Saturday, January 31, 2009

Credo in $

Today's guest post is by Frank, who uncovers what must be the deeply held beliefs of those who still have hope that the status quo can be maintained. (We're just going through a rough patch, right, people?) Axiomatically, to have hope, you must have faith. (And if your hope turns out to be false, there is always charity.) Hast thou yet hope, O {username}? If so, please genuflect, direct your gaze heavenward, and repeat after Brother Frank:

I believe in worldwide Ponzi schemes and universal gullibility. I believe that reckless lending can be cured by reckless borrowing and that fraudulent borrowing can be healed by fraudulent lending. I believe that a housing bubble fueled by loose credit can be corrected by easing credit. I believe that each trillion of hallucinated dollars that disappears in a puff of Wall Street smoke then always reappears magically from behind a Treasury Department mirror.

I believe in America's almighty financial geniuses and monetary officials, who destroy wealth indiscriminately and indefinitely, and whose kingdom shall have no end. It is divine justice that those who cause financial catastrophes are rewarded with public money, while innocent bystanders are punished in their stead. I believe that central banks can print all the money anyone will ever need. I believe that if one stimulus package does not work, the next one surely will.

I believe in the redeeming power of financial complexity. I believe that hedge funds and sovereign wealth funds are righteous to enter into incomprehensible contracts having convoluted ownership and no inherent value. And I believe that opaque, secretive companies which pretend to insure those investments are offering a valuable service, even if this requires the use of public money.

I believe that economic stability and confidence will return when every failing business is bailed out, with no failure too small to be left behind. I believe that all dying institutions shall be consolidated, merging the smaller basket cases with the larger ones. The lion and the lamb shall lie down together in a new spirit of national competitiveness.

I believe
that the end of days shall come when there is only one institution left, comprehensively unified, far too big to fail, owning everything and controlling nothing. All shall come and supplicate before its holy ATM machines, for they are subtle and quick to anger. It is in this one true financial institution that I put my faith, truly gigantic, truly bankrupt, amen.

50 comments:

Blue Pearl said...

My faith is restored. Amen.

Anonymous said...

Quite fantastic credo, Frank. Many thanks. Thanks also to Kollapsnik, for posting it.

pebird@pacbell.net said...

People who say "too big to fail" have never witnessed wars.

degustibus said...

Back to buffalo chips and cowry shells...

degustibus

Anonymous said...

Excellent. By the way, it just dawned on me that of course "everything", the total set, is too big to fail. The total system can and will go on... even without humans.

The irony of trying to solve a debt problem by borrowing and consuming more is too precious for words...

Does anyone remember the so-called "Orwell problem", that is, why people firmly believe things that not only contradict the evidence but are also harmful to their own interests?

The old medieval merchant knew that the only positive news was when more was coming into his pocket than was going out. What else is there to say, really?

Mr. Emrich said...

I teach at a floundering public middle school and one of our more recent indignities is that the staff had to absorb a pay cut mid-year. Now the State is projecting massive cuts in funding to schools next year. The water-cooler topic du jour is whether we'll have gigantic class sizes or take another pay cut. When I say it's going to be both, and remain that way for the indefinite future, I get incredulous looks, and a lot of statements like, "when things get better..." or "it'll be bad for a few years...". The district I work for can't even find the resources to fix the vandalized and smashed windows with anything other than duct tape and cardboard. Copy paper was rationed this year. The heat lowered.

More and more kids are asking me for something to eat 1st period because no one fed them breakfast. Half my students experienced financial collapse (foreclosures, lost jobs, living in RV parks) long before it was a debated topic in the media so they're less freaked out by it than the teachers (who live in nice neighborhoods far away). We teach denial and obfuscation for a living so I doubt my peers will do anything other than continue to preach the Credo in $ despite the fact that our kids are going hungry, getting slapped around by recently unemployed, newly evicted step-dads, and our school is falling apart around us.

Thanks for the Credo, Frank. I'll start using it in my Social Studies class instead of the Pledge of Allegiance.

Li said...

Nail hits head.

Anonymous said...

"More and more kids are asking me for something to eat 1st period because no one fed them breakfast."

I would be surprised if the locally funded public schools are not replaced soon by federally funded (equitably funded) schools.

You fund the schools with local money but the army with federal money? This is an absurdity. It perpetuates class inequalities, among other problems.

I say federal funding but not federal control. The control should be totally local, by each individual school, not even a district.

If the collective of the nation is not amenable to funding all schools equitably, we've got ourselves a serious problem: we don't have a nation.

kingacres said...

The Wall Street Prayer is no less rational, no more fantastical than the Lord's Prayer; both seem inappropriate to the needs of modern times.

A few words on public education (Mr. Emrich) and all the other programs that are about to receive gobs of printing press money: no revolutionary changes in the educational model are contemplated; no great increase in personal savings demanded; no great increase in manufacturing capacity envisioned; no drastic curtailment of military expenditures forseeen; health care without private insurance is not contemplated.

In other words, business, with minor modifications and a bit more oversight, as usual - which amounts to a massively expensive postponement of what is likely to be an inevitable collapse.

Vinton

Russian President said...

Pretty good; to show that something is ridiculous, bring it to the extreme and thus expose it.

Anonymous said...

For those looking for a perfect collection of boondoggles and wrong thinking, I recommend the article "The Big Fix" by David Leonhardt in this Sunday's New York Times magazine.

Link:

http://www.nytimes.com/2009/02/01/magazine/01Economy-t.html


Just for a taste, here is the crux of the author's credo:

"For centuries, people have worried that economic growth had limits – hat the only way for one group to prosper was at the expense of another. The pessimists, from Malthus and the Luddites and on, have been proved wrong again and again. Growth is not finite."

This is such an astonishing statement that it deflated my desire to write an article for this excellent Orlov duma rebutting Leonhardt's. It would be like arguing with the Flat Earth Society.

In the light of this assumption, any comments on his proposals (essentially, making the Big Fix really Big) would be futile.

If, as I suspect, this article was written in full support and with the participation of the Obama circle of advisors, the only thing I can say is: we are doomed.

tal said...

You know it's happening when Friedman starts talking about the stages of collapse :

"Indeed, the whispers here were that what has been an exclusively economic crisis up to now may soon morph into a domino of political crises — as happened in Iceland, where the bankruptcy of the banks toppled the government on Monday."

Anonymous said...

This broadcast by Canadian radical humanist Stefan Molyneux (freedomainradio.com) may be of interest to the audience here:

http://www.youtube.com/watch?v=ymHMY4P3OPM

It is part of a series, all of it interesting and relevant for those exploring alternatives.

Anonymous said...

Hey anonymous,
Don't get bent out of shape over the statement "Growth is not finite..."
Growth is not finite if he means growth in complexity etc
"Virtus"

Anonymous said...

Jim Kunstler has a very good rant today:

http://jameshowardkunstler.typepad.com/clusterfuck_nation/2009/02/road-trip.html

It is curious that suburbia and (particularly) the state of American cities are absent from the discourse. Either Obama thinks that places Montgomery --described by Kunstler in this article-- will fix themselves, including a new economy, or he has decided that they will reach their final decay. In either case, the conclusion is inescapable: the American way of life may not be negotiable, and "we" will not apologize for it, but it is a real disaster with much worse to come. Rehabilitating and reactivating cities is not a stimulus, apparently. Better to keep financial institutions on life support, pour money into black holes, and talk about abstractions.

Meanwhile, Paul Krugman has decided to rebel against the stimulus scam. Interesting.

Michael Dawson said...

Federal funding of schools? Not in this society, unless people start taking to the streets. Federal school funding is egalitarian and rational and would work well.

Ergo, it is unthinkable and permanently "off the table."

You know, like health insurance and world peace.

Anonymous said...

Boondoggle alert:

In an article in today's Washington Post, Robert Samuelson proposes giving a tax credit to those who buy new cars...

Katrina Witness said...

Re: Mr. Emrich-

Do you live in New Orleans? What you speak of sounds just like what's happening here post-Katrina. In fact, most of what you've described was already going on even before the storm. Hurricane Katrina only exacerbated this city's problems.

I know someone who teaches in the public schools here. She has plenty of astonishingly-absurd stories on how the schools work. It truly is sad that many of these children usually don't make it out of high-school. Getting caught up in the gang/drug scene it's usually the grave or prison. Is it any wonder why this place is the way it is?

For such a backwards place, New Orleans is ahead of the rest of this country when it comes to Collapse. Want to see what the future has for ya? Come on down to Nawlins! We'll show you what "good times" will be instore for ya with our moon-cratered streets, violent-crimes gone wild, uber-corrupt politics, hyper-inflated living cost, institutionalized equal-opportunity racism, environmental catastrophes and chemically-dependent brethren to cheer you on.

Excellent book Dmitry Orlov. A vodka toast to you! *raise glass*

Anonymous said...

"Do you live in New Orleans? What you speak of sounds just like what's happening here post-Katrina. In fact, most of what you've described was already going on even before the storm. Hurricane Katrina only exacerbated this city's problems."

A country that lets an emblematic city like New Orleans (one of the few American cities that foreigners actually want to visit) go to hell and then doesn't even show up when a disaster happens is a country with very warped values. It certainly is a country without civic honor or pride.

Pangolin said...

Money? Take all the money you want. At the current rate of printing US dollars are going to race Zimbabwe dollars for the infinity bill that will buy nothing.

Sure we're behind but we're cooking off CPU's to keep up and that's faster than printers any day of the week.

Energy in+waste >= Energy out.

That's the only social equation that matters. Try to bust that equation and you're going down. Guess which equation nobody on the WSJ editorial board understands?

Some people have been living off of the sweat of others for so long that they simply can't comprehend that you have to feed the bullock that pulls the plow or next winter you starve. Ask a farmer if he has seed money; you won't like the answer.

Anonymous said...

Here is a very lucid article by Kirkpatrick Sale on Obama, Lincoln, big empires and local life:

http://counterpunch.org/sale02032009.html

The sad thing is that people like Sale have been writing persuasively on such topics for a long time. They have lots of readers but the consequences tend to be... zero. There is a dissociation between understanding and doing. Until people shake off that sense of impotence, things won't get moving.

Anonymous said...

Pangolin says:

"Energy in+waste >= Energy out.

That's the only social equation that matters. Try to bust that equation and you're going down. Guess which equation nobody on the WSJ editorial board understands"

I wonder what society would be like if people understood basic physics...

For sure, Jim Kunstler could not keep making the (good) joke that "Americans believe you can get something for nothing". As it is, he can keep making it forever and getting laughs of recognition. He's hitting a big target.

Question: If the joke hits home, as it does, it means that people know what's going on. Why do they keep believing something that they know is obviously wrong? Back to the Orwell Problem, alas... Maybe teaching physics is not enough.

Anonymous said...

The outrageous suggestion (a great boondoggle) by Robert Samuelson about giving tax breaks to buyers of new vehicles has been passed by the Senate:

http://news.yahoo.com/s/ap/20090203/ap_on_go_co/congress_stimulus

Abandon all hope. This country won't be fixed. There was very little dissent about this measure...

Anonymous said...

Here are a few more boondoggle suggestions, to be added to the subsidies for buying houses and cars (according to Orlov, the two enemies of the American people):

- A break for buying a new TV and subscribing to cable.
- A break for buying drugs.
- A break for buying hormone-loaded meat.
- A break for moving into heavily polluted areas, especially those where air AND water are poisonous.
- A break for buying guns.

Add this to the straight giveaway of lots of condoms and everybody will be OK.

This is getting sinister, folks.

Anonymous said...

I would like to draw attention to a superb article by Prof. Arno Mayer on the subject of corruption in the US:

http://counterpunch.org/mayer02042009.html

The North Coast said...

Mr.Orlov, I hope you do not mind that I posted this great post to my own blog, duly credited to you and "Frank", of course.

I took this liberty because my blog has a local focus, and I wish to expose my neighbors to your great blog...and because the "Credo" is just too delicious not to reach the maximum exposure possible.

Anonymous said...

I recomment Ghost Malls, an excellent article by economist James Quinn on the death of malls:

http://prudentbear.com/index.php/commentary/guestcommentary?art_id=10187

kollapsnik said...

No, I certainly don't mind. Post away!

Anonymous said...

Gnashing of teeth, jawboning louder and louder, flailing and flailing in the US Capitol and White House.........the night terror descends, smothering them, they can't move. Alas, the citizenry have awoken from their long stupor and have left the hot air bags in freefall. Squeezing,Pressure builds, Can't breathe....implosion, dead cool arrogant cat..parts everywhere, carrion plenty

Anonymous said...

Neil Lori Montclair NJ thinks the credo was great. In additon to what Frank writes I steal a bit from Kunstler in the sense that too many Americans believe in something for nothing. I also believe that the Obama Nation will foolishly continue roads roads roads aka highways highways highways. He and his minions are afraid to think out of the box. Big companies should be allowed to crash aka fall aka fail. The bailouts of large greedy corparations pisses the working men and working women of this nation off. How dare they steal tax money from us and distribute it to the rich. This is reverse Robinhood or Welfare for the rich. We need small scale and local projects to feed us in ther future. Those projects would be called organic and natural farms plus victory gardens.
Neil Lori Buy American
Neil Lor Buy USA

Anonymous said...

"Big companies should be allowed to crash aka fall aka fail. The bailouts of large greedy corparations pisses the working men and working women of this nation off."

The companies have already failed, they are carcasses. This includes many banks. The fact that the money is gone will eventually be made manifest. For now, they are doodling around, talking about "propping up", "providing liquidity" and so forth. It is so much hot air.

Consider what they are purportedly trying to do (Obama, Congress and the plutocrats):

1. Save the failed banks. Can't be done. Their value is negative.

2. Save the stock market. Can't be done. If nobody knows what things are worth, nobody buys and many people sell to save their ass.

3. Save the lifestyle. Can't be done (for all the reasons that have been made abundantly clear in this blog).

4. Save the housing market. Again, you have to let the losses happen. When a house doubled in value in a few years, as happened in some areas, I didn't hear anybody saying that there was something wrong. Same when prices go down. When houses are cheap enough, people will start to buy them. Schemes will be created to make this possible, but I fear that if we are to go back to a multiple of 3 (median house = 3 times median household earnings), we have a ways to go, nationally. Or maybe the multiple in the new era of collapse will be 2, not the historical 3. Who knows? Certainly not some bureaucrat or politician.

On the questions of food, energy and transportation, which are the most urgent, my conclusion, call me pessimistic, is that we are fucked. The efforts to maintain points 1 to 4 above will make it impossible to attend to these tasks, let alone providing medical attention to the population.

You can't attend to a collapse if you think it just means buying less stuff, being a litle less spoiled. It is a lot worse than that. In fact, it is an entirely different thing.

I thank Mr. Orlov for making this so clear and in such vivid terms. He has earned a place among the respected radical humanists. I only hope that his message affects some people enough to do something about their own lives.

Chris B said...

I must say I do enjoy watching the futile efforts to prop the system up. Our esteemed host has a lot of good ideas in his Collapse Party Platform, which is as sensible as it is impossible to implement within the confines of our current imperial system.

The other amusing thing I've noticed is that the ruling elites are the last to feel the effects of collapse thus have no incentive to make the necessary drastic changes to a system that has rewarded them so richly. Until they can no longer ignore the possibility of collapse but by that time it will be too late even for drastic measures.

cjryan2000 said...

At least we're not buying bread with shopping carts filled with marks/dollars.....yet. I'm fascinated at how many relocalizers still resist consideration of a "worst case scenario" in their planning. Thanks for a great piece.

Chris R.
The Localizer Blog

dorvek said...

"Nihil nove sub sole":

http://www.kersplebedeb.com/mystuff/books/lafargue.html

Anon of Florida said...

Kunstlerian adaptation proceeding:
http://seattletimes.nwsource.com/html/localnews/2008717626_concrete07m.html

pfh said...

Dmitry,

I like your list of “I believe’s”. I believe... you should look at this comparison between the 100 yr historic DOW Jones average and the 100 yr US total energy consumption in Quads. http://www.synapse9.com/issues/DJ_Energy+exp.jpg

My physical economy science says the end of exponential growth in the energy curve (at ~1967) is when the Fed should have switched policy to prevent the automatic compounding of money that ended up stimulating a Ponzi economy that then collapsed. They didn't know any better, I guess you could say, not understanding what the approach of limits would look like or how it would be needed to change the rules of money so that pricing would not diverge from reality... My first general exposition of it is buried in dust,[http://www.synapse9.com/GenAlloTheory.pdf] and still waiting for anyone to ask me to dust it off, but treats the subject definitively based on well verified physical science principles. If you believe our economy is anchored in physical systems, then you might give a physical systems economy model higher value than the traditional “magic of big dreams” sort of economic theory... ;-)

Anonymous said...

And here is an assessment of the economic situation in the US by Paul Craig Robert, an honest man:

http://counterpunch.org/roberts02092009.html

It should be strong medicine against rosy-colored pictures. It is not a question of being pessimistic, folks, it's about seeing reality. Wishes are not worth much.

Anonymous said...

Excellent article by Alec Dubro on the scam of "efficient cars":

http://www.progressive.org/mag/mpdubro020309.html

Very much in line with the objective analyses that we read on this blog.

Tiwaz said...

http://www.youtube.com/watch?v=m_atOvrTtT8

Further proof the Great Orlov speaks the truth.

Anonymous said...

The excellent writer Joe Bageant publishes this chronicle from Belize. It should be of interest to people watching the collapse:

http://counterpunch.org/bageant02102009.html

There is much truth in what he says. Do you think there will emerge a new kind of shrink specializing in victims of the Collapse? The psychological results will likely be devastating.

Anonymous said...

A clear statement from an economist: the problem is insolvency, not illiquidity:

http://prudentbear.com/index.php/commentary/guestcommentary?art_id=10189

Is this so hard to understand? Meanwhile boondoggle after boondoggle about "getting credit to flow to families". They're broke! They can't take on more debt and they shouldn't take on more debt...

Anonymous said...

A killer article by Michael Hudson on the Ultima Obama Financial Boondoggle we are witnessing:

http://counterpunch.org/hudson02122009.html

I fear that the debacle will occur much sooner than anybody thought. My prediction: within six months.

Pangolin said...

Wall Street and Washington are spinning in circles trying to avoid a single necessary reform. Until real wages go up the economic destruction will continue. I don't mean "family income" meaning two people working 2.6 jobs making what one working man did in 1975. I mean one guy, as in male, being able to support a wife and two kids with an average job and still put some savings back. Plans to lend Joe and Jane sixpack ever more money only to snatch the value away later will result in continued pain. Guess what the current stimulus package is?

Anonymous said...

A great quote from Paul Craig Roberts (should be available from Counterpunch in a week or two):

"Modern economic theory is based on “empty-world” economics. But, in fact, today the world is full. In a “full world,” the fish catch is limited by the remaining population of fish, not by the number of fishing boats, which are man-made capital in excess supply. Oil energy is limited by geological deposits, not by the drilling and pumping capacity of man-made capital. In national income accounting, the use of man-made capital is depreciated, but the use of nature’s capital has no cost. Therefore, the using up of natural capital always results in economic growth.

For example, the dead zones in the Gulf of Mexico from fertilizer runoff from chemical fertilizer farming are not counted as a cost against the increase in agricultural output from chemical farming. The brown clouds that reduce light over large areas of Asia are not included as costs in the production of energy from coal. Economists continue to assume that the only limits to growth are labor, man-made capital, and consumer demand. In fact, the critical limit is ecological."

Yes indeed, and burning capital is not usually considered a profit or "growth", outside of corrupt companies and governments...

Anonymous said...

Entirely, totaly, unimagianbly off toppic. I just read 'The New Age of Sail' The box boats that you describe, although much larger, seem to be built exactly allong the lines of the 'Optimist' class dinghies, plentifull in youth sailing clubs on the lakes in Poland. Is anyone aware of any relation between the two designs?

blackheathbugle said...

This is the most interesting post I've read in ages! Where is the video that is promised? Can someone make some subtitles for it too?

magicalnet said...

Apparently Soros is on record as agreeing with you:

http://www.reuters.com/article/newsOne/idUSTRE51K0A920090221?sp=true

Anonymous said...

I was in Magadan, Omsuchan and further north, in the Kolyma River valley in 1995, installing a satellite telephone and high speed data network for .. a mining company .. a system that never "formally" entered Russia nor was licensed by any authority other than the mine and the people who fixed things so that a million dollars worth of gear could be transported across Siberia .. a system that then - and even now - could be used to call the mine, north of the Arctic Circle, toll-free on an 800 number that terminated in Denver ...

Mr. Orlov's speaking far more truth than most who had not been there in the post-Soviet period would believe.

We Americans have so far to fall, and we're so close to the edge.

Anonymous said...

"I say federal funding but not federal control. The control should be totally local, by each individual school, not even a district."

HAHAHAHAHAHAHAHA- that's good: "federal funding but not federal control". Have you been in this country long?

Amanda Crowe said...

Already, no one expects that the market will return to its pre-crisis state. Confidence about future economic prospects will be a critical influence on people’s willingness to spend. Confidence took a major hit last fall, and my best guess is that it will recover slowly along with the financial markets.