Housing crisis, etc.

Ashlee Andrews wrote:

> I am sure that you and Jill feel a bit unsettled, but it is one of
> those really unique times when nothing is in your hands, which I am
> sure is both liberating and nerve wracking. But there is something to
> be said for a time when prayers or thoughts about the future, or at
> least my prayers about you and Jill don't involve me praying for some
> specific outcome, but, rather, the right outcome, which is totally
> unknown at this time. I guess what I am saying is I am excited about
> what the future holds for you both because I think it will be what is
> right.

Yeah just keep on prayin'. In this case, I actually think that prayer isn't enough--though I appreciate and respect the sentiment. What it comes down to is that our ability to move, our "freedom," has been significantly reduced because of the greed and arrogance of people who believe that the market is a just and accurate measure of value and that we, as citizens, shouldn't attempt to use our collective power to administrate that market for our collective benefit. Whatever we want to call it, and however we want to balance these two forces, the fact is that they must be balanced. The people who object to this seem to think that administrating the market for the benefit of an elect few is somehow NOT social engineering, that the free market is somehow natural despite the numerous regulations that, for instance, we have to impose on other countries to bring it about. If all this sounds polemical and crazy, there's not much I can do about it. I am speaking in response to a polemical worldview, what liberation theologist Franz J. Hinkelammert called Ideological Weapons of Death. Against this, even the most measured response often appears like some crazed rant.

Our problem is minuscule compared to people who are being foreclosed upon--especially people of color who ended up with these loans not because they had bad credit but because of racist assumptions--but that doesn't change the fact that this is precisely the result of deregulating the financial sector over the last thirty years. The thing we didn't talk about the other night is how this fits into the other sweeping changes that we often think about under the heading "Globalization." In the recent news, we keep hearing references to this being the worst possible downturn since the end of WWII or even a possible repeat of the Great Depression. You are right that some of this is self fulfilling prophecy, that it has less basis in any material change. But this is not to say the value we thought we had is not gone; instead, it is to say that the value we thought we had was never there. And, more importantly, the value that people said would be created in the stock market, the faith that we were supposed to put in its mechanisms, was never something that would reward everyone and it was always bound to fail if we put all our faith in it.

The long and the short of it is that, after the Great Depression, which was caused, in part by a failure of the banking sector in almost exactly the same way that the financial sector is failing today, the federal government stepped in and began regulating the banking industry, putting rules on their transactions, trying to make it work better, more reliably, less in line with what economist John Manyard Keynes called the "animal spirits" of the stock market. By this he meant that, if it was allowed to completely dictate the value of everything existing, we would find ourselves in quite a pickle. This has to do with the twofold quality of money: on the one hand, it is meant to be something that represents value in general, that we get paid with and buy things with. But on the other hand, that value is relative and, since money itself is ALSO a commodity, it can be traded and re-valued on a separate market.

This value has less to do with any relative value of what a dollar can buy or how it relates to our wages: it is more about perception on the part of the trading class. Here it doesn't necessarily matter if I think the dollar is going to be more valuable or if it should be: it matters if I think you think it will be. I may buy up a bunch of dollars (or subprime mortgages) less because I believe that they will pay off: I may think they are total crap. But if I believe that you (or the abstract "market") believe they are valuable, then I will buy them up because down the road I may be able to sell them for more than I bought them. This opens up the possibility that the item itself hasn't changed in the least, that nothing will come of it, but that it will still appear more valuable. In this case, the subprime mortgages are only the tip of the iceberg since the reason they were necessary at all was because people were already buying up homes and property on the assumption that it would pay off (again, not because they thought it was valuable in and of itself; not because they thought it would be a good place to live, but because they thought other people in the investing class would, down the road, think it was valuable.)

In the Great Depression--the new Fed Chairman's interpretation aside--the main problem was that this had come to a head in about the same way it is now--largely because the investors and business people at the time had decried any attempt at government intervention in the market as a form of socialism. When the government was basically forced to step in--not just to save the economy but to quell the widespread social unrest (riots, runs on the bank, as well as the more basic problems of homelessness, poverty, starvation, etc.)--they continued to call it socialism, but the regulations that were imposed were largely what made the postwar economy so much more stable than before. On the other hand, it is frustrating for investors because it takes all the fun out of it: instead of playing the game and having the chance to get some astronomical return on your investment (600% instead of 6%) it was just a modest return. It's a gross oversimplification, but in a nutshell, that is one of the causes of the class revolt from above--from the class of investors and owners of capital--in the early 1970s.

The argument made at the time was that all this regulation was a drag on the dynamics of economic growth and one of the main changes in the coming decade (from about the mid 1970s to 1980s) was the deregulation of financial institutions. This made possible not only all kinds of crazy investment schemes in the 1980s (which in turn made possible all kinds of crazy 1980s movies--Less Than Zero, Wall Street (based on a true story), and any film where a maniacal [white, male, heterosexual] trader tries to beat the odds and must have cocaine and hookers to do it) but, since they were also imposed on a grand scheme through bilateral investment treaties, it also made possible the massive trend towards offshoring manufacturing to overseas sweatshops, etc. The latter weren't as big a change in the US economy as is often assumed--i.e. there weren't as many jobs outsourced as we're led to believe--but the constant threat of that possibility made all of us less likely to ask for any increase in our wages or our working conditions and, certainly, to claim that unions or any other form of collective action could be of no help since those were the bohemeths of a previous era. Meanwhile, new bohemeths of transnational corporations, international accounting firms, international insurance firms, and international financial institutions facilitated the integration of networks far above and beyond our collective control.

This has meant that, despite the recent fall in the dollar, none of the usual wage increases that would allow us to live our lives at the same level have happened. Thus, quoting from

What are the immediate effects of such a steep drop in our currency? It puts extreme upward pressure on anything and everything. This has really kicked in especially within the last year to two years, and has been building before that for the better part of this decade.

Metals

* Aluminum: up 76% in 4.5 years
* Copper: up 333% in 5 years
* Platinum: up 353% in 9 years
* Silver: up 272% in 6 years
* Gold: up 300% in 7 years

Food

* Canola: up 133% in 2 years
* Cocoa: up 206% in 7 years
* Coffee: up 170% in 6 years
* Corn: up 150% in 2 years
* Oats: up 160% in 3.5 years
* Rice: up 239% in 6 years
* Soybeans: up 134% in 1.5 years
* Wheat: up 200% in 2 years

Fuel

* Brent Crude Oil: up 900% in 9 years
* Heating Oil: up 450% in 9 years
* Light Crude Oil: up 850% in 9 years
* Propane: up 190% in 9 years

(source: http://bonddad.blogspot.com/2008/02/what-inflation_18.html

During this time, how much have your wages gone up? For the average American, down about 2%. If you made $50,000 a year in 2000, you would need to be at $61,289.20 just to keep pace with inflation today. To actually "get ahead" in the world (to do what raises are supposed to accomplish), you would need to be further ahead of that number.

That high school $8/hr job in 2000 would bring in $9.81 today. How many supermarkets are paying that, though? In many places, they're still paying $8, or even less. That $8/hr job today was worth $6.53 only 8 years ago.

As wages has stagnated and the price of everything has soared, Americans have tended to find another way to get income - the equity that is stored within the value of one's home. From this last gamble to hang on to the American Dream that was the good times of the 1990's, we witnessed what may perhaps be the greatest bubble and crash in our lives: the housing bubble.

This commentator points to only the latest way for us to do this. Before people were taking out home equity loans (where, as I mentioned the other night, people are taking out second or third mortgages on their homes based on the market *perception* that they have had a vast increase in the value of their homes), before people were, as Doug Henwood says, "using their homes as credit cards," they were just using credit cards. And, likewise, before marketeers were trading mortgage backed securities, they were trading credit card debt, again bundled into securities that were assumed to pay off at a certain rate. To help make sure that this happened, a few years ago, congress passed legislation to make it almost impossible to declare bankruptcy on the basis of credit card debt. Some have pointed out that this made people more concerned with paying off their credit cards than paying their mortgages--on which they could still declare bankruptcy--and that this attempt to suture one of the places the economy was about to burst made it more likely to do so at the tender seams of the housing bubble.

In other words, the deregulation of the 1980s and 90s did indeed make the capital markets more dynamic, but we could also ask whether it was really the creation of new wealth or just shifting it from a more equitable distribution to one that was more top heavy. What this meant for each of us was less security in the workplace, almost no increase in real wages (i.e. wages that increased to keep up with inflation) and, as you know first hand, an increasingly ineffective heath care system--one that was, again, left up to the market and is thus inevitably skewed towards giving the best health care money can buy, but only if you have the money to buy it. It's worth mentioning that a good amount of those credit card debts that were being traded were for medical expenses.

The discourse around this development in US culture in recent years has mostly centered on criticism of people for racking up credit card debt. The prototypical character who does this on a mainstream TV show is assumed to be a profligate and irresponsible spender, someone who simply "lives beyond their means." It is especially women who do this because they can't stand not to have some $400 pair of boots. It is this kind of spending that is assumed when people come on news programs to caution us against the dangers of high credit card debt. The contradiction is, of course, that a few moments before or after this, we are, in one way or another being asked to fulfill our role as consumers. This is our basic role in the US (and world) economy. In fact, when I mentioned that China was buying up a lot of US treasury bonds for years before this crash happened--despite the fact that they were basically buying into a crashing system--was largely understood as an attempt to help prop up the US consumer--who, incidentally, was the main consumer of goods from China.

In this, the kinds of critiques made by the Situationists of the 1970s which I think Travis is interested in, are mostly interesting as an early description of this separation of the spectacle from the material existence: the early sense that our role as producers (our focus on collective action in the workplace) was being subverted by a sense of our main goal being individual consumers. Their critique was largely that this consumer understanding of freedom was a pale comparison of what real freedom was, which involved some sort of authentic communal experience which lifted us to a new dimension of humanity and made our individual consciousness more improved. But this critique has gotten stalled at the level of simply critiquing consumerism, often seeing the great number of people in the world--and especially in US society--as some sort of sad, deluded carcass of humanity.

The question of the avante garde should still be asked of course--whether we could shake people out of this through some cultural production--but it cannot be an excuse for seeing the problem in its totality. The problem isn't just that we all became mindless consumers: its that we didn't see how the pleasure we got from this was often bought with borrowed money; that this was the result of us abandoning other kinds of collective pressure to make the country more liveable; and that, in the meantime, we were colluding with the very people who helped create the political, economic, social and cultural environment in which the "spectacle" could be perfected.

The answer isn't to destroy the pleasure of consumption, the real and genuine feeling we get when we can enjoy something--whether because it has some authentic cultural content which we have the expertise to appreciate or because of the superficial joy we all have to admit exists in crass consumerism--but to figure out how to re-engineer the system so that these joys we have found can still exist, on a more widespread basis with an even more diverse set of pleasurable objects, without us having to bargain our future on it and make it so that our enjoyment depends on misery elsewhere--whether through degrading workshop conditions, unsustainable environmental practices, or the violence of war to secure resources and political power. At the moment, the latter are absolutely necessary for the continuation of the system as it stands, even if we are able to save the financial institutions from collapse.

In any case, one level of what we are seeing today is effectively the result of leaving these financial institutions to their own devices. The argument was that this would create this amazing new period of growth and development and that this rising tide would lift all boats. But since the essence of this system is to privilege individual innovation in the greedy extraction of money from wherever it can be extracted, the effect was not to lift all boats but to create a whole new way of getting even more rich off the fact that the average person was suffering financially. The credit card debt and home equity loans that people were using to make up for the fact that they weren't making enough money to meet their basic expenses and sometimes to pay for costly healthcare that was not covered by their insurance; the subprime mortgages made necessary by the fact that wages weren't rising fast enough to keep up with the investor class's inflation of the housing bubble (following the dot.com bubble of the 1990s); these were securitized and turned into instruments of debt that could be traded and profited from even more.

The changes in the US economy that made it necessary for people to go to these extremes also made it possible for the class of people who were already profiting from the changes to profit from them further, turning people's precarious situation into a commodity itself. That anyone in the financial sector was truly surprised by any of this is astonishing: like the intelligence that led up to the Iraq war, either they knew they were lying or they are so amazingly incompetent at their jobs that we should fire all of them and reform the entire institutions.
I normally wouldn't go all out socialist on this point but there is a pretty coherent view of the historical roots of what's happening today here.

And if all of this is too serious, then I'll just end by returning to my own troubles, namely that I don't know if we'll be able to do anything but stay put for the foreseeable future since we can't compete in a market dominated by houses being sold at reduced prices by banks who have foreclosed for non-payment. This is a pattern that is very bad for an economy that depends on people being able to move across the vast united states for work. It is also, as I began this now overly long tirade, a real limit on our individuality, our freedom to move. In this, I like to think of these words from Oscar Wilde's nice essay "The Soul of Man Under Socialism" where he contrasts private property with what it might be like otherwise:

[T]he Individualism generated under conditions of private property is not always, or even as a rule, of a fine or wonderful type, [...]. The possession of private property is very often extremely demoralising, and that is, of course, one of the reasons why Socialism wants to get rid of the institution. In fact, property is really a nuisance. Some years ago people went about the country saying that property has duties. They said it so often and so tediously that, at last, the Church has begun to say it. One hears it now from every pulpit. It is perfectly true. Property not merely has duties, but has so many duties that its possession to any large extent is a bore. It involves endless claims upon one, endless attention to business, endless bother. If property had simply pleasures, we could stand it; but its duties make it unbearable. In the interest of the rich we must get rid of it.

Of course when people talk about property, they aren't usually talking about private homes. However, in today's market, where my house is not just a place where I live, but a potential income generating investment, the distinction becomes blurred.

> Thanks for talking the other night. Sorry I had to cut short. I know
> you felt like you rambled, but I really was interested and Friday
> evening I had the opportunity of talking about how crazy securities
> and the concept of using debt as money are with Meagan and Ben when we
> hung out with them. Anyways, I wouldn't have had the opportunity of
> sharing in that intellectual conversation (which nowadays are pretty
> hard to come by in a world of post-graduate working life) had I not
> gotten some background knowledge.

Well I've certainly overdone it today, but in any case, I've given you something more to read. I'd be interested in what the three of you talked about, particularly since you all have had some interesting experiences with it. And, obviously, I haven't been having many of those conversations (though I did rant to Jill a bit the other day).

> That reminds me, you mentioned the possibility, in our previous
> discussion, reading assignments to keep me involved in the
> intellectual community. I would love that. Some days, when I am tired
> and chose to sit in front of a DVD for hours, I feel my brain
> withering away. So, if you would like and have something you think
> might be a good read (keep in mind I am a bit rusty) I would be very
> thankful to have something to involve me in the academic community
> again. Sometimes I do become afraid that once the time comes for me to
> apply for graduate programs and provide writing samples, that I will
> realize that I am too rusty to even be considered, thereby making my
> undergrad work unhelpful (that is, of course, an extreme but it is my
> fear).

It is certainly a hard thing to keep primed. On the other hand, a lot of it would probably come back to you pretty quickly once you got back into it. I guess I'd want to know what you think is most important, what you'd like to learn about. I could probably learn a lot from you about feminist and religion as well. For instance, I've been increasingly interested in the way religion is being used in progressive politics. I thought of you in reading an article in last week's The Nation, about how young evangelicals are much more interested in Social Justice than their cranky leaders like Dobson, etc.

None of this is necessarily going to continue, but it is an interesting development and it shows how uncertain it is to use religion to define politics. In reading about the English Civil war for my dissertation I was struck by how old this tradition is in Protestantism--and how difficult it is to contain these energies once they are released. A rather great book on this--and one which, again, reminded me a lot of you, mom, and Uncle Don--was Christopher Hill's book _World Turned Upside Down_. It's an easy to read book but it takes a while to get into it since his discussion about history sounds like a foreign language. Still there are some sections on, for instance, the origins of the Baptist, Presbyterian, and Quaker religion and the political activism they inspired that is really interesting to understand from a historical perspective. Likewise, the newly reissued set of writings from the Putney Debates, where the English Levellers used religion to back up their political program for democracy and, in some cases, redistribution, are an interesting case.

The later writings of Gerald Winstanley, who had a much clearer program in mind about social organization, was also greatly inspired by Christianity in writing his "Laws of Freedom."

These may sound like extremely boring lines of inquiry, but there is also the argument about how new political Islam is a reaction to imperialism and the like. I think I sent you that book _No God But God_ but if not, I think it is a really accessible and is a good place to start on this conversation. I don't really know where it would go next, but considering the connections that can be made across religions and the variation of the role that religion can play as a cultural and social institution seems like a very pressing issue at both the national and international level. I think you are already dealing with some of this in your church situation--and I think the issue of gentrification, urban planning, etc. is also of amazing importance in the current moment.

Again, I don't have a lot of sources to offer here, but since it has such a deep effect on our lives (both the current phase and previous phases) we would all do well to understand these forces better. There are some sections on this in Fast Food Nation and the connection it makes between urban and state policy seems to be mirrored in the Michael Pollin book on food (which I think we gave you for X-mas)

I would say that all of these have issues that relate back to feminist concerns, but they aren't always made explicit. In a lot of cases one of the best strategies is to notice that all the sources I just mentioned are written by men. This is probably because I am a man and there are always hidden biases in the way we choose to look at things. But on the other hand, these men are probably missing a lot of issues that you would be able to see from a feminist perspective. Some really great work is produced by reading books like this--that have become very popular and are in some ways defining the debate at hand--against the grain, or of introducing the important correctives of a feminist perspective. One great work in this regard--which is also quite accessible--is Cynthia Enloe's Bananas, Beaches, and Bases where she looks at International Politics through the lens of feminism and comes up with some really striking observations about tourism, nationalism, women married to military and diplomatic personnel, as well as the role of gender in the more discussed elements of globalized food and clothing production. I have some more explicit data on stuff like this, but much of it may be stuff you know already.

Finally, since you're working in a certain convergence between all of the above issues as well as the question of the role of NGOs (like the American Cancer Society) and the issues in the US healthcare system, that also might be an interesting place to study. Here I'm more at a loss but I could likely drum up some sources from some people. Giving at least some cursory study to this might actually make the seeming drudgery of working there more like an extended research project. It might make it hard to tune it out some, but I would think it could also give you a different way to think about it which might be productive to your thinking about what you want to do next.