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On Some Questions in the Study of the Juche Idea Clarified by Comrade Kim Jong Il

Vice-President Pak Yong Gon of Joson University
With the approach of the 21st century the socialist movement is faced with various problems which require solution, and the road to the independence of mankind is beset by manifold difficulties. Many people in world are seeking new ideas to solve these problems. The Juche idea has been evolved as an idea for carrying out the historic mission of the present era in the protracted struggle to build a new peaceful and independent world free from exploitation and oppression.
The Juche idea is a man-centred world outlook which approaches everithing with the main emphasis placed on man’s position in the world and his creative role in remoulding and developing the world, and a people-centred outlook on social history which clarifies the essence the socio-historical movement and its logical character regarding man, that is, the people as the main agent of social movement. The Juche idea is a collectivist view of life which clarifies the essence and value of the worthy and happy life, regarding the social collective as the parent body of human life.
The Juche idea arouses sympathy among many people and is widely spreading in the world because it is a new idea which places at the centre the people who strive to carve out their destiny, and indicates the way to it. Recently in south Korea the Juche idea has become not only an important ideological trend but also the guiding idea for the reunification of Korea and the democratic movement. Because of its influence in philosophical circles it has become the main trend of the time to make a serious study the Juche idea. (Philosophical Study compiled by the Philosophical Study Society, No. 29, autumn 1991.)
There is still clearly a tendency to fail to have a correct understanding of the relations of the Juche idea to former progressive ideas and their principles because it is a new idea and some questions require detailed explanation.
In view of such a situation this article briefly refers to some questions to be noted for a correct understanding of the Juche idea.
1
The Juche idea was evolved in the process of development of progressive ideas. Hence it should be made clear what development it has made in comparison with the former ideas, what position it holds in the history of ideologies and what practical significance it has.
The quintessence of the Juche idea can be grasped only when one adheres to the basic stand of considering the continuity of the Juche idea with main emphasis placed on the originality in the relations of the Juche idea to Marxism-Leninism.
Comrade Kim Jong Il said:
“First of all, the tendency to explain the merit and originality of the Juche idea from the viewpoint of Marx’s materialistic dialectics should be rectified.”
It is an undeniable fact that with the passage of time social ideologies progress. It is true that some people still tend to consider and interpret the Juche idea from the framework of Marxism-Leninism, holding its scientific accuracy and validity supreme.
As is known, Marxist materialistic dialectics was established on the basis of Feuerbach’s metaphysical materialism and Hegel’s idealistic dialectics. However, no Marxist has tried to interpret Marxist philosophy from the framework of Feuerbach’s or Hegel’s philosophy. Because there is an understanding that materialistic dialectics is entirely new and original although it inherited and developed Feuerbach’s materialism and Hegel’s dialectics. As to the Juche idea, however, there is still a tendency to interpret it from the framework of Marxism-Leninism. It is because of a lack of full understanding of the merit and originality of the Juche idea and of a proper understanding of the historical limitations of Marxism.
The Marxist philosophy made a historic contribution to the refutation d idealism and metaphysics by elucidating the basic principle that the world consists of matter, and that it invariably changes and develops. Proceeding from the understanding that the basic mission of philosophy is to show the way to carving out human destiny, the Juche idea raised it as a fundamental question of philosophy to elucidate the relations of man to the world, in other words, man’s position and role in the world, and established a man-centred philosophical world outlook. This shed a new light on the fundamental question of the former philosophy.
Needless to say, man is matter. However, man is not matter in general but a social being with independence, creativity and consciousness, and the most developed matter. The relation of man to his surrounding world is not the relation of consciousness to matter but the relation of the most developed matter with consciousness to matter without consciousness. It goes without saying that in the interactions between developed matter and matter in the lower stage of development the former holds a higher position and plays a greater role than the latter.
Man with independence, creativity and consciousness is not subjected to the environment but plays a decisive role in remoulding and developing the world, and in hewing out his destiny holding an independent position in the world because he acts on the world surrounding him in an independent, creative and purposeful manner. The Juche-oriented philosophical principle elucidates that through his creative activity man invariably carves out his destiny by his own efforts and enhances his position as the master of the world.
Proceeding from the philosophical principle that man holds the position of master and plays the decisive role in hewing out his destiny, the Juche idea requires that man should adhere to the independent stand and creative method in carving out his destiny. The independent stand and creative method advocated by the Juche idea can be said to be the most scientific and innovative ones which require that the world should not simply be regarded as a changing and developing material world but as one changing and developing to meet man’s independent needs through his creative activity. Unlike this, the fundamental principle of the Marxist philosophy holds that the development of all matter is a process of natural history, as clearly laid down in the foreword to Capital.
This means that it does not differentiate the social movement caused by man’s independent, creative and purposeful activity from me spontaneous movement of nature, and regards social progress as following the laws of change and development of nature.
The Marxist classics maintained that the development of all matter should be grasped as a process of natural history with a view to refuting idealistic views on the development of social history.
In the face of the developing natural sciences in those days, idealists could no longer deny that the natural world changes and develops following objective laws. Proceeding from the fact that social change and development are due to the activities of man with consciousness, they made a mystery of the conscious activity of man and held that objective laws were not the cause of social change and development.
The Marxist classics stressed that social change and progress is an aspect of development of nature, and, consequently, social progress follows objective laws like the development of nature since society is the product of the evolution and development of nature. That was why they focussed their efforts on proving the commonness of nature and social being rather than on the essential difference between nature and social being or on the essential difference in the change and development of nature and society.
The Marxist classics elucidated the general characteristic features of the physical world, the material character of the world and the general law governing its change and development, thereby making a historic contribution to the victory of materialism and dialectics over idealism and metaphysics.
They established a materialistic view of history by applying materialistic dialectics to society, and elucidated the objective laws governing social progress.
Proceeding from the fundamental proposition that social being decides social consciousness, the materialistic view of history held that the productive forces decide the relations of production, which in turn decide the consciousness of people and the political and legal institutions which reflect it. It characterized the essence of the process of historical development as the process of change of the mode of production. The materialistic view of history considered social being as the material condition of social life and that this is what decides the consciousness of people. Hence, it considered man acting purposefully himself as the subjective factor decided by the objective factors.
In contrast, the Juche idea does not regard man only as an isolated being with just a body, but as a social being with social wealth linked to social relations and as the main agent of social movement. As the cause and motive force of social movement lie in man, the main agent of the movement, man, that is, the people play the leading and decisive role in social movement. Although the objective factors are important conditions which influence human activity, they themselves cannot become the main agent which causes and pushes ahead social movement nor factors decisive of the fate of this movement. In this light, the law of the change and development of social movement can be said to be in essence the law of movement of man himself who, although subjected to certain limitations of objective conditions, hews out his destiny in an independent and creative manner. Man creates material wealth through interaction with nature, and forms social relations and social systems through interaction between human beings.
It is true that human activity is subject to limitations depending on the degree of development of material wealth of society and social relations. However, since social wealth and social relations are created by man, the degree of their development is eventually decided by the level of development of man’s independence, creativity and consciousness. It is true that creators and creation are in an inseparable relationship and limit each other, but in approaching everything emphasis should not be placed on the aspect of creation’s determining influence on the creators but on the aspect of the creators’ determining influence on creation.
2
Next, let us examine from the Juche viewpoint the law of unity and struggle of opposites which was recognized as an important methodology in evolving the theory of the materialistic view of history, which constitutes the kernel of materialistic dialectics.
Comrade Kim Jong II said:
“It can be seen from the explanation of the law of unity and struggle of opposites that the Juche philosophy is considered in close relation to Marxist materialistic dialectics.
“Marxist materialistic dialectics makes its major content the principle of unity and struggle of opposites. However, this problem is not a problem to be treated simply from the academic viewpoint alone. Like other theoretical problems of Marxism-Leninism the law of unity and of opposites, too, must be considered historically from the viewpoint of revolutionary practice. Importance was attached to the law of unity and struggle of opposites because philosophical exposition of the socio-economic contradictions and the law governing class struggle in capitalist society in those days was posed as an important historical task. Therefore, the principle of unity and struggle of opposites elucidated by the Marxist philosophy now has many irrational points when it comes to clarifying the law-governed process of development of socialist society, I think.”
Marx’s materialistic dialectics regards the law of unity and struggle of opposites as its main content. Marxist philosophy tries to elucidate all problems with this law. But the question is not one to be considered simply from the academic viewpoint alone. The so-called study of dialectics so far has recognized this law as a universal law applicable irrespective of time and space, and tried to substantiate theoretically why the law of unity and struggle of opposites constitutes the kernel of materialistic dialectics. But only when the law of unity and struggle of opposites is considered historically from the viewpoint of revolutionary practice and not from the purely academic viewpoint like other theoretical problems, can its validity be deepened.
The Marxist classics attached great importance to the law of unity and struggle of opposites because it was posed as an urgent task to give a philosophical exposition of the socio-economic contradictions of capitalist society of those days and the law of class struggle. The Marxist classics held that since all matter has unity of opposites, matter develops through the struggle of opposites in such a way that the old disappears and the new emerges. They tried to prove that the socio-economic contradictions of capitalist society are settled through class struggle by the law of unity and struggle of opposites and, consequently, capitalist society inevitably develops into socialist society. In other words, the law of unity and struggle of opposites served as an important theoretical method for the Marxist classics to prove the inevitability of the ruin of capitalism and the victory of socialism, class struggle and the dictatorship of the proletariat.
Today we are carrying on revolution and construction in historical circumstances different from those of the time when the Marxist classics were active. Therefore, the Marxist philosophical principle concerning the law of unity and struggle of opposites is not applicable to today’s reality.
It is evident that the principle of Marxist dialectics which holds that the inner contradictions of matter are the basic source of the development of matter and struggle is the motive force of development is insufficient for explaining the law-governed process of the development of modern socialist society. Today the source of social process in Korea lies not in inner contradictions but in the ideological unity of the leader, the Party and the masses that strive to effect the independence of the masses of the people. The motive force of social development does not lie in antagonism and struggle but in the might of unity based on comradely cooperation which involves helping and leading each other forward under the leadership of the Party and the leader.
The Juche idea is embodied in the three-point principle of national reunification—independence, peaceful reunification and grand national unity—to which the Korean people consistently adhere. The aim of the struggle for national reunification is to put an end to the division of the nation and recover the independence of the nation. Consequently, the entire Korean people is the main agent. Therefore, whether national reunification can be achieved or not depends upon whether all the national forces can be enlisted for the unity of the nation and reunification or not. If the principle of struggle is applied here to settle contradictions, grand national unity cannot be achieved and antagonism and distrust will be the result.
The historic lessons of the experiences of certain countries show that if the principle of Marxist philosophy on unity and struggle is applied to socialist construction it will not contribute to the unity and cohesion of socialist society but will rather increase contradictions and distrust within society and cause social confusion.
It goes without saying that if antagonistic contradictions exist the basic method of combatting them is class struggle and that the dictatorship of the proletariat is essential for protecting socialist society from the subversive moves of the imperialists. However, in a society in which the people hold power and social ownership is in force the factor of development lies in the ever-increasing independent demand of the people and in the might of unity. For this purpose, the people should be made the genuine masters of society. Therein lies the basic motive force of development of socialist society.
The former view which regarded the law of contradiction as the kernel of dialectics and contradictions as the cause and motive force of social progress was effective in proving the doom of capitalism and the victory of socialist revolution but may be said to be insufficient for demonstrating the law of today’s social progress and in increasing its practical effect. That is why materialistic dialectics has to be reexamined, placing man at centre.
3
The originality of Marx’s philosophical ideas lies in the materialistic view of history. It is theoretically grounded on social being and social consciousness. Therefore, it is very important to have a correct understanding of the problem in order to make a serious study of the Juche idea.
Above all, the question of whether the relations of social being to social consciousness can be interpreted by the general principle of materialism or not should be examined. In other words, the question of whether or not a formulation can be made simply in such a manner that social existence is primary and social consciousness is secondary should be examined.
As is known, the question of whether matter or consciousness is primary is the question of the origin of the world. The question of origin should be considered in the realm of nature. Only then has the question significance for a world outlook. Unlike this, in the realm of society characterized by human activities it is not the question of origin but the reflection theory that has philosophical significance.
It is evident that human consciousness reflects social being. However, there are no grounds for saying that social existence gives rise to social consciousness. In that case consciousness always has to follow the development of matter. However, reality shows that new things are created by the consciousness of people, and they are always used intentionally.
Secondly, understanding of social being, particularly the question of how to approach the position of ideas should be examined.
Former theories treated the concept of social being by setting against consciousness, in order to apply materialism to the realm of society. This can be seen from the fact that almost all the passages treating of this problem in the works of Marx and Engels invariably use the set phrases “social existence” and “consciousness”.
But the Juche idea puts forward the concept of social existence in relation to natural existence. This viewpoint deduces the original concept of social organism and brings the independent character of social law into bold relief.
Thirdly, it concerns the question of considering social existence, placing man at the centre.
Comrade Kim Jong Il said:
“Some articles which try to explain the Juche idea say that social wealth, too, belongs to social being. It is an erroneous view that regards man and the social wealth he has created as equal.”
The viewpoint advocating the material character of society poses the question of whether it is social existence or consciousness which is more important and, consequently, the methodology of distinguishing society by either material or ideological relations has been established. According to Lenin, this methodology is so important that it can be said to be the basic idea behind the materialistic view of history.
But by this methodology the view of social history cannot be developed into a man-centred view of history.
In order to embody fully the man-centred idea in the view of social history it is, above all, necessary to consider social existence placing man at the centre. For this purpose, special attention should be paid to the following:
Above all, it is necessary to combat the tendency to generalize both man and social wealth as social existence, considering them as equal.
Man alone directly embodies social attributes, and social wealth can be included in the concept of social existence only in relation to man. When reference is made to social wealth, above all, man should be borne in mind. It is taken for granted that man, the creator, and created material wealth cannot be considered as equal.
What is evident is that the concept of man in social science does not imply man with a body alone but man who embodies social attributes and uses objectified materials and cultural wealth. In other words, when man is referred to as social existence, he must be understood as social man with social wealth linked to all other men through social relations and not as an isolated man with a separate body.
Of course, since social wealth is a component part of society, there is no doubt that it belongs to society and not to nature. The wealth created by man exists objectively outside the body of man, but does not share its lot with nature. It is subjected to man and shares its lot with him. In order to ascertain the extent of development of society it is necessary not only to consider the extent of the development of independence, creativity and consciousness embodied in man but also to analyse how much social wealth and social relations have developed.
Thus when reference is made to man in the sense used in social science but not in a biological sense it is supposed that this includes social wealth as well as the human body. But they must not be considered as equal. When we say that man is the master of nature and society, regarding him as a powerful being, we mean such a man and not a man only with a separate body.
Therefore, social being in essence means man alone, and when reference is made to his composition it must be understood as meaning man and social wealth.
As mentioned above, when reference is made to the concept of social being, it is important to get rid of the former viewpoint which considers it as a concept indicating its material character and evolve a concept attaching significance to it as concept which discriminates between natural being and social being.
The emergence of man with consciousness, social relations and labour tools and other social wealth constitute an inseparable and linked integral process. Hence, as man is not conceivable apart from social relations, so man as a social being cannot be conceived of apart from social wealth.
Since individual man can have independence, creativeness and consciousness as a member of a social collective, the term social being is appliable to individual man on the supposition that man is a member of the social collective. However, originally man cannot be a social being if he has not social wealth and is not linked to other men through social relations. Therefore it would be right to consider social man having social wealth and linked with other men through social relations rather than individual man.
Next, to place man at the centre means to consider that man creates social wealth and unfolds historical movement as the process of manifestation of independence, creativity and consciousness, his essential attributes.
Another important question is to evolve a theory of social organism different from individual physical life, on a higher plane.
These two questions will be treated separately on other occasions since they are very important philosophical problems.
If one attempts to appreciate or criticize the Juche-oriented view of social history on the basis of different outdated theories including that of the social organism, this itself only means that one is prepossessed with outdated thinking and methods. Philosophy, particularly views of social history should be thoroughly linked with revolutionary practice and be evolved so as to contribute to the cause of independence of the people. I particularly stress this, taking into account the current international situation, in other words, the moves of the imperialists and emergence of modern social democracy in some countries.
4
At present, the national problem is posed as an important one. Hence consideration of the Juche idea’s view on the nation is of practical significance, I think.
The former progressive theory regarded the issue of national liberation as a component part of the class emancipation struggle. Hence, it can be said that not much attention was paid to the peculiarity of national liberation revolutions. Proceeding from the new viewpoint that the struggle against social subjugation and bondage, whether it is a national liberation struggle or a class liberation struggle, is a struggle to effect man’s independence, the Juche idea admits the peculiarity of the national liberation struggle as well as the class liberation struggle.
The former theory elucidated the question of the formation of the nation in connection with the emergence of capitalism (formation of modern states) and the question of the role of the capitalist class. Hence, it gave things of class character the first consideration and regarded things national as a matter of secondary importance. Viewed historically, it is true that, particularly in Europe, the capitalist class played the leading role in the formation of national markets and national states under banner of nationalism. Nevertheless, it is wrong to consider the question of the fate of a nation in relation to the capitalist class alone. It is wrong to try to interpret the essence of a nation, solely in relation to capitalism and to assess patriotism toward the nation-states as a manifestation of the ideology of the capitalist class and petty-bourgeoisie on the plea that the capitalist class once led the struggle for national independence under the slogan of democracy with a view to monopolizing the national market. Of course, the slogans of nationalism and patriotism the capitalist class put up in the beginning were appropriate for those days. But the capitalist class gradually distorted the substance of the slogans to suit its selfish aims, using them as if their class interests coincided with the interests of the whole nation. Nevertheless, if nationalism and patriotism themselves are negated, identifying them with the capitalist class alone, the working class and the working masses will have no beloved homeland or nation.
In all ages and in all societies it was the masses of the people who really loved, defended, strengthened and developed their nations and homelands. When the privileged position of the reactionary ruling class was threatened by the invasion of foreign aggressors, the reactionary ruling class often sold out the interests of their countries and nations, but the working people always fought for the interests of their nations. The working people always devotedly fight for the independence of the nation because they regard the life of the nation as their own and the fate of the nation as their own. True patriotism can be said to be an inherent attribute of the working people.
Some people in the past, when they considered the national problem, identifying it with capitalism alone, thought that with the disappearance of the capitalist system and establishment of the socialist system the national problem would no longer exist and the borders between socialist countries would disappear. But history shows that even when the socialist system has been established and is expanding in the world people live and develop in each country and nation as the basic unit. Of course, when the ideal society of mankind is established on a world-wide scale its looks will naturally change. But as long as there exist borders between countries and differences between nations the masses of the people will hew out their destinies in each country and nation as the unit.
It conforms with the principle of independence that even in socialist society each country and nation paves its own way, adhering to the principle of self-reliance. Nevertheless, in the past some countries failed to rectify the former wrong attitude towards the nation, and suffered serious setbacks in building new societies while neglecting the establishment of national identity and following the path to dependence on big powers. The Juche idea holds that at the present stage of historical development for working people to establish their own identity is nothing other than to establish national entity. This is because the destiny of the people is carved out in each country and nation as a unit.
Establishment of the national entity does not contradict the class interests of the working people and has nothing to do with national egoism.
Originally the working people have no class privileges. So they do not set the national interests against their class interests but value the national interests more than the interests of any class or social stratum. It is the masses who undergo the greatest sufferings and misfortunes when the independence of a nation is encroached upon and the country faces a crisis. The working people know that their independent lives and happiness are ensured only when the nation and the country exist.
Originally the country and the political power of the state are closely related to each other. Nevertheless, they are not the same concept. The view on the nation and state of the Juche idea differs greatly from that of the former theory which holds that the nation is capitalistic, and the country and the political power of the state are the means whereby one class holds sway over other classes, without discriminating between them. The Juche idea holds that the nation is a collective of fellow countrymen who share the same fate and understands that the concept of the country covers the popular masses living under unitary political leadership and the entire living environment. In exploitative societies the working people are opposed to the political power of the state which the reactionary ruling class abuses for its egoistic purposes, but not to the country itself. The spirit of genuinely loving the country and nation can be said to be one of the essential attributes of the working people.
The Juche idea does not regard any class or social stratum, but the masses of the people, as the main agent of history. The Juche idea is the ideology of the masses, who are the main agent of history. The independence, independent requirements and interests of the masses conform to the requirement of social progress and to the common interests of the nation moving towards independence. The common interests of the nation which conform to the essential requirements of social development are the same, although the requirements and interests of classes and social strata differ from each other. The class interests of the working class conform to the interests of the masses of the people and the common interim of the nation because the working class fights to abolish class privileges and differences, having nothing to do with egoism and exclusivism. Hence the Juche idea is called the idea of the masses or the idea of the working class.
The privileged class cannot represent the interests of the masses and the common interests of a nation because it is an egoistic class which protects its privileged interests. When its force is weak, the capitalist class exerts efforts to monopolize supremacy in a country under the slogan of opposition to another nation’s interference and domination, but when its force is strong it tends to trample on the independence of other nations and establish supremacy over them. Hence, bourgeois nationalism at times advocates the Monroe Doctrine and its like, calling for national or regional autonomy and noninterference, and at times puts forward cosmopolitanism, calling for unlimited sway and liberty.
In contrast, the nationalism and patriotism of the working people striving for the establishment of the national entity not only respect the independence of their nation but also advocate internationalism to develop friendship and cooperation between nations, proceeding from the independent stand of respecting the independence of other nations as well. The Juche idea prefers to use the term patriotism rather than the term nationalism because there is an essential difference between bourgeois nationalism and the nationalism of the masses. Proceeding from the viewpoint that the establishment of a national entity is the basic problem deciding the prosperity and ruin of a nation, the Juche idea applies other principles and methods different from the former theory in overcoming contradictions between classes and social strata within a nation.
The former theory regarded the process of historical development as a process of class struggle, and class struggle as the basic motive force of social progress. Hence, it placed class interests above national interests and gave priority to the struggle to settle class contradictions over the struggle to overcome national contradictions. However, the Juche idea gives priority to the realization of national interests and national independence, valuing national interests and national independence more than class interests and class independence. This is because as the nation existed classes came into being and because the nation is the parent body of classes and the classes are the component parts of the nation. Foreign imperialist aggressors are the common enemy of all the classes and social strata of the national entity. Consequently, the struggle against foreign aggressors requires national unity transcending the interests of classes and social strata.
Because the Juche idea puts the interests of the nation before class interests, it regards the establishment of national entity and its further strengthening as a historic mission to be steadily promoted for the welfare and happiness of the nation until the whole of mankind becomes one big family and holds that the conflicts of class interests within the nation should be settled on the principle of strengthening national unity and defending the common interests of the nation. In order to promote the unity and development of the nation, each class and social stratum should steadily strengthen solidarity and cooperation for the common needs and interests of the nation, thereby strengthening the national entity and gradually overcoming differences and conflicts of interests. The struggle within the nation is not the motive force of development, but the unity and cohesion of the national entity are. Not division and antagonism but national amity and unity based on fraternity is the source of welfare and prosperity of the nation. This is the quintessence of the Juche-orientated view of the nation.
― Great Successor to the Cause of Juche, Foreign Languages Publishing House, Pyongyang 1995, pp. 26-42.

Bonjour et bienvenue à cette 101ème édition du Week-End Gribouills !
Artistes confirmés, peintres du dimanche ou gribouilleurs de pupitre, cet espace vous est dédié ! Chaque semaine, le samedi, un nouveau thème vous est proposé, non imposé : libre à vous de le suivre ou pas. Il ne s’agit pas d’un concours, tous les niveaux sont les bienvenus. L’objectif est de se faire plaisir et de partager ses créations dans la bienveillance.
Vous pouvez proposer autant d’œuvres que vous le souhaitez. La seule restriction est de prévenir si votre création est NSFW/PSPLT.
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Thème de la semaine : LUNAIRE
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Propositions sur le thème : À CARREAU
goeloin - chat à carreau
leftascenter - abstrait
leftascenter - pensif
Proposition sur le thème : SUJET LÉGER
goeloin - sujet léger
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Le thème de la semaine prochaine sera : C'EST QUI LE PATRON ?!!!
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Voici quelques ressources utiles si vous voulez progresser :

• [De petites illustrations pour expliquer le sens de lecture d'une BD par u/TempucchiCat](https://imgur.com/a/EnerchGDe%20petites%20illustrations%20pour%20expliquer%20le%20sens%20de%20lecture%20d'une%20BD%20par%20u/TempucchiCat)
• learntodraw
• Proko
• DrawABox
• Sketchbook
• Petite liste de recommendation de livres sur le dessin par Tempucchicat -Archive imgur weekend Gribouillis
• Sketch Daily, site de références pour SketchDaily. Sélectionnez vos critères (nu ou non, type de pose, etc.) et dessinez.
• Quick Poses(anglais et russe) : Vous pouvez chercher dans le catalogue (library) ou tenter le mode aléatoire avec les mêmes critères qu'au-dessus.
• Les vidéos de New Masters Academy : playlist de nus et playlist habillée.

Bon dessin à tous, à vos crayons/pinceaux/autres et bon weekend! <- cliquez sur ce lien à vos risques et périls

https://www.reddit.com/MichaelJacksonLegacy/comments/13p0tb4/i_do_not_believe_that_mj_is_the_bio_fathe
I wasn't going to respond but since this post is being reposted around in MJ spaces and it's filled with misinformation. I will respond to the incorrect statements.

But this is not a strong enough defense for PPB being MJ's, specifically Paris. Debby's eyes are blue and this is the most logical reason why Paris's eyes are also blue. People like to bring up that because Joe's eyes are green (they are not blue, they are green) and believe he carries the allele for blue eyes, hence why she has blue eyes. This is a weak defense because light eyes are caused by the lack of melanin being developed. All eyes are blue underneath. Green eyes are the rarest eye color in the world, even more rare than blue. Also, both green and brown eyes are dominant over blue eyes. I'm not discounting the possibility of the recessive gene taking over, but I find it highly unlikely that she would have blue eyes if Mj is her father. Katherine and Joe had 9 children together who all had dark brown eyes. (also in order for there to be a 50/50 chance of a child having blue eyes, one parent has to have two parents with blue eyes and the other has to have one parent with brown and the other with blue. Joe has green eyes, which reduces this chance even lower).

This entire passage is just.....clunky. But I will try my best to unpack it.
For starters. Paris, like Joe does not even have completely blue eyes. Her eyes can look blue or green depending on the lighting. Since her eyes can look green sometimes, but there are no pictures of her mother eyes looking green it's fair to say her eyes are probably in between, so a greenish blue.
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https://preview.redd.it/6ylelrdnto3b1.jpg?width=885&format=pjpg&auto=webp&s=05a022c491986ebec10dc7204605e222f698ea9b
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https://preview.redd.it/400hezwyto3b1.png?width=216&format=png&auto=webp&s=0feef90cf7c44ee48331d68ba39315a6d7950b5d
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Since OP's argument is built off of the faulty claim that Paris has strictly blue eyes, I will address that anyway. Joe has green eyes because his mother was half white and his father was mixed race as well. So it is not crazy or unreasonable to assume that Joe has blue eyed genes as well.
And even if Joe didn't have light colored eyes. And even if Paris had ice blue eyes, you can go on Instagram and find literally thousands of biracial kids with bright blue eyes. It is not rare nor is it impossible.
The blue eyes argument is a fallacy anyway because even if Paris had the same eye color as Michael, OP would still say she is not Michael's daughter just as she does with Prince and Bigi who both have the exact same eye color as Michael.
The goal post is forever moving.
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PPB are tan
This is a common defense that I see used. The classification of being Caucasian goes far beyond having pale skin and blue eyes. There is a difference between what is widely seen as "white" and the racial classification of being Caucasian. The term Caucasian covers the phenotype and racial makeup of a group of people, regardless of their skin color. In anthropology, it is referred to "as some or all of the populations of Europe, the Caucasus (a region in Europe between the Black Sea and the Caspian Sea, which includes Georgia, Armenia, Azerbaijan and parts of Russia, Turkey and Iran), Asia Minor, North Africa, the Horn of Africa, Western Asia, Central Asia and South Asia." Even though we are all one "race" the human race, you can tell the racial identity of a person by their skull. I studied forensic anthropology in college, and scientists were able to tell the race and gender of the remains of skulls and bones. I went to predominantly white schools and saw girls and guys that were naturally Paris's complexion and Prince's as well.

This is a faulty argument because none of those people have anything to do with Prince and Paris. The only white person they should be compared with is their mother, who contributed 50% of their genes, and others of her background. Debbie Rowe is not from Turkey or North Africa. She is of Northwestern European stock. British to be exact and very likely she has significant Scandinavian ancestry like many English people do, due to the Vikings invading.
When you compare Prince and Paris to their mother or people of her background you can clearly see that they are not the same ethnicity.
Paris compared to mom Debbie,
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https://preview.redd.it/2uutq3qg0p3b1.jpg?width=850&format=pjpg&auto=webp&s=c11fb446fb138efe5a9b3d8d58c89a787ca2a9e1
Paris compared with her Aunt Latoya and Kathy Hilton
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Paris compared with Mark Lester and his children, who are also of English descent.
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https://preview.redd.it/s1qia3gb0p3b1.jpg?width=768&format=pjpg&auto=webp&s=0e6750fe25ce5f4570ee36013e48afe97921986f
Paris, Paris and Bigi compared to Jackie's white wife.
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Prince Paris and blanket compared to Carrie Fisher (who isn't the pales person herself)
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OP should realize that just because you can find some Caucasian people who look like Prince and Paris, it's not proof that Prince and Paris are not biracial. The same can be said for this girl, This girl is also biracial and as you can see she looks very similar to Prince in terms of hair texture, facial features, skin color. She and Prince could be twins. The black woman in the picture is her biological mother.
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This is a logical fallacy called a red herring. A red herring is when irrelevant information is presented alongside relevant information, distracting attention from that relevant information. For those that are unaware, people often like to use other celebrities that are unrelated to Michael to try and prove their stance on his kids. These are often celebs that they deem as "passing" (some are others are not ). The most common celebrities used are Rashida Jones, Sophia Richie, Alphonso Roberio (his kids), and Derek Jeter. All are very weak defenses.

How is it irrelevant when the whole argument that Michael isn't the father is based on the claim that they don't look like other biracial people?
How is it a weak defense?

Rashida Jones looks like her father and has some of his features. Considering her "passing" is a stretch, she is noticeably tanner than PPB and looks like she has Hispanic ancestry (yes, i know that's not a race but i think people know what i mean by that).

This is not a valid argument. Looks are subjective. It's simply a matter of opinion and ones own perspective. Rashida was on a family roots show and she looks strikingly like her Maternal grandmother. I personally do not see much resemblance to Quincy. Rashida is also the same color as Michael's kids. Bigi is actually darker than her. Bigi is often assumed to be Hispanic as well. I have seen People comment that Prince looks hispanic as well, even people who don't believe Michael is the father.
And notice OP just went through a whole spiel about white people having tan skin and caucasians can be dark and then turned around and used Rashida's tan as evidence that she is biracial.
Goal post is just swaying in the breeze.
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Alphonso Ribeiro's children are probably the "best" defense but still prove nothing in regard to PPB. His sons look like him, one of his sons does pass for sure but he does look like his father. His youngest daughter passes as well, and though she does not like much like him, she does have a few features around the mouth area.

Again this is subjective. I think Michael's kids have his features as well. OP will say otherwise. I see what I see and others see what they see.
And this does prove something, because again the whole argument against Michael's kids is that they "look white" and biracial people can't look white.

Derek Jeter does not look like he passes when he has hair. He also does resemble both his mother and his father.

From what I can see Derek Jeter has big wavy curly hair, Much like Prince and Paris. So im trying to figure out how he wouldn't pass. It's not like he has an Afro.

Jackie's Twins
This was the best place to put this. The only logical way to compare PPB to anyone's children is Jackie, since he is MJ's brother and the only one to have children with a white woman. One of Jackie's twins looks just like him, and he does not pass at all. The other twin does have green eyes and straighter hair, but he does resemble Jackie in the mouth and teeth area. I would not consider him passing either. His wife has a very similar phenotype to Debby as well. The second son (green eyes) looks more like her but to me, he does not pass.

This is also a silly argument to me. Because Full siblings and even twins can come out looking like 2 different races. So I don't see how this proves Michael isn't the father of his children.
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https://preview.redd.it/lizhhzyacp3b1.png?width=2500&format=png&auto=webp&s=e03c840e6d63770085ee213ff78ef4f9905394f1
Also Jackie's son has the same eye color as Paris. Why OP is trying to pretend like he doesn't is beyond me.
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The only pictures that I see of Mike and Paris are those of MJ after plastic surgery and with lighter skin. There is only one or two that use any pictures of MJ before any alterations (the Jackson era). Paris looks nothing like MJ. People use photos mainly for the teeth. All I have to say is they looked nothing like his before she had braces. I will move on from this.
Prince also does not look like Mike at all. Prince does not look all that much like Samuel Jackson. I do not see it and I am not in "denial". I have seen other pictures of Joe's father and I do not see a resemblance.
Paris looks nothing like Latoya, I mean I can understand the Prince and Samuel one a little bit, but this one is just very far off.

More subjective opinions. I see Michael when Paris smiles. Prince looks identical to Samuel in my opinion. I also see a strong resemblance to Joe and some of his cousins on Joe's side of the family.
OP doesn't see it. I do. I am not "in denial" either. When Paris was a little girl I use to think she looked nothing like Michael. And I admitted that. Now I see the resemblance. It is what it is. I can't make OP see what I see and OP can't make me not see what I see.
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This piggybacks on what I said earlier about differences in racial groups when it comes to features. Afro and Eurocentric features do exist. I have seen people try and call others "ignorant" for pointing this out when this is true. There are literally follicle differences between the makeup of Asian, Caucasian, and African hair. "Asian hair grows from a round hair follicle, while Afro hair sprouts from an oval one, and Caucasian hair follicles vary." The article also states, "Asian hair is usually bone straight, Afro grows in a spiral-like fashion, and Caucasian hair can be anything in between". Afro hair grows out from our scalps in a parallel manner and sits out like an afro. There is a difference between having curly hair and having an afro. African hair has a high sebum production which leads to a far more oily scalp than Caucasian and Asian hair. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7869811/

This information in irrelevant because biracial people can have hair anywhere in between their parents and even inherit a grandparents hair.
Not sure what this is supposed to prove.
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People like to point out that Paris has "naturally curly hair", and I have evidence to debunk this exaggeration. I just shared facts on how Caucasian people can have naturally curly or straight hair. I have seen Caucasian women with their natural hair that was thick and "curly" like Paris (her hair is not even that curly). A great example is Anne Hathaway in The Princess Diaries. Her hair was very thick and curly. I am also not blind nor am I an idiot, I know Paris dies her hair blonde.

One of the main arguments always used against Paris and her brothers has always been "they don't even have curly hair"
But when it's pointed out that they DO have curly hair, the goal post is moved yet again.
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OP said that other white passing biracial people are irrelevant to the discussion, but constantly uses certain white people as evidence for their argument. Interesting.
Anne Hathaway is not Paris mother, Debbie Rowe is and Debbie does not have curly hair. Debbie has straight hair.
Anne Hathway also has curlier hair than Rashida Jones who has bone Straight hair as a child and still does, unlike Paris.
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I have also seen people use the photo of MJ in the late 70s when his hair was wet and curly. Idk why people use this, as my hair literally looks just like his when wet and I have slightly more African makeup than Mike due to me being two generations younger than him. I have very similar racial ancestry to him. This is irrelevant though, because all you have to do is go on youtube and look up black women washing their hair, many have the same curl pattern. Also, I have met African women (their ancestry is 90-100 percent African) that have the same curl pattern. I believe people use this to try to push the "not fully black" narrative on Mike, but they don't know that wavy or curly hair is not exclusive to non-black people.

I've never seen anyone use Michael's hair texture as proof for the kids paternity. Like ever. I have seen people use it when other claimed Michael has "4c" hair when he clearly didnt.
I use the kids curly hair as proof of their paternity, even though biracial people CAN have straight hair.
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I already made a post on this and I debunked this myth as well. The average black American is only 77 percent black. The Jacksons are no less black than about 50 percent of black people their age. The Jacksons are probably between 65-70 percent African. That's slightly less than the average black American person of today.

And that means that Michael had European ancestry and "white" genes that could have easily matched up with their white mothers genes and gave them the appearance they have.
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I have seen the photos with Prince and light marks. Until it comes out of his mouth that he has vitiligo, then this is still speculation. If he does have it, I'm not delusional, this would sway me towards Prince bc it's highly unlikely that he would have it if MJ were not his father. This also very well could be birthmarks.

TJ Jackson was Prince's legal guardian which means he was privy to what happened when Prince would visit the dermatologist as a teen (and he photographed by the paps at the dermatologists multiple times as a teen) and TJ says Prince has vitiligo. So no it's not speculation.
And lets just tell it like it is. If prince went live on his Instagram page right now and shouted "I have vitiligo" O would say he was lying.
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This concludes my stance on this topic. Some people may ask "why do you care?" but that can be used against those same people on different topics concerning MJ's life. I don't dislike his children and I do not care about the race or color of the children that he had. I also know that even if it does come out that he is not the father, it changes nothing because he loved and raised them. This could pose an issue because at least as of 2023, you can not "identify" as a race. Paris told Willow Smith that she "identifies" as black. To me, if she were why didn't she just say that she was black? Biracial people do not "identify" as anything, they are considered biracial and they are part of two races. What inspired me to make this post was the bullying that I have witnessed on this subreddit in regard to people who have this belief. I will not be dismissed as "bitter", "hateful, "insecure" or all this other crap, just because I disagree with anyone on this topic. I feel that all voices should be able to be heard on this issue. Like I said I have no problem with anyone who disagrees with me, as long as you remain respectful.

She has. She's also stated that she is mixed.
This is just grasping at straws.

Source: https://www.marketwatch.com/articles/shadow-banks-account-for-half-of-the-worlds-assetsand-pose-growing-risks-8f4b5961

The sudden failure this year of three sizable American banks demonstrated one way in which the financial system can “break” as the Federal Reserve and other central banks press a campaign to normalize interest rates.
There could be others.
Risk-minded regulators, policy makers, and investors are eyeing the huge but nebulous world of largely unregulated nonbank financial intermediaries, known colloquially as shadow banks, as a potential locus of future problems. It includes sovereign-wealth funds, insurers, pension funds, hedge funds, financial-technology firms, financial clearing houses, mutual funds, and fast-growing entities such as money-market funds and private credit funds.

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The nonbank financial system now controls $239 trillion, or almost half of the world’s financial assets, according to the Financial Stability Board. That’s up from 42% in 2008, and has doubled since the 2008-09 financial crisis. Postcrisis regulations helped shore up the nation’s biggest banks, but the restrictions that were imposed, coupled with years of ultralow interest rates, fueled the explosive growth of nonbank finance.

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To be sure, these financial intermediaries play an important role in the economy, lending to many businesses too small or indebted to tap institutional markets. Moreover, while talk is rife on Wall Street about problems brewing in shadow banking, few have surfaced since the Fed began tightening monetary policy in the first quarter of 2022. To the contrary, disruptions caused by rising interest rates have been most evident so far in the regulated banking sector. And any turmoil in the nonbank arena could prove relatively benign, especially if the economy avoids a severe recession.
Yet, no one seems to have a firm handle on the risks that nonbank financial entities could pose if numerous trades and investments sour. Nor is there a detailed understanding of the connections among nonbank entities, or their links to the regulated banking system.
To date, this system hasn’t been tested, at this scale, for a wave of credit losses and defaults that could stem from higher rates and a weakening economy. History suggests caution: Shadow banking was at the epicenter of the financial crisis, as nontraditional financial institutions turned subprime mortgages into complex securities sold to banks and investors, often using high levels of leverage. As homeowners defaulted, these products lost value, and the damage cascaded through the financial system.
While nonbank finance looks a lot different today, as do the potential risks, it remains a source of concern. Some policy makers and bankers use the shadow-bank moniker to refer to that segment of the nonbank universe considered most likely to trigger the sorts of liquidity-draining events that sparked prior financial contagion. The Institute of International Finance ballparks such exposure at about 14% of nonbank financial assets. But the links remain cloudy between the riskier elements of shadow banking, a term that rankles many nonbank entities, and the more resilient world of market-based finance.
“The enormous size and high leverage levels of the nonbank financial-institutions sector, along with the more lax reporting and regulatory standards applied to this sector relative to banks make it a potential tinderbox,” says Eswar Prasad, an economics professor at Cornell University and a senior fellow at Brookings Institution, who formerly worked at the International Monetary Fund.
Worried economists and financial analysts have been urging regulators to gain a better understanding of nonbank financial intermediaries because they see telltale signs of potential trouble, including illiquid assets, increasing leverage, lack of transparency, and rapid growth.
The nonbank universe is “everyone’s obvious candidate” for more breaks, says Simon Johnson, a professor at the Massachusetts Institute of Technology and a former director of research at the IMF, who has spent much of his career working to prevent economic crises.
There are no direct parallels to the asset mismatches and bank runs that took down Silicon Valley Bank and First Republic Bank earlier this year. In part, that’s because the pension funds, insurers, and endowments of the nonbank world tend to hold assets for decades through funds that lock up their money for five to seven years. Also, big players such as private credit funds tend to use far less leverage than banks.
Still, there are indications that inflation and the sharp rise in rates may be causing strains in some parts of the nonbank system. High interest rates have sapped demand for new mortgages, for instance, hurting nonbank lenders. Liquidity in parts of the bond market, such as emerging market debt and high-yield, is at the lowest levels since the Covid pandemic. And cash flow at some companies financed by private credit is shrinking due to inflation, a slowing economy, and higher debt payments.
One thing is clear: What happens in one corner of this sprawling world doesn’t stay there. Consider the collapse of the hedge fund Archegos Capital Management in 2021. Its losses on concentrated bets on blue-chip stocks triggered a margin call that led to the sale of about $20 billion of assets. That left big banks exposed to the fund, including Nomura and UBS, with billions of dollars in losses.
“Risks came back to banks’ balance sheets from the back door,” says Fabio Massimo Natalucci, deputy director of monetary and capital markets development at the International Monetary Fund and co-author of its global financial-stability report.
Federal Reserve governor Michelle Bowman said in a speech this spring that losses related to riskier activities pushed out of the banking system could come back to haunt banks through activities such as the banks’ extension of credit to nonbank lenders. According to the Fed, bank lending to nonbank financial intermediaries totaled $2 trillion in commitments at the end of 2022, a level the Fed described as high.

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While many nonbank entities are regulated in some way, no regulator has attempted to assess the overall financial stability of the nonbank world. The Financial Stability Oversight Council, or FSOC, is now seeking comments on designating some nonbank institutions as systemic and subjecting some to Federal Reserve supervision. That would reverse some of the changes made during the last administration.
A look at three types of nonbank financial intermediaries—private-credit providers, open-end bond funds, and nonbank mortgage lenders—offers a window into the prevailing concerns about shadow banking, and suggests how conditions could unravel in this sector in ways that roil the economy and the markets.

Private Credit

Rapid growth in the world of finance tends to draw attention, and few business segments have grown since the financial crisis as much as private credit. Private-credit providers typically lend directly to midsize, privately owned businesses that generate from $10 million to $1 billion of revenue and can’t get funding in the institutional market.

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As banks retreated after the crisis and each minicrisis that followed, these financial intermediaries stepped in. Private-credit assets have mushroomed to nearly $1.5 trillion from $230 billion in 2008**,** putting the private-credit market in the league of the leveraged-loan and high-yield markets.
Drawn by high yields, attractive returns, and diversification opportunities, investors have poured money into private-credit funds. Insurers have doubled their allocation to these pools of largely illiquid assets over the past decade, while pension funds have more than doubled their allocation to alternative investments, including private credit, since 2006.
The Fed said in its financial stability report, published in May, that the risk to financial stability from private-credit funds appears limited. It noted that the funds don’t use much leverage, are held by institutional investors, and have long lockup periods, limiting the risk of runs. But the Fed also acknowledged that it had little visibility into loan portfolios, including the traits of borrowers, the nature of deal terms, and default risks.
Some observers are concerned about the connections between private lending and other nonbank activities, as well as lenders’ links to the banking sector. “Wall Street says they aren’t going to lend to subprime borrowers, but they lend to funds that lend to them,” says Ana Arsov, who oversees private-credit research at Moody’s.
There is no public view of banks’ total exposure to private credit, Arsov says. Given the scale of the business and limited visibility into the risks, analysts worry that any widespread deterioration of asset quality could ripple through other parts of the financial world before regulators could act.
Business development companies, some of which are publicly traded, offer some insight through disclosure documents into this $250 billion market. “Most managers that have both BDCs and institutional structures share deals across their platform, providing insight into the types of credits in their portfolios,” says Dwight Scott, global head of Blackstone Credit.
Moody’s sees increasing challenges for some BDCs over the next 12 to 18 months as the economy slows and companies grapple with higher borrowing costs, inflation, and market volatility. Although liquidity looks adequate for the next 12 months, loan maturities for portfolio companies will accelerate after that. If rates are still high and the economy is slumping, that could hamper the prospects for further borrowing. Similarly, lenders could become more conservative.
Blackstone Private Credit fund, or BCRED, the biggest private-credit fund, said late last year that it had hit its 5% quarterly investor-redemption limit. While Blackstone had no trouble meeting redemptions, and has reported that redemption requests fell in this year’s first quarter, Arsov worries about how smaller players would handle a similar situation. The industry’s efforts to court retail investors, she says, could increase the possibility that risks in private credit seep into broader financial markets, potentially by creating confidence issues.
What could trigger problems in the broader private-credit universe? One concern is a potential wave of struggling borrowers larger than the anticipated 5% to 6%. Arsov says expectations may be too rosy, based on the low default rate during the pandemic, when the Fed stepped in with trillions of dollars in stimulus. With the Fed now raising rates to curb inflation and trimming its balance sheet, such assistance is unlikely to be repeated.
Leverage metrics also have deteriorated, and covenant protections have weakened as the growth in private credit has increased competition for deals. Many have been concentrated in software, business services, and healthcare, in companies backed by private-equity funds. Given the benign interest-rate and economic backdrop of recent years, many private-equity investors were willing to pay higher multiples of enterprise value for companies with sustainable revenue, which allowed them to take on more leverage, says Richard Miller, head of private credit at TCW.
“Our markets stopped focusing on debt to Ebitda [earnings before interest, taxes, depreciation, and amortization], the longstanding gauge of risk, and looked at loan to value,” Miller says. “That was fine as long as enterprise values didn’t contract and the [interest] rate on that elevated debt didn’t go up. We have had a change in both.”
Now, some of these companies are generating less cash flow, which affects their ability to cover interest payments. While leverage isn’t as high as during the financial crisis, limiting potential systemic risk, Miller sees the risks today transferred to the individual borrower, and worries about the prospect of some borrowers running out of money.
A shift in the market might weed out weaker private-credit upstarts. But a potential combination of rising defaults, elevated interest rates, and flagging investor appetite for private credit could exacerbate a downturn, albeit in slow motion, given the nature of borrowing.
Not surprisingly, industry leaders are more upbeat. “People conflate default with losses,” says Blackstone’s Scott. But much of direct lending involves senior secured debt, he notes, which should minimize actual losses and enable lenders to help businesses through the challenges.
“Rather than increasing risk to the markets, private-credit asset managers are typically a stabilizing force, given the ability to invest patiently and opportunistically, and with little to no use of leverage, when banks and other traditional market participants either can’t or won’t,” says Michael Arougheti, chief executive of Ares Management, one of the largest alternative-asset managers.

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Bond Funds

Unlike private-credit funds, which lock up investors’ money for a set period, most mutual funds allow investors to buy and sell whenever they want, offering daily liquidity. But that could turn problematic for bond funds under certain conditions, as some corporate bonds change hands only once a month—and less frequently in times of stress. If credit losses pile up or markets become stressed, some policy makers fear that bond funds could face demands to liquidate holdings at fire-sale prices, as investors scramble to sell funds with assets that have become illiquid.
Liquidity in bond markets dried up in the early days of the pandemic as investors scrambled for cash and some bond funds sold assets to meet redemptions. That set off a further frenzy as investors tried to unload assets before they became more illiquid. The selling pressure eventually forced the Fed to intervene and offer to buy corporate bonds for the first time ever to keep credit flowing. Hoping to minimize the damage from another fire sale, policy makers are looking to develop new rules, including on fund pricing.
The Investment Company Institute, which represents the mutual fund industry, has pushed back against this effort, arguing it is based on an incorrect view of the role that bond funds played in 2020. Citing its own research, the ICI says bond sales didn’t spark the Treasury market dysfunction that disrupted the flow of credit, but started only after markets began seizing up and, at that, represented a fraction of the selling.
The ICI notes that concerns about fire sales during periods of market stress aren’t unique to the mutual fund structure.
Bond funds have seen net inflows of $1.74 trillion since 2013. Global fixed-income funds, a subset of the sector, have crowded into some of the same corners of the market in the past two years. The IMF has raised alarms about that, citing fears of a stampede out of certain assets if a single fund runs into trouble.

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Bid/ask spreads, a common gauge of a market’s liquidity, have widened in areas such as high-yield and emerging market debt to levels last seen in the spring of 2020, according to the IMF.
Mara Dobrescu, director of fixed-income strategies for Morningstar’s manager-research group, also sees increasing vulnerabilities, but notes that most funds are equipped to handle stresses and that not many bond funds have had to institute limits on redemptions.
Warning SignThe liquidity risk in high-yield bond funds increased in 2022 as bid-ask spreads widened.Portfolio-level bid-ask spread across fundsSource: International Monetary Fund

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Nonbank Mortgage Lenders

The mortgage market has seen dramatic changes in the years since the global financial crisis. The business of originating and servicing loans has migrated steadily away from banks, with nonbank lenders accounting for more than two-thirds of all originations. Rocket Cos. ’ [ticker: RKT] Rocket Mortgage unit and UWM Holdings ’ [UWMC] United Wholesale Mortgage top the list of the biggest lenders.
Neither company responded to Barron’s requests for comment.
Housing finance is raising flags again, not so much for risky lending practices as in 2008, but because of the business models of these nonbank lenders, which don’t have to hold as much capital as banks. With people buying fewer houses, mortgage originations are down 60% in the past two years, raising concerns that potential losses will eat into these businesses’ slim capital cushion and raise leverage levels.

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Nancy Wallace, a finance and real estate professor at the University of California, Berkeley Haas School of Business, has been warning for years about these nonbank lenders’ business model. She fears that a rise in defaults could lead to disruptions in the mortgage and housing markets.
One concern is the companies’ reliance on short-term funding through warehouse lines of credit from banks. Those presumably could be pulled during periods of market stress, or if the borrowers’ financial health were to deteriorate.
In this year’s first quarter, delinquency rates were only 3.6%, the lowest level for any first quarter since the Mortgage Bankers Association started tracking them in 1979. A sharp rise in delinquencies, however, could bring added pain, as the companies’ servicing businesses, which collect monthly payments from borrowers and funnel them to investors including banks, Fannie Mae, and Freddie Mac, would need to advance the money.
On its own, analysts don’t see the nonbank mortgage-lending industry triggering a financial crisis, although distress throughout the industry could diminish confidence in other nonbank lenders. In a worst-case scenario, credit could dry up for riskier borrowers, hitting home prices and sapping mortgage demand.
Peter Mills, senior vice president of residential policy for the Mortgage Bankers Association, has pushed back on recent regulatory efforts aimed at designating nonbank lenders as systemic, noting that the framework under consideration doesn’t include a cost/benefit analysis or an assessment of the probability that an entity could default.
Plus, he doesn’t see a financial-transmission risk from the industry, which is working on tools to mitigate strains in the event of delinquencies. “It’s less a financial earthquake and more of an operational challenge,” he says.
That may prove to be the case throughout the nonbank financial sector as interest rates normalize and the era of free money ends. Plenty of things might bend without breaking in this vast and opaque world. Just the same, it pays to be vigilant.

TLDRS:

Shorter Version:

• The nonbank financial intermediaries, or "shadow banks," controlling almost half of the world’s financial assets, are being watched closely as central banks work towards normalizing interest rates.
• Though few problems have been noted since the Fed's monetary policy tightening in 2022, there are concerns about the risk these nonbank entities could pose if numerous investments fail, especially given the lack of understanding about their interconnections.
• Rising interest rates and inflation may be causing strain in the nonbank system, with decreased demand for new mortgages and reduced liquidity in some bond markets.
• The collapse of Archegos Capital Management in 2021 highlighted the risk of problems in one area of the nonbank system impacting others, prompting calls for regulators to improve understanding of nonbank financial intermediaries.
• Despite private credit growth, concerns persist due to limited visibility into these funds' loan portfolios and connections between private lending and other nonbank activities, as well as links to the banking sector.
• Bond funds, with their daily liquidity, could face challenges in times of stress when certain corporate bonds are infrequently traded, potentially leading to liquidation at reduced prices.
• The shift from banks to nonbank lenders in the mortgage market, combined with the latter's reliance on short-term funding from banks, has raised concerns, especially in the event of a sharp rise in delinquencies.

Longer Version:

• As the Federal Reserve and other central banks work towards normalizing interest rates, the largely unregulated nonbank financial intermediaries, also known as shadow banks, are being closely watched due to their potential to cause future financial issues.
  • These entities, which include everything from sovereign-wealth funds to financial-technology firms, currently control $239 trillion, almost half of the world’s financial assets, an increase from 42% in 2008.
• These intermediaries serve a crucial role in the economy, lending to businesses that are too small or too indebted to tap into institutional markets.
  • Despite concerns, few issues have emerged in the shadow banking sector since the Fed began tightening monetary policy in 2022.
  • However, it's unclear what risks these nonbank entities could pose if numerous investments go sour, especially considering the lack of detailed understanding about their connections among themselves and to the regulated banking system.
• The shadow banking system hasn't been tested on this scale against a potential wave of credit losses and defaults that could result from higher rates and a weakening economy.
  • The sector, with its size, high leverage levels, and lax reporting and regulatory standards, could potentially become a "tinderbox" according to some economists.
• There are indications that rising interest rates and inflation may be causing some strain in the nonbank system.
  • High rates have reduced demand for new mortgages, affecting nonbank lenders. Also, liquidity in some bond markets is at the lowest levels since the COVID pandemic.
• Still, there have been instances where problems in one part of the nonbank system have impacted others. The collapse of the hedge fund Archegos Capital Management in 2021, for example, resulted in significant losses for big banks exposed to the fund (and those continue as that bag is passed around...).
  • Given these risks, regulators are being urged to gain a better understanding of nonbank financial intermediaries.
• Private credit has grown exponentially since the 2008 financial crisis, ballooning from $230 billion to almost $1.5 trillion.
  • This sector lends directly to midsize businesses that can't obtain funding in the institutional market.
  • Investors are attracted to private credit due to high yields, returns, and diversification opportunities.
• The Federal Reserve stated in a recent report that risks to financial stability from private-credit funds seem limited because these funds don't use much leverage, have long lockup periods, and are held by institutional investors.
  • However, there's limited visibility into these funds' loan portfolios, including borrower characteristics, deal terms, and default risks.
• Concerns arise from connections between private lending and other nonbank activities, as well as links to the banking sector.
  • The lack of public view into banks' total exposure to private credit is a cause for concern for some analysts who worry that asset quality deterioration could impact other parts of the financial world before regulators can intervene.
• A potential wave of struggling borrowers larger than the anticipated 5-6% could trigger problems in the broader private credit universe.
  • Leverage metrics have also worsened, and covenant protections have weakened as competition for deals has grown.
    • The market's focus has shifted from debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) to loan to value, which could lead to some borrowers running out of money.
• There is concern that a potential combination of rising defaults, high interest rates, and waning investor appetite for private credit could exacerbate a downturn.
• Most mutual funds offer daily liquidity, allowing investors to buy and sell whenever they wish.
  • However, this could be an issue for bond funds in certain conditions, as some corporate bonds are traded only once a month and even less often during stressful times.
  • If credit losses accumulate or markets become stressed, bond funds could face pressure to liquidate holdings at reduced prices as investors rush to sell funds with illiquid assets.
• Bond funds have experienced net inflows of $1.74 trillion since 2013, with global fixed-income funds investing heavily in certain market areas in the last two years.
  • The IMF has expressed concerns about this, noting that if a single fund encounters issues, it could lead to a rush out of certain assets.
  • Liquidity risks in high-yield bond funds have increased in 2022, with bid-ask spreads, a measure of a market’s liquidity, widening.
• Since the global financial crisis, the mortgage market has undergone significant changes, with nonbank lenders now accounting for over two-thirds of all originations.
  • While the shift away from banks isn't due to risky lending as in 2008, concerns have been raised about the business models of nonbank lenders.
  • These lenders don't need to hold as much capital as banks, and with a 60% decline in mortgage originations in the past two years due to decreased house purchases, potential losses could deplete their modest capital buffer and increase leverage levels.
• One concern is the nonbank lenders' reliance on short-term funding via warehouse lines of credit from banks, which could be withdrawn during market stress or if the borrowers' financial condition worsens.
  • Although delinquency rates were just 3.6% in Q1 of this year, a sharp increase could cause issues, as these companies' servicing businesses would have to advance the money.

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Hello everyone, I'm doog and I run The Bone. I know many of us are still in the dark as to what doginals and DRC-20 really is, so I thought I would make a short post on where this stuff came from.
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What are doginals? An introduction to DRC-20.

Doginals - a word you may have heard recently, but what are they really? Where did they come from and why did they come about? I'm here to help break that down, but first, to understand Doginals, we first need to take a short look at their cousin, Ordinals.
Ordinals have become a popular trend in the Bitcoin community as of late. Similar to NFTs, Ordinal Inscriptions are digital assets inscribed onto satoshis, the smallest denomination of Bitcoin. This became possible through Casey Rodarmor’s “Ordinal Theory”, which created a system for individualizing satoshis and giving them unique identities.
Similar to how Ordinals inscribe information onto the smallest units of a Bitcoin, Doginals inscribe information onto the smallest units of Dogecoin, named shibes.
You see, each shibe can store a very tiny amount of information via a process we call “inscribing”. By keeping track every shibe in circulation, a normally fungible token like $DOGE can be inscribed with data, tracked, and transferred amongst collectors, speculators, and enthusiasts.

How the heck is any of this done?

By using a tool called an indexer, which is just a fancy word for a platform that acts as a ledger for all of the data being written onto every single shibe in existence. Armed with an indexer, users can now create token and image collections on blockchains that wouldn’t normally have the capacity to natively map this type of information.
Plain and simple: Doginals came about as a spin on Bitcoin’s Ordinals. Because Dogecoin is a fork of Bitcoin, they both have the capability to utilize Ordinal Theory. Amongst the hype of Bitcoin’s Ordinals spawned a handful of other mirrored systems, including Doginals on Dogecoin and Litecoin Ordinals on, uh, Litecoin.

So how did Doginals specifically come about?

In February 2023, a developer named "Apezord" introduced the Doginal standard by launching the first Shibescription (shown below).
Shibescription 0
This sparked the formation of a community where numerous Shibescriptions were created, ranging from texts to images to even gifs. During this time, someone also introduced the inaugural DRC-20 token, $DOGI, with a maximum supply of 21 million “tokens”.
Progress in the DRC-20 space has faced its fair share of obstacles, mainly due to the challenges posed by Dogecoin's random block rewards (that’s a topic for another day). Projects have thus far faced difficulties in establishing a reliable indexing infrastructure which means sometimes your collection would be recognized as one thing in one place, and entirely different attributes in another.
But, despite this, leaps are being made within the doginals community, and DRC-20 trading has been off the charts.
On May 22nd, transactions on $DOGE skyrocketed, marking a new all time high of over 719,000. For reference, Bitcoin’s transactions for the day - in the midst of Ordinals season still, mind you - was 566,000.
Similar to Bitcoin’s Ordinals, Doginals began to rapidly gain interest from the wider cryptocurrency community. The low fee structure of Dogecoin allowed many participants to begin minting all sorts of DRC-20s without too much overhead or risk.
Plus, you know, being early to the next new thing in crypto never hurt.

Not Everything that glitters is gold.

Doginals have not been without their challenges, however - and there’s been contention both inside and outside of the community when it comes to DRC-20.
For example, one Dogecoin core developer voiced his skepticism, saying:
“Something like this cannot become a real ‘feature’ because it has not had enough thought given to it… Sustained and growing pressure on Dogecoin will cause this to die off quickly.” -Patrick Lodder
Coincidentally enough, a similar sentiment was shared by Luke Dashjr, one of the leading Bitcoin Core developers, in relation to BRC-20. He went so far as to say that immediate action needed to be taken to stop the Ordinals trend.
If you’ve attempted to transact with Bitcoin recently, you may have noticed the elaborately high fees. In case you need a quick refresher, as competition for block space increases, so does the cost to transact on the network.
Case-in-point: Dogecoin network’s transaction fees increased three-fold between May 10th and May 22nd. Thankfully, the fees are still relatively cheap due to the nature of Dogecoin’s blockchain, but you get the picture.

What’s Next?

That’s the million dollar question now isn’t it? I’m afraid the only answer I can confidently say is: Who knows?
Ordinals are still new enough that we’re seeing exorbitant volume on Bitcoin’s blockchain, so we don’t even have much to compare the current state of affairs to.
Maybe doginals will fade away into the annuls of crypto history. Or maybe, just maybe, DRC-20 is the next evolution of $DOGE history. But, for a chain built on community, memes, and having fun, some might say doginals is just what the shibe ordered.