If you follow my delicious bookmarks at all, you will have noticed that I’ve developed a bit of a macabre fascination with articles about the events that have come to be known as America’s Current Financial Crisis. Here’s the full list of those that I’ve considered significant for one reason or another over the past few days. They’re in no order, at this point, as I’m in a bit of an “information gathering” phase, reading through all these articles repeatedly to try and tease out the unifying threads.
I’ve quoted what I thought was a critical or key point in each article, though I change my mind as all this churns around in my head. As a teaser, you might pay particular attention to the articles from Open Secrets — that is, The Center for Responsive Politics — which will figure prominently in what I have to say. Open Secrets provides a look at the intersection of economics and politics that, as far as I know, is unlike any you’ll find anywhere else on the web.
Bloomberg.com: Worldwide – “The market storm that brought down Lehman Brothers Holdings Inc., American International Group Inc. and other pillars of U.S. finance may have also blown holes in the portfolios of House Speaker Nancy Pelosi, Senator John Kerry and more than 50 other members of Congress…. Altogether, 56 senators and representatives had stakes in AIG, Lehman, Fannie Mae, Freddie Mac, Bear Stearns Cos. or IndyMac Bancorp Inc. — some of the biggest casualties of the market bloodbath — according to the Center for Responsive Politics….”
Abroad, Bailout Is Seen as a Free Market Detour – NYTimes.com – “Is the United States no longer the global beacon of unfettered, free-market capitalism? In extending a last-minute $85 billion lifeline to American International Group, the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has also probably undercut future American efforts to promote such policies abroad…. ‘I fear the government has passed the point of no return,’ said Ron Chernow, a leading American financial historian. ‘We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in it’s wildest dreams.’”
Organic Market – Forbes.com – “The consensus is that Something Must Be Done to rein in financial markets. This consensus is part of a general theme among some pundits and economists that it’s time to give up the naïve faith that markets can solve every problem. We are told that markets have failed…. Yet much of the current chaos is the result of attempts to steer or control markets rather than let them be. Much of the chaos is the result of political failure.”
Free Market To The Rescue – Forbes.com – “Although market ideas are today taking something of a beating, nothing like the 1930s fervor for central planning is in the air. For this reason alone, I am optimistic that we are not on the verge of a second Great Depression….. But in this optimistic account there’s a warning. If our confidence in free markets does come to be overwhelmed by a renewed, if utterly baseless, confidence in the central direction of the economy, then our economic prospects will once again truly be in a great depression.”
Optimism Quickly Fading – “To ban short-selling of stocks is to short-circuit an important mechanism through which people share their knowledge and expectations with others. Banning a mechanism that better allows share prices to reflect the expectation that the underlying assets are not worth as much as current market prices suggest does nothing to change the underlying reality. Such a ban merely distorts knowledge of this reality.”
SEC bans short-selling – Yahoo! News – “The Securities and Exchange Commission took the dramatic step early Friday of temporarily banning the routine practice of betting against company stocks…. The move, announced on the agency’s Web site, may well be unprecedented and a reflection of regulators’ concern about the widening scope of the financial crisis as entreaties come from all quarters to stem a swarm of short-selling.”
Regulating away improvement – “The bailouts are getting bigger. The rescue of US mortgage giants Freddie-Mac and Fannie-Mae is hailed as the largest bailout in history. On our side of the Atlantic we saw the similar, but smaller, rescue of Northern Rock. All of these have common features. The companies concerned were nationalized, and their losses are now underwritten by taxpayers. Between them their rescues have engendered a culture of bailout,which says that the public has to be protected at all costs from the consequences of failure. It is almost as if there has been a collective loss of faith in capitalism and in its ability to take failures in its stride.”
The Austrian Economists: Who Can Fix This? – “Government is NOT a corrective. More often than not, it is the source (as in this case) of our economic difficulties. No bailouts, eliminate regulations, certainly no nationalizations, no priming of the pump with easy money, just allow firms to be weeded out that made imprudent decisions, allow capital to be reallocated, and permit prices to adjust to the new market realities.”
Economic View – Too Few Regulations? No, Just Ineffective Ones – NYTimes.com – “There is a misconception that President Bush’s years in office have been characterized by a hands-off approach to regulation. In large part, this myth stems from the rhetoric of the president and his appointees, who have emphasized the costly burdens that regulation places on business…. But the reality has been very different: continuing heavy regulation, with a growing loss of accountability and effectiveness. That’s dysfunctional governance, not laissez-faire…. In the meantime, if you hear a call for more regulation, without a clear explanation of why regulation failed in the past, beware. The odds are that we’ll get additional regulation but with even less accountability and even less focus on solving our very real economic problems.”
OpenSecrets | Fannie Mae and Freddie Mac Bailed Out After Buying In – Capital Eye – “As economists and analysts try to sort out how giant mortgage buyers Fannie Mae and Freddie Mac ended up needing to be bailed out by the federal government this past weekend, here at CRP we can see part of the picture of why that solution won out over others. Both Fannie Mae and Freddie Mac are prolific political players, pouring millions of dollars into campaign contributions and lobbying, efforts that have resulted in keeping the two companies afloat as more Americans have defaulted on their mortgages.”
Commentary: How to prevent the next Wall Street crisis – CNN.com – The author writes about several causes of the current U.S. financial crisis, concluding with: “The coup d’grace was the Iraq War, which contributed to soaring oil prices. Money that used to be spent on American goods now got diverted abroad. The Fed took seriously its responsibility to keep the economy going…. It did this by replacing the tech bubble with a new bubble, a housing bubble. Household savings plummeted to zero, to the lowest level since the Great Depression. It managed to sustain the economy, but the way it did it was shortsighted: America was living on borrowed money and borrowed time.”
How Paulson Would Save Fannie Mae – WSJ.com – “Recent statements by Barney Frank (D., Mass.), the chairman of the House Financial Services Committee, and Chuck Schumer (D., N.Y.), a powerful member of the Senate Banking Committee, make clear that Congress will never let them be privatized, broken up, slimmed down, nationalized or any of the other options hopeful reformers are putting forth today. Fannie and Freddie in their current form are just what Congress wants: an inexhaustible source of campaign contributions and funds for favored groups.”
OpenSecrets | Wall Street Shake-up Connects to Washington Through Contributions, Personal Investments – Capital Eye – “Wall Street’s grim news has plenty of people worried about their pocketbooks. Lawmakers are among them, not only concerned with how to boost the economy but with their own personal finances tied to companies that are struggling. The richest members of Congress seem to be the most invested in the companies at the center of the Wall Street shake-up…. Of all of the companies facing major transitions, lawmakers owned the most stock in American International Group (AIG), the nation’s largest insurer, which has asked the Federal Reserve for emergency funding as it faces financial hardships. Twenty-seven lawmakers owned stock in AIG last year, worth between $6.4 million and $20 million…..”
I’ll have more on all this shortly, with a longish-post (more like a small book) where I try to make some sense out of what I’ve read in these articles. Until then, as a thought for today, listen to the lyrics of this 1986 performance of “Is This the World We Created,” by Freddie Mercury and Queen.
Is this the world we created?
We made it on or own.
Is this the world we devastated
Right to the bone.
If there’s a god up in the sky
What must he think of what we’ve done
To all that he created….
I nearly burned myself out late last year with too much work, which was thankfully balanced out with a holiday vacation to another state where I spent a fair amount of time doing absolutely nothing.
The possibility that we’re collectively losing our ability to do nothing — to detach ourselves from all forms of work and recharge by reveling in the moment, whatever type of moment recharges us — is one of the topics Heather Menzies discusses in her book No Time: Stress and the Crisis of Modern Life. I started this book a couple of weeks ago, and I’m about half way through it, having decided to read it slowly and take notes on the ideas Menzies presents. Over the past year or so, I’ve been fascinated by the fact that the technology we’re becoming so immersed in begs us to ask some questions about how it’s affecting each of us and our lives — yet we barely ask those questions, or, perhaps, we don’t yet know how to ask them. We’re so linked in, always on, wired up and plugged up that even when we do try to detach, as Menzies notes, we’re seldom successful; or worse, we are successful but riddled with guilt over that success. That we might detach enough to reflect on technology’s effects is very nearly inconceivable.
Menzies was spurred to the idea of writing this book as she looked at her own life, and saw how for her — like many of her contemporaries — the connections among people that technology seemed to promise were actually creating disconnections instead. It is, I think, one of those crucial questions about technology that social scientists and historians together would do well to explore, particularly as our distance from the experience of every day reality seems to increase with the growing use of technology: to what extent are we withdrawing from human interaction as technology becomes embedded in our lives, and what is the significance of that withdrawal? My understanding is that Robert Putnam’s Bowling Alone: The Collapse and Revival of American Community also takes on this subject, perhaps with even more to say about the relationship between technology and human interaction. Bowling Alone is the next book on my reading list.
Instead of slowing down and gaining more time from new, faster technologies, the family crams more activities into everyday life. Having time on your hands becomes an important signal [about] which kind of everyday life the individual has. The traffic jam for the car driver becomes a time thief that does not comply with the signal of freedom the car driver wishes to send….
I remember that when I read "having time on your hands" how it sounded like a completely foreign concept: it jolted me to realize that I had to stop for a second and think about what it even meant. I was equally jolted by Menzies’ discussion of dreamless sleep, how researchers are finding that more and more people are sleeping not just less but differently than they used to, reporting that they never remember enough of their dreams to know if they’re even having any, their brains never "idling" enough to enter the state where dreams take place. I’ll come back to that later; it’s one of the most interesting parts of Menzies’ book so far — personally interesting, I think, because I can’t remember the last time I had a dream or recall having a dream, and I’ve even wondered now and then why that’s been happening. Dreams, it seems, are something of an organizing activity for the mind, something that helps commit our waking or mental experiences to different segments of our memory for use later; and while I always thought that dreams served a purpose like that, until reading what Menzies has to say about them, it never occurred to me that it was significant that I could no longer remember any.
What is the elephant in all our rooms? It is the global triumph of capitalism. Democracy is fiercely disputed. Freedom is under threat even in old-established democracies such as Britain. Western supremacy is on the skids. But everyone does capitalism. Americans and Europeans do it. Indians do it. Russian oligarchs and Saudi princes do it. Even Chinese communists do it. And now the members of Israel’s oldest kibbutz, that last best hope of egalitarian socialism, have voted to introduce variable salaries based on individual performance….
Above all, though, there is the inescapable dilemma that this planet cannot sustain six-and-a-half billion people living like today’s middle-class consumers in its rich north….
However ingenious modern capitalists are at finding alternative technologies – and they will be very ingenious – somewhere down the line this is going to mean richer consumers settling for less rather than more….
Marx thought capitalism would have a problem finding consumers for the goods that improving techniques of production enabled it to churn out. Instead, it has become expert in a new branch of manufacturing: the manufacture of desires. The genius of contemporary capitalism is not simply that it gives consumers what they want but that it makes them want what it has to give. It’s that core logic of ever-expanding desires that is unsustainable on a global scale. But are we prepared to abandon it? We may be happy to insulate our lofts, recycle our newspapers and cycle to work, but are we ready to settle for less so others can have more? Am I? Are you?
Ash has an odd mix of good and bad points throughout the article; but in general he seems to have little interest in an actual definition of capitalism. There’s a lot of weakness in intellectual discourse along the lines where history and economics meet; Ash’s article is more accurately about corporatism and consumerism than it is about capitalism.
And, well, I’d like someone to show me one generation in history that hasn’t at least partly embraced the myth that it was a step or two away from doomsday. Funny thing about doomsday … the deadline keeps slipping.
Last night, I started reading Fear: A Cultural History by Joanna Bourke. I’ve had my eye on the book for a few weeks now, and finally picked it up at Borders yesterday. It’s the type of book I like, because I enjoy writing that confidently integrates history with cultural studies. It also has some relevance to my History of Science and Technology in Western Culture class, as it discusses fears of science, technology, medical advancements, and military machinery. I’m only on page 50, and have already come across some fascinating ideas.
Bourke devotes the first section of the book to describing the fear of death and how it affected individual lives in the late nineteenth and early twentieth centuries. She illustrates how fear of death was intertwined with a fear of being prematurely buried – that is, buried alive. At the same time, she explains how closely fear of death was related to fearing poverty; and she notes how social welfare targeted at reducing poverty didn’t eradicate the fear, but only diluted its effects and changed in focus:
Rather than trembling about the effects of absolute privation, people shuddered to think about the consequences of relative impoverishment, such as being rehoused in a rougher area or forced to sell prized possessions. The providers of public assistance were determined to retain (indeed, even boost) this element of fear. After all, they reasoned, public assistance should not be made too easy in case people jettisoned all economic anxieties, thus damaging the economy. As a consequence, moral panics arose around unscrupulous individuals and groups who did not feel sufficiently apprehensive of the stigma attached to the receipt of poor relief. – pg. 27
Describing the use of fear as a public policy tool, and explaining how its boundaries were altered to reflect public reaction to policy or manipulate society, strikes me as a fairly unique perspective. I’m curious about the extent to which Bourke keeps these themes out in front, as she continues the discussion of the cultural parameters of fear.
In early 2006, I completed a class on American Intellectual History, where the first book I read was Benedict Anderson’s Imagined Communities. The course – an independent study course where I worked directly with a mentor to define its content and purpose – was intended to give me a beginning understanding of some of the theory of intellectual history and the different ways it can be approached. Anderson’s book describes the emergence of the idea of a nation as a imagined construct, and his book covers an incredible amount of intellectual territory.
There were a few finer points in Anderson’s book, however, that I found compelling to consider with respect to blogging, and potentially worth exploring from the perspective of intellectual history. Anderson anchors much of his thesis around the impact of the emergence of print publishing, and the spread of newly published material to masses of people as a result of the logic of market capitalism. Anderson goes on to relate this to changes in concepts of time, specifically describing how the conceptual experience of time changed to one where we grasp the idea that there is a distinct past and present, and more importantly that there are people engaging in actions, and events taking place, outside our (approximately) immediate perceptual awareness. Anderson states, as an example:
An American will never meet, or even know the names of [most] of his fellow Americans. He has no idea what they are up to at any one time. But he has complete confidence in their steady, anonymous, simultaneous activity. – pg. 26
Anderson goes on to explain this by describing the experience of reading a newspaper, in which all the news stories are connected first by coincidence of time, and second by their immediate obsolescence:
The obsolescence of the newspaper on the morrow of its printing … creates this extraordinary mass ceremony: the almost precisely simultaneous consumption (“imagining”) of the newspaper-as-fiction. We know that particular morning and evening editions will overwhelmingly be consumed between this hour and that, only on this day, not that…. The significance of this mass ceremony … is paradoxical. It is performed in silent privacy, in the lair of the skull. Yet each communicant is well aware that the ceremony he performs is being replicated simultaneously by thousands (or millions) of others of whose existence he is confident, yet of whose identity he has not the slightest notion. Furthermore, this ceremony is incessantly repeated at daily or half-daily intervals throughout the calendar. What more vivid figure for the secular, historically clocked, imagined community can be envisioned? At the same time, the newspaper reader, observing exact replicas of his own paper being consumed by his subway, barbershop, or residential neighbors, is continually reassured that the imagined world is visibly rooted in everyday life. – pg. 35
If you find these ideas difficult – as I did at first – try to imagine not having an awareness of simultaneous activity. That is, try to imagine how differently you would look at the world, if you didn’t have an awareness of a distinct past and present, and of human beings engaged in simultaneous activity. While you won’t really achieve that state of mind, you might begin to grasp what sort of intellectual revolution occurred in human thought for the shift toward this awareness to take hold.
As Anderson also describes, this intellectual revolution occurred within a historical context where existing social and political power structures began to crumble. Blogging is often described as democratizing, in the sense that it moves some control over information from traditional institutions to anybody who has enough interest, and takes enough time, to post their thoughts on a web site. While there are certainly questions to be raised about the efficacy or value of the information on a typical blog site, the fact that blogs even exist – and that they are written and managed by individuals usually working on their own – has implications for human intellectual development that, I think, have yet to be considered. Their potential influence is dramatic; the potential of that influence to effect political, cultural, and social change is also dramatic. And if Anderson’s thesis is true, or even mostly true, then they even have the potential – at least partly because of their immediacy and the speed with which information now travels – to permanently alter some elements of the way human beings think.
Anna: I am paranoid about loosing data after working in IT for years and also having several of my own hard drives crash – and they were only a few months old. I backup to both a USB hard drive as well as online using AmazonS3. People who...
Dawn LaPlante Recore: Hi Dale. Was searching Saranac alumni, and quite indirectly, I ended up at your blog. It’s fascinating. Good for you! Although it was a sad time when I saw you in September, it was never-the-less, good to see you. By...
Ron Coryer: Dale, I was sorry to hear of your father’s passing. I would like to express my condolences to you and you family. As I read your post on your website, I couldn’t help thinking back to the time I lost my dad and I had the...
Gary Coryer: Dale, So sorry to hear of the loss of your Dad. He was always nice to us as kids. Next time I am in Cadyville I will drop in to see your mom and express my condolences. Hope she is doing okay. I will send a note to my brother Ron with...
A u d e e: A deepest condolence to you Dale. Losing a parent is never easy. May Your Father rest in peace.
A u d e e: Hi Dale, It’s been a while since my last visit . I’m sorry to hear about plumbing problems at your house. I’m pretty sure that it is a quite distraction when you hope to be able to spend times on other interesting...