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Teeming Links – April 18, 2014

FireHead

Washington, DC as a corrupt inferno of reality distortion (WARNING: Reading this may make you profoundly ill): “The resulting offspring of this confluence of industry, politics, and pop-culture has produced a wide range of hybrid permutations of all three partners: the celebrity operative (Carville-Matalin, Stephanopoulos), the cable news partisanship industry (Fox, MSNBC), the Hollywood revisionist/fictional political thriller (West Wing, Game Change, House of Cards), and the reality challenged political self-promotions industry (any consultant living in DC) — all of which has in the ensuing decades created a political atmosphere in DC having very little to do with the real business of governing, and more about massaging reality to fit whatever narrative serves your brand best.”

Wall Street as dystopian nightmare: “Imagine you’re a scientist in some sci-fi alternate universe, and you’ve been charged with creating a boot camp that will reliably turn normal but ambitious people into broken sociopaths more or less willing to do anything.”

How Goldman Sachs (and others) blew up the economy and profited from our misery: “The cumulative impact of this fusion of technology, greed, and moral blindness, duplicated from one end of Wall Street to the other, was global economic meltdown.”

The secret spiritual history of calculus: “Integral calculus originated in a 17th-century debate that was as religious as it was scientific. . . . For the Jesuits, the purpose of mathematics was to construct the world as a fixed and eternally unchanging place, in which order and hierarchy could never be challenged. . . . For Cavalieri and his fellow indivisiblists, it was the exact reverse.”

The (not so) secret magical history of science: “In reality, science owes its origins to beliefs that the high priests of modern science such as Richard Dawkins would regard as even more irrational than Christianity.”

The historical birth and continued vitality of the Illuminati conspiracy theory: “In popular culture and old-time religion, satire and nationalist politics, the Illuminati conspiracy still resonates with its warning that the light of reason has its shadows, and even the most enlightened democracy can be manipulated by hidden hands.”

It turns out George Romero was more prophetic than even he knew when he set Dawn of the Dead in a shopping mall. As reported by the BBC, it’s the end of an era as the entire phenomenon of American shopping malls is dying: “Born in the 1950s, these temples of commerce were symbols of the US consumer culture — but many are now dying out. . . . Soon enough, and just as no one knows how to make use of Ancient Egyptian temples today, shopping malls will become the stuff of archaeology and folklore.”

So what might replace indoor shopping malls? Well, isn’t it obvious? Say hello to outdoor mega-shopping villages based on the Disney model, where shoppers are called “guests” and the whole experience is carefully controlled, right down to the faux quaint architecture and village-like layout. Says one leading developer, “We’re in the entertainment business. You step on the property in the morning, it’s got to be perfect.”

Lessons from Stephen King and Valley of the Dolls: A college student named Matthew Kahn is reading 94 bestselling books from the past century (1913-2013) and blogging about what he’s learning re: the evolving nature and status of popular fiction and its audience.

A brief history of “Choose Your Own Adventure” (and oh, did I love those books when I was in junior high): “Nearly 35 years after its debut, ‘Choose Your Own Adventure’ remains a publishing landmark.”

 

Image courtesy of Salvatore Vuono / FreeDigitalPhotos.net

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,

Recommended Reading 20

This week’s recommendations cover the history of Wall Street’s addiction to inhumanly fast and economically abstracted trading practices; the history of “dark money” in American politics, culminating in the current game-changing dominance of hidden funding; the rise of real-life “cyborgs” via the burgeoning body-hacking movement; a couple of considerations of what it means for human social and personal existence to be wired into a digital social network of ad hoc spying and self-promotion; a look at the rise and definition of “knowledge art” in an age dominated by objectified scientific understandings of life and reality; a look at the meaning of art in light of evolutionary biology; an opinion piece from The New York Times lambasting the “positive thinking” movement as exemplified by Tony Robbins; and links to podcasts on “recovering environmentalists,” Jung and synchronicity, and findings from the new scientific study of the biological unconscious with neuroimagining technology.

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The Frankenstein Economy, part 2: It’s alive!

It’s everywhere now. The Frankenstein metaphor is being used far and wide and fast and furiously to describe the monster of a financial/economic crisis that has taken on a life of its own and is rampaging through the little Bavarian village called America (or perhaps, more accurately, Planet Earth).

Two days ago I uploaded a post (The Frankenstein Economy: Monster metaphor of the moment) noting this trend and offering four examples. Here are more, some from last year, some from more recently. A survey of the field shows that this phenomenon began to stir to life (wink, nudge) in earnest in early 2007, when the shape of the future began to come clear with the bursting of the housing bubble and the advent of mortgage-related troubles.

1) Wall Street can’t cage its mortgage monster (The Los Angeles Times, July 2007)

When the rocket scientists on Wall Street outsmart even themselves, very bad things can happen. The 1987 stock market crash was fueled by an institutional investment strategy that its creators ironically had termed portfolio insurance.” The collapse of the giant hedge fund Long-Term Capital Management in 1998 was triggered by a sequence of market events that the fund’s engineers believed couldn’t occur in literally billions of years.

Today’s version of Frankenstein turning on its creator is the mortgage loan mess. Wall Street in recent years has taken a simple concept -– bundling mortgages and selling them to investors as interest-paying bonds -– and concocted an alphabet soup of securities so incredibly complex they defy understanding by all but a handful of PhDs….Once again, Wall Street’s rocket scientists have created a monster they can no longer control.

[Note: It’s amazing how closely the language of this article parallels and previews the language used by “former Wall Street economist” Nancy Kimmelman in an NPR story a few days ago. Specifically, the reference to Wall Street rocket scientists in back rooms sounds like she flat-out parroted it. See my first previous Frankenstein Economy post for details and a link.]

2) Revenge of Frankenstein finance (Financial Armageddon, August 6, 2007)

A chimerical force has been rampaging through global markets in recent months, wreaking widespread havoc. Cobbled together from myriad agreements, assumptions, and transactions by academics, financiers, and marketers, this labyrinthine creation was once seen as an unmitigated success of new age financial alchemy. But now, with changing economic and financial conditions exposing the derivatives-securitization monster to the harsh light of day, the nightmare of Frankenstein finance is coming home to roost.

….[N]ow that the man-made monstrosity has emerged from dormancy with a destructive, self-perpetuating momentum, it’s too late, of course, to go back and try to repair the mistakes of the past. All we can do now is batten down the hatches and steel ourselves for a rapidly expanding global threat: the revenge of Frankenstein finance.

3) Has modern finance created a Frankenstein? (The Business Times, December 19, 2007)

4) Our Frankenstein Economy (Globevest, January 19, 2008)

In the classic horror film, Mary Shelly’s gothic colossus is reanimated through massive doses of electro-shock. As bolts of lightning illuminate the silver screen, the Frankenstein corpse begins to twitch, and through the miracle of mad science is awakened from death….Apropos of the film…, the “mad scientists” in Washington are floating plans to stimulate our faltering economy.

5) Frankenstein Finance: Trying to breathe life in WaMu and Wachovia (Blogging Stocks, April 4, 2008)

Do not let the smokescreen fool you. There are still a great deal of problems within the financial sector. These bailouts are designed to bring life to corpses … Dr. Frankenstein, calling Dr. Frankenstein.

6) Henry Paulson’s Frankenstein (The New York Times, September 17, 2008)

Mr. Paulson and company have now backed themselves into a corner. They can allow the Lehmans of the world — those that fail to collapse quickly enough or are unfortunately too small — to go under, but they can’t let companies like A.I.G. go. And after Bear, Fannie and Freddie, the private sector knows that, too.

People will throw around the word “moral hazard” a lot today. But this is not about that concept: this is what we call free riding. The private financial companies are letting their good neighbor do the clean-up, and they’re not helping because they know the neighbor will do it anyway.

In the meantime, I fear that we are creating Frankenstein. Fannie Mae and Freddie Mac are deliberately being expanded over the next year and a half to accommodate the housing crisis. And the semi-strong banks are eating the weak financial institutions, creating more too-big-to-fail institutions. There may be nothing wrong with that, but in its race to provide liquidity (and not have to be seen cutting interest rates), the Fed is engaging in some incredibly risky maneuvers.

The Frankenstein Economy: Monster metaphor of the moment

[Note added 09/24/08: There is now a sequel post to this one, offering several more examples of the Frankensteinian “monster amok” theme as it’s being used in contemporary economic discourse.]

Has anybody else noticed the increasing prevalence of monster metaphors, especially Frankenstein-themed ones, in mainstream public discourse about the mounting economic and financial disaster? I’m noticing it mightily myself, and am thinking this trend lends even more credence to horror writer and filmmaker John Skipp’s diagnosis and pronouncement that “These are horror times.”

(Needless to say — if you’re a longtime reader of The Teeming Brain, that is — this observation is occurring against the backdrop of all the reading and commenting I did about the mounting financial and economic catastrophe in my series of posts titled “Headlines from the Meltdown” earlier this year. You can enter that term into the search box on this page to access those posts.)

Some examples of this monster metaphor rearing its head are:

On September 19 NPR’s Morning Edition aired a story that contained “former Wall Street economist” Nancy Kimmelman saying the current crisis stems largely from the extreme complexity of the financial products that were concocted by “mad scientist” type braniacs in the back rooms of Wall Street investment banks. You can listen to the entire story at the link and hear her words beginning about 2:30 into the roughly four-minute piece. Specifically, she says,

Wall Street has rocket scientists creating derivatives. These scientist types in back rooms with test tubes and bunsen burners. They’ve created monsters. They’ve created these securities that nobody has a handle on.

On September 20 there was a Reuters story (“U.S. readies massive toxic debt plan“) in which the second a third paragraphs invoked an apocalyptic biblical beast metaphor:

[The U.S. government’s] moves cap a week in which financial markets faced their most serious confluence of crises since the Great Depression in the 1930s and threatened national economies and the worldwide banking system.”It’s like having a heart attack, and you go and get your chest cracked open and get it fixed, but the next morning you’re still hurting,” said Warren Simpson, managing director at Stephens Capital Management in Little Rock, Arkansas. “This has been a beast of biblical proportions. Nobody has seen anything like it.”

Back in January, Bill Gross, manager of Pimco, the world’s largest investment bond fund and a frequently sought after commentator, talked in his newsletter about the “Frankenstein levered body of shadow banks” that actually runs world financial events behind the scenes, “craftily dodging the reserve requirements of traditional institutions and promot[ing] a chain letter, pyramid scheme of leverage, based in many cases on no reserve cushion whatsoever.” The Boston Globe quoted him prominently in a story titled “The Black Box Economy.” (Note: The story’s header said, “Beyond the recent bad news lurks a much deeper concern: The world economy is now being driven by a vast, secretive web of investments that might be out of anyone’s control.” Of course we now know, these eight months later, that this dire analysis isn’t conspiracy theorizing like some people might have suspected but a simple statement of the facts.)

In March The New York Times ran a piece about the mounting situation whose title says it all: “What Created This Monster?”

“Horror times,” indeed. Where’s Mary Shelley when we need her?

* * * * *

p.s. I’m still settling into my new living arrangement in Central Texas. I wasn’t blown away by Hurricane Ike, although the forecasts made it sound like my part of the state (Waco area) was destined for a damaging blast. The bulk of the storm went east of me, with the ironic result that it turned out my friends and family back in southwest Missouri had a worse time of it than I did.

I’m teaching some classes at a college in Waco. I’m learning to avoid fire ants. I’m making new friends and looking for a permanent house. I’m enjoying the fact that I didn’t have to leap back into the high school teaching grind when the new school year kicked off. I’m hoping to start posting here more regularly again (turns out the blog’s resurrection a couple of months ago was sort of short-circuited by my relocation). So there’s the in-a-nutshell update.

Be well and keep your head. As you and I and all of us know from recent news headlines, life looks like it’s about to get even weirder. Right on schedule.