Wednesday, July 27, 2011

Money vs. Capital

"Money well-timed and well applied can do anything." -- the 'thief taker' Peachum in The Beggar's Opera, by John Gay

I begin with a very simple and quite unoriginal question. Why are there so many grand, empty houses for sale?
As I said, this is not an original question. We can take this basic question and treat it as a symbol (?). Now, we can add another entirely unoriginal question: Why are house prices falling to three quarters (and dropping 25% per year) or even a half of their purchase prices? Let us treat that as question #2, or (?1). Finally, let us add in the third, extremely important, consuming question: What are we doing with the 20% of our people who are unemployed and facing Republican ruthlessness, who can hardly afford rents? Let's call that (?0), because it is actually the question that occurred chronologically prior to the others.

So, let's leave aside the principle question of why the U.S. economy is not hiring people anymore. I know why, and it has absolutely nothing to do with tax rates. Banks are not making short term loans, for reasons they must answer, and short term lending creates inventory, and inventory creates production. Small loans are business loans, too, and those are not coming, so the "job creators" don't exist. Actual job creation comes, when corporations fail to hire, from artisanal and small market groups supplying what the corporations will not and rising, but, if no one will lend.... Let's leave that aside, though, because I could be wrong. We could have joblessness simply because corporations pay too much tax.

Instead, let's think about those empty houses, row upon row of them, little patches of them snaking through the woods where subdivisions and suburban protection were once planned. In London, they had a problem like this in the Thatcher years, and the response of the unemployed was to start a squatter movement. Brits now look upon it with some admiration, as a goodly number of artists and intellectuals were associated with it (artist and intellectual being traditionally low-paying jobs), so if you prefer a radio history, here is one. Such attempts in the United States, where property rights are, we are told, the basis of the Declaration of Independence and the U. S. Constitution, are typically met a mite ... violently. No one would be foolhardy enough to try it.

Therefore, we are left with mute, rotting clapboard constructions staring at mounds of dirt.

Suppose a house were bought at the high market for $200,000. (I know! In 2007, $200,000 barely got a basement, much less a house.) Now, MBWF lends the young marrieds an adjustable rate mortgage for $185,000, because they used grants and other methods to put down a good plunk. The bank has now paid the builder. The builder already paid the contractors, or is about to. The real estate agent has run to the bank with her check. Money has changed hands. The bank now gave out $185,000 real. They did this because they have a 20 year loan and have the couple on the hook for a completely insane amount. Why, the first year, they'll get 1% interest on the payments (185000/(12*20)+((185000/(12*20)*0.01) or $770.84+7.71 for the twelve months and, tee-hee, 8% the next year, 9% the year after, and 18% for the rest of the time. Oh, the profits they will make!

You know what happens, I'm sure.
For some strange reason, the married couple did not experience increases in profits equal to those the bank had planned for itself. Astonishing, that. Now, we can blame the couple, of course. Regardless, let us look, amorally, at what happens next. The couple falls behind for three months, and then they either run from their mortgage or they get the repossession.

Congratulations, bank! You have the house. Now what?

Given the explosion in repossessed houses, the bank cannot sell these "distressed properties," and the prices fall. Instead of getting the imagined profit of all that lovely interest, the bank has a house for sale for a year, then two years, and then three years or more. While the house is waiting to sell for three years, it is getting no prettier, and its neighbors are looking no better.


I'm serious. Why is it in the bank's interest to repossess a house at all? If they do repossess a house, why is it in their interest to sell it? How is it better for the bank to recover $0 of the $185,000 because they were unable to gain the $1,100 a month they demanded? How is it better for them to say, "Because we did not get all the profit we want, we will get none of the money back?" How is it better for a bank to say, "No, no. We demand that adjustable rate, or you're kicked out, you evil poor people. We don't care if you can still pay the original rate and give us back all the money?"

I couldn't understand this. I could not understand why banks didn't hire real estate companies to manage their "distressed properties" and rent the danged things so that they could get the money back. It makes no sense to a human being.

It makes sense, though, to an MBA. It makes sense if this is what you learn:

Yes. Now you see it. When the bank loaned that $185,000, it wrote down the whole thing as one transaction. It wrote down the profits of $45,000 or so it expected along with the debit of $185,000, and then, when the couple failed, the exchange failed, because the bankers were dealing not with people, but with capital.

You and I spend money. They move capital. Capital is never so grubby as to be material. It is consensual, mathematical, transactional, and powerful, while money is only one of those. The bank passed the "bad loan" onto its underwriter, or it didn't, and after enough time of letting the house sit vacant, they could "write down" or "write off" the loss.

Poof! The whole terrible mess has now gone away, so far as the bank is concerned. Lesson learned: don't lend money, when you can invest capital.

You and me? Well, we squat in the dirt and wonder why.

Monday, July 11, 2011

OJ-KC: What Trials of the Century Do

The trial of the century happens every few years. We are stunned, aghast, a-riot, that the vile monster, guilty of such detailed crime and giving such explicit horror, in the face of so many angry commentators, was let go, scot-free. I recall the O.J. Simpson trial, and the unfairness, the racism (as the radio told us), that resulted in his getting away with his graphic crime, and now Casey Anthony has gotten away with an equally foul murder. We saw them do it, after all, and those jurors must be racist or stupid to come to any conclusion other than the television's.

If you think my tone betrays me and sounds cynical, you are right that my attitude is ironic, but not that it's cynicism. Consider the history of trials of the century. Trials of the century are a genre.

It may not seem germane, but it is worth remembering that nothing drew a crowd in the good old days of Merry Olde England or Ye Wilde West like a public hanging. The earliest novels arose partly out of journalism. Daniel Defoe's Moll Flanders and Roxana were imitations of the sorts of work that he did as a journalist. A sure top seller would be 'Captain Johnson's' “The General History of Pyrates” or The Lives of the Most Notorious Gamblers (1699, Charles Cotton, reprinted in books) or the “Life” of a master criminal recently hung. The public has always liked true crime, and true trial and punishment. The virtue of the criminal biography was that the criminal ended badly.

The first television Trial of the Century that I can remember was Watergate. In fact, I can say that my politics were considerably formed by watching the Watergate hearings. I saw them every day, as my mother, then in her 30's, watched obsessively and kept precise track of what had been said and done by whom. Television ratings were enormous. The effect on America was even bigger. It gave us a hero of John Dean, and it showed us “rat f*ckers” and other low lifes. I was ten and bright, and my eyes were opening to what some people would do and how some folks would fight back. I did not make party distinction at ten. I made honest/dishonest distinctions.

However, O.J. was a new thing under the sun. It began happening around this same time of year, curiously enough, and it played out until the fall. In other words, it took place when students could be home watching it and when it was “slow news.” The 24 hour cable saw ratings booms of tearful, incontinence-causing proportions. The whole nation (and statistically most of that nation did not care about the football player OJ and even less of it cared about the actor OJ) was brought into this dichotomy of either the Everyman African American who made good and the racist cops of LA or the viciously jealous murderer who was going to play “the race card” to get away with murder.

After OJ, the cable news tried to give us others. Lord knows they wanted to have another trial of the century. Winona? Lindsay? Each celebrity gone bad, all the way down to Amy Winehouse, was going to recapture that old O.J. magic. (Television executives, I am told, think in demographics and categories. They won't notice that no one really cares much about Lindsay or that shoplifting is too grubby and ordinary for a Trial of the Century. They're thinking only celebrity + crime + cameras.)

Casey Anthony has happened in summer, in prime coverage. The cable news has had nothing else to report, because they don't want to report on the budget impasse, the Republicans refuse to give them a leader to cover twenty-four hours a day, and the world is expensive (South Sudan would mean flying someone there!), but this comes with a feed, and it comes with details, and it can be made to last all day. From the point of view of “Trial of the Century,” it has worked nearly as well as the Lindbergh baby and the trial of Bruno Hauptmann.

First, it is an “obviously guilty” case, so far as the spectator is concerned. It is obscene. It is agonizing in detail. It has outlandish personalities. The verdict is an outrage, or at least a furore.

Let's be clear: the guilt or innocence of Casey Anthony is like that of O.J. Simpson: a matter of law, not opinion. “Guilty” and “Not guilty” are legal verdicts, not spiritual states; the terms only have meaning inside a court room. Both individuals are “not guilty” of murder, although one is “liable” for murder. I will not take a stance on whether I think the individuals committed the crimes or not, because I do not know. I saw snatches of television, and, like all of those who did, I got the strong impression that both individuals killed a loved one, but I also have learned from a long life that what I did not see might be staggering, that what was not said could be definitive, and that drawing conclusions from television is dangerous. I do not want to talk about the real or imagined deeds; I want to talk about the function of the Trial of the Century and the way it is supposed to work.

So, let's look at a pretty picture and then go on, ok?

I know this is long and academical, but below this, I'll discuss what seems to be the master narrative of the Trial of the Century and why American jurisprudence is necessarily ill fitted to it.

(Above is a gibbet)

What is the most popular type [warning for Linux users: that last link nearly choked my Ubuntu box] of television show in prime time? We may say “reality television,” but that encompasses everything from the contest to the freak out to the freakish documentary. In general, other than “American Idol,” and its Topo Gigio-like dopplegangers, the most popular type of show is the police procedural. Last year, "reality" contest shows were nine of the top twenty shows, and cop shows were five.

It is possible to turn on the cable or satellite television in a major city and watch murder from breakfast to breakfast. One can go through the full industry that is Dick Wolf enterprises – “Law and Order” this and that. One can see the real squad that handles sex crimes on HBO (and they're quite interesting for being -plunkplunk!- not dramatic, but rather professional). One can go over to “NCIS (another noisy link)” for six hours on USA. One can see “Bones,” with its gore, and then there are the Bruckheimer gross-out shows where coroners and crime scene investigators combine “Fear Factor” with “Miami Vice” to show us every bit of prosthetic goo possible. In a day, a television viewer can observe numerous rapes, child molestations, dozens of dead bodies in bushes, lots of decayed corpses in unlikely or impossible places, and, of course, learn that every jogger or dog walker in New York City will find at least one corpse and that one in every fifty people partying to techno at a club will fall over dead from mysterious causes.

Obviously, the people like the procedural. My thesis is that the Trial of the Century is the police procedural writ large (very large), but, because of the function the trial is supposed to fulfill, it faces a dilemma and must either fail as a trial or fail as a social function. The Trial of the Century offers a juxtaposition of generic expectation with wretched reality and evokes rage for that reason.

To explain what I mean, I need to establish some things about detective work as a functional fiction.

What is the functional value of the detective?

The detective is a social physician. In any crime story, the world's social order opens in working order, where the rich are rich, the preppy have nice lives, and the honest workers get by. Into this world of expectations and rewards, an element of chaos enters in the form of the criminal. The criminal offers two forms of chaos.

The most important and first chaos the criminal offers is by his or her absence. It is the not knowing who did it that drives the first frenzy. Because the effects of the challenge are present (a bank robbery, a dead body, a stolen car), but not the narrative surrounding the event, the criminal's absence threatens the smooth operation of the world. We do not know why the man is dead, because the vengeful mistress is in hiding, and the longer she remains hidden, the more upset, literally, the world is. So long as no criminal is present, all criminals are present potentially. (I.e. until we find the ex-athlete with jealousy, the knife wielding killer of blonds could be anywhere.)

When killers are caught, we frequently say, "Getting revenge won't bring Buster back." From the point of view of the actual damage done to society, the criminal's identification is not materially important (the crime won't be undone) as much as it is psychically and socially important.

Second, the criminal's actions disturb our social promise. We promise one another that we allow overbearing police so that we can be safe, and we tolerate the rich, the greedy, the selfish, because we assume that an hierarchy functions. The function forgives the pain of daily life (the rich man's contumely, as Hamlet says). A criminal rejects social commands. The criminal reminds us of the beast, suggests that our neighbors might be insane or evil, and offers us the idea that society might be a cheat after all. Instead of feeling enraged, this makes the average person feel afraid, because, the tough talk of libertarians aside, few people are either prepared for or willing to go hand to hand with the whole world.

The detective is therefore a figure who heals society. The procedural is a particular form of the detective fiction in that it offers us a method and a safety in seeing the method at work. “CSI: Mayberry” reassures us that Otis the drunk will never get away with it, because Science is stronger than the man (link should be read by those who believe too much in CSI). “Law and Order: SUV” lets us know that the detectives are not blasé. They are furious. They are going to overact and throttle their way to a conclusion in twenty-two minutes, but, of course, the defense attorney will get all the evidence thrown out on a “technicality” that some liberal invented, and the brilliant prosecutors will win in the end and give us justice.

The procedural thus lends Society with a majiscule a role as the detective. It assures us that there are things to fix about society, but also that all the dangers that exist anterior to the system (madness, jealousy, hatred, as the crimes investigated tend always to be things that can be related to "bad man" rather than "disequilibrium in the system") can be balanced.

In detective fiction and the film noir, in contrast to the procedural, detectives are themselves transgressive figures. A goodly number of detective novels, insist on quirky, even illegal or amoral, detectives. These figures challenge the social order and heal it by breaking it. Their first job is to disorder the usual social flow so as to get to the truth, because the authors feel that the process (the very one television loves) obscures truth, so Philip Marlow and Lisbeth have to break the laws, offend the rich, and stamp on some toes.

At the end of a detective novel, the oddball detective usually isn't rich, usually isn't rewarded much, and the truth has been detected, but not often with the effect of improving the world (e.g. “Chinatown”). (Inherent Vice is an interesting goof on genre. Pynchon's detective learns little and immediately forgets it.)

Trial of the Century, the script
I referred, before, to the Lindbergh baby and Bruno Hauptmann. Hauptmann was almost certainly innocent, but he was executed. That trial followed after Sacco and Vanzetti, and later there would be Leopold and Loeb. In all of these cases, the newspapers presented the prosecution's case. Why?

Essentially, the television today, like the newspaper then, got customers by getting lurid details, and the prosecution has them. The person mounting a defense has nothing to offer. “I have an exclusive for you about my client sitting at home that day” won't cause a run at the newspaper box or sustain :45 of pundit plaudits. The defense is mounting a case of “not.” The prosecution gives facts that recreate the primary anxiety of crime (the missing criminal) by repeating (“Someone did this”) and offers relief in the form of circumstances (“Defendant said this, but this was true”). The combination writes copy, compels the anchors emotionally, addicts the viewers, and, honestly, works upon our primal selves. Prosecution always has an advantage in a Trial of the Century, no matter how restrained it is, because simply providing the details of the crime and giving the mere name of the suspect is sufficient for our needs to put the two together.

In a Trial of the Century, the public gets to participate in a procedural. The reader of the Daily Paper gets to assemble all the facts, just like the detective, and gets to achieve the greatest of psychological triumphs: healing the fear. The fear crime presents is that any and all of us can be next, and we turn to detective shows because we get to have faith in a world that works, but what we really would want is the chance to solve it ourselves, to be the agent of healing. (The number of amateur detectives trying to solve Zodiac is staggering.) The detailed coverage offers each of us the chance to star in the show.

We can see, I think, that the outrage the public is feeling today is programmed into the very process.

Why the world is angry: Justice and Poetic Justice
Aristotle, in Poetics, said that fiction is better than history, because history only tells us what happened, where fiction tells us what should or must occur. He meant that fiction tells us what should occur, morally, or what must occur, logically. A real king going into battle might yell, “This way!” Shakespeare has him give an inspiring speech about the emerald isle and happy few and into the breech, because Kings should talk that way.

Fictional justice, and we are swimming in it, sets us up the character and follows through with the logic of the character, or with an acceptable amount of curve. In reality, the evil flourish and the good die by the hundreds of thousands.

Real justice relies on juries and judges' instructions to the jury. Real justice has jurors who may be a bit dim. Real justice is what we really have. Sometimes real justice is smarter than fictional justice. Either way, it is real, and the Trial of the Century demands that it be otherwise.

Our Trials of the Century have been best for public interest when they have been most psychologically fearful, most primal, most vicious. Lindsay Winehouse's drugs won't do much, but the graphic case of Othello-scripted jealousy or Medea-like infanticide demands the tragic or epic conclusion. In addition, when the television or newspaper create the beast, it has conditioned into prosecution material, an internal interest in fear, an existential threat to the family structure of America, and thus a need for a guilty criminal for the hanging that will heal that threat.

Real trials can't be trails of the century, unless we want more Sacco and Vanzettis, more Goldbergs, more Hauptmanns.

Monday, July 04, 2011

Are You Tough Enough, Strong Enough, Fit Enough?

Blake: We're adding a little something to this month's sales contest. As you all know, first prize is a Cadillac Eldorado. Anybody want to see second prize?
[Holds up prize]
Blake: Second prize is a set of steak knives. Third prize is you're fired.
from "Glengarry Glen Ross" 1992, found at IMDB
A show of hands: who here was shocked when David Mamet announced that he was a conservative? The man who celebrated strong men preying on weak women, womenly men, and scorning mercy is a conservative? Nooooo, really? What's more, his "conservative" views are remarkably like his characters: Nietzschean humping of the muscled up thigh of the leather glove that slaps, the boot that stamps, and the lip that sneers. Whoopie. Mistress Roxana might help him with his problem without his needing to inflict it on the world.

Mamet has a claim to an American vision, a claim given to him by theater critics who noticed in his abusive, abrasive, and humiliating works an accurate mirror to the world America had become, first in the home (apparently, theater critics have alcoholic fathers) and then in sexual and office politics. The common theme is that America is about competing, and everyone is competing, whether they know it or not, and the strong will not merely triumph over the weak, but they will degrade and punish them, too.

You can tell from my tone, can't you, that I disagree?

I don't want to give it away too much, but, gosh, I'm not sure I can keep it in much longer. The Ayn Randian vision (Nietzsche misunderstood for America) that each superior person must take what is necessary and that compassion is a slave quality is anti-Christian. Rand herself made the point openly. Mamet's expressed vision was beyond her, though, because his strong men were not John Galt as much as John Gotti. (Of course, I rather think that John Galt is John Gotti.) Nevertheless, as countless articles have suddenly realized and you and I have known all along, there is a truth to the observation that the world sure seems to be acting like one of those plays.

Part of this is that it only takes one jackass to dominate the soundscape and convince the farmer that the entire corral of horses is filled with asses. One really determined sociopath can trigger defensive and offensive reactions, and so it just doesn't take much. (I wrote, somewhere, about the person galloping down the hall being a jerk and the rest ducking out of the way, but I can't find the post. I may have deleted it as being obviously about a co-worker.) Then again, our corporate structures have seen no reason not to hold a carpet knife to the collective carotid artery, so there is fear enough for all.

"It is not the strongest of the species that survives, nor the most intelligent; it is the one that is most adaptable to change." - Charles Darwin
We are in competition, constant competition, in the American system, and it is "survival of the fittest." Since Americans know that "fitness means being physically fit," it follows that our society should favor and honor the most athletic, the most intelligent, and the most speedy. They are the fittest. Never mind what you just read. Darwin meant, we're convinced, what we think he meant, even though he never said it nor intended it.

This is the heart of the Nietzschean and Objectivist myth, after all: we will have the greater person by having the best person who will be the fittest person, whether we measure fitness by will or power. The fact that Darwin argued that the best was the most adaptable to the changing circumstances, that Odysseus (the crafty) is better than Ajax (strongest of warriors), just couldn't get through those prejudiced skulls.

We should be thinking about who's creative, who's malleable, who's quick to modify, but we instead worry always.

"... there are so many fools placed in heights of which they are unworthy, that he who cannot restrain his contempt or indignation at the sight will be too often quarrelling with the disposal of things to relish that share which is allotted to himself." --Henry Mackenzie, The Man of Feeling.

Are you the right one? Will you keep your job through the year? When you go to the interview, will your looks be adequate? When you go to the dance, will someone be cooler than you? When you wake up in the morning, the referee looks at your eyelids flutter and chants, "1, 2, 3... fight!" Therefore, you must always assert yourself against others, over others, away from others.

I had a brief exchange recently with someone who said that it was impossible to have an identity without opposing someone or something.

The secret of envy is competition, and the seeds of it come from looking about. Oh, sure, it is tied up in pride, but envy is not reserved for the well to do wishing for the material goods of their neighbors. It's in every person who says, "Oh, pshw! Can you believe how much they pay that jerk?" It's comparing.

Descartes beginning point of philosophy was Cogito ero sum. It is quite possible to say "I am" without saying, "and I'm glad I'm not you!" There is no need to contrast in order to be oneself. When the discussion of "I can't believe they pay Bozo so much" starts, it should only be to resolve with "We should all be paid well."

Envy may thrive more today than any time in its history. In a land of plenty, people grouse about income taxes and what's "theirs." In a place of riches, people look over at their neighbors more and more to decry how those people are acting. Envy takes time away from building any part of a self, fills one's heart with ashes, and leads only to imitation or negation, but it is one of our dearest, deadliest friends.