Subprime Plot Thickens

I found out about Minyanville today, a website by investing guru Todd Harrison. He is hardly a progressive, but he writes with candour and wit, both rare commodities in the financial journals.

Part of a recent article of his is posted below; in it he covers the past few months of financial machinations connecting the dots and it is is well worth the read.

If you have any retirement whatsoever, READ IT.

As for me, I'm moving everything into cash and bonds (see Strategies for a Bear Market) until things shake out. It seems very clear that this going to be much worse than the dot.com bubble burst.

David Walker, the U.S. comptroller general, proclaimed that the U.S government was on a "burning platform of unsustainable policies with fiscal deficits, chronic health-care underfunding" and "chilling long-term stimulations" as he mapped the parallels between modern-day society and the fall of the Roman Empire.

These are not my words. They come from a nonpartisan figure in charge of the Government Accountability Office, which is often described as the investigative arm of the U.S. Congress.

"I'm trying to sound an alarm and issue a wakeup call," he said in the midst of his 15-year term, which began during the Clinton administration. "The U.S is on a path toward an explosion of debt."

Excerpt of the article by Todd Harrison:

NEW YORK -- They say that if you're playing poker and don't know who the sucker is, chances are it's you. For those currently holding trading cards, the stakes have never been higher.

Over the past few weeks, as risk chips stacked around the table, investors have been forced to call the bluffs of some of the savviest players in the global game.

The winners will walk away with a royal flush of profits, smiling all the way to the casino pool. The losers? They'll self-loathe and second-guess themselves on the hitchhike home, hungry for redemption and wanting for more.

Let's review the series of seemingly inconsistent hands we've been dealt during what was supposed to be a quiet stretch on the summer deck.

At the beginning of the summer, when "collateralized debt obligations" and "subprime mortgages" were first introduced into the mainstream vernacular, Treasury Secretary Hank Paulson was quick to assure us that the problems were "contained."

To be fair, Mr. Paulson wasn't alone. In fact, he was in very good company. See Minyanville article. San Francisco Fed President Janet Yellen, Federal Reserve Chairman Ben Bernanke, Dallas Fed President Richard Fisher and Federal Reserve Governor Fredric Mishkin were unanimous in their assuring voices that we had nothing to fear but fear itself.

Fast forward a few months. That's when things really started getting strange.

[...]

Two days after the FOMC meeting, BNP Paribas, France's largest bank, halted withdrawals from three funds because it couldn't fairly value holdings tied to the stateside subprime mess.

IKB Deutsche Bundesbank confirmed that it was holding special meetings to discuss
its "financial situation."

The U.K. issued a statement that its subprime crisis might be worse than the one in the U.S.

Those concerns, on the margin, were disconcerting. But as actions speak louder than words, the sequence of events that followed offered a more telling view that strange things were afoot at the Circle-K.

The European Central Bank, in an "unprecedented response to a sudden demand for cash," injected $130 billion into the financial machination. The U.S., Japan and Australia also stepped up to the plate with piles of dough, upping the ante to more than $300 billion.

Even Canada -- Canada! -- chimed in to "assure financial-market participants that it will provide liquidity to support the stability of the Canadian financial system and
the continued functioning of the financial markets."

MarketWatch: If the wheels fall of the financial wagon, you were warned

Weeping Man

From an article by author Steve Ryals:

President Harry Truman said that, "a weeping man is an abomination." Truman was president from the close of World War II into the early 50s. I saw this quote
just the other day, and was reminded of my grandfather, Oren Ryals. Oren was my
father's father, and when I was a boy I idolized him. He ran a chicken farm on a
seven acre spread near McMinnville Oregon in the 50s and early 60s. I got to go
down and spend time working there just about every summer between 1956 and 1963.

Oren loves his grandchildren very much and I'm sure from his perspective
he spoiled us rotten. He built a bunkhouse out of the bar and stayed out there
with my brothers and I we came to visit. He told us tall tales of Bigfoot and
other legends, and we had great time. He taught me the value of working hard and
enjoying the fruits of my labor. It seemed as though he could fix anything from
repairing a building to repairing a truck or a tractor. He also worked hard on
his chicken farm, establishing an egg route in Portland as a market for the
14,000 or 15,000 eggs the chickens is produced every week.

When I was quite young, before the age of 10 and remember grandpa being quite affectionate. However, at the conclusion of a trip my mom, my brothers and I had taken to visit with grandma and grandpa, I was deeply shaken by the way he said goodbye. We were standing in the train station in Portland. It was the summer of 1960, and here was heavy with diesel fumes and sticky heat. I remember the massive engine throbbing just behind us as though breathing. I loved trains, and was so excited to be heading home to Seattle on one.

There we were, say goodbye to grandma and grandpa. Grandma hugged everybody of course, and grandpa of my younger brothers. I thought he was saving me for last because I was his favorite, but think that was just a fantasy I had. The conductor's voice rang out, calling everyone to board. I stepped towards grandpa and put my arms out to get out just like I always had, but he stuck his hand out to home raise and shoved against my chest, stopping me cold. Shock shuddered through me and I
wondered what I might have done wrong.

I looked up into his face, tears welling, and he said rather roughly, "big boys don't cry, and they don't hug either. Men shake hands." With that, he stuck out his hand for me to shake. Numbly, fighting back tears, I shook his hand, then turned without another glance and climbed into the train. My brothers and I settled into our seats, and I looked out the window. Grandma and grandpa waved to us, smiles on their faces, as though nothing had happened.

I sat there feeling crushed. I sniffed once or twice as I wiped away the remnants of my tears. I vowed then and there never to cry again. If grandpa said it wasn’t okay to cry or hug him, then that must be okay. I would just have to get over my hurt. It would be six long years before my tears again graced my cheeks.

I tell you this story because, as I read, President Truman's words that I quoted you at the beginning of this essay, I was reminded of my grandpa. He turned 50 years old in 1952, and I realized that this was the reality that my grandpa lived in. He really did think that a weeping man was an abomination, and he was trying to protect me from being thought of it that way. He was just doing his best. Today I picked up my grandpa with great affection and love. He taught me so much, and he really did love me the very best way he knew how.

Tears flow easily for me now. I consider them sacred. I know in my heart, the tears are not a sign of weakness. Instead, they are a sign of strength. I honor them in myself and in others. My heart breaks open for all of the people who do not feel as though they can afford to cry. Part of my mission is to teach people that feeling is healing, that any feeling fully felt shifts. It took me a long time to learn to laughter
is connected to tears just as rain is connected flowers. One enhances the other, creates a context, provides perspective. Tears are healing. Trust your tears, and trust your heart.

A Weeping Man

So basically Truman and all the other Cold Warriors and their ilke (NeoCons anyone?) were assholes. Sure he did some good stuff, but really, no big surprise eh?

Global Climate for Socialism

Global climate change is obviously recognized by the vast majority of people as a fact on the ground. If Hurricane Katrina and the Indian Ocean tsunami disasters did not convince everyone, the increasingly bizzare weather patterns affecting most if not all parts of the globe, have done so.

With increasing flooding not just in the hurricane affected zones but also south Texas and England, the question of whether capitalism has what it takes to handle this crisis becomes all the more pressing.

An interview with Marc Brodine in Political Affairs calls for a concerted, socialistic world effort united to combat world climate change before it is too late:

[...]

Capitalism is a significant part of the cause of the environmental problems that we are facing. Because we can’t separate out how we produce things and how we finance things, and how we distribute things, and how we sell things, from our interactions with the natural world. That is why we are burning all this carbon to produce lots and lots of commodities that capitalists think they can sell profitably, whether that’s actual goods like plastic bags or little toys, or the gas that we put in our car, or use for chemical processes like making plastic for example. So capitalism is part of the cause, and we have to change our economic system, because it is directly linked to why we have these problems. However, socialism does not automatically solve such problems for us. We have to unite socialism with the latest in science.

[...]

"We Can't Wish it Away": Climate Change and the Human Prospect

Real-Estate Meltdown, Just the Beginning?

Yesterday I posted on the mortgage crisis and the effect on the credit market and homeowners. The other side of the finance equation is of course real estate values. Today the Wall Street Journal reported that real-estate mutual funds (or 'REITs' in the finance world parlance) are posting huge losses with no end in sight.

From a Wall Street Journal article by Tom Lauricella:

Mutual funds specializing in real estate are getting clobbered, hit by a one-two punch of woes in the property markets and the tumult in the debt markets.

Although real-estate stocks staged a late rally yesterday, their recent troubles were highlighted this week by a 31% one-day drop in the stock of KKR Financial Holdings LLC Wednesday, a real-estate investment trust, after the company reported financing problems.

The result is that after seven years of spectacular gains, funds investing in real-estate investment trusts are posting huge losses -- some with losses topping 15% over just the past month. That is particularly bad news for investors who poured nearly $18 billion into these funds in the past year and a half.

Meeting Redemptions

As some investors sell, fund managers are forced to sell holdings to meet those redemptions.

The average real-estate fund investing primarily in the U.S. has lost 17.2% over the past three months and is down 16.5% so far this year, according to Morningstar Inc. In contrast, the average diversified U.S. stock fund is up 0.7% so far this year and down 5.9% over the past three months.

[...]

The average global real estate fund -- which will invest both in and outside the U.S. -- has shed 15.2% over the past three months and is down 10.3% since the start of 2007.

Wall Street Journal: Real-Estate Funds Are Hit Hard

Lets face it folks, we are at the beginning of a serious crisis in capital. Where will the bailout come from this time?

The end of the 90s saw the 'dot com' bubble burst which affected millions but was relatively isolated to a specific sector (information technology) and confined to specific urban markets, such as San Fransisco. This was a stage in the increasing finanicialization of capital.

Now capital needed a new outlet for reinvestment and real-estate provided the perfect opportunity. Combined with the massive boost given by investments in the war sector, the real-estate boom provided the much needed new outlet for capital investment.

It was clear from the outset, however, that with real wages decreasing and job growth static, that the real-estate investment strategy required cheap credit and lots of it. This, as we have seen, has been achieved through a combination of extremely low interest rates with increasingly aggressive (until recently) lending practices.

The current crisis is huge. Nearly every financial institution will be affected. Nearly every country will be affected. Consumer demand will be affected on a global scale. Real estate prices will deflate on a global scale.

It seems increasingly likely this very irresponsible and unsustainable run-up will lead to a global depression with dire consequences for all.

The financial capital sector must be reigned in. A socialist program for managing and regulating the financial sector is the only way to prevent such irresponsible behavior and prevent the cyclical boom and bust pattern that is inherent to capitalism, and which has (as we have seen) and will continue to, become increasingly painful with each subsequent cycle.

Give Me Mao Better Statistics

Since the 1980s the propaganda campaign to discredit the achievements of socialistic states has intensified in support of the neo-liberal TINA ("there is no alternative" to capitalism) agenda.

A recent article in the Monthly Review (September 2006) by Joseph Ball picks apart the pseudo-science of the anti-Mao revisionist history movement:

Over the last 25 years the reputation of Mao Zedong has been seriously undermined by ever more extreme estimates of the numbers of deaths he was supposedly responsible for. In his lifetime, Mao Zedong was hugely respected for the way that his socialist policies improved the welfare of the Chinese people, slashing the level of poverty and hunger in China and providing free health care and education. Mao’s theories also gave great inspiration to those fighting imperialism around the world. It is probably this factor that explains a great deal of the hostility towards him from the Right. This is a tendency that is likely to grow more acute with the apparent growth in strength of Maoist movements in India and Nepal in recent years, as well as the continuing influence of Maoist movements in other parts of the world.

[...]

[I]n 1973-5 life expectancy in China was higher than in Africa, the Middle East, South Asia and many countries in Latin America. In 1981 she co-wrote an article where she described the People's Republic of China as a 'super-achiever' in terms of mortality reduction, with life expectancy increasing by approximately 1.5 years per calendar year since the start of communist rule in 1949. Life expectancy increased from 35 in 1949 to 65 in the 1970s when Mao’s rule came to an end.

[...]

Monthly Review: Did Mao Really Kill Millions in the Great Leap Forward?

Subprime Capitalism

" All contradictions of bourgeois production collectively come into eruption in the general crises on the world market." (Marx, Theories on Surplus-value, Vol. II, Part II, P. 318.)

Today CountryWide Financial Corp, one of the largest mortgage lenders in the United States, announced that it is tapping a $11.5 billion loan to stay out of bankruptcy due to overextending itself in the sub-prime lending market (full story). The stock of this company slid 13% on the news, after shedding nearly 50% of its value already this year.

CountryWide is one example of many mortgage companies which are teetering close to failure because of overextending themselves with sub-prime loans which fueled the "housing bubble."

This had been widely reported as a looming disaster by progressive socialist publications, because housing prices were forcing low and middle income people out of cities, because people were being saddled with unmanageable debt, and because the cyclical nature of capitalism naturally produces crises (see below) which disproportionately affect the working and under-classes.

The Wall Street Journal ran a story today describing the plight for one couple which reflects the stark reality for tens of millions of Americans:

Nearly two years ago, Mario and Leticia Montes found a home they loved, a gray stucco bungalow with a hot tub in the backyard in a middle-class neighborhood of Orange County.

The price was a major stretch at $567,000. But the couple, who had sold a home a few years earlier to move to a better area, was tired of renting. Mr. and Mrs. Montes convened a meeting with their two teenage daughters around the kitchen table to hash out the implications. "We agreed we wanted to be homeowners again," says Mr. Montes, "even if it meant the end of vacations and not eating out as often."

[...]

With a December "reset" on their loan looming, however, the refinancing option now looks impossible. A friend who works as a loan officer called with some bad news this week: Similar homes in their area have been selling for $535,000 to $565,000 recently. That means the Monteses' loan balance may exceed the value of their home.

[...]

"We have a disaster on our hands," says Mr. Montes, a 48-year-old warehouse manager. He fears he won't be able to handle the payments after the December reset and wonders whether the family can avert foreclosure. "At this point," he says, "we really don't have a plan."

Wall Street Journal: One Family's Journey Into a Subprime Trap

The Montes annual income is $90K whereas their yearly mortgage loan payments (sans-taxes) are nearly $40K. They are in terrible shape, have no equity in their home and have very difficult decisions ahead of them. However, their plight could be considered relatively good news in the sub-prime market. Why?

A large percentage of sub-prime loans are "refis" - refinancing an existing home with a second mortgage against the "equity" in the house due to increased property values.

Alexander Gourse describes the practice in a recent In These Times article:

When the housing market began its rapid ascent in the mid-’90s, many observers waxed rhapsodic about the potential of high-interest, subprime loans to merge the financial interests of investors and low income and minority communities.

[...]

Industry representatives typically cite the poor credit histories of most subprime borrowers to explain increasing foreclosure rates. Consumer and community advocates, however, paint a darker picture. “Predatory lending is definitely a systemic problem within the subprime mortgage industry,” says Al Hofeld Jr., a litigation attorney and chair of the South Side Community Federal Credit Union in Chicago (SSCFU). “There are very few subprime lenders who will make a subprime loan where the interest rate actually reflects the risk involved.”

According to Smith, predatory lenders put borrowers into loans that they cannot afford. While blatant fraud, such as the falsification of a borrower’s income to justify a larger loan, is becoming less common, the misrepresentation of a loan’s characteristics, like the concealment of a fixed rate “teaser” period that adjusts upward after two years, is a growing problem.

Hofeld says subprime mortgage companies routinely use bait-and-switch tactics to lure in potential borrowers and maximize the amount of money loaned out. At closing, borrowers are often presented with terms that do not match those previously offered by the company, and then pressured into signing documents which they have not had time to review. Ameriquest Mortgage Company is currently facing hundreds of lawsuits which allege that they routinely baited potential customers by promising fixed interest rates, low or no fees, lower monthly payments, no prepayment penalties, or by representing to borrowers that they qualify for a particular set of terms.

[...]

As they later discovered, however, the terms of the loan were not as they expected. Not only did the loan have an adjustable rate that can go as high as 13.4 percent, but the Walkers allege that Ameriquest falsely told them that their home had doubled in value since they had bought it a few years earlier, thus qualifying them for a larger loan amount. Ameriquest didn’t give them copies of their loan documents at closing, and as a result the Walkers did not realize that the terms had been changed until well after the three-day period during which they could legally cancel the loan. They have since tried to refinance, but have been unable to find another lender willing to lend them the amount currently owed to Ameriquest; the artificially inflated appraisal value has in effect trapped them in a loan with a rising interest rate.

[...]

“The problems in the subprime mortgage industry should be framed as an affordable housing issue,” says Hofeld. “We often compartmentalize the way we think about issues, but I really think that predatory lending is something that is decreasing the supply of affordable housing. And the lack of access to mortgage credit on fair terms is something that prevents people from getting into homes.”

In These Times: The Subprime Bait and Switch

The cyclical nature of the capitalist system is designed to concentrate wealth into the hands of the few. This latest cycle is an example of that process writ large. Real estate values will rebound eventually but only after many people loose their homes as foreclosures and bankruptcies commence. Capitalist enterprises and wealthy individuals will swoop in to buy up the properties and do with them as they please.

To close, an excerpt from a political economy course:

The general possibility of crises which is inherent in the commodity form of social production, attains its further development in the expansion of credit and the functioning of money as a means of payment (i.e., goods are sold but the money for it is paid only after the lapse of a certain time, and it is then only that the business is concluded; money thus exercises the function of credit).

During the space of time which lies between the moment of inception of the credit operation and that of the actual payment of the money, the value of the commodity may change. The payment might, besides this, not be made in time. The separation between purchase and sale and the independence of one from the other then again become revealed. The [consumer] for instance buys 20 yards of linen at the price of $40. He does not, however, pay this money immediately, as he has not yet sold his wheat, the value of which is similarly $40. The weaver, on his part, buys machinery which he promises to pay after he will have received the money from the [consumer]. But if the value of the wheat changes at the time when the [consumer] can sell it and he can realize for it less than $40 or if the [consumer] cannot sell it at all, he can of course make no final settlement with the weaver. The result of this is that the weaver is also unable to pay the manufacturer of the machinery, etc.

Credit ties up in this way all commodity producers who participate in credit operations by a chain of reciprocal dependence. The consequence of the break of any link of financial obligations may result in a shock to the whole chain, i.e., a crisis might break out.

Political Economy: The Marxian Crises Theory

Clearly, not the borrowers, but the capitalist system itself is subprime, unable to meet the basic needs of housing in a fair, equitable and sustainable fashion for the vast majority of citizens who labor under its dominion. A bold new direction is needed which can guarantee fair and affordable housing standards for all people. This can only be accomplished by breaking with the capitalist profit model through adoption of a democratic socialist program.

Stupid Cuba Embargo

Yes, the Cuba Embargo, one of the most idiotic policies of the United States government. Guess what? I plan to go anyhow...

From an AP story found on MSNBC:

In a first for an online travel company, Travelocity.com has been fined by federal regulators for booking trips between the U.S. and Cuba in violation of a 45-year-old embargo.

Travelocity.com earlier this month paid $182,750 to settle a complaint brought by the U.S. Treasury Department's Office of Foreign Assets Control, which said the company violated the prohibition nearly 1,500 times between January 1998 and April 2004.

Treasury's complaint said Travelocity "provided travel-related services in which Cuba or Cuban nationals had an interest by arranging air travel and hotel reservations to, from, with or within Cuba without an OFAC license."

[...]

Elsewhere, OFAC fined one unnamed individual $999.45 and another person $510 for buying Cuban cigars for sale on the Internet.

MSNBC: Travelocity fined for Cuba trips

You can do what's right or you can do what you are told

I was inspired to post these Phil Ochs lyrics after reading of the death of Moe Fishman. Fishman was a Communist organizer in the US who volunteered to fight in the Spanish Civil War against the fascists, while our own democratic government stood on the sidelines.

Time and again the major "democracies" of the west have stood by and tacitly supported authoritarian and fascist governments and parties, while attacking and destroying those on the left. The simple fact is that people power is feared and repressed and that western democracy is largely a sham. To this day western governments support materially many authoritarian regimes in the Middle East, Asia, Latin America and Africa, while oppressing the poor and disenfranchised, minorities and leftists at home.

It's time for the pattern to end, and that does NOT mean electing Democrats either! A fighting progressive socialist alternative linking students, the working class and the disenfranchised must be established at local, national and global levels to combat the neo-liberal agenda.

Phil Ochs, lyrics to "Days of Decision":

Oh, the shadows of doubt are in many a mind,
Lookin' for an answer they're never gonna find,
But they'd better decide 'cause they're runnin' out of time,
For these are the days of decision.

Oh, the games of stalling you cannot afford,
Dark is the danger that's knocking on the door,
And the far-reaching rockets say you can't wait anymore,
For these are the days of decision.

In the face of the people who know they're gonna win,
There's a strength that's greater than the power od the wind,
And you can't stand around when the ice is growing thin,
For these are the days of decision.

I've seen your heads hinding 'neath the blankets of fear,
When the paths they are plain and the choices are clear,
But with each passing day, boys, the cost is more dear
For these are the days of decision.

There's many a cross that burns in the night,
And the fingers of the fire are pointing as they bite,
Oh you can't let the smoke keep on blinding all your sight,
For these are the days of decision.

Now the mobs of anger are roamin' the street,
From the rooftops they are aimin' at the police on the beat,
And in city after city you know they will repeat,
For these are the days of decision.

There's been warnin's of fire, warnin's of flood,
Now there's the warnin' of the bullet and the blood,
From the three bodies buried in the Mississippi mud,
Sayin' these are the days of decision.

There's a change in the wind, and a split in the road,
You can do what's right or you can do what you are told,
And the prize of the victory will belong to the bold,
Yes, these are the days of decision.

Abraham Lincoln Brigade Veteran Dies at 92

A dedication to Moe Fishman posted by some new friends on the blog "An Unrepentant Communist.....":

Fishman (1915-2007) the seemingly indestructible Moe Fishman, the public face of the Veterans of the Abraham Lincoln Brigade (VALB) for more than half a century, died of pancreatic cancer on August 6, 2007 in New York. He was 92. Born in New York on September 28, 1915, Fishman left school during the Depression and became a laundry worker and truck driver. He participated in unionizing his fellow workers and found a commitment to social justice issues as a member of the Young Communist League. When war broke out in Spain, Fishman volunteered to fight, but was rejected for lack of military experience. However, his skill as a truck driver was needed and a second application for service was accepted—with the proviso that he recruit ten other volunteers. Fishman quickly found the men, though none actually showed up. The recruiters took him anyway. He arrived in Spain in April 1937 and trained as a foot soldier in the George Washington battalion. He was wounded during the battle of Brunete, his first action. He spent a year in convalescence in Spain; the injury left him with a lifelong limp.Back home in New York, Fishman stayed in touch with humanitarian aid organizations providing assistance for the civilian refugees of the Spanish Civil War.

SALUD! to Moe Fishman (1915-2007)

Harry Potter - As Great as All That?

Although I expect little from pop-culture, the sheer mass of the Harry Potter phenomenon and the obvious attempts to link it with and sell it as true literature cause me a lot of consternation. So I have been thinking a lot about Harry Potter lately; and of course because of the media blitz and the fact that I have two kids I really have no choice. My first impressions of Harry Potter as of the first book(s) were positive.

However, after the third book the series (I would not consider the books an epic by any measure) it became clear that this was nothing more than a continual rehash over and over again. Each book has a formula that is repeated from the previous book - Harry is isolated, Harry is despondent, Harry breaks the rules and almost gets kicked out of Hogswart, Harry discovers a lurking evil and no one believes him, Harry defeats the evil (sort of) and saves his family and friends (sans-one at least, of course).

I fully accept Harry Potter for what it is - comic book quality entertainment which inspires the imaginations of children. I think it is great that kids love the books and it encourages them to read. I think it is great that they love the movies and it makes them think about magic and fantasy. I also think that J.K. Rowling does a great job of squarely contextualizing the entire series within the petit-bourgeois milieu making it very easy for the majority of the western world to identify with.

But literature it is not and it disturbs me that it disguises itself as such, because by doing so it offers us superfluous reflections on our own lives in a trite and disingenuous fashion. Basically J.K. Rowling gets to have her cake and eat it too by offering prepackaged pop-morals without actually having to put any effort into developing or exploring the meaning of, or taking any responsibility for, what she is writing.

In the end, literature is significant because of what it tells us about ourselves and the human condition. Harry Potter unfortunately has nothing significant to say.

Excerpt from an article by Lakshmi Chaudhry in The Nation:

When Harry Potter and the Deathly Hallows, the eagerly anticipated conclusion of J.K. Rowling's seven-part saga, was finally released on July 21, the critics weren't disappointed. The New York Times's Michiko Kakutani praised the "epic showdown" as "deeply rooted in traditional literature and Hollywood sagas--from the Greek myths to Dickens and Tolkien to 'Star Wars.'" But great battles in fiction, especially of the caliber name-checked by Kakutani, are epic not merely in scale but also in moral content. Whether aimed at adults or children, they speak directly to the nature of good and evil and what is at stake when we choose between them. Most critics this past week didn't seem to notice that Rowling fails entirely to meet this key requirement. What we get instead is a moral fuzziness that parades as realism, innumerable references to a post-9/11 world coupled with throwaway and often derivative insights that never add up to a coherent moral vision.

[...]

Deathly Hallows is a sad confirmation of the same. The shallowness of Rowling's enterprise is revealed in the vapid little epilogue that seems inspired less by great fiction than B-list Hollywood scripts. Where the cataclysmic showdown in The Lord of the Rings leaves the Hobbits and Middle-earth irrevocably altered even in victory, the wizarding world merely returns to business as usual, restoring its most famous citizens to a life of middle-class comfort. At the end of this overly long saga, the reader leaves with the impression that what Harry was fighting for all along was his right--and now that of his children--to play Quidditch, cast cool spells and shop for the right wand. Or what George Bush would call "our way of life."

Harry Potter and the Half-Baked Epic

US Students Visit Cuba

From an article appearing in Workers World by Abraham Mwaura and Dante Strobino:

Twelve members of the youth group Fight Imperialism, Stand Together (FIST) from San Diego, Raleigh, West Virginia, Denver, Boston, Rutgers University and New York City—together with five members of Workers World Party—traveled to Cuba from July 18-28 to defy the travel ban and to witness the gains of the socialist revolution.

In Cuba, the FIST delegation observed how a planned economy and centralized government following the path of socialist revolution have provided the necessary material conditions to carry out the process of the withering away of racism, sexism, homophobia and all forms of oppression, and for the building of a new human being.

U.S. activists from the Venceremos Brigade, Pastors for Peace, the U.S/Cuba Labor Exchange and FIST all traveled to the island to oppose the travel ban and participated in joint activities.

Surprising most in the FIST delegation, a Cuban representative told youth group members that FIST was the first socialist youth group from the U.S. in decades to officially travel to the island.

[...]

One of the major campaigns currently being organized by the UJC [Union of Young Communists] is the “Battle of Ideas.” Almost 80 percent of Cubans alive today have been born under socialism and many have come to expect free health care and education, while the struggles to defend these rights have begun to appear as things of the past.

The Battle of Ideas was designed in 1999 with more than 200 programs in education, health, construction and culture available to all children.

[...]

In their statement to the national and international media, the [ELAM (Latin American School of Medicine)] graduates said, “This is a dream come true: the dream of becoming doctors and helping people in need, helping those people who, like ourselves, don’t have enough money to access expensive health care service.”

Workers World: FIST youth visit Cuba

Socialism a Loaded Word

From an article by UT student Colin Pace in the Daily Texan (University of Texas):

There is no doubt that "socialism" is a loaded word in the Western world. Institutions ranging from news stations to school systems teach that socialist and nationalized programs are doomed to collapse under the weight of bureaucracy and corruption. There seems to be a general acceptance that leaders of socialist nations are aspiring despots, and that any pro-socialist ideas should be immediately dismissed, as it is understood that socialism just isn't right.

The idea exists in the West that the Cold War was the final showdown between the Communist bloc and the Western world. As the story goes, the United States trounced the Evil Empire by setting up a bulwark of capitalist states to ward off the threat of Communism. Since then, the remaining socialist nations are puttering out, drawing near their final days before privatization comes to their rescue.

Yet anti-socialist rhetoric, in a sense, is merited. It is undeniable that most of the world powers are capitalist nations, and dominant "socialist" nations - China, Cuba, North Korea and Vietnam - are having difficulties. Moreover, neoliberal policies, extended through institutions like the International Monetary Fund and the World Bank, are set up to help developing nations privatize and modernize their industries. These policies, in theory, will eradicate destitution. What we are taught in school and grow up believing is that capitalism not only benefits the leading nations of the world, but is also working to raise the standard of living for everyone.

Today, most Western institutional authorities claim that capitalism is indisputably superior to socialism. They nearly make it a crime to question what socialism is, how it functions and why it is "failing" around the world. From the red-baiting that Eugene V. Debs faced to the extremity of the McCarthyism era, the West continues to stigmatize socialists as "others," marginalizing their ideas and movements.

Socialism, however, should not be cast aside so easily. Socialism is not a monolithic ideology and it is not a terrible, fear-driven beast that threatens the U.S. masses. In fact, it is quite the opposite. To understand this, one need not look further than Michael Moore's recent movie, "Sicko." Though gimmicky and biased, like his other movies, the film raises an important question about why universal health care systems rank so high above the United States' privatized system in a global comparison.

But as the disparity between rich and poor grows in the United States, the same is happening around the world in situations far more significant than health care. Developing nations have received infrastructure-building loans from the World Bank to help industrialize. While this may help the upper class, the money does not usually benefit the people who need it most. The World Bank dictates the terms of loan agreements, often forcing developing nations to break up or sell nationalized industries to make way for private interests from other countries, leaving developing nations in debt. Meanwhile, massive cuts in social spending, devaluation of currency and unequal trading policies result from the policies instated by the new backers. Countries around the world, from Asia to Latin America to Africa, have been hit hard by these austerity measures.

While many U.S. citizens may be enjoying a relatively comfortable lifestyle, it is precisely because they are in the upper echelon of the economic spectrum compared to worldwide standards, and our current system caters to those at the top of society. Factory workers thousands of miles away are harshly exploited so consumer goods such as clothing and TVs can be sold at low prices to American consumers.

People should not judge the word "socialism" solely by what they know of "socialist" leaders. Leaders like Joseph Stalin and Fidel Castro may have upheld socialist aspects of their administrations, but they were not actually "socialists" - A ruling elite still oppressed people within their countries, and did so just as harshly as their capitalist rivals. The immediate knee-jerk reaction that many have to the word "socialism" stems from the connotations of atrocities carried out under those administrations. Moving beyond superficial analysis of the word will allow people to better understand what socialist arguments are about.

Socialists around the world work toward bettering working conditions, raising wages, ending the war in Iraq, halting the injustices of the prison system and combating global warming, just to name a few of their critical agendas.

Even those who are staunchly opposed to the nationalization of industry, believing that the free market is the only means for progress, should question the objectivity of the Western view of socialism. The word is loaded with connotations, but that should not stop people from asking what the system is really about.

Daily Texan: Ignoring the undertones of socialism

Businesses Advance Socialism in China

Excerpts from an article by Li Qian from China Daily:

When China opened up to the world over 20 years ago, Wei Jianhua joined the Communist Party of China (CPC) because of its social ideals. A decade later, she became an owner of a chemical manufacturing corporation – a private enterprise.

At the end of last year, more than 2.86 million party members work in privately owned enterprises, including 810,000 running their own businesses, shows figures released by the Organization Department of the CPC Central Committee.

Party members going into private businesses, especially those who left state-owned enterprises and government positions once became a national hot topic starting from the early 1990s when the country deepened development towards the market-oriented economic system.

[...]

The businesswoman's conversion has led to a fresh interpretation of socialism with Chinese characteristics. The CPC's constitution states that human society should eliminate the exploitation of the labor class, and calls on party members to establish businesses that are owned by all citizens or a collective of people.

But for Wei and many other Communist entrepreneurs, serving the people and country could be practiced in other ways.

"I believe the key issue is how to properly allocate profits to benefit the society," Wei said. "My company didn't receive a single penny from the government, but provides job opportunities and products. And we're committed in shouldering social responsibilities.”

[...]

"I feel I'm not a pure businessperson. When commercial interests conflict with social duties, I'll definitely place responsibilities ahead," Wei explained. "It's not just me, actually there are a great number of private business owners who have the same philosophy as me."

[...]

In the Sixteenth National Conference of the CPC in 2002, private owners and individual entrepreneurs were labeled for the first time as "Builders of Socialism with Chinese Characteristics".

"My heart was moved when I heard the news," Wei recalled. "I immediately felt my life was fulfilled."

China Daily: Red capitalists keep socialism alive

Predatory Lending: Subprime Pt I

Excerpts from an article in Justice newspaper by Theodros Shibabaw:

You’ve heard the commercials. “Want to own your own home, want to buy a car? Bad Credit? No Credit? No problem!” The past decade has seen the immense growth of “subprime” loans made to millions of people with bad credit histories.

Mortgage loan companies and banks have made hundred of billions of dollars in profit by preying on people who would otherwise be shut out of the market. These days, it’s hard to even pay for basic necessities without going into debt, as stagnating wages fail to keep pace with the fast-rising cost of living.

[...]

In the first quarter of 2007 almost 19 percent of all subprime loans, or 1.1 million mortgages, were either delinquent by more than 30 days or in foreclosure, an increase from 16.4 percent six months earlier (Mortgage Bankers Association, 6/14/07). Dozens of companies have either quit the subprime business or gone bankrupt.

[...]

Defending ourselves against these [capitalist] attacks will take a broad mobilization of the affected working-class communities. Working-class homeowners need to organize community committees to demand an end to foreclosures and zero tolerance to throwing families out of their homes. We need to demand state and federal funding for debt relief and fight for the cancellation of debts with no payment to the super-rich predatory lenders.

[...]

In the long term, however, it’s important to see the subprime lending crisis as just one expression of what big business can get away with in the absence of a strong working-class movement. Our economy is controlled by a tiny elite that glibly chases profits without the slightest regard to the livelihoods it destroys. It’s more urgent than ever to build a mass movement that consciously aims to replace the rule of profit with a rational, democratically-planned, socialist economy.

Predatory Lending: Cheating Workers Out of House and Home

Red Cross (TM)

A heart warming story of capitalism at its best. Perhaps J&J should consider a somewhat more creative logo instead of slapping a copyright on a symbol that has been used for thousands of years. But no...

From the Wall Street Journal:

Johnson & Johnson filed suit against the American Red Cross and some of its licensing partners claiming the charity misused the cross design that is its signature emblem, which also appears on J&J's first-aid kits and bandages.

The health-care products company alleges that the Red Cross licensed the eponymous design to for-profit companies that sell medical products -- such as first-aid kits and hand sanitizers -- and infringed J&J's trademark. The suit was filed yesterday in Southern District Court in New York.

In the suit, J&J asked the court to have all licensed products with the red-cross emblem destroyed and to permanently enjoin all sales of products bearing the emblem on first-aid, safety-preparedness and related products. The New Brunswick, N.J., company also seeks punitive damages and payment of its legal fees. J&J said it tried for several months to resolve the issue with the Red Cross, but that those efforts failed.

Wall Street Journal: Red Cross Is Sued by J&J Over Signature Emblem

Its funny, but the only product I can think of which uses the red cross are Band-Aid's, which I didn't even know was a J&J brand until I read this article.