Visualizations of Migration and on the Crisis

Development experts love to compare remittances (the portion of the wages of labor migrants going to their families abroad) with foreign aid, and foreign direct investment to point to how large remittances are.

Mexicans in the U.S. sent at least $25 billion dollars in 2008. Yet the remittances of these millions of workers pales in comparison to the $50 billion dollars that Bernie Madoff himself accepts to have stolen. That is around 2 years of remittances from around 7 million workers. Remittances numbers pale even more when compared to bail-out figures. Now that is a comparison that you will not see graphed in World Bank reports, etc.

Look here for great visualizations of internal migration within the U.S. (of U.S. born individuals) from the Pew Research Center. A much less common visualization than that of (the still interesting) international immigration into the U.S. (see links bellow). This Pew report shows the immobility of large proportion of Americans, as well as the great mobility of another.

Immigration Explorer

Other visualization of US Immigration to the U.S.

Flowing Data: Other Visualization of Immigration

27 Visualizations on the Financial Crisis

Article on Wall Street Quants

















And here good graphic explanation of the home mortgage-based investments from the NYT.

But as the article rightly concludes, “Recent events have invalidated all the models we had,” said Emanuel Derman, a Columbia University professor and former Goldman Sachs quant.

Trust and Economic Transactions 2

Trust and Economic Transactions 2

James Surowiecki writes, "On Wall Street, fraudulent schemes tend to thrive during economic booms, and to blow up when times turn tough. While bank robbers are getting busier, the Bernard Madoffs are starting to get caught ... Cheap money engenders a surfeit of trust, and vice versa. (The word “credit” comes from the Latin for “believe.”) The same overconfidence that leads investors and lenders to underestimate the risks of legitimate investments also leads them to underestimate the likelihood of fraud." The full article is here in case you missed this short entry on last week's New Yorker.

And here is a very interesting discussion of the current crisis and state of affairs by Niall Ferguson:

Quantitative “Easing” and Qualitative Uneasiness

Quantitative “Easing” and Qualitative Uneasiness

Something that the current economic crisis has shown are the systemic contradictions, the un-sustainability of the new "products" of the financial sectors, and sometimes the hypocrisy of economic experts and the proponents of free market and neoliberal reforms who preached throughout the world deregulation, a reduced role of the government in “the economy”, independence of the central banks, and inflation control at the expense of unemployment but now are engaged in the opposite. These experts were especially against the irresponsible printing of money which they saw as dangerous as it could produce inflation and corruption, even when some world leaders claimed that they needed the money to support social programs, protect national workers, and to avoid negative growth and deflation. But just when these experts had convinced almost everyone about the supposed truth of their claims which had become almost dogmatic, we see that with the current crisis the United States Federal Reserve has been engaged in “quantitative easing” i.e. printing dollars. Sure printing dollars is not the same as printing pesos or Dirhams since the dollars has actually strengthened lately in relation to the Euro and the British Pound!

The scandal around the Madoff Investment Securities has shown how bonds traded in Wall Street and other financial markets also depends on trust sometimes deserved others not.

Similar if to a different degree is regular activity in the financial sector, as see in this first person account from Michael Lewis:

"To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue. "

"I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance."

More from Liar’s Poker

At the same time it seems that the French authorities have let out of prison the defrauder that goes by the alias of Lionel Doyen and Ernest Koumang since people continue reporting scam attempts for fraudulent departments in Paris through Craigslist.

Are these all examples of the same phenomenon but at different scales? Who is responsible for all this? Those who play this game willing knowingly or not? How about those who watch in the sidelines? Leaving these hard questions aside there is no doubt that the State can still play a role in regulating the bounds for how much can be gambled and how. Yes, this is a global exchange but what the government of the countries where the leading financial centers are located decide to do should rein these transactions. The remaining question is how much and at what cost? Can this genie be brought back into the bottle?

Faith Based Economy

Something that has further been shown in the current economic crisis is how hard governments, economic experts, and pundits are trying hard to reassure consumers (a.k.a citizens, a.k.a voters) that things won't be that bad (except when it is time to ask for financial help from the government) with the open and deliberate goal to increase consumer confidence and investor's trust in companies and financial institutions so that indicators such as the Dow Jones (supposedly reflecting the "real economy") do not go down. Why is collective delusion so important in keeping up financial markets, "quant shops," and hedge funds? Were financial derivatives and other "products" nothing but a collective delusion? Had Wall Street and other stock exchanges been living in a Faith Based Economy FBE?

Noted scholar and social scientists Arjun Appadurai thinks so,

"we are in a new Weberian moment, where Calvinist ideas of proof, certainty of election through the rationality of good works, and faith in the rightness of predestination, are not anymore the backbone of thrift, calculation and bourgeois risk-taking. Now faith is about something else. It is faith in capitalism itself, capitalism viewed as a transcendent means of organizing human affairs, of capitalism as a theodicy for the explanation of evil, lust, greed and theft in the economy, and of the meltdown as a supreme form of testing by suffering, which will weed out the weak of heart from those of true good faith. We must believe in capitalism, in the ways that the early Protestants were asked to believe in predestination. Not all are saved, but we must all act as if we might be saved, and by acting as if we might be among the saved, we enact our faith in capitalism, even if we might be among the doomed or damned. Such faith must be shown in our works, in our actions: we must continue to spend, to work hard, to invest, and, as George Bush long ago said, “to shop” as if our very lives depended on it. In other words, capitalism now needs our faith more than our faith needs capitalism."


"But Faith, it turns out, is not enough. Capitalism, as a master-belief system, reasonably operates on faith. But markets, especially capitalist financial markets, need something more specific: Trust. And that is the second biggest Revelation of the last few weeks. We have a trade deficit, as we all know, but much worse is our “trust deficit.” No one trusts the (financial) other anymore, we are told, and without trust no one lends and without lending the plastic ceases to work and everyday life comes to a complete halt. This news will come as a shock to all of us on “Main Street,” who trust our friends, our neighbors, our leaders, our churches and our employers as much—or as little—as we did last year. No, trust is not a Main Street problem, it is a Wall Street problem. In other words, banks won’t lend to one another, and that problem in the high mountains of finance is melting down into the valleys and plains of our everyday lives."

Read the rest at "The Immanent Frame"

Financial Crisis, Breaking News?

The bubble hidden behind the housing boom, derivatives and other financial instruments has long been known to sociologists or anyone bothering to read any economic sociology.

For an insiders look of a previous crisis see: Joseph E. Stiglitz. 2003. "The Roaring Nineties: A New History of the World's Most Prosperous Decade." W. W. Norton. Where Joe Stiglitz, Nobel Prize winner, and head economic adviser during Clinton, talks about the financial crisis of the 1990's. He is not scared to use the terms "corporate theft" and "corporate welfare" to talk about the dubious accounting schemes used by CEOs to get stock options at the expense of shareholders, and other ingenious mechanisms to avoid paying taxes, along with the surprising help from the US government specially of the Treasury and the Fed under Alan Greenspan at the expense of more social programs as desired by the Clintons, Stiglitz and Robert Reich. That was a policy discussion won by economic experts, technocrats, and large economic interests. Hopefully it won't be the same this time around.

For a terrible precedent of bank bailout, and the bad deal it is for Mexican tax payers, look into the fiasco of the deceivingly called Fondo Bancario de Protección al Ahorro, commonly known as FOBAPROA.

To look at the road not taken in the current discussion which fails to acknowledge the systemic elements of this crisis hear the podcast of Craig Calhoun here.

Or for better alternatives see Saskia Sassen's and others' suggestions in "7 better uses for $700 billion" in Forbes.

Provocative quote I found at NPR's website:

"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. -- Attributed to Alexander Tytler (1747-1814)."

OLYMPIC WRESTLING

Henry Cejudo captures gold and a piece of the American dream

"The son of undocumented Mexican immigrants who had to work two jobs to keep food on the table, Cejudo gave the U.S. its first Olympic gold medal in freestyle wrestling in 16 years Tuesday with a stunning win over Japan's Tomohiro Matsunaga in the 55-kilogram (121 pounds) final (Baxter 2008)"

"This is what I always wanted. The frustration was let out. The hard work and everything. I set my goal, I trained hard. I had a good staff around me. I just put the pieces together and I really believed in myself." And moving from the personal to the social, Cejudo added,

"This is cool. Coming out of a Mexican American background, it feels good to represent the U.S.," said Cejudo, who was born in Los Angeles. "Not too many Mexicans get the chance to do that."

"Cejudo's parents divorced when he was 4 and he saw his father, Jorge, only one more time before he died in Mexico City. But his mother, Nelly Rico, raised a family of six children on her own, bouncing from low-paying jobs in California to New Mexico and Arizona, where the family sometimes slept four to a bed."

"A large group of family and friends -- including sister Gloria, brother Alonzo and brother Angel, his training partner in Beijing -- were in the stands for the match. And they made so much noise they were nearly ejected at one point."

"Missing, however, was Cejudo's mother, the person he has repeatedly said was most responsible for his success."

"We always moved forward. We always moved forward. My mom always taught us to suck it up and whatever you want to do, you can do," Cejudo said. "And that's what I did."

"There were conflicting stories as to why his mother remained in Colorado. According to one explanation she had passport problems. Cejudo said she stayed home to take care of her grandchildren." Others say it was because of nervousness.

Repeating some negative stereotypes his coach Terry Brands said, "He has done an unbelievable job coming from the environment that he came from. Could be in prison. Could be a drug runner. Could be this, could be that. He's done an unbelievable job of not being a victim."

"He is the American dream. Gold medals are the American dream."

"And Cejudo had one around his neck Tuesday. But he was also wearing an American flag. And he wouldn't let on which he liked better."

"I don't want to let it go," he finally said, tugging on the flag. "I might sleep with this."

Talk about successful assimilation...

Baxter Kevin, "Henry Cejudo captures gold and a piece of the American dream." Los Angeles Times. August 20, 2008. Full article at:
http://www.latimes.com/sports/la-spw-olywrestling20-2008aug20%2C0%2C4592238.story

Obama and McCain's commitment to immigration reform tested amongst a hard crowd

Both candidates support an eventual path to citizenship for illegals

Both McCain and Obama addressed a conference of Hispanic some 700 people attending the National Association of Latino Elected and Appointed Officials in Washington, DC both were looking to cater their favors but underlined different points:

Obama, "admired Mr McCain's attempt last year to get an immigration reform bill approved by Congress...But he said that Mr McCain had since walked away from that commitment." Obama said, "We must assert our values and reconcile our principles as a nation of immigrants and a nation of laws. That is a priority I will pursue from my very first day."

McCain said, "I know this country... would be the poorer were we deprived of the patriotism, industry and decency of those millions of Americans whose families came here from Mexico, Central and South America." But added, "that his primary focus regarding immigration reform was to secure the United States border with Mexico." BBC reports that, "Mr McCain's speech was disrupted several times by hecklers from an anti-war group."

Source: BBC. "U.S. rivals clash over immigration." BBC News. http://news.bbc.co.uk/go/pr/fr/-/2/hi/americas/7479651.stm Published: 2008/06/28