Saturday, June 6, 2009

The Politics of Drugs

by Jackson Dave

In April, Robbinsense addressed the state budget, focusing primarily on amending the state constitution. Though there is now some discussion on that possibility, this would take years, if we had the political will to undertake it. We touched, then, on legalizing drugs as a solution.

Legalization of opiates, cocaine and marijuana, which comprise the vast majority of illegal drugs, would remove the “trafficking” element from the economy that supports gangs, removing the money which drives the industry. Many (including Kevin A. Sabet) believe that legalization, even of marijuana, should be avoided simply because it provides additional avenues for the social ills of drug use, with attendant health care costs and workplace problems. But at what cost, I beg you, do we infringe upon our own freedom when the price of admittedly ineffective restrictions appears to exceed the value we place on liberty?

The actual extent to which drug use would increase is, after all, moot, and there are many elements to the discussion that should be addressed. In the first place, we are not advocating legalizing drugs for teenagers or amphetamines under any circumstances. We advocate that opiates, cannabis and cocaine be available legally, essentially as alternatives to alcohol and tobacco. Availability of cocaine at an affordable price would likely displace much of the market for amphetamines, which are probably the most dangerous of all the "recreational" drugs.

All of these drugs are readily available, legal or not. In The United States, the “social” cost of loss of productivity in the workplace from alcohol is estimated at $148 billion annually. This doesn’t include the cost of medical problems, traffic injuries, psycho-trauma to children of alcoholics or domestic violence that arise from alcohol abuse. While the social costs of alcohol and tobacco dwarf those of the other drugs, we’ve seen that the social cost of prohibition is far greater. Consider the general lawlessness and expansion of organized crime networks produced by the Volstead Act (Prohibition).

Regarding marijuana, in 1988, The Drug Enforcement Administration's own Judge Francis L. Young, after two years of hearings, deemed marijuana “one of the safest therapeutically active substances known to man. In strict medical terms, it is far safer than many foods we commonly consume.” Young went on, “…nor is it physically addictive, unlike your daily burst at Starbucks, as anyone who has suffered from a caffeine withdrawal headache can attest.” Beyond that, there are many therapeutic cases made for this drug.

Much of the allure of drugs, especially to young people, comes from their illegality. For an analogy we can look at the diamond market. Diamonds are perhaps the most plentiful of the precious stones. Their great supply should make them inexpensive; but DeBeers controls world supply---by coercion or force---and limits that supply to keep prices up. Illegality of narcotics restricts that trade as well, leading to high prices generated by underground distribution networks. While the allure of diamonds is enhanced by their presumed scarcity, the same applies to illegal drugs. Economists recognize "negative elasticity of demand" for certain products---that is, as the price of a commodity increases, the demand increases. This is in direct opposition to a normal demand profile; it applies to diamonds, as well as, perhaps, drugs.

Legalization would remove the “criminal” aspect of the distribution networks, leaving us with only the social problems. It’s a stretch to speculate that this would be greater than the total cost that we face now, especially considering the law enforcement aspects. Legalization would result in normal suppliers with low prices and the prospect of substantial tax revenue, as with alcohol and tobacco.

Why do we handle these different classes of drugs differently? The sad answer is politics and special interests. We have been conditioned to accept this policy, much as for decades we were conditioned to believe that Communism was a mortal threat to our society. We’ll look more closely at the “logic” behind this policy later.

We have a lengthy and confusing legal history with Cannabis as well as opiates. A brief history will ensue---in italics for those wishing to skip it.

In Jamestown Colony, Virginia, 1619, all farms were required to grow Indian Hempseed. Farmers who failed to comply were jailed. We've been led to believe that George Washington was a tobacco farmer, but hemp was the primary crop at Mt. Vernon, and secondary crop at the Jefferson’s estate.

In 1909 opium smoking was outlawed, while the 1914 Harrison Act regulated opiates.

In 1919, Congress overrode President Wilson’s veto (one of the few intelligent things he did) to pass the Volstead Act, outlawing alcohol .

The 1933 repeal of Prohibition did little to end the madness that it created. Organized crime had a small impact on this nation prior to prohibition. Prohibition gave mobs the foothold from which to establish a vast industry supplying alcohol. Repeal of the Volstead Act simply transferred this industry to the supply of anything else that might be prohibited, including drugs.

States began as early as 1910 to outlaw cannabis. Utah’s prohibition of marijuana was said to have resulted from wide-spread use by Mexican inhabitants. But the truth is that its use was becoming common among Mormons, who were bringing it back from travels. The church's reaction to this contributed to the state's marijuana law.

Other states quickly followed suit with marijuana prohibition laws, including Wyoming (1915), Texas (1919), Iowa (1923), Nevada (1923), Oregon (1923), Washington (1923), Arkansas (1923), and Nebraska (1927). These laws tended to target the Mexican-American population. When Montana outlawed marijuana in 1927, the Butte Montana Standard reported a legislator's comment: "When some beet field peon takes a few traces of this stuff, he thinks he has just been elected president of Mexico, so he starts out to execute all his political enemies." In Texas, a senator said on the floor of the Senate: "All Mexicans are crazy, and this stuff [marijuana] is what makes them crazy."

Again, racism was part of the charge against marijuana, as newspapers in 1934 editorialized: "Marijuana influences Negroes to look at white people in the eye, step on white men's shadows and look at a white woman twice."

In 1930, the Federal Bureau of Narcotics was added to the Treasury Department and Harry J. Anslinger was named director. This marked the beginning of the all-out war against marijuana. Anslinger was an ambitious man, and recognized the Bureau as a career opportunity---a new government agency giving him the opportunity to both define a problem and deliver the solution. He realized that opiates and cocaine wouldn't generate enough “business” to fit his ambition, so he latched on to marijuana and started to work on making it illegal at the federal level.

Anslinger used themes of racism and violence to draw national attention to the problem he wanted to create. He also promoted and frequently read from the "Gore Files" wild reefer-madness-style exploitation tales of ax murderers on marijuana and sex and... Negroes.

There was wide-spread
contention and discussion over Anslinger’s claims by the AMA as well as others. But he became essentially the first Drug Czar, though the term didn't exist until William Bennett's position as director of the White House Office of National Drug Policy. There are parallels between Anslinger and many of our current administrators. He had carte blanche to demonize drugs and drug users. He had resources and a large public podium to promote his personal agenda, with attendant ears of law makers. He was a racist. He lied constantly, often when unnecessary, and realized the extent to which he could persuade with lies, particularly if he could pressure the media into squelching or downplaying any opposition views. Anslinger had 37 years to solidify his propaganda and stifle opposition.

With the repeal of prohibition, the huge bureaucracy of law enforcement agencies were left without a mission. So in 1937,
Marijuana was taxed and demonized, leading to criminalization on a national scale to give the large apparatus a mission.


In 1938, Mayor LaGuardia of New York appointed a committee to study marijuana's affects. The committee found that it did not act as a "gateway drug". It also found no scientific reason for its criminalization. In 1972 the Shafer Commission, appointed by President Nixon, similarly concluded that cannabis should be re-leaglized. '72 was an election year; Nixon, under the political cloud of continuing war and the break-in at the Watergate office complex not only failed to act upon the recommendations, he didn't even read the report.


Moving forward forty years, President Obama has cracked the door of legalization, stating that he favors “decriminalization” of marijuana, and “rethinking” the whole war on drugs. Savings to the US by replacing marijuana prohibition with a system of taxation and regulation similar to that used for alcoholic beverages would produce combined savings and tax revenues of between $10 billion and $14 billion per year, finds a June 2005 report by Dr. Jeffrey Miron, visiting professor of economics at Harvard University. Jon Gettman's report on the consequences of outlawing marijuana show similar statistics: interdiction costs at $10.7 Billion, lost revenue at $31 Billion.

These reports have been endorsed by more than 530 distinguished economists, who signed an open letter to President Bush and other public officials calling for "an open and honest debate about marijuana prohibition," adding, "We believe such a debate will favor a regime in which marijuana is legal but taxed and regulated like other goods." Chief among the endorsing economists are three Nobel Laureates in economics: Dr. Milton Friedman of the Hoover Institute, Dr. George Akerlof of the University of California at Berkeley, and Dr. Vernon Smith of George Mason University.

Revenue from taxation of marijuana sales would range from $2.4 billion per year if marijuana were taxed like ordinary consumer goods to $6.2 billion if it were taxed like alcohol or tobacco.” This is only the beginning of the benefits from legalization. Beyond that, decriminalizing drugs would relieve enormous law enforcement capacity for the persecution and prosecution of serious criminals, both blue and white collar. We could empty out our prisons, as only a small percentage the prison population is now considered violent. The courts would be freed up from the never-ending stream of drug-related infractions. Justice statistics for 2007 showed that nearly 60% of the state prisoners serving time for a drug offense had no history of violence and 80% of arrests were for possession, not sales.


Brian O'Dea, author of High: Confessions of an International Drug Smuggler, with an acute perspective from both sides of the controversy says, "A cascade of bad outcomes follows a policy of prohibition. The worst may be the dangerous, bloody criminal activity it promotes." "...now guns are a large part of the picture. The illegal drug trade is the currency that funds and inspires a vast, violent and well-armed gangster class." "Take away the currency of illegal drugs and you take away the guns, the violence and corruption."

Lastly with revenues from increased taxes and scale-backs in law enforcement, we could balance budgets, offer free drug treatment programs, better schools and health programs for children, if not all of us.

Let’s look more closely at the roots of our drug policy:

As we moved through the industrial age and into the 20th Century, America was the manufacturing powerhouse of the world. By the end of WWII, the United States had close to half of the manufacturing base of the entire world. We financed the Marshal Plan, extending aid and resources to many of the countries destroyed by the war.

With the emergence of the “global market”, our manufacturing base has withered away, leaving large pockets of unemployment. Through labor cost disparity, a great network of international transportation and government indifference to budget and trade imbalance, the third world has stripped our economy of manufacturing jobs.

We now see economic chaos as well as wide-spread unemployment. Where a generation ago, we might see an unemployment rate of 3 to 5 percent, now 7 to 8 percent is considered normal, and that only counts those “looking for work”. As one might expect, the lower classes have borne the brunt of these job losses. We currently have a population of approximately 15 million people who face chronic unemployment; they have been effectively phased out of our economy. With poor education in their neighborhoods, only the most gifted and motivated are able to escape.

The stark truth that America doesn’t want to face is that there is no profit in bringing the marginal classes on line; they have effectively been declared “surplus”, casualties of the modern age. In the absence of a normal economy of goods, services and jobs in these ghettos, we offer the drug economy. A child growing up on the streets discovers that this underground economy provides his only chance for a decent life. The street culture of drugs is fueled by the “war on drugs”, with which we distract ourselves and perpetuate the lie that we care. The drug war represents “bread and circuses” offered up by the modern age to distract the masses from their misery.

If we ended the “war on drugs” the inner city economy would have to be replaced by something. The “establishment” resists this change with enormous financial and political energy. Much of the enormous savings presented by putting a stop to the interdiction, prosecution and imprisonment of these people would have to be invested in services for this population: rehabilitation, education, job training. Law enforcement agencies, as well as the “corrections” industry vigorously opposes this policy, not because it’s bad policy, but because it would put so many of them out of work. (See an interview with David Simon for more material on this aspect of the “war of drugs”.) “The drug war is a war on the underclass. That's all it is. It has no other meaning.”

Any politician attempting to change this dynamic faces tremendous political risk. Undermining “the war on drugs” will produce a chorus of outrage claiming that drug-use will increase. This concern is not directed toward inner city culture, of course, rather at drug use in the suburbs.

According to Brian O'Dea, "It is time we stopped treating drug addiciton, a medical condition, with law enforcement. It's time to repatriate the vast quantities of money that are being hidden, removed from the country and going untaxed, and it's time we keep those same vast sums from funding violent crime. It's time to end modern prohibition. It didn't work for alcohol; it isn't working for drugs."

If this argument for ending our war on drugs is not compelling enough, it pales next to the international aspects of the madness. Next month we’ll look at that.

Jackson Dave is a Robbinsense staff writer

Friday, May 8, 2009

100 Day Assessment

In accordance with our policy of handling the tough issues, and to recognize the 100 day mark on the Obama presidency Robbinsense will address our present economic situation and assess the new administration.

As for the economy, the present economic and financial situation is very complicated; the world’s best economic minds are in discord over how to handle it. Republicans hypocritically oppose anything that the Obama government proposes, after supporting similar measures for years when advanced by the Republican administrations. Republicans are motivated by fear or dread that Obama might be successful; if they support him, they have no base, whereas by opposing him they can claim to have been right if the policies fail.

Being a fiscal conservative, myself, it has been difficult to get on board with massive government spending programs; but who are we to claim that what occurred in the 30s isn’t around the corner? Is there safe haven for our savings with all crashing around us; or what will hyper-inflation do to our economy after spending our way to prosperity, devaluating the debt and the currency?

I believe the government must step in and take charge. We’ve seen that the financial industry is motivated by greed and willing to enrich their top management through fraudulent means. Who will clean up the mess if government simply allows these banks to collapse, leaving the financial soup to congeal in the muck? How do we handle our massive foreign debt if government steps aside?

On the other hand, The Prompt Correction Action Law mandates that FDIC-insured banks go into receivership when they become insolvent. In violation of this law, the Obama Administration has continued the Bush policy of giving money to our largest banks to keep them afloat---without substantive changes in their operation and leadership. This is old-time politics, catering to powerful, industrial mucky-mucks.

I believe three things are necessary: one is to find out exactly who and what was responsible for the mistakes made by these banks; two is to take measures to ensure that the mistakes won’t be repeated; three is to present transparency in the industry.

Shortly after she was named to head the Commodity Futures Trading Commission in 1996, Brooksley E. Born was invited to lunch by Federal Reserve chairman Alan Greenspan. Born, a very good regulator, had been trying to do the right thing to regulate one of the exotic derivatives (credit default swaps). While Greenspan couldn’t stop Born’s crusade, Larry Summers, Robert Rubin, and Phil Gramm worked together to block this particular regulation. They also pushed a law through congress to prevent regulation. It's this type of derivative that is most involved in the AIG scandal. AIG alone cost as much as the entire Savings and Loan debacle of the 80s. (Rubin and Summers were treasury secretaries for Bill Clinton, while Gramm was John McCain’s principal economic advisor.)

It’s not that we couldn’t see this coming! In 2004 the FBI issued a warning of “an epidemic of mortgage fraud”. The Bush administration, meanwhile, had moved 500 agents from white collar crime investigation to “Homeland Security”. The agents were never reposted, and the fraud continued unabated. These are precisely the kind of things that need to be brought to light and corrected, this time forever.

Competent or not, the men who ran these companies into the ground have a vested interest in preventing the truth from emerging. How can we get to the bottom of this mess if we allow the failed executives who ran their ships aground to remain at the helm? And who could claim that they’re competent in regard to anything except fraud when they took part in the greatest Ponzi scheme in history? (see Financial Disservices in this blog, February ’09.) We believe these men belong in jail.

We need executives in these failed companies who will get to the bottom of what’s happened. Initial resources poured into the industry were swallowed up, disappeared into the black hole of their toxic asset portfolios, as well as into bonuses for these scoundrels. Ledgers and balance sheets need to be exposed, scrutinized and straightened out. It’s only after the toxic assets are purged and proper accounting is restored that the public (and the world) will be able to again trust our financial system.


So on this 100th day of the Obama Administration, how do we rate the new president? Since most of the media pundits have gone on record, Robbinsense will follow suit.

The President is definitely a breath of fresh air. It feels good to have a man with dignity, who can speak English running our country. There is a long list of executive orders and new legislation that have been pushed through congress to steer us back on track. For an abbreviated list: ending torture, impending closure of The Guantanamo Bay Prison, “morning after” pill okayed for distribution to all over 16, stem cell research given fast track approval, $15Billion boost to veteran’s health programs (the largest increase in history), environmental measures reversed, opening up diplomacy with Iran, Cuba, Venezuela. I could go on with an impressive list of small accomplishments, but our editorial staff deems them to be small potatoes.

We feel the president’s patient efforts at “bi-partisanship” are noble, but we take exception to the appearance that the Obama Administration is “playing politics” with the Republicans, trying to appease them into co-operating. This is the same old-time politicking that has led us to this brink. The GOP is in disarray and politically irrelevant at this time. Their agenda is driven by interests of the Republican Party, rather than the interests of our country.

1) As discussed above, we are dissatisfied with the political maneuvering going on in efforts to get the economy on track. Keeping the old brokers in power is playing the old political game. These rascals have NO interest in changing anything. They are only interested in keeping themselves in power and in clover.

2) On his 100th day the president answered a question in his press conference about torture. He said it was wrong to use torture because we could have gotten the information by other means. What!!?? No, it is wrong to use torture because 1) It violates national and international law, 2) it violates explicit terms of treaties to which we are signatory, 3) it is an affront to anyone’s morality, and 4) it violates the essence of what this country stands for. Torture is criminal activity. The president's answer was designed to disarm Rush Limbaugh and Dick Cheney, while in reality, those two titanic jerks are comfortably in the process of destroying the Republican Party. Let them rant!

Soft-pedaling the torture issue to avoid pissing off Republicans is not the way to restore the shattered integrity of our country---especially when most of the developed world is hungry for a piece of our hide after we’ve sent world economies as well as personal savings and retirements into the black hole of our economic melt-down.

The world has seen countless people come to enormous power who should never have arrived at the throne. Many have been good, intelligent men, like Alexander (Greece), who once in power became obsessed by the opportunity to expand their power. We’ve also seen capable, yet totally improbable leaders with little or no ambition (such as Claudius and Truman) arise from circumstances that impel them to power.

We’ve seen evil, mad men, such as Hitler and Caligula who end up in the seat of great power because of a combination of intense ambition and bizarre circumstances. We’ve seen rulers with little desire and no leadership capabilities, such as Millard Fillmore and Warren G. Harding, come to power by accident. Andrew Johnson and Woodrow Wilson were petty, mean and incapable leaders. Franklin Roosevelt was thrust back into office for his fourth term, a dying man, by the power elite behind him who intended to use Truman for their political agenda.

It might appear that we’re too sophisticated to continue making great mistakes such as these, but our political system and voter naiveté make misrule inevitable. George W. Bush, like Tiberius, was a man of little ambition who was thrust into power by his station in life and strong political force behind. In Tiberius’ case, it was his mother, while for Bush it was Carl Rove and the Republican establishment, indifferent to his lack of intellectual qualifications. Once in power, both men morphed into despots, driven to excess on whatever level was available.

There was no reason to believe that once in power, Bush wouldn’t be a boring technocrat, adhering to the will of the forces behind him. He appeared to be bland and harmless, but he used a tragedy (9/11) to thrust himself to the world stage as emperor, using lies and deceit in an effort to re-shape the world, obsessed by possible immortality (legacy), impelled by the limitless military might of this country and scornful of the strictures of our Constitution. By his own admission, Iraq was only the first conquest in the region that we would attack and consume.

It is a virtual certainty that we will have more incompetent, corrupt, "ambitious" leaders running this country. We face an opportunity, right now, to put a lid on such abuse. We can tell the world that we are a better country than this. We can tell our posterity and every future president who swears to uphold The Constitution that they can’t get away with what Mr. Bush did. Mr. Obama has that opportunity; and if he doesn’t have the political stomach for it, he should not stand in the path of any political force that chooses to do the work. The integrity of our country, along with Robbinsense, call out for national atonement.

3) In that regard, Robbinsense supported Mr. Obama on the assumption that on his 100th day our military mission in Iraq would have ended---that withdrawal would have commenced. Instead, we have vague promises that withdrawal will commence sometime next year! The killing goes on, with our soldiers on the delivery and on the receiving end. With the $100 Billion annual budget for that war, we could begin earnest war reparations. The Iraqi government is never going to “get their act together” as long as we are there shepherding them around, handing out largess like it’s Easter candy. A previous Republican president brought us out of Viet Nam with our tails between our legs 35 years ago; who but rabid, right-wingers second-guesses that decision?

4) We are increasing our military commitment in Afghanistan. This is madness in our opinion. We need to extricate ourselves from that mess in any way possible. We cannot kill all the terrorists---the more we kill, the more we spawn! We need to minimize our military presence in the region; this may be the only way to deflect terrorism and to resolve the conflict between Israel and the Palestinians.

5) We now have a new front opened up in the war. President Obama has embraced an escalation in the raids over western Pakistan that were approved by Mr. Bush. In the first months of his administration we have carried out at least 16 Predator attacks, killing at least 161 people. Compared to 36 total attacks in 2008, this is a marked escalation in a disgusting policy that is not even publicly acknowledged. This is the equivalent of Nixon expanding the Viet Nam war into Laos and Cambodia. It’s anybody’s guess how few of these people were actual terrorists, and how many more terrorists will be spawned by this war of the drones. The government claims to have killed16 al Qaeda leaders and 700 civilians. Who are the terrorists here, anyway? Beyond the killing, [our] terrorist attacks anger the people, placing enormous pressure on the Pakistani government, which supposedly we support!!! Go figure. Those people just want us out of their country and out of their lives so they can go back to fighting each other.

6) On political appointments, how can we have so many glitches? It’s nice that he has admitted errors, but why so many? Why can’t he get proper advice on such small items as appropriate gifts for foreign dignitaries?

We recognize that there are political exigencies that require consideration. With each of these matters there is a price to pay for confronting the right wing. We also recall that in 1977, upon taking office, Jimmy Carter canceled every (of approximately 83) water project on the federal docket. Since water projects are the “mother’s milk” of political largess, this pissed off practically every legislator in the congress, including those of his own party. Carter also pushed the Foreign Corrupt Practices Act through congress, another high-minded measure which put our exports at disadvantage (since bribery is routine and legal in other countries). Carter lost legislative leverage in the face of such bold gestures, and though 82 of the water projects eventually resumed, this was a significant contributing factor in what is considered to be an ineffective presidency.

In the mid nineties President Clinton, in his move to the political center, seemed to be adopting the Republican agenda. Among other things, he balanced the budget and initiated welfare reform. He also pushed an anti-crime agenda that would make any Republican proud, expanding the scope of the war on drugs and imposing mandatory sentencing guidelines. The fallout from these measures was a dramatic increase in the rate of incarceration on the federal level. With a prison population of 2 million, we have achieved the highest rate of incarceration in the world. Where the percentage of violent offenders in the prison system was 30 to 35%, it is now 7 to 8%. Prisons are over-flowing with with non-violent offenders; zealous law enforcement officials interdict drug offenders because they are a safe and easy mark, while the number of arrests advances their individual careers. This leaves violent offenders free on the streets and releases thousands more to make room for drug offenders. (We will discuss this matter in more depth next month.)

So did these measures bring political capital to the Clinton Administration from the right? Absolutely not! For stealing their agenda they hated Clinton all the more, becoming more obstreperous, more obstructionist. They hammered the man over ethics issues and their cultural agenda.

It’s easy to be high-minded when looking in from the outside. We recognize that political expediency may be necessary, and we applaud him for doing what’s necessary to get things done, but we elected Mr. Obama to straighten out our political and economic mess, which means changing the way Washington operates. (Change: remember that word from the election?) We will be increasingly vexed by continued capitulation and slow progress on these enormously important matters.

So to assess the president’s performance through 100 days: If John McCain had won the election and had performed equally, I would be ecstatic over his (unexpected) performance and grant him a B. But for Mr. Obama, though he looks very “presidential” and has done many commendable things, in the face of high expectations, on the big ticket items we find his performance lacking. We give Mr. Obama a C, with a plus for political considerations.

As of May 13, we discover that Mr. Obama has reversed his position on releasing pertinent material implicating wide-spread complicity in torture by American forces. This is illegal, hypocritical, and an outrage. This administration is looking more and more like our previous one. We are down-grading our assessment of Mr. Obama's performance to C minus, with no political considerations; and we're watching a bit more closely for further downgrades.

Tuesday, April 7, 2009

Evolution, Science or Fiction?

Creation Science. Intelligent Design. Hokum? Science? Religion?

Watching the 1960 classic, Inherit the Wind, we cheer while Spencer Tracey attacks William Jennings Bryan, portraying him as backward and silly. Even though the actual trial occurred a mere 35 years earlier, somehow it had to be ancient history. Could people really have been that parochial in modern times? Well,

In 2005, the Scopes trial was replayed in Dover Pennsylvania. The Dover school board mandated that a 4-paragraph dissertation describing “Intelligent Design” as an alternative to evolution be presented in science classrooms. A number of teachers protested. Eleven parents filed suit against the school board through the ACLU for violation of their children’s civil rights. Click here for a transcript of the trial.

Actually, Scopes lost the 1925 case. But in 1987, in Edwards vs. Aguillard, the U. S. Supreme Court struck down “Scopes” and ruled that “Creationism” could not be taught in public schools. The Dover school board argued that Intelligent Design (I/D) is not “Creationism”, but a scientific field of study.

The case was heard by Judge John E. Jones, a Republican and George W. Bush appointee, and came down to the pivotal question: Is “Intelligent Design” science or religion? In a six-week trial the Thomas More Law Center (“The Sword and Shield for People of Faith”) defended the school board, with The Discovery Institute, the Seattle firm that coined the phrase ("Intelligent Design"), weighing in with “intellectual” support.

In the face of resistance from teachers, students and ultimately the board itself, the two members of the board who sponsored this measure secured a “text book” called Of Pandas and People for students who wished to pursue the claim. Fifty copies of the book had been “donated” by a benefactor, but were actually procured by the two board sponsors, who lied under oath to cover their involvement.

After 21 days of testimony Judge Jones found I/D’s case for science insubstantial and ruled against the school board. (Actual) intelligence prevailed in a small, Pennsylvania town in pursuit of a decent education for children in the face of a large population of religious dogmatists.

Robbinsence has condensed the argument for our readers’ consideration.

What is Science?
Science is the systematic study of natural phenomena.
The “scientific method” is to extrapolate a hypothesis to explain natural phenomena, leaving the theory to be disproved by the scientific community. It is important here to emphasize that the procedure is to disprove the theory---not to prove it. (It’s assumed that there is enough empirical evidence to advance the material as a theory, but “proof” is beyond the purview of science.) In order to qualify as “science”, a hypothesis must stand up to an effort to disprove it, and there must be a scientific manner by which to test it.

Christians who promote various theories of biology that fail to conform to evolutionary paradigms claim that their theory (under whatever name might be in fashion) is true. While it’s conceivable that their vision is in fact reality, this is not science. I/D advocates devote considerable energy to disproving evolution, leaving NO discernable body of research to explore their own theory, much less to try to disprove it. No one has yet arrived at a systematic or "scientific" manner to test or disprove God.

The “theory” of evolution, as proposed by Charles Darwin, in his treatise: On the Origin of Species, has survived 150 years of scrutiny. The entire science of “genetics”, which was beyond Darwin’s imagination, serves only to validate his far-reaching insight.

While Christians emphasize the “theory” aspect of the controversy, evolution is accepted by the scientific community as fact. There are a number of theories as to the driving mechanism behind evolution, including “natural selection” and “punctuated equilibrium”, but evolution is an accepted “scientific fact”. Note here the distinction between “fact” and “truth”. Science does not deal in “truth” or “reality”. It does not contend that The Big Bang theory, for example, is reality. But while reality is beyond the scope of science, it is the essence of religion. Christianity, applying its own system of “logic”, asserts that its description of nature is “the truth”, with The Bible is its body of “research”. This is not science.

While science deals with exploration of the unknown, religion is an exercise in basking in the “known” (the presumed). The two fields are virtual opposites. Exploring the unknown, requires an open mind and is sabbotaged by pre-conception. But by their own admission, I/D has no body of research, no actual “scientific methodology” at work in their pursuit of the truth. In fact, there’s no effort within the movement to expand knowledge about anything. “Inside” memos generated by the Discovery Institute and presented in the trial revealed that by their own admission, I/D “methodology” consists of “a bag of powerful intuitions” and “a handful of notions such as ‘irreducible complexity’”.

The argument over science or religion is a discussion on apples or oranges. They are too different to compare.

The closing chapter of the Dover trial has Judge Jones and his family put on 24-hour armed protection because of numerous death threats from good, sanctimonious Christians who didn’t like his verdict. The fact that these hateful, violent people have descended from the teachings of Jesus would be ample evidence of evolution in itself.


Next month: Who, or what, is God?

Monday, April 6, 2009

The Fightin' 81st

The Fightin’ 81st



by Randoid


I was a nineteen-year old airman stationed at Keesler Air Force Base in Biloxi, Mississippi. Keesler was a training base for new recruits, and I was attending a technical school to become a microwave radio technician. There were thousands of new airmen on the base and most were like me, attending a technical school of one sort or another. The base was cut in two by an airstrip. The main base was located east of the airstrip and represented about 80% of the base acreage. The main base housed all the technical schools. The remaining part of the base was a triangular-shaped area to the west which was known as the Triangle. The Triangle was devoted to student housing and consisted of 12 or more large complexes or squadrons. Each squadron complex contained administrative offices, a chow hall, and a barracks for approximately 700-1,000 students. I was assigned to the 3381st Student Squadron, which just happened to be the squadron closest to the airstrip.


My job, as a student, was to attend my designated technical school 6 hours a day from 6 AM to noon, 5 days a week. However, with the Vietnam War in full bloom the wartime demand for qualified technicians was high. In order to fill that technical manpower gap, the powers-that-be wanted to speed up the graduation process so that we could make our contribution to the war effort as soon as possible. To that end, they came up two solutions. First, the students will attend classes in three shifts. A shift, will attend class from 6 AM to noon, B shift from noon to 6 PM, and C shift from 6 PM to midnight. Second, all students will now attend class 6 days a week. I was assigned to C shift. So now my job, as student, was to attend my designated technical school 6 hours a day from 6 PM to midnight, 6 days a week.


Most of the students in the 3381st were on the A shift and the B shift so the chow hall in my squadron was designated as an A and B shift chow hall. C shift students couldn’t eat there. I had to attend a C shift chow hall in another squadron about 500-600 yards down the road.
Every school day, which also happened to be most days, began at 5 PM as C shift students lined up for an inspection by our Squadron Commander and our Red Rope. The Red Rope, who was a student just like the rest of us, was sort of like a “prison trustee” in that he was responsible for our overall welfare when the Squadron Commander and First Sergeant were not around. In keeping with military tradition, he also had complete authority over us. Our Red Rope was named Richardson and he was a pretty good guy.


With the inspection completed, it was time to march to school. The 3381st had the “honor” of leading all the other Triangle squadrons across the flight line, past the reviewing stand, and on to our main base schools. Along the way, our squadron would sing marching songs and, in doing so, try to drown out the other squadrons who were trying to do the same thing.


After six hours of learning about electronics, it was midnight and school was finished for the day. Although it was midnight, it had also been at least eight hours since our last meal and most of us were too hungry to be tired. Now it was time to march back across the flight line, past our barracks, and onto a C shift chow hall.


A long time ago back in the afternoon, we were the first squadron to march across the flight line in going to school. But now, at midnight, the order is reversed and we are the last squadron to march back across the flight line. This resulted in the 3381st being the last squadron to be fed, which was bad enough, but wait! It gets worse! Occasionally, the chow hall would run out of food, or to be more exact, the designated meal. For example, every other squadron would dine on roast beef and mashed potatoes but that would be long gone by the time the 3381st showed up at a quarter to one in the morning. The cooks, being basically unimaginative and pissed off to be working that late, would boil potatoes and canned hot dogs for us. To make matters worse we usually had to wait for that.


Well, what started off as an occasional chow hall problem soon became a frequent chow hall problem. We were eating boiled canned hot dogs 2 to 3 days a week. I remember that the hot dogs were a grayish color! Gray! Complaints to the chow hall supervisor and our Squadron Commander fell on deaf ears.


Each day around 10 AM all C shift students would gather for PT or physical training led by our Red Rope. One day, after another canned hot dog dinner, the PT session became a forum for complaints about the food. The complaints grew louder and louder and finally Richardson, in exasperation, asked, “What the hell can I do? We’ve talked to our commander and the chow hall supervisor and it doesn’t seem to matter.” The crowd fell silent for a moment but that was just long enough for one unidentified voice to say, “Let’s go down there this afternoon and wreck that fucking chow hall.”


The C shift students let out a huge cheer of approval as they looked to their Red Rope for guidance. Richardson, the right man for the right time shouted, “Let’s do it!” Now, drunk with power, he whipped the mob into a frenzy. “Assemble at 3 PM for the afternoon meal,” he screamed, “and we’ll go down there and wreck that fucking chow hall!”


3 PM rolled around and we marched down to the chow hall. We entered the building in single file to collect our trays, plates, and silverware on our way to the steam tables. It’s tough for a couple of hundred guys to keep a secret for 5 hours and you could see it in the cook’s faces. They knew something was up and eyed us warily as we shuffled through the serving line. I was with my good friends Greg Bonzer and Chuck Corne, and there were about 20 guys in front of us in the line. Much to our surprise the guys moved through the serving line without incident. There was plenty of tension in the air but so far no one had started anything. Corne picked up a plate, stared at it for a second or two, and then hurled it to the tile floor where it shattered into smithereens. Thanks to Corne the game was now on. Bonzer and I smashed our plates too!



Then we got new plates and headed through the serving line. The cooks, dumbfounded at this display, didn’t know what to do so they did the only thing they knew how to do – they gave us our food. Guys continued to pass through the serving line as the stunned cooks served up more and more food. Meanwhile, the sound of breaking plates could be heard in the background. Soon a full-fledged food fight was on, except everyone was throwing their food at walls, under tables, on top of tables, all over the chairs, etc. In only a few minutes the chow hall was in shambles. Our mission completed, we marched back to our squadron to get ready for school.


With another open rank inspection completed we took our usual position leading the other squadrons across the flight line. We began to march but were soon surrounded by several trucks full of Air Police. They diverted us from the flight line to a nearby grassy area. Our squadron commander was there to greet us and he wasn’t happy. There were several other officers there as well, presumably on hand to get in on the ass-chewing that were about to receive. Our immediate punishment was that there would be no school for us this night. What, this is punishment!? We had to return to our barracks where we were under house arrest! Wow, I thought! I’m under arrest!


The next day we found what else they had in store for us. Richardson, of course, lost his rope. He was about to graduate so I don’t think he gave a damn. As for the rest of us, we were under house arrest for the next 10 days. We could leave the barracks only to attend school and to go to the chow hall, but only under the watchful eye of the police. Once at the chow hall we had to revert to basic training rules where we stood at attention, even through the serving line, and were forbidden to talk. News of our uprising soon spread and as were marched to and from the chow hall under guard, students from neighboring squadrons waved and cheered us from their windows.


With our arrest period was over, we lost our police guard and were now free to speak and move about in the Triangle. We soon discovered that our food rebellion turned us into instant celebrities. Someone in the group came up with this song which we sang lustily on our way to school, and more importantly, to the chow hall.


“Everywhere we go-oh,
People want to know-oh,
Who-o we are,
So-o we tell them,
We are the 81st,
The chow hall bustin’ 81st,
We go to school to read our books,
And all we do is fight with cooks.”



Randoid is a Robbinsense staff writier and a Carpinteria Taler

Saturday, April 4, 2009

On the State Budget

I’m not an anti-government dogmatist, but I can see that government is the problem in our state budget crisis. The budget impasse, which may or may not have been temporarily resolved, could be relieved quickly. Any combination of a few of the following matters might solve the problem.

1) Abolish the state senate. Our legislature is a relic left over from 18th century British Parliament. The British legislature, comprised by the House of Commons and House of Lords, was designed to give voice to the interests of "commoners", while still providing and preserving the prerogatives of aristocracy. The so-called “tyranny of the majority” was a pressing concern carried over from the British system among the (essentially American) aristocracy that drew up our government between 1787 and 1789 We might argue over the necessity of this duality in our national legislature, but I doubt you will find many to contend that it’s necessary in California government. While the makeup of the U.S. Senate (comprised of two senators per state) is different from that of the house (population based), there is no such distinction in the state legislature. Both houses are population-based. While they have different districts, both cover the entire population.

We have two separate houses, each with its own mini-fiefdoms, both trying to accomplish the same tasks, both covering the same population---both playing off each other---both “protecting” their own turf---both with their own sets of staff---both with their own bureaucracy---and neither performing diddly-squat! In case you haven’t noticed, the lion’s share of real law making in this state is thrown back to us through initiative and proposition. This is largely because the legislature shuns serious law-making, which is a potential threat to re-election. Re-election is their primary concern. The bi-cameral legislature significantly magnifies the gridlock and in the process costs billions to support its bloated bureaucracy.

I regret to say that Robbinsense staffers have been unable to untangle the mass of state budget and finance in order to report the cost of the legislature. Hours spent on the internet proved fruitless. I tried to contact the State Comptroller, but he failed to respond to my inquiry. We can be certain that the annual savings would be in the billions.

The major, and pressing, question about this measure is, “How do we do it?” We can’t expect the legislature to put themselves out of work, when their primary imperative is to keep themselves in place! It must be done through constitutional amendment. Co-incidentally, our governor in the last couple of months has been advocating just that!

With nearly 500 amendments, our constitution is the 2nd largest in the nation. (The US Constitution has only 27 amendments.) Our first constitutional convention occurred in 1849. Forty-eight delegates hammered out a sensible document in six weeks. The second convened in 1878. This convention planted the seed of our problems by disempowering the legislature. This vastly increased the size of the constitution while presenting the legislature with excuses for not doing their job. In 1911, the mischief which began forty years earlier was codified by inaugurating the initiative, recall and referendum.

After 100 years, it’s time to get serious. The Gubernator’s agenda is notably light-weight, comprised of small measures like tying the Lieutenant Governor to the governor (rather than having a separate election). But anything that will get the show moving will be worthwhile. Now, we need a movement and a deep-pocketed angel. Anyone?

2) Legalize drugs, including marijuana, opiates, cocaine (but not methamphetamines, please.) This would save the state billions in law enforcement, empty out prisons, bring in billions in tax revenue, lower the cost of drugs, put an end to the drug wars raging in Mexico and end the reign of terror that we impose on countries all over the world by hypocritically demanding drugs on one hand, while pressuring them to stop supplying our demand on the other. If the U. S. Government doesn’t like this move, let them enforce their laws through the FBI and Federal court system. The amount of money saved by this measure is vast, and could easily solve the budget problem alone; but there are large political interests in preserving the status quo. We have an enormous law enforcement industry, for example, which is largely dependent upon existing drug laws.


3) Repeal the politically motivated “3 strikes” law ending the senseless, judicial and correctional burdens that it places upon our criminal justice system.


4) Scuttle Term Limits. This is bad legislation to begin with, as it places greater restrictions on our ability to govern ourselves than it imposes upon the legislators. It keeps the legislature occupied by inexperienced representatives.


5) Return approval of state budget to a simple majority. This prevents a small group from being able to stymie sensible budget measures and reforms.

Politics is the one significant issue that stands between a balanced budget and our current mess. We tolerate this mess; and with our system of government, we deserve it. Engage!

Note: We asked Jackson Dave to weigh in on this issue, and his piece will appear next month. Jack sees this issue through a simpler lens.

Wednesday, March 4, 2009

Patriots All

By Jackson Dave

We’ve heard a great deal about “patriotism” in the years since 9/11.

Samuel Johnson tells us: “Patriotism is the last refuge for a scoundrel”. [Wait a minute; we thought this was a good thing!] Redneck truckers tell us: “America, love it or leave it.” “Minutemen” patrol our borders, protecting us from “aliens” that look an awful lot like our parents, a couple of generations back. [I thought an “alien” came from outer space.] Good, solid citizens pass picketing “PEACE-niks” with scorn and rebuke, then demand prayer in our schools.

What do we feel when we sing: ♫ “…from sea to shining sea”, or “♫…amber waves of grain”, God Bless America? What do we feel when we watch a video clip of the president signing a bill authorizing hydraulic mining of mountain tops in Appalachia, or that authorizes “harvesting” hundreds of thousands of acres of old-growth forest---bills that will provide a couple thousand jobs for a few short years, yet impact climate, bring illness to thousands and leave scars upon our nation and the world for generations?

What do we feel when our president deprives us of the rights that our fathers fought and died for on behalf of a vague risk presented by “terrorists”---when the real risk comes from our own meddling in other countries’ affairs and fallout from “half-baked” wars contrived to suit our politicians’ political ambitions?

What is “Patriotism”? People think patriotism is high regard for one’s country; but how exactly does that manifest itself? The dictionary tells us that patriotism is love for one’s country. That’s it. How do all these diverse issues converge on such a simple notion?

For many, patriotism evokes images of martial dominance---the so-called “might is right” syndrome. After all, “We saved the world…twice!” It’s natural to be proud of the accomplishments of our ancestors. But that’s not patriotism. Patriotism is well-founded pride in what one’s country does - - - - - - today---pride in how it treats its neighbors and how it treats the least of its citizens.

To love one’s country means to cherish and protect the land (flora and fauna), culture and institutions. There must be more. This definition doesn’t necessarily include “government”. The Constitution established our government, but what allegiance do we owe government, and what if it’s undermining the Constitution that defines it? That government tells us we should support its policies as an expression of patriotism. Is that true? Is the government our country? On that, clearly: No. Our “country” pre-dated the Constitution by quite a few generations, and we had a different government after the revolution under the Articles of Confederation.

In most “Western” countries the distinction between government and state is clear. In Britain, for example, the prime minister is head of the government, while the queen is chief of state. Under our Constitution the president is chief of state and head of the government. Ambiguity between government and state has been used by leaders over the years to sway and deceive us. Young men march to the drums of war in defense of their country, when in fact they’re “defending” the political ambitions of their president. Unfortunately, our government’s folly usually runs counter to the interests of our nation. Our leaders govern on behalf of the government instead of in the interest of our country.

But what of those other diverse notions? Why did Samuel Johnson, a fairly bright guy, feel so strongly against patriotism? What do we do to love our country?

We might describe affection for our country in terms of the love we feel for family. After all, we fight and die to protect our family, just as a patriot might do on behalf of his country. It’s natural to love our children, but that doesn’t include turning a blind eye to the trouble they get into. Does a loving parent tell himself and his neighbors that his kid is a “good kid” while ignoring signs of trouble? Or does he make it his business to know what his fourteen-year-old son is up to---who his friends are, where he got the money to buy that leather vest he doesn’t think you’ve seen?

Just as a loving parent is ever vigilant, a patriot monitors his government. It’s the nature of adolescents to test their boundaries; it’s the nature of politicians to succumb to greed and pursue political ambition. If yours is the biggest and toughest kid on the block, your job as a parent is more difficult. If you’re a citizen of the most powerful country in the world, your job as a patriot is to make it your business to know if your country is an international bully---doing a little ass-kicking (for political objectives), swindling or stealing other counties’ assets, influencing other countries’ political structures when that’s illegal for them to do in return, fomenting revolution, arm-twisting to get its way, addicted to drugs.…and oil.

Resurrecting images of D-Day, Argonne and Guadalcanal massages our collective egos and evokes validating glances of affirmation. But we don’t mention the “trail of tears” in a “discussion” like this. Rather we include images of tanks and bombers; “might makes right” because victors write history.

So what was Samuel Johnson speaking of? We’ve all watched politicians invoke the “patriotism” shibboleth to muster political support. If a politician broaches (real) patriotism, this is a discussion of sacrifice, and rarely attracts votes. Invariably, when a politician speaks of “patriotism”, he’s using it as a euphemism---what he’s really talking about is “nationalism”.

“Nationalism” is pursuit of the interests of one’s country in disregard, or at the expense of other countries. A patriot does not condone this any more than he allows his child to be dishonest or a scoundrel. These two “isms” are very different, in fact, opposites. Our government has told us that dissent is “un-patriotic”. But informed dissent is the essence of patriotism. In his quote, Samuel Johnson was referring to nationalism. Governments and those who manipulate us by intentionally misusing the term rely on our ignorance and complacency.

Am I saying that if you don’t agree with my politics, you’re not a patriot? Absolutely not! There’s room for a full spectrum of politics in patriotism. But if your president is waging irrational war or conducting torture, it’s your business to make yourself aware of that. Torture is torture; a patriot is aware of our international treaties and not deceived by rationalization or euphemisms. If it’s OK that the president whom you voted for is doing this, it’s OK for a president of any party to do the same. There is no room for partisan politics in patriotism. If lying to cover up personal indiscretion is an impeachable offense, then certainly lying to promote war, killing hundreds of thousands of people, undermining the Constitution, violating international law and torture are all impeachable “high crimes and misdemeanors.” There is no room for apathy or detachment with regard to the business of your government. If you voted for a candidate, as a patriot, you take responsibility for his administration, even more than if you voted against him. You hold that man’s feet to the fire of your expectations and his promises.

I am a Democrat (only by defaul). My greatest disappointment in government is not George Bush. In fact, the Bush saga has the palliative effect of validating my political perspective. My greatest political trauma has been Bill Clinton. I voted for him. He violated not only his potential, but also my expectations. I feel responsible for his errors of judgment and administration, of which I could easily cite a dozen.

On the other hand, redneck nationalists with their “America, love it or leave it” signs, and politicians who violate our Constitution and betray the founding principles of this nation on behalf of political expediency are not patriots. And what of lapel pins, the “pledge” and “patriotic” displays? If they feel good, that’s great. But let’s not confuse trinkets with the devotion that a conscientious citizen shows when he stands before his government, puts his safety, maybe his life on the line to hold our leaders to the standards that our nation is supposed to represent. Committed citizens, “unwashed” and bloodied hippies, students, intellectuals, marching the streets of San Francisco, Chicago, New York and Kent dragged our government from Indochina in 1973 after ten years of politically motivated and senseless carnage. That, my friends, is Patriotism.

Jackson Dave is a staff writer for Robbinsenese jacksondave.rsense@gmail.com

Tuesday, March 3, 2009

Butternut Soup

After cooking up a brew of this previously-guarded recipe, you'll wonder why you ever order soup in a restaurant. You could go to Downey's in Santa Barbara---or cook it up yourself! Butternut Soup.

Monday, February 2, 2009

Financial Disservices

Financial Disservices

by Jackson Dave

If you were wondering three years ago how our banks could be extending six hundred thousand dollar mortgages to families without substantial income, here’s your primer on financial services mismanagement.

A two-pronged catastrophe occurred. Not only were people buying properties they could never afford to pay for, but also normal, responsible folks were using their homes as ATMs, extracting money from their bloated value to finance either a lifestyle beyond their means or investments to “catch the wave”.

The first question is why did we extend ourselves beyond reason?

Answer: We’d been hearing stories about ballooning real estate values---about people making lots of money buying and selling homes, by “trading up”, about buying second and third homes in Boise or Madera---to catch the wave. The financial pages of major newspapers were filled with articles painting rosy pictures of people exercising the American dream on a shoestring. It’s hard to see through so many “experts” who should know what’s on the horizon. How could this financial boom be a fraud when the banks are up to their noses in it and the SEC is watching from the sidelines? How can we resist the lure of a dozen offers each week to lower our mortgage payment---oh, and while we’re at it, why not take a chunk of cash out for a little spree? It’s not even “borrowing”; we’re tapping newly found wealth.

It seems that every so often a pyramid scheme comes around. A real estate agent I knew was wrapped up in one several years ago. Three nights a week she went “pyramiding” at a friend’s home, and was incredulous that I wouldn’t join in. “All you have to do is show up, buy and sell, and the money flows in!”

These schemes take many forms and disguises. When they’re run by “legitimate” investment agents, they’re called “Ponzi Schemes”. The term has circulated recently since Bernard Madoff used it to describe his own financial fraud. They all work the same: Early investors realize quick profits because they are buoyed by the geometric expansion of capital contributed from below. So long as naïve people can be “suckered in” by claims of the early birds, they feed the fire. Soon, however, the expansion required to fund the pyramid requires more buyers from below than are either willing to fall for the scheme or than there are people in the world. One or the other is inevitable. But by then, the core that started the game has long ago cashed out; some of the second generation get the light. Everyone else is left “holding the bag”.

When pyramiding hits the confused financial structure itself, it’s commonly referred to as a “bubble”. In 1719, trying to reform the financial structure of France, John Law, a Scottish immigrant, created the world’s first stock market bubble by claims of riches and beauty in the Louisiana Territory. Consisting mostly of the Mississippi Valley, it was largely a mosquito-infested swamp and considered wasteland even by those living in the colonies. Shares in his Mississippi Company rose from 500 to 15,000 livres. But by summer of 1721, reports describing the territory were circulating on the streets of Paris and the bulls stampeded. Soon the price stabilized back at 500.

Since that event, every forty to fifty years the world experiences another bubble and crash. It would seem that this frequency co-incides with the lifetime or memory of the principals involved in the financial industry.

Law’s spiritual brother, and the father of our present bubble emerged in the 1990s; he was our own Kenneth Lay. With political and oil connections through the Bush family, Lay built Enron Corporation into an energy giant, re-structuring the distribution of energy, just as Law did the financial structure of France. In addition to purchasing vast quantities of energy producers, Enron moved into the position of intermediary between suppliers and users. From this vantage, Enron was able to manipulate supply of energy to large regions (such as California), capriciously staging "shortages" to send prices to stratospheric levels.

During the boom, between February of 1995 and June of 1999, Alan Greenspan delivered only a single, small increase in the interest rates, as well as an abundance of currency to keep the bubble growing. Lay established “special purpose entities” to hide Enron’s debts, and stock soared from under $20 to over $90. On November 15, 2001 Lay presented Greenspan with the Enron Prize for Distinguished Public Service. Two weeks later it notified 4500 workers in its corporate headquarters of bankruptcy---one day after passing out copious bonus checks to upper management personnel. Enron had “hidden” debts of over $25 Billion. In the final months before the announcement, Lay extolled not only the strength, but also the integrity of his corporation to all including his own employees, thus pushing the stock ever higher while he and top managers quietly unloaded their holdings.

Even as Lay and his chief lieutenant, Jeffrey Skilling, were prosecuted, the practices that they had established to hide debts spread through the financial markets through entities roughly known as “joint stock, limited liability” companies. The government’s emasculated regulatory agencies stood on the sidelines either oblivious or in league with the movers and shakers.


So how could our bankers fall for this…with our money? And how did we get involved in this real estate bubble?

It’s easy to see how unsophisticated borrowers fall prey to the lure of a home that they can’t afford at any price, much less a grossly inflated price. The bait is in the promise of appreciation. Just look around: home values are going up fast and have been for years. Even if you can’t afford the home, by buying it you’ll realize the appreciation, which you may extract at any time by selling. It’s foolish not to get the most expensive home possible because that provides the greatest profit. And selling is easy; look at the market! Homes are sold within hours of listing. Unsophisticated buyers, however, don’t buy a home as a personal residence, to cash out and “trade down” into one they can afford.

But investment bankers are sophisticated buyers! How did they get involved in this? The truth is our investment bankers haven’t been vetting the instruments they purchase. Only recently, when a Savings and Loan company (the dominant mortgage providers of a generation ago) wrote a mortgage, they scrutinized the borrower carefully. The buyer had to show proof of employment, tax returns, even a bargaining agreement that defined his terms of salary and employment. The banker scrutinized qualifications because his bank intended to hold the paper and shoulder the risk of default.

Since deregulation, “Savings & Loans” are a relic of the past and banks write loans which they sell to other institutions in mortgage packages. They make money on the transaction. One might think that after the S&L meltdown of the eighties, banks would be wary of bad loans, but the government bailed them out, sending a message that would not be soon forgotten. Financial institutions could buy and sell mortgages without worrying about default. With a mortgage buried in a large pool, an individual default is inconsequential anyway.

Economic prosperity of the late 90s, fueled by the “dot-com bubble”, put a surge of capital into the hands of more and more buyers. By 2000, low interest rates had started an explosion of appreciation in home values. In October, 2002, President Bush declared, "We want everybody in America to own their own home." Restrictions on income qualifications for buyers were lifted or ignored, allowing banks to offer "sub-prime" loans to just about anyone. ("Sub-prime" has no relation to the interest rate; it's a function of the financial status of the borrower. A sub-prime mortgage is one that has been sold to a less than "prime" candidate for a loan.)
Finally, with enormous flows of dollars from its trade surplus, China had in essence become our national banker. China was sending up to ¼ of its surplus back to us as credit to fuel the market. This along with low interest rates and high demand were pushing prices ever higher. Large quantities of mortgages began to appear in financial markets without anyone knowing how to assess their risk. Essentially the industry was riding a wave of rising property values. So long as real estate prices increased, banks could buy mortgages with no fear of default. Default was irrelevant because the property could re-sell in a day at higher value; and every time a property turned around, they would make money on the transaction.

In the absence of information on borrowers, lending institutions turn to credit rating agencies to assess the risk on potential investments. Two of the biggest of these firms are Standard & Poors and Moody’s. The banks, through a process they called "securitization", were pooling large numbers of mortgages into loan packages called mortgage backed securities (MBS). They bunched them loosely into groups, with the sub-prime loans going into groups called collateral debt obligations (CDO). The agencies use statistics for their ratings, however, and since the industry had never before seen a market like this, there were no data upon which to assess the risk of this paper. But the industry looked to attract overseas markets, pension and insurance funds which base their investments upon the risk assessment, so managers at the agencies demanded that these securities be assessed even in the absence of data. With AAA being the safest, AA, A, BBB, BB---so on down to C and lower, with a nod and a wink, the CDOs were rated AAA! How? Why?

If the CDOs were rated according to the financial security of the borrowers, the securities would be rated D or lower. Potential investors would demand high interest rates. In the low to mid-range housing market, home values are precisely determined by interest rate of the loan. High interest rates drive real estate values down. But the market was being fueled by low rates. So long as interest rates were low, the market would boom, prices would soar, more and more units would move, more and more loans would be written. Most of all, the credit rating firms scored commissions on the loans that they rated! If they rated the loans as high-risk, the market would collapse---no loans, no commissions. This is a massive conflict of interest!

At the height of this boom, S&P was making $6 million a month on commissions from these loans, with no risk to themselves. Within the banking community these loans were known as "liar's loans", or "NINJA" loans (no income verification, no job verification, no asset verification). In 2006 alone, IndyMac Bank sold $80 Billion worth of liar's loans. The brokers were moving paper and making commissions on the loans as well. Large financial institutions were buying AAA securities that they believed to be extremely safe. Those in the middle were raking in the dough, with nothing to lose---grab the money while it was coming and be prepared to run. As for the big institutions, there was no reason to think the government wouldn’t bail them out again when the pyramid, a house of cards, collapsed. This was massive white collar fraud, on an international scale.

As this gorging at the public trough, this orgy of greed went on before our eyes, the government stood back and watched the fat cats dance at a “bonfire of the vanities”.
President Bush had removed 500 "watch-dog" agents from the corporate and financial arm of the FBI after 9/11 to "keep us safe" from terror. Even though the agency itself proclaimed that the banking system was headed for a cliff (in 2004), the bureau was emasculated and its warnings were ignored.
And collapse, it did. Detroit, always on the edge, went first and then the entire national home loan structure began to implode. The government "got theirs back" directly as Freddy Mac and Fannie Mae, which guarantee half of the home loans in the country, had to be nationalized. Overseas investment and retirement funds, thinking that United States, AAA securities were the gold standard, were left with fifteen cents on the dollar.

While the bankers were running their own pyramid scheme, insurance companies were not going to be nosed out. Creative financiers were quick to dream up an instrument to fill that bill in an unregulated industry:

The “Credit default swap”. A CDS is a contract guaranteeing the solvency of an entity. It can be used for speculation, especially by someone with inside information. As the health of the entity rises and falls, the value of the contract falls and rises. Prior to 2000 this kind of contract was illegal, but the Commodity Futures Modernization Act was passed in the closing days of the 106th Congress. This dandy little piece allowed people and institutions to gamble on the market without even buying into it. It produced the "Enron Bubble", ultimately was a huge factor in the financial crash of 2008, and allowed financiers with enough savvy to make billions on a very small investment.

“Betting on the boom” seems more like something you go to Lloyds of London for, but it was a quick formula for raking in cash. The downside disaster of an economic crash is mitigated, of course, by the likelihood that the government will step in to save the industry if it comes to that. After all, this industry makes large campaign contributions.
Not to be out-done by their insurance brethren, financiers found innovative instruments to tap the flow of wealth. With assets of $85 Trillion, the true heavyweight of financial markets is the bond market. Comprised largely of government-backed securities from all over the world, the ebb and flow of this market has the potential to send seismic shockwaves through all markets. In order to protect itself from these forces, the market devised “hedge funds”. A hedge fund is the stock market equivalent of the futures market for commodities.

Robert Merton and Myron Scholes, of Long Term Capital Management, devised a formula for calculating the price for such options, and their model predicted only an extremely remote possibility of collapse. The funds, after all, “hedged” their investors’ bets. For this Merton and Scholes received the Nobel Prize for Economics in 1997. LTCM lost $4.6 Billion in 1998, four months after a financial crisis in Russia. Assistance from the financial community prevented this collapse from spreading, however, and allowed these practices to continue in the industry.

Among other dubious practices in this market we find:
● “Derivatives”. This “investment” is a contract for an option to buy an instrument at a future time for a given price. Since it varies with the rate of return on a separate financial instrument, it “derives” its value from the other. (A derivative is a mathematical concept designed to express a variable in terms of another dimension, such as acceleration as a derivative of speed. Got it?) By 2008 there were $596 Trillion on the world derivative markets, a staggering 43 times the size of the U.S. economy.
There's a case for derviatives among prudent investors. A home buyer could hedge the value of his $300,000 home by buying a $350,000 derivative contract related to the home price index that would protect him from falling values. Such a contract would, however, be money wasted in a bull real estate market. As such, the product does not now exist---there's no market for it. The market is dominated by fat cats looking for a kill.

● “Synthetic collateralized debt obligations” allow investors to tap into the profits from insurance on the CDS pools. These instruments, in theory, made credit more available, but in practice they created a dense web of international entanglements of impenetrable confusion. The lack of transparency and compliant ratings agencies allowed securities firms to conceal risks so thoroughly that even sophisticated investors were surprised by the poor quality of the assets they had gambled on.

In case you can’t understand these descriptions, neither could the large investors purchasing them, the emasculated regulators supposedly overseeing them or the mop-up crew that’s trying to unravel this mess. But that was the point: lack of transparency in the industry. Does this sound like “investing”? No these are risk ventures, gambling. And who’s being placed at risk here? Not the firms devising all this mumbo-jumbo. The top people in the industry knew it was “too big to allow failure”. The CEOs of these investment firms were bringing in a $ Billion per year, and putting it in safe harbor. And where did the money come from? Much came from overseas. It came from small investors through retirement and insurance funds---from people who hadn’t a clue what was happening to their money, what risk they were facing and who was accountable. Much was being filtered from the staggering sums thrown into the economy by the government budget deficit. Who pays? We all pay immediately through this economic downturn, next through inflation, and ultimately our children and grandchildren pay what’s left from the “fruits” of their parents’ folly and greed.

A small number of individuals in these firms have been making staggeringly high sums, filtering commissions, profits and stock options, leaving the rest of us holding the bag, as in any pyramid scheme. They have been aware of the fine line that the industry was walking; but in our business culture, managers only look a year or two ahead. If they could hold it together for only that long, they’d pocket enormous salaries and bail when the economy went south. With a couple hundred million dollars in their private accounts, what do they care about these faceless institutions?

If these people were caught as cat burglars, stealing your assets by breaking into your home, they’d go straight to jail. But as “white collar” criminals, stealing your assets through bogus financial instruments, they get wealth with impunity. This is all made possible by lax regulation and by direct payments from the industry into our political system.

Are they responsible? Yes, but will they be held accountable? You might round up a thousand principals who were pocketing fifty million to a billion dollars over the past five years; each would have to be tried individually for culpability [in a giant embezzlement scheme]. Could the money be recovered? Not enough to make a dent in the losses of the masses, but perhaps enough to get the attention of future white collar criminals. The political cost of redress in this matter would be off the charts.


So are the principals behind this mess stupid? Hell, no. They're opportunists, feeding in at the public trough. The great majority are right-wingers who deify “capitalism” while they vilify “communism” (whatever that is), socialism, as a scourge. They rage over the evils of “welfare” (for the poor). Welfare for the rich? That’s perfectly ok. We privatize profits, but socialize risk. The assurance of government bailout (welfare for the rich) is what propelled this financial mess. The sickness that our economy faces is gout; it’s an illness of gluttony, greed. The poor will absorb the lion’s share of hardship. The poor lose their jobs, homes, health and families. Inflation generated by this mountain of debt will hit the poor with full fury. The bankers and the rich keep bobbing to the surface, only to dream up the next scheme, and to again decry the evils of welfare. Ma and Pa in Middle America (“good, hard-working folks”) buy into it. The last great depression went on for 10 years, and was at last ended by terrible war. We’ll see what has changed if/after this mess is cleaned up. Any bets?
Jackson Dave is a staff writer for Robbinsense jacksondave.rsense@gmail.com

Tomatillo Soup

You cannot fail to impress your dinner guests (or spouse) by adding Tomatillo Soup to the front of your meal. This gem comes from Weight Watchers, but you won't believe it's diet friendly. Yum!

Reflections of the Credit Culture

Credit Card Debt? You can get out of this hole…no additional loans, no fees.


When we're first introduced to the credit card, it's like cinnamon toast. Instantly one can purchase almost anything. The drawbacks are small; the minimum payment is minuscule. Life is good. It’s very easy to lapse quickly into a life style beyond our means, and by the time we realize what’s happened we are over our head in debt. As soon as there’s a problem with a payment, the interest on the benign little convenience soars from 7% to 30%; the monthly minimum payment mushrooms.

The single most important element in recovering from credit card debt, (yes, this is recovery, as from any dependency), is to understand what’s happening. Essentially, this is “indenture by debt”; you must “know thy enemy”. You are in a battle; you’re not only battling your creditors, you’re fighting our commercial culture.

First, realize that you're facing internal programming that has been thrust upon us for over fifty years. We live in a commercial culture, immersed in advertising. For those of us weaned on television, this has a profound effect on the way we think. (See Marshal McLuhan, Understanding Media). Hence, many of us live with a drive to consume. For some it's a tonic, even a "deity"; for others it's status in society, or a palliative for depression. Along with the slick ads urging us to consume, we see ads from credit card companies reminding us that we don't need money to purchase what we want---just charge it.

Resolution of this dilemma lies within yourself. A loan company, promising to lower your monthly payments through a debt-consolidation is enticing you to borrow more! The loan officer’s mind is on a commission he’ll make by selling you additional debt! Don’t look for the solution where you found the problem unless you are offered a substantially reduced interest rate on the debt or a program of debt relief. If you have credit problems it’s unlikely that you’ll be presented with such an attractive package. If they claim they can get your debt “excused”, examine carefully the qualifications, consequences and their fees. My plan is free, and you will take charge of your life.

Five hundred years ago, charging interest for loans, usury, was illegal, even punishable by death. Now our economy has evolved to the point that debt is our standard. Our government spends beyond its means. During slow economic times, some presidents even tell us that spending is “patriotic”. This is idiocy. We now have 50 million families in the United States that are at least partially buried in credit card debt.

In an evening's television you’ll see sixty products that we must have (to be sexy, popular, up to date or just cool) and at least a handful of credit card ads telling us that we can have everything we want immediately. Even if you watch DVD movies, they come laden with commercials, now embedded into the content. All of these forces are massed to impel you to consume!

Take careful note: If you can’t afford to buy something with cash, you can’t afford to buy it with a credit card!! You really need to believe this! A credit card is a convenience item---a substitute for cash, not a replacement. If you use it to buy things you can’t afford, you will end up paying much more, perhaps two or three times the price for these items through compounded interest, concealed by a low monthly minimum. If you can't afford the item, how can you afford the massive amount of interest you'll eventually pay? Do not fall prey to this scheme!

What the banks fail to disclose, is that with your $25/month minimum payment, it’ll take about thirty years to pay off a $2000 debt---if you never charge anything else! At that rate, you’ll pay $8000 for your purchase, which will have become obsolete 25 years ago.

It's more insidious than that. Bankers have access to information that allows them to assess your income and budget profiles. You can make all of your payments promptly, and still be within their scrutiny and over the edge. If your banker sees an expense/income profile that indicates you're beyond your means, essentially living off of credit cards, you are tagged regardless of your payment history. When you become identified as a risk, your interest rate will soar from 8% to 30%, and your credit limit can be reduced below your outstanding balance. This immediately produces penalty payments, as well as a tripling of interest charges. For a family in financial distress, this is crippling. The bank is trying to get as much out of you as they can before you go down---you have essentially been written off. Again: CREDIT CARDS MUST BE USED AS A CONVENIENCE ONLY; DO NOT USE THEM TO BUY THINGS YOU CAN'T AFFORD.




So how do we get out of this mess?

The fact that your monthly minimum payment won’t pay off the debt for 30 years is not apparent. Legislation is periodically introduced that would require the banks to disclose this on our monthly bill. Invariably this measure is supported by one of our political parties and opposed by the other. The bankers’ lobby has enough influence with the opposing party to prevent this disclosure. Banks want us in over our heads, that’s why they send out so many cards, and with high credit limits. They “bank” on the likelihood that your early payments will cover the possibility that you'll later default. Once you miss a payment, your interest rate skyrockets, your finances, your future financial viability is in trouble. The bankers are rubbing their hands with glee; you’re snared. You’ve been bamboozled by the bankers.

If we all used credit cards wisely, they wouldn’t exist in their present form because the banks would be losing lots of money. The key is to remove yourself from the group of consumers who pay the banks and join the ranks of those who reap the benefits paid for by the other group.

Recovering from credit card debt looks like a diet: You’re over-weight (over budget), right? You find a diet which offers a plan to lose weight; but the key is to keep the weight off after you lose it! After quitting a diet most people put the weight back on---they get on the roller coaster of weight reduction/gain, jeopardizing their health. Rather than getting on board with a weird diet, we all know the only real way to lose weight and keep it off is to adopt sensible eating habits that will allow gradual weight loss, then continue that “diet” for the rest of your life. This doesn’t sound very attractive.

Good news! Credit card debt is not like that. Picture a diet plan that will allow you to lose excess weight, then when the weight is off you may return to your old eating habits---in fact, you may eat more of the stuff you like while retaining your new, trim shape. This is the reality of credit card debt!

We all know that the banks charge interest for their outstanding loans on the cards; but there's an additional charge, a hidden "tax". The credit card tax is the same as a consumption or sales tax. At the grocery store, for instance, on taxable items you pay sales tax on the spot. But you pay the credit card tax on ALL items, including the sales tax, credit card or cash! Nothing is sheltered. If you have credit card debt, even if you pay with cash you’re using borrowed money to make your purchases. You pay tax on every purchase. If you’re struggling with this debt, you’re probably paying from 22 to 30% or more for this tax. It's hidden because the store clerk doesn’t collect it; the bank collects it from you indirectly. Unlike sales tax, however, payment of credit card tax is voluntary.

If you buy a $100 jacket, for which you think you’re paying $107.50 with sales tax, actually you may be paying $127.50 or more with your credit card tax. Again, you pay this whether you use plastic or cash. Think of a credit card as either a mule or a yoke. The credit card is like a pack mule, following you around and carrying your purchasing power. If you allow yourself to get behind in debt, however, the mule disappears and in its place you are presented with a yoke. You shoulder the yoke and begin to drag the load on a sledge, no wheels. To make progress against credit card debt, you must see your credit cards in this manner.


The Plan

First, realize that your purchases incur this additional tax. I will explain how to calculate your credit card tax in the index. The rate of this voluntary tax on all purchases is commensurate with your debt burden. I hope that you now have some incentive to reduce the purchases which are being taxed so heavily. You need to go on a spending diet. Keep in mind that (unlike a food diet) this is temporary deprivation. When you go to the grocery store those items that are taxed by the state are “discretionary”. If you see soda pop, beer, cookies, ice cream, chips--- anything like that---in your basket, you may be paying over 30% tax on these items. Remove them from your basket. You and your family need to go on a life-style diet for however long it takes to get out from under this debt….no new televisions, no dinners out, no beers at the bar. You’re living on borrowed money; you’re paying big time for everything you buy!

Obviously there are things you must purchase. We hope you know your family's essentials. Generally none of these items are taxed by the state. And yes these purchases will still incur the credit card tax; but as you pay your debt down, your CC tax rate goes down. Liquidate all stocks, bonds and savings, and pay it your creditors. (You're paying a far higher interest rate to your creditors than you're earning from these investments.) Sell your boat; or at least put it on blocks, out of service.

This is a period of deprivation, the degree of which is a function of the size of your debt. If you feel you can’t ask your family to share the consequences of your budgetary indiscretion, consider the value to your children of teaching financial responsibility. You must draw a line of distinction between (actual) essentials and non-essentials. The average family will find a multitude of routine purchases (soda pop, bottled water, lottery tickets, beer, cigarettes, sporting events, candy and snack food, trips and vacations) that can be pared from the budget. Scrutinize all purchases. Much of our energy consumption is discretionary. If you think it’s necessary to keep your home at 75 degrees in the summertime, think again. Civilization existed quite nicely prior to the 1960s without air conditioning. Turn the unit up to 85, or turn it off and buy a couple of fans. Save on gasoline by driving at 60 instead of 75.

Every cent of this money must be sent to your creditors, paying down your debt. Start with the card that charges the highest interest rate; make minimum payments to all others. Check with the bank that offers lower interest rates, and ask if you may transfer debt to that card from another bank that's charging a higher rate.

As your debt decreases, your credit card tax rate will descend toward zero. Even when you've paid off the last of the debt, however, you’re not out of the woods. The most important portion of a monthly credit card bill is in fine print. It’s in fine print because the bank hopes you won’t notice it. It's where you authorize automatic payment of your bill. After exercising this option, your credit card balance will be paid from your checking account every month. Be sure to check "pay total bill", as your option may default to "make minimum payment". (Minimum payment is what the bank wants.) You'll see a monthly review of the activity on the account, but you’ll never again send a check. You’ll never again miss a payment. You’ll never again pay the credit card tax. Don’t abandon your "budget diet" until your bank account has enough funds to cover future credit card bills every month. It may take a couple of additional months, but at this point, with no interest payments, no credit card tax and your austere "diet", that will happen quickly.

Now with resumtion of your previous consumption habits, you’ll have additional funds to spend or save that were wasted on interest payments. Do not charge anything that your bank account can’t cover at the end of the month. You've lived forty-seven years without one of those big TVs; you can wait a few more months! If you lose your resolve, the moment you miss a full payment, you’re back in the trap. All purchases revert to the credit card tax, and interest is charged to the time of purchase. With no outstanding balance, you use the bank’s money free!

For major purchases set up an account at your bank to make small deposits every month. Take half the money you used to pay for CC interest and put that away to save for your next car. If some emergency occurs, such as medical bills, that you don't have sufficient funds for, after making that charge, you must be sure to pay down the balance every month. Don't go back to minimum payment and let your balance increase!


The good news is that right now your credit card debt is probably stable. If it’s maxed out, you’re already living within your means! The interest on your credit card bills is your penalty for living beyond your means in the past. Turn the tables on the banks and start using their money; it’s free. In short, to get out from under this debt and start living better you sacrifice unnecessary items for a short period. Once you begin automatic monthly payment of all your credit card bills you will have more to spend and will never again pay the dreaded credit card tax.

Congratulations.


Index


The Credit Card Tax

Your credit card tax varies with the portion of your monthly disposable income that goes to credit card interest. We can quantify the loss in buying power from your income. To calculate the tax, first determine your actual monthly disposable income (d/i). This is your take-home pay, after taxes, minus necessary expenditures, such as mortgage, insurance, work expenses, water, minimum electrical rate, basic food costs and your minimum credit card payments. Remember, your minimum electric rate may be only half of what you’re paying. Total the interest expenses, not minimum payments, from your credit card bills and add it to your disposable income to arrive at (d/i + int). Now divide (d/i + int) by your disposable income. Your credit card tax will be the .xx figure following the 1 in the solution.

For example, if you have a disposable income of $925 per month, and $75 goes to credit card interest, then $1000 ÷ $925 = 1.08. Your Credit card tax is 8%. You pay this tax on everything that you purchase, in addition to sales tax, whether you use plastic or cash.

If you have credit card debt of $20,000 and you’re paying an average of 18% on the cards, with disposable income of $1200 per month, your tax will be: $1500 ÷ $1200 = 1.25, 25%! This makes your total sales or consumption tax approximately 32%! Get off this treadmill!