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I had lunch with a friend, yesterday, and I came up with a pretty good metaphor to describe the current financial crisis while talking about it with her. It is the dish stacking metaphor. At the root of this crisis is a shortfall in the amount of money that the average household can afford to pay on a house. That’s real simple. Stacked on top of that is the larger shortfalls of nested securities that depended on those bottom mortgages. The shape of the financial system is, from the plate stacking perspective, all wrong. Instead of smaller amounts of money depending on the larger amount at the bottom, the plates above the bottom plate get larger and larger, until you reach the great world of the derivatives plate. The government has so far been trying to fix the problem from the top. But when a stack of plates starts to wobble, you can’t fix the problem from the top. The more you add to the top, the more the instability increases. Which takes us to the latest and greatest news from our

“And when you pray, you shall not be as the hypocrites are: for they love to pray standing in the synagogues and in the corners of the streets, that they may be seen of men. Truly I say to you, They have their reward. But thou, when thou prayest, enter into thy closet, and when thou hast shut thy door, pray to thy Father which is in secret; and thy Father which seeth in secret shall reward thee openly. But when you pray, use not vain repetitions, as the heathen do: for they think that they shall be heard for their much speaking. Be not ye therefore like unto them: for your Father knoweth what things ye have need of, before ye ask him.” – Matthew 6:5-7 I went into a bicycle shop the other day. I’d been delaying having my bike fixed, but I knew, from the hairraising sound that the brakes emitted every time I pressed them, that the pads were shot. I also knew that, ever penny wise and pound foolish, I’d waited too long to fix them. The clerk told me, at first, that they could change the p

Over the last eight years, LI has developed a pretty fierce hatred for the Left. We break out in hives whenever we hear some grave person intone about the Left should do this or the Left should do that. As if the Left were anything but a miserable con game, one hundred fifty years of murder and disaster under its belt, led by young romantic young men who turn into old horrors as soon as they get a chance to mismanage an organization. The convergence of Mao and Milton Friedman in China has been a beautiful symbol of what the “left” is all about. That former Leftists loved the invasion of Iraq is not only not a surprise, but the secret face of the Left all along. But as the “Left” exploded, I was hoping, romantic to the end, that something would take its place. In 2000, I even stupidly thought that thing would be the anti-corporation movement, which crystallized at the time around Ralph Nader. Nader, of course, had a more than honorable career in the seventies. Unfortunately, the only

I hear the roar of big machines Two worlds and in between Love lost, fire at will Dum-dum bullets and shoot to kill, I hear Dive, bombers, and Empire down Empire down The economists, pundits and our elite have patted themselves on the back for the past year about “handling” the “credit” crisis. They have handled it by pouring money into the pockets of the top earners, who are, not coincidentally, the people who run the financial sector. Manufacturers in this country – GE, GM – have, for a long time, gotten in on the racket by manufacturing financial centers themselves. Was there a better way? How about: bottom up financing? A clever commentator over at Mark Thoma’s Economist’s view named James Kroeger has been pounding on this idea for a while. He put it very succinctly before, once again, the Fed took another step into the quagmire. I have to quote him: Let's go through this a step at a time... How would the Average American be hurt by a complete collapse of the financial sector

In the new Feudalism, we have to have a set of new euphemisms. So when a government agency simply abandons the law of the land – otherwise known as breaking the law – we have to find a gentle, doe eyed way of describing it. And who is better at the task than our faithful scribes and minions, the same people who transformed the Great Fly’s war of aggression in Iraq into a crusade for democracy? Who can put the human face on predator capitalism better than the NYT? Thus we get explanations like this one, about the use of taxpayer money to support private peculators: “Until this week, it would have been unthinkable for the Federal Reserve to bail out an insurance company, and A.I.G.’s request for help from the Fed of just a few days ago was rebuffed. But with the prospect of a giant bankruptcy looming — one with unpredictable consequences for the world financial system — the Fed abandoned precedent and agreed to let the money flow.” Abandoned precedent. Let the money flow. Such beautiful

Since last August, economic policy in the U.S. has advanced under the banner of orderliness. The Fed, the Treasury, and all of the Great Fly’s horses and all of the Great Fly’s men are making sure that the unwinding is orderly. What does this mean? Well, it means that the New Deal is inversed. The old New Deal was about spending money to employ the unemployed. The New New Deal is about transferring money to plutocrats. Now, yesterday we had one outcome – an easily foreseen outcome – of what an “orderly” unwinding means: bankruptcies of the banks, freezing up of credit for consumers, inflation on all fronts, a steady increase in unemployment (which is, as we all know, grossly undercounted) – and money, massive amounts of money, for the rich. As you can see, that outcome is much to be preferred to a disorderly unwinding. The latter would involve bankruptcies of banks, freezing up of credit for consumers, inflation on all fronts, a steady increase in unemployment – and no extra money for

LI is back. We come back minus one tooth (about which, more on another post) from a trip that consisted mostly of following my friend M. around Mexico City and playing circus with her daughter and protect the castle with her son – although protect the castle is a complicated game of which the rules change to the extent that it isn’t clear what the castle is, as J. decides which miniature bowling pin stands for the king or the queen, which pile of books, toys, and odds and ends makes up the battlements, and how to deal with the collateral damage that ensues when he dances around the room, jumps on the bed, yells yippee, and generally makes a ruckus when the silver ball I toss at the castle misses the king, the queen, and all nine knights. Let it not be said that we lacked for intellectual content, down there in DEF. Plus we read a lot of Proust and took notes, all for The Human Limit, which we so hope our few remaining readers have not totally forgotten. Oh, and in our own little person