Why Sacrifice is Evil

Let us discuss the logic of sacrifice and why sacrifice is evil.

Situation 1:

Suppose two children are drowning in a pool. You can save only one of them. Your child is 1 foot further out than your neighbor's child. Therefore, there is a slightly greater cost to saving your child's life than your neighbor's child. What do you do?

Do you save your child? Do you save your neighbor's child?

Situation 2:

You have a choice to give up $1 for a hamburger. Is this a sacrifice?

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My answer: in situation 1, I save my child.
My answer: in situation 2, yes, it is an extreme sacrifice even more so than situation 1.

Why?
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I believe that most people would agree with me about situation 1. You would save your child. Yet you sacrificed the neighbor's child by your choice to do so. You were being SELFISH and definitely not altruistic. Jesus says in Mark 12:31, "Love thy neighbor as thyself. There is no greater commandment than these." These in this case refers to love of God and love of neighbor and the love of God part is irrelevant for this argument. Yet virtually all of us in Situation 1 would tell Jesus to go fly a kite. We are saving our child and it is the moral thing to do.

In situation 2, most people would argue that it is not a sacrifice. However, it is an even greater sacrifice than in situation 1! Why? $1 can save a child life (actually even far less than that can) by insuring that they do not suffer from iodine deficiency (total cost in a child's lifetime = 5 cents). So when you eat your hamburger instead of paying for a child to receive adequate iodine, you are effectively stating that the child's life is not worth as much as your hamburger.
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So now you are going to take that $1 and send it to stop iodine deficiency. Good! Well, not exactly. Let's take it one step further. Since you agree that one should "Love thy neighbor as thyself" then your life is no more precious than my life and certainly your life is not worth as much as two lives. But if we kill you and take your money, we can save hundreds or even thousands of lives. So, logic dictates that we should kill you. Jesus commands it. After all, "There is no greater commandment than these." (love God and love thy neighbor) Surely if your life is worth my life, then two of my neighbor's lives are worth more than one of my neighbor's lives.
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Logic further dictates that I should kill myself and allow the money to go to others but there is a problem with this. You see, if I kill you, I can GUARANTEE that your money will go to good causes. I cannot guarantee that for my own life. Therefore, since I know that you are not spending your money properly (since you are sitting there eating that hamburger), God commands me to kill you, take all your money, and spend it all on curing iodine deficiency (which killed 7,000 in 2002).
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Wait a minute! you say. God also commands, "Thou shall not kill." God also commands, "Thou shall not steal." Hmm... Okay, but God said with regard to love of God and love of neighbor, "There is no greater commandment than these." Therefore, your objection is noted and you will still die.
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Doesn't anyone else see the utter EVIL in this line of reasoning? Yet it follows from the basic logic of altruism. If your life is more important (or even AS important) as mine, the logic is incontrovertable. You must die (from my perspective). I must die (from your perspective).
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Since this cannot be good, sacrifice must be evil. End of proof. Now let me go and eat my hamburger. Class dismissed.

Toxic TARP Funds

Are TARP Funds Responsible for the Credit Crunch in Consumer Lending?

You might think TARP funds were necessary to get the consumer credit market moving. After all, reports abounded that consumer credit was “frozen.” However, the facts do not paint this picture. According to the records of the Federal Reserve, total credit was expanding by 2.9% on an annualized basis, which is close to the long-run growth trend of the economy, from November 2007 to August 2008.

Bailout money went predominantly to large commercial banks and finance companies (defined by the Federal Reserve as the credit arms of the big 3 automakers). Credit unions did not receive any TARP funds and small commercial banks received only a limited amount.

Lending at finance companies is closely correlated with the demand for cars and the auto industry has suffered a serious pullback. However, lending at large commercial banks should have grown at a faster rate than pre-TARP if TARP funds broke a credit logjam, while lending at small commercial banks and credit unions should lag behind the big banks. This is not borne out by the facts. The rate of growth of consumer credit since January has declined most dramatically at the large commercial banks:

For Large Commercial Banks, they expended their lending by 10.4% from November 2007 - September 2008 and by 13.3% from September 2008 to January 2009. However, their lending declined by 7.6% from January 2009 to the present.

For Small Commercial Banks, they expanded their lending by 2.2% from November 2007 to September 2008 and by 12.2% from September 2008 to January 2009. They also expanded their lending by 9.8% from January 2009 to the present.

For Credit Unions, their lending declined by 0.6% from November 2007 to September 2008 and increased by 2.6% from September 2008 to January 2009. Their lending was off 0.8% from January 2009 to the present.

In other words, the large commercial banks had the greatest decline in lending post-TARP.

From September 2008 to January 2009, although large commercial banks had TARP money, there was little in the way of regulations on them. TARP money began to come in the form of excess reserves which ballooned from less than $2 billion in August 2008 to more than $767 billion in December 2008. Large commercial banks were actually content to allow consumers to expand their use of their credit lines, perhaps believing that the TARP funds acted as a form of insurance against default. Still, lending was up at all three groups and the large banks do not appear to be increasing their lending significantly faster than they had previously been doing.

Things change by January. Already rumblings were being made in the media that the banking sector was not lending the TARP funds and that restrictions needed to be placed on them to force them to lend. There was a lot of worry that the funds had been given without any strings attached, so the government began to implement ex post ad hoc regulations to ensure that lending would be expanded. In addition, the TARP funds often came in the form of warrants that pay between 5% and 8% per annum. These costs are sigificantly higher than the rates that banks can receive from mortgages and personal loans. It just doesn't make sense to borrow expensive money to lend cheaply. Furthermore, at least for the consumer sector, the figures show that the banks and credit unions were lending and, in fact, were expanding lending in a major way for the last four months of the year.

It is only when these institutions start being told that they need to account for the money that we see the consumer credit market freeze. Notice that the large commercial banks that initially expanded lending after the TARP funds first became available see large reversals at the start of this year. Excess reserves continued to climb reaching $798 billion in January 2009 and hit a high of $844 billion in May 2009. This is signficantly higher than the total amount available to banks under TARP, indicating that banks were not only not lending out TARP funds, they were not lending out other funds that they had at their disposal. Consumer credit dropped by 7.6% at the large commercial institutions over the first five months of the year.

Once they saw the strings that were attached to them, it should not be surprising that large banks have scrambled to try to pay back the funds. Credit unions and small banks, which form the bulk of sustained lending, did not see large injections of TARP funds. This should help satisfy the case that the TARP funds, once the full restrictions came into force, did not do what they were intended to do: increase consumer credit lending in any significant way. Indeed, if any assets of large commercial banks are toxic, TARP funds are.

Is it time for the ultimate bailout?

With the US financial sector effectively insolvent, the retail sector in tatters, the insurance industry in disarray, the manufacturing industry moribund, the transportation industry going nowhere, and the American consumer in full-scale retreat, with no end in sight to government deficits if we continue to try to prop it up, perhaps it is time for the ultimate bailout:



Let's bail out everyone.



What would this heresy mean? Essentially cancelling all debts currently owed by everyone and starting over. It almost is coming to that, isn't it? The writing down of debt by bankruptcy judges essentially does this to give companies and individuals a "clean start" so why not try it for the entire country? At first, this sounds like a wonderful elixir: no more debt. Even better, let's let people keep the cars and the homes that they have. Of course, all bondholders would be wiped out and that means that the pensions for most Americans would be effectively gone but isn't that happening anyway?



It sounds ridiculous doesn't it? Unfortunately, this is essentially the strategy that we are currently pursuing for the American financial sector. The US government is so concerned with eliminating systemic risk in the US financial sector that it is essentially ensuring that hundreds of banks that have failed are bailed out and allowed to continue. Even though they owe billions or even trillions in obligations (in the aggregate), these highly leveraged companies are not only allowed to continue to operate and lend, they are encouraged to do so.



We no longer punish failure. This means that we no longer reward success.

We will NEVER run out of oil!

"It's not a call to arms, or a doomsday prophecy. It's a simple truth: Someday the planet will run out of oil." -- Eric Sofge, MSN Autos in "A World Without Gas" retrieved from http://editorial.autos.msn.com/article.aspx?cp-documentid=748083&topart=luxury on February 17, 2009.

Actually, contrary to what Mr. Sofge argues, we will never run out of oil. We might run out of the cheap stuff, the light sweet crude that proliferates in the Middle East. However, there will be oil in the ground until the Earth ends. Now we will likely have gone on to other sources of energy by then but, in reality, it is a simple truth: The planet itself will never run out of oil.

How can this be? The reason is simple: as oil becomes harder to find and extract, the price will rise. The rising price will make it so that we will begin to economize and finally will develop alternatives until we leave oil to the dustbins of history. At that point, we will stop using oil but there will still be oil in the ground. It is just that it won't be economically feasible for us to extract it because something cheaper will have replaced it.

South Carolina to Move Up Primary

What is next? I can see it now:

SOUTH DAKOTA, MONTANA, NEW MEXICO ALL CHANGE PRIMARY RULES. JUNE 3, 2008 PRIMARY VOTE WILL BE FOR 2012 PRESIDENTIAL PRIMARY
Three states decide to replace traditional 'last in nation' primaries with 'first in nation' ones....
--I mean if the nomination is already decided by then, why not get a head start on the NEXT election season?

Talking Toddlers and our Incapacity to Reason

A mother and her 19 month old child were kicked off a commuter jet because the child constantly stated, "Bye Bye Plane" for over a half an hour during the safety instructions and taxi of the turboprop.

http://abclocal.go.com/ktrk/story?section=local&id=5472927

Now I might understand if the little kid was warning everyone about a terrorist plot to blow up the plane (I mean obviously in these post 9/11 days, anyone saying "Bye Bye Plane" while on the plane must be trying to blow it up and you know that these Al-Qaeda people are getting younger and younger all the time).

That apparently isn't how it went down. The flight attendant apparently asked that the child be given Benedryl to quiet the kid whose noise level was about the same as a normal conversation. Great, if it were a terrorist plot, that ensures that the co-conspirator won't be able to tell us where the bomb is because he would be too sleepy!

In any case, the situation escalated and the kid and mom were asked to deplane simply because the kid couldn't stop uttering the same phrase over and over again and it made the flight attendant upset.

So now you can be kicked off a plane because you can't get a toddler to shut up. Have you ever tried to silence a 19 month old? If this flight attendant represents our first line of defense against terrorism, our capacity for reason appears to be on a par with that toddler. For me, that's almost as scary as the possibility of another terrorist plot.

Hot Oil? More like Hot Air

There are now lawsuits alledging price fixing by oil companies that costs US drivers up to $2.3 billion a year in extra costs for gasoline based on a (supposed) average annual temperature in the US of 65 degrees:

http://www.huffingtonpost.com/jamie-court/hot-gas-shorting-driver_b_28625.html

Guess again:

Actually, we BENEFIT from this. Why? Because actually the average annual temperature in the US is LESS than 60 degrees: In 2006, the 2ND HOTTEST YEAR ON RECORD, the average annual temperature in the US was just 54.9 degrees...

Source: http://www.ncdc.noaa.gov/oa/climate/research/2006/ann/us-summary.html

Well, surely, California has it worse, right?

Yes, but the temperature still doesn't reach 65 degrees. In San Diego, the average annual temperature is just 64.2 degrees.

Source: http://www.cityrating.com/citytemperature.asp?City=San+Diego
In Los Angeles, it is 63 degrees:

Source: http://www.cityrating.com/citytemperature.asp?City=Los+Angeles

In San Jose, they are actually BENEFITING FROM THIS POLICY because the average is 57.1 degrees:

http://www.cityrating.com/citytemperature.asp?City=San%20Jose

In Sacramento, it is 60.8 degrees:

http://www.cityrating.com/citytemperature.asp?City=Sacramento

Surely the Southwest is burning up (all figures come from cityrating.com and were corroborated via multiple weather websites)? Not exactly, yes, there are a few cities that are hot:

Phoenix, AZ: 72.6 degrees
Las Vegas, NV: 67.1 degrees
Tuscon, AZ: 68.4 degrees

But many are not:

Roswell, NM: 60.8 degrees.
Albuquerque, NM: 56.2 degrees
Reno, NV: 50.8 degrees
Clayton, NM: 53.2 degrees
Flagstaff, AZ: 45.8 degrees

What about the South? (all figures come from cityrating.com and were corroborated via multiple weather websites)

Atlanta 61.3 degrees
Wichita Falls, TX: 63 degrees
Birmingham, AL: 61.8 degrees
Charlotte, NC: 60.1 degrees
Charleston, SC: 55 degrees
Greensboro, NC: 57.8 degrees
Amarillo, TX: 56.9 degrees
Huntsville, AL: 60.3 degrees
Richmond, VA: 57.7 degrees
Tupelo, MS: 61.7 degrees

The Midwest?
Oklahoma City, OK: 60 degrees
Rapid City, SD: 46.6 degrees
Des Moines, IA: 49.9 degrees

And don't even get me started on the Mid-Atlantic, Northeast and Rust Belt:

Philadelphia, PA: 54.3 degrees
New York City, NY: 54.7 degrees
Boston, MA: 51.3 degrees
Buffalo, NY: 47.7 degrees
Cincinnati, OH: 51.7 degrees
Cleveland, OH: 49.6 degrees
Detroit, MI: 48.6 degrees

So for many of us, apparently, the oil companies are actually doing something to the consumer's benefit! Yet some lawyers want to use 'fuzzy math' to line their pocketbooks. In addition, this is something that consumers can work to their advantage. By gassing up in the early morning, just before going to work, the average yearly temperature will likely be lower than the figures given above.

Zagros Madjd-Sadjadi, Ph.D.
Assistant Professor of Economics
Winston-Salem State University
sadjadizm@wssu.edu
(336) 750-2398

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