# [Numeracy 363] Re: Freirean Math, plutonomics

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Pat Fina mathcabinet at gmail.com
Wed May 12 07:51:53 EDT 2010

Many thanks for your lucid explanation, Carol!

Peace,

Pat

On Tue, May 11, 2010 at 12:32 PM, Carol King <cking at lyon.k12.nv.us> wrote:

> There really is nothing that mystifying about the derivatives used in

> the housing market. Here is how I explain it on a very general level. I take

> a pool of debt I expect to go unpaid and a pool of debt I expect to get paid

> and possibly a pool of debt I expect to get paid but with penalties. Split

> the pools up so that some of each is mixed together. Basically you are using

> probabilities to create mixes of loans that should limit loss on high-risk

> loans. One thing that made it complicated was the use of fractions of loans

> being used to create the pools and the probabilities of payback in each

> pool. When it was time to close the accounts how do you round those

> fractional amounts that fall below a penny when there are people out there

> actually expecting to be paid in actual currency? It doesn’t take much

> education to see that housing prices were unrealistic, loan risks were

> unrealistic, and that we were headed for an economic correction because

> spending with credit was far outpacing savings and income increases while

> causing rising prices and rising costs. (What we all need is a change in our

> attitudes about the material things we need and about paying for items now

> not at some future date.) Derivatives work to balance out when calculated

> over time, but not when you shorten the timeframe for payback because you

> have directly changed your calculation outcomes (a basic math concept in

> probabilities.). Add to the mix complex instruments like pay -the -interest

> –only mortgages or fluctuating payments like the ballooning interest rates

> and the math looks impossible, but the intent is clear: make money but don’t

> pay the actual cost of the item. No one could predict the exact date the of

> the bubble burst, but everyone knew it was coming because the balance of

> value to cost was getting out of line and it was increasingly unlikely to be

> thirty years down the road when the correction occurred (the time when the

> mortgages would be paid); the calculation were projections made assuming the

> full time period of the loan when they knew they were unlikely to reach

> maturity (or didn’t bother to think about it.) People took predictions to be

> facts instead of probabilities and they didn’t follow common sense rules in

> making purchases of homes or derivatives. (Couple that with governments like

> the one in Nevada where all their predictions for cash flow were based off

> the housing boom without regard to its probable end and you get the mess we

> are in.)

>

> More than knowing the actual math you needed to know the purpose of

> the math to determine if this was a good bet or not. So long as you could

> quickly hand it off it was a good bet; maybe we should be teaching the game

> of hot potato to our children?

>

> Carol King

>

>

> Cking @lyon.k12.nv.us

>

>

> ------------------------------

>

> *From:* numeracy-bounces at nifl.gov [mailto:numeracy-bounces at nifl.gov] *On

> Behalf Of *Michael Gyori

> *Sent:* Thursday, May 06, 2010 6:01 PM

> *To:* The Math and Numeracy Discussion List

> *Subject:* [Numeracy 351] Re: Freirean Math, plutonomics

>

>

>

> David,

>

>

>

> How well-educated do those who hold the purse strings really want us to be?

> Education, very much so in the United States, is controlled by

> corporations. Then again, knowledge of the math behind

> derivatives isn't what's going to bring about a shift in how societies are

> structured. You can have all the revolutions you may wish, and a select few

> will come to power and take charge of affairs. It comes down to core values

> and to what degree our choices are guided by them once we're the ones who

> yield power.

>

>

>

> Michael

>

>

> Michael A. Gyori

>

> Maui International Language School

>

> www.mauilanguage.com

>

>

>

>

> ------------------------------

>

> *From:* david dirtyknees <neesdd at gmail.com>

> *To:* numeracy at nifl.gov

> *Sent:* Thu, May 6, 2010 8:42:05 AM

> *Subject:* [Numeracy 346] Freirean Math, plutonomics

>

> Susan, Michael and All,

>

>

>

> I was watching a program about Wall Street recently, followed closely by

> Michael Moore's Capitalism. The same point was made in both that the

> best mathematicians don't go to work in fields we might expect (science,

> technology, engineering, etc.) anymore, but now go to Wall Street where they

> create the math behind derivatives that is far too complex for most of us to

> grasp. This has effectively enslaved most of us and nullified much of our

> democracy through engineered financial crises where democracy is shelved to

> allow for swift action.

>

>

>

> I know that sounds alarmist, but if you learn about plutonomics and view

> the history of how America wealth has shifted from being middle-class at the

> end of WW2 to having 99% of the wealth owned the top 1% of the population

> now, it is clear that math is being used in ways that serve the interests of

> the wealthy to our detriment.

>

>

>

> Math must have been an ally to the common person at some points in our

> development, but in my lifetime, I worry that math has become an enemy of

> the people. Is there a Math-Freire or a New-Marx around who could help us

> understand how to educate ourselves and our students to understand

> plutonomics, and then take action through the last vestige of democracy we

> have, the vote?

>

>

>

> David Dirty Knees

>

>

>

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