Jim D's old roomate, Paul Krugman, posted on his blog a video of a discussion at Princeton last week of the financial crisis. I haven't watched the whole thing -- actually I've only looked at the opening minutes of it -- but there was something there that caught my attention. The speaker presented a chart showing the growth of the "broker/dealer" sector compared to other economic sectors and emphasized the relative growth of that sector, beginning around 1980, as ten times faster than the others.
One way to look at this is that the "current" crisis really began around 30 years ago and has manifested itself as a continuing series of crisis-management interventions engineered to keep the debt expanding one step ahead of the wolf at the door. Or, to put it more bluntly, one could characterize the entire period as the bailout stage of capitalism. The current wave of bailouts, though, seems to raise the spectre of a "crisis in the crisis." I think this is best expressed in terms of the metaphor itself. Bailout is, of course, a metaphor that refers to trying to keep a boat afloat by emptying the water it is filling with. The metaphor emplies a certain localization of the problem. It is one boat with a leak that is presumably containable. But this metaphor does stretch to whole system. Then you're talking about bailing out the sea. There is no effective "out" to bail to. >From a more literal standpoint, it is widely understood that it is not politically feasible to conduct a system-wide bank rescue operation that leaves intact the underlying incentives for reckless speculation through the expansion of debt. However, the secret mission of previous bailouts was precisely to restore conditions for the unchecked expansion of debt. A systemic rescue -- as opposed to a localized one -- might be called "unwinding" or something but not bailout. -- Sandwichman _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
