I saw a documentary about AIDS in Zambia last night – “The Lazarus Effect”, free on YouTube Red Channel. I was astounded by the way they talked about ARV’s (anti-retrovirals) – it was like they were just a given. As though, at some point in the early 2000’s, some beneficent hand (God, the Zambian government, Butros Butros Gali) sprinkled them across the land like manna. Not even a mention of the evil capitalist society and the greed-mongering pharmaceutical companies that developed the drugs and now give them away at or below cost to the poor of the world.
I mean, it’s really amazing: AIDS in the United States started out as, and still remains, a disease that primarily effects homosexuals. I am not making a judgment on homosexuality here, but I am making a judgment on human nature. Anywhere else, AIDS would have been ignored at best. Here? We mobilized hundreds of billions over the course of 25 years and we cured it, and now we give it away to the less fortunate. No other culture in human history has ever had the combination of empathy and expendable resources to do something like that. Not even close.
And yet, not a mention of it in the documentary.
We see this today - the stimulus and TARP funds are in bank reserves right now to shore up bank balance sheets against "toxic assets" with little resale value. But what if they weren't? Where would they go? But where did those TARP funds come from? Banks, somewhere, be they American banks or foreign banks or foreign central banks. Banks with liquid assets, who had invested wisely in the bubble years or got lucky at the crash, and seeing a bad economy, ran to the treasury for "safe" investments. Treasury was all to willing to oblige. But what if their had not been massive deficit spending to finance?
- First, there would have been more demand for the same supply of "safe" treasury assets. This alone would have caused an expansion of the money supply and made the Fed redundant because it would have forced interest rates to zero or even lower.
- As those interest rates dropped, commercial investments would have looked better and better to banks. So banks would have started lending and investing. Currently fashionable argument is that banks aren't lending because the economy is bad. Really, banks aren't lending because the US treasury is offering a sweet deal to finance massive government spending. All that stimulus cash would still have found its way to the market, it just would have been in the form of small business loans, M&A, and mortgages. The current Obama fetish with admonishing bankers for not lending is laughable and see through - it is the direct result of his policies.
- We would also still get plenty of foreign investment. China would start to act like Japan did in the '80's, buying up cheap real estate and taking controlling interests in large American firms. Is this worrisome? Sure. But is it more worrisome than China taking a large interest in the federal government, on which we depend for national security against... China? No, not even remotely.
You can talk about multipliers all you want, but they all apply just as well to private lending; and without deadweight loss incurred by government hamfistedness in the economy. So they apply better to private lending. Banks won't just sit on money if they have it and if the market drives interest down on treasury bonds; they will invest or die. It's the same reason why I'm lathering at the mouth about buying a house as soon as I can; you can get good investments cheap right now.
The main point is, in a fractional reserve system, the amount of liquidity is set by the reserve rate, the rules about what constitutes a collateral asset, and the inflation rate. If government is borrowing to spend, it is taking liquidity from business.
“For what we’ve learned in the last few years as one scandal after another spilled onto the front pages is that the bubble economies of the last two decades were not merely monstrous Ponzi schemes that destroyed trillions in wealth while making a small handful of people rich. They were also a profound expression of the fundamentally criminal nature of our political system, in which state power/largess and the private pursuit of (mostly short-term) profit were brilliantly fused in a kind of ongoing theft scheme that sought to instant-cannibalize all the wealth America had stored up during its postwar glory, in the process keeping politicians in office and bankers in beach homes while continually moving the increasingly inevitable disaster to the future.”
He nails it pretty well. In a word, the US financial system is a giant compulsory Ponzi scheme, with politicians and business executives at the top and the rest of us getting screwed. The blame for the crisis should be shared, he says, and letting either the Wall Streeters or the politicians off the hook is dogmatic. It’s similar to the Rand/Marx dichotomy that isn’t: “There is some small class of people who have great power and use it to steal from everyone else. Invariably, I belong to the second group.” It’s a teens-level redux of class warfare.
Taibbi suggests that both the politicians funneling dirty money to election funds, and the businesspeople providing that money by taking their points off toxic deals and buying vacation homes in the Caribbean, were both equally guilty:
“This GSE story is a big one, but if it gets used as a path back to a “The Market Reacted Rationally” version of history, we’re screwed. It has to be looked at as an important part of a diabolical whole, a symbiotic scheme in which the banks and the state were irreversibly intertwined in an enterprise that on both sides was never about market economics, but crime. Because otherwise… the diversionary notion that one side or the other is wholly to blame is part of what makes the whole scam possible.”
I cannot quite buy this evil incarnate at the top of the mountain theory. Taibbi ignores the difference in projected power between two groups of people. Businesses can only balance the books in their favor, politicians can use force against any form of blowback. There is a qualititative difference there, and just following the money does not quite tell the story. For instance, I’ve pointed out before that bankers’ actions were perfectly rational if one considers the implicit guarantee from the Fed, Treasury, and Congress that they would not be allowed to fail – by forceful edict. There were two ways this trading could have played out when the system crashed. In the market version, conservative banks who had eschewed growth for the last decade would watch as the paper tigers of the BoA’s and Citigroups collapsed, and use their hard-won capital to purchase the remains at pennies on the dollar. This happened in a few cases, like Wells Fargo picking up Wachovia, but it was not to the extent that it should have been to break up the too-big-to-fails once and for all. In the corporatist version, the government would step in and save bad banks from their bad investments using money forcefully extracted from taxpayers. This happened and is still happening and will happen for the next 50 years.
Rationality does not just mean seeing bad investments for what they are and avoiding them. Taibbi ignores game theory. Rationality requires weighing the risks including the reactions of others. If there is a player in the game who can tilt the field in your favor unfairly, game theory suggests you court that player and play the tilted field. That is exactly what Wall Street did – rationally. The only short term gains here were election cycles.
I would also lump into this category movies like The Matrix, which don't so much place me in another world with their story and characters, as with the technology they use to tell build the world. These films are more about world building than they are about storytelling. Avatar is a tremendous example of this - certainly the best since The Matrix, and maybe the best since The Wizard of Oz made color the technical standard of the future. Not only was the 3D experience completely immersive, but it seamlessly integrated the computer world with the cellulite.
There were a number of times when I truly felt like I was inside the world. There were the exquisite scenes where the main character was learning to fly, and the battle that included floating mountains in mist, aircraft and helicopters, and flying pterosaurs. But there was also a quality of depth to the faces during conversations which placed you right in the circle. Where past 3D films looked something like a diorama, with 2D cutouts at different 3D depths, there was a gradualism in the Avatar 3D world.
An then there was the story. Because you can make a great movie with only effects, but you cannot make a truly groundbreaking one without a story. On the one hand, I enjoyed the love story quite a bit (but then I'm a sap). It was felt natural, and I've got to say 'em are some hot aliens. I found the rest of the story to be vapid and empty, though. It retreaded ground already trod to death, and it did so with no shades of gray or ballsy plot twists or even depth of character. 3D movie, 1D characters was something I saw a lot on the internet - and it is true. The story itself is the same old Silent Spring re-telling about how humans of the future, and by metaphor the present, are ruled by large corporations which are driven solely by a profit motive that inexorably leads to the destruction of the environment and aboriginal cultures with the help of corrupt military mercenaries.
The best part about the movie’s “pantheism” or “gaiaism” or whatever is that it unwittingly (I presume) blows a fatal hole in its own metaphor. Obviously, if the biomass of Earth were sentient and communicative as the biomass on Pandora was, one would have to approach things like, say, mining and forestry, quite differently. In the context of the movie’s world, the response of the main characters is quite ethical and reasonable. Although, on the other hand, the response of the businesspeople is clearly allegorical and lacks any depth whatsoever… Giovanni Ribisi’s momentary pauses for effect notwithstanding, of course.
The problem for the holier than thou set is that it bears no parallel to reality. If you are not dealing with sentient plant life, then it makes perfect sense to cut down the tree. Likewise, it makes perfect sense to replant the tree and foster a diverse forest ecosystem around it once you are done with the area, provided of course you own the property and hope to continue to be able to make money off it for generations. And if you are mining, it makes a great deal of sense to reclaim the land when the mine closes, so you don’t get a bad rep for you company and therefore end up shut out of other rich resources by the people who live nearby. The fatal conceit is the idea that reality must support your faith, that ideally science must find a justification for your beliefs, when in fact the converse is true.
Likewise for the Na’Vi. We hear things like “We don’t have anything they want.” A perfectly true statement for a people who apparently never get sick thanks to the protection of their planetary organism and live quite fantastical lives flying on their neurologically-joined pets and not-breaking their “natural carbon fiber reinforced” bones and and living harmoniously within just heirarchical tribal structures and transferring their consciousness intact to the biomass organism when they do die. And if that was representative of the lives of pre-technical humans or, say, modern Islamic societies, then it would be a valid metaphor to the intrusions of the Western world into our developing neighbors.
But it’s not. The fact is, poor people do live brutal lives, both at the hands of nature and at the hands of their neighbors. They do want medicine, education, surplus food, and cell phones; regardless of whether they particularly like the people they are getting them from. And they are led by demagogues who twist their words, feed them false information, and promise things that they have no intention of delivering.It did not need to be this way. Star Wars was groundbreaking both for its technology and its story, as was The Wizard of Oz, and 2001: A Space Odyssey. If the stakeholders had had some balls, there were a lot of places to take the plot besides a dramatic re-telling of Silent Spring with some Little Bighorn mixed in. But in the end, Cameron et al. went the safe route. The produced a technical masterpiece on the bare minimum story, and it is still a great movie.