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Archive for September 2008

“this blind world”

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From the NYT review of the new movie of Saramago’s Blindness:

In the movie, as in the book, every character but one — an ophthalmologist’s wife played by Julianne Moore — comes down with the title affliction, which is, bafflingly, contagious. (And which, just as mysteriously, manifests itself not as darkness but as total, blank-page whiteness.) “In most films everything is based on the eyes,” Mr. Meirelles said. “You cut to show where the character is looking, that’s how you tell stories. It’s all about point of view, and I wasn’t going to do this film showing only Julianne’s character’s point of view. So how do you get people involved with the characters when you can’t put them in the same position visually?”

His solution, he said, was to “put the audience in this blind world, to try to deconstruct the image, if I can say that.” (Just this once, but don’t let it happen again.) “Sometimes the image is washed out, sometimes it’s out of focus, sometimes the framing is totally wrong, deliberately,” he continued, “and toward the end of the film I even tried separating the sound from the image — showing a character with his mouth shut, but you’re hearing his voice.”

“It was all very experimental,” he said. “Very scary.”

We live in interesting times. One spends their weekend moving around as one is accustomed to moving around on weekends. Let’s see… Saturday went over to Highgate to spend time in a park, noticed that Andrew Marvell used to live where this park is now, ate lunch, returned to same establishment to drink a bit more once the kiddo was asleep in her stroller, watched the US debate on tv. Sunday: walked from Archway past Highgate Cemetery and through Parliament Hill to Hampstead where I ate a crêpe avec jambon et frômage from that cart there, saw Russell Brand eating lunch (didn’t realize he was anything other than a Guardian sports columnist till, like, yesterday – I’m still new to the UK), and almost bought Mary Beard’s new book on Pompeii. While doing all this, found time to purchase snacks and groceries and beer, watched Arsenal lose, watched the Mets lose, made headway on the novel that I’m reading and enjoying, and read some but not all of the newspapers I’d purchased.

So very bourgieboho and parental, no? Everyday life as it’s been lived in the age of the rising tides, the rising boats. It was a sunny weekend in London, so the parks were full, the outdoor spots at the eateries were packed.

But of course all this normalcy is playing out against the backdrop of some very very dire analysis that I don’t need to link to – I’m sure you’ve read it all already. Let’s not even talk about the bailout – even its authors don’t seem at all convinced that it will be effective in any palpable way. And really, it’s been clear from the start that that’s not the point. But the general consensus seems to have turned toward the inevitability of something very depression like, and perhaps deeper even than the depression with which we’re all familiar. So… the destruction of the last vestiges of the better bits of the state, soaring unemployment, insane inflation, the end of consumer credit, the evisceration of retirement accounts, mass repossessions of homes, bank failures beyond the means of the authorities to insure, and did I mention soaring unemployment? It was, apparently, ten minutes to midnight seven minutes ago – this is the takeaway from the papers and internet today.

Ordinary weekend days in London. I’ll go to work tomorrow and put the finishing touches on my lectures for the week. Reports of the imminent collapse of the world financial order. Collapse. Rubble. I’ll try to make it to the shop on campus, for once, before they sell out of the sandwiches I like. I’ll order that Beard book from Amazon; I’ll check CNBC.com thirty or forty times especially once the US markets open.

Listen: not everyone has the luxury of this disjunction. I know that very very well, and it’s true a hundred times over. Titannic numbers worldwide never got lifted on the upswing, or were directly punished by it. More locally, lots have already lots their shirts. I know this. I know it very very well.

But that said, this disjunction is something else. I suspect just about everyone who is in a position to is feeling it by now. And there are a bunch of things to say about it. The temptation is simply to keep detailing the uncanniness of the whole affair, where life goes on as an LCD mushroom cloud rises over the affluent corners of the earth. It is so easy to aesthetize it, to keep typing it out – especially since it feels like we’ve been in training to paint in just the tones we have on hand now for a decade or more.

But there’s something more profitable to do than painting for painting’s sake at the moment. Something is showing itself through the very failure of lived experience and financial news to line up properly. It is, perhaps, a promising pedagogical situation – or even a perfect political entry point. It goes something like this: the difficulty that we have reconciling our day to day lives with the problems in the market, the trouble that we might have actually believing that everything might be about to change, and change for the worse, and change as if overnight, is an appropriate difficulty to have. The fact that our lives are running along as they are, but might be ruined in a blink of an eye by a spreading virus of speculatory paper gone bad, is irrational, insane. I work, I am paid by my employer, I spend my money on the things that I need and sometimes just want – what should that have to do with credit default options or short sold stocks or baroquely structured derivatives?

It actually doesn’t make sense, not any sense at all. Our blindness before this thing, our inability to see (or see and then believe) what is about to happen, makes all the sense in the world. We are the realists; the world has conspired against realism.

If there is a “we,” we would do well to make much of the mysteries of abstraction, the violence that it has but should not be permitted to bring down upon ordinary life. We should cast this as a problem of a simplicity whose rights are being infringed upon by an unnecessary and illicit complexity. We should encourage those who would to wonder about the reasons why the normal circuits of life are being interrupted by factors that can’t even be understood by their administrators, their authors. For there is no reason why this must be – there is no reason that whatever these people in the financial districts of the world get up to, legally or illegally, normal life need be interrupted in any way. It will be, it is almost sure to be, but this is the tragedy. This is not, whatever the metaphors distributed by the news media and politicians, a meteorological event, an unforeseen occurrence. This, we should say, is not at all the case. It is not a sudden storm, a “black swan” – the difficulty of seeing this is part and parcel of the problem at hand…

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September 29, 2008 at 1:07 am

tough love

with 2 comments

Democrats Set Bailout Conditions as Treasury Chief Rallies Support – NYTimes.com

But Mr. Paulson said that he was concerned that imposing limits on the compensation of executives could discourage companies from participating in the program.

“If we design it so it’s punitive and so institutions aren’t going to participate, this won’t work the way we need it to work,” Mr. Paulson said on “Fox News Sunday.” “Let’s talk about executive salaries. There have been excesses there. I agree with the American people. Pay should be for performance, not for failure.”

But he quickly added: “But we need this system to work, and so we — the reforms need to come afterwards.”

Sorry, I don’t follow. I thought, you know, the banks desperately needed this help. I thought that was, you know, the point. We’re worried that they’ll turn their backs on our bouquet and box of chocolates and then do what exactly? Is the idea that if we don’t let the executives keep their packages, they will intentionally destroy their companies rather than take the fed’s gift money?

Um, the fix is in kids….

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September 22, 2008 at 10:14 am

Posted in crisis, marketing

counterbranding, slow economists, etc

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Would rather they’d stop branding this as ours, as what our ism would look like:

This is the state of our great republic: We’ve nationalized the financial system, taking control from Wall Street bankers we no longer trust. We’re about to quasi-nationalize the Detroit auto companies via massive loans because they’re a source of American pride, and too many jobs — and votes — are at stake. Our Social Security system is going broke as we head for a future where too many retirees will be supported by too few workers. How long before we have national healthcare? Put it all together, and the America that emerges is a cartoonish version of the country most despised by red-meat red-state patriots: France. Only with worse food.

They keep writing that piece, over and over and over. It’s attributable to the stupidity of the people who write for the respectable papers and magazines, their pavlovian ass-covering refusal to think for even a few seconds. That said, despite it’s actual origins, it has the look of a perfect last ditch PR campaign concocted in the dark recesses of one of the Madison Avenue imaginariums, doesn’t it. They starve the beast, reward their cronies, and the American public walks around thinking “Jesus, this is what France is like? This is socialism?”

One really does wonder also about economists. I’m not going to name names – because it’s potentially libelous – but I’m pretty sure one very prominent econoblogger (used to work in the Clinton admin, now teaches) who has been consistently wrong about this whole thing has actually pulled posts from early last week and from the week before. It shouldn’t come as such a surprising relief finally to see Krugman (not the one I’m talking about) come forward against what is happening.

The Paulson plan calls for the federal government to buy up $700 billion worth of troubled assets, mainly mortgage-backed securities. How does this resolve the crisis?

Well, it might — might — break the vicious circle of deleveraging […] Even that isn’t clear: the prices of many assets, not just those the Treasury proposes to buy, are under pressure. And even if the vicious circle is limited, the financial system will still be crippled by inadequate capital.

Or rather, it will be crippled by inadequate capital unless the federal government hugely overpays for the assets it buys, giving financial firms — and their stockholders and executives — a giant windfall at taxpayer expense. Did I mention that I’m not happy with this plan?

The logic of the crisis seems to call for an intervention, not at step 4, but at step 2: the financial system needs more capital. And if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place.

[….]

But Mr. Paulson insists that he wants a “clean” plan. “Clean,” in this context, means a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out. Why is that a good thing? Add to this the fact that Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency,” and this adds up to an unacceptable proposal.

I’m aware that Congress is under enormous pressure to agree to the Paulson plan in the next few days, with at most a few modifications that make it slightly less bad. Basically, after having spent a year and a half telling everyone that things were under control, the Bush administration says that the sky is falling, and that to save the world we have to do exactly what it says now now now.

But I’d urge Congress to pause for a minute, take a deep breath, and try to seriously rework the structure of the plan, making it a plan that addresses the real problem. Don’t let yourself be railroaded — if this plan goes through in anything like its current form, we’ll all be very sorry in the not-too-distant future.

Really doesn’t seem all that difficult to see this for what it is… except, apparently, for anyone in a position to say something about it. Thankfully PK’s getting there, but too little and too slow and too late, I’m sure.

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September 22, 2008 at 9:01 am

Posted in crisis, markets

here, this will make you feel better

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From a big New York Magazine piece on the end of book publishing:

It’s inherently risky, though. You have to wonder about the prospects for one new book that Elberse had her students case-study—Dewey: The Small-Town Library Cat Who Touched the World. Grand Central, inspired by the best seller Marley & Me, is betting on the new mini-genre of cat-related nonfiction. Grand Central initially offered $300,000, then went up to $1.25 million. Gobs more will be spent on marketing. You’ll likely be hearing about Dewey when it comes out this month, and if half a million of you still feel that you can’t get enough heartwarming pet stories, it just might earn back its advance.

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September 19, 2008 at 3:37 pm

Posted in such as it is

preview

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Everything happens five hours earlier here:

The public finances suffered yet another lurch into the red last month amid warnings of a record deficit this year that would force the next government to raise taxes or cut spending – or possibly both.

[…]

The national debt figures lurched higher as the government’s nationalisation of Northern Rock’s £87bn debt came onto the books for the first time, pushing debt up to 43.3% of national income, well above the government’s self-imposed 40% ceiling.

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September 19, 2008 at 12:22 am

Posted in crisis

“a Keynesianism largely military”

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Letter in the Guardian yesterday:

Despite the main finding in the latest report from the International Atomic Energy Agency that it “has been able to continue to verify the non-diversion of declared nuclear material in Iran”, the western media has focused on the issue of Tehran’s lack of transparency over the IAEA investigation into recent intelligence allegations (Report, September 12). These involve missile re-entry vehicle projects and have been rejected by the Iranians, who have not even been permitted to see the documents upon which the allegations are founded.

This week the US Congress is debating two non-binding resolutions which, if passed, will greatly increase the likelihood of military intervention against Iran. They call on the US president to “increase economic, political and diplomatic pressure on Iran to verifiably suspend its nuclear enrichment activities”, and demand “stringent inspection requirements” of all goods entering or leaving Iran and an embargo of refined petroleum products to Iran. Although both resolutions exclude authorisation for military action, the embargo will require a naval blockade. Such a blockade could result in skirmishes with the Iranian navy which could rapidly escalate.

The US is massing the largest armada of warships in the Gulf since 2003. Two aircraft carrier task forces are already there and a third was dispatched on August 22. French and British warships and carrier groups are also reportedly on their way. This has increased speculation that George Bush might authorise military attacks against Iran before the end of his term in office in January, or before the November elections to boost to the likelihood of a McCain presidency.
Stefan Simanowitz
Westminster Committee on Iran

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September 19, 2008 at 12:16 am

Posted in crisis, war

the socialisation of finance

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From Willem Buiter’s Blog at the Financial Times:

If financial behemoths like AIG are too large and/or too interconnected to fail but not too smart to get themselves into situations where they need to be bailed out, then what is the case for letting private firms engage in such kinds of activities in the first place?

Is the reality of the modern, transactions-oriented model of financial capitalism indeed that large private firms make enormous private profits when the going is good and get bailed out and taken into temporary public ownership when the going gets bad, with the tax payer taking the risk and the losses?

If so, then why not keep these activities in permanent public ownership?There is a long-standing argument that there is no real case for private ownership of deposit-taking banking institutions, because these cannot exist safely without a deposit guarantee and/or lender of last resort facilities, that are ultimately underwritten by the taxpayer.

Even where private deposit insurance exists, this is only sufficient to handle bank runs on a subset of the banks in the system. Private banks collectively cannot self-insure against a generalised run on the banks. Once the state underwrites the deposits or makes alternative funding available as lender of last resort, deposit-based banking is a license to print money.

That suggests that either deposit-banking licenses should be periodically auctioned off competitively or that depostit-taking banks should be in public ownership to ensure that the tax payer gets the rents as well as the risks.The argument that financial intermediation cannot be entrusted to the private sector can now be extended to include the new, transactions-oriented, capital-markets-based forms of financial capitalism.

The risk of a sudden vanishing of both market liquidity for systemically important classes of finanial assets and funding liquidity for systemically important firms may well be too serious to allow private enterprises to play. No doubt the socialisation of most financial intermediation would be costly as regards dynamism and innovation, but if the risk of instability is too great and the cost of instability too high, then that may be a cost worth paying.

These are issues that must be pondered not just in Washington but everywhere modern financial intermediation has taken root or is threatening to do so – in the financial heartland (Wall Street, the City of London, Frankfurt, Zurich, Tokyo and Dubai) and in the emerging markets that until recently were having their ears bent on the desirability of precisely the kind of financial institutions and markets that have now turned into trillion dollar collapsing dominos.

From financialisation of the economy to the socialisation of finance. A small step for the lawyers, a huge step for mankind. Who said economics was boring?

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September 18, 2008 at 9:19 am

Posted in crisis, markets, socialism