Rotten to the Core

Comix Economics Events Fiction Film Kid Lit Music News Postmodernism Religion
1. I applaud former AIG executive Jake DeSantis for having the nerve to whine in public about having to give back his bonus. But DeSantis misses the larger point: the era of bloated multi-million dollar bonuses for financial firm executives must end -- not just temporarily, but permanently.

There's a popular misunderstanding that big bonuses were a symptom of the problem at companies like Lehman Brothers and Citibank and AIG. In fact these bonuses were not a symptom but a cause of the problem. How can a financier justify a seven-figure salary/bonus every year? Not with honest investment in honest business, not year after year -- that's not how honest business works. The system of hedge funds and risk management and credit default swaps grew to support the illusion that high finance could produce infinite wealth and infinite growth, and this system was not rotten at the edges but rotten to the core. A bank or insurance company that pays large numbers of employees millions of dollars a year will inevitably have to resort to deceptive or dishonest practices to maintain that excessive level of reward.

Personally, my private prescription for our sick economy can be found in the book Walden by Henry David Thoreau. But it's hard to translate this into public policy, so on a more practical level what I want is strong permanent salary caps for executives who manage companies our government considers "too big to fail". If they're too big to fail, then they're too big to be entrusted to high-rollers with dollar signs in their eyes.

2. I've been spending a lot of time in Washington DC lately, and may have to miss PEN World Voices in New York City this year. If so, I'll be missing a really good lineup including Paul Auster, Lou Reed, Muriel Barbery, Mark Danielewski, Neil Gaiman, Paul Krugman, Michael Ondaatje, Parker Posey (?) (okay), Francine Prose, Laila Lalami, Esther Allen, Daniel Mendelsohn, Jonathan Ames, Roxana Robinson, Niall Ferguson, John Freeman, Richard Ford,Wesley (John Wesley Harding) Stace, Philip Gourevitch, Lynne Tillman, Bob Holman, A. M. Homes and a whole lot of international authors I've barely or never heard of but would probably benefit from hearing from. If you can go to this, I urge you to do so.

3. Speaking of Thoreau: "Henry David Thoreau is one of those authors that readers think they know, even if they don’t." I agree with that. I haven't yet seen Robert Sullivan's The Thoreau You Don't Know, but the basic idea as described on this website sounds good to me.

4. According to GalleyCat, Robert Crumb's next masterwork will be an illustrated Book of Genesis.

5. I'm the kind of guy whose idea of fun is to sit around talking about the meaning of postmodernism (which I feel I understand perfectly). But this article by Andrew Seal (via Scott Esposito, who liked it) is terribly written: At any rate, de Onís also theorized a bifurcation in the set of reactions to modernism: 'postmodernismo' was "a conservative reflux within modernism itself: one which sought refuge from its formidable lyrical challenge in a muted perfectionism of detail and ironic humour, whose most original feature was the newly authentic expression it afforded women" (4). Postmodernism was a fading light, however, to be succeeded quickly by 'ultramodernismo', its opposite, an intensification of "the radical impulses of modernism to a new pitch" (ibid.) Anderson returns frequently to this basic division. That ain't postmodern.

6. Bob Dylan's new album is apparently inspired by the fiction of Larry Brown, an author I've never read. I best get reading.

7.. Appreciating Edgar Keret.

8. I got your Wild Things right here.

15 Responses to "Rotten to the Core"

by dlt on

"Too big to fail" means too big to compete

Regarding the high bonus/high pay for financiers. I have a friend who is in the commercial real estate business and makes a lot of money. But when Michael Milken made some 500 million dollars, he said "no one can make that much money as an employee and be legitimate." If a company is considered too big to fail it must be broken up, or at the very least the salaries and bonuses capped. The government went after IBM, AT&T and Microsoft, but it's interesting that they haven't gone after any Wall Street firms or banks. Or media companies...

by Duncan Brown on

The Rising Fall of It All

Before the fall there was the wall
Street of coins and the money halls
Everything falls, streets 'n' walls
Glass or stone can't resist the call
The more it rises the more it falls
Destruction and renaissance tells all
Eyes are always on the up for the call
Tearing down head first for the fall
It's another day on the rise and tall
Falling for the falls sweeter call,
Just another up on the down,thats all.

by Levi Asher on

By the way, I know I'm not an economist. Paul Krugman wrote an editorial in today's New York Times that says what I'm trying to say much more succinctly:

"The market mystique didn’t always rule financial policy. America emerged from the Great Depression with a tightly regulated banking system, which made finance a staid, even boring business. Banks attracted depositors by providing convenient branch locations and maybe a free toaster or two; they used the money thus attracted to make loans, and that was that.

And the financial system wasn’t just boring. It was also, by today’s standards, small. Even during the “go-go years,” the bull market of the 1960s, finance and insurance together accounted for less than 4 percent of G.D.P. The relative unimportance of finance was reflected in the list of stocks making up the Dow Jones Industrial Average, which until 1982 contained not a single financial company.

It all sounds primitive by today’s standards. Yet that boring, primitive financial system serviced an economy that doubled living standards over the course of a generation.

After 1980, of course, a very different financial system emerged. In the deregulation-minded Reagan era, old-fashioned banking was increasingly replaced by wheeling and dealing on a grand scale. The new system was much bigger than the old regime: On the eve of the current crisis, finance and insurance accounted for 8 percent of G.D.P., more than twice their share in the 1960s. By early last year, the Dow contained five financial companies — giants like A.I.G., Citigroup and Bank of America."

Here's the whole article.

Levi, you are pointing out exactly what has happend to our country. We have gone from a producer of products - financial companies only 4% of GDP - to a service economy dominated by what is called FIRE - Finance Insurance and Real Estate. In other words, we don't concentrate on production, where there is a company that creates jobs for middle class and blue collar people, but rather on companies that own assets, and pay a small number of highly skilled people to exploit those assets or trade those assets for other assets. The rest of the jobs are low paying service jobs that do things that the high paid people don't want to do themselves and have enough money to pay for. Technology jobs fit into the high paid expert category, because it requires powerful computers and software to move the money around the world.

In the 60s and 70s we had a lot of producer-type jobs. Good jobs could be found at GM and Ford, Motorola, and IBM, blue collar as well as white collar jobs. The US middle class benefitted, and I think we saw our best period of economic growth (for all) during that period. Then along came the Reagan era and the rise of the FIRE economy, and the rich got richer and the poor got poorer.

What we need is for Obama to get America back on track as a producer nation. If we produce green energy, and the means by which to produce that energy, and if we can sell some of these products to our trading partners, this will be a big step forward for the ecology as well as the economy. We still produce and sell software, but we need to produce other products that create middle class jobs, because this is what will make the country grow. When I say middle class jobs, I mean jobs that people on the lower economic levels can grow into so that we have an upwardly-mobile economy, not just all money and power in the hands of the rich.

I don't know if the automakers can pull out of their tailspin, but it is those kinds of durable goods industries, along with the thechnology industries, that in my opinion create real wealth in our country, because the wealth is shared with the employees, who then spend their money in their communities, so the wealth is passed along to shops and services.

We need to go back to banking as a boring industry. Look what happens when it gets sexy and exciting! Watch out for your wallet and your 401k!

Krugman's article is good. Let me just add that we shouldn't think of companies as being "too big" but rather, we need transparency and regulation to prevent them from gambling away people's life savings. There is nothing wrong with being big - it's how you get there that's important.

by Duncan Brown on

Money making money is a futile activity. On the upside it cuts out the middleman. On the downside it cuts up everyone.

by catalyst on

That Thoreau website is great, the book looks promising. Duncan, while I dig the piece, and generally agree with that point of view, I am reluctant to accept nor tolerate! your use of all. That is all. Good day.

by Cal Godot on

Money is the least interesting thing in the world to talk about. This "crisis" has happened before, and it will happen again. I guarantee it. Americans are the biggest and best suckers in history when it comes to money. An entire nation of craven moneygrubbing rubes in debt up to their eyeballs, obese from fast food, gleefully investing money with wealthy thieves in the vain hope they can become wealthy thieves as well, and when that tempestuous tumult toward avarice falters demanding handouts from the government about which they complain incessantly. Jeffers was right: if there's a God, he oughta wipe out the whole lot of us and start afresh. (I vote cats, Lord, as the next dominant species.)

Etgar Keret, though, is not the least interesting thing in the world to talk about. Neither is Thoreau. A single page of either author is far more engaging, compelling, and perhaps important than a thousand Paul Krugmans.

But.. sigh... money money money. That's all anybody wants to fucking talk about in this morbid rat race. If the love of money is the root of all evil, then what is the American obsession with money? Evil itself?

by conrad on

Just so everybody knows: Walden is available at Project Gutenberg http://www.gutenberg.org/etext/205

PG is the only website worth spamming comments sections for.

by Levi Asher on

Well, Cal, I definitely disagree that this financial crisis is nothing new. I think it represents a type of institutionalized corruption -- I'm referring specifically to the hedge fund/credit default swap con game here -- that hasn't been seen before. The subprime mortgage bubble is like many bubbles before, but I don't think there's ever been anything like this hedge/swap scheme before. This is another case of increased technological sophistication giving us more tools with which to damage ourselves.

On the moral side ... well, I used to go around saying "It's Not About Money". I still believe that, if you're talking about reward -- wealth has never been a goal for me in my life. But I did learn some lessons from the experience of going broke (and working my way back from broke) that changed my outlook. It sure is about money once you suddenly look around you and realize you don't have any.

by dlt on

During his final decade, Jack Kerouac, a sentimental republican, could've used the money, w/ all the moving from Florida to Lowell, etc. But he was boozing, not working much.

More liberal minded Hank Charles Bukowski spent a few decades on park benches, in flop/rooming houses. He died in the suburbs, however.

AIG is now AIU. Wow

by andrew on

Levi,

I'm not certain you understood the context of that definition of postmodernism (possibly because you didn't read the whole post?): de Onís is one of the authors Anderson looks to while trying to trace the origins of the word. Neither he nor I am trying to say that this definition of the postmodern is the same as what we now generally mean by the term.

Also, I would appreciate more extensive criticism of my writing, if you feel generous enough to give it. I am always trying to improve: as Beckett says, "Try again. Fail again. Fail better."

by Levi Asher on

Andrew -- thanks for the feedback, and you're right that I didn't read your whole piece. I wanted to read it, though, and I was stopped dead by I was paragraph I quoted. I totally believe that there are good things in the piece -- I know that Scott Esposito wouldn't have praised it if there weren't. I guess I was just trying to express my objection to the fact that discussions about postmodernism often use stuffy and difficult academic language. I will look out for a chance to read other things you write and will hopefully like them better ...

by Duncan Brown on

Postmodernism, doesn't exist beyond the mental confines of those who think it does.
There's a lot of stuff like that around.
Anyone know where the delete key is located.

Add new comment