Race, Poverty, and The Second America

In his new book, Gang Leader for a Day, Sudhir Venkatesh who is a Sociology Professor at Columbia University writes about his days as a graduate student in the University of Chicago and his experience interacting with the African American community around the University in general and the residents of Robert Taylor Homes, a high rise affordable housing project on the South Side of Chicago. The book revolves around his interaction with the drug selling gang members, the tight knit community that has developed due of this trade and the documentation of the underground economy that flourishes as a result.
In one such interaction he has with one of the residents Mrs Bailey, Sudhir is discussing the 60% dropout rate from high school of kids from Robert Taylor. Below is the text of the conversation:
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"Research today says that if kids can get through high school, they have a 25% greater likelihood of escaping poverty," I said, as if giving a lecture.
Ms. Bailey interrupted, "If your family is starving and I tell you that I'll give you a chance to make some money, what are you going to do?"
"Make the money. I have to help my family".
"But what about school?" she said.
"I guess it will have to wait."
"Until what?"
"Until my family gets enough to eat."
"But you should stay in school right?" she said, sarcasm rising in her voice. "That's what will help you leave poverty."
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This discussion highlights the dilemma that many African American's experience. And when the choice comes between feeding your family to survive and basic education, the choice is very clear.
Reading this book opened my eyes to this "Second America", away from the glitz and glamor which is associated with America all over the world, which is poor, under educated an under nourished but still is a tight knit self sustaining community in itself.

Also read my previous posting Barack Obama's Speech on Race

Former Olympian, Activist Debate Beijing Boycott

Recent crackdown by China on Tibetan monks has brought the Chinese Human Rights record into focus. Listen to a former US Olympian and an Human Rights Advocate duel it out on whether it is necessary to boycott the entire Beijing Olympics or just the opening ceremony.

Also read my previous post on the same issue Tibetan Uprising

15-year-old girl assaulted by teacher dies in coma

What a shame that a valuable life has been wasted and for what? The accused teacher beat up the student because she did not agree to private tuition given by him. There is no news of any action been taken on the teacher or the school.

Read more at Teacher Assault

IRS Rebate Checks

In an op-ed for The New York Times, Bruce Bartlett provides an interesting commentary on the proposed $117 tax rebate that the federal government is sending to all taxpayers. The tax rebate is supposed to stimulate the economy by boosting consumer spending. I do agree with his main argument that the $117 billion rebate is not going to solve the woes of the financial markets. Its frankly like throwing water at the neighbors place when your house is on fire. The current financial crisis is due to housing market gone bad which has resulted in decrease in consumer spending. The tax rebate is just treating the symptom but leaving the underlying disease untouched and intact.
What really is necessary as suggested by Bruce is some kind of a "Mortgage Superfund" which will be used to cleanse the financial system of atleast some if not all of the bad mortgages. Of course the problem with this approach is that the taxpayer will have to foot the bill for all the lousy decisions made by highly paid Wall Streets pros and misinformed home buyers.
But in the larger interest of the economy, we taxpayers may have to swallow this bitter pill, whether it be in the form of a tax rebate or in the form of a "Mortgage Superfund". So why not ensure that this bitter pill addresses the problem and not create new ones down the road.

Read more at Stop the Checks

Obama's Speech on Race

Recent inflammatory remarks about race and American government by Reverend Jeremiah Wright, a former pastor for Senator Barack Obama, brought to the forefront issues that have been dogging his campaign since he decided to run for President. Senator Obama was compelled to address issues related racism and his relationship with the Reverend, in order to minimize the political damage as well as ensure the viability of his presidential campaign. I thought that the speech was flat out brilliant. Here are some excerpts from the speech
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And this helps explain, perhaps, my relationship with Reverend Wright. As imperfect as he may be, he has been like family to me. He strengthened my faith, officiated my wedding, and baptized my children. Not once in my conversations with him have I heard him talk about any ethnic group in derogatory terms, or treat whites with whom he interacted with anything but courtesy and respect. He contains within him the contradictions – the good and the bad – of the community that he has served diligently for so many years.

I can no more disown him than I can disown the black community. I can no more disown him than I can my white grandmother – a woman who helped raise me, a woman who sacrificed again and again for me, a woman who loves me as much as she loves anything in this world, but a woman who once confessed her fear of black men who passed by her on the street, and who on more than one occasion has uttered racial or ethnic stereotypes that made me cringe.

These people are a part of me. And they are a part of America, this country that I love.

Some will see this as an attempt to justify or excuse comments that are simply inexcusable. I can assure you it is not. I suppose the politically safe thing would be to move on from this episode and just hope that it fades into the woodwork. We can dismiss Reverend Wright as a crank or a demagogue, just as some have dismissed Geraldine Ferraro, in the aftermath of her recent statements, as harboring some deep-seated racial bias.

But race is an issue that I believe this nation cannot afford to ignore right now. We would be making the same mistake that Reverend Wright made in his offending sermons about America – to simplify and stereotype and amplify the negative to the point that it distorts reality.

The fact is that the comments that have been made and the issues that have surfaced over the last few weeks reflect the complexities of race in this country that we’ve never really worked through – a part of our union that we have yet to perfect. And if we walk away now, if we simply retreat into our respective corners, we will never be able to come together and solve challenges like health care, or education, or the need to find good jobs for every American.
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See the Video along with the transcript at Speech on Race
Also read my previous post Barack Obama's Dilemma

Sub Prime Mortgage Crisis Simplified

This document helps provide a background about the how different players came together to create the Sub Prime Mortgage Crisis.

Money (That's What I Want)

For those who are fans of The Beatles , this song may sound familiar.
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The best things in life are free
But you can tell me 'bout the birds and bees.
Now gimme money (that's what I want)
That's what I want (that's what I want)
That's what I want, ye-ye-yeh,
That's what I want.

Money don't get everything it's true.
What it don't get I can't use.
So gimme money (that's what I want)
A little money (that's what I want)
That's what I want, ye-ye-yeh,
That's what I want.

Yeh gimme money (that's what I want)
A little money (that's what I want)
That's what I want (that's what I want)
So gimme money (that's what I want)
That's what I want, ye-ye-yeh,
That's what I want.

Your lovin' give me a thrill
But your lovin' don't pay my bill.
Now gimme money (that's what I want)
That's what I want (that's what I want)
That's what I want, ye-ye-yeh,
That's what I want.

Money don't get everything it's true.
What it don't get I can't use.
So gimme money (that's what I want)
A little money (that's what I want)
That's what I want, ye-ye-yeh,
That's what I want.

Yeh gimme money (that's what I want)
A little money (that's what I want)
That's what I want (that's what I want)
So gimme money (that's what I want)
That's what I want, ye-ye-yeh,
That's what I want.
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But right now, its not Paul McCartney who is asking for the money. Its his wife or shall we say ex-wife ,Heather Mills, who is singing this song all the way to the bank because she just received a $50 Million Divorce Settlement .

Tibetan Uprising

The recent protests by Tibetan monks against the oppressive Chinese regime and the crackdown of these protests by the Chinese government have raised the issue of Chinese Human Rights record just before the start of the 2008 Beijing Olympics in August. Depending on what report you read and believe, the death toll in the current uprising varies from 3 to 80. The crackdown by the Chinese government has not been limited to just Tibet. It has also blocked the You Tube website as Videos of the protests emerged. Protests against the current crackdown have also happened in New York, with protesters attacking the Chinese Embassy in New York.
Dalai Lama, the spiritual leader of the Tibetan's has said that the Chinese occupation of Tibet is causing Cultural Genocide of his people. However the Dalai Lama was unequivocal when he said "China, as the world's most populous nation, deserves to host the Olympics but it must look seriously at repairing its human rights record in order to be a good host." He also called on the international community to exercise its "moral responsibility" and remind Beijing about Human Rights.
The current timing of the protests could not have been any worst from China's point of view. With it hosting the Summer Olympics in August, it is trying to portray a squeaky clean image. Though it is highly unlikely that the current protests will result in any meaningful resolution to the question of "Tibetan Autonomy". But if the protests drag on for too long, Beijing may just start feeling the pressure.
Scott Simon in a Commentary for NPR put this beautifully when he says "The protests of monks and others may not deliver freedom to Tibet anytime soon, but freedom is an effervescent ideal that can't be bottled up forever." Amen to this.....

Greatest Financial Crisis in History?

Recently, not a days passes without hearing about another shoe drop in the US financial market. Gone are the days of the Dow Jones setting records and uncontrolled home price appreciation. The financial crisis, which started with the bursting of the housing bubble last year, has snowballed into a full blown crisis that has taken down some of the big names in the financial business. The latest casualty in this crisis is Bear Sterns, the fifth largest bank in the United States and one of the primary players in the US mortgage market.
The reason for this crisis are diverse and complex including, inability of home owners to repay their mortgages, bad judgements on part of the lenders, increased use of adjustable rate mortgages, lack of education about risks associated with the different types of mortgages available, easy access to credit etc. In addition due to innovations in Securitization, the risks associated with mortgages are no more borne by the lenders. The loans were repacked into complex investment vehicles generally referred to as Mortgage Backed Securities(MBS) or Collateralized Debt Obligations(CDO) and sold to investors. This securitization process created a "Moral Hazard", because the originator, knowing they would be able to repackage and sell it to Wall Street investors, had little incentive to check the borrowers ability to repay the loan. In addition the current lack of perceived transperancy in the financial markets is leading to a Credit Crunch. Trust, when it comes to lending money, is hard to come by these days. No individual or financial institution is sure or can verify the other parties capability of paying back the loan. This is leading to a Liquidity Crisis as banks and other financial institutions which thrive on short term loans to run their business are finding it hard to access this line of credit.
Efforts by the Federal Reserve to stop the spillover of this financial crisis into other markets have been futile so far. Cutting the interest rates have stoked fears of inflation and some economists are even mentioning a growing chance of a Stagflation , a period of stagnant economic growth and high inflation. The Fed is doing all it can, even pumping in more money into the financial system so that there is enough liquidity to ease the credit crunch. The Bush administration is doing its part by announcing a plan to voluntarily and temporarily freeze the mortgages of a limited number of mortgage debtors holding. In addition the President signed into law a $168 Billion economic stimulus package, where families will be getting one time rebates of close to $1000. The administration is hoping that this will jump start the economic.
But is more consumer spending the right panacea for this current situation, or is it the root cause of the current crisis. I am not advocating that consumers should completely stop spending, but isn't the current situation a result of Americans spending way beyond their means, whether it is big houses, SUV's or flat screen TV's. And wouldn't the $168 Billion economic stimulus package encourage more of the same behavior. These are all important questions for which there are no answers as of yet. Only passage of time will tell whether the current financial crisis will be as big as "The Great Depression" of the 1930's. But with the passage of each day, it looks like we are inching towards a worldwide economic slowdown. Whether it will be akin to "The Great Depression", we will just have to wait for all the shoes to drop.

Law Enforcers or Law Breakers - You Decide?

Speeding on a road can result in a ticket which can cost you a ticket for a couple of hundred dollars and even a license suspension. But what happens when the enforcers of these speed limits (read police officers) themselves are caught speeding?

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In the last eight months of 2007, Maryland's Montgomery County's new speed cameras recorded 224 cases in which police vehicles were recorded traveling more than 10 mph over the speed limit, according to department records.

Supervisors dismissed 76 of those citations after determining the officers were responding to calls or had valid reasons to break the speed limit.

But that left 148 who didn't have that excuse, and about two-thirds of those citations haven't been paid, said police Lt. Paul Starks.
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I like what the police union has to say about this:"The police union says officers shouldn't pay because the citations are issued to the owner of a vehicle, in this case the county, and not to the driver."

What a good use of the tax payers dollars. Wouldn't you say so?

Almost 75% of small, marginal farmers may not benefit from loan waiver

According to an article published in the Indian Express , about three out of four small and marginal farmers will not benefit from the Rs 600 Billion loan waiver announced by the Finance Minister P. Chidambaram. According to the article, most of them borrow money from informal channels like money lenders, family and friends and self help groups.
This just goes to reinforce the point I made is one of my previous posts, Rs 600 Billion Bailout for Farmers in India, that the bailout will not impact the farmers that are most in need of the relief.

Read more at Majority of the Farmers not to Benefit from Loan Waiver

Also read Paying Private Money Lenders

Is This Deja-Vu?

2006 would seem like a distant dream if you are a wall street investor. During the 2006 economic boom any talk about US recession would be classified as "crazy talk". Watch Arthur Laffer and Peter Schiff duel it out on CNBC in August 2006. The topic of discussion, whether the United States is headed for a recession.
Watching this video, even though I have the benefit of hindsight, feels like Deja-Vu.

Barack Obama's Dilemma

In an Op-Ed for The New York Times , David Brooks points out the dilemma that the Barack Obama campaign is facing. Barack Obama has built his campaign on changing all that is wrong with the partisan politics and the negative rhetoric that Washington thrives on. He has run his campaign on the theme of "Hope" and "Change in Washington".
As David Brooks points out, with the losses in the politically key states of Ohio and Texas, his campaign theme of "Hope" and "Change in Washington" is being tested anew. There have been renewed cry for Barack Obama to start attacking by accusing Hillary Clinton of things. But the dilemma for him lies in either being on the offensive using the same old style of Washington politics, or being perceived as different from what Washington has to offer.
David Brooks puts this dilemma brilliantly: "In short, a candidate should never betray the core theory of his campaign, or head down a road that leads to that betrayal. Barack Obama doesn’t have an impressive record of experience or a unique policy profile. New politics is all he’s got. He loses that, and he loses everything. Every day that he looks conventional is a bad day for him."

Read more at Barak Obama's Dilemma

I'll be Just Fine, Says Planet Earth

If Earth had a chance to talk about Global Warming what would it say?
In a satirical commentary published in The Daily Mash , the Earth turns the discussion on global warming on its head. According to the Earth, even if it's temperature increases by a few degrees, it will be just fine. In fact it will enjoy the increased temperatures while they last. It is the human race and other living creatures that should be worried, as they are the ones that will cease to exist. So according to the Earth, environmental campaigners should change their slogan from 'Save the Planet' to something more relevant such as 'Save Your Sorry Arse'.

Read more at I'll be just fine, says planet Earth

Also read The World Without Us

PGA Cancelling the three American Majors

Frank Deford an NPR commentator takes a satirical look at why PGA is cancelling all American golf majors and other golf tournaments in America. All this because Tiger Woods said that he is playing the best golf of his career and even talked about a perfect major season. Just good stuff.

Read more or listen to the commentary at PGA Cancelling the three American Majors

Also read
What it Takes to be Great
Best Shot in Golf

Inflation at 100,500 Percent!!!

When I read this headline, I double checked to see if I was reading this correctly and my eyes were not making a mistake. But this is actually true. Zimbabwe has the worlds highest inflation currently at 100,500 Percent. Also One US dollar will buy you $25 million in Zimbabwean currency.

I thought US Fed chairman Ben Bernanke had a tough job balancing inflation and growth. Compared to the job of the the Zimbabwean Fed chairman,if there is one, Ben Bernanke's job seems like a walk in the park. I still wonder though, what would Ben Bernanke or for that matter any economist do in this case.....

Read more at In Zimbabwe, $1 U.S. now buys $25 million

Corporations Threaten Democracy

Today NPR had a very thought provoking commentary by management guru Charles Handy. The commentary focused on how American corporations are run more like totalitarian states than pillars of democracy and his hope that they can restore their reputations as forces of economic good.

You can read the commentary at and also listen to it Corporations Threaten Democracy

Will Not Paying the Private Money Lenders Back Solve the Problem?

When Sharad Pawar, the Honorable Union Agriculture Minister was asked in the post budget press conference, what would happen to farmers who have borrowed money from private money lenders, his response was “I appreciate the media’s concern about the fate of farmers who have taken loan from private moneylenders. According to our information, most of the moneylenders operating in rural areas don’t have the licence for the same, hence their moneylending business is illegal and farmers are under no legal or moral obligation to repay these illegal loans.”
Most of the farmers who borrow from these private money lenders are small and marginal farmers who are not always eligible for loans from private and co-operative banks. So their only source of readily available cash to buy necessary materials, be it seeds for planting or farming equipment, are these private money lenders. And most of the times when these farmers borrow money, they borrow it against a collateral which many times will be the very land they are tilling. So if the farmer follows the advise of the Honorable Union minister and does not pay the lender back, wouldn't the lender take possession of this collateral. What is to stop the lender from doing this. Also wouldn't it make the situation worse now that the farmer has lost his only source of livelihood, his land.
To solve the problem of the private money lenders, paying them not back would be counter productive and just worsen the situation. It would dry up the only source of credit that these farmers have right now. Instead increasing the sources of credit availability,and making credit available on affordable terms with private players involvement would bringg a sense of legitimacy to the whole process and be beneficial to the parties involved in the long run. This would be the ideal first step.

Rs 600 Billion Bailout for Farmers in India?

Yesterday the Finance Minister of India P Chidambaram in his Budget speech announced the single largest bailout for the farmer community in India's history. Of the Rs 600 billion which was earmarked for the bailout, about Rs 500 billion of that would go towards waiving out all the loans ,taken from scheduled, commercial and cooperative banks, by small and marginal farmers holding less then 2 hecters of land. The other Rs 100 billion would go towards a one time settlement (OTS) for all other farmers, where a 25% rebate will be given on the loan if the farmer agrees to pays off the other 75% in full.
On the surface, this seems like a very good idea that would help address and perhaps ease the financial distressing situation that many farmers are in which has led many of them to commit suicides. But the real question is will this bailout effect the farmers who are most in need.
In an after budget press conference when asked about how the loan waiver would affect the farmers who have taken out loans from private money lenders instead of banks, the FM himself was unequivocal when he said "It doesn't". And here lies the crux of the whole issue. According to some estimates, two third of all farm debt is not with commercial banks but with private money lenders. So does the bailout impact only one third of the farmers and ignore the rest. According to the experts, most of the distressed farmers are in the latter two thirds shackled in a revolving debt trap with private money lenders. If the bailout does ignore the majority two thirds, how far will it go in addressing the issue at the heart of the matter. Also what is to prevent the corrupt babus and well connected so called super rich farmers i.e. film stars from milking the system to further their ends.
As Rajiv Gandhi ones famously put it, "Out of every Rs 1 announced in a welfare scheme, only 15 paisa reaches the intended recipient". According to the FM, about 40 million farmers will benefit from this scheme. If what Rajiv Gandhi said still holds true, then each of these farmers will get on average of about Rs 2250. Forget about the majority two third, even the minority one third will get a tenth of what an average software developer makes in a month. So where is the bailout Mr Finance Minister?

Also Read:
Outlook India has a very good article on the same issue.