Filed under: Uncategorized | Tags: bubble, economics, finance, homeownership, mortgages
About all those people who we’re supposed to feel so sorry for because The Financial Crisis(tm/2007) ended up getting them kicked out of their homes:
Most of those whining people never owned those homes in the first place. They were borrowing those homes – often very nice, spacious, granite-counter-top- jacuzzi-in-bathroom- Salamander-oven-having McMansion homes – from some bank.
Now look, if someone got kicked out of his house because he lost his job and couldn’t make mortgage payments, then ok, that’s one thing. But those people didn’t lose their house because of people shorting ABX or the home-price bubble bursting. They lost their house because they lost their job, see? Obviously this can be devastating, but the cause needs to be sought elsewhere than evil bankers shorting the mortgage market. That’s not what caused them to lose their job, which probably had more to do with the CP market.
What I’m talking about are people who bought more house than they could really afford using e.g. a pay option-ARM and stated-stated docs, taking a gamble that home-price appreciation would continue upward and they could always just refi into a fixed-rate mortgage (or sell the house at a nice profit) 2 years later, and then when that didn’t happen and their appraisal was too low (and they couldn’t just bribe/game/cajole the appraisers anymore like the old days because of all the renewed heat on the sector), they couldn’t refi and realized they wouldn’t be able to make the payments when they reset. And so now they’re complaining that they have to move out, and Obama wants to put a freeze on foreclosing them, and genius economists have all sorts of ideas for principal-forgiveness programs, and on and on.
Poor, poor them. Let’s all bend over backwards to help the people in the preceding paragraph. I think I should totally be taxed more so the people in the preceding paragraph can just keep living in those houses they
borrowed bought and totally deserve to stay in just because they’re such great people.
Let’s get one thing straight: those people aren’t people who were ‘hurt by the Financial Crisis’. Those are people who were helped by the Bubble. They profited from a Ponzi scheme. They rode the tide of an asset inflation. They took advantage of overenthusiastic tulip-buyers. As a result, guess what? They got to live in a far, far nicer house than they could actually afford. Maybe for only a few years or two years or one year, but guess what assholes?
However long you lived in that McMansion, that’s longer than I’ve lived in a house. Assholes. So stop your fucking whining. Assholes.
Dexter is a bizarre TV show and I had been catching up with it again from where I last left off, finally reaching the end of Season 4. I wasn’t completely happy with some of the developments (e.g. killing off the Frank Lundy FBI character, who was one of my favorites, in an especially dumb/pointless way), but I still found the season pretty good until the very end. But, the last two minutes of the finale were so sickening and off-putting that I think I shall never watch or think about it again. Indeed, I wish I could un-watch those two minutes. This is slight spoiler territory so you’ve been warned and stop reading now if you care, but…..essentially the season ends with more or less the same development as the movie Seven.
And come to think of it, I had the exact same reaction to that part of Seven: a sickened feeling in my stomach, disgust for the filmmakers, and a deep desire to unsee what I had seen or at least to never see it again. I guess I know where a movie/story begins to cross the line for me.
Dexter is a clever dark comedy that over the years has ultimately turned out to be about, well, guys. Dexter is an exaggerated version of all the usual ‘men are from Mars’ cliches about guys: that they are clueless in relationships, that they can’t talk about their feelings and don’t understand when women do, that they need a personal space, that they look to father figures, that they need guy buddies. And at its best it can be quite funny and insightful when it hits on these themes. But like I said before, I was watching Dexter in the hopes that it would take a certain direction, one of redemption and change. I don’t see that, or anything much good, happening now. So, Dexter is over as far as I’m concerned. Maybe I just don’t have the stomach for these things anymore, I guess I should stick with The Office….anyway, let this be the last time I think about Dexter.
Filed under: Uncategorized | Tags: cdos, fabrice tourre, finance, goldman, politics, senate, synthetic cdos, the big short
I guess I should have known: it would take a government hearing to make me actually root for Goldman Sachs. But root I did.
Impressions of the hearing, which (in some bit of masochism never fully explained) we had up on all our TV screens all day at work:
- Many LOL moments that had the whole trading floor nearly in tears. Some moments nearly reached Maxine Waters territory.
- Fabrice Tourre, and most of the Goldman execs testifying, came off quite well.
- Most of the Senators don’t know what they are talking about, in a very profound way. At best some of them appear to know the lingo.
- I believe in civilian government answerable to the people rather than insulated technocratic committees making decisions in smoke-filled rooms and all, but if anything can make one question this model and prefer the latter (more European) approach, it’s the spectacle of people on podiums who don’t know what the hell they’re talking about compel specialists to come in for a marathon of televised, ignorant questioning and demagoguery.
- At least one Senator appeared to have recently read The Big Short and based his entire questioning/premises on it. He seemed quite proud of himself.
- Almost to a person, Senators kept insisting they weren’t against going short and that they understood the value and role of going short but then asked questions whose clear premise was that going short is a bad, unseemly, nasty thing Goldman should never have done or even helped someone else to do. As far as I can tell from some of the questions, Goldman was supposed to only sell things in such a way that they simultaneously went long that thing. Not sure how that’s, um, possible, but that’s why I’m not in Congress I suppose.
This leads me to a recurring theme I find emerging out The Financial Crisis (tm/2007): politicians creating or abetting problems, and then complaining about those problems to others, finally using those problems as an excuse to do more stuff (which will inevitably create more problems). Examples:
- Bending over backwards (Fannie/Freddie, tax credit, Community Reinvestment Act, loose reg cap requirements, whining about banks ‘redlining’…) to encourage more lending and
howeborrowershiphomeownership – in short, creating a bubble – and then complaining about loose lending standards causing the bubble. Which is it, do they want banks to lend money to people or don’t they?
- Complaining that there was a real estate bubble, and yet getting mad at the fact that people shorted the market. Isn’t the problem that not enough people figured out ways to go short, sooner? Should the bubble just never have been punctured?
- Anointing rating agencies as the arbiter of reg-cap requirements, and then being irked that banks found ways to game the rating-agencies’ models. What did you expect?
In everyday conversation these paradoxes would be recognized as utter insanity. “Lend to more minorities you racists WHY WERE YOUR LENDING STANDARDS SO LOOSE YOU SHOULD HAVE KNOWN?” From the mouths of politicians, this tripe counts as wise, justified ‘populist’ rhetoric and policymaking.
Filed under: Uncategorized | Tags: abacus, cdos, cds, fabrice tourre, finance, goldman sachs
So by now you’ve heard about the SEC fraud case against Goldman involving a synthetic CDO. How weird: once again, as with Climategate, a scandal emerges into the spotlight on which – unlike most who are doing so – I’m actually somewhat qualified to opine. (After all, I’m sort of, um, in that business, technically.) So, it’s a weird feeling.
My initial reaction to reading the surprisingly readable SEC complaint was (1) they probably have the goods on the one Goldman employee (Fabrice Tourre) but (2) Goldman will probably deflect the bulk of the blame towards him and away from them as an institution, and thus (3) Goldman will pay a fine (=Obama 2012 campaign contribution?) that represents a tiny fraction of what they’ve already earned in Q1 2010, and that will be the end of that.
To me the only real uncertainty here is how much commentary full of ignorance and half-truths we are likely to be saddled with in connection with this story. Some people have made going-short into some sort of evil thing (usually these are the same people who don’t like ‘bubbles’, ironically.) Some people think CDS in particular are bad, it’s CDS that are the culprit. Some people think it’s CDOs. Most people don’t know the difference. Some people think CDOs are ok but there’s something evil about ‘synthetic’ CDOs (as if there’s a huge and meaningful difference). Most people (i.e. everyone but me) think there is a huge and meaningful difference. Most people are convinced that this is just another illustration of the (supposed) ‘free market’ needing more ‘reining in’ by the government.
Those people are all wrong. The problem is the government.
Ok, I’m slightly joking. But only slightly so. Let’s get one thing clear: CDOs (especially synthetic ABS CDOs) would not exist if not for the government actions and regulations that incentivized them.
Why does the financial sector create new ‘financial products’? In all cases, it’s because they think those products represent legal ways to make more money for someone (in particular, them, but fundamentally they’re in sales so they only make money if they find ways to make money for other, “real-money” people). Smart people on Wall Street read all the rules, read the fine print, ran the numbers, and realized that if they do XYZ they can achieve more value than people currently get. CDOs are no different and they are nothing special or intrinsically evil. They are a solution to a problem.
Here’s the problem CDOs solve(d): “How do I get a high return from a AAA-rated (or at least, investment-grade) fixed-income instrument?” But the only reason people really wanted (want) to solve this problem is: the government, in one form or another, for one reason or another.
Let’s back up a bit to the first “CDOs”. I claim that the first “CDOs” (at least, in the modern sense…) were actually the mortgage bonds you may have read about in Liar’s Poker. CDO just stands for ‘collateralized debt obligation’, which I scan as something like: repackaged IOU. So just think of a CDO as an IOU based on (collateralized by) other IOU’s. It is just a way to buy a cut of some portfolio of IOUs.
A mortgage is an IOU. You borrow money from the bank and give them a piece of paper with your signature on it. The piece of paper says, in effect, IOU. The bank, which has lots of these pieces of paper, could sit around and just wait for all of them to pay off via everyone’s monthly mortgage checks, but that has risk/uncertainty. If someone came along and offered to pay cash today for all those IOUs, it might be worth it to banks. Problem: individual mortgages themselves aren’t “AAA-rated securities”. Certain types of buyers (who would, otherwise, want those returns) therefore can’t buy them – either aren’t allowed to (because they are, say, an insurance company required by law – i.e. the government – to hold a certain amount of AAA securities), or can’t afford the capital charges they’d be hit with on non-AAA securities (due to government regulations).
Solution: turn mortgages into AAA-rated securities. Pool up mortgage IOUs, and sell off the top 90% as a “AAA” bond. This is what was done in the late ’70s/early ’80s. It was also a “CDO”, technically. It solves the problem of how to sell off mortgage debt to buyers who can’t buy things that aren’t “AAA”. Let me emphasize: this is a problem that would not have existed if not for government actions/regulations. Imagine that no buyers had any legal or regulatory reason to care about or pay attention to a bond’s “rating” in the first place; then the act of cleverly repackaging IOUs to achieve a certain “rating” wouldn’t make any sense. There would be no reason – no financial incentive – to do it at all. It would be a waste of time and money, legal fees and man-hours.
There would be no CDOs or even mortgage bonds, at least, not as we know them. They would not have been overvalued. So there would have been no ‘bubble’ to burst.
Let’s pause for a second to discuss what “AAA” is. “AAA”, the “rating” of a bond, is a thing slapped onto it by some or another private company called a “rating agency”. Another way to describe this, I claim, is that it’s an opinion. A private company has come up with an opinion regarding how risky a bond is, and if their opinion is that it’s not very risky at all, they will call it “AAA”.
So far so good. I mean everyone has the right to their opinion. Who cares? If I, personally came out with a blog post stating my opinion that the bond ABAC 2007 AC1-A1 is “money-good”, would you rush out to buy it as a result? Maybe you would, maybe you wouldn’t, it would depend on how much you valued my opinion. That would be your call. (You probably wouldn’t.)
The problem is that when it comes to rating agencies, the government has elevated their opinion to carry the force of law. Suddenly a “rating” is not just an advisory, like a movie review or some article in Consumer Reports; it has legal and regulatory ramifications for the buyer. Imagine how this would warp any market. Imagine that, by law, you could get better financing on a car that Consumer Reports gave four-stars. Two effects would predictably occur: (1) the price of “four-star” cars would inflate, (2) auto manufacturers would work very hard to try to achieve at minimal cost a rating of “four-stars” for all new models (especially those that would otherwise be on the fence between three and four “stars”…).
Exactly the same thing happened in the debt market. Who the hell is a “rating agency” (some private company) to declare that a bond is “AAA”, and why should anyone care (unless they trusted and believed that rating agency’s analysis, i.e. unless they had done their own analysis too and confirmed that opinion)? Well, the government forces people to care, because the government made “ratings” matter, by law. As a result, buyers (like the German bank who bought ABAC07) end up paying more attention to a “rating” than to anything fundamental. This is a natural, normal, predictable result of the incentives that were in place. The fact that these incentives were in place is entirely the government’s doing and the government’s fault, yet nobody seems to want to blame the government, instead they want to blame rating agencies, or short sellers, or financial firms, all for doing what they are designed to do – read the rules, and figure out the best way to work within them.
Nothing I’ve just written above changes one bit if you move away from mortgage bonds themselves and start talking about “CDOs”. A cash CDO is the same thing (repackaged IOU), except the IOUs inside it are other bonds rather than mortgage loans. Nor does anything change if you speak about ‘synthetic’ CDOs. A ‘synthetic’ CDO just means the IOUs inside it are side bets on bonds rather than the bonds themselves. None of these details have anything to do with the fundamental reason for the bubble, the conflicts of interest, the abuse people are now complaining about, which all stem from one thing: the government incentivizing the achievement of certain “ratings” in the debt market, by making a bond’s “rating” matter in a legal way. This distorted the market by incentivizing people to eschew genuine risk analysis in favor of merely looking at a bond’s “rating”. It created the incentive to game the “rating” system by chasing ways to construct ever-higher-spread (thus, higher-priced and more appealing to the less discerning, rating-sensitive buyers) bonds that were still “AAA”.
Incentives matter. It was the government who designed (intentionally or not) all these incentives. In a very real sense: the government made CDOs. If you don’t like them, and think they’re bad and evil, you now know who to blame.
Filed under: Uncategorized
NEW! Every link comes with its own blockquote, free of charge:
- Shocker: diversity training classes don’t work. Surely that means we’ll stop doing them? Especially to the ‘reality-based’?
Not anytime soon. Admitting these programs don’t work would lower the status of legal elites who suggested they would work, and such elites can rationalize this expense as a signal of our society’s commitment to diversity.
Actually it’s slightly wrong to say they don’t work. That begs the question of the definition of ‘work’. If the goal were to, like, actually change attitudes and increase minority/women promotions, then sure, maybe they don’t work. But if the goal is just to set up, without regard to cost to the rest of us, cushy make-work jobs (as ‘diversity coordinators’ and the like, not to mention padding the legal fees for lawyers who sue/threaten to sue on this stuff), mostly for certain types of people who would otherwise be economically useless, it appears to me that diversity programs ‘work’ quite well.
- Scott Sumner on the “failure” of the Milwaukee voucher program.
If a policy that leads to greater consumer satisfaction at lower cost, and produces no negative side-effects in test scores, is viewed as a “failure” by progressives, then I don’t think we need to worry very much when progressives criticize the free market. As Dylan once said: “There’s no success like failure, and failure’s no success at all.”
Can’t believe this didn’t occur to me before, but it’s easy to go around claiming your positions are ‘reality-based’ when you yourself get to define the metrics of success and failure, and they just happen to correspond to what you already wanted/didn’t want to happen.
- Brian Moore thinks a blog-discussion that’s been making libertarian rounds lately is a big waste given some of the other issues libertarians could be talking about:
These are front-line, high profile issues where libertarians are miles better than either major party. And these aren’t piddling little things either — people are actually dying and suffering because the US pursues the wrong policies on these things. But no, since libertarians are wrong on 1880 gender issues and their blind allegiance to their stupid ideas will invariably lead to feudalism, we probably shouldn’t listen to them.
- Whiskey doesn’t seem to like Joss Whedon, let alone think he’s a good choice to direct the new Avengers movie.
Joss Whedon has his talents. Arch, camp, sort of gay, stuff like “Dr. Horrible’s Sing A Long,” or Buffy the Vampire Slayer, or Angel, or inside Hollywood stories like “Serenity” or “Firefly” (about a Hollywood rebel who did it his way, as a space cowboy captain), are certainly within Whedon’s power. Arch, camp, gay, popular culture snappy dialog, are things Whedon can do in his sleep. If one were to remake “Nick and Nora’s Infinite Playlist” only with an Alpha, thuggish asshole that women love, instead of Michael Cera, with a few rape scenes (for shock value) and even more hipsterism, well Whedon’s your guy.
On the plus side, it was through reading that post that I finally figured out that ‘The Avengers’ that everyone’s been talking about in the context of new movie productions has something to do with comic books or something, and has nothing to do with this:
Such a shame. Let’s do that again:
- Alex Tabarrok on carbon offsets:
Highly complex, difficult to value assets are being evaluated by a handful of firms with strong ties to the financial corporations whose job it is to market those assets to investors around the world. Sound familiar?
Sure does. On the plus side, the carbon-offset market just seems so phony and corrupt that it just seems impossible for it to last much longer.
- Steve Sailer has an interesting theory about President Obama that you’ve probably never heard before: CIA plant. However that theory sounds to you, one thing cannot be denied, which is that Sailer knows a heck of a lot more about Obama’s biography than do the vast majority of people who adore him:
Barack Obama Sr. was a protege of Tom Mboya, the Kenyan Luo politician who was famously Washington’s man in a three way struggle for power within Kenya between the pro-Soviet Luo Oginga Odinga and the pro-British Kikuyu Jomo Kenyatta. …. Obama’s mother worked in the late 1960s at the U.S. Embassy in Jakarta, Indonesia, which was Ground Zero for the CIA after the 1965 Communist putsch and subsequent military massacre of leftists. Indeed, Dreams from My Father refers to her conversations on the job with CIA men. …. At Occidental, Obama’s best friends were rich Pakistanis leftists. In 1981, he visited Pakistan and stayed at a friend’s estate, whose politician father became the caretaker Prime Minister of Pakistan in 2008. …. After he got out of Columbia, Obama got a job at an international business newsletter firm, Business International, where, he says, he felt like “a spy behind enemy lines.” That reflects his leftist ideology, but I suspect he’s amusing himself as well by referring to the fact that Business International had served to provide cover to at least four CIA agents over the years.
How did Obama wind up working at a CIA front? Coincidence? Perhaps, but maybe he had some advice. Maybe somebody made a phone call for him.
Seriously, when I look at the hopey-changey people, I have to wonder how much of this do they actually know? Why don’t President Obama’s supporters seem to be the least bit interested in the biography of this man they admire so much and assume is so great and wise?
- I’m not sure it can really be true that David Henderson only just now figured out that progressives aren’t primarily motivated by a desire to help actual people. During a radio call-in with other guests, someone with a teaching credential called in & complained that someone with ‘[his] resume’ couldn’t find a job:
But then Krasny asked Sylvia, with a little laugh, whether she wanted to give her suggestion. I think Krasny’s laugh said a lot about his attitude. I think it said that he thinks we aren’t really there to help people solve their problems and that instead it’s about advocating large-scale government programs. Then Sylvia said. “The problem is that we have millions of people like the caller. So that trying to be a tutor, to work on your own, to be self-employed, which a lot of people do try to do, is really not the answer.” Wow! It’s not? He couldn’t find a job? Yet, she wasn’t saying that. She seemed to be saying that maybe he could but she didn’t care about him. She cared about millions of people as a mass, but not as individuals.
- It’s amusing what happens when ‘healthcare reform’ supporters start to actually encounter the realities of the bill they were so in favor of but knew diddly-squat about, as Bookworm illustrates.
My friend was shocked: “Why didn’t anyone tell us about this before?” I replied, quite mildly, “I did.” She had the grace to fall silent.
It turns out that my friend didn’t raise the issue randomly. The people in her insurance office are getting panicky because they’ve suddenly realized that they’ve entered the insurance Twilight Zone, where all the rules are upside down.
What’s truly ironic is that the executives in her office, like my friend herself, backed the bill. The guys and gals with MDs and MBAs and Obama bumper stickers boldly affixed to the back of their cars had their heads up their collective butts for the past year. How else to explain their inability to see the patently obvious?
Fantasy-world thinking can do that. I also think it has something to do with that ‘Yes We Can’ Youtube clip from ’08. Amazing how easy it was to turn intelligent peoples’ brains to mush.
- This Breaking Bad recap has it right, last week’s episode was a game-changer. This was the key quote:
And we see Gus Fring manipulate Walt with his admirable speech in the ep declaring, “A man provides and he does even when he’s not appreciated, or respected, or loved.”
If you’ve never watched Breaking Bad, read that recap and tell me you’re not at least intrigued.
- Seth Roberts on The Hockey Stick Illusion:
That story has a hero (Stephen McIntryre) and a villain (Michael Mann) and illustrates a basic truth about the world: A consensus of the “best people” can be wrong.
It’s very difficult to make this point when everyone you know considers themselves among the “best people”….
- A good theory of California government failure (HT Tyler Cowen).
The underlying problem here is that California is simply a beautiful place to live. It’s not just the climate, or the people, or the geography. It’s that something floating around in the air that just makes you happy all the time you are there. And then the second problem is that there is free entry.
So it really doesn’t matter what you do with the constitution. You can fix the referendum system, you could change the budget process, you could turn the government into Singapore. But that only means that something else has to get hosed to bring the quality of life again back down to the level that maintains the zero-rent equilibrium condition with free entry.
- Jonah Goldberg makes a good point:
If by “capitalist” you mean someone who cares more about his own profit than yours; if you mean someone who cares more about providing for his family than providing for yours; if you mean someone who trusts that he is a better caretaker of his own interests and desires than a bureaucrat he’s never met, often in a city he’s never been to: then we are all capitalists. Because, by that standard, capitalism isn’t some far-off theory about the allocation of capital; it is a commonsense description of what motivates pretty much all human beings everywhere.
I’ve said before, there’s really no such ‘ism’ as ‘capitalism’. There’s no ideology or theory that merits that name. There’s just people trying to do the best they can by them and theirs. If that’s ‘capitalism’ then everyone’s a ‘capitalist’, whether they live in 2010 USA or 1955 USSR.
- Andrew Clavell has a nasty derivatives tale.
So I called my friendly investment banker and said, hey, I’d like to buy protection on a decline in value of a reference pool of equity securities of 20% or more of their present value. …. So my banker went out and spoke to an assembler of reference pools of securities. As it happens, they knew an outfit called Standard and Poor’s, and they had a handy list of 500 stocks which they had previously selected into a pool. They already sponsored this pool of securities so all was good, and they happily agreed to arbitrate the performance of my 200 stocks. … As luck would have it, the reference pool fell by 50%. The first 20% fall didn’t do anyone any harm, as no-one had a sidebet on this risk. Investors in my bankers’ bonds lost 30% though, and that was paid to me.
Hint: he’s not talking about a CDO there…
- I had previously ignored if not been hostile to the ads for (yet another) obscure-comic-book movie adaptation, called Kick-Ass. Leigh Scott kinda makes me want to see it.
What Ebert is really offended about is the fact that the underage “Hit Girl” isn’t a victim. It’s okay to have young actresses brutalized sexually or engaged in salacious situations involving drugs and sex as long as they maintain the leftist party line that women are helpless victims. The movie “Precious” depicts a young girl who is brutalized by her family and must turn to the state for help. Awesome! Four stars. “Hit Girl” doesn’t take sh!t from anybody, avenges her family, drives a hot rod, and has $3 million in cash in a suitcase. She doesn’t need anyone or anything. My, my how offensive!
- Via Maggie’s Farm, an explanation of what professors want and why they lean so far left:
On the Left and Right money means power, and we “pointy heads” and “eggheads” are on the outside looking in….. Those making as much money as, say, an experienced furnace repairman account for little in this world, despite the PhD. How many academics even sit on the governing board that sets policies for their campus? It is all most humiliating. …. One way to compensate for this bleak and futureless existence is to become involved in left-wing causes. They give us a sense of identity in a world seemingly owned and operated by Rotarians. And they provide us with hope. In big government we trust…
In other words, it’s because professors, by and large, are Smart People, as a very good blogger once explained.
Filed under: Uncategorized | Tags: climate change, government, healthcare reform, politics, television
One of my pet theories about government is that it is destined to become more and more fictional.
On the one hand, conservatives complain about government getting bigger and more powerful. And that it certainly is, at least if measured in absolute terms: more tax dollars controlled, more employees, more agencies, more laws and rules and paper produced. But at the same time one must acknowledge that its actual effect on our lives doesn’t necessarily seem to be getting bigger in tandem. While government gets bigger and wealthier and more information-centric, so does the country. It’s possible the government is just spinning its wheels, trying (and failing) to play catch-up – and that this failure will be the long-term trend: a government that controls a large amount of capital in absolute terms, but is pretty much unable to do anything meaningful with it.
Technology, usually cited as enabling Big Brother, actually works in the peoples’ favor just as often. Taxes are onerous etc. but technology helps a lot of people file their taxes for a fraction of the trouble it used to be (imagine actually having to go to the Post Office to get forms, and then fill them out by hand, and then go back to mail them. This used to be the norm!) Technology helps people navigate bureaucracies more easily (imagine having to look in the yellow pages for some phone number, or call someone for directions to somewhere, or go stand in line at some office somewhere before you could get any answers about something). Technology even helps people do things the government theoretically doesn’t like and would want to stop if they could, such as pirate music. The ‘government nuisance’ factor present in these and other activities seems to be going down not up.
Yet the government does things like health-care reform, you say, which is going to be a giant intrusion into all of our lives. Well, I wonder. How much of Obamacare is really going to come to pass? How much of it is enforceable? How much of it will be changed or altered to correspond to reality? How much of it is DOA? How much of it will simply be ignored, either because of its inherent illogic, or simply because the people who could and would be charged with implementing and enforcing it don’t have the first clue what’s in it?
There’s often a gap between government rhetoric/ambition, and the actual tangible things they are able to implement. The really interesting thing here is that the people who want the government to do all these things don’t seem to care whether they actually occur.
It’s like that woman who got into a Youtube clip after the Obama election in which she said she ‘wouldn’t have to worry about her mortgage’. Now, almost certainly nothing Obama has done has changed her situation with respect to her mortgage one iota. But you know what? I bet she doesn’t care. She may actually even think he did do something vis-a-vis her mortgage. She may (in fact, probably does) genuinely feel better about things than before the election. The important thing is not what President Obama actually does re: her mortgage. The important thing (to her) is that she ‘doesn’t have to worry about’ it. Why doesn’t she have to worry about it? Not because of anything tangible, but rather, simply because her guy is in the Oval Office. That makes her feel good, it makes her feel that things are right and proper and that her needs are being taken care of (somehow – even if they aren’t), and that’s all that counts.
It is similar with health-care reform. Health-care reform supporters, generally speaking, have no idea what was in the bill that just passed. They don’t care. They love it and hate people who don’t. They have no idea what the actual tangible effect, if any, will be on them or anyone else. They don’t care. They’re in favor of it just the same. Tangible effects and realities aren’t important at all. What is important is that ‘the government finally passed historic health-care reform’. Why is this important? Because it’s just something people wanted to happen. It’s something people wanted government to do. And now it has. This makes (certain types of) people happy, by itself, regardless of actual, tangible effects. It’s about the narrative, not the results.
In this sense my theory is that government, and what people expect and desire of government, is becoming more and more fictional. There is a convergence here between the sorts of things people want and desire out of following government activities, and the way they react to them, and the sorts of things people want and desire out of following (say) a TV serial like Lost. There’s a convergence between people who write about government on blogs and magazines, and people who write about TV shows on websites like Television Without Pity. Will Jim and Pam get together? Will ‘healthcare reform’ pass? Will Jack Bauer stop the terrorists? Will we attack Iran? What do the ‘Lost numbers’ mean? What did Sarah Palin just say? Will House kick his drug habit? Will John Edwards pay child support?
To most people, these are all becoming the same kinds of questions.
TV shows, of course, have no tangible effect on anything. Except they sort of do, because people follow them, have opinions about them, want things to happen or not happen on them, and (genuinely) become sad or happy if the guy and the girl don’t or do hook up, if the bad guy is defeated, if the good guy loses a loved one… In a way people have the same reaction to developments in government. They’re sad or happy if the ‘climate change bill’ or ‘healthcare reform’ doesn’t or does pass, if a woman or minority is or isn’t elected, if troops are or aren’t stationed somewhere. Now, why? To most people – the vast majority of people, in fact – these things are not real developments in their actual lives. They are events that occur solely on TV, in TV-land, and can and will be discussed in the same terms as last night’s soap opera or 24 episode.
In short, my theory is that the government, in the long run, is destined to become our longest-running and most-watched serial TV show.
Filed under: Uncategorized | Tags: anti-semitism, baader-meinhof, fascism, lefties, obama, red army fraction, ron paul
Ron Paul is right that President Obama is a corporatist but wrong that this means he’s not a socialist. Since when are the two mutually exclusive?
The larger point that today’s left is far more comfortable being in bed with corporations is well taken, however. They don’t want to socialize health care, they just want to commandeer insurance companies. They don’t want to give free housing to everyone, they want Fannie and Freddie buying up mortgage bonds. A classical lefty might wish to ban carbon emissions above a certain amount, but today’s left just wants to ‘cap’ them then let Wall Street having fun trading the resulting made-up securities (emissions credits)….
Today’s left has the same goals they always did, but have tended to drift towards using corporations to achieve them. As long as they get a seat at the table, and a piece of the action, the left is all for big business.
There’s a perfectly good term that describes this sort of economic philosophy, but I run the risk of confirming Godwin’s Law by saying it, so let me just hint at it by pointing out that The Baader-Meinhof Complex was a very well-done movie. I wouldn’t be the first to notice that it mostly skirted around the issue of the vicious anti-Semitism of the Red Army Fraction, however. Some truths, like the anti-Semitism at the root of a lot of socialist thinking, just hit too close to home, I suppose.