Terms like “securitisation”, “derivatives”, “longitudinal diversification” and “dynamic hedging” would make most of our eyes glaze over, I suspect. Yet all this arcana is now having an impact on us – vie the subprime mortgage crisis and the shock waves it’s set off in the world economy. There are at least two factors which mitigate against discussion and examination of causes and solutions – the arcane nature of the math and language used by the finance wonks, and the reactive press coverage – attuned more to reporting on what pollies and regulators are saying or doing than assessing causes and debating the way forward. So I’d thoroughly recommend taking the time to read author and sociologist Robin Blackburn’s article The Subprime Crisis. It took me about half an hour to read, but I think it was time well spent, as Blackburn takes great care to demystify the nature and history of the crisis, and thus provides a basis for thinking about its implications which is far better than skimming spin laden or impenetrably written articles.
In what follows I interpret the credit crunch as a crisis of financialization—otherwise put, as a crisis of that venturesome ‘new world’ of leverage, deregulation and ‘financial innovation’ which Alan Greenspan celebrates in his recent memoir. I show how the pursuit of a market in almost everything led to a banker’s nightmare in which key assets could not be valued. I urge that attention be paid to the ideas of Fischer Black, the improbable inventor of structured finance, who warned against ‘loading up on risk’ when declining to become a founder member of Long Term Capital Management. I evoke both the New Deal response to financial failure and the rise of consumer finance in the postwar world, before considering, in conclusion, what can be done today.
No doubt some will decry any intervention by a non-specialist, and others run in horror from the idea that banking and finance should be brought under social regulation, and should act to serve social purposes. Since they’re the people who contributed to this mess in the first place, and since this mess is causing social havoc, I don’t much care.
Kim,
I’m sorry, I have to disagree with just about everything here. To me, the whole sub-prime thing arose from a desire by lenders to profit from lending to people that had previously not been able to borrow through regular financial institutions before – the poorer members of our community. Perviously they had needed to rely on loan sharks, permanent renting, pawn brokers etc. so that the poor had to pay interest rates typically multiple of what the rich were paying. From a “social equity” point of view this sucked. Having the banks do it, at much closer rates to those that the richer people pay, is (IMHO) a much better outcome.
It also meant that, for many people, it was the first time they could borrow to fund a home acquisition, get a credit record etc.
The simple problem was that lenders ended up lending too much too cheaply as inexperience in the market (because the banks were not loan sharks) meant that they underpriced the riskiness of the lending. Once this happened, and with the US system of non-recourse lending* the sheer amounts lent meant there was a glut in the market for houses – dropping the price.
Sure, there is a hangover now, but the cheaper lending we all experienced during the last 10 years (IMHO) makes up for it. Let’s face it – what this meant was simple. The net result was that many poorer people in the US got to borrow for the first time, at rates far below what they had been paying before. This was (ultimately) paid for by bank shareholders. There has also been some more generalised pain in the process.
The long term position will be better as well (IMHO). Lenders know the pain and gains from lending to poorer people better now than they did before. They are unlikely to mis-price risk as badly again, meaning once things turn around they will lend again, but more cautiously.
Once you cut through all the BS of the instruments, this is the bare bones of what happened. No rocket science needed.
*In the US if a mortgage goes into collection – i.e. the bank forecloses – the bank only has rights over the house, not the borrower.
Andrew, Blackburn’s article suggests that the story is more complex than that. Your position appears to be similar to Greenspan’s – but the “social equity” argument collapses when those who were initiated into the credit and housing markets now find themselves without both. Note that he’s largely discussing the US experience, and the non-recourse lending point needs to be remembered. But it doesn’t appear to me that “socialism for bankers” has really driven home the costs of mispricing risk and elaborate forms of debt bundling. It seems more like the poor and the average working folks have been left to pick up the pieces. Nor am I as sanguine about self-correcting and regulating markets in this context. As Blackburn points out, the sorts of regulatory interventions which would be desirable would not have a major impact on the capacity of markets to do what they do best, but would be very beneficial for society generally.
(Remembering that he discusses both minor forms of regulatory response and a more ambitious Keynesian agenda).
Andrew Reynolds wrote:
Not really. The vast majority of those sub-prime mortgages were done at teaser rates – once they reset and the interest rate represented the risk properly, those lenders could no longer afford the repayments and started walking away. In a very fundamental sense, they were living in places they simply couldn’t afford.
The teaser rates (and the dodgy financial instruments that enabled them) caused a much bigger problem: major asset price inflation as the influx of customers drove the price of housing upwards. The asset inflation caused another problem: over investment in new building.
Once the teaser rates started unwinding, it was apparent that there was a glut of housing on the market and a rapidly shrinking number of customers. Basically, it was a genuine ponzi scheme.
Banks will always mis-price risk if they don’t understand the implications of the instruments they are trying to price. You only need to have a dig through the documents of LTCM to see just how self deceiving the magic of the Black-Scholes option pricing formula is when there are yearly profits to be made.
Crossed with David.
Kim,
They do find themselves without either – but then, without it, they would not have had the house anyway and would have been renting, at higher payments.
A full explanation of my position would probably take a lot more time than I have at the moment – but the complex financial instruments that everyone loves to blame were not the problem here. As with most examples of this sort of thing the lending simply got seperated from the risk assessment, so mistakes were made. The tradable nature of the instruments allowed that – not their complexity. Most of them were actually fairly simple by modern standards.
If you want me to go through why I believe this happened I am happy to, but to me it is at least partly down to the screwy way US regulations force the banks to do odd things in the normal course of business – but I do not have time for it now.
Don’t get me wrong, this should not have happened. Lending into this area is something the banks are not good at. People have been hurt during the learning process and that is unfortunate and in some cases tragic. I would strongly disagree witht he idea that this means we need more regulation, though. I would say it is good evidence we need less.
I covered some of the issues here a while back and I think my conclusions there still hold true.
.
David,
You are sounding like GMB there, throwing around the word “Ponzi” without, to me, understanding what it means. There was no element of a Ponzi here. Please actually understand the term before you use it again – wikipedia is a good enough reference.
I do not mean to be insulting, but a Ponzi scheme has nothing to do with this.
Andrew, I’m not sure from your comments if you’ve read the article I linked to. As I said, it’s not a quick read, but if you do get a chance I’d be interested to hear your view as Blackburn’s seems quite different to yours.
The increase costs in the financial markets aren’t about the direct risk of sub-prime mortgages, but rather about the uncertainly of the risk within the traded mortgage assets. The crisis was driven not because some people couldn’t make their repayments, but because investors that bought the debt were not aware of the associated risk factors. This then eroded the confidence investors had in the market drying up the liquid capital. It’s this lack of liquid capital that drove the risk of a ‘big crash’ and the lack of confidence in the financial market that will drive up the cost of credit in the medium term.
Andrew Reynolds wrote:
Andrew, these are the exactly the same thing: the instruments enabled the separation from risk assessment – you can’t untangle them.
Andrew Reynolds wrote:
Well, I’m flattered at being compared to GMB. Obviously you’ve never seen the “flipper” phenomenon on TV – paint the bathroom and increase the value of your home by $30,000 and sell it on to the next sucker as quickly as possible. Like all schemes of this nature, it collapsed. It was enabled via massive and easily manipulated market for barely assessed credit – not that different to Amway really, just a lot slower and without a catalog.
I should also add holders of US currency to that list, as the federal reserve bought a lot of the ‘bad debt’, presumably by printing up more money.
David,
Flip schemes are not Ponzis, no more than this issue was. Price increases can happen for any number of reasons – and none of them are related to Ponzi schemes.
On the instruments – it was not any complexity that was the issue, nor was it the ability to transfer risk. It was simply that the risk was not priced correctly.
.
Kim,
I have skimmed the article – and (IMHO) it is standard boilerplate stuff by a person who has academically studied the lending market but does not understand it. This quote, in particular, I object to:
IMHO the ignorance of the way that regulation works embedded within that is almost breathtaking. One of the root causes of the problem (again, IMHO) is that banks were stuck with a (excuse the strong language) bloody stupid, risk insensitive regulatory driven method of calculating risk under Basel I. The Basel II methodology, while it has its faults, is much, much better and if it had been in place in the US this would have been much less bad, if it had happened at all. The risk systems under Basel II would have gone a long way to forcing correct pricing. Striking them down would be a step towards ensuring this happens again, not stopping it.
Andrew Reynolds wrote:
…but the Wikipedia article you recommended says:
Pretty much an exact description of house flipping I would reckon, without a central organising authority.
J. M. Keynes’ view of the long term is well enough known.
It is perhaps true that anything that doesn’t kill us makes us stronger.
The same is true of the Great Depression. The world learned much about financial stability, which provided more than half a century of relatively crisis-free financial management, until Greenspan and Clinton knocked many of the chocks out from under that edifice of stability.
However, these missteps cause what economists call externalities. It is impossible to isolate financial causes from social, political, and military results.
While in future financiers may be able to meet at the club and swap old war stories about the exciting times when the LIBOR rose to 8% and they will congratulate themselves on keeping their nerve when all around them sere inclined to panic, still small issues like the rise of fascism, the collapse of world markets, the rise of protectionism accompanied the last major financial crisis. Lives were blighted. Millions died. Revolution roiled the world.
These items tend not to be mentioned on banks’ balance sheets.
Andrew I agree with you to some extent but feel that you are damaging your argument by being so unequivocal in your assertion that “the complex financial instruments that everyone loves to blame were not the problem here”.
It has been documented in the press that UBS were giving presentations up until recently whereby they demonstrated via Powerpoint how they could splice up a $100,000 mortgage into $80million of securities. Surely this is an extreme and unrealistic example of the way in which CDO’s work but the fact of the matter is that this practice has been occurring albeit not to such a gross extent. The fact that they can be so artfully spliced up has contributed to the fear. Inter-bank lending has been in crisis due to this.
I don’t see how you can argue with the fact that these products were inherently defective. Securities which were given AAA ratings were suddenly written down to in some cases 10% of their face value. Clearly the inbuilt credit protection mechanisms such as tranching failed to work.
Further, the products are so complex that it seems impossible to value them. All well and good to mark-to-market but when the models have been proven to be so thoroughly defective this has proven to be impossible.
Also, your argument rests on the fact that the issue is merely one of underlying credit quality. However, the whole securitisation market in the US has dried up including for full-documentation, prime loans. Likewise, the Australian securitisation market is dead despite slightly heightened but still low arrears rate. This cannot be solely attributed to the Australian market’s reliance on American funding markets as previously lots of securitisations were denominated in AUD with plenty of Australian investors. It comes down to people being scared of the products they are investing in, due to their complexity and their observance of what has happened in the US. Surely the fact that the ratings agencies got their assessments so incredibly wrong is testament to this.
That being said I don’t feel that securitisation itself is the problem, merely the fact that it has been taken to such perverse levels with the development of all these exotic derivatives. The fact that most of the assets were held off balance sheet also meant that barely anyone was able to comprehensively assess a company’s exposure, even seeming in some instances its CFO and CEO.
However, I do agree with you that the trigger and underlying cause is that of dodgy credit practices but feel that it is undeniable that this was exacerbated by the financial products in play. I also agree that we should not go overboard with regulation. The main focus should be at regulating the mortgage broker and credit assessment levels. The investment banks are not victims here and only have themselves to blame for their massive losses.
By the way, I am yet to read Robin’s article.
David,
The profit there is from the sale of a home after taking on the market risk over a period – not out of simply incoming funds. The home could equally have gone down in value, as many in the US have. Risk is taken on, profit is earned. No Ponzi there.
.
Katz,
That stability was bought at a huge price – part of which we are paying now. Fortunately regulators now are a bit more informed (and markets more flexible) than they were in the late 1920s. This limits both the economic costs and the potential for battle damage. Perhaps if markets had been allowed to clear and correct then we would not have had the war stories in the first place.
Andrew Reynolds wrote:
Not really. The period risk wasn’t priced correctly (see above: sweetheart and teaser loans, LIAR loans etc). There simply wasn’t enough money turning up in the form of mortgage repayments, enabled by the dodgy securities that underpinned it. Sure, there’s no single person to blame (i.e. it’s not quite a classic Ponzi) but I think it can be successfully argued that the companies re-packaging loans, in concert with fraudulent house valuations and overstated incomes, created a scheme that had all the attributes of a Ponzi. Just because the basis was an asset bubble doesn’t mean the underlying scheme wasn’t basically fraud. The victims turned out to be remarkably similar too – last in, first bankrupt. That massive democratization of lending you were lauding was a mirage.
David,
You forgot the Ninja loans – I will let you look that one up.
To correct your statement: “Not really. I believe, and using the wisdom of hindsight, the period risk wasn’t priced correctly.”
Some people believed that at the time, others did not. Some people made the correct call on future prices, others did not. Standard market operation – no fraud nor Ponzi there.
I should add that I was one of those who made the correct call on future prices, but that was purely my call.
To say that you can have a Ponzi scheme without a fraudster is simply wrong, David.
My contention, Andrew, is that fraud *was* involved – and that re-packaging of debt in the manner it was done constitutes fraud on a massive scale, by removing the ability to adequately price risk in a deliberate fashion, dressed up as exotic financial instruments. I suspect we will have to agree to disagree.
Here’s a link to give you some idea of where I’m coming from: Merrill Lynch Fraud
Do I detect some lurking Rooseveltophobia?
Need I remind you that Hitler was in office in Germany before Roosevelt was inaugurated. Therefore, FDR can’t be blamed for that externality.
You have absolutely no basis upon which to assert that the market would have corrected itself speedily enough to avoid the externalities of which we speak.
Indeed, the banking reforms of the Depression Era preceeded decades of stability? Post hoc, ergo propter hoc? Perhaps. But the repeal of Glass-Steagall in the US has allowed a raft of rash financial transactions which serve as the underlying causes of the present crisis.
David,
While there may have been a few instances of fraud in some transactions, there are elements of fraud (in that sense) in every market. Some of the smaller players that were originating these loans almost certainly knew that the borrowers could not pay the full rate.
I would strongly disagree it was systemic, as you seem to be implying. The participants in the market as a whole simply got their risk pricing wrong.
David,
I fail to see how that example of the sytematic fraud you were alleging. On Merril’s salesman sold one city some instruments that were probably inappropriate for their investment profile.
That does not even get close to, say, the Orange County issue or Gibson’s Greetings, much less an example of systemic fraud.
Interesting discussion and good post, Kim.
On his ABC news segment recently, Alan Kohler alluded to some recent research showing not just an increase in uncertainty, but increasing uncertainty about uncertainty itself (ie. increasing fluctuations in indicies of uncertainty) over the past decade or so. From a non-specialist perspective, this seems to be evidence that changes to the practices of financing are moving further away from the kind of rational self-healing processes that are supposedly intrinsic to the marketplace.
I don’t buy David’s account of fraud as the root of the problem. I think it’s more subtle insofar as the assumptions built into financial models can only be thought of a ‘representations’ in a very limited sense.
Don Mackenzie in a forthcoming edition of the LRB http://www.sps.ed.ac.uk/__data/assets/pdf_file/0018/13608/end_of_the_world_trade.pdf:
Mackenzie, who has also published on Black-Scholes though takes more of an analytic than activist approach compared to Blackburn, goes through the complexities of creating trust in CDOs because they are largely private ‘facts’. This is compounded by the loss of trust in credit ratings, one of the only ‘public’ facts. It’s worth reading. He points out that ‘correct pricing’ is not a simple process that will happen automatically:
Apologies to Tom S and Katz for their comments being held up in the spaminator and the mod filter (it’s that Hitler reference!) respectively. People participating in this thread might like to scroll back up to 20 and 14 to read their contributions.
Should’ve checked that spam filter before I wrote my comment!
I’m not sure that Blackburn is taking an “activist” rather than an “analytic” approach in the article, dk.au (and I read it last night in hard copy). It seems to me that he’s trying to do two things – the first being to analyse and describe what went on and why, and the second is to draw some parallels with the first tranche of financial market regulation stretching from the Great Depression to Keynes’ original conception of what the IMF and the World Bank would do (which didn’t really survive Bretton Woods itself). It seems to me that you can accept the accuracy of the former without agreeing that the historical parallel is either relevant or the solutions proposed appropriate (or of course you could agree with them!)…
To introduce a little levity:
How the subprime crisis began
Despite flogging a possibly dead horse, I think that the financial instrument known as a CDO is basically a fraudulent misrepresentation of the underlying asset. In this case, it’d be nice if perhaps banking regulation were not so much increased but the existing provisions tightened. That includes instruments that nobody can reliably price being re-classified as fraudulent in the sense that the packagers and sellers of them are deliberately misrepresenting their attributes. Selling the cashflow from a sub-prime mortgage as a higher value security is, in my opinion, fraudulent.
Maybe that dichotomy came out more harshly than I intended. I seldom read articles of that length on my screen alone. I’ll have a shot at a printed version. I took my cue from this line without digesting what followed:
which strikes me a fair assessment of the situation. I don’t think the current problems cannot be extricated from the, at times fanatically, positivist social science that financiers base their decisions on. Enter the growing body of literature on the performativity of markets … (eg. http://press.princeton.edu/chapters/s8442.html )
Hmmm – what had been a comfortable little stoush between two has expanded greatly. I may miss a couple – if so, apologies.
To deal with them in no particular order:
Katz,
No Rooseveltophobia in that – although his actions (IMHO) certainly made it worse and prolonged it. It was directed (poorly) at Silent Cal and the mine manager after him, along with most other nations that had steadily been “protecting” industry, playing around with the monetary system etc. before he got there.
.
TomS,
There are thousands, if not millions, of example of instruments much more complex than a tranched securitisation out there and pricing them is not an issue. The problem (IMHO) was not that the instruments were difficult to price, but the credit risk under them was. This accounts for the “gumming up” of even the simplest of the instruments. Most participants in the market had one set of assumptions about the underlying credit risk of the mortgages. When that proved false liquidity simply dried up while participants waited to see what the credit risks were. Prices for even the highest ranking tranches dropped not due to high credit risk but because some of the more leveraged in the market had to sell at whatever price could be obtained.
The highly leveraged participants knew thay had more risk and were using it to drive returns. They had made more money over the last decade. They lost much of it when the market turned. This is normal. More risk = more variability in returns.
Bears, for example, went not because the underlying assets were bad – they were not – but they simply ran out of cash. Again, perfectly normal. Banks, like other businesses sometimes fail.
The staggering thing is not that Bears went, but that for a decade or so almost no banks in the US had.
In Australia no major banking institution has collapsed for over a century. That is also abnormal. The system could be better, but we should start with an appreciation of the simple fact that it is not bad.
.
dk.au,
I would agree that part of the problem (as with most market problems) was informational. I would not agree, however, that the problem is a circular one. Credit, market and liquidity risk affect each other but can (and typically are) managed seperately, but with each influencing the others. To relate that back to the head article, though, I see no reason why more regulation will create better information. The whole history of regulation (IMHO) reinforces the view that the opposite is the case.
Cheers, Andrew.
Can you point me to something explaining how?
David,
I like this one:
http://ozrisk.net/2007/10/30/sub-prime-a-lighter-view/
On your main point, using a “waterfall” structure you can make a fairly safe instrument out of a parcel of unsafe ones. I would agree that it should never be classified as being as safe as a government bond, but they can be made fairly safe by prioritising the cash flows.
dk.au,
I think that this is just as demonstrative of the “…failure of Anglo-Saxon capitalism with its deregulation, privatization and belief in the alchemy of financialization…” as the 17 years of strong stable growth we have had is, along with the millions, if not billions of people it has lifted out of poverty.
Everytime there is a little hiccup like this people are proud to stand up and declare the failure of whatever it is they want to proclaim the failure of. It is nonsense.
dk.au,
Are you happy to pay my consulting fees?
Seriously though, here is one I wrote a while back. (False) modesty aside, it gives you an idea of how the tests are brought together.
http://ozrisk.net/2006/08/31/basel-ii-%e2%80%93-best-practice-in-stress-testing/
On liquidity specifically:
http://ozrisk.net/2007/10/09/bank-liquidity-management/
If you want some of the more serious mathematics, anything by clive at ozrisk will do. His maths are much, much better than mine.
http://ozrisk.net/author/cliveah/
Oops – too many links. dk.au – your answer is pending.
Andrew Reynolds wrote:
Safe for who?
The subprime crisis pretty much demonstrates that the theoretical “safeness” didn’t match the actual aka. it’s akin to polishing a turd and putting it in a box, then putting several wrappers of paper on it with a little prize at each layer, like a childrens game of pass the parcel. The first 10 players get a trinket, the last player gets the box.
Again, I don’t think it’s a failure so much of market capitalism, but it sure is a failure of at least imagination on behalf of the institutions who created a willing market for CDO’s without really understanding what might be in the box at the centre.
David,
I have done due diligence around some of those instruments in Australia. If, for example, you have the safest 50% on a parcel of home loans in a waterfall structure you are pretty bloody safe. The chances that losses will exceed 50% on Australian home loans is very low.
Andrew Reynolds wrote:
For good reason. We don’t have an overbuilding problem (although we do have an asset bubble), we don’t have anywhere near the number of low-doc / no-doc home loans with the same stinkyness level that the US produced, we don’t have systemic fraud in home valuations and income overstatement driven by commissions payed to mortgage writers. i.e. our housing market is better regulated.
There are far less opportunities to repackage junk than there were in the U.S. and far less incentive to do so.
However, I don’t think the crisis is finished just yet – there are plenty of pockets in Western Sydney and the Central Coast in NSW where a lot of home equity loans have been written. A lot of that money is heading into plain old living costs as petrol and food prices are heading north. Those home loans, once considered “safe as houses” are about to acquire a stench all of their own.
David,
You asked if they could be made sfe – I think I have demonstrated that, even if you think some of the homeowners in Western Sydney and the Central Coast are deadbeats.
But AR, I’m a great fan of market sovereignty myself.
However, I’m also realistic enough to know that folks don’t act according to market prescriptions. It’s not sufficient to lecture these folks after their collective decisions have tipped the market out of bed and after all sorts of nasty externalities have been visited upon the world. It’s too late after it has happened.
Consider the following analogy. It would be possible for boat designers to build a ferry that is much more efficient than the ferries we have now. These ferries could be sleek and light. They could power through the water much quicker and with much less expenditure of fuel to drive them. Unfortunately, these ferries would require their passengers to to trim the boat and to ensure that they don’t capsize it by moving around and by crowding the gangplanks. Unfortunately, when passengers do this, these efficient ferries capsize and sink to the bottom, causing all sorts of nasty externalities.
We don’t allow ferry companies to run efficient ferries like these because we know that people don’t act logically, rationally and consistently.
Why is a financial system any different? Roosevelt’s banking reforms protected people from themselves and protected the whole system from the actions of the greedy and the stupid.
How is a sound financial system different from a sound, but somewhat stodgy, ferry system?
Katz,
To adapt your analogy to something I feel a little more close to the true situation:
How about the designers of the ferries did not understand boat building at all and had instead been trained in origami? They believe that the whole idea of ferries travelling on water was the wrong thing to do and only little paper boats should be used. They got pushed around by the ferry owners to come up with something that the owners could live with temporarily provided, as you say, their passengers trim the boat and ensure that they don’t capsize it by moving around and by crowding the gangplanks. The owners also managed to slip a few things in there that increase the amount they can charge the passengers, perhaps by persuading the designers that the ferries should be wide enough to stop others using their berths.
Do you blame the passengers, the owners or, perhaps, have a look at the designers when one of these things capsizes?
No AR, your adaptation doesn’t work because it’s ahistorical.
For much of the modern age, financial transactions weren’t regulated at all. A cycle of boom, panic and bust characterised finance. In other words, no one dictated the shape of the financial world apart from financiers.
The worst of these busts that arose from unregulated finance was the 1929 Crash that presaged the Great Depression.
This era can be characterised as the era in which the ferry builders decided on how ferries should work. They sank regularly.
In the wake of the 1929 crash banking and finance reform built controls and redundancies into the system. There followed 70 years of remarkable financial stability.
In 1998, the Glass-Steagall Act, one of the great bulwarks of redundancy, was repealed. Within a decade, massive instability has returned.
Coincidence, or not? You decide.
Katz,
I would suggest that looking at a history of US banking regulation would be helpful for you. There were several regulators before 1933 and the actions of the Fed from 1913 were not exactly those of an all-wise participant. The OCC (est. 1863) and each state’s regulators could be almost guaranteed to the directing finance.
Not as ahistorical as you may think
Glass-Steagall operated by pushing most financial innovation offshore and did nothing to stop massive inflation.
The repeal of Glass-Steagall marked the beginning of one of the most powerful decades of growth in US (and world) history. Coincidence, or not? You decide.
AR, more ahistorical fallacies!
I’d recommend thatyou develop some understanding of the history of finance in the century to the outbreak of the Great War.
Until the outbreak of the Great War, the US was a net importer, and a large net importer, of finance.
The actions of parochial regulators in various US states up to 1913 had minimal impact upon the conditions of world fiance, which was in fact dominated by London.
Re Glass-Steagall, I never suggested that it was perfect. I merely suggested that it may have encouraged the longest panic-free era in world finance.
Inflation during the 1970s and 1980s was much lower in the US than in most western, industrialised nations. This fact puts the lie to your assertion that Glass-Steagall caused massive inflation. Perhaps, if the rest of the world had Glass-Steagall, there would have been less inflation in the 1970s and 1980s.
The growth of the US economy past repeal has been quite aenemic compared with China, the real locomotive of world growth post repeal. You aren’t trying to suggest that the repeal of Glass-Steagall caused the rapid growth of the Chinese economy, surely?
Katz,
Are you confining your look to the US or not? If we are looking generally then there is little scope for claiming there were any large problems before 1913 – with a few localised issues the system coped well with the expansion from around 1770. The odd thing is the period from 1913 to 1929 when the regulators and legislators were blocking capital flows, trade and were stepping in on other areas in which they had little competance and even less knowledge.
There were some problems, but for any system to grow and evolve over such a period was (IMHO) little short of stunning.
Sorry, missed a bit.
You seem to think that Glass-Steagall (and I would add its equivalents elsewhere) caused stability. I would tend to agree – such stability that banks all opened and closed at the same time, lent at the same rates to people who could prove they did not need it, borrowed at the same rates from everyone and made fat margins on both. Great stability.
On the China bit – any idiot can encourge growth from a starving country simply by removing his hands from its throat. To compare China’s growth to that of the US is laughable. On the specific point – Glass-Steagell’s repeal certainly did not hurt. It (finally) allowed a proper mobilisation of US funds towards productive outcomes, and away from the moribund places they had been kept in – resulting in increased productivity and, yes borrowing. Yes, there has been some instability as a result – but I, for one, do not see the 1950s as some sort of ideal. That sort of stability you can keep.
In the era of globalised finance, which began shortly after the end of the Napoleonic Wars, the study of finance at a purely national level is of marginal utility.
This is epecially true of the US in the nineteenth century, which was a wide open market for massive capital flows, especially from London.
Your characterisation of the nineteenth century as a period of financial stability is very strange.
I recommend that you read up on the (London) Panic of 1825, the panics of the 1840s, and the so-called “Long Depression”, which persisted for the last 25 years of the nineteenth century. The Australian colonies were particularly hard-hit by this financial panic after 1891. These panics had world-wide ramifications, wheras the episodic American panics ofthe nineteenth century were either local reflections of larger events or were simply local phenomena. The US did not export its crises in the nineteenth century.
It is true that the bone-headed intrusion of economic nationalism in the 1920s was particularly destabilising. But don’t forget that this was also an era of the biggest economic boom in history.
Depends on your sense of humour.
But for folks who takes economics seriously, there is only one valid economic measure — growth in GDP per capita.
Using that measure comparisons are valid, and telling.
And again, the repeal of Glass-Steagall occurred at a time when the US returned to its nineteenth-century condition as the world’s biggest net borrower of capital. US banks borrowed overseas funds to lend to US consumers and persons enmeshed in the housing bubble.
These borrowings were supposed to generate interest to reward foreign investors’ risk. Some of the largest banks in the US now threaten to default on these obligations. And willy nilly, these foreign lenders have found themselves on the receiving end of a massive decline in the exchange value of the US dollar. Any way you cut it, foreign lenders to US banks have taken a huge hair-cut since the repeal of Glass-Steagall.
From the US point of view it was a good thing, then.
Most of the lending has been from the Chinese government – which is hardly a bastion of free-market economics. The US reaction has been to take advantage of that. This is hardly a bad thing from their PoV.
US banks, governments and residents owe more than ever and their dollar has collapsed. The US appears to be incapable of sustaining its living standards without massive injections of foreign finance. And now these financiers are beginning to consider their options.
Here’s an externality for you: what happens when folks are evicted from their homes, have no job to go to and no safety net to catch them? My guess is that it will be ugly.
Katz (#46),
Seriously, mate. Trying to say that China growing from the pits of probably the worst period of mass starvation in history and the single most destructive government ever can be compared to a modern industrialised country is just plain silly. Sure it is growing fast – but it has a long way to go before it can come close in per head terms to the US. A Trabant can accellerate form 5kmh to 10kmh faster than a Ferrari can accelerate from 150 to 300. That does not mean I would be thinking the Trabant is the model to buy.
.
#45 – Looks like we both consider the other has a lot of reading to do. To me you have to look at the times they were in. The way the system changed and grew while no-one knew where it was going was remarkable. Could an over-arching regulator have done it better? Sorry – but I am not on those particular drugs.
As for the 1890s – please remind me, when was the McKinley tarrif passed by the country that was just about to become the largest trading nation?
Look at all of those crises, Katz. For all of them there was at the very least a major regulatory change just prior. Coincidence? You decide.
If you want to console yourself that the US still has a much higher per capita income than China, or much of the rest of the world for that matter, feel welcome.
There may even come a time when US decisionmakers make more economic use of the borrowed capital of the world to help sustain that hgh standard o living.
But the point is that since the early 1980s that hasn’t been happening.
And then this:
Your point being…? Why do you continue to insist on confusing finance with trade? By the end of the nineteenth century the US economy was the largest in the world. Yet the US continued to be the largest borrower of foreign finance. There’s no contradiction here.
The salient point is that, contrary to your roseate view of the nineteenth century, the era was rife with financial panics that arose out of an unregulated, market-driven financial system. No amount of special pleading alters that fact.
Do you have some kind of emotional need to deny it? If so, get help.
“A Trabant can accellerate form 5kmh to 10kmh faster than a Ferrari can accelerate from 150 to 300.”
You got a reference for this outrageous assertion REYNOLDS?
Evidence is what we were after fella.
GO!!!
Andrew Reynolds wrote:
Like I said – safe for who? Certainly, they are safe for the original lender who has neatly packaged up all his junk and sold it on.
The lenders themselves have deadbeat qualities to equal their customers – the idea that house prices in australia only go up is just as invalid as it was in the US. Nobody really has a handle on just how many of those central coast and western sydney properties are under water right now – not even the lenders (who are possibly afraid to ask).
Re: the whole China/US relationship, most financial commentators have agreed that the US, by attempting to avoid a recession after the tech wreck, have merely extended their own misery by fuelling a debt wreck on the back of ridiculous interest rates. That other countries were willing participants in the US economies destruction is neither here nor there, although I’m sure both the Saudi’s and the Chinese are hardly unhappy that the hollowed out US economy is facing an unprecedented disaster.
FDB,
Just coz your chosen moniker is 3 letters long there is no need to channel others of that nature.
.
Katz,
Are you seriously saying that you admire China more because they simply stopped slaughtering their own people, are now merely murdering a few, imprisoning some and getting out of the way of a few more and, as a result, are now shining beacons of light in the world of economics? If so, all I can say is to push back on whether it is you that have some emotional needs.
On the finance / trade question – you acknowledge the problems in the 1920s, which resulted in the crash of the 1930s as having an effect on the banking system yet will not accord the same to the 1890s? Odd, if I may say so. If you want more elaboration, look at the monetary changes arising from the Sherman Silver Purchase Act.
I have no rosy view of the period from 1770 to 1913, Katz. Governments were just as capable of passing stupid laws then as they are now – they were just less capable of enforcing them. Fortunately, voters now are a bit more educated than they were then and are more capable of restraining government’s worst excesses through the ballot box. That moderates government’s ability to do some really stupid things. As a result, I believe things are still improving overall – we just have to keep an eye on them.
I don’t admire China.
On the contrary, I’m very concerned that US banks, governments and corporations have mortgaged themselves to Chinese government-run banks. I fear that this will end badly. I acknowledge that these same Chinese decisionmakers appear to be winning this struggle for control of the world.
I’ll try to explain my attitude to US policy-making in the nineteenth century one more time.
In the nineteenth century, US banks and businesses were net borrowers. They were therefore subject to financial conditions that persisted elsewher, mostly London.
Here is a parallel. It would be idle today to attempt to understand the conditions of capital creation by studying Argentinian banks, businesses and it public sector. Argentinian decisionmakers are net borrowers. They can borrow only what is available and what is offered to them. The availability of capital is utterly beyond the competence of any Argentinian decisionmaker to influence.
Argentinians, however, can have some in deciding to accept or reject the terms on which that capital is offered to them. (Sometimes that is Hobson’s choice.)
In the nineteenth century, the US was in the same structural relationship with world capital markets as Argentina is today.
Therefore US regulations in the 19th century are of marginal importance. (And yes, I’ve read Milton Friedman’s “A monetary history of the United States, 1867-1960″, too. In fact it is sitting on my desk right now.
Here is an interesting quote from Friedman concerning the Panic of 1907:
As you can see, the stability of US financial markets was beyond the control of US interests.
The Bank of China now has that kind of power over US markets.
Katz,
Thanks for the clarification – I thought from your previous utterances that your position was different from the one above.
I would agree with you if the monetary system was like that of 1907 – i.e. a gold standard. It is not. China is not holding calls on US gold reserves and is therefore able to call gold, they are holding fiat. The difference is crucial.
If the US simply raised a digit to China, what happens? Under gold, China can call on the gold reserves in the US and ship large quantities of gold out – severely contracting the US money supply, leading almost inevitably, to recession or depression. With fiat, all China can do is dump the holdings to buy – what? Other currencies? China would be sitting on the biggest losing forex position in history. They may not be that answerable to the people, but such a loss would be noticed. Sure, the resulting currency turmoil and US inflation would hurt, but not nearly as much as China would be hurt. The US would also be able to structurally adjust much faster than China. The point here is that, in 1907, the US debt was denominated in gold. In 2008, it is in their own fiat currency. The difference in power that gives the US is marked, IMHO.
Thinking about it, this may be a good reason why fiat may be superior to commodity, in that it gives a cushion to external impacts. I will have to think about that.
I agree that there is a difference between the inflexibility of the gold standard and the flexibility of fiat money. But this simply means that the two systems take different routes to systemic crisis.
The solution you are prescribing arising out of a fiat currency system is a policy of inflation. At the moment the US has a decided advantage in international financial transactions because these transactions are conducted in US dollars, which means that the US does not have to concern itself with adverse movements in exchange rates.
However, there are at least two other dangers:
1. Inflation can undermine the stability of domestic financing, especially in a regime of negative real interest rates. The coincidence of these two factors can stimulate speculative bubbles of the kind that has already been witnessed in the US real estate market.
2. Inflation endangers the exorbitant advantage that the US enjoys in having its currency accepted as the medium of international exchange. There comes a time when foreign interests refuse to accept US currency as a medium of exchange, fearing as they do the effects of inflation on its utility as a store of value.
Both of these scenarios conceive of a rationing of credit, which can be achieved only by an increase in interest rates. This is a state of affairs which imposes further burdens on an already wobbly real economy.
These are further externalities arising from a financial system careering out of control.
I don’t have time to dig it out, but I read a fascinating account of Chinese banks disinvesting in the US in the last 18 months or so. Chinese interests appear to be disengaging from the potential toxic effects of a collapse of the US dollar.
If that collapse continues, the world will feel the pain, but the pain will be greater in the US than elsewhere, including China.
Katz,
I would tend to agree with some of that and, as I said, the US would be hurt – but China would be hurt orders of magnitude more. The Bank of China has over a trillion dollars in USD denominated assets, mostly government bonds. If they dumped that onto the market, the USD would go into freefall – no doubt. But the BoC would find it a Phyrric victory as the value of their holdings would go down with it. The vast bulk of Chinese trade deals are also denominated in USD – meaning any executed deals would have to be done at the “old” price, costing Chinese exporters a huge amount until they were able to re-negotiate deals. While a lot of their imports are also in USD, the nature of the trade in commodities against the trade in finished products would mean that the commodity prices China pays would adjust much faster.
Wal-Mart would be bloody happy, though.
The US, with their more open economic system, would be able to adjust to the new price levels more readily as well. No doubt, it would hurt, and hurt a lot – but the damage to China would be incalculable.
I would personally doubt that the current Chinese government would survive.
Personally, I think they have been vey unwise to build up such a position in USD alone. Allowing the currency to adjust or putting the position across many currencies would have been better, but they are now stuck with fistfulls of dollars and really, not a lot they can do with them.
Not necessarily. Intelligent hedging could blunt the impact.
This is undoubtedly true. However, there are indirect means through currency and bond and interest rate futures and options to achieve the same hedging effect as now pertains in major commodities markets.
This openness is both an American strength and an American weakness. The adjustments you speak of also necessarily involve enormous stresses on household finances. There is alreay a tsunami of liquidation and repossession sweeping through the US population. It is an open question as to how much of this Americans will tolerate before serious civil disorder breaks out.
I’ve been short on the US dollar for two years. I don’t think we’ve seen the end of that rainmaker.
Katz,
If the BoC even started to try to hedge such a position, the effect would be the same. Hedging a billion or a few would probably go un-noticed, although I suspect the Chinese walls (no pun intended) would prove leaky. Hedging one thousand billion, even over a few years, would be noticed.
If they tried to cushion the importers the position would get even larger and the walls much leakier. To me there is no way they can do it.
The potential for serious civil disorder is, IMHO, much, much greater in China – there are already regular riots on considerable scale in the countryside. A government that deliberately tried to beggar their major trading partner, with the consequential job losses and disruption in the cities would be not merely playing with fire but casting themselves into it.
I would agree, though, that a short position in the USD is a good medium term bet.
AR,
I never suggested nor less still recommended that Chinese authorities might attempt to destroy the US financial system.
That certainly was not the intent of the Bank of England way back in 1907 either.
In 1907 the Bank of England was merely attempting to punish the profligacy of issuers of US financial paper. This attempt to discipline got out of hand.
In the same way, I’d suggest that Chinese financial decisionmakers, who are very patient, are attempting to do a number of things:
1. buying US equity when the price seems right.
2. supporting US consumerism while at the same time seeking for alternative markets and looking to the day when the US consumer is less important to Chinese exporters.
3. gradually unwinding gargantuan holdings in US official paper and in non-government bonds.
All this is done not by dumping the US dollar but by a gradual unwinding of positions, while keeping the yuan pegged to the dollar as much as practicable.
These manoeuvres show every sign of being subtle and choreographed rather than rushed and precipitate, unlike the Bank of England coup of 1907.
I would agree, Katz – all of which means that the US posiion will be a slow, gradual change – not 1907 / 1929 or any other crash all over again. The only really scary thing would be when China finally gets a change of government. If they get there through revolution who knows what will happen.
I’d argue that this is a hydra-headed scary thing.
Perhaps the communist regime in China will collapse peacefully like the CPSU.
However, the successor government in Moscow did not have at its disposal trillions of dollars of US financial paper.
Nor, for that matter, did the government that it replaced. A communist Chinese government in its death throes could do immense damage to the US and world financial systems.
The mere threat of such a thing would be enormously destabilitising. Thus, there may be an element of mutually assured financial destruction operating to minimise the possibility of rapid political change in China.
Neither the US nor China, it may be argued, can afford to entertain rapid, destabilising change in each other’s financial and political systems.
I remain to be convinced that China is more prone to systemic crisis that the US.
Katz,
Again – are you serious that China, a poor country with a dictatorial system of government and a long history of violent revolution is less likely to suffer a systemic crisis than the US – a democracy that has a (mildly faulty, at times) system of governmental change that has over the last 140 years regularly proved to be able to handle changes without revolution? Is that seriously your claim?
Seriously?
I’m not happy that you are implying that I’m not writing in good faith. Why would you do this, given the fact that we have had a reasonably civil exchange up to now?
Who says that a “systemic crisis” has to be a governmental or constitutional crisis?
My guess is that civil disruption in the US will induce Congress to introduce a raft of measures that will make it more expensive for businesses to transact business and will establish barriers against the kind of foreign equity buy-outs that I mentioned above.
All these measures will add up to a systemic crisis as it becomes more clear that economically the US will prove itself to be incapable of maintaining the levels of mass prosperity to which Americans have become habituated, and it becomes clear that politically, nativism provides cold comfort indeed.
Probably because you’re writing absolute bollocks, Katz. The USA is the most powerful and resilient country on Earth. You’re kidding yourself if you think it can’t handle a cyclical downturn in its economy. The last time the Chinese had a major economic snafu tens of millions of people died.
Shorter Li Kao: “I don’t know the difference between bad faith and bollocks.”
How is power and resilience of which you speak to be measured?
1. If you disagree with my definition of a systemic crisis, show how. Otherwise, please refrain from turning me into your straw person.
2. Yes, millions did die in China, but the regime continues. What is your point?
Shorterer Katz: I’m touchy when questioned.
You were the one who mentioned bad faith; Andrew simply questioned the seriousness of your assertions. Why was he questioning the seriousness of your assertions? Because they were self-evident bollocks. Can you follow the logic? There’s no strawman.
Power and resilience? The world’s largest GDP, an economy of incomparable breadth and depth, sufficient in nearly all raw materials, possessed of the largest and most numerous powerful corporations, the world’s finest universities, dominating high-technology, the largest pool of skilled and motivated human capital in the world…need I go on?
1. An economic downturn may be a crisis, depending on how you want to define it; there are degrees of magnitude…and hyperbole. Is it systemic? Depends on the breadth of your definition of “systemic”. Has the US handled these situations before? Of course. Recesssions and bear markets come and go. And yet the US economy recovers and powers on. Has anything changed in the US economy that would cause this pattern of growth-decline-growth to change so that the US becomes “incapable of maintaining the levels of mass prosperity to which Americans have become habituated”? No. In the late 1980s doomsayers trotted out the same line about the rise of Japan and its dominance in financing the US economy. Twenty years on and the fretful now get their knickers knotted over China. Plus ça change.
2. For one thing, the USA doesn’t have crises on a scale faced by the Chinese because of the strength and flexibility of its economy and political institutions. China is a huge, under-developed country controlled by a one-party state. It has fewer resources to deal with crises, certainly less political and economic flexibility and, in fact, it’s own political and economic structures help to cause crises (Tiananmen Square, Tibet, anyone?). When the USA has a crisis, you don’t see massive civil unrest or mass starvation. Can you see the difference there, Katz? Yet you assert that China is less prone to systemic crises than the USA. Shirley you’re not serious?
“The USA is the most powerful and resilient country on Earth”
Like a lot of people tend to do you are viewing the future through the prism of a very limited perspective of the past.
The USA has been the most powerful etc. country for (let’s be generous) the last seventy years. This is an insignificant period of time and as a predictor of what will happen in the future, totally useless. Somebody could have as easily used the same blind faith to describe the British Empire at the turn of the 19th century, and look how that turned out.
A crisis is not a collapse.
The seriousness of a crisis isn’t measured by its absolute magnitude, it is measured by ability to endure pain stoically without making demands upon those in authority.
Who’s Shirley?
Adrian, I don’t need to look into the past or the future to assess the respective strengths and weaknesses of the USA and China right now.
Who said it was?
Is it? Since when? I mean, I like stoicism, so the measurement system you’re proposing has some appeal in theory, but how do you go about measuring this kind of thing in practice? Are the Burmese bigger whingers than the Chinese? Do low expectations make one less crisis-prone? Does the fact that the Russians seem willing to put up with all manner of shite from their governments mean that they tend to stay out of trouble? Fucked if I know, or you either.
Shirley = surely. The correct response is, “don’t call me Shirley”.
Your personal endorsement of stoicism is, of course, heart-warming.
How is this different in kind from any other historical question?
Some cultures are more bellicose than others.
Some are more inclined to suicide than others.
Some are more litigious than others.
Why these may be is perhaps more difficult to explain, but stoical, bellicose, suicidal or litigious behaviour is relatively easy to measure over time and space.
You appear to be quite well versed in that Shirley schtick. Has it always been so amusing?
Really? Do tell. Are you really suggesting that the silent, stoical suffering of millions of Chinese is less bad than the loudly litigious discomfort of a smaller number of Americans? That seems like an awfully skewed view of the world.
I can’t help thinking it resembles that D-Generation (Late Show?) skit from many eons ago where perky newsreaders racially adjusted the trauma of foreigners relative to the horrors of the Australian road toll. You know: 20 deaths on Australian roads over Christmas is more important than 20,000 Bangladeshis drowning in monsoonal floods. Is that the kind of measurement and equilibration you’re talking about, Katz?
Always.
The subject under discussion is the causes of crisis, not what Katz thinks should cause crisis.
It matters zero what I think is more or less serious or even “bad”.
You see, I’m resident neither in China nor in the US. Therefore I have zero input into how Chinese or Americans behave.
You and I are mere spectators of others’ behaviour. It is an observable fact that similar inputs or stimuli provoke quite different responses from different folk at different times.
Whether I think that one response is admirable, yet another is deplorable, while it might serve as a fascinating insight into the way I think, tells us nothing about how others think and behave.
The subject here is American (and latterly Chinese) behaviour, not Katz’ behaviour.
Thus, the behaviour of Americans, as described by you, may provoke crisis, despite the stimulus being very small. On the contrary, the stoical suffering of millions of Chinese in quite appalling circumstances may mean that a crisis is never encountered.
This is credible.
Well, no, actually, it isn’t. The subject is whether the USA or China is more prone to crises.
“Crisis” being a term of varying interpretation, you got yourself truly diverted into a bizarre attempt to measure such events by the ethnic characteristics of those suffering said “crises”. Now you’re suggesting that those same ethnic characteristics are actually a causal factor in creating the crises.
Needless to say, this has no bearing on the original question, being the relative tendencies towards crises. I can only return to the evidence: USA has not suffered anything like the magnitude of crises suffered by the Chinese in recent decades, if not centuries and, furthermore, has greater resources and resilience in dealing with future crises. You, OTOH, seem to think that superior stoicity decides the argument in favour of the Chinese. Incredible.
Not variances in interepretation, rather misinterpretation on your part.
You seem not to understand what a crisis is.
You appear to think that a crisis is an unwelcome set of circumstances.
In fact, a crisis is a “moment of decision”. (Oxford dictionary) The definition is rounded out by the following:
“A turning-point in the progress of anything; also, a state of affairs in which a decisive change for better or worse is evident.”
Stoicism blunts and sometimes obviates the determination to make “decisive change”.
In other words, for a crisis to exist, it must be experienced, and there needs to be some belief that a decision can be made, that is a choice of actions is possible.
Following from that, all of this:
is irrelevant.
“magnitude of crises” is a term symptomatic of your confusion.
Do you intend it to mean
“size or importance of the decision to be made” (the correct interpretation, but pretty meaningless in the context).
or
“difficulty of the circumstances in which the subjects find themselves” (meaningful in the context. bu an incorrect use of the word “crises”.)
Oh, that explains everything! Of course you didn’t mean the word to mean “an unwelcome set of circumstances”…
*crickets chirping; in the distance a lone coyote howls at the moon*
…except for every instance where you – and EVERYONE else, for that matter – used the word on this thread.
Nice try, though. Resorting to distortionarily diverting dictionary definitions was really clever. No, really, it was.
Following from that, all of this:
is irrelevant. Well, your bits anyhoo.
Given I’ve established that my interpretation is the only applicable one on this thread, I rather think it’s the latter. Apart from your superfluous and incorrect addendum, I mean.
Oh really? Where precisely did I sue the word “crisis” in the incorrect way in which you have been using it?
*sounds of interlocutor rifling desperately, but fruitless, upthread and downthread*
With lexical laissez-faire such as yours, it is possible that you actually think that “shirley” means “surely”.
C’mon, Katz. This is getting pathetic, and beyond pedantry. You know very well that “an unwelcome set of circumstances” is a perfectly acceptable – if not THE most commonly used – interpretation of the word crisis. It is not in any way incorrect. Your literalist stance might possibly attract some sympathy from scholars of classical Greek, but comes across as desperate to the anglophone.
As for examples where YOU used that meaning:
#74:
#70:
#67
#65
Easy, and that was just from the last half-dozen comments.
The question isn’t so much where you used the interpretation that EVERYONE ELSE was using. The question is where you didn’t.
*sounds of interlocutor rifling desperately, but fruitless, upthread and downthread, trying to rewrite his own words*
Yes, how dare I abuse lexicons in such a flagrant manner! What a scandal, that I should have failed to switch to an alternative interpretation of the word “crisis” when you did, for reasons that are pathetically obvious.
Thanks for the rifling.
As you can see, all of my uses of the term “crisis” were both consistent and correct.
and
This is about the choice whether or not to make demands, not suffering.
This refers to the choice of Americans to make demands in distinction to the passivity of Chinese.
This is about the possibility that American residents may decide to choose to make further demands after concessions already made may prove to be inadequate. (All this is in the future. I’m not asserting that this has happened yet.)
Pathos is in fact the propensity to evoke sympathy.
You have achieved that for yourself brilliantly.
And now we’ve established what a crisis actually is — a moment of critical decision — the linked blog post does a great job on pointing to important contradictory tendencies in slump-wracked California.
http://globaleconomicanalysis.blogspot.com/2008/05/california-leads-way-to-consumer-bust.html
California, comprising 13% of the US economy, is caught between unrealisitc hope and crippling despair. One city (Vallejo) has already filed for bankruptcy. Others will follow. Tax revenues are down in absolute terms, even before inflationary effects are factored in. This suggests a major decline in economic activity.
And now the Governator proposes to raise more debt on the basis of future income from the state lottery. This is a choice that can only drive California public finances further into the red. And given the fact that California is compelled by law to run a budget surplus, the crisis of a choice of breaking the law or of slashing provision of a wide range of state-funded sevices looms.
We’re about to see how much pain Californians are willing to endure before they get up on their hind legs and say “We’re as mad as hell and we’re not going to take it any more!”
Well, hold on now. They were correct, in that your usage of “crisis” conformed with one of the SEVERAL interpretations of the word. Did they all have, consistently, the ONLY meaning you claimed for them in #76: “A turning-point in the progress of anything; also, a state of affairs in which a decisive change for better or worse is evident.”? No, of course they didn’t, as I pointed out.
Yet here you are, pushing water uphill again, defending this ludicrous, pathetic diversion to the argument. Oh, well, if you insist…
The question is not whether people make demands or not. The question is whether the word “crisis” means, as you assert, ONLY “A turning-point in the progress of anything; also, a state of affairs in which a decisive change for better or worse is evident.” and NOT “an unwelcome set of circumstances”.
#74 has NO REFERENCE to “decisive changes” or “turning points”. It does refer, however, to the suffering of millions of Chinese in appalling circumstances, i.e. “an unwelcome set of circumstances”.
#70 states that the seriousness of a crisis is measured by the ability to endure pain. This is in no way a reference to “decisive changes” or “turning points”, but ENTIRELY a reference to “an unwelcome set of circumstances”.
Not only is there no reference to making demands, there is no reference to “decisive changes” or “turning points”, and the deaths of millions do, indeed, fall into the category of “an unwelcome set of circumstances”.
You seem rather fixated on the “making of demands”, don’t you? You do realise it has NOTHING to do with your attempt to reinterpret your own words? The “crisis” you refer to here is the inability to maintain mass prosperity. Again, this does NOT fit your interpretation of “crisis”, but mine, yours and everybody else’s on this thread until your bizarre little mind-fart at #76.
Reading the dictionary again, Katz? Look up “failure”, there’s a good lad.
“Oh, look! Isn’t that an African swallow?!”
I’m sorry, but my curiousity has gotten the better of me. Please, I have to know: who do you think you’re kidding?
My Oxford Australian Dictionary (1998) gives:
My (American) Webster’s New Collegiate (1959) gives:
FYI. I thought the synonym “juncture” was interesting.
I would most humbly submit that whether or not a crisis event is “an unwelcome set of circumstances” depends somewhat on the actual circumstances, how they relate to you and how you feel about them. Some people seem to thrive on crises and presumably enjoy them. I’m for the quiet life.
Brian, forget about giving a straigt dictionary definition to Katz.
He’s been caught out on this before and he will lie through his teeth before he admitrs he is wrong.
GregM I thought he was doing OK in the argument, but I got lost in the last bit, except to say that people may not be starving in the US but there is a lot of distress and I recall a figure of 40 million plus who are “food insecure” whatever that meant.
OTOH I’ve also heard that there have been new calculations of poverty in China indicating that the much vaunted claim by the World bank about hundreds of millions lifted out of poverty may have been premature.
But these are stray thoughts and I’d really like not to join in the argument.
No you didn’t.
As Brian’s thoughtful addenda to the definitions of the word “crisis” have demonstrated, none of them conform to yours.
To clarify one more time: a crisis may be, and usually is, brought on by perception of an “unfortunate set of circumstances”. but the unfortunate set of circumstanes is not, in itself, the crisis. On may experience an unfortunate set of circumstances without experiencing a crisis.
To use a parallel that Li Kao may understand. Jokes provoke laughter. The joke is the circumstance. The laughter is the response. Some jokes make everyone laugh. Some jokes make only a few laugh. The laugh isn’t the joke. The laugh is the response to the joke.
Li Kao may try to argue that the laugh is in fact the joke. But that attempt would be as quaint as it would be amusing — an attempted “joke”, if you like.
A crisis has an analogous relationship to its provoking circumstances as laughter does to its provoking joke.
Let’s see: Li Kao accuses me of kidding him.
GregM accuses me, for the fourth or fifth time, of being a liar.
I’d prefer to be called a kidder. But I’m prepared to accept that the ideationally inflexible GregM is incapable of exerting self-control over his outbursts, thereby breaching serially the following LP comments policy:
Actually, I rather enjoy GregM’s outbursts. No kidding.
Which was my definition, Katz? I’ve been working off your interpretative dance, to-date. Unlike some, I don’t have to resort to a dictionary to tell me what I mean. Furthermore, one of the interpretations listed by Brian, specifically, “a time of danger or great difficulty”, conforms perfectly with the interpretation that you protested so vainly was incorrect, back at #76: “an unwelcome set of circumstances”.
The important point Brian was making, and which you’ve chosen to ignore, is that there are varying interpretations of the word [gee, didn't I write that before?], thus your lexical dogmatism is not only incorrect, but pointless.
Or not. Depends on the interpretation, doesn’t it?
Truly, you are a scholar of humour. Let me ponder your insight a while.
You don’t really “get” humour, do you? What’s your strategy here? Write a string of banalities and hope that a joke miraculously appears at the end, iocus ex machina?
Nope, still not getting it.
No…also, I didn’t accuse you of kidding me. I thought the implication was obvious: that you were kidding noone. Except maybe yourself. That’s possible.
That’s lovely for you. You do realise that you’re starting to write like Jack Strocchi, don’t you? Don’t say I didn’t warn you: if you start referring to yourself in the third person, step away from the keyboard. No kidding. Well, not much, anyhoo.
Li Kiao inscribes: “thus your lexical dogmatism is not only incorrect, but pointless.”
Samuel Johnson once said, “Lexical dogmatism is the last refuge of a wordy scoundrel!” but as no-one wrote down the remark, it has not been treasured as it should, nor handed down as worthy wisdom on desk calendars and in school classrooms. Samuel knew lexicons.
I recall a fussy school teacher many decades ago, harrumphing because foolish journalists and leader writers were misusing “crisis”. By golly, they were not meaning “moment of decision, turning point” etc, they were meaning humanitarian disaster, or military confrontation or political drama, e.g.
* earthquake aftermath, tens of thousands homeless
* resignation of senior Minister in Govt
* Cold War manoeuvres such as pressure on West Berlin, or PRC ramping up military pressure on off shore islands held by Republican Taiwan, or deployment of nuclear missiles in Cuba
Some of these in turn LED to decisions, turning pints, but when FIRST reported (with “CRISIS” in bold upper case screamimng headlines) the plain meaning was “a deplorable [massively tragic or highly dangerous] set of circumstances.
Sadly for the pedantic teacher of yore, that common meaning has persisted – and if anytrhing has become more entrenched. Lament we may.
IMHO Scholar Katz should have indicated that he was using the older, purer meaning lest his many avid readers assumed the more common [debased, impure, incorrect] meaning. But again, that’s only my opinion, and previously Katz has adjudged me a “dill”.
Ambi, Purveyor of Finest Dill Pickle to the Discerning
Huh? Do you have your own private meaning of the word “may”, as well? Sometimes dictionaries do come in handy. You’ll find that the entriesin them are in alphabetical order.
In the world where words are used to communicate meaning the word “may” means “absence of necessity”.
Synchronicity! I was thinking exactly the same about you (or youse).
If there is a “moment of great danger” without it being a crisis then Li Kao’s increasingly frenetic attempts to extricate himself from his self-inflicted embarrassment falls to the ground.
Let us consider the possibility that a huge asteroid is hurtling undetected towards the earth. This would have to be accounted as a moment of great, even world-ending, danger. Yet this state of affairs cannot be called a “crisis” because the inhabitants of planet earth are unaware of the asteroid’s approach and go on living what little remains of their lives in their normal way.
And consider also the unfortunate victims of the recent earthquake in China. In the moments leading up to the tremblor they were in “a moment of great danger” yet they were not in a crisis until after it happened, when suddenly they be came aware of the great difficulties that they faced.
Thus it is the awareness of the difficulties, not the presence of danger, that defines a crisis.
There you go again. At issue is the interpretation of the word “crisis”, not “may”. Do keep up. If one interprets “crisis” to mean “an unfortunate set of circumstances” then, yes, one IS experiencing a crisis. As I said, it depends on your interpretation.
That’s a relief. For your sake, I mean. I’m pretty sure that questioning another person’s Strocchismo is good evidence that one isn’t afflicted.
Blimey. And you think I’m the one trying to extract myself from embarassment?
Both the asteroid and the Chinese earthquake fit at least one of Brian’s dictionary definitions, e.g. “a time of danger or great difficulty”, as well as the interpretation you’re so pettily pedantic about, i.e. “an unfortunate set of circumstances”. What you think you’re achieving with these little vignettes is beyond me. I’m pretty sure you’ve already convinced yourself, if nobody else.
“Let us consider the possibility that a huge asteroid is hurtling undetected towards the earth. This would have to be accounted as a moment of great, even world-ending, danger. Yet this state of affairs cannot be called a “crisis” because the inhabitants of planet earth are unaware of the asteroid’s approach and go on living what little remains of their lives in their normal way … Thus it is the awareness of the difficulties, not the presence of danger, that defines a crisis.”
Um … I haven’t been following this argument the whole way. But I can say with definitive clarity that this statement is utter bollocks.
It’s entirely possible to imagine an ‘unacknowledged crisis’.
This has been a most entertaining thread.
Forgive me for intruding my unwelcome nose into this highly enjoyable (and very weird) spat over the meaning of the word “crisis,” but… well, come on, be fair. This sort of thing is catnip to a language nerd. How can I refuse?
Here’s the main (and by far the least entertaining) point. While Katz’s elaborated and needlessly serpentine definition of “crisis” is not without its accuracies, this adds nothing to the original argument. If I recall, the predicate to this particular use of “crisis” was an attempt by China to deliberately and precipitously sabotage the currency of the United States. Not exactly small-stakes poker. Basically, there isn’t a world in which such a madcap attempt would not be both a calamity of vast scope, and *also* a moment of enormous danger and decision. Regardless of the nuances of the word in question, the song remains the same. Sing out Hare Hare, dance the hootchie-koo. This sort of move isn’t “wrong,” strictly speaking, but it’s just a knight’s tour, it doesn’t advance the game. Who was it that said that Sometimes the best way around is through?
That said, it has to be pointed out that between two properly-educated combatants (as our two candidates here indisputably are), there’s something that just isn’t cricket about resorting to dictionary definitions of such a big, poetic word, rich in associations and nuances. It’s not only a tad bit petty, it’s actually incorrect duelling form. A fencing-master would slap you for failing to respect a worthy opponent. For people who already possess a legitimate Class C license in the operation of heavy machinery like the English language, dictionaries are best employed for remembering what words like “zydeco” and “barcarole” mean, not for quashing ripping debates about weighty matters on technical grounds. You wanna know what “crisis” means, check in with Thomas Paine, not Noah Webster. Or look at the context and use your head.
In language, once we get past basic training, certain matters rest upon one’s authority, and a general (and gentlemanly) consensus about how that sort of thing to be shared out. Walking the bases loaded in the second inning is a calamity but it’s generally not a crisis, because it’s not particularly irreversible, whereas walking the bases loaded in the eighth inning during a rally as your two-run lead slips through your fingers IS a crisis. Except if I happen to be the pitching coach who has just looked at the bullpen roster and seen that it’s prematurely exhausted, in which case, if I say the second-inning problem is a crisis, then it is one.
All the same, don’t let me stop the two of you. This is first-rate stuff. No smirking intended!
Scholar j_p_z has enunciated fairly on the resort to a dictionary: the last refuge of a wordy scoundrel, indeed. I salute his use of “just isn’t cricket”, while objecting strenuously to his citation of Noah Webster where the OED should reign over seas Britannic and language English. Forever. Fo’ evah, j_p_z.
Equally, one is mightily distressed to read an example/analogy apparently taken from a sporting contest of some interest to the ex-colonists west of Plymouth Rock, but whose opacity to some ex-colonists west of Sydney Town may be a perennial obstacle to gentlemanly discussion.
[as to lexicons, they strain most beautifully in your "Let Us Now Praise Famous Men" book; where meanings are laboriously squeezed like the last drops of water on a hot, dry, thirsty day
amen to the efforts made there]
“there’s something that just isn’t cricket about resorting to dictionary definitions of such a big, poetic word, rich in associations and nuances”
Very true and very well put, Herr Zenger.
‘Crisis’ carries as one of its dictionary definitions ‘an unfortunate set of circumstances’ because it is a subset of the category thereby defined. This is a perfectly normal thing to find in a dictionary. There are therefore examples within this category, but outside the ‘crisis’ subset, and clearly these cannot properly be called crises.
The crucial and defining attribute of the subset ‘crisis’ is that a particular unfortunate set of circumstances is occasion for an action or response, and that the size, timing and nature of the response will have a significant effect on the eventual outcome. Semantically speaking, ‘crisis’ refers as much to the response as to the events that demand one, and is thus a qualitatively different means of referring to the same general situation as ‘catastrophe’ or ‘unfortunate event’ or what have you.
The phrase “this is not merely a disaster, it’s a crisis” has meaning, and we all know what it is. The dictionary folks have a hard enough job without having to explain to Fyodor what he already knows.
Thank you for your kind words, j_p_z. Your baseball parallel is particularly apt. Once we clear the difficulty of meaning I’d like to return to your reference to China.
Jobby, there is a distinction that must be made between something which is knowable, and yet denied and something that is unknowable. This sounds Rumsfeldian, I know, but in his famous riff, Rumsfeld stated an important truth.
Something can be knowable, yet unacknowledged. In that sense the crisis may exist in the act of denialism.
Something that cannot be knowable can neither be acknowledged nor denied.
“…words like “zydeco” and “barcarole” mean..”
Well I’m up for a savage blogstoush over the fact that “barcarolle” is actually the correct spelling when using this word in English.
Ambigulous — Y’know, I’m perfectly happy to defer to the OED as dictionary supreme (not only because it’s a classier act, but it really is the Thing Itself), it’s just that its lack of an individual proprietor’s name woulda hurt my parallel construction. The things one has to fret about! Though the nitpicker in me has to point out that whilst over here our language is English, our seas are emphatically not Britannic, which puts a bit of a crimp in your sweeping claim.
FDB — yeah, good point. Another important thing about big words like that is their innate flexibility, which gives the language its sturdiness and robustness, which in turn lets us all say idiosyncratic things while still mostly knowing what each other mean. Flann O’Brien once said of Irish Gaelic that it was so overly complicated and overly-nuanced that a Gaelic-speaking farmer who never left his farm could live to a ripe old age without ever using the same word twice. Which is not an advantage for a living language to have. English strikes a great balance between richness and stability.
Back to the original question(s), but in reverse order. Actually I wanted to comment about the initial substance of the post (the housing/credit cris… er, unpleasantness), but I think I’ll save that til later. First let’s get back to this interesting business of China’s holding a few too many aces in the currency markets.
It’s no doubt true, and it’s no doubt partly down to a certain profligacy and lazy thinking amongst those with their hands on the American steering wheel; but when we see it in full context (remembering things like Japan in the 1980s), it’s also probably part of a larger political-diplomatic ongoing initiative, and it will probably start to be adjusted gradually in the near future.
Think of it like this. Why does China hold certain strategic financial advantages over the US at this moment? Well, you might do well to also ask: Why does a vaudeville act like France have a permanent seat on the UN Security Council? Because on the whole, it keeps the peace and calms the horses.
One of the big problems of the new century will be accomodating China’s rise to prominence without its turning into a heated rivalry like the Germany-Britain thing that ruined much of the 20th century. One of the ways to keep China calm and (in at least some ways) onside, is to give them the distinct impression from time to time that they’re winning at a couple of things. If they think they’re losing EVERY single time, they’ll morph into something bitter and dangerous, like Japan did when it screwed after pounding the Russians in 1905.
China looks at a map of the globe, and sees that the only Chinese-dominated part of the world is, well, China. When it thinks of the US, it doesn’t just see the continental States, it sees North and South America, most of Europe, parts of Africa and India, Japan, the only part of Korea that matters, and a huge chunk of the Pacific. In coming decades, more parts of the world (chunks of Africa, and maybe even some of Latin America) will come under Chinese sway, but they won’t get as much as they aspire to, and adjusting for that fact is going to be a careful and delicate business. My suspicion is that although US trade and dollar policy w/r/t China looks foolish at first (and probably actually is foolish to a certain limited degree), there’s more going on than you realize. The national game of America is poker, not chess; ask a game theorist some time about the differences between the two.
“a vaudeville act like France”
*epic guffaw!*
“The national game of America is poker, not chess”
Agreed, but it shouldn’t be. Their one poker-style advantage is (was?) a huge wad to draw from. They can’t bluff for shit.
Whereas, if they learned some chess…
King – more or less invulnerable.
Queen – can fly and shoot lasers from her eyeballs.
Pawns – outsourced.
j_p_z I was indulging in nostalgia (re Britannic seas) as others on this thread have done re Classical Greek, Obscure But Cwucial Moments in US Regulatory Achievements, etc
Please forgive my errant ways.
re China and US: there are many ways to view the interrelationships, and parameters to consider: Walmart, trade surpluses, Chinese investments, holdings in $US, American trade deficits, American financing of Iraq and Afghanistan invasions, slave labour in Chinese prisons, resource security (inc Aussie raw materials, minerals, etc); nuclear weapons, the Taiwan thorn (in both China’s side and US side); geopolitics of the Pacific and Asia and the globe. If China holds US bonds or US$ or has large trade with US, why should it relish a downturn in the US, let alone a collapse?
It reminds me of the so-called ‘petro-dollars’ surging out of Mesopotamia in the 1970’s, invested in US, Europe etc (“safe havens”). [Poor old Rex Connor in Australia was bedazzled, sadly. He wasn't alone.] The world is awash with real goods, real $, and credit. The flows are huge and rapid. Stable? who can tell? Interlocking? yes, on a grand scale.
Now overlay that with competition from Europe, reform of the UN, stifled democratic voices in China – with influences from Hong Kong, Taiwan and the wider Chinese diaspora. Reforming the economic system while trying to keep tight political control is a tightrope act: ask Gorby.
Senator Bob Brown, commenting on the Olympic Torch relay’s visit to Canberra, said (something like) “When the democratic fire begins inside China, we’ll see such a storm!” That’s the kind of “externality” (or internality for the Chinese), if it happens, that would knock over all the confident predictions of economists and pundits…. in a few months and years.
Fair enough, Katz: it hasn’t happened. But I’m curious: did you predict the Tien An Men square protests of May 1989 and the subsequent “incident”? I didn’t. I reckon China has the look of a tinder-box. More openness every year, and more savage local protests. Some of these angry folk are like the South Korean protestors of a few decades ago: they do NOT mess around.
cheerio
Hmm, I turn away for a few days and the thread moves on.
Katz,
I was not accusing you or arguing in bad faith, I was just incredulous as to that position and wanted confirmation that this really was the case. I would add that I still find it a very odd one to take. To me a systemic crisis (to attempt to cut through the dictionary wars above) is a set of circumsances that threatens the survival of the current system – in this case the economic or political one. To me the US, with its demonstrated ability to change the system on the fly will be less likely to face a systemic crisis as it can simply change the system. China has a long history of inflexibility. To use a little bit of Tao philosophy – the bamboo that bends before the wind is stronger than the oak that cannot.
The US has shown it can change in response to changed circumstances. China has repeatedly demonstrated an inability to change it political system without systemic change, while some economic flexibility has been demonstrated in the last 24 years.
I would argue this makes a systemic crisis much more likely in China than in the US.
FDB, a typical entry in a dictionary for “crisis” will include, as one of its interpretations, the meaning of “an unwelcome set of circumstances” or equivalent. There is no necessity in modern usage for said set of circumstances to force a decision, or krisis, as this literal meaning has been lost from much of its current, common interpretation. Brian’s earlier example demonstrates this point. Katz’s extended, diversionary dummy-spit on this lexical trivia is thus both incorrect and pointless.
Given the original word is barcarola, the point’s rather contentious, and rather depends on whether you’re borrowing the word from French (“barcarolle”) or directly from the Italian.
Terwilliger, I disagree. Mostly.
We (well, certainly I at least) often still use ‘crisis’ to specifically refer to bad situations which require action. We say that something hasn’t “reached crisis point” yet, and thereby employ precisely the distinction we’re discussing. This isn’t the same as asking whether something qualifies as a disaster, which is merely quantitative. It is a qualitative difference (in meaning – in the very nature of what is being referred to) and it remains important.
At least to those of us (and you are one surely) who regard matters lexical as anything but trivial.
FDB, Li Kao, Katz — You’re all three right. That’s the thing. It’s like the word “tragic,” which in a classical sense means certain precise emotional conditions must be met, but which in common parlance usually now means, Just Really Really Sad; and when somebody uses it in that way, you know perfectly well what they mean, and there’s no real point in rolling your eyes and lecturing. On the one hand the more precise usage lends a specific richness of meaning to the language which gets lost when we use it only in the more common sense, esp. when we already have perfectly usable words for the common meaning. But on the other hand, it’s strapping yourself into an Auto-Electric Exasperation and Futility Machine to spend your life going around explaining to everyone what words like “terrible,” “awful,” and even “classical” really mean (or used to mean). So we just come up with fun new phrases to express the precise end of the curve.
Back in the 70s some people called that trouble with OPEC the “Energy Crisis,” and others called it the “Oil Shocks”. Considering that no great turning point or decision was made (even though one was called for) and people just muddled on til it was over, “oil shocks” was probably more accurate, but everybody knew what you meant by “energy crisis” all the same.
Or my favorite, “radical,” which now mostly means just kind of angry and crazy and extremist, instead of “returning to the root/radix,” which is a meaning we seem to find we just don’t need as much any more. Forget about the fact that for, say, the Salafists, both meanings, ironically are a good fit.
On to ‘barcarolle.’ Does this mean that another correct spelling is Barcallounger? And what about Barcellona?
Frankenstein’s brain hurt! Must cool brain!
You are absolutely correct that your interpretation of the word “crisis” is A correct interpretation. However, whether it is A correct interpretation is not at issue. The issue is whether it is the ONLY interpretation. You need only refer to the many times you have heard or read the word “crisis” used when the context demonstrates that no decision or turning point is evident to KNOW that there is more than one valid interpretation of the word, as it is commonly used.
As for triviality, I’m in j_p_z’s camp on the subject of the cricketness of Katz’s quibbles. They add nothing to the argument but diversionary pettyfoggery.
“Frankenstein’s brain hurt! Must cool brain!”
Sneaky.
Anyway, yeah I’m right! What of it? Doesn’t mean we can’t all keep arguing does it?
I had a Lit teacher who used to insist that ‘tragic’ be reserved for cases where an herois fatal flaw has brought about the events theretobyreferred. Even I thought she was a nerd.
“Or my favorite, “radical,” which now mostly means just kind of angry and crazy and extremist, instead of “returning to the root/radix,” which is a meaning we seem to find we just don’t need as much any more. Forget about the fact that for, say, the Salafists, both meanings, ironically are a good fit.”
FFS, surely right here is a good place to be cautious about calling something ironic!
I’ve always thought of ‘radical’ in what I thought to be the original sense, because I always took the original to depict a map of thinking or acting in which things are taken back to the centre (the present moment, with the currently available information) and a completely different radial trajectory of action proposed. So much more explanatory power the ‘revolutionary’, which plainly connotes a cycle.
But for those with a hyper-linear view of time and teleology, as any good Marxist must, revolutionary changes aren’t cyclical at all, they’re strictly one-way only.
Tragically, the distinction isn’t a critical one.
Errata:
heroisheroic [or hero's at a pinch]“more explanatory power
thethan ‘revolutionary’”And can something be “plainly connoted”? I think I meant denoted. Or did I?
Fyodor – what I’m going in to bat for here is precision, not what-is-permitted. For me, the beauty of language comes in many forms, and one of my faves is the ability of apparent synonyms to have, on further examination, a very precise role. One of my least favourite things is the tendency of precise terminology to devolve. Hence everything I’ve been saying.
You do know you’re using the wrong interpretation of “favourite”, don’t you?
But here’s the thing, AR. You have incorporated the point I’ve been making in your critique of my argument.
When a system changes it’s not the same system. It’s a different system. The systemic crisis evokes the embrace of change. A system that rejects change or denies the need for change remains the same system until it collapses.
When a system adjusts, on the other hand, it is the same system adapting itself to different circumstances.
Diverting (in the secondary sense of the word) thesis, Japerz. I’m inclined to cosy up to it. Just one question: who, if anyone, in the US do you believe to be in control of such a feat of geopoliticofinancio legerdemain? Or do you think that this flexibility and control of the commanding heights inheres in the situation?
Your use of the poker metaphor suggests the former. If so, who are the master bluffers suckering the Chinese into blowing their stash on the second-best live hand in the deal?
To all participants (well, most) in the crisis stoush: thanks. I enjoyed that.
FDB: “They can’t bluff for shit.”
Katz: “who are the master bluffers…?”
Huh. There seems to be this idea in Australia that the most important part of poker is bluffing.
I think we should all sit down together, and play some cards.
Katz proclaimed: “When a system changes it’s not the same system. It’s a different system.”
Yep, and you, old Katz, are a different person every day because you’ve lost a few molecules and gained some others.
And if I stand at a particular spot on what the imbeciles call a “river bank”, I can never step into the same river, can I? Different water each time.
Gee whizz, I wonder how we’re going to escape that pretty little puzzle you’ve set us? {Sound of several thousand years’ philiosophy & commonsense creaking into action……}
cheerio
Bluffing may, or may not, be important.
I’ll have you know, Japerz, that the present world champion poker player is from right here in Melbourne.
Please come to Melbourne to play poker. And bring plenty of money.
Awwww Katz, why don’t jpz just bring a bagful o’ them lovely mortgage instroomunts ‘n shares ‘n equities ‘n Chinese walls??
Katz — Heh heh.
But back to my zany China/dollar theory for a moment. (btw, I’m not completely convinced of it myself, I’m just creating a sort of thought experiment based on past history and my sense of American intentions and overarching policy philosophy.)
Even if what I’m suggesting is true (more likely only partly true — a certain percentage of the current situation does seem to be the result of stupidity, or more accurately in the case of the Bush circle, a bizarre inability to properly order priorities, coupled with a very poor talent for cost/benefit comparisons), still I don’t think the model is one of the wily Americans snookering or “suckering” the Chinese in order to fleece them. (Although that was part of the process with Japan.) I think it’s more like, this is a somewhat expensive method, partly wilful, partly built in to the system, of slowly managing China’s entry and comfortable settling into the existing system, so that it takes a nice comfy seat and remains a player in the system, rather than upending the whole table in a fit of pique, or rashly trying to build a counter-system. Maintaining the US Navy is awfully expensive too, but man, does it pay good dividends.
My poker analogy was incomplete, because I tend to think of the game differently than an actual player usually does. “Who are the bluffers?” you asked. My short answer would be that the House doesn’t have to bluff. If the House comps its high-stakes players on a regular basis and lets them win big often enough so that they think they’re hot-shot high rollers, then the system remains stable, and the disgruntled players don’t go across the street and try to set up a house of their own. It’s worked in the past more often than people realize.
There are a couple of problems with the strategy, though. One is that historical analogies are never exact, and sometimes not even close. (China isn’t like Japan isn’t like Germany isn’t like Iraq.) Another is that China will likely prove to be a much larger and more unpredictable creature than the US guesses. It’s just a thesis.
Still, plans do have to be laid to prevent a world war, which is the big danger. The idea isn’t to dominate China, the idea is to live and prosper, and not have a stupid destructive world war for avoidable reasons. The way they used to do in Europe before we took them over.
Katz,
Precisely the point – the US is less likely to face a systemic crisis as it is likely to change before the circumstances get to the point of a systemic crisis. It will not get to the crisis point. China is more likely to face a systemic crisis as the system is less likely to change before the crisis point is reached.
I’m sorry – but I cannot agree that the ability to change before a crisis is reached is somehow worse than the inability to change.
I think it was Ambigulous who mentioned the OED and Britannia. I wish to point out that while the OED is indisputably the greatest dictionary ever produced in the whole world,* back at 83 I quoted the Oxford Australian Dictionary. I bought the OAD because Gough Whitlam said it was the best, that is, better than the Macquarie Dictionary, just as back in 1959 I bought the Webster’s New Collegiate because my headmaster said it was the best.
I can’t compare them with others, but have found both useful and even now Webster’s Collegiate a useful supplement.
I thought the OAD lexicographers nailed the essential meaning of “crisis” as they do unerringly in most instances. I thought it unnecessary to say that they don’t have the space to ramble on about all the nuances and connotations. It’s also unnecessary to point out that the lexicographers are governed by usage, but users less so by the definitions of lexicographers.
As a small diversion, the OAD has 12,500 encyclopedic entries, so that you can find out, if you don’t know, that the “Welcome Stranger” was the biggest gold nugget ever found in the whole wide world (2284 oz, in Victoria in 1869). And that entry is not far from “Westphalia, treaty of”.
* That’s with the possible exception of Das Deutsche Wörterbuch von Jacob und Wilhelm Grimm, otherwise known as Grimm’s German Dictionary now meticulously rendered online (Wiki entry here).
Brian: “I wish to point out that while the OED is indisputably the greatest dictionary ever produced in the whole world,*…”
But, what about the “Dictionnaire des Idees Recus”? Those have been crowd-pleasers with the human race since the dawn of time…
AR, this is an important point and an intelligent observation.
My, perhaps, unstated general argument is that you have described the customary condition of the US for much of the post Great War era. The US has usually adapted well to changing circumstances, well before the need for any crisis management. To that extent, I think, we are in agreement.
My complementary argument is that decisionmakers in the US have been undermining their own ability to adapt creatively to changing circumstances. In other words, the US is sliding closer to a crisis moment when mere adaptation of their system will no longer be sufficient. They will be compelled to change their system or face collapse. This will be the crisis (in the proper sense of the word) moment — the moment of decision.
Is the present emergency this crisis moment? Perhaps not. But if these decisionmakers fail to make the appropriate adjustments now, then the crisis moment will be reached all the sooner.
That’s not an argument, but an assertion. HOW is it that US decisionmakers have been undermining their adaptability? WHY is the USA less flexible and resilient than previously?
You are correct Little Grasshopper. A fully developed argument would be very lengthy.
The first thing to do is to identify important US decisionmakers.
I’d suggest US administrations, Central Bankers, the boards of the largest US banks, hedge funds, and pension funds, the boards of several large US multinationals.
Have I omitted an important category of decisionmaker? Do you disagree with the inclusion of any of the above?
No shit, Lolkatz. It seems everything is lengthy with you these days.
That works, though I’d argue you’re being too specific. The key decisionmakers are the respective worthies of the executive, judiciary and legislature at Federal and State level and the boards and management of corporate USA. Central bankers we can include in the executive for the purposes of the argument.
Are you asserting that the interests and priorities of the US Executive and US Central Bankers are identical?
How does that follow? I’m just including them as “decisionmakers” within the executive branch of government which, effectively, they are.
So how many separate institutional interests, if more than one, do you believe are represented under this umbrella conceptualisation of yours, which you understand to be “the executive”?
If only one, how do you justify that conclusion?
@79
Do you think you could settle this by armwrestling or something? By the time you guys get beyond defining your terms we’ll all be speaking Mandarin.
INTERPRETATIVE DANCEOFF
NAKED MIME FIGHT!
How many? Heaps. How many decisionmakers? Heaps. That makes your second question redundant, and begs the following: does it fecking matter?
Just get on with stating your argument. You’ll be quibbling later anyway, so why start the pedantry now?
I condemn this thread. I feel like it’s dancing on Birdy’s grave.
http://catallaxyfiles.com/?p=3587
Li Kiao, you are being most unfair to the Master Sophist Katz. He who knows, knows all; and soars with the eagles in azure realms of unbounded flexibility, then swoops down to grasp a narrow disctionary definition. His talons are wasted here.
pre-pedantry is only a tiny part of his mighty method; watch and learn; he aims to instruct the imbeciles
Nah, Mark. THIS would be dancing on Birdy’s grave.
Heh!
Katz,
With apologies to Mark, I do not believe you are even close to justifying your point that the US is more likely to suffer a systemic crisis than China – in fact, you have demonstrated yourself an important point against your argument. You have said (in listing the various areas of power) that decision making in the US is diffuse. I would add that as far as anything like this goes, it is reasonably transparent and at least partially accountable. In China none of those is true. It is autocratic and inflexible, highly prone to corruption and without redress or effective checks.
I would argue that this makes systemic crisis and collapse the only likely way to achieve any real change.
Systemic crisis and collapse in China? Why, by An Lu-shan’s beard, that’s impossible! Look, I’ll even prove it to you. Let me just get out my notes from the Former Han… no, I mean the Later Han… no, I mean the Sung… no, wait, I mean the Ch’ing… Geez, I must have left them with that warlord when we were fleeing through the mountains from the advancing Tai-pings…
Anyway I’ve got them here somewhere. Just wait a few more dynasties, and I’ll have them ready to refute you.
lol TKFD
Katz is a boy?
Man did i have that wrong.
SC, I don’t know about you but I’ve always pictured Katz as a bloke. A stroppy one, in a stroller, with a dummy in one hand and a law textbook in the other, and a fat cigar between his milk teeth.
I think its just i know quite a few ‘Kats’ (Katherine’s Katrina’s etc) that i just made the gender assumption. Sorry Katz !
History does not repeat but it can often rhyme.
I’d also suggest that neither China or the US are quite the monolithic all of one mind entities that many seem to be assuming during the foundation debate here.
“Given the original word is barcarola, the point’s rather contentious,…”
‘zactly! I’d argue that since the French spelling is one that made it into common currency in English, then that should be accepted as the definitive spelling. In your face, you Commie taxeater!
Cue PDFs of scanned 19th century opera programs at twelve paces.
The Valley Spirit never dies
It is named the Mysterious Female.
And the doorway of the Mysterious Female
Is the base from which Heaven and Earth sprang.
It is there within us all the while;
Draw upon it as you will, it never runs dry.
Do not stoop to adjust your footwear in your neighbour’s melon patch.
j_p_z at 118, in truth I wasn’t aware of the Dictionnaire des Idees Recus, not having studied French. I was aware of Grimm’s little effort, though, because the UQ when I was there had all 32 vols in the main reading room.
Btw, the OAD has useful entries on pollies like Bjelke Petersen, Whitlam and Malcom Fraser, but on the latter fails the ultimate test by not mentioning the Memphis trousers affair.
Chi K’ang asked how to cause the people to reverence their ruler, to be faithful to him, and to go on to nerve themselves to virtue. I said, “Let him preside over them with gravity;-then they will reverence him. Let him be final and kind to all;-then they will be faithful to him. Let him advance the good and teach the incompetent;-then they will eagerly seek to be virtuous.”
On China, according to The Economist Asia is not impressed with the latest developments in Western banking:
The Economist takes the view that this is a pity because the Chinese would do well to adopt the, shall we say, American way.
The resolution of the crisis, if in fact there be one, could come from an odd direction. Loretta Napoleoni who is here for the Sydney Writers’ festival reckons the answer is Islamic economics. After all it is based on ethics, albeit from Sharia Law. It’s verboten to invest money in money to produce money. Money must be invested in the real world.
Anyway it’s all done and dusted:
Brian,
In the event that western banks banks can be described in that way Chinese banks would be accurately described by a word much, much worse than “shit”.
As for the Sharia compliant banking, I would suggest that it is decidedly premature to try to forecast that this is the way of the future. Even the most enthusiastic supporter would conceed that it has a long way to go before it can threaten established (western) banking practice.
Andrew, why am I not surprised?!
Li Kao, there is only a tiny handful of institutional interests that could be considered legitimately to be part of the US executive. There are many individual decisionmakers, yet many of them are sufficiently acculturated to the institutional cultures in which they operate, thereby allowing us to discount to a large degree the influence of individual personality. (A stunning example of the opposite would be G. Gordon Liddy, who parlayed his lowly position in the Nixon administration into a pivotal role of provoking a systemic crisis in US governance.)
AR, I never alleged that the US was more prone to systemic crisis than China. I said (@63):
Nevertheless, you do paraphrase me more correctly here:
These qualities, as admirable as they may be, can sometimes contribute to systemic crisis. I refer once again to one of my favourite history books, George Dangerfield, “The Strange Death of Liberal England”. He shows that power was distributed and diffuse in Britain before the Great War, especially in comparison with the situation in Imperial Germany. Yet it was Britain that suffered systemic crisis in the years before 1914, not Germany. And it was Britain that later proved to be incapable of maintaining the effort of wartime production necessary for total war, not Germany.
It would seem, therefore, that crises are often brought on by circumstance and exigencies, not by underlying conditions of the constitutional system or the means of production and exchange.
Liam, I imagine that chaps fantasise in different ways from women. I hope your cigar-chomping image of the infant me is appropriately gratifying.
Master Katz inscribed: “Liam, I imagine that chaps fantasise in different ways from women. I hope your cigar-chomping image of the infant me is appropriately gratifying.”
As an onlooker, may I say that it’s an image of some interest, but it’s not the one I had. Thanks for your unique view, Liam.
I feel that the Poet Taishang has captured another aspect of the many-faceted original, at least as you are revealed through your esteemed writings here.
Would it be fair to say that “Katz” derives from the Geelong Football Club ?[note to Quincelanders: AFL warning] If so, the Mantle of Heaven is upon you and your Brethren, Katz. No systemic crisis is in the offing. But Mighty may fall; dry winds may blow across Lara and the You Yangs may tremble. Birds drop from the skies; mice scurry for shelter; the Ba ‘won flows brown.
Katz,
I was not aware that Germany had won that war. I will have to check my herstory books. In reality, though, Katz, Britain came out of that war with its system of government intact, as did (to an extent) France. Germany went from partially constitutional monarchy to anarchy to constitutional republic to dictatorship.
While Britain did have its problems before the war they were manageable and resulted in good changes. Germany did not – went to war and got beaten. I would further argue that Germany’s system was part (if not most) of the reason why the war started and was an even better reason why it got as bad as it did – leading to the systemic crisis that brought down not only its government, but its system of government several times.
Any more of a systemic crisis I would find difficult to imagine.
Correct, AR.
Germany did lose the war.
But you make the mistake of post hoc ergo propter hoc.
When the war started in 1914, neither side gave serious consideration to the stance of the US in this war. Indeed, both sides mistakenly beleived that they would fight a short and victorious war that “would all be over by Christmas”. In fact, after years of stalemate, during which period the British government went into deep debt to US banks, the US emerged as a deus ex machina in the policy of both the British and the Germans.
Indeed, the boneheadedness of the German governing elite was the primary cause.
But it cannot be said that the British won the war. They were on the side that achieved military victory. However, the war was not won on British terms.
Moreover, if we tease out those strands a little further, we see that the US, despite its openness and flexibility of decision-making, was incapable of coping with the inflexibility and stubbornnness of its Europesan associates, especially Britain and France. The result was the failure of US diplomacy at Versailles. That failure would have to count as a systemic failure on the part of the United States.
Master K wrote, about the US at Versailles, “That failure would have to count as a systemic failure on the part of the United States.”
Really? It might be termed a ‘characteristic failure’ or an ineptness leading to terrible developments in Europe and globally, but a “systemic failure”? I think not, Katz. If it WAS a failure, it didn’t cause directly, huge and insuperable challenges to the US system did it?
Or are you implying that everything negative for the US occurring after Versailles was CAUSED by US actions at Versailles?
Sounds a bit “post hoc propter hoc” to me, unless you can outline the direct cause/effect chains.
On the other hand, perhaps you’re still clinging to “crisis” = moent of decision. Are you arguing that because the US govt and top financial guys had to MAKE DECISIONS after Versailles, the negotiations and outcome at Versaille were a systemic failure by the US?
Well, that would broaden out the field. And again, would seem to be post hoc propter hoc, prima facie.
Decisionmakers face decisive moments often. It’s part of their job.
+++++++++++++++++
Go Cats!
Neither, Ambi.
A systemic failure in US diplomacy caused the US to fail to achieve its diplomatic ambitions at Versailles.
I’ve never mentioned whatever consequences that may have arisen from that systemic failure. That is a different matter altogether.
My actual meaning seems clear enough:
The word “at” seems clear enough. It is not “before”, or “after” or “as a result of”.
The US diplomatic system, such as it was, failed at Versailles.
Quibbling again, Katz. YOU included central bankers in your categorisation of “important US decisionmakers” way back at #121. I agreed and simply included them in the category of executive. It should be needless to say this – but you have trouble following your own argument, so I’ll state it for your benefit – but this further diversion from you HAS NOTHING TO DO WITH substantiating your assertion at #119 that,
The amusing part of your this diversion is that for all this buildup and quibbling you’ve yet to actually state your argument.
And now you’re resiling from the original argument altogether! LOL, Katz, LOL.
Wow, this has to go on the books as one of the most schizophrenic threads in memory. I can’t count how many times the subject has changed. Not that that’s a bad thing at all; it’s all quite fascinating, really.
I’m less and less able to chime in, but this requires correction:
“The result was the failure of US diplomacy at Versailles. That failure would have to count as a systemic failure on the part of the United States… The US diplomatic system, such as it was, failed at Versailles.”
Now come on, that’s a regular Hippo Hurrican Howler. The US failed to fully achieve its diplomatic objectives in the midst of complex, multipolar, multi-party talks with what were at the time all of the most powerful (and angry) nations/empires on the planet, and this failure was a “systemic” failure?
No, it’s called reality. I think the Rolling Stones wrote a song about it:
“You can’t
always get
what you want…”
If two teams play a match in a sport (let’s even say it’s this “Australian football” you chaps are so fond of), and one side loses, that’s called “defeat,” on that day and for that game; it’s not “systemic failure.” Failure of that scope would be if the entire team became fractious, walked off the field, refused to play, and then quit their sports careers and moved to NZ to take up the restaurant biz.
The US diplomatic corps didn’t collapse, it simply didn’t achieve its full Christmas list. It lost the match. Life went on, albeit not so grandly in Weimar-Welt.
“But if you try some time,
you just might find,
you get what you need”
Considering what went down post-1945, I’d say the failure at Versailles worked out pretty niftily for the US. Wouldn’t you?
I would only care to add to the above that, if that, is the case, then systemic failures happen to all of us almost every day of the year.
“Life – don’t talk to me about life”
KatzMarvin the Paranoid Android (or is characterising him as “paranoid” a systemic failure?).Oh – j_p_z, if you are looking for a thread that twists more than this one, try A is A over at catallaxy – it started off as a thread on e-prime and ended up around (alleged) pyramids on Mars, after meandering through fractional reserve banking and who knows what else.
Thank you j_p_z and Andrew reynolds,
I knew that what Katz wrote about the US at Versailles was silly, but youse blokes coralled it into a tiny corner and shone a brighter spotlight on it than I could lay my hands on. Good work.
If the thread ever gets back out of this Geelong side-alley, I’m inclined to think the US system (right now) is more resilient than the Chinese (right now). But it’s only a hunch.
You see, some of the examples discussed earlier seem to me purely “wisdom in hindsight”. Yes, you can enumerate pressures and difficulties for Germany and Britain around 1914; but similar pressures were felt by Imperial Russia, France, Sweden, Switzerland, USA, etc. weren’t theyt? So we pick out a few nations where dramatic changes occurred: say Germany with chaos in early 1920’s, and blame the pressures; while ignoring the cases where no dramatic changes (collapse, failure, major re-organisation) followed similar pressures.
Do you see my difficulty with the line of argument? (I’d hesitate to call it methodology). It seems post hoc and very selective.
Somewhat like the recent Fritzl thread: Fritzl is a monster, so let’s look around to see what terribly twisted society/history Austria has. That’ll be the cause then.
Well, maybe. And maybe not. Bavaria may be just as Catholic, repressed, tortured by a Nazi past; so until you produce a Bavarian monster, the claimed ‘causation’ or even ‘influence’ in the Austrian case is somewhat dodgy. Please Goddess, don’t let us find another in Bavaria. Even if a cellar-botherer is discovered in Bavaria, it’s still bollocky speculation.
Go Cats!
Ambigulous,
Just have a look at the examples you provided should add at least a little weight to the argument:
* Imperial Russia – same pressure – collapsed
* France – same pressure – survived
* Sweden – not involved in the war
* Switzerland – not involved in the war
* USA – less pressure – survived.
Surely the pattern is clear. Democracies, when pressure is applied, survive. Dictatorships do not.
Yet more of the sporting analogies. And what is this fixation with Australian Rules Football and “the Cats”?
A sporting contest presumes a set of rules under which competitors meet on equal terms. Folks, apparently, are interested in how teams fare under a rule of laws or rules applied without favour.
Any person who thinks that this is an adequate parallel for international diplomacy is living in a world of fantasy. There is no referee in international diplomacy. There are no rules in international diplomacy. Any country that enters into diplomacy with a model of diplomacy that entails rules or laws is ipso facto the victim of systemic failure.
Any nation that holds the whip hand, as the US did in 1919 at Versailles, that failed to achieve its ambitions, established with due recognition of the scope of its inherent advantage, is the victim of systemic failure.
To be specific: the system that such a nation developed to achieve maximal advantage misfired, resulting in a much less than maximal return. That is a more than adequate definition of systemic failure.
Any description of failure that involves any mention of New Zealand is not a description of failure. It is a description of catastrophe.
Please note the distinction between failure and catastrophe.
He’s ‘avin’ a larf.
Coupla points here, Katz:
1) There are rules. States practise diplomacy within a number of constraints (e.g. the dominance of state actors, the respect for diplomatic protocols – immunity etc. – and implicit and explicit agreements on international law) that are regularly adhered to by participants.
2) Your second sentence in the quotation above is thus garbage.
3) As j_p_z points out, failure to achieve a particular set of objectives in a given set of negotiations says nothing about a particular system. Wilson had unrealistic objectives (most of which had bugger-all to do with enhancing the position of the USA) and little domestic support for enforcing his peculiarly idealistic preferences on Europe. The fact that he didn’t succeed in creating WoodrowWorld has no bearing on the US diplomatic system, so-called, and nor does it provide any evidence of “systemic failure”.
Your implication that the hegemon of the day should always get everything it wants out of the diplomatic process is stupefyingly naive.
Just on “Cats”, Katz.
This was in response to a poster who had assumed “Katz” was a feminine nickname: e.g. from Kat, Katarina, Kate, Katie, Catherine, whatever. I had a dim memory of your posting an endorsement of the Geelong Football Club, a while back. Perhaps you didn’t? So I thought I’d just keep popping “Go Cats!” into the posts until you fessed up.
But of course your AFL allegiance (if any) is none of our business. “Are you, or have you ever been, a member or supporter or fellow-traveller of the Geelong Football Club?”
It’s just that (unlike Master and aspiring Dear Leader Katz) I can’t do the hard yards in geopolitics, social stability, history of finances, lexicographical archaeology, finding specks in others’ eyes by putting side the log in my eye, and all of this with a special study of the Castro Boys; without occasionally breaking away to something simpler like AFL footy.
This is of course a dire weakness and clearly a serious personal failing. But not, I trust, a “systemic failure”. ‘cos then I’d really be up Poop Creek, in a barbed wire canoe, with no GPS and only Master Katz’s barbs to “take on board”. Luckily, with the drought, Poop Creek dried up 8 months ago; but Master Katz was too busy admonishing US financial decisionmakers, to notice.
Go, Cats!
And here was I thinking this shared Man-Ball allegiance might temper your silly feud.
Yep, if you wanted to grab hold of overseas industry & companies in general…& art, other tangible assets…& in turn promote your ideology/views by way of film & music etc. the War followed by the Marshall Plan was certainly the way to go. Use the taxpayer’s money. A few get rich quick. (Remind you of anything?) Block the pesky Soviet’s ideas. Drain the brains too…for innovation/science/medical/defense purposes. Introduce American managerial practices.
Still, there’s NO WAY the intellects in government & corporations & think tanks could come up w/ such a diabolical plan. Most probably it was a bits & pieces thing…a combination of TREATY making incompetence, arrogance, ignorance…a bit of profiteering…& criminality…& the motivation to overcome other’s influence deriving from suffering due to natural disasters & dopey financial investments/transactions…stacks of technological ideas & progress used for killing purposes…lots of propaganda & communication systems & codes development…little moral development…& lots of xenophobia, extreme Nationalism…a touch of religiosity that too often failed to show up compassionately at the worst of times…quite a few disposable types…a few grand characters…& eventually practical, pragmatic ideas won the day.
Shame so many had to die for it tho…but at least the American govt has a big cemetery & walls to remember the sacrifices…and after much suffering the Jews got a homeland out of it. And globalization American style continued on its merry way:
In 1945 as part of Germany’s surrender terms ending World War II, Deutsche Grammophon forfeited its rights to the His Master’s Voice trademark to EMI.
(wiki pedia)
And the American/British military got to try out a few of its big bombs just to kick-start the process, ensure lots of cleaning up to do, less competition from overseas industry, keep every one in line & working hard.
Still, plenty of good came out of the plans…relocation of refugees, agricultural & industrial booms. Cheap labour. Just a shame that the screw-ups had to construct a depression & war in the first place…it’s kinda like charging for the ambulance & hospital care after you setup (accidentally, inadvertently, purposely?) the accident.
Noam Chomsky wrote that the amount of American dollars given to France and the Netherlands equaled the funds these countries used to finance their military forces in southeast Asia. The Marshall Plan was said to have “set the stage for large amounts of private U.S. investment in Europe, establishing the basis for modern transnational corporations.” (sorry, I know most of you are over Chomsky & Wikipedia these days)
I noticed Al Gore has a Global Marshall Plan…provided the benefits aren’t reaped by just A FEW then it might be OK.
“The new plan will require the wealthy nations to allocate money for transferring environmentally helpful technologies to the Third World and to help impoverished nations achieve a stable population and a new pattern of sustainable economic progress. To work, however, any such effort will also require wealthy nations to make a transition themselves that will be in some ways more wrenching than that of the Third World.”
(Al himself)
To know or not to know?…that is the question…in a world covered in the fog of war…and dotted by malls…who will find their way?…when TRUTH is nothing but a pot of gold at the end of the rainbow.
But in the long run it’s about certain characters getting what they want…even thru compromise…’cause they knows what’s best for us. You can call yourself a Nation-State…a democratic…or Republican one…but if you can’t impeach or dump the morally bankrupt, bully profiteers & asset gatherers who undermine your worth & environment from your government…if the failsafes don’t work…& the Supreme Court is tacked…as is the Senate…& top of the military…& Reserve Bank…& many top corporations, including financial institutions…& the mainstream media tends to gag unless it needs to increase revenues & let some steam out of the boiling kettle…then it seems to me you might as well call yourself a society on the way to TOTALITARIANISM…one that just has a SMILE on it…provided you don’t get caught protesting & have a taser stuck up yer derriere. Just a thought.
Robert Reich seems to be thinking along similar lines. One of the better Clintonites.
Credit crunch anyone…i guess it depends on which group of companies benefit from it & who they support. Hopefully some of the beneficiaries like the idea of “the tyranny of Democracy”.
“tacked”…make that “stacked”
woods for the trees
There’s a front page story on Slashdot today about Moodys (the credit rating agency) blaming a software error for their incorrect rating on debt securities.
I don’t buy it. I *still* think it’s systemic fraud they were encouraged to participate in while the money was sloshing around. It started at the bottom with mortgage brokers and house valuers and poisoned the whole system, right to be top.
No, Little Grasshopper. That’s your inference, not my implication.
Of course, I cannot be held responsible for any false inferences that you may draw.
The word I used was “maximal”, not “total”.
Dear me, is all nuance dead?
Most of us know how much sugar we want in our coffee, from zero to several teaspoonsful. We are capable of regulating the sweetness we desire. Why then do some have so much difficulty with simple words like “maximal” which means “as much as possible” and “total”, which means “everything”?
Sigh, and lackaday. Back to my (unsweetened) latte.
LOL, Lolkatz! My, you’re a slow learner.
It’s an implication, i.e. a suggestion, and yes, your meaning, i.e. what you imply, is clear.
There is no inference if the conclusion, i.e. the USA is the victim of systemic failure because failed to achieve its objectives, does not follow logically from the premises, i.e. the USA held the “whip hand”. As I pointed out to you, your argument didn’t follow, so I would not have been inferring, let alone falsely.
I recommend more logic as an antidote for your lexicomania.
Whoops – spoke too soon. Maybe you should spend more time reading dictionaries. Maximal derives from maximum, the superlative of magnus, “great” or “large”, thus meaning the biggest/greatest/most.
In the context of a negotiation, THE MOST than can be obtained is everything.
Please don’t hide behind the pretence that you’re practising nuance. What you’re really engaged in is pointless quibbling because your arguments are so weak.
I don’t want to take sides here – frankly you’re both full of shit – but this:
“In the context of a negotiation, THE MOST than can be obtained is everything.”
is bullshit. Depending on the situation, the ‘most’ one can get from a negotiation might be very little indeed.
What is the purpose of any “logic” from one who does not have the language to express logical thought?
It would be desirable to discuss logic. But that ambition must await an adequate degree of lexical clarity.
So, on the subject of language:
“Maximal” is a relative, not a superlative, term.
Its complement is “minimal”, which means “less”, but not necessarily “zero”, (although it can mean “zero” too, depending on context.
Thanks FDB, our messages crossed.
You demonstrate that you understand the meaning of “maximal”.
As does Sideshow, of course.
I’ll also just edit myself from upthread:
The same purpose logic always has. Is that too logical for you to understand?
From whom, I wonder? The evidence so far is that you’re tying yourself in knots over simple words AND neglecting the logic of your arguments. I’m beginning to think it’s too ambitious for you to walk and talk at the same time.
Comprehension failing you as well as logic? Maximum was the superlative, as I stated in, “Maximal derives from maximum, the superlative of magnus“. The rest of your comment there was redundant floccinaucinihilipilification.
Hmmm, perhaps the floccinaucinihilipilificatiousness of this thread is getting too much.
The word “maximal” has a contingent character – hence “can be obtained” – which makes it a particularly unhelpful weasel word, used in this case for the obvious reason. In the context of implying what is possible for the new superpower in 1919, “very little indeed” is, IMO, very far from the mark.
Let’s all sit down and eat our Lopadotemakhoselakhogameokranioleipsanodrimypotrimmatosilphiokarabomelitokatakekhymenokikhlepikossyphophattoperisterphobiaticlerialektryonoptokephalliokigklopeleiolagōiosiraiobaphētraganopterýgōn for lunch
“The rest of your comment there was redundant floccinaucinihilipilification.”
But you’ve quoted the entire thing.
If however the mythical rest did exist, then to the extent that it floccinaucinihilipilificated your last comment, it would be anything but redundant for it to have done so.
This is a very gracious concession.
Fair’s fair, FDB – Lolkatz hates to be misquoted, and I’d hate for him to think I was taking his lexicomania less seriously than his arguments. That would be really pedantic of me.
It’s always redundant to downplay minimalism, FDB. Also, you’re assuming that it floccinaucinihilipilificated my comment, when it was actually floccinaucinihilipilificating floccinaucinihilipilificatiousness in a profoundly, floccinauciously redundant manner.
Whereas THAT is a very poor effort. Are you losing puff, Lolkatz?
“It’s always redundant to downplay minimalism, FDB.”
Not when more complexity or precision is required. That’s the WHOLE FUCKING POINT. Let’s review your oh-so-clever farting around with terminology, shall we?
First, you wanted to insist on so broad an inerpretation of ‘crisis’ as to remove any distinction between a crisis and any old bad event, thereby eliding the defintive purpose of the word.
Now, you’re clinging to so narrow a definition of ‘maximal’ returns on diplomacy that it may only be satisfied by the complete annihilation of one’s negotiating opponent.
So, what’s it going to be?
Oh, let’s.
No, Katz insisted, at #76, after numerous different uses of the word “crisis” that only his chosen interpretation of the word was appropriate. I insisted, accurately, that the word has several interpretations. There was no elision of his favoured definition, just a recognition that his was not the ONLY interpretation. Let’s be clear about this: Katz started this farting about with terminology.
What’s narrow about it? In the context, “maximal” returns would mean the USA had extracted the most that was possible from the negotiations. Given the USA was the dominant power in 1919, complete annihilation of its negotiating opponents was entirely possible. Therefore, what was maximal was obtaining “everything” it wanted, as I pointed out earlier. That’s the substance of the argument, which Katz has chosen to evade with these pointless lexical diversions which, again, HE started.
Like a dog to vomit…
I think I’ll leave youse to it. Like I said, you’re both full of shit, and I doubt you actually disagree about much.
Look, each to their own*, FDB, but you’re taking this too seriously. It’s stoush: harden the fuck up.
*Particularly with vomit.
“It’s stoush: harden the fuck up.”
I prefer my stoush with a certain minimum percentage of actual, substantial disagreement is all. Well, not necessarily – if the snark’s up to scratch.
Orright, orright, no need to get snooty. I’m not nominating this one for SoY ‘08 either, but you’re forgetting that I’ve seen you drink deep of far worse stooshes than this one.
What a pathetic little wanker is “Li Kao”, a particularly odious blend of pendantry, pomposity and peurility.
Or am I perhaps too harsh?
Guilty m’lud.
Ah, #192 is re: 190.
Adrian, Li Kao is he of the flexible moniker, usually known as Fyodor.
It’s puerility, Adrian. Oh, and pedantry.
Katz definitely started the farting about with definitions. I salute him for it, it’s an enviable talent.
This is very high-level stoush, by the way FDB, and you should really appreciate it when you have it so good. When it descends, you’ll know it, because there’ll be monkey noises, appeals to moderators, and comparisons to Bill Clinton (who was worse).
Thanks Li, thought that they might reel you in. But on reeflexion, perhaps I was a little harsh.
No sweat, Ads. I’ve pissed you off several times now, under different pseudonyms. It’s a hobby.
Well we all need a hobby, particularly those with a lot of time on their hands.
Oh, tell me about it. When you get the time, I mean.
On reflection, I’m wrong. [Don't find anyone saying that too much in a good stoush eh? But I digress] The purity of a stoush completely devoid of genuine disagreement makes it the pinnacle to which we all should aspire.
You’ve been hanging around Birdy too long.
If he is admitting to error it is unlikely he has been around Birdy too long. Not much cause to admit error on one side and no tendency to do it on the other.
I’ll let you decide which is which.
Therein lies the joke, Joyce.
Bit slow today – dealing with mining tenements tends to somewhat unfocus the mind.
Logically, this implies that there is an appropriate length of time to hang around Birdy.
It is possible (though quite unlikely) that this appropriate length of time is more than zero.
If this appropriate length of time is more than zero, then we have admitted the existence of a maximal length of time that is more than zero but less than forever.
This recognition disposes of the crisis over the definition of maximal.
No. You are lying.
Andrew R at 161
Now here is some meat to dine on. What features of a democratic polity confer resilience? Openness? Rule of law? Strength of the bourgeoisie? Strength of organised labour? The banality and acceptance of non-violent political disputation? Smaller disparities of wealth? Power spread over a wider set of individuals and groups?
China or USA started this discussion off.
OK, does China still have more in-built financial weaknesses (vis a vis stability, resilience) because it’s still a one-party state? Official corruption there is legendary. Does corruption lessen resilience and adaptation?
Some dictators are notorious kleptocrats [Soeharto, Saddam, anyone?] But Mao seems not to have been? As long as plenty of young girls were supplied to his bed…. And Stalin? As long as the shootings continued, he was a happy ogre.
When you have time, Andrew.
cheers
Weimar Republic: democracy, collapsed.
Spanish Republic: democracy, collapsed.
Italian Monarchy: democracy, collapsed.
Austrian Republic: democracy, committed self-abolition, collapsed.
Pre-Pinochet Chile: democracy, collapsed.
!920s Japan: democracy, collapsed.
Pre-Peronist Argentina: democracy, collapsed.
Fourth french republic: democracy, collapsed.
Singapore: founded as a democracy, now a one-party state.
Greece 1967: democracy, collapsed.
There are more…
OK, Katz – there are a few more. I will concede I over-generalised just off that list I was given.
Now, do the list for the defence. I would hazard a guess that list, even just from your own knowledge, would be much, much, much longer.
.
Assuming Katz’s second list is longer, why do I think they tend to be more resilient? Now, that is something that would be the topic of a really good discussion lasting well into the night and with some good Cuban (socialist products aren’t all bad) cigars and whisky.
.
Now, Katz, straight answer. Do you think that dictatorships tend to be more resiliant than democracies? Straight answer, please – and then feel free to expand.
Were there more democracies in 1939 than there had been in 1929? No.
Were there more democracies than 1999 than there had been in 1989? Yes.
Are there more democracies in 2008 than there had been in 1998? Perhaps.
During periods when the expectations of citizens are met, democracies tend to flourish.
During periods when the expectations of citizens are disappointed, democracies tend to wither.
Are the expectations of citizens more likely to be satisfied or disappointed worldwide in the decade 2008 to 2018? My guess is that they are more likely to be disappointed.
This is only a guess.
But if my guess is correct, we can expect to witness a withering of democracy in the coming decade.
Much of this withering could be the result of oil politics. It may be experienced as violent economic protest in much of the oil-poor Third World. It may be experienced as comprador expropriation in parts of the oil producing world. It may be experienced as social conflict in some of the developed world.
But I could be wrong.
Thus the answer to you question is “It depends…”
Almost worthy of the Bird himself, there Katz.
Do you think that dictatorships tend to be more resilient than democracies? Straight answer, please – and then feel free to expand.
BAU, then?
“Surely the pattern is clear. Democracies, when pressure is applied, survive. Dictatorships do not.”
O Rly? What was Hitler’s invasion of the Motherland? Chopped liver? We were doing fine as a world best practice dictatorship until my brain exploded and those wimpchevs took over and looosened the reins.
The excessively Stakanovite deputy assistant checker of the spelling who inserted an additional “o” into “looosened” has just been penalised with the most severe form of punishment.
I haven’t called anyone a LIAR. I never use capitalisation. (Except for illustrational purposes). I was tentative to the point of self-effacement.
As I said above, “It depends…”
I did, above.
StakHanovite
There you go Iosif, I can “Katz you out”, too, with the Pointleee Pedantry. But I see your Transliteration Engine is in fine working order.
By the way, why do you go by that old moniker? Why not “Man of Steel”? it goes better with the steely gaze, the huge steel production figures, the cold steel of beautiful tanks and electricity pylons etc.
And what’s this about “world’s best practice dictatorship”? Surely you jest? AH morphed a democracy into a dictatorship, got plenty of murders onto the scoreboard before his Goetterdaemerung. Your protege MTT over in China outdid you by several millions I think. Then HIS protege PP in Cambodia outdid youse both, on a per capita basis (or ex capita – how many dead or tortured, let me count both ways)
But youse weren’t running a dictatorship, Iosif!!! Come now, sir. Be a man and admit you were running a Workers’ Paradise, with a bloody wonderful, democratic Constitution, hosting admiring visitors from many lands afar including Australia; a fully functioning Court system to deal with traitors [and golly, were you plagued with traitors and saboteurs, eh?], etc etc. Your country was so far above mere “bourgeois democracies” that it gave new meanings to the word “democracy”. New dictionaries were required. New history books. New State organs. New school books. Such a democracy, and so many foreign admirers.
Even in Germany, where your keenest admirers followed your fatherly advice and condemned the Social Democrats as “social fascists”, quite possibly assisting those National Socialists in their rise to power. What a democracy you ran, mate!
We are in awe, and some of us – yes even here on Australia’s far shores – still cling to our old admiration for your cute little Cubano admirers, los hermanos Castro (the Castro Boys).
Democracy: Da !!!
Dictatorship, Nyet !!!
So, how about that credit crunch?
I think all of our credit here is about to be crunched.
.
Katz – “it depends” is hardly an answer. You seem determined to fly the flag for dictatorship yet you do not want to admit to doing so – yet you are (by the “it depends” answer) saying that under certain circumstances dictatorships are better – or at least more resilient. Can you please be clearer?
Andrew,
asking Katz to be clearer is futile: he Demands Clarity from Others.
Katz’s list of democracies which failed is long. As you suggested, [10.34pm last night] a list of dictatorships that crashed might be longer. But we can’t make progress in this discussion by “you show me your list and I’ll show you mine.”
We could make progress by attempting to identify what characteristics make open, democratic societies more reliient, and what characteristics of dictatorships make them less resilient [if that's the case]. It’s very much both an empirical matter, and an attempt to explain past events.
BTW, although financial resilience/ability to innovate/good productivity and sharing of wealth, is the main focus of this thread, I’d not be one to argue that if a dictatorship is stable and resilient, then it’s a Wonderful Thing. Far from it: I prefer dictatorships to be low on body counts, low on harshness, and shortlived.
Others (very few, I hope) may take a more benign view of foreign dictatorships. For example, they may favour international stability and burgeoning trade, above the human rights of those actually living under the dictator.
Go, Cats!
Well, no, actually. It’s implied that there is an appropriate length of time that is more than zero. You’re assuming that “appropriate” = “maximal”, but they don’t mean the same thing. Furthemore, to state that an “appropriate” amount of time is between zero and forever is redundant to the point of banality.
Non sequitur. What crisis? I think you were in a minor crisis over the definition, just like every polysyllabic word seems to send you scurrying for the dictionary, but the rest of us weren’t.
Oh no, Little Grasshopper, I believe that you did the pre-emptive dictionary scurrying over the meaning of “maximal” way back at #171, viz:
(You may be a saved by an appeal to punctilio here. Perhaps your etymological dredgings could be better described as “plodding” rather than “scurrying”.)
Ambigulous,
One of the few items on which I would agree with Mao (if he did write the little red book) was the line normally translated as “The greater the repression the greater the revolution”. I would argue that democracies tend to be less repressive by their very nature, therefore the scope for revolution is lessened. Where they are overthrown it tends to be where (for one reason or another) they have lost touch with the people and/or the overthrowing force is prepared to use extreme force to (temporarily) cow the people.
.
Katz,
I note the apparent failure to clarify your position.
Thanks Andrew,
and then there’s the worrying phenomenon of the new revolutionary powers-that-be aping the worst of the old, e.g. Bolshevik secret police, aping Czarist secret police. The revolutionaries seem to learn harsh lessons from their oppressors and then repeat the harshness.
“Capitalism is the system where we observe exploitation of man by man. Under communism, it’s the other way around.”
Katz: I think Li Kiao went to the dictionary for “maximal” a long time after your Long March to “crisis”.
cheer up, mighty Master:
North Korea is still Valiant and Faithful
Go, Cats!
LOL, Lolkatz. #171 was in direct response to your lexical scurrying at #170. You do accept that 171 comes AFTER 170, right? Do you know what “pre-emptive” means? Do you need to look it up?
So far we’ve found faults in your grasp of language and logic, and now it seems you can’t even count. Sheesh.
But Little Grasshopper, I did no etymological scurrying for #170.
That modest distinguishment of “maximal” vs “total” came straight off the top of my head.
Frankly I’m a little miffed that you think that I’d need a dictionary to perform such a simple task.
Let me assure you, however, that I’m slow to anger and quick to forgive.
So please continue. I seem to have got my second wind.
If you have your second wind, perhaps you can get around to clarifying your position.
More delusion, Lolkatz. Who mentioned etymology? You accused me of pre-emptively scurrying to a dictionary at #171, after you yourself BEGAN the quibblefest at #170:
I’ll ask you again the question you avoided: do you know what “pre-emptive” means?
Really? That miffed you? Well toughen up, buttercup, because I’m not in the slightest bit sorry to say that there’s a whole range of simple tasks that I don’t think you can handle without assistance. Counting, for instance – how do you manage it when you run out of fingers and toes?
I agree that you’re slow.
“Got”? Broken, more like.
Well, AR, before we can discuss intelligently the resilience of democracies vis a vis all other systems of government, we need to agree that we are talking about the same thing when we speak of democracies.
The first point that needs to be made is that by any reasonable definition of “democracy”, democratic polities anywhere in the world are a little more that a century old.
For example, in the US, not until 1920 did women, a majority of the population of the country, get the right to vote. And not until the mid 1960s in the regions of the US where most of them lived (viz., the South) did Afro-Americans get the right to vote.
Thus, as late as 1916, at least 60% of the adult population of the US did not have the right to vote.
I’m sure you would agree that a political system that denied the vote to 60% of its adult population could not legitimately be called a “democracy”.
For a stunning illustration of how a credit crunch translates into real-life effects, check out the graph embedded in this site:
http://calculatedrisk.blogspot.com/2008/05/us-vehicle-miles-vs-real-gasoline-price.html
As CalculatedRisk says:
I’d like to observe that the red line in the top graph (representing miles driven by Americans) has been exhibiting signs of unusually low automobile use longer than at any other time, certainly since 1970 and probably since at least WWII.
Do these figures represent a large change in American habits? Probably.
Do they represent an unwelcome decline in quality of life? Possibly. (Most of those McMansions are uninhabitable unless one has access to a car.)
Do they represent a cause for political discontent and/or social instability? Too early to tell. However, I happened to be resident in the US during the 1980 oil shock and I recall the occasional gun-fight over access to the local, suburban bowser.
Katz,
If I take the bait you have offered and move off onto another tangent I have little to no confidence we would get it back to here. I learnt long ago not to follow people (or Birds) off onto those tangents unless I find them more interesting than the main thrust. This one I do not. How about answering the question – or do you not feel comfortable that your answer will be politiically acceptable?
I am beginning to think that Li Kao is his use of the icanhascheezburger style typification of your moniker.
I meant to add “…is justified…” somewhere in that last sentence.
But AR, aren’t you interested in efficiency and clarity?
If we get some distance into the very interesting discussion you proposed only to discover that when we use the word “democracy”, you and I have significantly different things in mind, imagine the time we will have wasted.
My sole, modest points are:
1. Democracy is a very young system of goverment (indeed, it is younger than the internal combustion engine).
2. At least one important currently democratic nation has been a democracy for a considerably shorter time than has customarily been assumed.
Both of these facts must be acknowledged before we can discuss adequately the resilience of democracies vis a vis nations with all other systems of government. After all, the US was quite resilient before it ever became a democracy.
Ancient Athens is still customarily referred to as a democracy, though a huge majority of its inhabitants were not voters. (Limited franchise does not equate to dictatorship.) Florida notoriosly had crappy voting machines, all kinds of dodginess in procedures, yet I’d make bold and declare Florida a functioning democracy.
Is this another Katzian smokescreen?
In the latest AFL news, the hitherto “mighty” Cats were thrashed on Friday night by the detested Magpies. Yet still the battle cry rings out: “Go Cats!”. This despite the systemic failure of the Cats against the scarcely democratic Magpies.
A major sponsor of the Cats is the Ford motor company, which operates a large factory on the outskirts of Geelong, home of the Cats. Any compradors in Geelong? Any imperialist corporations there? Been any financial instability there since the collapse of the Pyramind Building Society? … brought down the Cain Premiership…. systemic instability forsooth… Is Geelong the HOME of systemic crisis in the Sate of Victoria? Does Katz take an unhealthy interest in miles diven by US auto drivers, because of the Ford connection?
You wanna put up smokescreens Katz? Game on!!
Go, Cats.
Master Katz of the Second Wind wrote:
“After all, the US was quite resilient before it ever became a democracy.”
{sigh} we were suggesting that, in general, democracries TEND to be more financially resilient than dictatorships.
This does not imply
i) that no non-democracy can show resilience
ii) that every democracy is always resilient
iii) that every dictatorship is headed for a speedy collapse
What I still can’t fathom, is whether Katz cannot comprehend these conclusions, which seem straightforward to me; or whether Katz REFUSES to see this logic, for some reason(s) best known to Katz.
If it’s due to the old “ideological flexibility” which he praised and adopted a while back, then I say [following and adapting dear leader Deng Hsiao Ping pronouncing on cats and mice] “It doesn’t matter what colour the ideological flexibility is, it’s still utter crap!”
But Ambi, do you really want to mention Athens and Athenian democracy in the ontext of resilence?
Athens has been a settlement for more than 3000 years. Only between the years approx. 500 BC and about 320 BC did “Athenian democracy” exist. And during that brief time it was interrupted at least twice by oligarchies. Thus, during its long history of at least 1400 years, Ancient Athens enjoyed democracy for three incredibly brief and turbulent periods between about 500 BC and about 320 BC. And then “Athenian democracy” disappeared altogether.
This doesn’t appear to be a good example of demoratic “resilience” to me.
This argument, I would modestly submit, does AR’s general case no good at all.
AR won’t thank you for your assistance, I fear.
Boy, is this thread finding its legs for a long canter in the middle stretch.
And few realise that it was Ancient Greek lipsnigers who first toyed with the idea of fractional reserve. On Mars.
Shorterer Lolkatz: Democracies are less resilient than dictatorships because the USA only gave women and blacks the vote really quite nearly recently. Plus the Americans are driving a bit less at the mo’. This is critically important to understand before we can successfully avoid answering the question.
Shortererer Lolkatz: Clinton was worse.
Thereby precipitating a crisis of maximal proportions: a BRUTAL AND PULVERISING ICE AGE!
Shorterererererer Little Grasshopper: “I know a democracy when I see one. It’s the resilient one.”
Master Katz,
there you go again: I wasn’t attesting to the resilience of Ancient Athens, as anyone who read my modest post would realise. I was just sayin’ : many folk call that pathetic little settlement “the birthplace of democracy”, even though the overwhelming majority of its inhabitants had NO voting rights.
This was in response to your pointing out that the US had various limited franchises in modern times. As did Britain, Australia, NZ, etc: all widely acknowledged to have been parliamentary democracies for a very long time, in that wide realm OUTSIDE the Katziverse.
I understood when I did it, that it was foolish to follow you down the side-alley of “please define ‘democracy’”. Having now confirmed exactly how foolish my rash detour was, we may ask you again: what is your argument on the relative resiliences of dictatorships and democracies? Despite claiming to have gained a second wind, you seem to be studiously avoiding the task of getting back to that question.
Nobody can force you to do so, of course. But if you don’t, after strongly criticising most of the other veterans of this thread,…. well, what can we conclude? Have you run out of excuses? I doubt that your mini-crisis is due to a shortage of dictionaries.
Go, Cats!
Let’s review, shall we Ambi?
Way back at #63 I modestly stated:
The only fair reading of this statement is that I have no firm opinion on the question. However, I am open to being convinced.
Now, on this thread, there are several partisans of the resilience of democratic systems who proclaim themselves confident of their arguments. I like a good argument and I am prepared to be convinced.
It would be churlish of me to claim centre stage with my uncertain feelings on the topic and my unprepared and ill-digested conclusions.
I therefore cede the podium to those who are more certain of their positions on this interesting and weighty matter.
So, proceed…
Katz,
Perhaps we could also then enter into a discussion on whether depriving prisoners, or the recently released, of their vote means that “democracy” does not exist. Should depriving those under 18 of the vote (they are citizens after all) disqualify you as a democracy? The mentally ill? Those of infirm mind? Those unable to get to a polling booth? If soldiers out in the field fighting and dying can’t get to a booth – are we no longer a democracy?
I will repeat, yet again:
If I take the bait you have offered and move off onto another tangent I have little to no confidence we would get it back to here. I learnt long ago not to follow people (or Birds) off onto those tangents unless I find them more interesting than the main thrust. This one I do not. How about answering the question – or do you not feel comfortable that your answer will be politically acceptable?
Shortererererererer Lolkatz: I’ve engaged in a lengthy stoush about the respective resilience of the USA and China to crises because, “I have no firm opinion on the question”. You know, like, whatevs, dude.
Good going, Lolkatz: bumble like a bee, sting like a butterfly.
AR,
It is clear enough to me at least that there is a large difference between denying small groups of persons the suffrage either deliberately or by accident and denying very large groups the suffrage deliberately.
I’m prepared to call the first example democracy, even though imperfect perhaps.
I’m less confident about calling a system that denies suffrage to over one half of the adult population “democratic”. However, again, I’m open to persuasion on that question.
LG,
You may doubt my bona fides if you like. That’s your prerogative.
Li Kiao,
Master Katz of the Second Wind Who Remains To Be Convinced {a title to be savoured} has wrapped himself inside an enigma. I fear he may not emerge for some time.
He argueth furiously and with vehemence, he flingeth dictionary definitions, he hisseth acidly, then like a fairground puff of smoke, he vanisheth. They seek him here, they seek him there……
Let us not retire from the field, but be spurred on to further disputation by the wraith-like hovering presence of LOLK.
What was that presciently titled old TV series? was it “The Incredible LOLK”?
Go, Cats!
OK – I will play your game for a little while to see if we can usefully progress this as I remain interested in he main point that this thread seems to be headed towards (if anywhere now).
I would say that, for the purposes of this discussion, anywhere that a significant proportion of the population has a say in the broad direction of government policy would qualify as sufficiently democratic for these purposes.
For example – would you say that Russia is currently democratic? Personally, despite near-universal sufferage I doubt it. Was Britain democratic in 1918 despite the non-enfranchisement of women? I would say, again by the criteria above, yes.
.
Now, on that criteria, would you agree that “democracies” as defined above, tend to be more resilient (i.e. resistent to systemic crises) than dictatorships (defined as those countries where only a very small group of people have any significant say in the broad direction of government policy)?
Please do not bother with a definitional quibble but a genuine attempt to advance the discussion.
Depends on what you mean by “systemic”.
As I suggested way up, societies are comprised of many systems — juridical, financial, infrastructural, cultural, and last but not least, political.
If you are talking about political systems, as long as the participants agree to respect the rules, then, by and large, democratic systems (as defined by you) are possibly less prone to collapse. Note, however, I did not say “crisis”. For as we have seen a crisis is not a collapse, although a crisis may provoke a collapse.
There, even though hedged as much as it was, that wasn’t too hard, was it?
Now, why do you think this?
Usually democratic political systems allow for compromise and usually democratic political systems have built-in protections to prevent majorities tyrannising minorities (though, not always).
But here’s the thing. Are democratic political systems the cause of a culture of respect, or are they the product of a culture of respect?
Simply foisting a democratic political system onto a collectivity that does not respect minority rights and that does not recognise the benefits of compromise will not make those collectivities honour democracy. The Weimar Republic is the classic case of a democratic constitution transplanted onto an authoritarian culture. Culture trumped constitution.
So, your rather whiggish fixation on the importance of form, unfortunately, seems to have neglected some rather important features of the 20th century, most notably that ugly development called “illiberal democracy”.
Katz,
To follow that tangent, then – what do you do with a nation mired in dictatorship that does not respect minority rights? Leave the people to be dictated to in the hope that one day they will develop some understanding of the importance of minority rights (and in the mean time allow the dictatorial style of government to continue to destroy those rights) or try to change the style of government?
Or try to build something in the style of a civil society under the glare of the government?
That’s not a tangent.
It challenges your leading presumption that a democratic system is the independent variable.
It is a tangent, but let me comment also. AR has a good point about “leaving the dictatorship in place” which relates to the Katzian dictum that sometimes “culture trumps constitution” [Weimar example].
Under your sad weltanschauung, Katz, it seems unlikely that a nation would ever escape the dictatorial style/political culture. For oppression (of minorities, of majorities) would beget further oppression. I accept that many persons who grow up in such a society LEARN from their parents and ‘the system’ that they have no rights.
That’s partly what I meant when earlier suggesting that the Bolshevik secret police aped the Czarist secret police. Habits of thought, habits of action die out slowly. Equally well, one of the main tasks of a dictator is to cow the populace and BREED submission, by ‘breeding’ persons who (he hopes and plans) never threaten the totalitarian polity.
This isn’t fresh news: “Brave New World”, “1984″, “RUR”, etc from last century; writings against bourgeois hegemony from the previous century; etc.
Now I’ll take a Great Leap Forward* and ask you, Katz: if I live under a dictatorship and I’ve heard about democracy (possibly through hypocritical statements of my dictator), how should I go about helping my fellow slaves to somehow break out of that diktat system, for my personal benefit and theirs?
What Is To Be Done???
Go, Cats!
* I’m making a very rash assumption: that you, Katz, if living under a dictatorship, would prefer not to so live; and that instead of fleeing the country into exile, you would have the guts to attempt amelioration in concert with others dissatisfied with their lot. Please correct me if this assumption is deficient in any of its particulars.
Mighty Cats!!
I’ll have to exercise a bit of asperity here.
This is an absurd and mendacious misreading of my position. I merely need to refer to the long gestation of democratic notions and respect for human rights that evolved in England. Under the Tudors, England was no different from any number of early modern European tyrannies.
Yet, out of a peculiar set of circumstances in England arose a culture supportive of the rule of law, freedom of conscience and limited government. In other words, the culture supportive of democracy evolved in England long before the arrival of democracy.
The English example is the classic case of the rise of the cultural precursors of democracy. It is also the classic example of cultural change.
I therefore think that cultural change is possible and that this dynamic comes from within. Attempts to foist liberal ideas by illiberal means, such as by Napoleon and latterly by George W. Bush, are usually doomed to failure in the medium term. Did Europe become democratic because of Napoleon? He may take some credit, I guess, but he also unleashed many profoundly undemocratic forces as well.
My above comments to AR are therefore not tangential, but rather definitively critical of his position.
And Ambi has further vulgarised vulgar whiggism.
So Katz – how do you see a civil society being fostered?
No, it doesn’t. If valid, it challenges the presumption that a democratic system is the ONLY independent variable. You don’t in any way challenge AR’s argument that democracies are more resilient than dictatorships. You conceded as much at #246, and your subsequent quibbling is no more than vulgar hedging.
On the tangent itself, you posit in #248 that “culture” determines whether a democratic system of government is viable or not, i.e. “Culture trumped constitution”. You seem to think the instance of the Weimar Republic can be presented as an exemplar of this vulgar Strocchism of yours, but neglect to acknowledge that the dictatorship that replaced it was relatively short-lived, and was replaced by a thoroughly democratic and liberal BRD, despite the dreadful cultural proclivities of les Boches.
Not only was your argument tangential, it was badly subtantiated, quibbling garbage.
I should add in – it would be valuable to see your discussion of Germany post 1945.
LG, you are the vulgarian, because you have swallowed whole the notion that cultures are fixed and don’t change, as if genetically determined.
You’ve morphed into Strocchi. Flee before it’s too late!
As per my reference to Napoleon, cultural change can be made at the point of a gun, including, possibly, democratisation of a culture. It’s just very difficult, uncertain and expensive.
Post WWII Germany and Japan provided a perfect laboratory for such an experiment for a number of reasons:
1. They were both advanced, industrialised nations in which had been inculcated several of the cultural requirements for sustaining a sophisticated polity.
2. The US (as metropolitan power) was prepared to pay and capable of paying the huge cost required to reconstruct Germany and Japan.
3. Germany and Japan were isolated and friendless in the world in 1945. No other major polity was inclined to see either Japan or Germany as martyrs to some noble cause.
Napoleon’s efforts ran into insuperable difficulties on all three grounds.
George W. Bush is running into the same difficulties in a small nation (25m) like Iraq.
Germany and Japan post 1945 are outliers and should not be considered as typical exemplars of successful democratisation at the point of a gun.
So Katz, how do you see a civil society being fostered?
Coming up next on Australia’s Funniest Home Quibbles: disputes over the definitions of “civil”, “society” and “fostering”.
Have I? Where? You’re the one generalising a dodgy anecdote to an even dodgier cultural theory. The fact that I called bullshit on you says nothing about what I have or haven’t swallowed. Apart from your bullshit, that is.
Look in the mirror, Lolkatz. Again, the one spouting dodgy unsubstantiated cultural theories, à la Strocchi, here is you.
Except for that whole Weimar-Hitler imbroglio, right? You’ve just contradicted yourself at #248. In the 1930s, you reckon Germany’s culture was too “authoritarian” to “honour democracy”. However, less than 20 years and one bloody authoritarian dictatorship later it had “several of the cultural requirements for sustaining a sophisticated polity”. Are you making this shite up as you go along?
Also, what’s with the fixation on Napoleon? He was a dictator, not a democrat. Your focus on him as a foister of “liberal ideas” is bizarrely misplaced.
P.S. I’ll just note for the record your failure to defend your shameless tangentialism and vulgar hedging of your concession at #246.
Katz, at 11.29am wrote “This is an absurd and mendacious misreading of my position.”
Well, I don’t regard it as absurd. Others may inspect the original and come to their own readings. Like several other contributors to this thread, I find your “position” difficult to ascertain, Katz. Of course, I’m a dill; that may be the main cause of my difficulties.
Then again, we haven’t been asking you to state your “position” – partly because that might take you too many pages. We asked you about the resilience of democracies vs the resilience of dictatorships.
Tudor England: an interesting example. I agree about Tudor England. We’re still living with and working through its influences, I think. Among many influences – IMDO [In My Dillish Opinion] is a hunger for free, open, swashbuckling expression of emotion, opinion and intellect. This hunger, and the right and means to satisfy it, is recognised in official proclamations such as the UN Declaration (and earler examples) and in national constitutions and in the texture and traditions (culture if you will) of polities.
Several centuries post-Tudor we have wider education, more and varied publishing, intertubes and radio and TV and phone; most of these are known about by persons living under dictatorships, and I venture to guess that such persons may hunger for the free use of these artefacts as a means of free expression.
Because the means have spread so widely across so many parts of the globe, my guess is that the time for democratic-gestation-through-cultural-preparation has shortened somewhat since Tudor times. Granted it was very slow in that England.
Did you predict the collapse of the Soviet/Eastern Europe political system before 1989, Katz? Some did. They included the firm anti-communist writers such as Robert Conquest, who had spent decades chronicling the mendacity which oiled that system. How strange that opponents of those dictatorships were prescient.
No, I prefer to talk about the systemic crisis facing decisionmakers as a result of the current credit crunch.
This is, after all closer to the topic of this thread.
And, to drive home the practical point, any attempt by the US to “foster” democratic change in the way they did in Germany and Japan after 1945 is dependant on access to finance for such a venture.
Here are two salient facts about finance:
1. The US government is experiencing difficulties in funding its deficits for present purposes without adding to its agenda. These difficulties are financial in the narrow sense of the term and political in the sense that US voters are objecting to the allegedly unsustainable nature US official adventurism abroad.
2. The major source of international finance today is China (though much of it is mediated through London money markets).
“Fostering” democracy abroad goes on to the backburner when 3 million households are foreclosed at home.
OK,
I recall comments round 1973-5 that the global financial system had underwritten the US war in VietNam by financing large US deficits. Which as I recall it, led to the $US declining in value for a period then. (Australian Minister RFX Connor commented on it, I think.) Do we have figures on this?
Has the US been borrowing from the rest of the world, MORE than usual, to finance its invasion of Iraq and its war-making in Afghanistan? Has the total cost been higher (relative to US GDP, say) in 2006-8, say, than it was in 1973-5?
Now we’re getting down to tin tacks.
Thanks.
Priceless. This is comedy G-O-L-D.
How are they experiencing financial “difficulties”, Lolkatz? Also, the “political” difficulties you refer to aren’t a funding problem; they’re a motivational problem. That is, the question is not whether the Americans WANT to fund adventurism, not whether they CAN.
How do you measure “international finance”, and what’s your source?
Again you have demonstrated your ignorance about what constitutes the US Government. This is becoming a habit, Little Grasshopper.
Do you understand the difference between a constitutional problem and a motivational problem? I think not.
The US Government is the Administration (at present George W. Bush is the titular head of the Executive) that goes to the Congress (which is not the government) for funding. The US Executive is still highly motivated to spend funding on a wide range of projects, including foreign adventurism, but the Congress, which I repeat is not the US Government, but rather is the legislature, is throttling off some of these desired funds. The Congress has the constitutional right to stymie the motivation of the Executive. And the Congress is exercising this right. Hence the problem.
Also, if you need to point out that something is comedy, it often isn’t.
Katz,
To express Li Kao’s thoughts in perhaps another way – the US is not having any difficulty financing its deficit. They owe a lot of money – and they are paying interest and capital as and when they fall due without substantial harm. No “difficulty” there. Additionally – most of the US oppobrium towards their government is of the nature of “bring our boys home”. Note that the rallying cry is not “bring our dollars home”.
On China – it is a major source – but very little of it is going through London. Mostly they are just buying US debt with it. Finance through London is coming from most other sources – the Chinese government deals (through their banks) direct with the US.
So – two “salient facts” down.
On the “fostering democracy” bit. Do you believe governmetns should not be “fostering democracy” when some of their people enter into too much debt and cannot repay it? How many foreclosures should stop you trying to create civil society – one per month maybe? Would the limit be 5? 100? 1000? Two million per month? What figure would be an allowable limit? What should a government do if it is boldly fostering democracy and the number of foreclosures goes above that limit? Immediately stop and pull back?
These are important questions.
AR, If I had meant to talk about difficulties in funding the deficit, I would have talked about the Federal Reserve Bank, which is not part of the US government. The Fed works on behalf of the US Government, indeed, that is one of its main functions. But it is not its only function.
I agree that the Fed has continued to auction US paper very efficiently despite the credit crunch. Purchasers of US paper are prepared to accept lower returns at present.
When I referred to Chinese investment above, I wasn’t referring only to Chinese purchase of US government debt intruments.
Are you sure this is true? I suspect that Chinese Banks are investing the majority of their funds elsewhere, not merely in US government paper.
Katz,
No – the most boring investment strategy of all. Hold it in USD denominated government debt. Yawn.
http://www.treas.gov/tic/mfh.txt
China has about 1/2 of its total USD position in US treasuries. Much of the rest is in semi-government debt with a smattering of corporates – mostly large corporates.
You might find this interesting. I have not yet read through it, but the stats would be accurate(ish).
I didn’t need to point it out, just wanted to. And it was. Or, rather, you are very funny, Lolkatz. You’re a source of constant delight on this thread.
As regards your point above, your diatribe on the role of the legislature blah di blah blah might have been to the point if you hadn’t referrred to US voters at #262:
Also, you’re kidding yourself about the legislature not being part of the government. Of course it is.
Again you have demonstrated your ignorance about what constitutes the US Government. This is becoming a habit, Lolkatz.
OF COURSE the US Federal Reserve System (it’s not A bank, it’s a system of 12 regional banks) is part of the US government. Honestly, where do you come up with claptrap?
And the Fed does NOT auction US paper, the Department of Treasury does.
But thanks for conceding that the US government is not experiencing any financial difficulties in financing its deficits.
AR’s comments are dead-on. He neglected to point out, however, that his link also shows that Japan, not China, is the largest holder of treasury paper.
As to whether, “Chinese Banks are investing the majority of their funds elsewhere, not merely in US government paper.” I think you’re confusing the investment of the PBOC’s foreign exchange reserves and the Chinese banking system. Chinese commercial banks don’t invest much outside of China – the bulk of China’s capital outflow takes place through the PBOC’s accumulation of FX reserves. And, as AR rightly points out, that’s mostly parked in USD treasuries, and government bonds denominated in other major currencies.
O to be caught in a quibble,
The edges of discourse to nibble,
The straws I could throw
To the wind as I go!
While argument slows to a dribble.
FDB,
Some of us enjoy a good discussion. If you do not, fine – but that is not reason to bring Vogon poetry into it.
Just fartin’ around Andrew. And without having read the last 3 or 4 comments, where it appears actual subject matter(!) has once more reared its head. Do carry on old chap, I’m enjoying reading both the quibbling and the argument – separating the two is half the fun!
Little Grasshopper:
1. The Federal Reserve Bank auctions Treasury paper on behalf of the US Government. Your ignorance continues to manifest itself.
2. The Federal Reserve system is described as quasi-government. Representatives of private banks outnumber government appointees. The system was established by legislation, but membership is voluntary and the system is not controllable by government appointees against the wishes of representatives of private banks. You continue to harbour a very strange sense of what constitutes the US “government”.
3. While it is true that Japanese entities are the largest holders of US government paper, they have been buying it for much longer than Chinese entities. In recent years, Chinese entities have bought more than Japanese entities. AR’s Table indicates cumulative holdings. Chinese purchases have increased at a more rapid pace and as could be perceived from the Table, if it extended back to the early 1990s. The Chinese often bought more on a month-to-month basis than the Japanese. (Although it is also true to say that AR’s Table indicates that the Chinese and to a lesser extent the Japanese have demonstrated an inclination to disinvest month-on-month, which has caused some concern.)
1. There is no one “Federal Reserve Bank”. As I stated previously, there are 12 Federal Reserve Banks. Also, as I stated previously, the US Department of Treasury (through its Bureau of Public Debt) auctions Treasury paper. If you insist on contradicting me, FFS provide a source.
2. The US Federal Reserve System is most definitely part of the government. When you say that “representatives of private banks outnumber government appointees” you are confusing the members of the various boards of directors of the 12 regional Federal Reserve Banks with the control of the system, which lies with the Chairman and Board of Governors, who are all appointed by the President of the USA and confirmed by the Senate. It reports to, and is overseen by, Congress. But don’t take my word for it, why not educate yourself for once:
3. “…it is true that Japanese entities are the largest holders of US government paper…” is sufficient concession from you, Lolkatz. The rest was, of course, quibbling.
Ahem. Moderat/or/rix?
FDB, it has been a curious admixture of quibble and meat. Some of the quibble was enough to drive one to drink. But of a pattern.
cheerio
Ta
FDB,
I thought the reference to Vogon poetry sufficiently carried my own comic intent. [sigh] I will have to do better next time.
.
Perhaps Mr. Katz could also do better – to whit by addressing my #266. But I am a patient man – I have been through 3000+ threads with GMB. 300 comment long ones with Katz are merely a pleasant diversion.
Here ya go Little Grasshopper, from the Fed’s own FAQs
1. Relationship with government
http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm
2. Role of the Fed in auctioning US government instruments:
Katz,
Sorry – but your own quotes show you to be wrong – or at least do not support your case.
1. The first quote clearly says it is “within government”. This, to me at least, means that they are a part of the government, even if formally independent of the President and cabinet. They are clearly an executive arm of the government as they function using and within powers granted to them by the legislature.
2. OMOs are conducted by buying and selling existing government debt – not the actual selling of it in the first place. The US Treasury is the primary issuer. The Fed just buys or sells it once it is in existence (i.e. it is a secondary market player) and it does this to affect not the debt level (although on a consolidated whole of government basis it does) but to affect the price of money in the economy – i.e. the interest rate.
#266 is still sitting out there.
Master of Seven Dictionaries, he say: “to be driven to strong drink by Katz is to assuage one’s despair; to accompany Li Kiao to a fresh mountain spring under sunny skies is to caper with the joy of living and conversation; to be instructed by AR is to imbibe both sense and knowledge.”
He so right.
greetings, Li Kiao!
wrws?
rhyme with ’stoush’?
’stoush’ needs no rhyme, it is complete in and of itself: it lives and breathes then falls over after strong drink.
One is humbled by the words of the Master of the Seven Dictionaries as he is unworthy of such compliments. [prostrates self]
AR,
And I’ve driven Birdy into spasms of fury using far fewer than 3000 threads.
Not hard, I know, but one collects such pleasant memories during life’s journey.
My answer to yours of #266 is embodied in my comments about the confusion that appears to exist in your mind between cumulative holdings and recent activity in the market for US instruments.
For example, your own table demonstrates that the Japanese have actually disinvested between March 2007 (holdings $611b) and March 2008 (holdings $600b). On the other hand, the Chinese have increased their investments by $70b.
Well it might rhyme with fermez la bouche, for a start, both a rhyme and an example of the practice.
So, ’stoush’ is poetry distilled eh?
A one-word oddyssey unrolling through the ages, spilling from the mewling maws of the new-born, echoed in life’s last laboured breath?
Is that about the size of it Ambi?
Quibble City!
This “within government” business is a mystery like the definition of the Holy Trinity.
The point is that no bank is compelled to belong to the Fed system. The Fed System does not answer to any branch of government. It merely reports to Congress. The Fed System is not funded by government.
What would you call the US Army were it constituted in the same way? That’s right — mercenaries.
Katz,
On #266:
The first paragraph covered both the “difficulty” in financing the deficit and the Iraq question. You seem to have conceded on the first, but not touched the second.
The second paragraph (I believed) showed no misunderstanding. To the extent that the US debt is held by overseas parties (even though most of it is financed domestically) China still finances a lot of it. They are not disinvesting, although the proportion of US debt financed from this source is declining due to the increase in absolute size. As the existing debt matures they are re-investing to keep the value of the holding steady.
The last paragraph was a question built on your last paragraph of #262. AFAICS you have not yet touched it.
Lolkatz, exactly what AR said at #281.
The Fed System is controlled by its Board of Governors, who are appointed by the executive and accountable to the Congress. It’s own FAQ, which I quoted to you FIRST, at #275, states categorically that it is part of the government. The fact that is has a high degree of independence from the executive and legislature in no way mitigates that basic fact.
BTW, your desperation is transparent. Now that this particular tangent of yours has blown up in your face, why don’t you take up AR’s suggestion at #266 and fuck that one up as well?
P.S. Re: driving Birdy into a Savage Fowl of Fury, Lolkatz, you’re a rank amateur. Pull your head in.
No Little Grasshopper, I couldn’t feel calmer.
But I do detect just a soupcon of Birdyesque vituperativeness in your contributions.
Thus, I am enjoying your projection of “desperation” on to me.
The Fed is “subject to oversight” by Congress. The Fed is not “accountable to Congress.”
I take it that you concede that the Japanese have in fact disinvested in US Treasury paper auctioned by the Fed Open Market Committee in the period March 2007 to March 2008.
And in any case, as we have established, Congress is not “the Government”.
Now we’re moving out from quibbling into the arena of wrong. Congress is the legislative arm of the US Federal Government, the others being the executive and judiciary. As you perfectly well know.
Mmyeah…Birdy used to whinge about other people “projecting” on to him as well…
More quibbling, Lolkatz. From the FAQ:
The Federal Reserve is authorised by an Act of Congress, reports to Congress and may have its powers altered by Congress. Furthermore, its Chairman and Board of Governors are appointed by the President and confirmed by the Senate.
What’s to concede? I never contested that point of trivia; it changes nothing of the argument and, moreover, you’ve already conceded at #274 that “Japanese entities are the largest holders of US government paper”. But, of course, you had to hedge that graceless concession as well.
Whoops, forgot to tackle you on yet another mistake.
The FOMC doesn’t auction US Treasury paper. The US Department of Treasury does. Don’t you remember me correcting you those last couple of times?
In any case – it is clearly an executive arm of the government. Not “executive” a defined in the US constitution, but it is an executive arm, just one established by statute, not the Constitution.
FDB and IKWRWS of 285, 286 loc cit.
Gentlemen, I dips me lid. Youse are grouse. Thanks AR.
It appears that I was incorrect about the status of the Board of the Federal Reserve.
The definitive answer was in the legislation:
http://www.federalreserve.gov/generalinfo/fract/sect10.htm
I’m slightly disappointed that my interlocutors couldn’t find this definitive evidence. They should strive to do better next time.
You live and you learn.
LOL, Lolkatz.
I’m less than slightly surprised that’s the best you could produce. The evidence was definitive – the fact that you chose to ignore it was entirely your fault.
If vehemence = definitiveness, Little Grasshopper, then you are correct.
Nah, I was correct because I got the facts right. You were incorrect because you got them wrong. Do you see the difference there?
However, thanks to yet another example of your graceless quibbling we’ve made it to 300, so a big WELL DONE, Lolkatz.
It’s a very small achievement, Little Grasshopper.
However, I now know much more about the Federal Reserve System, so it has been educational for me.
Katz,
Now can you answer some of the points above? You could start with each of the parts of 266 you have not touched.
AR, I presume you are referring to this:
You seem to be very keen to establish some benchmarks. Whereas, I on the other hand, have expressed no preference for them.
I await to be convinced that there is any need to establish a precise benchmark, no matter what the figure may be.
What is your argument in favour of any benchmarks?
To be precise, I am not a US citizen. I pay very little US tax. I wouldn’t presume to tell US citizens, residents or taxpayers how much of their hard-earned or how many of their creature comforts they should expend to “foster” someone else’s democracy.
But it seems that you may think differently…