Monday, March 30, 2009

baseline genius

I had lunch with a genius yesterday. First I golfed. My game sucked, but then again, I hadn’t hit a stroke since last fall. Still, it was rather embarrassing the way I hooked, and baulked, and hit all grounders. I was playing against my friend J. and his 5 year old, Ian. I’d suggested this because last year, we took Ian out and afterwards retired to a restaurant for lunch and exuded a general maleness. Which I figure is good for Ian. This year, he did a bit better – I do have hopes for him on some future golf team. This is Texas, and a boy has to have a sport. Ian lines up his putts pretty well, when, that is, he remembers that this isn’t hockey…

Anyway, the genius is Ian’s brother Eric. Sitting with him at the barbecue place we went to this time, Eric, genius that he is, pointed to his french-fries and said: mine. That wasn’t maybe so genius. What was genius was I pointed to his French fries and said mine, and he obviously disagreed. And said, mine, more emphatically.

Obviously, Eric has crossed the equator here and discovered that when he says mine and when I say mine, there are two different references. He has discovered anaphora! Only an absolute genius could do that. Of course, Eric is two, and that is when we do become, saving brain injury, geniuses.

A while back, IT and some of the theory bloggers discussed equality, and Ranciere’s claim that equality should be at the base of education – which is a scandal to the meritocrats. She explained it like this:

“What if one were to reverse the order of observation and begin not with concrete inequalities in education, of which there are almost too many to enumerate, but with a seemingly impossible assertion, yet the very thing that founds education the moment it is no longer a question of filling up the 'blank slate' of the student's mind with knowledge, but of accepting that education is a question of what all students, equally have, namely a baseline intelligence.”

Myself, I don’t think the word “intelligence” quite captures our radical equality. In the seventeenth and eighteenth century, one would have said, esprit. Spirit. Spirit is much closer to what we really have. I don’t think it is a baseline intelligence that is operating when Eric distinguished his “mine” from my “mine”, but something that combines a muted deduction with … amusement and frustration. With Eric’s position, looking me in the face, and the French fries before him – the world, that is. To carve out of this situation something called intelligence only makes sense on a certain institutional level, which is of course dependent on what a culture is going to teach, how it is going to set up the “lesson” situation. The lesson, here, what it is, how it comes about, its myths – these are things that condition what we call intelligence. In the West, that teaching comes in the form of two seemingly contradictory steps: walling off the world – the parents, the French fries, the golf, the noon sky, etc. – in the form of a school; and then letting that school operate to teach in terms of the world, although a world that is managed, this time. A world in which something called intelligence functions and has its own universals and programs.

It isn’t that I think this is the wrong world. I simply think that equality does radically oppose intelligence. I think equality is about genius, and genius is about being oneself – which is not a thing you can test for. It is always finally the genius of the place. And we learn to think that it is merely the genius of the placeholder.

Myself, I was a very fine and select child of the school: a reader, a maker of good grades, a teacher’s pet. Even now, when I am challenged about my intelligence, I react with all the predictability of one of Pavlov’s dogs hearing the bell. However, I have seen enough of the genius of people to know that a baseline intelligence is, at best, a partial thing, which will eat a society if you let it. Whereas equality still retains the strong, radical implication that no institution is going to capture the situation of the spirit, which is firmly embedded in the life. That genius is a perpetual delinquent.

Friday, March 27, 2009


I have been doing a great and fine thing this week. I have been watching Satantango, Bela Tarr’s seven hour film. I do my editing, I read the newspapers like Don Quixotte read his romances, fulmination and prophecies race through my brain and come out of my fingertips, perched on the keyboard, and I know that I am behind, utterly behind on everything in my life, that what I do is plunge into what avails not and what I don’t do is what does avail and must avail and this is my mortal sin, and then the night is here, quicker than I expect it to be, always, and then I go to bed and watch Satantango. Beautifully, the rains have finally come to Austin, so there is a correspondence, a balance, between this most rainy of movies and the chance that I will hear thunder outside, or the sound of water echoing in the ductwork of the HVAC system in this perennially shabby apartment in this perennially shabby apartment complex where I pretend I am alive.

There are many ways into Satantango, but there are surprisingly few articles about it. I’ve looked for criticism. I’ve looked because I am essentially a textual maroon, I need the written. This was the most helpful of the links I found. The cinefeuille writer is especially attentive to the spider web structure of the film, which reproduces, from what I have read, the the intention of the Krasznahorkai novel upon which it is based. Every episode is a thread that passes through a node in that small peasant village lost entirely in the mud.

There is no central node, but certain nodes get thicker as the threads pass over it – especially the drunken dance at the village pub. Erkele – the daughter of an alcoholic mother, the sister of the town’s two prostitutes who work out of the evidently unused mill, and of a thief brother, makes her way to the pub with the blindness of a Faulkner character being led by what Faulkner would call “fate”, that peculiar surrender of thought to its own sheer narrative impulse. We watch, behind her, in one episode, as she looks through the window, and we see her face, in another episode that is set within the pub, watching the drunken dance, framed in the window.

The peasants that night are the peasants in the Inn in Don Quixote, the drunks in L'assommoir, the stragglers living on the banks of the Mississippi, easily gulled, easily prodded into violence, in The Adventures of Huck Finn, the bands that were raised by Thomas Muenzer, the villagers that were slaughtered in the Sixty Years War, the people whose mythology the Grimm brothers thought they were recovering, the people who hung priests and burnt castles in the French Revolution, in the Spanish Civil war, the petitioners in 1905 who turned against the Czar and then hunted down the Jews. Myself, one of Isaac Babel’s intellectuals with autumn in my heart and spectacles on my nose, I can marvel at them, I can try to catch them in the grand gestures and schemas of the Great Tradition, but in the end they will always fail as Universal subjects, as they have a tendency to shred the universal like so much tawdry wrapping paper and go for your throat, or, alternatively, become your best friend in some drunken moment of joint babel.

But this is a film, a mysteriously attractive, often sleep inducing, often entranced film. The word that is often used about Tarr is “slow”. He lets the time of the filmed object pour into the filming – as though some mysterious fourth wall had collapsed. Other film makers, cutting between what they film, present days and years in a minute – Tarr’s minutes, on the other hand, often feel like days and years. If that child, with her dead cat, walks down the muddy track into the village, the camera is ahead of her and stays there, it seems, for the entire trip – time being measured her by the child’s stride. Just as, in another episode, time is measured by the stride of a sick, enormous old man, the village doctor.

All of which reminds me not so much of another filmmaker, but of J.A. Baker. Baker, of whom I was perfectly unaware until I read Jeremy Mynott’s marvelous Birdscapes (which I reviewed this month for the New Yorker – in their Noted section), who used Baker in his book as his case of the extreme bird watcher. Baker was a school teacher, apparently in Essex, who wrote two books, one of which, the Peregrine, has been republished by NYRB. I have only read the excerpts in Mynott, but this book seems to be one of the fiercer books about watching and the watcher’s metamorphosis. One reviewer called the Peregrine one of the few examples of shamanism in English – because Baker is not simply watching a Peregrine in his local patch, sixty miles from London. He is watching with the intent to become like the peregrine. It is a dangerous transaction, this of exchanging what one is for what one is watching, walled about on all sides by warnings: in myth, the punishment of the Gods (from Lot’s wife to Acteon), and in science by similar protocols of objectivity. To allow tranformation to come in by the eye is to open oneself to trauma. And trauma – with its bloody beak, its Gorgon face - has always accepted those invitations.

This is from Baker:

Hawk-hunting sharpens vision. Pouring away behind the moving bird, the land flows out from the eye in deltas of piercing colour. The angled eye strikes through the surface dross as the obliqued axe cuts to the heart of a tree. A vivid sense of place grows like another limb. Direction has colour and meaning. South is a bright, blocked place, opaque and stifling; West is a thickening of the earth into trees, a drawing together, the great beef side of England, the heavenly haunch; North is open, bleak, a way to nothing; East is a quickening in the sky, a beckoning of light, a storming suddenness of sea. Time is measured by a clock of blood. When one is active, close to the hawk, pursuing, the pulse races, time goes faster; when one is still, waiting, the pulse quietens, time is slow. Always as one hunts for the hawk, one has an oppressive sense of time contracting inwards like a tightening spring. One hates the movement of the sun, the steady alteration of the light, the increase of hunger, the maddening metronome of the heart-beat. When one says ‘ten o’clock’ or ‘three o’clock’, this is not the grey and shrunken time of towns; it is the memory of a certain fulmination or declension of light that was unique to that time and that place on that day, a memory as vivid to the hunter as burning magnesium.”

Thursday, March 26, 2009

More light

The new rules are a start. I have already written more than enough about crushing the peer to peer OTC system in the trading of "exotic" financial instruments. The Clearing house idea is a start.

What I haven't read, however, is the simplest but most necessary reform of this bilious system. More money for the SEC. Much more money. Three times the funding it gets now at the very least. Some protocol for allocating funding so that the SEC cannot be threatened by the stray bribed senator. An increase of SEC personnel by at least a couple of thousand. Again, the increase should be dictated by the size of the sector to be regulated. If all regulations simply remained the same and the SEC was inflated to a size commensurate with the work it should be doing, we would already have avoided a couple of turns on the slide into the pit. After Bear Stearns fell, amazingly, the SEC did nothing. They sent nary a forensic accountant nor a lawyer into Lehman Bros, Goldman Sachs, Merril etc. etc. In those six months, the zombies and their enablers should have been thoroughly anatomized. They haven't been yet. They may not be ever. And this intentional mystery - mysteries and enigmas are what the Street lives on, now - persists as an elite defense mechanism, against all comers.

More light, as Goethe said, and died. More light.

Tuesday, March 24, 2009

Good night ladies good night sweet ladies good night

It was crime at the time but the laws, we changed iem
though the hero
for hire is forever the same one.

I hate money. I've always disliked money. Join this to my loa, Don Quixote - the man who went crazy through reading - and before long, the Knight of the Woeful Countenance is thrashing about in the business pages, forever lost to literature and love.

Well, fuck that. Watching the massive erosion of democracy and the emplacement of what appears to be a fraudulent auction system designed to shift Wall Street's old gambling debts onto the shoulders of the government for the temporary relief of the kleptocrats (and it will be temporary, for remember, like a shark, a plutocrat has to keep moving in order to breath - and in the world of burndown, there's no place to move), I am getting Iraq flashbacks. The more evident it becomes that protest doesn't fucking matter, the more one channels frustration into analysis. But what is the fucking point?

I would rather be a bird in a tree, piping away, than going after this headless beast. Apparently, the program of American capitalism has become a self-destroying machine, and who wants to be caught between its mechanical paws as it tears its own operating system apart?

All of which means, I need to get back to concentrating on Limited Inc. for a while.

ANDROMAQUE. – La guerre de Troie n’aura pas lieu, Cassandre !

CASSANDRE. – Je te tiens un pari, Andromaque.

ANDROMAQUE. – Cet envoyé des Grecs a raison. On va bien le recevoir. On va bien lui envelopper sa petite Hélène, et on la lui rendra.

CASSANDRE. – On va le recevoir grossièrement. On ne lui rendra pas Hélène. Et la guerre de Troie aura lieu.

Sunday, March 22, 2009

Economic ebola

I was rattled the whole of yesterday after reading the NYT story about the Geithner plan, which should be called the Paulson-Geithner plan. It isn’t just the fact that, as Matt Taibbi put it, we are meekly accepting an absolutely feudal structure in which the wealthy are given access to the public treasury on a scale never seen before, giving them unprecedented powers. It is not just that having the FDIC cough up, suddenly, 800 billion dollars makes a joke of the FDIC, which will spread the pain of Wall Street on an entirely new level. The runarounds to avoid Congressional authority are, perhaps, the logical end result of unplugging Congress from the power to declare war – the most important thing Congress can do, which has been done, since the forties, by the executive branch without a peep of protest that this is a vile and illegal practice.

All of these are bad things. Politically, they spell out the end of democracy. That's bad. But just as bad is that the plan can’t work. I’m pretty confident of this. Thus, when I went to Brad Delong’s site and saw his FAQ of the Geithner plan, I was at first non-plussed. Just looking at the FAQ, with its detail and busy-ness, makes one think, well, maybe it will work. It is the reality effect Barthes described – the way in which, in Flaubert’s descriptions, some detail will be offered that has no symbolic or other value. Its value is that it is mentioned at all – as if the world is leaking in to the text.

However, the text is all the case is. And in the case of this FAQ, the details are premised on a lie.

It is easy to see where the lie comes in. It is the second point in the whole FAQ:

“Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn't make back its money?
A: Then we have worse things to worry about than government losses on TARP-program money--for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition.”

What is happening here? First, notice the question. The question is deliberately made obscure and petulant. What is in question is the “markets” in general – which is another way of saying, nothing is in question. Then the “fundamentally undervalued” – by which is meant, what if the assets are overvalued by the banks at such a rate that the governments “loans” to buy them are greater than the value that can be squeezed from them. And then notice the non-answer. The non-answer is: to ask that question, you must be a survivalist!

However, let’s ask the question properly. Go to this helpful map of unemployment, put up by the NYT. Put your mouse on the counties where the housing prices were highest, and notice that those are also, often, the counties where the unemployment is now highest. Reflect on the fact that there is nobody who predicts that the unemployment rate is going to get better this year – and in fact the rate has gotten much worse than any of the predictions so far. Then reflect on why the mortgages went bad. To help you along here, I will quote this passage from Michael Lewis’ The End of Wall Street.

“At the end of 2004, Eisman, Moses, and Daniel shared a sense that unhealthy things were going on in the U.S. housing market: Lots of firms were lending money to people who shouldn’t have been borrowing it. They thought Alan Greenspan’s decision after the internet bust to lower interest rates to 1 percent was a travesty that would lead to some terrible day of reckoning. Neither of these insights was entirely original. Ivy Zelman, at the time the housing-market analyst at Credit Suisse, had seen the bubble forming very early on. There’s a simple measure of sanity in housing prices: the ratio of median home price to income. Historically, it runs around 3 to 1; by late 2004, it had risen nationally to 4 to 1. “All these people were saying it was nearly as high in some other countries,” Zelman says. “But the problem wasn’t just that it was 4 to 1. In Los Angeles, it was 10 to 1, and in Miami, 8.5 to 1. And then you coupled that with the buyers. They weren’t real buyers. They were speculators.”

Zelman alienated clients with her pessimism, but she couldn’t pretend everything was good. “It wasn’t that hard in hindsight to see it,” she says. “It was very hard to know when it would stop.” Zelman spoke occasionally with Eisman and always left these conversations feeling better about her views and worse about the world. “You needed the occasional assurance that you weren’t nuts,” she says. She wasn’t nuts. The world was.

By the spring of 2005, FrontPoint was fairly convinced that something was very screwed up not merely in a handful of companies but in the financial underpinnings of the entire U.S. mortgage market. In 2000, there had been $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Eisman couldn’t understand who was making all these loans or why. He had a from-the-ground-up understanding of both the U.S. housing market and Wall Street. But he’d spent his life in the stock market, and it was clear that the stock market was, in this story, largely irrelevant. “What most people don’t realize is that the fixed-income world dwarfs the equity world,” he says. “The equity world is like a fucking zit compared with the bond market.” He shorted companies that originated subprime loans, like New Century and Indy Mac, and companies that built the houses bought with the loans, such as Toll Brothers. Smart as these trades proved to be, they weren’t entirely satisfying. These companies paid high dividends, and their shares were often expensive to borrow; selling them short was a costly proposition.”

Finally, reflect on the fact that, by speaking of “markets” and “undervalued assets”, Delong has deliberately avoided speaking of the real estate market, the mortgages that flowed out of it, and the way they were pooled, sliced and diced and mixed with other loans, and thus interconnected, the bad and the good, in various financial instruments. We have no idea, and the Treasury wants us to have no idea, what instruments it is buying. By calling these “mortgage backed’ securities, the Treasury’s defenders are engaging in deliberate obfuscation. If they were simply securities in which the payoffs matched the mortgages 1 to 1, there would be a gigantic hole; it was made supergigantic by the fact that these securities aren’t structured like that. I think Delong knows this, and just thinks it would “confuse” laymen. Unless the Treasury is assuming that the securities are going to be restructured before they are auctioned off, and that this won’t violate the contracts (which it would – you can’t just restructure a financial security after you have used it to borrow money, or swapped it, or the thousand greasy ways phantom profit comes out of these things) – then we are loaning money for bids on securities based on mortgage pools from mortgages at the housing bubble peak, mixed up and interconnected with a variety of loans, including subprime mortgages that are going bust, at prices high enough that the banks holding them won’t take the hit.
What’s a good estimate of the hit? Eight trillion dollars. As Dean Baker puts it, the Geithner plan conveniently forgets the eight trillion dollar bubble.

Why is this happening? It is quite simple. The establishment – the Wall Street/DC axis – cannot make sense of what just happened. Their Pavlovian response is to grab as much money as is available for themselves – from bonuses to the money made out of thin air by the Fed, the Treasury, and now the FDIC. Will this save them? No. The more they engage in this massive pilfering, the more they threatened every structure which supports their wealth – for remember, no matter how quant-ed the financial sector became, how abstract the billions of the billionaire are made to be, in the end, the whole thing is based on real goods and services. Debauching the currency to this extent, creating purely peculative vehicles to pour money into dying financial entities, is not just immoral, but will have a massively downside effect on the economy. The map of unemployment isn’t just sad for the “losers” – it is a map of business losses. It is a map of clawback, coming not in the form of government taxes, but in the form that was bound to come when and if the business cycle met up with the neo-liberal insistence on displacing social insurance from the public sphere (medicare/Social Security) to the private speculative sphere – 401ks, the numerous tax encouraged money funds, etc. Neo-liberalism only works if the business cycle truly is controlled. As we can see, the business cycle has not been truly controlled. And what is happening now is: the attempt to put this all in slow motion. To slow down the bleeding. But you only slow the bleeding as a preliminary to an operation. There is no operation. The doctors don’t understand this disease. And those that do – read this Galbraith entry – are kept out of the magic circle of policymakers.

Saturday, March 21, 2009

Buenos Aires on the Potomac

“I remember I was very sad for many days when I discovered that in the world there were poor people and rich people, and the strange thing is that the existence of the poor didn’t cause me as much pain as the knowledge that at the same time there were people who were rich.” - Eva Peron.

I extract that quote from Naipaul’s famous, ferocious account of Argentina in the seventies. Naipaul, an anti-third word-ist, a cultural conservative, got many things wrong about Argentina – as an outsider, he knew nothing of the opaque, wheels within wheels relationships between the Monteneros, the Army, the rightwing Peron groups, the left wing Peron groups. What he got right, however, was the crumbling on the surface. Famouly, the Buenos Aires paper that excerpted the report was shut down for printing this sentence about Eva: “She was the macho’s ideal victim-woman – don’t those red lips still speak to the Argentine macho of her reputed skill in fellatio?” The question is pitched at a fevered degree appropriate to the times.

The U.S. fights its dirty wars outside its borders. But suddenly, inside its borders, the cracks have suddenly appeared. We wake up, go outside, and where the street used to be, there is now a crack in the earth. We walk up to it and peer down into its depths, and there’s no bottom. And then we look up and we notice the crack is running through houses, through playgrounds, through the neighbors. And look at our hands, at our legs, and see the crack beginning there, too. Will no one free us from this crack? We would cry, but the crack’s got our tongue.

In one of the sicker stories of this year, the NYT has published the Plan put forth by our own Peron, Obama, the man of hope, to help us get rid of the crack. He has, as expected, under the power of his soothsayers, Geithner and Summers, thrown in his lot with the hopeless, hapless rich. He has taken under his wing the entire Paulson plan, and made it even worse. There are only two things to say about this. The plan stinks to high heaven. And the plan won’t work.

Let’s go firstly to the plan’s unworkability. James Galbraith’s article in the Washington Monthly this week was much swapped around the blogosphere. Galbraith – like, I should say, myself at Limited Inc – sees pretty clearly that we have stumbled into a crack that can’t be normalized away. The mangle of inequality has broken.

As in all seemingly slowmo economic disasters, the ironies abound. They reproduce like fucking bunnies. Here is the irony of the plan: because the soothsayers, Geithner and Summers, have decided that it is God’s word that the government can’t run financial institutions, they have decided to set up, God help us, a non-market for toxic assets.

It will look like a market, but it will lack the one thing that makes markets work – a robust price mechanism. Long ago – back in the dim, drear days of October – I offered, for free, the key to the mysteries here. It is – o America – the magic of the market place. Rather than an OTC peer to peer system for “trading” securities – the whole derivatives/options set of instruments – the government should then and there have set up an institutional marketplace, built much like the Stock exchange, for the public exchange of all securities. They should have given the institution building a certain window of time – say six months – and they should have calmly made it the case that any securities traded on the OTC system after that time would be null and void in these here states.

Well, Weltgeschichte and me, we go way back. I give out the keys, and find no takers. I would have gathered Jerusalem under my wings like a chicken gathers her chicks, but the chicks are stubborn, and insist on getting their little necks wrung. So be it.

I’ll throw out another key, here. Putting the falling financial institutions into receivership and making the Federal workers credit unions into the core of a tax funded bank to provide the necessary credit – along with the many, many surviving local banks, and some national banks – is the only way to avoid the mounting disaster of what is happening to the productive segment of the economy, here and abroad. The attention and money lavished on the financial sector is wholly and completely on account of the wealthy. In the end, this sector has to shrink, and will, as Galbraith vaticinates, be dormant for many a moon. Too bad we plugged our social insurance into the monster.

Now, onto the first part of our objection.

The rich – the AIG Bonus babies, for instance – have exuded around themselves such a hard cocoon that this reality can’t, as yet, penetrate it. There’s a sad tale to tell about such cocoons from history: it is that they get crushed. Eva Peron’s sentiment – Nemesis taking wing in her ghostwriter’s ghostly, deadly words – is being energetically enkindled by the “progressive” sector who see in Obama a return to Clintonomics, except this time, with better health care. I have watched in disbelief as such litmus test figures as Ezra Klein and Matt Yglesias fumbled over the uproar about the AIG bonuses – that “distraction”, as they call it. It is distracting, as only reality can be distracting to the man inebriated with ideology. Just as in other forms of inebriation, in this state, the ground itself sometimes comes up and smacks you in the face – and you wake up the next morning with bruises, if you are lucky, or no teeth, if you aren’t, or even dead in your own vomit, if you are very, very unlucky.

“An attitude to history, an attitude to the land. Magic is important in Argentina; the country is full of witches and magicians and thaumaturges and mediums. But the visitor must ignore this side of Argentine life because, he is told, it isn’t real. The country is full of estancias, but the visitor mustn’t go to that particular estancia because it isn’t typical. But it exists, it works. Yes, but it isn’t real. Nor is that real, nor that, nor that. So the whole country is talked away, and the visitor finds himself directed to the equivalent of a gaucho curio shop. It isn’t the Argentina that anyone inhabits, least of all one’s guides; but that is real, that is Argentina. “Basically we all love the country,” an Anglo-Argentine said. “But we would like it to be in our own image. And many of us are now suffering for our fantasies.” A collective refusal to see, to come to terms with the land: an artificial, fragmented colonial society, made deficient and bogus by its myths.”

We are all Argentine now.

PS - the clever name for this plan should be: the inverse Madoff plan. First, they tell you that they are committing a fraud, then they ask you to invest in it. And since your money is captive to the Treasuy, you don't have a choice! Lovely, lovely, altogether.

Thursday, March 19, 2009

French protests, anglosphere blackout

You will notice the total blackout of the nationawide strike in France. I've followed it on facebook - you see, it is good for something. According to the numbers in Le Monde, it involved a nationwide turnout of around 3 million. From the Parisian:

231 manifestations. In total, there were 231 manifestations organized in all of France, which is a twentieth more than on 29 January last. In Nice, Lyon, Grenoble thousands of salaried workers invaded the streets. At Marseilles [where there was 320,000], the demonstrators by the thousands grouped themselves in the old port. In Paris, the line of marchers went a little after two o'clock from the place de la Republique in the direction of place de la Nation, passing by the Bastille."

Meanwhile, in the U.S., Dr. Jeep plays on...

what did you do in the dirty war, daddy?

Maintenant qu'ils sont fauchés et tous morts
On ne parlera plus jamais à Dieu

“Administration officials Mr. Geithner’s instincts are that government should not dictate compensation issues to businesses. As Treasury secretary, however, Mr. Geithner since has developed executive compensation limits, which Congress in turn toughened.”

On the Economist’s View, I made a comment on this revealing graf that, I think, I will copy here. Readers may wonder why the News from the Zona hasn’t commented, at length, about the AIG scandal. I am finding it most instructive, yet I am waiting to put it all in some bigger picture.

my view. My notion, all along, has been that reality has shifted in the Zona to the “left”, to used that tired and to-be-retired term. Reality, in the seventies, was about the fall in the rate of profit, and the entangled fall in productivity, that scared the shit out of the elites. The Cold War architecture was slipping out of their hands, and they had to get it back with a vengeance. In Argentina, this meant the dirty war, and in the U.S., this meant the moral equivalent of the dirty war – liquidating the power of labor to bargain for higher compensation. When one reads, nowadays, about the horrors that would result from this or that “politicizing” of economics (1), you are reading reports from that distant event: the idea that the economy operates without politics, under its own logic, was one of the spurious principles Reaganomics loosed upon the world. Translated, this means: the elite should be buffered from any political claim, from higher taxes to having to adhere to accounting standards. Aristocrats in the early modern era tried to take regional advantage to fight against the encroachment of the monarch’s power. The financial aristocracy, now, does just the opposite – it is, in a way, always offshore, always a floating island, always a gated community. Its lack of place is its weapon – if the rules of the FDIC are too ‘onerous’, it finds an island, like Trinidad, that doesn’t have those rules.

To return, then, to the final graf of the NYT story on Geithner:

"Administration officials Mr. Geithner’s instincts are that government should not dictate compensation issues to businesses."

The term parapraxis, for misspeaking, applies I suppose to the lack of verb between those administration officials and Mr. Geithner. Already this signals some distress - collective distress no doubt, as the reporter and the editors hammer the article together. I'm going to guess that the verb missing here is not "get a good joke out of the fact that", or "joke that", or "find it highly risible that..." I'm as interested in Mr. Geithner's "instincts". What is funny here is how those instincts are not part of his monkey-being. Certainly we know enough about behavior to know that if instinct is used to describe common human reactions, then his instinct should certainly have rebelled at the sheer gall and unfairness of the AIG payouts. His instincts could have led to physical violence, even. But those aren't the instincts of the economically informed - or those raised in the atmosphere of unimaginable money, privilege, and the devestating culture of Randian selfishness characteristic of Wall Street.

There, instincts seem more finely tuned. For instance, I would imagine Geithner probably approves of the bureaucratic architecture weighing down the ability of labor unions to go on strike. Of course, my instinct is to say that this is government interference with a compensation issue. But then, my instincts don't reach far enough to give me an overall picture of the way things should work according to Geithner like instincts. The latter seem to accord more with a society in which the stratification between the nobiility and the peasants is much clearer. The rule for the nobility is, of course, that the government should interfere with their compensation only to the extent of spending as much money as possible to make sure they are well and bountifully compensated. Imagine the loss to country clubs everywhere if AIG had not been a convenient conduit to smuggle money to Bank of America, Societe General, and -- more than anything else - our dear and beloved Goldman Sachs. Luckily, after a Goldman Sachs alum as Treasury Secretary had a meeting with the Goldman Sachs CEO and AIG about what the Government could do to help AIG pay off Goldman Sachs to the dollar, that compensation issue was handled neatly - with the appointment of another Goldman Sachs alum, Neel Kashkari, to oversee things.

My instincts would be [insert joke about the, weep buckets over the] takeover of the American government by an openly corrupt and unaccountable system that generates people with their own instincts for things - Pavlovian kleptocrats, one might call them. This is corruption on a scale that was never dreamt of before - Grant's foolish son in law, who was drawn into a Gold Ring, and the Teapot Dome figures look like amiable goofs compared to the Bush-Obama era of looting. All of course signed, sealed and propagandized for by economists who have a mother's love for the Great Moderation.

Sad, how instincts can be so debauched.

1. Tyler Cowen’s response to the AIG bonus scandal is a perfect example of non-politicized economics of the far right: “Outrage, outrage, blah, blah, blah, etc. Often I feel that some topics are too obvious to blog.
The real lesson is that this is another reason not to nationalize banks. It means politicizing every decision which ends up in the newspaper.” – Indeed, Cowen is at least smart enough to think ahead of the news cycle. He knows that this scandal implies dire things for the fresh water economics crowd. If you cannot loot a country in peace, then the whole structure of the aristocracy is threatened.

Wednesday, March 18, 2009

britneyology update

Thousands of people have been emailing me complaining that Limited Inc is doing a terrible job of britneyology now that Brit has released her third vid from the circus Cd.

So, in the interest of keeping in with the crowd, a few remarks.

It was Flaubert who said that Britney is at her best when, like God, she is felt everywhere, but seen nowhere. As we have remarked, Britney’s ability to look completely generic and to sing as though her voice had been mixed together from various digitalized vocoder strands is what makes her unique. Womanizer is perhaps the summit of Brit’s disappearing act, which is counterbalanced by the sequences of her lounging about naked (in such a way as to not reveal her privates) on what looks like a bench in a sauna. Usually, we think of nakedness as a state in which we are undisguised. Here, though, Brit seems more opaque then ever.

The sad fact is, the If U seek Amy vid is a regression. It is a return to childhood, and in a sense a surrender to Britney’s real life circumstances, in which, through an entirely unjust series of court judgments, this 28 year old is being treated like a 14 year old. From the intro, which explains the title for even the dullest nosepicker out there, to the dance sequences, this is a disaster of a vid.

The dance sequences are particularly sad. If a martian came to earth and was thrust into a mid level strip joint at midnight on Friday in any city in the Sunbelt, the creature might devise a dance routine like Brit’s. I can only compare that to Ian Curtis’s choreography of his own epileptic attacks – in both cases, the performers open up to a genius outside of themselves. Ian Curtis’s career was, of course, before MTV, and Brit’s is after MTV. After MTV, the video is as important, and as disseminated, as the song. In Piece of Me, the sequences in which Britney dances alone highlight the eccentricity of her strip joint borrowings. Again and again, when she has the chance, Britney takes the banal and pushes it until it opens up to a whole different dimension of the uncanny. There’s no place for that strangeness in If U seek Amy, which ends by trying to have it two ways – Britney the naïf and Britney commenting on Britney. The second Britney only found herself after she went sane and shave off her hair. It was a Pauline moment, and since then her life has becoming madder and madder as she has become saner and saner.

The people around her obviously are maximally disturbed by this development. The whole of Circus was designed to eclipse and erase the breakaway, sane Britney. But Womanizer, with the banal lines about craziness, did not put her in an airtight box – and her genius came rushing in.

Tuesday, March 17, 2009

a prophet should be with honor on his own blog

Since I'm a firm believer that a prophet should be with honor on his own blog, I am reminded, given the recent AIG fuckup and the inability of Obama's establishment economics team to get out of the wreck of the financial system, that I should repeat the taunting posts I put up last November, when it was obvious what was going to happen and what these people were going to do.

You will notice that every souring of the public on the Obama administration originates with something that started with Summers and Geithner - those helpless boys who couldn't figure out how to stop those AIG payouts.

This is from November 25, 2008

In the cage: Obama's Team of Losers

Like any other liberal, I’m appalled by the rightwing tilt of Obama’s economics team. Any team that is hailed by libertarians and Bushites like Greg Mankiew is obviously not a team I want to play with.

And yet, in some ways, I’m indifferent.

When I use the term rightwing, some explanation needs to be put in place. The terms rightwing and leftwing are often used as markers of rhetoric. It is as if we should bracket the social context of these comments, and discuss them as “ideas”. Myself, I think that the rhetoric only makes sense when embedded in a robust sense of the sociology of a situation. Rhetoric is part of the way a society dreams itself, and like all dreams, should be subject to psychoanalysis – but psychoanalysis is no substitute for history. The history of the last thirty years was about the growing power of the parasitic Dixie model, in which heavy public investment elsewhere – in the Northeast U.S., say, or in Japan – produced an economic activity that could be successfully transported to the South by way of a government intervention – a tax break, say, along with laws preventing labor organization – which would be followed by the continued refusal to make public investments. Thus, in the Sunbelt, you have considerable industrial activity, little of it generated within the Sunbelt, plus an indigenous asset based sector – real estate – and the two together allowed for a regime that took on the accoutrements of the highly developed economy without making the necessary sacrifices to sustain one. This, and this only, is what is meant by small government. This economic form joined with a neo-liberal mindset that had three pillars – as I’ve said over and over. (Pause for breath)

What they are, these pillars, ahem, ahem, I outlined in this huffy reply to a post on Matt Yglesias’ blog. MY is very enthused about the murder of the American auto industry, which he shares with the libertarian young turks he knows, admires, and goes to whenever he has questions about the deeper passages in Atlas Shrugged. In this particular post, MY is psyched that a master such as Bruce Bartlett is giving the thumbs up to Obama’s economics team – Bruce Bartlett! Admittedly, this reply goes over things that I repeat like an organ grinder on this blog. But what can I do? Indignation does have a tendency to degenerate into Tourette’s, and that is what I have, political Tourette’s syndrome.

But here’s the latest version of my rant:

“I’m not sure of the point of this post. The point, I guess, should be that the neo-liberal establishment thinks that basically, nothing is happening here, and we are gonna move back to our open and free markets uber alles position that binds administration policies from Reagan to W in one big happy family. Minus the pesky automakers, which have to be thrown right out of the club, those scum! It is all creative destruction and how we like it.

Meanwhile, this is the week neo-liberalism died. All economies are political economies - they depend on a political pact that underlies any macro policy. The political pact underlying neo-liberalism was pretty simple: a. expanded credit for the masses; b. a robust shadow financial sector; and c., a continuing influx of money from household savings, in the form of 401(k)s, mutual funds, money markets, etc. These all worked together. The middle class did not bond with the investor class because they are “aspirational”, but because they saw their retirement accounts swelling and their assets becoming pricier. While their everyday economic life, which depends on labor income, became in one sense harder, as the rate of earnings increases decreased and then vanished, the increased credit patched over the spots in the lifestyle. And of course, b., allowed the creditor to take increased risks.

Well, a, b, and c are dead. It would not at all be surprising that the equities markets either stabilize at a low level and stay there for a decade, or keep sinking. That means, in essence, that the accumulated savings of those who went through the boom years from the eighties until now are seeing their future systematically destroyed. That was the future they were willing to trade slower income growth for. And meanwhile, good bye to the expanded credit sphere. You might patch your lifestyle gaps with 9 percent, but 19 percent, 29 percent - that is when we are talking about the pre-modern economy. That is interest that, in effect, retracts the elbow room given by credit. In the final month in which Obama pulled ahead, it was clearly the 401(k) effect. It wasn’t youth, it wasn’t change, it wasn’t hope - it was a vast fear. Which will be speaking out a lot more as it turns out that the fear was understated - things are a lot worse than they seem.
So the “brilliant” Larry Summers, missionary of neo-liberalism when the U.S. was the indispensible nation and architect, with Phil Gramm, of the deregulated marketplace that made the perverse Bush boom possible, is going to find that he simply can’t use the old nostrums. Because the old system is gone. Bartlett celebrating this is like one of Louis XVI’s courtiers assuring everybody that the Bishop of Autan, Tallyrand, being so powerful in the Assembly, everybody’s head is safe. It is a joke.

Of course, the last joke of the expiring neo-liberal imperium was the very funny one, which MY laughed at heartily, of course, along with other important young public intellectuals, of shooting GM in the head. Funny funny funny. Those people had the gall to ask for a loan of 25 billion - and sharpeyed Matt saw that could reach to 75 billion! Over the weekend, we decide that Citi needs 300 billion and - well, that’s all right then. It might not be a great deal, but shucks, they needed it and all.

Yes, neoliberalism is a corpse, but it will keep kicking for a while among the pundits.”

My hope, in this election, was that Obama saw the obvious. My disappointment with the appointment of that team of A level neo-libs is that he doesn’t. Yet the difference here is that the neo-libs have lost their tools. They have become State financed humpty dumpties, trying to glue together one cracked egg after another. It is funny, a ha ha joke, that the only industry bailout that ever worked was – surprise! – with the auto industry, namely the Chrysler loan of 1979. My working definition of worked is that Chrysler is still around, paid off the loan with interest, generated tons of profits for investors and paid wages that made life pleasant for thousands of employees, and even led the car design field – admittedly, in the disastrous direction of the SUV – in the early nineties. Manufacturing is one area in which government can actively intervene to good purpose, because the metrics are pretty clear.

Finance, on the other hand, has to be a market driven sector, and the government has to be a guardian of the institutions, even to the extent of coercing those institutions into being. When, in 1927, Coolidge unilaterally seized the radio airwaves for the government and then rented out space on them, he was creating an institution. On this model, the Fed should long ago have seized the peer-to-peer, OTC system by which derivatives are traded and forced it to become an open derivatives market, much like any other equities market, in which all products are transparent and all traders are known. Anything else is bullshit. That they still haven’t done that, and that the crewe brought together by Obama has a historic interest in continuing the sector in its dysfunctional ways is a bad, bad thing. But I think they will be forced to do what they don’t want to do, anyway. The question is, will they be forced to do it before the Treasure blows such a hole in the U.S. Government’s ability to respond that we have a crippled, Brazil like government. We’ll see.

Oh, and Yves Smith, my darling - she is definitely up in the pantheon as far as I am concerned - wrote an excellent little post about our collective cognitive capture by the financial hegemony model:

"There is a remarkable failure to acknowledge a key element of the task before us, that is, that the financial system HAS to shrink. Its current size is based on an unsustainable level of debt, a big chunk of which will go bust or be renegotiated. Yet rather than trying to figure out what a new, slimmed down version of banking ought to look like, to ascertain which pieces should be preserved and which jettisoned, the authorities are instead reacting in a completely ad hoc fashion, rushing to put out the latest fire. And in the process, they keep trying to validate overly inflated asset values (a measure straight out of the failed Japan playbook) rather than try to ascertain what their real value might be so as to determine how much recapitalization might ultimately be needed (if you doubt me, Exhibit One is the pending Citi bailout, in which lousy assets will be guaranteed at phony values). Is this denial? Do the authorities fear that if they work up this analysis, it will leak out and the markets will panic? This seems to be the first, most important order of business, yet here we are more than a year into the crisis, still tip-toeing around one of the very biggest issues.

And why is that? Back to the cult issue. Willem Buiter has chastised the Fed for what he calls "cognitive regulatory capture," that is, that they identify far too strongly with the values and world view of their charges. But it isn't just the Fed. The media. and to a lesser degree, society at large has bought into the construct of the importance, value, and virtue of the financial sector, even as it is coming violently apart before our eyes. Why, for instance, the vituperative reaction against a GM bailout, while we assume Citi has to be rescued? A GM bankruptcy would be at least as catastrophic as a Citi failure. but GM elicits attacks for the incompetence of its management and the supposedly unreasonable posture of the UAW (the same free market advocates recoil at a deal struck by consenting adults). The particular target for ire is the autoworker pensions and health plans, as well as their work rules. But the pension plans being underwater is the fault of GM management for not providing for them in the fat years; I personally have trouble with the idea that health care should vary by class; and for the work rules, German and Swedish automakers have strong unions and yet can compete. I see the UAW as having correctly seen GM management feeding at the trough and doing a good job at extracting their share.

And yet the specter of incompetent, and worse, DISHONEST management elicits far less anger. GM may not make the best cars, but Citi and other banks sold products that were terrible, destructive, that resulted in huge losses and are wrecking economies, damage crappy cars could never inflict (environmentalists might quibble, but never has so much seeming wealth evaporated in so little time, and with the main culprits readily identified). They paid huge bonuses, yet their 2004-mid 2007 earnings have been wiped out by subsequent losses. But while UAW workers will have to give up on deals cut earlier, in terms of health care and pension promises (entered into, by the way, to bridge difference over wage levels), I guarantee no Wall Street denizen of the peak years will have to cough up one penny of his bonus from those days."

And this was Dec 3, 2008

Mr. Summers, let me refer you to Chapter 13: the whiteness of the whale

In the election of 1910, Democrats took control of the House of Representatives. The economy still hadn’t recovered from the bust of 1907. The original impetus for the progressive legislation that had received support and scorn in equal measure from Teddy Roosevelt – America’s most bipolar president – had not died out, which is why President Taft couldn’t block the amendment to the Constitution instituting a federal income tax. Unfortunately, the move to force corporations to incorporate federally, instead of in the states, failed.

There was, back in those days, a burning issue that has flamed out so much since that the very word brings an eery blank to the mind: overcapitalization. The reason this figured so heavily as a scare word among the progressives is that the era from the turn of the century to the establishment of the Interstate Commerce Commission, in 1914 – which is generally taken to bookend the progressive moment – saw the instantiation of what Lawrence Mitchell, in The Speculation Economy, claims is the founding moment of modern American capitalism: the subjugation of industry to finance. This was a moment that expressed itself on several fronts – for instance, the Courts finally cleared up the confusion about how property law applied to corporations – creating a new form of property, defined by John Commons this way: [the old common law definition] … is Property, the other is Business. The one is property in the sense of Things owned, the other is property in the sense of exchange-value of things. One is physical objects, the other is marketable assets.” [quoted by Sklar, page 50]

One of the results of this legal change, or rather, one of the reasons it came about, was that the notion of a corporation as a body issuing stock was changing. And that change brought up the charge of overcapitalization – that a corporation, instead of finding its raison d’etre in using its assets to produce a good or service on which it made a profit, was now an entity wrapped up entirely in the market for its stocks.

In 1911, a bill was voted through the House of Representatives and narrowly turned down in the Senate that would have smashed this legal structure. S. 232 built on legislative ideas already crafted during Roosevelt’s term (remember, Roosevelt was in the wings in 1911, and would run in 1912, thus ruining Taft’s chance at a second term). S. 232 would not only have required federal incorporation of all interstate businesses. Here’s Mitchell’s description of it:

“It would have replaced traditional state corporate finance law by preventing companies from issuing “new stock” for more than the cash value of their assets, addressing both traditional antitrust concerns and newer worries about the stability of the stock market by preventing overcapitalization. But it would have done much more.

S. 232 was designed to restore industry to its primary role in American business, subjugating finance to its service. It would have directed the proceeds of securities issues to industrial progress by preventing corporations from issuing stock except “for the purpose of enlarging or extending the business of such corporation or for improvements or betterments”, and only with the permission of the Secretary of Commerce and Labor. Corporations would only be permitted to issue stock to finance revenue-generating industrial activities rather than finance the ambitions of sellers and promoters. … S. 232 would have restored the industrial business model to American corporate capitalism and prevented the spread of the finance combination from continuing it dominance of American industry.” (137) In Sklar’s account of the Roosevelt era draft, ‘whenever the amount of outstanding stock should exceed the value of assets, the secretary would require the corporation to call in all staock and issue new stock in lieu thereof in an amount not exceeding the value of assets, and each stockholder would be required to surrender the old stock and receive the new issue in an amount proportionate to the old holdings.”

This may well be the most radical legislation every considered by Congress. Think of it – the stock market as we know it today simply wouldn’t exist. Instead of being a legal fiction, the stock holders would literally own the company, and their profits would be limited to the profits of the company. The price to earnings index would level out so that the stock price would only hover marginally above earnings.

Needless to say, America did not go down this path. In fact, this path of needles seems to have been so traumatic an adventure that it has been thoroughly forgotten. We accept the equities market as it is as an expression of American capitalism. It is really an expression of changes in the physiology of American capitalism that came about during this era – almost overnight, in Mitchell’s view.

The last couple of weeks have both deepened the desperate prospects for the economy and shortened the dimension of changes we are supposed to envision for that economy. Obama’s bright old things – the Geithner/Summers/Romer crewe – have every intellectual investment in how things used to be. Like, two years ago. Why not? They feel themselves to be at the very least master carpenters in the building of the Great Moderation. LI’s stand is that the system – the mangle of inequality – is collapsing, and our vision is that this collapse will be mortal – but this might just be the optimist in us, Jonah’s kindly side, looking forward to Ninevah’s conversion. We think that crewe would certainly resist the radical remedies of 1911. Roosevelt would now be considered somewhat left of Chomsky. However, we have to have broader vistas in order to think about what is happening here. This is one of the reasons that LI considers the strongest charge against Summers to be that he doesn’t read literary novels. He should be questioned on this. The whole board of Economic Advisors should stock up on the great novels – we’d suggest, among others, Moby Dick and J.R. It is the lack of imagination of the self-aggrandizer set that actually produced this mess. At the bottom of the deaths of so much over the last eight years – the death of Iraqis, the death of American money, etc. – is a mortal lack of poetry.

LI, doing our part, will end with another notice from Ludwig Hohl.

“The alteration of the object to be tested through the person, the appearance of the tester, is also very important in the investigation of human situations. One goes to visit the unhappy, the said, the lonely: the visit effects a change. The deepsea divers appears 900 meters below the surface of the sea with a lamp of a terrible intensity, in order to surprise life. But those that were there, flee the light, while those who weren’t there, come near to it. (In spite of all of which, here outer eyes have seen what is hardly given to inner eyes to see, dreams and fantasies).”

Monday, March 16, 2009

the britney spears of the zona - me

There’s a lovely phrase by one of my favorite poets, John Clare – to “get out of my knowledge.” He uses it unselfconsciously to talk about rambling around a piece of country that was adjacent to his local patch. To get out of his knowledge meant that he didn’t know the soil here, or the flowers, and he couldn’t predict the tune of the bird in the tree.

Well, I think it can be said coolly, and without nostalgia, that I know few people who are not out of their knowledge. The U.S. has been a place where getting out of my knowledge was the point, as my knowledge was killing me. And it was the fate of a country that was founded by the stoic, the killer, as Lawrence recognized, that out of my knowledge made killing all too easy. It always has. Every bomb dropped from every plane was dropped out of my knowledge. Wipeout – it is something we’ve become used to, the history that trails up to our house. And yet at the end of it all was the creation of this oddly gentle people. In my time on earth, I’ve seen crime waves and moral panics, I’ve seen repressed memory witchhunts and crack witchhunts, I’ve seen the towers fall and the people respond like Gandarene swine, I’ve seen money knock on every heart and inhabit, with its abstract breath, the heart until the body was corpsed. And yet the children kept getting gentler.

Myself, then, I have of course existed in that same fraught way, open to every corruption that came on the breeze, and I was born out of my knowledge. Yet I find the zona very much in my knowledge. This is a startling thing. I feel like I am the Britney Spears of the Zona.

But lately, I’ve been trying hard to make a living, and have had no time to write as much as I would like to for the people who come by. I’m sorry. This will probably continue for a week. Forgive me.

Saturday, March 14, 2009

neo-liberalism, or the vorovskoy mir in action: a bedtime tale for demons

Oh, the dirty tales we can tell of this brave new world – the world its prophet, its reflection, its mediocrity, its voice Thomas Friedman called, justly, the “flat world” – for indeed, all heads, all minds, all hearts were flat in this world, flat as soda when the fizz has gone out of it and left behind a toxic industrial syrup laced through with sugar substitutes. Drink it up! Oh, drink it all up, every last drop, zeks!

Such are the rules in the zona. The flat world has another name, a more secret one perhaps: vorovskoy mir – the thieves world. The bankrobbers who have graduated in their masses from the Ivies best business schools have built ever more elegant algorithms on the approved vorovskoy mir model, algorithms that have produced a flat utopia. Here flat is a word that signifies an act – as in a tire going flat. Every one of us is caught within its rubbery coils – can’t you smell them? It that rubber, in endless amounts, that is being rubbed in our faces.

Thus, to understand the zona, it isn’t enough to read the business pages – one must go back to texts like Pushkin’s The Captain’s Daughter, which is, I believe, the first instance of the vorovskoy mir bursting into the pages of the classics, through the use of Fenya, or thief’s slang. And haven’t we grown used to our own fenya, that of the financial market, where the letter killeth? Of course we have. We are the geeks. We swallow everything. We wait for the next course.

And where is that next course, brothers and sisters? Why, it is coming, steaming hot, out of Austria. There’s a small article by Piotr Dobrowolski on the Austrian difficulty in Freitag, The Alpine Banks on the Slalom. Or Nightmare Banks – Alpen meaning both things. It appears they made a 100 billion dollar bubu. After the wall fell, “No ukranian cow station was too out of the way not to have its own branch, no business plan of a Hungarian neo-capitalist was too absurd not to be supported with generous credit.”

Now, of course, as Dobrowolski writes, the money is gone. Goldman Sachs estimate the money lost at around 70 percent of the total, the Austrian banks insist on 10 percent: so it is in a range of 100 billion to 23 billion.

Of course, in Austria, it is rather hard to catch ahold of these facts. As Dobrowski points out, when a paper like Profil, the Austrian Spiegel, assures its readers that Austria is not going bankrupt, what it doesn’t tell its readers is that it is owned by the Raiffeisenbank – a strictly guarded media secret, just as NBC’s fealty to GE is never mentioned by anyone in the press (for who can seriously believe that our thieves in law would distort the news for their own purposes?) – and Raiffeisenbank took a strong position in the East.

Of course, when the thieve’s world money dries up, someone somewhere must take a hit. Only among the vory does the true sense of the last judgment survive in this fallen world – for they know down to the birthmark what it means for the demons to strip the sinner and prod and poke his shameful hindquarters towards a roaring furnace.

“The massive support that Austria is extending to its bankers does not remain without any effect. Just now the discussion of social cuts is being engaged: beginning with the overtime for teachers, demands for wage cuts with all branches up to a projected dismantling of the state postal service. Now, where Proell [the chancellor] has had no luck in his preference of getting more money out of the EU for the Austrian banks, the compulsion for savings is even greater. For the money for the poor bankers must come from somewhere.”

“For those who think Jesus Christ is Santa Claus, oh yeah”

I am only a humble collagist, so for my final quote, let’s go to this remarkable summary of the Free Market ideology:

“The best way to understand the society of vory v zakone, the governing elite in the world of thieves, is to describe the system of norms that its representatives observed. The first rule prohibited cooperation with any state authorities. Anyone who had ever served in the army or worked for or been a member of a state organization could never aspire to receive the title of thief-in-law. “The major collective representation of thieves that determined their relation with external reality is their idea of a struggle between the two worlds,” writes Likhachev. “The thief, like a primitive man, divides the whole world into two parts, ‘its own’ – the good one – and ‘the alien’ – the bad one. A consistent and conspicuous rejection of any order from state authorities, whatever it may cost the thief, constituted a major element of his behavioral norms.”

In the U.S., of course, we call this Fresh water economics. But as Vadim Volkov concedes, this admirable distrust of the state order was thrown out the window when the state order became subordinate to thievery. And who can doubt the brilliant results? Not this zek.

Thursday, March 12, 2009

narrative induction

Charlotte Linde is a rather brilliant ethnographer broadly within the symbolic interaction school – although not participating in that schools downhill slide into the irrelevance of infinitely coding conversations to make the smallest of small bore points. Rather, she has taken Labov’s idea that a story is a distinguishable discursive unit and researched Life Stories – she wrote the standard book on the subject.

In 2000, she wrote an article that I just read, and that I’m going to use in my book project. But I’ll use it here as well, so I thought I’d say something about it and crosspost it.

The article is a study of an insurance firm with the truly great title, “The acquisition of a speaker by a story: how history becomes memory and identity.” Identity, with its columnally Latinate Id seemingly standing for noun in general, has during the course of my lifetime been dipped in the acid of the verbal form, and now little leagurers talk of identifying with their team – their grandparents would, of course, used identify to talk not of a subjective process of belonging, but an objective process of witnessing, as in, can you identify the man who you saw shoot mr x in this courtroom? Conservative hearts break as the columnar Id falls to the ground, but that’s life, kiddo.

Linde’s article introduces a marvelous phrase: narrative induction. “I define narrative induction as the process by which people come to take on an existing set of stories as their own story…” (2000:608)My editor’s eye was pleased and did a little dance all over my face to see that this was the second sentence in the article – getting people to forthrightly state their topic is, surprisingly, one of the hardest things about editing academic papers. Most graduate students have concluded, from experience, that the best way to make a point is to hide it somewhere, perhaps on page 5, and hope that their advisor doesn’t see it for fear of being attacked. The rough and tumble of intellectual debate is the Ur-traumatic experience of the classroom – funny that this hasn’t been investigated, rather than mindlessly celebrated. But alors, avancez, boys and girls!

Narrative induction properly locates story as part of a process of initiation (which, being a “native” thing, or occult, failed to qualify for the verbal place held by identify with). Linde, in this paper, is obviously moving from her concern with stories people tell about themselves – the point of which is to say something significant about the self, and not the world – to stories people tell about the world. Those stories often are about experiences not one’s own. They are non-participant narratives.

Linde divides the NPN process– as she calls it – into three bits: how a person comes to take on someone else’s story; how a person comes to tell their own story in a way shaped by the stories of others; and how that story is heard by others as an instance of a normative pattern.

There is an area, as Linde points out, where work on this has been done: in religious studies. Specifically, the study of metanoia, conversion stories. But there’s metanoia and then there’s metanoia. There’s St. Paul on the way to Damascas, and there’s Updike’s Rabbit Angstrom, on the way to the relative wealth of a Toyota Car Dealership, owned by his father-in-law. Linde, not having access to St. Paul, opted to study the trainees of a major American insurance company in the Midwest. Like Labov, Linde is interested in class issues. In particular, stories of occupational choice. In her Life Stories book, she presented some evidence that professionals present their occupational choice stories in terms of some vocation or calling, while working class speakers present it, more often, in terms of accident or need for money. Philosophy professors rarely will say, for instance, well, I needed a steady paycheck, looked at the job security of tenure, loved the idea of travel and vacation time, so I went into philosophy. They will give a story rooted in their view of themselves as emotional/cognitive critters. Labov’s work was done in the seventies, and my guess is that there has been some shift. The NYT recently published an article about “quants” in finance, many of whom came from physics, and their stories were all without a moral/personal dimension – they were all about money, not interest in finance. Interestingly, as a sort of saving face gesture, they all talked about how there are “deep problems” in finance.

Tuesday, March 10, 2009

I dream of another world

Naivete and amazement should always be your guides, your Virgil and Sacajawea, when tracking across the zona.

So, take the issue of the law. It used to be the case, and according to the droning theorists, waving their Rawls around, it still is the case, that a law is passed in order to implement or regulate some practice.

Perhaps I should say retract that “used to be the case”, given the massive fraudulence of the Cold War. But I do find it astonishing that few seem to investigate another function of the law: to seemingly address and issue, and thus give a cover to the government to fundamentally transgress it. In other words, the laws exist much like the declaration of freedoms in the Soviet Constitution of Stalin’s time: as a curtain.

So, in the U.S., laws were passed to prevent government agencies from extending to investment banks the kind of insurance that are extended to other banks. And so in the U.S.. these laws were casually and massively broken, and nobody really cares.

In the UK, which is becoming the black hole of civil rights in the West, Nu Labour came up with an idea that obviously sample surveyed like a cool Net advertisement: Freedom of information. It sounds so good, let’s plaster the name on a bill! No sooner thought of than done. The Guardian editors and CiF can trumpet the progressiveness of it all, and the Government can proceed to ignore it.

So the Heathrow airport protesters are finding out. This is from the Index on Censorship:

“Following Jack Straw’s veto of the release of the pre-Iraq war cabinet minutes, the government’s commitment to freedom of information (FOI) has again been called into question. Campaigners against the third Heathrow runway are finding the Department for Transport (DfT) strangely reluctant to publish the latest versions of documents that have already proved painfully embarrassing for ministers. Both Greenpeace and Tory MP Justine Greening have previously used FOI laws to obtain evidence revealing the relationship between ministers and officials at the DfT and BAA over airport expansion. In this light, it is not surprising that the department is trying every trick in the book — and some that aren’t in the book — to block new requests for similar papers.

Greening famously obtained proof that BAA helped the DfT to ‘reverse-engineer’ its forecasts to show that a new runway would meet ministers’ ‘strict environmental tests’. This evidence came from a request for disclosure of communications between the two organisations. But the DfT has refused two almost identical requests from Greening covering later periods. The Information Commissioner, Richard Thomas, is expected to rule shortly on her complaints.”
I’m on pins and needles about that ruling! Like the investigation of the BEA, or like, well, almost anything done by that horrendous collection of crooks that took a moribund socialist party to the Thatcherite heights, we already know what happens when the guardians figure out the puzzle of who will guard the guardians: pass fake laws, of course.
The DIT claims that if it publishes earlier studies where the parameters weren’t fixed to make everything look Potemkin village fine, it will lead to ‘ill-informed’ speculation. The rulers, having our interests at heart, have come down hard, throughout the freedom loving nations, on ill informed speculation. That’s why the Fed coolly told the Senate to fuck off when the Senate enquired about AIT counterparties. That is why we watched the SEC pretend that they were so in the midst of investigations, of a very delicate nature, that they could by no means and in good conscience answer questions they were being asked about the nutty, ideologically driven lea-way they gave to any fly by night company to rip off the public. They invoked executive privilege even thought the executive hadn’t been told – why bother? The organs function when the body is dead. Every zek knows this.

Je rêvais d'un autre monde

Sunday, March 8, 2009

humpty dumpty in the zona

You'll see him in your head on your screen
hey buddy I'm warning you to turn it off...

I’ve been feverishly editing _ and probably getting editor’s cancer of the brain – lately. Thus, I’v e had no time for limited inc – oh, the thing I was going to do about the labyrinth, the encyclopedia, plots, myth and conspiracy! On the other hand, one of my papers required me to do some research, which is how I came upon “The Study of Islamic Culture and Politics: An Overview and Assessment” by Mansoor Moaddel in the Annual Revie of Sociology – I read these things, reader, so that you don’t have to – and found this terrific quote:

The rentier state model advanced a compelling analysis of this specificity, attempting to supercede that of the Islamicists. Far from being an outcome of Islamic culture or the historical legacy of Islam, this model focuses on the effect of enormous petrodollars on the structure and functions of the state in Islamic coun- tries. First used by Mahdavi (1970, pp. 428-67) in reference to Iran, the concept in reference to Iran, the concept of the rentier state, or the rentier economy, applies to a country's reliance on sub- stantial external rent in the form of the sale of oil, transit charges (Suez Canal), or tourism. This economy is believed to have far-reaching political, social, and cultural consequences. First, only a small fraction of the population is directly involved in the creation of wealth. As a result, modem social organizations asso- ciated with productive activities were developed only to a limited extent. Second, the work-reward nexus is no longer the central feature of economic transactions where wealth is the end result of the individual involvement in a long, risky, and organized production process Wealth is rather accidental, a windfall gain, or situ- ational, where citizenship becomes a source of economic benefit. To acquire wealth requires different types of subjective orientation, which Beblawi (1987, p. 52) called "rentier mentality" and "rentier ethics." Non-economic criteria such as prox- imity to the ruling elite and citizenship became the key determinants of income. Rentierism thus reinforced the state's tribal origins, as it regenerated the tribal hier- archy consisting of varying layers of beneficiaries with the ruling elite on top, in an effective position of buying loyalty through their redistributive power. As the state is not dependent on taxation, there is far less demand for political participation (pp. 53-59). [377]

Terrific not because it is unusual, but because it is the standard developmentalist boilerplate since the great Fall of the Wall (which was prophecized in Finnegan’s Wake, my own Book of Revelations. Soviet Humpty’s great great fall….) For of course, the consensus is that the democratic, developed states were all about the creation of wealth, baby! Imagine, an elite that subsists on windfall gains and situational power! Why, that would never happen to proud Western man!

The arrogance has been grooved into the academic tabula rasa, and so the human rights contingent, dear hearts all, the Rawlsians, the well meaning liberals are still running with this tune in their head. Crooked Timber had a post yesterday couched in the Asiatic Despotism mode that just missed using the word kowtow to describe the Chinese system. And of course, under every sentence is the assumption, the snuggly sleepers assumption, that peasants and despots are far from our modern institutions. Have we no academic conferences? Have we no tenure? Have we not exhaustively and conclusively disproved the anti-democratic menace? Wasn’t that the lesson of the 20th century? So it goes in the Post-Humpty era, but meanwhile another egg has fallen and it can’t get up.

Friday, March 6, 2009

they shoot hedge managers, don't they?

Another manager tells me a story about Morgan Stanley’s annual hedge-fund conference at the Breakers, in Palm Beach, which was held the last week of January. In years past, every hedge-fund manager wanted a plum spot on a panel, so they could present themselves to prospective investors. This year, Morgan had to beg its clients to participate. Managers were reluctant not because they didn’t want—or need—the money, but because “no one wanted to be subject to a Q&A from strangers about why we all suck so bad,” as this manager put it. And those who worried were right to do so. “It was open warfare,” he says. He adds that the attitude from wealthy families was “Who are these bourgeois pigs who ripped us off?”

Another manager describes the mood at the Breakers as “pure, unbridled anger.” A source says one foreign investor at the conference declared, “These hedge-fund managers are like the Somali pirates!”—and he wasn’t kidding.

‘I think I know a few names I’d like to be callin you meself.”

Lady from Shanghai, the most realistic film ever made about the species of hybrid – half hyena, half spider – which composes the upper .01 percent. A zona film for zeks.

‘And you know, there wasn’t one of them sharks in the whole crazy pack that survived.”

‘In a way, hedge funds were eating one another alive. As managers sold their positions, some discovered, as one manager puts it, that “all our names were owned by the same guys. We had become the market. When I ran for the exits, all the buyers who should have been there were doing the same.” During the third quarter, a Goldman Sachs index which tracks stocks that are heavily owned by hedge funds lost 19 percent, more than twice the decline of the S&P 500, while another Goldman Sachs index that tracks stocks which hedge funds were likely to sell short actually gained 2.4 percent, according to a Cambridge Associates LLC report. “Hedge funds were shooting at each other,” says one manager, meaning that some funds would make bets against stocks that were heavily owned by other managers.”

Warning: the VF article has a feel good establishment ending, which rather spoils the course. After all, who respects the rich more than VF? Titus Andronicus knew not to serve optimism at the table when you are going for an all around barbecue, but these people are served up and then all their sins are forgiven. Meritocrats, really. The writer even writes of the 'hard-earned' money that went into the hedgies. Hard earned. Hard earned. The guy up on the corner, sitting there with a sign about his service to the country and all I got was this lousy mental disease that the VHA doesn’t recognize, begging for quarters, is earning his money hard. And it didn’t go to no stinkin’ hedge fund. Meanwhile, the idea that last year was just a bad year, and hedge funds are coming back? A dream that even the VF gated community is beginning to doubt. Oh, honey, it wasn’t all a dream! Welcome to reality.

I love bottoms

I’ve always been an ardent ass man. Georges Bataille, in L’impossible, reflects on the anxiety the thought of his own derriere causes him. Not me. While my face may wither and wizen, my ass, from what I can see of it in my mirror, is still doing well. I well know the Freudian explanation – that imprinting I got as a tyke, looking upwards to Mom. Ah, the joys of those first infantile counter-generalities! As Herrick wrote:

WHENAS in silks my Julia goes
Then, then (methinks) how sweetly flows
That liquefaction of her clothes.
Next, when I cast mine eyes and see
That brave vibration each way free;
Oh how that glittering taketh me!

The brave vibration rocks my fucking world. Thus, having read for the past year so much discussion, every day, of seeking the bottom – the bottom of housing, the bottom of the stock market, the bottom of unemployment, the bottom of energy prices, the bottom of this and the bottom of that – I have thought that perhaps all these bottoms would ramify in the great bourgeois unconsciousness and we would begin to enjoy the bottom seeking. We would become connoisseurs of bottoms, confessors of the fesse. The very word has a brave vibration. On the bottom. The bare bottom. According to the OED, the word seems to go back, all Germanic and with a horned helmet, to boden, to ground, as though this teeming world were one bottom, and we the bottom dwellers upon it.

Unfortunately, the zona is unsexing us all. This orgy, this bonfire of all our fictions, this too too mortal slicing and dicing (and we thought it was all loaves and fishes) has become a downer. Liquidity, it turns out, is liquification, but nobody is getting hot and wet, as per all the girls in all the live cams the world over – rather, they are deflating, parking their bottom lust in anger, and thinking all that glitters is not gold.

Myself, however, I am more… sanguine, I suppose you could say. The last decade has been like breathing in some poisoned gas, day after day. What was coming out of our top seeking, our ascent, on the wings of algorithms, to the Island of LaPuta? Not much. We now call it toxic waste, and we then called it innovation, but it was always a cancer. Living closer, always closer, to the bottom myself, I have, in a sense, shrunk. Where once I looked up Mommy’s skirt, little pervert tyke, I now look up the “metaphorical” skirt of all that traffic, those big bottomed SUVs, all that glitter of equity loan wealth, gorging on overpriced Tex Mex, all the big bottomed McMansions on their miniskirt lawns – and I was not seeing good solid ass. I was not seeing the kind of behind that would make Bataille redden with lust, the voluptuous curve, the good meat. I was seeing the withered shank of the white magic of the Western World, which has clotted the seas with its plastic bags and done its best to harness the imagination to the new species, the human worker ant, chemically neutralized, quanta in search of quanta, unbottomed, tasteless, death in life and life in death. When pleasure becomes the synthetic substitute of pleasure, give me the bottom.

PS - and for those of you who want News from the Zona instead of news from the Sex Zona, go on over and look at this post. Never ever ever underestimate the mendacity and sheer legalistic evil of the kleptocratic system. The Great Fly left his eggs all over the this country. It will be years before we clean it up.

Thursday, March 5, 2009

Zona Plutarch

Poor James Glassman. This interview with him tells us a lot, not so much about the reactionary bumbler, but about the impossibility of unseating a right wing propagandist in D.C.

Now, as a matter of fact, I have some stake in Glassman’s career. I was his secretary, once. This was way back when I was a freshman at Tulane. Glassman edited a weekly, then, the Figaro. He was young, he was nice, and he was never particularly bright. That the pup I knew, who was fighting for ad revenue from the booming porno theater scene, went to Reagan’s D.C. and became a mover and a shaker was, well, a big sign for me that the moronic inferno has a great sense of humor. I like the question, But you don't feel the need to apologize to someone that read your book, went in and got creamed? And the answer: Absolutely not. Surely a good interviewer would have probed this marvelous moral insensitivity. Has Glassman ever had thoughts of hurting people? How did these thoughts make him feel? Is he on meds? But no, they go on to another topic in which Glassman, knowing nothing about the field, has made himself a mover and a shaker: Iraq! For a man who, when I knew him, barely knew that King Tut came from Egypt, he has set himself up as quite the whiz. Of course, he was appointed by Bush – one of those small but symbolic appointments, for if anybody is channeling the same country club avatars as Bush, it is James Glassman. Here moral numbness and a subdeb’s ability to manipulate Heritage Foundation boilerplate has put him in good stead. Luckily, the three page article cuts off just about where he is asked about Al Qaeda. I could ask the shoes in my closet about Al Qaeda and get a more informed response.

A paper that wasn’t up the asshole of the establishment – an anti-Post – would surely have asked some questions about Glassman’s credentials. Does he know anything about anything? Does he speak Arabic? How much of the history of the Middle East can he spout in one setting? Does he know, for instance, about the treaties separating Kuwait from Iraq, and how they were put in place by the British? Can he name three Iraqi rulers before Saddam Hussein? What is a popular Iraqi dessert?
But, just as Glassman’s financial knowhow was on par with that of your average mortgage salesman at Washington Mutual, his ability in foreign policy is unquestioned by the ever asskissing Post, the newspaper that periodically shills for global warming denialism (as well as the Iraq war and bombing Iran – it is a regular circus).

To understand the elite – their gated community smugness, their vulgarity, their incompetence, their backscratching, their pseudo-meritocracy, their confusion, their vanity, their pent up acids and mineral salts, their cancerous talons, their Skeletor evil, their chatter, their poshlost, their pimpleness on the hindquarters of history, their wear and tear on my neck and bones, you have to understand such as Glassman. A Great Moderation careerist. An ignoramus. A moral numbnut. An accessory to mass murder. All grown out of the country club puppy he once was. And to think, he could have gone into something useful, like cocaine smuggling or something.

Wednesday, March 4, 2009

a Zona joke for the 401(k) zek

A ps to my last post - anyone who had the misfortune of running into a Thomas Friedman bsstseller over the last decade - There's an olive tree in my lexus, the world are flat and it belong to cookie monster, and other assorted fare - should turn to his column this morning for a little zona joke. Turns out he was wrong for twenty years! Although of course he doesn't end his piece by promising to refund the buyers of his books. This isn't Paul on the way to Damascus, this is Paul suddenly writing a guide to Antioch's best bordellos.

Luckily, in this world, you can change on a dime, say the opposite of what you have said for twenty years, and nobody cares. It is a great country! And definitely, contra Yeats and Cormac McCarthy, a country for old men - old wizened country clubbers. Old Madoff madmen. People who write feelingly in comments sections, I've been hardworking my whole life and how could wall street do this to my retirement account, as if that whole hardworking life hadn't been devoted to putting coins in a slot machine.

By the way, in order to resolve all problems, I have just founded the International Anti-Servility League. Please consider joining.

oh, and one last comment about the last post: I've been thinking that Nina Simone's chorus of Power in sinnerman, and Aretha Franklin's chorus of Freedom in Think, might just be the essential American dialectic, the intersybilline interliner notes to the American sound track. I wonder what Amie and North think of this proposition.

Tuesday, March 3, 2009

o sinnerman where you going to run to

But the rock cried out, I can’t hide you…

The investor class has finally cobbled together its political program lately. The parts come from the dead bodies of far right fantasy going all the way back to Hoover’s day. Martin Hutchinson, to whose country club echolalia the NYT has provided a space and no place to comment, pretty much sums up the whole mindset:

“With the Dow Jones Industrial Average below 7,000 – at 6,763 – the US stock market is well below its early-1995 level, adjusted for changes in nominal GDP. That suggests its cheap – if growth prospects are as good as they were back then. The risk, however, is that too much fiscal and budgetary stimulus will bring on growth stultifying inflation.”

That paragraph is a relic of the true faith of our late Great Moderation: the idea that the economy is equivalent to what is good for the plutocrats, the idea that inflation is solely a product of monetary policy, the inability to understand that the meltdown has undermined every model used by the Reagan-Greenspan-Bush era, and of course, key, the fear that the fiscal and budgetary stimulus is going to lead to higher tax rates for the wealthy. Since the wealthy constitute a narrow and parasitic class, it is going to be hard to get game arguing that we should both supply them with the keys to the Treasury and make sure they pay a minimal amount of their various hordes – hence, the inflation argument – you too, poor schmoo, will be affected if we don’t stop the awful socialist monster!

So sound off, one two. The market isn’t cheap. Cheap would imply that the losses so far are as nothing, and that in reality, the economy is sound. It is far from sound. The stocks are cheap has been a reliable formula to scare up some dough from greedy nimrods, but this time they don’t have the dough. The prospects for growth in 1995 were determined not by the fiscal and budgetary policies of the Clinton administration, but by the last wave of tech innovation that originated in the 30s and 40s – the computer wave. Without another wave of innovation – which, I think, can only be green tech – there’s only the zona winter spreadin’ out so far and wide and cold before the feet of poor and country clubber alike. And finally, there is the tunnel vision, as Tim Duy called it, of thinking that the status quo ante can just be put back together again.

Duy’s piece, quoted over at Economist’s View, indicates that what I have been harping about due to my paranoia seems, actually, to be what the establishment thinks: that somehow we are going back to 1995. That somehow the speculative economy, with the overlarge, overripe financial sector, is coming back. Duy’s piece even contains intimations that he has discovered the Mangle of Inequality! Amazingly, he actually connects household income to household purchases – this is a huge step for an economist:

“Leaving aside the issue of housing prices for a moment, consider the issue of household net worth. I always feel that academics misinterpret balance sheets, particularly household balance sheets. Here Bernanke is saying that debt is not a problem because it is matched by an asset of equal or greater value. Ergo, you have positive net worth, so everything is good. But that debt needs to be supported by a positive cash flow, and the many assets on household balance sheets generally do not generate cash flow, especially owner occupied housing assets. This differs from a corporate balance sheet, where the assets are supposed to be combined in some fashion that generates a positive cash flow.

The cash flow that supports most household debt is independent of assets; it is the result of employment income. To be sure, perhaps some of those assets support the employment, such as a car. But even in this case a Toyota Camry performs the same function as a Lexus. Claiming the latter is necessary for employment is largely a fantasy.

Bernanke praises the power of the household balance sheet, and further supports his contention that households are financially strong by the disposable income growth at the time. What he missed, however, was the importance of declining savings rates, which were quickly converging on zero. When saving rates hit zero, free cash flow for households is gone, and without free cash flow, the ability to increase debt diminishes unless either interest rates fall further or we can divorce credit access from ability to repay. In this speech, Bernanke effectively endorsed the illusion that asset value growth could replace ability to repay for underwriting purposes. Debt accumulation and thus spending can be supported indefinitely as long as asset values increase.”

I’ll quote myself from Feb. 08th – admittedly, my language does have the drypoint hauteur of Duy’s. It is written in dayglo:

“The little thread that ties these things together is the housing market. It is as if the media sphere decided to throw Marx a surprise party: in his honor, they are demonstrating just what commodity fetishism means. The housing market has been curiously disembedded it real location in the world of social labor, and transported into the never land of econospeak and graphs. In the never land, there is never and there will never be any mention of the one overriding fact about the housing market, which is that houses are actually bought by people.

As I have pointed out again and again, like an erotomaniac compulsively returning to the habit of masturbating in public when released from his straight jacket, this is what happens when inequality reaches a tipping point. The half baked neo-liberal theory upon which the American economy has stood for three decades supposes that certain social goods (retirement, healthcare, education, etc.) can be ultimately provided for in the private sphere. How is this accomplished? By making the average household not only a unit of production, but also a source of investment. Thus, X and Y, the double wage-earners in the household, will enjoy a progressively better lifestyle even if their combined earnings stagnate or advance slowly, because they will have socked away money in their 401(k)s and IRAs and they will have invested in an asset, a house, that will bring them a healthy return even as they live in it. It is a bubble gum vision of the good life, worthy less of the American Economic Journal than Teen Beat magazine.

The flaw, of course, is that income counts. It counts so much that if you freeze it or slow down its increase in order to feed the wealthy (who, after all, are investors like all of us! It is the solidarity of capital, here, one for all, or – getting real, heh heh heh – all for one), who, pray tell, are X and Y going to sell their asset to? Another X and Y, in basically the same circumstances? Any child can tell you that no matter how often two poor shits sells a commodity back and forth to each other at higher and higher prices, which they borrow, the end result is not going to be that each gets infocommercial wealthy – it is going to be that each gets financially broken. The commodity didn’t do that. What did that has been doing that for a long time. It is called your Government. Plus your private sector. Check it out. Open your eyes. The Fed has openly tried to batter the bargaining position of labor for years. The commerce department, for decades, has held seminars for businesses about how they can move to labor cheap locales. The industrial policy of the U.S. government – which claims it has no industrial policy – has been directed, for years, at keeping incomes down and credit lines at high interest open.”

And, since I am in a self-quoting mood, I will leave with a link to a piece I wrote for the Austin Chronicle in 2000, all about the neo-liberal theology. Here.