The Binary Circumstance

Fannie Mae and Freddie Mac helped create the currently mortgage crisis and all the related financial problems by using government to their advantage.

If you want to know how Fannie Mae and Freddie Mac have survived scandal and crisis, consider this: Over the past decade, they have spent nearly $200 million on lobbying and campaign contributions.

But the political tentacles of the mortgage giants extend far beyond their checkbooks.

The two government-chartered companies run a highly sophisticated lobbying operation, with deep-pocketed lobbyists in Washington and scores of local Fannie- and Freddie-sponsored homeowner groups ready to pressure lawmakers back home.

They’ve stacked their payrolls with top Washington power brokers of all political stripes, including Republican John McCain’s presidential campaign manager, Rick Davis; Democrat Barack Obama’s original vice presidential vetter, Jim Johnson; and scores of others now working for the two rivals for the White House.

Fannie and Freddie’s aggressive political maneuvering has helped stave off increased regulation and preserve special benefits such as exemption from state and local income taxes and the ability to borrow at low rates.

When their stock prices took a dive last week, their government allies extended another helping hand with a plan for the Treasury Department, the Federal Reserve and, possibly, Congress to shore up the companies.

This is exactly the marriage of government and business that Ayn Rand warned against.

I’m still in the process of researching both the Einstein-Podolsky-Rosen Paradox (EPR Paradox) as well as Bell’s Theorem in an effort to understand their implications for Objectivism as well as the binary circumstance or the binary nature of existence.

Albert Einstein argued that quantum mechanics was an incomplete theory and that certain hidden variables were required to fully understand quantum reality.

Niels Bohr argued that quantum mechanics was a complete theory and there were no hidden variables.

The ongoing discussion has been called the Bohr-Einstein debates.

Whether the hidden variables exist or not is a binary circumstance.

I plan to expand upon this post as I learn more about the subject. I learned some of the basics in college physics thirty years ago and have read more about it since then. It’s all so mind-boggling that I doubt I could ever fully understand it. It is clear that many Nobel Prize winners are still trying to figure it all out.

Nonetheless, it’s a fascinating subject. More interesting than the election or any other current events to me. I’ve said just about everything I have to say about politics and government and I’m tired of repeating myself. I’m looking for new subjects to think about.

Bell’s Theorem and Locality

Bell’s Theorem says that reality is non-local. [1,230] More specifically it says that “No physical theory of local hidden variables can ever reproduce all of the predictions of quantum mechanics.” [Wikipedia]

There are challenges to Bell’s Theorem but experiments have supported it so far.

I have a problem with the definition of non-locality. “Spooky action at a distance,” says that measurement of a property of one electron can change another electron instantly at any distance, even millions of miles away. While this action is called non-local, I would call it absolute locality or hyper locality. It seems that you must do away with time and space, as if the two particles in question occupied the same point, even though the experimenters perceive them (and measure them) to be a great distance from each other.

If information is communicated instantly, that means no time can elapse. How can information go from point A to point B? To travel from one point in space to another implies a lapse of time, unless point A and point B occupy the same point in space.

Oddly, when physicists talk of locality, the are talking about one object impacting another even though they may be at some distance. An example would be the sun shining on earth or the earth’s gravity pulling on the moon. These actions are called local even when the action occurs over time and through space. If that’s local, shouldn’t instant communication require and even greater locality, an “absolute” locality?

When a scientist says, “A universe that displays local phenomena built upon a non-local reality is the only sort of world consistent with known facts and Bell’s proof,” [1,230] it calls into question what is really local and what isn’t.

If there is communication, that is connection, which makes it local. There is a relationship where one electron can effect others instantly. To my mind that is not “non-local,” it is absolute locality.

How can an object influence another which is millions of miles away instantly? We’re not just talking about traveling faster than the speed of light, which Einstein said was impossible, we’re talking about not traveling at all because traveling requires time and instant communication by definition can’t require time.

Welcome to the world of Bell’s Theorem and Quantum Mechanics.

Notes
1. Quantum Reality: Beyond the New Physics, Nick Herbert. New York: Anchor Books (1985)

As I write this, the stock market is up today as it has been for the past three days. I read that it’s because Fed Chief Ben Bernanke told Congress that he’s prepared to lower interest rates again if needed.

Recent economic numbers have not been good with housing prices falling in much of the country, consumer confident lower, and inflation on the rise.

Two recent articles suggest that the problem is worse than the government is letting on and that the Fed is getting desperate and perhaps seeing the limits of its power to contain a pending meltdown.
Guardian.co.uk suggests that we should be talking about a depression rather than a recession:

[Nouriel Roubini, professor of economics at the Stern School of Business at New York University] says that the Fed is, belatedly, alive to the danger. “To understand the Fed actions one has to realise that there is now a rising probability of a ‘catastrophic’ financial and economic outcome, ie, a vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe. The Fed is seriously worried about this vicious circle and about the risks of a systemic financial meltdown.

“That is the reason the Fed had thrown all caution to the wind - after a year in which it was behind the curve and under-playing the economic and financial risks - and has taken a very aggressive approach to risk management; this is a much more aggressive approach than the Greenspan one in spite of the initial views that the Bernanke-led Fed would be more cautious than Greenspan’s in reacting to economic and financial vulnerabilities.”

Bernanke clearly feels that the clock has turned back 78 years to the early months of 1930. He is slashing interest rates because he fears that the Great Depression is just around the corner.

Paul B. Farrell, writing for MarketWatch, gives 11 reasons the economy won’t recover soon. Here’s just one of them:

4. Toxic derivatives: World’s $516 trillion ticking time bomb
Derivatives are great for deal-by-deal risk management in a $48 trillion GDP world. But leverage them 10 times over across the globe and we got a financial “weapon of mass economic destruction.”
Bill Gross warns that the world’s new unregulated “shadow banking system” is printing new money, now at $516 trillion, out of thin air, with no “central banks of last resort” backing up the “Frankenstein” monsters they’ve created.

In another development today, the government lifted restrictions on the portfolio size of Frannie Mae and Freddie Mac, the two GSEs that buy up home mortgages and sell them as securities. Both were major players in the creation of the housing mortgage bubble.

Feb. 27 (Bloomberg) — U.S. regulators for Fannie Mae and Freddie Mac removed limits on the companies’ $1.5 trillion mortgage portfolios, bringing an end to a restriction that stifled their ability to provide financing for the housing market.

The caps, imposed in 2006 after the two largest mortgage finance companies uncovered $11.3 billion of accounting errors, will end on March 1, the Office of Federal Housing Enterprise Oversight said in a statement today. Ofheo kept in place a requirement for the companies to hold extra capital.

Ayn Rand repeated pointed out that marrying government and business is just as bad as marrying government and religion. The last seven years have seen increased efforts to march both couples down the aisle. They’ve been heading in that direction for a much longer time, but the Bush administration gave them a big push and many of the vows have already been exchanged.

Now we will pay the price for these marriages of political convenience.

Shortly after NBC’s Matt Lauer arrived at the Virginia Tech campus he walked from West Ambler Johnston Hall to Norris Hall to see how long it would take. He said in a report that it took about five minutes. He wondered aloud what the shooter was doing during the two hours between the shootings in the dorm and the carnage in the engineering building.

Now, we have at least part of the answer and it’s a little ironic given Lauer’s report. It appears that Cho Seung-Hui sent a package to NBC in New York.

BLACKSBURG, Va. - Between his first and second bursts of gunfire, the Virginia Tech gunman mailed a package to NBC News containing what authorities said were video, photos of himself brandishng weapons, and a rambling diatribe about getting even with rich people.

[…]

NBC said that a time stamp on the package indicated the material was mailed in the two-hour window between the first burst of gunfire in a high-rise dormitory and the second fusillade, at a classroom building.

The package included digital images of him holding weapons and a manifesto that “rants against rich people and warns that he wants to get even,” according to a law enforcement official who spoke on the condition of anonymity because he was not authorized to speak about the case.

Add to this the fact that he had no ID on him when he committed the murder-suicide, and it took some time for the police to identify him, it sounds like he wanted to control how he was portrayed in the media. Perhaps he hoped that NBC would get the packet before he had been identified. There were three attempts at getting the zip code correct on the envelope and NBC reported on the Nightly News that if it had had the correct zip code, it probably would have arrived a day earlier.

It has been reported more than once that his writings conveyed a hatred of the rich. I’m going to guess that he was either never explosed to Ayn Rand’s philosophy or if exposed, he didn’t understand it.

Here are some quotes from Cho’s video manifesto:

• “You just loved to crucify me. You loved inducing cancer in my head, terror in my heart and ripping my soul all this time.”

• “You have vandalized my heart, raped my soul and torched my conscience. You thought it was one pathetic boy’s life you were extinguishing. Thanks to you, I die like Jesus Christ, to inspire generations of the weak and the defenseless people.”

• “Do you know what it feels like to be spit on your face and have trash shoved down your throat? Do you know what it feels like to dig your own grave? Do you know what it feels like to have your throat slashed from ear to ear? Do you know what it feels like to be torched alive? Do you know what it feels like to be humiliated and be impaled upon a cross and left to bleed to death for your amusement?

You have never felt a single ounce of pain your whole life. And you want to inject as much misery in our lives because you can, just because you can. You had everything you wanted. Your Mercedes wasn’t enough, you brats. Your golden necklaces weren’t enough, you snobs. Your trust fund wasn’t enough. Your vodka and cognac wasn’t enough. All your debaucheries weren’t enough. Those weren’t enough to fulfill your hedonistic needs. You had everything.”

His view of himself as a martyr for some cause reminds me of the 9/11 terrorists. As you can see, religious ideation played a role in his view of himself as some kind of savior and his plot to get back at those he viewed as evil doers.

This kid was in a tremendous amount of pain and he wanted to be sure that everybody else felt it as well.

Again, if he had incorporated the basic tenets of Rand’s philosophy into his thinking, he would not have held self-sacrifice in such high regard, nor would he have held Jesus Christ up in such a bizarre way as a role model.