We all know the pitfalls of comparing apples to oranges. But what of pigs and elephants? (Note: PIGS = Portugal, Ireland, Greece, Spain).
Case in point, the sovereign debt crisis which started in Greece and spread to Portugal, Spain and other such debt-fed porcines. It wasn't long before Italy, France and other EU nations started feeling the ripples in their government bond prices. Even Germany, that beacon of uber-conservative government finances, saw its CDS prices climb higher.
Analysts, financial journalists and global pundits are now falling all over themselves to criticize the Greeks for the mess they made. Nouveau-popular Roubini and Taleb have gotten in on the act and a day does not go by without mention of Greece in the front pages of major financial networks (Bloomberg, Reuters, WSJ, FT..). They have even unearthed a funky $1 billion cross-currency swap from 2002 arranged by Goldman Sachs (who else?).
Ahhh.. as the ancient Greeks used to say: Δρυός πεσούσης πας ανήρ ξυλεύεται (once a tree is felled everyone can be a lumberjack). To use yet another allusion, the Greek pig is being sacrificed at the altar of "high" finance.
And who's the elephant? Why, the USA of course! Compare the size of projected budget deficits for 2010: Greece $27 billion, USA $1.6 trillion - and that's just the federal deficit, i.e. excluding state and local deficits. And everyone is hyperventilating about the Greeks' ability to borrow? Oh, puh-lease!
It is evident to even the least suspicious observer that what is going on is a concerted effort to besmirch the euro in order to drive the dollar higher. Why? Because the US needs to borrow on a gargantuan scale from foreign investors. Since the US cannot pay high interest rates (they would destroy the economy), it must make Treasury bonds attractive in other ways, i.e. through the dollar exchange rate in the FX market. What matters to a foreign bondholder is total return: interest plus FX gains.
Pretty simple to see the picture when the dots are connected..
Case in point, the sovereign debt crisis which started in Greece and spread to Portugal, Spain and other such debt-fed porcines. It wasn't long before Italy, France and other EU nations started feeling the ripples in their government bond prices. Even Germany, that beacon of uber-conservative government finances, saw its CDS prices climb higher.
Analysts, financial journalists and global pundits are now falling all over themselves to criticize the Greeks for the mess they made. Nouveau-popular Roubini and Taleb have gotten in on the act and a day does not go by without mention of Greece in the front pages of major financial networks (Bloomberg, Reuters, WSJ, FT..). They have even unearthed a funky $1 billion cross-currency swap from 2002 arranged by Goldman Sachs (who else?).
Ahhh.. as the ancient Greeks used to say: Δρυός πεσούσης πας ανήρ ξυλεύεται (once a tree is felled everyone can be a lumberjack). To use yet another allusion, the Greek pig is being sacrificed at the altar of "high" finance.
And who's the elephant? Why, the USA of course! Compare the size of projected budget deficits for 2010: Greece $27 billion, USA $1.6 trillion - and that's just the federal deficit, i.e. excluding state and local deficits. And everyone is hyperventilating about the Greeks' ability to borrow? Oh, puh-lease!
It is evident to even the least suspicious observer that what is going on is a concerted effort to besmirch the euro in order to drive the dollar higher. Why? Because the US needs to borrow on a gargantuan scale from foreign investors. Since the US cannot pay high interest rates (they would destroy the economy), it must make Treasury bonds attractive in other ways, i.e. through the dollar exchange rate in the FX market. What matters to a foreign bondholder is total return: interest plus FX gains.
Pretty simple to see the picture when the dots are connected..
Cool, look at those Greed (oops, I meant Greek...) characters, how does he do that ?
ReplyDeletePersonally I'm thinking of parading around the jungle carrying my pancarte "IN DEFENSE OF PIGS" (those cute, fuzzy, almost human animals, not the EMU countries...).
I've already written extensively on this blog about the joys and conveniences of scapegoating.
The only thing the Elephant has going for it STILL in everybody's mind is that... ARMY, ya know ? (And a still hefty image of successful bullying all over the planet, don't let's discount that...)
Pretty cool analysis. I think you're spot on.
If Hel can read and write in Greek, I must confess to being jealous.
ReplyDeleteBravo Hell. It appears PIIGS and (red) herring are quite tasty together.
ReplyDeletePerhaps it would be pleasantly paired with Folie a Deux?
Or a blends with a little more balance and depth, such as Folie a ..? (Deb, help me on the French)
... "tout le monde"?
Thai, you don't need MY help with your French, you're doing just fine.
ReplyDeleteA little linguistic analysis of your link...
Did you catch that "enter if you're 21" ?? :-) :-)
And what about that little parody of a Rorschach ink blot on the first page ? What fun. Some people have lots of imagination these days, and at least THEY are having fun, in the midst of apocalyptic w(h)ining and diving...
I'm STILL twiddling my thumbs waiting for you guys to unscrew yourselves from the boob tube.
The communist creed: From each according to his ability, to each according to
ReplyDeletehis need.
The capitalist creed: From each according to his gullibility, to each according
to his greed.
This comment has been removed by the author.
ReplyDeleteWell done, Hell. Your conclusion, that besmirching the Euro for the benefit of the dollar, particularly dollar denominated U.S. Treasury debt, is spot on.
ReplyDeleteAnd the meaningless, jawboning exercise by The Fed, because, essentially, that is what it is, of raising the discount rate, is part and parcel of the same initiative. They are trying to, indirectly of course, dampen enthusiasm for the stock market, so as to scare capital back into bonds.
On the other hand, as strange as it may sound in prospect, we must be on guard for The Fed actually believing that a U.S. economic recovery is at hand such that the discount rate maneuver is best viewed as the opening salvo, tepid though it may be, of more substantial liquidity draining moves to come.
We will know in the fullness of time.
That is a unique perspective. Create a crisis in Euroland to make people buy treasuries. I don't know if it is true or not. I am not much for the ability of the elite to coordinate such plans but then the biggest trick the devil played was to make us believe he doesn't exist.
ReplyDeleteWhat is undeniable is that the Greek deficit is about the same %GDP as US and UK. I noticed this when Obama proposed his budget. And I know that our GDP is bloated by all kind of adjustments, meaning the actual numbers are worse. It is interesting how few people have mentioned this and this definitely plays to your theory.
Thank you for sharing your thoughts.
Well now, Yo, that's a real CIVIC service that you have done for us, sticking this link...
ReplyDeleteFor a minute I didn't know what I was reading, and I was getting ready to tell YOU not to stick all YOUR personal info over the oueb like that, but I smartened up quick.
That "rant" is no longer... available, is it ? It has been... CENSURED for "security" reasons, FOR OUR OWN GOOD, to keep us "safe"...
Not unlike that other "rant" which IN PLACES (not everywhere) ALSO sounds extremely pertinent, and has some damned good insights into the current (and at the time... ) political/economic situation.
That one is over 600 pages, and you WON'T find it in your local library. Censured too.
For the IRS ? .... No comment....
I suspect that you are correct.
ReplyDeleteWhat happens to a dream deferred?
ReplyDeleteDoes it dry up
Like a raisin in the sun?
Or fester like a sore--
And then run?
Does it stink like rotten meat?
Or crust and sugar over--
like a syrupy sweet?
Maybe it just sags
like a heavy load.
Or does it explode?
Well, I think we are beginning to see what can happen when well grounded rants are ignored too long. I expect that there will be more such explosions.
I wonder whatever happened to the Anon of the 80+ page rant. Unfortunately, he of the 600+ page rant took some seriously wrong turns; otherwise I would have liked to see someone break the Anglo-American imperialistic grip at the time.
Some inside dirt on Cheney & Rumsfeld going way back. Who would ever have thought that Tricky Dick would end up looking like a choir boy (by comparison) in our lifetimes.
ReplyDeleteC’mon hell…
ReplyDeleteWhy doncha wanna have fun with the flavor of the month???
I’d partially agree with you, but rather debate this point thoroughly. The facts, as I’m sure you know, (…and you’ve probably stated in prior posts, but I don’t have the time or the memory to see if you’ve stated these same things) are that the EU as a whole is looking at 1.7 trillion. …and that doesn’t include the bankrupt satellites that are on life support through the financing of said “fiscally sound” EU and outside the EU countries.
Apart from the fact that there is no central bank to completely monetize that 1.7T, what we’d be looking at as an equivalent would be if the US 1.6T was broken down by region. Let’s say of the 1.6T, $50billion was needed by the Detroit or Cleveland area. What outside entity would want to buy that portion of the 1.6T tranche? Thankfully, the US centralization of its 50 states helps us mask our problems. (…and yes, I know our 1.6T is only a portion of the net. I’m just trying to adjust the perception on the problem at hand.)
The EU doesn’t have that luxury or ability to do the same masking or monetizing. So that Greek portion is very exposed.
So when it comes to cross border support, I’m not saying that the EU is set to abandon ship… (…and nor do I take WW1 or WW2 as “history lessons”, since those are no longer modern day viable options.)
What it comes down to are basics. Money divides. It’s why you don’t loan it to friends. Luckily, the US version of a casino has a house that can fund its gamblers infinitely. The EU has gone into the same casino gaming without a house. …and it’s either time to establish a house, or you make some large privatized loans to “friends”. …and what happens when you make loans to friends???
Outside of exiting the casino business… those are your options.
As a whole, I find Italy’s situation far scarier to the EU, in the way that California is to the US, …but as since this game is all “confidence” game, I guess people have more faith in the public’s need for pizza over a gyro.
All the best,
Rich Hartmann – Miss America
aw, Rich.
ReplyDelete"That's why you don't LOAN it to friends".
Right on.
That's why you... GIVE IT to friends.
All the best.
I hear you deb. (I hope the EU and its citizens hear you too.)
ReplyDelete...not to harp on the WW1 & WW2 things… but I still do fear unrest. Please remember that many of European countries that are not EU members, but are pegged to the Euro, do not have the luxury of debasing their debt. Their current crisis is tied in synch with the falling Euro.
They financed themselves on the way up through a credit rich EU, as their main source of financing, but now that the EU needs to tend to their PIIGS, it leaves these Non-EU countries high and dry. On the downside of credit, when obligations come due, the last thing you need is to make a call for help and find out the other end of the phone call is on strike for better wages!
Many of these high and dry countries are countries that have not been afraid to shed a little blood in recent years to enjoy the freedom from oppressive shackles. ….well, well, well, to be cast into a similar situation of becoming debt slaves on the downside to the EU would not seem to be a likely/desirable thing!!! (they don’t want to be Icelands!!!)
…so that situation then leaves us with this question: If the EU has to tend to Greece (the “moral hazard”, which in it of itself, is deemed potentially problematic), then where do they get the extra financing for Latvia, Serbia, etc…??? …and if they don’t have cash/credit to give them… then what do these countries do? Default? (well guess who their main creditors are??? Guess who stands to lose the most here. …I wouldn’t be surprised to see that GS is already on the other side of this bet!!!)
The other options for these counties is to depeg, and pay back Euro denominated debt, in exchanges that will shoot their currencies into instant hyperinflation, which is even worse considering that many of these in debt satellites are already experiencing 15-20% unemployment. Lose Lose Lose Lose.
Me thinks this Greece thing is a lot stickier then you Hell. In my opinion, it has a scarier endgame potential.
All the best,
Rich Hartmann – Miss America
...and when I said: "They financed themselves on the way up through a credit rich EU, as their main source of financing"
ReplyDeleteI mean: "MAIN SOURCE!!!!!!!!!!" of financing.
The numbers are UGLY!
Since you guys love quoting books/stories... This ones for you.
Remember the Pied Piper from Hungary? Keep an eye on your kids. When Hungary help you gain your fortune on the way up (rats), will there be an expectation in their time of need?
All the best,
Rich Hartmann - Miss America
Rich, thanks for the intelligent comments.
ReplyDeleteWould you help me out for a moment as I just have a hard time seeing your fear.
In the end, as Steve Waldman reminds us, nothing is fundamentally any different globally except our perception of things.
Now between different people in different countries there are very real differences on what their future will look like depending on how debt issues resolve on default/inflate/payback, etc... But as a while we are all the same.
I see a lot of bad investment decisions have been made as we gave money to people who never should have been given this money in the first place were given it- e.g the milk has been spilled so to speak- Yet things are also no different than they were yesterday.
And to the extent people stop loaning money to other people who never should have been given it in the first place, it will now go to wiser harbors.
So the future should be brighter.
And yet you fear that everyone will start killing each other as they feel they are debt slaves when before they were something different?
When nothing is different today than it was yesterday?
I have a hard time seeing this.
I certainly think there will be those who gripe and try to get the collective to intervene on their behalf- hopefully no one will listen to them.
If Hungary is in trouble tomorrow over their debt and as a result eventually default so that we lose the rest of our investment, we are back to the same place we were before.
Yet future growth should improve as $ goes to wiser places.
Technically it seems our future is should be even brighter since this credit cycle has unwound.
Why fear war?
"I have a hard time seeing this."
ReplyDeleteEver hear of cascading cross-defaults?
Debra,
ReplyDeleteThis unconventional analysis might interest you especially as it comes from a professor of philosophy (I know how much you love to wax philosophical).
The ground is definitely shifting; a while back I saw an interview with two French Jews of Egyptian origin who write for Le Monde Diplomatique, Alain Gresh & Erique Rollo (not sure of correct spelling), and they were surprisingly critical of not only Israeli policy but zionist supremacist/separatist ideology.
And to the extent people stop loaning money to other people who never should have been given it in the first place, it will now go to wiser harbors.
ReplyDeleteTrue - But ... Where did the bailouts go?
To the very same crooked / inept people who caused the problem in the first place, i.e. "we" chose to punish the productive to keep the scum afloat!!
Agreed, but "productive" people would also have been swept up in Yo's "cascading cross-defaults" had they not bailed these banks out.
ReplyDeleteYou know as well as I that bank collapse would have meant many good solid companies would have not met payroll. And many working people like on razor thin margins- isn't that one of the main reasons the universal coverage group says we should have universal coverage?
Yet we are to accept these unfortunate people's payroll losses as "the price needed to pay" in order to fix this problem? (as if there is a solution to a credit cycle- not!)
Indeed you share with me ANY SOLUTION to a credit cycle unwinding that does not either catch all of us in its back-draft and/or hit the innocent hard and I will say "yes".
I agree that propping the banks up clearly fails this test, but so does letting them go bust.
That money is back in the hands of the incompetent is a problem I certainly agree with you on. But again, bank loans are also a response to demand from you and I.
I refuse to let you and me off the hook so easily. That is just the way I see it.
@ Thai - Part 1
ReplyDelete“When nothing is different today than it was yesterday?” and “we are back to the same place we were before.”
Exactly! “Nothing is different.” That statement seems calming, but should actually scare the hellasious out of you! That is one of the biggest problems. Get all the smartest minds in the world together, lock em in a room, and tell them they don’t eat until the “problems are fixed” and you’d have a room full of dead people. You can’t unscramble this egg.
I’m not illuminating anyone with this statement, but I love this analogy so I say it all the time. Our economy is like a high speed car. Unfortunately someone put the spark plug right next to the gas tank. Thankfully, TPTB, were there with a fire extinguisher. …but rather then scrap the car, or “fix the problem” (like move the spark plug) they just installed more fire extinguishers.
F@#$ the Dotcom bubble and F@#$ the Housing bubble. It was neither. It’s been the 401k bubble all along. This guaranteed weekly feed into the ponzi market created a monetary base for exploding financial “innovations” which happened to land in different spots (like Dotcom/house), and then the subsequent marriage of fractional reserve banking to leverage (with said monetary base from the 401k) led to severely understated inflation. To complicate this further, securitization locked in the debt that was spinning around this overstated credit boom.
Now on the downside, when the tide pulls back, you don’t see the emperor with no clothes. Instead you see a gaping hole! (the emperor cashed out, built a castle and consumed by himself, 2x what was put in by the collective whole!) …and now we’re trying to fill that hole (and “whole”) with fresh pulp, bits and bytes, etc… …but we are getting nowhere in filling the gap because it’s too large. Hell, the hole is continuing to grow as the tide keeps pulling back. I guess the hope is that tide will just roll back in and cover that hole back up… so that the “collective whole” will feel hole again??? (Wholly cow I never used the words Hole and Whole so many times in a paragraph!! Hopefully, my theories have holes in them! G0D damn I can’t stop!!! I think I’ve been eating too much swiss cheese?)
“Yet future growth should improve as $ goes to wiser places.”
If you can show me where that is, I’d love to know??? The unfortunate reality is the obligations coming due are so large, there just doesn’t seem to be cash beyond the filling of existing gaps and creation of “buffer zones” for what is inevitable and unrealized deflation where the rubber meets the road.
All the best,
Rich Hartmann – Miss America
@Thai:
ReplyDeleteI still think that letting the banks go bust and sending quite a few of the most crooked executives to jail for fraud is part of the maintenance costs of having a capitalist system!
Of course there will be pain and loss to people.
This is all unavoidable; therefore it is better to take the loss earlier, while we still have resources and ability to deal with the unpleasant consequences, rather than later when everything of value has been thrown to the pit, all government credibility is lost and violence & revolution will be the only way to rebuild.
@ Thai - Part 2
ReplyDeleteAs far as this goes:
“Indeed you share with me ANY SOLUTION to a credit cycle unwinding that does not either catch all of us in its back-draft and/or hit the innocent hard and I will say "yes".”
I think everyone in the world would agree with that statement… unfortunately, that’s where “hard decisions” and “tough times” come in. Unfortunately, no one wants that, so we’re all tugging hard at keeping our fantasy in place.
The people with wealth and power will do everything in their powers to keep up their illusion. As long as the rinse, lather, wash can buy us 1 more day, then they will repeat it again tomorrow.
…but the reality is, in casino culture, while everybody stays at the table, and just keeps running a bigger tab, everything is fine… The game can continue. It’s once 1, 2, 3, decide to cash out that reality sets in. …and in this game of chicken, right now, it’s in EVERY COUNTRIES BEST INTEREST TO STAY AT THE TABLE!!! The “cascading cross-defaults” will be set in motion if anyone get up.
The unfortunate reality is… The Greece situation, coupled by the non- EU countries (CEE) might not be “getting up from the table”, but rather being removed from the table. …and this scares me. In the US, we keep our illusion going. Can Europe keep all of its sovereign counterparty risk at the table and in the game???
I’ve parsed out some potential theories at the RGE over the years that I believe “could” help domestically… but I am realistic in knowing that this problem is far out of my cognitive reach. I don’t even want to attempt to think about Europe, because as a person who is not there, I have even less knowledge of its culture or people and their resolve.
All the best,
Rich Hartmann – Miss America
Rich, (what's in a name ? ;-) ), I REALLY LIKE THAT ANALYSIS.
ReplyDelete401k, that's... PENSION FUNDS, isn't it ??
If you're saying what I think you're saying, take a look at my post in the saloon about Fear of Declassement (what is moving the baby boomer generation, and the older members of the middle class to hold on for dear life to everything they've still GOT).
What's left when the castle of cards falls down ??
GUESS WHAT ??
The.. POUND OF FLESH.
When a symbolic system collapses, what's left is the flesh and blood body as a "measure" of reference.
Dixit Shakespeare. And I agree with him.
@fajensen
ReplyDeleteMy point is much like Keith Hennessey's analogy that one must have four sides to build a box.
I completely agree with you that IF we were to let all the inefficiencies and poor choices in this system collapse, we should. But under our current system, letting the banks fail all by itself is like creating one wall of a box and saying the new three shape will work fine for a box when we both know it will not.
If the banks had collapsed:
-We would still be paying enormous amounts of money to people to not work (before we even started paying for unemployment insurance for those who did work but are now out of a job).
- We would still be paying absurd amounts of money in health care to keep people alive a few extra days because no one asks "what value am I getting for this spending", etc...
-We would still be stuck with a defined benefits time bomb for the public sector
-Do I make my point?
Saying bad decisions need to get flushed out but then getting upset when they part you find most offensive does not yet ignoring the other parts does nothing but feed into your own particular view of what is wrong with the world.
But what to the person who sees it somewhere else?
People should be getting angry at government in my opinion. It is mathematically impossible for government to be everything to everyone and yet the voters keep buying into this lie in the hopes that when their particular person is elected, their view of the world will finally prevail.
Cooperation seems impossible under such an approach. You know as well as I that we are all responsible for this mess and yet we all want someone else to pay for it.
That dog won't hunt.
We have kicked the can of moral differences as far as they can go- to the level of our elected representatives. If you and I can't find common ground, why do you think our elected officials will do it for us?
And if we can, then why did we really need them to do it for us in the first place?
Our problem is really political in the trues sense of the word imo, not economic.
@Rich
ReplyDeleteThanks
And re: "If you can show me where that is, I’d love to know???"
I obviously can't.
Balancing America's trade deficit would seem to go a long way towards stabilizing our nation's economy so Bob can argue with just Ken and Sarah over who owes whom what in this whole debt mess and without having to worry they are also splitting whatever earnings they make with China, Japan and the rest of the world.
... Hell has been reminding us from the very beginning of his blog that investing in energy would go a long way towards solving our issues (energy is a big chunk of our trade deficit) and I have been reading about increased investments in the energy sector in the newspaper. But I obviously cannot prove this with my cursory Google skills. Nor do I know if these investments will pan out.
As for new investments stabilizing Europe?
Forgive my ethnocentrism but I really do not know European economics very well. If you or others do know and are willing to comment on what thee stabilizing investments are, I would love to read whatever you know.
Be well
As for new investments stabilizing Europe?
ReplyDeleteStability is greatly overvalued here - stability is seen as "more of the same 4 ever & ever"; i.e more power to Bruxelles, the rule of technocracy, the destruction of the nation states, outsourcing of all jobs except the rentiers (FIRE) and taxationers (Gov.), mass immigration - to destroy the living standard attainable from all what "they" cannot outsource until "The Elite" permanently controls 99% of the resources as is the case in the US.
What people in Europe want instead is:
Opportunity, Someone to pick you up when you fall and that Government (especially the UN & the EU) gets out of the way.
For that to happen, creative destruction must happen -or- we eventually elect someone who just go for the normal destruction as per Standard European History.
Great post fajensen
ReplyDeleteUnsubstantiated conspiracy theory.
ReplyDeleteI too do NOT see France taking any... COURAGEOUS steps to boost the economy.
ReplyDelete"Everybody" seems to be looking from side to side to see what the neighbor is doing, closing their eyes, saying a prayer, and hoping that the status quo (excuse me, I meant, structural ajustement, substraction down to the pound of flesh...) will hold on and save the day.
There is a certain amount of job creation going on. It is mostly in the sector of... training people to find jobs. Spiffy, huh ? Convenient ?
I personally don't like conspiracy theories, but pooh poohing them in the age of Thales and Hypervisor is unwise, in my book.
Interpol is joining forces all over Europe now.
Convenient, huh ?
We will soon have an EMU AND a POLICE union.
Just what our grandfathers dreamed of...
@ fajansere: "Stability is greatly overvalued here"
ReplyDeleteWell said
Though I might ask what you mean when you say "someone to pick you up when you fall" in the context of
"Stability is greatly overvalued here"?
For while I think I completely agree with the sentiment, there seems to me to be an awfully big devil hidden within the details of such a seemingly small and well intentioned comment.
How much pick up are you talking about? And who gets this pick up when they fall? And how often are they allowed to fall before someone is not there to pick them up? And what kind of falls are rescued?
Isn't "pick up" what Brussels was created to provide? ;-)
@ fajensen
ReplyDeleteI thought you might enjoy the following Jefferson quote:
“Men by their constitutions are naturally divided into two parties:
1. Those who fear and distrust the people, and wish to draw all powers from them into the hands of the higher classes.
2. Those who identify themselves with the people, have confidence in them, cherish and consider them as the most honest and safe, although not the most wise depository of the public interests.
In every country these two parties exist, and in every one where they are free to think, speak, and write, they will declare themselves.” –Thomas Jefferson to Henry Lee, 1824.
You would know much better than I so I pulled the following link on the purpose of the European Union- would you agree these were its original founders' intents?
... It does kind of sounds like "pick up" to me.
For if this is true, it sounds like you Europeans have other problems that are just as big as your banks. And while relative changes in population growth between our two regions might explain some of this, I do not think it explains all of this change- assuming the two are independent of each other which is a big assumption indeed.
Be well
A twitter feed just reported 6 hours ago that all flights in and out of Athens, Greece have been canceled and all attractions have been closed.
ReplyDeleteHell, can you confirm or deny this report/rumor?
Thai, I really dislike chest beating in all forms, and I think I feel like gagging at this time at the slightest hint of any form whatsoever of "my_ is bigger than yours".
ReplyDeleteThe United States of America is an Enlightenment experiment that started on European soil.
I hate to burst them thar bubbles, but I definitely think that this is true.
And to this extent, the fate of the European Union is intimately tied to the fate of the U.S.A., and vice versa.
It would be wise to remember this, in my opinion.
I suppose that it is my sometimes passionate nature that makes me want to confront you, Thai on the issue of "if it were YOUR CHILD who was set to fall through all the safety nets, would you be so keen on trying to see this in a cost-benefit analysis ?".
Or... does it seem IMPOSSIBLE to you that YOUR CHILD ever could fall through all those safety nets ??
I'll get to the links later. Mea culpa, I have not yet read them.
But I'm having a shitty day...
fajensen- if you interpret my links as somehow being a competitive, my apologies. This is not even close to my intentions. I think I have been quite clear there are many things I think America is doing particularly poorly on.
ReplyDeleteAnd "no" Deb, I would not be keen. But I would also not understate the role of personal responsibility in the need for safety nets in the first place. The need for a safety net is largely a function of how much and how often you get yourself into trouble. And the degree you get yourself into trouble is clearly related to the degree you think there is a safety net in the first place. It is an endless catch-22.
Further the definition of "trouble" exactly is an endlessly changing target. And to add to this quagmire, many of the people preaching for more safety nets seem particularly keen on having someone else pay for them.
But again "no", I would not.
It is what it is.
And Deb, FWIW, I am not commenting on safety nets as they are clearly necessary.
ReplyDeleteMy links were on Europe's love of vacations.
To imply that commenting on European leisure is akin to attacking "safety net" programs does show how our two continents view such things differently.
... As I said before, the definition of what constitutes "trouble" is a clearly a moving target. ;-)
The personal responsibility problem is a serpent biting its own tail.
ReplyDeleteOne of the great disadvantages of "neo"liberal economic thought (TOTALLY derived from the perversion of Protestant ideals, in my book...) is the OVERSTATEMENT of individual responsibility, and the continued culpabilization of the individual for conditions that the social body itself has created (to keep him in line, of course. As a tactic of social control).
A BIG example : at this time the continuous overvaluation of (pseudo) scientific and mathematic skills has made it extremely difficult for people with literary/artistic talents to find or create meaningful work. So.... is the "solution" for all of us to get engineering diplomas ? Even if our gifts do not lie in this direction ? This is in strict contradiction to my credo : it takes all kinds, and ALL of us to make a world. (No exclusion)
Your analysis does NOT take into account the fact that it is the SOCIAL BODY ITSELF which has proclaimed that the "individual" is and should be... KING of his own world.
Totally responsible for what happens to him.
And totally capable of claiming all the credit too.
THAT is what is behind the myth of the "self made man".
But there is only one problem. Things don't work that way.
But I keep telling everybody that we are wasting time and resources in this futile attempt to assign culpability (the blame game).
And singling out the "people who are taking advantage of the system" to punish them, too.
We would be better off ...tending our own garden and not looking around so hard to see what our "neighbor" is doing (wrong...)
@ Debra,
ReplyDeleteThe moral hazzard of not holding people accountable or even having ANY risk-v-reward factor in place is sooooooooooooooooooooo cyclically damaging.
I walk amongst these thieves. I talk to the brokers. They are from another F-ING PLANET!!! Their egos and sense of self importance is only overshadowed by their beliefs of entitlement. That mocking GS quote of: "doing god's work" far and away best describes what most of these guys truly believe.
They are like fanatical cult members! Get this... most of the guys I talk (off the record) to tend to blame the poor people who shouldn't have bought houses. They flat out blame the poor for 90% of the whole crisis!
We all know that those subprime-ers were a trigger, and piece of the puzzle,but as I argue with them, they see no problem with the higher up enablers, the securitizers, and the launderers of that toxic waste. They act oblivious to the fact that prime, commercial, leveraged borrowers are all just as toxic. They act as if their financial WMDs (swaps, CDO’s etc…) have so little to do with the real problem.
I hear it over and over again. They blame the poor, and then they blame the left wing gov’t for enabling the market to give these poor the loans. Nothing, blame wise, falls on these guys. …and even as I say this, they have no problem taking those same poor people’s bad loans, and selling them to low and middle class pension funds for a profit.
…and to boot they think of themselves as geniuses for doing so, …and think they are entitled to that stimulus laden bonus off of the profits from these government stabilizing acts of systemic welfare, and even more so, are entitled to their criminal collection of insurance payments derived from the houses they subsequently set on fire.
Feet must be held to the flames… and soon. or it will get worse in a hurry. In tough times, the criminals become more ruthless!
All the best,
Rich Hartmann – Miss America
@ Rich Hartmann:
ReplyDeleteImagine practicing law for 12 years and knowing what the public never knows.
Telling them to shut up when others say that they are incompetent because it is a legal defense to be found so.
"Better to be quiet and thought of as a fool then to speak up and remove all doubt."
There is a very good legal reason why these guys spread the meme that they are incompetent and foolish.
Read between the lines, my friend. Read between the lines.
correction:
ReplyDeleteshould be "than to speak up...."
PIGS is something we have started to hear alot about recently - I'm beginning to think they are being used as a different animal - a (scape)goat (see what I did there?!). These Countries may have debt, but they are essentially still developing, and are heavily relient on tourism, which as we know has dropped recently due to the GFC.
ReplyDeleteOh, Okie, really I am SO SO HAPPY that I don't live in your (professional) world, and I am not saying this to belittle what you do, I think that really, the perversion of the spirit of the law (or should I say justice ?.... since when did the law ever really have much to do with justice ?...) must make your life hell.
ReplyDeleteThe people who ALLOW themselves to see and understand the most are generally the ones who suffer the most from what they see and understand.
For the problem of deterrence...
Way back when, when I was doing my death penalty activism, I put to use my shrink knowledge to deduce that DETERRENCE is another one of those basically esthetically pleasing, but effectively inadequate ideas/ideologies.
The "deterrence" ideology allows people who feel self righteous to channel their aggressivity into the punishment game (why not ? after all, channelling and controlling aggressivity is important for a society, right ?).
But... when we take up Thai's "cost/benefit" analyses (lol, Thai, I am using your weapons...), then you have to ask yourself...when I spend over 2M for a death penalty trial with no guarantee that I will get a conviction, JUST WHAT ELSE COULD I BE GETTING FOR THIS MONEY, and is there another way to address this problem that could be better ? (That is called THINKING, by the way...)
American culture seems to be even more into having heads roll these days than addressing the problems.
That is what I call thinking with one's gonads.
(I told my son a long time ago to beware "thinking" with HIS gonads.)
How can deterrence work if... PEOPLE DON'T SEE WHAT THEY ARE DOING WRONG ???
Hmm...
That is a big question.
One that you haven't answered.
And... if you punish somebody for something that HE doesn't see as wrong, just HOW is he/she going to react to it ?? Will he/she be DETERRED the next time ?
On the other hand, if you have a society which has shifted its social control from a system of internal constraints (i.e. religion...) to a system of EXTERNAL constraints ("moralizing" through prison and punishment), you're going to spend a hell of a lot of time and money to punish. With probably fewer results. BECAUSE THE ONLY REASON THAT PEOPLE WILL BEHAVE WILL BE TO AVOID PUNISHMENT. And that, my friends, will necessitate having a society where there is a policeman behind every citizen.
Goodbye, freedom. Hello cage.
And.. cage + criminality, because how in the hell are you going to PUT a policeman behind every citizen ??? (Just think of all the FILTHY LUCRE that will take.. Mind boggling...)
I think that a cost/benefit analysis (LOL LOL) would show you up to be a loser.
Counterproductive.
You guys REALLY should be reading less social science/economics and MORE philosophy.
And by the way... JESUS really was a savvy politician.
He understood this stuff...
Too bad we don't.
@Debra:
ReplyDeleteHow can deterrence work if... PEOPLE DON'T SEE WHAT THEY ARE DOING WRONG ???
Hmm...
That is a big question.
One that you haven't answered.
You miss this salient fact: it's not that they don't know what they are doing wrong, it's that they don't care. Do you understand the difference?
You are dealing with the mind of a sociopath.
Now re-analyze with this in mind.
But Okie, as far as this is concerned, are you SURE that punishment is the best option for a "sociopath" ?
ReplyDelete(I for one have given up on the nametag game too, while we're at it.)
On the difference between "not knowing" and "not caring". Considering the fact that the market ideology prones simplistic solutions of getting rid of employees in order to cut costs, I would say that the vital SOCIAL controls of feeling concern for one's fellow man have been seriously eroded to the point that... many people can no longer empathize, and thus easily commmit actions that they wouldn't if business were conducted in a more face to face manner.
How are you expected to "care" if you have your head in a balance sheet all day ?
Should ALL of us be required to have the philosophical/psychological capacity to "care" in the face of so much pressure that encourages uncaring ?
A little... IDEALISTIC, perhaps, no ?
I am not sure that punishment accomplishes anything other than... the animal satisfaction involved in punishing the "bad guys".
It does NOT stop these people from doing things again and again. (Most of them, at least.)
Not unless you want to... lock them up indefinitely.
In which case your bill soon becomes staggering.
Whether or not your punishment system is public or private, moreover, or WHO is paying for it.
(We all pay for it collectively in the long run.)
Deb, re: externalities and accepted common values/rule (however irrational and totalitarian they may be)...
ReplyDeleteAll of us on this blog have had some variant of this conversation more times than I can remember.
Okie, FWIW you know I think sociopathy is exists at all socioeconomic levels. And the "Robin Hood" ideal you seem to cling to is amongst the most sociopathic ideal of all imo. Taking from those who follow the rules to give to those who do not (to way oversimplify things) does not create any social cohesion at all in my opinion.
But if what Rich is saying is true (and I suspect it is), I do concur with your sentiment on this particular point.
The more time I spend on this blog, the more I have come to understand why the observation that war is fractal may be true. Common ground is really really hard to achieve when we have such different kin boundaries. afajensen's love of "keep things local" seems quite wise in this framework.
If war does come- when nothing is any different than it was before to add such irony to the whole thing- let's hope it does not happen on our, or our kid's, watch.
Thai, you know how much I love provocation.
ReplyDeleteYes, we have had this conversation many times before.
You need to take a look at what I wrote over in the saloon about the advantages/disadvantages of divine right monarchy vs democracy.
For your information, I rather like Robin Hood.
It is the people at the margins of the social body who make said social body evolve. (Careful, I did not say that all evolution was positive evolution...)
I think that y'all will be interested to know that French shrinks in my circles now refer to "hyperadaptive" behavior.
That is a nametag to label people whose behavior seems suffocatingly "normal" along the bourgeois line, and are so stifled that they do the métro/boulot/dodo routine 5 days a week (yeah, Thai with those vacations that have got you salivating...) year in and year out. Their conversation sounds like... an accountant's balance sheet (sorry, the accountants among you..).
The clincher question is...
for those Wall Street traders, brokers, bankers, whatever, their behavior IN THEIR SOCIAL CIRCLE, is completely normal and desirable.
And... up until VERY VERY RECENTLY..
EVERYBODY WAS APPLAUDING THEM FOR IT !!!
And NOW, we are going to tell them that they are perverts/sociopaths ?
Gimme a break, you elder brothers out there.
I like Robin Hood.
But of course, I am the kind of person who can defend Robin Hood and the divine right monarchy at the same time...
"...it's not that they don't know what they are doing wrong, it's that they don't care."
ReplyDeleteThat attitude sometimes extends to those who are entrusted to administer the law as exemplified by govt misrepresentation of DNA statistics in some (many?) criminal prosecutions.
Yo
ReplyDeleteAmen
Great post by Steve Waldman (as well as a link to another great post) if you guys have not read it.
ReplyDeleteInteresting that Waldman is suggesting an approach similar to what we are debating in medicine right now.
"To be overt, or not to be over (covert)- that is the question: whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune
Or to take arms against a sea of troubles
And by opposing end them.
Maybe the internet will help us achieve some kind of common ground after all?
Time will tell
I can tell...
ReplyDeleteI can argue here until I'm blue in the face, appealing to your REASON about the ills of punishment, y'all are not going to change your mind till you get.. CONVERTED. (Careful, I didn't say converted TO, I just said converted...)
"I walk amongst these thieves. I talk to the brokers."
ReplyDeleteI just shivered. Keep up on your vaccines!
This is a very good blog (from my limited perspective). Sudden Debt - some incisive opinion. thank you and keep it up. Best regards, The Peril
ReplyDeleteI came across the following fascinating blog post comparing Latvia vs. Ukraine's currency policies.
ReplyDeleteBoth are in deep trouble, yet both took opposite approaches- Latvia with a fixed currency peg vs. Ukraine with a floating currency. Latvia is thus in a deflationary depression while Ukraine is in an inflationary one.
And here was the line that got my biggest smile: "The question of which of these two countries had the biggest drop depends on what measure of GDP change you use." ;-)
It is what it is