2008 Made History

I think 2008 made history. You think 2008 was historic. But it is hard to tell which years mark major changes in our civilization until decades, perhaps centuries later. Events that seem historic to us now may not even get a sentence in the history books of 2200, yet events we did not hear of yet may seem earth-shaking in retrospect.

When American war ships "opened" Japan in 1854 [See U.S. Bullies Japan], newspapers noted the event. No one in the U.S. and Europe, however, expected Japan to become anything other than another subjugated Asian nation.

This year Barack Obama was elected President of the United States, and George W. Bush became the most unpopular American President since Abraham Lincoln. [Honest Abe won the 1860 election with only 40% of the popular vote, and in 1864, even with the Confederacy not voting, he won the election with only 55% of the vote.]. Conversely Herbert Hoover won 59% of the vote in 1928; no one foresaw the economic unraveling of 1929-1933.

This week, to cap off what most consider to be the worst year in American history since maybe 1932, Israel launched a large scale air attack against Palestinians confined to the Gaza Strip. This because Hamas occasionally was lobbing a mortar or crude missile into occupied Palestine as an act of defiance. Why should the Palestinians not be able to use the land that has been stolen from them for target practice? Especially since their aim is so bad?

I doubt the timing had anything to do with the cease fire ending or Hamas missiles. It probably had the secret blessing of President Bush in advance. Bush will claim he can't, as a lame duck, do anything, and Barack Obama will be able to treat it as an accomplished fact. Those who hope Barack will stand for justice for the Palestinians are truly deluded. It's a brilliant strategy for Israel: enrage 1 billion Moslems, most of whom will find it easier to take out their anger on the U.S. than on Zion. Then, attacked by Moslem patriots, the U.S. will feel an even closer emotional bond to Israel.

But what is on everyone's mind is the economy. Negative overall economic growth is treated as a far greater disaster than global warming, the U.S. engineered famine in Somalia, or even the disintegration of support in Afghanistan for the U.S. puppet government.

I don't expect Barack Obama to straighten out these problems. The economy is likely to right itself during 2009 as long as the banking system is restored to soundness. Like any President, he will take credit for anything good that happens on his watch, and will be blamed by the other party for anything bad that happens. I believe Obama will turn out to be the first black imperialist U.S. President. Part of my plan for 2009 is to point this out, constantly, to the Democrats who should be in the Green Party but continue to drink Democratic Party kool-aid. But if I am wrong, I will admit it, even cheer as he withdraws all U.S. troops stationed outside our own territories.

On a positive note, the Internet continues to bind the world together. Whether that is good or bad is anybody's guess. Iranian mullahs can eye American cam girls, and American teenagers can read Al-Qaeda propaganda. We can all read what individuals think now, not just the news (or misinformation) their governments or corporate news networks want us to read.

While the U.S. wastes its soldiers' lives and what is left of its industry on subduing its colonies, China and India are making great economic, political, and cultural strides. More importantly, most trends worth watching are transnational. Even the localization, anti-globalization folk are now a global phenomena. Imagine a world in which peace, protecting the environment, and knowledge of the real world are the dominant paradigms. That would be history worth making. And that is what this Natural Liberation blog is about.

Adobe and the Capitalist Firing Squad

Did you hear about the leftist firing squad?

Everybody stands in a circle and fires at each other.

So now lets talk about the capitalist firing squad. They are in a circle now, blazing away, and hoping the government will intervene to

They are not firing bullets (yet); they are firing people.

I thought of this because I listened to Adobe (the software makers of Acrobat and Flash fame) management do their analyst conference yesterday. You can read my financial commentary on Adobe at Dissecting the Bull. Here I want to remind people about how selfishness can be negative even for the selfish (in contrast to the Adam Smith inspired sentiment that greed is good for society).

Adobe is immensely profitable. In the latest quarter they had profits of $320 million on revenues (sales) of $915 million. They say they would have done better if we were not in a recession.

So what are they going to do? Their profits were up 10% from a year-earlier, at a time when a lot of people and companies are in a world of hurt. But their response is to fire a large percentage of their employees. Actually, apparently the pink slips went out at the beginning of December.

Those employees will respond to their own personal situations by cutting their spending. Joining other laid-off workers, they will contribute to a macroeconomic spending downturn. Other companies, feeling less demand, will do another round of layoffs. Perhaps compelling Adobe itself to lay off more workers in 2009.

You can understand layoffs when a company is losing money. But Adobe is not the only company that is firing people just to keep its stock price up. Practically every profitable company I have paid attention to has done the same. They have absolutely no loyalty to their workers. If the past is any indicator, corporations will lay off some of their best workers and keep the ones whose main characteristics are lip puckering and back stabbing.

I believe we are actually in a fairly typical cyclical economic downturn. For the usual reasons, probably in 2009 we will realize that the bottom is behind us. Companies will start hiring again. The capitalist firing squad will go back to its usual anarchistic ways. Housing led us into the recession and will probably lead us out of the recession. Very few new homes are being built right now, and with interest rates and housing prices low, excess inventory is beginning to be sucked up (except when it was built in the middle of nowhere) [See California Housing Dynamics]

On the other hand, if the capitalists close their circle tighter and shoot more accurately than I expect, there is still a possibility that they can turn a recession into a depression. Then it will be the leftists turn to go hunting among the disillusioned and hungry.

If Wishes Were Horses

This blog was meant to be mainly about philosophy, but I have been writing a great deal about politics lately. That is okay, history and politics are about reality, and philosophy is (or should be) about reality. Reality is everything, but looking only at subsets of reality can send you astray.

Now let's look at some folk wisdom:

"If wishes were horses, beggars would ride."

As far as anyone can tell, this is genuine folk wisdom, not to be quoted from the Bible, the Tao Te Ching, Benjamin Franklin, The Beatles or even Ludwig Wittgenstein. According to my Familiar Quotations, it first was printed in 1670 in John Ray's English Proverbs as "If wishes were horses, beggars might ride."

Nothing quite sums up the case against prayer, subjectivist philosophies, wishful thinking, and the power of positive thought quite like this proverb.

Few people worry about not having a horse these days. Horses being the object of desire gives the phrase a vintage that could pass for wisdom even if it were unwise.

Am I saying it is best to dwell in negative thoughts, or to be in a constant state of pessimism? No, though occasional thorough examination of the negative is as instructive about reality as is occasional thorough examination of best case scenarios.

I want a philosophy that corresponds to, that accurately describes, reality. On that tiny bit of reality we call Earth, in the tiny sliver of time I will live, I don't want to waste all my time on illusions. Illusions are a part of reality we humans construct in our minds. We can learn a lot about our mental parameters by looking at illusions. In our lives the illusion/reality foreground/background sometimes inverts; we become disillusioned. Illusions are sold to people for a variety of reasons. When we are children we have little choice other than to believe the stories we are told of the world, whether they are true or not. I thought Heaven and Hell (and Purgatory and Limbo) were real when I was a young child. More complex illusions, more believable ones anyway, may fool me yet. The important thing to remember is that people may be lying to you, or they may be telling the truth, and it is up to you to decide when it is important enough to investigate a matter for yourself.

If wishes were horses, beggars would ride.

If you want to ride a horse, you need to do more than wish for it. Wishing for it does not prevent you from riding it; it might be a first step. You still need a plan and you need to execute on plan.

Are people's interpretations, and even perceptions, of reality subjective? Sure. Leaping from that to the idea that people create reality is a leap to nowhere. Reality was around before people. Even horses were around before people. People are a creation of reality, not the other way around.

Read all about the various philosophies and religions; it won't take that much time, it should not hurt you. But when it comes time to chose a philosophy, and make a life plan, and execute that plan, you should start with a firm foundation. If you turn out to be wrong, admit you are wrong and right yourself. If the popular consensus is wrong, be aware that people will think you are wrong for not agreeing with them, but keep in mind that reality is on your side. Reality is heavy; it is your best friend and ultimate refuge.

Reality is very complex, to be sure. One day the wind blows from the north, another day from the south. One day we do everything we can to keep cool; another day we can survive only by setting the world on fire. Weathermen are fine, but if you want to know the way the wind is blowing where you are, the best thing to do is just step outside and feel it.

Natural liberation might be defined as being liberated by knowing you are part of nature, and knowing what you can about nature, and acting on what you know.

See also my Philosophy page

Treasury Notes and CDs

My wife asked me why people would buy Treasuries when the equivalent CDs (Certificates of Deposit) pay higher interest rates. Or when you can just put your cash in a sack and not lose money when rates turn negative, as they did yesterday. It is a good question and the answer illuminates the current financial situation.

Short term Treasuries (Treasury bills or T-bills) are paying little, no, or even (as the headlines say today) no interest because their prices are set by auction and right now a lot of people want them. They are perceived (incorrectly) as being the safest liquid money investment there is, which attracts a lot of investors in a time of fear.

CDs at banks, savings and loans, and credit unions are nearly as liquid, and they are backed by federal government agencies up to a set sum per individual per bank. If you have more than the insurable amount (currently $250,000), you can get CD's at a variety of institutions and all of your money will be insured by the federal government.

Interest paid on CDs varies quite a bit by institution and by the amount you deposit and time until maturity, but in general today the interest rate is quite a bit higher than you would get on a treasury that is roughly equivalent. That difference in interest is what we must account for.

Suppose you manage a money market fund, equity fund, or any large, multi-billion dollar pool of money. One day clients may put in ten billion dollars, the next day they may withdraw $20 billion. You have to have enough liquidity to deal with this. You can't get a $1 billion CD one minute and then cash it back in 4 hours later. But treasuries are always being traded. You can by $10 billion or $20 billion in treasuries right now, or sell them at a moments notice. So your clients' panicked stupidity forces you to put their money where it has the lowest rate of return. Also, if you did try to get CDs instead, they would be not be backed by the FDIC. So if the bank that issued them failed, you would be out the money (unlike ordinary CD buyers).

The nature of financial panic is that most people don't panic early enough, so they panic with everyone else, and the auction pricing mechanisms in place bring ruin to them. They also don't emerge from panic early enough, so they miss the big bounces when auction prices turn around.

For those of you who are not familiar with the conventional wisdom, I should point out that:

Only suckers buy bonds when interest rates are low.

Why? Because bonds have what is called principle risk. Suppose you buy a ten year treasury note at 2% interest today. Suppose this liquidity crisis is over in 2010 and in addition has spawned some inflation, so interest rates have gone up to say 8%. You aren't scared any more so you ask your account manager to sell your totally safe $100,000 in 10-year Treasury notes for you. You check your computer the next day and your $100,000 has turned into $25,000 (more really, but I want to keep our math simple). No kidding. So, too late, you ask for an explanation.

If someone buys $100,000 in new securities they can get 8%. So to get 8% from your lousy 2% notes, they can only offer one-fourth the principle.

But could you not save your $100,000 by keeping it until maturity? Of course, that is allowed, but in the meantime it is locked in at 2% interest, or $2,000 per year, when if you could reinvest the same amount you could get $8,000 per year for the following 8 years. $64,000 versus, $16,000.

Of course, I used 8% to magnify the problem, but to any extent interest rates rise, you lose principal if you must sell.

And believe me, the Wall Street guys know how this works. Fortunately for them it is your money, they just get paid for managing it.

We are told banks don't have money to loan right now. The federal government is putting money into its pet banks (including favored institutions that were not even banks before this program began). If the money that had flowed into treasuries had been deposited at banks instead, the banks would have plenty of money to lend.

Think about it. And buy bonds when interest rates are high, so you can make a killing selling them when interest rates are low. Let the buyer beware.

And keep diversified!

Buying Treasuries directly from the government, instead of from a broker (I've done it and its easy).

Barack Obama and Woodrow Wilson

Barack Obama was not the favorite Democratic Party primary candidate of the hard-core peace advocates within the Democratic Party (and duly noting that most serious peace activists are outside the Democratic Party). Hillary Clinton, who looks to be the next Secretary of State, had voted for the illegal invasions of Iraq and Afghanistan back before Barack made it to the United States Senate. She was the presumed winner, and so kept a moderate stance on continuing the wars in order to be ready to go up against the Republican nominee. Barack kept saying "hope" and "change," and pointed to his not voting for beginning the wars (he did vote regularly to continue funding them). When he became the nominee, he not only assumed the Clinton "moderate" position but promised to send more U.S. troops to Afghanistan to make sure, by slaughtering even more Afghanis on their own soil, that our puppet government in Kabul would hold onto power.

But, so far, he can't claim to be as bad as Woodrow Wilson. President Wilson is one of the Presidents we are usually told was a "great" President. During his presidency the U.S. joined the great imperialist powers France and Great Britain in defeating Germany in World War I. We are told this was a victory for Democracy, even though Great Britain was demonstrably less of a democracy than Germany at that time.

U.S. historians, even those who might better be called propagandists, do not fail to mention that in the 1916 campaign Wilson sought re-election on the basis of having "kept us out of war," but then pushed our nation into the war (See Woodrow Wilson and the Lusitania [December 4, 2006]). In contrast the U.S. government is already slaughtering the innocents of Afghanistan, and note Barack Obama never promised to get us out of Afghanistan.

But there are lesser known aspects of Woodrow Wilson that will be interesting to compare with Barack Obama, the first non-white to be elected President of the United States. Notably, Wilson was a racist. A tried and true racist. Not a gun-toting, Ku Klux Klan racist, but very clear on the idea that Europeans were a superior people and that non-Europeans did not deserve full citizenship status under law. For instance, "The federal government showed little or no interest in civil rights, and indeed, Woodrow Wilson, a Southerner by birth, was only too eager to promote segregation in Washington, D.C." [p. 525, Lawrence M. Friedman's A History of American Law, Third Edition]

Moreover, Wilson's alleged love of peace is usually "proven" by his promotion of the League of Nations. While Wilson was too busy in Europe to devote America's energies to the War Against Asia, he did manage to remind the Japanese (and all Asians) that the Europeans did not consider them to be fully human. The Japanese were U.S. allies in World War I (because they wanted to grab German colonies in east Asia). They had defeated both China and Russia in earlier wars. They felt they were as civilized and capable as Europeans. The Japanese delegation to the League of Nations proposed that the Preamble to the Covenant include a declaration for "the principle of equality of nations and the just treatment of their nationals." Which, if it had passed, might have meant a gradual end of colonialism, and a peaceful Japan.

Woodrow Wilson was chairman of the committee hearing the proposal. Wanting to defeat it, he ruled that the motion could only be approved by a unanimous vote. Eleven of the seventeen nations on the committee voted for the proposal, six against, with the U.S. and the "democracy" of Great Britain not voting for it. So the League of Nations was an openly imperialist, racist organization. [Meribeth E. Cameron et al, China, Japan and the Powers, The Ronald Press Company, New York. Pages 377-379]

In short Woodrow Wilson was a disgrace. And the history of the Democratic party is disgraceful.

You can argue the Barack Obama situation two ways. Democrats like the idea that the past is no concern of theirs, that the party is what they say it is today. Forget about all those votes for the wars in Iraq and Afghanistan; forget the lack of protest against the U.S. paying allies to trample on the sovereignty of Somalia. Hope for a new, brighter future in which even black men, as long as they are inoffensive and have two parents with graduate degrees and somehow get themselves a degree from Harvard Law School, can become President.

Or you can ask: why would Barack Obama devote himself to the Democratic Party when he knows it is the primary racist institution in the United States? If you are going to forget the past and reform a war crimes organization, why not work within the Republican Party, which at least has the merit of having opposed slavery and segregation?

Of course, what Barack and the Democratic majority in Congress do in the next four years will at least define the true, honest, current state of the Democratic Party. Maybe it will turn out better than I think.

If this democratic republic still exists a century from now, with the same system of two-party rule, rest assured that American citizens will be told that Barack Obama was a great President. Just as they will be told that George W. Bush was a great President. No matter what Barack does or does not do in office.