Look behind youLook behind you
“I’m always more intrigued with the story no one is telling than the story everyone is telling.” – Liz Ann Sonders, Senior Vice President, Chief Investment Strategist, Charles Schwab & Co., Inc.
Category: Economics
No trespassingNo trespassing
“In the premodern world, control reached to points and the lines connecting them; there simply was not enough prevention of motion to go around to cover an entire plane and bring it all under control. In the modern world, this changed, and the topology was inverted: control reached everywhere, and only isolated points were left for motion, that is, not controlled from a center.” – Reviel Netz, Barbed Wire
No pasaranNo pasaran
“Define, on the two-dimensional surface of the earth, lines across which motion is to be prevented, and you have one of the key themes of history.” – Reviel Netz, Barbed Wire
Small and determined to stay that waySmall and determined to stay that way
“Theirs was the America of the turn of the century, an America of sound business practices and old-fashioned virtues, of which they were exemplars. They did not owe money and did not depend on the government to employ them. They were the town leaders in an era when that leadership was almost exclusively white, male, and Protestant, and they were largely professional men, in an age when the middle class was still narrow. They belonged to civic clubs where almost everyone they knew felt much as they did about the drift of the country away from what they considered Americanism. The New Deal—and the forces that it had opened the door to—was the enemy. Or, as Senator Hugh Butler of Nebraska had said before the 1946 election: ‘If the New Deal is still in control of the Congress after the election, it will owe that control to the Communist Party in this country.’ These men were instinctively nativist, believing it a strength, not a weakness. They neither liked nor trusted the America that had elected Franklin Roosevelt and Harry Truman, the big-city America of Catholics, Jews, Negroes, and unions. They distrusted anything or anyone that was different.” – David Halberstam, The Coldest Winter
Same as it ever isSame as it ever is
“Probably as good a date as any for the beginning of World War II is July 1937, when Chinese troops clashed with Japanese invaders near Beijing, close to the Chinese-Manchurian border. If nothing else, it surely ended any hope of the rise of a modern, semi-democratic China under Chiang Kai-shek’s Nationalist or Guomindang Party, the kind of China many Americans had hoped for, and dreamed of long after it became the most hopeless of causes. What then took place in China, under the dual force of the Japanese invasion and the constant undercurrent of the civil war, was as powerful and complete a transformation of a social, economic, and political order as the modern world had witnessed. It was a cataclysmic event, driven at first by forces from without, but in no way purely an external challenge. It was, at the same time, a challenge of one China, as yet unborn and potentially lethal in its norms and residual hatreds, to another China, at once weak, cruel, and barbaric in its own way: a challenge by one set of violent, autocratic men to another set of autocratic and ruthless men who had ruled so poorly and with such elemental brutality for too long. It was a system of oppression rather than authority that had been imposed with unparalleled harshness and greed upon ordinary Chinese. The few who benefitted were rich, powerful, and lived above the laws, which, in any case, were set by force of arms. The many who were poor existed that way in what seemed like hopeless perpetuity. Every unbearable aspect of their daily lives was marked by some kind on injustice, and the absence of elemental dignity. This China was probably dying even before the first Japanese troops marched into Manchuria.” – David Halberstam, The Coldest Winter
Pissing with the big dogs nowPissing with the big dogs now
“Truman and his administration had spanned a critical moment in American history. America was changing, like it or not, from the America that had been, that is, the America that was powerful but did not yet know it and was hesitant to use its industrial muscularity internationally, to the America that would be America the superpower. . . . Truman was the first president who had to deal with the consequences and contradictions of the great victory in World War II, and the power (and responsibility) it bequeathed to his country. He not only had to marshal the government behind a new kind of internationalism but had to deal with a volatile, sometimes hostile, domestic political reaction as the nation slowly began to accept its new responsibilities. The choice was a basic one, between greater internationalism or continued isolation—and, perhaps equally important, how much the country was willing to pay.” – David Halberstam, The Coldest Winter
Blind being led by the blindedBlind being led by the blinded
“Dwell on the past an you’ll lose an eye. Forget the past and you’ll lose both eyes.” – Russian proverb (quoted by Aleksandr I. Solzhenitsyn in The Gulag Archipelago)
Garret troopersGarret troopers
“The United States would go to war [in Korea] totally unprepared. The first American units thrown into battle were poorly armed, in terrible shape physically, and, more often than not, poorly led. The mighty army that had stood victorious in two great theaters of war, Europe and Asia, just five years earlier was a mere shell of itself. Militarily, America was a country trying to get by on the cheap, and in Korea it showed immediately. The blame for the poor condition of the Army belonged to everyone—the president, who wanted to keep taxes down, pay off the debt from the last war, and keep the defense budget down to a bare-bones level; the Congress, which if anything wanted to cut the budget even more; and the theater commander, MacArthur, under whose aegis the troops had been so poorly trained, and who had only five years earlier said that he did not really need all the troops Washington had assigned him. But mostly it was Truman—the president has to take full responsibility in a matter like this: the Army of this immensely prosperous country, rich now in a world that was still poor and war-ravaged, was threadbare. It had been on such short rations, so desperately underfinanced, that artillery units had not been able to practice adequately because there was no ammo; armored groups had done a kind of faux training because they lacked gas for real maneuvers; and troops at famed bases like Fort Lewis were being told to use only two sheets of toilet paper each time they visited the latrine.” – David Halberstam, The Coldest Winter
Good luck with all thatGood luck with all that
“To make the United States an effective democracy – to shift control over the state from the centers of financial and industrial power, now global in reach, to broadly based, self-financed and self-governing groups of active citizens with only average resources – will take several generations, at least. This is a daunting prospect for just about anyone. “ – George Scialabba, “Farewell, Hitch”
The still, calm centerThe still, calm center
“In a violent, distracted, media-saturated world the most needed artistic resource is no longer a critique of the possibility of meaning—mass culture itself has become that critique. What is needed, rather, is the production of meaning that resists distraction. Consumer capitalism thrives by simultaneously creating human loneliness and commodifying a thousand cures for it. One form of resistance to it is the experience in art and life of a human intimacy achieved through sustained attention to what lies beyond and outside the sphere of the market.” – Adam Haslett, “The Perpetual Solitude of the Writer”
The tired, the poor, the huddled massesThe tired, the poor, the huddled masses
“Who are the poor, and what do they need? 1.1 billion people have less than $1 a day of income. This is officially designated ‘extreme’ poverty. Another 1.6 billion have between $1 and $2 a day; this is ‘moderate’ poverty. This large slice of humankind either cannot, or can just barely, meet their basic needs. Mostly they live in rural isolation or in urban slums, roughly 90 percent of them in three regions: East Asia, South Asia, and sub-Saharan Africa. There has never been any mystery about how to increase a country’s per capita income: simply invest capital in it, using a modicum of good business sense. However, if your citizens don’t have any income left over after meeting their basic needs, then you have no capital to invest in new means of production. And since the old means of production wear out—depreciate—they eventually produce even less income, so you are still further from having the necessary capital. . . . Why are some countries but not others caught in the poverty trap? It is not primarily a matter of Anglo-Saxon propriety or American ingenuity or Confucian dutifulness. Nor is it a matter of African fecklessness. Countries are poor . . . because they are landlocked or resource-poor or afflicted with unfavorable climates or disease ecologies (like the global malaria belt). Above all, they are poor because they have always been poor. Just as economic growth is cumulative and self-sustaining—a virtuous circle—economic stagnation is a vicious circle. This is evident above all in demographics and literacy. Poverty means high child mortality, which means high birth rates, which means both that women will not be educated for the work force (since they must spend the bulk of their lives raising children) and that there will not be enough money to educate all the children (leaving many illiterate). Economic growth invariably lowers birth rates and raises literacy rates.” – George Scialabba, “The End of Poverty”
Living the lieLiving the lie
“It is often said these days that America is a Christian country. If that’s true, then a great many Americans should be worried about their eternal salvation. According to Jesus, when He returns to settle accounts at the Last Judgment, He will separate the sheep from the goats, telling the goats: ‘Go, you damned souls, into the fire. For you saw Me hungry and ragged and homeless and unemployed and uninsured, and you ignored Me.’ And when the goats bleat in self-justification: ‘But, Lord, when did we see You hungry or ragged or homeless or unemployed or uninsured?’ He will answer furiously and unmercifully: ‘When you ignored the poorest of the poor, you ignored Me. Go, now, to Hell.’ It’s right there in Matthew, chapter 25, verses 41 to 46.” – George Scialabba, “The End of Poverty”
Slaughter in contextSlaughter in context
“The U.S. in 1945 was a prisoner of great industrial decisions taken years earlier, in quite different strategic circumstances. In 1942, the commitment to build the B-29 long-range bomber was entirely rational. The programme reached technological maturity and large-scale production too late to make a decisive impact on the war. Yet it was asking far too much of the U.S., never mind of its senior airmen, to forgo the use of these aircraft, at a time when the enemy was still resisting fiercely, and killing many Americans. In the circumstances then prevailing—an essential caveat for any historian to emphasize—the B-29s were bound to be employed.” – Max Hastings, Retribution (emphasis in original)
Silent serviceSilent service
“By early 1945, Japan’s ability to provide raw materials for its industries, and even to feed itself, was fatally crippled. The nation could import by sea no more than a fraction of its requirements. An invisible ring of steel extended around the waters of the home islands, created by the submarines of the U.S. Navy. . . . Every nation’s soldiers instinctively believe that wars are won by engaging the armies of the enemy and seizing terrain. Yet the most critical single contribution to the American defeat of Japan was made far out of sight of any general, or indeed admiral. The Japanese empire was uniquely vulnerable to blockade. Its economy was dependent upon fuel and raw materials shipped from China, Malaya, Burma and the Netherlands East Indies. Yet, unlike the British, who faced a similar threat to their Atlantic lifeline, the Japanese failed to equip themselves with a credible anti-submarine force to defend their commerce. Here was one of the major causes of Japan’s downfall. . . . No other combatant force as small as the U.S. Navy’s submarine flotillas and their 16,000 men achieved a comparable impact upon the war anywhere in the world.” – Max Hastings, Retribution
Until they all fall downUntil they all fall down
“The post-1972 take-off of financialization coincided with advances in computing capacity and the discovery of new mathematical techniques for valuing options and constructing derivatives. To begin with, these techniques were used mainly to reduce uncertainty and hedge currency risk. But before long it became clear that derivative swaps could be used to bamboozle tax authorities and shareholders. Financial engineering could convert one type of income stream into another, or an asset into income or the other way round-reducing or avoiding tax.” – Robin Blackburn, “The Subprime Crisis”
On the road againOn the road again
“In order to grasp today’s capitalism we need financial analysis, but the phenomenon of financialization sucks oxygen from the atmosphere. It privatizes information that should be public, just as it commercializes everyday life and promotes a pattern of ‘uncreative destruction’ in which enterprises and work teams are continually broken up and re-assembled to take advantage of transient arbitrage gains. In addition to helping financial institutions game their own customers, the techniques of financialization allow big capital—large corporations and wealthy individuals—to escape tax and skim the holdings of small shareholders. Note that most pension funds and charitable endowments, but not US mutual funds, are limited by fiduciary rules from much exposure to hedge funds or exotic derivatives. A further corollary of proliferating financialization is that the regulations governing credit creation were first loosened and then almost entirely ignored. Reckless credit expansion has long been the primrose path to financial crisis and collapse.” – Robin Blackburn, “The Subprime Crisis”
Iceberg fields and shoal watersIceberg fields and shoal waters
“A well-regulated stock exchange is a phenomenal source of information for all market participants. It generates second-by-second data concerning the volume and price of trades, and its settlement system registers the identity of buyers and sellers. The analytic feats of the financial economists were themselves based on such data. Yet the advent of structured finance generated a gigantic volume of direct trades between institutions whose details were only known to the participants. These ‘over-the-counter’ transactions exceeded stock- exchange transactions by the turn of the millennium, and led the exchanges to skimp on procedure in order to remain competitive. Here we have both the cause of the credit crunch and the ultimate irony of the Western crusade to marketize the globe. A great wave of securitization aimed to turn even the most unpromising cash prospect, or intimate personal ambition, into a tradeable. It succeeded in submerging the world’s main capital markets in a deluge of non-performing and unpriced securities. The fog of grey capital descended on the financial districts, shrouding the great banks and clouding the view of investors and regulators alike.” – Robin Blackburn, “The Subprime Crisis”
A point from which to move the worldA point from which to move the world
“Resort to ‘leverage’ in the financialized world supposedly enables individuals and corporations to get rid of ‘unrewarded risk’ and maximize outcomes. While the word ‘debt’ has a negative ring to it, the word ‘leverage’ is positive; indeed it is now often used as a verb, as we leverage our assets in order to reach for the stars. Forgetting that Archimedes’ lever had a purchase point, the financial engineers aspire to move the world without securing the land on which they stand. In their philosophy, all that is fixed melts into air. This gives them some insight into capitalist motion but no sense of its limits. In contemporary capitalist conditions, especially a grey capitalism riddled with defective links between principals and agents, financialization becomes hugely destructive.” – Robin Blackburn, “The Subprime Crisis”
The god we worshipThe god we worship
“The subprime debacle and its sequels train a spotlight on financialization. When properly embedded in structures of social control, finance can help to allocate capital, facilitate investment and smooth demand. But if it is unaccountable and unregulated it becomes sovereign in the re-allocation process, and can grab the lion’s share of the gains it makes possible, including anticipated gains before they have been realized. The problem is aggravated as financial intermediaries proliferate and take advantage of asymmetries in access to information and power imbalances. Such distortions multiply as ‘financialization’ takes hold. It is boosted as the logic of finance becomes ubiquitous, feeding on a commodification of every aspect of life and the life-course—student loans, baby bonds, mortgages, home equity release, credit-card debt; health insurance, individualized pension funds. Financialization also encourages corporations to privilege financial functions and to see themselves as chance collections of assets which, as circumstances change, must be continually broken up and reconfigured. While the individual is encouraged to think of him or herself as a two-legged cost and profit centre, the corporation is simply an accidental assemblage to be continually shuffled in response to fleeting market signals.” – Robin Blackburn, “The Subprime Crisis”
We have ways of making you payWe have ways of making you pay
“If the judgment debtor was concealing assets or had assets in the custody of others, the creditor had few remedies. The primary remedy a creditor did have in such a case was imprisonment for debt. Contrary to the misrepresentations fostered by Dickens and others, this was not a mechanism by which the poor were summarily thrown into prison. Rather, this was a mechanism for persuading a debtor who was hiding assets to reveal them. The creditor paid a per diem sum for the incarceration of the debtor, and this amount was deducted from the judgment each day. The premise was that the debtor would reveal the assets and pay the judgment to avoid continued imprisonment. This procedure had mixed effectiveness and was generally an inefficient remedy for creditors.” – Robert G. Markoff and Christopher J. McGeehan, “Enforcement of Judgments”
Be careful what you wish forBe careful what you wish for
“Bandits come and go. Soldiers come and stay.” – Chinese peasants’ saying (quoted by Max Hastings in Retribution)
As per the usualAs per the usual
“After Pearl Harbor, Chiang [Kai-Shek]’s armies began to receive massive American support in kind and in cash, much of which the generalissimo and his supporters pocketed. Since there was no overland link between British-ruled India and Chiang’s territories between 1942 and early 1945, all supplies had to be flown five hundred miles ‘over the Hump’ of 15,000-foot mountains to Kunming, the nearest accessible landing ground in China, at staggering cost in fuel, planes, and American pilots’ lives. In December 1942, the Hump air shuttle shifted a mere thousand tons a month. By July 1944 it was carrying 18,975 tons. This was an extraordinary logistical achievement, but remained a negligible contribution to the Chinese war effort; especially so as most of these supplies were stolen and sold long before they reached Chiang’s soldiers. Much of the matériel which remained was absorbed by the needs of the U.S. air forces in China. It was simply not feasible to airlift arms and ammunition on the scale needed to equip a Chinese army. From beginning to end, Chiang’s formations lacked indispensable heavy weapons to match those of the Japanese. For all the strivings of American generals, diplomats and military advisers, most of the fourteen million men drafted into the Nationalist army between 1937 and 1945 served as hapless victims rather than as effective combatants. Xu Yongqiang, in 1944 an interpreter with the Nationalists, watched new intakes of men herded in from the provinces: ‘Most recruits came simply as prisoners, roped together at bayonet point. They had so little training that it was easy to see why they were no match for the Japanese, who for years had been schooled to kill. It was inhuman! Inhuman! There were no such things as civil rights in China. For eight years, it was the peasants who had to fight the Japanese, both for the Communists and the Kuomintang. The middle class stayed at home and made money. The big families did nothing at all.’ ” – Max Hastings, Retribution
A fruitful victimA fruitful victim
“Historians of Asia assert that the Second World War properly began in China, rather than Poland. In 1931 Japan almost bloodlessly seized Manchuria—the north-eastern Chinese provinces, an area twice the size of Britain, with a population of thirty-five million people, hitherto ruled by an old warlord in uneasy cohabitation with a Japanese garrison—to secure its coal, raw materials, industries and strategic rail links. The Nationalist government based in Nanjing was too weak to offer resistance. The following year, Tokyo announced Manchuria’s transformation into the puppet state of Manchukuo, nominally ruled by the Manchu emperor Pu Yi, in practice by a Japanese-controlled prime minister, and garrisoned by Japan’s so-called Guandong Army. The Japanese perceived themselves as merely continuing a tradition established over centuries by Western powers in Asia—that of exploiting superior might to extend their home industrial and trading bases.” – Max Hastings, Retribution
The great endeavorThe great endeavor
“The wartime expansion of the U.S. Navy was an extraordinary achievement, which should never be taken for granted. Between 1941 and 1945, its tonnage swelled from three million to almost thirty. Of the service’s total war expenditure of $100 billion, more than a third went to ship construction. . . . Mare Island Navy Yard expanded from 6,000 employees in 1939 to 40,000 in 1944, Boston Yard from 8,700 in June 1940 to 50,000 three years later. . . . By 1944 more than a million workers were building and repairing ships, 55 percent of them on the Atlantic coast, 27 percent on the Pacific, while a further two million served supporting industries. Most were working forty-eight-hour weeks on multiple shifts. . . . Many smaller vessels, submarines and escorts, were built in sections at plants as far inland as Denver, then transported to the coasts for completion. Thousands of landing ships were constructed on the Great Lakes and sailed to the sea.” – Max Hastings, Retribution
No winning for losingNo winning for losing
“The British and Japanese fought each other on the Burman front for forty-six months. Burma thus became the longest single campaign of the Second World War. It cost the Japanese only 2,000 lives to seize this British possession in 1942, but a further 104,000 dead to stay there until 1945. The largest country on the South-East Asian mainland, rich in oil, teak and rubber, Burma had been ruled by a British governor, with only token democratic institutions. Its population of eighteen million included a million Indians, who played a prominent part in commerce and administration. A host of Indian fugitives died in ghastly circumstances during the 1942 British retreat. Burmans had always been hostile to colonial rule. Many acquiesced willingly in occupation by fellow Asians, until they discovered that their new masters were far more brutal than their former ones. By 1944, they had learned to hate the Japanese. They craved independence and, ironically, now looked to the British to secure it for them.” – Max Hastings, Retribution
Mr. OfficerMr. Officer
“Societies run by civilians proved vastly better able to organize themselves to fight the Second World War than those dominated by military men, of which Japan offered the most notable example. It is hard to overstate the extent to which Anglo-American wartime achievements were made possible by the talents of amateurs in uniform, fulfilling almost every responsible function save that of higher military command. Intelligence, for instance, was dominated by academics, many of startling brilliance. [Britain’s] intelligence chief in north-west Europe was an Oxford don masquerading in a brigadier’s uniform. In Japan, by contrast, authority and influence remained almost exclusively in the hands of career officers, who were reluctant to grant scope to outsiders even in such fields as scientific research. The Japanese army and navy never mobilised clever civilians in the fashion of the Western Allies. Intelligence was poor, because the Japanese mind-set militated against energetic inquiry, frank analysis and expression.” – Max Hastings, Retribution
Same as it ever isSame as it ever is
“Even before Pearl Harbor, Japan was divided by widespread poverty, and by tensions between city and countryside, peasants and landlords, soldiers and civilians. For all the government’s strident nationalist propaganda campaigns, conflict had deepened rather than healed domestic divisions. There was bitterness that the rich and armed forces still ate heartily, while no one else did. The government’s Home Ministry was dismayed by the incidence of what in the West would be called defeatism, ‘statements, letters and wall-writing that are disrespectful, anti-war, anti-military, or in other ways inflammatory.’ There were reports of people making contemptuous references to the emperor as a baka, bakayaro or bocchan, ‘fool,’ ‘stupid fool,’ or ‘spoiled child.’ ” – Max Hastings, Retribution
Of Hobbesian natureOf Hobbesian nature
“From a place where only the law of the strongest prevails, no one returns unharmed.” – Rik Coolsaet, “Facing the Fourth Foreign Fighters Wave”
On top of itOn top of it
“If you’re a super well-developed, gorgeous rich guy who is being watched by all the girls, then you might be less pissed at the world.” – Adil El Arbi (Director, Black)
We might give this a tryWe might give this a try
“There is no defense or security for any of us except in the highest intelligence and development of all.” – Booker T. Washington, “1895 Atlanta Exposition Address”