Everyday Life

The ‘bubble’ description of the price hikes is plausible because more and more aspects of capitalism in this neoliberal period are becoming ‘financialised’. Thus, in the major mercantile exchanges for grains, investment funds and hedge funds have joined agribusiness and food processing firms as the major buyers and sellers. They are involved in these markets not in order to make a profit out of selling the commodity or through using it to produce other commodities, but in selling the right to sell the commodity at some fixed price in the future. This motivation creates the conditions for a bubble to develop.  

Market is big pie which consist of all kind of the product as we all  know. When everything was financialised of course food market and agricultural business was not left out, after 3 decades of relative stability , food prices dramatically increased last 3 years. Between May 2007 and May 2008, corn prices increased by 46 percent, wheat by 80 percent, soybeans by 72 percent; rice by 75 percent. As of this prices increase 130 million people were add to people who are starving already. Shocking number is it ? And we are talking about basic need of the person. Shelter and food is what person needs to survive. Oil prices skywriting, which crated reason for the food prices to increase and it was predicted. Thru out the inflation we know things go up and not necessarily our salary goes up , and how can we offered just basic needs.  Even thought prices for the food were going up, we still have quotas for the production of the food , the following paragraph  shows shocking information , that I discovered about the food production.

In Europe as well, since the formation of the European Common Market, the possibility of food self-sufficiency was undermined, as the objective shaping agricultural production has been the maintenance of a profitable price structure, even though it is achieved through the destruction of much wealth. Building a highly profitable agricultural sector, in fact, has meant instituting quotas regulating what quantity of each product a member country is allowed to produce, and imposing stiff fines on those who exceed these measures. Depending on the country and the particular quotas assigned to it, dairy farmers have been paid to kill their ‘surplus’ cows, so their milk production would not exceed the limits prescribed, and have been fined when they did not comply, while other farmers have been forced to uproot fruit trees, destroy ‘surplus’ crops, and so forth….

And in some part of the world people are starving, and as we read in the above paragraph information  about how surplus is destroyed is hard to bare, it is the  truth that we need to face. We can take U.S as example too, in one part of the country it is all well, people earn good income and very little percentage of people are starving  and food is easy accessed, which almost creates so much waste  as an example we can take  New York. And I am sure there are states where people who are in very bad situation who are starving and have no home and shelter and no even just basic bread to feed their kids or themselves. Who control all this, why this can’t be divided in to equal part, all that waste could go to charities and to people who starve with in their own country. Maybe if some charity contest were created, people would have done a lot better job by trying to win. This is the following paragraph I thought was very interesting from the article.

Perfect storm’, however, is not the only description that obscures the social agents responsible for the sudden food price increases. For the crisis is also often depicted as a price ‘bubble’ driven by the irrational speculative activity of short sighted investors who are bidding up wheat, corn and rice futures far beyond their ‘true value’ in a desperate desire to wring every last bit of profit before the bubble bursts and the price collapses. The implication being that these investors are as caught up in the process as the people who do not have the money to pay for the corn flour to make their daily tortillas! So, according to this logic, if a market bubble is responsible for the death by hunger and malnutrition of millions, then nobody is to blame

Well investor can not keep themselves from any part of the market, so they had to create the bubble in food industry as well , and this is the paragraph that  talks about some sad points , which created food prices to go up. Maybe I am very cynical about the whole situation and from the business point of the view maybe this is right way to do business. However “FOOD MARKET” was not left out from the bubble.

As we discussed in class about crisis in U.S economy one of the scary and hard part of the reality we need to face is how most of the Americans got themselves in to housing bubble .The buyers believed their dream of owning a home could come true and entrepreneur got themselves in to this careers that were called mortgage broker, real states agent, real state builders and etc. Every 3-4 person was in mortgages, everyone wanted to have a piece of this quick easy money market. However bubble did explod and it is scary what is going on with the housing market in today’s U.S economy. As I read this article http://www.truthout.org/article/part-i-mortgage-crisis-triggers-walk-aways , it explains little bit about the situation in housing market, most of it talks about how people simple did think about losing their job at some point. They did not think about market collapsing and everyone depend on stability which is not always case with the economy. Economy’s circle always goes up and down, but we didn’t expect to be this bad.

          “To understand why the next phase of the nation’s housing crisis might mean financially troubled owners just give up and walk away from their homes, look no further than the winding roads and carefully tended lawns of the Piedmont subdivision in the once-booming exurbs of Washington.”

 

People just walking away giving up their American dream. The reasons for that  a lot of families miscalculated their household income. Consumer spent their 99.5% of the personal disposable income in the interest rate and  daily consumption .Life was good when economy was good in the U.S, but still many consumers took for granted credit cards and very little saving , to many unnesessary purchases also created some part of the problem that cause consumer debt which links with house payment as well, however the problem is a lot bigger. Most of us forgot to ask the important  questions from ourselves , before we dove in to housing bubble:

WHAT WILL HAPPEN IF I LOSE MY JOB, HOW WILL I PAY MY MORTGAGE, HOW WILL I SALE THE HOUSE I BOUGHT AS INVESTMENT IF HOUSING MARKET COLLAPSE?

These are the questions we forgot to answer before we got themselves in to this housing bubble.

            “She stirs her tea while leaning on a granite countertop in the gourmet kitchen of her Piedmont home, the one she and her husband can no longer afford, the one they’ve listed for three months now as a short sale: “When we moved in we thought we’d spend the rest of our lives here,” she said, pointing to the expansive rooms with gleaming wood floors.” I used to say, ‘I love our house. It’s so wonderful. We’re going to live here forever.”’ Now I just say, ‘God, I hate this place. I just want to get out of here.'”

 

                How sad is reading these story over and over , I can not stop thinking where this people will live ? what will happen to all this people who have no jobs, who can afford home and with their kids , where will they go ? Is it to late how can we undue situation  in U.S economy ?

I found this article in New York Times when I researched about AIG bail out and its consequences, and lack of regulation over non-bank institutions. The article is called “Geithner Seeks Broader Powers Over Financial Firms” . As we may know that companies such as AIG or Lehman Brothers are very low regulated even I would say don’t regulated. These companies can do what they want with money and than as we see can be bailed out by government. But who is taking a price for that? Whose money comes it from? Of course ours, taxpayers.

“(…) Financial crises like those caused by the recklessness of A.I.G. “contains a basic and tragic unfairness – that those who were prudent and responsible in their personal and professional judgments are harmed by the actions of those who were less careful and less prudent.”

People’s hard earn money were lost because someone – kind of smart investors – made wrong choice based on what they will get from it which is money. Why government didn’t stop them when there was time to do it? Now, because of lack of control of these institutions we, honest people, are harm. Executives from AIG got bonuses from bail out for good work. It doesn’t make sense for me to give company money to recover it losses and save economy. However, this company instead used it to pay executives who get it in this bad situation.

“(…) the government been able to assume control of AIG in that fashion there never would have been seven-figure bonuses paid to executives, a total of about $165 million over all, even while the company was receiving some $170 billion in government backing.”

Nevertheless, government got these information and asked AIG executives to return money given from bail out. Who is going to give money back? That is so funny. Government should more control AIG’s actions and use of money. It should send someone inside the company and check how money is going to help to get out from foreseen bankruptcy. “The government now owns almost 80 percent of AIG.” Does it make sense how much it owns? I believe that AIG will not pay back so huge amount. In the future, the ones that will lose will be government and taxpayers. I learned that rich people get more money and hard workers lose their jobs and get poorer.

This is a very interesting article that I read in the Washington Post. The article is written by Derek Kravitz and it highlights the measures that homeowners whose houses have been foreclosed take to resist leaving. As we discussed in class last week, the mortgage crisis is very severe and it is devastatingly affecting the live of many. Last week we focused on how many people commit suicide because they are unable to pay their mortgages. However the people that are discussed in this article do not turn to such extreme measures by killing themselves. Instead they feel that these houses are theirs and it is their right to live there regardless of what the banks or police say. Therefore when their houses are foreclosed they protest to leave and at times they do some things that are unthinkable or at some times literally gross. Kravitz states that

One former homeowner rigged his front door with coffeepots filled with boiling water. Another left pile of ferret feces. Hidden compartments have been used as living spaces, with people hiding in attics, tool sheds and garages to elude police.

I understand the plight of these people. They have worked hard to achieve the American dream of home ownership. It definitely is not easy to let go of their investment, regardless of what anyone says. The people who are doing this is not necessarily the working class America who were working from pay check to pay check and suddenly lost their jobs which was their only means of survival. This is also affecting Middle class America.

In the D.C. suburbs, a new class of squatter has emerged, as people illegally remain in homes after they have lost them to the bank. Some have become aggressive in their efforts to stay, setting booby traps to ward off police.

Many people may ask why these people so resistant. Can’t they just leave and rent somewhere. Yet we tend to forget that to rent somewhere cost money. Most of these people are broke and jobless. They used what little savings that they had to pay their mortgage. Their retirement plan money that they could have used to sustain them is all lost in the stock market. Their unemployment benefit may have run out or it is just not enough to sustain them and their family. Therefore they are facing a dilemma of being homeless on the streets or squatting at a place that they once called home. This is an extremely sad predicament to be in.

A national survey released last month showing the impact of widespread foreclosures found that an estimated 42 percent of those who have lost their homes in the housing crisis now have no fixed address. A large number of the cases involve families who have lost their homes and struggled to transition into rental units that they also cannot afford. 

This statistic is alarming. This is almost half of the people whose houses have been foreclosed. This is clear that sometimes rent is not an option simply because some people cannot afford to pay rent.

Squatting has long been a barometer of economic health in urban areas.

This situation is a clear remainder of the great depression and how squatting had become a way of life. I am starting to wonder how far we are now from normalizing squatting. I am also wondering how unhealthy the economy is?  Are we still in a recession or is this a depression? I guess the economic experts will inform us of that soon.

This is the link to read this article in its entirety.

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/02/AR2009050202150.html

This is a very interesting article that I read in the Washington Post. It is about how people are obsessed with credit cards. As we discussed in class credit cards are so easily accessible and being a credit card holder gives us a sense of freedom to shop. However, a lot of us are living in a sense of false consciousness and need to realize that credit cards do not give you the freedom to shop. Instead it enables us to be in debt easier.  Phillip Arlington in this article enlightens us that

If you truly want to spring clean your life, it’s time to ditch your credit cards. We all know that plastic pseudo-currency tempts us to buy almost anything today and repay next month, next year or even next decade. And we know that a card’s interest and fees can dwarf the original price of whatever toy, bauble, event or shroud that we or — heaven help us — our kids purchase

I totally agree with Arlington some people view credit cards as cash. They are oblivious to the fact that credit cards are like loans. They go out and buy everything under the sun and do not think about how or when they are going to pay their credit card bills. Arlington also makes a point that a lot of us tend to ignore. He states that

The worst aspect of credit cards, though, is psychological. When you can immediately have almost any consumer good you want, you wind up not appreciating much of anything. You frequently tell yourself, with a prod from advertisers, that “I’m worth it.” You pay for something with plastic, and then, before the bill arrives, it’s off to the next shiny distraction, payable of course with Visa or MasterCard. You end up with more stuff, more debt, and less satisfaction with any one item.

This statement is absolutely true.  Some people tend to “shop until they drop” because they think that they are worth it. They buy things that they do not need all because they have a credit card at their disposal. Their homes are filled with boxes of goods that serve no purpose, things that they will never use. If someone enters their homes they would think that they are in a warehouse. Since their homes are lined with unused goods. A lot of online shoppers are guilty of this.

Credit cards were once not that easily accessible. Credit cards holders were once people who had good credit ratings and who could prove that they could and have the financial resources to make their monthly payments. People who did not have a credit card had to save their money to purchase things that they wanted. As Arlington states

Contrast today’s attitude with the ancient 1950s through 1970s, when kids and adults actually had to save money before buying something. If you were a kid, you’d do yard work, save your earnings and then buy that bike of your dreams. Sure, it took time, but you had an emblem of your labors and a reason to actually take care of the thing.

Therefore this was a huge accomplishment when you purchase something. You felt a sense of pride and you saw the benefits of your labor. Unlike today a purchase is just a swipe away. Therefore a lot of people are less attached to the goods that they purchase and tend to care less for them. There is a less sense of ownership. When a purchase is made, most people are thinking about what they can buy next. They are not thinking about the hard work that they need to invest to try to decrease their credit card bills.

 Most people need to wake up a face reality and be cognizant of the fact that credit cards are not free money. It increases your debt and often times with all the hidden fees and interest attached you will end up paying a lot more money than if a purchase was made with cash. Arlington supports this point. He states that

Studies show that people spend more if they “pay” with a credit card instead of the cold-water-in-the-face reality of actual cash. Yet it is this reality that we sorely need, to put not just our finances in order but also our attitudes toward consumption. After all, you’re worth it.

I do agree with Arlington we definitely need to put our finances in order. We definitely need to spring clean our finances.  Do not be fooled by all these credit cards companies. You don’t need five or six credit cards. If you can’t avoid having a credit card, one or two should be sufficient. If you take out a credit card read all the fine prints. Make sure you pay your credit card bills on time. As the credit card companies are like predators. They ply on people who are less likely to pay their credit card bills on time because these are the people who maximize their profits.

As we have talked about in class many times before, capitalists in a capitalist country try their hardest to squeeze what they can out of their workers as they are the ones who turn supplies into goods.Their exploitation is one of the single worst aspects of capitalism and in Romania some foreign workers finally took a stand. In the Phillipines, 95 textile workers had a contractual agreement to “a basic wage of 400 US Dollars, 100 percent bonus for over-time and free accommodation and food” to work in Romania. Because of this agreement, these same workers took out loans back in Manila to pay for the travel fees and the agency who found them the job in the amount of 2500 USD. Once they arrived in Romania however, Mondostar, the company that had hired them forced the workers to “sign a second contract…to undermine the previous contractual agreement, to squeeze out a maximum labour performance and to lower their own expenses”. The new agreement called for a 60 hour work week paying 235 US dollars a month, and 165 of which would be deducted for food and accommodation. This is the absurdity of capitalist principles, as making a profit and cutting expenditures was far more important for Mondostar than keeping their business integrity and ethics. However, the workers plight was not over as they could only stay in Romania if they kept their job at Mondostar, and now they had incurred massive debts back home in the Phillipines because they had taken out the loans. Their complaints at the Phillipine embassy caused Mondostar to not be able to hire any more foreign workers and 78 of the workers eventually quit 5 months after their hiring. It’s crazy to think about capitalism screwing so many people, but it does on a day-to-day basis. I think maybe with correct legislation and workers rights, capitalism would still tend to do the same because the overall goal is to maximize profit at any cost. But in Romania? A third world country can never have that type of protection for their workers, and that is why capitalism hurts so many people. When you lessen trade barriers and open up economies and make everything a competition, ethics and integrity are thrown out the window.

http://sites.google.com/site/radicalperspectivesonthecrisis/struggles/wildcatreportoncrisisromania

This is an academic article i read while doing research for my paper, which deals with the commodification of education, and how education today has been increasingly standardized similar to other commodities in economic markets. Author Mary Kupiec Cayton, shows how education has essentially entered the global market and has been standardized to a point where it is given a value measurable by how this “good” is produced, and sold.

“Today services, too, can be commodities, and whatever else education may be, in economic terms it is a service. Standardization has come later to higher education than to other commodities markets, but it has arrived. As with other commodities, unit cost matters, as do how “goods” are produced, measured, and sold”.

While education has in previous generations has never been thought of or viewed as a major commodity  especially in economic terms, it has slowly entered this competitive global market where it is given market value. Because of this, the value of education isnt just valued by the degree itself that is attained, but also by the the ways in which that degree was attained, how it was offered, and where.

“Regulation of goods and services comes both from free trade and from government intervention, and in higher education these days, we are seeing both. For example, many for-profit universities are driving down the cost of instruction by outsourcing it to part-time workers, often with lesser qualifications than those of faculty members at more traditional four-year degree-granting institutions. In so doing, those universities are forcing a reconsideration everywhere of how to cut labor costs in order to compete. At the level of government intervention, my own state, Ohio, has developed an articulation-and-transfer policy for postsecondary institutions that guarantees the ability of credits for certain courses — for instance, U. S. history surveys — to transfer between institutions and apply directly to the major at any public postsecondary institution in the state”.

A major issue is raised here and that is the ways in which Universities have begun to financialize the ways in which they operate. Many colleges are seeking to improve profits and their “bottom line” by outsourcing teaching to other less qualified individuals. This is just one of the many profit seeking practices put into place by these institutions in order to “compete” with one another as in any competitive global market. You even have local and state government (gov’t intervention) that play a pivotal role in the ways in which colleges operate by helping establish policies that affect the ways in which credits are transffered and so on. This regulatory practice is greatly affecting the functionality of education and in effect jeopardizing the level of education available.

“The history of consumerism and commodities further suggests that as a mass market develops for certain goods and services, a luxury market often develops alongside it. The well-to-do seek out and consume scarce goods and services with which status becomes associated, and as those goods enter the mass market, the elite move on to identify new status-oriented consumables. For example, in Europe, for much of the 17th century, when coffee became popular as an exotic beverage, it was the drink of the rich. After a time, what once was a luxury became a staple of the masses”.

 “Have we arrived at a point in higher education where we will see increasing divergence between degrees meant for the masses and those for the elites? How will a Wal-Mart-type degree (“Always low prices”) differ from high-end products with status value à la Lord & Taylor (“The Signature of American Style”) and those targeted, Macy’s-like, to folks in the middle (“Way to Shop!”)?”

And this is one of the major problems that is beginning to take affect. There has slowly begun to take place a division of higher education among the public and private institutions, where the quality of educaton isnt necessarily the same and neither is that degree that you would eventually attain.  This “luxury” market developing among the private institutions is a perfect example of the elitism that is shaping education in this day and age. Individuals attaining degrees from such universities will unjustifiably in my opinion, be viewed in a much higher regard not just in society, but more importantly in the competitive job markets. They will be put “ahead of the line” when applying to jobs and drastically affect the value of education from public institutions.

Will this trend ever end? I personally dont think so. I think this is just the beginning especially with increasing tuitions. College is becoming less affordable, so more and more individuals will turn to these public and community colleges that offer “education for the masses”. The only individuals that would benefit from this are the upper class and elitist who can afford to attend top private institutions and continue to have a leg up on everyone else.

I just read the article Risk, Reward, Steroids Inside a Tempting World of Easy Steroids by Michael S. Schmidt on NewYorkTimes.com it explained that over the past decade the use of performance enhancing drugs has become known to the public.  This illegal practice has been going on inside major league baseball for longer than any fan or writer can speculate.  Steroids had been banned since 1991 but there was nothing the league could do to enforce these rules until 2003.  Even after punishments had been set and implemented on some, players like all-star third baseman Troy Glaus and pitcher Scott Schoeneweis still proceeded to inject the banned substances

“Even after Major League Baseball and its players union bowed to pressure and started a testing program in 2003, the All-Star third baseman — Troy Glaus of the Anaheim Angels — and the worn-down pitcher — his teammate Scott Schoeneweis — said they continued using steroids…Glaus said he was “willing to take the risk” because he needed to play, according to a report written by the federal agent who interviewed him.”

These players began taking steroids not to become the best player to ever play the game but, instead to heal quicker to make a living for their families.  Major league baseball has been a complete victim of financialization, with these new billion dollar stadiums that have advertisements in every corner of the stadium.  Players started taking steroids because many players numbers were being inflated by players who were using steroids.  Therefore to keep up, many more began to follow so they could produce numbers which in actuality turned into a big contract.

The scariest part of this whole entire ordeal is that most of these cheaters were not to sure what they were actually putting into their bodies

“Frustrated with his rehabilitation, Glaus contacted Scruggs, whose only request was for a blood sample to see whether Glaus’s testosterone levels were low enough to warrant a prescription for steroids. Medical files seized from Scruggs’s office show the steroids were sent before Scruggs reviewed Glaus’s blood test.

Asked by the investigators whether he was concerned that Scruggs did not ask to see him, Glaus was quoted in the report as saying: “I just wanted to get better, it didn’t alarm me. I just wanted to get better and play.”

To play at the level that he needed to Glaus risked everything but all Glaus cared about was getting better to play the game he loved.  This should never be the case for America’s past time, these are men who love the game cheating and tainting the game that so many other’s truly love.  From my perspective I don’t ever seeing Major League baseball ever becoming definancialized.  There is way to much money to be made in the industry.  I do see the use of illegally band substances being used at a much lower rate in the upcoming decade from its predecessor.

The URL ishttp://www.nytimes.com/2009/04/12/sports/baseball/12steroids.html?scp=1&sq=reason%20players%20took%20steroids&st=cse

I have just read, Dean Baker: How to End Corruption in the Drug Industry by Yves Smith, an article from Naked Capitalism.  The article raises many of the big issues within the Pharma market, particularly within research.  It then suggest some solutions that arguably can fix this corruption.  Overall, the problems it sites are rather obvious issues within the industry that would make any reader a little hesitant before trusting their doctors prescription.  On the other hand, I personally do not see the solution to be as clear cut as she implies.

The main issue brought up with Pharma’s research methods is that

“most of their so-called research is on ‘new drug applications.'”

Basically most of the research done nowadays is not to discover new drugs that are needed to cure illnesses; rather they Pharmas spend the majority of their research budget on finding other uses for thier drugs so that they can be marketed for these new uses, essentially attempting to gain an edge of the generics when the patents run out.  Clearly this is a problem.  The research branch of a pharma company like Pfizer should not be used as an extension of marketing.   Medical research is meant to be for finding cures for increasingly more prominent and more dangerous diseases, or at least that was my understanding.  It is not meant to create new “talking points” for industry salesmen.  This point, I believe, shows the transformation of what was once productive labor, the advent of new drugs that have the promise of alleviating symptons or  possibly curing an ailment, into unproductive labor, the creation of new marketablity.

Another problem within Pharma research is that the testing done on a specific drug is done by the company itself, “who has a direct material stake in their outcome.”  This is indubitably a conflict of interest.  Some of the negative effects of this are

“concealing test results that show drugs to be harmful or ineffective, payoffs to researchers for publishing favorable articles in professional journals, bribing doctors to prescribe certain drugs.”

A way that she suggests these problems can be eliminated is by having exclusively government funded research.  By moving the sponsorship into the public sphere, first and foremost, it can be insured that there will be no alternative motives for a drug to enter into the market.  The government would pay for the research by

“appropriating a sum of money approximately equal to what the industry now spends on clinical trials (around $20bn a year). It can then arrange long-term contracts (10-12 years) with independent testing firms, who would then decide which drugs to test. Renewal and expansion of the contracts would depend on the effectiveness of the contractor in finding and testing new drugs and preventing unsafe drugs from coming to market.”

There would also be full disclosure of the research, publishing everything online, accessible to all. This would in theory work the same way the press should, giving independant researches the ability to check the government’s work and therefore making the government research accountable to the public.  With methods like this and strict regulations, the belief is that prices will be forced to become lower, making persciption drugs more affordable and more widely accessible as well as more acurately match their cost of production.

Personally one of the biggest flaws in this theory is that too much power is awarded to the government.  This I believe is seen through the example of George Bush and stem cell research.  The Government already sponsers some medical research, but only the type of research it believes is proper and ethical.  Because of this America is now 8 years behind the world in stem cell research because President Bush decided that it was not moral to conduct such studies.  By giving the government complete power in deciding what should be researched and how much money to alot to a given product, it is possible that there will be less corruption in the development and marketing of a certain drug but is also possible that the country will only be ingaging in selective research and cut itself off from crucial medical advances.