The U.S. Congress is working “to finalize the language of an agreement,” reports the NYTimes this morning, concerning “the bailout” of what has been called “the financial crisis” and/or “the economic crisis” in the United States.
Overthinkingit.com imagines “put[ting] Bruce Wayne in charge of the SEC.” Surrealism of The Dark Knight aside (compliance or complicity?), critique and background information (listen to Jim Crotty’s interview) has been issuing from my University for weeks. I admitted to a friend,
“I don’t know enough about macro-economics to argue [against the opinion that the bailout is the only option], and certainly have no idea regarding the other consequences (intended and not) that will rain down upon us little people if they do not bail out the banks, but letting people keep their homes seems good to me. Let the major players take the hit and figure out new, better rules.”
Perhaps a naive stance, but I want to bridge the harder science of physics with this soft science of economics. I missed most of last Friday’s live broadcast from CERN about the next operational steps for the Large Hadron Collider. When I did tune in, one of the scientists was responding to a concern that iron might bend against the steel floor (or some such) because certain experimental results differed from simulated results in an earlier test.
The point the responding scientist emphasized, was that the data is the information, not the simulation: “We won’t fit the data to the simulation,” he said (quoted from memory), “We will believe the data, as we always should.” Someone else argued: “We must do a risk versus benefit analysis for every intervention we imagine we want to make…. according to the Alara Principle – you must do it now” (in this case, install a pre-shower). The question CERN scientists are debating is:
The CERN debate regards when to determine priorities – now, or after some weeks of data has been secured? In another email, I wrote:
I believe [the critique emerging from my University and others] engage[s] the matter of the government tending to bail out the large investors and major institutions (even if the premises for their business are shaky – such as financing purchases that people cannot afford) instead of, or without also bailing out the individuals who suffer the most direct and dire consequences.
I do not want a debate between conservatives (keep traditional, established systems in place) and progressives (change everything), rather, I’d like to figure out ways to change our basis of comparison to long-term sustainability with evidence of gradual improvement for everyone: this is my understanding of U.S. banking policy after the Great Depression, and especially after WWII. Indeed – up through the 1960s, ALL social classes improved their status. Of course markets are more complicated now, but that is just an excuse for a lack of creativity and policy innovation.
Of course, it always matters which data one chooses to pay attention to, and there is always information left out. So illustrates another article in today’s NYTimes, describing the participation of Goldman Sachs in negotiations to save American International Group. Gretchen Morgenson explains that the housing collapse is often cited – i.e., framed – as the “cause” of the problem, but argues that A.I.G. is a better exemplar, much closer to – and indicative of – the root of the problem:
the virus exploded from a freewheeling little 377-person unit in London, and flourished in a climate of opulent pay, lax oversight and blind faith in financial risk models.
I am astonished at how easy it has been for the housing market as symptom to become the scapegoat for the problem.
“We have to commit [the bailout agreement] to paper so we can formally agree,” Nancy Pelosi is quoted in the NYTimes headline story quoted above. The language is the crux of the matter.
The BBC’s Newsnight reported (introduced with a dramatic actionflick score) on Friday’s imminent challenge to the U.S. Congress about dealing with the U.S. economy. This clip was shared with my academic department (Communication) with this intro:
“If you are interested in English humor, BBC-interview techniques and reporting, and want to learn a thing or two about the current ‘Wall Street’ crisis, which you may have missed in the [U.S.] mainstream media, watch [it].”
I learned a thing or three about the dynamic forces at play: financial interests, political imperatives, the role of the presidential campaign debate as a factor in Congress’ negotiations. Responses from Communication Department faculty included “Stephen Colbert’s razor sharp take on the financial crisis,” and a multilayered observation comparing British and U.S. modes of humor and reporting.
In addition to Colbert’s labeling of the (apparent) need for the U.S. to decide “in a panic” the largest financial overhaul in our lifetimes, is that while the BBC may have more of a history of engaging “troubling questions,” such difficult questions “are [being] posed of those proposing the bailout, questions that used to be hard to pose here [in the U.S.]. Now, though,” explains another faculty member, “they’re surfacing, e.g. on Rachel Maddow (weeknights, MSNBC, also mainstream).”
Maddow’s metaphor of kids in a candy store is excellent. Robert Reich also weighs in on the sugar high. Addiction. That is what this behavior reminds me of – junkies who will do anything in order to score the next hit. Addicts need treatment, and toxic substances (such as those emitting radiation) need careful, deliberate, and open handling. We need to weigh the financial and economic priorities at stake – those in potential as well as those at risk.