Links 8/22/10

Today is Go Topless Day! (hat tip reader John D).

Walk ‘could track down criminals’, researchers claim BBC. Really? Just put in a heel lift or rigid knee brace on one side to induce a limp, or wear super high platforms, or use a cane!

Face Verification (2008-Present) Dr. Philip A. Tresadern. Another step down the path of giving up more information about ourselves to third parties in the name of convenience and security.

High-tech carts will tell on Cleveland residents who don’t recycle … and they face $100 fine Cleveland Plain Dealer (hat tip reader John D)

A guide to the Australian election for non-Australians John Hempton

Back to the Heart of Darkness in America’s Unended War in Iraq Chris Floyd

U.S. restaurants starved for business Los Angeles Times

In Striking Shift, Small Investors Flee Stock Market New York Times. Investors are now down to a 57% allocation. Maybe I am a hopeless old fart, but that strikes me as a high number, if you look to a broader sweep of history. Even as late as the early 1980s, bank trust departments saw stocks as speculative and were loath to invest client assets in them.

Monty Some humor, hat tip reader John M

Monday at the Treasury: an overlong exegesis Steve Waldman. This is am extremely good and gracious summary (he gives a little credit to every participant and has links to all the other writeups of the session) but I’m a bit astonished to find that Waldman found the session enjoyable. I was often annoyed and was finding it hard to maintain my usual WASP composure (but all annoyed WASPs do is put on a stony disapproving face, we really are not good at confrontation). I am also aware of the effect of having spent time there (my Santa Fe friends would call it being psychically attacked, the weird mental hangover which is finally wearing off is enough to make me start taking that sort of talk seriously).

The Sausage Making Begins. I’m Sure It Will Turn Out Swell. Streetwise Professor. A really good piece on what a disaster the derivatives clearing house is likely to be.

Beyond City Limits Parag Khanna, Foreign Policy (hat tip reader John D). Today’s must read.

Antidote du jour:

Picture 12

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  1. attempter

    Re face verification and recycling techno snitchery:

    It should go without saying that these are related and have the same underlying malevolence. There’s just no end to the subjectively good reasons for building up the objectively totalitarian surveillance state, is there?

    Does putting surveillance professionals to work on recycling surveillance (obviously just as a training and proving ground for more important class war projects) qualify for the liberals as a “green job”? I bet it does. I bet the surveillance companies even get special subsidies that way.

    (I of course want recycling and probably take it to excess on a personal level; but we don’t need creeping police-statism and corporate welfare to enforce it.)

    I could also tangibly feel all the jobs being destroyed or failing to be created – the truck is automated (the driver doesn’t even have to leave the cab), the chip counts things instead of a person…(That’s how I end up reading most articles by now.)

    1. Tom Crowl

      The truth about face-verification is that it SHOULD put the whole issue about “National I.D.” into a new context.

      While I agree with those concerns about the prospect, you won’t protect your privacy by trying to stop National I.D.s … sad to say.

      Face-verification and other technologies are going to make the issue moot… game over… you are going to be identifiable on sight to whoever has access to the database.

      The question then becomes do you go nuts trying to keep the database available to just ‘the state’?

      Or is it better to throw in the towel and say ‘come one, come all!” … or is there some middle way…

      Anyway, that’s the proper frame for the discussion… so remember that the next time you hear arguments about National I.D.

      THE ISSUE IS MOOT (or will be very soon) so re-frame the question as to how to deal with how best to deal with it.

      From David Brin on transparency:

      (though in third person these are his words and his version of how the wiki article on his book “Transparency” should be written)

      “Brin argues that a core level of privacy – protecting our most intimate interactions – may be preserved, despite the rapid proliferation of cameras that become ever-smaller, cheaper and more numerous faster than Moore’s Law. He feels that this core privacy can be saved simply because that is what humans deeply need and want. Hence, Brin explains that “…the key question is whether citizens will be potent, sovereign and knowing enough to enforce this deeply human want.

      “This means they must not only have rights, but also the power to use them and the ability to detect when they are being abused. Ironically, that will only happen in a world that is mostly open, in which most citizens know most of what is going on, most of the time. It is the only condition under which citizens may have some chance of catching the violators of their freedom and privacy. Privacy is only possible if freedom (including the freedom to know) is protected first.”

      Brin thus maintains that privacy is a “contingent right,” one that grows out of the more primary rights, e.g. to know and to speak. He admits that such a mostly-open world will seem more irksome and demanding; people will be expected to keep negotiating the tradeoffs between knowing and privacy. It will be tempting to pass laws that restrict the power of surveillance to authorities, entrusting them to protect our privacy — or a comforting illusion of privacy. By contrast, a transparent society destroys that illusion by offering everyone access to the vast majority of information out there.

      Brin argues that it will be good for society if the powers of surveillance are shared with the citizenry, allowing ‘sousveillance’ or ‘viewing from below’, enabling the public to watch the watchers. According to Brin, this only continues the same trend promoted by Adam Smith, John Locke, the US Constitutionalists and the western enlightenment, who held that any elite (whether commercial, governmental, or aristocratic) should experience constraints upon its power. And there is no power-equalizer greater than knowledge.”

      1. Sundog

        Tom, I suggest that “consumers” and “human resources” being managed as (less than sufficiently) domesticated livestock is a much more likely scenario.

        Internal and external security services are literally drowning in data. Do you imagine the NSA making its stream available to the open-source community? Ain’t gonna happen; no algo would permit it, let alone a human. And increasingly it will be algos calling the shots.

        1. aet

          In ancient Rome at the time if the republic ,, EVERY aspect of a citizen’s conduct was open to question by the State.
          BUT, the citizen could ONLY be punished for such, if he had broken the Law.

    2. Cynthia

      There’s a lot of hocus-pocus in using biometric technologies to identify individuals, but this still hasn’t stop our military from using these technologies to determine if someone is an enemy terrorist. So if biometrics data determines that someone is a terrorist, even though he’s unarmed and doesn’t appear to be dangerous, our soldiers are perfectly free, according to the rules of engagement, to gun him down. Robert Parry has a mouth-full to say about this. Robert Parry, BTW, is an investigative journalist who won the George Polk Award in 1984 for reporting on the Iran-Contra affair and uncovering Oliver North’s involvement in it……robert-parry-7/

      I’m disturbed enough as it is that we are using such iffy technology to decide whether someone can be gunned down or not, especially given that this technology can easily be transferred from battlefronts abroad to our homeland here in the US. But what disturbs me even more is that many military types (including the rather mild-mannered Colin Powell) believe there’s nothing wrong with gunned down unarmed civilians all in the name of this so-called “war on terrorism.” About the only way any invader or occupier, such as the US, can justify the killing of civilians, such as the ones in Afghanistan or Iraq, is to view them as being less than human. And now that our armed forces see little difference between innocent civilians and enemy combatants, I think it’s high time that we put an end to our never-ending war on terror.

      Let me also mention that as long as terrorists aren’t being supported by any particular state or government, we have no business invading and occupying any country on the planet, which happens to harbor terrorists. As I’ve said before, the war on terror is similar to the war of drugs in that it can only be fought through covert actions. But because there’s a vicious cycle to terrorism, just as there is to the illicit drug trade (the harder we fight them, the bigger and more vicious they become), I have serious doubts that covert actions can put a lid on terrorism, much less stamp it out. So I think in the long run, the best way for us to battle terrorists and drug dealers alike is to distance ourselves from them, not to seek them out!

  2. Ina Deaver

    That article on Australian politics for dummies is fantastic. Not only was it clear and concise, it really gives an excellent feel for why a coalition built with any of the options is likely to be unstable and difficult to maintain. Extremely informative.

    If you are a hopeless old fart, so am I: I’m 100% out of equities and have been for a good long while. But you have remarked yourself on the gross pinch that ZIRP puts savers into – exactly where does one earn a return? And it pushes towards risk the exact demographics who need to be weaning off of it.

    The fewer ordinary investors there are in the stock market, the more the casino “houses” will be competing against each other for a fixed pie. At some point, no one takes the other side of your trades. . . . .

    1. Skippy

      At some point, no one takes the other side of your trades. . . . .

      Ain’t that the 600 Trillion/1.4 Quadrillion question.

      Personally I’m reevaluating the definition of return, value or investment, relationships?

      1. Tom Crowl

        Skippy is RIGHT ON!

        Ponder this:

        In a hunter-gatherer society… when times get tough… they’re tough for everyone… everyone takes a hit.

        In an unhealthy scaled-society…

        There’s an idea that the “chiefs” should pay no price and even get a bigger share of the shrinking pie… (justified with supply-side, Objectivism, neo-whatever and various other versions of rationalized crapola)…

        In a hunter-gatherer society… if the chief tried to sell that idea when things got dicey…

        He’d be a dead chief!

        And as we all know this happens occasionally in scaled societies also…

        Yes! The definition of returns, the value of ‘investment’ and the effects of relationships on decision… all need a good looking at.

        1. MyLessThanPrimeBeef

          It’s too bad people don’t talk about hunter-gatherer societies more often.

          It’s possible we can go home again, just like the whales and dolphins whose ancestors came from the ocean, evolved into mammals and then went home again.

          Legend has it that some whales decided against going back into the water. And where do you think they are now?

    2. charcad

      the gross pinch that ZIRP puts savers into – exactly where does one earn a return? And it pushes towards risk the exact demographics who need to be weaning off of it.

      The answer to this dual question (risk free yield) might be found in the present 10 yr & up Treasury Bond markets. Were the aging boomers not ceaselessly told for decades that US Treasury notes and bonds are “risk free”? They are for repayment. They are not for price/yield and nearly everyone reading this blog knows that.

      The boomer generation has progressively blown and popped the and real estate bubbles. Now we’re in the mother of all Treasury bond bull markets. This is right on schedule relative to the boomer demographic.

      There’s a Treasury bond Ultra Short ETF I’m eyeballing for the moment a top looks to be in.

  3. i on the ball patriot

    “I was often annoyed and was finding it hard to maintain my usual WASP composure (but all annoyed WASPs do is put on a stony disapproving face, we really are not good at confrontation).”

    Bust through those inhibitions and you could lead the revolution!

    Deception is the strongest political force on the planet

  4. rd

    On 57% equities and hopeless old farts…

    I started working near the beginning of the defined contribution revolution (1981 which probably means that I am at least a middle-aged fart). Prior to that people had pensions or just their regular savings along with Social Security. If they invested in equities it was through a Merril Lynch broker paying exorbitant commissions for either blue chip stocks or whatever the brokers were trying to dump that day.

    After 1980, we moved into the Charles Schwab and Fidelity era of lower commissions and lots and lots of mutual funds. Trying to find good investing information and advice for small investors was tough.

    What was becoming clear in the 90s was that mutual fund companies had latched onto Modern Portfolio Theory big time. The timing of this was that the historical returns for equities that could be plugged into the MPT calculators was in the 8% to 10% range which would make everybody wealthy over a few short years. The drumbeat that everybody had to be in equities for the long-term to stay ahead of inflation had begun. Even the previously staid pension fund professionals latched onto this which is why we are seeing so many pension fund blow-ups.

    I was lucky. I picked up a copy of Benjamin Graham’s “The Intelligent Investor” in the 1980s and read it cover to cover. As an engineer, his basic concepts made a lot of sense, especially the “factor of safety.” While I didn’t have enough money at that time to buy enough individual stocks to have a sufficiently diverse portfolio, it did lead me to hunt down the few mutual funds that were basically following those precepts. That allowed me to avoid large losses in the early 1990 and 2000-2003. I looked at MPT theory and used some of its concepts, but the lack of input regarding overall market valuation didn’t make sense to me.

    Shiller published Irrational Exuberance in 2000 where he applied Benjamin Graham’s 10-yr earnings history to the overall stock market and showed that long-term returns suck when the market is in the top quintile (@PE>20). His little charts on this are now my primary market valuation tool. It is clear that the PE is still too high but the Greenspan-Bernanke put and Bernanke’s QE is pushing the professionals to buy equities and other risky assets.

    I think the small investors are starting to understand that they are just pawns in this grand game of money sloshing back and forth between the Fed and the Wall Street traders. As a result, they are jumping and pulling the cord on their parachute. They are beginning to focus on Will Rogers old investment adage “I am more concerned about the return of my money than the return on my money.”

    I think small investors are getting back to where they need to be but I don’t think that there will be a systematic approach by small investors until we start to see calculators that incorporate both MPT and Shiller’s valuation metrics to come up with rational long-term predictions of investment strategies looking out a decade or more. Wall Street won’t do it since its time frame is focused on quarterly numbers and annual bonuses. It will not surprise me if we will have a period like the 40s and 50s where most people had very little personal savings in the stock market.

    1. charcad

      “Supermoney” was my entry point. “Adam Smith” turned me on to Buffett and Ben Graham, The Intelligent Investor and “Security Analysis”.

      It will not surprise me if we will have a period like the 40s and 50s where most people had very little personal savings in the stock market.

      I think so too.

      After October 1929 it was 25 years before the market set another new high in 1954. Consider what occurred in the intervening period. The world of 1954 was changed beyond dreams from 1929.

      I tell my kids (generally in their early 20s) they’ll see new highs in “the markets”, both real estate and intangible equity markets. At 54 I could even live to see them myself. But the world at that time will have changed at least as thoroughly as it did between 1929 – 1954.

  5. dcb

    Treasury meeting:
    I was deeply disturbed that admninistration officials can back administration polices but go unnanmed. Geithner giving a meeting and refusing to be mamed as a source for cheerleading his own acheivements should not be something that should be reported upon.

    if he wants to be critical that is another story.

    When I look at the fed and treasury I anm reminded by what I have called a conspiracy of thought. Large systems have a way of alienating outside thinkers and while those left may be attempting their best because of the limitations of the structure of the system they don’t (or can’t) realize the false assumptions their logic is predicated upon.

    For example the ultraa low interest rate policy of the federal reserve. I think the great majority of benefit goes to the top. borrowed funds are invested elsewhere (for eign countries). banks don’t lend (hurting the real econmy) and the federal reserve doesn’t believe the fed funds rate should be tied to credit card rates. therefore the entire transmission of monetary policy is ineffective and benefits the already wealthy.

    Unconventional approaches appear top be lacking from our policy apparatus. Borrowed money at different rates for different purposes for instance, letting commercial banks borrow from the fed, but interest rates for asset purchases being higher. HFT transaction tax so rapid trading isn’t as profitable and investing long term for the future has a better chance.

    As far as I can tell our policy apparatus has been against any and all of these types of ideas. So I see policy as fostering the whole wall street mainstreet divide and hurting the real economy. This is the sort of thing I get the feeling our officials don’t understand because of the conspirisy of thought.

    Geithner and Bernanke could be great guys, but if you have the wrong understanding of what is going on because of a limited world view then your solutions won’t work. when surrounded with faulty theories you can only produce faulty solutions.

    If these guys were so blinded that they couldn’t see that leverage on wall street compines that our last ‘boom” was entirely financied with mortgage equity withdrawls on over priced assets we have a problem. we have a bigger problem that they had no clue that when such a system broke it would break big. I’m an MD, not an economist but when oil hit 147 I knew the recession wouold be deeper and all that debt would explode. Not very difficult and I jumped. I’m really not comfortable with somone with real training couldn’t see, and yet a dope like me figured out very quickly.

    By the way, the bubble was pure ponzi finance (I learned about minsky later). borrowing against over priced assets for pruchase of things with debt. there is no real worth to any system when the only money behind it is leveraged. The big boys want to bring back this system and that scares me.

    1. Yves Smith Post author

      This not naming particular sources in “background” meetings is an Obama administration fixation, it’s been commented on elsewhere as being more than a bit neurotic. The Treasury folks actually offered an excuse for it, their claim was that if the meeting was on the record (or “not for attribution” which means you can quote precisely, but not name the person quoted, just say “senior Treasury official”) they’d have to pick their words very carefully due to a worry of being quoted out of context (I take that also as an attempt to explain why Geithner looks so twitchy before Congress, but he also radiates contempt of the process, so this doesn’t really wash as a defense).

  6. Ignim Brites

    Re: U.S. restaurants starved for business in the LA Times. Most of the article referenced SoCal restaurants. Of course, if LA had an account at the FED or if more of the primary dealers were located in LA things would be different (more equal one might say). So economically and culturally, California’s best choice is secession.

  7. frosty zoom

    re: topless day…

    alas, perhaps we should have topful day instead.

    in these sweaty climes, many fellows walk about topless, and frankly it’s about as appetizing as gmoporkdogs cooked on a bbq with last years gristle.

    smells about the same, too.

    i guess equal rights means equal access to bad taste as well.

    1. Yves Smith Post author

      I was going to say I was not participating because I think everyone over 50 should have a top on at all times unless they are particularly well preserved.

    2. MyLessThanPrimeBeef

      I thought topless meant brainless.

      Just imagine how much trouble the world could be spared of if the the R&D departments on Wall Street could go brainless for a day!

  8. doom

    Wow, Waldman, from the mouths of babes. They’re having fun. Looting of unprecented scale, officially sanctioned commercial predation, mounting mass desperation.


  9. KFritz

    At least the high-rise, glitzy, service dependent part of the mega-cities is dependent on cheap fossil fuel for it every need. If the fuel runs short or becomes prohibitively expensive, isn’t there a strong likelihood of mega-ghost-cities? Even the sprawling slums are a good distance fr/ the agricultural land producing their meager rations.

  10. Doug Terpstra

    Re: America’s “Heart of Darkness” in Iraq is reminiscent of the horrific Vietnam movie “Casualties of War”, “Platoon” and others.

    “The soldiers [raped and murdered a defenseless Iraqi family] because they had the power to do it; they didn’t need a reason why – almost the invasion of Iraq in microcosm.”

    “…Abeer’s two younger brothers…came home to find their house burned, their family dead and blood and brains all over the walls. The killers meanwhile celebrated with a barbeque. Green bragged to anyone who would listen about what he had done… Then Green, unpunished, was honorably discharged with a diagnosis of ‘antisocial psychiatric disorder.'”

    Surely ‘antisocial psychiatric disorder’ is not atypical among returning veterans, and sadly, it is likely those of remnant humanity and conscience that are among the rising suicide rates. The blanket immunity and pardon for all war crimes implicitly declared by Obama ensures that this nation will not heal, and “the sins of the fathers will be visited upon the third and fourth generation of those who hate…”

    What Floyd’s piece, “Casualties of War”, “Platoon”, “Band of Brothers”, “The Hurt Locker” and other movies and books convey is that the cyclical dynamic of violence is inescapable. As Chris Hedges puts it:

    “I am not a pacifist. I know there are times, and even concede that this [rise of American fascism] may eventually be one of them, when human beings are forced to respond to mounting repression with violence…[but]…When you ingest the poison of violence, even in a just cause, [unlike Iraq] it corrupts, deforms and perverts you. Violence is a drug, indeed it is the most potent narcotic known to humankind. Those most addicted to violence are those who have access to weapons and a penchant for force. And these killers rise to the surface of any armed movement and contaminate it with the intoxicating and seductive power that comes with the ability to destroy. I have seen it in war after war.”

    This is so even in “just” wars of defense, but this was a war of aggression, a criminal enterprise, as Floyd puts it:

    “…the undeniable fact is that the American military was not in Iraq ‘to help the Iraqis.’ This has not only been confirmed by the evidence of what has actually happened — a million innocent people killed, four million displaced, a society destroyed and plunged into a state of permanent terror, violence and extremist hatred – – but also by the historical record of the preparations for the war at the highest levels. The record shows that the intention of the war was to …implant a more favorable government in what was considered a key strategic area for enforcing and extending American dominance over world affairs.”

  11. EmilianoZ

    Yves asked what the purpose of the Treasury meeting with bloggers could be. I think Waldman explains it perfectly in his first paragraph:

    “But having chatted so cordially, I’m far less likely to take up pitchforks against them. Drawn to the Secretary’s conference room by curiosity, vanity, ambition, and conceit, I’ve been neutered a bit. There’s some irony to that, because some of the people I met with may have been neutered, in precisely the same way and to disastrous effect, by their own meetings and mentorings with the Robert Rubins and Jamie Dimons of the world.”

    1. EmilianoZ

      But what does it mean psychologically? That we have an innate fear and awe of the rich and powerful? That the simple fact that they behave nicely towards us dispose us favorably towards them? Is that “slave mentality”?

      1. Yves Smith Post author

        I think it’s even simpler. Anyone who is not warped tends to default to “people are decent unless proven otherwise” and to engage in reciprocity (“if you are nice to me, I’ll be nice back”). The question is what one construes as “nice”. Most people are flattered to be invited to meet with senior government dudes. While I know I have that working, I am simultaneously annoyed at the “kiss the ring” aspect, as in I have to spend time and money to do see them, they set the meeting time to suit them, and most important, this is for their benefit, they are trying to make us serve their ends, when what do we really get from this? So I try to focus on the annoyance as a prophylactic against the other dynamics. It may not be fully effective, but I think it helps.

        So these people do appear to be decent, that’s a big cognitive disconnect with their actions one is forced to reconcile (or not, but having fallen for Chase branch staff lying to me repeatedly and my falling for it even knowing Chase lies, I can tell you how easy it is to be fooled). It’s a well known cognitive bias, the halo effect, we take someone’s performance on one attribute (good looking, smart, seems genuine) and project it to others (they must be trustworthy, competent, etc.). We tend to see people as black or white, and have a lot of difficultly seeing people as good on one attribute of behavior, bad on others. That’s why pretty people are attributed more IQ points than they have, even though it’s pretty obvious looks have not much to do with smarts (maybe around the margin, as in pretty people might get more attention from teachers…)

        So absent the power issues you raise, merely giving good meeting is quite effective.

        1. ChrisPacific

          “One may smile, and smile, and be a villain”

          (Shakespeare, Hamlet)

          “There are hardly any excesses of the most crazed psychopath that cannot easily be duplicated by a normal kindly family man who just comes in to work every day and has a job to do.”

          (Terry Pratchett, Small Gods)

        2. Altoid

          “a big cognitive disconnect with their actions one is forced to reconcile”

          Yes. I don’t know whether annoyance is prophylactic or not. Maybe humor is? Irony, though, probably is not.

          The (subliminal) recognition of this kind of being-coopted-through-mere-personal-contact is, I think, a big reason why the DC press reacted so coldly to Colbert at the annual dinner a few years ago even though he was unbelievably brilliant. Maybe also a reason why I. F. Stone didn’t interview people, if I remember reports correctly. It worked very powerfully for w bush in 2000, all those barbecues with reporters he rather openly despised, and for the likes of Rove, who cultivated informal contacts with some, as I recall.

          I think there are many games afoot when the invitations come, but at the most basic level it’s what you call the halo effect that everyone’s after. “People accuse Kissinger of the most heinous things but I’ve been in the same room with him [not as an audience but in an informal setting] and I can’t believe he’d do that.” But of course he would.

          A big difficulty arises because lots of critics tend to attribute personal animosity or hostile feeling states as reasons why these people do vile things. That, I’d think, would actually be rare. Most of the time, for complex reasons, the ones who suffer just don’t matter. They’re the eggs that have to get broken to make the omelet, and that’s their role in whatever this particular drama is. You might even feel sorry for the eggs, but you don’t hate them.

          We would do better to focus on the analysis, or the policy process, that produces misery, and to stay the hell away from attributing any kind of emotion toward those on whom misery is wreaked as motivating the designer of policy.

          When I refer to that, of course, I’m not saying you do it. But a lot of other people tend to. Maybe it’s kind of an obverse halo effect, or just that when evil is done we really do want to see malice behind it.

          1. Yves Smith Post author

            Agreed re motives, I am puzzled looking at these Treasury folks. Can’t they see they are enabling a terrible system? I don’t know how much of this is de facto class issues (the elites closing ranks and finding ways to rationalize it), how much is that they have been successfully co-opted by the banksters, how much they believe (IMHO incorrectly) that this is the best they can do in a bad situation.

            And re co-optation via contact, my belief is it is short lived drug. If we saw them more often, I think there’d be a real danger, but they have poor turnout relative to the number of invites extended (since this isn’t any of our day jobs and we therefore incur a time and financial opportunity cost), and we aren’t high priority regardless, so we are less likely to be turned to their ends. But the positive, even a tad fawming write-ups from the other bloggers suggests I may be naive on this front.

    2. Yves Smith Post author

      Having seen Robert Rubin at close range when I was young at Goldman (I worked on the acquisition of J. Aron, called in late in the game because John Thain, the junior working oar, was clearly at his physical limits after two month of three hours of sleep a night [even Wall Street once is a great while is capable of recognizing that junior staff are not machines] and they needed another resource on the effort), I’m aware of the danger. I went to the meeting somewhat pissy and felt increasingly fogged as it progressed.

      I’m not flattered per Waldman (these guys are very polite and skilled, so they use the same manner on lots of folks), I’m annoyed at the efforts at flattery, as in we do not rate by any normal standards, our being cultivated is a sign of how deep this Administration is willing to drill in information control (ie our being included says much about them, much less about us, but the natural tendency is to take it as saying something about us) I’m annoyed that even mere curiosity (how does this game work? how do these guys operate? what does it look like when a toad hops out of one of their mouths?) risks one getting pulled into their gravitational field.

  12. ChrisPacific

    The Waldman summary is interesting. I thought there were a few reported comments that were telling.

    They clearly don’t consider themselves accountable to the taxpayer, at all. Witness the comment about HAMP: “what may have been an agonizing process for individuals was a useful palliative for the system as a whole” [i.e., banks]. They have completely bought into the idea that a systemic failure means the collapse of civilization as we know it, and so they don’t care how many taxpayers they have to burn on the altar in order to prevent it, because no matter how bad it gets for them it’s still better than the alternative.

    The other comment I found interesting was this one: “In any case, the quick response was to say it wouldn’t pass Congress, as though that were that.” It’s probably characteristic of public officials in high office that they’re accustomed to pragmatism and compromise – no doubt idealists get filtered out at an early stage – but this is also precisely what makes them most vulnerable to cognitive capture. If you can get your opponent to accept that their preferred option is unworkable for practical reasons and give up on it, then you’ve won the battle before it even begins.

  13. Altoid

    About enabling a terrible system, I’m not so sure. By responsibility and probably personal predilection they tend to think of systems first. Within that, I’d guess they really thought the banking system was on the verge of collapse (probably not so far off) and that’s been priority number one ever since. But that’s the banking system as it existed over the past, say, decade, institutions and all, and not as it should be.

    I tend to agree with Krugman et al that there have been and continue to be real losses that some of the actual parties have to eat in fairly short order for the bigger economic system to work right, and that the fair thing is to make lenders eat most of them. Some form of cramdown, for example. It should be possible to put a value on the paper out there without committing to support zombie institutions. Otherwise we’re Japan and we’re looking at creating a lost generation here too. But that’s not to say they see it that way.

    Personally, I think their disconnect from the real actual economy is scary. Their mileage obviously varies.

  14. Sundog

    A growing body of cognitive research is demonstrating something schoolteachers and entertainers have known for a long time: Most of us respond better to personal stories than to impersonal numbers and ideas. That cognitive bias is so pronounced that Deborah Small, a professor of marketing at the Wharton School, has found that charitable giving actually goes down if too many statistics are included in individual tales of need (and if we get only statistics and don’t learn any personal stories, giving is even lower). Forget “just the facts, ma’am.” Actually, forget the facts altogether.

    Kinda sums up why I read NC and other econ blogs. Too bad Freeland doesn’t go there.

    Chrystia Freeland, “Business Journalism’s Image Problem”

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