Thursday, October 16, 2008

Notes on the Zona 1

LI, as we hope we have made clear, has been disgusted with Nader and the Green party for years. Yet, in 2000, we voted for Nader, under the delusion that the Green party was something more than a vanity movement that existed to keep Nader’s name in the papers. But we’ve never regretted that vote. We regretted that Gore ran a suck campaign and then, insanely, didn’t contest all Florida precincts immediately, demanding a recount.

Well, ho ho ho, it turns out that all the things Nader and the anti-corporation crowd were railing at – the failure to regulate the derivatives market, the failure to reign in corporate abuses, the use of lobbyists to stifle regulatory agencies that were warning about things like the abuse of accounting rules –well, they were all correct. It is like the 100 percent correct record. That’s nice. Meanwhile, the bipartisan oohing and ahhing over Maestro Greenspan has now started to settle in the national stomach a little badly, like a cannibal stew. Such, of course is the zona.

Read the WAPO account of the attempt by Brooksley E. Born to stop the oncoming train wreck.

"The meeting of the President's Working Group on Financial Markets on an April day in 1998 brought together Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert E. Rubin and Securities and Exchange Commission Chairman Arthur Levitt Jr. -- all Wall Street legends, all opponents to varying degrees of tighter regulation of the financial system that had earned them wealth and power.

Their adversary, although also a member of the Working Group, did not belong to their club. Brooksley E. Born, the 57-year-old head of the Commodity Futures Trading Commission, had earned a reputation as a steely, formidable litigator at a high-powered Washington law firm. She had grown used to being the only woman in a room full of men. She didn't like to be pushed around.

Now, in the Treasury Department's stately, wood-paneled conference room, she was being pushed hard."

Remember the days of yore, when economics would be pulled out of politics, and the private sector would chug along and do all the good things for the good little boys and girls? Sure you do. Uncle Thomas Friedman wrote a book about it. LI, in a prescient little review for the Austin Chronicle, reviewed said book.

Wednesday, October 15, 2008

The Spirit of the Ultimate Game

Come on pretty boy
Can't you show me nothing but surrender

Economists call it the Ultimate Game. James Surowiecki gives a good description of it:

“Take two people. Give them a hundred dollars to split. One person (the proposer) decides, on his own, what the split should be (fifty-fifty, seventy-thirty, or whatever) and makes the other person a take-it-or-leave-it offer. If he accepts the deal, both players get their share of the money. If he rejects it, both players walk away empty-handed.

The rational thing for the second person to do is to accept the offer, whatever it is, since even one dollar is better than nothing. But in practice this rarely happens. Instead, lowball offers are almost always rejected. Apparently, people would rather throw away money than let someone else walk away with too much. Other experiments illustrate the same idea. Essentially, people are willing to pay to punish those they think are free-riding or acting unfairly, even when doing so brings them no material benefits.”

The Ultimate Game has been known since the beginning of civilization. Among other things, the Iliad might be considered to be a poem about the Ultimate Game. Naturally, it is presided over by a divinity, in this case, the goddess Nemesis.

LI finds it curiously stirring that Herder turned to Nemesis in 1787, two years before the French Revolution (of which he was, to begin with, an ardent supporter – and even after the Terror, he never lost his sense that ultimately, the Revolution was a good thing), at the very peak of the culture of enlightened hedonism.

Classicists today still find Nemesis a puzzling figure. She was a double goddess, or a goddess with two aspects. Herder’s essay on Nemesis is an attempt to understand this mystery – and to understand it on behalf of bright Nemesis, the fair goddess, mother of Helen.

The psycho-social heart of his essay is about happiness and indifference. He tries to understand how one deals with another’s happiness and unhappiness. In particular, why is it that “we sympathize more immediately and strongly with the unhappy than the happy”?

“And so the lightest kind of Nemesis was born, that is actually not envy, not jealousy, but a kind of indifference, that allows us no pleasing fusion with another. By raw spirits this breaks out in cold repulsion [Unwillen]; and the more the other shows off his happiness, the less he understands how to put a pleasing disguise over his advantages, the more he arouses, when not envy, yet repulsion against himself. For even those who would grant him his happiness, become indignant over the fact that he doesn’t enjoy it more wisely and know how to be measured in his enjoyment. This Nemesis lies in all hearts; it was even, as the Greek idioms show, the first that the language and mythology observed. It is, when it wildly breaks out, a daughter of the night, the companion of quarrels, hatred and schadenfreude; in brief, the Nemesis, who Hesiod describes in his Theogony as an evil Goddess. In noble spirits on the other hand, just this cold observation of the ethos of others in their happier hours preserves its pure essnce, and since it mixes neither with pain [Leide] or with pity [Mitleiden], it thus becomes the sharpest point in their scale of judgment. This is the good Nemesis, that looks on, cold and indifferent; but it also must be assuaged or reconciled, then it is an incorruptible judge of virtue and truth.

And how does one most honorable reconcile it? No otherwise than that one makes oneself the observer of one’s happiness and ethos; look there, the goddess with the measuring rod and bridle, who drives away black envy. She drives it away since she hats all passionate presumption and binds the presumptions of men with her bridle; and in this way alone does the good Nemesis defeat the evil one.” [141]

His biographer, Haym, writing in the 1880s, calls this essay an “archaeology of antiquity”. As LI has already pointed out, the appearance of an essay on Nemesis in the time period that saw the first fine extension of happiness from a mere passing feeling to both a norm concerning one’s total life and a norm concerning the political and economic arrangements of the social life already signals a certain dissent. This is Haym’s judgment:

“There is nothing so distinctive as the fact that just at this time, in the 80s, Herder was mightily grasped by this symbol. It is the symbol for the beautiful equilibrium into which with his being he committed his activity and art as a writer. This symbol could not have been predicted by the writing of his earlier period. After the thrusting and enthusiasm, the numerous incidents that lacked measure and that stepped over the line, in which his views, his appearance, his ambitious striving, his unbridled hate and love itself, his style, the whole way of being and art in which he moved, he was now at the point of recognizing the mean, adherence to noble forms, submission to necessity, to decorum, like Goethe, and expressed this with the appropriate words, as Goethe did with other words. He had to pay homage to Nemesis after his Sturm und Drang period had passed as Goethe had already, after traveling through Switzerland in 1779, wanted to erect an altar to Fortuna, Genius and Terminus.” (329)

Tuesday, October 14, 2008

the smell of cognitive dissonance in the morning

The Republican re-election plan, such as it is, has been to blame GSEs- Fannie Mae and Freddie Mac – for the subprime crisis. Meanwhile, the Republican administration’s new plan is – to make every bank a GSE! LI loves the smell of cognitive dissonance in the morning!

So, basically, the developed countries (save for China, the new home of the free market) have put their treasuries on the line. This will be an interesting game. As we pointed out before, the shrinking that is going to come will wipe out a lot, as in hundreds of trillions, of value, namely as the 550 trillion dollar pool of derivatives comes back to earth. Since nothing on earth – including the combined treasuries of all the richest nations – has that much money, the decision that is coming up is how to let it go. LI advises readers to check out the popping of John Law’s system for pointers. Or ... the Grimm’s tale about the Fisherman’s wife who wished to be God.

Sunday, October 12, 2008

Nemesis and the Zona

- When Pompey was finally defeated, his head was cut off and sent to Julius Caesar in Egypt. Caesar buried the head in a spot of ground especially dedicated to Nemesis.

- Events keep fucking with LI’s general strategy. I should be writing about the varieties of eighteenth century hedonism. But I am watching the money culture blow up before my eyes, like a dream. Things I have written on this blog long ago about inequality and its effects, or the meltdown in pensions, etc., have leaped into the coldblooded half reality of the headline world.

- My brother Doug likes to say that I think I know all the answers. This is true. The prophetic vocation is in my bones. However, so far in my life, none of the answers have matched any of the questions anybody is asking. The answers were all torn from literature, a thing that has long been laid aside in that place where the dead bury the dead. These are tv washed days in the land of Cockagne, the artificial Paradise, and he not busy doing crack is busy lining his footsteps to the grave with asset based securities. I have watched the best minds of my generation discover that the mind is a ludicrous entity that the system could synthesize for itself, just as it could manufacture its own imagination from zeros and ones, its own virtual emotions (better than any felt by DNA based creatures), and its own cyber others to hate. Fuck off and die is written on my forehead, and yes, I’ve been looking forward to the latter part of that admonition. But I suddenly feel all relevant.

- All of which means that my bittersweet topic, the Human Limit, is now all the more pressing. It is just the time for sowing doubts about the entire direction of this here civilization.

- What are the roots that clutch?

- So: Herder’s essay on Nemesis, written in the 1780s, has been on my list of references for a while. Now that the Zona is blowing, it is time to address Nemesis – that limit to happiness itself. To start with, here is a quote about Nemesis from Mathew Grumpert’s book, Grafting Helen:

Aristotle asks at 5.5.17-20: what is it that holds the city together? and answers: the equitable exchange of disparate goods. That means, in essence, setting up equivalences between them: “all things that are exchanged must be somehow comparable. It is for this end that money had been introduced and... becomes... an intermediate[meson]; for it meaures all things. ... money “has become by convention a sort of representative of demand; and this is why it has the name money [nomisma] – because it exists not bey nature but by law [nomos]” E. Laroche, in “Histoire de la racine nem- en grec ancien” notes that in the earlest instances of nemesis, conventionally defined as blame, the term is always used to make a “value judgment” (1949:93), in both an ethical and economic sense. Both are central to the act of assessment at the walls of Troy, as the elders gaze upon the face of Helen (3.156) ou nemesis Troas (surely there is no blame if Trojans...). Helen is, indeed, a form of nomos, a powerful generator of equivalences, but ruthlessly pursued – like money – as a possession in her own right.

Helen as nemesis suggests the financial abuses described by Aristotle in the Politics: she provokes an economy fueled entirely by desire, as opposed to demand. And the face of Helen is, to use Aristotle’s definition of nomos, a “representative’ of desire, as opposed to demand.” (2001:61)

Biden's foreign policy: let's bet everything on authoritarianism!

  And watch it all slip away (Por fin se va acabar) Or leave a garden for your kids to play (Jamás van a alcanzar)  --- The Black Angels, El...