Intimations of Further Fall

Well, now that we have shot a hole in the economy by highhatting the auto companies, a sort of collaboration between the incredible mummies of this ancien regime, the brainless auto barons and the brainless congressional barons (as the zona whips itself into a frenzy outside), and as Paulson’s ass is licked in precise proportion to his ideologically driven incompetence – the Post would have absolutely loved Andrew Mellon! – we hear the creaking of the largest bank collapse in history – oh, just ahead of us. Nothing to worry about. While the terrible, terrible UAW clowns, making their 26 an hour and destroying their economy with their greed, are about to fall into the toilet, our pity goes out, now, to the upper management of Citi, where the per hour is what, 1,000? 2,000? – but only because of the amazing skills they display, on a historic scale. That Ayn Rand could have lived to see her hero caste in all its glory today. Weep a little on her tomb, will ya?

What we are discovering, or rediscovering, is that the private sector is pisspoor at allocating capital and decreasing inequality – the latter is also known as increasing social mobility. The two faults in the private system are interlocked – see the Mangle of Inequality for further details. As is good and fucking obvious, the “investments” of the last eight years, when not going into spec houses, were going into spec houses of cards, otherwise known as securities. It was all insurance. It was all for our good. It was all for the ownership society. It was all about spreading risk. It was all about making us good risktakers. It was all about entrerpreneurship. It was all about aligning the interests of the managers with the companies. It was all about shareholder value. It was all about storing leafs, mud and human feces in huts and performing certain rituals that would turn them into cargo.

Oh, the deadly zona, and it seems, this week, to be blowing on me. My editing business has suddenly gone to shit. And I walk around or ride my bike past restaurants that were filled, three years ago, but are now deadly quiet – past dress shops that seem haunted by the mannequins wearing today’s sale item – and feeling this particular quiet in the streets. It is the quiet after a loud boom. The ear experiences a sort of time hallucination, a confusion between the time of the boom and the time of the silence that rushes in just afterwards. By ear we go down into the depths.

Io sentia gia da la man destra il gorgo
Far sotto noi un orribile scroscio
Per che con li occhi ‘n giu la testa sporgo


Brian said…
wonderful essay, roger. I work in a field (a city planner) tied to the home building industry. We built over 800 homes in 2005. There have been 20 permits pulled this year.

Because of my own toxic, pathological spending (I am an exemplar of America on a small scale), there is no way I can survive a layoff. I can't even pay my bills now! So....whaddayagonnado?
roger said…
Oh oh. Brian, you worry me, my man. But aren't you employed by some public department?

Of course, the Bay area was not just inching towards a collapse, but making big, flamboyant leaps towards one. In Michael Lewis' essay on the End of Wall Street, he mentions that the ratio between home price and yearly income - which is traditionally around 3 to 1 - leaped to 10 to 1 in Los Angeles. 10 TO 1!!!! I don't know what it was in the San Francisco area, but I do know that there simply aren't enough rich people in the world to keep up that kind of pace. I'm a big one for thinking that if a ratio has gone quietly on, humming to itself, year after year, and then suddenly goes epileptic, that probably something is wrong. Or you have to look for some vast structural change. It is the Durkheim in my blood!
Brian said…
I am, indeed.

Layoffs are initially unlikely (that's one benefit of being a long timer).

But the path to insolvency is independent of income-it's a moral failure,