The Mirage of Economic Recovery

These are halcyon days for the Armageddon Financial Bloggers (the AFBs) who experience something akin to orgasm when they behold the latest unemployment figures from the Dept. of Labor, or quote from the Federal Reserve's monthly "Beige Book," which lays out American economic parameters in all their horrifying detail. Things really are bad - very, very bad indeed. There is actually no reason that the AFBs or anyone else needs to exaggerate our parlous state. It's real, alright.

Word is leaking out, even from the Head Cheerleaders on CNBC, that the recent 4-month rally on Wall Street, led, suspiciously enough, by financial stocks, was the result of federal manipulation. The Plunge Protection Team, that cabal of big econ players who operate out of the basement of the White House or somewhere like that, have been investing the Fed's "money" in equity positions in the big commerical and investment banks as a means of providing them with funding. One can look at this continuing favoritism as further evidence of a government-Wall Street conspiracy or simply regard it as a token of Ben Bernanke's sincere belief that we must stabilize the banking system to avoid turning a downturn into an absolute panic where people are rushing to the teller lines to get their money out and put it somewhere safe, like in the broom closet. The feds didn't want to nationalize these banks so they've turned the cat around and are stroking it a different way. The Titans of Wall Street are reacting the only way they know how: by draining out the resumed largesse in the form of huge bonuses for themselves. The run-up in the Dow, however, gives the people the impression of returning prosperity, and this is no doubt a desired side effect of the federal intervention.

Some thoughtful observers, such as Hale Stewart on the Huffington Post, believe that signs of turnaround are here, and point to historical markers (factory orders, that kind of stuff) as reliable indicators that prosperity is just around the corner. Prez O has talked about "green shoots" and "hopeful signs." Well, what else are they going to say?

Down on Main Street, the U-6 index says that about 16% of the workforce is unemployed or marginally attached to employment. John Williams with his ShadowStats irritates the government by using the standards in force prior to Bill Clinton's decision to define away a large part of the unemployed, and gives us a figure of 20% unemployment. Since the methodolody Williams uses is about the same as that used during the Great Depression, his is probably the most accurate for comparing the current doldrums to that classic era. We're within about 5% of Depression levels.

Housing prices continue to slip, there is another large wave of foreclosures coming (Alt-A and prime), the commerical real estate market is in trouble because of all the shuttering retail stores, wages are falling and over a half million people a month are thrown out of work. How does that translate to "green shoots?" More problematic yet is that the forecast for recovery, when you get right down to it, is based on the Mayan Observatory Hypothesis. You can see this theory in action at Chichen Itza in the Yucatan. The ancients celebrated the solstice becuase they believed the gods had once again kept the sun from falling completely out of the sky. The sun dipped to its lowest orbit in the southern sky, shining through the slot in the limestone dome, and then, miraculously, it began to rise again. Time to party!

I think that something like that is happening now. Indicators from past recessions are consulted; if there's a fit, then it must mean we are at a certain place on the road to recovery. What this leaves out is that the American economy has been hollowed out by decades of offshoring, globalization, free trade agreements, decline in educational standards, a ruinous rise in the cost of health care, massive trade deficits caused by an over-reliance on imported oil, a failure to invest in mass transportation as a means to get people around, and a systematic over-investment in nonproductive military expenditures, including completely unnecessary wars. To wit, the conditions for recovery are simply not the same as in previous down-cycles, which often were caused by classical economic problems such as a temporary misfit between supply and demand. That's not this recession. This one is structural, and it happened when it did because we finally ran out of games to play with cheap foreign money, which in turn was available because we were in the climax of the Consumer Economy, the Shopper to the World.

It's now said that Americans are "saving" money. They're not saving money as opposed to buying gadgets and stuff; they're simply paying down credit cards and other debts in an effort to hang on. But the turnaway from consumerism means that the 70% of the economy that relied on largely discretionary spending is taking a body blow.

A good result from all this, probably the best that can be hoped, is that a smooth transition to a lower level of economic activity and prosperity (about 40% lower) occurs without a massive "discontinuity." That is, without panic or public insurrection. I think that will turn out to be Obama's job, and maybe his conciliatory, mediating style will actually be appropriate to this task. I don't think he's really a galvanizer, now that I've seen him in action. The problems he's experiencing now that he's in charge of this mess were highly predictable, and he will take tremendous flak for not solving problems immediately that were about thirty years in the making. That's the inevitable result of our ahistorical style of discourse. Maybe at some point he'll realize that the attempt to get the economy back to early 2007 levels is futile and even dangerous, given the gargantuan debt the government is taking on, and then he can devote his efforts to transforming our energy regime, which is the only path out of this desert.

Happy Fourth

After I finish Halberstam's majestic The Fifties, I think I'll read Kevin Starr's Golden Dreams, which covers California during the same era. It was my late, great cousin Jim Houston, writer and highly-practical philosopher, who taught me that when one's own times fail to satisfy, it's best to revert mentally to some earlier epoch when life seemed better. Jim went all the way back to the turn of the last century, 1890 to 1910, what the Parisians may have called La Belle Epoque. Before the First World War, before income tax, before all the improvements to modern life which have made it largely unlivable.

Usually when one expresses such an opinion, one is met immediately with the objection that modern improvements in health care, and particularly the eradication of many infectious diseases and improvements in surgical techniques, make such nostalgia silly and misplaced. An intellectually honest person must yield to the truth of some of this; although I would say that human life span, as opposed to expectancy, has remained largely unchanged over the last few thousand years or so. About 85 to 95 years is the human life span, and probably the best predictor of a long life is the fact that you're alive at a certain age. My Southern relatives tended to achieve this life span almost to a person, and it's fatuous to think that modern medicine "allowed" them to live as long as they did. It's really more tautological than that. They lived long lives because they were long-lived people. When your German Shepherd goes to that Great Kennel in the Sky at age twelve, you do not ascribe it to the wonderful work done by his vet. You figure it's because he lived out his normal life span.

I find myself becoming more of a Luddite as I age, perhaps in keeping with the masthead of this blog. I think all of our mediated experiences of reality have turned back against us: television, the Internet, Twitter, Facebook, iPhones and Blackberrys, texting, e-mail, video games. We've let the world turn into a shit pile because we don't pay that much attention to the Real Thing, just reality as represented in pixel images. How could the Great Pacific Garbage Patch exist without anyone even talking about it? How could there be 600,000 pieces of trash orbiting the Earth? California's broke, and one of the first cost-saving measures proposed by our Austrian governor is to close all the state parks, maybe on the realistic notion that no one will notice that all the preserves of nature have become suddenly inaccessible. We can still watch them on TV, I guess.

Anyway, while wandering around in the past, I came across this remarkable quote in Halberstam's book:

"Years later, when Ike gave his farewell speech warning against the power of the military-industrial complex, he was much heralded; but the truth was that such views were always the bedrock of his philosophy. He was the second President who had to make difficult choices about complex and expensive weapons systems. He worried about the potential drain on the economy, and he believed that the Joint Chiefs cared little or nothing about the dangers of inflation. He spoken often in private about the danger of spending so much on weaponry and defense and in the process destroying the economy and thus weakening the country these weapons were going to protect. The federal budget, he liked to say, had risen from $4 billion a year in 1932 to $85.5 billion in 1952 - with some 57 percent of that increase going to the Pentagon. 'This country," he once noted, 'can choke itself to death piling up expenditures just as surely as it can defeat itself by not spending enough for protection.' Defense spending, he believed quite passionately, was dead weight; it was inflationary and subtracted from the nation's vitality rather than added to it."

I don't think anyone can say with a straight face that the Supreme Commander of the Allied Forces, the supervisor of D-Day, did not know an awful lot about wars and the military. Now it's a commonplace for the Commander in Chief to defer to the judgment of the generals. What matter are the opinions of the "commanders on the ground" in our endless theaters of war. Obama now has his war of choice, Afghanistan, and he gets to play army, with real lives at stake, in a Marine assault in Helmand Province. He wants to root out the Taliban and their illicit drug trade so that the warlords can return and resume running the drug trade under a regime with free elections, and so that Osama bin Laden, who left eight years ago, cannot be harbored by the Taliban. While we're in Afghanistan we will also kill all the al-Qaeda terrorists, and I believe it is very obliging of these terrorists, very thoughtful even, to gather in one narrow corridor of the world so we can kill them all at once, and not disperse to, say, Egypt, Indonesia, Pakistan, Saudi Arabia, Algeria, Morocco, Tunisia, the Sudan, Yemen, the UAE, Kuwait and other Muslim countries. Life imitates old jokes, like the one about the guy who drops his car keys in a parking lot at night and asks his friend to help. His friend walks around in circles at the far end of the lot. "I think I dropped them around here," the first guy says. The friend answers, "Yeah, but the light is better over here."

Eisenhower's warning is now a very faint echo from the past. No one even talks about military spending anymore - it's a given, an untouchable, our raison d'etre, as Lafayette, who did so much so long ago to put us on the map, might have said.

Is Fielding Mellish Involved in the Coup in Honduras?

One must admit the circumstances are highly suspicious. A democratically elected Presidente in Honduras has been overthrown by means of a military coup soon after the Presidente signalled his clear intent to move Leftward in his policies and associations. As just one example, although only 70% of the populace in Honduras live in abject poverty, Presidente Zelaya saw fit to pass a law increasing their minimum wage from "starvation," which the business elites approved of, to "ridiculously low," which enraged them. It didn't stop there. Zelaya accused the U.S. of using the "war on drugs" as a way to intervene in Latin American politics, instead of taking the more logical step of controlling the distribution and trafficking within the U.S. No demand, no drugs. Who knows where this kind of thinking could lead? We might legalize drugs to remove the crime premium from their street value. While this makes sense and is a completely rational approach to an endemic and ineradicable problem, the approach is, for the very same reasons, contrary to U.S. policy.

Tegucigalpa is important to me because it is one of the few world capitals with five syllables in its name. Others include Montevideo, Kuala Lumpur and Santo Domingo.

Manuel Zelaya was arrested yesterday by a military contingent headed up by General Romeo Vasquez, a graduate of the U.S. School of the Americas. He was taken in his pajamas to the airport and flown to Costa Rica. What I mean by that is that Zelaya was wearing his pajamas when he was driven to the airport. Hugo Chavez has warned Honduras's appointed successor, Roberto Michelleti, whom Hugo calls "Thug-etti" (Hugo's pretty good with a jibe), that if any harm should befall Zelaya, Venezuela will intervene militarily. Hugo, Zelaya, Raul Castro of Cuba, Daniel Ortega of Nicaragua and Evo Morales of Bolivia have become pretty tight in recent months, with Honduras joining the Bolivarian Alternative for the Americas (ALBA as the Spanish acronym) as a defiant alternative to Washington-sponsored alliances. Let's face it: they're all Left-leaning.

I can't help but think that none of this could have gotten so far out of hand when United Fruit was running Honduras and Eisenhower was our President. My guess is that the Latinos, and particularly Chavez and Castro, are testing Obama to see how much independence they can assert against a weakened and distracted United States. Maybe our first pushback has taken the form of bringing Fielding Mellish out of retirement to head up a Central American coup. It's been decades since we pulled off a successful Central American intervention. And in our complacent passivity, look what's happened. They're lining up against us, some of them are Commies, they're all pretty liberal, and most galling of all -- they're locals. What will happen to our sweatshop factories there? Will they be forced to pay a living wage? Then what's the point of locating a maquiladora there at all? Why own their land and grow bananas there?

So this coup offers the first ray of hope. It's all in the hands of "Romeo Vasquez," with or without the red beard.

My Fact Finding Mission to Buenos Aires

Recently, I suggested that Governor Mark Sanford should be our next President. To say the least, this is not the majority view in the United States. Maureen Dowd in her column in the New York Times today, for example, wrote a whole number accusing Sanford of a Mark/Marco duality ("he was in love with her, and in love with the image of himself in her eyes," etc.) consistent with her usual pop psychological approach. I use Freudian references in my own amateur psychology; if you're going to use uninformed generalizations, be sure to borrow from the best - the classics.

The South Carolina Democrats are now calling, of course, for an "investigation" into the state money spent on Sanford's trysts. This was all too predictable. The fun part of these scandals always gets ground to dust under the relentless assault of the scolds and bluenoses. We move from tan lines and magnificent parts to special prosecutors and audits. I still maintain that Americans do not know how to really mount, so to speak, a sex scandal, and I return to my own gold standard on the subject, Silvio Berlusconi, the 72 year old Prime Minister of Italy. Prosecutors there are interviewing 30 young women in connection with Silvio's habit of throwing parties where the guest list includes a lot of prostitutes, although Berlusconi has grandly dismissed the idea he's ever paid for it.

Does anyone ever ask why someone's sex life has anything to do with serving in office? In Eliot Spitzer's case, it was at least obvious that the Bush Administration's Justice Department tapped Spitzer's phone at the behest of the big investment banks on Wall Street which Spitzer had prosecuted in connection with their illegal laddering and insider trading frauds, arising from their IPO and mutual fund scams. Spitzer made them pay fines which were tiny in comparison to the bonanzas they'd stolen in violation of the securities laws, but still...it was the principle of the thing. It was as if Spitzer had taken the regulatory laws seriously or something. So he had to be run out of office by a compliant Bush Administration and media industry. Thus, the public lost one of its last remaining firewalls against systematic cheating, but gained a minor scandal for a couple of weeks. The tableau with the distraught wife, the giggles about knee socks, pictures of the whore. Tee-hee. We're such a mature people.

As for Wide Stance Larry Craig, Diaper-Clad David Vitter, and the rest of the gang, the usual explanation for their persecution is that they persecuted Bill Clinton when he was impeached. This explanation now extends to Mark Sanford, since he was a congressman at the time of the impeachment. This is one of those explanations that explains nothing. Yes, they're hypocritical about sex, but what, again, does that have to do with their fitness for office? It's as if the press, in digging up quotes from more than a decade ago, says "See? Tah-dah!" And we're supposed to instantly get that these guys have got to go.

See tah-dah what? What two ideas have been connected in the mind? I was reading a book by Pascal Boyer called Religion Explained not long ago, and he was discussing some of the recent thinking in evolutionary psychology, and the inference systems which we use to acquire knowledge and build on our existing database. For an example of such an inference, if I say that an ooglarp is an animal, you know a little - it's not a mineral or a plant. But in evolutionary terms, you're not much farther along than when we started. Should I be afraid of it? Can I eat it? That kind of essential hunter-gatherer knowledge. If I say that the ooglarp is the main predator of the zebra, you suddenly know an awful lot. It's probably a feline or canine creature, it's carniverous, it's probably fast and powerful, it has four legs and sharp teeth, and it lives in Africa. If it's feline, you would probably encounter one or two hunting together; if canine, it probably hunts in packs.

How did you know all that? With one clue, you inferred all the rest. The evolutionary psychologists think this is how our brains work. It's the most efficient way to learn; you don't start from scratch every time you learn some new piece of data. You extrapolate from what you already know. Thus, when ancient man looked around him, he naturally inferred, from the existence of creation, that someone created it. This was natural because he knew, from his own rudimentary tool-making and use, that you can build things. He naturally assumed, because of the way his brain worked, that the world was made by someone, and he inferred that it was someone of great power (the ancient cave-dweller couldn't build something like this). Thus, an omnipotent, anthropomorphic God was created by man to explain the world, using his natural, adaptive inferential technique.

Since humans were also very social animals (they evolved in that direction since cooperation was essential to survival, given their relative weakness in the animal world), they transmitted their belief systems in myths. A key requirement of such transmission is reproducibility; not just any story will work. The essential details have to hang together so they can be passed as a complete myth, without too many weird, extraneous features. Thus, an anthropomorphic God who is omnipotent, possessed of human emotions and exists only on Wednesdays just won't work. That last detail messes up the transmission. Similarly, the Virgin Mary is in every way a normal human except she gives birth immaculately. That's easy to remember and gives the story the mythic character it needs to go along with omnipotence, etc. Normal woman, Mother of God. Perfect. By the same token, the New Age approach of reducing God to a sort of inchoate force just doesn't catch on - where are the humanoid details, the story line that makes a myth a myth? So New Agers are actually the stealth atheists of the religious world, and I pass this on to my Fundamentalist friends who might be tempted otherwise to lend a New Age spiritualist their car keys.

It follows then, and ironically enough, that evolutionary psychology strongly suggests that belief in God is the natural tendency of humans, which is why religion and belief in the supernatural are found everywhere in human civilization, and always have been. By contrast, scientific thinking is highly unnatural and foreign to our innate brain processes. It takes a great deal of mental discipline to inculcate a truly scientific approach to reality. It gives the advantage of allowing tremendous predictive ability and control over outcomes, but it is not the normal, default way of thinking. If a plane crashes today and you're scheduled to fly tomorrow (on a different airline, on a different route, in different weather), your first instinct is probably not to reflect on the fact that the probabilities have not really changed at all. You infer, on the basis of atavistic tendencies, that you're in greater danger today than you would have been two days ago.

A scientific approach to the question of God would suggest that any anthropomorphic God could not have pulled this off. If God's brain is given over to emotional attributes like anger, jealousy, wrath, love, etc., it's unlikely that this human-like brain (supposedly we're made in his "image") could also undertake the enormous complexities, and the computational speed, required to make the universe. And if God could do all that, it seems unlikely that such a being would have even the faintest sort of commonality with man. As noted, the Cosmic Force version of God, endowed with the power to do all these things, doesn't sell down at the local cathedral because He's just too foreign to human experience.

So it seems likely, particularly given the conditioning of our specific culture, that a politician who errs sexually is subject to a set of inferences by the general public. These inferences include the presumption that a philandering man (and men in particular) are not trustworthy and fail in their public "father" role as a leader of humans. Is this scientifically reasonable? I don't see how it could be. Traits such as intelligence, creativity, organization and force of personality (which might make a leader more vulnerable to straying, after all) surely count for more than marital fidelity, since the governor or president or whoever is not married to the people he governs. The only question is whether he's effective at his job. Eliot Spitzer was very effective; that he had a thing for call girls is absolutely, completely beside the point.

As I've said, Europe seems, in general, to do much better with sex scandals and politicians than we do. I think this may reflect a higher-level mental functioning than is found in the United States. Not that the Europeans are innately more intelligent, but that their inference systems operate at a higher level of integration with scientific, rigorous thinking. Americans are primitive in the inferences they draw, conjoining factors which have no reality-based connection. America, of course, is far more religious than the secular Europeans, and the ready acceptance in the U.S. of all kinds of myths and literalist religion is probably indicative of lower, less evolved mental functioning.

But as an example of my own faulty inferential system: I assumed that Buenos Aires was farther south than it really is. It's in the north of Argentina across the water from Montevideo. Because it was located in South America, and I knew Argentina was the southernmost country, I inferred in a faulty manner that its capital would be in the extreme south. Yet scientifically this makes little sense. Why put your capital in the coldest location in the country? This becomes clear once you reflect on the role of latitude, which applies as logically in the Southern Hemisphere as in the Northern. What else have I assumed? Have I jumped to the faulty inference that because Sanford's mistress appears to be a tamale caliente, that all women in BA are such? And if her boyfriend down there leaked Mark's emails to the press, should I infer that all their boyfriends are treacherous and hot-blooded, and that one's hotel room door must be kept securely locked?

An old friend of mine, who has seen the whole world in the course of his work, writes that I should go to Buenos Aires myself, forgetting about the prudish sermons from the likes of Keith Olbermann and Maureen Dowd, indeed, forgetting about the blog - maybe, tal vez, forgetting about everything. And returning a new man. Does the cause of science demand any less?