fractional reserve

[strantor]

"Do you have a dollar in your wallet, or in your bank account? If so, do you know where it came from? how it was created?I’ll tell you; at some point, someone took out a loan from a bank, and that dollar was created".

I stopped reading the initial post at this point because, dollars only represent things. Dollars represent value in goods. As soon as that is no longer true, the system falls apart. When there are more dollars in the system then they represent in value of goods, the dollar gets inflated so they come in line with the value of goods they represent. A gallon of gas that used to be $2.50, is now $3.50 because the Fed is printing too much money. Well one of the reasons the cost of goods has gone up recently.

Dollars are not created, goods or labor are created, the dollar only represents those goods or labor.

It's obvious you stopped reading there, because I went on to say the exact same thing you did.
Dollars represent value of goods and services, like meters represent value of distance. What's happening is our tape measure is being shrunk down, so we need more and more meters to cover the same distance.
The money should only represent goods and services, but by it's finite nature, it becomes a commodity in it's own right. People seek to get as much of it as they can and hold onto it for dear life. Everybody is scrambling to get as much as they can because they know there's not enough to go around. This squeezes some people out. It is a false scarcity.

 

[Gordo]

Nothing like over-inflated property prices to cripple people with debt-burden for decades.

Houses/apartments/flats should be roughly two-and-a-half times the average industrial wage. The second standard way of calculating it is by rent. Therefore a property should be worth 12 to 14 times the yearly annual rental income.

If the property prices are not even remotely close to those figures you have a property bubble that is destined for a crash.

Take Berlin for example, one of the most sought-after cities in the world in one of the largest economies. These are the prices they pay:

http://www.findaproperty.com/searchresults.aspx?edid=09&salerent=0&areaid=4522

If you are paying much than the formulas above for property you are being ripped-off.

Joseph,
I wonder what the monthly "common fee" in these Berlin apartments is? Are you really buying a property or are you purchasing the right to pay $1000 per month in fees? A few years ago we were approached by a fellow who would give us an apartment in another country, if we would sign the purchase agreement. When we investigated, we found that his monthly fees were @25% more than the rent for a similar unit just across the street. His problem was that he was very wealthy and could therefore not simply walk away.

This use of a multiple, is conventional wisdom that has proven false in many areas. We currently have cities in Canada where the multiple is 30-35. This has been the norm for many years. Immigration pressure is the reason. "Student visas" are a secondary pressure as they are really just a way of circumventing the immigration process. There seems to be no limit on the length of these visas and when combined with a work permit, you have an immigrant, not a student. When you have millions of relatively wealthy "students" competing for housing, you displace the working poor. To keep the house building going, many communities now allow 2 independent suites in a "single family dwelling." This pushes the house price up and also keeps the rent multiple of separate apartments up. It seems very difficult for a generation raised in parent owned, single family, homes to accept the premiss that renting for a lifetime is the smart option. At a multiple of 30, there is no question that this is the intelligent choice. Even a professional with a 100K per annum income should not purchase a single family dwelling under these circumstances.

 

[Joseph C.]

Joseph,
I wonder what the monthly "common fee" in these Berlin apartments is? Are you really buying a property or are you purchasing the right to pay $1000 per month in fees? A few years ago we were approached by a fellow who would give us an apartment in another country, if we would sign the purchase agreement. When we investigated, we found that his monthly fees were @25% more than the rent for a similar unit just across the street. His problem was that he was very wealthy and could therefore not simply walk away.

This use of a multiple, is conventional wisdom that has proven false in many areas. We currently have cities in Canada where the multiple is 30-35. This has been the norm for many years. Immigration pressure is the reason. "Student visas" are a secondary pressure as they are really just a way of circumventing the immigration process. There seems to be no limit on the length of these visas and when combined with a work permit, you have an immigrant, not a student. When you have millions of relatively wealthy "students" competing for housing, you displace the working poor. To keep the house building going, many communities now allow 2 independent suites in a "single family dwelling." This pushes the house price up and also keeps the rent multiple of separate apartments up. It seems very difficult for a generation raised in parent owned, single family, homes to accept the premiss that renting for a lifetime is the smart option. At a multiple of 30, there is no question that this is the intelligent choice. Even a professional with a 100K per annum income should not purchase a single family dwelling under these circumstances.

You raise some good points that I hadn't considered. When I was taking a Start Your Own Business Course the tutor, who was a self-employed businessman, told the group that one could purchase an apartment in an affluent area of West Berlin for under €40,000. He had done so himself. He was only mentioning this in passing to compare the prices over there with the ludicrous price of houses in Ireland. There was no hidden agenda.

As a continuation of what you are saying, when the tutor went over to Berlin with a group of Irish lads to check out property. He was shown a place in East Berlin for far more than the market price. There was an Irish cowboy selling these to naive Irish buyers who didn't know much about the German market. Only a chance encounter with a taxi driver, where she warned them that apartment was crap and overpriced, prevented them for purchasing.

I believe the use of multiples is standard fare in continental Europe. It certainly seems to be the case in Germany anyway. Of course there are certain affluent locations that are unaffordable.

In Ireland and the UK house prices are inflated. London is probably the worst, you could pay half a million pounds and still end up in a shoebox. That's chiefly because they removed legislation, effectively allowing them to sell flats and houses as small as they can get away with, whereas previously there was a minimum size.

It appears you are correct in your assumption of extra fees. You do own the property but you have to pay a monthly maintenance fee called a Hausgeld that could be from 150 to 200 euro. I think it includes water and bin rates.

 

[Philistine]

Joseph C the idea that you can simply apply multiples re rent and property values to any market is nuts, and you know it. Even the economist magazine (who's property analysis I love and agree with) fundamentally acknowledges this.

All property markets have their own wild variables going on, the belief that somehow property should be a special asset compared to others (ie why it might have "rules") is the very reason we get bubbles. Buddy, the average Australian property price went up this year (who in the Uk, Us, Euro can say their property went up in value?). Why? because our econmony has enourmous product it is selling, last time I checked Ireland took a losing bet on lowering company tax (hows that whole "centre of financial activity") working out for you right now? The most dang rotten turd hole properties in Australia are getting let/sold... But Ireland is a gape? Why? I am not going to dicate to you why your country (who by all moral rights deserved to emerge), turned into the terminal dunghole it is. But I take no glory or pride about my own, because none of my countries success (you would have to say Australia is the greatest most successfull country right now in the world, it simply must be said), has nothing to do with the talent of its people, it is in spite of it. We have some sweet rocks.... now lets go over and chat about those rocks.....

EDIT: I must say that a huge aspect of our sucess (which we deserve to boast about), was our commitment to prudential banking. We never engaged (directly) in the insantity that you Euro/american's did, and our banking system is something you should come have a look at. The great irony of our country is that we are the first to drink until we can't stand anymore, but the idea that you could lend money to someone who has no job blows our mind.... We stand by the reasonableness of our hangover....

 

[Joseph C.]

Joseph C the idea that you can simply apply multiples re rent and property values to any market is nuts, and you know it. Even the economist magazine (who's property analysis I love and agree with) fundamentally acknowledges this.

All property markets have their own wild variables going on, the belief that somehow property should be a special asset compared to others (ie why it might have "rules") is the very reason we get bubbles. Buddy, the average Australian property price went up this year (who in the Uk, Us, Euro can say their property went up in value?). Why? because our econmony has enourmous product it is selling, last time I checked Ireland took a losing bet on lowering company tax (hows that whole "centre of financial activity") working out for you right now? The most dang rotten turd hole properties in Australia are getting let/sold... But Ireland is a gape? Why? I am not going to dicate to you why your country (who by all moral rights deserved to emerge), turned into the terminal dunghole it is. But I take no glory or pride about my own, because none of my countries success (you would have to say Australia is the greatest most successfull country right now in the world, it simply must be said), has nothing to do with the talent of its people, it is in spite of it. We have some sweet rocks.... now lets go over and chat about those rocks.....

EDIT: I must say that a huge aspect of our sucess (which we deserve to boast about), was our commitment to prudential banking. We never engaged (directly) in the insantity that you Euro/american's did, and our banking system is something you should come have a look at. The great irony of our country is that we are the first to drink until we can't stand anymore, but the idea that you could lend money to someone who has no job blows our mind.... We stand by the reasonableness of our hangover....

Nothing is ever terminal in economics and well you know it. Good times and bad times, feasts and famines. These things come and go.

Australia is no different and your country is starting to put more and more of its eggs in the Chinese basket. You do also realise that Australia has one of the highest amounts of household-debt-to-disposable-income ratios in the world. This reminds me of when the Irish ministers were going around telling the world that they should copy the Irish model - madness.

 

[Gordo]

It appears you are correct in your assumption of extra fees. You do own the property but you have to pay a monthly maintenance fee called a Hausgeld that could be from 150 to 200 euro. I think it includes water and bin rates.

The amount of this fee is roughly the norm in NA for non-vacation properties. Dwellings in the southern sunshine, by the ocean or lake, tend to have very high fees.

We have friends who retired to Aus with a pension fixed in US $ when the exchange was $0.6X. Now his $150,000 Victorian flat is taxed at $600,000, and his pension is worth almost 1/2, he must sell and go back to the US, where the bubble already burst.

 

[MikeB]

Yes, even if everybody stopped protesting, and went out and got a job (assuming there are jobs to be had), there would still be “losers” despite their best efforts. It is mathematical fact. Now, I’m not saying the protesters are right. In my opinion, they are mostly a bunch of entitlement seeking lazy idiots. The occupy movement is angry at some of the right people, but has completely missed the boat on WHY. They are protesting rich people in general. “you have money, you should give it me” – that’s their general message as I have interpreted it. I have read up on their demands and gripes, and nowhere did I see anything about the Fractional Reserve System (that’s what it’s called by the way, this system of creating money by the banks, google that). They just want the rich to “pay their fair share” – fair share of WHAT? Interest?

There's been some good debunking in here, nice work Sunder. But I think strantor has missed the message of the Occupy movement. It's not about poor people resenting wealthy people, it's a protest about a system that is rigged. Wealthy people have all the political power, and they tweak the system to make themselves wealthier while making the poor poorer. Fortunately, bank loans are a perfect example to think about.

We had a situation with trillions of dollars of property loses it's value due to a bubble collapse. People can't pay their loans, and their houses aren't worth enough as collateral to pay off the loan. Both the homeowner and the banks are screwed, financially. And letting both the homeowners and the banks just get screwed isn't a good idea, since the entire economy will collapse, so some action does need to be taken. So what does the government do? It pays off the banks, leaving the homeowners in the red. But if the government had spent exactly the same amount of money and simply given it to homeowners, both the homeowners and the banks would be in good shape. Why pay the banks and not the homeowners? You can argue that the homeowners made a bad decision to get a loan that they couldn't afford, but the banks also made the same bad decision in giving a loan that wasn't secure. And most homeowners actually got loans that were perfectly reasonable, but the bursting bubble plus skyrocketing unemployment provides a lock that keeps them from following the financially prudent path and moving to a cheaper house. The banks, on the other hand, were probably far more irresponsible, since they created derivatives based on these mortgages that were designed to conceal any underlying risk, and then created derivatives based on derivatives. But the consequence of bailing out the banks is that wealthy investors lost nothing, while average homeowners may have lost everything. Why did the wealthy investors deserve to be protected more than the average homeowner? Because the system is rigged.


As to the objections to debt, there's a reasonable amount of debt and an unreasonable amount. Getting a loan for a college education is generally a good investment, as long as your degree is not in a worthless subject like comparative religion. I needed some loans to afford a computer science degree from a respectable state university, and it's been a fabulous investment, paying back 1000x the cost of the loans. Buying a home is also generally a good investment, as long as you aren't in a bubble and don't need to move very often. I agree that the average american probably has more debt than is good for them, but living completely debt-free is nearly impossible and probably unwise.

 

[Gordo]

MikeB,
In December of 2007 I read a story of an American family who previously ran their credit card to the limit and could not pay. There were 3 generations of the same family living under the same roof in a rental apartment. The grandmother went to the bank to explain their situation. A loans officer was called in and the decision was made to put this family into their own house by loaning them money to not only buy the house but to pay off the credit card. After 6 months and no payments being made on the loan, the house was reappraised and a futher loan was made. This allowed the family to go on the first holiday ever. And the story goes on. Although this can not possibly be true in my mind, it may well have been very close to the truth. Close enough that when I looked further, I found a verifiable situations where people who had purchased a $200K home with 5% down, now 3 years later, had $450K mortgage. This family had 2 new cars, a boat and camping trailer and took expensive trips every year. They were living far beyond their means. At this point, I detailed the above in a letter to my close friends, with the advice that the bubble had to burst, NOW. I was a little premature. 6 months to be exact. None of my friends listened and all of them took huge hits when the collapse came.

I totally disagree with the conclusion that one can not go through their life debt free. The only debt one should consider is a debt which will pay off it's self. A tool, truck, commercial boat, education, etc. The idea that one should have consumer debt is absurd. What NEED is there to pay for the banker's TV while buying one for yourself? The ancient model of being owned by the "company store" has been replaced by consumer debt. The only disadvantage I have found in my life has been in 1982, when a prospective employer hired a far less experienced person. When I asked for an explanation I was told the other fellow was up to his eyeballs in debt, and would therefore be a far better employee. This employer recognized that some who is in debt is a wage slave and one who is debt free, does not make a good slave. I went back to being self employed.

As far saving while living with parents, I left home as a 17 year old, classified as a learning disabled, a highschool dropout, with $20 in my pocket. My largest debt in life was $10,000 @6% fixed term 10 years in 1970. This asset earned enough to only work 5-7 months per year, go south every winter, buy a house, toys, put 2 kids through university and retire at 59. Many who became life long friends, followed a somewhat similar path. Those who got heavily into debt buying the huge house with all the gadgets, cars, boats, RV's etc, on credit, had to face 24% interest in 1980. Several lost everything. Their current quality of life can be measured directly by the size of the consumer debt they incurred. It ain't rocket science. Paying 50-300% more for everything you NEED, does not work. Yes, the "system" is rigged against you. So is Vegas. Don't play their game, make your own rules I fail to understand how any protest, especially by a tiny minority, will change the rules? Conversely, not incurring consumer debt, destroys the very game, they are protesting against. How the protestors convince the wage slaves to not play the game is the puzzle Playing Don Quixote on Wall St. is not going to work. The protest belongs at the factory gates, the big box stores and infront of all the little banks. The King is not the problem, it is those who bow down and follow the rules of the land. No debt, no default, no bailout, END OF THIS GAME

What you should be looking out for is the NEW GAME. I began looking for the NEW GAME in 2008. It took me until the middle of 2009 to find it. Do you know what the NEW GAME is Where did all the money go in 2008 How will the rich get richer and the poor get poorer if the wage slaves abandon debt Even if consumer debt remains high & interest rates remain low, the return on debt is not all that attractive. We are all playing the NEW GAME already. But again, if you make your own rules, you can win this one, for a while.

 

[MikeB]

The only debt one should consider is a debt which will pay off it's self. A tool, truck, commercial boat, education, etc. The idea that one should have consumer debt is absurd.

But that's my point: many forms of debt are exactly the ones that will pay themselves off. They are investments, and smart investments are always a good strategy. I listed my education as the example, and there's no question it's been a good investment. Houses are also (traditionally) a valid investment, since you gain equity rather than wasting your money on rent, but you have to account for variations in the housing market itself. Starting a business almost always requires some level of debt, even if it's just buying a set of tools for a tradesman. As an economic tool, debt is essential. And even for governments, debt is a tool for investment, and a government should be in the business of making investments on behalf of the country (smart investments, like roads and research, not dumb ones like wars).

But I also agree that consumer debt isn't a good idea, at least not at any level above noise. I buy tons of stuff using a credit card, but pay the balance at the end of the month, so I pay no interest and the average debt lasts about 14 days. (Car purchases are probably on the borderline, most people need a car in this country, and being without transportation can kill your employability. But a car can be purchased at nearly a 0% interest rate, which makes a car in your price range a reasonable decision.) But we both agree that most things beyond that are hard to justify. I wouldn't say absurd, but unwise might be a good term. And we also agree that the average person in the US has too much debt, and that many absurd situations develop when people spend beyond their income level.

As for the protestors, they've actually been phenomenally successful. The point is to get the issue discussed, to get the media talking about inequality and fairness. Mitt Romney might very well lose the election simply by releasing his tax returns and showing that he pays an effective 15% tax rate on his millions, while many of us wage earners pay 25% or higher. Once the media starts looking at these issues, the general population starts to notice, and they eventually make their voice heard. I don't think there will be a big revolution, but significant change might be on the way.

 

[chroot]

Exactly! Thanks for the information.. Pretty sad many peoples out there lazy sitting do nothing. Like the US president handed to immigration peoples who worked 2x harder than American peoples (picking vegetables or fruits farming). That's true story.

Of course, at the end of the day. If you don't like the debt, you can go without. You can live with your parents until you have enough money to buy a house outright. You could be there a while though. You could just rent your entire life. Nothing wrong with that. You could go without a car. Catch public transport - ride an eBike. You don't need debt, and if you think that it will cause you to live like a slave, you're probably right, because you don't know how to handle debt. Debt is a tool. It can be used to create, or it can be used to destroy. Too many have used it to destroy their lives and blame the tool. That's why this post makes me sad.

 

[Gordo]

The only debt one should consider is a debt which will pay off it's self. A tool, truck, commercial boat, education, etc. The idea that one should have consumer debt is absurd.

But that's my point:
As for the protestors, they've actually been phenomenally successful. The point is to get the issue discussed, to get the media talking about inequality and fairness. Mitt Romney might very well lose the election simply by releasing his tax returns and showing that he pays an effective 15% tax rate on his millions, while many of us wage earners pay 25% or higher. Once the media starts looking at these issues, the general population starts to notice, and they eventually make their voice heard. I don't think there will be a big revolution, but significant change might be on the way.

MikeB,
We agree on most points.
Equating issues being discussed, with success of the protest movement, is not one of them. Most politicians dicuss only what will enhance their image. I have several close friends who were and are politicians. I consider them "good people" as they all love the job and hate the process. The process of getting re-elected. The party provides them with pr experts who attempt to craft their every word. Up until the second election, a "good person" (in my view) will listen to the point of compromising their integrity. After the second election, they have all said to hell with the process. They got down to doing the job and to heck with the consequences. They quit consulting with the pr experts as required by the party. One served as the minister of several branches during the 3 terms and ended as Speaker. One has gone from a huge party majority position to a tiny party minority, while still having a large personal majority. I count these as personal successes as well as a country's success. The success of a democratic system that will elect good people, not just politcally savvy people. Discussing the problem of the day is often more smoke and mirrors. My point was the misplacement of the occupation. Take it to the wage slaves.
Time will tell.
But have you figured out the NEW GAME Where the smart money has gone

 

[Sunder]

I don't use debt even if I could potentially profit from it because I KNOW it's WRONG and makes people's lives hell. I don't use banks and credit cards because I've NEVER met a banker that didn't deserve a painful execution and by using their system, at all, I'd further empower them.

So since I don't use the system, I have had a VERY difficult time not killing myself because I see lies and pain all around everyday and nothing but more ignorant people supporting the system that causes it all.

I am a homeless, outcast refugee in my own country. I also don't take advantage of unconstitutional, socialist government programs because of the same reasons. So, when I need money, I hit the streets and find any work I can. I may not be rich, but because of my commitment to honesty, integrity and compassion, and my serious intolerance for drama and greed, I have acquired many valuable skills.

(quote trimmed down by me)

Dropped out of this thread for a bit. Sorry.

What you've written above is your prerogative. But don't blame the system, it's your CHOICE. Your understanding of honesty, integrity, and compassion is very different form the vast majority of the western world, but that's your right, provided you do nothing to undermine our system. My honesty is ensuring that I work hard for my employer and report my income as earned. My integrity is that I will not disadvantage anyone else to increase my own wealth. My compassion is to make sure that beyond helping fund the "socialist government programs" through taxes, I contribute not only money, but time to help out those in need. I couldn't do any of that being a "homeless outcast refugee". I do it far better as an IT professional, who is well paid, and therefore can use valuable skills to contribute to society - that society will then remunerate me for, and which I can use in the ways described above. Poverty is not a virtue - Charity is. The poor cannot serve their community as much as the rich can.

I've already shown in previous examples how debt - when it is used to invest (such as when the baker maker used it to increase production), benefits everyone in the community. Debt is not the problem. People who don't know how to use debt are the problem. Nobody is obliging you to become indebted, but if you are dogmatically avoiding it, I think you are misguided, not virtuous.

I had heard plenty of stories like the ones Gordo have told - stories of negative amortisation - where the bank increases the amount owing, rather than insisting you pay more off. That is a story of a nation's lenders gone crazy, and in such a situation it's much harder fault the borrowers. I've heard advice in the 80s and 90s that was something like: "Ask the bank what you can borrow, and take 90% of it" or "If you want to to start a business, even if you use your own money, write a business plan and try to get a bank to lend you everything you need. If they won't lend money to you, don't start the business". At the time that was sound advice - if the bank will lend it to you, it probably means it's a safe loan - but when the nation's bankers go nuts like they did in the US, you can't trust that.

Australia has its own individual stories of debt abuse, but thankfully, our banking system was far more prudent. We have a far lower reliance on brokers to sell loans, so we don't get silly loans issued just to earn a broker commission. While we did have high LVR loans, they were quite unpopular, and we never had negative amortisation or NINJA loans.

Again, stories like this make me sad. People don't understand debt, and so they fear debt. So rather than learn, they avoid it totally, and blame the system.

 

[Philistine]

Dropped out of this thread for a bit. Sorry.

What you've written above is your prerogative. But don't blame the system, it's your CHOICE. Your understanding of honesty, integrity, and compassion is very different form the vast majority of the western world, but that's your right, provided you do nothing to undermine our system. My honesty is ensuring that I work hard for my employer and report my income as earned. My integrity is that I will not disadvantage anyone else to increase my own wealth. My compassion is to make sure that beyond helping fund the "socialist government programs" through taxes, I contribute not only money, but time to help out those in need. I couldn't do any of that being a "homeless outcast refugee". I do it far better as an IT professional, who is well paid, and therefore can use valuable skills to contribute to society - that society will then remunerate me for, and which I can use in the ways described above. Poverty is not a virtue - Charity is. The poor cannot serve their community as much as the rich can.

I've already shown in previous examples how debt - when it is used to invest (such as when the baker maker used it to increase production), benefits everyone in the community. Debt is not the problem. People who don't know how to use debt are the problem. Nobody is obliging you to become indebted, but if you are dogmatically avoiding it, I think you are misguided, not virtuous.

I had heard plenty of stories like the ones Gordo have told - stories of negative amortisation - where the bank increases the amount owing, rather than insisting you pay more off. That is a story of a nation's lenders gone crazy, and in such a situation it's much harder fault the borrowers. I've heard advice in the 80s and 90s that was something like: "Ask the bank what you can borrow, and take 90% of it" or "If you want to to start a business, even if you use your own money, write a business plan and try to get a bank to lend you everything you need. If they won't lend money to you, don't start the business". At the time that was sound advice - if the bank will lend it to you, it probably means it's a safe loan - but when the nation's bankers go nuts like they did in the US, you can't trust that.

Australia has its own individual stories of debt abuse, but thankfully, our banking system was far more prudent. We have a far lower reliance on brokers to sell loans, so we don't get silly loans issued just to earn a broker commission. While we did have high LVR loans, they were quite unpopular, and we never had negative amortisation or NINJA loans.

Again, stories like this make me sad. People don't understand debt, and so they fear debt. So rather than learn, they avoid it totally, and blame the system.

Agree with everything you said Sunder. You have some pearls in this thread. This is what I mean when I say I find it so frustrating that people view the GFC as some necessary stage of evolution in the failure of capitalism or such. It is just a point on the bubble and debt swing that humans go through over history, it is just this time we allowed the sophistication of our debt instruments to get us into some scary territory, and the greed in this instance was particularly extreme, but we have been doing this for centuries (boom/busts and bubbles). As you point out, one of the main reasons Australia didn't suffer the same pain as the US and Europe is that we were much more sensible in how we allowed debt to be issued and sold, but that doesn't mean we didn't have loads of debt, we just had quality debt.

But there seems to be a conflation of points in this thread by some people, on the one hand people are ranting about the evils of debt, but they are also lamenting the consequences of a highly specialised society. THe answer to both those concerns is the same thing (and is the same answer for most problems in life): it is about balance and moderation - ie, no debt is stupid, but Ninja loans and a blackhole of Credit default swaps is also stupid. LIkewise, I think it is somewhat absurd that a person with some crazy specialisation can make billions of dollars, but not know how to change the oil on their car or to cook a basic meal, but I also really like mondern dentistry, and when I get sick I really like the fact that I am a member of a highly advanced and specialised economy.

 

[Gordo]

basic meal, but I also really like mondern dentistry, and when I get sick I really like the fact that I am a member of a highly advanced and specialised economy.

A long ways off topic, but I always wonder why our Native poplulations around the world, do not give us any credit for what our society has brought to their world

 

[Sunder]

Agree with everything you said Sunder. You have some pearls in this thread. This is what I mean when I say I find it so frustrating that people view the GFC as some necessary stage of evolution in the failure of capitalism or such. It is just a point on the bubble and debt swing that humans go through over history, it is just this time we allowed the sophistication of our debt instruments to get us into some scary territory, and the greed in this instance was particularly extreme, but we have been doing this for centuries (boom/busts and bubbles). As you point out, one of the main reasons Australia didn't suffer the same pain as the US and Europe is that we were much more sensible in how we allowed debt to be issued and sold, but that doesn't mean we didn't have loads of debt, we just had quality debt.

But there seems to be a conflation of points in this thread by some people, on the one hand people are ranting about the evils of debt, but they are also lamenting the consequences of a highly specialised society. THe answer to both those concerns is the same thing (and is the same answer for most problems in life): it is about balance and moderation - ie, no debt is stupid, but Ninja loans and a blackhole of Credit default swaps is also stupid. LIkewise, I think it is somewhat absurd that a person with some crazy specialisation can make billions of dollars, but not know how to change the oil on their car or to cook a basic meal, but I also really like mondern dentistry, and when I get sick I really like the fact that I am a member of a highly advanced and specialised economy.

Thanks Philistine,

Many doomsayers who say Australia is just having a delayed housing bubble crash overlook the fact that we do have better quality credit. Sure it's not all low LVR, low stress, ultra-prime borrowing, but with a foreclosure rate of less than 0.2% even during tougher times, it's hardly a NINJA loan either, is it?

I had a professor of finance tell me once that the world is going towards paying people more and more, to learn more and more about less and less. While it sounds funny, it's true! The less I know about, the more I get paid, it seems sometimes. I live in the lower north shore of Sydney, I don't know how well you know the area, but for example, I find it hard to find a non-genuine auto parts store (Such as Repco or Super Cheap) here. There's one nearly every fourth suburb where I come from (South Western Sydney). I suspect that it's mostly because none of my local friends know how to service their own car... These are engineers who could probably build you a new car, and merchant bankers who could buy a new car every week on their salary, but can't look after their own one.

I also agree with you that I very much appreciate living in a specialised society. Last night, I met this girl at a pub - sister of a friend. She works in cancer research, and I told her about a project I volunteered my workplace for - an distributed computing Xray crystalography project for early detection of cancer. That's pretty much all I said - She had no idea what distributed computing was, but was able to explain to me in detail what X-Ray crystalography was, and we collaborated to figure out together how the project must be working. It's astounding that two people with no knowledge of each other's work, can combine the two to advantage society in such a way. It would take her 4 years to get basic knowledge of my field, and 6 years to get basic knowledge of hers. Who would want to spend 10 years to learn both to get a project like this up and running?

 

[Philistine]

Philistine wrote:basic meal, but I also really like mondern dentistry, and when I get sick I really like the fact that I am a member of a highly advanced and specialised economy.


A long ways off topic, but I always wonder why our Native poplulations around the world, do not give us any credit for what our society has brought to their world

I might be totally misunderstanding your post Gordo, but are you inferring that "native" (whatever the hell that means) populations, are generally unhappy for the "development" (and I have put the quotes on intentionally to acknowledge the value in the term), we have given them?

I don't know, in Australia amongst the politically correct, there is a lot of chat about how the Australian Aborigines were the brilliant fieldkeepers of this country, and engaged in harmonised burnings of the land, and how when whitey got here it all went wrong. There is also rabid condemnation of the fact that Australian aboriginal's have some of the worst life expectancy, ear and eye infection and kidney failure rates, in the whole world. The funny thing is (if "funny" can even occur in such a situation), is that the current life expectancy rates and eye/kidney/ear failure rates, are advanced by decades from what they were..... White man didn't retard the poluation, it was somewhat retarded to begin with (i don't mean "retarded" in a mean way, I mean retarded in its literal sense, a failure to progress).

I have travelled extensivelly throughout extreme remote parts of northwestern Australia, and Central Australia, both in a professional capacity, and in a personal capacity. I have some research on my side.

I only feel confident enough to rant so offensively on this issue, because I come from two generations of people directly involved in the economic development of indigenous people. Anyone on this forum who wants to take me on about the economic development and welfare of Australia's first people, better bring some serious quals and experience to the table. I get so sick of this idealisation of "the noble savage". Australian Aboriginal culture is some of the most harsh, nasty, brutish shit, you will ever see. It is also amazingly generous and communal, and one of the most giving and caring cultures in the world. But at the end of the day it is easily the most unsophisticated in the whole (and I mean whole), world.

I feel the same way about Australian indigenous culture, as I do about global muslim culture. Both are nasty, brutish, tribal, retarded forms of community. Those are statements of fact I am willing to back up, and please don't make out like shit would all be sweet if we just went back to eating what we hit with sticks and screwed the minute there was grass on the wicket....

 

[nicobie]

please don't make out like shit would all be sweet if we just went back to eating what we hit with sticks and screwed the minute there was grass on the wicket....

You really do have a way with words.

 

[Gordo]

I feel the same way about Australian indigenous culture, as I do about global muslim culture. Both are nasty, brutish, tribal, retarded forms of community. Those are statements of fact I am willing to back up, and please don't make out like shit would all be sweet if we just went back to eating what we hit with sticks and screwed the minute there was grass on the wicket....

My story is very similar, but too, too long. My first job was for a native chief on his 7 man boat. I have spend many years in many capacities visiting and working in the Villages. One of my partner's wife is native. 20 years ago she asked for help with a Canadian Aborinal Project. From helping with this, I learned a great deal about our natives position. They adopted the Australian model 100% in attacking the Central government for compensation. The brought advisors from Austraulia. Their legal bill in the 1970's was @ $100M per annum, paid by the taxpayers. I do not know what the gov. legal bill was or what the compensation was. This model has been followed to this day, at a very high burden on the working poor. We have the current spectacle of one village having received an average of $10,000 per man, woman and child, per annum over the past 5 years. $90M Here is a post by one sympathetic person;
"1800 people sharing 90 000 000 over 5 years is 10 000 per person....they can't afford infastructure, they can't afford schools....they are living on nothing....they have no jobs to work....and yes, they chose to live there...but what happens when you can't afford to move....what happens when you don't feel educated enough to survive....fixing holes in walls doesn't seem like a priority when you can't afford to live. My little home, which is paid for, costs me a 1300 a month in bills....never mind food, clothing, etc...REALITY SUCKS but the government has shot themselves in the foot by not setting them up for success! "

They are crowed up to 3 generation of 20 people in one house. No running water, no sewer, inadequate heat, no food, actually starving. But wait, 20 people with an $833 per person, per month. No, the $833 does not go the the person. The house was free, the water, if they fix the system is free (the water manager is paid a large salary) and the funds go to the band manager, no taxes of any kind. Free medical, dental, eye care etc. They built a multimillion dollar cultural center, which has no heat or water either. They live in the middle of a forest that they own, and according to reports have no heat for their houses. They have absolutely refused 3rd party management. This is the condition of about 1/3 of our natives.

This is NOT "THE" horror story by any means. I have seen many horror stories. A village of 680 people, all with diabetes by age 30+ Flying out for treatment, dialysis, transplants, amputations, blind training. I counted 25,000 cans of pop being delivered every 2 weeks. Is there any connection between invert sugar and diabetes? I taught the kids to make a can crusher with two 2 x 4's and a door hinge. Zillions of cans now go to recycle instead of out to sea with each rain.
The bright side is 2/3 of the bands have managers who care for their people and the entire band is doing very well. A few are buying up non-native farms and have huge successful businesses.
Sorry I started.

 

[hydro-one]

WEll i for one would like to know where the smart money is "NEW GAME"

 

[strantor]

what are all these vague references to "new game"? I googled it and all I get is video game hit lists and a mudvayne album. Why all the vagueness? can someone post a link?

 

[mdd0127]

I don't use debt even if I could potentially profit from it because I KNOW it's WRONG and makes people's lives hell. I don't use banks and credit cards because I've NEVER met a banker that didn't deserve a painful execution and by using their system, at all, I'd further empower them.

(quote trimmed down by me)

My integrity is that I will not disadvantage anyone else to increase my own wealth. My compassion is to make sure that beyond helping fund the "socialist government programs" through taxes, I contribute not only money, but time to help out those in need. I couldn't do any of that being a "homeless outcast refugee". I do it far better as an IT professional, who is well paid, and therefore can use valuable skills to contribute to society - that society will then remunerate me for, and which I can use in the ways described above. Poverty is not a virtue - Charity is. The poor cannot serve their community as much as the rich can.

Your integrity is something you've tricked yourself into so you can sleep at night. I'll type it out again. If you use banks and big unethical corporations.....AT ALL......even though you ADMIT that they've behaved in horrible and unethical ways, YOU ARE FURTHER EMPOWERING THEM TO SCREW MORE PEOPLE. Sorry about the caps. It's not intended to be yelling, just emphasis so my point is understood. It's a pretty simple one but for some reason it keeps getting overlooked or dismissed.

Another point that I'd like to make is that MOST RICH PEOPLE HELP THEMSELVES and only themselves. A very few do extremely minor little things here and there to keep face. Give a man a fish type of thing.....Most of the help I've received when I really needed it was from poor people with good hearts. Poor people usually tip better than the rich in my experience....which is vast. Rich people go play golf and generally ignore the global and local consequences of their greed. People that have more than they need and can ever use is WRONG and GREEDY. They are running the show because people like you play into their system. Do you not get the point that every time a loan is given out, EVERYONE else's money becomes worth less??? You seem like a very smart person........time to work on the honesty and integrity thing......seriously. If you use the products of a corrupt system that's ran by EVIL people and causes social inequity, you ARE supporting that system.

For example, I feel bad for using this computer right now because I know that Liberia is in the shape it's in so people can have cheap laptops and the people that sell them can still make lots of money. I'm trying to ween myself from it though because I know it's wrong and if this laptop breaks.....I'll do everything I can to fix it. My last laptop lasted ten years and I was inside of it every few months for the last 5 until it did something I couldn't figure out (a little black chip with no labeling on it quit). I keep using a laptop because it's basically the only tool to promote change that I have. If I spoke like this in public, I'd be declared an enemy of the state and locked away indefinitely in Guantanamo. It's even scary to post stuff like this here but if they get me for telling the truth......so be it. I'd LOVE to be proven wrong.

I will personally do EVERYTHING I can legally do to stop the current, dishonest, greedy, self centered system.

I'm so disgusted with the actions of participators in the current westernized industrial society model, that I've seriously considered leaving the country......but the more I think about it, the more I think that I need to stay here and make a stand. So my new plan is occupying an long abandoned bank owned property. I won't use the house or utilities, only the land, and the only changes I plan to make will be putting in a garden. If a REAL person wants to buy the property with their own money, I've improved it for them and will gladly move on, but if some bank agent comes in and wants to cause problems so the property can return to it's previous neglected, abandoned state and a conversation with them doesn't change their mind about letting me stay until someone else wants to live there.....it's war, that person will become an enemy combatant in my eyes, and I will defend my right to exist in peace on this planet..... with force if necessary.

You can keep typing big long sentences and making pseudo points that the peanut gallery agrees with but the bottom line is: If you USE the system, you SUPPORT the system and are therefore just as guilty of treason against humanity as the bankers, corporations, and politicians you enable.

I'd still have a beer or go on a bike ride with you though because I know for sure that there are millions of good hearted people out there that have been programmed beyond logic. :wink:

Check out Joe Rogan's podcast with Micheal Ruppert. Research the facts. Then try to sleep at night knowing that by participating, you are supporting an evil, unethical, and immoral system.

 

[Sunder]

Sorry, its 's a secret known only to us Illuminati, and our brothers in Majestic 12. (They read these boards all through a crawler, so they look like the Majestic 12 bot when they log on.)

It seems though, we may need to send a caution through the ranks to stop people mentioning the code name of our plans... even vaguely

 

[Philistine]

My story is very similar, but too, too long. My first job was for a native chief on his 7 man boat. I have spend many years in many capacities visiting and working in the Villages. One of my partner's wife is native. 20 years ago she asked for help with a Canadian Aborinal Project. From helping with this, I learned a great deal about our natives position. They adopted the Australian model 100% in attacking the Central government for compensation. The brought advisors from Austraulia. Their legal bill in the 1970's was @ $100M per annum, paid by the taxpayers. I do not know what the gov. legal bill was or what the compensation was. This model has been followed to this day, at a very high burden on the working poor. We have the current spectacle of one village having received an average of $10,000 per man, woman and child, per annum over the past 5 years. $90M Here is a post by one sympathetic person;
"1800 people sharing 90 000 000 over 5 years is 10 000 per person....they can't afford infastructure, they can't afford schools....they are living on nothing....they have no jobs to work....and yes, they chose to live there...but what happens when you can't afford to move....what happens when you don't feel educated enough to survive....fixing holes in walls doesn't seem like a priority when you can't afford to live. My little home, which is paid for, costs me a 1300 a month in bills....never mind food, clothing, etc...REALITY SUCKS but the government has shot themselves in the foot by not setting them up for success! "

They are crowed up to 3 generation of 20 people in one house. No running water, no sewer, inadequate heat, no food, actually starving. But wait, 20 people with an $833 per person, per month. No, the $833 does not go the the person. The house was free, the water, if they fix the system is free (the water manager is paid a large salary) and the funds go to the band manager, no taxes of any kind. Free medical, dental, eye care etc. They built a multimillion dollar cultural center, which has no heat or water either. They live in the middle of a forest that they own, and according to reports have no heat for their houses. They have absolutely refused 3rd party management. This is the condition of about 1/3 of our natives.

This is NOT "THE" horror story by any means. I have seen many horror stories. A village of 680 people, all with diabetes by age 30+ Flying out for treatment, dialysis, transplants, amputations, blind training. I counted 25,000 cans of pop being delivered every 2 weeks. Is there any connection between invert sugar and diabetes? I taught the kids to make a can crusher with two 2 x 4's and a door hinge. Zillions of cans now go to recycle instead of out to sea with each rain.
The bright side is 2/3 of the bands have managers who care for their people and the entire band is doing very well. A few are buying up non-native farms and have huge successful businesses.
Sorry I started.

So glad to hear all that Gordo, totally accords with my Australian experience. Thankfully in Australia we have an aboriginal activist called Noel Pearson, the guy is a deadset legend, and understands the only way that he will emancipate his people, is to get them off the welfare handout, and being self reliant proud people. The policitics of aboriginal culture in Australia is some of the most nasty shit you will ever see (makes the Australian Union movement look like a bunch of pussies, and they regularly break peoples legs and have them fall under shipping containers). This guy Noel Pearson is just a godsend to the welfare of Aboriginal people, he really is the Martin Luthar King of Australia's indeginous folk. In my opinion he will single handedly deliver economic outcomes for his people that will surpass fifty years of throwing money wastefully at welfare. It's funny what you said Gordo about the Aussie consultants, I am fully aware of that "industry".

 

[jonescg]

Noel has the self-empowerment approach, which is definitely popular amongst white conservatives in Oz - not the blackfellas though. He knows very well that leading horses to water hasn't lead to any quenched thirst. Tough love might mean no services in the Tanami communities; pack your things and move to Adelaide for a job. However, Pearson is no stranger to the Aboriginal 'industry' either. He's been at the receiving end of many a taxpaying fund. I too believe he is working in the best interests of blackfellas, but I wouldn't canonise him just yet. He's ruffled a few conservative feathers when he openly stated his support for constitutional amendments, recognising aborigines and removing the race bits.

It's been a frocked up situation for so long, everyone has forgotten what the goal was. Are we whitefellas to blame for letting it get so bad? Are the blackfellas to blame for not getting off their arses and working? Or are we just asking them to be white?

What this has to do with the OP I don't know, but anyway, stay outta my booze.

 

[Gordo]

With appologies to the OP, here is a reference to our version of Noel, who has never been on the gov-tit.
http://www.thepolitic.com/archives/2006/09/22/straight-talk-from-osoyoos-chief-clarence-louie/
That was 2006 and his band now owns a huge campground, where we often stay, a hotel, golf coarse, winery, fruit farms, grapes, veggie farm, etc. He is absolutely & very publically brutal, towards the leaders of "failed bands." He took his band from broke to profit in only 5 years. Not BS Aboriginal Business Plan profit where the government gives you equipment, which you rent for the season, sell and get free new equipment next year, but almost real whitefellas profit. They still pay no tax.
http://www.theglobeandmail.com/news/national/article844275.ece
On the other side and off the scale, we have the Canadian Grand Chief, Shawn Atleo, President of our local university, sucking at the government tit until the top of his head caves in.
http://www.ctv.ca/CTVNews/TopStories/20111206/attawapiskat-housing-political-crisis-111206/
This is the $90M starving band noted in my previous post.