Saturday, April 25, 2009

Taking things seriously

In the introduction to the Observations of a Non-Political Man, Thomas Mann makes a very Thomas Mann-ish apology for the entire text, which, he keeps protesting, was a sort of neurotic crucifixion, a rubbing against his own talents, a symptom of his middle aged feeling of being out of sorts with his age. He imagines a reader asking of this huge defense of Germany, what is all this to you? - meaning, why should we go to a novelist for a defense of Germany in 1918? Or even, why should a novelist waste 600 closely printed pages of politically charged prose to tell us that he doesn’t care for politics? That he is, even, constitutionally incapable of caring about politics?

“All pain about things is self pain, and only the man who takes himself seriously pains himself. You will excuse all the childishness and pedantry of these pages when you have excused the fact that I take myself seriously – a fact that becomes obvious as soon as I talk about myself. And, of course, it is a quality that one intuits as the first foundation of all pedantry and may find laughable. “Heavens, how seriously he takes himself” – to this whisper my book obviously gives occasion in its every nook and cranny. I can’t reply in any way except with the fact that, without taking myself seriously, I could never have lived nor could live now; as the consciousness that all that seems good and noble to me, the mind, art, morality, stems from humans taking themselves seriously; except for the clear insight, that everything that I’ve done or influenced, up to the charm and value of the smallest components of it, every line and trope of my life’s work up to now – so much and so little as this may mean – is uniquely reducible to the fact that I take myself seriously.” XVII

These are sentences in the high Thomas Mann style, in that he seems, even as he is jotting them down, to be turning them over, like pebbles he has found out on a walk, so that the pathos of taking himself seriously becomes both funnier and more serious the more he presses the point until the end, when it turns out that what is taken most seriously is the fact of taking seriously – and how can one take that seriously as a content, as the reward for the attitude? It is like digging up a treasure chest and finding another treasure chest inside it. This cry that contains its counter-cry, this way of ducking into a fight, it is very very Mann – and if you take the taking seriously too seriously, you will end up, like Nabakov, not understanding a bit of it. Or rather rejecting all of it. I read Nabakov before I read Mann, and was thus left with a prejudice against the latter. Nabakov’s reflexive distaste for a story that wears its thoughts on its surface – when, for him, the whole of art depends on submerging and hiding the conceptual in the work, as a good magician hides his strings and false bottoms – comes out when he writes about Mann and Dostoevsky. But once you reject the idea that magicians are only to be hired to entertain rich children at birthday parties, once you take the magic in a more serious sense – that sense given it by Gogol when he recognized that the devil is incarnated in the banal – then you are ready to read Mann, and take him seriously. And at the same time see how funny taking things seriously is. The ludicrous, sitcom fate, the slapstick of circumstance, dogs all men.

Wednesday, April 22, 2009

blind pig nation

The central figure in this engraving [The Cockpit] is the blind Lord Albemarle Bertie, who stakes money he cannot control on the outcome of a fight he cannot see. – England in the Age of Hogarth, Derek Jarrett

This is the time, oh most certainly the time, for Lord A. Bertie! What a perfect description of the financialized economy, dominated by sharps, financed by the greedy blind, and staging a lower-life fight to the death. That’s us, sweethearts.

Hogarthian comparisons mass and pass through the papers and magazines, and I, poor bard of the Zona, the appalled and sniggering spectator of every vile move, can hardly cut and paste fast enough. That the bubble in which our worst live is as transparent as the bubble in which Glenda the Good Witch traveled through Oz, and thus displays sights desired by all, the whole open mouthed world, as long as you have been able to divert some capital flow (oh, it flows like piss, or blood, or the blackest shit from the bowels of an almost ossified and incredible monster, a monster composed, can you believe it, of the beads of sweat of billions of suckers?) into your bank account. And to think, there is a lack of appreciation on the part of some of the merely unmentionable outside the bubble! There are rumors of taxes. Taxes! As if these were not the great captains of industry, the great minds, the ever spinning wheels, the great and oh so hardworking slicers and dicers, doing so, so much for us, and asking in return merely to sit on our necks and ride us for the rest of our living days.

Quick quick to our scissoring. Here is the New York article that really should be printed on every zek forehead, just in case the angels above want to index the winners and the losers. It is all about what the very very rich think about having gorged themselves nicely on a couple trillion dollars of government monies – that it is yesterday’s news, that’s what. They’ve already forgotten it. And that is cause they are smart and hard hard hard workers:

“No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?” e-mails an irate Citigroup executive to a colleague.

“I’m not giving to charity this year!” one hedge-fund analyst shouts into the phone, when I ask about Obama’s planned tax increases. “When people ask me for money, I tell them, ‘If you want me to give you money, send a letter to my senator asking for my taxes to be lowered.’ I feel so much less generous right now. If I have to adopt twenty poor families, I want a thank-you note and an update on their lives. At least Sally Struthers gives you an update.”

It is difficult to sympathize with these people, their comments laced with snobbery and petulance. But you can understand their shock: Their world has been turned on its head. After years of enjoying favorable tax rates, they are facing an administration that wants to redistribute their wealth. Their industry is being reordered—no one knows what Wall Street will look like in a few years. They are anxious, and their anxiety is making them mad.”

I’m so worried that the poor and grateful are being screwed, again, by those who want to tax the proud, proud products of Columbia and Wharton! And not only are they so smart, but hard workers? You can’t believe it!

“A few weeks ago, I had drinks with a friend who used to work at Lehman Brothers. She had come to Wall Street in the mid-eighties, when the junk-bond boom spawned a new class of globe-trotting financiers. Over two decades, she had done stints at all the major banks—Chase, Goldman, Lehman—and had a thriving career directing giant streams of capital around the world and extracting a substantial percentage for herself. To her mind, extreme compensation is a fair trade for the compromises of such a career. “People just don’t get it,” she says. “I’m attached to my BlackBerry. I was at my doctor the other day, and my doctor said to me, ‘You know, I like that when I leave the office, I leave.’ I get calls at two in the morning, when the market moves. That costs money. If they keep compensation capped, I don’t know how the deals get done. They’re taking Wall Street and throwing it in the East River.”

And then there is this: "Part of the problem, the Goldman vet explains, is that there’s a vast divide between where the public is and where the bankers are. The public registers how fundamentally the system has changed; the bankers are far from getting to that point. “When I talked to my friends in November and December at firms like Goldman, they would tell me, ‘If the government doesn’t bail us out, we’re going down.’ They really thought they were going to zero, and without exception, they all forget that now,” he says. “They forget that their company’s stock was going to zero. It’s a state of delusion; they don’t remember those days. The flip side of that is, every guy except the Goldman guy remembers that Goldman was bailed out.”

So, this is the culture, these are the people, to which a couple of trillion dollars in bailout money has been directed. Cute!

For a change of pace, let’s go to the near criminal class. I’m talking losers. I’m talking people who endanger our feudal way of living. Yes – nurses who want to unionize! Can you believe it? Luckily, the Dems, who promised to make unionization easier when they needed votes, now need corporate money to live in the way they are accustomed to live in D.C., so their new motto is: eat shit and die.

“The battle has ground on for 20 years. In 1989 and again in 1994, a clear majority of nurses at a Louisville, Ky., hospital signed cards saying they wanted a union. But each time a majority of the nurses later voted down the idea when it was put to a secret ballot.

“Given the deceitful tactics unions employ when trying to get nurses to sign these cards, this is dangerous legislation that should not be enacted,” Stephen A. Williams, president of the hospital’s parent, the nonprofit corporation Norton Healthcare, wrote to the nurses in March.
In the Louisville fight, the National Labor Relations Board ruled that the nurses had changed their minds about the union in 1994 mainly because management conducted an often illegal campaign against unionization.”

Now this would seem to be an easy one for the Dems, right? Pass the fuckin changes to the onerous labor laws that heavily favor capital. But the Senate has, in Dem hands, suddenly changed into such a precious, peevish institution that can’t, that just can’t, have a debate – thus, legislation always has to begin with a vote to close off debate. If they have the debate, land sakes, it would be terrible. Filibustering and stuff, when a senator has to meet with many important people and map out the lobbying groups his wife and kids will work for and like that.

“The N.L.R.B.’s rulings described weeks of psychological warfare. Management put television sets in the nurses’ stations. “They would show these horrible old movies showing miners’ strikes and violence involving unions,” said Betty Schmitt, a nurse who has since retired.

She said management put up signs reading: “Be careful with whom you associate. You can be found guilty by association.” Many nurses were scared to be seen talking to union supporters, she said.
“It didn’t feel like America,” Ms. Schmitt said. “It felt like Nazi Germany.”
In 1994, the nurses voted 366 to 220 against unionizing — a sharp reversal considering that a majority of 348 nurses had originally signed pro-union cards. Management said the nurses in the majority did not want to pay union dues or have an outside party speak for them.”

If I had time time time, I’d end this collage with the current quiet collapse of efforts to change the outrageous and completely stupid bankruptcy bill – another Dem promise – cause, well, those bank lobbyists just don’t like it. And the legislature is paralyzed in a self-captivity of its own making.
Faites vos jeux, monsieurs et Mesdames.

Saturday, April 18, 2009

just the facts I feel, ma'am.

The Daniel Gross article about Green shoots in Slate is a good example biz journalist malfeasance. Save for Michael Lewis, seemingly no journalist can, at the same time, write color and write sense. Take the comparison between NYC and Chicago, which is premised on the idea that the financial sector has taken a big hit while Chicago, diverse town that it is, hasn't. This is utterly bizarre, in that Chicago happens, according to the Bureau of Labor, to have an unemployment rate of 9.2, a point above NYC's rate of 8.1. But a narrative is a narrative, and once you start out doing color with the supposition that things are awefully bad in NYC, then - by the law of story - you have to contrast it - and not with Lafayette La, with 3.9 percent unemployment, either, cause that is too small. Seemingly, Gross hasn't seen that NYC has been lagging the recession, not leading it.

Here's Gross's idea about Chicago:

"Meanwhile, signs of a hopeful spring are evident in the region surrounding Chicago, a city that was never too full of itself during the boom and hasn't gotten too down on itself during the bust. Chicago has been holding up better, according to the Beige Book. The Second City's diversified economy is less reliant on finance than that of the First City. In March, the Fed reported, "consumer spending improved some and the pace of business spending was little changed." After a long winter, the locals are finally emerging into sunlight. "There are people on the streets again," said Bill Bennett, manager of the Omni Hotel, whose office overlooks the white-hot throbbing heart of Midwestern discretionary spending: the Apple store on Michigan Avenue. Each of the hotel's 347 suites was sold out for the weekend, although prices were as much as 20 percent lower than last year. Tourists at the Shedd Aquarium idled on a line longer than a right whale."

One notices the color here is a little haywired. There are people on the streets? Although this is supposed to be logically sequent, somehow, to Chicago doing better, it actually makes no sense at all. Until the depression cancels spring, people will be on the streets in warmer weather. This is about as subpar as you can get.

The other part has to do with everybody's friend, diversification. Gross is continuing that old chestnut of the financial advisor which advises diversification as though it were the philosopher's stone, rather than a hedge against volatility. On exactly that same mistake, our Pension office person under Bush started investing in equities last year.

Of course, because the narrative is about the pain that the financial sector is in, rather than what a fine hedge can be built against unemployment with two to three trillion dollars in Fed and Treasury money delivered pronto, along with the pizza and the free coke (cola, not the other type - this isn't the eighties!) Gross implies that the financial sector is really suffering from job losses. He is so sure of this that he doesn't need no stinkin' stats - rather, he feels it, being an extra sensitive guy, on a subway train. When a reporter starts feeling his facts, then you know - he's ready for the bigtime! Ready to go to D.C. to report on the groundswell of indignation that we haven't "reformed" social security, or maybe to Iraq to report on our victory there.

So of course his story misses what could be an interesting observation - that the green shoots might be green only for a very limited, elite group - their last bubble, so to speak.

This is from the economist, April 3, 2009:

"What may be unexpected is that unemployment in financial services is well below the national average—just 6.8%. The popular perception, at least outside of New York, is that there are no jobs in finance; Wall Street is clogged with people looking for work. The loose job market in finance is often used to justify the government's meddling with finance pay and the hopelessly misguided decision to make hiring workers who require H1-B visas more difficult. The unemployment rate suggests that finance has fewer people looking for work than most industries."

Friday, April 17, 2009

a toast to all amateurs

In the real world, where I go quietly about my business, I sometimes discover that, to my astonishment, I have a reputation as an ultra-leftist. A communist or something. This is not the label I’d put on myself. I think of myself as an amateur.

In the end, I suppose, that is why I love Marx. The early writings, with the lovely vision of a man doing literary criticism in the morning and fishing in the evening in a society that has slipped the bonds of the division of labor, is a society of amateurs.

I am an amateur in all things sacred and profane. And I stick up for amateurs. Thus, when some fact or theory in science is defended on the basis of authority, I get antsy. While I am convinced, for instance, that the global warming theory is true, I am not convinced it is true because we find a consensus among scientists. Science is amateur heaven because the consensi of the scientists are continually being shifted, modified or broken. No, it seems true because the pieces fit, such as the melting of the tundra, the move of species from warmer climates into more northern climates, the changes in the migrations of birds, etc. And because we can look back and see how the addition of matter to the atmosphere can cause severe short term climate changes – we have volcanic activity to guide us.

There is a distressing tendency, on the part of the liberal side to which I generally incline, to believe something if a committee puts it out. But the liberal heroes, like John K. Galbraith or Rachel Carson, were precisely the type to suspect all committee truths. Carson in particular was unbowed by the weight of the scientific community, which had a professional interest in spraying DDT, damn the consequences. That this community existed in disjunction with another community of scientists, those who study evolution, brought it about that DDT use to put down malaria carrying mosquitoes badly overshot, as resistant mosquitoes returned – which any amateur could predict. But it would take a sociologist to understand the difference between the engineering mentality of the spraying/public health crowd and the adaptive notions of the evo crowd.

A distrust of institutional science in the U.S. is amply justified. Take, for example, the shameful history of the AEC. While AEC staff members were writing each other secret memos about ‘disposeable populations”, AEC publicly affirmed, over and over, that the fallout from the above ground bomb tests in Nevada was harmless. We now know, from one study of a single isotope of iodine, that the bomb tests caused, at a minimum, 250 thousand thyroid cancers. Other isotopes have not been studied, and will not be as long as the last surviving member of the decision elite who callously sacrificed civilian lives is alive enough to pull strings in D.C.

So, a toast to amateurs! It is to the amateurs, and not to the economists, that I turn for ways through the zona maze.

Tuesday, April 14, 2009

Magic Mountain

It is in Middle Age that you begin to understand the Magic Mountain.

The book begins with Hans Castorp visiting his cousin at the Sanatorium. He tells his cousin he is going to be staying three weeks. Castorp, at this point, thinks he knows the value of three weeks. But his cousin, who has been staying at the Sanatorium for some time, sets him straight:

“Oh, you have already gone home in your thoughts”, answered Joachim. Now, only wait, you have just arrived. Three weeks are almost nothing for us here above, but for you, on a visit here, merely staying for three week, for you it is a mass of time. First acclimatize yourself, that isn’t so easy, you will see. And then the climate is not the only curious thing about us. You will see a lot of new things here, naturally. As for what you said of me, that doesn’t go so well with me, you, with your “in three weeks I’m going home”, these are ideas from below.”

Indeed. Middle age is when you finally know above and below. Above, the time passes quickly. Your body, that encyclopedia of experiences lodged not just in your neurons, but in your immune system, your gut, your tongue (the taste of homemade ice cream when you were ten, the taste of your lover’s lips when you were twenty five), is now issuing addendums, but the entries have pretty much been laid down. One of them, death, that’s the motherfucker you keep circling. And time?

Of course, there are physical factors that explain the strange speeding up of time, but they don’t describe the experience. Three weeks can disappear in a flash. This great time divide is hardly ever referenced when we speak of the social, or when we talk of old men ordering young men to war, etc. But it is the single most terrifying thing about Above. There’s no way to prepare for this, no way to tell those Below about it. That one’s sense of time starts to converge with that of the housefly is inexplicable. It explains a lot about middle age surliness and depression. Somehow, one had assumed that as the body slows down, the sense of time would slow down. That one would see a sort of pharaonic form of time, drifting by at the monumental pace of the sphinx walking. Instead, the body slows down and time speeds up.

That is how it is above. You will see a lot of new things here, but none, none will impress you like this acceleration of one of the fundamental dimensions in the synthetic apriori. That’s the one that fucks with you.

Sunday, April 12, 2009

alan blinder, the vivien sisters, and me

Put your raygun to my head...

Like Henry Darger putting newspaper scraps, coloring books and his abortion of a life together to produce the great interplanetary apocalypse through which the Vivien sisters ride, forever, to his rescue, and forever fail to reach him –I too combine my ashcan life, scraps of newspaper stories, and tags of song lyrics to wall paper the zona.

It is Easter. I should be jubilant. I am jubilant in a way. I am, however, beginning to realize myself that the zona will be here for a while before anyone really gets it. Gets the implications. The newspapers reflect an elite relief that the zona is over – for our masters once again have been sniffing the glue. Thirty percent of the wealth of the median American household was wiped out last year, unemployment, including those who have stopped looking and those on part time, is well over ten percent, manufacturing is crashing globally, and housing prices – that cancerous indice of the Great American nexus, where cars proliferate, lawns grow smaller, power needs grow bigger, and unnecessary space just fits the unnecessary extension of the tv screen, that death in life of sit com soul death given that hi def gloss – is still a death trap for the incomes of millions.

On the other hand, the elite are looking at a buying opportunity in stocks – the Geithner plan has made Wall Street confident that, if there is no bubble for the common man, there will be one for the wealthiest – and spring is here.

Of course, when our masters are at their wit’s end, they have one reliable word. I hadn’t heard it until today. Oh joy, the word finally cam out. The word, war.

Americans love war. They love it because the opposite of war, for them, is not peace, but chaos. There are the drugs, for instance, getting snorted or shot or smoked and causing music and underground comics, and there is the war on drugs, which makes it all so clear: the only solution must be to throw millions of people, mostly of course black people, into jail. The angels came back to earth, and started DARE, and just say no, and zero tolerance, and chaos was mastered. Meanwhile, of course, the compassionate heart of big pharma was infinitely moved, looking down at suffering whiteness in the suburbs and ordered up, toute suite, mood altering drugs for the good people. And lo! They sold them just as the stereotyped pusher sold your first sweet pop of heroin, with free offers from your local GP. War is so good.

So it was a neo-lib from Princeton, Alan wtf Blinder, former Fed Reserve governor, who has loosed the dogs of war. He frankly admits to a moral quandary. Three million people have died in Congo’s wars in the last six years. Two million people will die of malaria this year, and the amount spent on finding a cure for malaria might be all of one hundred million dollars. At least two billion \people make do on a couple dollars a day. Thus, it would seem odious, it would seem to be a crime against humanity, for the world’s wealthiest country to spend two, three, four trillion dollars propping up the people who make more in a day than most villages in India make in a lifetime. How can we explain this quandary? How can we even explain that the money being spent will do squat for most of the people in the developed world, but will certainly limit their ability to get health care, or to solve the problems associated with environmental disaster.

Theere’s only one solution. This is “financial war”. Oh Jesus, Mary, and all the Saints!

In the bubble era, even sophisticated people deluded themselves into believing that home prices would soar indefinitely and that lending risks were minimal. On those weak foundations, a huge house of cards was built. Wall Streeters designed a hideously complex financial system to enrich themselves. Financial institutions took on far too much debt. People signed mortgages they could ill afford and did not understand. Regulators, the Bush administration and Congress looked the other way. The bubble grew until it burst.
Much of this shouldn’t have happened. But we are where we are, and the urgent priority is to extricate ourselves from this mess as quickly as possible, with minimal damage. Here’s how I conceptualize the master plan.
American policy makers are fighting a two-front war.”
Of course they are. It is a war! But what kind of war? Why, this war, this time, is a two front thingy. You might think it is just one front: greedy monstrous kleptocrats fighting to decimate the Treasury, which is commanded by the assistants of greedy kleptocrats. But no! We, we, I weep to say, are in this thing too!
“On the eastern front, they are battling a shortage of demand, as traumatized households and businesses pull in their horns. Less spending by some people means fewer jobs for others who, in turn, curtail their own spending.”
I’m stirred. Now, of course, perhaps this spending – the only function that Blinder sees the households doing – goes along with, well, producintg. Which goes along with production. Which goes along with who seizes the profits coming from the increase in production. But that would be the wrong, just the rillly rilly wrong way to see this war. You see, in war, there are the privates, who live in the labor market. Their wage is determined by competition. But then, there are the upper end people. The CEOs. Magically, here things change. These people are hard workers. They are star workers. The work they do is measured not by how cheaply they can be got by some damn labor market, no – they are responsible, don’t you know, for the profits that companies accrue. And they are even more responsible when a company doesn’t accrue a profit – then, captains of the ship, they steer their companies. Steering, fighting, starring – all in a day’s work for this doughty crew, the last sector for whom the neo-classicals believe the labor theory of value is true and good. But now, they are generals!

“The western front is vastly more complex. All economies run on credit, and ours developed an extreme dependency. Largely through their own failings, banks have been seriously damaged. Bankers are paralyzed by fear of further loan losses and shrinking capital that might subject them to regulatory penalties — or worse. One way or another, the banks must be restored to health and emboldened to lend.
How? The Fed has made huge loans to banks and flooded them with cash. But the banks also need capital, and private money is not stepping up to the plate. That was why Henry M. Paulson Jr., the former Treasury secretary, decided to devote the Troubled Asset Relief Program to injecting capital into banks last fall. I disagreed with both his decision and the way he executed it. But there was a rationale for what he did, and the current Treasury secretary, Timothy F. Geithner, will eventually be back for more money for this purpose.”
That is a fine, fine war story. There were failings, one notices. Failings are human. But they can’t lead to like failure.
And here is pretty much the war plan. As Tim Duy has written, as I have written, the plan is to go back to 2006. Blinder even wants, o miracle of imbecility, to restore the shadow financial system!
“But banks are just part of the problem. Much modern lending is securitized by the so-called shadow banking system — a complex web of interlocking, sometimes mysterious capital markets. Invisible to most people, it is crucial to getting credit to mortgagees, credit card holders and businesses. And while the financial implosion wounded the banks, it decimated the shadow banking system.
The most obvious — but not the only — disasters stem from mortgage delinquencies, fears of more, and consequent uncertainty about the values of mortgage-related securities. Bringing these markets back to life is one rationale for both the administration’s foreclosure mitigation programs and its public-private investment programs. It is also a principal rationale for many of the Fed’s unprecedented lending and money-creation activities.”

At least we know one thing: elite wars always fail. The war on drugs, the war on terror. The war on cancer. I’m confident that the only way to bring the shadow system back is to institute measures that the Government is still probably a bit afraid of – for instance, police raids on neighborhoods in which the police gather all portables and pocket money and deposit it in the accounts of the megawealthy. And even that has a limited time span.

War, the dino cried. But these flesh eaters, these soulless raptors, don’t know the meaning of war. Not like the Vivien sisters and me.

Saturday, April 11, 2009

Four proposals to kill the financial vampires

I never face my fears

So, the establishment is coming to think that it will live to fight another day. And the zona has been cooked. No more to worry about!
This pause in the panic is like unto the six months between Bear Stearns stroke and the demise of Lehman, swinging dick banker for the stars. I should say, it is like unto it in as much as during this time, the establishment goes through the rituals of self assurance. These will include defending the institutions it has made its money on, patting itself on the back for being so smart, and finding heroes. Apparently, WAPO has discovered that Bernanke is our Achilles.

Predictable songs waft out of the Gated Community. Meanwhile, I’m with the guy who said: “Son of man, what is the vine tree more than any tree, or than a branch which is among the trees of the forest? Shall wood be taken thereof to do any work? or will men take a pin of it to hang any vessel thereon? Behold, it is cast into the fire for fuel; the fire devoureth both the ends of it, and the midst of it is burned. Is it meet for any work? Behold, when it was whole, it was meet for no work: how much less shall it be meet yet for any work, when the fire hath devoured it, and it is burned?
In the meantime, four points for a legislative program.

1. All interstate companies must incorporate on the Federal level, with the Commerce department. Break the tyranny of Delaware and North Dakota,
2. The amount of all stock issued by a company must equal and be worth no more than the company’s real gross value.
3. Repeal the exemption for 401(k)s and 401(k) like programs.
4. Put in place Therese Ghilarducci’s much better retirement money fund scheme. To quote her testimony from last year: “…since 401(k) accounts and the like are financial
institutions -- the bank about where 38% of the workforce2 can intend to save for their
retirement – Congress [should] let workers trade their 401(k) and 401(k) - type plan assets (perhaps valued at mid-August prices) for a Guaranteed Retirement Account composedof governm ent bonds (earning a 3% return, adjusted for inflation). When the worker collects Social Security, the Guaranteed Retirement Account will pay an inflation adjusted annuity, based on the accumulated funds."

No. 2, by the way, is the most important. Eventually, we will have to come to grips with the fact that a speculative sector requires limits. In the progressive era, there was quite a lot of worry about watered stock. Now we watch calmly as stock prices normalize around 14-20 times earnings. This is watered stock. In actuality, if there were some speculative leaway – 2 times earnings – this could actually be of benefit in the capital hoho system we live and breathe in. But what is not of benefit is allowing the amount of stock and prices to discover itself.

Friday, April 10, 2009

the oligarch's song

I am not a Black Swan fan. Taleb’s faith in Popper is definitely not my faith. On the other hand, nobody can doubt that a rigged risk assessment system has just blown up, and – if it were properly accounted for – taken down the global elite that were amassing real power with fictitious fortunes. Here, he presses the right buttons. How do I know? Read The Economist’s blog response to him: it is a full court oligarch’s defense, containing some beautiful zombie lines. In the zona, the second tier, the people who specialize in the kind of patter that picks your pocket, often consists of people who are not cynical at all: they are sincerely, blessedly stupid.

This is my favorite bit:

“While limits on leverage are necessary and tax policy which encourages firms to issue debt rather than equity is misguided, the villain here is not complexity. Perhaps Mr Taleb and lawyers hired as regulators do not understand complex derivatives, but many people do. Should we outlaw innovation for the benefit of people who lack quantitative skills? These products do indeed provide a means to hedge risk. The crisis may have been much worse without some of the financial products that did pay off.”

Innovation. One can only laugh. There are innovations of all kinds in the world. For instance, off the coast of Somalia at the moment, an innovation in piracy is being launched – Piracy 2.0. Yippee! The second tier has a Pavlovian instinct for wrapping a motive and an instrument (greed/robbery) in the appalling banalities of bizspeak. If this was simply a throatclearing defense of rentseeking behavior by the richest, at least it would be honest. But innovation simply means finding more cockamamie combinations, whose only use is to enrich the inventor by creating non-productive risk (and no, when you create a risk, you don’t get extra points for creating insurance for that risk ). A commenter, obviously from the financial services industry, remarked piously that these “innovations” freed up capital. They did indeed. They freed up capital to find other non-productive innovations to pour into. Fiction attracts fiction, which is how a nominal 400 trillion dollars worth of derivatives piled up from 2001-2008.

However, the best is: “The crisis may have been much worse without some of the financial products that did pay off.”

Now, in one sense this is true, just as it is true that, when a fire is sweeping through a forest, the best fire-fighting formula may be to set a counter-fire. But before a fire sweeps through a forest, one can do preventive work – for instance, don’t douse every living thing in the forest with gasoline and then throw about lighted matches.

There is an ant’s nest blindness to the oligarchy. They have learned, over the past 30 years, that they can loot, and that their looting will be rewarded with huzzas in the press. The secondary market in sycophancy has boomed. And it will continue to plug along during the zona, as the new line will be that the crisis proved how splendidly the slicers and dicers worked things out.

At least the Somalian pirates are honest. So far, they don’t slice a throat and talk about the wondrous innovations they are foisting upon the world in the matter of throat-slicing.

Tuesday, April 7, 2009

why I always find the selfishness/altruism controversy rather bogus

I’m working on a review of Jeffrey Abramson’s Minerva’s Owl for the Statesman this week. It is a pretty entertaining book. The section on Hobbes made me sit up a bit. Hobbes, as is well known, constructed a politics from his view of the fundamental motives that animate the human heart. Those motives were self-aggrandizing. Abramson gives a standard gloss on Hobbes’ psychology: … “all seemingly altruistic and other-regarding acts start when the imagination sets in motion before the mind’s eye a re-visioning of someone else’s suffering as if it were our own suffering. Only because the imagination can perform this work of translation can our limbs be set in motion in altruistic or charitable ways.”

What made me sit up is how implausible this account seems. It involves an act of seeing someone else’s suffering, taking that vision in, somehow revisioning it as suffering that we have (how exactly does this work?) and then having sympathy for the other insofar as we can complete the analogy, meaning that we are really sympathizing with ourselves.

But this whole process doesn’t really seem to have an Other in it at all. In fact, in modern terms, there may be no other in all of Hobbes. But if there were an Other, then surely the revisioning (if such a fantastic thing happened) would consist, as the translating process is going on, of treating oneself as an Other. Unless I am myself in pain, to imagine myself in pain is to imagine myself as an Other. No matter if I call up memories of myself in pain in the past, or if I project pain in the future – the translation business must do what translation does – take the terms of one language and put them in another language. If I, say, sympathize with the discomfort of a pregnant woman, am I seriously to suppose that what is happening here is I am imagining myself pregnant? And if this was part, or even all, of the sympathy, what does this amount to but imagining myself other than I am? To call this self-interested is to extend the term “self” to the point where it means self-as-other, or: the other-as-self. In fact, the principle elements in this translation process seem to be laid down by the other – I sympathize with a pregnant woman, myself being male, by reconstructing my self-as-other image to make it analogous to her experience. She as the other doesn’t exist as a variable into which I can project anything – such as self-as-suffering-from-malaria. She defines the term, so to speak, that requires translation into the self language.

The surface plausibility of Hobbes account comes from the way in which it does capture a significant phase of sympathy. I hear the account of some calamity by X, and I respond to it by telling of a similar calamity that happened to me. By doing so, I think I am sympathizing with X. Yet the template for my story is still shaped by X’s story. And it is not just the broad outline of X’s story that evokes the broad outline of my story, but the very mood, the emotional tenor. There is a process of learning here – when such exchanges of stories occur, it might happen that the sympathizer tells a story about him or herself wildly at variance with the story told by the sufferer. And this would be a sign that the translation that is going on has only reached a Hobbesian stage. That is, it is only raw projection, the self-as-other-as-self.

I was made to sit up and think about these (rather elementary) things from Abramson’s example of Hobbes’s account of laughter: Sudden Glory is the passion which maketh those Grimaces called Laughter; and is caused by either some sudden act of their own, that pleaseth them, or by the apprehension of some deformed things in another, by comparison whereof they suddenly applaud themselves.”

Now if Hobbes were right about the re-translating of the suffering of the other, than surely that retranslating would go on with the apprehension of some deformed things. But two instances of perception bring about two different translatings in the perceiver – of pity or of laughter. What makes the difference here? While it may be that there are tendencies in the perceiver to cause some of this difference, I don’t think anyone would make the case that there are pitiers and there are laughers, and that never the twain shall meet – although there is something to this. Temperament can come into play, here. But still, suffering or deformity does not lead the self to automatically project itself as deformed or suffering. There’s room for different responses, and this room is unaccounted for in the notion of the sequence from perception to interpretation. One can project one’s self on the other, or one can project oneself beside the other – the latter being a ‘comparison”. Since Hobbes is accounting for traits in terms of motions, here are two motions that are unaccountably different. Yet, if we give the slightest credit to the other in creating a response, then we have ruined the self-interested account we begin with.

Monday, April 6, 2009

more pablum from Robert Frank

Robert Frank, a Cornell economist and well respected theologian to the country club circuit, reminds us in his Newsweek column of last week to beware of killing our best and brightest goose, laying our best and brightest golden eggs:

“We are such a rich country in part because our corporations hire the right people most of the time. In managerial jobs, an increment in talent has more impact in a big corporation than in a small one. That's why it's in everyone's interest that the most talented managers run large corporations rather than children's shoe stores. And that's what happens under current arrangements. But those managers would have little reason to seek the most important positions if salaries were the same elsewhere.”

The word has come down from the mountain! Now, of course, the second sentence is a little less than divine. What it seems to mean is that managers at big corporations make decisions that have bigger impacts than the managers at children’s shoe stores. Wow, such wisdom. And the man is one of Cornell’s best and brightest – I believe he is holds the Lickspittle Chair there, named for Arthur C. Lickspittle, who came up with the “rich work harder than you and me’ doctrine. An excellent doctrine! We all saw it unfolding at Bear Stearns, when the management was working hard at a bridge tournament while the company went down.

But those other talents – and Frank can point to how talented they have been in the last year! – have been putting in their years of brightness, and they certainly don’t want their perks cut at such an ugly time. That would be, well, like scaring the vultures away just as they were having a tasty feast. This feast is, of course, on the global working class.

Michael Perelman, an economist who publishes in Challenge, Jeff Madrick’s magazine, reprises an article by David Yermack, Flights of Fancy. It was about the increment of talent getting at little relief from their terrifying work loads and the non-stop brilliance in their heads by being able to relax at their favorite golf courses. Unlike your children’s shoe store, many of them work for corporations that are more than delighted to roll out the private corporate jet, so they can take their incrementally more talented asses to places where they would be appreciated as good putters, too:

Yermack’s paper reported that “more than 30 percent of Fortune 500 CEOs in 2002 were permitted to use company planes for personal travel, up from a frequency below 10 percent a decade earlier.” Since Yermack’s study, the problem has continued to escalate. Between 2004 and 2005, the reported value of personal use of corporate aircraft increased 45 percent, according to government filings of the 100 largest public companies (Fabrikant 2006).

Not surprisingly, Raghuram Rajan, the chief economist of the International Monetary Fund, gallantly came to the defense of the corporations. He suggested, without the slightest hint of humor, that these expenditures may have actually been justified because they encouraged executives to be more efficient (Rajan and Wulf 2004). This justification does not seem particularly credible since Rajan’s study did not bother to distinguish between planes used for business or personal purposes, including use by retired executives.

In fact, the personal use of corporate jets does not seem to be correlated with profitability at all. Of course, some of the firms that supply their executives with corporate jets for personal use are successful, despite such wasteful excesses, but the use of corporate jets is correlated with poor performance. According to Yermack: “Firms that permit personal aircraft use by the CEO under﷓perform market benchmarks by about 4 percent or 400 basis points per year, after controlling for a standard range of risk, size and other factors” (Yermack 2004).”

But never fear – such cruel barbs do not penetrate the establishment, which is just sure that a man making, say, 40 million in compensation per is a mighty, mighty hard worker – 99 percent perspiration, these guys.

Myself, I’m not absolutely convinced about the level of brightness of our oligarchy, in spite of Frank’s vision of their increments of talent making the country (although not the average reader of Newsweek) rich. In fact, I think corporations should be taxed at a phenomenally high rate if they pay their management more than some ratio over the lowest salaried worker. Right now, the average is 300 times. I think 9 times, the 70s average, is about right. As for the money saved – it can go to the lucky workers.

How to make sure it goes to the workers? Crush the speculative market in equities. I’m more and more convinced that Theodore Roosevelt was right – the price of a share of stock should have a one to one ratio with the assets of the company. No more. If you want to buy and trade stock, it would not be in a word in which “market capitalization” differs so wildly from real value.

Sunday, April 5, 2009

Want to do a quick x ray of who owns congress? I have a simple test. Find some senator or congressman to introduce a bill federalizing the incorporation of interstate businesses. Watch the bill get shot down pronto by the wholly owned hacks. Bring popcorn. Zona fun for the whole family!

And this, from the NYT story on corporate boards:

“In the absence of fraud or self-dealing, it’s hard for shareholders to make a legal argument that boards have failed at their job. State law in Delaware, where most big public entities are incorporated, simply requires companies to have boards that direct or manage their affairs, and it affords broad legal protection to board members so long as they act in good faith and in a manner “believed to be in or not opposed to the best interests of the corporation.”

That was the basis for the recent ruling of a Delaware judge who threw out most of the claims in a shareholder lawsuit seeking to hold Citigroup directors and officers liable for big losses tied to subprime mortgages. But the judge did allow the plaintiffs to pursue one of their claims, which alleged corporate waste stemming from a multimillion-dollar parting pay package that Citigroup’s board awarded Charles O. Prince III, the former C.E.O., in 2007.”

Capital is an excellent sides player. It finds the tax haven. It finds the state with the pro-biz laws. It finds the state with the no-usury law. It spreads its dark wings over the world, and there is no countering internationale, no labor group, to dance with it. Consequently, it wins. It wins. It wins. The more it atomizes, the better it globalizes.

Saturday, April 4, 2009

Ludwig Hohl and me

“The conversion before the Fish

This is about an experience I had about a year ago (in my thirtieth year) and was exactly the opposite of Lenin’s when he sat through one of Beethoven’s sonatas. – It was a small tropical fish in an aquarium in a zoo, of the most unheard of, unnameable colors. Colors, at the sight of which I could have howled, I mean, given my life – and that each time made me understand, that I would always forget everything before such glory. – Lenin, at the time, said about his sonata, this sonata is glorious – and it is not for us – for us right now, it is a question of knocking together heads (i.e., broadening a way on which many persons could find a way to this beautiful entrance). Bur here, standing before the fish (and similar to the fish had I felt the same many times before certain visions of Balzac: the Grenadiere, Colonel Chabert, the Medecin de Campagne), I believed that I knew, down to my deepest foundation, that I could never my whole life long become political (that is, overwhelmingly so). Not for instance that I deluded myself into thinking I was thereby assuming a higher standpoint! It was simply a question of belonging, conditioned through the person. One cannot be more and will as Lenin, only other and other.” – Ludwig Hohl

Thursday, April 2, 2009

the old boys are dead - not that they know it

When I was a child
I toyed with dirt and I fought
As a child
I killed the slugs, I bored with a bough
In their spiracle

So many childish things – but aren’t we the apocalyptic children, children of the decaying atmosphere, children of the clotted ocean, children who cover their faces and believe that they are hidden? The aging, senile and sclerotic children who sit in the Senate and in the House, those bought and paid for children, heavy with the death that has been fucking them, those in-dealing dealers of the cards that make up our misery (here’s the college loan, here’s the car loan, here’s the mortgage, here’s the health bill, here’s the years of the cancer at sitting in a chair you do not own doing work in the cancer of a cubicle you do not care for, here are the invisible pyramids of sacrifice and on them we sacrifice the bird migrations, the poetry, the novels, the spirit twitching beneath the scalpel, I killed the slugs), they have come up with another plan, this one involving waving the magic wand over the defunct “assets” in banks:

“Under intense political pressure, the board that sets accounting rules in the United States will meet on Thursday to complete changes in accounting rules that are aimed at reducing the losses banks have been forced to report as the values of their mortgage-backed securities have crumbled.

The changes, proposed two weeks ago after a Congressional hearing in which Robert H. Herz, the chairman of the Financial Accounting Standards Board, was essentially ordered to change the rules or face Congressional action, are generally supported by banks, although some want the board to go even further.”

What a sanitized world our sclerotic Congress children are urging upon us! In this world, soldiers who die, pow, in a war in the Middle East get shipped home to the most private of landings and dumpings; in this world, those who come home with head injuries or that wound to the spirit that comes from watching a two year old pop – pop! – apart, like a blood filled balloon, because you have shot the child, and that’s a real reel that you aren’t going to be able to play backwards, are tucked safely away, in the same place that they keep the statistics on how many dead Iraqis it takes to make for a great Victory in Mesopotamia. Hide and seek among the shadows, it is our Great American zona style.

And if the shadows infect the accounts held by the banks, and if the columns are full of shadows that no reality corresponds to, the only thing to do, children, is to pretend it never happened.

“It seems highly unlikely that FASB will make major changes to the proposals that it rushed out only two weeks ago, but it may be willing to consider additional steps. And it will have to face the important decision of when to make the new rule take effect.

Some banks have requested that the board issue further guidance to make it easier for them to avoid writing down the value of assets, while some investors have asked for detailed disclosures to help them assess how far the newly reported values are from current market value.”

“Use of Soviet supplied economic information in such studies can be compared to playing Three Card Trick with a cardsharp on the street. The cardsharp will allow his mark to win enough times to feel the game is fair, but will palm the winning card so that it is not even on the table when the bets reach a critical point. Similarly, economic analysts have generally found enough plausible data to convince them that the Soviets provided figures with at least enough relation to reality to enable the analysts to compensate and correct for any distortions – but ultimately they have to accept information concerning many of the critical factors on faith…” U.S. Intelligence Perceptions of Soviet Power, 1921-1946 by Leonard Leshuk.

Run for the shadows…

I had to laugh at this, from the NYT story about the smoke and mirrors rise past 8,000 on the NYSE today:

"Even a stark rise in weekly first-time unemployment claims barely dented the upward trajectory.

The Labor Department said that initial jobless claims rose to a seasonally adjusted 669,000 from the previous week’s revised figure of 657,000.

Investors are bracing for a bleak report when the government announces the March unemployment rate on Friday, but Steve Sachs, director of trading at Rydex Investments, said the newly optimistic market dynamic might be able to withstand the shock.

“I think the shock value of the employment numbers is starting to wear off,” he said. “We all know employment’s a lagging indicator.”