A Voyage of Prediction.

Last time, I mentioned articles from the International edition of Der Spiegel as the prompt for me to set out a description of the Earth of 2309 that my Iskanders left to take up their development contracts on N-3. That flight went astray – stranding them on the alternate earth called Gaia. The articles  were by Wolfram Eilenburger and by Parag Khanna, both academics with positions in US universities – you can probably find the articles by searching their names.

I had previously avoided describing the Iskanders’ Earth because I never fancied myself as a futurist and the great majority of SF authors who do picture a future Earth clearly have more imagination than understanding. But I have been reading quite a lot of predictions lately – mostly about America’s status at the end of the present Depression as well as a great deal of speculation about the form of the future multilateral world order. So I felt I might take a stab at picturing the future.

I think I was on the right track when I made my Iskanders a multicultural mix – but perhaps it was also a tribute to Canada. I also believe having the Iskander voyage a civilian project in a chartered commercial transport based at Baikoneur instead of a government mission run from Houston is in line with the probabilities for 2309. I envisaged a corporate project that hired the best from all the world – somewhat more grand but otherwise similar to the oil exploration crew I joined in Libya 46 years ago. In fact I have no culturally recognizable Americans mentioned in the stories, although Dirk Scopes, Richard Norris, and Jon Mich’l could be Anglo-Saxons from any of the A-S homelands and diaspora. I do have others who could easily be from the States, that has always been home to the bright and ambitious from everywhere in the world.

In contrast I have several Germans, including Liz Gursche and Kurt Stockmuller; A few Arabs, Hannan Badry and Ahmed Villars (the latter likely French Tunisian); a number of Asians, Wang Ke xian, Dr Chan, and Huang; East Europeans, Yvan Korchik and M’Tov (never been fixed but perhaps Russian Jew?); and at least one named African, Helen Svambini. The Matahs are Anglo Indian/Greek of course ( I worked with a Pakistani in Libya whose daughter combined these heritages and I thought Gisel should share it ); and people like Professor James Hutton were historical figures I felt like including. (He’s the 18th century British Father of Geology – and I made him the head of the Iskander Geology department.)

This non-American milieu was established even before the huge political over-reach and fiascos of the Bush years, the paybacks for which are only now appearing in the mainstream consciousness. The American Century has clearly reached its ‘best by’ date and portraying any future SF  story in an Americo-centric way will clearly seem quaint in the mid-term. Of course the States will bounce back to become a leader among equals when it pays down its massive indebtedness, but as Eilenburger suggests – not until the people embrace the solid social fabric that a social-democratic capitalism will impart.

I don’t mention any off-world religion except the eastern Buddhist-Taoist meditation and philosophy Gisel embraces. It seems to me that in the future the concordance between modern scientific views and those two ancient religions should see them gain ground against the logically marginalized Abrahamic faiths, but I’m prepared to admit that the bias is mine. I do accept that a deep philosophical belief of some kind is an almost necessary grounding for most people – even if only during those periodic dark nights of the ‘soul’.

Women play an essential part in the Iskander expedition, but that doesn’t prevent latent paternalistic chauvinism from annoying our self-confident and capable Gisel. She is a natural free-thinker and rebel, who benefits from my own observation that the operator of a remote project has much more scope for doing things his or her own way than the poor saps in a cubicles just down the room from some pointy-haired manager. (I chose to be an exploration surveyor and foreman precisely because I could generally drive projects in my own fashion by judicial massaging of the developing body of information I sent back to the city.)

But to get back to the chauvinism, I felt I should have Gisel’s problems with her own male colleagues somewhat less infuriating than those she finds among the Gaians. The other female disadvantages are reflected in her relationships and affairs – how does a woman form a stable relationship with a man who may be her intellectual and cultural inferior? Not for nothing did women cultivate the “dumb blonde” image in the world I grew up in. One clever and beautiful young friend observes that it is hard for the male ego to accept the second spot for more than a year, and often much less.

Young Gisel is attracted to the more exotic Gaians; knights, spies, military heroes, and princes, but eventually she realizes she needs a stolid stable kind of fellow whose own personality is strong enough to recognize his present inferiority but with enough ego to believe he is capable of matching her successes in the future. The very unexciting Yohan Felger, of course. They are buddies and partners in enterprise as much as lovers. She has fewer romantic attachments with her Iskander colleagues, and it’s not only because of an intention to avoid workplace entanglements. She does become entangled with Marc Cronon (and I’m still working on a plausible start to that relationship), who is definitely an unexciting fellow. One reviewer pointed out that the passionate Gisel would surely opt for more exciting lovers (and I do have Lord Ricart in that role) but I guess I’m too male to understand women who fall for the most wildly unsuitable partners.

Does that exhaust my picture of Earth 2309? Not sure – I may have a stab at painting some broad strokes of the differences between our world and the future one, and of course, I should provide a capsule history of Gaia before I leave the futurist posts.

Public Acceptance of Retrofuturism

I’ll start with an apology for not posting for several weeks. I have been back and forth to the city since my brother-in-law went into hospital and not had the tranquility needed to hone this draft into something I wanted to post. Now I’m home again and my wife’s brother is being discharged from hospital into the situation she wanted I’ve been able to make the necessary revisions.

I fully intend writing about retrofuturism in this post, but I cannot but point to a book moving to best-seller status that comes at the financial crash from the other direction than I wrote about. While I looked for a possible hero to save us from the effects of the crash, Barry Ritholtz has looked for the people who caused it. See his book, “Bailout Nation”, here – http://tiny.cc/L7fJ0 for the full story, but I have to post a couple of paragraphs here.

Several of Greenspan’s policies proved to be wildly misguided: the regular interventions to protect asset prices and bail out investors, the irresponsibly low rates after the post-2000 crash, and his nonfeasance in supervising lending.  Most of all, it was his deeply held philosophical conviction that all regulations are bad, and are to be avoided at all cost. We now know what that cost is, and it’s astronomical.

Alan Greenspan had spent his years at the Fed operating under an enormous philosophical misconception, as the former Fed chairman admitted in testimony before Congress on October 22, 2008: “I made a mistake in presuming that the self-interest of organizations, specifically banks and others, was such as that they were capable of protecting their own shareholders.”

Just as well I didn’t propose Alan Greenspan as a potential protagonist – hero – for my “Follow the Money”. I didn’t, did I?

Moving on to a new concern, I’m interested in learning where retrofiction fits within readers’ tastes. This is prompted by a perceived incongruence between it and science fiction. I offer a couple of examples that suggest most SF today comes with assumptions that are as good as set in stone. They are actually only crutches to help the SF writers, in my estimation.

Artificial gravity – this helps writers set their in-space scenes as if the characters were on a planet under conditions where their feet stay on the ground. It eases the logistical problems for the authors. The fact that there is no such thing as artificial gravity and only the most flimsy of (so-called) scientific assessments of its possibility seems to be an inconvenience swept under the rug. I have to note that it conflicts with the reader’s own knowledge of space as we are all too familiar with video from the International Space Station, where the occupants drift about weightlessly.

Faster than light travel – as if Einstein was nothing more than a bumbling idiot. While it is very inconvenient to write novels within the limitations the universe places on us, it is quite evident that a novel incorporating any form of hyper-drive is actually fantasy. Some physicists have suggested that there is room for such concepts as superluminal travel within string theory, but I’d suggest these statements are only attempts at headline grabbing by individuals looking for publicity.

Yes – I know that I used a wormhole jump as a device within my Iskander series, but I didn’t presume to show it working in scenes that allowed people to swan about all over the universe at will. Besides, since I’m extremely skeptical of such mathematical fantasies, I had it not work – at least not work in any reliable fashion.

I used the device as an off-stage prop to account for the presence of modern people in an earlier world. I suppose I could have used other devices, but it seemed to me that most of them were a form of magic – which didn’t fit the novels I wanted to write. If my use of this suspect worm-hole device makes my series part company with real SF, such as it still exists, then I’m not averse to being a fantasy writer – I have written in that genre too. Actually, I’d suggest that retrofuturism belongs as a sub-type between SF and fantasy.

In a new development, there have been a couple of predictions of world changes over the next 21 years in Der Spiegel and so I decided to take them as my starting point for a picture of the Earth my Iskanders left to take the ten year contract on N-3. I have previously been very reluctant to attempt any such prediction about the future Earth – since it is almost certain to be wrong – but these offer a starting point to develop the multicultural and multilateral world that I have hinted they come from. So the next few posts will be an exploration of the home world of 2309.

Back to the Retrofuture.

I think I’ve belaboured the efforts of the current President of the United States enough – a thankless task in many ways. (His or mine?) One last comment on that topic – the Ayatollahs have solved one conundrum for him. He now has no need to distance himself quite as far from the religious fanatic Benyamin Netanyahu because the equally unbalanced Ahmedinijad has destroyed his regime’s credibility with every observer and policy wonk who felt Iran deserved a fair shake. Time to put engaging Iran on the back burner.

Did you ever wonder how much a gold sovereign bought in 1700 – or a French Livre, or a Piece of Eight? How much was a doctor’s visit or a lawyer’s fee? Having puzzled over the relative values of currencies through the ages, I have to welcome a new book from the historian Robert Allen, Oxford professor of economic history. Entitled  “The British Industrial Revolution in Global Perspective” it examines the economic underpinnings of the gradual developments in technology that blossomed into the Industrial Revolution.

Those who are familiar with my Iskander series retrofuturist novels will know this is a row I’ve also hoed at times – if in fiction. How do the prices and values of money in history relate to the events? Where Allen points out that strictly commercial factors such as pricing and capitalisation enabled the early inventions to last long enough to prove their worth, I picked my technologists to have knowledge some 400 years ahead of the Gaians of my alternate Earth. Once they had the venture capital to hand they soon demonstrated the superiority of every product they sold.

While Allen apparently credits free trade and imperialism as the factor that provided the necessary store of investment capital (aren’t they one and the same?) I had my Iskanders outright steal it – al la Hawkins, Drake, Henry Morgan and Admiral Vernon – by finding a pretext to attack the ports where Potosi silver was exported. This naturally plunges them into a feud, if not undeclared war, with the Empire who believed their own stealing the silver from the natives was a legitimate theft. Again, the Spaniards in our world considered their murder and conquest of the S. Americans to be more legal than the actions of other Europeans to part them from their ill-gotten gains.

While I haven’t detailed it in any of the novels so far, I do mention in The Wildcat’s Burden (due for release in September) that Iskander is conducting diplomatic discussions with the Empire – now no longer an open enemy – to arrive at a figure for reparations they might pay to wipe the slate clean. I suggest here, that the Iskanders expected the time would arrive that they would be financially secure and able to make peace with the Emperor over this little bit of diplomatic inconvenience. International politics a cynical sham? We calls ‘em as we sees ‘em.

Professor Allen also credits the Black Death of the 14th century with disposing of surplus English population and allowing the survivors to flourish among a more generous division of resources. The result was that the English of the 17th and 18th centuries were not as impoverished as the rest of Europe and had the money and better trained labour force to work with the new inventions. Also, the use of coal to heat London homes was caused by this relative prosperity, and it in turn developed the coal mining industry on a sounder economic footing when its product was needed to fuel the furnaces of the new steam engines.

My European Gaia – approximately equivalent to 1670s England – similarly has a developed coal trade from the north of Lingdon to the city, which is extended to the Iskander installations. Sweden (aka Tarnland) is deficient in metallurgical and steam coal – which was why its good magnetite ores are shipped to Germany etc, where the local coal is used to turn them into steel.

At least one reader has complained that the Iskander developments of steel and steam are starting the inevitable progression to pollution, carbon dioxide overload, and global climate change. There is one big difference between Iskander’s developments within a world population of about 500 millions and our circumstances. The Iskanders already understand the technologies beyond the fossil fuel age and once they have created the infrastructure – the trained people and the plant – they will be able to develop out of the carbon trap before the world population reaches its first billion. There is really nothing bad about burning fossil fuels – only by doing it inefficiently and by six billion people. Henrik Matah intends to develop cheap and clean public transportation based on fusion generated electricity before that monster – the automobile – can establish itself.

Why Will it be a Tragedy?

Our protagonist of the Great Crash novel, Follow the Money, Barack Obama, has tied his star to a very weak and unreliable vessel. While he is making noble efforts to build a new way of running a GM kind of country, he has taken on too much for any one person to achieve. The compromised individuals he has gathered around him and appointed to his cabinet may well be the best he can find – but they are not adequate. I watch, breathless, for signs of his success in such a noble venture, but I cannot possibly be optimistic.

Leaving aside all the foreign policy disasters that threaten to drown him – the legacy of more than thirty years of cynical imperialist meddling – one has only to focus on the economic problems to recognise what a hopeless task he has taken on. As the excesses of credit for the last twenty years have turned the western economies into bubble economies, so the great leveler – debt – has punctured them. His administration officials are busy trying to cure a debt problem by creating huge new debts – they cannot possibly succeed.

The supposed signs of recovery in the stock markets are beginning to fray around the edges –as those observers who identified it as a bear rally forecast. That is not the tragedy. The gyrations of stock markets are no reliable indicator of the future or of the health of the real economy. As they have recently been too optimistic they will soon tumble headlong in fear and become too pessimistic. The US can recover but not by going farther into debt – the bubble economy has been built on credit and as I quoted here a couple of weeks ago – the Chinese have cancelled the US’s credit card.

Who will suffer from this? No doubt we all will if the Benanke-Geithner plan continues and builds up a huge inflationary overload. Welcome to the Weimar Dollar and hyperinflation when the monetarist policies get away from them. Monetarism needs to be buried deep – with a stake through its heart, and Keynsianism will likely prove incapable of correcting the problems that it created.

But let us say the policy of printing dollars works. Since it is already impossible for the US to repay its current debts it has only one way out of the jam – printing almost worthless dollars to pay off the creditors with. So – who suffers most? The creditors, of course, as well as all the generations who will follow the current profilgate scoundrels into a severely compromised future. That means your kids and grandkids – and their kids.

The only source of value in human society is people. Not dollars, not oil, not capital, not gold – only well educated, well adjusted, healthy and wise people. And lord knows – the present generations have proved themselves incapable of raising them. Maybe I should repeat that for those who are so quick to dismiss the idea and prefer to cling to their current idols. People are the only renewable resource we have, and are the only measure of value in human society. Bankrupting them – before most are even born – is a crime commited against posterity.

That’s why Obama cannot possibly be any more than a hero of tragedy – another Othello – because if he succeeds, he fails.

Dream Realm Awards

Hi All:                                                                    

Just a quick note — my retrofuturist novel “Arrival” has been selected as a finalist in the 2009 Dream Realm awards for 2009.

I will be able to add the logo to this site and be able to continue regular posts here when I leave the city this week.

Now for the Good News.

In fiction, and especially in tragedy, the plot cannot be unidirectional – the protagonist must have a fighting chance to win, so the reader roots for him/her right up to the last line. The nemesis also is not certain of victory. So for this look at the plot of our novel “Follow the Money” about the great crash of 2009, we want to suppose our hero, Barack Obama (an Othello of tragedy if ever there was one) comes out smelling like a rose. At least until the final act.

You may wonder how, after I have posted two months worth of naysaying on this blog, I can possible point to the possibility of an ending that promises hope for the future. The simplest way is to pinpoint the hopes and manipulations of the worst of the antagonists and have our protagonist set them up for a fall. The Cairo speech (even though it was only words, and means nothing without the appropriate actions) has hinted that our man has the moxie to strand his opponents out on a limb – and hopefully to cut it off from under them. (This last has yet to be done, but I wait expectantly.)

So we might believe the financial speculators and creators of all the toxic inventions in the derivatives box will want to see the financial rules and markets left untouched to build up into a bubble once more (or twice, thrice, or a hundred times more). Their only interest being to use the market to get rich without actually working for it. They must be foiled and completely destroyed. Since it is unlikely that spineless Democrats in Congress and the Senate will ever have the integrity to pass legislation that accomplishes this plainly and in full public view, our protagonist will have to be really devious in creating an outcome where this happens as a result of the market’s own operation.

The rich – and I mean the super rich, not you hopeful fools who still hope to make your first million – have been allowed to grow immensely richer since the last stock market crash and depression from 1929 into the 30s. You may well believe that the billionaires at the top 2% of our economic tree who own 50% of the wealth will want to ensure that their interests will be protected and their tax shelters and non-existent wealth taxes will remain as active for them in the future, as they have been through all of the last 10 administrations. For society to recover on a new and more positive track – they must be totally disappointed. As the world learned when Revolutionary France sent all the super rich to the guillotine – society can bumble along without them no less efficiently than it did with. (The French Revolution was the precursor to most of our Western freedoms.)

To expand on that – it is axiomatic that capitalist society depends upon its ‘consumers’ (how I hate that word) to not only produce the goods and services that bump up GDP, but they must be wealthy enough to be the purchasers of those goods and services. This no longer happens in the US and other economies where the top few on the economic pyramid grasp the bulk of the wealth for themselves. The result is an unstable economy where consumption has to be financed by credit – read debt – and huge unemployment and hardship is caused when the equity dries up. As it has done with the collapse of the US and UK house price bubbles. It would be wildly utopian to imagine Washington would strike out on a new path to increase the wages and lower the taxes of citizens (now there’s the inclusive word that has dignity) who work, save, invest, and produce the wealth of society, but somehow the dead wood within the Beltway must be tricked into agreeing to exactly that.

I’ll end this post with a little homily. In Britain, towards the end of the Second World War, the people who had endured the hardships and the sacrifices of six years as cogs in the huge war machine were invited to vote in a General Election. To the immense surprise of almost everyone, including that of those kicked out of government, the war leader who everyone presumed was a sure winner, Winston Churchill and his Conservatives, lost to the Labour Party under the completely uncharismatic Clement Atlee.

To those who had served under the British system of privilege and the old-boy network for those years it was no surprise. The vestiges of that parody of democracy were still evident fifteen years later when I did my stint in the army, but it had been cut off at the knees and was merely taking time to die. (Until Thatcher gave it artificial resuscitation.) The biggest millstones that the socialist government took from around the necks of the British were three, and they were all undercut by one measure. Pre-war Britain was still a fief of the wealthy land owning class – the lords and ladies – who had been weakened by the First World War but not knocked out for the count. They owned a huge percentage of the land and of the infrastructure that people – and the new capitalists – needed to control in order to build new industries.

This archaic hold-over was hewn down by the huge death duties passed into legislation by the Labour dominated Parliament. In order to pay these assessments upon the deaths of Lord Soandso, and the Earl of Somewherelse, these holdings that sometimes stretched back to Norman times had to be liquidated. I saw the changes in my own life as I grew up. The first noticeable effect was the transformation of the drab villages around us – where everyone used to be a tenant of the local aristocrat – when the tenants were given the opportunity to buy and improve their dwellings. The second was an expansion of the freedom to trade land as freehold property instead of leasehold (buying land before 1945 was a case of buying a lease term of some years on the land, which remained the property of the aristocratic estate). This freed up more real estate for development. The third was the Butler Education Act which opened all higher education to low income students who were bright enough to win scholarships. I owe my own education to this act – as do almost all those educated there in the past sixty years – the Stephen Hawkings and the  Francis Cricks, as well as a significant number of the engineers who flooded into US industry after 1955..

Death duties are the godsend of society. Set at the appropriate level they are the rejuvenator of a moribund economy and the resuscitator of a moribund establishment. Everything in nature dies to make room for the new and the healthy – societies need this too.

Double Dragon Authors do it Again

I Share in an Award.

The authors with Double Dragon Publishing have produced four – so far – anthologies of their short stories. These collections have all won awards or recognitions of excellence. I was privileged to have short stories in Twisted Tales II (Time on Our Hands) and Twisted Tales III (Pure Fear). This last named was recently given an Honorable Mention as a finalist in the ForeWord Magazine Book of the Year Awards.

I certainly cannot claim more credit than any of the other contributors, but I feel that I held up my end – particularly as I don’t consider myself a short story writer. The other authors in Pure Fear are Kim McDougall, Marilyn Peake, John Klawitter, Geoff Nelder, J Richard Jacobs (also Ed.), Ann Dulhanty, Ginny Davis, Biff Mitchell, K L Nappier, Brandon Berntson, and A J Chaboya.

Usually, I cannot satisfy my fictional images with less than 90,000 words, so writing something around 2500 requires an extra effort for me. Although both anthologies I had stories in won recognition – Time on our Hands won the Eppie for anthology last year – I decided not to contribute to the latest edition. My stories worked to a degree, but I feel I’d need to go back to the writing school in order to produce something a cut above, and I’m more at home with novels.

Anyway – congratulations to us – especially the other authors represented.

Misallocation of Everything

Following our supposed novel of the 2007-8 great crash as an epic tragedy with Barack Obama as Othello we go next to the underlying causes of what happened and compare his administration’s policies to rectify things with what should be done. So before we proceed with the plot – what he does once he gets all the secret memos that first day in the White House and acts – we need to look at some neutral person’s explanation to bring ourselves up to speed.

Why are investment communities around the world reducing their purchases of US Treasury bonds – do they fear something the administration is doing? In order to structure the plot of our possible novel “Follow the Money” we need to find out.

First we might ask Doug Noland, a market strategist for the Prudent Bear Funds.
“It is more certain, however, that the great benefits commanded to our economy and markets over the decades from governing the world’s reserve currency are drawing to an end. Our policymakers still believe they can inflate credit and manipulate interest rates – and not have to pay a price for it. But the new global reality may be that currency markets will protest against massive US fiscal deficits and activist monetary policy, while global markets come to dictate US market yields. Over the past two weeks, we have seen the dollar and US Treasuries/MBS come under significant pressure. Is this the beginning of global markets disciplining Washington?”

The following comes from another article in Asia Times Online. This one by W Joseph Stroupe, a strategic forecasting expert and editor of Global Events Magazine.

“Bigger trouble looms, regardless of this Wall Street rally and other “green shoots”. Geithner’s toxic asset removal plan hasn’t worked yet, and it and other government plans face huge obstacles. Fears over the size of US debt are swiftly mounting, while China has “cancelled our credit card”, according to US Senator Mark Kirk, referring to the fact that China’s investors have radically slowed their purchase of US Treasury bonds in the past three months.”

“Income-based model versus asset-based model
At fundamental issue here is the new asset-based economic/financial model (as contrasted with a traditional income-based model) which the US and Britain in particular have progressively adopted over the past couple of decades, and whether that new model is really workable and revivable in the light of its massive collapse that began with the emergence of the subprime crisis in late July of 2007.

The US economy has rapidly converted from a traditional, income-generating machine to a so-called “new economy”, an asset-inflating one. An income-generating machine derives wealth from the production and sale of goods and services, while an asset-inflating one derives wealth from accelerated asset appreciation, or targeted inflation of assets – in other words, by the creation of serial asset bubbles. In this new model, traditional wealth generation takes a back seat to “paper” wealth generation via serial asset bubble creation.

In the traditional income-based economic model, the financial sector serves to support the real economy, where the vast bulk of real income is generated, by providing credit and other traditional financing services aimed at sustaining existing and fostering new income-generating business ventures, and supporting consumer spending via traditional credit services. The income generated in the financial sector is not of major proportions, but is a distant second to that generated in the real economy.

The asset-based model is radically different. In this new model, innovative and grandiose opportunities arise for the generation of gigantic sums of “paper” wealth from within the financial sector itself, thanks to what can only be called the fostering of an incestuous relationship between government and Big Finance.”

In the pre-Reagan/Thatcher/Mulroney days the Western economic model was one where we made things if we needed them. We saved up for them (at least in part) if we wanted to buy them, and we cautiously built up our nest-eggs for a possible rainy day. That all went by the board when the three irresponsible idiots named above went to work.

We no longer needed to dig coal, or smelt iron, or build things in factories – we sent all that overseas for others to do the dirty work. We wouldn’t want to soil our manicured hands or wrinkle our Armani suits, would we? If we wanted to become rich we merely found enough suckers to buy our invented derivatives and lived off the proceeds. It worked for awhile, but now the suckers and the poor devils in the dirt, working for peanuts, are wising up.

What have we done with our greatest resource –  the manpower, woman power, and brain power of our recent generations? We have misallocated it all.

A couple of examples. European and Japanese autos have become technologically far superior to those built in North America and there is one prime reason for that. While the others employed their most brilliant and creative technology graduates in automobile engineering, the US shunted them into another industry that produces nothing of social value – the military-industrial complex. Instead of producing super-reliable energy efficient autos they are creating computer game military hardware that can murder around the world remotely from the safety of Langley, Virginia. Today, the bright and ambitious never even study in disciplines where work is done and things made – all they know is how to code computer games, to dream up even more exotic ‘investment’ schemes, and to produce ever more complex and fragile IT systems.

Why hasn’t the Obama administration taken steps to put our society back on the rails – employing our graduates to build, to create, to save? Because the people he has appointed wouldn’t know what to do with such graduates – even if such appropriately trained ones existed. If we, the public, are looking for some bright and creative brains to pull our societies out of this mess – we might have to look to someone else.

So, while Othello is spending his effort at shoring up the last gasp of the asset model with every phoney dollar he can print, the underlying rot is getting worse. What likely time-scale will this work out over? Everyone whose forecasts seem credible admit that this is almost impossible to predict. The current bear rally may last until the end of 2009 and everyone credit the US administration with saving the ‘world’, but down in the basement the termites are still munching away. If, under the worst possible scenario, Othello manages to create a new phony dollar bubble so that asset prices once again attain completely unrealistic heights – the whole shebang may not crash again for five years or more. But that crash will be an even bigger disaster than this. That’s great for a novel – a humdinger of an ending – but not so good for the people left to pick up the pieces.

Can’t Win for Losing

I had planned to start the Obama version of our projected great crash novel, “Follow the Money” – the tragedy –  with a look at the new president’s first moves to correct the problem, but a far better analyst than myself has posted a detailed list of the administration’s initial failures. It can be found on Tom Dispatch at http://www.tomdispatch.com/post/175075/andy_kroll_six_ways_the_financial_bailout_scams_taxpayers and on Salon.com at http://www.salon.com/opinion/feature/2009/05/27/kroll/index.html?source=newsletter.

That leaves me with the option of either repeating what Andy Kroll says or taking a slightly different tack. I’ll choose the latter.

Most media sources recently have become cheering sections for bailout plans and have taken the present upward swings of stock markets (a bear rally, remember) as a sign that the disaster is at an end. For those of us who have noticed that all the millions thrown out of work are still unemployed, that a great many debts in residential and commercial real estate have not yet come up for rate re-setting, that many people are borrowing off their credit cards to pay their rent and buy their groceries, that companies and banks are still declaring bankruptcy, and that many of the most qualified economists are warning that the worst is yet to come, I think it may be in order to look at the administration’s actions in terms of popular but mistaken beliefs.

Firstly, the stock market is not a good indicator of the health of society. It is not filled with the best and brightest of an educated society – these are the idiots that bid up the credit bubble that just crashed and caused the oncoming depression. They also bid up all the bubbles before this – the dot com, the speculative excesses of 1987, and all the rest – and have now piled on the government bail-out bubble of printing trillions of phantom dollars to rescue the so-called investors whose wealth is imperiled by the asset price deflation. The “Wisdom of the Market” is the biggest snake oil pitch since the Devil handed Eve the apple. The market is the abode of the largest collection of fools and swindlers the world has ever known.

President Obama, the bit between his teeth and eager to leap into the role of tragedian has lavished trillions of taxpayer dollars on the bleeding hearts and squeaky wheels on Wall Street. He devotes great attention to the 19 biggest banks that serve the investment community while ignoring the thousands of smaller banks where ordinary Americans keep their savings. He has allowed his administration to underwrite the investments (speculations) of any petty crook who owns a bank, a hedge fund, insurance or financial company – and every sharp eyed market operator out in the bushes – in distressed assets that guarantees them the lion’s share of any profits and uses taxpayer money to backstop any losses. This guy really must have his heart set on the Othello role.

“I pray you, in your letters,
When you shall these unlucky deeds relate,
Speak of me as I am; nothing extenuate,
Nor set down aught in malice: then, must you speak
Of one that lov’d not wisely but too well; …”

It’s quite clear that Americans love free-market capitalism far too well, and blind themselves to the faults and weaknesses that wise oversight and direction could ameliorate. That said, I have to acknowledge the Austrian school and admit that wise oversight and regulation has been conspicuously absent ever since the first cave man took out a loan to buy a flint-knapping site. I state categorically that the greatest problem has been the investment community’s selfish interest in blocking adult supervision until their failures have caused it to land on their necks. The plans for regulating market excesses may work wonderfully well, but the time to institute them and have them operate is before disaster strikes, not afterwards.

I cannot leave this without offering a preview of the next plot element of Obama’s tragedy we must look at next time. The British government has printed so many treasury bonds that no one wants – and bought them itself with phantom pounds – that the UK is expected to lose its triple A credit rating. I have to look at our protagonist’s supervision of the US Treasury bond market, that is actually in no better shape, for the first downward turning point of the novel.

Follow the Money … the Tragedy.

Continuing our examination of the plot and cast of our proposed novel on the current financial crisis, we move from last week’s structure of comedy (in the ancient Greek classification) to tragedy. I had a couple of reasons for excluding Barack Obama from consideration as the hero of our Great Crash novel, “Follow the Money”, but now we turn to a consideration of the novel as a classic tragedy, he seems the most appropriate candidate for protagonist. The Greek term tragedy comes from ‘goat-song’ (when goats were used for sacrifice) and one has to admit the man who stumbled into the biggest disaster of the century and inherited it, lock stock and barrel, is the ultimate fall guy. If he’s the goat, he’s at least taking some of the big steps slowly and carefully, so he could yet wind up the hero – even if a tragic one.

As before we look at a simple plot diagram, for tragedy the inverted W. Since I cannot turn this one upside down, I have to ask you to squint at it a bit and imagine it the other way up. The opening of the novel is a deep low point of disaster that waits for our protagonist to begin clawing his way out of the mess. President Obama reaches the White House after the swearing in ceremonies, and before he can kick off his shoes and loosen his tie one of his new staff escorts him to the Oval Office and hands him the Domesday Book – the straight scoop on everything that the Bush administration has done and has kept under wraps. Hoo boy! Talk about ruining your day. Opening page one is the inciting incident.

The name Domesday comes from the book where William the Bastard, King of England in1066, had  complete inventory of his newly acquired kingdom written down. A thousand years later we don’t know how accurate or complete its information was but I doubt its evasions, omissions, and outright lies (bought as bribes to the inspectors) were any worse than a similar record of 2009 State of the USA would be if the incoming president had one to read. Just look at one segment of the US body politic – the movers and shakers inside the Beltway.

The US Congress, where at least 75% of the members have been bought by lobbyists for various public and private interests (as evidenced by the number of Congress men and women who attended the AIPAC convention at the beginning of May) has to vote on every measure the President puts forward. AIPAC is the American Israel Public Affairs Committee, a body founded and operating to advance the interests of a foreign country by manipulating the lawmaking and legislation of another – the US. There’s a Trojan Horse if ever there was one. However, since we are concerned about financial and economic matters instead of foreign policy here let’s just take a quick scan of the pork barreling in what is euphemistically called defence spending, where every multi-million dollar contract is split between a multitude of cities and states to increase the political pressure on any honest lawmaker who might want to curtain wasteful spending. What about the earmarks, where extraneous expenditures are tacked on to congress bills to provide enough pork barrel funds to buy sufficient house votes for the measure to pass? Need I go on?

I don’t have any equivalent Senate estimates but note that the cost of campaigning for election to the Senate rose from about $437,000 in 1974 to $5,300,000 in 2000 – and increase of 1200%. (“Parties and Elections in America” by Louis Sandy Maisel.) This kind of money does not grow on trees, and many political commentators have expressed concern that the financial contributors to these Senators have, at least, bought preferential access to the official. The same pork barreling and earmarking as mentioned for Congress apply similarly to the Senate.

When it comes to picking officials for cabinet and other administration positions, the majority of candidates come through a revolving door of top bureaucrats and experts who divide their time between running companies dependent on government largess and overseeing those same companies as members of a government. An example: Treasury Secretary, Henry Paulson had to decide upon bailing out the top financial institutions in trouble and gave money to Goldman Sachs, who he had previously headed, and denied it to Lehman Brothers who he hadn’t. Without even suggesting wrongdoing it’s clear the expectation that unbiased decisions are impossible jumps out at any observer.

With these considerations, we haven’t even reached as far as the first action of the President after his jaw has bounced back off the floor. Everything he considers a necessary action needs first to be discussed with an army of advisers – most of them insiders of previous administrations or dependent corporations. Not much leeway for change when the only opinions garnered are those grounded firmly in the way things have always been done. Let’s just note that the first hundred days saw a continuation of the Bush administration’s financial remedies – with a few bits of fine tuning. That the failing and unnecessary war in Afghanistan – a vested interest of both the Pentagon and CIA – has expanded to Pakistan and is now a vital Overseas Contingency Operation. The necessary cleansing of the American soul by holding an investigation into the previous administration’s record on torture has to be set aside as ‘divisive’. Guantanamo still doesn’t have its marching orders. And pulling the troops out of Iraq within 18 months has become the renaming of combat units as support troops so they can remain forever.

I’ll need to continue the plot of the novel further next time – we need to give the President a chance to impose more of his promises onto an unwilling Washington – but it’s sure looking a lot like a tragedy to me.