Politics. Economics. Morality. Religion. And Everything In Between.

Tuesday, August 9, 2011

What's Killing the Markets

In case you've been living under a rock, the U.S. stock market has been taking it on the chin over the past two weeks. Despite their rallies today, the Dow, Nasdaq, and S&P 500 are all still down over 10% from their post-financial crisis highs. The media is blaming two main factors for this decline. The first is the downgrade of U.S. government debt from AAA to AA+ by the credit rating agency Standard & Poors. The second cause that political and financial pundits have identified is the European currency and sovereign debt crisis that recently came to a head when it spread to Italy. Unlike Portugal or Greece, Italy is a major player in the global economy, and it has a large enough debt to bankrupt the European Financial Stability Facility (European sovereign debt TARP) if it needs a bailout.

I think the talking heads are partially right and partially wrong on both counts. First, the painful sell-offs began on August 1 with the announcement of a bad ISM number (an important manufacturing index) and downward revisions of U.S. GDP growth figures for the first two quarters of 2011. If I recall correctly, by the time the decline accelerated last Thursday and Friday, August 6 and 7, the markets had already been down six days in a row. The U.S. debt downgrade is not the cause of all our woes. It's merely the straw that broke the camel's back. Investors had been preparing to sell for over a week based on a host of negative economic indicators. The relationship between the debt downgrade and the market correction is more correlative than causative. Both occurred because the economy sucks and neither the government nor private individuals can stay afloat financially.

The pundits are spot-on about the European crisis being another cause of the market meltdown, though. Here's the deal: several European countries, namely Portugal, Italy, Ireland, Greece, and Spain, are up to their eyeballs in debt. Most of the big European banks own significant amounts of this debt and have made loans and other investments using this debt as collateral. If these countries can't pay back their debt, though, the value of the bonds the banks hold becomes worthless, the banks' total assets drop, and they run the risk of failing and taking the entire European financial system down with them. It's like the U.S. mortgage-backed security crisis all over again, except with countries not paying back their loans instead of homeowners.

What does this have to do with the U.S. economy? Well, to put it simply, the U.S. sells a lot of stuff to Europe. The economies of all the European countries put together are bigger than that of the U.S. or China or any other individual large economy. If a big chunk of the global marketplace becomes financially paralyzed, that could harm the U.S. by reducing the number of buyers for our goods. All things considered, though, with the rise of China, Brazil, and other low-wage exporters, the United States economy is nowhere near as dependent upon exports as it used to be, so the damage we would incur from a European financial crisis, though severe, would be limited to a particular sector of the economy.

The real problem we face is that large, export-driven multinational companies, the kinds of companies that would really suffer in the face of a European recession (and possibly emerging market cutbacks as Asian and South American exports to Europe fall, too), are the only companies that are growing and powering our economy right now because the U.S. domestic market sucks. Unemployment is high, prices are high, and wages are stagnating. The domestic market is still the main driver of U.S. production, and until that turns around, we're gonna be mired in the muck. What is keeping America's economy down? Stay tuned for my next post to find out.

Thursday, August 4, 2011

It Was the Fetus in the Conservatory with the Candlestick!

Hello again, readers. If any of you were wondering why it's been so long since I've posted, it's because of this little thing called real life. Contrary to popular opinion, I actually have one, and mine has been rather busy lately, so I haven't had much time for blogging. I'm back now, though, so as always, here's the deal:

For this post, I'm gonna write about abortion. I've been blogging long enough that it's about time that I got around to this topic. Oddly enough, abortion isn't a hotly-contested issue right now. Most people fall into one of two camps: either they believe that the fetus is a human person from conception onwards and is therefore off-limits, or they believe it's just a lump of tissue and that granting it "rights" would be preposterous. Neither side can get the other to accept its basic premise, which is the foundation for all of its further arguments, so no argument can take place. People just agree to disagree (though they don't do so agreeably).

Those arguments that do occur center around the one, big, fundamental question: when does the fetus become a human person? I'm going to respond by beginning with another question, one that's slightly ridiculous. If a fetus were to somehow exit the womb, commit a murder, and return, leaving DNA evidence at the scene, who would the CSI crew identify as the killer? It sure wouldn't be the mother, because from the moment of conception, half of a fetus's DNA is the father's. How, then, can one say that a fetus is merely "part of its mother's body" when our most accurate and fundamental means of identifying tissue disagrees?

One could cite cells with virally corrupted or mutated genes as examples of "parts of one's body" that contain foreign or nonstandard DNA, but such cells are few and far between, and the unusual DNA makes up a very small percentage of the cell's total genome. There is no "organ" or "tissue" with 50% foreign DNA that grows naturally in the human body besides the fetus.

If it's not part of its mother's body, whose body is it a part of? Well, if we let our hypothetical homicidal fetus develop through birth and run a DNA test on the baby, we would identify the baby as the killer. If it's a part of anyone's body at all, the fetus must then be part of the baby's body. How can that be the case if the baby does not yet exist? Such a proposition is absurd, especially when one considers that every cell in the baby's body is a daughter cell of the original single-celled zygote. Every bit of the baby comes from the fetus, so the fetus cannot be a part of the baby's body, it IS the baby's body. Therefore, if the fetus exists, the baby exists.

This is a ridiculous example, but it's useful for illustrating some points about the continuity of the fetus's development from conception to birth. If a fetus committed a murder, would we charge the baby with the crime? Assuming this highly capable and responsible fetus became a similarly advanced baby, we would have to, because what was once the fetus is now the baby. What is now the baby, furthermore, will become the child, the teen, and then the adult. All throughout these differing stages of development, the child grows and matures physically and mentally, but its DNA and its basic identity in our eyes remain the same. The fetus participates in the same process and shares the same DNA. Should the fact that its development takes place inside the womb exclude it from the condition of personhood we extend to human life in all other stages of development? I don't think so.