Takeo-chan at one

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.

ding dong the witch is dead, the wicked witch

... 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 compare Bush to Hitler, a stupid and pointless comparison. But there is one area where it seems to fit - just as Hitler, in his last days, decided to take Germany down with him in one sweeping Gotterdammerung, apparently Bush decided he'd do the same thing with the Republican Party. For of course, the Republican Party will be toast forever, with its own constituency, if it calmly passed this giveaway. Germany surrendered, and the GOP has decided to cut Bush and let him float alone. What this means is that the corporate party is now, out of sheer survival instinct, defying its patrons. I have no idea if that signals the breakup of the party into the Churchlady Party and the Carlyle Party - but it surfaces a strain that has always been there, which could only be closed over by electoral success. My guess is the Carlyle party will have to blink.

My beyond

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 essay, as a marker, from which we can measure our own dialectical leaps that, collectively, express our idea of the relationship of the happiness norm and the eclipse of the human limit; two moments that mutually condition one another. If at one time I, too, took, took transgression as the way to dissolve personal structures that stood in the way of what Bataille called Pure Happiness, I now see it from a different point of view, one that is much more skeptical of the entire project of happiness.

By chance, when I was in Mexico, I seemed to get into a lot of discussions about Foucault. R. was reading Veyne’s book on Foucault, and we had a long and rather clumsy argument about Foucault’s relativism (R. being against that interpretation, I being for it, but regretting the terms in which such arguments are usually cast). And then I met a professor who was conducting a seminar on Foucault, and we discussed what I consider to be Foucault’s arbitrary principle in Les Mots et Les Choses, which is that a period could be characterized by one episteme only – which I think is a Duchampian rule, something that exists in order for one to create a new kind of picture of an object, but cannot be defended outside of that realm). Finally, I talked a lot with my friend M. about the lack of any discussion of “discovery” as a mot du savoir in Foucault. To me, this is tied in to the treatment of Europe as a closed system from the baroque to the 19th century. To really look at discovery as the key to an episteme would be to see the tight tie between imperialism and knowing. All of my caveats, however, are not meant to jettison Foucault, but to get my bearings in relation to him, get a useful sense of the limits of someone who is looking at the same period I am, with some of the same assumptions.

“A world that no longer recognizes any positive meaning in the sacred” – this came about in some way that we hear about only on the margins of the early work. Because Foucault wanted to emphasize discontinuity, because he wanted to free himself from the tiresome tropes of the dialectic, he chose this route. There was a price, however, and it is interesting that as he came back to sexuality as a continuing theme in the end. That the human limit is within us, wrenched from its sacred correlate, in a sense orphaned, without a vocabulary of its own, or a conceptual scheme – an impulse, an instinct that has to cloth itself in metaphors borrowed from a past that is in conflict with the history that validates its very position, its interiority, its integrity, this is the puzzle that I’ve been working on. The larger question that faces the critique of the happiness culture is: is it even possible to carry through this critique without recourse to the sacred, without infusing the conceptual structure one uses with borrowings, and thus debts, to the religious?

Now, of course, my utopian idea is that this is possible. The possibility is realized in the performance of the critique, but – my position, the positive possibility of a position, is definitely rooted in Bataille’s impossible. My own use of an ironically magical and hermetic vocabulary is a not wholly successful way to express my intuition.

This may be why I feel such a kinship to Foucault’s project, since I feel like the “lunar” starting point, the sense people had that Foucault was inhuman, has to do with an assumption that was rooted in impossibility. If, now, I end up on the other side of that impossibility, if I refuse the path to “pure happiness” – that last sentiment that Bataille could not give up – well, maybe that is because my impossible is beyond happiness – the only truly radical beyond, in my opinion. The Archimedean point for overturning the modern order. This conviction I will, of course, scrupulously disguise in my book to come – since I don’t want to be rejected so easily. I will smile, smile, and be a villain still.

Primer for the day

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 “insurance” on risk, bizarrely, is institutionally dispersed, and thus systematically opaque.

If – as with a heavy heart, LI thinks will be the case – some type of bailout is attempted that doesn’t address the institutional failure, we will simply watch the greatest disappearing act ever performed, dwarfing Houdini’s legendary vanishing elephant routine.

So, congress should insist that any bailout bill carries with it mandatory institutional reforms. The two things can’t be disconnected. That the Treasury, absurdly, proposes to price the securities “by hand” tells us all we need to know about the ridiculousness of the current system. The OTC system is in ruins. There must be an open and instituted exchange through which all instruments must pass. There could even be more than one. But to pass this bill and continue the OTC system is utter folly. This “crisis” is much like the gold ring crisis of 1876, except that the corrupt officials in Grant’s administration were violating the law, while this bold faced robbery sticks up the nation and demands to be legalized. The least we can demand is that the pricing system be radically revamped.

The Cosmological significance of the Secretary of the Treasury

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 closing Chile’s credit lines. The government then responded by stuffing the individual responsibility crap, nationalizing the debt, which entailed nationalizing most of the economy, and agreeing to pay it off – in other words, the debt was spread over the people of Chile.
This is a pretty standard pattern. After Salinas oversaw the entirely dirty privatization of Mexican banks, the crooks that bought them rode them directly into bankruptcy – at which point their debts were nationalized. Same with Argentina, Russia, etc. Privatization always is a two part shuffle – one part enriches an irresponsible and often corrupt elite, the other part nationalizes that elite’s debts. After the debt situation is taken care of, the elite is then surprised and delighted by a second wave of “privatizations.” It is a beautiful machine, and the Bush gang obviously have studied it. That is the point of the privatization of social security – don’t worry, no administration will allow the private part of the public pension fund, after it bottoms out in some predictable recession, to go to zero – no, the debts there will be quietly nationalized, in the same way S&L debts were nationalized. Under capitalism, this is known as individual responsibility and free enterprise. It is called reform -- a wonderfully civic sounding word. We have wondered why bank robbers don't plead "reform" in court -- "Judge, I was just reforming the deposit structure of the bank!" On this site we are too ignorant to handle those words. We call it moral hazard and stealing.”

Those were innocent days, back in 2004. LI was like a blind man peering into an abyss – we didn’t know what we were seeing, being encased in our own private darkness. We now have a better sense of the depths. The great Ouroboros-like worm of American stupidity writhes at the very lowest level.

KING LEAR
Howl, howl, howl, howl! O, you are men of stones:
Had I your tongues and eyes, I'd use them so
That heaven's vault should crack. She's gone for ever!
I know when one is dead, and when one lives;
She's dead as earth. Lend me a looking-glass;
If that her breath will mist or stain the stone,
Why, then she lives.
KENT
Is this the promised end?
EDGAR
Or image of that horror?
ALBANY
Fall, and cease!

let them eat money

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, in the end, cut down on buying jewels. The ancien regime really has to fall.

blue states and red states

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 on the flea circus. And now America is preparing to strip itself of its economic power to please the investor class. This can’t be analyzed by party, although that is the dumb category clung to in the political blogosphere. This is about investors and debtors. The investor class just happens to be concentrated in heavily democratic states. Their reps are going to make damn sure that they get taken care of. Meanwhile, red state reps are torn between their usual kleptocratic impulses and the angry calls from the folks at home, who want the old days back, when they could coast on government insured programs, using credit limits that were the result of government fiscal policy, in order to buy and sell land at tell each other, gubmint ain’t the solution, its the problem. Its the battle of two rentseeking classes going down. Fun for the whole family.

I’m of two minds about the ongoing robbery. On the one hand, people I love are going to be hurt. On the other hand, this nation used its years of bogus prosperity to push two propositions: that we had a right to invade and massacre at will any place in the world; and that we had a right to fuck up the earth’s atmosphere until we were good and tired of it. Shouldn’t these days, these forerunners of grief, be considered condign punishment for this thoughtless nation?

The latter is probably the most deadly of the deadly American sins. Unfortunately, a nation that starts descending into the pits, economically, doesn’t shut off its emissions, although at the moment, there is less car driving and shit. Rather, it can’t afford the technology to clean up its power plants, businesses and households. Poverty, or relative poverty, will not equal a cleaner America.

There is a remark I hear over and over, and it makes me sick: I can’t understand economics. Economics is a model ruled social science. If you strip out the equations from a model, you get relations. Narrative relations. Models are stories. If you can understand a story, you can understand economics.

Now, I’d recommend, I do recommend, my essay on this topic in the preface to Silja Graupe’s The Basho of Economics. Alas, I know only two people who read that preface. And one said she couldn’t understand it. I realize that it is not written in the free and easy style I would use to write an email to a friend, but fuck, occasions call for different styles. Go read it. In it, you will find a description of the favorite story, down the years, of orthodox economics.

In American culture, there is only one group that holds to a more rigid narrative pattern than neo-classical economists. That is the Harlequin romance company. You can write off to Harlequin and get a sheet in which to fill in the variables to make a story. The inputs can differ a bit, but the output, the happy ending, is almost invariable. The difference is that in economics, the stories are invariable. They always come out with market clearing. That is the happy end around which the whole world of economics, as a science, revolves. But the story is refuted over and over by the world – and economists hate that. Thus, the attraction of thinking of the current crisis as a market clearing one – liquidity in the banks – instead of what it is, a symptom of the deep, corrupting inequality in wealth that have been allowed to overrun our economy. The economist has an instinctive reaction to market clearing problems, but is averse to the messiness of inequality, and would prefer to read that out of the model. Just as Harlequin can’t afford ambiguity in the heroine – she might be attracted or raped by the evil character, but she can’t traipse around and have several lovers, for instance – economists can’t afford to let in too much of the world into their story. If, for instance, economists had looked at the rise in oil prices earlier this year and had let in the part of the world that was about the threat of war against Iran, they would have had to “politicize” their analysis. That they could look back and find, regularly, stockpiling of commodities before a war escaped them entirely. They were content to make it a doable story of speculators versus supply and demand, and soon came home to the equilibrium that explains everything. They can’t help themselves.