Economy and All That

[syamuj]

Does anyone know anything about 'fraternal capital'?What is it?

[Maripat]

Jim Rogers talking about inflationary holocaust.

[Maripat]

So how can this monster be destroyed? You work on yourself, the people around you, you form communities, you build institutions like a baitul mal (Treasuary), you appoint a leader who will govern the community, he appoints Zakaat collectors. You build halal markets where rents are not charged, you start to use gold and silver currencies and at all costs you avoid any violence or conflict with the Democratic State. As the monetary and financial system of the Democratic State starts to break up...more and more people will be drawn to the sanity of the Muslims, when chaos and the breakdown of State laws occurs, Muslims will still abide by the laws of the Shariah, we will nor murder and loot...we will be an oasis of peace and security and our markets and ways will begin to thrive.

This is excellent but how do we even begin when there is so much disunity and mistrust amongst Muslims. Muslims trust kafirs over Muslim organisations, how are they going to select ameers and communities to hand over their money to - how to develop trust, confidence in motivation in such radical proposals. People may hate government but they still trust it with their security especially financial. Also stuff like markets without charging rent etc. will fall foul of government laws at some stage - the government is not going to allow people to be independent of them especially where money is concerned - this is one of the reasons for the massive drives against cash in hand, so that eveything is electronic and has to go through banks.

Link

[Maripat]

Here is a conversation from another thread.

What is the opinion of Muslim Brotherhood about riba based banking system ?

I don't know any Muslim who agrees with Riba, maybe they support some type of "Islamic banking" but I wouldn't know for sure, you can ask on their forums.

There are many threads on Riba related issues on SF but this conversation raises one more question for yours truly.
May be it is very familiar to other brothers and sisters.
Is banking dubious in itself?

[Maripat]

Book : Small is Beautiful
Author : E.F. Schumacher

Wikipedia

IIT Mumbai (Grab your e-copy)

Eco Books

Amazon

I try to bring the Amazon review also here, IA.

Taken from another thread.

[Maripat]

The book Small is Beautiful

(1) Collection of 13 essays (20 in later edition) by British economist, E.F.Schumacher, who had worked with John Maynard Keynes and John Kenneth Galbraith, was published in 1973.
(2) The Times Literary Supplement ranked Small Is Beautiful among the 100 most influential books published since World War II.
(3) Single-minded concentration on output and technology is dehumanizing.
(4) Infinite economic growth is impossible within a finite system.
(5) Subtitle of the book - a Study of Economics as if People Mattered.
(6) Another Book by him: Good Work
(7) Good Work: The effects of modern economics on the individual.
(8) Yet another book by him : A Guide for the Perplexed
(9) Its Subject Matter : the philosophical and spiritual underpinnings of his work.
(10) Work coincided with ecological concerns and environmental movement.
(11) Concluded that government effort must be concentrated on sustainable development.
(12) Ideas grow out of study of village economics later termed Buddhist economics.
(13) Blasted bigger is better and growth is good slogans.
(14) Man is small, and, therefore, small is beautiful.
(15) First to question GNP as a measure of human well being.
(16) A professor's advice to student: Read the book but do not quote it to protect your reputation - he will also turn out to be right in the end.
(17) Critic : Messy, digressive writing. Point does not become clear by the end of the chapter. Vague and worthless solutions without any idea about implementation.
(18) Critic's summary of ideas: Intermediate technology, think locally, value people, distinguish between renewable and non-renewable resources

Also posted here.

[Maripat]

A Californian Odyssey

According to BBC:

The Californian city of Stockton is set to become the largest US city to declare bankruptcy.

Looking at these tidbits it is clear that US economy is not what it used to be.
Of course there is that magical wend called media management.
But that can not revive dead bodies, bodies dead economically.

[Maripat]

The New York Times

July 2, 2012

Poor Land in Jail as Companies Add Huge Fees for Probation
By ETHAN BRONNER

CHILDERSBURG, Ala. — Three years ago, Gina Ray, who is now 31 and unemployed, was fined $179 for speeding. She failed to show up at court (she says the ticket bore the wrong date), so her license was revoked.

When she was next pulled over, she was, of course, driving without a license. By then her fees added up to more than $1,500. Unable to pay, she was handed over to a private probation company and jailed — charged an additional fee for each day behind bars.

For that driving offense, Ms. Ray has been locked up three times for a total of 40 days and owes $3,170, much of it to the probation company. Her story, in hardscrabble, rural Alabama, where Krispy Kreme promises that “two can dine for $5.99,” is not about innocence.

It is, rather, about the mushrooming of fines and fees levied by money-starved towns across the country and the for-profit businesses that administer the system. The result is that growing numbers of poor people, like Ms. Ray, are ending up jailed and in debt for minor infractions.

“With so many towns economically strapped, there is growing pressure on the courts to bring in money rather than mete out justice,” said Lisa W. Borden, a partner in Baker, Donelson, Bearman, Caldwell & Berkowitz, a large law firm in Birmingham, Ala., who has spent a great deal of time on the issue. “The companies they hire are aggressive. Those arrested are not told about the right to counsel or asked whether they are indigent or offered an alternative to fines and jail. There are real constitutional issues at stake.”

Half a century ago in a landmark case, the Supreme Court ruled that those accused of crimes had to be provided a lawyer if they could not afford one. But in misdemeanors, the right to counsel is rarely brought up, even though defendants can run the risk of jail. The probation companies promise revenue to the towns, while saying they also help offenders, and the defendants often end up lost in a legal Twilight Zone.

Here in Childersburg, where there is no public transportation, Ms. Ray has plenty of company in her plight. Richard Garrett has spent a total of 24 months in jail and owes $10,000, all for traffic and license violations that began a decade ago. A onetime employee of United States Steel, Mr. Garrett is suffering from health difficulties and is without work. William M. Dawson, a Birmingham lawyer and Democratic Party activist, has filed a lawsuit for Mr. Garrett and others against the local authorities and the probation company, Judicial Correction Services, which is based in Georgia.

“The Supreme Court has made clear that it is unconstitutional to jail people just because they can’t pay a fine,” Mr. Dawson said in an interview.

In Georgia, three dozen for-profit probation companies operate in hundreds of courts, and there have been similar lawsuits. In one, Randy Miller, 39, an Iraq war veteran who had lost his job, was jailed after failing to make child support payments of $860 a month. In another, Hills McGee, with a monthly income of $243 in veterans benefits, was charged with public drunkenness, assessed $270 by a court and put on probation through a private company. The company added a $15 enrollment fee and $39 in monthly fees. That put his total for a year above $700, which Mr. McGee, 53, struggled to meet before being jailed for failing to pay it all.

“These companies are bill collectors, but they are given the authority to say to someone that if he doesn’t pay, he is going to jail,” said John B. Long, a lawyer in Augusta, Ga., who is taking the issue to a federal appeals court this fall. “There are things like garbage collection where private companies are O.K. No one’s liberty is affected. The closer you get to locking someone up, the closer you get to a constitutional issue.”

The issue of using the courts to produce income has caught the attention of the country’s legal establishment. A recent study by the nonpartisan Conference of State Court Administrators, “Courts Are Not Revenue Centers,” said that in traffic violations, “court leaders face the greatest challenge in ensuring that fines, fees and surcharges are not simply an alternate form of taxation.”

J. Scott Vowell, the presiding judge of Alabama’s 10th Judicial Circuit, said in an interview that his state’s Legislature, like many across the country, was pressuring courts to produce revenue, and that some legislators even believed courts should be financially self-sufficient.

In a 2010 study, the Brennan Center for Justice at the New York University School of Law examined the fee structure in the 15 states — including California, Florida and Texas — with the largest prison populations. It asserted: “Many states are imposing new and often onerous ‘user fees’ on individuals with criminal convictions. Yet far from being easy money, these fees impose severe — and often hidden — costs on communities, taxpayers and indigent people convicted of crimes. They create new paths to prison for those unable to pay their debts and make it harder to find employment and housing as well as to meet child support obligations.”

Most of those fees are for felonies and do not involve private probation companies, which have so far been limited to chasing those guilty of misdemeanors. A decade or two ago, many states abandoned pursuing misdemeanor fees because it was time-consuming and costly. Companies like Judicial Correction Services saw an opportunity. They charge public authorities nothing and make their money by adding fees onto the bills of the defendants.

Stephen B. Bright, president of the Southern Center for Human Rights, who teaches at Yale Law School, said courts were increasingly using fees “for such things as the retirement funds for various court officials, law enforcement functions such as police training and crime laboratories, victim assistance programs and even the court’s computer system.” He added, “In one county in Pennsylvania, 26 different fees totaling $2,500 are assessed in addition to the fine.”

Mr. Dawson’s Alabama lawsuit alleges that Judicial Correction Services does not discuss alternatives to fines or jail and that its training manual “is devoid of any discussion of indigency or waiver of fees.”

In a joint telephone interview, two senior officials of Judicial Correction Services, Robert H. McMichael, its chief executive, and Kevin Egan, its chief marketing officer, rejected the lawsuit’s accusations. They said that the company does try to help those in need, but that the authority to determine who is indigent rests with the court, not the company.

“We hear a lot of ‘I can’t pay the fee,’ ” Mr. Egan said. “It is not our job to figure that out. Only the judge can make that determination.” Mr. Egan said his company had doubled the number of completed sentences where it is employed to more than two-thirds, from about one-third, and that this serves the company, the towns and the defendant. “Our job is to keep people out of jail,” he said. “We have a financial interest in getting them to comply. If they don’t pay, we don’t get paid.”

Mr. Bright, of the Southern Center for Human Rights, said that with the private companies seeking a profit, with courts in need of income and with the most vulnerable caught up in the system, “we end up balancing the budget on the backs of the poorest people in society.”

A few days back we had the story of an American city going bankrupt.
A sober news.
The situation perhaps is not a stray one.
US capitalist system has been geared to cater to the interests of few rich and powerful.
May be that society is really in a state of internal collapse.

May be it is the beginning of the end of the greatest experiment of modern times called US.
A country sucking in the most talented, the cream of cream, from every corner of the globe has run its course. Now the fortress is crumbling like a pack of cards.

Even at the height of its glory the US has been the most horrific example of poverty, drug abuse, and social disfunction but the media savvy country managed to fool civilized Europe, simplistic Asia and unaware Africa and the rest of the world into believing a story of prosperity for all.

Above article is about how justice has been privatized in US and the private companies generating revenue at the expanse of hapless public.

[Usama2]

I came across a quote from Benjamin Franklin, one of America's founding fathers and an astute analyst.
"democracy is two wolves and a lamb voting on what to have for lunch".
Explains a lot about how democracy feeds into capitalism.

He also is reported to have said "when the people find out they can vote themselves money, that will herald the end of the republic".

He failed to follow up with the reality that in such case, the 'republic' turns into an empire. And the empire votes to conquer foreign lands & subjugate them to the motherland, aka "Homeland", and exploit the resources and interests for lobbying industries and special interest groups.


This Franklin quote coins what has become of the American empire in particular.

The government is the biggest single spender. Companies form lobbies who in turn lobby for spending towards their own industry, even so government will favor them and allocate big budgets towards their interests. That's how the military industry works in America.

But we shouldn't forecast the speedy collapse of America or any nation yet.
We can certainly look to see weakness, however.


Incidently, China is said to have a real estate bubble so large and systemic that when it bursts, it will make America's 2008 crisis look tame in comparison.
Several Chinese cities are said to have a massive oversupply of expensively priced but unoccupied housing. This oversupply should naturally drive prices down until they equalize with existing demand. However, such a decrease in price would devalue property, causing investors to loose 100s of billions nationwide. The govt seeks to avoid this by trying to prop up prices artifically. Hence, the bubble.



China's currency and holdings will be the most affected.

[Usama2]

Also,

keep an eye on the Barclay's short term interest rate rigging scandal which began in the early 2005 CE. It is said to effect trillions of dollars worth of loans.
Previous years of Barclay analysts plotting to drive Libor (London interbank offered rate) interest rates up have since driven down the value of Barclays and calling into serious doubt its liquidity. And as appearance is largely the staple of securities market, Barclays corruption suggests market wide corruption, devaluing everyone's holdings.

This June 2012 CE, Bank of England Governor Sir Mervyn King called for a "cultural change", adding:

"The future calculation of Libor on 'my word is my Libor' is now dead."

It is now impossible to avoid the appearance of systemic impropriety in the British financial industry.