Ideas have consequences.

The blathering of stupidity as if it was just an academic exercise -- a free exchange of ideas -- where demagogues take advantage of the lottery mindset public IS dangerous.

What we're seeing is NOT driven by the mindset of a three year old toddler, but a concrete exercise of the base instincts to survive, to breed with the other elites, to ensure that one's particular genes get propagated and have a better than average chance of survival. That's the whole point of hypereducation -- to enslave others so that they may serve the one.

Let it burn. I was hoping for a McCain victory to create a tipping point, but this actually could turn out better (actually worse is better).

Bwahahahaha!

I remember Alan Watts saying something that stuck with me - it would be as if you went to work at a construction site, and the foreman told you there wouldn't be any work done for a long time, because "we're all out of inches. We've still got all the physical supplies and tools, but we're all out of inches."

Let it burn.

Be the change you want to see in the world, Labiche.

There was a poem, by Charles Simic I think, where he described a few leaves on a tree moving and then suddenly the whole tree is shaking. How panic spreads. The same instinct for stampedes in crowds and the reason behind making horror movies becomes the engine of panic.

But that huge groups of people tend to act like children should not be surprising. International behavior is surprisingly childish. One head of state banged his shoe at the UN but I'd say the rationale's for our wars are quite purile.

Be the change you want to see in the world, Labiche.

Excuse me but your advice is opaque to me. Can you clarify?

If we were all (particularly the people at the top) willing to accept a little less, and stop trying to stick somebody else with the entire loss, we'd all be fine.

But apparently this type of behaviour ... is beyond the capability of humanity. We'd prefer to suffer enormously instead.

Trying, and succeeding, to stick somebody else with the entire loss is precisely why the people at the top won't be suffering enormously.

This isn't anthropological - it's political.

Labiche, he seems to be telling you to set something on fire.

I don't watch commercial television, and I rarely read corporate media, preferring independent news sources. I don't feel the panic.

Certainly, the stampede has been at the very least exacerbated, if not completely fabricated, by the corporate news businesses, since people tune in to negative scary news, and that drives up the prices for the commercial spots.

I wonder if we can bring a huge class lawsuit against these media. What do y'all think?

At least here in the USA we can't act differently because, as de Tocqueville put a long time ago, "I know of no country, indeed, where the love of money has taken stronger hold on the affection of men."
The pain of unrequited love.

Labiche, he seems to be telling you to set something on fire

I'm no arsonist dude. :-)

I was watching the telly this morning in a window on the screen and the general panicked advice from the CNN economic punditry was:

Don't just do something, stand there!

And I got a warm and fuzzy feeling that the world has come to my philosophy of making things better (worse) by just standing there.

God bless their hearts.

Capitalism is very inefficient even in the good times. I noticed this when I worked at a soup kitchen and food bank: that in our society there are human needs not begin met, unemployment, and resources going unused. An efficient economy would not have all three together at the same time. There is also a lot of wasted productive power in our society (marketing is one major example, another would be military production).

An economy is all about delivering goods and services to people but that concept is almost completely lost in the management of our economy. Instead our economy is managed so that money (the abstract concept it is) finds its way to the right people. It should be expected that with a system to increase imaginary numbers would not be good at supporting the needs of people.

It is certainty within the capability of humanity to produce everything humans could need and have a lot left over to produce what humans want. Humanity fails miserably at this and it is all because of a matter of organization. Until humanity actively seeks to organize itself to provide the most efficient production we will not approach anything close to satisfying all human needs. Unless capitalism (at-least in it's current form) is abandoned, under which humanity organizes itself so that individuals active seek out ones own perceived short term best interest, this just won't happen.

Humans have instincts and those are quite strong. Humans are special (maybe unique, I don't know) in that humans have the ability to act in a way different then what instinct would dictate. My guess is that for most everybody this happens less then half the time. From this analysis it is little wounder that when in groups humans tend to fallow instinctual behavior rather then something else and the larger the group the more often the group decides to fallow instinct.

I try to watch both the BBC "World" News and ABC "World" News Tonight. I don't try very hard but if I'm home during the 6:00 hour I do so. Often my attention is divided but sometimes more so then others. I end up watching the news programs about 3 times a week. Using the BBC news as a benchmark, ABC news is quite biased int eh covering of the financial crisis. The coverage is quite obviously determined to convince people that this is a horrible crisis and that unless the government does what big business wants, the viewer will face starvation and homelessness. Considering who owns ABC, this is not surprising but... it's my first hand experience (not the only one) of the absurdity of the main stream American press claiming that it is objective. The best news in the Washington D.C. Area is C-Span radio, which I listen to whenever I'm in my car. That source has actual objectivity and the issues are discussed more in depth then anywhere else I have encountered over the airwaves (or on the internet).

CEOs making 1000 times the workers pay and STILL can't pay a DECENT minimun wage. That's the MAIN taproot of the problem. Its rooted in poison and is now killing the ecconomy. Everyone wants the lifestyle of the rich and famous (just like the boss) only 5 bucks per hour don't get it. Its kinda like George wanting to be another Eisenhower, only 6 weeks of boot camp don't make a great general.

I think this may not get at the root of the matter, which is (hah!) The Iron Law of Institutions. If the people at the top get relatively richer from a new Depression - lower wages mean more workers, servants, and power for them - then we'll have a Depression. That they (and we) will be poorer in absolute terms than we otherwise would be doesn't figure.

I know, for instance, that a lot of very nice buildings at Stutts owe their existence to the poor economic conditions of the Great Depression. They're quite proud of this, in fact. Long downturns appear to be good times for the very rich.

And in the end they traded their tired wings
For the resignation that living brings
And exchanged love's bright and fragile glow
For the glitter and the rouge
And in the moment they were swept before the deluge

Labiche, he seems to be telling you to set something on fire.

I think he was more specific.

Labiche, you have a long way to go. Trust me on this.

So we don't have $8 trillion of imaginary wealth we thought we did. Who cares?

i do. i have founded greenbackpeace. save the wealth! stop the slaughter! i believe we can live in harmony with the financial environment. we are all derivatives of the constant cosmos.

however, "wealth" is not what it seems.

wealth is not fake. it is chains and webs of promises based on expectations. break the expectations and you break the promises. break the promises and you break the tight schedules. break the schedules and everything has to be renegotiated, to start again. but at what terms? new expectations must be set under stable conditions, no matter your politics. you negotiate in order to stabilize and better understand what expectations are realistic.

the food crisis showed us that we turned over the most basic elements of stability to social gamblers, people too deep in promises to act flexibly in crisis. they panic (or thrill) and millions starve.

we need to be adults, and adults work these things through in court, which in this case will be an incredible PITA.

Sorry about that. Wonder what happened to the website!
http://www.counterpunch.com/chomsky10122008.html

Hippie!

Labiche:

"Things have to get worse before they can get better" = "We must refuse to help each other, ease the pain, make the world a better place, until EVERYONE SEES THAT I WAS RIGHT! AND DOES WHAT I SAY!"

The world's full of people insisting that things have to get worse before they can get better. And as far as I've ever been able to tell, every single one of them means what I've described. Including you.

It's futile. Things will never get so bad that they'll decide you're right, because they'll all be waiting for things to get so bad that everyone else admits they're right.

The people who make the world better are the ones who go out and work to make the world better.

Labiche, you have a long way to go. Trust me on this.

I trust you but how do you know where I'm going? I was just heading sorta thataway, and later I'm going to go elsewhere, not really intending to get anywhere. For me, it's the journey, not the destination that's important.

Sounds like you already got where you're going. Happy for you -- trust me on this. :-)

And as far as I've ever been able to tell, every single one of them means what I've described. Including you.

Good lord, you're right*. I HAVE always wanted to enslave humanity and bend them to my will. Deep down I mean -- on the surface I'm just lazy, spiteful and indifferent like the rest of my neighbors so not much to fear there.

---
What's not to enjoy with capitalism doing a little forced self-introspection? You go ahead and be all serious about it. Me, I'm going to be be amused -- this type of conspicuous financial carnage doesn't come too often to the gated communities. Glad I lived to see it. :-)

The people who make the world better are the ones who go out and work to make the world better.

and that has gotten us to where we are today, hasn't it? shouldn't we just accept the world as it is, with all it's imperfections?

I like that Alan Watts quote a lot. Really though, what money does is make it possible for the work to get done without everybody having to trust each other to do the right thing, and it makes it easier to agree on what the right thing is. So it is sorta like running out of inches, but it's almost exactly like running out of trust.

If everybody on the work site trusts everybody else to do their job, and agrees that the work and the benefits are being fairly distributed, then the work can proceed without any need for money. When trust is scarce, or the proceeds and the work get complicated and have to be constantly negotiated and kept track of, then money is definitely useful. But money is by no means the only way to get things done.

The lines in Woody Guthrie's "Deportee" -
The crops are all in and the peaches are rotting,
The oranges piled in their creosote dumps
are about withholding produce from the market to drive the price up.
There were people living in refugee camps all around the areas where that happened. Steinbeck's novel "The Grapes of Wrath" is about that. Vivid portraits of human suffering, people whose lives suddenly became unbearably hard, through no fault of their own.
The thing is the price has to be high enough to justify picking and shipping the crop you grew, otherwise, even if you give it away to hungry people, the good you accomplish by that isn't balanced by the fact you've worked all year for nothing. It's something you're unlikely to do very many years in a row.
Whereas if people live and work communally they can bear the ups and downs communally.
Deportee is about the deaths of a planeful of migrant laborers, who were dismissed in the newspapers of the time as unimportant, faceless, below even the Okies in the social hierarchy of 1930's California. Guthrie set about rectifying that in song.
The world Steinbeck and Guthrie confronted was a lot bleaker than this one is, yet, and they didn't turn away from the call.

Here's a post from a guy who thinks that maybe, just maybe, the whole mess has been planned just to do exactly what it's doing:

www.321gold.com/editorials/engdahl/engdahl101008.html

Steve: Excellent article, very informative, puts one's eyes on Goldman-Sachs. These people, Paulson, Rubin, et al are the worst kind of leeches.

BBC - Nature loss 'dwarfs bank crisis'

Think not 1929, but 1720 - since the derivatives market, Greenspan's pride and joy, is more like John Law's system than anything else. Did you know - and are you proud of the fact - that the world got four hundred trillion dollars richer in the last six years? At least, if we believe the estimated nominal value of all derivatives, that is what happened, according to the NYT article on Greenspan published last Thursday. The system - as John Law called his plan - was designed in a similar way, with prices of "securities" pegged to unknown land in Mississippi (plus the national debt, plus the collection of taxes - which, in 1720, was privatized, with tax "farmers" paying the government to collect taxes). Law's system made for an incredible bubble, as shares in his company skyrocketed - it was in 1720 that the term "millionaire" was coined. The problem, of course, was that the impetus of the system was Ponzi like - it had to keep feeding on itself.

Similarly, the relentless inflation of financial instruments derived from real assets - which are often nothing more than bets on point spreads between unrelated financial entities, such as the NYSE stock index and, say, commodity futures - operated to connect those entities. Which is why a precipitous wipeout of stocks can create even more massive wipeouts further into the shadow system. In fact, they surely have - it would be an interesting question to pose - how many hedge funds went belly up last week, and just don't want to admit it?

Which has been the sad and dangerous thing about Paulson and Bernanke's policy going all the way back to last August. Afraid of that connectivity, they attempted to let the equities markets down easily with loans and the lowering of interest rates, and in the process got the government entangled in the financial markets in a very unsettling way. The presumption among the elites that the state has an unlimited power to borrow, and can thus backstop this system, is going to be tested majorly as the derivative bubble comes back to earth. There is, of course, not enough money in the solar system to backstop it. And nobody knows who is connected to it.

1929 was relatively straightforward. The bubble of 1720 - which generated a parallel bubble in England - was not. And this bubble is the most opaque of all - because it may well mean a retrospective assessment of all those wonderful quarters by all those wonderful corporations that actually make stuff - like GE - but have inflated their profit margins through financial games. GE could well be the next AIG - and that will definitely take us into new territory.

@roger: impressive. i didn't have to wait ten minutes for the universe (in this case, you) to respond to this:

Corsetti: financial globalization has led to consumption smoothing, making households less dependent on current income

I bookmarked an article in July 2004 by William Engdahl. It's title - Is a USA Economic collapse due in 2005?

Choice cuts -

'The problem with this optimistic picture is the fact it is entirely based on the dollar and unprecedented creation of cheap dollar credit by Greenspan and the Bush Administration. Their only short-term goal has been to keep the US economy strong enough to assure re-election for George Bush in November. Washington reports are that Bush made a deal to re-appoint Greenspan on the promise Greenspan would keep the economy growing until the elections. They have done this by a combination of historic low interest rates, rates only seen before in times of war or depression, and by stimulating the economy by record budget deficit spending, issuing government bonds to finance it. The world has been flooded with cheap dollars as a result.

What is clear now is that this unsustainable effort is likely to come to an end sometime in 2005, just after the elections, regardless of who is President. Given the scale of the money -printing by the Fed and the US Treasury since 2001, it is pre-programmed that the „correction“ of the latest Greenspan credit binge will impact the entire global financial and economic system. Some economists fear a new Great Depression like the 1930‘s. The world today depends on cheap US dollar credit. When US interest rates are finally forced higher, dramatic shocks will hit Europe, Asia and the entire global economy, unlike any seen since the 1930‘s. Debts that now appear manageable will suddenly become un-payable. Defaults and bankruptcies will spread as they did in the wake of the 1931 Creditanstalt collapse...

The rise in home prices has been driven by cheap interest rates and banks rushing to lend with abandon. Because two semi-government agencies, the Federal National Mortgage Association, known as FannieMae, and the Government National Mortgage Association, or GinnieMae buy up the bank‘s mortgage contracts, taking the risk from the local banks, so the local lending bank has less pressure to guarantee that he lends to low-risk credit-worthy families likely to repay the loan.

The US Congress has passed new laws making it even easier for families to buy homes with no penny of their own money required initially as „down payment.“ This has meant a huge rise in mortgage loans to economically marginal or risky families. The number of such risky or „sub-prime“ mortgage loans has risen by 70% this year alone, and now makes up 18% of all US mortgages. '

His timing was off, but so far as I know this is pre-Roubini and Taleb's more celebrated doom-saying. If all these people could see the outline of disaster looming, don't you think Paulson and his cohort could to? And if that is true, the question must be asked - did they either help arrange the crash, or at least allow it to happen? Did they see opportunity in this chaos, a silver lining on a cloud that's pure black to the rest of us?

Think of Hank, standing at the ready, the 700 mill in his pocket increasing the size of his balls somewhat, holding the Treasury reins as all this unfolded as he must have known it would, his 'urgent plan' perhaps crafted with his cronies months in advance, ready to leap into the panic with the panacea?

Only the panacea carefully avoids mention of one obvious route to safety, namely government equity in the banks concerned, rather than throwing money at those Hank and co deem worthy of the public largesse. Speed is of the essence of course, and there's no time to discuss such abstruse objections - just pass it!

The same pressure was applied to Europe to pass a mad bailout which would have put many Euro banks at the mercy of those Hank-approved behemoths that remain as the US banking sector once he's done his work administering the last rites to the rest. But the Bundesbank hardheads saw thru the game and sensibly recommended the equity option, which is now widespread in Europe and has just been announced as a possibility here in Australia. (Most of this came from Engdahl too) As a result, Euro banks seem more likely to be able to withstand whatever the near future can throw at them.

So they dip out with Europe, but it's obvious that cui bono here tells you that there are big winners, giant banks that will dominate US finance and banking unchallenged for years to come.

That might simply be happenstance, but I wouldn't bet the house on it!