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A year ago, more or less, a son, Takeo, was born to our far flung correspondent, Mr. T, and his lovely wife, Mrs. K., a renowned Gotham jewelrymaker. Takeo has done some amazing things since then. For instance, he has exponentially increased the number of his neural connections. Takeo made this decision as a sort of species friendly gesture towards all humanity. At two, which is the age of genius, he will decide that he’s gone too far, and start pruning the synapses. It is the age of tragedy, two – looking around, the child discovers that his species decision has landed him among a buncha dumb apes – adult humans, in short. With a sigh, the two year old begins the intense and lifelong process of becoming as shortwitted as the rest of us. But there is that year of genius! And Takeo-chan is going to spend it perfecting his dance moves.

... the wicked witch ding dong, the wicked witch is dead! Thank god for Republicans. They did what the Dems should have done in 2002. They told Bush to go fuck himself. Granted, the Republicans have delusional ideas about what is causing the implosion on Wall Street, but they aren’t so deluded that they can’t see that the investor class that benefited from the massive credit “market” dysfunctions that brought about the crash are proposing to solve it by – giving themselves a lot of money. As I pointed out, the solution involves a lot of money going from the Red states to the Blue states, inverting what happened during the S and L crisis. Unsurprisingly, people in the Red states don’t like that. Unsurprisingly, big business, the mainstay of the Republican party, does like it. The status quo ante is dead. Ho ho ho! Floyd Norris's column this morning is an essential read for all you fans of the coming (r)(d)(ecession)(epression) . ps - it is a commonplace of liberal vituperation to

In A Preface to Transgression, Foucault’s 1963 essay on Bataille, Foucault discusses the at the time Utopian hopes vested in the seeming fall of sexual taboos. And he expresses something rather marvelous. ... sexuality is a fissure – not one that surrounds us as the basis of our isolation or individuality, but one that marks the limit within us and designates us a limit. Perhaps we could say that it has become the only division possible in a world now emptied of objects, beings and spaces to desecrate. Not that it profers any new content for our age-old acts; rather, it permits a profanation without object, a profanation that is empty and turned inward upon itself and whose instruments are brought to bear on nothing but each other. Profanation in a world which no longer recognizes any positive meaning in the sacred – is this not more or less what we may call transgression?” [Sorry, I could only find the English translation by Bouchard and Simon] Li takes this, and indeed the whole ess

Let’s do a little primer. Let’s bracket the idea, for a moment, that collateralizing securities and layering contractual bets on these securities – derivatives – only exist as rentseeking instruments, ie, have no productive economic use. What, then, is the justification for them? The only possible justification is that they ameliorated risk, so that lenders, who would otherwise not be able to afford more hazardous loans, are able to make them. And what is the signal for the lenders that the risk is well spread? The signal is prices. So, the only justification for the derivative market, and for the off the books market in collateralized securities, is that they can smooth out the price of risk. Given this, ask yourself: why, then, does it turn out that nobody can price out these instruments? The answer is that this is an institutional failure. Unlike the stock exchange, which transparently represents the price of stocks for all buyers and sellers to see, the pricing system for risk and

Back in 2004, LI wrote about the neo-liberal business cycle – which, since then, Naomi Klein has labeled shock therapy economics. An excellent label. We wrote in the context of Bush’s Chilean inspired social security “reform” package: Right. What happened in Chile is what happens periodically in countries in the neo-liberal system that veer to the right. A period of bubble prosperity is succeeded by a period of deep ‘recession.’ During the recession, the people who did not prosper during the bubble, i.e., the majority of the population, has shifted onto its back the debts accumulated by the wealthy to hold their party. This is exactly what happened when, in 1982, the IMF, the huge partisan of privatization, suddenly turned around and demanded that the Chilean government take responsibility for the huge outstanding debts racked up by its new private sector. The government, of course, responded with its bracing rhetoric of individual responsibility. The IMF and World Bank responded by c

LI should pay no attention to politics. It simply fries my wiring. I have to get back to my project. But I have to say this: I’ve never seen a president go on tv to take up special time to talk about the crisis in healthcare, with 40 million uninsured people and most insured people being whacked for substantial and horrific sums for medical emergencies. I have never seen a president go on tv and take special time to talk about the disaster hitting the manufacturing section, putting millions of people out of work, and zapping cities and towns, turning them into zombie zones. But this president got on tv to take up special time to urge that the U.S. turn over 700 billion dollars to Wall Street because a total of maybe 40,000 investors are going to be in severe financial straits if they don’t. It is amazing, and if the elite didn’t run the alarmatoriums, the scandaloriums, and the Kindercare media modules, this would be known as a superbly let them eat cake moment. Even Marie Antoinette,

When, in 2004, Bush won the election, LI analyzed the results for the paradox in them – the Red states, we said, were electing a man who’s main task had been to pile money on the investor class, who are concentrated in the Blue states And we also said, fuck the Red states, stick the broom up their ass. Well, the endgame, as far as the Great Fly is concerned, follows this logic off the cliff. We said then that the coming recession would target the red states. In the South and West, the easy money has always been in selling land. In the 80s, this led to the S and L bust. That turned out to be a net plus for the Red States, who were floated by tax money that came from the Northeast. It feels good to be a rent seeker, and George Bush personified the breed, so they flocked to the polls to elect him. But the investor class had long learned its lessons from the S and L bust. The suckers, this time, were selling the land to each other, as always, while the real money was being made taking bets

LI has been trying to find various easy ways to explain that the topdown solution of the bailout actually aggravates the bottom up problem. Here’s one: the bailout, as proposed, would take around 2,000 dollars from each American, which comes to about 8,000 dollars per household. So, we are proposing, in essence, that the people who owe the money on the credit cards and the mortgages transfer 8,000 dollars to the people who own the credit card companies and the banks, and that they do this without even the least diminution of the debt they already owe. It is like demanding blood from a hemophiliac. However, I have confidence in the inertia of things. Perhaps nobody will notice the radically diminished spending power of the average household over the long run – you know, that run of thirty years, which is the time period of the average loan. Maybe the banks will not see the obvious. Who knows? I, personally, believe in Santa Claus.

Yesterday, LI went to Whole Foods to get some coffee and write our review of the new Library of America edition of Katherine Anne Porter’s short stories and essays. Unfortunately, two older white guys decided to sit next to me at the table and swap Fox news stories about the current financial crisis. First, however, they started out by talking about some speculative house buying the one of them was in the midst of, while he could “still get money.” They then proceeded to exclaim against Freddie Mac and Fannie Mae, which they both said they had never heard of until two weeks ago. At which point my inner concentration on the artistry of Porter was entirely broken, since I thought, you are speculating in houses and have never heard of Freddie Mac and Fannie Mae? Apparently, in the Fox/Limbaugh circuit, the old standard about guvmint being incompetent is still fluttering above the tattered reactionary hordes, who have decided that those two agencies are wholly part of the guvmint, and whol

The third chapter of the section on Propriety in The Theory of the Moral Sentiments is entitled: “Of the corruption of our moral sentiments, which is occasioned by this disposition to admire the rich and the great, and to despise or neglect persons of poor and mean condition” I believe that this chapter is about the most insightful thing Adam Smith ever wrote. It is certainly pertinent to the present crisis, one which is to be solved by a rushed, inverse bank robbery on the grand scale which is consistent through all of the Great Fly’s disasters. It is an astonishingly audacious step, proposed by a Treasury secretary who has failed, systematically, for a year to understand the crisis, and is thus being hailed by the establishment as a hero and our only hope – Tom Friedman, who has never failed us yet as an omen of the conventional ignorance swapped around country clubs and CEO chitchat fests, comes out in his column today with the gorgeous suggestion that Obama re-appoint Paulson if h

It is nice to see that some of the bigfoots – Greider and Krugman , and even the Bushite pinhead, Sebastian Mallaby in the WAPO – are coming out of the shrubbery to denounce the Treasury department’s theft in the offing. The NYT, in contrast, has set Peter Baker to the task of licking up a monument of bubble gum and marble for those two superheroes of this Bushian time, Paulson and Bernanke. Baker is the man for the task: on the Washington Post, he strove mightily to apologize for mass murder and torture, covering President Backbone with the same objectivity that might be expected from one of Nero’s catamites, reviewing Nero’s acting abilities in the Coliseum. His description of the brain (Bernanke) and the man of action (Paulson) is like a Damien Hirst piece, if Hirst took to carving Pierrots out of his own shit: it is kitsch cast in excrement: “The two men have been working early and working late, tracking Asian markets and fielding calls from their European counterparts, then rec