A Voice of Sanity in the Wilderness
Paul Volcker has always stood out, not only because he’s so tall, but because he is so disinterested, in the original meaning of the word. He has never seemed a political animal, and therefore his mind rings like a good bell in the murk.
Evidently he’s no longer considered a playa, and so his testimony this morning in front of the House Financial Services Committee was carried only on the House website, with terrible sound. None of the cable networks carried it, excerpted it, or even mentioned it, according to Icepick, who was looking for it. People are having much too good a time perpetuating their delusions and addictions.
However, Calculated Risk printed some excerpts, and linked to Volcker’s whole prepared statement (PDF). Just a taste:
Now the financial pressures have eased and there are signs of renewed economic growth. There are some on “Wall Street” who would like to return to ”business as usual”. After all, for a time, and for some that system was enormously remunerative. However, it placed at risk not only the American economy, but also large parts of the world economy. […]
However well justified in terms of dealing with the extreme threats to the financial system in the midst of crisis, the emergency actions of the Federal Reserve, the Treasury, and ultimately the Congress to protect the viability of particular institutions – their bond holders and to some extent even their stockholders – have inevitably left an indelible mark on attitudes and behavior patterns of market participants. […]
Will not the pattern of protection for the largest banks and their holding companies tend to encourage greater risk-taking, including active participation in volatile capital markets, especially when compensation practices so greatly reward short-term success? […]
The obvious danger is that with the passage of time, risk-taking will be encouraged and efforts at prudential restraint will be resisted. Ultimately, the possibility of further crises – even greater crises – will increase.
Don’t just listen to the content, listen to the tone: deliberate, thoughtful, unexaggerating, unhysterical. You won’t hear its like again anytime soon, possibly not in your lifetime, possibly not in the rest of our civilization’s life cycle as it it founders and is rent by the eager teeth of barbarism within and without. This is an aspect of civilization that is on its way out.
Ambiance 
realpc said,
September 24, 2009 at 2:03 pm
“Will not the pattern of protection for the largest banks and their holding companies tend to encourage greater risk-taking”
Yes of course. And I don’t even believe the bailouts had any positive effect anyway. How do we know that it would have been much worse without them?
Maxwell said,
September 24, 2009 at 2:13 pm
Volcker’s a mensch. I disagree that what he represents is dying out, but I agree that a media and political culture driven by a sound-byte mentality has little interest in critical thinking or prudential governance.
Realpc: Here’s one response, made by a libertarian economist.
Randy said,
September 24, 2009 at 2:37 pm
I hope you’re right, Maxwell. I really do.
Maxwell said,
September 24, 2009 at 3:17 pm
Randy, it’s tough to be a clear-eyed optimist. Perhaps impossible. But I think the market for clear-eyed pessimists is quite oversaturated.
amba12 said,
September 24, 2009 at 3:29 pm
Ha! That’s for sure. A dime a dozen!
Maybe it’s not dying out, but it sure is being drowned out.
Icepick said,
September 24, 2009 at 4:53 pm
Let me clarify. I could not find the testimony on live tv this morning except for some of the opening comments by Barney Frank on CNBC. The channel then cut away to its usual cheerleading before Volcker started speaking.* I checked FNC, CNN, C-SPAN 1, C-SPAN 2, C-SPAN 3, CNBC and Bloomberg. I never check MSNBC, but I saw in the preview pane that they appeared to be covering UN/G20 stuff. I don’t get Fox Business or the CNN Money channels. (Does CNN Money still exist?)
So basically no coverage of the event itself. And I haven’t trsuted the news people to do a decent job of editting or interpretation since I realized back aroun 1985 that they can’t do math. (Long story, and I won’t bother retelling it here.)
* The link provides an example of the cheerleading, it wasn’t what was one this morning.
Icepick said,
September 24, 2009 at 4:56 pm
Randy, it’s tough to be a clear-eyed optimist. Perhaps impossible. But I think the market for clear-eyed pessimists is quite oversaturated.
Yeah, those guys that saw the crash coming were a dime a dozen. Oh, wait, that’s not right….
Icepick said,
September 24, 2009 at 5:21 pm
And in any event pessimism is entirely warranted.
Icepick said,
September 24, 2009 at 5:24 pm
On the other hand* there is some cause for optimism: Barry O is finally getting tough with those international miscreants, the British! (They’re almost as bad as the Belgians.)
* In honor of the economics profession.
realpc said,
September 24, 2009 at 5:42 pm
“Realpc: Here’s one response, made by a libertarian economist.”
Well some of the commenters on that response did not agree with the “libertarian.” And I don’t either. I can’t have a strong opinion since I am not an economist — on the other hand, economists have shown that they don’t understand the economy much better than the rest of us. My opinion is based on my vague and general understanding of complex systems. And my vague and confused opinion of the bailouts is that they were a gigantic mistake, and we won’t realize that until some time later. We don’t know if things would have been worse without them, and we don’t know if things will be worse because of them.
We don’t know. And most of these “experts” with all their predictions were unable to predict the crisis. So why are we supposed to believe their predictions and reassurances now?
pathmv said,
September 24, 2009 at 5:48 pm
There’s nothing in the world preventing the media from covering such things. The NY Times, the Washington Post, they could cover this on their front pages tomorrow. CBS, ABC, NBC, CNN, FOXNews, all could decide to give prime-time coverage to common-sense statements like that one. They choose, instead, to devote lots of coverage to whether the GOP is racist, to having the vapors over the inanities of Rush, O’Reilly, and Beck, to political game issues rather than the serious underlying policy issues.
Sure, part of it is the fault of partisans on both sides who elect less-than-deep thinkers to office. But much of the blame also lies at the feet of the media, who decide who gets annointed as the main story on any given day. Rather than treating as “news” all the relative fighting and arguing over Beck or Limbaugh or whatever, they could choose instead to become an actual trusted sources for real news, leaving Beck’s importance to depend entirely on his own program. Instead, they give Beck (and frankly, I like a lot of what Beck says, though certainly not all) even MORE air time and column inches, time which could otherwise be devoted to less controversial characters.
But that’s not what they think will sell their ad spots.
amba12 said,
September 24, 2009 at 8:49 pm
Marx was exaggerating, but only a little bit, when he said “The conditions of existence determine consciousness.”
I’m just being struck by how drastically differently people see things depending on where they’re looking from. “No atheists in foxholes,” no optimists in unemployment lines (these too may be exaggerations, but only slight ones).
Paul Hawken said in a recent rhapsodic commencement address, “The most unrealistic person in the world is the cynic, not the dreamer.” Hawken turns up on websites with names like globalmindshift and wiserearth.org (the latter is his own). His latest book “describes a convergence of the environmental and social justice movements as the largest social movement in history, and the fastest growing.” He’s also a proponent of “Natural Capitalism.” He has coined phrases like The Next Reformation and the Ecology of Commerce and “the Earth is hiring”. “While literary agents, publishers, and would-be authors were lamenting the demise of the recent business-book boom, Paul Hawken was signing a contract for a $400,000 advance from Simon & Schuster.” Works for him.
realpc said,
September 25, 2009 at 1:22 pm
People are free to talk, imagine and dream, and reality is free to ignore them. He sounds like a utopianist, and look how accurate their predictions have been. Nothing can stop over-population, which is the main problem. Certain cultures don’t use birth control and I don’t see how you can force the.
I am not trying to be pessimistic, but whenever I hear that kind of motivational exultation I just feel tired. I don’t think it’s because i’m old, I think I have always been an anti-utopianist.
amba12 said,
September 25, 2009 at 1:33 pm
Hawken is an example of the new we-are-all-one nature religion. Its believers are currently in a state of exalted agitation about climate change, riding to the rescue of the Earth. That’s one story. The tea-partiers are in a state of exalted agitation about saving the U.S. Constitution. That’s another story. I envy both; they’re both having a very good time. It’s thrilling to have a designated evil to be against and a chaste Ideal you are defending, whether it’s Gaia or Lady Liberty.
Been there. But the two ideologies I’ve been exposed to have canceled each other out, and on top of that I’ve been irradiated by the stupefying findings of science. The end result is that I’m in an advanced state of “I don’t know.” These storylines that people craft to explain life and motivate action all strike me as extremely partial, inadequate to reality, and in some ways wrong. They get superimposed on a reality that is unfathomable. I suppose it’s the only way we can function, and I must still be doing it on some level by definition. But I can’t muster any enthusiasm for it any more. I can’t pick one of those stories and lose myself in it.
realpc said,
September 25, 2009 at 1:49 pm
[The end result is that I’m in an advanced state of “I don’t know.”]
Amba, I am in exactly the same state. I am not exulting and elated, but I am not depressed either. I guess maybe it is fun to have a designated absolute evil to hate — I don’t know, I never had one.
I guess I’m trying to just appreciate each day, if possible. Maybe if I had kids I would be agonizing and marching for the nature worshipers or the constitution worshipers, to save the future.
But probably not, even then, because I just don’t think our species is smart enough to fix anything without breaking ten other things.
I have faith in the infinite universe, and in my personal guides, whoever they may be. I don’t have answers for the world or even for myself. I am not that smart.
realpc said,
September 25, 2009 at 1:53 pm
But I admit I am glad people are aware we have been destroying the earth. It’s better than just going on as usual. But it’s nothing to be exulted about — no one has any idea how to undo all that damage, or to stop the ongoing destruction. But maybe it will help get the economy going again, as green technology is invented and marketed. Just another new thing for consumers to go into debt over.
lfineaux said,
September 26, 2009 at 1:32 am
an advanced state of “I don’t know” is probably the most advanced state there is!!
Sometimes I feel my life is a soup of repelling mixtures. Yes, my son is disabled and deserves some allowance for that. Yet, he doesn’t need to be discouraged to perform where he can. Where is the balance? Where is the justice?
Yes, black people are discriminated against because of their skin color (as is my son because of his limp and his lisp) but where does help become a hindrance?
I live in a town that is 55% black and… well, it is strange in so many ways. One of the defining incidents that I witnessed was the Rev. Al Sharpton and his entourage on an American Airlines flight from Dallas to Shreveport. Those planes are small jets and they are usually about 3/4 full.
The Shreveport airport is small, with a limited passenger pickup zone.
During boarding in Dallas, I noticed that the Sharpton group was easily identifiable… not by race but by attitude. No row contained white and black. OK… it wasn’t really that crowded and frankly, I was glad to not have to share my row.
But… it was while waiting for my husband to pick my up that I noticed the most horrible actions by Sharpton’s group. (I’m estimating 15 people in his entourage.)
We live a 5 minute drive from the airport and it’s always been our agreement that when the luggage carousel starts spitting out bags, we call for pickup. Sure, sometimes we have to wait, sometimes pickup has to circle, but most of the time it works.
This particular day, I called my husband when I got my bag, one of the first off the plane. I was already outside with my bag when I called him, it was so fast.
In the 5 to 10 minutes it took him to get there, I saw the worst class abuse I’ve ever seen. One of Sharpton’s aides was greeted by either his wife or significant other. Her trunk was a mess. The black porter had to completely re-arrange the trunk in order to fit the luggage. During this time, the car owner and the passenger were having a fun dialogue about something I couldn’t determine… but they were completely ignorant of the trouble and stress the porter was having in trying to fit the luggage into the disorganized trunk full of junk.
But the most painful thing to watch was the black porter wait around as long as he could for a tip. Oh, I felt so sorry for that man. The MAN who had done his job perfectly, possibly beyond the ‘call of duty’ and thought he might have earned a tip.
This was not a display of racism, but classism. And I was nauseated. When my husband got there to pick me up with my one bag, I stopped him from putting the bag in the empty trunk and asked the porter to do it. I tipped him $20, not out of “white” guilt but out of anger that others regardless of color would cheat him.
That experience (among others) has led me to believe that there would be no “race war” if class war were not the underlying cause.
My viewpoint is also supported by my experiences as a minority because I was white. I attended a school where mathematics was taught in Spanish. Needless to say I didn’t really “get” it even though mathematics is a universal language. Every one of my classmates understood and spoke English perfectly, yet the teacher and his hispanic students chose to “omit” me from their conversations.
Yet, I understood enough of their language to get the mathematical concepts. That the state of New Mexico chose not to give accreditation to this high school meant that my parents moved me to a boarding school… a whole ‘nuther experience in racial/ethnic experience.
My parents, bless them, let me explore on my own. I was allowed to attend Catholic catechism after school and Mormon whatever (indoctrination? I really don’t have a name for it…) before school. My parents trusted that their teachings would either triumph over the others or that I would come up with an ideal that surpassed any of the current teachings.
Though my brother and sister would disagree completely, for me, my parents allowed me to choose my own way. I think they are possibly disappointed that my way is agnosticism at best, but I don’t doubt their love for me regardless.
Now… I am of the opinion and belief that human activity has little effect upon nature. Nature rules and it will overrule humans when necessary. Nature includes nuclear reactions… there is nothing that humans can do that does not involve nature.
Perhaps it is a contest. Perhaps humans can hurt nature. But… I think nature rules humans and human behavior and will ultimately be the “winner”.
Time is on nature’s side. Time will overrule all human activity.
amba12 said,
September 26, 2009 at 2:11 am
I love your parents.
Yes, in the long view humans could be just a flash in the pan. Even now we’re just the new kids on the block. The dinosaurs were around, what, 100 million years? But it wasn’t the same dinosaurs for all that time. Every once in a while on a planet here or there, perhaps, a species develops not only intelligence but technological capacity. Then it is a race against time, whether their curiosity can get them off the planet before their fear, greed, and rage blow it up. Time and space are so vast, even if this is an exceedingly rare event it must have happened quite a few times. My father (91) predicts that before this century is out we will meet at least one of the others.
lfineaux said,
September 26, 2009 at 5:13 am
I love my parents too, and I miss my mother’s wisdom terribly. She died nine years ago. My father and I agree on many things, yet one of the biggest disagreements we had was when he learned my oldest daughter was pregnant.
He said he couldn’t understand why anyone would want to bring a child into the world as it is today (2 1/2 years ago). I was dumbfounded… I asked what was so different today than the early ’50s when I was born.
Then he was sort of dumbfounded because he couldn’t quite explain that. Anyway, we got over our disagreements… and eventually he came around to agreeing that his granddaughter would likely be a better parent than either he or I was. And that his great-grandchildren could make this world a better place than his generation or mine had.
It’s quite amusing to watch my 2 1/2 year old granddaughter wrap her Papa around her little finger… he’s totally enthralled although he will go to great lengths trying to refute that. His step-great-grandchildren and his grand nieces and nephews have a similar effect on him.
I don’t disagree with your father that we may meet others similar to ourselves someday, but the idea they exist and the likelihood we will meet them are far different equations.
Being an optimist, I think our species will survive its fear, greed, rage, and even its curiosity. I see fear as the greatest threat, with rage accompanying it. Curiosity is next in order of danger. Greed we’ve survived many times before.
amba said,
September 26, 2009 at 12:29 pm
Greed we’ve survived many times before.
Ha!! And as it’s been popular to say for a while now (quoting Gordon Gekko without irony), greed ain’t all bad! As a motive behind exploration of all kinds, it is certainly intertwined with curiosity. And both are expressions of Nietzsche’s “will to power” which, when I actually read it, turned out not to be something primarily sinister and political, but something really instinctive and biological — a drive for expansion of one’s territory, one’s numbers, one’s influence, one’s knowledge. Something I have observed as quite universal since reading about it, and not entirely different from Hopkins’ “selves, goes itself.”