I'm waiting for the machines to take over, really, and for the robots to be standing over our dead human asses, explaining in a monotone that their "programming determined that the most efficient answer was to shut [our] motherfucking systems down." How to really get our brains around what I heard on NPR a few weeks back...
The symbolism of this one fact perplexes me in exponential ways that only a supercomputer could calculate apparently: MIT physicists are responsible for creating the 14 year-old, "dark matter"-wealth-creating, financial instrument par excellence that sunk our economy (with the assistance of stupid, greedy, and credulous politicians): Namely----the credit default swap (CDS).
That physicists are toying now with our economy in addition to designing literal weapons of mass destruction should make us stop and admire the wonderfully self-spawned complexities we see all around us. How little we understand the power and force we unleash, not The Virgin and The Dynamo, but The Ignorance and The Financial Instruments. This should sound like the beginning of a dumb science-fiction plot, heavily laden with allegory----the sages of the material universe applying their labors and wisdom to the laws of men and the social sciences in hopes of a more prosperous society. It should only be limited to that cliche kind of awesomeness we get from that (mostly) escapist genre of entertainment. Yet, all in one, these CDSs----abstractions----are instrument, scheme, metaphor, and artifice, weighted down with various dire social consequences simply because they were foolishly injected into reality. Where the hell can we escape to when The Masters of the Universe impose their economic metaphors on the whole system? It makes paranoid geniuses like this guy sound entirely reasonable (in a descriptive, not prescriptive way):
But we are suggesting neither that the human race would voluntarily turn power over to the machines nor that the machines would willfully seize power. What we do suggest is that the human race might easily permit itself to drift into a position of such dependence on the machines that it would have no practical choice but to accept all of the machines’ decisions. ... Eventually a stage may be reached at which the decisions necessary to keep the system running will be so complex that human beings will be incapable of making them intelligently. At that stage the machines will be in effective control. People won’t be able to just turn the machines off, because they will be so dependent on them that turning them off would amount to suicide.The Humans Are Dead! For god's sake, this is-----THEODORE KACZINSKI!----quoted in the amusing op-ed, "The Rise of the Machines." Help...If anyone can explain the poignancy of physicists intruding into our flippin' economics, I can definitely use some serious counseling on what apparently is manifesting as a nightmarishly full-blooded, living metaphor.
A Tenuous Speculation
As V. will teach us, metaphor "cloaks that innate mindlessness" "so that the 'practical' half of humanity may continue in the Great Lie," lessening the impression that we're "alone with the task of living in a universe of things which simply are." That is the sad reality that our hapless postmodern poets protect us from. If physicists continue their brilliant metaphorical contributions to our economy, people will be forced to meet life-nullifying truths. These might be on par with losing all the equity in one's house, facing foreclosure, loss of work and retirement savings for the narrow class interests of the lazy and avaricious. No one wants to succumb to those kinds of delusions and economic circumstances, do they? Leave the heavy lifting to the poets; let them discover the right metaphors for us to be culled into living so that our economy will function properly. We've seen what the credit default swap metaphor/artifice has done for the proper redistribution of wealth.
If the "practical half" begin connecting the viral CDS metaphor to this broader, integral Great Lie, we're fucked because in V., as in life, the only useful purpose poets serve (to "cloak" that "innate" and inanimate "mindlessness") goes down the tubes; and then "society would live no longer than the quick memories and dead books of their poetry." These frackin' dorks from the 4th dimension have threatened the utilitarian necessity of our Great Lie: that our "machines, dwellings, streets, and weather share the same human motives, personal traits and fits of contrariness" as we do. How to live without this Lie where people are deceived into believing that our economic circumstances and realities function as laws of nature, sometimes a storm, other times prudent investments in our collective success, but always as scientific as the 2nd Law of Thermodynamics? If we disabused ourselves of these kindly falsehoods, modern conservative economic and political philosophy would be dooooooooomed, their metaphor exposed as mere contrivance.
01010101010101010101010101010101010101010101010101010101010101010101010101...
Either way, deception or not, I'm thinking Henry Adams' Education was right----we don't have the right kinds of knowledge for the forces we've unleashed in the 20th Century----entropy, entropy, entropy we go! So in that case, it's more the grim phoenix of Pynchon's Gravity's Rainbow than any "rationality of the market," or even universe for that matter.
The Banks Were Too Generous to Minorities Great Lie
What is great is that conservatives are pushing this line that it's mainly the sub-prime mortgage housing crisis to blame for all our economic woes, when it is only an infinitesimal part of it. They bring all the old canards to the table, but the most notable and insidious: That the government went too gushy for minorities and the poor (for them they're synonymous) in the 90's because of their liberal, do-gooder philosophy that forced banks to loan to people who couldn't pay. Matt Taibbi schooled Byron York on this a month ago; and yet the media still offer it as credible. (The latter embarrassingly cuts it short during the live on-line discussion because Taibbi demonstrates that York doesn't understand anything about CDS or derivatives, but "he sure knows what a minority homeowner looks like.")
Funny how conservatives these days also don't seem to acknowledge the motivation of banks wanting to "get their credit risk off their books and into non-financial institutions like insurance companies and pension funds." This from a Newsweek piece on credit default swaps that also pointed out that CDSs created a $62 trillion dollar market----"nearly four times the value of all stocks traded on the New York Stock Exchange"-----wealth that is not well understood (by even the "professionals"), not government regulated, and oh yeah----nothing fuckin' backs it! "Since credit default swaps are privately negotiated contracts between two parties and aren't regulated by the government, there's no central reporting mechanism to determine their value."
So when conservatives, like York and the MSM, push the Fannie Mae and Freddy Mac narrative, Taibbi reminds them:
Not to mention the fact that since McCain's ex-economic advisor, Phil "Mental Recession, Nation of Whiners" Gramm got his pet project, the Commodities Future Modernization Act passed in 2000, CDSs went from $100 billion, to $6.4 trillion in '04, up to the unfathomable $62 trillion in '08. Again, Taibbi argues:What we're talking about here is the difference between one homeowner defaulting and forty, four hundred, four thousand traders betting back and forth on the viability of his loan. Which do you think has a bigger effect on the economy?
...these massive companies [Fannie, Freddie, AIG] aren't going under because of individual homeowner defaults. They're going under because of the myriad derivatives trades that go on in connection with each piece of debt, whether it be a homeowner loan or a corporate bond.Conservative motives are brazenly obvious. But what about those fracked up physicists? Maybe its the relative value of the dollar to the speed at which its propelled around the earth cyber-optically that attracts their misplaced attention. Shouldn't they be dorking out on "string theories" and "Battlestar Gallactica"? "If we know its speed, we can't know its location; if we know its location...watch out Commander Adama!"----So says "The Rise of the Machines":
Making money, it seems, is all about the velocity of moving it around, so that it can exist in Hong Kong one moment and Wall Street a split second later. “The unlimited replication of information is generally a public good,” George Dyson writes. “The problem starts, as the current crisis demonstrates, when unregulated replication is applied to money itself. Highly complex computer-generated financial instruments (known as derivatives) are being produced, not from natural factors of production or other goods, but purely from other financial instruments.”
Wealth created by instruments not in any way connected to the "natural factors of production or other goods"----otherwise known as reality. These financial instruments represent something real in the sense that they may be possible academically, but injecting them into economic relations that signify, not a thought experiment, but peoples' survival and livelihoods smacks of a war against objective reality best suited to postmodernists (whose valuable services don't reconfigure material existence, but consciousness). These financial instruments, being like metaphors to our postmodern poets, have "no value apart from [their] function...a device, an artifice... cloaking that innate mindlessness." Better to see it as "emptiness" instead; there's more hope in that.
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My friend, Milan, sent the funniest and smartest explanation of the logic of Wall Street and the crisis we see today, this BBC clip.
And Truthdig's financial crisis timeline project, here.
And lastly, the poor guy who predicted the crisis, and got derided for it, over and over, at the time. The prophetic Ben Stein and Fox News' "expert" advice: "The financials are great, invest in Merrill Lynch, Washington Mutual."
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