“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Friday, October 25, 2002

What to say?
Wellstone is dead.

Thursday, October 24, 2002

Dope

Who among us, droogs and stooges all, remembers the mighty Bishop Butler, the Anglican divine that, of all churchmen, retained the admiration of David Hume, even � who was otherwise impatient of the breed? Yes, well, we admit to having neglected Butler�s Analogy of Religion, Natural and Revealed, for more frivolous works, mainly those by Sir Thomas Browne. What can we say, the sins of our youth, the mark of Cain on our accent, the frittering away, seeds and husks of seeds, of our days and ways, that organic time passing from sleep to sleep, the question of money, that slight but annoying sense that we aren�t alone here, there is always someone by you, the porno that smells like rancid butter, and the things undone world without end that no recording angel will record and yet we swear, to the beating of wings and the feel of the talons closing about us, these were the causes and reasons of our very heart, Lord thou know�est.

We�ve been thinking of Butler because he, like Pascal, was ambitious to annex probability theory to the Christian apologetic. This was a bold undertaking, and you can see how Christian theology, by then, what with the seemingly real threat that an explanation of the world was possible without God � the cogito ergo sum extended, mathematically, over the endless graph of the world, a spectre is haunting Europe and it is the European man, the white mythology � you can see how probability starts turning up, the ace that was neglected, like Jesus himself..For one thing, there�s suddenly the sense that the proposal that there is a life after death is actually a statement about what the world is composed of, the basic blocks, and those blocks aren�t made of matter or spirit but events. The possible, the impossible, and the compossible, that�s the spirit here. A life suddenly means an event among other events, and having to be consonant with other events � in fact, a life it turns out is rooted in a world, and the world is a series of probabilities that radiates out from some dark center of certainty, the convergent point. The terror of the actual. This was, for Leibnitz, the supreme problem, from which the entire Monodology flows.



That�s the one side of it, the intellectual side. The political side, the economic side, the sociological side, whatever you want to call it � we�d guess that the impulse to import into philosophy and theology the methods of the gambler probably says something about the relationship between shifting forms of the social organization of expectation in the seventeenth and eighteenth century. A person's global expectation is an important, but hard to capture, aspect of social stability. It is about what seems walled up and what doesn�t. The directions one goes in, or one doesn�t. One of the effects of the "pure" market -- the financial market -- that are often remarked upon in its being introduced to traditional societies -- that is, those marked by evident and legal distinctions of class, with a strongly developed system of legal and social obstacles to confine and regulate the free flow of goods and services -- is that that social organization is felt to be a threat to the very marks of identity that define the basis of traditional social power -- those bases being inheritence, class position, gender, and some order that maps degrees of separation from a charismatic figure (the sovereign) onto social reputation. The threat that the illegal drug market poses to American society is of this type. However, the dissolution of identity is also a strong temptation to that traditional order, which is maintained by an ethos of boldness, of honor. Honor without the test of honor is simply laziness, complacency, the lukewarm that the lord spits out at the end of days. The aristocrat is always, in the literature of the seventeenth and eighteenth century, a heavy gambler. Perhaps this is because a social order that is slowly being liquidated by changes in the economic reality in which it exists -- as the landed aristocracy was being liquidated by the increasing reach of the commercial system --finds its interest less in a compromise, or integration into that system, which would mean becoming merchants themselves, than into countering the novelty with its extremest expression. That expression is, of course, gambling -- the most developed form of speculation at the time. Although there were irruptions that presaged other forms of speculation -- Law's Mississippi Bubble, which was much more extensive and ingenius than just speculation in shares of land, and the English South Sea Bubble are the two most famous instances.



Enough, though, of this and that. Let's get to what Butler has to say, and tomorrow to what Amos Tversky, the non-Nobel winner, dead and so out of luck, has to say, too, about luck, chance, and its perception.

This is the good Bishop:>


"That which chiefly constitutes Probability is expressed in the word Likely, i. e. like some truth or true event; like it, in itself, in its evidence, in some more or fewer of its circumstances. For when we determine a thing to be probably true, suppose that an event has or will come to pass, it is from the mind's remarking in it a likeness to some other event, which we have observed has come to pass. And this observation forms, in numberless daily instances, a presumption, opinion, or full conviction, that such event has or will come to pass ; according as the observation is, that the like event has sometimes, most commonly, or always, so far as our ob-servation reaches, come to pass at like distances of time, or place, or upon like occasions. Hence arises the be-lief, that a child, if it lives twenty years, will grow up to the stature and strength of a man; that food will contribute to the preservation of its life, and the want of it for such a number of days, be its certain destruction. So likewise the rule and measure of, our hopes and fears concerning the success of our pursuits; our expectations that others will act so and so in such circumstances; and our judgment that such actions proceed from such principles; all these rely upon our having observed the like to what we hope, fear, expect, judge; I say, upon our having observed, the like, either with respect to others or ourselves. And thus, whereas, the prince* who had always lived in a warm climate naturally concluded in the way of analogy, that there was no such thing as water's becoming hard, because he had always observed it to be fluid and yielding: we, on the contrary, from analogy conclude, that there is no presumption at all against this: that it is supposable there may be frost in England any given day in January next; probable that there will on some day of the month; and that there is a moral certainty, i. e. ground for an expectation without any doubt of it in some part or other of the winter. "



Tuesday, October 22, 2002

Remora

LI�s editorial philosophy (besides �a sera sera) is to ignore the exaggerated attention given to the standard controversialists of the governing classes. In Hitchens� case, we�ve torn up many rabid commentaries on his various contemporary meanderings, because we just didn�t see the need to add another comment about the guy. But LI's patience is at an end with the guy, and we want to say something.

Hitchens is a instructive case of the way the felinities of the polemicist can give way suddenly to the scurrilities of the flak. His essay in the Sunday Washington Post, So Long Fellow Travellers (actually, it should have been entitled the Long Goodbye, so much copy has Hitchens squeezed out of quitting his column at the Nation), is typical of the new, belligerant Hitchens. The piece distorts the positions of his opponents, the anti-war Left � a venal sin, to which controversialists are prone; and then distorts the position of his own party, which is a much worse sin, even mortal. It is the end of one�s intellectual integrity, which is really all the writer has to offer. The barrage method of insult can't disguise the inglorious intimations of flakhood: the impossible pomposity, the apology for established power, the tone of privileged resentment. .

His criticism of the anti-belligerent case is -- to summarize not unfairly -- that they are cryptic reds, that they �fawn� over Saddam Hussein (disguising this, of course, by pretending to disapprove of gassing Kurds and such), that they mistake George Bush for the aggressor in the current affair, and that, when pretending to make a practical case against the war, they add to their record of mistaken prophecies by contending that war with Iraq would be a quagmire, would entail massive casualties, and a widening war � prophecies that were not realized in Afghanistan and Kosovo. He also makes the astonishing claim that Ramsey Clark is the �main organizer of anti-war propaganda� (all arguments against the war are propaganda, just as all critics of George Bush �smirk,� according to the new Hitchens) � which is about as credible as the claim that Hitchens has changed his political bearings due to a large bribe from the Heritage Foundation.

Briefly, we�d say that the case against the war does not relate to having a soft spot for Brezhnev; that it does claim George Bush is the aggressor in the current affair � this might have something to do with pre-emptive military action, as the very definition of it seems to indicate taking the position of an aggressor, or being aggressive �resisting threats,� which is what every aggressor has claimed to be doing ; that the record of failures in forecasting the course of wars in Kosovo and Afghanistan has little relevance for Iraq; and finally, that the claim that Iraq would be a quagmire, which LI takes to mean would cost one hundred billion dollars and entail leaving an occupying army in Iraq for at least a year -- is buttressed by recent announcements from the administration itself, which forecasts just these things.

Something should be said about the forecasting the course of wars. The great military fact of the nineties was the astonishing success of TAC � the integration of tactical air units into the battlefield. While LI supported the American fight in Afghanistan, we did think that it would be bloodier and longer. The fall of the Taliban, in hindsight, shouldn�t have been so hard to predict � they had conquered only a brief time before, and they were relatively new to real military engagement. However, TAC so far has been successful against small conventional armies, or disorganized armies. It hasn�t been successful against Al Qaeda. Undoubtedly there is a strong chance that the new structure of military engagement will be overwhelmingly, and quickly, successful against Saddam Hussein � but the argument depends more on the previous Gulf war than Kosovo or Afgahnistan, which were much different political and military situations. But even if Hussein�s forces are rolled, the occupation of Iraq looks very, very different than the occupation of Afghanistan. Afghanistan, frankly, is of very little value in the world economy. Iraq is very valuable. It is surrounded by countries with very strong ambitions and plans for that section of the world. It is composed of several ethnic groups that are held together, in the country, by main force. The situation in Iraq looks more like the situation in Lebanon in 1983 than Afghanistan.

Worse than Hitchens dishonesty about the anti-war Left � or just the anti-belligerents, since Left here is pretty much a red herring � is the distortion of his own party of belligerents. He makes no reference both to the recent history of Iraq, which is the background against which we can judge his claims for the Iraqi opposition, nor does he make any references to the administration that is, after all, going to enact his war. That Hitchens wants democracy is a fine thing � we weep for the nobility of his sentiments, and he does too, as often as possible. That he doesn�t mention the political history of Northern Iraq, a safe zone for almost ten years, in which we can see the politics of Kurdish groups played out, is unscrupulous to the highest degree, insofar as he knows what that politics is about. One very strong argument against war with Iraq, from the point of view of the democratic cause in the Middle East, is that it is not in the American interest to allow a high degree of autonomy or democracy to Northern Iraq, especially in the case that it is integrated into an American led state, as it would be after the war. The coming war will collapse a situation that has emerged, after several years of violence, in Northern Iraq. The violence has been between Kurdish war lords, who have not hesitated to ally themselves with Saddam Hussein to establish an advantage with regard to one another. The PKK, the Kurdish guerilla group that terrorized Turkey, and was in turn subject to Turkish terror, is another war lord group that has made certain claims on Northern Iraq. Luckily, the structure of the PKK has collapsed, and the hostilities of the war lords have toned down, recently. There are reports of a free press, elections, even tolerance. These have emerge unexpectedly from a chaotic situation that was never intended to encourage political liberalism. Hooray that such liberalism, however fragile the shoots, has emerged. But don�t look for it to survive a war. What it needs is the preservation of its present circumstances. And that, in turn, will operate as a strong attractor for Iraqi opposition to S.Hussein that is democratic in nature.

The pretense that opposing the war is opposing Hitchens friend in the Iraqi administration is silly. We can understand Venn diagrams. We can understand that two sets that share some members don�t necessarily share all members. LI opposes the war in Iraq that Bush is going to make. We don�t oppose the war Hitch�s friends are going to make, because they haven�t made a war yet, and it doesn�t look like they ever will. Hitchens himself has written in the past that the administration has ignored his Iraqi friends. In the WP essay, however, this caveat vanishes. The implication is that the D.C. belligerents and the Iraqi oppositionists are synonymous. They aren�t. Hitchens rhetoric is the verbal equivalent of the way the CIA gamed the Kurds in the late seventies. It makes a false promise, it uses a group to achieve an end, and then it betrays them. The upcoming war will be about America�s interest, not Hitchens. It is a blow to the ego, but that�s how it will be.

Well, we hadn�t meant to work up a lather about H. Tomorrow we want to move onto a more interesting topic � which is about how distortions inherent in argument might be related to Tversky�s work on the psychology of risk.

Monday, October 21, 2002

Remora

"Now, this bill also represents the first step in our administration's comprehensive program of financial deregulation. I particularly want to commend the leadership of the chairman, Senator Garn, and Chairman St Germain, along with Secretary Regan and his fine team at Treasury. They did a remarkable job forging a consensus within the Congress and among affected industries in favor of the bill's deregulatory provisions. I'd like to also thank Congressmen Stanton, Wylie, and LaFalce for their assistance.

What this legislation does is expand the powers of thrift institutions by permitting the industry to make commercial loans and increase their consumer lending. It reduces their exposure to changes in the housing market and in interest rate levels. This in turn will make the thrift industry a stronger, more effective force in financing housing for millions of Americans in the years to come."

These words of Ronald Reagan's, spoken at the signing of the Garn-St. Germain act, have echoed down the years, much like the last words of Kim Novak going through Jimmy Stewart's brain in Vertigo. Andrew Sullivan recently observed that Bartlett's Book of Quotations had too few Reagan quotes, proving an underlying left leaning bias. Surely, If LI were to edit a book of quotations, we'd select a few choice R.R. quotes. The lines from the speech above, for instance, would be place, on thematic lines, in the same section that included Willie Sutton's famous dictum that he robbed banks because that's where the money is. Yes, wasn't "reducing their exposure" and "expanding the powers of the thrift institutions" a nice way of saying, we're putting the tommyguns in the hands of the bank presidents? No need for a getaway car when you can't get the company to buy you a nice, corporate Lear jet. Indeed, it was that lot, from Charlie Keating to Herman Beebee, who proved that Sutton was a piker in the way of all freelance robbers. What you really need, when it comes to looting on an imperial scale, is friends in high places and a seat at the board. The best part is the lack of punishment. Not even lack -- the rewards that are heaped upon the larcenous are rich, rich indeed. Because bank robbery by bankers is met not with that ultimate social disapprobium, pinstripes and legchains, but by bail-outs, Reagan's stirring words eventually cost about 32 billion dollars a year to American taxpayers.

For the act that Reagan called the greatest "reform" of the financial industry in 50 years operated, as deregulatory reforms have operated since then, to create systemic problems, both in the S&Ls and then, by an easily tracked contagion, to the composition of corporate ownership as a whole, that eventually brought about a collapse. It was a collapse that, as conservative commentators like to say, was due to the government. Although what they don't say is that it was due to the Government deregulating an industry in a manner that was corrupt at the very root.

We bring up ancient history -- LI was once told we were all woulda, shoulda, coulda cause we keep bringing up ancient history, but you know what? We like it that way -- because we think the shape of the S&L crisis is very similar to the shape of the current crisis of confidence in the market, especially as it has to do with regulatory oversight, or the lack of it. LI wonders if there is a wave pattern here that speaks to a greater structure -- a long-term pattern of corruption that indicates structural invariants extending from the beginning of the Reagan years to now -- extending, that is, through the length of the post-Keynsian era. The contours of it, and the mechanisms that brought it about, have very little to do with the categories that are tossed around in public discourse. Especially unhelpful is the idea that the "government" is somehow opposed to "private enterprise." What happens in capitalism in our time is that alliances of interests, cutting across government and private lines, will marshall resources -- rule changes in regulatory agencies, Senatorial pressures on individual regulators or regulatory bodies, capital from banks, offshore entities, gaps in corporate governance, disguises made available by creative accounting, etc., to create systems of malfeasance that push great amounts of money into the hands of a few. Borrowing a term from Burroughs, let's call this the capitalist Interzone. This machinery is such that it can't last forever. It eventually implodes. The periodic crises in the system are explicitly linked to the high degree of inequity in the system, the corruption of the electoral process, and the inability to replace the money taken out of the system. The moment of implosion, though, will be unevenly distributed throughout the system, burdening those who benefitted least from it by way of taxes, looted pensions, firings, etc. During the S&L crisis, there was a window during which the D.C. co-conspirators of the process were actually held up to the light. Well, a few of them -- the infamous Keating five. This was entirely inadequate, of course. Everyone knew that the legislative orignators of the S&L deregulation process, Fernand St. Germain and Jake Garn, had benefited in the most outrageous ways from S&L largesse. But back then, there actually were symbols that represented a crucial part of the system.

This time around, nothing like that has happened. That is because the system has become much too pervasive to pick out five senators. There was a halfhearted attempt to hold Bush and Cheney symbolically responsible; it was half-hearted because no Senator or Representative -- nobody on the political scene -- can really afford to go after symbols of the system. This is especially noticeable in the case of Phil Gramm. If anybody represented a point man for Enron in the Senate, it was the horrid Gramm. He seems almost devised by some Dickensian god to recieve the slings and arrows of an outraged society, so porcine are his features, and his appetite, so open are his ties to the most corrupt American business to have gone under since Vesco days of yore. His wife's role in the Enron affair is common knowledge. Yet he's slipped out quietly, with no fuss made about his jumping ship to UBS Warburg.

The first phase of the current crisis is over. There are signs that the second phase has kicked in. In this phase, the system reverts back to its corrupt norm. There was much todo made in the conservative press that the reforms enacted this summer went "too far." This noise provides cover for the actual cutting back of those reforms. A story in the NYT this weekend heralds one sign of the reversion to the corrupt norm: the refusal to adequately fund the SEC.

"WASHINGTON, Oct. 18 � Less than three months ago, President Bush signed with great fanfare sweeping corporate antifraud legislation that called for a huge increase in the budget of the Securities and Exchange Commission to police corporate America and clean up Wall Street.

Now the White House is backing off the budget provision and urging Congress to provide the agency with 27 percent less money than the new law authorized.'

Bush and his congressional allies had no intention of stiffening the regulatory mechanisms that oversee corporate governance, accounting, and the markets until they had to, and they have no intention of seeing those new laws work. The last couple weeks, much has been made of the rollover at the new Public Company Accounting Oversight board. Jane Quinn's story, Is Reform a Bad Joke? is mis-named. It is a very good joke.



"At issue is the new Public Company Accounting Oversight Board, created by Congress and signed into law with a flourish by President Bush in July. It�s supposed to set new and higher standards for auditors, who check corporate books. To succeed, it will need a true reformer at its head.

The Securities and Exchange Commission will name the board�s members. As head, SEC chairman Harvey Pitt chose John Biggs�the respected CEO of the giant teacher�s pension fund, TIAA-CREF�say people in a position to know. But the big accounting firms (yes, like the ones that abetted Enron, Tyco, Xerox and WorldCom) scorn goody-goody reformers, and promptly called their political pals. Rep. Michael Oxley (R-Ohio) complained about Biggs and Pitt pulled back. (Oxley�s House committee just happens to oversee the SEC.)"

The SEC funding storry, coming on the heels of the Biggs debacle, isn't exactly a surprise. What does surprise us is the grossness of the maneuver. The Bush regime has consistently lived up to its coup origins: it's grand gestures are coup-like; it's spokesmen of a type made depressingly familiar in Latin America in the seventies, thuggish, happiest when employing junta-like categories in which a manichean world justifies a manichean hunt for subversives. But juntas usually take three to four years to go completely corrupt -- the Bush people are ahead of the game, here. The open conspiracy between Cheney's office and various energy company bigwigs to subvert environmental protection and rig the market began almost as soon as Bush hit the White House. The current subversion of corporate reform is, like Cheney's meetings with his cronies, covered by tissue thin rationalizations. Here is the reason given by the White house for refusing to fully fund the SEC

"The president does believe the S.E.C. has a substantial mission and we think $568 million is sufficient to carry that out," said Amy Call, a spokeswoman for the White House Office of Management and Budget.

Administration officials say that the budget figure in the law is too high considering the other needs of the budget. They say that the agency would be able to carry out more investigations, increase staff and raise pay levels with the more modest budget proposed by the White House."

The line about other needs of the budget is not quite a lie, but it does creep up to the starting line of falsification and crouches like a racer. For some reason, the article doesn't explain where the SEC's money comes from. Well, it comes from fees taken in by the SEC.

According to Congressional testimony in 2001,

"The current fees the SEC is required to collect � registration fees, transaction fees, and merger and tender offer fees ... will total almost $2.5 billion - an amount more than five times the SEC's current budget."

The Wall Street Journal recently published a five part series on what went wrong in the last three years. Interestingly, especially for a WSJ story, the concentration in the article three days ago was on five instances of either congressional interference, administrative decision, or Fed decisionmaking, that contributed to the slack regulatory posture of the nineties. One of them was Levitt's unsuccessful attempt to get the SEC fully funded -- to get control, that is, over the amount taken in by SEC fees. Phil Gramm quickly put a stop to that. Gramm, who is now going to ex-Enron central (UBS Warburg), is the very spirit of the Bush attitude towards free markets. It is the blind idea that, a., all regulations are the same, and b., that all regulations should be rolled back.

The depressing thing is, the Dems aren't going to fight for SEC funding. What, Joseph Lieberman leaning on his funders to enforce a bunch of pesky rules for the investing rubes? No way.