Picking the Low Hanging Fruits of the pWnership Society, or Enron was a Proof of Concept

As the last of the air drained from the dot com bubble, the Boys Behind the Scenes were hard at work trying to figure out what vertical market would make the best new inflatable Big Thing.  They came up with a doozy.  After many hours spent pouring over this market or that, they hit on real whopper: They would inflate the housing market. 

Now, to anyone with a modicum of understanding of the principles of economic fundamentals, this would seem far to the east of any rational mode of thought.  The inflation of a core commodity is, without question, one of the most asinine things you can do to a consumer-driven society, and despite being a refined product, housing IS a commodity.  Shelter is requisite for any society, just like food, water, air, and in the case of  modern day society, oil.  And if the Boys Behind the Scenes know anything, it's economic fundamentals.  Hence the "No one could have foreseen this" ploy is off the table.  They knew the theory quite well, so all that remained outstanding was the manner of implementation.  Gaming a core commodity is tricky, because you have to have a solid plausible denial in place in case the masses get wise to the con.  So they needed a proof-of-concept.  For this, they chose California, and the energy market therein. They would engineer a scenario where a series of refineries would shut down for "maintenance" in such a way that energy would become wildly inflated in that particular market.

Stick with me on this, because in these early experiments we see the trappings of the Neo-Feudal Age in which we live now.

The problem was the middle-class.  Despite years of wage stagnation and shipping jobs overseas, the middle class was still far too affluent.  Years of hard work and moderately sensible money management had created a large swath of people who, while not well off, were at least comfortable.  To put it another way, there was far too much money distributed amongst too many people to implement such an age.  That money, those resources, needed to be consolidated.  And most of that money was snugly squared away in home equity and retirement savings.  Thus, the first phase was to unseat that equity and get it back into play.

The plan to do this was encapsulated and presented to the masses in the form of the so-called Ownership Society.

The Ownership Society was rolled out in 2002, not long after the proof-of-concept, Enron, had proven beyond a doubt that commodities could be inflated by gaming the system without the need for open speculation.  Open speculation would come later, once desperation has set in.  First, however, that home equity and those retirement accounts needed to be put into play. The plan to do this was two-fold.  First, loosen the requirements for getting a mortgage.  Second, flood the market with "cheap money."   For the first step, the types of home loans one could obtain were expanded.  So called, Option-ARM loans, Interest Only, Negative Amortization loans were rolled out in force. Then the banks flooded the system with cash. Suddenly, people's homes turned into large ATMs.  Working for a living was deprecated, and everyone was buying a house on what amounted to credit card terms.  All you needed to do was sell your house, buy a bigger one, hold on to it for a year or so and in that time slap in a faux marble counter top and Roman bath, then sell it, and presto: Profit!  From this giddiness, a new type of house was born: the McMansion. Entire communities of McMansions sprang up nation wide.  The price of gas (and food) started rising stealthily  but no one cared.  They were to busy being chauffeured around by real estate agents looking for their next ATM.  With no proof of ability to pay, and armed with only your signature, you could walk into a loan office and they'd hand you half-a-million dollars or more, very few questions asked. Pastry and coffee were gratis.

Within just a few years, millions of homeowners had sold their cherished heirloom tinder box and traded it for a McMansion, while others had tapped their retirement savings to do the same, or to invest. They were deep in debt, but they were told it was the 'good kind' of debt.

Of course, there is no such thing as 'good' debt.  Debt is debt.  It is money you're obligated to pay back. Period. If you can't pay it back, your credit rating goes south, and you wind up living in a van down by the river, but I digress.

And while loan agents were writing mortgages at the speed of clicking the 'Fast Cash' button on the ATM, on the backside, these mortgages were being bundled and sold off to the highest bidder as stable, solid investments.   These AAA rated junk bonds were being scooped up at an alarming rate by individuals, business, cities, states and countries. That the money was flowing quickly from the budget was irrelevant, because it was all 'good' debt.

Despite being craven, the plan was very well orchestrated, indeed. It was attacking the middle class on a variety of levels, and the middle class wasn't aware of it in the least.  The Middle Class had been completely sold on the Ownership Society, and was in the process of fixing up their McMansions so they could flip it, go deeper into 'good' debt, and buy another, larger McMansion in the newest gated community being built just down the road.  Homes worth 80 to 150K were being sold for 2 or 3 times that much, for no other reason than that they were homes, and the equity was now liquid.

Then, in the summer of 2007, something happend.  An investment company called Bear Stearns collapsed.  Why?  Because someone somewhere along the way (or more likely, on purpose) had realized that a $100,000 house being marketed for half-a-million was silly.  And as it turns out, many investment companies had socked vast sums of capital into these highly rated "safe and stable" investment vehicles.

These 'vehicles', as it turns out, were neither safe, nor stable, and were, in fact, careening at top speed towards the approaching cliff.

The jig, as it were, was up.  The Fat Lady had sung, the bill had come due and it was time to pay the fiddler.  The only problem was that there wasn't a dime to be had to settle up that bill, because it was leveraged to the hilt in mortgages, bundled or otherwise.

So now the consolidation of capital could commence, unencumbered by home equity or personal savings.  A new phenomena emerged: the 'underwater' homeowner.  And pretty much anyone who had bought a house during this period of willful abandon fit into that category.  The ARM loans, armed with a balloon clause in the fine print, came due, and the whole house of cards came tumbling down, catching everything from investment firms to entire cities in its wake. Shortly thereafter, the stock market, also wildly inflated, crashed. Small and medium-sized banks began to fail, the party was over, and the mopping up could begin. The federal government threw money at a few of the big banks, Citi, Goldman Sachs and the like, and the individual home owner was left holding the bag.

Which brings us to where we are today, awash up to our ears in the 'good' kind of debt.

Today, 'most' homeowners are underwater on their mortgages.  Today, companies like Blackstone are buying up houses on the cheap.  Today, the average worker is beholden to The Man, with little to no hope of a comfy retirement.

And thus the Neo-Feudal Age was born.

The City Inside the Walls, or closing the gates on innovation.

A disturbing trend is bolting through the technological world at teraflop speed.  Two technological giants are working feverishly to marginalize both independent third-party development and the very concept of Open Source, not to mention the Open Source Community.  The trend is the development of closed systems (think iPhone, iPad and Windows Surface), which will only run applications from vendors who have paid Apple or Microsoft up front, and further forced to forego as much as 30% of their application price to these company's "app stores."  This is disturbing for a number of reasons.

First, it limits the users choice in applications, from the Operating System all the way down line.  It decimates the idea of freeware, and discourages developers from writing for these platforms because of the inherent costs, bureaucratic hoops and overall inconvenience. Since the advent of the Personal Computer, you have had a choice in what hardware you wanted to run, what OS, what applications, and so on.  The move to close these devices stifles these choices enormously.

Secondly, it is an aggressive attempt to destroy the Open Source Community.  Open Source is one of the primary reasons that PCs have evolved to where they are today, one of the reasons that they have become ubiquitous in the modern world.  Open Source encourages innovation from all comers, it's transparent, and available to entry level technologists at no cost whatsoever, beyond the cost of their hardware.   When I began programming, it was the Open Source Community that allowed me to learn the skills required to advance in the technological world.  I was living as a 'starving artist' at the time, and had the desire but lacked the financial resources to return to college.  The only way I was going to learn these skills was to teach myself.  I scrapped together the money for a book on HTML, borrowed a friends computer, and set out to teaching myself how to make web pages.  From there I went to Javascript, and then to PHP, to XML, to Java and so on.  Over the years I've been able to master several languages, and not once have I had to pay MS or Apple anything more than the cost of a machine with an OEM Operating System.  It's the Open Source Community that allowed the internet to thrive, allowed the dot com boom to happen, and shape the technological landscape we live in today.

That landscape, that openness, is now under threat from the same companies that rose to power because of that openness, and now that they have this power, their obvious goal is to lock out anyone who is unwilling or unable to pay them top dollar for the privilege of running the applications they wrote themselves, or further, applications they want to run by choice.   These companies that started with slogans like "Think Different" and "Where do you want to go today" are now, in effect, saying "Think like we tell you to think" and "You'll go where we damn well tell you to go."

The irony is breathtaking.  It's a classic bait and switch move, made quasi-legal only by the size of the company.  Right now, it's illegal to 'Jailbreak' a smartphone.  Got that?  Illegal. Tablets aren't on the list yet, but they're looking at them, which means it's only a matter of time. And in reality it's not even limited to Apple and Microsoft.  Intel is in on it from the chip side, Dell on the distribution side, and there are even gaming companies taking the "who cares what you think" approach to their products. 

Think about that for a moment.

A company builds up a customer base, the customer's lives become fully-integrated into the company's  products -- that the consumer doesn't own in many cases, then that company closes the gate on the customer and forces them to buy constant upgrades -- and only from said company and their "preferred vendors."  And further, if you don't like it, there are no refunds.

What. The. Hell?

I remember very clearly the first commercial Apple released nationwide:  A black and white Orwellian dystopia, stark and bleak and dismal. Enter an individual in full color, who slings a mace at the old man on the screen doling out the propaganda.  The screen shatters.  "Think Different."

Now that all these people have thought differently, or decided where they wanted to go,  now that they've invested thousands of dollars and countless hours on one OS or another, the gates are being closed so that choice is no longer an option.

Though, all is not lost.  The Open Source Community is still very much alive, and there are still open systems out there.  Linux remains free and open, and Android, despite being peddled by yet another Behemoth, remains open as well, at least for now.  If, however, people don't express themselves and move away from the aforementioned closed systems and migrate towards the open configurations, the gates will be locked,  the barricades raised, and users will be at the mercy of the companies who sold them the hardware, once again at the mercy of Planned Obsolescence.

It's time to think differently about where you want to go today.

The Perennial Paradox of Progress, or seeding the Grapes of Wrath

I stopped reading contemporary literature about 20 years ago.  Truth be told, the only so-called 'contemporary' writers I liked were Kurt Vonnegut, Joseph Heller, Hunter S. Thompson, and some of the 'Beat Generation' writers like Charles Bukowski and Richard Brautigan.  Beyond those, most of the writers I admire grew up in the early years of the 20th century or prior, among them Ernest Hemingway and John Steinbeck.  Once I had read everything the aforementioned had written, I looked around for new material, but couldn't really get through anything 'modern'. So I started at the beginning and re-read the works that I could enjoy.

Lately, I've been re-re-re-reading The Grapes of Wrath, by John Steinbeck.  While his prose is a bit more flowery than Hemingway's, Stenbeck knew how to turn a good sentence and was an extra-ordinary story teller. As I've been working my way through this powerful epic, I started seeing parallels to what is happening today.  The inventions have changed, but the core events we see unfolding mirror the gut-wrenching narrative of Grapes.

Economies are cyclical beasts by nature.  They rise and fall, being lifted by, or succumbing to, various so-called 'market forces'.  These forces are driven by the emerging technologies.  The 1920's and 30's, saw the maturation of mechanization and industrialization.  Those who were skilled enough to master the machines -- to design, build and maintain them -- weathered this watershed moment and were able to make a decent living, or in some cases, a fortune.  Those unable to make the shift to the emerging technology were discarded, often with extreme prejudice.  As the industrial revolution blossomed, it forced out the agrarian farmers and local craftsman by the thousands.  Those who were unable or unwilling to accept the new paradigm found themselves out of both life and livelihood. Labeled as outcasts, they were forced to the fringe of society, jostled from place to place, brutalized, traumatized and stigmatized until they vanished from the landscape.  This massive culling of the herd, as it were, was instigated by the wealthy, engineered by the politicians, orchestrated by the banks, and implemented by those self-centered individuals of low moral character who were willing to follow marching orders for a price -- mercenaries, in a name.  The end result was the demise of the family farm, and the rise of industrial agriculture and the assembly line.

So the Industrial Age reached it's zenith shortly after World War II, and then began to whither slowly, giving way to the Technological Age.  Now those who had mastered machinery were obsolete.  Once again, a culling was required. Over the next two decades, slowly and systematically, city by city, factories were shutdown, liquidated, disassembled and moved overseas, and those who unable to adapt were once again shown the door to the fringes of society, ostracized, stigmatized, traumatized and brutalized until they, too, vanished from the landscape.

The Technological Age peaked a decade later, then plunged, giving way to the Information Age, which brings us to where we are today: the next culling of the herd.

These cyclic and purely economics-based culling instances are, of course, blatant violations of the Social Contract. The Social Contract is something ubiquitous in modern civilization, but the roots go back many thousands of years.  Any individual born into a nation-state becomes an instant signatory to this contract, like it or not.  I don't write this to advocate for the Social Contract.  While it contains many inherent advantages for the individual, it contains far more advantages for the State.  The Social Contract basically posits that an individual voluntarily gives up certain freedoms in trade for protection by the State.  The issues that arise from this agreement are self-evident, so I won't go into them in greater detail here.  Suffice to say that the one thing the State agrees to do in this contract is protect the individual from the malfeasance of the everyday life, both natural and social.

 Thus in the matter of this cyclical culling at the behest of the wealthy, the state is clearly in violation of this already specious contract.  This is important because this contract is, for all practical intents and purposes, involuntary, at least insofar as the individual goes.

There is a scene from the movie Braveheart that provides an ideal allegory for this paradox.  It takes place shortly after William Wallace is captured, and brought before the court, accused of treason against the king of England.

Wallace: "I've sworn allegiance to no king."

Inquisitor: "It matters not.  He is your king."

In this brief exchange we see the crux of the Social Contract.  You enter into it by being born.  There is nothing that you sign, nothing you consent to, nothing to which you extend your proxy.  The extent to which you are required to submit to this contract depends simply on the nation in which your born.  Conversely, it is up to the nation-state to determine just what you receive in return.  It's a very typically tilted playing field that favors the state over the individual.

Planned Obsolescence is a term most commonly associated with industrial design, a term coined during the industrial revolution.  But since the advent of this 'revolution', the focus for planned obsolescence has applied not only to products, but to individuals as well.  This is apparent in all areas of the work force, both blue collar and professional.  Once you hit a certain age, you're out. Period. If you haven't made enough money to retire, you'll find yourself out of your field, out of your career, and find yourself bagging groceries at the local supermarket.

And herein lies my premise, buried deep at the end of this blog:  There is no Social Contract.  There is only Planned Obsolescence.

As technological advances become more rapid (they operate on the law of halves), so goes your shelf life as a valuable member of the work force. Be prepared to be obsolete, because the Grapes of Wrath grow much faster today than they did just a few years ago, and much slower than they'll be growing tomorrow.

An Angry Ghost in the Machine

The System is broken. It's FUBAR in a big, big way. As I write this, I'm wondering which of several government agency thugs will be showing up to give me a hard time. And what is it that I've done, exactly, to merit this unwanted attention? I've refused to reinforce the status quo of the System. I've refused to connect myself to the grid so that I can offer my availability to make money for the power companies. I've refused the directive to pay a well-connected group of people money for nothing. I've refused to go wildly deep in debt (a.k.a. get a mortgage), and spend the rest of my life giving my earnings to self-centered distant bankers. The System is furious with me for having committed these atrocities. The System was alerted to my presence by my neighbors, who are wildly deep in debt, who are effectively squatters, living a life they can ill afford. The System protects them. The System has no problem with them. The System is tickled pink with them.

The System, however, is mad-as-hell at me. It cannot abide my insubordination. It cannot tolerate my insistence that there are more efficient, more sustainable, more robust, more reliable ways of creating a habitat in which to live a simple life.

To argue that the System is not broken is an untenable position. To claim that the System "is for the best" or that it is merely "protecting" me is ludicrous. The System cares only that it continues to exist. Its primary concern is that it not be questioned, and that it be fed by all souls willing and unwilling. The System runs all the way from the United Nations, to the Federal government, and all the way down to the local housing association. These are all elements of the System, and their Primary Directive is to ensure its survival.

I was speaking with an attorney yesterday. He was acting as a mouthpiece for the System, one of many. He told me to just "do what was right." My reply was that the avenue he was describing was not right. The System supports the idea of a Neo-Feudal Age. It is, in fact, giddy at the prospect. A Neo-Feudal Age empowers a handful of True Believers with the ability to make the Rest of Us miserable. It creates mile-high walls and codifies the status quo. The System reigns supreme in the Neo-Feudal Age, unconcerned with innovation, nauseated by new technology -- or old technology refashioned.

The System, in following its prime directive -- maintaining it's survival -- will ultimately destroy us all. This is not an exaggeration. The System has destroyed civilizations throughout history. It has murdered millions. It has caused the extinction of countless species. It has visited brutality, cruelty, torture and misfortune on anything and everything threatening its survival. Every dominant species, every civilization has fallen prey to this singular vision.

The System protects the grifters. It rushes to defend the liars, cheats and swindlers, and chastises the honest. It despises those who speak truth to power. It loathes the trail-blazers and visionaries. It has no tolerance for anyone who questions this blatant hypocrisy.

In the end, the System will collapse under its own weight, and all that will be left is the worst of the worst. Ironically, it's moving toward this ultimate destination that we call "progress."

There's a common stream-of-thought that says humanity will eventually evolve out of this destructive pattern. 50,000 years later, however, nothing has changed. We sow the seeds of our demise daily, and the Angry Ghost in the Machine laughs like hell.