Posts Tagged Economics

Mixed Martial Arts

How, and more importantly why, has this sport over the last fifteen years become so popular that people wear tee shirts showing the splattered winner’s faces and set up viewing parties at home?  One answer that I’ve read explains that it all began in New York city with formation of the something called the UFC, Ultimate Fighting Championships.  But Wikipedia presents a slightly different explanation, one that may be related to the David Mamet film, Red Belt.  It claims it all started in So Cal with the famous Brazilian martial arts family, the Gracies in collaboration with film maker John Milius. 

Whatever its origins, I personally hold it started with the Romans and probably explains the popularity of such weak film fare as Gladiator.   1993 seems to be the beginning of the current phenomenon.  According to the history of the UFC, gathering enthusiastic competitors from all kinds of fighting sports, the spectacles quickly became competitive events fought in an arena shaped like an Octagon.

 

The octagonal competition mat and cage design are registered trademarks and/or trade dress of Zuffa, LLC and are symbolic of the highest quality mixed martial arts events brought to you under the Ultimate Fighting Championship® brand name.  In 1993, UFC events were the first to feature an eight-sided competition configuration which has become known worldwide as the UFC Octagon™
 
The UFC Octagon is unique from any other fighting arena because the octagonal shape and structure have become inherently associated with Zuffa and the UFC brand name among mixed martial arts consumers, other mixed martial arts organizations and the national media.  The UFC Octagon is regularly featured on UFC Pay-per-view events, UFC® Fight Night™ and The Ultimate Fighter® reality TV series.  The UFC Octagon creates a neutral arena to showcase the skills of UFC mixed martial arts athletes. The UFC organization has established a reputation for providing the maximum safety to the fighters with commission approved ring structures, canvas, and all safety padding and fences.  Zuffa makes major investments to ensure the safety of competitors in the UFC Octagon — as a result, when people see the Octagon they associate it with the reputation and quality delivered only by Zuffa at UFC events.  
Add Las Vegas, males aged 18-34 and their companions, to beer drinking, football loving, and bet craziness and real Americans have apparently found their match.  Fight clubbing, clamoring for more wars, as long as they don’t actually have to enlist, the current followers of this sport brook no interference to their “god-given” right to watch other people beat themselves into bloody unconsciousness.  And then they sit idly by, as Micheal Vick is sent to jail.
What is it in our psychological makeup that somehow does see this violence for what it is?  In this dissertation, I found the following to be of interest:
Ernest Becker is a psychologically oriented anthropologist who focuses on fear of physical death as the mainspring of human behavior. He sees himself as continuing to develop Jung’s idea of the projection of the shadow, but he very emphatically argues that this shadow that is projected is a rejected awareness of one’s mortality. Because human beings are animals, we are mortal. But we also have highly developed brains that give us an ability to be self-conscious and to anticipate the future. We can see that death is our eventual fate, but because we are animals who are basically narcissistic, we want to be immortal. This clash between what we want and what we know is coming overwhelms us. It disturbs us so much that we invent all sorts of personal and social lies in our efforts to somehow pretend that we are immortal. One of the lies we tell ourselves is that if we can triumph over our enemies, we can rise above the limitations of our condition. We can project the shadow, that awareness of our mortality that we have repressed into our unconscious, onto the enemies or the scapegoats we attack in an attempt to prove that they will die and we will not. At root, violence against others is an effort to avoid facing one’s own mortality with existential honesty and courage.
Which brings to mind the film Rollerball and the conflict between the Oligarchs who run/own the games (See Las Vegas) and the players like Jonathan E who enjoy the competition for its own sake.
Am I getting anywhere with all of this?  Will any of what I think change the yearly income of millions this pay-per-view event earns or shift the viewers to whom I appeal for rationality to another choice?  Probably not.  Do I wish someone would comment on my original question?  Most def.
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Stimulus check

This week the government announced the schedule for the delivery of our stimulus tax check.  If you used an electronic debit to pay your taxes, you will get yours in early May.  If you paid the old fashion way, then those checks will be spread out over the next three months with the latest being delivered in July.  I don’t now about you, but if I was one those receiving my check in July, then “frustrating” would be the descriptor I’d be using instead of “stimulus”.  With everyone else already in their money so to speak, the pressure to spend it ahead of time via credit card will grow exponentially.  Just what we need, more pressure to use credit.

Meanwhile, the possibility that the U.S. will suddenly change into a nation of savers with this check continues to disappear as food and fuel prices escalate.  The free market frame of mind that has held America and the world in thrall for the last 30 years is going to be more than difficult to shake off.  Just as individuals have been captured in the credit debt cycle of living large, so is the U.S. caught in the cycle of being the world’s only super power.  Both with the same type debt loads, and with the same spending styles.  I see no reason not to believe that just as American lenders are extremly unfriendly when we don’t pay on time, so to will the foreign investor countries follow form.

Our problem, it seems to me, is our very own political and economic behavior.  As a people, according to the last two elections, we eschew taxes.  The lower the better.  For the middle and lower class that means they will have a few more dollars upon which to survive.  For the rich and the ultra-rich, it means they will have more and more to invest and sock away and pay for the richest standard of living in the world.  Politically, because we are constantly stressed out over which party is in power, we almost never notice that economically both parties are the same old same believers in the efficacy of the free market.  Though I don’t know if believe in is the right phrase at this point.  Many of them may be finally noticing the free market failures but just like any credit debtor knows being locked in means paying for your mistakes right to the very bankrupt and foreclosed end.

Tomorrow I’ll be reviewing Charles R. Morris’s The Trillion Dollar Meltdown.  I am hoping it will provide some ideas for what we as individuals and as a nation can do to turn this disaster into an opportunity.  After all, isn’t that what super powers do, save the world?

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A trip to LA

Today we are heading up to LA for a day finance fun at the TD Ameritrade seminar on trading.  T loves to attend workshops and I don’t mind them if I can bring a book or laptop and do something useful while she learns and I listen.  Actually, the workshop is in Anaheim so technically that’s not LA but if you live out here it gets to be a habit to think of anything above Santa Ana as part of the greater LA nation.

The nice thing about it is that the Marriot has a great pool and the weather is 75 degrees and blue skies.  This is not to say that things aren’t serious what with the economic climate being not so sunny.  But for a day or two we are going to enjoy ourselves and think about solutions instead of problems.

Meanwhile, if you really want to get in on some great discussions about finance then tune in to this link: http://jtaplin.wordpress.com/ and get your brain thinking.

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Greenspan in England

I was on my way to pick up a Borrelli’s pepperoni pizza before the Houston/Boston game when I heard the funniest story on NPR via the BBC news service. According to the report, Alan Greenspan was in England and being severely questioned about the current credit crisis in the US. The reporter said that according to Greenspan the problem may have been caused by the use in many companies of teenage programmers who’s computer models were not really reliable in economic terms.

Teenagers.  Damn, and I was so eager to blaim it on the neoliberals and the free market that apparently can’t really adjust itself the way that the economists claim.

Meanwhile, the fix which over the weekend seemed secure now is apparently not.  And while JP Morgan Chase’s offer of $2 a share is on the table, the stock is actually trading this morning in the $6 range.

As I was discussing yesterday, this solution, the $30 billion buyout that uses tax payers funds to rescue one financial institution, is not the correct solution.  But we are stuck in a top down model, Daddy Fed, or Mommy Central Bank, or Uncle Sucker, however you want to call it, will solve the problem it has caused by doing the same thing it has been doing.  Borrow money to pay off borrowed money.  This is wrong.  We need some new thinking and different people doing the thinking.

And meanwhile, England, please keep Mr. Greenspan there.

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Money in the bank

A sure thing that may no longer apply.  As the dollar continues to devalue and the Fed continues to print more, the piles of money we have stored away in emergency funds, savings plans, and even in precious metals is worth less and less.  This is definitely a frustrating situation.

For the past several years, counter to the rest of the nation, a small but dedicated group of bloggers have been posting about the trials and tribulations of teaching themselves and their readers about how to be frugal in a consumer economy.  101 ways to save at the grocery store, 21 ways to use your vehicle less, 15 steps to budgeting your income, 10 reasons to invest in index funds, and 20 baby steps to getting out of debt – those are the types of posts that have piqued reader’s comments and led the charge towards spending less and earning more.

So, secure in the thought that we have done things right and have avoided the danger of the bubble pops that have hurt so many people in recent months, we wake up this morning to the news of Bear Stearns and begin to wonder, if an individual or even a group of individuals working collectively can avoid the credit trap, why did this financial giant get caught short?

When an individual is in a credit crisis, there are documented ways to begin to deal with it.  But when a financial institution is in a similar situation, it represents a much larger problem than just poor financial planning.  In Bear Stearns we are seeing a reverse collapse of an economic system which has been under increasing attack in the last year.  The so-called Free Market economy that so many of our neoliberal political and business leaders, and corporations are so proud of is at the heart of the problem. 

Seen through the eyes of an individual, we can not help but notice that our economy has been taken over by credit junkies.  Borrowing today to fix yesterday over and over again until the debt load is so deep that they can’t look up and see a way out.  An individual can choose a bail out loan, pay off the creditors and then stick to a budget.  But anyone who has been there will tell you, fixing things is a life time process.  It’s so easy to take out that new credit card, or buy that new car, or invest in the new stock,  or . . ., and there you are right back where you started.  As long as the economic world we live in is invested (yes, there’s that word again) in consumerism, advertising its many wares thousands of times daily and pressing us to be engaged constantly in the same process through our jobs and our lives, we will be in danger of falling back into the hole.

Now we are seeing that this is not just an individual problem.  We have been taught that a free market will fix it all.  That a market place without regulation is self-correcting.  But in personal finance you learn that the first step in dealing with an addiction is accepting the fact that you are addicted.  Sometimes it takes a crisis, sometimes it takes an intervention to help you see the light.  What is happening with Bear Stearns today may just be that crisis.

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Barbara Ehrenreich’s Bait and Switch

chronicles more than a year of her adventures into the white collar middle class job industry in the US.  Those of you familiar with the rules of the classic bait and switch will understand just by the title that she is talking about the failure of promise in a world that says work hard, go to college and you will be rewarded with a lifetime of jobs that will pay you four times what your uneducated brethren make.  Well, we already know that that’s a lie just on its surface.  There are more examples than can be cited of dropouts who are millionaires.  Still, . . . we all go through school believing the bait (education is its own reward) even if we don’t choose it.

The switch comes later.  Well, actually it is coming right now.  And it appears that it is coming to not just us but every economy world wide as we all encounter the fact of living a life based on credit.  We can’t even deny our part in what is now unfolding.  We saw the envelope in the parking lot filled with money (credit cards, home equity, carry trade economics, the stock market) and we knew it wasn’t really ours.  But it only seemed fair to keep it as long as no one came along to claim it (the credit card interest rate fluctuating, the failure of the housing industry, the sub-prime loan crash, the bond rating slip) for their own.  So here we are all hoping that what is happening is really just some nay-Sayer’s dream come true.  But not really. 

As our writer friend, Trent, at the Simple Dollarsays think long term and it will all come out right.  Sure, focus on Edwards’s hair, Hillary’s laugh, Obama’s name, or McCain’s jaw clench.  That’s the real news, our media tells us.  Anyone who says different is just filled with negative thinking and we all know where that gets us.  Do the words of George Bush the second sound familiar.  Just go shopping.  God is on our side.  Talk about buying into a dream.

As Ehrenreich points out in her book’s concluding chapter,

The most recent corporate tax break, for example, is provided by the appealingly titled American Jobs Creation Act, although it does nothing at all to encourage job creation.  Elected officials coddle the corporations for our sake, we are always told; there is no other way to generate jobs.

The real bottom line is that our corporations are in the process (through buyouts, layoffs, and outsourcing) of doing exactly the opposite.  Instead of creating jobs they are eliminating them.  And because we are the shareholders that the corporations are beholden to, (pay us our dividend now, we demand) we are caught in our own little Catch 22 cycle.  Only it isn’t little and it isn’t just us that are now opening that envelope of counterfeit paper.

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It all comes down to the money

The dollar is falling, the dollar is falling, scream the headlines even as millions of Americans continue to park their cash.  1.3 trillion dollars were sitting in American savings accounts, CD and Money Markets according to an industry chart shown last week on Jon Taplin’s blog.  Yesterday, the fed continued the fall when Chairman Ben Bernanke described the economy as a no growth, financially frozen, and inflation-risen wasteland.  Wow! talk about your politics of hope.  Gold prices, silver, and platinum have doubled, and no one knows for sure what’s under the mattress or in the coffee can in the cupboard.

Looking for the cause of this wonderful circumstance?  Take a look, Pogo.  We are the ones who applauded as the real estate market provided us with a seemingly endless supply of equity to use on new cars, vacations, and just about any exported items our heart desired.  We are the ones who made millionaires out of the authors who tempted us to seminars where we all learned how to be the next millionaire.  We are the ones who voted in the politicians who took us to war.  We are the ones who suddenly are flocking to the polls to elect someone we hope can bring our country back under control.

Well, as any surfer can tell you, sometimes it takes a long time for a wave to form but this one looks like the ninth wave to me.  Around our house we have had long discussion as to what is really happening.  One thing that stands out to us is the cognitive dissonance caused by reading/watching the news and then looking out the window at a world that seems remarkably untouched.  The streets are still clogged with traffic, the parking lots in front of Target, Office Depot, and Linen and Things are jammed, and the price of real estate, though dropping, is still way beyond the reach of us ordinary two salary per household folk. 

The conservative folk in our midst will tell you that this is all nay-saying from the defeatist liberal left.  We are just fine, the surge is working, the jobless rate is, well who worries about those folks, right?  But if that is so true, why are they all taking their tax cut dollars and putting them into savings?  Aren’t we supposed to see those dollars reappearing in the economy as retooled industry, and more and better paying jobs for Americans?  We know the corporate heads are falling but they all seem to be landing softly on pillows of buy out cash and stock options.  Do I have to be liberal and left to notice this?  And then there’s the war, where Senator McCain claims we will be fighting Al Qaeda for the rest of this century.  Again, some of those left leaning anti-American liberals (boy that is some oxymoron) are calling it the $3 Trillion Dollar war but what do they know, right?  It’s money well spent if it will secure our country and lock in our oil.  The thing is, as Senator Obama points out, there was no Al Qaeda in Iraq before we went to war there and quite rightly I think there won’t be any Al Qaeda there once we end this war and bring our troops home.   But that hope – bringing our troops home, ending the war, forcing the Arab states to solve the problem of Al Qaeda – doesn’t really fit with the plans of corporate conservative Blackwater Haliburton does it?  After all, where’s the money in that?

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