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I wonder if football clubs will hold their value in these difficult economic times. It would be a pity if Manchester United fans were unable to repay the £800million the Glazers borrowed on their behalf.

Len, If the Bank situation wasn't so serious I would suggest we all have a "whip-round" and send it to Bush.
There will be an 11th.hour reprieve once all the Senators have peered over the Abyss,

Is there any rapid move to get derivatives and CDS under control? Also I would have thought "new" instruments should be vetted cleared and also controlled.

As has been discussed the numbers involved dwarf the mortgage based problems at the moment.

I have not yet heard of any regulation or control. Common sense say it must be in the pipeline but then Dubya is President for a matter of months.

the chances are we will end up with a few super banks or 'national champions' as some call them [although they would be neither national nor champions but creatures of govt subsidy]

the projections on the chart is that if these levels fail to support the markets we could repeat 1929 and be in for a full 80% wipeout.

some [the no regulation chicago school insurgency] reckon it can't be stopped so why bother to drag it out. Rather hold you powder dry till you can see the whites of the eyes and use the money to rebuild when the worst is over. That boom and bust are just natural cycles. So why fight it.

politicians [few are business people] maybe like rabbits in the headlights and are likely to repeat what anyone tells them.

Even the economic astrologers [yes they do exist] have a view- with mercury in retrograde which means all forms of communications are likely to become confused, entangled and difficult for the next three weeks.

So we are in headless chicken land.

as each day goes by 700 billion increasingly looks like peanuts?

One reason for McCain suspending campaigning may be the realisation that the VP debate on Oct 2nd may focus attention on Palin`s weaknesses (economics, foreign policy) in front of a large audience at a time of genuine crisis.

It`s also going to be interesting to see how much McCain/Obama change their election promises. Tax cuts? Health Care? Phooey, that`s so yesterday.

All future Presidents may be able to exert influence upon are social issues such as abortion or civil unions and the like. The prospect of recession plus Palin unleashed may not be a vote winner at present.

...Is there any rapid move to get derivatives and CDS under control? ...

there are 17 banks responsible for 90% of this. Should they be named and shamed?

cds have fallen as those responsible begin to rip them up. But there are no rules or reporting regulations. We got quick action on short selling but not cds. Which is suspicious. It is not rocket science to even have temporary measures to limit the generation of new derivatives so they are linked to the ability to fund 2-5 year contracts for longer than 90 days.

given there are some 460 trillion in derivatives of which about 60 trillion is cds its not some much control as management.

the existing cds will expire over the next 5 years. So we need measures to survive till then. Which must include regulations on them to limit account managers paid by bonus from continuously writing blank chqs.

THE obstacle to overcome is to intellectually defeat the chicago school of economists who sell the 'light' regulation line to politicians.

its not a question of light or heavy regulation but of the right regulation. The jedi mind trick of the chicago school is the unspoken assertion that the public will save them if it goes wrong. So this assertion must be made overt and 'a new deal' must be forged between private and state capital.

Basically in trading terms there has to be a stop loss. They will hate that because it reduces their unlimited profits outlook. Profits will be limited but then so too will the losses.

which is the point really. At the moment 'light' regulation philosophy is code for unlimited profits for private capital and unlimited losses for public capital. Which suits the oligarchy just fine. And how we got where we are today.

Hillary Clinton?

Judging by all this doom and gloom my bed matress is becoming a distinct possibility.

#6 bookhimdano

Thanks thats useful.

There is something about numbers as big as $460 trillion - although I understand its not all bad debt - that just stuns you.

How did we get here?

Am I being simplistic in assuming the Chicago School are essentially free market Republicans and so Obama, who can only look like a god coming in after Bush, being a Republican will tend to a heavier touch.

I take on board though the point about the "right" touch.

9.

basically these are bets on the 'too big to fail' idea.

Suppose GE was selling engines to Boeing and they came to you for insurance for 20 billion to cover that deal against either of them going bust for which they would pay you 50 million a year for the 5 years of the contract. You'd think that was easy money as they are 'too big to fail'.

Then suppose rather than wait 5 years for 250 million you sold the contract on to someone else for 200 million you'd get a super bonus that year. So you'd want more of these deals. Due to having no regulation none of these people needed the 20 billion in assets in case the contract folded.

And so deal upon deal builds up based on the idea they are too big to fail. And each deal is sold on so in the end no one knows who really owns them or what would happened if any default occurred.

Then someone worked out the maths of all these deals and that they amounted to more money than ever could be covered by hard assets. if effect these deals could not pay up if anything went wrong. so you'd want to dump them as quick as you could but everyone else has worked that out and so no one is buying them.

According to accounting rules you have to mark assets 'to market' ie what you could sell them at today. So the value of derivatives might in theory be 60 trillion but they might now only be worth 1 trillion marked to market. Which kind of crashed the books.

Lehman was thought too big to fail. So when it did that blew the 'too big to fail' mindset.

Now people think nothing is too big to fail so why lend them money or do any business with them. Banks do not lend to other banks because according to their financial computer models the probability is that there is a good chance they will fail.

Which brings us to the Paulson plan. Remove those [in this case housing] 'toxic' assets from the system that were marked to mark at a fraction of their real worth but pay the real maturity value of them with perhaps a 20% haircut. The books would then become more stable and in theory the banks could lend in confidence to each other and so free up the credit market.


Politicians who don't understand this think paying above the marked to 'market price' means profiteering for wall st. When all that means is the price you would get if you sold them today and not the real value of those contracts.

If that Paulson plan proves unacceptable they could 'cook the books' instead and just pretend those assets don't exist until value comes back in and they can either expire or be sold on.

But one way or another those assets have to be taken off the bank books for there to be confidence for banks to lend to each other. If this does not happen, credit freezes and firms start to go bust just because they cannot borrow then the CDS will start to kick in which is meltdown.


Thus the light regulation philosophy of private capital [backed by plenty of political donations] have engineered a game with the public finance of 'Heads i win tails you lose'.

So when it was heads they won now it is tails we lose.

NOT SCAPEGOATING, JUST SPIN-DOCTORING

bookhimdano (#6)

"THE obstacle to overcome is to intellectually defeat the chicago school of economists who sell the 'light' regulation line to politicians.

its not a question of light or heavy regulation but of the right regulation. The jedi mind trick of the chicago school is the unspoken assertion that the public will save them if it goes wrong. So this assertion must be made overt and 'a new deal' must be forged between private and state capital. "

Surely 'the jedi mind trick' of the Chicago/Austrian/Neocon school has been to play every dark-force (verbal/symbolic) trick available in order to keep their Trotskyite vision of 'democracy' alive, i.e the one where they profit by stealth at the expense of the rest of the population who take on the risk/debt?

They play the holocaust, the evils of Islamo-fascism/'war on terror', the equality of all ethnic groups/anti-racism (which protects themselves and exonerates them from exploitating 'the young in mind ('nobody forced them to take out the loans') - despite the evidence that legal age is not all there is to cognitive-development, i.e. some plateau in late childhood. ), the alleged absence of sex-differences (in spite of the well documented evidence at the tails of the distribution because of the female shorter range, and the serious cost to TFRs and invidious dysgenesis of more eduction and the expense of motherhood and family life), the alleged advantages of immigration (despite the evidence of the differential crime rate and poverty), the vain promises of universal education (despite IQ being largely genetic and the failures of Headstart, Surestart, Aiming High, SEAL, etc etc..). It just goes on and on in my view. Most people don't see just how much deception they are mired in. Maybe it's just as well? The lifetime risk of a Major Depressive episode for women in 20% as it is (nearly double what it is for men).

We've been here before (back on the 1920s and 1930s)....

Once again, National Socialist (Democratic-Centralist (aka 'Socialists in One Country', the system that allegedly doesn't work according to Condoleezza Rice last night) Stalinists of the PRC seem to have the Trotskyites just where it hurts them.

[But of course, they aren't Trotskyites are they, They are, after all, 'anti-communists' (read anti Stalinists).................But is that also anti 'FDR' type New Dealers?]

and Jedi spin doctors eh?

It should be a fascinating discussion. But it should ideally go much further than economics; though – as you will be well aware - Vince Cable is probably the most lucid politician in that field. One has to hope that, in any case, a US settlement will address all the problems caused by derivatives, not just US mortgages, and that the bickering of the two Presidential contenders does not divert attention from the real problems which would be posed by a banking collapse

Beyon that, and potentially more important, however is the real seismic shift is in US politics. After their investment of a quarter of a century in building the dominant popular position for their ‘new’ right-wing policies, the neocons have had their work destroyed in just a few days; hence their bitter opposition to the new ‘settlement’. In this context, Will Hutton is probably the best speaker on Keynesian approaches and Polly Toynbee, of course, on the new socialist politics.

To put the political position succinctly, it is a source of wonder that a Republican government, and a neocon one at that, is already responsible for the largest nationalisation program in history; even before it spends $700 billion on the next step. To say that we are all socialist now is probably not an overestimate of the change. Previously much of the world, even including China, had looked to the US as the dominant leader in economic policy; and thence to its loudly broadcast political message of ‘freedom’, which was in reality code for free markets. Now that those free markets have in effect collapsed, the US message has been all but wiped out.

Beyond that, the US will now be so busy sorting out its internal problems that it will have no time or resources for pursuing its dreams of hegemony. Indeed, where it will have to go – cap in hand – to the sovereign funds (especially China) to cover its position, it will now have to dance to their tune.

It is a fitting end to a lamed duck presidency, but it unexpectedly leaves behind a lame duck nation. The world leaders will probably now be China and the EU. So what does this mean for the new political realities. Has history ended for the second time?

Please would you put this situation in perspective in terms of precedent. Most people know that the Great Depression was a bad time and, I believe, was one factor leading to the rise of Hitler's fascism. Given that the situation today appears to be hanging in the balance and could go one way (problem-solved) or the other (Armageddon), just what are the odds on each of these outcomes? I don't think I'm unusual in wanting to understand the worst case scenario here so that I can start my preparations for dealing with it. Nobody likes surprises. I sense that politicians, journalists and other commentators are trying to do the Dad's Army "Don't panic" routine, whereas I've a sneaking suspicion that we might be headiing for the perfect storm, or a "convergence of catastrophes" (as someone once said). Give it me straight, doc.

11.

i'm sure that view is not lost on the jihadis which is why they call it 'punishment from allah'?

but for me i'd say its what happens when there are no rules. so was entirely predictable.

fannie and freddie gave big political donations, they were overseen by politicians and the books had not been signed off for 5 years.

which for me one essential rule is that financial institutions should not be able to give political donations of any significance.

it is mainly the light touch fundamentalist insurgency that is blocking the paulson plan because for them it goes against their 'beliefs'. they want a crash.

LEST WE FORGET

Even as J Gordon Brown struts the world, propounding his ability to fix its financial difficulties, THE 10p DEBACLE REMAINS UN ADDRESSED. Gordon's 'apology' in his Conference speech, was pure Blair-Boloney.
The transcript in on the web - just read the words. The dumb media 'bought' it, just as they bought '45minutes' from Tony.
BROWN MUST NOT BE ALLOWED TO GET AWAY WITH THIS. He is a proven fool, or a proven knave, and I don't want either prancing about the globe on my money putting their ten-pen'orth of incompetence into the already mind-numbingly bizarre phenomenon of The Emperor's New Money.
PLEASE CHALLENGE BROWN. He is either useless at maths or useless at being PM - probably both, but one will do to nail him. AND DON'T LET HIM NEAR ANY CRISIS-FIXER WHO IS STUPID ENOUGH TO THINK HE KNOWS SOMETHING.

MERCURY RETROGRADE (#4)

And a sunspot minimum approximating to zero, yielding 50 year low solar wind! One good blast of radiation under these conditions and 'communication' could get cooked. Then bookhimdano's headless chickens will really come home to roost.

MUTTERS ARISING (#11 and #12)

You lost me again JJ, but I have a question that I think might be relevant.

Virtually all politicians are chosen by a party to suit party requirements - toeing the line, protecting the leader, staying on message etc. Further, no qualifications are called for except, perhaps, the ability to speak endlessly and avoid questions. Has anyone studied politicians to define where they are on the bell curves of IQ? (I suppose we must allow those harpies a 'female' label.)
To what extent does a dumb, devious government bring a country (or a world) to disaster?

VINCE CABLE IS A BREATH OF FRESH AIR so what is he doing in the Westminster miasma? How can he suffer the disgraceful charade that is British Governance and not denounce it ON OUR BEHALF? We need a hero, but Vince has some other agenda that I cannot fathom.

Barrie (#17) All I was really just drawing attention (once again) to the fact that the hotbed of Trotskyism became the USA after Trotsky was ejected from the USSR in the late 1920s and that it was also the choice destination for the exodus from Germany in the 1930s (as well as the 'dissidents' from the USSR in later decades). Trotskyism is next to freemarket anarcho-capitalism in my book. They have an extreme hatred of National Socialist (e.g. Stalinist) regulators, basically because they're which is why I see anarchism/Bolshevism (incl. Cultural Marxist 'political correctness') and Conservatism as sharing essentially the same political agenda (here, Bolshevism does not cover Stalinism, which was why Hitler invited Stalin to join him in the fight against the COMINTERN and why China turned against the USSR after 1953).

I wasn't too surprised when I came across from when he WAISed the Nuremberg defendents. The above comments may interest you.

I suspect that many of our politicians are stronger on the verbal (arts/feminine) rather than their spatial (sciences/male) dimensions of IQ just because that's what the profession calls for? I have no data to support that, it's just an educated conjecture. The Civil Service exams also favour the arts/humanities (hence the C.P. Snow "Two Cultures" link a while back). It's a tragic mistake in my view as it probably accounts for the spin, and what's more, they probably don't have the insight to see it (i.e. know any better a lot of the time). A scomata.

I want to know why foreign nationals outside the EEC need to get identity cards first, and why it costs each person 300 pounds to get it.

THE ANTICS OF MORBID REGULOPHOBICS?

Barrie (#17) All I was really drawing attention to (once again) was the fact that the hotbed of Trotskyism became the USA after Trotsky was ejected from the party/USSR in the late 1920s and that it was also the choice destination for the exodus from Germany in the 1930s (as well as the 'disidents' from the USSR in later decades). Trotskyism is next to freemarket anarcho-capitalism in my book. They have a morbid hatred of National Socialist (e.g. Stalinist) regulators, basically because such types are (which is why I see anarchism/Bolshevism incl. Cultural Marxist 'political correctness'/Conservatism as sharing essentially the same political agenda (here, Bolshevism does not include Stalinism, which was why Hitler invited Stalin to join him in the fight against the COMINTERN in the 1930s, and why China turned against the USSR after Stalin's death in 1953, as I understand it). FDR got on OK with Stalin. Hitler did for a while. June 1941 puzzles me.

I wasn't too surprised when I came across (which was from when he WAISed the Nuremberg 'evil-dooers' (who were visibly shocked by what they were accused of, and especially disturbed by the video which was laid on). The above link's comments may interest you.

I suspect that many of our politicians are stronger on the verbal (arts/female) rather than their spatial (sciences/male) dimensions of IQ just because that's what the profession calls for? I have no data to support that, it's just an educated conjecture. The Civil Service exams also favour the arts/humanities (hence the C.P. Snow "Two Cultures" link a while back). It's a tragic mistake in my view as it probably accounts for the spin, and what's more, they probably don't have the insight to see it (i.e. know any better a lot of the time).

Just the vicissitudes of scotoma or the antics of morbid regulophobics?

IQ NOTWITHSTANDING (JJ's Gilbert link #20)

It is often asked (one way or another) what does IQ measure? The fact that scientists, of high IQ, also go to church to exercise 'worship' seems to illustrate the ease with which we function, psycho-illogically, in non-conferring compartments. (I have no problem with the concept of an unprovable, unknowable god, but one who wants to be worshipped seems too close to being 'made in my image' to be worth the bother. I'll just continue to worship me.)
I use the simple division of 'clever' and 'wise', relating cleverness to IQ and wisdom to sustainable life and minimum misery. I also regard wisdom as vital to the OPTIMUM APPLICATION OF CLEVERNESS, and necessary restraint of its excesses.
I recently enquired after a test of 'WQ' - I am unaware of any. Perhaps wisdom, like the Tao, cannot be defined, but everyone knows when it manifests? Sadly, cleverness seems to blind the clever to any need for wisdom - stupidity the more so. That covers Westminster. Any thoughts JJ?
I have said before: life, in the years between birth and puberty, should concentrate on establishment of a secure, confident, wise individual, the better to fend off the pressures of sexual imperatives and institutionalising schooling-for-Mammon.
Of course, even the stupid/clever politicians can see that this would spoil their 'game playing' and it would not do the worshipping classes a lot of good either. Doh!

, OEDIPUS, JOCASTA AND INTENSIONAL OPACITY

"The fact that scientists, of high IQ, also go to church to exercise 'worship' seems to illustrate the ease with which we function, psycho-illogically, in non-conferring compartments."

Maybe they just do it to be sociable?

Oedipus wanted to sleep with Jocasta but not his mother.

It's a matter of logic.

Quinean extensionality is all there is, and for when we can't abide .

I suspect that were it not for our 'non-conferring compartments' (fragmentation) highlighted by , we'd surely collapse into the horrors of omniscience. Hence projective deification, our loss of narcissism?

is extensional and demands good spatial IQ, but it's not very girlie, and as don't like it much either, got short shrift.

SLEEPING WITH ONE'S OWN SIDE.

I see right through your opacity JJ. Opacity is no substitute for you know what. It is also the last refuge of a Scandinavian.

Barrie (#23) I reckon natural referential opacity just illustrates how we're genetically made. We don't make all the right connections simply because our brains are wired up that way. We turn to science (not politics and the arts) for transparency, predictability and stability, but that's a very unfashionable (boring) thing to say.....

It's a 'woman's' world today.

"FIRST DEFINE YOUR TERMS" (#24)

Let's start with 'woman'. I mean, of course, the definitive Quinean Woman! (Or have I descended into tautology?)

PS JJ! We can't go on not-meeting like this!

SPOTTING TROUBLE

Barrie (#25) They tend to write stuff like , not like [see link here for full paper] or .

It's a logical/spatial, frequency and brain-gender thing I suspect. See earlier posts on NCAH as to why presence/absence of the SRY gene isn't all there is to it.

HEAD IS DO IN

Sorry JJ, Mr Quine is '"doin' my 'ed in."
I am off down the shallow end. (:o)

PS I bet old Quiney could do a thousand words on "doin' my 'ed in" and the world would still be none the wiser.

MIND SCHMIND: GOING OFF THE DEEP END

Barrie (#27) "...the world would still be none the wiser".

It's none the wiser for the simple [dysgenic fertility] reason that . ?]

There's nothing 'deep' here. On the contrary, it's all very basic, and that's what the spinmeisters currently milking/destabilizing our economy find so threatening (several of the main IQ researchers received death threats over the years, many more have had their jobs threatened etc).

Tweedledum (Skinner) and Tweedledee (Quine) were radical/evidential behaviourists, which is about as far from depth psychology and spin as one can possibly get.

"It was then and there that Fred and I met, but we had already been preconditioned to see eye to eye on most of what mattered. Back in the 20's I had imbibed behaviorism at Oberlin from Raymond Stetson, who had wisely required us to study John B. Watson's Psychology from the Standpoint of a Behaviorist. In Czechoslovakia (5) a few years later I had been confirmed in my behaviorism by Rudolf Carnap's physicalism, his Psychlogic in physikalischer Sprache. So Fred and I met on common ground in our scorn of mental entities Mind shmind; on that proposition we were agreed. The things of the mind were strictly for the birds. To say nothing of freedom and dignity."



Herrnstein was Skinner's successor at Harvard, and much of what Herrnstein and Murray had to say in 'The Bell Curve' (1994) Herrnstein had said back in 1973 in (a reference to 1958 satire, the Michael Young, ironically, who drafted the somewhat Stalinist 1945 Labour Party manifesto which we have seen New Labour (and the Conservatives before them), so eagerly take apart in pursuit of the wisdom of market-forces.

It seems to me that most of us today , which probably doesn't bother whom you frequently castigate, as it makes ordinary people much easier to mislead. Sadly, the evidence is that these types are as immune to criticism as most people are immune to education, i.e. they know not what they do (and Hare's not counting the malevolent narcissists either and that must be on the rise given all the family instabilty/dysgenesis these days).

I fear this may be why Hitler took such draconian steps back in the 1930s, and I truly hope that don't turn out to be chillingly prophetic given our current economic/demographic trends.

IMPASSE

Oh JJ. I have a feeling one of us understands me all too well and the other doesn't. Trouble is - I have no idea which is which. Perhaps you do?

See you next week.