Torture and found lyrics

The artist is Jonathan Mann. His Web site is here. I labeled this "politics" only because some people want it to be political. It isn't. It's a matter of justice.

Via Andrew Sullivan.

Outrage

This video is rather long, but I think it's worth watching:




BILL MOYERS: This wound that you say has been inflicted on American life. The loss of worker's income. And security and pensions and future happened, because of the misconduct of a relatively few, very well-heeled people, in very well-decorated corporate suites, right?

WILLIAM K. BLACK: Right.

BILL MOYERS: It was relatively a handful of people.

WILLIAM K. BLACK: And their ideologies, which swept away regulation. So, in the example, regulation means that cheaters don't prosper. So, instead of being bad for capitalism, it's what saves capitalism. "Honest purveyors prosper" is what we want. And you need regulation and law enforcement to be able to do this. The tragedy of this crisis is it didn't need to happen at all.

BILL MOYERS: When you wake in the middle of the night, thinking about your work, what do you make of that? What do you tell yourself?

WILLIAM K. BLACK: There's a saying that we took great comfort in. It's actually by the Dutch, who were fighting this impossible war for independence against what was then the most powerful nation in the world, Spain. And their motto was, "It is not necessary to hope in order to persevere."

Now, going forward, get rid of the people that have caused the problems. That's a pretty straightforward thing, as well. Why would we keep CEOs and CFOs and other senior officers, that caused the problems? That's facially nuts. That's our current system.

So stop that current system. We're hiding the losses, instead of trying to find out the real losses. Stop that, because you need good information to make good decisions, right? Follow what works instead of what's failed. Start appointing people who have records of success, instead of records of failure. That would be another nice place to start. There are lots of things we can do. Even today, as late as it is. Even though they've had a terrible start to the administration. They could change, and they could change within weeks. And by the way, the folks who are the better regulators, they paid their taxes. So, you can get them through the vetting process a lot quicker.

Taleb: one guy's prescription

From yesterday's Financial Times, ten principles to limit risk:

1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.

2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

I find it interesting that so many commenters on the banking mess are saying the same things about the bailout. The pollution of the political process by banks, bankers, financiers, and fellow travelers is just plain wrong.

Update: Simon Johnson discusses turnaround scenarios here. Among his observations, this one stood out for me:

To me, fixing the banks - i.e., greatly reducing their economic and political power - is essential for all our futures, irrespective of when and how the economy recovers. We cannot allow the same kind of potentially system-breaking risks to be taken again, and we cannot assume that the solutions that failed in the past (e.g., tweaking regulatory powers) will work in the future. Next time, the banks won’t just be Too Big To Fail, they’ll be Too Big To Rescue - the fiscal costs if we let this happen again would likely be huge; where is it written that the U.S. will for all time have fiscal credibility and provide the world’s leading reserve currency?

It's come to this: Too Big To Fail is Too Big To Exist.

Oligarchs III

Oligarchs II

Not long ago I wrote here about the oligarchy the financial industry has become, concentrating wealth and political power in the hands of a few "Masters of the Universe" whose opinions about bailouts, regulations, and the wisdom of our financial system have all but become dogma for policymakers and the rest of us. Let me add to that this bit of information: the director of the Obama Administration's National Economic Council, Lawrence Summers receive more than $6 million as a managing director of New York Based hedge fund D.E. Shaw and Co. over the past 16 month, according to Bloomberg.

Now Larry advises Barry, and Barry (being the newest decider) makes the policy. But Barry's adviser Larry got $6 extra large from a big Wall Street player quite recently.

When Thailand, Malaysia, and Indonesia seized up economically speaking a bit over ten years ago, word got out here in the US that a large part of their problem had to do with crony capitalism -- a distorted credit market arising from an unholy comingling of finance and governmental power. Reading news reports at the time, we were led to feel superior to such undeveloped nations. America isn't like that.

Are we?

Our garden

There's a reason I've been less than prolific here on the blog lately. We're creating a public garden here in Commerce, and I've been hauling and trenching and organizing just about full time for the past week and a half. Part time before that.

Here are a few pictures of what we've accomplished so far.

The land we leased hasn't been tilled for about 40 years, so it needed some attention. First it was tilled using equipment that belongs to Cereal Crops Research, Inc., an area non-profit that's been working with farmers in this area for a couple of decades to determine which cultivars are most successful in our climate and our soil conditions. The big John Deere machine below is disking with only its central part as it passes over the heavy "Blackland gumbo" at first. The greater weight on a smaller footprint was necessary to break up the heavy soil. Later the big wings came down for further passes.




After the soil was loosened, we applied two cubic yards of composted chicken manure to the area, and that was tilled in. Next came amendments to loosen the soil further, specifically three truckloads of salvaged potting soil. This was tilled in before it could blow away.



Since this area has been in a steady drought for the past few years, we determined to develop an irrigation plan involving drip lines to conserve water. The plan involved laying PVC pipes underground to each of the 36 individual garden plots. Trenching and plumbing were completed this week.

While the digging was being done, a few of us also worked on setting the raised beds in place -- no easy task. Those suckers are heavy.






Still to do are moving amended soil into most of the raised beds and mulching the pathways around them. County government has donated about 130 cubic yards of mulch, and we expect a number of volunteers to descend on us Saturday morning in conjunction with a larger civic event scheduled for that day.

This morning the mulch pile was steaming in the cool sunlight.


Our plan is to begin signing up gardeners on Saturday. Planting will commence soon.

Populist outrage and oligarchs

One reason populist outrage over the excessive bonuses at AIG and elsewhere in the financial industry doesn't miss the point is discussed in an excellent Atlantic article by Simon Johnson and James Kwak. Johnson was the chief economist at the International Monetary Fund in 2007 and 2008. He's currently a professor at the Sloan School of Management at MIT. His experience with IMF bailouts of faltering economies gives him a perspective on the crisis in the US economy which is not shared by many of the people working to solve our problems in Washington and on Wall Street.

He sees what's happening here to have much in common with the collapse of the Malaysian economy in 1998 and other emerging market economic crises: It's a case of oligarchs manipulating the government to maintain wealth and power. However, unlike the methods of corrupt crony capitalism in emerging economies (bribery, political graft, extortion, etc.), what the US has is an ideological predisposition to follow the big players' lead in matters financial, even when they are precisely the ones who have conjured the current fubar situation.

In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption—envelopes stuffed with $100 bills—is probably a sideshow today, Jack Abramoff notwithstanding.

Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.

The argument continues by looking at who the big players in government are (and were) -- Geithner, Rubin, Snow, Paulson, Greenspan, et al. -- and how they are and were intimately connected with major financial institutions, particularly Goldman Sachs. The political/governmental decision makers are one and the same as the financial guys. Furthermore, their worldview has become just plain common sense among so many politicians and policy wonks. Thinking like a megacapitalist is just the way you think in the halls of power.

I'm reminded of Louis Althusser and his ideological state apparatus.


Meanwhile the money keeps piling up around the financial services people and their companies as more and fancier financial products are developed, making more and fancier ways to make more and (presumably) fancier dollars. (image from the Atlantic)

From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.

Keep in mind the capitalist rationale for having a financial sector in the first place: The bankers and brokers provide an essential service to the economy by aggregating savings and lending to business both so that goods and services can flow efficiently through the market and so that innovations and start ups can find necessary funding. For this the banks and brokerages deserve a profit (it is argued), and for this their employees and executives deserve a good wage. In recent years, however, wealth has been concentrated in the financial sector itself where it has flowed and eddied and swirled in a gyre of more wealth and (I'd argue) where it has created nothing but wealthy people. Well, according to Simon Johnson, it also created a worldview in which financiers could do no wrong and the rest of us were just too ignorant and innocent of economic realities to have anything worthwhile to say in economic policy discussions.

While it is true that the ginormous bonuses assorted AIG players received are only a tiny fraction of the many billions we taxpayers have so far poured into the company's ravenous maw, our outrage -- our populism in the face of a huge payday for the people who blew our economy to bits -- is exactly the right response. A populist pushback against the evident groupthink in Washington and on wall Street would be a healthy thing, indeed.