Links 9/17/08


  1. doc holiday

    Thank you Comrade Smith, for a very focused visual metaphor. This is so fun.

    I see in this, that society has no time for play, and even when time may become available, the activity of play is condensed into solving puzzles and thus being beyond the grasp of actually relaxing. What drives us all to this point is a work ethic built upon the false promise of future value, i.e, placing a carrot in front of a horse, or a bone in front of a dog and pushing for realtime performance in the moment. The lure and promise of play makes us work harder and thus the universal desire to play provides a catch-22 loop that demands more of us, while draining us of energy, as we demand more time off, as we feel guilty about not working.

    Nonetheless, every dog is promised a day in the sun, but as we see here, the grind at the office is exchanged for a new toy that remains distant and idle, while we are worked to the bone.

    However, I also see and sense the possibility of rebellion and the potential of the pooch to jump across the table and just say, no. No, I’m not gonna keep working like a slave, so that wall street frauds can steal me blind and play hedge fund casino with my hard earned pay, while they escape to Cayman like some feline entity with 9 friggn lives. Gimmie a bone here, life is too hard to be screwed over by thieves!

  2. Richard Kline

    So Yves, there is a very fine, concise discussion of interest rates in cases of sovereign currency distress over at, following on from the FOMC’s non-move (hat tip Barry Ritholtz). Great use of historical comparables, and I agree with the conclusions, though not necessarily that the Fed has its head fully in the same space. It would be worth appending to links, or even pushing up to a post if it suits your mix given the present surge of news and notables.

  3. Richard Kline

    Re: Ehrenberg’s named ‘Paulson Doctrine,’ his action’s as E. describes lack the coherence for that adjective. Rather, in keeping with ‘the Greenspan Put,’ I would call this the Paulson Heave. Whenever he sees foaming zombies clawing up through the floorboards or busting the door down, he heaves pallets of bills on the spot until no bogies are visible.

    I don’t entirely condemn Paulson for the reactive and erratic nature of his response. He surely gets no help from his nominal superiors, Dick and Georgie Boy, who have neither interest or competence in these matters compared to barging over sovereign borders on the other side of the world looking for feathers in their caps (regarding which the latter have no competence, either, but that’s different and old news). Ben Bernanke came in planning to vomit forth money in a crisis and crash dive rates; having done that, he nearly broke the Big Buck, and is fresh out of ideas, a man well over his head. Paulson is further hampered by ridiculous anti-regulation ideology which in its stated principles runs entirely opposite to the kinds of massive public interventions he is now compelled by circumstance to orchestrate. Further and finally, neither the Treasury nor the Fed has any explicit statutory authority for the kinds of actions they are taking, and lacking that obviously has done no contingency planning (publicly) for these things.

    We can and should blame Paulson for his complete opacity of action and lack of candor. This may be reflexive action for the industry from which he came, and is the required MO for the Bushies and their ilk of whom he has become one. But in a crisis like this it is unhelpful. Looking at the sheet for the last twelve months, I can’t say in the end that the bailouts which have happened directly or indirectly at Paulson’s behest are unsound: BSC, the GSEs, and AIG all have posed real and massive systemic risks. The form of the interventions involved has been grossly ad hoc and sloppy, yes we can blame Paulson for that, but the need to act seems manifest. A man who entered office prepared to act, ideologically and as a function of the authority of his office, might and should make cleaner interventions, but that man was not Paulson.

    In effect, Hank the Heaver is playing the Herbert Hoover role in this re-make, an improviser having to act against his grain in fast breaking systemic shifts posing catastrophic risks to the public whose interests he has sworn to uphold. Let’s look on the upside: He hasn’t blown up the system. Yet. He won’t come out a hero in this, but there it is.

  4. Chris

    Sometimes dogged determination is not enough. This may be one of them.

    From the subprime to the ridiculous.

    If AIG is too big to fail are we now accepting the idea that the CDS and Swaps markets are to become GSE’s? Is the full faith and credit of USam to be put behind creative finance in its death throes?

    What will be the criteria for deciding how much to stick tax-payers with on the MBS account (FNM and FRE) and on the CDS and whatever accounts?

    Are these decisions for the miniature version of the bull-dog breed?

    Isn’t it strange that the “banks” which comprise the credit index underlying the pricing of CDS and which charge each other fees for holding each others paper for a certain period of time (free money– fee income) are also the TBTF list? Will they continue to get their fee income from the Fed?

    There’as a story about this in the Old Testament. Numbers 22-23. Bail’em and his Ass. Paulsen and Bernanke (Bail’em) should listen to what their joint ass (the unfailable financial system) is telling them about the obstacles on the road ahead. Sometimes the beast that bears the burden knows more than the “driver”.

    Now there might also be an argument about which is Bail’em and which the ass, but I wouldn’t want to stretch biblical exegetics that far.

  5. dearieme

    Your photo is obviously intended to remind us that though he was a Great Man, Winston Churchill was a lousy Chancellor of the Exchequer. The contrast is evident in comparison with Presidents Clinton and W, who are neither great men nor any good with the taxpayers’ money. And so fragile is the USA that if you elect a third dud in a row, it could be curtains. Oh dear, oh dear.

  6. Chris

    Bail’em and his Ass are the subject of a great painting by Rembrandt.

    Google image search “Rembrandt Baalam”

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