Sunday, September 28, 2008

End of Capitalism?


In case you haven't heard, there are lots of people in the U.S and abroad who count the recent economic problems as strong evidence that capitalism does not work. They claim it has created a greedy few who have now taken advantage of the small people. They claim a lack of regulation is entirely to blame. The failure of this capitalist strategy led to a systemic collapse, and now the government is "bailing out" those criminal, greedy people on top, and not doing anything to help the poor people on the bottom.

Related sentiments are very common in the media. For example, after President Bush's address to the nation about the economic bail-out, the local news people here interviewed many people at risk of losing their homes. Their universal response to the speech, emphasized by the interviewers, was that the bail-out protected the rich, but allowed the working class to lose their homes all the same. They all thought the billions should go to pay the mortgages on which they are about to default.

This message of the victimization of the poor was also articulated by both Obama and McCain in the recent debate. McCain said "And Main Street is paying a penalty for the excesses and greed in Washington, D.C., and on Wall Street."

Regarding these thoughts, let's look at a couple of interesting articles from the end of the Clinton era. Please skim this:

and this:

I especially like this paragraph, in case you missed it:
"In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains. It has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to serve these markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down payments–or with mortgage payments that represent an unusually high percentage of a buyer’s income. That’s made banks willing to lend to lower-income families they once might have rejected."
Now tell me, the mortgage crisis that initiated this entire economic downturn, was it the result of unregulated capitalism, or did government intrusion in the free market disrupt the balance of normal risk taking behavior?

Now, I know I am going to sound cruel, but think about this. In America, we have enjoyed, for the past 12 years, the ability to live in incredible houses. Granite counter tops were only in mansions a decade ago. Now, they are almost standard. American have felt entitled to live in whatever the neighbors live in. The mortgage people said we qualified for these homes, so we must be able to afford them, right? Isn't this where the greed lies?

McCain said the average American, or main street, is paying the price for the greed of Wall Street and Washington D.C. I think Wall Street and Washington D.C. are paying the price for the greed of the average American.

Please share your thought. The purpose of this post is discussion and debate.

Tuesday, September 16, 2008

We were wondering where everyone was spending the holiday's this year. We are planning on being in Soda Springs for Thanksgiving. That is our only plans so far.

Monday, September 15, 2008

Go Broncos

We took Sophie to her first BSU game!
this is the bus my company rented to take us, there were about 20 of us. We rented the bus and driver for 500 RMB (or $70) for the day. Pretty good travel arrangements. Notice the guy in front of us, his load is probably 3 or 4 times the size that he is, I'm not really sure how we got around him. The road the whole way there was pretty much a one lane road made into two full speed lanes.
Some of rice fields and a rice field worker.
One of the rice field workers dwelling.
Some more fields on the way
Somebodys house, that is old and made of wood (in background) rebuilt with mud and rocks and fell apart (on the left) and now building a new house of brick and cement. Notice they live in there while they build it too.
3 people on a motorcycle is a regular occurance, but this is quite the skill set. You can easily see how 3 would fit on there comfortably, right? But add just one more and it gets a little crowded.