Sunday, 28 February 2016

Space Invaders - The Early Days of Computer Games

I have already written a post about the good old days of the Commodore 64 so I thought that I might go back and have a look at the original computer games. Sure enough, it didn't take me long to find a Youtube video of the very first computer game - Pong:

In fact, that was the first computer game that we ever owned, and the version we had my Dad had built himself (it was one of his hobbies), though it didn't work all that well. However, while I was lucky enough to have an electronics engineer as a father, many of us didn't, but we didn't miss out because you could purchase the machine, which looked a little like this:

Atari Pong Machine
The original X-box
Pong wasn't actually the earliest of games namely because it has graphics and graphical games have, and always will be, some of the most difficult games to develop. The earliest games were actually a style of game known as the Adventure Game, or as they are known today, Interactive Fiction. However I won't say anymore about them because since the humble adventure game was a significant part of my childhood I will leave it for another post. Oh, you also have chess games, though the earliest ones simply had the computer tell you what moves they wanted to make and you would move the piece on a chess board.

In fact, chess is one of those games that people seem to be determined to have computers play, possibly because it is one of those indicators of artificial intelligence. Mind you, computers are actually really, really good at playing chess to the point that they will have chess champions go into competition with them. I suspect the main reason is that computers can predict a huge amount of moves based upon the current layout on the board and then calculate, all within the split second, what would be the most strategic move to make.

I should mention that the dream of creating a robot that could beat a human goes back to the beginning of the 19th century with the creation of a machine known as The Turk. However, that turned out to be one whopping great big con because the Turk wasn't a machine but rather a sophisticated puppet.

Anyway, once again I seem to have gone off onto a tangent because I wanted to talk about video games, as opposed to chess or adventure games. Well, the first, and most popular, of the video games has to be by a long shot space invaders. Okay, the game itself is pretty basic - you have rows of space ships descending from the sky while you, in your little tank, duck in and out of cover in an attempt to shoot the lot of them down (and for some reason you are all on your lonesome). Every so often a mothership would fly across the top of the screen, and if you manage to shoot that down, you receive extra points. Anyway, I've managed to embed a version of this famous game that I found somewhere on the internet so you can give it a go yourself.

More arcade games to play online!

I have to say that as a kid I spent hours playing this game, namely because it was one of the few arcade games that we had on our computer. Actually, this was back in the days before the home computer was ubiquitous. That didn't mean that people didn't have game machines in their own home - the Atari 2600, which was the ancient version of the X-Box and the Nintendo, was quite popular, however being a gaming console you were limited in what you go get for the machine, and the cartridges tended to be pretty expensive (not that computer games have come down in price mind you - you are still paying around $80.00 for a latest release game - which is one of the reasons why I never purchased latest release games).

Atari 2600
Yep, that's right, that controller only has ONE button
Okay, some of the lucky families owned their own consoles, and even had multiple games, however due to the limited power of home computers and the consoles, if you wanted to play the latest release games with the best sound and graphics you had to go to the video arcade. This is a place that you simply don't see anymore, namely because as computing power grew, the need to have all of the best games located in one place diminished. Okay, you still see a few of them around the place, usually adjoined to cinema complexes, however the games you find there tend to be games (such as racing car games where the game is played inside a racing car) that can't really fit in your average suburban home.

Old Fashioned Video Arcade
The good old fashioned video arcade.
Modern Video Arcade
This is what you get now a days
Mind you, they are making a bit of a come back, especially since in some of the pubs that I've visited I've found a video game table which literally has a huge collection of games that you can play on it, as well as a bar in Melbourne called Pixel Alley, which has a collection of old fashioned games and pinball machines (and they even give you a free token with every beer you buy - choice). I still remember going to lockups at the video arcades back in the 80s where you would be given free games all night for a set price - and I would spend ages trying to beat my favourite games.

Anyway, as I have suggested, as time moved on games became more complex, and the machines more powerful. While Space Invaders remained an all time favourite (and in many ways still is), the game developed where other things would happen, such as Galaxia where the ships would dive bomb you instead of just moving down the screen (and they also dispensed with the barriers).

Of course, we can't forget another all time favourite - Pacman

As for me, I'd have to say that I had a soft spot for Frogger:

Creative Commons License

Space Invaders - The Early Days of Computer Games by David Alfred Sarkies is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.If you wish to use this work commercially please feel free to contact me. This license only applies to the text and any image that is within the public domain. Any images that are the subject of copyright are not covered by this license. Use of these images are for illustrative purposes only are are not intended to assert ownership. If use wish to use the creative commons part for commercial purposes, please contact me directly.

Atari Pong Machine source: Evan-Amos use permitted under creative commons attribution-share alike 3.0 unported

Sunday, 21 February 2016

Our War On Nature - Naomi Klein and Climate Change

Naomi Klein certainly doesn't mince her words, but another thing she does is that she does not publish endless numbers of books saying the same thing over and over again. When she publishes a book she will say everything that she wants to say on the topic once, and once only. In her latest project, she once again takes the hyper-capitalist economic system squarely in her sights (which is a constant theme in her books) and exposes how they are destroying the world.

The first book of hers that I read, ages ago mind you, was No Logo, which is basically about the cultures wars - how modern consumerism is destroying our culture, and stealing our space and our ideas by turning us from citizens into consumers. Her second book, The Shock Doctrine, exposes how modern aristocrats scare us into submission and take advantage of natural disasters and wars to force through their agenda. I have now finished her third book - This Changes Everything - and here Klein seeks to expose the threat that climate change poses not only to the world, or the ecosystem but to our very way of life.


How I became an ecologist

Actually, I probably shouldn't use the term ecologist because I have to admit that I am probably don't do anywhere near as much as I should to help preserve the natural world. However I am aware of the situation that we are in, and I have to admit that I do have a soft spot for the natural world and a part of me squirms when I head to the outskirts of Melbourne to see more and more land being parcelled up, developed, and then sold. Even though much of that land had been cleared in times past for farming, there is still some beauty in that land with the trees scattered across the paddocks. Even though the natural landscape had been cleared, there is something about a new housing development that destroys even that part of nature.

As for me, well I have to admit that I've gone through a number of stages to reach the point at where I am. When I was a teenager you could consider me a rebel, not so much a left-wing radical but rather a James Dean type rebel, one without a cause. Okay, I may not have cruised around the town in a leather jacket on a motorcycle, but I did have an unhealthy disrespect for authority because, well, everybody else that I hung around with did as well. The thing with us at this age was that we simply wanted to be left alone to do our own thing, to have fun, but when it came to politicians, well, they were all bastards and we simply didn't care (in fact the last thing I wanted to do on election night was actually finding out who won).

Then I became a Christian.
No, this isn't some 'how Jesus changed my life' type of post (I've already written one of them, though I have to admit that having been a Christian for quite a while now the stereotypical 'I was a bad boy and then Jesus saved me' type of testimony simply doesn't wash with me, or anybody else - I prefer to keep it real) but I that stage in my life did have an impact on where I am at the moment.

Anyway, as I said, I became a Christian, which basically meant my worldview changed - a lot. It isn't so much that I drifted sharply to the right because I really can't say I sat anywhere on the political spectrum at the time. If anything I was politically apathetic with the exception of one thing - I wanted Paul Keating out of there (only to discover that we would be stuck with John Howard for the next eleven years). Mind you, that movement to the right of the spectrum wasn't a sudden shift, but rather a gradual one, and probably had a lot to do with spending four years at law school. However, one thing I could say was that I wanted Australia to become an economically powerful nation, and as far as I was concerned human rights was something that only selfish people wanted for themselves.

As I came to the end of my time at university I found myself drifting away from my old friends and starting to form some new ones, some of them Christian, others of them not. I remember when I was on a camp on my final year and I was speaking to somebody from another university who was also studying law and telling him of my disdain for people who support human rights. He then challenged me by pointing out that fighting for human rights wasn't about fighting for your own, but for other people's. It was then that it dawned on me - human rights wasn't about being selfish but about seeking justice for others who may not be able to access it.

My next revelation was when I was visiting a friend of mine one evening and we were talking about, well, politics. She then handed me a little booklet on the World Trade Organisation. Mind you, at the time I had probably begun my shift over to the left because if I still held my right-wing beliefs I highly doubt I would have been sitting there since the one thing that my friend wasn't was right-wing. In fact, a number of the friendships that I had begun to develop at that time tended to be to the left of the political spectrum, though not so far to the left that they dreamt of another Marxist revolution. However, she handed me this booklet, and I read it, and I suddenly realised how much damage globalisation was doing to the world, and how much power the World Trade Organisation had over the way member states drafted their policies. You could say that that little booklet was my wake up call.

History of the Smoke Stack

Okay, Klein does touch upon the history of modern industry in her book, but I feel that I probably should talk about it as well (particularly since I love history). The thing is that we have always had industry in one form or another, and our civilisation isn't the first civilisation to have devastated the environment. For instance, the Ancient Egyptians faced the force of a shifting climate, with crop failures impacted by the overuse of the Nile River. Granted, while the emergence of the Sahara Desert was not exclusively due to the activity of the Egyptians, no doubt farming, and relentless construction, did not help. More so the Romans were guilty of capturing animals en-mass to put on display in the Colosseum to the point that these days Lions, Giraffes, and Elephants are no longer found north of sub-Saharan Africa.

Industry didn't die with the collapse of the Roman Empire (and in fact in Rome industry was mostly agricultural) as during the medieval ages forests were cleared and swamps were drained to create land to grow food. In fact, food was the major commodity of the time, and much of the land was occupied with the need to produce crops. However it wasn't just crops because iron was extracted to produce swords and ploughshares, coal was dug up to power the blacksmith's forge, and gold and silver were mined to produce coins and jewellery.

It wasn't until the 18th century that things began to change. As Klein points out, up to that time industry was restricted by nature. While windmills and waterwheels had been developed as a way to increase the production of flour, they still required strong winds and flowing water to work. This changed with the invention of the steam engine. This invention literally revolutionised industry because no longer was it subject to the forces of nature, but factories could not only be set up anywhere, they could be much larger than was previously possible. However there was a catch - the steam engine needed to be powered, and that power came from a little black rock we all know as coal (which according to some people is good for humanity).

Suddenly the world changed. Factory towns began to emerge, and production began to ramp up. People who used to work the land began to move into the cities where there were well-paying jobs in the factories and suddenly the cities doubled, even trebled, in size. The steam engine was then placed into boats, creating the steamship, and onto wheels creating the train. Furthermore, the engine was refined so that it didn't need to use the process of burning coal heating water - all the internal combustion engine required was a black liquid that came out of the ground that we all know as oil. The invention of the internal combustion engine then led to another invention - the automobile.

The World Wakes Up

The inventions of the 18th and 19th centuries were refined, and became cheaper, throughout the 20th century. Numerous machines were developed, and perfected, that would make our lives simpler. For instance, the washing machine and the refrigerator mean that washing clothes was much easier and we could store food for much longer. Cars also became cheaper, but along with cheaper cars, our standard of living also increased. In many ways, life was good and easy, and everything seemed to be going well for humanity.

However there was a problem - these labour saving devices didn't run on goodwill, they required power, and the power had to be created, namely by burning coal. Okay, back then things were built to last, but even as early as the turn of the 20th Century people started to become concerned that industry was beginning to destroy the world. In fact, Teddy Roosevelt was taken on a camping trip to show him the wonders of nature, which lead to him locking away parts of the country as national parks. Yet as the 20th Century rolled on groups started to worry about the impact that our industry would have on the world at large, and in the early 70s, we begin to see the rise of the conversationalist lobby.

While the conversationalists negotiated for limits to industry, with the election of Reagan in the United States, and Thatcher in England, we suddenly saw a massive shift to the right, and many of these groups suddenly became absorbed into the machine of industry, and suddenly we began to see a shift away from preservation to consumption. In fact, it was around this time that the concept of growth of growth's sake became popular, and goods that in the past that were built to last suddenly became disposable. With the collapse of the Soviet Union, the capitalist West saw this as a vindication of their system, and suddenly industry saw a world where there were no boundaries - as the economist Francis Fukuyama said: we had reached the end of history.

Yet come the 21st Century something suddenly began to change. Okay, this change had started to emerge during the 1990s but began to ramp up a notch during the first decade of the 21st Century. All of a sudden there was a growing concern about the environment, and climate change in particular. Maybe it had something to do with the Al Gore movie 'An Inconvenient Truth', maybe it has something to do with the election of George Bush to the White House, and a sudden shift further to the right of the political spectrum. Maybe it had something to do with the peak oil crisis, where the price of oil suddenly when through the roof. In any case, in the middle of the decade the environment, and climate change, suddenly took centre stage, and politicians to the centre-left of the spectrum started developing policies to take to the election.


I still remember when Kevin Rudd was elected prime minister of Australia, and Barak Obama was elected President of the United States of America. At the time those of us on the left were jubilant - we had won and suddenly the excess of capitalism, and the neo-liberal agenda, could begin to be rolled back. It was a time of hope, and a time when we could once again begin to feel free. However that was not to last, and in hindsight, this was pretty evident even before the US Presidential election when Barack Obama, then a senator, voted to bail out the banks at the height of the Global Financial Crisis.

The thing with so-called left-leaning politicians is that they have this habit of tapping into the felt needs of the people, playing on their hopes and dreams to get them over the line. While I am not suggesting that Obama or Rudd weren't necessarily lying to get into office, it is just that electoral promises and reality are two different things. Rudd had certainly done his bit to move Australia towards establishing a green energy future, however, there was one major thing that got in the way - the collapse of the US banking sector. The problem was that jobs, and prosperity, always seem to trump social justice, and in this case, the climate.

While here in Australia, when a prime minister is elected they are generally able to push through their agenda, in the United States the president has to deal with Congress, and this was something where Obama began to face difficulties. However, as Klein pointed out in her book, the proposed emissions trading scheme that both leaders proposed was in reality little more than another fancy financial instrument of the type that created the crisis in the first place. In fact, Rudd had managed to implement an emissions trading scheme only to discover that the scheme collapsed during the financial crisis.

There was another thing that came out of this whole débâcle (which doesn't include the scams that arose during the scheme, such as getting carbon credits by not burning off gas, a process known as flaring, when one is drilling for oil), and that is that the scheme doesn't stop companies from polluting the atmosphere, it just turns fresh air into another commodity that is bought and sold on the financial markets. In reality, emission trading schemes are little more than business as usual, with an added financial cost that inevitably is passed down to the end consumer.

The thing with emission trading schemes is that they are referred to as 'cap and trade'. Basically, the government caps the number of emissions that are allowed to be produced, and the emission heavy companies can then purchase credits to allow them to exceed their cap. These credits are supposed to be created through emission-reducing projects such as forests and companies lowering emissions. However, as I have mentioned, such concepts bring out the hucksters (and the lawyers) who end up creating carbon credits without actually lowering the emissions. Another problem is that companies end up crying foul because such schemes eat into their profits, so the government ends up forking out more money so that they can maintain their imaginary profit margin (a profit that is generated from a government handout isn't a profit).

The Corporate Spin Doctor

Corporations are all about producing an image, especially in this neo-liberal world. In fact many companies these days don't do anything other than producing an image - they aren't manufacturers they are just middlemen who create a massive price hike on a product to support this image. What they do is that they contract the manufacture out to a third party in a developing country, and simply sell this product at a massive mark up. I wouldn't be surprised if the pair of jeans that I purchase at The Gap (not that I have ever shopped at The Gap) and the jeans that I buy at Target is not only made in the same factory but are actually the same pair of jeans.

Anyway, when combating climate change became all the rage in the pre-GFC era, a lot of companies suddenly jumped on board, especially if they were an emission heavy industry. Some of the power companies would actually set up solar farms so that they could claim that they were investing in green energy; supermarkets would offer a range of green products; even airline companies would allow you to pay extra to purchase carbon offsets. However this, in my mind, is nothing short of another marketing strategy. Sure, the power company may have invested in wind and solar farms or maybe pouring money into an alternate form of energy such as geothermal or tidal power, but in reality, a bulk of their energy comes from the good, old fashioned, coal-fired power plant. As for the carbon credits that you could purchase with your flight, all I can speculate is that it was either a part of the ETS scam or just a means of upping their profits (in the era of high priced oil, the airline industry's profits were being cut to shreds).

Yet one thing I started to notice of late is that all of a sudden the environmentally friendly items are beginning to disappear from the supermarket shelves. I used to always purchase the environmentally friendly washing detergent, yet all of a sudden that is no longer available. In a way, it seems that environmentalism, and climate change, was a fad for the prosperous times, and now that those times are past, paying more to be environmentally friendly is simply no longer an option.

"Climate Change is Crap!"

This is probably one of the cleverest strategies that the corporate world has thrown against the environmentalist movement: sowing the seed of doubt with regards to climate change. Mind you, that isn't the only tactic that they have used, but it is one of them. The thing is that our modern world isn't all that interested in reading thick scientific papers that argue that our rampant industrial society is causing the temperature of the Earth is increasing, they simply resort to sound bites, and the one thing sound bites lack is scientific backing. However, if they are short and witty, then people will listen to them, and it will sink in. The thing with the corporatocracy is that they have control of the media, as well as the financial resources, to flood the airwaves with their sound bites, and one thing that they have learnt is that by shouting louder than the opposition then they can win an argument.

The other thing that they resort to is a single word - jobs. People are defined by their job, and the one thing that they fear is losing their job. Hey, I could probably survive without a job, but while I don't let my job define me, I would rather continue working at this time than to go onto unemployment benefits (namely because of the income stream, although I try to live a frugal life as much as possible). However many of us are burdened by debt and have no savings, which means that if we were to lose our jobs then we are up the proverbial creek without a paddle.

However, even if Climate Change is not caused by industry pumping huge amounts of carbon into the atmosphere, I always fall back onto the fact that we are still destroying our environment. For instance, we are mining the crap out of the Earth, and as such destroying the once pristine landscape:

Our water sources are becoming undrinkable, which in turn works to increase the profits of the corporate sector by forcing us to purchase bottled water (which apparently comes straight out of the tap anyway).

As for our air, who really wants to spend our entire lives wandering around wearing masks (which is what I saw when I was last in Hong Kong, and even now I am beginning to see it here in Melbourne).

Of course, a lot of us are beginning to put our foot down and saying 'no, we do not want to live in this dystopian world', however when we do we suddenly discover that the government isn't actually on our side. However, I will get onto that thing in a bit because I want to talk about something else that is being spun as the new, clean, green way of the future.

Frack it!

As I suggested earlier, one of the main reasons that there was a movement towards renewable energy before the Global Financial Crisis was not so much that people started to become concerned with the climate, but because the price of oil had gone through the roof. However come 2015 this has changed dramatically, and in fact the price of oil is now hovering around $30.00 a barrel (having at one stage being at a peak of $147.02 a barrel). One of the reasons for this is because industry discovered a way of getting to what is termed unconventional, or shale, gas deposits, and compared to the oil there is an awful lot of gas trapped underground, as this chart demonstrates.

The problem was that the United States had pretty much run out of oil and had to rely upon getting it from foreign sources, particularly the Middle East, where it was located in regions that were either incredibly unstable or were simply unfriendly. The US had made an attempt to remove one of the unfriendly governments only to discover that in doing so the entire country had collapsed and extracted the oil became a lot more difficult. However, a system of extraction known as Hydraulic Fracturing has been developed which meant that all of a sudden a lot more gas became readily available.

However, there was a problem - while burning natural gas was much cleaner than burning oil, the process of removing the gas from the ground wasn't. In fact, the movie Gasland goes and explores the dangers of hydraulic fracturing and how the water resources that are required to get the gas out of the ground end up poisoning the groundwater and the run of turns the river into an undrinkable mess. Mind you, all forms of extraction are in fact really, really dirty, and even if we ignore the fact that by digging up the ground leaves ugly scars across once beautiful environments, the pollution-intensive nature of this industry acts to destroy one of the major sources of life - water.

I had a friend who used to work in the industry on a site up in Central Australia where there happens to be huge amounts of gas under the ground. Unlike the United States, where a lot of the fracking is occurring around inhabited rural areas, Central Australia is pretty much empty desert. In fact, a lot of the mines in Australia are located out in the remote regions that takes days to be able to get there and areas far away from the inhabited cities as one could imagine. So, the question that is raised is it better that these industries operate out in the desert where there is basically nothing there? Well, as it turns out, deserts are much more than just empty wasteland, as this post on Death Valley attests. While I haven't spent all that much time out in the desert wastelands of Australia, from what I have seen there is much, much more than just sand.

However since there is a huge amount of gas located underground, there are places that are much closer to our cities where wells can be sunk, which makes setting up the wells, extracting the gas, and sending it to the market much simpler. However the closer one gets to the cities the more populated the land becomes, and while mines located in the middle of nowhere tend to be out of people's minds (and the middle of nowhere isn't necessarily a desert, but could be a third world country, or even a tropical island), when companies start sinking wells into people's backyards the locals start to get a bit tetchy. In fact when proposals to sink wells in Australia's Hunter Valley, a major wine-growing region and a location where executives have their stud farms, a huge protest was raised by the locals.

Rise of the Police State

I remember when I was in Sydney during the APEC conference back in 2007 and was visiting one of the churches there. Security during this time was at an all-time high and half the streets were barricaded off and police (and snipers) were everywhere. I remember that there was a protest against globalisation and unlike other protests elsewhere, this one was tightly regulated. While the official line was that this minority had the right to voice their opinion, they were only a minority and the trade talks were going to go ahead. Anyway, the pastor (actually it was the Dean of the Cathedral, but that is just a technicality) pointed out that the primary role of the police is to keep the current rulers in power, however, this is beneficial as it creates a safe environment where we can live.

Yet one raises the question as to the real purpose of the police. The thing is that it seems to be more and more the case that they exist to protect the corporate interests as opposed to protecting the population at large. Despite there being huge amounts of opposition against trade treaties, particularly since the reality is that these treaties tend to benefit the upper one percent as opposed to the rest of us, our leaders seem to completely ignore our concerns. As such when the people go out onto the streets to claim that enough is enough, and that trade is actually hurting the environment, then out come the police to basically silence them.

Granted, there have been many posts from the right that suggest that people who run afoul of the police tend to have done something wrong to get there in the first place, however, there is a fallacy that says that if we are doing nothing wrong then we have nothing to fear. This is a fallacy because the opposite is also true - the best way for evil to triumph is for good people to do nothing. However the problem arises when the good person who decides to do something and to stand up for what they believe in, runs afoul of the moneyed interests that wish to do otherwise, and in the end, you discover that the law enforcement agencies tend to fall on the side of the moneyed interests.

Trade Trumps All

One of the major things that Klein raises in her book is the conflict between the environment and trade. While countries agree to environmental protections, these treaties tend to be fairly weak and compose only of promises to do something without any penalties for failing to live up to their end of the agreement. However, trade treaties tend to be much, much more powerful - if you breach a clause in one of the trade treaties then you are dragged in front of closed-door tribunals and are forced to pay reparations to the injured parties. As such when governments, states, and even local councils decide to move in a direction that seeks to protect the environment and cut down on needless pollution, companies and foreign governments immediately rush to these tribunals to put a stop to it.

For instance, the government of the Northern Territory decided to introduce a system where bottles and cans would have a deposit, and if you took them to a recycling depot then you could claim that deposit. Such a system had been in place in South Australia since I was a kid, to the point where the scouts would go on an annual bottle drive to collect bottles as a means of raising funds. I also remember that we would have heaps of bottles stored up in the back yard and we would regularly go down to the depot, collect the deposit, which would usually be enough to go and buy more beer and thus start the cycle all over again. However, the beverage companies didn't like this because it meant that it would eat into their profits so they ran to the Federal Government to got them to overturn the law in the Northern Territory.

The problem that we now face is that in the war between profit and the environment the profit motive always wins. The Biblical statement that the love of money is the root of all evil seems to become ever more true by the day. It is not so much that money in itself if evil - it is simply a means of exchange for goods and services - rather it is the hoarding of money and the desire of many to try and get as much of it as possible. I remember reading this fantasy series where there was this currency known as red gold, and the thing about red gold was that it was incredibly addictive - you simply could not have enough of it so once you had some you had to get more and more of it. In my mind money has suddenly become like that - people aren't satisfied with enough to live a comfortable life, they have to get as much of it as possible, and even then they want more.

Interestingly, over the years a new phrase has entered into the English language - petrodollars. To me, that phrase is starting to sound a lot like dirty money, money that is obtained by less than ethical means. The term refers to money that is generated by oil extraction, but I would suggest that is should refer to any money that is made through the destruction of the environment. As such it seems to be getting more and more the case that making money is coming about through ever more dishonest means but means that while being in some ways unethical, are still very much legal. For instance generating commission by writing up loans for people that have no way of paying it back, or through convincing people to buy ever more stuff that they don't need, and by making sure that this stuff won't last anywhere near as long as it could possibly last.

My Confession

I have to admit that I am probably not the most environmentally friendly person out there. Okay, I don't own a car, but that has more to do with not wanting to spend the money on buying, and maintaining, one (and the public transport in Melbourne is actually pretty good as well). However, the only reason that I sold my interests in SANTOS and BHP had nothing to do with them being dirty industries, but rather because the share price had completely collapsed and I wanted to salvage at least some of my money (and I have since purchased an interest in a gold mining company namely because it is a bet on a rising gold price).

Personally, I could probably do a lot more than what I am doing, however, like many of us, our minds tend to be more focused on the economy as opposed to the ethical. I simply cannot bring myself to put all my money into ethical investments because ethical investments do not generate anywhere near the same return as the less than ethical ones. While I could also shop at the farmers' markets, I find myself regularly going to the supermarket simply because it is cheaper, and easier, than spending my time wandering around the greengrocers (as well as buying easy to prepare meals as opposed to spending the time cooking my own).

A Way Forward?

Okay, in the couple of years since Klein released her book we have seen a complete collapse in the price of oil, and many extractors are suddenly bleeding money because they simply cannot stop extracting because to do so would mean that they wouldn't be able to make any money, therefore it is entering a vicious cycle. While one of the good things about a low oil price is that much of the reserves will actually stay in the ground because the cost of extracting is no longer profitable, the companies that have already tapped a well will continue extracting even if it forces them into bankruptcy - which simply means that a bigger company will come along and buy up all the assets.

However, one thing that we have learnt over the past few years is that we simply cannot put our faith in the politicians because they are simply going to let us down. Unfortunately, our political class has become so beholden to business that simply 'changing the law' is no longer possible. Julia Guillard and Kevin Rudd discovered that the hard way when they introduced a carbon and mining tax. All of a sudden they were attacked from all quarters and a sustained campaign was launched by big business to completely destroy the government - a campaign that they won which resulted in the election of a government that was much, much more beholden to business (as well as the systematic dismantling of the green economy).

What we need to do is to start here at home - we need to begin to live simple lives, look for greener ways to consume, and turn away from our hyper-consumerist ways. If we are able we can look at switching our sources of energy to greener sources, and looking at ways we can ethically invest our money. However, most importantly, we need to reject that lie that more is better and be happy with what we have and learn to once again enjoy the simple things.

Creative Commons License

Our War On Nature - Naomi Klein and Climate Change by David Alfred Sarkies is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.If you wish to use this work commercially please feel free to contact me. This license only applies to the text and any image that is within the public domain. Any images that are the subject of copyright are not covered by this license. Use of these images are for illustrative purposes only are are not intended to assert ownership. If you wish to use the creative commons part for commercial purposes, please contact me directly.

By Mstyslav Chernov - Self-photographed,

Sunday, 14 February 2016

Cross Cultural Christianity

The changing face of Australian Culture

Australia has certainly changed since I was young. I remember that the country I grew up in was decisively European in character, with mostly Anglo-Saxons and a growing community of Italians and Greeks. In fact it has been said that Melbourne was the largest Greek city outside of Athens. Speaking to the older generation I have learnt that it was much different back in the 50s, with Australia being little more than a colonial extension of the British Empire.
During my life I have seen huge changes in the makeup of our society, first with waves of immigrants coming from South-East Asia, and in more recent times, arriving from the Middle-East. Back in my younger days, eateries would simply be your local fish and chip shop, with the occasional Indian and Austro-Chinese restaurant (though these days they are called Asian-Fusion), whereas now it is hard not to walk down your local shopping strip to see a whole range of restaurants from all parts of the world.

Shops in Reservoir
Here are a few shops that are above a five minute walk from my house
We are also seeing this multicultural shift within our own churches, and this is quite noticeable in my local church. When I first arrived in Melbourne most of the church was composed of Anglo-saxons, however over the two and a half years I have been going there I seen a shift in the congregation in that we now have people representing a multitude of different cultures from around the globe. Realising this shift, our pastor decided to run a series of sessions on how we should approach this move towards a more multi-cultural society.

Christianity in a Multi-cultural world

For much of its life Christianity has been viewed as 'white-man's religion'. While was not necessarily the reality on the ground (such as with the Copts in Egypt, the Nestorians in the Middle East, and groups going as far out as India and even China), this has been the perception in the modern era. Criticism has been levelled against Christianity as being the fore-runner of colonialism, with the missionaries going in first, followed by the merchants, and finally by the army who would then conquer the territory in the name of Queen and country. Images like this bring up a pictures of Dr Livingstone, a famous missionary and explorer into the interior of Africa. However, when he travelled deep into darkest Africa, did he really end up creating a colonial outpost where British values were imposed onto native populations, or did his message have a more substantial transformation on the culture at large? While I won't be going much further into this topic, I would suggest that it has come out as the later as opposed to the former.

Dr Livingstone I presume
Dr Livingstone I presume
Another idea that culture brings out that I wish to touch upon is the question as to whether all religions are the same? This question is undoubtedly tying religion to culture, in that by doing so one is suggesting that one's culture defines one's religion. Much ink has been spilled by Christian writers all over the Anglo-sphere regarding this question, however my position is that this is not the case. Using Hegel's dialectic, my argument is that all religions differ in many ways, and one cannot reconcile those differences without changing the core elements of the religion. One cannot simply say that Christianity and Buddhism are the two sides of the same coin because there are irreconcilable differences between the two. Instead of reconciling the two belief systems into one and the same, you are in fact creating a different religion all together, the synthesis in Hegel's argument. However, as I have mentioned, I simply wanted to touch upon this issue rather than delving too deeply into it.

Biblical View of Culture

And God blessed Noah and his sons and said to them, “Be fruitful and multiply and fill the earth. Genesis 9:1
And the Lord said, “Behold, they are one people, and they have all one language, and this is only the beginning of what they will do. And nothing that they propose to do will now be impossible for them. Come, let us go down and there confuse their language, so that they may not understand one another's speech.” So the Lord dispersed them from there over the face of all the earth, and they left off building the city. Therefore its name was called Babel, because there the Lord confused the language of all the Earth. And from there the Lord dispersed them over the face of all the earth. Genesis 11:6-9
An artist's depiction of the Tower of Babel
At this point I want to disassociate religion from culture and argue that differing cultures can exist even though the religion remains the same. If we look at continental Europe for instance we notice that despite Europe being Christian, as we wonder across the national boundaries we still see changes in culture. For instance the German culture differs from the French culture, which in turn differs from the Greek culture. Yet, despite these differences, they are still, in essence Christian cultures (though some would argue that this is not necessarily the case).
Traditional Chinese Wedding Dress
Chinese Wedding dress
One thing that I have discovered this year is the concept of the cultural mandate. We see is in Genesis 9:1, but we also see this in Genesis 1:28. While it is not explicitly stated, it is implied that humanity is to not just fill the Earth, but to develop their own culture and their own identity. Take marriage for instance: marriage seems to be common across all cultures, yet the ceremony, and even the dresses, differ widely. In fact the concept of formal wear differs vastly across cultures as well. This is something that is very evident when you wonder into my local church on a Christmas morning. The formal dress of the Indians is vastly different to that which us Anglo-Saxons wear.
Another aspect of culture is language, which is why I referred to the Tower of Babel above. The story behind this part of the Bible is that humanity refused to spread out across the Earth, and instead congregated in a single city and plotted to remove God from his throne. However, God being God was not easily swayed, and responded by creating language barriers and then scattering humanity across the Earth. How this happened in reality is something that I don't intend on speculating on (especially since the Bible is not a scientific text-book), though we still see the results of that today with the difficulties we have communicating with people that do not, or barely understand, our language.


As I have indicated above there are aspects of culture that is separate from religion, but there was an event, Pentecost, which further redefined the relationship between religion and culture. While I would not necessarily state that religion and culture were intertwined (since the Greco-Roman religion was widespread and had adherents from people of various cultural backgrounds - in fact it was very much like what we have today), it was the case when it came to Judaism. Christianity has come out of Israel, but the events at Pentecost worked to demonstrate that this new faith was not going to be tied to one particular culture (that is Judaism). The breaking down of the language barriers at Pentecost was a statement indicating that Christianity was open to all, no matter what background, language, or culture, and that the religious texts were not restricted to a language that was spoken only by a few (the New Testament was written mostly in Greek, the lingua-franca of the Eastern Mediterranean).
Pentecost Painting
Pentecost - Medieval Style
This cultural shift that Christianity brought about is best seen when Paul rants against circumcision. Circumcision was a practice that was specifically Jewish, and there was a debate that arose as to whether non-Jews who become Christians should be circumcised. Granted, Herodotus does point out that the Jews weren't the only nation to practice circumcision, but at the time of Paul's writing it was very much the case. Paul's reaction against this was two fold: firstly it reeked of salvation by works (ie, unless you are circumcised you cannot consider yourself a Christian), however secondly what this was saying was that if one were to become a Christian one had to also culturally become a Jew. This, however, was not the case.
Paul was also aware that there were cultural practices that the non-Jews would practice that were offensive to the Jews. This was not so much the question of living a moral life, but rather things that were culturally insensitive. This further has an effect of indicating that Christianity does not necessarily seek to create a mono-culture where everybody is one and the same, but rather to seek diversity, and to be respectful when interacting within this diversity realising that some actions may be offensive.

Responding to the cultural shift

Greece and Anatolia
It is interesting that Paul wrote many of his letters from Greece and Anatolia in that this region of the world during the Roman Empire was almost as multi-cultural and pluralistic as our society is becoming. This is why Pastor Andrew focused on the book of 1 Corinthians when we looked at this topic. The thing about ancient Corinth was that it was a port city indicating that people from all over the Roman world would be passing through here. Also its location on the ithmus made it one of the major port cities of the time. As such Paul understood the nature of a multi-cultural society quite well.
Unfortunately Paul's experience of a multi-cultural society is much different from ours. Australia is still predominantly a white Anglo-Saxon country meaning that while mosques and temples may be appearing, they still do not dominate the country. A quick look at the census data from 2011 will show that the Christian religion is still the predominant religion in Australia (with only 22% indicating that they have no religion). If Presbyterian and Reformed churches round off the top five responses at 2.8% then that is a clear indication that practitioners of non-Christian religions fall way below that. Wikipedia indicates that 7% of the population practice a non-Christian religion. As such, Paul's experience is much different to ours in 21st Century Australia.
However, things are much different when you leave Australia for one of our neighbours (such as Bali). My experience was been mainly with Hong Kong (with a short stint in Thailand). Travelling 8 hours by plane across the South China Sea reveals a much different society than the one within I grew up.

Taoist Shrine
You see a lot of these shrines scattered about Hong Kong
The thing about Hong Kong, from my experience, is that it is much more multi-cultural than Australia. Walking through the streets it is not uncommon to see a church sitting next to a Taoist Shrine (and there are quite a lot of churches in Hong Kong). Now, Paul, when writing to the Corinthians, warns then against participating in their worship rituals. While we may not necessarily be tempted to wander into a mosque here in Australia and participate in morning prayer, the situation is much different in Hong Kong. On my first trip there a friend of my invited me into the Tin Hau Temple that was across the road from our hotel.We went inside and had a look around, however when he handed me some joss sticks to burn, I politely declined. When I went over to Hong Kong a second time, I found it difficult to actually walk into the temples. It is not because I do not think that they are beautiful structures, but rather that due to my Christian faith I cannot be seen worshipping elsewhere, as by doing so could compromise my own faith.
However, it goes further than that, Paul indicates that we can cause confusion, especially among young adherents, by what we do. As such we must always be mindful of our actions, and even voluntarily decide not to do something, so as not to give the wrong message to other people. Once again I bring back the example of the temple in Hong Kong. Some of us may simply see it as a building full of beautiful art and with a beautiful garden. However others may see that there is a spiritual reality that exists beyond that temple and that the spiritual forces involved actually have an influence upon people's lives. As such, if they see us, who only see it as a building, walking in there it may say to them that it is okay for Christians to go and worship in these temples because they are seeing their Christian friends doing so.
Aberdeen Tin Hau Temple
The Tin Hau temple in the district of Aberdeen
Does that mean that we should reject all of Chinese Culture because of their religion? No, I don't think so, and that is where the balancing act comes along. In Paul's day eating certain types of food would be a religious act because much of the food, especially meat, would be put through a ritual before being served up on the plate. However, this is not the case in Hong Kong. Over there food is food, therefore eat away. However, the use of joss sticks is a different story. You don't have to travel far to see joss sticks being used for ceremonial purposes, however here in Australia we use them to simply make our room smell nice. This is one thing that I feel that us Australian Christians need to be mindful of, especially with Asians, because while we have a secular use for joss sticks, in the mind of many Chinese there would no doubt be a spiritual connection.

Meeting our Cross-Cultural Family

In the final session Pastor Andrew introduced us to a number of people from different cultures, including China, India, Africa, the Middle East, and traditional Anglo-Saxon Australia. While our friends were able to give us an understanding of some of the aspects of their culture, we must remember what our African friend told us - even in one country there are many, many different cultures and one should not blind themselves to this fact based upon the opinion of a single person. However, here are a few things that I learnt.
  • Chinese people do not have the same perception of privacy as we do;
  • Chinese people tend to be very reserved and shy, to the point that there is not much touching within their culture;
  • Indians work on India time;
  • Middle Eastern men kiss each other on the cheek as a form of greeting;
  • Meat and three vegetables are the traditional diet of the white Anglo-saxon;
  • An African will be baffled if you arrive on time;
  • Africans have a strong respect for their elders.

When do you arrive at a party?

I guess that is one of the very big questions that we are faced with as a multi-cultural society. People do not necessarily have the same concept of time as we Anglo-saxons do. Okay, when we throw a party we generally do not expect everybody to turn up on the dot. In fact, in my experience, I have found people who arrive early to be quite frustrating. We all know about being fashionably late, and when it comes to a party then this is generally accepted.
It is also generally accepted that when we have a business meeting we all turn up on time. This goes without saying, and it does not matter which culture you are in, this is what is expected - business is business.
Domestic Workers Party
Now this is one big party
However, how about church? We Europeans generally arrive at church early, or at least on time (or maybe a couple of minutes late). However our cross cultural families do not see it in the same light. One church that I visited (a Coptic Church) had the service run for four hours and people would wonder in when they felt like it. We are seeing the same thing now with our local church - people generally don't arrive on time (unless you are white Anglo-saxon), but rather they drift in up to about half-an-hour after the service has started. This is something we need to understand as we move into a more cross cultural society as not everybody views 'arriving on time' the same way we do.

Can our culture be offensive to others?

This was a question that was posed to us at the beginning, and the problem is that it can be really difficult being able to critically analyse our culture while being immersed in it, however I feel that there are some aspects of our European society that we do need to address, and I will touch upon two here.

Privacy: like it or not we are a very private culture. We have our public face and we have our private face. In fact one thing we do not like are people turning up at our house uninvited, or people questioning us as to what we do in our private life. This has led to a very isolated society were we are quite closed in, something that people from other cultures do no experience. While our desire for privacy is a part of our culture I feel that we need to address that to an extent if we are going to be able to relate to those from other backgrounds.

Profanity: this may be surprising, but we Anglo-Saxons are a very profane culture - we like swearing and cursing. While many of us Christians generally don't use such language regularly, we still use it. Just turn on a movie and it will be rare that you will not encounter any profanity. In fact, the pervasiveness of profanity in our culture goes to the extent that we cannot understand a culture that doesn't swear, and in reality, a lot of them don't, not in the same way that we do.


I have touched on a lot of things in this post but the one thing that I wished to bring out is that culture and religion are not necessarily the same thing, and we should be aware that when people come into Christianity from other cultures they do not necessarily do things the same as we do. This goes beyond language, in that language is really only a tool for communication, however we should not expect that Christians all speak the same language (beyond the need to be able to communicate). It also comes down to the food we eat, and the various social mores of which we need to be aware. However, if there is one thing that I love about other cultures (other than language, art, and literature) is the different ways they cook meals (and eat them).

Food with Chopsticks
I love eating with chopsticks
Chinese Wedding Dress source: Kelidimari use permitted under Creative Commons Attribution 3.0 unported
Chinese Red Pork source: Free Food Photos use permitted under Creative Commons Attribution 3.0 unported


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Sunday, 7 February 2016

The Big Short - Capitalism in Crisis

Once again I watched a movie that when I started writing a review on IMDB I realised that there was a lot more that I could say about the film than I could easily fit in one of its posts (and even then those post are more for reviews of the film than actually deeply exploring the ideas that come out of the film, not that I actually don't do that since it is better for me to jump over to my blog to explore the themes). Anyway, The Big Short is based upon a book of the same name and is about some Wall Street traders who predict the coming collapse of the housing market in the United States and decided to bets against this with the purpose of making a profiting (which is what Wall Street traders do). The movie follows these four people from when fund manager Michael Burry first identifies a problem within the market to when the US government bails out the banks.

However, before I continue here is the trailer:

One Pretty Cool Film

As I have indicated above, I have already written a review of this film on IMDB, however I should probably say a few things about it here. In a way the film is crafted in a style known as a docu-drama, where the director is exploring a real situation, and explaining what happened and what went wrong (in the tradition of a documentary) while doing so in the form of a story, as opposed to simply dumping facts upon the audience. While I suspect that there are a number of others similar films out there, the one that a couple of others have pointed out is The Wolf of Wall Street (though that is more an autobiography). The interesting thing about the docu-drama is that the characters regularly break the fourth wall (that is speak directly to the audience). Sure, narrators have done that for a long time, and the narrator may even take the role of a character in the film, but we also have the character turning to the audience simply to flag who he is (personally I wouldn't have known otherwise).

As for the performances I have to say that they were absolutely outstanding. It was Steve Carrol, playing Mark Baum (who actually doesn't exist - the character is based on Steve Eisman), the cynical Wall Street trader who was not afraid to call a spade a spade, who stole the show. In many ways Baum is used as the mouthpiece that brings attention to all of the shady practices that had occurred, and are still occurring, within the financial system. Sure, the narrator Jarred Bennett is also bringing that to our attention, however it was Baum's character that actually saw the rubbish that was being peddled, and the underhanded practices that were occurring all around him. While Bennett and Burry were aware of what was going on, these two simply wanted to cash in on the crash (though I will speak more about it below).

As I have mentioned, the film is about a group of people, who aren't necessarily interconnected, discovering the discrepancies in the financial system and making a bet upon its collapse. Burry is the one who initially discovers the problem, and then goes out to make a bet that the market is going to collapse. However since there wasn't any financial instrument at the time to allow him to do it, he ends up creating his own (the credit default swap, or CDS). He then goes and visits a number of large investment banks to request that they sell them to him, which they are more than willing to do since they think the idea of a collapse in the housing market is ludicrous simply see it as easy money.

Once he had done the word gets around: first to Jarred Bennett, who decides that there might be an opportunity in selling these products, who then dials a wrong number which brings them to the attention of Mark Baum. Finally, after being rejected by one of the banks, he ends up leaving the prospectus on the table in the lobby, which is picked up by a couple of others (Charlie Geller and Jamie Shipley) who happen to be outsiders, but enlist the help of retired investment banker Ben Rickett (who is brilliantly portrayed by Brad Pitt) to help them make the bet. Mind you, as they say, they didn't discover these products the way the film portrays it, but it does add a bit more of a flavour to the story (and at least the film is being honest - most of them don't actually say anything when they are playing loose with the truth).

Anyway, while we all know what is going to happen in the end - the financial system collapses and these guys make an absolute packet because of it - much of the tension arises due to the fact that these guys are betting against the trend. The thing with being in the financial industry is that you are playing with other people's money, and other people want to see growth, not losses. As such these people need to convince the other people (in Burry's case his investors, and in Baum's case Morgan Stanley) that the bet that they have made is the correct one. The problem with Baum is that he is betting against is own employer (whom we discover has made a $15 billon bet that the housing market will continue to grow). Anyway, it is probably a good time to explain some background.

A Short History of Banking

Actually, if you want a pretty detailed history of the modern financial markets you simply cannot go past The Ascent of Money by Niall Fergusson. However, I will give you a brief run down of what I know (and I am writing this from memory).

The modern financial system began in Renaissance Florence with the Medici family. To enable them to raise money to be able to fight their wars they came up with this ingenious idea of the bond. Basically what they did is that they grabbed some paper and basically wrote 'IOU $1000' on them, with the promise to pay $100.00 every year that they don't pay it back. They then sold these pieces of paper for, well, $1000.00 each. What these pieces of paper said was that it was worth, at face value $1000.00, and that the person who held the piece of paper was entitled to receive $100.00 per year. The thing with these pieces of paper was that the holder could sell it to another person, and that person could then approach the Medici's and claim that $100.00, or the $1000.00 when the Medici's chose to redeem them.

An example of a paper bond (actually it is a stock, but they look the same)

However, while the face value of these pieces of paper were $1000.00, the actual value could rise, and fall, based upon the ability of the debtor to be able to pay. The concept then spread across Europe, and as we moved into the 18th century, we see the development of what is known as the joint stock company. Initially such companies were created by the government but they would raise money by selling stock - which is basically an interest in the company. This stock, like the bond, was a piece of paper that basically said that you had a financial interest in the company and thus were not only entitled to a share of the profits, but also a say in the way the company was run.

One of the major differences between a bond and stock (or a share as they have come to be known) is that the share does not have a face value. While the share would be issued for a certain amount, that did not necessarily mean that it would remain at that value. As such the share could increase, and decrease, in value based upon the perceived profitability of the company. This eventually led to some disastrous events, such as the South Sea Bubble, where people were paying huge amounts of money for a company that was in effect worthless.

An example of a share certificate

Trading Paper

Well, from what you can see above, the entire stock market is made up of pieces of paper, and the market makes money by selling these pieces of paper. To be more precise these pieces of paper are actually contracts between the company and the holder of the bond or the certificate. For many years (as far as I am aware) the financial markets simply consisted of these two pieces of paper - shares and bonds. Many of the crashes in the past simply came about because these pieces of paper were way over valued. For instance shares were being sold at a value that did not actually represent the profitability of the company, and when that fact came out the holder of the certificate suddenly came to realise that their piece of paper was worthless.

To protect themselves against such falls further instruments were created - options. Now while I am familiar with the financial markets, and understand the concept, I am trying to explain it in a way that the average punter can understand. Basically an option is a piece of paper that derives from an underlying share (from which we get the term derivative). Basically an option is a bet that the value of a share is going to rise (a call option), or fall (a put option). These instruments (the financial term which refers to these pieces of paper) were created as insurance against a rising, or a falling, market.

As the movie suggested, back in the 1970s banking, and insurance, was a boring business. This came about due to the financial collapse on 1929 which resulted in the Glass Stegal Act separating a bank's commercial business from its investing business. The basic bank would take deposits and then use the money from the deposits to make loans to creditworthy people. However along comes this chap (I can't remember his name) who came up with this idea of the mortgage backed security. His idea was to package all of these loans and sell them as pieces of paper that promised a decent return. What this meant was that the banks could then free up their capital (money) by selling the loans onto a third party.

Now, the movie suggested that a Collateral Debt Obligation (CDO) and a mortgage back security are two different things, however I am inclined to disagree. As far as I am aware a CDO is a mortgage back security (MBS), basically an MBS is a piece of paper that represents a bunch of mortgages, and you are paid an amount of money based on the current interest rate (though it is generally less because the middle man has to scape a bit of cream off the top). However what the Big Short did say was that a CDO was basically a bunch of really bad loans that they weren't able to sell on, so that they divide them up and mix them in with good loans so as to make the piece of paper look attractive to potential investors. The movie used the analogy of a chef mixing three day old meat into a soup so that he would not lose any money by throwing the fish away.

Fraud on an Epic Scale

When most of us think of fraud we generally think of those Nigerian Email Scams, or some dodgy small timer that swindles an old person out of their life savings. Many of us don't equate it with the big banks or the reputable ratings agencies, but it happens. For instance HCBC was implicated in a money laundering scandal (yet they are still operating - it's the economy stupid). My argument is that the big banks are just as capable of fraud as that guy down the road running a two bit financial advice service - the difference is that the banks operate within the law namely because they have an army of lobbyists that make the law.

Anyway, this is how the scam worked. Economics works upon a principle of the Law of Diminishing Returns, which basically means that there is only so much money that you can make from an investment. The longer the investment goes the less money you will make from it. The reason for this is that there are only so many resources that are available, and in the case of mortgage backed securities there are only so many credit worthy people around at a time that one can lend money to and expect to get it back. As such when the banks onsold all of their mortgages they had a heap of money that they had to do something with. The problem with banks (and with me for that matter) is that we cannot simply have money sitting there doing nothing - we have to invest it in something to produce a return, and with banks that is loans.

Okay, the banks make money from other methods - such as fees and charges - but their primary way of making money is from interest payments on loans, so when they had sold off all of their good mortgages they needed to lend the money they had sitting there to more people - namely to those who already had loans. However it went further than that because once they had leant all of that money out they would bundle it up and onsell it which meant that they had more money to lend out, so the quality of the borrower became less and less to the point that they had to resort to what was known as NINJA Loans - no income, no job, and no assets.

During this time arose a profession known as a mortgage broker - somebody who would find the best loan for a prospective customer, and would receive a kickback for writing up this loan. As with the banks, as the creditworthiness of the customer declined, the mortgage brokers would pretty much look for anybody to whom they could possibly lend money. In the movie we are introduced to two such people, one who preys on immigrants, and one who goes even lower to those who literally have no money at all. When Mark Baun discovered that a stripper owned five houses (and a condominium) he knew there was a problem.

Oh, I should also mention the teaser rates - the banks, to encourage people to borrow more, would offer what was known as a teaser rate, that is a really low (or non-existent) rate of interest and then after a period of time would jump to the average, or even higher, rate. People were thus drawn in by these teaser rates (which is why the term teaser was used) only to discover that when the rates jumped that they were in serious financial trouble.

Are These Guys Heroes?

I guess this is the big question, and to be honest there is some debate about this (at least on IMDB). Sure, these guys have pierced the veil of the financial markets, and in a way we see them as bucking the trend, but what do we get out of it - absolutely nothing. These guys make an absolute bucket load of money by shorting what many of their peers saw as an impossibility, but in the end while they walk away with their millions, those who were caught up in the whole fiasco are left to suffer.

In a sense it is what Ben Rickett says when Geller and Shipley are dancing out of the securitisation convention - sure they have made money, but what are they making money off - other people's suffering. When the unemployment rate goes up so do the number of deaths. What they are betting against is the American economy, and the fact that it is based entirely on a lie. Sure, they might make millions out of their trades, however there are going to be hundreds of thousands of people suffering from this event.

I remember at the height of the financial crisis going up to a couple of friends at church, one of them quite young, one of them quite old. I asked them what they thought about what happened and the young one thought it was hilarious, while the older one was incredibly incensed - it's those short sellers. Mind you, he had lost a heap of money when one of his 'sure-fire' investments had completely collapsed (though he never lost faith in the financial markets).

That is the thing with short selling - where you borrow shares and then sell them into the market and buy them back at a lower price - it exacerbates the falls. Sure, it is incredibly risky, and can result in you losing a lot of money, but when you do it at the right time it can pay off immensely. However what it does is that it exacerbates the problem. When people sell they sell because they want to maintain their capital, however short sellers sell simply to make money, which means that when the market is in free fall they suddenly come out of the woodwork and make the crash much worse than it really is.

They are not necessarily responsible for people losing their jobs, but their act of exacerbating a falling market means that peoples' life savings literally vanish. Okay, I entered the market after the crash (and I have to admit that I really don't have the time, energy, or willingness for risk to do anything other than buy shares that look like they might make me some money), but a stock market crash affects lots and lots of people. In fact one of the reasons that this crash was as bad as it was was because of the existence of the financial instruments - the Credit Default Swap - that Burry created to short the housing market.

The thing with the Credit Default Swap (CDS) was that it was an insurance policy issued against a rock solid security, which meant that if the price of the security (a piece of paper) went below a certain level, then the bank that wrote the security would pay out the face value of the security. When these were written up (as was portrayed in the movie) it was believed that they would never have to pay out on them, however when Lehman Brothers collapsed it suddenly because evident that the holders of these securities would be making their claims. In fact this is what brought AIG, at one stage the biggest insurance company in the world, to financial ruin - which resulted in the multi-trillion dollar bailout.

The Other Side of the Story

I remember standing on the front of a boat with some guy I knew (I won't call him a friend because, well, he wasn't) talking about the financial crisis. Now he was a die hard capitalist that believed in the sanctity of the market, while I'm, well, a Democratic Socialist (for want of a better word). At the time people like me were gloating over the fact that capitalism had failed and that a new world order was just around the corner. What did he do - he blamed Clinton.

The theory goes that Clinton enacted a law that forced banks to loan money to people who were not credit worthy and it was that law that laid the foundations of the crisis. However my understanding was that at the time people of a certain colour (namely blacks) were being discriminated against because, well, they were black. Despite the fact that they were credit worthy the banks refused to lend money to them because the perception was that if you were black, and lived in the United States, then you were poor and thus automatically disqualified for a loan.

However the claim that this was the root of the financial crisis is somewhat of a furphy. While it is true that there was a lot of discrimination against certain minorities, the banks would exacerbate this by offering teaser rates - low rates of interest with the expectation that once the real rates kicked in the bank could repossess the property and sell it for a profit (with the expectation that during the time the teaser rates where in effect the value of the property would grow). However it was the repeal of the Glass-Steagall act that was the cause of the crisis. This was an act that basically said that a bank had to separate its normal banking activities (taking deposits and making secured loans) from its investing activities (making risky investments). Buy removing this layer of security meant that the deposits of the average punter were suddenly at risk.

A Casino Culture

I found it quite interesting that in the movie the securiterisation conference was held in Las Vegas, the casino capital of the world. In a way it says a lot about the modern banking industry - it is little more than a sophisticated casino. In many ways it is, especially when it comes to speculation. The traditional form of investment was to purchase either bonds for steady repayments, term deposits for a similar result, or purchase shares to add some risk to your investment. However as the financial markets developed, investment suddenly turned to speculation, which is a sophisticated form of gambling.

For a while I have suggested that investing in the financial markets is a much safer, and less riskier form of gambling than going to the casino and pouring your money into poker machines. Okay, while the odds are much better, the thing with gambling at the casino is that more likely than not you are going to lose all your money. With the exception of maybe craps (and I really don't know how to play craps) I can't think of any game where if you don't win money you don't lose the lot. The difference with the financial markets is that if you make a bet (though the proper term is trade) that goes against you then you can at least cut your loses and walk away with some of your initial investment.

However what I am talking about here is the basic buying and selling of ordinary securities (stocks and bonds). Things change when you move into derivatives. I have already spoken about options, which are seen as a form of insurance against your investments moving in the opposite direction (and they really only become useful when you are playing around with huge amounts of money). They aren't the only forms of derivatives though (the Credit Default Swap - the derivative that was the focus of the movie, is another form of insurance, and while they had been around since 1994, what the players in the story did was create a financial market for them), another is known as a Contract for Difference (CFD).

Basically a CFD is a contract that represents a fraction of of the value of the underlying share (say 10%), so if the value of the share moves (you can purchase CFDs in anticipation of a share going up, and a share going down) when you sell it you keep the entire difference. For, for instance if you buy a CFD over a share worth $10 (which means you pay $1.00 for the CFD), and the value of the share increases to $12.00, then you have effectively tripled your money. The catch is that if the share decreases to $8.00, then you have to fork out the extra $1.00 to cover the different. This is the major difference between gambling on the market and gambling at the casino - on the market there is the potential for you to actually lose more than you have invested.

As it turns out, CFDs aren't actually available in the United States, however that doesn't stop the casino nature of the stock market from flourishing. With short sellers and day traders, the idea of investment in stocks being long term investments has gone out of the window, and people buy and sell shares with the hope of generating a quick profit. Sure, there are still some funds out there that prefer the Warren Buffet style of investment - looking for a company that is undervalued and then buying into it, and taking the position that when you buy a share you are actually buying a company. However with super computers scanning the markets looking for mispriced securities, and buying and selling them at light speed, one wonders if the nature of the market has changed for ever.

Government by Wall Street, of Wall Street, and for Wall Street

Many of the right wing commentators and free market advocates love to fall back on Adam Smith's famous invisible hand quote and use that as an argument for the government not to regulate the market simply because government regulation has the effect of distorting the market. However many of these same people seem to completely forget this quote which also comes from the Wealth of Nations:

The interest of [businessmen] is always in some respects different from, and even opposite to, that of the public ... The proposal of any new law or regulation of commerce which comes from this order ... ought never to be adopted, till after having been long and carefully examined ... with the most suspicious attention. It comes from an order of men ... who have generally an interest to deceive and even oppress the public
and not to mention what he had to say about taxation:
It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than that proportion.
Mind you, people have always picked and chosen bits of pieces of philosophers to promote their own agenda, and this is very much true of religion. However it is always interesting that out of a huge, two volume book, the only thing that people pay any attention to, and base their entire economic theory on, is a single paragraph.

Yet I believe Smith is correct about the danger of allowing business men to enter the government namely because it is very difficult for them not to push their own agenda. In fact there is a scene in the movie where one of the characters approaches an old acquaintance who works at the Securities Exchange Commission, the government regulator of the financial sector, whom he discovers is currently looking for opportunities to enter the private sector. To him, jumping straight from the government over to private industry reeks of corruption - yet it happens because it is allowed to happen. The problem is that these people tend to retain their contacts in the government.

The revolving door between the government and the private sector has being going on for a very long time, and we aren't necessarily talking about politicians here. However there is a counter argument to this because the people that are needed to head up the various government departments need the experience to be able to effectively run these departments, and the only way you can find them is in private industry. Mind you this is an element of the American system namely because the department heads are chosen from anywhere except Congress, while in the Westminster system they can only be selected from parliament. One does raise the question of whether is a potential conflict of interest when it comes to many of these appointments.

The end of Capitalism

I have actually already written a substantial piece on this on a couple of book sites that I use to review books I have read (and in this case it was a book by Slajov Zizek about, you guessed it, the global financial crisis) however I will finish off with a few thoughts on this idea. Basically the gist of that piece is that we are in the process of (or already have) moved from a capitalist, free market economy, to a new form of feudalism where the corporate bosses basically control society and the little guys are subject to their whims and desires. Sure, we still have a lot of small businesses floating around, however the small business paradise is slowly being crushed by competition from the major corporations.

For instance there has been a lot written about the practices of stores like Walmart (and while that is only one link, you can certainly find a lot of others through a simple Google search) on how they destroy local businesses through cutting prices to a point where they can't compete, and then cutting them further. Sure, such stores are useful in that they offer goods at low, low prices, yet the variety and nature of the small business is destroyed in the process. One of the great things about a small business is, in many cases, their customer service. The owner of a small business has a lot more at stake in the business than your average checkout operator at McDonalds.

However another thing is the idea that bad businesses go bust while good businesses survive. If a small business owner is rude to his customers and rips them off then word gets around and people stop shopping there. However what we now have is a system where a business will survive simply due to its shear size. Further, what the global financial crisis taught us was that if a financial institution makes foolish investments and collapses, then the government will simply run in and bail them out - in effect propping up the economy. This is not how capitalism works, and in the end encourages dependency. When a multi-national corporation is bailed out, or propped up by government handouts (and tax exemptions) then the business becomes reliant upon it, and adjusts its practices as such. The company will become much more wasteful, and speculative, knowing that if anything happens they can simply run to the government, cap in hand, claiming that if they went under then hundreds of people would be out of work.

That, to me, is not capitalism, but then again it isn't socialism either. Socialism is where the state has power over the corporations (as is the case in China) as opposed to the Corporations having power over the state. This needs a new term - neo-feudalism. Still, whenever something goes wrong, these companies all run to the government, cap in hand, wanting them to bail them out while the same companies dump of the poor who are forced to survive on government handouts and food stamps. To me, there seems something really hypocritical with that.

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The Big Short - Capitalism in Crisis by David Alfred Sarkies is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. If you wish to use this work commercially please feel free to contact me. This license only applies to the text and any image that is within the public domain. Any images that are the subject of copyright are not covered by this license. Use of these images are for illustrative purposes only are are not intended to assert ownership. If use wish to use the creative commons part for commercial purposes, please contact me directly.