Category Archives: Economy

Bloated banks are “an existential threat” bigger than terrorism

John Lanchester, writing for London Review of Books, offers a dire warning about the status of Britain’s big banks that likewise speaks loudly to all of us living over here across the pond, since we’re in a similar situation:

As the new governor of the Bank of England, Mark Carney, takes up his job, it’s a good moment to reflect on the nature and scale of the work ahead of him. In the rear-view mirror, he can see how our banks reached their current condition — a story full of failure, scandal, greed and incompetence. That, as far as the overall picture of modern Britain is concerned, is the fun part. The difficult thing is looking forward and trying to work out what to do next. That’s because in their current condition our banks are an existential threat to British democracy, a more serious one than terrorism, either external or internal. As Andrew Haldane, director of stability at the Bank of England, put it in a historical overview a few years ago, ‘there is one key difference between the situation today and that in the Middle Ages. Then, the biggest risk to the banks was from the sovereign. Today, perhaps the biggest risk to the sovereign comes from the banks. Causality has reversed.’ Yes, it has: and the sovereign at risk is us. The reason for that is that in the UK bank assets are 492 per cent of GDP. In plain English, our banks are five times bigger than our entire economy. (When the Icelandic and Cypriot banking systems collapsed the respective figures were 880 and 700 per cent.) We know from the events of 2008 and subsequently that the financial sector, indeed the whole world economy, is in an inherently unstable condition. Put the size together with the instability, and we are facing a danger that is no less real for not being on the front page this exact second. This has to be fixed, and it has to be fixed soon, and nothing about fixing it is easy.

More: “Let’s Consider Kate

Conspiracy theories are a mythologization of capitalism


From an essay published on May 21 at The New Inquiry and bearing the teaser line “Just because we can hear the black helicopters doesn’t mean they don’t exist”:

The modern conspiracy theory is a mythologization of capitalism. That humanity writhes in the grip of a power alien to itself is so palpable that the expression of this reality assumes countless forms in the popular imagination, permeating pop culture, politics, and the persecution anxieties of our booming psychiatric industry. Films like The Adjustment Bureau and television programs like Burn Notice capture the zeitgeist with the laughable simplicity of its most trite tropes, trench coats and all. The novels of Dan Brown append cheap noir to rich cultural pseudo-histories in order to make them more entertaining. The wildly popular television program Ancient Aliens became a cash cow for the History (!) Channel by attributing the greatest historical achievements of scientific discovery and collective activity to little green neo-Calvinist deities from outer space. And never mind the “9/11 Truth Movement” and the shocking contention by some of its leading ideologues that the Federal Emergency Management Agency could organize a poker game, let alone a secret network of underground internment camps in which Art Bell and Alex Jones will soon argue over the top bunk.

In all these expressions, which blur entertainment and information in a manner consistent with the present cultural imaginary, human or extraterrestrial agents are depicted as consciously directing world events behind the backs of those who live them. Though countless colorful theories fall under the umbrella of “New World Order,” and this canon has enjoyed a febrile explosion since the election of the suspiciously other Barack Obama, their basic structure is largely universal. Most importantly, any good conspiracy theory proceeds from empirical premises which are manifestly true. In the vein of Dan Brown, stray facts are woven into vast interconnected webs by tenuous strings of causality and barbaric modus ponens proofs. Historical and social phenomena which are in fact intimately intertwined by the total social relation of capital are instead linked superficially by cheap literary devices.

. . . The irony of the increasing rationalization of society toward some mythic equilibrium is the intensification of paroxysm, of violent crisis, of catastrophe on a heightening scale which it has ensured. The crises inherent in the capitalist cycle now grip the entire planet, leaving destitution in the wake of periodic booms, leaving entire regions to starve, evacuating capital from entire cities and letting them rot while the local ruling class throws up their hands. In the major developed countries, the transition from hulking welfare state apparatuses to militarized police forces maintaining order indicates the increasingly reactionary tendency of states, faced with simply containing the results of a disordered market by brute force, rather than even pretending to curb the causes of destitution and hopelessness among the poor.

When market “experts” discussing the flow of capital sound like meteorologists groping to account for the weather, this is not a coincidence, nor are they’re being disingenuous. Chaos rules the day, though it is backed by the forces of “law and order,” a “hybrid monster” as the bald man remarked, the former referring to legal statutes aimed at responding to crime, and the latter aimed at extra-legal (and often illegal) intervention preventing hypothetical crimes and generally molding the social terrain. The chaos underlying modern life and the scrupulous social order which protects and enforces it appears as a vast global intrigue against those who reproduce it with their daily work. And in a way, it is.

In short, somebody would have to be bat shit crazy not to develop a conspiracy theory about the centralized interconnectivity of these conditions.

More: “I Want to Believe


Original “All-Seeing Eye” image by de:Benutzer:Verwüstung [Public domain], via Wikimedia Commons.

Disruption, catastrophe, and resilience in a hyperfast, hyperconnected world

From The Chronicle of Higher Education, a thought-provoking examination of the ins and outs, both philosophical and practical, of the contemporary reality of disasters, catastrophes, and “resilience” — a word and concept that, as the article points out, is currently all the rage among scholars and policy wonks:

In all, [Japan’s earthquake, tsunami, and nuclear meltdown] is the costliest natural disaster of all time, with the World Bank estimating the damage at $235-billion. The full extent of disruption might not be known for years. The Tohoku earthquake and subsequent Fukushima Daiichi meltdown echoed other major catastrophes — acts of nature, of the market, or of terrorists — that we have endured over the past several years. Those events also created ripple effects in a highly interconnected world, revealing the urgent need to be able to absorb such shocks — because we are certainly going to see more of them.

. . . Most approaches to resilience, [Joseph] Fiksel [one of the founders of the Center for Resilience at Ohio State University] complains, resemble traditional risk management: Identify a set of risks, calculate the probabilities, and do what you can to mitigate those risks. Those techniques, says Fiksel, don’t account for the unexpected — the so-called black swans — and they don’t acknowledge the rolling, compounding effects that disruptions can have in a hyperfast, hyperconnected world.

“We tend to get locked into economic and technological patterns that constrain us in terms of our ability to evolve and cope with new challenges,” he says. “What we really need is to operate with variability as the norm.”

Consider what has hit us hardest in recent years, how some of these disruptions came from or led to other woes: September 11, 2001; the 2003 Northeast blackout; the oil shock of 2008; the mortgage crisis and the Great Recession; Deepwater Horizon; the intense droughts; Hurricanes Katrina, Irene, and Sandy.

There are surely more disruptions to come. Stephen E. Flynn, a security expert and former military officer who is co-director of the George J. Kostas Research Institute for Homeland Security at Northeastern University, ticks off the most likely threats: a breakdown in the power grid; interruption of global supply chains, including those that provide our food; an accident at one of the many chemical factories in urban areas; or damage to the dams, locks, and waterways that shuttle agricultural products and other goods out to sea. The No. 1 threat, he says, is a terrorist attack that prompts lawmakers and a frightened public to shred the Bill of Rights or overreact in another way.

. . .  Thomas Homer-Dixon, director of the Waterloo Institute for Complexity and Innovation and a professor at the University of Waterloo who has long focused on studies in systems and resilience [and also the author of the much-discussed 2006 book The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization] . . . . takes an approach that’s more radical than what most policy makers and security experts are comfortable with. Resilience, he insists, comes from a process of creative destruction, as coined by the Austrian-American economist Joseph Schumpeter. Schumpeter described the way that capitalism brought about new businesses and new products from the destruction and discard of old businesses and products — a notion that has been adopted to describe the renewal of cities, information systems, political structures, governments, and so on. Our economic and political systems, Homer-Dixon says, are resilient because they have embraced a Schumpeterian framework, in a constant cycle of ruin and reinvention.

As for what creative destruction means for communities and societies, Homer-Dixon readily admits he doesn’t fully know. But the outline of the idea doesn’t always sit well with his audiences. “Fundamentally, it is a very threatening idea for vested and elite interests,” he says. Recently, when he spoke to civil servants in Canada about resilience, “they thought I was completely insane, or they were terrified,” he says. When most bureaucrats talk about resilience, they are talking about bouncing back to the status quo.

“Adaptation and innovation often require shock and crisis,” he says. “It can be a violent and messy process, and also really essential to real adaptation and real changes, instead of changes at the margins.”

More: “After Catastrophe


‘Monarchs of Money’: How central bankers became the new ruling class

A new short documentary from the CBC titled The Monarchs of Money explains in hair-raising and gut-punching detail how “The world’s central banks have printed unimaginable amounts of money in recent years. Neil Macdonald explores what this means for the global economy and for your financial well-being.”

There’s also an accompanying written report, billed as the first in a series of articles to be collectively titled Power Shift, “on the rise of the central bankers and the global imposition of cheap credit”:

Quietly, without much public fuss or discussion, a new ruling class has risen in the richer nations. These men and women are unelected and tend to shun the publicity hogged by the politicians with whom they co-exist.

They are the world’s central bankers. Every six weeks or so, they gather in Basel, Switzerland, for secret discussions and, to an extent at least, they act in concert. The decisions that emerge from those meetings affect the entire world. And yet the broad public has a dim understanding, if any, of the job they do. In fact, these individuals now wield at least as much influence over the lives of ordinary citizens as prime ministers and presidents.

The tool they have used to change the world so profoundly is one they alone possess: creating money out of thin air. There is an economic term for this: quantitative easing. More colloquially, it’s called printing money. Since the great economic meltdown in 2008, these central bankers have probably saved the world’s economy from collapse, and dragged it into the unknown at the same time. The amounts they have created are so vast as to be almost incomprehensible — trillions of dollars in pounds and euros, among other currencies.

. . . [T]here are two big concerns with what this new central banker elite has done. One is that no one really understands the consequences of pumping such vast amounts of money into the world economy. It’s already distorted the prices of certain assets, and some fear hyperinflation or market crashes are inevitable (the subject of tomorrow’s column). The other is that it’s caused a massive shift in wealth, from savers to borrowers, and is taking money out of the pockets of almost everyone approaching or at retirement age.

. . . Most of that generation grew up believing that if you save and exercise prudence that you will earn at least a modest return on your hard-earned money to keep you comfortable in your old age, perhaps along with a pension. But the money-printing orgy of the last five years looks to have shot that notion to smithereens. Very deliberately, the central bankers have punished savers, pushing interest rates so low that any truly safe investment — and older people are always advised to play it safe — yields a negative return when inflation is factored in.

. . . The plain fact. . . is that central bank- and government-imposed solutions to disasters caused by irresponsible, greedy, foolish behaviour are almost always carried out on the backs of the virtuous.

— Neil Macdonald, “The ‘monarchs of money’ and the war on savers,” CBC News, April 29, 2013

This is brilliant dot-connecting, big-picture journalism of the most valuable sort. Thank you Daniel Gill for the tip!

Recommended Reading 37

U.S. Out of Vermont!
Christopher Ketcham, The American Prospect, March 19, 2013

[EDITOR’S NOTE: This captivating article/essay about the relatively thriving secession movement in Vermont features a cameo appearance from Teeming Brain favorite Morris Berman, who delivered the keynote address at a secession-oriented conference held in September 2012 in the chambers of the house of representatives in Montpelier. E. F. Schumacher (another favorite) also shows up, as do a host of fascinating additional thinkers and activists, not to mention a passel of worthwhile ideas and concerns.]

During the Obama years, secession has mostly been an antic folly of the political right, courtesy of Texas nationalists, Dixie nostalgists, white supremacists, “sovereign citizens,” and gun nuts. There was no small amount of hypocrisy, of course, in this conservative rebellion. When Texas Governor Rick Perry in 2009 spoke publicly about a possible Lone Star secession, he billed it as a constitutional right in the face of overreaching government — though Republicans mostly hadn’t complained when George W. Bush was demanding profligate budgets and stabbing the sacred document with pencil holes.

Yet here in granola-eating, hyper-lefty, Subaru-driving Vermont was a secession effort that had been loud during the Bush years, had not ceased its complaining under Barack Obama, did not care for party affiliation, and had welcomed into its midst gun nuts and lumberjacks and professors, socialists and libertarians and anarchists, ex–Republicans and ex-Democrats, truck drivers and schoolteachers and waitresses, students and artists and musicians and poets, farmers and hunters and wooly-haired woodsmen. The manifesto that elaborated their platform was read at the conference: a 1,400-word mouthful that echoed the Declaration of Independence in its petition of grievances. “[T]ransnational megacompanies and big government,” it proclaimed, “control us through money, markets, and media, sapping our political will, civil liberties, collective memory, traditional cultures.” The document was signed by, among others, its principal authors, a professor emeritus of economics at Duke University named Thomas Naylor and the decentralist philosopher Kirkpatrick Sale, author of Human Scale. “Citizens,” it concluded, “lend your name to this manifesto and join in the honorable task of rejecting the immoral, corrupt, decaying, dying, failing American Empire and seeking its rapid and peaceful dissolution before it takes us all down with it.”

. . . . When the proceedings broke for lunch, I asked Morris Berman, who had been invited from his home in Mexico, what he thought of the conferees and their intentions. “There’s no chance in hell that a secession is going to happen under current conditions,” he said. “I’m a historian. I look at what’s possible. If Vermont seceded, there would be troops in Burlington in two hours.” Yet Berman was also hopeful. The Vermonters were reinventing secession. It would not be a mere political revolt, not simply a regional separation, but also, and probably more important, a revolt against the economy of empire, a move toward economic independence.These people here,” he told me, “are experimenting with a kind of monastic withdrawal that has political implications. Capitalism is eating itself alive, but as the system unravels you have all these little flowering buds appear.”

* * *

Europe’s flesheaters now threaten to devour us all
Seuman Milne, The Guardian, March 26, 2013

Teaser: Cyprus risks deepening the eurozone crisis as austerity is failing across the continent. Resistance will have to get stronger.

Europe’s flesheaters are back. The claim that the worst of the eurozone crisis is behind us now looks foolish. The deal forced on Cyprus by the German-led Troika at the weekend isn’t a bailout: it will effectively destroy the island’s economy. Instead of getting a grip on its grossly inflated banks, it will impose a brutal credit contraction, combined with sweeping cuts and privatisations, wiping out perhaps a quarter of Cyprus’s national income. Ordinary Cypriots, not Russian oligarchs, will pay the price.

. . . The eurozone has now become a zombie zone. . . . Whatever the focus of the meltdown in each country — banking in Cyprus, property in Spain — all flow from the same crisis that erupted in 2007-8 out of a deregulated profit-hunting credit boom across the western world and has delivered a prolonged depression. . . . [A]cross Europe, people are being held to ransom by banks, bondholders and corporations determined to ensure that it’s not they who bear the costs of the crisis they created — and politicians who regard it as their job to oblige them.

* * *

The Bacon-Wrapped Economy
Ellen Cushing, East Bay Express, March 20, 2013

Teaser: Tech has brought very young, very rich people to the Bay Area like never before. And the changes to our cultural and economic landscape aren’t necessarily for the better.

If, after all, money has always been a means of effecting the world we want to bring about, when a region is flooded with uncommonly rich and uncommonly young people, that world begins to look very different. And we’re all living in it, whether we like it or not.

. . . . It’s become cliché at this point to describe the tech world as a bubble, but that word has an important double meaning: It’s not just that it could pop at any moment, it’s that it is in, but not quite of, the rest of the world — even as it’s changing it. The work is often abstract and piecemeal; the setting is a continent away from old financial centers. The culture is insular, specific, and self-affirming. As Catherine Bracy, director of international programs at Code for America, wrote in a December Tumblr post, tech’s power-players are “making widgets or iterating on things that already exist. Their goal is to … get bought out for a few hundred million dollars and then devote the rest of their lives to a) building Burning Man installations, b) investing in other people’s widgets, or c) both. They really don’t care that much about making the world a better place, mostly because they feel like they don’t have to live in it.”

But sooner or later, everyone has to live in the world they’ve created. Tech has made a world where certain skills are highly valued, and that has implications. “It used to be, the cleverest people in the world are being called to work at NASA,” Pleeth of notoriety said toward the end of our interview. “But now I can make a billion dollars building a cool photo app or targeting ads to people more effectively. And that is a problem: More and more people in tech are making huge amounts of money, and people aren’t curing cancer because it’s not an attractive thing to do.” Pleeth was being intentionally hyperbolic — and to some degree, what the economy values and what society values have never been entirely in line with each other — but he raised a good point: Maybe this isn’t just unsustainable on the level that funding art via Kickstarter is untenable, or that taking Ubers instead of hiring a driver is shortsighted, or that living hand-to-mouth on a $2,000-a-week paycheck is imprudent. Instant gratification isn’t necessarily just something individuals indulge in — maybe societies can, too.

* * *

How We’re Turning Digital Natives into Etiquette Sociopaths
Evan Selinger, Wired, March 26, 2013

Let’s face it: Technology and etiquette have been colliding for some time now, and things have finally boiled over if the recent spate of media criticisms is anything to go by. There’s the voicemail, not to be left unless you’re “dying.” There’s the e-mail signoff that we need to “kill.” And then there’s the observation that what was once normal — like asking someone for directions — is now considered “uncivilized.”

Cyber-savvy folks are arguing for such new etiquette rules because in an information-overloaded world, time-wasting communication is not just outdated — it’s rude. But while living according to the gospel of technological efficiency and frictionless sharing is fine as a Silicon Valley innovation ethos, it makes for a downright depressing social ethic.

People like Nick Bilton over at The New York Times Bits blog argue that norms like thank-you messages can cost more in time and efficiency than they are worth. However, such etiquette norms aren’t just about efficiency: They’re actually about building thoughtful and pro-social character.

. . . . The longstanding technological goal of enhancing efficiency serves us well in many cases. But we need to avoid prioritizing it over genuine connectivity.

* * *

Best Tweets in the House
Tom Jacobs, Pacific Standard, March 12, 2013

Teaser: In a desperate attempt to engage with younger audiences, arts organizations are scrambling to make their productions more interactive. But who really is more engaged: A live-tweeting audience member, or someone staring silently at the stage?

Although the trend has yet to hit the nation’s largest cities or most prominent companies, arts organizations from Minnesota’s Guthrie Theatre to Palm Beach Opera have begun allowing — nay, encouraging — audiences to break out their mobile devices and respond to performances in real time, even as the actors, singers, and players onstage are working hard to hold everyone’s gaze.

The rise of tweet seats is just one facet of a larger shift taking place in the performing arts — one that champions “audience engagement” and, in the minds of critics, subtly denigrates “passive spectating.” The new conventional wisdom is that it’s vital not just to put on the best show you can, but to give audiences the sort of intense, interactive, personal experience that makes them feel involved in the production. That means prepping your audience ahead of time, debriefing them afterwards, and giving them opportunities to comment or participate as well as observe. In some cases, audience engagement means inviting people to sing, play, or dance along with the performers; in others, to split their attention between the stage and (very small) screen.

. . . . The trouble is that modern 20-somethings seem to have little taste for full engagement. “There is evidence beginning to suggest truly deep attention is not valued among the young,” [Stanford University sociologist Clifford] Nass reports. “The question is, where do you get your pleasure? Do you get pleasure by being transported, which requires great immersion? Or do you get pleasure by having your focus on multiple places at once? “That’s a cultural shift. Artists have to think about what that means, and what they want to do about it.”

* * *

Police Restrain Crowd from Taking Food after Supermarket Eviction
Mark Barber,, March 26, 2013

[EDITOR’S NOTE: It would be difficult to surpass this story’s galling power as an illustration of the literally insane behavior that can result from unthinking adherence to a system of external rule. In this case, the external rule is that of civil law in rural Georgia. One understands why the police did what they did, given the nature of their formal jobs, but in terms of their more fundamental identities and roles as human beings, their behavior is reprehensible. Not tangentially, it bears remembering that this same scenario is played out in slightly different form in restaurants around America every day, as I witnessed personally in college when I worked briefly for a McDonald’s and found that a titanic amount of food was formally required by company policy to be thrown away every day. It was against policy to give this food to employees or anybody else. One manager regularly sacked up as much of it as possible and secretly left it on top of a trash dumpster out back for a group of homeless people to claim. One wonders how many people right now are doing something similar. One hopes the number is huge.]

Law enforcement officials pushed back hundreds of people who were crowding around a large pile of merchandise outside an Augusta grocery store Tuesday afternoon. But the goods sitting in the parking lot of the Laney Supermarket didn’t make into anyone’s hands. Instead, the food people hoped to take home was tossed into the trash. “People have children out here that are hungry, thirsty, could be anything. Why throw it away when you could be issuing it out?” asked Robertstine Lambert.

The Marshal of Richmond County, Steve Smith, says the food wasn’t theirs to give away, so they had to trash it. “We don’t have authority to take possession of the property; we just have to make sure that it’s handled, disposed of by law,” Smith, said.

SunTrust Bank in Atlanta owns the property and they’re sending the merchandise to the landfill after evicting the Chois, the owners of the grocery store. The Chois didn’t want to speak on camera but they say they were kicked out by the bank because they owe them thousands of dollars. They say they offered the food to a church, but members didn’t show up to claim it.

That’s when word that store products were abandoned spread through the community. About 300 people came to take merchandise home, but they were held back by law enforcement. “These are brand new items; we saw the potential for a riot was extremely high,” said Sheriff Richard Roundtree.

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The Sound of the Gravediggers
John Michael Greer, The Archdruid Report, March 28, 2013

[EDITOR’S NOTE: This is a blog post in which Greer explores “the religious dimensions of peak oil and the end of the industrial age” — a topic that he has broached many times at The Archdruid Report, and that he unfailingly handles with eloquence and insight. This time is no exception.]

Unlike too many of today’s atheists, Nietzsche had a profound understanding of just what it was that he was rejecting when he proclaimed the death of God and the absurdity of faith. To abandon belief in a divinely ordained order to the cosmos, he argued, meant surrendering any claim to objectively valid moral standards, and thus stripping words like “right” and “wrong” of any meaning other than personal preference.  It meant giving up the basis on which governments and institutions founded their claims to legitimacy, and thus leaving them no means to maintain social order or gain the obedience of the masses other than the raw threat of violence — a threat that would have to be made good ever more often, as time went on, to maintain its effectiveness. Ultimately, it meant abandoning any claim of meaning, purpose, or value to humanity or the world, other than those that individual human beings might choose to impose on the inkblot patterns of a chaotic universe.

. . . . The surrogate God that western civilization embraced, tentatively in the 19th century and with increasing conviction and passion in the 20th, was progress. In our time, certainly, the omnipotence and infinite benevolence of progress have become the core doctrines of a civil religion as broadly and unthinkingly embraced, and as central to contemporary notions of meaning and value, as Christianity was before the Age of Reason.

That in itself defines one of the central themes of the predicament of our time. Progress makes a poor substitute for a deity, not least because its supposed omnipotence and benevolence are becoming increasingly hard to take on faith just now. There’s every reason to think that in the years immediately before us, that difficulty is going to become impossible to ignore — and the same shattering crisis of meaning and value that the religion of progress was meant to solve will be back, adding its burden to the other pressures of our time.

Listen closely, and you can hear the sound of the gravediggers who are coming to bury progress.

Recommended Reading 36

This week: How entire U.S. towns now rely on food stamps. The regrets of the Iraqi “sledgehammer man,” whose image became famous in Western media when Saddam’s statue fell. The Obama administration’s epic (and hypocritical) focus on secrecy. The demise of Google Reader and what it portends for Net-i-fied life and culture. The sinister rise of an all-pervasive — and unblinkingly embraced — Orwellian Big Brotherism in the age of Big Data, with a focus on Facebook’s “Like” button, Google Glass, and Google’s vision of “a future of frictionless, continuous shopping.” A surge of ghost sightings and spiritual troubles among survivors of Japan’s earthquake and tsunami. The rise of the “Little Free Libraries” movement in America and abroad. Read the rest of this entry

Recommended Reading 35

This week, a more America-centric set of recommendations than usual, covering: the gargantuan crisis of America’s “health-care-industrial” complex, which is literally killing the nation with galactically inflated prices and substandard healthcare; the Alice-in-Wonderland nature of America’s “sequestration” debacle; how the “personalized” Internet experience created by user profiling and content filtering actually delivers up two different Internets for the rich and the poor; the problem with a huge self-help industry that actually has no idea what a “self” is or how to help it; the personal and societal downside of the much-prized elite university education, which inculcates an all-dominating sense of privilege, specialness, and entitledness while grooming new generations of leaders to be just like the old ones; and a lovely essay exploring and honoring the East Texas roots of the recently deceased Van Cliburn. Read the rest of this entry

Financial dystopia: “The giant Wall Street firms have taken on lives of their own”

In a review of Why I Left Goldman Sachs: A Wall Street Story, the new (October 2012) book by Greg Smith — who also wrote last year’s bombshell piece “Why I Am Leaving Goldman Sachs” for The New York Times — Michael Lewis makes the following cogent, riveting, and frightening observation about the current world of American high finance and the way it has now mutated into a Frankenstein-like entity and manifested a monster-amok scenario, such that insider confessions and whistle-blowing are rendered meaningless, since the system is effectively operating autonomously, without regard for human morals and meanings.

He also offers one of the most succinct accounts of the real history and nature of the financial crisis in the collusion of Goldman Sachs (and by extension the rest of Wall Street) with government power, the better to pursue an agenda of unfettered greed by gaming the whole system from top to bottom, that you’re likely to read anywhere.

In the end, the reader puts down Why I Left Goldman Sachs a little mystified. Why exactly did Greg Smith leave Goldman Sachs? What did he hope to achieve? If it’s change he is after, his particular story comes too late. If, say, back in 2004, someone such as Greg Smith had stepped forward and explained to the world what was going on inside Goldman, he might have spared us all a lot of pain and trouble. But today’s insider confessions feel like vain and useless acts. And what would he have us do, four years after the Great Collapse, to fix the system, or to change in any way his former employer’s behavior? The dystopia often imagined in the world of artificial intelligence — in which computers somehow take on a life of their own and come to rule mankind — has actually happened in the world of finance. The giant Wall Street firms have taken on lives of their own, beyond human control. The people flow into and out of them but have only incidental effect on their direction and behavior. The firms may not be intent on evil; they aren’t intent on anything except short-term profits: they’re insensible. If anyone attempted to seize control of one of these strange machines and impose upon them a clear moral direction, the machine would hit its own button and he would be ejected.

Stop and think once more about what has just happened on Wall Street: its most admired firm conspired to flood the financial system with worthless securities, then set itself up to profit from betting against those very same securities, and in the bargain helped to precipitate a world historic financial crisis that cost millions of people their jobs and convulsed our political system. In other places, or at other times, the firm would be put out of business, and its leaders shamed and jailed and strung from lampposts. (I am not advocating the latter.) Instead Goldman Sachs, like the other too-big-to-fail firms, has been handed tens of billions in government subsidies, on the theory that we cannot live without them. They were then permitted to pay politicians to prevent laws being passed to change their business, and bribe public officials (with the implicit promise of future employment) to neuter the laws that were passed — so that they might continue to behave in more or less the same way that brought ruin on us all. And after all this has been done, a Goldman Sachs employee steps forward to say that the people at the top of his former firm need to see the error of their ways, and become more decent, socially responsible human beings. Right. How exactly is that going to happen?

— Michael Lewis, “The Trouble with Wall Street,” The New Republic,

Energy, food, and the upside (or not) of dystopia


This piece from The Telegraph’s Jeremy Warner is supposed to be about the upside of the fact that we’ve transitioned definitively to a new era of elevated food and energy prices, but the upshot that Warner arrives at sounds less like a silver lining than a recipe for a Promethean desperate-dystopian transformation of human civilization into something akin to Soylent Green:

[T]here are more positive ways of looking at…the apparently catastrophe of a current spike in food and oil prices…which don’t entirely fit with the present mood of declinism that has come to instruct all aspects of debate around the global economy … It seems that every time Western economies show some sign of climbing out of the mire, along comes another oil price shock to push them back in. Meanwhile, the most severe US drought in 25 years has sent grain prices soaring, adding to the already debilitating effects on world food supply of a poor monsoon season in Asia and a bad harvest in Russia and Ukraine. In our own neck of the woods, high levels of rainfall have wrecked the annual harvest from potatoes to wheat, apples and Brussels sprouts. Looking at the phenomenon globally, this is the third such food price shock in five years. Previous such episodes have spawned mass riots, and the last one is often cited as a major factor in the Arab spring.

… So where is the positive in all this gloom? Nobody is pretending that high oil and food prices are anything other than extremely painful. But by rationing demand, encouraging efficiency, incentivising new investment and driving the search for alternatives, high prices also provide an absolutely vital market discipline … Malthusian catastrophe is neither inevitable nor actually particularly likely given these pricing disciplines. At prices like these, previously untapped hydrocarbon reserves suddenly become economically viable, as do great tracks of under-exploited agricultural land. The era of cheap and plentiful may already be a thing of the past, but is that really such a bad thing?

— Jeremy Warner, “Best to get used to high food and energy prices — they’re here to stay,” The Telegraph, August 29, 2012 (emphasis added)

Regarding those “previously untapped hydrocarbon reserves” that have “suddenly become economically viable,” it’s important to remember that the reality on (and also under) the ground when it comes to “developing” untapped hydrocarbon reserves is profoundly problematic, as seen in, to name just one example, the growing problems stemming from the rise of fracking. And on the food side, there is of course no lack of problems with the universal adoption of industrial farming practices, including troubling effects on the food itself, the land, animals, and people: physically, psychologically, spiritually. The assumption behind Warner’s views appears to be the same one driving most mainstream thought and rhetoric on these issues: that our industrial-technological way of life simply has to be maintained. For an updated view of what the reality of a future unfolding in this fashion might well look like, switch from Soylent Green and see the human and planetary wasteland depicted by Paolo Bacigalupi in Pump Six and Other Stories, which, in the words of Publishers Weekly, “explores a post–fossil fuel future where genetically modified crops both feed and power the world, and greedy megacorporations hold the fates of millions in their hands.”

Meanwhile, note that despite all of the recent triumphalist rhetoric about the supposed end of peak oil as a viable theory, the estimable Andrew Evans-Pritchard pointed out just a few days ago in The Telegraph that “Peak cheap oil is an incontrovertible fact.” And that, of course, is what the practical reality of our present energy-and-economy predicament has always boiled down to.

To assume that things have to continue operating according to currently reigning principles and trajectories is both the height of unconsciousness and a surefire method for stumbling directly into a true disaster via our very efforts to avoid one. How much more challenging and rewarding it would be to approach the present circumstance conversely by using it as an opportunity for learning to see through the old agenda and its assumptions, even if only on an individual and personal level. To quote Jesus, the Buddha, The Matrix, and Rage Against the Machine: wake up!


Our global Ayn Rand moment

In the past half-decade, the name and legacy of Ayn Rand have become the subject of much prominent comment, debate, analysis, and punditry in the English-speaking press, where a swelling sea of multiform journalism examines her enduring and pervasive (some would say insidious and awful, while others would say heroic and wonderful) influence on American politics, culture, and economic policy. Nor is her influence limited to just one nation; as reported in 2009 in Foreign Policy magazine, she has become roaringly popular in India. This is precisely what her admirers would hope; one of them recently averred in The Guardian that Europe’s woes have resulted largely from its adoption of ideas and policies contrary to the Randian ethos of economic egoism.

The entry of Paul Ryan into the current American presidential race has naturally occasioned an explosive new surge of Randian journalism, since Ryan is an avowed admirer and semi-disciple of laissez faire libertarianism’s high priestess. (The public recognition and analysis of this fact  is, however, not at all new.)

So in the midst of all this, it’s interesting to see what may be the single most useful — as in compact, accurate, engaging, detailed, and user-friendly — introduction to Rand’s life, work, and legacy appear not in an American publication at all, but in BBC News Magazine. “A Russian-American writer who died 30 years ago is still selling hundreds of thousands of books a year, and this week one of her former devotees, Paul Ryan, became Mitt Romney’s running mate in the US presidential election,” says the teaser/lead-in. “So why is Ayn Rand and her most famous work, Atlas Shrugged, so popular?” The article then proceeds to illustrate and answer that question. If you’re in need of an Ayn Rand primer, then this piece is for you, since it includes not only information about her life, work, philosophy, and influence but a rundown of prominent characters, quotes, and ideas from her books. It’s also even-handed, in that it explains the views of both Rand’s admirers and her detractors.

If you’re not informed about Ms. Rand right now, then you’re not clued in to one of the most significant philosophical conflicts — with real-world practical ramifications — that is presently informing (some would say deforming) American political, economic, and cultural reality. This is an opportunity to remedy that.

It’s 1,200 pages long and was panned by critics when it was published 55 years ago. Yet few novels have had an impact as enduring as Atlas Shrugged, a dystopian allegory in which captains of industry struggle against stifling regulations and an over-reaching government and one by one close down production, bringing the world economy to its knees. Rand’s philosophy, which she called objectivism, tapped directly into the American ideals of freedom, hard work and individualism. In novels like Atlas Shrugged, and her non-fiction like The Virtues of Selfishness, Rand argued for the removal of any religious or political controls that hindered the pursuit of self-interest.

… [M]illions were drawn to her central message of individualism and unfettered capitalism, even if they didn’t buy into her whole philosophy. In the 1990s, a survey by the Library of Congress named Atlas Shrugged as the most influential book in the US, after the Bible. And more than 50 years after publication, sales are booming … Beyond politics, the novel also had an impact in Silicon Valley, where entrepreneurs identified with its emphasis on heroic individuals and their work ethic. Some have named their companies or their newborn children after the author or her characters. Rand’s popularity is not confined to the US, however, with healthy book sales in the UK, India, Australia, Italy and South Africa.

… The emergence of the Tea Party — a wing of the Republican Party which favours a shrinking of the state — appears to be driving her recent resurgence.

— Tom Geoghegan, “Ayn Rand: Why is she so popular?” BBC News Magazine, August 17, 2012


Image by Playing Futures: Applied Nomadology via Wikimedia Commons under Creative Commons