Financial Crisis as Mental Problem

The financial crisis continues to foreground a crisis of knowledge: what are people allowed to know? When is what they know allowed to be true?

The financial industry has never faced the extent to which its analyses are skewed by its own financial interests, or how completely the uses of bailout money remain secret.  AIG remains a black box, and more generally we have no idea what any of it is worth once semi-detached from the government guarantees that float it now, and sink the rest of us.

Anne Enright has a nice piece in the London Review of Books on the universal mental unreality.  Called "Sinking by Inches," she writes about Ireland's meltdown as caused in part by Ireland's mental paralysis.

I can understand the denial at the end of the boom; what worries me is the denial that made it. From 2001 to 2007 it was not possible to be off-message about the Irish economy or, especially, about the housing market. You would barely be published. . . . It was no fun being informed, either then or later. People don’t like you for it, and why should they?
One of the strangest feelings, living through a housing boom, is that you are rich or poor not because of the money you earn, but the year you started earning it. It is not a question of effort, but of luck. This was part of the impotence and panic that drove Irish people to buy overvalued houses towards the end of the boom; it was the feeling that we were running up a down escalator and had to grab hold of whatever we could, to stop being swept away. . .
Telling the truth was, in the circumstances, not just boring, it was also unlucky, hexed, taboo. It might even be unclean. Careless talk costs jobs. If the bubble burst it would be your fault for calling it a bubble, because, at the end of the day, it’s not an economy, it’s a mood.

 This is still where the U.S. leadership seems to be, new bank tax or not.  Its main goal is to make the mistakes of the past into something bearable - at least for them.  While they continue to foucs on this, the country as a whole won't be able to tell the truth because it is still afraid of making it all worse.   And so we'll stay stuck with the combination of "impotence and panic" that got us where we are.

Dogs are Feeding

I got back to France from Santa Barbara a week ago today. The most memorable political moment back home was when Bill Maher's show came on while I was hooking up my mother's new computer to her giant TV monitor so she could see it better. Maher got through a sequence about Christian breast implants and then had Elizabeth Warren as his guest, an interesting law professor who has done a lot of good work on the decline of family finances in the new economy and how they get screwed by debt, and became the head of the Congressional Oversight Office charged with evaluating the uses of TARP bailout funds. Maher talked TARP for a while, and they agreed Repubs undid 50 years of prosperity with the help of Bill then said you passed the economics part of our show, but I have a philosophical question.

He then used a word I never thought Maher would use: "Philosophically." "I mean just put on another cap for a second. The root cause of our problems is that we really don't treat each other very well as people. . . I don't know if in Norway or Denmark, they are always trying to trick and trap and screw each other for money. . . if you look at a dozen problems in this country, it always comes down to that. We will do anything to each other for money."

Well um yes. Capitalism. Honed to perfection.

Warren's reponse was terrible: "But you know. Every game has rules . . ."

Here are the rules in Arizona, put in story form by this excellent piece that you must read: “You need to buy when there’s blood in the streets,” he said with a shrug. “Even if it’s your own blood.”

That means you bought high, prices fell, so you drive around town all day to find people getting foreclosed and try to by superlow to make up your losses by forcing them to eat theirs. Pure Road Warrior for a nation of house flippers.

Or Terminator 2, where John Connor, whom Terminator is now protecting, watches two boys hitting each other with sticks and says, "we're not going to make it, are we? "Who?" asks Arnold S, newly good Terminator. "People."

Well Arizona isn't. Maybe not the U.S. It's economy turns on shitheaded cons, like billionaire mayor Bloomberg making NY taxpayers cough up $1-4 billion in still-not-clear amounts of bond financing for the NY Yankees' new stadium. It's not just jet-lagged me saying crap like this. Currency traders, not exactly critics of Yankee capitalism, are again crushing the dollar on the generally correct theory that the main Obama financial strategy is to print huge oceans of money and then give it all to the banks, who will not pocket it fast enough to keep its value up.

Warren said we might have to say: "This is what America looks like for the next 50 years." Well yes. Because we're aren't changing too damn much now are we??

And I haven't even started in on California or the higher ed budgets. Or Star Trek, the longest series of movie quotations in movie history.