Saturday, May 23, 2009

Falling Up

Unfortunately for us—and for reformers trying to rescue our post-bubble economy—the history of economic thought has been rewritten in infantile caricature, to give the impression that today’s stripped-down, largely trivialized junk economics is the apex of Western social thought.
--Michael Hudson

That’s history for you—always moving in the direction our ideological prejudices think it should. In the eyes of the corporate state, anything that adds a point or two to an enterprise's profit is “destiny.” Anything that reduces the margin of profit is an anomaly.

This explains why there are people out there who still believe that:

America’s new generation of financial assets that resulted from the recently invented financial process known as “securitization” are fundamentally sound in value, and that an over-reaction on the part of investors to the subprime crises has resulted in a panic-induced collapse in their valuations.

All we have to do, they tell us, is restore confidence in the market, which financial wizards are doing, hand-over-fist, by making the banks appear more profitable than they really are using accounting gimmicks such as marking to model and the creation of pie-in-the-sky scenarios for economic recovery. Once this confidence is restored, they assure us, the toxic assets will no longer be toxic and the latest of our collapsed economic bubbles will miraculously re-inflate itself and God will still be in his heaven.

It’s kind of like believing in the tooth fairy.

When a fool steps off the edge of a cliff, he believes his fall to be progress. I suppose that, in one respect, it is destiny at work. That’s the problem with those who believe in destiny: down is up.

--Case Wagenvoord


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