Thursday, October 13, 2011

Different frequencies - On Brilliance, Part 2

Continuing from Part 1.
Like any vivid metaphor...it is simplistic in that it treats non-conforming cases as marginal issues. Perhaps Jobs is just one of those "suddenly rich" who have to be then indoctrinated into the system -- except that this forces the biographies of countless such ingenious people, at great strenuousness, into a counterfactual mold.
In defense of literary concept alone, vivid metaphors would be so guilty if they claimed to be absolute--i.e., to explain every single occurrence possible. Before broaching the metaphor of the "hill," though, this one will restate the explanation in short form:

Elites control the world financial markets, ensuring their continued ability to exert power over the rest of the world. Through the use of a system of monetary exchange sold as a fair and impartial trading method, they rationalize their own power, and the lack of others' power, as a result of them having certain numerical quantities of money, and others having lesser numerical quantities of money. Occasionally, through operating within this system, people are able to accumulate numbers that might elevate them to the ranks of the elite. Too many elites would diminish the power and influence of the upper caste. Therefore, the numbers ascending to that caste must be regularly limited.

The narrative, here, was applied to the "housing crash" of 2008 (pick your year). Some things the narrative did not say:

1) Every elite (or even any!) was conscious of this plan, as expressed above.

2) Every wealthy person is behind it and/or benefited by it.

Every person beating their spouse/child does not know why she or he does it, even if she or he is able to express the reason(s) well. A woman may strike her husband because she was struck and emotionally abused as a child, and still bears the scars on her soul; a man may commit serial murders because he was raped as a boy; a woman may be afraid of heights for a reason she can't figure out lacking hypnosis or deep therapy.

This was a very clever, very detailed "plan." Nationwide, almost all the major banks began dropping lending standards, hiring less experienced people, requiring less collateral, et cetera. At every stage of the process, from realtor to broker to bank officer to legal department to government agency, hordes of people participated in the ritual, approving ridiculous "housing loans." This occurred in tandem with media blitzes pushing the virtues and savings of home ownership, much like the NYT was all ready with WMD scare stories when it came time to kill Iraq again. The rush of demand for housing pumped up prices, making loans even less theoretically viable, yet the loans kept coming, and the prices went higher. Experienced financial professionals begged their clients to offer more than the list price for real estate, to ensure that the offer would be accepted before someone else bought the property on day one.

Just like the invasion of Iraq led to massive sectarian violence, underground civil war, and regional instability, the effects could have been predicted, and may have been planned for specifically by malevolent figures, which doesn't necessarily (or probably) mean that everyone involved in invading Iraq was cognizant of what the effects would be. Things can and do happen to keep well-regulated systems running, even if the left hand doesn't know what the right is doing. However, as Mannheim might say, they keep the system running because it benefits them, whether they fully, consciously know the most minute details of how it benefits them or not.

Once the loans began to default and the price spiral started to turn around, people lost their homes, lost their jobs, lost their retirement planning, et cetera. Accordingly, "demand" (rather, ability to afford) for everything else dropped, and the rising upper middle class was washed back down. It worked really well, in a Machiavellian way--especially because the banks who middlemanned the "crisis" ended up getting to not only repossess all of the houses, but also to garnish wages for years on full-recourse mortgages.

To use the provided example, each individual elite, or a mystical Illuminati somewhere, were not (maybe!) cackling around a fireplace detailing this fully ahead of time. Like slapping a child in the face because a nugget of irritation buried in the soul forty years ago, the systematic binge and hangover does not always have a traditional explanation in the sense that Ben Bernanke might confess to it while being waterboarded. This is what people did; this is how they did it; this is how so many were hurt, in varying levels. The mystery of the why the elites would hurt not only the rest of the world, but also themselves, is found elsewhere, here. More discussion on the "why" when this one goes on to Stage Fourth, later.

All that said, don't fall into the "zomg conspiracy theories!" trap. It isn't so hard to believe, is it, that somewhere, out there, someone is planning to make money? If you wanted to make a lot of money, and stay king of the world, how would you go about stopping anyone else from climbing the hill? You can't blatantly declare your intentions. If you invade a country, it's for humanitarian reasons. If you relax lending standards, it's to help good, hardworking people find homes. If you evict them, it's because they didn't pay the mortgage, and you have a business to run, employees to pay, and stockholders to answer to. If you then take tax dollars from those same evicted people, and give them to the bankers (ultimately, the elite stockholders of said bankers, who may or may not hold a position on the board) who manufactured the crisis, it's because you're benefiting the poor in the long-run by keeping afloat banks that those people need to live, which are too big to fail. You never say, "I want the money! And I'm gonna get it!"

Somewhere, out there, someone is trying to get money. The guy bagging your groceries at the supermarket is trying; the guy fixing your car is trying; the guy flipping stocks is trying; the guy whose financial adviser pays other people to buy securities in companies that hire people to evaluate stock flipping is trying. That's the nature of the jungle civilization, where economic failure is underwritten by homeless starvation or freezing to death.
[I]t is written from the perspective of ignorance -- of an outsider looking enviously in. Does Arka really know what issues attend the lives of the super-rich? Is it true that there is no existential difference between a net worth of twenty billion and twenty million? One or two examples from Arka's personal acquaintance would have aided his/her case...we can be non-producers at all levels of income. You see how story-book the thesis gets?
(Before continuing, this one will say two things to the former part of the selection: firstly, depending on the definition of net worth qualifying one for super-rich, yes; secondly, super-rich net worth, as part of the aforementioned monetary charade, tends to be defined by power over companies, i.e., power to control the lives of others and shuffle assets owner through a variety of legal entities, rather than just a liquid account with a bajillion dollars in it. Thirdly, and far most importantly, humans can and should trust one another to comment on something without having "been there." To employ Godwin's Law, as inevitably must be done, the illustrative question is, "did Hitler do bad things?" with the follow-up being, "have you met him or any of his advisers?" This ability of humans to understand and think about things they haven't yet fallen into is why a little girl who writes a letter to the president asking him not to kill anymore people is more right than every one of the president's advisers.)

Onward! The lack of difference between twenty billion and twenty million deals in the fact that, as humans, and not having yet purchased immortality of the singular ghost expression (as far as general culture appears to know), we each only have one human lifetime, filtered through one set of human sensory organs, from which to benefit from "money" and the things it can acquire. And part of that time, you're sleeping. This is the law of diminishing returns, which it is perfectly appropriate to use against economic elites in the land of the invisible hand. $5 means more to the starving kid in Africa than to the harried single mom in America; $100K means more to the said single mom than to the corporate lawyer; $10 million means more to Ice T than to Bill Gates.

Just as there is a world of difference between reading Dune and watching Seinfeld, there is a world of difference between twenty billion and twenty million, or between one million and two. It would be cool to be able to buy islands, commission thereupon colossal cotton-candy sculptures in the Easter Island style, then light them on fire and pay an astronaut to take pictures of them from space. It would be cool to own a one million square foot house--or twenty of them! It would be cool to pay homeless people $10K each to dress in drag and stage a transvestite pride march on Washington.

At a meaningful human level, though, the use of the economic cutoff point was to discuss the secure fulfillment of human needs. Shortly put, with more another time, inflation is one of the price manipulation tools that serves as a background elite protection strategy. Here's how it works, again, shortly put: constantly, slightly devaluing money causes accumulated holdings ("savings" or "IRAs" or whatever you like) to become worth less over time, unless they are invested in the stock market. The stock market serves two cool purposes: firstly, investing in minority shareholdings (now even more cleverly diffused through mutual funds) places funds in the control of majority shareholders, and secondly, it subjects holdings to the cyclical dropouts of the market, like the overflow drain in a tub.

If you pull out of the investment trap, and go for something "safer," you don't get an interest rate that can beat inflation, and you and your heirs gradually decrease in net worth. The only way to stay out of this cycle is (1) to work, i.e., to labor for the ownership caste, producing things of value in return for numbers allotting you potential survivability, or (2) to have so much money that your investment earnings can not only outpace inflation, but increase principal sufficiently to ensure the future outpacing of inflation, and also, to have so much that you can still live exceedingly well during any necessary stock crashes.

(In terms of one lifetime, this isn't always easy to follow, but think dynasty, which is how elites are so successful, economically speaking.)

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