Stoopid Stuff

Stoopid Economic Analysis

There are a vast number of subjects about which I am ignorant. My ignorance could fill volumes, libraries, indeed, the number of things I don't know cannot even be measured. They are, as articulated by the eloquently pusillanimous Don Rumsfeld, Known Unknowns and Unknown Unknowns.

For me, Economics falls into the known unknown category. Honestly, there is a part of me that wants to question whether there is even a viable science in all of this random sloshing about of money and the greed and fear that drives it. It's Von Clausewitz's "fog of war" without a clearly defined goal beyond "more, more, more". Kind of as if you let Billy Idol write your corporate mission statement.

But after a few months of this meltdown and the obviously venal motives behind not just the suggested solutions, but behind the solution SUGGESTERS, a couple things have begun to become clear.

First, the nature of "financial markets". It's pretty much inarguable at this point that "financial markets" are a parasite that has found a way to live on the blood and health of the host, the International Economy. The International Economy is based on things. Things you can make, things you can sell, things you can send down a fiber optic cable that people might want to buy.

In it's most simplified terms, it works like this. Companies pay people to develop, bring to market and deliver stuff. People earn a living producing the stuff companies sell. They take that money and buy stuff other companies make and sell. It works because there is always new STUFF, and there is always people with money to buy it.

This depends on a lot of fragile, finely balanced factors, but none more important than the requirement that the parasite, the financial markets, take their sustenance from the host, the International Economy, but that they leave enough lifeblood in the host that it can continue to grow and thrive. Now, nothing compels this parasite to behave with moderation and prevents it from eating the host, so we have "regulations", rules and laws and modes of conduct that prevents the greedy parasites from draining more from the host than it can afford to lose and still remain viable.

Post Reagan, in the eighties and nineties, the parasite became much bigger. It began to develop and use political clout, particularly, of course, in the nature of cash, to begin to redefine the rules to allow it to grow larger. A particular political ideology began to be dominant. In this ideology, "The Market" was all knowing, all seeing, and self correcting. There was no long term or systemic problem in "The Market", because "The Market" would correct these problems more quickly and more efficiently than any political entity ever could.

So the Parasite became larger, and it sucked more resources, more value, out of the system. And it began to find itself in a dominant position that allowed it to actually MAKE the rules. Well, if you're a parasite, your job is to grow. Now sure, a carefully evolved parasite would have learned over the millennia to avoid taking more from the host than the host could provide and still stay healthy, but this was a young, powerful parasite that had no sense of it's own vulnerability. And it ate, and sucked and sought more power, and made more, riskier investments, and then it derived even riskier investments out of those investments, again and again, until the huge valuation of the parasite was significantly based on a dense, unregulated and completely impossible to truly understand pile of paper.

Now? Now, the host is sick. With all this worthless paper valued at ridiculous levels, nobody knows what institution is actually viable, and which is nothing more than a dead man walking. Hands out, they come to the very government they've been pouring money into for decades, and pronounce themselves "too big to fail". Suddenly, they find they have stolen too much wealth, stripped too much value out of the system they ultimately depend upon for their existence, and demand tax dollars to prevent them from suffering the costs of their own malfeasance.

I don't know. My government, including a new President I have a great deal of respect for, tells me we just don't have an option. And yet, and still, they hand out BILLIONS without any rules, without any questions, without any requirement that they be able to tell US, you and me, what the fuck they did with our money. I'll be honest, it makes me want to go to the pitchfork and torch closet and start dragging stuff out.

I guess there's really two things I don't know. Was it necessary, and can it work? We'll honestly never know the answer to the first question, but we're going to find out the answer to the second, whether we want to or not...

posted by mikey @ 5:50 PM