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Friday: Cassandras and Luddites

Cassandra harshes the Trojans mellow

Cassandra harshes the Trojan's mellow

PUMAs are the latest incarnation of Cassandra.  We have been since May 31, 2008 when the way in which the Democratic party achieved “unity” was to not count more than half of their own party members who did not vote for their pre-chosen candidate.  It was done in such a blatantly obvious way that there was no other way to interpret it other than that a giant fraud had been perpetrated on the primary voters.  Only in America in 2008 was it possible for a voter in Idaho to completely invalidate the voter in NJ.

We said nothing good ever grows from a bad seed.  It hasn’t even been 100 days since  Obama took office that he has proven himself to be the most inexperienced, Republican asskissing, shmoozer who ever found something uniquely charming about the unitary executive theory.  And now he is taking the economy to the brink of disaster and gently pushing it over with the help of the well-heeled shoes of Tim Geithner and Larry Summers because, heaven forbid we impose any limits on the finance industry or cause their shareholders to lose sleep over their investments.

Indeed, it is possible that their actions are making matters worse.  I just have to say here that it’s one thing if you have never seen anything like the situation you face before.  You can perhaps be forgiven for initially trying stupid things and making iterative corrections.  That’s the nature of scientific inquiry and it’s perfectly acceptable to make mistakes in a lab as long as you wear your goggles against blinding shards of glass that result when your experiment blows up.  It’s quite another thing to have witnessed other people make similar mistakes and then decide that repeating their actions makes sense.  “Oooo, Robert Mugabe brought Zimbawbwe to its knees with rampant corruption and idiotic policies in just a decade.  Cool!  Let ME try it!  How does this oligarchy thingy work?”

Simon Johnson at Baseline Scenario tells us how propping up insolvent banks is making failure more likely and avoiding the glass spewing explosion more difficult:

The latest credit default spreads data for the largest banks show a speculative run underway.  As the system stabilizes, it becomes more plausible that a single big bank will fail or be rescued in a way that involves large losses for creditors.  This would like trigger further speculative attacks on other banks, much as the shorting of countries’ obligations spread from Thailand to Indonesia/Malaysia and then to Korea in fall 1997.

The government’s own policies are facilitating these attacks, because as the Fed and Treasury make progress towards easing credit conditions, this makes it easier and cheaper for large hedge funds and others to take large short positions.  And keep in mind the underlying loss of confidence is self-fulfilling: as you lose confidence, you want to go short, and selling the credit causes further loss of confidence – and banks are forced out of business.

The government’s entirely reasonable and long overdue request for a resolution authority will set up runs on that authority.  If the authority is not granted, the runs will be on the government’s low and failing ability to save banks – given that the trust of Congress has been lost and no more cash for bailouts is likely forthcoming (presumably until there are large further shock waves or until Goldman Sachs itself is on the line.)

The continuing pressure on banks has nothing to do with populism and everything to do with the internal contradictions of the house of cards they built.  Now they will scramble to limit short selling or find other emergency measures that will protect their credit.  Such partial fixes would do nothing to stop the underlying deterioration of their credit; think about how countries facing currency attacks throw up futile defenses, try to change the rules, and squander their reserves on the way down.

Sounds pretty bad, doesn’t it?  Not really surprising though when you think about who helped Obama get elected in the first place.  But if you object, if you predict catastrophe based on research and try to persuade people to avoid it, you are a Luddite, or merely a woman, like Brooksley Born, whose opinions are intrinsically less worthy than a man’s.   I swear there is a book to be written about women who were dismissed or ignored by the likes of Larry Summers, Tim Geithner, Robert Rubin and Alan Greenspan.  Sexism may have cost this country a decade or more in growth and millions of people their retirements.   Think about all the women who tried to prevent catastrophe in the past but were roundly ignored: “Ummm, I wouldn’t let that big wooden horse in the gates if I were you.”  “There’s a suspicious character hanging around a flight school in Minnesota.”  “If I were president, I might get out in front of the mortgage foreclosures so that the money keeps flowing to the banks.”  (God, what a loss)  “Unregulated derivatives and ‘swaps’ are a really bad idea that will allow out of control gambling with our nation’s finances.”

Ahhhh, what does *she* know?  But I digress.

The problem remains that the people who have the power to fix the problem are the ones who do not listen to the ones who see the future.  They stand in the way and guard the establishment’s old machinery that exists because they profit from it.

They have a lot of nerve calling us Luddites.


Podcast of the Day: Wisconsin Public Radio has a new podcast called To The Best of Our Knowledge.  Very progressive.  The latest episode is on Depression Stories.  It’s not as grim as you think.  The first segment is a conversation with a Quaker author Parker Palmer, who has a unique take on depression.  He says it’s nature’s way of telling you that you’ve hit bottom and there’s nowhere to go but up.  The other segments feature, Depression stories, thrift and a brief biography Frances Perkins, who along with Harold Ickes Sr. was one of the visionaries of The New Deal.  They finish up with a Woodie Guthrie song called Madonna on the Curb.  Highly recommended.  You won’t feel alone in this Depression.

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56 Responses

  1. Cassandra’s curse was being able to see the future but not being believed.

    She probably the first person to say “I told you so”

    But the people never apologized for not believing her. They just got even angier at her.

    Some things never change.

    • “Cassandra cried and curs’d th’ unhappy hour; / Foretold our fate; but, by the god’s decree, / All heard, and none believ’d the prophecy.”

      • it would be an interesting study to contrast perceptions of Tiresias and other male visionaries/prophets with those of Cassandra.

  2. had we elected Hillay, had we listened to Born….
    What a difference. Can you all just consider refusing to play in the male power structure anymore?
    We have all that we need to turn around this country and it means voting for women so that half the talent in this country ceases to be ignored.
    The only power we have is our vote. Trying to convince men to change what they are doing is a waste of time.

    • ‘The only power we have is our vote’

      Well, I used to think that.

      • we refused to use that vote in 2008. Most democratic women flocked to the polls and voted for the guy who cheated in the primaries, because like a lot of sheep they were lulled by the chants of “choice choice choice” … and issue that democratic males use to keep us in line just like republican males us it to keep republican women in line.
        Our vote does count, it IS all we have, the problem is that we are not courageous with it.

      • Floridians stopped believing in 2000.

      • Me too tucsonlynn, I guess we had an awakening last year. 😦

      • hi, checking if mac works here for wife.

  3. The male elites assure any serious women contenders are smeared but what depresses the hell out of me is many times they use women to do it.
    Good article at BAR (Black Agenda Report) on corporate media pushing Obama’s “success” .

  4. This is why Hillary had such a difficult time raising money for her candidacy. Obama had already pledged his soul to the Wall Street sharks. It’s payback time now! Isn’t it also quid pro quo?

  5. RD, your post coupled with the quest to “define” PUMA inspire me to keep flying in the face of bad behavior. If all I can be is an irritant, let it be!

    The podcast looks great. Thanks.

  6. If Dakinikat is in the house, can you please explain to us economic amateurs why they keep talking about signs of recovery? The article does mention the need for new inventory, and the stimulus money, but those are not evidence of fundamental recovery, but just infusions of cash that are temporary and limited–correct?

    Economists See a Rebound in September

    Economists in the latest Wall Street Journal forecasting survey expect the recession to end in September, though most say it won’t be until the second half of 2010 that the economy recovers enough to bring down unemployment.

    Meanwhile, 72% of respondents say the Treasury’s plan to purchase toxic assets will help the economy.


    • From what I’ve been reading, it depends what how you define “recovery.” The stock market may rebound some, but that doesn’t mean that all of the systemic problems like unemployment, homelessness are going to go away. We are still going to have businesses failing, defaulting on their commercial property leases, etc. Pretty soon a lot of people are going to run out of unemployment benefits and then we’ll see a lot more defaults on mortgages and credit cards.

      Willem Buiter at Financial Times:

      As regards the financial sector, we are not too far – probably less than a year – from the beginning of the end. The impact of the collapse of real economic activity and of the associated dramatic increase in defaults and insolvencies by non-financial enterprises and households on the loan book of what is left of the banking sector will begin to show up in the banks’ financial reports at the end of the summer and in the autumn. By the end of the year – early 2010 at the latest – we will know which banks will survive and which ones are headed for the scrap heap. With the resolution of the current pervasive uncertainty about the true state of the banks’ balance sheets and about their off-balance-sheet exposures, normal financial intermediation will be able to resume later in 2010.

      Governments everywhere are doing the best they can to delay or prevent the lifting of the veil of uncertainty and disinformation that most banks have cast over their battered balance sheets. The banking establishment and the financial establishment representing the beneficial owners of the institutions exposed to the banks as unsecured creditors – pension funds, insurance companies, other banks, foreign investors including sovereign wealth funds – have captured the key governments, their central banks, their regulators, supervisors and accounting standard setters to a degree never seen before.

      I used to believe this state capture took the form of cognitive capture, rather than financial capture. I still believe this to be the case for many, perhaps even most of the policy makers and officials involved, but it is becoming increasingly hard to deny the possibility that the extraordinary reluctance of our governments to force the unsecured creditors (and any remaining non-government shareholders) of the zombie banks to absorb the losses made by these banks, may be due to rather more primal forms of state capture.

      • Exactly. As long as the decrease in GDP stabilizes and ‘general economic conditions’ improve, they will call the trough of the recession (the low point) which means that ANY upward movement will be considered a ‘recovery’.

        However, remember the slope doesn’t need to be a straight up like a V or a U in order for it to be called a recovery, it could crawl along the trough, like a L for awhile and still be considered a recovery because it’s no longer falling. We’ve seen the trough. That’s those damnable second and third derivatives that describe how ‘fast things are going up”. Every thing I’ve seen is that we’re in for a long period of bottom crawling.

        Also, remember the lesson of the average. Average implies that half the time things will be above, half the time things will be below the average. Natural, random variation will cause serious to go up and down around the average. It takes a persistent trend upward to say that it’s not just variation around an average, it’s an upward movement of the average. I think some of these guys are mistaking variation around an average for an upward trend. I wouldn’t want to be in the forecasting business at the moment.

        Remember, those little blasts of rebates in the summer caused many of the series to show a false recovery in August. We ended up in September with a terrible economic event. This was even with some of the spending variables looking good and caused the NBER to call the recession actually back a year, even though GDP was still positive.

        The root of this problem is the systemic problems in the banking system. We’re vulnerable until they correct that.

    • Of course the DOW is rebounding – why wouldn’t it be? Mark-to-market is gone, and we are allowing them to value their own assets!

      Look at it this way – let’s suppose that the value of your house had drastically dropped, so that your net worth took a huge hit. But then, in a change of rules, you were suddenly allowed to set the appraisal on your own house. That’s right, you would be allowed to arbitrarily decide what your house was worth, regardless of what you could actually get for it if you sold today.

      What would happen to your “balance sheet”, to your personal net worth? Why, it would suddenly be looking rosy! You’d be waaaay in the black! “Poof!”, problem solved, your net worth goes back up!

      That’s pretty much what they’ve done. They’ve given the banks the tools to artificially re-inflate the values of their assets, without having to address the underlying problem.

      Those in the know are making money on this while the sun shines, and the market is booming. They also know (but aren’t telling the rest of us) that this is just as temporary and unstable as where we were at a year ago – but who cares, if they can make a buck today and then short it all and make another killing when the next (and worse) crash hits?

  7. LOL, I call my mother a Luddite because after slamming Obama and the Republicans, she morphs into an echo of Sean Hannity, basically DEFENDING their past actions!!

    Listen, neither party gives a damn about us peons…that’s what has become clear. Just to prove it…in the middle of this huge meltdown, what do we see? The NEXT WEDGE ISSUE being developed and it’s a doozy….You will hear it constantly coming from the right. So, here’s another thing that Casandras can watch unfold…

    Here It Comes…the (Not so New) NEW Republican Wedge Issue!!!!!


  8. This will resonate with the Christian Right… Spare the Rod – Spoil The Child… and all that, tied up with an extra-territorial entity intruding into a previously demarcated space, that is, the sovereignty of the USA.

  9. Just a few interesting tidbits on the AM news. Japan exports down by 50% and German imports down by 25% this year. Also increased FDIC rates are causing banks who did not deal in risky loans significant problems. Souns like signs of improvement to me?

  10. Thank you for posting the link to Wisconsin Public Radio, RD.

    Very nice-am listening now.

  11. This is sort of OT, but not — check out this BAR article about polls: http://www.blackagendareport.com/?q=content/obama-brand-soars-gop-plummets-american-illusory-exchange-amillex

  12. BB, thanks for the link

    Willem Buiter at Financial Times:

    As regards the financial sector, we are not too far – probably less than a year – from the beginning of the end….

    The question for awhile has been : Does the Upper Crust ( for want of a better term) just want to maintain a certain level of looting , or does it want to crash the system and cash out? I think it’s safe to say now, they want to crash the system, cash out and that desire has informed every decision for years ….The point is, they aren’t making ” mistakes” , they aren’t making “bone head” moves. They want exactly what we have now and they want to crash it futher. IMO.

  13. Another song to help us through this Depression:

    Stephen Foster’s “Hard Times” performed by Irish band De Dannan ( with Mary Black, Tommy Fleming, etc. )

  14. Just a few thoughts on a brilliant post today.

    The failure to listen to women and the other honorary Cassandras among us; the increasing atrocities against women worldwide; and the sex ist abuse by male leaders in American government, media, and certain religious sects everywhere clearly have put our world in peril.

    Meanwhile, thinking about the debates on Puma priorities and how much or whether to formalize them — I am coming to believe that there is no greater umbrella priority, no greater movement needed — for the sake of humanity — than to focus on women’s rights as human rights (as did a certain First Lady). That means not backing off of thinking big (as our current president seems to be doing after he claimed his own rights and protested loudly about rac ism).. That means prioritizing equality for all humans from birth. That means not backing down demurely and stepping aside for other issues (that may also be our issues).

    Helping to save half the world’s population will, as we know — trite as it sounds — save families (and that also means saving persons who currently are not listening). Women –along with the men who are wise thinkers – then would, as they have done historically, address the other matters that plague us, such as voting irregularities, election reform (including that of “private” primaries). Women already have led many great movements –even if it was sometimes behind the scenes – from child care, labor reforms, education, care for the elderly, and abolition of slavery. Our present economic collapse desperately calls for their leadership. There far too much daily suffering among men and women who have been laid off from work and who also can’t get proper health care.

    Brute force may have its place in society at times – like they say when politics fails, we’re forced to go to war – but now it is being used symbolically against women by too many male leaders.

    For the sake of “mankind,” we need to continue promoting a powerful movement on behalf of women who often are oppressed daily in good and bad times. Maybe that mission is too idealistic, too abstract, too big to address, too icky, too wimpy, too unimportant, too selfish, too foolish, too grounded in history, but what is more critical in today’s world as enormous forces — religions, cultures, governments, and opportunists — simultaneously attack the core of their families and gleefully torture and suppress women?

    Real women (and girls) actually feel that pain from flogging and ra ping – physical or mental.

    I think the answer for Pumas is staring us in the face.
    We have a common link for addressing many ills.

  15. Being a Luddite might not be a bad idea circa 2009.

    I read this yesterday off the BBC. What RD doesn’t nail — they do.
    They really do.


  16. It appears that the human body develops a tolerance to Kool-aid.

    If you lurk around the Obot blogs you can see more and more of them expressing doubts and raising questions about TOTUS – their lying eyes are starting to weaken their faith.

    This is only in Obot to Obot discussions of course.

  17. Great post RD! I dugg it! and passed it on via Facebook!

  18. Watch out, France and Co, there is a new surrender monkey on the block and, over the next four years, he will spectacularly sell out the interests of the West with every kind of liberal-delusionist initiative on nuclear disarmament and sitting down to negotiate with any power freak who wants to buy time to get a good ICBM fix on San Francisco, or wherever. If you thought the world was a tad unsafe with Dubya around, just wait until President Pantywaist gets into his stride.


    • Some witty commentary there — I especially like this part about Obama’s scolding of N Korea:

      “Words must mean something.” (Why, Barack? They never did before, for you – as a cursory glance at your many speeches will show.)

    • I was rather enjoying Warner until he brought up the lie of missile defense, which he seems to support; I guess Warner actually believes in smart rocks and frickin’ laser beam cannons. :mrgreen:

    • they’re trying to protect the damned zombies again. all that does is put the reputation of the well-run banks in question

  19. From the last paragraph of the Cassandra wiki entry:

    The Cassandra Effect –

    The Cassandra effect is when one believes they know the future happening of a catastrophic event, having already seen it in some way, or even experienced it first hand. However the person knows there is nothing that can be done to stop the event from happening, and that nobody will believe them if they try to tell others.

    For example, in finance, the more you warn your colleagues about the tall risks—the rare but devastating events that can bring the bank down—the more they roll their eyes, give a yawn and change the subject. This eventually leads to self-censorship.[12]

  20. Interesting article –
    Obama and “Buyer’s Remorse” by Cynthia McKinney


  21. We have to deal with reality. The reality is that Democrats support Obama at the 80% + level. Those numbers are reversed for Republicans—about 20 for/ 80 against. Independents are dropping in their support but they still show a majority for Obama (59%). Unfortunately, there are just far more Dems than Repubs. And again unfortunately the Repubs have no leader or even someone who looks like he/she might emerge as a leader. Palin has been hopelessly trashed. Jindal and others just have that southern conservative social agenda that won’t appeal to very many people in the center and slightly left of center. Even Guiliani, who at least has a quick mind and ability to put sentences together, is too personally tainted. Jeb Bush who probably would have been a much better pres than his brother is so tarred with his brother’s black brush that he has no hope even though I see Hannity trotted him out the other night to hold forth on education. Nor do we have anyone we could really launch as a third party candidate visible on the horizon at this moment. The Republicans are lost in a fog of righteousness. McKinney would have no appeal to the Repubs who are howling in the wind. The Repubs profoundly need a Teddy Roosevelt or any one of several east coast Repubs of the past. The Repubs on the east coast and here on the west coast are all but dead.

    So there is great opportunity for someone. Maybe the Pumas can best serve the future by hunting out new leadership. When you think about people on the scene right now who draw your attention and respect, who are they? Bair, Krugman, Warren, maybe even Birch Bayh. By the way I am a hoosier and I do like Bayh; that family has a good political history. I attended IU with his father, Birch Bayh. Hillary would be the ideal but we know that Hillary is not going to probably break with O. What about Chelsea?

    As bleak as things are right now, I just keep telling myself that time is on our side. Obama is governing hard to the left on social and cultural issues but hard to the right on executive power. His national security is a fog but the defense cutbacks are going to bring another big blow to unemployment as the aerospace companies east and west begin layoffs. This stew is bubbling along but it hasn’t reached anywhere near the temperature needed to break glass.

  22. His world apology tour has worn me out.
    He looks so stoned lately.
    I wonder where he’ll go to church Sunday? He SAID he was a christian…but he’s also commonly known as a liar.

  23. His world tour reminds me so much of that sequence in “Evita” about the Rainbow Tour; Evita— filled with admiration and adoration. I think of that song about being adored. At least in that scenario there was a bitter sweet heroine aura to it. In his case it is just utterly crass and tacky self promotion—which all of we PUMA Cassandras predicted.

    I was reading the UK Telegraph about Obama the Pantywaist President—the surrender monkey. Now that surrender monkey is going to start a war and a half. I did not know that Obama had declined to visit the beaches of Normandy and pay respects to the dead—out of concern for offending the Germans????? OMG

    And he is leaving that brave Capt. to hang by a thread on a pirate life raft?

    Well, this may be his Carter hostage moment. Carter was done in by what I think was probably his fatally misguided kindness. Obama will be done in by his stupidity. I want to see how he blames this all on Bushies.

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