It is actually the confederate navy flag. If you read the history books, some scholars say we fought for states rights, and others say we fought for slavery. It's more of a historical figure, than it is a hatred for blacks. If blacks can be proud of their African heritage, why can't southerners be proud of their forefathers for standing up for themselves? Don't get me wrong, slavery was bad, and state's rights were a problem too, but those weren't the only causes for the war. It was more about who should be in control, the federal government, or the state government. So it is a historical figure that has been adapted by some to represent racial hate.
If you see that flag flying in the grassless yard of a single wide trailer with no underpinning, 2 Chevy cars up on blocks, a few hound dogs laying about, a big mud smeared 4X4 truck with tires taller than your head and a c.b. radio antenna that could be a danger to low flying aircraft, and laundry hanging on a clothes line, it would be safe to assume that the beer gut, toothless "good ole boy" that lives there is using it as a racial statement.
resident of Allerbammer a.k.a. Alabama