Garton Ash: [..]We must make the social market economy credible again as the central solution for the middle class.In fact, it was Albert Camus who spoke earlier (cca. 1951) about work's lacking meaning. Making a living has become comparatively much easier than ever before. But we lost something in the process, which, despite Mr. Garton Ash prescription, won't be easy to come by.
SPIEGEL: How?
Garton Ash: There are two major domestic policy challenges for the European Union. First: Creating meaningful work for the majority of society. And second: the integration of fellow citizens of non-European descent.
on the nature of work
Timothy Garton Ash, in a recent Der Spiegel interview implicitly talks about the nature of work in our society.
It still can go anywhere
As Secretaries Clinton and Geithner went to China, I wondered if and how long before we had a roadmap for the reunification of Taiwan. Such roadmap would be a prerequisite of Chimerica.
However, some important voices consider the notion of a duopoly between China and America (Chimerica) a mirage and suggest that a way out would be for the US and other countries to speak to China with one voice. Moreover, from Der Spiegel, we learn that:
One can only ask, where is multilateralism when you need it? Bush, the president about whom the Economist wrote that there had been no multilateral agreement to his liking, and his neocon apparatus have a lot to answer for this. The most that camp could come up with was the group of democracies, through the writings of Robert Kagan, during John McCain's electoral campaign.
The challenge now is for Obama to convince the US allies, and the world at large, that there is in the self interest of everyone to continue to support Pax Americana, and the US dollar. In other words, it's worth paying protection tax, as it were. However, the challenge then becomes how to frame LARGE the loses of leaving the US shrinking umbrella when countries and peoples suffer what they may soon imagine as a deluge.
And, for whatever reason, I now feel compelled to make the following observation: There is no tax cut, or at least not as it's been defined by the conservative camp. It's only a taxation position along a continuum defined between front-loading and back-loading.
However, some important voices consider the notion of a duopoly between China and America (Chimerica) a mirage and suggest that a way out would be for the US and other countries to speak to China with one voice. Moreover, from Der Spiegel, we learn that:
Last month, Beijing completed the last of a series of so-called currency swaps -- providing yuan to other central banks for use in trade with China -- with Argentina, Hong Kong, Indonesia, Malaysia, South Korea, and others. These arrangements theoretically removed any need for these trading partners to use the dollar as an intermediary currency in dealing with China. Last week, Beijing denominated a bilateral trade deal with Brazil in the two countries' currencies, rather than in dollars; the value of the agreement was not specified. The value of the other agreements comes to $95 billion (€68 billion). By way of comparison, US-Chinese trade amounted to $333 billion (€238 billion) in 2008.So China is using bilateralism, not unlike the US has since the end of the Cold War, to grow its status. Moreover, China is coopting US friends as well into her bilateralism.
One can only ask, where is multilateralism when you need it? Bush, the president about whom the Economist wrote that there had been no multilateral agreement to his liking, and his neocon apparatus have a lot to answer for this. The most that camp could come up with was the group of democracies, through the writings of Robert Kagan, during John McCain's electoral campaign.
The challenge now is for Obama to convince the US allies, and the world at large, that there is in the self interest of everyone to continue to support Pax Americana, and the US dollar. In other words, it's worth paying protection tax, as it were. However, the challenge then becomes how to frame LARGE the loses of leaving the US shrinking umbrella when countries and peoples suffer what they may soon imagine as a deluge.
And, for whatever reason, I now feel compelled to make the following observation: There is no tax cut, or at least not as it's been defined by the conservative camp. It's only a taxation position along a continuum defined between front-loading and back-loading.
Ten principles for a Black Swan-proof world
Published: Financial Times, April 7 2009
Nassim Nicholas Taleb
1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.
2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.
3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.
4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks. Odds are he would cut every corner on safety to show “profits” while claiming to be “conservative”. Bonuses do not accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.
5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage: the leverage of efficiency. Such systems survive thanks to slack and redundancy; adding debt produces wild and dangerous gyrations and leaves no room for error. Capitalism cannot avoid fads and bubbles: equity bubbles (as in 2000) have proved to be mild; debt bubbles are vicious.
6. Do not give children sticks of dynamite, even if they come with a warning . Complex derivatives need to be banned because nobody understands them and few are rational enough to know it. Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.
7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”. Cascading rumours are a product of complex systems. Governments cannot stop the rumours. Simply, we need to be in a position to shrug off rumours, be robust in the face of them.
8. Do not give an addict more drugs if he has withdrawal pains. Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. The debt crisis is not a temporary problem, it is a structural one. We need rehab.
9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement. Economic life should be definancialised. We should learn not to use markets as storehouses of value: they do not harbour the certainties that normal citizens require. Citizens should experience anxiety about their own businesses (which they control), not their investments (which they do not control).
10. Make an omelette with the broken eggs. Finally, this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties.
Then we will see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news.
In other words, a place more resistant to black swans.
Nassim Nicholas Taleb
The deregulation before deregulation
We are where we are, don't like it so some soul searching is in order. Thomas Geoghegan, a Chicago (labor) lawyer, takes a historical detour to search for the root causes of today's situation beyond the deregulation of the last decade or so. In a recent Harper's article “Infinite Debt: How Unlimited Interest Rates Destroyed the Economy,” Geoghehan is looking at:
Following is a Democracy Now! interview where the main points in the article and suggestions for the future are provided:
- Interest rates deregulation--worth mentioning is that both Adams Smith and JM Keynes were in favor of capping interest rates, for otherwise, in addition to hurting the masses, capital flees from production to banking due to higher rates of return;
- Weakening of labor unions, which in turn led to lower negotiating power for skilled labor--as the author puts it, the side effect was that union cards were replaced by credit cards;
- The ability of corporations to eliminate contractual employee-liabilities (read pensions and health-care obligations) through Chapter 11 reorganization.
Following is a Democracy Now! interview where the main points in the article and suggestions for the future are provided:
Obama - Gorbachev
Due either to the vagaries of the body-politik in Washington DC, or to his own temperament and biases, Obama is taking the Japanese way out of the current problems--read, long.
On the other hand, at times, it's hard to resist a growing sense of déjà vu: Obama as the Financial Capitalism's Gorbachev.
Click here to read what the LinkedIn professionals think of this subject.
(Photo Source: President Barack Obama drops by VP Joe Biden's meeting with former Soviet Union President Mikhail Gorbachev in the Vice President's Office, West Wing 3/20/09. Official White House Photo by Pete Souza)
Home to Roost
or the banker as chicken
The chickens
are circling and
blotting out the
day. The sun is
bright, but the
chickens are in
the way. Yes,
the sky is dark
with chickens,
dense with them.
They turn and
then they turn
again. These
are the chickens
you let loose
one at a time
and small—
various breeds.
Now they have
come home
to roost—all
the same kind
at the same speed.
blotting out the
day. The sun is
bright, but the
chickens are in
the way. Yes,
the sky is dark
with chickens,
dense with them.
They turn and
then they turn
again. These
are the chickens
you let loose
one at a time
and small—
various breeds.
Now they have
come home
to roost—all
the same kind
at the same speed.
The following YouTube Kay Ryan insert illustrates how interestingly beautiful life can turn amidst language commons.
Subscribe to:
Posts (Atom)
Posts
