Archive for the ‘ Economy ’ Category

The Biggest Boom/Bust of All Time

This began with the economic boom of America after WWII. Nothing like it had ever been seen like it before, and my parents were right in there with everyone else, soaking it up, and feeling more self-righteous all the time.

The Depression had nearly finished America off, and the rest of the world too. We were ashamed of this, as we should have been. We were not in control of our economy; it was in control of us. We demanded the government do something about it, and the New Deal was beginning to make some progress – although no one really knew what to do about it.

The official wisdom was that the economy was some kind of benevolent self-regulating mechanism that could not be interfered with. Once bottom was reached, it would recover automatically by itself. But the people were starving, they had lost faith in empty promises. They demanded that something be done.

And then a miracle happened: WWII. A miracle for America, that is, but a disaster for everywhere else. At the end of the War, American found itself the most powerful nation in history – by accident. This was helped immensely by the devastation elsewhere.  But Americans didn’t think of it this way – they were simply God’s people and he had rewarded them for their goodness.

In reality – and can remember this well, since I was a teen-ager at the time – Americans for the most part were disgusting. And they haven’t got much better. In the half-century that followed, they set to work to destroy America – and they have largely succeeded. The whole thing made me sick, and I barely survived my working life – if you could call it that.

I have this old-fashioned belief that we should do things right – and maybe even be good ourselves in the process, although this might be too much to expect. But above all, pay attention to what is really going on: good or bad. Exactly what Americans are determined not to do. They are determined to go straight to hell – by the shortest route – and to take the rest of the world with them. And they are succeeding admirably.

Once again, as has often happened in the past, a whole society have gone mad.

2010
04/22
CATEGORY
Economy
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America is Losing it’s Last Chance to be a World Leader Again

It has created the Information Economy, but is not taking charge of it. As a matter of fact, no one is.

But before I go into this, let remind you that not too long ago American was the world leader, the leader of the Manufacturing Economy. It got there by accident, by default, because the rest of the world was devastated by WWII – the same thing that rescued America from the Depression. The war forced it to build a functioning economy, and to rebuild its factories, something it could not manage to do on its own. The result was an affluence the world had never seen.

But we could not maintain this momentum and build a Great Society that would benefit us all. We could not maintain our long-term leadership, but allowed our corporations to take advantage of the short-term profits available by neglecting America’s interests. We did not take care of ourselves, but allowed a few greedy, unscrupulous people to get rich at our expense.

And we now display our helplessness proudly and proclaim “We could’t help it!” And point our fingers elsewhere, when we should be pointing at ourselves. We gave away our power, and intend to keep on doing so – while the whole world goes to hell.

2010
04/19
CATEGORY
Economy
Political comment
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The Best Way to Rob a Bank is to Control One

The best way to rob a bank used to be to own one, but why bother? The best way to control any corporation is to simply take control of it by any means – fair or foul. Then you can plunder it at your leisure. If you have friends willing to help you, this makes it much easier, and you can divvy up the spoils.

Even better, take control of a banking system, such as a Federal Reserve Bank. And better yet, take control of the regulators who are supposed to control this piracy.

The New York Times today has three articles about this amazing situation.

A Wall Street Invention Let the Crisis Mutate describes the Synthetic C.D.O.’s that Wall Street cooked up to fleece the suckers.

This is followed by S.E.C. Accuses Goldman of Fraud in Housing Deal:

Goldman Sachs, the Wall Street powerhouse, was accused of securities fraud in a civil lawsuit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly intended to fail.

Finally, Investor Who Made Billions Is Not Target of Suit:

Three and half years ago, a New York hedge fund manager with a bearish view on the housing market was pounding the pavement on Wall Street.

Eager to increase his bets against subprime mortgages, the investor, John A. Paulson, canvassed firm after firm, looking for new ways to profit from home loans that he was sure would go sour.

Only a few investment banks agreed to help him. One was Deutsche Bank. The other was the mighty Goldman Sachs.

Mr. Paulson struck gold. His prescience made him billions and transformed him from a relative nobody into something of a celebrity on Wall Street and in Washington.

Now this is bank robbery on a truly grand scale!

2010
04/17
CATEGORY
Business
Economy
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The Economy is a Living System

The reason for this is obvious: it consists of the interactions of people, who, hopefully, are living beings – although this is becoming doubtful, as I have recently said.

But this is not the view of economists, who like think of it as something mechanical, subject to simple linear laws – the law of supply and demand, for example – when it is clearly a complex system, with many interrelated actors – much like natural ecosystems – an analogy that seems natural to business analysts, who talk this way all the time.

The difference between living and non-living systems is fundamental. Non-living systems are subject to increasing entropy: they eventually run down. Living systems have the amazing ability to defeat this, and can keep on running forever – by a process of continual renewal: individuals are continually born and continually die.

Economies also arise and fall continuously – but in addition they have an internal feedback system that determines whether they are growing or declining. Once an economy begins to be successful, this very fact makes it more successful, because people see new opportunities for them to acquire wealth, and this, in turn attracts more people. Confidence builds, and this creates more confidence.

This can also work in reverse: people lose confidence in their society and their economy. And this causes a downward spiral.

An short-term example is the familiar business cycle, the bane of capitalism. Slower feedback loops determine longer-term trends – but these can be fundamental and hard to detect by the people directly involved, because they are often blind to them – and assume what has worked in the past will also work in the future.

This is not always the case.

2010
04/16
CATEGORY
Economy
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The Market is Not a Marketplace

The Market is an abstract place where all our economic activity is said to converge, and where prices are settled. Capitalism has been renamed the Market Economy, presumable because is sounds better – and because we believe in it implicitly without knowing anything about it. It has become part of our new religion.

One reason for this is because we have never experienced a real marketplace, where people exchange their goods in person. I lived for a while in a remote village Indian village in Guatemala, where I often ate native food, bought on the spot for very little, and enjoyed watching everything going on. I didn’t realize how simple the food was until I got on the flight home and tasted the airline food. It was delicious by comparison, and I ate too much. But I digress.

The markets in most cultures were originally run by the women, as it is today in Bali. The transfer of economic life from the women to the men, was, in my opinion, one of our big, big mistakes. But again I digress.

I am taking another course: The Age of Pericles from the Teaching Company. The first lesson is about the Agora, the Athenian markplace – which was much more besides, being the center of Athenian life. I quote from the course guide:

This was the center of the commercial, religious, and political life of Athens. This lecture surveys each of these categories, with special attention to the buildings on the western side of the agora, where the Athenian council met, where the state archive was housed, and where officials entertained state visitors and ambassadors. Laws were put on display in the Royal Stoa, and legal cases were often first investigated by magistrates here. Because the agora was home to moneylenders, traders, and a wide variety of manufacturers, we will also look at the economic activity that took place on a daily basis in downtown Athens at the time of Pericles. In this space, hundreds of stalls were set up, and the range of economic activities taking place suggests that the agora was like a huge bazaar. Sausage-sellers, moneylenders, metalworkers, perfumers, shoemakers, and potters all congregated in parts of the agora. These activities were watched by state officials who ensured that fair weights and measures were used and that grain was sold at fair prices. Finally, we will consider the agora as a religious complex. Within the boundaries of the agora, altars, small sanctuaries, and even temples were dedicated to the various gods who oversaw the welfare of the state.

A lively place! I would loved to have seen it. Professor McInerney makes the point that it was a face-to-face community, where everybody knew everybody. In other words, it was a people place.

Today’s Market, by contrast, is not a people place and plays no attention to people’s needs. It considers them irrelevant.

What a loss!

2010
04/16
CATEGORY
Business
Economy
Sociology
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Ticos are No Longer so Fond of American Stuff

Don’t get me wrong, they are still fond of the American Dollar – they will accept all of them they can get their hands on (including those lovely American tourist Dollars) – but they are less eager to spend their precious Colones on American goods. As a result, the Dollar, relative to the Colone, is in decline.

This has not been obvious (except the the decline in the exchange rate) but as I think about it, I can now see a pattern in all kinds of consumer goods. There are less American cars, and vehicles of all types. Blue Bird buses used to be ubiquitous, but they are now only seen in rural areas. Much the same for Mack dump trucks, other countries are now muscling in on their territory, by selling better products for less.

American used clothing used to be a big business down here, and all over Central America. But as people get more affluent, they want new clothing, not used American hand-me-downs that make them feel inferior.

2010
04/14
CATEGORY
Economy
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Real Americans Love War

I just realized this clearly – and immediately wondered why I never realized it before. No doubt it was because Americans are not aware of it themselves, and don’t want anyone else realizing it. But everyone else in the world already knows it, and Americans should too.

When the peaceniks marched on Washington before the Iraq War, the media disparaged them as weak nothings. Real Americans, they implied, were eager for another war, and not too squeamish about the reasons for one. War had become a national pastime – and one they didn’t want to deprive themselves of.

What baffled me was the support for war from the business world. I could see how the defense industry was in favor of it: it was money directly into their pockets. But how could all this vast flow of money elsewhere benefit the civilian industries, since it would obviously weaken the civilian economy?

Then I realized: war would make popular control of the economy impossible – the thing they dread most. They have to be in control of the economy. A peace economy would make this difficult because the people would come to their senses, and decide the economy should benefit them. That they should have more power.

Business is interested in power, and they don’t want this taken away from them. If the nation collapses, this is not a problem: they will still rule in the ruins that remain.

2010
04/12
CATEGORY
Business
Economy
Political comment
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We Have Lost It

What is this it? It was our interest in reality, something new in human history. Previously, we had believed in various illusions, beginning with a universal belief in Spirits – beings that only existed in our minds and nowhere else. This was later enlarged to include Religion – and a belief in Monarchy, as closely related beliefs. Recently, as I have been studying The Making of the Modern World, one section was devoted to showing that Nationality, was in effect a new religion. As the Monarchy declined, people still needed something to identify with.

I am convinced, based on my working experience in high-tech, that we now have another new religion, but one without a name. At least Nationalism had a name, so we could point to it. This new religion is a worship of business – as being omnipotent, all-wise and all-powerful – global, in fact. The New Economy.

In this economy, the business world owns everything: all the money and all the jobs. You can’t get more powerful than that. And the business world is now only interested in power: getting it and keeping it.

There is only one problem with this: this is not reality, but only another illusion. Because power is only something that exists in human minds.

We became powerful and affluent originally because about five hundred years ago we were able to see what reality really was. And once we understood this, we could align ourselves with it – and use its power. But we misunderstood the situation, and ended up thinking we we all-powerful ourselves – when we were only tapping into the real source of power.

So we switched back to a worship of ourselves – or more precisely, a worship of our technologies and institutions – and ignored the reality we are embedded in. This reality is of two kinds: external and internal – outside of us and inside of us. Some of the stuff inside of us is delusional, as I have said. But some of it is real enough, and constitutes what we are as individuals.

We are now ignoring external reality- global warming, for example – but are ignoring our inner reality even more. It has even got the point where it hardly exists, because our new religion demands that we ignore it.

2010
04/11
CATEGORY
Business
Economy
1 comment

The Moral Destruction of America

I hesitate to write about this, because to pontificate on this subject has become so popular. The worst people do not hesitate to set themselves up as moral authorities – and to demand courses of actions that are immoral in the highest degree. I am not anxious to be associated with them.

But someone needs to say that morality still matters – and to give some examples of where we have gone grievously wrong. And also admit, quite frankly, that is is a difficult subject – as Beauvoir makes clear in her book The Ethics of Ambiguity – to say nothing of Satre’s Being and Nothingness. Few will trouble themselves to think about this – and I may be wasting my time. But I have plenty of time to waste, so why not?

One blatant example is our continuing wars – which, I maintain are actually aimed at America itself, not some foreign enemy. They are aimed at our weakest spot: our fragile morality – and frankly, our fragile economy also. It may seem strange to associate morality and the economy – but this is exactly what we must do. We must take morality seriously – and not just clothe immorality in moral talk. Moral behavior is what makes a nation great – not a powerful military. Greatness and successfulness are two different things; we should aim for the former, not the later.

I have touched on two subjects: war and the economy, both intensely moral issues. If we do not insist that they are just that, we will become an immoral people.

2010
04/09
CATEGORY
Economy
Iraq/Afghanistan/Pakistan
Morality
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An Economy of Illusions

The economic crisis was caused by the securitization of illusions; the marketing of lies.

This, in turn, was part of our all-to-human belief in illusions of all kinds, since they are much more satisfying than reality. An economy based on illusions is just the latest development of this part of the human condition. One bolstered by the latest technologies.

Wall Street discovered, no doubt to its surprise, that the world trusted it – and immediately set about violating this trust by cashing in on it. It created fancy new investments no one could really understand, but this made them even more desirable. The world, it seemed, wanted to be fooled and it was glad to oblige them.

The result, when the world realized it had been fooled, was a global emotional depression – which coincided with an economic depression. This was inevitable, because the economy is built on trust – and when that evaporates, the economy evaporates.

The economy is not something that operates in a special world, all by itself – as we have been led to believe. It is very much a human thing with human attributes – and must be seen as that. The alternative view: that it is some kind of heaven on earth, that benefits humans only if they worship it – must be seen as an extremely dangerous illusion – the most dangerous one we have invented yet.

But that is not the complete story. A lot of people, the majority of Americans in fact, had prospered because of these illusions – it seemed like the price of stocks and home prices would rise forever. Instant riches were theirs for the taking – and they took all they could get. The gravy train was headed for heaven, and they got on board.

Then something strange happened: the train ran off a cliff. And the people on the train started asking themselves “What did we do wrong.”

A voice from heaven answered: “You put your faith in the wrong kind of gods!”

2010
04/02
CATEGORY
Economy
4 comments
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