidents?

But all this shit is gonna cost up to $1.3 trillion potential, so don't expect that "health care" or "victory in the war on terror" or "new highways" you were expecting anytime soon.

Good time to invest in oil, though! That shit ain't a bubble!

I hope this has been informative. If I write any more at this time my arms will fall off. This has only skimmed the surface, but I hope it's made some of you more interested in this meltdown. I'm going back to obsessively scanning the websites now. Please feel free to leave comments, attacks upon me personally, or further questions.

RECOMMENDED READING: Holy fuck, there's an ocean of it. I stand by Paul Krugman despite what many people say. He might have been wrong on globalization and Iraq initially, but he's more than acquitted himself. All his books are worth reading, and they're easy reads. If you only read the newspaper twice a week, read his columns on Monday and Friday in the NY Times. You can skip basically every other weekly syndicated columnist in this country, in my opinion. Some of them may make you feel warm and fuzzy but none of them give you the facts you need to know.

Also read Wall St. by Doug Henwood. A bit dense, but indispensible to understanding some of these financial instruments. The Shock Doctrine, mentioned above, is only tangentially related to the subject but still helps you understand the larger debates about Keynesianism vs. Monetarism we're about the get into... well, many of us are already into it. Anything by Joseph Stiglitz is a must read. Three Billion New Capitalists by Clyde Prestowitz paints a new way forward in a statist way that I respect. And I eagerly look forward to reading Bad Money by Kevin Phillips, a fantastic author and former (now disgruntled) Republican with a great grip on how finance has ruined things in the past few decades.

There is much more to read and recommend... I barely know where to start. Keep reading The Economist from time to time to get a scholarly but Wall St. perspective. And read Secrets of the Temple by William Greider if you want to understand the Fed, monetarism in practice in this country, and whether inflation is necessarily always a bad thing and a strong dollar always a good thing, especially if you're in debt.