Monthly Archives: May 2009

JP Morgan Says Losses on WaMu Credit Cards Could Reach 24%

I smell a “ahh I knew this was going to happen moment”. Almost like a kick in the face.  This article basically talks about the credit card loans that many banks are failing to collect. Hmm, I woornder why. This is to say and show how serious credit cad debt is. I mean banks offer all these special promotions to lure us into having a credit card, and feeding us to use it, but at the same time, knowing many people can’t afford to pay for what they actually spend. End result? A crash and a high percent of unable to collect.   

“At the end of the first quarter, 12.63 per cent of the WaMu credit card loans were deemed uncollectable by JPMorgan”.

My research paper was about finanicilization fashion along with credit card debt. This clearly shows that this hole capitalism created is actually suffering their own consequence. I mean I know it’s bad on a macro level, because this means as  country we are more in debt. But thinking of it in micro level, people should realize what they can spend and what they can’t afford. The piece of plastic doesn’t mean anything if you can’t pay for the bills.

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Standards of Fashion

It seems as if everyone wants something different.  The more unique the clothing is, the more fashionable and expensive it will be.  The article “Fashion lives outside malls” by Anna Barbara Lorenzo, does a good job at describing how the mass production hurts fashion marketability.  She stated:

“Mass production maybe good for certain businesses, but it is a nightmare for fashion-conscious people who want not just to be trendy but to be different as well.”

In the fashion world I agree that consumers want not only to be fashionable, but they want to be set apart from everyone else and feel “exclusive”.  If everyone can have your oufit, suddenly you don’t want it anymore because its not special. However, the specialness is something you must pay for.  Often, the mass produced department store clothing is much cheaper because it is produced for a very cheap price by underpaid workers.

Lorenzo described a store called the I Love You store where everything is unique and made with a personal touch. It is owned by three women  Corinne Ching, Sharon Atillo and Mimi Sanson. I think consumers feel better about an item when it is made under fair labor practices and is unique but I’m not sure whether there is a way to make these couture items a reasonable price.

“There is emphasis on each piece being an artwork. The clothes are their canvas. We give them complete freedom to express themselves,” Ms. Ching said in a recent interview.”

Fashion is art and I think people should be creative with their style but when its mass produced you just dont feel the same. consumers don’t feel that they are going above the normal standards.  Fashion consumers want the best and the best is more expensive. The article said that the clothing prices range from 300 dollars to 3000 dollars and shoes from 800 dollars to 1200 dollars. Rocker tee shirts are from 400 to 1200 dollars.  Thats right, tee shirts. One of the store owners stated,

“I have to feel that what they (designers) bring is different and not like the stuff one can just get in a mall. The styles here are diverse. We have clothes for yuppies and rockers alike,”.

These clothes in the boutique are not meant for everyone and they are stating that it isn’t meant for the low or middle class, its meant for yuppies because thats who can afford it.  Not many can afford to drop 1200 dollars on a tee shirt and still have enough money to live comfortably that month.  So what is everyone else doing? shopping at department stores for clothing that is mass produced.

To get a bit of history backround about the standardization of clothes i visited the site It explained how clothing was not always mass produced before the civil war.  For the war they produced uniforms in mass quantities.  From then on mass production increased.  However womens clothing was still custom made until the 1920s.  Then advertising increased and demand increased so clothing started to be mass produced and that led us to where we are today.  Please check this interesting website out it is a virtual museum of the history of fashion.

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steal this university

these are the quotes I got from the first two chapters of steal this university, which helped me write my paper.


“in the past twenty years, more than 500 new for-profit colleges and universities have opened their doors- at the four year level, for-profits have increased their number from 18 to 192. “- p15

-this is a prime example of where the pressure on universities to move towards a profit motive is coming from. they have to compete with all these online universities that use different methods to issue degrees that aren’t necessarily what the real universities would have.


“shift the meaning of college from that of a process one goes through to a product one buys.: p 16

-this is the commodification of higher education, making it move from an experience that enriches a person to something the person owns and uses


“the board of higher ed. in mass. suggested to eliminate, or provide a compelling reason for retaining academic programs that have fewer than a minimum threshold of graduates per year for a period of three years.”p 21

– this is very business like, not very academic to eliminate programs because there are not enough students graduating from them. they would not have been worried about this before efficiency was necessary to compete as a more business like model.


“all campuses have developed alliances with local and regional business and industry to provide employee training and development opportunities as well as research support.” massachusetts p 21

-shows how the cooperations are moving into academia and using their labor for themselves.

“Mc Education” p23

higher exploitation –marc bousquet

doing the work of staff, the work of faculty, grading, tutoring and even serving as research assistants just like grad students

– the unpaid labor provided to the cooperations

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Suprstar Economics #2

           I reviewed the article, “Superstars without talent? The Yule distribution controversy”, by Laura Spierdijk and Mark Voorneveld. The article is quite interesting, as it focuses on the world wide phenomenon of novice artists that start their career with little or no talent and end up with all the benefits of being a superstar. The following example roughly illustrates why this may happen. Music has an important social aspect and people tend to follow the crowd, thus creating the snowball effect. This is one explanation, but there are many more that go more in depth.  



           I also want to touch on my favorite topic of the economics of the superstar, which the commoditization of the superstar. It is the idea that the artist itself is made into a product. This product, just like any other product, can be advertised on television, shown on billboards in Times Square, mentioned on the radio, etc. the image now can be used to promote literally any other brand such as clothing or a beverage. The artist is already well known for their own individual fame and so is now ready to be marketed. When this happens, companies need to take advantage of it and use the artist to promote their own product- “product for product advertising”. And so we cannot blame the company or the artist because both parties are benefiting a great deal. People will be more likely to warm up to the product if they see it being utilized by someone famous to them. They rarely stop and think about how primitive this way of marketing really is. That it takes advantage of the consumer into utilizing the product just because another human being is using it.


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Financialization of the NBA…part 2

Jeff Schmidt writes in Disciplined Minds that industry looks for “an obedient thinker, an intellectual property whom employers can trust to experiment, theorize, innovate and create safely within the confines of an assigned ideology” (Schmidt), so to, the NBA does the same with its players. Have you ever heard a player speak out on the lackluster cleanup after Hurricane Katrina? What about the sub-prime loans given to many low income minority families that have them losing homes at a rapid pace? The answer is a resounding no, because the league as a brand does not want its name associated with political views or “radical” perspectives, instead it wants “obedient” players. The classic example of this is Craig Hodges, one of the best pure shooters in NBA history, who after winning the NBA Championship with the Chicago Bulls donned a “dashiki and delivered a hand-written letter addressed to then President George H. W. Bush, expressing his discontent at the administration’s treatment of poor and minorities” (Wikipedia). After this act of individualism, not only was he not signed by the Bulls the following season, but he was not even offered a tryout by any other team in the league…ever again. Many think he was blackballed by the league because of his strong opinions, and he even filed a lawsuit against the NBA to that degree. This is still a confusing act by a league that should be more concerned with good officiating than the opinions of its players. However, when realizing how financialized the NBA is, the picture becomes more clear.

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Superstar economics #1

           Sherwin Rosen’s, “the economics of superstars”, is a very interesting article. This is a topic which I wanted to research and write on for quite some time. To start off, all artists these days are signed for profit gain. The way that playing the stock market is a gamble, the same is with artists. When buying a stock, you are hoping that it will bring profit in the future. When signing an artist to become a recording artist, you are betting that they will become a cash cow in the near future. Now, although it has technically always been like this, this sole profit seeking has been on a considerably lower level in the past. In the past centuries, there has been a larger emphasis on pure talent and the service of entertainment, without the tremendous burden of it being obligated to make money. In this day in age, the pursuit to make profit is all that we care about it, as it seems. Now, this is from the institution point of view, such as a recoding company. But what about the artists themselves, who after a while in the spotlight (which doesn’t even have to be a long time), can work their image into a multi million dollar machine.

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The Oligarchy

          I read an excerpt from Simon Johnson’s article, “U.S. Oligarchs and their Minions”. The article basically states that one possible outcome that can occur if, this financial crises prolongs in a certain way, is the reign of an Oligarchy. Now, the definition of an Oligarchy is a form of government where power effectively rests with a small elite segment of society distinguished by royal, wealth, family, military or religious hegemony. Of course if this transition happens, it will not be so evident, as in the public will not be able to tell much difference from the way it was before. It will only be evident to those in position of power. The article also touches on the controversial issue of whether the United States is an Oligarchy already, which many believe this to be true.

          If this is true, that the United States is in fact an Oligarchy, it means that the country is ultimately controlled by a small elite at the very top. Which means that “democratic machines”, such as a presidential election, is nothing more than an illusion made for the public to practice their democratic rule. Where in fact, the outcome of the election is already known long before and is just used to preserve image and control. In my opinion, I do believe the America is an Oligarchy that is controlled by the power of the elite and has been for a very long time, if not since the birth of the country.

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Financialization of Pop Teen Idol

Disney seems to have alot of new comers of the music industry. Everyone starts out young and then Disney seems to replace them with even younger more talented kids, who not only can sing but can act too. Disney makes money, not only by making mini-series of their popular teen shows, but with movies and merchandises such as dolls, lunchboxes, clothes, just anything that can sell bearing the teens’ face on it.

Teen idols are a whole industry of their own, making more money than those of movie stars. Pop sensation Miley Cyrus just recently started out in the Disney scene in the popular show known as Hannah Montana. Disney had a break with her because she can act and sing; but they were concern though about her age when she audition for the part. She was only 13 years old when she auditioned, but Disney did not cast her at first and went through alot of other girls before finally making the final decision.

Disney tends to cast younger kids for shows or movies before eventually they all will gow up. Since they started out very young, then Disney can make thier money very quickly by merchandising them as a brand. For example, there are Hannah Montana backpacks, clothes, dolls, makeup, books, movies, anything and everything bearing the Hannah Montana name makes money for Disney and of course Miley Cyrus gets her cut too. Department stores such as Walmart and Target all sell Hannah Montana merchandises.

According to People’s magazine Miley Cyrus is the richest teen celebrity, making more money than the Jonas Brothers, Selena Gomez, The High School Musical cast (all which are teen idols that first appeared on Disney shows).

NEW YORK —  Miley Cyrus is already way richer than her dad, Billy Ray, and she’s only 15.

People magazine reports that the Miley Cyrus franchise will be worth a projected 1 billion dollars by the end of the year. She tops the magazine’s list of the richest teen celebrities.

Not that Miley is seeing much of the money. Her mom says most is invested and Miley can’t touch it until she’s 18.

The Jonas Brothers are also on the list, making 12 million dollars a year. Fourteen-year-old Dakota Fanning makes 4 million dollars a movie.

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Egoavil: “Fictitious Capital and the New-Fangled Schemes of Public Credit ”

This was an article on the radical perspectives website which discusses Carl Marx’s theory of fictitious capital. As we all know Carl Marx was very critical of Capitalism and how he believed it only produces class struggles and inequalities. In this particular article, Michael Egoavil discusses Marx’s views on a particular aspect of Capitalism, securities, and why he felt it only produced fictitious capital.

   In the third volume of Capital, Marx discusses what he calls “fictitious capital” – what we know as “securities.”  Essentially these are titles to streams of income, which are treated as commodities and bought and sold on financial markets.  There are significant differences between types of securities.  Some represent corporate debts, as with bonds, some represent consumer debts, as with mortgage backed securities, and others represent capital investments, as with shares of stock.  But the common aspect of all these different securities is that they all give their owners a right to a stream of income, hopefully leaving them with more money than they started off with.  The security owner therefore looks upon his security as capital.

Securities are basically instruments representing financial value. Although you aren’t really purchasing real capital, you are still purchasing some form of value in the form of a legal title. You are only given claim on a stream of income and aren’t producing income yourself. This is what is meant by it being “fictitious”. Also, money never passes hands. When these legal entities are sold, you are only receiving claim to income that exist elsewhere.

Marx gives his three reasons for calling securities fictitious capital:

The first reason is specific to shares of stock.  With the creation of shares of stock, it appears as if capital has doubled; as if capital is not only the real capital that firms possess, but also the property titles created to represent that capital.  So for Marx, shares of stock are fictitious capital because while they merely represent real capital, they also seem to multiply that capital.

So stock allows the creation of additional capital that may not necessarily have any value. So for Marx, you are essentially taking something that doesn’t represent immediate value, and then continuously manipulating it to “increase” its value.

The second reason Marx calls securities “fictitious capital” is that their value can fluctuate in ways that are entirely independent of the real capital that they represent.  A change in interest rates, a rise or fall in profits, the inability of a borrower to repay debt – all of these things lead to a change in the market-value of fictitious capital without at all effecting the value of a firm’s real capital – the cash the firm has on hand, its machinery, buildings, and so forth.  The value of all those things can remain constant while the value of a firm’s stocks and bonds rise or fall.

So again, with this additional value created from securities, only the “fictitious” aspect of the value can be drastically changed and manipulated. The real value a firm or corporation possesses will remain unchanged. And this is a major aspect of securities, as markets are created. With Securities there exist both primary and secondary markets, where in the primary markets money is received by the issuer from investors in initial public offerings (this is where stock is issued), and in secondary markets simple assets exchange hands between investors.

 And lastly, a security may never have represented any capital at all.  Take the case of residential mortgage-backed securities.  The income that accrues to their holder is derived from the repayment of a home loan.  The home was not capital for the homebuyer – he did not create surplus-value with it.  It was just a dwelling.  So the initial sum of money advanced was never used as capital at all, although the holder of the security views it as his “capital”.

So you can see how securities gives the illusion of possessing actual capital and value. These particular types of securities are backed by the mortgage payments on the home and are offered as alternatives to more traditional forms of debt and equity financing. What this also does is create an additional market for these types of securities.

Here’s an illustration showing how it all works:  

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Finnancialization of the NBA…

Looking at the NBA today, it is easy to see that the game has gone through a major change since its inception in 1946. One such change has been the role that owners play in the game and for the cities whom their teams represent. It used to be that owners of NBA teams acquired teams to bring notoriety to their cities and to serve a sort-of civic service. A city that has an NBA team is always recognized as a major metropolitan city, and the the hometown pride that comes from winning a major sports championship can be as great as hosting an Olympic Games. Owners did not see their ownership in an NBA franchise as a source of profit, and rather saw it as an avenue to bring pride to their city, and pride to themselves by owning and operating another succesful enterprise. Essentially, they could make their money and profits from their original businesses, and the NBA team could be their hobby.

This is changing however, in an NBA market where owners are buying teams less for the will to win a championship, and more to use the team as a new investment to add to their portfolio. Donald Sterling, owner of the Los Angelous Clippers is one of these types of owners. One of the largest property holders and landlords in LA, he bought the Clippers for 12.7 million dollars in 1981. Since his acquisition of the Clippers, they have been the worst team in the NBA. The statistics are astonishing, “2008-09 marks the seventh time the Clippers have lost 60 games in a season and the 17th time they’ve lost 50 (they play 82 games a season)” and “The Clippers have reached the second round of the playoffs just once in that time, going 701-1,317 overall, for a .347 winning percentage that is easily the worst among the four major sports”. Sterling employs many cost cutting strategies like “declining to replace injured Clippers” and even had the Clippers playing in the “Los Angeles Sports Arena (they have since moved to Staples Center), a facility so outdated that the Lakers had abandoned it nearly 20 years earlier…even though the team averaged fewer than 8,500 fans per game in its first three years in LA — among the worst attendance in the league, the arena charged the Clippers just a few thousand dollars per game in leasing fees, making profitability easy”. With these cost cutting strategies, in the last nine years the Clippers have “made $140 million in profits”. Compare that with teams such as the Dallas Mavericks who try to win championships, and the Mavs have lost 137 million over the same period.

Sterling “runs a low-risk, sure-reward game” and this has been the trend in the NBA for a number of years. Just last year, the SuperSonics moved to Oklahoma City (a metropolitan city??) because they thought they could make bigger profits there than in Seattle, their home for over 40 years. Owners now see their ownership of teams as profitable investments, and now groups of people buy teams (such as Professional Basketball Club LLC, owners of the Oklahoma City team) to add it to their portfolios. Teams make cost-cutting moves that hurt their championship aspirations in order to save money and capital losses. This is just one of the many things that are currently being finnancialized by the NBA, but it is also one of the most major.

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