Saturday, February 28, 2009

The Shape of Things to Come -- Part 10

(continued from Part 9, below):
6. It would actually be possible, therefore, to maintain something resembling normalcy by indefinitely sustaining the bubble already begun. This would be accomplished by continually pouring more and more money into the failed financial institutions, money obtained either through additional borrowing (already stretched to the limit) or simply by printing it (as Bernanke is already doing). This appears to be the best idea Obama and Geithner have come up with so far:
Here’s what is most infuriating: Here we are now, fully aware of how these scams worked. Yet for all practical purposes, the government has to keep them going. Indeed, that may be the single most important reason it can’t let A.I.G. fail. If the company defaulted, hundreds of billions of dollars’ worth of credit-default swaps would “blow up,” and all those European banks whose toxic assets are supposedly insured by A.I.G. would suddenly be sitting on immense losses. Their already shaky capital structures would be destroyed. A.I.G. helped create the illusion of regulatory capital with its swaps, and now the government has to actually back up those contracts with taxpayer money to keep the banks from collapsing. It would be funny if it weren’t so awful (from Propping Up a House of Cards, by Joe Nocera).

Whether the cash infusions are administered via "nationalizing" the banks or maintaining their "private sector" status has no real bearing on the fundamental problem. In a sense, the "nationalization" question is a red herring, obscuring the far more basic issue, as described so eloquently by Nocera. While the Republicans fixate on their version of creeping socialism, the Democrats can safely pursue their own agenda by insisting on their loyalty to the tried and true "private sector" model. (Getting the hapless Republicans all worked up for nothing almost makes the whole charade worth while.)

In theory, there is no limit to the numbers of dollars the Federal Reserve can print, but in practical terms a "system" of this sort is highly unstable. Which makes it very difficult to predict exactly when or how the inevitable collapse will take place. The Chinese could decide at any time to call in their chips, or, more likely, stop investing in Treasuries altogether, forcing Bernanke's printing presses into overdrive. Since we are now in what looks like a deflationary spiral, the danger of inflation appears minimal -- a situation that's being used to justify the explosion of the money supply. But things could turn around literally on a dime if the Chinese or the Oil sheiks or Warren Buffett or George Soros, Bill Gates, etc. make any sudden moves in the wrong direction. Given the insatiable need for trillions in freshly minted dollars, it's impossible to ignore the very real danger of hyperinflation or worse -- and the high probability that the inflation will, in fact, be far worse than anything heretofor experienced or even imagined.

Meanwhile, the instability of the "Geithner fix" will be compounded by a host of forces, not only in the form of predictable Republican opposition, but also from second guessing by a long list of experienced economists, like Nocera, alarmed by its inherent weaknesses (but with no viable alternatives to offer). So the plan will lurch along half-heartedly, winding down a bit when the deficits become too alarming, picking up the pace whenever the stock market takes too steep a plunge. One thing I can say for sure, however, is that the madness will continue to the bitter end. Because, as we've learned from Vietnam, and as we've learned from Iraq, once a certain level of commitment is made, there is no going back. Once so many billions of "taxpayer" dollars have been invested, no one in government will be in a position to say, "this was a mistake, we are on the wrong track, we have to cut our losses and get out." So what we'll be hearing more and more in the coming months or years is: "Don't panic. There is light at the end of the tunnel. Stay the course."

7. Meanwhile, given the drastic downturn in literally every economy worldwide, real people in the real world are going to be suffering. North Americans tend to be politically uninformed, naive and passive. Not true of most people in other parts of the world. While the US has been predictably quiescent, we are already seeing many protests and riots in farflung corners of the "global economy" and there will certainly be many more. Most of these countries already have well established socialist parties and it's not difficult to predict that such parties are going to do really well in upcoming elections, a development that will increasingly isolate the United States from the rest of the world.

8. Nevertheless, modern socialist governments will not necessarily be in a better position to deal with the economic repercussions of the financial meltdown than their capitalist predecessors. So economic conditions will continue to deteriorate everywhere as the financial meltdown evolves into a black hole. Socialist governments will be in a better position to deal with the social aspects of the crisis, since they are far more likely to give priority to human needs, as opposed to the "needs" of investors, but these governments will nevertheless continue to assume that what they most need is money -- and money will be continually losing its value. The citizens of the United States, with its staunch opposition to socialism in any way shape manner or form, will suffer the most, because it will still be assumed, right up to the last minute, that stabilizing the economy by protecting investors at all costs must take priority over what is misleadingly called "entitlements" (i.e., basic human needs). The mantra will persist to the bitter end: what's good for Wall St. is essential for Main St.

9. At some point, with millions of people literally starving and homeless, there will be a breakthrough. A moment of truth. It will come only when the value of all the world's money finally reaches zero. Goose Egg! This will be the great awakening, the fall over the precipice, the opening of the "gateless gate," the resolution of the aporia, the passage into economic Hell . . .

(to be continued . . . )

Friday, February 27, 2009

The Answer -- Part 3

From Song of the Open Road, by Walt Whitman

From this hour, freedom!
From this hour I ordain myself loos’d of limits and imaginary lines,
Going where I list, my own master, total and absolute,
Listening to others, and considering well what they say,
Pausing, searching, receiving, contemplating,
Gently, but with undeniable will, divesting myself of the holds that would hold me.

I inhale great draughts of space;
The east and the west are mine, and the north and the south are mine.

I am larger, better than I thought;
I did not know I held so much goodness.

All seems beautiful to me;
I can repeat over to men and women, You have done such good to me, I would do the same to you.

I will recruit for myself and you as I go;
I will scatter myself among men and women as I go;
I will toss the new gladness and roughness among them;
Whoever denies me, it shall not trouble me;
Whoever accepts me, he or she shall be blessed, and shall bless me.

Thursday, February 26, 2009

The Answer -- Part 2

But on the other side, it didn't say nothing.

Wednesday, February 25, 2009

The Answer

The answer has already existed for some time now, in the words of an old poem. See if you can find it:

As I went walking that ribbon of highway,
I saw above me that endless skyway:
I saw below me that golden valley:
This land was made for you and me.

This land is your land This land is my land
From California to the New York island;
From the red wood forest to the Gulf Stream waters
This land was made for you and Me.

I've roamed and rambled and I followed my footsteps
To the sparkling sands of her diamond deserts;
And all around me a voice was sounding:
This land was made for you and me.

This land is your land This land is my land
From California to the New York island;
From the red wood forest to the Gulf Stream waters
This land was made for you and Me.

In the square of the city, by the shadow of the steeples
By the relief office, I saw my people
As they stood hungry, I stood there whistling
This land was made for you and Me.

A great high wall there tried to stop me
A great big sign there, said "Private Property"
But on the other side it didn't say nothing,
That side was made for you and me.

This land is your land This land is my land
From California to the New York island;
From the red wood forest to the Gulf Stream waters
This land was made for you and Me.

Nobody living can ever stop me,
As I go walking that freedom highway;
Nobody living can ever make me turn back
This land was made for you and me.

This land is your land This land is my land
From California to the New York island;
From the red wood forest to the Gulf Stream waters
This land was made for you and Me.

The Aporia

Aporia. From the ancient Greek. Poria = passage; thus aporia literally means impassable. Like the gateless gate, an aporia is therefore an impenetrable barrier. In western philosophy "aporia" is understood to stand for "an insoluble contradiction or paradox." Many Zen koans are presented in the form of aporia. For example, "A philosopher asked Buddha: 'Without words, without silence, will you teach me the Dharma (truth)?'" Since the truth can only be either spoken or transmitted silently, the question takes the form of a contradiction in terms. (NOT an oxymoron, by the way. This term is often confused with a contradiction but it is not. It is a figure of speech that suggests a contradiction.) And since there is no evident way of resolving the contradiction, it is an aporia.

Another example: Shuzan held up his staff and waved it before his monks."If you call this a staff," he said, "you deny its essential existence. If you do not call this a staff, you deny its temporal existence. What should you call it?"

Another: "Suppose you meet a Zen master on the road. You can't
talk to him. You can't stand there silent. What can you do?"

Or this: Baso said to a monk, "If I see you have a staff, I will give it to
you. If I see you have no staff, I will take it away from you."

The situation we now find themselves in is actually very much like a koan, in that it takes the form of an aporia and appears to present an impenetrable dilemma. It is indeed a gateless gate. If presented like a koan it might go something like this:

If the government doesn't bail out the many failing banks and other financial institutions holding toxic assets then there will be a ripple effect among similar institutions all over the world. The entire financial system will collapse and along with it the stock market. As a result we will have a terrible depression. On the other hand, there is no way to meaningfully bail out these institutions, first, because their debts are so huge, and second, because there is no way to determine how much they are worth. If the government tries to bail them out nevertheless, either by guaranteeing their debts or by nationalizing them, it will have to print so much money that the dollar will almost certainly collapse -- and the world monetary system along with it.

Or, to put it in simpler terms: the economic system cannot be allowed to collapse because that would be a catastrophe; on the other hand, there is no way to prevent the economic system from collapsing without producing a catastrophe. So what are you going to do, Mr. Obama?

The Financial Armageddon we are now confronting is not simply a technical problem that has to be solved, as assumed by our leaders, the pundits and the media generally, who are continually arguing back and forth on this issue -- but an aporia, an inherently insoluble dilemma. Our future should not, therefore, be in the hands of either the politicians or the economists. But you already knew that. Only a poet can pass through the gateless gate!

The Gate

A gate can be either open or closed. If open, one can pass through. If closed, it becomes a barrier. Nevertheless, there is always a way to overcome such a barrier, by climbing over it or tunneling under it or breaking the lock, etc. But when the gate is a gateless gate, no barrier presents itself, in which case there is nothing to climb over, tunnel under or break. Consequently, the gateless gate is impenetrable.

The Japanese term for such a gate is mumon. "Mu" is a negative term, meaning no, not or without. "Mon" means, simply, gate. The masters of Zen Buddhism composed little stories or prose poems, called koans, that function as gateless gates. If the student can penetrate the koan, the gate will open. But the koans are impenetrable, so the gate will always remain closed.

Franz Kafka wrote of a man who stood at such a gate for most of his life and was never able to pass through. The Spanish filmmaker Luis Bunuel created a film about the gateless gate, The Exterminating Angel. It's about a group of people who gather together for a dinner party but, when it's time to leave are unable to do so. Nothing prevents them from passing through the door, which presents no barrier, as it isn't locked. But for them it becomes a gateless gate and they remain trapped inside for months. In the final scene we see a herd of sheep, which gives us a hint as to the nature of this gateless gate.

When I saw President Obama's speech before congress last night I was reminded of this film. Everyone seemed to be having such a great time (except for the Republicans of course) and our president was literally beaming with confidence. However, as is becoming increasingly evident, the barrier confronting them is not one that can be climbed over, tunneled under or smashed through. Like the door of the dinner party or the Zen koan, it is a gateless gate. The wealthy, privileged and spoiled partyers of Bunuel's film start the evening happy and carefree, but as the film progresses, food and water become increasingly scarce and the social order disintegrates.

The koan has been described as a hot coal stuck in the throat that one can neither spit out nor swallow. The Gateless Gate is the Gate of Hell.

Tuesday, February 24, 2009

The Precipice

"In trying to answer the Koan, the student will come to a mental "precipice", as it were, where all the methods and procedures of accepted thinking no longer function. The purpose of the Koan is to shove the student over this precipice into an area of experience that is completely new. This is the spiritual reality that the Zen master is attempting to guide the student towards" (from Understanding the Meaning of Zen Koans, by Gary Smith).

The Shape of Things to Come -- Part 9

Here's how I think it's going to play out, over the next few months or maybe even years:

1. Thanks to the Power of Magical Thinking (see previous post), most economists, especially the ones now advising our President, are still seeing the world in terms of "free market" dogma. In other words, like Wile E. Coyote, they're still hanging in empty space, off the cliff, not yet brave enough to look down to see for themselves that there is no longer any "there" there. They are thus not yet ready to take the plunge into the new reality that inevitably awaits them (and us). Not only don't they see that the financial system they're straining so hard to preserve is already dead, they also can't see that it is not worth saving even if it could be revived. Their model of a healthy economy is based on "free market" principles now universally understood to be horribly misguided delusions. But the full force of this revelation has not yet sunk in, so they still see the revival of the status quo as not only a worthy goal, but an absolute necessity -- and at all costs. In other words, in their minds they are still on the same horizontal trajectory, despite the fact that there is no longer anything solid beneath their feet whatsoever. This is an extremely dangerous delusion. But the "free market" ideology they've been raised on prevents them from seeing any alternative.

2. In the words of Alan Greenspan, an ideology "is a conceptual framework with the way people deal with reality. Everyone has one. You have to — to exist, you need an ideology." To give Greenspan his due, he's one of the few to actually admit he was wrong. And its extremely important to understand his insight into why he was wrong. An ideology is more than just a set of beliefs, its also a set of blinders that prevents people from seeing beyond the limits of their own worldview -- or to realize that anything at all can even exist beyond those limits. And, as Greenspan so eloquently put it: "The question is whether it is accurate or not." If ones ideology contains flaws but one persists nevertheless in uncritically accepting it, then one is in danger of falling grievously into error: "And what I’m saying to you is, yes, I found a flaw. I don’t know how significant or permanent it is, but I’ve been very distressed by that fact." (As are a great many others.) It's important, therefore, to realize not only that our political and economic leaders are completely deluded, but that their delusion isn't simply the result of some miscalculations or even wishful thinking, but solidly based in their innermost core beliefs about how the world operates and why. Which means that, no matter how many times they are told by this or that expert that that this or that effort to revive a hopelessly deceased economy is doomed to failure, they will persist in their failure until, as with Greenspan, they are ultimately forced by circumstances to admit that, yes, there was a "flaw" in their thinking. But by then it may be too late.

3. So. What will happen is that governments worldwide will persist in their folly, pouring increasingly alarming billions and trillions of dollars, euros, rubles, whatever, into a financial system whose outrageous debts are a bottomless pit that will never be filled. And to finance this expenditure, while at the same time attempting to stimulate the economy, handle the interest on their national debts, pay the cost of various and sundry wars and other conflicts, and cover the expenses of the various "entitlement" programs that form the basis of their social safety nets, they will need to print humungous amounts of money, far beyond anything attempted in the past, beyond Weimar Germany, beyond Zimbabwe.

4. For a while this strategy will appear to be working. "Toxic" debts will be paid, investment bubbles will be re-inflated, jobs will be created, mortgages will be paid, wars will be fought, entitlement programs will flourish, etc. While major creditors such as the Arab oil sheiks, the Chinese, etc. will be unhappy about the diluting of their enormous Treasuries investments, thanks to inflation on overdrive, they will have little choice in the matter, due to a variation on a principle known as MAD, or Mutual Assured Destruction. If they were to call in their loans, demanding their money back, then the whole fabric of the financial universe would dissolve before their eyes, and their money would be not only worthless but meaningless. So they will have no other choice but to opt for "peaceful co-existence" by looking the other way, biting the bullet, and continuing to export product to an ever more "affluent," continually "reviving" consumer market in the West.

5. Strangely enough, such an arrangement, as zany as it might sound, actually could work -- so long as everyone involved agreed to let it work. In other words, so long as Wile E. Coyote refuses to look down, his boundless "confidence" could in principle keep him afloat indefinitely. This is in fact the basic principle behind what could be called the "Infinite Ponzi Scheme." What's important to realize is that such a scheme can work simply because what is possible in the real world need not depend on money at all. Money is simply paper. Whether it holds its value or continues to decline in value is of no intrinsic importance whatsoever. As Einstein once noted, an astronaut accelerating in free fall would, like our coyote friend, feel nothing unusual. Until landing, of course.

To be continued . . .

Sunday, February 22, 2009

The Power of Magical Thinking

In Cartoon Laws and the Economy, by Paul Petillo, we have a primer on the fundamental processes now at work in our government's efforts to "revive" a hopelessly compromised financial system. Here is Petillo's "Cartoon Law I":
"Any body suspended in space will remain in space until made aware of its situation." If the economy steps off a cliff even as we spend countless hours listening to educated bankers and economists tell us that the near future looks fine, you can expect the following to happen. The President takes the microphone and declares, while loitering midair, offering such tidbits of wisdom about the beneficial effects his stimulus package this or his tax cut that, until he chances to look down. And you know what happens next.
The dynamics of the situation are demonstrated in the following diagram, from another, more technical, analysis, called the Wile E. Coyote Effect:
The above is what actually happens when some object runs or is pushed off a cliff. But the majority of people believe the object will actually hang in the air for an instant before falling, as in the leftmost trajectory of the following diagram:
Most get it wrong because they have watched far too many cartoons. In the world of high finance, however, where the laws of psychology are more important than the laws of physics, trajectory 1 does in fact apply. It is certainly possible to find oneself suspended in space when contemplating the dynamics of our economy, buoyed up by something called "confidence," which we are told we need more of -- as in the phrase "confidence game."

Here is Petillo's Cartoon Law IV:
"The time required for an object to fall twenty stories is greater than or equal to the time it takes for whoever knocked it off the ledge to spiral down twenty flights to attempt to capture it unbroken." This is my favorite axiom of all. Who among us has not seen the Federal Reserve do this with each rate cut? And now as Fed chairman Ben Bernanke wonders if inflation is worth controlling even if there is no wage-price spiral evident (an inflationary benchmark that suggests the worker will have the ability to demand higher pay because things cost more and the employer, reluctantly will give this wage to the worker creating a spiral downward dragging the whole of the economy with it) as he races down the stairs. Only Cartoon Law IV is a waste of time. The priceless nature of the economy, the object hurtling through space in this instance, falls victim to the inevitable comic result: the attempt to catch it is unsuccessful.
Most amusing of all is the mystification experienced by the pundits, especially the pompous, humorless, pseudo-conservatives of the Republican Party, as they contemplate the transmogrification of their "free market" Capitalist system into, horror of horrors, socialism, via the nationalization of the banks. Well they ain't seen nothing yet. Because Mr. Coyote will ultimately fall, at an ever accelerating rate -- straight down into the sort of neocon Hell where everything becomes nationalized. Not because anyone actually wants that, but due to a hitherto unknown law of economics that I will call Cartoon Law XYZ: when Capitalism goes into free fall, the only power in the world that can stop it is: socialism. And if you doubt me -- do the math: as in 2 + 2 = 4.

Saturday, February 21, 2009

She's a Rider, but . . .

Last Payday at Coal Creek
As performed by Pete Steele.

(That IV chord just kills me every time:)

Bye bye, bye bye, oh, bye bye,
Bye bye, my woman, I'm gone,
Bye bye, my woman, I'm gone.

Payday, it's payday, oh, payday,
Payday at Coal Creek no more,
Payday at Coal Creek no more.

Payday, it's payday, oh, payday,
Payday don't come at Coal Creek no more,
Payday don't come no more.

Miss me, you'll miss me, you'll miss me,
You'll miss me when I'm gone,
You'll miss me when I'm gone.

She's a rider, she's a rider, she's a rider,
She's a rider, but she'll leave that rail sometime,
She's a rider, but she'll leave that rail sometime.

Timing is everything, I think. Pete Steele had it. The "easy riders" of Wall St. didn't. The prophecy in the song came true and they got themselves derailed.

Soros Sees No Bottom

From Reuters:

Soros Sees No Bottom for World Financial "Collapse"

NEW YORK (Reuters) - Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.

"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."

His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama.

Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker said.

No one really wants to hear this, but there is no way the old system is going to be revived. Which is just as well, because why on Earth would we want to revive a system so clearly manipulative, exploitive and corrupt? -- to the core! Am I the ONLY one who sees this?

Friday, February 20, 2009

Hard Times

Interesting article in the NY Times a few days ago (Feb. 18): A Swiss Bank is Set to Open its Secret Files. Remember those Swiss banks? The ones with those secret numbered accounts that were never ever supposed to be revealed? That could somehow flaunt the laws of every government everywhere in the world, providing a safe haven for tax cheats, mafia dons, jewel thieves, corrupt officials, Ponzi scheme operators, and God knows how many Wall St. bonus babies? (In case you were wondering where all that money is being stashed.) Gee, it's funny how for so many years no one in government seemed too concerned about those accounts or what they might mean. (And come to think of it, haven't you ever wondered about what happened to all that extra campaign contribution money that never got spent?) And our citizens never seemed particularly worried either.

"Call it sleep," I suppose. But now we're being rudely awakened -- and at the worst possible time. "Gee Ma, do I have to go to school today? Again???" "I'm afraid so, son." As Marshall McLuhan once said: "Education is painful."
UBS, the largest bank in Switzerland, agreed on Wednesday to divulge the names of well-heeled Americans whom the authorities suspect of using offshore accounts at the bank to evade taxes. The bank admitted conspiring to defraud the Internal Revenue Service and agreed to pay $780 million to settle a sweeping federal investigation into its activities. It is unclear how many of its clients’ names UBS will divulge. Federal prosecutors have been examining about 19,000 accounts at the bank, but UBS ultimately may disclose the identities of only a few hundred customers.
Only $780 million? Chump change these days. Looked like UBS might be getting off easy, especially if the heads of only a few hundred "customers" will be on the chopping block. There's more, however, because in a followup article yesterday the Times revealed that the Justice Dept. wanted UBS "to divulge the identities of 52,000 Americans whom the authorities suspect of using secret offshore accounts at the bank to dodge taxes." Say what? 52,000 who??? As in: fifty two thousand? Americans? Dodging taxes????

More juicy details:

The 2004 memorandum, for instance, described how UBS created hundreds of “dummy” offshore corporations where its clients could hide money from the I.R.S. An e-mail message sent that year captured some of the coded language used by UBS bankers. In their world, “one nut” meant $250,000, while “one swan” meant $1 million. Colors were used to designate certain currencies. Orange, for example, represented the euro; blue, the British pound. Several messages described UBS actively referring clients to outside lawyers and accountants in Switzerland and elsewhere who set up secret accounts for them.

In a brief interview on Thursday, one UBS client said the bank also provided wealthy clients with electronic devices with coded computer chips that enabled them to gain access to their accounts and transfer money secretly. The passwords changed each time the accounts were accessed.

In the criminal investigation that led to this week’s settlement, the Justice Department had zeroed in on about 19,000 wealthy Americans. Those UBS customers had a combined $20 billion in assets at the bank, and may have evaded $300 million a year in federal taxes through UBS’s undeclared offshore private banking services.

But the I.R.S. has been conducting a parallel investigation, and on Thursday the Justice Department asked a federal judge to require UBS to disclose to the I.R.S. the identities and records of the 52,000 clients. In the past, UBS has suggested that the 19,000 accounts under investigation, which it is now closing, were the extent of its undeclared offshore banking services.
So far, this truly astounding and profoundly disturbing piece of news doesn't seem to have made much of an impact on the media. And I'm wondering why. Nothing at all on the economics blogs I've been following. Nothing on the usual network news or even PBS. I don't have cable, so maybe something's been mentioned there. Nothing on the CNBC website today, unless it's buried somewhere at the bottom of the heap. All I get when I search the Fox News website for UBS is under "subscribe." Maybe if I subscribed???

I have a bad feeling about this. There are going to be lots of very influential people who will not be happy about this development and will be doing everything in their considerable power to kill both the investigation and the story. On the other hand, if we could collect back taxes from 52,000 (count 'em!!!!) crooked billionaries -- think what that could do for the "recovery."

To borrow the prophetic refrain of an old song:
Since cheating has got so much in the fashion
I'm afraid it'll spread all over the nation
And it's Hard Times:

(As sung by Mrs. Lillie Steele.)

Come all you good people, I'll sing you a song
I'll tell you the truth I know I ain't wrong.
From father to mother, from sister to brother
They've got in the fashion of cheating each other
And it's hard times.

Since cheating has got so much in the fashion
I'm afraid it'll spread all over the nation
And it's hard times.

Here's the old baker bakes the bread we eat.
Likewise, the old butcher by selling his meat.
They tip up the scale yards and make them lay down
And swear it's good weight if it lies ten pounds
And it's hard times.

Here's the old blacksmith makes his living by the sweat of his brow.
Likewise, the old farmer by following his plow.
They think they are right in their own conceit,
They'll cheat each other in measure and weight
And it's hard times.

Since cheating has got so much in the fashion
I'm afraid it'll spread all over the nation
And it's hard times.

Here's the old Methodists they'll sigh and they'll morn.
They'll hang down their heads, they'll grunt and they'll groan.
And if there's no money, they'll have to go out
They'll shut up their doors and they'll sing and they'll shout
And it's hard times.

And here's the young gentlemens, they'll mat (?) and they'll go.
With ruffles and buckles, to make a great show.
They go to their town, and call for some wine
I'm afraid a great many the gallows will find
And it's hard times.

And there's the young ladies, they'll slick and they'll sleep (?)
They bunch up there hair, so nice and so neat
They'll sit up in their chairs, so nice and so straight
To make the young gentlemens think they look sweet
And it's hard times.

Since cheating has got so much in the fashion
I'm afraid it'll spread all over the nation
And it's hard times.

There's the old Baptists I like to left out
I believe to my God they're the worst in the shop\
They'll sell you cold iron instead of good steel
They'll charge two dollars a bushel for meal
And it's hard times.

Now concluded I'll finish my song
I've told you the truth and I know I ain't wrong.
And if you ain't ready to come at his call,
The Lord will depart and the Devil take all
And it's hard times.

Since cheating has got so much in the fashion
I'm afraid it'll spread all over the nation
And it's hard times.


The stock market hit its lowest point in many years today. This is because, either 1. the "market" was relieved to learn that the administration is dead set against nationalization of the banks (because after all it could have been worse), OR: 2. the "market" was unhappy to learn that the administration is dead set against nationalization of the banks (because after all it could have been better).

Meanwhile all the "taxpayers" who will be suffering so much due to the administration's programs will actually be getting tax breaks and there will be NO tax increases for anyone in the foreseeable future. So who will be paying for all this?

One thing is for sure. It won't be: the ROMANIANS!!!!!!!!!!!

Of course, Romania isn't the only place in the world worth singing about. There is (was) also: McCainia:

Fortunately, DocG is Jewish, so capable of seeing the humor in anything -- and everything. Gut Shabbas, one and all!

Thursday, February 19, 2009

The Most Dangerous Man on the Planet

No. Not Osama bin Laden. Not Bush/Cheney either -- not anymore, at least.

The envelope, please. And our winner is:

Al Gore

Any serious attempt to counter the effects of global warming will have serious consequences, including drastic increases in the price of energy. And the consequences of such increases could be far more devastating than anything global warming might (and I must emphasize the word "might") do.

I think the terms of the whole debate need to be reconsidered, because the real issue is not whether or not g. w. is caused by nature or by humans -- the "mea culpa" factor -- but whether or not we can actually do anything about it that won't be worse than the perceived threat itself.

Sure, it looks very much like g. w. is the result of human activity over the last century and a half. If we want to blame ourselves we have good reason. But the mistakes of the past were made precisely because we were reacting to certain perceived problems and ignoring others, which is exactly what we may be doing now.

A drastic increase in the price of energy worldwide -- and the enormous pressures that would have on the most vulnerable among us on the planet, including not only the possibility that many now living on the margins could actually freeze and/or starve to death but also the huge rise in unemployment that would result -- would in itself be a major disaster, possibly of epic proportions. There has already been a serious food shortage precipitated by short sighted efforts to produce Ethanol. The diversion of farmers and farmland to the production of this and other biofuels has been disastrous, seriously raising the price of certain essential foods for many of the most vulnerable people in the world. Biofuels of this type are clearly NOT the answer. Biofuels of some other type might be -- eventually. But the rush to make drastic changes based on a panic induced by Al Gore in chicken-little mode is not the way to solve the problem.

I'm not saying there is no problem, nor would I claim that certain matters don't deserve our urgent attention. Pollution of our air and water is certainly an urgent problem. Development of energy sources to replace fossil fuels, which will eventually run out, is also a serious problem -- though at the moment less urgent. But the notion, fostered by Gore and the "scientists" foolishly supporting him, that we absolutely must drop everything and concentrate on eliminating any and all carbon producing power sources NOW before it is TOO LATE is NOT the answer. I'll add that the scientists supporting Gore's position are primarily geologists, meteorologists, etc., but not economists. They may be qualified to evaluate the question of whether or not the Earth is getting warmer, if this is caused by humans or not, and whether carbon is the culprit. But they are not in a position to evaluate what impact any effort to drastically change course, in an effort to reverse a trend that is probably irreversible in any case, will have on our economy -- and the lives of the billions of people now struggling to survive on the planet.

Even if we were to somehow stop the production of greenhouse gases tomorrow, that would not bring back the melted glaciers - and the ones now melting would continue to melt, meaning the seas would continue to rise, regardless. Nothing we can do now can prevent some really drastic things from happening climatewise over the next 100 to 200 years. But an over-reaction to this perceived problem is almost guaranteed to produce a man made disaster we'd have to face in the immediate future.

The good news about g. w. is that it is a very slow, very gradual process we can prepare for. There are a great many things we can do over the next 50 years or so, to relocate people, build dikes (the Dutch did it, why not the New Yorkers or the Florideans), etc. If certain parts of the world will become uninhabitable, others (such as large areas of Canada, Greenland, etc.) will move in the opposite direction. The United States opened up the west via the homestead act -- Canada could do the same with its vast and largely uninhabited northern territories, due, apparently, for a major warmup.

The ONLY way to effectively start to bring down the level of greenhouse gases in the forseeable future is to go whole hog with nuclear power. All sorts of people who would have never dreamed of advocating such a move are now considering it. And, given time, maybe it's possible that we could some day find a way to build such plants in a truly fail-safe manner. But Al Gore insists we have no time and have to act NOW! True, he's not calling for nuclear power as a solution. But more and more people are starting to take it very seriously, since it appears to be the only viable option if we want to turn things around on a dime, as Gore insists we absolutely MUST do.

Currently the old and very dangerous Indian Point nuclear power plant, dangerously near New York City is being looked at, since it is due for re-commisioning. In a world without all the hysteria invoked by Al Gore, it would probably be decommisioned in the interests of safety, and some sort of coal-fired technology considered as an alternative. In the present climate, however, that's not likely to happen. All indications are that the old plant will be recommisioned despite the very real dangers of a serious accident. And if there is a serious Chernobyl type breakdown there, the lives of millions could be effectively destroyed, a consequence far worse than anything global warming would do for the next 50 years at least.

Humankind has adapted in all sorts of ways to all sorts of environmental challenges and as I see it we have a very good chance of adapting to this one -- especially because it is coming at us with all the speed and alacrity of a Galapagos tortoise. It's huge -- but slow. We do have world enough and time to deal with it. We would NOT have world enough and time to deal with the sort of crisis that would be produced by serious increases in the cost of energy and food or a major accident at a nuclear power plant.

Don't get me wrong. We are probably responsible for global warming. But the lesson to be learned from that is: less hubris, less effort to bend mother nature to our will. More common sense, more of an effort to look ahead, calmly assess what we are faced with -- and deal with it.

In the introduction to his NY Times Blog, dotearth, Andrew Revkin, a strong Gore supporter, warns us that "By 2050 or so, the world population is expected to reach nine billion, essentially adding two Chinas to the number of people alive today." The implication being that unless we do something now about global warming, the planet will not be able to sustain a population of this size. This projection is presented as though it were inevitable and irreversible. It is not. Like Global Warming, it is the result of human actions, but unlike Global Warming, effective action CAN be taken to ameliorate it. Yet, for reasons that are political, ideological, what have you, but mainly thanks to the efforts of Al Gore, nothing is being said about this population explosion, and no serious largescale attempts (outside of China) are being made to forestall it -- instead, all eyes are on Global Warming.

No matter how effective we might be in eliminating carbon from the atmosphere, the effects of that might not be meaningful for another 100 years, at least. Meanwhile, the sort of extreme efforts needed to reverse the trend could have devastating effects on human life in the next 10 to 20 years, by diverting attention and funding away from much more urgent concerns — such as the uncontrolled population crisis.

Consider this. If we were to find a way to feed everyone on earth and cure all their illnesses, and did nothing to control population expansion, then our efforts would have been in vain, because within a generation we would have at least quadrupled the number of mouths to feed. This is the problem we should be focusing on, because it is the size of the Earth's population and its alarming growth that is far and away the most serious problem to be faced in the years to come.

As I see it, Global Warming is for real, but it is also so difficult to control and so costly, that any serious effort to ameliorate it in any meaningful way could literally wreck the world economy, with devastating consequences for hundreds of millions of people in the poorest areas.

On the other hand, an all out effort to control population expansion could be dramatically successful with far less risk and cost. If world population could be brought under control, the effects of global warming would be, as as Revkin suggests, far less drastic.

What Gore and his followers have forgotten is an important concept called “ecology” — which ought not be understood as limited to the “natural” environment alone. What ecology teaches us is that a great many factors must be taken into consideration when planning, because certain things have a way of affecting certain other things, and in ways that are often very difficult to predict. There is a balance in nature, true. But there is also, and now especially, a balance between the “natural” environment — and the human environment, including something usually referred to as “the economy” (stupid!). If we march full steam ahead to “fix” the one, and neglect the impact of our actions on the other — we could be producing a man-made disaster far greater — and more immediate — than the many environmental crises (global warming is only one) we’ve already produced.

Tuesday, February 17, 2009

Take This Hammer

Take this hammer,

Carry it to my captain,

Tell him I'm gone.

Twelve words. Three plus five plus four. You can spend the rest of your life trapped in that web, trying to either puzzle it out or free yourself from its spell. Economics is poetry. And poetry is economics. A twelve word investment, yielding untold dividends, year after year after year.

Take this hammer.

The token. The mediator. The medium of exchange.
Elementary semiotics.
Take this hammer. Carry it to my captain. A symbol. Or maybe an IOU. A promissory note.

Tell him I'm gone.

So you have the note in your hand. You are the bearer of the note. But the debtor, he's long gone. You won't find him. Hang onto your note, hang onto your hammer -- because that's all you have. Your faithful employee is gone. But he's left you with his most precious possession: his ball and chain.

The visuals tell the story in this version, though the musical rendition leaves something to be desired:

This old hammer

Rings like Silver,

This old hammer

Rings like Silver,

This old hammer

Rings like Silver,

Shine like gold,

And it shine like gold.

But the note itself has value, don't you see? It rings like silver. It rings like silver. It rings like silver. And it shines like gold.

(“I’ve got this thing and its uh golden, and Im not giving it up for fucking nothing!” -- Rod Blagovich)

What'd I tell you? Poetry is economics. Economics is poetry.
But don't you DARE pick that quarter up off of the ground. No telling where it's been. NO telling where it's been.

The Rage

They tell me Rage is sweeping the country -- which got me thinking . . .

One of my favorite Bluegrass bands, playing Little Maggie:

Oh, yonder stands little Maggie
With a dram glass in her hand
She's drinkin' away her troubles
She's a-courtin' another man

Last time I saw little Maggie
She was sittin' on the banks of the sea
With a forty-four all around her
And a banjo on her knee

Pretty flowers were made for bloomin'
Pretty stars were made to shine
Pretty women were made for lovin'
Little Maggie was made for mine

Lay down your last gold dollar
Lay down your gold watch and chain
Little Maggie's gonna dance for daddy
Listen to that ol' banjo ring

Go away, go away, little Maggie
Go and do the best you can
I'll get me another woman
You can get you another man

And while thinking about Little Maggie, I got to thinking about the prisoner who told his buddy to "take this hammer, and carry it to the captain -- tell him I'm gone." What most of us would like to tell our boss from time to time, I suppose -- as told by Leadbelly:

Take this hammer, carry it to the captain
Take this hammer, carry it to the captain
Take this hammer, carry it to the captain
Tell him I'm gone
Tell him I'm gone

If he asks you was I runnin'
If he asks you was I runnin'
If he asks you was I runnin'
Tell him I was flyin'
Tell him I was flyin'

If he asks you was I laughin'
If he asks you was I laughin'
If he asks you was I laughin'
Tell him I was cryin'
Tell him I was cryin'

They wanna feed me cornbread and molasses
They wanna feed me cornbread and molasses
They wanna feed me cornbread and molasses
But I got my pride
Well, I got my pride

Then I got to thinking about Little Maggie's cousin, Darlin' Corey, recently deceased, and her boyfriend's efforts to wake her from the grave. A song about capitalism and stock market gambling gone wrong, I suppose, but great poetry nevertheless (which is what we are here for, right?):

Wake up, wake up, Darlin' Corey.
What makes you sleep so sound?
Them revenue officers a'commin'
For to tear your still-house down.

Well the first time I seen Darlin' Corey
She was settin' by the side of the sea,
With a forty-four strapped across her bosom
And a banjo on her knee.

Dig a hole, dig a hole, in the medder
Dig a hole, in the col' col' groun'
Dig a hole, dig a hole in the medder
Goin' ter lay Darlin' Corey down.

The next time I seen Darlin' Corey
She was standin' in the still-house door
With her shoes and stockin's in her han'
An' her feet all over the floor.

Wake up,wake up Darlin Corey.
Quit hangin' roun' my bed.
Hard likker has ruined my body.
Pretty wimmen has killed me mos' dead

Wake up, wake up my darlin';
Go do the best you can.
I've got me another woman;
You can get you another man.

Oh yes, oh yes my darlin'
I'll do the best I can,
But I'll never take my pleasure
With another gamblin' man.

Don' you hear them blue-birds singin'?
Don' you hear that mournful sound?
They're preachin' Corey's funeral
In some lonesome buryin' groun.'

A more traditional version, as performed by Roscoe Holcomb. Can you make out the words?

More by Roscoe Holcomb, beginning with Little Birdie:

Little birdie, little birdie
Come and sing me your song
Got a short time to stay here
And a long time to be gone
Rather be in some dark hollow
Where the sun don't ever shine
Than for you to be another man's darling
And to know that you'd never be mine
Little birdie, little birdie
What makes you fly so high
When you know that my true lover
Is a-waiting in the sky
I'm a long way from old Dixie
And my old Kentucky home
Got no father or mother
No place to call my home
Little birdie, little birdie
What makes your head so red
Well, after all that I been through
It's a wonder I ain't dead
Married woman, married woman
Why don't you settle down
Your heart's like the little birdie's
You're flying all around
Little birdie, little birdie
Won't you sing to me your song
You've caused me lots of trouble
You've caused me to do wrong
Pete Seeger's listening -- and I'm wondering what he's thinking.
For one thing I'm sure he's proud to be bringing the work of this great artist to the public. So he's "presenting" Roscoe Holcomb, and you can see that.

But. At the same time, you can also see in his expression something like what must have gone through Salieri's mind when he heard Mozart: what is the enormous gulf between this man's art and mine? Why will I never be able to come near what he is expressing? What is that profound gap between the direct pipeline to the soul and that which merely represents it? It's not just the poetry, because the same words can be sung by anyone. So what is it?

I'm recalling the great line in Kurosawa's "Seven Samurai," where the master swordsman confronts a young, but inexperienced challenger: "It's so obvious."

Sunday, February 15, 2009

The Shape of Things to Come -- Part 8

The complete self-destruction of our monetary and financial systems would be a lot like the process by which cancer is usually treated through chemotherapy. The power of the oligarchs who have ruled us, both covertly and overtly, for so many years will, like the cancer cells, be destroyed. As with chemotherapy, which attacks both malignant and healthy cells alike, a great many innocent people will also be damaged in the same process. But, as with an effective cancer treatment, what is good for the organism as a whole can be nourished back to health -- but only after what is harmful has been completely eliminated. And by eliminated I do not mean the super-wealthy themselves -- I am NOT advocating violent revolution -- but only the inordinate power they have been allowed to wield, since their power lay in their great wealth, which they themselves have foolishly squandered, in a wild orgy of greed and corruption. At bottom they are humans like the rest of us, and not necessarily evil -- maybe the better term would be "spoiled." And since these spoiled children have literally destroyed their own world of privilege, there would be no need for violent revolution in any case -- the revolution will, thank God, be entirely bloodless. Unless you insist on equating money with blood, in which case we could characterize it as a bloodbath -- of epic proportions.

How can an economy whose monetary and financial systems have been destroyed be nurtured back to health? As I see it, the only viable treatment would be some form of what is called "socialism." And it's important to remember that there is really no such thing as socialism in itself, as a rigidly defined socio-economic system. Strictly speaking, in fact, any government that is truly of the people, by the people and FOR the people, would entail some form of what could be called "socialism." And would, of course, be a democracy.

There are many possible ways in which such a democratic socialism could be instituted, but as I see it, one thing seems very clear: it can succeed only to the extent that it involves a high degree of international consultation and cooperation. I am not necessarily advocating "world government," though that too can be implemented in a great many different ways, and certainly need not be "totalitarian," as many might fear. Since the problems will be international in scope, any attempt to implement solutions based on competition between one nation and any others is bound to fall apart, with consequences that could be dire in the extreme. It is capitalism that promotes zero sum competition in any case. Socialism is predicated on cooperation for mutual benefit and it is in that spirit that socialist procedures should be implemented -- on every conceivable scale, from the neighborhood all the way up to the international community as a whole.

Is it possible for an economy of international scope to exist in the absence of a monetary system? I.e., without money? This may be the most fascinating question of all and it would be interesting to solicit suggestions from imaginative people everywhere as to how this could be done. I'm sure there are many possible options, all the way from pure, face-to-face barter, to a complex system of international exchange monitored by computers. Whatever form it takes, it will have to be what is called a "managed economy," i.e., an economy based on some sort of planned management scheme, rather than the free flow of money and credit.

Many people are suspicious of socialism because they fear any system based on large-scale management. Until recently it was generally assumed that a system based on the "free" flow of money, credit and capital would be more in line with democratic principles than an economy managed by "big government," via a complex bureaucracy. In the light of current events it has become all too clear that this is NOT the case. It was, as we now know, the lack of bureaucracy, in the form of regulation and regulators, that contributed to the problem. If government bureaucracy can be associated with bothersome "red tape," it must now be admitted that red tape is not always such a bad thing.

Returning to the issue of money, and whether or not it is necessary, I'd like to offer the proposition that money was already becoming a thing of the past long before the current crisis. Not only is our monetary system being destroyed, but it may have ultimately become obsolete in any case, as anyone who regularly carries a credit card can easily see. One possible solution to the problems we'll be facing when money (inevitably) loses all meaning, is the possibility of basing an economic system on a practice that was prevalent during World War II (and may in fact have contributed to the economic upswing associated with the aftermath of that horrible event): rationing.

Instead of credit cards, everyone could be issued plastic items that resemble credit cards, but that would actually function as ration cards. Ideally every adult in the world would get one. When you went to make a purchase, you would present your ration card, which would then be electronically connected to a computer system that would determine whether or not you are entitled to make the purchase. Everyone would be entitled to a baseline of ration "points" that would enable that person and his or her children to live in reasonable comfort, i.e., to eat adequately, be adequately clothed, purchase reasonable amounts of gas or other fuel, etc. (Under such a system housing, health care, education, etc. would already be covered, so the rationing system would not apply in such areas). Workers would be given additional points according to the nature of their work, how many hours they work, how difficult or strenuous the work is, how much education is required for their job, etc.

I'm not advocating such a system at this point, just tossing it out for consideration. And also demonstrating that we do have alternatives to money and to the highly destructive "free market" capitalist financial system everyone now seems to think is absolutely necessary.

Saturday, February 14, 2009

The Shape of Things to Come -- Part 7:The Black Hole

While our politicians continue to resist nationalization, the need for it is becoming increasingly clear to leading economists. Witness a column in today's NY Times,
A Stress Test for the Latest Bailout Plan, by Joe Nocera, who "still can’t help thinking that Mr. Geithner is avoiding the most straightforward, obvious path out of the crisis."

“When I talk to experts, after about two minutes they say, ‘we should just nationalize,’ ” said Simon Johnson, a banking expert (and blogger) at the Sloan School of Business at M.I.T. “That tells me that the consensus is moving in this direction, and we are all just afraid to say it.” Nationalization. I just said it. The roof didn’t cave in.

But nationalization isn't in the cards, because . . .
Mr. Geithner simply doesn’t seem able to get his head around the idea of nationalizing a big bank. As he told the New York Times columnist David Brooks recently, “It’s very important that we don’t look like there’s any intent of taking over or managing banks. Governments are terrible managers of bad assets. There’s no good history of governments doing that well.”

But that’s a canard. The government did a terrific job managing banks during the savings and loan crisis of the 1980s. It took over banks — “we called them bridge banks,” recalled William Seidman, the former chairman of the Federal Deposit Insurance Corporation, with a chuckle — replaced their top managers and directors, stripped out bad assets that the government then managed brilliantly, and sold the newly healthy banks to private buyers. It turned out not to be all that hard to find actual bankers who could run these S.& L.’s for the federal government.
In my view, nationalization is certainly preferable to any alternative Geithner is likely to come up with, and I predict that, sooner or later, the banks will in fact be nationalized. I also predict, by the way, that Geithner will be resigning soon, possibly very soon. But the process by which nationalization will take place will be the wrong one -- and it will fail. The sensible way to nationalize the banks (and all other institutions "too big to fail") is to first allow them to fail and then take them over -- at little or no cost to the government (i.e., the people -- I hate that word "taxpayers"). Unfortunately, however, our politicians are still bemused by the fatal notion that somehow these banks can be "saved," whatever that means, so, in the process of nationalizing them, they will simultaneously be pouring money into them -- not as an investment, as in spending money to hire new staff or modernize the technology, but in the vain hope that somehow the mountain of "toxic debt" held by these banks can be exorcised.

It can't. And for that reason, nationalization won't really solve the problem either. The only way to deal with the toxic assets is to let the banks fail first, which will reduce their investors, their creditors -- and their toxic assets -- to zero (Goose Egg, remember?), where they rightfully belong, since the investments in question are clearly worthless. But the "assets" (actually liabilities) are so huge that their failure would be tantamount to the failure of the entire US -- and world -- financial system. And that cannot be allowed to happen. Except that there is no way to prevent it from happening. So everything that will be done after nationalization will be purely in the realm of magical thinking. Very expensive magical thinking, because the only way to maintain the illusion that these obligations can be redeemed is to print money -- trillions of dollars of it.

There will never be enough. Not only will our economy follow the financial institutions themselves into bankruptcy, but our profligate printing of money will eventually make money itself worthless. This development will be far beyond mere inflation, or even hyperinflation. It will take us to the point that money will cease to have any meaning whatsoever. One could call this the "Black Hole" theory of economics, which would make it especially attractive to science fiction fans. Only it won't be fiction. It will be real.

This will be the oft-mentioned, but never explained, "unacceptable alternative" we've been hearing so much about, the total and complete disaster everyone in government is determined to avoid at all costs. But, as I explained in an earlier post, such a disaster, while it cannot be avoided, can most certainly be lived with. It's not like the aftermath of a war, where factories, transportation, communication, power, agriculture, even the social fabric itself, may have been totally destroyed. What will have been destroyed is the monetary system, i.e., money -- and the financial system that depends on it. And if its destruction is handled sensitively and intelligently, then the collateral damage to society per se can be minimized. If the process is badly handled, then the collateral damage could prove disastrous -- and that would be a shame, because such a dire outcome is not necessary.

Socialist Hell -- Part 3

T: [Simulateous with BB's recitation, also in a loud voice] When crimes multiply, they grow invisible. When suffering becomes unendurable, one no longer hears the cries of the sufferers. They fall like summer rain.

[It begins to rain. The original back lighting fades in gradually. Visual rain effect, using some sort of projection, sound of rain over the loudspeaker system, mixing with the increasingly violent wind sounds. As the scene continues, the memorial candles are blown out one by one.]

[VG sits down on the floor of the stage, putting his head in his hands and cries out:]

VG: [This speech is overlaid with the remainder of the interview] Hopeless. It's hopeless! I'm tired. So tired. So DAMNED tired! [He reaches under his mattress and pulls out a pistol.] All I want now is to rest, that's all. Nothing's worked out. For me. For the world. After all the years of idealism, all the hopes and dreams, all the debates, the protests, the activism, where has it gotten us? Even in this country the "new economy" is a sham. Plenty of "jobs," sure. If you want to teach part time, for a pittance, or take a temporary job, no benefits, minimum wage. The only ones profiting from it are the wealthy. The CEO's of big companies are the old robber barons born again. Raking in millions every year, the companies they work for could succeed or fail, no difference for them. Whether in Russia, Japan, the USA, wherever, nobody seems to mind. Let them rob us blind, who cares? Who the Hell SHOULD care, the way things have gone? What can we DO about it, they seem to be sneering at us, what can we do that hasn't already been attempted, hasn't already failed?

And on top of it all, I didn't get my grant -- and my wife is leaving me. I'm tired, I need to rest, rest, I need Death, to end it, to rest, rest, rest, so tired . . . .

[S.makes her way across the stage, approaches VG gently, touches his face, moves her hand down to his shoulder, down his arm and finally to the pistol, which she gently holds, as though holding his hand.]

[All freeze until the interview is over.]

[Interview ends.]

VG: [Shouting deliriously.] I can't stand it any more. [Casting S aside, he runs to the opposite end of the stage and lifts the revolver to his head.] End it now. Tired, so tired. End it now. I just want to sleep, to rest. End it. Forever. Sleep now. Sleep.

BB, S and T: [singing in both English and German. As they sing, they walk slowly toward VG. He gradually lowers the revolver and sinks down to the floor.]

English version:

Rest now but not in death in life
No time in death no time for rest
In death time dies too rest rest now

While there is time make time for rest
Death can not rest no time for death
Death can't persist there is no time

No time to breathe to turn to think
No time to rest no time in death
So rest in life rest now now rest

Rest now in time while there is time
In life rest now now rest in time
In time now rest while living rest

Death has no time no time to rest
When time is dead death can't persist
No rest for death there is no time

To breathe to think to rest to die
So rest now while there is some time
Rest now in life don't wait for death

Take time to rest for death will wait
Until you're done and take you then

There is no death there only was
Some time to live some time to think
To think of death to think of time

No death for time I think no rest
Rest now while there is time for rest
Rest now there is no time in death

Rest now for if you wait for death
There'll be no time in death for rest.

Death strikes you when you are asleep
You die but then you wake again
Was it a dream you dreamed you died?

It felt so real but here you are again
You die you're dead a billion years
You wake and think it's all a dream

Those years have vanished in a blink
You've dreamed you died and here you are.

German Version

Ruh nun doch nicht im Tod im Leben
Zeit nicht im Tod Zeit nicht in Ruh
Im Tod Zeit stirbt auch ruh ruh nun

Wenn Zeit es gibt nimm Zeit zur Ruh.
Tod kann nicht ruhn kein Zeit für Tod
Der Tod harrt nicht aus Zeit ist nicht

Zeit nicht zu atmen zu wenden zum Denken
Zeit nicht zu ruhn Zeit nicht im Tod.
So ruh im Leben ruh nun nun ruh

Ruh nun in der Zeit wenn es Zeit gibt
Im Leben ruh nun nun ruh in der Zeit
In Zeit nun ruh wenn Leben ruht.

Der Tod ohn Zeit ohn Zeit zur Ruh
Ist die Zeit tot harrt der Tod nicht aus
Kein' Ruh zum Tod gibt es kein Zeit

Zu atmen zu denk'n zu ruhn zu sterb'n.
Ruh nun so es noch gibt etwas Zeit

Ruh nun im Leben wart' nicht auf den Tod
Nimm Zeit zu ruhn der Tod wird wart'n
Bis du fertig bist dann holt er dich.

Es gibt kein Tod er war doch nur
Noch Zeit zu leben noch Zeit zu denken
Zu denken den Tod zu denken die Zeit
Kein Tod fuer die Zeit ich denk ruh' nicht

Ruh nun so es Zeit gibt zu ruhn
Ruh nun es gibt kein Zeit im Tod
Ruh nun denn wart'st du auf den Tod
Wird Zeit nicht sein im Tod zu ruhn.

Der Tod holt dich im tiefen Schlaf
Du stirbst doch dann wachst du wieder
War's ein Traum du traeumtest du starbst

S'war so echt doch nun bist du wieder
Du stirbst du bist tot Milliarden Jahre
Du wachst und denkst es ist ein Traum

Diese Jahre verstreich'n doch im Nu
Da traeumtest du starbst und da bist du.

[During the recitation of the poem, VG falls into a deep sleep.]

BB: Quickly. Gently. Tie his hands. Carry him to the laboratory.

[S and T tie VG. All three carry him offstage. Blackout.]

Socialist Hell -- Part 2

From I Bertolt Brecht, Act I, Scene 4:

(From a PBS report):Interviewer: I am here with Pavel Voshanov, formerly press secretary of Boris Yeltsin. Mr. Voshanov, when we met a few months ago, you said that in many ways Russia has ended up just where it began. Can you describe those ways to me?

Voshanov: After I looked at everything that's taken place between 1985 and the year 2000, I began to realize that Russia had run in a strange, terrifying circle, and now finds itself almost in the same place where it was at the dawn of perestroika. In 1985-87, there was no multi-party system in Russia. . . . We came full circle and now find ourselves in a situation where we do not have a multi-party system. . . . There is only one political party, and that is the party of the bureaucracy. Second, we started the reform with a complete disregard for the rights of citizens and have arrived back at the same situation. A human being, with his concerns and opinions, is of no interest to the political elite. He was of very little interest to politicians back in 1985, just like in 2000. But what is the most frightening is that, in 1985, we started with a society that was angry and disoriented. We ran this circle and ended up with an angry and politically disoriented society that is ready to accept any political slogans that the elite offers them. The public is ravenous. In 1985, there was no society in our country--what was then the Soviet Union. There was a population; but no society, no public opinion, no public pressure, no public oversight for what the government does. Look at what we have now. Everything is the same. There is a population, but there is no society. That's why there is no public opinion, there is no public oversight, there is no public pressure on the authorities. None of this. And this population is as easily manipulated as it was in 1985. Only one thing has changed. Now those who were in power in 1985 are flying different colors and are singing different hymns than they did back then--although nothing, in essence, has changed. . . . If you look at the moral core of Russia's politicians, you'll see that we escaped the corruption of the Communist Party only to find an even greater corruption--this time by non-Party members--not within one specific party, but on the level of the state. This corruption is even worse, and hard to fight. So I really think that our country has come full circle. We failed to build democracy in Russia.

Interviewer: What are some of the reasons?

Voshanov: . . . What did all of our troubles start with? As soon as intellectuals said the word "market" aloud, bureaucrats sensed right away that the market was a new way to gain property. If you move from one to another, you need to divide property. How do you do that? You make sure that you become rich, and your relatives become rich, and those people who are connected with you become rich. So this doctrine of property distribution by the bureaucracy was feudal in nature. . . . Our reformers like to claim that the entire problem lies in the fact that the Russian people were used to living in a communist society, with its communist slogans and ideals, while they, the reformers, were trying to transform the people into a capitalist society, with its slogans and ideals. Their claim has nothing to do with what actually happened. These reformers were trying to take us back to feudalism, with rich and omnipotent lords and an impoverished and powerless population. So what we see today in Russia is this very feudalism, a feudalism with some elements of democracy. Every four years, serfs are allowed to elect their leader, to elect in such a way that the results of the elections have already been determined. Everyone knows the outcome. Even the serfs themselves know who will be elected. It'll probably take a long time before democratic ideas will become appealing to Russians. For the time being, democratic ideas have been discredited. . . . One may charge Yeltsin with many wrongdoings: corruption, economic chaos, a huge bureaucracy. And all of this is true. But Yeltsin's main crime lies in the fact that he has discredited the very idea of a democratic society. This is the biggest loss of the last ten years. It is hardly possible to restore it over the next five or ten years. It'll take a long time. We are doomed to live in a very strange political system for a number of years. We are going to live under a "party-less" authoritarianism, with some elements of democracy.

[Midway through the above interview, BB recites the following, in a loud voice: ]

BB: "Wenn die Verbrechen sich haeufen, werden sie unsichbar. Wenn die Leiden unertraeglich werden, hoert man die Schreie nicht mehr. Auch die Schreie fallen wie der Sommmerregen." [see Brecht, Collected Poems, Suhrkamp, pp. 552]

T: [Simulateous with BB's recitation, also in a loud voice] When crimes multiply, they grow invisible. When suffering becomes unendurable, one no longer hears the cries of the sufferers. They fall like summer rain.

(to be continued . . . )

Friday, February 13, 2009

Socialist Hell

from I Bertolt Brecht, Act I, Scene 4:
"Weihnachtslegend," by Bertolt Brecht:
On this holy Christmas night/ We poor folk sit in this dim light
Huddled in our tiny shack/ While wind blows in through every crack.
Come to us our dear Lord and see:/ How badly we have need of Thee.
In a circle now we sit/ Like lost souls cast into the pit
The snow falls cold upon our skin/ The snow is freely coming in
Come, snow, with soft and silent grace: / Like us, in heaven you have no place.
We're brewing brandy as you see/ To warm us in our misery
As we add a bit of yeast/ We hear outside some big fat beast
Come, beast, inside, come quickly pray: / Beasts too have no warm place to stay.
Let's throw our coats into the fire/ For warmth is what we most desire
Burn the roofbeam too my friends/ We might not freeze before night ends.
Enter wind, and be our guest: / For you too have no where to rest.
[As the song ends, sounds of wind are heard from the loudspeakers. As the scene progresses, these sounds become more intense and violent.] . . .

VG: [Interrupting. From this point on, VG's speech and the news report are presented simultaneously, with VG intermittently shouting down the others.] I see what you're trying to do. You can't fool me. I'm not impressed. "What is to be done," wasn't that Tolstoy? Echoed by Lenin? Then trashed by Stalin? The "Wretched of the Earth," yes I know all about them. The most subtle temptation of all, the grand illusion that one can save the world. Sorry, I'm not tempted. [pause -- the news report continues]

It's been tried, hasn't it? What a delusion, what a disaster! Bloody revolutions were fought, one after the other. So many killed, maimed, tortured, sentenced to hard labor, slave labor. And for what? [pause]

Rejected by the very people they thought they were saving. Because those very people became their slaves. The saviors became the tormentors. Finally, it seems, they no longer cared any more about those people, no longer even saw them, all they thought about was themselves, their privileges, their power and ultimately, their own hides, which had to be preserved at any cost. [pause]

The road to Hell is paved by good intentions. The best intentions. Leading to the worst possible results. [pause]

There is a specter haunting Europe, yes. The specter of Communism. The specter of Bertolt Brecht. Because you are both dead! [pause] Over! [pause] Kaput! [pause]

Hey, I'm an artist! I know that to you it's a dirty word, "art." You wanted to make your plays into educational experiences, NOT artistic ones. I know all about that, don't think I don't. The Epic theater, yes, verfremdung, estrangement, the "alienation effect," so the audience would resist the hypnotic effect of theatrical "art", NOT get involved, see behind the illusion to "come to terms" with the world as a human construction, learn how "external conditions" produce what the Bourgeois call "nature." To make the audience "think" for itself. What a joke! And all the time you were pulling their strings, manipulating them, getting them to salivate on cue, yes. You sacrificed your great poetic gift to make simple minded propaganda for Stalin and his ilk, so that's what you want ME to do? [pause]

You know, I marched, I protested, I rioted, I even sabotaged -- almost. We all did, back in the Sixties. Some put their lives on the line. I pushed the envelope pretty far, you know, pretty far. Lost my job over it, threw away my career. Gladly. I didn't want a career anyhow, just wanted -- needed -- art. [pause]

You're dead, a spook, you can't do anything anymore but try to get to me, so I can take your place, carry on your mission. Why? It's over, it's failed, forget it, it's no longer new. [pause]

I refuse to politicize my art. I know how that sounds, in the "postmodern" age, which never ceases to remind us that EVERYTHING is politics, that we can't escape it. Fine. Good. I don't care. I insist on doing things my way, I insist on the freedom to be irresponsible, to question EVERYTHING, NOT just "external conditions" but internal ones as well, I'm proud to be an artist, NOT ashamed. If that's an elitist attitude, so be it, I don't care!

S: What a marvelous thing. Capitalism. The "new economy." The "new world order."

VG: My God! This is unbearable. I can't stand to hear it. How can people be expected to live like that? What is to be done? What is to be done? What is to be done?

T: Well, what do YOU think should be done? Can such a human catastrophe be dealt with simply by permitting "free speech," holding "free elections"? Aren't stronger measures required, don't such conditions cry out for such measures, despite everything you say?

BB: Did Communism really fail? And if so, what about that which has taken its place? The "former Soviet Union," what does that amount to now?

T: Compare Russia and China. One has cast Communism aside, the other still embraces it. Where would you rather live?

VG: I wouldn't last two days in Communist China. I'd say the wrong thing and be arrested. Or deported. Or murdered.

BB: And what would you choose to say, my friend?

VG: I don't know. I'd think of something.

S: Look at Russia, the way things are now. Or look at India, now there's a lesson in "Democracy" for you. China and India. Before Communism, both were so much alike. Class. Caste. Pariahs. Untouchables. Poverty on a scale unimaginable to us, horrible exploitation, human misery on a scale we can hardly contemplate.

BB: Now India is a "Democracy." China is not. China has changed. India has not. India is a disaster area. China is thriving, it's people have decent housing, health care, education, they are poor, certainly, but not starving, not desperate, not degraded not exploited. And Russia now, since its "democratization," is becoming another India.

VG: Of course the Chinese people are exploited. By the state. Which controls every detail of their lives. Over which the people have not the slightest influence. Of course they're starving, many at least are starving, or on the edge of starvation. There's just too many people, not enough resources, the commissars can't deal with it, but they want us to think they can, so they put on a happy face. What phoneys.

T: The "commissars" as you call them take responsibility for the well being of the people, which is more than I can say for the government of your United States, where simple human needs, like health care, or even a neighborhood shop in which to buy food, are left at the mercy of "market forces". Even in a poor country like Cuba, the government does the best it can to provide for the basic needs of its people.

VG: Well, if Castro is doing such a great job for "the people," and they love him so much, why can't he trust them enough to hold free elections?

S: Elections in Cuba would be controlled by American money, any thinking person knows that. Castro would lose, and so would Cuba, which would become like Russia is now -- corrupted and degraded -- exploited by the Robber Barons.


T: Look, if you really want to do something, you can. You can contribute to a fund that's been set up to help the poorest of the poor in the Phillipines. You can write a check.

VG: Well, OK, this sounds like a good cause. I can give you some cash, sure. [digs into his pocket]

S: And you can sign this petition, on behalf of working people all over the world, a pledge to help in the fight against exploitation . . .

VG: A petition? What do you mean? Let me see it. [she hands it to him] No. I'd rather not sign. Leave my name out of it, OK? I don't want my name mentioned.

[All freeze. Voices are heard over the loudspeaker system, presenting a news report, an interview (from a report broadcast originally on PBS).]

:Interviewer: I am here with Pavel Voshanov, formerly press secretary of Boris Yeltsin. Mr. Voshanov, when we met a few months ago, you said that in many ways Russia has ended up just where it began. Can you describe those ways to me?

(to be continued . . . )

Financial Sinners cast into the Hell of Socialism

Gustav Dore

Alternate title: Hard Landing for the High Flyers

The Valley of Dry Bonds

The hand of the LORD was upon me, and carried me out in the Spirit of the LORD, and set me down in the midst of the valley which was full of bonds,
and caused me to pass by them round about: and, behold, there were very many in the open valley; and, lo, they were very dry.
And he said unto me, Son of man, can these bonds live? And I answered, O Lord GOD, thou knowest.
Again he said unto me, Prophesy upon these bonds, and say unto them, O ye dry bonds, hear the word of the LORD.
Thus saith the Lord GOD unto these bonds; Behold, I will cause breath to enter into you, and ye shall live:
and I will lay sinews upon you, and will bring up flesh upon you, and cover you with skin, and put breath in you, and ye shall live; and ye shall know that I am the LORD.
So I prophesied as I was commanded: and as I prophesied, there was a noise, and behold a shaking, and the bonds came together, bond to his bond:
The Collateralized Mortage Obligation bond connected to the real estate mortgage investment conduit bond.
The real estate mortgage investment conduit bond connected to the interest-only security bond.
The interest only security bond connected to the principal-only security bond.
The principal-only security bond connected to the pass-through mortgage-backed securities with senior/subordinated structures bond.
Oh hear the word of the Lord!
And when I beheld, lo, the sinews and the flesh came up upon them, and the skin covered them above: but there was no confidence in them.
Then said he unto me, Prophesy unto the wind, prophesy, son of man, and say to the wind, Thus saith the Lord GOD; Come from the four winds, O Hot Air, and blow hard upon these slain toxic assets, that they may live.
So I prophesied as he commanded me, and the confidence came into them, and they lived, and stood up upon their feet, an exceeding great investment.
Then he said unto me, Son of man, these bonds are the whole Financial System: behold, the bankers say, Our bonds are dried, and our hope is lost: our derivatives are cut off from one another.
Therefore prophesy and say unto them, Thus saith the Lord GOD; Behold, O my toxic assets, I will open your graves, and cause you to come up out of your graves to reinflate your bubbles, and return you into the land of high finance.
And ye shall know that I am the LORD, when I have opened your graves, O my collateralized securities, and brought you up out of your graves,
and shall put my Spirit in you, and ye shall live, and I shall place you in your own bad bank: then shall ye know that I the LORD have spoken it, and performed it, saith the Secretary of the Treasury.

Thursday, February 12, 2009

Moral Hazard

For economists, "moral hazard" is a technical term. (From Wikipedia: Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions.)

But there is another kind of moral hazard that must be defined more broadly, and on a higher level of responsibility. First, in terms of morality in the most universal sense -- i.e., doing the right thing; and hazard -- as in, placing ones soul in jeopardy by failing to do the right thing. In terms of this definition of moral hazard, our greatest problem is not that our financial system has been irretrievably destroyed (which it has), but that someone might somehow find some way to revive the rotting corpse, so something resembling the status quo could be restored and we could "get on with our lives" more or less as before. This would place the whole world in the greatest possible moral hazard.

The lesson to be learned is that the system has been rotten to the core for too many years, and by fixing it we will only be inviting even more disaster. There is no way we can ever get it back to some earlier, more innocent state, certainly not through putting some regulations and regulators in place and letting everything proceed as before. Which is what will certainly be attempted, especially if people like Rubin, Summers and Gaithner are in charge. Where billions of dollars are at stake, there is no way you're going to find regulators who can be trusted to actually regulate. Talk about moral hazard! They'll go through the motions for a year or so and it will then be back to the races.

Face it. The only way to proceed is through full nationalization of every failing institution and, ultimately, some type of socialism, which can be a very good thing indeed, if it's designed by people who know what they are doing and have a commitment to basic human rights and values, including democracy. There is no real alternative that would not involve the sort of moral hazard that would rot the soul and put us all right back to where we are right now: on the road to nowhere.

Let the system fail. Let the mighty fall! And build a decent, truly democratic, equable, society from the ashes. It's been done before. It can be done again. It must.
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