Gene's Blog

Let’s talk billions and sense

As opposed to dollars and cents. Because I’ve been holding on to a couple of articles for a few days now, just thinking about them. And they make no sense to me. We all know the foreclosure rate across the country is just decimating the middle class of America. Actually I think our middle class has three classes within it, that we are a five class society now, maybe six. This is not good as in a five star hotel. If that IS good, I wouldn’t actually know that either, having never been in one, let alone stayed at one. Probably still have bedbugs. :^)

Okay, the first article was in last Friday’s Minneapolis StarTribune, yes, they like it like that, one word, it is an affectation they picked up when they merged the morning and afternoon papers many years ago, which were, of course, the Minneapolis Tribune and Minneapolis Star. That was to assure we readers that the new paper would retain the best of both, which it actually did for a few minutes. :^). So now it is just the Strib to most of us. Anyway, this article was by a man named David Cho and the article was from the Washington Post originally. It says the subprime mortgage crisis hasn’t been all bad news. Three men, managers of what are called hedge funds, managed to do a bit more than all right. John Paulson earned 3.7 Billion dollars last year betting the subprime market would collapse. Yes, billion. George Soros made a tidy 2.9 billion and James Simons a mere 2.8 billion. Dollars. Each. Individually.

2002 was the first year hedge fund compensation was tracked, the top 25 managers earned 2.8 billion combined. Mr. Paulson started 2007 managing a fund that was itself worth “only” 6 billion dollars. Over the course of the year, one of his funds earned a 590 per cent return, and 353 per cent. The total value by the end of the year was $28 billion dollars. The way this works is by something called “short sales”. An investor borrows securities, in this instance, subprime mortgages owned by bank, brokerages and other investors, then sells them later to another buyer. Later the investor must buy those securities back and return them to the original lender. As the subprime market collapsed, the value of the securities fell, and Mr. Paulson was able to pocket the difference.

Hedge funds themselves are composed of pools of private money, largely made up of funds from wealthy individuals, pension funds, endowments, etc., and used for a wide variety of investments. Normally 80% of gains are distributed to the investors and the manager of the fund retains 20%, plus an annual fee. You see the math here? :^) Congress last year really tried to jump on these guys. Several bills were introduced that would raise the tax rate, 15%, that fund managers pay on their gains. Not one of those bills became law.

So, the subprime market, which this same Strib has been spotlighting the past week only in the terms of individual woes, people who were scammed, led to believe things that were not true, induced into illegal activities and just plain hoodwinked, while being disastrous for individuals, banks, etc., and the country as a whole hasn’t been all bad. At least for a few.

Remember a bit ago when I said we are a five class society now? I take it back. We’re a nine class society, if indeed some of us can be said to have any class whatsoever. The dirt poor, the poor, the just above poor but a paycheck missed away from disaster, the lower middle class which is just a notch above the just above poor, the middle middle class, those with some savings but a medical bill away from financial disaster, the upper middle class, who are doing well, but are largely two income families who can be brought to disaster by one ill-timed medical crisis, one ill-timed layoff or merger, or any serious accident – which can bring any of these six groups to their knees, and put most of them onto one form of assistance or another. Then we have three variations of the upper class, the wealthy small business owners, those flirting with real money for the first time, highly paid employees, but employees just the same. Then the middle group, secure business owners in secure industries, the upper echelon of legal and medical workers, the highest paid people in the country. Then our top 1%, the uber wealthy, with so much money they couldn’t spend it in many life times. I think we’d put Mr’s. Paulson, Soros, and Simons in this group, along with, around the world, a relative handful of such in each country, even the poorest of countries.

Am I saying they didn’t earn it? No. I am saying it is inequitable and arguably immoral that the gap between the poorest and the richest has grown to be as large as it is. How I can make that statement we’ll talk about in another post. And, yes, it is because God said so, giggle. Well, He didn’t actually say that, He said, such situations demonstrate what humanity thinks of itself and what it really values in the way it treats its people. This is more than a red state blue state issue and we’ll talk about why in that post. It is what has been building in the stillness of the past month.

But before we get to that, before I leave this, I want to mention something else I saw in the Strib. This is how our tax dollars are spent so I’m going to make it a nice little list. :^)

42.2 cents to the Military
22.1 cents to Health Care
10.2 cents to Nonmilitary interests – foreign aid? Not sure.
8.7 cents to anti-poverty efforts
4.4 cents to education
3.9 cents to government and law enforcement
3.3 cents to housing and community development
2.6 cents to environment, energy and science
1.5 cents to transportation, commerce and agriculture
1 cent to internal affairs

So what do those numbers say about what we care about? What our national priorities are? Are we REALLY that afraid? Need we be? What would the world look like if we made a few changes to those numbers, in concert with the rest of the world. We are, by the way, as one of my previous posts pointed out, far and away the largest spender on military items. Very much fear-based living, isn’t it? What if we chose again? What if we all chose again? What might we do then? THAT is the post we’ll come to shortly. God has quite a reasonable plan laid out in book 2. I’d like to see it become the driving force behind peace, environmental and political agendas the world over. We need change. The three men to whom I introduced you at the beginning of this post might disagree, but I think we out number them. :^). At some point, we have to ask ourselves, when is enough, enough? That is a reasonable question. And it is one reasonable people deserve an answer to. The solution does not lie in a 75% tax rate either – God actually proposes a tithe, a voluntary tithe at that. There, that’s the teaser to the end game in this little political diatribe. All is not lost and we don’t need to bring the mighty to the ground nor burn them, or anyone, at the stake. Love can do this all. And it will if enough of us want it to. I do. much love, :^) gene

Deepskyblue tonight, because this covers us all.

If today brings even one choice your way
choose to be a bringer of the light :^) gene