Tuesday, October 23, 2007

Earth to Greenspan: Go Away!

The picture is not a metaphor for global financial meltdown: it's my Southern Cal land of origin burning to the ground. See my Global California blog for links to the maps and more.

I get a little preachy there about the social roots of natural disaster, which we can call in shorthand "Mike Davis is Right." There's been lots of great work in recent decades about the natural disasters caused by social forces like the international banking community's idea of development - the effects on ecosystems and communities of the IMF's love of giant dams, for example. Greenspan is one of those guys, helping to cause economic and natural disasters that he then permits himself to lament.

He's doing it again, using his recent book as an excuse to go around lecturing everyone about current policy errors in his typically convoluted way.
"Obviously there is a limit to the extent that obligations to foreigners can reach,'' Greenspan said in a speech in Washington yesterday. The dollar's decline to its lowest since 1997 may be "an indication America is approaching this limit.''
Well golly. (See the full article for an attempt to endow Greenspan with the dignity of historical consistency.) The irritating thing here is not that Greenspan is wrong - he's right. The irritating thing is that he acts like he wasn't the leading economic policymaker in the U.S. if not the world until 2006, having been chair of the Federal Reserve since 1987, and therefore in large part responsible for this financial "limit" and many others.

He can go around acting innocent because of an even more irritating thing: now well into his 80s, Greenspan continues his quest to make economics seem like a collection of natural phenomena rather than the effects of deliberate choices made by the folks in charge, like him.

So he is an outrageous overuser of the passive voice, in which no policy agent ever does anything, things just happen. "A diminished appetite for adding to dollar balances" is reached, or the subprime crisis is suddenly observed, or this or that crisis is "waiting to happen." The only agents are inanimate objects: the dollar "drifts downward," for example.

As an explanation of how things work, this is really dumb. It's like my 5-year-old self standing next to the cookie jar and telling my mother, "the cookie is no longer in the jar." Mom wouldn't buy it, but hundreds of millions if not billions of people have to buy this kind of nonsense - about what happens to their money - every day.

What is the goal of Greenspan dumbness? With the dollar, it allows policymakers to continue to let the dollar slide. Greenspan is thought to oppose Bush Administration economic strategy. Here, he helps Treasury Secretary Hank Paulson tank the dollar to help US export firms by implying that it's all automatic, the dollar drifts, limits are reached, nothing can be done.

That's absurd: European policymakers are warning traders not to make "one-way bets" against the dollar, and scholars offer ways the U.S. Treasury could stop or slow the decline (e.g. suddenly buy dollars, scaring dollar-shorters out of their one-way bets). But as long as we have Greenspan around to muddy the waters with laissez-faire dumbness, stabilization will be that much harder.

Short those dollars. Burn baby burn.

Saturday, October 20, 2007

Things Are Not Good

Three sighs for Southern Cal, where I was born and raised.

Continuing signs of the runoff of the ongoing financial meltdown swamping the real economy. Big profit plunges in the big banks and the like. Always fun to watch them losing our money.

Meanwhile, the banks are having a hard time figuring out how to bail themselves out.

Even a financial journalist finds the Treasury secretary incoherent and dissociative.

Another F.J. marvels that "interconnected global markets should make the world economy more stable," except they don't. Duh. Life is surprising for journalists who believe in the Invisible Hand.

Fr. Frank supplies the details on the financial conflicts of interest, nepotism, and for-profit self-dealing that are the main aim of Bushian government.

Media companies that can't create it - buy it. Always enough money in this country for that.

Meanwhile, Rep. Pete Stark blows his stack, and tells Bush off.

Thursday, October 18, 2007

A Little Distracted

Paris transportation was shut down today by the strike. We went looking for the revolution on foot, couldn't find it at the Bastille, and were told by cops that the route of the revolution had changed. By the time we got to Nation, the revolution had moved to the cafes, where les militants were blowing their sheephorns for additional wine. This was a post-revolutionary state I could relate to. But the media didn't care about stuff like social movements, because they were too busy covering the ins and outs of Cecilia Sarkozy dumping Le Jogger out in the open, having covered for him during the election, so he could play the man in charge of everything including his wife. Meanwhile, if you are noticing the financial meltdown, and are one of the undumb members of the economic other 90 percent who hasn't been wafted upwards by the right-wing pseudoeconomics for the last five or twenty-five years, and have begun to notice that many financial columnists are truly insane, you might be ready to read a long piece on structured investment vehicles as a down payment on getting the big picture on who's been screwing you. Enjoy - just one of many past and future attempts to turn over the financial rocks to see what crawls out.

Tuesday, October 16, 2007

Rich And Dumb

That would describe our current Secretary of the Treasury, Hank Paulson, your average Wall Street billionaire who said this at Georgetown:

"Let me be clear: Despite strong economic fundamentals, the housing decline is still unfolding, and I view it as the most significant current risk to our economy,” Mr. Paulson said in a speech at a Georgetown University law forum. “The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth."

Right. Housing price inflation - cornerstone of American economic greatness. Hmm. Now that you mention it, maybe it is.

Paulson sounds like a North LA County realtor, but that doesn't make him stand out. There's all sorts of statements from Fed Chair Bernanke that contradict themselves in mid-paragraph, which is considered a sign of moderation and good judgement in the financial world. They actually have no idea what's going on right now. They only have about 2 tools anyway to fix a machine with six billion parts - interest rate levels, money supply. Frighteningly helpless strutting around from people who control all the money anyway.

Meanwhile: "Foreign Investors Flee US Securities"
"Europe Records Unprecedented Outflows"

Forget about it. Read Colbert on the US Election. My only laugh in the paper this week, and I'll take what I can get.

Sunday, October 14, 2007

Dum n Dummer

On this Sunday morning Fr. Frank is more righteously wrathful than ever, comparing American public silence on the U.S. practice of torture to the "good Germans" who ignored Nazi extermination during World War II. One chilling moment is when he borrows from Andrew Sullivan this observation"

America’s “enhanced interrogation” techniques have a grotesque provenance: “Verschärfte Vernehmung, enhanced or intensified interrogation, was the exact term innovated by the Gestapo to describe what became known as the ‘third degree.’ It left no marks. It included hypothermia, stress positions and long-time sleep deprivation.”
So "As the war has dragged on, it is hard to give Americans en masse a pass." Amen, Fr. Frank!

How did we sink this low- and against a small poor country (again)? Well one answer is that we've always been there. Jim Crow segregation, Japanese internment camps, civilian massacres in Vietnam, and many similar American practices didn't produce rebellion in the streets. Americans are like people all over the world: most of us keep our heads down, if not firmly up our butts, and do what's good for ourselves and nothing more. A reasonable rule of thumb, with the occasional hopeful exception.

Another part of the answer is that the U.S. public has actually gotten dumber in the last twenty years. I was reminded of this when Fr Frank's own paper, the New York Times, couldn't think of any better commentary on the novelist Doris Lessing's Nobel prize than to reprint a fifteen-year old piece of genuine crap that she published about political correctness carrying on for the communist illusion. It sounds like it was ghostwritten by Denish D'Souza or some other culture warrior of the period, and comes complete with a headnote that apparently inspired the reprint - the arch-conservative literary critic Harold Bloom taking the Nobel as an opportunity to say Lessing only got it because of political correctness. This whole idiotic time-warp experience didn't fall down the memory-hole, but became the most emailed article by the upscale types who read the NYT.

What's the connection? The attacks on political correctness in 1990 and 1991 launched the culture wars. These sought to destroy whatever egalitarian instincts had survived the Cold War in the hearts of the American public, and which had been inspired by the civil rights and anti-war movements, among others. Newsweek published a piece in December 1990 about how race consciousness was another version of the Soviet dictatorship of the proletariat. This was right as the Soviet Union was opening up and soon to disband itself, and the Berlin wall was going to fall. What would the Right use to smear equality, negotiation, multilateral foreign policy, and racial justice if the couldn't call it Soviet puppeteering anymore? Like lots of liberals, Lessing fell into the trap, calling PC a kind of communism.

I just finished the copy-edits of chapter 3 of my forthcoming book, Unmaking the Public University, so let me quote myself on the subject:
the early 1990s attacks on PC succeeded through their ability to associate PC with race consciousness, which they in turn described as an internal enemy that challenged national unity. The civil rights movement had yoked race consciousness to increased equality, and these were denounced interchangeably in culture-warrior attacks. Arnold-style invocations of a unified and universal national culture expressed a genuine nostalgia while running intellectual cover for a conceptual rollback. The attacks took advantage of a national culture in transition, one in which most of the American population seemed not to know what to do with an increasingly multiracial, culturally dispersed, and economically fragmented democracy, while their leaders seemed to know even less. American society needed new cultural capabilities, new powers of complex analysis and construction. The need was evident in the PC wars themselves, since the phony social crisis of a few ethnic studies courses and isolated campus incidents could have occurred only in a country that needed new bearings. What the country got, instead of new cultural knowledge about multiracial and egalitarian democracy, was the attacks on PC. These tied racial equality to a Communist-style threat to the nation, while making inequality the prerequisite to order.
I'm not happy to report that this is where we still are, nationally: we don't believe in equality anymore, and don't think negotiation or fairness or development will make the "war on terror" unnecessary. So we do force and war, and torture is the core of war unleashed. That's not because torture works (Fr. Frank cites WWII vets saying they learned more from Nazi prisoners by playing chess with them); it's because torture is what war boys do.

Thursday, October 11, 2007

A Little Good News

I forgot to mention here, though I did say it on my Global Cal blog, that the problem of declining public funding for the University of California had a really nice write-up in the Los Angeles Times on Sunday. Hats off to Rick Paddock for the best daily newspaper story on public higher ed funding in world history.

We'll see what it does. But at least the idea is out there that privatization can't save public universities: the amount of the donations aren't enough, and the money comes for specific purposes, including, in the case of sponsored research, for a return on investment and not for general social development. For doing the latter, general taxation is far more efficient than cutting taxes and then hoping companies give a small percentage of their tax savings back to the public sector in the form of targeted research that may or may not have social spillovers. Read the original report if you want more on this topic. And who wouldn't want more? Take your medicine! It will help you to keep from getting screwed.

There was some good coverage here in France of the insider trading scandal at the Airbus parent company. The story is that a number of politically-connected insiders at the company sold much of their stock right before it plunged on news of Airbus 380 delays. One piece of the problem is that they appeared to profit from knowledge they had as insiders that the public did not. Another piece is that a government financial institution, la Caisse des dépôts, bought the stock high with public funds, bailed out the insiders, and thus took the loss out of the public till. Did the Caisse directors have a deal with the insiders to help them out? No proof, they deny it, and so it goes.

The only good news here was that the mainstream radio coverage I heard (Europe 1) said if one side sells at a good price (high), another buys at a bad price (high and about to fall). They noted that the government's losses, 180 million Euro, meant that the insiders in effect gained 3 Euro per man, woman, and child in France. It's helpful to think about who pays when others gain, rather than living in the magical world of Anglo-Saxon market talk in which everyone wins, and the big wins are allotted simply to those who are best.

I have a few thoughts about le Jogger's trip to see his fellow strongman Putin and to have a virile dialog of mutual respect, but I'll spare you. Better news elsewhere - including TV criticism - where people are seeing how it really is.

Saturday, October 06, 2007

The Big Empty

I talked compulsively on my cell phone back home in Santa Barbara, since there were lots of great people to catch up with after 3 months in France. One of them is my friend (and excellent blogger) Raphaelle, my mirror-image refugee from her home-city Paris, now living in Venice CA and telling me how LA traffic is just fine if you know what you're doing - much better than in Paris. I could have missed my Air France flight from LAX to CDG if I'd let the 405 work its bottleneck magic - a 6 car wreck on perfect early autumn morning, both sunny and dry, backed us all up to Mulholland. But I fought the road and I won.

Thanks go out to the unknown black-haired brother and sister (as I think of them) in the black Chrysler wagon from Alhambra - the brother's head back looking at the sky, the sister driving like a bush pilot - whose passing and falling back in lane number 1 gave me the strength to stick with lane number 2.

F Scott Fitzgerald supposedly said, "In a real dark night of the soul it is always three o'clock in the morning." I first read that when I was 16, born and raised on the west side of LA, and my first thought was no, the dark night is when you are trapped in a Southern Cal 3 o'clock in the afternoon. There are no clouds, and the sky is a giant pale blank like the roof of a fundraising tent the company forgot to take down. It tells you nothing will ever change. The dog barks at 3:05 pm just like he did the day before. Yesterday's skin-temperature breeze drifts in the window again. The sun is the bare overhead bulb that someone forgot to turn off. You are tempted to find some feature in the world by looking at the sun, and the simple fear of looking at it can make you blind.

State Hospital about forty years ago. I only remember her, and not the building, which is a Cal State campus today. I turned off After I dropped Avery off at LAX I drove back to Santa Barbara up the coast, and then left Hwy 1 at Las Posas because I like the last unbuilt crop fields in western Ventura county, fields that run up against the dry hills where I used to visit my great grandmother Mooney at CamarilloLas Posas to find it, wound up Old Hueneme Road and kept going away from Santa Barbara through the pass into the Santa Monica mountains and landed in the back forty of Thousand Oaks, where it runs out of asphalt next to the scrub and grassland, both of which look eternally on the brink of death.

3 o'clock in the afternoon looks like this:

Luckily there are the friends. Richard and Hilal put us up and we had a chance to hang out a little bit especially over breakfast. They gave me a birthday party the day after the actual day, Sept 26th, because I again spent it with my Academic Senate pals in Oakland, since the last week of September is the beginning of the fall quarter at UC.

A bunch of us saw Naomi Klein speak about her new book The Shock Doctrine at Victoria Hall. I liked her because she's putting up a good fight and because the film she did with her film- maker partner on Argentinian workers taking back factories closed by their owners - The Take - is one of the best globalization documentaries ever made.

The best point for folks to take away from this project is that "free markets arrive through force." Not all her links between markets, shock doctrines, and dictators are equally convincing, but she's completely right in making the general point that markets rest on state regulation, and when markets are used by elites to screw the middle- and working-classes, as in Argentina and the United States, they are so unpopular that marketeers turn to dictatorship or, in the US, to hard-core minority rule.

Klein's more serious limitation is that she didn't in the talk have a good new story to tell about non-market development. This is my obsession - showing that progress, prosperity, and development proceed faster when they are done by and for everybody. In contrast, Klein is still a Keynesian, wanting government easing of the fallout of globalization, and that 20th century kind of social democracy is of course a radical position in the US. It's not enough any more, but what the hell - Klein's off to a good start, and I hope a lot of people read the book.

Some fight, but most do not. In higher circles the death trip continued. One example is the confused strategy for maintaining that pillar of the good life for the vast majority - public higher ed. One of the things I do in Oakland, which hosts the Supreme Allied Command headquarters for the University of California, is sit on the Senate's Academic Council, which hears testimony from the University's senior managers once a month. This month I again asked the President and his 3 Executive Vice Presidents why we seemed to be going backwards again. Six months ago, my committee's "Futures Report" had been put before the Regents. It showed that the University has lost over a billion dollars in state funding compared to where we would have been if we'd kept even with state income growth since 2001. The report also showed that private fundraising, though deeply beloved by senior administrators everywhere - losers ask for state money, winners get it from the rich - could never fill the gap, and that the same inadequacy held for research funding, which went for specific scholarly work and not for overall education. We showed that the choice was between more state money and doubling and then tripling student fees.

But there I was end of September saying that though we all agreed on the numbers, but then the University destroyed public support for public funding every chance it got. The President's public statements on the budget repeatedly said that state funding is strong and pleasing to us. Every time a major private donation comes in, senior administrators praised our excellent public funding. Every time small, elite UC units like Boalt Hall law school asked for private money, they said public funds would never increase to adequate levels again. How the heck, I asked, can we ever possibly ask the state to restore the funds they took from us when we keep saying we have everything we need?

Each senior manager began his or her comments by saying "Chris, I completely agree with what you just said," and then explained that they would keep doing exactly what I was lamenting. I didn't know whether to laugh or shout, so I smiled benignly and thought my usefulness in this Senate mechanism was at an end. The decline continues, not because these aren't good and intelligent people - they are - but because they accept as given the rules that ruin us. Good and intelligent professional people don't revolt against the rules.

What is the rule that we must now break? The rule is reject taxes, beg for charity. In the world of low-tax and low-service conservatism, huge, intentional wealth concentration has meant that for the wealthy most taxation is voluntary, and they tax themselves entirely at their own discretion (and at far lower rates) via self-aggrandizing philanthropy with the money that should have gone to public services in the first place. Universities, hospitals, schools, music, art and sports programs, libraries, health clinics, nursing homes, disability services, housing authorities, all must complete their budgets by begging the wealthy hat in hand. Getting the money up front, via taxes, as a public right, as a return to the public for its service in supporting the endeavors that made the wealthy wealthy - that is what breaking the rule should restore.

It's time to find another strategy, outside the Big Empty.