tired fools

as scared as i am about the economic catatrophe that we are all going through, i’m beginning to get concerned that the moves by the federal agencies are all wrong. short-termism seems to be the way of it all. almost everyone supports the various bail-outs, few want to stay back and pick through the wreckage afterwards. something tells me this is wrong. even paul krugman, recent nobel laureat, has supported the moves in principle. i was interested to find, then, that looking at the japanese crisis of the 1990s, a paper that purported to examine economic darwinism:

This paper investigates whether the natural selection mechanism (NSM) of economic Darwinism works in severe recessions. Based on micro data, we constructed a comprehensive firm-level panel dataset for Japan from 1994 to 1998 to analyze a firm’s entry, survival, and exit and its relationship with TFP. Empirical results show that efficient firms in terms of TFP exited while inefficient ones survived in the banking-crisis period of 1996–1997. Further, this phenomenon is observed mainly for new entrants and contributes substantially to a fall in macro TFP after 1996. These facts strongly suggest a malfunctioning of NSM in severe recessions.

i then go on to read that a certain mr. krugman had written about this:

Finally, suppose that the government were in fact to simply give this bank money, say by buying off some of its questionable loans at par. Would this make the bank more willing to lend? On the contrary: If the logic of moral hazard applies - and the unwillingness of the banks to accept capital injections suggests that it does - better capitalized banks will be less willing to make risky loans, because they will care more about the left tail of the distribution of returns.

Strange, isn’t it? The Japanese bank bailout is supposedly the key to the recovery of Japan’s economy, which is supposedly the key to recovery in Asia; optimism sparked by that bailout has fueled a definite improvement in the mood in the whole region. Yet a simple example suggests that the rescue program is likely to end in farce, as banks decline to be rescued; and that if somehow the Japanese government finds the will to force the banks to take money anyway, it will actually be counterproductive.

Please tell me that I am missing something.

of course, the situation was not exactly the same (it never is), but it should give us pause. already it’s easy to see parrallels between measures taken in 2008 and those following the 1929 crash, and again with Japan in the 1990s. Neither of these had a good outcome.

i’ve just finished Malcolm Gladwell’s “outliers”. I find myself in the position of having read each of his three books, which is odd since I don’t really like any of them. There was an interesting blog post citing his (and his growing army of write-alikes) anecdotal style. I think this is a slightly unfair criticism, but as Terry said, when discussing this the other night, “it had to be said”.

the problem with the books is not that they communicate ideas through anecdotes at all. if you removed all anecdotes, what would be left would be worth reading. The guy is a journalist who likes a bit of science, well social science. In another world he would produce pop-science books. but he is a journalist and what he does is write new yorkerish prose, that’s to say that entertainment comes first. but if i wanted to read entertainment i would steer well clear of gladwell. at the end of this book you get an epilogue and, hey, it’s his own family’s story. i read precisely one page and nearly threw it onto the tracks at London Bridge station. i walked to the news-stand and bought the evening standard in the hope that its reactionary invective would remove the icky syrupy taste from my mouth.

no. out of every gladwell book could be made a perfectly satisfying and informative pamphlet, probably 20 pages long. i don’t mean that it could be condensed, rather that all the dross could be expunged leaving something worth reading. and it is worth reading.

there’s been a lot of traffic about passwords recently. just how secure is yours etc. I use the same few passwords for everything, and it seems the US administration at the height of the cold war did the same. remember that “secret” code preventing unauthorised use of nukes, well it seems that they left the code as 00000000. Just like a brand new cobination lock on a recently bought briefcase. cute.

Our launch checklist in fact instructed us, the firing crew, to double-check the locking panel in our underground launch bunker to ensure that no digits other than zero had been inadvertently dialed into the panel. SAC remained far less concerned about unauthorized launches than about the potential of these safeguards to interfere with the implementation of wartime launch orders. And so the “secret unlock code” during the height of the nuclear crises of the Cold War remained constant at OOOOOOOO.

Shortly after the great tsunami hit, I was reading Gibbon’s “Decline and Fall . . . ” and I came upon a wonderful description of a similar event in antiquity. Whilst on the plane back from Berlin today I had a similar experience whilst reading Tacitus’ “The Annals of Imperial Rome” A wonderful description of a credit crunch, complete with property slump and government bail-out. From the reign of Tiberius:

Accusers were now intesely active. Their present targets were men who enriched themselves by usury, infringing laws by which the dictator Julius Ceasar had controlled loans and land-ownership in Italy. Since patriotism comes second to private profits, this law had long been ignored. Money-lending is an ancient problem in Rome, and a frequent cause of disharmony and disorder. Even in an earlier, less currupt society steps had been taken against it. At first, interest had been determined arbitrarily by the rich, but then the Twelve Tables had fixed the maximum at 10 per cent. Next, a tribune’s law had halved the rate. Finally loans on compound interest were forbidden completely. Fraudulence, attacked by repeated legislation, was ingeniously revived after each successive counter-measure.

Now, however, the praetor Sempronius Gracchus, responsible for the investigation, was compelled by the numbers of potential defendants to refer the matter to the senate. That body - being implicated to a man - nervously entreated the emporer’s indulgence. It was granted. Eighteen months were allowed in which all private finances had to be brought into line with the law. The result was a shortage of money. For all debts were called in simultaneously, and the numerous convictions and sales of confiscated property had concentrated currency in the Treasury and its imperially controlled branches. To meet this situation the senate had instructed that creditors should invest two-thirds of their capital in Italy, and debtors immediately pay the same proportion of their debts.

However, creditors demanded payment in full, and debtors were morally bound to respond. The first results were importunate appeals to money-lenders. Next, the praetors’s court resounded with activity. The decree requiring land purchase and sales, envisaged as relief, had the opposite effect since when the capitalists received payment they hoarded it, to buy land at their convenience. These extensive transactions reduced prices. but large-scale debtors found it difficult to sell; so many of them were ejected from their properties, and lost not only their estates but their rank and reputation.

Then Tiberius came to the rescue. He distributed a hundred million sesterces among specially established banks, for interest-free three year state loans, against security of double the value in landed property. Credit was thus restored; and gradually private lenders, too, reappeared. However, land transactions failed to adhere to the provisions of the senatorial decree. As usual, the beginning was strict, the sequel slack.

’nuff said.

What is living comes to death, for its very being is a contradiction; in itself it is the general, the class, yet its immediate existence is as an individual. In death the class shows its power over the immediate individual.

yeah, whatever. Here’s where his corpse is buried -

i’m addicted, but going to bed now.

One is still what one is going to cease to be and already what one is going to become. One lives one’s death, one dies one’s life.

I think of death only with tranquility, as an end. I refuse to let death hamper life. Death must enter life only to define it.

Only a fool remains alive, but such fools are we! And that is surely the most foolish thing about life!

oh, go on, let’s have another -

It seems to me that I may be living too long. Indeed: my nearest relations have all died, and so have some of my best friends, and even some of my best pupils. However, I do not have a reason to complain. I am grateful and happy to be alive, and still be able to continue with my work, if only just. My work seems to me more important than ever.

It was Camus who said that the most important event in life is death. Spurred on by a number of hits from people googling “philosophers graves”, of which i’ve written before, I give you this:

I’m enjoying Tacitus‘ “The Annals of Imperial Rome”. Roman history is meaty and full of fascinating incidental characters. As with reading Gibbon, you learn to recognise certain patterns. Anyone who wins a number of victories while the emporer sits in Rome is bound for a sticky end. If they’re honest and true, doubly so. My favourite, in reading Gibbon, was Belisarius. The poor guy did almost everything right and was vilified and horribly betrayed by his emporer and even his wife. My new favourite is Germanicus. Again, he does everything right, and is even aware of the dangers in doing so. He tries to play it down, never extolling his own virtues etc. It does him no good, of course. Incidentally his son and grandson do not inherit his exemplorary behaviour (Caligula and Nero).

I was interested to read of his visit to Egypt. He was fascinated by the antiquities. Mention is made of Memnon:

Germanicus was interested in other remarkable sights, too, particularly the stone statues of Memnon which gives out the sound of a voice when the sun’s rays strike it.

Intrigued, I looked it up. From Wikipedia:

Following its rupture, this statue was then reputed to “sing” every morning at dawn: a light moaning or whistling, probably caused by rising temperatures and the evaporation of dew inside the porous rock. The legend of the “Vocal Memnon”, the luck that hearing it was reputed to bring, and the reputation of the statue’s oracular powers, travelled the length of the known world, and a constant stream of visitors, including several Roman Emperors, came to marvel at the statues. The mysterious vocalisations of the broken colossus ceased in 199, however, when Emperor Septimius Severus, in an attempt to curry favour with the oracle, reassembled the two shattered halves.